17.	Operating and Reporting Segments

HEI’s operating segments are components of the Company’s business for which discrete financial information is available and reviewed regularly by the chief operating decision maker, our Chief Executive Officer, to evaluate performance and make operating decisions. Based on this criteria, each of the Company's communities qualifies as an operating segment, and therefore, it is impractical to provide segment disclosures for this many segments. As such, HEI has aggregated the homebuilding operating segments into

six

reportable segments.

HEI’s homebuilding operating segments are aggregated into reportable segments based primarily upon geographic proximity, similar regulatory environments, land acquisition characteristics and similar methods used to construct and sell homes. HEI’s reportable segments consist of the following

six

homebuilding segments and a financial services segment noted below.

Homebuilding:

	( 1 )	Northeast (New Jersey and Pennsylvania)
	( 2 )	Mid-Atlantic (Delaware, Maryland, Virginia, Washington D.C. and West Virginia)
	( 3 )	Midwest (Illinois and Ohio)
	( 4 )	Southeast (Florida, Georgia and South Carolina)
	( 5 )	Southwest (Arizona and Texas)
	( 6 )	West (California)

Financial Services

Operations of the Homebuilding segments primarily include the sale and construction of single-family attached and detached homes, attached townhomes and condominiums, urban infill and active lifestyle homes in planned residential developments. In addition, from time to time, operations of the homebuilding segments include sales of land. Operations of the Financial Services segment include mortgage banking and title services provided to the homebuilding operations’ customers. Our financial services subsidiaries do

not

typically retain or service mortgages that we originate but rather sell the mortgages and related servicing rights to investors.

Corporate and unallocated primarily represents operations at our headquarters in New Jersey. This includes our executive offices, information services, human resources, corporate accounting, training, treasury, process redesign, internal audit, construction services, and administration of insurance, quality and safety. It also includes interest income and interest expense resulting from interest incurred that cannot be capitalized in inventory in the Homebuilding segments, as well as the gains or losses on extinguishment of debt from any debt repurchases or exchanges.

Evaluation of segment performance is based primarily on operating earnings from continuing operations before provision for income taxes (“Income (loss) before income taxes”). Income (loss) before income taxes for the Homebuilding segments consist of revenues generated from the sales of homes and land, income (loss) from unconsolidated entities, management fees and other income, less the cost of homes and land sold, selling, general and administrative expenses and interest expense. Income (loss) before income taxes for the Financial Services segment consist of revenues generated from mortgage financing, title insurance and closing services, less the cost of such services and selling, general and administrative expenses incurred by the Financial Services segment.

Operational results of each segment are

not

necessarily indicative of the results that would have occurred had the segment been an independent stand-alone entity during the periods presented

Financial information relating to HEI’s segment operations was as follows:

	Three Months Ended
	January 31,
(In thousands)	2020		2019

Revenues:
Northeast	$45,276		$19,941
Mid-Atlantic	87,759		53,430
Midwest	46,444		44,921
Southeast	36,774		43,991
Southwest	163,899		118,199
West	99,621		89,901
Total homebuilding	479,773		370,383
Financial services	14,014		9,608
Corporate and unallocated	269		603
Total revenues	$494,056		$380,594

(Loss) income before income taxes:
Northeast	$5,741		$5,879
Mid-Atlantic	4,058		(7	)
Midwest	(3,443	)	(849	)
Southeast	(4,311	)	(2,929	)
Southwest	8,620		2,386
West	1,611		11,705
Total homebuilding	12,276		16,185
Financial services	4,460		1,134
Corporate and unallocated (1)	(24,172	)	(34,425	)
(Loss) income before income taxes	$(7,436	)	$(17,106	)

(

) Corporate and unallocated for the

three

months ended

January 31, 2020

included corporate general and administrative costs of

$19.7

million, interest expense of

$14.9

million (a component of Other interest on our Condensed Consolidated Statements of Operations), $(

9.5

) million of gain on extinguishment of debt and $(

0.9

) million of other income and expenses primarily related to interest income and stock compensation. Corporate and unallocated for the

three

months ended

January 31, 2019

included corporate general and administrative costs of

$17.7

million, interest expense of

$17.5

million (a component of Other interest on our Condensed Consolidated Statements of Operations) and $(

0.8

) million of other income and expenses primarily related to interest income, gain on the sale of our corporate headquarters building and stock compensation.

	January 31,	October 31,
(In thousands)	2020	2019

Assets:
Northeast	$151,859	$163,342
Mid-Atlantic	267,198	264,894
Midwest	122,317	117,242
Southeast	276,643	281,654
Southwest	364,239	357,052
West	336,243	311,919
Total homebuilding	1,518,499	1,496,103
Financial services	117,557	199,275
Corporate and unallocated	153,947	186,046
Total assets	$1,790,003	$1,881,424