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Note 4 - Segment Reporting
 12 Months Ended
Dec. 31, 2018
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]
4.
Segment Reporting
 
An operating segment is defined as a component of an enterprise for which discrete financial information is available and is reviewed regularly by the Chief Operating Decision Maker (“CODM”), or decision-making group, to evaluate performance and make operating decisions. We have identified our CODM as
two
key executives—the Chief Executive Officer (“CEO”) and the Chief Operating Officer (“COO”).
 
We have identified each homebuilding division as an operating segment. Our homebuilding operating segments have been aggregated into the reportable segments noted below because they are similar in the following regards: (
1
) economic characteristics; (
2
) housing products; (
3
) class of homebuyer; (
4
) regulatory environments; and (
5
) methods used to construct and sell homes. Our homebuilding reportable segments are as follows:
 
 
●
West (Arizona, California, Nevada, Washington and Oregon)
 
●
Mountain (Colorado and Utah)
 
●
East (mid-Atlantic, which includes Virginia and Maryland, and Florida)
 
Our financial services business consists of the operations of the following operating segments: (
1
) HomeAmerican; (
2
) Allegiant; (
3
) StarAmerican; (
4
) American Home Insurance; and (
5
) American Home Title. Due to its contributions to consolidated pretax income we consider HomeAmerican to be a reportable segment (“mortgage operations”). The remaining operating segments have been aggregated into
one
reportable segment (“other”) because they do
not
individually exceed
10
percent of: (
1
) consolidated revenue; (
2
) the greater of (a) the combined reported profit of all operating segments that did
not
report a loss or (b) the positive value of the combined reported loss of all operating segments that reported losses; or (
3
) consolidated assets.
 
Corporate is a non-operating segment that develops and implements strategic initiatives and supports our operating divisions by centralizing key administrative functions such as finance, treasury, information technology, insurance, risk management, litigation and human resources. Corporate also provides the necessary administrative functions to support MDC as a publicly traded company. A portion of the expenses incurred by Corporate are allocated to the homebuilding operating segments based on their respective percentages of assets, and to a lesser degree, a portion of Corporate expenses are allocated to the financial services segments. A majority of Corporate’s personnel and resources are primarily dedicated to activities relating to the homebuilding segments, and, therefore, the balance of any unallocated Corporate expenses is included in the homebuilding operations section of our consolidated statements of operations and comprehensive income.
 
The following table summarizes revenues for our homebuilding and financial services operations.
 
   
Year Ended December 31,
  
   
2018
    
2017
    
2016
  
 
  
(Dollars in thousands)
  
Homebuilding
                        
West
   $
1,567,141
     $
1,316,069
     $
1,128,513
  
Mountain
    
1,080,475
      
805,669
      
756,997
  
East
    
334,195
      
381,504
      
377,343
  
Total homebuilding revenues
   $
2,981,811
     $
2,503,242
     $
2,262,853
  
                         
Financial Services
  
 
 
 
  
 
 
 
  
 
 
 
Mortgage operations
   $
53,476
     $
48,841
     $
41,585
  
Other
    
29,929
      
25,531
      
22,406
  
Total financial services revenues
   $
83,405
     $
74,372
     $
63,991
  
                         
Total revenues
   $
3,065,216
     $
2,577,614
     $
2,326,844
  
 
The following table summarizes pretax income (loss) for our homebuilding and financial services operations.
 
   
Year Ended December 31,
  
   
2018
    
2017
    
2016
  
   
(Dollars in thousands)
  
Homebuilding
  
 
 
 
  
 
 
 
  
 
 
 
West
   $
128,829
     $
79,719
     $
73,594
  
Mountain
    
134,710
      
86,428
      
73,104
  
East
    
12,611
      
14,418
      
4,949
  
Corporate
(1)
    
(58,656
 )    
5,374
      
(36,269
 )
Total homebuilding pretax income
   $
217,494
     $
185,939
     $
115,378
  
                         
Financial Services
  
 
 
 
  
 
 
 
  
 
 
 
Mortgage operations
   $
31,920
     $
28,628
     $
23,845
  
Other
    
14,440
      
15,165
      
12,558
  
Total financial services pretax income
   $
46,360
     $
43,793
     $
36,403
  
                         
Total pretax income
   $
263,854
     $
229,732
     $
151,781
  
_______________________
                        
 
(
1
) The pretax gain for the year ended
December 31, 2017
was driven by
$53.6
million in realized gains due to the sale of investments.
 
The following table summarizes total assets for our homebuilding and financial services operations. The assets in our West, Mountain and East segments consist primarily of inventory while the assets in our Corporate segment primarily include cash and cash equivalents, marketable securities, and our deferred tax assets. The assets in our financial services segment consist mostly of cash and cash equivalents, marketable securities and mortgage loans held-for-sale.
 
   
December 31,
  
   
2018
    
2017
  
 
  
(Dollars in thousands)
  
Homebuilding assets
                
West
   $
1,301,374
     $
1,084,756
  
Mountain
    
793,150
      
674,057
  
East
    
169,485
      
201,684
  
Corporate
    
484,193
      
597,589
  
Total homebuilding assets
   $
2,748,202
     $
2,558,086
  
                 
Financial services assets
  
 
 
 
  
 
 
 
Mortgage operations
   $
159,677
     $
152,345
  
Other
    
93,198
      
69,861
  
Total financial services assets
   $
252,875
     $
222,206
  
                 
Total assets
   $
3,001,077
     $
2,780,292