XML 47 R14.htm IDEA: XBRL DOCUMENT v2.4.0.6
Segment Disclosures
 3 Months Ended
Mar. 31, 2012
Segment Disclosures [Abstract]  
Segment Disclosures
9. Segment Disclosures

The following disclosure includes four homebuilding reportable segments that aggregate geographically the Company’s homebuilding operating segments, and the mortgage banking operations presented as a single reportable segment. The homebuilding reportable segments are comprised of operating divisions in the following geographic areas:

Homebuilding Mid Atlantic – Virginia, West Virginia, Maryland, and Delaware

Homebuilding North East – New Jersey and eastern Pennsylvania

Homebuilding Mid East – Kentucky, New York, Ohio, western Pennsylvania, Indiana and Illinois

Homebuilding South East – North Carolina, South Carolina, Florida and Tennessee

Homebuilding profit before tax includes all revenues and income generated from the sale of homes, less the cost of homes sold, selling, general and administrative expenses, and a corporate capital allocation charge. The corporate capital allocation charge eliminates in consolidation, is based on the segment’s average net assets employed, and is charged using a consistent methodology in the periods presented. The corporate capital allocation charged to the operating segment allows the Chief Operating Decision Maker to determine whether the operating segment’s results are providing the desired rate of return after covering the Company’s cost of capital. The Company records charges on contract land deposits when it is determined that it is probable that recovery of the deposit is impaired. For segment reporting purposes, impairments on contract land deposits are charged to the operating segment upon the determination to terminate a finished lot purchase agreement with the developer, or to restructure a lot purchase agreement resulting in the forfeiture of the deposit. Mortgage banking profit before tax consists of revenues generated from mortgage financing, title insurance and closing services, less the costs of such services and general and administrative costs. Mortgage banking operations are not charged a capital allocation charge.

In addition to the corporate capital allocation and contract land deposit impairments discussed above, the other reconciling items between segment profit and consolidated profit before tax include unallocated corporate overhead (including all management incentive compensation), equity-based compensation expense, consolidation adjustments and external corporate interest expense. NVR’s overhead functions, such as accounting, treasury, human resources, etc., are centrally performed and the costs are not allocated to the Company’s operating segments. Consolidation adjustments consist of such items necessary to convert the reportable segments’ results, which are predominantly maintained on a cash basis, to a full accrual basis for external financial statement presentation purposes, and are not allocated to the Company’s operating segments. Likewise, equity-based compensation expense is not charged to the operating segments.

Following are tables presenting revenues, segment profit and segment assets for each reportable segment, with reconciliations to the amounts reported for the consolidated enterprise, where applicable:

 

 

                 
    Three Months Ended March 31,  
    2012     2011  

Revenues:

                

Homebuilding Mid Atlantic

   $ 360,811     $ 312,940  

Homebuilding North East

     52,200       39,193  

Homebuilding Mid East

     106,282       98,152  

Homebuilding South East

     66,902       52,459  

Mortgage Banking

     14,297       11,760  
   

 

 

    

 

 

  

Total consolidated revenues

   $ 600,492     $ 514,504  
   

 

 

    

 

 

  

 

 

      000,000,000       000,000,000  
    Three Months Ended March 31,  
    2012     2011  

Profit:

                

Homebuilding Mid Atlantic

   $ 29,086     $ 25,876  

Homebuilding North East

     2,461       1,123  

Homebuilding Mid East

     960       1,607  

Homebuilding South East

     3,905       2,213  

Mortgage Banking

     8,742       6,741  
   

 

 

    

 

 

  

Total segment profit

     45,154       37,560  
   

 

 

    

 

 

  

Contract land deposit reserve adjustment(1)

     1,309       (1,130 ) 

Equity-based compensation expense

     (16,440 )      (15,580 ) 

Corporate capital allocation (2)

     18,972       15,423  

Unallocated corporate overhead (3)

     (18,803 )      (16,460 ) 

Consolidation adjustments and other (4)

     827       5,125  

Corporate interest expense

     (61 )      (103 ) 
   

 

 

    

 

 

  

Reconciling items sub-total

     (14,196 )      (12,725 ) 
   

 

 

    

 

 

  

Consolidated income before taxes

   $ 30,958     $ 24,835  
   

 

 

    

 

 

  

 

 

      000,000,000       000,000,000  
    March 31,
2012		     December 31,
2011		  

Assets:

                

Homebuilding Mid Atlantic

   $ 697,590     $ 626,157  

Homebuilding North East

     69,745       55,948  

Homebuilding Mid East

     116,002       94,593  

Homebuilding South East

     73,439       63,263  

Mortgage Banking

     134,495       270,820  
   

 

 

    

 

 

  

Total segment assets

     1,091,271       1,110,781  
   

 

 

    

 

 

  

Consolidated variable interest entity

     17,546       20,182  

Cash and cash equivalents

     567,922       475,566  

Deferred taxes

     156,843       155,881  

Intangible assets

     48,927       48,927  

Contract land deposit reserve

     (69,062 )      (70,333 ) 

Consolidation adjustments and other

     37,465       38,481  
   

 

 

    

 

 

  

Reconciling items sub-total

     759,641       668,704  
   

 

 

    

 

 

  

Consolidated assets

   $ 1,850,912     $ 1,779,485  
   

 

 

    

 

 

  

 

(1) This item represents changes to the contract land deposit impairment reserve, which are not allocated to the reportable segments.
(2) This item represents the elimination of the corporate capital allocation charge included in the respective homebuilding reportable segments. The corporate capital allocation charge is based on the segment’s monthly average asset balance, and was as follows for the periods presented:

 

 

                 
    Three Months Ended March 31,  
    2012     2011  

Homebuilding Mid Atlantic

   $ 12,680     $ 10,831  

Homebuilding North East

     1,822       1,163  

Homebuilding Mid East

     2,742       2,204  

Homebuilding South East

     1,728       1,225  
   

 

 

    

 

 

  

Total

   $ 18,972     $ 15,423  
   

 

 

    

 

 

  

 

(3) The increase in unallocated corporate overhead in the first quarter of 2012 was primarily attributable to higher management incentive costs period over period.
(4) The decrease in consolidation adjustments and other in 2012 from 2011 was primarily attributable to changes in the corporate consolidation entries based on production and settlement volumes in the respective quarters.