Company Quick10K Filing
Beazer Homes
Price14.83 EPS-3
Shares31 P/E-6
MCap459 P/FCF4
Net Debt-123 EBIT-71
TEV336 TEV/EBIT-5
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-12-31 Filed 2021-01-28
10-K 2020-09-30 Filed 2020-11-12
10-Q 2020-06-30 Filed 2020-07-30
10-Q 2020-03-31 Filed 2020-04-30
10-Q 2019-12-31 Filed 2020-01-30
10-K 2019-09-30 Filed 2019-11-13
10-Q 2019-06-30 Filed 2019-08-01
10-Q 2019-03-31 Filed 2019-05-02
10-Q 2018-12-31 Filed 2019-02-04
10-K 2018-09-30 Filed 2018-11-13
10-Q 2018-06-30 Filed 2018-07-26
10-Q 2018-03-31 Filed 2018-05-02
10-Q 2017-12-31 Filed 2018-02-06
10-K 2017-09-30 Filed 2017-11-14
10-Q 2017-06-30 Filed 2017-08-01
10-Q 2017-03-31 Filed 2017-05-04
10-Q 2016-12-31 Filed 2017-02-09
10-K 2016-09-30 Filed 2016-11-15
10-Q 2016-06-30 Filed 2016-07-28
10-Q 2016-03-31 Filed 2016-04-28
10-Q 2015-12-31 Filed 2016-02-04
10-K 2015-09-30 Filed 2015-11-10
10-Q 2015-06-30 Filed 2015-08-04
10-Q 2015-03-31 Filed 2015-04-30
10-Q 2014-12-31 Filed 2015-01-30
10-K 2014-09-30 Filed 2014-11-13
10-Q 2014-06-30 Filed 2014-07-31
10-Q 2014-03-31 Filed 2014-05-01
10-Q 2013-12-31 Filed 2014-01-31
10-K 2013-09-30 Filed 2013-11-08
10-Q 2013-06-30 Filed 2013-08-01
10-Q 2013-03-31 Filed 2013-05-02
10-Q 2012-12-31 Filed 2013-01-28
10-K 2012-09-30 Filed 2012-11-13
10-Q 2012-06-30 Filed 2012-08-03
10-Q 2012-03-31 Filed 2012-05-02
10-Q 2011-12-31 Filed 2012-02-02
10-K 2011-09-30 Filed 2011-11-15
10-Q 2011-06-30 Filed 2011-08-09
10-Q 2011-03-31 Filed 2011-05-10
10-Q 2010-12-31 Filed 2011-02-08
10-K 2010-09-30 Filed 2010-11-05
10-Q 2010-06-30 Filed 2010-08-05
10-Q 2010-03-31 Filed 2010-05-03
10-Q 2009-12-31 Filed 2010-02-05
8-K 2020-11-20
8-K 2020-11-12
8-K 2020-10-08
8-K 2020-09-22
8-K 2020-07-30
8-K 2020-04-30
8-K 2020-04-06
8-K 2020-02-05
8-K 2020-01-30
8-K 2019-11-13
8-K 2019-09-24
8-K 2019-09-18
8-K 2019-09-09
8-K 2019-08-29
8-K 2019-08-07
8-K 2019-08-01
8-K 2019-05-30
8-K 2019-05-02
8-K 2019-02-06
8-K 2019-02-04
8-K 2018-11-15
8-K 2018-11-13
8-K 2018-10-01
8-K 2018-10-01
8-K 2018-09-25
8-K 2018-09-18
8-K 2018-07-26
8-K 2018-07-13
8-K 2018-07-09
8-K 2018-05-02
8-K 2018-02-26
8-K 2018-02-06
8-K 2018-02-01
8-K 2018-01-08

BZH 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Item 5. Other Information
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 6. Exhibits
EX-10.2 bzh-123120ex102.htm
EX-22 bzh-123120ex22.htm
EX-31.1 bzh-123120ex311.htm
EX-31.2 bzh-123120ex312.htm
EX-32.1 bzh-123120ex321.htm
EX-32.2 bzh-123120ex322.htm

Beazer Homes Earnings 2020-12-31

Balance SheetIncome StatementCash Flow
2.52.01.51.00.50.02012201420172020
Assets, Equity
0.80.60.40.20.0-0.22018201820192020
Rev, G Profit, Net Income
0.30.20.1-0.1-0.2-0.32012201420172020
Ops, Inv, Fin

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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________________________________________________ 
FORM 10-Q
_____________________________________________________________ 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended December 31, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 001-12822
_____________________________________________________________ 
BEAZER HOMES USA, INC.
(Exact name of registrant as specified in its charter)
 _____________________________________________________________ 
Delaware 58-2086934
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
1000 Abernathy Road, Suite 260, Atlanta, Georgia
 30328
(Address of principal executive offices) (Zip Code)
(770) 829-3700
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par valueBZHNew York Stock Exchange
 _____________________________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days.    Yes  x    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act:
Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES      NO  
Number of shares of common stock outstanding as of January 26, 2021: 31,244,247


Table of Contents
BEAZER HOMES USA, INC.
TABLE OF CONTENTS
 
1

Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements

BEAZER HOMES USA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
in thousands (except share and per share data)December 31,
2020
September 30,
2020
ASSETS
Cash and cash equivalents$244,628 $327,693 
Restricted cash17,420 14,835 
Accounts receivable (net of allowance of $348 and $358, respectively)
18,599 19,817 
Income tax receivable9,203 9,252 
Owned inventory1,413,990 1,350,738 
Investments in unconsolidated entities3,928 4,003 
Deferred tax assets, net221,168 225,143 
Property and equipment, net22,111 22,280 
Operating lease right-of-use assets13,592 13,103 
Goodwill11,376 11,376 
Other assets8,459 9,240 
Total assets$1,984,474 $2,007,480 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Trade accounts payable$120,863 $132,192 
Operating lease liabilities15,560 15,333 
Other liabilities110,264 135,983 
Total debt (net of debt issuance costs of $10,483 and $10,891, respectively)
1,131,725 1,130,801 
Total liabilities1,378,412 1,414,309 
Stockholders’ equity:
Preferred stock (par value $0.01 per share, 5,000,000 shares authorized, no shares issued)
  
Common stock (par value $0.001 per share, 63,000,000 shares authorized, 31,253,816 issued and outstanding and 31,012,326 issued and outstanding, respectively)
31 31 
Paid-in capital857,360 856,466 
Accumulated deficit(251,329)(263,326)
Total stockholders’ equity606,062 593,171 
Total liabilities and stockholders’ equity$1,984,474 $2,007,480 
See accompanying notes to condensed consolidated financial statements.

2

Table of Contents
BEAZER HOMES USA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
Three Months Ended
 December 31,
 in thousands (except per share data)20202019
Total revenue$428,539 $417,804 
Home construction and land sales expenses352,781 354,667 
Inventory impairments and abandonments465  
Gross profit75,293 63,137 
Commissions16,507 16,065 
General and administrative expenses37,976 39,699 
Depreciation and amortization3,122 3,427 
Operating income17,688 3,946 
Equity in loss of unconsolidated entities(75)(13)
Other expense, net(1,452)(1,340)
Income from continuing operations before income taxes16,161 2,593 
Expense (benefit) from income taxes4,125 (211)
Income from continuing operations12,036 2,804 
Loss from discontinued operations, net of tax(39)(58)
Net income$11,997 $2,746 
Weighted average number of shares:
Basic29,771 29,746 
Diluted30,086 30,138 
Basic income (loss) per share:
Continuing operations$0.40 $0.09 
Discontinued operations  
Total$0.40 $0.09 
Diluted income (loss) per share:
Continuing operations$0.40 $0.09 
Discontinued operations  
Total$0.40 $0.09 
See accompanying notes to condensed consolidated financial statements.

3

Table of Contents
BEAZER HOMES USA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)

Three Months Ended December 31, 2020
Common StockPaid-in CapitalAccumulated Deficit
in thousandsSharesAmountTotal
Balance as of September 30, 202031,012 $31 $856,466 $(263,326)$593,171 
Net income and comprehensive income— — — 11,997 11,997 
Stock-based compensation expense— — 3,511 — 3,511 
Exercises of stock options117 — 3 — 3 
Shares issued under employee stock plans, net411 — — — — 
Forfeiture and other settlements of restricted stock— — — — — 
Common stock redeemed for tax liability(286)— (2,620)— (2,620)
Balance as of December 31, 202031,254 $31 $857,360 $(251,329)$606,062 


Three Months Ended December 31, 2019
Common StockPaid-in CapitalAccumulated Deficit
in thousandsSharesAmountTotal
Balance as of September 30, 201930,933 $31 $854,275 $(315,552)$538,754 
Net income and comprehensive loss— — — 2,746 2,746 
Stock-based compensation expense— — 2,311 — 2,311 
Exercises of stock options47 — 173 — 173 
Shares issued under employee stock plans, net574 — — — — 
Forfeiture and other settlements of restricted stock(1)— (2,058)— (2,058)
Common stock redeemed for tax liability(170)— (2,646)— (2,646)
Balance as of December 31, 201931,383 $31 $852,055 $(312,806)$539,280 
See accompanying notes to condensed consolidated financial statements.

4

Table of Contents
BEAZER HOMES USA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
 December 31,
in thousands20202019
Cash flows from operating activities:
Net income$11,997 $2,746 
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization3,122 3,427 
Stock-based compensation expense3,511 2,311 
Inventory impairments and abandonments465  
Deferred and other income tax expense (benefit) 4,114 (228)
Gain on sale of fixed assets(95)(63)
Change in allowance for doubtful accounts(10)9 
Equity in loss from unconsolidated entities75 13 
Changes in operating assets and liabilities:
Decrease in accounts receivable1,228 6,947 
Decrease in income tax receivable49 303 
Increase in inventory(62,661)(68,999)
Decrease in other assets1,076 1,978 
Decrease in trade accounts payable(11,329)(20,999)
Decrease in other liabilities(26,120)(11,975)
Net cash used in operating activities(74,578)(84,530)
Cash flows from investing activities:
Capital expenditures(2,953)(2,632)
Proceeds from sale of fixed assets95 66 
Return of capital from unconsolidated entities 19 
Net cash used in investing activities(2,858)(2,547)
Cash flows from financing activities:
Repayment of debt (1,150)
Repayment of borrowings from credit facility (95,000)
Borrowings from credit facility 125,000 
Debt issuance costs(427) 
Tax payments for stock-based compensation awards(2,620)(2,646)
Stock option exercises and other financing activities3 (1,885)
Net cash (used in) provided by financing activities(3,044)24,319 
Net decrease in cash, cash equivalents, and restricted cash(80,480)(62,758)
Cash, cash equivalents, and restricted cash at beginning of period342,528 122,794 
Cash, cash equivalents, and restricted cash at end of period$262,048 $60,036 
See accompanying notes to condensed consolidated financial statements.
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BEAZER HOMES USA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Description of Business
Beazer Homes USA, Inc. (“we,” “us,” “our,” “Beazer,” “Beazer Homes” and the “Company”) is a geographically diversified homebuilder with active operations in 13 states within three geographic regions in the United States: the West, East, and Southeast.
Our homes are designed to appeal to homeowners at different price points across various demographic segments and are generally offered for sale in advance of their construction. Our objective is to provide our customers with homes that incorporate exceptional value and quality, while seeking to maximize our return on invested capital over the course of a housing cycle.
For an additional description of our business, refer to Item 1 within our Annual Report on Form 10-K for the fiscal year ended September 30, 2020 (2020 Annual Report).
(2) Basis of Presentation and Summary of Significant Accounting Policies
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. The unaudited condensed consolidated financial statements do not include all of the information and disclosures required by GAAP for complete financial statements. As such, the accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's 2020 Annual Report. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation have been included in the accompanying unaudited condensed consolidated financial statements. The results of the Company's consolidated operations presented herein for the three months ended December 31, 2020 are not necessarily indicative of the results to be expected for the full fiscal year due to seasonal variations in our operations and other factors, such as the effects of the coronavirus (“COVID-19”) pandemic and its influence on our future results.
Basis of Consolidation
The accompanying unaudited condensed consolidated financial statements include the accounts of Beazer Homes USA, Inc. and its consolidated subsidiaries. Intercompany transactions and balances have been eliminated in consolidation. Our net income (loss) is equivalent to our comprehensive income (loss), so we have not presented a separate statement of comprehensive income (loss).
In the past, we have discontinued homebuilding operations in various markets. Results from certain of these exited markets are reported as discontinued operations in the accompanying unaudited condensed consolidated statements of operations for all periods presented (see Note 16 for a further discussion of our discontinued operations).
Our fiscal year 2021 began on October 1, 2020 and ends on September 30, 2021. Our fiscal year 2020 began on October 1, 2019 and ended on September 30, 2020.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make informed estimates and judgments that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Accordingly, actual results could differ from these estimates.
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Share Repurchase Program
During the first quarter of fiscal 2019, the Company's Board of Directors approved a share repurchase program that authorizes the Company to repurchase up to $50.0 million of its outstanding common stock. As part of this program, the Company repurchased common stock during fiscal 2019 and 2020 through open market transactions, 10b5-1 plans, and accelerated share repurchase (ASR) agreements. All shares have been retired upon repurchase. The aggregate reduction to stockholders’ equity related to share repurchases during the fiscal year ended September 30, 2020 and September 30, 2019 was $3.3 million and $34.6 million, respectively.
No share repurchases were made during the three months ended December 31, 2020. As of December 31, 2020, the remaining availability of the share repurchase program was $12.0 million.
Inventory Valuation
Inventory assets are assessed for recoverability no less than quarterly in accordance with the policies described in Notes 2 and 5 to the audited consolidated financial statements within our 2020 Annual Report. Homebuilding inventories that are accounted for as held for development (projects in progress) include land and home construction assets grouped together as communities. Homebuilding inventories held for development are stated at cost (including home construction costs, direct overhead costs, capitalized indirect costs, capitalized interest, real estate taxes and allocated lot costs) unless facts and circumstances indicate that the carrying value of the assets may not be recoverable. For communities that have been idled (land held for future development), all applicable carrying costs, such as interest and real estate taxes, are expensed as incurred, and the inventory is stated at cost unless facts and circumstances indicate that the carrying value of the assets may not be recoverable. We record land held for sale at the lower of the carrying value or fair value less costs to sell.
Revenue Recognition
We recognize revenue upon the transfer of promised goods to our customers in an amount that reflects the consideration to which we expect to be entitled by applying the following five-step process specified in Accounting Standards Codification Topic 606.
Identify the contract(s) with a customer
Identify the performance obligations
Determine the transaction price
Allocate the transaction price
Recognize revenue when the performance obligations are met
The following table presents our total revenue disaggregated by revenue stream:
Three Months Ended
December 31,
in thousands20202019
Homebuilding revenue$424,229 $417,399 
Land sales and other revenue4,310 405 
Total revenue (a)
$428,539 $417,804 
(a) Please see Note 15 for total revenue disaggregated by reportable segment.
Homebuilding revenue
Homebuilding revenue is reported net of any discounts and incentives and is generally recognized when title to and possession of the home are transferred to the buyer at the closing date. The performance obligation to deliver the home is generally satisfied in less than one year from the original contract date. Home sale contract assets consist of cash from home closings held by title companies in escrow for our benefit, typically for less than five days, and are considered accounts receivable. Contract liabilities include customer deposits related to sold but undelivered homes and totaled $22.9 million and $18.9 million as of December 31, 2020 and September 30, 2020, respectively. Of the customer liabilities outstanding as of September 30, 2020, $8.3 million was recognized in revenue during the three months ended December 31, 2020 upon closing of the related homes.


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Land sales and other revenue
Land sales revenue relates to land that does not fit within our homebuilding programs and strategic plans. Land sales typically require cash consideration on the closing date, which is generally when performance obligations are satisfied. We also provide title examinations for our homebuyers in certain markets. Revenues associated with our title operations are recognized as closing services are rendered and title insurance policies are issued, both of which generally occur as each home is closed.
Recent Accounting Pronouncements
Fair Value Measurements. On October 1, 2020 we adopted Accounting Standards Update (ASU) No. 2018-13, Fair Value Measurement (Topic 820) - Disclosure Framework (ASU 2018-13). The updated guidance improves the disclosure requirements for fair value measurements. No retrospective adjustments were required.
Reference Rate Reform. In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASU 2020-04). ASU 2020-04 provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. This guidance is effective beginning on March 12, 2020, and we may elect to apply the amendments prospectively through December 31, 2022. The Company is currently evaluating the effect that the new guidance will have on its consolidated financial statements and related disclosures.
(3) Supplemental Cash Flow Information
The following table presents supplemental disclosure of non-cash and cash activity as well as a reconciliation of total cash balances between the condensed consolidated balance sheets and condensed consolidated statements of cash flows for the periods presented:
Three Months Ended
 December 31,
in thousands20202019
Supplemental disclosure of non-cash activity:
Beginning operating lease right-of-use assets (ASC 842 adoption)(a)
$ $13,895 
Beginning operating lease liabilities (ASC 842 adoption)(a)
 16,028 
Increase in operating lease right-of-use assets1,391  
Increase in operating lease liabilities1,391  
Supplemental disclosure of cash activity:
Interest payments$27,048 $15,954 
Income tax payments  
Tax refunds received49 303 
Reconciliation of cash, cash equivalents, and restricted cash:
Cash and cash equivalents$244,628 $41,277 
Restricted cash17,420 18,759 
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows$262,048 $60,036 
(a) On October 1, 2019, we adopted Accounting Standards Update (ASU) No. 2016-02, Leases (ASU 2016-02) and related amendments, collectively codified in ASC 842, Leases (ASC 842). Upon adoption of ASC 842, we recorded net operating lease right-of-use (ROU) assets of $13.9 million and operating lease liabilities of $16.0 million. Existing prepaid rent and accrued rent were recorded as an offset to the gross operating lease ROU assets.
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(4) Investments in Unconsolidated Entities
Unconsolidated Entities
As of December 31, 2020, the Company participated in certain joint ventures and had investments in unconsolidated entities in which it had less than a controlling interest. The following table presents the Company's investment in these unconsolidated entities as well as the total equity and outstanding borrowings of these unconsolidated entities as of December 31, 2020 and September 30, 2020:
in thousandsDecember 31, 2020September 30, 2020
Investment in unconsolidated entities$3,928 $4,003 
Total equity of unconsolidated entities7,310 7,079 
Total outstanding borrowings of unconsolidated entities10,843 8,807 
Equity in income from unconsolidated entity activities included in income from continuing operations is as follows for the periods presented:
Three Months Ended
December 31,
in thousands20202019
Equity in loss of unconsolidated entities$(75)$(13)
For the three months ended December 31, 2020 and 2019, there were no impairments related to investments in unconsolidated entities.
Guarantees
Historically, the Company's joint ventures typically obtained secured acquisition, development, and construction financing. In addition, the Company and its joint venture partners provided varying levels of guarantees of debt and other debt-related obligations for these unconsolidated entities. However, as of December 31, 2020 and September 30, 2020, the Company had no outstanding guarantees or other debt-related obligations related to our investments in unconsolidated entities.
The Company and its joint venture partners generally provide unsecured environmental indemnities to land development joint venture project lenders. These indemnities obligate the Company to reimburse the project lenders for claims related to environmental matters for which they are held responsible. During the three months ended December 31, 2020 and 2019, the Company was not required to make any payments related to environmental indemnities.
In assessing the need to record a liability for these guarantees, the Company considers its historical experience in being required to perform under the guarantees, the fair value of the collateral underlying these guarantees, and the financial condition of the applicable unconsolidated entities. In addition, the fair value of the collateral of unconsolidated entities is monitored to ensure that the related borrowings do not exceed the specified percentage of the value of the property securing the borrowings. As of December 31, 2020, no liability was recorded for the contingent aspects of any guarantees that were determined to be reasonably possible but not probable.
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(5) Inventory
The components of our owned inventory are as follows as of December 31, 2020 and September 30, 2020:
in thousandsDecember 31, 2020September 30, 2020
Homes under construction$625,296 $525,021 
Development projects in progress563,285 589,763 
Land held for future development23,068 28,531 
Land held for sale10,045 12,622 
Capitalized interest119,148 119,659 
Model homes73,148 75,142 
Total owned inventory$1,413,990 $1,350,738 
Homes under construction include homes substantially finished and ready for delivery and homes in various stages of construction, including the cost of the underlying lot. We had 109 (with a cost of $34.1 million) and 133 (with a cost of $42.2 million) substantially completed homes that were not subject to a sales contract (spec homes) as of December 31, 2020 and September 30, 2020, respectively.
Development projects in progress consist principally of land acquisition, land development and other common costs. These land related costs are allocated to individual lots on a pro-rata basis, and the lot costs are transferred to homes under construction when home construction begins for the respective lots. Certain of the fully developed lots in this category are reserved by a customer deposit or sales contract.
Land held for future development consists of communities for which construction and development activities are expected to occur in the future or have been idled and are stated at cost unless facts and circumstances indicate that the carrying value of the assets may not be recoverable. All applicable carrying costs, such as interest and real estate taxes, are expensed as incurred.
Land held for sale includes land and lots that do not fit within our homebuilding programs and strategic plans in certain markets, and land is classified as held for sale once certain criteria are met (refer to Note 2 to the audited consolidated financial statements within our 2020 Annual Report). These assets are recorded at the lower of the carrying value or fair value less costs to sell.
The amount of interest we are able to capitalize depends on our qualified inventory balance, which considers the status of our inventory holdings. Our qualified inventory balance includes the majority of our homes under construction and development projects in progress but excludes land held for future development and land held for sale (see Note 6 for additional information on capitalized interest).
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Total owned inventory by reportable segment is presented in the table below as of December 31, 2020 and September 30, 2020:
in thousands
Projects in
Progress (a)
Land Held for Future DevelopmentLand Held for SaleTotal Owned
Inventory
December 31, 2020
West Segment$645,137 $3,483 $1,775 $650,395 
East Segment278,258 14,077 3,844 296,179 
Southeast Segment284,216 5,508 4,426 294,150 
Corporate and unallocated (b)
173,266 

  173,266 
Total$1,380,877 $23,068 $10,045 $1,413,990 
September 30, 2020
West Segment$627,986 $3,483 $4,516 $635,985 
East Segment241,799 14,077 3,702 259,578 
Southeast Segment266,905 10,971 4,404 282,280 
Corporate and unallocated (b)
172,895   172,895 
Total$1,309,585 $28,531 $12,622 $1,350,738 
(a) Projects in progress include homes under construction, development projects in progress, capitalized interest, and model home categories from the preceding table.
(b) Projects in progress amount includes capitalized interest and indirect costs that are maintained within our Corporate and unallocated segment.
Inventory Impairments
When conducting our community level review for the recoverability of inventory related to projects in progress, we consider both qualitative and quantitative factors to establish a quarterly “watch list” of communities. Each community is evaluated qualitatively and quantitatively to determine if there are factors driving the low profitability levels. Communities with more than ten homes remaining to close with potential indicators of impairment resulting from this initial evaluation are subjected to additional financial and operational reviews that consider the competitive environment and other factors contributing to gross margins below our specified threshold. Our assumptions about future home sales prices and absorption rates require significant judgment because the residential homebuilding industry is cyclical and is highly sensitive to changes in economic conditions. For certain communities, it may be prudent to reduce sales prices or further increase sales incentives in response to a variety of factors, including competitive market conditions in those specific submarkets for the product and locations of these communities. For communities where the current competitive and market dynamics indicate that assets may not be recoverable, a formal impairment analysis is performed. The formal impairment analysis consists of both qualitative competitive market analyses and quantitative analyses reflecting market and asset specific information. The quantitative analyses compare the projected future undiscounted cash flows for each such community with its current carrying value. If the aggregate undiscounted cash flows from our quantitative analyses are in excess of the carrying value, the asset is considered to be recoverable and is not impaired. If the aggregate undiscounted cash flows are less than the carrying value, we perform a discounted cash flow analysis to determine the fair value of the community.
We performed our quarterly inventory impairment assessment for the quarter ended December 31, 2020 taking into consideration the qualitative and quantitative factors discussed above, and determined that no community required a formal impairment analysis (projected cash flow analysis). No project in progress impairment charges were recognized during the quarter ended December 31, 2020 and 2019, respectively. However, because the full magnitude and duration of the COVID-19 pandemic is uncertain and difficult to predict, changes in our cash flow projections may change our conclusions on the recoverability of inventory in the future, and we may recognize charges in future periods for inventory impairments related to our current inventory assets. Any such charges could be material to our consolidated financial statements.
Impairments on land held for sale generally represent write downs of these properties to net realizable value based on sales contracts, letters of intent, current market conditions, and recent comparable land sale transactions, as applicable. Absent an executed sales contract, our assumptions related to land sales prices require significant judgment because the real estate market is highly sensitive to changes in economic conditions, and our estimates of sale prices could differ significantly from actual results. There were no land held for sale impairment charges recognized during the quarter ended December 31, 2020 and 2019, respective

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From time-to-time, we may determine to abandon lots or not exercise certain option contracts that are not projected to produce adequate results, no longer fit with our long-term strategic plan. Additionally, in certain limited instances, we are forced to abandon lots due to seller non-performance, or permitting or other regulatory issues that do not allow us to build on those lots. If we intend to abandon or walk away from a property, we record an abandonment charge to earnings for the deposit amount and any related capitalized costs in the period such decision is made. During the quarter ended December 31, 2020, we recognized $0.5 million abandonment charges in the East reportable segment related to one under contract land acquisition deal that we decided to terminate. There were no such abandonment charges during the quarter ended December 31, 2019.
Lot Option Agreements and Variable Interest Entities (VIE)
As previously discussed, we also have access to land inventory through lot option contracts, which generally enable us to defer acquiring portions of properties owned by third parties and unconsolidated entities until we have determined whether to exercise our lot option. The majority of our lot option contracts require a non-refundable cash deposit or irrevocable letter of credit based on a percentage of the purchase price of the land for the right to acquire lots during a specified period of time at a specified price. Under lot option contracts, purchase of the properties is contingent upon satisfaction of certain requirements by us and the sellers. Our liability under option contracts is generally limited to forfeiture of the non-refundable deposits, letters of credit, and other non-refundable amounts incurred. We expect to exercise, subject to market conditions and seller satisfaction of contract terms, most of our remaining option contracts. Various factors, some of which are beyond our control, such as market conditions, weather conditions, and the timing of the completion of development activities, will have a significant impact on the timing of option exercises or whether lot options will be exercised at all.
The following table provides a summary of our interests in lot option agreements as of December 31, 2020 and September 30, 2020:
in thousandsDeposits &
Non-refundable
Pre-acquisition
Costs Incurred
Remaining
Obligation
As of December 31, 2020
Unconsolidated lot option agreements$83,016 $493,845 
As of September 30, 2020
Unconsolidated lot option agreements$75,921 $395,133 
(6) Interest
Interest capitalized during the three months ended December 31, 2020 and 2019 was limited by the balance of inventory eligible for capitalization. The following table presents certain information regarding interest for the periods presented:
Three Months Ended December 31,
in thousands20202019
Capitalized interest in inventory, beginning of period$119,659 $136,565 
Interest incurred19,902 21,556 
Interest expense not qualified for capitalization and included as other expense (a)
(1,600)(1,442)
Capitalized interest amortized to home construction and land sales expenses (b)
(18,813)(19,669)
Capitalized interest in inventory, end of period$119,148 $137,010 
(a) The amount of interest capitalized depends on the qualified inventory balance, which considers the status of the Company's inventory holdings. Qualified inventory balance includes the majority of homes under construction and development projects in progress but excludes land held for future development and land held for sale.
(b) Capitalized interest amortized to home construction and land sales expenses varies based on the number of homes closed during the period and land sales, if any, as well as other factors.
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(7) Borrowings
The Company's debt, net of unamortized debt issuance costs consisted of the following as of December 31, 2020 and September 30, 2020:
in thousandsFinal Maturity DateDecember 31, 2020September 30, 2020
Senior Unsecured Term Loan (Term Loan)September 2022$100,000 $100,000 
6 3/4% Senior Notes (2025 Notes)March 2025229,555 229,555 
5 7/8% Senior Notes (2027 Notes)October 2027394,000 394,000 
7 1/4% Senior Notes (2029 Notes)October 2029350,000 350,000 
Unamortized debt issuance costs(10,483)(10,891)
Total Senior Notes, net1,063,072 1,062,664 
Junior Subordinated Notes (net of unamortized accretion of $32,120 and $32,636, respectively)
July 203668,653 68,137 
Revolving Credit FacilityFebruary 2023  
Total debt, net$1,131,725 $1,130,801 
Secured Revolving Credit Facility
The Secured Revolving Credit Facility (the Facility) provides working capital and letter of credit capacity of $250.0 million. The Facility is currently with four lenders. For additional discussion of the Facility, refer to Note 8 to the audited consolidated financial statements within our 2020 Annual Report.
On October 8, 2020, the Company executed a Ninth Amendment to the Facility. The Ninth Amendment (1) extended the termination date of the Facility from February 15, 2022 to February 15, 2023; (2) permits the maximum aggregate amount of commitments under the Credit Agreement to be increased to up to $300.0 million pursuant to one or more additional incremental increases, subject to the approval of any lenders providing such increases; and (3) revises the minimum liquidity covenant such that if the interest coverage ratio is greater than or equal to 1.00 to 1.00 and the housing collateral ratio is greater than or equal to 1.75 to 1.00, the Company is required to maintain minimum liquidity of $50.0 million; and in all other cases, the Company is required to maintain minimum liquidity of $100.0 million.
As of December 31, 2020, no borrowings and no letters of credit were outstanding under the Facility, resulting in $250.0 million remaining capacity. As of September 30, 2020, no borrowings and no letters of credit were outstanding under the Facility. The Facility requires compliance with certain covenants, including negative covenants and financial covenants. As of December 31, 2020, the Company believes it was in compliance with all such covenants.
Senior Unsecured Term Loan
On September 9, 2019, the Company entered into a term loan agreement, which provides for a Senior Unsecured Term Loan (the Term Loan). The principal balance as of December 31, 2020 was $100.0 million. The Term Loan (1) will mature in September 2022, with remaining $50.0 million annual repayment installments in September 2021 and September 2022; (2) bears interest at a fixed rate of 4.875%; and (3) includes an option to prepay, subject to certain conditions and the payment of certain premiums. The Term Loan contains covenants generally consistent with the covenants contained in the Facility. As of December 31, 2020, the Company believes it was in compliance with all such covenants.
Letter of Credit Facilities
The Company has entered into stand-alone, cash-secured letter of credit agreements with banks to maintain pre-existing letters of credit and to provide for the issuance of new letters of credit (in addition to the letters of credit issued under the Facility). As of December 31, 2020 and September 30, 2020, the Company had letters of credit outstanding under these additional facilities of $11.7 million and $12.7 million, respectively, all of which were secured by cash collateral in restricted accounts. The Company may enter into additional arrangements to provide additional letter of credit capacity.
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In May 2018, the Company entered into a reimbursement agreement, which provides for the issuance of performance letters of credit, and an unsecured credit agreement that provides for the issuance of up to $50.0 million of standby letters of credit to backstop the Company's obligations under the reimbursement agreement (collectively, the "Bilateral Facility"). On June 17, 2020, the Company executed an Amendment No. 1 to the Bilateral Facility that extends the termination date of the agreement from June 10, 2021 to June 10, 2022. As of December 31, 2020, the total stated amount of performance letters of credit issued under the reimbursement agreement was $25.7 million (and the stated amount of the backstop standby letter of credit issued under the credit agreement was $40.0 million). The Company may enter into additional arrangements to provide greater letter of credit capacity.
Senior Notes
The Company's Senior Notes are unsecured obligations ranking pari passu with all other existing and future senior indebtedness. Substantially all of the Company's significant subsidiaries are full and unconditional guarantors of the Senior Notes and are jointly and severally liable for obligations under the Senior Notes and the Facility. Each guarantor subsidiary is a 100% owned subsidiary of Beazer Homes.
All unsecured Senior Notes rank equally in right of payment with all existing and future senior unsecured obligations, senior to all of the Company's existing and future subordinated indebtedness and effectively subordinated to the Company's existing and future secured indebtedness, including indebtedness under the Facility, if outstanding, to the extent of the value of the assets securing such indebtedness. The unsecured Senior Notes and related guarantees are structurally subordinated to all indebtedness and other liabilities of all of the Company's subsidiaries that do not guarantee these notes but are fully and unconditionally guaranteed jointly and severally on a senior basis by the Company's wholly-owned subsidiaries party to each applicable indenture.
The Company's Senior Notes are issued under indentures that contain certain restrictive covenants which, among other things, restrict our ability to pay dividends, repurchase our common stock, incur certain types of additional indebtedness, and make certain investments. Compliance with the Senior Note covenants does not significantly impact the Company's operations. The Company believes it was in compliance with the covenants contained in the indentures of all of its Senior Notes as of December 31, 2020.
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For additional redemption features, refer to the table below that summarizes the redemption terms of our Senior Notes:
Senior Note DescriptionIssuance DateMaturity DateRedemption Terms
6 3/4% Senior NotesMarch 2017March 2025
On or prior to March 15, 2020, we may redeem up to 35% of the aggregate principal amount of the 2025 Notes with the net cash proceeds of certain equity offerings at a redemption price equal to 106.750% of the principal amount, plus accrued and unpaid interest to, but excluding, the redemption date, provided at least 65% of the aggregate principal amount of the 2025 Notes originally issued remains outstanding immediately after such redemption.
Callable at any time prior to March 15, 2020, in whole or in part, at a redemption price equal to 100.000% of the principal amount, plus a customary make-whole premium; on or after March 15, 2020, callable at a redemption price equal to 105.063% of the principal amount; on or after March 15, 2021, callable at a redemption price equal to 103.375% of the principal amount; on or after March 15, 2022, callable at a redemption price equal to 101.688% of the principal amount; on or after March 15, 2023, callable at a redemption price equal to 100.000% of the principal amount, plus, in each case, accrued and unpaid interest.
5 7/8% Senior NotesOctober 2017October 2027
On or prior to October 15, 2022, we may redeem up to 35% of the aggregate principal amount of the 2027 Notes with the net cash proceeds of certain equity offerings at a redemption price equal to 105.875% of the principal amount, plus accrued and unpaid interest to, but excluding, the redemption date, provided at least 65% of the aggregate principal amount of the 2027 Notes originally issued remains outstanding immediately after such redemption.
Callable at any time prior to October 15, 2022, in whole or in part, at a redemption price equal to 100.000% of the principal amount, plus a customary make-whole premium; on or after October 15, 2022, callable at a redemption price equal to 102.938% of the principal amount; on or after October 15, 2023, callable at a redemption price equal to 101.958% of the principal amount; on or after October 15, 2024, callable at a redemption price equal to 100.979% of the principal amount; on or after October 15, 2025, callable at a redemption price equal to 100.000% of the principal amount, plus, in each case, accrued and unpaid interest.
7 1/4% Senior NotesSeptember 2019October 2029
On or prior to October 15, 2022, we may redeem up to 35% of the aggregate principal amount of the 2029 Notes with the net cash proceeds of certain equity offerings at a redemption price equal to 107.250% of the principal amount, plus accrued and unpaid interest to, but excluding, the redemption date, provided at least 65% of the aggregate principal amount of the 2029 Notes originally issued remains outstanding immediately after such redemption.
Callable at any time prior to October 15, 2024, in whole or in part, at a redemption price equal to 100.000% of the principal amount, plus a customary make-whole premium; on or after October 15, 2024, callable at a redemption price equal to 103.625% of the principal amount; on or after October 15, 2025, callable at a redemption price equal to 102.417% of the principal amount; on or after October 15, 2026, callable at a redemption price equal to 101.208% of the principal amount; on or after October 15, 2027, callable at a redemption price equal to 100.000% of the principal amount, plus, in each case, accrued and unpaid interest.
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Junior Subordinated Notes
The Company's unsecured junior subordinated notes (Junior Subordinated Notes) mature on July 30, 2036. The Junior Subordinated Notes are redeemable at par and paid interest at a fixed rate of 7.987% for the first ten years ending July 30, 2016. The securities now have a floating interest rate as defined in the Junior Subordinated Notes Indenture, which was a weighted-average of 4.25% as of December 31, 2020. The obligations relating to these notes are subordinated to the Facility and the Senior Notes. In January 2010, the Company modified the terms of $75.0 million of these notes and recorded them at their then estimated fair value. Over the remaining life of the Junior Subordinated Notes, we will increase their carrying value until this carrying value equals the face value of the notes. As of December 31, 2020, the unamortized accretion was $32.1 million and will be amortized over the remaining life of the notes. As of December 31, 2020, the Company believes it was in compliance with all covenants under the Junior Subordinated Notes.
(8) Operating Leases
The Company leases certain office space and equipment under operating leases for use in our operations. We recognize operating lease expense on a straight-line basis over the lease term. Certain of our lease agreements include one or more options to renew. The exercise of lease renewal options is generally at our discretion. Variable lease expense primarily relates to maintenance and other monthly expense that do not depend on an index or rate.
We determine if an arrangement is a lease at contract inception. Lease and non-lease components are accounted for as a single component for all leases. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of the future lease payments over the expected lease term, which includes optional renewal periods if we determine it is reasonably certain that the option will be exercised. As our leases do not provide an implicit rate, the discount rate used in the present value calculation represents our incremental borrowing rate determined using information available at the commencement date.
Operating lease expense is included as a component of general and administrative expenses in our condensed consolidated statements of operations. For the three months ended December 31, 2020, we recorded operating lease expense of $1.1 million. Cash payments on lease liabilities during the three months ended December 31, 2020 totaled $1.4 million. Sublease income and variable lease expenses are de minimis.
At December 31, 2020, weighted-average remaining lease term and discount rate were as follows:
Weighted-average remaining lease term5.1 years
Weighted-average discount rate4.77%
The following is a maturity analysis of the annual undiscounted cash flows reconciled to the carrying value of the operating lease liabilities as of December 31, 2020:
Fiscal Years Ending September 30,
in thousands
2021 (a)
$3,364 
20224,053 
20233,254 
20242,121 
20251,824 
Thereafter3,000 
Total lease payments 17,616 
Less: Imputed interest2,056 
Total operating lease liabilities$15,560 
(a) Remaining lease payments are for the period beginning January 1, 2021 through September 30, 2021
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(9) Contingencies
Beazer Homes and certain of its subsidiaries have been and continue to be named as defendants in various construction defect claims, complaints, and other legal actions. The Company is subject to the possibility of loss contingencies related to these defects as well as others arising from its business. In determining loss contingencies, we consider the likelihood of loss and our ability to reasonably estimate the amount of such loss. An estimated loss is recorded when it is considered probable that a liability has been incurred and the amount of loss can be reasonably estimated.
Warranty Reserves
We currently provide a limited warranty ranging from one to two years covering workmanship and materials per our defined quality standards. In addition, we provide a limited warranty for up to ten years covering only certain defined structural element failures.
Our homebuilding work is performed by subcontractors who typically must agree to indemnify us with regard to their work and provide certificates of insurance demonstrating that they have met our insurance requirements and have named us as an additional insured under their policies. Therefore, many claims relating to workmanship and materials that result in warranty spending are the primary responsibility of these subcontractors. In addition, we maintain insurance coverage related to our construction efforts that can result in recoveries of warranty and construction defect costs above certain specified limits.
Warranty reserves are included in other liabilities within the condensed consolidated balance sheets, and the provision for warranty accruals is included in home construction expenses in the condensed consolidated statements of operations. Reserves covering anticipated warranty expenses are recorded for each home closed. Management assesses the adequacy of warranty reserves each reporting period based on historical experience and the expected costs to remediate potential claims. Our review includes a quarterly analysis of the historical data and trends in warranty expense by division. Such analysis considers market-specific factors such as warranty experience, the number of home closings, the prices of homes, product mix, and other data in estimating warranty reserves. In addition, the analysis also contemplates the existence of any non-recurring or community-specific warranty-related matters that might not be included in historical data and trends. While estimated warranty liabilities are adjusted each reporting period based on the results of our quarterly analyses, we may not accurately predict actual warranty costs, which could lead to significant changes in the reserve.
Changes in warranty reserves are as follows for the periods presented:
Three Months Ended
 December 31,
in thousands20202019
Balance at beginning of period$13,052 $13,388 
Accruals for warranties issued (a)
2,254 1,665 
Changes in liability related to warranties existing in prior periods377 67 
Payments made(3,067)(2,474)
Balance at end of period$12,616 $12,646 
(a) Accruals for warranties issued are a function of the number of home closings in the period, the selling prices of the homes closed, and the rates of accrual per home estimated as a percentage of the selling price of the home.
Insurance Recoveries
The Company has insurance policies that provide for the reimbursement of certain warranty costs incurred above specified thresholds for each period covered. Amounts recorded for anticipated insurance recoveries are reflected within the condensed consolidated statements of income as a reduction of home construction expenses. Amounts not yet received from our insurer are recorded on a gross basis, without any reduction for the associated warranty expense, within accounts receivable on our condensed consolidated balance sheets.
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Litigation
In the normal course of business, we are subject to various lawsuits. We cannot predict or determine the timing or final outcome of these lawsuits or the effect that any adverse findings or determinations in pending lawsuits may have on us. In addition, an estimate of possible loss or range of loss, if any, cannot presently be made with respect to certain of these pending matters. An unfavorable determination in any of the pending lawsuits could result in the payment by us of substantial monetary damages that may not be fully covered by insurance. Further, the legal costs associated with the lawsuits and the amount of time required to be spent by management and our Board of Directors on these matters, even if we are ultimately successful, could have a material adverse effect on our financial condition, results of operations, or cash flows.
Claims Related to Inventory Impairment Charges. During the quarter ended March 31, 2019, we recognized inventory impairment charges related to 15 communities in California, all of which were previously land held for future development assets. Related to these inventory impairment charges, on June 5, 2019, a putative class action lawsuit was filed against Beazer Homes USA, Inc. and certain of our officers in the U.S. District Court for the Southern District of New York. The proposed class consisted of all persons and entities that acquired our securities between August 1, 2014 and May 2, 2019. On October 18, 2019, the plaintiffs filed a notice of voluntary dismissal of this case, and the Court subsequently entered an order dismissing the case.

Beginning June 25, 2019, several shareholder derivative lawsuits relating to the same inventory impairment charges discussed above were filed against Beazer Homes USA, Inc., certain of our officers and members of our Board of Directors in the U.S. District Court for the Northern District of Georgia. The plaintiffs in these cases allege breaches of fiduciary duty, unjust enrichment and violations of the federal securities laws. These federal actions have been consolidated into a single derivative action. Additionally, a substantially similar derivative action has been filed in the Superior Court of Fulton County, Georgia. The plaintiffs in each of these actions seek, among other things, monetary damages, disgorgement of profits and attorneys’ and experts’ fees, but do not specify any specific amounts. On October 5, 2020, the Court granted a motion to dismiss the consolidated federal action but provided the plaintiffs an opportunity to attempt to amend their complaint. An amended complaint was filed in late October, and a motion to dismiss this amended complaint is pending. We continue to believe the allegations are without merit and intend to vigorously defend against the claims. However, because the outcome of these legal proceedings cannot be predicted with certainty, we have determined that the amount of any possible losses or range of possible losses in connection with these matters is not reasonably estimable.
Other Matters
We and certain of our subsidiaries have been named as defendants in various claims, complaints, and other legal actions, most relating to construction defects, moisture intrusion, and product liability. Certain of the liabilities resulting from these actions are covered in whole or in part by insurance. In our opinion, based on our current assessment, the ultimate resolution of these matters will not have a material adverse effect on our financial condition, results of operations, or cash flows.
We have an accrual of $5.1 million and $5.0 million in other liabilities on our condensed consolidated balance sheets related to litigation and other matters, excluding warranty, as of December 31, 2020 and September 30, 2020, respectively.
We had outstanding letters of credit and surety bonds of approximately $37.4 million and $257.3 million, respectively, as of December 31, 2020, related principally to our obligations to local governments to construct roads and other improvements in various developments.
(10) Fair Value Measurements
As of the dates presented, we had assets on our condensed consolidated balance sheets that were required to be measured at fair value on a recurring or non-recurring basis. We use a fair value hierarchy that requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value as follows:
Level 1 – Quoted prices in active markets for identical assets or liabilities;
Level 2 – Inputs other than quoted prices included in Level 1 that are observable either directly or indirectly through corroboration with market data; and
Level 3 – Unobservable inputs that reflect our own estimates about the assumptions market participants would use in pricing the asset or liability.
Certain of our assets are required to be recorded at fair value on a recurring basis. The fair value of our deferred compensation plan assets is based on market-corroborated inputs (Level 2).
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Certain of our assets are required to be recorded at fair value on a non-recurring basis when events and circumstances indicate that the carrying value of these assets may not be recovered. We review our long-lived assets, including inventory, for recoverability when factors indicate an impairment may exist, but no less than quarterly. Fair value on assets deemed to be impaired is determined based upon the type of asset being evaluated. Fair value of our owned inventory assets, when required to be calculated, is further discussed within Notes 2 and 5. The fair value of our investments in unconsolidated entities is determined primarily using a discounted cash flow model to value the underlying net assets of the respective entities. Due to the substantial use of unobservable inputs in valuing the assets on a non-recurring basis, they are classified within Level 3.
During the three months ended December 31, 2020 and 2019 we recognized no impairments on projects in process or land held for sale.
Determining within which hierarchical level an asset or liability falls requires significant judgment. We evaluate our hierarchy disclosures each quarter.
The following table presents the period-end balances of assets measured at fair value on a recurring basis and the impairment-date fair value of certain assets measured at fair value on a non-recurring basis for each hierarchy level. These balances represent only those assets whose carrying values were adjusted to fair value during the periods presented:
in thousandsLevel 1Level 2Level 3Total
As of December 31, 2020
Deferred compensation plan assets (a)
$ $2,552 $ $2,552 
As of September 30, 2020
Deferred compensation plan assets (a)
$ $2,339 $ $2,339 
Land held for sale (b)
  6,240 
(c)
6,240 
(a) Measured at fair value on a recurring basis.
(b) Measured at fair value on a non-recurring basis, including the capitalized interest and indirect costs related to the asset.
(c) Amount represents the impairment-date fair value of the land held for sale assets that were impaired during the period indicated.
The fair value of cash and cash equivalents, restricted cash, accounts receivable, trade accounts payable, other liabilities, amounts due under the Facility (if outstanding), and other secured notes payable approximate their carrying amounts due to the short maturity of these assets and liabilities. When outstanding, obligations related to land not owned under option agreements approximate fair value.
The following table presents the carrying value and estimated fair value of certain other financial liabilities as of December 31, 2020 and September 30, 2020:
As of December 31, 2020As of September 30, 2020
in thousands
Carrying
Amount (a)
Fair Value
Carrying
Amount (a)
Fair Value
Senior Notes and Term Loan (b)
$1,063,072 $1,147,058 $1,062,664 $1,098,117 
Junior Subordinated Notes (c)
68,653 68,653 68,137 68,137 
Total$1,131,725 $1,215,711 $1,130,801 $1,166,254 
(a) Carrying amounts are net of unamortized debt issuance costs or accretion.
(b) The estimated fair value for our publicly-held Senior Notes and the Term Loan have been determined using quoted market rates (Level 2).
(c) Since there is no trading market for our Junior Subordinated Notes, the fair value of these notes is estimated by discounting scheduled cash flows through maturity (Level 3). The discount rate is estimated using market rates currently being offered on loans with similar terms and credit quality. Judgment is required in interpreting market data to develop these estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that we could realize in a current market exchange.
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(11) Income Taxes
Income Tax Provision
The Company's income tax provision for quarterly interim periods is based on an estimated annual effective income tax rate calculated separately from the effect of significant, infrequent, or unusual items. The total income tax provision, including discontinued operations, was a tax expense of $4.1 million for the three months ended December 31, 2020, compared to an income tax benefit of $0.2 million for the three months ended December 31, 2019. Income tax expense for the three months ended December 31, 2020 was substantially driven by (1) income from continuing operations, and (2) the discrete impact related to stock-based compensation expense as a result of current period activity. Income tax benefit for the three months ended December 31, 2019 was primarily driven by (1) the completion of work necessary to claim an additional $0.7 million in tax credits related to prior fiscal years, and (2) the discrete impact related to stock-based compensation expense as a result of current period activity, partially offset by (3) income from continuing operations.
Deferred Tax Assets and Liabilities
The Company continues to evaluate its deferred tax assets each period to determine if a valuation allowance is required based on whether it is more likely than not that some portion of these deferred tax assets will not be realized. As of December 31, 2020, management concluded that it is more likely than not that a substantial portion of our deferred tax assets will be realized. As part of our analysis, we considered both positive and negative factors that impact profitability and whether those factors would lead to a change in the estimate of our deferred tax assets that may be realized in the future. As we continue to monitor the impacts of the COVID-19 pandemic on our business, any sustained or prolonged reductions in future earnings periods may change our conclusions on whether we are more likely than not to realize portions of our deferred tax assets. At this time, our conclusions on the valuation allowance and Internal Revenue Code Section 382 limitations related to our deferred tax assets remain consistent with the determinations we made during the period ended September 30, 2020, and such conclusions are based on similar company specific and industry factors to those discussed in Note 13 to the audited consolidated financial statements within our 2020 Annual Report.
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