Note 3 - Segment Reporting

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

3

.             Segment Reporting

An operating segment is defined as a component of an enterprise for which discrete financial information is available and is reviewed regularly by the Chief Operating Decision Maker (“CODM”), or decision-making group, to evaluate performance and make operating decisions. We have identified our CODM as

two

key executives—the Chief Executive Officer and the Chief Operating Officer.

We have identified each homebuilding division as an operating segment. Our homebuilding operating segments have been aggregated into the reportable segments noted below 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

. Our homebuilding reportable segments are as follows:

● West (Arizona, California, Nevada and Washington)

● Mountain (Colorado and Utah)

● East (Virginia, Florida and Maryland, which includes Pennsylvania and New Jersey)

Our financial services business consists of the operations of the following operating segments:

(1)

 HomeAmerican;

(2)

 Allegiant;

(3)

 StarAmerican;

(4)

 American Home Insurance Agency, Inc.; and

(5)

 American Home Title and Escrow Company. Due to its contributions to consolidated pretax income we consider HomeAmerican to be a reportable segment (“mortgage operations”)

. The remaining operating segments have been aggregated into

one

reportable segment (“other”) 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, treasury, information technology, insurance, 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 segments. 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 operations section of our consolidated statements of operations and comprehensive income

.

The following table summarizes home and land sale revenues for our homebuilding operations and revenues for our financial services operations. 

	Year Ended December 31,
	2016		2015		2014
	(Dollars in thousands)
Homebuilding
West	$	1,128,513	$	915,259	$	770,051
Mountain		756,997		609,002		534,244
East		377,343		335,965		346,336
Total home and land sale revenues	$	2,262,853	$	1,860,226	$	1,650,631
Financial Services
Mortgage operations	$	41,585	$	30,276	$	25,887
Other		22,406		18,534		18,066
Total financial services revenues	$	63,991	$	48,810	$	43,953
Total revenues	$	2,326,844	$	1,909,036	$	1,694,584

The following table summarizes pretax income (loss) for our homebuilding and financial services operations.

	Year Ended December 31,
	2016			2015			2014
	(Dollars in thousands)
Homebuilding
West	$	73,594		$	64,627		$	63,071
Mountain		73,104			52,707			39,343
East		4,949			(6,033	)		10,730
Corporate		(36,269	)		(40,860	)		(37,340	)
Total homebuilding pretax income	$	115,378		$	70,441		$	75,804
Financial Services
Mortgage operations	$	23,845		$	17,230		$	14,034
Other		12,558			13,753			10,637
Total financial services pretax income	$	36,403		$	30,983		$	24,671
Total pretax income	$	151,781		$	101,424		$	100,475

The following table summarizes total assets for our homebuilding and financial services operations. The assets in our West, Mountain and East segments consist primarily of inventory while the assets in our Corporate segment primarily include cash and cash equivalents, marketable securities, and our deferred tax assets. The assets in our financial services segment consist mostly of cash and cash equivalents, marketable securities and mortgage loans held-for-sale.

	December 31,
	2016		2015
	(Dollars in thousands)
Homebuilding assets
West	$	1,035,033	$	991,393
Mountain		571,139		536,831
East		256,816		324,457
Corporate		454,507		393,712
Total homebuilding assets	$	2,317,495	$	2,246,393
Financial services assets
Mortgage operations	$	153,182	$	123,176
Other		57,912		46,330
Total financial services assets	$	211,094	$	169,506
Total assets	$	2,528,589	$	2,415,899