Note 4 - Inventories

12 Months Ended

Dec. 31, 2013

Inventory Disclosure [Abstract]

Inventory Disclosure [Text Block]

4. Inventories

a. Inventories Owned

Inventories owned consisted of the following at:

	December 31, 2013
	California		Southwest		Southeast		Total
	(Dollars in thousands)
Land and land under development	$	819,278	$	415,910	$	536,473	$	1,771,661
Homes completed and under construction		280,875		159,927		187,569		628,371
Model homes		82,367		27,466		26,237		136,070
Total inventories owned	$	1,182,520	$	603,303	$	750,279	$	2,536,102

	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 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 years ended December 31, 2013, 2012 and 2011, the total number of projects included in inventories-owned and reviewed for impairment were 343, 290 and 262, respectively. Based on the impairment review, we recorded $13.2 million of inventory impairments during the year ended December 31, 2011, which are included in cost of home sales in the accompanying consolidated statements of operations (please see Note 3 for a breakout of impairment charges by segment). We did not record any inventory impairments during the years ended December 31, 2013 and 2012. The operating margins (defined as gross margin less direct selling and marketing costs) used to calculate land residual values and related fair values for our projects impaired during the year ended December 31, 2011 were generally in the 6% to 12% range and discount rates were generally in the 20% to 30% range.

During the 2013 second quarter, 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 (as of December 31, 2013, $5.7 million was included in inventories not owned), $2.2 million of intangible assets, $4.2 million of other accrued liabilities and $0.9 million of secured project debt.  In addition, we incurred approximately $1.2 million of transaction costs, which is included in homebuilding other income (expense) in the accompanying consolidated statements of operations.

b. Inventories Not Owned

Inventories not owned consisted of the following at:

	December 31,
	2013		2012
	(Dollars in thousands)
Land purchase and lot option deposits	$	44,005	$	23,803
Other lot option contracts, net of deposits		54,336		47,492
Total inventories not owned	$	98,341	$	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. In accordance with ASC 810, we perform ongoing reassessments of whether we are the primary beneficiary of a VIE. As of December 31, 2013 and 2012, we had consolidated $21.7 million and $20.5 million, respectively, within inventories not owned (with a corresponding increase in accrued liabilities) related to land option and purchase contracts where we were deemed to be the primary beneficiary of a VIE.

Other lot option contracts also included $27.0 million as of December 31, 2013 and 2012, related to a land purchase contract where we made a significant deposit and as a result we were deemed to be economically compelled to purchase the land.