Segment Information

An operating segment is defined as a component of an enterprise for which separate financial information is available and for which segment results are evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. We have identified each of our homebuilding divisions as an operating segment. Our homebuilding operating segments have been aggregated into four homebuilding reporting segments based primarily on similarities in economic and geographic characteristics, product types, regulatory environments, methods used to sell and construct homes and land acquisition characteristics. We also have one financial services reporting segment. Management evaluates segment performance primarily based on segment pretax results.

As of November 30, 2018, our homebuilding reporting segments conducted ongoing operations in the following states:

West Coast: California and Washington

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, first 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.

In the 2018 third quarter, we expanded into the state of Washington with our entrance into the Seattle market. In 2016, we announced that we had begun a transition out of the Metro Washington, D.C. market which was substantially completed in 2017. Our operations in the Metro Washington, D.C. market consisted of communities in Maryland and Virginia, which were included in our Southeast homebuilding reporting segment, and represented 2% of our consolidated homebuilding revenues for the year ended November 30, 2016. As described in Note 7 – Inventory Impairments and Land Option Contract Abandonments, we recorded inventory impairment and land option contract abandonment charges related to this transition during the year ended November 30, 2016.

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 mortgage loan originations, to our homebuyers indirectly through HCM, an unconsolidated joint venture we formed with Nationstar. 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.

In 2016, we and Stearns formed KBHS, an unconsolidated mortgage banking joint venture, to offer mortgage banking services, including mortgage loan originations, to our homebuyers. We and Stearns each have a 50.0% ownership interest, with Stearns providing management oversight of KBHS’ operations. KBHS was operational in all of our served markets as of June 2017. KBHS did not have an impact on our consolidated statement of operations for the year ended November 30, 2016. Our homebuyers may select any lender of their choice to obtain mortgage financing for the purchase of their home. The 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 reporting segments follow the same accounting policies used for our consolidated financial statements as described in Note 1 – Summary of Significant Accounting Policies. The results of each reporting 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):



	Years Ended November 30,
	2018		2017		2016
Revenues:
West Coast	$	2,085,328	$	2,186,411	$	1,638,078
Southwest	707,075		533,052		447,473
Central	1,239,305		1,188,839		1,018,535
Southeast	502,087		447,963		478,857
Total	$	4,533,795	$	4,356,265	$	3,582,943



Pretax income (loss):
West Coast	$	240,337		$	217,649		$	148,014
Southwest	91,017			45,540			38,807
Central	117,609			116,098			85,924
Southeast	7,624			(509		)	(29,385		)
Corporate and other	(105,286		)	(101,851		)	(98,511		)
Total	$	351,301		$	276,927		$	144,849

Equity in income (loss) of unconsolidated joint ventures:
West Coast	$	(966	)	$	(1,770	)	$	(1,561	)
Southwest	3,033			362			(618		)
Central	—			—			—
Southeast	(1		)	(1		)	(2		)
Total	$	2,066		$	(1,409	)	$	(2,181	)

Inventory impairment charges:
West Coast	$	19,169		$	13,482		$	8,209
Southwest	—			3,445			3,191
Central	1,463			—			10,633
Southeast	5,472			3,678			27,547
Total	$	26,104		$	20,605		$	49,580

Land option contract abandonment charges:
West Coast	$	1,212		$	3,225		$	769
Southwest	432			—			253
Central	1,095			846			460
Southeast	151			556			1,750
Total	$	2,890		$	4,627		$	3,232



	November 30,
	2018		2017
Inventories:
Homes under construction
West Coast	$	514,099	$	638,639
Southwest	173,036		179,240
Central	312,366		320,205
Southeast	125,651		98,764
Subtotal	1,125,152		1,236,848
Land under development
West Coast	1,059,432		723,761
Southwest	404,201		309,672
Central	543,472		435,373
Southeast	212,831		182,533
Subtotal	2,219,936		1,651,339
Land held for future development or sale
West Coast	154,462		233,188
Southwest	21,137		62,475
Central	9,346		12,654
Southeast	52,806		66,882
Subtotal	237,751		375,199
Total	$	3,582,839	$	3,263,386

Investments in unconsolidated joint ventures:
West Coast	$	56,128	$	53,506
Southwest	3,327		8,784
Central	—		—
Southeast	2,505		2,504
Total	$	61,960	$	64,794

Assets:
West Coast	$	1,880,516	$	1,747,786
Southwest	631,509		586,666
Central	1,017,490		901,516
Southeast	463,224		359,307
Corporate and other	1,068,452		1,433,883
Total	$	5,061,191	$	5,029,158