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Note 13 - Reduction of Inventory to Fair Value | 12 Months Ended
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Oct. 31, 2014
Inventory Impairments And Land Option Cost Write Offs [Abstract] |
Inventory Impairments And Land Option Cost Write Offs [Text Block] | 13. Reduction of Inventory to Fair Value We record impairment losses on inventories related to communities under development and held for future development when events and circumstances indicate that they may be impaired and the undiscounted cash flows estimated to be generated by those assets are less than their related carrying amounts. If the expected undiscounted cash flows are less than the carrying amount, then the community is written down to its fair value. We estimate the fair value of each impaired community by determining the present value of the estimated future cash flows at a discount rate commensurate with the risk of the respective community. For the years ended October 31, 2014, 2013 and 2012, our discount rates used for the impairments recorded ranged from 16.8% to 17.3%, 18.0% to 19.3% and 16.8% to 18.5%, respectively. Should the estimates or expectations used in determining cash flows or fair value decrease or differ from current estimates in the future, we may need to recognize additional impairments. During the years ended October 31, 2014 and 2013, we evaluated inventories of all 396 and 388 communities under development and held for future development, respectively, for impairment indicators through preparation and review of detailed budgets or other market indicators of impairment. We performed detailed impairment calculations during the years ended October 31, 2014 and 2013 for 12 and 33 of those communities (i.e., those with a projected operating loss or other impairment indicators), respectively, with an aggregate carrying value of $28.2 million and $85.0 million, respectively, (four and eight were in the fourth quarter of fiscal 2014 and 2013, respectively, with an aggregate carrying value of $7.1 million and $21.8 million, respectively). As impairment indicators are assessed on a quarterly basis, some of the communities evaluated during the years ended October 31, 2014 and 2013 were evaluated in more than one quarterly period. Of those communities tested for impairment during the years ended October 31, 2014 and 2013, both periods had four communities with an aggregate carrying value of $23.1 million and $4.5 million, respectively, had undiscounted future cash flows that only exceeded the carrying amount by less than 20%. As a result of our impairment analysis, we recorded impairment losses, which are included in the Consolidated Statement of Operations and deducted from inventory, of $1.2 million, $2.4 million and $9.8 million for the years ended October 31, 2014, 2013 and 2012, respectively. The following table represents impairments by segment for fiscal 2014, 2013 and 2012:
(Dollars in millions) |  | Year Ended October 31, 2014 |
|  | Number of Communities |  |  | Dollar Amount of Impairment |  |  | Pre- Impairment Value (1) |
Northeast |  | 2 |  |  | $0.3 |  |  | $0.6 |
Mid-Atlantic |  | - |  |  | - |  |  | - |
Midwest |  | 3 |  |  | 0.9 |  |  | 3.8 |
Southeast |  | - |  |  | - |  |  | - |
Southwest |  | - |  |  | - |  |  | - |
West |  | - |  |  | - |  |  | - |
Total |  | 5 |  |  | $1.2 |  |  | $4.4 |
(Dollars in millions) |  | Year Ended October 31, 2013 |
|  | Number of Communities |  |  | Dollar Amount of Impairment (2) |  |  | Pre- Impairment Value (1) |
Northeast |  | 4 |  |  | $2.4 |  |  | $7.7 |
Mid-Atlantic |  | 1 |  |  | - |  |  | 0.1 |
Midwest |  | - |  |  | - |  |  | - |
Southeast |  | 1 |  |  | - |  |  | 0.4 |
Southwest |  | - |  |  | - |  |  | - |
West |  | - |  |  | - |  |  | - |
Total |  | 6 |  |  | $2.4 |  |  | $8.2 |
(Dollars in millions) |  | Year Ended October 31, 2012 |
|  | Number of Communities |  |  | Dollar Amount of Impairment |  |  | Pre- Impairment Value (1) |
Northeast |  | 10 |  |  | $2.8 |  |  | $19.6 |
Mid-Atlantic |  | 3 |  |  | 0.4 |  |  | 0.8 |
Midwest |  | 2 |  |  | 1.6 |  |  | 4.5 |
Southeast |  | 12 |  |  | 2.8 |  |  | 8.3 |
Southwest |  | - |  |  | - |  |  | - |
West |  | 5 |  |  | 2.2 |  |  | 4.9 |
Total |  | 32 |  |  | $9.8 |  |  | $38.1 |
(1) | Represents carrying value, net of prior period impairments, if any, at the time of recording the applicable period’s impairments.
(2) | During the year ended October 31, 2013, the Mid-Atlantic had an impairment totaling $2 thousand and the Southeast had an impairment totaling $17 thousand.
The Consolidated Statements of Operations line entitled “Homebuilding-Inventory impairment loss and land option write-offs” also includes write-offs of options and approval, engineering and capitalized interest costs that we record when we redesign communities and/or abandon certain engineering costs and we do not exercise options in various locations because the communities’ pro forma profitability is not projected to produce adequate returns on investment commensurate with the risk. The total aggregate write-offs were $4.0 million, $2.6 million and $2.7 million for the years ended October 31, 2014, 2013 and 2012, respectively. Occasionally, these write-offs are offset by recovered deposits (sometimes through legal action) that had been written off in a prior period as walk-away costs. Historically, these recoveries have not been significant in comparison to the total costs written off. The following table represents write-offs of such costs by segment for fiscal 2014, 2013 and 2012:
|  | Year Ended October 31, |
(In millions) |  | 2014 |  |  | 2013 |  |  | 2012 |
Northeast |  | $0.9 |  |  | $0.7 |  |  | $0.7 |
Mid-Atlantic |  | 0.2 |  |  | 0.1 |  |  | 0.6 |
Midwest |  | 1.0 |  |  | 0.2 |  |  | 0.2 |
Southeast |  | 0.7 |  |  | 0.2 |  |  | 0.7 |
Southwest |  | 1.2 |  |  | 1.4 |  |  | 0.4 |
West |  | - |  |  | - |  |  | 0.1 |
Total |  | $4.0 |  |  | $2.6 |  |  | $2.7 |

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- Definition Information about inventory impairments and land option cost write-offs, including the assumptions used in the impairment analysis. + References No definition available. + Details
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