Note 4 - Segment Reporting

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

4.

Segment Reporting

We operate

two

principal businesses: homebuilding and financial services.

Our homebuilding operations acquire and develop land and construct and sell single-family attached and detached homes. In connection with the merger with Ryland, the Company experienced key personnel changes and significant growth in its operations, and as a result, the Company began to develop processes and reporting packages to manage and assess the Company’s performance at a regional level. In light of the key personnel changes, growth in operations, and the focus on regional information provided to the Company’s chief operating decision maker, during

2016,

we performed an assessment of our operating segments in accordance with ASC

280

and determined that each of our

four

homebuilding regions and financial services operations are our operating segments. Prior to this change, in accordance with the aggregation criteria defined in ASC

280,

our homebuilding divisions were grouped into

four

reportable segments (which were our

four

homebuilding regions): North, consisting of our divisions in Georgia, Delaware, Illinois, Indiana, Maryland, Minnesota, New Jersey, Pennsylvania, Virginia and Washington D.C.; Southeast, consisting of our divisions in Florida and the Carolinas; Southwest, consisting of our divisions in Texas, Colorado and Nevada; and West, consisting of our divisions in California and Arizona. As such, current period segment information is presented consistent with prior periods.

Our mortgage financing operation provides mortgage financing to many of our homebuyers in substantially all of the markets in which we operate, and sells substantially all of the loans it originates in the

secondary

mortgage market. Our title, escrow and insurance subsidiaries provide title, escrow and insurance services to homebuyers in many of our markets. Our mortgage financing, title, escrow and insurance services operations are included in our financial services reportable segment, which is separately reported in our consolidated financial statements under "Financial Services."

Corporate is a non-operating segment that develops and implements strategic initiatives and supports our operating segments by centralizing key administrative functions such as accounting, finance and treasury, information technology, insurance and risk management, litigation, marketing and human resources. Corporate also provides the necessary administrative functions to support us as a publicly traded company. All of the expenses incurred by Corporate are allocated to each of our

four

homebuilding regions based on their respective percentage of revenues. 

Segment financial information relating to the Company’s homebuilding operations was as follows:

	Year Ended December 31,
	2016		2015		2014
	(Dollars in thousands)
Homebuilding revenues:
North	$	1,017,063	$	262,988	$	n/a
Southeast		1,559,345		988,773		672,776
Southwest		1,659,477		889,496		495,008
West		2,152,155		1,355,154		1,243,394
Total homebuilding revenues	$	6,388,040	$	3,496,411	$	2,411,178
Homebuilding pretax income (1):
North	$	80,498	$	5,556	$	n/a
Southeast		130,656		69,726		66,232
Southwest		165,694		70,851		48,958
West		336,654		179,417		224,931
Total homebuilding pretax income	$	713,502	$	325,550	$	340,121
Homebuilding income (loss) from unconsolidated joint ventures:
North	$	588	$	78	$	n/a
Southeast		435		219		119
Southwest		1,019		159		28
West		2,015		1,510		(815	)
Total homebuilding income (loss) from unconsolidated joint ventures	$	4,057	$	1,966	$	(668	)

(1) Homebuilding pretax income includes depreciation and amortization expense of $6.5 million, $16.0 million, $12.1 million and $27.0 million in the North, Southeast, Southwest and West, respectively, for the year ended December 31, 2016; $1.5 million, $10.1 million, $6.6 million and $22.8 million in the North, Southeast, Southwest and West, respectively, for the year ended December 31, 2015; and $0 million, $6.5 million, $4.0 million and $16.7 million in the North, Southeast, Southwest and West, respectively, for the year ended December 31, 2014.

Segment financial information relating to the Company’s homebuilding assets was as follows:

	December 31,
	2016		2015
	(Dollars in thousands)
Homebuilding assets:
North	$	1,181,544	$	732,689
Southeast		2,253,289		1,766,241
Southwest		1,842,869		1,470,654
West		2,500,163		2,357,597
Corporate (1)		578,780		1,678,072
Total homebuilding assets	$	8,356,645	$	8,005,253
Homebuilding investments in unconsolidated joint ventures:
North	$	5,691	$	5,634
Southeast		334		313
Southwest		6,085		5,594
West		115,017		121,222
Total homebuilding investments in unconsolidated joint ventures	$	127,127	$	132,763

(1) The assets in our Corporate Segment include cash and cash equivalents and our deferred tax asset, and at December 31, 2015 included $0.9 billion of goodwill recorded in connection with our merger with Ryland. During the 2016 second quarter, recorded goodwill was allocated to the Company’s reporting units (as of December 31, 2016, approximately $0.3 billion was included in each of the North, Southeast and Southwest segments, and approximately $0.1 billion was included in the West segment).