XML 1090 R19.htm IDEA: XBRL DOCUMENT
v2.4.1.9

Income Taxes | 12 Months Ended
--- | ---
Nov. 30, 2014
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income Tax Benefit. The components of the income tax benefit in the consolidated statements of operations are as follows (in thousands):
| Federal |  | State |  | Total
2014 |  |  |  |  |
Current | $ | 100 |  |  | $ | (1,900 | ) |  | $ | (1,800 | )
Deferred | 646,000 |  |  | 179,200 |  |  | 825,200 |
Income tax benefit | $ | 646,100 |  |  | $ | 177,300 |  |  | $ | 823,400 |
2013 |  |  |  |  |
Current | $ | — |  |  | $ | 1,600 |  |  | $ | 1,600 |
Deferred | — |  |  | — |  |  | — |
Income tax benefit | $ | — |  |  | $ | 1,600 |  |  | $ | 1,600 |
2012 |  |  |  |  |
Current | $ | 16,500 |  |  | $ | 3,600 |  |  | $ | 20,100 |
Deferred | — |  |  | — |  |  | — |
Income tax benefit | $ | 16,500 |  |  | $ | 3,600 |  |  | $ | 20,100 |
We recognized an income tax benefit of $823.4 million in 2014, $1.6 million in 2013 and $20.1 million in 2012. The income tax benefit in 2014 was primarily due to the reversal of a substantial portion of our deferred tax asset valuation allowance at November 30, 2014. The income tax benefit in 2013 was due to the resolution of a state tax audit, which resulted in a refund receivable of $1.4 million, as well as the recognition of unrecognized tax benefits of $1.0 million, partly offset by the state tax liability of $.8 million. In 2012, the income tax benefit primarily reflected the resolution of federal and state tax audits, which also resulted in the realization of $1.2 million of deferred tax assets. Due to the effects of our deferred tax asset valuation allowances and changes in our unrecognized tax benefits, our effective tax rates in 2014, 2013 and 2012 are not meaningful items as our income tax amounts are not directly correlated to the amount of our pretax income (loss) for those periods. Deferred Tax Assets, Net. Deferred income taxes result from temporary differences in the financial and tax basis of assets and liabilities. Significant components of our deferred tax liabilities and assets are as follows (in thousands):
| November 30,
| 2014 |  | 2013
Deferred tax liabilities: |  |  |
Capitalized expenses | $ | 103,196 |  |  | $ | 87,599 |
State taxes | 72,258 |  |  | 62,884 |
Depreciation and amortization | — |  |  | 300 |
Other | 310 |  |  | 208 |
Total | 175,764 |  |  | 150,991 |
| November 30,
| 2014 |  | 2013
Deferred tax assets: |  |  |
Inventory impairments and land option contract abandonments | $ | 229,264 |  |  | $ | 110,745 |
NOL from 2006 through 2013 | 459,393 |  |  | 459,885 |
Warranty, legal and other accruals | 42,621 |  |  | 50,110 |
Employee benefits | 82,776 |  |  | 73,039 |
Partnerships and joint ventures | 15,672 |  |  | 122,081 |
Depreciation and amortization | 9,022 |  |  | — |
Capitalized expenses | 12,528 |  |  | 9,359 |
Tax credits | 176,234 |  |  | 173,289 |
Deferred income | 638 |  |  | 656 |
Other | 13,998 |  |  | 11,267 |
Total | 1,042,146 |  |  | 1,010,431 |
Valuation allowance | (41,150 | ) |  | (859,440 | )
Total | 1,000,996 |  |  | 150,991 |
Deferred tax assets, net | $ | 825,232 |  |  | $ | — |
Reconciliation of Expected Income Tax Benefit. The income tax benefit computed at the statutory U.S. federal income tax rate and the income tax benefit provided in the consolidated statements of operations differ as follows (dollars in thousands):
| Years Ended November 30,
| 2014 |  | 2013 |  | 2012
| $ |  | % |  | $ |  | % |  | $ |  | %
Income tax benefit (expense) computed at statutory rate | $ | (33,232 | ) |  | (35.0 | )% |  | $ | (13,427 | ) |  | (35.0 | )% |  | $ | 27,672 |  |  | 35.0 | %
Increase (decrease) resulting from: |  |  |  |  |  |  |  |  |  |  |
State taxes, net of federal income tax benefit | (13,907 | ) |  | (14.7 | ) |  | (1,947 | ) |  | (5.1 | ) |  | 9,948 |  |  | 12.6 |
Reserve and deferred income | — |  |  | — |  |  | (1,808 | ) |  | (4.7 | ) |  | (9,146 | ) |  | (11.6 | )
Capitalized expenses | 1,249 |  |  | 1.3 |  |  | — |  |  | — |  |  | 7,960 |  |  | 10.1 |
Basis in joint ventures | 10,441 |  |  | 11.0 |  |  | (9,598 | ) |  | (25.0 | ) |  | 42,503 |  |  | 53.8 |
NOL reconciliation | 12,973 |  |  | 13.7 |  |  | (3,806 | ) |  | (9.9 | ) |  | (5,345 | ) |  | (6.8 | )
Inventory impairments | — |  |  | — |  |  | 2,827 |  |  | 7.4 |  |  | (59,401 | ) |  | (75.1 | )
Recognition of federal and state tax benefits | 59 |  |  | .1 |  |  | 1,600 |  |  | 4.2 |  |  | 17,650 |  |  | 22.3 |
Tax credits | 2,884 |  |  | 3.0 |  |  | 2,675 |  |  | 7.0 |  |  | 17,889 |  |  | 22.6 |
Valuation allowance for deferred tax assets | 825,232 |  |  | 869.1 |  |  | 20,673 |  |  | 53.9 |  |  | (32,286 | ) |  | (40.8 | )
Depreciation and amortization | 15,765 |  |  | 16.6 |  |  | 4,523 |  |  | 11.8 |  |  | 2,482 |  |  | 3.1 |
Other, net | 1,936 |  |  | 2.1 |  |  | (112 | ) |  | (.3 | ) |  | 174 |  |  | .2 |
Income tax benefit | $ | 823,400 |  |  | 867.2 | % |  | $ | 1,600 |  |  | 4.3 | % |  | $ | 20,100 |  |  | 25.4 | %
Valuation Allowance. In accordance with ASC 740, we evaluate our deferred tax assets quarterly to determine if adjustments to our valuation allowance are required based on the consideration of all available positive and negative evidence using a “more likely than not” standard with respect to whether deferred tax assets will be realized. Our evaluation considers, among other factors, our historical operating results, our expectation of future profitability, the duration of the applicable statutory carryforward periods, and conditions in the housing market and the broader economy. The ultimate realization of our deferred tax assets depends primarily on our ability to generate future taxable income during the periods in which the related temporary differences in the financial basis and the tax basis of the assets become deductible. The value of our deferred tax assets will depend on applicable income tax rates. At November 30, 2014, consistent with the above process, we evaluated the need for a valuation allowance against our deferred tax assets and determined that it was more likely than not that most of our deferred tax assets would be realized. As a result, in accordance with ASC 740, we recognized an $824.2 million income tax benefit in the fourth quarter of 2014, which included the reversal of all but $41.2 million of our deferred tax asset valuation allowance. The components of the valuation allowance remaining at November 30, 2014 primarily relate to foreign tax credits and certain state NOL that have not met the “more likely than not” realization standard under ASC 740. We conducted our evaluation by considering all positive and negative evidence to determine our ability to realize our deferred tax assets. In our evaluation, we gave more significant weight to evidence that was objective in nature as compared to subjective evidence. Also, more significant weight was given to evidence that directly related to our current financial performance as compared to indirect or less current evidence. The principal positive evidence that led us to determine at November 30, 2014 that a significant portion of our deferred tax asset valuation allowance could be reversed included our emergence from a three-year cumulative pretax loss position in 2014 as well as the underlying momentum in our business and generally improved housing market and broader economic conditions over the past few years and continuing in 2014 that have enabled us to achieve and maintain a three-year cumulative pretax income position since August 31, 2014; the significant pretax income we generated during 2014 and 2013, including six consecutive quarters of pretax income totaling $149.8 million as of November 30, 2014; improvement in key financial metrics in 2014 when compared to the previous year (including in our revenues; housing gross profits; selling, general and administrative expenses as a percentage of housing revenues; net orders and backlog); our expectation of future profitability; our strong financial position; and significant evidence that conditions in the U.S. housing industry are more favorable than in recent years and our belief that such conditions will continue to be favorable over the long term. Prior to the quarter ended November 30, 2014, we gave significant weight to the negative, direct evidence of our three-year cumulative pretax loss position that resulted from pretax losses incurred during the housing downturn. As of November 30, 2014, we had generated six consecutive quarters of pretax income and had maintained a positive three-year cumulative pretax income position since initially achieving such a position at the end of our 2014 third quarter. Therefore, the prior pretax losses were weighted less than the recent positive financial results in our evaluation at November 30, 2014. Also, negative, direct evidence of our housing gross profit margins, which were lower than historical levels before the housing downturn, was given less weight than the direct, positive evidence of our growing pretax income levels. Other negative, indirect evidence, such as negative macroeconomic conditions that included unemployment and consumer confidence as well as a more restrictive mortgage lending environment, was considered at a lower weighting because our recent financial performance was achieved in this environment. Based on our evaluation of positive and negative evidence at November 30, 2014, we concluded that the positive evidence outweighed the negative evidence and that it was more likely than not that a substantial portion of our deferred tax assets would be realized. The most significant changes in our evaluation of the realizability of our deferred tax assets at November 30, 2014 compared to earlier periods were the development of significant positive evidence related to our year-over-year growth in pretax income, net orders and backlog levels during 2014; our expectation that we will realize all of our federal NOL and absorb substantially all federal deductible temporary differences as they reverse in future years based on projected fiscal 2015 pretax income levels; our expectation of sustained and increasing profitability in future years; and the reduced significance of the negative evidence we considered before November 30, 2014 related to our pretax losses incurred in prior years, because we had generated six consecutive quarters of pretax income and cumulative pretax income for the past three years as of November 30, 2014. These significant changes in evidence at November 30, 2014 led us to determine that it was more likely than not that most of our deferred tax assets would be realized. We reversed the valuation allowance on all of our federal deferred tax assets, except for the portion related to foreign tax credits due to the utilization of federal NOL to offset taxable income in the years through tax credit expiration. We estimated the amount of the valuation allowance needed for our state NOL carryforwards based on an analysis of the amount of our NOL carryforwards associated with each state in which we operate as compared to our expected level of taxable income under existing apportionment rules in each state and the carryforward periods allowed in each state’s tax code. At November 30, 2014, after the reversal, we had a valuation allowance of $41.2 million against our deferred tax assets. As of November 30, 2014, we needed to generate more than $2 billion of pretax income in future periods before 2034 to realize our deferred tax assets. During 2013, we reduced the valuation allowance by $20.7 million to account for adjustments to our deferred tax assets associated with the pretax income generated during the year and the loss of state NOLs due to the expiration of the applicable statute of limitations. During 2012, we recorded a valuation allowance of $32.3 million against net deferred tax assets generated primarily from the pretax losses for that year. We will continue to evaluate both the positive and negative evidence on a quarterly basis in determining the need for a valuation allowance with respect to our deferred tax assets. The accounting for deferred tax assets is based upon estimates of future results. Changes in positive and negative evidence, including differences between estimated and actual results, could result in changes in the valuation of our deferred tax assets that could have a material impact on our consolidated financial statements. Changes in existing tax laws could also affect actual tax results and the realization of deferred tax assets over time. The majority of the tax benefits associated with our NOL can be carried forward for 20 years (as we have no taxable income in the allowable two-year carryback period) and applied to offset future taxable income. The federal NOL carryforwards of $298.7 million, if not utilized, will begin to expire in 2030 through 2033. The state NOL carryforwards of $160.7 million, if not utilized, will begin to expire between 2015 and 2033. During 2014, $3.9 million of state NOL carryforwards expired. In addition, $87.3 million of our tax credits, if not utilized, will begin to expire in 2015 through 2034. Included in the $87.3 million are $3.2 million of investment tax credits, of which $2.4 million and $.8 million will expire in 2026 and 2027, respectively, as well as foreign tax credits of $.5 million and $14.0 million that will expire in 2015 and 2016, respectively. Unrecognized Tax Benefits. Gross unrecognized tax benefits are the differences between a tax position taken or expected to be taken in a tax return, and the benefit recognized for accounting purposes. A reconciliation of the beginning and ending balances of the gross unrecognized tax benefits, excluding interest and penalties, is as follows (in thousands):
| Years Ended November 30,
| 2014 |  | 2013 |  | 2012
Balance at beginning of year | $ | 206 |  |  | $ | 1,671 |  |  | $ | 1,899 |
Reductions for tax positions related to prior years | — |  |  | — |  |  | (165 | )
Reductions due to lapse of statute of limitations | — |  |  | (1,465 | ) |  | (63 | )
Balance at end of year | $ | 206 |  |  | $ | 206 |  |  | $ | 1,671 |
W e recognize accrued interest and penalties related to unrecognized tax benefits in our consolidated financial statements as a component of the provision for or benefit from income taxes. As of November 30, 2014, 2013 and 2012, there were $.1 million, $.3 million and $1.3 million, respectively, of gross unrecognized tax benefits (including interest and penalties) that, if recognized, would affect our annual effective tax rate. Our total accrued interest and penalties related to unrecognized income tax benefits was $.1 million at November 30, 2014 and $.3 million at November 30, 2013. Our liabilities for unrecognized tax benefits at November 30, 2014 and 2013 are included in accrued expenses and other liabilities in our consolidated balance sheets. Included in the balance of gross unrecognized tax benefits at both November 30, 2014 and 2013 were tax positions of $.2 million for which the ultimate deductibility is highly certain but the timing of such deductibility is uncertain. Because of the impact of deferred tax accounting, other than interest and penalties, the disallowance of the shorter deductibility period would not affect our annual effective tax rate, but would accelerate the payment of cash to a tax authority to an earlier period. As of November 30, 2014, our gross unrecognized tax benefits (including interest and penalties) totaled $.3 million. We anticipate that these gross unrecognized tax benefits will decrease by an amount ranging from zero to $.1 million during the 12 months from this reporting date due to various state filings associated with the resolution of a federal audit. The fiscal years ending 2010 and later remain open to federal and state examinations. Notwithstanding the reversal of a substantial portion of our deferred tax asset valuation allowance at November 30, 2014, the benefits of our deferred tax assets, including our NOL, built-in losses and tax credits would be reduced or potentially eliminated if we experienced an “ownership change” under Section 382. Based on our analysis performed as of November 30, 2014, we do not believe that we have experienced an ownership change as defined by Section 382, and, therefore, the NOL, built-in losses and tax credits we have generated should not be subject to a Section 382 limitation as of this reporting date.

X
- Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration