16.

Operating and Reporting Segments

Our operating segments are components of our business for which discrete financial information is available and reviewed regularly by the chief operating decision maker, our Chief Executive Officer, to evaluate performance and make operating decisions. Based on this criteria, each of our communities qualifies as an operating segment, and therefore, it is impractical to provide segment disclosures for this many segments.

As such, we have aggregated the homebuilding operating segments into

six

reportable segments.

Our homebuilding operating segments are aggregated into reportable segments based primarily upon geographic proximity, similar regulatory environments, land acquisition characteristics and similar methods used to construct and sell homes.

Our reportable segments consist of the following

six

homebuilding segments and a financial services segment noted below. During fiscal

2016,

we decided to exit the Minneapolis, MN and Raleigh, NC markets and in the

third

quarter of fiscal

2016,

we completed the sale of our portfolios in those markets.

Homebuilding:

	( 1 )	Northeast (New Jersey and Pennsylvania )
	( 2 )	Mid-Atlantic (Delaware, Maryland, Virginia, Washington D.C. and West Virginia)
	( 3 )	Midwest (Illinois and Ohio)
	( 4 )	Southeast (Florida, Georgia and South Carolina)
	( 5 )	Southwest (Arizona and Texas)
	( 6 )	West (California)

Financial Services

Operations of the Company

’s Homebuilding segments primarily include the sale and construction of single-family attached and detached homes, attached townhomes and condominiums, urban infill and active lifestyle homes in planned residential developments. In addition, from time to time, operations of the homebuilding segments include sales of land. Operations of the Company’s Financial Services segment include mortgage banking and title services provided to the homebuilding operations’ customers. We do

not

typically retain or service mortgages that we originate but rather sell the mortgages and related servicing rights to investors.

Corporate and unallocated primarily represents operations at our headquarters in Red Bank, New Jersey.

This includes our executive offices, information services, human resources, corporate accounting, training, treasury, process redesign, internal audit, construction services, and administration of insurance, quality and safety. It also includes interest income and interest expense resulting from interest incurred that cannot be capitalized in inventory in the Homebuilding segments, as well as the gains or losses on extinguishment of debt from any debt repurchases or exchanges.

Evaluation of segment performance is based primarily on operating earnings from continuing operations before provision for income taxes (“Income (loss) before income taxes”).

Income (loss) before income taxes for the Homebuilding segments consist of revenues generated from the sales of homes and land, income (loss) from unconsolidated entities, management fees and other income, less the cost of homes and land sold, selling, general and administrative expenses and interest expense. Income before income taxes for the Financial Services segment consist of revenues generated from mortgage financing, title insurance and closing services, less the cost of such services and selling, general and administrative expenses incurred by the Financial Services segment.

Operational results of each segment are

not

necessarily indicative of the results that would have occurred had the segment been an independent stand-alone entity during the periods presented.

Financial information relating to the Company

’s segment operations was as follows:

	Three Months Ended July 31,						Nine Months Ended July 31,
(In thousands)	2017			2016			2017			2016

Revenues:
Northeast	$	39,956		$	69,989		$	144,481		$	196,539
Mid-Atlantic		113,298			111,739			314,124			295,546
Midwest		41,052			72,581			126,773			249,132
Southeast		68,435			96,323			181,654			186,873
Southwest		209,295			248,546			617,959			729,606
West		104,523			101,158			301,897			237,831
Total homebuilding		576,559			700,336			1,686,888			1,895,527
Financial services		14,993			16,485			42,336			51,714
Corporate and unallocated		483			29			755			(63	)
Total revenues	$	592,035		$	716,850		$	1,729,979		$	1,947,178

(Loss) income before income taxes:
Northeast	$	(5,737	)	$	(995	)	$	(7,553	)	$	(4,945	)
Mid-Atlantic		3,714			3,467			8,514			7,161
Midwest		(3,313	)		(2,452	)		(5,771	)		(8,034	)
Southeast		(1,580	)		(5,621	)		(1,446	)		(14,710	)
Southwest		19,010			20,532			50,718			55,392
West		5,873			3,297			7,436			(6,989	)
Homebuilding income before income taxes		17,967			18,228			51,898			27,875
Financial services		6,126			7,569			19,254			24,965
Corporate and unallocated (1)		(74,266	)		(24,704	)		(128,701	)		(82,545	)
( Loss) income before income taxes	$	(50,173	)	$	1,093		$	(57,549	)	$	(29,705	)

(

) Corporate and unallocated for the

three

months ended

July 31, 2017

included corporate general and administrative costs of

$15.7

million, interest expense of

$17.2

million (a component of Other interest on our Condensed Consolidated Statements of Operations), loss on extinguishment of debt of

$42.3

million and

$0.9

million of other income and expenses primarily related to interest income, rental income and stock compensation. Corporate and unallocated for the

nine

months ended

July 31, 2017

included corporate general and administrative costs of

$47.4

million, interest expense of

$46.5

million (a component of Other interest on our Condensed Consolidated Statements of Operations), loss on extinguishment of debt of

$34.9

million and

$0.1

million of other income and expenses primarily related to interest income, rental income, bond amortization and stock compensation.

(In thousands)	July 31, 2017		October 31, 2016

Assets:
Northeast	$	183,486	$	219,363
Mid-Atlantic		280,711		292,899
Midwest		104,962		111,596
Southeast		246,251		226,124
Southwest		335,601		341,472
West		197,816		269,400
Total homebuilding		1,348,827		1,460,854
Financial services		109,722		197,230
Corporate and unallocated(1)		363,770		696,872
Total assets	$	1,822,319	$	2,354,956

(

) Includes

$283.6

million of income taxes receivable, including deferred tax assets, as of

October 31, 2016.