Segment Reporting

6 Months Ended

Jun. 30, 2012

Segment Reporting

3. Segment Reporting

The Company’s operating segments are defined as a component of an enterprise for which discrete financial information is available and is reviewed regularly by the chief operating decision-maker, or decision-making group, to evaluate performance and make operating decisions. The Company has identified its chief operating decision-makers (“CODMs”) as two key executives—the Chief Executive Officer and the Chief Operating Officer.

The Company has identified each homebuilding subdivision as an operating segment as each homebuilding subdivision engages in business activities from which it earns revenue, primarily from the sale of single-family detached homes, generally to first-time and first-time move-up homebuyers. Subdivisions in the reportable segments noted below have been aggregated because they are similar in the following regards: (1) economic characteristics; (2) housing products; (3) class of homebuyer; (4) regulatory environments; and (5) methods used to construct and sell homes. The Company’s homebuilding reportable segments are as follows:

(1) West (Arizona, California, Nevada and Washington)

(2) Mountain (Colorado and Utah)

(3) East (Virginia and Maryland, which includes Pennsylvania, Delaware and New Jersey)

(4) Other (Florida and Illinois)

The Company’s Financial Services reportable segment consists of the operations of the following operating segments: (1) HomeAmerican Mortgage Corporation (“HomeAmerican”); (2) Allegiant Insurance Company, Inc., A Risk Retention Group (“Allegiant”); (3) StarAmerican Insurance Ltd. (“StarAmerican”); (4) American Home Insurance Agency, Inc.; and (5) American Home Title and Escrow Company. These operating segments have been aggregated into one reportable segment because they do not individually exceed 10 percent of: (1) consolidated revenue; (2) the greater of (A) the combined reported profit of all operating segments that did not report a loss or (B) the positive value of the combined reported loss of all operating segments that reported losses; or (3) consolidated assets.

Corporate is a non-operating segment that develops and implements strategic initiatives and supports our operating divisions by centralizing key administrative functions such as finance and treasury, information technology, insurance and risk management, litigation and human resources. Corporate also provides the necessary administrative functions to support MDC as a publicly traded company. A portion of the expenses incurred by Corporate are allocated to the homebuilding operating segments based on their respective percentages of assets, and to a lesser degree, a portion of Corporate expenses are allocated to the financial services segment. A majority of Corporate’s personnel and resources are primarily dedicated to activities relating to the homebuilding segments, and, therefore, the balance of any unallocated Corporate expenses is included in the homebuilding segment.

The following table summarizes home and land sale revenues and homebuilding pretax income (loss) for the Company’s homebuilding operations. Intercompany adjustments noted in the table below relate to mortgage-related costs that were paid by the homebuilding segments to HomeAmerican as a part of home purchase incentives provided to certain homebuyers.

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
	(Dollars in thousands)
Home and land sale revenues:
West	$	117,424		$	68,844		$	186,965		$	110,453
Mountain		79,699			78,158			140,290			147,934
East		51,948			50,839			96,897			93,277
Other		9,276			10,887			20,463			20,651
Total home and land sale revenues	$	258,347		$	208,728		$	444,615		$	372,315
Homebuilding pretax income (loss):
West	$	2,677		$	(11,837	)	$	2,844		$	(16,397	)
Mountain		4,640			(1,204	)		6,795			(2,436	)
East		480			(2,345	)		2,300			(4,301	)
Other		(346	)		(916	)		(64	)		(1,692	)
Corporate		(4,474	)		(16,590	)		(11,635	)		(33,550	)
Total homebuilding pretax income (loss)	$	2,977		$	(32,892	)	$	240		$	(58,376	)

The following table summarizes total assets for the Company’s homebuilding operations. The assets in the Company’s Corporate segment primarily include cash, cash equivalents, marketable securities and property and equipment, net.

	June 30, 2012		December 31, 2011
	(Dollars in thousands)
Homebuilding assets:
West	$	363,759	$	346,442
Mountain		299,793		262,787
East		234,495		223,606
Other		30,545		31,468
Corporate		797,554		852,561
Total homebuilding assets	$	1,726,146	$	1,716,864