Cover Page
Cover Page | 9 Months Ended |
Aug. 31, 2019$ / sharesshares | |
Document Information [Line Items] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | Aug. 31, 2019 |
Document Fiscal Year Focus | 2019 |
Document Fiscal Period Focus | Q3 |
Entity Registrant Name | KB HOME |
Entity Central Index Key | 0000795266 |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Current Fiscal Year End Date | --11-30 |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock Shares Outstanding | 88,398,314 |
Entity Shell Company | false |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity File Number | 001-09195 |
Entity Incorporation, State or Country Code | DE |
Entity Tax Identification Number | 95-3666267 |
Entity Address, Address Line One | 10990 Wilshire Boulevard |
Entity Address, City or Town | Los Angeles |
Entity Address, State or Province | CA |
Entity Address, Postal Zip Code | 90024 |
City Area Code | 310 |
Local Phone Number | 231-4000 |
Common Stock, Par or Stated Value Per Share | $ / shares | $ 1 |
Document Quarterly Report | true |
Document Transition Report | false |
Grantor Stock Ownership Trust | |
Document Information [Line Items] | |
Entity Common Stock Shares Outstanding | 7,859,975 |
Common Stock | |
Document Information [Line Items] | |
Title of 12(b) Security | Common Stock (par value $1.00 per share) |
Trading Symbol | KBH |
Security Exchange Name | NYSE |
Rights | |
Document Information [Line Items] | |
Title of 12(b) Security | Rights to Purchase Series A Participating Cumulative Preferred Stock |
Trading Symbol | KBH |
Security Exchange Name | NYSE |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Aug. 31, 2019 | Aug. 31, 2018 | Aug. 31, 2019 | Aug. 31, 2018 | |
Total revenues | $ 1,160,786 | $ 1,225,347 | $ 2,994,072 | $ 3,198,393 |
Equity in income of unconsolidated joint ventures | 5,859 | 6,691 | ||
Total pretax income | 91,936 | 114,676 | 183,208 | 239,029 |
Income tax expense | (23,800) | (27,200) | (37,600) | (165,500) |
Net income | $ 68,136 | $ 87,476 | $ 145,608 | $ 73,529 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.77 | $ 0.99 | $ 1.65 | $ 0.83 |
Diluted (in dollars per share) | $ 0.73 | $ 0.87 | $ 1.55 | $ 0.75 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 88,262 | 87,951 | 87,630 | 87,565 |
Diluted (in shares) | 92,842 | 101,072 | 94,032 | 101,213 |
Cash dividends declared per common share (in dollars per share) | $ 0.09 | $ 0.025 | $ 0.14 | $ 0.075 |
Home Building [Member] | ||||
Total revenues | $ 1,156,855 | $ 1,221,875 | $ 2,984,314 | $ 3,189,753 |
Costs of goods and services sold | (943,754) | (1,001,509) | (2,458,353) | (2,642,231) |
Selling, general and administrative expenses | (127,626) | (114,753) | (357,048) | (323,708) |
Operating income | 85,475 | 105,613 | 168,913 | 223,814 |
Interest income | 201 | 458 | 1,745 | 2,739 |
Equity in income of unconsolidated joint ventures | (384) | 3,493 | (1,159) | 2,326 |
Total pretax income | 85,292 | 109,564 | 169,499 | 228,879 |
Financial Service [Member] | ||||
Total revenues | 3,931 | 3,472 | 9,758 | 8,640 |
Selling, general and administrative expenses | (1,003) | (945) | (3,067) | (2,855) |
Operating income | 2,928 | 2,527 | 6,691 | 5,785 |
Equity in income of unconsolidated joint ventures | 3,716 | 2,585 | 7,018 | 4,365 |
Total pretax income | $ 6,644 | $ 5,112 | $ 13,709 | $ 10,150 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Aug. 31, 2019 | Nov. 30, 2018 | |
Assets | |||
Cash and cash equivalents | $ 184,837 | $ 575,119 | |
Receivables | 291,492 | 292,830 | |
Inventories | 3,919,076 | 3,582,839 | |
Investments in unconsolidated joint ventures | 57,168 | 61,960 | |
Property and equipment, net | 64,119 | 24,283 | |
Other assets | 85,515 | 83,100 | |
Total assets | 5,035,170 | 5,073,571 | |
Liabilities and stockholders’ equity | |||
Accrued expenses and other liabilities | 629,168 | 666,268 | |
Mortgages and notes payable | 1,860,135 | 2,060,263 | |
Common stock | 120,523 | 119,196 | |
Paid-in capital | 782,300 | 753,570 | |
Retained earnings | 2,042,034 | 1,897,168 | |
Accumulated other comprehensive loss | (9,565) | (9,565) | |
Grantor stock ownership trust, at cost | (85,246) | (88,472) | |
Treasury stock, at cost | (587,817) | (584,397) | |
Total stockholders’ equity | 2,262,229 | 2,087,500 | |
Total liabilities and stockholders’ equity | 5,035,170 | 5,073,571 | |
Home Building [Member] | |||
Assets | |||
Cash and cash equivalents | 183,794 | 574,359 | |
Receivables | 291,492 | 292,830 | |
Inventories | 3,919,076 | 3,582,839 | |
Investments in unconsolidated joint ventures | 57,168 | 61,960 | |
Property and equipment, net | 64,119 | 24,283 | |
Deferred tax assets, net | 402,095 | 441,820 | |
Other assets | 85,515 | 83,100 | |
Total assets | 5,003,259 | 5,061,191 | |
Liabilities and stockholders’ equity | |||
Accounts payable | 281,855 | 258,045 | |
Accrued expenses and other liabilities | 629,168 | 666,268 | |
Mortgages and notes payable | 1,860,135 | 2,060,263 | |
Total Liabilities | 2,771,158 | 2,984,576 | |
Financial Service [Member] | |||
Assets | |||
Cash and cash equivalents | 1,043 | 760 | |
Receivables | 1,435 | 2,885 | |
Investments in unconsolidated joint ventures | 9,162 | 8,594 | |
Other assets | [1] | 20,271 | 141 |
Total assets | 31,911 | 12,380 | |
Liabilities and stockholders’ equity | |||
Financial services | $ 1,783 | $ 1,495 | |
[1] | Other assets at August 31, 2019 included $20.1 million of contract assets for estimated future renewal commissions due to our adoption of ASC 606 effective December 1, 2018, as described in Note 1 – Basis of Presentation and Significant Accounting Policies. |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Aug. 31, 2019 | Aug. 31, 2018 | |
Cash flows from operating activities: | ||
Net income | $ 145,608 | $ 73,529 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Equity in income of unconsolidated joint ventures | (5,859) | (6,691) |
Distributions of earnings from unconsolidated joint ventures | 6,450 | 6,297 |
Amortization of discounts, premiums and issuance costs | 3,500 | 4,677 |
Depreciation and amortization | 19,825 | 1,882 |
Deferred income taxes | 35,701 | 164,668 |
Stock-based compensation | 14,479 | 12,149 |
Inventory impairments and land option contract abandonments | 13,143 | 19,925 |
Changes in assets and liabilities: | ||
Receivables | 2,788 | (36,030) |
Inventories | (389,461) | (370,048) |
Accounts payable, accrued expenses and other liabilities | 4,965 | 84,885 |
Other, net | (3,283) | (4,751) |
Net cash used in operating activities | (152,144) | (49,508) |
Cash flows from investing activities: | ||
Contributions to unconsolidated joint ventures | (7,656) | (15,640) |
Return of investments in unconsolidated joint ventures | 5,001 | 9,934 |
Proceeds from sale of building | 5,800 | 0 |
Purchases of property and equipment, net | (32,211) | (4,137) |
Net cash used in investing activities | (29,062) | (9,843) |
Cash flows from financing activities: | ||
Proceeds from issuance of debt | 405,250 | 0 |
Issuance costs for unsecured revolving credit facility | (5,209) | 0 |
Repayment of senior notes | (630,000) | (300,000) |
Borrowings under revolving credit facility | 460,000 | 70,000 |
Repayments under revolving credit facility | (410,000) | (70,000) |
Payments on mortgages and land contracts due to land sellers and other loans | (32,149) | (10,494) |
Issuance of common stock under employee stock plans | 18,729 | 17,433 |
Tax payments associated with stock-based compensation awards | (3,345) | (6,787) |
Payments of cash dividends | (12,352) | (6,686) |
Net cash used in financing activities | (209,076) | (306,534) |
Net decrease in cash and cash equivalents | (390,282) | (365,885) |
Cash and cash equivalents at beginning of period | 575,119 | 720,861 |
Cash and cash equivalents at end of period | $ 184,837 | $ 354,976 |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 9 Months Ended |
Aug. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Significant Accounting Policies | Basis of Presentation and Significant Accounting Policies Basis of Presentation. The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with GAAP have been condensed or omitted. In our opinion, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly our consolidated financial position as of August 31, 2019 , the results of our consolidated operations for the three months and nine months ended August 31, 2019 and 2018, and our consolidated cash flows for the nine months ended August 31, 2019 and 2018. The results of our consolidated operations for the three months and nine months ended August 31, 2019 are not necessarily indicative of the results to be expected for the full year due to seasonal variations in operating results and other factors. The consolidated balance sheet at November 30, 2018 has been taken from the audited consolidated financial statements as of that date. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended November 30, 2018 , which are contained in our Annual Report on Form 10-K for that period. Unless the context indicates otherwise, the terms “we,” “our,” and “us” used in this report refer to KB Home, a Delaware corporation, and its subsidiaries. Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents. We consider all highly liquid short-term investments purchased with an original maturity of three months or less to be cash equivalents. Our cash equivalents totaled $11.4 million at August 31, 2019 and $385.2 million at November 30, 2018 . At August 31, 2019 and November 30, 2018 , our cash equivalents were invested in interest-bearing bank deposit accounts. Comprehensive Income. Our comprehensive income was $68.1 million for the three months ended August 31, 2019 and $87.5 million for the three months ended August 31, 2018. For the nine months ended August 31, 2019 and 2018, our comprehensive income was $145.6 million and $73.5 million , respectively. Our comprehensive income for each of the three-month and nine-month periods ended August 31, 2019 and 2018 was equal to our net income for the respective periods. Adoption of New Accounting Pronouncement . In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 supersedes the revenue guidance in Accounting Standards Codification Topic 605, “Revenue Recognition,” and most industry-specific revenue and cost guidance in the accounting standards codification, including some cost guidance related to construction-type and production-type contracts. The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. On December 1, 2018, we adopted ASU 2014-09 and its related amendments (collectively, “ASC 606”), using the modified retrospective method applied to contracts that were not completed as of the adoption date. Results for reporting periods beginning December 1, 2018 and after are presented under ASC 606, while results for prior reporting periods have not been adjusted and continue to be presented under the accounting guidance in effect for those periods. We recorded the following cumulative effect adjustment to increase beginning retained earnings as of December 1, 2018 (in thousands): 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 Deferred tax assets, net 441,820 (4,024 ) 437,796 Property and equipment, net 24,283 31,194 55,477 Financial services 12,380 19,728 32,108 Stockholders’ equity: Retained earnings 1,897,168 11,610 1,908,778 Within our homebuilding operations, ASC 606 impacts the classification and timing of recognition in our consolidated financial statements of certain community sales office and other marketing- and model home-related costs, which we previously capitalized to inventories and amortized through construction and land costs with each home delivered in a community. With our adoption of ASC 606, these costs are capitalized to property and equipment and depreciated to selling, general and administrative expenses, or expensed to selling, general and administrative expenses as incurred. Upon adopting ASC 606, we reclassified these community sales office and other marketing- and model home-related costs and related accumulated amortization from inventories to either property and equipment, net or retained earnings in our consolidated balance sheet. Forfeited deposits related to cancelled home sale and land sale contracts, which were previously reflected as other income within selling, general and administrative expenses, are included in homebuilding revenues under ASC 606. Within our financial services operations, ASC 606 impacts the timing of recognition in our consolidated financial statements of insurance commissions for insurance policy renewals. We previously recognized such insurance commissions as revenue when policies were renewed. With our adoption of ASC 606, insurance commissions for future policy renewals are estimated and recognized as revenue when the insurance carrier issues an initial insurance policy to our homebuyer, which generally occurs at the time each applicable home sale is closed. Upon adopting ASC 606, we recognized contract assets for the estimated future renewal commissions related to existing insurance policies as of December 1, 2018. There were no significant changes to our business processes or internal control over financial reporting as a result of adopting ASC 606. The impacts of adopting ASC 606 on our consolidated statements of operations for the three months and nine months ended August 31, 2019 and consolidated balance sheet as of August 31, 2019 were as follows (in thousands, except per share amounts): Three Months Ended August 31, 2019 Nine Months Ended August 31, 2019 Statement of Operations As Reported Amounts without the Adoption of ASC 606 Effect of Change Higher/(Lower) As Reported Amounts without the Adoption of ASC 606 Effect of Change Higher/(Lower) Homebuilding: Revenues $ 1,156,855 $ 1,156,112 $ 743 $ 2,984,314 $ 2,982,201 $ 2,113 Construction and land costs (943,754 ) (951,613 ) (7,859 ) (2,458,353 ) (2,478,583 ) (20,230 ) Selling, general and administrative expenses (127,626 ) (118,772 ) 8,854 (357,048 ) (332,691 ) 24,357 Operating income 85,475 85,727 (252 ) 168,913 170,927 (2,014 ) Financial services: Revenues 3,931 3,751 180 9,758 9,366 392 Total pretax income 91,936 92,008 (72 ) 183,208 184,830 (1,622 ) Income tax expense (23,800 ) (23,800 ) — (37,600 ) (38,000 ) (400 ) Net income 68,136 68,208 (72 ) 145,608 146,830 (1,222 ) Diluted earnings per share .73 .73 — 1.55 1.56 (.01 ) As of August 31, 2019 Balance Sheet As Reported Amounts without the Adoption of ASC 606 Effect of Change Higher/(Lower) Assets Homebuilding: Inventories $ 3,919,076 $ 3,964,873 $ (45,797 ) Deferred tax assets, net 402,095 405,719 (3,624 ) Property and equipment, net 64,119 24,431 39,688 Financial services 31,911 11,791 20,120 Stockholders’ equity: Retained earnings 2,042,034 2,031,647 10,387 As a result of our adoption of ASC 606, we updated our significant accounting policies as follows: Homebuilding Revenues . We apply the following steps in determining the timing and amount of revenue to recognize: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract, if applicable; and (5) recognize revenue when (or as) we satisfy a performance obligation. Our home sale transactions are made pursuant to contracts under which we typically have a single performance obligation to deliver a completed home to the homebuyer when closing conditions are met. Revenues from home sales are recognized when we have satisfied the performance obligation within the sales contract, which is generally when title to and possession of the home and the risks and rewards of ownership are transferred to the homebuyer on the closing date. Under our home sale contracts, we typically receive an initial cash deposit from the homebuyer at the time the sales contract is executed and receive the remaining consideration to which we are entitled, through a third-party escrow agent, at closing. Customer deposits related to sold but undelivered homes totaled $26.8 million and $19.5 million at August 31, 2019 and November 30, 2018, respectively, and are included in accrued expenses and other liabilities. Concurrent with the recognition of revenues in our consolidated statements of operations, sales incentives in the form of price concessions on the selling price of a home are recorded as a reduction of revenues. The costs of sales incentives in the form of free or discounted products or services provided to homebuyers, including option upgrades and closing cost allowances, are reflected as construction and land costs because such incentives are identified in our home sale contracts with homebuyers as an intrinsic part of our single performance obligation to deliver and transfer title to their home for the transaction price stated in the contracts. Sales incentives that we may provide in the form of closing cost allowances are immaterial to the related revenues. Cash proceeds from home sale closings held by third-party escrow agents for our benefit, typically for less than five days, are considered deposits in-transit and classified as cash. Land sale transactions are made pursuant to contracts under which we typically have a performance obligation(s) to deliver specified land parcels to the buyer when closing conditions are met. We evaluate each land sale contract to determine our performance obligation(s) under the contract, including whether we have a distinct promise to perform post-closing land development work that is material within the context of the contract, and use objective criteria to determine our completion of the applicable performance obligation(s), whether at a point in time or over time. Revenues from land sales are recognized when we have satisfied the performance obligation(s) within the sales contract, which is generally when title to and possession of the land and the risks and rewards of ownership are transferred to the land buyer on the closing date. Under our land sale contracts, we typically receive an initial cash deposit from the buyer at the time the contract is executed and receive the remaining consideration to which we are entitled, through a third-party escrow agent, at closing. In the limited circumstances where we provide financing to the land buyer, we determine that collectibility of the receivable is reasonably assured before we recognize revenue. In instances where we have a distinct and material performance obligation(s) within the context of a land sale contract to perform land development work after the closing date, a portion of the transaction price under the contract is allocated to such performance obligation(s) and is recognized as revenue over time based upon our estimated progress toward the satisfaction of the performance obligation(s). We generally measure our progress based on our costs incurred relative to the total costs expected to satisfy the performance obligation(s). While the payment terms for such a performance obligation(s) vary, we generally receive the final payment when we have completed our land development work to the specifications detailed in the applicable land sale contract and it has been accepted by the land buyer. Homebuilding revenues include forfeited deposits, which occur when home sale or land sale contracts that include a nonrefundable deposit are cancelled. Revenues from forfeited deposits are immaterial. Within our homebuilding operations, substantially all of our contracts with customers and the related performance obligations have an original expected duration of one year or less. Community Sales Office and Other Marketing- and Model Home-Related Costs . Community sales office and other marketing- and model home-related costs are either recorded as inventories, capitalized as property and equipment, or expensed to selling, general and administrative expenses as incurred. Costs related to the construction of a model home, inclusive of upgrades that will be sold as part of the home, are recorded as inventories and recognized as construction and land costs when the model home is delivered to a homebuyer. Costs to furnish and ready a model home or on-site community sales facility that will not be sold as part of the model home, such as model furnishings, community sales office and model complex grounds, sales office construction and sales office furniture and equipment, are capitalized as property and equipment under “model furnishings and sales office improvements.” Model furnishings and sales office improvements are depreciated to selling, general and administrative expenses over their estimated useful lives. Other costs related to the marketing of a community, removing the on-site community sales facility and readying a completed (model) home for sale are expensed to selling, general and administrative expenses as incurred. Financial Services Revenues . Our financial services reporting segment generates revenues primarily from title services and insurance commissions. Revenues from title services are recognized when policies are issued, which generally occurs at the time each applicable home sale is closed. We receive insurance commissions from various third-party insurance carriers for arranging for the carriers to provide homeowner and other insurance policies for our homebuyers that elect to obtain such coverage. In addition, each time a homebuyer renews their insurance policy with the insurance carrier, we receive a renewal commission. Revenues from insurance commissions are recognized when the insurance carrier issues an initial insurance policy to our homebuyer, which generally occurs at the time each applicable home sale is closed. As our performance obligations for policy renewal commissions are satisfied upon issuance of the initial insurance policy, insurance commissions for renewals are considered variable consideration under ASC 606. Accordingly, we estimate the probable future renewal commissions when an initial policy is issued and record a corresponding contract asset and insurance commission revenues. We estimate the amount of variable consideration based on historical renewal trends and constrain the estimate such that it is probable that a significant reversal of cumulative recognized revenue will not occur. We also consider the likelihood and magnitude of a potential future reversal of revenue and update our assessment at the end of each reporting period. The contract assets for estimated future renewal commissions are included in other assets within our financial services reporting segment and totaled $20.1 million at August 31, 2019 . Contract assets totaling $19.7 million were recognized on December 1, 2018 in connection with the adoption of ASC 606. Disaggregation of Revenues . As our homebuilding operations accounted for 99.7% of our total revenues for the year ended November 30, 2018, with most of those revenues generated from home sale contracts with customers, we believe the disaggregation of revenues as reported in our consolidated statement of operations and as disclosed in Note 2 – Segment Information and in Note 3 – Financial Services, fairly depict how the nature, amount, timing and uncertainty of cash flows are affected by economic factors. SEC Disclosure Update and Simplification . In August 2018, the SEC issued Final Rule Release No. 33-10532, “Disclosure Update and Simplification,” which makes a number of changes meant to simplify interim disclosures. In complying with the relevant aspects of the rule within this quarterly report, we have removed the presentation of cash dividends declared per common share from our consolidated statements of operations and expanded our analysis of stockholders ’ equity in Note 18 – Stockholders’ Equity. Recent Accounting Pronouncements Not Yet Adopted . In February 2016, the FASB issued Accounting Standards Update No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). ASU 2016-02 will require lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Under this guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Lessor accounting remains substantially similar to previous lease accounting guidance. In addition, disclosures of leasing activities are to be expanded to include qualitative along with specific quantitative information. ASU 2016-02 is effective for us beginning December 1, 2019 (with early adoption permitted). We expect to adopt ASU 2016-02 and its related amendments (collectively, “ASC 842”) beginning December 1, 2019 using the modified retrospective method. Results for reporting periods beginning December 1, 2019 and after will be presented under ASC 842, while results for prior reporting periods will not be adjusted and will continue to be presented under the accounting guidance in effect for those periods. The main impact of our adoption of ASC 842 will be the recording on our consolidated balance sheet of lease right-of-use assets and lease liabilities for our operating leases with terms of more than 12 months, which are primarily real estate leases for office space and our design studios, as well as certain equipment leases. While we are currently evaluating and quantifying the potential impact of adopting ASC 842, we do not expect the adoption to have a material impact on our consolidated statements of operations or cash flows. In February 2018, the FASB issued Accounting Standards Update No. 2018-02, “Income Statement — Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU 2018-02”), which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (“TCJA”), and requires certain disclosures about stranded tax effects. ASU 2018-02 is effective for us beginning December 1, 2019 (with early adoption permitted), and shall be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the corporate income tax rate in the TCJA is recognized. We expect to adopt ASU 2018-02 beginning December 1, 2019. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements. Reclassifications. Certain amounts in our consolidated financial statements of prior periods have been reclassified to conform to the current period presentation. |
Segment Information
Segment Information | 9 Months Ended |
Aug. 31, 2019 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information We have identified five operating reporting segments, comprised of four homebuilding reporting segments and one financial services reporting segment. As of August 31, 2019 , our homebuilding reporting segments conducted ongoing operations in the following states: West Coast: California and Washington Southwest: Arizona and Nevada Central: Colorado and Texas Southeast: Florida and North Carolina Our homebuilding reporting segments are engaged in the acquisition and development of land primarily for residential purposes and offer a wide variety of homes that are designed to appeal to first-time, first move-up and active adult homebuyers. Our homebuilding operations generate most of their revenues from the delivery of completed homes to homebuyers. They also earn revenues from the sale of land. Our financial services reporting segment offers property and casualty insurance and, in certain instances, earthquake, flood and personal property insurance to our homebuyers in the same markets as our homebuilding reporting segments, and provides title services in the majority of our markets located within our Southwest, Central and Southeast homebuilding reporting segments. This segment earns revenues primarily from insurance commissions and from the provision of title services. We offer mortgage banking services, including residential consumer mortgage loan (“mortgage loan”) originations, to our homebuyers indirectly through KBHS Home Loans, LLC (“KBHS”), an unconsolidated joint venture we formed with Stearns Ventures, LLC (“Stearns”). We and Stearns each have a 50.0% ownership interest, with Stearns providing management oversight of KBHS’ operations. The financial services reporting segment is separately reported in our consolidated financial statements. Our reporting segments follow the same accounting policies used for our consolidated financial statements. The results of each reporting segment are not necessarily indicative of the results that would have occurred had the segment been an independent, stand-alone entity during the periods presented, nor are they indicative of the results to be expected in future periods. The following tables present financial information relating to our homebuilding reporting segments (in thousands): Three Months Ended August 31, Nine Months Ended August 31, 2019 2018 2019 2018 Revenues: West Coast $ 497,654 $ 571,880 $ 1,194,728 $ 1,455,272 Southwest 180,238 196,056 522,721 528,872 Central 326,058 327,888 874,730 885,875 Southeast 152,905 126,051 392,135 319,734 Total $ 1,156,855 $ 1,221,875 $ 2,984,314 $ 3,189,753 Pretax income (loss): West Coast $ 43,775 $ 72,996 $ 86,480 $ 156,472 Southwest 26,366 31,065 76,433 66,619 Central 34,417 32,294 80,199 80,464 Southeast 5,272 (702 ) 5,316 1,405 Corporate and other (24,538 ) (26,089 ) (78,929 ) (76,081 ) Total $ 85,292 $ 109,564 $ 169,499 $ 228,879 Inventory impairment and land option contract abandonment charges: West Coast $ 5,065 $ 4,409 $ 12,148 $ 15,697 Southwest 126 432 408 432 Central — 1,131 366 1,354 Southeast 60 2,442 221 2,442 Total $ 5,251 $ 8,414 $ 13,143 $ 19,925 August 31, November 30, Assets: West Coast $ 2,177,265 $ 1,880,516 Southwest 695,741 631,509 Central 1,048,958 1,017,490 Southeast 448,391 463,224 Corporate and other 632,904 1,068,452 Total $ 5,003,259 $ 5,061,191 |
Financial Services
Financial Services | 9 Months Ended |
Aug. 31, 2019 | |
Segment Reporting [Abstract] | |
Financial Services | Financial Services The following tables present financial information relating to our financial services reporting segment (in thousands): Three Months Ended August 31, Nine Months Ended August 31, 2019 2018 2019 2018 Revenues Insurance commissions $ 2,224 $ 1,928 $ 5,342 $ 4,743 Title services 1,707 1,544 4,410 3,897 Interest income — — 6 — Total 3,931 3,472 9,758 8,640 Three Months Ended August 31, Nine Months Ended August 31, 2019 2018 2019 2018 Expenses General and administrative (1,003 ) (945 ) (3,067 ) (2,855 ) Operating income 2,928 2,527 6,691 5,785 Equity in income of unconsolidated joint ventures 3,716 2,585 7,018 4,365 Pretax income $ 6,644 $ 5,112 $ 13,709 $ 10,150 August 31, November 30, Assets Cash and cash equivalents $ 1,043 $ 760 Receivables 1,435 2,885 Investments in unconsolidated joint ventures 9,162 8,594 Other assets (a) 20,271 141 Total assets $ 31,911 $ 12,380 Liabilities Accounts payable and accrued expenses $ 1,783 $ 1,495 Total liabilities $ 1,783 $ 1,495 (a) Other assets at August 31, 2019 included $20.1 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 – Basis of Presentation and Significant Accounting Policies. On July 9, 2019, the parent company of Stearns, our partner in KBHS, filed a voluntary bankruptcy petition in the United States Bankruptcy Court, Southern District of New York, with Stearns included as a debtor in the case. KBHS is not included in the filing and there are no known plans for it to be included as a debtor. The debtors obtained authority from the court to continue Stearns’ business with respect to KBHS in the ordinary course. On September 11, 2019, Stearns’ parent company announced it will seek confirmation of a modified plan of reorganization supported by its largest noteholders at a hearing scheduled for October 24, 2019. We are monitoring the status of the bankruptcy proceedings. We believe KBHS is, at present, financially and operationally able to continue to provide mortgage banking services to our homebuyers. However, the ultimate resolution and timing of the bankruptcy process is uncertain and could be disruptive to KBHS’ operations, which may, in turn, adversely impact the number of homes we deliver in future periods. We are currently unable to estimate the effect, if any, this event may have on our consolidated financial statements. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Aug. 31, 2019 | |
Earnings Per Share, Basic and Diluted [Abstract] | |
Earnings Per Share | Earnings Per Share Basic and diluted earnings per share were calculated as follows (in thousands, except per share amounts): Three Months Ended August 31, Nine Months Ended August 31, 2019 2018 2019 2018 Numerator: Net income $ 68,136 $ 87,476 $ 145,608 $ 73,529 Less: Distributed earnings allocated to nonvested restricted stock (48 ) (12 ) (76 ) (37 ) Less: Undistributed earnings allocated to nonvested restricted stock (365 ) (472 ) (825 ) (388 ) Numerator for basic earnings per share 67,723 86,992 144,707 73,104 Three Months Ended August 31, Nine Months Ended August 31, 2019 2018 2019 2018 Effect of dilutive securities: Interest expense and amortization of debt issuance costs associated with convertible senior notes, net of taxes — 796 541 2,389 Add: Undistributed earnings allocated to nonvested restricted stock 365 472 825 388 Less: Undistributed earnings reallocated to nonvested restricted stock (354 ) (416 ) (769 ) (335 ) Numerator for diluted earnings per share $ 67,734 $ 87,844 $ 145,304 $ 75,546 Denominator: Weighted average shares outstanding — basic 88,262 87,951 87,630 87,565 Effect of dilutive securities: Share-based payments 4,580 4,719 4,501 5,246 Convertible senior notes — 8,402 1,901 8,402 Weighted average shares outstanding — diluted 92,842 101,072 94,032 101,213 Basic earnings per share $ .77 $ .99 $ 1.65 $ .83 Diluted earnings per share $ .73 $ .87 $ 1.55 $ .75 We compute earnings per share using the two-class method, which is an allocation of earnings between the holders of common stock and a company’s participating security holders. Our outstanding nonvested shares of restricted stock contain non-forfeitable rights to dividends and, therefore, are considered participating securities for purposes of computing earnings per share pursuant to the two-class method. We had no other participating securities at August 31, 2019 or 2018. For the three-month and nine-month periods ended August 31, 2019 , outstanding stock options to purchase .6 million shares of our common stock were excluded from the diluted earnings per share calculation because the effect of their inclusion would be antidilutive. The diluted earnings per share calculation for the nine months ended August 31, 2019 included the dilutive effect of the $230.0 million in aggregate principal amount of our 1.375% convertible senior notes due 2019 (“1.375% Convertible Senior Notes due 2019”) based on the number of days they were outstanding during the period. We repaid the notes at their February 1, 2019 maturity. For the three-month and nine-month periods ended August 31, 2018 , outstanding stock options to purchase 1.6 million |
Receivables
Receivables | 9 Months Ended |
Aug. 31, 2019 | |
Receivables [Abstract] | |
Receivables | Receivables Receivables consisted of the following (in thousands): August 31, November 30, Due from utility companies, improvement districts and municipalities $ 130,339 $ 113,434 Recoveries related to self-insurance and other legal claims 115,904 138,261 Refundable deposits and bonds 11,453 14,115 Recoveries related to warranty and other claims 2,315 4,750 Other 40,793 33,775 Subtotal 300,804 304,335 Allowance for doubtful accounts (9,312 ) (11,505 ) Total $ 291,492 $ 292,830 |
Inventories
Inventories | 9 Months Ended |
Aug. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consisted of the following (in thousands): August 31, November 30, Homes under construction $ 1,587,617 $ 1,125,152 Land under development 2,150,088 2,219,936 Land held for future development or sale (a) 181,371 237,751 Total $ 3,919,076 $ 3,582,839 (a) Land held for sale totaled $27.8 million at August 31, 2019 and $9.8 million at November 30, 2018 . Interest is capitalized to inventories while the related communities or land parcels are being actively developed and until homes are completed or the land is available for immediate sale. Capitalized interest is amortized to construction and land costs as the related inventories are delivered to homebuyers or land buyers (as applicable). For land held for future development or sale, applicable interest is expensed as incurred. Our interest costs were as follows (in thousands): Three Months Ended August 31, Nine Months Ended August 31, 2019 2018 2019 2018 Capitalized interest at beginning of period $ 212,160 $ 247,276 $ 209,129 $ 262,191 Interest incurred 36,024 35,228 107,356 115,096 Interest amortized to construction and land costs (a) (38,558 ) (53,288 ) (106,859 ) (148,071 ) Capitalized interest at end of period (b) $ 209,626 $ 229,216 $ 209,626 $ 229,216 (a) Interest amortized to construction and land costs for the three months ended August 31, 2018 included $.3 million related to land sales during the period. Interest amortized to construction and land costs for the nine months ended August 31, 2019 and 2018 included $.6 million and $4.3 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. |
Inventory Impairments and Land
Inventory Impairments and Land Option Contract Abandonments | 9 Months Ended |
Aug. 31, 2019 | |
Inventory Impairments and Land Option Contract Abandonments [Abstract] | |
Inventory Impairments and Land Option Contract Abandonments | Inventory Impairments and Land Option Contract Abandonments Each community or land parcel in our owned inventory is assessed on a quarterly basis to determine if indicators of potential impairment exist. We record an inventory impairment charge on a community or land parcel that is active or held for future development when indicators of potential impairment exist and the carrying value of the real estate asset is greater than the undiscounted future net cash flows the asset is expected to generate. These real estate assets are written down to fair value, which is primarily determined based on the estimated future net cash flows discounted for inherent risk associated with each such asset, or other valuation techniques. We record an inventory impairment charge on land held for sale when the carrying value of a land parcel is greater than its fair value. These real estate assets are written down to fair value, less associated costs to sell. The estimated fair values of such assets are generally based on bona fide letters of intent from outside parties, executed sales contracts, broker quotes or similar information. We evaluated 31 and 47 communities or land parcels for recoverability during the nine months ended August 31, 2019 and 2018, respectively. The carrying value of those communities or land parcels evaluated during the nine months ended August 31, 2019 and 2018 was $219.2 million and $303.5 million , respectively. Some of the communities or land parcels evaluated during the nine months ended August 31, 2019 and 2018 were evaluated in more than one quarterly period. Communities or land parcels evaluated for recoverability in more than one quarterly period were counted only once for each nine-month period. In addition, the communities or land parcels evaluated during the nine months ended August 31, 2019 and 2018 included certain communities or land parcels previously held for future development that were reactivated as part of our efforts to improve asset efficiency under our Returns-Focused Growth Plan. Based on the results of our evaluations, we recognized inventory impairment charges of $4.8 million for the three months ended August 31, 2019 and $11.5 million for the nine months ended August 31, 2019 . For the three months and nine months ended August 31, 2018 , we recognized inventory impairment charges of $7.1 million and $17.8 million , respectively. The impairment charges for the three-month and nine-month periods ended August 31, 2019 and 2018 reflected our decisions to make changes in our operational strategies aimed at more quickly monetizing our investment in certain communities by accelerating the overall pace for selling, building and delivering homes on land previously held for future development. The following table summarizes significant quantitative unobservable inputs we utilized in our fair value measurements with respect to the impaired communities written down to fair value during the periods presented: Three Months Ended August 31, Nine Months Ended August 31, Unobservable Input (a) 2019 2018 2019 2018 Average selling price $325,300 - $957,200 $306,400 - $407,300 $315,000 - $1,045,400 $306,400 - $774,100 Deliveries per month 2 - 4 2 - 6 1 - 4 2 - 6 Discount rate 17% 17% - 18% 17% 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. As of August 31, 2019 , the aggregate carrying value of our inventory that had been impacted by inventory impairment charges was $134.7 million , representing 21 communities and various other land parcels. As of November 30, 2018 , the aggregate carrying value of our inventory that had been impacted by inventory impairment charges was $156.1 million , representing 22 communities and various other land parcels. Our inventory controlled under land option contracts and other similar contracts is assessed on a quarterly basis to determine whether it continues to meet our investment return standards. When a decision is made not to exercise certain land option contracts and other similar contracts due to market conditions and/or changes in our marketing strategy, we write off the related inventory costs, including non-refundable deposits and unrecoverable pre-acquisition costs. Based on the results of our assessments, we recognized land option contract abandonment charges of $.4 million for the three months ended August 31, 2019 and $1.7 million for the nine months ended August 31, 2019 . For the three-month and nine-month periods ended August 31, 2018 , we recognized land option contract abandonment charges of $1.3 million and $2.1 million , respectively. Due to the judgment and assumptions applied in our inventory impairment and land option contract abandonment assessment processes, particularly as to land held for future development, it is possible that actual results could differ substantially from those estimated. |
Variable Interest Entities
Variable Interest Entities | 9 Months Ended |
Aug. 31, 2019 | |
Variable Interest Entities [Abstract] | |
Variable Interest Entities | Variable Interest Entities Unconsolidated Joint Ventures. We participate in joint ventures from time to time that conduct land acquisition, land development and/or other homebuilding activities in various markets where our homebuilding operations are located. Our investments in these joint ventures may create a variable interest in a variable interest entity (“VIE”), depending on the contractual terms of the arrangement. We analyze our joint ventures under the variable interest model to determine whether they are VIEs and, if so, whether we are the primary beneficiary. Based on our analyses, we determined that one of our joint ventures at August 31, 2019 and November 30, 2018 was a VIE, but we were not the primary beneficiary of the VIE. All of our joint ventures at August 31, 2019 and November 30, 2018 were unconsolidated and accounted for under the equity method because we did not have a controlling financial interest. Land Option Contracts and Other Similar Contracts. In the ordinary course of our business, we enter into land option contracts and other similar contracts with third parties and unconsolidated entities to acquire rights to land for the construction of homes. Under these contracts, we typically make a specified option payment or earnest money deposit in consideration for the right to purchase land in the future, usually at a predetermined price. We analyze each of our land option contracts and other similar contracts under the variable interest model to determine whether the land seller is a VIE and, if so, whether we are the primary beneficiary. Although we do not have legal title to the underlying land, we are required to consolidate a VIE if we are the primary beneficiary. As a result of our analyses, we determined that as of August 31, 2019 and November 30, 2018 , we were not the primary beneficiary of any VIEs from which we have acquired rights to land under land option contracts and other similar contracts. We perform ongoing reassessments of whether we are the primary beneficiary of a VIE. The following table presents a summary of our interests in land option contracts and other similar contracts (in thousands): August 31, 2019 November 30, 2018 Cash Deposits Aggregate Purchase Price Cash Deposits Aggregate Purchase Price Unconsolidated VIEs $ 37,720 $ 932,770 $ 26,542 $ 784,334 Other land option contracts and other similar contracts 32,017 532,159 27,288 586,904 Total $ 69,737 $ 1,464,929 $ 53,830 $ 1,371,238 In addition to the cash deposits presented in the table above, our exposure to loss related to our land option contracts and other similar contracts with third parties and unconsolidated entities consisted of pre-acquisition costs of $30.8 million at August 31, 2019 and $46.9 million at November 30, 2018 . These pre-acquisition costs and cash deposits were included in inventories in our consolidated balance sheets. For land option contracts and other similar contracts where the land seller entity is not required to be consolidated under the variable interest model, we consider whether such contracts should be accounted for as financing arrangements. Land option contracts and other similar contracts that may be considered financing arrangements include those we enter into with third-party land financiers or developers in conjunction with such third parties acquiring a specific land parcel(s) on our behalf, at our direction, and those with other landowners where we or our designee make improvements to the optioned land parcel(s) during the applicable option period. For these land option contracts and other similar contracts, we record the remaining purchase price of the associated land parcel(s) in inventories in our consolidated balance sheets with a corresponding financing obligation if we determine that we are effectively compelled to exercise the option to purchase the land parcel(s). As a result of our evaluations of land option contracts and other similar contracts for financing arrangements, we recorded inventories in our consolidated balance sheets, with a corresponding increase to accrued expenses and other liabilities, of $1.8 million at August 31, 2019 and $21.8 million at November 30, 2018 |
Investments in Unconsolidated J
Investments in Unconsolidated Joint Ventures | 9 Months Ended |
Aug. 31, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investments in Unconsolidated Joint Ventures | Investments in Unconsolidated Joint Ventures We have investments in unconsolidated joint ventures that conduct land acquisition, land development and/or other homebuilding activities in various markets where our homebuilding operations are located. We and our unconsolidated joint venture partners make initial and/or ongoing capital contributions to these unconsolidated joint ventures, typically on a pro rata basis, according to our respective equity interests. The obligations to make capital contributions are governed by each such unconsolidated joint venture’s respective operating agreement and related governing documents. For distributions we receive from these unconsolidated joint ventures, we have elected to use the cumulative earnings approach for our consolidated statements of cash flows. Under the cumulative earnings approach, distributions up to the amount of cumulative equity in earnings recognized are treated as returns on investment within operating cash flows and those in excess of that amount are treated as returns of investment within investing cash flows. The following table presents combined condensed information from the statements of operations of our unconsolidated joint ventures (in thousands): Three Months Ended August 31, Nine Months Ended August 31, 2019 2018 2019 2018 Revenues $ 5,729 $ 35,391 $ 21,707 $ 52,015 Construction and land costs (5,686 ) (22,211 ) (21,704 ) (38,866 ) Other expense, net (708 ) (226 ) (1,946 ) (2,209 ) Income (loss) $ (665 ) $ 12,954 $ (1,943 ) $ 10,940 The year-over-year decrease in combined revenues and income for three months and nine months ended August 31, 2019 mainly reflected the sale of land by an unconsolidated joint venture in Arizona, and contingent consideration (profit participation revenues) earned by an unconsolidated joint venture in California in the year-earlier periods. The following table presents combined condensed balance sheet information for our unconsolidated joint ventures (in thousands): August 31, November 30, Assets Cash $ 27,282 $ 18,567 Inventories 134,524 131,074 Other assets 969 530 Total assets $ 162,775 $ 150,171 Liabilities and equity Accounts payable and other liabilities $ 14,133 $ 11,374 Notes payable (a) 37,340 17,956 Equity 111,302 120,841 Total liabilities and equity $ 162,775 $ 150,171 (a) As of August 31, 2019 and November 30, 2018 , one of our unconsolidated joint ventures had a construction loan agreement with a third-party lender to finance its land development activities, with the outstanding debt secured by the underlying property and related project assets and non-recourse to us. All of the outstanding secured debt at August 31, 2019 is scheduled to mature in February 2020. None of our other unconsolidated joint ventures had outstanding debt at August 31, 2019 or November 30, 2018 . The following table presents additional information relating to our investments in unconsolidated joint ventures (dollars in thousands): August 31, November 30, Number of investments in unconsolidated joint ventures 6 6 Investments in unconsolidated joint ventures $ 57,168 $ 61,960 Number of unconsolidated joint venture lots controlled under land option contracts and other similar contracts 8 36 We and our partner in the unconsolidated joint venture that has the above-noted outstanding construction loan agreement at August 31, 2019 provide certain guarantees and indemnities to the lender, including a guaranty to complete the construction of improvements for the project; a guaranty against losses the lender suffers due to certain bad acts or failures to act by the unconsolidated joint venture or its partners; and an indemnity of the lender from environmental issues. Our actual responsibility under the foregoing guaranty and indemnity obligations is limited to our pro rata interest in the unconsolidated joint venture. We do not have a guaranty or any other obligation to repay or to support the value of the collateral underlying the outstanding secured debt. However, various financial and non-financial covenants apply with respect to the outstanding secured debt and the related guaranty and indemnity obligations, and a failure to comply with such covenants could result in a default and cause the lender to seek to enforce such guaranty and indemnity obligations, if and as may be applicable. As of August 31, 2019 , we were in compliance with the applicable terms of our relevant covenants with respect to the construction loan agreement. We do not believe that our existing exposure under our guaranty and indemnity obligations related to the outstanding secured debt is material to our consolidated financial statements. We are committed to purchase all 8 unconsolidated joint venture lots controlled under land option and other similar contracts at August 31, 2019 from one of our unconsolidated joint ventures. The purchase will be made in quarterly takedowns over the next year for an aggregate purchase price of $3.8 million under agreements that we entered into with the unconsolidated joint venture in 2016. |
Property and Equipment, Net Pro
Property and Equipment, Net Property and Equipment, Net | 9 Months Ended |
Aug. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | Property and Equipment, Net Property and equipment, net consisted of the following (in thousands): August 31, November 30, Computer software and equipment $ 25,580 $ 20,940 Model furnishings and sales office improvements (a) 76,805 — Leasehold improvements, office furniture and equipment (b) 15,790 23,491 Subtotal 118,175 44,431 Less accumulated depreciation (a) (54,056 ) (20,148 ) Total $ 64,119 $ 24,283 (a) The balance at August 31, 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 – Basis of Presentation and 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 will be recognized on a straight-line basis over a 10 |
Other Assets
Other Assets | 9 Months Ended |
Aug. 31, 2019 | |
Other Assets [Abstract] | |
Other Assets | Other Assets Other assets consisted of the following (in thousands): August 31, November 30, Cash surrender value of corporate-owned life insurance contracts $ 74,694 $ 73,721 Prepaid expenses and other 10,821 9,379 Total $ 85,515 $ 83,100 |
Accrued Expenses and Other Liab
Accrued Expenses and Other Liabilities | 9 Months Ended |
Aug. 31, 2019 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other Liabilities | Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consisted of the following (in thousands): August 31, November 30, Self-insurance and other litigation liabilities $ 258,727 $ 283,651 Employee compensation and related benefits 132,669 148,549 Warranty liability 86,172 82,490 Accrued interest payable 44,491 31,180 Customer deposits 26,823 19,491 Inventory-related obligations (a) 16,817 40,892 Real estate and business taxes 14,796 16,639 Other 48,673 43,376 Total $ 629,168 $ 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 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. |
Income Taxes
Income Taxes | 9 Months Ended |
Aug. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income Tax Expense. Our income tax expense and effective tax rates were as follows (dollars in thousands): Three Months Ended August 31, Nine Months Ended August 31, 2019 2018 2019 2018 Income tax expense $ 23,800 $ 27,200 $ 37,600 $ 165,500 Effective tax rate 25.9 % 23.7 % 20.5 % 69.2 % Our income tax expense and effective tax rate for the three months ended August 31, 2018 , included the favorable impacts of $3.0 million of federal energy tax credits that we earned from building energy-efficient homes and $.6 million of excess tax benefits related to stock-based compensation. There were no such impacts included in our income tax expense for the three months ended August 31, 2019. For the nine months ended August 31, 2019 , our income tax expense and effective tax rate included the favorable impacts of $4.3 million of federal energy tax credits, a $3.3 million reversal of a deferred tax asset valuation allowance and $2.9 million of excess tax benefits related to stock-based compensation. Our income tax expense and effective tax rate for the nine months ended August 31, 2018 included a non-cash charge of $111.2 million for the estimated impacts of the TCJA. Of the total charge, $107.9 million related to the accounting re-measurement of our deferred tax assets based on the reduction in the federal corporate income tax rate from 35% to 21%, effective January 1, 2018, under the TCJA. The remaining $3.3 million was due to our establishing a federal deferred tax asset valuation allowance for the sequestration of refundable alternative minimum tax (“AMT”) credits. Our income tax expense and effective tax rate for the nine months ended August 31, 2018 also reflected the favorable impacts of $7.2 million of federal energy tax credits and $3.0 million of excess tax benefits related to stock-based compensation. Deferred Tax Asset Valuation Allowance. We evaluate our deferred tax assets quarterly to determine if adjustments to our valuation allowance are required based on the consideration of all available positive and negative evidence using a “more likely than not” standard with respect to whether deferred tax assets will be realized. Our evaluation considers, among other factors, our historical operating results, our expectation of future profitability, the duration of the applicable statutory carryforward periods, and conditions in the housing market and the broader economy. The ultimate realization of our deferred tax assets depends primarily on our ability to generate future taxable income during the periods in which the related deferred tax assets become deductible. The value of our deferred tax assets depends on applicable income tax rates. Our deferred tax assets of $422.3 million as of August 31, 2019 and $465.4 million as of November 30, 2018 were partly offset by valuation allowances of $20.2 million and $23.6 million , respectively. The decrease in the valuation allowance during the nine months ended August 31, 2019 primarily reflected our reversal of the above-mentioned $3.3 million federal deferred tax asset valuation allowance due to the Internal Revenue Service’s announcement in January 2019 that refundable AMT credits will not be subject to sequestration for taxable years beginning after December 31, 2017. The deferred tax asset valuation allowances as of August 31, 2019 and November 30, 2018 were primarily related to certain state net operating losses (“NOLs”) that had not met the “more likely than not” realization standard at those dates. Based on our evaluation of our deferred tax assets as of August 31, 2019 , we determined that most of our deferred tax assets would be realized. Therefore, other than the $3.3 million reversal discussed above, no significant adjustments to our deferred tax valuation allowance were needed for the nine months ended August 31, 2019 . We will continue to evaluate both the positive and negative evidence on a quarterly basis in determining the need for a valuation allowance with respect to our deferred tax assets. The accounting for deferred tax assets is based upon estimates of future results. Changes in positive and negative evidence, including differences between estimated and actual results, could result in changes in the valuation of our deferred tax assets that could have a material impact on our consolidated financial statements. Changes in existing federal and state tax laws and corporate income tax rates could also affect actual tax results and the realization of deferred tax assets over time. Unrecognized Tax Benefits. As of August 31, 2019 and November 30, 2018 , we had no |
Notes Payable
Notes Payable | 9 Months Ended |
Aug. 31, 2019 | |
Debt Disclosure [Abstract] | |
Notes Payable | Notes Payable Notes payable consisted of the following (in thousands): August 31, November 30, Unsecured revolving credit facility $ 50,000 $ — Mortgages and land contracts due to land sellers and other loans 16,856 40,038 4.75% Senior notes due May 15, 2019 — 399,483 8.00% Senior notes due March 15, 2020 349,044 347,790 7.00% Senior notes due December 15, 2021 447,957 447,359 7.50% Senior notes due September 15, 2022 348,129 347,731 7.625% Senior notes due May 15, 2023 351,860 248,074 6.875% Senior notes due June 15, 2027 296,289 — 1.375% Convertible senior notes due February 1, 2019 — 229,788 Total $ 1,860,135 $ 2,060,263 The carrying amounts of our senior notes listed above are net of unamortized debt issuance costs, premiums and discounts, which totaled $6.7 million at August 31, 2019 and $9.8 million at November 30, 2018 . Unsecured Revolving Credit Facility. We have a $500.0 million unsecured revolving credit facility with various banks (“Credit Facility”) that will mature on July 27, 2021 . The Credit Facility contains an uncommitted accordion feature under which the aggregate principal amount of available loans can be increased to a maximum of $600.0 million under certain conditions, including obtaining additional bank commitments. The Credit Facility also contains a sublimit of $250.0 million for the issuance of letters of credit. Under the terms of the Credit Facility, we are required, among other things, to maintain compliance with various covenants, including financial covenants relating to our consolidated tangible net worth, Leverage Ratio, and either a consolidated interest coverage ratio (“Interest Coverage Ratio”) or minimum level of liquidity, each as defined therein. The amount of the Credit Facility available for cash borrowings or the issuance of letters of credit depends on the total cash borrowings and letters of credit outstanding under the Credit Facility and the maximum available amount under the terms of the Credit Facility. As of August 31, 2019 , we had $50.0 million of cash borrowings and $23.0 million of letters of credit outstanding under the Credit Facility. Therefore, as of August 31, 2019 , we had $427.0 million available for cash borrowings under the Credit Facility, with up to $227.0 million of that amount available for the issuance of letters of credit. Letter of Credit Facilities. On February 13, 2019, we entered into a new unsecured letter of credit agreement with a financial institution (“New LOC Facility”). Under the New LOC Facility, which expires on February 13, 2022, we may issue up to $50.0 million of letters of credit. We maintain the New LOC Facility and a cash-collateralized letter of credit facility (together, the “LOC Facilities”) to obtain letters of credit from time to time in the ordinary course of operating our business. As of August 31, 2019 , we had $15.3 million of letters of credit outstanding under the LOC Facilities, all of which were under the New LOC Facility. We had no letters of credit outstanding under the LOC Facilities at November 30, 2018 . Mortgages and Land Contracts Due to Land Sellers and Other Loans. As of August 31, 2019 , inventories having a carrying value of $41.0 million were pledged to collateralize mortgages and land contracts due to land sellers and other loans. Senior Notes. On February 1, 2019, we repaid the entire $230.0 million in aggregate principal amount of our 1.375% Convertible Senior Notes due 2019 at their maturity. On February 20, 2019, we completed concurrent public offerings of $300.0 million in aggregate principal amount of 6.875% senior notes due 2027 (“6.875% Senior Notes due 2027”) at 100.000% of their aggregate principal amount, and an additional $100.0 million in aggregate principal amount of our existing series of 7.625% senior notes due 2023 (“7.625% Senior Notes due 2023”) at 105.250% of their aggregate principal amount plus accrued interest from November 15, 2018 (the last date on which interest was paid on the existing 2023 senior notes) to the date of delivery. Net proceeds from these offerings totaled $400.0 million , after deducting the underwriting discount and our expenses relating to the offerings. On March 8, 2019, we applied the net proceeds from the concurrent public offerings toward the optional redemption of the entire $400.0 million in aggregate principal amount of our 4.75% senior notes due 2019 (“4.75% Senior Notes due 2019”) before their May 15, 2019 maturity date. All of our senior notes outstanding at August 31, 2019 and November 30, 2018 represent senior unsecured obligations that are guaranteed by certain of our subsidiaries that guarantee our obligations under the Credit Facility and rank equally in right of payment with all of our other unsecured and unsubordinated indebtedness. Interest on each of these senior notes is payable semi-annually. The indenture governing our senior notes does not contain any financial covenants. Subject to specified exceptions, the indenture contains certain restrictive covenants that, among other things, limit our ability to incur secured indebtedness, or engage in sale and leaseback transactions involving property above a certain specified value. In addition, the indenture contains certain limitations related to mergers, consolidations and sales of assets. As of August 31, 2019 , we were in compliance with the applicable terms of all our covenants and other requirements under the Credit Facility, the senior notes, the indenture, and the mortgages and land contracts due to land sellers and other loans. Our ability to access the Credit Facility for cash borrowings and letters of credit and our ability to secure future debt financing depend, in part, on our ability to remain in such compliance. As of August 31, 2019 , principal payments on senior notes, mortgages and land contracts due to land sellers and other loans are due as follows: 2019 – $7.9 million ; 2020 – $359.0 million ; 2021 – $0 ; 2022 – $800.0 million ; 2023 – $350.0 million ; and thereafter – $300.0 million . |
Fair Value Disclosures
Fair Value Disclosures | 9 Months Ended |
Aug. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Disclosures | Fair Value Disclosures Fair value measurements of assets and liabilities are categorized based on the following hierarchy: Level 1 Fair value determined based on quoted prices in active markets for identical assets or liabilities. Level 2 Fair value determined using significant observable inputs, such as quoted prices for similar assets or liabilities or quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, or inputs that are derived principally from or corroborated by observable market data, by correlation or other means. Level 3 Fair value determined using significant unobservable inputs, such as pricing models, discounted cash flows, or similar techniques. Fair value measurements are used for inventories on a nonrecurring basis when events and circumstances indicate that their carrying value is not recoverable. The following table presents the fair value hierarchy, pre-impairment value, inventory impairment charges and fair value for our assets measured on a nonrecurring basis for the nine months ended August 31, 2019 and the year ended November 30, 2018 (in thousands): August 31, 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 Level 3 $ 31,673 $ (11,482 ) $ 20,191 $ 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 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. The fair values for inventories that were determined using Level 3 inputs were based on the estimated future net cash flows discounted for inherent risk associated with each underlying asset. The following table presents the fair value hierarchy, carrying values and estimated fair values of our financial instruments, except those for which the carrying values approximate fair values (in thousands): August 31, 2019 November 30, 2018 Fair Value Hierarchy Carrying Value (a) Estimated Fair Value Carrying Value (a) Estimated Fair Value Financial Liabilities: Senior notes Level 2 $ 1,793,279 $ 1,967,313 $ 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. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Aug. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Commitments and contingencies include typical obligations of homebuilders for the completion of contracts and those incurred in the ordinary course of business. Warranty . We provide a limited warranty on all of our homes. The specific terms and conditions of our limited warranty program vary depending upon the markets in which we do business. We generally provide a structural warranty of 10 years , a warranty on electrical, heating, cooling, plumbing and certain other building systems each varying from two years to five years based on geographic market and state law, and a warranty of one year for other components of the home. Our limited warranty program is ordinarily how we respond to and account for homeowners’ requests to local division offices seeking repairs of certain conditions or defects, including claims where we could have liability under applicable state statutes or tort law for a defective condition in or damages to a home. Our warranty liability covers our costs of repairs associated with homeowner claims made under our limited warranty program. These claims are generally made directly by a homeowner and involve their individual home. We estimate the costs that may be incurred under each limited warranty and record a liability in the amount of such costs at the time the revenue associated with the sale of each home is recognized. Our primary assumption in estimating the amounts we accrue for warranty costs is that historical claims experience is a strong indicator of future claims experience. Factors that affect our warranty liability include the number of homes delivered, historical and anticipated rates of warranty claims, and cost per claim. We periodically assess the adequacy of our accrued warranty liability, which is included in accrued expenses and other liabilities in our consolidated balance sheets, and adjust the amount as necessary based on our assessment. Our assessment includes the review of our actual warranty costs incurred to identify trends and changes in our warranty claims experience, and considers our home construction quality and customer service initiatives and outside events. While we believe the warranty liability currently reflected in our consolidated balance sheets to be adequate, unanticipated changes or developments in the legal environment, local weather, land or environmental conditions, quality of materials or methods used in the construction of homes or customer service practices and/or our warranty claims experience could have a significant impact on our actual warranty costs in future periods and such amounts could differ significantly from our current estimates. The changes in our warranty liability were as follows (in thousands): Three Months Ended August 31, Nine Months Ended August 31, 2019 2018 2019 2018 Balance at beginning of period $ 83,030 $ 76,404 $ 82,490 $ 69,798 Warranties issued 9,067 9,590 23,500 27,243 Payments (5,925 ) (6,023 ) (17,018 ) (17,070 ) Adjustments — — (2,800 ) — Balance at end of period $ 86,172 $ 79,971 $ 86,172 $ 79,971 Guarantees. In the normal course of our business, we issue certain representations, warranties and guarantees related to our home sales and land sales. Based on historical experience, we do not believe any potential liability with respect to these representations, warranties or guarantees would be material to our consolidated financial statements. Self-Insurance. We maintain, and require the majority of our independent subcontractors to maintain, general liability insurance (including construction defect and bodily injury coverage) and workers’ compensation insurance. These insurance policies protect us against a portion of our risk of loss from claims related to our homebuilding activities, subject to certain self-insured retentions, deductibles and other coverage limits. We also maintain certain other insurance policies. In Arizona, California, Colorado and Nevada, our subcontractors’ general liability insurance primarily takes the form of a wrap-up policy under a program where eligible independent subcontractors are enrolled as insureds on each community. Enrolled subcontractors contribute toward the cost of the insurance and agree to pay a contractual amount in the future if there is a claim related to their work. To the extent provided under the wrap-up program, we absorb the enrolled subcontractors’ general liability associated with the work performed on our homes within the applicable community as part of our overall general liability insurance and our self-insurance. We self-insure a portion of our overall risk through the use of a captive insurance subsidiary, which provides coverage for our exposure to construction defect, bodily injury and property damage claims and related litigation or regulatory actions, up to certain limits. Our self-insurance liability generally covers the costs of settlements and/or repairs, if any, as well as our costs to defend and resolve the following types of claims: • 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. Our self-insurance liability at each reporting date represents the estimated costs of reported claims, claims incurred but not yet reported, and claim adjustment expenses. The amount of our self-insurance liability is based on an analysis performed by a third-party actuary that uses our historical claim and expense data, as well as industry data to estimate these overall costs. Key assumptions used in developing these estimates include claim frequencies, severities and resolution patterns, which can occur over an extended period of time. 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 the ultimate resolution of such claim; uncertainties regarding such claims relative to our markets and the types of product we build; and legal or regulatory actions and/or interpretations, among other factors. Due to the degree of judgment involved and the potential for variability in these underlying assumptions, our actual future costs could differ from those estimated. In addition, changes in the frequency and severity of reported claims and the estimates to resolve claims can impact the trends and assumptions used in the actuarial analysis, which could be material to our consolidated financial statements. Though state regulations vary, construction defect claims are reported and resolved over a long period of time, which can extend for 10 years or more. As a result, the majority of the estimated self-insurance liability based on the actuarial analysis relates to claims incurred but not yet reported. Therefore, adjustments related to individual existing claims generally do not significantly impact the overall estimated liability. Adjustments to our liabilities related to homes delivered in prior years are recorded in the period in which a change in our estimate occurs. Our self-insurance liability is presented on a gross basis without consideration of insurance recoveries and amounts we have paid on behalf of and expect to recover from other parties, if any. Estimated probable insurance and other recoveries of $45.5 million and $56.9 million are included in receivables in our consolidated balance sheets at August 31, 2019 and November 30, 2018 , respectively. These self-insurance recoveries are principally based on actuarially determined amounts and depend on various factors, including, among other things, the above-described claim cost estimates, our insurance policy coverage limits for the applicable policy year(s), historical third-party recovery rates, insurance industry practices, the regulatory environment and legal precedent, and are subject to a high degree of variability from period to period. Because of the inherent uncertainty and variability in these assumptions, our actual insurance recoveries could differ significantly from amounts currently estimated. The changes in our self-insurance liability were as follows (in thousands): Three Months Ended August 31, Nine Months Ended August 31, 2019 2018 2019 2018 Balance at beginning of period $ 170,978 $ 176,715 $ 176,841 $ 177,695 Self-insurance expense (a) 4,802 5,554 12,844 14,264 Payments (b) (5,162 ) (3,496 ) (19,067 ) (13,186 ) Balance at end of period $ 170,618 $ 178,773 $ 170,618 $ 178,773 (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. For most of our claims, there is no interaction between our warranty liability and self-insurance liability. Typically, if a matter is identified at its outset as either a warranty or self-insurance claim, it remains as such through its resolution. However, there can be instances of interaction between the liabilities, such as where individual homeowners in a community separately request warranty repairs to their homes to address a similar condition or issue and subsequently join together to initiate, or potentially initiate, a legal process with respect to that condition or issue and/or the repair work we have undertaken. In these instances, the claims and related repair work generally are initially covered by our warranty liability, and the costs associated with resolving the legal matter (including any additional repair work) are covered by our self-insurance liability. The payments we make in connection with claims and related repair work, whether covered within our warranty liability and/or our self-insurance liability, may be recovered from our insurers to the extent such payments exceed the self-insured retentions or deductibles under our general liability insurance policies. Also, in certain instances, in the course of resolving a claim, we pay amounts in advance of and/or on behalf of a subcontractor(s) or their insurer(s) and believe we will be reimbursed for such payments. Estimates of all such amounts, if any, are recorded as receivables in our consolidated balance sheets when any such recovery is considered probable. Such receivables associated with our warranty and other claims totaled $2.3 million at August 31, 2019 and $4.8 million at November 30, 2018 . We believe the collection of these receivables is probable based on our history of collections for similar claims. Northern California Claims. In the 2017 third quarter, we received claims from a homeowners association alleging approximately $100.0 million of damages from purported construction defects at a completed townhome community in Northern California, which claims increased to $142.0 million in December 2018. In September 2018, a binding arbitration proceeding on this matter was scheduled to begin on July 1, 2019. On May 24, 2019, we reached a settlement with the homeowners association on their claims that was within our previous accrual for this matter and paid in August 2019. Florida Chapter 558 Actions (Individual and Homeowner Association Claims) . We and certain of our subcontractors have received a growing number of claims from attorneys on behalf of individual owners of our homes and/or homeowners’ associations that allege, pursuant to Chapter 558 of the Florida Statutes, various construction defects, with most relating to stucco and water-intrusion issues. The claims primarily involve homes in our Jacksonville, Orlando, and Tampa operations. Under Chapter 558, homeowners must serve written notice of a construction defect(s) and provide the served construction and/or design contractor(s) with an opportunity to respond to the noticed issue(s) before they can file a lawsuit. Although we have resolved many of these claims without litigation, and a number of others have been resolved with applicable subcontractors or their insurers covering the related costs, as of August 31, 2019 , we had approximately 615 outstanding noticed claims, and some are scheduled for trial over the next few quarters and beyond. In addition, some of our subcontractors’ insurers in some of these cases have informed us of their inability to continue to pay claims-related costs. At August 31, 2019 , we had an accrual for our estimated probable loss for these matters and a receivable for estimated probable insurance recoveries. While it is reasonably possible that our loss could exceed the amount accrued and our recoveries could be less than the amount recorded, at this time, we are unable to estimate the total amount of the loss in excess of the accrued amount and/or associated with a shortfall in the recoveries that is reasonably possible. Performance Bonds and Letters of Credit . We are often required to provide to various municipalities and other government agencies performance bonds and/or letters of credit to secure the completion of our projects and/or in support of obligations to build community improvements such as roads, sewers, water systems and other utilities, and to support similar development activities by certain of our unconsolidated joint ventures. At August 31, 2019 , we had $795.9 million of performance bonds and $38.3 million of letters of credit outstanding. At November 30, 2018 , we had $689.3 million of performance bonds and $28.0 million of letters of credit outstanding. If any such performance bonds or letters of credit are called, we would be obligated to reimburse the issuer of the performance bond or letter of credit. We do not believe that a material amount of any currently outstanding performance bonds or letters of credit will be called. Performance bonds do not have stated expiration dates. Rather, we are released from the performance bonds as the underlying performance is completed. The expiration dates of some letters of credit issued in connection with community improvements coincide with the expected completion dates of the related projects or obligations. Most letters of credit, however, are issued with an initial term of one year and are typically extended on a year-to-year basis until the related performance obligations are completed. Land Option Contracts and Other Similar Contracts . In the ordinary course of our business, we enter into land option contracts and other similar contracts to acquire rights to land for the construction of homes. At August 31, 2019 , we had total cash deposits of $69.7 million to purchase land having an aggregate purchase price of $1.46 billion |
Legal Matters
Legal Matters | 9 Months Ended |
Aug. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Matters | Legal Matters We are involved in litigation and regulatory proceedings incidental to our business that are in various procedural stages. We believe that the accruals we have recorded for probable and reasonably estimable losses with respect to these proceedings are adequate and that, as of August 31, 2019 |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Aug. 31, 2019 | |
Equity [Abstract] | |
Stockholders’ Equity | Stockholders’ Equity A summary of changes in stockholders’ equity is presented below (in thousands): Three Months Ended August 31, 2019 and 2018 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 May 31, 2019 120,350 (7,860 ) (24,264 ) $ 120,350 $ 775,693 $ 1,981,795 $ (9,565 ) $ (85,246 ) $ (587,817 ) $ 2,195,210 Net income — — — — — 68,136 — — — 68,136 Dividends on common stock — — — — — (7,897 ) — — — (7,897 ) Employee stock options/other 173 — — 173 2,094 — — — — 2,267 Stock-based compensation — — — — 4,513 — — — — 4,513 Balance at August 31, 2019 120,523 (7,860 ) (24,264 ) $ 120,523 $ 782,300 $ 2,042,034 $ (9,565 ) $ (85,246 ) $ (587,817 ) $ 2,262,229 Balance at May 31, 2018 118,397 (8,460 ) (22,248 ) $ 118,397 $ 736,047 $ 1,717,248 $ (16,924 ) $ (91,760 ) $ (548,365 ) $ 1,914,643 Net income — — — — — 87,476 — — — 87,476 Dividends on common stock — — — — — (2,186 ) — — — (2,186 ) Employee stock options/other 652 — — 652 12,010 — — — — 12,662 Stock awards — — 47 — (1,157 ) — — — 1,157 — Stock-based compensation — — — — 3,354 — — — — 3,354 Balance at August 31, 2018 119,049 (8,460 ) (22,201 ) $ 119,049 $ 750,254 $ 1,802,538 $ (16,924 ) $ (91,760 ) $ (547,208 ) $ 2,015,949 Nine Months Ended August 31, 2019 and 2018 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, 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 — — — — — 145,608 — — — 145,608 Dividends on common stock — — — — — (12,352 ) — — — (12,352 ) Employee stock options/other 1,271 — — 1,271 17,458 — — — — 18,729 Stock awards 56 297 (4 ) 56 (3,207 ) — — 3,226 (75 ) — Stock-based compensation — — — — 14,479 — — — — 14,479 Tax payments associated with stock-based compensation awards — — (147 ) — — — — — (3,345 ) (3,345 ) Balance at August 31, 2019 120,523 (7,860 ) (24,264 ) $ 120,523 $ 782,300 $ 2,042,034 $ (9,565 ) $ (85,246 ) $ (587,817 ) $ 2,262,229 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 — — — — — 73,529 — — — 73,529 Dividends on common stock — — — — — (6,686 ) — — — (6,686 ) Employee stock options/other 1,049 — — 1,049 16,384 — — — — 17,433 Stock awards 54 438 37 54 (5,762 ) — — 4,749 959 — Stock-based compensation — — — — 12,149 — — — — 12,149 Tax payments associated with stock-based compensation awards — — (217 ) — — — — — (6,787 ) (6,787 ) Balance at August 31, 2018 119,049 (8,460 ) (22,201 ) $ 119,049 $ 750,254 $ 1,802,538 $ (16,924 ) $ (91,760 ) $ (547,208 ) $ 2,015,949 On February 15, 2019, the management development and compensation committee of our board of directors approved the payout of 297,260 shares of our common stock in connection with the vesting of PSUs that were granted to certain employees on October 8, 2015. The shares paid out under the PSUs reflected our achievement of certain performance measures that were based on average return on invested capital, cumulative earnings per share, and revenue growth relative to a peer group of high-production public homebuilding companies over the three-year period from December 1, 2015 through November 30, 2018. Of the shares of common stock paid out, 147,382 shares or $3.3 million , were purchased by us in the 2019 first quarter to satisfy the recipients’ withholding taxes on the vesting of the PSUs. The shares purchased were not considered repurchases under the authorizations described below. As of August 31, 2019 , we were authorized to repurchase 2,193,947 shares of our common stock under a board of directors approved share repurchase program. We did not repurchase any of our common stock under this program in the nine months ended August 31, 2019 . Unrelated to the share repurchase program, our board of directors authorized in 2014 the repurchase of not more than 680,000 shares of our outstanding common stock, and also authorized potential future grants of up to 680,000 stock payment awards under the KB Home 2014 Equity Incentive Plan (“2014 Plan”), in each case solely as necessary to settle outstanding stock appreciation rights awards granted under our Non-Employee Directors Compensation Plan. As of August 31, 2019 , we have not repurchased any shares and no stock payment awards have been granted under the 2014 Plan pursuant to the board of directors authorization. During the three-month period ended August 31, 2019, our board of directors approved an increase in the quarterly cash dividend on our common stock to $.090 per share from $.025 per share, upon which they declared, and we paid, a quarterly cash dividend at the new higher rate. During the three-month period ended August 31, 2018, our board of directors declared, and we paid, a quarterly cash dividend of $.025 per share of common stock. Quarterly cash dividends declared and paid during the nine-month periods ended August 31, 2019 and 2018 totaled $.140 per share and $.075 |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Aug. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation Stock Options. We estimate the grant-date fair value of stock options using the Black-Scholes option-pricing model. The following table summarizes stock option transactions for the nine months ended August 31, 2019 : Options Weighted Average Exercise Price Options outstanding at beginning of period 7,237,544 $ 16.02 Granted — — Exercised (1,263,505 ) 14.78 Cancelled (180,000 ) 33.59 Options outstanding at end of period 5,794,039 $ 15.75 Options exercisable at end of period 5,506,883 $ 15.72 As of August 31, 2019 , the weighted average remaining contractual life of stock options outstanding and stock options exercisable was 3.8 years and 3.6 years , respectively. Total unrecognized compensation expense related to unvested stock option awards was nominal as of August 31, 2019 . For each of the three-month and nine-month periods ended August 31, 2019 , stock-based compensation expense associated with stock options was nominal. For the three months and nine months ended August 31, 2018, stock-based compensation expense associated with stock options totaled $.2 million and $.5 million , respectively. The aggregate intrinsic values of stock options outstanding and stock options exercisable were $80.2 million and $76.8 million , respectively, at August 31, 2019 . (The intrinsic value of a stock option is the amount by which the market value of a share of the underlying common stock exceeds the exercise price of the stock option.) Other Stock-Based Awards. From time to time, we grant restricted stock and PSUs to various employees as a compensation benefit. We recognized total compensation expense of $4.5 million and $3.2 million for the three months ended August 31, 2019 and 2018, respectively, related to restricted stock and PSUs. We recognized total compensation expense of $14.4 million and $11.6 million for the nine months ended August 31, 2019 |
Supplemental Disclosure to Cons
Supplemental Disclosure to Consolidated Statements of Cash Flows | 9 Months Ended |
Aug. 31, 2019 | |
Supplemental Cash Flow Information [Abstract] | |
Supplemental Disclosure to Consolidated Statements of Cash Flows | Supplemental Disclosure to Consolidated Statements of Cash Flows The following are supplemental disclosures to the consolidated statements of cash flows (in thousands): Nine Months Ended August 31, 2019 2018 Summary of cash and cash equivalents at end of period: Homebuilding $ 183,794 $ 354,361 Financial services 1,043 615 Total $ 184,837 $ 354,976 Supplemental disclosures of cash flow information: Interest paid, net of amounts capitalized $ (13,311 ) $ (5,529 ) Income taxes paid 3,962 9,808 Supplemental disclosures 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 (20,048 ) 20,370 Increase in inventories due to distributions of land and land development from an unconsolidated joint venture 6,288 10,390 Inventories acquired through seller financing 8,967 44,586 |
Supplemental Guarantor Informat
Supplemental Guarantor Information | 9 Months Ended |
Aug. 31, 2019 | |
Guarantees [Abstract] | |
Supplemental Guarantor Information | Supplemental Guarantor Information Our obligations to pay principal, premium, if any, and interest on the senior notes and borrowings, if any, under the Credit Facility are guaranteed on a joint and several basis by certain of our subsidiaries (“Guarantor Subsidiaries”). The guarantees are full and unconditional and the Guarantor Subsidiaries are 100% owned by us. Pursuant to the terms of the indenture governing the senior notes and the terms of the Credit Facility, if any of the Guarantor Subsidiaries ceases to be a “significant subsidiary” as defined by Rule 1-02 of Regulation S-X using a 5% rather than a 10% threshold (provided that the assets of our non-guarantor subsidiaries do not in the aggregate exceed 10% of an adjusted measure of our consolidated total assets), it will be automatically and unconditionally released and discharged from its guaranty of the senior notes and the Credit Facility so long as all guarantees by such Guarantor Subsidiary of any other of our or our subsidiaries’ indebtedness are terminated at or prior to the time of such release. We have determined that separate, full financial statements of the Guarantor Subsidiaries would not be material to investors and, accordingly, supplemental financial information for the Guarantor Subsidiaries is presented. The supplemental financial information for all periods presented below reflects the relevant subsidiaries that were Guarantor Subsidiaries as of August 31, 2019 . Condensed Consolidating Statements of Operations (in thousands) Three Months Ended August 31, 2019 KB Home Corporate Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Total revenues $ — $ 1,061,698 $ 99,088 $ — $ 1,160,786 Homebuilding: Revenues $ — $ 1,061,698 $ 95,157 $ — $ 1,156,855 Construction and land costs — (859,733 ) (84,021 ) — (943,754 ) Selling, general and administrative expenses (23,619 ) (95,376 ) (8,631 ) — (127,626 ) Operating income (loss) (23,619 ) 106,589 2,505 — 85,475 Interest income 140 20 41 — 201 Interest expense (34,488 ) (175 ) (1,361 ) 36,024 — Intercompany interest 84,880 (45,826 ) (3,030 ) (36,024 ) — Equity in loss of unconsolidated joint ventures — (384 ) — — (384 ) Homebuilding pretax income (loss) 26,913 60,224 (1,845 ) — 85,292 Financial services pretax income — — 6,644 — 6,644 Total pretax income 26,913 60,224 4,799 — 91,936 Income tax expense (6,900 ) (14,900 ) (2,000 ) — (23,800 ) Equity in net income of subsidiaries 48,123 — — (48,123 ) — Net income $ 68,136 $ 45,324 $ 2,799 $ (48,123 ) $ 68,136 Three Months Ended August 31, 2018 KB Home Corporate Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Total revenues $ — $ 1,144,253 $ 81,094 $ — $ 1,225,347 Homebuilding: Revenues $ — $ 1,144,253 $ 77,622 $ — $ 1,221,875 Construction and land costs — (927,346 ) (74,163 ) — (1,001,509 ) Selling, general and administrative expenses (24,688 ) (81,540 ) (8,525 ) — (114,753 ) Operating income (loss) (24,688 ) 135,367 (5,066 ) — 105,613 Interest income 380 — 78 — 458 Interest expense (33,319 ) (669 ) (1,240 ) 35,228 — Intercompany interest 78,519 (40,675 ) (2,616 ) (35,228 ) — Equity in income of unconsolidated joint ventures — 3,493 — — 3,493 Homebuilding pretax income (loss) 20,892 97,516 (8,844 ) — 109,564 Financial services pretax income — — 5,112 — 5,112 Total pretax income (loss) 20,892 97,516 (3,732 ) — 114,676 Income tax expense (3,500 ) (22,700 ) (1,000 ) — (27,200 ) Equity in net income of subsidiaries 70,084 — — (70,084 ) — Net income (loss) $ 87,476 $ 74,816 $ (4,732 ) $ (70,084 ) $ 87,476 Nine Months Ended August 31, 2019 KB Home Corporate Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Total revenues $ — $ 2,739,096 $ 254,976 $ — $ 2,994,072 Homebuilding: Revenues $ — $ 2,739,096 $ 245,218 $ — $ 2,984,314 Construction and land costs — (2,226,829 ) (231,524 ) — (2,458,353 ) Selling, general and administrative expenses (76,507 ) (268,506 ) (12,035 ) — (357,048 ) Operating income (loss) (76,507 ) 243,761 1,659 — 168,913 Interest income 1,549 20 176 — 1,745 Interest expense (102,763 ) (630 ) (3,963 ) 107,356 — Intercompany interest 245,090 (130,142 ) (7,592 ) (107,356 ) — Equity in loss of unconsolidated joint ventures — (1,159 ) — — (1,159 ) Homebuilding pretax income (loss) 67,369 111,850 (9,720 ) — 169,499 Financial services pretax income — — 13,709 — 13,709 Total pretax income 67,369 111,850 3,989 — 183,208 Income tax expense (10,400 ) (21,300 ) (5,900 ) — (37,600 ) Equity in net income of subsidiaries 88,639 — — (88,639 ) — Net income (loss) $ 145,608 $ 90,550 $ (1,911 ) $ (88,639 ) $ 145,608 Nine Months Ended August 31, 2018 KB Home Corporate Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Total revenues $ — $ 2,965,829 $ 232,564 $ — $ 3,198,393 Homebuilding: Revenues $ — $ 2,965,829 $ 223,924 $ — $ 3,189,753 Construction and land costs — (2,436,079 ) (206,152 ) — (2,642,231 ) Selling, general and administrative expenses (73,669 ) (227,480 ) (22,559 ) — (323,708 ) Operating income (loss) (73,669 ) 302,270 (4,787 ) — 223,814 Interest income 2,559 9 171 — 2,739 Interest expense (109,233 ) (1,992 ) (3,871 ) 115,096 — Intercompany interest 226,642 (104,420 ) (7,126 ) (115,096 ) — Equity in income (loss) of unconsolidated joint ventures — 2,327 (1 ) — 2,326 Homebuilding pretax income (loss) 46,299 198,194 (15,614 ) — 228,879 Financial services pretax income — — 10,150 — 10,150 Total pretax income (loss) 46,299 198,194 (5,464 ) — 239,029 Income tax expense (50,600 ) (88,500 ) (26,400 ) — (165,500 ) Equity in net income of subsidiaries 77,830 — — (77,830 ) — Net income (loss) $ 73,529 $ 109,694 $ (31,864 ) $ (77,830 ) $ 73,529 Condensed Consolidating Balance Sheets (in thousands) August 31, 2019 KB Home Corporate Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Assets Homebuilding: Cash and cash equivalents $ 67,247 $ 104,043 $ 12,504 $ — $ 183,794 Receivables 2,368 226,063 63,061 — 291,492 Inventories — 3,623,232 295,844 — 3,919,076 Investments in unconsolidated joint ventures — 57,168 — — 57,168 Property and equipment, net 22,732 38,024 3,363 — 64,119 Deferred tax assets, net 71,939 282,066 48,090 — 402,095 Other assets 81,192 2,773 1,550 — 85,515 245,478 4,333,369 424,412 — 5,003,259 Financial services — — 31,911 — 31,911 Intercompany receivables 3,869,512 — 183,833 (4,053,345 ) — Investments in subsidiaries 159,161 — — (159,161 ) — Total assets $ 4,274,151 $ 4,333,369 $ 640,156 $ (4,212,506 ) $ 5,035,170 Liabilities and stockholders’ equity Homebuilding: Accounts payable, accrued expenses and other liabilities $ 135,855 $ 507,361 $ 267,807 $ — $ 911,023 Notes payable 1,818,169 16,856 25,110 — 1,860,135 1,954,024 524,217 292,917 — 2,771,158 Financial services — — 1,783 — 1,783 Intercompany payables 57,898 3,748,931 246,516 (4,053,345 ) — Stockholders’ equity 2,262,229 60,221 98,940 (159,161 ) 2,262,229 Total liabilities and stockholders’ equity $ 4,274,151 $ 4,333,369 $ 640,156 $ (4,212,506 ) $ 5,035,170 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 5,523 310 — 24,283 Deferred tax assets, net 84,564 303,669 53,587 — 441,820 Other assets 77,288 4,007 1,805 — 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 Condensed Consolidating Statements of Cash Flows (in thousands) Nine Months Ended August 31, 2019 KB Home Corporate Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Net cash provided by (used in) operating activities $ 92,935 $ (335,428 ) $ 90,349 $ — $ (152,144 ) Cash flows from investing activities: Contributions to unconsolidated joint ventures — (7,656 ) — — (7,656 ) 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 (4,728 ) (18,252 ) (9,231 ) — (32,211 ) Intercompany (274,010 ) — — 274,010 — Net cash used in investing activities (278,738 ) (15,103 ) (9,231 ) 274,010 (29,062 ) 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 (630,000 ) — — — (630,000 ) Borrowings under revolving credit facility 460,000 — — — 460,000 Repayments under revolving credit facility (410,000 ) — — — (410,000 ) Payments on mortgages and land contracts due to land sellers and other loans — (32,149 ) — — (32,149 ) Issuance of common stock under employee stock plans 18,729 — — — 18,729 Tax payments associated with stock-based compensation awards (3,345 ) — — — (3,345 ) Payments of cash dividends (12,352 ) — — — (12,352 ) Intercompany — 372,454 (98,444 ) (274,010 ) — Net cash provided by (used in) financing activities (176,927 ) 340,305 (98,444 ) (274,010 ) (209,076 ) Net decrease in cash and cash equivalents (362,730 ) (10,226 ) (17,326 ) — (390,282 ) Cash and cash equivalents at beginning of period 429,977 114,269 30,873 — 575,119 Cash and cash equivalents at end of period $ 67,247 $ 104,043 $ 13,547 $ — $ 184,837 Nine Months Ended August 31, 2018 KB Home Corporate Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Net cash provided by (used in) operating activities $ 50,507 $ (78,593 ) $ (21,422 ) $ — $ (49,508 ) Cash flows from investing activities: Contributions to unconsolidated joint ventures — (15,640 ) — — (15,640 ) Return of investments in unconsolidated joint ventures — 9,934 — — 9,934 Purchases of property and equipment, net (3,508 ) (520 ) (109 ) — (4,137 ) Intercompany (80,955 ) — — 80,955 — Net cash used in investing activities (84,463 ) (6,226 ) (109 ) 80,955 (9,843 ) 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 — (9,574 ) (920 ) — (10,494 ) Issuance of common stock under employee stock plans 17,433 — — — 17,433 Tax payments associated with stock-based compensation awards (6,787 ) — — — (6,787 ) Payments of cash dividends (6,686 ) — — — (6,686 ) Intercompany — 83,560 (2,605 ) (80,955 ) — Net cash provided by (used in) financing activities (296,040 ) 73,986 (3,525 ) (80,955 ) (306,534 ) Net decrease in cash and cash equivalents (329,996 ) (10,833 ) (25,056 ) — (365,885 ) Cash and cash equivalents at beginning of period 575,193 104,120 41,548 — 720,861 Cash and cash equivalents at end of period $ 245,197 $ 93,287 $ 16,492 $ — $ 354,976 |
Basis of Presentation and Sig_2
Basis of Presentation and Significant Accounting Policies (Policies) | 9 Months Ended |
Aug. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Use of Estimates | The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. |
Cash and Cash Equivalents and Restricted Cash | We consider all highly liquid short-term investments purchased with an original maturity of three months or less to be cash equivalents. Our cash equivalents totaled $11.4 million at August 31, 2019 and $385.2 million at November 30, 2018 . At August 31, 2019 and November 30, 2018 , our cash equivalents were invested in interest-bearing bank deposit accounts. |
Comprehensive Income (Loss) | Our comprehensive income was $68.1 million for the three months ended August 31, 2019 and $87.5 million for the three months ended August 31, 2018. For the nine months ended August 31, 2019 and 2018, our comprehensive income was $145.6 million and $73.5 million , respectively. Our comprehensive income for each of the three-month and nine-month periods ended August 31, 2019 and 2018 was equal to our net income for the respective periods. |
Adoption of New Accounting Pronouncement and Recent Accounting Pronouncements | Adoption of New Accounting Pronouncement . In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 supersedes the revenue guidance in Accounting Standards Codification Topic 605, “Revenue Recognition,” and most industry-specific revenue and cost guidance in the accounting standards codification, including some cost guidance related to construction-type and production-type contracts. The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. On December 1, 2018, we adopted ASU 2014-09 and its related amendments (collectively, “ASC 606”), using the modified retrospective method applied to contracts that were not completed as of the adoption date. Results for reporting periods beginning December 1, 2018 and after are presented under ASC 606, while results for prior reporting periods have not been adjusted and continue to be presented under the accounting guidance in effect for those periods. We recorded the following cumulative effect adjustment to increase beginning retained earnings as of December 1, 2018 (in thousands): 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 Deferred tax assets, net 441,820 (4,024 ) 437,796 Property and equipment, net 24,283 31,194 55,477 Financial services 12,380 19,728 32,108 Stockholders’ equity: Retained earnings 1,897,168 11,610 1,908,778 Within our homebuilding operations, ASC 606 impacts the classification and timing of recognition in our consolidated financial statements of certain community sales office and other marketing- and model home-related costs, which we previously capitalized to inventories and amortized through construction and land costs with each home delivered in a community. With our adoption of ASC 606, these costs are capitalized to property and equipment and depreciated to selling, general and administrative expenses, or expensed to selling, general and administrative expenses as incurred. Upon adopting ASC 606, we reclassified these community sales office and other marketing- and model home-related costs and related accumulated amortization from inventories to either property and equipment, net or retained earnings in our consolidated balance sheet. Forfeited deposits related to cancelled home sale and land sale contracts, which were previously reflected as other income within selling, general and administrative expenses, are included in homebuilding revenues under ASC 606. Within our financial services operations, ASC 606 impacts the timing of recognition in our consolidated financial statements of insurance commissions for insurance policy renewals. We previously recognized such insurance commissions as revenue when policies were renewed. With our adoption of ASC 606, insurance commissions for future policy renewals are estimated and recognized as revenue when the insurance carrier issues an initial insurance policy to our homebuyer, which generally occurs at the time each applicable home sale is closed. Upon adopting ASC 606, we recognized contract assets for the estimated future renewal commissions related to existing insurance policies as of December 1, 2018. There were no significant changes to our business processes or internal control over financial reporting as a result of adopting ASC 606. The impacts of adopting ASC 606 on our consolidated statements of operations for the three months and nine months ended August 31, 2019 and consolidated balance sheet as of August 31, 2019 were as follows (in thousands, except per share amounts): Three Months Ended August 31, 2019 Nine Months Ended August 31, 2019 Statement of Operations As Reported Amounts without the Adoption of ASC 606 Effect of Change Higher/(Lower) As Reported Amounts without the Adoption of ASC 606 Effect of Change Higher/(Lower) Homebuilding: Revenues $ 1,156,855 $ 1,156,112 $ 743 $ 2,984,314 $ 2,982,201 $ 2,113 Construction and land costs (943,754 ) (951,613 ) (7,859 ) (2,458,353 ) (2,478,583 ) (20,230 ) Selling, general and administrative expenses (127,626 ) (118,772 ) 8,854 (357,048 ) (332,691 ) 24,357 Operating income 85,475 85,727 (252 ) 168,913 170,927 (2,014 ) Financial services: Revenues 3,931 3,751 180 9,758 9,366 392 Total pretax income 91,936 92,008 (72 ) 183,208 184,830 (1,622 ) Income tax expense (23,800 ) (23,800 ) — (37,600 ) (38,000 ) (400 ) Net income 68,136 68,208 (72 ) 145,608 146,830 (1,222 ) Diluted earnings per share .73 .73 — 1.55 1.56 (.01 ) As of August 31, 2019 Balance Sheet As Reported Amounts without the Adoption of ASC 606 Effect of Change Higher/(Lower) Assets Homebuilding: Inventories $ 3,919,076 $ 3,964,873 $ (45,797 ) Deferred tax assets, net 402,095 405,719 (3,624 ) Property and equipment, net 64,119 24,431 39,688 Financial services 31,911 11,791 20,120 Stockholders’ equity: Retained earnings 2,042,034 2,031,647 10,387 As a result of our adoption of ASC 606, we updated our significant accounting policies as follows: Homebuilding Revenues . We apply the following steps in determining the timing and amount of revenue to recognize: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract, if applicable; and (5) recognize revenue when (or as) we satisfy a performance obligation. Our home sale transactions are made pursuant to contracts under which we typically have a single performance obligation to deliver a completed home to the homebuyer when closing conditions are met. Revenues from home sales are recognized when we have satisfied the performance obligation within the sales contract, which is generally when title to and possession of the home and the risks and rewards of ownership are transferred to the homebuyer on the closing date. Under our home sale contracts, we typically receive an initial cash deposit from the homebuyer at the time the sales contract is executed and receive the remaining consideration to which we are entitled, through a third-party escrow agent, at closing. Customer deposits related to sold but undelivered homes totaled $26.8 million and $19.5 million at August 31, 2019 and November 30, 2018, respectively, and are included in accrued expenses and other liabilities. Concurrent with the recognition of revenues in our consolidated statements of operations, sales incentives in the form of price concessions on the selling price of a home are recorded as a reduction of revenues. The costs of sales incentives in the form of free or discounted products or services provided to homebuyers, including option upgrades and closing cost allowances, are reflected as construction and land costs because such incentives are identified in our home sale contracts with homebuyers as an intrinsic part of our single performance obligation to deliver and transfer title to their home for the transaction price stated in the contracts. Sales incentives that we may provide in the form of closing cost allowances are immaterial to the related revenues. Cash proceeds from home sale closings held by third-party escrow agents for our benefit, typically for less than five days, are considered deposits in-transit and classified as cash. Land sale transactions are made pursuant to contracts under which we typically have a performance obligation(s) to deliver specified land parcels to the buyer when closing conditions are met. We evaluate each land sale contract to determine our performance obligation(s) under the contract, including whether we have a distinct promise to perform post-closing land development work that is material within the context of the contract, and use objective criteria to determine our completion of the applicable performance obligation(s), whether at a point in time or over time. Revenues from land sales are recognized when we have satisfied the performance obligation(s) within the sales contract, which is generally when title to and possession of the land and the risks and rewards of ownership are transferred to the land buyer on the closing date. Under our land sale contracts, we typically receive an initial cash deposit from the buyer at the time the contract is executed and receive the remaining consideration to which we are entitled, through a third-party escrow agent, at closing. In the limited circumstances where we provide financing to the land buyer, we determine that collectibility of the receivable is reasonably assured before we recognize revenue. In instances where we have a distinct and material performance obligation(s) within the context of a land sale contract to perform land development work after the closing date, a portion of the transaction price under the contract is allocated to such performance obligation(s) and is recognized as revenue over time based upon our estimated progress toward the satisfaction of the performance obligation(s). We generally measure our progress based on our costs incurred relative to the total costs expected to satisfy the performance obligation(s). While the payment terms for such a performance obligation(s) vary, we generally receive the final payment when we have completed our land development work to the specifications detailed in the applicable land sale contract and it has been accepted by the land buyer. Homebuilding revenues include forfeited deposits, which occur when home sale or land sale contracts that include a nonrefundable deposit are cancelled. Revenues from forfeited deposits are immaterial. Within our homebuilding operations, substantially all of our contracts with customers and the related performance obligations have an original expected duration of one year or less. Community Sales Office and Other Marketing- and Model Home-Related Costs . Community sales office and other marketing- and model home-related costs are either recorded as inventories, capitalized as property and equipment, or expensed to selling, general and administrative expenses as incurred. Costs related to the construction of a model home, inclusive of upgrades that will be sold as part of the home, are recorded as inventories and recognized as construction and land costs when the model home is delivered to a homebuyer. Costs to furnish and ready a model home or on-site community sales facility that will not be sold as part of the model home, such as model furnishings, community sales office and model complex grounds, sales office construction and sales office furniture and equipment, are capitalized as property and equipment under “model furnishings and sales office improvements.” Model furnishings and sales office improvements are depreciated to selling, general and administrative expenses over their estimated useful lives. Other costs related to the marketing of a community, removing the on-site community sales facility and readying a completed (model) home for sale are expensed to selling, general and administrative expenses as incurred. Financial Services Revenues . Our financial services reporting segment generates revenues primarily from title services and insurance commissions. Revenues from title services are recognized when policies are issued, which generally occurs at the time each applicable home sale is closed. We receive insurance commissions from various third-party insurance carriers for arranging for the carriers to provide homeowner and other insurance policies for our homebuyers that elect to obtain such coverage. In addition, each time a homebuyer renews their insurance policy with the insurance carrier, we receive a renewal commission. Revenues from insurance commissions are recognized when the insurance carrier issues an initial insurance policy to our homebuyer, which generally occurs at the time each applicable home sale is closed. As our performance obligations for policy renewal commissions are satisfied upon issuance of the initial insurance policy, insurance commissions for renewals are considered variable consideration under ASC 606. Accordingly, we estimate the probable future renewal commissions when an initial policy is issued and record a corresponding contract asset and insurance commission revenues. We estimate the amount of variable consideration based on historical renewal trends and constrain the estimate such that it is probable that a significant reversal of cumulative recognized revenue will not occur. We also consider the likelihood and magnitude of a potential future reversal of revenue and update our assessment at the end of each reporting period. The contract assets for estimated future renewal commissions are included in other assets within our financial services reporting segment and totaled $20.1 million at August 31, 2019 . Contract assets totaling $19.7 million were recognized on December 1, 2018 in connection with the adoption of ASC 606. Disaggregation of Revenues . As our homebuilding operations accounted for 99.7% of our total revenues for the year ended November 30, 2018, with most of those revenues generated from home sale contracts with customers, we believe the disaggregation of revenues as reported in our consolidated statement of operations and as disclosed in Note 2 – Segment Information and in Note 3 – Financial Services, fairly depict how the nature, amount, timing and uncertainty of cash flows are affected by economic factors. SEC Disclosure Update and Simplification . In August 2018, the SEC issued Final Rule Release No. 33-10532, “Disclosure Update and Simplification,” which makes a number of changes meant to simplify interim disclosures. In complying with the relevant aspects of the rule within this quarterly report, we have removed the presentation of cash dividends declared per common share from our consolidated statements of operations and expanded our analysis of stockholders ’ equity in Note 18 – Stockholders’ Equity. Recent Accounting Pronouncements Not Yet Adopted . In February 2016, the FASB issued Accounting Standards Update No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). ASU 2016-02 will require lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Under this guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Lessor accounting remains substantially similar to previous lease accounting guidance. In addition, disclosures of leasing activities are to be expanded to include qualitative along with specific quantitative information. ASU 2016-02 is effective for us beginning December 1, 2019 (with early adoption permitted). We expect to adopt ASU 2016-02 and its related amendments (collectively, “ASC 842”) beginning December 1, 2019 using the modified retrospective method. Results for reporting periods beginning December 1, 2019 and after will be presented under ASC 842, while results for prior reporting periods will not be adjusted and will continue to be presented under the accounting guidance in effect for those periods. The main impact of our adoption of ASC 842 will be the recording on our consolidated balance sheet of lease right-of-use assets and lease liabilities for our operating leases with terms of more than 12 months, which are primarily real estate leases for office space and our design studios, as well as certain equipment leases. While we are currently evaluating and quantifying the potential impact of adopting ASC 842, we do not expect the adoption to have a material impact on our consolidated statements of operations or cash flows. In February 2018, the FASB issued Accounting Standards Update No. 2018-02, “Income Statement — Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU 2018-02”), which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (“TCJA”), and requires certain disclosures about stranded tax effects. ASU 2018-02 is effective for us beginning December 1, 2019 (with early adoption permitted), and shall be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the corporate income tax rate in the TCJA is recognized. We expect to adopt ASU 2018-02 beginning December 1, 2019. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements. Reclassifications. Certain amounts in our consolidated financial statements of prior periods have been reclassified to conform to the current period presentation. |
Segment Reporting (ASC 280) | We have identified five operating reporting segments, comprised of four homebuilding reporting segments and one financial services reporting segment. As of August 31, 2019 , our homebuilding reporting segments conducted ongoing operations in the following states: West Coast: California and Washington Southwest: Arizona and Nevada Central: Colorado and Texas Southeast: Florida and North Carolina Our homebuilding reporting segments are engaged in the acquisition and development of land primarily for residential purposes and offer a wide variety of homes that are designed to appeal to first-time, first move-up and active adult homebuyers. Our homebuilding operations generate most of their revenues from the delivery of completed homes to homebuyers. They also earn revenues from the sale of land. Our financial services reporting segment offers property and casualty insurance and, in certain instances, earthquake, flood and personal property insurance to our homebuyers in the same markets as our homebuilding reporting segments, and provides title services in the majority of our markets located within our Southwest, Central and Southeast homebuilding reporting segments. This segment earns revenues primarily from insurance commissions and from the provision of title services. We offer mortgage banking services, including residential consumer mortgage loan (“mortgage loan”) originations, to our homebuyers indirectly through KBHS Home Loans, LLC (“KBHS”), an unconsolidated joint venture we formed with Stearns Ventures, LLC (“Stearns”). We and Stearns each have a 50.0% ownership interest, with Stearns providing management oversight of KBHS’ operations. The financial services reporting segment is separately reported in our consolidated financial statements. Our reporting segments follow the same accounting policies used for our consolidated financial statements. The results of each reporting segment are not necessarily indicative of the results that would have occurred had the segment been an independent, stand-alone entity during the periods presented, nor are they indicative of the results to be expected in future periods. |
Earnings Per Share (ASC 260) | We compute earnings per share using the two-class method, which is an allocation of earnings between the holders of common stock and a company’s participating security holders. Our outstanding nonvested shares of restricted stock contain non-forfeitable rights to dividends and, therefore, are considered participating securities for purposes of computing earnings per share pursuant to the two-class method. We had no other participating securities at August 31, 2019 or 2018. |
Property, Plant and Equipment (ASC 360) | Each community or land parcel in our owned inventory is assessed on a quarterly basis to determine if indicators of potential impairment exist. We record an inventory impairment charge on a community or land parcel that is active or held for future development when indicators of potential impairment exist and the carrying value of the real estate asset is greater than the undiscounted future net cash flows the asset is expected to generate. These real estate assets are written down to fair value, which is primarily determined based on the estimated future net cash flows discounted for inherent risk associated with each such asset, or other valuation techniques. We record an inventory impairment charge on land held for sale when the carrying value of a land parcel is greater than its fair value. These real estate assets are written down to fair value, less associated costs to sell. The estimated fair values of such assets are generally based on bona fide letters of intent from outside parties, executed sales contracts, broker quotes or similar information. |
Consolidation (ASC 810) | We participate in joint ventures from time to time that conduct land acquisition, land development and/or other homebuilding activities in various markets where our homebuilding operations are located. Our investments in these joint ventures may create a variable interest in a variable interest entity (“VIE”), depending on the contractual terms of the arrangement. We analyze our joint ventures under the variable interest model to determine whether they are VIEs and, if so, whether we are the primary beneficiary. Based on our analyses, we determined that one of our joint ventures at August 31, 2019 and November 30, 2018 was a VIE, but we were not the primary beneficiary of the VIE. All of our joint ventures at August 31, 2019 and November 30, 2018 were unconsolidated and accounted for under the equity method because we did not have a controlling financial interest. Land Option Contracts and Other Similar Contracts. In the ordinary course of our business, we enter into land option contracts and other similar contracts with third parties and unconsolidated entities to acquire rights to land for the construction of homes. Under these contracts, we typically make a specified option payment or earnest money deposit in consideration for the right to purchase land in the future, usually at a predetermined price. We analyze each of our land option contracts and other similar contracts under the variable interest model to determine whether the land seller is a VIE and, if so, whether we are the primary beneficiary. Although we do not have legal title to the underlying land, we are required to consolidate a VIE if we are the primary beneficiary. As a result of our analyses, we determined that as of August 31, 2019 and November 30, 2018 |
Debt (ASC 470) | For land option contracts and other similar contracts where the land seller entity is not required to be consolidated under the variable interest model, we consider whether such contracts should be accounted for as financing arrangements. Land option contracts and other similar contracts that may be considered financing arrangements include those we enter into with third-party land financiers or developers in conjunction with such third parties acquiring a specific land parcel(s) on our behalf, at our direction, and those with other landowners where we or our designee make improvements to the optioned land parcel(s) during the applicable option period. For these land option contracts and other similar contracts, we record the remaining purchase price of the associated land parcel(s) in inventories in our consolidated balance sheets with a corresponding financing obligation if we determine that we are effectively compelled to exercise the option to purchase the land parcel(s). As a result of our evaluations of land option contracts and other similar contracts for financing arrangements, we recorded inventories in our consolidated balance sheets, with a corresponding increase to accrued expenses and other liabilities, of $1.8 million at August 31, 2019 and $21.8 million at November 30, 2018 |
Income Taxes (ASC 740) | We evaluate our deferred tax assets quarterly to determine if adjustments to our valuation allowance are required based on the consideration of all available positive and negative evidence using a “more likely than not” standard with respect to whether deferred tax assets will be realized. Our evaluation considers, among other factors, our historical operating results, our expectation of future profitability, the duration of the applicable statutory carryforward periods, and conditions in the housing market and the broader economy. The ultimate realization of our deferred tax assets depends primarily on our ability to generate future taxable income during the periods in which the related deferred tax assets become deductible. The value of our deferred tax assets depends on applicable income tax rates. |
Fair Value Measurements and Disclosures (ASC 820) | Fair value measurements of assets and liabilities are categorized based on the following hierarchy: 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. |
Guarantees (ASC 460) | Guarantees. In the normal course of our business, we issue certain representations, warranties and guarantees related to our home sales and land sales. Based on historical experience, we do not believe any potential liability with respect to these representations, warranties or guarantees would be material to our consolidated financial statements. |
Self-Insurance | Self-Insurance. We maintain, and require the majority of our independent subcontractors to maintain, general liability insurance (including construction defect and bodily injury coverage) and workers’ compensation insurance. These insurance policies protect us against a portion of our risk of loss from claims related to our homebuilding activities, subject to certain self-insured retentions, deductibles and other coverage limits. We also maintain certain other insurance policies. In Arizona, California, Colorado and Nevada, our subcontractors’ general liability insurance primarily takes the form of a wrap-up policy under a program where eligible independent subcontractors are enrolled as insureds on each community. Enrolled subcontractors contribute toward the cost of the insurance and agree to pay a contractual amount in the future if there is a claim related to their work. To the extent provided under the wrap-up program, we absorb the enrolled subcontractors’ general liability associated with the work performed on our homes within the applicable community as part of our overall general liability insurance and our self-insurance. We self-insure a portion of our overall risk through the use of a captive insurance subsidiary, which provides coverage for our exposure to construction defect, bodily injury and property damage claims and related litigation or regulatory actions, up to certain limits. Our self-insurance liability generally covers the costs of settlements and/or repairs, if any, as well as our costs to defend and resolve the following types of claims: • 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. Our self-insurance liability at each reporting date represents the estimated costs of reported claims, claims incurred but not yet reported, and claim adjustment expenses. The amount of our self-insurance liability is based on an analysis performed by a third-party actuary that uses our historical claim and expense data, as well as industry data to estimate these overall costs. Key assumptions used in developing these estimates include claim frequencies, severities and resolution patterns, which can occur over an extended period of time. 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 the ultimate resolution of such claim; uncertainties regarding such claims relative to our markets and the types of product we build; and legal or regulatory actions and/or interpretations, among other factors. Due to the degree of judgment involved and the potential for variability in these underlying assumptions, our actual future costs could differ from those estimated. In addition, changes in the frequency and severity of reported claims and the estimates to resolve claims can impact the trends and assumptions used in the actuarial analysis, which could be material to our consolidated financial statements. Though state regulations vary, construction defect claims are reported and resolved over a long period of time, which can extend for 10 years or more. As a result, the majority of the estimated self-insurance liability based on the actuarial analysis relates to claims incurred but not yet reported. Therefore, adjustments related to individual existing claims generally do not significantly impact the overall estimated liability. Adjustments to our liabilities related to homes delivered in prior years are recorded in the period in which a change in our estimate occurs. Our self-insurance liability is presented on a gross basis without consideration of insurance recoveries and amounts we have paid on behalf of and expect to recover from other parties, if any. Estimated probable insurance and other recoveries of $45.5 million and $56.9 million are included in receivables in our consolidated balance sheets at August 31, 2019 and November 30, 2018 , respectively. These self-insurance recoveries are principally based on actuarially determined amounts and depend on various factors, including, among other things, the above-described claim cost estimates, our insurance policy coverage limits for the applicable policy year(s), historical third-party recovery rates, insurance industry practices, the regulatory environment and legal precedent, and are subject to a high degree of variability from period to period. Because of the inherent uncertainty and variability in these assumptions, our actual insurance recoveries could differ significantly from amounts currently estimated. |
Warranty | Warranty . We provide a limited warranty on all of our homes. The specific terms and conditions of our limited warranty program vary depending upon the markets in which we do business. We generally provide a structural warranty of 10 years , a warranty on electrical, heating, cooling, plumbing and certain other building systems each varying from two years to five years based on geographic market and state law, and a warranty of one year for other components of the home. Our limited warranty program is ordinarily how we respond to and account for homeowners’ requests to local division offices seeking repairs of certain conditions or defects, including claims where we could have liability under applicable state statutes or tort law for a defective condition in or damages to a home. Our warranty liability covers our costs of repairs associated with homeowner claims made under our limited warranty program. These claims are generally made directly by a homeowner and involve their individual home. We estimate the costs that may be incurred under each limited warranty and record a liability in the amount of such costs at the time the revenue associated with the sale of each home is recognized. Our primary assumption in estimating the amounts we accrue for warranty costs is that historical claims experience is a strong indicator of future claims experience. Factors that affect our warranty liability include the number of homes delivered, historical and anticipated rates of warranty claims, and cost per claim. We periodically assess the adequacy of our accrued warranty liability, which is included in accrued expenses and other liabilities in our consolidated balance sheets, and adjust the amount as necessary based on our assessment. Our assessment includes the review of our actual warranty costs incurred to identify trends and changes in our warranty claims experience, and considers our home construction quality and customer service initiatives and outside events. While we believe the warranty liability currently reflected in our consolidated balance sheets to be adequate, unanticipated changes or developments in the legal environment, local weather, land or environmental conditions, quality of materials or methods used in the construction of homes or customer service practices and/or our warranty claims experience could have a significant impact on our actual warranty costs in future periods and such amounts could differ significantly from our current estimates. |
Stock-Based Compensation (ASC 718) | We estimate the grant-date fair value of stock options using the Black-Scholes option-pricing model. |
Basis of Presentation and Sig_3
Basis of Presentation and Significant Accounting Policies (Tables) | 9 Months Ended |
Aug. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of New Accounting Pronouncements | The impacts of adopting ASC 606 on our consolidated statements of operations for the three months and nine months ended August 31, 2019 and consolidated balance sheet as of August 31, 2019 were as follows (in thousands, except per share amounts): Three Months Ended August 31, 2019 Nine Months Ended August 31, 2019 Statement of Operations As Reported Amounts without the Adoption of ASC 606 Effect of Change Higher/(Lower) As Reported Amounts without the Adoption of ASC 606 Effect of Change Higher/(Lower) Homebuilding: Revenues $ 1,156,855 $ 1,156,112 $ 743 $ 2,984,314 $ 2,982,201 $ 2,113 Construction and land costs (943,754 ) (951,613 ) (7,859 ) (2,458,353 ) (2,478,583 ) (20,230 ) Selling, general and administrative expenses (127,626 ) (118,772 ) 8,854 (357,048 ) (332,691 ) 24,357 Operating income 85,475 85,727 (252 ) 168,913 170,927 (2,014 ) Financial services: Revenues 3,931 3,751 180 9,758 9,366 392 Total pretax income 91,936 92,008 (72 ) 183,208 184,830 (1,622 ) Income tax expense (23,800 ) (23,800 ) — (37,600 ) (38,000 ) (400 ) Net income 68,136 68,208 (72 ) 145,608 146,830 (1,222 ) Diluted earnings per share .73 .73 — 1.55 1.56 (.01 ) As of August 31, 2019 Balance Sheet As Reported Amounts without the Adoption of ASC 606 Effect of Change Higher/(Lower) Assets Homebuilding: Inventories $ 3,919,076 $ 3,964,873 $ (45,797 ) Deferred tax assets, net 402,095 405,719 (3,624 ) Property and equipment, net 64,119 24,431 39,688 Financial services 31,911 11,791 20,120 Stockholders’ equity: Retained earnings 2,042,034 2,031,647 10,387 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 Deferred tax assets, net 441,820 (4,024 ) 437,796 Property and equipment, net 24,283 31,194 55,477 Financial services 12,380 19,728 32,108 Stockholders’ equity: Retained earnings 1,897,168 11,610 1,908,778 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Aug. 31, 2019 | |
Segment Reporting [Abstract] | |
Financial Information Relating to Company Reporting Segments | The following tables present financial information relating to our homebuilding reporting segments (in thousands): Three Months Ended August 31, Nine Months Ended August 31, 2019 2018 2019 2018 Revenues: West Coast $ 497,654 $ 571,880 $ 1,194,728 $ 1,455,272 Southwest 180,238 196,056 522,721 528,872 Central 326,058 327,888 874,730 885,875 Southeast 152,905 126,051 392,135 319,734 Total $ 1,156,855 $ 1,221,875 $ 2,984,314 $ 3,189,753 Pretax income (loss): West Coast $ 43,775 $ 72,996 $ 86,480 $ 156,472 Southwest 26,366 31,065 76,433 66,619 Central 34,417 32,294 80,199 80,464 Southeast 5,272 (702 ) 5,316 1,405 Corporate and other (24,538 ) (26,089 ) (78,929 ) (76,081 ) Total $ 85,292 $ 109,564 $ 169,499 $ 228,879 Inventory impairment and land option contract abandonment charges: West Coast $ 5,065 $ 4,409 $ 12,148 $ 15,697 Southwest 126 432 408 432 Central — 1,131 366 1,354 Southeast 60 2,442 221 2,442 Total $ 5,251 $ 8,414 $ 13,143 $ 19,925 August 31, November 30, Assets: West Coast $ 2,177,265 $ 1,880,516 Southwest 695,741 631,509 Central 1,048,958 1,017,490 Southeast 448,391 463,224 Corporate and other 632,904 1,068,452 Total $ 5,003,259 $ 5,061,191 |
Financial Services (Tables)
Financial Services (Tables) | 9 Months Ended |
Aug. 31, 2019 | |
Segment Reporting Information [Line Items] | |
Financial Services Income (Loss) | The following tables present financial information relating to our financial services reporting segment (in thousands): Three Months Ended August 31, Nine Months Ended August 31, 2019 2018 2019 2018 Revenues Insurance commissions $ 2,224 $ 1,928 $ 5,342 $ 4,743 Title services 1,707 1,544 4,410 3,897 Interest income — — 6 — Total 3,931 3,472 9,758 8,640 Three Months Ended August 31, Nine Months Ended August 31, 2019 2018 2019 2018 Expenses General and administrative (1,003 ) (945 ) (3,067 ) (2,855 ) Operating income 2,928 2,527 6,691 5,785 Equity in income of unconsolidated joint ventures 3,716 2,585 7,018 4,365 Pretax income $ 6,644 $ 5,112 $ 13,709 $ 10,150 |
Financial Service [Member] | |
Segment Reporting Information [Line Items] | |
Schedule of Financial Services Assets and Liabilities | August 31, November 30, Assets Cash and cash equivalents $ 1,043 $ 760 Receivables 1,435 2,885 Investments in unconsolidated joint ventures 9,162 8,594 Other assets (a) 20,271 141 Total assets $ 31,911 $ 12,380 Liabilities Accounts payable and accrued expenses $ 1,783 $ 1,495 Total liabilities $ 1,783 $ 1,495 (a) Other assets at August 31, 2019 included $20.1 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 – Basis of Presentation and Significant Accounting Policies. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Aug. 31, 2019 | |
Earnings Per Share, Basic and Diluted [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | Basic and diluted earnings per share were calculated as follows (in thousands, except per share amounts): Three Months Ended August 31, Nine Months Ended August 31, 2019 2018 2019 2018 Numerator: Net income $ 68,136 $ 87,476 $ 145,608 $ 73,529 Less: Distributed earnings allocated to nonvested restricted stock (48 ) (12 ) (76 ) (37 ) Less: Undistributed earnings allocated to nonvested restricted stock (365 ) (472 ) (825 ) (388 ) Numerator for basic earnings per share 67,723 86,992 144,707 73,104 Three Months Ended August 31, Nine Months Ended August 31, 2019 2018 2019 2018 Effect of dilutive securities: Interest expense and amortization of debt issuance costs associated with convertible senior notes, net of taxes — 796 541 2,389 Add: Undistributed earnings allocated to nonvested restricted stock 365 472 825 388 Less: Undistributed earnings reallocated to nonvested restricted stock (354 ) (416 ) (769 ) (335 ) Numerator for diluted earnings per share $ 67,734 $ 87,844 $ 145,304 $ 75,546 Denominator: Weighted average shares outstanding — basic 88,262 87,951 87,630 87,565 Effect of dilutive securities: Share-based payments 4,580 4,719 4,501 5,246 Convertible senior notes — 8,402 1,901 8,402 Weighted average shares outstanding — diluted 92,842 101,072 94,032 101,213 Basic earnings per share $ .77 $ .99 $ 1.65 $ .83 Diluted earnings per share $ .73 $ .87 $ 1.55 $ .75 |
Receivables (Tables)
Receivables (Tables) | 9 Months Ended |
Aug. 31, 2019 | |
Receivables [Abstract] | |
Schedule of Receivables | Receivables consisted of the following (in thousands): August 31, November 30, Due from utility companies, improvement districts and municipalities $ 130,339 $ 113,434 Recoveries related to self-insurance and other legal claims 115,904 138,261 Refundable deposits and bonds 11,453 14,115 Recoveries related to warranty and other claims 2,315 4,750 Other 40,793 33,775 Subtotal 300,804 304,335 Allowance for doubtful accounts (9,312 ) (11,505 ) Total $ 291,492 $ 292,830 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Aug. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories consisted of the following (in thousands): August 31, November 30, Homes under construction $ 1,587,617 $ 1,125,152 Land under development 2,150,088 2,219,936 Land held for future development or sale (a) 181,371 237,751 Total $ 3,919,076 $ 3,582,839 (a) Land held for sale totaled $27.8 million at August 31, 2019 and $9.8 million at November 30, 2018 |
Schedule of Capitalized Interest Costs | Our interest costs were as follows (in thousands): Three Months Ended August 31, Nine Months Ended August 31, 2019 2018 2019 2018 Capitalized interest at beginning of period $ 212,160 $ 247,276 $ 209,129 $ 262,191 Interest incurred 36,024 35,228 107,356 115,096 Interest amortized to construction and land costs (a) (38,558 ) (53,288 ) (106,859 ) (148,071 ) Capitalized interest at end of period (b) $ 209,626 $ 229,216 $ 209,626 $ 229,216 (a) Interest amortized to construction and land costs for the three months ended August 31, 2018 included $.3 million related to land sales during the period. Interest amortized to construction and land costs for the nine months ended August 31, 2019 and 2018 included $.6 million and $4.3 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. |
Inventory Impairments and Lan_2
Inventory Impairments and Land Option Contract Abandonments (Tables) | 9 Months Ended |
Aug. 31, 2019 | |
Inventory Impairments and Land Option Contract Abandonments [Abstract] | |
Schedule of Significant Unobservable Inputs | The following table summarizes significant quantitative unobservable inputs we utilized in our fair value measurements with respect to the impaired communities written down to fair value during the periods presented: Three Months Ended August 31, Nine Months Ended August 31, Unobservable Input (a) 2019 2018 2019 2018 Average selling price $325,300 - $957,200 $306,400 - $407,300 $315,000 - $1,045,400 $306,400 - $774,100 Deliveries per month 2 - 4 2 - 6 1 - 4 2 - 6 Discount rate 17% 17% - 18% 17% 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. |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 9 Months Ended |
Aug. 31, 2019 | |
Variable Interest Entities [Abstract] | |
Summary of Interests in Land Option Contracts | The following table presents a summary of our interests in land option contracts and other similar contracts (in thousands): August 31, 2019 November 30, 2018 Cash Deposits Aggregate Purchase Price Cash Deposits Aggregate Purchase Price Unconsolidated VIEs $ 37,720 $ 932,770 $ 26,542 $ 784,334 Other land option contracts and other similar contracts 32,017 532,159 27,288 586,904 Total $ 69,737 $ 1,464,929 $ 53,830 $ 1,371,238 |
Investments in Unconsolidated_2
Investments in Unconsolidated Joint Ventures (Tables) | 9 Months Ended |
Aug. 31, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Statements of Operations of Unconsolidated Joint Ventures | The following table presents combined condensed information from the statements of operations of our unconsolidated joint ventures (in thousands): Three Months Ended August 31, Nine Months Ended August 31, 2019 2018 2019 2018 Revenues $ 5,729 $ 35,391 $ 21,707 $ 52,015 Construction and land costs (5,686 ) (22,211 ) (21,704 ) (38,866 ) Other expense, net (708 ) (226 ) (1,946 ) (2,209 ) Income (loss) $ (665 ) $ 12,954 $ (1,943 ) $ 10,940 |
Balance Sheets of Unconsolidated Joint Ventures | The following table presents combined condensed balance sheet information for our unconsolidated joint ventures (in thousands): August 31, November 30, Assets Cash $ 27,282 $ 18,567 Inventories 134,524 131,074 Other assets 969 530 Total assets $ 162,775 $ 150,171 Liabilities and equity Accounts payable and other liabilities $ 14,133 $ 11,374 Notes payable (a) 37,340 17,956 Equity 111,302 120,841 Total liabilities and equity $ 162,775 $ 150,171 (a) As of August 31, 2019 and November 30, 2018 , one of our unconsolidated joint ventures had a construction loan agreement with a third-party lender to finance its land development activities, with the outstanding debt secured by the underlying property and related project assets and non-recourse to us. All of the outstanding secured debt at August 31, 2019 is scheduled to mature in February 2020. None of our other unconsolidated joint ventures had outstanding debt at August 31, 2019 or November 30, 2018 |
Information Related Investments in Unconsolidated Joint Ventures | The following table presents additional information relating to our investments in unconsolidated joint ventures (dollars in thousands): August 31, November 30, Number of investments in unconsolidated joint ventures 6 6 Investments in unconsolidated joint ventures $ 57,168 $ 61,960 Number of unconsolidated joint venture lots controlled under land option contracts and other similar contracts 8 36 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 9 Months Ended |
Aug. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | Property and equipment, net consisted of the following (in thousands): August 31, November 30, Computer software and equipment $ 25,580 $ 20,940 Model furnishings and sales office improvements (a) 76,805 — Leasehold improvements, office furniture and equipment (b) 15,790 23,491 Subtotal 118,175 44,431 Less accumulated depreciation (a) (54,056 ) (20,148 ) Total $ 64,119 $ 24,283 (a) The balance at August 31, 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 – Basis of Presentation and 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 will be recognized on a straight-line basis over a 10 |
Other Assets (Tables)
Other Assets (Tables) | 9 Months Ended |
Aug. 31, 2019 | |
Other Assets [Abstract] | |
Schedule of Other Assets | Other assets consisted of the following (in thousands): August 31, November 30, Cash surrender value of corporate-owned life insurance contracts $ 74,694 $ 73,721 Prepaid expenses and other 10,821 9,379 Total $ 85,515 $ 83,100 |
Accrued Expenses and Other Li_2
Accrued Expenses and Other Liabilities (Tables) | 9 Months Ended |
Aug. 31, 2019 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses and Other Liabilities | Accrued expenses and other liabilities consisted of the following (in thousands): August 31, November 30, Self-insurance and other litigation liabilities $ 258,727 $ 283,651 Employee compensation and related benefits 132,669 148,549 Warranty liability 86,172 82,490 Accrued interest payable 44,491 31,180 Customer deposits 26,823 19,491 Inventory-related obligations (a) 16,817 40,892 Real estate and business taxes 14,796 16,639 Other 48,673 43,376 Total $ 629,168 $ 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 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. |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Aug. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income tax benefit computed at the statutory U.S federal income tax rate and income tax benefit (expense) provided in the consolidated statements of operations | Our income tax expense and effective tax rates were as follows (dollars in thousands): Three Months Ended August 31, Nine Months Ended August 31, 2019 2018 2019 2018 Income tax expense $ 23,800 $ 27,200 $ 37,600 $ 165,500 Effective tax rate 25.9 % 23.7 % 20.5 % 69.2 % |
Notes Payable (Tables)
Notes Payable (Tables) | 9 Months Ended |
Aug. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Mortgages and Notes Payable | Notes payable consisted of the following (in thousands): August 31, November 30, Unsecured revolving credit facility $ 50,000 $ — Mortgages and land contracts due to land sellers and other loans 16,856 40,038 4.75% Senior notes due May 15, 2019 — 399,483 8.00% Senior notes due March 15, 2020 349,044 347,790 7.00% Senior notes due December 15, 2021 447,957 447,359 7.50% Senior notes due September 15, 2022 348,129 347,731 7.625% Senior notes due May 15, 2023 351,860 248,074 6.875% Senior notes due June 15, 2027 296,289 — 1.375% Convertible senior notes due February 1, 2019 — 229,788 Total $ 1,860,135 $ 2,060,263 |
Fair Value Disclosures (Tables)
Fair Value Disclosures (Tables) | 9 Months Ended |
Aug. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets Measured at Fair Value on Nonrecurring Basis | The following table presents the fair value hierarchy, pre-impairment value, inventory impairment charges and fair value for our assets measured on a nonrecurring basis for the nine months ended August 31, 2019 and the year ended November 30, 2018 (in thousands): August 31, 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 Level 3 $ 31,673 $ (11,482 ) $ 20,191 $ 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 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. |
Schedule of Fair Value Hierarchy, Carrying Values, and Estimated Fair Values of Financial Instruments | The following table presents the fair value hierarchy, carrying values and estimated fair values of our financial instruments, except those for which the carrying values approximate fair values (in thousands): August 31, 2019 November 30, 2018 Fair Value Hierarchy Carrying Value (a) Estimated Fair Value Carrying Value (a) Estimated Fair Value Financial Liabilities: Senior notes Level 2 $ 1,793,279 $ 1,967,313 $ 1,790,437 $ 1,853,438 Convertible senior notes Level 2 — — 229,788 229,425 (a) |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Aug. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Changes in the Warranty Liability | The changes in our warranty liability were as follows (in thousands): Three Months Ended August 31, Nine Months Ended August 31, 2019 2018 2019 2018 Balance at beginning of period $ 83,030 $ 76,404 $ 82,490 $ 69,798 Warranties issued 9,067 9,590 23,500 27,243 Payments (5,925 ) (6,023 ) (17,018 ) (17,070 ) Adjustments — — (2,800 ) — Balance at end of period $ 86,172 $ 79,971 $ 86,172 $ 79,971 |
Schedule of Self-Insurance Liability | The changes in our self-insurance liability were as follows (in thousands): Three Months Ended August 31, Nine Months Ended August 31, 2019 2018 2019 2018 Balance at beginning of period $ 170,978 $ 176,715 $ 176,841 $ 177,695 Self-insurance expense (a) 4,802 5,554 12,844 14,264 Payments (b) (5,162 ) (3,496 ) (19,067 ) (13,186 ) Balance at end of period $ 170,618 $ 178,773 $ 170,618 $ 178,773 (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. |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Aug. 31, 2019 | |
Equity [Abstract] | |
Summary of Changes in Stockholders’ Equity | A summary of changes in stockholders’ equity is presented below (in thousands): Three Months Ended August 31, 2019 and 2018 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 May 31, 2019 120,350 (7,860 ) (24,264 ) $ 120,350 $ 775,693 $ 1,981,795 $ (9,565 ) $ (85,246 ) $ (587,817 ) $ 2,195,210 Net income — — — — — 68,136 — — — 68,136 Dividends on common stock — — — — — (7,897 ) — — — (7,897 ) Employee stock options/other 173 — — 173 2,094 — — — — 2,267 Stock-based compensation — — — — 4,513 — — — — 4,513 Balance at August 31, 2019 120,523 (7,860 ) (24,264 ) $ 120,523 $ 782,300 $ 2,042,034 $ (9,565 ) $ (85,246 ) $ (587,817 ) $ 2,262,229 Balance at May 31, 2018 118,397 (8,460 ) (22,248 ) $ 118,397 $ 736,047 $ 1,717,248 $ (16,924 ) $ (91,760 ) $ (548,365 ) $ 1,914,643 Net income — — — — — 87,476 — — — 87,476 Dividends on common stock — — — — — (2,186 ) — — — (2,186 ) Employee stock options/other 652 — — 652 12,010 — — — — 12,662 Stock awards — — 47 — (1,157 ) — — — 1,157 — Stock-based compensation — — — — 3,354 — — — — 3,354 Balance at August 31, 2018 119,049 (8,460 ) (22,201 ) $ 119,049 $ 750,254 $ 1,802,538 $ (16,924 ) $ (91,760 ) $ (547,208 ) $ 2,015,949 Nine Months Ended August 31, 2019 and 2018 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, 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 — — — — — 145,608 — — — 145,608 Dividends on common stock — — — — — (12,352 ) — — — (12,352 ) Employee stock options/other 1,271 — — 1,271 17,458 — — — — 18,729 Stock awards 56 297 (4 ) 56 (3,207 ) — — 3,226 (75 ) — Stock-based compensation — — — — 14,479 — — — — 14,479 Tax payments associated with stock-based compensation awards — — (147 ) — — — — — (3,345 ) (3,345 ) Balance at August 31, 2019 120,523 (7,860 ) (24,264 ) $ 120,523 $ 782,300 $ 2,042,034 $ (9,565 ) $ (85,246 ) $ (587,817 ) $ 2,262,229 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 — — — — — 73,529 — — — 73,529 Dividends on common stock — — — — — (6,686 ) — — — (6,686 ) Employee stock options/other 1,049 — — 1,049 16,384 — — — — 17,433 Stock awards 54 438 37 54 (5,762 ) — — 4,749 959 — Stock-based compensation — — — — 12,149 — — — — 12,149 Tax payments associated with stock-based compensation awards — — (217 ) — — — — — (6,787 ) (6,787 ) Balance at August 31, 2018 119,049 (8,460 ) (22,201 ) $ 119,049 $ 750,254 $ 1,802,538 $ (16,924 ) $ (91,760 ) $ (547,208 ) $ 2,015,949 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Aug. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Outstanding and Exercisable Stock Options | The following table summarizes stock option transactions for the nine months ended August 31, 2019 : Options Weighted Average Exercise Price Options outstanding at beginning of period 7,237,544 $ 16.02 Granted — — Exercised (1,263,505 ) 14.78 Cancelled (180,000 ) 33.59 Options outstanding at end of period 5,794,039 $ 15.75 Options exercisable at end of period 5,506,883 $ 15.72 |
Supplemental Disclosure to Co_2
Supplemental Disclosure to Consolidated Statements of Cash Flows (Tables) | 9 Months Ended |
Aug. 31, 2019 | |
Supplemental Cash Flow Information [Abstract] | |
Schedule of Supplemental Cash Flow Disclosures | The following are supplemental disclosures to the consolidated statements of cash flows (in thousands): Nine Months Ended August 31, 2019 2018 Summary of cash and cash equivalents at end of period: Homebuilding $ 183,794 $ 354,361 Financial services 1,043 615 Total $ 184,837 $ 354,976 Supplemental disclosures of cash flow information: Interest paid, net of amounts capitalized $ (13,311 ) $ (5,529 ) Income taxes paid 3,962 9,808 Supplemental disclosures 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 (20,048 ) 20,370 Increase in inventories due to distributions of land and land development from an unconsolidated joint venture 6,288 10,390 Inventories acquired through seller financing 8,967 44,586 |
Supplemental Guarantor Inform_2
Supplemental Guarantor Information (Tables) | 9 Months Ended |
Aug. 31, 2019 | |
Guarantees [Abstract] | |
Condensed Consolidated Statements of Operations | Condensed Consolidating Statements of Operations (in thousands) Three Months Ended August 31, 2019 KB Home Corporate Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Total revenues $ — $ 1,061,698 $ 99,088 $ — $ 1,160,786 Homebuilding: Revenues $ — $ 1,061,698 $ 95,157 $ — $ 1,156,855 Construction and land costs — (859,733 ) (84,021 ) — (943,754 ) Selling, general and administrative expenses (23,619 ) (95,376 ) (8,631 ) — (127,626 ) Operating income (loss) (23,619 ) 106,589 2,505 — 85,475 Interest income 140 20 41 — 201 Interest expense (34,488 ) (175 ) (1,361 ) 36,024 — Intercompany interest 84,880 (45,826 ) (3,030 ) (36,024 ) — Equity in loss of unconsolidated joint ventures — (384 ) — — (384 ) Homebuilding pretax income (loss) 26,913 60,224 (1,845 ) — 85,292 Financial services pretax income — — 6,644 — 6,644 Total pretax income 26,913 60,224 4,799 — 91,936 Income tax expense (6,900 ) (14,900 ) (2,000 ) — (23,800 ) Equity in net income of subsidiaries 48,123 — — (48,123 ) — Net income $ 68,136 $ 45,324 $ 2,799 $ (48,123 ) $ 68,136 Three Months Ended August 31, 2018 KB Home Corporate Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Total revenues $ — $ 1,144,253 $ 81,094 $ — $ 1,225,347 Homebuilding: Revenues $ — $ 1,144,253 $ 77,622 $ — $ 1,221,875 Construction and land costs — (927,346 ) (74,163 ) — (1,001,509 ) Selling, general and administrative expenses (24,688 ) (81,540 ) (8,525 ) — (114,753 ) Operating income (loss) (24,688 ) 135,367 (5,066 ) — 105,613 Interest income 380 — 78 — 458 Interest expense (33,319 ) (669 ) (1,240 ) 35,228 — Intercompany interest 78,519 (40,675 ) (2,616 ) (35,228 ) — Equity in income of unconsolidated joint ventures — 3,493 — — 3,493 Homebuilding pretax income (loss) 20,892 97,516 (8,844 ) — 109,564 Financial services pretax income — — 5,112 — 5,112 Total pretax income (loss) 20,892 97,516 (3,732 ) — 114,676 Income tax expense (3,500 ) (22,700 ) (1,000 ) — (27,200 ) Equity in net income of subsidiaries 70,084 — — (70,084 ) — Net income (loss) $ 87,476 $ 74,816 $ (4,732 ) $ (70,084 ) $ 87,476 |
Condensed Consolidated Balance Sheets | Condensed Consolidating Balance Sheets (in thousands) August 31, 2019 KB Home Corporate Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Assets Homebuilding: Cash and cash equivalents $ 67,247 $ 104,043 $ 12,504 $ — $ 183,794 Receivables 2,368 226,063 63,061 — 291,492 Inventories — 3,623,232 295,844 — 3,919,076 Investments in unconsolidated joint ventures — 57,168 — — 57,168 Property and equipment, net 22,732 38,024 3,363 — 64,119 Deferred tax assets, net 71,939 282,066 48,090 — 402,095 Other assets 81,192 2,773 1,550 — 85,515 245,478 4,333,369 424,412 — 5,003,259 Financial services — — 31,911 — 31,911 Intercompany receivables 3,869,512 — 183,833 (4,053,345 ) — Investments in subsidiaries 159,161 — — (159,161 ) — Total assets $ 4,274,151 $ 4,333,369 $ 640,156 $ (4,212,506 ) $ 5,035,170 Liabilities and stockholders’ equity Homebuilding: Accounts payable, accrued expenses and other liabilities $ 135,855 $ 507,361 $ 267,807 $ — $ 911,023 Notes payable 1,818,169 16,856 25,110 — 1,860,135 1,954,024 524,217 292,917 — 2,771,158 Financial services — — 1,783 — 1,783 Intercompany payables 57,898 3,748,931 246,516 (4,053,345 ) — Stockholders’ equity 2,262,229 60,221 98,940 (159,161 ) 2,262,229 Total liabilities and stockholders’ equity $ 4,274,151 $ 4,333,369 $ 640,156 $ (4,212,506 ) $ 5,035,170 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 5,523 310 — 24,283 Deferred tax assets, net 84,564 303,669 53,587 — 441,820 Other assets 77,288 4,007 1,805 — 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 |
Condensed Consolidated Statements of Cash Flows | Condensed Consolidating Statements of Cash Flows (in thousands) Nine Months Ended August 31, 2019 KB Home Corporate Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Net cash provided by (used in) operating activities $ 92,935 $ (335,428 ) $ 90,349 $ — $ (152,144 ) Cash flows from investing activities: Contributions to unconsolidated joint ventures — (7,656 ) — — (7,656 ) 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 (4,728 ) (18,252 ) (9,231 ) — (32,211 ) Intercompany (274,010 ) — — 274,010 — Net cash used in investing activities (278,738 ) (15,103 ) (9,231 ) 274,010 (29,062 ) 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 (630,000 ) — — — (630,000 ) Borrowings under revolving credit facility 460,000 — — — 460,000 Repayments under revolving credit facility (410,000 ) — — — (410,000 ) Payments on mortgages and land contracts due to land sellers and other loans — (32,149 ) — — (32,149 ) Issuance of common stock under employee stock plans 18,729 — — — 18,729 Tax payments associated with stock-based compensation awards (3,345 ) — — — (3,345 ) Payments of cash dividends (12,352 ) — — — (12,352 ) Intercompany — 372,454 (98,444 ) (274,010 ) — Net cash provided by (used in) financing activities (176,927 ) 340,305 (98,444 ) (274,010 ) (209,076 ) Net decrease in cash and cash equivalents (362,730 ) (10,226 ) (17,326 ) — (390,282 ) Cash and cash equivalents at beginning of period 429,977 114,269 30,873 — 575,119 Cash and cash equivalents at end of period $ 67,247 $ 104,043 $ 13,547 $ — $ 184,837 Nine Months Ended August 31, 2018 KB Home Corporate Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Net cash provided by (used in) operating activities $ 50,507 $ (78,593 ) $ (21,422 ) $ — $ (49,508 ) Cash flows from investing activities: Contributions to unconsolidated joint ventures — (15,640 ) — — (15,640 ) Return of investments in unconsolidated joint ventures — 9,934 — — 9,934 Purchases of property and equipment, net (3,508 ) (520 ) (109 ) — (4,137 ) Intercompany (80,955 ) — — 80,955 — Net cash used in investing activities (84,463 ) (6,226 ) (109 ) 80,955 (9,843 ) 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 — (9,574 ) (920 ) — (10,494 ) Issuance of common stock under employee stock plans 17,433 — — — 17,433 Tax payments associated with stock-based compensation awards (6,787 ) — — — (6,787 ) Payments of cash dividends (6,686 ) — — — (6,686 ) Intercompany — 83,560 (2,605 ) (80,955 ) — Net cash provided by (used in) financing activities (296,040 ) 73,986 (3,525 ) (80,955 ) (306,534 ) Net decrease in cash and cash equivalents (329,996 ) (10,833 ) (25,056 ) — (365,885 ) Cash and cash equivalents at beginning of period 575,193 104,120 41,548 — 720,861 Cash and cash equivalents at end of period $ 245,197 $ 93,287 $ 16,492 $ — $ 354,976 |
Basis of Presentation and Sig_4
Basis of Presentation and Significant Accounting Policies (Narratives) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Aug. 31, 2019 | Aug. 31, 2018 | Aug. 31, 2019 | Aug. 31, 2018 | Nov. 30, 2018 | Dec. 01, 2018 | |
Cash equivalents | $ 11,400 | $ 11,400 | $ 385,200 | |||
Other comprehensive income (loss) | 68,100 | $ 87,500 | 145,600 | $ 73,500 | ||
Retained earnings | 2,042,034 | 2,042,034 | 1,897,168 | $ 1,908,778 | ||
Customer deposits | 26,800 | 26,800 | $ 19,500 | |||
Financial Service [Member] | ||||||
Contract assets | 20,100 | 20,100 | 19,700 | |||
Home Building [Member] | Product Concentration Risk [Member] | Total Revenues [member] | ||||||
Percentage of total revenue | 99.70% | |||||
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 [Member] | ||||||
Retained earnings | $ 10,387 | $ 10,387 | 11,610 | |||
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 [Member] | Financial Service [Member] | ||||||
Contract assets | $ 19,728 |
Basis of Presentation and Sig_5
Basis of Presentation and Significant Accounting Policies (Cumulative Effect of Changes on Consolidated Balance Sheets Resulting From Adoption of ASC 606) (Details) - USD ($) $ in Thousands | Aug. 31, 2019 | Dec. 01, 2018 | Nov. 30, 2018 | Aug. 31, 2018 |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Inventories | $ 3,919,076 | $ 3,582,839 | ||
Property and equipment, net | 64,119 | 24,283 | ||
Total assets | 5,035,170 | 5,073,571 | ||
Retained earnings | 2,042,034 | $ 1,908,778 | 1,897,168 | |
Accounting Standards Update 2014-09 [Member] | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Inventories | (35,288) | $ 0 | ||
Property and equipment, net | 31,194 | $ 0 | ||
Calculated under Revenue Guidance in Effect before Topic 606 [Member] | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Retained earnings | 2,031,647 | 1,897,168 | ||
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 [Member] | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Retained earnings | 10,387 | 11,610 | ||
Home Building [Member] | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Inventories | 3,919,076 | 3,547,551 | 3,582,839 | |
Deferred tax assets, net | 402,095 | 437,796 | 441,820 | |
Property and equipment, net | 64,119 | 55,477 | 24,283 | |
Total assets | 5,003,259 | 5,061,191 | ||
Home Building [Member] | Calculated under Revenue Guidance in Effect before Topic 606 [Member] | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Inventories | 3,964,873 | 3,582,839 | ||
Deferred tax assets, net | 405,719 | 441,820 | ||
Property and equipment, net | 24,431 | 24,283 | ||
Home Building [Member] | Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 [Member] | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Inventories | (45,797) | (35,288) | ||
Deferred tax assets, net | (3,624) | (4,024) | ||
Property and equipment, net | 39,688 | 31,194 | ||
Financial Service [Member] | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Total assets | 31,911 | 32,108 | 12,380 | |
Contract assets | 20,100 | 19,700 | ||
Financial Service [Member] | Calculated under Revenue Guidance in Effect before Topic 606 [Member] | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Total assets | 11,791 | $ 12,380 | ||
Financial Service [Member] | Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 [Member] | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Total assets | $ 20,120 | |||
Contract assets | $ 19,728 |
Basis of Presentation and Sig_6
Basis of Presentation and Significant Accounting Policies (Impacts of Adopting ASC 606) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Aug. 31, 2019 | Aug. 31, 2018 | Aug. 31, 2019 | Aug. 31, 2018 | Dec. 01, 2018 | Nov. 30, 2018 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||
Total revenues | $ 1,160,786 | $ 1,225,347 | $ 2,994,072 | $ 3,198,393 | ||
Total pretax income | 91,936 | 114,676 | 183,208 | 239,029 | ||
Income tax expense | (23,800) | (27,200) | (37,600) | (165,500) | ||
Net income | $ 68,136 | $ 87,476 | $ 145,608 | $ 73,529 | ||
Diluted earnings per share (in dollars per share) | $ 0.73 | $ 0.87 | $ 1.55 | $ 0.75 | ||
Assets | ||||||
Inventories | $ 3,919,076 | $ 3,919,076 | $ 3,582,839 | |||
Property and equipment, net | 64,119 | 64,119 | 24,283 | |||
Total assets | 5,035,170 | 5,035,170 | 5,073,571 | |||
Stockholders’ equity: | ||||||
Retained earnings | 2,042,034 | 2,042,034 | $ 1,908,778 | 1,897,168 | ||
Calculated under Revenue Guidance in Effect before Topic 606 [Member] | ||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||
Total pretax income | 92,008 | 184,830 | ||||
Income tax expense | (23,800) | (38,000) | ||||
Net income | $ 68,208 | $ 146,830 | ||||
Diluted earnings per share (in dollars per share) | $ 0.73 | $ 1.56 | ||||
Stockholders’ equity: | ||||||
Retained earnings | $ 2,031,647 | $ 2,031,647 | 1,897,168 | |||
Financial Service [Member] | ||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||
Contract assets | 20,100 | 20,100 | 19,700 | |||
Total revenues | 3,931 | $ 3,472 | 9,758 | $ 8,640 | ||
Selling, general and administrative expenses | (1,003) | (945) | (3,067) | (2,855) | ||
Operating income | 2,928 | 2,527 | 6,691 | 5,785 | ||
Total pretax income | 6,644 | 5,112 | 13,709 | 10,150 | ||
Assets | ||||||
Total assets | 31,911 | 31,911 | 32,108 | 12,380 | ||
Financial Service [Member] | Calculated under Revenue Guidance in Effect before Topic 606 [Member] | ||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||
Total revenues | 3,751 | 9,366 | ||||
Assets | ||||||
Total assets | 11,791 | 11,791 | 12,380 | |||
Home Building [Member] | ||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||
Total revenues | 1,156,855 | 1,221,875 | 2,984,314 | 3,189,753 | ||
Construction and land costs | (943,754) | (1,001,509) | (2,458,353) | (2,642,231) | ||
Selling, general and administrative expenses | (127,626) | (114,753) | (357,048) | (323,708) | ||
Operating income | 85,475 | 105,613 | 168,913 | 223,814 | ||
Total pretax income | 85,292 | 109,564 | 169,499 | 228,879 | ||
Assets | ||||||
Inventories | 3,919,076 | 3,919,076 | 3,547,551 | 3,582,839 | ||
Deferred tax assets, net | 402,095 | 402,095 | 437,796 | 441,820 | ||
Property and equipment, net | 64,119 | 64,119 | 55,477 | 24,283 | ||
Total assets | 5,003,259 | 5,003,259 | 5,061,191 | |||
Home Building [Member] | Calculated under Revenue Guidance in Effect before Topic 606 [Member] | ||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||
Total revenues | 1,156,112 | 2,982,201 | ||||
Construction and land costs | (951,613) | (2,478,583) | ||||
Selling, general and administrative expenses | (118,772) | (332,691) | ||||
Operating income | 85,727 | 170,927 | ||||
Assets | ||||||
Inventories | 3,964,873 | 3,964,873 | 3,582,839 | |||
Deferred tax assets, net | 405,719 | 405,719 | 441,820 | |||
Property and equipment, net | 24,431 | 24,431 | $ 24,283 | |||
Accounting Standards Update 2014-09 [Member] | ||||||
Assets | ||||||
Inventories | 0 | 0 | (35,288) | |||
Property and equipment, net | $ 0 | $ 0 | 31,194 | |||
Accounting Standards Update 2014-09 [Member] | Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | ||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||
Total pretax income | (72) | (1,622) | ||||
Income tax expense | 0 | 400 | ||||
Net income | $ (72) | $ (1,222) | ||||
Diluted earnings per share (in dollars per share) | $ 0 | $ (0.01) | ||||
Stockholders’ equity: | ||||||
Retained earnings | $ 10,387 | $ 10,387 | 11,610 | |||
Accounting Standards Update 2014-09 [Member] | Financial Service [Member] | Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | ||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||
Contract assets | 19,728 | |||||
Total revenues | 180 | 392 | ||||
Assets | ||||||
Total assets | 20,120 | 20,120 | ||||
Accounting Standards Update 2014-09 [Member] | Home Building [Member] | Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | ||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||
Total revenues | 743 | 2,113 | ||||
Construction and land costs | 7,859 | 20,230 | ||||
Selling, general and administrative expenses | (8,854) | (24,357) | ||||
Operating income | (252) | (2,014) | ||||
Assets | ||||||
Inventories | (45,797) | (45,797) | (35,288) | |||
Deferred tax assets, net | (3,624) | (3,624) | (4,024) | |||
Property and equipment, net | $ 39,688 | $ 39,688 | $ 31,194 |
Segment Information (Narratives
Segment Information (Narratives) (Details) | 3 Months Ended |
Aug. 31, 2019segment | |
Schedule of Equity Method Investments [Line Items] | |
Number of reporting segments | 5 |
KBHS, LLC [Member] | |
Schedule of Equity Method Investments [Line Items] | |
Ownership interest in the venture | 50.00% |
KBHS, LLC [Member] | Stearns Lending, LLC [Member] | |
Schedule of Equity Method Investments [Line Items] | |
Ownership interest in the venture | 50.00% |
Home Building [Member] | |
Schedule of Equity Method Investments [Line Items] | |
Number of reporting segments | 4 |
Financial Service [Member] | |
Schedule of Equity Method Investments [Line Items] | |
Number of reporting segments | 1 |
Segment Information (Segment Fi
Segment Information (Segment Financial Information) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Aug. 31, 2019 | Aug. 31, 2018 | Aug. 31, 2019 | Aug. 31, 2018 | Dec. 01, 2018 | Nov. 30, 2018 | ||
Segment Reporting Information [Line Items] | |||||||
Inventory impairments and land option contract abandonments | $ 13,143 | $ 19,925 | |||||
Revenues: | |||||||
Total revenues | $ 1,160,786 | $ 1,225,347 | 2,994,072 | 3,198,393 | |||
Pretax income (loss): | |||||||
Pretax income (loss) | 91,936 | 114,676 | 183,208 | 239,029 | |||
Inventories: Homes under Construction | 1,587,617 | 1,587,617 | $ 1,125,152 | ||||
Inventories: Land under development | 2,150,088 | 2,150,088 | 2,219,936 | ||||
Inventories: Land held for future development or sale | [1] | 181,371 | 181,371 | 237,751 | |||
Inventories | 3,919,076 | 3,919,076 | 3,582,839 | ||||
Assets | |||||||
Total assets | 5,035,170 | 5,035,170 | 5,073,571 | ||||
Land Option Contract Abandonment [Member] | |||||||
Pretax income (loss): | |||||||
Land option contract abandonment charges | 400 | 1,300 | 1,700 | 2,100 | |||
Home Building [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Inventory impairments and land option contract abandonments | 5,251 | 8,414 | 13,143 | 19,925 | |||
Revenues: | |||||||
Total revenues | 1,156,855 | 1,221,875 | 2,984,314 | 3,189,753 | |||
Pretax income (loss): | |||||||
Pretax income (loss) | 85,292 | 109,564 | 169,499 | 228,879 | |||
Inventories | 3,919,076 | 3,919,076 | $ 3,547,551 | 3,582,839 | |||
Assets | |||||||
Total assets | 5,003,259 | 5,003,259 | 5,061,191 | ||||
Home Building [Member] | West Coast [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Inventory impairments and land option contract abandonments | 5,065 | 4,409 | 12,148 | 15,697 | |||
Revenues: | |||||||
Total revenues | 497,654 | 571,880 | 1,194,728 | 1,455,272 | |||
Pretax income (loss): | |||||||
Pretax income (loss) | 43,775 | 72,996 | 86,480 | 156,472 | |||
Assets | |||||||
Total assets | 2,177,265 | 2,177,265 | 1,880,516 | ||||
Home Building [Member] | Southwest [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Inventory impairments and land option contract abandonments | 126 | 432 | 408 | 432 | |||
Revenues: | |||||||
Total revenues | 180,238 | 196,056 | 522,721 | 528,872 | |||
Pretax income (loss): | |||||||
Pretax income (loss) | 26,366 | 31,065 | 76,433 | 66,619 | |||
Assets | |||||||
Total assets | 695,741 | 695,741 | 631,509 | ||||
Home Building [Member] | Central [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Inventory impairments and land option contract abandonments | 0 | 1,131 | 366 | 1,354 | |||
Revenues: | |||||||
Total revenues | 326,058 | 327,888 | 874,730 | 885,875 | |||
Pretax income (loss): | |||||||
Pretax income (loss) | 34,417 | 32,294 | 80,199 | 80,464 | |||
Assets | |||||||
Total assets | 1,048,958 | 1,048,958 | 1,017,490 | ||||
Home Building [Member] | Southeast [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Inventory impairments and land option contract abandonments | 60 | 2,442 | 221 | 2,442 | |||
Revenues: | |||||||
Total revenues | 152,905 | 126,051 | 392,135 | 319,734 | |||
Pretax income (loss): | |||||||
Pretax income (loss) | 5,272 | (702) | 5,316 | 1,405 | |||
Assets | |||||||
Total assets | 448,391 | 448,391 | 463,224 | ||||
Home Building [Member] | Corporate and Other [Member] | |||||||
Pretax income (loss): | |||||||
Pretax income (loss) | (24,538) | $ (26,089) | (78,929) | $ (76,081) | |||
Assets | |||||||
Total assets | $ 632,904 | $ 632,904 | $ 1,068,452 | ||||
[1] | Land held for sale totaled $27.8 million at August 31, 2019 and $9.8 million at November 30, 2018 |
Financial Services (Schedule of
Financial Services (Schedule of Income (Loss)) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Aug. 31, 2019 | Aug. 31, 2018 | Aug. 31, 2019 | Aug. 31, 2018 | |
Revenues | ||||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 1,160,786 | $ 1,225,347 | $ 2,994,072 | $ 3,198,393 |
Expenses | ||||
Equity in income of unconsolidated joint ventures | 5,859 | 6,691 | ||
Pretax income | 91,936 | 114,676 | 183,208 | 239,029 |
Financial Service [Member] | ||||
Revenues | ||||
Insurance commissions | 2,224 | 1,928 | 5,342 | 4,743 |
Title services | 1,707 | 1,544 | 4,410 | 3,897 |
Interest income | 0 | 0 | 6 | 0 |
Revenue from Contract with Customer, Excluding Assessed Tax | 3,931 | 3,472 | 9,758 | 8,640 |
Selling, General and Administrative Expense | 1,003 | 945 | 3,067 | 2,855 |
Expenses | ||||
Operating income | 2,928 | 2,527 | 6,691 | 5,785 |
Equity in income of unconsolidated joint ventures | 3,716 | 2,585 | 7,018 | 4,365 |
Pretax income | $ 6,644 | $ 5,112 | $ 13,709 | $ 10,150 |
Financial Services (Schedule _2
Financial Services (Schedule of Assets and Liabilities) (Details) - USD ($) $ in Thousands | Aug. 31, 2019 | Dec. 01, 2018 | Nov. 30, 2018 | Aug. 31, 2018 | Nov. 30, 2017 | |
Assets | ||||||
Cash and cash equivalents | $ 184,837 | $ 575,119 | $ 354,976 | $ 720,861 | ||
Receivables | 291,492 | 292,830 | ||||
Investments in unconsolidated joint ventures | 57,168 | 61,960 | ||||
Other assets | 85,515 | 83,100 | ||||
Total assets | 5,035,170 | 5,073,571 | ||||
Financial Service [Member] | ||||||
Assets | ||||||
Cash and cash equivalents | 1,043 | 760 | $ 615 | |||
Receivables | 1,435 | 2,885 | ||||
Investments in unconsolidated joint ventures | 9,162 | 8,594 | ||||
Other assets | [1] | 20,271 | 141 | |||
Total assets | 31,911 | $ 32,108 | 12,380 | |||
Liabilities | ||||||
Accounts payable and accrued expenses | 1,783 | 1,495 | ||||
Total liabilities | 1,783 | $ 1,495 | ||||
Contract assets | $ 20,100 | $ 19,700 | ||||
[1] | Other assets at August 31, 2019 included $20.1 million of contract assets for estimated future renewal commissions due to our adoption of ASC 606 effective December 1, 2018, as described in Note 1 – Basis of Presentation and Significant Accounting Policies. |
Earnings Per Share (Basic and D
Earnings Per Share (Basic and Diluted Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Aug. 31, 2019 | Aug. 31, 2018 | Aug. 31, 2019 | Aug. 31, 2018 | Feb. 01, 2019 | Nov. 30, 2018 | |
Numerator: | ||||||
Net income | $ 68,136 | $ 87,476 | $ 145,608 | $ 73,529 | ||
Less: Distributed earnings allocated to nonvested restricted stock | (48) | (12) | (76) | (37) | ||
Less: Undistributed earnings allocated to nonvested restricted stock | (365) | (472) | (825) | (388) | ||
Numerator for basic earnings per share | 67,723 | 86,992 | 144,707 | 73,104 | ||
Interest expense and amortization of debt issuance costs associated with convertible senior notes, net of taxes | 0 | 796 | 541 | 2,389 | ||
Add: Undistributed earnings allocated to nonvested restricted stock | 365 | 472 | 825 | 388 | ||
Less: Undistributed earnings reallocated to nonvested restricted stock | (354) | (416) | (769) | (335) | ||
Numerator for diluted earnings per share | $ 67,734 | $ 87,844 | $ 145,304 | $ 75,546 | ||
Denominator: | ||||||
Weighted average shares outstanding — basic (in shares) | 88,262 | 87,951 | 87,630 | 87,565 | ||
Effect of dilutive securities: Share-based payments (in shares) | 4,580 | 4,719 | 4,501 | 5,246 | ||
Effect of dilutive securities: Convertible senior notes (in shares) | 0 | 8,402 | 1,901 | 8,402 | ||
Weighted average shares outstanding — diluted (in shares) | 92,842 | 101,072 | 94,032 | 101,213 | ||
Basic earnings (loss) per share (in dollars per share) | $ 0.77 | $ 0.99 | $ 1.65 | $ 0.83 | ||
Diluted earnings (loss) per share (in dollars per share) | $ 0.73 | $ 0.87 | $ 1.55 | $ 0.75 | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 600 | 1,600 | 800 | |||
Mortgages and notes payable | $ 1,860,135 | $ 1,860,135 | $ 2,060,263 | |||
1.375% Convertible senior notes due February 1, 2019 [Member] | Convertible Notes Payable [Member] | ||||||
Mortgages and notes payable | $ 0 | $ 0 | $ 230,000 | $ 229,788 | ||
Senior notes, rate | 1.375% |
Receivables (Details)
Receivables (Details) - USD ($) $ in Thousands | Aug. 31, 2019 | Nov. 30, 2018 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Due from utility companies, improvement districts and municipalities | $ 130,339 | $ 113,434 |
Refundable deposits and bonds | 11,453 | 14,115 |
Other | 40,793 | 33,775 |
Subtotal | 300,804 | 304,335 |
Allowance for doubtful accounts | (9,312) | (11,505) |
Total | 291,492 | 292,830 |
Self Insurance and Other Legal Claims [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Recoveries related to self-insurance and other legal claims | 115,904 | 138,261 |
Recoveries related to warranty and other claims [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Recoveries related to warranty and other claims | $ 2,315 | $ 4,750 |
Inventories (Schedule of Invent
Inventories (Schedule of Inventories) (Details) - USD ($) $ in Thousands | Aug. 31, 2019 | Nov. 30, 2018 | |
Inventories | |||
Homes under construction | $ 1,587,617 | $ 1,125,152 | |
Land under development | 2,150,088 | 2,219,936 | |
Land held for future development | [1] | 181,371 | 237,751 |
Total | 3,919,076 | 3,582,839 | |
Inventory, Land Held-for-sale | $ 27,800 | $ 9,800 | |
[1] | Land held for sale totaled $27.8 million at August 31, 2019 and $9.8 million at November 30, 2018 |
Inventories (Schedule of Capita
Inventories (Schedule of Capitalized Interest Costs) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Aug. 31, 2019 | Aug. 31, 2018 | Aug. 31, 2019 | Aug. 31, 2018 | ||
Interest Costs | |||||
Capitalized interest at beginning of period | $ 212,160 | $ 247,276 | $ 209,129 | $ 262,191 | |
Interest incurred | 36,024 | 35,228 | 107,356 | 115,096 | |
Interest amortized to construction and land costs | [1] | (38,558) | (53,288) | (106,859) | (148,071) |
Capitalized interest at end of period | [2] | $ 209,626 | 229,216 | 209,626 | 229,216 |
Land [Member] | |||||
Interest Costs | |||||
Interest amortized to construction and land costs | $ (300) | $ (600) | $ (4,300) | ||
[1] | (a) Interest amortized to construction and land costs for the three months ended August 31, 2018 included $.3 million | ||||
[2] | b) Capitalized interest amounts reflect the gross amount of capitalized interest, as inventory impairment charges recognized, if any, are not generally allocated to specific components of inventory. |
Inventory Impairments and Lan_3
Inventory Impairments and Land Option Contract Abandonments (Narratives) (Details) | 3 Months Ended | 9 Months Ended | ||||
Aug. 31, 2019USD ($)lotdeliveryRate | Aug. 31, 2018USD ($)deliveryRate | Aug. 31, 2019USD ($)propertylotdeliveryRate | Aug. 31, 2018USD ($)propertydeliveryRate | Nov. 30, 2018USD ($)property | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | ||||||
Number of land parcels or communities evaluated for recoverability | property | 31 | 47 | ||||
Carrying value of communities or land parcels evaluated for impairment | $ 219,200,000 | $ 303,500,000 | $ 219,200,000 | $ 303,500,000 | ||
Inventory impairment charges | 4,800,000 | 7,100,000 | 11,500,000 | 17,800,000 | ||
Aggregate carrying value of inventory impacted by pretax, noncash inventory impairment charges | $ 134,700,000 | $ 134,700,000 | $ 156,100,000 | |||
Number of communities and various other land parcels impacted by pretax, noncash inventory impairment charges | 21 | 21 | 22 | |||
Minimum [Member] | ||||||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | ||||||
Average selling price | [1] | $ 325,300 | $ 306,400 | $ 315,000 | $ 306,400 | |
Deliveries per month | delivery | [1] | 2 | 2 | 1 | 2 | |
Minimum [Member] | Measurement Input, Discount Rate [Member] | ||||||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | ||||||
Discount Rate, Percent | Rate | [1] | 17.00% | 17.00% | 17.00% | 17.00% | |
Maximum [Member] | ||||||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | ||||||
Average selling price | [1] | $ 957,200 | $ 407,300 | $ 1,045,400 | $ 774,100 | |
Deliveries per month | delivery | [1] | 4 | 6 | 4 | 6 | |
Maximum [Member] | Measurement Input, Discount Rate [Member] | ||||||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | ||||||
Discount Rate, Percent | Rate | [1] | 17.00% | 18.00% | 17.00% | 18.00% | |
Land Option Contract Abandonment [Member] | ||||||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | ||||||
Land option contract abandonment charges | $ 400,000 | $ 1,300,000 | $ 1,700,000 | $ 2,100,000 | ||
[1] | 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. |
Variable Interest Entities (Det
Variable Interest Entities (Details) $ in Thousands | Aug. 31, 2019USD ($)joint_venture | Nov. 30, 2018USD ($)joint_venture |
Variable Interest Entity [Line Items] | ||
Number of investments in unconsolidated joint ventures | joint_venture | 6 | 6 |
Cash Deposits | $ 69,737 | $ 53,830 |
Aggregate Purchase Price | 1,464,929 | 1,371,238 |
Pre-acquisition costs related to land option contracts and other similar contracts | 30,800 | 46,900 |
Increase in inventories and accrued expenses and other liabilities | $ 1,800 | $ 21,800 |
Variable Interest Entity, Not Primary Beneficiary [Member] | ||
Variable Interest Entity [Line Items] | ||
Number of investments in unconsolidated joint ventures | joint_venture | 1 | 1 |
Cash Deposits | $ 37,720 | $ 26,542 |
Aggregate Purchase Price | 932,770 | 784,334 |
Other land option contracts and other similar contracts [Member] | ||
Variable Interest Entity [Line Items] | ||
Cash Deposits | 32,017 | 27,288 |
Aggregate Purchase Price | $ 532,159 | $ 586,904 |
Investments in Unconsolidated_3
Investments in Unconsolidated Joint Ventures (Financial Information for Unconsolidated Joint Ventures) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Aug. 31, 2019 | Aug. 31, 2018 | Aug. 31, 2019 | Aug. 31, 2018 | Nov. 30, 2018 | ||
Statements of operations of unconsolidated joint venture | ||||||
Revenues | $ 5,729 | $ 35,391 | $ 21,707 | $ 52,015 | ||
Construction and land costs | (5,686) | (22,211) | (21,704) | (38,866) | ||
Other expense, net | (708) | (226) | (1,946) | (2,209) | ||
Income (loss) | (665) | $ 12,954 | (1,943) | $ 10,940 | ||
Assets | ||||||
Cash | 27,282 | 27,282 | $ 18,567 | |||
Inventories | 134,524 | 134,524 | 131,074 | |||
Other assets | 969 | 969 | 530 | |||
Total assets | 162,775 | 162,775 | 150,171 | |||
Liabilities and equity | ||||||
Accounts payable and other liabilities | 14,133 | 14,133 | 11,374 | |||
Notes payable | [1] | 37,340 | 37,340 | 17,956 | ||
Equity | 111,302 | 111,302 | 120,841 | |||
Total liabilities and equity | $ 162,775 | $ 162,775 | $ 150,171 | |||
[1] | As of August 31, 2019 and November 30, 2018 , one of our unconsolidated joint ventures had a construction loan agreement with a third-party lender to finance its land development activities, with the outstanding debt secured by the underlying property and related project assets and non-recourse to us. All of the outstanding secured debt at August 31, 2019 is scheduled to mature in February 2020. None of our other unconsolidated joint ventures had outstanding debt at August 31, 2019 or November 30, 2018 . |
Investments in Unconsolidated_4
Investments in Unconsolidated Joint Ventures (Information for Investments in Unconsolidated Joint Ventures) (Details) $ in Thousands | 9 Months Ended | |
Aug. 31, 2019USD ($)lotjoint_venture | Nov. 30, 2018USD ($)lotjoint_venture | |
Schedule of Equity Method Investments [Line Items] | ||
Number of investments in unconsolidated joint ventures | 6 | 6 |
Investments in unconsolidated joint ventures | $ | $ 57,168 | $ 61,960 |
Number of Unconsolidated Joint Venture Lots Controlled Under Land Option Contracts | lot | 8 | 36 |
Number of Units in Real Estate Property | lot | 8 | |
Long-term Purchase, Commitment, Amount | $ | $ 3,800 | |
Investments in Unconsolidated Joint Ventures with Debt [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Number of investments in unconsolidated joint ventures | 1 | 1 |
Investments in Unconsolidated Joint Ventures with Purchase Commitments [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Number of investments in unconsolidated joint ventures | 1 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | 9 Months Ended | ||||
Aug. 31, 2019 | Aug. 31, 2018 | Feb. 28, 2019 | Nov. 30, 2018 | ||
Property, Plant and Equipment [Abstract] | |||||
Computer software and equipment | $ 25,580 | $ 20,940 | |||
Model furnishings and sales office improvements | [1] | 76,805 | 0 | ||
Leasehold improvements, office furniture and equipment | [2] | 15,790 | 23,491 | ||
Subtotal | 118,175 | 44,431 | |||
Less accumulated depreciation | [1] | (54,056) | (20,148) | ||
Total | 64,119 | $ 24,283 | |||
Proceeds from sale of building | $ 5,800 | $ 0 | |||
Deferred gain on sale of property | $ 2,200 | ||||
Lessee, Operating Lease, Term of Contract | 10 years | ||||
[1] | The balance at August 31, 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 – Basis of Presentation and Significant Accounting Policies. | ||||
[2] | 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 $2.2 million , which will be recognized on a straight-line basis over a 10 |
Other Assets (Details)
Other Assets (Details) - USD ($) $ in Thousands | Aug. 31, 2019 | Nov. 30, 2018 |
Other Assets [Abstract] | ||
Cash surrender value of corporate-owned life insurance contracts | $ 74,694 | $ 73,721 |
Prepaid expenses and other | 10,821 | 9,379 |
Total | $ 85,515 | $ 83,100 |
Accrued Expenses and Other Li_3
Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands | Aug. 31, 2019 | May 31, 2019 | Nov. 30, 2018 | Aug. 31, 2018 | May 31, 2018 | Nov. 30, 2017 | |
Payables and Accruals [Abstract] | |||||||
Self-insurance and other litigation liabilities | $ 258,727 | $ 283,651 | |||||
Employee compensation and related benefits | 132,669 | 148,549 | |||||
Warranty liability | 86,172 | $ 83,030 | 82,490 | $ 79,971 | $ 76,404 | $ 69,798 | |
Accrued interest payable | 44,491 | 31,180 | |||||
Customer deposits | 26,823 | 19,491 | |||||
Inventory-related liabilities | [1] | 16,817 | 40,892 | ||||
Real estate and business taxes | 14,796 | 16,639 | |||||
Other | 48,673 | 43,376 | |||||
Total | $ 629,168 | $ 666,268 | |||||
[1] | 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. |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Aug. 31, 2019 | Aug. 31, 2018 | Aug. 31, 2019 | Aug. 31, 2018 | Nov. 30, 2018 | |
Income Tax Expense (Benefit), Continuing Operations [Abstract] | |||||
Income tax expense | $ 23,800,000 | $ 27,200,000 | $ 37,600,000 | $ 165,500,000 | |
Effective tax rate | 25.90% | 23.70% | 20.50% | 69.20% | |
Net (increase) reduction in valuation allowance | $ 3,300,000 | $ 3,300,000 | |||
Excess tax benefits related to stock-based compensation | (600,000) | (2,900,000) | $ (3,000,000) | ||
Tax cuts and jobs act, non-cash charge | 111,200,000 | ||||
Tax cuts and jobs act, re-measurement of deferred tax assets | 107,900,000 | ||||
Tax credits | $ (3,000,000) | (4,300,000) | $ 7,200,000 | ||
Deferred tax assets | $ 422,300,000 | 422,300,000 | $ 465,400,000 | ||
Valuation allowance | 20,200,000 | 20,200,000 | 23,600,000 | ||
Adjustments to deferred tax valuation allowance | 0 | ||||
Gross unrecognized tax benefits (including interest and penalties) | $ 0 | $ 0 | $ 0 |
Notes Payable (Schedule Notes P
Notes Payable (Schedule Notes Payable) (Details) - USD ($) $ in Thousands | Aug. 31, 2019 | Feb. 01, 2019 | Nov. 30, 2018 |
Debt Instrument [Line Items] | |||
Mortgages and notes payable | $ 1,860,135 | $ 2,060,263 | |
Mortgages and land contracts due to land sellers and other loans | |||
Debt Instrument [Line Items] | |||
Mortgages and notes payable | $ 16,856 | 40,038 | |
Senior Notes [Member] | 4.75% Senior notes due May 15, 2019 [Member] | |||
Debt Instrument [Line Items] | |||
Senior notes, rate | 4.75% | ||
Mortgages and notes payable | $ 0 | 399,483 | |
Senior Notes [Member] | 8.00% Senior notes due March 15, 2020 [Member] | |||
Debt Instrument [Line Items] | |||
Senior notes, rate | 8.00% | ||
Mortgages and notes payable | $ 349,044 | 347,790 | |
Senior Notes [Member] | 7.00% Senior notes due December 15, 2021 [Member] | |||
Debt Instrument [Line Items] | |||
Senior notes, rate | 7.00% | ||
Mortgages and notes payable | $ 447,957 | 447,359 | |
Senior Notes [Member] | 7.50% Senior notes due September 15, 2022 [Member] | |||
Debt Instrument [Line Items] | |||
Senior notes, rate | 7.50% | ||
Mortgages and notes payable | $ 348,129 | 347,731 | |
Senior Notes [Member] | 7.625% Senior notes due May 15, 2023 [Member] | |||
Debt Instrument [Line Items] | |||
Senior notes, rate | 7.625% | ||
Mortgages and notes payable | $ 351,860 | 248,074 | |
Senior Notes [Member] | 6.875% Senior notes due June 15, 2027 [Member] | |||
Debt Instrument [Line Items] | |||
Senior notes, rate | 6.875% | ||
Mortgages and notes payable | $ 296,289 | 0 | |
Convertible Notes Payable [Member] | 1.375% Convertible senior notes due February 1, 2019 [Member] | |||
Debt Instrument [Line Items] | |||
Senior notes, rate | 1.375% | ||
Mortgages and notes payable | 0 | $ 230,000 | 229,788 |
Revolving Credit Facility [Member] | Line of Credit [Member] | |||
Debt Instrument [Line Items] | |||
Mortgages and notes payable | $ 50,000 | $ 0 |
Notes Payable (Narratives) (Det
Notes Payable (Narratives) (Details) - USD ($) | Mar. 08, 2019 | Feb. 20, 2019 | Feb. 01, 2019 | Aug. 31, 2019 | Aug. 31, 2019 | Aug. 31, 2018 | Nov. 30, 2018 |
Debt Instrument [Line Items] | |||||||
Unamortized debt issuance costs, premiums and discounts | $ 6,700,000 | $ 6,700,000 | $ 9,800,000 | ||||
Letters of credit outstanding | 38,300,000 | 38,300,000 | 28,000,000 | ||||
Inventories pledged to collateralize mortgages and land contracts, carrying value | 41,000,000 | 41,000,000 | |||||
Repayment of senior notes | 630,000,000 | $ 300,000,000 | |||||
Proceeds from issuance of debt | $ 400,000,000 | 405,250,000 | $ 0 | ||||
Repayments of principal, 2019 | 7,900,000 | 7,900,000 | |||||
Repayments of principal, 2020 | 359,000,000 | 359,000,000 | |||||
Repayments of principal, 2021 | 0 | 0 | |||||
Repayments of principal, 2022 | 800,000,000 | 800,000,000 | |||||
Repayments of principal, 2023 | 350,000,000 | 350,000,000 | |||||
Repayments of principal, thereafter | $ 300,000,000 | $ 300,000,000 | |||||
1.375% Convertible senior notes due February 1, 2019 [Member] | Convertible Notes Payable [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Repayment of senior notes | $ 230,000,000 | ||||||
Senior notes, rate | 1.375% | ||||||
6.875% Senior notes due June 15, 2027 [Member] | Senior Notes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Senior notes, rate | 6.875% | 6.875% | |||||
Proceeds from issuance of debt | 300,000,000 | ||||||
Debt Instrument, Redemption Price, Percentage | 100.00% | ||||||
7.625% Senior notes due May 15, 2023 [Member] | Senior Notes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Senior notes, rate | 7.625% | 7.625% | |||||
Proceeds from issuance of debt | $ 100,000,000 | ||||||
Debt Instrument, Redemption Price, Percentage | 105.25% | ||||||
4.75% Senior notes due May 15, 2019 [Member] | Senior Notes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Repayment of senior notes | $ 400,000,000 | ||||||
Senior notes, rate | 4.75% | 4.75% | |||||
Revolving Credit Facility [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Unsecured revolving credit facility, borrowing capacity | $ 500,000,000 | $ 500,000,000 | |||||
Unsecured revolving credit facility, expiration date | Jul. 27, 2021 | ||||||
Unsecured revolving credit facility, maximum borrowing capacity | $ 600,000,000 | 600,000,000 | |||||
Credit facility, letters of credit outstanding | 50,000,000 | 50,000,000 | |||||
Unsecured revolving credit facility, remaining borrowing capacity | 427,000,000 | 427,000,000 | |||||
Letter of Credit [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Unsecured revolving credit facility, maximum borrowing capacity | 250,000,000 | 250,000,000 | |||||
Credit facility, letters of credit outstanding | 23,000,000 | 23,000,000 | |||||
Unsecured revolving credit facility, remaining borrowing capacity | 227,000,000 | 227,000,000 | |||||
LOC Facilities [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Unsecured revolving credit facility, borrowing capacity | 50,000,000 | 50,000,000 | |||||
Letters of credit outstanding | $ 15,300,000 | $ 15,300,000 | $ 0 |
Fair Value Disclosures (Assets
Fair Value Disclosures (Assets Measured at Fair Value on Nonrecurring Basis) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Aug. 31, 2019 | Aug. 31, 2018 | Aug. 31, 2019 | Aug. 31, 2018 | Nov. 30, 2018 | ||
Assets measured at fair value on a nonrecurring basis | ||||||
Inventory Impairment Charges | $ (4,800) | $ (7,100) | $ (11,500) | $ (17,800) | ||
Fair Value, Nonrecurring [Member] | Level 3 | ||||||
Assets measured at fair value on a nonrecurring basis | ||||||
Pre-Impairment Value | 31,673 | 31,673 | $ 70,156 | |||
Inventory Impairment Charges | (11,482) | (26,104) | ||||
Fair Value | [1] | $ 20,191 | $ 20,191 | $ 44,052 | ||
[1] | Amounts represent the aggregate fair value for real estate assets impacted by inventory impairment charges during the applicable period as of the date the fair value measurements were made. The carrying value for these real estate assets may have subsequently increased or decreased from the fair value reflected due to activity that has occurred since the measurement date. |
Fair Value Disclosures (Fair Va
Fair Value Disclosures (Fair Value Hierarchy, Carrying Values, and Estimated Fair Values of Financial Instruments) (Details) - Level 2 - USD ($) $ in Thousands | Aug. 31, 2019 | Nov. 30, 2018 | |
Carrying Value [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Convertible senior notes | [1] | $ 0 | $ 229,788 |
Carrying Value [Member] | Senior Notes [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Senior notes | [1] | 1,793,279 | 1,790,437 |
Estimate of Fair Value [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Convertible senior notes | 0 | 229,425 | |
Estimate of Fair Value [Member] | Senior Notes [Member] | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Senior notes | $ 1,967,313 | $ 1,853,438 | |
[1] | 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. |
Commitments and Contingencies_2
Commitments and Contingencies (Narratives) (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Aug. 31, 2017USD ($) | Aug. 31, 2019USD ($)Homeclaim_filed | Nov. 30, 2018USD ($) | |
Loss Contingencies [Line Items] | |||
Minimum warranty on electrical and other building systems (in years) | 2 years | ||
Maximum warranty on electrical and other building systems (in years) | 5 years | ||
Warranty for other components of the home (in years) | 1 year | ||
Performance bonds | $ 795,900 | $ 689,300 | |
Letters of credit outstanding | $ 38,300 | 28,000 | |
Warranty for other components of a home (in years) | 1 year | ||
Cash deposits | $ 69,737 | 53,830 | |
Aggregate purchase price of land | $ 1,464,929 | 1,371,238 | |
Damages from Product Defects [Member] | |||
Loss Contingencies [Line Items] | |||
Structural warranty provided by the company (in years) | 10 years | ||
Minimum number of affected homes for construction defect claims | Home | 2 | ||
Warranty Obligations [Member] | |||
Loss Contingencies [Line Items] | |||
Structural warranty provided by the company (in years) | 10 years | ||
Self Insurance [Member] | |||
Loss Contingencies [Line Items] | |||
Recoveries related to warranty and other claims | $ 45,500 | 56,900 | |
Warranty and other [Member] | |||
Loss Contingencies [Line Items] | |||
Recoveries related to warranty and other claims | 2,300 | $ 4,800 | |
Northern California Townhome Community [Member] | |||
Loss Contingencies [Line Items] | |||
Claims for damages | $ 100,000 | $ 142,000 | |
Chapter 558 of the Florida Statutes [Member] | |||
Loss Contingencies [Line Items] | |||
Outstanding noticed claims | claim_filed | 615 |
Commitments and Contingencies_3
Commitments and Contingencies (Changes in the Warranty and Self-Insurance Liability) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Aug. 31, 2019 | Aug. 31, 2018 | Aug. 31, 2019 | Aug. 31, 2018 | ||||
Changes in the Warranty Liability | |||||||
Balance at beginning of period | $ 83,030 | $ 76,404 | $ 82,490 | $ 69,798 | |||
Warranties issued | 9,067 | 9,590 | 23,500 | 27,243 | |||
Payments | (5,925) | (6,023) | (17,018) | (17,070) | |||
Balance at end of period | 86,172 | 79,971 | 86,172 | 79,971 | |||
Movement In Self Insurance Reserve [Roll Forward] | |||||||
Balance at beginning of period | 170,978 | 176,715 | 176,841 | 177,695 | |||
Self-insurance expense | [1] | 4,802 | 5,554 | 12,844 | 14,264 | ||
Payments | (5,162) | [2] | (3,496) | [2] | (19,067) | (13,186) | |
Balance at end of period | 170,618 | 178,773 | 170,618 | 178,773 | |||
Standard and Extended Product Warranty Accrual, Increase (Decrease) for Preexisting Warranties | $ 0 | $ 0 | $ (2,800) | $ 0 | |||
[1] | (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. | ||||||
[2] | (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. |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Aug. 31, 2019 | Aug. 31, 2018 | Aug. 31, 2019 | Aug. 31, 2018 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | $ 2,195,210 | $ 1,914,643 | $ 2,087,500 | $ 1,926,311 |
Cumulative effect of adoption of ASC 606 | 11,610 | 11,610 | ||
Net income | 68,136 | 87,476 | 145,608 | 73,529 |
Dividends on common stock | (7,897) | (2,186) | $ (12,352) | (6,686) |
Employee stock options/other (in shares) | (1,263,505) | |||
Employee stock options/other | 2,267 | 12,662 | $ 18,729 | 17,433 |
Stock awards | 0 | 0 | 0 | |
Stock-based compensation | 4,513 | 3,354 | 14,479 | 12,149 |
Tax payments associated with stock-based compensation awards | (3,345) | (6,787) | ||
Ending balance | $ 2,262,229 | $ 2,015,949 | $ 2,262,229 | $ 2,015,949 |
Common Stock | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance (in shares) | (120,350,000) | (118,397,000) | (119,196,000) | (117,946,000) |
Beginning balance | $ 120,350 | $ 118,397 | $ 119,196 | $ 117,946 |
Employee stock options/other (in shares) | (173,000) | (652,000) | (1,271,000) | (1,049,000) |
Employee stock options/other | $ 173 | $ 652 | $ 1,271 | $ 1,049 |
Stock awards (in shares) | (56,000) | (54,000) | ||
Stock awards | $ 56 | $ 54 | ||
Ending balance (in shares) | (120,523,000) | (119,049,000) | (120,523,000) | (119,049,000) |
Ending balance | $ 120,523 | $ 119,049 | $ 120,523 | $ 119,049 |
Paid-in Capital | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | 775,693 | 736,047 | 753,570 | 727,483 |
Employee stock options/other | 2,094 | 12,010 | 17,458 | 16,384 |
Stock awards | (1,157) | (3,207) | (5,762) | |
Stock-based compensation | 4,513 | 3,354 | 14,479 | 12,149 |
Ending balance | 782,300 | 750,254 | 782,300 | 750,254 |
Retained Earnings | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | 1,981,795 | 1,717,248 | 1,897,168 | 1,735,695 |
Cumulative effect of adoption of ASC 606 | 11,610 | 11,610 | ||
Net income | 68,136 | 87,476 | 145,608 | 73,529 |
Dividends on common stock | (7,897) | (2,186) | (12,352) | (6,686) |
Ending balance | 2,042,034 | 1,802,538 | 2,042,034 | 1,802,538 |
Accumulated Other Comprehensive Income | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance | (9,565) | (16,924) | (9,565) | (16,924) |
Ending balance | $ (9,565) | $ (16,924) | $ (9,565) | $ (16,924) |
Grantor Stock Ownership Trust | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance (in shares) | (7,860,000) | (8,460,000) | (8,157,000) | (8,898,000) |
Beginning balance | $ (85,246) | $ (91,760) | $ (88,472) | $ (96,509) |
Stock awards (in shares) | (297,000) | (438,000) | ||
Stock awards | $ 3,226 | $ 4,749 | ||
Ending balance (in shares) | (7,860,000) | (8,460,000) | (7,860,000) | (8,460,000) |
Ending balance | $ (85,246) | $ (91,760) | $ (85,246) | $ (91,760) |
Treasury Stock | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Beginning balance (in shares) | (24,264,000) | (22,248,000) | (24,113,000) | (22,021,000) |
Beginning balance | $ (587,817) | $ (548,365) | $ (584,397) | $ (541,380) |
Stock awards (in shares) | 47,000 | (4,000) | 37,000 | |
Stock awards | $ 1,157 | $ (75) | $ 959 | |
Tax payments associated with stock-based compensation awards (in shares) | (147,000) | (217,000) | ||
Tax payments associated with stock-based compensation awards | $ (3,345) | $ (6,787) | ||
Ending balance (in shares) | (24,264,000) | (22,201,000) | (24,264,000) | (22,201,000) |
Ending balance | $ (587,817) | $ (547,208) | $ (587,817) | $ (547,208) |
Stockholders' Equity (Narrative
Stockholders' Equity (Narratives) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Aug. 31, 2019 | Aug. 31, 2018 | Aug. 31, 2019 | Aug. 31, 2018 | Feb. 15, 2019 | Feb. 01, 2019 | Jul. 17, 2014 | |
Debt Instrument [Line Items] | |||||||
Cash dividends declared per common share (in dollars per share) | $ 0.09 | $ 0.025 | $ 0.14 | $ 0.075 | |||
Payment, Tax Withholding, Share-based Payment Arrangement | $ 3,345 | $ 6,787 | |||||
Dividend paid in each quarter (in dollars per share) | $ 0.090 | $ 0.025 | $ 0.140 | $ 0.075 | |||
January 2016 Stock Repurchase Program [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Number of common stock, authorized, approved under a board approved stock repurchase program (in shares) | 2,193,947 | 2,193,947 | |||||
Shares Withheld to Pay Taxes [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Common stock repurchased (in shares) | 147,382 | ||||||
Payment, Tax Withholding, Share-based Payment Arrangement | $ 3,300 | ||||||
PSU 2014 [Domain] | Performance Shares [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Common Stock, Shares, Issued (in shares) | 297,260 | ||||||
Director Plan SARs [Domain] | |||||||
Debt Instrument [Line Items] | |||||||
Number of common stock, authorized, approved under a board approved stock repurchase program (in shares) | 680,000 | ||||||
2014 Equity Incentive Plan [Domain] | |||||||
Debt Instrument [Line Items] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 680,000 | 680,000 | |||||
Convertible Notes Payable [Member] | 1.375% Convertible senior notes due February 1, 2019 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Senior notes, rate | 1.375% |
Stock-Based Compensation (Outst
Stock-Based Compensation (Outstanding and Exercisable Stock Options) (Details) - $ / shares | 9 Months Ended |
Aug. 31, 2019 | |
Options | |
Options outstanding at beginning of period, options (in shares) | 7,237,544 |
Granted, options (in shares) | 0 |
Exercised, options (in shares) | (1,263,505) |
Cancelled, options (in shares) | (180,000) |
Options outstanding at end of period, options (in shares) | 5,794,039 |
Options exercisable at end of period (in shares) | 5,506,883 |
Weighted Average Exercise Price in dollars per share | |
Options outstanding at beginning of period, weighted average exercise price (in dollars per share) | $ 16.02 |
Granted, weighted average exercise price (in dollars per share) | 0 |
Exercised, weighted average exercise price (in dollars per share) | 14.78 |
Cancelled, weighted average exercise price (in dollars per share) | 33.59 |
Options outstanding at end of period, weighted average exercise price (in dollars per share) | 15.75 |
Options exercisable at end of period (in dollars per share) | $ 15.72 |
Stock-Based Compensation (Narra
Stock-Based Compensation (Narratives) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Aug. 31, 2019 | Aug. 31, 2018 | Aug. 31, 2019 | Aug. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Weighted average remaining contractual life of stock options outstanding | 3 years 9 months 18 days | |||
Weighted average remaining contractual life of stock options exercisable | 3 years 7 months 6 days | |||
Aggregate intrinsic value of stock options outstanding | $ 80.2 | $ 80.2 | ||
Aggregate intrinsic value of stock options exercisable | 76.8 | 76.8 | ||
Stock Options [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense (income) associated with stock options, total | $ 0.5 | |||
Restricted Stock and Performance Unit Shares [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense (income) associated with stock options, total | $ 4.5 | $ 3.2 | $ 14.4 | $ 11.6 |
Supplemental Disclosure to Co_3
Supplemental Disclosure to Consolidated Statements of Cash Flows (Details) - USD ($) $ in Thousands | 9 Months Ended | ||||
Aug. 31, 2019 | Aug. 31, 2018 | Dec. 01, 2018 | Nov. 30, 2018 | Nov. 30, 2017 | |
Summary of cash and cash equivalents at end of period: | |||||
Cash and cash equivalents | $ 184,837 | $ 354,976 | $ 575,119 | $ 720,861 | |
Supplemental disclosures of cash flow information: | |||||
Interest paid, net of amounts capitalized | (13,311) | (5,529) | |||
Income taxes paid | 3,962 | 9,808 | |||
Supplemental disclosures of non-cash activities: | |||||
Decrease in inventories due to adoption of ASC 606 | 3,919,076 | 3,582,839 | |||
Increase in property and equipment, net due to adoption of ASC 606 | 64,119 | 24,283 | |||
Increase (decrease) in consolidated inventories not owned | (20,048) | 20,370 | |||
Inventories acquired through seller financing | 8,967 | 44,586 | |||
Inspirada Builders LLC | |||||
Supplemental disclosures of non-cash activities: | |||||
Increase in inventories due to distributions of land and land development from an unconsolidated joint venture | 6,288 | 10,390 | |||
Accounting Standards Update 2014-09 [Member] | |||||
Supplemental disclosures of non-cash activities: | |||||
Decrease in inventories due to adoption of ASC 606 | 0 | $ (35,288) | |||
Increase in property and equipment, net due to adoption of ASC 606 | 0 | 31,194 | |||
Home Building [Member] | |||||
Summary of cash and cash equivalents at end of period: | |||||
Cash and cash equivalents | 183,794 | 354,361 | 574,359 | ||
Supplemental disclosures of non-cash activities: | |||||
Decrease in inventories due to adoption of ASC 606 | 3,919,076 | 3,547,551 | 3,582,839 | ||
Increase in property and equipment, net due to adoption of ASC 606 | 64,119 | $ 55,477 | 24,283 | ||
Financial Service [Member] | |||||
Summary of cash and cash equivalents at end of period: | |||||
Cash and cash equivalents | $ 1,043 | $ 615 | $ 760 |
Supplemental Guarantor Inform_3
Supplemental Guarantor Information (Narrative) (Details) | 9 Months Ended |
Aug. 31, 2019 | |
Guarantees [Abstract] | |
Ownership share in guarantor subsidiaries, percent | 100.00% |
Line of credit facility, significant subsidiary threshold, percent | 5.00% |
Line of credit facility, non guarantor subsidiary threshold, percent | 10.00% |
Supplemental Guarantor Inform_4
Supplemental Guarantor Information (Condensed Consolidated Statements of Operations) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Aug. 31, 2019 | Aug. 31, 2018 | Aug. 31, 2019 | Aug. 31, 2018 | |
Condensed Consolidated Statements of Operations | ||||
Total revenues | $ 1,160,786 | $ 1,225,347 | $ 2,994,072 | $ 3,198,393 |
Homebuilding: | ||||
Equity in income of unconsolidated joint ventures | 5,859 | 6,691 | ||
Total pretax income (loss) | 91,936 | 114,676 | 183,208 | 239,029 |
Income tax expense | (23,800) | (27,200) | (37,600) | (165,500) |
Equity in net income of subsidiaries | 0 | 0 | 0 | 0 |
Net income | 68,136 | 87,476 | 145,608 | 73,529 |
Reportable Legal Entities [Member] | KB Home Corporate [Member] | ||||
Condensed Consolidated Statements of Operations | ||||
Total revenues | 0 | 0 | 0 | 0 |
Homebuilding: | ||||
Total pretax income (loss) | 26,913 | 20,892 | 67,369 | 46,299 |
Income tax expense | (6,900) | (3,500) | (10,400) | (50,600) |
Equity in net income of subsidiaries | 48,123 | 70,084 | 88,639 | 77,830 |
Net income | 68,136 | 87,476 | 145,608 | 73,529 |
Reportable Legal Entities [Member] | Guarantor Subsidiaries [Member] | ||||
Condensed Consolidated Statements of Operations | ||||
Total revenues | 1,061,698 | 1,144,253 | 2,739,096 | 2,965,829 |
Homebuilding: | ||||
Total pretax income (loss) | 60,224 | 97,516 | 111,850 | 198,194 |
Income tax expense | (14,900) | (22,700) | (21,300) | (88,500) |
Equity in net income of subsidiaries | 0 | 0 | 0 | 0 |
Net income | 45,324 | 74,816 | 90,550 | 109,694 |
Reportable Legal Entities [Member] | Non-Guarantor Subsidiaries [Member] | ||||
Condensed Consolidated Statements of Operations | ||||
Total revenues | 99,088 | 81,094 | 254,976 | 232,564 |
Homebuilding: | ||||
Total pretax income (loss) | 4,799 | (3,732) | 3,989 | (5,464) |
Income tax expense | (2,000) | (1,000) | (5,900) | (26,400) |
Equity in net income of subsidiaries | 0 | 0 | 0 | 0 |
Net income | 2,799 | (4,732) | (1,911) | (31,864) |
Consolidating Adjustments [Member] | ||||
Condensed Consolidated Statements of Operations | ||||
Total revenues | 0 | 0 | 0 | 0 |
Homebuilding: | ||||
Total pretax income (loss) | 0 | 0 | 0 | 0 |
Income tax expense | 0 | 0 | 0 | 0 |
Equity in net income of subsidiaries | (48,123) | (70,084) | (88,639) | (77,830) |
Net income | (48,123) | (70,084) | (88,639) | (77,830) |
Home Building [Member] | ||||
Condensed Consolidated Statements of Operations | ||||
Total revenues | 1,156,855 | 1,221,875 | 2,984,314 | 3,189,753 |
Homebuilding: | ||||
Construction and land costs | (943,754) | (1,001,509) | (2,458,353) | (2,642,231) |
Selling, general and administrative expenses | (127,626) | (114,753) | (357,048) | (323,708) |
Operating income | 85,475 | 105,613 | 168,913 | 223,814 |
Interest income | 201 | 458 | 1,745 | 2,739 |
Interest expense | 0 | 0 | 0 | 0 |
Intercompany interest | 0 | 0 | 0 | 0 |
Equity in income of unconsolidated joint ventures | (384) | 3,493 | (1,159) | 2,326 |
Total pretax income (loss) | 85,292 | 109,564 | 169,499 | 228,879 |
Home Building [Member] | Reportable Legal Entities [Member] | KB Home Corporate [Member] | ||||
Condensed Consolidated Statements of Operations | ||||
Total revenues | 0 | 0 | 0 | 0 |
Homebuilding: | ||||
Construction and land costs | 0 | 0 | 0 | 0 |
Selling, general and administrative expenses | (23,619) | (24,688) | (76,507) | (73,669) |
Operating income | (23,619) | (24,688) | (76,507) | (73,669) |
Interest income | 140 | 380 | 1,549 | 2,559 |
Interest expense | (34,488) | (33,319) | (102,763) | (109,233) |
Intercompany interest | 84,880 | 78,519 | 245,090 | 226,642 |
Equity in income of unconsolidated joint ventures | 0 | 0 | 0 | 0 |
Total pretax income (loss) | 26,913 | 20,892 | 67,369 | 46,299 |
Home Building [Member] | Reportable Legal Entities [Member] | Guarantor Subsidiaries [Member] | ||||
Condensed Consolidated Statements of Operations | ||||
Total revenues | 1,061,698 | 1,144,253 | 2,739,096 | 2,965,829 |
Homebuilding: | ||||
Construction and land costs | (859,733) | (927,346) | (2,226,829) | (2,436,079) |
Selling, general and administrative expenses | (95,376) | (81,540) | (268,506) | (227,480) |
Operating income | 106,589 | 135,367 | 243,761 | 302,270 |
Interest income | 20 | 0 | 20 | 9 |
Interest expense | (175) | (669) | (630) | (1,992) |
Intercompany interest | (45,826) | (40,675) | (130,142) | (104,420) |
Equity in income of unconsolidated joint ventures | (384) | 3,493 | (1,159) | 2,327 |
Total pretax income (loss) | 60,224 | 97,516 | 111,850 | 198,194 |
Home Building [Member] | Reportable Legal Entities [Member] | Non-Guarantor Subsidiaries [Member] | ||||
Condensed Consolidated Statements of Operations | ||||
Total revenues | 95,157 | 77,622 | 245,218 | 223,924 |
Homebuilding: | ||||
Construction and land costs | (84,021) | (74,163) | (231,524) | (206,152) |
Selling, general and administrative expenses | (8,631) | (8,525) | (12,035) | (22,559) |
Operating income | 2,505 | (5,066) | 1,659 | (4,787) |
Interest income | 41 | 78 | 176 | 171 |
Interest expense | (1,361) | (1,240) | (3,963) | (3,871) |
Intercompany interest | (3,030) | (2,616) | (7,592) | (7,126) |
Equity in income of unconsolidated joint ventures | 0 | 0 | 0 | (1) |
Total pretax income (loss) | (1,845) | (8,844) | (9,720) | (15,614) |
Home Building [Member] | Consolidating Adjustments [Member] | ||||
Condensed Consolidated Statements of Operations | ||||
Total revenues | 0 | 0 | 0 | 0 |
Homebuilding: | ||||
Construction and land costs | 0 | 0 | 0 | 0 |
Selling, general and administrative expenses | 0 | 0 | 0 | 0 |
Operating income | 0 | 0 | 0 | 0 |
Interest income | 0 | 0 | 0 | 0 |
Interest expense | 36,024 | 35,228 | 107,356 | 115,096 |
Intercompany interest | (36,024) | (35,228) | (107,356) | (115,096) |
Equity in income of unconsolidated joint ventures | 0 | 0 | 0 | 0 |
Total pretax income (loss) | 0 | 0 | 0 | 0 |
Financial Service [Member] | ||||
Condensed Consolidated Statements of Operations | ||||
Total revenues | 3,931 | 3,472 | 9,758 | 8,640 |
Homebuilding: | ||||
Selling, general and administrative expenses | (1,003) | (945) | (3,067) | (2,855) |
Operating income | 2,928 | 2,527 | 6,691 | 5,785 |
Equity in income of unconsolidated joint ventures | 3,716 | 2,585 | 7,018 | 4,365 |
Total pretax income (loss) | 6,644 | 5,112 | 13,709 | 10,150 |
Financial Service [Member] | Reportable Legal Entities [Member] | KB Home Corporate [Member] | ||||
Homebuilding: | ||||
Total pretax income (loss) | 0 | 0 | 0 | 0 |
Financial Service [Member] | Reportable Legal Entities [Member] | Guarantor Subsidiaries [Member] | ||||
Homebuilding: | ||||
Total pretax income (loss) | 0 | 0 | 0 | 0 |
Financial Service [Member] | Reportable Legal Entities [Member] | Non-Guarantor Subsidiaries [Member] | ||||
Homebuilding: | ||||
Total pretax income (loss) | 6,644 | 5,112 | 13,709 | 10,150 |
Financial Service [Member] | Consolidating Adjustments [Member] | ||||
Homebuilding: | ||||
Total pretax income (loss) | $ 0 | $ 0 | $ 0 | $ 0 |
Supplemental Guarantor Inform_5
Supplemental Guarantor Information (Condensed Consolidated Balance Sheets) (Details) - USD ($) $ in Thousands | Aug. 31, 2019 | May 31, 2019 | Dec. 01, 2018 | Nov. 30, 2018 | Aug. 31, 2018 | May 31, 2018 | Nov. 30, 2017 | |
Assets | ||||||||
Cash and cash equivalents | $ 184,837 | $ 575,119 | $ 354,976 | $ 720,861 | ||||
Receivables | 291,492 | 292,830 | ||||||
Inventories | 3,919,076 | 3,582,839 | ||||||
Investments in unconsolidated joint ventures | 57,168 | 61,960 | ||||||
Property and equipment, net | 64,119 | 24,283 | ||||||
Other assets | 85,515 | 83,100 | ||||||
Total assets | 5,035,170 | 5,073,571 | ||||||
Liabilities and stockholders’ equity | ||||||||
Mortgages and notes payable | 1,860,135 | 2,060,263 | ||||||
Intercompany payables | 0 | 0 | ||||||
Stockholders’ equity | 2,262,229 | $ 2,195,210 | 2,087,500 | 2,015,949 | $ 1,914,643 | 1,926,311 | ||
Total liabilities and stockholders’ equity | 5,035,170 | 5,073,571 | ||||||
Reportable Legal Entities [Member] | KB Home Corporate [Member] | ||||||||
Assets | ||||||||
Cash and cash equivalents | 67,247 | 429,977 | 245,197 | 575,193 | ||||
Total assets | 4,274,151 | 4,252,493 | ||||||
Liabilities and stockholders’ equity | ||||||||
Intercompany payables | 57,898 | 43,702 | ||||||
Stockholders’ equity | 2,262,229 | 2,087,500 | ||||||
Total liabilities and stockholders’ equity | 4,274,151 | 4,252,493 | ||||||
Reportable Legal Entities [Member] | Guarantor Subsidiaries [Member] | ||||||||
Assets | ||||||||
Cash and cash equivalents | 104,043 | 114,269 | 93,287 | 104,120 | ||||
Total assets | 4,333,369 | 4,002,279 | ||||||
Liabilities and stockholders’ equity | ||||||||
Intercompany payables | 3,748,931 | 3,377,920 | ||||||
Stockholders’ equity | 60,221 | 0 | ||||||
Total liabilities and stockholders’ equity | 4,333,369 | 4,002,279 | ||||||
Reportable Legal Entities [Member] | Non-Guarantor Subsidiaries [Member] | ||||||||
Assets | ||||||||
Cash and cash equivalents | 13,547 | 30,873 | 16,492 | 41,548 | ||||
Total assets | 640,156 | 614,638 | ||||||
Liabilities and stockholders’ equity | ||||||||
Intercompany payables | 246,516 | 306,560 | ||||||
Stockholders’ equity | 98,940 | 67,657 | ||||||
Total liabilities and stockholders’ equity | 640,156 | 614,638 | ||||||
Consolidating Adjustments [Member] | ||||||||
Assets | ||||||||
Cash and cash equivalents | 0 | 0 | 0 | $ 0 | ||||
Total assets | (4,212,506) | (3,795,839) | ||||||
Liabilities and stockholders’ equity | ||||||||
Intercompany payables | (4,053,345) | (3,728,182) | ||||||
Stockholders’ equity | (159,161) | (67,657) | ||||||
Total liabilities and stockholders’ equity | (4,212,506) | (3,795,839) | ||||||
Home Building [Member] | ||||||||
Assets | ||||||||
Cash and cash equivalents | 183,794 | 574,359 | 354,361 | |||||
Receivables | 291,492 | 292,830 | ||||||
Inventories | 3,919,076 | $ 3,547,551 | 3,582,839 | |||||
Investments in unconsolidated joint ventures | 57,168 | 61,960 | ||||||
Property and equipment, net | 64,119 | 55,477 | 24,283 | |||||
Deferred tax assets, net | 402,095 | 437,796 | 441,820 | |||||
Other assets | 85,515 | 83,100 | ||||||
Intercompany receivables | 0 | 0 | ||||||
Investments in subsidiaries | 0 | 0 | ||||||
Total assets | 5,003,259 | 5,061,191 | ||||||
Liabilities and stockholders’ equity | ||||||||
Accounts payable and accrued expenses | 911,023 | 924,313 | ||||||
Mortgages and notes payable | 1,860,135 | 2,060,263 | ||||||
Total Liabilities | 2,771,158 | 2,984,576 | ||||||
Home Building [Member] | Reportable Legal Entities [Member] | KB Home Corporate [Member] | ||||||||
Assets | ||||||||
Cash and cash equivalents | 67,247 | 429,977 | ||||||
Receivables | 2,368 | 5,135 | ||||||
Inventories | 0 | 0 | ||||||
Investments in unconsolidated joint ventures | 0 | 0 | ||||||
Property and equipment, net | 22,732 | 18,450 | ||||||
Deferred tax assets, net | 71,939 | 84,564 | ||||||
Other assets | 81,192 | 77,288 | ||||||
Intercompany receivables | 3,869,512 | 3,569,422 | ||||||
Investments in subsidiaries | 159,161 | 67,657 | ||||||
Total assets | 245,478 | 615,414 | ||||||
Liabilities and stockholders’ equity | ||||||||
Accounts payable and accrued expenses | 135,855 | 126,176 | ||||||
Mortgages and notes payable | 1,818,169 | 1,995,115 | ||||||
Total Liabilities | 1,954,024 | 2,121,291 | ||||||
Home Building [Member] | Reportable Legal Entities [Member] | Guarantor Subsidiaries [Member] | ||||||||
Assets | ||||||||
Cash and cash equivalents | 104,043 | 114,269 | ||||||
Receivables | 226,063 | 198,465 | ||||||
Inventories | 3,623,232 | 3,314,386 | ||||||
Investments in unconsolidated joint ventures | 57,168 | 61,960 | ||||||
Property and equipment, net | 38,024 | 5,523 | ||||||
Deferred tax assets, net | 282,066 | 303,669 | ||||||
Other assets | 2,773 | 4,007 | ||||||
Intercompany receivables | 0 | 0 | ||||||
Investments in subsidiaries | 0 | 0 | ||||||
Total assets | 4,333,369 | 4,002,279 | ||||||
Liabilities and stockholders’ equity | ||||||||
Accounts payable and accrued expenses | 507,361 | 584,321 | ||||||
Mortgages and notes payable | 16,856 | 40,038 | ||||||
Total Liabilities | 524,217 | 624,359 | ||||||
Home Building [Member] | Reportable Legal Entities [Member] | Non-Guarantor Subsidiaries [Member] | ||||||||
Assets | ||||||||
Cash and cash equivalents | 12,504 | 30,113 | ||||||
Receivables | 63,061 | 89,230 | ||||||
Inventories | 295,844 | 268,453 | ||||||
Investments in unconsolidated joint ventures | 0 | 0 | ||||||
Property and equipment, net | 3,363 | 310 | ||||||
Deferred tax assets, net | 48,090 | 53,587 | ||||||
Other assets | 1,550 | 1,805 | ||||||
Intercompany receivables | 183,833 | 158,760 | ||||||
Investments in subsidiaries | 0 | 0 | ||||||
Total assets | 424,412 | 443,498 | ||||||
Liabilities and stockholders’ equity | ||||||||
Accounts payable and accrued expenses | 267,807 | 213,816 | ||||||
Mortgages and notes payable | 25,110 | 25,110 | ||||||
Total Liabilities | 292,917 | 238,926 | ||||||
Home Building [Member] | Consolidating Adjustments [Member] | ||||||||
Assets | ||||||||
Cash and cash equivalents | 0 | 0 | ||||||
Receivables | 0 | 0 | ||||||
Inventories | 0 | 0 | ||||||
Investments in unconsolidated joint ventures | 0 | 0 | ||||||
Property and equipment, net | 0 | 0 | ||||||
Deferred tax assets, net | 0 | 0 | ||||||
Other assets | 0 | 0 | ||||||
Intercompany receivables | (4,053,345) | (3,728,182) | ||||||
Investments in subsidiaries | (159,161) | (67,657) | ||||||
Total assets | 0 | 0 | ||||||
Liabilities and stockholders’ equity | ||||||||
Accounts payable and accrued expenses | 0 | 0 | ||||||
Mortgages and notes payable | 0 | 0 | ||||||
Total Liabilities | 0 | 0 | ||||||
Financial Service [Member] | ||||||||
Assets | ||||||||
Cash and cash equivalents | 1,043 | 760 | $ 615 | |||||
Receivables | 1,435 | 2,885 | ||||||
Investments in unconsolidated joint ventures | 9,162 | 8,594 | ||||||
Other assets | [1] | 20,271 | 141 | |||||
Total assets | 31,911 | $ 32,108 | 12,380 | |||||
Liabilities and stockholders’ equity | ||||||||
Accounts payable and accrued expenses | 1,783 | 1,495 | ||||||
Financial services | 1,783 | 1,495 | ||||||
Financial Service [Member] | Reportable Legal Entities [Member] | KB Home Corporate [Member] | ||||||||
Assets | ||||||||
Total assets | 0 | 0 | ||||||
Liabilities and stockholders’ equity | ||||||||
Financial services | 0 | 0 | ||||||
Financial Service [Member] | Reportable Legal Entities [Member] | Guarantor Subsidiaries [Member] | ||||||||
Assets | ||||||||
Total assets | 0 | 0 | ||||||
Liabilities and stockholders’ equity | ||||||||
Financial services | 0 | 0 | ||||||
Financial Service [Member] | Reportable Legal Entities [Member] | Non-Guarantor Subsidiaries [Member] | ||||||||
Assets | ||||||||
Total assets | 31,911 | 12,380 | ||||||
Liabilities and stockholders’ equity | ||||||||
Financial services | 1,783 | 1,495 | ||||||
Financial Service [Member] | Consolidating Adjustments [Member] | ||||||||
Assets | ||||||||
Total assets | 0 | 0 | ||||||
Liabilities and stockholders’ equity | ||||||||
Financial services | $ 0 | $ 0 | ||||||
[1] | Other assets at August 31, 2019 included $20.1 million of contract assets for estimated future renewal commissions due to our adoption of ASC 606 effective December 1, 2018, as described in Note 1 – Basis of Presentation and Significant Accounting Policies. |
Supplemental Guarantor Inform_6
Supplemental Guarantor Information (Condensed Consolidated Statements of Cash Flows) (Details) - USD ($) $ in Thousands | Feb. 20, 2019 | Aug. 31, 2019 | Aug. 31, 2018 |
Cash flows from operating activities: | |||
Net cash provided by (used in) operating activities | $ (152,144) | $ (49,508) | |
Cash flows from investing activities: | |||
Contributions to unconsolidated joint ventures | (7,656) | (15,640) | |
Return of investments in unconsolidated joint ventures | 5,001 | 9,934 | |
Proceeds from sale of building | 5,800 | 0 | |
Purchases of property and equipment, net | (32,211) | (4,137) | |
Intercompany | 0 | 0 | |
Net cash used in investing activities | (29,062) | (9,843) | |
Cash flows from financing activities: | |||
Proceeds from issuance of debt | $ 400,000 | 405,250 | 0 |
Issuance costs for unsecured revolving credit facility | (5,209) | 0 | |
Repayment of senior notes | (630,000) | (300,000) | |
Borrowings under revolving credit facility | 460,000 | 70,000 | |
Repayments under revolving credit facility | (410,000) | (70,000) | |
Payments on mortgages and land contracts due to land sellers and other loans | (32,149) | (10,494) | |
Issuance of common stock under employee stock plans | 18,729 | 17,433 | |
Payments of cash dividends | (12,352) | (6,686) | |
Tax payments associated with stock-based compensation awards | (3,345) | (6,787) | |
Intercompany | 0 | 0 | |
Net cash used in financing activities | (209,076) | (306,534) | |
Net decrease in cash and cash equivalents | (390,282) | (365,885) | |
Cash and cash equivalents at beginning of period | 575,119 | 720,861 | |
Cash and cash equivalents at end of period | 184,837 | 354,976 | |
Reportable Legal Entities [Member] | KB Home Corporate [Member] | |||
Cash flows from operating activities: | |||
Net cash provided by (used in) operating activities | 92,935 | 50,507 | |
Cash flows from investing activities: | |||
Contributions to unconsolidated joint ventures | 0 | 0 | |
Return of investments in unconsolidated joint ventures | 0 | 0 | |
Proceeds from sale of building | 0 | ||
Purchases of property and equipment, net | (4,728) | (3,508) | |
Intercompany | (274,010) | (80,955) | |
Net cash used in investing activities | (278,738) | (84,463) | |
Cash flows from financing activities: | |||
Proceeds from issuance of debt | 405,250 | ||
Issuance costs for unsecured revolving credit facility | (5,209) | ||
Repayment of senior notes | (630,000) | (300,000) | |
Borrowings under revolving credit facility | 460,000 | 70,000 | |
Repayments under revolving credit facility | (410,000) | (70,000) | |
Payments on mortgages and land contracts due to land sellers and other loans | 0 | 0 | |
Issuance of common stock under employee stock plans | 18,729 | 17,433 | |
Payments of cash dividends | (12,352) | (6,686) | |
Tax payments associated with stock-based compensation awards | (3,345) | (6,787) | |
Intercompany | 0 | 0 | |
Net cash used in financing activities | (176,927) | (296,040) | |
Net decrease in cash and cash equivalents | (362,730) | (329,996) | |
Cash and cash equivalents at beginning of period | 429,977 | 575,193 | |
Cash and cash equivalents at end of period | 67,247 | 245,197 | |
Reportable Legal Entities [Member] | Guarantor Subsidiaries [Member] | |||
Cash flows from operating activities: | |||
Net cash provided by (used in) operating activities | (335,428) | (78,593) | |
Cash flows from investing activities: | |||
Contributions to unconsolidated joint ventures | (7,656) | (15,640) | |
Return of investments in unconsolidated joint ventures | 5,001 | 9,934 | |
Proceeds from sale of building | 5,804 | ||
Purchases of property and equipment, net | (18,252) | (520) | |
Intercompany | 0 | 0 | |
Net cash used in investing activities | (15,103) | (6,226) | |
Cash flows from financing activities: | |||
Proceeds from issuance of debt | 0 | ||
Issuance costs for unsecured revolving credit facility | 0 | ||
Repayment of senior notes | 0 | 0 | |
Borrowings under revolving credit facility | 0 | 0 | |
Repayments under revolving credit facility | 0 | 0 | |
Payments on mortgages and land contracts due to land sellers and other loans | (32,149) | (9,574) | |
Issuance of common stock under employee stock plans | 0 | 0 | |
Payments of cash dividends | 0 | 0 | |
Tax payments associated with stock-based compensation awards | 0 | 0 | |
Intercompany | 372,454 | 83,560 | |
Net cash used in financing activities | 340,305 | 73,986 | |
Net decrease in cash and cash equivalents | (10,226) | (10,833) | |
Cash and cash equivalents at beginning of period | 114,269 | 104,120 | |
Cash and cash equivalents at end of period | 104,043 | 93,287 | |
Reportable Legal Entities [Member] | Non-Guarantor Subsidiaries [Member] | |||
Cash flows from operating activities: | |||
Net cash provided by (used in) operating activities | 90,349 | (21,422) | |
Cash flows from investing activities: | |||
Contributions to unconsolidated joint ventures | 0 | 0 | |
Return of investments in unconsolidated joint ventures | 0 | 0 | |
Proceeds from sale of building | 0 | ||
Purchases of property and equipment, net | (9,231) | (109) | |
Intercompany | 0 | 0 | |
Net cash used in investing activities | (9,231) | (109) | |
Cash flows from financing activities: | |||
Proceeds from issuance of debt | 0 | ||
Issuance costs for unsecured revolving credit facility | 0 | ||
Repayment of senior notes | 0 | 0 | |
Borrowings under revolving credit facility | 0 | 0 | |
Repayments under revolving credit facility | 0 | 0 | |
Payments on mortgages and land contracts due to land sellers and other loans | 0 | (920) | |
Issuance of common stock under employee stock plans | 0 | 0 | |
Payments of cash dividends | 0 | 0 | |
Tax payments associated with stock-based compensation awards | 0 | 0 | |
Intercompany | (98,444) | (2,605) | |
Net cash used in financing activities | (98,444) | (3,525) | |
Net decrease in cash and cash equivalents | (17,326) | (25,056) | |
Cash and cash equivalents at beginning of period | 30,873 | 41,548 | |
Cash and cash equivalents at end of period | 13,547 | 16,492 | |
Consolidating Adjustments [Member] | |||
Cash flows from operating activities: | |||
Net cash provided by (used in) operating activities | 0 | 0 | |
Cash flows from investing activities: | |||
Contributions to unconsolidated joint ventures | 0 | 0 | |
Return of investments in unconsolidated joint ventures | 0 | 0 | |
Proceeds from sale of building | 0 | ||
Purchases of property and equipment, net | 0 | 0 | |
Intercompany | 274,010 | 80,955 | |
Net cash used in investing activities | 274,010 | 80,955 | |
Cash flows from financing activities: | |||
Proceeds from issuance of debt | 0 | ||
Issuance costs for unsecured revolving credit facility | 0 | ||
Repayment of senior notes | 0 | 0 | |
Borrowings under revolving credit facility | 0 | 0 | |
Repayments under revolving credit facility | 0 | 0 | |
Payments on mortgages and land contracts due to land sellers and other loans | 0 | 0 | |
Issuance of common stock under employee stock plans | 0 | 0 | |
Payments of cash dividends | 0 | 0 | |
Tax payments associated with stock-based compensation awards | 0 | 0 | |
Intercompany | (274,010) | (80,955) | |
Net cash used in financing activities | (274,010) | (80,955) | |
Net decrease in cash and cash equivalents | 0 | 0 | |
Cash and cash equivalents at beginning of period | 0 | 0 | |
Cash and cash equivalents at end of period | $ 0 | $ 0 |