Note 7 - Inventories

9 Months Ended

Sep. 30, 2013

Inventory Disclosure [Abstract]

Inventory Disclosure [Text Block]

7.     Inventories

a. Inventories Owned

Inventories owned consisted of the following at:

	September 30, 2013
	California		Southwest		Southeast		Total
	(Dollars in thousands)
Land and land under development	$	785,752	$	387,392	$	462,867	$	1,636,011
Homes completed and under construction		285,306		167,066		194,899		647,271
Model homes		80,808		26,822		19,737		127,367
Total inventories owned	$	1,151,866	$	581,280	$	677,503	$	2,410,649

	December 31, 2012
	California		Southwest		Southeast		Total
	(Dollars in thousands)
Land and land under development	$	778,419	$	352,705	$	313,037	$	1,444,161
Homes completed and under construction		240,236		93,265		93,695		427,196
Model homes		67,504		15,231		17,326		100,061
Total inventories owned	$	1,086,159	$	461,201	$	424,058	$	1,971,418

In accordance with ASC Topic 360, Property, Plant, and Equipment (“ASC 360”), we record impairment losses on inventories when events and circumstances indicate that they may be impaired, and the future undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts. Inventories that are determined to be impaired are written down to their estimated fair value. We calculate the fair value of a project under a land residual value analysis and in certain cases in conjunction with a discounted cash flow analysis. During the nine months ended September 30, 2013 and 2012, the total number of projects included in inventories-owned and reviewed for impairment were 324 and 281, respectively. Based on the impairment review, we did not record any inventory impairments during the three and nine months ended September 30, 2013 and 2012.

During the second quarter of 2013, we acquired control of approximately 30 current and future communities from a homebuilder in the Southeast, which we accounted for as a business combination in accordance with ASC Topic 805, Business Combinations.  As a result of this transaction, we recorded approximately $108.6 million of inventories owned, $8.1 million of inventories not owned, $2.2 million of intangible assets, $4.2 million of other accrued liabilities and $0.9 million of secured project debt.  As of September 30, 2013, these amounts are subject to change as we have not yet finalized the purchase price allocation of the real estate assets acquired in this transaction. In addition, we incurred approximately $1.2 million of transaction costs, which is included in homebuilding other income (expense) in the accompanying condensed consolidated statements of operations.

b. Inventories Not Owned

Inventories not owned consisted of the following at:

	September 30, 2013		December 31, 2012
	(Dollars in thousands)
Land purchase and lot option deposits	$	34,581	$	23,803
Other lot option contracts, net of deposits		69,153		47,492
Total inventories not owned	$	103,734	$	71,295

Under ASC Topic 810, Consolidation (“ASC 810”), a non-refundable deposit paid to an entity is deemed to be a variable interest that will absorb some or all of the entity’s expected losses if they occur. Our land purchase and lot option deposits generally represent our maximum exposure to the land seller if we elect not to purchase the optioned property. In some instances, we may also expend funds for due diligence, development and construction activities with respect to optioned land prior to takedown. Such costs are classified as inventories owned, which we would have to absorb should we not exercise the option. Therefore, whenever we enter into a land option or purchase contract with an entity and make a non-refundable deposit, a variable interest entity (“VIE”) may have been created. As of September 30, 2013 and 2012, we were not required to consolidate any VIEs related to land option or purchase contracts. In accordance with ASC 810, we perform ongoing reassessments of whether we are the primary beneficiary of a VIE. Other lot option contracts noted in the table above includes specific performance obligations where the land option contract contains a binding obligation requiring us to complete the lot purchases and amounts allocated in connection with the business combination noted above.