Segment Information

Historically, the Company managed its operations through its real estate segment, mineral resources segment (previously referred to as oil and gas) and other segment (previously referred to as other natural resources). During the first quarter of fiscal 2019, the Company began managing its operations through one real estate segment. As such, the operating results of the Company's real estate segment are consistent with its consolidated operating results and no separate disclosure is required as of and for the fiscal year ended September 30, 2019. The Company's real estate segment is its core business and generated all of the Company’s revenues in fiscal 2019. The real estate segment primarily acquires land and develops infrastructure for single-family residential communities. The Company's real estate segment generates its revenues principally from sales of residential single-family finished lots to local, regional and national homebuilders.

The Company has other business activities which were presented in its other segment in prior periods. The assets and results of operations of these business activities are immaterial and are included within the Company's real estate segment in fiscal 2019.

Additionally, as of and for the fiscal year ended September 30, 2019, all assets and results of operations have been included in the real estate segment. In prior periods, certain costs and assets were not allocated to the Company’s segments. During the first quarter of fiscal 2019, the Company began evaluating the results of operations of its real estate segment based on income from continuing operations before income taxes. As a result, all of the Company’s results of operations have been allocated to the real estate segment for the fiscal year ended September 30, 2019. This change in the measure of segment profit (loss) was adopted prospectively and the prior period segment results have not been adjusted to conform to the current year. In prior periods, 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 segments in prior periods consist of general and administrative expense, stock-based and long-term incentive compensation, gain on sale of timberland assets, interest expense, and other corporate interest and other income.

The accounting policies of the segments are the same as those described in Note 1 — Summary of Significant Accounting Policies. The Company's revenues are derived from its real estate operations and all of its assets are located in the U.S. In fiscal 2019, D.R. Horton accounted for $326.6 million of the Company's real estate revenues.

Total assets by segment at September 30, 2018 were as follows:



	September 30, 2018
	Real Estate		Other		Items Not Allocated		Consolidated
	(In millions)
Cash and cash equivalents	$	—	$	—	$	318.8	$	318.8
Restricted cash	—		—		16.2		16.2
Real estate	498.0		—		—		498.0
Investment in unconsolidated ventures	11.7		—		—		11.7
Income taxes receivable	—		—		4.4		4.4
Property and equipment, net	—		1.5		0.2		1.7
Deferred tax asset, net	—		—		26.9		26.9
Other assets	12.4		0.4		2.6		15.4
	$	522.1	$	1.9	$	369.1	$	893.1

Segment results for the nine months ended September 30, 2018 were as follows:



	Nine Months Ended September 30, 2018
	Real Estate			Other			Items Not Allocated			Consolidated
	(In millions)
Revenues	$	78.3		$	—		$	—		$	78.3
Cost of sales	48.9			0.6			—			49.5
Selling, general and administrative expense	7.1			0.3			12.0			19.4
Equity in earnings of unconsolidated ventures	(4.8		)	—			—			(4.8		)
Gain on sale of assets	(18.6		)	(9.2		)	—			(27.8		)
Interest expense	—			—			3.7			3.7
Interest and other income	(1.8		)	—			(4.6		)	(6.4		)
Income from continuing operations before taxes	$	47.5		$	8.3		$	(11.1	)	$	44.7
Net income attributable to noncontrolling interests	1.2			—			—			1.2
Income from continuing operations before taxes attributable to Forestar Group Inc.	$	46.3		$	8.3		$	(11.1	)	$	43.5

Gain on sale of assets within the Company's real estate segment in the nine months ended September 30, 2018 consists primarily of a gain of $14.6 million related to the sale of its interest in a multifamily venture near Denver.

In the nine months ended September 30, 2018, the Company's other segment sold non-core water interests in Texas, Louisiana, Georgia and Alabama for $10.5 million, which generated a gain on sale of assets of $9.2 million.

Segment results for the fiscal year ended December 31, 2017 were as follows:



	Year Ended December 31, 2017
	Real Estate			Mineral Resources			Other			Items Not Allocated			Consolidated
	(In millions)
Revenues	$	112.7		$	1.5		$	0.1		$	—		$	114.3
Cost of sales	67.8			38.3			6.5			—			112.6
Selling, general and administrative expense	15.9			1.4			0.4			57.6			75.3
Equity in earnings of unconsolidated ventures	(16.4		)	(1.4		)	—			—			(17.8		)
Gain on sale of assets	(1.9		)	(82.4		)	(0.4		)	(28.7		)	(113.4		)
Interest expense	—			—			—			8.5			8.5
Loss on extinguishment of debt	—			—			—			0.6			0.6
Interest and other income	(2.0		)	—			—			(1.6		)	(3.6		)
Income (loss) from continuing operations before taxes	$	49.3		$	45.6		$	(6.4	)	$	(36.4	)	$	52.1
Net income attributable to noncontrolling interests	2.0			—			—			—			2.0
Income (loss) from continuing operations before taxes attributable to Forestar Group Inc.	$	47.3		$	45.6		$	(6.4	)	$	(36.4	)	$	50.1

In fiscal 2017, the Company's mineral resources segment sold its remaining owned mineral assets for approximately $85.7 million, which generated gains of $82.4 million. These gains were partially offset by a $37.9 million impairment charge associated with the mineral resources reporting unit goodwill which is included in cost of sales in the consolidated statement of operations.

In fiscal 2017, cost of sales in the Company's other segment includes impairment charges of $5.8 million primarily related to the Company's central Texas water assets.

Items not allocated to segments consist of:



	Nine Months Ended September 30, 2018			Year Ended December 31, 2017
	(In millions)
Selling, general and administrative expense	$	11.5		$	50.4
Stock-based and long-term incentive compensation expense	0.5			7.2
Gain on sale of assets	—			(28.7		)
Interest expense	3.7			8.5
Loss on extinguishment of debt	—			0.6
Interest and other income	(4.6		)	(1.6		)
	$	11.1		$	36.4

Selling, general and administrative expense in fiscal 2017 includes Merger related transaction costs of $37.2 million which included a Merger termination fee of $20.0 million paid to Starwood Capital Group, $11.8 million in professional fees and other costs, and $5.4 million in executive severance and change in control costs.