the three and nine months ended August 31, 2009 is attributable to those conditions. Our gross margins decreased during the three and nine months ended August 31, 2009, compared to the same periods last year, primarily as a result of Statement of Financial Accounting Standards No. 144, Accounting for the Impairment of Long-lived Assets, ("SFAS 144") valuation adjustments and a decrease in the average sales price of homes delivered during the three and nine months ended August 31, 2009, compared to the same periods last year.
Financial information relating to our operations was as follows:

                                                      Three Months Ended                        Nine Months Ended
                                                          August 31,                               August 31,
(In thousands)                                      2009                2008                 2009                 2008

Homebuilding revenues:
Sales of homes                                  $  635,266              995,731            1,946,624            2,967,651
Sales of land                                        8,347               20,425               31,252               88,825

Total homebuilding revenues                        643,613            1,016,156            1,977,876            3,056,476

Homebuilding costs and expenses:
Cost of homes sold                                 585,770              848,609            1,786,854            2,595,468
Cost of land sold                                   17,792               49,273               48,839              149,526
Selling, general and administrative                100,798              156,298              314,501              488,288

Total homebuilding costs and expenses              704,360            1,054,180            2,150,194            3,233,282

Homebuilding operating margins                     (60,747 )            (38,024 )           (172,318 )           (176,806 )
Equity in loss from unconsolidated
entities                                           (42,303 )            (10,958 )           (105,110 )            (52,857 )
Other expense, net                                 (51,697 )            (52,228 )           (122,053 )           (121,895 )
Minority interest income, net                        2,779                9,016               11,033                9,000

Homebuilding operating loss                     $ (151,968 )            (92,194 )           (388,448 )           (342,558 )

Financial services revenues                     $   77,117               90,384              227,770              240,893
Financial services costs and expenses               65,961              103,245              199,583              266,460

Financial services operating earnings
(loss)                                          $   11,156              (12,861 )             28,187              (25,567 )

Total operating loss                            $ (140,812 )           (105,055 )           (360,261 )           (368,125 )
Corporate general and administrative
expenses                                           (28,053 )            (34,047 )            (86,323 )            (98,453 )

Loss before (provision) benefit for
income taxes                                    $ (168,865 )           (139,102 )           (446,584 )           (466,578 )

Three Months Ended August 31, 2009 versus Three Months Ended August 31, 2008 Revenues from home sales decreased 36% in the third quarter of 2009 to $635.3 million from $995.7 million in 2008. Revenues were lower primarily due to a 28% decrease in the number of home deliveries, excluding unconsolidated entities, and a 12% decrease in the average sales price of homes delivered in the third quarter of 2009. New home deliveries, excluding unconsolidated entities, decreased to 2,660 homes in the third quarter of 2009 from 3,694 homes last year. In the third quarter of 2009, new home deliveries were lower in each of our homebuilding segments and Homebuilding Other, compared to 2008. The average sales price of homes delivered decreased to $239,000 in the third quarter of 2009 from $270,000 in the same period last year. Sales incentives offered to homebuyers were $42,200 per home delivered in the third quarter of 2009, compared to $45,900 per home delivered in the same period last year, and declined sequentially from $52,600 per home delivered in the second quarter of 2009.
Gross margins on home sales were $49.5 million, or 7.8%, in the third quarter of 2009, which included $49.4 million of SFAS 144 valuation adjustments, compared to gross margins on home sales of $147.1 million, or 14.8%, in the third quarter of 2008, which included $32.3 million of SFAS 144 valuation adjustments. Gross margins on home sales excluding SFAS 144 valuation adjustments were $98.9 million, or 15.6%, in the third quarter of 2009, compared to $179.4 million, or 18.0%, in the third quarter of 2008. Gross margin percentage on home sales, excluding SFAS 144 valuation adjustments, decreased compared to last year, due to reduced pricing and to sales incentives as a percentage of revenues from home sales

increasing to 15.0% in the third quarter of 2009, from 14.5% in the same period last year. Gross margins on home sales excluding SFAS 144 valuation adjustments is a non-GAAP financial measure which is discussed in the Non-GAAP Financial Measure section.
Homebuilding interest expense was $40.7 million in the third quarter of 2009 ($17.8 million was included in cost of homes sold, $0.5 million was included in cost of land sold and $22.4 million was included in other expense, net), compared to $27.6 million in the third quarter of 2008 ($21.4 million was included in cost of homes sold, $1.0 million was included in cost of land sold and $5.2 million was included in other expense, net). Despite a decrease in deliveries during the third quarter of 2009, compared to the third quarter of 2008, interest expense increased primarily due to the interest related to $400 million of 12.25% senior notes due 2017 issued during the second quarter of 2009 and a reduction in qualifying assets eligible for interest capitalization as a result of a decrease in inventories.
Selling, general and administrative expenses were reduced by $55.5 million, or 36%, in the third quarter of 2009, compared to the same period last year, primarily due to reductions in associate headcount, variable selling expenses and fixed costs. As a percentage of revenues from home sales, selling, general and administrative expenses were 15.9% in the third quarter of 2009 and 15.7% in 2008.
Losses on land sales totaled $9.4 million in the third quarter of 2009, which included $0.6 million of SFAS 144 valuation adjustments and $8.7 million of write-offs of deposits and pre-acquisition costs related to homesites under option that we do not intend to purchase. In the third quarter of 2008, losses on land sales totaled $28.8 million, which included $21.4 million of SFAS 144 valuation adjustments and $10.9 million of write-offs of deposits and pre-acquisition costs related to homesites that were under option.
Equity in loss from unconsolidated entities was $42.3 million in the third quarter of 2009, which included $31.0 million of SFAS 144 valuation adjustments related to assets of unconsolidated entities in which we have investments, compared to equity in loss from unconsolidated entities of $11.0 million in the third quarter of 2008, which included $2.9 million of SFAS 144 valuation adjustments related to assets of unconsolidated entities in which we have investments.
Other expense, net, was $51.7 million in the third quarter of 2009, which included $27.5 million of Accounting Principles Board Opinion No. 18, The Equity Method of Accounting for Investments in Common Stock, ("APB 18") valuation adjustments to our investments in unconsolidated entities and $0.5 million of write-offs of notes receivable, compared to other expense, net, of $52.2 million in the third quarter of 2008, which included $40.0 million of APB 18 valuation adjustments to our investments in unconsolidated entities and $5.6 million of write-offs of notes receivable.
Minority interest income, net, was $2.8 million in the third quarter of 2009, compared to minority interest income, net, of $9.0 million in the third quarter of 2008, which included $7.9 million of minority interest income as a result of a $15.9 million SFAS 144 valuation adjustment to inventory of a 50%-owned consolidated joint venture.
Sales of land, equity in loss from unconsolidated entities, other expense, net and minority interest income, net may vary significantly from period to period depending on the timing of land sales and other transactions entered into by us and unconsolidated entities in which we have investments.
Operating earnings for the Financial Services segment was $11.2 million in the third quarter of 2009, compared to an operating loss of $12.9 million in the same period last year. In the third quarter of 2008, there was a $27.2 million write-off of goodwill related to the segment's mortgage operations, compared to no write-off in the third quarter of 2009.
Corporate general and administrative expenses were reduced by $6.0 million, or 18%, in the third quarter of 2009, compared to the same period last year. As a percentage of total revenues, corporate general and administrative expenses increased to 3.9% in the third quarter of 2009, from 3.1% in 2008, due to lower revenues.

SFAS 109 requires a reduction of the carrying amounts of deferred tax assets by a valuation allowance, if based on available evidence, it is more likely than not that such assets will not be realized. As a result of its net loss during the three months ended August 31, 2009, we generated deferred tax assets of $60.2 million and recorded a non-cash valuation allowance in accordance with SFAS 109 against the entire amount of deferred tax assets generated.
During the three months ended August 31, 2009, we issued 8.1 million shares of our Class A common stock under an equity offering into the market from time to time for gross proceeds of $99.2 million.
In July 2009, the United States Bankruptcy Court for the District of Delaware confirmed the plan of reorganization for LandSource Communities Development LLC ("LandSource"). As a result of the bankruptcy proceedings, LandSource was reorganized into a new company called Newhall Land Development, LLC, ("Newhall"). The reorganized company emerged from Chapter 11 free of bank debt. As part of the reorganization plan, we invested $140 million in exchange for approximately a 15% equity interest in the reorganized Newhall, ownership in several communities that were formerly owned by LandSource and the settlement and release of any claims that might have been asserted against us.
Our overall effective income tax rates were (1.62%) and 36.04%, respectively for the three months ended August 31, 2009 and 2008. The decrease in the effective tax rate, compared with the same period during 2008, resulted primarily from the establishment of a deferred tax asset valuation allowance. Nine Months Ended August 31, 2009 versus Nine Months Ended August 31, 2008 Revenues from home sales decreased 34% in the nine months ended August 31, 2009 to $1.9 billion from $3.0 billion in 2008. Revenues were lower primarily due to a 27% decrease in the number of home deliveries, excluding unconsolidated entities, and a 10% decrease in the average sales price of homes delivered in 2009. New home deliveries, excluding unconsolidated entities, decreased to 7,934 homes in the nine months ended August 31, 2009 from 10,860 homes last year. In the nine months ended August 31, 2009, new home deliveries were lower in each of our homebuilding segments and Homebuilding Other, compared to 2008. The average sales price of homes delivered decreased to $245,000 in the nine months ended August 31, 2009 from $274,000 in 2008. Sales incentives offered to homebuyers were $48,600 per home delivered in the nine months ended August 31, 2009, compared to $47,500 per home delivered in the same period last year.
Gross margins on home sales were $159.8 million, or 8.2%, in the nine months ended August 31, 2009, which included $124.7 million of SFAS 144 valuation adjustments, compared to gross margins on home sales of $372.2 million, or 12.5%, in the nine months ended August 31, 2008, which included $132.1 million of SFAS 144 valuation adjustments. Gross margins on home sales excluding SFAS 144 valuation adjustments were $284.5 million, or 14.6%, in the nine months ended August 31, 2009, compared to $504.3 million, or 17.0%, in 2008. Gross margin percentage on home sales, excluding SFAS 144 valuation adjustments, decreased compared to last year, due to reduced pricing and to sales incentives as a percentage of revenues from home sales increasing to 16.5% in the nine months ended August 31, 2009, from 14.8% in the same period last year. Gross margins on home sales excluding SFAS 144 valuation adjustments is a non-GAAP financial measure, which is discussed in the Non-GAAP Financial Measure section.
Homebuilding interest expense was $99.5 million in the nine months ended August 31, 2009 ($45.5 million was included in cost of homes sold, $5.0 million was included in cost of land sold and $49.0 million was included in other expense, net), compared to $98.0 million in the same period last year ($73.6 million was included in cost of homes sold, $2.3 million was included in cost of land sold and $22.1 million was included in other expense, net). Despite a decrease in deliveries during the nine months ended August 31, 2009, compared to the same period last year, interest expense increased primarily due to the interest related to $400 million of 12.25% senior notes due 2017 issued during the second quarter of 2009 and a reduction in qualifying assets eligible for interest capitalization as a result of a decrease in inventories.

Selling, general and administrative expenses were reduced by $173.8 million, or 36%, in the nine months ended August 31, 2009, compared to the same period last year, primarily due to reductions in associate headcount, variable selling expenses and fixed costs. As a percentage of revenues from home sales, selling, general and administrative expenses improved to 16.2% in the nine months ended August 31, 2009, from 16.5% in 2008.
Losses on land sales totaled $17.6 million in the nine months ended August 31, 2009, which included $6.5 million of SFAS 144 valuation adjustments and $20.8 million of write-offs of deposits and pre-acquisition costs related to homesites under option that we do not intend to purchase. In the nine months ended August 31, 2008, losses on land sales totaled $60.7 million, which included $39.0 million of SFAS 144 valuation adjustments and $34.3 million of write-offs of deposits and pre-acquisition costs related to homesites that were under option.
Equity in loss from unconsolidated entities was $105.1 million in the nine months ended August 31, 2009, which included $81.0 million of SFAS 144 valuation adjustments related to assets of unconsolidated entities in which we have investments, compared to equity in loss from unconsolidated entities of $52.9 million in the nine months ended August 31, 2008, which included $29.9 million of SFAS 144 valuation adjustments related to assets of unconsolidated entities in which we have investments.
Other expense, net, was $122.1 million in the nine months ended August 31, 2009, which included $71.7 million of APB 18 valuation adjustments to our investments in unconsolidated entities and $0.5 million of write-offs of notes receivable, compared to other expense, net, of $121.9 million in the nine months ended August 31, 2008, which included $116.5 million of APB 18 valuation adjustments to our investments in unconsolidated entities and $5.6 million of write-offs of notes receivable.
Minority interest income, net, was $11.0 million in the nine months ended August 31, 2009, compared to minority interest income, net, of $9.0 million in the nine months ended August 31, 2008, which included $7.9 million of minority interest as a result of a $15.9 million SFAS 144 valuation adjustment to inventory of a 50%-owned consolidated joint venture.
Sales of land, equity in loss from unconsolidated entities, other expense, net and minority interest income, net may vary significantly from period to period depending on the timing of land sales and other transactions entered into by us and unconsolidated entities in which we have investments.
Operating earnings for the Financial Services segment was $28.2 million in the nine months ended August 31, 2009, compared to an operating loss of $25.6 million in the same period last year. The increase in profitability in the Financial Services segment was primarily due to lower fixed costs as a result of its successful cost reduction initiatives implemented throughout the downturn. In addition, in the nine months ended August 31, 2008, there was a $27.2 million write-off of goodwill related to the segment's mortgage operations, compared to no write-off in the nine months ended August 31, 2009.
Corporate general and administrative expenses were reduced by $12.1 million, or 12%, in the nine months ended August 31, 2009, compared to the same period last year. As a percentage of total revenues, corporate general and administrative expenses increased to 3.9% in the nine months ended August 31, 2009, from 3.0% in the same period last year, due to lower revenues.
SFAS 109 requires a reduction of the carrying amounts of deferred tax assets by a valuation allowance, if based on available evidence, it is more likely than not that such assets will not be realized. As a result of its net loss during the nine months ended August 31, 2009, we generated deferred tax assets of $162.4 million and recorded a non-cash valuation allowance in accordance with SFAS 109 against the entire amount of deferred tax assets generated.
As of August 31, 2009, we had issued 21.0 million shares of our Class A common stock under an equity offering into the market from time to time for gross proceeds of $225.5 million. We are authorized to sell shares for up to $275 million under the equity offering. We will use the proceeds from the equity offering for general corporate purposes which may include acquisitions.

Our overall effective income tax rates were (1.37%) and 36.11%, respectively for the nine months ended August 31, 2009 and 2008. The decrease in the effective tax rate, compared with the same period during 2008, resulted primarily from the establishment of a deferred tax asset valuation allowance. Non-GAAP Financial Measure
Gross margins on home sales excluding SFAS 144 valuation adjustments is a non-GAAP financial measure, and is defined by us as sales of homes revenue less costs of homes sold excluding SFAS 144 valuation adjustments recorded during the period. Management finds this to be an important and useful measure in evaluating our performance because it discloses the profit we generate on homes we actually delivered during the period, as our SFAS 144 valuation adjustments relate to inventory that we did not deliver during the period. Gross margins on home sales excluding SFAS 144 valuation adjustments also is important to our management, because it assists our management in making strategic decisions regarding our construction pace, product mix and product pricing based upon the profitability we generated on homes we actually delivered during previous periods. We believe investors also find gross margins on home sales excluding SFAS 144 valuation adjustments to be important and useful because it discloses a profitability measure on homes we actually delivered in a period that can be compared to the profitability on homes we delivered in a prior period without regard to the variability of SFAS 144 valuation adjustments recorded from period to period. In addition, to the extent that our competitors provide similar information, disclosure of our gross margins on home sales excluding SFAS 144 valuation adjustments helps readers of our financial statements compare our ability to generate profits with regard to the homes we deliver in a period to our competitors' ability to generate profits with regard to the homes they deliver in the same period.
Although management finds gross margins on home sales excluding SFAS 144 valuation adjustments to be an important measure in conducting and evaluating our operations, this measure has limitations as an analytical tool as it is not reflective of the actual profitability generated by our company during the period. This is because it excludes charges we recorded, in accordance with SFAS 144, relating to inventory that was impaired during the period. In addition, because gross margins on home sales excluding SFAS 144 valuation adjustments is a financial measure that is not calculated in accordance with GAAP, it may not be completely comparable to similarly titled measures of our competitors due to differences in methods of calculation and charges being excluded. Our management compensates for the limitations of using gross margins on home sales excluding SFAS 144 valuation adjustments by using this non-GAAP measure only to supplement our GAAP results in order to provide a more complete understanding of the factors and trends affecting our operations. In order to analyze our overall performance and actual profitability relative to our homebuilding operations, we also compare our gross margins on home sales during the period, inclusive of SFAS 144 valuation adjustments, with the same measure during prior comparable periods. Due to the limitations discussed above, gross margins on home sales excluding SFAS 144 valuation adjustments should not be viewed in isolation as it is not a substitute for GAAP measures of gross margins.
The table set forth below reconciles our gross margins on home sales excluding SFAS 144 valuation adjustments for the three and nine months ended August 31, 2009 and 2008 to our gross margins on home sales for the three and nine months ended August 31, 2009 and 2008:

                                                  Three Months Ended                  Nine Months Ended
                                                      August 31,                          August 31,
(In thousands)                                  2009             2008              2009               2008

Sales of homes                                $ 635,266          995,731          1,946,624          2,967,651
Cost of homes sold                              585,770          848,609          1,786,854          2,595,468

Gross margins on home sales                      49,496          147,122            159,770            372,183
SFAS 144 valuation adjustments to
finished homes, CIP and land on which we
intend to build homes                            49,398           32,284            124,736            132,133

Gross margins on home sales excluding
SFAS 144 valuation adjustments                $  98,894          179,406            284,506            504,316

Homebuilding Segments
We have grouped our homebuilding activities into four reportable segments, which we refer to as Homebuilding East, Homebuilding Central, Homebuilding West and Homebuilding Houston, based primarily upon similar economic characteristics, geography and product type. Information about homebuilding activities in states that do not have economic characteristics that are similar to those in other . . .