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Segment Disclosures | 6 Months Ended
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Jun. 30, 2020
Segment Reporting [Abstract] |
Segment Disclosures | Segment Disclosures We disclose four homebuilding reportable segments that aggregate geographically our homebuilding operating segments, and our mortgage banking operations presented as one reportable segment. The homebuilding reportable segments are comprised of operating divisions in the following geographic areas:
Mid Atlantic: |  | Maryland, Virginia, West Virginia, Delaware and Washington, D.C.
North East: |  | New Jersey and Eastern Pennsylvania
Mid East: |  | New York, Ohio, Western Pennsylvania, Indiana and Illinois
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 is eliminated in consolidation and is based on the segment’s average net assets employed. The corporate capital allocation charged to the operating segment allows the Chief Operating Decision Maker (“CODM”) to determine whether the operating segment’s results are providing the desired rate of return after covering our cost of capital. Assets not allocated to the operating segments are not included in either the operating segment’s corporate capital allocation charge or the CODM’s evaluation of the operating segment’s performance. We record 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 generally charged to the operating segment upon the termination of a Lot Purchase Agreement with the developer, or the restructuring of 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 corporate 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. Overhead functions such as accounting, treasury and human resources are centrally performed and these costs are not allocated to our 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 our operating segments. Our external corporate interest expense primarily consists of interest charges on our 3.95% Senior Notes due 2022 and 3.00% Senior Notes due 2030 and is not charged to the operating segments because the charges are included in the corporate capital allocation discussed above. The f ollowing tables present segment revenues, profit and assets with reconciliations to the amounts reported for the consolidated enterprise, where applicable:
|  | Three Months Ended June 30, |  |  |  | Six Months Ended June 30, |  |
|  | 2020 |  | 2019 |  | 2020 |  | 2019
Revenues: |  |  |  |  |  |  |  |
Homebuilding Mid Atlantic |  | $ | 839,845 |  |  | $ | 982,032 |  |  | $ | 1,613,903 |  |  | $ | 1,863,356 |
Homebuilding North East |  | 98,219 |  |  | 121,804 |  |  | 204,355 |  |  | 244,431 |
Homebuilding Mid East |  | 299,955 |  |  | 359,908 |  |  | 620,650 |  |  | 698,457 |
Homebuilding South East |  | 350,739 |  |  | 293,704 |  |  | 705,557 |  |  | 594,410 |
Mortgage Banking |  | 31,610 |  |  | 42,746 |  |  | 58,431 |  |  | 86,551 |
Total consolidated revenues |  | $ | 1,620,368 |  |  | $ | 1,800,194 |  |  | $ | 3,202,896 |  |  | $ | 3,487,205 |
|  | Three Months Ended June 30, |  |  |  | Six Months Ended June 30, |  |
|  | 2020 |  | 2019 |  | 2020 |  | 2019
Income before taxes: |  |  |  |  |  |  |  |
Homebuilding Mid Atlantic |  | $ | 98,067 |  |  | $ | 123,802 |  |  | $ | 179,740 |  |  | $ | 223,166 |
Homebuilding North East |  | 6,658 |  |  | 11,563 |  |  | 16,809 |  |  | 23,023 |
Homebuilding Mid East |  | 27,302 |  |  | 40,291 |  |  | 58,466 |  |  | 75,766 |
Homebuilding South East |  | 42,765 |  |  | 30,825 |  |  | 89,909 |  |  | 65,861 |
Mortgage Banking |  | 15,692 |  |  | 26,173 |  |  | 27,571 |  |  | 55,731 |
Total segment profit before taxes |  | 190,484 |  |  | 232,654 |  |  | 372,495 |  |  | 443,547 |
Reconciling items: |  |  |  |  |  |  |  |
Contract land deposit reserve adjustment (1) |  | (460) |  |  | 374 |  |  | (36,075) |  |  | 1,324 |
Equity-based compensation expense (2) |  | (14,434) |  |  | (18,577) |  |  | (21,926) |  |  | (37,910) |
Corporate capital allocation (3) |  | 59,870 |  |  | 56,177 |  |  | 116,521 |  |  | 110,735 |
Unallocated corporate overhead |  | (23,288) |  |  | (29,354) |  |  | (60,927) |  |  | (61,089) |
Consolidation adjustments and other |  | 6,803 |  |  | 9,462 |  |  | 16,456 |  |  | 18,710 |
Corporate interest expense |  | (9,144) |  |  | (6,024) |  |  | (15,338) |  |  | (11,998) |
Reconciling items sub-total |  | 19,347 |  |  | 12,058 |  |  | (1,289) |  |  | 19,772 |
Consolidated income before taxes |  | $ | 209,831 |  |  | $ | 244,712 |  |  | $ | 371,206 |  |  | $ | 463,319 |
(1)This item represents changes to the contract land deposit impairment reserve, which are not allocated to the reportable segments. See further discussion of lot deposit impairment charges in Note 2. (2)The decrease in equity-based compensation expense for the three and six-month periods ended June 30, 2020 was primarily attributable to stock options issued in 2014 under the 2014 Equity Incentive Plan becoming fully vested in 2019. In addition, stock compensation expense for the six-month period ended June 30, 2020 was favorably impacted by higher stock option forfeitures during 2020. (3)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 June 30, |  |  |  | Six Months Ended June 30, |  |
|  | 2020 |  | 2019 |  | 2020 |  | 2019
Corporate capital allocation charge: |  |  |  |  |  |  |  |
Homebuilding Mid Atlantic |  | $ | 31,581 |  |  | $ | 31,378 |  |  | $ | 61,336 |  |  | $ | 61,794 |
Homebuilding North East |  | 5,790 |  |  | 4,626 |  |  | 11,349 |  |  | 9,353 |
Homebuilding Mid East |  | 9,687 |  |  | 9,497 |  |  | 19,050 |  |  | 18,512 |
Homebuilding South East |  | 12,812 |  |  | 10,676 |  |  | 24,786 |  |  | 21,076 |
Total |  | $ | 59,870 |  |  | $ | 56,177 |  |  | $ | 116,521 |  |  | $ | 110,735 |
|  | June 30, 2020 |  | December 31, 2019
Assets: |  |  |  |
Homebuilding Mid Atlantic |  | $ | 1,148,688 |  |  | $ | 1,024,996 |
Homebuilding North East |  | 189,076 |  |  | 166,860 |
Homebuilding Mid East |  | 346,232 |  |  | 293,773 |
Homebuilding South East |  | 444,593 |  |  | 400,979 |
Mortgage Banking |  | 384,576 |  |  | 560,407 |
Total segment assets |  | 2,513,165 |  |  | 2,447,015 |
Reconciling items: |  |  |  |
Cash and cash equivalents |  | 1,982,890 |  |  | 1,110,892 |
Deferred taxes |  | 121,526 |  |  | 115,731 |
Intangible assets and goodwill |  | 49,756 |  |  | 49,834 |
Operating lease right-of-use assets |  | 57,701 |  |  | 63,825 |
Contract land deposit reserve |  | (63,647) |  |  | (27,572) |
Consolidation adjustments and other |  | 68,629 |  |  | 50,090 |
Reconciling items sub-total |  | 2,216,855 |  |  | 1,362,800 |
Consolidated assets |  | $ | 4,730,020 |  |  | $ | 3,809,815 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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