Note 7 - Other Assets

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Other Assets Disclosure [Text Block]

7. Other Assets

Other assets consist of the following:

	March 31,		December 31,
	2020		2019
	(Dollars in thousands)
Capitalized selling and marketing costs, net(1)	$	6,662	$	7,148
Prepaid income taxes(2)		11,676		1,032
Insurance receivable(3)		6,500		10,900
Warranty insurance receivable(4)		1,878		1,852
Prepaid expenses		2,388		2,729
Right-of-use lease assets		1,695		1,988
Other		306		231
	$	31,105	$	25,880

(1)

Capitalized selling and marketing costs includes costs incurred for tangible assets directly used in the sales process such as our sales offices, design studios and model furnishings, and also includes model landscaping costs, which were $2.4 million and $2.6 million as of March 31, 2020 and December 31, 2019, respectively. The Company depreciated $1.8 million and $2.6 million of capitalized selling and marketing costs to selling and marketing expenses during the three months ended March 31, 2020 and 2019, respectively.

(2)

The amount at March 31, 2020 includes approximately $10.7 million of expected federal income tax refunds due to the recent enactment of the CARES act which allows net operating losses generated from 2018 – 2020 to be carried back five years.

(3) At December 31, 2019, the Company recorded insurance receivables of $10.9 million in connection with $10.9 million of litigation reserves recorded.  During the three months ended March 31, 2020, $4.2 million was paid by insurance related to one claim and the Company also reduced its insurance receivable estimate by $0.2 million for a separate claim, resulting in an insurance receivable balance of $6.5 million at March 31, 2020, with a corresponding decrease recorded within litigation reserves.  For more information, please refer to Note 8.

(4) During the three months ended March 31, 2020, the Company adjusted its warranty insurance receivable upward by $0.1 million to true-up the receivable to its estimate of qualifying reimbursable expenditures, which resulted in pretax income of the same amount.