Question-and-Answer Session
Operator
Your first question comes from Stephen Kim - Citigroup.
Stephen Kim - Citigroup
Good job with the cash flow. I wanted to ask you about your inventory if I could, a little bit more detail than what was provided in the press release. What I'd like to get is a sense of where your WIP versus your land inventory stood at the end of the quarter?
Jeffrey Mezger
Stephen, the $4.4 billion of inventory dollars, $1.6 billion related to the 11,880 homes in backlog, and $1.7 billion was in the slots and open communities, so $3.3 billion of the $4.4 billion was in open communities, finished lots, homes under construction. Another $500 million in land and $600 million in options to buy land.
Stephen Kim - Citigroup
The FIN 46 inventory was basically zilch, right?
Jeffrey Mezger
Right.
Stephen Kim - Citigroup
My second question relates to your intentions with respect to subdivision count. You guys have done a pretty good job think as well paring down your subdivisions, but in light of Jeff's commentary about the excitement over your brand recognition and Martha Stewart and so fourth, I was curious as to what you anticipated a subdivision ramp as we entered next year?
Jeffrey Mezger
Stephen, we really don't see a ramp up right now. It doesn't make sense to us to fuel cash into opening communities if we're not going to hit our margin in returns, so we'll continue to be very strategic and community specific. Clearly we're driving to open as many Martha communities as we can because we do have great success stories now. I would not expect a community count ramp up in '08.
Operator
Your next question comes from Carl Reichardt - Wachovia.
Carl Reichardt - Wachovia Securities
Jeff, could you talk a little bit about the rational for cans on the 50% can rate? Do you have a sense of what percentage of those folks canning were due to finance challenges versus leaving you to go buy a house from peers?
Jeffrey Mezger
Carl, as I shared on my comments, we saw the can rate spike a bit in August from where it was trending in June and July, and a lot of it was tied to the credit crunch and the media noise around the credit crunch that occurred in August, so there's always a mixed bag in cans, but we saw significant increase in people who had a loan and with the changes in the credit environment and the tightening loan terms, either didn't like the payment or couldn't qualify at the new payments, so that was a phenomenon. I think in part our cans spiked because consumer confidence got rattled. We had buyers who said that I'm not comfortable making this purchase today.
- To read the full transcript on Seeking Alpha, click here »
