☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
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☐
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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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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐
(Do not check if a smaller reporting company)
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Smaller reporting company
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☐
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Page
Number
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Consolidated Statements of Operations -
Three Months Ended February 28, 2017 and February 29, 2016 |
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Consolidated Balance Sheets -
February 28, 2017 and November 30, 2016 |
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Consolidated Statements of Cash Flows -
Three Months Ended February 28, 2017 and February 29, 2016 |
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Item 1.
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Financial Statements
|
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Three Months Ended
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||||||
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February 28,
2017 |
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February 29,
2016 |
||||
Total revenues
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$
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818,596
|
|
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$
|
678,371
|
|
Homebuilding:
|
|
|
|
||||
Revenues
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$
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816,246
|
|
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$
|
675,742
|
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Construction and land costs
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(698,080
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)
|
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(568,818
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)
|
||
Selling, general and administrative expenses
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(92,889
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)
|
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(87,932
|
)
|
||
Operating income
|
25,277
|
|
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18,992
|
|
||
Interest income
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198
|
|
|
152
|
|
||
Interest expense
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(6,307
|
)
|
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(3,697
|
)
|
||
Equity in income (loss) of unconsolidated joint ventures
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731
|
|
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(603
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)
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||
Homebuilding pretax income
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19,899
|
|
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14,844
|
|
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Financial services:
|
|
|
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||||
Revenues
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2,350
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|
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2,629
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|
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Expenses
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(819
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)
|
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(859
|
)
|
||
Equity in income (loss) of unconsolidated joint ventures
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29
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|
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(587
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)
|
||
Financial services pretax income
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1,560
|
|
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1,183
|
|
||
Total pretax income
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21,459
|
|
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16,027
|
|
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Income tax expense
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(7,200
|
)
|
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(2,900
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)
|
||
Net income
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$
|
14,259
|
|
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$
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13,127
|
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Earnings per share:
|
|
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||||
Basic
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$
|
.17
|
|
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$
|
.15
|
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Diluted
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$
|
.15
|
|
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$
|
.14
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Weighted average shares outstanding:
|
|
|
|
||||
Basic
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85,122
|
|
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89,239
|
|
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Diluted
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96,273
|
|
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99,427
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|
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Cash dividends declared per common share
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$
|
.025
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|
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$
|
.025
|
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February 28,
2017 |
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November 30,
2016 |
||||
Assets
|
|
|
|
||||
Homebuilding:
|
|
|
|
||||
Cash and cash equivalents
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$
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351,880
|
|
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$
|
592,086
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Receivables
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238,358
|
|
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231,665
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Inventories
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3,423,344
|
|
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3,403,228
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|
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Investments in unconsolidated joint ventures
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64,916
|
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64,016
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Deferred tax assets, net
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731,885
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738,985
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|
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Other assets
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96,679
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|
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91,145
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4,907,062
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|
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5,121,125
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Financial services
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15,518
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10,499
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Total assets
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$
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4,922,580
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$
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5,131,624
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|
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||||
Liabilities and stockholders’ equity
|
|
|
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||||
Homebuilding:
|
|
|
|
||||
Accounts payable
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$
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178,491
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|
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$
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215,331
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Accrued expenses and other liabilities
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501,902
|
|
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550,996
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|
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Notes payable
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2,504,449
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2,640,149
|
|
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3,184,842
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3,406,476
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Financial services
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1,278
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|
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2,003
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|
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Stockholders’ equity:
|
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|
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||||
Common stock
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116,299
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|
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116,224
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Paid-in capital
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697,656
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696,938
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Retained earnings
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1,575,786
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1,563,742
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Accumulated other comprehensive loss
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(16,057
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)
|
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(16,057
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)
|
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Grantor stock ownership trust, at cost
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(99,279
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)
|
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(102,300
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)
|
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Treasury stock, at cost
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(537,945
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)
|
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(535,402
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)
|
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Total stockholders’ equity
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1,736,460
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1,723,145
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Total liabilities and stockholders’ equity
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$
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4,922,580
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$
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5,131,624
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Three Months Ended
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||||||
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February 28,
2017 |
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February 29,
2016 |
||||
Cash flows from operating activities:
|
|
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|
||||
Net income
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$
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14,259
|
|
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$
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13,127
|
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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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(760
|
)
|
|
1,190
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|
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Amortization of discounts and issuance costs
|
1,665
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|
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1,881
|
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Depreciation and amortization
|
802
|
|
|
900
|
|
||
Deferred income taxes
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7,100
|
|
|
2,800
|
|
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Loss on early extinguishment of debt
|
5,685
|
|
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—
|
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Stock-based compensation
|
3,152
|
|
|
2,893
|
|
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Inventory impairments and land option contract abandonments
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4,008
|
|
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1,966
|
|
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Changes in assets and liabilities:
|
|
|
|
||||
Receivables
|
(6,788
|
)
|
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3,999
|
|
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Inventories
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(36,878
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)
|
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(150,265
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)
|
||
Accounts payable, accrued expenses and other liabilities
|
(64,105
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)
|
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(20,558
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)
|
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Other, net
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(5,182
|
)
|
|
(1,246
|
)
|
||
Net cash used in operating activities
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(77,042
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)
|
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(143,313
|
)
|
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Cash flows from investing activities:
|
|
|
|
||||
Contributions to unconsolidated joint ventures
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(8,750
|
)
|
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(291
|
)
|
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Return of investments in unconsolidated joint ventures
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1,107
|
|
|
—
|
|
||
Purchases of property and equipment, net
|
(1,015
|
)
|
|
(1,413
|
)
|
||
Net cash used in investing activities
|
(8,658
|
)
|
|
(1,704
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Change in restricted cash
|
—
|
|
|
4,987
|
|
||
Repayment of senior notes
|
(105,326
|
)
|
|
—
|
|
||
Payments on mortgages and land contracts due to land sellers and other loans
|
(45,428
|
)
|
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(5,659
|
)
|
||
Issuance of common stock under employee stock plans
|
662
|
|
|
—
|
|
||
Payments of cash dividends
|
(2,215
|
)
|
|
(2,270
|
)
|
||
Stock repurchases
|
(2,543
|
)
|
|
(87,526
|
)
|
||
Net cash used in financing activities
|
(154,850
|
)
|
|
(90,468
|
)
|
||
Net decrease in cash and cash equivalents
|
(240,550
|
)
|
|
(235,485
|
)
|
||
Cash and cash equivalents at beginning of period
|
593,000
|
|
|
560,341
|
|
||
Cash and cash equivalents at end of period
|
$
|
352,450
|
|
|
$
|
324,856
|
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1.
|
Basis of Presentation and Significant Accounting Policies
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2.
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Segment Information
|
|
Three Months Ended
|
||||||
|
February 28,
2017 |
|
February 29,
2016 |
||||
Revenues:
|
|
|
|
||||
West Coast
|
$
|
355,832
|
|
|
$
|
283,846
|
|
Southwest
|
117,636
|
|
|
100,332
|
|
||
Central
|
242,256
|
|
|
202,161
|
|
||
Southeast
|
100,522
|
|
|
89,403
|
|
||
Total
|
$
|
816,246
|
|
|
$
|
675,742
|
|
|
|
|
|
||||
Pretax income (loss):
|
|
|
|
||||
West Coast
|
$
|
22,853
|
|
|
$
|
22,116
|
|
Southwest
|
8,672
|
|
|
12,503
|
|
||
Central
|
19,678
|
|
|
10,579
|
|
||
Southeast
|
(2,213
|
)
|
|
(7,564
|
)
|
||
Corporate and other
|
(29,091
|
)
|
|
(22,790
|
)
|
||
Total
|
$
|
19,899
|
|
|
$
|
14,844
|
|
Inventory impairment charges:
|
|
|
|
||||
West Coast
|
$
|
—
|
|
|
$
|
—
|
|
Southwest
|
1,343
|
|
|
—
|
|
||
Central
|
—
|
|
|
787
|
|
||
Southeast
|
1,874
|
|
|
559
|
|
||
Total
|
$
|
3,217
|
|
|
$
|
1,346
|
|
|
|||||||
Land option contract abandonments:
|
|
|
|
||||
West Coast
|
$
|
791
|
|
|
$
|
160
|
|
Southwest
|
—
|
|
|
—
|
|
||
Central
|
—
|
|
|
460
|
|
||
Southeast
|
—
|
|
|
—
|
|
||
Total
|
$
|
791
|
|
|
$
|
620
|
|
|
February 28,
2017 |
|
November 30,
2016 |
||||
Inventories:
|
|
|
|
||||
Homes under construction
|
|
|
|
||||
West Coast
|
$
|
760,720
|
|
|
$
|
695,742
|
|
Southwest
|
137,732
|
|
|
130,886
|
|
||
Central
|
314,071
|
|
|
297,290
|
|
||
Southeast
|
119,863
|
|
|
122,020
|
|
||
Subtotal
|
1,332,386
|
|
|
1,245,938
|
|
||
|
|
|
|
||||
Land under development
|
|
|
|
||||
West Coast
|
754,126
|
|
|
820,088
|
|
||
Southwest
|
253,674
|
|
|
268,507
|
|
||
Central
|
473,646
|
|
|
456,508
|
|
||
Southeast
|
176,829
|
|
|
182,554
|
|
||
Subtotal
|
1,658,275
|
|
|
1,727,657
|
|
||
|
|
|
|
||||
Land held for future development or sale
|
|
|
|
||||
West Coast
|
206,063
|
|
|
210,910
|
|
||
Southwest
|
132,183
|
|
|
122,927
|
|
||
Central
|
15,342
|
|
|
15,439
|
|
||
Southeast
|
79,095
|
|
|
80,357
|
|
||
Subtotal
|
432,683
|
|
|
429,633
|
|
||
Total
|
$
|
3,423,344
|
|
|
$
|
3,403,228
|
|
|
|
|
|
Assets:
|
|
|
|
||||
West Coast
|
$
|
1,850,374
|
|
|
$
|
1,847,279
|
|
Southwest
|
566,631
|
|
|
564,636
|
|
||
Central
|
926,252
|
|
|
909,497
|
|
||
Southeast
|
396,643
|
|
|
414,730
|
|
||
Corporate and other
|
1,167,162
|
|
|
1,384,983
|
|
||
Total
|
$
|
4,907,062
|
|
|
$
|
5,121,125
|
|
3.
|
Financial Services
|
|
Three Months Ended
|
||||||
|
February 28,
2017 |
|
February 29,
2016 |
||||
Revenues
|
|
|
|
||||
Insurance commissions
|
$
|
1,210
|
|
|
$
|
1,576
|
|
Title services
|
1,135
|
|
|
1,053
|
|
||
Interest income
|
5
|
|
|
—
|
|
||
Total
|
2,350
|
|
|
2,629
|
|
||
|
|
|
|
|
Three Months Ended
|
||||||
|
February 28,
2017 |
|
February 29,
2016 |
||||
Expenses
|
|
|
|
||||
General and administrative
|
(819
|
)
|
|
(859
|
)
|
||
Operating income
|
1,531
|
|
|
1,770
|
|
||
Equity in income (loss) of unconsolidated joint ventures
|
29
|
|
|
(587
|
)
|
||
Pretax income
|
$
|
1,560
|
|
|
$
|
1,183
|
|
|
February 28,
2017 |
|
November 30,
2016 |
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
570
|
|
|
$
|
914
|
|
Receivables
|
1,859
|
|
|
1,764
|
|
||
Investments in unconsolidated joint ventures (a)
|
13,051
|
|
|
7,771
|
|
||
Other assets
|
38
|
|
|
50
|
|
||
Total assets
|
$
|
15,518
|
|
|
$
|
10,499
|
|
Liabilities
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
1,278
|
|
|
$
|
2,003
|
|
Total liabilities
|
$
|
1,278
|
|
|
$
|
2,003
|
|
(a)
|
Our investments in unconsolidated joint ventures as of February 28, 2017 included a
$5.3 million
capital contribution we made to KBHS in the 2017 first quarter.
|
4.
|
Earnings Per Share
|
|
Three Months Ended
|
||||||
|
February 28,
2017 |
|
February 29,
2016 |
||||
Numerator:
|
|
|
|
||||
Net income
|
$
|
14,259
|
|
|
$
|
13,127
|
|
Less: Distributed earnings allocated to nonvested restricted stock
|
(15
|
)
|
|
(10
|
)
|
||
Less: Undistributed earnings allocated to nonvested restricted stock
|
(85
|
)
|
|
(50
|
)
|
||
Numerator for basic earnings per share
|
14,159
|
|
|
13,067
|
|
||
Effect of dilutive securities:
|
|
|
|
||||
Interest expense and amortization of debt issuance costs associated with convertible senior notes, net of taxes
|
663
|
|
|
667
|
|
||
Add: Undistributed earnings allocated to nonvested restricted stock
|
85
|
|
|
50
|
|
||
Less: Undistributed earnings reallocated to nonvested restricted stock
|
(75
|
)
|
|
(45
|
)
|
||
Numerator for diluted earnings per share
|
$
|
14,832
|
|
|
$
|
13,739
|
|
|
|
|
|
|
Three Months Ended
|
||||||
|
February 28,
2017 |
|
February 29,
2016 |
||||
Denominator:
|
|
|
|
||||
Weighted average shares outstanding — basic
|
85,122
|
|
|
89,239
|
|
||
Effect of dilutive securities:
|
|
|
|
||||
Share-based payments
|
2,749
|
|
|
1,786
|
|
||
Convertible senior notes
|
8,402
|
|
|
8,402
|
|
||
Weighted average shares outstanding — diluted
|
96,273
|
|
|
99,427
|
|
||
Basic earnings per share
|
$
|
.17
|
|
|
$
|
.15
|
|
Diluted earnings per share
|
$
|
.15
|
|
|
$
|
.14
|
|
5.
|
Receivables
|
|
February 28,
2017 |
|
November 30,
2016 |
||||
Due from utility companies, improvement districts and municipalities
|
$
|
106,923
|
|
|
$
|
102,780
|
|
Recoveries related to self-insurance claims
|
83,174
|
|
|
84,476
|
|
||
Refundable deposits and bonds
|
14,220
|
|
|
13,665
|
|
||
Recoveries related to warranty and other claims
|
13,907
|
|
|
14,609
|
|
||
Other
|
33,122
|
|
|
28,745
|
|
||
Subtotal
|
251,346
|
|
|
244,275
|
|
||
Allowance for doubtful accounts
|
(12,988
|
)
|
|
(12,610
|
)
|
||
Total
|
$
|
238,358
|
|
|
$
|
231,665
|
|
6.
|
Inventories
|
|
February 28,
2017 |
|
November 30,
2016 |
||||
Homes under construction
|
$
|
1,332,386
|
|
|
$
|
1,245,938
|
|
Land under development
|
1,658,275
|
|
|
1,727,657
|
|
||
Land held for future development or sale (a)
|
432,683
|
|
|
429,633
|
|
||
Total
|
$
|
3,423,344
|
|
|
$
|
3,403,228
|
|
|
Three Months Ended
|
||||||
|
February 28,
2017 |
|
February 29,
2016 |
||||
Capitalized interest at beginning of period
|
$
|
306,723
|
|
|
$
|
288,442
|
|
Interest incurred (a)
|
50,079
|
|
|
46,251
|
|
||
Interest expensed (a)
|
(6,307
|
)
|
|
(3,697
|
)
|
||
Interest amortized to construction and land costs (b)
|
(39,384
|
)
|
|
(30,682
|
)
|
||
Capitalized interest at end of period (c)
|
$
|
311,111
|
|
|
$
|
300,314
|
|
(a)
|
The amount for the three months ended
February 28, 2017
included a charge of
$5.7 million
for the early extinguishment of debt.
|
(b)
|
Interest amortized to construction and land costs for each of the three-month periods ended
February 28, 2017
and
February 29, 2016
included
$.5 million
related to land sales during the periods.
|
(c)
|
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.
|
7.
|
Inventory Impairments and Land Option Contract Abandonments
|
|
|
Three Months Ended
|
||
Unobservable Input (a)
|
|
February 28,
2017 |
|
February 29,
2016 |
Average selling price
|
|
$299,800 - $307,900
|
|
$310,000
|
Deliveries per month
|
|
3 - 4
|
|
1
|
Discount rate
|
|
17%
|
|
17%
|
(a)
|
The ranges of inputs used in each period primarily reflect differences between the housing markets where each impacted community is located, rather than fluctuations in prevailing market conditions.
|
8.
|
Variable Interest Entities
|
|
February 28, 2017
|
|
November 30, 2016
|
||||||||||||
|
Cash
Deposits
|
|
Aggregate
Purchase Price
|
|
Cash
Deposits
|
|
Aggregate
Purchase Price
|
||||||||
Unconsolidated VIEs
|
$
|
15,085
|
|
|
$
|
452,478
|
|
|
$
|
24,910
|
|
|
$
|
641,642
|
|
Other land option contracts and other similar contracts
|
23,068
|
|
|
431,644
|
|
|
17,919
|
|
|
431,954
|
|
||||
Total
|
$
|
38,153
|
|
|
$
|
884,122
|
|
|
$
|
42,829
|
|
|
$
|
1,073,596
|
|
9.
|
Investments in Unconsolidated Joint Ventures
|
|
Three Months Ended
|
||||||
|
February 28,
2017 |
|
February 29,
2016 |
||||
Revenues
|
$
|
19,722
|
|
|
$
|
3,338
|
|
Construction and land costs
|
(17,895
|
)
|
|
(7,495
|
)
|
||
Other expense, net
|
(1,096
|
)
|
|
(1,123
|
)
|
||
Income (loss)
|
$
|
731
|
|
|
$
|
(5,280
|
)
|
|
February 28,
2017 |
|
November 30,
2016 |
||||
Assets
|
|
|
|
||||
Cash
|
$
|
28,083
|
|
|
$
|
31,928
|
|
Receivables
|
889
|
|
|
882
|
|
||
Inventories
|
152,689
|
|
|
165,385
|
|
||
Other assets
|
1,089
|
|
|
629
|
|
||
Total assets
|
$
|
182,750
|
|
|
$
|
198,824
|
|
|
|
|
|
||||
Liabilities and equity
|
|
|
|
||||
Accounts payable and other liabilities
|
$
|
19,446
|
|
|
$
|
19,880
|
|
Notes payable (a)
|
35,987
|
|
|
44,381
|
|
||
Equity
|
127,317
|
|
|
134,563
|
|
||
Total liabilities and equity
|
$
|
182,750
|
|
|
$
|
198,824
|
|
(a)
|
One
of our unconsolidated joint ventures has a construction loan agreement with a third-party lender to finance its land development activities that is secured by the underlying property and related project assets. Outstanding debt under the agreement is non-recourse to us and is scheduled to mature in August 2018. None of our other unconsolidated joint ventures had outstanding debt at
February 28, 2017
or
November 30, 2016
.
|
|
|
February 28,
2017 |
|
November 30,
2016 |
||||
Number of investments in unconsolidated joint ventures
|
|
7
|
|
|
7
|
|
||
Investments in unconsolidated joint ventures
|
|
$
|
64,916
|
|
|
$
|
64,016
|
|
Number of unconsolidated joint venture lots controlled under land option contracts and other similar contracts
|
|
428
|
|
|
471
|
|
10.
|
Other Assets
|
|
February 28,
2017 |
|
November 30,
2016 |
||||
Cash surrender value of insurance contracts
|
$
|
72,547
|
|
|
$
|
70,829
|
|
Property and equipment, net
|
14,450
|
|
|
14,240
|
|
||
Prepaid expenses
|
8,610
|
|
|
4,894
|
|
||
Other
|
1,072
|
|
|
1,182
|
|
||
Total
|
$
|
96,679
|
|
|
$
|
91,145
|
|
11.
|
Accrued Expenses and Other Liabilities
|
|
February 28,
2017 |
|
November 30,
2016 |
||||
Self-insurance and other litigation liabilities
|
$
|
174,082
|
|
|
$
|
170,988
|
|
Employee compensation and related benefits
|
97,971
|
|
|
130,352
|
|
||
Accrued interest payable
|
77,569
|
|
|
67,411
|
|
||
Inventory-related obligations (a)
|
57,751
|
|
|
82,682
|
|
||
Warranty liability
|
57,710
|
|
|
56,682
|
|
||
Customer deposits
|
16,694
|
|
|
18,175
|
|
||
Real estate and business taxes
|
10,547
|
|
|
14,370
|
|
||
Other
|
9,578
|
|
|
10,336
|
|
||
Total
|
$
|
501,902
|
|
|
$
|
550,996
|
|
(a)
|
Represents liabilities for financing arrangements discussed in Note 8 – Variable Interest Entities, as well as liabilities for fixed or determinable amounts associated with tax increment financing entity (“TIFE”) assessments. As homes are delivered, our 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 on applicable lots before the related TIFE obligations mature.
|
12.
|
Income Taxes
|
|
Three Months Ended
|
||||||
|
February 28,
2017 |
|
February 29,
2016 |
||||
Income tax expense (a)
|
$
|
7,200
|
|
|
$
|
2,900
|
|
Effective income tax rate (a)
|
33.6
|
%
|
|
18.1
|
%
|
(a)
|
Amounts reflect the favorable net impact of federal energy tax credits we earned from building energy-efficient homes. The net impact of these tax credits was
$1.1 million
and
$3.3 million
for the three months ended
February 28, 2017
and
February 29, 2016
, respectively.
|
13.
|
Notes Payable
|
|
February 28,
2017 |
|
November 30,
2016 |
||||
Mortgages and land contracts due to land sellers and other loans
|
$
|
29,313
|
|
|
$
|
66,927
|
|
9.10% Senior notes due September 15, 2017
|
164,538
|
|
|
263,932
|
|
||
7 1/4% Senior notes due June 15, 2018
|
299,701
|
|
|
299,647
|
|
||
4.75% Senior notes due May 15, 2019
|
397,617
|
|
|
397,364
|
|
||
8.00% Senior notes due March 15, 2020
|
345,156
|
|
|
344,811
|
|
||
7.00% Senior notes due December 15, 2021
|
446,080
|
|
|
445,911
|
|
||
7.50% Senior notes due September 15, 2022
|
346,886
|
|
|
346,774
|
|
||
7.625% Senior notes due May 15, 2023
|
247,482
|
|
|
247,404
|
|
||
1.375% Convertible senior notes due February 1, 2019
|
227,676
|
|
|
227,379
|
|
||
Total
|
$
|
2,504,449
|
|
|
$
|
2,640,149
|
|
14.
|
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.
|
Description
|
|
Fair Value Hierarchy
|
|
February 28,
2017 |
|
November 30,
2016 |
||||
Inventories (a)
|
|
Level 2
|
|
$
|
—
|
|
|
$
|
3,657
|
|
Inventories (a)
|
|
Level 3
|
|
6,089
|
|
|
37,329
|
|
(a)
|
Amounts represent the aggregate fair value for real estate assets impacted by inventory impairment charges during the applicable period, as of the date the fair value measurements were made. The carrying value for these real estate assets may have subsequently increased or decreased from the fair value reflected due to activity that has occurred since the measurement date.
|
|
|
|
February 28, 2017
|
|
November 30, 2016
|
||||||||||||
|
Fair Value
Hierarchy
|
|
Carrying
Value (a)
|
|
Estimated
Fair Value
|
|
Carrying
Value (a)
|
|
Estimated
Fair Value
|
||||||||
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||
Senior notes
|
Level 2
|
|
$
|
2,247,460
|
|
|
$
|
2,432,112
|
|
|
$
|
2,345,843
|
|
|
$
|
2,494,844
|
|
Convertible senior notes
|
Level 2
|
|
227,676
|
|
|
228,563
|
|
|
227,379
|
|
|
223,675
|
|
(a)
|
The carrying values for the senior notes and convertible senior notes, as presented, include unamortized debt issuance costs. Debt issuance costs are not factored into the estimated fair values of these notes.
|
15.
|
Commitments and Contingencies
|
|
Three Months Ended
|
||||||
|
February 28,
2017 |
|
February 29,
2016 |
||||
Balance at beginning of period
|
$
|
56,682
|
|
|
$
|
49,085
|
|
Warranties issued
|
7,140
|
|
|
5,252
|
|
||
Payments
|
(6,112
|
)
|
|
(4,021
|
)
|
||
Adjustments
|
—
|
|
|
259
|
|
||
Balance at end of period
|
$
|
57,710
|
|
|
$
|
50,575
|
|
•
|
Construction defect
: Construction defect claims, which represent the largest component of our self-insurance liability, typically originate through a legal or regulatory process rather than directly by a homeowner and involve the alleged occurrence of a condition affecting
two
or more homes within the same community, or they involve a common area or homeowners’ association property within a community. These claims typically involve higher costs to resolve than individual homeowner warranty claims, and the rate of claims is highly variable.
|
•
|
Bodily injury
: Bodily injury claims typically involve individuals (other than our employees) who claim they were injured while on our property or as a result of our operations.
|
•
|
Property damage
: Property damage claims generally involve claims by third parties for alleged damage to real or personal property as a result of our operations. Such claims may occasionally include those made against us by owners of property located near our communities.
|
|
Three Months Ended
|
||||||
|
February 28,
2017 |
|
February 29,
2016 |
||||
Balance at beginning of period
|
$
|
158,584
|
|
|
$
|
173,011
|
|
Self-insurance expense (a)
|
4,640
|
|
|
4,016
|
|
||
Payments
|
(2,040
|
)
|
|
(3,406
|
)
|
||
Reclassification of estimated probable recoveries (b)
|
(1,302
|
)
|
|
(604
|
)
|
||
Balance at end of period
|
$
|
159,882
|
|
|
$
|
173,017
|
|
(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)
|
Amount for each period represents the changes in the estimated probable insurance and other recoveries that were reclassified to receivables to present our self-insurance liability on a gross basis.
|
16.
|
Legal Matters
|
17.
|
Stockholders’ Equity
|
|
Three Months Ended February 28, 2017
|
|||||||||||||||||||||||||||||||||||
|
Number of Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Common
Stock
|
|
Grantor
Stock
Ownership
Trust
|
|
Treasury
Stock
|
|
Common Stock
|
|
Paid-in Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Grantor Stock
Ownership Trust
|
|
Treasury Stock
|
|
Total Stockholders’ Equity
|
|||||||||||||||||
Balance at November 30, 2016
|
116,224
|
|
|
(9,432
|
)
|
|
(21,720
|
)
|
|
$
|
116,224
|
|
|
$
|
696,938
|
|
|
$
|
1,563,742
|
|
|
$
|
(16,057
|
)
|
|
$
|
(102,300
|
)
|
|
$
|
(535,402
|
)
|
|
$
|
1,723,145
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,259
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,259
|
|
|||||||
Dividends on common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,215
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,215
|
)
|
|||||||
Employee stock options/other
|
75
|
|
|
—
|
|
|
—
|
|
|
75
|
|
|
587
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
662
|
|
|||||||
Stock awards
|
—
|
|
|
279
|
|
|
—
|
|
|
—
|
|
|
(3,021
|
)
|
|
—
|
|
|
—
|
|
|
3,021
|
|
|
—
|
|
|
—
|
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,152
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,152
|
|
|||||||
Stock repurchases
|
—
|
|
|
—
|
|
|
(152
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,543
|
)
|
|
(2,543
|
)
|
|||||||
Balance at February 28, 2017
|
116,299
|
|
|
(9,153
|
)
|
|
(21,872
|
)
|
|
$
|
116,299
|
|
|
$
|
697,656
|
|
|
$
|
1,575,786
|
|
|
$
|
(16,057
|
)
|
|
$
|
(99,279
|
)
|
|
$
|
(537,945
|
)
|
|
$
|
1,736,460
|
|
18.
|
Stock-Based Compensation
|
|
Options
|
|
Weighted
Average Exercise
Price
|
|||
Options outstanding at beginning of period
|
12,731,545
|
|
|
$
|
18.95
|
|
Granted
|
—
|
|
|
—
|
|
|
Exercised
|
(74,854
|
)
|
|
8.85
|
|
|
Cancelled
|
(124,090
|
)
|
|
19.46
|
|
|
Options outstanding at end of period
|
12,532,601
|
|
|
$
|
19.01
|
|
Options exercisable at end of period
|
10,307,866
|
|
|
$
|
19.78
|
|
19.
|
Supplemental Disclosure to Consolidated Statements of Cash Flows
|
|
Three Months Ended
|
||||||
|
February 28,
2017 |
|
February 29,
2016 |
||||
Summary of cash and cash equivalents at end of period:
|
|
|
|
||||
Homebuilding
|
$
|
351,880
|
|
|
$
|
323,076
|
|
Financial services
|
570
|
|
|
1,780
|
|
||
Total
|
$
|
352,450
|
|
|
$
|
324,856
|
|
|
|
|
|
||||
Supplemental disclosures of cash flow information:
|
|
|
|
||||
Interest paid, net of amounts capitalized
|
$
|
(9,536
|
)
|
|
$
|
(12,955
|
)
|
Income taxes paid
|
836
|
|
|
458
|
|
||
|
|
|
|
||||
Supplemental disclosures of noncash activities:
|
|
|
|
||||
Reclassification of warranty recoveries to receivables
|
$
|
—
|
|
|
$
|
1,758
|
|
Decrease in consolidated inventories not owned
|
(22,554
|
)
|
|
(28,511
|
)
|
||
Increase in inventories due to distributions of land and land development from an unconsolidated joint venture
|
1,986
|
|
|
2,674
|
|
||
Inventories acquired through seller financing
|
7,814
|
|
|
32,435
|
|
20.
|
Supplemental Guarantor Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended February 28, 2017
|
||||||||||||||||||
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
729,927
|
|
|
$
|
88,669
|
|
|
$
|
—
|
|
|
$
|
818,596
|
|
Homebuilding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
729,927
|
|
|
$
|
86,319
|
|
|
$
|
—
|
|
|
$
|
816,246
|
|
Construction and land costs
|
—
|
|
|
(618,452
|
)
|
|
(79,628
|
)
|
|
—
|
|
|
(698,080
|
)
|
|||||
Selling, general and administrative expenses
|
(22,267
|
)
|
|
(62,898
|
)
|
|
(7,724
|
)
|
|
—
|
|
|
(92,889
|
)
|
|||||
Operating income (loss)
|
(22,267
|
)
|
|
48,577
|
|
|
(1,033
|
)
|
|
—
|
|
|
25,277
|
|
|||||
Interest income
|
197
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
198
|
|
|||||
Interest expense
|
(48,349
|
)
|
|
(568
|
)
|
|
(1,162
|
)
|
|
43,772
|
|
|
(6,307
|
)
|
|||||
Intercompany interest
|
73,493
|
|
|
(26,603
|
)
|
|
(3,118
|
)
|
|
(43,772
|
)
|
|
—
|
|
|||||
Equity in income of unconsolidated joint ventures
|
—
|
|
|
731
|
|
|
—
|
|
|
—
|
|
|
731
|
|
|||||
Homebuilding pretax income (loss)
|
3,074
|
|
|
22,138
|
|
|
(5,313
|
)
|
|
—
|
|
|
19,899
|
|
|||||
Financial services pretax income
|
—
|
|
|
—
|
|
|
1,560
|
|
|
—
|
|
|
1,560
|
|
|||||
Total pretax income (loss)
|
3,074
|
|
|
22,138
|
|
|
(3,753
|
)
|
|
—
|
|
|
21,459
|
|
|||||
Income tax benefit (expense)
|
1,300
|
|
|
(8,800
|
)
|
|
300
|
|
|
—
|
|
|
(7,200
|
)
|
|||||
Equity in net income of subsidiaries
|
9,885
|
|
|
—
|
|
|
—
|
|
|
(9,885
|
)
|
|
—
|
|
|||||
Net income (loss)
|
$
|
14,259
|
|
|
$
|
13,338
|
|
|
$
|
(3,453
|
)
|
|
$
|
(9,885
|
)
|
|
$
|
14,259
|
|
|
Three Months Ended February 29, 2016
|
||||||||||||||||||
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
601,343
|
|
|
$
|
77,028
|
|
|
$
|
—
|
|
|
$
|
678,371
|
|
Homebuilding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
601,343
|
|
|
$
|
74,399
|
|
|
$
|
—
|
|
|
$
|
675,742
|
|
Construction and land costs
|
—
|
|
|
(500,964
|
)
|
|
(67,854
|
)
|
|
—
|
|
|
(568,818
|
)
|
|||||
Selling, general and administrative expenses
|
(24,340
|
)
|
|
(53,464
|
)
|
|
(10,128
|
)
|
|
—
|
|
|
(87,932
|
)
|
|||||
Operating income (loss)
|
(24,340
|
)
|
|
46,915
|
|
|
(3,583
|
)
|
|
—
|
|
|
18,992
|
|
|||||
Interest income
|
134
|
|
|
18
|
|
|
—
|
|
|
—
|
|
|
152
|
|
|||||
Interest expense
|
(44,370
|
)
|
|
(820
|
)
|
|
(1,061
|
)
|
|
42,554
|
|
|
(3,697
|
)
|
|||||
Intercompany interest
|
74,043
|
|
|
(27,508
|
)
|
|
(3,981
|
)
|
|
(42,554
|
)
|
|
—
|
|
|||||
Equity in loss of unconsolidated joint ventures
|
—
|
|
|
(603
|
)
|
|
—
|
|
|
—
|
|
|
(603
|
)
|
|||||
Homebuilding pretax income (loss)
|
5,467
|
|
|
18,002
|
|
|
(8,625
|
)
|
|
—
|
|
|
14,844
|
|
|||||
Financial services pretax income
|
—
|
|
|
—
|
|
|
1,183
|
|
|
—
|
|
|
1,183
|
|
|||||
Total pretax income (loss)
|
5,467
|
|
|
18,002
|
|
|
(7,442
|
)
|
|
—
|
|
|
16,027
|
|
|||||
Income tax benefit (expense)
|
700
|
|
|
(3,900
|
)
|
|
300
|
|
|
—
|
|
|
(2,900
|
)
|
|||||
Equity in net income of subsidiaries
|
6,960
|
|
|
—
|
|
|
—
|
|
|
(6,960
|
)
|
|
—
|
|
|||||
Net income (loss)
|
$
|
13,127
|
|
|
$
|
14,102
|
|
|
$
|
(7,142
|
)
|
|
$
|
(6,960
|
)
|
|
$
|
13,127
|
|
|
February 28, 2017
|
||||||||||||||||||
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Homebuilding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
257,656
|
|
|
$
|
83,677
|
|
|
$
|
10,547
|
|
|
$
|
—
|
|
|
$
|
351,880
|
|
Receivables
|
4,833
|
|
|
143,517
|
|
|
90,008
|
|
|
—
|
|
|
238,358
|
|
|||||
Inventories
|
—
|
|
|
3,072,225
|
|
|
351,119
|
|
|
—
|
|
|
3,423,344
|
|
|||||
Investments in unconsolidated joint ventures
|
—
|
|
|
62,417
|
|
|
2,499
|
|
|
—
|
|
|
64,916
|
|
|||||
Deferred tax assets, net
|
277,977
|
|
|
309,378
|
|
|
144,530
|
|
|
—
|
|
|
731,885
|
|
|||||
Other assets
|
85,433
|
|
|
8,728
|
|
|
2,518
|
|
|
—
|
|
|
96,679
|
|
|||||
|
625,899
|
|
|
3,679,942
|
|
|
601,221
|
|
|
—
|
|
|
4,907,062
|
|
|||||
Financial services
|
—
|
|
|
—
|
|
|
15,518
|
|
|
—
|
|
|
15,518
|
|
|||||
Intercompany receivables
|
3,654,435
|
|
|
—
|
|
|
93,065
|
|
|
(3,747,500
|
)
|
|
—
|
|
|||||
Investments in subsidiaries
|
55,813
|
|
|
—
|
|
|
—
|
|
|
(55,813
|
)
|
|
—
|
|
|||||
Total assets
|
$
|
4,336,147
|
|
|
$
|
3,679,942
|
|
|
$
|
709,804
|
|
|
$
|
(3,803,313
|
)
|
|
$
|
4,922,580
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Homebuilding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable, accrued expenses and other liabilities
|
$
|
134,143
|
|
|
$
|
327,181
|
|
|
$
|
219,069
|
|
|
$
|
—
|
|
|
$
|
680,393
|
|
Notes payable
|
2,450,026
|
|
|
28,393
|
|
|
26,030
|
|
|
—
|
|
|
2,504,449
|
|
|||||
|
2,584,169
|
|
|
355,574
|
|
|
245,099
|
|
|
—
|
|
|
3,184,842
|
|
|||||
Financial services
|
—
|
|
|
—
|
|
|
1,278
|
|
|
—
|
|
|
1,278
|
|
|||||
Intercompany payables
|
15,518
|
|
|
3,302,230
|
|
|
429,752
|
|
|
(3,747,500
|
)
|
|
—
|
|
|||||
Stockholders’ equity
|
1,736,460
|
|
|
22,138
|
|
|
33,675
|
|
|
(55,813
|
)
|
|
1,736,460
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
4,336,147
|
|
|
$
|
3,679,942
|
|
|
$
|
709,804
|
|
|
$
|
(3,803,313
|
)
|
|
$
|
4,922,580
|
|
|
November 30, 2016
|
||||||||||||||||||
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Homebuilding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
463,100
|
|
|
$
|
100,439
|
|
|
$
|
28,547
|
|
|
$
|
—
|
|
|
$
|
592,086
|
|
Receivables
|
4,807
|
|
|
135,915
|
|
|
90,943
|
|
|
—
|
|
|
231,665
|
|
|||||
Inventories
|
—
|
|
|
3,048,132
|
|
|
355,096
|
|
|
—
|
|
|
3,403,228
|
|
|||||
Investments in unconsolidated joint ventures
|
—
|
|
|
61,517
|
|
|
2,499
|
|
|
—
|
|
|
64,016
|
|
|||||
Deferred tax assets, net
|
276,737
|
|
|
318,077
|
|
|
144,171
|
|
|
—
|
|
|
738,985
|
|
|||||
Other assets
|
79,526
|
|
|
9,177
|
|
|
2,442
|
|
|
—
|
|
|
91,145
|
|
|||||
|
824,170
|
|
|
3,673,257
|
|
|
623,698
|
|
|
—
|
|
|
5,121,125
|
|
|||||
Financial services
|
—
|
|
|
—
|
|
|
10,499
|
|
|
—
|
|
|
10,499
|
|
|||||
Intercompany receivables
|
3,559,012
|
|
|
—
|
|
|
97,062
|
|
|
(3,656,074
|
)
|
|
—
|
|
|||||
Investments in subsidiaries
|
35,965
|
|
|
—
|
|
|
—
|
|
|
(35,965
|
)
|
|
—
|
|
|||||
Total assets
|
$
|
4,419,147
|
|
|
$
|
3,673,257
|
|
|
$
|
731,259
|
|
|
$
|
(3,692,039
|
)
|
|
$
|
5,131,624
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Homebuilding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable, accrued expenses and other liabilities
|
$
|
131,530
|
|
|
$
|
397,605
|
|
|
$
|
237,192
|
|
|
$
|
—
|
|
|
$
|
766,327
|
|
Notes payable
|
2,548,112
|
|
|
66,927
|
|
|
25,110
|
|
|
—
|
|
|
2,640,149
|
|
|||||
|
2,679,642
|
|
|
464,532
|
|
|
262,302
|
|
|
—
|
|
|
3,406,476
|
|
|||||
Financial services
|
—
|
|
|
—
|
|
|
2,003
|
|
|
—
|
|
|
2,003
|
|
|||||
Intercompany payables
|
16,360
|
|
|
3,208,725
|
|
|
430,989
|
|
|
(3,656,074
|
)
|
|
—
|
|
|||||
Stockholders’ equity
|
1,723,145
|
|
|
—
|
|
|
35,965
|
|
|
(35,965
|
)
|
|
1,723,145
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
4,419,147
|
|
|
$
|
3,673,257
|
|
|
$
|
731,259
|
|
|
$
|
(3,692,039
|
)
|
|
$
|
5,131,624
|
|
|
Three Months Ended February 28, 2017
|
||||||||||||||||||
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
11,773
|
|
|
$
|
(71,130
|
)
|
|
$
|
(17,685
|
)
|
|
$
|
—
|
|
|
$
|
(77,042
|
)
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Contributions to unconsolidated joint ventures
|
—
|
|
|
(3,500
|
)
|
|
(5,250
|
)
|
|
—
|
|
|
(8,750
|
)
|
|||||
Return of investments in unconsolidated joint ventures
|
—
|
|
|
1,107
|
|
|
—
|
|
|
—
|
|
|
1,107
|
|
|||||
Purchases of property and equipment, net
|
(892
|
)
|
|
(113
|
)
|
|
(10
|
)
|
|
—
|
|
|
(1,015
|
)
|
|||||
Intercompany
|
(106,903
|
)
|
|
—
|
|
|
—
|
|
|
106,903
|
|
|
—
|
|
|||||
Net cash used in investing activities
|
(107,795
|
)
|
|
(2,506
|
)
|
|
(5,260
|
)
|
|
106,903
|
|
|
(8,658
|
)
|
|||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Repayment of senior notes
|
(105,326
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(105,326
|
)
|
|||||
Payments on mortgages and land contracts due to land sellers and other loans
|
—
|
|
|
(45,428
|
)
|
|
—
|
|
|
—
|
|
|
(45,428
|
)
|
|||||
Issuance of common stock under employee stock plans
|
662
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
662
|
|
|||||
Payments of cash dividends
|
(2,215
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,215
|
)
|
|||||
Stock repurchases
|
(2,543
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,543
|
)
|
|||||
Intercompany
|
—
|
|
|
102,302
|
|
|
4,601
|
|
|
(106,903
|
)
|
|
—
|
|
|||||
Net cash provided by (used in) financing activities
|
(109,422
|
)
|
|
56,874
|
|
|
4,601
|
|
|
(106,903
|
)
|
|
(154,850
|
)
|
|||||
Net decrease in cash and cash equivalents
|
(205,444
|
)
|
|
(16,762
|
)
|
|
(18,344
|
)
|
|
—
|
|
|
(240,550
|
)
|
|||||
Cash and cash equivalents at beginning of period
|
463,100
|
|
|
100,439
|
|
|
29,461
|
|
|
—
|
|
|
593,000
|
|
|||||
Cash and cash equivalents at end of period
|
$
|
257,656
|
|
|
$
|
83,677
|
|
|
$
|
11,117
|
|
|
$
|
—
|
|
|
$
|
352,450
|
|
|
Three Months Ended February 29, 2016
|
||||||||||||||||||
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
13,908
|
|
|
$
|
(137,158
|
)
|
|
$
|
(20,063
|
)
|
|
$
|
—
|
|
|
$
|
(143,313
|
)
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Contributions to unconsolidated joint ventures
|
—
|
|
|
(291
|
)
|
|
—
|
|
|
—
|
|
|
(291
|
)
|
|||||
Purchases of property and equipment, net
|
(1,129
|
)
|
|
(265
|
)
|
|
(19
|
)
|
|
—
|
|
|
(1,413
|
)
|
|||||
Intercompany
|
(115,459
|
)
|
|
—
|
|
|
—
|
|
|
115,459
|
|
|
—
|
|
|||||
Net cash used in investing activities
|
(116,588
|
)
|
|
(556
|
)
|
|
(19
|
)
|
|
115,459
|
|
|
(1,704
|
)
|
|||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Change in restricted cash
|
4,987
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,987
|
|
|||||
Payments on mortgages and land contracts due to land sellers and other loans
|
—
|
|
|
(5,659
|
)
|
|
—
|
|
|
—
|
|
|
(5,659
|
)
|
|||||
Payments of cash dividends
|
(2,270
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,270
|
)
|
|||||
Stock repurchases
|
(87,526
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(87,526
|
)
|
|||||
Intercompany
|
—
|
|
|
104,452
|
|
|
11,007
|
|
|
(115,459
|
)
|
|
—
|
|
|||||
Net cash provided by (used in) financing activities
|
(84,809
|
)
|
|
98,793
|
|
|
11,007
|
|
|
(115,459
|
)
|
|
(90,468
|
)
|
|||||
Net decrease in cash and cash equivalents
|
(187,489
|
)
|
|
(38,921
|
)
|
|
(9,075
|
)
|
|
—
|
|
|
(235,485
|
)
|
|||||
Cash and cash equivalents at beginning of period
|
444,850
|
|
|
96,741
|
|
|
18,750
|
|
|
—
|
|
|
560,341
|
|
|||||
Cash and cash equivalents at end of period
|
$
|
257,361
|
|
|
$
|
57,820
|
|
|
$
|
9,675
|
|
|
$
|
—
|
|
|
$
|
324,856
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Three Months Ended
|
|||||||||
|
February 28,
2017 |
|
February 29,
2016 |
|
Variance
|
|||||
Revenues:
|
|
|
|
|
|
|||||
Homebuilding
|
$
|
816,246
|
|
|
$
|
675,742
|
|
|
21
|
%
|
Financial services
|
2,350
|
|
|
2,629
|
|
|
(11
|
)
|
||
Total revenues
|
$
|
818,596
|
|
|
$
|
678,371
|
|
|
21
|
%
|
Pretax income:
|
|
|
|
|
|
|||||
Homebuilding
|
$
|
19,899
|
|
|
$
|
14,844
|
|
|
34
|
%
|
Financial services
|
1,560
|
|
|
1,183
|
|
|
32
|
|
||
Total pretax income
|
21,459
|
|
|
16,027
|
|
|
34
|
|
||
Income tax expense
|
(7,200
|
)
|
|
(2,900
|
)
|
|
(148
|
)
|
||
Net income
|
$
|
14,259
|
|
|
$
|
13,127
|
|
|
9
|
%
|
Basic earnings per share
|
$
|
.17
|
|
|
$
|
.15
|
|
|
13
|
%
|
Diluted earnings per share
|
$
|
.15
|
|
|
$
|
.14
|
|
|
7
|
%
|
|
Three Months Ended
|
||||||
|
February 28,
2017 |
|
February 29,
2016 |
||||
Net orders
|
2,580
|
|
|
2,272
|
|
||
Net order value (a)
|
$
|
1,085,422
|
|
|
$
|
824,674
|
|
Cancellation rate (b)
|
23
|
%
|
|
27
|
%
|
||
Ending backlog — homes
|
4,776
|
|
|
4,285
|
|
||
Ending backlog — value
|
$
|
1,793,564
|
|
|
$
|
1,433,507
|
|
Ending community count
|
240
|
|
|
241
|
|
||
Average community count
|
238
|
|
|
244
|
|
(a)
|
Net order value represents the potential future housing revenues associated with net orders generated during a period, as well as homebuyer selections of lot and product premiums and design studio options and upgrades for homes in backlog during the same period.
|
(b)
|
The cancellation rate represents the total number of contracts for new homes canceled during a period divided by the total (gross) orders for new homes generated during the same period.
|
|
Three Months Ended
|
||||||
|
February 28,
2017 |
|
February 29,
2016 |
||||
Revenues:
|
|
|
|
||||
Housing
|
$
|
810,947
|
|
|
$
|
672,646
|
|
Land
|
5,299
|
|
|
3,096
|
|
||
Total
|
816,246
|
|
|
675,742
|
|
||
Costs and expenses:
|
|
|
|
||||
Construction and land costs
|
|
|
|
||||
Housing
|
(692,787
|
)
|
|
(564,828
|
)
|
||
Land
|
(5,293
|
)
|
|
(3,990
|
)
|
||
Total
|
(698,080
|
)
|
|
(568,818
|
)
|
||
Selling, general and administrative expenses
|
(92,889
|
)
|
|
(87,932
|
)
|
||
Total
|
(790,969
|
)
|
|
(656,750
|
)
|
||
Operating income
|
$
|
25,277
|
|
|
$
|
18,992
|
|
Homes delivered
|
2,224
|
|
|
1,953
|
|
||
Average selling price
|
$
|
364,600
|
|
|
$
|
344,400
|
|
Housing gross profit margin as a percentage of housing revenues
|
14.6
|
%
|
|
16.0
|
%
|
||
Adjusted housing gross profit margin as a percentage of housing revenues
|
19.9
|
%
|
|
20.7
|
%
|
||
Selling, general and administrative expenses as a percentage of housing revenues
|
11.5
|
%
|
|
13.1
|
%
|
||
Operating income as a percentage of homebuilding revenues
|
3.1
|
%
|
|
2.8
|
%
|
|
|
Three Months Ended
|
||||||||||||||||||||
|
|
Homes Delivered
|
|
Net Orders
|
|
Cancellation Rates
|
||||||||||||||||
Segment
|
|
February 28,
2017 |
|
February 29,
2016 |
|
February 28,
2017 |
|
February 29,
2016 |
|
February 28,
2017 |
|
February 29,
2016 |
||||||||||
West Coast
|
|
606
|
|
|
508
|
|
|
826
|
|
|
555
|
|
|
13
|
%
|
|
24
|
%
|
||||
Southwest
|
|
407
|
|
|
350
|
|
|
456
|
|
|
359
|
|
|
20
|
|
|
24
|
|
||||
Central
|
|
861
|
|
|
765
|
|
|
960
|
|
|
901
|
|
|
29
|
|
|
31
|
|
||||
Southeast
|
|
350
|
|
|
330
|
|
|
338
|
|
|
457
|
|
|
30
|
|
|
25
|
|
||||
Total
|
|
2,224
|
|
|
1,953
|
|
|
2,580
|
|
|
2,272
|
|
|
23
|
%
|
|
27
|
%
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
||||||||||||||||||||
|
|
Net Order Value
|
|
Average Community Count
|
||||||||||||||||||
Segment
|
|
February 28,
2017 |
|
February 29,
2016 |
|
Variance
|
|
February 28,
2017 |
|
February 29,
2016 |
|
Variance
|
||||||||||
West Coast
|
|
$
|
583,503
|
|
|
$
|
337,611
|
|
|
73
|
%
|
|
64
|
|
|
56
|
|
|
14
|
%
|
||
Southwest
|
|
131,731
|
|
|
107,288
|
|
|
23
|
|
|
40
|
|
|
39
|
|
|
3
|
|
||||
Central
|
|
274,883
|
|
|
253,215
|
|
|
9
|
|
|
91
|
|
|
90
|
|
|
1
|
|
||||
Southeast
|
|
95,305
|
|
|
126,560
|
|
|
(25
|
)
|
|
43
|
|
|
59
|
|
|
(27
|
)
|
||||
Total
|
|
$
|
1,085,422
|
|
|
$
|
824,674
|
|
|
32
|
%
|
|
238
|
|
|
244
|
|
|
(2
|
)%
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Backlog – Homes
|
|
Backlog – Value
|
||||||||||||||||||
Segment
|
|
February 28,
2017 |
|
February 29,
2016 |
|
Variance
|
|
February 28,
2017 |
|
February 29,
2016 |
|
Variance
|
||||||||||
West Coast
|
|
1,133
|
|
|
785
|
|
|
44
|
%
|
|
$
|
754,511
|
|
|
$
|
461,738
|
|
|
63
|
%
|
||
Southwest
|
|
853
|
|
|
614
|
|
|
39
|
|
|
241,917
|
|
|
174,381
|
|
|
39
|
|
||||
Central
|
|
2,078
|
|
|
1,978
|
|
|
5
|
|
|
596,813
|
|
|
548,985
|
|
|
9
|
|
||||
Southeast
|
|
712
|
|
|
908
|
|
|
(22
|
)
|
|
200,323
|
|
|
248,403
|
|
|
(19
|
)
|
||||
Total
|
|
4,776
|
|
|
4,285
|
|
|
11
|
%
|
|
$
|
1,793,564
|
|
|
$
|
1,433,507
|
|
|
25
|
%
|
|
0-2 years
|
|
3-5 years
|
|
6-10 years
|
|
Greater than
10 years
|
|
Total
|
||||||||||
Inventories
|
$
|
2,032.1
|
|
|
$
|
1,047.6
|
|
|
$
|
260.1
|
|
|
$
|
83.5
|
|
|
$
|
3,423.3
|
|
|
Three Months Ended
|
||||||
|
February 28,
2017 |
|
February 29,
2016 |
||||
Housing revenues
|
$
|
810,947
|
|
|
$
|
672,646
|
|
Housing construction and land costs
|
(692,787
|
)
|
|
(564,828
|
)
|
||
Housing gross profits
|
118,160
|
|
|
107,818
|
|
||
Add: Amortization of previously capitalized interest (a)
|
38,873
|
|
|
30,206
|
|
||
Inventory-related charges (b)
|
4,008
|
|
|
1,179
|
|
||
Adjusted housing gross profits
|
$
|
161,041
|
|
|
$
|
139,203
|
|
Housing gross profit margin as a percentage of housing revenues
|
14.6
|
%
|
|
16.0
|
%
|
||
Adjusted housing gross profit margin as a percentage of housing revenues
|
19.9
|
%
|
|
20.7
|
%
|
(a)
|
Represents the amortization of previously capitalized interest associated with housing operations.
|
(b)
|
Represents inventory impairment and land option contract abandonment charges associated with housing operations.
|
|
February 28,
2017 |
|
November 30,
2016 |
||||
Notes payable
|
$
|
2,504,449
|
|
|
$
|
2,640,149
|
|
Stockholders’ equity
|
1,736,460
|
|
|
1,723,145
|
|
||
Total capital
|
$
|
4,240,909
|
|
|
$
|
4,363,294
|
|
Ratio of debt to capital
|
59.1
|
%
|
|
60.5
|
%
|
||
|
|
|
|
||||
Notes payable
|
$
|
2,504,449
|
|
|
$
|
2,640,149
|
|
Less: Cash and cash equivalents
|
(351,880
|
)
|
|
(592,086
|
)
|
||
Net debt
|
2,152,569
|
|
|
2,048,063
|
|
||
Stockholders’ equity
|
1,736,460
|
|
|
1,723,145
|
|
||
Total capital
|
$
|
3,889,029
|
|
|
$
|
3,771,208
|
|
Ratio of net debt to capital
|
55.3
|
%
|
|
54.3
|
%
|
|
Three Months Ended
|
||||||
|
February 28,
2017 |
|
February 29,
2016 |
||||
Revenues
|
$
|
2,350
|
|
|
$
|
2,629
|
|
Expenses
|
(819
|
)
|
|
(859
|
)
|
||
Equity in income (loss) of unconsolidated joint ventures
|
29
|
|
|
(587
|
)
|
||
Pretax income
|
$
|
1,560
|
|
|
$
|
1,183
|
|
•
|
internally generated cash flows;
|
•
|
public issuances of our common stock;
|
•
|
public issuances of debt securities;
|
•
|
land option contracts and other similar contracts and seller notes; and
|
•
|
letters of credit and performance bonds.
|
•
|
land acquisition and land development;
|
•
|
home construction;
|
•
|
operating expenses;
|
•
|
principal and interest payments on notes payable; and
|
•
|
cash collateral.
|
|
|
February 28, 2017
|
|
November 30, 2016
|
|
Variance
|
|||||||||||||||
Segment
|
|
Lots
|
|
$
|
|
Lots
|
|
$
|
|
Lots
|
|
$
|
|||||||||
West Coast
|
|
10,562
|
|
|
$
|
1,720,909
|
|
|
10,904
|
|
|
$
|
1,726,740
|
|
|
(342
|
)
|
|
$
|
(5,831
|
)
|
Southwest
|
|
8,521
|
|
|
523,589
|
|
|
8,338
|
|
|
522,320
|
|
|
183
|
|
|
1,269
|
|
|||
Central
|
|
18,059
|
|
|
803,059
|
|
|
18,272
|
|
|
769,237
|
|
|
(213
|
)
|
|
33,822
|
|
|||
Southeast
|
|
7,329
|
|
|
375,787
|
|
|
7,311
|
|
|
384,931
|
|
|
18
|
|
|
(9,144
|
)
|
|||
Total
|
|
44,471
|
|
|
$
|
3,423,344
|
|
|
44,825
|
|
|
$
|
3,403,228
|
|
|
(354
|
)
|
|
$
|
20,116
|
|
|
February 28,
2017 |
|
November 30,
2016 |
|
Variance
|
||||||
Mortgages and land contracts due to land sellers and other loans
|
$
|
29,313
|
|
|
$
|
66,927
|
|
|
$
|
(37,614
|
)
|
Senior notes
|
2,247,460
|
|
|
2,345,843
|
|
|
(98,383
|
)
|
|||
Convertible senior notes
|
227,676
|
|
|
227,379
|
|
|
297
|
|
|||
Total
|
$
|
2,504,449
|
|
|
$
|
2,640,149
|
|
|
$
|
(135,700
|
)
|
Financial Covenants and Other Requirements
|
|
Covenant Requirement
|
|
Actual
|
|
Consolidated tangible net worth
|
|
>
|
$1.22 billion
|
|
$1.74 billion
|
Leverage Ratio
|
|
<
|
.650
|
|
.591
|
Interest Coverage Ratio (a)
|
|
>
|
1.500
|
|
2.178
|
Minimum liquidity (a)
|
|
>
|
$181.4 million
|
|
$351.9 million
|
Investments in joint ventures and non-guarantor subsidiaries
|
|
<
|
$464.7 million
|
|
$98.6 million
|
Borrowing base in excess of borrowing base indebtedness (as defined)
|
|
|
n/a
|
|
$435.8 million
|
(a)
|
Under the terms of the Credit Facility, we are required to meet either the Interest Coverage Ratio or a minimum level of liquidity, but not both. As of
February 28, 2017
, we met both the Interest Coverage Ratio and the minimum liquidity requirements.
|
|
Three Months Ended
|
||||||
|
February 28,
2017 |
|
February 29,
2016 |
||||
Net cash used in:
|
|
|
|
||||
Operating activities
|
$
|
(77,042
|
)
|
|
$
|
(143,313
|
)
|
Investing activities
|
(8,658
|
)
|
|
(1,704
|
)
|
||
Financing activities
|
(154,850
|
)
|
|
(90,468
|
)
|
||
Net decrease in cash and cash equivalents
|
$
|
(240,550
|
)
|
|
$
|
(235,485
|
)
|
|
Total
|
|
2017
|
|
2018-2019
|
|
2020-2021
|
|
Thereafter
|
||||||||||
Contractual obligations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt
|
$
|
2,524.3
|
|
|
$
|
194.3
|
|
|
$
|
930.0
|
|
|
$
|
350.0
|
|
|
$
|
1,050.0
|
|
Interest
|
631.6
|
|
|
136.8
|
|
|
256.6
|
|
|
167.6
|
|
|
70.6
|
|
|||||
Total
|
$
|
3,155.9
|
|
|
$
|
331.1
|
|
|
$
|
1,186.6
|
|
|
$
|
517.6
|
|
|
$
|
1,120.6
|
|
•
|
We expect to generate housing revenues in the range of $880 million to $940 million, compared to $807 million in the year-earlier quarter, reflecting both the conversion of our higher backlog at
February 28, 2017
into homes delivered and an anticipated overall average selling price of those homes in the range of $387,000 to $392,000.
|
•
|
We expect our housing gross profit margin will improve by approximately 50 basis points from the 2017 first quarter to approximately 15.6%, assuming no inventory impairment or land option contract abandonment charges. We believe our selling, general and administrative expenses as a percentage of housing revenues will be about 11.2%, improving on a sequential and year-over-year basis due to our anticipated improved operating leverage from a higher volume of homes delivered and corresponding higher housing revenues, and our ongoing cost containment efforts.
|
•
|
We are projecting an effective income tax rate of approximately 39% for the quarter, based on our present forecasts for pretax income and an anticipated decrease in federal energy tax credits for the period as compared to the 2016 second quarter.
|
•
|
We expect our average community count for the second quarter will be essentially flat as compared to the same quarter of 2016.
|
•
|
We expect our housing revenues to be in the range of $4.0 billion to $4.3 billion, an increase from $3.6 billion in 2016, and anticipate our overall average selling price to be in the range of $385,000 to $395,000, representing an increase of 6% to 9% as compared to $363,800 in 2016.
|
•
|
We expect our operating income margin to range from 5.8% to 6.4%, assuming no inventory-related charges, as compared to 5.7% in 2016.
|
•
|
We expect our housing gross profit margin to range from 16.1% to 16.5%, assuming no inventory-related charges, as compared to 16.6% in 2016.
|
•
|
We expect our selling, general and administrative expenses as a percentage of housing revenues to be in the range of 10.0% to 10.4%, as compared to 10.9% in 2016.
|
•
|
We expect our effective income tax rate to be in the range of 38.5%.
|
•
|
We expect our average community count to be essentially flat relative to 2016.
|
•
|
general economic, employment and business conditions;
|
•
|
population growth, household formations and demographic trends;
|
•
|
conditions in the capital, credit and financial markets;
|
•
|
our ability to access external financing sources and raise capital through the issuance of common stock, debt or other securities, and/or project financing, on favorable terms;
|
•
|
material and trade costs and availability;
|
•
|
changes in interest rates;
|
•
|
our debt level, including our ratio of debt to capital, and our ability to adjust our debt level and maturity schedule;
|
•
|
our compliance with the terms of the Credit Facility;
|
•
|
volatility in the market price of our common stock;
|
•
|
weak or declining consumer confidence, either generally or specifically with respect to purchasing homes;
|
•
|
competition from other sellers of new and resale homes;
|
•
|
weather events, significant natural disasters and other climate and environmental factors, including the prolonged drought and related water-constrained conditions in the southwest United States and California;
|
•
|
government actions, policies, programs and regulations directed at or affecting the housing market (including the Dodd-Frank Act, tax benefits associated with purchasing and owning a home, 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;
|
•
|
changes in existing tax laws or enacted corporate income tax rates;
|
•
|
the availability and cost of land in desirable areas;
|
•
|
our warranty claims experience with respect to homes previously delivered and actual warranty costs incurred;
|
•
|
costs and/or charges arising from regulatory compliance requirements or from legal, arbitral or regulatory proceedings, investigations, claims or settlements, including unfavorable outcomes in any such matters resulting in actual or potential monetary damage awards, penalties, fines or other direct or indirect payments, or injunctions, consent decrees or other voluntary or involuntary restrictions or adjustments to our business operations or practices that are beyond our current expectations and/or accruals;
|
•
|
our ability to use/realize the net deferred tax assets we have generated;
|
•
|
our ability to successfully implement our current and planned strategies and initiatives related to our product, geographic and market positioning, gaining share and scale in our served markets;
|
•
|
our operational and investment concentration in markets in California;
|
•
|
consumer interest in our new home communities and products, particularly from first-time homebuyers and
higher-income consumers;
|
•
|
our ability to generate orders and
convert our backlog of orders to home deliveries and revenues, particularly in key markets in California;
|
•
|
our ability to successfully implement our returns-focused growth roadmap/strategy and achieve the associated revenue, margin, profitability, cash flow, community reactivation, land sales, business growth, asset efficiency, return on invested capital, return on equity, net debt-to-capital ratio and other financial and operational targets and objectives;
|
•
|
the ability of our homebuyers to obtain residential mortgage loans and mortgage banking services;
|
•
|
the performance of mortgage lenders to our homebuyers;
|
•
|
completing the wind down of HCM as planned;
|
•
|
Stearns Lending’s management of HCM’s assets and operations;
|
•
|
whether we can operate a joint venture with Stearns Lending, and the performance of any such mortgage banking joint venture once operational;
|
•
|
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
|
|||
2017
|
|
$
|
165,000
|
|
|
9.6
|
%
|
2018
|
|
300,000
|
|
|
7.3
|
|
|
2019
|
|
630,000
|
|
|
3.9
|
|
|
2020
|
|
350,000
|
|
|
8.5
|
|
|
2021
|
|
—
|
|
|
—
|
|
|
Thereafter
|
|
1,050,000
|
|
|
7.5
|
|
|
Total
|
|
$
|
2,495,000
|
|
|
6.9
|
%
|
Fair value at February 28, 2017
|
|
$
|
2,660,675
|
|
|
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs
|
|||||
December 1-31
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
1,627,000
|
|
January 1-31
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,627,000
|
|
|
February 1-28
|
|
152,569
|
|
|
16.67
|
|
|
—
|
|
|
1,627,000
|
|
|
Total
|
|
152,569
|
|
|
$
|
16.67
|
|
|
—
|
|
|
|
|
KB HOME
Registrant
|
Dated
|
April 5, 2017
|
|
By:
|
/s/ JEFF J. KAMINSKI
|
|
|
|
|
Jeff J. Kaminski
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
Dated
|
April 5, 2017
|
|
By:
|
/s/ WILLIAM R. HOLLINGER
|
|
|
|
|
William R. Hollinger
Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer)
|
|
|
|
31.1
|
|
Certification of Jeffrey T. Mezger, Chairman, 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, Chairman, President and Chief Executive Officer of KB Home Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.2
|
|
Certification of Jeff J. Kaminski, Executive Vice President and Chief Financial Officer of KB Home Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
101
|
|
The following materials from KB Home’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2017, formatted in eXtensible Business Reporting Language (XBRL): (a) Consolidated Statements of Operations for the three months ended February 28, 2017 and February 29, 2016, (b) Consolidated Balance Sheets as of February 28, 2017 and November 30, 2016, (c) Consolidated Statements of Cash Flows for the three months ended February 28, 2017 and February 29, 2016, and (d) Notes to Consolidated Financial Statements.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of KB Home;
|
2.
|
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;
|
3.
|
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;
|
4.
|
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:
|
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;
|
b)
|
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;
|
c)
|
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
|
d)
|
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
|
5.
|
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):
|
a)
|
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
|
b)
|
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.
|
Dated
|
April 5, 2017
|
|
/s/ JEFFREY T. MEZGER
|
|
|
|
Jeffrey T. Mezger
|
|
|
|
Chairman, President and Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of KB Home;
|
2.
|
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;
|
3.
|
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;
|
4.
|
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:
|
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;
|
b)
|
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;
|
c)
|
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
|
d)
|
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
|
5.
|
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):
|
a)
|
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
|
b)
|
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.
|
Dated
|
April 5, 2017
|
|
/s/ JEFF J. KAMINSKI
|
|
|
|
Jeff J. Kaminski
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
(Principal Financial Officer)
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Dated
|
April 5, 2017
|
|
/s/ JEFFREY T. MEZGER
|
|
|
|
Jeffrey T. Mezger
|
|
|
|
Chairman, President and Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Dated
|
April 5, 2017
|
|
/s/ JEFF J. KAMINSKI
|
|
|
|
Jeff J. Kaminski
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
(Principal Financial Officer)
|