XML 41 R19.htm IDEA: XBRL DOCUMENT
v3.6.0.2

Income Taxes | 12 Months Ended
--- | ---
Nov. 30, 2016
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income Tax Benefit (Expense). The components of the income tax benefit (expense) in our consolidated statements of operations are as follows (in thousands):
| Federal |  | State |  | Total
2016 |  |  |  |  |
Current | $ | (1,900 | ) |  | $ | (1,000 | ) |  | $ | (2,900 | )
Deferred | (28,700 | ) |  | (12,100 | ) |  | (40,800 | )
Income tax expense | $ | (30,600 | ) |  | $ | (13,100 | ) |  | $ | (43,700 | )
2015 |  |  |  |  |
Current | $ | (1,400 | ) |  | $ | (2,000 | ) |  | $ | (3,400 | )
Deferred | (35,900 | ) |  | (3,100 | ) |  | (39,000 | )
Income tax expense | $ | (37,300 | ) |  | $ | (5,100 | ) |  | $ | (42,400 | )
2014 |  |  |  |  |
Current | $ | 100 |  |  | $ | (1,900 | ) |  | $ | (1,800 | )
Deferred | 646,000 |  |  | 179,200 |  |  | 825,200 |
Income tax benefit | $ | 646,100 |  |  | $ | 177,300 |  |  | $ | 823,400 |
Our income tax expense for 2016 and 2015 reflected the favorable net impact of $15.2 million and $5.6 million, respectively, of federal energy tax credits we earned from building energy-efficient homes, resulting in effective tax rates of 29.3% for 2016 and 33.4% for 2015. 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. Due to the effects of our deferred tax asset valuation allowance and changes in our unrecognized tax benefits, our effective tax rate in 2014 was not a meaningful item as our income tax amount was not directly correlated to our pretax income for that period. The majority of the federal energy tax credits for 2016 resulted from legislation enacted on December 18, 2015. Among other things, this legislation extended the availability of a business tax credit for building new energy-efficient homes through December 31, 2016. Prior to this legislation, the tax credit expired on December 31, 2014. The federal energy tax credits for 2015 were earned primarily from building energy-efficient homes in prior periods based on legislation enacted on December 19, 2014, which permitted retroactive application of the credits. 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,
| 2016 |  | 2015
Deferred tax liabilities: |  |  |
Capitalized expenses | $ | 116,551 |  |  | $ | 110,408 |
State taxes | 65,766 |  |  | 68,866 |
Other | 286 |  |  | 196 |
Total | $ | 182,603 |  |  | $ | 179,470 |
| November 30,
| 2016 |  | 2015
Deferred tax assets: |  |  |
NOLs from 2006 through 2016 | $ | 350,329 |  |  | $ | 423,274 |
Tax credits | 197,766 |  |  | 186,169 |
Inventory impairment and land option contract abandonment charges | 176,555 |  |  | 179,828 |
Employee benefits | 102,321 |  |  | 93,395 |
Warranty, legal and other accruals | 51,448 |  |  | 49,655 |
Capitalized expenses | 36,950 |  |  | 34,887 |
Partnerships and joint ventures | 16,293 |  |  | 18,557 |
Depreciation and amortization | 8,530 |  |  | 9,146 |
Other | 6,196 |  |  | 4,537 |
Total | 946,388 |  |  | 999,448 |
Valuation allowance | (24,800 | ) |  | (37,782 | )
Total | 921,588 |  |  | 961,666 |
Deferred tax assets, net | $ | 738,985 |  |  | $ | 782,196 |
Reconciliation of Expected Income Tax Benefit (Expense). The income tax benefit (expense) computed at the statutory U.S. federal income tax rate and the income tax benefit (expense) provided in our consolidated statements of operations differ as follows (dollars in thousands):
| Years Ended November 30,
| 2016 |  | 2015 |  | 2014
| $ |  | % |  | $ |  | % |  | $ |  | %
Income tax expense computed at statutory rate | $ | (52,260 | ) |  | (35.0 | )% |  | $ | (44,462 | ) |  | (35.0 | )% |  | $ | (33,232 | ) |  | (35.0 | )%
Valuation allowance for deferred tax assets | 12,982 |  |  | 8.7 |  |  | 3,356 |  |  | 2.6 |  |  | 825,232 |  |  | 869.1 |
Tax credits | 4,447 |  |  | 3.0 |  |  | 6,926 |  |  | 5.5 |  |  | 1,875 |  |  | 2.0 |
Depreciation and amortization | 1,842 |  |  | 1.2 |  |  | 3,183 |  |  | 2.5 |  |  | 15,765 |  |  | 16.6 |
Basis in unconsolidated joint ventures | (86 | ) |  | (0.1 | ) |  | 1,617 |  |  | 1.3 |  |  | 10,441 |  |  | 11.0 |
NOL reconciliation | (3,691 | ) |  | (2.5 | ) |  | (3,379 | ) |  | (2.7 | ) |  | 12,973 |  |  | 13.7 |
State taxes, net of federal income tax benefit | (7,511 | ) |  | (5.0 | ) |  | (5,155 | ) |  | (4.1 | ) |  | (13,907 | ) |  | (14.7 | )
Other, net | 577 |  |  | .4 |  |  | (4,486 | ) |  | (3.5 | ) |  | 4,253 |  |  | 4.5 |
Income tax benefit (expense) | $ | (43,700 | ) |  | (29.3 | )% |  | $ | (42,400 | ) |  | (33.4 | )% |  | $ | 823,400 |  |  | 867.2 | %
Deferred Tax Asset Valuation Allowance. 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. In our evaluation, we give more significant weight to evidence that is objective in nature as compared to subjective evidence. Also, more significant weight is given to evidence that directly relates to our then-current financial performance as compared to indirect or less current evidence. 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 in our consolidated balance sheets depends on applicable income tax rates. Our deferred tax assets of $763.8 million at November 30, 2016 and $820.0 million at November 30, 2015 were partially offset by valuation allowances of $24.8 million and $37.8 million, respectively. The deferred tax asset valuation allowance at November 30, 2016 was primarily related to certain state NOLs that had not met the “more likely than not” realization standard at that date. The valuation allowance at November 30, 2015 was mainly related to foreign tax credits and certain state NOLs that had not met the “more likely than not” realization standard as of that date. As of November 30, 2016, we needed to generate approximately $1.8 billion of pretax income in future periods before 2036 to realize our deferred tax assets. Based on the evaluation of our deferred tax assets as of November 30, 2016, we determined that most of our deferred tax assets would be realized. In 2016, we reduced our valuation allowance by $13.0 million, which reflected the expiration of foreign tax credits and the release of a valuation allowance associated with state NOLs that met the “more likely than not” realization standard, partly offset by the establishment of a valuation allowance for state NOLs related to the wind down of our Metro Washington, D.C. operations. In 2015, the valuation allowance was reduced by $3.4 million to account for the expiration of foreign tax credits and state NOLs that were not utilized. At November 30, 2014, we determined through our evaluation process that it was more likely than not that most of our deferred tax assets would be realized. As a result, we recognized an $824.2 million income tax benefit in the 2014 fourth quarter, which included the reversal of all but $41.2 million of our deferred tax asset valuation allowance. The principal positive evidence that led us to determine at November 30, 2014 that most 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 that had enabled us to achieve and maintain a three-year cumulative pretax income position as of and after the 2014 third quarter; the significant pretax income we generated during 2014 and 2013, including six consecutive quarters of pretax income 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; significant evidence that conditions in the U.S. housing industry at the time were more favorable than they had been in the then-recent past and our belief that such conditions would continue to be favorable over the long term; and our belief that we would be able to make operational adjustments to address any potential changes in market conditions to maintain long-term profitability and realize our deferred tax assets. 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 federal and state tax laws and corporate income tax rates could also affect actual tax results and the realization of deferred tax assets over time. The majority of the tax benefits associated with our NOLs can be carried forward for 20 years (as we did not have taxable income in the allowable two-year carryback period) and applied to offset future taxable income. The federal NOL carryforwards of $204.2 million, if not utilized, will begin to expire in 2030 through 2033. Depending on their applicable statutory period, the state NOL carryforwards of $146.1 million, if not utilized, will begin to expire between 2017 and 2036. State NOL carryforwards of $.5 million and $1.7 million expired in 2016 and 2015, respectively. In addition, $104.9 million of our tax credits, if not utilized, will begin to expire in 2026 through 2036. Included in the $104.9 million are $3.2 million of investment tax credits, of which $2.4 million and $.8 million will expire in 2026 and 2027, 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 gross unrecognized tax benefits, excluding interest and penalties, is as follows (in thousands):
| Years Ended November 30,
| 2016 |  | 2015 |  | 2014
Balance at beginning of year | $ | 56 |  |  | $ | 206 |  |  | $ | 206 |
Reductions due to lapse of statute of limitations | — |  |  | (150 | ) |  | — |
Balance at end of year | $ | 56 |  |  | $ | 56 |  |  | $ | 206 |
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 each of November 30, 2016, 2015 and 2014, there was a balance of $.1 million of gross unrecognized tax benefits (including interest and penalties) that, if recognized, would affect our annual effective tax rate. Our liabilities for unrecognized tax benefits at November 30, 2016 and 2015 are included in accrued expenses and other liabilities in our consolidated balance sheets. As of November 30, 2016 and 2015, there were no tax positions for which the ultimate deductibility is highly certain but the timing of such deductibility is uncertain. Our total accrued interest and penalties related to unrecognized income tax benefits was zero at both November 30, 2016 and 2015. 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, 2016, our gross unrecognized tax benefits (including interest and penalties) totaled $.1 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 the expiration of the applicable statute of limitations. The fiscal years ending 2013 and later remain open to federal examinations, while 2012 and later remain open to 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 NOLs, 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, 2016, we do not believe that we have experienced an ownership change as defined by Section 382, and, therefore, the NOLs, built-in losses and tax credits we have generated should not be subject to a Section 382 limitation as of this reporting date.

X
- References No definition available. + 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 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 2: 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=65882285&loc=d3e32559-109319 Reference 3: 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=65882285&loc=d3e32718-109319 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=65882285&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=65882285&loc=d3e32537-109319 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration