Note 3 - Segment Reporting

6 Months Ended

Jun. 30, 2018

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 (“CEO”) and the Chief Operating Officer (“COO”).

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, Washington and Oregon)

● Mountain (Colorado and Utah)

● East (Virginia, Florida and Maryland)

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

1

) 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. 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 revenues for our homebuilding and financial services operations:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
	(Dollars in thousands)
Homebuilding
West	$	391,806	$	323,758	$	711,315	$	632,837
Mountain		268,541		224,356		477,173		397,492
East		89,261		100,857		168,808		182,368
Total homebuilding revenues	$	749,608	$	648,971	$	1,357,296	$	1,212,697
Financial Services
Mortgage operations	$	14,547	$	12,697	$	27,243	$	24,880
Other		6,825		6,376		13,164		12,172
Total financial services revenues	$	21,372	$	19,073	$	40,407	$	37,052

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

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
	(Dollars in thousands)
Homebuilding
West	$	37,708		$	21,134		$	62,081		$	36,589
Mountain		35,854			24,541			60,039			42,771
East		4,141			4,734			7,516			7,376
Corporate		(15,366	)		(10,246	)		(26,838	)		(21,222	)
Total homebuilding pretax income	$	62,337		$	40,163		$	102,798		$	65,514
Financial Services
Mortgage operations	$	9,040		$	7,670		$	16,560		$	15,236
Other		5,239			4,061			7,790			7,504
Total financial services pretax income	$	14,279		$	11,731		$	24,350		$	22,740
Total pretax income	$	76,616		$	51,894		$	127,148		$	88,254

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 our cash and cash equivalents, marketable securities and 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.

	June 30,		December 31,
	2018		2017
	(Dollars in thousands)
Homebuilding assets
West	$	1,268,004	$	1,084,756
Mountain		740,414		674,057
East		179,445		201,684
Corporate		445,530		597,589
Total homebuilding assets	$	2,633,393	$	2,558,086
Financial services assets
Mortgage operations	$	121,692	$	152,345
Other		92,544		69,861
Total financial services assets	$	214,236	$	222,206
Total assets	$	2,847,629	$	2,780,292