Inventory

9 Months Ended

Jun. 30, 2019

Inventory Disclosure [Abstract]

INVENTORY

INVENTORIES

At June 30, 2019, the Company reviewed the performance and outlook for all of its communities and land inventories for indicators of potential impairment and performed detailed impairment evaluations and analyses when necessary. The Company performed detailed impairment evaluations of communities and land inventories with a combined carrying value of $63.1 million and recorded impairment charges of $6.8 million during the three months ended June 30, 2019 to reduce the carrying value of impaired communities to fair value. During the nine months ended June 30, 2019, impairment charges totaled $18.6 million. There were $3.9 million and $8.3 million of impairment charges recorded in the three and nine months ended June 30, 2018, respectively. Inventory impairments and the land option charges discussed below are included in cost of sales in the consolidated statements of operations.

During the three and nine months ended June 30, 2019, the Company wrote off $12.4 million and $22.4 million, respectively, of earnest money deposits and pre-acquisition costs related to land purchase contracts that the Company has terminated or expects to terminate. Earnest money and pre-acquisition cost write-offs for the three and nine months ended June 30, 2018 were $5.0 million and $10.0 million, respectively. Inventory and land option charges for the nine months ended June 30, 2018 also included a charge of $24.5 million related to the settlement of an outstanding dispute associated with a land transaction.

In February 2018, the Forestar land development segment sold a portion of its assets for $232 million. This strategic asset sale included projects owned both directly and indirectly through ventures. The total net proceeds after certain purchase price adjustments, closing costs and other costs associated with selling these projects was $217.5 million, and a gain on the sale of these assets of $0.7 million is included in the Company’s consolidated statement of operations for the nine months ended June 30, 2018.