ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
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Delaware
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95-3666267
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(State of incorporation)
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(IRS employer identification number)
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Large accelerated filer
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ý
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Accelerated filer
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o
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Non-accelerated filer
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o
(Do not check if a smaller reporting company)
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Smaller reporting company
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o
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Page
Number
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February 28
, 2014 and November 30, 201
3
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Three
Months Ended February 28, 2014 and
2013
|
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Item 1.
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Financial Statements
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Three Months Ended February 28,
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||||||
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2014
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2013
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||||
Total revenues
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$
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450,687
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|
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$
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405,219
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Homebuilding:
|
|
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||||
Revenues
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$
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448,267
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$
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402,816
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Construction and land costs
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(369,274
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)
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(343,265
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)
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Selling, general and administrative expenses
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(61,274
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)
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(59,097
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)
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Operating income
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17,719
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454
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|
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Interest income
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168
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204
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|
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Interest expense
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(11,276
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)
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(15,240
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)
|
||
Equity in income (loss) of unconsolidated joint ventures
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2,590
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(435
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)
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Homebuilding pretax income (loss)
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9,201
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(15,017
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)
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Financial services:
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||||
Revenues
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2,420
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2,403
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Expenses
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(852
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)
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(835
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)
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Equity in income (loss) of unconsolidated joint ventures
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(6
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)
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1,091
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Financial services pretax income
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1,562
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2,659
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Total pretax income (loss)
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10,763
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(12,358
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)
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Income tax expense
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(200
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)
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(100
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)
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||
Net income (loss)
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$
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10,563
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$
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(12,458
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)
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Earnings (loss) per share:
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||||
Basic
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$
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.13
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$
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(.16
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)
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Diluted
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$
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.12
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$
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(.16
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)
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Weighted average shares outstanding:
|
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||||
Basic
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83,745
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79,401
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Diluted
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93,946
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79,401
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Cash dividends declared per common share
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$
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.0250
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$
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.0250
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February 28,
2014 |
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November 30,
2013 |
||||
Assets
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||||
Homebuilding:
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||||
Cash and cash equivalents
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$
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303,269
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$
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530,095
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Restricted cash
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42,083
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41,906
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Receivables
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87,355
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75,749
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Inventories
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2,634,944
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2,298,577
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Investments in unconsolidated joint ventures
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60,648
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130,192
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Other assets
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110,487
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107,076
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3,238,786
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3,183,595
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Financial services
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9,386
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10,040
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Total assets
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$
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3,248,172
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$
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3,193,635
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||||
Liabilities and stockholders’ equity
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||||
Homebuilding:
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Accounts payable
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$
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138,213
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$
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148,282
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Accrued expenses and other liabilities
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386,085
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356,176
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Mortgages and notes payable
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2,175,190
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2,150,498
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2,699,488
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2,654,956
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Financial services
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2,350
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2,593
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Common stock
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115,296
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115,296
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Paid-in capital
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790,672
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788,893
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Retained earnings
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490,358
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481,889
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Accumulated other comprehensive loss
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(17,516
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)
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(17,516
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)
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Grantor stock ownership trust, at cost
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(113,911
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)
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(113,911
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)
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Treasury stock, at cost
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(718,565
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)
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(718,565
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)
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Total stockholders’ equity
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546,334
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536,086
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Total liabilities and stockholders’ equity
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$
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3,248,172
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$
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3,193,635
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Three Months Ended February 28,
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||||||
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2014
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2013
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Cash flows from operating activities:
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Net income (loss)
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$
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10,563
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$
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(12,458
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)
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Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
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||||
Equity in income of unconsolidated joint ventures
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(2,584
|
)
|
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(656
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)
|
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Distributions of earnings from unconsolidated joint ventures
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—
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1,438
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Amortization of discounts and issuance costs
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1,600
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971
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Depreciation and amortization
|
467
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465
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Stock-based compensation
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1,779
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1,013
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Land option contract abandonments
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433
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—
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Changes in assets and liabilities:
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||||
Receivables
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(10,221
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)
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326
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Inventories
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(205,037
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)
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(198,761
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)
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Accounts payable, accrued expenses and other liabilities
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(14,514
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)
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(2,413
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)
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Other, net
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(3,549
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)
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(957
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)
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Net cash used in operating activities
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(221,063
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)
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(211,032
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)
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Cash flows from investing activities:
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||||
Contributions to unconsolidated joint ventures
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(8,618
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)
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(304
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)
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Proceeds from sale of investment in unconsolidated joint venture
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10,110
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—
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Purchases of property and equipment, net
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(1,576
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)
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(430
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)
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Net cash used in investing activities
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(84
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)
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(734
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)
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Cash flows from financing activities:
|
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|
||||
Change in restricted cash
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(177
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)
|
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(2,257
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)
|
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Proceeds from issuance of debt
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—
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230,000
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|
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Payment of debt issuance costs
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—
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(6,878
|
)
|
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Payments on mortgages and land contracts due to land sellers and other loans
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(2,655
|
)
|
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(17,003
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)
|
||
Proceeds from issuance of common stock, net
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—
|
|
|
109,811
|
|
||
Issuance of common stock under employee stock plans
|
—
|
|
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52
|
|
||
Payments of cash dividends
|
(2,094
|
)
|
|
(2,089
|
)
|
||
Net cash provided by (used in) financing activities
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(4,926
|
)
|
|
311,636
|
|
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Net increase (decrease) in cash and cash equivalents
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(226,073
|
)
|
|
99,870
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|
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Cash and cash equivalents at beginning of period
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532,523
|
|
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525,688
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|
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Cash and cash equivalents at end of period
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$
|
306,450
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$
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625,558
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1.
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Basis of Presentation and Significant Accounting Policies
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1.
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Basis of Presentation and Significant Accounting Policies (continued)
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2.
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Segment Information
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2.
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Segment Information (continued)
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Three Months Ended February 28,
|
||||||
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2014
|
|
2013
|
||||
Revenues:
|
|
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|
||||
West Coast
|
$
|
181,721
|
|
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$
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206,104
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Southwest
|
46,115
|
|
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31,831
|
|
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Central
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125,162
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|
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106,492
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|
||
Southeast
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95,269
|
|
|
58,389
|
|
||
Total homebuilding revenues
|
448,267
|
|
|
402,816
|
|
||
Financial services
|
2,420
|
|
|
2,403
|
|
||
Total
|
$
|
450,687
|
|
|
$
|
405,219
|
|
|
|
|
|
||||
Pretax income (loss):
|
|
|
|
||||
West Coast
|
$
|
18,365
|
|
|
$
|
9,842
|
|
Southwest
|
1,285
|
|
|
(749
|
)
|
||
Central
|
2,776
|
|
|
136
|
|
||
Southeast
|
3,841
|
|
|
(8,324
|
)
|
||
Corporate and other
|
(17,066
|
)
|
|
(15,922
|
)
|
||
Total homebuilding pretax income (loss)
|
9,201
|
|
|
(15,017
|
)
|
||
Financial services
|
1,562
|
|
|
2,659
|
|
||
Total
|
$
|
10,763
|
|
|
$
|
(12,358
|
)
|
Land option contract abandonments:
|
|
|
|
||||
West Coast
|
$
|
—
|
|
|
$
|
—
|
|
Southwest
|
—
|
|
|
—
|
|
||
Central
|
433
|
|
|
—
|
|
||
Southeast
|
—
|
|
|
—
|
|
||
Total
|
$
|
433
|
|
|
$
|
—
|
|
|
February 28,
2014 |
|
November 30,
2013 |
||||
Inventories:
|
|
|
|
||||
Homes under construction
|
|
|
|
||||
West Coast
|
$
|
321,787
|
|
|
$
|
275,516
|
|
Southwest
|
34,278
|
|
|
39,661
|
|
||
Central
|
173,194
|
|
|
157,572
|
|
||
Southeast
|
104,137
|
|
|
113,690
|
|
||
Subtotal
|
633,396
|
|
|
586,439
|
|
||
Land under development
|
|
|
|
||||
West Coast
|
659,753
|
|
|
560,032
|
|
||
Southwest
|
237,788
|
|
|
106,654
|
|
||
Central
|
285,407
|
|
|
238,311
|
|
||
Southeast
|
180,392
|
|
|
161,919
|
|
||
Subtotal
|
1,363,340
|
|
|
1,066,916
|
|
||
Land held for future development
|
|
|
|
||||
West Coast
|
306,902
|
|
|
308,636
|
|
||
Southwest
|
147,865
|
|
|
157,924
|
|
||
Central
|
23,746
|
|
|
15,193
|
|
||
Southeast
|
159,695
|
|
|
163,469
|
|
||
Subtotal
|
638,208
|
|
|
645,222
|
|
||
Total
|
$
|
2,634,944
|
|
|
$
|
2,298,577
|
|
|
|
|
|
||||
Investments in unconsolidated joint ventures:
|
|
|
|
||||
West Coast
|
$
|
44,598
|
|
|
$
|
40,246
|
|
Southwest
|
13,549
|
|
|
80,877
|
|
||
Central
|
—
|
|
|
—
|
|
||
Southeast
|
2,501
|
|
|
9,069
|
|
||
Total
|
$
|
60,648
|
|
|
$
|
130,192
|
|
|
|
|
|
||||
Assets:
|
|
|
|
||||
West Coast
|
$
|
1,395,759
|
|
|
$
|
1,230,761
|
|
Southwest
|
453,062
|
|
|
402,443
|
|
||
Central
|
546,222
|
|
|
465,547
|
|
||
Southeast
|
461,442
|
|
|
456,965
|
|
||
Corporate and other
|
382,301
|
|
|
627,879
|
|
||
Total homebuilding assets
|
3,238,786
|
|
|
3,183,595
|
|
||
Financial services
|
9,386
|
|
|
10,040
|
|
||
Total
|
$
|
3,248,172
|
|
|
$
|
3,193,635
|
|
|
Three Months Ended February 28,
|
||||||
|
2014
|
|
2013
|
||||
Revenues
|
|
|
|
||||
Insurance commissions
|
$
|
1,262
|
|
|
$
|
1,303
|
|
Title services
|
708
|
|
|
649
|
|
||
Marketing services fees
|
450
|
|
|
450
|
|
||
Interest income
|
—
|
|
|
1
|
|
||
Total
|
2,420
|
|
|
2,403
|
|
||
Expenses
|
|
|
|
||||
General and administrative
|
(852
|
)
|
|
(835
|
)
|
||
Operating income
|
1,568
|
|
|
1,568
|
|
||
Equity in income (loss) of unconsolidated joint ventures (a)
|
(6
|
)
|
|
1,091
|
|
||
Pretax income
|
$
|
1,562
|
|
|
$
|
2,659
|
|
(a)
|
The equity in income of unconsolidated joint ventures in 2013 related to the wind down of KBA Mortgage, LLC (“KBA Mortgage”), our unconsolidated mortgage banking joint venture with a subsidiary of Bank of America, N.A., which ceased offering mortgage banking services in 2011.
|
|
February 28,
2014 |
|
November 30,
2013 |
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
3,181
|
|
|
$
|
2,428
|
|
Receivables
|
699
|
|
|
2,084
|
|
||
Investments in unconsolidated joint ventures
|
5,484
|
|
|
5,490
|
|
||
Other assets
|
22
|
|
|
38
|
|
||
Total assets
|
$
|
9,386
|
|
|
$
|
10,040
|
|
Liabilities
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
2,350
|
|
|
$
|
2,593
|
|
Total liabilities
|
$
|
2,350
|
|
|
$
|
2,593
|
|
|
Three Months Ended February 28,
|
||||||
|
2014
|
|
2013
|
||||
Numerator:
|
|
|
|
||||
Net income (loss)
|
$
|
10,563
|
|
|
$
|
(12,458
|
)
|
Less: Distributed earnings allocated to nonvested restricted stock
|
(5
|
)
|
|
—
|
|
||
Less: Undistributed earnings allocated to nonvested restricted stock
|
(22
|
)
|
|
—
|
|
||
Numerator for basic earnings (loss) per share
|
10,536
|
|
|
(12,458
|
)
|
||
Effect of dilutive securities:
|
|
|
|
||||
Interest expense and amortization of debt issuance costs associated with convertible senior notes, net of taxes
|
667
|
|
|
—
|
|
||
Add: Undistributed earnings allocated to nonvested restricted stock
|
22
|
|
|
—
|
|
||
Less: Undistributed earnings reallocated to nonvested restricted stock
|
(20
|
)
|
|
—
|
|
||
Numerator for diluted earnings (loss) per share
|
$
|
11,205
|
|
|
$
|
(12,458
|
)
|
Denominator:
|
|
|
|
||||
Weighted average shares outstanding — basic
|
83,745
|
|
|
79,401
|
|
||
Effect of dilutive securities:
|
|
|
|
||||
Share-based payments
|
1,799
|
|
|
—
|
|
||
Convertible senior notes
|
8,402
|
|
|
—
|
|
||
Weighted average shares outstanding — diluted
|
93,946
|
|
|
79,401
|
|
||
Basic earnings (loss) per share
|
$
|
.13
|
|
|
$
|
(.16
|
)
|
Diluted earnings (loss) per share
|
$
|
.12
|
|
|
$
|
(.16
|
)
|
|
|
February 28, 2014
|
|
November 30, 2013
|
||||
Homes under construction
|
|
$
|
633,396
|
|
|
$
|
586,439
|
|
Land under development
|
|
1,363,340
|
|
|
1,066,916
|
|
||
Land held for future development
|
|
638,208
|
|
|
645,222
|
|
||
Total
|
|
$
|
2,634,944
|
|
|
$
|
2,298,577
|
|
|
|
Three Months Ended February 28,
|
||||||
|
|
2014
|
|
2013
|
||||
Capitalized interest at beginning of period
|
|
$
|
216,681
|
|
|
$
|
217,684
|
|
Interest incurred
|
|
39,280
|
|
|
33,422
|
|
||
Interest expensed
|
|
(11,276
|
)
|
|
(15,240
|
)
|
||
Interest amortized to construction and land costs
|
|
(17,485
|
)
|
|
(18,705
|
)
|
||
Capitalized interest at end of period (a)
|
|
$
|
227,200
|
|
|
$
|
217,161
|
|
(a)
|
Inventory impairment charges are recognized against all inventory costs of a community, such as land acquisition, land development, cost of home construction and capitalized interest. Capitalized interest amounts presented in the table reflect the gross amount of capitalized interest as impairment charges recognized are not generally allocated to specific components of inventory.
|
6.
|
Inventory Impairments and Land Option Contract Abandonments
|
6.
|
Inventory Impairments and Land Option Contract Abandonments (continued)
|
6.
|
Inventory Impairments and Land Option Contract Abandonments (continued)
|
7.
|
Variable Interest Entities
|
|
February 28, 2014
|
|
November 30, 2013
|
||||||||||||
|
Cash
Deposits
|
|
Aggregate
Purchase Price
|
|
Cash
Deposits
|
|
Aggregate
Purchase Price
|
||||||||
Unconsolidated VIEs
|
$
|
25,031
|
|
|
$
|
589,713
|
|
|
$
|
11,063
|
|
|
$
|
616,000
|
|
Other land option contracts and other similar contracts
|
30,603
|
|
|
500,853
|
|
|
30,502
|
|
|
535,496
|
|
||||
Total
|
$
|
55,634
|
|
|
$
|
1,090,566
|
|
|
$
|
41,565
|
|
|
$
|
1,151,496
|
|
8.
|
Investments in Unconsolidated Joint Ventures
|
8.
|
Investments in Unconsolidated Joint Ventures (continued)
|
|
|
Three Months Ended February 28,
|
||||||
|
|
2014
|
|
2013
|
||||
Revenues
|
|
$
|
6,118
|
|
|
$
|
—
|
|
Construction and land costs
|
|
(3,523
|
)
|
|
—
|
|
||
Other expenses, net
|
|
(1,130
|
)
|
|
(855
|
)
|
||
Income (loss)
|
|
$
|
1,465
|
|
|
$
|
(855
|
)
|
|
February 28,
2014 |
|
November 30,
2013 |
||||
Assets
|
|
|
|
||||
Cash
|
$
|
17,958
|
|
|
$
|
18,752
|
|
Receivables
|
4,619
|
|
|
4,902
|
|
||
Inventories
|
165,133
|
|
|
381,195
|
|
||
Other assets
|
149
|
|
|
1,183
|
|
||
Total assets
|
$
|
187,859
|
|
|
$
|
406,032
|
|
Liabilities and equity
|
|
|
|
||||
Accounts payable and other liabilities
|
$
|
22,843
|
|
|
$
|
85,386
|
|
Equity
|
165,016
|
|
|
320,646
|
|
||
Total liabilities and equity
|
$
|
187,859
|
|
|
$
|
406,032
|
|
|
February 28,
2014 |
|
November 30,
2013 |
||||
Number of investments in unconsolidated joint ventures
|
7
|
|
|
9
|
|
||
Investments in unconsolidated joint ventures
|
$
|
60,648
|
|
|
$
|
130,192
|
|
Number of unconsolidated joint venture lots controlled under land option contracts or other similar contracts
|
673
|
|
|
5,367
|
|
8.
|
Investments in Unconsolidated Joint Ventures (continued)
|
9.
|
Other Assets
|
|
February 28,
2014 |
|
November 30,
2013 |
||||
Cash surrender value of insurance contracts
|
$
|
69,443
|
|
|
$
|
68,534
|
|
Debt issuance costs
|
26,103
|
|
|
27,366
|
|
||
Property and equipment, net
|
9,571
|
|
|
8,460
|
|
||
Prepaid expenses
|
5,370
|
|
|
2,716
|
|
||
Total
|
$
|
110,487
|
|
|
$
|
107,076
|
|
10.
|
Accrued Expenses and Other Liabilities
|
|
February 28,
2014 |
|
November 30,
2013 |
||||
Self-insurance and other litigation liabilities
|
$
|
94,939
|
|
|
$
|
99,612
|
|
Employee compensation and related benefits
|
87,519
|
|
|
99,332
|
|
||
Accrued interest payable
|
64,971
|
|
|
45,562
|
|
||
Inventory-related obligations (a)
|
62,748
|
|
|
29,517
|
|
||
Warranty liability
|
43,419
|
|
|
48,704
|
|
||
Real estate and business taxes
|
6,106
|
|
|
8,131
|
|
||
Other
|
26,383
|
|
|
25,318
|
|
||
Total
|
$
|
386,085
|
|
|
$
|
356,176
|
|
(a)
|
The increase in inventory-related obligations at February 28, 2014, compared to November 30, 2013, reflected a
$33.2 million
liability we recorded for fixed or determinable amounts associated with tax increment financing entities (“TIFE”) in connection with the distribution of land we received from Inspirada during the three months ended February 28, 2014. As homes are delivered, the obligation to pay the remaining TIFE assessments associated with each underlying lot is transferred to the homebuyer. As such, these assessment obligations will be paid by us only to the extent we do not deliver homes to homebuyers on the applicable lots before the related TIFE obligations mature.
|
|
February 28,
2014 |
|
November 30,
2013 |
||||
Mortgages and land contracts due to land sellers and other loans
|
$
|
37,970
|
|
|
$
|
13,615
|
|
6 1/4% Senior notes due June 15, 2015
|
199,870
|
|
|
199,864
|
|
||
9.10% Senior notes due September 15, 2017
|
262,213
|
|
|
262,048
|
|
||
7 1/4% Senior notes due June 15, 2018
|
299,295
|
|
|
299,261
|
|
||
8.00% Senior notes due March 15, 2020
|
345,842
|
|
|
345,710
|
|
||
7.00% Senior notes due December 15, 2021
|
450,000
|
|
|
450,000
|
|
||
7.50% Senior notes due September 15, 2022
|
350,000
|
|
|
350,000
|
|
||
1.375% Convertible senior notes due February 1, 2019
|
230,000
|
|
|
230,000
|
|
||
Total
|
$
|
2,175,190
|
|
|
$
|
2,150,498
|
|
12.
|
Mortgages and Notes Payable (continued)
|
13.
|
Fair Value Disclosures
|
13.
|
Fair Value Disclosures (continued)
|
Level 1
|
|
Fair value determined based on quoted prices in active markets for identical assets or liabilities.
|
|
|
|
Level 2
|
|
Fair value determined using significant observable inputs, such as quoted prices for similar assets or liabilities or quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, or inputs that are derived principally from or corroborated by observable market data, by correlation or other means.
|
|
|
|
Level 3
|
|
Fair value determined using significant unobservable inputs, such as pricing models, discounted cash flows, or similar techniques.
|
|
|
Fair Value
|
||||||||
Description
|
|
Hierarchy
|
|
February 28,
2014 |
|
November 30,
2013 |
||||
Long-lived assets held and used (a)
|
|
Level 3
|
|
$
|
—
|
|
|
$
|
1,143
|
|
(a)
|
Amounts represent the aggregate fair value for communities or land parcels where we recognized inventory impairment charges during the period, as of the date that the fair value measurements were made. The carrying value for these communities or land parcels may have subsequently increased or decreased from the fair value reflected due to activity that has occurred since the measurement date.
|
13.
|
Fair Value Disclosures (continued)
|
|
|
|
February 28, 2014
|
|
November 30, 2013
|
||||||||||||
|
Fair Value
Hierarchy
|
|
Carrying
Value
|
|
Estimated
Fair Value
|
|
Carrying
Value
|
|
Estimated
Fair Value
|
||||||||
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||
Senior notes
|
Level 2
|
|
$
|
1,907,220
|
|
|
$
|
2,121,250
|
|
|
$
|
1,906,883
|
|
|
$
|
2,069,325
|
|
Convertible senior notes
|
Level 2
|
|
230,000
|
|
|
249,263
|
|
|
230,000
|
|
|
224,825
|
|
14.
|
Commitments and Contingencies
|
|
|
Three Months Ended February 28,
|
||||||
|
|
2014
|
|
2013
|
||||
Balance at beginning of period
|
|
$
|
48,704
|
|
|
$
|
47,822
|
|
Warranties issued
|
|
3,426
|
|
|
2,766
|
|
||
Payments
|
|
(8,711
|
)
|
|
(8,929
|
)
|
||
Adjustments
|
|
—
|
|
|
1,674
|
|
||
Balance at end of period
|
|
$
|
43,419
|
|
|
$
|
43,333
|
|
14.
|
Commitments and Contingencies (continued)
|
14.
|
Commitments and Contingencies (continued)
|
|
Three Months Ended February 28,
|
||||||
|
2014
|
|
2013
|
||||
Balance at beginning of period
|
$
|
92,214
|
|
|
$
|
93,349
|
|
Self-insurance expense (a)
|
2,616
|
|
|
1,809
|
|
||
Payments, net of recoveries (b)
|
(4,414
|
)
|
|
(3,435
|
)
|
||
Balance at end of period
|
$
|
90,416
|
|
|
$
|
91,723
|
|
(a)
|
These expenses are included in selling, general and administrative expenses and are largely offset by contributions from subcontractors participating in the wrap-up policy.
|
(b)
|
Recoveries are reflected at the time we receive funds from subcontractors and/or their insurers.
|
14.
|
Commitments and Contingencies (continued)
|
15.
|
Legal Matters
|
15.
|
Legal Matters (continued)
|
16.
|
Stockholders’ Equity
|
|
|
Three Months Ended February 28, 2014
|
||||||||||||||||||||||||||
|
|
Common Stock
|
|
Paid-in Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Grantor Stock Ownership Trust
|
|
Treasury Stock
|
|
Total Stockholders’ Equity
|
||||||||||||||
Balance at November 30, 2013
|
|
$
|
115,296
|
|
|
$
|
788,893
|
|
|
$
|
481,889
|
|
|
$
|
(17,516
|
)
|
|
$
|
(113,911
|
)
|
|
$
|
(718,565
|
)
|
|
$
|
536,086
|
|
Net income
|
|
—
|
|
|
—
|
|
|
10,563
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,563
|
|
|||||||
Dividends on common stock
|
|
—
|
|
|
—
|
|
|
(2,094
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,094
|
)
|
|||||||
Stock-based compensation
|
|
—
|
|
|
1,779
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,779
|
|
|||||||
Balance at February 28, 2014
|
|
$
|
115,296
|
|
|
$
|
790,672
|
|
|
$
|
490,358
|
|
|
$
|
(17,516
|
)
|
|
$
|
(113,911
|
)
|
|
$
|
(718,565
|
)
|
|
$
|
546,334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended February 28, 2013
|
||||||||||||||||||||||||||
|
|
Common Stock
|
|
Paid-in Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Grantor Stock Ownership Trust
|
|
Treasury Stock
|
|
Total Stockholders’ Equity
|
||||||||||||||
Balance at November 30, 2012
|
|
$
|
115,178
|
|
|
$
|
888,579
|
|
|
$
|
450,292
|
|
|
$
|
(27,958
|
)
|
|
$
|
(115,149
|
)
|
|
$
|
(934,136
|
)
|
|
$
|
376,806
|
|
Net loss
|
|
—
|
|
|
—
|
|
|
(12,458
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,458
|
)
|
|||||||
Dividends on common stock
|
|
—
|
|
|
—
|
|
|
(2,089
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,089
|
)
|
|||||||
Stock-based compensation
|
|
—
|
|
|
1,013
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,013
|
|
|||||||
Issuance of common stock
|
|
—
|
|
|
(106,314
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
216,125
|
|
|
109,811
|
|
|||||||
Grantor stock ownership trust
|
|
—
|
|
|
20
|
|
|
—
|
|
|
—
|
|
|
32
|
|
|
—
|
|
|
52
|
|
|||||||
Balance at February 28, 2013
|
|
$
|
115,178
|
|
|
$
|
783,298
|
|
|
$
|
435,745
|
|
|
$
|
(27,958
|
)
|
|
$
|
(115,117
|
)
|
|
$
|
(718,011
|
)
|
|
$
|
473,135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16.
|
Stockholders’ Equity (continued)
|
17.
|
Stock-Based Compensation
|
|
Options
|
|
Weighted
Average Exercise
Price
|
|||
Options outstanding at beginning of period
|
10,531,938
|
|
|
$
|
21.11
|
|
Granted
|
—
|
|
|
—
|
|
|
Exercised
|
—
|
|
|
—
|
|
|
Cancelled
|
(4,947
|
)
|
|
33.72
|
|
|
Options outstanding at end of period
|
10,526,991
|
|
|
$
|
21.11
|
|
Options exercisable at end of period
|
9,414,988
|
|
|
$
|
22.24
|
|
18.
|
Supplemental Disclosure to Consolidated Statements of Cash Flows
|
|
Three Months Ended February 28,
|
||||||
|
2014
|
|
2013
|
||||
Summary of cash and cash equivalents at end of period:
|
|
|
|
||||
Homebuilding
|
$
|
303,269
|
|
|
$
|
624,044
|
|
Financial services
|
3,181
|
|
|
1,514
|
|
||
Total
|
$
|
306,450
|
|
|
$
|
625,558
|
|
|
|
||||||
Supplemental disclosures of cash flow information:
|
|
|
|
||||
Interest paid, net of amounts capitalized
|
$
|
(8,133
|
)
|
|
$
|
5,872
|
|
Income taxes paid
|
103
|
|
|
120
|
|
||
Income taxes refunded
|
20
|
|
|
58
|
|
||
|
|
|
|
||||
Supplemental disclosures of noncash activities:
|
|
|
|
||||
Increase in consolidated inventories not owned
|
$
|
917
|
|
|
$
|
4,842
|
|
Increase in inventories due to distribution of land from unconsolidated joint venture
|
70,642
|
|
|
—
|
|
||
Increase in inventories and inventory-related obligations associated with TIFE tied to distribution of land from unconsolidated joint venture
|
33,197
|
|
|
—
|
|
||
Cost of inventories acquired through seller financing
|
27,010
|
|
|
27,600
|
|
19.
|
Supplemental Guarantor Information
|
19.
|
Supplemental Guarantor Information (continued)
|
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
435,849
|
|
|
$
|
14,838
|
|
|
$
|
—
|
|
|
$
|
450,687
|
|
Homebuilding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
435,849
|
|
|
$
|
12,418
|
|
|
$
|
—
|
|
|
$
|
448,267
|
|
Construction and land costs
|
—
|
|
|
(358,092
|
)
|
|
(11,182
|
)
|
|
—
|
|
|
(369,274
|
)
|
|||||
Selling, general and administrative expenses
|
(15,744
|
)
|
|
(41,972
|
)
|
|
(3,558
|
)
|
|
—
|
|
|
(61,274
|
)
|
|||||
Operating income (loss)
|
(15,744
|
)
|
|
35,785
|
|
|
(2,322
|
)
|
|
—
|
|
|
17,719
|
|
|||||
Interest income
|
167
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
168
|
|
|||||
Interest expense
|
(38,008
|
)
|
|
(1,272
|
)
|
|
—
|
|
|
28,004
|
|
|
(11,276
|
)
|
|||||
Intercompany interest
|
59,722
|
|
|
(32,096
|
)
|
|
378
|
|
|
(28,004
|
)
|
|
—
|
|
|||||
Equity in income of unconsolidated joint ventures
|
—
|
|
|
2,590
|
|
|
—
|
|
|
—
|
|
|
2,590
|
|
|||||
Homebuilding pretax income (loss)
|
6,137
|
|
|
5,008
|
|
|
(1,944
|
)
|
|
—
|
|
|
9,201
|
|
|||||
Financial services pretax income
|
—
|
|
|
—
|
|
|
1,562
|
|
|
—
|
|
|
1,562
|
|
|||||
Total pretax income (loss)
|
6,137
|
|
|
5,008
|
|
|
(382
|
)
|
|
—
|
|
|
10,763
|
|
|||||
Income tax expense
|
(100
|
)
|
|
(100
|
)
|
|
—
|
|
|
—
|
|
|
(200
|
)
|
|||||
Equity in net income of subsidiaries
|
4,526
|
|
|
—
|
|
|
—
|
|
|
(4,526
|
)
|
|
—
|
|
|||||
Net income (loss)
|
$
|
10,563
|
|
|
$
|
4,908
|
|
|
$
|
(382
|
)
|
|
$
|
(4,526
|
)
|
|
$
|
10,563
|
|
19.
|
Supplemental Guarantor Information (continued)
|
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
393,228
|
|
|
$
|
11,991
|
|
|
$
|
—
|
|
|
$
|
405,219
|
|
Homebuilding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
393,228
|
|
|
$
|
9,588
|
|
|
$
|
—
|
|
|
$
|
402,816
|
|
Construction and land costs
|
—
|
|
|
(334,498
|
)
|
|
(8,767
|
)
|
|
—
|
|
|
(343,265
|
)
|
|||||
Selling, general and administrative expenses
|
(14,823
|
)
|
|
(40,809
|
)
|
|
(3,465
|
)
|
|
—
|
|
|
(59,097
|
)
|
|||||
Operating income (loss)
|
(14,823
|
)
|
|
17,921
|
|
|
(2,644
|
)
|
|
—
|
|
|
454
|
|
|||||
Interest income
|
201
|
|
|
1
|
|
|
2
|
|
|
—
|
|
|
204
|
|
|||||
Interest expense
|
(31,847
|
)
|
|
(1,575
|
)
|
|
—
|
|
|
18,182
|
|
|
(15,240
|
)
|
|||||
Intercompany interest
|
45,356
|
|
|
(28,134
|
)
|
|
960
|
|
|
(18,182
|
)
|
|
—
|
|
|||||
Equity in loss of unconsolidated joint ventures
|
—
|
|
|
(435
|
)
|
|
—
|
|
|
—
|
|
|
(435
|
)
|
|||||
Homebuilding pretax loss
|
(1,113
|
)
|
|
(12,222
|
)
|
|
(1,682
|
)
|
|
—
|
|
|
(15,017
|
)
|
|||||
Financial services pretax income
|
—
|
|
|
—
|
|
|
2,659
|
|
|
—
|
|
|
2,659
|
|
|||||
Total pretax income (loss)
|
(1,113
|
)
|
|
(12,222
|
)
|
|
977
|
|
|
—
|
|
|
(12,358
|
)
|
|||||
Income tax expense
|
—
|
|
|
(100
|
)
|
|
—
|
|
|
—
|
|
|
(100
|
)
|
|||||
Equity in net loss of subsidiaries
|
(11,345
|
)
|
|
—
|
|
|
—
|
|
|
11,345
|
|
|
—
|
|
|||||
Net income (loss)
|
$
|
(12,458
|
)
|
|
$
|
(12,322
|
)
|
|
$
|
977
|
|
|
$
|
11,345
|
|
|
$
|
(12,458
|
)
|
19.
|
Supplemental Guarantor Information (continued)
|
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Homebuilding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
234,234
|
|
|
$
|
61,043
|
|
|
$
|
7,992
|
|
|
$
|
—
|
|
|
$
|
303,269
|
|
Restricted cash
|
42,083
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
42,083
|
|
|||||
Receivables
|
1,446
|
|
|
85,659
|
|
|
250
|
|
|
—
|
|
|
87,355
|
|
|||||
Inventories
|
—
|
|
|
2,600,119
|
|
|
34,825
|
|
|
—
|
|
|
2,634,944
|
|
|||||
Investments in unconsolidated joint ventures
|
—
|
|
|
60,648
|
|
|
—
|
|
|
—
|
|
|
60,648
|
|
|||||
Other assets
|
97,477
|
|
|
11,574
|
|
|
1,436
|
|
|
—
|
|
|
110,487
|
|
|||||
|
375,240
|
|
|
2,819,043
|
|
|
44,503
|
|
|
—
|
|
|
3,238,786
|
|
|||||
Financial services
|
—
|
|
|
—
|
|
|
9,386
|
|
|
—
|
|
|
9,386
|
|
|||||
Intercompany receivables
|
2,397,174
|
|
|
—
|
|
|
113,059
|
|
|
(2,510,233
|
)
|
|
—
|
|
|||||
Investments in subsidiaries
|
42,004
|
|
|
—
|
|
|
—
|
|
|
(42,004
|
)
|
|
—
|
|
|||||
Total assets
|
$
|
2,814,418
|
|
|
$
|
2,819,043
|
|
|
$
|
166,948
|
|
|
$
|
(2,552,237
|
)
|
|
$
|
3,248,172
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Homebuilding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable, accrued expenses and other liabilities
|
$
|
134,679
|
|
|
$
|
295,212
|
|
|
$
|
94,407
|
|
|
$
|
—
|
|
|
$
|
524,298
|
|
Mortgages and notes payable
|
2,112,110
|
|
|
63,080
|
|
|
—
|
|
|
—
|
|
|
2,175,190
|
|
|||||
|
2,246,789
|
|
|
358,292
|
|
|
94,407
|
|
|
—
|
|
|
2,699,488
|
|
|||||
Financial services
|
—
|
|
|
—
|
|
|
2,350
|
|
|
—
|
|
|
2,350
|
|
|||||
Intercompany payables
|
21,295
|
|
|
2,455,743
|
|
|
33,195
|
|
|
(2,510,233
|
)
|
|
—
|
|
|||||
Stockholders’ equity
|
546,334
|
|
|
5,008
|
|
|
36,996
|
|
|
(42,004
|
)
|
|
546,334
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
2,814,418
|
|
|
$
|
2,819,043
|
|
|
$
|
166,948
|
|
|
$
|
(2,552,237
|
)
|
|
$
|
3,248,172
|
|
19.
|
Supplemental Guarantor Information (continued)
|
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Homebuilding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
476,847
|
|
|
$
|
41,316
|
|
|
$
|
11,932
|
|
|
$
|
—
|
|
|
$
|
530,095
|
|
Restricted cash
|
41,906
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41,906
|
|
|||||
Receivables
|
1,472
|
|
|
74,186
|
|
|
91
|
|
|
—
|
|
|
75,749
|
|
|||||
Inventories
|
—
|
|
|
2,263,034
|
|
|
35,543
|
|
|
—
|
|
|
2,298,577
|
|
|||||
Investments in unconsolidated joint ventures
|
—
|
|
|
130,192
|
|
|
—
|
|
|
—
|
|
|
130,192
|
|
|||||
Other assets
|
97,647
|
|
|
9,072
|
|
|
357
|
|
|
—
|
|
|
107,076
|
|
|||||
|
617,872
|
|
|
2,517,800
|
|
|
47,923
|
|
|
—
|
|
|
3,183,595
|
|
|||||
Financial services
|
—
|
|
|
—
|
|
|
10,040
|
|
|
—
|
|
|
10,040
|
|
|||||
Intercompany receivables
|
2,129,729
|
|
|
—
|
|
|
117,829
|
|
|
(2,247,558
|
)
|
|
—
|
|
|||||
Investments in subsidiaries
|
39,955
|
|
|
—
|
|
|
—
|
|
|
(39,955
|
)
|
|
—
|
|
|||||
Total assets
|
$
|
2,787,556
|
|
|
$
|
2,517,800
|
|
|
$
|
175,792
|
|
|
$
|
(2,287,513
|
)
|
|
$
|
3,193,635
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Homebuilding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable, accrued expenses and other liabilities
|
$
|
117,875
|
|
|
$
|
292,220
|
|
|
$
|
94,363
|
|
|
$
|
—
|
|
|
$
|
504,458
|
|
Mortgages and notes payable
|
2,111,773
|
|
|
38,725
|
|
|
—
|
|
|
—
|
|
|
2,150,498
|
|
|||||
|
2,229,648
|
|
|
330,945
|
|
|
94,363
|
|
|
—
|
|
|
2,654,956
|
|
|||||
Financial services
|
—
|
|
|
—
|
|
|
2,593
|
|
|
—
|
|
|
2,593
|
|
|||||
Intercompany payables
|
21,822
|
|
|
2,186,855
|
|
|
38,881
|
|
|
(2,247,558
|
)
|
|
—
|
|
|||||
Stockholders’ equity
|
536,086
|
|
|
—
|
|
|
39,955
|
|
|
(39,955
|
)
|
|
536,086
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
2,787,556
|
|
|
$
|
2,517,800
|
|
|
$
|
175,792
|
|
|
$
|
(2,287,513
|
)
|
|
$
|
3,193,635
|
|
19.
|
Supplemental Guarantor Information (continued)
|
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
25,225
|
|
|
$
|
(238,483
|
)
|
|
$
|
(7,805
|
)
|
|
$
|
—
|
|
|
$
|
(221,063
|
)
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Contributions to unconsolidated joint ventures
|
—
|
|
|
(8,618
|
)
|
|
—
|
|
|
—
|
|
|
(8,618
|
)
|
|||||
Proceeds from sale of investment in unconsolidated joint venture
|
—
|
|
|
10,110
|
|
|
—
|
|
|
—
|
|
|
10,110
|
|
|||||
Purchases of property and equipment, net
|
(70
|
)
|
|
(1,455
|
)
|
|
(51
|
)
|
|
—
|
|
|
(1,576
|
)
|
|||||
Intercompany
|
(265,497
|
)
|
|
—
|
|
|
—
|
|
|
265,497
|
|
|
—
|
|
|||||
Net cash provided by (used in) investing activities
|
(265,567
|
)
|
|
37
|
|
|
(51
|
)
|
|
265,497
|
|
|
(84
|
)
|
|||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Change in restricted cash
|
(177
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(177
|
)
|
|||||
Payments on mortgages and land contracts due to land sellers and other loans
|
—
|
|
|
(2,655
|
)
|
|
—
|
|
|
—
|
|
|
(2,655
|
)
|
|||||
Payments of cash dividends
|
(2,094
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,094
|
)
|
|||||
Intercompany
|
—
|
|
|
260,828
|
|
|
4,669
|
|
|
(265,497
|
)
|
|
—
|
|
|||||
Net cash provided by (used in) financing activities
|
(2,271
|
)
|
|
258,173
|
|
|
4,669
|
|
|
(265,497
|
)
|
|
(4,926
|
)
|
|||||
Net increase (decrease) in cash and cash equivalents
|
(242,613
|
)
|
|
19,727
|
|
|
(3,187
|
)
|
|
—
|
|
|
(226,073
|
)
|
|||||
Cash and cash equivalents at beginning of period
|
476,847
|
|
|
41,316
|
|
|
14,360
|
|
|
—
|
|
|
532,523
|
|
|||||
Cash and cash equivalents at end of period
|
$
|
234,234
|
|
|
$
|
61,043
|
|
|
$
|
11,173
|
|
|
$
|
—
|
|
|
$
|
306,450
|
|
19.
|
Supplemental Guarantor Information (continued)
|
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
8,208
|
|
|
$
|
(206,425
|
)
|
|
$
|
(12,815
|
)
|
|
$
|
—
|
|
|
$
|
(211,032
|
)
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Contributions to unconsolidated joint ventures
|
—
|
|
|
(94
|
)
|
|
(210
|
)
|
|
—
|
|
|
(304
|
)
|
|||||
Purchases of property and equipment, net
|
(96
|
)
|
|
(318
|
)
|
|
(16
|
)
|
|
—
|
|
|
(430
|
)
|
|||||
Intercompany
|
(239,211
|
)
|
|
—
|
|
|
—
|
|
|
239,211
|
|
|
—
|
|
|||||
Net cash used in investing activities
|
(239,307
|
)
|
|
(412
|
)
|
|
(226
|
)
|
|
239,211
|
|
|
(734
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Change in restricted cash
|
(2,257
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,257
|
)
|
|||||
Proceeds from issuance of debt
|
230,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
230,000
|
|
|||||
Payment of debt issuance costs
|
(6,878
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,878
|
)
|
|||||
Payments on mortgages and land contracts due to land sellers and other loans
|
—
|
|
|
(17,003
|
)
|
|
—
|
|
|
—
|
|
|
(17,003
|
)
|
|||||
Proceeds from issuance of common stock, net
|
109,811
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
109,811
|
|
|||||
Issuance of common stock under employee stock plans
|
52
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
52
|
|
|||||
Payments of cash dividends
|
(2,089
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,089
|
)
|
|||||
Intercompany
|
—
|
|
|
230,182
|
|
|
9,029
|
|
|
(239,211
|
)
|
|
—
|
|
|||||
Net cash provided by financing activities
|
328,639
|
|
|
213,179
|
|
|
9,029
|
|
|
(239,211
|
)
|
|
311,636
|
|
|||||
Net increase (decrease) in cash and cash equivalents
|
97,540
|
|
|
6,342
|
|
|
(4,012
|
)
|
|
—
|
|
|
99,870
|
|
|||||
Cash and cash equivalents at beginning of period
|
457,007
|
|
|
54,205
|
|
|
14,476
|
|
|
—
|
|
|
525,688
|
|
|||||
Cash and cash equivalents at end of period
|
$
|
554,547
|
|
|
$
|
60,547
|
|
|
$
|
10,464
|
|
|
$
|
—
|
|
|
$
|
625,558
|
|
20.
|
Subsequent Event
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
|
Three Months Ended February 28,
|
|||||||||
|
|
2014
|
|
2013
|
|
Variance
|
|||||
Revenues:
|
|
|
|
|
|
|
|||||
Homebuilding
|
|
$
|
448,267
|
|
|
$
|
402,816
|
|
|
11
|
%
|
Financial services
|
|
2,420
|
|
|
2,403
|
|
|
1
|
|
||
Total
|
|
$
|
450,687
|
|
|
$
|
405,219
|
|
|
11
|
%
|
Pretax income (loss):
|
|
|
|
|
|
|
|||||
Homebuilding
|
|
$
|
9,201
|
|
|
$
|
(15,017
|
)
|
|
(a)
|
|
Financial services
|
|
1,562
|
|
|
2,659
|
|
|
(41
|
)%
|
||
Total pretax income (loss)
|
|
10,763
|
|
|
(12,358
|
)
|
|
(a)
|
|||
Income tax expense
|
|
(200
|
)
|
|
(100
|
)
|
|
100
|
|
||
Net income (loss)
|
|
$
|
10,563
|
|
|
$
|
(12,458
|
)
|
|
(a)
|
|
Basic earnings (loss) per share
|
|
$
|
.13
|
|
|
$
|
(.16
|
)
|
|
(a)
|
|
Diluted earnings (loss) per share
|
|
$
|
.12
|
|
|
$
|
(.16
|
)
|
|
(a)
|
(a)
|
Percentage not meaningful.
|
•
|
Revenues.
Total revenues of
$450.7 million
for the three months ended
February 28, 2014
increased
11%
from
$405.2 million
for the three months ended
February 28, 2013
due to higher housing and land sale revenues in the current quarter. Housing revenues rose
9%
to
$440.1 million
for the first quarter of 2014 from
$402.8 million
for the year-earlier quarter, reflecting an increase in our overall average selling price that was partly offset by a slight decrease in the number of homes delivered. We use the term “home” in this discussion and analysis to refer to a single-family residence, whether it is a single-family home or other type of residential property. Land sale revenues for the first quarter of 2014 totaled
$8.1 million
. We had no land sales in the year-earlier period. Our total revenues included financial services revenues of
$2.4 million
in each of the three-month periods ended
February 28, 2014
and 2013.
|
◦
|
Homes Delivered.
We delivered
1,442
homes in the first quarter of 2014, down
3%
from
1,485
homes delivered in the year-earlier quarter, as a decrease in our West Coast homebuilding reporting segment was mostly offset by increases in each of our other three homebuilding reporting segments. In our West Coast homebuilding reporting segment, homes delivered declined
32%
from the year-earlier quarter, primarily due to a
39%
lower backlog level at the beginning of the 2014 first quarter. The lower beginning backlog in this segment was due to a year-over-year decline in the segment’s net orders in 2013 that reflected the ongoing shift of our community mix largely toward coastal California submarkets, delays experienced in opening new home communities in those submarkets, and our emphasis on pricing discipline in balancing sales pace and home selling prices at our new home communities open for sales to drive profitability. In our Southwest, Central and Southeast homebuilding reporting segments, homes delivered increased
15%
,
4%
and
28%
, respectively, compared to the first quarter of 2013.
|
◦
|
Average Selling Price.
Our overall average selling price of homes delivered increased to
$305,200
in the first quarter of 2014, up
12%
, from
$271,300
in the year-earlier quarter. This increase reflected our strategic operational targeting of attractive, land-constrained locations that generally feature higher household incomes and demand for larger home sizes, as well as incremental revenues from lot premiums, design options and upgrades, and generally favorable market conditions. This was the sixth consecutive quarter of double-digit year-over-year percentage growth in our average selling price.
|
•
|
Operating Income.
Our homebuilding operating income of
$17.7 million
for the three months ended
February 28, 2014
increased by
$17.2 million
from
$.5 million
for the three months ended
February 28, 2013
. The year-over-year improvement reflected higher housing and land sale gross profits, partly offset by higher selling, general and administrative expenses in the first quarter of 2014. As a percentage of homebuilding revenues, operating income rose
390
basis points to
4.0%
, compared to
.1%
for the 2013 first quarter.
|
◦
|
Housing Gross Profits.
Housing gross profits of
$78.0 million
for the three months ended
February 28, 2014
increased by
$18.4 million
from
$59.6 million
for the year-earlier period. Our housing gross profit margin improved to
17.7%
in the current quarter from
14.8%
in the first quarter of 2013. This marked our highest first-quarter housing gross profit margin since 2006. Our current quarter housing gross profit margin included a land option contract abandonment charge of
$.4 million
. The 2013 first quarter housing gross profit margin included a warranty charge of
$1.7 million
associated with water intrusion-related repairs of homes at certain of our communities in central and southwest Florida. Excluding the above-mentioned charges, our adjusted housing gross profit margin expanded by
260
basis points to
17.8%
in the first quarter of 2014 from
15.2%
in the year-earlier quarter. The calculation of adjusted housing gross profit margin, which we believe provides a clearer measure of the performance of our business, is described below under “Non-GAAP Financial Measures.” The year-over-year improvement in our first-quarter adjusted housing gross profit margin primarily reflected our ongoing execution of strategies targeting growth and profitability and our actions to generate greater operating efficiencies, partly offset by the impact of higher direct construction labor and material costs in the 2014 period.
|
◦
|
Selling, General and Administrative Expenses.
Our selling, general and administrative expenses increased by
$2.2 million
, or
4%
, to
$61.3 million
for the three months ended
February 28, 2014
from
$59.1 million
for the year-earlier period, reflecting, among other things, the higher housing revenues in the current quarter. As a percentage of housing revenues,
|
◦
|
Interest Expense.
Interest expense of
$11.3 million
for the three months ended
February 28, 2014
decreased from
$15.2 million
for the year-earlier period, reflecting an increase in the amount of inventory qualifying for interest capitalization in the current period.
|
•
|
Net Income (Loss).
Our net income increased to
$10.6 million
, or
$.12
per diluted share, for the three months ended
February 28, 2014
, compared to a net loss of
$12.5 million
, or
$.16
per diluted share, for the three months ended
February 28, 2013
, mainly due to our higher revenues, expanded housing gross profit margin and improved selling, general and administrative expenses as a percentage of housing revenues. In the current quarter, our net income also included a
$3.2 million
gain on the sale of our interest in an unconsolidated joint venture in Maryland, which is included in equity in income (loss) of unconsolidated joint ventures in our consolidated statements of operations, and income tax expense of
$.2 million
. Our net loss in the first quarter of 2013 included income tax expense of
$.1 million
.
|
•
|
Cash, Cash Equivalents and Restricted Cash.
Our cash, cash equivalents and restricted cash totaled
$345.4 million
at
February 28, 2014
, compared to
$572.0 million
at
November 30, 2013
. Of our total cash, cash equivalents and restricted cash at
February 28, 2014
and November 30, 2013,
$303.3 million
and
$530.1 million
, respectively, was unrestricted. The decrease in our total cash, cash equivalents and restricted cash was mainly due to investments in land and land development during the three months ended
February 28, 2014
. Our operating activities used net cash of
$221.1 million
in the first three months of 2014, up from
$211.0 million
of net cash used in the corresponding period of 2013, largely due to investments in land and land development that drove our inventories higher at
February 28, 2014
compared to the November 30, 2013 level.
|
•
|
Inventories.
Reflecting our investments in land and land development of
$354.3 million
and the distribution of land we received from Inspirada in the three months ended February 28, 2014, our inventory balance of
$2.63 billion
at
February 28, 2014
increased
15%
from
$2.30 billion
at
November 30, 2013
. We made strategic investments in land and land development in each of our homebuilding reporting segments during the three months ended
February 28, 2014
, with the majority of our investments made in our West Coast homebuilding reporting segment. With these substantial inventory investments, we ended our 2014 first quarter with a land inventory portfolio comprised of
57,438
lots owned or controlled, representing an increase of
21%
compared to the end of the 2013 first quarter, though a
6%
decrease from the
61,095
lots owned or controlled at November 30, 2013. The decrease from November 30, 2013 primarily reflected land option contract abandonments in the first quarter of 2014.
|
•
|
Investments in Unconsolidated Joint Ventures.
Our investments in unconsolidated joint ventures decreased to
$60.6 million
at February 28, 2014 from
$130.2 million
at November 30, 2013, primarily due to
$70.6 million
of land distributed to us from Inspirada and the above-noted sale of our interest in an unconsolidated joint venture in Maryland. These transactions were partly offset by capital contributions made to various unconsolidated joint ventures during the three months ended February 28, 2014.
|
•
|
Mortgages and Notes Payable.
Our debt balance was
$2.18 billion
at
February 28, 2014
, compared to
$2.15 billion
at
November 30, 2013
. Our ratio of debt to total capital was
79.9%
at
February 28, 2014
, compared to
80.0%
at
November 30, 2013
. Our ratio of net debt to total capital (a calculation that is described below under “Non-GAAP Financial Measures”) was
77.0%
at
February 28, 2014
, compared to
74.6%
at
November 30, 2013
.
|
•
|
Stockholders’ Equity.
Our stockholders’ equity increased to $
546.3 million
at
February 28, 2014
from
$536.1 million
at
November 30, 2013, primarily due to the net income we generated for the three months ended
February 28, 2014
.
|
•
|
Net Orders.
Net orders from our homebuilding operations rose
6%
to
1,765
in the first quarter of 2014 from
1,671
in the year-earlier quarter, a period during which we had experienced a
40%
year-over-year increase in net orders. The year-over-year increase in net orders in the first quarter of 2014 reflected our increased average community count as we continued to convert the substantial land and land development investments we have made over the past several quarters to new communities open for sales.
|
◦
|
The year-over-year growth in overall net orders reflected increases in our Central and Southeast homebuilding reporting segments of
16%
and
11%
, respectively, partly offset by decreases in our West Coast and Southwest homebuilding reporting segments of
5%
and
9%
, respectively.
|
◦
|
The decrease in net orders from our West Coast homebuilding reporting segment was primarily due to the ongoing shift of our community mix largely toward coastal California submarkets, delays experienced in opening new home communities in those submarkets, and our emphasis on pricing discipline in balancing sales pace and home selling prices at our new home communities open for sales to drive profitability. In addition, a majority of the community openings within this homebuilding reporting segment in the first quarter of 2014 occurred in the latter part of the quarter.
|
◦
|
The decrease in net orders from our Southwest homebuilding reporting segment reflected our closing out of communities and delays experienced in opening new home communities in Nevada, partly offset by higher year-over-year net orders from our new home communities in Arizona.
|
◦
|
The overall value of the net orders we generated in the three months ended February 28, 2014 increased
18%
to
$600.2 million
from
$506.8 million
in the year-earlier quarter, a period in which our net order value had increased
83%
from the prior year.
|
◦
|
All four homebuilding reporting segments generated year-over-year increases in net order value in the current quarter, with our West Coast homebuilding reporting segment up
15%
to
$299.3 million
, our Southwest homebuilding reporting segment up
11%
to
$48.4 million
, our Central homebuilding reporting segment up
27%
to
$169.0 million
, and our Southeast homebuilding reporting segment up
22%
to
$83.5 million
.
|
◦
|
Our first quarter cancellation rate was
30%
in 2014 and
32%
in 2013. We define our cancellation rate in a given period as the total number of contracts for new homes canceled divided by the total new (gross) orders for homes during the same period.
|
•
|
Backlog
. Our backlog at
February 28, 2014
was comprised of
2,880
homes, representing potential future housing revenues of
$851.6 million
, and at
February 28, 2013
was
2,763
homes, representing potential future housing revenues of
$703.9 million
. The number of homes in our backlog increased
4%
year over year, primarily due to the
6%
year-over-year increase in our first quarter 2014 net orders. The potential future housing revenues in our backlog at
February 28, 2014
rose
21%
from
February 28, 2013
, reflecting the increased number of homes in our backlog and a higher average selling price.
|
|
|
Three Months Ended February 28,
|
||||||
|
|
2014
|
|
2013
|
||||
Net orders
|
|
1,765
|
|
|
1,671
|
|
||
Net order value
|
|
$
|
600,172
|
|
|
$
|
506,803
|
|
Cancellation rate
|
|
30
|
%
|
|
32
|
%
|
||
Ending backlog — homes
|
|
2,880
|
|
|
2,763
|
|
||
Ending backlog — value
|
|
$
|
851,553
|
|
|
$
|
703,893
|
|
Ending community count
|
|
188
|
|
|
171
|
|
||
Average community count
|
|
190
|
|
|
172
|
|
|
|
Three Months Ended February 28,
|
||||||
|
|
2014
|
|
2013
|
||||
Revenues:
|
|
|
|
|
||||
Housing
|
|
$
|
440,127
|
|
|
$
|
402,816
|
|
Land
|
|
8,140
|
|
|
—
|
|
||
Total
|
|
448,267
|
|
|
402,816
|
|
||
Costs and expenses:
|
|
|
|
|
||||
Construction and land costs
|
|
|
|
|
||||
Housing
|
|
(362,106
|
)
|
|
(343,265
|
)
|
||
Land
|
|
(7,168
|
)
|
|
—
|
|
||
Total
|
|
(369,274
|
)
|
|
(343,265
|
)
|
||
Selling, general and administrative expenses
|
|
(61,274
|
)
|
|
(59,097
|
)
|
||
Total
|
|
(430,548
|
)
|
|
(402,362
|
)
|
||
Operating income
|
|
$
|
17,719
|
|
|
$
|
454
|
|
Homes delivered
|
|
1,442
|
|
|
1,485
|
|
||
Average selling price
|
|
$
|
305,200
|
|
|
$
|
271,300
|
|
Housing gross profit margin as a percentage of housing revenues
|
|
17.7
|
%
|
|
14.8
|
%
|
||
Adjusted housing gross profit margin as a percentage of housing revenues
|
|
17.8
|
%
|
|
15.2
|
%
|
||
Selling, general and administrative expenses as a percentage of housing revenues
|
|
13.9
|
%
|
|
14.7
|
%
|
||
Operating income as a percentage of homebuilding revenues
|
|
4.0
|
%
|
|
.1
|
%
|
|
|
Three Months Ended February 28,
|
||||||||||||||||
|
|
Homes Delivered
|
|
Average Community Count
|
||||||||||||||
Segment
|
|
2014
|
|
2013
|
|
Variance
|
|
2014
|
|
2013
|
|
Variance
|
||||||
West Coast
|
|
346
|
|
|
509
|
|
|
(32
|
)%
|
|
44
|
|
|
40
|
|
|
10
|
%
|
Southwest
|
|
161
|
|
|
140
|
|
|
15
|
|
|
19
|
|
|
15
|
|
|
27
|
|
Central
|
|
595
|
|
|
571
|
|
|
4
|
|
|
81
|
|
|
82
|
|
|
(1
|
)
|
Southeast
|
|
340
|
|
|
265
|
|
|
28
|
|
|
46
|
|
|
35
|
|
|
31
|
|
Total
|
|
1,442
|
|
|
1,485
|
|
|
(3
|
)%
|
|
190
|
|
|
172
|
|
|
10
|
%
|
|
|
Three Months Ended February 28,
|
||||||||||||||||||
|
|
Net Orders
|
|
Net Order Value
|
|
Cancellation Rates
|
||||||||||||||
Segment
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
West Coast
|
|
506
|
|
|
530
|
|
|
$
|
299,283
|
|
|
$
|
261,342
|
|
|
21
|
%
|
|
23
|
%
|
Southwest
|
|
181
|
|
|
199
|
|
|
48,388
|
|
|
43,706
|
|
|
27
|
|
|
22
|
|
||
Central
|
|
757
|
|
|
653
|
|
|
168,973
|
|
|
133,492
|
|
|
37
|
|
|
39
|
|
||
Southeast
|
|
321
|
|
|
289
|
|
|
83,528
|
|
|
68,263
|
|
|
29
|
|
|
34
|
|
||
Total
|
|
1,765
|
|
|
1,671
|
|
|
$
|
600,172
|
|
|
$
|
506,803
|
|
|
30
|
%
|
|
32
|
%
|
|
|
February 28,
|
||||||||||||||||||
|
|
Backlog – Homes
|
|
Backlog – Value
|
||||||||||||||||
Segment
|
|
2014
|
|
2013
|
|
Variance
|
|
2014
|
|
2013
|
|
Variance
|
||||||||
West Coast
|
|
580
|
|
|
705
|
|
|
(18
|
)%
|
|
$
|
328,676
|
|
|
$
|
287,970
|
|
|
14
|
%
|
Southwest
|
|
208
|
|
|
242
|
|
|
(14
|
)
|
|
57,648
|
|
|
54,604
|
|
|
6
|
|
||
Central
|
|
1,510
|
|
|
1,231
|
|
|
23
|
|
|
320,926
|
|
|
235,759
|
|
|
36
|
|
||
Southeast
|
|
582
|
|
|
585
|
|
|
(1
|
)
|
|
144,303
|
|
|
125,560
|
|
|
15
|
|
||
Total
|
|
2,880
|
|
|
2,763
|
|
|
4
|
%
|
|
$
|
851,553
|
|
|
$
|
703,893
|
|
|
21
|
%
|
|
|
Three Months Ended February 28,
|
||||||
|
|
2014
|
|
2013
|
||||
Land option contract abandonment charges
|
|
$
|
433
|
|
|
$
|
—
|
|
Water intrusion-related charges
|
|
—
|
|
|
1,674
|
|
||
Total
|
|
$
|
433
|
|
|
$
|
1,674
|
|
|
|
Three Months Ended February 28,
|
||||
|
|
2014
|
|
2013
|
||
Number of communities or land parcels evaluated for recoverability
|
|
11
|
|
|
20
|
|
|
0-2 years
|
|
3-5 years
|
|
6-10 years
|
|
Greater than
10 years
|
|
Total
|
||||||||||
Inventories
|
$
|
1,334.0
|
|
|
$
|
677.5
|
|
|
$
|
357.5
|
|
|
$
|
265.9
|
|
|
$
|
2,634.9
|
|
|
Three Months Ended February 28,
|
||||||
|
2014
|
|
2013
|
||||
Housing revenues
|
$
|
440,127
|
|
|
$
|
402,816
|
|
Housing construction and land costs
|
(362,106
|
)
|
|
(343,265
|
)
|
||
Housing gross profits
|
78,021
|
|
|
59,551
|
|
||
Add: Land option contract abandonment charges
|
433
|
|
|
—
|
|
||
Water intrusion-related charges
|
—
|
|
|
1,674
|
|
||
Adjusted housing gross profits
|
$
|
78,454
|
|
|
$
|
61,225
|
|
Housing gross profit margin as a percentage of housing revenues
|
17.7
|
%
|
|
14.8
|
%
|
||
Adjusted housing gross profit margin as a percentage of housing revenues
|
17.8
|
%
|
|
15.2
|
%
|
|
February 28,
2014 |
|
November 30,
2013 |
||||
Mortgages and notes payable
|
$
|
2,175,190
|
|
|
$
|
2,150,498
|
|
Stockholders’ equity
|
546,334
|
|
|
536,086
|
|
||
Total capital
|
$
|
2,721,524
|
|
|
$
|
2,686,584
|
|
Ratio of debt to total capital
|
79.9
|
%
|
|
80.0
|
%
|
||
|
|
|
|
||||
Mortgages and notes payable
|
$
|
2,175,190
|
|
|
$
|
2,150,498
|
|
Less: Cash and cash equivalents and restricted cash
|
(345,352
|
)
|
|
(572,001
|
)
|
||
Net debt
|
1,829,838
|
|
|
1,578,497
|
|
||
Stockholders’ equity
|
546,334
|
|
|
536,086
|
|
||
Total capital
|
$
|
2,376,172
|
|
|
$
|
2,114,583
|
|
Ratio of net debt to total capital
|
77.0
|
%
|
|
74.6
|
%
|
|
Three Months Ended February 28,
|
|||||||||
|
2014
|
|
2013
|
|
Variance
|
|||||
West Coast:
|
|
|
|
|
|
|||||
Revenues
|
$
|
181,721
|
|
|
$
|
206,104
|
|
|
(12
|
)%
|
Construction and land costs
|
(145,107
|
)
|
|
(171,898
|
)
|
|
16
|
|
||
Selling, general and administrative expenses
|
(13,124
|
)
|
|
(16,785
|
)
|
|
22
|
|
||
Operating income
|
23,490
|
|
|
17,421
|
|
|
35
|
|
||
Other, net
|
(5,125
|
)
|
|
(7,579
|
)
|
|
32
|
|
||
Pretax income
|
$
|
18,365
|
|
|
$
|
9,842
|
|
|
87
|
%
|
Southwest:
|
|
|
|
|
|
|||||
Revenues
|
$
|
46,115
|
|
|
$
|
31,831
|
|
|
45
|
%
|
Construction and land costs
|
(35,652
|
)
|
|
(24,183
|
)
|
|
(47
|
)
|
||
Selling, general and administrative expenses
|
(5,030
|
)
|
|
(3,630
|
)
|
|
(39
|
)
|
||
Operating income
|
5,433
|
|
|
4,018
|
|
|
35
|
|
||
Other, net
|
(4,148
|
)
|
|
(4,767
|
)
|
|
13
|
|
||
Pretax income (loss)
|
$
|
1,285
|
|
|
$
|
(749
|
)
|
|
(a)
|
|
|
|
|
|
|
|
|||||
Central:
|
|
|
|
|
|
|||||
Revenues
|
$
|
125,162
|
|
|
$
|
106,492
|
|
|
18
|
%
|
Construction and land costs
|
(106,846
|
)
|
|
(91,270
|
)
|
|
(17
|
)
|
||
Selling, general and administrative expenses
|
(14,834
|
)
|
|
(13,620
|
)
|
|
(9
|
)
|
||
Operating income
|
3,482
|
|
|
1,602
|
|
|
117
|
|
||
Other, net
|
(706
|
)
|
|
(1,466
|
)
|
|
52
|
|
||
Pretax income
|
$
|
2,776
|
|
|
$
|
136
|
|
|
(a)
|
|
|
|
|
|
|
|
Southeast:
|
|
|
|
|
|
|||||
Revenues
|
$
|
95,269
|
|
|
$
|
58,389
|
|
|
63
|
%
|
Construction and land costs
|
(81,329
|
)
|
|
(55,347
|
)
|
|
(47
|
)
|
||
Selling, general and administrative expenses
|
(10,661
|
)
|
|
(8,364
|
)
|
|
(27
|
)
|
||
Operating income (loss)
|
3,279
|
|
|
(5,322
|
)
|
|
(a)
|
|
||
Other, net
|
562
|
|
|
(3,002
|
)
|
|
(a)
|
|
||
Pretax income (loss)
|
$
|
3,841
|
|
|
$
|
(8,324
|
)
|
|
(a)
|
|
(a)
|
Percentage not meaningful.
|
|
|
Housing
Revenues
(in thousands)
|
|
Percentage of
Total
Housing
Revenues
|
|
Homes
Delivered
|
|
Percentage of
Total
Homes
Delivered
|
|
Average
Selling Price
|
|||||||
Three Months Ended February 28, 2014
|
|
|
|
|
|
|
|
|
|
|
|||||||
West Coast
|
|
$
|
181,721
|
|
|
41
|
%
|
|
346
|
|
|
24
|
%
|
|
$
|
525,200
|
|
Southwest
|
|
46,115
|
|
|
11
|
|
|
161
|
|
|
11
|
|
|
286,400
|
|
||
Central
|
|
125,162
|
|
|
28
|
|
|
595
|
|
|
41
|
|
|
210,400
|
|
||
Southeast
|
|
87,129
|
|
|
20
|
|
|
340
|
|
|
24
|
|
|
256,300
|
|
||
Total
|
|
$
|
440,127
|
|
|
100
|
%
|
|
1,442
|
|
|
100
|
%
|
|
$
|
305,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Three Months Ended February 28, 2013
|
|
|
|
|
|
|
|
|
|
|
|||||||
West Coast
|
|
$
|
206,104
|
|
|
51
|
%
|
|
509
|
|
|
34
|
%
|
|
$
|
404,900
|
|
Southwest
|
|
31,831
|
|
|
8
|
|
|
140
|
|
|
9
|
|
|
227,400
|
|
||
Central
|
|
106,492
|
|
|
26
|
|
|
571
|
|
|
39
|
|
|
186,500
|
|
||
Southeast
|
|
58,389
|
|
|
15
|
|
|
265
|
|
|
18
|
|
|
220,300
|
|
||
Total
|
|
$
|
402,816
|
|
|
100
|
%
|
|
1,485
|
|
|
100
|
%
|
|
$
|
271,300
|
|
|
Three Months Ended February 28,
|
||||||
|
2014
|
|
2013
|
||||
Revenues
|
$
|
2,420
|
|
|
$
|
2,403
|
|
Expenses
|
(852
|
)
|
|
(835
|
)
|
||
Equity in income (loss) of unconsolidated joint ventures
|
(6
|
)
|
|
1,091
|
|
||
Pretax income
|
$
|
1,562
|
|
|
$
|
2,659
|
|
|
|
February 28, 2014
|
|
November 30, 2013
|
|
Variance
|
|||||||||||||||
Segment
|
|
Lots
|
|
$
|
|
Lots
|
|
$
|
|
Lots
|
|
$
|
|||||||||
West Coast
|
|
13,005
|
|
|
$
|
1,288,442
|
|
|
12,612
|
|
|
$
|
1,144,184
|
|
|
393
|
|
|
$
|
144,258
|
|
Southwest
|
|
10,429
|
|
|
419,931
|
|
|
12,217
|
|
|
304,239
|
|
|
(1,788
|
)
|
|
115,692
|
|
|||
Central
|
|
21,478
|
|
|
482,347
|
|
|
22,806
|
|
|
411,076
|
|
|
(1,328
|
)
|
|
71,271
|
|
|||
Southeast
|
|
12,526
|
|
|
444,224
|
|
|
13,460
|
|
|
439,078
|
|
|
(934
|
)
|
|
5,146
|
|
|||
Total
|
|
57,438
|
|
|
$
|
2,634,944
|
|
|
61,095
|
|
|
$
|
2,298,577
|
|
|
(3,657
|
)
|
|
$
|
336,367
|
|
|
February 28,
2014 |
|
November 30,
2013 |
|
Variance
|
||||||
Mortgages and land contracts due to land sellers and other loans
|
$
|
37,970
|
|
|
$
|
13,615
|
|
|
$
|
24,355
|
|
Senior notes
|
1,907,220
|
|
|
1,906,883
|
|
|
337
|
|
|||
Convertible senior notes
|
230,000
|
|
|
230,000
|
|
|
—
|
|
|||
Total
|
$
|
2,175,190
|
|
|
$
|
2,150,498
|
|
|
$
|
24,692
|
|
•
|
Consolidated Tangible Net Worth.
We must maintain a minimum consolidated tangible net worth equal to the sum of (a)
$282.6 million
; (b) 50% of cumulative positive consolidated net income after November 30, 2012, excluding consolidated net income realized from a reversal of our deferred tax asset valuation allowance after November 30, 2012; (c) 75% of any consolidated net income realized as a result of a reversal of our deferred tax asset valuation allowance after November 30, 2012; and (d) 50% of the cumulative net proceeds received from our issuance of capital stock after November 30, 2012. As of
February 28, 2014
, our applicable minimum consolidated tangible net worth requirement was
$370.3 million
.
|
•
|
Leverage Ratio.
We must also maintain a Leverage Ratio of less than .850, which adjusts to less than .825 for the first and second quarters of 2015; and to less than .800 for the third quarter of 2015 and each quarter thereafter during the term of the Credit Facility. As defined under the Credit Facility, the Leverage Ratio is calculated as the ratio of our consolidated total indebtedness to the sum of consolidated total indebtedness and consolidated tangible net worth.
|
•
|
Interest Coverage Ratio or Liquidity.
We are also required to maintain either (a) a minimum consolidated interest coverage ratio (“Coverage Ratio”) of 1.10, which adjusts to 1.20 for the second quarter of 2014; to 1.40 for the third quarter of 2014; to 1.60 for the fourth quarter of 2014; to 1.75 for the first and second quarter of 2015; and to 2.00 for the third quarter of 2015 and each quarter thereafter during the term of the Credit Facility; or (b) a minimum level of liquidity, but not both. As defined under the Credit Facility, the Coverage Ratio is the ratio of our consolidated adjusted EBITDA to consolidated interest incurred, in each case for the previous 12 months. Our minimum liquidity is required to be the greater of (a) $50.0 million or (b) the sum of (i) consolidated interest incurred for the four most recently ended quarters and (ii) the aggregate principal amount of indebtedness coming due in the next 12 months, provided that the highest minimum liquidity applicable under (b) is $200.0 million. As of
February 28, 2014
, our minimum liquidity requirement was
$142.4 million
.
|
Financial Covenants and Other Requirements
|
|
Covenant Requirement
|
|
Actual
|
|
Consolidated tangible net worth
|
|
>
|
$370.3 million
|
|
$546.3 million
|
Leverage Ratio
|
|
<
|
.850
|
|
.799
|
Coverage Ratio (a)
|
|
>
|
1.10
|
|
1.50
|
Minimum Liquidity (a)
|
|
>
|
$142.4 million
|
|
$303.3 million
|
Investments in joint ventures and non-guarantor subsidiaries
|
|
<
|
$244.4 million
|
|
$97.6 million
|
Borrowing base in excess of borrowing base indebtedness (as defined)
|
|
|
n/a
|
|
$184.8 million
|
(a)
|
Under the terms of the Credit Facility, we are required to meet either the Coverage Ratio or the minimum liquidity thresholds, but not both. As of
February 28, 2014
, we met both the Coverage Ratio and the minimum liquidity requirements.
|
|
Three Months Ended February 28,
|
||||||
|
2014
|
|
2013
|
||||
Net cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
(221,063
|
)
|
|
$
|
(211,032
|
)
|
Investing activities
|
(84
|
)
|
|
(734
|
)
|
||
Financing activities
|
(4,926
|
)
|
|
311,636
|
|
||
Net increase (decrease) in cash and cash equivalents
|
$
|
(226,073
|
)
|
|
$
|
99,870
|
|
|
February 28, 2014
|
|
November 30, 2013
|
||||||||||||
|
Cash
Deposits
|
|
Aggregate
Purchase Price
|
|
Cash
Deposits
|
|
Aggregate
Purchase Price
|
||||||||
Unconsolidated VIEs
|
$
|
25,031
|
|
|
$
|
589,713
|
|
|
$
|
11,063
|
|
|
$
|
616,000
|
|
Other land option contracts and other similar contracts
|
30,603
|
|
|
500,853
|
|
|
30,502
|
|
|
535,496
|
|
||||
Total
|
$
|
55,634
|
|
|
$
|
1,090,566
|
|
|
$
|
41,565
|
|
|
$
|
1,151,496
|
|
•
|
general economic, employment and business conditions;
|
•
|
population growth, household formations and demographic trends;
|
•
|
adverse market conditions, including an increased supply of unsold homes, declining home prices and greater foreclosure and short sale activity, among other things, that could negatively affect our consolidated financial statements, including due to additional impairment or land option contract abandonment charges, lower revenues and operating and other losses;
|
•
|
conditions in the capital, credit and financial markets (including mortgage lending standards, the availability of mortgage financing and mortgage foreclosure rates);
|
•
|
material prices and availability;
|
•
|
labor costs and availability;
|
•
|
changes in interest rates;
|
•
|
inflation;
|
•
|
our debt level, including our ratio of debt to total capital, and our ability to adjust our debt level, maturity schedule and structure and to access the equity, credit, capital or other financial markets or other external financing sources, including raising capital through the public or private issuance of common stock, debt or other securities, and/or project financing, on favorable terms;
|
•
|
our compliance with the terms and covenants of the Credit Facility;
|
•
|
weak or declining consumer confidence, either generally or specifically with respect to purchasing homes;
|
•
|
competition for home sales from other sellers of new and resale homes, including lenders and other sellers of homes obtained through foreclosures or short sales;
|
•
|
weather conditions, significant natural disasters and other environmental factors;
|
•
|
government actions, policies, programs and regulations directed at or affecting the housing market (including the Dodd-Frank Act, tax credits, tax incentives and/or subsidies for home purchases, tax deductions for mortgage interest payments and real estate taxes, tax exemptions for profits on home sales, programs intended to modify existing mortgage loans and to prevent mortgage foreclosures and the standards, fees and size limits applicable to the purchase or insuring of mortgage loans by government-sponsored enterprises and government agencies), the homebuilding industry, or construction activities;
|
•
|
decisions regarding federal fiscal and monetary policies, including those relating to taxation, government spending, interest rates and economic stimulus measures;
|
•
|
the availability and cost of land in desirable areas;
|
•
|
our warranty claims experience with respect to homes previously delivered and actual warranty costs incurred, including our warranty claims and costs experience at certain of our communities in Florida;
|
•
|
legal or regulatory proceedings or claims;
|
•
|
our ability to use/realize the net deferred tax assets we have generated;
|
•
|
our ability to successfully implement our current and planned strategies and initiatives with respect to product, geographic and market positioning (including our efforts to expand our inventory base/pipeline with desirable land positions or interests at reasonable cost and to expand our community count, open additional new home communities for sales and sell higher-priced homes and more design options, and our operational and investment concentration in markets in California), revenue growth, asset optimization (including by effectively balancing home sales prices and sales pace in our new home communities), asset activation, local field management and talent investment, and overhead reduction and cost management;
|
•
|
consumer traffic to our new home communities and consumer interest in our product designs and offerings, particularly higher-income consumers;
|
•
|
cancellations and our ability to realize our backlog by converting net orders to home deliveries;
|
•
|
our home sales and delivery performance, particularly in key markets in California;
|
•
|
the manner in which our homebuyers are offered and whether they are able to obtain mortgage loans and mortgage banking services, including from our preferred mortgage lender, Nationstar;
|
•
|
the performance of Nationstar as our preferred mortgage lender;
|
•
|
the ability of Home Community Mortgage to become operational in all of our served markets and its performance upon becoming operational;
|
•
|
information technology failures and data security breaches; and
|
•
|
other events outside of our control.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Exhibits
|
|
|
|
|
|
4.29
|
|
Ninth Supplemental Indenture, dated as of February 28, 2014, by and among us, the Guarantors party thereto, the Additional Guarantors named therein and U.S. Bank National Association, as Trustee, filed as an exhibit to our Post-Effective Amendment No. 4 to Form S-3 Registration Statement (No. 333-176930), is incorporated by reference herein.
|
|
|
|
10.48
|
|
KB Home 2014 Equity Incentive Plan.
|
|
|
|
31.1
|
|
Certification of Jeffrey T. Mezger, President and Chief Executive Officer of KB Home Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2
|
|
Certification of Jeff J. Kaminski, Executive Vice President and Chief Financial Officer of KB Home Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1
|
|
Certification of Jeffrey T. Mezger, President and Chief Executive Officer of KB Home Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.2
|
|
Certification of Jeff J. Kaminski, Executive Vice President and Chief Financial Officer of KB Home Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
101
|
|
The following materials from KB Home’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2014, formatted in eXtensible Business Reporting Language (XBRL): (a) Consolidated Statements of Operations for the three months ended February 28, 2014 and 2013, (b) Consolidated Balance Sheets as of February 28, 2014 and November 30, 2013, (c) Consolidated Statements of Cash Flows for the three months ended February 28, 2014 and 2013, and (d) Notes to Consolidated Financial Statements.
|
|
KB HOME
Registrant
|
Dated
|
April 4, 2014
|
|
By:
|
/s/ JEFF J. KAMINSKI
|
|
|
|
|
Jeff J. Kaminski
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
Dated
|
April 4, 2014
|
|
By:
|
/s/ WILLIAM R. HOLLINGER
|
|
|
|
|
William R. Hollinger
Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer)
|
4.29
|
|
Ninth Supplemental Indenture, dated as of February 28, 2014, by and among us, the Guarantors party thereto, the Additional Guarantors named therein and U.S. Bank National Association, as Trustee, filed as an exhibit to our Post-Effective Amendment No. 4 to Form S-3 Registration Statement (No. 333-176930), is incorporated by reference herein.
|
|
|
|
10.48
|
|
KB Home 2014 Equity Incentive Plan.
|
|
|
|
31.1
|
|
Certification of Jeffrey T. Mezger, President and Chief Executive Officer of KB Home Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2
|
|
Certification of Jeff J. Kaminski, Executive Vice President and Chief Financial Officer of KB Home Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1
|
|
Certification of Jeffrey T. Mezger, President and Chief Executive Officer of KB Home Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.2
|
|
Certification of Jeff J. Kaminski, Executive Vice President and Chief Financial Officer of KB Home Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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101
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The following materials from KB Home’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2014, formatted in eXtensible Business Reporting Language (XBRL): (a) Consolidated Statements of Operations for the three months ended February 28, 2014 and 2013, (b) Consolidated Balance Sheets as of February 28, 2014 and November 30, 2013, (c) Consolidated Statements of Cash Flows for the three months ended February 28, 2014 and 2013, and (d) Notes to Consolidated Financial Statements.
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Page
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ARTICLE 1.
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PURPOSE...............................................................................
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1
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ARTICLE 2.
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DEFINITIONS AND CONSTRUCTION...............................
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1
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ARTICLE 3.
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SHARES SUBJECT TO THE PLAN.....................................
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8
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3.1
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Number of Shares..........................................................................
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8
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3.2
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Stock Distributed...........................................................................
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9
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ARTICLE 4.
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GRANTING OF AWARDS....................................................
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9
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4.1
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Participation...................................................................................
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9
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4.2
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Award Agreement..........................................................................
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9
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4.3
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Programs........................................................................................
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9
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4.4
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Limitations Applicable to Section 16 Persons...............................
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9
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4.5
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Fiscal Year Award Limit.................................................................
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9
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4.6
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At-Will Employment......................................................................
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10
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4.7
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Stand-Alone and Tandem Awards..................................................
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10
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ARTICLE 5.
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PERFORMANCE-BASED COMPENSATION.....................
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10
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5.1
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Purpose...........................................................................................
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10
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5.2
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Applicability...................................................................................
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10
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5.3
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Types of Awards.............................................................................
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11
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5.4
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Procedures with Respect to Performance-Based Awards..............
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11
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5.5
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Payment of Performance-Based Awards........................................
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11
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5.6
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Additional Limitations...................................................................
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11
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ARTICLE 6.
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GRANTING OF OPTIONS....................................................
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11
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6.1
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Granting of Options to Eligible Individuals..................................
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11
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6.2
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Qualification of Incentive Stock Options......................................
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12
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6.3
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Option Exercise Price....................................................................
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12
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6.4
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Option Term...................................................................................
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12
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6.5
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Option Vesting...............................................................................
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12
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6.6
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Substitute Awards...........................................................................
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13
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6.7
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Substitution of Stock Appreciation Rights.....................................
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13
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ARTICLE 7.
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EXERCISE OF OPTIONS......................................................
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13
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7.1
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Partial Exercise..............................................................................
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13
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Page
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7.2
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Manner of Exercise........................................................................
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13
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7.3
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Notification Regarding Disposition...............................................
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14
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ARTICLE 8.
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AWARD OF RESTRICTED STOCK.....................................
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14
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8.1
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Award of Restricted Stock.............................................................
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14
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8.2
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Rights as Stockholders...................................................................
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14
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8.3
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Restrictions....................................................................................
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14
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8.4
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Repurchase or Forfeiture of Restricted Stock................................
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15
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8.5
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Certificates for Restricted Stock....................................................
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15
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8.6
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Section 83(b) Election....................................................................
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15
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ARTICLE 9.
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AWARD OF PERFORMANCE AWARDS, STOCK PAYMENTS AND RESTRICTED STOCK UNITS...............
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15
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9.1
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Performance Awards......................................................................
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15
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9.2
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Stock Payments..............................................................................
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16
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9.3
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Restricted Stock Units....................................................................
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16
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9.4
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Term...............................................................................................
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16
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9.5
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Exercise or Purchase Price.............................................................
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16
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9.6
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Dividend Equivalents.....................................................................
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16
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ARTICLE 10.
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AWARD OF STOCK APPRECIATION RIGHTS..................
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17
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10.1
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Grant of Stock Appreciation Rights...............................................
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17
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10.2
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Stock Appreciation Right Term......................................................
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17
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10.3
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Stock Appreciation Right Vesting..................................................
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18
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10.4
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Manner of Exercise........................................................................
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18
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10.5
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Payment..........................................................................................
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18
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ARTICLE 11.
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ADDITIONAL TERMS OF AWARDS..................................
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18
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11.1
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Payment..........................................................................................
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18
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11.2
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Tax Withholding.............................................................................
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19
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11.3
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Transferability of Awards...............................................................
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19
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11.4
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Conditions to Issuance of Shares...................................................
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20
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11.5
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Forfeiture Provisions......................................................................
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21
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11.6
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Prohibition on Repricing................................................................
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21
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11.7
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Permitted Replacement Awards.....................................................
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21
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ARTICLE 12.
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ADMINISTRATION...............................................................
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22
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12.1
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Committee......................................................................................
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22
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12.2
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Duties and Powers of Committee..................................................
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22
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12.3
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Action by the Committee...............................................................
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22
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12.4
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Authority of Committee.................................................................
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23
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12.5
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Decisions Binding..........................................................................
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23
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12.6
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Delegation of Authority..................................................................
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23
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ARTICLE 13.
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MISCELLANEOUS PROVISIONS.......................................
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24
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13.1
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Amendment, Suspension or Termination of the Plan....................
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24
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13.2
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Changes in Common Stock or Assets of the Company, Acquisition or Liquidation of the Company and Other Corporate Events.............................................................................................
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24
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13.3
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No Stockholder Rights...................................................................
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27
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13.4
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Paperless Administration...............................................................
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27
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13.5
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Effect of Plan upon Other Compensation Plans............................
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27
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13.6
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Compliance with Laws..................................................................
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27
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13.7
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Titles and Headings, References to Sections of the Code, the Securities Act or Exchange Act......................................................
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27
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13.8
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Governing Law...............................................................................
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28
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13.9
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Section 409A..................................................................................
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28
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13.10
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No Rights to Awards......................................................................
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29
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13.11
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Unfunded Status of Awards............................................................
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29
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13.12
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Indemnification..............................................................................
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29
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13.13
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Term...............................................................................................
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29
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1.
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I have reviewed this quarterly report on Form 10-Q of KB Home;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Dated
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April 4, 2014
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/s/ JEFFREY T. MEZGER
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Jeffrey T. Mezger
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President and Chief Executive Officer
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(Principal Executive Officer)
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1.
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I have reviewed this quarterly report on Form 10-Q of KB Home;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Dated
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April 4, 2014
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/s/ JEFF J. KAMINSKI
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Jeff J. Kaminski
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Executive Vice President and Chief Financial Officer
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(Principal Financial Officer)
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(1)
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The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Dated
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April 4, 2014
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/s/ JEFFREY T. MEZGER
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Jeffrey T. Mezger
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President and Chief Executive Officer
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(Principal Executive Officer)
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(1)
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The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Dated
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April 4, 2014
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/s/ JEFF J. KAMINSKI
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Jeff J. Kaminski
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Executive Vice President and Chief Financial Officer
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(Principal Financial Officer)
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