NOTE 6 Inventories

The Company acquired a significant amount of repossessed pre-owned (Buy Back) inventory in 2011. Other pre-owned homes are periodically acquired (Repossessions) as a convenience to the Company’s joint venture partner. Pre-owned homes are also taken as trade-ins on new home sales (Trade-Ins). This inventory consists of individual homes and homes on a real estate parcel. The Company continually monitors this inventory and records a valuation allowance where necessary on a unit specific basis which management believes results in inventory being valued at market. The Company could experience additional losses on the disposition of these homes beyond the level of the reserve recorded by the Company.

A breakdown of the elements of inventory at November 5, 2016 and October 31, 2015 is as follows:


	November 5, 2016			October 31, 2015
Raw materials	$	717,525		$	721,751
Work-in-process		120,693			113,891
Finished homes		6,025,268			5,114,568
Model home furniture		105,595			69,495

Inventories	$	6,969,081		$	6,019,705

Pre-owned homes *	$	4,014,119		$	5,516,272
Inventory impairment reserve **		(984,815	)		(1,425,108	)

		3,029,304			4,091,164
Less homes expected to sell in 12 months		(1,295,694	)		(1,366,974	)

Pre-owned homes, long-term	$	1,733,610		$	2,724,190

*	The following table summarizes a breakdown of pre-owned homes inventory for fiscal years 2016 and 2015:


	Buy Back			Repossessions			Trade-Ins			Total
Balance at November 1, 2014	$	5,173,960		$	1,137,968		$	10,555		$	6,322,483
Additions		429,109			436,478			66,610			932,197
Sales		(1,287,831	)		(416,337	)		(34,240	)		(1,738,408	)

Balance at October 31, 2015		4,315,238			1,158,109			42,925			5,516,272
Additions		—			350,735			56,486			407,221
Sales		(1,745,955	)		(106,453	)		(56,966	)		(1,909,374	)

Balance at November 5, 2016	$	2,569,283		$	1,402,391		$	42,445		$	4,014,119

**	An analysis of the pre-owned home inventory impairment reserve at November 5, 2016 and October 31, 2016 is as follows:


	November 5, 2016			October 31, 2015
Balance at beginning of year	$	1,425,108		$	1,772,280
Less: Reductions for homes sold		(568,797	)		(258,001	)
Inventory holding costs		(143,079	)		(141,468	)
Additions to impairment reserve		271,583			52,297

Balance at end of year	$	984,815		$	1,425,108