Fair Value Measurements (Tables)

12 Months Ended

Sep. 30, 2013

Fair Value Disclosures [Abstract]

Fair value measurements of assets and liabilities on a recurring basis

The following tables summarize the Company’s assets and liabilities measured at fair value on a recurring basis at September 30, 2013 and 2012, and the changes in the fair value of the Level 3 assets during fiscal 2013.

		Fair Value at September 30, 2013
	Balance Sheet Location	Level 1		Level 2			Level 3		Total
		(In millions)
Homebuilding:
Debt securities collateralized by residential real estate (a)	Other assets	$	—	$	—		$	20.3	$	20.3
Financial Services:
Mortgage loans held for sale (b)	Mortgage loans held for sale	—		389.4			5.7		395.1
Derivatives not designated as hedging instruments (c):
Interest rate lock commitments	Other assets	—		7.0			—		7.0
Forward sales of MBS	Other liabilities	—		(8.8		)	—		(8.8		)
Best-efforts and mandatory commitments	Other liabilities	—		(3.1		)	—		(3.1		)

		Fair Value at September 30, 2012
	Balance Sheet Location	Level 1		Level 2			Level 3		Total
		(In millions)
Homebuilding:
Marketable securities, available-for-sale:
U.S. Treasury securities	Marketable securities	$	75.7	$	—		$	—	$	75.7
Government agency and corporate debt securities	Marketable securities	—		212.3			—		212.3
Certificates of deposit	Marketable securities	—		10.0			—		10.0
Financial Services:
Mortgage loans held for sale (b)	Mortgage loans held for sale	—		345.3			—		345.3
Derivatives not designated as hedging instruments (c):
Interest rate lock commitments	Other assets	—		6.1			—		6.1
Forward sales of MBS	Other liabilities	—		(6.9		)	—		(6.9		)
Best-efforts and mandatory commitments	Other liabilities	—		(0.8		)	—		(0.8		)

	Level 3 Assets at Fair Value for the
	Year Ended September 30, 2013
	Balance at September 30, 2012		Net realized and unrealized gains/(losses)		Purchases		Sales and Settlements			Principal Reductions			Net transfers in and/or (out) of Level 3		Balance at September 30, 2013
	(In millions)
Debt securities collateralized by residential real estate (a)	$	—	$	3.1	$	18.6	$	—		$	(1.4	)	$	—	$	20.3
Mortgage loans held for sale (b)	—		0.3		—		(3.5		)	—			8.9		5.7

(a) In October 2012, the Company purchased $18.6 million of defaulted debt securities which are secured by residential real estate. The Company intends to foreclose on the property or negotiate an agreement to obtain the right to take possession of the residential real estate in order to develop the property and ultimately build and sell homes. These securities, which are included in other assets on the consolidated balance sheets, are classified as available for sale and are reflected at fair value. The fair value of these securities was determined by estimating the future cash flows of the securities and the residential real estate utilizing discount rates of 6% and 18%, respectively. Unrealized gains or losses on these securities, net of tax, are recorded in accumulated other comprehensive income (loss) on the consolidated balance sheets.

(b) Mortgage loans held for sale are reflected at fair value. Interest income earned on mortgage loans held for sale is based on contractual interest rates and included in financial services interest and other (income) expense. Mortgage loans held for sale at September 30, 2013 includes $5.7 million of originated loans for which the Company elected the fair value option upon origination and for which the Company has not sold into the secondary market, but plans to sell as market conditions permit. The fair value of these mortgage loans held for sale is generally calculated considering the secondary market and adjusted for the value of the underlying collateral, including interest rate risk, liquidity risk and prepayment risk; therefore, they were transferred from a Level 2 valuation to a Level 3 valuation during fiscal 2013.

(c) Fair value measurements of these derivatives represent changes in fair value since inception and are reflected in the balance sheet. Changes in these fair values during the periods presented are included in financial services revenues on the consolidated statement of operations.

Fair value measurements of assets on a non-recurring basis

The following table summarizes the Company’s assets measured at fair value on a nonrecurring basis at September 30, 2013 and 2012:

		Fair Value at September 30, 2013		Fair Value at September 30, 2012
	Balance Sheet Location	Level 3		Level 3
		(In millions)
Homebuilding:
Inventory held and used (a) (b)	Inventories	$	0.5	$	1.2
Inventory available for sale (a) (c)	Inventories	10.8		—
Financial Services:
Other mortgage loans (a) (d)	Other assets	22.6		25.8
Real estate owned (a) (d)	Other assets	0.7		0.9

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(a) The fair values included in the table above represent only those assets whose carrying values were adjusted to fair value in the current quarter.

(b) In performing its impairment analysis of communities, discount rates ranging from 12% to 18% were used in fiscal 2013 and 2012.

(c) The fair value of inventory available for sale was determined based on recent offers received from outside third parties and actual contracts.

(d) The fair values of other mortgage loans and real estate owned are determined based on the value of the underlying collateral.

Fair value of financial assets and liabilities

For the financial assets and liabilities for which the Company has not elected the fair value option, the following tables present both their respective carrying value and fair value at September 30, 2013 and 2012:

	Carrying Value		Fair Value at September 30, 2013
			Level 1		Level 2		Level 3		Total
	(In millions)
Homebuilding:
Cash and cash equivalents (a)	$	913.3	$	913.3	$	—	$	—	$	913.3
Restricted cash (a)	77.8		77.8		—		—		77.8
Senior notes (b)	2,783.3		—		2,811.5		—		2,811.5
Convertible senior notes (b)	478.7		—		762.4		—		762.4
Financial Services:
Cash and cash equivalents (a)	23.2		23.2		—		—		23.2
Mortgage repurchase facility (a)	238.6		—		—		238.6		238.6

	Carrying Value		Fair Value at September 30, 2012
			Level 1		Level 2		Level 3		Total
	(In millions)
Homebuilding:
Cash and cash equivalents (a)	$	1,030.4	$	1,030.4	$	—	$	—	$	1,030.4
Restricted cash (a)	49.3		49.3		—		—		49.3
Senior notes (b)	1,854.2		—		1,973.9		—		1,973.9
Convertible senior notes (b)	447.0		—		821.2		—		821.2
Financial Services:
Cash and cash equivalents (a)	17.3		17.3		—		—		17.3
Mortgage repurchase facility (a)	187.8		—		—		187.8		187.8

_______________________________________

(a) The fair value approximates carrying value due to its short-term nature, short maturity or floating interest rate terms, as applicable.

(b) The fair value is determined based on quoted market prices of recent transactions of the notes, which is classified as Level 2 within the fair value hierarchy