Fair Value Disclosures

3 Months Ended

Feb. 29, 2012

Fair Value Disclosures [Abstract]

Fair Value Disclosures

7. Fair Value Disclosures

Accounting Standards Codification Topic No. 820, “Fair Value Measurements and Disclosures,” defines fair value, provides a framework for measuring the fair value of assets and liabilities under GAAP, 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 fair value hierarchy can be summarized as follows:

Level 1 Fair value determined based on quoted prices in active markets for identical assets or 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 pricing models, discounted cash flows, or similar techniques.

Fair value measurements are used for inventories on a nonrecurring basis when events and circumstances indicate the carrying value may not be recoverable. The following table presents the Company’s assets measured at fair value on a nonrecurring basis during the three months ended February 29, 2012 and the year ended November 30, 2011 (in thousands):

	Fair Value
Description	Hierarchy		February 29, 2012 (a)		November 30, 2011 (a)
Long-lived assets held and used		Level 2	$	—	$	75
Long-lived assets held and used		Level 3		12,239		33,947
Total			$	12,239	$	34,022

(a) Amounts represent the aggregate fair values for land parcels or communities for which the Company recognized noncash inventory impairment charges during the period, as of the date that the fair value measurements were made. The carrying value for these land parcels and communities may have subsequently increased or decreased from the fair value reflected due to activity that has occurred since the measurement date.

In accordance with the provisions of ASC 360, long-lived assets held and used with a carrying value of $18.8 million were written down to their fair value of $12.2 million during the three months ended February 29, 2012, resulting in noncash inventory impairment charges of $6.6 million. Long-lived assets held and used with a carrying value of $56.7 million were written down to their fair value of $34.0 million during the year ended November 30, 2011, resulting in noncash inventory impairment charges of $22.7 million.

The fair values for the Company’s long-lived assets held and used that were determined using Level 2 inputs were based on an executed contract. The fair values for the Company’s long-lived assets held and used that were determined using Level 3 inputs were primarily based on the estimated future cash flows discounted for inherent risk associated with each asset. The discount rates used and related discounted cash flows were impacted by the following: the risk-free rate of return; expected risk premium based on estimated land development, construction and delivery timelines; market risk from potential future price erosion; cost uncertainty due to development or construction cost increases; and other risks specific to the asset or conditions in the market in which the asset is located at the time the assessment is made. These factors were specific to each land parcel or community and may have varied among land parcels or communities.

The Company’s financial instruments consist of cash and cash equivalents, restricted cash, mortgages and notes receivable, senior notes, and mortgages and land contracts due to land sellers and other loans. Fair value measurements of financial instruments are determined by various market data and other valuation techniques as appropriate. When available, the Company uses quoted market prices in active markets to determine fair value.

The following table presents the carrying value and estimated fair values of the Company’s financial instruments, except for those for which the carrying values approximate fair value (in thousands):

	February 29, 2012				November 30, 2011
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Liabilities:
Senior notes due 2014 at 5  3/4%	$	193,452	$	195,633	$	249,647	$	232,500
Senior notes due 2015 at 5  7/8%		169,626		170,007		299,273		270,000
Senior notes due 2015 at 6  1/4%		296,171		297,038		449,795		401,625
Senior notes due 2017 at 9.10%		261,001		278,250		260,865		235,519
Senior notes due 2018 at 7  1/4%		299,037		297,000		299,007		251,625
Senior notes due 2020 at 8.00%		344,858		351,750		—		—

The fair values of the Company’s senior notes are estimated based on quoted market prices.

The carrying values reported for cash and cash equivalents, restricted cash, mortgages and notes receivable, and mortgages and land contracts due to land sellers and other loans approximate fair values.