Segment Information

6 Months Ended

May 31, 2017

Segment Reporting [Abstract]

Segment Information

Segment Information

We have identified five operating reporting segments, comprised of four homebuilding reporting segments and one financial services reporting segment. As of May 31, 2017, our homebuilding reporting segments conducted ongoing operations in the following states:

West Coast: California

Southwest: Arizona and Nevada

Central: Colorado and Texas

Southeast: Florida and North Carolina

Our homebuilding reporting segments are engaged in the acquisition and development of land primarily for residential purposes and offer a wide variety of homes that are designed to appeal to first-time, move-up and active adult homebuyers. Our homebuilding operations generate most of their revenues from the delivery of completed homes to homebuyers. They also earn revenues from the sale of land.

Our homebuilding reporting segments were identified based primarily on similarities in economic and geographic characteristics, product types, regulatory environments, methods used to sell and construct homes and land acquisition characteristics. Management evaluates segment performance primarily based on segment pretax results.

Our financial services reporting segment offers property and casualty insurance and, in certain instances, earthquake, flood and personal property insurance to our homebuyers in the same markets as our homebuilding reporting segments, and provides title services in the majority of our markets located within our Central and Southeast homebuilding reporting segments. This segment earns revenues primarily from insurance commissions and from the provision of title services. Until October 2016, we provided mortgage banking services, including residential mortgage loan (“mortgage loan”) originations, to our homebuyers indirectly through Home Community Mortgage, LLC (“HCM”), a joint venture of a subsidiary of ours and a subsidiary of Nationstar Mortgage LLC (“Nationstar”). Through these respective subsidiaries, we have a 49.9% ownership interest and Nationstar has a 50.1% ownership interest in HCM, with Nationstar providing management oversight of HCM’s operations. In the 2016 fourth quarter, we and Nationstar began the process to wind down HCM and transfer HCM’s operations and certain assets to Stearns Lending, LLC (“Stearns Lending”). Our homebuyers may select any lender of their choice to obtain mortgage financing for the purchase of their home.

In the 2016 fourth quarter, a subsidiary of ours and a subsidiary of Stearns Lending entered into an agreement to form KBHS Home Loans, LLC (“KBHS”), an unconsolidated mortgage banking joint venture that will offer mortgage banking services, including mortgage loan originations, to our homebuyers. We and Stearns Lending each have a 50.0% ownership interest in KBHS, with Stearns Lending providing management oversight of KBHS’ operations. KBHS was operational in all of our served markets outside of California as of May 31, 2017, and became operational in California in June 2017. Our financial services reporting segment is separately reported in our consolidated financial statements.

Corporate and other is a non-operating segment that develops and oversees the implementation of company-wide strategic initiatives and provides support to our reporting segments by centralizing certain administrative functions. Corporate management is responsible for, among other things, evaluating and selecting the geographic markets in which we operate, consistent with our overall business strategy; allocating capital resources to markets for land acquisition and development activities; making major personnel decisions related to employee compensation and benefits; and monitoring the financial and operational performance of our divisions. Corporate and other includes general and administrative expenses related to operating our corporate headquarters. A portion of the expenses incurred by Corporate and other is allocated to our homebuilding reporting segments.

Our segments follow the same accounting policies used for our consolidated financial statements. The 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, nor are they indicative of the results to be expected in future periods.

The following tables present financial information relating to our homebuilding reporting segments (in thousands):

	Three Months Ended May 31,						Six Months Ended May 31,
	2017			2016			2017			2016
Revenues:
West Coast	$	460,600		$	331,273		$	816,432		$	615,119
Southwest	126,189			111,671			243,825			212,003
Central	292,746			240,232			535,002			442,393
Southeast	120,537			125,286			221,059			214,689
Total	$	1,000,072		$	808,462		$	1,816,318		$	1,484,204
Pretax income (loss):
West Coast	$	36,496		$	19,619		$	59,349		$	41,735
Southwest	9,949			10,134			18,621			22,637
Central	26,985			23,335			46,663			33,914
Southeast	479			(6,590		)	(1,734		)	(14,154		)
Corporate and other	(24,744		)	(23,221		)	(53,835		)	(46,011		)
Total	$	49,165		$	23,277		$	69,064		$	38,121

Inventory impairment charges:
West Coast	$	3,144	$	4,574	$	3,144	$	4,574
Southwest	—		—		1,343		—
Central	—		—		—		787
Southeast	1,158		5,356		3,032		5,915
Total	$	4,302	$	9,930	$	7,519	$	11,276

	Three Months Ended May 31,				Six Months Ended May 31,
	2017		2016		2017		2016
Land option contract abandonments:
West Coast	$	1,044	$	261	$	1,835	$	421
Southwest	—		111		—		111
Central	518		—		518		460
Southeast	137		1,438		137		1,438
Total	$	1,699	$	1,810	$	2,490	$	2,430

	May 31, 2017		November 30, 2016
Inventories:
Homes under construction
West Coast	$	937,202	$	695,742
Southwest	149,669		130,886
Central	334,326		297,290
Southeast	109,855		122,020
Subtotal	1,531,052		1,245,938
Land under development
West Coast	641,669		820,088
Southwest	287,557		268,507
Central	451,551		456,508
Southeast	179,982		182,554
Subtotal	1,560,759		1,727,657
Land held for future development or sale
West Coast	195,684		210,910
Southwest	111,608		122,927
Central	18,328		15,439
Southeast	70,773		80,357
Subtotal	396,393		429,633
Total	$	3,488,204	$	3,403,228

Assets:
West Coast	$	1,881,660	$	1,847,279
Southwest	584,515		564,636
Central	918,171		909,497
Southeast	375,823		414,730
Corporate and other	1,187,216		1,384,983
Total	$	4,947,385	$	5,121,125