Segment Information

During the three months ended March 31, 2018, we began managing our operations through two business segments, real estate and other. Historically, we managed our operations through our real estate segment, mineral resources segment (previously referred to as oil and gas) and other segment (previously referred to as other natural resources).

Our real estate segment is our core business and acquires land and developed lots, secures entitlements and develops infrastructure on our lands for single-family residential and mixed-use communities. Our other segment consists of non-core water interests in 1.5 million acres, including a 45% nonparticipating royalty interest in groundwater produced or withdrawn for commercial purposes or sold from 1.4 million acres in Texas, Louisiana, Georgia and Alabama that are classified as assets held for sale at March 31, 2018 and December 31, 2017, and 20,000 acres of groundwater leases in central Texas.

We divested substantially all of our oil and gas working interest properties in 2016 and sold all of our remaining owned mineral assets and related entities in 2017. We have reclassified the results of operations from our mineral resources segment for the three months ended March 31, 2017 to our other segment. There was no significant activity for these operations during three months ended March 31, 2018.

The accounting policies of the reporting segments are described throughout Note 1 included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017. Total assets allocated by segment are as follows:



	March 31, 2018		December 31, 2017
	(In thousands)
Real estate	$	291,307	$	386,222
Other	3,331		3,346
Assets not allocated to segments ^(a)	486,460		372,344
	$	781,098	$	761,912

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^(a)	Assets not allocated to segments at March 31, 2018 principally consist of cash and cash equivalents of $436,401,000 and restricted cash of $40,013,000. Assets not allocated to segments at December 31, 2017 principally consist of cash and cash equivalents of $321,783,000 and restricted cash of $40,017,000.

We evaluate performance based on segment earnings (loss) before unallocated items and income taxes. Segment earnings (loss) consist of operating income, equity in earnings (loss) of unconsolidated ventures, gain on sales of assets, interest income and net (income) loss attributable to noncontrolling interests. Items not allocated to our business segments consist of general and administrative expense, share-based and long-term incentive compensation, interest expense, and other corporate interest and other income. Our revenues are derived from our U.S. operations and all of our assets are located in the U.S.

Segment revenues and earnings are as follows:



	Three Months Ended March 31,
	2018			2017
	(In thousands)
Revenues:
Real estate	$	22,575		$	20,752
Other	24			1,553
Total revenues	$	22,599		$	22,305
Segment earnings (loss):
Real estate	$	9,703		$	10,473
Other	(553		)	37,429
Total segment earnings	9,150			47,902
Items not allocated to segments	(4,550		)	(6,904		)
Income from continuing operations before taxes attributable to Forestar Group Inc.	$	4,600		$	40,998

In the three months ended March 31, 2017, we sold all of our remaining owned mineral assets for approximately $85,700,000 which resulted in the recognition of a gain on the sale of these assets of $74,215,000 which is reflected within other segment earnings. As a result of this sale we recognized a non-cash goodwill impairment charge of $37,900,000 in the three months ended March 31, 2017 which is reflected within other segment earnings.

Items not allocated to segments consist of:



	Three Months Ended March 31,
	2018			2017
	(In thousands)
General and administrative expense	$	(3,653	)	$	(4,028	)
Share-based and long-term incentive compensation expense	(136		)	(895		)
Interest expense	(2,136		)	(2,235		)
Other corporate interest and other income	1,375			254
	$	(4,550	)	$	(6,904	)