Business Segments

The Company’s chief operating decision makers evaluate the Company’s performance in various ways, including: (1) the results of our 15 individual homebuilding operating segments and the results of our financial services operations; (2) the results of our three homebuilding reportable segments; and (3) our consolidated financial results.

In accordance with ASC 280, Segment Reporting (“ASC 280”), we have identified each homebuilding division as an operating segment and have determined our reportable segments are as follows: Midwest homebuilding, Southern homebuilding, Mid-Atlantic homebuilding and financial services operations. The homebuilding operating segments that are included within each reportable segment have been aggregated because they share similar aggregation characteristics as prescribed in ASC 280 in the following regards: (1) long-term economic characteristics; (2) historical and expected future long-term gross margin percentages; (3) housing products, production processes and methods of distribution; and (4) geographical proximity.

The homebuilding operating segments that comprise each of our reportable segments are as follows:



Midwest	Southern	Mid-Atlantic
Chicago, Illinois	Orlando, Florida	Charlotte, North Carolina
Cincinnati, Ohio	Sarasota, Florida	Raleigh, North Carolina
Columbus, Ohio	Tampa, Florida	Washington, D.C.
Indianapolis, Indiana	Austin, Texas
Minneapolis/St. Paul, Minnesota	Dallas/Fort Worth, Texas
	Houston, Texas
	San Antonio, Texas

The following table shows, by segment, revenue, operating income and interest expense for 2017, 2016 and 2015, as well as the Company’s income before income taxes for such periods:



	Year Ended December 31,
(In thousands)	2017			2016			2015
Revenue:
Midwest homebuilding	$	742,577		$	637,894		$	500,873
Southern homebuilding	730,482			602,273			514,747
Mid-Atlantic homebuilding	439,219			409,149			366,800
Financial services ^(a)	49,693			42,011			35,975
Total revenue	$	1,961,971		$	1,691,327		$	1,418,395

Operating income:
Midwest homebuilding	$	81,522		$	70,446		$	51,436
Southern homebuilding ^(b)	36,798			20,398			47,276
Mid-Atlantic homebuilding	35,598			33,450			25,144
Financial services ^(a)	27,288			23,262			21,032
Less: Corporate selling, general and administrative expenses	(42,547		)	(38,813		)	(33,094		)
Total operating income ^{(b) (c)}	$	138,659		$	108,743		$	111,794

Interest expense:
Midwest homebuilding	$	5,010		$	3,754		$	4,005
Southern homebuilding	8,508			8,039			7,244
Mid-Atlantic homebuilding	2,599			3,693			4,656
Financial services ^(a)	2,757			2,112			1,616
Total interest expense	$	18,874		$	17,598		$	17,521

Equity in income of joint venture arrangements	$	(539	)	$	(640	)	$	(498	)
Loss on early extinguishment of debt	—			—			7,842

Income before income taxes	$	120,324		$	91,785		$	86,929

Depreciation and amortization:
Midwest homebuilding	$	2,069		$	1,752		$	1,614
Southern homebuilding	3,014			2,525			2,069
Mid-Atlantic homebuilding	1,565			1,645			1,464
Financial services	1,503			1,948			1,213
Corporate	6,023			5,736			4,568
Total depreciation and amortization	$	14,174		$	13,606		$	10,928


(a)	Our financial services operational results should be viewed in connection with our homebuilding business as its operations originate loans and provide title services primarily for our homebuying customers, with the exception of an immaterial amount of mortgage refinancing.


(b)	Includes an $8.5 million and a $19.4 million charge for stucco-related repair costs in certain of our Florida communities (as more fully discussed in Note 8 to our Consolidated Financial Statements) taken during the year ended December 31, 2017 and 2016, respectively.


(c)	For the years ended December 31, 2017, 2016 and 2015, total operating income was reduced by $7.7 million, $4.0 million and $3.6 million, respectively, related to asset impairment charges taken during the period.

The following tables show total assets by segment at December 31, 2017 and 2016:



	December 31, 2017
(In thousands)	Midwest		Southern			Mid-Atlantic		Corporate, Financial Services and Unallocated		Total
Deposits on real estate under option or contract	$	4,933	$	20,719		$	6,904	$	—	$	32,556
Inventory ^(a)	500,671		636,019			245,328		—		1,382,018
Investments in joint venture arrangements	4,410		9,677			6,438		—		20,525
Other assets	13,573		38,784		^(b)	13,311		364,004		429,672
Total assets	$	523,587	$	705,199		$	271,981	$	364,004	$	1,864,771



	December 31, 2016
(In thousands)	Midwest		Southern			Mid-Atlantic		Corporate, Financial Services and Unallocated		Total
Deposits on real estate under option or contract	$	3,989	$	22,607		$	3,260	$	—	$	29,856
Inventory ^(a)	399,814		484,038			302,226		—		1,186,078
Investments in joint venture arrangements	10,155		10,630			7,231		—		28,016
Other assets	25,747		35,622		^(b)	13,912		229,280		304,561
Total assets	$	439,705	$	552,897		$	326,629	$	229,280	$	1,548,511


(a)	Inventory includes single-family lots, land and land development costs; land held for sale; homes under construction; model homes and furnishings; community development district infrastructure; and consolidated inventory not owned.


(b)	Includes development reimbursements from local municipalities.