Inventory (Tables)

9 Months Ended

Jun. 30, 2017

Jun. 30, 2016

The components of our owned inventory are as follows as of June 30, 2017 and September 30, 2016:



(In thousands)	June 30, 2017		September 30, 2016
Homes under construction	$	558,533	$	377,191
Development projects in progress	706,134		742,417
Land held for future development	152,959		213,006
Land held for sale	20,182		29,696
Capitalized interest	148,330		138,108
Model homes	69,715		68,861
Total owned inventory	$	1,655,853	$	1,569,279

Schedule of total owned inventory, by segment

Total owned inventory, by reportable segment, is presented by category in the table below as of June 30, 2017 and September 30, 2016:



(In thousands)	Projects in Progress ^(a)		Land Held for Future Development		Land Held for Sale		Total Owned Inventory
June 30, 2017
West Segment	$	662,958	$	128,096	$	4,612	$	795,666
East Segment	293,802		13,920		13,159		320,881
Southeast Segment	325,523		10,943		1,311		337,777
Corporate and unallocated ^(b)	200,429		—		1,100		201,529
Total	$	1,482,712	$	152,959	$	20,182	$	1,655,853
September 30, 2016
West Segment	$	586,420	$	172,015	$	6,577	$	765,012
East Segment	276,785		30,036		20,930		327,751
Southeast Segment	276,385		10,955		1,090		288,430
Corporate and unallocated ^(b)	186,987		—		1,099		188,086
Total	$	1,326,577	$	213,006	$	29,696	$	1,569,279

^(a)Projects in progress include homes under construction, development projects in progress, capitalized interest and model homes categories from the preceding table.

^(b)Projects in progress amount includes capitalized interest and indirect costs that are maintained within our Corporate and unallocated segment. Land held for sale amount includes parcels held by our discontinued operations.

Recoverability schedule of inventory assets held for development, by reportable segment

The table below summarizes the results of our impairment analysis by reportable segment for the period presented (as noted, such analysis was not required for the current quarter):



($ in thousands)		Undiscounted Cash Flow Analyses Prepared
Segment ^(a)	# of Communities on Watch List^(b)	# of Communities ^(c)	Pre-analysis Book Value (BV)		Aggregate Undiscounted Cash Flow as a % of BV ^(d)
Quarter Ended June 30, 2016
West	4	2	$	22,969	124.0	%
East	2	1	22,469		88.5	%
Southeast	1	—	—		—	%
Corporate and unallocated ^(e)	—	—	2,794		N/A^(f)
Total	7	3	$	48,232

^(a) We have elected to aggregate our disclosure at the reportable segment level because we believe this level of disclosure is most meaningful to the readers of our financial statements.

^(b)Number of communities in this column excludes communities that are closing out and have less than ten closings remaining.

^(c)Number of communities in this column is lower than the number of communities on our watch list because it excludes communities due to certain qualitative considerations that would imply that the low profitability levels are temporary in nature.

^(d)An aggregate undiscounted cash flow as a percentage of book value under 100% would indicate a possible impairment and is consistent with our “watch list” methodology. While this metric for the communities in the West segment was above 100% for the quarter ended June 30, 2016 in total, for the community that we ultimately impaired, the metric was below 100%, while the metric for the community we did not impair was above 100%.

^(e) Amount represents capitalized interest and indirects balance related to the communities for which an undiscounted cash flow analysis was prepared. Capitalized interest and indirects are maintained within our Corporate and unallocated segment.

^(f) N/A - not applicable.

Schedule of discounted cash flow analysis

The following table presents, by reportable segment, details around the impairment charges taken on projects in progress for the periods presented:



($ in thousands)	Three Months Ended						Nine Months Ended
Segment	# of Communities Impaired	# of Lots Impaired	Impairment Charge		Estimated Fair Value of Impaired Inventory at time of Impairment		# of Communities Impaired	# of Lots Impaired	Impairment Charge		Estimated Fair Value of Impaired Inventory at time of Impairment
June 30, 2016
West	1	179	$	5,216	$	10,827	2	213	$	6,729	$	16,345
East	1	78	5,894		18,073		1	78	5,894		18,073
Corporate and unallocated ^(a)	—	—	789		—		—	—	1,101		—
Total	2	257	$	11,899	$	28,900	3	291	$	13,724	$	34,418

^(a) Amount represents capitalized interest and indirects balance that was impaired. Capitalized interest and indirects are maintained within our Corporate and unallocated segment.

Quantitative unobservable inputs for inventory impairment

The following table presents the values of significant quantitative unobservable inputs we used in determining the fair value of the communities we impaired during the periods presented:



	Three Months Ended		Nine Months Ended
Unobservable Inputs	June 30, 2016		June 30, 2016
Average selling price (in thousands)	$355 - $560		$355 - $560
Closings per community per month	2 - 4		2 - 4
Discount rate	14.15	%	14.15% - 15.33%

Schedule of inventory impairments and lot option abandonment charges, by reportable homebuilding segment

The following table presents, by reportable segment, our total impairment and abandonment charges for the periods presented:



	Three Months Ended June 30,				Nine Months Ended June 30,
(In thousands)	2017		2016		2017		2016
Projects in Progress:
West	$	—	$	5,216	$	—	$	6,729
East	—		5,894		—		5,894
Corporate and unallocated ^(a)	—		789		—		1,101
Total impairment charges on projects in progress	$	—	$	11,899	$	—	$	13,724
Land Held for Sale:
West	$	—	$	—	$	94	$	—
East	470		18		470		215
Southeast	—		—		—		371
Total impairment charges on land held for sale	$	470	$	18	$	564	$	586
Abandonments:
East	$	—	$	—	$	188	$	—
Southeast	—		—		—		788
Total abandonments charges	$	—	$	—	$	188	$	788
Total impairment and abandonment charges	$	470	$	11,917	$	752	$	15,098

Summary of interests in lot option agreements

The following table provides a summary of our interests in lot option agreements as of June 30, 2017 and September 30, 2016:



(In thousands)	Deposits & Non-refundable Pre-acquisition Costs Incurred		Remaining Obligation
As of June 30, 2017
Unconsolidated lot option agreements	$	91,286	$	439,316
As of September 30, 2016
Unconsolidated lot option agreements	$	80,433	$	446,414