| OPERATING AND REPORTING SEGMENTS |
NOTE 12 — OPERATING AND REPORTING SEGMENTS
As defined in ASC 280-10, Segment Reporting, we have seven operating segments (the seven states in which we operate). These segments are engaged in the business of acquiring and developing land, constructing homes, marketing and selling those homes, and providing warranty and customer service. We aggregate our operating segments into reporting segments based on similar long-term economic characteristics and geographical proximity. Our reporting segments are as follows:
West: California and Nevada
Central: Texas, Arizona and Colorado
East: Florida and North Carolina
Management’s evaluation of segment performance is based on segment operating income/(loss), which we define as homebuilding and land revenue less cost of home construction, commissions and other sales costs, land development and other land sales costs and other costs incurred by or allocated to each segment, including impairments. Each reportable segment follows the same accounting policies described in Note 1, “Organization and Basis of Presentation,” to the consolidated financial statements in our 2011 Annual Report on Form 10-K. Operating results for each segment may not be indicative of the results for such segment had it been an independent, stand-alone entity. The following is our segment information (in thousands):
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2012 |
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2011 |
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2012 |
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2011 |
Revenue (1): |
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West |
$ |
97,249 |
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$ |
32,930 |
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$ |
184,365 |
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$ |
88,290 |
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Central |
193,784 |
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156,935 |
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510,110 |
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458,623 |
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East |
51,610 |
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27,669 |
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134,613 |
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|
68,341 |
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Consolidated total |
342,643 |
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217,534 |
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829,088 |
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|
615,254 |
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Operating income/(loss) (2): |
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West |
8,665 |
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|
363 |
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10,621 |
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(84 |
) |
Central |
12,327 |
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5,128 |
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27,674 |
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17,203 |
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East |
3,691 |
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1,721 |
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9,768 |
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5,962 |
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Segment operating income |
24,683 |
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7,212 |
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48,063 |
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23,081 |
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Corporate and unallocated (3) |
(7,323 |
) |
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(5,443 |
) |
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(17,233 |
) |
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(15,620 |
) |
Earnings from unconsolidated entities, net |
2,975 |
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1,797 |
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6,626 |
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3,931 |
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Interest expense |
(5,009 |
) |
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(7,517 |
) |
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(18,718 |
) |
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(23,036 |
) |
Other (expense)/income, net |
(8,340 |
) |
|
876 |
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(7,712 |
) |
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2,872 |
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Loss on extinguishment of debt |
— |
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— |
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(5,772 |
) |
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— |
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Income/(loss) before income taxes |
$ |
6,986 |
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$ |
(3,075 |
) |
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$ |
5,254 |
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$ |
(8,772 |
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(1) |
Revenue includes the following land closing revenue, by segment: three months ended September 30, 2012— $4.4 million in the West Region, $2.6 million in the Central Region, $0.8 million in the East Region; nine months ended September 30, 2012— $4.4 million in the West Region, $3.6 million in the Central Region, $0.8 million in the East Region; nine months ended September 30, 2011—$100,000 in the Central Region.
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(2) |
See Note 2 of this Quarterly Report on Form 10-Q for a breakout of real estate-related impairments by region. |
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(3) |
Balance consists primarily of corporate costs and numerous shared service functions such as finance and treasury that are not allocated to the reporting segments. |
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At September 30, 2012 |
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West |
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Central |
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East |
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Corporate and
Unallocated (1)
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Total |
Deposits on real estate under option or contract |
$ |
3,516 |
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$ |
8,367 |
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$ |
1,100 |
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$ |
— |
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$ |
12,983 |
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Real estate |
204,737 |
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672,037 |
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128,051 |
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— |
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1,004,825 |
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Investments in unconsolidated entities |
177 |
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10,983 |
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13 |
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|
835 |
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12,008 |
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Other assets |
18,417 |
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145,271 |
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21,264 |
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266,434 |
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451,386 |
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Total assets |
$ |
226,847 |
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$ |
836,658 |
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$ |
150,428 |
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$ |
267,269 |
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$ |
1,481,202 |
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At December 31, 2011 |
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West |
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Central |
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East |
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Corporate and
Unallocated (1)
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Total |
Deposits on real estate under option or contract |
$ |
3,216 |
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$ |
11,158 |
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$ |
834 |
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$ |
— |
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$ |
15,208 |
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Real estate |
207,656 |
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529,885 |
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77,884 |
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— |
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|
815,425 |
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Investments in unconsolidated entities |
176 |
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10,245 |
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14 |
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|
653 |
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11,088 |
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Other assets |
8,911 |
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90,532 |
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8,842 |
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271,372 |
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379,657 |
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Total assets |
$ |
219,959 |
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$ |
641,820 |
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$ |
87,574 |
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$ |
272,025 |
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$ |
1,221,378 |
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(1) |
Balance consists primarily of cash and other corporate assets not allocated to the reporting segments. |
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