☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
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Delaware
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95-3666267
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(State of incorporation)
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(IRS employer identification number)
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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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Accelerated filer
|
☐
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Non-accelerated filer
|
☐
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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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Consolidated Statements of Operations -
Three Months Ended February 29, 2020 and February 28, 2019 |
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Consolidated Balance Sheets -
February 29, 2020 and November 30, 2019 |
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Consolidated Statements of Cash Flows -
Three Months Ended February 29, 2020 and February 28, 2019 |
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Item 1.
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Financial Statements
|
|
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Three Months Ended
|
||||||
|
|
February 29, 2020
|
|
February 28, 2019
|
||||
Total revenues
|
|
$
|
1,075,935
|
|
|
$
|
811,483
|
|
Homebuilding:
|
|
|
|
|
||||
Revenues
|
|
$
|
1,072,382
|
|
|
$
|
808,788
|
|
Construction and land costs
|
|
(886,053
|
)
|
|
(670,855
|
)
|
||
Selling, general and administrative expenses
|
|
(126,134
|
)
|
|
(106,594
|
)
|
||
Operating income
|
|
60,195
|
|
|
31,339
|
|
||
Interest income
|
|
935
|
|
|
1,105
|
|
||
Equity in income (loss) of unconsolidated joint ventures
|
|
1,905
|
|
|
(406
|
)
|
||
Homebuilding pretax income
|
|
63,035
|
|
|
32,038
|
|
||
Financial services:
|
|
|
|
|
||||
Revenues
|
|
3,553
|
|
|
2,695
|
|
||
Expenses
|
|
(962
|
)
|
|
(1,024
|
)
|
||
Equity in income of unconsolidated joint ventures
|
|
3,222
|
|
|
802
|
|
||
Financial services pretax income
|
|
5,813
|
|
|
2,473
|
|
||
Total pretax income
|
|
68,848
|
|
|
34,511
|
|
||
Income tax expense
|
|
(9,100
|
)
|
|
(4,500
|
)
|
||
Net income
|
|
$
|
59,748
|
|
|
$
|
30,011
|
|
Earnings per share:
|
|
|
|
|
||||
Basic
|
|
$
|
.66
|
|
|
$
|
.34
|
|
Diluted
|
|
$
|
.63
|
|
|
$
|
.31
|
|
Weighted average shares outstanding:
|
|
|
|
|
||||
Basic
|
|
89,842
|
|
|
86,972
|
|
||
Diluted
|
|
94,205
|
|
|
96,962
|
|
||
Cash dividends declared per common share
|
|
$
|
.090
|
|
|
$
|
.025
|
|
|
February 29,
2020 |
|
November 30,
2019 |
||||
Assets
|
|
|
|
||||
Homebuilding:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
429,706
|
|
|
$
|
453,814
|
|
Receivables
|
297,215
|
|
|
249,055
|
|
||
Inventories
|
3,728,616
|
|
|
3,704,602
|
|
||
Investments in unconsolidated joint ventures
|
57,147
|
|
|
57,038
|
|
||
Property and equipment, net
|
64,453
|
|
|
65,043
|
|
||
Deferred tax assets, net
|
312,166
|
|
|
364,493
|
|
||
Other assets
|
129,719
|
|
|
83,041
|
|
||
|
5,019,022
|
|
|
4,977,086
|
|
||
Financial services
|
33,812
|
|
|
38,396
|
|
||
Total assets
|
$
|
5,052,834
|
|
|
$
|
5,015,482
|
|
|
|
|
|
||||
Liabilities and stockholders’ equity
|
|
|
|
||||
Homebuilding:
|
|
|
|
||||
Accounts payable
|
$
|
236,981
|
|
|
$
|
262,772
|
|
Accrued expenses and other liabilities
|
621,558
|
|
|
618,783
|
|
||
Notes payable
|
1,749,148
|
|
|
1,748,747
|
|
||
|
2,607,687
|
|
|
2,630,302
|
|
||
Financial services
|
2,043
|
|
|
2,058
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Common stock
|
122,291
|
|
|
121,593
|
|
||
Paid-in capital
|
803,420
|
|
|
793,954
|
|
||
Retained earnings
|
2,211,851
|
|
|
2,157,183
|
|
||
Accumulated other comprehensive loss
|
(17,149
|
)
|
|
(15,506
|
)
|
||
Grantor stock ownership trust, at cost
|
(79,359
|
)
|
|
(82,758
|
)
|
||
Treasury stock, at cost
|
(597,950
|
)
|
|
(591,344
|
)
|
||
Total stockholders’ equity
|
2,443,104
|
|
|
2,383,122
|
|
||
Total liabilities and stockholders’ equity
|
$
|
5,052,834
|
|
|
$
|
5,015,482
|
|
|
Three Months Ended
|
||||||
|
February 29, 2020
|
|
February 28, 2019
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
59,748
|
|
|
$
|
30,011
|
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
|
||||
Equity in income of unconsolidated joint ventures
|
(5,127
|
)
|
|
(396
|
)
|
||
Distributions of earnings from unconsolidated joint ventures
|
8,150
|
|
|
2,400
|
|
||
Amortization of discounts, premiums and issuance costs
|
613
|
|
|
1,468
|
|
||
Depreciation and amortization
|
7,316
|
|
|
6,446
|
|
||
Deferred income taxes
|
8,500
|
|
|
4,501
|
|
||
Stock-based compensation
|
4,950
|
|
|
4,152
|
|
||
Inventory impairments and land option contract abandonments
|
5,672
|
|
|
3,555
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Receivables
|
(4,195
|
)
|
|
(19,495
|
)
|
||
Inventories
|
(17,941
|
)
|
|
(154,083
|
)
|
||
Accounts payable, accrued expenses and other liabilities
|
(60,996
|
)
|
|
(70,057
|
)
|
||
Other, net
|
(16,556
|
)
|
|
(6,712
|
)
|
||
Net cash used in operating activities
|
(9,866
|
)
|
|
(198,210
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Contributions to unconsolidated joint ventures
|
(1,668
|
)
|
|
(2,527
|
)
|
||
Return of investments in unconsolidated joint ventures
|
500
|
|
|
5,001
|
|
||
Proceeds from sale of building
|
—
|
|
|
5,804
|
|
||
Purchases of property and equipment, net
|
(6,671
|
)
|
|
(10,025
|
)
|
||
Net cash used in investing activities
|
(7,839
|
)
|
|
(1,747
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuance of debt
|
—
|
|
|
405,250
|
|
||
Payment of debt issuance costs
|
—
|
|
|
(5,209
|
)
|
||
Repayment of senior notes
|
—
|
|
|
(230,000
|
)
|
||
Borrowings under revolving credit facility
|
—
|
|
|
140,000
|
|
||
Repayments under revolving credit facility
|
—
|
|
|
(140,000
|
)
|
||
Payments on mortgages and land contracts due to land sellers and other loans
|
—
|
|
|
(28,020
|
)
|
||
Issuance of common stock under employee stock plans
|
8,226
|
|
|
832
|
|
||
Tax payments associated with stock-based compensation awards
|
(6,219
|
)
|
|
(3,342
|
)
|
||
Payments of cash dividends
|
(8,233
|
)
|
|
(2,266
|
)
|
||
Net cash provided by (used in) financing activities
|
(6,226
|
)
|
|
137,245
|
|
||
Net decrease in cash and cash equivalents
|
(23,931
|
)
|
|
(62,712
|
)
|
||
Cash and cash equivalents at beginning of period
|
454,858
|
|
|
575,119
|
|
||
Cash and cash equivalents at end of period
|
$
|
430,927
|
|
|
$
|
512,407
|
|
1.
|
Basis of Presentation and Significant Accounting Policies
|
2.
|
Segment Information
|
|
Three Months Ended
|
||||||
|
February 29, 2020
|
|
February 28, 2019
|
||||
Revenues:
|
|
|
|
||||
West Coast
|
$
|
484,497
|
|
|
$
|
305,810
|
|
Southwest
|
191,318
|
|
|
157,656
|
|
||
Central
|
283,513
|
|
|
241,592
|
|
||
Southeast
|
113,054
|
|
|
103,730
|
|
||
Total
|
$
|
1,072,382
|
|
|
$
|
808,788
|
|
|
|
|
|
||||
Pretax income (loss):
|
|
|
|
||||
West Coast
|
$
|
34,029
|
|
|
$
|
17,916
|
|
Southwest
|
32,112
|
|
|
22,072
|
|
||
Central
|
22,678
|
|
|
18,583
|
|
||
Southeast
|
2,630
|
|
|
(545
|
)
|
||
Corporate and other
|
(28,414
|
)
|
|
(25,988
|
)
|
||
Total
|
$
|
63,035
|
|
|
$
|
32,038
|
|
Inventory impairment and land option contract abandonment charges:
|
|
|
|
||||
West Coast
|
$
|
4,392
|
|
|
$
|
3,251
|
|
Southwest
|
171
|
|
|
59
|
|
||
Central
|
984
|
|
|
245
|
|
||
Southeast
|
125
|
|
|
—
|
|
||
Total
|
$
|
5,672
|
|
|
$
|
3,555
|
|
|
February 29,
2020 |
|
November 30,
2019 |
||||
Assets:
|
|
|
|
||||
West Coast
|
$
|
1,936,066
|
|
|
$
|
1,925,192
|
|
Southwest
|
732,656
|
|
|
674,310
|
|
||
Central
|
1,045,352
|
|
|
1,035,563
|
|
||
Southeast
|
438,274
|
|
|
441,451
|
|
||
Corporate and other
|
866,674
|
|
|
900,570
|
|
||
Total
|
$
|
5,019,022
|
|
|
$
|
4,977,086
|
|
3.
|
Financial Services
|
|
Three Months Ended
|
||||||
|
February 29, 2020
|
|
February 28, 2019
|
||||
Revenues
|
|
|
|
||||
Insurance commissions
|
$
|
1,953
|
|
|
$
|
1,472
|
|
Title services
|
1,600
|
|
|
1,217
|
|
||
Interest income
|
—
|
|
|
6
|
|
||
Total
|
3,553
|
|
|
2,695
|
|
||
Expenses
|
|
|
|
||||
General and administrative
|
(962
|
)
|
|
(1,024
|
)
|
||
Operating income
|
2,591
|
|
|
1,671
|
|
||
Equity in income of unconsolidated joint ventures
|
3,222
|
|
|
802
|
|
||
Pretax income
|
$
|
5,813
|
|
|
$
|
2,473
|
|
|
February 29,
2020 |
|
November 30,
2019 |
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,221
|
|
|
$
|
1,044
|
|
Receivables
|
1,589
|
|
|
2,232
|
|
||
Investments in unconsolidated joint ventures
|
9,446
|
|
|
14,374
|
|
||
Other assets (a)
|
21,556
|
|
|
20,746
|
|
||
Total assets
|
$
|
33,812
|
|
|
$
|
38,396
|
|
Liabilities
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
2,043
|
|
|
$
|
2,058
|
|
Total liabilities
|
$
|
2,043
|
|
|
$
|
2,058
|
|
(a)
|
Other assets at February 29, 2020 and November 30, 2019 included $21.1 million and $20.6 million, respectively, of contract assets for estimated future renewal commissions related to then-existing insurance policies.
|
4.
|
Earnings Per Share
|
|
|
Three Months Ended
|
||||||
|
|
February 29, 2020
|
|
February 28, 2019
|
||||
Numerator:
|
|
|
|
|
||||
Net income
|
|
$
|
59,748
|
|
|
$
|
30,011
|
|
Less: Distributed earnings allocated to nonvested restricted stock
|
|
(44
|
)
|
|
(14
|
)
|
||
Less: Undistributed earnings allocated to nonvested restricted stock
|
|
(281
|
)
|
|
(176
|
)
|
||
Numerator for basic earnings per share
|
|
59,423
|
|
|
29,821
|
|
|
|
Three Months Ended
|
||||||
|
|
February 29, 2020
|
|
February 28, 2019
|
||||
Effect of dilutive securities:
|
|
|
|
|
||||
Interest expense and amortization of debt issuance costs associated with convertible senior notes, net of taxes
|
|
—
|
|
|
541
|
|
||
Add: Undistributed earnings allocated to nonvested restricted stock
|
|
281
|
|
|
176
|
|
||
Less: Undistributed earnings reallocated to nonvested restricted stock
|
|
(268
|
)
|
|
(158
|
)
|
||
Numerator for diluted earnings per share
|
|
$
|
59,436
|
|
|
$
|
30,380
|
|
|
|
|
|
|
||||
Denominator:
|
|
|
|
|
||||
Weighted average shares outstanding — basic
|
|
89,842
|
|
|
86,972
|
|
||
Effect of dilutive securities:
|
|
|
|
|
||||
Share-based payments
|
|
4,363
|
|
|
4,202
|
|
||
Convertible senior notes
|
|
—
|
|
|
5,788
|
|
||
Weighted average shares outstanding — diluted
|
|
94,205
|
|
|
96,962
|
|
||
Basic earnings per share
|
|
$
|
.66
|
|
|
$
|
.34
|
|
Diluted earnings per share
|
|
$
|
.63
|
|
|
$
|
.31
|
|
5.
|
Receivables
|
|
February 29,
2020 |
|
November 30,
2019 |
||||
Due from utility companies, improvement districts and municipalities
|
$
|
129,234
|
|
|
$
|
128,047
|
|
Recoveries related to self-insurance and other legal claims
|
77,217
|
|
|
80,729
|
|
||
Income taxes receivable
|
44,304
|
|
|
—
|
|
||
Refundable deposits and bonds
|
11,494
|
|
|
10,925
|
|
||
Other
|
43,317
|
|
|
37,846
|
|
||
Subtotal
|
305,566
|
|
|
257,547
|
|
||
Allowance for doubtful accounts
|
(8,351
|
)
|
|
(8,492
|
)
|
||
Total
|
$
|
297,215
|
|
|
$
|
249,055
|
|
6.
|
Inventories
|
|
February 29,
2020 |
|
November 30,
2019 |
||||
Homes completed or under construction
|
$
|
1,306,344
|
|
|
$
|
1,340,412
|
|
Land under development
|
2,271,073
|
|
|
2,213,713
|
|
||
Land held for future development or sale (a)
|
151,199
|
|
|
150,477
|
|
||
Total
|
$
|
3,728,616
|
|
|
$
|
3,704,602
|
|
|
Three Months Ended
|
||||||
|
February 29, 2020
|
|
February 28, 2019
|
||||
Capitalized interest at beginning of period
|
$
|
195,738
|
|
|
$
|
209,129
|
|
Interest incurred
|
30,962
|
|
|
34,788
|
|
||
Interest amortized to construction and land costs (a)
|
(34,575
|
)
|
|
(30,547
|
)
|
||
Capitalized interest at end of period (b)
|
$
|
192,125
|
|
|
$
|
213,370
|
|
(a)
|
Interest amortized to construction and land costs for the three months ended February 28, 2019 included $.6 million related to land sales during the period. There was no such interest amortized for the three months ended February 29, 2020.
|
(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.
|
7.
|
Inventory Impairments and Land Option Contract Abandonments
|
|
|
Three Months Ended
|
||
Unobservable Input (a)
|
|
February 29, 2020
|
|
February 28, 2019
|
Average selling price
|
|
$302,700 - $915,500
|
|
$1,045,400
|
Deliveries per month
|
|
1 - 4
|
|
1
|
Discount rate
|
|
17% - 18%
|
|
17%
|
(a)
|
The ranges of inputs used in each period primarily reflect differences between the housing markets where each impacted community is located, rather than fluctuations in prevailing market conditions.
|
8.
|
Variable Interest Entities
|
|
February 29, 2020
|
|
November 30, 2019
|
||||||||||||
|
Cash
Deposits
|
|
Aggregate
Purchase Price
|
|
Cash
Deposits
|
|
Aggregate
Purchase Price
|
||||||||
Unconsolidated VIEs
|
$
|
34,070
|
|
|
$
|
793,439
|
|
|
$
|
34,595
|
|
|
$
|
823,427
|
|
Other land option contracts and other similar contracts
|
41,536
|
|
|
599,426
|
|
|
40,591
|
|
|
600,092
|
|
||||
Total
|
$
|
75,606
|
|
|
$
|
1,392,865
|
|
|
$
|
75,186
|
|
|
$
|
1,423,519
|
|
9.
|
Investments in Unconsolidated Joint Ventures
|
|
Three Months Ended
|
||||||
|
February 29, 2020
|
|
February 28, 2019
|
||||
Revenues
|
$
|
27,547
|
|
|
$
|
12,192
|
|
Construction and land costs
|
(21,543
|
)
|
|
(12,220
|
)
|
||
Other expense, net
|
(2,107
|
)
|
|
(628
|
)
|
||
Income (loss)
|
$
|
3,897
|
|
|
$
|
(656
|
)
|
|
February 29,
2020 |
|
November 30,
2019 |
||||
Assets
|
|
|
|
||||
Cash
|
$
|
38,454
|
|
|
$
|
23,965
|
|
Inventories
|
126,240
|
|
|
139,536
|
|
||
Other assets
|
730
|
|
|
792
|
|
||
Total assets
|
$
|
165,424
|
|
|
$
|
164,293
|
|
|
|
|
|
||||
Liabilities and equity
|
|
|
|
||||
Accounts payable and other liabilities
|
$
|
13,352
|
|
|
$
|
13,282
|
|
Notes payable (a)
|
39,463
|
|
|
40,672
|
|
||
Equity
|
112,609
|
|
|
110,339
|
|
||
Total liabilities and equity
|
$
|
165,424
|
|
|
$
|
164,293
|
|
(a)
|
As of both February 29, 2020 and November 30, 2019, we had investments in five unconsolidated joint ventures, 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 underlying property and related project assets and is non-recourse to us. All of the outstanding secured debt at February 29, 2020 is scheduled to mature in February 2021. However, the loan agreement provides for a one-year extension beyond this date. None of our other unconsolidated joint ventures had outstanding debt at February 29, 2020 or November 30, 2019.
|
10.
|
Property and Equipment, Net
|
|
|
February 29,
2020 |
|
November 30,
2019 |
||||
Computer software and equipment
|
|
$
|
28,114
|
|
|
$
|
27,091
|
|
Model furnishings and sales office improvements
|
|
84,624
|
|
|
82,117
|
|
||
Leasehold improvements, office furniture and equipment
|
|
16,686
|
|
|
16,173
|
|
||
Subtotal
|
|
129,424
|
|
|
125,381
|
|
||
Less accumulated depreciation
|
|
(64,971
|
)
|
|
(60,338
|
)
|
||
Total
|
|
$
|
64,453
|
|
|
$
|
65,043
|
|
11.
|
Other Assets
|
|
February 29,
2020 |
|
November 30,
2019 |
||||
Cash surrender value and benefit receivable from corporate-owned life insurance contracts
|
$
|
74,010
|
|
|
$
|
73,849
|
|
Lease right-of-use assets
|
32,036
|
|
|
—
|
|
||
Prepaid expenses
|
20,637
|
|
|
5,944
|
|
||
Debt issuance costs associated with unsecured revolving credit facility, net
|
3,036
|
|
|
3,248
|
|
||
Total
|
$
|
129,719
|
|
|
$
|
83,041
|
|
12.
|
Accrued Expenses and Other Liabilities
|
|
February 29,
2020 |
|
November 30,
2019 |
||||
Self-insurance and other legal liabilities
|
$
|
231,299
|
|
|
$
|
229,483
|
|
Employee compensation and related benefits
|
114,379
|
|
|
163,646
|
|
||
Warranty liability
|
90,213
|
|
|
88,839
|
|
||
Accrued interest payable
|
36,435
|
|
|
32,507
|
|
||
Inventory-related obligations (a)
|
34,130
|
|
|
26,264
|
|
||
Lease liabilities
|
33,538
|
|
|
—
|
|
||
Customer deposits
|
32,888
|
|
|
22,382
|
|
||
Real estate and business taxes
|
11,870
|
|
|
14,872
|
|
||
Other
|
36,806
|
|
|
40,790
|
|
||
Total
|
$
|
621,558
|
|
|
$
|
618,783
|
|
(a)
|
Represents liabilities for financing arrangements discussed in Note 8 – Variable Interest Entities, as well as liabilities for fixed or determinable amounts associated with tax increment financing entity (“TIFE”) assessments. As homes are delivered, our obligation to pay the remaining TIFE assessments associated with each underlying lot is transferred to the homebuyer. As such, these assessment obligations will be paid by us only to the extent we do not deliver homes on applicable lots before the related TIFE obligations mature.
|
13.
|
Leases
|
Lease right-of-use assets (a)
|
|
|
$
|
32,388
|
|
Lease liabilities (b)
|
|
|
33,918
|
|
|
Lease right-of-use assets obtained in exchange for new lease liabilities
|
|
|
3,640
|
|
|
Non-cash operating lease expense
|
|
|
—
|
|
|
Cash payments on lease liabilities
|
|
|
2,743
|
|
|
Weighted-average remaining lease term
|
|
|
5.0 years
|
|
|
Weighted-average discount rate (incremental borrowing rate)
|
|
|
5.1
|
%
|
(a)
|
Represents lease right-of-use assets of $32.0 million within our homebuilding operations and $.4 million within our financial services operations.
|
(b)
|
Represents lease liabilities of $33.5 million within our homebuilding operations and $.4 million within our financial services operations.
|
Years Ending November 30,
|
|
|
|
||
2020
|
|
|
$
|
7,826
|
|
2021
|
|
|
8,342
|
|
|
2022
|
|
|
7,058
|
|
|
2023
|
|
|
5,234
|
|
|
2024
|
|
|
4,289
|
|
|
Thereafter
|
|
|
5,875
|
|
|
Total lease payments
|
|
|
38,624
|
|
|
Less: Interest
|
|
|
(4,706
|
)
|
|
Present value of lease liabilities
|
|
|
$
|
33,918
|
|
14.
|
Income Taxes
|
|
Three Months Ended
|
||||||
|
February 29, 2020
|
|
February 28, 2019
|
||||
Income tax expense
|
$
|
9,100
|
|
|
$
|
4,500
|
|
Effective tax rate
|
13.2
|
%
|
|
13.0
|
%
|
15.
|
Notes Payable
|
|
February 29,
2020 |
|
November 30,
2019 |
||||
Mortgages and land contracts due to land sellers and other loans
|
$
|
7,889
|
|
|
$
|
7,889
|
|
7.00% Senior notes due December 15, 2021
|
448,375
|
|
|
448,164
|
|
||
7.50% Senior notes due September 15, 2022
|
348,408
|
|
|
348,267
|
|
||
7.625% Senior notes due May 15, 2023
|
351,633
|
|
|
351,748
|
|
||
6.875% Senior notes due June 15, 2027
|
296,471
|
|
|
296,379
|
|
||
4.80% Senior notes due November 15, 2029
|
296,372
|
|
|
296,300
|
|
||
Total
|
$
|
1,749,148
|
|
|
$
|
1,748,747
|
|
16.
|
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.
|
|
|
|
|
February 29, 2020
|
|
November 30, 2019
|
||||||||||||||||||||
Description
|
|
Fair Value Hierarchy
|
|
Pre-Impairment Value
|
|
Inventory Impairment Charges
|
|
Fair Value (a)
|
|
Pre-Impairment Value
|
|
Inventory Impairment Charges
|
|
Fair Value (a)
|
||||||||||||
Inventories
|
|
Level 3
|
|
$
|
14,394
|
|
|
$
|
(5,105
|
)
|
|
$
|
9,289
|
|
|
$
|
41,160
|
|
|
$
|
(14,031
|
)
|
|
$
|
27,129
|
|
(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.
|
|
|
|
February 29, 2020
|
|
November 30, 2019
|
||||||||||||
|
Fair Value
Hierarchy
|
|
Carrying
Value (a)
|
|
Estimated
Fair Value
|
|
Carrying
Value (a)
|
|
Estimated
Fair Value
|
||||||||
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||
Senior notes
|
Level 2
|
|
$
|
1,741,259
|
|
|
$
|
1,936,250
|
|
|
$
|
1,740,858
|
|
|
$
|
1,921,563
|
|
(a)
|
The carrying values for the senior notes include unamortized debt issuance costs. Debt issuance costs are not factored into the estimated fair values of these notes.
|
17.
|
Commitments and Contingencies
|
|
Three Months Ended
|
||||||
|
February 29, 2020
|
|
February 28, 2019
|
||||
Balance at beginning of period
|
$
|
88,839
|
|
|
$
|
82,490
|
|
Warranties issued
|
8,363
|
|
|
6,294
|
|
||
Payments
|
(6,989
|
)
|
|
(4,593
|
)
|
||
Balance at end of period
|
$
|
90,213
|
|
|
$
|
84,191
|
|
•
|
Construction defect: Construction defect claims, which represent the largest component of our self-insurance liability, typically originate through a legal or regulatory process rather than directly by a homeowner and involve the alleged occurrence of a condition affecting two or more homes within the same community, or they involve a common area or homeowners association property within a community. These claims typically involve higher costs to resolve than individual homeowner warranty claims, and the rate of claims is highly variable.
|
•
|
Bodily injury: Bodily injury claims typically involve individuals (other than our employees) who claim they were injured while on our property or as a result of our operations.
|
•
|
Property damage: Property damage claims generally involve claims by third parties for alleged damage to real or personal property as a result of our operations. Such claims may occasionally include those made against us by owners of property located near our communities.
|
|
Three Months Ended
|
||||||
|
February 29, 2020
|
|
February 28, 2019
|
||||
Balance at beginning of period
|
$
|
177,765
|
|
|
$
|
176,841
|
|
Self-insurance expense (a)
|
4,634
|
|
|
3,747
|
|
||
Payments (b)
|
(918
|
)
|
|
(2,726
|
)
|
||
Balance at end of period
|
$
|
181,481
|
|
|
$
|
177,862
|
|
(a)
|
These expenses are included in selling, general and administrative expenses and are largely offset by contributions from subcontractors participating in the wrap-up policy.
|
(b)
|
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.
|
18.
|
Legal Matters
|
19.
|
Stockholders’ Equity
|
|
Three Months Ended February 29, 2020 and February 28, 2019
|
|||||||||||||||||||||||||||||||||||
|
Number of Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Common
Stock
|
|
Grantor
Stock
Ownership
Trust
|
|
Treasury
Stock
|
|
Common Stock
|
|
Paid-in Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Grantor Stock
Ownership Trust
|
|
Treasury Stock
|
|
Total Stockholders’ Equity
|
|||||||||||||||||
Balance at November 30, 2019
|
121,593
|
|
|
(7,631
|
)
|
|
(24,356
|
)
|
|
$
|
121,593
|
|
|
$
|
793,954
|
|
|
$
|
2,157,183
|
|
|
$
|
(15,506
|
)
|
|
$
|
(82,758
|
)
|
|
$
|
(591,344
|
)
|
|
$
|
2,383,122
|
|
Cumulative effect of adoption of ASC 842
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,510
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,510
|
|
|||||||
Reclassification of stranded tax effects (ASU 2018-02)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,643
|
|
|
(1,643
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
59,748
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
59,748
|
|
|||||||
Dividends on common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,233
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,233
|
)
|
|||||||
Employee stock options/other
|
698
|
|
|
—
|
|
|
—
|
|
|
698
|
|
|
7,528
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,226
|
|
|||||||
Stock awards
|
—
|
|
|
314
|
|
|
(15
|
)
|
|
—
|
|
|
(3,012
|
)
|
|
—
|
|
|
—
|
|
|
3,399
|
|
|
(387
|
)
|
|
—
|
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,950
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,950
|
|
|||||||
Tax payments associated with stock-based compensation awards
|
—
|
|
|
—
|
|
|
(155
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,219
|
)
|
|
(6,219
|
)
|
|||||||
Balance at February 29, 2020
|
122,291
|
|
|
(7,317
|
)
|
|
(24,526
|
)
|
|
$
|
122,291
|
|
|
$
|
803,420
|
|
|
$
|
2,211,851
|
|
|
$
|
(17,149
|
)
|
|
$
|
(79,359
|
)
|
|
$
|
(597,950
|
)
|
|
$
|
2,443,104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
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
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,011
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,011
|
|
|||||||
Dividends on common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,266
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,266
|
)
|
|||||||
Employee stock options/other
|
62
|
|
|
—
|
|
|
—
|
|
|
62
|
|
|
770
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
832
|
|
|||||||
Stock awards
|
—
|
|
|
297
|
|
|
(4
|
)
|
|
—
|
|
|
(3,151
|
)
|
|
—
|
|
|
—
|
|
|
3,226
|
|
|
(75
|
)
|
|
—
|
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,152
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,152
|
|
|||||||
Tax payments associated with stock-based compensation awards
|
—
|
|
|
—
|
|
|
(147
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,342
|
)
|
|
(3,342
|
)
|
|||||||
Balance at February 28, 2019
|
119,258
|
|
|
(7,860
|
)
|
|
(24,264
|
)
|
|
$
|
119,258
|
|
|
$
|
755,341
|
|
|
$
|
1,936,523
|
|
|
$
|
(9,565
|
)
|
|
$
|
(85,246
|
)
|
|
$
|
(587,814
|
)
|
|
$
|
2,128,497
|
|
20.
|
Stock-Based Compensation
|
|
Options
|
|
Weighted
Average Exercise
Price
|
|||
Options outstanding at beginning of period
|
4,163,481
|
|
|
$
|
13.00
|
|
Granted
|
—
|
|
|
—
|
|
|
Exercised
|
(698,372
|
)
|
|
11.78
|
|
|
Cancelled
|
(6,000
|
)
|
|
45.16
|
|
|
Options outstanding at end of period
|
3,459,109
|
|
|
$
|
13.20
|
|
Options exercisable at end of period
|
3,459,109
|
|
|
$
|
13.20
|
|
21.
|
Supplemental Disclosure to Consolidated Statements of Cash Flows
|
|
Three Months Ended
|
||||||
|
February 29, 2020
|
|
February 28, 2019
|
||||
Summary of cash and cash equivalents at end of period:
|
|
|
|
||||
Homebuilding
|
$
|
429,706
|
|
|
$
|
511,690
|
|
Financial services
|
1,221
|
|
|
717
|
|
||
Total
|
$
|
430,927
|
|
|
$
|
512,407
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
||||
Interest paid, net of amounts capitalized
|
$
|
(3,928
|
)
|
|
$
|
(15,318
|
)
|
Income taxes paid
|
139
|
|
|
113
|
|
||
Supplemental disclosures of non-cash activities:
|
|
|
|
||||
Reclassification of federal tax refund from deferred tax assets to receivables
|
$
|
43,322
|
|
|
$
|
—
|
|
Increase in operating lease right-of-use assets and lease liabilities due to adoption of ASC 842
|
31,199
|
|
|
—
|
|
||
Increase (decrease) in consolidated inventories not owned
|
8,781
|
|
|
(16,262
|
)
|
||
Increase in inventories due to distributions of land and land development from an unconsolidated joint venture
|
2,964
|
|
|
1,946
|
|
||
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
|
|
22.
|
Supplemental Guarantor Information
|
|
Three Months Ended February 29, 2020
|
||||||||||||||||||
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Total revenues
|
$
|
—
|
|
|
$
|
992,545
|
|
|
$
|
83,390
|
|
|
$
|
—
|
|
|
$
|
1,075,935
|
|
Homebuilding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
992,545
|
|
|
$
|
79,837
|
|
|
$
|
—
|
|
|
$
|
1,072,382
|
|
Construction and land costs
|
—
|
|
|
(815,558
|
)
|
|
(70,495
|
)
|
|
—
|
|
|
(886,053
|
)
|
|||||
Selling, general and administrative expenses
|
(27,650
|
)
|
|
(93,012
|
)
|
|
(5,472
|
)
|
|
—
|
|
|
(126,134
|
)
|
|||||
Operating income (loss)
|
(27,650
|
)
|
|
83,975
|
|
|
3,870
|
|
|
—
|
|
|
60,195
|
|
|||||
Interest income
|
884
|
|
|
—
|
|
|
51
|
|
|
—
|
|
|
935
|
|
|||||
Interest expense
|
(29,555
|
)
|
|
—
|
|
|
(1,407
|
)
|
|
30,962
|
|
|
—
|
|
|||||
Intercompany interest
|
80,580
|
|
|
(45,836
|
)
|
|
(3,782
|
)
|
|
(30,962
|
)
|
|
—
|
|
|||||
Equity in income of unconsolidated joint ventures
|
—
|
|
|
1,905
|
|
|
—
|
|
|
—
|
|
|
1,905
|
|
|||||
Homebuilding pretax income (loss)
|
24,259
|
|
|
40,044
|
|
|
(1,268
|
)
|
|
—
|
|
|
63,035
|
|
|||||
Financial services pretax income
|
—
|
|
|
—
|
|
|
5,813
|
|
|
—
|
|
|
5,813
|
|
|||||
Total pretax income
|
24,259
|
|
|
40,044
|
|
|
4,545
|
|
|
—
|
|
|
68,848
|
|
|||||
Income tax expense
|
(3,100
|
)
|
|
(5,100
|
)
|
|
(900
|
)
|
|
—
|
|
|
(9,100
|
)
|
|||||
Equity in net income of subsidiaries
|
38,589
|
|
|
—
|
|
|
—
|
|
|
(38,589
|
)
|
|
—
|
|
|||||
Net income
|
$
|
59,748
|
|
|
$
|
34,944
|
|
|
$
|
3,645
|
|
|
$
|
(38,589
|
)
|
|
$
|
59,748
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended February 28, 2019
|
||||||||||||||||||
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Total revenues
|
$
|
—
|
|
|
$
|
744,453
|
|
|
$
|
67,030
|
|
|
$
|
—
|
|
|
$
|
811,483
|
|
Homebuilding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
744,453
|
|
|
$
|
64,335
|
|
|
$
|
—
|
|
|
$
|
808,788
|
|
Construction and land costs
|
—
|
|
|
(611,041
|
)
|
|
(59,814
|
)
|
|
—
|
|
|
(670,855
|
)
|
|||||
Selling, general and administrative expenses
|
(25,382
|
)
|
|
(75,540
|
)
|
|
(5,672
|
)
|
|
—
|
|
|
(106,594
|
)
|
|||||
Operating income (loss)
|
(25,382
|
)
|
|
57,872
|
|
|
(1,151
|
)
|
|
—
|
|
|
31,339
|
|
|||||
Interest income
|
1,014
|
|
|
—
|
|
|
91
|
|
|
—
|
|
|
1,105
|
|
|||||
Interest expense
|
(33,195
|
)
|
|
(321
|
)
|
|
(1,272
|
)
|
|
34,788
|
|
|
—
|
|
|||||
Intercompany interest
|
77,972
|
|
|
(41,738
|
)
|
|
(1,446
|
)
|
|
(34,788
|
)
|
|
—
|
|
|||||
Equity in loss of unconsolidated joint ventures
|
—
|
|
|
(406
|
)
|
|
—
|
|
|
—
|
|
|
(406
|
)
|
|||||
Homebuilding pretax income (loss)
|
20,409
|
|
|
15,407
|
|
|
(3,778
|
)
|
|
—
|
|
|
32,038
|
|
|||||
Financial services pretax income
|
—
|
|
|
—
|
|
|
2,473
|
|
|
—
|
|
|
2,473
|
|
|||||
Total pretax income (loss)
|
20,409
|
|
|
15,407
|
|
|
(1,305
|
)
|
|
—
|
|
|
34,511
|
|
|||||
Income tax expense
|
(700
|
)
|
|
(3,400
|
)
|
|
(400
|
)
|
|
—
|
|
|
(4,500
|
)
|
|||||
Equity in net income of subsidiaries
|
10,302
|
|
|
—
|
|
|
—
|
|
|
(10,302
|
)
|
|
—
|
|
|||||
Net income (loss)
|
$
|
30,011
|
|
|
$
|
12,007
|
|
|
$
|
(1,705
|
)
|
|
$
|
(10,302
|
)
|
|
$
|
30,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 29, 2020
|
||||||||||||||||||
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Homebuilding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
309,983
|
|
|
$
|
92,853
|
|
|
$
|
26,870
|
|
|
$
|
—
|
|
|
$
|
429,706
|
|
Receivables
|
44,583
|
|
|
184,288
|
|
|
68,344
|
|
|
—
|
|
|
297,215
|
|
|||||
Inventories
|
—
|
|
|
3,391,612
|
|
|
337,004
|
|
|
—
|
|
|
3,728,616
|
|
|||||
Investments in unconsolidated joint ventures
|
—
|
|
|
57,147
|
|
|
—
|
|
|
—
|
|
|
57,147
|
|
|||||
Property and equipment, net
|
25,185
|
|
|
36,047
|
|
|
3,221
|
|
|
—
|
|
|
64,453
|
|
|||||
Deferred tax assets, net
|
93,510
|
|
|
203,661
|
|
|
14,995
|
|
|
—
|
|
|
312,166
|
|
|||||
Other assets
|
102,826
|
|
|
19,198
|
|
|
7,695
|
|
|
—
|
|
|
129,719
|
|
|||||
|
576,087
|
|
|
3,984,806
|
|
|
458,129
|
|
|
—
|
|
|
5,019,022
|
|
|||||
Financial services
|
—
|
|
|
—
|
|
|
33,812
|
|
|
—
|
|
|
33,812
|
|
|||||
Intercompany receivables
|
3,630,262
|
|
|
—
|
|
|
196,703
|
|
|
(3,826,965
|
)
|
|
—
|
|
|||||
Investments in subsidiaries
|
162,105
|
|
|
—
|
|
|
—
|
|
|
(162,105
|
)
|
|
—
|
|
|||||
Total assets
|
$
|
4,368,454
|
|
|
$
|
3,984,806
|
|
|
$
|
688,644
|
|
|
$
|
(3,989,070
|
)
|
|
$
|
5,052,834
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Homebuilding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable, accrued expenses and other liabilities
|
$
|
137,855
|
|
|
$
|
429,680
|
|
|
$
|
291,004
|
|
|
$
|
—
|
|
|
$
|
858,539
|
|
Notes payable
|
1,716,149
|
|
|
7,889
|
|
|
25,110
|
|
|
—
|
|
|
1,749,148
|
|
|||||
|
1,854,004
|
|
|
437,569
|
|
|
316,114
|
|
|
—
|
|
|
2,607,687
|
|
|||||
Financial services
|
—
|
|
|
—
|
|
|
2,043
|
|
|
—
|
|
|
2,043
|
|
|||||
Intercompany payables
|
71,346
|
|
|
3,507,195
|
|
|
248,424
|
|
|
(3,826,965
|
)
|
|
—
|
|
|||||
Stockholders’ equity
|
2,443,104
|
|
|
40,042
|
|
|
122,063
|
|
|
(162,105
|
)
|
|
2,443,104
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
4,368,454
|
|
|
$
|
3,984,806
|
|
|
$
|
688,644
|
|
|
$
|
(3,989,070
|
)
|
|
$
|
5,052,834
|
|
|
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
|
|
|
Three Months Ended February 29, 2020
|
||||||||||||||||||
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
(21,949
|
)
|
|
$
|
31,705
|
|
|
$
|
(19,622
|
)
|
|
$
|
—
|
|
|
$
|
(9,866
|
)
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Contributions to unconsolidated joint ventures
|
—
|
|
|
(1,668
|
)
|
|
—
|
|
|
—
|
|
|
(1,668
|
)
|
|||||
Return of investments in unconsolidated joint ventures
|
—
|
|
|
500
|
|
|
—
|
|
|
—
|
|
|
500
|
|
|||||
Purchases of property and equipment, net
|
(1,048
|
)
|
|
(4,432
|
)
|
|
(1,191
|
)
|
|
—
|
|
|
(6,671
|
)
|
|||||
Intercompany
|
(18,760
|
)
|
|
—
|
|
|
—
|
|
|
18,760
|
|
|
—
|
|
|||||
Net cash used in investing activities
|
(19,808
|
)
|
|
(5,600
|
)
|
|
(1,191
|
)
|
|
18,760
|
|
|
(7,839
|
)
|
|||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Issuance of common stock under employee stock plans
|
8,226
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,226
|
|
|||||
Tax payments associated with stock-based compensation awards
|
(6,219
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,219
|
)
|
|||||
Payments of cash dividends
|
(8,233
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,233
|
)
|
|||||
Intercompany
|
—
|
|
|
1,314
|
|
|
17,446
|
|
|
(18,760
|
)
|
|
—
|
|
|||||
Net cash provided by (used in) financing activities
|
(6,226
|
)
|
|
1,314
|
|
|
17,446
|
|
|
(18,760
|
)
|
|
(6,226
|
)
|
|||||
Net increase (decrease) in cash and cash equivalents
|
(47,983
|
)
|
|
27,419
|
|
|
(3,367
|
)
|
|
—
|
|
|
(23,931
|
)
|
|||||
Cash and cash equivalents at beginning of period
|
357,966
|
|
|
65,434
|
|
|
31,458
|
|
|
—
|
|
|
454,858
|
|
|||||
Cash and cash equivalents at end of period
|
$
|
309,983
|
|
|
$
|
92,853
|
|
|
$
|
28,091
|
|
|
$
|
—
|
|
|
$
|
430,927
|
|
|
Three Months Ended February 28, 2019
|
||||||||||||||||||
|
KB Home
Corporate
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Total
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
13,062
|
|
|
$
|
(337,286
|
)
|
|
$
|
126,014
|
|
|
$
|
—
|
|
|
$
|
(198,210
|
)
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Contributions to unconsolidated joint ventures
|
—
|
|
|
(2,527
|
)
|
|
—
|
|
|
—
|
|
|
(2,527
|
)
|
|||||
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
|
(2,068
|
)
|
|
(2,032
|
)
|
|
(5,925
|
)
|
|
—
|
|
|
(10,025
|
)
|
|||||
Intercompany
|
(190,765
|
)
|
|
—
|
|
|
—
|
|
|
190,765
|
|
|
—
|
|
|||||
Net cash provided by (used in) investing activities
|
(192,833
|
)
|
|
6,246
|
|
|
(5,925
|
)
|
|
190,765
|
|
|
(1,747
|
)
|
|||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from issuance of debt
|
405,250
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
405,250
|
|
|||||
Payment of debt issuance costs
|
(5,209
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,209
|
)
|
|||||
Repayment of senior notes
|
(230,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(230,000
|
)
|
|||||
Borrowings under revolving credit facility
|
140,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
140,000
|
|
|||||
Repayments under revolving credit facility
|
(140,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(140,000
|
)
|
|||||
Payments on mortgages and land contracts due to land sellers and other loans
|
—
|
|
|
(28,020
|
)
|
|
—
|
|
|
—
|
|
|
(28,020
|
)
|
|||||
Issuance of common stock under employee stock plans
|
832
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
832
|
|
|||||
Tax payments associated with stock-based compensation awards
|
(3,342
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,342
|
)
|
|||||
Payments of cash dividends
|
(2,266
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,266
|
)
|
|||||
Intercompany
|
—
|
|
|
325,137
|
|
|
(134,372
|
)
|
|
(190,765
|
)
|
|
—
|
|
|||||
Net cash provided by (used in) financing activities
|
165,265
|
|
|
297,117
|
|
|
(134,372
|
)
|
|
(190,765
|
)
|
|
137,245
|
|
|||||
Net decrease in cash and cash equivalents
|
(14,506
|
)
|
|
(33,923
|
)
|
|
(14,283
|
)
|
|
—
|
|
|
(62,712
|
)
|
|||||
Cash and cash equivalents at beginning of period
|
429,977
|
|
|
114,269
|
|
|
30,873
|
|
|
—
|
|
|
575,119
|
|
|||||
Cash and cash equivalents at end of period
|
$
|
415,471
|
|
|
$
|
80,346
|
|
|
$
|
16,590
|
|
|
$
|
—
|
|
|
$
|
512,407
|
|
23.
|
Subsequent Event
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Three Months Ended
|
|||||||||
|
February 29, 2020
|
|
February 28, 2019
|
|
Variance
|
|||||
Revenues:
|
|
|
|
|
|
|||||
Homebuilding
|
$
|
1,072,382
|
|
|
$
|
808,788
|
|
|
33
|
%
|
Financial services
|
3,553
|
|
|
2,695
|
|
|
32
|
|
||
Total revenues
|
$
|
1,075,935
|
|
|
$
|
811,483
|
|
|
33
|
%
|
Pretax income:
|
|
|
|
|
|
|||||
Homebuilding
|
$
|
63,035
|
|
|
$
|
32,038
|
|
|
97
|
%
|
Financial services
|
5,813
|
|
|
2,473
|
|
|
135
|
|
||
Total pretax income
|
68,848
|
|
|
34,511
|
|
|
99
|
|
||
Income tax expense
|
(9,100
|
)
|
|
(4,500
|
)
|
|
(102
|
)
|
||
Net income
|
$
|
59,748
|
|
|
$
|
30,011
|
|
|
99
|
%
|
Basic earnings per share
|
$
|
.66
|
|
|
$
|
.34
|
|
|
94
|
%
|
Diluted earnings per share
|
$
|
.63
|
|
|
$
|
.31
|
|
|
103
|
%
|
|
|
Three Months Ended
|
||||||
|
|
February 29, 2020
|
|
February 28, 2019
|
||||
Net orders
|
|
3,495
|
|
|
2,675
|
|
||
Net order value (a)
|
|
$
|
1,382,654
|
|
|
$
|
1,022,087
|
|
Cancellation rates (b)
|
|
14
|
%
|
|
20
|
%
|
||
Ending backlog — homes
|
|
5,821
|
|
|
4,631
|
|
||
Ending backlog — value
|
|
$
|
2,124,551
|
|
|
$
|
1,658,284
|
|
Ending community count
|
|
250
|
|
|
248
|
|
||
Average community count
|
|
251
|
|
|
244
|
|
(a)
|
Net order value represents the potential future housing revenues associated with net orders generated during the 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 rates represent 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.
|
|
Three Months Ended
|
||||||
|
February 29, 2020
|
|
February 28, 2019
|
||||
Revenues:
|
|
|
|
||||
Housing
|
$
|
1,071,810
|
|
|
$
|
798,171
|
|
Land
|
572
|
|
|
10,617
|
|
||
Total
|
1,072,382
|
|
|
808,788
|
|
||
Costs and expenses:
|
|
|
|
||||
Construction and land costs
|
|
|
|
||||
Housing
|
(885,481
|
)
|
|
(661,328
|
)
|
||
Land
|
(572
|
)
|
|
(9,527
|
)
|
||
Total
|
(886,053
|
)
|
|
(670,855
|
)
|
||
Selling, general and administrative expenses
|
(126,134
|
)
|
|
(106,594
|
)
|
||
Total
|
(1,012,187
|
)
|
|
(777,449
|
)
|
||
Operating income
|
$
|
60,195
|
|
|
$
|
31,339
|
|
Homes delivered
|
2,752
|
|
|
2,152
|
|
||
Average selling price
|
$
|
389,500
|
|
|
$
|
370,900
|
|
Housing gross profit margin as a percentage of housing revenues
|
17.4
|
%
|
|
17.1
|
%
|
||
Housing gross profit margin excluding inventory-related charges as a percentage of housing revenues
|
17.9
|
%
|
|
17.6
|
%
|
||
Adjusted housing gross profit margin as a percentage of housing revenues
|
21.1
|
%
|
|
21.3
|
%
|
||
Selling, general and administrative expenses as a percentage of housing revenues
|
11.8
|
%
|
|
13.4
|
%
|
||
Operating income as a percentage of homebuilding revenues
|
5.6
|
%
|
|
3.9
|
%
|
|
|
Three Months Ended
|
||||||||||||||||||||
|
|
Homes Delivered
|
|
Net Orders
|
|
Cancellation Rates
|
||||||||||||||||
Segment
|
|
February 29, 2020
|
|
February 28, 2019
|
|
February 29, 2020
|
|
February 28, 2019
|
|
February 29, 2020
|
|
February 28, 2019
|
||||||||||
West Coast
|
|
794
|
|
|
497
|
|
|
979
|
|
|
699
|
|
|
11
|
%
|
|
20
|
%
|
||||
Southwest
|
|
603
|
|
|
483
|
|
|
765
|
|
|
533
|
|
|
11
|
|
|
13
|
|
||||
Central
|
|
968
|
|
|
824
|
|
|
1,217
|
|
|
926
|
|
|
16
|
|
|
24
|
|
||||
Southeast
|
|
387
|
|
|
348
|
|
|
534
|
|
|
517
|
|
|
18
|
|
|
20
|
|
||||
Total
|
|
2,752
|
|
|
2,152
|
|
|
3,495
|
|
|
2,675
|
|
|
14
|
%
|
|
20
|
%
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Net Order Value
|
|
Average Community Count
|
||||||||||||||||||
Segment
|
|
February 29, 2020
|
|
February 28, 2019
|
|
Variance
|
|
February 29, 2020
|
|
February 28, 2019
|
|
Variance
|
||||||||||
West Coast
|
|
$
|
598,416
|
|
|
$
|
420,461
|
|
|
42
|
%
|
|
74
|
|
|
61
|
|
|
21
|
%
|
||
Southwest
|
|
257,220
|
|
|
170,839
|
|
|
51
|
|
|
39
|
|
|
38
|
|
|
3
|
|
||||
Central
|
|
373,481
|
|
|
284,266
|
|
|
31
|
|
|
90
|
|
|
95
|
|
|
(5
|
)
|
||||
Southeast
|
|
153,537
|
|
|
146,521
|
|
|
5
|
|
|
48
|
|
|
50
|
|
|
(4
|
)
|
||||
Total
|
|
$
|
1,382,654
|
|
|
$
|
1,022,087
|
|
|
35
|
%
|
|
251
|
|
|
244
|
|
|
3
|
%
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
February 29, 2020 and February 28, 2019
|
||||||||||||||||||||
|
|
Backlog – Homes
|
|
Backlog – Value
|
||||||||||||||||||
Segment
|
|
February 29, 2020
|
|
February 28, 2019
|
|
Variance
|
|
February 29, 2020
|
|
February 28, 2019
|
|
Variance
|
||||||||||
West Coast
|
|
1,228
|
|
|
917
|
|
|
34
|
%
|
|
$
|
712,218
|
|
|
$
|
533,076
|
|
|
34
|
%
|
||
Southwest
|
|
1,400
|
|
|
976
|
|
|
43
|
|
|
456,024
|
|
|
315,797
|
|
|
44
|
|
||||
Central
|
|
2,237
|
|
|
1,816
|
|
|
23
|
|
|
680,904
|
|
|
537,351
|
|
|
27
|
|
||||
Southeast
|
|
956
|
|
|
922
|
|
|
4
|
|
|
275,405
|
|
|
272,060
|
|
|
1
|
|
||||
Total
|
|
5,821
|
|
|
4,631
|
|
|
26
|
%
|
|
$
|
2,124,551
|
|
|
$
|
1,658,284
|
|
|
28
|
%
|
|
Three Months Ended
|
||||||
|
February 29, 2020
|
|
February 28, 2019
|
||||
Housing revenues
|
$
|
1,071,810
|
|
|
$
|
798,171
|
|
Housing construction and land costs
|
(885,481
|
)
|
|
(661,328
|
)
|
||
Housing gross profits
|
186,329
|
|
|
136,843
|
|
||
Add: Inventory-related charges (a)
|
5,672
|
|
|
3,555
|
|
||
Housing gross profits excluding inventory-related charges
|
192,001
|
|
|
140,398
|
|
||
Add: Amortization of previously capitalized interest (b)
|
34,575
|
|
|
29,986
|
|
||
Adjusted housing gross profits
|
$
|
226,576
|
|
|
$
|
170,384
|
|
Housing gross profit margin as a percentage of housing revenues
|
17.4
|
%
|
|
17.1
|
%
|
||
Housing gross profit margin excluding inventory-related charges as a percentage of housing revenues
|
17.9
|
%
|
|
17.6
|
%
|
||
Adjusted housing gross profit margin as a percentage of housing revenues
|
21.1
|
%
|
|
21.3
|
%
|
(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.
|
|
February 29,
2020 |
|
November 30,
2019 |
||||
Notes payable
|
$
|
1,749,148
|
|
|
$
|
1,748,747
|
|
Stockholders’ equity
|
2,443,104
|
|
|
2,383,122
|
|
||
Total capital
|
$
|
4,192,252
|
|
|
$
|
4,131,869
|
|
Ratio of debt to capital
|
41.7
|
%
|
|
42.3
|
%
|
||
|
|
|
|
||||
Notes payable
|
$
|
1,749,148
|
|
|
$
|
1,748,747
|
|
Less: Cash and cash equivalents
|
(429,706
|
)
|
|
(453,814
|
)
|
||
Net debt
|
1,319,442
|
|
|
1,294,933
|
|
||
Stockholders’ equity
|
2,443,104
|
|
|
2,383,122
|
|
||
Total capital
|
$
|
3,762,546
|
|
|
$
|
3,678,055
|
|
Ratio of net debt to capital
|
35.1
|
%
|
|
35.2
|
%
|
|
Three Months Ended
|
|||||||||
|
February 29, 2020
|
|
February 28, 2019
|
|
Variance
|
|||||
Revenues
|
$
|
191,318
|
|
|
$
|
157,656
|
|
|
21
|
%
|
Construction and land costs
|
(142,899
|
)
|
|
(121,218
|
)
|
|
(18
|
)
|
||
Selling, general and administrative expenses
|
(16,169
|
)
|
|
(14,120
|
)
|
|
(15
|
)
|
||
Operating income
|
$
|
32,250
|
|
|
$
|
22,318
|
|
|
45
|
%
|
|
|
|
|
|
|
|
Three Months Ended
|
|||||||||
|
February 29, 2020
|
|
February 28, 2019
|
|
Variance
|
|||||
Homes delivered
|
603
|
|
|
483
|
|
|
25
|
%
|
||
Average selling price
|
$
|
316,400
|
|
|
$
|
326,400
|
|
|
(3
|
) %
|
Housing gross profit margin
|
25.4
|
%
|
|
23.1
|
%
|
|
230
|
bps
|
(a)
|
Percentage not meaningful.
|
|
Three Months Ended
|
||||||
|
February 29, 2020
|
|
February 28, 2019
|
||||
Revenues
|
$
|
3,553
|
|
|
$
|
2,695
|
|
Expenses
|
(962
|
)
|
|
(1,024
|
)
|
||
Equity in income of unconsolidated joint ventures
|
3,222
|
|
|
802
|
|
||
Pretax income
|
$
|
5,813
|
|
|
$
|
2,473
|
|
|
|
|
|
||||
Total originations:
|
|
|
|
||||
Loans
|
1,764
|
|
|
1,209
|
|
||
Principal
|
$
|
558,537
|
|
|
$
|
339,264
|
|
Percentage of homebuyers using KBHS
|
71
|
%
|
|
64
|
%
|
||
Average FICO score
|
722
|
|
|
718
|
|
||
|
|
|
|
|
Three Months Ended
|
||||||
|
February 29, 2020
|
|
February 28, 2019
|
||||
Loans sold:
|
|
|
|
||||
Loans sold to Stearns
|
2,289
|
|
|
1,161
|
|
||
Principal
|
$
|
700,037
|
|
|
$
|
333,353
|
|
Loans sold to third parties
|
72
|
|
|
244
|
|
||
Principal
|
$
|
23,299
|
|
|
$
|
62,355
|
|
|
Three Months Ended
|
||||||
|
February 29, 2020
|
|
February 28, 2019
|
||||
Income tax expense
|
$
|
9,100
|
|
|
$
|
4,500
|
|
Effective tax rate
|
13.2
|
%
|
|
13.0
|
%
|
•
|
internally generated cash flows;
|
•
|
public issuances of debt securities;
|
•
|
borrowings under the Credit Facility;
|
•
|
land option contracts and other similar contracts and seller notes;
|
•
|
public issuances of our common stock; and
|
•
|
letters of credit and performance bonds.
|
•
|
land acquisition and land development;
|
•
|
home construction;
|
•
|
operating expenses;
|
•
|
principal and interest payments on notes payable; and
|
•
|
repayments of borrowings under the Credit Facility.
|
|
|
February 29, 2020
|
|
November 30, 2019
|
|
Variance
|
|||||||||||||||
Segment
|
|
Lots
|
|
$
|
|
Lots
|
|
$
|
|
Lots
|
|
$
|
|||||||||
West Coast
|
|
15,010
|
|
|
$
|
1,751,958
|
|
|
15,186
|
|
|
$
|
1,795,088
|
|
|
(176
|
)
|
|
$
|
(43,130
|
)
|
Southwest
|
|
11,459
|
|
|
680,161
|
|
|
11,191
|
|
|
629,811
|
|
|
268
|
|
|
50,350
|
|
|||
Central
|
|
24,472
|
|
|
900,013
|
|
|
25,871
|
|
|
889,179
|
|
|
(1,399
|
)
|
|
10,834
|
|
|||
Southeast
|
|
12,293
|
|
|
396,484
|
|
|
12,662
|
|
|
390,524
|
|
|
(369
|
)
|
|
5,960
|
|
|||
Total
|
|
63,234
|
|
|
$
|
3,728,616
|
|
|
64,910
|
|
|
$
|
3,704,602
|
|
|
(1,676
|
)
|
|
$
|
24,014
|
|
|
|
February 29,
2020 |
|
November 30,
2019 |
||||
Total cash and cash equivalents
|
|
$
|
429,706
|
|
|
$
|
453,814
|
|
Credit Facility commitment
|
|
800,000
|
|
|
800,000
|
|
||
Borrowings outstanding under the Credit Facility
|
|
—
|
|
|
—
|
|
||
Letters of credit outstanding under the Credit Facility
|
|
(12,429
|
)
|
|
(18,884
|
)
|
||
Credit Facility availability
|
|
787,571
|
|
|
781,116
|
|
||
Total liquidity
|
|
$
|
1,217,277
|
|
|
$
|
1,234,930
|
|
|
February 29,
2020 |
|
November 30,
2019 |
|
Variance
|
||||||
Mortgages and land contracts due to land sellers and other loans
|
$
|
7,889
|
|
|
$
|
7,889
|
|
|
$
|
—
|
|
Senior notes
|
1,741,259
|
|
|
1,740,858
|
|
|
401
|
|
|||
Total
|
$
|
1,749,148
|
|
|
$
|
1,748,747
|
|
|
$
|
401
|
|
Financial Covenants and Other Requirements
|
|
Covenant Requirement
|
|
Actual
|
|
Consolidated tangible net worth
|
|
>
|
$1.67 billion
|
|
$2.44 billion
|
Leverage Ratio
|
|
<
|
.650
|
|
.418
|
Interest Coverage Ratio (a)
|
|
>
|
1.500
|
|
4.340
|
Minimum liquidity (a)
|
|
>
|
$137.2 million
|
|
$429.7 million
|
Investments in joint ventures and non-guarantor subsidiaries
|
|
<
|
$593.4 million
|
|
$179.2 million
|
Borrowing base in excess of borrowing base indebtedness (as defined)
|
|
|
n/a
|
|
$1.29 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 February 29, 2020, we met both the Interest Coverage Ratio and the minimum liquidity requirements.
|
|
Three Months Ended
|
||||||
|
February 29, 2020
|
|
February 28, 2019
|
||||
Net cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
(9,866
|
)
|
|
$
|
(198,210
|
)
|
Investing activities
|
(7,839
|
)
|
|
(1,747
|
)
|
||
Financing activities
|
(6,226
|
)
|
|
137,245
|
|
||
Net decrease in cash and cash equivalents
|
$
|
(23,931
|
)
|
|
$
|
(62,712
|
)
|
•
|
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 to 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 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 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;
|
•
|
an epidemic or pandemic (such as the outbreak and worldwide spread of COVID-19), and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it, which may (as with COVID-19) precipitate or exacerbate one or more of the above-mentioned and/or other risks, and significantly disrupt or prevent us from operating our business in the ordinary course for an extended period; and
|
•
|
other events outside of our control.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
|
|
|
|
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs
|
|||||
December 1-31
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
2,193,947
|
|
January 1-31
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,193,947
|
|
|
February 1-29
|
|
155,307
|
|
|
40.04
|
|
|
—
|
|
|
2,193,947
|
|
|
Total
|
|
155,307
|
|
|
$
|
40.04
|
|
|
—
|
|
|
|
|
KB HOME
Registrant
|
Dated
|
April 1, 2020
|
|
By:
|
/s/ JEFF J. KAMINSKI
|
|
|
|
|
Jeff J. Kaminski
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
Dated
|
April 1, 2020
|
|
By:
|
/s/ WILLIAM R. HOLLINGER
|
|
|
|
|
William R. Hollinger
Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of KB Home;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Dated
|
April 1, 2020
|
|
/s/ JEFFREY T. MEZGER
|
|
|
|
Jeffrey T. Mezger
|
|
|
|
Chairman, President and Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of KB Home;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Dated
|
April 1, 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
|
April 1, 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
|
April 1, 2020
|
|
/s/ JEFF J. KAMINSKI
|
|
|
|
Jeff J. Kaminski
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
(Principal Financial Officer)
|