8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

June 15, 2016

Date of report (Date of earliest event reported)

AV Homes, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	001-07395	23-1739078
(State of Incorporation)	(Commission File Number)	(I.R.S. Employer IdentificationNo.)

8601 N. Scottsdale Rd. Suite 225 Scottsdale, Arizona	85253
(Address of Principal Executive Offices)	(Zip Code)

(480) 214-7400

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d‑2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e‑4(c))

Item 8.01.  Other Events.

AV Homes, Inc. (the “Company”) is filing this Current Report on Form 8‑K to update Items 6, 7 and 8 of its Annual Report on Form 10‑K for the year ended December 31, 2015. These updates are being made to reflect a reclassification of certain selling, general and administrative expenses and to reflect the retrospective application upon adoption, effective January 1, 2016, of Auditing Standards Update No. 2015‑03, Interest – Imputation of Interest (Subtopic 835‑30): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015‑03”). As previously disclosed, beginning with the Company’s Quarterly Report on Form 10‑Q for the quarter ended March 31, 2016, the selling, general and administrative expenses related to homebuilding previously included in Homebuilding expenses have been combined with corporate general and administrative expenses and reclassified into a new line item called “Selling, general and administrative expenses” to enhance visibility to the Company’s core homebuilding operations and conform with standard industry presentation. The selling, general and administrative expenses reclassified include commissions, other selling expenses and overhead incurred at the divisional level. In addition, in accordance with adoption of ASU 2015‑03, our debt issuance costs are now presented as a deduction from the corresponding debt liability. This guidance was applied retrospectively and had the effect of reducing the Company’s prepaid expenses and other assets and senior notes, net balances in its consolidated balance sheets.

The Company is filing this Current Report on Form 8‑K to provide investors with recast financial information from prior periods in order to assist them in making comparisons of financial information for current and future periods with financial information for such prior periods. The recast information for Items 6, 7 and 8 contained in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2015 is attached as Exhibits 99.1, 99.2 and 99.3 to this Current Report on Form 8‑K and incorporated by reference herein.

This Current Report on Form 8‑K does not reflect events or developments that occurred after March 4, 2016, and the information contained herein should be read in conjunction with the Company’s Annual Report on Form 10‑K for the year ended December 31, 2015 and the Company’s Quarterly Report on Form 10‑Q for the quarter ended March 31, 2016, as well as the Company’s other filings with the Securities and Exchange Commission.

Item 9.01.  Financial Statements and Exhibits.

(d)Exhibits.

Number	Description
23.1	Consent of Ernst & Young LLP.
99.1	Updates, where applicable, to Part II, Item 6, Selected Financial Data, from the Company’s Annual Report on Form 10‑K for the year ended December 31, 2015.
99.2	Updates, where applicable, to Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, from the Company’s Annual Report on Form 10‑K for the year ended December 31, 2015.
99.3	Updates, where applicable, to Part II, Item 8, Financial Statements and Supplementary Data, from the Company’s Annual Report on Form 10‑K for the year ended December 31, 2015.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase.
101.DEF	XBRL Taxonomy Extension Definition Linkbase.
101.LAB	XBRL Taxonomy Extension Label Linkbase.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	AV HOMES, INC.
Date:    June 15, 2016	/s/ Roger A. Cregg
	Roger A. Cregg
	President and Chief Executive Officer

EXHIBIT INDEX

Number	Description	Method of Filing
23.1	Consent of Ernst & Young LLP.	Filed Herewith
99.1	Updates, where applicable, to Part II, Item 6, Selected Financial Data, from the Company’s Annual Report on Form 10‑K for the year ended December 31, 2015.	Filed Herewith
99.2	Updates, where applicable, to Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, from the Company’s Annual Report on Form 10‑K for the year ended December 31, 2015.	Filed Herewith
99.3	Updates, where applicable, to Part II, Item 8, Financial Statements and Supplementary Data, from the Company’s Annual Report on Form 10‑K for the year ended December 31, 2015.	Filed Herewith
101.INS	XBRL Instance Document.	Filed Herewith
101.SCH	XBRL Taxonomy Extension Schema.	Filed Herewith
101.CAL	XBRL Taxonomy Extension Calculation Linkbase.	Filed Herewith
101.DEF	XBRL Taxonomy Extension Definition Linkbase.	Filed Herewith
101.LAB	XBRL Taxonomy Extension Label Linkbase.	Filed Herewith
101.PRE	XBRL Taxonomy Extension Presentation Linkbase.	Filed Herewith

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the reference to our firm under the caption “Experts” in the Registration Statement (Form S-3 No. 333-187763) and related Prospectus of AV Homes, Inc. for the registration of $300,000,000 in common stock, preferred stock and debt securities and to the incorporation by reference therein of our report dated March 4, 2016, except for paragraph 2 of Note 1, as to which the date is June 15, 2016, with respect to the consolidated financial statements of AV Homes, Inc. and subsidiaries included in its Current Report on Form 8-K dated June 15, 2016, and our report dated March 4, 2016, with respect to the effectiveness of internal control over financial reporting of AV Homes, Inc. and subsidiaries, included in its Annual Report (Form 10-K) for the year ended December 31, 2015, both filed with the Securities and Exchange Commission.

/s/ Ernst & Young LLP

Phoenix, Arizona

June 15, 2016

EX-99.1

Exhibit 99.1

ITEM 6.  SELECTED FINANCIAL DATA

Set forth below is selected consolidated financial data for each of the past five fiscal years. The selected financial data should be read in conjunction with Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and our consolidated financial statements and notes thereto included elsewhere in this report.

FIVE YEAR COMPARISON OF SELECTED FINANCIAL DATA

(Dollars in thousands, except per share amounts)

	Years Ended December 31,
	2015		2014		2013		2012		2011
Operations Data:
Revenues	$	517,766	$	285,913	$	141,482	$	107,487	$	88,982
Income (loss) before income taxes	$	12,386	$	(1,603)	$	(8,272)	$	(87,683)	$	(165,704)
Income tax expense		(436)		—		—		—		(473)
Net income (loss) (including net income (loss) attributable to non-controlling interests)		11,950		(1,603)		(8,272)		(87,683)		(166,177)
Net income (loss) attributable to non-controlling interests in consolidated entities		—		329		1,205		2,552		(296)
Net income (loss) attributable to AV Homes stockholders	$	11,950	$	(1,932)	$	(9,477)	$	(90,235)	$	(165,881)
Per Share Data:
Basic and diluted earnings (loss) per share (1)	$	0.54	$	(0.09)	$	(1.34)	$	(7.19)	$	(13.33)
Balance Sheet Data:
Cash and cash equivalents	$	46,898	$	180,334	$	144,727	$	79,815	$	124,316
Restricted cash		26,948		16,447		3,956		4,682		7,872
Land and other inventories		582,531		383,184		240,078		171,044		180,067
Total assets		736,139		663,151		465,928		335,554		405,843
Senior notes, net		320,846		294,221		104,602		103,085		102,189
Stockholders' equity (2)		301,681		286,740		286,101		166,172		254,197
Shares outstanding		22,333,154		22,072,098		21,986,378		12,827,283		12,942,502
Stockholders' equity per share	$	13.51	$	12.99	$	13.01	$	12.95	$	19.64
Other Data:
Contracts signed, net		2,035		994		463		393		229
Closings		1,750		953		481		306		174
Backlog units		799		331		167		185		98
Backlog value	$	243,947	$	85,753	$	39,862	$	43,064	$	21,540

(1) The deemed dividend related to the beneficial conversion feature of $11,894 had an impact of ($0.75) per share on earnings for the year ended December 31, 2013.

(2) These figures exclude cumulative non-controlling interests for the years ended December 31, 2013, 2012 and 2011, which are classified in consolidated stockholders' equity in accordance with authoritative accounting guidance.  These non-controlling interests represent our partners’ equity in limited liability companies that we consolidate for financial reporting purposes.

1

EX-99.2

Exhibit 99.2

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with Item 6, Selected Financial Data, and the audited consolidated financial statements and accompanying notes included elsewhere in this Annual Report.

Overview

We are engaged in the business of homebuilding and community development in Florida, Arizona and the Carolinas.  We also engage to a limited degree in other real estate activities, such as the operation of amenities and the sale of land for third-party development.  We manage our business through three reportable segments:  Florida, Arizona and the Carolinas.

For the year ended December 31, 2015, we derived 62% of our revenues from Florida, 16% of our revenues from Arizona, and 22% of our revenues from the Carolinas. The following is a summary of our revenues by segment for the years ended December 31, 2015, 2014 and 2013.

Our primary business is the development of land and the construction and sale of homes for people of all ages, including active adults (55 years and older).  Our current homebuilding sales activities include locations in Florida, Arizona and the Carolinas, with additional communities in the pipeline for each state. Within each geographical segment, we build both active adult communities, which are restricted to homeowners that are age 55 and older, and primary residential communities, which are open to all ages. This geographic and product segment diversification helps mitigate our overall business risks. We generate a smaller portion of our revenues from the sale of land from our portfolio of legacy land holdings that we will sell in favorable market conditions.  While we have in the past acquired land with the intention to resell to developers and other third parties, we now purchase land for the purpose of developing communities.  We also opportunistically sell existing non-core commercial and industrial land assets, as well as scattered lot positions and land assets, that are in excess of our needed supply in a given market.

As of December 31, 2015, our selling community count includes 62 locations, 26 in Florida, 10 in Arizona, and 26 in the Carolinas, with additional communities in the pipeline for each region.  Our count of communities with closings includes 57 locations, 24 in Florida, eight in Arizona, and 25 in the Carolinas.

Solivita and Vitalia, our active adult communities in Central Florida; CantaMia and Encore in Arizona; and Creekside at Bethpage in Raleigh, North Carolina currently serve as our flagship communities in the active adult segment.  These

communities broaden our geographic footprint and product offering, and should provide us with market participation in the longer term growth of demand from the wave of Baby Boomers entering their retirement years.

We continue to invest in the primary residential market to create a more diversified portfolio that mitigates cyclical impact over time.  Through homebuilder acquisitions and by acquiring new land and lot positions, we have and continue to expand within our existing markets in Central Florida, Charlotte and the greater Phoenix area.  We have also expanded into the Jacksonville, Florida market through the acquisition and development of land and lot positions in that market.  Replacement lot positions require new acquisitions of developed lots or platted or unplatted undeveloped land, or we may decide to develop current land holdings, depending on market conditions within the submarket of these assets.

2015 Highlights

During 2015, we continued to execute our strategic and operational business plan through (i) the acquisition of Bonterra Builders, (ii) the continued deployment of existing capital into land and lot acquisitions, (iii) the development of existing land and lot positions, in addition to the construction of homes for sale, (iv) the increase in the number of homes sold and closed, and (v) the profitable sale of non-core asset positions.

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The following table provides a comparison of certain financial data related to our operations in each of our geographic segments (in thousands):

	For the Year Ended
	2015		2014		2013
Operating income (loss):
Florida
Revenues:
Homebuilding	$	300,260	$	193,218	$	81,440
Amenity and other		12,385		10,140		9,786
Land sales		6,466		18,158		9,257
Total revenues	$	319,111	$	221,516	$	100,483
Expenses:
Homebuilding cost of revenues		239,001		156,439		64,726
Homebuilding selling, general and administrative		38,500		24,388		14,004
Amenity and other		10,587		10,524		11,663
Land sales		823		10,316		5,369
Segment operating income	$	30,200	$	19,849	$	4,721
Arizona
Revenues:
Homebuilding	$	84,378	$	48,665	$	33,533
Amenity and other		—		6		420
Land sales		—		14,438		7,046
Total revenues		84,378		63,109		40,999
Expenses:
Homebuilding cost of revenues		71,305		41,261		27,073
Homebuilding selling, general and administrative		11,981		7,747		5,561
Amenity and other		115		425		2,110
Land sales		—		11,688		2,744
Segment operating income	$	977	$	1,988	$	3,511
Carolinas
Revenues:
Homebuilding	$	114,277	$	1,288	$	—
Total revenues		114,277		1,288		—
Expenses:
Homebuildingcost of revenues		95,232		1,183		—
Homebuilding selling, general and administrative		12,205		2,230		97
Segment operating income (loss)	$	6,840	$	(2,125)	$	(97)
Operating income	$	38,017	$	19,712	$	8,135
Unallocated income (expenses):
Interest income and other		154		447		2,499
Equity in earnings (loss) from unconsolidated entities		154		(16)		(101)
Corporate general and administrative expenses		(16,900)		(15,941)		(15,975)
Interest expense		(9,039)		(5,805)		(2,830)
Income (loss) before income taxes		12,386		(1,603)		(8,272)
Income tax expense		(436)		—		—
Net income attributable to non-controlling interests		—		329		1,205
Net income (loss) attributable to AV Homes	$	11,950	$	(1,932)	$	(9,477)

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Data from closings for the Florida, Arizona and the Carolinas segments for the years ended December 31, 2015, 2014 and 2013 is summarized as follows (dollars in thousands):

				Average
	Number			Price
Years Ended December 31,	of Units	Revenues		Per Unit
2015
Florida	1,124	$	300,260	$	267
Arizona	298		84,378		283
Carolinas	328		114,277		348
Total	1,750	$	498,915		285
2014
Florida	755	$	193,218	$	256
Arizona	193		48,665		252
Carolinas	5		1,288		258
Total	953	$	243,171		255
2013
Florida	349	$	81,440	$	233
Arizona	132		33,533		254
Carolinas	—		—		—
Total	481	$	114,973		239

Fiscal Year 2015 Compared to Fiscal Year 2014

Selling, general and administrative expenses related to homebuilding previously included in Homebuilding expenses have been combined with corporate general and administrative expenses and reclassified into a separate new line item called "Selling, general and administrative expenses" to enhance the visibility to our core homebuilding operations and conform with standard industry presentation.  The selling, general and administrative expenses reclassified include commissions, other selling expenses and overhead incurred at the divisional level. For the years ended December 31, 2015, 2014 and 2013, selling, general and administrative costs of $62.7 million,  $34.4 million, and $19.7 million, that were previously presented in Homebuilding expenses are now included in Selling, general and administrative expenses. In addition, in accordance with adoption of Accounting Standards Update No. 2015-03, Interest-Imputation of Interest, our debt issuance costs are now presented as a deduction from the corresponding debt liability.  This guidance was applied retrospectively and had the effect of reducing our Prepaid expenses and other assets and Senior notes, net balances in our consolidated balance sheets. As of December 31, 2015 and 2014, unamortized deferred debt issuance costs of $5.9 million and $5.7 million, respectively were previously presented in Prepaid expenses and other assets on the consolidated balance sheet and are now included as a reduction to Senior notes, net.

Consolidated Results

Overall revenue increased by $231.9 million or 81.1% to $517.8 million during the year ended December 31, 2015 compared to the year ended December 31, 2014.  Homebuilding revenue increased by $255.7 million or 105.2% to $498.9 million and amenity and other revenue increased by $2.2 million or 22.1% to $12.4 million compared to the year ended December 31, 2014.  The increase in homebuilding and amenity and other revenue was driven by an 83.6% increase in units closed and an 11.7% increase in the average sales price for homes closed.  Revenue from land sales decreased by $26.1 million or 80.2% during the year ended December 31, 2015 compared to the year ended December 31, 2014.  This decrease is primarily due to large non-recurring sales of non-core assets in Florida and Arizona in 2014.  Land sales are highly variable from quarter to quarter and large fluctuations may occur. 

Homebuilding Operations

Homebuilding revenue increased 105.2% from $243.2 million to $498.9 million for the year ended December 31, 2015 compared to the same period in 2014 due to an 83.6% increase in closings and an 11.7% increase in average sales price for homes closed.  In the Florida segment, revenues increased $107.0 million or 55.4% for the year ended December 31, 2015 compared to the same period in 2014 driven by a 48.9% increase in units closed due to an increase in the number of communities in which we had closings from 17 to 24.  In the Arizona segment, revenues increased $35.7 million or 73.4% for the year ended December 31, 2015 compared to the same period in 2014 driven by a 54.4% increase in units closed due to an increase in the number of communities in which we had closings from five to eight.  In the Carolinas segment, revenues

4

increased by $113.0 million to $114.3 million for the year ended December 31, 2015 compared to $1.3 million in the same period in 2014 due to an increase in the number of communities in which we had closings from two to 25, primarily as a result of the Bonterra Builders acquisition.  Additionally, the average selling prices increased 4.4% and 12.3% for the Florida and Arizona segments, respectively.

Gross margin from combined home closings increased by 50 basis points to 18.7% from 18.2% for the year ended December 31, 2015 compared to the same period in 2014.  Gross margin from the Florida segment increased by 140 basis points to 20.4% from 19.0% for the year ended December 31, 2015 compared to the same period in 2014, primarily due to cost reduction initiatives favorably impacting our construction costs and selective price increases.  Gross margin from the Arizona segment increased by 30 basis points to 15.5% from 15.2% for the year ended December 31, 2015 compared to the same period in 2014, primarily due to addition of higher margin communities and reduced warranty costs from older communities exiting the warranty period.  Gross margin from the Carolinas segment increased by 850 basis points to 16.7% from 8.2% for the year ended December 31, 2015 compared to the same period in 2014 due to the acquisition of Bonterra Builders and lower margins in 2014 due to the start up of new communities.  Capitalized interest included in cost of sales for the Florida, Arizona and Carolinas segments was $6.7 million, $2.7 million and $1.7 million, respectively, for the year ended December 31, 2015 and was $3.4 million, $1.2 million and less than $0.1 million, respectively, for the same period in 2014.

Combined homebuilding selling, general and administrative expenses as a percentage of homebuilding revenue improved to 12.6% for the year ended December 31, 2015 from 14.1% for the same period in 2014 as we were able to continue to leverage the cost base over our increased revenues, primarily driven by the Bonterra Builders acquisition.  Homebuilding selling, general and administrative expenses for the Florida segment as a percentage of homebuilding revenue for the Florida segment was 12.8% for the year ended December 31, 2015 compared to 12.6% for the same period in 2014.  Homebuilding selling, general and administrative expenses for the Arizona segment as a percentage of homebuilding revenue for the Arizona segment decreased to 14.2% for the year ended December 31, 2015 compared to 15.9% for the same period in 2014, primarily due to a significant increase in revenue while containing our costs.  Homebuilding selling, general and administrative expenses for the Carolinas segment as a percentage of homebuilding revenue for the Carolinas segment decreased to 13.5% for year ended December 31, 2015 compared to 173.1% for the same period in 2014, primarily due to a significant increase in revenue while containing our costs.

Corporate general and administrative expenses increased by $1.0 million to $16.9 million for the year ended December 31, 2015 compared to the same period in 2014.  As a percentage of total revenue, corporate general and administrative expenses improved to 3.3% for the year ended December 31, 2015 compared to 5.6% for the same period in 2014.  The decrease as a percentage of revenue was driven by the significant increase in revenue while containing our costs.

Interest expense increased $3.2 million or 55.7% for the year ended December 31, 2015 compared to the same period in 2014.  The increase in interest expense is primarily attributable to the $200.0 million issuance of 8.50% Senior Notes on June 30, 2014, partially offset by an increase in capitalized interest due to an expansion of inventory under development in 2015 as compared to 2014.  Interest costs incurred, prior to capitalization, increased to $28.2 million for the year ended December 31, 2015 as compared to $18.1 million for the same period in 2014.

Net income for the year ended December 31, 2015 was $12.0 million or $0.54 per share compared to a net loss of $1.9 million or ($0.09) per share for the year ended December 31, 2014.  The increase in net income for the year ended December 31, 2015 compared to the same period in 2014 was primarily due to (i) the higher volume of closings, and increases in average selling price, driving leverage in our cost base, and (ii) improved gross margins, partially offset by a decrease of $5.0 million in land sale gains and increased interest expense of $3.2 million.

5

Data from contracts signed for the Florida, Arizona and Carolinas segments for the years ended December 31, 2015, 2014 and 2013 is summarized as follows (dollars in thousands):

	Gross
	Number		Contracts			Average
	of Contracts		Signed, Net of	Dollar		Price Per
Years Ended December 31,	Signed	Cancellations	Cancellations	Value		Unit
2015
Florida	1,509	(242)	1,267	$	344,171	$	272
Arizona	590	(111)	479		142,004		296
Carolinas	331	(42)	289		102,851		356
Total	2,430	(395)	2,035	$	589,026		289
2014
Florida	929	(121)	808	$	206,503	$	256
Arizona	216	(41)	175		45,012		257
Carolinas	13	(2)	11		3,212		292
Total	1,158	(164)	994	$	254,727		256
2013
Florida	412	(97)	315	$	75,895	$	241
Arizona	178	(30)	148		34,471		233
Carolinas	—	—	—		—		—
Total	590	(127)	463	$	110,366		238

The total number of net housing contracts signed during the year ended December 31, 2015 compared to the same period in 2014 increased by 1,041 or 104.7%.  The dollar value of housing contracts signed increased by $334.3 million or 131.2% over the same period.  The increase in units and value were driven by improvements in all segments.  The number of net housing contracts signed for the Florida segment during the year ended December 31, 2015 increased by 459 or 56.8%, while the dollar value of housing contracts signed increased by $137.7 million or 66.7% over the same period, due to an increase in the number of selling communities from 18 to 26.  The number of net housing contracts signed for the Arizona segment during the year ended December 31, 2015 increased by 304 or 173.7%, while the dollar value of housing contracts signed increased by $97.0 million or 215.5% over the same period, due to an increase in the number of selling communities from six to 10, including the opening of our new active adult community.  The number of net housing contracts signed for the Carolinas segment during the year ended December 31, 2015 increased by 278 to 289, while the dollar value of housing contracts signed increased by $99.6 million to $102.9 million over the same period, due to an increase in the number of selling communities from three to 26, primarily as a result of the Bonterra Builders acquisition.  The overall increase reflects an increase in the number of selling communities from 27 to 62 as well as higher average selling prices.

The cancellation rate increased to 16.3% from 14.2% for the years ended December 31, 2015 and 2014, respectively.  The cancellation rate within the Florida segment increased to 16.0% from 13.0% for the years ended December 31, 2015 and 2014, respectively.  The cancellation rate in the Arizona segment improved to 18.8% from 19.0% for the years ended December 31, 2015 and 2014, respectively.  The cancellation rate in the Carolinas segment improved to 12.7% compared to 15.4% for the years ended December 31, 2015 and 2014, respectively.

6

Backlog for the Florida, Arizona and the Carolinas segments as of December 31, 2015, 2014 and 2013 is summarized as follows (dollars in thousands):

				Average
	Number	Dollar		Price
As of December 31,	of Units	Volume		Per Unit
2015
Florida	416	$	116,061	$	279
Arizona	233		71,459		307
Carolinas	150		56,427		376
Total	799	$	243,947		305
2014
Florida	273	$	70,194	$	257
Arizona	52		13,635		262
Carolinas	6		1,924		321
Total	331	$	85,753		259
2013
Florida	97	$	23,113	$	238
Arizona	70		16,749		239
Carolinas	—		—		—
Total	167	$	39,862		239

The backlog of housing contracts as of December 31, 2015 compared to 2014 increased by 468 or 141.4%, and the dollar value of backlog increased by $158.2 million or 184.5% over the same period.  The increase in units of backlog was driven by increased sales of new orders due to higher community counts in all segments, as well as increases in the average price per unit sold due to price increases and the sales mix of product sold.  The backlog of housing contracts in the Florida segment as of December 31, 2015 compared to 2014 increased by 143 or 52.4%, and the dollar value increased by $45.9 million or 65.3% over the same period, driven by the increase in selling communities.  The backlog of housing contracts in the Arizona segment as of December 31, 2015 compared to 2014 increased by 181 or 348.1%, and the dollar value increased by $57.8 million or 424.1% over the same period, driven by an increase in the number of selling communities including our new active adult community.  The backlog of housing contracts in the Carolinas segment as of December 31, 2015 compared to 2014 increased by 144 to 150 and the dollar value increased by $54.5 million to $56.4 million over the same period, driven by the increase in selling communities, primarily as a result of the Bonterra Builders acquisition.

As of December 31, 2015, our inventory of unsold (speculative) homes, both completed and under construction, was 421 units, as compared to 258 units as of December 31, 2014.  As of December 31, 2015, approximately 40% of unsold homes were completed compared to approximately 49% as of December 31, 2014.  The increase in speculative homes is consistent with the growth in the number of communities.

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The following is a breakdown of our land holdings as of December 31, 2015 and 2014:

	December 31, 2015				December 31, 2014
		Partially		Total		Partially		Total
	Developed	Developed	Raw	Remaining	Developed	Developed		Remaining
	Lots	Lots	Lots	Lots	Lots	Lots	Raw Lots	Lots
Florida
Active adult	737	143	5,898	6,778	588	897	5,817	7,302
Primary residential	2,111	637	1,040	3,788	1,651	1,195	1,233	4,079
	2,848	780	6,938	10,566	2,239	2,092	7,050	11,381
Arizona
Active adult	432	1,238	452	2,122	304	288	1,691	2,283
Primary residential	550	—	345	895	593	95	345	1,033
	982	1,238	797	3,017	897	383	2,036	3,316
Carolinas
Active adult	148	79	408	635	—	166	487	653
Primary residential	533	886	478	1,897	96	15	375	486
	681	965	886	2,532	96	181	862	1,139
Total principal communities	4,511	2,983	8,621	16,115	3,232	2,656	9,948	15,836

(1) Estimated planned lots are based on historical densities for our land.  New projects may ultimately be developed into more or less than the number of lots stated.

The Company also has approximately 1,731 acres of commercial and industrial land, approximately 5,600 acres of unplatted scattered mixed-use land, and 690 platted scattered lots not reflected in the above lot counts.

Fiscal Year 2014 Compared to Fiscal Year 2013

Consolidated Results

Overall revenue increased by $144.4 million or 102.1% to $285.9 million during the year ended December 31, 2014 compared to the year ended December 31, 2013.  Homebuilding revenue increased by $128.2 million or 111.5% to $243.2 million compared to the year ended December 31, 2013.   The increase in homebuilding revenue was driven by a 98.1% increase in units closed and a 6.8% increase in the average sales price for homes closed.  Revenue from land sales increased by $16.3 million or 99.9% during the year ended December 31, 2014 compared to the year ended December 31, 2013.  This increase is primarily due to the sale of a multi-family property in Arizona for $13.9 million resulting in a gain of $2.3 million in the first quarter of 2014 and the sale of a land position in Florida in the third quarter of 2014 for $11.5 million resulting in a gain of $3.3 million.  Homebuilding expenses increased by $122.1 million or 109.8%, consistent with the increase in revenue.

Homebuilding Operations

Homebuilding revenue increased 111.5% from $115.0 million to $243.2 million for the year ended December 31, 2014 compared to the same period in 2013 due to a 98.1% increase in closings and a 6.8% increase in average sales price.  In the Florida segment, revenues increased $111.8 million or 137.3% for the year ended December 31, 2014 compared to the same period in 2013 driven by a 116.3% increase in units closed due to an increase in the number of communities in which we had closings from four to 17, primarily due to the acquisition of Royal Oak Homes.  In the Arizona segment, revenues increased $15.1 million or 45.1% for the year ended December 31, 2014 compared to the same period in 2013 driven by a 46.2% increase in units closed due to an increase in the number of communities in which we had closings from three to five.  In the Carolinas segment, revenues increased by $1.3 million for the year ended December 31, 2014 compared to the same period in 2013 because we recorded our first closings for the Carolinas segment in the fourth quarter of 2014.  Additionally, the average selling price increased 9.7% in our Florida segment, which was partially offset by a 0.7% decrease in our Arizona segment.

Gross margin from combined home closings decreased by 200 basis points to 18.2% from 20.2% for the year ended December 31, 2014 compared to the same period in 2013.  Gross margin from the Florida segment decreased by 150 basis points to 19.0% from 20.5% for the year ended December 31, 2014 compared to the same period in 2013, primarily due to the 2014 acquisition of Royal Oak Homes, which has lower gross margins.  Gross margin from the Arizona segment decreased by 410 basis points to 15.2% from 19.3% for the year ended December 31, 2014 compared to the same period in 2013, primarily due to a mix of homes closed in 2014 that had higher than average lot costs at some of our newer communities.  Gross margin from the Carolinas segment was 8.2% for the year ended December 31, 2014.  Capitalized interest included in cost of sales for

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the Florida, Arizona and Carolinas segments was $3.4 million, $1.2 million and less than $0.1 million, respectively, for the year ended December 31, 2014 and was $1.7 million, $0.8 million and $0.0 million, respectively, for the same period in 2013.

Combined homebuilding selling, general and administrative expenses as a percentage of homebuilding revenue improved to 14.1% for the year ended December 31, 2014 from 17.1% for the same period in 2013, primarily driven by increasing revenue while containing our costs, partially offset by costs incurred to start up new selling communities that are not yet generating revenue.  Homebuilding selling, general and administrative expenses for the Florida segment as a percentage of homebuilding revenue for the Florida segment improved to 12.6% for the year ended December 31, 2014, from 17.2% for the same period in 2013.  Homebuilding selling, general and administrative expenses for the Arizona segment as a percentage of homebuilding revenue for the Arizona segment improved to 15.9% for the year ended December 31, 2014 from 16.6% for the same period in 2013.  Homebuilding selling, general and administrative expenses for the Carolinas segment as a percentage of homebuilding revenue for the Carolinas segment was 173.1% for year ended December 31, 2014 due to the startup of the division.  Overall improvements in cost leverage from the increased revenue were partially offset by the costs incurred to start up new selling communities that are not yet generating revenue.

Corporate general and administrative expenses decreased by less than $0.1 million or 0.2% to $15.9 million for the year ended December 31, 2014 compared to the same period in 2013.  As a percentage of total revenue, corporate general and administrative expenses improved to 5.6% for the year ended December 31, 2014 compared to 11.3% for the same period in 2013.  The decrease as a percentage of revenue was driven by the significant increase in revenue while containing our costs.

Interest expense increased $3.0 million or 105.1% for the year ended December 31, 2014 compared to the same period in 2013.  The increase in interest expense is primarily attributable to the $200.0 million issuance of 8.50% Senior Notes on June 30, 2014, partially offset by an increase in capitalized interest due to an expansion of inventory under development in 2014 as compared to 2013.  Interest costs incurred, prior to capitalization, increased from the prior year to $18.1 million for the year ended December 31, 2014 as compared to $9.3 million for the same period in 2013.

Net loss for the year ended December 31, 2014 was $1.9 million or ($0.09) per share compared to $9.5 million or ($1.34) per share for the year ended December 31, 2013.  The net loss per share in 2013 includes a non-cash charge of ($0.75) per share for deemed dividends related to the recognition of a beneficial conversion feature embedded in the convertible preferred stock issued in the second quarter of 2013 and converted to common stock in the third quarter of 2013.  The decrease in net loss for the year ended December 31, 2014 compared to the same period in 2013 was primarily due to leveraging our overhead cost base with a significant increase in revenues, a decrease in other real estate expenses, and an increase in the profits from the sale of assets held for sale.

Contracts Signed

The total number of net housing contracts signed during the year ended December 31, 2014 compared to the same period in 2013 increased by 531 or 114.7%.  The dollar value of housing contracts signed increased by $144.4 million or 130.8% over the same period.  The increase in units and value were driven by improvements in all segments. The number of net housing contracts signed for the Florida segment during the year ended December 31, 2014 increased by 493 or 156.5%, while the dollar value of housing contracts signed increased by $130.6 million or 172.1% over the same period, due to an increase in the number of selling communities from five to 18.  The number of net housing contracts signed for the Arizona segment during the year ended December 31, 2014 increased by 27 or 18.2%, while the dollar value of housing contracts signed increased by $10.5 million or 30.6% over the same period, due to an increase in the number of selling communities from five to six.  The number of net housing contracts signed for the Carolinas segment during the year ended December 31, 2014 increased by 11, while the dollar value of housing contracts signed increased by $3.2 million. The overall increase reflects an increase in the number of selling communities from 10 to 27 as well as higher average selling prices.

The cancellation rate decreased to 14.2% from 21.5% for the years ended December 31, 2014 and 2013, respectively.  The cancellation rate within the Florida segment decreased to 13.0% from 23.5% for the years ended December 31, 2014 and 2013, respectively.  The cancellation rate in the Arizona segment increased to 19.0% from 16.9% for the years ended December 31, 2014 and 2013, respectively.  The cancellation rate in the Carolinas segment was 15.4% for the year ended December 31, 2014.

Backlog

The backlog of housing contracts as of December 31, 2014 compared to 2013 increased by 164 or 98.2%, and the dollar value of backlog increased by $45.9 million or 115.1% over the same period.  The increase in units of backlog was driven by increased sales of new orders due to higher community counts in all segments, as well as increases in the average price per unit sold due to price increases and the sales mix of product sold.  The backlog of housing contracts in the Florida

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segment as of December 31, 2014 compared to 2013 increased by 176 or 181.4%, and the dollar value increased by $47.1 million or 203.7% over the same period, driven by the increase in selling communities from five to 18.  The backlog of housing contracts in the Arizona segment as of December 31, 2014 compared to 2013 decreased by 18 or 25.7%, and the dollar value decreased by $3.1 million or 18.6% over the same period, driven by slower sales in third and fourth quarters of 2014.  The backlog of housing contracts in the Carolinas segment as of December 31, 2014 was six and the dollar value was $1.9 million.

As of December 31, 2014, our inventory of unsold (speculative) homes, both completed and under construction, was 258 units, as compared to 60 units as of December 31, 2013.  As of December 31, 2014, approximately 49% of unsold homes were completed compared to approximately 22% as of December 31, 2013.  The increase in speculative homes is consistent with the growth in the number of communities.

Income Taxes

Income taxes have been provided for using the liability method under Accounting Standards Codification ("ASC") 740, Income Taxes (“ASC 740”).  The liability method is used in accounting for income taxes where deferred income tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences reverse.

The Company evaluates its deferred tax assets quarterly to determine if valuation allowances are required.  ASC 740 requires that companies assess whether valuation allowances should be established based on the consideration of all available evidence using a “more likely than not” standard.  The realization of the deferred tax assets ultimately depends upon the existence of sufficient taxable income in future periods. The Company continues to analyze all available positive and negative evidence in determining the continuing need for a valuation allowance with respect to its deferred tax assets.  This evaluation considers, among other factors, historical operating results, forecasts of future profitability, and the duration of statutory carryforward periods. A significant part of the evidence the Company considers is its position with respect to a three year cumulative profit or loss. This position combined with the other evidence described above has continued to support the need for a valuation allowance.  We earned a profit before income taxes for the year ended December 31, 2015 and have seen significant increases in community count, new orders, and backlog.  If homebuilding industry conditions and the Company’s business remain stable and additional positive evidence develops, the Company believes there could be sufficient positive evidence to support a conclusion that the Company will generate sufficient taxable income in future periods to realize its deferred tax asset, which would allow the company to significantly reduce the valuation allowance at some point during 2016.

During the year ended December 31, 2015, we recognized a decrease of $5.3 million in the deferred tax valuation allowance against net deferred tax assets generated from the pre-tax income for the year.  As of December 31, 2015, our deferred tax asset valuation allowance was $124.5 million.

Liquidity and Capital Resources

Our primary business activities are capital intensive in nature. Significant capital resources are required to finance planned residential communities, homebuilding construction in process, community infrastructure, selling expenses, new projects and working capital needs, including funding of debt service requirements, operating deficits and the carrying costs of land.

Cash Flows

As of December 31, 2015, our cash and cash equivalents totaled $46.9 million compared to $180.3 million as of December 31, 2014.  As of December 31, 2015, total consolidated indebtedness was $326.8 million compared to $300.0 million as of December 31, 2014.  The decrease in cash and cash equivalents as of December 31, 2015 is primarily due to (i) the purchase and development of land, and the increase in homes under construction due to new orders and (ii) the purchase of Bonterra Builders.  Additionally, as of December 31, 2015, we had $26.9 million in restricted cash, which is comprised primarily of cash on deposit as an interest reserve to comply with the terms of our senior secured credit facility, as compared to $16.4 million in restricted cash as of December 31, 2014.  We were in compliance with all debt covenants as of December 31, 2015 and December 31, 2014.

Our operating cash flows fluctuate relative to the status of development within existing communities, expenditures for land, new developments and other real estate activities, sales of various homebuilding product lines within those communities and other developments and to fund operating deficits.

For the year ended December 31, 2015, net cash used in operating activities was $59.0 million.  The operating cash outflow was primarily due to the increase in land and other inventories of $83.8 million and an increase in restricted cash of

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$10.5 million related to a covenant requirement in our senior secured credit facility.  Using the proceeds from our 8.50% Senior Notes issued in June 2014 and our 6.00% Notes issued in June 2015, we purchased land and lots for the expansion of all our homebuilding segments and increased the number of homes under construction commensurate with the increase in our new orders.  These outflows were partially offset by cash inflow of $19.1 million from increased customer deposits and accrued liabilities.  Net cash used in investing activities was $97.8 million, primarily due to the purchase of Bonterra Builders in the third quarter of 2015.  Net cash provided by financing activities was $23.4 million, primarily due to the issuance of $80.0 million of the 6.00% Notes, partially offset by the aggregate redemption and repurchase of the 7.50% Exchange Notes and portions of the 7.50% Notes for $53.2 million.

For the year ended December 31, 2014, net cash used in operating activities was $81.4 million.  The operating cash outflow was primarily due to an increase in restricted cash of $12.5 million related to a covenant requirement in our senior secured credit facility and the increase in land and other inventories of $111.7 million.  Using portions of the proceeds from our equity issuance in June 2013 and the issuance of our 8.50% Senior Notes in 2014, we purchased land and lots for the expansion of our primary residential segment and increased the number of homes under construction commensurate with the increase in our new orders.  These outflows were partially offset by cash inflow of $19.8 million from assets held for sale and an increase in accounts payable and accrued liabilities of $15.6 million as a result of the increase in the number of homes under construction.  Net cash used by investing activities amounted to $68.1 million primarily due to the purchase of Royal Oak Homes in the first quarter of 2014.  Net cash provided by financing activities was $185.1 million, primarily due to the issuance of the $200.0 million 8.50% Senior Notes in the second quarter of 2014, partially offset by $9.2 million of debt issue costs related to the senior secured credit facility and 8.50% Senior Notes, as well as the repayment of $5.4 million of the 4.50% Notes.

Surety Bonds

Surety bonds, issued by third-party entities, are used primarily to guarantee our performance to construct improvements in our various communities.  As of December 31, 2015, and 2014, we had outstanding surety bonds of approximately $30.9 million and $21.5 million, respectively.  The amount of outstanding surety bonds could fluctuate depending on the level of development activity.  We do not believe that it is likely any of these outstanding surety bonds will be drawn upon.

Other

Assuming that no additional significant adverse changes in our business occur, we anticipate the aggregate cash on hand, cash flow generated through homebuilding and related operations, our senior secured credit facility, and sales of commercial and industrial and other land will provide sufficient liquidity to fund our business for 2016.

Off-balance Sheet Arrangements

When we are either deemed to hold the controlling interest in a voting interest entity or deemed to be the primary beneficiary of a variable interest entity (“VIE”), we are required to consolidate the investment.  The primary beneficiary of a VIE is the entity that has both of the following characteristics: (a) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and (b) the obligation to absorb the majority of losses of the VIE or the right to receive the majority of benefits from the VIE.  Investments where we do not hold the controlling interest and we are not the primary beneficiary are accounted for under the equity method.

Our variable interests may be in the form of (1) equity ownership, (2) contracts to purchase assets and/or (3) loans provided by us to the investor.  We examine specific criteria and use judgment when determining if we are the primary beneficiary of a VIE.  Factors considered in determining whether we are the primary beneficiary include risk and reward sharing, experience and financial condition of other partner(s), voting rights, involvement in day-to-day capital and operating decisions, level of economic disproportionality between us and the other partner(s) and contracts to purchase assets from VIEs.

We participate in entities with equity interests ranging from 20% to 58% for the purpose of acquiring and/or developing land in which we may or may not have a controlling interest or be the primary beneficiary.  These entities, along with other arrangements, may represent variable interests, depending on the contractual terms of the arrangement.  We determine the method for accounting for our investments at inception or upon a reconsideration event.

We share in the profits and losses of the unconsolidated entities generally in accordance with our ownership interests. We and our equity partners make initial and ongoing capital contributions to these unconsolidated entities on a pro rata basis. The obligation to make capital contributions is governed by each unconsolidated entity’s respective operating agreement.

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As of December 31, 2015, these unconsolidated entities were financed by partner equity and do not have third-party debt.  In addition, we have not provided any guarantees to these entities or our equity partners.

Effects of Inflation and Economic Conditions

We may be adversely affected during periods of inflation because of higher land and construction costs. Inflation may also increase our financing costs. In addition, higher mortgage interest rates affect the affordability of our products to prospective homebuyers. While we attempt to pass on to our customers increases in our costs through increased sales prices, market forces may limit our ability to do so. If we are unable to raise sales prices enough to compensate for higher costs, or if mortgage interest rates increase significantly, our revenues, gross margins, and net income could be adversely affected.

Various housing indices have shown improvement in recent periods.  While we believe that higher interest rates are inevitable and may have a moderating effect on demand and pricing, we believe this impact will be outweighed by the other factors driving increased sales activity as overall new orders remain low compared with historical levels.  We believe that any sustained rise in interest rates will be indicative of a stronger macroeconomic environment that will support a continued recovery in the homebuilding industry.

Seasonality

Our business is affected to some extent by the seasonality of home sales which generally produce higher levels of sales contracts during the months of November through April for active adult communities in the geographic areas in which we conduct our business.  This pattern typically produces increased closings in the latter half of the year.

Contractual Obligations and Commercial Commitments

The following table reflects contractual obligations as of December 31, 2015 (in thousands):

	Payments Due by Period
							More
	Less than		1 – 3		3 – 5		Than
	1 Year		Years		Years		5 Years		Total
Long-term debt obligations (1)	$	46,793	$	—	$	280,000	$	—	$	326,793
Interest obligations on long-term debt		22,239		43,600		15,700		—		81,539
Operating lease obligations		1,493		2,128		609		71		4,301
Capital lease obligations		612		624		24		—		1,260
Purchase obligations - residential development (2)		120,371		—		—		—		120,371
Other long-term liabilities (3)		2,418		1,851		721		32,051		37,041
Total	$	193,926	$	48,203	$	297,054	$	32,122	$	571,305

(1) Long-term debt obligations represent:

(i) $46,793 outstanding under the 7.50% Notes (see Note 6, Debt, to the consolidated financial statements included in Part II of this report) due February 15, 2016;

(ii) $200,000 outstanding under the 8.50% Senior Notes due July 1, 2019; and

(iii) $80,000 outstanding under the 6.00% Senior Convertible Notes due July 1, 2020.

(2) Purchase obligations-residential development represent purchase commitments for land development and construction expenditures, substantially for homebuilding operations that relate to contracts for services, materials and supplies, which obligations generally relate to corresponding contracts for sales of homes.

(3) Other long-term liabilities represent the estimated cost-to-complete of certain utilities improvements in areas within Poinciana, Florida and Rio Rico, Arizona where home sites have been sold and certain development obligations associated with CantaMia.

Critical Accounting Policies and Estimates

The accompanying consolidated financial statements were prepared in conformity with U.S. generally accepted accounting principles.  When more than one accounting principle, or the method of its application, is generally accepted, we select the principle or method that is appropriate in our specific circumstances (see Note 1, Basis of Financial Statement Presentation and Summary of Significant Accounting Policies, to the consolidated financial statements included in Part II of

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this report).  Application of these accounting principles requires us to make estimates about the future resolution of existing uncertainties; as a result, actual results could differ from these estimates. In preparing these consolidated financial statements, we have made our best estimates and judgments of the amounts and disclosures included in the consolidated financial statements, giving due regard to materiality.

The accounting policies that we deem most critical to us and involve the most difficult, subjective or complex judgments are as follows:

Revenue Recognition

Homebuilding revenue and related profit are generally recognized when title to and possession of the property are transferred to the buyer.  Sales are closed when all of the following conditions are met: a sale is consummated, a sufficient down payment is received, the earnings process is complete and the collection of any remaining receivables is reasonably assured. Concurrent with the recognition of revenues in our consolidated statements of operations and comprehensive income (loss), sales incentives in the form of price concessions on the selling price of a home are recorded as a reduction of revenues, while the cost of sales incentives in the form of free products or services to homebuyers, including option upgrades and closing cost allowances used to cover a portion of the fees and costs charged to a homebuyer, is reflected as construction and land costs.

Land and Other Inventories

Land and other inventories are stated at cost unless the asset is determined to be impaired, in which case the asset is written to its fair value.  Land and other inventories include expenditures for land acquisition, construction, land development and direct and allocated indirect costs.  Land and other inventories owned and constructed by us also include interest cost and real estate taxes capitalized until development and construction are substantially completed.  Land and development costs, construction and direct and allocated indirect costs are assigned to components of land and other inventories based on specific identification, relative sales value, or area allocation methods.

Our inventories include land we are holding for future development, which is comprised of land where development activity has been suspended or has not yet begun but is expected to occur in the future. These assets held for future development are located in various submarkets where conditions do not presently support further investment or development, or are subject to a building permit moratorium or regulatory restrictions, or are portions of larger land parcels that we plan to build out over several years and/or that have not yet been entitled. We may also suspend development activity if we believe it will result in greater returns and/or maximize the economic performance of a particular community by delaying improvements for a period of time to, for instance, allow earlier phases of a long-term, multi-phase community or a neighboring community to generate sales momentum or for market conditions to improve.  In some instances, we may activate or resume development activity for this inventory to accelerate sales and/or our return on investment.  We have activated assets previously held for future development in certain markets as part of our strategic growth initiatives.  Interest and real estate taxes are not capitalized on land held for future development or for land or communities for which construction and development activities have been idled.

In accordance with ASC 360-10, Property, Plant and Equipment ("ASC 360-10"), we review our land and other inventories for indicators of impairment.

For assets held and used, if indicators are present, we perform an impairment test in which the asset is reviewed for impairment by comparing the estimated future undiscounted cash flows to be generated by the asset to its carrying value.  If such cash flows are less than the asset’s carrying value, the carrying value is written down to its estimated fair value.  Generally, fair value is determined by discounting the estimated cash flows at a rate commensurate with the inherent risks associated with the asset and related estimated cash flow streams.  The discount rate used in the determination of fair value would vary, depending on the state of development.  Assumptions and estimates used in the determination of the estimated future cash flows are based on expectations of future operations and economic conditions and certain factors described below. Changes to these assumptions could significantly affect the estimates of future cash flows, which could affect the potential for future impairments.  Due to the uncertainties of the estimation process, actual results could differ significantly from such estimates.

We evaluate our land and other inventories for impairment on a quarterly basis to reflect market conditions, which may include a significant oversupply of homes available for sale, higher foreclosure activity and significant competition.  During the years ended December 31, 2015, 2014 and 2013 there were no significant impairment charges that related to homes completed or under construction.  During 2013, we recorded impairment charges of $0.7 million related to land developed and/or held for future development or sale.

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As of December 31, 2015, we had no other land and other inventories that had estimated undiscounted cash flows that were less than their carrying values.  However, we can give no assurance that any future evaluations will not result in further impairments given the real estate market, the likelihood of increased competition within the age-restricted segment as conditions improve, and other factors as more fully described below.

Land and other inventories that are subject to a review for indicators of impairment include our: (i) housing communities (active adult and primary residential, including scattered lots) and (ii) land developed and/or held for future development or sale. A discussion of the factors that impact our impairment assessment for these categories follows.

Housing communities:  Homebuilding activities include the development of active adult and primary residential communities and the operation of amenities.  The operating results generated from active adult and primary residential communities during the years ended December 31, 2015 and 2014 include operating expenses relating to the operation of the amenities in our communities as well as divisional overhead allocated among several communities.

Our active adult and primary residential communities range from small to large master-planned communities in Florida, Arizona and the Carolinas.  Several of these communities are long-term projects on land we have owned for many years.  In reviewing each of our communities, we determine if potential impairment indicators exist by reviewing various factors such as actual margins on homes closed in recent months, projected margins on homes in backlog, projected margins on speculative homes, average selling prices, sales activities and local market conditions.  If indicators are present, the asset is reviewed for impairment.  In determining estimated future cash flows for purposes of the impairment test, the estimated future cash flows are significantly impacted by specific community factors such as: (i) sales absorption rates; (ii) estimated sales prices and sales incentives; and (iii) estimated cost of home construction, estimated land development costs, interest costs, indirect construction and overhead costs, and selling and marketing costs.  In addition, our estimated future cash flows are also impacted by general economic and local market conditions, competition from other homebuilders, foreclosures and depressed home sales in the areas in which we build and sell homes, product desirability in our local markets and the buyers’ ability to obtain mortgage financing.  The build-out of our active adult residential communities generally exceeds five years.  Our assumptions are based on current activity and recent trends at our active adult and primary residential communities.  There are a significant number of assumptions with respect to each analysis.  Many of these assumptions extend over a significant number of years.  The substantial number of variables related to these assumptions could significantly affect the potential for future impairments.

Land developed and/or held for future development or sale:  Our land developed and/or held for future development or sale represents land holdings for the potential development of future active adult and/or primary residential communities, commercial and industrial uses.  For land developed and/or held for future development or sale, indicators of potential impairment include changes in use, changes in local market conditions, declines in the selling prices of similar assets and increases in costs.  If indicators are present, the asset is reviewed for impairment.  In determining estimated future cash flows for purposes of the impairment test, the estimated future cash flows could be significantly impacted by specific community factors such as: (i) sales absorption rates; (ii) estimated sales prices and sales incentives; and (iii) estimated costs of home construction, estimated land and land development costs, interest costs, indirect construction and overhead costs, and selling and marketing costs.  In addition, our estimated future cash flows could also be impacted by general economic and local market conditions, competition from other homebuilders, foreclosures and depressed home sales in the areas where we own land for future development, product desirability in our local markets and the buyers’ ability to obtain mortgage financing.  Factors that we consider in determining the appropriateness of moving forward with land development or whether to write-off the related amounts capitalized include: our current inventory levels, local market economic conditions, availability of adequate resources and the estimated future net cash flows to be generated from the project.

Assets Held for Sale

We account for assets held for sale in accordance with ASC 360-10.  In order for an asset to be classified as held for sale, it must meet the following criteria:

· Management, having the authority to approve the action, commits to a plan to sell the asset;

· The asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets;

· An active program to locate a buyer and other actions required to complete the plan to sell the asset (disposal group) have been initiated;

· The sale of the asset is probable, and transfer of the asset is expected to qualify for recognition as a completed sale, within one year;

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· The asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and

· Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

We continue to opportunistically sell non-core commercial and industrial assets, as well as scattered lot positions and land assets that are in excess of our needed supply in a given market.  Under this plan, assets that meet the criteria above are classified as held for sale.  During the year ended December 31, 2015, we changed our plans to sell assets that were previously classified as held for sale, or the assets no longer met the held-for-sale criteria, resulting in a reclassification of $4.1 million of land positions to land and other inventories.  There was no change in the carrying value in these assets due to this reclassification.  Approximately $19.8 million of assets held for sale were sold during 2014.

For assets held for sale (such as homes completed or under construction or vacant land parcels available for sale), we perform an impairment test in which the asset is reviewed for impairment by comparing the fair value (estimated sales price) less cost to sell the asset to its carrying value.  If such fair value less cost to sell is less than the asset’s carrying value, the carrying value is written down to its estimated fair value less cost to sell.

Homebuilding Cost of Revenues

Homebuilding cost of revenues includes the specific construction costs of each home and all applicable land acquisition, land development and related costs, both incurred and estimated to be incurred, warranty costs, capitalized interest costs, and closing costs.  The construction cost of the home includes amounts paid through the closing date of the home, plus an appropriate accrual for costs incurred but not yet paid, based on an analysis of budgeted construction costs.  This accrual is reviewed for accuracy based on actual payments made after closing compared with the amount accrued, and adjustments are made, if needed.

In determining a portion of the construction and land costs recognized for each period, we rely on project budgets that are based on a variety of assumptions, including future construction schedules and costs to be incurred. It is possible that actual results could differ from budgeted amounts for various reasons, including construction delays, construction resource shortages, increases in costs that have not yet been committed, changes in governmental requirements, unforeseen environmental hazard discoveries or other unanticipated issues encountered during construction and other factors beyond our control. While the actual results for a particular construction project are accurately reported over time, variances between the budgeted and actual costs of a project could result in the understatement or overstatement of construction and land costs and homebuilding gross profits in a particular reporting period. To reduce the potential for this occurring, we have set forth procedures that collectively comprise a critical accounting policy. These procedures, which we have applied on a consistent basis, include assessing, updating and revising project budgets on a quarterly basis, obtaining commitments from independent subcontractors and vendors for future costs to be incurred, reviewing the adequacy of warranty accruals and historical warranty claims experience, and utilizing the most current information available to estimate construction and land costs to be charged to expense.

The development cycles for our communities range from under one year to in excess of ten years for certain master-planned communities.  Adjustments to estimated total land acquisition and development costs for the community affects the costs of the community’s remaining lots. We believe that our policies provide for reasonably dependable estimates to be used in the calculation and reporting of construction and land costs.

Goodwill

We evaluate goodwill for possible impairment in accordance with ASC Topic 350, Intangibles-Goodwill and Other, on an annual basis, or more frequently if events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. We use a three step process to assess whether or not goodwill can be realized. The first step is a qualitative assessment that analyzes current economic indicators associated with a particular reporting unit. For example, we analyze changes in economic, market and industry conditions, business strategy, cost factors, and financial performance, among others, to determine if there would be a significant decline to the fair value of a particular reporting unit. If the qualitative assessment indicates a stable or improved fair value, no further testing is required.

If a qualitative assessment indicates that a significant decline to fair value of a reporting unit is more likely than not, or if a reporting unit’s fair value has historically been closer to its carrying value, we will proceed to the second step where we calculate the fair value of a reporting unit based on discounted future cash flows. If this step indicates that the carrying value of a reporting unit is in excess of its fair value, we will proceed to the third step where the fair value of the reporting unit will be

15

allocated to assets and liabilities as they would in a business combination. Impairment occurs when the carrying amount of goodwill exceeds its estimated fair value calculated in the third step.

Business Combinations

The Company accounts for business combinations in accordance with ASC Topic 850, Business Combinations, if the acquired assets assumed and liabilities incurred constitute a business. For acquired companies constituting a business, we recognize the identifiable assets acquired and liabilities assumed at their acquisition-date fair values and recognize any excess of total consideration paid over the fair value of the identifiable assets as goodwill.

The estimated fair value of the acquired assets and assumed liabilities requires significant judgments by management which are outlined below:

Inventories:  The fair value of acquired inventories largely depends on the stage of production of the acquired land and work in process inventory.  For acquired land inventory, we typically utilize, with the assistance of a third party appraiser, a forecasted cash flow approach for the development, marketing, and sale of each community acquired. Significant assumptions included in our estimates include future per lot development costs, construction and overhead costs, mix of products sold in each community, as well as average sales price.  For work in process inventories, we estimate the fair value based upon the stage of production of each unit and a gross margin that we believe a market participant would require to complete the remaining development and requisite selling efforts.  For the acquisitions that we completed in the current year, we estimated a market participant would require a gross margin of 20%.

Intangible assets:  The fair value of the acquired intangible assets largely depends on the nature of the intangible asset acquired.  During the years ended 2015 and 2014 we have identified intangible assets acquired in our business combinations for non-compete agreements and trade names. With the assistance of a third party valuation firm, we estimate the value of each intangible asset based on a combination of approaches.  The fair value of acquired intangible assets is largely a factor of our forecasted future results of each acquisition and is dependent on similar assumptions as those outlined above for “Inventories.”

If forecasts and estimates utilized in our purchase price allocation differ significantly from actual results in future periods, impairments of inventory, amortizable intangible assets, and goodwill could arise.

Income Taxes

We account for income taxes in accordance with ASC 740, Income Taxes.  The provision for, or benefit from, income taxes is calculated using the asset and liability method, under which deferred tax assets and liabilities are recognized by identifying the temporary differences arising from the different treatment of items for tax and accounting purposes.  In assessing the ability to realize the value of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets may not be realized.  Deferred tax assets are evaluated on a quarterly basis to determine if adjustments to the valuation allowance are required. The ultimate realization of deferred tax assets is primarily dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

In determining the future tax consequences of events that have been recognized in the financial statements or tax returns, judgment is required.  We evaluate our uncertain tax positions quarterly based on various factors, including changes in facts or circumstances, tax laws or the status of audits by tax authorities.  Differences between the anticipated and actual outcomes of these future tax consequences could have a material impact on the consolidated results of operations or financial position.  As of December 31, 2015, our deferred tax asset and valuation allowance was $124.5 million.

Warranty Costs

Warranty reserves for houses are established to cover estimated costs for materials and labor with regard to warranty-type claims to be incurred subsequent to the closing of a house.  We estimate the costs to be incurred under these warranties and record a liability in the amount of such costs at the time product revenue is recognized.  Our primary assumption in estimating the amounts we accrue for warranty costs is that historical claims experience is a strong indicator of future claims experience. Factors that affect our warranty liability include the number of homes sold, historical and anticipated rates of warranty claims, and the cost per claim.  We periodically assess the adequacy of our recorded warranty liability for each geographic market in which we operate and adjust the amounts as necessary.  Actual warranty costs in the future could differ from our estimates. Warranty reserves are included in accrued and other liabilities in the consolidated balance sheets.

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EX-99.3

Exhibit 99.3

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Consolidated Balance Sheets as of  December 31, 2015 and 2014	2
Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended December 31, 2015, 2014 and 2013	3
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2015, 2014 and 2013	4
Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013	5
Notes to Consolidated Financial Statements	6
Report of Independent Registered Public Accounting Firm	28

1

AV HOMES, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, except share amounts)

	December 31,
	2015		2014
Assets
Cash and cash equivalents	$	46,898	$	180,334
Restricted cash		26,948		16,447
Land and other inventories		582,531		383,184
Receivables		7,178		2,906
Property and equipment, net		34,973		36,922
Investments in unconsolidated entities		1,172		17,991
Prepaid expenses and other assets		17,144		15,245
Assets held for sale		—		4,051
Goodwill		19,295		6,071
Total assets	$	736,139	$	663,151
Liabilities and Stockholders' Equity
Liabilities
Accounts payable	$	33,606	$	16,087
Accrued and other liabilities		38,826		28,134
Customer deposits		8,629		4,966
Estimated development liability		32,551		33,003
Senior Notes, net		320,846		294,221
Total liabilities		434,458		376,411
Stockholders' equity
Common stock, par value $1 per share
Authorized: 50,000,000 shares
Issued:  22,444,028 shares outstanding as of December 31, 2015
22,182,972 shares outstanding as of December 31, 2014		22,444		22,183
Additional paid-in capital		399,719		396,989
Accumulated deficit		(117,463)		(129,413)
		304,700		289,759
Treasury stock, at cost, 110,874 shares as of December 31, 2015, and 2014, respectively		(3,019)		(3,019)
Total stockholders’ equity		301,681		286,740
Total liabilities and stockholders' equity	$	736,139	$	663,151

See notes to consolidated financial statements.

2

AV HOMES, INC. AND SUBSIDIARIES

Consolidated Statements of Operations and Comprehensive Income (Loss)

(in thousands, except per share amounts)

	For the Year Ended
	2015		2014		2013
Revenues
Homebuilding	$	498,915	$	243,171	$	114,973
Amenity and other		12,385		10,146		10,206
Land sales		6,466		32,596		16,303
Total revenues		517,766		285,913		141,482
Expenses
Homebuilding cost of revenues		405,538		198,885		91,519
Amenity and other		10,702		10,949		13,773
Land sales		823		22,003		8,111
Total real estate expenses		417,063		231,837		113,403
Selling, general and administrative expenses		79,586		50,305		35,638
Interest income and other		(154)		(447)		(2,218)
Interest expense		9,039		5,805		2,830
Total expenses		505,534		287,500		149,653
Equity in earnings (loss) from unconsolidated entities		154		(16)		(101)
Income (loss) before income taxes		12,386		(1,603)		(8,272)
Income tax expense		(436)		—		—
Net income (loss) and comprehensive income (loss)		11,950		(1,603)		(8,272)
Net income attributable to non-controlling interests in consolidated entities		—		329		1,205
Net income (loss) and comprehensive income (loss) attributable to AV Homes stockholders	$	11,950	$	(1,932)	$	(9,477)
Reconciliation of net income (loss) to income (loss) attributable to common stockholders:
Net income (loss)	$	11,950	$	(1,932)	$	(9,477)
Deemed dividend related to beneficial conversion feature of convertible preferred stock (Note 1)		—		—		(11,894)
Net income (loss) attributable to AV Homes common stockholders	$	11,950	$	(1,932)	$	(21,371)
Basic and diluted income (loss) per share	$	0.54	$	(0.09)	$	(1.34)

See notes to consolidated financial statements.

3

AV HOMES, INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders' Equity

(Dollars in thousands)

	Common Stock							Treasury Stock
											Total AV
				Additional							Homes		Non-		Total
				Paid-in		Accumulated					Stockholders'		controlling		Stockholders'
	Shares	Amount		Capital		Deficit		Shares	Amount		Equity		Interest		Equity
Balance as of December 31, 2012	12,938,157	$	12,938	$	262,363	$	(106,110)	(110,874)	$	(3,019)	$	166,172	$	13,704	$	179,876
Issuance of common stock	9,215,017		9,215		118,619		—	—		—		127,834		—		127,834
Issuances of restricted stock and stock units	96,372		96		(96)		—	—		—		—		—		—
Forfeiture of restricted stock	(147,833)		(148)		148		—	—		—		—		—		—
Shares repurchased to satisfy tax obligations	(4,461)		(4)		(72)		—	—		—		(76)		—		(76)
Share-based compensation	—		—		1,648		—	—		—		1,648		—		1,648
Beneficial conversion feature	—		—		11,894		(11,894)	—		—		—		—		—
Contributions from non-controlling interests	—		—		—		—	—		—		—		724		724
Net income (loss)	—		—		—		(9,477)	—		—		(9,477)		1,205		(8,272)
Balance as of December 31, 2013	22,097,252	$	22,097	$	394,504	$	(127,481)	(110,874)	$	(3,019)	$	286,101	$	15,633		301,734
Issuances of restricted stock and stock units	127,518		128		(128)		—	—		—		—		—		—
Forfeiture of restricted stock	(30,164)		(30)		30		—	—		—		—		—		—
Shares repurchased to satisfy tax obligations	(13,179)		(14)		(213)		—	—		—		(227)		—		(227)
Share-based compensation	—		—		2,770		—	—		—		2,770		—		2,770
Conversion of 7.50% Exchange Notes	1,545		2		26		—	—		—		28		—		28
Contributions from non-controlling interests	—		—		—		—	—		—		—		193		193
Deconsolidation of non-controlling interests	—		—		—		—	—		—		—		(15,826)		(15,826)
Net loss	—		—		—		(1,932)	—		—		(1,932)		—		(1,932)
Balance as of December 31, 2014	22,182,972	$	22,183	$	396,989	$	(129,413)	(110,874)	$	(3,019)	$	286,740	$	—		286,740
Issuances of restricted stock and stock units	291,075		291		(291)		—	—		—		—		—		—
Forfeiture of restricted stock	(20,973)		(21)		21		—	—		—		—		—		—
Shares repurchased to satisfy tax obligations	(9,046)		(9)		(113)		—	—		—		(122)		—		(122)
Share-based compensation	—		—		3,113		—	—		—		3,113		—		3,113
Net income	—		—		—		11,950	—		—		11,950		—		11,950
Balance as of December 31, 2015	22,444,028	$	22,444	$	399,719	$	(117,463)	(110,874)	$	(3,019)	$	301,681	$	—	$	301,681

See notes to consolidated financial statements.

4

AV HOMES, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Dollars in thousands)

	For the Year Ended
	2015		2014		2013
OPERATING ACTIVITIES
Net income (loss) including net income attributable to non-controlling interests	$	11,950	$	(1,932)	$	(8,272)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		3,693		3,267		2,804
Amortization of share-based compensation		3,113		2,770		1,648
Change in fair value of contingent consideration		(116)		—		—
Impairment charges, net		—		—		(248)
Equity in loss (income) from unconsolidated entities		(154)		16		101
Loss (gain) from disposal of assets		(31)		—		36
Changes in operating assets and liabilities:
Restricted cash		(10,501)		(12,491)		726
Land and other inventories		(83,804)		(111,667)		(68,787)
Receivables, net		(3,698)		987		2,837
Income tax receivable		—		—		1,293
Assets held for sale		—		19,811		(1,213)
Prepaid expenses and other assets		1,510		398		(361)
Accounts payable, estimated development liability, and accrued and other liabilities		17,248		15,643		6,661
Customer deposits		1,813		1,789		338
NET CASH USED IN OPERATING ACTIVITIES		(58,977)		(81,409)		(62,437)
INVESTING ACTIVITIES
Investment in property and equipment		(1,209)		(1,815)		(1,023)
Proceeds from sales of property and equipment		31		12		—
Business acquisitions		(93,760)		(62,684)		—
Investment in unconsolidated entities		(2,887)		(3,644)		(111)
Return of capital from unconsolidated entities		—		33		—
NET CASH USED IN INVESTING ACTIVITIES		(97,825)		(68,098)		(1,134)
FINANCING ACTIVITIES
Proceeds from issuance of debt		79,930		200,000		—
Gross proceeds from Senior Secured Credit Facility		40,000		—		—
Debt issuance costs		(2,072)		(9,220)		—
Principal payments of notes		(53,163)		(5,446)		—
Payments of Senior Secured Credit Facility		(40,000)		—		—
Issuance of common shares		—		—		35,805
Issuance of preferred shares		—		—		92,030
Other financing activities, net		(1,329)		(220)		648
NET CASH PROVIDED BY FINANCING ACTIVITIES		23,366		185,114		128,483
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(133,436)		35,607		64,912
Cash and cash equivalents at beginning of year		180,334		144,727		79,815
CASH AND CASH EQUIVALENTS AT END OF YEAR	$	46,898	$	180,334	$	144,727
Non-cash transactions:
Transfer from assets held for sale to land and other inventories and property and equipment	$	4,051	$	—	$	13,767
Distribution of land from unconsolidated joint venture	$	19,860	$	13,418	$	—
Beneficial conversion feature (deemed dividend)	$	—	$	—	$	11,894
Common stock issued for conversion of preferred stock	$	—	$	—	$	92,030

See notes to consolidated financial statements.

5

AV HOMES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2015

Note 1 -Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements include the accounts of AV Homes, Inc. and all subsidiaries, partnerships and other entities in which AV Homes, Inc. (“AV Homes," “we,” “us,” “our,” or “the Company”) has a controlling interest. Our investments in unconsolidated entities in which we have less than a controlling interest are accounted for using the equity method.  All significant intercompany accounts and transactions have been eliminated in consolidation.  Beginning with our Form 10-Q for the quarter ended March 31, 2015, certain revenue and expense balances were reclassified from "Homebuilding and amenity," as well as "Other real estate," into the line item "Amenity and other" to enhance the visibility to our core homebuilding operations.

Selling, general and administrative expenses related to homebuilding previously included in Homebuilding expenses have been combined with corporate general and administrative expenses and reclassified into a separate new line item called "Selling, general and administrative expenses" to enhance the visibility to our core homebuilding operations and conform with standard industry presentation.  The selling, general and administrative expenses reclassified include commissions, other selling expenses and overhead incurred at the divisional level. For the years ended December 31, 2015, 2014 and 2013, selling, general and administrative costs of $62.7 million, $34.4 million, and $19.7 million, that were previously presented in Homebuilding expenses are now included in Selling, general and administrative expenses. In addition, in accordance with adoption of Accounting Standards Update No. 2015-03, Interest-Imputation of Interest, our debt issuance costs are now presented as a deduction from the corresponding debt liability.  This guidance was applied retrospectively and had the effect of reducing our Prepaid expenses and other assets and Senior notes, net balances in our consolidated balance sheets. As of December 31, 2015 and 2014, unamortized deferred debt issuance costs of $5.9 million and $5.7 million, respectively were previously presented in Prepaid expenses and other assets on the consolidated balance sheet and are now included as a reduction to Senior notes, net.

Use of Estimates

The preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

TPG Investment in Company

On June 19, 2013, we entered into a Securities Purchase Agreement (the "Purchase Agreement") by and among AV Homes and TPG Aviator, L.P. ("TPG Aviator") pursuant to which TPG Aviator agreed to acquire 2,557,474 shares of AV Homes’ common stock, par value $1.00 per share (the “Common Stock"), at a purchase price of $14.65 per share, and 665,754 shares of a newly authorized series of AV Homes’ preferred stock, designated as Series A Contingent Convertible Cumulative Redeemable Preferred Stock, par value $0.10 per share (the “Series A Preferred Stock"), at a purchase price and liquidation preference of $146.50 per share, for an aggregate investment in AV Homes by TPG Aviator of $135.0 million.

On June 20, 2013, AV Homes and TPG Aviator closed the transactions (the “TPG Investment") contemplated by the Purchase Agreement, and AV Homes issued to TPG Aviator the Common Stock and the Series A Preferred Stock in the amounts and in exchange for the purchase price described above.

On September 18, 2013, we held a special meeting of stockholders at which our stockholders:  (1) approved the right to convert, at the option of the Company or the holders of the Series A Preferred Stock, the Series A Preferred Stock into 6,657,543 shares of our Common Stock and (2) approved TPG Aviator's pre-emptive rights following the approval of such conversion to participate in future issuances of our Common Stock or securities convertible into or exercisable

6

for our Common Stock.  Following the meeting of stockholders, we provided notice to TPG Aviator of our intention to convert the Series A Preferred Stock as of September 18, 2013.  The Common Stock issuable upon conversion of the Series A Preferred Stock was issued on September 19, 2013 and the Series A Preferred Stock was cancelled.

In accordance with GAAP, before its conversion, the Series A Preferred Stock was classified outside of permanent equity because the redemption provisions were not solely within our control.  We incurred approximately $7.2 million of transaction fees in connection with the TPG Investment, which have been offset against the proceeds received.  The contingent beneficial conversion feature of the Series A Preferred Stock was recognized upon stockholder approval of the conversion and amortized at the time of conversion by treating it as a deemed dividend in retained earnings and crediting additional paid-in capital for $11.9 million, consequently resulting in no diminution in total stockholders' equity or book value per share.  We have assessed the provisions of the Series A Preferred Stock and concluded that the impact of any embedded derivative features was not material.

In connection with the Purchase Agreement, we entered into a Management Services Agreement with TPG VI Management, LLC (“TPG Management”), an affiliate of TPG Aviator, that sets forth certain financial advisory services to be provided by, and fees to be paid to, TPG Management in connection with ongoing services to us.  Pursuant to the Management Services Agreement and in exchange for certain ongoing advisory and consulting services, we agreed to pay to TPG Management a monitoring fee up to $0.5 million per year for so long as TPG and its affiliates own at least 30% of the Common Stock outstanding and also to reimburse expenses incurred by TPG Management and its affiliates to provide services or enforce its rights under the management services agreement. The monitoring fee is reduced proportionately based on TPG Aviator's board representation rights under a separate Stockholders Agreement we entered into with TPG Aviator. The monitoring fee is payable quarterly in advance and is reduced by director fees otherwise payable to the TPG Nominated Directors who are not employed by TPG Aviator or its affiliates.  For 2015 and 2014, we paid TPG Management a total of $0.4 million and $0.5 million, respectively, for the annual monitoring fee and reimbursement of expenses under the Management Services Agreement.

Cash and Cash Equivalents and Restricted Cash

We consider all highly liquid investments purchased with an initial maturity of three months or less to be cash equivalents.  As of December 31, 2015, our cash and cash equivalents were invested primarily in money market accounts that invest primarily in U.S. government securities.  Due to the short maturity period of the cash equivalents, the carrying amount of these instruments approximate their fair values.

Our cash items that are restricted as to withdrawal or usage include deposits of $26.9 million and $16.4 million as of December 31, 2015 and 2014, respectively.  The balance as of December 31, 2015 is comprised primarily of $25.6 million on deposit as an interest reserve to comply with the terms of our Senior Secured Credit Facility (defined below).  In February 2016, the interest reserve was released since it was determined that the Company was in compliance with the interest coverage ratio covenant.  See Note 16, Subsequent Events, for further discussion.

Land and Other Inventories and Cost of Revenues

Land and other inventories include expenditures for land acquisition, construction, land development, construction costs for homeowners association amenities, and direct and allocated indirect costs, including interest cost capitalized until development and construction are substantially completed.  These costs are assigned to components of Land and other inventories based on specific identification, relative sales value, or area allocation methods.

Land and other inventories are stated at cost unless the asset is determined to be impaired, in which case the asset is written to its fair value, in accordance with ASC 360.

We evaluate our land and other inventories for impairment on a quarterly basis in accordance with ASC 360 to reflect market conditions, including a consideration of supply of new and resale homes for sale in the respective market, level of foreclosure activity and competition.  For assets held and used, if indicators are present, we perform an impairment test in which the asset is reviewed for impairment by comparing the estimated future undiscounted cash flows to be generated by the asset to its carrying value.  If such cash flows are less than the asset’s carrying value, the

7

carrying value is written down to its estimated fair value.  Generally, fair value is determined by discounting the estimated cash flows at a rate commensurate with the inherent risks associated with the asset and related estimated cash flow streams.  The discount rate used in the determination of fair value would vary, depending on the state of development.  Assumptions and estimates used in the determination of the estimated future cash flows are based on expectations of future operations and economic conditions and certain factors described below.  Changes to these assumptions could significantly affect the estimates of future cash flows, which could affect the potential for future impairments.  Due to the uncertainties of the estimation process, actual results could differ significantly from such estimates.

During the years ended December 31, 2015 and 2014, our impairment assessment resulted in no impairment charges related to land and other inventories.  During 2013, we recorded impairment charges of $0.7 million.

In 2013, we changed our plans to sell certain assets, resulting in the reclassification of these assets to land and other inventories and a reversal of previously recorded impairment expense of $1.0 million.  This reversal was the result of measuring these assets at the lower of the original carrying amount or the fair value at the date of the decision not to sell, in accordance with ASC 360-10-35-44.

Receivables

Receivables primarily consists of amounts in transit or due from title companies for house closings and contracts mortgage notes receivable from the sale of land.

Property and Equipment, net

Property and equipment are stated at cost, net of accumulated depreciation, which is computed by the straight-line method over the following estimated useful lives of the assets: land improvements 10 years to 25 years; buildings and improvements 8 to 39 years; and machinery, equipment and fixtures 3 to 7 years.  Maintenance and operating expenses of equipment utilized in the development of land are capitalized to land inventory.  Repairs and maintenance are expensed as incurred.

Property and equipment includes the cost of amenities such as club facilities on properties owned by us.  The cost of amenities includes expenditures for land acquisition, construction, land development and direct and allocated costs.  Property and equipment owned and constructed by us also includes interest cost incurred during development and construction.

Each reporting period, we review our property and equipment for indicators of impairment in accordance with ASC 360. For our amenities, which are located within our housing communities, indicators of potential impairment are similar to those of our housing communities, as these factors may impact our ability to generate revenues at our amenities or cause construction costs to increase.  In addition, we factor in the collectability and potential delinquency of the fees due for our amenities.  For the years ended December 31, 2015 and December 31, 2014, we did not identify indicators of impairments for property and equipment.  During 2013, management changed its plans to sell certain assets, resulting in the reclassification of these assets from assets held for sale to property and equipment.  There was no change in the carrying value in these assets due to this reclassification.

Assets Held for Sale

We classify assets held for sale in accordance with the criteria set forth in ASC 360.  We continue to opportunistically sell non-core commercial and industrial assets, as well as scattered lot positions and land assets that are in excess of our needed supply in a given market.  Under this plan, assets that meet the criteria above are classified as held for sale.

During the year ended December 31, 2015, we changed our plans to sell assets that were previously classified as held for sale, or the assets no longer met the held-for-sale criteria, resulting in a reclassification of $4.1 million of land

8

positions to land and other inventories.  There was no change in the carrying value in these assets due to this reclassification.

During 2014, we sold assets held for sale with a carrying value of $20.6 million for cash proceeds of $27.2 million for a gain of $6.6 million.  Included in this was the sale of a multi-family property in Arizona to a related party for $13.9 million for a gain of $2.3 million.

Investments in Partnerships and LLCs

When we are either deemed to hold the controlling interest in a voting interest entity or deemed to be the primary beneficiary of a variable interest entity (“VIE”), we are required to consolidate the investment.  The primary beneficiary of a VIE is the entity that has both of the following characteristics: (a) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and (b) the obligation to absorb the majority of losses of the VIE or the right to receive the majority of benefits from the VIE.  Investments where we don't hold the controlling interest and we are not the primary beneficiary are accounted for under the equity method.

Factors considered when determining if we hold the controlling interest in a voting interest entity include who holds the general partnership or managing member interests, which partner or member makes the day-to-day decisions regarding the operations of the entity, and whether or not the other partners or members have substantive participating rights.  With respect to VIEs, our variable interests may be in the form of (1) equity ownership, (2) contracts to purchase assets and/or (3) loans provided by us to the investor.  We examine specific criteria and use judgment when determining if we are the primary beneficiary of a VIE.  Factors considered in determining whether we are the primary beneficiary include risk and reward sharing, experience and financial condition of other partner(s), sufficiency of equity to conduct the operations of the entity, voting rights, involvement in decisions significantly impacting the entity's economic performance, level of economic disproportionality between us and the other partner(s) and contracts to purchase assets from VIEs.

We have investments in unconsolidated entities, including joint ventures, with independent third parties.  The equity method of accounting is used for unconsolidated entities over which we have significant influence.  Under the equity method of accounting, we recognize our proportionate share of the earnings and losses of these entities.

We evaluate our investments in unconsolidated entities for recoverability in accordance with ASC 323, Investments – Equity Method and Joint Ventures (“ASC 323”).  If we determine that a loss in the value of the investment is other than temporary, we write down the investment to its estimated fair value.  Any such losses are recorded to equity in (earnings) loss of unconsolidated entities in the consolidated statements of operations and comprehensive income (loss).  Due to uncertainties in the estimation process and the significant volatility in demand for new housing, actual results could differ significantly from such estimates.  During the years ended December 31, 2015 and 2014, our impairment assessments resulted in no impairment charges.

Non-Controlling Interest

In 2012, we consolidated an investment in an LLC where we were determined to be the primary beneficiary due to a related party affiliation.  Therefore, the LLC's financial statements were consolidated into our financial statements and the other partner’s equity in the LLC was recorded as non-controlling interest as a component of consolidated equity.   Since June 2014, we were no longer considered the primary beneficiary of this LLC due to the discontinuation of the related party affiliation, resulting in shared power between the remaining members.  For additional information, see Note 5, Investments in Unconsolidated Entities.

Business Acquisitions

When acquiring a business, we allocate the purchase price of real estate to the tangible and intangible assets and liabilities acquired based on their estimated fair values.  In making estimates of fair values for this purpose, we use a number of sources, including independent appraisals and information obtained about each property as a result our pre-acquisition due diligence and its marketing and housing activities.

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Goodwill

Goodwill arises from business combinations and represents the excess of the cost of an acquired entity over the net fair value amounts that were assigned to the identifiable assets acquired and the liabilities assumed.  Goodwill is tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value.  There were no indicators of impairment during the years ended December 31, 2015 and 2014.

Homebuilding Revenue Recognition

In accordance with ASC 360, homebuilding revenue and related profit from the sales of housing units are recognized when title to and possession of the property are transferred to the buyer. In addition, revenues from land sales are recognized in full at closing, provided the buyer's initial and continuing investment is adequate, any financing is considered collectible and there is no significant continuing involvement.

Sales incentives

When sales incentives involve a discount on the selling price of the home, we record the discount as a reduction of revenue at the time of house closing. If the sales incentive requires us to provide a free product or service to the customer, the cost of the free product or service is recorded as cost of revenues at the time of house closing. This includes the cost related to optional upgrades and seller-paid financing costs, closing costs, homeowners’ association fees, or merchandise.

Advertising Costs

Advertising costs are expensed as incurred.  For the years ended December 31, 2015, 2014 and 2013, advertising costs totaled $3.0 million, $3.1 million and $2.4 million, respectively.  Advertising costs, sales commissions and closing costs are included in homebuilding expense in the accompanying consolidated statements of operations and comprehensive income (loss).

Warranty Costs

Warranty reserves for houses are established to cover estimated costs for materials and labor with regard to warranty-type claims to be incurred subsequent to the closing of a house for one to two years.  Reserves are determined based on historical data and other relevant factors.  We have, and require our subcontractors to have, general liability, property, workers compensation, and other business insurance.  These insurance policies protect us against a portion of our risk of loss from claims, subject to certain self-insured per occurrence and aggregate retentions, deductibles, and available policy limits.  We may have recourse against subcontractors for certain claims relating to workmanship and materials.  Warranty reserves are included in accrued and other liabilities in the consolidated balance sheets.

During the years ended December 31, 2015, 2014 and 2013, changes in the warranty reserve consist of the following (in thousands):

	2015		2014		2013
Accrued warranty reserve, beginning of period	$	1,528	$	638	$	549
Reserve provided		3,974		1,495		578
Payments		(2,169)		(605)		(489)
Accrued warranty reserve, end of period	$	3,333	$	1,528	$	638

Income Taxes

The provision for income taxes is calculated using the asset and liability method, under which deferred tax assets and liabilities are recognized by identifying the temporary differences arising from the different treatment of items

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for tax and accounting purposes.  In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.  The ultimate realization of deferred tax assets is primarily dependent upon the generation of future taxable income.  In determining the future tax consequences of events that have been recognized in the financial statements or tax returns, judgment is required.  Differences between the anticipated and actual outcomes of these future tax consequences could have a material impact on our consolidated results of operations or financial position.

Share-Based Compensation

The Amended and Restated 1997 Incentive and Capital Accumulation Plan (2011 Restatement), as amended ("the Incentive Plan") and the 2015 Incentive Compensation Plan (the "2015 Plan") provide for the grant of stock options, stock appreciation rights, stock awards, performance awards, and stock units to officers, employees and directors of AV Homes.  The exercise prices of stock options granted under the Incentive Plan and the 2015 Plan may not be less than the stock exchange closing price of our common stock on the date of grant.  Stock option awards under the Incentive Plan and 2015 Plan generally expire 10 years after the date of grant.

As of December 31, 2015, an aggregate of 590,483 shares of our common stock, subject to certain adjustments, were reserved for issuance under the Incentive Plan, relating to outstanding options and restricted stock units previously awarded and currently outstanding under the Incentive Plan.  There were 764,182 shares available for grant under the 2015 Plan as of December 31, 2015.

Employee Benefit Plans

We have a defined contribution savings plan that covers substantially all employees.  Under this savings plan, we may contribute to the plan based upon specified percentages of employees' voluntary contributions.  We made no contributions to the plan for the years ended December 31, 2015, 2014 and 2013.

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) attributable to AV Homes stockholders by the weighted average number of common shares outstanding for the period.  Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of AV Homes.  The computation of diluted earnings (loss) per share for the year ended December 31, 2015, did not assume the potential effect of employee stock options, the 6.00% Notes, the 7.50% Notes, or the 7.50% Exchange Notes because the effects were antidilutive.  The computation of diluted loss per share for the years ended December 31, 2014 and 2013 did not assume the effect of restricted stock units, employee stock options, the 4.50% Notes, the 7.50% Notes, or the 7.50% Exchange Notes because the effects were antidilutive.

The weighted average number of shares outstanding in calculating basic earnings (loss) per share includes the issuance of 61,101 shares in 2015, 67,274 shares in 2014 and 9,272,795 shares in 2013, in connection with the vesting of restricted stock and restricted stock units each year, and stock issued in connection with the 2013 TPG Investment as described above.  Excluded from the weighted average number of shares outstanding are 332,103 shares for 2015, 127,078 shares for 2014 and 100,898 shares for 2013 associated with annual restricted stock awards that remain subject to vesting and performance requirements.  See Note 10, Share-Based Payments and Other Compensation.  In accordance with ASC 260, Earnings Per Share, nonvested shares are not included in basic earnings (loss) per share until the vesting and performance requirements are met.

In accordance with ASC 470-20, Debt, an embedded beneficial conversion feature present in a convertible instrument shall be recognized separately by allocating a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in-capital. Intrinsic value shall be calculated at the commitment date (preferred stock issuance) as the difference between the conversion price and the fair value of the common stock into which the security is convertible.  The most favorable conversion price shall be used to measure the intrinsic value.  The intrinsic value of the contingent beneficial conversion feature was recognized upon resolution of the contingency (shareholder approval of

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conversion) as a deemed dividend on the convertible preferred stock, and is added to net loss to arrive at loss attributable to common stockholders in the loss per share calculation.  The deemed dividend had a $(0.75) per share effect on earnings for the year ended December 31, 2013.

The following table represents a reconciliation of the net earnings (loss) and weighted average shares outstanding for the calculation of basic and diluted earnings (loss) per share for the years ended December 31, 2015, 2014 and 2013 (dollars in thousands):

	For the Year Ended
	2015		2014		2013
Numerator:
Net income (loss)	$	11,950	$	(1,932)	$	(9,477)
Deemed dividend related to the beneficial conversion feature		—		—		(11,894)
Basic and diluted net income (loss)	$	11,950	$	(1,932)	$	(21,371)
Denominator:
Basic weighted average shares outstanding		22,010,201		21,945,491		15,935,701
Diluted weighted average shares outstanding		22,130,384		21,945,491		15,935,701

Comprehensive Income (Loss)

Net income (loss) and comprehensive income (loss) are the same for the years ended December 31, 2015, 2014 and 2013.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers.  The standard is a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services.  In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which delayed the effective date by one year.  As a result, the standard is effective for us for annual and interim periods beginning January 1, 2018 and allows for full retrospective or modified retrospective methods of adoption.  We are currently evaluating the impact that the standard will have on our consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt, consistent with the presentation of a debt discount.  The guidance is effective for us beginning January 1, 2016.  We currently present deferred financing costs within other assets.  Accordingly, the adoption of the new guidance will result in the reclassification of debt issuance costs as an offset to the related debt on the balance sheet, which we do not expect to be material to our consolidated financial statements.

In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments, which eliminates the requirement to restate prior period financial statements for measurement period adjustments.  The new guidance requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified.  This cumulative adjustment would be reflected within the respective financial statement line items affected.  The new guidance does not change what constitutes a measurement period adjustment.  The new standard should be applied prospectively to measurement period adjustments that occur after the effective date.  The new standard is effective for interim and annual periods beginning after December 15, 2015, with early adoption permitted.  We believe the adoption of this standard will not have a material effect on our consolidated financial statements.

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Note 2 - Business Acquisitions

Bonterra Builders Acquisition

On July 1, 2015, we acquired substantially all of the assets and certain liabilities of Bonterra Builders, LLC (“Bonterra Builders”) for approximately $99.8 million.  Part of the aggregate consideration includes a $6.0 million estimated earn-out.  The actual amount of the earn-out may be more or less than the $6.0 million target amount based on the performance of the Bonterra Builders business through the end of 2016.  A portion of the aggregate consideration equal to $0.8 million was held back by us at the closing as security for Bonterra Builder's indemnification and other potential obligations under the purchase agreement.  Bonterra Builders acquires raw and developed land, develops raw land and constructs single-family homes in the Charlotte, North Carolina area.  With approximately 1,700 lots owned or controlled at the time of acquisition, Bonterra Builders significantly enhanced our position in a key growth market.  The results of Bonterra Builders' operations are included in our consolidated financial statements from the acquisition date of July 1, 2015.

The Bonterra Builders acquisition was accounted for in accordance with ASC 805, Business Combinations ("ASC 805").  We recorded the acquired assets and liabilities at their estimated fair value.  We determined the estimated fair values with the assistance of appraisals or valuations performed by independent third-party specialists, discounted cash flow analyses, quoted market prices where available, and estimates by management.  To the extent the consideration transferred exceeded the fair value of the net assets acquired in this transaction, such excess was assigned to goodwill.

We acquired substantially all of the assets of Bonterra Builders, including all of its real estate, land acquisition agreements and permits, and certain of its leases, contracts, commitments and purchase orders.  We also assumed certain liabilities of Bonterra Builders, including the liabilities and obligations relating to the acquired contracts, but excluding certain home warranty obligations relating to homes closed by Bonterra Builders prior to the acquisition.

The following table summarizes the calculation of the fair value of the total consideration transferred to Bonterra Builders and the amounts of assets acquired and liabilities assumed as of the acquisition date (in thousands):

Calculation of purchase price consideration
Cash paid for Bonterra Builders net assets	$	40,818
Contingent consideration (earn-out)		6,000
Debt repaid at closing		52,941
Total consideration	$	99,759
Assets acquired and liabilities assumed
Assets
Receivables and other current assets	$	574
Land and other inventories		91,632
Property and equipment		14
Trade name		1,400
Non-compete intangible asset		600
Goodwill		13,223
Total assets acquired		107,443
Liabilities
Accounts payable		5,071
Accrued and other liabilities		763
Customer deposits		1,850
Total liabilities assumed		7,684
Total net assets acquired	$	99,759

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Fair Value

Receivables, other current assets, property, equipment, accounts payable, accrued and other liabilities and customer deposits were generally stated at historical carrying values given the short-term nature of these assets and liabilities.  Liabilities were recorded at historical carrying values in accordance with ASC 805.

We determined the fair value of land and other inventories on a lot-by-lot basis, primarily using a combination of market comparable land transactions, where available, and discounted cash flow models using Level 3 inputs, and independent appraisals were also utilized in certain instances.  These estimated cash flows are significantly impacted by estimates related to expected average home selling prices and sales incentives, expected sales paces and cancellation rates, expected land development and construction timelines, and anticipated land development, construction, and overhead costs.  Such estimates must be made for each individual community and may vary significantly between communities.

The fair values for acquired intangible assets were determined based on valuations performed by independent valuation specialists using Level 3 inputs. The $2.0 million of acquired intangible assets relates to trade names and non-compete agreements that are being amortized over five years and three years, respectively.  Amortization expense for these assets totaled $0.3 million for the year ended December 31, 2015, which is included in the consolidated statements of operations and comprehensive income (loss) within homebuilding expense.

The Company has substantially completed its business combination accounting as of December 31, 2015.  For the year ended December 31, 2015, goodwill decreased by $1.7 million due to a post-closing purchase price adjustment and a revision of the valuation of the earn-out.  The Company has not completed its final review of certain other assets and liabilities. Final determinations of the values of assets acquired and liabilities assumed may result in adjustments to the values presented above and a corresponding adjustment to goodwill.

Transaction and Integration Costs

Transaction and integration costs directly related to the Bonterra Builders acquisition, including legal and accounting fees, totaled $0.9 million for the year ended December 31, 2015, the majority of which are included in the consolidated statements of operations and comprehensive income (loss) within corporate general and administrative expenses.  Such costs were expensed as incurred in accordance with ASC 805.

Goodwill

As of the acquisition date, goodwill included the expected economic value attributable to Bonterra Builders' assembled workforce.  The acquisition provided increased scale and presence in an existing market with immediate revenue opportunities through an established backlog.  We expect $7.2 million of goodwill to be deductible for tax purposes as of December 31, 2015.  Goodwill related to the Bonterra Builders acquisition has been assigned to the Carolinas reporting unit.

Supplemental Pro Forma Information

The following represents the unaudited pro forma operating results as if Bonterra Builders had been included in the Company’s consolidated statements of operations and comprehensive income (loss) as of the beginning of the fiscal year presented (in thousands, except per share data):

	Year Ended December 31,
	2015		2014
Revenue	$	588,533	$	397,695
Net income	$	17,158	$	1,674

The supplemental pro forma operating results have been determined after adjusting the operating results of Bonterra Builders to reflect additional expense that would have been recorded assuming the fair value adjustments to

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inventory and intangible assets had been applied as of January 1, 2014.  These results may not be indicative of future operating results.

The amount of revenue and net income of Bonterra Builders since the acquisition date included in the consolidated statements of operations and comprehensive income (loss) for 2015 is $92.5 million and $8.6 million, respectively.

Royal Oak Homes Acquisition

On March 13, 2014, we acquired substantially all of the assets and certain liabilities of Royal Oak Homes, LLC, a residential homebuilder based in Orlando, Florida (“Royal Oak”).  In connection with the transaction, we also acquired certain land positions from an affiliate of Royal Oak. The transaction expanded our presence in Central Florida and the Poinciana market.  With over 2,500 primary residential lots owned or controlled at the time of acquisition, Royal Oak enhanced our position in a key growth market.  The total purchase price paid under the acquisition agreements was approximately $65.0 million in cash, which includes a potential $3.0 million payment related to an earn-out covering the financial results for 2014 and 2015.  The current estimate of the total payment for the earn-out is $2.1 million, of which $1.2 million has been paid as of December 31, 2015.  The results of Royal Oak are included in the Company's consolidated financial statements from the acquisition date of March 13, 2014.

We acquired $0.6 million of intangible assets in the Royal Oak transaction that relate to trade names that are being amortized over three years.  Amortization expense for these assets totaled $0.2 million for the years ended December 31, 2015 and 2014, respectively, which is included in the consolidated statements of operations and comprehensive income (loss) within homebuilding expense.

Note 3 - Land and Other Inventories

Land and other inventories consist of the following (in thousands):

	December 31,
	2015		2014
Land held for future development	$	21,403	$	20,844
Land developed and in process of development		348,648		269,764
Homes completed or under construction		212,480		92,576
Total	$	582,531	$	383,184

We capitalize interest to inventories during the period of development in accordance with ASC 835, Interest ("ASC 835").  Homebuilding interest capitalized as cost of inventories is included in cost of sales as related units or lots are sold.  To the extent our homebuilding debt exceeds our qualified assets, as defined in ASC 835, we expense a portion of interest incurred.  Qualified homebuilding assets consist of land, lots and homes, excluding finished unsold homes or finished models, that are under development or construction.

The following table represents interest incurred, interest capitalized, and interest expense for 2015, 2014 and 2013 (in thousands):

	For the Year Ended
	2015		2014		2013
Interest incurred	$	28,207	$	18,107	$	9,296
Interest capitalized		(19,168)		(12,302)		(6,466)
Interest expense	$	9,039	$	5,805	$	2,830

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Note 4 - Property and Equipment, net

As of December 31, 2015 and 2014, the property and equipment, net balance consisted of the following (in thousands):

	December 31,
	2015		2014
Land improvements	$	21,966	$	21,816
Building		39,209		39,050
Equipment		5,117		6,698
Motor vehicles		598		603
Furniture and fixtures		3,937		4,017
Capitalized software		2,099		1,962
Gross property and equipment		72,926		74,146
Less: accumulated depreciation		(37,953)		(37,224)
Property and equipment, net	$	34,973	$	36,922

As of December 31, 2015, we had $1.8 million of equipment with $0.8 million of accumulated depreciation that were financed with capital leases. The amortization of these assets is included in depreciation expense.

Note 5 - Investments in Unconsolidated Entities

We participate in entities with equity interests ranging from 20% to 58% for the purpose of acquiring and/or developing land.  We determine the method for accounting for our investment at inception or upon a reconsideration event.

We share in the profits and losses of unconsolidated entities generally in accordance with our ownership interests.  We and our equity partners make initial and ongoing capital contributions to these unconsolidated entities on a pro rata basis.  The obligation to make capital contributions is governed by each unconsolidated entity’s respective operating agreement or other governing documents.  We made contributions totaling $2.9 million, $3.6 million and $0.1 million to our unconsolidated entities during 2015, 2014 and 2013, respectively.  The balance of our investments in unconsolidated entities was $1.2 million and $18.0 million as of December 31, 2015 and December 31, 2014, respectively.

In May 2012, we entered into an agreement with JEN Arizona 4, LLC to form a limited liability company, EM 646, LLC (“EM 646”).  We hold a 58.2% interest in the venture, which was organized for the purpose of acquiring, entitling, developing, and distributing specific sections of real property located in Mesa, Arizona.  The property was originally acquired in November 2012, and in April 2015 the final distribution of developed land to the partners was completed at cost.  For the years ended December 31, 2015 and 2014, EM 646 distributed $19.9 million and $7.1 million, respectively, of developed land to AV Homes.

During 2014, we were no longer considered the primary beneficiary of this LLC due to a discontinuation of a related party affiliation, resulting in shared power between the remaining members.  As we no longer have the power on a stand-alone basis to direct the activities of the LLC that most significantly impact the LLC’s economic performance, we deconsolidated this LLC, in accordance with ASC 810, Consolidation, and ASC 360.  As this transaction involves the deconsolidation of in-substance real estate, we have accounted for the deconsolidation under ASC 360-20, Real Estate Sales.  In determining whether a gain should be recognized as part of this transaction, ASC 360-20-40-10, Real Estate Sales, requires that a sufficient amount of cash be received in order to recognize a gain on transactions within the scope of ASC 360.  As we did not receive any proceeds from this transaction and as there was not a culmination of an earning process, we recognized our investment in the venture at our carry over cost basis and, therefore, no gain or loss was recognized.  We will reflect future earnings, contributions and distributions on an equity method basis.  As of December 31, 2015 and December 31, 2014, our consolidated balance sheets included amounts related to investments in the unconsolidated EM 646 entity of $0.0 million and $15.6 million, respectively.

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We and our equity partners make capital contributions to the entity and receive distributions on a pro rata basis.  The obligation to make such capital contributions is governed by the entity’s operating agreement.  As of December 31, 2015, this entity was financed by partner equity and does not have third-party debt. In addition, we have not provided any guarantees to the entity or our equity partner.  The assets of our investee can only be used to settle obligations of the investee.

Note 6 – Senior Notes

Senior Notes are summarized as follows:

	December 31,
	2015		2014
7.50% Senior Convertible Notes due 2016	$	46,793	$	55,481
7.50% Senior Exchange Convertible Notes due 2016		—		44,475
8.50% Senior Notes due 2019		200,000		200,000
6.00% Senior Convertible Notes due 2020		80,000		—
Senior Secured Credit Facility		—		—
Total Senior Notes	$	326,793	$	299,956
Deferred debt issuance costs		(5,877)		(5,735)
Debt discount		(70)		—
Total Senior Notes, net	$	320,846	$	294,221

7.50% Senior Convertible Notes due 2016 and 7.50% Senior Exchange Convertible Notes due 2016

On February 4, 2011, we completed an underwritten public offering for $100.0 million aggregate principal amount of our 7.50% Senior Convertible Notes due 2016 (the “7.50% Notes”). The 7.50% Notes were governed by the Indenture and the First Supplemental Indenture, each dated February 4, 2011, between us and the trustee named therein.  Interest on the 7.50% Notes was payable semi-annually in arrears in cash on February 15 and August 15 of each year.

In July 2012, we entered into exchange agreements under which we retired $44.5 million in aggregate principal amount of our 7.50% Notes, in exchange for the issuance of $44.5 million in aggregate principal of new 7.50% Senior Exchange Convertible Notes due 2016 (“7.50% Exchange Notes”).  The 7.50% Exchange Notes would have matured on February 15, 2016.  The 7.50% Exchange Notes were governed by the Indenture dated February 4, 2011 and the Second Supplemental Indenture dated July 25, 2012 between us and the trustee named therein.  Interest on the 7.50% Exchange Notes was payable semi-annually in arrears in cash on February 15 and August 15 of each year, commencing February 15, 2013.  In connection with the issuance of the 6.00% Notes (defined below), $20.5 million of 7.50% Exchange Notes and $8.7 million of 7.50% Notes were repurchased on June 23, 2015.  On July 20, 2015, the remaining 7.50% Exchange Notes were redeemed, pursuant to our option to redeem such notes at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest.

On February 16, 2016, the remaining 7.50% Notes were repaid at maturity.  See Note 16, Subsequent Events.

8.50% Senior Notes due 2019

On June 30, 2014, we completed an underwritten offering for $200.0 million aggregate principal amount of our 8.50% Senior Notes due 2019 (the “8.50% Senior Notes”).  The 8.50% Senior Notes mature on July 1, 2019 unless earlier converted, redeemed or repurchased. Interest on the 8.50% Senior Notes is 8.50% per year, payable semi-annually in arrears in cash on January 1 and July 1 of each year, commencing January 1, 2015.  The 8.50% Senior Notes are redeemable at our option, in whole or in part, at any time on or after July 1, 2016, at certain redemption prices, together with accrued and unpaid interest, if any, to, but excluding, the date of redemption.

Certain of our subsidiaries are guarantors of the 8.50% Senior Notes.  All of the subsidiary guarantors are 100% owned by us, and all of the guarantees are full, unconditional, and joint and several.  We have no independent assets or operations, and our subsidiaries, other than the subsidiary guarantors, are minor.

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6.00% Senior Convertible Notes due 2020

On June 23, 2015, we completed a private offering of $80.0 million aggregate principal amount of 6.00% Senior Convertible Notes due 2020 (the “6.00% Notes”).  The 6.00% Notes were issued in exchange for $15.4 million aggregate principal amount of 7.50% Exchange Notes and $64.5 million in cash.  We used $30.7 million of the net cash proceeds from the sale of the 6.00% Notes to (i) repurchase 7.50% Exchange Notes and 7.50% Notes and (ii) pay approximately $1.5 million of accrued interest (in respect of the notes being exchanged or repurchased) and premium (in respect of the notes being repurchased).  The 6.00% Notes will mature on July 1, 2020 unless earlier repurchased or converted.  The 6.00% Notes are governed by the Indenture dated February 4, 2011 and the Third Supplemental Indenture dated June 23, 2015 between us and the trustee named therein.  The 6.00% Notes bear regular cash interest on the principal amount of each note, payable semiannually in arrears on January 1 and July 1 of each year, beginning on January 1, 2016.

The 6.00% Notes were issued pursuant a series of separate, privately negotiated note purchase agreements entered into on June 17, 2015 by us and certain qualified institutional buyers.  TPG Aviator, L.P. (“TPG”) purchased $20.0 million aggregate principal amount of 6.00% Notes for $20.0 million in cash and waived its rights to purchase additional 6.00% Notes, resulting in a fully diluted beneficial ownership of approximately 43.8% of our common stock for TPG.  Pursuant to the terms of the Company’s Related Person Transaction Policy, the audit committee of the Company’s board of directors reviewed and approved the terms of the 6.00% Notes and TPG’s purchase of 6.00% Notes.

Senior Secured Credit Facility

On April 7, 2014, we entered into a $65.0 million senior secured credit facility with JPMorgan Chase Bank, N.A., as agent, a lender and a letter of credit issuer (the "Senior Secured Credit Facility"). The other original lenders and letter of credit issuers include Royal Bank of Canada and Credit Suisse AG.  Later in 2014, we increased the Senior Secured Credit Facility by $40.0 million with the addition of Citibank, N.A., and Deutsche Bank, A.G., as additional lenders.

The Senior Secured Credit Facility includes revolving credit and letter of credit facilities in an aggregate principal amount of up to $105.0 million, with an “accordion” feature that allows us, with the consent of the lenders, to increase the aggregate amount to $175.0 million.  The Senior Secured Credit Facility also includes a swing line loan facility in an aggregate principal amount of up to $30.0 million.  As of December 31, 2015, we had sufficient qualified assets in the borrowing base to cover the full $105.0 million capacity and had no borrowings outstanding.

We were in compliance with all financial covenants under the Senior Secured Credit Facility as of December 31, 2015.

Maturities of Senior Notes as of December 31, 2015 are as follows (in thousands):

	Total
2016	$	46,793
2017		—
2018		—
2019		200,000
2020		80,000
Thereafter		—
Total	$	326,793

We made interest payments of $24.0 million, $7.6 million, and $7.9 million during the years ended December 31, 2015, 2014 and 2013, respectively.

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Note 7 - Lease Commitments

We lease the majority of our administration and sales offices under operating leases that expire at varying times through 2021.  Rental expense was $0.9 million in 2015, $0.5 million in 2014 and $0.4 million in 2013.  The following table reflects lease commitments as of December 31, 2015 (in thousands):

	Payments Due By Period
	2016		2017		2018		2019		2020		Thereafter		Total
Noncancelable operating leases	$	1,443	$	1,289	$	839	$	438	$	171	$	71	$	4,251
Capital lease obligations		612		507		117		24		—		—		1,260
Leased model homes		50		—		—		—		—		—		50
Total	$	2,105	$	1,796	$	956	$	462	$	171	$	71	$	5,561

Note 8 - Accrued and Other Liabilities

Accrued and other liabilities are summarized as follows (in thousands):

	December 31,
	2015		2014
Accrued interest	$	12,253	$	11,312
Accrued compensation		5,476		4,052
Warranty reserve		3,333		1,528
Infrastructure obligations		5,799		4,671
Contingent consideration		7,083		2,404
Other		4,882		4,167
Total	$	38,826	$	28,134

Note 9 - Estimated Development Liability

The estimated development liability consists primarily of utilities improvements in Poinciana, Florida and Rio Rico, Arizona for more than 8,000 home sites previously sold, in most cases prior to 1980.  The estimated development liability is reduced by actual expenditures and is evaluated and adjusted, as appropriate, to reflect management’s estimate of potential costs.  In addition, we obtain third-party engineer evaluations on an annual basis and adjust this liability as necessary to reflect changes in the estimated costs.  Cash expenditures associated with these obligations were $0.5 million, $0.2 million and $0.1 million during 2015, 2014 and 2013, respectively.  Future increases or decreases of costs for construction, material and labor, as well as other land development and utilities infrastructure costs, may have a significant effect on the estimated development liability.  The balance of the estimated development liability was $32.6 million and $33.0 million as of December 31, 2015 and 2014, respectively.

Note 10 - Share-Based Payments and Other Compensation

The Amended and Restated 1997 Incentive and Capital Accumulation Plan (2011 Restatement), as amended ("the Incentive Plan") and the 2015 Incentive Compensation Plan (the "2015 Plan") provide for the grant of stock options, stock appreciation rights, stock awards, performance awards, and stock units to officers, employees and directors of AV Homes.  The exercise prices of stock options granted under the Incentive Plan or the 2015 Plan may not be less than the stock exchange closing price of our common stock on the date of grant.  Stock option awards under the Incentive Plan and 2015 Plan generally expire 10 years after the date of grant.

As of December 31, 2015, an aggregate of 590,483 shares of our common stock, subject to certain adjustments, were reserved for issuance under the Incentive Plan, relating to outstanding options and restricted stock units previously awarded and currently outstanding under the Incentive Plan.  There were 764,182 shares available for grant under the 2015 Plan as of December 31, 2015.

During 2013, we cancelled 114,750 restricted shares granted in 2011 to certain executives and issued additional performance-based restricted shares in exchange.  The cancellation and issuance of shares was accounted for as a

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modification with the future compensation expense computed using the greater of unamortized fair value of the cancelled awards or the incremental fair value as remeasured each reporting period.  We also issued performance-based restricted shares to other members of management.  Vesting is contingent upon the achievement of certain performance objectives, some of which are subjective in nature.  Compensation cost for these awards is recognized over the service period, and variable accounting is applied whereby the fair value of the award is remeasured each reporting period until vesting occurs.

Compensation expense related to the stock option, restricted stock, and restricted stock unit awards during the years ended December 31, 2015, 2014 and 2013 was $3.1 million, $2.8 million and $1.6 million, respectively.  During 2015, we did not grant any stock options.  During 2015, we granted 291,075 shares of restricted stock which have a weighted average grant date fair value of $9.32 per share.

As of December 31, 2015, there was $2.0 million of unrecognized compensation expense related to unvested restricted stock and restricted stock units. That expense is expected to be recognized over a weighted average period of 1.60 years.

As of December 31, 2015, there was $3.3 million of unrecognized compensation expense related to unvested stock options.  That expense is expected to be recognized over a weighted average period of 0.9 years.

Under ASC 718, Stock Compensation ("ASC 718"), the fair value of awards of restricted stock and units that do not contain a specified hurdle price condition is based on the market price of our common stock on the date of grant.  Under ASC 718, the fair value of restricted stock awards that contain a specified hurdle price condition is estimated on the grant date using the Monte-Carlo option valuation model.  Under ASC 718, the fair value of each stock option is estimated on the grant date using the Black-Scholes option-pricing model.  The valuation models require assumptions and estimates to determine expected volatility, expected life, expected dividend yield and expected risk-free interest rates.  The expected volatility was determined using historical volatility of our stock based on the contractual life of the award.  The risk-free interest rate assumption was based on the yield on zero-coupon U.S. Treasury strips at the award grant date.  We also used historical data to estimate forfeiture experience.

The significant weighted average assumptions used for the years ended December 31, 2015, 2014 and 2013 were as follows:

	2015			2014			2013
Dividend yield		—	%		—	%					—	%
Volatility rate		38.00	%		42.60	%		52.37	%	-	52.49	%
Risk-free interest rate		1.0	%		0.66	%		1.66	%	-	1.86	%
Expected life (years)		2.95			2.91						6.25
Weighted average fair value of units granted	$	5.95		$	9.30					$	8.75

A summary of the status of the stock option activity for the years ended December 31, 2015, 2014 and 2013 is presented below:

	2015			2014			2013
		Weighted			Weighted			Weighted
		Average			Average			Average
	Stock	Exercise Price		Stock	Exercise Price		Stock	Exercise Price
	Options	Per Share		Options	Per Share		Options	Per Share
Outstanding as of beginning of year	555,036	$	17.00	585,036	$	16.99	110,000	$	25.00
Granted	—		—	—		—	585,036		16.99
Exercised	—		—	—		—	—		—
Forfeited	(10,000)		16.80	(30,000)		16.80	(110,000)		—
Outstanding as of end of year	545,036	$	17.01	555,036	$	17.00	585,036	$	16.99
Exercisable as of end of year	272,518	$	17.01	146,259	$	16.99	—	$	—

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The weighted average remaining contractual life of stock options outstanding as of December 31, 2015 was 7.8 years.

A summary of the restricted stock and stock units activity for the year ended December 31, 2015 is presented below:

			Weighted
	Restricted		Average
	Stock and		Grant Date
	Stock Units		Fair Value
Outstanding as of beginning of year	145,352	(1)	$	16.59
Granted	291,075			9.32
Vested	(62,434)			16.93
Expired/forfeited/cancelled	(21,655)			10.95
Outstanding as of end of year	352,338		$	10.87

(1) Restricted stock shares are considered legally outstanding but are not considered outstanding for accounting purposes until the vesting conditions are satisfied in accordance with authoritative accounting guidance.

Under our director deferral program, non-management directors may elect to defer up to 50% of annual retainer fees, committee fees and/or chairperson fees, for which the director is credited with a number of stock units based upon the closing price of our common stock on the due date of each payment.  The number of stock units become distributable as shares of common stock upon the earlier of a date designated by the individual director or the date of the individual’s separation from service as a director.  No stock units were distributed as shares to non-management directors during the years ended December 31, 2015, 2014 and 2013.  The outstanding balance of restricted stock units under the deferral plan as of December 31, 2015, 2014 and 2013 was 50,376, 42,659 and 36,257, respectively.

Note 11 - Income Taxes

Income taxes have been provided using the liability method under ASC 740.  The liability method is used in accounting for income taxes where deferred income tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences reverse.

The components of income tax expense for the years ended December 31, 2015, 2014 and 2013 are as follows (in thousands):

	2015		2014		2013
Current
Federal	$	253	$	—	$	—
State		183		—		—
Total current		436		—		—
Deferred
Federal		—		—		—
State		—		—		—
Total deferred		—		—		—
Total income tax expense	$	436	$	—	$	—

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Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.  Significant components of deferred income tax assets and liabilities as of December 31, 2015 and 2014 are as follows (in thousands):

	2015		2014
Deferred income tax assets:
Tax over book basis of land inventory	$	15,338	$	15,085
Unrecoverable land development costs		5,321		6,222
Executive incentive compensation		2,112		1,338
Net operating loss carryforward		56,768		61,128
Impairment charges		53,103		55,529
Other		4,745		4,061
Total deferred income tax assets		137,387		143,363
Valuation allowance for deferred tax assets		(124,525)		(129,862)
Net deferred income tax assets		12,862		13,501
Deferred income tax liabilities:
State tax effect of deferred tax assets		(3,139)		(3,412)
Book over tax income recognized on sale of the Ocala Property		(7,094)		(7,751)
Tax over book on 4.50% Convertible Notes		(857)		(960)
Book over tax basis of depreciable assets		(1,772)		(1,378)
Total deferred income tax liabilities		(12,862)		(13,501)
Net deferred income tax liabilities	$	—	$	—

As of December 31, 2015, our gross federal and state NOL carryforwards were approximately $132.7 million and $283.2 million, respectively.  Federal NOL carryforwards may be used to offset future taxable income for 20 years and begin to expire in 2030.  State NOL carryforwards may be used to offset future taxable income for a period of time ranging from 5 to 20 years, depending on the state, and begin to expire in 2016.

The Company evaluates its deferred tax assets quarterly to determine if valuation allowances are required.  ASC 740 requires that companies assess whether valuation allowances should be established based on the consideration of all available evidence using a “more likely than not” standard.  The realization of the deferred tax assets ultimately depends upon the existence of sufficient taxable income in future periods.  The Company continues to analyze all available positive and negative evidence in determining the continuing need for a valuation allowance with respect to its deferred tax assets.  This evaluation considers, among other factors, historical operating results, forecasts of future profitability, and the duration of statutory carryforward periods.  A significant part of the evidence the Company considers is its position with respect to a three year cumulative profit or loss.  This position combined with the other evidence described above has continued to support the need for a valuation allowance.  We earned a profit before income taxes for the year ended December 31, 2015 and have seen significant increases in community count, new orders, and backlog.  If homebuilding industry conditions and the Company’s business remain stable and additional positive evidence develops, the Company believes there could be sufficient positive evidence to support a conclusion that the Company will generate sufficient taxable income in future periods to realize its deferred tax asset, which would allow the company to significantly reduce the valuation allowance at some point during 2016.

During the years ended December 31, 2015 and 2014, we recognized a decrease of $5.3 million and $0.4 million, respectively, in the deferred tax valuation allowance against net deferred tax assets generated from the pre-tax income for the year.  As of December 31, 2015, our deferred tax asset valuation allowance was $124.5 million.  In future periods, the allowance could be reduced based on sufficient evidence indicating that it is more likely than not that a portion of our deferred tax assets will be realized.

Any interest or penalties that have been assessed in the past have been minimal and immaterial to our financial results.  In the event we are assessed any interest or penalties in the future, we plan to include them in our consolidated statements of operations and comprehensive income (loss) as income tax expense.

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No additional income tax benefits were generated from the exercise of share-based compensation during 2015, 2014 and 2013.

A reconciliation of income tax expense (benefit) to the expected income tax expense (benefit) at the federal statutory rate of 35% for each of the years ended December 31, 2015, 2014 and 2013 is as follows (in thousands): 

	2015		2014		2013
Income tax (benefit) expense computed at statutory rate	$	4,320	$	(522)	$	(3,317)
State income tax (benefit) expense, net of federal benefit		1,452		823		(385)
Change in valuation allowance on deferred tax assets		(5,336)		(370)		3,699
Other		—		69		3
Income tax expense	$	436	$	—	$	—

We file income tax returns in the U.S. federal jurisdiction and various state jurisdictions.  We are subject to U.S. federal income tax examination for calendar tax years ending 2012 through 2014.  Additionally, we are subject to various state income tax examinations for the 2011 through 2014 calendar tax years.

Note 12 - Commitments and Contingencies

Legal

We are involved in litigation from time to time, primarily arising in the normal course of our business.  These cases are in various procedural stages.  In view of the inherent difficulty of predicting the outcome of these legal and regulatory matters, we generally cannot predict the ultimate resolution of the pending matters, the related timing, or the eventual loss.  While the outcome of such contingencies cannot be predicted with certainty, we do not believe that the resolution of such matters will have a material adverse impact on our results of operations, financial position, or cash flows.

Surety bonds

Surety bonds, issued by third-party entities, are used primarily to guarantee our performance to construct improvements in our various communities.  As of December 31, 2015 and 2014, we had outstanding surety bonds of approximately $30.9 million and $21.5 million, respectively.  The amount of outstanding surety bonds could fluctuate depending on the level of development activity.  We do not believe that it is likely any of these outstanding surety bonds will be drawn upon.

Community Development District and Other Special Obligations

A community development district or similar development authority (“CDD”) is a unit of local government created under various state statutes that utilizes the proceeds from the sale of bonds to finance the construction or acquisition of infrastructure assets of a development.  A portion of the liability associated with the bonds, including principal and interest, is assigned to each parcel of land within the development.  This debt is typically paid by subsequent special assessments levied by the CDD on the landowners.  Generally, we are only responsible for paying the special assessments for the period during which we are the landowner of the applicable parcels.  However, in certain limited instances we record a liability for future assessments.

Note 13 - Segment Information

Prior to the first quarter of 2015, our operations included the following reportable segments: (i) active adult communities; (ii) primary residential communities; and (iii) land sales.  Based on the evolving nature of our business and recent operational and reporting changes, we reevaluated the identification of our reportable segments during the first quarter of 2015.  As a result, beginning with the first quarter of 2015, our reportable segments are as follows: Florida, Arizona and the Carolinas.

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Our operating segments are defined as a component of an enterprise for which discrete financial information is available and is reviewed regularly by the chief operating decision maker to evaluate performance and make operating decisions.  We have identified our chief operating decision maker as our Chief Executive Officer.

The following table summarizes our information for reportable segments for the years ended December 31, 2015, 2014 and 2013, which have been recast for all periods presented to reflect the change described above (in thousands):

	For the Year Ended
	2015		2014		2013
Operating income (loss):
Florida
Revenues:
Homebuilding	$	300,260	$	193,218	$	81,440
Amenity and other		12,385		10,140		9,786
Land sales		6,466		18,158		9,257
Total revenues	$	319,111	$	221,516	$	100,483
Expenses:
Homebuilding cost of revenues		239,001		156,439		64,726
Homebuilding selling, general and administrative		38,500		24,388		14,004
Amenity and other		10,587		10,524		11,663
Land sales		823		10,316		5,369
Segment operating income	$	30,200	$	19,849	$	4,721
Arizona
Revenues:
Homebuilding	$	84,378	$	48,665	$	33,533
Amenity and other		—		6		420
Land sales		—		14,438		7,046
Total revenues		84,378		63,109		40,999
Expenses:
Homebuilding cost of revenues		71,305		41,261		27,073
Homebuilding selling, general and administrative		11,981		7,747		5,561
Amenity and other		115		425		2,110
Land sales		—		11,688		2,744
Segment operating income	$	977	$	1,988	$	3,511
Carolinas
Revenues:
Homebuilding	$	114,277	$	1,288	$	—
Total revenues		114,277		1,288		—
Expenses:
Homebuilding cost of revenues		95,232		1,183		—
Homebuilding selling, general and administrative		12,205		2,230		97
Segment operating income (loss)	$	6,840	$	(2,125)	$	(97)
Operating income	$	38,017	$	19,712	$	8,135
Unallocated income (expenses):
Interest income and other		154		447		2,499
Equity in earnings (loss) from unconsolidated entities		154		(16)		(101)
Corporate general and administrative expenses		(16,900)		(15,941)		(15,975)
Interest expense		(9,039)		(5,805)		(2,830)
Income (loss) before income taxes		12,386		(1,603)		(8,272)
Income tax expense		(436)		—		—
Net income attributable to non-controlling interests		—		329		1,205
Net income (loss) attributable to AV Homes	$	11,950	$	(1,932)	$	(9,477)

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	December 31,
	2015		2014
Segment assets:
Florida	$	328,233	$	278,091
Arizona		175,929		145,380
Carolinas		152,141		28,475
Unallocated assets		79,836		211,205
Total assets	$	736,139	$	663,151

· Our businesses are conducted in the United States.

· Identifiable assets by segment are those assets that are used in the operations of each segment.

· No significant part of the business is dependent upon a single customer or group of customers.

· The caption “Unallocated assets” under the table depicting the segment assets represents the following as of December 31, 2015 and 2014, respectively: cash, cash equivalents and restricted cash of $72.9 million and $196.5 million; land inventories of $0.0 million and $4.6 million; property and equipment of $1.8 million and $2.7 million; investment in and notes from unconsolidated entities of $1.2 million and $1.2 million; receivables of $0.0 million and $2.0 million; and prepaid expenses and other assets of $4.0 million and $4.4 million.  None of the foregoing are directly attributable to a reportable segment in accordance with ASC 280, Segment Reporting.

· There is no interest expense from the Florida, Arizona and Carolinas segments included in segment operating income (loss) for 2015, 2014 and 2013.

· Included in segment operating income (loss) for 2015 is depreciation expense (including amortization of assets under capital leases) of $2.4 million, $0.0 million, $0.1 million and $0.6 million from Florida, Arizona, Carolinas and unallocated corporate general and administrative expenses, respectively.  Included in segment operating income (loss) for 2014 is depreciation expense of $2.4 million, $0.1 million, $0.0 million and $0.6 million from Florida, Arizona, Carolinas and unallocated corporate general and administrative expenses, respectively.  Included in segment operating income (loss) for 2013 is depreciation expense of $2.1 million, $0.1 million, $0.5 million and $0.6 million from Florida, Arizona, Carolinas and unallocated corporate general and administrative expenses, respectively.

· During fiscal years 2015, 2014 and 2013, there were no impairment losses recognized.

· Goodwill of $6.1 million and $13.2 million has been assigned to the Florida and Carolinas segments, respectively.

Note 14 - Fair Value Disclosures

ASC 820, Fair Value Measurements and Disclosures, provides guidance for using fair value to measure assets and liabilities, defines fair value, establishes a framework for measuring fair value under GAAP, expands disclosures about fair value measurements, and establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The accounting standards require that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:

Level 1: Fair value determined based on quoted market prices in active markets for identical assets and liabilities.

Level 2: Fair value determined using significant observable inputs, such as quoted prices for similar assets or liabilities or quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted

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prices that are observable for the asset or liability, or inputs that are derived principally from or corroborated by observable market data, by correlation or other means.

Level 3: Fair value determined using significant unobservable inputs, such as discounted cash flows, or similar techniques.

The carrying value of cash and cash equivalents, restricted cash, receivables, accounts payable and Senior Secured Credit Facility approximates the fair value due to their short-term nature.

Certain assets are required to be recorded at fair value on a non-recurring basis when events and circumstances indicate that the carrying value may not be recoverable.

The carrying amounts and fair values of our financial instruments as of December 31, 2015 and 2014 are as follows (in thousands):

	December 31, 2015				December 31, 2014
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Senior Notes:
7.50% Notes and 7.50% Exchange Notes	$	46,793	$	45,389	$	99,956	$	99,040
8.50% Senior Notes, net (1)		195,495		199,000		194,265		193,000
6.00% Notes, net (1)		78,558		75,368		—		—
Contingent consideration (earn-out)		7,083		7,083		2,404		2,404

(1) The carrying value of the debt instruments are net of unamortized deferred financing costs and certain debt discounts.

In estimating the fair value of financial instruments, we used the following methods and assumptions:

8.50% Senior Notes, 7.50% Notes, 7.50% Exchange Notes, and 6.00% Notes: As of December 31, 2015 and December 31, 2014, the fair value of the 8.50% Senior Notes, 7.50% Notes, 7.50% Exchange Notes, and 6.00% Notes is estimated, based on quoted or estimated market prices.  These fall within Level 2 of the fair value hierarchy.

Contingent consideration ("earn-out"): This was first recognized as part of the purchase price paid for the Royal Oak and Bonterra Builders acquisitions in 2014 and 2015, respectively, and falls within Level 3 of the fair value hierarchy. Valuation models were used to value the earn-outs by simulating earnings, applying the terms of the earn-out in each simulated path, determining the average payment in each year across all the trials of the simulation, and calculating the sum of the present values of the payments in each year.  The primary inputs and key assumptions include estimated future earnings, probabilities of achievement, earnings volatility, and the discount rate.

Given a range in the discount rate from 6.8% to 11.8%, the valuation of the earn-outs could vary from $7.0 million to $7.1 million.  The carrying amount of the earn-out has decreased by a net $0.2 million since inception, resulting in an offset to general and administrative expenses.

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Note 15 -  Unaudited Quarterly Information

Summarized quarterly financial data for 2015 and 2014 is as follows (dollars in thousands):

	2015 Quarter
	First		Second		Third		Fourth
Net revenues	$	58,830	$	79,389	$	153,827	$	225,720
Expenses		63,832		84,026		148,302		209,374
Equity earnings (losses) from unconsolidated entities		(6)		171		(5)		(6)
Income (loss) before income taxes		(5,008)		(4,466)		5,520		16,340
Less: income tax expense		—		—		—		(436)
Less: net income attributable to non-controlling interests		—		—		—		—
Net income (loss) attributable to AV Homes	$	(5,008)	$	(4,466)	$	5,520	$	15,904
Earnings (loss) per share: (1)
Basic	$	(0.23)	$	(0.20)	$	0.25	$	0.72
Diluted	$	(0.23)	$	(0.20)	$	0.25	$	0.65

	2014 Quarter
	First		Second		Third		Fourth
Net revenues	$	43,865	$	51,447	$	86,641	$	103,960
Expenses		45,499		53,694		85,958		102,349
Equity earnings (losses) from unconsolidated entities		1		(6)		(5)		(6)
Income (loss) before income taxes		(1,633)		(2,253)		678		1,605
Less: net income attributable to non-controlling interests		293		36		—		—
Net income (loss) attributable to AV Homes	$	(1,926)	$	(2,289)	$	678	$	1,605
Earnings (loss) per share: (1)
Basic and diluted	$	(0.09)	$	(0.10)	$	0.03	$	0.07

(1) Quarterly and year-to-date computations of per share amounts are made independently.  Therefore, the sum of per share amounts for the quarters may not be consistent with the per share amounts for the year.

Note 16 -  Subsequent Events

Our Senior Secured Facility requires that we comply with certain financial covenants.  One such covenant requires that if our interest coverage ratio is less than 1.50 to 1.00, we must maintain an interest reserve account with restricted cash in an amount equal to the interest we have incurred on all indebtedness during the prior 12 months.  As of December 31, 2015, we had $25.6 million of cash in a restricted account to comply with this financial covenant.  We submitted a compliance certificate certifying that our interest coverage ratio exceeded the 1.50 minimum, and on February 4, 2016, the interest reserve was released, removing any restrictions from that cash balance.

On February 16, 2016, our 7.50% Notes matured.  We used cash on hand and borrowings under our Senior Secured Credit Facility to repay $46.8 million of principal and interest due on these notes.

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of AV Homes, Inc.

We have audited the accompanying consolidated balance sheets of AV Homes, Inc. and subsidiaries as of December 31, 2015 and 2014, and the related consolidated statements of operations and comprehensive income (loss), stockholders' equity and cash flows for each of the three years in the period ended December 31, 2015. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of AV Homes, Inc. and subsidiaries at December 31, 2015 and 2014, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2015, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), AV Homes, Inc. and subsidiaries' internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 4, 2016, expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Phoenix, Arizona

March 4, 2016, except for paragraph 2 of Note 1, as to which the date is June 15, 2016

28

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Document and Entity Information	12 Months Ended
	Dec. 31, 2015
Document and Entity Information [Abstract]
Document Type	8-K
Entity Registrant Name	AV Homes, Inc.
Entity Central Index Key	0000039677
Document Period End Date	Dec. 31, 2015
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2015
Amendment Flag	true
Amendment Description	AV Homes, Inc. (the "Company") is filing this Current Report on Form 8 K to update Items 6, 7 and 8 of its Annual Report on Form 10 K for the year ended December 31, 2015. These updates are being made to reflect a reclassification of certain selling, general and administrative expenses and to reflect the retrospective application upon adoption, effective January 1, 2016, of Auditing Standards Update No. 2015 03, Interest – Imputation of Interest (Subtopic 835 30): Simplifying the Presentation of Debt Issuance Costs ("ASU 2015 03"). As previously disclosed, beginning with the Company's Quarterly Report on Form 10 Q for the quarter ended March 31, 2016, the selling, general and administrative expenses related to homebuilding previously included in Homebuilding expenses have been combined with corporate general and administrative expenses and reclassified into a new line item called "Selling, general and administrative expenses" to enhance visibility to the Company's core homebuilding operations and conform with standard industry presentation. The selling, general and administrative expenses reclassified include commissions, other selling expenses and overhead incurred at the divisional level. In addition, in accordance with adoption of ASU 2015 03, our debt issuance costs are now presented as a deduction from the corresponding debt liability. This guidance was applied retrospectively and had the effect of reducing the Company's prepaid expenses and other assets and senior notes, net balances in its consolidated balance sheets. The Company is filing this Current Report on Form 8 K to provide investors with recast financial information from prior periods in order to assist them in making comparisons of financial information for current and future periods with financial information for such prior periods. The recast information for Items 6, 7 and 8 contained in the Company's Annual Report on Form 10 K for the year ended December 31, 2015 is attached as Exhibits 99.1, 99.2 and 99.3 to this Current Report on Form 8 K and incorporated by reference herein. This Current Report on Form 8 K does not reflect events or developments that occurred after March 4, 2016, and the information contained herein should be read in conjunction with the Company's Annual Report on Form 10 K for the year ended December 31, 2015 and the Company's Quarterly Report on Form 10 Q for the quarter ended March 31, 2016, as well as the Company's other filings with the Securities and Exchange Commission.
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer

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Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Assets
Cash and cash equivalents	$ 46,898	$ 180,334
Restricted cash	26,948	16,447
Land and other inventories	582,531	383,184
Receivables	7,178	2,906
Property and equipment, net	34,973	36,922
Investments in unconsolidated entities	1,172	17,991
Prepaid expenses and other assets	17,144	15,245
Assets held for sale		4,051
Goodwill	19,295	6,071
Total assets	736,139	663,151
Liabilities
Accounts payable	33,606	16,087
Accrued and other liabilities	38,826	28,134
Customer deposits	8,629	4,966
Estimated development liability	32,551	33,003
Senior Notes, net	320,846	294,221
Total liabilities	434,458	376,411
Stockholders' equity
Common Stock, par value $1 per share; Authorized: 50,000,000 shares; Issued: 22,444,028 shares and 22,182,972 shares as of December 31, 2015 and 2014, respectively	22,444	22,183
Additional paid-in capital	399,719	396,989
Accumulated deficit	(117,463)	(129,413)
Equity before treasury stock	304,700	289,759
Treasury stock, at cost, 110,874 shares as of December 31, 2015 and 2014, respectively	(3,019)	(3,019)
Total stockholders' equity	301,681	286,740
Total liabilities and stockholders' equity	$ 736,139	$ 663,151

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Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Common stock par value (in dollars per share)	$ 1	$ 1
Common Stock, authorized shares (in shares)	50,000,000	50,000,000
Common Stock, issued shares (in shares)	22,444,028	22,182,972
Treasury stock shares held (in shares)	110,874	110,874

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Consolidated Statements of Operations and Comprehensive Income (Loss) (unaudited) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Revenues
Homebuilding	$ 498,915	$ 243,171	$ 114,973
Amenity and other	12,385	10,146	10,206
Land sales	6,466	32,596	16,303
Total revenues	517,766	285,913	141,482
Expenses
Homebuilding cost of revenues	405,538	198,885	91,519
Amenity and other	10,702	10,949	13,773
Land sales	823	22,003	8,111
Total real estate expenses	417,063	231,837	113,403
Selling, general and administrative expenses	79,586	50,305	35,638
Interest income and other	(154)	(447)	(2,218)
Interest expense	9,039	5,805	2,830
Total expenses	505,534	287,500	149,653
Equity in earnings (loss) from unconsolidated entities	154	(16)	(101)
Income (loss) before income taxes	12,386	(1,603)	(8,272)
Income tax expense	(436)	0	0
Net income (loss) and comprehensive income (loss)	11,950	(1,603)	(8,272)
Net income attributable to non-controlling interests in consolidated entities	0	329	1,205
Net income (loss) and comprehensive income (loss) attributable to AV Homes stockholders	11,950	(1,932)	(9,477)
Deemed dividend related to beneficial conversion feature of convertible preferred stock (Note 1)	0	0	(11,894)
Net income (loss) attributable to AV Homes common stockholders	$ 11,950	$ (1,932)	$ (21,371)
Basic and Diluted Loss Per Share (in dollars per share)	$ 0.54	$ (0.09)	$ (1.34)

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Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
OPERATING ACTIVITIES
Net income (loss) including net income attributable to non-controlling interests	$ 11,950	$ (1,932)	$ (8,272)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	3,693	3,267	2,804
Amortization of share-based compensation	3,113	2,770	1,648
Change in fair value of contingent consideration	(116)	0	0
Impairment charges, net	0	0	(248)
Equity in loss (income) from unconsolidated entities	(154)	16	101
Loss (gain) from disposal of assets	(31)	0	36
Changes in operating assets and liabilities:
Restricted cash	(10,501)	(12,491)	726
Land and other inventories	(83,804)	(111,667)	(68,787)
Receivables, net	(3,698)	987	2,837
Income tax receivable	0	0	1,293
Assets held for sale	0	19,811	(1,213)
Prepaid expenses and other assets	1,510	398	(361)
Accounts payable, estimated development liability, and accrued and other liabilities	17,248	15,643	6,661
Customer deposits	1,813	1,789	338
NET CASH USED IN OPERATING ACTIVITIES	(58,977)	(81,409)	(62,437)
INVESTING ACTIVITIES
Investment in property and equipment	(1,209)	(1,815)	(1,023)
Proceeds from sales of property and equipment	31	12	0
Business acquisitions	(93,760)	(62,684)	0
Investment in unconsolidated entities	(2,887)	(3,644)	(111)
Return of capital from unconsolidated entities	0	33	0
NET CASH USED IN INVESTING ACTIVITIES	(97,825)	(68,098)	(1,134)
FINANCING ACTIVITIES
Proceeds from issuance of debt	79,930	200,000	0
Gross proceeds from Senior Secured Credit Facility	40,000	0	0
Debt issuance costs	(2,072)	(9,220)	0
Principal payments of notes	(53,163)	(5,446)	0
Payments of Senior Secured Credit Facility	(40,000)	0	0
Issuance of common shares	0	0	35,805
Issuance of preferred shares	0	0	92,030
Other financing activities, net	(1,329)	(220)	648
NET CASH PROVIDED BY FINANCING ACTIVITIES	23,366	185,114	128,483
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(133,436)	35,607	64,912
Cash and cash equivalents at beginning of year	180,334	144,727	79,815
CASH AND CASH EQUIVALENTS AT END OF YEAR	46,898	180,334	144,727
Transfer from assets held for sale to land and other inventories and property and equipment	4,051	0	13,767
Distribution of land from unconsolidated joint venture	19,860	13,418	0
Beneficial conversion feature (deemed dividend)	0	0	11,894
Common stock issued for conversion of preferred stock	$ 0	$ 0	$ 92,030

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Consolidated Statements of Equity - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Parent [Member]	Noncontrolling Interest [Member]	Total
Balance at Dec. 31, 2012	$ 12,938	$ 262,363	$ (106,110)	$ (3,019)	$ 166,172	$ 13,704	$ 179,876
Balance (in shares) at Dec. 31, 2012	(12,938,157)			(110,874)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock	$ 9,215	118,619			127,834		127,834
Issuance of common stock (in shares)	9,215,017
Issuances of restricted stock and stock units	$ 96	(96)
Issuances of restricted stock and stock units (in shares)	96,372
Forfeiture of restricted stock	$ (148)	148
Forfeiture of restricted stock (in shares)	(147,833)
Shares repurchased to satisfy tax obligations	$ (4)	(72)			(76)		(76)
Stock repurchases (in shares)	(4,461)
Forfeiture of restricted stock		1,648			1,648		1,648
Issuances of restricted stock and stock units		11,894	(11,894)
Contributions from non-controlling interests						724	724
Net (loss) income			(9,477)		(9,477)	1,205	(8,272)
Balance at Dec. 31, 2013	$ 22,097	394,504	(127,481)	$ (3,019)	286,101	15,633	301,734
Balance (in shares) at Dec. 31, 2013	(22,097,252)			(110,874)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuances of restricted stock and stock units	$ 128	(128)
Issuances of restricted stock and stock units (in shares)	127,518
Forfeiture of restricted stock	$ (30)	30
Forfeiture of restricted stock (in shares)	(30,164)
Shares repurchased to satisfy tax obligations	$ (14)	(213)			(227)		(227)
Stock repurchases (in shares)	(13,179)
Forfeiture of restricted stock		2,770			2,770		$ 2,770
Conversion of 7.50% Exchange Notes (in shares)							1,545
Conversion of 7.50% Exchange Notes	$ 2	26			28		$ 28
Contributions from non-controlling interests						193	193
Deconsolidation of non-controlling interests						$ (15,826)	(15,826)
Net (loss) income			(1,932)		(1,932)		(1,932)
Balance at Dec. 31, 2014	$ 22,183	396,989	(129,413)	$ (3,019)	286,740		286,740
Balance (in shares) at Dec. 31, 2014	(22,182,972)			(110,874)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuances of restricted stock and stock units	$ 291	(291)
Issuances of restricted stock and stock units (in shares)	291,075
Forfeiture of restricted stock	$ (21)	21
Forfeiture of restricted stock (in shares)	(20,973)
Shares repurchased to satisfy tax obligations	$ (9)	(113)			(122)		(122)
Stock repurchases (in shares)	(9,046)
Forfeiture of restricted stock		3,113			3,113		3,113
Net (loss) income			11,950		11,950		11,950
Balance at Dec. 31, 2015	$ 22,444	$ 399,719	$ (117,463)	$ (3,019)	$ 301,681		$ 301,681
Balance (in shares) at Dec. 31, 2015	(22,444,028)			(110,874)

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Basis of Financial Presentation and Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements include the accounts of AV Homes, Inc. and all subsidiaries, partnerships and other entities in which AV Homes, Inc. (“AV Homes," “we,” “us,” “our,” or “the Company”) has a controlling interest. Our investments in unconsolidated entities in which we have less than a controlling interest are accounted for using the equity method.  All significant intercompany accounts and transactions have been eliminated in consolidation.  Beginning with our Form 10-Q for the quarter ended March 31, 2015, certain revenue and expense balances were reclassified from "Homebuilding and amenity," as well as "Other real estate," into the line item "Amenity and other" to enhance the visibility to our core homebuilding operations.

Selling, general and administrative expenses related to homebuilding previously included in Homebuilding expenses have been combined with corporate general and administrative expenses and reclassified into a separate new line item called "Selling, general and administrative expenses" to enhance the visibility to our core homebuilding operations and conform with standard industry presentation.  The selling, general and administrative expenses reclassified include commissions, other selling expenses and overhead incurred at the divisional level. For the years ended December 31, 2015,  2014 and 2013, selling, general and administrative costs of $62.7 million, $34.4 million, and $19.7 million, that were previously presented in Homebuilding expenses are now included in Selling, general and administrative expenses. In addition, in accordance with adoption of Accounting Standards Update No. 2015-03, Interest-Imputation of Interest, our debt issuance costs are now presented as a deduction from the corresponding debt liability.  This guidance was applied retrospectively and had the effect of reducing our Prepaid expenses and other assets and Senior notes, net balances in our consolidated balance sheets. As of December 31, 2015 and 2014, unamortized deferred debt issuance costs of $5.9 million and $5.7 million, respectively were previously presented in Prepaid expenses and other assets on the consolidated balance sheet and are now included as a reduction to Senior notes, net.

Use of Estimates

The preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

TPG Investment in Company

On June 19, 2013, we entered into a Securities Purchase Agreement (the "Purchase Agreement") by and among AV Homes and TPG Aviator, L.P. ("TPG Aviator") pursuant to which TPG Aviator agreed to acquire 2,557,474 shares of AV Homes’ common stock, par value $1.00 per share (the “Common Stock"), at a purchase price of $14.65 per share, and 665,754 shares of a newly authorized series of AV Homes’ preferred stock, designated as Series A Contingent Convertible Cumulative Redeemable Preferred Stock, par value $0.10 per share (the “Series A Preferred Stock"), at a purchase price and liquidation preference of $146.50 per share, for an aggregate investment in AV Homes by TPG Aviator of $135.0 million.

On June 20, 2013, AV Homes and TPG Aviator closed the transactions (the “TPG Investment") contemplated by the Purchase Agreement, and AV Homes issued to TPG Aviator the Common Stock and the Series A Preferred Stock in the amounts and in exchange for the purchase price described above.

On September 18, 2013, we held a special meeting of stockholders at which our stockholders:  (1) approved the right to convert, at the option of the Company or the holders of the Series A Preferred Stock, the Series A Preferred Stock into 6,657,543 shares of our Common Stock and (2) approved TPG Aviator's pre-emptive rights following the approval of such conversion to participate in future issuances of our Common Stock or securities convertible into or exercisable for our Common Stock.  Following the meeting of stockholders, we provided notice to TPG Aviator of our intention to convert the Series A Preferred Stock as of September 18, 2013.  The Common Stock issuable upon conversion of the Series A Preferred Stock was issued on September 19, 2013 and the Series A Preferred Stock was cancelled.

In accordance with GAAP, before its conversion, the Series A Preferred Stock was classified outside of permanent equity because the redemption provisions were not solely within our control.  We incurred approximately $7.2 million of transaction fees in connection with the TPG Investment, which have been offset against the proceeds received.  The contingent beneficial conversion feature of the Series A Preferred Stock was recognized upon stockholder approval of the conversion and amortized at the time of conversion by treating it as a deemed dividend in retained earnings and crediting additional paid-in capital for $11.9 million, consequently resulting in no diminution in total stockholders' equity or book value per share.  We have assessed the provisions of the Series A Preferred Stock and concluded that the impact of any embedded derivative features was not material.

In connection with the Purchase Agreement, we entered into a Management Services Agreement with TPG VI Management, LLC (“TPG Management”), an affiliate of TPG Aviator, that sets forth certain financial advisory services to be provided by, and fees to be paid to, TPG Management in connection with ongoing services to us.  Pursuant to the Management Services Agreement and in exchange for certain ongoing advisory and consulting services, we agreed to pay to TPG Management a monitoring fee up to $0.5 million per year for so long as TPG and its affiliates own at least 30% of the Common Stock outstanding and also to reimburse expenses incurred by TPG Management and its affiliates to provide services or enforce its rights under the management services agreement. The monitoring fee is reduced proportionately based on TPG Aviator's board representation rights under a separate Stockholders Agreement we entered into with TPG Aviator. The monitoring fee is payable quarterly in advance and is reduced by director fees otherwise payable to the TPG Nominated Directors who are not employed by TPG Aviator or its affiliates.  For 2015 and 2014, we paid TPG Management a total of $0.4 million and $0.5 million, respectively, for the annual monitoring fee and reimbursement of expenses under the Management Services Agreement.

Cash and Cash Equivalents and Restricted Cash

We consider all highly liquid investments purchased with an initial maturity of three months or less to be cash equivalents.  As of December 31, 2015, our cash and cash equivalents were invested primarily in money market accounts that invest primarily in U.S. government securities.  Due to the short maturity period of the cash equivalents, the carrying amount of these instruments approximate their fair values.

Our cash items that are restricted as to withdrawal or usage include deposits of $26.9 million and $16.4million as of December 31, 2015 and 2014, respectively.  The balance as of December 31, 2015 is comprised primarily of $25.6 million on deposit as an interest reserve to comply with the terms of our Senior Secured Credit Facility (defined below).  In February 2016, the interest reserve was released since it was determined that the Company was in compliance with the interest coverage ratio covenant.  See Note 16, Subsequent Events, for further discussion.

Land and Other Inventories and Cost of Revenues

Land and other inventories include expenditures for land acquisition, construction, land development, construction costs for homeowners association amenities, and direct and allocated indirect costs, including interest cost capitalized until development and construction are substantially completed.  These costs are assigned to components of Land and other inventories based on specific identification, relative sales value, or area allocation methods.

Land and other inventories are stated at cost unless the asset is determined to be impaired, in which case the asset is written to its fair value, in accordance with ASC 360.

We evaluate our land and other inventories for impairment on a quarterly basis in accordance with ASC 360 to reflect market conditions, including a consideration of supply of new and resale homes for sale in the respective market, level of foreclosure activity and competition.  For assets held and used, if indicators are present, we perform an impairment test in which the asset is reviewed for impairment by comparing the estimated future undiscounted cash flows to be generated by the asset to its carrying value.  If such cash flows are less than the asset’s carrying value, the carrying value is written down to its estimated fair value.  Generally, fair value is determined by discounting the estimated cash flows at a rate commensurate with the inherent risks associated with the asset and related estimated cash flow streams.  The discount rate used in the determination of fair value would vary, depending on the state of development.  Assumptions and estimates used in the determination of the estimated future cash flows are based on expectations of future operations and economic conditions and certain factors described below.  Changes to these assumptions could significantly affect the estimates of future cash flows, which could affect the potential for future impairments.  Due to the uncertainties of the estimation process, actual results could differ significantly from such estimates.

During the years ended December 31, 2015 and 2014, our impairment assessment resulted in no impairment charges related to land and other inventories.  During 2013, we recorded impairment charges of $0.7 million.

In 2013, we changed our plans to sell certain assets, resulting in the reclassification of these assets to land and other inventories and a reversal of previously recorded impairment expense of $1.0 million.  This reversal was the result of measuring these assets at the lower of the original carrying amount or the fair value at the date of the decision not to sell, in accordance with ASC 360-10-35-44.

Receivables

Receivables primarily consists of amounts in transit or due from title companies for house closings and contracts mortgage notes receivable from the sale of land.

Property and Equipment, net

Property and equipment are stated at cost, net of accumulated depreciation, which is computed by the straight-line method over the following estimated useful lives of the assets: land improvements 10 years to 25 years; buildings and improvements 8 to 39 years; and machinery, equipment and fixtures 3 to 7 years.  Maintenance and operating expenses of equipment utilized in the development of land are capitalized to land inventory.  Repairs and maintenance are expensed as incurred.

Property and equipment includes the cost of amenities such as club facilities on properties owned by us.  The cost of amenities includes expenditures for land acquisition, construction, land development and direct and allocated costs.  Property and equipment owned and constructed by us also includes interest cost incurred during development and construction.

Each reporting period, we review our property and equipment for indicators of impairment in accordance with ASC 360. For our amenities, which are located within our housing communities, indicators of potential impairment are similar to those of our housing communities, as these factors may impact our ability to generate revenues at our amenities or cause construction costs to increase.  In addition, we factor in the collectability and potential delinquency of the fees due for our amenities.  For the years ended December 31, 2015 and December 31, 2014, we did not identify indicators of impairments for property and equipment.  During 2013, management changed its plans to sell certain assets, resulting in the reclassification of these assets from assets held for sale to property and equipment.  There was no change in the carrying value in these assets due to this reclassification.

Assets Held for Sale

We classify assets held for sale in accordance with the criteria set forth in ASC 360.  We continue to opportunistically sell non-core commercial and industrial assets, as well as scattered lot positions and land assets that are in excess of our needed supply in a given market.  Under this plan, assets that meet the criteria above are classified as held for sale.

During the year ended December 31, 2015, we changed our plans to sell assets that were previously classified as held for sale, or the assets no longer met the held-for-sale criteria, resulting in a reclassification of $4.1 million of land positions to land and other inventories.  There was no change in the carrying value in these assets due to this reclassification.

During 2014, we sold assets held for sale with a carrying value of $20.6 million for cash proceeds of $27.2 million for a gain of $6.6 million.  Included in this was the sale of a multi-family property in Arizona to a related party for $13.9 million for a gain of $2.3 million.

Investments in Partnerships and LLCs

When we are either deemed to hold the controlling interest in a voting interest entity or deemed to be the primary beneficiary of a variable interest entity (“VIE”), we are required to consolidate the investment.  The primary beneficiary of a VIE is the entity that has both of the following characteristics: (a) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and (b) the obligation to absorb the majority of losses of the VIE or the right to receive the majority of benefits from the VIE.  Investments where we don't hold the controlling interest and we are not the primary beneficiary are accounted for under the equity method.

Factors considered when determining if we hold the controlling interest in a voting interest entity include who holds the general partnership or managing member interests, which partner or member makes the day-to-day decisions regarding the operations of the entity, and whether or not the other partners or members have substantive participating rights.  With respect to VIEs, our variable interests may be in the form of (1) equity ownership, (2) contracts to purchase assets and/or (3) loans provided by us to the investor.  We examine specific criteria and use judgment when determining if we are the primary beneficiary of a VIE.  Factors considered in determining whether we are the primary beneficiary include risk and reward sharing, experience and financial condition of other partner(s), sufficiency of equity to conduct the operations of the entity, voting rights, involvement in decisions significantly impacting the entity's economic performance, level of economic disproportionality between us and the other partner(s) and contracts to purchase assets from VIEs.

We have investments in unconsolidated entities, including joint ventures, with independent third parties.  The equity method of accounting is used for unconsolidated entities over which we have significant influence.  Under the equity method of accounting, we recognize our proportionate share of the earnings and losses of these entities.

We evaluate our investments in unconsolidated entities for recoverability in accordance with ASC 323, Investments – Equity Method and Joint Ventures (“ASC 323”).  If we determine that a loss in the value of the investment is other than temporary, we write down the investment to its estimated fair value.  Any such losses are recorded to equity in (earnings) loss of unconsolidated entities in the consolidated statements of operations and comprehensive income (loss).  Due to uncertainties in the estimation process and the significant volatility in demand for new housing, actual results could differ significantly from such estimates.  During the years ended December 31, 2015 and 2014, our impairment assessments resulted in no impairment charges.

Non-Controlling Interest

In 2012, we consolidated an investment in an LLC where we were determined to be the primary beneficiary due to a related party affiliation.  Therefore, the LLC's financial statements were consolidated into our financial statements and the other partner’s equity in the LLC was recorded as non-controlling interest as a component of consolidated equity.   Since June 2014, we were no longer considered the primary beneficiary of this LLC due to the discontinuation of the related party affiliation, resulting in shared power between the remaining members.  For additional information, see Note 5, Investments in Unconsolidated Entities.

Business Acquisitions

When acquiring a business, we allocate the purchase price of real estate to the tangible and intangible assets and liabilities acquired based on their estimated fair values.  In making estimates of fair values for this purpose, we use a number of sources, including independent appraisals and information obtained about each property as a result our pre-acquisition due diligence and its marketing and housing activities.

Goodwill

Goodwill arises from business combinations and represents the excess of the cost of an acquired entity over the net fair value amounts that were assigned to the identifiable assets acquired and the liabilities assumed.  Goodwill is tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value.  There were no indicators of impairment during the years ended December 31, 2015 and 2014.

Homebuilding Revenue Recognition

In accordance with ASC 360, homebuilding revenue and related profit from the sales of housing units are recognized when title to and possession of the property are transferred to the buyer. In addition, revenues from land sales are recognized in full at closing, provided the buyer's initial and continuing investment is adequate, any financing is considered collectible and there is no significant continuing involvement.

Sales incentives

When sales incentives involve a discount on the selling price of the home, we record the discount as a reduction of revenue at the time of house closing. If the sales incentive requires us to provide a free product or service to the customer, the cost of the free product or service is recorded as cost of revenues at the time of house closing. This includes the cost related to optional upgrades and seller-paid financing costs, closing costs, homeowners’ association fees, or merchandise.

Advertising Costs

Advertising costs are expensed as incurred.  For the years ended December 31, 2015, 2014 and 2013, advertising costs totaled $3.0 million, $3.1 million and $2.4 million, respectively.  Advertising costs, sales commissions and closing costs are included in homebuilding expense in the accompanying consolidated statements of operations and comprehensive income (loss).

Warranty Costs

Warranty reserves for houses are established to cover estimated costs for materials and labor with regard to warranty-type claims to be incurred subsequent to the closing of a house for one to two years.  Reserves are determined based on historical data and other relevant factors.  We have, and require our subcontractors to have, general liability, property, workers compensation, and other business insurance.  These insurance policies protect us against a portion of our risk of loss from claims, subject to certain self-insured per occurrence and aggregate retentions, deductibles, and available policy limits.  We may have recourse against subcontractors for certain claims relating to workmanship and materials.  Warranty reserves are included in accrued and other liabilities in the consolidated balance sheets.

During the years ended December 31, 2015, 2014 and 2013, changes in the warranty reserve consist of the following (in thousands):

	2015		2014		2013
Accrued warranty reserve, beginning of period	$	1,528	$	638	$	549
Reserve provided		3,974		1,495		578
Payments		(2,169)		(605)		(489)
Accrued warranty reserve, end of period	$	3,333	$	1,528	$	638

Income Taxes

The provision for income taxes is calculated using the asset and liability method, under which deferred tax assets and liabilities are recognized by identifying the temporary differences arising from the different treatment of items for tax and accounting purposes.  In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.  The ultimate realization of deferred tax assets is primarily dependent upon the generation of future taxable income.  In determining the future tax consequences of events that have been recognized in the financial statements or tax returns, judgment is required.  Differences between the anticipated and actual outcomes of these future tax consequences could have a material impact on our consolidated results of operations or financial position.

Share-Based Compensation

The Amended and Restated 1997 Incentive and Capital Accumulation Plan (2011 Restatement), as amended ("the Incentive Plan") and the 2015 Incentive Compensation Plan (the "2015 Plan") provide for the grant of stock options, stock appreciation rights, stock awards, performance awards, and stock units to officers, employees and directors of AV Homes.  The exercise prices of stock options granted under the Incentive Plan and the 2015 Plan may not be less than the stock exchange closing price of our common stock on the date of grant.  Stock option awards under the Incentive Plan and 2015 Plan generally expire 10 years after the date of grant.

As of December 31, 2015, an aggregate of 590,483 shares of our common stock, subject to certain adjustments, were reserved for issuance under the Incentive Plan, relating to outstanding options and restricted stock units previously awarded and currently outstanding under the Incentive Plan.  There were 764,182 shares available for grant under the 2015 Plan as of December 31, 2015.

Employee Benefit Plans

We have a defined contribution savings plan that covers substantially all employees.  Under this savings plan, we may contribute to the plan based upon specified percentages of employees' voluntary contributions.  We made no contributions to the plan for the years ended December 31, 2015, 2014 and 2013.

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) attributable to AV Homes stockholders by the weighted average number of common shares outstanding for the period.  Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of AV Homes.  The computation of diluted earnings (loss) per share for the year ended December 31, 2015, did not assume the potential effect of employee stock options, the 6.00% Notes, the 7.50% Notes, or the 7.50% Exchange Notes because the effects were antidilutive.  The computation of diluted loss per share for the years ended December 31, 2014 and 2013 did not assume the effect of restricted stock units, employee stock options, the 4.50% Notes, the 7.50% Notes, or the 7.50% Exchange Notes because the effects were antidilutive.

The weighted average number of shares outstanding in calculating basic earnings (loss) per share includes the issuance of 61,101 shares in 2015, 67,274 shares in 2014 and 9,272,795 shares in 2013, in connection with the vesting of restricted stock and restricted stock units each year, and stock issued in connection with the 2013 TPG Investment as described above.  Excluded from the weighted average number of shares outstanding are 332,103 shares for 2015, 127,078 shares for 2014 and 100,898 shares for 2013 associated with annual restricted stock awards that remain subject to vesting and performance requirements.  See Note 10, Share-Based Payments and Other Compensation.  In accordance with ASC 260, Earnings Per Share, nonvested shares are not included in basic earnings (loss) per share until the vesting and performance requirements are met.

In accordance with ASC 470-20, Debt, an embedded beneficial conversion feature present in a convertible instrument shall be recognized separately by allocating a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in-capital. Intrinsic value shall be calculated at the commitment date (preferred stock issuance) as the difference between the conversion price and the fair value of the common stock into which the security is convertible.  The most favorable conversion price shall be used to measure the intrinsic value.  The intrinsic value of the contingent beneficial conversion feature was recognized upon resolution of the contingency (shareholder approval of conversion) as a deemed dividend on the convertible preferred stock, and is added to net loss to arrive at loss attributable to common stockholders in the loss per share calculation.  The deemed dividend had a $(0.75) per share effect on earnings for the year ended December 31, 2013.

The following table represents a reconciliation of the net earnings (loss) and weighted average shares outstanding for the calculation of basic and diluted earnings (loss) per share for the years ended December 31, 2015, 2014 and 2013 (dollars in thousands):

	For the Year Ended
	2015		2014		2013
Numerator:
Net income (loss)	$	11,950	$	(1,932)	$	(9,477)
Deemed dividend related to the beneficial conversion feature		—		—		(11,894)
Basic and diluted net income (loss)	$	11,950	$	(1,932)	$	(21,371)
Denominator:
Basic weighted average shares outstanding		22,010,201		21,945,491		15,935,701
Diluted weighted average shares outstanding		22,130,384		21,945,491		15,935,701

Comprehensive Income (Loss)

Net income (loss) and comprehensive income (loss) are the same for the years ended December 31, 2015, 2014 and 2013.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers.  The standard is a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services.  In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which delayed the effective date by one year.  As a result, the standard is effective for us for annual and interim periods beginning January 1, 2018 and allows for full retrospective or modified retrospective methods of adoption.  We are currently evaluating the impact that the standard will have on our consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt, consistent with the presentation of a debt discount.  The guidance is effective for us beginning January 1, 2016.  We currently present deferred financing costs within other assets.  Accordingly, the adoption of the new guidance will result in the reclassification of debt issuance costs as an offset to the related debt on the balance sheet, which we do not expect to be material to our consolidated financial statements.

In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments, which eliminates the requirement to restate prior period financial statements for measurement period adjustments.  The new guidance requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified.  This cumulative adjustment would be reflected within the respective financial statement line items affected.  The new guidance does not change what constitutes a measurement period adjustment.  The new standard should be applied prospectively to measurement period adjustments that occur after the effective date.  The new standard is effective for interim and annual periods beginning after December 15, 2015, with early adoption permitted.  We believe the adoption of this standard will not have a material effect on our consolidated financial statements.

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Business Acquisitions

12 Months Ended

Dec. 31, 2015

Business Combinations [Abstract]

Business Acquisitions

Business Acquisitions

Bonterra Builders Acquisition

On July 1, 2015, we acquired substantially all of the assets and certain liabilities of Bonterra Builders, LLC (“Bonterra Builders”) for approximately $99.8 million.  Part of the aggregate consideration includes a $6.0 million estimated earn-out.  The actual amount of the earn-out may be more or less than the $6.0 million target amount based on the performance of the Bonterra Builders business through the end of 2016.  A portion of the aggregate consideration equal to $0.8 million was held back by us at the closing as security for Bonterra Builder's indemnification and other potential obligations under the purchase agreement.  Bonterra Builders acquires raw and developed land, develops raw land and constructs single-family homes in the Charlotte, North Carolina area.  With approximately 1,700 lots owned or controlled at the time of acquisition, Bonterra Builders significantly enhanced our position in a key growth market.  The results of Bonterra Builders' operations are included in our consolidated financial statements from the acquisition date of July 1, 2015.

The Bonterra Builders acquisition was accounted for in accordance with ASC 805, Business Combinations ("ASC 805").  We recorded the acquired assets and liabilities at their estimated fair value.  We determined the estimated fair values with the assistance of appraisals or valuations performed by independent third-party specialists, discounted cash flow analyses, quoted market prices where available, and estimates by management.  To the extent the consideration transferred exceeded the fair value of the net assets acquired in this transaction, such excess was assigned to goodwill.

We acquired substantially all of the assets of Bonterra Builders, including all of its real estate, land acquisition agreements and permits, and certain of its leases, contracts, commitments and purchase orders.  We also assumed certain liabilities of Bonterra Builders, including the liabilities and obligations relating to the acquired contracts, but excluding certain home warranty obligations relating to homes closed by Bonterra Builders prior to the acquisition.

The following table summarizes the calculation of the fair value of the total consideration transferred to Bonterra Builders and the amounts of assets acquired and liabilities assumed as of the acquisition date (in thousands):

Calculation of purchase price consideration
Cash paid for Bonterra Builders net assets	$	40,818
Contingent consideration (earn-out)		6,000
Debt repaid at closing		52,941
Total consideration	$	99,759
Assets acquired and liabilities assumed
Assets
Receivables and other current assets	$	574
Land and other inventories		91,632
Property and equipment		14
Trade name		1,400
Non-compete intangible asset		600
Goodwill		13,223
Total assets acquired		107,443
Liabilities
Accounts payable		5,071
Accrued and other liabilities		763
Customer deposits		1,850
Total liabilities assumed		7,684
Total net assets acquired	$	99,759

Fair Value

Receivables, other current assets, property, equipment, accounts payable, accrued and other liabilities and customer deposits were generally stated at historical carrying values given the short-term nature of these assets and liabilities.  Liabilities were recorded at historical carrying values in accordance with ASC 805.

We determined the fair value of land and other inventories on a lot-by-lot basis, primarily using a combination of market comparable land transactions, where available, and discounted cash flow models using Level 3 inputs, and independent appraisals were also utilized in certain instances.  These estimated cash flows are significantly impacted by estimates related to expected average home selling prices and sales incentives, expected sales paces and cancellation rates, expected land development and construction timelines, and anticipated land development, construction, and overhead costs.  Such estimates must be made for each individual community and may vary significantly between communities.

The fair values for acquired intangible assets were determined based on valuations performed by independent valuation specialists using Level 3 inputs. The $2.0 million of acquired intangible assets relates to trade names and non-compete agreements that are being amortized over five years and three years, respectively.  Amortization expense for these assets totaled $0.3 million for the year ended December 31, 2015, which is included in the consolidated statements of operations and comprehensive income (loss) within homebuilding expense.

The Company has substantially completed its business combination accounting as of December 31, 2015.  For the year ended December 31, 2015, goodwill decreased by $1.7 million due to a post-closing purchase price adjustment and a revision of the valuation of the earn-out.  The Company has not completed its final review of certain other assets and liabilities. Final determinations of the values of assets acquired and liabilities assumed may result in adjustments to the values presented above and a corresponding adjustment to goodwill.

Transaction and Integration Costs

Transaction and integration costs directly related to the Bonterra Builders acquisition, including legal and accounting fees, totaled $0.9 million for the year ended December 31, 2015, the majority of which are included in the consolidated statements of operations and comprehensive income (loss) within corporate general and administrative expenses.  Such costs were expensed as incurred in accordance with ASC 805.

Goodwill

As of the acquisition date, goodwill included the expected economic value attributable to Bonterra Builders' assembled workforce.  The acquisition provided increased scale and presence in an existing market with immediate revenue opportunities through an established backlog.  We expect $7.2 million of goodwill to be deductible for tax purposes as of December 31, 2015.  Goodwill related to the Bonterra Builders acquisition has been assigned to the Carolinas reporting unit.

Supplemental Pro Forma Information

The following represents the unaudited pro forma operating results as if Bonterra Builders had been included in the Company’s consolidated statements of operations and comprehensive income (loss) as of the beginning of the fiscal year presented (in thousands, except per share data):

	Year Ended December 31,
	2015		2014
Revenue	$	588,533	$	397,695
Net income	$	17,158	$	1,674

The supplemental pro forma operating results have been determined after adjusting the operating results of Bonterra Builders to reflect additional expense that would have been recorded assuming the fair value adjustments to inventory and intangible assets had been applied as of January 1, 2014.  These results may not be indicative of future operating results.

The amount of revenue and net income of Bonterra Builders since the acquisition date included in the consolidated statements of operations and comprehensive income (loss) for 2015 is $92.5 million and $8.6 million, respectively.

Royal Oak Homes Acquisition

On March 13, 2014, we acquired substantially all of the assets and certain liabilities of Royal Oak Homes, LLC, a residential homebuilder based in Orlando, Florida (“Royal Oak”).  In connection with the transaction, we also acquired certain land positions from an affiliate of Royal Oak. The transaction expanded our presence in Central Florida and the Poinciana market.  With over 2,500 primary residential lots owned or controlled at the time of acquisition, Royal Oak enhanced our position in a key growth market.  The total purchase price paid under the acquisition agreements was approximately $65.0 million in cash, which includes a potential $3.0 million payment related to an earn-out covering the financial results for 2014 and 2015.  The current estimate of the total payment for the earn-out is $2.1 million, of which $1.2 million has been paid as of December 31, 2015.  The results of Royal Oak are included in the Company's consolidated financial statements from the acquisition date of March 13, 2014.

We acquired $0.6 million of intangible assets in the Royal Oak transaction that relate to trade names that are being amortized over three years.  Amortization expense for these assets totaled $0.2 million for the years ended December 31, 2015 and 2014, respectively, which is included in the consolidated statements of operations and comprehensive income (loss) within homebuilding expense.

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Land and Other Inventories

12 Months Ended

Dec. 31, 2015

Land and Other Inventories [Abstract]

Land and Other Inventories

Land and Other Inventories

Land and other inventories consist of the following (in thousands):

	December 31,
	2015		2014
Land held for future development	$	21,403	$	20,844
Land developed and in process of development		348,648		269,764
Homes completed or under construction		212,480		92,576
Total	$	582,531	$	383,184

We capitalize interest to inventories during the period of development in accordance with ASC 835, Interest ("ASC 835").  Homebuilding interest capitalized as cost of inventories is included in cost of sales as related units or lots are sold.  To the extent our homebuilding debt exceeds our qualified assets, as defined in ASC 835, we expense a portion of interest incurred.  Qualified homebuilding assets consist of land, lots and homes, excluding finished unsold homes or finished models, that are under development or construction.

The following table represents interest incurred, interest capitalized, and interest expense for 2015, 2014 and 2013 (in thousands):

	For the Year Ended
	2015		2014		2013
Interest incurred	$	28,207	$	18,107	$	9,296
Interest capitalized		(19,168)		(12,302)		(6,466)
Interest expense	$	9,039	$	5,805	$	2,830

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Property and Equipment

12 Months Ended

Dec. 31, 2015

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and Equipment, net

As of December 31, 2015 and 2014, the property and equipment, net balance consisted of the following (in thousands):

	December 31,
	2015		2014
Land improvements	$	21,966	$	21,816
Building		39,209		39,050
Equipment		5,117		6,698
Motor vehicles		598		603
Furniture and fixtures		3,937		4,017
Capitalized software		2,099		1,962
Gross property and equipment		72,926		74,146
Less: accumulated depreciation		(37,953)		(37,224)
Property and equipment, net	$	34,973	$	36,922

As of December 31, 2015, we had $1.8 million of equipment with $0.8 million of accumulated depreciation that were financed with capital leases. The amortization of these assets is included in depreciation expense.

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Investments in Partnerships and LLCs

12 Months Ended

Dec. 31, 2015

Variable Interest Entities [Abstract]

Variable Interest Entities

Investments in Unconsolidated Entities

We participate in entities with equity interests ranging from 20% to 58% for the purpose of acquiring and/or developing land.  We determine the method for accounting for our investment at inception or upon a reconsideration event.

We share in the profits and losses of unconsolidated entities generally in accordance with our ownership interests.  We and our equity partners make initial and ongoing capital contributions to these unconsolidated entities on a pro rata basis.  The obligation to make capital contributions is governed by each unconsolidated entity’s respective operating agreement or other governing documents.  We made contributions totaling $2.9 million, $3.6 million and $0.1 million to our unconsolidated entities during 2015, 2014 and 2013, respectively.  The balance of our investments in unconsolidated entities was $1.2 million and $18.0 million as of December 31, 2015 and December 31, 2014, respectively.

In May 2012, we entered into an agreement with JEN Arizona 4, LLC to form a limited liability company, EM 646, LLC (“EM 646”).  We hold a 58.2% interest in the venture, which was organized for the purpose of acquiring, entitling, developing, and distributing specific sections of real property located in Mesa, Arizona.  The property was originally acquired in November 2012, and in April 2015 the final distribution of developed land to the partners was completed at cost.  For the years ended December 31, 2015 and 2014, EM 646 distributed $19.9 million and $7.1 million, respectively, of developed land to AV Homes.

During 2014, we were no longer considered the primary beneficiary of this LLC due to a discontinuation of a related party affiliation, resulting in shared power between the remaining members.  As we no longer have the power on a stand-alone basis to direct the activities of the LLC that most significantly impact the LLC’s economic performance, we deconsolidated this LLC, in accordance with ASC 810, Consolidation, and ASC 360.  As this transaction involves the deconsolidation of in-substance real estate, we have accounted for the deconsolidation under ASC 360-20, Real Estate Sales.  In determining whether a gain should be recognized as part of this transaction, ASC 360-20-40-10, Real Estate Sales, requires that a sufficient amount of cash be received in order to recognize a gain on transactions within the scope of ASC 360.  As we did not receive any proceeds from this transaction and as there was not a culmination of an earning process, we recognized our investment in the venture at our carry over cost basis and, therefore, no gain or loss was recognized.  We will reflect future earnings, contributions and distributions on an equity method basis.  As of December 31, 2015 and December 31, 2014, our consolidated balance sheets included amounts related to investments in the unconsolidated EM 646 entity of $0.0 million and $15.6 million, respectively.

We and our equity partners make capital contributions to the entity and receive distributions on a pro rata basis.  The obligation to make such capital contributions is governed by the entity’s operating agreement.  As of December 31, 2015, this entity was financed by partner equity and does not have third-party debt. In addition, we have not provided any guarantees to the entity or our equity partner.  The assets of our investee can only be used to settle obligations of the investee.

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Lease Commitments

12 Months Ended

Dec. 31, 2015

Leases [Abstract]

LEASE COMMITMENTS

Lease Commitments

We lease the majority of our administration and sales offices under operating leases that expire at varying times through 2021.  Rental expense was $0.9 million in 2015, $0.5 million in 2014 and $0.4 million in 2013.  The following table reflects lease commitments as of December 31, 2015 (in thousands):

	Payments Due By Period
	2016		2017		2018		2019		2020		Thereafter		Total
Noncancelable operating leases	$	1,443	$	1,289	$	839	$	438	$	171	$	71	$	4,251
Capital lease obligations		612		507		117		24		—		—		1,260
Leased model homes		50		—		—		—		—		—		50
Total	$	2,105	$	1,796	$	956	$	462	$	171	$	71	$	5,561

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Notes Payable

12 Months Ended

Dec. 31, 2015

Debt Disclosure [Abstract]

Notes, Mortgage Notes and Other Debt

Senior Notes

Senior Notes are summarized as follows:

	December 31,
	2015		2014
7.50% Senior Convertible Notes due 2016	$	46,793	$	55,481
7.50% Senior Exchange Convertible Notes due 2016		—		44,475
8.50% Senior Notes due 2019		200,000		200,000
6.00% Senior Convertible Notes due 2020		80,000		—
Senior Secured Credit Facility		—		—
Total Senior Notes	$	326,793	$	299,956
Deferred debt issuance costs		(5,877)		(5,735)
Debt discount		(70)		—
Total Senior Notes, net	$	320,846	$	294,221

7.50% Senior Convertible Notes due 2016 and 7.50% Senior Exchange Convertible Notes due 2016

On February 4, 2011, we completed an underwritten public offering for $100.0 million aggregate principal amount of our 7.50% Senior Convertible Notes due 2016 (the “7.50% Notes”). The 7.50% Notes were governed by the Indenture and the First Supplemental Indenture, each dated February 4, 2011, between us and the trustee named therein.  Interest on the 7.50% Notes was payable semi-annually in arrears in cash on February 15 and August 15 of each year.

In July 2012, we entered into exchange agreements under which we retired $44.5 million in aggregate principal amount of our 7.50% Notes, in exchange for the issuance of $44.5 million in aggregate principal of new 7.50% Senior Exchange Convertible Notes due 2016 (“7.50% Exchange Notes”).  The 7.50% Exchange Notes would have matured on February 15, 2016.  The 7.50% Exchange Notes were governed by the Indenture dated February 4, 2011 and the Second Supplemental Indenture dated July 25, 2012 between us and the trustee named therein.  Interest on the 7.50% Exchange Notes was payable semi-annually in arrears in cash on February 15 and August 15 of each year, commencing February 15, 2013.  In connection with the issuance of the 6.00% Notes (defined below), $20.5 million of 7.50% Exchange Notes and $8.7 million of 7.50% Notes were repurchased on June 23, 2015.  On July 20, 2015, the remaining 7.50% Exchange Notes were redeemed, pursuant to our option to redeem such notes at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest.

On February 16, 2016, the remaining 7.50% Notes were repaid at maturity.  See Note 16, Subsequent Events.

8.50% Senior Notes due 2019

On June 30, 2014, we completed an underwritten offering for $200.0 million aggregate principal amount of our 8.50% Senior Notes due 2019 (the “8.50% Senior Notes”).  The 8.50% Senior Notes mature on July 1, 2019 unless earlier converted, redeemed or repurchased. Interest on the 8.50% Senior Notes is 8.50% per year, payable semi-annually in arrears in cash on January 1 and July 1 of each year, commencing January 1, 2015.  The 8.50% Senior Notes are redeemable at our option, in whole or in part, at any time on or after July 1, 2016, at certain redemption prices, together with accrued and unpaid interest, if any, to, but excluding, the date of redemption.

Certain of our subsidiaries are guarantors of the 8.50% Senior Notes.  All of the subsidiary guarantors are 100% owned by us, and all of the guarantees are full, unconditional, and joint and several.  We have no independent assets or operations, and our subsidiaries, other than the subsidiary guarantors, are minor.

6.00% Senior Convertible Notes due 2020

On June 23, 2015, we completed a private offering of $80.0 million aggregate principal amount of 6.00% Senior Convertible Notes due 2020 (the “6.00% Notes”).  The 6.00% Notes were issued in exchange for $15.4 million aggregate principal amount of 7.50% Exchange Notes and $64.5 million in cash.  We used $30.7 million of the net cash proceeds from the sale of the 6.00% Notes to (i) repurchase 7.50% Exchange Notes and 7.50% Notes and (ii) pay approximately $1.5 million of accrued interest (in respect of the notes being exchanged or repurchased) and premium (in respect of the notes being repurchased).  The 6.00% Notes will mature on July 1, 2020 unless earlier repurchased or converted.  The 6.00% Notes are governed by the Indenture dated February 4, 2011 and the Third Supplemental Indenture dated June 23, 2015 between us and the trustee named therein.  The 6.00% Notes bear regular cash interest on the principal amount of each note, payable semiannually in arrears on January 1 and July 1 of each year, beginning on January 1, 2016.

The 6.00% Notes were issued pursuant a series of separate, privately negotiated note purchase agreements entered into on June 17, 2015 by us and certain qualified institutional buyers.  TPG Aviator, L.P. (“TPG”) purchased $20.0 million aggregate principal amount of 6.00% Notes for $20.0 million in cash and waived its rights to purchase additional 6.00% Notes, resulting in a fully diluted beneficial ownership of approximately 43.8% of our common stock for TPG.  Pursuant to the terms of the Company’s Related Person Transaction Policy, the audit committee of the Company’s board of directors reviewed and approved the terms of the 6.00% Notes and TPG’s purchase of 6.00% Notes.

Senior Secured Credit Facility

On April 7, 2014, we entered into a $65.0 million senior secured credit facility with JPMorgan Chase Bank, N.A., as agent, a lender and a letter of credit issuer (the "Senior Secured Credit Facility"). The other original lenders and letter of credit issuers include Royal Bank of Canada and Credit Suisse AG.  Later in 2014, we increased the Senior Secured Credit Facility by $40.0 million with the addition of Citibank, N.A., and Deutsche Bank, A.G., as additional lenders.

The Senior Secured Credit Facility includes revolving credit and letter of credit facilities in an aggregate principal amount of up to $105.0 million, with an “accordion” feature that allows us, with the consent of the lenders, to increase the aggregate amount to $175.0 million.  The Senior Secured Credit Facility also includes a swing line loan facility in an aggregate principal amount of up to $30.0 million.  As of December 31, 2015, we had sufficient qualified assets in the borrowing base to cover the full $105.0 million capacity and had no borrowings outstanding.

We were in compliance with all financial covenants under the Senior Secured Credit Facility as of December 31, 2015.

Maturities of Senior Notes as of December 31, 2015 are as follows (in thousands):

	Total
2016	$	46,793
2017		—
2018		—
2019		200,000
2020		80,000
Thereafter		—
Total	$	326,793

We made interest payments of $24.0 million, $7.6 million, and $7.9 million during the years ended December 31, 2015, 2014 and 2013, respectively.

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Accrued and Other Liabilities

12 Months Ended

Dec. 31, 2015

Payables and Accruals [Abstract]

Accrued and Other Liabilities

Accrued and Other Liabilities

Accrued and other liabilities are summarized as follows (in thousands):

	December 31,
	2015		2014
Accrued interest	$	12,253	$	11,312
Accrued compensation		5,476		4,052
Warranty reserve		3,333		1,528
Infrastructure obligations		5,799		4,671
Contingent consideration		7,083		2,404
Other		4,882		4,167
Total	$	38,826	$	28,134

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Estimated Development Liability for Sold Land

12 Months Ended

Dec. 31, 2015

Estimated Development Liability for Sold Land [Abstract]

Estimated Development Liability for Sold Land

Estimated Development Liability

The estimated development liability consists primarily of utilities improvements in Poinciana, Florida and Rio Rico, Arizona for more than 8,000 home sites previously sold, in most cases prior to 1980.  The estimated development liability is reduced by actual expenditures and is evaluated and adjusted, as appropriate, to reflect management’s estimate of potential costs.  In addition, we obtain third-party engineer evaluations on an annual basis and adjust this liability as necessary to reflect changes in the estimated costs.  Cash expenditures associated with these obligations were $0.5 million, $0.2 million and $0.1 million during 2015, 2014 and 2013, respectively.  Future increases or decreases of costs for construction, material and labor, as well as other land development and utilities infrastructure costs, may have a significant effect on the estimated development liability.  The balance of the estimated development liability was $32.6million and $33.0million as of December 31, 2015 and 2014, respectively.

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Share-Based Payments and Other Executive Compensation

12 Months Ended

Dec. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Payments and Other Executive Compensation

Share-Based Payments and Other Compensation

The Amended and Restated 1997 Incentive and Capital Accumulation Plan (2011 Restatement), as amended ("the Incentive Plan") and the 2015 Incentive Compensation Plan (the "2015 Plan") provide for the grant of stock options, stock appreciation rights, stock awards, performance awards, and stock units to officers, employees and directors of AV Homes.  The exercise prices of stock options granted under the Incentive Plan or the 2015 Plan may not be less than the stock exchange closing price of our common stock on the date of grant.  Stock option awards under the Incentive Plan and 2015 Plan generally expire 10 years after the date of grant.

As of December 31, 2015, an aggregate of 590,483 shares of our common stock, subject to certain adjustments, were reserved for issuance under the Incentive Plan, relating to outstanding options and restricted stock units previously awarded and currently outstanding under the Incentive Plan.  There were 764,182 shares available for grant under the 2015 Plan as of December 31, 2015.

During 2013, we cancelled 114,750 restricted shares granted in 2011 to certain executives and issued additional performance-based restricted shares in exchange.  The cancellation and issuance of shares was accounted for as a modification with the future compensation expense computed using the greater of unamortized fair value of the cancelled awards or the incremental fair value as remeasured each reporting period.  We also issued performance-based restricted shares to other members of management.  Vesting is contingent upon the achievement of certain performance objectives, some of which are subjective in nature.  Compensation cost for these awards is recognized over the service period, and variable accounting is applied whereby the fair value of the award is remeasured each reporting period until vesting occurs.

Compensation expense related to the stock option, restricted stock, and restricted stock unit awards during the years ended December 31, 2015, 2014 and 2013 was $3.1 million, $2.8 million and $1.6 million, respectively.  During 2015, we did not grant any stock options.  During 2015, we granted 291,075 shares of restricted stock which have a weighted average grant date fair value of $9.32 per share.

As of December 31, 2015, there was $2.0 million of unrecognized compensation expense related to unvested restricted stock and restricted stock units. That expense is expected to be recognized over a weighted average period of 1.60 years.

As of December 31, 2015, there was $3.3 million of unrecognized compensation expense related to unvested stock options.  That expense is expected to be recognized over a weighted average period of 0.9 years.

Under ASC 718, Stock Compensation ("ASC 718"), the fair value of awards of restricted stock and units that do not contain a specified hurdle price condition is based on the market price of our common stock on the date of grant.  Under ASC 718, the fair value of restricted stock awards that contain a specified hurdle price condition is estimated on the grant date using the Monte-Carlo option valuation model.  Under ASC 718, the fair value of each stock option is estimated on the grant date using the Black-Scholes option-pricing model.  The valuation models require assumptions and estimates to determine expected volatility, expected life, expected dividend yield and expected risk-free interest rates.  The expected volatility was determined using historical volatility of our stock based on the contractual life of the award.  The risk-free interest rate assumption was based on the yield on zero-coupon U.S. Treasury strips at the award grant date.  We also used historical data to estimate forfeiture experience.

The significant weighted average assumptions used for the years ended December 31, 2015, 2014 and 2013 were as follows:

	2015			2014			2013
Dividend yield		—	%		—	%					—	%
Volatility rate		38.00	%		42.60	%		52.37	%	-	52.49	%
Risk-free interest rate		1.0	%		0.66	%		1.66	%	-	1.86	%
Expected life (years)		2.95			2.91						6.25
Weighted average fair value of units granted	$	5.95		$	9.30					$	8.75

A summary of the status of the stock option activity for the years ended December 31, 2015, 2014 and 2013 is presented below:

	2015			2014			2013
		Weighted			Weighted			Weighted
		Average			Average			Average
	Stock	Exercise Price		Stock	Exercise Price		Stock	Exercise Price
	Options	Per Share		Options	Per Share		Options	Per Share
Outstanding as of beginning of year	555,036	$	17.00	585,036	$	16.99	110,000	$	25.00
Granted	—		—	—		—	585,036		16.99
Exercised	—		—	—		—	—		—
Forfeited	(10,000)		16.80	(30,000)		16.80	(110,000)		—
Outstanding as of end of year	545,036	$	17.01	555,036	$	17.00	585,036	$	16.99
Exercisable as of end of year	272,518	$	17.01	146,259	$	16.99	—	$	—

The weighted average remaining contractual life of stock options outstanding as of December 31, 2015 was 7.8 years.

A summary of the restricted stock and stock units activity for the year ended December 31, 2015 is presented below:

			Weighted
	Restricted		Average
	Stock and		Grant Date
	Stock Units		Fair Value
Outstanding as of beginning of year	145,352	(1)	$	16.59
Granted	291,075			9.32
Vested	(62,434)			16.93
Expired/forfeited/cancelled	(21,655)			10.95
Outstanding as of end of year	352,338		$	10.87

(1) Restricted stock shares are considered legally outstanding but are not considered outstanding for accounting purposes until the vesting conditions are satisfied in accordance with authoritative accounting guidance.

Under our director deferral program, non-management directors may elect to defer up to 50% of annual retainer fees, committee fees and/or chairperson fees, for which the director is credited with a number of stock units based upon the closing price of our common stock on the due date of each payment.  The number of stock units become distributable as shares of common stock upon the earlier of a date designated by the individual director or the date of the individual’s separation from service as a director.  No stock units were distributed as shares to non-management directors during the years ended December 31, 2015, 2014 and 2013.  The outstanding balance of restricted stock units under the deferral plan as of December 31, 2015, 2014 and 2013 was 50,376,  42,659 and 36,257, respectively.

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Income Taxes

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income taxes have been provided using the liability method under ASC 740.  The liability method is used in accounting for income taxes where deferred income tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences reverse.

The components of income tax expense for the years ended December 31, 2015, 2014 and 2013 are as follows (in thousands):

	2015		2014		2013
Current
Federal	$	253	$	—	$	—
State		183		—		—
Total current		436		—		—
Deferred
Federal		—		—		—
State		—		—		—
Total deferred		—		—		—
Total income tax expense	$	436	$	—	$	—

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.  Significant components of deferred income tax assets and liabilities as of December 31, 2015 and 2014 are as follows (in thousands):

	2015		2014
Deferred income tax assets:
Tax over book basis of land inventory	$	15,338	$	15,085
Unrecoverable land development costs		5,321		6,222
Executive incentive compensation		2,112		1,338
Net operating loss carryforward		56,768		61,128
Impairment charges		53,103		55,529
Other		4,745		4,061
Total deferred income tax assets		137,387		143,363
Valuation allowance for deferred tax assets		(124,525)		(129,862)
Net deferred income tax assets		12,862		13,501
Deferred income tax liabilities:
State tax effect of deferred tax assets		(3,139)		(3,412)
Book over tax income recognized on sale of the Ocala Property		(7,094)		(7,751)
Tax over book on 4.50% Convertible Notes		(857)		(960)
Book over tax basis of depreciable assets		(1,772)		(1,378)
Total deferred income tax liabilities		(12,862)		(13,501)
Net deferred income tax liabilities	$	—	$	—

As of December 31, 2015, our gross federal and state NOL carryforwards were approximately $132.7 million and $283.2 million, respectively.  Federal NOL carryforwards may be used to offset future taxable income for 20 years and begin to expire in 2030.  State NOL carryforwards may be used to offset future taxable income for a period of time ranging from 5 to 20 years, depending on the state, and begin to expire in 2016.

The Company evaluates its deferred tax assets quarterly to determine if valuation allowances are required.  ASC 740 requires that companies assess whether valuation allowances should be established based on the consideration of all available evidence using a “more likely than not” standard.  The realization of the deferred tax assets ultimately depends upon the existence of sufficient taxable income in future periods.  The Company continues to analyze all available positive and negative evidence in determining the continuing need for a valuation allowance with respect to its deferred tax assets.  This evaluation considers, among other factors, historical operating results, forecasts of future profitability, and the duration of statutory carryforward periods.  A significant part of the evidence the Company considers is its position with respect to a three year cumulative profit or loss.  This position combined with the other evidence described above has continued to support the need for a valuation allowance.  We earned a profit before income taxes for the year ended December 31, 2015 and have seen significant increases in community count, new orders, and backlog.  If homebuilding industry conditions and the Company’s business remain stable and additional positive evidence develops, the Company believes there could be sufficient positive evidence to support a conclusion that the Company will generate sufficient taxable income in future periods to realize its deferred tax asset, which would allow the company to significantly reduce the valuation allowance at some point during 2016.

During the years ended December 31, 2015 and 2014, we recognized a decrease of $5.3 million and $0.4 million, respectively, in the deferred tax valuation allowance against net deferred tax assets generated from the pre-tax income for the year.  As of December 31, 2015, our deferred tax asset valuation allowance was $124.5 million.  In future periods, the allowance could be reduced based on sufficient evidence indicating that it is more likely than not that a portion of our deferred tax assets will be realized.

Any interest or penalties that have been assessed in the past have been minimal and immaterial to our financial results.  In the event we are assessed any interest or penalties in the future, we plan to include them in our consolidated statements of operations and comprehensive income (loss) as income tax expense.

No additional income tax benefits were generated from the exercise of share-based compensation during 2015, 2014 and 2013.

A reconciliation of income tax expense (benefit) to the expected income tax expense (benefit) at the federal statutory rate of 35% for each of the years ended December 31, 2015, 2014 and 2013 is as follows (in thousands): 

	2015		2014		2013
Income tax (benefit) expense computed at statutory rate	$	4,320	$	(522)	$	(3,317)
State income tax (benefit) expense, net of federal benefit		1,452		823		(385)
Change in valuation allowance on deferred tax assets		(5,336)		(370)		3,699
Other		—		69		3
Income tax expense	$	436	$	—	$	—

We file income tax returns in the U.S. federal jurisdiction and various state jurisdictions.  We are subject to U.S. federal income tax examination for calendar tax years ending 2012 through 2014.  Additionally, we are subject to various state income tax examinations for the 2011 through 2014 calendar tax years.

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Legal

We are involved in litigation from time to time, primarily arising in the normal course of our business.  These cases are in various procedural stages.  In view of the inherent difficulty of predicting the outcome of these legal and regulatory matters, we generally cannot predict the ultimate resolution of the pending matters, the related timing, or the eventual loss.  While the outcome of such contingencies cannot be predicted with certainty, we do not believe that the resolution of such matters will have a material adverse impact on our results of operations, financial position, or cash flows.

Surety bonds

Surety bonds, issued by third-party entities, are used primarily to guarantee our performance to construct improvements in our various communities.  As of December 31, 2015 and 2014, we had outstanding surety bonds of approximately $30.9 million and $21.5 million, respectively.  The amount of outstanding surety bonds could fluctuate depending on the level of development activity.  We do not believe that it is likely any of these outstanding surety bonds will be drawn upon.

Community Development District and Other Special Obligations

A community development district or similar development authority (“CDD”) is a unit of local government created under various state statutes that utilizes the proceeds from the sale of bonds to finance the construction or acquisition of infrastructure assets of a development.  A portion of the liability associated with the bonds, including principal and interest, is assigned to each parcel of land within the development.  This debt is typically paid by subsequent special assessments levied by the CDD on the landowners.  Generally, we are only responsible for paying the special assessments for the period during which we are the landowner of the applicable parcels.  However, in certain limited instances we record a liability for future assessments.

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Reportable Segments

12 Months Ended

Dec. 31, 2015

Segment Reporting [Abstract]

Business Segments

Segment Information

Prior to the first quarter of 2015, our operations included the following reportable segments: (i) active adult communities; (ii) primary residential communities; and (iii) land sales.  Based on the evolving nature of our business and recent operational and reporting changes, we reevaluated the identification of our reportable segments during the first quarter of 2015.  As a result, beginning with the first quarter of 2015, our reportable segments are as follows: Florida, Arizona and the Carolinas.

Our operating segments are defined as a component of an enterprise for which discrete financial information is available and is reviewed regularly by the chief operating decision maker to evaluate performance and make operating decisions.  We have identified our chief operating decision maker as our Chief Executive Officer.

The following table summarizes our information for reportable segments for the years ended December 31, 2015, 2014 and 2013, which have been recast for all periods presented to reflect the change described above (in thousands):

	For the Year Ended
	2015		2014		2013
Operating income (loss):
Florida
Revenues:
Homebuilding	$	300,260	$	193,218	$	81,440
Amenity and other		12,385		10,140		9,786
Land sales		6,466		18,158		9,257
Total revenues	$	319,111	$	221,516	$	100,483
Expenses:
Homebuilding cost of revenues		239,001		156,439		64,726
Homebuilding selling, general and administrative		38,500		24,388		14,004
Amenity and other		10,587		10,524		11,663
Land sales		823		10,316		5,369
Segment operating income	$	30,200	$	19,849	$	4,721
Arizona
Revenues:
Homebuilding	$	84,378	$	48,665	$	33,533
Amenity and other		—		6		420
Land sales		—		14,438		7,046
Total revenues		84,378		63,109		40,999
Expenses:
Homebuilding cost of revenues		71,305		41,261		27,073
Homebuilding selling, general and administrative		11,981		7,747		5,561
Amenity and other		115		425		2,110
Land sales		—		11,688		2,744
Segment operating income	$	977	$	1,988	$	3,511
Carolinas
Revenues:
Homebuilding	$	114,277	$	1,288	$	—
Total revenues		114,277		1,288		—
Expenses:
Homebuilding cost of revenues		95,232		1,183		—
Homebuilding selling, general and administrative		12,205		2,230		97
Segment operating income (loss)	$	6,840	$	(2,125)	$	(97)
Operating income	$	38,017	$	19,712	$	8,135
Unallocated income (expenses):
Interest income and other		154		447		2,499
Equity in earnings (loss) from unconsolidated entities		154		(16)		(101)
Corporate general and administrative expenses		(16,900)		(15,941)		(15,975)
Interest expense		(9,039)		(5,805)		(2,830)
Income (loss) before income taxes		12,386		(1,603)		(8,272)
Income tax expense		(436)		—		—
Net income attributable to non-controlling interests		—		329		1,205
Net income (loss) attributable to AV Homes	$	11,950	$	(1,932)	$	(9,477)

	December 31,
	2015		2014
Segment assets:
Florida	$	328,233	$	278,091
Arizona		175,929		145,380
Carolinas		152,141		28,475
Unallocated assets		79,836		211,205
Total assets	$	736,139	$	663,151

· Our businesses are conducted in the United States.

· Identifiable assets by segment are those assets that are used in the operations of each segment.

· No significant part of the business is dependent upon a single customer or group of customers.

· The caption “Unallocated assets” under the table depicting the segment assets represents the following as of December 31, 2015 and 2014, respectively: cash, cash equivalents and restricted cash of $72.9 million and $196.5 million; land inventories of $0.0 million and $4.6 million; property and equipment of $1.8 million and $2.7 million; investment in and notes from unconsolidated entities of $1.2 million and $1.2 million; receivables of $0.0 million and $2.0 million; and prepaid expenses and other assets of $4.0 million and $4.4 million.  None of the foregoing are directly attributable to a reportable segment in accordance with ASC 280, Segment Reporting.

· There is no interest expense from the Florida, Arizona and Carolinas segments included in segment operating income (loss) for 2015, 2014 and 2013.

· Included in segment operating income (loss) for 2015 is depreciation expense (including amortization of assets under capital leases) of $2.4 million, $0.0 million, $0.1 million and $0.6 million from Florida, Arizona, Carolinas and unallocated corporate general and administrative expenses, respectively.  Included in segment operating income (loss) for 2014 is depreciation expense of $2.4 million, $0.1 million, $0.0 million and $0.6 million from Florida, Arizona, Carolinas and unallocated corporate general and administrative expenses, respectively.  Included in segment operating income (loss) for 2013 is depreciation expense of $2.1 million, $0.1 million, $0.5 million and $0.6 million from Florida, Arizona, Carolinas and unallocated corporate general and administrative expenses, respectively.

· During fiscal years 2015, 2014 and 2013, there were no impairment losses recognized.

· Goodwill of $6.1 million and $13.2 million has been assigned to the Florida and Carolinas segments, respectively.

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Fair Value Disclosures

12 Months Ended

Dec. 31, 2015

Fair Value Disclosures [Abstract]

Fair Value Disclosures

Note 14 - Fair Value Disclosures

ASC 820, Fair Value Measurements and Disclosures, provides guidance for using fair value to measure assets and liabilities, defines fair value, establishes a framework for measuring fair value under GAAP, expands disclosures about fair value measurements, and establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The accounting standards require that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:

Level 1: Fair value determined based on quoted market prices in active markets for identical assets and liabilities.

Level 2: Fair value determined using significant observable inputs, such as quoted prices for similar assets or liabilities or quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, or inputs that are derived principally from or corroborated by observable market data, by correlation or other means.

Level 3: Fair value determined using significant unobservable inputs, such as discounted cash flows, or similar techniques.

The carrying value of cash and cash equivalents, restricted cash, receivables, accounts payable and Senior Secured Credit Facility approximates the fair value due to their short-term nature.

Certain assets are required to be recorded at fair value on a non-recurring basis when events and circumstances indicate that the carrying value may not be recoverable.

The carrying amounts and fair values of our financial instruments as of December 31, 2015 and 2014 are as follows (in thousands):

	December 31, 2015				December 31, 2014
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Senior Notes:
7.50% Notes and 7.50% Exchange Notes	$	46,793	$	45,389	$	99,956	$	99,040
8.50% Senior Notes, net (1)		195,495		199,000		194,265		193,000
6.00% Notes, net (1)		78,558		75,368		—		—
Contingent consideration (earn-out)		7,083		7,083		2,404		2,404

(1) The carrying value of the debt instruments are net of unamortized deferred financing costs and certain debt discounts.

In estimating the fair value of financial instruments, we used the following methods and assumptions:

8.50% Senior Notes, 7.50% Notes, 7.50% Exchange Notes, and 6.00% Notes: As of December 31, 2015 and December 31, 2014, the fair value of the 8.50% Senior Notes, 7.50% Notes, 7.50% Exchange Notes, and 6.00% Notes is estimated, based on quoted or estimated market prices.  These fall within Level 2 of the fair value hierarchy.

Contingent consideration ("earn-out"): This was first recognized as part of the purchase price paid for the Royal Oak and Bonterra Builders acquisitions in 2014 and 2015, respectively, and falls within Level 3 of the fair value hierarchy. Valuation models were used to value the earn-outs by simulating earnings, applying the terms of the earn-out in each simulated path, determining the average payment in each year across all the trials of the simulation, and calculating the sum of the present values of the payments in each year.  The primary inputs and key assumptions include estimated future earnings, probabilities of achievement, earnings volatility, and the discount rate.

Given a range in the discount rate from 6.8% to 11.8%, the valuation of the earn-outs could vary from $7.0 million to $7.1 million.  The carrying amount of the earn-out has decreased by a net $0.2 million since inception, resulting in an offset to general and administrative expenses.

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Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2015

Quarterly Financial Data [Abstract]

Quarterly Financial Data (Unaudited)

Unaudited Quarterly Information

Summarized quarterly financial data for 2015 and 2014 is as follows (dollars in thousands):

	2015 Quarter
	First		Second		Third		Fourth
Net revenues	$	58,830	$	79,389	$	153,827	$	225,720
Expenses		63,832		84,026		148,302		209,374
Equity earnings (losses) from unconsolidated entities		(6)		171		(5)		(6)
Income (loss) before income taxes		(5,008)		(4,466)		5,520		16,340
Less: income tax expense		—		—		—		(436)
Less: net income attributable to non-controlling interests		—		—		—		—
Net income (loss) attributable to AV Homes	$	(5,008)	$	(4,466)	$	5,520	$	15,904
Earnings (loss) per share: (1)
Basic	$	(0.23)	$	(0.20)	$	0.25	$	0.72
Diluted	$	(0.23)	$	(0.20)	$	0.25	$	0.65

	2014 Quarter
	First		Second		Third		Fourth
Net revenues	$	43,865	$	51,447	$	86,641	$	103,960
Expenses		45,499		53,694		85,958		102,349
Equity earnings (losses) from unconsolidated entities		1		(6)		(5)		(6)
Income (loss) before income taxes		(1,633)		(2,253)		678		1,605
Less: net income attributable to non-controlling interests		293		36		—		—
Net income (loss) attributable to AV Homes	$	(1,926)	$	(2,289)	$	678	$	1,605
Earnings (loss) per share: (1)
Basic and diluted	$	(0.09)	$	(0.10)	$	0.03	$	0.07

(1) Quarterly and year-to-date computations of per share amounts are made independently.  Therefore, the sum of per share amounts for the quarters may not be consistent with the per share amounts for the year.

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Subsequent Events

12 Months Ended

Dec. 31, 2015

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

Our Senior Secured Facility requires that we comply with certain financial covenants.  One such covenant requires that if our interest coverage ratio is less than 1.50 to 1.00, we must maintain an interest reserve account with restricted cash in an amount equal to the interest we have incurred on all indebtedness during the prior 12 months.  As of December 31, 2015, we had $25.6 million of cash in a restricted account to comply with this financial covenant.  We submitted a compliance certificate certifying that our interest coverage ratio exceeded the 1.50 minimum, and on February 4, 2016, the interest reserve was released, removing any restrictions from that cash balance.

On February 16, 2016, our 7.50% Notes matured.  We used cash on hand and borrowings under our Senior Secured Credit Facility to repay $46.8 million of principal and interest due on these notes.

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Basis of Financial Presentation and Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Basis of Presentation

TPG Investment in Company

On June 19, 2013, we entered into a Securities Purchase Agreement (the "Purchase Agreement") by and among AV Homes and TPG Aviator, L.P. ("TPG Aviator") pursuant to which TPG Aviator agreed to acquire 2,557,474 shares of AV Homes’ common stock, par value $1.00 per share (the “Common Stock"), at a purchase price of $14.65 per share, and 665,754 shares of a newly authorized series of AV Homes’ preferred stock, designated as Series A Contingent Convertible Cumulative Redeemable Preferred Stock, par value $0.10 per share (the “Series A Preferred Stock"), at a purchase price and liquidation preference of $146.50 per share, for an aggregate investment in AV Homes by TPG Aviator of $135.0 million.

On June 20, 2013, AV Homes and TPG Aviator closed the transactions (the “TPG Investment") contemplated by the Purchase Agreement, and AV Homes issued to TPG Aviator the Common Stock and the Series A Preferred Stock in the amounts and in exchange for the purchase price described above.

On September 18, 2013, we held a special meeting of stockholders at which our stockholders:  (1) approved the right to convert, at the option of the Company or the holders of the Series A Preferred Stock, the Series A Preferred Stock into 6,657,543 shares of our Common Stock and (2) approved TPG Aviator's pre-emptive rights following the approval of such conversion to participate in future issuances of our Common Stock or securities convertible into or exercisable for our Common Stock.  Following the meeting of stockholders, we provided notice to TPG Aviator of our intention to convert the Series A Preferred Stock as of September 18, 2013.  The Common Stock issuable upon conversion of the Series A Preferred Stock was issued on September 19, 2013 and the Series A Preferred Stock was cancelled.

In accordance with GAAP, before its conversion, the Series A Preferred Stock was classified outside of permanent equity because the redemption provisions were not solely within our control.  We incurred approximately $7.2 million of transaction fees in connection with the TPG Investment, which have been offset against the proceeds received.  The contingent beneficial conversion feature of the Series A Preferred Stock was recognized upon stockholder approval of the conversion and amortized at the time of conversion by treating it as a deemed dividend in retained earnings and crediting additional paid-in capital for $11.9 million, consequently resulting in no diminution in total stockholders' equity or book value per share.  We have assessed the provisions of the Series A Preferred Stock and concluded that the impact of any embedded derivative features was not material.

In connection with the Purchase Agreement, we entered into a Management Services Agreement with TPG VI Management, LLC (“TPG Management”), an affiliate of TPG Aviator, that sets forth certain financial advisory services to be provided by, and fees to be paid to, TPG Management in connection with ongoing services to us.  Pursuant to the Management Services Agreement and in exchange for certain ongoing advisory and consulting services, we agreed to pay to TPG Management a monitoring fee up to $0.5 million per year for so long as TPG and its affiliates own at least 30% of the Common Stock outstanding and also to reimburse expenses incurred by TPG Management and its affiliates to provide services or enforce its rights under the management services agreement. The monitoring fee is reduced proportionately based on TPG Aviator's board representation rights under a separate Stockholders Agreement we entered into with TPG Aviator. The monitoring fee is payable quarterly in advance and is reduced by director fees otherwise payable to the TPG Nominated Directors who are not employed by TPG Aviator or its affiliates.  For 2015 and 2014, we paid TPG Management a total of $0.4 million and $0.5 million, respectively, for the annual monitoring fee and reimbursement of expenses under the Management Services Agreement.

Basis of Presentation

The accompanying consolidated financial statements include the accounts of AV Homes, Inc. and all subsidiaries, partnerships and other entities in which AV Homes, Inc. (“AV Homes," “we,” “us,” “our,” or “the Company”) has a controlling interest. Our investments in unconsolidated entities in which we have less than a controlling interest are accounted for using the equity method.  All significant intercompany accounts and transactions have been eliminated in consolidation.  Beginning with our Form 10-Q for the quarter ended March 31, 2015, certain revenue and expense balances were reclassified from "Homebuilding and amenity," as well as "Other real estate," into the line item "Amenity and other" to enhance the visibility to our core homebuilding operations.

Use of Estimates

Use of Estimates

The preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Cash and Cash Equivalents and Restricted Cash

Cash and Cash Equivalents and Restricted Cash

We consider all highly liquid investments purchased with an initial maturity of three months or less to be cash equivalents.  As of December 31, 2015, our cash and cash equivalents were invested primarily in money market accounts that invest primarily in U.S. government securities.  Due to the short maturity period of the cash equivalents, the carrying amount of these instruments approximate their fair values.

Our cash items that are restricted as to withdrawal or usage include deposits of $26.9 million and $16.4million as of December 31, 2015 and 2014, respectively.  The balance as of December 31, 2015 is comprised primarily of $25.6 million on deposit as an interest reserve to comply with the terms of our Senior Secured Credit Facility (defined below).  In February 2016, the interest reserve was released since it was determined that the Company was in compliance with the interest coverage ratio covenant.  See Note 16, Subsequent Events, for further discussion.

Land and Other Inventories and Cost of Revenues

Land and Other Inventories and Cost of Revenues

Land and other inventories include expenditures for land acquisition, construction, land development, construction costs for homeowners association amenities, and direct and allocated indirect costs, including interest cost capitalized until development and construction are substantially completed.  These costs are assigned to components of Land and other inventories based on specific identification, relative sales value, or area allocation methods.

Land and other inventories are stated at cost unless the asset is determined to be impaired, in which case the asset is written to its fair value, in accordance with ASC 360.

We evaluate our land and other inventories for impairment on a quarterly basis in accordance with ASC 360 to reflect market conditions, including a consideration of supply of new and resale homes for sale in the respective market, level of foreclosure activity and competition.  For assets held and used, if indicators are present, we perform an impairment test in which the asset is reviewed for impairment by comparing the estimated future undiscounted cash flows to be generated by the asset to its carrying value.  If such cash flows are less than the asset’s carrying value, the carrying value is written down to its estimated fair value.  Generally, fair value is determined by discounting the estimated cash flows at a rate commensurate with the inherent risks associated with the asset and related estimated cash flow streams.  The discount rate used in the determination of fair value would vary, depending on the state of development.  Assumptions and estimates used in the determination of the estimated future cash flows are based on expectations of future operations and economic conditions and certain factors described below.  Changes to these assumptions could significantly affect the estimates of future cash flows, which could affect the potential for future impairments.  Due to the uncertainties of the estimation process, actual results could differ significantly from such estimates.

During the years ended December 31, 2015 and 2014, our impairment assessment resulted in no impairment charges related to land and other inventories.  During 2013, we recorded impairment charges of $0.7 million.

In 2013, we changed our plans to sell certain assets, resulting in the reclassification of these assets to land and other inventories and a reversal of previously recorded impairment expense of $1.0 million.  This reversal was the result of measuring these assets at the lower of the original carrying amount or the fair value at the date of the decision not to sell, in accordance with ASC 360-10-35-44.

Receivables

Receivables

Receivables primarily consists of amounts in transit or due from title companies for house closings and contracts mortgage notes receivable from the sale of land.

Property and Equipment, net

Property and Equipment, net

Property and equipment are stated at cost, net of accumulated depreciation, which is computed by the straight-line method over the following estimated useful lives of the assets: land improvements 10 years to 25 years; buildings and improvements 8 to 39 years; and machinery, equipment and fixtures 3 to 7 years.  Maintenance and operating expenses of equipment utilized in the development of land are capitalized to land inventory.  Repairs and maintenance are expensed as incurred.

Property and equipment includes the cost of amenities such as club facilities on properties owned by us.  The cost of amenities includes expenditures for land acquisition, construction, land development and direct and allocated costs.  Property and equipment owned and constructed by us also includes interest cost incurred during development and construction.

Each reporting period, we review our property and equipment for indicators of impairment in accordance with ASC 360. For our amenities, which are located within our housing communities, indicators of potential impairment are similar to those of our housing communities, as these factors may impact our ability to generate revenues at our amenities or cause construction costs to increase.  In addition, we factor in the collectability and potential delinquency of the fees due for our amenities.  For the years ended December 31, 2015 and December 31, 2014, we did not identify indicators of impairments for property and equipment.  During 2013, management changed its plans to sell certain assets, resulting in the reclassification of these assets from assets held for sale to property and equipment.  There was no change in the carrying value in these assets due to this reclassification.

Assets Held for Sale

Assets Held for Sale

We classify assets held for sale in accordance with the criteria set forth in ASC 360.  We continue to opportunistically sell non-core commercial and industrial assets, as well as scattered lot positions and land assets that are in excess of our needed supply in a given market.  Under this plan, assets that meet the criteria above are classified as held for sale.

During the year ended December 31, 2015, we changed our plans to sell assets that were previously classified as held for sale, or the assets no longer met the held-for-sale criteria, resulting in a reclassification of $4.1 million of land positions to land and other inventories.  There was no change in the carrying value in these assets due to this reclassification.

During 2014, we sold assets held for sale with a carrying value of $20.6 million for cash proceeds of $27.2 million for a gain of $6.6 million.  Included in this was the sale of a multi-family property in Arizona to a related party for $13.9 million for a gain of $2.3 million.

Investments in Partnerships and LLCs

Investments in Partnerships and LLCs

When we are either deemed to hold the controlling interest in a voting interest entity or deemed to be the primary beneficiary of a variable interest entity (“VIE”), we are required to consolidate the investment.  The primary beneficiary of a VIE is the entity that has both of the following characteristics: (a) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and (b) the obligation to absorb the majority of losses of the VIE or the right to receive the majority of benefits from the VIE.  Investments where we don't hold the controlling interest and we are not the primary beneficiary are accounted for under the equity method.

Factors considered when determining if we hold the controlling interest in a voting interest entity include who holds the general partnership or managing member interests, which partner or member makes the day-to-day decisions regarding the operations of the entity, and whether or not the other partners or members have substantive participating rights.  With respect to VIEs, our variable interests may be in the form of (1) equity ownership, (2) contracts to purchase assets and/or (3) loans provided by us to the investor.  We examine specific criteria and use judgment when determining if we are the primary beneficiary of a VIE.  Factors considered in determining whether we are the primary beneficiary include risk and reward sharing, experience and financial condition of other partner(s), sufficiency of equity to conduct the operations of the entity, voting rights, involvement in decisions significantly impacting the entity's economic performance, level of economic disproportionality between us and the other partner(s) and contracts to purchase assets from VIEs.

We have investments in unconsolidated entities, including joint ventures, with independent third parties.  The equity method of accounting is used for unconsolidated entities over which we have significant influence.  Under the equity method of accounting, we recognize our proportionate share of the earnings and losses of these entities.

We evaluate our investments in unconsolidated entities for recoverability in accordance with ASC 323, Investments – Equity Method and Joint Ventures (“ASC 323”).  If we determine that a loss in the value of the investment is other than temporary, we write down the investment to its estimated fair value.  Any such losses are recorded to equity in (earnings) loss of unconsolidated entities in the consolidated statements of operations and comprehensive income (loss).  Due to uncertainties in the estimation process and the significant volatility in demand for new housing, actual results could differ significantly from such estimates.  During the years ended December 31, 2015 and 2014, our impairment assessments resulted in no impairment charges.

Non-controlling Interest

Non-Controlling Interest

In 2012, we consolidated an investment in an LLC where we were determined to be the primary beneficiary due to a related party affiliation.  Therefore, the LLC's financial statements were consolidated into our financial statements and the other partner’s equity in the LLC was recorded as non-controlling interest as a component of consolidated equity.   Since June 2014, we were no longer considered the primary beneficiary of this LLC due to the discontinuation of the related party affiliation, resulting in shared power between the remaining members.  For additional information, see Note 5, Investments in Unconsolidated Entities.

Business Acquisitions

Business Acquisitions

When acquiring a business, we allocate the purchase price of real estate to the tangible and intangible assets and liabilities acquired based on their estimated fair values.  In making estimates of fair values for this purpose, we use a number of sources, including independent appraisals and information obtained about each property as a result our pre-acquisition due diligence and its marketing and housing activities.

Goodwill

Goodwill

Goodwill arises from business combinations and represents the excess of the cost of an acquired entity over the net fair value amounts that were assigned to the identifiable assets acquired and the liabilities assumed.  Goodwill is tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value.  There were no indicators of impairment during the years ended December 31, 2015 and 2014.

Homebuilding Revenue Recognition

Homebuilding Revenue Recognition

In accordance with ASC 360, homebuilding revenue and related profit from the sales of housing units are recognized when title to and possession of the property are transferred to the buyer. In addition, revenues from land sales are recognized in full at closing, provided the buyer's initial and continuing investment is adequate, any financing is considered collectible and there is no significant continuing involvement.

Sales Incentives

Sales incentives

When sales incentives involve a discount on the selling price of the home, we record the discount as a reduction of revenue at the time of house closing. If the sales incentive requires us to provide a free product or service to the customer, the cost of the free product or service is recorded as cost of revenues at the time of house closing. This includes the cost related to optional upgrades and seller-paid financing costs, closing costs, homeowners’ association fees, or merchandise.

Advertising Costs

Advertising Costs

Advertising costs are expensed as incurred.  For the years ended December 31, 2015, 2014 and 2013, advertising costs totaled $3.0 million, $3.1 million and $2.4 million, respectively.  Advertising costs, sales commissions and closing costs are included in homebuilding expense in the accompanying consolidated statements of operations and comprehensive income (loss).

Warranty Costs

Warranty Costs

Warranty reserves for houses are established to cover estimated costs for materials and labor with regard to warranty-type claims to be incurred subsequent to the closing of a house for one to two years.  Reserves are determined based on historical data and other relevant factors.  We have, and require our subcontractors to have, general liability, property, workers compensation, and other business insurance.  These insurance policies protect us against a portion of our risk of loss from claims, subject to certain self-insured per occurrence and aggregate retentions, deductibles, and available policy limits.  We may have recourse against subcontractors for certain claims relating to workmanship and materials.  Warranty reserves are included in accrued and other liabilities in the consolidated balance sheets.

During the years ended December 31, 2015, 2014 and 2013, changes in the warranty reserve consist of the following (in thousands):

	2015		2014		2013
Accrued warranty reserve, beginning of period	$	1,528	$	638	$	549
Reserve provided		3,974		1,495		578
Payments		(2,169)		(605)		(489)
Accrued warranty reserve, end of period	$	3,333	$	1,528	$	638

Income Taxes

Income Taxes

The provision for income taxes is calculated using the asset and liability method, under which deferred tax assets and liabilities are recognized by identifying the temporary differences arising from the different treatment of items for tax and accounting purposes.  In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.  The ultimate realization of deferred tax assets is primarily dependent upon the generation of future taxable income.  In determining the future tax consequences of events that have been recognized in the financial statements or tax returns, judgment is required.  Differences between the anticipated and actual outcomes of these future tax consequences could have a material impact on our consolidated results of operations or financial position.

Share-based Compensation

Share-Based Compensation

The Amended and Restated 1997 Incentive and Capital Accumulation Plan (2011 Restatement), as amended ("the Incentive Plan") and the 2015 Incentive Compensation Plan (the "2015 Plan") provide for the grant of stock options, stock appreciation rights, stock awards, performance awards, and stock units to officers, employees and directors of AV Homes.  The exercise prices of stock options granted under the Incentive Plan and the 2015 Plan may not be less than the stock exchange closing price of our common stock on the date of grant.  Stock option awards under the Incentive Plan and 2015 Plan generally expire 10 years after the date of grant.

As of December 31, 2015, an aggregate of 590,483 shares of our common stock, subject to certain adjustments, were reserved for issuance under the Incentive Plan, relating to outstanding options and restricted stock units previously awarded and currently outstanding under the Incentive Plan.  There were 764,182 shares available for grant under the 2015 Plan as of December 31, 2015.

Employee Benefit Plans

Employee Benefit Plans

We have a defined contribution savings plan that covers substantially all employees.  Under this savings plan, we may contribute to the plan based upon specified percentages of employees' voluntary contributions.  We made no contributions to the plan for the years ended December 31, 2015, 2014 and 2013.

Earnings (Loss) Per Share

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) attributable to AV Homes stockholders by the weighted average number of common shares outstanding for the period.  Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of AV Homes.  The computation of diluted earnings (loss) per share for the year ended December 31, 2015, did not assume the potential effect of employee stock options, the 6.00% Notes, the 7.50% Notes, or the 7.50% Exchange Notes because the effects were antidilutive.  The computation of diluted loss per share for the years ended December 31, 2014 and 2013 did not assume the effect of restricted stock units, employee stock options, the 4.50% Notes, the 7.50% Notes, or the 7.50% Exchange Notes because the effects were antidilutive.

The weighted average number of shares outstanding in calculating basic earnings (loss) per share includes the issuance of 61,101 shares in 2015, 67,274 shares in 2014 and 9,272,795 shares in 2013, in connection with the vesting of restricted stock and restricted stock units each year, and stock issued in connection with the 2013 TPG Investment as described above.  Excluded from the weighted average number of shares outstanding are 332,103 shares for 2015, 127,078 shares for 2014 and 100,898 shares for 2013 associated with annual restricted stock awards that remain subject to vesting and performance requirements.  See Note 10, Share-Based Payments and Other Compensation.  In accordance with ASC 260, Earnings Per Share, nonvested shares are not included in basic earnings (loss) per share until the vesting and performance requirements are met.

In accordance with ASC 470-20, Debt, an embedded beneficial conversion feature present in a convertible instrument shall be recognized separately by allocating a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in-capital. Intrinsic value shall be calculated at the commitment date (preferred stock issuance) as the difference between the conversion price and the fair value of the common stock into which the security is convertible.  The most favorable conversion price shall be used to measure the intrinsic value.  The intrinsic value of the contingent beneficial conversion feature was recognized upon resolution of the contingency (shareholder approval of conversion) as a deemed dividend on the convertible preferred stock, and is added to net loss to arrive at loss attributable to common stockholders in the loss per share calculation.  The deemed dividend had a $(0.75) per share effect on earnings for the year ended December 31, 2013.

The following table represents a reconciliation of the net earnings (loss) and weighted average shares outstanding for the calculation of basic and diluted earnings (loss) per share for the years ended December 31, 2015, 2014 and 2013 (dollars in thousands):

	For the Year Ended
	2015		2014		2013
Numerator:
Net income (loss)	$	11,950	$	(1,932)	$	(9,477)
Deemed dividend related to the beneficial conversion feature		—		—		(11,894)
Basic and diluted net income (loss)	$	11,950	$	(1,932)	$	(21,371)
Denominator:
Basic weighted average shares outstanding		22,010,201		21,945,491		15,935,701
Diluted weighted average shares outstanding		22,130,384		21,945,491		15,935,701

Comprehensive Income (Loss)

Comprehensive Income (Loss)

Net income (loss) and comprehensive income (loss) are the same for the years ended December 31, 2015, 2014 and 2013.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers.  The standard is a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services.  In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which delayed the effective date by one year.  As a result, the standard is effective for us for annual and interim periods beginning January 1, 2018 and allows for full retrospective or modified retrospective methods of adoption.  We are currently evaluating the impact that the standard will have on our consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt, consistent with the presentation of a debt discount.  The guidance is effective for us beginning January 1, 2016.  We currently present deferred financing costs within other assets.  Accordingly, the adoption of the new guidance will result in the reclassification of debt issuance costs as an offset to the related debt on the balance sheet, which we do not expect to be material to our consolidated financial statements.

In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments, which eliminates the requirement to restate prior period financial statements for measurement period adjustments.  The new guidance requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified.  This cumulative adjustment would be reflected within the respective financial statement line items affected.  The new guidance does not change what constitutes a measurement period adjustment.  The new standard should be applied prospectively to measurement period adjustments that occur after the effective date.  The new standard is effective for interim and annual periods beginning after December 15, 2015, with early adoption permitted.  We believe the adoption of this standard will not have a material effect on our consolidated financial statements.

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Basis of Financial Presentation and Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Changes in warranty reserve

During the years ended December 31, 2015, 2014 and 2013, changes in the warranty reserve consist of the following (in thousands):

	2015		2014		2013
Accrued warranty reserve, beginning of period	$	1,528	$	638	$	549
Reserve provided		3,974		1,495		578
Payments		(2,169)		(605)		(489)
Accrued warranty reserve, end of period	$	3,333	$	1,528	$	638

Reconciliation of net earnings (loss) and weighted averages shares outstanding for the calculation of basic and diluted earnings (loss) per share

The following table represents a reconciliation of the net earnings (loss) and weighted average shares outstanding for the calculation of basic and diluted earnings (loss) per share for the years ended December 31, 2015, 2014 and 2013 (dollars in thousands):

	For the Year Ended
	2015		2014		2013
Numerator:
Net income (loss)	$	11,950	$	(1,932)	$	(9,477)
Deemed dividend related to the beneficial conversion feature		—		—		(11,894)
Basic and diluted net income (loss)	$	11,950	$	(1,932)	$	(21,371)
Denominator:
Basic weighted average shares outstanding		22,010,201		21,945,491		15,935,701
Diluted weighted average shares outstanding		22,130,384		21,945,491		15,935,701

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Business Acquisitions (Tables)

12 Months Ended

Dec. 31, 2015

Business Combinations [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following table summarizes the calculation of the fair value of the total consideration transferred to Bonterra Builders and the amounts of assets acquired and liabilities assumed as of the acquisition date (in thousands):

Calculation of purchase price consideration
Cash paid for Bonterra Builders net assets	$	40,818
Contingent consideration (earn-out)		6,000
Debt repaid at closing		52,941
Total consideration	$	99,759
Assets acquired and liabilities assumed
Assets
Receivables and other current assets	$	574
Land and other inventories		91,632
Property and equipment		14
Trade name		1,400
Non-compete intangible asset		600
Goodwill		13,223
Total assets acquired		107,443
Liabilities
Accounts payable		5,071
Accrued and other liabilities		763
Customer deposits		1,850
Total liabilities assumed		7,684
Total net assets acquired	$	99,759

Pro Forma Operating Results

The following represents the unaudited pro forma operating results as if Bonterra Builders had been included in the Company’s consolidated statements of operations and comprehensive income (loss) as of the beginning of the fiscal year presented (in thousands, except per share data):

	Year Ended December 31,
	2015		2014
Revenue	$	588,533	$	397,695
Net income	$	17,158	$	1,674

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Land and Other Inventories (Tables)

12 Months Ended

Dec. 31, 2015

Land and Other Inventories [Abstract]

Land and Other Inventories

Land and other inventories consist of the following (in thousands):

	December 31,
	2015		2014
Land held for future development	$	21,403	$	20,844
Land developed and in process of development		348,648		269,764
Homes completed or under construction		212,480		92,576
Total	$	582,531	$	383,184

Interest incurred, capitialized and expensed

The following table represents interest incurred, interest capitalized, and interest expense for 2015, 2014 and 2013 (in thousands):

	For the Year Ended
	2015		2014		2013
Interest incurred	$	28,207	$	18,107	$	9,296
Interest capitalized		(19,168)		(12,302)		(6,466)
Interest expense	$	9,039	$	5,805	$	2,830

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Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2015

Property, Plant and Equipment [Abstract]

Property and Equipment

As of December 31, 2015 and 2014, the property and equipment, net balance consisted of the following (in thousands):

	December 31,
	2015		2014
Land improvements	$	21,966	$	21,816
Building		39,209		39,050
Equipment		5,117		6,698
Motor vehicles		598		603
Furniture and fixtures		3,937		4,017
Capitalized software		2,099		1,962
Gross property and equipment		72,926		74,146
Less: accumulated depreciation		(37,953)		(37,224)
Property and equipment, net	$	34,973	$	36,922

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Lease Commitments Lease Commitments (Tables)

12 Months Ended

Dec. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Contractual Obligation, Fiscal Year Maturity Schedule

The following table reflects lease commitments as of December 31, 2015 (in thousands):

	Payments Due By Period
	2016		2017		2018		2019		2020		Thereafter		Total
Noncancelable operating leases	$	1,443	$	1,289	$	839	$	438	$	171	$	71	$	4,251
Capital lease obligations		612		507		117		24		—		—		1,260
Leased model homes		50		—		—		—		—		—		50
Total	$	2,105	$	1,796	$	956	$	462	$	171	$	71	$	5,561

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Notes Payable (Tables)

12 Months Ended

Dec. 31, 2015

Debt Disclosure [Abstract]

Schedule of debt

Senior Notes are summarized as follows:

	December 31,
	2015		2014
7.50% Senior Convertible Notes due 2016	$	46,793	$	55,481
7.50% Senior Exchange Convertible Notes due 2016		—		44,475
8.50% Senior Notes due 2019		200,000		200,000
6.00% Senior Convertible Notes due 2020		80,000		—
Senior Secured Credit Facility		—		—
Total Senior Notes	$	326,793	$	299,956
Deferred debt issuance costs		(5,877)		(5,735)
Debt discount		(70)		—
Total Senior Notes, net	$	320,846	$	294,221

Maturities of notes payable

Maturities of Senior Notes as of December 31, 2015 are as follows (in thousands):

	Total
2016	$	46,793
2017		—
2018		—
2019		200,000
2020		80,000
Thereafter		—
Total	$	326,793

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Accrued and Other Liabilities (Tables)

12 Months Ended

Dec. 31, 2015

Payables and Accruals [Abstract]

Accrued and other liabilities summary

Accrued and other liabilities are summarized as follows (in thousands):

	December 31,
	2015		2014
Accrued interest	$	12,253	$	11,312
Accrued compensation		5,476		4,052
Warranty reserve		3,333		1,528
Infrastructure obligations		5,799		4,671
Contingent consideration		7,083		2,404
Other		4,882		4,167
Total	$	38,826	$	28,134

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Share-Based Payments and Other Executive Compensation (Tables)

12 Months Ended

Dec. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Significant weighted average assumptions

The significant weighted average assumptions used for the years ended December 31, 2015, 2014 and 2013 were as follows:

	2015			2014			2013
Dividend yield		—	%		—	%					—	%
Volatility rate		38.00	%		42.60	%		52.37	%	-	52.49	%
Risk-free interest rate		1.0	%		0.66	%		1.66	%	-	1.86	%
Expected life (years)		2.95			2.91						6.25
Weighted average fair value of units granted	$	5.95		$	9.30					$	8.75

Summary of stock options activity

A summary of the status of the stock option activity for the years ended December 31, 2015, 2014 and 2013 is presented below:

	2015			2014			2013
		Weighted			Weighted			Weighted
		Average			Average			Average
	Stock	Exercise Price		Stock	Exercise Price		Stock	Exercise Price
	Options	Per Share		Options	Per Share		Options	Per Share
Outstanding as of beginning of year	555,036	$	17.00	585,036	$	16.99	110,000	$	25.00
Granted	—		—	—		—	585,036		16.99
Exercised	—		—	—		—	—		—
Forfeited	(10,000)		16.80	(30,000)		16.80	(110,000)		—
Outstanding as of end of year	545,036	$	17.01	555,036	$	17.00	585,036	$	16.99
Exercisable as of end of year	272,518	$	17.01	146,259	$	16.99	—	$	—

Summary of restricted stock and stock units activity

A summary of the restricted stock and stock units activity for the year ended December 31, 2015 is presented below:

			Weighted
	Restricted		Average
	Stock and		Grant Date
	Stock Units		Fair Value
Outstanding as of beginning of year	145,352	(1)	$	16.59
Granted	291,075			9.32
Vested	(62,434)			16.93
Expired/forfeited/cancelled	(21,655)			10.95
Outstanding as of end of year	352,338		$	10.87

(1) Restricted stock shares are considered legally outstanding but are not considered outstanding for accounting purposes until the vesting conditions are satisfied in accordance with authoritative accounting guidance.

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

Components of income tax expense (benefit)

The components of income tax expense for the years ended December 31, 2015, 2014 and 2013 are as follows (in thousands):

	2015		2014		2013
Current
Federal	$	253	$	—	$	—
State		183		—		—
Total current		436		—		—
Deferred
Federal		—		—		—
State		—		—		—
Total deferred		—		—		—
Total income tax expense	$	436	$	—	$	—

Components of deferred income tax assets and liabilities

Significant components of deferred income tax assets and liabilities as of December 31, 2015 and 2014 are as follows (in thousands):

	2015		2014
Deferred income tax assets:
Tax over book basis of land inventory	$	15,338	$	15,085
Unrecoverable land development costs		5,321		6,222
Executive incentive compensation		2,112		1,338
Net operating loss carryforward		56,768		61,128
Impairment charges		53,103		55,529
Other		4,745		4,061
Total deferred income tax assets		137,387		143,363
Valuation allowance for deferred tax assets		(124,525)		(129,862)
Net deferred income tax assets		12,862		13,501
Deferred income tax liabilities:
State tax effect of deferred tax assets		(3,139)		(3,412)
Book over tax income recognized on sale of the Ocala Property		(7,094)		(7,751)
Tax over book on 4.50% Convertible Notes		(857)		(960)
Book over tax basis of depreciable assets		(1,772)		(1,378)
Total deferred income tax liabilities		(12,862)		(13,501)
Net deferred income tax liabilities	$	—	$	—

Reconciliation of income tax expense (benefit)

A reconciliation of income tax expense (benefit) to the expected income tax expense (benefit) at the federal statutory rate of 35% for each of the years ended December 31, 2015, 2014 and 2013 is as follows (in thousands): 

	2015		2014		2013
Income tax (benefit) expense computed at statutory rate	$	4,320	$	(522)	$	(3,317)
State income tax (benefit) expense, net of federal benefit		1,452		823		(385)
Change in valuation allowance on deferred tax assets		(5,336)		(370)		3,699
Other		—		69		3
Income tax expense	$	436	$	—	$	—

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Reportable Segments Reportable Segments (Tables)

12 Months Ended

Dec. 31, 2015

Segment Reporting [Abstract]

Reportable Segment Information

The following table summarizes our information for reportable segments for the years ended December 31, 2015, 2014 and 2013, which have been recast for all periods presented to reflect the change described above (in thousands):

	For the Year Ended
	2015		2014		2013
Operating income (loss):
Florida
Revenues:
Homebuilding	$	300,260	$	193,218	$	81,440
Amenity and other		12,385		10,140		9,786
Land sales		6,466		18,158		9,257
Total revenues	$	319,111	$	221,516	$	100,483
Expenses:
Homebuilding cost of revenues		239,001		156,439		64,726
Homebuilding selling, general and administrative		38,500		24,388		14,004
Amenity and other		10,587		10,524		11,663
Land sales		823		10,316		5,369
Segment operating income	$	30,200	$	19,849	$	4,721
Arizona
Revenues:
Homebuilding	$	84,378	$	48,665	$	33,533
Amenity and other		—		6		420
Land sales		—		14,438		7,046
Total revenues		84,378		63,109		40,999
Expenses:
Homebuilding cost of revenues		71,305		41,261		27,073
Homebuilding selling, general and administrative		11,981		7,747		5,561
Amenity and other		115		425		2,110
Land sales		—		11,688		2,744
Segment operating income	$	977	$	1,988	$	3,511
Carolinas
Revenues:
Homebuilding	$	114,277	$	1,288	$	—
Total revenues		114,277		1,288		—
Expenses:
Homebuilding cost of revenues		95,232		1,183		—
Homebuilding selling, general and administrative		12,205		2,230		97
Segment operating income (loss)	$	6,840	$	(2,125)	$	(97)
Operating income	$	38,017	$	19,712	$	8,135
Unallocated income (expenses):
Interest income and other		154		447		2,499
Equity in earnings (loss) from unconsolidated entities		154		(16)		(101)
Corporate general and administrative expenses		(16,900)		(15,941)		(15,975)
Interest expense		(9,039)		(5,805)		(2,830)
Income (loss) before income taxes		12,386		(1,603)		(8,272)
Income tax expense		(436)		—		—
Net income attributable to non-controlling interests		—		329		1,205
Net income (loss) attributable to AV Homes	$	11,950	$	(1,932)	$	(9,477)

	December 31,
	2015		2014
Segment assets:
Florida	$	328,233	$	278,091
Arizona		175,929		145,380
Carolinas		152,141		28,475
Unallocated assets		79,836		211,205
Total assets	$	736,139	$	663,151

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Fair Value Disclosures (Tables)

12 Months Ended

Dec. 31, 2015

Fair Value Disclosures [Abstract]

Fair value, by Balance Sheet Grouping

The carrying amounts and fair values of our financial instruments as of December 31, 2015 and 2014 are as follows (in thousands):

	December 31, 2015				December 31, 2014
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Senior Notes:
7.50% Notes and 7.50% Exchange Notes	$	46,793	$	45,389	$	99,956	$	99,040
8.50% Senior Notes, net (1)		195,495		199,000		194,265		193,000
6.00% Notes, net (1)		78,558		75,368		—		—
Contingent consideration (earn-out)		7,083		7,083		2,404		2,404

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Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2015

Quarterly Financial Data [Abstract]

Summarized quarterly financial data

Summarized quarterly financial data for 2015 and 2014 is as follows (dollars in thousands):

	2015 Quarter
	First		Second		Third		Fourth
Net revenues	$	58,830	$	79,389	$	153,827	$	225,720
Expenses		63,832		84,026		148,302		209,374
Equity earnings (losses) from unconsolidated entities		(6)		171		(5)		(6)
Income (loss) before income taxes		(5,008)		(4,466)		5,520		16,340
Less: income tax expense		—		—		—		(436)
Less: net income attributable to non-controlling interests		—		—		—		—
Net income (loss) attributable to AV Homes	$	(5,008)	$	(4,466)	$	5,520	$	15,904
Earnings (loss) per share: (1)
Basic	$	(0.23)	$	(0.20)	$	0.25	$	0.72
Diluted	$	(0.23)	$	(0.20)	$	0.25	$	0.65

	2014 Quarter
	First		Second		Third		Fourth
Net revenues	$	43,865	$	51,447	$	86,641	$	103,960
Expenses		45,499		53,694		85,958		102,349
Equity earnings (losses) from unconsolidated entities		1		(6)		(5)		(6)
Income (loss) before income taxes		(1,633)		(2,253)		678		1,605
Less: net income attributable to non-controlling interests		293		36		—		—
Net income (loss) attributable to AV Homes	$	(1,926)	$	(2,289)	$	678	$	1,605
Earnings (loss) per share: (1)
Basic and diluted	$	(0.09)	$	(0.10)	$	0.03	$	0.07

(1) Quarterly and year-to-date computations of per share amounts are made independently.  Therefore, the sum of per share amounts for the quarters may not be consistent with the per share amounts for the year.

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Basis of Financial Presentation and Summary of Significant Accounting Policies - Basis of Presentation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Basis of Presentation
Homebuilding expenses	$ 405,538	$ 198,885	$ 91,519
Selling, general and administrative expenses	79,586	50,305	35,638
Prepaid expenses and other assets	17,144	15,245
Senior Notes, net	320,846	294,221
Reclassifications
Basis of Presentation
Homebuilding expenses	(62,700)	(34,400)	(19,700)
Selling, general and administrative expenses	62,700	34,400	$ 19,700
Accounting Standards Update No. 2015-03, Interest-Imputation of Interest | Reclassifications
Basis of Presentation
Prepaid expenses and other assets	(5,900)	(5,700)
Senior Notes, net	$ (5,900)	$ (5,700)

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Basis of Financial Presentation and Summary of Significant Accounting Policies - Part One (Details) - USD ($) $ / shares in Units, $ in Thousands			12 Months Ended
	Sep. 18, 2013	Jun. 19, 2013	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Class of Stock [Line Items]
Preferred Stock Deemed Dividend from Beneficial Conversion Feature					$ (0.75)
Common stock par value (in dollars per share)			$ 1	$ 1
TPG's aggregate investment in AV homes		$ 135,000
Issuances of restricted stock and stock units	$ 11,900
Restricted cash			$ 26,948	$ 16,447
Impairment of Real Estate				1,000
Reclassification of land held for sale			$ 21,403	20,844
Assets Held-for-sale, at Carrying Value				20,600
Proceeds from sale of property				27,200
Gain on sale of assets				6,600
Shares available for grant (in shares)			764,182
Land Improvements [Member] | Minimum [Member]
Class of Stock [Line Items]
Estimated useful lives			10 years
Land Improvements [Member] | Maximum [Member]
Class of Stock [Line Items]
Estimated useful lives			25 years
Building and Improvements [Member] | Minimum [Member]
Class of Stock [Line Items]
Estimated useful lives			8 years
Building and Improvements [Member] | Maximum [Member]
Class of Stock [Line Items]
Estimated useful lives			39 years
Machinery, Equipment and Fixtures [Member] | Minimum [Member]
Class of Stock [Line Items]
Estimated useful lives			3 years
Machinery, Equipment and Fixtures [Member] | Maximum [Member]
Class of Stock [Line Items]
Estimated useful lives			7 years
Wells Fargo Deposit Account [Member]
Class of Stock [Line Items]
Restricted cash			$ 25,600
Common Stock [Member]
Class of Stock [Line Items]
Number of shares agreed to sell (shares)		2,557,474
Common stock par value (in dollars per share)		$ 1.00
Sales price per share (in dollars per share)		$ 14.65
Conversion of stock shares issued (in shares)	6,657,543
Convertible Preferred Stock [Member]
Class of Stock [Line Items]
Number of shares agreed to sell (shares)		665,754
Sales price per share (in dollars per share)		$ 146.50
Preferred stock par value (in dollars per share)		$ 0.10
Transaction fees	$ 7,200
Land Developed and or Held for Future Development or Sale [Member]
Class of Stock [Line Items]
Impairment of Real Estate				0	$ 700
Multi-Family Property in Arizona [Member]
Class of Stock [Line Items]
Proceeds from sale of property				13,900
Gain on sale of assets				2,300
Land Sales [Member]
Class of Stock [Line Items]
Reclassification of land held for sale			$ 4,100
The Incentive Plan [Member]
Class of Stock [Line Items]
Expiration period after grant issued			10 years
Common Stock [Member]
Class of Stock [Line Items]
Shares available for grant (in shares)			590,483
Management Services Agreement [Member] | Affiliated Entity [Member]
Class of Stock [Line Items]
Monitoring fee (up to)			$ 500
TPG ownership percentage (at least)			30.00%
Payments for Fees			$ 400	$ 500

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Basis of Financial Presentation and Summary of Significant Accounting Policies - Part Two (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Transfer from assets held for sale to land and other inventories and property and equipment									$ 4,051	$ 0	$ 13,767
Impairment of Real Estate										(1,000)
Goodwill	$ 19,295				$ 6,071				19,295	6,071
Non-controlling interest in joint ventures	0				15,600				0	15,600
Net income (loss) attributable to non-controlling interest	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 36	$ 293	0	329	1,205
Advertising Expense									$ 3,000	$ 3,100	$ 2,400

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Basis of Financial Presentation and Summary of Significant Accounting Policies - Part Three (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Movement in Standard Product Warranty Accrual [Roll Forward]
Accrued warranty reserve, beginning of period	$ 1,528	$ 638	$ 549
Reserve provided	3,974	1,495	578
Payments	(2,169)	(605)	(489)
Accrued warranty reserve, end of period	$ 3,333	$ 1,528	$ 638
Shares available for grant (in shares)	764,182
Common Stock [Member]
Movement in Standard Product Warranty Accrual [Roll Forward]
Shares available for grant (in shares)	590,483

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Basis of Financial Presentation and Summary of Significant Accounting Policies - Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Debt Instrument, Interest Rate, Stated Percentage Rate Range, Minimum									4.50%
Debt Instrument, Interest Rate, Stated Percentage Rate Range, Maximum									7.50%
Issuance of common stock (in shares)									61,101	67,274	9,272,795
Antidilutive securities excluded from weighted average number of shares outstanding									332,103	127,078	100,898
Preferred Stock Deemed Dividend from Beneficial Conversion Feature											$ (0.75)
Numerator: [Abstract]
Net income (loss)	$ 15,904	$ 5,520	$ (4,466)	$ (5,008)	$ 1,605	$ 678	$ (2,289)	$ (1,926)	$ 11,950	$ (1,932)	$ (9,477)
Deemed dividend related to the beneficial conversion feature									0	0	(11,894)
Net income (loss) attributable to AV Homes common stockholders									$ 11,950	$ (1,932)	$ (21,371)
Denominator: [Abstract]
Basic weighted average shares outstanding (in shares)									22,010,201	21,945,491	15,935,701
Diluted weighted average shares outstanding (in shares)									22,130,384	21,945,491	15,935,701

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Basis of Financial Presentation and Summary of Significant Accounting Policies Receivables (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Receivables [Abstract]
Valuation allowance for deferred tax assets	$ 124,525	$ 129,862

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Business Acquisitions - Narrative (Details)			3 Months Ended								12 Months Ended
	Jul. 01, 2015 USD ($) property	Mar. 13, 2014 USD ($) item	Dec. 31, 2015 USD ($)	Sep. 30, 2015 USD ($)	Jun. 30, 2015 USD ($)	Mar. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Sep. 30, 2014 USD ($)	Jun. 30, 2014 USD ($)	Mar. 31, 2014 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)
Business Acquisition [Line Items]
Business acquisitions											$ 93,760,000	$ 62,684,000	$ 0
Potential earn-out			$ 7,083,000				$ 2,404,000				7,083,000	2,404,000
Decrease in goodwill											1,700,000
Revenues			225,720,000	$ 153,827,000	$ 79,389,000	$ 58,830,000	$ 103,960,000	$ 86,641,000	$ 51,447,000	$ 43,865,000
Net (loss) income											11,950,000	(1,932,000)	$ (8,272,000)
Bonterra Builders, LLC [Member]
Business Acquisition [Line Items]
Business Combination, Consideration Transferred	$ 99,759,000
Number of primary residential lots | property	1,700
Business acquisitions	$ 40,818,000
Potential earn-out	6,000,000
Contingent consideration (earn-out)	6,000,000
Trade name	2,000,000
Amortization of Intangible Assets				$ 300,000
Transaction and integration costs	900,000
Business Acquisition, Goodwill, Expected Tax Deductible Amount			7,200,000								7,200,000
Revenues											92,500,000
Net (loss) income											8,600,000
Business Combinations, Consideration Transferred, Contingent Consideration, Estimate	6,000,000
Business Combinations, Consideration Transferred, Contingent Consideration, Security	800,000
Bonterra Builders, LLC [Member] | Noncompete Agreements [Member]
Business Acquisition [Line Items]
Trade name	$ 600,000
Amortization period	5 years
Bonterra Builders, LLC [Member] | Trade Names [Member]
Business Acquisition [Line Items]
Trade name	$ 1,400,000
Amortization period	3 years
Royal Oak Homes LLC and Affiliate [Member]
Business Acquisition [Line Items]
Business acquisitions		$ 65,000,000
Potential earn-out		3,000,000
Business Combinations, Consideration Transferred, Contingent Consideration, Estimate			2,100,000
Business Combinations, Consideration Transferred, Contingent Consideration, Payments to Date			$ 1,200,000
Royal Oak Homes LLC and Affiliate [Member] | Trade Names [Member]
Business Acquisition [Line Items]
Trade name		$ 600,000
Amortization of Intangible Assets											$ 200,000	$ 200,000
Royal Oak Homes LLC and Affiliate [Member] | Lots Owned Or Controlled [Member]
Business Acquisition [Line Items]
Number of primary residential lots | item		2,500

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Business Acquisitions - Fair Value of the Total Consideration and Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands			12 Months Ended
	Jul. 01, 2015	Mar. 13, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Business Acquisition [Line Items]
Cash paid for Bonterra Builders net assets			$ 93,760	$ 62,684	$ 0
Assets
Goodwill			$ 19,295	$ 6,071
Bonterra Builders, LLC [Member]
Business Acquisition [Line Items]
Cash paid for Bonterra Builders net assets	$ 40,818
Contingent consideration (earn-out)	6,000
Debt repaid at closing	52,941
Total consideration	99,759
Assets
Receivables and other current assets	574
Land and other inventories	91,632
Property and equipment	14
Intangible assets	2,000
Goodwill	13,223
Total assets acquired	107,443
Liabilities
Accounts payable	5,071
Accrued and other liabilities	763
Customer deposits	1,850
Total liabilities assumed	7,684
Total net assets acquired	99,759
Royal Oak Homes LLC and Affiliate [Member]
Business Acquisition [Line Items]
Cash paid for Bonterra Builders net assets		$ 65,000
Trade Names [Member] | Bonterra Builders, LLC [Member]
Assets
Intangible assets	1,400
Trade Names [Member] | Royal Oak Homes LLC and Affiliate [Member]
Assets
Intangible assets		$ 600
Noncompete Agreements [Member] | Bonterra Builders, LLC [Member]
Assets
Intangible assets	$ 600

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Business Acquisitions - Pro Forma Operating Results (Details) - Bonterra Builders, LLC [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Business Acquisition [Line Items]
Revenue	$ 588,533	$ 397,695
Net income (loss)	$ 17,158	$ 1,674

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Land and Other Inventories (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Land and Other Inventories [Abstract]
Land held for future development	$ 21,403	$ 20,844
Land developed and in process of development	348,648	269,764
Homes completed or under construction	212,480	92,576
Total Land and other inventories	582,531	383,184
Interest incurred	28,207	18,107	$ 9,296
Interest capitalized	(19,168)	(12,302)	(6,466)
Interest expense	$ 9,039	$ 5,805	$ 2,830

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Property and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	$ 72,926	$ 74,146
Less: accumulated depreciation	(37,953)	(37,224)
Property, Plant and Equipment, Net	34,973	36,922
Land Improvements [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	21,966	21,816
Building and Improvements [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	39,209	39,050
Machinery, Equipment and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	5,117	6,698
Capital leases	1,800
Accumulated depreciation of capital leased assets	800
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	598	603
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	3,937	4,017
Software and Software Development Costs [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	$ 2,099	$ 1,962

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Investments in Partnerships and LLCs (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Noncontrolling Interest [Line Items]
Investments in unconsolidated entities	$ 1,172	$ 17,991
Noncontrolling Interest in Joint Ventures	$ 0	15,600
Minimum [Member]
Noncontrolling Interest [Line Items]
Ownership percentage (percent)	20.00%
Maximum [Member]
Noncontrolling Interest [Line Items]
Parent ownership percentage (percent)	58.00%
EM 646 [Member]
Noncontrolling Interest [Line Items]
Parent ownership percentage (percent)	58.20%
Distribution Made to Partners, Value of Land Distributed	$ 19,900	7,100
Variable Interest Entity, Not Primary Beneficiary [Member]
Noncontrolling Interest [Line Items]
Contributions to unconsolidated entities	$ 2,900	$ 3,600	$ 100

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Lease Commitments (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Future minimum rental commitments [Abstract]
2016	$ 1,443
2017	1,289
2018	839
2019	438
2020	171
Thereafter	71
Total	4,251
Capital lease obligations [Abstract]
2016	612
2017	507
2018	117
2019	24
2020	0
Thereafter	0
Total	1,260
Leased Model Homes, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
2016	50
2017	0
2018	0
2019	0
2020	0
Thereafter	0
Total	50
Leases, Future Minimum Payments Due, Fiscal Maturity [Abstract]
2016	2,105
2017	1,796
2018	956
2019	462
2020	171
Thereafter	71
Total	5,561
Administration and Sales Offices [Member]
Rental expense [Abstract]
Rental expense	$ 900	$ 500	$ 400

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Notes Payable (Details) - USD ($)		1 Months Ended		12 Months Ended
	Jun. 23, 2015	Aug. 31, 2014	Jul. 31, 2012	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Jun. 17, 2015	Sep. 30, 2014	Apr. 07, 2014	Dec. 31, 2012	Feb. 04, 2011
Debt Instrument [Line Items]
Outstanding debt				$ 326,793,000	$ 299,956,000
Deferred debt issuance costs				(5,877,000)	(5,735,000)
Debt discount				(70,000)
Total Senior Notes, net				320,846,000	294,221,000
Stated interest rate (percent)	6.00%
Interest Paid	$ 1,500,000
Repayments of Notes Payable				53,163,000	5,446,000	$ 0
Minimum cash and cash equivalents				46,898,000	180,334,000	144,727,000				$ 79,815,000
Repurchase Right [Abstract]
Interest payments				24,000,000	7,600,000	$ 7,900,000
Maturities of notes payable:
2016				46,793,000
2017				0
2018				0
2019				200,000,000
2020				80,000,000
Thereafter				0
Total				326,793,000
Line of Credit [Member]
Debt Instrument [Line Items]
Line Of Credit Facility, Maximum Borrowing Capacity, Swing Line									$ 30,000,000
Line of Credit Facility, Amount Outstanding				0
Maturities of notes payable:
Line of Credit Facility, Maximum Borrowing Capacity				105,000,000
Line Of Credit Facility, Conditional Maximum Borrowing Capacity				175,000,000					175,000,000
7.50% Notes [Member]
Debt Instrument [Line Items]
Face amount of debt instrument											$ 100,000,000
Stated interest rate (percent)			7.50%								7.50%
Repurchase Right [Abstract]
Extinguishment of Debt, Amount			$ 44,500,000
7.50% Senior Exchange Convertible Notes Member [Member]
Debt Instrument [Line Items]
Face amount of debt instrument					44,500,000
Stated interest rate (percent)			7.50%
7.50% Senior Exchange Convertible Notes [Member] | Senior Exchange Convertible Debt [Member]
Debt Instrument [Line Items]
Outstanding debt				$ 0	44,475,000
Stated interest rate (percent)			7.50%
Debt Instrument, Repurchased Face Amount	15,400,000
Repurchase amount of debt instrument	20,500,000
7.50% Notes [Member]
Debt Instrument [Line Items]
Stated interest rate (percent)				7.50%
7.50% Notes [Member] | Senior Convertible Debt [Member]
Debt Instrument [Line Items]
Outstanding debt				$ 46,793,000	55,481,000
Stated interest rate (percent)											7.50%
Repurchase amount of debt instrument	8,700,000
Eight Point Five Percent Senior Notes Due Twenty Nineteen [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Outstanding debt				200,000,000	200,000,000
Face amount of debt instrument								$ 200,000,000
Stated interest rate (percent)								8.50%
6.00% Senior Convertible Notes Due 2020 [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Outstanding debt				80,000,000	0
Face amount of debt instrument	$ 80,000,000
Stated interest rate (percent)	6.00%
Proceeds from Notes Payable	$ 64,500,000
Repurchase amount of debt instrument	$ 30,700,000
Senior Credit Facility [Member] | Line of Credit [Member]
Debt Instrument [Line Items]
Outstanding debt				0	$ 0
Senior Credit Facility [Member] | Senior Exchange Convertible Debt [Member]
Maturities of notes payable:
2016				$ 46,800,000
JPMorgan Chase Bank, N.A. [Member] | Line of Credit [Member]
Maturities of notes payable:
Line of Credit Facility, Maximum Borrowing Capacity									$ 65,000,000
Citibank and Deutsche Bank [Member] | Line of Credit [Member]
Debt Instrument [Line Items]
Increase in maximum borrowing capacity		$ 40,000,000
TPG Aviator, L.P. [Member]
Debt Instrument [Line Items]
Equity Method Investment, Ownership Percentage							43.80%

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Accrued and Other Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Payables and Accruals [Abstract]
Accrued Interest	$ 12,253	$ 11,312
Accrued compensation	5,476	4,052
Warranty reserve	3,333	1,528
Infrastructure obligations	5,799	4,671
Contingent consideration	7,083	2,404
Other	4,882	4,167
Total accrued and other liabilities	$ 38,826	$ 28,134

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Estimated Development Liability for Sold Land (Details) home in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2015 USD ($) home	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)
Estimated Development Liability for Sold Land [Abstract]
Number of estimated homes the estimated liability covers (homesites) | home	8
Cash expenditures for improvements	$ 500	$ 200	$ 100
Estimated development liability for sold land	$ 32,551	$ 33,003

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Share-Based Payments and Other Executive Compensation (Details) - USD ($) $ / shares in Units, $ in Millions	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for grant (in shares)	764,182
Restricted stock expired/forfeited/cancelled (in shares)	(114,750)
Share-based compensation cost	$ 3.1	$ 2.8	$ 1.6
Weighted average fair value of units granted (in dollars per share)	$ 5.95	$ 9.30	$ 8.75
Weighted average expense recognition period (in years)	10 months 24 days
Unrecognized compensation expense for unvested stock options	$ 3.3
Weighted average remaining contractual life of stock options	7 years 9 months 18 days
Stock units outstanding	50,376	42,659	36,257
The Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration period after grant issued	10 years
Common Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for grant (in shares)	590,483
Restricted Stock and RSU Granted [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock expired/forfeited/cancelled (in shares)	(21,655)
Restricted stock granted (in shares)	291,075
Weighted average grant date fair value (in dollars per share)	$ 10.87	$ 16.59
Weighted average fair value of units granted (in dollars per share)	9.32
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average fair value of units granted (in dollars per share)	$ 9.32
Unrecognized compensation expense	$ 2.0
Weighted average expense recognition period (in years)	1 year 7 months 6 days
Maximum percentage of qualified remuneration	50.00%

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Share-Based Payments and Other Executive Compensation - Weighted Average Assumptions (Details) - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Dividend Yield	0.00%	0.00%	0.00%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate	38.00%	42.60%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate	1.00%	0.66%
Volatility rate, maximum			52.37%
Volatility rate, minimum			52.49%
Risk-free interest rate, maximum			1.86%
Risk-free interest rate, minimum			1.66%
Expected life (years)	2 years 11 months 12 days	2 years 10 months 28 days	6 years 3 months
Weighted average fair value of units granted (in dollars per share)	$ 5.95	$ 9.30	$ 8.75

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Share-Based Payments and Other Executive Compensation - Summary of Stock Option Activity (Details) - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Outstanding at beginning of year, in dollars per share	$ 17.00	$ 16.99	$ 25.00
Granted, in dollars per share	0.00	0.00	16.99
Exercised, in dollars per share	0.00	0.00	0.00
Forfeitured, in dollars per share	16.80	16.80	0.00
Outstanding at end of year, in dollars per share	17.01	17.00	16.99
Exercisable at the enf of year, in dollars per share	$ 17.01	$ 16.99	$ 0.00
Stock options, restricted stock and RSU granted [Member]
Stock option activity, shares
Outstanding at beginning of year, Shares	555,036	585,036	110,000
Granted, in shares	0	0	585,036
Exercised, in shares	0	0	0
Forfeitured, in shares	(10,000)	(30,000)	(110,000)
Outstanding at beginning of year, Shares	545,036	555,036	585,036
Exercisable at end of year	272,518	146,259	0

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Share-Based Payments and Other Executive Compensation - Restricted Stock and Stock Units Activity (Details) - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Restricted Stock and Stock Units
Restricted stock expired/forfeited/cancelled (in shares)	(114,750)
Weighted Average Grant Date Fair Value
Granted (in dollars per share)	$ 5.95	$ 9.30	$ 8.75
Restricted Stock and RSU Granted [Member]
Restricted Stock and Stock Units
Outstanding at beginning of year	145,352
Restricted stock granted (in shares)	291,075
Restricted stock converted/exercised (in shares)	(62,434)
Restricted stock expired/forfeited/cancelled (in shares)	(21,655)
Outstanding at end of year	352,338	145,352
Weighted Average Grant Date Fair Value
Outstanding at the beginning of year(in dollars per share)	$ 16.59
Granted (in dollars per share)	9.32
Converted/Exercised (in dollars per share)	16.93
Expired/Forfeited/Cancelled (in dollars per share)	10.95
Outstanding at the end of year(in dollars per share)	$ 10.87	$ 16.59

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended				12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Operating Loss Carryforwards [Line Items]
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent					35.00%
Current
Federal					$ 253	$ 0	$ 0
State					183	0	0
Total current					436	0	0
Deferred
Federal					0	0	0
State					0	0	0
Total deferred					0	0	0
Total income tax expense	$ 436	$ 0	$ 0	$ 0	436	0	0
Deferred income tax assets:
Tax over book basis of land inventory	15,338				15,338	15,085
Unrecoverable land development costs	5,321				5,321	6,222
Executive incentive compensation	2,112				2,112	1,338
Net operating loss carryforward	56,768				56,768	61,128
Impairment charges	53,103				53,103	55,529
Other	4,745				4,745	4,061
Total deferred income tax assets	137,387				137,387	143,363
Valuation allowance for deferred tax assets	(124,525)				(124,525)	(129,862)
Net deferred income tax assets	12,862				12,862	13,501
Deferred Tax Liabilities, Other	(3,139)				(3,139)	(3,412)
Deferred income tax liabilities:
Book over tax income recognized on sale of the Ocala Property	(7,094)				(7,094)	(7,751)
Tax over book on 4.50% Convertible Notes	(857)				(857)	(960)
Book over tax basis of depreciable assets	(1,772)				(1,772)	(1,378)
Total deferred income tax liabilities	(12,862)				(12,862)	(13,501)
Net deferred income tax liabilities	0				0	0
Effective income tax rate reconciliation
Income tax (benefit) expense computed at statutory rate					4,320	(522)	(3,317)
State income tax (benefit) expense, net of federal benefit					1,452	823	(385)
Change in valuation allowance on deferred tax assets					(5,336)	(370)	3,699
Other					0	69	$ 3
Increase in deferred tax asset valuation allowance					5,300	$ 400
Internal Revenue Service (IRS) [Member]
Operating Loss Carryforwards [Line Items]
NOL carryforwards	132,700				132,700
State [Member]
Operating Loss Carryforwards [Line Items]
NOL carryforwards	$ 283,200				$ 283,200
Maximum [Member] | Internal Revenue Service (IRS) [Member]
Operating Loss Carryforwards [Line Items]
NOL carryforward period of use					20 years
Maximum [Member] | State [Member]
Operating Loss Carryforwards [Line Items]
NOL carryforward period of use					20 years
Minimum [Member] | State [Member]
Operating Loss Carryforwards [Line Items]
NOL carryforward period of use					5 years

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Commitments and Contingencies (Details) - USD ($) $ in Millions	Dec. 31, 2015	Dec. 31, 2014
Performance Guarantee [Member]
Loss Contingencies [Line Items]
Loss contingency on certain claims	$ 30.9	$ 21.5

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Reportable Segments Reportable Segments (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Segment Reporting Information [Line Items]
Homebuilding									$ 498,915	$ 243,171	$ 114,973
Amenity and other									12,385	10,146	10,206
Land sales									6,466	32,596	16,303
Total revenues									517,766	285,913	141,482
Homebuilding cost of revenues									405,538	198,885	91,519
Selling, general and administrative expenses									79,586	50,305	35,638
Amenity and other									10,702	10,949	13,773
Land sales									823	22,003	8,111
Operating income (loss)									38,017	19,712	8,135
Unallocated income (expenses):
Interest income and other									154	447	2,218
Equity in earnings (loss) from unconsolidated entities	$ (6)	$ (5)	$ 171	$ (6)	$ (6)	$ (5)	$ (6)	$ 1	154	(16)	(101)
Interest expense									(9,039)	(5,805)	(2,830)
Income (loss) before income taxes	16,340	5,520	(4,466)	(5,008)	1,605	678	(2,253)	(1,633)	12,386	(1,603)	(8,272)
Less: income tax expense	(436)	0	0	0					(436)	0	0
Net income attributable to non-controlling interests in consolidated entities	0	0	0	0	0	0	36	293	0	329	1,205
Net income (loss) and comprehensive income (loss) attributable to AV Homes stockholders	15,904	$ 5,520	$ (4,466)	$ (5,008)	1,605	$ 678	$ (2,289)	$ (1,926)	11,950	(1,932)	(9,477)
Assets	736,139				663,151				736,139	663,151
Land inventories	582,531				383,184				582,531	383,184
Property and equipment, net	34,973				36,922				34,973	36,922
Investments in unconsolidated entities	1,172				17,991				1,172	17,991
Receivables	7,178				2,906				7,178	2,906
Prepaid expenses and other assets	17,144				15,245				17,144	15,245
Goodwill	19,295				6,071				19,295	6,071
Florida
Unallocated income (expenses):
Depreciation									2,400	2,400	2,100
Goodwill	6,100								6,100
Arizona
Unallocated income (expenses):
Depreciation									0	100	100
Carolinas
Unallocated income (expenses):
Depreciation									100	0	500
Goodwill	13,200								13,200
Segment Reconciling Items [Member]
Unallocated income (expenses):
Cash, cash equivalents and restricted cash	72,900				196,500				72,900	196,500
Land inventories	0				4,600				0	4,600
Property and equipment, net	1,800				2,700				1,800	2,700
Investments in unconsolidated entities	1,200				1,200				1,200	1,200
Receivables	0				2,000				0	2,000
Prepaid expenses and other assets	4,000				4,400				4,000	4,400
Corporate Segment [Member]
Unallocated income (expenses):
Depreciation									600	600	600
Geography Eliminations [Member]
Unallocated income (expenses):
Assets	79,836				211,205				79,836	211,205
Operating Segments [Member] | Florida
Segment Reporting Information [Line Items]
Total revenues									319,111	221,516	100,483
Homebuilding cost of revenues									239,001	156,439	64,726
Selling, general and administrative expenses									38,500	24,388	14,004
Amenity and other									10,587	10,524	11,663
Land sales									823	10,316	5,369
Operating income (loss)									30,200	19,849	4,721
Operating Segments [Member] | Arizona
Segment Reporting Information [Line Items]
Homebuilding									84,378	48,665	33,533
Amenity and other									0	6	420
Land sales									0	14,438	7,046
Total revenues									84,378	63,109	40,999
Homebuilding cost of revenues									71,305	41,261	27,073
Selling, general and administrative expenses									11,981	7,747	5,561
Amenity and other									115	425	2,110
Land sales									0	11,688	2,744
Operating income (loss)									977	1,988	3,511
Operating Segments [Member] | Carolinas
Segment Reporting Information [Line Items]
Homebuilding									114,277	1,288	0
Total revenues									114,277	1,288	0
Homebuilding cost of revenues									95,232	1,183	0
Selling, general and administrative expenses									12,205	2,230	97
Operating income (loss)									6,840	(2,125)	(97)
Segment Reconciling Items [Member]
Unallocated income (expenses):
Interest income and other									154	447	2,499
Equity in earnings (loss) from unconsolidated entities									154	(16)	(101)
Corporate general and administrative expenses									(16,900)	(15,941)	(15,975)
Interest expense									(9,039)	(5,805)	(2,830)
Income (loss) before income taxes									12,386	(1,603)	(8,272)
Less: income tax expense									(436)	0	0
Net income attributable to non-controlling interests in consolidated entities									0	329	1,205
Homebuilding [Member] | Operating Segments [Member] | Florida
Segment Reporting Information [Line Items]
Homebuilding									300,260	193,218	81,440
Amenity [Member] | Operating Segments [Member] | Florida
Segment Reporting Information [Line Items]
Amenity and other									12,385	10,140	9,786
Land Sales [Member] | Operating Segments [Member] | Florida
Segment Reporting Information [Line Items]
Land sales									6,466	18,158	$ 9,257
Florida | Reportable Geographical Components [Member]
Unallocated income (expenses):
Assets	328,233				278,091				328,233	278,091
Arizona | Reportable Geographical Components [Member]
Unallocated income (expenses):
Assets	175,929				145,380				175,929	145,380
Carolinas | Reportable Geographical Components [Member]
Unallocated income (expenses):
Assets	$ 152,141				$ 28,475				$ 152,141	$ 28,475

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Fair Value Disclosures - Carrying and Fair Values of Financial Instruments (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Jun. 23, 2015
Notes, mortgage notes and other debt [Abstract]
Stated interest rate (percent)				6.00%
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability	$ (116,000)	$ 0	$ 0
7.50% Notes [Member]
Notes, mortgage notes and other debt [Abstract]
Stated interest rate (percent)	7.50%
7.5% Senior Exchange Convertible Notes [Member]
Notes, mortgage notes and other debt [Abstract]
Stated interest rate (percent)	7.50%
6.00% Notes [Member]
Notes, mortgage notes and other debt [Abstract]
Stated interest rate (percent)	6.00%
Carrying Amount [Member]
Notes, mortgage notes and other debt [Abstract]
Contingent Consideration, Fair Value	$ 7,083,000	2,404,000
Carrying Amount [Member] | Notes and Senior Exchange Convertible Notes [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Notes Payable, Fair Value Disclosure	46,793,000	99,956,000
Carrying Amount [Member] | 8.50% Senior Notes [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Notes Payable, Fair Value Disclosure	195,495,000	194,265,000
Carrying Amount [Member] | 6.00% Notes [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Notes Payable, Fair Value Disclosure	78,558,000	0
Estimate of Fair Value, Fair Value Disclosure [Member]
Notes, mortgage notes and other debt [Abstract]
Contingent Consideration, Fair Value	7,083,000	2,404,000
Estimate of Fair Value, Fair Value Disclosure [Member] | Notes and Senior Exchange Convertible Notes [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Notes Payable, Fair Value Disclosure	45,389,000	99,040,000
Estimate of Fair Value, Fair Value Disclosure [Member] | 8.50% Senior Notes [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Notes Payable, Fair Value Disclosure	199,000,000	193,000
Estimate of Fair Value, Fair Value Disclosure [Member] | 6.00% Notes [Member]
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Notes Payable, Fair Value Disclosure	75,368,000	$ 0
Minimum [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Notes, mortgage notes and other debt [Abstract]
Contingent consideration, low end of range	7,000,000
Maximum [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Notes, mortgage notes and other debt [Abstract]
Contingent consideration, high end of range	7,100,000
Bonterra and Royal Oak [Member]
Notes, mortgage notes and other debt [Abstract]
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability	$ 200,000
Fair Value, Inputs, Level 3 [Member] | Minimum [Member]
Notes, mortgage notes and other debt [Abstract]
Fair Value Inputs, Discount Rate	6.80%
Fair Value, Inputs, Level 3 [Member] | Maximum [Member]
Notes, mortgage notes and other debt [Abstract]
Fair Value Inputs, Discount Rate	11.80%

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Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Quarterly Financial Data [Abstract]
Net revenues	$ 225,720	$ 153,827	$ 79,389	$ 58,830	$ 103,960	$ 86,641	$ 51,447	$ 43,865
Expenses	209,374	148,302	84,026	63,832	102,349	85,958	53,694	45,499	$ 505,534	$ 287,500	$ 149,653
Equity earnings (losses) from unconsolidated entities	(6)	(5)	171	(6)	(6)	(5)	(6)	1	154	(16)	(101)
Income (loss) before income taxes	16,340	5,520	(4,466)	(5,008)	1,605	678	(2,253)	(1,633)	12,386	(1,603)	(8,272)
Less: income tax expense	(436)	0	0	0					(436)	0	0
Net income (loss) attributable to non-controlling interest	0	0	0	0	0	0	36	293	0	329	1,205
Net income (loss) and comprehensive income (loss) attributable to AV Homes stockholders	$ 15,904	$ 5,520	$ (4,466)	$ (5,008)	$ 1,605	$ 678	$ (2,289)	$ (1,926)	$ 11,950	$ (1,932)	$ (9,477)
Loss per share:
Earnings per share - basic (in dollars per share)	$ 0.72	$ 0.25	$ (0.20)	$ (0.23)
Earnings per share - diluted (in dollars per share)	$ 0.65	$ 0.25	$ (0.20)	$ (0.23)
Basic and Diluted Loss Per Share (in dollars per share)					$ 0.07	$ 0.03	$ (0.10)	$ (0.09)	$ 0.54	$ (0.09)	$ (1.34)

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Subsequent Events (Details) $ in Thousands		12 Months Ended
	Feb. 04, 2016	Dec. 31, 2015 USD ($)	Jun. 23, 2015	Dec. 31, 2014 USD ($)	Jul. 31, 2012
Subsequent Event [Line Items]
Restricted cash		$ 26,948		$ 16,447
Stated interest rate (percent)			6.00%
Long-term Debt, Maturities, Repayments of Principal in Next Twelve Months		$ 46,793
Senior Exchange Convertible Debt [Member] | Senior Credit Facility [Member]
Subsequent Event [Line Items]
Interest coverage ratio covenant (less than)		1.50
Restricted cash		$ 25,600
Long-term Debt, Maturities, Repayments of Principal in Next Twelve Months		$ 46,800
Senior Exchange Convertible Debt [Member] | Senior Credit Facility [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Interest coverage ratio (exceeded)	1.50
Senior Exchange Convertible Debt [Member] | 7.50% Senior Exchange Convertible Notes [Member]
Subsequent Event [Line Items]
Stated interest rate (percent)					7.50%