Note 7 - Inventories

9 Months Ended

Sep. 30, 2014

Inventory Disclosure [Abstract]

Inventory Disclosure [Text Block]

7.       Inventories

a. Inventories Owned

Inventories owned consisted of the following at: 

	September 30, 2014
	California		Southwest		Southeast		Total
	(Dollars in thousands)
Land and land under development	$	886,782	$	491,696	$	669,689	$	2,048,167
Homes completed and under construction		411,200		255,697		273,551		940,448
Model homes		75,663		41,493		39,598		156,754
Total inventories owned	$	1,373,645	$	788,886	$	982,838	$	3,145,369

	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

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. As of September 30, 2014 and 2013, the total active and future projects that we owned were 373 and 323, respectively.  During the nine months ended September 30, 2014 and 2013, we reviewed all projects for indicators of impairment and based on our review, we did not record any inventory impairments during these periods.

During the second quarter of 2014, we acquired control of approximately 10 current and future communities from a homebuilder in Austin, Texas, 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 $31.5 million of inventories owned, $4.9 million of inventories not owned, $1.2 million of other assets and $4.2 million of other accrued liabilities. As of September 30, 2014, these amounts are subject to change as we have not yet finalized the purchase accounting for the real estate assets acquired in this transaction.

b. Inventories Not Owned

Inventories not owned consisted of the following at:

	September 30,		December 31,
	2014		2013
	(Dollars in thousands)
Land purchase and lot option deposits	$	46,610	$	44,005
Other lot option contracts, net of deposits		40,181		54,336
Total inventories not owned	$	86,791	$	98,341

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 September 30, 2014 and December 31, 2013, we had consolidated $7.6 million and $21.7 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 September 30, 2014 and December 31, 2013, 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, and $5.6 million and $5.7 million, as of September 30, 2014 and December 31, 2013, respectively, of purchase price allocated in connection with business acquisitions during the 2014 and 2013 second quarters.