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Note 16 - Operating and Reporting Segments
 3 Months Ended
Jan. 31, 2019
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]
16.
Operating and Reporting Segments
 
HEI’s operating segments are components of the Company’s 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 the Company's communities qualifies as an operating segment, and therefore, it is impractical to provide segment disclosures for this many segments. As such, HEI has aggregated the homebuilding operating segments into
six
reportable segments.
 
HEI’s 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. HEI’s reportable segments consist of the following
six
homebuilding segments and a financial services segment noted below.
 
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 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 Financial Services segment include mortgage banking and title services provided to the homebuilding operations’ customers. Our financial services subsidiaries 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 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 (loss) 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 HEI’s segment operations was as follows:
 
   
Three Months Ended
January 31,
  
(In thousands)
  
2019
    
2018
  
             
Revenues:
            
Northeast
  
$19,941
    
$20,199
  
Mid-Atlantic
  
53,430
    
71,297
  
Midwest
  
44,921
    
40,579
  
Southeast
  
43,991
    
56,668
  
Southwest
  
118,199
    
128,305
  
West
  
89,901
    
85,050
  
Total homebuilding
  
370,383
    
402,098
  
Financial services
  
9,608
    
10,888
  
Corporate and unallocated
  
603
    
4,180
  
Total revenues
  
$380,594
    
$417,166
  
             
(Loss) income before income taxes:
            
Northeast
  
$5,879
    
$(9,701
)
Mid-Atlantic
  
(7
 )  
1,952
  
Midwest
  
(849
 )  
(2,344
)
Southeast
  
(2,929
 )  
(1,661
)
Southwest
  
2,386
    
5,511
  
West
  
11,705
    
8,067
  
Total homebuilding
  
16,185
    
1,824
  
Financial services
  
1,134
    
2,547
  
Corporate and unallocated (1)
  
(34,425
 )  
(34,842
)
(Loss) income before income taxes
  
$(17,106
 )  
$(30,471
)
 
 (
1
)  Corporate and unallocated for the
three
months ended
January 31, 2019
included corporate general and administrative costs of
$17.7
million, interest expense of
$17.5
million (a component of Other interest on our Condensed Consolidated Statements of Operations) and $(
0.8
) million of other income and expenses primarily related to interest income and stock compensation. Corporate and unallocated for the
three
months ended
January 31, 2018
included corporate general and administrative costs of
$19.1
million, interest expense of
$19.6
million (a component of Other interest on our Condensed Consolidated Statements of Operations) and $(
3.9
) million of other income and expenses primarily related to interest income, gain on the sale of our corporate headquarters building and stock compensation.
 
(In thousands)
  
January 31,
2019
    
October 31,
2018
  
             
Assets:
            
Northeast
  
$160,918
    
$152,607
  
Mid-Atlantic
  
249,687
    
217,807
  
Midwest
  
84,828
    
85,398
  
Southeast
  
272,385
    
246,497
  
Southwest
  
337,601
    
320,452
  
West
  
267,218
    
244,886
  
Total homebuilding
  
1,372,637
    
1,267,647
  
Financial services
  
94,396
    
164,880
  
Corporate and unallocated
  
156,690
    
229,515
  
Total assets
  
$1,623,723
    
$1,662,042