16.	Operating and Reporting Segments

HEI’s operating segments are components of the Company’s 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 the Company's communities qualifies as an operating segment, and therefore, it is impractical to provide segment disclosures for this many segments. As such, HEI has aggregated the homebuilding operating segments into

six

reportable segments.

HEI’s 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. HEI’s reportable segments consist of the following

six

homebuilding segments and a financial services segment noted below.

Homebuilding:

	( 1 )	Northeast (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

Homebuilding segment operations 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. Financial Services segment operations include mortgage banking and title services provided to the homebuilding operations’ customers. Our financial services subsidiaries 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 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 (loss) 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 HEI’s segment operations was as follows:

	Three Months Ended July 31,				Nine Months Ended July 31,
(In thousands)	2019		2018		2019		2018

Revenues:
Northeast	$20,696		$26,705		$53,696		$90,675
Mid-Atlantic	86,948		79,712		221,225		255,169
Midwest	47,858		45,659		135,716		129,176
Southeast	50,233		47,498		143,606		165,067
Southwest	152,831		157,514		414,880		444,966
West	110,274		86,105		298,058		249,253
Total homebuilding	468,840		443,193		1,267,181		1,334,306
Financial services	12,764		13,009		34,679		36,951
Corporate and unallocated (1)	437		510		1,466		5,165
Total revenues	$482,041		$456,712		$1,303,326		$1,376,422

(Loss) income before income taxes:
Northeast	$283		$8,995		$6,287		$5,254
Mid-Atlantic	5,111		3,401		5,497		12,053
Midwest	191		66		(1,252	)	(3,388	)
Southeast	(2,198	)	(4,752	)	(9,259	)	(11,699	)
Southwest	8,598		12,461		15,270		28,019
West	6,584		14,442		28,599		29,681
Homebuilding income before income taxes	18,569		34,613		45,142		59,920
Financial services	3,837		4,023		8,600		10,826
Corporate and unallocated (1)	(29,470	)	(38,558	)	(92,824	)	(110,717	)
(Loss) income before income taxes	$(7,064	)	$78		$(39,082	)	$(39,971	)

(

) Corporate and unallocated for the

three

months ended

July 31, 2019

included corporate general and administrative costs of

$15.0

million, interest expense of

$14.7

million (a component of Other interest on our Condensed Consolidated Statements of Operations), $(

0.3

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

nine

months ended

July 31, 2019

included corporate general and administrative costs of

$48.8

million, interest expense of

$45.4

million (a component of Other interest on our Condensed Consolidated Statements of Operations), and $(

1.4

) million of other income and expenses. Corporate and unallocated for the

three

months ended

July 31, 2018

included corporate general and administrative costs of

$16.4

million, interest expense of

$20.2

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

$4.3

million and $(

2.3

) million of other income and expenses primarily related to an adjustment to our insurance reserves, resulting from a legal settlement. Corporate and unallocated for the

nine

months ended

July 31, 2018

included corporate general and administrative costs of

$51.7

million, interest expense of

$59.7

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

$5.7

million and $(

6.4

) million of other income and expenses primarily related to interest income and gain on sale of our corporate headquarters building.

(In thousands)	July 31, 2019	October 31, 2018

Assets:
Northeast	$189,299	$152,607
Mid-Atlantic	261,728	217,807
Midwest	121,664	85,398
Southeast	296,046	246,497
Southwest	391,536	320,452
West	299,037	244,886
Total homebuilding	1,559,310	1,267,647
Financial services	109,164	164,880
Corporate and unallocated	126,788	229,515
Total assets	$1,795,262	$1,662,042