Inventory (Tables)

9 Months Ended

Jun. 30, 2016

The components of our owned inventory are as follows as of June 30, 2016 and September 30, 2015:



(In thousands)	June 30, 2016		September 30, 2015
Homes under construction	$	520,313	$	377,281
Development projects in progress	736,587		809,900
Land held for future development	221,148		270,990
Land held for sale	38,791		44,555
Capitalized interest	142,398		123,457
Model homes	72,613		71,407
Total owned inventory	$	1,731,850	$	1,697,590

Schedule of Total Owned Inventory, by Segment

Total owned inventory, by reportable segment, is presented by category in the table below as of June 30, 2016 and September 30, 2015:



(In thousands)	Projects in Progress ^(a)			Land Held for Future Development		Land Held for Sale		Total Owned Inventory
June 30, 2016
West Segment	$	651,000		$	180,233	$	5,413	$	836,646
East Segment	316,779			29,918		26,339		373,036
Southeast Segment	309,886			10,997		5,939		326,822
Corporate and unallocated	194,246		^(b)	—		1,100		195,346
Total	$	1,471,911		$	221,148	$	38,791	$	1,731,850
September 30, 2015
West Segment	$	583,210		$	230,778	$	6,941	$	820,929
East Segment	353,054			29,280		30,927		413,261
Southeast Segment	277,351			10,932		5,587		293,870
Corporate and unallocated	168,430		^(b)	—		1,100		169,530
Total	$	1,382,045		$	270,990	$	44,555	$	1,697,590

^(a)Projects in progress include homes under construction, development projects in progress, capitalized interest and model home categories from the preceding table.

^(b)Includes capitalized interest and indirect costs that are maintained within Corporate and unallocated.

Recoverability Schedule of Inventory Assets Held for Development, by Reportable Segment

The table below summarizes the results of our undiscounted cash flow analysis by reportable segment, where applicable, for the quarter ended June 30, 2016:




($ in thousands)		Undiscounted Cash Flow Analyses Prepared
Segment ^(a)	# of Communities on Watch List^(b)	# of Communities	Pre-analysis Book Value (BV)		Aggregate Undiscounted Cash Flow as a % of BV ^(c)
Three Months Ended June 30, 2016
West	2	2	$	22,969	124.0	%
East	1	1	22,469		88.5	%
Corporate and unallocated ^(d)	—	—	2,794		N/A^(e)
Total	3	3	$	48,232

^(a) We have elected to aggregate our disclosure at the reportable segment level because we believe this level of disclosure is most meaningful to the readers of our financial statements.

^(b) Totals in this column exclude communities that are closing out (and have less than 10 closings remaining), as well as communities that are excluded due to certain qualitative considerations that would imply that low profitability levels are temporary in nature.

^(c)An aggregate undiscounted cash flow as a percentage of book value under 100% would indicate a possible impairment and is consistent with our “watch list” methodology. While this metric for the communities in the West segment was above 100% for the current quarter in total, the community that we ultimately impaired was below 100%, while the community we did not impair was above 100%.

^(d) Amount represents capitalized interest and indirects balance related to the communities for which an undiscounted cash flow analysis was prepared. Capitalized interest and indirects are maintained within our Corporate and unallocated segment.

^(e) N/A - not applicable.

Schedule of Discounted Cash Flow Analysis

The following table presents, by reportable segment, details around the impairment charges taken on projects in progress for the three and nine months ended June 30, 2016:



($ in thousands)	Three Months Ended June 30, 2016						Nine Months Ended June 30, 2016
Segment	# of Communities Impaired	# of Lots Impaired	Impairment Charge		Estimated Fair Value of Impaired Inventory at Period End		# of Communities Impaired	# of Lots Impaired	Impairment Charge		Estimated Fair Value of Impaired Inventory at Period End
West	1	179	$	5,216	$	10,827	2	213	$	6,729	$	16,345
East	1	78	5,894		18,073		1	78	5,894		18,073
Corporate and unallocated ^(a)	—	—	789		—		—	—	1,101		—
Total	2	257	$	11,899	$	28,900	3	291	$	13,724	$	34,418

^(a) Amount represents capitalized interest and indirects balance that was impaired. Capitalized interest and indirects are maintained within our Corporate and unallocated segment.

Quantitative Unobservable Inputs for Inventory Impairment

The following table presents the ranges or values of significant quantitative unobservable inputs we used in determining the fair value of the communities we impaired during the periods presented:



	Three Months Ended June 30,			Nine Months Ended June 30,
Unobservable Inputs	2016		2015	2016	2015
Average selling price (in thousands)	$355 - $560		—	$355 - $560	—
Closings per community per month	2 - 4		—	2 - 4	—
Discount rate	14.15	%	—	14.15% - 15.33%	—

Schedule of Inventory Impairments and Lot Option Abandonment Charges, by Reportable Homebuilding Segment

The following table presents, by reportable segment, our total impairment and abandonment charges for the periods presented:




	Three Months Ended June 30,				Nine Months Ended June 30,
(In thousands)	2016		2015		2016		2015
Projects in Progress:
West	$	5,216	$	—	$	6,729	$	—
East	5,894		—		5,894		—
Corporate and unallocated	789		—		1,101		—
Total impairment charges on projects in progress	$	11,899	$	—	$	13,724	$	—
Land Held for Sale:
East	$	18	$	249	$	215	$	249
Southeast	—		—		371		—
Total impairment charges on land held for sale	$	18	$	249	$	586	$	249
Abandonments:
Southeast	$	—	$	—	$	788	$	—
Total impairment and abandonment charges	$	11,917	$	249	$	15,098	$	249

Summary of Interests in Lot Option Agreements

The following table provides a summary of our interests in lot option agreements as of June 30, 2016 and September 30, 2015:



(In thousands)	Deposits & Non-refundable Pre-acquisition Costs Incurred		Remaining Obligation
As of June 30, 2016
Unconsolidated lot option agreements	$	76,968	$	438,498
As of September 30, 2015
Unconsolidated lot option agreements	$	51,475	$	420,070