Segment Disclosures

6 Months Ended

Jun. 30, 2015

Segment Reporting [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:

Mid Atlantic:	Maryland, Virginia, West Virginia, Delaware and Washington, D.C.
North East:	New Jersey and Eastern Pennsylvania
Mid East:	New York, Ohio, Western Pennsylvania, Indiana and Illinois
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 is eliminated in consolidation and is based on the segment’s average net assets employed.  The corporate capital allocation charged to the operating segment allows the Chief Operating Decision Maker (“CODM”) to determine whether the operating segment’s results are providing the desired rate of return after covering the Company’s cost of capital.  In addition, certain assets, including goodwill and intangible assets and consolidation adjustments as discussed further below, are not allocated to the operating segments as those assets are neither included in the operating segment’s corporate capital allocation charge, nor in the CODM’s evaluation of the operating segment’s performance.  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 corporate 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 and human resources, 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.  External corporate interest expense primarily consists of interest charges on the Company’s 3.95% Senior Notes due 2022 (the “Senior Notes”) and is not charged to the operating segments because the charges are included in the corporate capital allocation discussed above.

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Revenues:
Homebuilding Mid Atlantic	$	746,168	$	657,825	$	1,302,288	$	1,122,855
Homebuilding North East		114,375		92,438		197,368		171,230
Homebuilding Mid East		221,083		221,088		406,512		371,736
Homebuilding South East		139,485		112,729		256,481		217,446
Mortgage Banking		22,522		17,974		38,733		30,097
Total consolidated revenues	$	1,243,633	$	1,102,054	$	2,201,382	$	1,913,364

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Profit before taxes:
Homebuilding Mid Atlantic	$	85,041		$	67,347		$	129,607		$	108,358
Homebuilding North East		12,631			8,398			18,615			14,705
Homebuilding Mid East		15,586			11,116			22,649			10,867
Homebuilding South East		12,625			7,895			21,441			15,941
Mortgage Banking		12,256			7,427			18,881			9,267
Total segment profit		138,139			102,183			211,193			159,138
Reconciling items:
Contract land deposit reserve adjustment (1)		5,903			1,672			6,806			3,655
Equity-based compensation expense		(12,904	)		(15,938	)		(26,303	)		(26,641	)
Corporate capital allocation (2)		41,398			34,511			78,341			63,477
Unallocated corporate overhead		(19,764	)		(15,513	)		(49,748	)		(41,473	)
Consolidation adjustments and other		1,681			7,488			2,330			11,629
Corporate interest expense		(5,769	)		(5,579	)		(11,572	)		(11,254	)
Reconciling items sub-total		10,545			6,641			(146	)		(607	)
Consolidated profit before taxes	$	148,684		$	108,824		$	211,047		$	158,531

	June 30, 2015			December 31, 2014
Assets:
Homebuilding Mid Atlantic	$	1,020,837		$	917,689
Homebuilding North East		131,216			103,631
Homebuilding Mid East		258,942			192,781
Homebuilding South East		173,378			144,939
Mortgage Banking		311,808			255,969
Total segment assets		1,896,181			1,615,009
Reconciling items:
Consolidated variable interest entity		2,902			3,590
Cash and cash equivalents		476,493			514,780
Deferred taxes		170,162			165,189
Intangible assets and goodwill		53,600			54,291
Contract land deposit reserve		(49,237	)		(56,074	)
Consolidation adjustments and other		46,134			54,550
Reconciling items sub-total		700,054			736,326
Consolidated assets	$	2,596,235		$	2,351,335

(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,
	2015		2014		2015		2014
Corporate capital allocation charge:
Homebuilding Mid Atlantic	$	26,258	$	21,742	$	49,667	$	39,898
Homebuilding North East		3,805		2,733		7,115		5,182
Homebuilding Mid East		6,672		6,180		12,607		11,478
Homebuilding South East		4,663		3,856		8,952		6,919
Total	$	41,398	$	34,511	$	78,341	$	63,477