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 noted below. During fiscal

2016,

we decided to exit the Minneapolis, MN and Raleigh, NC markets and in the

third

quarter of fiscal

2016,

we completed the sale of our portfolios in those markets.

Homebuilding:

	( 1 )	Nor theast (New Jersey and Pennsylvania)
	( 2 )	Mid-Atlantic (Delaware, Maryland, Virginia, Washington D.C. and West Virginia)
	( 3 )	Midwest (Illinois and Ohio)
	( 4 )	Southeast (Florida, Georgia 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.

Eval

uation 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.

Oper

ational 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 April 30,						Six Months Ended April 30,
(In thousands)	2017			2016			201 7			201 6

Revenues:
Northeast	$	45,950		$	54,046		$	104,525		$	126,550
Mid-Atlantic		100,600			89,987			200,826			183,807
Midwest		42,019			84,631			85,721			176,551
Southeast		56,635			51,298			113,219			90,550
Southwest		225,255			276,735			408,664			481,060
West		100,843			81,095			197,374			136,673
Total homebuilding		571,302			637,792			1,110,329			1,195,191
Financial services		14,494			17,003			27,343			35,229
Corporate and unallocated		139			(72	)		272			(92	)
Total revenues	$	585,935		$	654,723		$	1,137,944		$	1,230,328

(Loss) income before income taxes:
Northeast	$	(2,722	)	$	(6,684	)	$	(1,816	)	$	(3,950	)
Mid-Atlantic		918			1,072			4,800			3,694
Midwest		(3,170	)		(23	)		(2,458	)		(5,582	)
Southeast		428			(7,255	)		134			(9,089	)
Southwest		19,785			18,491			31,708			34,860
West		2,317			(4,318	)		1,563			(10,286	)
Homebuilding income before income taxes		17,556			1,283			33,931			9,647
Financial services		7,134			7,385			13,128			17,396
Corporate and unallocated (1)		(32,389	)		(26,272	)		(54,435	)		(57,841	)
Loss before income taxes	$	(7,699	)	$	(17,604	)	$	(7,376	)	$	(30,798	)

(

)

Corporate and unallocated for the

three

months ended

April 30, 2017

included corporate general and administrative costs of

$16.1

million, interest expense of

$16.0

million (a component of Other interest on our Condensed Consolidated Statements of Operations), loss on extinguishment of debt of

$0.2

million and

$0.1

million of other income and expenses primarily related to stock compensation and rental income. Corporate and unallocated for the

six

months ended

April 30, 2017

included corporate general and administrative costs of

$31.7

million, interest expense of

$29.3

million (a component of Other interest on our Condensed Consolidated Statements of Operations), gain on extinguishment of debt of

$7.4

million and

$0.8

million of other income and expenses primarily related to bond amortization, stock compensation and rental income.

(In thousands)	April 30, 2017		October 31, 2016

Assets:
Northeast	$	196,796	$	219,363
Mid-Atlantic		290,279		292,899
Midwest		103,805		111,596
Southeast		236,085		226,124
Southwest		337,646		341,472
West		207,773		269,400
Total homebuilding		1,372,384		1,460,854
Financial services		119,538		197,230
Corporate and unallocated(1)		641,674		696,872
Total assets	$	2,133,596	$	2,354,956

(

) Includes

$284.5

million and

$283.6

million of income taxes receivable, including deferred tax assets, as of

April 30, 2017

and

October 31, 2016,

respectively.