Segment Disclosures

6 Months Ended

Jun. 30, 2012

Segment Disclosures [Abstract]

Segment Disclosures

10. Segment Disclosures

The following disclosure includes four homebuilding reportable segments that aggregate geographically the Company’s homebuilding operating segments, and the mortgage banking operations presented as a single reportable segment. The homebuilding reportable segments are comprised of operating divisions in the following geographic areas:

Homebuilding Mid Atlantic - Virginia, West Virginia, Maryland, Delaware and Washington, D.C.

Homebuilding North East - New Jersey and eastern Pennsylvania

Homebuilding Mid East - Kentucky, New York, Ohio, western Pennsylvania, Indiana and Illinois

Homebuilding South East - North Carolina, South Carolina, Florida and Tennessee

Homebuilding profit before tax includes all revenues and income generated from the sale of homes, less the cost of homes sold, selling, general and administrative expenses, and a corporate capital allocation charge. The corporate capital allocation charge eliminates in consolidation, is based on the segment’s average net assets employed, and is charged using a consistent methodology in the periods presented. The corporate capital allocation charged to the operating segment allows the Chief Operating Decision Maker to determine whether the operating segment’s results are providing the desired rate of return after covering the Company’s cost of capital. The Company records charges on contract land deposits when it is determined that it is probable that recovery of the deposit is impaired. For segment reporting purposes, impairments on contract land deposits are charged to the operating segment upon the determination to terminate a finished lot purchase agreement with the developer, or to restructure a lot purchase agreement resulting in the forfeiture of the deposit. Mortgage banking profit before tax consists of revenues generated from mortgage financing, title insurance and closing services, less the costs of such services and general and administrative costs. Mortgage banking operations are not charged a capital allocation charge.

In addition to the corporate capital allocation and contract land deposit impairments discussed above, the other reconciling items between segment profit and consolidated profit before tax include unallocated corporate overhead (including all management incentive compensation), equity-based compensation expense, consolidation adjustments and external corporate interest expense. NVR’s overhead functions, such as accounting, treasury, human resources, etc., are centrally performed and the costs are not allocated to the Company’s operating segments. Consolidation adjustments consist of such items necessary to convert the reportable segments’ results, which are predominantly maintained on a cash basis, to a full accrual basis for external financial statement presentation purposes, and are not allocated to the Company’s operating segments. Likewise, equity-based compensation expense is not charged to the operating segments.

Following are tables presenting segment revenues, segment profit and segment assets for each reportable segment, with reconciliations to the amounts reported for the consolidated enterprise, where applicable:

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Revenues:
Homebuilding Mid Atlantic	$	454,504		$	404,253		$	815,315		$	717,193
Homebuilding North East		71,201			67,715			123,401			106,908
Homebuilding Mid East		152,021			143,381			258,303			241,533
Homebuilding South East		77,564			67,314			144,466			119,773
Mortgage Banking		14,493			13,218			28,790			24,978
Total consolidated revenues	$	769,783		$	695,881		$	1,370,275		$	1,210,385
Profit:
Homebuilding Mid Atlantic	$	44,579		$	45,327		$	73,665		$	71,203
Homebuilding North East		5,632			6,676			8,093			7,799
Homebuilding Mid East		9,644			8,722			10,604			10,329
Homebuilding South East		4,379			5,251			8,284			7,464
Mortgage Banking		7,879			7,041			16,621			13,782
Total segment profit		72,113			73,017			117,267			110,577
Contract land deposit reserve adjustment (1)		41			(1,375	)		1,350			(2,505	)
Equity-based compensation expense		(16,733	)		(16,125	)		(33,173	)		(31,705	)
Corporate capital allocation (2)		22,555			17,897			41,527			33,320
Unallocated corporate overhead (3)		(15,209	)		(14,401	)		(34,012	)		(30,861	)
Consolidation adjustments and other (4)		1,249			4,448			2,076			9,573
Corporate interest expense		(61	)		(107	)		(122	)		(210	)
Reconciling items sub-total		(8,158	)		(9,663	)		(22,354	)		(22,388	)
Consolidated income before taxes	$	63,955		$	63,354		$	94,913		$	88,189

	June 30, 2012			December 31, 2011
Assets:
Homebuilding Mid Atlantic	$	737,104		$	626,157
Homebuilding North East		74,307			55,948
Homebuilding Mid East		140,268			94,593
Homebuilding South East		87,462			63,263
Mortgage Banking		170,360			270,820
Total segment assets		1,209,501			1,110,781
Consolidated variable interest entity		16,648			20,182
Cash and cash equivalents		587,646			475,566
Deferred taxes		156,839			155,881
Intangible assets		48,927			48,927
Contract land deposit reserve		(69,021	)		(70,333	)
Consolidation adjustments and other		40,420			38,481
Reconciling items sub-total		781,459			668,704
Consolidated assets	$	1,990,960		$	1,779,485

(1) This item represents changes to the contract land deposit impairment reserve, which are not allocated to the reportable segments.

(2) This item represents the elimination of the corporate capital allocation charge included in the respective homebuilding reportable segments. The corporate capital allocation charge is based on the segment’s monthly average asset balance, and was as follows for the periods presented:

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Homebuilding Mid Atlantic	$	14,837	$	12,105	$	27,517	$	22,936
Homebuilding North East		1,999		1,566		3,821		2,729
Homebuilding Mid East		3,506		2,840		6,248		5,044
Homebuilding South East		2,213		1,386		3,941		2,611
Total	$	22,555	$	17,897	$	41,527	$	33,320

(3) The increase in unallocated corporate overhead in the three and six month periods of 2012 was primarily attributable to higher management incentive costs period over period.

(4) The decrease in consolidation adjustments and other in 2012 from 2011 was primarily attributable to changes in the corporate consolidation entries based on production and settlement volumes in the respective quarters.