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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Item 1.
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Financial Statements
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Nine Months Ended August 31,
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Three Months Ended August 31,
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||||||||||||
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2014
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2013
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2014
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2013
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||||||||
Total revenues
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$
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1,604,908
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$
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1,478,599
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$
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589,214
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$
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548,974
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Homebuilding:
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||||||||
Revenues
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$
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1,596,894
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$
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1,470,404
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$
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586,231
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$
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545,800
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Construction and land costs
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(1,305,258
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)
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(1,232,644
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)
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(479,424
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)
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(446,381
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)
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||||
Selling, general and administrative expenses
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(205,715
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)
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(192,652
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)
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(72,897
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)
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(63,456
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)
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||||
Operating income
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85,921
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45,108
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33,910
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35,963
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Interest income
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393
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629
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110
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193
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Interest expense
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(26,289
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)
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(41,073
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)
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(6,455
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)
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(11,326
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)
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||||
Equity in income (loss) of unconsolidated joint ventures
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1,161
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(1,658
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)
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(751
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)
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(656
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)
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Homebuilding pretax income
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61,186
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3,006
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26,814
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24,174
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Financial services:
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Revenues
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8,014
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8,195
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2,983
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3,174
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Expenses
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(2,563
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)
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(2,235
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)
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(859
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)
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(764
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)
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||||
Equity in income (loss) of unconsolidated joint ventures
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(289
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)
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1,081
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(277
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)
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(6
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)
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Financial services pretax income
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5,162
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7,041
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1,847
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2,404
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Total pretax income
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66,348
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10,047
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28,661
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26,578
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Income tax benefit (expense)
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(800
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)
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1,800
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(300
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)
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700
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||||
Net income
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$
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65,548
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$
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11,847
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$
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28,361
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$
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27,278
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Earnings per share:
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Basic
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$
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.74
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$
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.14
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$
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.31
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|
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$
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.32
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Diluted
|
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$
|
.68
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$
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.14
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$
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.28
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$
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.30
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Weighted average shares outstanding:
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||||||||
Basic
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88,389
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82,261
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91,793
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83,714
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Diluted
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98,614
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84,289
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102,070
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94,047
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Cash dividends declared per common share
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$
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.0750
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$
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.0750
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$
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.0250
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$
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.0250
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August 31,
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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297,058
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$
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530,095
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Restricted cash
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32,456
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41,906
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Receivables
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117,425
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75,749
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Inventories
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3,240,320
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2,298,577
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Investments in unconsolidated joint ventures
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73,607
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130,192
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Other assets
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118,162
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107,076
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3,879,028
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3,183,595
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Financial services
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8,363
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10,040
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Total assets
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$
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3,887,391
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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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167,983
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$
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148,282
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Accrued expenses and other liabilities
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392,239
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356,176
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Mortgages and notes payable
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2,580,800
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2,150,498
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3,141,022
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2,654,956
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Financial services
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1,802
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2,593
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Common stock
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115,375
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115,296
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Paid-in capital
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665,840
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788,893
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Retained earnings
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540,755
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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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(445,976
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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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744,567
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536,086
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Total liabilities and stockholders’ equity
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$
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3,887,391
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$
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3,193,635
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Nine Months Ended August 31,
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||||||
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2014
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2013
|
||||
Cash flows from operating activities:
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|
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Net income
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$
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65,548
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$
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11,847
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Adjustments to reconcile net income to net cash used in operating activities:
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||||
Equity in (income) loss of unconsolidated joint ventures
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(872
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)
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577
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Distributions of earnings from unconsolidated joint ventures
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—
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1,638
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Amortization of discounts and issuance costs
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5,246
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|
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3,811
|
|
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Depreciation and amortization
|
1,677
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1,405
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Stock-based compensation
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5,959
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3,596
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|
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Inventory impairments and land option contract abandonments
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5,211
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|
|
284
|
|
||
Changes in assets and liabilities:
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|
||||
Receivables
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(27,754
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)
|
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(7,001
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)
|
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Inventories
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(784,457
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)
|
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(491,002
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)
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Accounts payable, accrued expenses and other liabilities
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20,388
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|
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72,315
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Other, net
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(7,608
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)
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1,071
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Net cash used in operating activities
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(716,662
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)
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(401,459
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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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(34,034
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)
|
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(10,056
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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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|
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Purchases of property and equipment, net
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(4,158
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)
|
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(1,359
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)
|
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Net cash used in investing activities
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(28,082
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)
|
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(11,415
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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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9,450
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|
|
731
|
|
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Proceeds from issuance of debt
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400,000
|
|
|
230,000
|
|
||
Payment of debt issuance costs
|
(5,448
|
)
|
|
(10,086
|
)
|
||
Payments on mortgages and land contracts due to land sellers and other loans
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(23,292
|
)
|
|
(44,405
|
)
|
||
Proceeds from issuance of common stock, net
|
137,045
|
|
|
109,503
|
|
||
Issuance of common stock under employee stock plans
|
202
|
|
|
2,147
|
|
||
Payments of cash dividends
|
(6,682
|
)
|
|
(6,272
|
)
|
||
Stock repurchases
|
(46
|
)
|
|
(7,967
|
)
|
||
Net cash provided by financing activities
|
511,229
|
|
|
273,651
|
|
||
Net decrease in cash and cash equivalents
|
(233,515
|
)
|
|
(139,223
|
)
|
||
Cash and cash equivalents at beginning of period
|
532,523
|
|
|
525,688
|
|
||
Cash and cash equivalents at end of period
|
$
|
299,008
|
|
|
$
|
386,465
|
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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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Nine Months Ended August 31,
|
|
Three Months Ended August 31,
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||||||||||||
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2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
||||||||
West Coast
|
|
$
|
707,532
|
|
|
$
|
746,232
|
|
|
$
|
265,491
|
|
|
$
|
266,638
|
|
Southwest
|
|
144,597
|
|
|
126,515
|
|
|
50,101
|
|
|
47,437
|
|
||||
Central
|
|
477,518
|
|
|
381,342
|
|
|
179,972
|
|
|
154,545
|
|
||||
Southeast
|
|
267,247
|
|
|
216,315
|
|
|
90,667
|
|
|
77,180
|
|
||||
Total homebuilding revenues
|
|
1,596,894
|
|
|
1,470,404
|
|
|
586,231
|
|
|
545,800
|
|
||||
Financial services
|
|
8,014
|
|
|
8,195
|
|
|
2,983
|
|
|
3,174
|
|
||||
Total
|
|
$
|
1,604,908
|
|
|
$
|
1,478,599
|
|
|
$
|
589,214
|
|
|
$
|
548,974
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pretax income (loss):
|
|
|
|
|
|
|
|
|
||||||||
West Coast
|
|
$
|
93,599
|
|
|
$
|
75,469
|
|
|
$
|
39,270
|
|
|
$
|
37,607
|
|
Southwest
|
|
7,599
|
|
|
2,026
|
|
|
2,543
|
|
|
1,185
|
|
||||
Central
|
|
24,806
|
|
|
11,569
|
|
|
11,514
|
|
|
9,085
|
|
||||
Southeast
|
|
(9,881
|
)
|
|
(35,012
|
)
|
|
(7,965
|
)
|
|
(9,920
|
)
|
||||
Corporate and other
|
|
(54,937
|
)
|
|
(51,046
|
)
|
|
(18,548
|
)
|
|
(13,783
|
)
|
||||
Total homebuilding pretax income
|
|
61,186
|
|
|
3,006
|
|
|
26,814
|
|
|
24,174
|
|
||||
Financial services
|
|
5,162
|
|
|
7,041
|
|
|
1,847
|
|
|
2,404
|
|
||||
Total
|
|
$
|
66,348
|
|
|
$
|
10,047
|
|
|
$
|
28,661
|
|
|
$
|
26,578
|
|
Equity in income (loss) of unconsolidated joint ventures:
|
|
|
|
|
|
|
|
|
||||||||
West Coast
|
|
$
|
(146
|
)
|
|
$
|
(109
|
)
|
|
$
|
(88
|
)
|
|
$
|
(36
|
)
|
Southwest
|
|
(1,984
|
)
|
|
(1,919
|
)
|
|
(663
|
)
|
|
(755
|
)
|
||||
Central
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Southeast
|
|
3,291
|
|
|
370
|
|
|
—
|
|
|
135
|
|
||||
Total
|
|
$
|
1,161
|
|
|
$
|
(1,658
|
)
|
|
$
|
(751
|
)
|
|
$
|
(656
|
)
|
|
|
Nine Months Ended August 31,
|
|
Three Months Ended August 31,
|
||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Land option contract abandonments:
|
|
|
|
|
|
|
|
|
||||||||
West Coast
|
|
$
|
554
|
|
|
$
|
284
|
|
|
$
|
451
|
|
|
$
|
—
|
|
Southwest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Central
|
|
995
|
|
|
—
|
|
|
562
|
|
|
—
|
|
||||
Southeast
|
|
254
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total
|
|
$
|
1,803
|
|
|
$
|
284
|
|
|
$
|
1,013
|
|
|
$
|
—
|
|
|
August 31,
2014 |
|
November 30,
2013 |
||||
Inventories:
|
|
|
|
||||
Homes under construction
|
|
|
|
||||
West Coast
|
$
|
564,945
|
|
|
$
|
275,516
|
|
Southwest
|
55,003
|
|
|
39,661
|
|
||
Central
|
213,011
|
|
|
157,572
|
|
||
Southeast
|
149,646
|
|
|
113,690
|
|
||
Subtotal
|
982,605
|
|
|
586,439
|
|
||
|
|
|
|
||||
Land under development
|
|
|
|
||||
West Coast
|
744,570
|
|
|
560,032
|
|
||
Southwest
|
332,056
|
|
|
106,654
|
|
||
Central
|
340,340
|
|
|
238,311
|
|
||
Southeast
|
224,035
|
|
|
161,919
|
|
||
Subtotal
|
1,641,001
|
|
|
1,066,916
|
|
||
|
|
|
|
||||
Land held for future development
|
|
|
|
||||
West Coast
|
332,000
|
|
|
308,636
|
|
||
Southwest
|
129,394
|
|
|
157,924
|
|
||
Central
|
24,357
|
|
|
15,193
|
|
||
Southeast
|
130,963
|
|
|
163,469
|
|
||
Subtotal
|
616,714
|
|
|
645,222
|
|
||
Total
|
$
|
3,240,320
|
|
|
$
|
2,298,577
|
|
|
August 31,
2014 |
|
November 30,
2013 |
||||
Investments in unconsolidated joint ventures:
|
|
|
|
||||
West Coast
|
$
|
54,673
|
|
|
$
|
40,246
|
|
Southwest
|
16,433
|
|
|
80,877
|
|
||
Central
|
—
|
|
|
—
|
|
||
Southeast
|
2,501
|
|
|
9,069
|
|
||
Total
|
$
|
73,607
|
|
|
$
|
130,192
|
|
|
|
|
|
||||
Assets:
|
|
|
|
||||
West Coast
|
$
|
1,755,721
|
|
|
$
|
1,230,761
|
|
Southwest
|
554,082
|
|
|
402,443
|
|
||
Central
|
656,333
|
|
|
465,547
|
|
||
Southeast
|
536,251
|
|
|
456,965
|
|
||
Corporate and other
|
376,641
|
|
|
627,879
|
|
||
Total homebuilding assets
|
3,879,028
|
|
|
3,183,595
|
|
||
Financial services
|
8,363
|
|
|
10,040
|
|
||
Total
|
$
|
3,887,391
|
|
|
$
|
3,193,635
|
|
3.
|
Financial Services
|
|
|
Nine Months Ended August 31,
|
|
Three Months Ended August 31,
|
||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Revenues
|
|
|
|
|
|
|
|
|
||||||||
Insurance commissions
|
|
$
|
4,364
|
|
|
$
|
4,677
|
|
|
$
|
1,832
|
|
|
$
|
1,887
|
|
Title services
|
|
2,503
|
|
|
2,165
|
|
|
904
|
|
|
836
|
|
||||
Marketing services fees
|
|
1,147
|
|
|
1,350
|
|
|
247
|
|
|
450
|
|
||||
Interest income
|
|
—
|
|
|
3
|
|
|
—
|
|
|
1
|
|
||||
Total
|
|
8,014
|
|
|
8,195
|
|
|
2,983
|
|
|
3,174
|
|
||||
Expenses
|
|
|
|
|
|
|
|
|
||||||||
General and administrative
|
|
(2,563
|
)
|
|
(2,235
|
)
|
|
(859
|
)
|
|
(764
|
)
|
||||
Operating income
|
|
5,451
|
|
|
5,960
|
|
|
2,124
|
|
|
2,410
|
|
||||
Equity in income (loss) of unconsolidated joint ventures (a)
|
|
(289
|
)
|
|
1,081
|
|
|
(277
|
)
|
|
(6
|
)
|
||||
Pretax income
|
|
$
|
5,162
|
|
|
$
|
7,041
|
|
|
$
|
1,847
|
|
|
$
|
2,404
|
|
(a)
|
Equity in loss of unconsolidated joint ventures for the three months and nine months ended August 31, 2014 primarily related to HCM. Equity in income of unconsolidated joint ventures for the nine months ended August 31, 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.
|
|
August 31,
2014 |
|
November 30,
2013 |
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,950
|
|
|
$
|
2,428
|
|
Receivables
|
956
|
|
|
2,084
|
|
||
Investments in unconsolidated joint ventures
|
5,180
|
|
|
5,490
|
|
||
Other assets
|
277
|
|
|
38
|
|
||
Total assets
|
$
|
8,363
|
|
|
$
|
10,040
|
|
Liabilities
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
1,802
|
|
|
$
|
2,593
|
|
Total liabilities
|
$
|
1,802
|
|
|
$
|
2,593
|
|
4.
|
Earnings Per Share
|
|
|
Nine Months Ended August 31,
|
|
Three Months Ended August 31,
|
||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
$
|
65,548
|
|
|
$
|
11,847
|
|
|
$
|
28,361
|
|
|
$
|
27,278
|
|
Less: Distributed earnings allocated to nonvested restricted stock
|
|
(18
|
)
|
|
(18
|
)
|
|
(6
|
)
|
|
(6
|
)
|
||||
Less: Undistributed earnings allocated to nonvested restricted stock
|
|
(159
|
)
|
|
(16
|
)
|
|
(73
|
)
|
|
(73
|
)
|
||||
Numerator for basic earnings per share
|
|
65,371
|
|
|
11,813
|
|
|
28,282
|
|
|
27,199
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
||||||||
Interest expense and amortization of debt issuance costs associated with convertible senior notes, net of taxes
|
|
2,000
|
|
|
—
|
|
|
667
|
|
|
667
|
|
||||
Add: Undistributed earnings allocated to nonvested restricted stock
|
|
159
|
|
|
16
|
|
|
73
|
|
|
73
|
|
||||
Less: Undistributed earnings reallocated to nonvested restricted stock
|
|
(142
|
)
|
|
(14
|
)
|
|
(66
|
)
|
|
(65
|
)
|
||||
Numerator for diluted earnings per share
|
|
$
|
67,388
|
|
|
$
|
11,815
|
|
|
$
|
28,956
|
|
|
$
|
27,874
|
|
Denominator:
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding — basic
|
|
88,389
|
|
|
82,261
|
|
|
91,793
|
|
|
83,714
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
||||||||
Share-based payments
|
|
1,823
|
|
|
2,028
|
|
|
1,875
|
|
|
1,931
|
|
||||
Convertible senior notes
|
|
8,402
|
|
|
—
|
|
|
8,402
|
|
|
8,402
|
|
||||
Weighted average shares outstanding — diluted
|
|
98,614
|
|
|
84,289
|
|
|
102,070
|
|
|
94,047
|
|
||||
Basic earnings per share
|
|
$
|
.74
|
|
|
$
|
.14
|
|
|
$
|
.31
|
|
|
$
|
.32
|
|
Diluted earnings per share
|
|
$
|
.68
|
|
|
$
|
.14
|
|
|
$
|
.28
|
|
|
$
|
.30
|
|
4.
|
Earnings Per Share (continued)
|
5.
|
Inventories
|
|
|
August 31,
2014 |
|
November 30, 2013
|
||||
Homes under construction
|
|
$
|
982,605
|
|
|
$
|
586,439
|
|
Land under development
|
|
1,641,001
|
|
|
1,066,916
|
|
||
Land held for future development
|
|
616,714
|
|
|
645,222
|
|
||
Total
|
|
$
|
3,240,320
|
|
|
$
|
2,298,577
|
|
|
|
Nine Months Ended August 31,
|
|
Three Months Ended August 31,
|
||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Capitalized interest at beginning of period
|
|
$
|
216,681
|
|
|
$
|
217,684
|
|
|
$
|
241,583
|
|
|
$
|
215,577
|
|
Interest incurred
|
|
127,041
|
|
|
102,256
|
|
|
44,603
|
|
|
34,345
|
|
||||
Interest expensed
|
|
(26,289
|
)
|
|
(41,073
|
)
|
|
(6,455
|
)
|
|
(11,326
|
)
|
||||
Interest amortized to construction and land costs
|
|
(59,471
|
)
|
|
(62,943
|
)
|
|
(21,769
|
)
|
|
(22,672
|
)
|
||||
Capitalized interest at end of period (a)
|
|
$
|
257,962
|
|
|
$
|
215,924
|
|
|
$
|
257,962
|
|
|
$
|
215,924
|
|
(a)
|
Capitalized interest amounts presented in the table reflect the gross amount of capitalized interest, as inventory impairment charges recognized, if any, 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)
|
7.
|
Variable Interest Entities
|
|
August 31, 2014
|
|
November 30, 2013
|
||||||||||||
|
Cash
Deposits
|
|
Aggregate
Purchase Price
|
|
Cash
Deposits
|
|
Aggregate
Purchase Price
|
||||||||
Unconsolidated VIEs
|
$
|
11,966
|
|
|
$
|
452,258
|
|
|
$
|
11,063
|
|
|
$
|
616,000
|
|
Other land option contracts and other similar contracts
|
28,499
|
|
|
451,871
|
|
|
30,502
|
|
|
535,496
|
|
||||
Total
|
$
|
40,465
|
|
|
$
|
904,129
|
|
|
$
|
41,565
|
|
|
$
|
1,151,496
|
|
8.
|
Investments in Unconsolidated Joint Ventures
|
8.
|
Investments in Unconsolidated Joint Ventures (continued)
|
|
Nine Months Ended August 31,
|
|
Three Months Ended August 31,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Revenues
|
$
|
6,118
|
|
|
$
|
11,908
|
|
|
$
|
—
|
|
|
$
|
5,552
|
|
Construction and land costs
|
(3,523
|
)
|
|
(7,391
|
)
|
|
—
|
|
|
(3,463
|
)
|
||||
Other expense, net
|
(3,088
|
)
|
|
(3,074
|
)
|
|
(1,050
|
)
|
|
(1,183
|
)
|
||||
Income (loss)
|
$
|
(493
|
)
|
|
$
|
1,443
|
|
|
$
|
(1,050
|
)
|
|
$
|
906
|
|
|
August 31,
2014 |
|
November 30,
2013 |
||||
Assets
|
|
|
|
||||
Cash
|
$
|
22,040
|
|
|
$
|
18,752
|
|
Receivables
|
4,872
|
|
|
4,902
|
|
||
Inventories
|
148,899
|
|
|
381,195
|
|
||
Other assets
|
149
|
|
|
1,183
|
|
||
Total assets
|
$
|
175,960
|
|
|
$
|
406,032
|
|
Liabilities and equity
|
|
|
|
||||
Accounts payable and other liabilities
|
$
|
11,973
|
|
|
$
|
85,386
|
|
Equity
|
163,987
|
|
|
320,646
|
|
||
Total liabilities and equity
|
$
|
175,960
|
|
|
$
|
406,032
|
|
|
August 31,
2014 |
|
November 30,
2013 |
||||
Number of investments in unconsolidated joint ventures
|
7
|
|
|
9
|
|
||
Investments in unconsolidated joint ventures
|
$
|
73,607
|
|
|
$
|
130,192
|
|
Number of unconsolidated joint venture lots controlled under land option contracts and other similar contracts
|
678
|
|
|
5,367
|
|
8.
|
Investments in Unconsolidated Joint Ventures (continued)
|
9.
|
Other Assets
|
|
August 31,
2014 |
|
November 30,
2013 |
||||
Cash surrender value of insurance contracts
|
$
|
70,763
|
|
|
$
|
68,534
|
|
Debt issuance costs
|
28,601
|
|
|
27,366
|
|
||
Property and equipment, net
|
10,936
|
|
|
8,460
|
|
||
Prepaid expenses
|
7,862
|
|
|
2,716
|
|
||
Total
|
$
|
118,162
|
|
|
$
|
107,076
|
|
10.
|
Accrued Expenses and Other Liabilities
|
|
August 31,
2014 |
|
November 30,
2013 |
||||
Employee compensation and related benefits
|
$
|
100,033
|
|
|
$
|
99,332
|
|
Self-insurance and other litigation liabilities
|
91,326
|
|
|
99,612
|
|
||
Accrued interest payable
|
71,539
|
|
|
45,562
|
|
||
Inventory-related obligations (a)
|
53,708
|
|
|
29,517
|
|
||
Warranty liability
|
42,396
|
|
|
48,704
|
|
||
Real estate and business taxes
|
10,639
|
|
|
8,131
|
|
||
Other
|
22,598
|
|
|
25,318
|
|
||
Total
|
$
|
392,239
|
|
|
$
|
356,176
|
|
(a)
|
The inventory-related obligations at August 31, 2014 included 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 first quarter of 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.
|
|
August 31,
2014 |
|
November 30,
2013 |
||||
Mortgages and land contracts due to land sellers and other loans
|
$
|
42,884
|
|
|
$
|
13,615
|
|
6 1/4% Senior notes due June 15, 2015
|
199,884
|
|
|
199,864
|
|
||
9.10% Senior notes due September 15, 2017
|
262,553
|
|
|
262,048
|
|
||
7 1/4% Senior notes due June 15, 2018
|
299,366
|
|
|
299,261
|
|
||
4.75% Senior notes due May 15, 2019
|
400,000
|
|
|
—
|
|
||
8.00% Senior notes due March 15, 2020
|
346,113
|
|
|
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
|
$
|
2,580,800
|
|
|
$
|
2,150,498
|
|
12.
|
Mortgages and Notes Payable (continued)
|
12.
|
Mortgages and Notes Payable (continued)
|
13.
|
Fair Value Disclosures
|
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
|
|
August 31,
2014 |
|
November 30,
2013 |
||||
Inventories (a)
|
|
Level 2
|
|
$
|
6,421
|
|
|
$
|
—
|
|
Inventories (a)
|
|
Level 3
|
|
—
|
|
|
1,143
|
|
||
Total
|
|
|
|
$
|
6,421
|
|
|
$
|
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)
|
|
|
|
August 31, 2014
|
|
November 30, 2013
|
||||||||||||
|
Fair Value
Hierarchy
|
|
Carrying
Value
|
|
Estimated
Fair Value
|
|
Carrying
Value
|
|
Estimated
Fair Value
|
||||||||
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||
Senior notes
|
Level 2
|
|
$
|
2,307,916
|
|
|
$
|
2,503,228
|
|
|
$
|
1,906,883
|
|
|
$
|
2,069,325
|
|
Convertible senior notes
|
Level 2
|
|
230,000
|
|
|
228,850
|
|
|
230,000
|
|
|
224,825
|
|
14.
|
Commitments and Contingencies
|
14.
|
Commitments and Contingencies (continued)
|
|
Nine Months Ended August 31,
|
|
Three Months Ended August 31,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Balance at beginning of period
|
$
|
48,704
|
|
|
$
|
47,822
|
|
|
$
|
40,937
|
|
|
$
|
53,475
|
|
Warranties issued
|
12,332
|
|
|
10,052
|
|
|
4,546
|
|
|
3,733
|
|
||||
Payments
|
(30,795
|
)
|
|
(30,867
|
)
|
|
(10,633
|
)
|
|
(12,654
|
)
|
||||
Adjustments (a)
|
12,155
|
|
|
23,478
|
|
|
7,546
|
|
|
5,931
|
|
||||
Balance at end of period
|
$
|
42,396
|
|
|
$
|
50,485
|
|
|
$
|
42,396
|
|
|
$
|
50,485
|
|
(a)
|
As discussed below, adjustments for the three months and nine months ended August 31, 2014 were primarily comprised of a reclassification of estimated minimum probable recoveries to receivables and a reclassification to establish a separate accrual for a water intrusion-related inquiry. These items had no impact on our consolidated statements of operations. Adjustments for the three months and nine months ended August 31, 2013 reflected net warranty charges associated with water intrusion-related issues in central and southwest Florida.
|
14.
|
Commitments and Contingencies (continued)
|
14.
|
Commitments and Contingencies (continued)
|
|
Nine Months Ended August 31,
|
|
Three Months Ended August 31,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Balance at beginning of period
|
$
|
92,214
|
|
|
$
|
93,349
|
|
|
$
|
90,458
|
|
|
$
|
90,630
|
|
Self-insurance expense (a)
|
8,761
|
|
|
5,490
|
|
|
3,108
|
|
|
2,083
|
|
||||
Payments, net of recoveries (b)
|
(12,666
|
)
|
|
(6,693
|
)
|
|
(5,257
|
)
|
|
(567
|
)
|
||||
Balance at end of period
|
$
|
88,309
|
|
|
$
|
92,146
|
|
|
$
|
88,309
|
|
|
$
|
92,146
|
|
(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 in the period we receive funds from subcontractors and/or their insurers.
|
14.
|
Commitments and Contingencies (continued)
|
15.
|
Legal Matters
|
15.
|
Legal Matters (continued)
|
16.
|
Stockholders’ Equity
|
|
|
Nine Months Ended August 31, 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
|
|
—
|
|
|
—
|
|
|
65,548
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
65,548
|
|
|||||||
Dividends on common stock
|
|
—
|
|
|
—
|
|
|
(6,682
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,682
|
)
|
|||||||
Employee stock options/other
|
|
25
|
|
|
177
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
202
|
|
|||||||
Conversion of liability awards to equity awards
|
|
—
|
|
|
6,455
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,455
|
|
|||||||
Restricted stock awards
|
|
54
|
|
|
(54
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Stock-based compensation
|
|
—
|
|
|
5,959
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,959
|
|
|||||||
Issuance of common stock
|
|
—
|
|
|
(135,590
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
272,635
|
|
|
137,045
|
|
|||||||
Stock repurchases
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(46
|
)
|
|
(46
|
)
|
|||||||
Balance at August 31, 2014
|
|
$
|
115,375
|
|
|
$
|
665,840
|
|
|
$
|
540,755
|
|
|
$
|
(17,516
|
)
|
|
$
|
(113,911
|
)
|
|
$
|
(445,976
|
)
|
|
$
|
744,567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended August 31, 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 income
|
|
—
|
|
|
—
|
|
|
11,847
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,847
|
|
|||||||
Dividends on common stock
|
|
—
|
|
|
—
|
|
|
(6,272
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,272
|
)
|
|||||||
Employee stock options/other
|
|
115
|
|
|
1,443
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,558
|
|
|||||||
Conversion of liability awards to equity awards
|
|
—
|
|
|
412
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,934
|
|
|
8,346
|
|
|||||||
Restricted stock awards
|
|
—
|
|
|
(325
|
)
|
|
—
|
|
|
—
|
|
|
325
|
|
|
—
|
|
|
—
|
|
|||||||
Stock-based compensation
|
|
—
|
|
|
3,596
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,596
|
|
|||||||
Issuance of common stock
|
|
—
|
|
|
(106,622
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
216,125
|
|
|
109,503
|
|
|||||||
Grantor stock ownership trust
|
|
—
|
|
|
305
|
|
|
—
|
|
|
—
|
|
|
284
|
|
|
—
|
|
|
589
|
|
|||||||
Stock repurchases
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,967
|
)
|
|
(7,967
|
)
|
|||||||
Balance at August 31, 2013
|
|
$
|
115,293
|
|
|
$
|
787,388
|
|
|
$
|
455,867
|
|
|
$
|
(27,958
|
)
|
|
$
|
(114,540
|
)
|
|
$
|
(718,044
|
)
|
|
$
|
498,006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
(25,000
|
)
|
|
8.02
|
|
|
Cancelled
|
(32,546
|
)
|
|
19.30
|
|
|
Options outstanding at end of period
|
10,474,392
|
|
|
$
|
21.15
|
|
Options exercisable at end of period
|
9,400,056
|
|
|
$
|
22.26
|
|
18.
|
Supplemental Disclosure to Consolidated Statements of Cash Flows
|
|
Nine Months Ended August 31,
|
||||||
|
2014
|
|
2013
|
||||
Summary of cash and cash equivalents at end of period:
|
|
|
|
||||
Homebuilding
|
$
|
297,058
|
|
|
$
|
383,314
|
|
Financial services
|
1,950
|
|
|
3,151
|
|
||
Total
|
$
|
299,008
|
|
|
$
|
386,465
|
|
|
|
||||||
Supplemental disclosures of cash flow information:
|
|
|
|
||||
Interest paid, net of amounts capitalized
|
$
|
312
|
|
|
$
|
34,902
|
|
Income taxes paid
|
1,537
|
|
|
623
|
|
||
Income taxes refunded
|
45
|
|
|
61
|
|
||
|
|
|
|
||||
Supplemental disclosures of noncash activities:
|
|
|
|
||||
Reclassification of warranty recoveries to receivables
|
$
|
12,794
|
|
|
$
|
—
|
|
Increase (decrease) in consolidated inventories not owned
|
(4,931
|
)
|
|
4,831
|
|
||
Increase in inventories due to distributions of land and land development from an unconsolidated joint venture
|
81,670
|
|
|
—
|
|
||
Inventories and inventory-related obligations associated with TIFE tied to distribution of land from an unconsolidated joint venture
|
33,197
|
|
|
—
|
|
||
Inventories acquired through seller financing
|
52,561
|
|
|
27,600
|
|
||
Conversion of liability awards to equity awards
|
6,455
|
|
|
8,346
|
|
19.
|
Supplemental Guarantor Information
|
19.
|
Supplemental Guarantor Information (continued)
|
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
1,557,252
|
|
|
$
|
47,656
|
|
|
$
|
—
|
|
|
$
|
1,604,908
|
|
Homebuilding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
1,557,252
|
|
|
$
|
39,642
|
|
|
$
|
—
|
|
|
$
|
1,596,894
|
|
Construction and land costs
|
—
|
|
|
(1,268,984
|
)
|
|
(36,274
|
)
|
|
—
|
|
|
(1,305,258
|
)
|
|||||
Selling, general and administrative expenses
|
(47,489
|
)
|
|
(146,607
|
)
|
|
(11,619
|
)
|
|
—
|
|
|
(205,715
|
)
|
|||||
Operating income (loss)
|
(47,489
|
)
|
|
141,661
|
|
|
(8,251
|
)
|
|
—
|
|
|
85,921
|
|
|||||
Interest income
|
385
|
|
|
7
|
|
|
1
|
|
|
—
|
|
|
393
|
|
|||||
Interest expense
|
(122,634
|
)
|
|
(4,408
|
)
|
|
—
|
|
|
100,753
|
|
|
(26,289
|
)
|
|||||
Intercompany interest
|
206,943
|
|
|
(105,892
|
)
|
|
(298
|
)
|
|
(100,753
|
)
|
|
—
|
|
|||||
Equity in income of unconsolidated joint ventures
|
—
|
|
|
1,161
|
|
|
—
|
|
|
—
|
|
|
1,161
|
|
|||||
Homebuilding pretax income (loss)
|
37,205
|
|
|
32,529
|
|
|
(8,548
|
)
|
|
—
|
|
|
61,186
|
|
|||||
Financial services pretax income
|
—
|
|
|
—
|
|
|
5,162
|
|
|
—
|
|
|
5,162
|
|
|||||
Total pretax income (loss)
|
37,205
|
|
|
32,529
|
|
|
(3,386
|
)
|
|
—
|
|
|
66,348
|
|
|||||
Income tax expense
|
(400
|
)
|
|
(400
|
)
|
|
—
|
|
|
—
|
|
|
(800
|
)
|
|||||
Equity in net income of subsidiaries
|
28,743
|
|
|
—
|
|
|
—
|
|
|
(28,743
|
)
|
|
—
|
|
|||||
Net income (loss)
|
$
|
65,548
|
|
|
$
|
32,129
|
|
|
$
|
(3,386
|
)
|
|
$
|
(28,743
|
)
|
|
$
|
65,548
|
|
19.
|
Supplemental Guarantor Information (continued)
|
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
1,434,836
|
|
|
$
|
43,763
|
|
|
$
|
—
|
|
|
$
|
1,478,599
|
|
Homebuilding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
1,434,836
|
|
|
$
|
35,568
|
|
|
$
|
—
|
|
|
$
|
1,470,404
|
|
Construction and land costs
|
—
|
|
|
(1,200,334
|
)
|
|
(32,310
|
)
|
|
—
|
|
|
(1,232,644
|
)
|
|||||
Selling, general and administrative expenses
|
(45,355
|
)
|
|
(136,703
|
)
|
|
(10,594
|
)
|
|
—
|
|
|
(192,652
|
)
|
|||||
Operating income (loss)
|
(45,355
|
)
|
|
97,799
|
|
|
(7,336
|
)
|
|
—
|
|
|
45,108
|
|
|||||
Interest income
|
607
|
|
|
18
|
|
|
4
|
|
|
—
|
|
|
629
|
|
|||||
Interest expense
|
(98,090
|
)
|
|
(4,167
|
)
|
|
—
|
|
|
61,184
|
|
|
(41,073
|
)
|
|||||
Intercompany interest
|
147,343
|
|
|
(86,909
|
)
|
|
750
|
|
|
(61,184
|
)
|
|
—
|
|
|||||
Equity in income (loss) of unconsolidated joint ventures
|
—
|
|
|
(1,659
|
)
|
|
1
|
|
|
—
|
|
|
(1,658
|
)
|
|||||
Homebuilding pretax income (loss)
|
4,505
|
|
|
5,082
|
|
|
(6,581
|
)
|
|
—
|
|
|
3,006
|
|
|||||
Financial services pretax income
|
—
|
|
|
—
|
|
|
7,041
|
|
|
—
|
|
|
7,041
|
|
|||||
Total pretax income
|
4,505
|
|
|
5,082
|
|
|
460
|
|
|
—
|
|
|
10,047
|
|
|||||
Income tax benefit
|
800
|
|
|
900
|
|
|
100
|
|
|
—
|
|
|
1,800
|
|
|||||
Equity in net income of subsidiaries
|
6,542
|
|
|
—
|
|
|
—
|
|
|
(6,542
|
)
|
|
—
|
|
|||||
Net income
|
$
|
11,847
|
|
|
$
|
5,982
|
|
|
$
|
560
|
|
|
$
|
(6,542
|
)
|
|
$
|
11,847
|
|
19.
|
Supplemental Guarantor Information (continued)
|
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
568,996
|
|
|
$
|
20,218
|
|
|
$
|
—
|
|
|
$
|
589,214
|
|
Homebuilding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
568,996
|
|
|
$
|
17,235
|
|
|
$
|
—
|
|
|
$
|
586,231
|
|
Construction and land costs
|
—
|
|
|
(464,162
|
)
|
|
(15,262
|
)
|
|
—
|
|
|
(479,424
|
)
|
|||||
Selling, general and administrative expenses
|
(15,995
|
)
|
|
(52,832
|
)
|
|
(4,070
|
)
|
|
—
|
|
|
(72,897
|
)
|
|||||
Operating income (loss)
|
(15,995
|
)
|
|
52,002
|
|
|
(2,097
|
)
|
|
—
|
|
|
33,910
|
|
|||||
Interest income
|
109
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
110
|
|
|||||
Interest expense
|
(42,955
|
)
|
|
(1,648
|
)
|
|
—
|
|
|
38,148
|
|
|
(6,455
|
)
|
|||||
Intercompany interest
|
76,512
|
|
|
(38,359
|
)
|
|
(5
|
)
|
|
(38,148
|
)
|
|
—
|
|
|||||
Equity in loss of unconsolidated joint ventures
|
—
|
|
|
(751
|
)
|
|
—
|
|
|
—
|
|
|
(751
|
)
|
|||||
Homebuilding pretax income (loss)
|
17,671
|
|
|
11,245
|
|
|
(2,102
|
)
|
|
—
|
|
|
26,814
|
|
|||||
Financial services pretax income
|
—
|
|
|
—
|
|
|
1,847
|
|
|
—
|
|
|
1,847
|
|
|||||
Total pretax income (loss)
|
17,671
|
|
|
11,245
|
|
|
(255
|
)
|
|
—
|
|
|
28,661
|
|
|||||
Income tax expense
|
(200
|
)
|
|
(100
|
)
|
|
—
|
|
|
—
|
|
|
(300
|
)
|
|||||
Equity in net income of subsidiaries
|
10,890
|
|
|
—
|
|
|
—
|
|
|
(10,890
|
)
|
|
—
|
|
|||||
Net income (loss)
|
$
|
28,361
|
|
|
$
|
11,145
|
|
|
$
|
(255
|
)
|
|
$
|
(10,890
|
)
|
|
$
|
28,361
|
|
19.
|
Supplemental Guarantor Information (continued)
|
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
533,593
|
|
|
$
|
15,381
|
|
|
$
|
—
|
|
|
$
|
548,974
|
|
Homebuilding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
533,593
|
|
|
$
|
12,207
|
|
|
$
|
—
|
|
|
$
|
545,800
|
|
Construction and land costs
|
—
|
|
|
(435,168
|
)
|
|
(11,213
|
)
|
|
—
|
|
|
(446,381
|
)
|
|||||
Selling, general and administrative expenses
|
(11,203
|
)
|
|
(48,706
|
)
|
|
(3,547
|
)
|
|
—
|
|
|
(63,456
|
)
|
|||||
Operating income (loss)
|
(11,203
|
)
|
|
49,719
|
|
|
(2,553
|
)
|
|
—
|
|
|
35,963
|
|
|||||
Interest income
|
178
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
193
|
|
|||||
Interest expense
|
(33,140
|
)
|
|
(1,204
|
)
|
|
—
|
|
|
23,018
|
|
|
(11,326
|
)
|
|||||
Intercompany interest
|
52,786
|
|
|
(29,486
|
)
|
|
(282
|
)
|
|
(23,018
|
)
|
|
—
|
|
|||||
Equity in income (loss) of unconsolidated joint ventures
|
—
|
|
|
(657
|
)
|
|
1
|
|
|
—
|
|
|
(656
|
)
|
|||||
Homebuilding pretax income (loss)
|
8,621
|
|
|
18,387
|
|
|
(2,834
|
)
|
|
—
|
|
|
24,174
|
|
|||||
Financial services pretax income
|
—
|
|
|
—
|
|
|
2,404
|
|
|
—
|
|
|
2,404
|
|
|||||
Total pretax income (loss)
|
8,621
|
|
|
18,387
|
|
|
(430
|
)
|
|
—
|
|
|
26,578
|
|
|||||
Income tax benefit
|
200
|
|
|
500
|
|
|
—
|
|
|
—
|
|
|
700
|
|
|||||
Equity in net income of subsidiaries
|
18,457
|
|
|
—
|
|
|
—
|
|
|
(18,457
|
)
|
|
—
|
|
|||||
Net income (loss)
|
$
|
27,278
|
|
|
$
|
18,887
|
|
|
$
|
(430
|
)
|
|
$
|
(18,457
|
)
|
|
$
|
27,278
|
|
19.
|
Supplemental Guarantor Information (continued)
|
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Homebuilding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
236,649
|
|
|
$
|
55,730
|
|
|
$
|
4,679
|
|
|
$
|
—
|
|
|
$
|
297,058
|
|
Restricted cash
|
32,456
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
32,456
|
|
|||||
Receivables
|
1,447
|
|
|
115,706
|
|
|
272
|
|
|
—
|
|
|
117,425
|
|
|||||
Inventories
|
—
|
|
|
3,197,073
|
|
|
43,247
|
|
|
—
|
|
|
3,240,320
|
|
|||||
Investments in unconsolidated joint ventures
|
—
|
|
|
73,607
|
|
|
—
|
|
|
—
|
|
|
73,607
|
|
|||||
Other assets
|
101,963
|
|
|
14,865
|
|
|
1,334
|
|
|
—
|
|
|
118,162
|
|
|||||
|
372,515
|
|
|
3,456,981
|
|
|
49,532
|
|
|
—
|
|
|
3,879,028
|
|
|||||
Financial services
|
—
|
|
|
—
|
|
|
8,363
|
|
|
—
|
|
|
8,363
|
|
|||||
Intercompany receivables
|
2,996,939
|
|
|
—
|
|
|
113,404
|
|
|
(3,110,343
|
)
|
|
—
|
|
|||||
Investments in subsidiaries
|
47,608
|
|
|
—
|
|
|
—
|
|
|
(47,608
|
)
|
|
—
|
|
|||||
Total assets
|
$
|
3,417,062
|
|
|
$
|
3,456,981
|
|
|
$
|
171,299
|
|
|
$
|
(3,157,951
|
)
|
|
$
|
3,887,391
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Homebuilding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable, accrued expenses and other liabilities
|
$
|
139,019
|
|
|
$
|
327,359
|
|
|
$
|
93,844
|
|
|
$
|
—
|
|
|
$
|
560,222
|
|
Mortgages and notes payable
|
2,512,806
|
|
|
67,994
|
|
|
—
|
|
|
—
|
|
|
2,580,800
|
|
|||||
|
2,651,825
|
|
|
395,353
|
|
|
93,844
|
|
|
—
|
|
|
3,141,022
|
|
|||||
Financial services
|
—
|
|
|
—
|
|
|
1,802
|
|
|
—
|
|
|
1,802
|
|
|||||
Intercompany payables
|
20,670
|
|
|
3,050,388
|
|
|
39,285
|
|
|
(3,110,343
|
)
|
|
—
|
|
|||||
Stockholders’ equity
|
744,567
|
|
|
11,240
|
|
|
36,368
|
|
|
(47,608
|
)
|
|
744,567
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
3,417,062
|
|
|
$
|
3,456,981
|
|
|
$
|
171,299
|
|
|
$
|
(3,157,951
|
)
|
|
$
|
3,887,391
|
|
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
|
$
|
65,951
|
|
|
$
|
(768,929
|
)
|
|
$
|
(13,684
|
)
|
|
$
|
—
|
|
|
$
|
(716,662
|
)
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Contributions to unconsolidated joint ventures
|
—
|
|
|
(34,034
|
)
|
|
—
|
|
|
—
|
|
|
(34,034
|
)
|
|||||
Proceeds from sale of investment in unconsolidated joint venture
|
—
|
|
|
10,110
|
|
|
—
|
|
|
—
|
|
|
10,110
|
|
|||||
Purchases of property and equipment, net
|
(131
|
)
|
|
(3,924
|
)
|
|
(103
|
)
|
|
—
|
|
|
(4,158
|
)
|
|||||
Intercompany
|
(840,539
|
)
|
|
—
|
|
|
—
|
|
|
840,539
|
|
|
—
|
|
|||||
Net cash used in investing activities
|
(840,670
|
)
|
|
(27,848
|
)
|
|
(103
|
)
|
|
840,539
|
|
|
(28,082
|
)
|
|||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Change in restricted cash
|
9,450
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,450
|
|
|||||
Proceeds from issuance of debt
|
400,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
400,000
|
|
|||||
Payment of debt issuance costs
|
(5,448
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,448
|
)
|
|||||
Payments on mortgages and land contracts due to land sellers and other loans
|
—
|
|
|
(23,292
|
)
|
|
—
|
|
|
—
|
|
|
(23,292
|
)
|
|||||
Proceeds from issuance of common stock, net
|
137,045
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
137,045
|
|
|||||
Issuance of common stock under employee stock plans
|
202
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
202
|
|
|||||
Payments of cash dividends
|
(6,682
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,682
|
)
|
|||||
Stock repurchases
|
(46
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(46
|
)
|
|||||
Intercompany
|
—
|
|
|
834,483
|
|
|
6,056
|
|
|
(840,539
|
)
|
|
—
|
|
|||||
Net cash provided by financing activities
|
534,521
|
|
|
811,191
|
|
|
6,056
|
|
|
(840,539
|
)
|
|
511,229
|
|
|||||
Net increase (decrease) in cash and cash equivalents
|
(240,198
|
)
|
|
14,414
|
|
|
(7,731
|
)
|
|
—
|
|
|
(233,515
|
)
|
|||||
Cash and cash equivalents at beginning of period
|
476,847
|
|
|
41,316
|
|
|
14,360
|
|
|
—
|
|
|
532,523
|
|
|||||
Cash and cash equivalents at end of period
|
$
|
236,649
|
|
|
$
|
55,730
|
|
|
$
|
6,629
|
|
|
$
|
—
|
|
|
$
|
299,008
|
|
19.
|
Supplemental Guarantor Information (continued)
|
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
25,657
|
|
|
$
|
(413,443
|
)
|
|
$
|
(13,673
|
)
|
|
$
|
—
|
|
|
$
|
(401,459
|
)
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Contributions to unconsolidated joint ventures
|
—
|
|
|
(5,063
|
)
|
|
(4,993
|
)
|
|
—
|
|
|
(10,056
|
)
|
|||||
Purchases of property and equipment, net
|
(346
|
)
|
|
(783
|
)
|
|
(230
|
)
|
|
—
|
|
|
(1,359
|
)
|
|||||
Intercompany
|
(493,419
|
)
|
|
—
|
|
|
—
|
|
|
493,419
|
|
|
—
|
|
|||||
Net cash used in investing activities
|
(493,765
|
)
|
|
(5,846
|
)
|
|
(5,223
|
)
|
|
493,419
|
|
|
(11,415
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Change in restricted cash
|
731
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
731
|
|
|||||
Proceeds from issuance of debt
|
230,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
230,000
|
|
|||||
Payment of debt issuance costs
|
(10,086
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,086
|
)
|
|||||
Payments on mortgages and land contracts due to land sellers and other loans
|
—
|
|
|
(44,405
|
)
|
|
—
|
|
|
—
|
|
|
(44,405
|
)
|
|||||
Proceeds from issuance of common stock, net
|
109,503
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
109,503
|
|
|||||
Issuance of common stock under employee stock plans
|
2,147
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,147
|
|
|||||
Payments of cash dividends
|
(6,272
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,272
|
)
|
|||||
Stock repurchases
|
(7,967
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,967
|
)
|
|||||
Intercompany
|
—
|
|
|
475,592
|
|
|
17,827
|
|
|
(493,419
|
)
|
|
—
|
|
|||||
Net cash provided by financing activities
|
318,056
|
|
|
431,187
|
|
|
17,827
|
|
|
(493,419
|
)
|
|
273,651
|
|
|||||
Net increase (decrease) in cash and cash equivalents
|
(150,052
|
)
|
|
11,898
|
|
|
(1,069
|
)
|
|
—
|
|
|
(139,223
|
)
|
|||||
Cash and cash equivalents at beginning of period
|
457,007
|
|
|
54,205
|
|
|
14,476
|
|
|
—
|
|
|
525,688
|
|
|||||
Cash and cash equivalents at end of period
|
$
|
306,955
|
|
|
$
|
66,103
|
|
|
$
|
13,407
|
|
|
$
|
—
|
|
|
$
|
386,465
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Nine Months Ended August 31,
|
|
Three Months Ended August 31,
|
||||||||||||||||||
|
2014
|
|
2013
|
|
Variance
|
|
2014
|
|
2013
|
|
Variance
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Homebuilding
|
$
|
1,596,894
|
|
|
$
|
1,470,404
|
|
|
9
|
%
|
|
$
|
586,231
|
|
|
$
|
545,800
|
|
|
7
|
%
|
Financial services
|
8,014
|
|
|
8,195
|
|
|
(2
|
)
|
|
2,983
|
|
|
3,174
|
|
|
(6
|
)
|
||||
Total
|
$
|
1,604,908
|
|
|
$
|
1,478,599
|
|
|
9
|
%
|
|
$
|
589,214
|
|
|
$
|
548,974
|
|
|
7
|
%
|
Pretax income:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Homebuilding
|
$
|
61,186
|
|
|
$
|
3,006
|
|
|
(a)
|
|
$
|
26,814
|
|
|
$
|
24,174
|
|
|
11
|
%
|
|
Financial services
|
5,162
|
|
|
7,041
|
|
|
(27
|
)%
|
|
1,847
|
|
|
2,404
|
|
|
(23
|
)
|
||||
Total pretax income
|
66,348
|
|
|
10,047
|
|
|
560
|
|
|
28,661
|
|
|
26,578
|
|
|
8
|
|
||||
Income tax benefit (expense)
|
(800
|
)
|
|
1,800
|
|
|
(a)
|
|
(300
|
)
|
|
700
|
|
|
(a)
|
||||||
Net income
|
$
|
65,548
|
|
|
$
|
11,847
|
|
|
453
|
%
|
|
$
|
28,361
|
|
|
$
|
27,278
|
|
|
4
|
%
|
Basic earnings per share
|
$
|
.74
|
|
|
$
|
.14
|
|
|
429
|
%
|
|
$
|
.31
|
|
|
$
|
.32
|
|
|
(3
|
)%
|
Diluted earnings per share
|
$
|
.68
|
|
|
$
|
.14
|
|
|
386
|
%
|
|
$
|
.28
|
|
|
$
|
.30
|
|
|
(7
|
)%
|
•
|
Revenues.
Total revenues of
$589.2 million
for the three months ended
August 31, 2014
increased
7%
from
$549.0 million
for the three months ended
August 31, 2013
, reflecting growth in our housing revenues. Housing revenues for the 2014 third quarter rose
7%
to
$586.2 million
from
$545.8 million
for the year-earlier quarter due to an increase in our overall average selling price that was partly offset by a decrease in 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. Our total revenues for the three months ended
August 31, 2014
and 2013 included financial services revenues of
$3.0 million
and
$3.2 million
, respectively.
|
◦
|
Homes Delivered.
We delivered
1,793
homes in the three months ended August 31, 2014, down
2%
from
1,825
homes delivered in the year-earlier period.
|
◦
|
Average Selling Price.
Our overall average selling price of homes delivered increased to
$327,000
for the third quarter of 2014, up
9%
from
$299,100
for the corresponding quarter of 2013.
|
•
|
Operating Income.
Our homebuilding operating income of
$33.9 million
for the three months ended
August 31, 2014
decreased
$2.1 million
from
$36.0 million
for the year-earlier quarter. In the current quarter, our homebuilding operating income included a
$3.4 million
impairment charge related to a planned future land sale and
$1.0 million
of land option contract abandonment charges. In the third quarter of 2013, our homebuilding operating income included a net warranty charge of
$5.9 million
associated with water intrusion-related repairs of homes at certain of our communities in central and southwest Florida. As a percentage of homebuilding revenues, our homebuilding operating income declined
80
basis points to
5.8%
for the three months ended August 31, 2014 from
6.6%
for the year-earlier period.
|
◦
|
Housing Gross Profits.
Housing gross profits rose
11%
to
$110.2 million
for the three months ended
August 31, 2014
from
$99.4 million
for the year-earlier period. Included in our third quarter housing gross profits were the above-mentioned land option contract abandonment charges in 2014 and net warranty charge in 2013. Our housing gross profit margin improved
60
basis points to
18.8%
in the current quarter from
18.2%
in the third quarter of 2013. Excluding the above-mentioned charges, our adjusted third quarter housing gross margin was
19.0%
in 2014 and
19.3%
in 2013. 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.”
|
◦
|
Selling, General and Administrative Expenses.
Our selling, general and administrative expenses increased to
$72.9 million
for the three months ended
August 31, 2014
from
$63.5 million
for the year-earlier period. As a percentage of housing revenues, selling, general and administrative expenses rose
80
basis points to
12.4%
for the quarter ended
August 31, 2014
, from
11.6%
for the year-earlier quarter, which largely reflected an offset to expense of $6.2 million in the 2013 third quarter associated with then-outstanding cash-settled equity-based compensation awards.
|
•
|
Interest Expense.
Interest expense of
$6.5 million
for the three months ended
August 31, 2014
decreased from
$11.3 million
for the year-earlier period, reflecting an increase in the amount of interest capitalized in the current period.
|
•
|
Net Income.
Net income totaled
$28.4 million
, or
$.28
per diluted share, for the three months ended
August 31, 2014
, compared to
$27.3 million
, or
$.30
per diluted share, for the three months ended
August 31, 2013
, reflecting our revenue growth, expanded housing gross profit margin and lower interest expense, partly offset by a higher selling, general and administrative expense ratio and the above-mentioned impairment charge for the planned future land sale. In the third quarter of 2014, our net income also included income tax expense of
$.3 million
. Net income in the third quarter of 2013 included the net water intrusion-related charge mentioned above and an income tax benefit of
$.7 million
.
|
•
|
Revenues.
Total revenues of
$1.60 billion
for the nine months ended
August 31, 2014
increased
9%
from
$1.48 billion
for the year-earlier period due to higher housing and land sale revenues in the 2014 period. Housing revenues rose
8%
to
$1.59 billion
for the first nine months of 2014 from
$1.47 billion
for the corresponding period of 2013, reflecting an increase in our overall average selling price that was partly offset by a decrease in the number of homes delivered. Land sale revenues for the nine months ended August 31, 2014 totaled
$10.7 million
. We had no land sales in the year-earlier period. Our total revenues for the nine months ended August 31, 2014 and 2013 included financial services revenues of
$8.0 million
and
$8.2 million
, respectively.
|
◦
|
Homes Delivered.
We delivered
4,986
homes in the first nine months of 2014, down
2%
from
5,107
homes delivered in the year-earlier period.
|
◦
|
Average Selling Price.
Our overall average selling price of homes delivered increased
10%
to
$318,100
for the first nine months of 2014 from
$287,900
for the year-earlier period.
|
•
|
Net Income.
Net income increased to
$65.5 million
, or
$.68
per diluted share, for the nine months ended
August 31, 2014
, compared to
$11.8 million
, or
$.14
per diluted share, for the nine months ended
August 31, 2013
. In the nine months ended August 31, 2014, our net income included inventory impairment and land option contract abandonment charges of
$5.2 million
and income tax expense of
$.8 million
, which were partly offset by a
$3.2 million
gain on the sale of our interest in an unconsolidated joint venture in Maryland. Our net income for the nine months ended August 31, 2013 included net water intrusion-related charges of
$23.5 million
, land option contract abandonment charges of
$.3 million
and an income tax benefit of
$1.8 million
.
|
•
|
Cash, Cash Equivalents and Restricted Cash.
Our cash, cash equivalents and restricted cash totaled
$329.5 million
at
August 31, 2014
, compared to
$572.0 million
at
November 30, 2013
. Of our total cash, cash equivalents and restricted cash at
August 31, 2014
and November 30, 2013,
$297.1 million
and
$530.1 million
, respectively, was unrestricted. The decrease in total cash, cash equivalents and restricted cash was primarily due to our investments in land and land development during the nine months ended
August 31, 2014
, partly offset by total net proceeds of
$531.6 million
from the underwritten public issuance of the 4.75% Senior Notes due 2019 and the 2014 Common Stock Offering. Our operating activities used net cash of
$716.7 million
in the first nine months of 2014, up from
$401.5 million
of net cash used in the corresponding period of 2013, largely due to our investments in land and land development, which drove our inventories higher at
August 31, 2014
compared to the November 30, 2013 level.
|
•
|
Inventories.
Reflecting our investments in land and land development of
$1.19 billion
and the distributions of land and land
development we received from Inspirada during the nine months ended
August 31, 2014
, our inventory balance of
$3.24 billion
at
August 31, 2014
increased
41%
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 nine months ended
August 31, 2014
, the majority of which were made in our West Coast homebuilding reporting segment. With our substantial inventory investments, the number of lots we owned at August 31, 2014 increased to
42,316
, up
10%
from
38,355
lots owned at November 30, 2013, and up
13%
from
37,374
lots owned at August 31, 2013. However, due to our land option contract abandonments, our 2014 third quarter land inventory portfolio of
54,081
lots owned or controlled decreased
3%
from the
55,877
lots owned or controlled at August 31, 2013, and
11%
from the
61,095
lots owned or controlled at November 30, 2013.
|
•
|
Investments in Unconsolidated Joint Ventures.
Our investments in unconsolidated joint ventures decreased to
$73.6 million
at
August 31, 2014
from
$130.2 million
at November 30, 2013, primarily due to
$81.7 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 we made to several of our unconsolidated joint ventures during the nine months ended
August 31, 2014
.
|
•
|
Mortgages and Notes Payable.
Our debt balance increased to
$2.58 billion
at
August 31, 2014
from
$2.15 billion
at
November 30, 2013
, reflecting the underwritten public issuance of the 4.75% Senior Notes due 2019 during the 2014 second quarter. Our ratio of debt to capital was
77.6%
at
August 31, 2014
, compared to
80.0%
at
November 30, 2013
. Our ratio of net debt to capital (a calculation that is described below under “Non-GAAP Financial Measures”) was
75.1%
at
August 31, 2014
, compared to
74.6%
at
November 30, 2013
.
|
•
|
Stockholders’ Equity.
Our stockholders’ equity increased to $
744.6 million
at
August 31, 2014
from
$536.1 million
at
November 30, 2013, primarily due to the net income we generated for the nine months ended
August 31, 2014
and the 2014 Common Stock Offering.
|
•
|
Net Orders.
Net orders from our homebuilding operations increased
5%
to
1,827
for the three months ended August 31, 2014, up from
1,736
for the year-earlier period. The year-over-year growth in net orders resulted from our higher average community count and our emphasis on balancing home selling prices and the pace of net orders to optimize the performance of our new home communities.
|
◦
|
The year-over-year increase in our total net orders reflected increases of
24%
in our West Coast homebuilding reporting segment and
10%
in our Southwest homebuilding reporting segment that were partly offset by a decrease of
8%
in our Southeast homebuilding reporting segment. Net orders from our Central homebuilding reporting segment were flat with the year-earlier quarter.
|
◦
|
The value of the net orders we generated in the third quarter of 2014 increased
19%
to
$629.2 million
from
$528.9 million
in the year-earlier period.
|
◦
|
Three of our four homebuilding reporting segments generated year-over-year increases in net order value in the third quarter of 2014, with our West Coast homebuilding reporting segment up
35%
to
$305.8 million
, our Southwest homebuilding reporting segment up
13%
to
$50.7 million
and our Central homebuilding reporting segment up
11%
to
$178.7 million
. In our Southeast homebuilding reporting segment, the value of net orders generated in the 2014 third quarter decreased
2%
from the year-earlier quarter to
$94.1 million
.
|
◦
|
For the nine months ended August 31, our net orders increased
5%
to
5,861
in 2014 from
5,569
in 2013. The value of the net orders we generated in the first nine months of 2014 rose
19%
to
$1.99 billion
from
$1.68 billion
in the year-earlier period.
|
◦
|
Our third quarter cancellation rate was
31%
in 2014 and
33%
in 2013. For the nine months ended August 31, 2014, our cancellation rate of
29%
was basically flat compared to the year-earlier period. 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
August 31, 2014
was comprised of
3,432
homes, representing potential future housing revenues of
$1.10 billion
, and at
August 31, 2013
was comprised of
3,039
homes, representing potential future housing revenues of
$808.5 million
. The number of homes in our backlog increased
13%
year over year, reflecting the
5%
year-over-year increase in our net orders for the nine months ended August 31, 2014. Our backlog at August 31, 2014 also included some homes whose expected delivery in the third quarter was deferred to the fourth quarter for the reasons discussed below under “Homebuilding.” The potential future housing revenues in our backlog at
August 31, 2014
rose
37%
from
August 31, 2013
, reflecting the increased number of homes in our backlog and a higher average selling price.
|
|
|
Nine Months Ended August 31,
|
|
Three Months Ended August 31,
|
||||||||||||
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net orders
|
|
5,861
|
|
|
5,569
|
|
|
1,827
|
|
|
1,736
|
|
||||
Net order value
|
|
$
|
1,992,576
|
|
|
$
|
1,675,363
|
|
|
$
|
629,248
|
|
|
$
|
528,922
|
|
Cancellation rate
|
|
29
|
%
|
|
30
|
%
|
|
31
|
%
|
|
33
|
%
|
||||
Ending backlog — homes
|
|
3,432
|
|
|
3,039
|
|
|
3,432
|
|
|
3,039
|
|
||||
Ending backlog — value
|
|
$
|
1,104,140
|
|
|
$
|
808,483
|
|
|
$
|
1,104,140
|
|
|
$
|
808,483
|
|
Ending community count
|
|
200
|
|
|
189
|
|
|
200
|
|
|
189
|
|
||||
Average community count
|
|
193
|
|
|
179
|
|
|
197
|
|
|
187
|
|
|
Nine Months Ended August 31,
|
|
Three Months Ended August 31,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Housing
|
$
|
1,586,173
|
|
|
$
|
1,470,404
|
|
|
$
|
586,231
|
|
|
$
|
545,800
|
|
Land
|
10,721
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total
|
1,596,894
|
|
|
1,470,404
|
|
|
586,231
|
|
|
545,800
|
|
||||
Costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Construction and land costs
|
|
|
|
|
|
|
|
||||||||
Housing
|
(1,292,224
|
)
|
|
(1,232,644
|
)
|
|
(476,016
|
)
|
|
(446,381
|
)
|
||||
Land
|
(13,034
|
)
|
|
—
|
|
|
(3,408
|
)
|
|
—
|
|
||||
Total
|
(1,305,258
|
)
|
|
(1,232,644
|
)
|
|
(479,424
|
)
|
|
(446,381
|
)
|
||||
Selling, general and administrative expenses
|
(205,715
|
)
|
|
(192,652
|
)
|
|
(72,897
|
)
|
|
(63,456
|
)
|
||||
Total
|
(1,510,973
|
)
|
|
(1,425,296
|
)
|
|
(552,321
|
)
|
|
(509,837
|
)
|
||||
Operating income
|
$
|
85,921
|
|
|
$
|
45,108
|
|
|
$
|
33,910
|
|
|
$
|
35,963
|
|
Homes delivered
|
4,986
|
|
|
5,107
|
|
|
1,793
|
|
|
1,825
|
|
||||
Average selling price
|
$
|
318,100
|
|
|
$
|
287,900
|
|
|
$
|
327,000
|
|
|
$
|
299,100
|
|
Housing gross profit margin as a percentage of housing revenues
|
18.5
|
%
|
|
16.2
|
%
|
|
18.8
|
%
|
|
18.2
|
%
|
||||
Adjusted housing gross profit margin as a percentage of housing revenues
|
18.6
|
%
|
|
17.8
|
%
|
|
19.0
|
%
|
|
19.3
|
%
|
||||
Selling, general and administrative expenses as a percentage of housing revenues
|
13.0
|
%
|
|
13.1
|
%
|
|
12.4
|
%
|
|
11.6
|
%
|
||||
Operating income as a percentage of homebuilding revenues
|
5.4
|
%
|
|
3.1
|
%
|
|
5.8
|
%
|
|
6.6
|
%
|
|
|
Nine Months Ended August 31,
|
||||||||||||||||
|
|
Homes Delivered
|
|
Net Orders
|
|
Cancellation Rate
|
||||||||||||
Segment
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||
West Coast
|
|
1,288
|
|
|
1,658
|
|
|
1,618
|
|
|
1,544
|
|
|
20
|
%
|
|
23
|
%
|
Southwest
|
|
521
|
|
|
545
|
|
|
590
|
|
|
568
|
|
|
25
|
|
|
23
|
|
Central
|
|
2,167
|
|
|
1,965
|
|
|
2,587
|
|
|
2,364
|
|
|
35
|
|
|
37
|
|
Southeast
|
|
1,010
|
|
|
939
|
|
|
1,066
|
|
|
1,093
|
|
|
30
|
|
|
27
|
|
Total
|
|
4,986
|
|
|
5,107
|
|
|
5,861
|
|
|
5,569
|
|
|
29
|
%
|
|
30
|
%
|
|
|
Nine Months Ended August 31,
|
||||||||||||||||||
|
|
Net Order Value
|
|
Average Community Count
|
||||||||||||||||
Segment
|
|
2014
|
|
2013
|
|
Variance
|
|
2014
|
|
2013
|
|
Variance
|
||||||||
West Coast
|
|
$
|
949,794
|
|
|
$
|
781,230
|
|
|
22
|
%
|
|
42
|
|
|
40
|
|
|
5
|
%
|
Southwest
|
|
155,592
|
|
|
137,837
|
|
|
13
|
|
|
19
|
|
|
17
|
|
|
12
|
|
||
Central
|
|
598,011
|
|
|
492,679
|
|
|
21
|
|
|
82
|
|
|
82
|
|
|
—
|
|
||
Southeast
|
|
289,179
|
|
|
263,617
|
|
|
10
|
|
|
50
|
|
|
40
|
|
|
25
|
|
||
Total
|
|
$
|
1,992,576
|
|
|
$
|
1,675,363
|
|
|
19
|
%
|
|
193
|
|
|
179
|
|
|
8
|
%
|
|
|
Three Months Ended August 31,
|
||||||||||||||||
|
|
Homes Delivered
|
|
Net Orders
|
|
Cancellation Rates
|
||||||||||||
Segment
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||
West Coast
|
|
458
|
|
|
555
|
|
|
529
|
|
|
427
|
|
|
19
|
%
|
|
25
|
%
|
Southwest
|
|
185
|
|
|
194
|
|
|
198
|
|
|
180
|
|
|
24
|
|
|
24
|
|
Central
|
|
807
|
|
|
757
|
|
|
745
|
|
|
743
|
|
|
38
|
|
|
41
|
|
Southeast
|
|
343
|
|
|
319
|
|
|
355
|
|
|
386
|
|
|
32
|
|
|
27
|
|
Total
|
|
1,793
|
|
|
1,825
|
|
|
1,827
|
|
|
1,736
|
|
|
31
|
%
|
|
33
|
%
|
|
|
Three Months Ended August 31,
|
||||||||||||||||||
|
|
Net Order Value
|
|
Average Community Count
|
||||||||||||||||
Segment
|
|
2014
|
|
2013
|
|
Variance
|
|
2014
|
|
2013
|
|
Variance
|
||||||||
West Coast
|
|
$
|
305,840
|
|
|
$
|
227,119
|
|
|
35
|
%
|
|
40
|
|
|
40
|
|
|
—
|
%
|
Southwest
|
|
50,692
|
|
|
44,885
|
|
|
13
|
|
|
20
|
|
|
19
|
|
|
5
|
|
||
Central
|
|
178,657
|
|
|
160,566
|
|
|
11
|
|
|
83
|
|
|
83
|
|
|
—
|
|
||
Southeast
|
|
94,059
|
|
|
96,352
|
|
|
(2
|
)
|
|
54
|
|
|
45
|
|
|
20
|
|
||
Total
|
|
$
|
629,248
|
|
|
$
|
528,922
|
|
|
19
|
%
|
|
197
|
|
|
187
|
|
|
5
|
%
|
|
|
August 31,
|
||||||||||||||||||
|
|
Backlog – Homes
|
|
Backlog – Value
|
||||||||||||||||
Segment
|
|
2014
|
|
2013
|
|
Variance
|
|
2014
|
|
2013
|
|
Variance
|
||||||||
West Coast
|
|
750
|
|
|
570
|
|
|
32
|
%
|
|
$
|
463,643
|
|
|
$
|
276,031
|
|
|
68
|
%
|
Southwest
|
|
257
|
|
|
206
|
|
|
25
|
|
|
69,621
|
|
|
48,646
|
|
|
43
|
|
||
Central
|
|
1,768
|
|
|
1,548
|
|
|
14
|
|
|
396,838
|
|
|
315,900
|
|
|
26
|
|
||
Southeast
|
|
657
|
|
|
715
|
|
|
(8
|
)
|
|
174,038
|
|
|
167,906
|
|
|
4
|
|
||
Total
|
|
3,432
|
|
|
3,039
|
|
|
13
|
%
|
|
$
|
1,104,140
|
|
|
$
|
808,483
|
|
|
37
|
%
|
|
Nine Months Ended August 31,
|
|
Three Months Ended August 31,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Inventory impairment and option contract abandonment charges
|
$
|
5,211
|
|
|
$
|
284
|
|
|
$
|
4,421
|
|
|
$
|
—
|
|
Water intrusion-related charges
|
—
|
|
|
23,478
|
|
|
—
|
|
|
5,931
|
|
||||
Total
|
$
|
5,211
|
|
|
$
|
23,762
|
|
|
$
|
4,421
|
|
|
$
|
5,931
|
|
|
Nine Months Ended August 31,
|
|
Three Months Ended August 31,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Inventory impairments:
|
|
|
|
|
|
|
|
||||||||
Number of communities or land parcels evaluated for recoverability (a)
|
42
|
|
|
54
|
|
|
20
|
|
|
16
|
|
||||
Number of communities or land parcels impaired
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Pre-impairment carrying value of communities or land parcels impaired
|
$
|
9,829
|
|
|
$
|
—
|
|
|
$
|
9,829
|
|
|
$
|
—
|
|
Inventory impairment charges
|
(3,408
|
)
|
|
—
|
|
|
(3,408
|
)
|
|
—
|
|
||||
Post-impairment fair value
|
$
|
6,421
|
|
|
$
|
—
|
|
|
$
|
6,421
|
|
|
$
|
—
|
|
(a)
|
Some of the communities or land parcels evaluated during the nine months ended August 31, 2014 and 2013 were evaluated in more than one quarterly period.
|
|
0-2 years
|
|
3-5 years
|
|
6-10 years
|
|
Greater than
10 years
|
|
Total
|
||||||||||
Inventories
|
$
|
1,408.4
|
|
|
$
|
1,202.8
|
|
|
$
|
415.7
|
|
|
$
|
213.4
|
|
|
$
|
3,240.3
|
|
|
Nine Months Ended August 31,
|
|
Three Months Ended August 31,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Housing revenues
|
$
|
1,586,173
|
|
|
$
|
1,470,404
|
|
|
$
|
586,231
|
|
|
$
|
545,800
|
|
Housing construction and land costs
|
(1,292,224
|
)
|
|
(1,232,644
|
)
|
|
(476,016
|
)
|
|
(446,381
|
)
|
||||
Housing gross profits
|
293,949
|
|
|
237,760
|
|
|
110,215
|
|
|
99,419
|
|
||||
Add: Land option contract abandonment charges
|
1,803
|
|
|
284
|
|
|
1,013
|
|
|
—
|
|
||||
Water intrusion-related charges
|
—
|
|
|
23,478
|
|
|
—
|
|
|
5,931
|
|
||||
Adjusted housing gross profits
|
$
|
295,752
|
|
|
$
|
261,522
|
|
|
$
|
111,228
|
|
|
$
|
105,350
|
|
Housing gross profit margin as a percentage of housing revenues
|
18.5
|
%
|
|
16.2
|
%
|
|
18.8
|
%
|
|
18.2
|
%
|
||||
Adjusted housing gross profit margin as a percentage of housing revenues
|
18.6
|
%
|
|
17.8
|
%
|
|
19.0
|
%
|
|
19.3
|
%
|
|
August 31,
2014 |
|
November 30,
2013 |
||||
Mortgages and notes payable
|
$
|
2,580,800
|
|
|
$
|
2,150,498
|
|
Stockholders’ equity
|
744,567
|
|
|
536,086
|
|
||
Total capital
|
$
|
3,325,367
|
|
|
$
|
2,686,584
|
|
Ratio of debt to capital
|
77.6
|
%
|
|
80.0
|
%
|
||
|
|
|
|
||||
Mortgages and notes payable
|
$
|
2,580,800
|
|
|
$
|
2,150,498
|
|
Less: Cash and cash equivalents and restricted cash
|
(329,514
|
)
|
|
(572,001
|
)
|
||
Net debt
|
2,251,286
|
|
|
1,578,497
|
|
||
Stockholders’ equity
|
744,567
|
|
|
536,086
|
|
||
Total capital
|
$
|
2,995,853
|
|
|
$
|
2,114,583
|
|
Ratio of net debt to capital
|
75.1
|
%
|
|
74.6
|
%
|
|
Nine Months Ended August 31,
|
|
Three Months Ended August 31,
|
|
Variance
|
||||||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Nine Months
|
|
Three Months
|
||||||||||
West Coast:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
707,532
|
|
|
$
|
746,232
|
|
|
$
|
265,491
|
|
|
$
|
266,638
|
|
|
(5
|
)%
|
|
—
|
%
|
Construction and land costs
|
(554,871
|
)
|
|
(598,638
|
)
|
|
(206,535
|
)
|
|
(206,635
|
)
|
|
7
|
|
|
—
|
|
||||
Selling, general and administrative expenses
|
(47,966
|
)
|
|
(54,198
|
)
|
|
(17,368
|
)
|
|
(18,402
|
)
|
|
11
|
|
|
6
|
|
||||
Operating income
|
104,695
|
|
|
93,396
|
|
|
41,588
|
|
|
41,601
|
|
|
12
|
|
|
—
|
|
||||
Other expense, net
|
(11,096
|
)
|
|
(17,927
|
)
|
|
(2,318
|
)
|
|
(3,994
|
)
|
|
38
|
|
|
42
|
|
||||
Pretax income
|
$
|
93,599
|
|
|
$
|
75,469
|
|
|
$
|
39,270
|
|
|
$
|
37,607
|
|
|
24
|
%
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Southwest:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
144,597
|
|
|
$
|
126,515
|
|
|
$
|
50,101
|
|
|
$
|
47,437
|
|
|
14
|
%
|
|
6
|
%
|
Construction and land costs
|
(112,447
|
)
|
|
(97,830
|
)
|
|
(39,691
|
)
|
|
(36,917
|
)
|
|
(15
|
)
|
|
(8
|
)
|
||||
Selling, general and administrative expenses
|
(16,112
|
)
|
|
(12,554
|
)
|
|
(5,671
|
)
|
|
(4,692
|
)
|
|
(28
|
)
|
|
(21
|
)
|
||||
Operating income
|
16,038
|
|
|
16,131
|
|
|
4,739
|
|
|
5,828
|
|
|
(1
|
)
|
|
(19
|
)
|
||||
Other expense, net
|
(8,439
|
)
|
|
(14,105
|
)
|
|
(2,196
|
)
|
|
(4,643
|
)
|
|
40
|
|
|
53
|
|
||||
Pretax income
|
$
|
7,599
|
|
|
$
|
2,026
|
|
|
$
|
2,543
|
|
|
$
|
1,185
|
|
|
275
|
%
|
|
115
|
%
|
|
Nine Months Ended August 31,
|
|
Three Months Ended August 31,
|
|
Variance
|
||||||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Nine Months
|
|
Three Months
|
||||||||||
Central:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
477,518
|
|
|
$
|
381,342
|
|
|
$
|
179,972
|
|
|
$
|
154,545
|
|
|
25
|
%
|
|
16
|
%
|
Construction and land costs
|
(400,335
|
)
|
|
(321,865
|
)
|
|
(149,817
|
)
|
|
(128,873
|
)
|
|
(24
|
)
|
|
(16
|
)
|
||||
Selling, general and administrative expenses
|
(51,480
|
)
|
|
(44,437
|
)
|
|
(18,635
|
)
|
|
(15,834
|
)
|
|
(16
|
)
|
|
(18
|
)
|
||||
Operating income
|
25,703
|
|
|
15,040
|
|
|
11,520
|
|
|
9,838
|
|
|
71
|
|
|
17
|
|
||||
Other expense, net
|
(897
|
)
|
|
(3,471
|
)
|
|
(6
|
)
|
|
(753
|
)
|
|
74
|
|
|
99
|
|
||||
Pretax income
|
$
|
24,806
|
|
|
$
|
11,569
|
|
|
$
|
11,514
|
|
|
$
|
9,085
|
|
|
114
|
%
|
|
27
|
%
|
Southeast:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
267,247
|
|
|
$
|
216,315
|
|
|
$
|
90,667
|
|
|
$
|
77,180
|
|
|
24
|
%
|
|
17
|
%
|
Construction and land costs
|
(235,636
|
)
|
|
(212,193
|
)
|
|
(82,686
|
)
|
|
(73,123
|
)
|
|
(11
|
)
|
|
(13
|
)
|
||||
Selling, general and administrative expenses
|
(36,803
|
)
|
|
(30,461
|
)
|
|
(13,261
|
)
|
|
(11,426
|
)
|
|
(21
|
)
|
|
(16
|
)
|
||||
Operating loss
|
(5,192
|
)
|
|
(26,339
|
)
|
|
(5,280
|
)
|
|
(7,369
|
)
|
|
80
|
|
|
28
|
|
||||
Other expense, net
|
(4,689
|
)
|
|
(8,673
|
)
|
|
(2,685
|
)
|
|
(2,551
|
)
|
|
46
|
|
|
(5
|
)
|
||||
Pretax loss
|
$
|
(9,881
|
)
|
|
$
|
(35,012
|
)
|
|
$
|
(7,965
|
)
|
|
$
|
(9,920
|
)
|
|
72
|
%
|
|
20
|
%
|
|
|
Housing
Revenues
(in thousands)
|
|
Percentage of
Total
Housing
Revenues
|
|
Homes
Delivered
|
|
Percentage of
Total
Homes
Delivered
|
|
Average
Selling Price
|
|||||||
Nine Months Ended August 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|||||||
West Coast
|
|
$
|
707,532
|
|
|
45
|
%
|
|
1,288
|
|
|
26
|
%
|
|
$
|
549,300
|
|
Southwest
|
|
144,597
|
|
|
9
|
|
|
521
|
|
|
10
|
|
|
277,500
|
|
||
Central
|
|
474,937
|
|
|
30
|
|
|
2,167
|
|
|
44
|
|
|
219,200
|
|
||
Southeast
|
|
259,107
|
|
|
16
|
|
|
1,010
|
|
|
20
|
|
|
256,500
|
|
||
Total
|
|
$
|
1,586,173
|
|
|
100
|
%
|
|
4,986
|
|
|
100
|
%
|
|
$
|
318,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Nine Months Ended August 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|||||||
West Coast
|
|
$
|
746,232
|
|
|
51
|
%
|
|
1,658
|
|
|
32
|
%
|
|
$
|
450,100
|
|
Southwest
|
|
126,515
|
|
|
9
|
|
|
545
|
|
|
11
|
|
|
232,100
|
|
||
Central
|
|
381,342
|
|
|
25
|
|
|
1,965
|
|
|
39
|
|
|
194,100
|
|
||
Southeast
|
|
216,315
|
|
|
15
|
|
|
939
|
|
|
18
|
|
|
230,400
|
|
||
Total
|
|
$
|
1,470,404
|
|
|
100
|
%
|
|
5,107
|
|
|
100
|
%
|
|
$
|
287,900
|
|
|
|
Housing
Revenues
(in thousands)
|
|
Percentage of
Total
Housing
Revenues
|
|
Homes
Delivered
|
|
Percentage of
Total
Homes
Delivered
|
|
Average
Selling Price
|
|||||||
Three Months Ended August 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|||||||
West Coast
|
|
$
|
265,491
|
|
|
45
|
%
|
|
458
|
|
|
26
|
%
|
|
$
|
579,700
|
|
Southwest
|
|
50,101
|
|
|
9
|
|
|
185
|
|
|
10
|
|
|
270,800
|
|
||
Central
|
|
179,972
|
|
|
31
|
|
|
807
|
|
|
45
|
|
|
223,000
|
|
||
Southeast
|
|
90,667
|
|
|
15
|
|
|
343
|
|
|
19
|
|
|
264,300
|
|
||
Total
|
|
$
|
586,231
|
|
|
100
|
%
|
|
1,793
|
|
|
100
|
%
|
|
$
|
327,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Three Months Ended August 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|||||||
West Coast
|
|
$
|
266,638
|
|
|
49
|
%
|
|
555
|
|
|
30
|
%
|
|
$
|
480,400
|
|
Southwest
|
|
47,437
|
|
|
9
|
|
|
194
|
|
|
11
|
|
|
244,500
|
|
||
Central
|
|
154,545
|
|
|
28
|
|
|
757
|
|
|
41
|
|
|
204,200
|
|
||
Southeast
|
|
77,180
|
|
|
14
|
|
|
319
|
|
|
18
|
|
|
241,900
|
|
||
Total
|
|
$
|
545,800
|
|
|
100
|
%
|
|
1,825
|
|
|
100
|
%
|
|
$
|
299,100
|
|
|
Nine Months Ended August 31,
|
|
Three Months Ended August 31,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Revenues
|
$
|
8,014
|
|
|
$
|
8,195
|
|
|
$
|
2,983
|
|
|
$
|
3,174
|
|
Expenses
|
(2,563
|
)
|
|
(2,235
|
)
|
|
(859
|
)
|
|
(764
|
)
|
||||
Equity in income (loss) of unconsolidated joint ventures
|
(289
|
)
|
|
1,081
|
|
|
(277
|
)
|
|
(6
|
)
|
||||
Pretax income
|
$
|
5,162
|
|
|
$
|
7,041
|
|
|
$
|
1,847
|
|
|
$
|
2,404
|
|
|
|
|
|
|
|
|
|
||||||||
Total originations (a):
|
|
|
|
|
|
|
|
||||||||
Loans
|
290
|
|
|
—
|
|
|
290
|
|
|
—
|
|
||||
Principal
|
$
|
70,345
|
|
|
$
|
—
|
|
|
$
|
70,345
|
|
|
$
|
—
|
|
Percentage of homebuyers using HCM
|
64
|
%
|
|
—
|
%
|
|
64
|
%
|
|
—
|
%
|
||||
Average FICO score
|
725
|
|
|
—
|
|
|
725
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Loans sold to third parties (a):
|
|
|
|
|
|
|
|
||||||||
Loans
|
51
|
|
|
—
|
|
|
51
|
|
|
—
|
|
||||
Principal
|
$
|
12,503
|
|
|
$
|
—
|
|
|
$
|
12,503
|
|
|
$
|
—
|
|
|
|
August 31, 2014
|
|
November 30, 2013
|
|
Variance
|
|||||||||||||||
Segment
|
|
Lots
|
|
$
|
|
Lots
|
|
$
|
|
Lots
|
|
$
|
|||||||||
West Coast
|
|
13,451
|
|
|
$
|
1,641,515
|
|
|
12,612
|
|
|
$
|
1,144,184
|
|
|
839
|
|
|
$
|
497,331
|
|
Southwest
|
|
9,791
|
|
|
516,453
|
|
|
12,217
|
|
|
304,239
|
|
|
(2,426
|
)
|
|
212,214
|
|
|||
Central
|
|
19,494
|
|
|
577,708
|
|
|
22,806
|
|
|
411,076
|
|
|
(3,312
|
)
|
|
166,632
|
|
|||
Southeast
|
|
11,345
|
|
|
504,644
|
|
|
13,460
|
|
|
439,078
|
|
|
(2,115
|
)
|
|
65,566
|
|
|||
Total
|
|
54,081
|
|
|
$
|
3,240,320
|
|
|
61,095
|
|
|
$
|
2,298,577
|
|
|
(7,014
|
)
|
|
$
|
941,743
|
|
|
August 31,
2014 |
|
November 30,
2013 |
|
Variance
|
||||||
Mortgages and land contracts due to land sellers and other loans
|
$
|
42,884
|
|
|
$
|
13,615
|
|
|
$
|
29,269
|
|
Senior notes
|
2,307,916
|
|
|
1,906,883
|
|
|
401,033
|
|
|||
Convertible senior notes
|
230,000
|
|
|
230,000
|
|
|
—
|
|
|||
Total
|
$
|
2,580,800
|
|
|
$
|
2,150,498
|
|
|
$
|
430,302
|
|
•
|
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
|
•
|
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.
|
•
|
Interest Coverage Ratio or Liquidity.
We are also required to maintain either (a) a minimum consolidated interest coverage ratio (“Interest Coverage Ratio”), as defined under the Credit Facility, of 1.40, which adjusts 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. 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
August 31, 2014
, our minimum liquidity requirement was
$200.0 million
.
|
Financial Covenants and Other Requirements
|
|
Covenant Requirement
|
|
Actual
|
|
Consolidated tangible net worth
|
|
>
|
$466.4 million
|
|
$744.6 million
|
Leverage Ratio
|
|
<
|
.850
|
|
.776
|
Interest Coverage Ratio (a)
|
|
>
|
1.40
|
|
1.48
|
Minimum Liquidity (a)
|
|
>
|
$200.0 million
|
|
$297.1 million
|
Investments in joint ventures and non-guarantor subsidiaries
|
|
<
|
$284.0 million
|
|
$110.0 million
|
Borrowing base in excess of borrowing base indebtedness (as defined)
|
|
|
n/a
|
|
$231.2 million
|
(a)
|
Under the terms of the Credit Facility, we are required to meet either the Interest Coverage Ratio or the minimum liquidity thresholds, but not both. As of
August 31, 2014
, we met both the Interest Coverage Ratio and the minimum liquidity requirements.
|
|
Nine Months Ended August 31,
|
||||||
|
2014
|
|
2013
|
||||
Net cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
(716,662
|
)
|
|
$
|
(401,459
|
)
|
Investing activities
|
(28,082
|
)
|
|
(11,415
|
)
|
||
Financing activities
|
511,229
|
|
|
273,651
|
|
||
Net decrease in cash and cash equivalents
|
$
|
(233,515
|
)
|
|
$
|
(139,223
|
)
|
|
August 31, 2014
|
|
November 30, 2013
|
||||||||||||
|
Cash
Deposits
|
|
Aggregate
Purchase Price
|
|
Cash
Deposits
|
|
Aggregate
Purchase Price
|
||||||||
Unconsolidated VIEs
|
$
|
11,966
|
|
|
$
|
452,258
|
|
|
$
|
11,063
|
|
|
$
|
616,000
|
|
Other land option contracts and other similar contracts
|
28,499
|
|
|
451,871
|
|
|
30,502
|
|
|
535,496
|
|
||||
Total
|
$
|
40,465
|
|
|
$
|
904,129
|
|
|
$
|
41,565
|
|
|
$
|
1,151,496
|
|
|
Total
|
|
2014
|
|
2015-2016
|
|
2017-2018
|
|
Thereafter
|
||||||||||
Contractual obligations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Mortgages and notes payable
|
$
|
2,580,800
|
|
|
$
|
10,265
|
|
|
$
|
232,504
|
|
|
$
|
561,918
|
|
|
$
|
1,776,113
|
|
Interest
|
892,133
|
|
|
67,177
|
|
|
314,323
|
|
|
268,447
|
|
|
242,186
|
|
|||||
Inventory-related obligations (a)
|
53,708
|
|
|
1,613
|
|
|
5,402
|
|
|
2,323
|
|
|
44,370
|
|
|||||
Total
|
$
|
3,526,641
|
|
|
$
|
79,055
|
|
|
$
|
552,229
|
|
|
$
|
832,688
|
|
|
$
|
2,062,669
|
|
(a)
|
Represents liabilities for fixed or determinable amounts associated with TIFE and liabilities related to inventory not owned. 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.
|
•
|
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 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 and whether and when we can reduce our deferred tax asset valuation allowance;
|
•
|
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, sell higher-priced homes and more design options, increase the size and value of our backlog, 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 open for sales 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;
|
•
|
the performance of HCM;
|
•
|
information technology failures and data security breaches; and
|
•
|
other events outside of our control.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Fiscal Year of Expected Maturity
|
|
Fixed Rate Debt
|
|
Weighted Average
Effective Interest Rate
|
|||
2014
|
|
$
|
—
|
|
|
—
|
%
|
2015
|
|
199,884
|
|
|
6.3
|
|
|
2016
|
|
—
|
|
|
—
|
|
|
2017
|
|
262,553
|
|
|
9.5
|
|
|
2018
|
|
299,366
|
|
|
7.3
|
|
|
Thereafter
|
|
1,776,113
|
|
|
6.1
|
|
|
Total
|
|
$
|
2,537,916
|
|
|
6.6
|
%
|
Fair value at August 31, 2014
|
|
$
|
2,732,078
|
|
|
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Exhibits
|
|
|
|
|
|
3.2
|
|
Amended and Restated By-Laws of KB Home, filed as an exhibit to our Current Report on Form 8-K dated July 17, 2014 (File No. 001-09195), is incorporated by reference herein.
|
|
|
|
4.30
|
|
Form of 4.75% Senior Notes due 2019, filed as an exhibit to our Current Report on Form 8-K dated March 25, 2014 (File No. 001-09195), is incorporated by reference herein.
|
|
|
|
4.31
|
|
Form of officers’ certificates and guarantors’ certificates establishing the terms of the 4.75% Senior Notes due 2019, filed as an exhibit to our Current Report on Form 8-K dated March 25, 2014 (File No. 001-09195), is incorporated by reference herein.
|
|
|
|
10.48
|
|
KB Home 2014 Equity Incentive Plan, filed as an exhibit to our Quarterly Report on Form 10-Q dated February 28, 2014 (File No. 001-09195), is incorporated by reference herein.
|
|
|
|
10.49
|
|
Third Amended and Restated KB Home Non-Employee Directors Compensation Plan, effective as of July 17, 2014, filed as an exhibit to our Registration Statement No. 333-197521 on Form S-8 (File No. 001-09195), is incorporated by reference herein.
|
|
|
|
10.50
|
|
Amendment to Amended and Restated KB Home 1999 Incentive Plan Non-Qualified Stock Option Agreement, effective July 17, 2014.
|
|
|
|
10.51
|
|
Amendment to KB Home 2001 Stock Incentive Plan Stock Option Agreement, effective July 17, 2014.
|
|
|
|
10.52
|
|
Amendment to KB Home Performance Based Incentive Plan for Senior Management Stock Option Agreement, effective July 17, 2014.
|
|
|
|
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 August 31, 2014, formatted in eXtensible Business Reporting Language (XBRL): (a) Consolidated Statements of Operations for the three months and nine months ended August 31, 2014 and 2013, (b) Consolidated Balance Sheets as of August 31, 2014 and November 30, 2013, (c) Consolidated Statements of Cash Flows for the nine months ended August 31, 2014 and 2013, and (d) Notes to Consolidated Financial Statements.
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KB HOME
Registrant
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Dated
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October 9, 2014
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By:
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/s/ JEFF J. KAMINSKI
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Jeff J. Kaminski
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
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Dated
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October 9, 2014
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By:
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/s/ WILLIAM R. HOLLINGER
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William R. Hollinger
Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer)
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3.2
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Amended and Restated By-Laws of KB Home, filed as an exhibit to our Current Report on Form 8-K dated July 17, 2014 (File No. 001-09195), is incorporated by reference herein.
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4.30
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Form of 4.75% Senior Notes due 2019, filed as an exhibit to our Current Report on Form 8-K dated March 25, 2014 (File No. 001-09195), is incorporated by reference herein.
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4.31
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Form of officers’ certificates and guarantors’ certificates establishing the terms of the 4.75% Senior Notes due 2019, filed as an exhibit to our Current Report on Form 8-K dated March 25, 2014 (File No. 001-09195), is incorporated by reference herein.
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10.48
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KB Home 2014 Equity Incentive Plan, filed as an exhibit to our Quarterly Report on Form 10-Q dated February 28, 2014 (File No. 001-09195), is incorporated by reference herein.
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10.49
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Third Amended and Restated KB Home Non-Employee Directors Compensation Plan, effective as of July 17, 2014, filed as an exhibit to our Registration Statement No. 333-197521 on Form S-8 (File No. 001-09195), is incorporated by reference herein.
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10.50
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Amendment to Amended and Restated KB Home 1999 Incentive Plan Non-Qualified Stock Option Agreement, effective July 17, 2014.
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10.51
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Amendment to KB Home 2001 Stock Incentive Plan Stock Option Agreement, effective July 17, 2014.
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10.52
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Amendment to KB Home Performance Based Incentive Plan for Senior Management Stock Option Agreement, effective July 17, 2014.
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31.1
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Certification of Jeffrey T. Mezger, President and Chief Executive Officer of KB Home Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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31.2
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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.
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32.1
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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.
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32.2
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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 August 31, 2014, formatted in eXtensible Business Reporting Language (XBRL): (a) Consolidated Statements of Operations for the three months and nine months ended August 31, 2014 and 2013, (b) Consolidated Balance Sheets as of August 31, 2014 and November 30, 2013, (c) Consolidated Statements of Cash Flows for the nine months ended August 31, 2014 and 2013, and (d) Notes to Consolidated Financial Statements.
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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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October 9, 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)
|
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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October 9, 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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October 9, 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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October 9, 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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