Thank you for standing by, and welcome to Lennar's Third Quarter Earnings Conference Call. [Operator Instructions] After the presentation, we will conduct a question-and-answer session. Today's conference call is being recorded. If you have any objections, you may disconnect at this time. I will now turn the call over to Mr. David Collins for the reading of the forward-looking statements.

Thank you. Today's conference call may include forward-looking statements that are subject to risks and uncertainties relating to Lennar's future business and financial performance. These forward-looking statements may include statements regarding Lennar's business, financial condition, results of operations, cash flows, strategies and prospects. Forward-looking statements represent only Lennar's estimates on the date of this conference call and are not intended to give any assurance as to actual future results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties. Many factors could cause Lennar's actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include those described under the caption Risk Factors contained in Lennar's annual report on Form 10-K most recently filed with the SEC. Please note that Lennar assumes no obligation to update any forward-looking statements.

I would like to introduce your conference host, Mr. Stuart Miller, CEO. Sir, you may begin.

Great. Thank you and good morning, everyone. Thank you, David. Thanks, everyone, for joining us for our third quarter 2012 update. We're pleased to detail our results for you this morning. As always, I'm joined this morning by Bruce Gross, our Chief Financial Officer; Diane Bessette, our Vice President and Treasurer; and Dave Collins, our Controller. Additionally, Rick Beckwitt, our President; and Jeff Krasnoff, Chief Executive Officer of our Rialto segment, are here to participate as well. Jon Jaffe, our Chief Operating Officer, will join us by conference line from California and also will participate. I'm going to begin this morning with some brief opening remarks about the housing market in general and about our first quarter results. Rick and Jon will comment on specific aspects of Lennar's Homebuilding operations and Jeff will update performance in our Rialto segment and Bruce will conclude and add specifics with the financial review. Simply put, the housing market is recovering. Not only are sales, margins and backlogs improving, but the beginnings of a sense of visibility are coming back to underwriting land acquisitions and planning for the future. The Homebuilding business is beginning to revert to normal and that's positive for the U.S. economy in general, which is, in turn, good for a sustained recovery in the housing market. Last quarter, I noted various trends that were driving stabilization and recovery in housing. Those trends have continued to define the path to recovery. Briefly, those drivers are: one, home price value and interest rates driving affordability; two, for-sale monthly payments compare favorably to rentals; three, inventories of distressed homes and foreclosures are declining; four, consumer confidence is improving and consumers don't want to miss current prices and interest rates; and five, the mortgage approval process is stabilizing and getting marginally better. In fact,…

Good morning. As Stuart noted, we saw continued improvement in our third quarter results with a post impairment 23.2% gross margin and an 11.2% net operating margin. This bottom line profitability was driven by our focus on pricing strategies, product offerings, direct cost management and by leveraging our operating structure. We continued to see a normalized sales pace in the third quarter, with a rate of 3.2 sales per community per month as compared to last year with a 2.2 sales per month rate. This level of activity produced 4,198 new orders and has positioned us with a backlog of 4,513 homes, respectively, 44% and 79% year-over-year improvement. In the context of these improving market conditions, many investors' questions have turned to the cost side of the equation. Let me give you some color as to what we see going on in the field. In the third quarter, we saw cost increases in all of our markets. The level of these increases range from $2,000 to $3,000 per home and an average total of about $2,400 per home or just over $1 per square foot. This equates to about 10 basis points of our average sales price. Many of these increases are not yet reflected in our closings as the timing of the effective date on each contract will vary. Cost increases range by product type and from region to region, depending upon the local supply-demand balances. The material categories that have increased the most over the last year are lumber, drywall and concrete. Together, these categories are up year-over-year, about $0.75 per square foot. In some markets, labor constraints are also contributing to the increasing costs. This is most commonly seen in framing and drywall labor. As an offset, we continue to implement cost reductions with the systems and…

Thanks, Jon. We're really pleased with the operating results we had this quarter. These results were driven by both a well-executed land acquisition strategy and a fine-tuned homebuilding machine. As in prior quarters, I'm going to review our land activities and explain why Lennar is positioned to succeed in today's recovering market. During the quarter, we continued to focus on acquiring or auctioning new homesites that would have a positive impact on our bottom line. This quarter, we purchased approximately 8,300 homesites for $339 million, and we spent about $81 million on land development. Combined, our land acquisition and land development spend was up about 67% over the prior year period. In addition, we signed contracts to acquire approximately 8,000 homesites. From a geographic standpoint, approximately 55% of our land spend in the third quarter was located in the West, 14% in Florida, 13% in Texas, 7% in the mid-Atlantic, with the remaining 11% spread throughout our other markets. The lion's share of our new land deals were sourced outside of the competitive bid environment and were relationship-based deals. As in prior quarters, money was invested geographically in the markets we saw the best opportunities. In Q3, we invested heavily in the West, particularly in California. We also continue to invest in some unique high-margin opportunities in Florida and Texas, 2 of our strongest markets. You will continue to see quarter-to-quarter changes in the geographic mix of our land purchases as we capitalize on the best opportunities out there. While the land market has heated up, we found no shortage of great opportunities. Strategically, we are still pursuing finished homesite deals, which, in today's market, provide a higher return on investment in exchange for a somewhat lower gross margin. The risk reward associated with these deals is still very compelling,…

Thanks, Rick, and good morning, everyone. During the current quarter, Rialto contributed $7.7 million of earnings to the company. While Bruce will walk you through in more detail the components of our contribution, the bulk of our earnings are from our growing investment management business, where we invest both our capital and that of third parties in funds and other vehicles. We participate in our share of the income from our investments in these vehicles, as well as the fees and carried interest we receive related to managing those investments. As an example, this quarter, we effectively wrapped up the bulk of our first vehicle, our public-private investment fund in partnership with the U.S. Department of Treasury. During the 2.5-year life of our $4.6 billion PPIP fund, we had, on average, $61 million of our equity outstanding as an investor in the fund that we helped to manage. Effective today, we've now recycled back in cash from interest income, capital gains, fees and carried interest almost $110 million, while generating a 25% internal rate of return. In addition, now that this very successful program is wrapped up with almost $16 million of earnings this quarter, the volatility associated with mark-to-market accounting has been eliminated. Similarly, our Rialto Real Estate Fund with $700 million of private equity commitments, including $75 million from us, had another strong quarter, contributing $10.6 million from our share of the funds' underlying earnings, plus our fees and reimbursements. All of our distressed debt investments since the fund's first closing in late 2010 have been made through this vehicle. We've now called all of the fund's original equity commitments to acquire in 44 separate transactions about $2 billion of assets based on unpaid principal balance and for less than $0.40 on the dollar. So far, we've done…

Thanks, Jeff, and good morning. I'll provide a little more color to the results, starting with Homebuilding. The company's average sales price, that increased 4% year-over-year to $258,000. I'd like to give a breakdown by region. The East region was $245,000, up 11%; Southeast Florida was $278,000, up 1%; Central, $225,000, up 1%; Houston, $236,000, up 3%; West Region, $299,000, down 1%; Other, $358,000, down 5%. Jon and Rick already highlighted the drivers of our strong gross margin performance and significant operating leverage during the quarter, so I'm going to turn to the Financial Services segment. We had a good quarter in Financial Services, generating operating earnings of $25.3 million versus $8 million last year. The third quarter is typically the strongest quarter of the year for the Financial Services segment and it was helped further this year with the strong refinance environment leading to higher volumes and strong operating leverage. Mortgage pretax income increased to $22.3 million from $7.4 million in the prior year. This quarter's mortgage originations increased by 72% to $1.3 billion. Our in-house mortgage capture rate of Lennar homebuyers was 75% this quarter. Originations with non-Lennar homebuyers increased 116% this quarter, primarily due to an increase in the number of refinance transactions. Our title company had a $3.6 million profit in Q3 and that compared with $1.3 million in the prior year. This was driven by a 35% increase in revenues. Our Rialto business segment that Jeff talked about, generated operating earnings of $7.7 million, and again, this number is net of $13.4 million of net loss attributable to the noncontrolling interest. As you remember, we have to consolidate the FDIC transaction, and this compares to $5.7 million in the prior year. Let me go through the composition of Rialto's $7.7 million of operating earnings by…

[Operator Instructions] The first question is coming from Michael Rehaut of JPMC. Michael Jason Rehaut - JP Morgan Chase & Co, Research Division: First question on the margins, they continue to surprise on the upside, the gross margins, as well as the SG&A leverage. You're at 11% roughly this quarter, kind of bumping up against what you would kind of consider normal versus the previous cycle. I know you've discussed perhaps gross margins, maybe moving into the mid-20s over the next couple of years. Is that still your view? And how do you think about "normalized operating margins" in the next 2, 3 years?

Well, Mike, we're really holding short of looking too far ahead and projecting future sales, deliveries and margins. And I think that we don't -- we certainly don't want to get ahead of ourselves or encourage anybody to get ahead of where we are. What we are seeing is strength in our numbers. We have an improving environment that is yielding increased pricing, but also increased cost. We've made some very important strategic land acquisitions. We have some mothballed communities coming back online. There are a number of positives, but we're still working through an uneven kind of recovery. So I don't want to answer the question by guiding to a gross margin range. But as we sit here today, the outlook is fairly positive with increased volumes and a good strategic position. Michael Jason Rehaut - JP Morgan Chase & Co, Research Division: All right, I appreciate that. Second question, mortgage approval process has stabilized and even marginally has begun to get better. We actually saw last week, we were with another builder that pointed to actually a new mortgage product out there, which is the first we've heard in some time. I was wondering if you could elaborate on your remarks in terms of either if you're seeing either new mortgage products out there or the approval process, elaborate on how it's getting better, either from a paperwork standpoint perhaps or just the standards overall.

Okay, let me take that, Mike. As we highlighted, first of all, from the mortgage approval process, appraisals have been -- appraisers have been cooperating with the price increases that we've been seeing coming through. So that's been helpful in the process in terms of the mortgage approval process for the full amount of what we're selling the homes for. We're seeing people coming out of the penalty boxes for some of the short-selling foreclosures, where they were put aside until they eliminated that. Income levels have been improving, and in general, we're seeing the trend positive in terms of approval percentages. And I don't know, Rick, if you want to add anything to that.

No, I think it's just been that we're seeing quality buyers out there that really want to execute. The process has gotten more streamlined of recent and things are going in the right direction. So still tough, but definitely gotten much better over the last quarter or so.

And the next question is coming from Ivy Zelman, Zelman & Associates. Alan Ratner - Zelman & Associates, Research Division: It's actually Alan on for Ivy. First question is just on the corporate G&A. I know you highlighted in the press release that there was an increase there from some increasing share based in variable comp. Is there any color you can give us on how to kind of think about that going forward? I know you indicated it's about 2.9% of revenues. Is that kind of a good bogey to use? Or should we think about that maybe as a percentage of EBITDA or share price or some other way that we can kind of model that going forward?

Sure, Alan. This quarter, because of the success we had with the bottom line, that ties directly into the way that we're compensating our management team, which is bottom line profitability. So the variable compensation expense is what drove the majority of the corp G&A increase. And then we also -- this quarter, there were some shares that were issued as well so that there was some share-based compensation expense that hit as well. I do want to tell you that there's still been tremendous focus on G&A at both the corporate and the field level, and we think there's going to be leverage as our volume picks up, but there is a component that's tied to the bottom line profitability with the variable comp expense. As far as an exact percentage, we came from the low 1%, so I think we're at 2.9% now. I think, over time, as volume picks up, that percentage should come down because a lot of that corporate G&A expense is not tied to volume increasing or profitability growing. So I do think we'll get leverage. I don't have an exact percentage to give you right now, but I think over time, we'll continue to migrate down off of that 2.9% going forward. Alan Ratner - Zelman & Associates, Research Division: Great, that's helpful. And on the Financial Services side on the mortgage business, can you give us any color on the composition or types of refi loans that you're doing today? Where are those loans generally sourced from? And does the composition in terms of split between FHA, GSEs, LTVs, are they similar to your purchase out in the Homebuilding business? Or is there any difference there?

There's a lower percentage of FHA/VA as you're looking at the refi business. I don't have the exact percent on the refi business. Our FHA percentage came down this quarter. If you look at it, combined FHA/VA down to about 53%, and of that 53%, FHA was 37% and VA was about 16% of that 53% number. So the sourcing of that business, it's being sourced by our loan consultants in the field. As you remember, we had a company called Eagle Mortgage that we combined into Universal American Mortgage, and we have loan consultants around the country that are focused in driving that business. Alan Ratner - Zelman & Associates, Research Division: Any difference in terms of LTVs or anything, FICO scores, credit quality?

No, I wouldn't say that there's a lot of difference other than as far as LTV, in a refinance, you're going to have a lower LTV than you will because you're going to have less FHA business, less purchase business. So we're dealing with highly qualified buyers, FICO scores and credit quality remains high. Those people that are able to refinance do have good credit today.

The next question is coming from Stephen Kim of Barclays.

I just wanted to ask you a question with respect to your pricing power that you're beginning to see. Obviously, some of that is a broad statement about the market, but also, you've done a number of things operationally that are kind of company-specific as well. Notably, some of your product offerings are a bit different from your peers. I was wondering if you've done an analysis on the degree to which you believe some of the shifts you've made or the difference, I guess, that exists in your product offering versus your peers, think of things like Next Gen and your Everything's Included and so forth, to what degree that may have led you to enjoy better price appreciation than the broader market.

Well, there's no question good product sells for a higher price and we've been very successful in introducing new plans. Our Next Gen plans, The Home Within a Home have been selling incredibly well and commands a premium in the marketplace. Our EI packages, our EI platform is doing extremely well, too, especially in an environment where you've got labor issues in order to get things built. They're easier to build, they're faster to build. We take the confusion out of the selection process, and as a result, we command very decent pricing for that. We've instituted price increases across the board, and the good news is they're sticking and we've been consistently pushing prices up, really, every month. We don't want to kill the momentum out there, but at the same point in time, we're very focused on the bottom line right now.

Yes, just let me add to that. The pricing side of the equation is not the only part that product is instrumental in driving. Just as Rick was talking, relative to our EI platform, we've consistently said that EI enables not only an easier and more orderly program for construction, but it also helps us contain the natural trend upward in construction costs. And so while pricing is kind of reverting to normal and is kind of moving up, so, too, are costs, and our EI platform, our product strategy, is really helping us to contain that by keeping a simple program in the field and a consistent kind of SKU purchase that enables us to negotiate costs a little bit better.

Great. Rick, I noticed you didn't actually give me any numbers to work with, but that's all right, and follow up later. Following up, though, Stuart, on your comments there about efficiency, I mean, that really touched on something that I think folks are going to be wrestling with over the next couple of years. There's a general presumption in the market that the builders -- that Homebuilding doesn't really lend itself to economies of scale. And certainly, all the things that you've been talking -- you just talked about would seem to argue that there are. I think it's going to be one of the major determinants of just how high your operating margin can get this cycle. And so in that regard, I was thinking -- I've been thinking about the evolution of the business over the last 10 years or so, and it seems to me that the business has been -- has seen the opportunity to extract economies of scale through the use of management technology and information technology and information sharing across regions in a way that didn't exist 15 years ago. But at the peak of the market, you guys were so frenzied that my sense is that you really didn't have the opportunity to fully explore those opportunities. And so this upturn is really the first period where we're going to actually see the potential to extract economies of scale that have been made available through improvements in information sharing and so forth across regions. Do you agree with that general view? And if so, could you give us some sense, not just of what you're doing now, but what you were doing now that you couldn't do before at the peak of the cycle to give us some sense of where operational efficiency may lead to higher margins?

This is Rick, and then I'll flip it over to Jon. Just a couple of examples and maybe to back up, during the depths of the market decline, it was a tough experience for all of us, but it gave us an opportunity to completely restructure the way we do business. We went from purchasing materials in every division to centrally locating our regional operating centers. So right now, we've got 3 instead of 27 or 30 purchasing centers. And the visibility that we have across the country is just tremendous, Steve. Another example of it is that during the downturn, we were able to de-bundle labor and materials. We were purchasing things in the heat of the market on a turnkey basis, and now we've separated those 2 things into different cost components. Once you start doing that, it's tough for the trades to get back into a turnkey type of program. But those are some examples of how things that we've done during the downturn, things we're focused on continuing today that give us an incredible amount of operating leverage as things start to grow. Jon, any other thoughts?

Sure. Steve, the unbundling point that Rick mentioned tied together with software and technology enabled us to do takeoffs and estimates of our plans much faster than we're able to before, really gives us a clarity into the details of purchasing that we didn't have before. And when things are moving very fast, it's hard to implement those. When things were slower, we were able to implement those. And I think as things continue to pick up, that will pay off from our ability to really track material usage and shift materials quickly when we need to. And then on a pure sort of technology side, today, we have rolled out iPads in the field and our construction managers are able to communicate very quickly with architects and engineers, find solutions, communicate information. Those things that used to take a couple of days perhaps can now get solved in a matter of minutes, and all those will add to our efficiency.

So kind of direct answer, we're kind of thinking, as we look ahead, that there will be economies of scale that reveal themselves in this recovery differently than we've seen in the past. It is a combination of technology and the adjustments that we've made to our operating platform. And all of this dovetails very well with our Everything's Included operating program.

The next question is coming from Steve East, ISI Group.

Stuart, if we stay on the cost a little bit, could you just give us an idea of what type of inflation you're seeing right now coming through your balance sheet -- or your income statement and just sort of rank order between the material costs or labor costs and the land inflation? And then looking at the land, what you're trying to buy now, Rick? You talked a lot about it. What type of inflation are you seeing in land on a year-over-year basis?

Okay, Steve, Jon reviewed a couple of those construction concepts. I'm going to toss it over to him and then Rick will come back on the land side.

When you look at what's happening with the material cost, you've seen the biggest increase in lumber where that represents about 7.5% of our construction spend and you've seen that go up anywhere in the 20%, 25% range, and then you go down to other materials that most of them represent 2% or 3% of the total spend. And in total, I think we've seen probably about a 5% increase. And because that represents about 42% of our sales price, it doesn't have a big impact if any one item goes up on our margins.

Okay, and then on the land side of that equation?

Yes, Steve, one thing to keep in mind as you look at us and you think about the land, a lot of the stuff that we're purchasing today was put under contract a year, 2 years, 3 years ago. And so it's coming on balance sheet at prices that are sub where market is today. The things we're contracting for today, if they're finished homesites, that's immediate, that's a retail type of purchase and we're still able to command 20% gross margins in that kind of stuff. Prices are up over a year or 2 ago, maybe 5% to 10% in various cases, but you've got to keep in mind that those are high ROI deals that move very quickly, so your operating leverage is tremendous if you can get good finished homesites. As far as the raw land deals that we're doing right now, there's still a shortage of folks out there that are pursuing those because there's different philosophies as to whether you want to internally develop or buy from other folks. We've been very, very aggressive in purchasing all throughout the continuum of the land curve. I've said it before, we are, I think, the best land company out there. And you've seen some of the jobs we've brought on, Steve. It's tremendous.

Okay, I appreciate that. That's helpful. And then if we look at -- Stuart, just sort of looking at your segments and geographically, the comparative nature of your business, what's going on and what you're seeing and then just an update on your second fund in Rialto, where you stand with it.

Well, relative to the second fund in Rialto, because we're in the -- we're in a quiet period relative to that fund, I really can't comment on that. The one thing I will comment on in that regard is fund 1, as Jeff reported, is really performing at a very high level. We can -- we have continued to generate an extraordinary pipeline of potential deals, and that continues to enable us to invest very attractively the remaining funds in fund 1, and it leaves for us a nice backlog of opportunities that are already identified and in line to begin fund 2 as it is raised. I really can't give any color beyond that. And the first part of your question was?

Just looking at geographically and maybe price point segment, how -- what you're seeing across the country.

Okay, I just want to highlight that, that was a compound question, was unrelated, so we noticed that.

I was trying to slip the fund 2 in there.

Okay, I know the shoehorn. In any case, relative to -- regionally, I've highlighted that the recovery of market is pretty much across the country right now, but it's pocketed. And we continue to see pockets of strength in all of the major markets across the country and it's kind of expanding from there. So I really wouldn't -- I wouldn't highlight one region versus another as being -- as kind of outperforming. We do see strength in places like Florida and some of the Eastern Seaboard markets. In California, some of the markets are coming back stronger than others. In terms of price point, we still see a trend in favor of move-up purchasers. The lower end is still a little bit more constrained. But there is a recovery going on in a broad-based way across the country. It's just very pocketed and very locally focused.

The next question is coming from Ken Zener, KeyBanc.

I wonder if you could clarify, of the 124,000 owned/controlled lots, what percent of those are owned? I think, last quarter, it was 100,000. And the kind of the breakdown of your finished lots versus your mothballed lots.

Sure. Out of the 124,000, Ken, about 106,000 are owned and the rest are controlled. And as far as the mothballed homesites -- I'm sorry, the finished homesites, you asked, finished homesites, let me give you a dollar amount because we don't typically break out the number as far as homesites go. Finished homesites have been running about $540 million as far as a pure finished homesite. Now if a homesite is in progress, construction in progress, there'll be a component of finished homesites included in our CIP as well. That's not right [ph].

So what I find interesting is, I think, given your 8,000 purchases this quarter, if my math's right, you've done about 48,500 lots since the -- in the last 3 years, which should be 1/2 of your owned inventory. Can you describe, just to be clear, your community count of 444, does that include just owned or is that owned and auctioned? And how does that kind of work out as you open up your mothballed communities next year? What's the kind of margin you're seeing on those?

Let me just highlight the way that we call an active community. Anytime a community has 5 or more homes to sell and it's actively selling, we call it an active community and that's what makes up the 444 number that Rick gave you.

So if we're not building in a community and don't have an ongoing sales presence, construction activity, it's not in our community count. The second question was on the 25% of the...

Right. What the incremental -- to the extent you're saying your new lots were coming in at 200 basis points above your benchmark, how are you seeing the mothballed component come on?

It's pretty much in that line. The new things are about 200 basis points higher than the overall average for the company. As we bring in the legacy or inactive communities, it starts off a little slow because we want to build momentum, then, generally, we bring pricing back up. You got to keep in mind that we hung onto these communities for a good reason because we knew the markets would come back, we took appropriate value hits on the assets and we don't want to start selling them too cheap, so we're waiting for the appropriate time to bring them on board.

And what percent of the mothballed is represented in these new openings next year?

I don't have that with me right now.

The next question is coming from Joshua Pollard, Goldman Sachs.

The first one was, in your prepared remarks, you said that there was a little bit more visibility in planning your business. Can you talk specifically about what you guys are expecting for next year in terms of community absorption rate? I think it was 3.2 this quarter versus 2.2 last year. You're talking about 40% growth just on that metric. That's before you start getting in the community count. So could you talk a little bit about what you're expecting there and also what you guys are looking for in terms of price increases and whether or not the 8% in your backlog is a good precursor?

Well, Josh, we kind of knew that, that remark might spur this kind of question. We're really not ready to start going out and giving too much forward-looking guidance, and we're still keeping our view fairly short, recognizing that we are in the initial stages of recovery. What we're really seeing is a sense of consistency starting to present itself. And so as we look ahead, rather than that very rocky bottom that we endured for quite a long period of time, we're starting to see a lot of consistency in our quarter-over-quarter movements and are able to do some better planning around that, expecting that we're likely to see more consistency going forward and kind of more stability in the way things look ahead rather than saying that we're going to get out over our skis and start projecting. So we're not really giving guidance as we go ahead, but we are saying that we do have a good sense that the market, as we look over the next quarters, is likely to show some consistent trends with what we've been seeing.

Stuart, that brings up an interesting question. Back in '05 when I first picked up this group, the entire group used to give guidance. What things do you guys need to see before you'll start feeling a level of confidence to give guidance to investors again?

Oh boy, I'm going to let Bruce answer that.

Sorry, Bruce. I was leaving that one for Stuart.

Yes, look, as we go forward, I think we'll have to look at the environment as we go, but we've given some guidance with gross margin as we've had stability. You don't have the land impairments that we've had to deal with. We're seeing the ability to raise prices, so we've given some level of our thoughts on gross margin. As far as activity going forward, I think when there's more clarity as to how many of the communities are actually coming out and whether the sales -- how much the sales pace might be changing, it will be a lot easier for us to give guidance because there's so much operating leverage, the volume's going to drive a lot of what we might guide. So I think we're going to look at this again very closely. We're in the middle of our planning season. And with the next quarterly conference call, after we come out of the planning season, we're going to be discussing what kind of metrics we can give for next year.

Okay, sounds good. Last question, around your gross margins, you said 200-basis-point spread between your newer land and your older land at 23.5%, that simply says 24.5% and 22.5%. But what I'm trying to understand is how low are you guys willing to go on high turnover, high returns, land? What are the gross margin metrics? And how low are you guys willing to go on that metric? And then I want to understand if your mothballed land, because of the write-downs, end up at the higher end of that spectrum or at the lower end because I think it's somewhere in the middle. Mothballed, you guys could have taken a lot of write-downs versus it being older land, and I'm not sure if mothballed land is something that we should be thinking of as additive to gross margins or a bit of a detractor.

Well, that's a lot of questions within one. You tricky guy, you. Okay, with regard to the finished lot or finished homesite opportunities that are high ROI and lower grosses, I don't want to really give you a number for competitive reasons as to where I would draw that threshold because that gets into overall strategy. But what I can tell you is that we -- depending on the number of communities, the proximity of that community to another community that we're operating in, Josh, we'd be willing to work with a lower margin because the overhead, the incremental overhead is de minimis. So if we're drawing that line from an underwriting standpoint at basically 20%, which is what the basic threshold is across the country today, it would be below that, but not much, all right? With regard to the margin and the gross margins in our mothballed communities, I tell you that there'd be some that are high and there'll be some that are below. All of them have been appropriately impaired. But as you have some things that were mothballed, there could be some just A locations in there that we chose to not bring online because we knew that the market would be really strong at some point down the road and that we'd be selling them too cheap. Those would be infill locations that we just decided to sit on.

The last question is coming from Steve Stelmach, FBR. Steve Stelmach - FBR Capital Markets & Co., Research Division: Just real quick, 2 questions, one on the FDIC impairment. I know earlier I inferred maybe you guys mentioned sort of a political process slowing our seats on some of those issues. The ID audit [ph], I believe, was due in August. Did that have any impact on that $20 million impairment? Or was that completely a separate -- entirely separate evaluation on your part?

No, and this is Jeff. No impact, totally separate. Steve Stelmach - FBR Capital Markets & Co., Research Division: Okay. Did you see the results of that? I know you guys have been a long, strong partner with the FDIC and this seemed more politically driven than FDIC-driven but...

We have not seen -- I personally have not seen the final report yet. It may have been issued, but I have not seen it yet. I did see a draft. Steve Stelmach - FBR Capital Markets & Co., Research Division: Got it, okay. And then the second question goes back to the economies of scale question. When I think about your operating business, I think of it more -- the operating leverage more in terms of your land acquisition strategy, your balance sheet financing leverage. Economies of scale, while positive incremental, is that more of a secondary and tertiary issue versus the others? How should I think about that?

The operating scale is actually a very big issue. To the extent that you bring on additional communities or you bring on additional sales per community, the incremental overhead that you have by bringing on a new community is basically the builder that you have in that community, the cost of the model in that community and the variable sales commissions associated with the sale. To the extent that you can add a community that will generate 100 closings in a year, that's a lot of money that pumps down to the bottom line. So the revenue associated with that allows us to spread the overhead across all the units.

I think the kind of metric that we kind of think about is that when you add absorption per community, you're only adding about 4% of SG&A. When you add a new community, an additional community, whether it's a retail developed homesite community or otherwise, you're adding about an incremental 7%, 7% to 8%, and that compares to where we are right now at 12%. So that's where you're seeing your operating leverage is, either in increasing absorption or increasing the number of communities with an already existing division. That's -- and it works in combination with all of those other factors, sales price and otherwise.

Okay, great. So that will wrap up our third quarter conference call. We look forward to reporting back as we close out our year end and look forward to a continuation of recovery in the housing market. Thank you.

This will conclude today's conference. All parties may disconnect at this time.