16.	Operating and Reporting Segments

HEI’s 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, 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 HEI’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 HEI’s 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 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 April 30,				Six Months Ended April 30,
(In thousands)	2019		2018		2019		2018

Revenues:
Northeast	$13,059		$43,771		$33,000		$63,970
Mid-Atlantic	80,847		104,160		134,277		175,457
Midwest	42,937		42,938		87,858		83,517
Southeast	49,382		60,901		93,373		117,569
Southwest	143,850		159,147		262,049		287,452
West	97,883		78,098		187,784		163,148
Total homebuilding	427,958		489,015		798,341		891,113
Financial services	12,307		13,054		21,915		23,942
Corporate and unallocated (1)	426		475		1,029		4,655
Total revenues	$440,691		$502,544		$821,285		$919,710

(Loss) income before income taxes:
Northeast	$125		$5,960		$6,004		$(3,741	)
Mid-Atlantic	393		6,700		386		8,652
Midwest	(594	)	(1,110	)	(1,443	)	(3,454	)
Southeast	(4,132	)	(5,286	)	(7,061	)	(6,947	)
Southwest	4,286		10,047		6,672		15,558
West	10,310		7,172		22,015		15,239
Homebuilding income before income taxes	10,388		23,483		26,573		25,307
Financial services	3,629		4,256		4,763		6,803
Corporate and unallocated (1)	(28,929	)	(37,317	)	(63,354	)	(72,159	)
Loss before income taxes	$(14,912	)	$(9,578	)	$(32,018	)	$(40,049	)

(

) Corporate and unallocated for the

three

months ended

April 30, 2019

included corporate general and administrative costs of

$16.2

million, interest expense of

$13.1

million (a component of Other interest on our Condensed Consolidated Statements of Operations), $(

0.3

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

six

months ended

April 30, 2019

included corporate general and administrative costs of

$33.8

million, interest expense of

$30.7

million (a component of Other interest on our Condensed Consolidated Statements of Operations), and $(

1.1

) million of other income and expenses. Corporate and unallocated for the

three

months ended

April 30, 2018

included corporate general and administrative costs of

$16.2

million, interest expense of

$19.9

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

$1.4

million and $(

0.1

) million of other income and expenses primarily related to interest income and gain on the sale of our former corporate headquarters building. Corporate and unallocated for the

six

months ended

April 30, 2018

included corporate general and administrative costs of

$35.3

million, interest expense of

$39.5

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

1.4

million and $(

4.0

) million of other income and expenses primarily related to interest income and gain on the sale of our former corporate headquarters building.

(In thousands)	April 30, 2019	October 31, 2018

Assets:
Northeast	$175,326	$152,607
Mid-Atlantic	262,896	217,807
Midwest	114,024	85,398
Southeast	281,546	246,497
Southwest	359,129	320,452
West	274,723	244,886
Total homebuilding	1,467,644	1,267,647
Financial services	119,912	164,880
Corporate and unallocated	167,716	229,515
Total assets	$1,755,272	$1,662,042