Note 17 - Operating and Reporting Segments

9 Months Ended

Jul. 31, 2016

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

17. Operating and Reporting Segments

Our operating segments are components of our business for which discrete financial information is available and reviewed regularly by the chief operating decision maker, our Chief Executive Officer, to evaluate performance and make operating decisions. Based on this criteria, each of our communities qualifies as an operating segment, and therefore, it is impractical to provide segment disclosures for this many segments. As such, we have aggregated the homebuilding operating segments into six reportable segments.

Our homebuilding operating segments are aggregated into reportable segments based primarily upon geographic proximity, similar regulatory environments, land acquisition characteristics and similar methods used to construct and sell homes. Our reportable segments consist of the following six homebuilding segments and a financial services segment:

Homebuilding:

(1) Northeast (New Jersey and Pennsylvania)

(2) Mid-Atlantic (Delaware, Maryland, Virginia, Washington D.C. and West Virginia)

(3) Midwest (Illinois, Minnesota and Ohio)

(4) Southeast (Florida, Georgia, North Carolina and South Carolina)

(5) Southwest (Arizona and Texas)

(6) West (California)

Financial Services

Operations of the Company’s Homebuilding segments primarily include the sale and construction of single-family attached and detached homes, attached townhomes and condominiums, urban infill and active lifestyle homes in planned residential developments. In addition, from time to time, operations of the homebuilding segments include sales of land. Operations of the Company’s Financial Services segment include mortgage banking and title services provided to the homebuilding operations’ customers. We do not typically retain or service mortgages that we originate but rather sell the mortgages and related servicing rights to investors.

Corporate and unallocated primarily represents operations at our headquarters in Red Bank, New Jersey. This includes our executive offices, information services, human resources, corporate accounting, training, treasury, process redesign, internal audit, construction services, and administration of insurance, quality and safety. It also includes interest income and interest expense resulting from interest incurred that cannot be capitalized in inventory in the Homebuilding segments, as well as the gains or losses on extinguishment of debt from any debt repurchases or exchanges.

Evaluation of segment performance is based primarily on operating earnings from continuing operations before provision for income taxes (“Income (loss) before income taxes”). Income (loss) before income taxes for the Homebuilding segments consist of revenues generated from the sales of homes and land, income (loss) from unconsolidated entities, management fees and other income, less the cost of homes and land sold, selling, general and administrative expenses and interest expense. Income before income taxes for the Financial Services segment consist of revenues generated from mortgage financing, title insurance and closing services, less the cost of such services and selling, general and administrative expenses incurred by the Financial Services segment.

Operational results of each segment are not necessarily indicative of the results that would have occurred had the segment been an independent stand-alone entity during the periods presented.

Financial information relating to the Company’s segment operations was as follows:

	Three Months Ended July 31,				Nine Months Ended July 31,
(In thousands)	2016		2015		2016		2015
Revenues:
Northeast	$69,989		$36,209		$196,539		$126,213
Mid-Atlantic	111,739		113,992		295,546		271,954
Midwest	72,581		82,325		249,132		220,020
Southeast	96,323		57,329		186,873		144,498
Southwest	248,546		203,249		729,606		560,863
West	101,158		33,180		237,831		93,895
Total homebuilding	700,336		526,284		1,895,527		1,417,443
Financial services	16,485		14,360		51,714		37,939
Corporate and unallocated	29		(31	)	(63	)	(106	)
Total revenues	$716,850		$540,613		$1,947,178		$1,455,276
Income (loss) before income taxes:
Northeast	$(995	)	$(4,008	)	$(4,945	)	$(10,973	)
Mid-Atlantic	3,467		5,440		7,161		10,439
Midwest	(2,452	)	3,120		(8,034	)	8,041
Southeast	(5,621	)	(1,225	)	(14,710	)	(3,583	)
Southwest	20,532		17,170		55,392		42,517
West	3,297		(3,973	)	(6,989	)	(15,309	)
Homebuilding income before income taxes	18,228		16,524		27,875		31,132
Financial services	7,569		6,116		24,965		14,870
Corporate and unallocated	(24,704	)	(32,641	)	(82,545	)	(105,164	)
Income (loss) before income taxes	$1,093		$(10,001	)	$(29,705	)	$(59,162	)

(In thousands)	July 31, 2016	October 31, 2015
Assets:
Northeast	$252,007	$321,983
Mid-Atlantic	337,371	342,159
Midwest	125,552	197,899
Southeast	235,141	223,206
Southwest	410,313	465,740
West	287,298	259,943
Total homebuilding	1,647,682	1,810,930
Financial services	165,885	159,981
Corporate and unallocated(1)	575,274	631,387
Total assets	$2,388,841	$2,602,298

(1) Includes $293.4 million and $290.3 million of income taxes receivable, including deferred tax assets, as of July 31, 2016 and October 31, 2015, respectively.