Delaware
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95-3666267
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Title of each class
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Trading Symbol(s)
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Name of each exchange
on which registered
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Common Stock (par value $1.00 per share)
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KBH
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New York Stock Exchange
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Rights to Purchase Series A Participating Cumulative Preferred Stock
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New York Stock Exchange
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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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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Page
Number
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Information about our Executive Officers
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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Item 16.
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Item 1.
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BUSINESS
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Segment
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States
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Major Market(s)
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West Coast
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California
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Contra Costa County, Elk Grove, Fresno, Los Angeles, Hollister, Madera, Modesto, Oakland, Orange County, Riverside, Sacramento, Salinas, San Bernardino, San Diego, San Francisco, San Jose, Santa Rosa-Petaluma, Stockton, Vallejo, Ventura and Yuba City
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Washington
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Olympia and Seattle
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Southwest
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Arizona
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Phoenix and Tucson
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Nevada
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Las Vegas
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Central
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Colorado
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Denver and Loveland
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Texas
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Austin, Dallas, Fort Worth, Houston and San Antonio
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Southeast
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Florida
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Daytona Beach, Fort Myers, Jacksonville, Lakeland, Melbourne, Orlando, Sarasota and Tampa
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North Carolina
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Raleigh
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Years Ended November 30,
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||||||||||
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2019
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2018
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|
2017
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||||||
West Coast:
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|
|
|
|
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||||||
Homes delivered
|
3,214
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|
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3,152
|
|
|
3,387
|
|
|||
Percentage of total homes delivered
|
27
|
%
|
|
28
|
%
|
|
31
|
%
|
|||
Average selling price
|
$
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592,300
|
|
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$
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661,500
|
|
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$
|
644,900
|
|
Homebuilding revenues (a)
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$
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1,912.2
|
|
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$
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2,085.3
|
|
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$
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2,186.4
|
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Southwest:
|
|
|
|
|
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||||||
Homes delivered
|
2,346
|
|
|
2,301
|
|
|
1,837
|
|
|||
Percentage of total homes delivered
|
20
|
%
|
|
20
|
%
|
|
17
|
%
|
|||
Average selling price
|
$
|
322,000
|
|
|
$
|
307,300
|
|
|
$
|
290,200
|
|
Homebuilding revenues (a)
|
$
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764.8
|
|
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$
|
707.1
|
|
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$
|
533.1
|
|
Central:
|
|
|
|
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||||||
Homes delivered
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4,291
|
|
|
4,113
|
|
|
4,136
|
|
|||
Percentage of total homes delivered
|
36
|
%
|
|
36
|
%
|
|
38
|
%
|
|||
Average selling price
|
$
|
293,500
|
|
|
$
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297,400
|
|
|
$
|
284,800
|
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Homebuilding revenues (a)
|
$
|
1,267.9
|
|
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$
|
1,239.3
|
|
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$
|
1,188.8
|
|
Southeast:
|
|
|
|
|
|
||||||
Homes delivered
|
2,020
|
|
|
1,751
|
|
|
1,549
|
|
|||
Percentage of total homes delivered
|
17
|
%
|
|
16
|
%
|
|
14
|
%
|
|||
Average selling price
|
$
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293,200
|
|
|
$
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286,600
|
|
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$
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284,100
|
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Homebuilding revenues (a)
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$
|
592.8
|
|
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$
|
502.1
|
|
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$
|
448.0
|
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Total:
|
|
|
|
|
|
||||||
Homes delivered
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11,871
|
|
|
11,317
|
|
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10,909
|
|
|||
Average selling price
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$
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380,000
|
|
|
$
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399,200
|
|
|
$
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397,400
|
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Homebuilding revenues (a)
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$
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4,537.7
|
|
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$
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4,533.8
|
|
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$
|
4,356.3
|
|
(a)
|
Homebuilding revenues include revenues from housing and, if applicable, land sales.
|
•
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Customers. With our customer-centered, Built-to-Order™ homebuying process, we provide each of our homebuyers with a highly personalized experience where they can make a wide range of structural and design choices for their future new home. Our community teams of sales representatives, design consultants and other personnel partner closely with each homebuyer through each major step in the design, construction and closing of their KB home. We believe this highly interactive, “customer-first” experience that puts our homebuyers firmly in control of designing a home with the particular features and amenities they want based on how they live and what they value, at an affordable price, promotes customer
|
•
|
Land. We seek to manage our working capital and reduce our operating risks by primarily acquiring entitled land parcels within attractive submarkets as identified by our market research activities. We typically focus on metropolitan areas with favorable long-term economic and population growth prospects that we believe have the potential to sustain a minimum of 800 homes delivered per year, and target land parcels that meet our investment return standards. Identified consumer preferences and home sales activity largely direct where our land acquisition teams search for available land. We focus on investments that provide a one- to two-year supply of land or lots per product line, per community, and individual assets that are generally between 50 to 200 lots in size. Our primary focus continues to be our existing geographic footprint, encompassing markets we identified for their long-term economic and demographic growth potential. We leverage the relationships we have with land owners, developers and brokers to find and acquire land parcels, and use our experience in working with municipalities to efficiently obtain development approvals.
|
•
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Products. We offer our customers a base product with a standardized set of functions and features that is generally priced to be affordable for the local area’s median household income level. As noted above, with our Built-to-Order approach, our customers have the opportunity to select their lot location within a community, floor plan, elevation and structural options, and to personalize their homes with numerous interior design options and upgrades in our design studios. Our design studios, generally centrally located within our served markets, are a key component of our Built-to-Order process, and the mix of design options and upgrades they offer are primarily based on the preferences identified by our market survey and purchase frequency data. We utilize a centralized internal architectural group that designs homes to meet or exceed customers’ price-to-value expectations while being as efficient as possible to construct. To enhance the simplicity and efficiency of our products and processes, our architectural group has developed a core series of high-frequency, flexible floor plans and elevations that we can offer across many of our served markets. Our standardized plans allow us to more effectively shift with local demand and developable land attributes, help us to better understand the cost to build our products and enable us to compare and implement best practices across divisions and communities. We also incorporate energy-efficient features into our product designs to help lower our homebuyers’ total cost of homeownership and reduce our homes’ impact on the environment, as further discussed below.
|
•
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Operations. In addition to differentiating us from other high-production homebuilders, our Built-to-Order process helps drive low-cost production. We generally commence construction of a home only after we have a signed purchase contract with a homebuyer and have obtained preliminary credit approval or other evidence of the homebuyer’s financial ability to purchase the home, and seek to build a backlog of sold homes. By maintaining a substantial backlog, along with centralized scheduling and standardized reporting processes, we have established a disciplined and scalable operational platform that helps us sustain an even-flow production of pre-sold homes. This reduces our inventory risk, promotes construction efficiencies and enhances our relationships with independent subcontractors and other business partners, and provides us with greater visibility and predictability on future deliveries as we grow.
|
•
|
Housing revenues greater than $5.0 billion.
|
•
|
Homebuilding operating income margin, excluding inventory-related charges, of 8.0% to 9.0%.
|
•
|
Return on invested capital in excess of 10.0%.
|
•
|
Return on equity of 10.0% to 15.0%.
|
•
|
Net debt to capital ratio of 40% to 50%, which we lowered in 2018 to a net debt to capital ratio of 35% to 45%, and further tightened in 2019 to a debt to capital ratio of 35% to 45%.
|
|
Homes Completed or Under
Construction and Land
Under Development
|
|
Land Held for Future
Development or Sale
|
|
Land Under
Option (a)
|
|
Total Land
Owned or
Under Option
|
||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
West Coast
|
8,586
|
|
|
8,671
|
|
|
918
|
|
|
1,291
|
|
|
3,338
|
|
|
2,718
|
|
|
12,842
|
|
|
12,680
|
|
Southwest
|
6,841
|
|
|
7,730
|
|
|
384
|
|
|
435
|
|
|
2,801
|
|
|
1,650
|
|
|
10,026
|
|
|
9,815
|
|
Central
|
14,712
|
|
|
14,821
|
|
|
84
|
|
|
105
|
|
|
8,141
|
|
|
7,311
|
|
|
22,937
|
|
|
22,237
|
|
Southeast
|
4,991
|
|
|
4,377
|
|
|
1,523
|
|
|
2,052
|
|
|
3,379
|
|
|
2,466
|
|
|
9,893
|
|
|
8,895
|
|
Total
|
35,130
|
|
|
35,599
|
|
|
2,909
|
|
|
3,883
|
|
|
17,659
|
|
|
14,145
|
|
|
55,698
|
|
|
53,627
|
|
(a)
|
Land under option as of November 30, 2019 and 2018 excludes 9,212 and 11,185 lots, respectively, under contract where the associated deposits were refundable at our discretion.
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||
Net Orders
|
|
|
|
|
|
|
|
||||
2019
|
21
|
%
|
|
32
|
%
|
|
26
|
%
|
|
21
|
%
|
2018
|
25
|
%
|
|
32
|
%
|
|
25
|
%
|
|
18
|
%
|
2017
|
24
|
%
|
|
31
|
%
|
|
24
|
%
|
|
21
|
%
|
|
|
|
|
|
|
|
|
||||
Homes Delivered
|
|
|
|
|
|
|
|
||||
2019
|
18
|
%
|
|
23
|
%
|
|
26
|
%
|
|
33
|
%
|
2018
|
20
|
%
|
|
24
|
%
|
|
26
|
%
|
|
30
|
%
|
2017
|
20
|
%
|
|
24
|
%
|
|
25
|
%
|
|
31
|
%
|
|
|
|
|
|
|
|
|
||||
Housing Revenues
|
|
|
|
|
|
|
|
||||
2019
|
18
|
%
|
|
23
|
%
|
|
25
|
%
|
|
34
|
%
|
2018
|
19
|
%
|
|
24
|
%
|
|
27
|
%
|
|
30
|
%
|
2017
|
19
|
%
|
|
23
|
%
|
|
26
|
%
|
|
32
|
%
|
|
|
|
|
|
|
|
|
•
|
build energy- and water-efficient new homes. Overall, we have built approximately 137,000 ENERGY STAR® certified homes, a milestone that exceeds any other homebuilder;
|
•
|
developed a KB Home Energy Performance Guide®, or EPG®, that informs our homebuyers of the relative energy efficiency and the related estimated monthly energy costs of each of our homes as designed, compared to typical new and existing homes;
|
•
|
include in our product offerings advanced home automation technologies, components (e.g., smart appliances) and systems that can increase convenience for our homebuyers; and
|
•
|
unveiled in 2019 the KB Home ProjeKt: Where Tomorrow Lives™, a collaboratively designed sustainable concept home that showcased, during the Consumer Electronics Show in Las Vegas, Nevada, a vision for the future of the American home.
|
Item 1A.
|
RISK FACTORS
|
•
|
Soft or negative economic or housing market conditions. Adverse conditions in our served markets or nationally could be caused or worsened by factors outside of our control, including, for example, U.S. trade disputes with other countries or a federal government shutdown, and financial markets’ reactions thereto.
|
•
|
Reduced employment levels and job and wage growth. Recent strong employment and wage growth trends may weaken or reverse in 2020. If they do, our core first-time and first move-up homebuyer segments could be particularly affected, impacting us more severely than homebuilders that target a different buyer demographic.
|
•
|
Lower population growth, household formations or other unfavorable demographic changes. These may be driven by, among other things, birth rate changes, economic factors or U.S. immigration policies.
|
•
|
Diminished consumer confidence, whether generally or as to purchasing a home. Consumers may be reluctant to purchase a home compared to housing alternatives (such as renting apartments or homes, or remaining in their existing home) due to location or lifestyle preferences, affordability perceptions (particularly in markets experiencing rapid home price appreciation), employment instability or otherwise.
|
•
|
Tightened availability or affordability of mortgage loans and homeowner insurance coverage. Most of our buyers need a mortgage loan to purchase their home. Their ability to obtain a mortgage loan is largely subject to prevailing interest rates, lenders’ credit standards and appraisals, and the availability of government-supported programs, such as those from the Federal Housing Administration, the Veterans Administration, Federal National Mortgage Association (also known as Fannie Mae) and the Federal Home Loan Mortgage Corporation (also known as Freddie Mac). If mortgage interest
|
•
|
Poor lender performance. We depend on third-party lenders, including our KBHS partner Stearns, to provide mortgage loans to our homebuyers, unlike homebuilders with a wholly-owned mortgage lender. These lenders may be unable or unwilling to complete, timely or at all, the loan originations they start for our homebuyers. Poorly performing lenders can significantly delay home closings, disrupting our production schedules and delivery forecasts, or cause home purchase contract cancellations. While KBHS was not materially affected by Stearns’ parent company’s successfully completed bankruptcy process in 2019 (as discussed in Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations in this report), if KBHS performs poorly and our customers use another lender, the income from and value of our KBHS equity interest would decline.
|
•
|
Adverse tax law changes. If federal or state laws are changed to eliminate or reduce the income tax benefits associated with homeownership, such as personal tax deductions for mortgage loan interest costs and real estate taxes, the after-tax cost of homeownership could measurably increase and diminish consumer interest in buying a home, as could increases in personal income tax rates.
|
•
|
Competition. We face significant competition for customers from other homebuilders, sellers of resale homes and other housing industry participants, including rental-housing operators. This competitive environment may, among other things, cause us to lower our home selling prices or offer incentives to attract or retain buyers.
|
•
|
Seasonality. As discussed in Item 1 – Business in this report, we historically have experienced fluctuations in our quarterly operating results with measurably more homes delivered and revenues generated in our third and fourth fiscal quarters. However, this pattern may not continue in the future at all or to the same degree as in the past.
|
•
|
Lack of available land. Securing sufficient developable land that meets our investment return standards is critical for us to meet our strategic goals and profitably expand our business’ scale. Land availability depends on several factors, including geographical/topographical/governmental constraints, sellers’ business relationships and reputation within the residential real estate community, and competition from other parties, some of which can bid more for land. We expect to continue to face fierce competition for desirable land in our served markets in 2020, pressuring its availability and increasing its cost.
|
•
|
Insufficient financial resources. Our business needs considerable cash to, among other things, acquire and develop land, build homes and provide customer service. We expect to meet our needs with existing cash, future operational cash flow, our Credit Facility and LOC Facility, or outside sources, including project financing. However, outside financing may be unavailable, costly and/or considerably dilute stockholders. For instance:
|
◦
|
Tight capital or financial market conditions may hinder our ability to obtain external financing, or use or expand our Credit Facility and LOC Facility, on favorable terms or at all. Also, if a rating agency downgrades our credit rating or outlook, external financing may be difficult and costly for us to obtain.
|
◦
|
Noncompliance with our Credit Facility and senior notes’ covenants (see Note 14 – Notes Payable in the Notes to Consolidated Financial Statements in this report) may restrict our ability to borrow; accelerate repayment of our debt, which may not be feasible for us; or cause our lenders to impose significant fees or cease lending to us.
|
◦
|
As described in Note 14 – Notes Payable in the Notes to Consolidated Financial Statements in this report, if a change of control or fundamental change occurs before our senior notes mature, we may need to offer to purchase certain of them. This may require us to refinance or restructure our debt, which we may be unable to do at all or on favorable terms.
|
◦
|
Our high debt and debt-to-capital levels could require us to dedicate substantial cash flow to debt service; inhibit our ability to respond to business changes or adjust our debt maturity schedule; curb execution on our current strategies; and/or make us more vulnerable in a downturn than our less-leveraged competitors. Our next senior note
|
•
|
Decreased land inventory value. Our land inventory’s value depends on market conditions, including our estimates of applicable future demand and revenue generation. If conditions deteriorate during the typically significant amount of time between our acquiring ownership/control of land and delivering homes on that land; if we cannot sell land held for sale at its estimated fair value; or if we make strategic changes, we may need to record inventory-related charges. We may also record charges if we decide to sell land at a loss or activate or sell land held for future development.
|
•
|
Trade disputes and defective materials. The federal government has imposed new or increased import tariffs, and other countries have implemented retaliatory measures, raising the cost and reducing the supply of several home construction items. In addition, shortages or rising prices of building materials may ensue from manufacturing defects, resulting in recalls of materials. If such disputes continue or recalls occur, our costs and supply chain disruptions could increase further.
|
•
|
Poor subcontractor availability and performance. Independent subcontractors perform essentially all of our land development and home construction work. Though we supervise such activities at our community sites, we have no control over our subcontractors’ availability or work methods. If qualified subcontractors are not available (due to general shortages in a tight labor market, competition from other builders or otherwise), or do not timely perform, we may incur production delays and other inefficiencies, or higher costs for substitute services. Also, if our subcontractors’ work or materials quality does not meet our standards, we could face more home warranty and construction defect claims, and they or their insurers may not be able to cover the associated repair costs.
|
•
|
Responsibility for duties owed to subcontractors’ employees. Governmental agencies have at times sought to hold contractors like us responsible for subcontractors’ employment-related obligations to their workforces. For instance, under California law, regulators or others could assert that we are responsible for wages and benefits that our subcontractors fail to pay to their employees, or, in certain circumstances, it could be alleged that employees of our subcontractors should be deemed to be our employees. Further efforts to impose such external labor-related obligations on us could create substantial exposure for us in situations beyond our control.
|
Item 1B.
|
UNRESOLVED STAFF COMMENTS
|
Item 2.
|
PROPERTIES
|
Item 3.
|
LEGAL PROCEEDINGS
|
Item 4.
|
MINE SAFETY DISCLOSURES
|
Name
|
|
Age
|
|
Present Position
|
|
Year
Assumed
Present
Position
|
|
Years
at
KB
Home
|
|
Other Positions and Other
Business Experience within the
Last Five Years
|
|
From – To
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey T. Mezger
|
|
64
|
|
Chairman, President and Chief Executive Officer (a)
|
|
2016
|
|
26
|
|
President and Chief Executive Officer (a)
|
|
2006-2016
|
Jeff J. Kaminski
|
|
58
|
|
Executive Vice President and Chief Financial Officer
|
|
2010
|
|
9
|
|
|
|
|
Matthew W. Mandino
|
|
55
|
|
Executive Vice President and Chief Operating Officer
|
|
2018
|
|
8
|
|
Regional President, Southwest
Division President, Colorado
|
|
2016-2018
2011-2016
|
Albert Z. Praw
|
|
71
|
|
Executive Vice President, Real Estate and Business Development
|
|
2011
|
|
23
|
|
|
|
|
Brian J. Woram
|
|
59
|
|
Executive Vice President and General Counsel
|
|
2010
|
|
9
|
|
|
|
|
(a)
|
Mr. Mezger has served as a director since 2006. He was elected Chairman of our board of directors in August 2016.
|
Item 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
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
|
|||||
September 1-30
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
2,193,947
|
|
October 1-31
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,193,947
|
|
|
November 1-30
|
|
107,800
|
|
|
36.58
|
|
|
—
|
|
|
2,193,947
|
|
|
Total
|
|
107,800
|
|
|
$
|
36.58
|
|
|
—
|
|
|
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
||||||||||||
KB Home
|
$
|
100
|
|
|
$
|
81
|
|
|
$
|
92
|
|
|
$
|
182
|
|
|
$
|
123
|
|
|
$
|
205
|
|
S&P 500 Index
|
100
|
|
|
103
|
|
|
111
|
|
|
136
|
|
|
145
|
|
|
168
|
|
||||||
Dow Jones US Home Construction Index
|
100
|
|
|
114
|
|
|
100
|
|
|
179
|
|
|
128
|
|
|
186
|
|
Item 6.
|
SELECTED FINANCIAL DATA
|
|
Years Ended November 30,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Homebuilding
|
$
|
4,537,658
|
|
|
$
|
4,533,795
|
|
|
$
|
4,356,265
|
|
|
$
|
3,582,943
|
|
|
$
|
3,020,987
|
|
Financial services
|
15,089
|
|
|
13,207
|
|
|
12,264
|
|
|
11,703
|
|
|
11,043
|
|
|||||
Total
|
$
|
4,552,747
|
|
|
$
|
4,547,002
|
|
|
$
|
4,368,529
|
|
|
$
|
3,594,646
|
|
|
$
|
3,032,030
|
|
Operating income:
|
|
|
|
|
|
|
|
|
|
||||||||||
Homebuilding
|
$
|
331,380
|
|
|
$
|
345,721
|
|
|
$
|
283,403
|
|
|
$
|
152,401
|
|
|
$
|
138,621
|
|
Financial services
|
10,756
|
|
|
9,363
|
|
|
8,834
|
|
|
7,886
|
|
|
7,332
|
|
|||||
Total
|
$
|
342,136
|
|
|
$
|
355,084
|
|
|
$
|
292,237
|
|
|
$
|
160,287
|
|
|
$
|
145,953
|
|
Pretax income
|
$
|
348,175
|
|
|
$
|
367,965
|
|
|
$
|
289,995
|
|
|
$
|
149,315
|
|
|
$
|
127,043
|
|
Net income (a)
|
268,775
|
|
|
170,365
|
|
|
180,595
|
|
|
105,615
|
|
|
84,643
|
|
|||||
Earnings per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
3.04
|
|
|
$
|
1.93
|
|
|
$
|
2.09
|
|
|
$
|
1.23
|
|
|
$
|
.92
|
|
Diluted
|
2.85
|
|
|
1.71
|
|
|
1.85
|
|
|
1.12
|
|
|
.85
|
|
|||||
Cash dividends declared per share
|
.23
|
|
|
.10
|
|
|
.10
|
|
|
.10
|
|
|
.10
|
|
|||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Homebuilding
|
$
|
4,977,086
|
|
|
$
|
5,061,191
|
|
|
$
|
5,029,158
|
|
|
$
|
5,121,125
|
|
|
$
|
5,072,877
|
|
Financial services
|
38,396
|
|
|
12,380
|
|
|
12,357
|
|
|
10,499
|
|
|
14,028
|
|
|||||
Total
|
$
|
5,015,482
|
|
|
$
|
5,073,571
|
|
|
$
|
5,041,515
|
|
|
$
|
5,131,624
|
|
|
$
|
5,086,905
|
|
Notes payable
|
$
|
1,748,747
|
|
|
$
|
2,060,263
|
|
|
$
|
2,324,845
|
|
|
$
|
2,640,149
|
|
|
$
|
2,601,754
|
|
Stockholders’ equity
|
2,383,122
|
|
|
2,087,500
|
|
|
1,926,311
|
|
|
1,723,145
|
|
|
1,690,834
|
|
|||||
Stockholders’ equity per share
|
26.60
|
|
|
24.01
|
|
|
22.13
|
|
|
20.25
|
|
|
18.32
|
|
|||||
Homebuilding Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Homes delivered
|
11,871
|
|
|
11,317
|
|
|
10,909
|
|
|
9,829
|
|
|
8,196
|
|
|||||
Average selling price
|
$
|
380,000
|
|
|
$
|
399,200
|
|
|
$
|
397,400
|
|
|
$
|
363,800
|
|
|
$
|
354,800
|
|
Net orders
|
12,841
|
|
|
11,014
|
|
|
10,900
|
|
|
10,283
|
|
|
9,253
|
|
|||||
Ending backlog — homes
|
5,078
|
|
|
4,108
|
|
|
4,411
|
|
|
4,420
|
|
|
3,966
|
|
|||||
Average community count
|
250
|
|
|
223
|
|
|
233
|
|
|
238
|
|
|
244
|
|
(a)
|
Net income for the year ended November 30, 2018 included a non-cash charge of $112.5 million to income tax expense for TCJA-related impacts.
|
Item 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Years Ended November 30,
|
|
Variance
|
||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019 vs 2018
|
|
2018 vs 2017
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||
Homebuilding
|
$
|
4,537,658
|
|
|
$
|
4,533,795
|
|
|
$
|
4,356,265
|
|
|
—
|
%
|
|
4
|
%
|
Financial services
|
15,089
|
|
|
13,207
|
|
|
12,264
|
|
|
14
|
|
|
8
|
|
|||
Total
|
$
|
4,552,747
|
|
|
$
|
4,547,002
|
|
|
$
|
4,368,529
|
|
|
—
|
%
|
|
4
|
%
|
Pretax income:
|
|
|
|
|
|
|
|
|
|
||||||||
Homebuilding
|
$
|
325,189
|
|
|
$
|
351,301
|
|
|
$
|
276,927
|
|
|
(7
|
)%
|
|
27
|
%
|
Financial services
|
22,986
|
|
|
16,664
|
|
|
13,068
|
|
|
38
|
|
|
28
|
|
|||
Total
|
348,175
|
|
|
367,965
|
|
|
289,995
|
|
|
(5
|
)
|
|
27
|
|
|||
Income tax expense
|
(79,400
|
)
|
|
(197,600
|
)
|
|
(109,400
|
)
|
|
60
|
|
|
(81
|
)
|
|||
Net income
|
$
|
268,775
|
|
|
$
|
170,365
|
|
|
$
|
180,595
|
|
|
58
|
%
|
|
(6
|
)%
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
3.04
|
|
|
$
|
1.93
|
|
|
$
|
2.09
|
|
|
58
|
%
|
|
(8
|
)%
|
Diluted
|
$
|
2.85
|
|
|
$
|
1.71
|
|
|
$
|
1.85
|
|
|
67
|
%
|
|
(8
|
)%
|
|
|
|
|
Years Ended November 30,
|
||||||
Returns-Focused Growth Plan Financial Metrics
|
|
2019 Targets
|
|
2019
|
|
2016
|
||||
Housing revenues
|
|
> $5.0 billion
|
|
$
|
4,510,814
|
|
|
$
|
3,575,548
|
|
Homebuilding operating income margin, excluding inventory-related charges
|
|
8% to 9%
|
|
7.7
|
%
|
|
5.7
|
%
|
||
Return on invested capital (a)
|
|
> 10%
|
|
9.5
|
%
|
|
5.2
|
%
|
||
Return on equity (a)
|
|
10.0% to 15.0%
|
|
12.2
|
%
|
|
6.3
|
%
|
||
Debt to capital ratio (b)
|
|
35.0% to 45.0%
|
|
42.3
|
%
|
|
60.5
|
%
|
(a)
|
The calculation of return on invested capital is described below under “Non-GAAP Financial Measures.” Return on equity is calculated as net income for the most recent 12-month period divided by average stockholders’ equity for the trailing five quarters.
|
(b)
|
Our original 2019 target was a net debt to capital ratio in the range of 40% to 50%, which we lowered to a range of 35% to 45% during 2018. In the 2019 second quarter, we further tightened our financial target to a debt to capital ratio in the range of 35% to 45%.
|
|
|
Years Ended November 30,
|
||||||
|
|
2019
|
|
2018
|
||||
Net orders
|
|
12,841
|
|
|
11,014
|
|
||
Net order value (a)
|
|
$
|
4,890,153
|
|
|
$
|
4,291,481
|
|
Cancellation rate (b)
|
|
19
|
%
|
|
22
|
%
|
||
Ending backlog — homes
|
|
5,078
|
|
|
4,108
|
|
||
Ending backlog — value
|
|
$
|
1,813,707
|
|
|
$
|
1,434,368
|
|
Ending community count
|
|
251
|
|
|
240
|
|
||
Average community count
|
|
250
|
|
|
223
|
|
(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)
|
Cancellation rate represents the total number of contracts for new homes cancelled during a period divided by the total (gross) orders for new homes generated during the same period.
|
|
Years Ended November 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Housing
|
$
|
4,510,814
|
|
|
$
|
4,517,244
|
|
|
$
|
4,335,205
|
|
Land
|
26,844
|
|
|
16,551
|
|
|
21,060
|
|
|||
Total
|
4,537,658
|
|
|
4,533,795
|
|
|
4,356,265
|
|
|||
Costs and expenses:
|
|
|
|
|
|
||||||
Construction and land costs
|
|
|
|
|
|
||||||
Housing
|
(3,683,174
|
)
|
|
(3,728,917
|
)
|
|
(3,627,732
|
)
|
|||
Land
|
(25,754
|
)
|
|
(15,003
|
)
|
|
(18,736
|
)
|
|||
Total
|
(3,708,928
|
)
|
|
(3,743,920
|
)
|
|
(3,646,468
|
)
|
|||
Selling, general and administrative expenses
|
(497,350
|
)
|
|
(444,154
|
)
|
|
(426,394
|
)
|
|||
Total
|
(4,206,278
|
)
|
|
(4,188,074
|
)
|
|
(4,072,862
|
)
|
|||
Operating income
|
$
|
331,380
|
|
|
$
|
345,721
|
|
|
$
|
283,403
|
|
Homes delivered
|
11,871
|
|
|
11,317
|
|
|
10,909
|
|
|||
Average selling price
|
$
|
380,000
|
|
|
$
|
399,200
|
|
|
$
|
397,400
|
|
Housing gross profit margin as a percentage of housing revenues
|
18.3
|
%
|
|
17.5
|
%
|
|
16.3
|
%
|
|||
Housing gross profit margin excluding inventory-related charges as a percentage of housing revenues
|
18.7
|
%
|
|
18.1
|
%
|
|
16.9
|
%
|
|||
Adjusted housing gross profit margin as a percentage of housing revenues
|
22.2
|
%
|
|
22.5
|
%
|
|
21.8
|
%
|
|||
Selling, general and administrative expense as a percentage of housing revenues
|
11.0
|
%
|
|
9.8
|
%
|
|
9.8
|
%
|
|||
Operating income as a percentage of homebuilding revenues
|
7.3
|
%
|
|
7.6
|
%
|
|
6.5
|
%
|
|
|
Years Ended November 30,
|
||||||||||||||||
|
|
Homes Delivered
|
|
Net Orders
|
|
Cancellation Rates
|
||||||||||||
Segment
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||
West Coast
|
|
3,214
|
|
|
3,152
|
|
|
3,542
|
|
|
2,985
|
|
|
19
|
%
|
|
20
|
%
|
Southwest
|
|
2,346
|
|
|
2,301
|
|
|
2,658
|
|
|
2,139
|
|
|
13
|
|
|
17
|
|
Central
|
|
4,291
|
|
|
4,113
|
|
|
4,565
|
|
|
4,045
|
|
|
21
|
|
|
27
|
|
Southeast
|
|
2,020
|
|
|
1,751
|
|
|
2,076
|
|
|
1,845
|
|
|
23
|
|
|
21
|
|
Total
|
|
11,871
|
|
|
11,317
|
|
|
12,841
|
|
|
11,014
|
|
|
19
|
%
|
|
22
|
%
|
|
|
Years Ended November 30,
|
||||||||||||||||||||
|
|
Net Order Value
|
|
Average Community Count
|
||||||||||||||||||
Segment
|
|
2019
|
|
2018
|
|
Variance
|
|
2019
|
|
2018
|
|
Variance
|
||||||||||
West Coast
|
|
$
|
2,087,293
|
|
|
$
|
1,893,597
|
|
|
10
|
%
|
|
67
|
|
|
54
|
|
|
24
|
%
|
||
Southwest
|
|
842,335
|
|
|
682,172
|
|
|
23
|
|
|
41
|
|
|
34
|
|
|
21
|
|
||||
Central
|
|
1,362,580
|
|
|
1,169,397
|
|
|
17
|
|
|
92
|
|
|
91
|
|
|
1
|
|
||||
Southeast
|
|
597,945
|
|
|
546,315
|
|
|
9
|
|
|
50
|
|
|
44
|
|
|
14
|
|
||||
Total
|
|
$
|
4,890,153
|
|
|
$
|
4,291,481
|
|
|
14
|
%
|
|
250
|
|
|
223
|
|
|
12
|
%
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
November 30,
|
||||||||||||||||||||
|
|
Backlog – Homes
|
|
Backlog – Value
|
||||||||||||||||||
Segment
|
|
2019
|
|
2018
|
|
Variance
|
|
2019
|
|
2018
|
|
Variance
|
||||||||||
West Coast
|
|
1,043
|
|
|
715
|
|
|
46
|
%
|
|
$
|
598,299
|
|
|
$
|
414,564
|
|
|
44
|
%
|
||
Southwest
|
|
1,238
|
|
|
926
|
|
|
34
|
|
|
389,597
|
|
|
302,614
|
|
|
29
|
|
||||
Central
|
|
1,988
|
|
|
1,714
|
|
|
16
|
|
|
590,936
|
|
|
487,921
|
|
|
21
|
|
||||
Southeast
|
|
809
|
|
|
753
|
|
|
7
|
|
|
234,875
|
|
|
229,269
|
|
|
2
|
|
||||
Total
|
|
5,078
|
|
|
4,108
|
|
|
24
|
%
|
|
$
|
1,813,707
|
|
|
$
|
1,434,368
|
|
|
26
|
%
|
|
Years Ended November 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Housing revenues
|
$
|
4,510,814
|
|
|
$
|
4,517,244
|
|
|
$
|
4,335,205
|
|
Housing construction and land costs
|
(3,683,174
|
)
|
|
(3,728,917
|
)
|
|
(3,627,732
|
)
|
|||
Housing gross profits
|
827,640
|
|
|
788,327
|
|
|
707,473
|
|
|||
Add: Inventory-related charges (a)
|
17,291
|
|
|
28,994
|
|
|
25,232
|
|
|||
Housing gross profits excluding inventory-related charges
|
844,931
|
|
|
817,321
|
|
|
732,705
|
|
|||
Add: Amortization of previously capitalized interest (b)
|
156,114
|
|
|
197,936
|
|
|
210,538
|
|
|||
Adjusted housing gross profits
|
$
|
1,001,045
|
|
|
$
|
1,015,257
|
|
|
$
|
943,243
|
|
Housing gross profit margin as a percentage of housing revenues
|
18.3
|
%
|
|
17.5
|
%
|
|
16.3
|
%
|
|||
Housing gross profit margin excluding inventory-related charges as a percentage of housing revenues
|
18.7
|
%
|
|
18.1
|
%
|
|
16.9
|
%
|
|||
Adjusted housing gross profit margin as a percentage of housing revenues
|
22.2
|
%
|
|
22.5
|
%
|
|
21.8
|
%
|
(a)
|
Represents inventory impairment and land option contract abandonment charges associated with housing operations.
|
(b)
|
Represents the amortization of previously capitalized interest associated with housing operations.
|
|
Years ended November 30,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||||||||||
|
As Reported
|
|
As Reported
|
|
TCJA Adjustment
|
|
As Adjusted
|
|
As Reported
|
||||||||||
Total pretax income
|
$
|
348,175
|
|
|
$
|
367,965
|
|
|
$
|
—
|
|
|
$
|
367,965
|
|
|
$
|
289,995
|
|
Income tax expense (a)
|
(79,400
|
)
|
|
(197,600
|
)
|
|
112,500
|
|
|
(85,100
|
)
|
|
(109,400
|
)
|
|||||
Net income
|
$
|
268,775
|
|
|
$
|
170,365
|
|
|
$
|
112,500
|
|
|
$
|
282,865
|
|
|
$
|
180,595
|
|
Diluted earnings per share
|
$
|
2.85
|
|
|
$
|
1.71
|
|
|
|
|
$
|
2.82
|
|
|
$
|
1.85
|
|
||
Weighted average shares outstanding — diluted
|
93,838
|
|
|
101,059
|
|
|
|
|
101,059
|
|
|
98,316
|
|
||||||
Effective tax rate (a)
|
22.8
|
%
|
|
53.7
|
%
|
|
|
|
23.1
|
%
|
|
37.7
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
(a)
|
For the year ended November 30, 2019, income tax expense and the related effective tax rate reflected the favorable impacts of $5.3 million of excess tax benefits related to stock-based compensation, a $4.4 million deferred tax asset valuation allowance reversal and $4.3 million of federal energy tax credits we earned from building energy-efficient homes, partly offset by a $1.9 million non-cash charge due to the re-measurement of deferred tax assets based on a reduction in certain state income tax rates. For the year ended November 30, 2018, income tax expense and adjusted income tax expense, as well as the related effective tax rate and adjusted effective tax rate, included the favorable impacts of the reduction in the federal corporate income tax rate from 35% to 21%, effective January 1, 2018, $10.7 million of federal energy tax credits we earned from building energy-efficient homes, a $2.1 million net benefit from a reduction in our deferred tax asset valuation allowance, and $1.0 million of excess tax benefits from stock-based compensation as a result of our adoption of Accounting Standards Update No. 2016-09, “Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”), effective December 1, 2017.
|
|
|
Years Ended November 30,
|
||||||
|
|
2019
|
|
2016
|
||||
Net income
|
|
$
|
268,775
|
|
|
$
|
105,615
|
|
Adjustments:
|
|
|
|
|
||||
Interest (income) expense, net
|
|
(2,158
|
)
|
|
5,371
|
|
||
Loss on early extinguishment of debt
|
|
6,800
|
|
|
—
|
|
||
Amortization of previously capitalized interest (a)
|
|
156,803
|
|
|
161,285
|
|
||
Income tax impact (b)
|
|
(36,800
|
)
|
|
(48,800
|
)
|
||
Net operating profit after tax
|
|
$
|
393,420
|
|
|
$
|
223,471
|
|
|
|
|
|
|
||||
Average notes payable
|
|
$
|
1,945,458
|
|
|
$
|
2,627,689
|
|
Average stockholders’ equity
|
|
2,211,312
|
|
|
1,669,731
|
|
||
Average invested capital
|
|
$
|
4,156,770
|
|
|
$
|
4,297,420
|
|
Return on invested capital
|
|
9.5
|
%
|
|
5.2
|
%
|
(a)
|
Represents the amortization of previously capitalized interest associated with homebuilding operations.
|
(b)
|
Represents the total adjustments to net income multiplied by our effective tax rate, which was 22.8% for 2019 and 29.3% for 2016.
|
|
November 30,
|
||||||
|
2019
|
|
2018
|
||||
Notes payable
|
$
|
1,748,747
|
|
|
$
|
2,060,263
|
|
Stockholders’ equity
|
2,383,122
|
|
|
2,087,500
|
|
||
Total capital
|
$
|
4,131,869
|
|
|
$
|
4,147,763
|
|
Ratio of debt to capital
|
42.3
|
%
|
|
49.7
|
%
|
||
|
|
|
|
||||
Notes payable
|
$
|
1,748,747
|
|
|
$
|
2,060,263
|
|
Less: Cash and cash equivalents
|
(453,814
|
)
|
|
(574,359
|
)
|
||
Net debt
|
1,294,933
|
|
|
1,485,904
|
|
||
Stockholders’ equity
|
2,383,122
|
|
|
2,087,500
|
|
||
Total capital
|
$
|
3,678,055
|
|
|
$
|
3,573,404
|
|
Ratio of net debt to capital
|
35.2
|
%
|
|
41.6
|
%
|
|
Years Ended November 30,
|
|
Variance
|
||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019 vs 2018
|
|
2018 vs 2017
|
||||||||
Revenues
|
$
|
764,816
|
|
|
$
|
707,075
|
|
|
$
|
533,052
|
|
|
8
|
%
|
|
33
|
%
|
Construction and land costs
|
(585,880
|
)
|
|
(568,194
|
)
|
|
(445,451
|
)
|
|
(3
|
)
|
|
(28
|
)
|
|||
Selling, general and administrative expenses
|
(67,223
|
)
|
|
(50,897
|
)
|
|
(42,329
|
)
|
|
(32
|
)
|
|
(20
|
)
|
|||
Operating income
|
$
|
111,713
|
|
|
$
|
87,984
|
|
|
$
|
45,272
|
|
|
27
|
%
|
|
94
|
%
|
|
|
|
|
|
|
|
|
|
|
||||||||
Homes delivered
|
2,346
|
|
|
2,301
|
|
|
1,837
|
|
|
2
|
%
|
|
25
|
%
|
|||
Average selling price
|
$
|
322,000
|
|
|
$
|
307,300
|
|
|
$
|
290,200
|
|
|
5
|
%
|
|
6
|
%
|
Housing gross profit margin
|
23.8
|
%
|
|
19.6
|
%
|
|
16.4
|
%
|
|
420
|
bps
|
|
320
|
bps
|
|
Years Ended November 30,
|
|
Variance
|
||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019 vs 2018
|
|
2018 vs 2017
|
||||||||
Revenues
|
$
|
592,804
|
|
|
$
|
502,087
|
|
|
$
|
447,963
|
|
|
18
|
%
|
|
12
|
%
|
Construction and land costs
|
(508,351
|
)
|
|
(437,522
|
)
|
|
(396,026
|
)
|
|
(16
|
)
|
|
(10
|
)
|
|||
Selling, general and administrative expenses
|
(65,902
|
)
|
|
(56,940
|
)
|
|
(52,378
|
)
|
|
(16
|
)
|
|
(9
|
)
|
|||
Operating income (loss)
|
$
|
18,551
|
|
|
$
|
7,625
|
|
|
$
|
(441
|
)
|
|
143
|
%
|
|
(a)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Homes delivered
|
2,020
|
|
|
1,751
|
|
|
1,549
|
|
|
15
|
%
|
|
13
|
%
|
|||
Average selling price
|
$
|
293,200
|
|
|
$
|
286,600
|
|
|
$
|
284,100
|
|
|
2
|
%
|
|
1
|
%
|
Housing gross profit margin
|
14.3
|
%
|
|
12.9
|
%
|
|
11.7
|
%
|
|
140
|
bps
|
|
120
|
bps
|
(a)
|
Percentage not meaningful
|
|
Years Ended November 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenues
|
$
|
15,089
|
|
|
$
|
13,207
|
|
|
$
|
12,264
|
|
Expenses
|
(4,333
|
)
|
|
(3,844
|
)
|
|
(3,430
|
)
|
|||
Equity in income of unconsolidated joint ventures
|
12,230
|
|
|
7,301
|
|
|
4,234
|
|
|||
Pretax income
|
$
|
22,986
|
|
|
$
|
16,664
|
|
|
$
|
13,068
|
|
|
|
|
|
|
|
||||||
Total originations (a):
|
|
|
|
|
|
||||||
Loans
|
7,436
|
|
|
5,659
|
|
|
2,485
|
|
|||
Principal
|
$
|
2,190,823
|
|
|
$
|
1,578,037
|
|
|
$
|
688,763
|
|
Percentage of homebuyers using KBHS
|
70
|
%
|
|
56
|
%
|
|
25
|
%
|
|||
Average FICO score
|
719
|
|
|
718
|
|
|
719
|
|
|||
|
|
|
|
|
|
||||||
Loans sold (a):
|
|
|
|
|
|
||||||
Loans sold to Stearns/Nationstar
|
6,224
|
|
|
5,028
|
|
|
1,872
|
|
|||
Principal
|
$
|
1,827,917
|
|
|
$
|
1,419,140
|
|
|
$
|
514,307
|
|
Loans sold to other third parties
|
772
|
|
|
490
|
|
|
196
|
|
|||
Principal
|
$
|
202,349
|
|
|
$
|
120,815
|
|
|
$
|
51,425
|
|
(a)
|
Loan originations and sales occurred within KBHS.
|
|
Years Ended November 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Income tax expense
|
$
|
79,400
|
|
|
$
|
197,600
|
|
|
$
|
109,400
|
|
Effective income tax rate
|
22.8
|
%
|
|
53.7
|
%
|
|
37.7
|
%
|
•
|
internally generated cash flows;
|
•
|
public issuances of debt securities;
|
•
|
land option contracts and other similar contracts and seller notes;
|
•
|
public issuances of our common stock; and
|
•
|
letters of credit and performance bonds.
|
•
|
land acquisitions and land development;
|
•
|
home construction;
|
•
|
operating expenses;
|
•
|
principal and interest payments on notes payable; and
|
|
|
November 30, 2019
|
|
November 30, 2018
|
|
Variance
|
|||||||||||||||
Segment
|
|
Lots
|
|
$
|
|
Lots
|
|
$
|
|
Lots
|
|
$
|
|||||||||
West Coast
|
|
12,842
|
|
|
$
|
1,795,088
|
|
|
12,680
|
|
|
$
|
1,727,993
|
|
|
162
|
|
|
$
|
67,095
|
|
Southwest
|
|
10,026
|
|
|
629,811
|
|
|
9,815
|
|
|
598,374
|
|
|
211
|
|
|
31,437
|
|
|||
Central
|
|
22,937
|
|
|
889,179
|
|
|
22,237
|
|
|
865,184
|
|
|
700
|
|
|
23,995
|
|
|||
Southeast
|
|
9,893
|
|
|
390,524
|
|
|
8,895
|
|
|
391,288
|
|
|
998
|
|
|
(764
|
)
|
|||
Total
|
|
55,698
|
|
|
$
|
3,704,602
|
|
|
53,627
|
|
|
$
|
3,582,839
|
|
|
2,071
|
|
|
$
|
121,763
|
|
|
|
November 30,
|
||||||
|
|
2019
|
|
2018
|
||||
Total cash and cash equivalents
|
|
$
|
453,814
|
|
|
$
|
574,359
|
|
Credit Facility commitment
|
|
800,000
|
|
|
500,000
|
|
||
Borrowings outstanding under the Credit Facility
|
|
—
|
|
|
—
|
|
||
Letters of credit outstanding under the Credit Facility
|
|
(18,884
|
)
|
|
(28,010
|
)
|
||
Credit Facility availability
|
|
781,116
|
|
|
471,990
|
|
||
Total liquidity
|
|
$
|
1,234,930
|
|
|
$
|
1,046,349
|
|
|
|
|
|
|
|
November 30,
|
|
|
||||||||
|
2019
|
|
2018
|
|
Variance
|
||||||
Mortgages and land contracts due to land sellers and other loans
|
$
|
7,889
|
|
|
$
|
40,038
|
|
|
$
|
(32,149
|
)
|
Senior notes
|
1,740,858
|
|
|
1,790,437
|
|
|
(49,579
|
)
|
|||
Convertible senior notes
|
—
|
|
|
229,788
|
|
|
(229,788
|
)
|
|||
Total
|
$
|
1,748,747
|
|
|
$
|
2,060,263
|
|
|
$
|
(311,516
|
)
|
•
|
Consolidated Tangible Net Worth – We must maintain a consolidated tangible net worth at the end of any fiscal quarter greater than or equal to the sum of (a) $1.54 billion, plus (b) an amount equal to 50% of the aggregate of the cumulative consolidated net income for each fiscal quarter commencing after May 31, 2019 and ending as of the last day of such fiscal quarter (though there is no reduction if there is a consolidated net loss in any fiscal quarter), plus (c) an amount equal to 50% of the cumulative net proceeds we receive from the issuance of our capital stock after May 31, 2019.
|
•
|
Leverage Ratio – We must also maintain a Leverage Ratio of less than or equal to .65 at the end of each fiscal quarter. The Leverage Ratio is calculated as the ratio of our consolidated total indebtedness to the sum of consolidated total indebtedness and consolidated tangible net worth, all as defined under the Credit Facility.
|
•
|
Interest Coverage Ratio or Liquidity – We are also required to maintain either (a) an Interest Coverage Ratio of greater than or equal to 1.50 at the end of each fiscal quarter; or (b) a minimum level of liquidity, but not both. The Interest Coverage Ratio is the ratio of our consolidated adjusted EBITDA to consolidated interest incurred, each as defined under the Credit Facility, in each case for the previous 12 months. Our minimum liquidity is required to be greater than or equal to consolidated interest incurred, as defined under the Credit Facility, for the four most recently ended fiscal quarters in the aggregate.
|
Financial Covenants and Other Requirements
|
|
Covenant Requirement
|
|
Actual
|
|||||
Consolidated tangible net worth
|
|
>
|
$
|
1.64
|
billion
|
|
$
|
2.38
|
billion
|
Leverage Ratio
|
|
<
|
.650
|
|
|
.424
|
|
||
Interest Coverage Ratio (a)
|
|
>
|
1.500
|
|
|
3.946
|
|
||
Minimum liquidity (a)
|
|
>
|
$
|
140.7
|
million
|
|
$
|
453.8
|
million
|
Investments in joint ventures and non-guarantor subsidiaries
|
|
<
|
$
|
581.4
|
million
|
|
$
|
172.8
|
million
|
Borrowing base in excess of borrowing base indebtedness (as defined)
|
|
|
n/a
|
|
$
|
1.31
|
billion
|
(a)
|
Under the terms of the Credit Facility, we are required to maintain either a minimum Interest Coverage Ratio or a minimum level of liquidity, but not both. As of November 30, 2019, we met both the Interest Coverage Ratio and the minimum liquidity requirements.
|
|
Years Ended November 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net cash provided by (used in):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
251,042
|
|
|
$
|
221,512
|
|
|
$
|
513,219
|
|
Investing activities
|
(40,944
|
)
|
|
(20,107
|
)
|
|
(15,744
|
)
|
|||
Financing activities
|
(330,359
|
)
|
|
(347,147
|
)
|
|
(369,614
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
$
|
(120,261
|
)
|
|
$
|
(145,742
|
)
|
|
$
|
127,861
|
|
|
Payments due by Period
|
||||||||||||||||||
|
Total
|
|
2020
|
|
2021-2022
|
|
2023-2024
|
|
Thereafter
|
||||||||||
Contractual obligations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt
|
$
|
1,757.9
|
|
|
$
|
7.9
|
|
|
$
|
800.0
|
|
|
$
|
350.0
|
|
|
$
|
600.0
|
|
Interest
|
553.0
|
|
|
121.5
|
|
|
224.5
|
|
|
83.4
|
|
|
123.6
|
|
|||||
Operating lease obligations
|
37.2
|
|
|
9.7
|
|
|
13.6
|
|
|
8.1
|
|
|
5.8
|
|
|||||
Inventory-related obligations (a)
|
29.1
|
|
|
5.3
|
|
|
8.9
|
|
|
1.5
|
|
|
13.4
|
|
|||||
Total
|
$
|
2,377.2
|
|
|
$
|
144.4
|
|
|
$
|
1,047.0
|
|
|
$
|
443.0
|
|
|
$
|
742.8
|
|
(a)
|
Represents liabilities for inventory not owned associated with financing arrangements as discussed in Note 8 – Variable Interest Entities in the Notes to Consolidated Financial Statements in this report, as well as liabilities for fixed or determinable amounts associated with tax increment financing entity (“TIFE”) assessments. 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 on applicable lots before the related TIFE obligations mature.
|
|
Years Ended November 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Inventory impairments:
|
|
|
|
|
|
||||||
Number of communities or land parcels evaluated for recoverability (a)
|
40
|
|
|
57
|
|
|
51
|
|
|||
Carrying value of communities or land parcels evaluated for recoverability (a)
|
$
|
326,255
|
|
|
$
|
356,100
|
|
|
$
|
456,875
|
|
Number of communities or land parcels written down to fair value
|
8
|
|
|
13
|
|
|
10
|
|
|||
Pre-impairment carrying value of communities or land parcels written down to fair value
|
$
|
41,160
|
|
|
$
|
70,156
|
|
|
$
|
58,962
|
|
Inventory impairment charges
|
(14,031
|
)
|
|
(26,104
|
)
|
|
(20,605
|
)
|
|||
Post-impairment fair value
|
$
|
27,129
|
|
|
$
|
44,052
|
|
|
$
|
38,357
|
|
Land option contract abandonments charges
|
$
|
3,260
|
|
|
$
|
2,890
|
|
|
$
|
4,627
|
|
(a)
|
As impairment indicators are assessed on a quarterly basis, some of the communities or land parcels evaluated during the years ended November 30, 2019, 2018 and 2017 were evaluated in more than one quarterly period. Communities or land parcels evaluated for recoverability in more than one quarterly period are counted only once for each applicable year. In 2019,
|
•
|
We expect to generate housing revenues in the range of $910 million to $970 million, an increase from $798.2 million in 2019, and anticipate our average selling price to be approximately $375,000, representing a slight increase compared to the year-earlier period.
|
•
|
We expect our homebuilding operating income margin to be in the range of 4.9% to 5.3%, assuming no inventory-related charges, up from 4.3% for the year-earlier quarter.
|
◦
|
We expect our housing gross profit margin to be in the range of 17.8% to 18.2%, assuming no inventory-related charges, compared to 17.6% for the corresponding 2019 quarter.
|
◦
|
We expect our selling, general and administrative expenses as a percentage of housing revenues to be in the range of 12.7% to 13.1%, an improvement from the 2019 first quarter ratio of 13.4%.
|
•
|
We expect the effective tax rate will be approximately 20%, including an expected favorable impact from federal energy tax credits for building energy-efficient homes. The effective tax rate for the prior year quarter was 13%.
|
•
|
We expect our average community count to be up in the mid-single digit range from the 2019 first quarter.
|
•
|
We expect our net order growth to increase between 15% to 25% compared to the year-earlier period.
|
•
|
We expect our housing revenues to be in the range of $4.90 billion to $5.30 billion, an increase from $4.51 billion in 2019, and anticipate our average selling price to be in the range of $380,000 to $400,000, an increase of up to 5% from 2019.
|
•
|
We expect our homebuilding operating income margin to be in the range of 7.9% to 8.5%, assuming no inventory-related charges, compared to 7.7% for 2019.
|
◦
|
We expect our housing gross profit margin to be in the range of 18.7% to 19.3%, assuming no inventory-related charges, compared to 18.7% for 2019.
|
◦
|
We expect our selling, general and administrative expenses as a percentage of housing revenues to be in the range of 10.5% to 11.1%, compared to 11.0% in the prior year.
|
•
|
We expect the effective tax rate will be approximately 23%, including an expected favorable impact from federal energy tax credits. The effective tax rate for 2019 was 23%.
|
•
|
We expect our average community count to be up in the low- to mid-single digit range from 2019.
|
•
|
We expect our return on equity to improve by more than 100 basis points from 12.2% for 2019.
|
•
|
We expect our debt to capital ratio to be below 40%, compared to 42.3% in 2019.
|
•
|
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;
|
•
|
the execution of any share repurchases pursuant to our board of directors’ authorization;
|
•
|
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;
|
•
|
any failure of lawmakers to agree on a budget or appropriation legislation to fund the federal government’s operations, and financial markets’ and businesses’ reactions to that failure;
|
•
|
government actions, policies, programs and regulations directed at or affecting the housing market (including the 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, including those resulting from regulatory guidance and interpretations issued with respect thereto;
|
•
|
changes in U.S. trade policies, including the imposition of tariffs and duties on homebuilding materials and products, and related trade disputes with and retaliatory measures taken by other countries;
|
•
|
the adoption of new or amended financial accounting standards, including revenue recognition (ASC 606) and lease accounting standards, and the guidance and/or interpretations with respect thereto;
|
•
|
the availability and cost of land in desirable areas and our ability to timely develop acquired land parcels and open new home communities;
|
•
|
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 and in entering into new 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 Plan and other business strategies and achieve any associated financial and operational targets and objectives;
|
•
|
income tax expense volatility associated with stock-based compensation;
|
•
|
the ability of our homebuyers to obtain residential mortgage loans and mortgage banking services;
|
•
|
the performance of mortgage lenders to our homebuyers;
|
•
|
the performance of KBHS;
|
•
|
information technology failures and data security breaches; and
|
•
|
other events outside of our control.
|
Item 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
|
As of November 30, 2019 and for the Years Ending November 30,
|
|
Fair Value at
November 30,
2019
|
||||||||||||||||||||||||||||
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
|
Total
|
|
|||||||||||||||||
Long-term debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Fixed Rate
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
800,000
|
|
|
$
|
350,000
|
|
|
$
|
—
|
|
|
$
|
600,000
|
|
|
$
|
1,750,000
|
|
|
$
|
1,921,563
|
|
Weighted Average Effective Interest Rate
|
—
|
%
|
|
—
|
%
|
|
7.4
|
%
|
|
7.5
|
%
|
|
—
|
%
|
|
6.0
|
%
|
|
7.0
|
%
|
|
|
|
As of November 30, 2018 and for the Years Ending November 30,
|
|
Fair Value at
November 30,
2018
|
||||||||||||||||||||||||||||
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
|
Total
|
|
|||||||||||||||||
Long-term debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Fixed Rate
|
$
|
630,000
|
|
|
$
|
350,000
|
|
|
$
|
—
|
|
|
$
|
800,000
|
|
|
$
|
250,000
|
|
|
$
|
—
|
|
|
$
|
2,030,000
|
|
|
$
|
2,082,863
|
|
Weighted Average Effective Interest Rate
|
3.9
|
%
|
|
8.5
|
%
|
|
—
|
%
|
|
7.4
|
%
|
|
7.8
|
%
|
|
—
|
%
|
|
6.6
|
%
|
|
|
Item 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
Page
Number
|
|
Years Ended November 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Total revenues
|
$
|
4,552,747
|
|
|
$
|
4,547,002
|
|
|
$
|
4,368,529
|
|
Homebuilding:
|
|
|
|
|
|
||||||
Revenues
|
$
|
4,537,658
|
|
|
$
|
4,533,795
|
|
|
$
|
4,356,265
|
|
Construction and land costs
|
(3,708,928
|
)
|
|
(3,743,920
|
)
|
|
(3,646,468
|
)
|
|||
Selling, general and administrative expenses
|
(497,350
|
)
|
|
(444,154
|
)
|
|
(426,394
|
)
|
|||
Operating income
|
331,380
|
|
|
345,721
|
|
|
283,403
|
|
|||
Interest income
|
2,158
|
|
|
3,514
|
|
|
1,240
|
|
|||
Interest expense
|
—
|
|
|
—
|
|
|
(622
|
)
|
|||
Equity in income (loss) of unconsolidated joint ventures
|
(1,549
|
)
|
|
2,066
|
|
|
(1,409
|
)
|
|||
Loss on early extinguishment of debt
|
(6,800
|
)
|
|
—
|
|
|
(5,685
|
)
|
|||
Homebuilding pretax income
|
325,189
|
|
|
351,301
|
|
|
276,927
|
|
|||
Financial services:
|
|
|
|
|
|
||||||
Revenues
|
15,089
|
|
|
13,207
|
|
|
12,264
|
|
|||
Expenses
|
(4,333
|
)
|
|
(3,844
|
)
|
|
(3,430
|
)
|
|||
Equity in income of unconsolidated joint ventures
|
12,230
|
|
|
7,301
|
|
|
4,234
|
|
|||
Financial services pretax income
|
22,986
|
|
|
16,664
|
|
|
13,068
|
|
|||
Total pretax income
|
348,175
|
|
|
367,965
|
|
|
289,995
|
|
|||
Income tax expense
|
(79,400
|
)
|
|
(197,600
|
)
|
|
(109,400
|
)
|
|||
Net income
|
$
|
268,775
|
|
|
$
|
170,365
|
|
|
$
|
180,595
|
|
Earnings per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
3.04
|
|
|
$
|
1.93
|
|
|
$
|
2.09
|
|
Diluted
|
$
|
2.85
|
|
|
$
|
1.71
|
|
|
$
|
1.85
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
87,996
|
|
|
87,773
|
|
|
85,842
|
|
|||
Diluted
|
93,838
|
|
|
101,059
|
|
|
98,316
|
|
|
Years Ended November 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
$
|
268,775
|
|
|
$
|
170,365
|
|
|
$
|
180,595
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Postretirement benefit plan adjustments:
|
|
|
|
|
|
||||||
Net actuarial gain (loss) arising during the period
|
(10,268
|
)
|
|
8,216
|
|
|
(3,143
|
)
|
|||
Amortization of net actuarial loss
|
218
|
|
|
336
|
|
|
142
|
|
|||
Amortization of prior service cost
|
1,556
|
|
|
1,556
|
|
|
1,556
|
|
|||
Settlement loss
|
356
|
|
|
—
|
|
|
—
|
|
|||
Other comprehensive income (loss) before tax
|
(8,138
|
)
|
|
10,108
|
|
|
(1,445
|
)
|
|||
Income tax benefit (expense) related to items of other comprehensive income (loss)
|
2,197
|
|
|
(2,749
|
)
|
|
578
|
|
|||
Other comprehensive income (loss), net of tax
|
(5,941
|
)
|
|
7,359
|
|
|
(867
|
)
|
|||
Comprehensive income
|
$
|
262,834
|
|
|
$
|
177,724
|
|
|
$
|
179,728
|
|
|
November 30,
|
||||||
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
||||
Homebuilding:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
453,814
|
|
|
$
|
574,359
|
|
Receivables
|
249,055
|
|
|
292,830
|
|
||
Inventories
|
3,704,602
|
|
|
3,582,839
|
|
||
Investments in unconsolidated joint ventures
|
57,038
|
|
|
61,960
|
|
||
Property and equipment, net
|
65,043
|
|
|
24,283
|
|
||
Deferred tax assets, net
|
364,493
|
|
|
441,820
|
|
||
Other assets
|
83,041
|
|
|
83,100
|
|
||
|
4,977,086
|
|
|
5,061,191
|
|
||
Financial services
|
38,396
|
|
|
12,380
|
|
||
Total assets
|
$
|
5,015,482
|
|
|
$
|
5,073,571
|
|
|
|
|
|
||||
Liabilities and stockholders’ equity
|
|
|
|
||||
Homebuilding:
|
|
|
|
||||
Accounts payable
|
$
|
262,772
|
|
|
$
|
258,045
|
|
Accrued expenses and other liabilities
|
618,783
|
|
|
666,268
|
|
||
Notes payable
|
1,748,747
|
|
|
2,060,263
|
|
||
|
2,630,302
|
|
|
2,984,576
|
|
||
Financial services
|
2,058
|
|
|
1,495
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock — $1.00 par value; 10,000,000 shares authorized; none issued
|
—
|
|
|
—
|
|
||
Common stock — $1.00 par value; 290,000,000 shares authorized at November 30, 2019 and 2018; 121,592,978 and 119,195,914 shares issued at November 30, 2019 and 2018, respectively
|
121,593
|
|
|
119,196
|
|
||
Paid-in capital
|
793,954
|
|
|
753,570
|
|
||
Retained earnings
|
2,157,183
|
|
|
1,897,168
|
|
||
Accumulated other comprehensive loss
|
(15,506
|
)
|
|
(9,565
|
)
|
||
Grantor stock ownership trust, at cost: 7,630,582 and 8,157,235 shares at November 30, 2019 and 2018, respectively
|
(82,758
|
)
|
|
(88,472
|
)
|
||
Treasury stock, at cost: 24,355,845 and 24,113,487 shares at November 30, 2019 and 2018, respectively
|
(591,344
|
)
|
|
(584,397
|
)
|
||
Total stockholders’ equity
|
2,383,122
|
|
|
2,087,500
|
|
||
Total liabilities and stockholders’ equity
|
$
|
5,015,482
|
|
|
$
|
5,073,571
|
|
|
Years Ended November 30, 2019, 2018 and 2017
|
|||||||||||||||||||||||||||||||||||
|
Number of Shares
|
|
Common
Stock
|
|
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Grantor
Stock
Ownership
Trust
|
|
Treasury
Stock
|
|
Total
Stockholders’
Equity
|
|||||||||||||||||||||
Common
Stock
|
|
Grantor
Stock
Ownership
Trust
|
|
Treasury
Stock
|
|
|||||||||||||||||||||||||||||||
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
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
180,595
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
180,595
|
|
|||||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(867
|
)
|
|
—
|
|
|
—
|
|
|
(867
|
)
|
|||||||
Dividends on common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,642
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,642
|
)
|
|||||||
Employee stock options/other
|
1,652
|
|
|
—
|
|
|
—
|
|
|
1,652
|
|
|
22,468
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24,120
|
|
|||||||
Stock awards
|
70
|
|
|
534
|
|
|
28
|
|
|
70
|
|
|
(6,556
|
)
|
|
—
|
|
|
—
|
|
|
5,791
|
|
|
695
|
|
|
—
|
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,633
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,633
|
|
|||||||
Tax payments associated with stock-based compensation awards
|
—
|
|
|
—
|
|
|
(329
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,673
|
)
|
|
(6,673
|
)
|
|||||||
Balance at November 30, 2017
|
117,946
|
|
|
(8,898
|
)
|
|
(22,021
|
)
|
|
117,946
|
|
|
727,483
|
|
|
1,735,695
|
|
|
(16,924
|
)
|
|
(96,509
|
)
|
|
(541,380
|
)
|
|
1,926,311
|
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
170,365
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
170,365
|
|
|||||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,359
|
|
|
—
|
|
|
—
|
|
|
7,359
|
|
|||||||
Dividends on common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,892
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,892
|
)
|
|||||||
Employee stock options/other
|
1,196
|
|
|
—
|
|
|
—
|
|
|
1,196
|
|
|
18,815
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,011
|
|
|||||||
Stock awards
|
54
|
|
|
741
|
|
|
48
|
|
|
54
|
|
|
(8,589
|
)
|
|
—
|
|
|
—
|
|
|
8,037
|
|
|
498
|
|
|
—
|
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,861
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,861
|
|
|||||||
Stock repurchases
|
—
|
|
|
—
|
|
|
(1,806
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(35,039
|
)
|
|
(35,039
|
)
|
|||||||
Tax payments associated with stock-based compensation awards
|
—
|
|
|
—
|
|
|
(334
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,476
|
)
|
|
(8,476
|
)
|
|||||||
Balance at November 30, 2018
|
119,196
|
|
|
(8,157
|
)
|
|
(24,113
|
)
|
|
119,196
|
|
|
753,570
|
|
|
1,897,168
|
|
|
(9,565
|
)
|
|
(88,472
|
)
|
|
(584,397
|
)
|
|
2,087,500
|
|
|||||||
Cumulative effect of adoption of ASC 606
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,610
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,610
|
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
268,775
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
268,775
|
|
|||||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,941
|
)
|
|
—
|
|
|
—
|
|
|
(5,941
|
)
|
|||||||
Dividends on common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,370
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,370
|
)
|
|||||||
Employee stock options/other
|
2,341
|
|
|
—
|
|
|
—
|
|
|
2,341
|
|
|
28,183
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,524
|
|
|||||||
Stock awards
|
56
|
|
|
526
|
|
|
27
|
|
|
56
|
|
|
(6,111
|
)
|
|
—
|
|
|
—
|
|
|
5,714
|
|
|
341
|
|
|
—
|
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,312
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,312
|
|
|||||||
Tax payments associated with stock-based compensation awards
|
—
|
|
|
—
|
|
|
(270
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,288
|
)
|
|
(7,288
|
)
|
|||||||
Balance at November 30, 2019
|
121,593
|
|
|
(7,631
|
)
|
|
(24,356
|
)
|
|
$
|
121,593
|
|
|
$
|
793,954
|
|
|
$
|
2,157,183
|
|
|
$
|
(15,506
|
)
|
|
$
|
(82,758
|
)
|
|
$
|
(591,344
|
)
|
|
$
|
2,383,122
|
|
|
Years Ended November 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
268,775
|
|
|
$
|
170,365
|
|
|
$
|
180,595
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Equity in income of unconsolidated joint ventures
|
(10,681
|
)
|
|
(9,367
|
)
|
|
(2,825
|
)
|
|||
Distributions of earnings from unconsolidated joint ventures
|
6,450
|
|
|
9,047
|
|
|
—
|
|
|||
Amortization of discounts, premiums and issuance costs
|
4,426
|
|
|
6,232
|
|
|
6,573
|
|
|||
Depreciation and amortization
|
27,158
|
|
|
2,530
|
|
|
2,791
|
|
|||
Deferred income taxes
|
73,303
|
|
|
191,817
|
|
|
105,348
|
|
|||
Loss on early extinguishment of debt
|
6,800
|
|
|
—
|
|
|
5,685
|
|
|||
Excess tax benefits from stock-based compensation
|
—
|
|
|
—
|
|
|
(958
|
)
|
|||
Stock-based compensation
|
18,312
|
|
|
15,861
|
|
|
14,633
|
|
|||
Inventory impairments and land option contract abandonments
|
17,291
|
|
|
28,994
|
|
|
25,232
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Receivables
|
44,428
|
|
|
(49,778
|
)
|
|
(12,508
|
)
|
|||
Inventories
|
(165,347
|
)
|
|
(270,126
|
)
|
|
126,085
|
|
|||
Accounts payable, accrued expenses and other liabilities
|
(40,583
|
)
|
|
126,710
|
|
|
66,594
|
|
|||
Other, net
|
710
|
|
|
(773
|
)
|
|
(4,026
|
)
|
|||
Net cash provided by operating activities
|
251,042
|
|
|
221,512
|
|
|
513,219
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Contributions to unconsolidated joint ventures
|
(11,290
|
)
|
|
(22,671
|
)
|
|
(18,694
|
)
|
|||
Return of investments in unconsolidated joint ventures
|
5,001
|
|
|
9,934
|
|
|
11,035
|
|
|||
Proceeds from sale of building
|
5,804
|
|
|
—
|
|
|
—
|
|
|||
Purchases of property and equipment, net
|
(40,459
|
)
|
|
(7,370
|
)
|
|
(8,085
|
)
|
|||
Net cash used in investing activities
|
(40,944
|
)
|
|
(20,107
|
)
|
|
(15,744
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from issuance of debt
|
705,250
|
|
|
—
|
|
|
—
|
|
|||
Repayment of senior notes
|
(986,231
|
)
|
|
(300,000
|
)
|
|
(270,326
|
)
|
|||
Payment of issuance costs
|
(11,128
|
)
|
|
—
|
|
|
(1,711
|
)
|
|||
Borrowings under revolving credit facility
|
610,000
|
|
|
70,000
|
|
|
—
|
|
|||
Repayments under revolving credit facility
|
(610,000
|
)
|
|
(70,000
|
)
|
|
—
|
|
|||
Payments on mortgages and land contracts due to land sellers and other loans
|
(41,116
|
)
|
|
(14,751
|
)
|
|
(106,382
|
)
|
|||
Issuance of common stock under employee stock plans
|
30,524
|
|
|
20,011
|
|
|
23,162
|
|
|||
Excess tax benefits from stock-based compensation
|
—
|
|
|
—
|
|
|
958
|
|
|||
Stock repurchases
|
—
|
|
|
(35,039
|
)
|
|
—
|
|
|||
Tax payments associated with stock-based compensation awards
|
(7,288
|
)
|
|
(8,476
|
)
|
|
(6,673
|
)
|
|||
Payments of cash dividends
|
(20,370
|
)
|
|
(8,892
|
)
|
|
(8,642
|
)
|
|||
Net cash used in financing activities
|
(330,359
|
)
|
|
(347,147
|
)
|
|
(369,614
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
(120,261
|
)
|
|
(145,742
|
)
|
|
127,861
|
|
|||
Cash and cash equivalents at beginning of year
|
575,119
|
|
|
720,861
|
|
|
593,000
|
|
|||
Cash and cash equivalents at end of year
|
$
|
454,858
|
|
|
$
|
575,119
|
|
|
$
|
720,861
|
|
Note 1.
|
Summary of Significant Accounting Policies
|
Balance Sheet
|
|
Balance at November 30, 2018
|
|
Adjustments due to ASC 606
|
|
Balance at December 1, 2018
|
||||||
Assets
|
|
|
|
|
|
|
||||||
Homebuilding:
|
|
|
|
|
|
|
||||||
Inventories
|
|
$
|
3,582,839
|
|
|
$
|
(35,288
|
)
|
|
$
|
3,547,551
|
|
Property and equipment, net
|
|
24,283
|
|
|
31,194
|
|
|
55,477
|
|
|||
Deferred tax assets, net
|
|
441,820
|
|
|
(4,024
|
)
|
|
437,796
|
|
|||
Financial services
|
|
12,380
|
|
|
19,728
|
|
|
32,108
|
|
|||
Stockholders’ equity:
|
|
|
|
|
|
|
||||||
Retained earnings
|
|
1,897,168
|
|
|
11,610
|
|
|
1,908,778
|
|
|
|
Year ended November 30, 2019
|
||||||||||
Statement of Operations
|
|
As Reported
|
|
Amounts without the Adoption of ASC 606
|
|
Effect of Change
Higher/(Lower)
|
||||||
Homebuilding:
|
|
|
|
|
|
|
||||||
Revenues
|
|
$
|
4,537,658
|
|
|
$
|
4,534,716
|
|
|
$
|
2,942
|
|
Construction and land costs
|
|
(3,708,928
|
)
|
|
(3,740,337
|
)
|
|
(31,409
|
)
|
|||
Selling, general and administrative expenses
|
|
(497,350
|
)
|
|
(464,105
|
)
|
|
33,245
|
|
|||
Operating income
|
|
331,380
|
|
|
330,274
|
|
|
1,106
|
|
|||
Financial services:
|
|
|
|
|
|
|
||||||
Revenues
|
|
15,089
|
|
|
14,211
|
|
|
878
|
|
|||
Total pretax income
|
|
348,175
|
|
|
346,191
|
|
|
1,984
|
|
|||
Income tax expense
|
|
(79,400
|
)
|
|
(78,900
|
)
|
|
500
|
|
|||
Net income
|
|
268,775
|
|
|
267,291
|
|
|
1,484
|
|
|||
Diluted earnings per share
|
|
2.85
|
|
|
2.85
|
|
|
—
|
|
|
|
As of November 30, 2019
|
||||||||||
Balance Sheet
|
|
As Reported
|
|
Amounts without the Adoption of ASC 606
|
|
Effect of Change
Higher/(Lower)
|
||||||
Assets
|
|
|
|
|
|
|
||||||
Homebuilding:
|
|
|
|
|
|
|
||||||
Inventories
|
|
$
|
3,704,602
|
|
|
$
|
3,746,567
|
|
|
$
|
(41,965
|
)
|
Deferred tax assets, net
|
|
364,493
|
|
|
369,017
|
|
|
(4,524
|
)
|
|||
Property and equipment, net
|
|
65,043
|
|
|
26,067
|
|
|
38,976
|
|
|||
Financial services
|
|
38,396
|
|
|
17,790
|
|
|
20,606
|
|
|||
Stockholders’ equity:
|
|
|
|
|
|
|
||||||
Retained earnings
|
|
2,157,183
|
|
|
2,144,090
|
|
|
13,093
|
|
Note 2.
|
Segment Information
|
Pretax income (loss):
|
|
|
|
|
|
||||||
West Coast
|
$
|
178,078
|
|
|
$
|
240,337
|
|
|
$
|
217,649
|
|
Southwest
|
111,016
|
|
|
91,017
|
|
|
45,540
|
|
|||
Central
|
126,304
|
|
|
117,609
|
|
|
116,098
|
|
|||
Southeast
|
18,550
|
|
|
7,624
|
|
|
(509
|
)
|
|||
Corporate and other
|
(108,759
|
)
|
|
(105,286
|
)
|
|
(101,851
|
)
|
|||
Total
|
$
|
325,189
|
|
|
$
|
351,301
|
|
|
$
|
276,927
|
|
|
|
|
|
|
|
||||||
Equity in income (loss) of unconsolidated joint ventures:
|
|
|
|
|
|
||||||
West Coast
|
$
|
(851
|
)
|
|
$
|
(966
|
)
|
|
$
|
(1,770
|
)
|
Southwest
|
(697
|
)
|
|
3,033
|
|
|
362
|
|
|||
Central
|
—
|
|
|
—
|
|
|
—
|
|
|||
Southeast
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|||
Total
|
$
|
(1,549
|
)
|
|
$
|
2,066
|
|
|
$
|
(1,409
|
)
|
|
|
|
|
|
|
||||||
Inventory impairment and land option contract abandonment charges:
|
|
|
|
|
|
||||||
West Coast
|
$
|
15,567
|
|
|
$
|
20,381
|
|
|
$
|
16,707
|
|
Southwest
|
408
|
|
|
432
|
|
|
3,445
|
|
|||
Central
|
848
|
|
|
2,558
|
|
|
846
|
|
|||
Southeast
|
468
|
|
|
5,623
|
|
|
4,234
|
|
|||
Total
|
$
|
17,291
|
|
|
$
|
28,994
|
|
|
$
|
25,232
|
|
|
|
|
|
|
|
|
November 30,
|
||||||
|
2019
|
|
2018
|
||||
Inventories:
|
|
|
|
||||
West Coast
|
$
|
1,795,088
|
|
|
$
|
1,727,993
|
|
Southwest
|
629,811
|
|
|
598,374
|
|
||
Central
|
889,179
|
|
|
865,184
|
|
||
Southeast
|
390,524
|
|
|
391,288
|
|
||
Total
|
$
|
3,704,602
|
|
|
$
|
3,582,839
|
|
|
|
|
|
||||
Investments in unconsolidated joint ventures:
|
|
|
|
||||
West Coast
|
$
|
51,740
|
|
|
$
|
56,128
|
|
Southwest
|
2,792
|
|
|
3,327
|
|
||
Central
|
—
|
|
|
—
|
|
||
Southeast
|
2,506
|
|
|
2,505
|
|
||
Total
|
$
|
57,038
|
|
|
$
|
61,960
|
|
|
|
|
|
||||
Assets:
|
|
|
|
||||
West Coast
|
$
|
1,925,192
|
|
|
$
|
1,880,516
|
|
Southwest
|
674,310
|
|
|
631,509
|
|
||
Central
|
1,035,563
|
|
|
1,017,490
|
|
||
Southeast
|
441,451
|
|
|
463,224
|
|
||
Corporate and other
|
900,570
|
|
|
1,068,452
|
|
||
Total
|
$
|
4,977,086
|
|
|
$
|
5,061,191
|
|
Note 3.
|
Financial Services
|
|
Years Ended November 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenues
|
|
|
|
|
|
||||||
Insurance commissions
|
$
|
8,662
|
|
|
$
|
7,535
|
|
|
$
|
6,991
|
|
Title services
|
6,421
|
|
|
5,672
|
|
|
5,268
|
|
|||
Interest income
|
6
|
|
|
—
|
|
|
5
|
|
|||
Total
|
15,089
|
|
|
13,207
|
|
|
12,264
|
|
|||
Expenses
|
|
|
|
|
|
||||||
General and administrative
|
(4,333
|
)
|
|
(3,844
|
)
|
|
(3,430
|
)
|
|||
Operating income
|
10,756
|
|
|
9,363
|
|
|
8,834
|
|
|||
Equity in income of unconsolidated joint ventures
|
12,230
|
|
|
7,301
|
|
|
4,234
|
|
|||
Pretax income
|
$
|
22,986
|
|
|
$
|
16,664
|
|
|
$
|
13,068
|
|
|
November 30,
|
||||||
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,044
|
|
|
$
|
760
|
|
Receivables
|
2,232
|
|
|
2,885
|
|
||
Investments in unconsolidated joint ventures
|
14,374
|
|
|
8,594
|
|
||
Other assets (a)
|
20,746
|
|
|
141
|
|
||
Total assets
|
$
|
38,396
|
|
|
$
|
12,380
|
|
Liabilities
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
2,058
|
|
|
$
|
1,495
|
|
Total liabilities
|
$
|
2,058
|
|
|
$
|
1,495
|
|
(a)
|
Other assets at November 30, 2019 included $20.6 million of contract assets for estimated future renewal commissions due to our adoption of ASC 606 effective December 1, 2018, as described in Note 1 – Summary of Significant Accounting Policies.
|
Note 4.
|
Earnings Per Share
|
|
Years Ended November 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income
|
$
|
268,775
|
|
|
$
|
170,365
|
|
|
$
|
180,595
|
|
Less: Distributed earnings allocated to nonvested restricted stock
|
(123
|
)
|
|
(51
|
)
|
|
(56
|
)
|
|||
Less: Undistributed earnings allocated to nonvested restricted stock
|
(1,505
|
)
|
|
(927
|
)
|
|
(1,121
|
)
|
|||
Numerator for basic earnings per share
|
267,147
|
|
|
169,387
|
|
|
179,418
|
|
|||
Effect of dilutive securities:
|
|
|
|
|
|
||||||
Interest expense and amortization of debt issuance costs associated with convertible senior notes, net of taxes
|
541
|
|
|
3,190
|
|
|
2,654
|
|
|||
Add: Undistributed earnings allocated to nonvested restricted stock
|
1,505
|
|
|
927
|
|
|
1,121
|
|
|||
Less: Undistributed earnings reallocated to nonvested restricted stock
|
(1,412
|
)
|
|
(805
|
)
|
|
(979
|
)
|
|||
Numerator for diluted earnings per share
|
$
|
267,781
|
|
|
$
|
172,699
|
|
|
$
|
182,214
|
|
|
|
|
|
|
|
|
Years Ended November 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Denominator:
|
|
|
|
|
|
||||||
Weighted average shares outstanding — basic
|
87,996
|
|
|
87,773
|
|
|
85,842
|
|
|||
Effect of dilutive securities:
|
|
|
|
|
|
||||||
Share-based payments
|
4,415
|
|
|
4,884
|
|
|
4,072
|
|
|||
Convertible senior notes
|
1,427
|
|
|
8,402
|
|
|
8,402
|
|
|||
Weighted average shares outstanding — diluted
|
93,838
|
|
|
101,059
|
|
|
98,316
|
|
|||
Basic earnings per share
|
$
|
3.04
|
|
|
$
|
1.93
|
|
|
$
|
2.09
|
|
Diluted earnings per share
|
$
|
2.85
|
|
|
$
|
1.71
|
|
|
$
|
1.85
|
|
Note 5.
|
Receivables
|
|
November 30,
|
||||||
|
2019
|
|
2018
|
||||
Due from utility companies, improvement districts and municipalities (a)
|
$
|
128,047
|
|
|
$
|
113,434
|
|
Recoveries related to self-insurance and other legal claims
|
80,729
|
|
|
138,261
|
|
||
Refundable deposits and bonds
|
10,925
|
|
|
14,115
|
|
||
Other
|
37,846
|
|
|
38,525
|
|
||
Subtotal
|
257,547
|
|
|
304,335
|
|
||
Allowance for doubtful accounts
|
(8,492
|
)
|
|
(11,505
|
)
|
||
Total
|
$
|
249,055
|
|
|
$
|
292,830
|
|
(a)
|
These receivables typically relate to infrastructure improvements we make with respect to our communities. We are generally reimbursed for the cost of such improvements when they are accepted by the utility company, improvement district or municipality, or after certain events occur, depending on the terms of the applicable agreements. These events may include, but are not limited to, the connection of utilities or the issuance of bonds by the respective improvement districts or municipalities.
|
Note 6.
|
Inventories
|
|
November 30,
|
||||||
|
2019
|
|
2018
|
||||
Homes completed or under construction
|
$
|
1,340,412
|
|
|
$
|
1,125,152
|
|
Land under development
|
2,213,713
|
|
|
2,219,936
|
|
||
Land held for future development or sale (a)
|
150,477
|
|
|
237,751
|
|
||
Total
|
$
|
3,704,602
|
|
|
$
|
3,582,839
|
|
(a)
|
Land held for sale totaled $19.3 million at November 30, 2019 and $9.8 million at November 30, 2018.
|
|
Years Ended November 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Capitalized interest at beginning of year
|
$
|
209,129
|
|
|
$
|
262,191
|
|
|
$
|
306,723
|
|
Interest incurred
|
143,412
|
|
|
149,698
|
|
|
171,486
|
|
|||
Interest expensed
|
—
|
|
|
—
|
|
|
(622
|
)
|
|||
Interest amortized to construction and land costs (a)
|
(156,803
|
)
|
|
(202,760
|
)
|
|
(215,396
|
)
|
|||
Capitalized interest at end of year (b)
|
$
|
195,738
|
|
|
$
|
209,129
|
|
|
$
|
262,191
|
|
(a)
|
Interest amortized to construction and land costs for the years ended November 30, 2019, 2018 and 2017 included $.7 million $4.8 million and $4.9 million, respectively, related to land sales during the periods.
|
(b)
|
Capitalized interest amounts reflect the gross amount of capitalized interest, as inventory impairment charges recognized, if any, are not generally allocated to specific components of inventory.
|
Note 7.
|
Inventory Impairments and Land Option Contract Abandonments
|
|
|
Years Ended November 30,
|
||||
Unobservable Input (a)
|
|
2019
|
|
2018
|
|
2017
|
Average selling price
|
|
$315,000 - $1,045,400
|
|
$291,300 - $774,100
|
|
$207,100 - $1,576,500
|
Deliveries per month
|
|
1 - 4
|
|
2 - 6
|
|
1 - 4
|
Discount rate
|
|
17%
|
|
17% - 19%
|
|
17% - 18%
|
(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.
|
Note 8.
|
Variable Interest Entities
|
|
November 30, 2019
|
|
November 30, 2018
|
||||||||||||
|
Cash
Deposits
|
|
Aggregate
Purchase Price
|
|
Cash
Deposits
|
|
Aggregate
Purchase Price
|
||||||||
Unconsolidated VIEs
|
$
|
34,595
|
|
|
$
|
823,427
|
|
|
$
|
26,542
|
|
|
$
|
784,334
|
|
Other land option contracts and other similar contracts
|
40,591
|
|
|
600,092
|
|
|
27,288
|
|
|
586,904
|
|
||||
Total
|
$
|
75,186
|
|
|
$
|
1,423,519
|
|
|
$
|
53,830
|
|
|
$
|
1,371,238
|
|
Note 9.
|
Investments in Unconsolidated Joint Ventures
|
|
Years Ended November 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenues
|
$
|
23,676
|
|
|
$
|
59,418
|
|
|
$
|
47,431
|
|
Construction and land costs
|
(23,659
|
)
|
|
(46,288
|
)
|
|
(47,459
|
)
|
|||
Other expenses, net
|
(2,644
|
)
|
|
(2,674
|
)
|
|
(4,749
|
)
|
|||
Income (loss)
|
$
|
(2,627
|
)
|
|
$
|
10,456
|
|
|
$
|
(4,777
|
)
|
|
November 30,
|
||||||
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
||||
Cash
|
$
|
23,965
|
|
|
$
|
18,567
|
|
Receivables
|
12
|
|
|
9
|
|
||
Inventories
|
139,536
|
|
|
131,074
|
|
||
Other assets
|
780
|
|
|
521
|
|
||
Total assets
|
$
|
164,293
|
|
|
$
|
150,171
|
|
Liabilities and equity
|
|
|
|
||||
Accounts payable and other liabilities
|
$
|
13,282
|
|
|
$
|
11,374
|
|
Notes payable (a)
|
40,672
|
|
|
17,956
|
|
||
Equity
|
110,339
|
|
|
120,841
|
|
||
Total liabilities and equity
|
$
|
164,293
|
|
|
$
|
150,171
|
|
(a)
|
As of November 30, 2019 and 2018, we had investments in five and six unconsolidated joint ventures, respectively, one of which had a construction loan agreement with a third-party lender to finance its land development activities. The outstanding debt is secured by the corresponding underlying property and related project assets and is non-recourse to us. All of the outstanding secured debt at November 30, 2019 is scheduled to mature in February 2020. However, the loan agreement provides for two-12 month extensions beyond this date. None of our other unconsolidated joint ventures had outstanding debt at November 30, 2019 or 2018.
|
Note 10.
|
Property and Equipment, Net
|
|
|
November 30,
|
||||||
|
|
2019
|
|
2018
|
||||
Computer software and equipment
|
|
$
|
27,091
|
|
|
$
|
20,940
|
|
Model furnishings and sales office improvements (a)
|
|
82,117
|
|
|
—
|
|
||
Leasehold improvements, office furniture and equipment (b)
|
|
16,173
|
|
|
23,491
|
|
||
Subtotal
|
|
125,381
|
|
|
44,431
|
|
||
Less accumulated depreciation (a)
|
|
(60,338
|
)
|
|
(20,148
|
)
|
||
Total
|
|
$
|
65,043
|
|
|
$
|
24,283
|
|
(a)
|
The balance at November 30, 2019 reflects a change in the classification of certain community sales office and other marketing- and model home-related costs and related accumulated amortization from inventories to property and equipment, net due to our adoption of ASC 606 effective December 1, 2018, as described in Note 1 – Summary of Significant Accounting Policies.
|
(b)
|
In January 2019, we completed the sale and leaseback of our office building in San Antonio, Texas. The sale generated net cash proceeds of $5.8 million and a gain of $2.2 million, which is being recognized on a straight-line basis over a 10-year lease term until our adoption of ASC 842, when the remaining gain will be recognized as a transition adjustment to beginning retained earnings, as described in Note 1 – Summary of Significant Accounting Policies.
|
Note 11.
|
Other Assets
|
|
November 30,
|
||||||
|
2019
|
|
2018
|
||||
Cash surrender value and benefit receivable from corporate-owned life insurance contracts
|
$
|
73,849
|
|
|
$
|
73,721
|
|
Prepaid expenses
|
5,944
|
|
|
7,647
|
|
||
Debt issuance costs associated with unsecured revolving credit facility, net
|
3,248
|
|
|
1,732
|
|
||
Total
|
$
|
83,041
|
|
|
$
|
83,100
|
|
Note 12.
|
Accrued Expenses and Other Liabilities
|
|
November 30,
|
||||||
|
2019
|
|
2018
|
||||
Self-insurance and other legal liabilities
|
$
|
229,483
|
|
|
$
|
283,651
|
|
Employee compensation and related benefits
|
163,646
|
|
|
148,549
|
|
||
Warranty liability
|
88,839
|
|
|
82,490
|
|
||
Accrued interest payable
|
32,507
|
|
|
31,180
|
|
||
Inventory-related obligations (a)
|
26,264
|
|
|
40,892
|
|
||
Customer deposits
|
22,382
|
|
|
19,491
|
|
||
Real estate and business taxes
|
14,872
|
|
|
16,639
|
|
||
Other
|
40,790
|
|
|
43,376
|
|
||
Total
|
$
|
618,783
|
|
|
$
|
666,268
|
|
(a)
|
Represents liabilities for financing arrangements discussed in Note 8 – Variable Interest Entities, as well as liabilities for fixed or determinable amounts associated with 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.
|
Note 13.
|
Income Taxes
|
|
Federal
|
|
State
|
|
Total
|
||||||
2019
|
|
|
|
|
|
||||||
Current
|
$
|
(200
|
)
|
|
$
|
(3,700
|
)
|
|
$
|
(3,900
|
)
|
Deferred
|
(53,800
|
)
|
|
(21,700
|
)
|
|
(75,500
|
)
|
|||
Income tax expense
|
$
|
(54,000
|
)
|
|
$
|
(25,400
|
)
|
|
$
|
(79,400
|
)
|
|
|
|
|
|
|
|
Federal
|
|
State
|
|
Total
|
||||||
2018
|
|
|
|
|
|
||||||
Current
|
$
|
(3,600
|
)
|
|
$
|
(4,800
|
)
|
|
$
|
(8,400
|
)
|
Deferred
|
(170,700
|
)
|
|
(18,500
|
)
|
|
(189,200
|
)
|
|||
Income tax expense
|
$
|
(174,300
|
)
|
|
$
|
(23,300
|
)
|
|
$
|
(197,600
|
)
|
|
|
|
|
|
|
||||||
2017
|
|
|
|
|
|
||||||
Current
|
$
|
(2,800
|
)
|
|
$
|
(3,000
|
)
|
|
$
|
(5,800
|
)
|
Deferred
|
(86,300
|
)
|
|
(17,300
|
)
|
|
(103,600
|
)
|
|||
Income tax expense
|
$
|
(89,100
|
)
|
|
$
|
(20,300
|
)
|
|
$
|
(109,400
|
)
|
•
|
We recorded a non-cash charge of $106.7 million in income tax expense due to the accounting re-measurement of our deferred tax assets based on the lower federal corporate income tax rate under the TCJA.
|
•
|
As we may claim a refund of 50% of our remaining AMT credits annually through 2021 to the extent the credits exceed regular income tax for any such year, and receive a full refund of any remaining credits in 2022, we estimated our refund of AMT credit carryforwards will total approximately $50.0 million. As the refund was subject to a sequestration reduction rate of approximately 6.6%, we established a federal deferred tax valuation allowance of $3.3 million for 2018. Our accounting policy regarding the balance sheet presentation of the AMT credits is to maintain the balance in deferred tax assets until a tax return is filed claiming a refund of a portion of the credit, at which time such amount will be presented in receivables.
|
•
|
We recorded a non-cash charge of $2.5 million in income tax expense for disallowed executive compensation due to the TCJA’s eliminating the deductibility of certain performance-based compensation. The TCJA also modified who is a covered employee with respect to the deduction limitation, and provided a transition rule that would preserve the
|
|
November 30,
|
||||||
|
2019
|
|
2018
|
||||
Deferred tax liabilities:
|
|
|
|
||||
Capitalized expenses
|
$
|
43,818
|
|
|
$
|
51,660
|
|
State taxes
|
26,290
|
|
|
31,246
|
|
||
Other
|
4,132
|
|
|
225
|
|
||
Total
|
74,240
|
|
|
83,131
|
|
||
|
|
|
|
||||
Deferred tax assets:
|
|
|
|
||||
Tax credits
|
180,737
|
|
|
231,100
|
|
||
Net operating losses (“NOLs”) from 2006 through 2019
|
95,562
|
|
|
121,432
|
|
||
Employee benefits
|
53,294
|
|
|
45,802
|
|
||
Inventory impairment and land option contract abandonment charges
|
48,862
|
|
|
67,416
|
|
||
Warranty, legal and other accruals
|
40,954
|
|
|
43,213
|
|
||
Capitalized expenses
|
25,116
|
|
|
27,894
|
|
||
Partnerships and joint ventures
|
9,990
|
|
|
6,368
|
|
||
Depreciation and amortization
|
479
|
|
|
1,869
|
|
||
Other
|
2,939
|
|
|
3,457
|
|
||
Total
|
457,933
|
|
|
548,551
|
|
||
Valuation allowance
|
(19,200
|
)
|
|
(23,600
|
)
|
||
Total
|
438,733
|
|
|
524,951
|
|
||
Deferred tax assets, net
|
$
|
364,493
|
|
|
$
|
441,820
|
|
|
Years Ended November 30,
|
|||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
|
$
|
|
%
|
|
$
|
|
%
|
|
$
|
|
%
|
|||||||||
Income tax expense computed at statutory rate
|
$
|
(73,117
|
)
|
|
(21.0
|
)%
|
|
$
|
(81,689
|
)
|
|
(22.2
|
)%
|
|
$
|
(101,499
|
)
|
|
(35.0
|
)%
|
Tax credits
|
6,595
|
|
|
1.9
|
|
|
14,177
|
|
|
3.9
|
|
|
6,227
|
|
|
2.2
|
|
|||
Valuation allowance for deferred tax assets
|
4,400
|
|
|
1.3
|
|
|
2,000
|
|
|
.5
|
|
|
1,200
|
|
|
.4
|
|
|||
Depreciation and amortization
|
4,276
|
|
|
1.2
|
|
|
1,223
|
|
|
.3
|
|
|
362
|
|
|
.1
|
|
|||
NOL reconciliation
|
3,111
|
|
|
.9
|
|
|
—
|
|
|
—
|
|
|
(2,210
|
)
|
|
(.8
|
)
|
|||
State taxes, net of federal income tax benefit
|
(20,927
|
)
|
|
(6.0
|
)
|
|
(20,155
|
)
|
|
(5.5
|
)
|
|
(14,450
|
)
|
|
(4.9
|
)
|
|||
Non-deductible compensation
|
(4,653
|
)
|
|
(1.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
TCJA adjustment
|
—
|
|
|
—
|
|
|
(112,458
|
)
|
|
(30.5
|
)
|
|
—
|
|
|
—
|
|
|||
Other, net
|
915
|
|
|
.2
|
|
|
(698
|
)
|
|
(.2
|
)
|
|
970
|
|
|
.3
|
|
|||
Income tax expense
|
$
|
(79,400
|
)
|
|
(22.8
|
)%
|
|
$
|
(197,600
|
)
|
|
(53.7
|
)%
|
|
$
|
(109,400
|
)
|
|
(37.7
|
)%
|
|
Years Ended November 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Balance at beginning of year
|
$
|
—
|
|
|
$
|
56
|
|
|
$
|
56
|
|
Reductions due to lapse of statute of limitations
|
—
|
|
|
(56
|
)
|
|
—
|
|
|||
Balance at end of year
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
56
|
|
Note 14.
|
Notes Payable
|
|
November 30,
|
||||||
|
2019
|
|
2018
|
||||
Mortgages and land contracts due to land sellers and other loans (at interest rates of 7% at November 30, 2019 and 2018)
|
$
|
7,889
|
|
|
$
|
40,038
|
|
1.375% Convertible senior notes due February 1, 2019
|
—
|
|
|
229,788
|
|
||
4.75% Senior notes due May 15, 2019
|
—
|
|
|
399,483
|
|
||
8.00% Senior notes due March 15, 2020
|
—
|
|
|
347,790
|
|
||
7.00% Senior notes due December 15, 2021
|
448,164
|
|
|
447,359
|
|
||
7.50% Senior notes due September 15, 2022
|
348,267
|
|
|
347,731
|
|
||
7.625% Senior notes due May 15, 2023
|
351,748
|
|
|
248,074
|
|
||
6.875% Senior notes due June 15, 2027
|
296,379
|
|
|
—
|
|
||
4.80% Senior notes due November 15, 2029
|
296,300
|
|
|
—
|
|
||
Total
|
$
|
1,748,747
|
|
|
$
|
2,060,263
|
|
|
|
|
|
|
|
|
|
Redeemable Prior to Maturity
|
|
Effective Interest Rate
|
|||
|
|
|
|
|
|
|
|
|
|||||
Notes Payable
|
|
Principal
|
|
Issuance Date
|
|
Maturity Date
|
|
|
|||||
7.00% Senior notes
|
|
$
|
450,000
|
|
|
October 29, 2013
|
|
December 15, 2021
|
|
Yes (a)
|
|
7.2
|
%
|
7.50% Senior notes
|
|
350,000
|
|
|
July 31, 2012
|
|
September 15, 2022
|
|
Yes (b)
|
|
7.7
|
|
|
7.625% Senior notes
|
|
350,000
|
|
|
February 17, 2015/February 20, 2019
|
|
May 15, 2023
|
|
Yes (a)
|
|
7.5
|
|
|
6.875% Senior notes
|
|
300,000
|
|
|
February 20, 2019
|
|
June 15, 2027
|
|
Yes (a)
|
|
7.1
|
|
|
4.80% Senior notes
|
|
300,000
|
|
|
November 4, 2019
|
|
November 15, 2029
|
|
Yes (a)
|
|
5.0
|
|
(a)
|
At our option, these notes may be redeemed, in whole at any time or from time to time in part, at a redemption price equal to the greater of (i) 100% of the principal amount of the notes being redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the notes being redeemed (exclusive of interest accrued to the applicable redemption date), discounted to the redemption date at a defined rate, plus, in each case, accrued and unpaid interest on the notes being redeemed to, but excluding, the applicable redemption date, except that three months prior to the stated maturity dates for the 7.00% Senior Notes due 2021 and until their respective maturity, and six months prior to the stated maturity date for the 7.625% Senior Notes due 2023, 6.875% Senior Notes due 2027 and 4.80% Senior Notes due 2029 and until their maturity, the redemption price will be equal to 100% of the principal amount of the notes being redeemed, plus, in each case, accrued and unpaid interest on the notes being redeemed to, but excluding, the applicable redemption date.
|
(b)
|
At our option, these notes may be redeemed, in whole at any time or from time to time in part, at a redemption price equal to the greater of (i) 100% of the principal amount of the notes being redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the notes being redeemed (exclusive of interest accrued to the applicable redemption date), discounted to the redemption date at a defined rate, plus, in each case, accrued and unpaid interest on the notes being redeemed to the applicable redemption date.
|
Note 15.
|
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.
|
|
|
|
|
November 30, 2019
|
|
November 30, 2018
|
||||||||||||||||||||
Description
|
|
Fair Value Hierarchy
|
|
Pre-Impairment Value
|
|
Inventory Impairment Charges
|
|
Fair Value (a)
|
|
Pre-Impairment Value
|
|
Inventory Impairment Charges
|
|
Fair Value (a)
|
||||||||||||
Inventories (a)
|
|
Level 3
|
|
$
|
41,160
|
|
|
$
|
(14,031
|
)
|
|
$
|
27,129
|
|
|
$
|
70,156
|
|
|
$
|
(26,104
|
)
|
|
$
|
44,052
|
|
(a)
|
Amounts represent the aggregate fair value for real estate assets impacted by inventory impairment charges during the applicable period, as of the date that 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.
|
|
|
|
|
November 30,
|
||||||||||||||
|
|
|
|
2019
|
|
2018
|
||||||||||||
Description
|
|
Fair Value Hierarchy
|
|
Carrying
Value (a)
|
|
Estimated
Fair Value
|
|
Carrying
Value (a)
|
|
Estimated
Fair Value
|
||||||||
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Senior notes
|
|
Level 2
|
|
$
|
1,740,858
|
|
|
$
|
1,921,563
|
|
|
$
|
1,790,437
|
|
|
$
|
1,853,438
|
|
Convertible senior notes
|
|
Level 2
|
|
—
|
|
|
—
|
|
|
229,788
|
|
|
229,425
|
|
(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.
|
Note 16.
|
Commitments and Contingencies
|
|
Years Ended November 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Balance at beginning of year
|
$
|
82,490
|
|
|
$
|
69,798
|
|
|
$
|
56,682
|
|
Warranties issued
|
35,480
|
|
|
37,792
|
|
|
38,452
|
|
|||
Payments
|
(23,531
|
)
|
|
(23,300
|
)
|
|
(25,336
|
)
|
|||
Adjustments
|
(5,600
|
)
|
|
(1,800
|
)
|
|
—
|
|
|||
Balance at end of year
|
$
|
88,839
|
|
|
$
|
82,490
|
|
|
$
|
69,798
|
|
•
|
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.
|
|
Years Ended November 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Balance at beginning of year
|
$
|
176,841
|
|
|
$
|
177,695
|
|
|
$
|
158,584
|
|
Self-insurance expense (a)
|
16,685
|
|
|
20,436
|
|
|
20,371
|
|
|||
Payments (b)
|
(15,761
|
)
|
|
(21,290
|
)
|
|
(22,933
|
)
|
|||
Adjustments (c)
|
—
|
|
|
—
|
|
|
21,673
|
|
|||
Balance at end of year
|
$
|
177,765
|
|
|
$
|
176,841
|
|
|
$
|
177,695
|
|
(a)
|
These expenses are included in selling, general and administrative expenses and are largely offset by contributions from independent subcontractors participating in the wrap-up policy.
|
(b)
|
Includes net changes in estimated probable insurance and other recoveries, which are recorded in receivables, to present our self-insurance liability on a gross basis.
|
(c)
|
The amount for 2017 reflected a change in estimate to increase our self-insurance liability based on an actuarially determined estimate that we believed had a higher probability of being adequate to cover future payments associated with unresolved claims, including claims incurred but not yet reported. This adjustment was included in selling, general and administrative expenses.
|
Note 17.
|
Legal Matters
|
Note 18.
|
Stockholders’ Equity
|
Note 19.
|
Accumulated Other Comprehensive Loss
|
Postretirement Benefit Plan Adjustments
|
|
|
Total Accumulated Other Comprehensive Loss
|
||
Balance at November 30, 2017
|
|
|
$
|
(16,924
|
)
|
Other comprehensive income before reclassifications
|
|
|
8,216
|
|
|
Amounts reclassified from accumulated other comprehensive loss
|
|
|
1,892
|
|
|
Income tax expense related to items of other comprehensive income
|
|
|
(2,749
|
)
|
|
Other comprehensive income, net of tax
|
|
|
7,359
|
|
|
Balance at November 30, 2018
|
|
|
(9,565
|
)
|
|
Other comprehensive loss before reclassifications
|
|
|
(10,268
|
)
|
|
Amounts reclassified from accumulated other comprehensive loss
|
|
|
2,130
|
|
|
Income tax benefit related to items of other comprehensive loss
|
|
|
2,197
|
|
|
Other comprehensive loss, net of tax
|
|
|
(5,941
|
)
|
|
Balance at November 30, 2019
|
|
|
$
|
(15,506
|
)
|
|
|
Years Ended November 30,
|
||||||||||
Details About Accumulated Other Comprehensive Loss Components
|
|
2019
|
|
2018
|
|
2017
|
||||||
Postretirement benefit plan adjustments
|
|
|
|
|
|
|
||||||
Amortization of net actuarial loss
|
|
$
|
218
|
|
|
$
|
336
|
|
|
$
|
142
|
|
Amortization of prior service cost
|
|
1,556
|
|
|
1,556
|
|
|
1,556
|
|
|||
Settlement loss
|
|
356
|
|
|
—
|
|
|
—
|
|
|||
Total reclassifications (a)
|
|
$
|
2,130
|
|
|
$
|
1,892
|
|
|
$
|
1,698
|
|
(a)
|
The accumulated other comprehensive loss components are included in the computation of net periodic benefit costs as further discussed in Note 21 – Postretirement Benefits.
|
Note 20.
|
Employee Benefit and Stock Plans
|
|
Years Ended November 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Stock options
|
$
|
189
|
|
|
$
|
917
|
|
|
$
|
2,592
|
|
Restricted stock
|
6,080
|
|
|
4,600
|
|
|
4,177
|
|
|||
PSUs
|
10,742
|
|
|
8,790
|
|
|
6,439
|
|
|||
Director awards
|
1,301
|
|
|
1,554
|
|
|
1,425
|
|
|||
Total
|
$
|
18,312
|
|
|
$
|
15,861
|
|
|
$
|
14,633
|
|
|
Years Ended November 30,
|
|||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
|
Options
|
|
Weighted
Average
Exercise
Price
|
|
Options
|
|
Weighted
Average
Exercise
Price
|
|
Options
|
|
Weighted
Average
Exercise
Price
|
|||||||||
Options outstanding at beginning of year
|
7,237,544
|
|
|
$
|
16.02
|
|
|
9,265,240
|
|
|
$
|
17.64
|
|
|
12,731,545
|
|
|
$
|
18.95
|
|
Granted
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Exercised
|
(2,300,004
|
)
|
|
13.27
|
|
|
(1,195,926
|
)
|
|
16.73
|
|
|
(1,650,360
|
)
|
|
16.01
|
|
|||
Cancelled
|
(774,059
|
)
|
|
40.43
|
|
|
(831,770
|
)
|
|
33.05
|
|
|
(1,815,945
|
)
|
|
28.31
|
|
|||
Options outstanding at end of year
|
4,163,481
|
|
|
$
|
13.00
|
|
|
7,237,544
|
|
|
$
|
16.02
|
|
|
9,265,240
|
|
|
$
|
17.64
|
|
Options exercisable at end of year
|
4,163,481
|
|
|
$
|
13.00
|
|
|
6,948,670
|
|
|
$
|
16.01
|
|
|
8,307,632
|
|
|
$
|
17.86
|
|
Options available for grant at end of year
|
5,567,467
|
|
|
|
|
6,418,197
|
|
|
|
|
7,495,792
|
|
|
|
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||||||
Range of Exercise Price
|
|
Options
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Life
|
|
Options
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Life
|
||||||||
$ 6.32 to $11.05
|
|
953,500
|
|
|
$
|
6.37
|
|
|
1.9
|
|
|
953,500
|
|
|
$
|
6.37
|
|
|
|
|
$11.06 to $14.62
|
|
1,250,424
|
|
|
13.66
|
|
|
3.8
|
|
|
1,250,424
|
|
|
13.66
|
|
|
|
|||
$14.63 to $15.44
|
|
853,000
|
|
|
14.92
|
|
|
5.9
|
|
|
853,000
|
|
|
14.92
|
|
|
|
|||
$15.45 to $16.22
|
|
754,057
|
|
|
16.21
|
|
|
6.9
|
|
|
754,057
|
|
|
16.21
|
|
|
|
|||
$16.23 to $45.16
|
|
352,500
|
|
|
17.12
|
|
|
3.8
|
|
|
352,500
|
|
|
17.12
|
|
|
|
|||
$ 6.32 to $45.16
|
|
4,163,481
|
|
|
$
|
13.00
|
|
|
4.3
|
|
|
4,163,481
|
|
|
$
|
13.00
|
|
|
4.3
|
|
|
Years Ended November 30,
|
|||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
|
Shares
|
|
Weighted
Average
per Share
Grant Date
Fair Value
|
|
Shares
|
|
Weighted
Average
per Share
Grant Date
Fair Value
|
|
Shares
|
|
Weighted
Average
per Share
Grant Date
Fair Value
|
|||||||||
Outstanding at beginning of year
|
555,457
|
|
|
$
|
23.19
|
|
|
503,926
|
|
|
$
|
21.69
|
|
|
604,619
|
|
|
$
|
16.24
|
|
Granted
|
282,523
|
|
|
31.67
|
|
|
303,030
|
|
|
23.05
|
|
|
321,835
|
|
|
24.49
|
|
|||
Vested
|
(319,687
|
)
|
|
34.66
|
|
|
(221,951
|
)
|
|
19.79
|
|
|
(364,670
|
)
|
|
16.09
|
|
|||
Cancelled
|
(18,227
|
)
|
|
22.81
|
|
|
(29,548
|
)
|
|
21.76
|
|
|
(57,858
|
)
|
|
15.61
|
|
|||
Outstanding at end of year
|
500,066
|
|
|
$
|
20.66
|
|
|
555,457
|
|
|
$
|
23.19
|
|
|
503,926
|
|
|
$
|
21.69
|
|
|
Years Ended November 30,
|
|||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
|
Shares
|
|
Weighted
Average
per Share
Grant Date
Fair Value
|
|
Shares
|
|
Weighted
Average
per Share
Grant Date
Fair Value
|
|
Shares
|
|
Weighted
Average
per Share
Grant Date
Fair Value
|
|||||||||
Outstanding at beginning of year
|
1,090,967
|
|
|
$
|
18.70
|
|
|
925,232
|
|
|
$
|
20.09
|
|
|
809,860
|
|
|
$
|
17.19
|
|
Granted
|
468,957
|
|
|
30.45
|
|
|
603,424
|
|
|
25.70
|
|
|
424,797
|
|
|
22.99
|
|
|||
Vested
|
(297,260
|
)
|
|
22.67
|
|
|
(437,689
|
)
|
|
31.28
|
|
|
(278,460
|
)
|
|
16.67
|
|
|||
Cancelled
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(30,965
|
)
|
|
14.92
|
|
|||
Outstanding at end of year
|
1,262,664
|
|
|
$
|
22.13
|
|
|
1,090,967
|
|
|
$
|
18.70
|
|
|
925,232
|
|
|
$
|
20.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 21.
|
Postretirement Benefits
|
|
|
Years Ended November 30,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Interest cost
|
|
$
|
2,478
|
|
|
$
|
2,252
|
|
|
$
|
2,274
|
|
Amortization of prior service cost
|
|
1,556
|
|
|
1,556
|
|
|
1,556
|
|
|||
Service cost
|
|
958
|
|
|
1,085
|
|
|
1,046
|
|
|||
Amortization of net actuarial loss
|
|
218
|
|
|
336
|
|
|
142
|
|
|||
Settlement loss
|
|
356
|
|
|
—
|
|
|
—
|
|
|||
Total
|
|
$
|
5,566
|
|
|
$
|
5,229
|
|
|
$
|
5,018
|
|
Note 22.
|
Supplemental Disclosure to Consolidated Statements of Cash Flows
|
|
Years Ended November 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Summary of cash and cash equivalents at the end of the year:
|
|
|
|
|
|
||||||
Homebuilding
|
$
|
453,814
|
|
|
$
|
574,359
|
|
|
$
|
720,630
|
|
Financial services
|
1,044
|
|
|
760
|
|
|
231
|
|
|||
Total
|
$
|
454,858
|
|
|
$
|
575,119
|
|
|
$
|
720,861
|
|
|
|
|
|
|
|
|
Years Ended November 30,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||||||
Interest paid, net of amounts capitalized
|
$
|
(1,327
|
)
|
|
$
|
8,338
|
|
|
$
|
7,581
|
|
Income taxes paid
|
4,479
|
|
|
11,949
|
|
|
4,664
|
|
|||
Income taxes refunded
|
221
|
|
|
220
|
|
|
202
|
|
|||
Supplemental disclosure of non-cash activities:
|
|
|
|
|
|
||||||
Decrease in inventories due to adoption of ASC 606
|
$
|
(35,288
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Increase in property and equipment, net due to adoption of ASC 606
|
31,194
|
|
|
—
|
|
|
—
|
|
|||
Increase (decrease) in consolidated inventories not owned
|
(9,634
|
)
|
|
16,098
|
|
|
(44,833
|
)
|
|||
Increase in inventories due to distributions of land and land development from an unconsolidated joint venture
|
9,662
|
|
|
17,637
|
|
|
6,650
|
|
|||
Inventories acquired through seller financing
|
8,967
|
|
|
44,586
|
|
|
49,658
|
|
Note 23.
|
Supplemental Guarantor Information
|
|
Year Ended November 30, 2019
|
||||||||||||||||||
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
4,161,511
|
|
|
$
|
391,236
|
|
|
$
|
—
|
|
|
$
|
4,552,747
|
|
Homebuilding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
4,161,511
|
|
|
$
|
376,147
|
|
|
$
|
—
|
|
|
$
|
4,537,658
|
|
Construction and land costs
|
—
|
|
|
(3,362,386
|
)
|
|
(346,542
|
)
|
|
—
|
|
|
(3,708,928
|
)
|
|||||
Selling, general and administrative expenses
|
(100,630
|
)
|
|
(375,199
|
)
|
|
(21,521
|
)
|
|
—
|
|
|
(497,350
|
)
|
|||||
Operating income (loss)
|
(100,630
|
)
|
|
423,926
|
|
|
8,084
|
|
|
—
|
|
|
331,380
|
|
|||||
Interest income
|
1,926
|
|
|
23
|
|
|
209
|
|
|
—
|
|
|
2,158
|
|
|||||
Interest expense
|
(137,327
|
)
|
|
(746
|
)
|
|
(5,339
|
)
|
|
143,412
|
|
|
—
|
|
|||||
Intercompany interest
|
328,361
|
|
|
(173,374
|
)
|
|
(11,575
|
)
|
|
(143,412
|
)
|
|
—
|
|
|||||
Equity in loss of unconsolidated joint ventures
|
—
|
|
|
(1,549
|
)
|
|
—
|
|
|
—
|
|
|
(1,549
|
)
|
|||||
Loss on early extinguishment of debt
|
(6,800
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,800
|
)
|
|||||
Homebuilding pretax income (loss)
|
85,530
|
|
|
248,280
|
|
|
(8,621
|
)
|
|
—
|
|
|
325,189
|
|
|||||
Financial services pretax income
|
—
|
|
|
—
|
|
|
22,986
|
|
|
—
|
|
|
22,986
|
|
|||||
Total pretax income
|
85,530
|
|
|
248,280
|
|
|
14,365
|
|
|
—
|
|
|
348,175
|
|
|||||
Income tax expense
|
(16,300
|
)
|
|
(58,100
|
)
|
|
(5,000
|
)
|
|
—
|
|
|
(79,400
|
)
|
|||||
Equity in net income of subsidiaries
|
88,639
|
|
|
—
|
|
|
—
|
|
|
(88,639
|
)
|
|
—
|
|
|||||
Net income
|
$
|
157,869
|
|
|
$
|
190,180
|
|
|
$
|
9,365
|
|
|
$
|
(88,639
|
)
|
|
$
|
268,775
|
|
|
Year Ended November 30, 2018
|
||||||||||||||||||
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
4,198,969
|
|
|
$
|
348,033
|
|
|
$
|
—
|
|
|
$
|
4,547,002
|
|
Homebuilding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
4,198,969
|
|
|
$
|
334,826
|
|
|
$
|
—
|
|
|
$
|
4,533,795
|
|
Construction and land costs
|
—
|
|
|
(3,435,058
|
)
|
|
(308,862
|
)
|
|
—
|
|
|
(3,743,920
|
)
|
|||||
Selling, general and administrative expenses
|
(101,152
|
)
|
|
(311,815
|
)
|
|
(31,187
|
)
|
|
—
|
|
|
(444,154
|
)
|
|||||
Operating income (loss)
|
(101,152
|
)
|
|
452,096
|
|
|
(5,223
|
)
|
|
—
|
|
|
345,721
|
|
|||||
Interest income
|
3,273
|
|
|
11
|
|
|
230
|
|
|
—
|
|
|
3,514
|
|
|||||
Interest expense
|
(141,812
|
)
|
|
(2,624
|
)
|
|
(5,262
|
)
|
|
149,698
|
|
|
—
|
|
|||||
Intercompany interest
|
302,253
|
|
|
(142,882
|
)
|
|
(9,673
|
)
|
|
(149,698
|
)
|
|
—
|
|
|||||
Equity in income of unconsolidated joint ventures
|
—
|
|
|
2,066
|
|
|
—
|
|
|
—
|
|
|
2,066
|
|
|||||
Homebuilding pretax income (loss)
|
62,562
|
|
|
308,667
|
|
|
(19,928
|
)
|
|
—
|
|
|
351,301
|
|
|||||
Financial services pretax income
|
—
|
|
|
—
|
|
|
16,664
|
|
|
—
|
|
|
16,664
|
|
|||||
Total pretax income (loss)
|
62,562
|
|
|
308,667
|
|
|
(3,264
|
)
|
|
—
|
|
|
367,965
|
|
|||||
Income tax expense
|
(62,100
|
)
|
|
(101,200
|
)
|
|
(34,300
|
)
|
|
—
|
|
|
(197,600
|
)
|
|||||
Equity in net income of subsidiaries
|
169,903
|
|
|
—
|
|
|
—
|
|
|
(169,903
|
)
|
|
—
|
|
|||||
Net income (loss)
|
$
|
170,365
|
|
|
$
|
207,467
|
|
|
$
|
(37,564
|
)
|
|
$
|
(169,903
|
)
|
|
$
|
170,365
|
|
|
Year Ended November 30, 2017
|
||||||||||||||||||
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
4,034,057
|
|
|
$
|
334,472
|
|
|
$
|
—
|
|
|
$
|
4,368,529
|
|
Homebuilding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
4,034,057
|
|
|
$
|
322,208
|
|
|
$
|
—
|
|
|
$
|
4,356,265
|
|
Construction and land costs
|
—
|
|
|
(3,342,617
|
)
|
|
(303,851
|
)
|
|
—
|
|
|
(3,646,468
|
)
|
|||||
Selling, general and administrative expenses
|
(91,120
|
)
|
|
(298,498
|
)
|
|
(36,776
|
)
|
|
—
|
|
|
(426,394
|
)
|
|||||
Operating income (loss)
|
(91,120
|
)
|
|
392,942
|
|
|
(18,419
|
)
|
|
—
|
|
|
283,403
|
|
|||||
Interest income
|
1,232
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
1,240
|
|
|||||
Interest expense
|
(166,417
|
)
|
|
(1,635
|
)
|
|
(3,434
|
)
|
|
170,864
|
|
|
(622
|
)
|
|||||
Intercompany interest
|
266,784
|
|
|
(118,138
|
)
|
|
22,218
|
|
|
(170,864
|
)
|
|
—
|
|
|||||
Equity in loss of unconsolidated joint ventures
|
—
|
|
|
(1,407
|
)
|
|
(2
|
)
|
|
—
|
|
|
(1,409
|
)
|
|||||
Loss on early extinguishment of debt
|
(5,685
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,685
|
)
|
|||||
Homebuilding pretax income
|
4,794
|
|
|
271,770
|
|
|
363
|
|
|
—
|
|
|
276,927
|
|
|||||
Financial services pretax income
|
—
|
|
|
—
|
|
|
13,068
|
|
|
—
|
|
|
13,068
|
|
|||||
Total pretax income
|
4,794
|
|
|
271,770
|
|
|
13,431
|
|
|
—
|
|
|
289,995
|
|
|||||
Income tax expense
|
(8,800
|
)
|
|
(100,000
|
)
|
|
(600
|
)
|
|
—
|
|
|
(109,400
|
)
|
|||||
Equity in net income of subsidiaries
|
184,601
|
|
|
—
|
|
|
—
|
|
|
(184,601
|
)
|
|
—
|
|
|||||
Net income
|
$
|
180,595
|
|
|
$
|
171,770
|
|
|
$
|
12,831
|
|
|
$
|
(184,601
|
)
|
|
$
|
180,595
|
|
|
Year Ended November 30, 2019
|
||||||||||||||||||
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Net income
|
$
|
157,869
|
|
|
$
|
190,180
|
|
|
$
|
9,365
|
|
|
$
|
(88,639
|
)
|
|
$
|
268,775
|
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
||||||||||
Postretirement benefit plan adjustments
|
(8,138
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,138
|
)
|
|||||
Other comprehensive loss before tax
|
(8,138
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,138
|
)
|
|||||
Income tax benefit related to items of other comprehensive loss
|
2,197
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,197
|
|
|||||
Other comprehensive loss, net of tax
|
(5,941
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,941
|
)
|
|||||
Comprehensive income
|
$
|
151,928
|
|
|
$
|
190,180
|
|
|
$
|
9,365
|
|
|
$
|
(88,639
|
)
|
|
$
|
262,834
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Year Ended November 30, 2018
|
||||||||||||||||||
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Net income (loss)
|
$
|
170,365
|
|
|
$
|
207,467
|
|
|
$
|
(37,564
|
)
|
|
$
|
(169,903
|
)
|
|
$
|
170,365
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
||||||||||
Postretirement benefit plan adjustments
|
10,108
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,108
|
|
|||||
Other comprehensive income before tax
|
10,108
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,108
|
|
|||||
Income tax expense related to items of other comprehensive income
|
(2,749
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,749
|
)
|
|||||
Other comprehensive income, net of tax
|
7,359
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,359
|
|
|||||
Comprehensive income (loss)
|
$
|
177,724
|
|
|
$
|
207,467
|
|
|
$
|
(37,564
|
)
|
|
$
|
(169,903
|
)
|
|
$
|
177,724
|
|
|
Year Ended November 30, 2017
|
||||||||||||||||||
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Net income
|
$
|
180,595
|
|
|
$
|
171,770
|
|
|
$
|
12,831
|
|
|
$
|
(184,601
|
)
|
|
$
|
180,595
|
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
||||||||||
Postretirement benefit plan adjustments
|
(1,445
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,445
|
)
|
|||||
Other comprehensive loss before tax
|
(1,445
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,445
|
)
|
|||||
Income tax benefit related to items of other comprehensive loss
|
578
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
578
|
|
|||||
Other comprehensive loss, net of tax
|
(867
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(867
|
)
|
|||||
Comprehensive income
|
$
|
179,728
|
|
|
$
|
171,770
|
|
|
$
|
12,831
|
|
|
$
|
(184,601
|
)
|
|
$
|
179,728
|
|
|
November 30, 2019
|
||||||||||||||||||
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Homebuilding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
357,966
|
|
|
$
|
65,434
|
|
|
$
|
30,414
|
|
|
$
|
—
|
|
|
$
|
453,814
|
|
Receivables
|
1,934
|
|
|
181,047
|
|
|
66,074
|
|
|
—
|
|
|
249,055
|
|
|||||
Inventories
|
—
|
|
|
3,400,307
|
|
|
304,295
|
|
|
—
|
|
|
3,704,602
|
|
|||||
Investments in unconsolidated joint ventures
|
—
|
|
|
57,038
|
|
|
—
|
|
|
—
|
|
|
57,038
|
|
|||||
Property and equipment, net
|
24,250
|
|
|
37,539
|
|
|
3,254
|
|
|
—
|
|
|
65,043
|
|
|||||
Deferred tax assets, net
|
96,301
|
|
|
237,877
|
|
|
30,315
|
|
|
—
|
|
|
364,493
|
|
|||||
Other assets
|
78,686
|
|
|
2,666
|
|
|
1,689
|
|
|
—
|
|
|
83,041
|
|
|||||
|
559,137
|
|
|
3,981,908
|
|
|
436,041
|
|
|
—
|
|
|
4,977,086
|
|
|||||
Financial services
|
—
|
|
|
—
|
|
|
38,396
|
|
|
—
|
|
|
38,396
|
|
|||||
Intercompany receivables
|
3,624,081
|
|
|
—
|
|
|
186,022
|
|
|
(3,810,103
|
)
|
|
—
|
|
|||||
Investments in subsidiaries
|
115,753
|
|
|
—
|
|
|
—
|
|
|
(115,753
|
)
|
|
—
|
|
|||||
Total assets
|
$
|
4,298,971
|
|
|
$
|
3,981,908
|
|
|
$
|
660,459
|
|
|
$
|
(3,925,856
|
)
|
|
$
|
5,015,482
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Homebuilding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable, accrued expenses and other liabilities
|
$
|
139,137
|
|
|
$
|
453,929
|
|
|
$
|
288,489
|
|
|
$
|
—
|
|
|
$
|
881,555
|
|
Notes payable
|
1,715,748
|
|
|
7,889
|
|
|
25,110
|
|
|
—
|
|
|
1,748,747
|
|
|||||
|
1,854,885
|
|
|
461,818
|
|
|
313,599
|
|
|
—
|
|
|
2,630,302
|
|
|||||
Financial services
|
—
|
|
|
—
|
|
|
2,058
|
|
|
—
|
|
|
2,058
|
|
|||||
Intercompany payables
|
60,964
|
|
|
3,520,090
|
|
|
229,049
|
|
|
(3,810,103
|
)
|
|
—
|
|
|||||
Stockholders’ equity
|
2,383,122
|
|
|
—
|
|
|
115,753
|
|
|
(115,753
|
)
|
|
2,383,122
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
4,298,971
|
|
|
$
|
3,981,908
|
|
|
$
|
660,459
|
|
|
$
|
(3,925,856
|
)
|
|
$
|
5,015,482
|
|
|
November 30, 2018
|
||||||||||||||||||
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Homebuilding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
429,977
|
|
|
$
|
114,269
|
|
|
$
|
30,113
|
|
|
$
|
—
|
|
|
$
|
574,359
|
|
Receivables
|
5,135
|
|
|
198,465
|
|
|
89,230
|
|
|
—
|
|
|
292,830
|
|
|||||
Inventories
|
—
|
|
|
3,314,386
|
|
|
268,453
|
|
|
—
|
|
|
3,582,839
|
|
|||||
Investments in unconsolidated joint ventures
|
—
|
|
|
61,960
|
|
|
—
|
|
|
—
|
|
|
61,960
|
|
|||||
Property and equipment, net
|
18,450
|
|
|
5,522
|
|
|
311
|
|
|
—
|
|
|
24,283
|
|
|||||
Deferred tax assets, net
|
84,564
|
|
|
303,669
|
|
|
53,587
|
|
|
—
|
|
|
441,820
|
|
|||||
Other assets
|
77,288
|
|
|
4,008
|
|
|
1,804
|
|
|
—
|
|
|
83,100
|
|
|||||
|
615,414
|
|
|
4,002,279
|
|
|
443,498
|
|
|
—
|
|
|
5,061,191
|
|
|||||
Financial services
|
—
|
|
|
—
|
|
|
12,380
|
|
|
—
|
|
|
12,380
|
|
|||||
Intercompany receivables
|
3,569,422
|
|
|
—
|
|
|
158,760
|
|
|
(3,728,182
|
)
|
|
—
|
|
|||||
Investments in subsidiaries
|
67,657
|
|
|
—
|
|
|
—
|
|
|
(67,657
|
)
|
|
—
|
|
|||||
Total assets
|
$
|
4,252,493
|
|
|
$
|
4,002,279
|
|
|
$
|
614,638
|
|
|
$
|
(3,795,839
|
)
|
|
$
|
5,073,571
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Homebuilding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable, accrued expenses and other liabilities
|
$
|
126,176
|
|
|
$
|
584,321
|
|
|
$
|
213,816
|
|
|
$
|
—
|
|
|
$
|
924,313
|
|
Notes payable
|
1,995,115
|
|
|
40,038
|
|
|
25,110
|
|
|
—
|
|
|
2,060,263
|
|
|||||
|
2,121,291
|
|
|
624,359
|
|
|
238,926
|
|
|
—
|
|
|
2,984,576
|
|
|||||
Financial services
|
—
|
|
|
—
|
|
|
1,495
|
|
|
—
|
|
|
1,495
|
|
|||||
Intercompany payables
|
43,702
|
|
|
3,377,920
|
|
|
306,560
|
|
|
(3,728,182
|
)
|
|
—
|
|
|||||
Stockholders’ equity
|
2,087,500
|
|
|
—
|
|
|
67,657
|
|
|
(67,657
|
)
|
|
2,087,500
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
4,252,493
|
|
|
$
|
4,002,279
|
|
|
$
|
614,638
|
|
|
$
|
(3,795,839
|
)
|
|
$
|
5,073,571
|
|
|
Year Ended November 30, 2019
|
||||||||||||||||||
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Net cash provided by operating activities
|
$
|
118,542
|
|
|
$
|
32,864
|
|
|
$
|
99,636
|
|
|
$
|
—
|
|
|
$
|
251,042
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Contributions to unconsolidated joint ventures
|
—
|
|
|
(11,290
|
)
|
|
—
|
|
|
—
|
|
|
(11,290
|
)
|
|||||
Return of investments in unconsolidated joint ventures
|
—
|
|
|
5,001
|
|
|
—
|
|
|
—
|
|
|
5,001
|
|
|||||
Proceeds from sale of building
|
—
|
|
|
5,804
|
|
|
—
|
|
|
—
|
|
|
5,804
|
|
|||||
Purchases of property and equipment, net
|
(6,365
|
)
|
|
(23,618
|
)
|
|
(10,476
|
)
|
|
—
|
|
|
(40,459
|
)
|
|||||
Intercompany
|
105,055
|
|
|
—
|
|
|
—
|
|
|
(105,055
|
)
|
|
—
|
|
|||||
Net cash provided by (used in) investing activities
|
98,690
|
|
|
(24,103
|
)
|
|
(10,476
|
)
|
|
(105,055
|
)
|
|
(40,944
|
)
|
|||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from issuance of debt
|
705,250
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
705,250
|
|
|||||
Repayment of senior notes
|
(986,231
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(986,231
|
)
|
|||||
Payment of issuance costs
|
(11,128
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,128
|
)
|
|||||
Borrowings under revolving credit facility
|
610,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
610,000
|
|
|||||
Repayments under revolving credit facility
|
(610,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(610,000
|
)
|
|||||
Payments on mortgages and land contracts due to land sellers and other loans
|
—
|
|
|
(41,116
|
)
|
|
—
|
|
|
—
|
|
|
(41,116
|
)
|
|||||
Issuance of common stock under employee stock plans
|
30,524
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,524
|
|
|||||
Tax payments associated with stock-based compensation awards
|
(7,288
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,288
|
)
|
|||||
Payments of cash dividends
|
(20,370
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,370
|
)
|
|||||
Intercompany
|
—
|
|
|
(16,480
|
)
|
|
(88,575
|
)
|
|
105,055
|
|
|
—
|
|
|||||
Net cash used in financing activities
|
(289,243
|
)
|
|
(57,596
|
)
|
|
(88,575
|
)
|
|
105,055
|
|
|
(330,359
|
)
|
|||||
Net increase (decrease) in cash and cash equivalents
|
(72,011
|
)
|
|
(48,835
|
)
|
|
585
|
|
|
—
|
|
|
(120,261
|
)
|
|||||
Cash and cash equivalents at beginning of year
|
429,977
|
|
|
114,269
|
|
|
30,873
|
|
|
—
|
|
|
575,119
|
|
|||||
Cash and cash equivalents at end of year
|
$
|
357,966
|
|
|
$
|
65,434
|
|
|
$
|
31,458
|
|
|
$
|
—
|
|
|
$
|
454,858
|
|
|
Year Ended November 30, 2018
|
||||||||||||||||||
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
236,892
|
|
|
$
|
9,668
|
|
|
$
|
(25,048
|
)
|
|
$
|
—
|
|
|
$
|
221,512
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Contributions to unconsolidated joint ventures
|
—
|
|
|
(22,672
|
)
|
|
1
|
|
|
—
|
|
|
(22,671
|
)
|
|||||
Return of investments in unconsolidated joint ventures
|
—
|
|
|
9,934
|
|
|
—
|
|
|
—
|
|
|
9,934
|
|
|||||
Purchases of property and equipment, net
|
(6,584
|
)
|
|
(674
|
)
|
|
(112
|
)
|
|
—
|
|
|
(7,370
|
)
|
|||||
Intercompany
|
(43,128
|
)
|
|
—
|
|
|
—
|
|
|
43,128
|
|
|
—
|
|
|||||
Net cash used in investing activities
|
(49,712
|
)
|
|
(13,412
|
)
|
|
(111
|
)
|
|
43,128
|
|
|
(20,107
|
)
|
|||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Repayment of senior notes
|
(300,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(300,000
|
)
|
|||||
Borrowings under revolving credit facility
|
70,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
70,000
|
|
|||||
Repayments under revolving credit facility
|
(70,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(70,000
|
)
|
|||||
Payments on mortgages and land contracts due to land sellers and other loans
|
—
|
|
|
(13,831
|
)
|
|
(920
|
)
|
|
—
|
|
|
(14,751
|
)
|
|||||
Issuance of common stock under employee stock plans
|
20,011
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,011
|
|
|||||
Stock repurchases
|
(35,039
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(35,039
|
)
|
|||||
Tax payments associated with stock-based compensation awards
|
(8,476
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,476
|
)
|
|||||
Payments of cash dividends
|
(8,892
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,892
|
)
|
|||||
Intercompany
|
—
|
|
|
27,724
|
|
|
15,404
|
|
|
(43,128
|
)
|
|
—
|
|
|||||
Net cash provided by (used in) financing activities
|
(332,396
|
)
|
|
13,893
|
|
|
14,484
|
|
|
(43,128
|
)
|
|
(347,147
|
)
|
|||||
Net increase (decrease) in cash and cash equivalents
|
(145,216
|
)
|
|
10,149
|
|
|
(10,675
|
)
|
|
—
|
|
|
(145,742
|
)
|
|||||
Cash and cash equivalents at beginning of year
|
575,193
|
|
|
104,120
|
|
|
41,548
|
|
|
—
|
|
|
720,861
|
|
|||||
Cash and cash equivalents at end of year
|
$
|
429,977
|
|
|
$
|
114,269
|
|
|
$
|
30,873
|
|
|
$
|
—
|
|
|
$
|
575,119
|
|
|
Year Ended November 30, 2017
|
||||||||||||||||||
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Net cash provided by operating activities
|
$
|
70,683
|
|
|
$
|
366,005
|
|
|
$
|
76,531
|
|
|
$
|
—
|
|
|
$
|
513,219
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Contributions to unconsolidated joint ventures
|
—
|
|
|
(13,569
|
)
|
|
(5,125
|
)
|
|
—
|
|
|
(18,694
|
)
|
|||||
Return of investments in unconsolidated joint ventures
|
—
|
|
|
4,119
|
|
|
6,916
|
|
|
—
|
|
|
11,035
|
|
|||||
Purchases of property and equipment, net
|
(7,215
|
)
|
|
(809
|
)
|
|
(61
|
)
|
|
—
|
|
|
(8,085
|
)
|
|||||
Intercompany
|
311,857
|
|
|
—
|
|
|
—
|
|
|
(311,857
|
)
|
|
—
|
|
|||||
Net cash provided by (used in) investing activities
|
304,642
|
|
|
(10,259
|
)
|
|
1,730
|
|
|
(311,857
|
)
|
|
(15,744
|
)
|
|||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Repayment of senior notes
|
(270,326
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(270,326
|
)
|
|||||
Payment of issuance costs
|
(1,711
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,711
|
)
|
|||||
Payments on mortgages and land contracts due to land sellers and other loans
|
—
|
|
|
(106,382
|
)
|
|
—
|
|
|
—
|
|
|
(106,382
|
)
|
|||||
Issuance of common stock under employee stock plans
|
23,162
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23,162
|
|
|||||
Excess tax benefits from stock-based compensation
|
958
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
958
|
|
|||||
Tax payments associated with stock-based compensation awards
|
(6,673
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,673
|
)
|
|||||
Payments of cash dividends
|
(8,642
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,642
|
)
|
|||||
Intercompany
|
—
|
|
|
(251,147
|
)
|
|
(60,710
|
)
|
|
311,857
|
|
|
—
|
|
|||||
Net cash used in financing activities
|
(263,232
|
)
|
|
(357,529
|
)
|
|
(60,710
|
)
|
|
311,857
|
|
|
(369,614
|
)
|
|||||
Net increase (decrease) in cash and cash equivalents
|
112,093
|
|
|
(1,783
|
)
|
|
17,551
|
|
|
—
|
|
|
127,861
|
|
|||||
Cash and cash equivalents at beginning of year
|
463,100
|
|
|
105,903
|
|
|
23,997
|
|
|
—
|
|
|
593,000
|
|
|||||
Cash and cash equivalents at end of year
|
$
|
575,193
|
|
|
$
|
104,120
|
|
|
$
|
41,548
|
|
|
$
|
—
|
|
|
$
|
720,861
|
|
Note 24.
|
Quarterly Results (unaudited)
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
2019
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
811,483
|
|
|
$
|
1,021,803
|
|
|
$
|
1,160,786
|
|
|
$
|
1,558,675
|
|
Gross profits
|
139,604
|
|
|
177,019
|
|
|
216,029
|
|
|
306,834
|
|
||||
Inventory impairment and land option contract abandonment charges
|
3,555
|
|
|
4,337
|
|
|
5,251
|
|
|
4,148
|
|
||||
Pretax income (a)
|
34,511
|
|
|
56,761
|
|
|
91,936
|
|
|
164,967
|
|
||||
Net income
|
30,011
|
|
|
47,461
|
|
|
68,136
|
|
|
123,167
|
|
||||
Earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
.34
|
|
|
.54
|
|
|
.77
|
|
|
1.37
|
|
||||
Diluted
|
.31
|
|
|
.51
|
|
|
.73
|
|
|
1.31
|
|
||||
|
|
|
|
|
|
|
|
||||||||
2018
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
871,623
|
|
|
$
|
1,101,423
|
|
|
$
|
1,225,347
|
|
|
$
|
1,348,609
|
|
Gross profits
|
141,192
|
|
|
189,222
|
|
|
222,893
|
|
|
245,931
|
|
||||
Inventory impairment and land option contract abandonment charges
|
4,985
|
|
|
6,526
|
|
|
8,414
|
|
|
9,069
|
|
||||
Pretax income
|
46,045
|
|
|
78,308
|
|
|
114,676
|
|
|
128,936
|
|
||||
Net income (loss) (b)
|
(71,255
|
)
|
|
57,308
|
|
|
87,476
|
|
|
96,836
|
|
||||
Earnings (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
(.82
|
)
|
|
.65
|
|
|
.99
|
|
|
1.09
|
|
||||
Diluted
|
(.82
|
)
|
|
.57
|
|
|
.87
|
|
|
.96
|
|
(a)
|
Pretax income for the fourth quarter included a $6.8 million loss on the early extinguishment of debt.
|
(b)
|
Net income (loss) included non-cash charges to income tax expense of $111.2 million in the first quarter and $1.3 million in the fourth quarter for TCJA-related impacts.
|
|
Valuation of Land Held for Future Development
|
|
|
Description of the Matter
|
As of November 30, 2019, the Company’s real estate inventories were $3.7 billion which includes land held for future development of $131.2 million. As disclosed in Note 6 to the consolidated financial statements, land held for future development principally reflects land acquisition and land development costs related to land where development activity has been suspended or has not yet begun but is expected to occur in the future. As more fully described in Note 7 to the consolidated financial statements, the Company assesses each community or land parcel to identify indicators of potential impairment. When an indicator of potential impairment is identified, the Company evaluates the recoverability of the asset based on its projected undiscounted future cash flows. When the carrying value of the asset is greater than its projected undiscounted future cash flows, the Company estimates the fair value of the asset based on its projected discounted cash flows and records an impairment charge. Inputs used in the Company’s impairment assessment for land held for future development consider then-current market conditions and expectations related to average selling prices and related price appreciation, volume of homes delivered, land development and construction costs to be incurred and related cost inflation, and discount rates reflecting the inherent risk associated with the asset.
|
|
|
|
Auditing the Company’s impairment assessment for land held for future development involves a high degree of auditor judgment and increased extent of audit effort to evaluate management’s estimates underlying projected future cash flows and the determination of fair values based on subjective assumptions about expected future sales activity, risk specific to the asset or conditions in the market in which the asset is located.
|
|
|
How We Addressed the Matter in Our Audit
|
We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s land held for future development impairment assessment process. For example, we tested controls over the Company’s significant data and assumptions used in the Company’s estimation of cash flows and fair value analysis.
|
|
|
|
To test the Company’s land held for future development impairment assessment, our audit procedures included, among others, evaluating the significant data and assumptions used to project future cash flows and estimate fair values for assets with identified indicators of impairment, including comparison of such data and assumptions to the Company’s accounting records and market data, and recalculation of the Company’s estimates. We also involved our real estate valuation specialists to assist in evaluating the key assumptions and methodologies used in the impairment assessments for certain projects, including assumptions related to average selling prices and related price appreciation, expected future costs and related cost inflation, and discount rate assumptions used to estimate fair values.
|
|
|
|
Self-insurance Liabilities and Recoveries
|
|
|
Description of the Matter
|
At November 30, 2019, the Company’s self-insurance liability was $177.8 million and receivables for estimated probable insurance and other recoveries related to self-insurance claims totaled $50.6 million. As disclosed in Note 16 to the consolidated financial statements, the Company’s self-insurance liability for construction defects is based on an analysis prepared by a third-party actuary that uses historical claim and expense data as well as industry data to estimate the cost of all unpaid losses, including estimates related to claims incurred but not yet reported. Key assumptions used in developing these estimates include claim frequencies, severities and resolution patterns, which can occur over an extended period of time. Self-insurance recoveries are principally based on actuarially determined amounts and consider the claim cost estimates described above, applicable insurance policy coverage limits, historical recovery rates, and other factors.
|
|
|
|
Auditing the Company’s self-insurance liability and related recoveries is complex and highly judgmental due to the complexity of the actuarial methods used to estimate the losses and related recoveries and degree of subjective judgment required to assess the underlying assumptions, which required us to involve our actuarial specialists. These estimates are subject to variability due to the length of time between the delivery of a home to a homebuyer and when a construction defect claim is made and ultimately resolved; uncertainties regarding such claims relative to the markets and types of products built; and legal or regulatory actions and interpretations, among other factors.
|
|
|
How We Addressed the Matter in Our Audit
|
We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s self-insurance liability and recoveries estimation process including controls over the data and assumptions used in the analysis.
|
|
|
|
To test the Company’s self-insurance liability and related recoveries, our audit procedures included, among others, testing the completeness and accuracy of the underlying claims and recovery data utilized by the Company’s third-party actuary, testing the existence and terms of third-party insurance policies, and involving our actuarial specialist to assist in our evaluation of the methodologies and assumptions applied by management’s third-party actuary. Additionally, we compared the Company’s recorded self-insurance liability and related recoveries to estimated ranges which our actuarial specialist developed based on independently selected assumptions.
|
Item 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
Item 9A.
|
CONTROLS AND PROCEDURES
|
(a)
|
Management’s Annual Report on Internal Control Over Financial Reporting
|
(b)
|
Report of Independent Registered Public Accounting Firm
|
(c)
|
Changes in Internal Control Over Financial Reporting
|
Item 9B.
|
OTHER INFORMATION
|
Item 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
Item 11.
|
EXECUTIVE COMPENSATION
|
Item 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
Equity Compensation Plan Information
|
|
|||||||||||
Plan category
|
|
Number of
common shares to
be issued upon
exercise of
outstanding options,
warrants and
rights
(a)
|
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)
|
|
Number of common
shares remaining
available for future
issuance under equity
compensation plans
(excluding common
shares reflected in
column(a))
(c)
|
|
|||||
Equity compensation plans approved by stockholders
|
|
4,163,481
|
|
|
$
|
13.00
|
|
|
5,567,467
|
|
|
|
Equity compensation plans not approved by stockholders
|
|
—
|
|
|
—
|
|
|
—
|
|
(1
|
)
|
|
Total
|
|
4,163,481
|
|
|
$
|
13.00
|
|
|
5,567,467
|
|
|
(1)
|
Represents a prior non-employee directors compensation plan under which our non-employee directors received Director Plan SARs, which were initially granted as cash-settled instruments. As discussed in Note 18 – Stockholders’ Equity in the Notes to Consolidated Financial Statements in this report, all non-employee directors serving on our board of directors have elected to receive shares of our common stock in settlement of their Director Plan SARs under the terms of the plan. We consider this non-employee director compensation plan as having no available capacity to issue shares of our common stock.
|
Item 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
Item 14.
|
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
Item 15.
|
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
Exhibit
Number
|
|
Description
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
4.1
|
|
|
|
|
|
4.2
|
|
|
|
|
|
4.3
|
|
|
|
|
|
4.4
|
|
|
|
|
|
4.5
|
|
|
|
|
|
4.6
|
|
|
|
|
|
4.7
|
|
|
|
|
|
4.8
|
|
|
|
|
|
4.9
|
|
|
|
|
|
4.10
|
|
|
|
|
|
4.11
|
|
Exhibit
Number
|
|
Description
|
|
|
|
|
|
|
4.12
|
|
|
|
|
|
4.13
|
|
|
|
|
|
4.14
|
|
|
|
|
|
4.15
|
|
|
|
|
|
4.16
|
|
|
|
|
|
4.17
|
|
|
|
|
|
4.18
|
|
|
|
|
|
4.19
|
|
|
|
|
|
4.20
|
|
|
|
|
|
4.21†
|
|
|
|
|
|
10.1
|
|
KB Home Directors’ Legacy Program, as amended January 1, 1999, filed as an exhibit to our 1998 Annual Report on Form 10-K (File No. 001-09195), is incorporated by reference herein.
|
|
|
|
10.2
|
|
Trust Agreement between Kaufman and Broad Home Corporation and Wachovia Bank, N.A. as Trustee, dated as of August 27, 1999, filed as an exhibit to our 1999 Annual Report on Form 10-K (File No. 001-09195), is incorporated by reference herein.
|
|
|
|
10.3*
|
|
|
|
|
|
10.4*
|
|
|
|
|
|
10.5*
|
|
|
|
|
|
10.6*
|
|
|
|
|
|
10.7*
|
|
|
|
|
|
10.8*
|
|
|
|
|
|
10.9*
|
|
|
|
|
Exhibit
Number
|
|
Description
|
|
|
|
10.10*
|
|
|
|
|
|
10.11*
|
|
|
|
|
|
10.12*
|
|
|
|
|
|
10.13
|
|
|
|
|
|
10.14
|
|
|
|
|
|
10.15*
|
|
|
|
|
|
10.16*
|
|
|
|
|
|
10.17*
|
|
|
|
|
|
10.18*
|
|
|
|
|
|
10.19*
|
|
|
|
|
|
10.20*
|
|
|
|
|
|
10.21*
|
|
|
|
|
|
10.22*
|
|
|
|
|
|
10.23*
|
|
|
|
|
|
10.24*
|
|
|
|
|
|
10.25*
|
|
|
|
|
|
10.26*
|
|
|
|
|
|
10.27*
|
|
|
|
|
|
10.28
|
|
|
|
|
|
Exhibit
Number
|
|
Description
|
|
|
|
10.29†
|
|
|
|
|
|
21†
|
|
|
|
|
|
23†
|
|
|
|
|
|
31.1†
|
|
|
|
|
|
31.2†
|
|
|
|
|
|
32.1†
|
|
|
|
|
|
32.2†
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
|
|
101.SCH
|
|
Inline XBRL Taxonomy Extension Schema Document.
|
|
|
|
101.CAL
|
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
101.DEF
|
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
101.LAB
|
|
Inline XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
101.PRE
|
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
104†
|
|
Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101).
|
Item 16.
|
FORM 10-K SUMMARY
|
|
|
KB Home
|
|
|
|
|
|
|
|
By:
|
/S/ JEFF J. KAMINSKI
|
|
|
|
Jeff J. Kaminski
|
|
|
|
Executive Vice President and Chief Financial Officer
|
Date:
|
January 24, 2020
|
|
Signature
|
|
Title
|
|
Date
|
/S/ JEFFREY T. MEZGER
|
|
Chairman, President and
Chief Executive Officer
(Principal Executive Officer)
|
|
January 24, 2020
|
Jeffrey T. Mezger
|
|
|
|
|
|
|
|
||
/S/ JEFF J. KAMINSKI
|
|
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
|
|
January 24, 2020
|
Jeff J. Kaminski
|
|
|
|
|
|
|
|
||
/S/ WILLIAM R. HOLLINGER
|
|
Senior Vice President and
Chief Accounting Officer
(Principal Accounting Officer)
|
|
January 24, 2020
|
William R. Hollinger
|
|
|
|
|
|
|
|
|
|
/S/ DORENE C. DOMINGUEZ
|
|
Director
|
|
January 24, 2020
|
Dorene C. Dominguez
|
|
|
|
|
|
|
|
|
|
/S/ TIMOTHY W. FINCHEM
|
|
Director
|
|
January 24, 2020
|
Timothy W. Finchem
|
|
|
|
|
|
|
|
|
|
/S/ STUART A. GABRIEL
|
|
Director
|
|
January 24, 2020
|
Stuart A. Gabriel
|
|
|
|
|
|
|
|
|
|
/S/ THOMAS W. GILLIGAN
|
|
Director
|
|
January 24, 2020
|
Thomas W. Gilligan
|
|
|
|
|
|
|
|
||
/S/ KENNETH M. JASTROW, II
|
|
Director
|
|
January 24, 2020
|
Kenneth M. Jastrow, II
|
|
|
|
|
|
|
|
||
/S/ ROBERT L. JOHNSON
|
|
Director
|
|
January 24, 2020
|
Robert L. Johnson
|
|
|
|
|
|
|
|
|
|
/S/ MELISSA LORA
|
|
Director
|
|
January 24, 2020
|
Melissa Lora
|
|
|
|
|
|
|
|
||
/S/ JAMES C. WEAVER
|
|
Director
|
|
January 24, 2020
|
James C. Weaver
|
|
|
|
|
|
|
|
|
|
/S/ MICHAEL M. WOOD
|
|
Director
|
|
January 24, 2020
|
Michael M. Wood
|
|
|
|
|
|
|
|
Page
|
|
1
|
|||
|
|
|
|
|
1.1
|
|
Defined Terms
|
|
1
|
1.2
|
|
Accounting Terms
|
|
33
|
1.3
|
|
Rounding
|
|
33
|
1.4
|
|
Other Interpretive Provisions
|
|
33
|
1.5
|
|
Exhibits and Schedules
|
|
34
|
1.6
|
|
References to “Borrower and its Subsidiaries”
|
|
34
|
1.7
|
|
Time of Day
|
|
34
|
1.8
|
|
Letter of Credit Amounts
|
|
35
|
1.9
|
|
Divisions
|
|
35
|
|
|
|
|
|
|
35
|
|||
|
|
|
|
|
2.1
|
|
Loans-General
|
|
35
|
2.2
|
|
Base Rate Loans
|
|
37
|
2.3
|
|
Eurodollar Rate Loans
|
|
37
|
2.4
|
|
[Intentionally Omitted]
|
|
37
|
2.5
|
|
Letters of Credit
|
|
37
|
2.6
|
|
Reduction of Commitment
|
|
46
|
2.7
|
|
Optional Increase to Commitment
|
|
46
|
2.8
|
|
Borrowing Base
|
|
48
|
|
|
|
|
|
|
48
|
|||
|
|
|
|
|
3.1
|
|
Principal and Interest
|
|
48
|
3.2
|
|
Commitment Fee
|
|
50
|
3.3
|
|
Other Fees
|
|
50
|
3.4
|
|
[Intentionally Omitted]
|
|
51
|
3.5
|
|
[Intentionally Omitted]
|
|
51
|
3.6
|
|
Eurodollar Fees and Costs
|
|
51
|
3.7
|
|
Late Payments/Default Interest
|
|
53
|
3.8
|
|
Computation of Interest and Fees
|
|
53
|
3.9
|
|
Alternate Rate of Interest
|
|
54
|
3.10
|
|
Payment Free of Taxes
|
|
55
|
3.11
|
|
Funding Sources
|
|
58
|
3.12
|
|
Failure to Charge or Making of Payment Not Subsequent Waiver
|
|
58
|
3.13
|
|
Time and Place of Payments; Evidence of Payments; Application of Payments
|
|
58
|
3.14
|
|
Administrative Agent’s Right to Assume Payments Will be Made
|
|
58
|
3.15
|
|
Survivability
|
|
59
|
3.16
|
|
Bank Calculation Certificate
|
|
59
|
3.17
|
|
Designation of a Different Lending Office
|
|
59
|
|
60
|
|||
|
|
|
|
|
4.1
|
|
Existence and Qualification; Power; Compliance with Law
|
|
60
|
4.2
|
|
Authority; Compliance with Other Instruments and Government Regulations
|
|
60
|
4.3
|
|
No Governmental Approvals Required
|
|
61
|
4.4
|
|
Subsidiaries
|
|
61
|
4.5
|
|
Financial Statements
|
|
62
|
4.6
|
|
No Material Adverse Change
|
|
62
|
4.7
|
|
Title to Assets
|
|
63
|
4.8
|
|
Intangible Assets
|
|
63
|
4.9
|
|
Anti-Terrorism Laws; Sanctions; Anti-Corruption Laws
|
|
63
|
4.10
|
|
Governmental Regulation
|
|
64
|
4.11
|
|
Litigation
|
|
64
|
4.12
|
|
Binding Obligations
|
|
64
|
4.13
|
|
No Default
|
|
64
|
4.14
|
|
Pension Plans
|
|
65
|
4.15
|
|
Tax Liability
|
|
65
|
4.16
|
|
Regulation U
|
|
65
|
4.17
|
|
Environmental Matters
|
|
65
|
4.18
|
|
Disclosure
|
|
65
|
4.19
|
|
Projections
|
|
65
|
4.20
|
|
ERISA Compliance
|
|
66
|
4.21
|
|
Solvency
|
|
66
|
4.22
|
|
Absence of Restrictions
|
|
66
|
4.23
|
|
Tax Shelter Regulations
|
|
66
|
|
|
|
|
|
|
66
|
|||
|
|
|||
|
|
|
|
|
5.1
|
|
Payment of Taxes and Other Potential Liens
|
|
67
|
5.2
|
|
Preservation of Existence
|
|
67
|
5.3
|
|
Maintenance of Properties
|
|
67
|
5.4
|
|
Maintenance of Insurance
|
|
67
|
5.5
|
|
Compliance with Laws
|
|
68
|
5.6
|
|
Inspection Rights
|
|
68
|
5.7
|
|
Keeping of Records and Books of Account
|
|
68
|
5.8
|
|
Use of Proceeds
|
|
68
|
5.9
|
|
Subsidiary Guaranty
|
|
68
|
|
|
|
|
|
|
69
|
|||
|
|
|
|
|
6.1
|
|
Payment or Prepayment of Subordinated Obligations and Certain Other Obligations
|
|
69
|
6.2
|
|
[Intentionally Omitted]
|
|
69
|
6.3
|
|
Merger and Sale of Assets
|
|
70
|
6.4
|
|
Investments and Acquisitions
|
|
70
|
6.5
|
|
[Intentionally Omitted]
|
|
71
|
6.6
|
|
Change in Business
|
|
71
|
6.7
|
|
Liens and Negative Pledges
|
|
71
|
6.8
|
|
Transactions with Affiliates
|
|
73
|
6.9
|
|
Consolidated Tangible Net Worth
|
|
74
|
6.10
|
|
Consolidated Leverage Ratio
|
|
74
|
6.11
|
|
Consolidated Interest Coverage Ratio or Minimum Liquidity
|
|
74
|
6.12
|
|
Distributions
|
|
74
|
6.13
|
|
Amendments
|
|
76
|
6.14
|
|
[Intentionally Omitted]
|
|
76
|
6.15
|
|
[Intentionally Omitted]
|
|
76
|
6.16
|
|
Investment in Subsidiaries and Joint Ventures
|
|
76
|
6.17
|
|
Borrowing Base Indebtedness Not to Exceed Borrowing Base
|
|
76
|
6.18
|
|
[Intentionally Omitted]
|
|
76
|
6.19
|
|
Regulation U
|
|
76
|
6.20
|
|
Fiscal Year
|
|
76
|
|
|
|
|
|
|
76
|
|||
|
|
|
|
|
7.1
|
|
Financial and Business Information of Borrower and Its Subsidiaries
|
|
76
|
7.2
|
|
Compliance Certificate
|
|
79
|
|
|
|
|
|
|
80
|
|||
|
|
|
|
|
8.1
|
|
Initial Advances, Etc
|
|
80
|
8.2
|
|
Any Advance
|
|
82
|
8.3
|
|
Any Letter of Credit
|
|
82
|
|
|
|
|
|
|
83
|
|||
|
|
|
|
|
9.1
|
|
Events of Default
|
|
83
|
9.2
|
|
Remedies Upon Event of Default
|
|
85
|
|
|
|
|
|
|
87
|
|||
|
|
|
|
|
10.1
|
|
Appointment and Authorization
|
|
87
|
10.2
|
|
Delegation of Duties
|
|
88
|
10.3
|
|
Liability of Administrative Agent
|
|
88
|
10.4
|
|
Reliance by Administrative Agent
|
|
89
|
10.5
|
|
Notice of Default
|
|
89
|
10.6
|
|
Credit Decision; Disclosure of Information by Administrative Agent
|
|
89
|
10.7
|
|
Indemnification of Administrative Agent
|
|
90
|
10.8
|
|
Administrative Agent in its Individual Capacity
|
|
90
|
10.9
|
|
Successor Administrative Agent
|
|
91
|
10.10
|
|
Administrative Agent May File Proofs of Claim
|
|
91
|
10.11
|
|
Guaranty Matters
|
|
92
|
10.12
|
|
Other Agents; Arrangers and Managers
|
|
93
|
10.13
|
|
Defaulting Banks
|
|
93
|
10.14
|
|
No Obligations of Borrower
|
|
95
|
|
|
|
|
|
|
95
|
|||
|
|
|
|
|
11.1
|
|
Cumulative Remedies; No Waiver
|
|
95
|
11.2
|
|
Amendments; Consents
|
|
95
|
11.3
|
|
Costs, Expenses and Taxes
|
|
97
|
11.4
|
|
Nature of Banks’ Obligations
|
|
98
|
11.5
|
|
Survival of Representations and Warranties
|
|
98
|
11.6
|
|
Notices and Other Communications; Facsimile Copies
|
|
98
|
11.7
|
|
Execution in Counterparts; Facsimile Delivery
|
|
100
|
11.8
|
|
Successors and Assigns
|
|
101
|
11.9
|
|
Sharing of Setoffs
|
|
104
|
11.10
|
|
Indemnification by the Borrower
|
|
105
|
11.11
|
|
Nonliability of Banks
|
|
105
|
11.12
|
|
Confidentiality
|
|
106
|
11.13
|
|
No Third Parties Benefited
|
|
107
|
11.14
|
|
Other Dealings
|
|
107
|
11.15
|
|
Right of Setoff — Deposit Accounts
|
|
107
|
11.16
|
|
Further Assurances
|
|
108
|
11.17
|
|
Integration
|
|
108
|
11.18
|
|
Governing Law
|
|
108
|
11.19
|
|
Severability of Provisions
|
|
109
|
11.20
|
|
Headings
|
|
109
|
11.21
|
|
Conflict in Loan Documents
|
|
109
|
11.22
|
|
Waiver of Right to Trial by Jury
|
|
109
|
11.23
|
|
Purported Oral Amendments
|
|
110
|
11.24
|
|
Payments Set Aside
|
|
110
|
11.25
|
|
Hazardous Materials Indemnity
|
|
110
|
11.26
|
|
USA PATRIOT Act Notice
|
|
110
|
11.27
|
|
Replacement of Banks
|
|
111
|
11.28
|
|
No Fiduciary Relationship
|
|
111
|
11.29
|
|
Effect of Amendment and Restatement; Affirmation of Existing Loan Documents
|
|
112
|
11.30
|
|
Acknowledgement and Consent to Bail-In of EEA Financial Institutions
|
|
112
|
11.31
|
|
Certain ERISA Matters
|
|
113
|
Applicable Pricing Level
|
Consolidated Leverage Ratio
|
I
|
<0.375:1
|
II
|
≥0.375:1 but <0.425:1
|
III
|
≥0.425:1 but <0.475:1
|
IV
|
≥0.475:1 but <0.525:1
|
V
|
≥0.525:1
|
Applicable Pricing Level
|
Applicable Base Rate Spread
|
Applicable Commitment Fee Rate
|
Applicable Eurodollar Rate Spread/Applicable Letter of Credit Fee
|
I
|
0.375%
|
0.20%
|
1.375%
|
II
|
0.50%
|
0.25%
|
1.50%
|
III
|
0.625%
|
0.25%
|
1.625%
|
IV
|
0.75%
|
0.30%
|
1.75%
|
V
|
1.00%
|
0.35%
|
2.00%
|
Title:
|
Executive Vice President and Chief Financial Officer
|
Title:
|
SVP - National Commercial Real Estate - Homebuilder Banking
|
Title:
|
Managing Director
|
Title:
|
Senior Vice President
|
Title:
|
Vice President
|
Title:
|
Vice President
|
Title:
|
Senior Vice President
|
Name of Company/Jurisdiction of Incorporation or Formation
|
|
Percentage of
Voting Securities
Owned by
the Registrant
or a
Subsidiary of
the Registrant
|
|
Arizona
|
|
|
|
KB HOME Phoenix Inc.
|
|
|
100
|
KB HOME Sales - Phoenix Inc.
|
|
|
100
|
KB HOME Sales - Tucson Inc.
|
|
|
100
|
KB HOME Tucson Inc.
|
|
|
100
|
California
|
|
|
|
KB HOME Central Valley Inc.
|
|
|
100
|
KB HOME Coastal Inc.
|
|
|
100
|
KB HOME Greater Los Angeles Inc.
|
|
|
100
|
KB HOME Insurance Agency Inc.
|
|
|
100
|
KB HOME Sacramento Inc.
|
|
|
100
|
KB HOME South Bay Inc.
|
|
|
100
|
Colorado
|
|
|
|
KB HOME Colorado Inc.
|
|
|
100
|
Delaware
|
|
|
|
KB HOME California LLC
|
|
|
100
|
KB HOME Florida LLC
|
|
|
100
|
KB HOME Fort Myers LLC
|
|
|
100
|
KB HOME Inspirada LLC
|
|
|
100
|
KB HOME Jacksonville LLC
|
|
|
100
|
KB HOME North Bay LLC
|
|
|
100
|
KB HOME Orlando LLC
|
|
|
100
|
KB HOME Tampa LLC
|
|
|
100
|
KB HOME Treasure Coast LLC
|
|
|
100
|
KBHPNW LLC
|
|
|
100
|
KBHPNW Sales LLC
|
|
|
100
|
KB Urban Inc.
|
|
|
100
|
Florida
|
|
|
|
KB HOME Title Services Inc.
|
|
|
100
|
Illinois
|
|
|
|
KB HOME Mortgage Company
|
|
|
100
|
Nevada
|
|
|
|
KB HOME Las Vegas Inc.
|
|
|
100
|
KB HOME Reno Inc.
|
|
|
100
|
Texas
|
|
|
|
KB HOME Lone Star Inc.
|
|
|
100
|
KBSA, Inc.
|
|
|
100
|
*
|
Certain subsidiaries have been omitted from this list. These subsidiaries, when considered in the aggregate as a single subsidiary, do not constitute a significant subsidiary as defined in Rule 1-02(w) of Regulation S-X.
|
|
(1)
|
Registration Statement (Form S-3 No. 333-219293) of KB Home,
|
|
(2)
|
Registration Statement (Form S-8 No. 333-129273) pertaining to the KB Home 1988 Employee Stock Plan, the KB Home 1998 Stock Incentive Plan, the KB Home Performance-Based Incentive Plan for Senior Management, the KB Home Non-Employee Directors Stock Plan, the KB Home 401(k) Savings Plan, the KB Home 1999 Incentive Plan, the KB Home 2001 Stock Incentive Plan, certain stock grants and the resale of certain shares by officers of KB Home,
|
|
(3)
|
Registration Statement (Form S-8 No. 333-168179) pertaining to the KB Home 401(k) Savings Plan,
|
|
(4)
|
Registration Statements (Form S-8 No. 333-168181 and Form S-8 No. 333-175601) pertaining to the KB Home 2010 Equity Incentive Plan,
|
|
(5)
|
Registration Statement (Form S-8 No. 333-197521) pertaining to the KB Home 2014 Equity Incentive Plan, the Third Amended and Restated KB Home Non-Employee Directors Compensation Plan, and the KB Home 401(k) Savings Plan, and
|
|
(6)
|
Registration Statement (Form S-8 No. 333-212521) pertaining to the Amended KB Home 2014 Equity Incentive Plan and the KB Home 401(k) Savings Plan;
|
1.
|
I have reviewed this annual report on Form 10-K 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;
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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:
|
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;
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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
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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
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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.
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Dated
|
January 24, 2020
|
|
/s/ JEFFREY T. MEZGER
|
|
|
|
Jeffrey T. Mezger
|
|
|
|
Chairman, President and Chief Executive Officer
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|
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this annual report on Form 10-K 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
|
January 24, 2020
|
|
/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
|
January 24, 2020
|
|
/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
|
January 24, 2020
|
|
/s/ JEFF J. KAMINSKI
|
|
|
|
Jeff J. Kaminski
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
(Principal Financial Officer)
|