XML 29 R15.htm IDEA: XBRL DOCUMENT v3.10.0.1
Accrued Expenses and Other Liabilities
 12 Months Ended
Dec. 31, 2018
Payables and Accruals [Abstract]  
Accrued Expenses and Other Liabilities
Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consist of the following:
 
December 31,
 
2018
 
2017
 
(Dollars in thousands)
 Warranty accrual(1)
$
6,898

 
$
6,859

 Accrued compensation and benefits
5,749

 
9,164

 Accrued interest
6,497

 
6,217

 Completion reserve
4,192

 
5,792

 Income taxes payable
—

 
6,368

 Deferred profit from unconsolidated joint ventures
—

 
136

 Other accrued expenses
5,692

 
3,518

 
$
29,028

 
$
38,054


 
 

(1)
Included in the amount for 2018 is approximately $0.9 million of additional warranty liabilities estimated to be covered by our insurance policies. Included in the amount for 2017 is approximately $1.2 million of additional warranty liabilities estimated to be covered by our insurance policies that were adjusted to present the warranty reserves and related estimated warranty insurance receivable on a gross basis at December 31, 2017. Of $1.2 million of this amount, approximately $0.6 million related to 2016 estimated warranty insurance recoveries.

Changes in our warranty accrual are detailed in the table set forth below:
 
Year Ended December 31,
 
2018
 
2017
 
2016
 
(Dollars in thousands)
Beginning warranty accrual for homebuilding projects
$
6,634

 
$
4,608

 
$
3,846

Warranty provision for homebuilding projects
2,330

 
1,825

 
1,921

Warranty assumed from joint ventures at consolidation
—

 
781

 
469

Warranty payments for homebuilding projects
(2,006
)
 
(989
)
 
(563
)
Adjustment to warranty accrual(1)
(277
)
 
409

 
(1,065
)
Ending warranty accrual for homebuilding projects
6,681

 
6,634

 
4,608

 
 
 
 
 
 
Beginning warranty accrual for fee building projects
225

 
323

 
335

Warranty provision for fee building projects
—

 
—

 
—

Warranty efforts for fee building projects
(70
)
 
(3
)
 
(12
)
Adjustment to warranty accrual for fee building projects(2)
62

 
(95
)
 
—

Ending warranty accrual for fee building projects
217

 
225

 
323

Total ending warranty accrual
$
6,898

 
$
6,859

 
$
4,931


 

(1)
Included in the amount for 2017 is approximately $1.2 million of additional warranty liabilities estimated to be covered by our insurance policies that were adjusted to present the warranty reserves and related estimated warranty insurance receivable on a gross basis at December 31, 2017. Of the $1.2 million adjusted in 2017, approximately $0.6 million related to prior year estimated warranty insurance recoveries. During 2018, the estimated amount to be covered by our insurance policies was reduced by $0.3 million. Netted against the amount recorded in 2017 is a warranty accrual adjustment of $0.8 million related to a lower experience rate of expected warranty expenditures. Netted against the amount recorded in 2018 is a warranty accrual adjustment of $43,000 related to higher expected warranty expenditures.
(2)
During 2018, the estimated amount to be covered by our insurance policies was increased by approximately $32,000. Netted with this amount is a warranty accrual adjustment of approximately $30,000 related to higher expected warranty expenditures.

We maintain general liability insurance designed to protect us against a portion of our risk of loss from construction-related warranty and construction defect claims. Our warranty accrual and related estimated insurance recoveries are based on historical claim and expense data, and expected recoveries from insurance carriers are recorded based on actual insurance claims and amounts determined using our warranty accrual estimates, our insurance policy coverage limits for the applicable policy years and historical recovery rates. Because of the inherent uncertainty and variability in these assumptions, our actual insurance recoveries could differ significantly from amounts currently estimated.

During 2018, we recorded an adjustment of $0.1 million to our warranty accrual due to higher expected warranty expenditures. Of which, $43,000 is included in "Adjustment to warranty accrual" and $30,000 is included in "Adjustment to warranty accrual for fee building projects" above and resulted in corresponding increases to cost of home sales and cost of fee building sales in the consolidated statements of operations. During 2017 and 2016, we recorded adjustments of $0.9 million and $1.1 million, respectively, to our warranty accrual due to a lower experience rate of expected warranty expenditures. In 2017, $0.8 million is included in "Adjustment to warranty accrual" and $63,000 is included in "Adjustment to warranty accrual for fee building projects" above and resulted in respective reductions of cost of homes sales and cost of fee building sales in the consolidated statements of operations.