10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended February 28, 2014.

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from [            ] to [            ].

Commission File No. 001-09195

KB HOME

(Exact name of registrant as specified in its charter)

Delaware	95-3666267
(State of incorporation)	(IRS employer identification number)

10990 Wilshire Boulevard

Los Angeles, California 90024

(310) 231-4000

(Address and telephone number of principal executive offices)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	ý	Accelerated filer	o
Non-accelerated filer	o  (Do not check if a smaller reporting company)	Smaller reporting company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o    No  ý

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of February 28, 2014.

There were 83,744,528 shares of the registrant’s common stock, par value $1.00 per share, outstanding on February 28, 2014. The registrant’s grantor stock ownership trust held an additional 10,501,844 shares of the registrant’s common stock on that date.

KB HOME

FORM 10-Q

INDEX

	Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Operations - Three Months Ended February 28, 2014 and 2013	3
Consolidated Balance Sheets - February 28, 2014 and November 30, 2013	4
Consolidated Statements of Cash Flows - Three Months Ended February 28, 2014 and 2013	5
Notes to Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3. Quantitative and Qualitative Disclosures About Market Risk	59
Item 4. Controls and Procedures	59
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	60
Item 1A. Risk Factors	60
Item 6. Exhibits	61
SIGNATURES	62
INDEX OF EXHIBITS	63

2

PART I.    FINANCIAL INFORMATION

Item 1. Financial Statements

KB HOME

CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, Except Per Share Amounts – Unaudited)

	Three Months Ended February 28,
	2014			2013
Total revenues	$	450,687		$	405,219
Homebuilding:
Revenues	$	448,267		$	402,816
Construction and land costs	(369,274		)	(343,265		)
Selling, general and administrative expenses	(61,274		)	(59,097		)
Operating income	17,719			454
Interest income	168			204
Interest expense	(11,276		)	(15,240		)
Equity in income (loss) of unconsolidated joint ventures	2,590			(435		)
Homebuilding pretax income (loss)	9,201			(15,017		)
Financial services:
Revenues	2,420			2,403
Expenses	(852		)	(835		)
Equity in income (loss) of unconsolidated joint ventures	(6		)	1,091
Financial services pretax income	1,562			2,659
Total pretax income (loss)	10,763			(12,358		)
Income tax expense	(200		)	(100		)
Net income (loss)	$	10,563		$	(12,458	)
Earnings (loss) per share:
Basic	$	.13		$	(.16	)
Diluted	$	.12		$	(.16	)
Weighted average shares outstanding:
Basic	83,745			79,401
Diluted	93,946			79,401
Cash dividends declared per common share	$	.0250		$	.0250

See accompanying notes.

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CONSOLIDATED BALANCE SHEETS

(In Thousands – Unaudited)

	February 28, 2014			November 30, 2013
Assets
Homebuilding:
Cash and cash equivalents	$	303,269		$	530,095
Restricted cash	42,083			41,906
Receivables	87,355			75,749
Inventories	2,634,944			2,298,577
Investments in unconsolidated joint ventures	60,648			130,192
Other assets	110,487			107,076
	3,238,786			3,183,595
Financial services	9,386			10,040
Total assets	$	3,248,172		$	3,193,635
Liabilities and stockholders’ equity
Homebuilding:
Accounts payable	$	138,213		$	148,282
Accrued expenses and other liabilities	386,085			356,176
Mortgages and notes payable	2,175,190			2,150,498
	2,699,488			2,654,956
Financial services	2,350			2,593
Common stock	115,296			115,296
Paid-in capital	790,672			788,893
Retained earnings	490,358			481,889
Accumulated other comprehensive loss	(17,516		)	(17,516		)
Grantor stock ownership trust, at cost	(113,911		)	(113,911		)
Treasury stock, at cost	(718,565		)	(718,565		)
Total stockholders’ equity	546,334			536,086
Total liabilities and stockholders’ equity	$	3,248,172		$	3,193,635

See accompanying notes.

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KB HOME

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands – Unaudited)

	Three Months Ended February 28,
	2014			2013
Cash flows from operating activities:
Net income (loss)	$	10,563		$	(12,458	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Equity in income of unconsolidated joint ventures	(2,584		)	(656		)
Distributions of earnings from unconsolidated joint ventures	—			1,438
Amortization of discounts and issuance costs	1,600			971
Depreciation and amortization	467			465
Stock-based compensation	1,779			1,013
Land option contract abandonments	433			—
Changes in assets and liabilities:
Receivables	(10,221		)	326
Inventories	(205,037		)	(198,761		)
Accounts payable, accrued expenses and other liabilities	(14,514		)	(2,413		)
Other, net	(3,549		)	(957		)
Net cash used in operating activities	(221,063		)	(211,032		)
Cash flows from investing activities:
Contributions to unconsolidated joint ventures	(8,618		)	(304		)
Proceeds from sale of investment in unconsolidated joint venture	10,110			—
Purchases of property and equipment, net	(1,576		)	(430		)
Net cash used in investing activities	(84		)	(734		)
Cash flows from financing activities:
Change in restricted cash	(177		)	(2,257		)
Proceeds from issuance of debt	—			230,000
Payment of debt issuance costs	—			(6,878		)
Payments on mortgages and land contracts due to land sellers and other loans	(2,655		)	(17,003		)
Proceeds from issuance of common stock, net	—			109,811
Issuance of common stock under employee stock plans	—			52
Payments of cash dividends	(2,094		)	(2,089		)
Net cash provided by (used in) financing activities	(4,926		)	311,636
Net increase (decrease) in cash and cash equivalents	(226,073		)	99,870
Cash and cash equivalents at beginning of period	532,523			525,688
Cash and cash equivalents at end of period	$	306,450		$	625,558

See accompanying notes.

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KB HOME

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation and Significant Accounting Policies

Basis of Presentation. The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. 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 U.S. generally accepted accounting principles (“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 February 28, 2014, the results of our consolidated operations for the three months endedFebruary 28, 2014 and 2013, and our consolidated cash flows for the three months endedFebruary 28, 2014 and 2013. The results of our consolidated operations for the three months endedFebruary 28, 2014 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, 2013 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, 2013, 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 informed estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from these 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 $124.2 million at February 28, 2014 and $436.2 million at November 30, 2013. The majority of our cash and cash equivalents were invested in money market funds and interest-bearing bank deposit accounts.

Restricted cash of $42.1 million at February 28, 2014 and $41.9 million at November 30, 2013 consisted of cash deposited with various financial institutions that was required as collateral for our cash-collateralized letter of credit facilities (“LOC Facilities”).

Comprehensive Income (Loss). Our comprehensive income for the three months ended February 28, 2014 was $10.6 million. For the three months ended February 28, 2013, our comprehensive loss was $12.5 million. Our comprehensive income (loss) for each of the three-month periods ended February 28, 2014 and 2013 was equal to our net income (loss) for the same periods. The accumulated other comprehensive loss in our consolidated balance sheets as of February 28, 2014 and November 30, 2013 was comprised solely of adjustments recorded directly to accumulated other comprehensive loss in accordance with Accounting Standards Codification Topic No. 715, “Compensation – Retirement Benefits” (“ASC 715”). Such adjustments are made annually as of November 30, when our benefit plan obligations are remeasured. ASC 715 requires an employer to recognize the funded status of defined postretirement benefit plans as an asset or liability on the balance sheet and requires any unrecognized prior service costs and actuarial gains/losses to be recognized in accumulated other comprehensive income (loss). 

Recent Accounting Pronouncements. In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force)” (“ASU 2013-11”), which states that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. ASU 2013-11 applies to all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax

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KB HOME

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation and Significant Accounting Policies (continued)

loss, or a tax credit carryforward exists at the reporting date. The amendments in ASU 2013-11 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Early adoption is permitted. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. We believe the adoption of this guidance will not have a material impact on our consolidated financial statements.

Reclassifications. Certain amounts in the consolidated financial statements of prior years have been reclassified to conform to the 2014 presentation.

2. Segment Information

As of February 28, 2014, we had identified five operating reporting segments, comprised of four homebuilding reporting segments and one financial services reporting segment, within our consolidated operations in accordance with Accounting Standards Codification Topic No. 280, “Segment Reporting.” As of February 28, 2014, our homebuilding reporting segments conducted ongoing operations in the following states:

West Coast: California

Southwest: Arizona and Nevada

Central: Colorado, New Mexico and Texas

Southeast: Florida, Maryland, North Carolina and Virginia

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, move-up and active adult homebuyers.

Our homebuilding reporting segments were identified based primarily on similarities in economic and geographic characteristics, product types, regulatory environments, methods used to sell and construct homes and land acquisition characteristics. We evaluate segment performance primarily based on segment pretax results.

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 within our Central and Southeast homebuilding reporting segments. This segment also earns revenues pursuant to the terms of a marketing services agreement with Nationstar Mortgage LLC (“Nationstar”), our preferred mortgage lender that offers mortgage banking services, including residential consumer mortgage loan (“mortgage loan”) originations, to our homebuyers who elect to use the lender. Our homebuyers are under no obligation to use our preferred mortgage lender and may select any lender of their choice to obtain mortgage financing for the purchase of a home. Except as discussed below, we have had no affiliation, ownership, joint venture or other interests in or with our preferred mortgage lender or its affiliates, or with respect to the revenues or income that may have been generated from their provision of mortgage banking services to, or origination of mortgage loans for, our homebuyers.

On January 21, 2013, we entered into an agreement with Nationstar to form Home Community Mortgage, LLC (“Home Community Mortgage”), a mortgage banking company that will offer an array of mortgage banking services to our homebuyers. We have a 49.9% ownership interest and Nationstar has a 50.1% ownership interest in Home Community Mortgage, with Nationstar providing management oversight of Home Community Mortgage’s operations. Nationstar will continue as our preferred mortgage lender until Home Community Mortgage begins offering mortgage banking services. Home Community Mortgage is accounted for as an unconsolidated joint venture within our financial services reporting segment.

Corporate and other is a non-operating segment that develops and implements company-wide strategic initiatives and provides support to our homebuilding reporting segments by centralizing certain administrative functions, such as promotional marketing, legal, purchasing administration, architecture, accounting, treasury, insurance and risk management, information technology and human resources, to benefit from economies of scale. Corporate and other includes general and administrative expenses related to operating our corporate headquarters. A portion of the expenses incurred by Corporate and other is allocated to the homebuilding reporting segments.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

2. Segment Information (continued)

Our segments follow the same accounting policies used for our consolidated financial statements. The results of each 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 segments (in thousands):

	Three Months Ended February 28,
	2014			2013
Revenues:
West Coast	$	181,721		$	206,104
Southwest	46,115			31,831
Central	125,162			106,492
Southeast	95,269			58,389
Total homebuilding revenues	448,267			402,816
Financial services	2,420			2,403
Total	$	450,687		$	405,219
Pretax income (loss):
West Coast	$	18,365		$	9,842
Southwest	1,285			(749		)
Central	2,776			136
Southeast	3,841			(8,324		)
Corporate and other	(17,066		)	(15,922		)
Total homebuilding pretax income (loss)	9,201			(15,017		)
Financial services	1,562			2,659
Total	$	10,763		$	(12,358	)

Equity in income (loss) of unconsolidated joint ventures:
West Coast	$	(38	)	$	(33	)
Southwest	(663		)	(525		)
Central	—			—
Southeast	3,291			123
Total	$	2,590		$	(435	)

Land option contract abandonments:
West Coast	$	—	$	—
Southwest	—		—
Central	433		—
Southeast	—		—
Total	$	433	$	—

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KB HOME

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

2. Segment Information (continued)

	February 28, 2014		November 30, 2013
Inventories:
Homes under construction
West Coast	$	321,787	$	275,516
Southwest	34,278		39,661
Central	173,194		157,572
Southeast	104,137		113,690
Subtotal	633,396		586,439
Land under development
West Coast	659,753		560,032
Southwest	237,788		106,654
Central	285,407		238,311
Southeast	180,392		161,919
Subtotal	1,363,340		1,066,916
Land held for future development
West Coast	306,902		308,636
Southwest	147,865		157,924
Central	23,746		15,193
Southeast	159,695		163,469
Subtotal	638,208		645,222
Total	$	2,634,944	$	2,298,577
Investments in unconsolidated joint ventures:
West Coast	$	44,598	$	40,246
Southwest	13,549		80,877
Central	—		—
Southeast	2,501		9,069
Total	$	60,648	$	130,192
Assets:
West Coast	$	1,395,759	$	1,230,761
Southwest	453,062		402,443
Central	546,222		465,547
Southeast	461,442		456,965
Corporate and other	382,301		627,879
Total homebuilding assets	3,238,786		3,183,595
Financial services	9,386		10,040
Total	$	3,248,172	$	3,193,635

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KB HOME

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

3. Financial Services

The following tables present financial information relating to our financial services reporting segment (in thousands):

	Three Months Ended February 28,
	2014			2013
Revenues
Insurance commissions	$	1,262		$	1,303
Title services	708			649
Marketing services fees	450			450
Interest income	—			1
Total	2,420			2,403
Expenses
General and administrative	(852		)	(835		)
Operating income	1,568			1,568
Equity in income (loss) of unconsolidated joint ventures (a)	(6		)	1,091
Pretax income	$	1,562		$	2,659

(a) The equity in income of unconsolidated joint ventures in 2013 related to the wind down of KBA Mortgage, LLC (“KBA Mortgage”), our unconsolidated mortgage banking joint venture with a subsidiary of Bank of America, N.A., which ceased offering mortgage banking services in 2011.

	February 28, 2014		November 30, 2013
Assets
Cash and cash equivalents	$	3,181	$	2,428
Receivables	699		2,084
Investments in unconsolidated joint ventures	5,484		5,490
Other assets	22		38
Total assets	$	9,386	$	10,040
Liabilities
Accounts payable and accrued expenses	$	2,350	$	2,593
Total liabilities	$	2,350	$	2,593

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

4. Earnings (Loss) Per Share

Basic and diluted earnings (loss) per share were calculated as follows (in thousands, except per share amounts):

	Three Months Ended February 28,
	2014			2013
Numerator:
Net income (loss)	$	10,563		$	(12,458	)
Less: Distributed earnings allocated to nonvested restricted stock	(5		)	—
Less: Undistributed earnings allocated to nonvested restricted stock	(22		)	—
Numerator for basic earnings (loss) per share	10,536			(12,458		)
Effect of dilutive securities:
Interest expense and amortization of debt issuance costs associated with convertible senior notes, net of taxes	667			—
Add: Undistributed earnings allocated to nonvested restricted stock	22			—
Less: Undistributed earnings reallocated to nonvested restricted stock	(20		)	—
Numerator for diluted earnings (loss) per share	$	11,205		$	(12,458	)
Denominator:
Weighted average shares outstanding — basic	83,745			79,401
Effect of dilutive securities:
Share-based payments	1,799			—
Convertible senior notes	8,402			—
Weighted average shares outstanding — diluted	93,946			79,401
Basic earnings (loss) per share	$	.13		$	(.16	)
Diluted earnings (loss) per share	$	.12		$	(.16	)

We compute earnings (loss) per share using the two-class method in accordance with Accounting Standards Codification Topic No. 260, “Earnings Per Share.” The two-class method 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 February 28, 2014 or 2013.

In the first quarter of 2013, we issued $230.0 million in aggregate principal amount of 1.375% convertible senior notes due 2019 (the “1.375% Convertible Senior Notes due 2019”), which are initially convertible into shares of our common stock at a conversion rate of 36.5297 shares for each $1,000 principal amount of the notes. The impact of the 1.375% Convertible Senior Notes due 2019 was excluded from the diluted earnings per share calculation for the three months ended February 28, 2013 because the effect would have been antidilutive.

Outstanding stock options to purchase 5.2 million shares of common stock were excluded from the diluted earnings per share calculation for the three months ended February 28, 2014, and all outstanding stock options were excluded from the diluted loss per share calculation for the three months ended February 28, 2013 because the effect of their inclusion would be antidilutive. Contingently issuable shares associated with outstanding performance-based restricted stock units (each a “PSU”) were not included in the earnings (loss) per share calculations for the three months ended February 28, 2014 or 2013 as the vesting conditions have not been satisfied.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

5. Inventories

Inventories consisted of the following (in thousands):

	February 28, 2014		November 30, 2013
Homes under construction	$	633,396	$	586,439
Land under development	1,363,340		1,066,916
Land held for future development	638,208		645,222
Total	$	2,634,944	$	2,298,577

Homes under construction is comprised of costs associated with homes in various stages of construction and includes direct construction and related land acquisition and land development costs. Land under development primarily consists of land acquisition and land development costs, which include capitalized interest and real estate taxes associated with land undergoing improvement activity. Land held for future development principally reflects land acquisition and land development costs related to land where development activity has been suspended or has not yet begun, but is expected to occur in the future. These assets held for future development are located in various submarkets where conditions do not presently support further investment or development, or are subject to a building permit moratorium or other regulatory restrictions, or are portions of larger land parcels that we plan to build out over several years and/or that have not yet been entitled. We may also suspend development activity if we believe it will result in greater returns and/or maximize the economic performance of a community by delaying improvements for a period of time to allow earlier phases of a long-term, multi-phase community or a neighboring community to generate sales momentum or for market conditions to improve. We resume development activity when we believe our investment in this inventory will be optimized or, in some instances, to accelerate sales pace and/or our return on investment, and we have activated assets previously held for future development in certain markets as part of our strategic growth initiatives. Interest and real estate taxes are not capitalized on land held for future development.

Our interest costs are as follows (in thousands):

	Three Months Ended February 28,
	2014			2013
Capitalized interest at beginning of period	$	216,681		$	217,684
Interest incurred	39,280			33,422
Interest expensed	(11,276		)	(15,240		)
Interest amortized to construction and land costs	(17,485		)	(18,705		)
Capitalized interest at end of period (a)	$	227,200		$	217,161

(a) Inventory impairment charges are recognized against all inventory costs of a community, such as land acquisition, land development, cost of home construction and capitalized interest. Capitalized interest amounts presented in the table reflect the gross amount of capitalized interest as impairment charges recognized are not generally allocated to specific components of inventory.

6. Inventory Impairments and Land Option Contract Abandonments

Each community or land parcel in our owned inventory is assessed to determine if indicators of potential impairment exist. Impairment indicators are assessed separately for each community or land parcel on a quarterly basis and include, but are not limited to, the following: significant decreases in net orders, average selling prices, volume of homes delivered, gross profit margins on homes delivered or projected gross profit margins on homes in backlog or future housing sales; significant increases in budgeted land development and home construction costs or cancellation rates; or projected losses on expected future land sales. If indicators of potential impairment exist for a community or land parcel, the identified asset is evaluated for recoverability in accordance with Accounting Standards Codification Topic No. 360, “Property, Plant, and Equipment” (“ASC 360”). We evaluated 11 and 20 communities or land parcels for recoverability during the three months endedFebruary 28, 2014 and 2013, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

6. Inventory Impairments and Land Option Contract Abandonments (continued)

When an indicator of potential impairment is identified for a community or land parcel, we test the asset for recoverability by comparing the carrying value of the asset to the undiscounted future net cash flows expected to be generated by the asset. The undiscounted future net cash flows are impacted by then-current conditions and trends in the market in which the asset is located as well as factors known to us at the time the cash flows are calculated. With the undiscounted future net cash flows, we also consider recent trends in our orders, backlog, cancellation rates and volume of homes delivered, as well as our expectations related to the following: product offerings; market supply and demand, including estimated average selling prices and related price appreciation; and land development, home construction and overhead costs to be incurred and related cost inflation. With respect to the three months endedFebruary 28, 2014 and 2013, these expectations reflected our experience that notwithstanding fluctuations in our company-wide net orders, backlog levels, homes delivered and housing gross profit margin, on a year-over-year basis, market conditions for each of our assets in inventory where impairment indicators were identified have been generally stable or improved, with no significant deterioration identified as to revenue and cost drivers that would prevent or otherwise impact recoverability. Based on this experience, and taking into account the generally favorable conditions in many of our served markets for new home sales, our inventory assessments as of February 28, 2014 considered an expected steady overall sales pace and average selling price performance for the remainder of 2014 relative to the improving trends in pace and performance in recent quarters.

Given the inherent challenges and uncertainties in forecasting future results, our inventory assessments at the time they are made take into consideration whether a community or land parcel is active, meaning whether it is open for sales and/or undergoing development, or whether it is being held for future development. Due to the short-term nature of active communities and land parcels as compared to land held for future development, our inventory assessments generally assume the continuation of then-current market conditions, subject to identifying information suggesting significant sustained changes in such conditions. These assessments, at the time made, generally anticipate net orders, average selling prices, volume of homes delivered and costs for land development and home construction to continue at or near then-current levels through the particular asset’s estimated remaining life. Inventory assessments for our land held for future development consider then-current market conditions as well as subjective forecasts regarding the timing and costs of land development and home construction and related cost inflation; the product(s) to be offered; and the net orders, volume of homes delivered, and selling prices and related price appreciation of the offered product(s) when an associated community is expected to open for sales. We evaluate various factors to develop these forecasts, including the availability of and demand for homes and finished lots within the relevant marketplace; historical, current and expected future sales trends for the marketplace; and third-party data, if available. These various estimates, trends, expectations and assumptions used in each of our inventory assessments are specific to each community or land parcel based on what we believe are reasonable forecasts for performance and may vary among communities or land parcels and may vary over time.

We record an inventory impairment charge when the carrying value of a 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 based on the estimated future net cash flows discounted for inherent risk associated with each such asset. Inputs used in our calculation of estimated discounted future net cash flows are specific to each affected community or land parcel and are based on our expectations for each such asset as of the applicable measurement date, including, among others, expectations related to average selling prices and delivery rates. The discount rates we used were impacted by the following at the time each calculation was made: the risk-free rate of return; expected risk premium based on estimated land development, home construction and delivery timelines; market risk from potential future price erosion; cost uncertainty due to land development or home construction cost increases; and other risks specific to the affected asset or conditions in the market in which the asset was located. Based on the results of our evaluations, we recognized no inventory impairment charges for the three months ended February 28, 2014 or 2013.

As of February 28, 2014, the aggregate carrying value of our inventory that had been impacted by inventory impairment charges was $284.5 million, representing 39 communities and various other land parcels. As of November 30, 2013, the aggregate carrying value of our inventory that had been impacted by inventory impairment charges was $293.1 million, representing 42 communities and various other land parcels.

Our inventory controlled under land option contracts and other similar contracts is assessed to determine whether it continues to meet our internal investment and marketing standards. Assessments are made separately for each optioned land parcel on a quarterly basis and are affected by the following factors relative to the market in which the asset is located, among others: current and/or anticipated net orders, average selling prices and volume of homes delivered; estimated land development and

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(Unaudited)

6. Inventory Impairments and Land Option Contract Abandonments (continued)

home construction costs; and projected profitability on expected future housing or land sales. 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 $.4 million of land option contract abandonment charges corresponding to 650 lots for the three months ended February 28, 2014 and no such charges for the three months ended February 28, 2013. We sometimes walk away from land option contracts or other similar contracts when we have incurred costs of less than $100,000; such costs and the corresponding lots, which totaled 3,380 lots in the three months ended February 28, 2014, are not included in the amounts above. Land option contract abandonment charges are included in construction and land costs in our consolidated statements of operations.

The estimated remaining life of each community or land parcel in our inventory depends on various factors, such as the total number of lots remaining; the expected timeline to acquire and entitle land and develop lots to build homes; the anticipated future net order and cancellation rates; and the expected timeline to build and deliver homes sold. While it is difficult to determine a precise timeframe for any particular inventory asset, we estimate our inventory assets’ remaining operating lives under current and expected future market conditions to range generally from one year to in excess of 10 years. Based on current market conditions and anticipated delivery timelines, we expect to realize, on an overall basis, the majority of our current inventory balance within five years.

Due to the judgment and assumptions applied in the estimation process with respect to inventory impairments, land option contract abandonments, the remaining operating lives of our inventory assets and the realization of our inventory balances, it is possible that actual results could differ substantially from those estimated.

7. Variable Interest Entities

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 in accordance with Accounting Standards Codification Topic No. 810, “Consolidation” (“ASC 810”), to determine whether they are VIEs and, if so, whether we are the primary beneficiary. None of our joint ventures at February 28, 2014 and November 30, 2013 were determined under the provisions of ASC 810 to be VIEs. All of our joint ventures were unconsolidated and accounted for under the equity method because we did not have a controlling financial interest.

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. The use of such land option contracts and other similar contracts to control land generally allows us to reduce the market risks associated with direct land ownership and development, and to reduce our capital and financial commitments, including interest and other carrying costs. Under such contracts, we typically pay a specified option 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 provisions of ASC 810 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, ASC 810 requires us to consolidate a VIE if we are determined to be the primary beneficiary. In determining whether we are the primary beneficiary, we consider, among other things, whether we have the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance. Such activities would include, among other things, determining or limiting the scope or purpose of the VIE, selling or transferring property owned or controlled by the VIE, or arranging financing for the VIE. As a result of our analyses, we determined that as of February 28, 2014 and November 30, 2013 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. In accordance with ASC 810, we perform ongoing reassessments of whether we are the primary beneficiary of a VIE.

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(Unaudited)

7.    Variable Interest Entities (continued)

The following table presents a summary of our interests in land option contracts and other similar contracts (in thousands):

	February 28, 2014				November 30, 2013
	Cash Deposits		Aggregate Purchase Price		Cash Deposits		Aggregate Purchase Price
Unconsolidated VIEs	$	25,031	$	589,713	$	11,063	$	616,000
Other land option contracts and other similar contracts	30,603		500,853		30,502		535,496
Total	$	55,634	$	1,090,566	$	41,565	$	1,151,496

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 $34.7 million at February 28, 2014 and $31.0 million at November 30, 2013. These pre-acquisition costs and cash deposits were included in inventories in our consolidated balance sheets. We also had outstanding letters of credit of $.1 million at both February 28, 2014 and November 30, 2013 in lieu of cash deposits under certain land option contracts and other similar contracts.

We also evaluate our land option contracts and other similar contracts for financing arrangements in accordance with Accounting Standards Codification Topic No. 470, “Debt” (“ASC 470”), and, as a result of our evaluations, increased inventories, with a corresponding increase to accrued expenses and other liabilities, in our consolidated balance sheets by $9.8 million at February 28, 2014 and $8.9 million at November 30, 2013.

8. 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. Our partners in these unconsolidated joint ventures are unrelated homebuilders and/or land developers and other real estate entities, or commercial enterprises. These investments are designed primarily to reduce market and development risks and to increase the number of lots we own or control. In some instances, participating in unconsolidated joint ventures has enabled us to acquire and develop land that we might not otherwise have had access to due to a project’s size, financing needs, duration of development or other circumstances. While we consider our participation in unconsolidated joint ventures as potentially beneficial to our homebuilding activities, we do not view such participation as essential.

We typically have obtained rights to acquire portions of the land held by the unconsolidated joint ventures in which we currently participate. When an unconsolidated joint venture sells land to our homebuilding operations, we defer recognition of our share of such unconsolidated joint venture’s earnings until a home sale is closed and title passes to a homebuyer, at which time we account for those earnings as a reduction of the cost of purchasing the land from the unconsolidated joint venture.

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, equal 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.

Each unconsolidated joint venture is obligated to maintain financial statements in accordance with GAAP. We share in the profits and losses of these unconsolidated joint ventures generally in accordance with our respective equity interests. In some instances, we recognize profits and losses related to our investment in an unconsolidated joint venture that differ from our equity interest in the unconsolidated joint venture. This may arise from impairments that we recognize related to our investment that differ from the impairments the unconsolidated joint venture recognizes with respect to the unconsolidated joint venture’s assets; differences between our basis in assets we have transferred to the unconsolidated joint venture and the unconsolidated joint venture’s basis in those assets; our deferral of the unconsolidated joint venture earnings from land sales made to our homebuilding operations; or other items. With respect to our investments in unconsolidated joint ventures, our equity in income (loss) of unconsolidated joint ventures included no impairment charges for the three months endedFebruary 28, 2014 or 2013.

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8. Investments in Unconsolidated Joint Ventures (continued)

The following table presents combined condensed information from the statements of operations of our unconsolidated joint ventures (in thousands):

	Three Months Ended February 28,
	2014			2013
Revenues	$	6,118		$	—
Construction and land costs	(3,523		)	—
Other expenses, net	(1,130		)	(855		)
Income (loss)	$	1,465		$	(855	)

The revenues and construction and land costs for the three months ended February 28, 2014 were solely related to the sale of land by one of our unconsolidated joint ventures.

The following table presents combined condensed balance sheet information for our unconsolidated joint ventures (in thousands):

	February 28, 2014		November 30, 2013
Assets
Cash	$	17,958	$	18,752
Receivables	4,619		4,902
Inventories	165,133		381,195
Other assets	149		1,183
Total assets	$	187,859	$	406,032
Liabilities and equity
Accounts payable and other liabilities	$	22,843	$	85,386
Equity	165,016		320,646
Total liabilities and equity	$	187,859	$	406,032

The following table presents information relating to our investments in unconsolidated joint ventures (dollars in thousands):

	February 28, 2014		November 30, 2013
Number of investments in unconsolidated joint ventures	7		9
Investments in unconsolidated joint ventures	$	60,648	$	130,192
Number of unconsolidated joint venture lots controlled under land option contracts or other similar contracts	673		5,367

As of February 28, 2014, the combined inventories of our unconsolidated joint ventures and the number of unconsolidated joint venture lots controlled under land option contracts or other similar contracts each decreased from November 30, 2013, partly due to a distribution of $70.6 million of land we received from Inspirada Builders, LLC (“Inspirada”), our unconsolidated joint venture in Las Vegas, during the three months ended February 28, 2014. In addition, we sold our interest in an unconsolidated joint venture in Maryland for $10.1 million, which resulted in a gain of $3.2 million that is included in equity in income of unconsolidated joint ventures in our consolidated statements of operations. The decrease in the combined inventories of our unconsolidated joint ventures also reflected the transfer of a $33.2 million inventory-related obligation to us in connection with the distribution of land we received from Inspirada, as discussed below in Note 10. Accrued Expenses

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8. Investments in Unconsolidated Joint Ventures (continued)

and Other Liabilities. This transfer also contributed to the decrease in the combined accounts payable and other liabilities of our unconsolidated joint ventures during the three months ended February 28, 2014.

The decrease in our investments in unconsolidated joint ventures at February 28, 2014, compared to November 30, 2013, reflected the above-mentioned transactions, partly offset by capital contributions made to various unconsolidated joint ventures.

None of our unconsolidated joint ventures had outstanding debt at February 28, 2014 or November 30, 2013.

9. Other Assets

Other assets consisted of the following (in thousands):

	February 28, 2014		November 30, 2013
Cash surrender value of insurance contracts	$	69,443	$	68,534
Debt issuance costs	26,103		27,366
Property and equipment, net	9,571		8,460
Prepaid expenses	5,370		2,716
Total	$	110,487	$	107,076

10. Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following (in thousands):

	February 28, 2014		November 30, 2013
Self-insurance and other litigation liabilities	$	94,939	$	99,612
Employee compensation and related benefits	87,519		99,332
Accrued interest payable	64,971		45,562
Inventory-related obligations (a)	62,748		29,517
Warranty liability	43,419		48,704
Real estate and business taxes	6,106		8,131
Other	26,383		25,318
Total	$	386,085	$	356,176

(a) The increase in inventory-related obligations at February 28, 2014, compared to November 30, 2013, reflected a $33.2 million liability we recorded for fixed or determinable amounts associated with tax increment financing entities (“TIFE”) in connection with the distribution of land we received from Inspirada during the three months ended February 28, 2014. As homes are delivered, the obligation to pay the remaining TIFE assessments associated with each underlying lot is transferred to the homebuyer. As such, these assessment obligations will be paid by us only to the extent we do not deliver homes to homebuyers on the applicable lots before the related TIFE obligations mature.

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(Unaudited)

11. Income Taxes

Income Tax Expense. Our income tax expense totaled $.2 million for the three months ended February 28, 2014 and $.1 million for the three months ended February 28, 2013. Due to the effects of the deferred tax asset valuation allowance, our effective tax rates for the three months ended February 28, 2014 and 2013 are not meaningful items as our income tax amounts are not directly correlated to the amount of our pretax income (loss) for those periods.

Deferred Tax Asset Valuation Allowance. In accordance with Accounting Standards Codification Topic No. 740, “Income Taxes” (“ASC 740”), we evaluate our deferred tax assets quarterly to determine if adjustments to the valuation allowance are required. ASC 740 requires that companies assess whether a valuation allowance should be established 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. The ultimate realization of deferred tax assets depends primarily on the generation of future taxable income. The value of our deferred tax assets will depend on applicable income tax rates. During the three months ended February 28, 2014, we reduced our deferred tax asset valuation allowance by $4.4 million to account for adjustments to our deferred tax assets associated with the pretax income generated during the period. During the three months ended February 28, 2013, we reduced our deferred tax asset valuation allowance by $.7 million to account for adjustments to our deferred tax assets associated with the vesting of equity-based awards. One of the primary pieces of negative evidence that we consider in evaluating the need for a valuation allowance is our three-year cumulative loss position, which is largely the result of our pretax losses in 2012 and 2011, as we generated pretax income for the year ended November 30, 2013. In the first quarter of 2014, we reported our third consecutive quarter of pretax income and experienced year-over-year increases in our revenues, housing gross profit margin, net orders and backlog. If such positive trends in our business continue, together with improvements in housing markets and the homebuilding industry, and we are profitable on a sustained basis, we believe that there could be sufficient positive evidence to support reducing a large portion of our valuation allowance during 2014.

We had no net deferred tax assets at February 28, 2014 or November 30, 2013 as we maintained a full valuation allowance against our deferred tax assets. The deferred tax asset valuation allowance decreased to $855.0 million at February 28, 2014 from $859.4 million at November 30, 2013, reflecting the $4.4 million valuation allowance adjustment recorded during the three months endedFebruary 28, 2014.

Unrecognized Tax Benefits. During the three months ended February 28, 2014, our total gross unrecognized tax benefits remained unchanged at $.3 million. The total amount of gross unrecognized tax benefits, including interest and penalties, that would affect the effective tax rate was $.3 million as of February 28, 2014. We anticipate that these gross unrecognized tax benefits will decrease by an amount ranging from $.1 million to $.3 million during the 12 months from this reporting date due to various state tax filings associated with the resolution of a federal tax audit. Our fiscal years ending 2010 and later remain open to federal and state examinations.

The benefits of our net operating losses (“NOL”), built-in losses and tax credits would be reduced or potentially eliminated if we experienced an “ownership change” under Internal Revenue Code Section 382 (“Section 382”). Based on our analysis performed as of February 28, 2014, we do not believe we have experienced an ownership change as defined by Section 382, and, therefore, the NOL, built-in losses and tax credits we have generated should not be subject to a Section 382 limitation as of this reporting date.

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(Unaudited)

12. Mortgages and Notes Payable

Mortgages and notes payable consisted of the following (in thousands):

	February 28, 2014		November 30, 2013
Mortgages and land contracts due to land sellers and other loans	$	37,970	$	13,615
6 1/4% Senior notes due June 15, 2015	199,870		199,864
9.10% Senior notes due September 15, 2017	262,213		262,048
7 1/4% Senior notes due June 15, 2018	299,295		299,261
8.00% Senior notes due March 15, 2020	345,842		345,710
7.00% Senior notes due December 15, 2021	450,000		450,000
7.50% Senior notes due September 15, 2022	350,000		350,000
1.375% Convertible senior notes due February 1, 2019	230,000		230,000
Total	$	2,175,190	$	2,150,498

Unsecured Revolving Credit Facility. We have a $200.0 million unsecured revolving credit facility with a syndicate of financial institutions (as amended, the “Credit Facility”) that will mature on March 12, 2016. The Credit Facility contains an uncommitted accordion feature under which its aggregate principal amount can be increased to up to$300.0 million under certain conditions and the availability of additional bank commitments, as well as a sublimit of $100.0 million for the issuance of letters of credit, which may be utilized in combination with or to replace our LOC Facilities. Interest on amounts borrowed under the Credit Facility is payable quarterly in arrears at a rate based on either the London Interbank Offered Rate or a base rate, plus a spread that depends on our debt rating and consolidated leverage ratio (“Leverage Ratio”), as defined under the Credit Facility. The Credit Facility also requires the payment of a commitment fee ranging from .50% to .75% of the unused commitment, based on our debt rating and Leverage Ratio. 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 an interest coverage ratio or a 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 February 28, 2014, we had no cash borrowings or letters of credit outstanding under the Credit Facility and we had $200.0 million available for cash borrowings, with up to $100.0 million of that amount available for the issuance of letters of credit.

Letter of Credit Facilities. We maintain the LOC Facilities with various financial institutions to obtain letters of credit in the ordinary course of operating our business. As of February 28, 2014 and November 30, 2013, we had $41.7 million and $41.5 million, respectively, of letters of credit outstanding under the LOC Facilities. The LOC Facilities require us to deposit and maintain cash with the issuing financial institutions as collateral for our letters of credit outstanding. We may maintain, revise or, if necessary or desirable, enter into additional or expanded letter of credit facilities, or other similar facility arrangements, with the same or other financial institutions.

Mortgages and Land Contracts Due to Land Sellers and Other Loans. As of February 28, 2014, inventories having a carrying value of $101.6 million were pledged to collateralize mortgages and land contracts due to land sellers and other loans totaling $38.0 million.

Shelf Registration. We have an automatically effective universal shelf registration statement on file with the SEC, which was filed on September 20, 2011 (the “2011 Shelf Registration”). The 2011 Shelf Registration registers the offering of debt and equity securities that we may issue from time to time in amounts to be determined.

Senior Notes. All of our senior notes outstanding at February 28, 2014 and November 30, 2013 represent senior unsecured obligations and rank equally in right of payment with all of our existing and future indebtedness. Interest on each of these senior notes is payable semi-annually. At our option, these notes may be redeemed, in whole at any time or from time to time in part, at a redemption price equal to the greater of (a) 100% of the principal amount of the notes being redeemed and (b) the sum of the present values of the remaining scheduled payments of principal and interest on the notes being redeemed discounted

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12. Mortgages and Notes Payable (continued)

to the redemption date at a defined rate, plus, in each case, accrued and unpaid interest on the notes being redeemed to the applicable redemption date.

Convertible Senior Notes. On January 29, 2013 and February 4, 2013, pursuant to the 2011 Shelf Registration, we issued in an underwritten public offering the 1.375% Convertible Senior Notes due 2019 at 100% of the $230.0 million in aggregate principal amount of these notes. The issuance on February 4, 2013 was made pursuant to the exercise of an option granted to the underwriters to purchase such notes to cover over-allotments. Interest on the 1.375% Convertible Senior Notes due 2019, which represent senior unsecured obligations of ours and rank equally in right of payment with all of our other senior unsecured indebtedness, is payable semi-annually in arrears on February 1 and August 1. We will also pay interest on November 1, 2018. The 1.375% Convertible Senior Notes due 2019 will mature on February 1, 2019, unless converted earlier by the holders, at their option, or redeemed by us, or purchased by us at the option of the holders following the occurrence of a fundamental change, as defined in the instruments governing the 1.375% Convertible Senior Notes due 2019.

At any time prior to the close of business on the business day immediately preceding the maturity date, holders may convert all or any portion of their 1.375% Convertible Senior Notes due 2019. The 1.375% Convertible Senior Notes due 2019 are initially convertible into shares of our common stock at a conversion rate of 36.5297 shares for each $1,000 principal amount of the notes, which represents an initial conversion price of approximately $27.37 per share and a conversion premium of approximately 47% based on the closing price of our common stock on January 29, 2013, which was $18.62 per share. This initial conversion rate equates to 8,401,831 shares of our common stock. The conversion rate is subject to adjustment upon the occurrence of certain events, including: subdivisions and combinations of our common stock; the issuance of stock dividends, or certain rights, options or warrants, capital stock, indebtedness, assets or cash dividends to all or substantially all holders of our common stock; and certain tender or exchange offers by us. The conversion rate will not, however, be adjusted for other events, such as a third party tender or exchange offer or an issuance of common stock for cash or an acquisition, that may adversely affect the trading price of the notes or our common stock. On conversion, holders of the 1.375% Convertible Senior Notes due 2019 will not be entitled to receive cash in lieu of shares of our common stock, except for cash in lieu of fractional shares.

We may not redeem the 1.375% Convertible Senior Notes due 2019 prior to November 6, 2018. On or after November 6, 2018, and prior to the stated maturity date, we may at our option redeem all or part of the 1.375% Convertible Senior Notes due 2019 for a cash price equal to 100% of the principal amount of the notes being redeemed, plus accrued and unpaid interest to, but not including, the redemption date. If a fundamental change, as defined in the instruments governing the 1.375% Convertible Senior Notes due 2019, occurs prior to the stated maturity date, the holders may require us to purchase for cash all or any portion of their 1.375% Convertible Senior Notes due 2019 at 100% of the principal amount of the notes, plus accrued and unpaid interest to, but not including, the fundamental change purchase date.

We used the $223.1 million in total net proceeds from the issuance of the 1.375% Convertible Senior Notes due 2019 together with the total net proceeds from a concurrent underwritten public offering of our common stock, which is described in Note 16. Stockholders’ Equity, for general corporate purposes, including for investments in land and land development.

The indenture governing the senior notes and the 1.375% Convertible Senior Notes due 2019 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-leaseback transactions involving property or assets above a certain specified value. In addition, the 1.375% Convertible Senior Notes due 2019 and all of the senior notes (with the exception of the 6 1/4% senior notes due 2015 and the 7 1/4% senior notes due 2018) contain certain limitations related to mergers, consolidations, and sales of assets.

As of February 28, 2014, we were in compliance with the applicable terms of all our covenants under the Credit Facility, the senior notes, the 1.375% Convertible Senior Notes due 2019, 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.

13. Fair Value Disclosures

Accounting Standards Codification Topic No. 820, “Fair Value Measurements and Disclosures,” provides a framework for measuring the fair value of assets and liabilities under GAAP, and establishes a fair value hierarchy that requires an entity to

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13. Fair Value Disclosures (continued)

maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The fair value hierarchy can be summarized as follows:

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 the carrying value is not recoverable. The following table presents the fair value hierarchy and our assets measured at fair value on a nonrecurring basis for the three months endedFebruary 28, 2014 and the year ended November 30, 2013 (in thousands):

	Fair Value
Description	Hierarchy	February 28, 2014		November 30, 2013
Long-lived assets held and used (a)	Level 3	$	—	$	1,143

(a) Amounts represent the aggregate fair value for communities or land parcels where we recognized inventory impairment charges during the period, as of the date that the fair value measurements were made. The carrying value for these communities or land parcels may have subsequently increased or decreased from the fair value reflected due to activity that has occurred since the measurement date.

We had no inventory impairment charges in the three months ended February 28, 2014. During the year ended November 30, 2013, long-lived assets held and used with a carrying value of $1.5 million were written down to their fair value of $1.1 million, resulting in inventory impairment charges of $.4 million.

The fair values for long-lived assets held and used that were determined using Level 3 inputs were primarily based on the estimated future net cash flows discounted for inherent risk associated with each asset as described in Note 6. Inventory Impairments and Land Option Contract Abandonments. The discount rates we used were impacted by the following at the time the calculations were made: the risk-free rate of return; expected risk premium based on estimated land development, home construction and delivery timelines; market risk from potential future price erosion; cost uncertainty due to land development or home construction cost increases; and other risks specific to the affected asset or conditions in the market in which the asset was located. These factors were specific to each affected community or land parcel and may have varied over time.

Our financial instruments consist of cash and cash equivalents, restricted cash, senior notes, the 1.375% Convertible Senior Notes due 2019, and mortgages and land contracts due to land sellers and other loans. Fair value measurements of financial instruments are determined by various market data and other valuation techniques as appropriate. When available, we use quoted market prices in active markets to determine fair value.

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):

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13. Fair Value Disclosures (continued)

		February 28, 2014				November 30, 2013
	Fair Value Hierarchy	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Liabilities:
Senior notes	Level 2	$	1,907,220	$	2,121,250	$	1,906,883	$	2,069,325
Convertible senior notes	Level 2	230,000		249,263		230,000		224,825

The fair values of our senior notes and the 1.375% Convertible Senior Notes due 2019 are generally estimated based on quoted market prices for these instruments. The carrying values reported for cash and cash equivalents, restricted cash, and mortgages and land contracts due to land sellers and other loans approximate fair values.

14. 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 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, including claims where we could have liability under applicable state statutes or tort law for a defective condition in or damages to a 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, 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 could have a significant impact on our actual warranty costs in future periods and such amounts could differ from our current estimates.

The changes in our warranty liability are as follows (in thousands):

	Three Months Ended February 28,
	2014			2013
Balance at beginning of period	$	48,704		$	47,822
Warranties issued	3,426			2,766
Payments	(8,711		)	(8,929		)
Adjustments	—			1,674
Balance at end of period	$	43,419		$	43,333

Central and Southwest Florida Claims. Our overall warranty liability at February 28, 2014 included $22.9 million for estimated remaining repair costs associated with 352 homes in central and southwest Florida that have been identified as having water intrusion-related issues and estimated repair costs associated with similarly affected homes in central and southwest Florida

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(Unaudited)

14. Commitments and Contingencies (continued)

that we believe are likely to be identified in the future. Our overall warranty liability at November 30, 2013 included $28.9 million for estimated remaining repair costs associated with 710 identified affected homes and estimated repair costs associated with similarly affected homes then-believed likely to be identified in the future. The above-mentioned amount, included in our overall warranty liability as of February 28, 2014, encompasses what we believe is the probable overall cost of the repair effort remaining before insurance and other recoveries. However, our actual costs to fully resolve repairs on affected homes could differ from the overall costs we have estimated, and the difference could be material to our consolidated financial statements.

The decrease in the liability for estimated remaining repair costs during the three months ended February 28, 2014 reflected the lower number of identified affected homes with unresolved repairs at February 28, 2014 compared to November 30, 2013. During the three months ended February 28, 2014, repairs were resolved on 371 identified affected homes and we identified 13 additional affected homes. For these purposes, we consider repairs for identified affected homes to be resolved when all repairs are completed and all repair costs are fully paid.

During the three months ended February 28, 2014 and 2013, we paid $6.0 million and $5.4 million, respectively, to repair identified affected homes. Since first identifying affected homes in late 2012, we have identified a total of 1,477 affected homes requiring more than minor repairs and resolved repairs on 1,125 of those homes through February 28, 2014. As of February 28, 2014, we had paid $42.7 million of the total costs of $65.6 million that we have estimated for the overall repair effort. Approximately half of the total estimated repair costs as of February 28, 2014 related to two attached-home communities. We anticipate resolving repairs on homes affected by the water intrusion-related issues by the end of 2014.

As of February 28, 2014, based on our investigation into the central and southwest Florida water intrusion-related issues, we believe it is probable that we will recover a portion of our repair costs associated with affected homes from various sources, including subcontractors involved with the original construction of the homes and their insurers, and have reflected these estimated probable recoveries in our warranty liability. Our investigation into the water intrusion-related issues, including the process of determining potentially responsible parties and our efforts to obtain recoveries, is ongoing, and as a result, our estimate of probable recoveries may change as additional information is obtained.

Other Claims. With respect to potential recoveries on claims regarding other homes previously delivered, we have tendered claims with responsible liability insurance carriers, seeking reimbursement of costs we have incurred to make repairs and to handle claims. We intend to continue to undertake efforts, including legal proceedings, to obtain reimbursement from various sources, including subcontractors, suppliers and their insurers, for the costs we have incurred or expect to incur to investigate and complete repairs and to defend ourselves in litigation. We have not recorded any material amounts for potential future recoveries as of February 28, 2014 related to these claims regarding other homes previously delivered.

Overall Warranty Liability Assessment. In assessing our overall warranty liability at a reporting date, we evaluate the costs for warranty-related items on a combined basis for all of our previously delivered homes that are under our limited warranty, which would include homes in central and southwest Florida that have been or may in the future be identified as having water intrusion-related issues. Based on our assessment of our overall warranty liability as of February 28, 2014, we determined that our overall warranty liability was adequate with respect to our then-estimated remaining repair costs associated with homes in central and southwest Florida that have been identified as having water intrusion-related issues, estimated repair costs associated with similarly affected homes in central and southwest Florida that we believe are likely to be identified in the future and our overall warranty obligations on homes delivered. In light of this assessment, we did not record adjustments in our consolidated statement of operations for the three months ended February 28, 2014 with respect to estimated repair costs associated with identified affected homes in central and southwest Florida that have been identified as having water intrusion-related issues and estimated repair costs associated with similarly affected homes in central and southwest Florida that we believe are likely to be identified in the future. As of February 28, 2013, based on our assessment of our overall warranty liability, we recorded an adjustment to increase our overall warranty liability by $1.7 million in the first quarter of 2013 with a corresponding charge to construction and land costs in our consolidated statement of operations, reflecting an increase in our estimated warranty costs, net of estimated probable recoveries for water intrusion-related issues in central and southwest Florida and other adjustments.

Depending on the number of additional homes in central and southwest Florida that are identified as having water intrusion-related issues, and the actual costs we incur in future periods to repair identified homes and/or homes affected by other issues, including costs to provide affected homeowners with temporary housing, we may revise the amount of our estimated liability,

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(Unaudited)

14. Commitments and Contingencies (continued)

which could result in an increase or decrease in our overall warranty liability. Based on our investigations of the water intrusion-related issues in central and southwest Florida, we believe that our warranty liability is adequate to cover the estimated probable total repair costs on these affected homes and on homes affected by other issues, though we believe it is reasonably possible that our loss in this matter could exceed the amount accrued as of February 28, 2014 by up to $6 million.

Guarantees. In the normal course of our business, we issue certain representations, warranties and guarantees related to our home sales and land sales that may be affected by Accounting Standards Codification Topic No. 460, “Guarantees.” Based on historical evidence, 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 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 self-insure a portion of our overall risk through the use of a captive insurance subsidiary. 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, where eligible subcontractors are enrolled as insureds on each project. Enrolled subcontractors contribute toward the cost of the insurance and agree to pay a contractual amount in the future in the event of a claim related to their work. For those enrolled subcontractors, we absorb their general liability associated with the work performed on our homes within the applicable projects as part of our overall general liability insurance and our self-insurance through our captive insurance subsidiary. We record expenses and liabilities based on the estimated costs required to cover our self-insured retention and deductible amounts under our insurance policies, and the estimated costs of potential claims and claim adjustment expenses that are above our coverage limits or that are not covered by our insurance policies. These estimated costs are based on an analysis of our historical claims and industry data, and include an estimate of claims incurred but not yet reported.

We engage a third-party actuary that uses our historical claim and expense data, as well as industry data, to estimate our liabilities related to unpaid claims, claim adjustment expenses, third-party recoveries and incurred but not yet reported claims associated with the risks that we are assuming under our self-insurance. These estimates are subject to uncertainty due to a variety of factors, the most significant being the long period of time between the delivery of a home to a homebuyer and when a structural warranty or construction defect claim is made, and the ultimate resolution of the construction defect claim. Though state regulations vary, construction defect claims are reported and resolved over a prolonged period of time, which can extend for 10 years or longer. As a result, the majority of the estimated liability relates to incurred but not yet reported claims. Because the majority of our estimated liabilities relate to incurred but not yet reported claims, 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.

The changes in our self-insurance liability are as follows (in thousands):

	Three Months Ended February 28,
	2014			2013
Balance at beginning of period	$	92,214		$	93,349
Self-insurance expense (a)	2,616			1,809
Payments, net of recoveries (b)	(4,414		)	(3,435		)
Balance at end of period	$	90,416		$	91,723

(a) These expenses are included in selling, general and administrative expenses and are largely offset by contributions from subcontractors participating in the wrap-up policy.

(b) Recoveries are reflected at the time we receive funds from subcontractors and/or their insurers.

The projection of losses related to these liabilities requires actuarial assumptions that are subject to variability due to uncertainties regarding construction defect claims relative to our markets and the types of product we build, insurance industry practices and legal or regulatory interpretations, among other factors. Key assumptions used in these estimates include claim

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

14. Commitments and Contingencies (continued)

frequencies, severities and settlement patterns, which can occur over an extended period of time. In addition, changes in the frequency and severity of reported claims and the estimates to settle claims can impact the trends and assumptions used in the actuarial analysis, which could be material to our consolidated financial statements. Due to the degree of judgment required and the potential for variability in these underlying assumptions, our actual future costs could differ from those estimated, and the difference could be material to our consolidated financial statements.

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 February 28, 2014, we had $427.0 million of performance bonds and $41.7 million of letters of credit outstanding. At November 30, 2013, we had $410.8 million of performance bonds and $41.5 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 obligations are 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. In the ordinary course of business, we enter into land option contracts and other similar contracts to acquire rights to land for the construction of homes. At February 28, 2014, we had total deposits of $55.7 million, comprised of $55.6 million of cash deposits and $.1 million of letters of credit, to purchase land having an aggregate purchase price of $1.09 billion. Our land option contracts and other similar contracts generally do not contain provisions requiring our specific performance.

15. Legal Matters

Nevada Development Contract Litigation. KB HOME Nevada Inc., a wholly owned subsidiary of ours (“KB Nevada”), is a defendant in a case in the Eighth Judicial District Court in Clark County, Nevada entitled Las Vegas Development Associates, LLC, Essex Real Estate Partners, LLC, et al. v. KB HOME Nevada Inc. In 2007, Las Vegas Development Associates, LLC (“LVDA”) agreed to purchase from KB Nevada approximately 83 acres of land located near Las Vegas, Nevada. LVDA subsequently assigned its rights to Essex Real Estate Partners, LLC (“Essex”). KB Nevada and Essex entered into a development agreement relating to certain major infrastructure improvements. LVDA’s and Essex’s complaint, initially filed in 2008, alleged that KB Nevada breached the development agreement, and also alleged that KB Nevada fraudulently induced them to enter into the purchase and development agreements. LVDA’s and Essex’s lenders subsequently filed related actions that were consolidated into the LVDA/Essex matter. The consolidated plaintiffs sought rescission of the agreements or, in the alternative, compensatory damages of $55 million plus unspecified punitive damages and other damages, and interest charges in excess of $41 million (the “Claimed Damages”). KB Nevada has denied the allegations, and believes it has meritorious defenses to the consolidated plaintiffs’ claims. At a November 19, 2012 hearing, the court denied all of the consolidated plaintiffs’ motions for summary judgment on their claims. In addition, the court granted several of KB Nevada’s motions for summary judgment, eliminating, among other of the consolidated plaintiffs’ claims, all claims for fraud, negligent misrepresentation, and punitive damages. With the court’s decisions, the only remaining claims against KB Nevada are for contract damages and rescission. In August 2013, the court granted motions that further narrowed the scope of the Claimed Damages. While the ultimate outcome is uncertain — we believe it is reasonably possible that the loss in this matter could range from zero to approximately $55 million plus prejudgment interest, which could be material to our consolidated financial statements — KB Nevada believes it will be successful in defending against the consolidated plaintiffs’ remaining claims and that the consolidated plaintiffs will not be awarded rescission or damages. The non-jury trial, originally set for September 2012, has been continued to May 20, 2014.

Other Matters. In addition to the specific proceedings described above, we are involved in other 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 February 28, 2014, it was not reasonably possible that an additional material loss had been incurred in an amount in excess of the estimated

25

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

15. Legal Matters (continued)

amounts already recognized in our consolidated financial statements. We evaluate our accruals for litigation and regulatory proceedings at least quarterly and, as appropriate, adjust them to reflect (a) the facts and circumstances known to us at the time, including information regarding negotiations, settlements, rulings and other relevant events and developments; (b) the advice and analyses of counsel; and (c) the assumptions and judgment of management. Similar factors and considerations are used in establishing new accruals for proceedings as to which losses have become probable and reasonably estimable at the time an evaluation is made. Based on our experience, we believe that the amounts that may be claimed or alleged against us in these proceedings are not a meaningful indicator of our potential liability. The outcome of any of these proceedings, including the defense and other litigation-related costs and expenses we may incur, however, is inherently uncertain and could differ significantly from the estimate reflected in a related accrual, if made. Therefore, it is possible that the ultimate outcome of any proceeding, if in excess of a related accrual or if no accrual had been made, could be material to our consolidated financial statements.

16. Stockholders’ Equity

A summary of changes in stockholders’ equity is presented below (in thousands):

	Three Months Ended February 28, 2014
	Common Stock		Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Grantor Stock Ownership Trust			Treasury Stock			Total Stockholders’ Equity
Balance at November 30, 2013	$	115,296	$	788,893	$	481,889		$	(17,516	)	$	(113,911	)	$	(718,565	)	$	536,086
Net income	—		—		10,563			—			—			—			10,563
Dividends on common stock	—		—		(2,094		)	—			—			—			(2,094		)
Stock-based compensation	—		1,779		—			—			—			—			1,779
Balance at February 28, 2014	$	115,296	$	790,672	$	490,358		$	(17,516	)	$	(113,911	)	$	(718,565	)	$	546,334

	Three Months Ended February 28, 2013
	Common Stock		Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Grantor Stock Ownership Trust			Treasury Stock			Total Stockholders’ Equity
Balance at November 30, 2012	$	115,178	$	888,579		$	450,292		$	(27,958	)	$	(115,149	)	$	(934,136	)	$	376,806
Net loss	—		—			(12,458		)	—			—			—			(12,458		)
Dividends on common stock	—		—			(2,089		)	—			—			—			(2,089		)
Stock-based compensation	—		1,013			—			—			—			—			1,013
Issuance of common stock	—		(106,314		)	—			—			—			216,125			109,811
Grantor stock ownership trust	—		20			—			—			32			—			52
Balance at February 28, 2013	$	115,178	$	783,298		$	435,745		$	(27,958	)	$	(115,117	)	$	(718,011	)	$	473,135

On January 29, 2013, pursuant to the 2011 Shelf Registration, we issued 6,325,000 shares of our common stock, par value $1.00 per share, in an underwritten public offering at a price of $18.25 per share (the “Common Stock Offering”). We used 6,325,000 shares of treasury stock for the issuance and received net proceeds of $109.8 million after underwriting discounts, commissions and transaction expenses.

In connection with the issuance of the 1.375% Convertible Senior Notes due 2019, which is discussed in Note 12. Mortgages and Notes Payable, we established a common stock reserve account with our transfer agent to reserve the maximum number of shares of our common stock potentially deliverable upon conversion to holders of the 1.375% Convertible Senior Notes due 2019 based on the terms of the instruments governing these notes. Accordingly, the common stock reserve account had

26

KB HOME

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

16. Stockholders’ Equity (continued)

a balance of 12,602,735 shares at February 28, 2014. The maximum number of shares would potentially be deliverable to holders only in certain limited circumstances as set forth in the instruments governing the 1.375% Convertible Senior Notes due 2019.

As of February 28, 2014, we were authorized to repurchase 4,000,000 shares of our common stock under a board-approved share repurchase program. We did not repurchase any of our common stock under this program in the three months ended February 28, 2014. We did not repurchase any shares pursuant to this common stock repurchase plan in 2013 or 2012. Any resumption of such stock repurchases under this program or any other program will be at the discretion of our board of directors.

During the three months ended February 28, 2014, our board of directors declared a cash dividend of $.0250 per share of common stock, which was paid on February 20, 2014 to stockholders of record on February 6, 2014. During the three months ended February 28, 2013, our board of directors declared a cash dividend of $.0250 per share of common stock, which was paid on February 21, 2013 to stockholders of record on February 7, 2013.

17. Stock-Based Compensation

We measure and recognize compensation expense associated with our grant of equity-based awards in accordance with Accounting Standards Codification Topic No. 718, “Compensation — Stock Compensation” (“ASC 718”). ASC 718 requires that companies measure and recognize compensation expense at an amount equal to the fair value of share-based payments granted under compensation arrangements over the vesting period. Compensation expense related to equity-based awards is included in selling, general and administrative expense in our consolidated statements of operations.

Stock Options. In accordance with ASC 718, we estimate the grant-date fair value of stock options using the Black-Scholes option-pricing model, which takes into account assumptions regarding an expected dividend yield, a risk-free interest rate, an expected volatility factor for the market price of our common stock and an expected term of the stock options. The following table summarizes stock option transactions for the three months ended February 28, 2014:

	Options		Weighted Average Exercise Price
Options outstanding at beginning of period	10,531,938		$	21.11
Granted	—		—
Exercised	—		—
Cancelled	(4,947	)	33.72
Options outstanding at end of period	10,526,991		$	21.11
Options exercisable at end of period	9,414,988		$	22.24

As of February 28, 2014, the weighted average remaining contractual life of stock options outstanding and stock options exercisable was 5.3 years and 4.9 years, respectively. There was $2.8 million of total unrecognized compensation expense related to unvested stock option awards as of February 28, 2014. For the three months ended February 28, 2014 and 2013, stock-based compensation expense associated with stock options totaled $.6 million and $.4 million, respectively. The aggregate intrinsic value of stock options outstanding was $48.0 million at February 28, 2014. The aggregate intrinsic value of stock options exercisable was $38.0 million at February 28, 2014. (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. We recognized total compensation expense of $1.2 million for the three months ended February 28, 2014 and $.6 million for the three months ended February 28, 2013 related to restricted stock and PSUs.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

18. Supplemental Disclosure to Consolidated Statements of Cash Flows

The following are supplemental disclosures to the consolidated statements of cash flows (in thousands):

	Three Months Ended February 28,
	2014			2013
Summary of cash and cash equivalents at end of period:
Homebuilding	$	303,269		$	624,044
Financial services	3,181			1,514
Total	$	306,450		$	625,558
Supplemental disclosures of cash flow information:
Interest paid, net of amounts capitalized	$	(8,133	)	$	5,872
Income taxes paid	103			120
Income taxes refunded	20			58
Supplemental disclosures of noncash activities:
Increase in consolidated inventories not owned	$	917		$	4,842
Increase in inventories due to distribution of land from unconsolidated joint venture	70,642			—
Increase in inventories and inventory-related obligations associated with TIFE tied to distribution of land from unconsolidated joint venture	33,197			—
Cost of inventories acquired through seller financing	27,010			27,600

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

19. Supplemental Guarantor Information

Our obligations to pay principal, premium, if any, and interest under our senior notes and the 1.375% Convertible Senior Notes due 2019 and borrowings, if any, under the Credit Facility are guaranteed on a joint and several basis by certain of our subsidiaries (the “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 our senior notes and the 1.375% Convertible Senior Notes due 2019, 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 (as in effect on June 1, 1996) 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 our senior notes, the 1.375% Convertible Senior Notes due 2019 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 February 28, 2014. The format of the condensed consolidating financial statements has been revised for the periods previously reported in our quarterly reports to retrospectively reflect (a) the transfer of certain of our subsidiaries from non-guarantor subsidiaries to guarantor subsidiaries as a result of such subsidiaries becoming guarantor subsidiaries during 2013 and (b) the following elective reclassifications which relate solely to transactions between KB Home corporate and its subsidiaries: (i) the reclassification of KB Home corporate, guarantor and non-guarantor intercompany interest, which had previously been included in interest expense, to a separate line item with corresponding offsets in the consolidating adjustments column; (ii) the reclassification of the net intercompany funding activity of KB Home corporate, which was previously included in cash flows provided by (used in) financing activities, to cash flows from investing activities with corresponding offsets in the consolidating adjustments column; and (iii) the reclassification of dividends received by KB Home corporate from its subsidiaries to cash provided by (used in) operating activities. Such dividends were previously included in net cash provided by (used in) financing activities. This revised presentation of the condensed consolidating financial statements had no impact or effect on our consolidated financial statements for any periods presented, including our consolidated statements of operations, consolidated balance sheets and consolidated statements of cash flows.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

19. Supplemental Guarantor Information (continued)

Condensed Consolidating Statement of Operations

Three Months Ended February 28, 2014 (in thousands)

	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Revenues	$	—		$	435,849		$	14,838		$	—		$	450,687
Homebuilding:
Revenues	$	—		$	435,849		$	12,418		$	—		$	448,267
Construction and land costs	—			(358,092		)	(11,182		)	—			(369,274		)
Selling, general and administrative expenses	(15,744		)	(41,972		)	(3,558		)	—			(61,274		)
Operating income (loss)	(15,744		)	35,785			(2,322		)	—			17,719
Interest income	167			1			—			—			168
Interest expense	(38,008		)	(1,272		)	—			28,004			(11,276		)
Intercompany interest	59,722			(32,096		)	378			(28,004		)	—
Equity in income of unconsolidated joint ventures	—			2,590			—			—			2,590
Homebuilding pretax income (loss)	6,137			5,008			(1,944		)	—			9,201
Financial services pretax income	—			—			1,562			—			1,562
Total pretax income (loss)	6,137			5,008			(382		)	—			10,763
Income tax expense	(100		)	(100		)	—			—			(200		)
Equity in net income of subsidiaries	4,526			—			—			(4,526		)	—
Net income (loss)	$	10,563		$	4,908		$	(382	)	$	(4,526	)	$	10,563

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

19. Supplemental Guarantor Information (continued)

Condensed Consolidating Statement of Operations

Three Months Ended February 28, 2013 (in thousands)

	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Revenues	$	—		$	393,228		$	11,991		$	—		$	405,219
Homebuilding:
Revenues	$	—		$	393,228		$	9,588		$	—		$	402,816
Construction and land costs	—			(334,498		)	(8,767		)	—			(343,265		)
Selling, general and administrative expenses	(14,823		)	(40,809		)	(3,465		)	—			(59,097		)
Operating income (loss)	(14,823		)	17,921			(2,644		)	—			454
Interest income	201			1			2			—			204
Interest expense	(31,847		)	(1,575		)	—			18,182			(15,240		)
Intercompany interest	45,356			(28,134		)	960			(18,182		)	—
Equity in loss of unconsolidated joint ventures	—			(435		)	—			—			(435		)
Homebuilding pretax loss	(1,113		)	(12,222		)	(1,682		)	—			(15,017		)
Financial services pretax income	—			—			2,659			—			2,659
Total pretax income (loss)	(1,113		)	(12,222		)	977			—			(12,358		)
Income tax expense	—			(100		)	—			—			(100		)
Equity in net loss of subsidiaries	(11,345		)	—			—			11,345			—
Net income (loss)	$	(12,458	)	$	(12,322	)	$	977		$	11,345		$	(12,458	)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

19. Supplemental Guarantor Information (continued)

Condensed Consolidating Balance Sheet

February 28, 2014 (in thousands)

	KB Home Corporate		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Total
Assets
Homebuilding:
Cash and cash equivalents	$	234,234	$	61,043	$	7,992	$	—		$	303,269
Restricted cash	42,083		—		—		—			42,083
Receivables	1,446		85,659		250		—			87,355
Inventories	—		2,600,119		34,825		—			2,634,944
Investments in unconsolidated joint ventures	—		60,648		—		—			60,648
Other assets	97,477		11,574		1,436		—			110,487
	375,240		2,819,043		44,503		—			3,238,786
Financial services	—		—		9,386		—			9,386
Intercompany receivables	2,397,174		—		113,059		(2,510,233		)	—
Investments in subsidiaries	42,004		—		—		(42,004		)	—
Total assets	$	2,814,418	$	2,819,043	$	166,948	$	(2,552,237	)	$	3,248,172
Liabilities and stockholders’ equity
Homebuilding:
Accounts payable, accrued expenses and other liabilities	$	134,679	$	295,212	$	94,407	$	—		$	524,298
Mortgages and notes payable	2,112,110		63,080		—		—			2,175,190
	2,246,789		358,292		94,407		—			2,699,488
Financial services	—		—		2,350		—			2,350
Intercompany payables	21,295		2,455,743		33,195		(2,510,233		)	—
Stockholders’ equity	546,334		5,008		36,996		(42,004		)	546,334
Total liabilities and stockholders’ equity	$	2,814,418	$	2,819,043	$	166,948	$	(2,552,237	)	$	3,248,172

32

KB HOME

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

19. Supplemental Guarantor Information (continued)

Condensed Consolidating Balance Sheet

November 30, 2013 (in thousands)

	KB Home Corporate		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Total
Assets
Homebuilding:
Cash and cash equivalents	$	476,847	$	41,316	$	11,932	$	—		$	530,095
Restricted cash	41,906		—		—		—			41,906
Receivables	1,472		74,186		91		—			75,749
Inventories	—		2,263,034		35,543		—			2,298,577
Investments in unconsolidated joint ventures	—		130,192		—		—			130,192
Other assets	97,647		9,072		357		—			107,076
	617,872		2,517,800		47,923		—			3,183,595
Financial services	—		—		10,040		—			10,040
Intercompany receivables	2,129,729		—		117,829		(2,247,558		)	—
Investments in subsidiaries	39,955		—		—		(39,955		)	—
Total assets	$	2,787,556	$	2,517,800	$	175,792	$	(2,287,513	)	$	3,193,635
Liabilities and stockholders’ equity
Homebuilding:
Accounts payable, accrued expenses and other liabilities	$	117,875	$	292,220	$	94,363	$	—		$	504,458
Mortgages and notes payable	2,111,773		38,725		—		—			2,150,498
	2,229,648		330,945		94,363		—			2,654,956
Financial services	—		—		2,593		—			2,593
Intercompany payables	21,822		2,186,855		38,881		(2,247,558		)	—
Stockholders’ equity	536,086		—		39,955		(39,955		)	536,086
Total liabilities and stockholders’ equity	$	2,787,556	$	2,517,800	$	175,792	$	(2,287,513	)	$	3,193,635

33

KB HOME

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

19. Supplemental Guarantor Information (continued)

Condensed Consolidating Statement of Cash Flows

Three Months Ended February 28, 2014 (in thousands)

	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net cash provided by (used in) operating activities	$	25,225		$	(238,483	)	$	(7,805	)	$	—		$	(221,063	)
Cash flows from investing activities:
Contributions to unconsolidated joint ventures	—			(8,618		)	—			—			(8,618		)
Proceeds from sale of investment in unconsolidated joint venture	—			10,110			—			—			10,110
Purchases of property and equipment, net	(70		)	(1,455		)	(51		)	—			(1,576		)
Intercompany	(265,497		)	—			—			265,497			—
Net cash provided by (used in) investing activities	(265,567		)	37			(51		)	265,497			(84		)
Cash flows from financing activities:
Change in restricted cash	(177		)	—			—			—			(177		)
Payments on mortgages and land contracts due to land sellers and other loans	—			(2,655		)	—			—			(2,655		)
Payments of cash dividends	(2,094		)	—			—			—			(2,094		)
Intercompany	—			260,828			4,669			(265,497		)	—
Net cash provided by (used in) financing activities	(2,271		)	258,173			4,669			(265,497		)	(4,926		)
Net increase (decrease) in cash and cash equivalents	(242,613		)	19,727			(3,187		)	—			(226,073		)
Cash and cash equivalents at beginning of period	476,847			41,316			14,360			—			532,523
Cash and cash equivalents at end of period	$	234,234		$	61,043		$	11,173		$	—		$	306,450

34

KB HOME

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

19. Supplemental Guarantor Information (continued)

Condensed Consolidating Statement of Cash Flows

Three Months Ended February 28, 2013 (in thousands) 

	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net cash provided by (used in) operating activities	$	8,208		$	(206,425	)	$	(12,815	)	$	—		$	(211,032	)
Cash flows from investing activities:
Contributions to unconsolidated joint ventures	—			(94		)	(210		)	—			(304		)
Purchases of property and equipment, net	(96		)	(318		)	(16		)	—			(430		)
Intercompany	(239,211		)	—			—			239,211			—
Net cash used in investing activities	(239,307		)	(412		)	(226		)	239,211			(734		)
Cash flows from financing activities:
Change in restricted cash	(2,257		)	—			—			—			(2,257		)
Proceeds from issuance of debt	230,000			—			—			—			230,000
Payment of debt issuance costs	(6,878		)	—			—			—			(6,878		)
Payments on mortgages and land contracts due to land sellers and other loans	—			(17,003		)	—			—			(17,003		)
Proceeds from issuance of common stock, net	109,811			—			—			—			109,811
Issuance of common stock under employee stock plans	52			—			—			—			52
Payments of cash dividends	(2,089		)	—			—			—			(2,089		)
Intercompany	—			230,182			9,029			(239,211		)	—
Net cash provided by financing activities	328,639			213,179			9,029			(239,211		)	311,636
Net increase (decrease) in cash and cash equivalents	97,540			6,342			(4,012		)	—			99,870
Cash and cash equivalents at beginning of period	457,007			54,205			14,476			—			525,688
Cash and cash equivalents at end of period	$	554,547		$	60,547		$	10,464		$	—		$	625,558

35

KB HOME

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

20. Subsequent Event

On March 25, 2014, pursuant to the 2011 Shelf Registration, we completed the underwritten public offering of 4.75% senior notes due 2019 (the “4.75% Senior Notes due 2019”), at 100% of the $400.0 million in aggregate principal amount of the notes, and the underwritten public offering of 6,944,445 shares of our common stock, par value $1.00 per share, at a price of $18.00 per share (the “2014 Common Stock Offering”). Interest on the 4.75% Senior Notes due 2019, which represent senior unsecured obligations of ours and rank equally in right of payment with all of our other senior unsecured indebtedness, is payable semi-annually in arrears on May 15 and November 15, commencing on November 15, 2014. The 4.75% Senior Notes due 2019 will mature on May 15, 2019. On April 4, 2014, the underwriters of the 2014 Common Stock Offering exercised their option to purchase 1,041,666 additional shares at a price of $18.00 per share, with the transaction expected to be completed on or about April 8, 2014. We plan to use the net proceeds from both the issuance of the 4.75% Senior Notes due 2019 and the 2014 Common Stock Offering (including the issuance of the additional shares) for general corporate purposes, including, without limitation, land acquisition and land development.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

OVERVIEW

Revenues are generated from our homebuilding and financial services operations. The following table presents a summary of our consolidated results of operations (dollars in thousands, except per share amounts):

	Three Months Ended February 28,
	2014			2013			Variance
Revenues:
Homebuilding	$	448,267		$	402,816		11	%
Financial services	2,420			2,403			1
Total	$	450,687		$	405,219		11	%
Pretax income (loss):
Homebuilding	$	9,201		$	(15,017	)	(a)
Financial services	1,562			2,659			(41	)%
Total pretax income (loss)	10,763			(12,358		)	(a)
Income tax expense	(200		)	(100		)	100
Net income (loss)	$	10,563		$	(12,458	)	(a)
Basic earnings (loss) per share	$	.13		$	(.16	)	(a)
Diluted earnings (loss) per share	$	.12		$	(.16	)	(a)

(a) Percentage not meaningful.

Conditions in most housing markets were generally favorable during the three months ended February 28, 2014, with relatively low inventories of new and existing homes available for sale, firm demand for housing, and mostly positive economic and demographic trends. While housing affordability has diminished somewhat compared to a year ago, and the performance of individual housing markets remains varied, consumers are adjusting to both higher mortgage loan interest rates and selling prices, and we expect to see a steady rise in demand in the coming quarters, though likely at a more moderate pace than in the first half of 2013. Based on the current housing environment, we believe there will be opportunities for our business to make measurable progress through the remainder of 2014.

In the three months ended February 28, 2014, we continued to build on the momentum and full-year profitability we achieved in 2013. We generated first quarter net income for the first time since 2007 and year-over-year improvement in key financial metrics, including average selling prices, revenues, housing gross profit margin, and selling, general and administrative expenses as a percentage of housing revenues. We believe our first quarter performance reflects the success of our strategic actions over the past few years to reposition our homebuilding activities and investments toward higher-performing, desirable locations in land-constrained growth markets and to refine our products to meet consumer preferences, as well as generally strengthening housing markets. It also reflects our success in executing on our current priorities of expanding our community count, increasing profitability per home delivered and growing our revenues.

A key driver of our performance in 2013 and our 2014 first quarter has been the substantial investments in land and land development we made in prior years and continue to make in support of our strategic repositioning efforts. We invested $1.14 billion in land and land development in 2013 and $354.3 million in the first quarter of 2014, and we believe our investments have established a solid growth platform of new home communities across the country. We continued to convert our land investments into new home communities open for sales in the first quarter of 2014, which resulted in an average community count of 190 for the quarter, up 10% from the previous year. The increase in the average community count contributed to a 6% year-over-year increase in our net orders in the 2014 first quarter. We use the term “community count” to refer to the number of new home communities with at least five homes/lots left to sell at the end of a reporting period.

37

Our investments in land and land development targeting attractive submarkets and our managing of our land assets to maximize revenues and investment returns amid relatively healthy consumer demand helped produce higher year-over-year average selling prices for our homes delivered in 2013 and in the current quarter. These strategic actions also helped push the overall value of our 2014 first quarter net orders to $600.2 million, up 18% from the year-earlier quarter. Our net order value for a given period represents the potential future housing revenues associated with net orders and homebuyer spending on premiums and Built to Order™ design options and upgrades for homes in backlog during the same period. We ended the 2014 first quarter with potential future housing revenues in backlog of $851.6 million, up 21% from a year ago, reflecting a 4% increase in the number of homes in our backlog from February 28, 2013 and higher average selling prices.

Three Months Ended February 28, 2014

• Revenues. Total revenues of $450.7 million for the three months ended February 28, 2014 increased 11% from $405.2 million for the three months ended February 28, 2013 due to higher housing and land sale revenues in the current quarter. Housing revenues rose 9% to $440.1 million for the first quarter of 2014 from $402.8 million for the year-earlier quarter, reflecting an increase in our overall average selling price that was partly offset by a slight decrease in the number of homes delivered. We use the term “home” in this discussion and analysis to refer to a single-family residence, whether it is a single-family home or other type of residential property. Land sale revenues for the first quarter of 2014 totaled $8.1 million. We had no land sales in the year-earlier period. Our total revenues included financial services revenues of $2.4 million in each of the three-month periods ended February 28, 2014 and 2013.

◦ Homes Delivered. We delivered 1,442 homes in the first quarter of 2014, down 3% from 1,485 homes delivered in the year-earlier quarter, as a decrease in our West Coast homebuilding reporting segment was mostly offset by increases in each of our other three homebuilding reporting segments. In our West Coast homebuilding reporting segment, homes delivered declined 32% from the year-earlier quarter, primarily due to a 39% lower backlog level at the beginning of the 2014 first quarter. The lower beginning backlog in this segment was due to a year-over-year decline in the segment’s net orders in 2013 that reflected the ongoing shift of our community mix largely toward coastal California submarkets, delays experienced in opening new home communities in those submarkets, and our emphasis on pricing discipline in balancing sales pace and home selling prices at our new home communities open for sales to drive profitability. In our Southwest, Central and Southeast homebuilding reporting segments, homes delivered increased 15%, 4% and 28%, respectively, compared to the first quarter of 2013.

◦ Average Selling Price. Our overall average selling price of homes delivered increased to $305,200 in the first quarter of 2014, up 12%, from $271,300 in the year-earlier quarter. This increase reflected our strategic operational targeting of attractive, land-constrained locations that generally feature higher household incomes and demand for larger home sizes, as well as incremental revenues from lot premiums, design options and upgrades, and generally favorable market conditions. This was the sixth consecutive quarter of double-digit year-over-year percentage growth in our average selling price.

• Operating Income. Our homebuilding operating income of $17.7 million for the three months ended February 28, 2014 increased by $17.2 million from $.5 million for the three months ended February 28, 2013. The year-over-year improvement reflected higher housing and land sale gross profits, partly offset by higher selling, general and administrative expenses in the first quarter of 2014. As a percentage of homebuilding revenues, operating income rose 390 basis points to 4.0%, compared to .1% for the 2013 first quarter.

◦ Housing Gross Profits. Housing gross profits of $78.0 million for the three months ended February 28, 2014 increased by $18.4 million from $59.6 million for the year-earlier period. Our housing gross profit margin improved to 17.7% in the current quarter from 14.8% in the first quarter of 2013. This marked our highest first-quarter housing gross profit margin since 2006. Our current quarter housing gross profit margin included a land option contract abandonment charge of $.4 million. The 2013 first quarter housing gross profit margin included a warranty charge of $1.7 million associated with water intrusion-related repairs of homes at certain of our communities in central and southwest Florida. Excluding the above-mentioned charges, our adjusted housing gross profit margin expanded by 260 basis points to 17.8% in the first quarter of 2014 from 15.2% in the year-earlier quarter. The calculation of adjusted housing gross profit margin, which we believe provides a clearer measure of the performance of our business, is described below under “Non-GAAP Financial Measures.” The year-over-year improvement in our first-quarter adjusted housing gross profit margin primarily reflected our ongoing execution of strategies targeting growth and profitability and our actions to generate greater operating efficiencies, partly offset by the impact of higher direct construction labor and material costs in the 2014 period.

◦ Selling, General and Administrative Expenses. Our selling, general and administrative expenses increased by $2.2 million, or 4%, to $61.3 million for the three months ended February 28, 2014 from $59.1 million for the year-earlier period, reflecting, among other things, the higher housing revenues in the current quarter. As a percentage of housing revenues,

38

selling, general and administrative expenses improved by 80 basis points to 13.9% for the three months ended February 28, 2014, from 14.7% for the year-earlier period, primarily due to higher year-over-year revenues and our actions to contain costs.

◦ Interest Expense. Interest expense of $11.3 million for the three months ended February 28, 2014 decreased from $15.2 million for the year-earlier period, reflecting an increase in the amount of inventory qualifying for interest capitalization in the current period.

• Net Income (Loss). Our net income increased to $10.6 million, or $.12 per diluted share, for the three months ended February 28, 2014, compared to a net loss of $12.5 million, or $.16 per diluted share, for the three months ended February 28, 2013, mainly due to our higher revenues, expanded housing gross profit margin and improved selling, general and administrative expenses as a percentage of housing revenues. In the current quarter, our net income also included a $3.2 million gain on the sale of our interest in an unconsolidated joint venture in Maryland, which is included in equity in income (loss) of unconsolidated joint ventures in our consolidated statements of operations, and income tax expense of $.2 million. Our net loss in the first quarter of 2013 included income tax expense of $.1 million.

Balance Sheet

• Cash, Cash Equivalents and Restricted Cash. Our cash, cash equivalents and restricted cash totaled $345.4 million at February 28, 2014, compared to $572.0 million at November 30, 2013. Of our total cash, cash equivalents and restricted cash at February 28, 2014 and November 30, 2013, $303.3 million and $530.1 million, respectively, was unrestricted. The decrease in our total cash, cash equivalents and restricted cash was mainly due to investments in land and land development during the three months ended February 28, 2014. Our operating activities used net cash of $221.1 million in the first three months of 2014, up from $211.0 million of net cash used in the corresponding period of 2013, largely due to investments in land and land development that drove our inventories higher at February 28, 2014 compared to the November 30, 2013 level.

• Inventories. Reflecting our investments in land and land development of $354.3 million and the distribution of land we received from Inspirada in the three months ended February 28, 2014, our inventory balance of $2.63 billion at February 28, 2014 increased 15% from $2.30 billion at November 30, 2013. We made strategic investments in land and land development in each of our homebuilding reporting segments during the three months ended February 28, 2014, with the majority of our investments made in our West Coast homebuilding reporting segment. With these substantial inventory investments, we ended our 2014 first quarter with a land inventory portfolio comprised of 57,438 lots owned or controlled, representing an increase of 21% compared to the end of the 2013 first quarter, though a 6% decrease from the 61,095 lots owned or controlled at November 30, 2013. The decrease from November 30, 2013 primarily reflected land option contract abandonments in the first quarter of 2014.

• Investments in Unconsolidated Joint Ventures. Our investments in unconsolidated joint ventures decreased to $60.6 million at February 28, 2014 from $130.2 million at November 30, 2013, primarily due to $70.6 million of land distributed to us from Inspirada and the above-noted sale of our interest in an unconsolidated joint venture in Maryland. These transactions were partly offset by capital contributions made to various unconsolidated joint ventures during the three months ended February 28, 2014.

• Mortgages and Notes Payable. Our debt balance was $2.18 billion at February 28, 2014, compared to $2.15 billion at November 30, 2013. Our ratio of debt to total capital was 79.9% at February 28, 2014, compared to 80.0% at November 30, 2013. Our ratio of net debt to total capital (a calculation that is described below under “Non-GAAP Financial Measures”) was 77.0% at February 28, 2014, compared to 74.6% at November 30, 2013.

• Stockholders’ Equity. Our stockholders’ equity increased to $546.3 million at February 28, 2014 from $536.1 million atNovember 30, 2013, primarily due to the net income we generated for the three months ended February 28, 2014.

Net Orders and Backlog

• Net Orders. Net orders from our homebuilding operations rose 6% to 1,765 in the first quarter of 2014 from 1,671 in the year-earlier quarter, a period during which we had experienced a 40% year-over-year increase in net orders. The year-over-year increase in net orders in the first quarter of 2014 reflected our increased average community count as we continued to convert the substantial land and land development investments we have made over the past several quarters to new communities open for sales.

◦ The year-over-year growth in overall net orders reflected increases in our Central and Southeast homebuilding reporting segments of 16% and 11%, respectively, partly offset by decreases in our West Coast and Southwest homebuilding reporting segments of 5% and 9%, respectively.

39

◦ The decrease in net orders from our West Coast homebuilding reporting segment was primarily due to the ongoing shift of our community mix largely toward coastal California submarkets, delays experienced in opening new home communities in those submarkets, and our emphasis on pricing discipline in balancing sales pace and home selling prices at our new home communities open for sales to drive profitability. In addition, a majority of the community openings within this homebuilding reporting segment in the first quarter of 2014 occurred in the latter part of the quarter.

◦ The decrease in net orders from our Southwest homebuilding reporting segment reflected our closing out of communities and delays experienced in opening new home communities in Nevada, partly offset by higher year-over-year net orders from our new home communities in Arizona.

◦ The overall value of the net orders we generated in the three months ended February 28, 2014 increased 18% to $600.2 million from $506.8 million in the year-earlier quarter, a period in which our net order value had increased 83% from the prior year.

◦ All four homebuilding reporting segments generated year-over-year increases in net order value in the current quarter, with our West Coast homebuilding reporting segment up 15% to $299.3 million, our Southwest homebuilding reporting segment up 11% to $48.4 million, our Central homebuilding reporting segment up 27% to $169.0 million, and our Southeast homebuilding reporting segment up 22% to $83.5 million.

◦ Our first quarter cancellation rate was 30% in 2014 and 32% in 2013. We define our cancellation rate in a given period as the total number of contracts for new homes canceled divided by the total new (gross) orders for homes during the same period.

• Backlog. Our backlog at February 28, 2014 was comprised of 2,880 homes, representing potential future housing revenues of $851.6 million, and at February 28, 2013 was 2,763 homes, representing potential future housing revenues of $703.9 million. The number of homes in our backlog increased 4% year over year, primarily due to the 6% year-over-year increase in our first quarter 2014 net orders. The potential future housing revenues in our backlog at February 28, 2014 rose 21% from February 28, 2013, reflecting the increased number of homes in our backlog and a higher average selling price.

The following table presents information concerning our net orders, cancellation rate, ending backlog and community count (dollars in thousands):

	Three Months Ended February 28,
	2014			2013
Net orders	1,765			1,671
Net order value	$	600,172		$	506,803
Cancellation rate	30		%	32		%
Ending backlog — homes	2,880			2,763
Ending backlog — value	$	851,553		$	703,893
Ending community count	188			171
Average community count	190			172

Our higher average community count for the three months ended February 28, 2014 compared to the corresponding year-earlier period reflected our strategic community positioning efforts and increased land acquisition and land development activities, as well as our opening of new home communities for sales. We expect that our average community count will continue to increase through the remainder of 2014 as a result of the substantial inventory-related investments we made in 2013 and in the first quarter of 2014, additional investments we intend to make in the remaining quarters of 2014, and planned new home community openings. Reflecting the investments we have made, our average community count for the three months ended February 28, 2014 increased 10% to 190 from 172 for the three months ended February 28, 2013.

40

HOMEBUILDING

The following table presents a summary of certain financial and operational data for our homebuilding operations (dollars in thousands, except average selling price):

	Three Months Ended February 28,
	2014			2013
Revenues:
Housing	$	440,127		$	402,816
Land	8,140			—
Total	448,267			402,816
Costs and expenses:
Construction and land costs
Housing	(362,106		)	(343,265		)
Land	(7,168		)	—
Total	(369,274		)	(343,265		)
Selling, general and administrative expenses	(61,274		)	(59,097		)
Total	(430,548		)	(402,362		)
Operating income	$	17,719		$	454
Homes delivered	1,442			1,485
Average selling price	$	305,200		$	271,300
Housing gross profit margin as a percentage of housing revenues	17.7		%	14.8		%
Adjusted housing gross profit margin as a percentage of housing revenues	17.8		%	15.2		%
Selling, general and administrative expenses as a percentage of housing revenues	13.9		%	14.7		%
Operating income as a percentage of homebuilding revenues	4.0		%	.1		%

We have grouped our homebuilding activities into four reporting segments, which we refer to as West Coast, Southwest, Central and Southeast. As of February 28, 2014, our homebuilding reporting segments consisted of ongoing operations located in the following states: West Coast — California; Southwest — Arizona and Nevada; Central — Colorado, New Mexico and Texas; and Southeast — Florida, Maryland, North Carolina and Virginia. The following tables present homes delivered, average community count, net orders, net order value, cancellation rates and ending backlog (number of homes and value) by homebuilding reporting segment (dollars in thousands):

	Three Months Ended February 28,
	Homes Delivered				Average Community Count
Segment	2014	2013	Variance		2014	2013	Variance
West Coast	346	509	(32	)%	44	40	10	%
Southwest	161	140	15		19	15	27
Central	595	571	4		81	82	(1	)
Southeast	340	265	28		46	35	31
Total	1,442	1,485	(3	)%	190	172	10	%

41

	Three Months Ended February 28,
	Net Orders		Net Order Value				Cancellation Rates
Segment	2014	2013	2014		2013		2014		2013
West Coast	506	530	$	299,283	$	261,342	21	%	23	%
Southwest	181	199	48,388		43,706		27		22
Central	757	653	168,973		133,492		37		39
Southeast	321	289	83,528		68,263		29		34
Total	1,765	1,671	$	600,172	$	506,803	30	%	32	%

	February 28,
	Backlog – Homes				Backlog – Value
Segment	2014	2013	Variance		2014		2013		Variance
West Coast	580	705	(18	)%	$	328,676	$	287,970	14	%
Southwest	208	242	(14	)	57,648		54,604		6
Central	1,510	1,231	23		320,926		235,759		36
Southeast	582	585	(1	)	144,303		125,560		15
Total	2,880	2,763	4	%	$	851,553	$	703,893	21	%

Revenues. Homebuilding revenues increased to $448.3 million for the three months ended February 28, 2014, up 11% from $402.8 million for the corresponding period of 2013 due to increased revenues from housing operations and land sales. Housing revenues rose 9% to $440.1 million for the three months ended February 28, 2014 from $402.8 million for the year-earlier period, reflecting an increase in our average selling price that was partly offset by a slight decrease in homes delivered. We delivered a total of 1,442 homes in the first quarter of 2014, down 3% from 1,485 homes delivered in the year-earlier quarter as a 32% decrease in homes delivered from our West Coast homebuilding reporting segment was mostly offset by increases of 15%, 4% and 28% in our Southwest, Central and Southeast homebuilding reporting segments, respectively.

The overall average selling price of homes delivered increased 12% to $305,200 for the three months ended February 28, 2014 from $271,300 for the year-earlier period. The higher average selling price for the 2014 first quarter reflected our strategic community positioning efforts, which have shifted our community mix toward markets and submarkets that generally feature buyers with higher household incomes who are choosing larger home sizes (as reflected in the 8% year-over-year increase in our average square footage of homes delivered), and spending more on premiums and Built to Order design options and upgrades at our KB Home Studios; our emphasis on earning incremental revenues and pricing discipline to drive profitability; and generally favorable market conditions. The first quarter of 2014 marked the sixth consecutive quarter of double-digit year-over-year increases in our average selling price.

Compared to the year-earlier quarter, each of our homebuilding reporting segments posted a double-digit percentage increase in average selling price for the three months ended February 28, 2014, with increases ranging from 13% in our Central homebuilding reporting segment to 30% in our West Coast homebuilding reporting segment. In our West Coast homebuilding reporting segment, the year-over-year increase in the average selling price was largely due to our strategic shift toward communities located in coastal submarkets in California, which feature strong demand and generally higher selling prices for homes as compared to inland submarkets in the state.

Land sale revenues for the three months ended February 28, 2014 totaled $8.1 million. We had no land sales in the three months ended February 28, 2013. Generally, land sale revenues fluctuate with our decisions to maintain or decrease our land ownership position in certain markets based upon the volume of our holdings, our marketing strategy, the strength and number of competing developers entering particular markets at given points in time, the availability of land at reasonable prices and prevailing market conditions.

Operating Income. Our operating income of $17.7 million for the three months ended February 28, 2014 increased by $17.2 million from $.5 million generated for the year-earlier period. The year-over-year improvement for the three months ended February 28, 2014 was primarily due to an increase in housing gross profits, partly offset by slightly higher selling, general and administrative expenses.

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The following table presents a summary of charges included in our operating income (in thousands):

	Three Months Ended February 28,
	2014		2013
Land option contract abandonment charges	$	433	$	—
Water intrusion-related charges	—		1,674
Total	$	433	$	1,674

Housing gross profits increased by $18.4 million to $78.0 million for the three months ended February 28, 2014 from $59.6 millionfor the year-earlier period. Our housing gross profits for the three months ended February 28, 2014 included a $.4 million land option contract abandonment charge, while the 2013 first quarter included a $1.7 million warranty charge associated with water intrusion-related repairs of homes at certain of our communities in central and southwest Florida, as discussed in Note 14. Commitments and Contingencies in the Notes to Consolidated Financial Statements in this report. Our housing gross profit margin for the first quarter of 2014 expanded 290 basis points to 17.7%, from 14.8% for the year-earlier quarter. Our adjusted housing gross profit margin improved 260 basis points to 17.8% in the first quarter of 2014, compared to the adjusted housing gross profit margin of 15.2% in the first quarter of 2013. As discussed above under “Overview — Three Months Ended February 28, 2014” and below under “Non-GAAP Financial Measures,” the adjusted housing gross profit margin excludes certain charges in both periods, and we believe it provides a clearer measure of the performance of our business.

Our land sales generated gross profits of $1.0 million in the three months ended February 28, 2014. We had no land sales in the three months ended February 28, 2013.

Selling, general and administrative expenses totaled $61.3 million in the first quarter of 2014, up from $59.1 million in the year-earlier quarter. As a percentage of housing revenues, selling, general and administrative expenses improved by 80 basis points to 13.9% for the three months ended February 28, 2014 from 14.7% for the year-earlier period. The year-over-year improvement in our selling, general and administrative expense percentage was primarily due to higher housing revenues and our actions to contain costs.

As discussed in Note 6. Inventory Impairments and Land Option Contract Abandonments in the Notes to Consolidated Financial Statements in this report, each community or land parcel in our owned inventory is assessed on a quarterly basis to determine if indicators of potential impairment exist. If indicators of potential impairment exist for a community or land parcel, the identified asset is evaluated for recoverability in accordance with ASC 360 by comparing the carrying value of the asset to the undiscounted future net cash flows expected to be generated by the asset. The undiscounted future net cash flows are impacted by then-current conditions and trends in the market in which the asset is located as well as factors known to us at the time the cash flows are calculated. We record an inventory impairment charge when the carrying value of a 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 based on the estimated future net cash flows discounted for inherent risk associated with each such asset.

The following table presents information regarding our inventory impairment assessments:

	Three Months Ended February 28,
	2014	2013
Number of communities or land parcels evaluated for recoverability	11	20

We had no inventory impairment charges for the three months ended February 28, 2014 or 2013. As of February 28, 2014, the aggregate carrying value of our inventory that had been impacted by inventory impairment charges was $284.5 million, representing 39 communities and various other land parcels. As of November 30, 2013, the aggregate carrying value of our inventory that had been impacted by inventory impairment charges was $293.1 million, representing 42 communities and various other land parcels.

Also, as discussed in Note 6. Inventory Impairments and Land Option Contract Abandonments in the Notes to Consolidated Financial Statements in this report, 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 internal investment and marketing 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 corresponding to 650 lots for the three months ended February 28, 2014 and no such charges for the three months ended February 28, 2013. We sometimes walk away from land option contracts or other similar contracts when we have incurred costs of less

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than $100,000; such costs and the corresponding lots, which totaled 3,380 lots in the three months ended February 28, 2014, are not included in the amounts above. Land option contract abandonment charges are included in construction and land costs in our consolidated statements of operations.

The estimated remaining life of each community or land parcel in our inventory depends on various factors, such as the total number of lots remaining; the expected timeline to acquire and entitle land and develop lots to build homes; the anticipated future net order and cancellation rates; and the expected timeline to build and deliver homes sold. While it is difficult to determine a precise timeframe for any particular inventory asset, we estimate our inventory assets’ remaining operating lives under current and expected future market conditions to range generally from one year to in excess of 10 years. Based on current market conditions and anticipated delivery timelines, we expect to realize, on an overall basis, the majority of our current inventory balance within five years. The following table presents our inventories as of February 28, 2014, based on our current estimated timeframe as to the delivery of the last home within an applicable community or land parcel (in millions):

	0-2 years		3-5 years		6-10 years		Greater than 10 years		Total
Inventories	$	1,334.0	$	677.5	$	357.5	$	265.9	$	2,634.9

The inventory balance in the 6-10 years category as of February 28, 2014 was located across all of our homebuilding reporting segments. The inventory balance in the greater than 10 years category as of February 28, 2014 was primarily located in our West Coast and Southwest homebuilding reporting segments. The inventory balances in the 6-10 years and greater than 10 years categories, which collectively represented 24% of our total inventory balance at February 28, 2014, were primarily comprised of land held for future development.

Due to the judgment and assumptions applied in the estimation process with respect to inventory impairments, land option contract abandonments, the remaining operating lives of our inventory assets and the realization of our inventory balances, it is possible that actual results could differ substantially from those estimated and reflected in the table above.

We believe that the carrying value of our inventory as of February 28, 2014 is recoverable. Our considerations in making this determination include, as applicable, the prevailing competitive home sales, economic and regulatory environment, as well as other factors and trends that are incorporated into our impairment analyses. In addition, we consider the financial and operational status of and our expectations regarding our inventories, as well as unique attributes of each community or land parcel that could be viewed as indicators of potential future impairments. However, if conditions in the overall housing market or in specific markets worsen in the future beyond our current expectations, if future changes in our marketing strategy significantly affect any key assumptions used in our projections of future cash flows, or if there are material changes in any of the other items we consider in assessing recoverability, we may recognize charges in future periods for inventory impairments or land option contract abandonments, or both, related to our current inventory assets. Any such charges could be material to our consolidated financial statements.

Interest Income. Interest income, which is generated from short-term investments, totaled $.2 million for the three months ended February 28, 2014 and February 28, 2013. Generally, increases and decreases in interest income are attributable to changes in the interest-bearing average balances of short-term investments and fluctuations in interest rates.

Interest Expense. Interest expense results principally from borrowings to finance land purchases, housing inventory and other operating and capital needs. Our interest expense, net of amounts capitalized, decreased to $11.3 million for the three months ended February 28, 2014 from $15.2 million for the three months ended February 28, 2013. The year-over-year decrease reflected an increase in the amount of interest capitalized in the current quarter. The percentage of interest capitalized increased to 71% in the first quarter of 2014, compared to 54% in the year-earlier quarter due to an increase in the amount of inventory qualifying for interest capitalization. Gross interest incurred totaled $39.3 million for the three months ended February 28, 2014, up from $33.4 million for the year-earlier period due to the higher average debt level in 2014.

Equity in Income (Loss) of Unconsolidated Joint Ventures. Our equity in income of unconsolidated joint ventures was $2.6 million for the three months ended February 28, 2014, compared to our equity in loss of unconsolidated joint ventures of $.4 million for the three months ended February 28, 2013. The 2014 first quarter results included a $3.2 million gain on the sale of our interest in an unconsolidated joint venture in Maryland. Activities performed by our unconsolidated joint ventures generally include acquiring, developing and selling land, and, in some cases, constructing and delivering homes.

For the three months ended February 28, 2014, our unconsolidated joint ventures posted combined revenues of $6.1 million and generated combined income of $1.5 million. All of the combined revenues and a substantial portion of the combined income for the three months ended February 28, 2014 reflected the sale of land by one of our unconsolidated joint ventures. For the three

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months ended February 28, 2013, our unconsolidated joint ventures posted no combined revenues and generated combined losses of $.9 million.

NON-GAAP FINANCIAL MEASURES

This report contains information about our adjusted housing gross profit margin and our ratio of net debt to total capital, both of which are not calculated in accordance with GAAP. We believe these non-GAAP financial measures are relevant and useful to investors in understanding our operations and the leverage employed in our operations, and may be helpful in comparing us with other companies in the homebuilding industry to the extent they provide similar information. However, because the adjusted housing gross profit margin and the ratio of net debt to total capital are not calculated in accordance with GAAP, these financial measures may not be completely comparable to other companies in the homebuilding industry and, thus, should not be considered in isolation or as an alternative to operating performance and/or financial measures prescribed by GAAP. Rather, these non-GAAP financial measures should be used to supplement their respective most directly comparable GAAP financial measures in order to provide a greater understanding of the factors and trends affecting our operations.

Adjusted Housing Gross Profit Margin. The following table reconciles our housing gross profit margin calculated in accordance with GAAP to the non-GAAP financial measure of our adjusted housing gross profit margin (dollars in thousands):

	Three Months Ended February 28,
	2014			2013
Housing revenues	$	440,127		$	402,816
Housing construction and land costs	(362,106		)	(343,265		)
Housing gross profits	78,021			59,551
Add: Land option contract abandonment charges	433			—
Water intrusion-related charges	—			1,674
Adjusted housing gross profits	$	78,454		$	61,225
Housing gross profit margin as a percentage of housing revenues	17.7		%	14.8		%
Adjusted housing gross profit margin as a percentage of housing revenues	17.8		%	15.2		%

Adjusted housing gross profit margin is a non-GAAP financial measure, which we calculate by dividing housing revenues less housing construction and land costs excluding land option contract abandonment charges and water intrusion-related charges (as applicable) associated with housing operations recorded during a given period, by housing revenues. The most directly comparable GAAP financial measure is housing gross profit margin. We believe adjusted housing gross profit margin is a relevant and useful financial measure to investors in evaluating our performance as it measures the gross profit we generated specifically on the homes delivered during a given period and enhances the comparability of housing gross profit margin between periods. This financial measure assists us in making strategic decisions regarding community location and product mix, product pricing and construction pace. We also believe investors will find adjusted housing gross profit margin relevant and useful because it represents a profitability measure that may be compared to a prior period without regard to variability of land option contract abandonment charges and water intrusion-related charges.

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Ratio of Net Debt to Total Capital. The following table reconciles our ratio of debt to total capital calculated in accordance with GAAP to the non-GAAP financial measure of our ratio of net debt to total capital (dollars in thousands):

	February 28, 2014			November 30, 2013
Mortgages and notes payable	$	2,175,190		$	2,150,498
Stockholders’ equity	546,334			536,086
Total capital	$	2,721,524		$	2,686,584
Ratio of debt to total capital	79.9		%	80.0		%
Mortgages and notes payable	$	2,175,190		$	2,150,498
Less: Cash and cash equivalents and restricted cash	(345,352		)	(572,001		)
Net debt	1,829,838			1,578,497
Stockholders’ equity	546,334			536,086
Total capital	$	2,376,172		$	2,114,583
Ratio of net debt to total capital	77.0		%	74.6		%

The ratio of net debt to total capital is a non-GAAP financial measure, which we calculate by dividing mortgages and notes payable, net of homebuilding cash and cash equivalents and restricted cash, by total capital (mortgages and notes payable, net of homebuilding cash and cash equivalents and restricted cash, plus stockholders’ equity). The most directly comparable GAAP financial measure is the ratio of debt to total capital. We believe the ratio of net debt to total capital is a relevant and useful financial measure to investors in understanding the degree of leverage employed in our operations.

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HOMEBUILDING REPORTING SEGMENTS

The following table presents financial information related to our homebuilding reporting segments for the periods indicated (dollars in thousands):

	Three Months Ended February 28,
	2014			2013			Variance
West Coast:
Revenues	$	181,721		$	206,104		(12	)%
Construction and land costs	(145,107		)	(171,898		)	16
Selling, general and administrative expenses	(13,124		)	(16,785		)	22
Operating income	23,490			17,421			35
Other, net	(5,125		)	(7,579		)	32
Pretax income	$	18,365		$	9,842		87	%

Southwest:
Revenues	$	46,115		$	31,831		45	%
Construction and land costs	(35,652		)	(24,183		)	(47	)
Selling, general and administrative expenses	(5,030		)	(3,630		)	(39	)
Operating income	5,433			4,018			35
Other, net	(4,148		)	(4,767		)	13
Pretax income (loss)	$	1,285		$	(749	)	(a)
Central:
Revenues	$	125,162		$	106,492		18	%
Construction and land costs	(106,846		)	(91,270		)	(17	)
Selling, general and administrative expenses	(14,834		)	(13,620		)	(9	)
Operating income	3,482			1,602			117
Other, net	(706		)	(1,466		)	52
Pretax income	$	2,776		$	136		(a)

Southeast:
Revenues	$	95,269		$	58,389		63	%
Construction and land costs	(81,329		)	(55,347		)	(47	)
Selling, general and administrative expenses	(10,661		)	(8,364		)	(27	)
Operating income (loss)	3,279			(5,322		)	(a)
Other, net	562			(3,002		)	(a)
Pretax income (loss)	$	3,841		$	(8,324	)	(a)

(a) Percentage not meaningful.

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The following table presents information concerning our housing revenues, homes delivered and average selling price by homebuilding reporting segment:

	Housing Revenues (in thousands)		Percentage of Total Housing Revenues		Homes Delivered	Percentage of Total Homes Delivered		Average Selling Price
Three Months Ended February 28, 2014
West Coast	$	181,721	41	%	346	24	%	$	525,200
Southwest	46,115		11		161	11		286,400
Central	125,162		28		595	41		210,400
Southeast	87,129		20		340	24		256,300
Total	$	440,127	100	%	1,442	100	%	$	305,200
Three Months Ended February 28, 2013
West Coast	$	206,104	51	%	509	34	%	$	404,900
Southwest	31,831		8		140	9		227,400
Central	106,492		26		571	39		186,500
Southeast	58,389		15		265	18		220,300
Total	$	402,816	100	%	1,485	100	%	$	271,300

West Coast. Our West Coast homebuilding reporting segment’s total revenues for the three months ended February 28, 2014 and 2013 were generated solely from housing operations. Housing revenues for the three months ended February 28, 2014 decreased 12% from the year-earlier period due to a 32% decline in the number of homes delivered, partly offset by a 30% increase in the average selling price. The decrease in homes delivered was primarily due to this segment having 39% fewer homes in backlog at the start of the 2014 first quarter as compared to the year-earlier quarter. The lower backlog at the beginning of 2014 was due to a year-over-year decline in the segment’s net orders in 2013 that reflected the ongoing shift of our community mix largely toward coastal California submarkets, delays experienced in opening new home communities in those submarkets, and our emphasis on pricing discipline in balancing sales pace and home selling prices to drive profitability. The average selling price for the three months ended February 28, 2014 increased from the corresponding period of 2013 due to the combination of a greater proportion of homes delivered from higher-priced communities located in coastal submarkets within this segment, a shift in product mix to larger home sizes, an increase in design option revenues per home, and generally rising home prices.

The pretax income generated by this segment for the three months ended February 28, 2014 increased $8.5 million from the year-earlier quarter. This improvement primarily reflected higher housing gross profits and lower selling, general and administrative expenses. The housing gross profit margin increased to 20.1% for the three months ended February 28, 2014 from 16.6% for the year-earlier period, mainly due to an increased proportion of deliveries from higher-margin communities and generally rising home prices, partly offset by higher direct construction labor and material costs. The housing gross margin for the three months ended February 28, 2013 benefited slightly from favorable warranty adjustments. Selling, general and administrative expenses in the 2014 first quarter decreased from the year-earlier quarter, reflecting the lower volume of homes delivered in this segment and our actions to contain costs. Other, net, in the first quarter of 2014 declined from the year-earlier quarter due to a decrease in interest expense, reflecting an increase in the amount of interest capitalized.

Southwest. In the three months ended February 28, 2014 and 2013, total revenues from our Southwest homebuilding reporting segment were generated entirely from housing operations. Housing revenues rose 45% from the year-earlier period, reflecting a 15% increase in the number of homes delivered and a 26% increase in the average selling price. The number of homes delivered increased year over year mainly due to the 10% higher backlog level in this segment at the start of the 2014 first quarter, compared to the year-earlier quarter. The year-over-year increase in homes delivered in this segment was from our Arizona operations. The average selling price in the first quarter of 2014 increased from the prior year quarter, primarily reflecting a shift in community and product mix of homes delivered, and generally rising home prices.

The pretax results from this segment improved by $2.0 million for the three months ended February 28, 2014, compared to the corresponding period of 2013, due to higher housing gross profits generated from the increase in homes delivered, partly offset by higher selling, general and administrative expenses. The housing gross profit margin decreased to 22.7% in the first quarter

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of 2014 from 24.0% in the year-earlier quarter, mainly due to a shift in community and product mix of homes delivered, as well as favorable warranty adjustments included in the first quarter of 2013. Selling, general and administrative expenses increased in the first quarter of 2014 from the year-earlier quarter, reflecting the increased volume of homes delivered and higher housing revenues. Other, net, in the first quarter of 2014 decreased from the year-earlier quarter due to lower interest expense as a result of an increase in the amount of interest capitalized.

Central. Our Central homebuilding reporting segment’s total revenues for the three months ended February 28, 2014 and 2013 were generated solely from housing operations. Housing revenues rose 18% for the three months ended February 28, 2014 compared to the year-earlier quarter as a result of a 4% increase in the number of homes delivered and a 13% rise in the average selling price. The increase in the number of homes delivered partly reflected the 16% higher backlog level in this segment at the start of the 2014 first quarter compared to the year-earlier quarter. The year-over-year increase in homes delivered in this segment was mainly from our Colorado operations. The average selling price for the three months ended February 28, 2014 increased from the corresponding period of 2013, primarily due to a greater proportion of homes delivered from higher-priced communities, larger home sizes, and generally rising home prices.

The pretax results from this segment for the three months ended February 28, 2014 improved by $2.6 million from the year-earlier period due to higher housing gross profits, partly offset by higher selling, general and administrative expenses. The housing gross profit margin increased slightly to 14.6% in the first quarter of 2014 from 14.3% in the first quarter of 2013 due to an increased proportion of deliveries from higher-margin communities, partly offset by higher direct construction labor and material costs. Selling, general and administrative expenses for the three months ended February 28, 2014 increased from the corresponding period of 2013, primarily due to the increase in homes delivered and higher housing revenues. Other, net, in the first quarter of 2014 declined from the year-earlier quarter due to a decrease in interest expense, reflecting an increase in the amount of interest capitalized.

Southeast. Our Southeast homebuilding reporting segment’s total revenues for the three months ended February 28, 2014 increased 63% from the year-earlier period due to higher housing and land sale revenues. Housing revenues increased 49% to $87.1 million in the first quarter of 2014 from $58.4 million in the year-earlier quarter due to a 28% increase in the number of homes delivered and a 16% increase in the average selling price. Most of the year-over-year increase in homes delivered in this segment was generated from our Florida operations. We delivered more homes in the first quarter of 2014 than in the first quarter of 2013 primarily due to this segment having 7% more homes in backlog at the start of the 2014 first quarter as compared to the start of the year-earlier quarter, and a higher backlog conversion ratio. The year-over-year increase in the average selling price was primarily due to a greater proportion of homes delivered from higher-priced communities, a change in product mix to larger home sizes, and generally rising home prices. This segment generated $8.1 million of revenues from land sales in the three months ended February 28, 2014. There were no land sales in the year-earlier period.

For the three months ended February 28, 2014, the pretax results from this segment increased by $12.2 million to pretax income of $3.8 million, from a pretax loss of $8.3 million posted in the year-earlier period, primarily due to higher housing and land sale gross profits, partly offset by higher selling, general and administrative expenses. The housing gross profit margin increased to 14.9% in the first quarter of 2014 from 5.2% in the first quarter of 2013, due to an increased proportion of deliveries from higher-margin communities and generally rising home prices. In addition, housing gross profits in the first quarter of 2013 included a charge for water intrusion-related repairs of homes at certain of our communities in central and southwest Florida, and unfavorable warranty adjustments. In the three months ended February 28, 2014, this segment also produced gross profits of $1.0 million from land sales. Selling, general and administrative expenses increased in the first quarter of 2014 from the year-earlier quarter as a result of administrative costs associated with water intrusion-related repairs, an increase in the number of homes delivered and higher housing revenues. Other, net, in the first quarter of 2014 included a $3.2 million gain on the sale of our interest in an unconsolidated joint venture in Maryland.

FINANCIAL SERVICES REPORTING SEGMENT

Our financial services reporting segment offers property and casualty insurance services 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 Central and Southeast homebuilding reporting segments. This segment also earns revenues pursuant to the terms of a marketing services agreement with Nationstar, a preferred mortgage lender that offers mortgage banking services, including mortgage loan originations, to our homebuyers who elect to use the lender. Our homebuyers are under no obligation to use our preferred mortgage lender and may select any lender of their choice to obtain mortgage financing for the purchase of a home. We make available to our homebuyers marketing materials and other information regarding our preferred mortgage lender’s financing options and mortgage loan products, and are compensated solely for the fair market value of these services. Except as discussed below, we have had no affiliation, ownership, joint venture or other interests in or with our preferred mortgage lender or its affiliates, or with respect to the revenues or income that may have been generated from their provision of mortgage banking services to, or origination of mortgage loans for, our homebuyers.

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On January 21, 2013, we entered into an agreement with Nationstar to form Home Community Mortgage, a mortgage banking company that will offer an array of mortgage banking services to our homebuyers. We have a 49.9% ownership interest and Nationstar has a 50.1% ownership interest in Home Community Mortgage, with Nationstar providing management oversight of Home Community Mortgage’s operations. Nationstar will continue as our preferred mortgage lender until Home Community Mortgage begins offering mortgage banking services. Pending the completion of an extensive regulatory approval process and certain operational requirements, Home Community Mortgage is expected to begin offering mortgage banking services in the latter half of 2014. Home Community Mortgage is accounted for as an unconsolidated joint venture within our financial services reporting segment.

Based on the number of homes delivered in the three months ended February 28, 2014, approximately 56% of our homebuyers used Nationstar to finance the purchase of their home, compared to 57% in the three months ended February 28, 2013. We expect to see increases in future periods if and as a greater percentage of our homebuyers obtain mortgage financing from Nationstar, as our preferred mortgage lender, and/or Home Community Mortgage.

The following table presents a summary of selected financial data for our financial services reporting segment (in thousands):

	Three Months Ended February 28,
	2014			2013
Revenues	$	2,420		$	2,403
Expenses	(852		)	(835		)
Equity in income (loss) of unconsolidated joint ventures	(6		)	1,091
Pretax income	$	1,562		$	2,659

Revenues. Our financial services operations generate revenues primarily from insurance commissions, title services and marketing services fees. Financial services revenues totaled $2.4 million in each of the three-month periods ended February 28, 2014 and 2013.

Expenses. General and administrative expenses totaled $.9 million for the three months ended February 28, 2014 and $.8 million for the three months ended February 28, 2013.

Equity in Income (Loss) of Unconsolidated Joint Ventures. The equity in loss of unconsolidated joint ventures was negligible for the three months ended February 28, 2014, compared to equity in income of unconsolidated joint ventures of $1.1 million for the year-earlier period. The equity in income of unconsolidated joint ventures in 2013 related to the wind down of KBA Mortgage, which ceased offering mortgage banking services in 2011.

INCOME TAXES

Our income tax expense totaled $.2 million for the three months ended February 28, 2014 and $.1 million for the three months ended February 28, 2013. Due to the effects of the deferred tax asset valuation allowance, our effective tax rates for the three months endedFebruary 28, 2014 and February 28, 2013 are not meaningful items as our income tax amounts are not directly correlated to the amount of our pretax income (loss) for those periods.

In accordance with ASC 740, we evaluate our deferred tax assets quarterly to determine if adjustments to the valuation allowance are required. ASC 740 requires that companies assess whether a valuation allowance should be established 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. The ultimate realization of deferred tax assets depends primarily on the generation of future taxable income. The value of our deferred tax assets will depend on applicable income tax rates. For the three months ended February 28, 2014, we reduced our deferred tax asset valuation allowance by $4.4 million to account for adjustments to our deferred tax assets associated with the pretax income generated during the period. For the three months ended February 28, 2013, we reduced our deferred tax asset valuation allowance by $.7 million to account for adjustments to our deferred tax assets associated with the vesting of equity-based awards. One of the primary pieces of negative evidence that we consider in evaluating the need for a valuation allowance is our three-year cumulative loss position, which is largely the result of our pretax losses in 2012 and 2011, as we generated pretax income for the year ended November 30, 2013. In the first quarter of 2014, we reported our third consecutive quarter of pretax income and experienced year-over-year increases in our revenues, housing gross profit margin, net orders and backlog. If such positive trends in our business continue, together with improvements in housing markets and the

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homebuilding industry, and we are profitable on a sustained basis, we believe that there could be sufficient positive evidence to support reducing a large portion of our valuation allowance during 2014.

We had no net deferred tax assets at February 28, 2014 or November 30, 2013 as we maintained a full valuation allowance against our deferred tax assets. The deferred tax asset valuation allowance decreased to $855.0 million at February 28, 2014 from $859.4 million at November 30, 2013, reflecting the $4.4 million valuation allowance adjustment recorded during the three months ended February 28, 2014.

The benefits of our NOL, built-in losses and tax credits would be reduced or potentially eliminated if we experienced an “ownership change” under Section 382. Based on our analysis performed as of February 28, 2014, we do not believe we have experienced an ownership change as defined by Section 382, and, therefore, the NOL, built-in losses and tax credits we have generated should not be subject to a Section 382 limitation as of this reporting date.

Liquidity and Capital Resources

Overview. We historically have funded our homebuilding and financial services activities with internally generated cash flows and external sources of debt and equity financing. We also have the ability to borrow funds under the Credit Facility.

We manage our use of cash in the operation of our business to support the execution of our primary strategic goals. As a result, we use our unrestricted cash balance primarily to acquire land, invest in land development and construct homes. Our investments in land and land development totaled approximately $354.3 million for the three months ended February 28, 2014, compared to $344.9 million for the year-earlier period. While we made strategic investments in land and land development in each of our homebuilding reporting segments during the three-month periods ended February 28, 2014 and 2013, most were made in our West Coast homebuilding reporting segment. Our investments in land and land development for the remainder of 2014 will depend significantly on market conditions and available opportunities that meet our investment return and marketing standards.

The following table presents the number of lots and the carrying value of inventory we owned or controlled under land option contracts or other similar contracts by homebuilding reporting segment (dollars in thousands):

	February 28, 2014			November 30, 2013			Variance
Segment	Lots	$		Lots	$		Lots		$
West Coast	13,005	$	1,288,442	12,612	$	1,144,184	393		$	144,258
Southwest	10,429	419,931		12,217	304,239		(1,788	)	115,692
Central	21,478	482,347		22,806	411,076		(1,328	)	71,271
Southeast	12,526	444,224		13,460	439,078		(934	)	5,146
Total	57,438	$	2,634,944	61,095	$	2,298,577	(3,657	)	$	336,367

The number of lots owned or controlled under land option contracts or other similar contracts at February 28, 2014 decreased from November 30, 2013 primarily due to land option contract abandonments in the first quarter of 2014 as discussed in Note 6. Inventory Impairments and Land Option Contract Abandonments in the Notes to Consolidated Financial Statements.

The increase in the carrying value of lots owned or controlled under land option contracts or other similar contracts at February 28, 2014 compared to November 30, 2013 reflected the investments we made in land and land development and the distribution of land we received from Inspirada during the first three months of 2014. Overall, the percentage of lots we controlled under land option contracts or other similar contracts was 31% at February 28, 2014, compared to 37% at November 30, 2013.

We ended our 2014 first quarter with $345.4 million of cash and cash equivalents and restricted cash, compared to $572.0 million at November 30, 2013. Our balance of unrestricted cash and cash equivalents was $303.3 million at February 28, 2014 and $530.1 million at November 30, 2013. The decrease in our unrestricted cash balance primarily reflected our investments in inventories during the first three months of 2014. The majority of our cash and cash equivalents at February 28, 2014 and November 30, 2013 were invested in money market funds and interest-bearing bank deposit accounts.

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Capital Resources.    Our mortgages and notes payable consisted of the following (in thousands):

	February 28, 2014		November 30, 2013		Variance
Mortgages and land contracts due to land sellers and other loans	$	37,970	$	13,615	$	24,355
Senior notes	1,907,220		1,906,883		337
Convertible senior notes	230,000		230,000		—
Total	$	2,175,190	$	2,150,498	$	24,692

Our financial leverage, as measured by the ratio of debt to total capital, was 79.9% at February 28, 2014, compared to 80.0% at November 30, 2013. Our ratio of net debt to total capital at February 28, 2014 was 77.0%, compared to 74.6% at November 30, 2013.

LOC Facilities. We maintain the LOC Facilities with various financial institutions to obtain letters of credit in the ordinary course of operating our business. As of February 28, 2014 and November 30, 2013, we had $41.7 million and $41.5 million, respectively, of letters of credit outstanding under the LOC Facilities. The LOC Facilities require us to deposit and maintain cash with the issuing financial institutions as collateral for our letters of credit outstanding. The amount of cash maintained for our LOC Facilities totaled $42.1 million at February 28, 2014 and $41.9 million at November 30, 2013, and these amounts were included in restricted cash on our consolidated balance sheets as of those dates. We may maintain, revise or, if necessary or desirable, enter into additional or expanded letter of credit facilities, or other similar facility arrangements, with the same or other financial institutions.

Unsecured Revolving Credit Facility. On March 12, 2013, we entered into the Credit Facility with a syndicate of financial institutions. The Credit Facility is further described in Note 12. Mortgages and Notes Payable in the Notes to Consolidated Financial Statements in this report. 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. The maximum available amount is the lesser of (a) $200.0 million and (b) the difference of (i) 15% of our consolidated net tangible assets (as defined in the Credit Facility) and (ii) our secured debt. As of February 28, 2014, we had no cash borrowings or letters of credit outstanding under the Credit Facility and we had $200.0 million available under the Credit Facility for cash borrowings, with up to $100.0 million of that amount available 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 regarding our consolidated tangible net worth, Leverage Ratio, and either an interest coverage ratio or a minimum level of liquidity. Our compliance with these financial covenants is measured by calculations and metrics that are specifically defined or described by the terms of the Credit Facility and can differ in certain respects from comparable GAAP or other commonly used terms. The financial covenant requirements are set forth below:

• Consolidated Tangible Net Worth. We must maintain a minimum consolidated tangible net worth equal to the sum of (a) $282.6 million; (b) 50% of cumulative positive consolidated net income after November 30, 2012, excluding consolidated net income realized from a reversal of our deferred tax asset valuation allowance after November 30, 2012; (c) 75% of any consolidated net income realized as a result of a reversal of our deferred tax asset valuation allowance after November 30, 2012; and (d) 50% of the cumulative net proceeds received from our issuance of capital stock after November 30, 2012. As of February 28, 2014, our applicable minimum consolidated tangible net worth requirement was $370.3 million.

• Leverage Ratio. We must also maintain a Leverage Ratio of less than .850, which adjusts to less than .825 for the first and second quarters of 2015; and to less than .800 for the third quarter of 2015 and each quarter thereafter during the term of the Credit Facility. As defined under the Credit Facility, the Leverage Ratio is calculated as the ratio of our consolidated total indebtedness to the sum of consolidated total indebtedness and consolidated tangible net worth.

• Interest Coverage Ratio or Liquidity. We are also required to maintain either (a) a minimum consolidated interest coverage ratio (“Coverage Ratio”) of 1.10, which adjusts to 1.20 for the second quarter of 2014; to 1.40 for the third quarter of 2014; to 1.60 for the fourth quarter of 2014; to 1.75 for the first and second quarter of 2015; and to 2.00 for the third quarter of 2015 and each quarter thereafter during the term of the Credit Facility; or (b) a minimum level of liquidity, but not both. As defined under the Credit Facility, the Coverage Ratio is the ratio of our consolidated adjusted EBITDA to consolidated interest incurred, in each case for the previous 12 months. Our minimum liquidity is required to be the greater of (a) $50.0 million or (b) the sum of (i) consolidated interest incurred for the four most recently ended quarters and (ii) the aggregate principal amount of indebtedness coming due in the next 12 months, provided that the highest minimum liquidity applicable under (b) is $200.0 million. As of February 28, 2014, our minimum liquidity requirement was $142.4 million.

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In addition, under the Credit Facility, our investments in joint ventures and non-guarantor subsidiaries (which are shown, respectively, in Note 8. Investments in Unconsolidated Joint Ventures and in Note 19. Supplemental Guarantor Information in the Notes to Consolidated Financial Statements in this report) cannot exceed the sum of (a) $135.1 million and (b) 20% of consolidated tangible net worth; and our borrowing base indebtedness, which is the aggregate principal amount of our outstanding indebtedness and non-collateralized financial letters of credit, cannot be greater than our borrowing base (a measure of our inventory and unrestricted cash assets).

The financial covenants under our Credit Facility represent the most restrictive covenants that we are subject to with respect to our mortgages and notes payable. The following table summarizes the above-described financial covenants and other requirements under the Credit Facility and our actual levels or ratios (as applicable) with respect to those covenants and other requirements, in each case as of February 28, 2014:

Financial Covenants and Other Requirements	Covenant Requirement		Actual
Consolidated tangible net worth	>	$370.3 million	$546.3 million
Leverage Ratio	<	.850	.799
Coverage Ratio (a)	>	1.10	1.50
Minimum Liquidity (a)	>	$142.4 million	$303.3 million
Investments in joint ventures and non-guarantor subsidiaries	<	$244.4 million	$97.6 million
Borrowing base in excess of borrowing base indebtedness (as defined)		n/a	$184.8 million

(a) Under the terms of the Credit Facility, we are required to meet either the Coverage Ratio or the minimum liquidity thresholds, but not both. As of February 28, 2014, we met both the Coverage Ratio and the minimum liquidity requirements.

The Credit Facility also prohibits us from repurchasing and exchanging equity securities from or with employees in excess of $10.0 million in any fiscal year.

The indenture governing the senior notes and the 1.375% Million Convertible Senior Notes due 2019 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-leaseback transactions involving property or assets above a certain specified value. In addition, the 1.375% Million Convertible Senior Notes due 2019 and all of the senior notes (with the exception of the 6 1/4% senior notes due 2015 and the 7 1/4% senior notes due 2018) contain certain limitations related to mergers, consolidations, and sales of assets.

Our obligations to pay principal, premium, if any, and interest under our senior notes and the 1.375% Convertible Senior Notes due 2019 and borrowings, if any, under the Credit Facility are guaranteed on a joint and several basis by the Guarantor Subsidiaries. The guarantees are full and unconditional and the Guarantor Subsidiaries are 100% owned by us. We may also cause other subsidiaries of ours to become Guarantor Subsidiaries if we believe it to be in our or the relevant subsidiary’s best interests. Condensed consolidating financial information for our subsidiaries considered to be Guarantor Subsidiaries is provided in Note 19. Supplemental Guarantor Information in the Notes to Consolidated Financial Statements in this report.

As of February 28, 2014, we were in compliance with the applicable terms of all our covenants under the Credit Facility, the senior notes, the 1.375% Million Convertible Senior Notes due 2019, 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. There are no agreements that restrict our payment of dividends other than to maintain compliance with the financial covenant requirements under the Credit Facility, which would restrict our payment of dividends if a default under the Credit Facility exists at the time of any such payment, or if any such payment would result in such a default.

Depending on available terms, we finance certain land acquisitions with purchase-money financing from land sellers or with other forms of financing from third parties. At February 28, 2014, we had outstanding mortgages and land contracts due to land sellers and other loans payable in connection with such financing of $38.0 million, secured by inventories having a carrying value of $101.6 million.

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Consolidated Cash Flows. The following table presents a summary of net cash provided by (used in) our operating, investing and financing activities (in thousands):

	Three Months Ended February 28,
	2014			2013
Net cash provided by (used in):
Operating activities	$	(221,063	)	$	(211,032	)
Investing activities	(84		)	(734		)
Financing activities	(4,926		)	311,636
Net increase (decrease) in cash and cash equivalents	$	(226,073	)	$	99,870

Operating Activities. Operating activities used net cash of $221.1 million in the three months ended February 28, 2014 and $211.0 million in the corresponding period of 2013. The year-over-year change in net operating cash flows primarily reflected increased investments in land and land development compared to the year-earlier period.

Our uses of operating cash in the three months ended February 28, 2014 included a net increase in inventories of $205.0 million (excluding $70.6 million of land distributed from an unconsolidated joint venture and a $33.2 million increase in inventories associated with TIFE assessment obligations tied to the land, $27.0 million of inventories acquired through seller financing, an increase of $.9 million in consolidated inventories not owned and land option contract abandonments of $.4 million) in connection with our investments in land and land development, a net decrease in accounts payable, accrued expenses and other liabilities of $14.5 million, a net increase in receivables of $10.2 million and other operating uses of $3.5 million. Partially offsetting the cash used was net income of $10.6 million.

In the three months ended February 28, 2013, our uses of operating cash included a net increase in inventories of $198.8 million (excluding $27.6 million of inventories acquired through seller financing and an increase of $4.8 million in consolidated inventories not owned) in connection with our land investment and development activities, a net loss of $12.5 million, a net decrease in accounts payable, accrued expenses and other liabilities of $2.4 million, and other operating uses of $1.0 million. Partially offsetting the cash used was a net decrease in receivables of $.3 million.

Investing Activities. Investing activities used net cash of $.1 million in the three months ended February 28, 2014 and $.7 million in the year-earlier period.

In the three months ended February 28, 2014, our uses of cash included $8.6 million for contributions to unconsolidated joint ventures and $1.6 million for net purchases of property and equipment, which were largely offset by proceeds of $10.1 million from the sale of our investment in an unconsolidated joint venture. In the three months ended February 28, 2013, cash of $.4 million was used for net purchases of property and equipment and $.3 million was used for contributions to unconsolidated joint ventures.

Financing Activities. Financing activities used net cash of $4.9 million in the three months ended February 28, 2014 and provided net cash of $311.6 million in the three months ended February 28, 2013. The cash provided by financing activities in 2013 was primarily due to the concurrent underwritten public issuance of the 1.375% Million Convertible Senior Notes due 2019 and the Common Stock Offering, which generated total net proceeds of $332.9 million, partly offset by payments on mortgages and land contracts due to land sellers and other loans.

In the three months ended February 28, 2014, uses of financing cash included payments on mortgages and land contracts due to land sellers and other loans of $2.7 million, dividend payments on our common stock of $2.1 million and an increase of $.2 million in our restricted cash balance.

In the three months ended February 28, 2013, sources of financing cash included proceeds of $230.0 million from the issuance of the 1.375% Convertible Senior Notes due 2019, net proceeds of $109.8 million from the issuance of common stock in the Common Stock Offering, and $.1 million of cash provided from the issuance of common stock under employee stock plans. The cash provided was partially offset by payments on mortgages and land contracts due to land sellers and other loans of $17.0 million, the payment of debt issuance costs of $6.9 million, an increase of $2.3 million in our restricted cash balance and dividend payments on our common stock of $2.1 million.

During the three months ended February 28, 2014, our board of directors declared a cash dividend of $.0250 per share of common stock, which was paid on February 20, 2014 to stockholders of record on February 6, 2014. During the three months ended February

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28, 2013, our board of directors declared a cash dividend of $.0250 per share of common stock, which was paid on February 21, 2013 to stockholders of record on February 7, 2013. The declaration and payment of future cash dividends on our common stock are at the discretion of our board of directors and depend upon, among other things, our expected future earnings, cash flows, capital requirements, debt structure and any adjustments thereto, operational and financial investment strategy and general financial condition, as well as general business conditions.

2011 Shelf Registration. We have an automatically effective universal shelf registration statement on file with the SEC. The 2011 Shelf Registration registers the offering of debt and equity securities that we may issue from time to time in amounts to be determined.

Share Repurchase Program. As of February 28, 2014, we were authorized to repurchase 4,000,000 shares of our common stock under a share repurchase program approved by our board of directors several years ago. We did not repurchase any shares of our common stock under this program in the three months ended February 28, 2014. We have not repurchased shares pursuant to this common stock repurchase plan for the past several years and any resumption of such stock repurchases will be at the discretion of our board of directors.

In the present environment, we are managing our use of cash for investments to maintain and grow our business. Based on our current capital position, we believe that we will have adequate resources and sufficient access to the capital markets and external financing sources to satisfy our current and reasonably anticipated long-term requirements for funds to acquire capital and land, to develop acquired land, to construct homes, to finance our financial services operations, and to meet other needs in the ordinary course of our business. Although our land and land development activities for the remainder of 2014 will be subject to market conditions and available opportunities, we will likely use a portion of our unrestricted cash resources to acquire and/or develop land that meets our investment return and marketing standards. For the remainder of 2014, we may also use or redeploy our unrestricted cash resources to support other business purposes that are aligned with our primary strategic goals, including our growth initiatives. In addition, we may also arrange or engage in capital markets, bank loan, project debt or other financial transactions, and/or expand the capacity of the Credit Facility or the LOC Facilities or enter into additional such facilities. These transactions may include repurchases from time to time of our outstanding senior notes or other debt through redemptions, tender offers, exchange offers, private exchanges, open market purchases or other means, and may include potential new issuances of equity or senior or convertible senior notes or other debt through public offerings, private placements or other arrangements to raise new capital to support our current land and land development investment targets, and for other business purposes and/or to effect repurchases or redemptions of our outstanding senior notes or other debt. Our ability to engage in such financial transactions, however, may be constrained by economic, capital, credit and/or financial market conditions, investor interest and/or our current debt balance and leverage ratios, and we can provide no assurance of the success or costs of any such transactions.

Off-Balance Sheet Arrangements, Contractual Obligations and Commercial Commitments

Unconsolidated Joint Ventures. As discussed in Note 8. Investments in Unconsolidated Joint Ventures in the Notes to Consolidated Financial Statements in this report, 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, equal 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. We also share in the profits and losses of these unconsolidated joint ventures generally in accordance with our respective equity interests. Our unconsolidated joint ventures had total combined assets of $187.9 million at February 28, 2014 and $406.0 million at November 30, 2013. The combined assets of our unconsolidated joint ventures at February 28, 2014 decreased from November 30, 2013 partly due to a distribution of $70.6 million of land we received from Inspirada during the three months ended February 28, 2014. In addition, we sold our interest in an unconsolidated joint venture in Maryland for $10.1 million, which resulted in a gain of $3.2 million that is included in equity in income of unconsolidated joint ventures in our consolidated statements of operations. The decrease in the combined assets of our unconsolidated joint ventures also reflected the transfer of a $33.2 million inventory-related obligation to us in connection with the distribution of land we received from Inspirada. Our investments in unconsolidated joint ventures decreased to $60.6 million at February 28, 2014 from $130.2 million at November 30, 2013. This decrease reflected the above-mentioned transactions, partly offset by capital contributions made to various unconsolidated joint ventures during the three months ended February 28, 2014.

Our unconsolidated joint ventures finance land and inventory investments for a project through a variety of arrangements, and certain of our unconsolidated joint ventures have obtained loans from third-party lenders that are secured by the underlying property and related project assets. However, none of our unconsolidated joint ventures had outstanding debt at February 28, 2014 or November 30, 2013.

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Our investments in joint ventures may create a variable interest in a VIE, depending on the contractual terms of the arrangement. We analyze our joint ventures in accordance with ASC 810 to determine whether they are VIEs and, if so, whether we are the primary beneficiary. None of our joint ventures at February 28, 2014 and November 30, 2013 were determined under the provisions of ASC 810 to be VIEs. All of our joint ventures 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. As discussed in Note 7. Variable Interest Entities in the Notes to Consolidated Financial Statements in this report, 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. We analyze each of our land option contracts and other similar contracts under the provisions of ASC 810 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, ASC 810 requires us to consolidate a VIE if we are determined to be the primary beneficiary. In determining whether we are the primary beneficiary, we consider, among other things, whether we have the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance. Such activities would include, among other things, determining or limiting the scope or purpose of the VIE, selling or transferring property owned or controlled by the VIE, or arranging financing for the VIE. As a result of our analyses, we determined that as of February 28, 2014 and November 30, 2013 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. In accordance with ASC 810, 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):

	February 28, 2014				November 30, 2013
	Cash Deposits		Aggregate Purchase Price		Cash Deposits		Aggregate Purchase Price
Unconsolidated VIEs	$	25,031	$	589,713	$	11,063	$	616,000
Other land option contracts and other similar contracts	30,603		500,853		30,502		535,496
Total	$	55,634	$	1,090,566	$	41,565	$	1,151,496

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 $34.7 million at February 28, 2014 and $31.0 million at November 30, 2013. These pre-acquisition costs and cash deposits were included in inventories in our consolidated balance sheets. We also had outstanding letters of credit of $.1 million at both February 28, 2014 and November 30, 2013 in lieu of cash deposits under certain land option contracts and other similar contracts.

We also evaluate our land option contracts and other similar contracts for financing arrangements in accordance with ASC 470 and, as a result of our evaluations, increased inventories, with a corresponding increase to accrued expenses and other liabilities, in our consolidated balance sheets by $9.8 million at February 28, 2014 and $8.9 million at November 30, 2013.

Contractual Obligations. Our inventory-related obligations as of February 28, 2014 increased to $62.7 million from $29.5 million at November 30, 2013, mainly due to a $33.2 million liability we recorded for fixed or determinable amounts associated with a TIFE in connection with the distribution of land we received from Inspirada during the three months ended February 28, 2014. As homes are delivered, the obligation to pay the remaining TIFE assessments associated with each underlying lot is transferred to the homebuyer. As such, these assessment obligations will be paid by us only to the extent we do not deliver homes to homebuyers on the applicable lots before the related TIFE obligations mature.

There have been no other significant changes in our contractual obligations from those reported in the Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended November 30, 2013.

Critical Accounting Policies

The preparation of our consolidated financial statements requires the use of judgment in the application of accounting policies and estimates of uncertain matters. There have been no significant changes to our critical accounting policies and estimates during the three months ended February 28, 2014 from those disclosed in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended November 30, 2013.

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Recent Accounting Pronouncements

Recent accounting pronouncements are discussed above at Note 1. Basis of Presentation and Significant Accounting Policies in the Notes to Consolidated Financial Statements in this report.

Outlook

For the remainder of 2014, we expect most of our served markets to further progress based on current favorable supply and demand dynamics, and the prevailing fundamental longer-term demand drivers of population, demographic and household formation growth. As a result, we anticipate a steady rise in demand in the coming quarters, though likely at a more moderate pace than in the first half of 2013 and largely dependent on the extent of continued economic and job growth, consumer confidence and greater stability in mortgage loan underwriting standards and interest rates. Based on the current housing environment, we believe there will be opportunities for our business to make measurable progress through the remainder of 2014.

Given our expectations for 2014, we will continue to prioritize expanding our community count, increasing profitability per home delivered and growing our revenues, along with investing in land and land development to advance the shift of our community mix toward higher-performing submarkets. In addition, we will also leverage the strengths of our KBnxt operational business model to promote and capture incremental revenues from our Built to Order design options and upgrades as well as from additional premiums from higher-demand floor plans, community lot locations, home exterior elevations and certain structural options, among other revenue-generating strategies. Through these actions, we anticipate that our overall average selling price will continue to trend higher in 2014, though the percentage growth rate is expected to moderate to the high single-digit to the low double-digit range for the year as compared to the prior year.

Expanding our community count will continue to be a primary driver of our top-line growth in 2014, in combination with other strategic efforts to increase our average selling price where possible in our served markets. Our average community count for the quarter ended February 28, 2014 was 10% higher than for the prior year quarter. We expect to open more new home communities for sales in 2014 than we did in 2013, and that our community count will increase in the range of 15% to 20% year over year by the end of 2014. At the same time, consistent with our goal to prioritize profitability, we will continue to balance sales pace and home selling prices at our new home communities open for sales to improve housing gross profit margins and our return on investment.

To expand our community count and grow our revenues, we plan to continue to make strategic investments in land and land development through the remainder of 2014. During the three months ended February 28, 2014, we invested $354.3 million in land and land development. In March 2014, we increased our unrestricted cash balance with proceeds from the successful underwritten public offerings of the 4.75% Senior Notes due 2019 and the 2014 Common Stock Offering. These capital markets transactions have strengthened our balance sheet to support additional investments in land and land development in line with market conditions and available opportunities that meet our investment return and marketing standards.

With the strategic actions we have taken and the improved results we achieved in the first quarter, we believe that we are favorably positioned to accomplish our profitability and growth priorities in 2014. We also anticipate that all four of our homebuilding reporting segments will generate year-over-year growth in homes delivered, average selling prices and revenues for the year ended November 30, 2014.

While the strength and durability of the present housing recovery, our future performance and the strategies we implement (and adjust or refine as necessary or appropriate) will depend significantly on prevailing economic and capital, credit and financial market conditions and on a fairly stable and constructive political and regulatory environment (particularly in regards to housing and mortgage loan financing policies), among other factors, and we caution that our future quarterly results could fluctuate, we expect to be profitable for 2014, and to achieve solid growth in the years ahead if and as housing markets continue to improve.

Forward-Looking Statements

Investors are cautioned that certain statements contained in this report, as well as some statements by us in periodic press releases and other public disclosures and some oral statements by us to securities analysts, stockholders and others during presentations, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”). Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” “hopes,” and similar expressions constitute forward-looking statements. In addition, any statements that we may make or provide concerning future financial or operating performance (including, without limitation, future revenues, community count, homes delivered, net orders, selling prices, sales pace per new home community, expenses, expense ratios, housing gross profit margins, earnings or earnings per share, or growth or growth

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rates), future market conditions, future interest rates, and other economic conditions, ongoing business strategies or prospects, future dividends and changes in dividend levels, the value of our backlog (including amounts that we expect to realize upon delivery of homes included in our backlog and the timing of those deliveries), the value of our net orders, potential future asset acquisitions and the impact of completed acquisitions, future share issuances or repurchases, future debt issuances, repurchases or redemptions and possible future actions are also forward-looking statements as defined by the Act. Forward-looking statements are based on our current expectations and projections about future events and are subject to risks, uncertainties, and assumptions about our operations, economic and market factors, and the homebuilding industry, among other things. These statements are not guarantees of future performance, and we have no specific policy or intention to update these statements.

Actual events and results may differ materially from those expressed or forecasted in forward-looking statements due to a number of factors. The most important risk factors that could cause our actual performance and future events and actions to differ materially from such forward-looking statements include, but are not limited to the following:

• general economic, employment and business conditions;

• population growth, household formations and demographic trends;

• adverse market conditions, including an increased supply of unsold homes, declining home prices and greater foreclosure and short sale activity, among other things, that could negatively affect our consolidated financial statements, including due to additional impairment or land option contract abandonment charges, lower revenues and operating and other losses;

• conditions in the capital, credit and financial markets (including mortgage lending standards, the availability of mortgage financing and mortgage foreclosure rates);

• material prices and availability;

• labor costs and availability;

• changes in interest rates;

• inflation;

• our debt level, including our ratio of debt to total capital, and our ability to adjust our debt level, maturity schedule and structure and to access the equity, credit, capital or other financial markets or other external financing sources, including raising capital through the public or private issuance of common stock, debt or other securities, and/or project financing, on favorable terms;

• our compliance with the terms and covenants of the Credit Facility;

• weak or declining consumer confidence, either generally or specifically with respect to purchasing homes;

• competition for home sales from other sellers of new and resale homes, including lenders and other sellers of homes obtained through foreclosures or short sales;

• weather conditions, significant natural disasters and other environmental factors;

• government actions, policies, programs and regulations directed at or affecting the housing market (including the Dodd-Frank Act, tax credits, tax incentives and/or subsidies for home purchases, tax deductions for mortgage interest payments and real estate taxes, tax exemptions for profits on home sales, programs intended to modify existing mortgage loans and to prevent mortgage foreclosures and the standards, fees and size limits applicable to the purchase or insuring of mortgage loans by government-sponsored enterprises and government agencies), the homebuilding industry, or construction activities;

• decisions regarding federal fiscal and monetary policies, including those relating to taxation, government spending, interest rates and economic stimulus measures;

• the availability and cost of land in desirable areas;

• our warranty claims experience with respect to homes previously delivered and actual warranty costs incurred, including our warranty claims and costs experience at certain of our communities in Florida;

• legal or regulatory proceedings or claims;

• our ability to use/realize the net deferred tax assets we have generated;

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• our ability to successfully implement our current and planned strategies and initiatives with respect to product, geographic and market positioning (including our efforts to expand our inventory base/pipeline with desirable land positions or interests at reasonable cost and to expand our community count, open additional new home communities for sales and sell higher-priced homes and more design options, and our operational and investment concentration in markets in California), revenue growth, asset optimization (including by effectively balancing home sales prices and sales pace in our new home communities), asset activation, local field management and talent investment, and overhead reduction and cost management;

• consumer traffic to our new home communities and consumer interest in our product designs and offerings, particularly higher-income consumers;

• cancellations and our ability to realize our backlog by converting net orders to home deliveries;

• our home sales and delivery performance, particularly in key markets in California;

• the manner in which our homebuyers are offered and whether they are able to obtain mortgage loans and mortgage banking services, including from our preferred mortgage lender, Nationstar;

• the performance of Nationstar as our preferred mortgage lender;

• the ability of Home Community Mortgage to become operational in all of our served markets and its performance upon becoming operational;

• information technology failures and data security breaches; and

• other events outside of our control.

Please see our Annual Report on Form 10-K for the fiscal year ended November 30, 2013 and other filings with the SEC for a further discussion of these and other risks and uncertainties applicable to our business.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

For information regarding our market risk, refer to Item 7A. Quantitative and Qualitative Disclosures About Market Risk in our Annual Report on Form 10-K for the year ended November 30, 2013. There have been no significant changes in our portfolio of financial instruments or market risk exposures from November 30, 2013.

Item 4. Controls and Procedures

We have established disclosure controls and procedures to ensure that information we are required to disclose in the reports we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and accumulated and communicated to management, including the President and Chief Executive Officer (the “Principal Executive Officer”) and Executive Vice President and Chief Financial Officer (the “Principal Financial Officer”), as appropriate, to allow timely decisions regarding required disclosure. Under the supervision and with the participation of senior management, including our Principal Executive Officer and our Principal Financial Officer, we evaluated our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934. Based on this evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective as of February 28, 2014.

There were no changes in our internal control over financial reporting during the quarter ended February 28, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Nevada Development Contract Litigation

KB Nevada is a defendant in a case in the Eighth Judicial District Court in Clark County, Nevada entitled Las Vegas Development Associates, LLC, Essex Real Estate Partners, LLC, et al. v. KB HOME Nevada Inc. In 2007, LVDA agreed to purchase from KB Nevada approximately 83 acres of land located near Las Vegas, Nevada. LVDA subsequently assigned its rights to Essex. KB Nevada and Essex entered into a development agreement relating to certain major infrastructure improvements. LVDA’s and Essex’s complaint, initially filed in 2008, alleged that KB Nevada breached the development agreement, and also alleged that KB Nevada fraudulently induced them to enter into the purchase and development agreements. LVDA’s and Essex’s lenders subsequently filed related actions that were consolidated into the LVDA/Essex matter. The consolidated plaintiffs sought rescission of the agreements or, in the alternative, compensatory damages of $55 million plus the Claimed Damages. KB Nevada has denied the allegations, and believes it has meritorious defenses to the consolidated plaintiffs’ claims. At a November 19, 2012 hearing, the court denied all of the consolidated plaintiffs’ motions for summary judgment on their claims. In addition, the court granted several of KB Nevada’s motions for summary judgment, eliminating, among other of the consolidated plaintiffs’ claims, all claims for fraud, negligent misrepresentation, and punitive damages. With the court’s decisions, the only remaining claims against KB Nevada are for contract damages and rescission. In August 2013, the court granted motions that further narrowed the scope of the Claimed Damages. While the ultimate outcome is uncertain — we believe it is reasonably possible based on the the court’s decisions in the case that the loss in this matter could range from zero to approximately $55 million plus prejudgment interest, which could be material to our consolidated financial statements — KB Nevada believes it will be successful in defending against the consolidated plaintiffs’ remaining claims and that the consolidated plaintiffs will not be awarded rescission or damages.  The non-jury trial, originally set for September 2012, has been continued to May 20, 2014.

Other Matters

In addition to the specific proceeding described above, we are involved in other 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 February 28, 2014, it was not reasonably possible that an additional material loss had been incurred in an amount in excess of the estimated amounts already recognized on our consolidated financial statements. We evaluate our accruals for litigation and regulatory proceedings at least quarterly and, as appropriate, adjust them to reflect (a) the facts and circumstances known to us at the time, including information regarding negotiations, settlements, rulings and other relevant events and developments; (b) the advice and analyses of counsel; and (c) the assumptions and judgment of management. Similar factors and considerations are used in establishing new accruals for proceedings as to which losses have become probable and reasonably estimable at the time an evaluation is made. Based on our experience, we believe that the amounts that may be claimed or alleged against us in these proceedings are not a meaningful indicator of our potential liability. The outcome of any of these proceedings, including the defense and other litigation-related costs and expenses we may incur, however, is inherently uncertain and could differ significantly from the estimate reflected in a related accrual, if made. Therefore, it is possible that the ultimate outcome of any proceeding, if in excess of a related accrual or if no accrual had been made, could be material to our consolidated financial statements.

Item 1A. Risk Factors

There have been no material changes to the risk factors we previously disclosed in our Annual Report on Form 10-K for the year ended November 30, 2013.

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Item 6. Exhibits

Exhibits
4.29	Ninth Supplemental Indenture, dated as of February 28, 2014, by and among us, the Guarantors party thereto, the Additional Guarantors named therein and U.S. Bank National Association, as Trustee, filed as an exhibit to our Post-Effective Amendment No. 4 to Form S-3 Registration Statement (No. 333-176930), is incorporated by reference herein.
10.48	KB Home 2014 Equity Incentive Plan.
31.1	Certification of Jeffrey T. Mezger, President and Chief Executive Officer of KB Home Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Jeff J. Kaminski, Executive Vice President and Chief Financial Officer of KB Home Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Jeffrey T. Mezger, President and Chief Executive Officer of KB Home Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Jeff J. Kaminski, Executive Vice President and Chief Financial Officer of KB Home Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials from KB Home’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2014, formatted in eXtensible Business Reporting Language (XBRL): (a) Consolidated Statements of Operations for the three months ended February 28, 2014 and 2013, (b) Consolidated Balance Sheets as of February 28, 2014 and November 30, 2013, (c) Consolidated Statements of Cash Flows for the three months ended February 28, 2014 and 2013, and (d) Notes to Consolidated Financial Statements.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

KB HOME

Registrant

Dated	April 4, 2014	By:	/s/ JEFF J. KAMINSKI
			Jeff J. Kaminski Executive Vice President and Chief Financial Officer (Principal Financial Officer)

Dated	April 4, 2014	By:	/s/ WILLIAM R. HOLLINGER
			William R. Hollinger Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)

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INDEX OF EXHIBITS

4.29	Ninth Supplemental Indenture, dated as of February 28, 2014, by and among us, the Guarantors party thereto, the Additional Guarantors named therein and U.S. Bank National Association, as Trustee, filed as an exhibit to our Post-Effective Amendment No. 4 to Form S-3 Registration Statement (No. 333-176930), is incorporated by reference herein.
10.48	KB Home 2014 Equity Incentive Plan.
31.1	Certification of Jeffrey T. Mezger, President and Chief Executive Officer of KB Home Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Jeff J. Kaminski, Executive Vice President and Chief Financial Officer of KB Home Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Jeffrey T. Mezger, President and Chief Executive Officer of KB Home Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Jeff J. Kaminski, Executive Vice President and Chief Financial Officer of KB Home Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials from KB Home’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2014, formatted in eXtensible Business Reporting Language (XBRL): (a) Consolidated Statements of Operations for the three months ended February 28, 2014 and 2013, (b) Consolidated Balance Sheets as of February 28, 2014 and November 30, 2013, (c) Consolidated Statements of Cash Flows for the three months ended February 28, 2014 and 2013, and (d) Notes to Consolidated Financial Statements.

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EX-10.48

EXHIBIT 10.48

KB HOME

2014 EQUITY INCENTIVE PLAN

Effective April 3, 2014

TABLE OF CONTENTS

			Page
ARTICLE 1.		PURPOSE...............................................................................	1
ARTICLE 2.		DEFINITIONS AND CONSTRUCTION...............................	1
ARTICLE 3.		SHARES SUBJECT TO THE PLAN.....................................	8
3.1	Number of Shares..........................................................................		8
3.2	Stock Distributed...........................................................................		9
ARTICLE 4.		GRANTING OF AWARDS....................................................	9
4.1	Participation...................................................................................		9
4.2	Award Agreement..........................................................................		9
4.3	Programs........................................................................................		9
4.4	Limitations Applicable to Section 16 Persons...............................		9
4.5	Fiscal Year Award Limit.................................................................		9
4.6	At-Will Employment......................................................................		10
4.7	Stand-Alone and Tandem Awards..................................................		10
ARTICLE 5.		PERFORMANCE-BASED COMPENSATION.....................	10
5.1	Purpose...........................................................................................		10
5.2	Applicability...................................................................................		10
5.3	Types of Awards.............................................................................		11
5.4	Procedures with Respect to Performance-Based Awards..............		11
5.5	Payment of Performance-Based Awards........................................		11
5.6	Additional Limitations...................................................................		11
ARTICLE 6.		GRANTING OF OPTIONS....................................................	11
6.1	Granting of Options to Eligible Individuals..................................		11
6.2	Qualification of Incentive Stock Options......................................		12
6.3	Option Exercise Price....................................................................		12
6.4	Option Term...................................................................................		12
6.5	Option Vesting...............................................................................		12
6.6	Substitute Awards...........................................................................		13
6.7	Substitution of Stock Appreciation Rights.....................................		13
ARTICLE 7.		EXERCISE OF OPTIONS......................................................	13
7.1	Partial Exercise..............................................................................		13

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TABLE OF CONTENTS

(continued)

			Page
7.2	Manner of Exercise........................................................................		13
7.3	Notification Regarding Disposition...............................................		14
ARTICLE 8.		AWARD OF RESTRICTED STOCK.....................................	14
8.1	Award of Restricted Stock.............................................................		14
8.2	Rights as Stockholders...................................................................		14
8.3	Restrictions....................................................................................		14
8.4	Repurchase or Forfeiture of Restricted Stock................................		15
8.5	Certificates for Restricted Stock....................................................		15
8.6	Section 83(b) Election....................................................................		15
ARTICLE 9.		AWARD OF PERFORMANCE AWARDS, STOCK PAYMENTS AND RESTRICTED STOCK UNITS...............	15
9.1	Performance Awards......................................................................		15
9.2	Stock Payments..............................................................................		16
9.3	Restricted Stock Units....................................................................		16
9.4	Term...............................................................................................		16
9.5	Exercise or Purchase Price.............................................................		16
9.6	Dividend Equivalents.....................................................................		16
ARTICLE 10.		AWARD OF STOCK APPRECIATION RIGHTS..................	17
10.1	Grant of Stock Appreciation Rights...............................................		17
10.2	Stock Appreciation Right Term......................................................		17
10.3	Stock Appreciation Right Vesting..................................................		18
10.4	Manner of Exercise........................................................................		18
10.5	Payment..........................................................................................		18
ARTICLE 11.		ADDITIONAL TERMS OF AWARDS..................................	18
11.1	Payment..........................................................................................		18
11.2	Tax Withholding.............................................................................		19
11.3	Transferability of Awards...............................................................		19
11.4	Conditions to Issuance of Shares...................................................		20
11.5	Forfeiture Provisions......................................................................		21
11.6	Prohibition on Repricing................................................................		21
11.7	Permitted Replacement Awards.....................................................		21

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TABLE OF CONTENTS

(continued)

			Page
ARTICLE 12.		ADMINISTRATION...............................................................	22
12.1	Committee......................................................................................		22
12.2	Duties and Powers of Committee..................................................		22
12.3	Action by the Committee...............................................................		22
12.4	Authority of Committee.................................................................		23
12.5	Decisions Binding..........................................................................		23
12.6	Delegation of Authority..................................................................		23
ARTICLE 13.		MISCELLANEOUS PROVISIONS.......................................	24
13.1	Amendment, Suspension or Termination of the Plan....................		24
13.2	Changes in Common Stock or Assets of the Company, Acquisition or Liquidation of the Company and Other Corporate Events.............................................................................................		24
13.3	No Stockholder Rights...................................................................		27
13.4	Paperless Administration...............................................................		27
13.5	Effect of Plan upon Other Compensation Plans............................		27
13.6	Compliance with Laws..................................................................		27
13.7	Titles and Headings, References to Sections of the Code, the Securities Act or Exchange Act......................................................		27
13.8	Governing Law...............................................................................		28
13.9	Section 409A..................................................................................		28
13.10	No Rights to Awards......................................................................		29
13.11	Unfunded Status of Awards............................................................		29
13.12	Indemnification..............................................................................		29
13.13	Term...............................................................................................		29

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KB HOME

2014 EQUITY INCENTIVE PLAN

ARTICLE 1.

PURPOSE

The purpose of the KB Home 2014 Equity Incentive Plan (the “Plan”) is to attract, motivate and retain the services of Employees, Non-Employee Directors and Consultants by enabling them to participate in the growth and financial success of KB Home (the “Company”) and to align their individual interests to those of the Company’s stockholders.

ARTICLE 2.

DEFINITIONS AND CONSTRUCTION

Wherever the following terms are used in the Plan they shall have the meanings specified below:

1.“Affiliate” shall mean a person or entity that directly or indirectly controls or is controlled by, or is under common control with, the Company.

2.“Award” shall mean, as the case may be, a grant under the Plan of Options, Restricted Stock, Restricted Stock Units, Performance Awards, Stock Payments or Stock Appreciation Rights.

3.“Award Agreement” shall mean any written notice, terms and conditions, contract or other instrument or document evidencing an Award, including in electronic form, which shall contain any terms and conditions with respect to the Award as the Committee shall determine consistent with the Plan and any applicable Program.

4.“Award Limit” shall mean with respect to Awards payable in Shares or in cash, as the case may be, the respective limit set forth in Section 4.5.

5.“Board” shall mean the Board of Directors of the Company.

6.A “Change of Ownership” shall be deemed to have occurred if any of the following has occurred: (a) any one person, or more than one person acting as a group, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company, as determined in accordance with Section 1.409A-3(i)(5)(v) of the Treasury Regulations; provided, that if a person or group is considered either to own more than 50% of the total fair market value or total voting power of the stock of the Company, or to own more than the market value or total voting power specified in (b) below, and such person or group acquires additional stock of the Company, the acquisition of additional stock by such person or group shall not be considered to cause a “Change of Ownership”; (b) any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing 30% or more of the total voting power of the stock of the Company, as determined in accordance with Section 1.409A-3(i)(5)(vi) of the Treasury Regulations; provided,

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that if a person or group is considered to possess 30% or more of the total voting power of the stock of the Company, and such person or group acquires additional stock of the Company, the acquisition of additional stock by such person or group shall not be considered to cause a “Change of Ownership”; (c) a majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election, as determined in accordance with Section 1.409A-3(i)(5)(vi) of the Treasury Regulations; (d) any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Company immediately before such acquisition or acquisitions, as determined in accordance with Section 1.409A-3(i)(5)(vii) of the Treasury Regulations; provided, that a transfer of assets shall not be treated as a “Change of Ownership” when such transfer is made to an entity that is controlled by the stockholders of the Company, as determined in accordance with Section 1.409A-3(i)(5)(vii)(B) of the Treasury Regulations; or (e) the Company’s stockholders approve a liquidation or dissolution of the Company.

7.“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, together with the Treasury Regulations and official guidance promulgated by the U.S. Department of Treasury.

8.“Committee” shall mean the Management Development and Compensation Committee of the Board or another committee of the Board designated by the Board that consists solely of Directors meeting the qualifications described in Section 12.1.

9.“Common Stock” shall mean the common stock of the Company, par value $1.00 per share.

10.“Company Stock Administrator” shall mean the stock administrator of the Company, or such other person or entity designated by the Committee, or his, her or its office, as applicable, whether or not employed by the Company.

11.“Consultant” shall mean any consultant or advisor engaged to provide services to the Company or any Affiliate that qualifies as a consultant or advisor under the instructions for use of a Form S-8 Registration Statement.

12.“Covered Employee” shall mean any Employee who is, or who the Committee believes may become, a “covered employee” within the meaning of Section 162(m) of the Code.

13.“Director” shall mean a member of the Board.

14.“Effective Date” shall mean the date the Plan is first approved by the Company’s stockholders in accordance with the requirements of the Company’s by-laws, the applicable Securities Exchange and Sections 162(m) and 422 of the Code.

15.“Eligible Individual” shall mean any person who is an Employee, a Consultant or a Non-Employee Director, as determined by the Committee or the Board.

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16.“Employee” shall mean any officer or other employee (as determined in accordance with Section 3401(c) of the Code) of the Company or of any Affiliate.

17.“Equity Restructuring” shall mean a nonreciprocal transaction between the Company and its stockholders, such as a stock dividend, stock split, spin-off, rights offering or recapitalization through a large, nonrecurring cash dividend, that affects the Shares (or other securities of the Company) or the Share price (or the price of other securities), and results upon its implementation in a change in the per-Share value of the Shares underlying outstanding Awards.

18.“Exchange Act” shall mean the Securities Exchange Act of 1934.

19.“Fair Market Value” shall mean, as of any given date, the value of a Share determined as follows:

(1)    If the Common Stock is listed on any Securities Exchange, its Fair Market Value shall be the closing sales price for a Share as quoted on such Securities Exchange for such date or, if there is no closing sales price for a Share on the date in question, the closing sales price for a Share on the last preceding date for which such quotation exists, as reported by The Wall Street Journal or such other source (whether in print or electronic) as the Committee deems reliable;

(2)    If the Common Stock is not listed on any Securities Exchange, but the Common Stock is regularly quoted by a recognized securities dealer, its Fair Market Value shall be the mean of the high bid and low asked prices for such date or, if there are no high bid and low asked prices for a Share on such date, the high bid and low asked prices for a Share on the last preceding date for which such information exists, as reported by The Wall Street Journal or such other source (whether in print or electronic) as the Committee deems reliable; or

(3)    If the Common Stock is neither listed on any Securities Exchange nor regularly quoted by a recognized securities dealer, its Fair Market Value shall be established by the Committee in good faith.

20.“Full Value Award” shall mean any Award other than (i) an Option, (ii) a Stock Appreciation Right or (iii) any other Award for which the Holder must pay the intrinsic value existing as of the date of grant (whether directly or by forgoing a right to receive a payment from the Company or any Affiliate) as a condition to exercising or receiving payment under it.

21.“Greater Than 10% Stockholder” shall mean an individual then owning (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or any subsidiary corporation (as defined in Section 424(f) of the Code) or parent corporation (as defined in Section 424(e) of the Code) thereof.

22.“Holder” shall mean a person who has been granted an Award.

23.“Incentive Stock Option” shall mean an Option that is intended to qualify as an incentive stock option and conforms to the applicable provisions of Section 422 of the Code.

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24.“Non-Employee Director” shall mean a Director of the Company who is not an Employee.

25.“Non-Qualified Stock Option” shall mean an Option that is not an Incentive Stock Option.

26.“Option” shall mean a right to purchase Shares at a specified exercise price, granted under Article 6. An Option shall be either a Non-Qualified Stock Option or an Incentive Stock Option; provided, however, that Options granted to Non-Employee Directors and Consultants shall only be Non-Qualified Stock Options.

27.“Performance Award” shall mean a cash bonus award, stock bonus award, performance award or incentive award that is paid in cash, Shares or a combination of both, awarded under Section 9.1.

28.“Performance-Based Compensation” shall mean any compensation that is intended to qualify as “performance-based compensation” as described in Section 162(m)(4)(C) of the Code.

29.“Performance Criteria” shall mean the criteria that the Committee selects for an Award for purposes of establishing the Performance Goal or Performance Goals for a Performance Period. The Performance Criteria that shall be used to establish Performance Goals are limited to the following: (i) income/loss (e.g., operating income/loss, EBIT or similar measures, net income/loss, earnings/loss per share, residual or economic earnings), (ii) cash flow (e.g., operating cash flow, total cash flow, EBITDA, cash flow in excess of cost of capital or residual cash flow, cash flow return on investment and cash flow sufficient to achieve financial ratios or a specified cash balance), (iii) returns (e.g., on revenues, investments, assets, capital or equity), (iv) working capital (e.g., working capital divided by revenues), (v) margins (e.g., variable margin, profits divided by revenues, gross margins or margins divided by revenues), (vi) liquidity (e.g., total or net debt, debt reduction, debt-to-capital, debt-to-EBITDA and other liquidity ratios), (vii) revenues, cost initiative and stock price metrics (e.g., revenues, stock price, total stockholder return, expenses, cost structure improvements and costs divided by revenues or other metrics); provided that any of the foregoing in (i) through (vii) may be calculated, or described on a GAAP or non-GAAP basis; and (viii) strategic metrics (e.g., market share, customer satisfaction, employee satisfaction /turnover/development, service quality, unit volume, orders, backlog, traffic, homes delivered, cancellation rates, productivity, operating efficiency, inventory management, community count, goals related to acquisitions, divestitures or other transactions and goals related to KBnxt operational business model principles, including goals based on a per-employee, per-home delivered or other basis).

30.“Performance Goals” shall mean, for a Performance Period, one or more goals established in writing by the Committee for the Performance Period based upon one or more Performance Criteria. Depending on the Performance Criteria used to establish such Performance Goals, the Performance Goals may be expressed in terms of overall Company performance, either independently or as compared to one or more companies, performance of specific subsidiaries or business units, either independently or as compared to one or more companies’ subsidiaries or business units, or otherwise as determined by the Committee. If the Committee

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believes, in its sole discretion, that an equitable adjustment to any Performance Goal is advisable in light of new developments or circumstances, the Committee may provide for one or more objectively determinable adjustments. Such adjustments may include or arise from one or more of the following: (i) items related to a change in accounting principle; (ii) items relating to financing or capital market activities; (iii) expenses for restructuring or productivity initiatives; (iv) other non-operating items; (v) items related to acquisitions; (vi) items attributable to the business operations of any entity acquired by the Company during the Performance Period; (vii) items related to the disposal of a business or segment of a business; (viii) items related to discontinued operations that do not qualify as a segment of a business under applicable accounting standards; (ix) items attributable to any stock dividend, stock split, combination or exchange of stock occurring during the Performance Period; (x) any other items of significant income or expense which are determined to be appropriate adjustments; (xi) items relating to unusual or extraordinary corporate transactions, events or developments, (xii) items related to amortization of acquired intangible assets; (xiii) items that are outside the scope of the Company’s core, on-going business activities; (xiv) items related to acquired in-process research and development; (xv) items relating to changes in tax laws; (xvi) items relating to major licensing or partnership arrangements; (xvii) items relating to asset impairment charges; (xviii) items relating to gains or losses for litigation, arbitration and contractual settlements; or (xix) items relating to any other unusual or nonrecurring events or changes in applicable laws or business conditions. For all Awards intended to qualify as Performance-Based Compensation, such determinations shall be made within the time prescribed by, and otherwise in compliance with, Section 162(m) of the Code.

31.“Performance Period” shall mean one or more periods of time, which may be of varying and overlapping durations, as the Committee may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Holder’s right to, and the payment of, a Performance Award.

32.“Permitted Transferee” shall mean, with respect to a Holder, any person entitled to use a Form S-8 Registration Statement to exercise Awards originally granted to the Holder and to sell Shares issued pursuant to Awards originally granted to the Holder.

33.“Program” shall mean any program adopted by the Committee pursuant to the Plan containing terms and conditions intended to govern one or more specific types of Awards and/or the manner in which they may be granted.

34.“QDRO” shall mean a domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended from time to time, or the regulations or official guidance promulgated thereunder.

35.“Restricted Stock” shall mean Shares awarded under Article 8 that are subject to certain restrictions and may be subject to risk of forfeiture or repurchase.

36.“Restricted Stock Units” shall mean the right to receive Shares or the value of Shares awarded under Section 9.3.

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37.“Retirement” shall mean an Employee’s severance from employment with the Company and its Affiliates for any reason other than a leave of absence, termination for cause, death or disability, at such time as the Employee’s age and years of service with the Company and its Affiliates equals at least 65 or more, provided that the Employee is then at least 55 years of age. The Company shall have the sole right to determine whether an Employee’s severance from employment constitutes a Retirement.

38.“Securities Act” shall mean the Securities Act of 1933.

39.“Securities Exchange” shall mean the New York Stock Exchange or any other securities exchange, national market system or automated quotation system on which the Shares are listed, quoted or traded.

40.“Shares” shall mean shares of Common Stock.

41.“Stock Appreciation Right” shall mean a stock appreciation right as described and granted under Article 10.

42.“Stock Payment” shall mean (a) a payment in the form of Shares or (b) a right to purchase Shares, however denominated or described, as part of a bonus, deferred compensation or other arrangement, in any such case awarded under Section 9.2.

43.“Substitute Award” shall mean Awards granted or Shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, in each case by a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines.

44.“Termination of Service” shall mean,

(1)    As to a Consultant, the time when the engagement of a Holder as a Consultant to the Company or an Affiliate is terminated for any reason, with or without cause, including, without limitation, by resignation, discharge, death or retirement, but excluding terminations where the Consultant simultaneously commences or remains in employment or service with the Company or any Affiliate.

(2)    As to a Non-Employee Director, the time when a Holder who is a Non-Employee Director ceases to be a Director for any reason, with or without cause, including, without limitation, a termination by resignation, failure to be elected, death or retirement, but excluding terminations where the Holder simultaneously commences employment or service with the Company or any Affiliate.

(3)    As to an Employee, the time when the employee-employer relationship between a Holder and the Company or any Affiliate is terminated for any reason, with or without cause, including, without limitation, a termination by resignation, discharge, death, disability or retirement; but excluding terminations where the Holder simultaneously commences or remains in employment or service with the Company or any Affiliate.

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The Committee, in its sole discretion, shall determine the effect of all matters and questions relating to Terminations of Service, including, without limitation, the question of whether a Termination of Service resulted from a discharge for cause and all questions of whether particular leaves of absence constitute a Termination of Service; provided, however, that, with respect to Incentive Stock Options, unless the Committee otherwise provides in the terms of the Program, Award Agreement or otherwise, a leave of absence, change in status from an employee to an independent contractor or other change in the employee-employer relationship shall constitute a Termination of Service only if and to the extent that any such event interrupts employment for the purposes of Section 422(a)(2) of the Code. For purposes of the Plan, a Holder’s employee-employer relationship or consultancy relationship shall be deemed to be terminated in the event that the Affiliate employing or contracting with such Holder ceases to remain an Affiliate following any merger, sale of stock or other corporate transaction or event (including, without limitation, a spin-off).

Notwithstanding the foregoing, with respect to any Award that constitutes “deferred compensation” subject to the requirements of Section 409A of the Code, a Termination of Service shall be deemed to have occurred upon a “separation from service” within the meaning of Section 409A of the Code, as determined in accordance with Section 1.409A-1(h) of the Treasury Regulations; provided that (i) for a Holder who provides services to the Company as an Employee, a separation from service shall be deemed to occur when the Holder has experienced a termination of employment with the Company and the facts and circumstances indicate that the Holder and the Company reasonably anticipate that either (A) no further services will be performed by the Holder for the Company after a certain date or (B) the level of bona fide services the Holder will perform for the Company after a certain date (whether as an Employee or as an independent contractor) will permanently decrease to no more than 20% of the average level of bona fide services performed by the Holder (whether as an Employee or an independent contractor) over the immediately preceding 36-month period (or the full period of services performed for the Company if the Holder has been performing services for less than 36 months); and (ii) for a Holder who provides services to the Company as an independent contractor, a separation from service shall be deemed to occur upon expiration or termination of all contracts under which services are performed by the Holder for the Company, provided that such expiration or termination constitutes a good-faith and complete severing of the contractual relationship between the Holder and the Company, and provided, further, that for a Holder who provides services to the Company as both an Employee and an independent contractor, a separation from service shall generally not occur until the Holder has ceased providing services for the Company as both an Employee and an independent contractor pursuant to clauses (i) and (ii) of this sentence. For purposes of determining whether a separation from service has occurred, services performed for the Company shall include services performed both for the Company and for any other corporation that is a member of the same “controlled group” as the Company under Section 414(b) of the Code or any other trade or business (such as a partnership) that is under common control with the Company as determined under Section 414(c) of the Code, in each case as modified by Section 1.409A-1(h)(3) of the Treasury Regulations and substituting “at least 50 percent” for “at least 80 percent” each place it appears in Section 1563(a) of the Code or Section 1.414(c)-2 of the Treasury Regulations.

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45.“Treasury Regulations” shall mean the final, temporary and proposed regulations promulgated by the U.S. Department of the Treasury under the Code, as such regulations may be amended from time to time.

ARTICLE 3

SHARES SUBJECT TO THE PLAN

3.1Number of Shares.

(a)Subject to adjustment as provided in Section 3.1(b) and Section 13.2, the aggregate number of Shares which may be authorized for grant under the Plan is the sum of (i) Four Million Eight Hundred Thousand (4,800,000) Shares and (ii) any Shares which as of the Effective Date are available for grant under the Company’s 2010 Equity Incentive Plan, and (iii) any Shares which are, as of the Effective Date, subject to awards under the Company’s 2010 Equity Incentive Plan and which subsequently expire or are canceled, forfeited, tendered or withheld to satisfy tax withholding obligations in respect of full value awards or settled for cash. Any Share that is subject to an Award that could be settled with Shares and is not a Full Value Award shall be deducted from this limit at the ratio of one (1) Share for every one (1) Share subject to the Award. Any Share that is subject to a Full Value Award that could be settled with Shares shall be deducted from this limit at the ratio of 1.78 Shares for every one (1) Share subject to the Award. After the Effective Date, no new awards may be granted under the 2010 Equity Incentive Plan, but any awards under the 2010 Equity Incentive Plan that are outstanding as of the Effective Date shall continue to be subject to the terms and conditions of the 2010 Equity Incentive Plan.

(b)If an Award expires or is canceled, forfeited or settled for cash (in whole or in part), the Shares subject to such Award shall, to the extent of such expiration, cancellation, forfeiture or cash settlement, again be available as Shares authorized for grant under the Plan, in accordance with Section 3.1(d) below. Shares tendered by a Holder or withheld by the Company to satisfy any tax withholding obligation with respect to a Full Value Award shall again be available as Shares authorized for grant under the Plan in accordance with Section 3.1(d) below. Notwithstanding anything to the contrary contained herein, Shares tendered by a Holder or withheld by the Company in payment of the exercise price of an Award or to satisfy any tax withholding obligation with respect to an Award that is not a Full Value Award shall not be available as Shares authorized for grant under the Plan.

(c)To the extent permitted by applicable law or the requirements of the Securities Exchange, Substitute Awards shall not reduce the Shares authorized for grant under the Plan or the limitations on grants to a Participant under Section 4.5, nor shall Shares subject to a Substitute Award be added to the Shares available for Awards under the Plan as provided in paragraph (b) above. Additionally, in the event that a company acquired by the Company or any Affiliate or with which the Company or any Affiliate combines has shares available under a pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used

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for Awards under the Plan and shall not reduce the Shares authorized for grant under the Plan; provided, that Awards using such available shares shall not be made after the date awards could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not employed by or providing services to the Company or its Affiliates immediately prior to such acquisition or combination.

(d)Each Share that again becomes available for grant pursuant to this Section 3.1 shall be added back as (i) one (1) Share if such Share was subject to an Award other than a Full Value Award, and (ii) as 1.78 Share if such Share was subject to a Full Value Award.

3.2Stock Distributed. Any Shares distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Common Stock, treasury Common Stock or Common Stock purchased on the open market.

ARTICLE 4.

GRANTING OF AWARDS

4.1Participation. The Committee may, from time to time, select from among all Eligible Individuals, those to whom an Award shall be granted.

4.2Award Agreement. Each Award shall be evidenced by an Award Agreement. Award Agreements shall contain such terms and conditions as may be determined by the Committee that are not inconsistent with the Plan, including any terms and conditions that are necessary for Awards to comply with, or be exempt from, the requirements of Section 409A of the Code. Award Agreements evidencing Awards intended to qualify as Performance-Based Compensation shall contain such terms and conditions as may be necessary to meet the applicable provisions of Section 162(m) of the Code. Award Agreements evidencing Incentive Stock Options shall contain such terms and conditions as may be necessary to meet the applicable provisions of Section 422 of the Code.

4.3Programs. The Board or the Committee may from time to time establish Programs pursuant to the Plan. An Award Agreement evidencing an Award granted pursuant to any Program shall comply with the terms and conditions of such Program and the Plan.

4.4Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan, the Plan, any Award granted to any individual who is then subject to Section 16 of the Exchange Act, and any applicable Program, shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including Rule 16b-3 of the Exchange Act and any amendments thereto) that are requirements for the application of such exemptive rule. To the extent permitted by applicable law, the Plan and each Program and Award shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.

4.5Fiscal Year Award Limit. Notwithstanding any provision in the Plan to the contrary, and subject to Section 13.2 and the terms of this Section 4.5 with respect to a Non-Employee Director, the maximum aggregate number of Shares with respect to one or more Awards that may be granted to any one person during any fiscal year of the Company shall be One Million (1,000,000) and the maximum aggregate amount of cash that may be paid to any

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one person during any fiscal year of the Company with respect to one or more Performance Awards payable in cash shall be Ten Million Dollars ($10,000,000); provided, however, that any Award granted pursuant to Section 11.7 shall not count against such fiscal year limits. To the extent required by Section 162(m) of the Code, Shares subject to Awards that are canceled shall continue to be counted against the Award Limit specified in the preceding sentence. Notwithstanding any provision in the Plan to the contrary, the aggregate grant date fair value (computed as of the date of grant in accordance with applicable financial accounting rules) of all Awards granted to any Non-Employee Director during any fiscal year of the Company shall not exceed One Million Dollars ($1,000,000); provided, however, that any Award granted pursuant to Section 11.7, any cash retainer or meeting fee paid or provided for service on the Board or any committee thereof, or any Award granted in lieu of any such cash retainer or meeting fee shall not count against such fiscal year limit.

4.6At-Will Employment. Nothing in the Plan, any Program or any Award Agreement shall confer upon any Holder any right to be employed by or to serve as a Director or Consultant for the Company or any Affiliate, or to continue in such employment or service, or shall interfere with or restrict in any way the rights of the Company and any Affiliate, which rights are hereby expressly reserved, to discharge any Holder at any time for any reason whatsoever, with or without cause, and with or without notice, or to terminate or change all other terms and conditions of employment or engagement, except to the extent expressly provided otherwise in a written agreement between the Holder and the Company or any Affiliate.

4.7Stand-Alone and Tandem Awards. Awards granted pursuant to the Plan may, in the sole discretion of the Committee, be granted either alone, in addition to, or in tandem with, any other Award granted pursuant to the Plan. Awards granted in addition to or in tandem with other Awards may be granted either at the same time as or (subject to the requirements of Section 409A of the Code) at a different time from the grant of such other Awards.

ARTICLE 5.

PERFORMANCE-BASED COMPENSATION

5.1Purpose. The Committee, in its sole discretion, may determine at the time an Award is granted whether such Award is intended to qualify as Performance-Based Compensation. If the Committee, in its sole discretion, decides to grant such an Award to an Eligible Individual that is intended to qualify as Performance-Based Compensation, then the provisions of this Article 5 shall control over any contrary provision contained in the Plan. The Committee may in its sole discretion grant Awards to other Eligible Individuals that are based on Performance Criteria or Performance Goals but that do not satisfy the requirements of this Article 5 and that are not intended to qualify as Performance-Based Compensation.

5.2Applicability. The grant of an Award to an Eligible Individual for a particular Performance Period shall not require the grant of an Award to such Eligible Individual in any subsequent Performance Period (or entitle such Eligible Individual to any such grant) and the grant of an Award to any one Eligible Individual shall not require the grant of an Award to any other Eligible Individual in such period or in any other period (or entitle any such other Eligible Individual to any such grant).

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5.3Types of Awards. Notwithstanding anything in the Plan to the contrary, the Committee may grant any Award to a Covered Employee in a manner intended to qualify as Performance-Based Compensation, including, without limitation, Restricted Stock for which the restrictions lapse upon the attainment of specified Performance Goals, and any Performance Awards described in Article 9 that vest or become exercisable or payable upon the attainment of one or more specified Performance Goals.

5.4Procedures with Respect to Performance-Based Awards. To the extent necessary to comply with the requirements of Section 162(m)(4)(C) of the Code, with respect to any Award granted to one or more Covered Employees and that is intended to qualify as Performance-Based Compensation, no later than 90 days following the commencement of any Performance Period (or such earlier time as may be required under Section 162(m) of the Code), the Committee shall, in writing, (a) designate one or more Eligible Individuals, (b) select the Performance Criteria applicable to the Performance Period, (c) establish objective Performance Goals, and amounts of such Awards, as applicable, which may be earned for such Performance Period based on the Performance Criteria, and (d) specify an objective relationship between the Performance Criteria and the Performance Goals and the amounts of such Awards, as applicable, to be earned by each Covered Employee for such Performance Period. Following the completion of each Performance Period, the Committee shall certify in writing whether and the extent to which the applicable Performance Goals have been achieved for such Performance Period. In determining the amount earned or payable under such Awards, to the extent provided under any applicable Program or Award Agreement, the Committee shall have the right to reduce or eliminate (but not to increase) the amount earned or payable at a given level of performance to take into account additional factors that the Committee may deem relevant, including, without limitation, the assessment of individual or Company performance for the Performance Period.

5.5Payment of Performance-Based Awards. Unless otherwise provided in the applicable Program or Award Agreement, as to an Award that is intended to qualify as Performance-Based Compensation, the Holder must be employed by the Company or an Affiliate throughout the Performance Period. Unless otherwise provided in the applicable Performance Goals, Program or Award Agreement, a Holder shall be eligible to receive payment pursuant to such Awards for a Performance Period only if and to the extent the Performance Goals for such period are achieved.

5.6Additional Limitations. Notwithstanding any other provision of the Plan and except as otherwise determined by the Committee, any Award that is granted to a Covered Employee and is intended to qualify as Performance-Based Compensation shall be subject to any additional limitations set forth in Section 162(m) of the Code that are requirements for qualification as Performance-Based Compensation, and the Plan, any applicable Program and the Award Agreement shall be deemed amended to the extent necessary to conform to such requirements.

ARTICLE 6.

GRANTING OF OPTIONS

6.1Granting of Options to Eligible Individuals. The Committee is authorized to grant Options to Eligible Individuals on such terms and conditions as it may determine that are

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not inconsistent with the Plan; provided, however, that no Option shall be granted to any Employee or Consultant of an Affiliate unless the Company is an “eligible issuer of service recipient stock” with respect to such person within the meaning of Section 409A of the Code.

6.2Qualification of Incentive Stock Options. No Incentive Stock Option shall be granted to any person who is not an Employee of the Company or any subsidiary corporation of the Company (as defined in Section 424(f) of the Code). No person who is a Greater Than 10% Stockholder may be granted an Incentive Stock Option unless such Incentive Stock Option conforms to the applicable provisions of Section 422 of the Code. Any Incentive Stock Option granted under the Plan may be modified by the Committee, with the consent of the Holder, to disqualify such Option from treatment as an “incentive stock option” under Section 422 of the Code. To the extent that the aggregate Fair Market Value of Shares with respect to which “incentive stock options” (within the meaning of Section 422 of the Code, but without regard to Section 422(d) of the Code) are exercisable for the first time by a Holder during any calendar year under the Plan, and all other plans of the Company and any subsidiary or parent corporation thereof (each as defined in Section 424(f) and (e) of the Code, respectively), exceeds $100,000, the Options shall be treated as Non-Qualified Stock Options to the extent required by Section 422 of the Code. The requirements set forth in the preceding sentence shall be applied by taking Options and other “incentive stock options” into account in the order in which they were granted and the Fair Market Value of Shares shall be determined as of the time the respective instruments were granted. Subject to adjustment as provided in Section 3.1(b) and Section 13.2, no more than One Million Seven Hundred and Fifty Thousand (1,750,000) Shares may be issued pursuant to the exercise of Incentive Stock Options granted under the Plan.

6.3Option Exercise Price. The exercise price per Share subject to each Option shall be set by the Committee, but shall not be less than 100% of the Fair Market Value of a Share on the date the Option is granted (or on the date the Option is modified, extended or renewed for purposes of Section 409A of the Code or, as to an Incentive Stock Option, Section 424(h) of the Code). In addition, in the case of Incentive Stock Options granted to a Greater Than 10% Stockholder, such price shall not be less than 110% of the Fair Market Value of a Share on the date the Option is granted (or the date the Option is modified, extended or renewed for purposes of Section 424(h) of the Code).

6.4Option Term. The term of each Option shall be set by the Committee in its sole discretion; provided, however, that the term shall not be more than ten (10) years from the date the Option is granted, or five (5) years from the date an Incentive Stock Option is granted to a Greater Than 10% Stockholder. The Committee shall determine the time period, including the time period following a Termination of Service, during which a Holder has the right to exercise the vested Options, which time period may not extend beyond the term of the Option.

6.5Option Vesting. The Committee shall determine the period of time and other conditions that must be satisfied before the Holder’s right to exercise an Option, in whole or in part, shall vest. Such vesting may be based on service with the Company or an Affiliate, any of the Performance Criteria, or any other criterion or condition determined by the Committee. No portion of an Option that cannot be exercised at the Holder’s Termination of Service shall thereafter become exercisable.

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6.6Substitute Awards. Notwithstanding the foregoing provisions of this Article 6 to the contrary, in the case of an Option that is a Substitute Award, the price per share of the shares subject to such Option may be less than the Fair Market Value per share on the date of grant; provided, that the excess of: (a) the aggregate Fair Market Value (as of the date such Substitute Award is granted) of the shares subject to the Substitute Award, over (b) the aggregate exercise price thereof does not exceed the excess of: (x) the aggregate Fair Market Value (as of the time immediately preceding the transaction giving rise to the Substitute Award, such Fair Market Value to be determined by the Committee) of the shares of the predecessor entity that were subject to the grant assumed or substituted for by the Company, over (y) the aggregate exercise price of such shares, and that the grant of the Substitute Award otherwise satisfies the requirements of Section 1.409A-1(b)(5)(v)(D) of the Treasury Regulations or, in the case of an Incentive Stock Option, Section 1.424-1(a) of the Treasury Regulations.

6.7Substitution of Stock Appreciation Rights. The Committee may provide in the applicable Program or the Award Agreement evidencing the grant of an Option that the Committee, in its sole discretion, shall have the right to substitute a Stock Appreciation Right for such Option at any time prior to or upon exercise of such Option; provided, that such Stock Appreciation Right shall be exercisable with respect to the same number of Shares for which such substituted Option would have been exercisable and such Stock Appreciation Right shall have the same exercise price and the same remaining vesting schedule and term as such Option.

ARTICLE 7.

EXERCISE OF OPTIONS

7.1Partial Exercise. An exercisable Option may be exercised in whole or in part. However, an Option shall not be exercisable with respect to fractional shares and the Committee may require that, by the terms of the Option, a partial exercise must be with respect to a minimum number of Shares.

7.2Manner of Exercise. All or a portion of an exercisable Option shall be deemed exercised upon delivery of all of the following to the Company Stock Administrator:

(a)A written or electronic notice complying with the applicable rules established by the Company Stock Administrator stating that the Option, or a portion thereof, is exercised. The notice must be signed in writing or electronically by the Holder or other person then entitled to exercise the Option or such portion of the Option;

(b)Such representations and documents as the Company Stock Administrator, in its sole discretion, deems necessary or advisable to effect compliance with all applicable laws and regulations, and the rules of any applicable Securities Exchange. The Company Stock Administrator may, in its sole discretion, also take whatever additional actions it deems appropriate to effect such compliance including, without limitation, placing legends on share certificates and issuing stop-transfer notices to agents and registrars;

(c)In the event that the Option shall be exercised by any person other than the Holder who is permitted to exercise the Option in accordance with Section 11.3, appropriate

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proof of the right of such person to exercise the Option, as determined in the sole discretion of the Company Stock Administrator; and

(d)Full payment of the exercise price and applicable withholding taxes to the Company for the Shares with respect to which the Option, or portion thereof, is exercised, in a manner permitted by Section 11.1 and 11.2.

7.3Notification Regarding Disposition. The Holder shall give the Company Stock Administrator prompt written or electronic notice of any disposition of Shares acquired by exercise of an Incentive Stock Option which occurs within (a) two years from the date of granting (including the date the Option is modified, extended or renewed for purposes of Section 424(h) of the Code) such Option to such Holder, or (b) one year after the transfer of such shares to such Holder.

ARTICLE 8.

AWARD OF RESTRICTED STOCK

8.1Award of Restricted Stock.

(e)The Committee is authorized to grant Restricted Stock to Eligible Individuals, and shall determine such terms and conditions, including the restrictions applicable to each Award of Restricted Stock, that are not inconsistent with the Plan, and may impose such conditions on the issuance of such Restricted Stock, as it deems appropriate.

(f)The Committee shall establish the purchase price, if any, and form of payment for Restricted Stock; provided, however, that if a purchase price is charged, such purchase price shall be no less than the par value of the Shares to be purchased, unless otherwise permitted by applicable state law. In all cases, legal consideration shall be required for each issuance of Restricted Stock.

8.2Rights as Stockholders. Subject to Section 8.4, upon the grant of a Restricted Stock Award, the Holder shall have, unless otherwise provided in the terms of the applicable Award Agreement, all the rights of a stockholder with respect to the Shares subject to the Award, subject to the restrictions in the applicable Program or in his or her Award Agreement, including the right to receive all dividends and other distributions paid or made with respect to the Shares; provided, however, that if the lifting or lapsing of the restrictions on an Award of Restricted Stock is subject to satisfaction of one or more Performance Goals, the Holder shall not be entitled to receive dividends or other distributions with respect to the Shares subject to the Award unless and until each of the applicable Performance Goals has been satisfied, at which time declared and accrued but unpaid dividends and distributions from and after the date of grant of the Award shall become payable to the Holder as soon as practicable.

8.3Restrictions. All Shares of Restricted Stock (including any Shares received by Holders thereof with respect to Shares of Restricted Stock as a result of stock dividends, stock splits or any other form of recapitalization) shall, under the terms of the applicable Program or Award Agreement, be subject to such restrictions and vesting requirements as the Committee

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shall provide. Such restrictions may include, without limitation, restrictions concerning voting rights and transferability and such restrictions may lapse separately or in combination at such times and pursuant to such circumstances or based on such criteria as selected by the Committee, including, without limitation, criteria based on the Holder’s duration of employment or service with the Company or its Affiliates, applicable Performance Criteria, Company performance or individual performance. Restricted Stock may not be sold or encumbered until all applicable restrictions are satisfied, terminated or expire.

8.4Repurchase or Forfeiture of Restricted Stock. If no purchase price was paid by a Holder in cash or property for a grant of Restricted Stock, upon a Termination of Service the Holder’s rights in any Shares of Restricted Stock then subject to restrictions shall terminate, and such Shares of Restricted Stock shall be surrendered to the Company and cancelled without consideration. If a purchase price was paid by a Holder in cash or property for a grant of Restricted Stock, upon a Termination of Service the Company shall have the right to repurchase from the Holder the Shares of Restricted Stock then subject to restrictions at a cash price per Share equal to the purchase price paid by the Holder in cash or property for such Shares of Restricted Stock or such other amount as may be specified under the applicable Program or in the applicable Award Agreement.

8.5Certificates for Restricted Stock. Restricted Stock granted pursuant to the Plan may be evidenced in such manner as the Company Stock Administrator shall determine. Certificates, book entries or electronic registration evidencing shares of Restricted Stock must include an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock, and the Company may, in it sole discretion, retain physical possession of any stock certificate until such time as all applicable restrictions lapse.

8.6Section 83(b) Election. If a Holder makes an election under Section 83(b) of the Code to be taxed with respect to the Restricted Stock as of the date of transfer of the Restricted Stock rather than as of the date or dates upon which the Holder would otherwise be taxable under Section 83(a) of the Code, the Holder shall be required to deliver a copy of such election to the Company promptly after filing such election with the Internal Revenue Service.

ARTICLE 9.

AWARD OF PERFORMANCE AWARDS, STOCKPAYMENTS AND RESTRICTED STOCK UNITS

9.1Performance Awards.

(a)The Committee is authorized to grant Performance Awards to any Eligible Individual, and to determine such terms and conditions that are not inconsistent with the Plan and whether such Performance Awards shall be Performance-Based Compensation. The number of Shares subject to a Performance Award and the value of a Performance Award may be linked to any one or more of the Performance Criteria or other specific criteria determined by the Committee, in each case on a specified date or dates or over any period or periods determined by the Committee. Performance Awards may be paid in cash, Shares, or both, as determined by the Committee.

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(b)Without limiting Section 9.1(a), the Committee may grant Performance Awards to any Eligible Individual in the form of a cash bonus payable upon the attainment of objective Performance Goals, or such other criteria, whether or not objective, which are established by the Committee, in each case on a specified date or dates or over any period or periods determined by the Committee. Any such bonuses paid to a Holder that are intended to be Performance-Based Compensation shall be based upon objectively determinable bonus formulas established in accordance with the provisions of Article 5.

9.2Stock Payments. The Committee is authorized to make Stock Payments to any Eligible Individual and to determine such terms and conditions that are not inconsistent with the Plan. The number or value of Shares of any Stock Payment shall be determined by the Committee and may be based upon one or more Performance Criteria or any other specific criteria, including service to the Company or any Affiliate, determined by the Committee. Shares underlying a Stock Payment that is subject to a vesting schedule or other restrictions, conditions or criteria set by the Committee will not be issued until the restrictions, conditions or criteria have been satisfied. Unless otherwise provided in the applicable Award Agreement, a Holder of a Stock Payment shall have no rights as a Company stockholder with respect to such Stock Payment until such time as the Stock Payment has vested and the Shares underlying the Award have been issued to the Holder. Stock Payments may, but are not required to, be made in lieu of base salary, bonus, fees or other cash compensation otherwise payable to such Eligible Individual.

9.3Restricted Stock Units. The Committee is authorized to grant Restricted Stock Units to any Eligible Individual. The number and terms and conditions of Restricted Stock Units shall be determined by the Committee, which shall not be inconsistent with the Plan. The Committee shall specify the date or dates on which the Restricted Stock Units shall become fully vested and nonforfeitable, and may specify such vesting restrictions, conditions or criteria as it deems appropriate, including, without limitation, conditions based on one or more Performance Criteria or other specific criteria, including service to the Company or any Affiliate, in each case on a specified date or dates or over any period or periods, as the Committee determines. The Company Stock Administrator shall specify, or permit the Holder to elect, the conditions and dates upon which the Shares underlying the Restricted Stock Units that shall be issued, if applicable, subject to the requirements of Section 409A of the Code. Restricted Stock Units may be paid in cash, Shares, or both, as determined by the Committee. On the distribution dates, the Company shall issue to the Holder one unrestricted, fully transferable Share (or the Fair Market Value of one such Share in cash) for each vested and nonforfeitable Restricted Stock Unit.

9.4Term. The term of a Performance Award, Stock Payment award and/or Restricted Stock Unit award shall be set by the Committee in its sole discretion.

9.5Exercise or Purchase Price. The Committee may establish an exercise or purchase price for a Performance Award, Shares distributed as a part of a Stock Payment or Shares distributed pursuant to a Restricted Stock Unit Award.

9.6Dividend Equivalents. Dividend equivalents may be granted by the Committee based on dividends declared on the Common Stock, to be credited as of dividend payment dates during the period between the date an Award is granted and the date such Award vests, is

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exercised, is distributed or expires, as determined by the Committee.  Such dividend equivalents shall be converted to cash or additional shares of Common Stock by such formula and at such time and subject to such limitations as may be determined by the Committee.

ARTICLE 10.

AWARD OF STOCK APPRECIATION RIGHTS

10.1Grant of Stock Appreciation Rights.

(a)The Committee is authorized to grant Stock Appreciation Rights to Eligible Individuals on such terms and conditions as it may determine that are not inconsistent with the Plan; provided, however, that no Stock Appreciation Right shall be granted to any Employee or Consultant of an Affiliate unless the Company is an “eligible issuer of service recipient stock” with respect to such person within the meaning of Section 409A of the Code.

(b)A Stock Appreciation Right shall entitle the Holder (or other person entitled to exercise the Stock Appreciation Right) to exercise all or a specified portion of the Stock Appreciation Right (to the extent then exercisable pursuant to its terms) and to receive from the Company an amount determined by multiplying the difference obtained by subtracting the exercise price of the Stock Appreciation Right from the Fair Market Value of a Share on the date of exercise of the Stock Appreciation Right, and multiplying the difference, if positive, by the number of Shares with respect to which the Stock Appreciation Right shall have been exercised, subject to any limitations the Committee may impose. Except as described in Section 10.1(c) below, the exercise price of each Stock Appreciation Right shall be set by the Committee, but shall not be less than 100% of the Fair Market Value of a Share on the date the Stock Appreciation Right is granted (or on the date the Stock Appreciation Right is modified, extended or renewed for purposes of Section 409A of the Code).

(c)Notwithstanding the foregoing provisions of Section 10.1(b) to the contrary, in the case of a Stock Appreciation Right that is a Substitute Award, the exercise price of such Stock Appreciation Right may be less than 100% of the Fair Market Value of a Share on the date of grant; provided, that the excess of: (a) the aggregate Fair Market Value (as of the date such Substitute Award is granted) of the Shares subject to the Substitute Award, over (b) the aggregate exercise price thereof does not exceed the excess of: (x) the aggregate fair market value (as of the time immediately preceding the transaction giving rise to the Substitute Award, such fair market value to be determined by the Committee) of the shares of the predecessor entity that were subject to the grant assumed or substituted for by the Company, over (y) the aggregate exercise price of such shares, and that the grant of the Substitute Award otherwise satisfies the requirements of Section 1.409A-1(b)(5)(v)(D) of the Treasury Regulations.

10.2Stock Appreciation Right Term. The term of each Stock Appreciation Right shall be set by the Committee in its sole discretion; provided, however, that the term shall not be more than ten (10) years from the date the Stock Appreciation Right is granted. The Committee shall determine the time period, including the time period following a Termination of Service, during

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which the Holder has the right to exercise a vested Stock Appreciation Right, which time period may not extend beyond the term of the Stock Appreciation Right.

10.3Stock Appreciation Right Vesting. The Committee shall determine the period of time and other conditions that must be satisfied before the Holder’s right to exercise a Stock Appreciation Right, in whole or in part, shall vest. Such vesting may be based on service with the Company or an Affiliate, any of the Performance Criteria, or any other criterion or condition determined by the Committee. No portion of a Stock Appreciation Right that cannot be exercised at the Holder’s Termination of Service shall thereafter become exercisable.

10.4Manner of Exercise. All or a portion of an exercisable Stock Appreciation Right shall be deemed exercised upon delivery of all of the following to the Company Stock Administrator, or such other person or entity designated by the Committee, or his, her or its office, as applicable:

(a)A written or electronic notice complying with the applicable rules established by the Company Stock Administrator stating that the Stock Appreciation Right, or a portion thereof, is exercised. The notice must be signed in writing or electronically by the Holder or other person then entitled to exercise the Stock Appreciation Right or such portion of the Stock Appreciation Right;

(b)Such representations and documents as the Company Stock Administrator, in its sole discretion, deems necessary or advisable to effect compliance with applicable laws and regulations. The Company Stock Administrator may, in its sole discretion, also take whatever additional actions it deems appropriate to effect such compliance; and

(c)In the event that the Stock Appreciation Right shall be exercised pursuant to this Section 10.4 by any person or persons other than the Holder, appropriate proof of the right of such person or persons to exercise the Stock Appreciation Right.

10.5Payment. Payment of the amounts payable with respect to Stock Appreciation Rights pursuant to this Article 10 shall be in cash, Shares (based on their Fair Market Value as of the date the Stock Appreciation Right is exercised), or a combination of both, as determined by the Committee, less the applicable withholding taxes.

ARTICLE 11.

ADDITIONAL TERMS OF AWARDS

11.1Payment. The Committee shall determine the methods by which payments by any Holder with respect to any Awards granted under the Plan shall be made, including, without limitation: (a) cash or check, (b) Shares (including, in the case of payment of the exercise price of an Award, Shares issuable pursuant to the exercise of the Award) or Shares not subject to any pledge or security interest and held for such period of time as may be required by the Committee, in each case, having a Fair Market Value on the date of delivery equal to the aggregate payments required, (c) delivery of a written or electronic notice that the Holder has placed a market sell order with a broker with respect to Shares then issuable upon exercise or vesting of an Award,

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and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the aggregate payments required; provided, that payment of such proceeds is then made to the Company upon settlement of such sale, or (d) other property or legal consideration acceptable to the Committee. The Committee shall also determine the methods by which Shares shall be delivered or deemed to be delivered to Holders. Notwithstanding any other provision of the Plan to the contrary, no Holder who is a Director or an “executive officer” of the Company within the meaning of Section 13(k) of the Exchange Act shall be permitted to make payment with respect to any Awards granted under the Plan, or continue any extension of credit with respect to such payment, with a loan from the Company or a loan arranged by the Company to the extent it would violate Section 13(k) of the Exchange Act.

11.2Tax Withholding. The Company and any Affiliate shall have the authority and the right to deduct or withhold, or require a Holder to remit to the Company, an amount sufficient to satisfy federal, state, local and foreign taxes (including the Holder’s FICA or employment tax obligation) required by law to be withheld with respect to any taxable event concerning a Holder arising as a result of the Plan. The Committee may, in its sole discretion and in satisfaction of the foregoing requirement, allow a Holder to elect to have the Company withhold Shares otherwise issuable under an Award (or allow the surrender of Shares). The number of Shares which may be so withheld or surrendered shall be limited to the number of Shares which have a Fair Market Value on the date of withholding or repurchase equal to the aggregate amount of such liabilities not to exceed the minimum statutory withholding rates for federal, state, local and foreign income tax and payroll tax purposes that are applicable to such supplemental taxable income. The Company Stock Administrator shall determine the Fair Market Value of the Shares, consistent with applicable provisions of the Code, for tax withholding obligations due in connection with a broker-assisted cashless Option exercise or a Stock Appreciation Right exercise involving the sale of Shares to pay the Option or Stock Appreciation Right exercise price or any tax withholding obligation.

11.3Transferability of Awards.

(d)Except as otherwise provided in Section 11.3(b):

(i)No Award under the Plan may be sold, pledged, assigned or transferred in any manner other than to a Permitted Transferee by will or the laws of descent and distribution or, subject to the consent of the Committee, pursuant to a QDRO, unless and until and to the extent such Award has been exercised, or the Shares underlying such Award have been issued, and all restrictions applicable to such Shares have lapsed;

(ii)No Award or interest or right therein shall be liable for the debts, contracts or engagements of the Holder or the Holder’s successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, hypothecation, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted imposition of liability thereon or disposition thereof shall be null and void and of no effect, except to the extent that such disposition is permitted hereunder; and

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(iii)During the lifetime of the Holder, only the Holder (or the personal representative of an incompetent Holder) may exercise an Award (or any portion thereof) granted to such Holder under the Plan, unless it has been disposed of pursuant to a QDRO, in which case the beneficiary of the QDRO may exercise the Award; after the death of the Holder, any exercisable portion of an Award may be exercised by a Permitted Transferee, but only prior to the time when such portion expires or becomes unexercisable under the Plan or the applicable Program or Award Agreement.

(e)Notwithstanding Section 11.3(a), the Committee, in its sole discretion and subject to such terms and conditions as it may impose, may permit a Holder to transfer an Award other than an Incentive Stock Option to any one or more Permitted Transferees, subject to any state, federal, local or foreign tax and securities laws applicable to transferable Awards.

(f)A Holder may, in the manner determined by the Committee, designate a Permitted Transferee to exercise the rights of the Holder as his or her beneficiary and to receive any distribution with respect to any Award upon the Holder’s death. Such person shall be subject to all terms and conditions of the Plan and any Program or Award Agreement applicable to the Holder, except to the extent the Plan, the Program, the Award Agreement or applicable law otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Committee. If the Holder is married and resides in a community property state, a designation of a person other than the Holder’s spouse as his or her beneficiary with respect to more than 50% of the Holder’s interest in the Award shall not be effective without the prior written or electronic consent of the Holder’s spouse. Subject to the foregoing, a beneficiary designation may be changed or revoked by a Holder at any time provided the change or revocation is filed with the Committee prior to the Holder’s death. If no beneficiary has been designated in this manner or the beneficiary does not survive the Holder, the rights of the Holder shall be exercisable by the Holder’s executor or administrator.

11.4Conditions to Issuance of Shares.

(a)Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any certificates or make any book entries evidencing Shares pursuant to the exercise or vesting of any Award, unless and until the Board or the Committee has determined, with advice of counsel, that the issuance of such Shares is in compliance with all applicable laws and regulations and, if applicable, the requirements of any Securities Exchange, and the Shares are covered by an effective registration statement or applicable exemption from registration. In addition to the terms and conditions provided herein, the Board or the Committee may require that a Holder make such reasonable covenants, agreements, and representations as the Board or the Committee, in its discretion, deems advisable in order to comply with any such laws, regulations, or requirements.

(b)All certificates evidencing Shares delivered pursuant to the Plan and all Shares issued pursuant to book entry procedures are subject to any stop-transfer orders and other restrictions as the Committee or the Company Stock Administrator deems necessary or advisable to comply with applicable laws and regulations and the rules of any Securities Exchange.

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(c)The Company Stock Administrator shall have the right to require any Holder to comply with any timing or other restrictions with respect to the settlement, vesting, distribution or exercise of any Award, including a window-period limitation, as may be imposed in the sole discretion of the Company Stock Administrator, or because of any other requirement arising from compliance with any applicable laws or regulations, as determined by the Company Stock Administrator, in its sole discretion.

(d)No fractional Shares shall be issued and the Company Stock Administrator shall determine, in its sole discretion, whether cash shall be given in lieu of fractional Shares or whether such fractional Shares shall be eliminated by rounding.

(e)Notwithstanding any other provision of the Plan, unless otherwise determined by the Company Stock Administrator or required by any applicable laws or regulations, the Company shall not deliver to any Holder certificates evidencing Shares issued in connection with any Award and instead such Shares shall be recorded in the books of the Company (or, as applicable, its transfer agent or the Company Stock Administrator).

11.5Forfeiture Provisions. Pursuant to its general authority to determine the terms and conditions applicable to Awards under the Plan, the Committee shall have the right to provide, in the terms or conditions of Programs or Awards made under the Plan or in any policy with respect to the recovery or recoupment of compensation or benefits in the event of financial restatements or the occurrence of other events that are inconsistent with the payment of compensation, as determined by the Committee, or to require a Holder to agree by separate written or electronic instrument, that: (a)(i) any proceeds, gains or other economic benefit actually or constructively received by the Holder upon any receipt or exercise of the Award, or upon the receipt or resale of any Shares underlying the Award, must be paid to the Company, and (ii) the Award shall terminate and any unexercised portion of the Award (whether or not vested) shall be forfeited, if (b)(i) a Termination of Service occurs prior to a specified date, or within a specified time period following receipt or exercise of the Award, (ii) the Holder at any time, or during a specified time period, engages in any activity in competition with the Company, or which is inimical, contrary or harmful to the interests of the Company, as further defined by the Committee, (iii) the Holder incurs a Termination of Service for “cause” (as such term is defined in the sole discretion of the Committee, or as set forth in a written agreement relating to such Award between the Company and the Holder) or (iv) the Company’s financial results are restated and such proceeds, gains or other economic benefit actually or constructively received by the Holder would have been lower had they been calculated based on such restated results.

11.6Prohibition on Repricing. Except as provided in Section 13.2, the Committee shall not, without the approval of the stockholders of the Company, (i) authorize the amendment of any outstanding Option or Stock Appreciation Right to reduce its exercise price, except with respect to any Substitute Award, or (ii) cancel any outstanding Option or Stock Appreciation Right in exchange for cash or another Award that has a lower exercise price or that provides additional value to the Holder, except with respect to any Substitute Award.

11.7Permitted Replacement Awards. The Committee shall have the authority, without the approval of the stockholders of the Company, to amend any outstanding Award (or any award granted under another Company plan, subject to the terms of such other plan) to increase

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the exercise price or to cancel and replace an Award (or any award granted under another Company plan, subject to the terms of such other plan) with the grant of an Award having an exercise price that is greater than or equal to the original price per share and/or having vesting schedule and term equal to the remaining vesting schedule and term of the Award (or award granted under another Company plan) being replaced.

ARTICLE 12.

ADMINISTRATION

12.1Committee. The Committee shall administer the Plan (except as otherwise permitted herein) and shall consist solely of two or more Non-Employee Directors appointed by and holding office at the pleasure of the Board, each of whom is intended to qualify as a “non-employee director” as defined by Rule 16b-3 of the Exchange Act or any successor rule, an “outside director” for purposes of Section 162(m) of the Code and an “independent director” under the rules of any Securities Exchange; provided, that any action taken by the Committee shall be valid and effective, whether or not members of the Committee at the time of such action are later determined not to have satisfied the requirements for membership set forth in this Section 12.1 or otherwise provided in any charter of the Committee.

12.2Duties and Powers of Committee. It shall be the duty of the Committee to conduct the general administration of the Plan in accordance with its provisions, subject to the Committee’s power to delegate duties under Section 12.6. The Committee shall have the power to interpret the Plan, the Program and any Award Agreement, and to adopt such rules for the administration, interpretation and application of the Plan as are not inconsistent therewith, to interpret, amend or revoke any such rules and to amend any Program or Award Agreement in any manner not inconsistent with the Plan; provided that the rights of the Holder of an Award that is the subject of any such Program or Award Agreement are not affected adversely by such amendment, unless the consent of the Holder is obtained or such amendment is otherwise permitted under Section 13.9. Any such Award under the Plan need not be the same with respect to each Holder. Any such interpretations and rules with respect to Incentive Stock Options shall be consistent with the provisions of Section 422 of the Code. In its sole discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Committee under the Plan except with respect to matters which under Rule 16b-3 under the Exchange Act, Section 162(m) of the Code or the rules of any Securities Exchange require otherwise.

12.3Action by the Committee. Unless otherwise established by the Board or in any charter of the Committee, a majority of the Committee shall constitute a quorum and the acts of a majority of the members present at any meeting at which a quorum is present, and acts approved in writing by all members of the Committee in lieu of a meeting, shall be deemed the acts of the Committee for purposes of the Plan. Each member of the Committee is entitled to, in good faith, rely or act upon any report or other information furnished to that member by any officer or other employee of the Company or any Affiliate, the Company’s independent certified public accountants, or any compensation consultant, attorney or other professional retained by the Company to assist in the administration of the Plan.

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12.4Authority of Committee. Subject to any specific designation in the Plan or any applicable Program, the Committee has the exclusive power, authority and sole discretion to:

(a)Designate Eligible Individuals to receive Awards;

(b)Determine the type or types of Awards to be granted to each Eligible Individual;

(c)Determine the number of Awards to be granted and the number of Shares to which an Award will relate;

(d)Determine the terms and conditions of any Award granted pursuant to the Plan, including, but not limited to: the exercise price, grant price, or purchase price; any Performance Criteria; any restrictions or limitations on the Award; any schedule for vesting; lapse of forfeiture restrictions or restrictions on the exercisability of an Award and accelerations or waivers thereof; and any provisions related to non-competition and recapture of gain on an Award, based in each case on such considerations as the Committee in its sole discretion determines;

(e)Determine whether, to what extent, and pursuant to what circumstances (i) an Award may be settled in, or the exercise price of an Award may be paid in cash, Shares, other Awards, or other property (subject to the requirements of Section 409A of the Code), or (ii) an Award may be canceled, forfeited, or surrendered;

(f)Prescribe the form of each Award Agreement, which need not be identical for each Holder;

(g)Decide all other matters that must be determined in connection with an Award;

(h)Establish, adopt, or revise any rules and regulations as it may deem necessary or advisable to administer the Plan;

(i)Interpret the terms of, and any matter arising pursuant to, the Plan, any Program or any Award Agreement; and

(j)Make all other decisions and determinations that may be required pursuant to the Plan or as the Committee deems necessary or advisable to administer the Plan.

12.5Decisions Binding. The Committee’s interpretation of the Plan, any Awards granted pursuant to the Plan, any Program, any Award Agreement and all decisions and determinations by the Committee with respect to the Plan are final, binding, and conclusive on all parties.

12.6Delegation of Authority. The Board or Committee may from time to time delegate (a) to a committee of one or more members of the Board the authority to grant or amend Awards and (b) to a committee of one or more members of the Board or to one or more officers of the Company the authority to take administrative actions pursuant to Article 12; provided that

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any delegation of authority shall only be permitted to the extent it is permissible under Section 162(m) of the Code, applicable securities laws, the rules of any applicable Securities Exchange and any Company policy governing the grant of equity-based awards. Any delegation hereunder shall be subject to the restrictions and limits that the Board or Committee specifies at the time of such delegation, and the Board may at any time rescind the authority so delegated or appoint a new delegate. At all times, the delegatee appointed under this Section 12.6 shall serve in such capacity at the pleasure of the Board and the Committee.

ARTICLE 13.

MISCELLANEOUS PROVISIONS

13.1Amendment, Suspension or Termination of the Plan. Except as otherwise provided in this Section 13.1, the Plan and any Award Agreement may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Board or the Committee. However, without approval of the Company’s stockholders, no action of the Committee may, except as provided in Section 13.2, (i) increase the limits imposed in Section 3.1 on the maximum number of Shares that may be issued under the Plan, (ii) take any action described in Section 11.6 above, (iii) materially modify the requirements for eligibility to participate in the Plan, (iv) materially increase the benefits accruing to participants in the Plan, or (v) take any other action that requires the approval of the Company’s stockholders under the rules of any applicable Securities Exchange. Except as provided in Section 13.9, no amendment, suspension or termination of the Plan shall, without the consent of the Holder, adversely affect the rights of the Holder under any Award theretofore granted to such Holder, unless the Award itself otherwise expressly so provides.

13.2Changes in Common Stock or Assets of the Company, Acquisition or Liquidation of the Company and Other Corporate Events.

(f)In the event of any stock dividend, stock split, combination or exchange of shares, merger, consolidation or other distribution (other than normal cash dividends) of Company assets to stockholders, or any other change affecting the Shares or the Share price other than an Equity Restructuring, the Committee shall make equitable adjustments, if any, to reflect such change with respect to (i) the aggregate number and kind of securities that may be issued under the Plan (including, but not limited to, adjustments of the limitations in Section 3.1 on the maximum number and kind of securities that may be issued under the Plan, adjustments of the Award Limit, and adjustments of the manner in which securities subject to Full Value Awards will be counted); (ii) the number and kind of securities (or other property) subject to outstanding Awards; (iii) the terms and conditions of any outstanding Awards (including, without limitation, any applicable performance targets or criteria with respect thereto); and (iv) the grant or exercise price per share for any outstanding Awards under the Plan.

(g)In the event of any transaction or event described in Section 13.2(a) or any unusual or nonrecurring transactions or events affecting the Company, any Affiliate of the Company, or the financial statements of the Company or any Affiliate, or of changes in applicable laws, regulations or accounting principles, the Committee, in its sole discretion, and on such terms and conditions as it deems appropriate, either by the terms of the Award or by action taken prior to the occurrence of such transaction or event and either automatically or upon

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the Holder’s request, is hereby authorized to take any one or more of the following actions whenever the Committee determines that such action is appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to any Award under the Plan, to facilitate such transactions or events or to give effect to such changes in laws, regulations or principles:

(i)To provide for either (A) termination of any such Award in exchange for an amount of cash, if any, equal to the amount that would have been attained upon the exercise of such Award or realization of the Holder’s rights (and, for the avoidance of doubt, if as of the date of the occurrence of the transaction or event described in this Section 13.2 the Committee determines in good faith that no amount would have been attained upon the exercise of such Award or realization of the Holder’s rights, then such Award may be terminated by the Company without payment) or (B) the replacement of such Award with other rights or property selected by the Committee in its sole discretion having an aggregate value not exceeding the amount that could have been attained upon the exercise of such Award or realization of the Holder’s rights had such Award been currently exercisable or payable or fully vested;

(ii)To provide that such Award be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar options, rights or awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices;

(iii)To make adjustments in the number and type of securities (or other property) subject to outstanding Awards, and in the number and kind of outstanding Restricted Stock and/or in the terms and conditions of (including the grant or exercise price), and the criteria included in, outstanding Awards and Awards which may be granted in the future;

(iv)To provide that such Award shall be exercisable or payable or fully vested with respect to all Shares covered thereby, notwithstanding anything to the contrary in the Plan or the applicable Program or Award Agreement; and/or

(v)To provide that the Award cannot vest, be exercised or become payable after such event.

(h)In connection with the occurrence of any Equity Restructuring, and notwithstanding anything to the contrary in Sections 13.2(a) and 13.2(b):

(i)The number and type of securities subject to each outstanding Award and the exercise price or grant price thereof, if applicable, shall be equitably adjusted; and/or

(ii)The number and kind of securities that may be issued under the Plan pursuant to new Awards shall be equitably adjusted.

(i)The Committee may, in its sole discretion, include such further provisions and limitations in any Award, Program, Award Agreement or certificate or book-entry

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evidencing Shares, as it may deem equitable and in the best interests of the Company that are not inconsistent with the provisions of the Plan.

(j)No adjustment or action described in this Section 13.2 or in any other provision of the Plan, any applicable Program or the Award Agreement shall be authorized to the extent that such adjustment or action would cause such Award to violate the requirements of Section 409A of the Code. With respect to any Award which is granted to a Covered Employee and is intended to qualify as Performance-Based Compensation, no adjustment or action described in this Section 13.2 or in any other provision of the Plan, any applicable Program or the Award Agreement shall be authorized to the extent that such adjustment or action would cause such Award to fail to so qualify as Performance-Based Compensation, unless the Committee determines that the Award should not so qualify. No adjustment or action described in this Section 13.2 or in any other provision of the Plan shall be authorized to the extent that such adjustment or action would cause the Plan to violate Section 422(b)(1) of the Code, unless the Committee determines that Options granted under the Plan are not to qualify as “incentive stock options”. Furthermore, no such adjustment or action shall be authorized to the extent such adjustment or action could result in short-swing profits liability under Section 16 or violate the exemptive conditions of Rule 16b-3 unless the Committee determines that the Award is not to comply with such exemptive conditions.

(k)The existence of the Plan, any Program, any Award Agreement and any Awards granted hereunder shall not affect or restrict in any way the right or power of the Company or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of stock or of options, warrants or rights to purchase stock or of bonds, debentures, preferred or prior preference stocks whose rights are superior to or affect the Common Stock or the rights thereof or which are convertible into or exchangeable for Common Stock, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.

(l)In the event of any pending stock dividend, stock split, combination or exchange of shares, merger, consolidation or other distribution (other than normal cash dividends) of Company assets to stockholders, or any other change affecting the Shares or the Share price, including any Equity Restructuring, for reasons of administrative convenience, the Company in its sole discretion may refuse to permit the exercise of any Award during a period of thirty (30) days prior to the consummation of any such transaction.

(m)Without limiting the generality of the foregoing, the vesting of an Award will not automatically accelerate upon the occurrence of a Change of Ownership; provided, however, the Committee may determine that upon the occurrence of a Change of Ownership, (i) the acquirer or surviving entity shall be required to assume an Award or substitute a comparable award with respect to the equity of the acquirer or surviving entity, (ii) the vesting of all or any portion of the Award will accelerate to the time immediately prior to the consummation of the Change of Ownership, or, in the case of an Option or Stock Appreciation Right, all or any portion of the Award shall become immediately exercisable so that the Holder will have the opportunity to exercise the Award (or portion thereof) immediately prior to consummation of the

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Change of Ownership, and/or (iii) all or any portion of the Award, including any unvested portion should the Committee so determine, shall be purchased for (x) in the case of an Option or Stock Appreciation Right, cash in an amount equal to the excess of the aggregate Fair Market Value of the Shares subject to the Award to be purchased over the aggregate exercise price for such Shares, net of tax withholding, and (y) in the case of any other Award, such consideration as the Committee may in good faith determine to be equitable under the circumstances; provided, further, that any determination of the Committee in this regard shall comply with Sections 409A and 424 of the Code.

13.3No Stockholder Rights. Except as otherwise provided herein, a Holder shall have none of the rights of a stockholder with respect to Shares subject to any Award until the Holder becomes the record owner of such Shares.

13.4Paperless Administration. In the event that the Company Stock Administrator establishes, for the Company or using the services of a third party, an automated system for the documentation, granting or exercise of Awards, such as a system using an internet website or interactive voice response, then the paperless documentation, granting or exercise of Awards by a Holder may be permitted through the use of such an automated system.

13.5Effect of Plan upon Other Compensation Plans. The adoption of the Plan shall not affect any other compensation or incentive plans in effect for the Company or any Affiliate, except as described in Section 3.1(a) above with respect to the Company’s 2010 Equity Incentive Plan. Nothing in the Plan shall be construed to limit the right of the Company or any Affiliate: (a) to establish any other forms of incentives or compensation for Employees, Directors or Consultants of the Company or any Affiliate, or (b) to grant or assume options or other rights or awards otherwise than under the Plan in connection with any proper corporate purpose including without limitation, the grant or assumption of options in connection with the acquisition by purchase, lease, merger, consolidation or otherwise, of the business, stock or assets of any corporation, partnership, limited liability company, firm or association.

13.6Compliance with Laws. The Plan, the granting and vesting of Awards under the Plan and the issuance and delivery of Shares and the payment of money under the Plan or under Awards granted or awarded under the Plan are subject to compliance with all applicable laws and regulations, the rules of any Securities Exchange, and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith. Any securities delivered under the Plan shall be subject to such restrictions, and the person acquiring such securities shall, if requested by the Company, provide such assurances and representations to the Company as the Company may deem necessary or desirable to assure compliance with all applicable legal requirements. To the extent permitted by applicable law, the Plan, any Program and any Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

13.7Titles and Headings, References to Sections of the Code, the Securities Act or Exchange Act. The titles and headings of the Sections in the Plan are for convenience of reference only and, in the event of any conflict, the text of the Plan, rather than such titles or

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headings, shall control. References to sections of the Code, the Securities Act or the Exchange Act shall include any amendment or successor thereto.

13.8Governing Law. The Plan, any Program and any agreements hereunder shall be administered, interpreted and enforced under the internal laws of the State of Delaware without regard to conflicts of laws thereof.

13.9Section 409A.

(a)To the extent that the Committee determines that any Award granted under the Plan is subject to Section 409A of the Code, the Program pursuant to which such Award is granted and the Award Agreement evidencing such Award shall incorporate the terms and conditions required by Section 409A of the Code. To the extent applicable, the Plan, the Program and any Award Agreements shall be interpreted in accordance with Section 409A of the Code. Notwithstanding any provision of the Plan or the applicable Program or Award Agreement to the contrary, in the event that following the Effective Date the Committee determines that any Award may be subject to Section 409A of the Code, the Committee may adopt such amendments to the Plan and the applicable Program and Award Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Administrator determines are necessary or appropriate to (i) exempt the Award from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (ii) comply with the requirements of Section 409A of the Code and related Department of Treasury guidance and thereby avoid the application of any penalty taxes under such Section.

(b)If, at the time of a Holder’s “separation from service” (within the meaning of Section 409A of the Code), (i) such Holder is a “specified employee” (within the meaning of Section 409A of the Code as determined annually by the Committee in accordance with the methodology specified by resolution of the Board or the Committee and in accordance with Section 1.409A-1(i) of the Treasury Regulations) and (ii) the Committee shall make a good-faith determination that an amount payable pursuant to an Option or Award constitutes “deferred compensation” (within the meaning of Section 409A of the Code) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A of the Code in order to preserve the tax treatment intended for such payment or to avoid additional tax, interest, or penalties under Section 409A of the Code, then the Company shall not pay such amount on the otherwise scheduled payment date but shall instead pay it on the first business day after such six-month period. Such amount shall be paid without interest, unless otherwise determined by the Committee, in its sole discretion, or as otherwise provided in any applicable agreement between the Company and the relevant Holder.

(c)The Holder shall be solely responsible and liable for the satisfaction of all taxes, interest, and penalties that may be imposed on such Holder or for such Holder’s account in connection with any Award (including any taxes, interest, and penalties under Section 409A of the Code), and neither the Company nor its Affiliates shall have any obligation to reimburse, indemnify or otherwise hold such Holder harmless from any or all of such taxes, interest, or penalties.

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13.10No Rights to Awards. No Eligible Individual or other person shall have any claim to be granted any Award pursuant to the Plan, and neither the Company nor the Committee is obligated to treat Eligible Individuals, Holders or any other persons uniformly.

13.11Unfunded Status of Awards. The Plan is intended to be an “unfunded” plan for incentive compensation. With respect to any payments not yet made to a Holder pursuant to an Award, nothing contained in the Plan or any Program or Award Agreement shall give the Holder any rights that are greater than those of a general creditor of the Company or any Affiliate.

13.12Indemnification. To the extent allowable pursuant to applicable law, each member of the Committee or of the Board shall be indemnified and held harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such member in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action or failure to act pursuant to the Plan and against and from any and all amounts paid by him or her in satisfaction of judgment in such action, suit, or proceeding against him or her. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled pursuant to the Company’s Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

13.13Term. The ability to grant new awards under this Plan shall terminate on the tenth (10^th) anniversary of the Effective Date.

# # #

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EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jeffrey T. Mezger, certify that: 

1. I have reviewed this quarterly report on Form 10-Q of KB Home;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated	April 4, 2014	/s/ JEFFREY T. MEZGER
		Jeffrey T. Mezger
		President and Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jeff J. Kaminski, certify that:

1. I have reviewed this quarterly report on Form 10-Q of KB Home;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. 

Dated	April 4, 2014	/s/ JEFF J. KAMINSKI
		Jeff J. Kaminski
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of KB Home (the "Company") on Form 10-Q for the period ended February 28, 2014 (the “Report”), I, Jeffrey T. Mezger, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated	April 4, 2014	/s/ JEFFREY T. MEZGER
		Jeffrey T. Mezger
		President and Chief Executive Officer
		(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of KB Home (the "Company") on Form 10-Q for the period ended February 28, 2014 (the “Report”), I, Jeff J. Kaminski, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated	April 4, 2014	/s/ JEFF J. KAMINSKI
		Jeff J. Kaminski
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

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Supplemental Disclosure to Consolidated Statements of Cash Flows (Tables)

3 Months Ended

Feb. 28, 2014

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):

	Three Months Ended February 28,
	2014			2013
Summary of cash and cash equivalents at end of period:
Homebuilding	$	303,269		$	624,044
Financial services	3,181			1,514
Total	$	306,450		$	625,558
Supplemental disclosures of cash flow information:
Interest paid, net of amounts capitalized	$	(8,133	)	$	5,872
Income taxes paid	103			120
Income taxes refunded	20			58
Supplemental disclosures of noncash activities:
Increase in consolidated inventories not owned	$	917		$	4,842
Increase in inventories due to distribution of land from unconsolidated joint venture	70,642			—
Increase in inventories and inventory-related obligations associated with TIFE tied to distribution of land from unconsolidated joint venture	33,197			—
Cost of inventories acquired through seller financing	27,010			27,600

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Investments in Unconsolidated Joint Ventures (Information for Investments in Unconsolidated Joint Ventures) (Details) (USD $)	3 Months Ended
	Feb. 28, 2014 lot joint_venture	Feb. 28, 2013	Nov. 30, 2013 lot joint_venture
Schedule of Equity Method Investments [Line Items]
Increase in Inventories Due to Distribution of Land From Equity Method Investees		$ 0
Proceeds from Equity Method Investment, Dividends or Distributions	0	1,438,000
Proceeds from Sale of Equity Method Investments	10,110,000	0
Number of investments in unconsolidated joint ventures	7		9
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures	60,648,000		130,192,000
Number of Unconsolidated Joint Venture Lots Controlled Under Land Option Contracts	673		5,367
Inspirada Builders LLC [Member]
Schedule of Equity Method Investments [Line Items]
Increase in Inventories Due to Distribution of Land From Equity Method Investees	70,642,000
Tax Increment Financing Entities (TIFE)	33,197,000	0
Crown Farm Investor, LLC [Domain]
Schedule of Equity Method Investments [Line Items]
Proceeds from Sale of Equity Method Investments	10,110,000
Equity Method Investment, Realized Gain (Loss) on Disposal	$ 3,200,000
Investments in Unconsolidated Joint Ventures with Debt
Schedule of Equity Method Investments [Line Items]
Number of investments in unconsolidated joint ventures	0		0

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Inventories (Schedule of Inventories) (Details) (USD $) In Thousands, unless otherwise specified	Feb. 28, 2014	Nov. 30, 2013
Inventories
Homes under construction	$ 633,396	$ 586,439
Land under development	1,363,340	1,066,916
Land held for future development	638,208	645,222
Total	2,634,944	2,298,577
West Coast [Member]
Inventories
Homes under construction	321,787	275,516
Land under development	659,753	560,032
Land held for future development	306,902	308,636
Southwest [Member]
Inventories
Homes under construction	34,278	39,661
Land under development	237,788	106,654
Land held for future development	147,865	157,924
Central [Member]
Inventories
Homes under construction	173,194	157,572
Land under development	285,407	238,311
Land held for future development	23,746	15,193
Southeast [Member]
Inventories
Homes under construction	104,137	113,690
Land under development	180,392	161,919
Land held for future development	$ 159,695	$ 163,469

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Supplemental Disclosure to Consolidated Statements of Cash Flows (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Feb. 28, 2014	Feb. 28, 2013	Nov. 30, 2013
Summary of cash and cash equivalents at end of period:
Cash and cash equivalents	$ 306,450	$ 625,558	$ 532,523
Supplemental disclosures of cash flow information:
Interest capitalized, net of amounts paid	(8,133)
Interest paid, net of amounts capitalized		5,872
Income taxes paid	103	120
Income taxes refunded	20	58
Supplemental disclosures of noncash activities:
Increase (decrease) in consolidated inventories not owned	917	4,842
Increase in inventories due to distribution of land from unconsolidated joint venture		0
Cost of inventories acquired through seller financing	27,010	27,600
Homebuilding
Summary of cash and cash equivalents at end of period:
Cash and cash equivalents	303,269	624,044	530,095
Financial Services
Summary of cash and cash equivalents at end of period:
Cash and cash equivalents	3,181	1,514	2,428
Inspirada Builders LLC [Member]
Supplemental disclosures of noncash activities:
Increase in inventories due to distribution of land from unconsolidated joint venture	70,642
Tax Increment Financing Entities (TIFE)	$ 33,197	$ 0

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Other Assets (Details) (USD $) In Thousands, unless otherwise specified	Feb. 28, 2014	Nov. 30, 2013
Other Assets [Abstract]
Cash surrender value of insurance contracts	$ 69,443	$ 68,534
Debt issuance costs	26,103	27,366
Property and equipment, net	9,571	8,460
Prepaid expenses	5,370	2,716
Total	$ 110,487	$ 107,076

XML

Earnings (Loss) Per Share (Details) (USD $)	3 Months Ended		0 Months Ended
	Feb. 28, 2014	Jan. 29, 2013 Convertible Senior Notes Due Two Thousand Nineteen At One Point Three Seven Five Percent [Member] [Member]	Jan. 29, 2013 Convertible Notes Payable [Member] Convertible Senior Notes Due Two Thousand Nineteen At One Point Three Seven Five Percent [Member] [Member]	Jan. 29, 2013 Convertible Notes Payable [Member] Convertible Senior Notes Due Two Thousand Nineteen At One Point Three Seven Five Percent [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount			$ 230,000,000
Debt Instrument, Interest Rate, Stated Percentage		1.375%	1.375%	1.375%
Debt Conversion, Converted Instrument, Shares Issued			36.5297
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	5,200,000

XML

Accrued Expenses and Other Liabilities (Tables)

3 Months Ended

Feb. 28, 2014

Payables and Accruals [Abstract]

Schedule of Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following (in thousands):

	February 28, 2014		November 30, 2013
Self-insurance and other litigation liabilities	$	94,939	$	99,612
Employee compensation and related benefits	87,519		99,332
Accrued interest payable	64,971		45,562
Inventory-related obligations (a)	62,748		29,517
Warranty liability	43,419		48,704
Real estate and business taxes	6,106		8,131
Other	26,383		25,318
Total	$	386,085	$	356,176

(a) The increase in inventory-related obligations at February 28, 2014, compared to November 30, 2013, reflected a $33.2 million liability we recorded for fixed or determinable amounts associated with tax increment financing entities (“TIFE”) in connection with the distribution of land we received from Inspirada during the three months ended February 28, 2014. As homes are delivered, the obligation to pay the remaining TIFE assessments associated with each underlying lot is transferred to the homebuyer. As such, these assessment obligations will be paid by us only to the extent we do not deliver homes to homebuyers on the applicable lots before the related TIFE obligations mature.

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Supplemental Guarantor Information (Condensed Consolidated Balance Sheets) (Details) (USD $) In Thousands, unless otherwise specified	Feb. 28, 2014	Nov. 30, 2013	Feb. 28, 2013	Nov. 30, 2012
Assets
Cash and Cash Equivalents, at Carrying Value	$ 306,450	$ 532,523	$ 625,558	$ 525,688
Restricted cash	42,083	41,906
Receivables	87,355	75,749
Inventory, Operative Builders	2,634,944	2,298,577
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures	60,648	130,192
Other assets	110,487	107,076
Intercompany Receivables	0	0
Investments in and Advances to Affiliates, Amount of Equity	0	0
Total assets	3,248,172	3,193,635
Liabilities and stockholders' equity
Accounts payable, accrued expenses and other liabilities	524,298	504,458
Mortgages and notes payable	2,175,190	2,150,498
Financial services	2,350	2,593
Intercompany	0	0
Stockholders' equity	546,334	536,086	473,135	376,806
Total liabilities and stockholders’ equity	3,248,172	3,193,635
KB Home Corporate
Assets
Cash and Cash Equivalents, at Carrying Value	234,234	476,847	554,547	457,007
Restricted cash	42,083	41,906
Receivables	1,446	1,472
Inventory, Operative Builders	0	0
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures	0	0
Other assets	97,477	97,647
Intercompany Receivables	2,397,174
Investments in and Advances to Affiliates, Amount of Equity	42,004	39,955
Total assets	2,814,418	2,787,556
Liabilities and stockholders' equity
Accounts payable, accrued expenses and other liabilities	134,679	117,875
Mortgages and notes payable	2,112,110	2,111,773
Financial services	0	0
Intercompany	21,295	21,822
Stockholders' equity	546,334	536,086
Total liabilities and stockholders’ equity	2,814,418	2,787,556
Guarantor Subsidiaries
Assets
Cash and Cash Equivalents, at Carrying Value	61,043	41,316	60,547	54,205
Restricted cash	0	0
Receivables	85,659	74,186
Inventory, Operative Builders	2,600,119	2,263,034
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures	60,648	130,192
Other assets	11,574	9,072
Intercompany Receivables	0
Investments in and Advances to Affiliates, Amount of Equity	0	0
Total assets	2,819,043	2,517,800
Liabilities and stockholders' equity
Accounts payable, accrued expenses and other liabilities	295,212	292,220
Mortgages and notes payable	63,080	38,725
Financial services	0	0
Intercompany	2,455,743	2,186,855
Stockholders' equity	5,008	0
Total liabilities and stockholders’ equity	2,819,043	2,517,800
Non-Guarantor Subsidiaries
Assets
Cash and Cash Equivalents, at Carrying Value	11,173	14,360	10,464	14,476
Restricted cash	0	0
Receivables	250	91
Inventory, Operative Builders	34,825	35,543
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures	0	0
Other assets	1,436	357
Investments in and Advances to Affiliates, Amount of Equity	0	0
Total assets	166,948	175,792
Liabilities and stockholders' equity
Accounts payable, accrued expenses and other liabilities	94,407	94,363
Mortgages and notes payable	0	0
Financial services	2,350	2,593
Intercompany	33,195	38,881
Stockholders' equity	36,996	39,955
Total liabilities and stockholders’ equity	166,948	175,792
Consolidating Adjustments
Assets
Cash and Cash Equivalents, at Carrying Value	0	0	0	0
Restricted cash	0	0
Receivables	0	0
Inventory, Operative Builders	0	0
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures	0	0
Other assets	0	0
Intercompany Receivables	(2,510,233)
Investments in and Advances to Affiliates, Amount of Equity	(42,004)	(39,955)
Total assets	(2,552,237)	(2,287,513)
Liabilities and stockholders' equity
Accounts payable, accrued expenses and other liabilities	0	0
Mortgages and notes payable	0	0
Financial services	0	0
Intercompany	(2,510,233)	(2,247,558)
Stockholders' equity	(42,004)	(39,955)
Total liabilities and stockholders’ equity	(2,552,237)	(2,287,513)
Homebuilding [Member]
Assets
Cash and Cash Equivalents, at Carrying Value	303,269	530,095	624,044
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures	60,648	130,192
Total assets	3,238,786	3,183,595
Liabilities and stockholders' equity
Total Liabilities Homebuilding	2,699,488	2,654,956
Homebuilding [Member] | KB Home Corporate
Assets
Cash and Cash Equivalents, at Carrying Value	234,234	476,847
Total assets	375,240	617,872
Liabilities and stockholders' equity
Total Liabilities Homebuilding	2,246,789	2,229,648
Homebuilding [Member] | Guarantor Subsidiaries
Assets
Cash and Cash Equivalents, at Carrying Value	61,043	41,316
Total assets	2,819,043	2,517,800
Liabilities and stockholders' equity
Total Liabilities Homebuilding	358,292	330,945
Homebuilding [Member] | Non-Guarantor Subsidiaries
Assets
Cash and Cash Equivalents, at Carrying Value	7,992	11,932
Total assets	44,503	47,923
Liabilities and stockholders' equity
Total Liabilities Homebuilding	94,407	94,363
Homebuilding [Member] | Consolidating Adjustments
Assets
Cash and Cash Equivalents, at Carrying Value	0	0
Total assets	0	0
Liabilities and stockholders' equity
Total Liabilities Homebuilding	0	0
Financial services [Member]
Assets
Cash and Cash Equivalents, at Carrying Value	3,181	2,428	1,514
Receivables	699	2,084
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures	5,484	5,490
Other assets	22	38
Total assets	9,386	10,040
Liabilities and stockholders' equity
Accounts payable, accrued expenses and other liabilities	2,350	2,593
Financial services [Member] | KB Home Corporate
Assets
Total assets	0	0
Financial services [Member] | Guarantor Subsidiaries
Assets
Total assets	0	0
Financial services [Member] | Non-Guarantor Subsidiaries
Assets
Total assets	9,386	10,040
Financial services [Member] | Consolidating Adjustments
Assets
Total assets	$ 0	$ 0

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Income Taxes (Details) (USD $)	3 Months Ended
	Feb. 28, 2014	Feb. 28, 2013	Nov. 30, 2013
Income Tax Disclosure [Abstract]
Income tax expense	$ (200,000)	$ (100,000)
Unrecognized Tax Benefits	300,000
Net Increase (reduction) in valuation allowance	(4,400,000)	(700,000)
Net deferred tax assets	0		0
Valuation allowance	855,000,000		859,400,000
Total amount of unrecognized tax benefits, including interest and penalties	300,000
Minimum [Member]
Income Tax Contingency [Line Items]
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Amount of Unrecorded Benefit	100,000
Maximum [Member]
Income Tax Contingency [Line Items]
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Amount of Unrecorded Benefit	$ 300,000

XML

Supplemental Guarantor Information (Narrative) (Details) (USD $)	3 Months Ended
	Feb. 28, 2014	Jan. 29, 2013 Convertible Notes Payable [Member] Convertible Senior Notes Due Two Thousand Nineteen At One Point Three Seven Five Percent [Member] [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount		$ 230,000,000
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%

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Basis of Presentation and Significant Accounting Policies (Policies)

3 Months Ended

Feb. 28, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Accounting Standards Codification Topic No. 260, Earnings Per Share

We compute earnings (loss) per share using the two-class method in accordance with Accounting Standards Codification Topic No. 260, “Earnings Per Share.” The two-class method 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 February 28, 2014 or 2013.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make informed estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from these 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 $124.2 million at February 28, 2014 and $436.2 million at November 30, 2013. The majority of our cash and cash equivalents were invested in money market funds and interest-bearing bank deposit accounts.

Restricted cash of $42.1 million at February 28, 2014 and $41.9 million at November 30, 2013 consisted of cash deposited with various financial institutions that was required as collateral for our cash-collateralized letter of credit facilities (“LOC Facilities”).

Presentation of Comprehensive Income

Our comprehensive income for the three months ended February 28, 2014 was $10.6 million. For the three months ended February 28, 2013, our comprehensive loss was $12.5 million. Our comprehensive income (loss) for each of the three-month periods ended February 28, 2014 and 2013 was equal to our net income (loss) for the same periods. The accumulated other comprehensive loss in our consolidated balance sheets as of February 28, 2014 and November 30, 2013 was comprised solely of adjustments recorded directly to accumulated other comprehensive loss in accordance with Accounting Standards Codification Topic No. 715, “Compensation – Retirement Benefits” (“ASC 715”). Such adjustments are made annually as of November 30, when our benefit plan obligations are remeasured. ASC 715 requires an employer to recognize the funded status of defined postretirement benefit plans as an asset or liability on the balance sheet and requires any unrecognized prior service costs and actuarial gains/losses to be recognized in accumulated other comprehensive income (loss). 

Reclassifications

Certain amounts in the consolidated financial statements of prior years have been reclassified to conform to the 2014 presentation.

Stock-Based Compensation (ASC 718)

We measure and recognize compensation expense associated with our grant of equity-based awards in accordance with Accounting Standards Codification Topic No. 718, “Compensation — Stock Compensation” (“ASC 718”). ASC 718 requires that companies measure and recognize compensation expense at an amount equal to the fair value of share-based payments granted under compensation arrangements over the vesting period.

Accounting Standards Codification Topic No.280, Segment Reporting

As of February 28, 2014, we had identified five operating reporting segments, comprised of four homebuilding reporting segments and one financial services reporting segment, within our consolidated operations in accordance with Accounting Standards Codification Topic No. 280, “Segment Reporting.” As of February 28, 2014, our homebuilding reporting segments conducted ongoing operations in the following states:

West Coast: California

Southwest: Arizona and Nevada

Central: Colorado, New Mexico and Texas

Southeast: Florida, Maryland, North Carolina and Virginia

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, move-up and active adult homebuyers.

Our homebuilding reporting segments were identified based primarily on similarities in economic and geographic characteristics, product types, regulatory environments, methods used to sell and construct homes and land acquisition characteristics. We evaluate segment performance primarily based on segment pretax results.

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 within our Central and Southeast homebuilding reporting segments. This segment also earns revenues pursuant to the terms of a marketing services agreement with Nationstar Mortgage LLC (“Nationstar”), our preferred mortgage lender that offers mortgage banking services, including residential consumer mortgage loan (“mortgage loan”) originations, to our homebuyers who elect to use the lender. Our homebuyers are under no obligation to use our preferred mortgage lender and may select any lender of their choice to obtain mortgage financing for the purchase of a home. Except as discussed below, we have had no affiliation, ownership, joint venture or other interests in or with our preferred mortgage lender or its affiliates, or with respect to the revenues or income that may have been generated from their provision of mortgage banking services to, or origination of mortgage loans for, our homebuyers.

On January 21, 2013, we entered into an agreement with Nationstar to form Home Community Mortgage, LLC (“Home Community Mortgage”), a mortgage banking company that will offer an array of mortgage banking services to our homebuyers. We have a 49.9% ownership interest and Nationstar has a 50.1% ownership interest in Home Community Mortgage, with Nationstar providing management oversight of Home Community Mortgage’s operations. Nationstar will continue as our preferred mortgage lender until Home Community Mortgage begins offering mortgage banking services. Home Community Mortgage is accounted for as an unconsolidated joint venture within our financial services reporting segment.

Corporate and other is a non-operating segment that develops and implements company-wide strategic initiatives and provides support to our homebuilding reporting segments by centralizing certain administrative functions, such as promotional marketing, legal, purchasing administration, architecture, accounting, treasury, insurance and risk management, information technology and human resources, to benefit from economies of scale. Corporate and other includes general and administrative expenses related to operating our corporate headquarters. A portion of the expenses incurred by Corporate and other is allocated to the homebuilding reporting segments.

Our segments follow the same accounting policies used for our consolidated financial statements. The results of each 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

Property, Plant and Equipment (ASC 360)

Each community or land parcel in our owned inventory is assessed to determine if indicators of potential impairment exist. Impairment indicators are assessed separately for each community or land parcel on a quarterly basis and include, but are not limited to, the following: significant decreases in net orders, average selling prices, volume of homes delivered, gross profit margins on homes delivered or projected gross profit margins on homes in backlog or future housing sales; significant increases in budgeted land development and home construction costs or cancellation rates; or projected losses on expected future land sales. If indicators of potential impairment exist for a community or land parcel, the identified asset is evaluated for recoverability in accordance with Accounting Standards Codification Topic No. 360, “Property, Plant, and Equipment” (“ASC 360”). We evaluated 11 and 20 communities or land parcels for recoverability during the three months endedFebruary 28, 2014 and 2013, respectively.

Accounting Standards Codification Topic No. 820, Fair Value Measurements and Disclosures

Accounting Standards Codification Topic No. 820, “Fair Value Measurements and Disclosures,” provides a framework for measuring the fair value of assets and liabilities under GAAP, and establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The fair value hierarchy can be summarized as follows:

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.

Accounting Standards Codification Topic No.810, 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 in accordance with Accounting Standards Codification Topic No. 810, “Consolidation” (“ASC 810”), to determine whether they are VIEs and, if so, whether we are the primary beneficiary. None of our joint ventures at February 28, 2014 and November 30, 2013 were determined under the provisions of ASC 810 to be VIEs. All of our joint ventures were unconsolidated and accounted for under the equity method because we did not have a controlling financial interest.

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. The use of such land option contracts and other similar contracts to control land generally allows us to reduce the market risks associated with direct land ownership and development, and to reduce our capital and financial commitments, including interest and other carrying costs. Under such contracts, we typically pay a specified option 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 provisions of ASC 810 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, ASC 810 requires us to consolidate a VIE if we are determined to be the primary beneficiary. In determining whether we are the primary beneficiary, we consider, among other things, whether we have the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance. Such activities would include, among other things, determining or limiting the scope or purpose of the VIE, selling or transferring property owned or controlled by the VIE, or arranging financing for the VIE. As a result of our analyses, we determined that as of February 28, 2014 and November 30, 2013 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. In accordance with ASC 810, we perform ongoing reassessments of whether we are the primary beneficiary of a VIE.

Accounting Standards Codification Topic No. 470, Debt (ASC 470)

We also evaluate our land option contracts and other similar contracts for financing arrangements in accordance with Accounting Standards Codification Topic No. 470, “Debt” (“ASC 470”), and, as a result of our evaluations, increased inventories, with a corresponding increase to accrued expenses and other liabilities, in our consolidated balance sheets by $9.8 million at February 28, 2014 and $8.9 million at November 30, 2013.

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 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, including claims where we could have liability under applicable state statutes or tort law for a defective condition in or damages to a 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, 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 could have a significant impact on our actual warranty costs in future periods and such amounts could differ from our current estimates

Accounting Standards Codification Topic No. 460, Guarantees

Guarantees. In the normal course of our business, we issue certain representations, warranties and guarantees related to our home sales and land sales that may be affected by Accounting Standards Codification Topic No. 460, “Guarantees.” Based on historical evidence, 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 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 self-insure a portion of our overall risk through the use of a captive insurance subsidiary. 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, where eligible subcontractors are enrolled as insureds on each project. Enrolled subcontractors contribute toward the cost of the insurance and agree to pay a contractual amount in the future in the event of a claim related to their work. For those enrolled subcontractors, we absorb their general liability associated with the work performed on our homes within the applicable projects as part of our overall general liability insurance and our self-insurance through our captive insurance subsidiary. We record expenses and liabilities based on the estimated costs required to cover our self-insured retention and deductible amounts under our insurance policies, and the estimated costs of potential claims and claim adjustment expenses that are above our coverage limits or that are not covered by our insurance policies. These estimated costs are based on an analysis of our historical claims and industry data, and include an estimate of claims incurred but not yet reported.

We engage a third-party actuary that uses our historical claim and expense data, as well as industry data, to estimate our liabilities related to unpaid claims, claim adjustment expenses, third-party recoveries and incurred but not yet reported claims associated with the risks that we are assuming under our self-insurance. These estimates are subject to uncertainty due to a variety of factors, the most significant being the long period of time between the delivery of a home to a homebuyer and when a structural warranty or construction defect claim is made, and the ultimate resolution of the construction defect claim. Though state regulations vary, construction defect claims are reported and resolved over a prolonged period of time, which can extend for 10 years or longer. As a result, the majority of the estimated liability relates to incurred but not yet reported claims. Because the majority of our estimated liabilities relate to incurred but not yet reported claims, 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.

Income Taxes (ASC 740)

In accordance with Accounting Standards Codification Topic No. 740, “Income Taxes” (“ASC 740”), we evaluate our deferred tax assets quarterly to determine if adjustments to the valuation allowance are required. ASC 740 requires that companies assess whether a valuation allowance should be established 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. The ultimate realization of deferred tax assets depends primarily on the generation of future taxable income.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements. In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force)” (“ASU 2013-11”), which states that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. ASU 2013-11 applies to all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. The amendments in ASU 2013-11 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Early adoption is permitted. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. We believe the adoption of this guidance will not have a material impact on our consolidated financial statements.

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Inventory Impairments and Land Option Contract Abandonments (Narratives) (Details) (USD $)	3 Months Ended		12 Months Ended
	Feb. 28, 2014 property lot	Feb. 28, 2013 property	Nov. 30, 2013 property
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Acquisition Costs Related To Land Option Contracts And Other Similar Contracts	$ 34,700,000		$ 31,000,000
Number of land parcels or communities evaluated for recoverability	11	20
Pretax, noncash inventory impairment charges	0	0	400,000
Aggregate carrying value of inventory impacted by pretax, noncash inventory impairment charges	284,500,000		293,100,000
Number of communities and various other land parcels impacted by pretax, noncash inventory impairment charges	39		42
Land Option Contract Abandonment Charges	433,000	0
Land Option Contract Abandonment Lots Associated with Projects Less Than $100,000	3,380
Land Option Contract Abandonment Lots	650
Remaining useful life in addition to specified useful lives (in years)	1 year
Specified period of remaining useful lives (in years)	10 years
Expected Realization Period of Inventory (in years)	5 years
Estimate of Fair Value, Fair Value Disclosure [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Post impairment fair value			1,100,000
Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Acquisition Costs Related To Land Option Contracts And Other Similar Contracts			$ 100,000

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Segment Information (Narratives) (Details)	3 Months Ended
	Feb. 28, 2014 segment
Schedule of Equity Method Investments [Line Items]
Number of reporting segments	5
Home Community Mortgage, LLC
Schedule of Equity Method Investments [Line Items]
Ownership interest in the venture	49.90%
Home Community Mortgage, LLC | Nationstar Mortgage, LLC
Schedule of Equity Method Investments [Line Items]
Ownership interest in the venture	50.10%
Homebuilding [Member]
Schedule of Equity Method Investments [Line Items]
Number of reporting segments	4
Financial services [Member]
Schedule of Equity Method Investments [Line Items]
Number of reporting segments	1

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Subsequent Event (Details) (USD $)	0 Months Ended
	Jan. 29, 2013	Apr. 04, 2014 Subsequent Event [Member]	Mar. 25, 2014 Subsequent Event [Member]	Mar. 25, 2014 Subsequent Event [Member] Senior Notes [Member] Senior Notes Due Two Thousand Nineteen at Four Point Seven Five Percent [Member]
Subsequent Event [Line Items]
Debt Instrument, Interest Rate, Stated Percentage				4.75%
Percentage of Principal Amount in Relation to Issued Value of Senior Notes				100.00%
Debt Instrument, Face Amount				$ 400,000,000
Stock Issued During Period, Shares, New Issues	6,325,000	1,041,666	6,944,445
Common Stock, Par or Stated Value Per Share	$ 1.00		$ 1.00
Treasury Stock Acquired, Average Cost Per Share	$ 18.25	$ 18.00	$ 18.00

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Stockholders' Equity Stockholders' Equity (Tables)

3 Months Ended

Feb. 28, 2014

Equity [Abstract]

Summary of Changes in Stockholders’ Equity

A summary of changes in stockholders’ equity is presented below (in thousands):

	Three Months Ended February 28, 2014
	Common Stock		Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Grantor Stock Ownership Trust			Treasury Stock			Total Stockholders’ Equity
Balance at November 30, 2013	$	115,296	$	788,893	$	481,889		$	(17,516	)	$	(113,911	)	$	(718,565	)	$	536,086
Net income	—		—		10,563			—			—			—			10,563
Dividends on common stock	—		—		(2,094		)	—			—			—			(2,094		)
Stock-based compensation	—		1,779		—			—			—			—			1,779
Balance at February 28, 2014	$	115,296	$	790,672	$	490,358		$	(17,516	)	$	(113,911	)	$	(718,565	)	$	546,334

	Three Months Ended February 28, 2013
	Common Stock		Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Grantor Stock Ownership Trust			Treasury Stock			Total Stockholders’ Equity
Balance at November 30, 2012	$	115,178	$	888,579		$	450,292		$	(27,958	)	$	(115,149	)	$	(934,136	)	$	376,806
Net loss	—		—			(12,458		)	—			—			—			(12,458		)
Dividends on common stock	—		—			(2,089		)	—			—			—			(2,089		)
Stock-based compensation	—		1,013			—			—			—			—			1,013
Issuance of common stock	—		(106,314		)	—			—			—			216,125			109,811
Grantor stock ownership trust	—		20			—			—			32			—			52
Balance at February 28, 2013	$	115,178	$	783,298		$	435,745		$	(27,958	)	$	(115,117	)	$	(718,011	)	$	473,135

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Investments in Unconsolidated Joint Ventures (Narratives) (Details) (USD $)	3 Months Ended
	Feb. 28, 2014	Feb. 28, 2013
Equity Method Investments and Joint Ventures [Abstract]
Equity in loss of unconsolidated joint ventures including pretax, noncash impairment charges	$ 0	$ 0

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Stockholders' Equity (Narratives) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	0 Months Ended	3 Months Ended
	Jan. 29, 2013	Feb. 28, 2014	Feb. 28, 2013
Equity [Abstract]
Stock Issued During Period, Shares, New Issues	6,325,000
Common Stock, Par or Stated Value Per Share	$ 1.00
Stock issued during period, shares, treasury stock reissued	6,325,000
Proceeds from issuance of common stock, net	$ 109,811	$ 0	$ 109,811
Common stock reserve, shares		12,602,735
Dividend paid in each quarter (in dollars per share)		$ 0.0250	$ 0.0250
Debt Instrument [Line Items]
Number of common stock, authorized, approved under a board approved stock repurchase program		4,000,000

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Fair Value Disclosures (Narratives) (Details) (USD $)	3 Months Ended		12 Months Ended
	Feb. 28, 2014	Feb. 28, 2013	Nov. 30, 2013
Fair Value Disclosures [Abstract]
Impairment of Long-Lived Assets Held-for-use	$ 0	$ 0	$ 400,000
Long-lived assets held and used, carrying value			1,500,000
Estimate of Fair Value, Fair Value Disclosure
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Post Impairment Fair Value			$ 1,100,000

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Earnings (Loss) Per Share (Basic and Diluted Earnings (Loss) Per Share) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Feb. 28, 2014	Feb. 28, 2013
Numerator:
Net income (loss)	$ 10,563	$ (12,458)
Less: Distributed earnings allocated to nonvested restricted stock	(5)	0
Less: Undistributed earnings allocated to nonvested restricted stock	(22)	0
Numerator for basic earnings (loss) per share	10,536	(12,458)
Interest expense and amortization of debt issuance costs associated with convertible senior notes, net of taxes	667	0
Add: Undistributed earnings allocated to nonvested restricted stock	22	0
Less: Undistributed earnings reallocated to nonvested restricted stock	(20)	0
Numerator for diluted earnings (loss) per share	$ 11,205	$ (12,458)
Denominator:
Weighted Average Number of Shares Outstanding, Basic	83,745	79,401
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements	1,799	0
Incremental Common Shares Attributable to Dilutive Effect of Conversion of Debt Securities	8,402	0
Weighted Average Number of Shares Outstanding, Diluted	93,946	79,401
Earnings Per Share, Basic, in dollars per share	$ 0.13	$ (0.16)
Earnings Per Share, Diluted, in dollars per share	$ 0.12	$ (0.16)

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Inventories

3 Months Ended

Feb. 28, 2014

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories consisted of the following (in thousands):

	February 28, 2014		November 30, 2013
Homes under construction	$	633,396	$	586,439
Land under development	1,363,340		1,066,916
Land held for future development	638,208		645,222
Total	$	2,634,944	$	2,298,577

Homes under construction is comprised of costs associated with homes in various stages of construction and includes direct construction and related land acquisition and land development costs. Land under development primarily consists of land acquisition and land development costs, which include capitalized interest and real estate taxes associated with land undergoing improvement activity. Land held for future development principally reflects land acquisition and land development costs related to land where development activity has been suspended or has not yet begun, but is expected to occur in the future. These assets held for future development are located in various submarkets where conditions do not presently support further investment or development, or are subject to a building permit moratorium or other regulatory restrictions, or are portions of larger land parcels that we plan to build out over several years and/or that have not yet been entitled. We may also suspend development activity if we believe it will result in greater returns and/or maximize the economic performance of a community by delaying improvements for a period of time to allow earlier phases of a long-term, multi-phase community or a neighboring community to generate sales momentum or for market conditions to improve. We resume development activity when we believe our investment in this inventory will be optimized or, in some instances, to accelerate sales pace and/or our return on investment, and we have activated assets previously held for future development in certain markets as part of our strategic growth initiatives. Interest and real estate taxes are not capitalized on land held for future development.

Our interest costs are as follows (in thousands):

	Three Months Ended February 28,
	2014			2013
Capitalized interest at beginning of period	$	216,681		$	217,684
Interest incurred	39,280			33,422
Interest expensed	(11,276		)	(15,240		)
Interest amortized to construction and land costs	(17,485		)	(18,705		)
Capitalized interest at end of period (a)	$	227,200		$	217,161

(a) Inventory impairment charges are recognized against all inventory costs of a community, such as land acquisition, land development, cost of home construction and capitalized interest. Capitalized interest amounts presented in the table reflect the gross amount of capitalized interest as impairment charges recognized are not generally allocated to specific components of inventory.

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Fair Value Disclosures (Fair Value Hierarchy, Carrying Values, and Estimated Fair Values of Financial Instruments) (Details) (USD $) In Thousands, unless otherwise specified	Jan. 29, 2013 Convertible Senior Notes Due Two Thousand Nineteen At One Point Three Seven Five Percent [Member] [Member]	Feb. 28, 2014 Carrying Value Level 2	Nov. 30, 2013 Carrying Value Level 2	Feb. 28, 2014 Carrying Value Level 2 Senior Notes [Member]	Nov. 30, 2013 Carrying Value Level 2 Senior Notes [Member]	Feb. 28, 2014 Estimate of Fair Value, Fair Value Disclosure [Member] Level 2	Nov. 30, 2013 Estimate of Fair Value, Fair Value Disclosure [Member] Level 2	Feb. 28, 2014 Estimate of Fair Value, Fair Value Disclosure [Member] Level 2 Senior Notes [Member]	Nov. 30, 2013 Estimate of Fair Value, Fair Value Disclosure [Member] Level 2 Senior Notes [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Estimated Fair Value				$ 1,907,220	$ 1,906,883			$ 2,121,250	$ 2,069,325
Convertible Debt, Fair Value Disclosures		$ 230,000	$ 230,000			$ 249,263	$ 224,825
Debt Instrument, Interest Rate, Stated Percentage	1.375%

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Segment Information (Segment Financial Information) (Details) (USD $)	3 Months Ended				12 Months Ended
	Feb. 28, 2014		Feb. 28, 2013		Nov. 30, 2013
Segment Reporting Information [Line Items]
Inventory, Homes under Construction	$ 633,396,000				$ 586,439,000
Inventory, Real Estate, Land and Land Development Costs	1,363,340,000				1,066,916,000
Inventory, Land Held for Development and Sale	638,208,000				645,222,000
Inventory, Operative Builders	2,634,944,000				2,298,577,000
Revenues:
Total revenues	450,687,000		405,219,000
Pretax income (loss):
Total pretax income (loss)	10,763,000		(12,358,000)
Equity in income (loss) of unconsolidated joint ventures:
Equity in income (loss) of unconsolidated joint ventures	2,584,000		656,000
Inventory impairments:
Impairment of Long-Lived Assets Held-for-use	0		0		400,000
Land option contract abandonments:
Land Option Contract Abandonment Charges	433,000		0
Assets:
Total assets	3,248,172,000				3,193,635,000
Investments in unconsolidated joint ventures:
Investments in unconsolidated joint ventures	60,648,000				130,192,000
Homebuilding [Member]
Revenues:
Total revenues	448,267,000		402,816,000
Pretax income (loss):
Total pretax income (loss)	9,201,000		(15,017,000)
Equity in income (loss) of unconsolidated joint ventures:
Equity in income (loss) of unconsolidated joint ventures	2,590,000		(435,000)
Assets:
Total assets	3,238,786,000				3,183,595,000
Investments in unconsolidated joint ventures:
Investments in unconsolidated joint ventures	60,648,000				130,192,000
Financial services [Member]
Revenues:
Total revenues	2,420,000		2,403,000
Pretax income (loss):
Total pretax income (loss)	1,562,000		2,659,000
Equity in income (loss) of unconsolidated joint ventures:
Equity in income (loss) of unconsolidated joint ventures	(6,000)	[1]	1,091,000	[1]
Assets:
Total assets	9,386,000				10,040,000
Investments in unconsolidated joint ventures:
Investments in unconsolidated joint ventures	5,484,000				5,490,000
West Coast [Member]
Segment Reporting Information [Line Items]
Inventory, Homes under Construction	321,787,000				275,516,000
Inventory, Real Estate, Land and Land Development Costs	659,753,000				560,032,000
Inventory, Land Held for Development and Sale	306,902,000				308,636,000
Land option contract abandonments:
Land Option Contract Abandonment Charges	0		0
West Coast [Member] | Homebuilding [Member]
Revenues:
Total revenues	181,721,000		206,104,000
Pretax income (loss):
Total pretax income (loss)	18,365,000		9,842,000
Equity in income (loss) of unconsolidated joint ventures:
Equity in income (loss) of unconsolidated joint ventures	(38,000)		(33,000)
Assets:
Total assets	1,395,759,000				1,230,761,000
Investments in unconsolidated joint ventures:
Investments in unconsolidated joint ventures	44,598,000				40,246,000
Southwest [Member]
Segment Reporting Information [Line Items]
Inventory, Homes under Construction	34,278,000				39,661,000
Inventory, Real Estate, Land and Land Development Costs	237,788,000				106,654,000
Inventory, Land Held for Development and Sale	147,865,000				157,924,000
Land option contract abandonments:
Land Option Contract Abandonment Charges	0		0
Southwest [Member] | Homebuilding [Member]
Revenues:
Total revenues	46,115,000		31,831,000
Pretax income (loss):
Total pretax income (loss)	1,285,000		(749,000)
Equity in income (loss) of unconsolidated joint ventures:
Equity in income (loss) of unconsolidated joint ventures	(663,000)		(525,000)
Assets:
Total assets	453,062,000				402,443,000
Investments in unconsolidated joint ventures:
Investments in unconsolidated joint ventures	13,549,000				80,877,000
Central [Member]
Segment Reporting Information [Line Items]
Inventory, Homes under Construction	173,194,000				157,572,000
Inventory, Real Estate, Land and Land Development Costs	285,407,000				238,311,000
Inventory, Land Held for Development and Sale	23,746,000				15,193,000
Land option contract abandonments:
Land Option Contract Abandonment Charges	433,000		0
Central [Member] | Homebuilding [Member]
Revenues:
Total revenues	125,162,000		106,492,000
Pretax income (loss):
Total pretax income (loss)	2,776,000		136,000
Equity in income (loss) of unconsolidated joint ventures:
Equity in income (loss) of unconsolidated joint ventures	0		0
Assets:
Total assets	546,222,000				465,547,000
Investments in unconsolidated joint ventures:
Investments in unconsolidated joint ventures	0				0
Southeast [Member]
Segment Reporting Information [Line Items]
Inventory, Homes under Construction	104,137,000				113,690,000
Inventory, Real Estate, Land and Land Development Costs	180,392,000				161,919,000
Inventory, Land Held for Development and Sale	159,695,000				163,469,000
Land option contract abandonments:
Land Option Contract Abandonment Charges	0		0
Southeast [Member] | Homebuilding [Member]
Revenues:
Total revenues	95,269,000		58,389,000
Pretax income (loss):
Total pretax income (loss)	3,841,000		(8,324,000)
Equity in income (loss) of unconsolidated joint ventures:
Equity in income (loss) of unconsolidated joint ventures	3,291,000		123,000
Assets:
Total assets	461,442,000				456,965,000
Investments in unconsolidated joint ventures:
Investments in unconsolidated joint ventures	2,501,000				9,069,000
Corporate and Other [Member] | Homebuilding [Member]
Pretax income (loss):
Total pretax income (loss)	(17,066,000)		(15,922,000)
Assets:
Total assets	$ 382,301,000				$ 627,879,000

[1] (a)The equity in income of unconsolidated joint ventures in 2013 related to the wind down of KBA Mortgage, LLC (“KBA Mortgage”), our unconsolidated mortgage banking joint venture with a subsidiary of Bank of America, N.A., which ceased offering mortgage banking services in 2011

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Inventories (Tables)

3 Months Ended

Feb. 28, 2014

Inventory Disclosure [Abstract]

Schedule of Inventories

Inventories consisted of the following (in thousands):

	February 28, 2014		November 30, 2013
Homes under construction	$	633,396	$	586,439
Land under development	1,363,340		1,066,916
Land held for future development	638,208		645,222
Total	$	2,634,944	$	2,298,577

Schedule of Capitalized Interest Costs

Our interest costs are as follows (in thousands):

	Three Months Ended February 28,
	2014			2013
Capitalized interest at beginning of period	$	216,681		$	217,684
Interest incurred	39,280			33,422
Interest expensed	(11,276		)	(15,240		)
Interest amortized to construction and land costs	(17,485		)	(18,705		)
Capitalized interest at end of period (a)	$	227,200		$	217,161

(a) Inventory impairment charges are recognized against all inventory costs of a community, such as land acquisition, land development, cost of home construction and capitalized interest. Capitalized interest amounts presented in the table reflect the gross amount of capitalized interest as impairment charges recognized are not generally allocated to specific components of inventory.

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Earnings (Loss) Per Share (Tables)

3 Months Ended

Feb. 28, 2014

Earnings Per Share, Basic and Diluted [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

Basic and diluted earnings (loss) per share were calculated as follows (in thousands, except per share amounts):

	Three Months Ended February 28,
	2014			2013
Numerator:
Net income (loss)	$	10,563		$	(12,458	)
Less: Distributed earnings allocated to nonvested restricted stock	(5		)	—
Less: Undistributed earnings allocated to nonvested restricted stock	(22		)	—
Numerator for basic earnings (loss) per share	10,536			(12,458		)
Effect of dilutive securities:
Interest expense and amortization of debt issuance costs associated with convertible senior notes, net of taxes	667			—
Add: Undistributed earnings allocated to nonvested restricted stock	22			—
Less: Undistributed earnings reallocated to nonvested restricted stock	(20		)	—
Numerator for diluted earnings (loss) per share	$	11,205		$	(12,458	)
Denominator:
Weighted average shares outstanding — basic	83,745			79,401
Effect of dilutive securities:
Share-based payments	1,799			—
Convertible senior notes	8,402			—
Weighted average shares outstanding — diluted	93,946			79,401
Basic earnings (loss) per share	$	.13		$	(.16	)
Diluted earnings (loss) per share	$	.12		$	(.16	)

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Accrued Expenses and Other Liabilities (Details) (USD $) In Thousands, unless otherwise specified							3 Months Ended
	Feb. 28, 2014		Nov. 30, 2013		Feb. 28, 2013	Nov. 30, 2012	Feb. 28, 2014 Inspirada Builders LLC [Member]	Feb. 28, 2013 Inspirada Builders LLC [Member]
Loss Contingencies [Line Items]
Tax Increment Financing Entities (TIFE)							$ 33,197	$ 0
Self-Insurance and Other Litigation Liabilities	94,939		99,612
Employee compensation and related benefits	87,519		99,332
Accrued interest payable	64,971		45,562
Inventory-related liabilities	62,748	[1]	29,517	[1]
Warranty liability	43,419		48,704		43,333	47,822
Real estate and business taxes	6,106		8,131
Other	26,383		25,318
Total	$ 386,085		$ 356,176

[1] (a)The increase in inventory-related obligations at February 28, 2014, compared to November 30, 2013, reflected a $33.2 million liability we recorded for fixed or determinable amounts associated with tax increment financing entities (“TIFE”) in connection with the distribution of land we received from Inspirada during the three months ended February 28, 2014. As homes are delivered, the obligation to pay the remaining TIFE assessments associated with each underlying lot is transferred to the homebuyer. As such, these assessment obligations will be paid by us only to the extent we do not deliver homes to homebuyers on the applicable lots before the related TIFE obligations mature.

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Financial Services (Schedule of Income (Loss)) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Feb. 28, 2014		Feb. 28, 2013
Revenues
Insurance commissions	$ 1,262		$ 1,303
Title services	708		649
Marketing services fees	450		450
Interest income	0		1
Total	2,420		2,403
Expenses
General and administrative	(852)		(835)
Operating income	17,719		454
Equity in income (loss) of unconsolidated joint ventures	2,584		656
Total pretax income (loss)	10,763		(12,358)
Financial services [Member]
Expenses
Operating income	1,568		1,568
Equity in income (loss) of unconsolidated joint ventures	(6)	[1]	1,091	[1]
Total pretax income (loss)	$ 1,562		$ 2,659

[1] (a)The equity in income of unconsolidated joint ventures in 2013 related to the wind down of KBA Mortgage, LLC (“KBA Mortgage”), our unconsolidated mortgage banking joint venture with a subsidiary of Bank of America, N.A., which ceased offering mortgage banking services in 2011

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Variable Interest Entities (Tables)

3 Months Ended

Feb. 28, 2014

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):

	February 28, 2014				November 30, 2013
	Cash Deposits		Aggregate Purchase Price		Cash Deposits		Aggregate Purchase Price
Unconsolidated VIEs	$	25,031	$	589,713	$	11,063	$	616,000
Other land option contracts and other similar contracts	30,603		500,853		30,502		535,496
Total	$	55,634	$	1,090,566	$	41,565	$	1,151,496

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Investments in Unconsolidated Joint Ventures (Tables)

3 Months Ended

Feb. 28, 2014

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 February 28,
	2014			2013
Revenues	$	6,118		$	—
Construction and land costs	(3,523		)	—
Other expenses, net	(1,130		)	(855		)
Income (loss)	$	1,465		$	(855	)

Balance Sheets of Unconsolidated Joint Ventures

The following table presents combined condensed balance sheet information for our unconsolidated joint ventures (in thousands):

	February 28, 2014		November 30, 2013
Assets
Cash	$	17,958	$	18,752
Receivables	4,619		4,902
Inventories	165,133		381,195
Other assets	149		1,183
Total assets	$	187,859	$	406,032
Liabilities and equity
Accounts payable and other liabilities	$	22,843	$	85,386
Equity	165,016		320,646
Total liabilities and equity	$	187,859	$	406,032

Information Related Investments in Unconsolidated Joint Ventures

The following table presents information relating to our investments in unconsolidated joint ventures (dollars in thousands):

	February 28, 2014		November 30, 2013
Number of investments in unconsolidated joint ventures	7		9
Investments in unconsolidated joint ventures	$	60,648	$	130,192
Number of unconsolidated joint venture lots controlled under land option contracts or other similar contracts	673		5,367

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Earnings (Loss) Per Share

3 Months Ended

Feb. 28, 2014

Earnings Per Share, Basic and Diluted [Abstract]

Earnings Per Share [Text Block]

Earnings (Loss) Per Share

Basic and diluted earnings (loss) per share were calculated as follows (in thousands, except per share amounts):

	Three Months Ended February 28,
	2014			2013
Numerator:
Net income (loss)	$	10,563		$	(12,458	)
Less: Distributed earnings allocated to nonvested restricted stock	(5		)	—
Less: Undistributed earnings allocated to nonvested restricted stock	(22		)	—
Numerator for basic earnings (loss) per share	10,536			(12,458		)
Effect of dilutive securities:
Interest expense and amortization of debt issuance costs associated with convertible senior notes, net of taxes	667			—
Add: Undistributed earnings allocated to nonvested restricted stock	22			—
Less: Undistributed earnings reallocated to nonvested restricted stock	(20		)	—
Numerator for diluted earnings (loss) per share	$	11,205		$	(12,458	)
Denominator:
Weighted average shares outstanding — basic	83,745			79,401
Effect of dilutive securities:
Share-based payments	1,799			—
Convertible senior notes	8,402			—
Weighted average shares outstanding — diluted	93,946			79,401
Basic earnings (loss) per share	$	.13		$	(.16	)
Diluted earnings (loss) per share	$	.12		$	(.16	)

We compute earnings (loss) per share using the two-class method in accordance with Accounting Standards Codification Topic No. 260, “Earnings Per Share.” The two-class method 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 February 28, 2014 or 2013.

In the first quarter of 2013, we issued $230.0 million in aggregate principal amount of 1.375% convertible senior notes due 2019 (the “1.375% Convertible Senior Notes due 2019”), which are initially convertible into shares of our common stock at a conversion rate of 36.5297 shares for each $1,000 principal amount of the notes. The impact of the 1.375% Convertible Senior Notes due 2019 was excluded from the diluted earnings per share calculation for the three months ended February 28, 2013 because the effect would have been antidilutive.

Outstanding stock options to purchase 5.2 million shares of common stock were excluded from the diluted earnings per share calculation for the three months ended February 28, 2014, and all outstanding stock options were excluded from the diluted loss per share calculation for the three months ended February 28, 2013 because the effect of their inclusion would be antidilutive. Contingently issuable shares associated with outstanding performance-based restricted stock units (each a “PSU”) were not included in the earnings (loss) per share calculations for the three months ended February 28, 2014 or 2013 as the vesting conditions have not been satisfied.

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Other Assets (Tables)

3 Months Ended

Feb. 28, 2014

Other Assets [Abstract]

Schedule of Other Assets

Other assets consisted of the following (in thousands):

	February 28, 2014		November 30, 2013
Cash surrender value of insurance contracts	$	69,443	$	68,534
Debt issuance costs	26,103		27,366
Property and equipment, net	9,571		8,460
Prepaid expenses	5,370		2,716
Total	$	110,487	$	107,076

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Supplemental Guarantor Information (Tables)

3 Months Ended

Feb. 28, 2014

Guarantees [Abstract]

Condensed Consolidated Statements of Operations

Condensed Consolidating Statement of Operations

Three Months Ended February 28, 2014 (in thousands)

	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Revenues	$	—		$	435,849		$	14,838		$	—		$	450,687
Homebuilding:
Revenues	$	—		$	435,849		$	12,418		$	—		$	448,267
Construction and land costs	—			(358,092		)	(11,182		)	—			(369,274		)
Selling, general and administrative expenses	(15,744		)	(41,972		)	(3,558		)	—			(61,274		)
Operating income (loss)	(15,744		)	35,785			(2,322		)	—			17,719
Interest income	167			1			—			—			168
Interest expense	(38,008		)	(1,272		)	—			28,004			(11,276		)
Intercompany interest	59,722			(32,096		)	378			(28,004		)	—
Equity in income of unconsolidated joint ventures	—			2,590			—			—			2,590
Homebuilding pretax income (loss)	6,137			5,008			(1,944		)	—			9,201
Financial services pretax income	—			—			1,562			—			1,562
Total pretax income (loss)	6,137			5,008			(382		)	—			10,763
Income tax expense	(100		)	(100		)	—			—			(200		)
Equity in net income of subsidiaries	4,526			—			—			(4,526		)	—
Net income (loss)	$	10,563		$	4,908		$	(382	)	$	(4,526	)	$	10,563

Condensed Consolidating Statement of Operations

Three Months Ended February 28, 2013 (in thousands)

	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Revenues	$	—		$	393,228		$	11,991		$	—		$	405,219
Homebuilding:
Revenues	$	—		$	393,228		$	9,588		$	—		$	402,816
Construction and land costs	—			(334,498		)	(8,767		)	—			(343,265		)
Selling, general and administrative expenses	(14,823		)	(40,809		)	(3,465		)	—			(59,097		)
Operating income (loss)	(14,823		)	17,921			(2,644		)	—			454
Interest income	201			1			2			—			204
Interest expense	(31,847		)	(1,575		)	—			18,182			(15,240		)
Intercompany interest	45,356			(28,134		)	960			(18,182		)	—
Equity in loss of unconsolidated joint ventures	—			(435		)	—			—			(435		)
Homebuilding pretax loss	(1,113		)	(12,222		)	(1,682		)	—			(15,017		)
Financial services pretax income	—			—			2,659			—			2,659
Total pretax income (loss)	(1,113		)	(12,222		)	977			—			(12,358		)
Income tax expense	—			(100		)	—			—			(100		)
Equity in net loss of subsidiaries	(11,345		)	—			—			11,345			—
Net income (loss)	$	(12,458	)	$	(12,322	)	$	977		$	11,345		$	(12,458	)

Condensed Consolidated Balance Sheets

Condensed Consolidating Balance Sheet

February 28, 2014 (in thousands)

	KB Home Corporate		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Total
Assets
Homebuilding:
Cash and cash equivalents	$	234,234	$	61,043	$	7,992	$	—		$	303,269
Restricted cash	42,083		—		—		—			42,083
Receivables	1,446		85,659		250		—			87,355
Inventories	—		2,600,119		34,825		—			2,634,944
Investments in unconsolidated joint ventures	—		60,648		—		—			60,648
Other assets	97,477		11,574		1,436		—			110,487
	375,240		2,819,043		44,503		—			3,238,786
Financial services	—		—		9,386		—			9,386
Intercompany receivables	2,397,174		—		113,059		(2,510,233		)	—
Investments in subsidiaries	42,004		—		—		(42,004		)	—
Total assets	$	2,814,418	$	2,819,043	$	166,948	$	(2,552,237	)	$	3,248,172
Liabilities and stockholders’ equity
Homebuilding:
Accounts payable, accrued expenses and other liabilities	$	134,679	$	295,212	$	94,407	$	—		$	524,298
Mortgages and notes payable	2,112,110		63,080		—		—			2,175,190
	2,246,789		358,292		94,407		—			2,699,488
Financial services	—		—		2,350		—			2,350
Intercompany payables	21,295		2,455,743		33,195		(2,510,233		)	—
Stockholders’ equity	546,334		5,008		36,996		(42,004		)	546,334
Total liabilities and stockholders’ equity	$	2,814,418	$	2,819,043	$	166,948	$	(2,552,237	)	$	3,248,172

Condensed Consolidating Balance Sheet

November 30, 2013 (in thousands)

	KB Home Corporate		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Total
Assets
Homebuilding:
Cash and cash equivalents	$	476,847	$	41,316	$	11,932	$	—		$	530,095
Restricted cash	41,906		—		—		—			41,906
Receivables	1,472		74,186		91		—			75,749
Inventories	—		2,263,034		35,543		—			2,298,577
Investments in unconsolidated joint ventures	—		130,192		—		—			130,192
Other assets	97,647		9,072		357		—			107,076
	617,872		2,517,800		47,923		—			3,183,595
Financial services	—		—		10,040		—			10,040
Intercompany receivables	2,129,729		—		117,829		(2,247,558		)	—
Investments in subsidiaries	39,955		—		—		(39,955		)	—
Total assets	$	2,787,556	$	2,517,800	$	175,792	$	(2,287,513	)	$	3,193,635
Liabilities and stockholders’ equity
Homebuilding:
Accounts payable, accrued expenses and other liabilities	$	117,875	$	292,220	$	94,363	$	—		$	504,458
Mortgages and notes payable	2,111,773		38,725		—		—			2,150,498
	2,229,648		330,945		94,363		—			2,654,956
Financial services	—		—		2,593		—			2,593
Intercompany payables	21,822		2,186,855		38,881		(2,247,558		)	—
Stockholders’ equity	536,086		—		39,955		(39,955		)	536,086
Total liabilities and stockholders’ equity	$	2,787,556	$	2,517,800	$	175,792	$	(2,287,513	)	$	3,193,635

Condensed Consolidated Statements of Cash Flows

Condensed Consolidating Statement of Cash Flows

Three Months Ended February 28, 2014 (in thousands)

	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net cash provided by (used in) operating activities	$	25,225		$	(238,483	)	$	(7,805	)	$	—		$	(221,063	)
Cash flows from investing activities:
Contributions to unconsolidated joint ventures	—			(8,618		)	—			—			(8,618		)
Proceeds from sale of investment in unconsolidated joint venture	—			10,110			—			—			10,110
Purchases of property and equipment, net	(70		)	(1,455		)	(51		)	—			(1,576		)
Intercompany	(265,497		)	—			—			265,497			—
Net cash provided by (used in) investing activities	(265,567		)	37			(51		)	265,497			(84		)
Cash flows from financing activities:
Change in restricted cash	(177		)	—			—			—			(177		)
Payments on mortgages and land contracts due to land sellers and other loans	—			(2,655		)	—			—			(2,655		)
Payments of cash dividends	(2,094		)	—			—			—			(2,094		)
Intercompany	—			260,828			4,669			(265,497		)	—
Net cash provided by (used in) financing activities	(2,271		)	258,173			4,669			(265,497		)	(4,926		)
Net increase (decrease) in cash and cash equivalents	(242,613		)	19,727			(3,187		)	—			(226,073		)
Cash and cash equivalents at beginning of period	476,847			41,316			14,360			—			532,523
Cash and cash equivalents at end of period	$	234,234		$	61,043		$	11,173		$	—		$	306,450

Condensed Consolidating Statement of Cash Flows

Three Months Ended February 28, 2013 (in thousands) 

	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net cash provided by (used in) operating activities	$	8,208		$	(206,425	)	$	(12,815	)	$	—		$	(211,032	)
Cash flows from investing activities:
Contributions to unconsolidated joint ventures	—			(94		)	(210		)	—			(304		)
Purchases of property and equipment, net	(96		)	(318		)	(16		)	—			(430		)
Intercompany	(239,211		)	—			—			239,211			—
Net cash used in investing activities	(239,307		)	(412		)	(226		)	239,211			(734		)
Cash flows from financing activities:
Change in restricted cash	(2,257		)	—			—			—			(2,257		)
Proceeds from issuance of debt	230,000			—			—			—			230,000
Payment of debt issuance costs	(6,878		)	—			—			—			(6,878		)
Payments on mortgages and land contracts due to land sellers and other loans	—			(17,003		)	—			—			(17,003		)
Proceeds from issuance of common stock, net	109,811			—			—			—			109,811
Issuance of common stock under employee stock plans	52			—			—			—			52
Payments of cash dividends	(2,089		)	—			—			—			(2,089		)
Intercompany	—			230,182			9,029			(239,211		)	—
Net cash provided by financing activities	328,639			213,179			9,029			(239,211		)	311,636
Net increase (decrease) in cash and cash equivalents	97,540			6,342			(4,012		)	—			99,870
Cash and cash equivalents at beginning of period	457,007			54,205			14,476			—			525,688
Cash and cash equivalents at end of period	$	554,547		$	60,547		$	10,464		$	—		$	625,558

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Investments in Unconsolidated Joint Ventures (Financial Information for Unconsolidated Joint Ventures) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Feb. 28, 2014	Feb. 28, 2013	Nov. 30, 2013
Statements of operations of unconsolidated joint venture
Revenues	$ 6,118	$ 0
Construction and land costs	(3,523)	0
Other expenses, net	(1,130)	(855)
Income (loss)	1,465	(855)
Assets
Cash	17,958		18,752
Receivables	4,619		4,902
Inventories	165,133		381,195
Other assets	149		1,183
Total assets	187,859		406,032
Liabilities and equity
Accounts payable and other liabilities	22,843		85,386
Equity	165,016		320,646
Total liabilities and equity	$ 187,859		$ 406,032

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Supplemental Guarantor Information (Condensed Consolidated Statements of Operations) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Feb. 28, 2014		Feb. 28, 2013
Condensed Consolidated Statements of Operations
Revenues	$ 450,687		$ 405,219
Homebuilding:
Revenues	448,267		402,816
Construction and land costs	(369,274)		(343,265)
Selling, general and administrative expenses	(61,274)		(59,097)
Operating income (loss)	17,719		454
Interest income	168		204
Interest expense	(11,276)		(15,240)
Intercompany Interest	0		0
Equity in income (loss) of unconsolidated joint ventures	2,584		656
Total pretax income (loss)	10,763		(12,358)
Income tax expense	(200)		(100)
Equity in Net Income (Loss) of Subsidiaries	0		0
Net income (loss)	10,563		(12,458)
KB Home Corporate
Condensed Consolidated Statements of Operations
Revenues	0		0
Homebuilding:
Revenues	0		0
Construction and land costs	0		0
Selling, general and administrative expenses	(15,744)		(14,823)
Operating income (loss)	(15,744)		(14,823)
Interest income	167		201
Interest expense	(38,008)		(31,847)
Intercompany Interest	(59,722)		(45,356)
Total pretax income (loss)	6,137		(1,113)
Income tax expense	(100)		0
Equity in Net Income (Loss) of Subsidiaries	4,526		(11,345)
Net income (loss)	10,563		(12,458)
Guarantor Subsidiaries
Condensed Consolidated Statements of Operations
Revenues	435,849		393,228
Homebuilding:
Revenues	435,849		393,228
Construction and land costs	(358,092)		(334,498)
Selling, general and administrative expenses	(41,972)		(40,809)
Operating income (loss)	35,785		17,921
Interest income	1		1
Interest expense	(1,272)		(1,575)
Intercompany Interest	(32,096)		(28,134)
Total pretax income (loss)	5,008		(12,222)
Income tax expense	(100)		(100)
Equity in Net Income (Loss) of Subsidiaries	0		0
Net income (loss)	4,908		(12,322)
Non-Guarantor Subsidiaries
Condensed Consolidated Statements of Operations
Revenues	14,838		11,991
Homebuilding:
Revenues	12,418		9,588
Construction and land costs	(11,182)		(8,767)
Selling, general and administrative expenses	(3,558)		(3,465)
Operating income (loss)	(2,322)		(2,644)
Interest income	0		2
Interest expense	0		0
Intercompany Interest	(378)		(960)
Total pretax income (loss)	(382)		977
Income tax expense	0		0
Equity in Net Income (Loss) of Subsidiaries	0		0
Net income (loss)	(382)		977
Consolidating Adjustments
Condensed Consolidated Statements of Operations
Revenues	0		0
Homebuilding:
Revenues	0		0
Construction and land costs	0		0
Selling, general and administrative expenses	0		0
Operating income (loss)	0		0
Interest income	0		0
Interest expense	28,004		18,182
Intercompany Interest	(28,004)		(18,182)
Total pretax income (loss)	0		0
Income tax expense	0		0
Equity in Net Income (Loss) of Subsidiaries	(4,526)		11,345
Net income (loss)	(4,526)		11,345
Homebuilding [Member]
Condensed Consolidated Statements of Operations
Revenues	448,267		402,816
Homebuilding:
Equity in income (loss) of unconsolidated joint ventures	2,590		(435)
Total pretax income (loss)	9,201		(15,017)
Homebuilding [Member] | KB Home Corporate
Homebuilding:
Equity in income (loss) of unconsolidated joint ventures	0		0
Total pretax income (loss)	6,137		(1,113)
Homebuilding [Member] | Guarantor Subsidiaries
Homebuilding:
Equity in income (loss) of unconsolidated joint ventures	2,590		(435)
Total pretax income (loss)	5,008		(12,222)
Homebuilding [Member] | Non-Guarantor Subsidiaries
Homebuilding:
Equity in income (loss) of unconsolidated joint ventures	0		0
Total pretax income (loss)	(1,944)		(1,682)
Homebuilding [Member] | Consolidating Adjustments
Homebuilding:
Equity in income (loss) of unconsolidated joint ventures	0		0
Total pretax income (loss)	0		0
Financial services [Member]
Condensed Consolidated Statements of Operations
Revenues	2,420		2,403
Homebuilding:
Operating income (loss)	1,568		1,568
Equity in income (loss) of unconsolidated joint ventures	(6)	[1]	1,091	[1]
Total pretax income (loss)	1,562		2,659
Financial services [Member] | KB Home Corporate
Homebuilding:
Total pretax income (loss)	0		0
Financial services [Member] | Guarantor Subsidiaries
Homebuilding:
Total pretax income (loss)	0		0
Financial services [Member] | Non-Guarantor Subsidiaries
Homebuilding:
Total pretax income (loss)	1,562		2,659
Financial services [Member] | Consolidating Adjustments
Homebuilding:
Total pretax income (loss)	$ 0		$ 0

[1] (a)The equity in income of unconsolidated joint ventures in 2013 related to the wind down of KBA Mortgage, LLC (“KBA Mortgage”), our unconsolidated mortgage banking joint venture with a subsidiary of Bank of America, N.A., which ceased offering mortgage banking services in 2011

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Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Feb. 28, 2014		Feb. 28, 2013
Total revenues	$ 450,687		$ 405,219
Homebuilding:
Revenues	448,267		402,816
Construction and land costs	(369,274)		(343,265)
Selling, general and administrative expenses	(61,274)		(59,097)
Operating income	17,719		454
Interest income	168		204
Interest expense	(11,276)		(15,240)
Equity in income (loss) of unconsolidated joint ventures	2,584		656
Total pretax income (loss)	10,763		(12,358)
Financial services:
Revenues	2,420		2,403
Expenses	(852)		(835)
Income tax expense	(200)		(100)
Net income (loss)	10,563		(12,458)
Earnings Per Share, Basic, in dollars per share	$ 0.13		$ (0.16)
Earnings Per Share, Diluted, in dollars per share	$ 0.12		$ (0.16)
Weighted Average Number of Shares Outstanding, Basic	83,745		79,401
Weighted Average Number of Shares Outstanding, Diluted	93,946		79,401
Cash dividends declared per common share	$ 0.0250		$ 0.0250
Homebuilding [Member]
Total revenues	448,267		402,816
Homebuilding:
Equity in income (loss) of unconsolidated joint ventures	2,590		(435)
Total pretax income (loss)	9,201		(15,017)
Financial services [Member]
Total revenues	2,420		2,403
Homebuilding:
Operating income	1,568		1,568
Equity in income (loss) of unconsolidated joint ventures	(6)	[1]	1,091	[1]
Total pretax income (loss)	$ 1,562		$ 2,659

[1] (a)The equity in income of unconsolidated joint ventures in 2013 related to the wind down of KBA Mortgage, LLC (“KBA Mortgage”), our unconsolidated mortgage banking joint venture with a subsidiary of Bank of America, N.A., which ceased offering mortgage banking services in 2011

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Financial Services (Schedule of Assets and Liabilities) (Details) (USD $) In Thousands, unless otherwise specified	Feb. 28, 2014	Nov. 30, 2013	Feb. 28, 2013	Nov. 30, 2012
Assets
Cash and cash equivalents	$ 306,450	$ 532,523	$ 625,558	$ 525,688
Receivables	87,355	75,749
Investments in unconsolidated joint ventures	60,648	130,192
Other assets	110,487	107,076
Total assets	3,248,172	3,193,635
Liabilities
Accounts payable and accrued expenses	524,298	504,458
Total liabilities	2,350	2,593
Financial services [Member]
Assets
Cash and cash equivalents	3,181	2,428	1,514
Receivables	699	2,084
Investments in unconsolidated joint ventures	5,484	5,490
Other assets	22	38
Total assets	9,386	10,040
Liabilities
Accounts payable and accrued expenses	$ 2,350	$ 2,593

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Segment Information

3 Months Ended

Feb. 28, 2014

Segment Reporting [Abstract]

Segment Information

Segment Information

As of February 28, 2014, we had identified five operating reporting segments, comprised of four homebuilding reporting segments and one financial services reporting segment, within our consolidated operations in accordance with Accounting Standards Codification Topic No. 280, “Segment Reporting.” As of February 28, 2014, our homebuilding reporting segments conducted ongoing operations in the following states:

West Coast: California

Southwest: Arizona and Nevada

Central: Colorado, New Mexico and Texas

Southeast: Florida, Maryland, North Carolina and Virginia

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, move-up and active adult homebuyers.

Our homebuilding reporting segments were identified based primarily on similarities in economic and geographic characteristics, product types, regulatory environments, methods used to sell and construct homes and land acquisition characteristics. We evaluate segment performance primarily based on segment pretax results.

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 within our Central and Southeast homebuilding reporting segments. This segment also earns revenues pursuant to the terms of a marketing services agreement with Nationstar Mortgage LLC (“Nationstar”), our preferred mortgage lender that offers mortgage banking services, including residential consumer mortgage loan (“mortgage loan”) originations, to our homebuyers who elect to use the lender. Our homebuyers are under no obligation to use our preferred mortgage lender and may select any lender of their choice to obtain mortgage financing for the purchase of a home. Except as discussed below, we have had no affiliation, ownership, joint venture or other interests in or with our preferred mortgage lender or its affiliates, or with respect to the revenues or income that may have been generated from their provision of mortgage banking services to, or origination of mortgage loans for, our homebuyers.

On January 21, 2013, we entered into an agreement with Nationstar to form Home Community Mortgage, LLC (“Home Community Mortgage”), a mortgage banking company that will offer an array of mortgage banking services to our homebuyers. We have a 49.9% ownership interest and Nationstar has a 50.1% ownership interest in Home Community Mortgage, with Nationstar providing management oversight of Home Community Mortgage’s operations. Nationstar will continue as our preferred mortgage lender until Home Community Mortgage begins offering mortgage banking services. Home Community Mortgage is accounted for as an unconsolidated joint venture within our financial services reporting segment.

Corporate and other is a non-operating segment that develops and implements company-wide strategic initiatives and provides support to our homebuilding reporting segments by centralizing certain administrative functions, such as promotional marketing, legal, purchasing administration, architecture, accounting, treasury, insurance and risk management, information technology and human resources, to benefit from economies of scale. Corporate and other includes general and administrative expenses related to operating our corporate headquarters. A portion of the expenses incurred by Corporate and other is allocated to the homebuilding reporting segments.

Our segments follow the same accounting policies used for our consolidated financial statements. The results of each 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 segments (in thousands):

	Three Months Ended February 28,
	2014			2013
Revenues:
West Coast	$	181,721		$	206,104
Southwest	46,115			31,831
Central	125,162			106,492
Southeast	95,269			58,389
Total homebuilding revenues	448,267			402,816
Financial services	2,420			2,403
Total	$	450,687		$	405,219
Pretax income (loss):
West Coast	$	18,365		$	9,842
Southwest	1,285			(749		)
Central	2,776			136
Southeast	3,841			(8,324		)
Corporate and other	(17,066		)	(15,922		)
Total homebuilding pretax income (loss)	9,201			(15,017		)
Financial services	1,562			2,659
Total	$	10,763		$	(12,358	)

Equity in income (loss) of unconsolidated joint ventures:
West Coast	$	(38	)	$	(33	)
Southwest	(663		)	(525		)
Central	—			—
Southeast	3,291			123
Total	$	2,590		$	(435	)

Land option contract abandonments:
West Coast	$	—	$	—
Southwest	—		—
Central	433		—
Southeast	—		—
Total	$	433	$	—

	February 28, 2014		November 30, 2013
Inventories:
Homes under construction
West Coast	$	321,787	$	275,516
Southwest	34,278		39,661
Central	173,194		157,572
Southeast	104,137		113,690
Subtotal	633,396		586,439
Land under development
West Coast	659,753		560,032
Southwest	237,788		106,654
Central	285,407		238,311
Southeast	180,392		161,919
Subtotal	1,363,340		1,066,916
Land held for future development
West Coast	306,902		308,636
Southwest	147,865		157,924
Central	23,746		15,193
Southeast	159,695		163,469
Subtotal	638,208		645,222
Total	$	2,634,944	$	2,298,577
Investments in unconsolidated joint ventures:
West Coast	$	44,598	$	40,246
Southwest	13,549		80,877
Central	—		—
Southeast	2,501		9,069
Total	$	60,648	$	130,192
Assets:
West Coast	$	1,395,759	$	1,230,761
Southwest	453,062		402,443
Central	546,222		465,547
Southeast	461,442		456,965
Corporate and other	382,301		627,879
Total homebuilding assets	3,238,786		3,183,595
Financial services	9,386		10,040
Total	$	3,248,172	$	3,193,635

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Mortgages and Notes Payable (Narratives) (Details) (USD $)	3 Months Ended					0 Months Ended		0 Months Ended					0 Months Ended
	Feb. 28, 2014	Feb. 28, 2013	Nov. 30, 2013	Feb. 28, 2014 Letter of Credit [Member]	Mar. 12, 2013 Letter of Credit [Member]	Mar. 12, 2013 Revolving Credit Facility [Member]	Feb. 28, 2014 Revolving Credit Facility [Member]	Mar. 12, 2013 Revolving Credit Facility [Member] Minimum [Member]	Mar. 12, 2013 Revolving Credit Facility [Member] Maximum [Member]	Jan. 29, 2013 Convertible Senior Notes Due Two Thousand Nineteen At One Point Three Seven Five Percent [Member] [Member]	Feb. 28, 2014 Mortgages and Land Contracts Due to Land Sellers and Other Loans [Member]	Nov. 30, 2013 Mortgages and Land Contracts Due to Land Sellers and Other Loans [Member]	Jan. 29, 2013 Convertible Notes Payable [Member] Convertible Senior Notes Due Two Thousand Nineteen At One Point Three Seven Five Percent [Member] [Member]	Feb. 28, 2014 Convertible Notes Payable [Member] Convertible Senior Notes Due Two Thousand Nineteen At One Point Three Seven Five Percent [Member] [Member]	Nov. 30, 2013 Convertible Notes Payable [Member] Convertible Senior Notes Due Two Thousand Nineteen At One Point Three Seven Five Percent [Member] [Member]	Feb. 28, 2014 Senior Notes [Member] Senior notes due March 15, 2020 at 8.00%	Nov. 30, 2013 Senior Notes [Member] Senior notes due March 15, 2020 at 8.00%	Feb. 28, 2014 Senior Notes [Member] Senior notes due September 15, 2017 at 9.10%	Nov. 30, 2013 Senior Notes [Member] Senior notes due September 15, 2017 at 9.10%	Feb. 28, 2014 Senior Notes [Member] Senior notes due September 15, 2022 at 7.50%	Nov. 30, 2013 Senior Notes [Member] Senior notes due September 15, 2022 at 7.50%
Debt Instrument [Line Items]
Line of Credit Facility, Current Borrowing Capacity	$ 200,000,000
Unsecured revolving credit facility, expiration date						Mar. 12, 2016
Unsecured revolving credit facility, maximum borrowing capacity					100,000,000	300,000,000
Line of credit facility, unused capacity, commitment fee percentage								0.50%	0.75%
Line of Credit Facility, Amount Outstanding							0
Unsecured revolving credit facility, remaining borrowing capacity				100,000,000			200,000,000
Line of credit facility, significant subsidiary threshold, percent	5.00%
Line of credit facility, non guarantor subsidiary threshold, percent	10.00%
Debt Instrument, Face Amount													230,000,000
Senior notes, rate										1.375%			1.375%			8.00%	8.00%	9.10%	9.10%	7.50%	7.50%
Percentage of Principal Amount in Relation to Issued Value of Senior Notes													100.00%
Debt Conversion, Converted Instrument, Shares Issued													36.5297
Debt instrument, convertible, conversion price													$ 27.37
Debt instrument, convertible, conversion premium													47.00%
Share price													$ 18.62
Incremental Common Shares Attributable to Dilutive Effect of Conversion of Debt Securities	8,402,000	0											8,401,831
Percentage of principal amount in relation to redemption value of notes														100.00%
Percentage of principal amount for purchase of notes if change in control														100.00%
Proceeds from issuance of senior notes													223,100,000
Ownership share in guarantor subsidiaries (percent)	100.00%
Letters of credit outstanding	41,700,000		41,500,000
Inventories pledged to collateralize mortgages and land contracts, carrying value	101,600,000
Notes and Loans Payable	$ 2,175,190,000		$ 2,150,498,000								$ 37,970,000	$ 13,615,000		$ 230,000,000	$ 230,000,000	$ 345,842,000	$ 345,710,000	$ 262,213,000	$ 262,048,000	$ 350,000,000	$ 350,000,000

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Fair Value Disclosures (Tables)

3 Months Ended

Feb. 28, 2014

Fair Value Disclosures [Abstract]

Schedule of Assets Measured at Fair Value on Nonrecurring Basis

The following table presents the fair value hierarchy and our assets measured at fair value on a nonrecurring basis for the three months endedFebruary 28, 2014 and the year ended November 30, 2013 (in thousands):

	Fair Value
Description	Hierarchy	February 28, 2014		November 30, 2013
Long-lived assets held and used (a)	Level 3	$	—	$	1,143

(a) Amounts represent the aggregate fair value for communities or land parcels where we recognized inventory impairment charges during the period, as of the date that the fair value measurements were made. The carrying value for these communities or land parcels may have subsequently increased or decreased from the fair value reflected due to activity that has occurred since the measurement date.

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):

		February 28, 2014				November 30, 2013
	Fair Value Hierarchy	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Liabilities:
Senior notes	Level 2	$	1,907,220	$	2,121,250	$	1,906,883	$	2,069,325
Convertible senior notes	Level 2	230,000		249,263		230,000		224,825

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Legal Matters (Details) (Nevada Development Contract Litigation, USD $) In Millions, unless otherwise specified	3 Months Ended
	Feb. 28, 2014 acre
Nevada Development Contract Litigation
Loss Contingencies [Line Items]
Acres of purchased land by LVDA	83
Expected compensatory damages	$ 55
Expected interest charges	$ 41

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Supplemental Disclosure to Consolidated Statements of Cash Flows

3 Months Ended

Feb. 28, 2014

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):

	Three Months Ended February 28,
	2014			2013
Summary of cash and cash equivalents at end of period:
Homebuilding	$	303,269		$	624,044
Financial services	3,181			1,514
Total	$	306,450		$	625,558
Supplemental disclosures of cash flow information:
Interest paid, net of amounts capitalized	$	(8,133	)	$	5,872
Income taxes paid	103			120
Income taxes refunded	20			58
Supplemental disclosures of noncash activities:
Increase in consolidated inventories not owned	$	917		$	4,842
Increase in inventories due to distribution of land from unconsolidated joint venture	70,642			—
Increase in inventories and inventory-related obligations associated with TIFE tied to distribution of land from unconsolidated joint venture	33,197			—
Cost of inventories acquired through seller financing	27,010			27,600

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Commitments and Contingencies (Tables)

3 Months Ended

Feb. 28, 2014

Commitments and Contingencies Disclosure [Abstract]

Changes in the Warranty Liability

The changes in our warranty liability are as follows (in thousands):

	Three Months Ended February 28,
	2014			2013
Balance at beginning of period	$	48,704		$	47,822
Warranties issued	3,426			2,766
Payments	(8,711		)	(8,929		)
Adjustments	—			1,674
Balance at end of period	$	43,419		$	43,333

Schedule of Self-Insurance Liability [Table Text Block]

The changes in our self-insurance liability are as follows (in thousands):

	Three Months Ended February 28,
	2014			2013
Balance at beginning of period	$	92,214		$	93,349
Self-insurance expense (a)	2,616			1,809
Payments, net of recoveries (b)	(4,414		)	(3,435		)
Balance at end of period	$	90,416		$	91,723

(a) These expenses are included in selling, general and administrative expenses and are largely offset by contributions from subcontractors participating in the wrap-up policy.

(b) Recoveries are reflected at the time we receive funds from subcontractors and/or their insurers.

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Subsequent Event

3 Months Ended

Feb. 28, 2014

Subsequent Events [Abstract]

Subsequent Event

Subsequent Event

On March 25, 2014, pursuant to the 2011 Shelf Registration, we completed the underwritten public offering of 4.75% senior notes due 2019 (the “4.75% Senior Notes due 2019”), at 100% of the $400.0 million in aggregate principal amount of the notes, and the underwritten public offering of 6,944,445 shares of our common stock, par value $1.00 per share, at a price of $18.00 per share (the “2014 Common Stock Offering”). Interest on the 4.75% Senior Notes due 2019, which represent senior unsecured obligations of ours and rank equally in right of payment with all of our other senior unsecured indebtedness, is payable semi-annually in arrears on May 15 and November 15, commencing on November 15, 2014. The 4.75% Senior Notes due 2019 will mature on May 15, 2019. On April 4, 2014, the underwriters of the 2014 Common Stock Offering exercised their option to purchase 1,041,666 additional shares at a price of $18.00 per share, with the transaction expected to be completed on or about April 8, 2014. We plan to use the net proceeds from both the issuance of the 4.75% Senior Notes due 2019 and the 2014 Common Stock Offering (including the issuance of the additional shares) for general corporate purposes, including, without limitation, land acquisition and land development.

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Stock-Based Compensation (Outstanding and Exercisable Stock Options) (Details) (USD $)	3 Months Ended
	Feb. 28, 2014
Options
Options outstanding at beginning of period, options	10,531,938
Granted, options	0
Exercised, options	0
Cancelled, options	(4,947)
Options outstanding at end of period, options	10,526,991
Options exercisable at end of period	9,414,988
Weighted Average Exercise Price in dollars per share
Options outstanding at beginning of period, weighted average exercise price in dollars per share	$ 21.11
Granted, weighted average exercise price in dollars per share	$ 0.00
Exercised, weighted average exercise price in dollars per share	$ 0.00
Cancelled, weighted average exercise price in dollars per share	$ 33.72
Options outstanding at end of period, weighted average exercise price in dollars per share	$ 21.11
Options exercisable at end of period	$ 22.24

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Financial Services

3 Months Ended

Feb. 28, 2014

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 February 28,
	2014			2013
Revenues
Insurance commissions	$	1,262		$	1,303
Title services	708			649
Marketing services fees	450			450
Interest income	—			1
Total	2,420			2,403
Expenses
General and administrative	(852		)	(835		)
Operating income	1,568			1,568
Equity in income (loss) of unconsolidated joint ventures (a)	(6		)	1,091
Pretax income	$	1,562		$	2,659

(a) The equity in income of unconsolidated joint ventures in 2013 related to the wind down of KBA Mortgage, LLC (“KBA Mortgage”), our unconsolidated mortgage banking joint venture with a subsidiary of Bank of America, N.A., which ceased offering mortgage banking services in 2011.

	February 28, 2014		November 30, 2013
Assets
Cash and cash equivalents	$	3,181	$	2,428
Receivables	699		2,084
Investments in unconsolidated joint ventures	5,484		5,490
Other assets	22		38
Total assets	$	9,386	$	10,040
Liabilities
Accounts payable and accrued expenses	$	2,350	$	2,593
Total liabilities	$	2,350	$	2,593

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Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Feb. 28, 2014	Nov. 30, 2013
Assets
Cash and cash equivalents at beginning of period	$ 306,450	$ 532,523
Restricted cash	42,083	41,906
Receivables	87,355	75,749
Inventories	2,634,944	2,298,577
Investments in unconsolidated joint ventures	60,648	130,192
Other assets	110,487	107,076
Total assets	3,248,172	3,193,635
Liabilities and stockholders' equity
Accounts payable	138,213	148,282
Accrued expenses and other liabilities	386,085	356,176
Mortgages and notes payable	2,175,190	2,150,498
Financial services	2,350	2,593
Common stock	115,296	115,296
Paid-in capital	790,672	788,893
Retained earnings	490,358	481,889
Accumulated other comprehensive loss	(17,516)	(17,516)
Grantor stock ownership trust, at cost	(113,911)	(113,911)
Treasury stock, at cost	(718,565)	(718,565)
Total stockholders’ equity	546,334	536,086
Total liabilities and stockholders’ equity	3,248,172	3,193,635
Homebuilding [Member]
Assets
Cash and cash equivalents at beginning of period	303,269	530,095
Investments in unconsolidated joint ventures	60,648	130,192
Total assets	3,238,786	3,183,595
Liabilities and stockholders' equity
Total Liabilities Homebuilding	2,699,488	2,654,956
Financial services [Member]
Assets
Cash and cash equivalents at beginning of period	3,181	2,428
Receivables	699	2,084
Investments in unconsolidated joint ventures	5,484	5,490
Other assets	22	38
Total assets	$ 9,386	$ 10,040

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Fair Value Disclosures

3 Months Ended

Feb. 28, 2014

Fair Value Disclosures [Abstract]

Fair Value Disclosures

Fair Value Disclosures

Accounting Standards Codification Topic No. 820, “Fair Value Measurements and Disclosures,” provides a framework for measuring the fair value of assets and liabilities under GAAP, and establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The fair value hierarchy can be summarized as follows:

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 the carrying value is not recoverable. The following table presents the fair value hierarchy and our assets measured at fair value on a nonrecurring basis for the three months endedFebruary 28, 2014 and the year ended November 30, 2013 (in thousands):

	Fair Value
Description	Hierarchy	February 28, 2014		November 30, 2013
Long-lived assets held and used (a)	Level 3	$	—	$	1,143

(a) Amounts represent the aggregate fair value for communities or land parcels where we recognized inventory impairment charges during the period, as of the date that the fair value measurements were made. The carrying value for these communities or land parcels may have subsequently increased or decreased from the fair value reflected due to activity that has occurred since the measurement date.

We had no inventory impairment charges in the three months ended February 28, 2014. During the year ended November 30, 2013, long-lived assets held and used with a carrying value of $1.5 million were written down to their fair value of $1.1 million, resulting in inventory impairment charges of $.4 million.

The fair values for long-lived assets held and used that were determined using Level 3 inputs were primarily based on the estimated future net cash flows discounted for inherent risk associated with each asset as described in Note 6. Inventory Impairments and Land Option Contract Abandonments. The discount rates we used were impacted by the following at the time the calculations were made: the risk-free rate of return; expected risk premium based on estimated land development, home construction and delivery timelines; market risk from potential future price erosion; cost uncertainty due to land development or home construction cost increases; and other risks specific to the affected asset or conditions in the market in which the asset was located. These factors were specific to each affected community or land parcel and may have varied over time.

Our financial instruments consist of cash and cash equivalents, restricted cash, senior notes, the 1.375% Convertible Senior Notes due 2019, and mortgages and land contracts due to land sellers and other loans. Fair value measurements of financial instruments are determined by various market data and other valuation techniques as appropriate. When available, we use quoted market prices in active markets to determine fair value.

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):

		February 28, 2014				November 30, 2013
	Fair Value Hierarchy	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial Liabilities:
Senior notes	Level 2	$	1,907,220	$	2,121,250	$	1,906,883	$	2,069,325
Convertible senior notes	Level 2	230,000		249,263		230,000		224,825

The fair values of our senior notes and the 1.375% Convertible Senior Notes due 2019 are generally estimated based on quoted market prices for these instruments. The carrying values reported for cash and cash equivalents, restricted cash, and mortgages and land contracts due to land sellers and other loans approximate fair values.

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Document and Entity Information	3 Months Ended
	Feb. 28, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	KB Home
Entity Central Index Key	0000795266
Document Type	10-Q
Document Period End Date	Feb. 28, 2014
Amendment Flag	false
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--11-30
Entity Filer Category	Large Accelerated Filer
Entity Common Stock Shares Outstanding	83,744,528

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Commitments and Contingencies

3 Months Ended

Feb. 28, 2014

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 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, including claims where we could have liability under applicable state statutes or tort law for a defective condition in or damages to a 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, 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 could have a significant impact on our actual warranty costs in future periods and such amounts could differ from our current estimates.

The changes in our warranty liability are as follows (in thousands):

	Three Months Ended February 28,
	2014			2013
Balance at beginning of period	$	48,704		$	47,822
Warranties issued	3,426			2,766
Payments	(8,711		)	(8,929		)
Adjustments	—			1,674
Balance at end of period	$	43,419		$	43,333

Central and Southwest Florida Claims. Our overall warranty liability at February 28, 2014 included $22.9 million for estimated remaining repair costs associated with 352 homes in central and southwest Florida that have been identified as having water intrusion-related issues and estimated repair costs associated with similarly affected homes in central and southwest Florida that we believe are likely to be identified in the future. Our overall warranty liability at November 30, 2013 included $28.9 million for estimated remaining repair costs associated with 710 identified affected homes and estimated repair costs associated with similarly affected homes then-believed likely to be identified in the future. The above-mentioned amount, included in our overall warranty liability as of February 28, 2014, encompasses what we believe is the probable overall cost of the repair effort remaining before insurance and other recoveries. However, our actual costs to fully resolve repairs on affected homes could differ from the overall costs we have estimated, and the difference could be material to our consolidated financial statements.

The decrease in the liability for estimated remaining repair costs during the three months ended February 28, 2014 reflected the lower number of identified affected homes with unresolved repairs at February 28, 2014 compared to November 30, 2013. During the three months ended February 28, 2014, repairs were resolved on 371 identified affected homes and we identified 13 additional affected homes. For these purposes, we consider repairs for identified affected homes to be resolved when all repairs are completed and all repair costs are fully paid.

During the three months ended February 28, 2014 and 2013, we paid $6.0 million and $5.4 million, respectively, to repair identified affected homes. Since first identifying affected homes in late 2012, we have identified a total of 1,477 affected homes requiring more than minor repairs and resolved repairs on 1,125 of those homes through February 28, 2014. As of February 28, 2014, we had paid $42.7 million of the total costs of $65.6 million that we have estimated for the overall repair effort. Approximately half of the total estimated repair costs as of February 28, 2014 related to two attached-home communities. We anticipate resolving repairs on homes affected by the water intrusion-related issues by the end of 2014.

As of February 28, 2014, based on our investigation into the central and southwest Florida water intrusion-related issues, we believe it is probable that we will recover a portion of our repair costs associated with affected homes from various sources, including subcontractors involved with the original construction of the homes and their insurers, and have reflected these estimated probable recoveries in our warranty liability. Our investigation into the water intrusion-related issues, including the process of determining potentially responsible parties and our efforts to obtain recoveries, is ongoing, and as a result, our estimate of probable recoveries may change as additional information is obtained.

Other Claims. With respect to potential recoveries on claims regarding other homes previously delivered, we have tendered claims with responsible liability insurance carriers, seeking reimbursement of costs we have incurred to make repairs and to handle claims. We intend to continue to undertake efforts, including legal proceedings, to obtain reimbursement from various sources, including subcontractors, suppliers and their insurers, for the costs we have incurred or expect to incur to investigate and complete repairs and to defend ourselves in litigation. We have not recorded any material amounts for potential future recoveries as of February 28, 2014 related to these claims regarding other homes previously delivered.

Overall Warranty Liability Assessment. In assessing our overall warranty liability at a reporting date, we evaluate the costs for warranty-related items on a combined basis for all of our previously delivered homes that are under our limited warranty, which would include homes in central and southwest Florida that have been or may in the future be identified as having water intrusion-related issues. Based on our assessment of our overall warranty liability as of February 28, 2014, we determined that our overall warranty liability was adequate with respect to our then-estimated remaining repair costs associated with homes in central and southwest Florida that have been identified as having water intrusion-related issues, estimated repair costs associated with similarly affected homes in central and southwest Florida that we believe are likely to be identified in the future and our overall warranty obligations on homes delivered. In light of this assessment, we did not record adjustments in our consolidated statement of operations for the three months ended February 28, 2014 with respect to estimated repair costs associated with identified affected homes in central and southwest Florida that have been identified as having water intrusion-related issues and estimated repair costs associated with similarly affected homes in central and southwest Florida that we believe are likely to be identified in the future. As of February 28, 2013, based on our assessment of our overall warranty liability, we recorded an adjustment to increase our overall warranty liability by $1.7 million in the first quarter of 2013 with a corresponding charge to construction and land costs in our consolidated statement of operations, reflecting an increase in our estimated warranty costs, net of estimated probable recoveries for water intrusion-related issues in central and southwest Florida and other adjustments.

Depending on the number of additional homes in central and southwest Florida that are identified as having water intrusion-related issues, and the actual costs we incur in future periods to repair identified homes and/or homes affected by other issues, including costs to provide affected homeowners with temporary housing, we may revise the amount of our estimated liability, which could result in an increase or decrease in our overall warranty liability. Based on our investigations of the water intrusion-related issues in central and southwest Florida, we believe that our warranty liability is adequate to cover the estimated probable total repair costs on these affected homes and on homes affected by other issues, though we believe it is reasonably possible that our loss in this matter could exceed the amount accrued as of February 28, 2014 by up to $6 million.

Guarantees. In the normal course of our business, we issue certain representations, warranties and guarantees related to our home sales and land sales that may be affected by Accounting Standards Codification Topic No. 460, “Guarantees.” Based on historical evidence, 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 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 self-insure a portion of our overall risk through the use of a captive insurance subsidiary. 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, where eligible subcontractors are enrolled as insureds on each project. Enrolled subcontractors contribute toward the cost of the insurance and agree to pay a contractual amount in the future in the event of a claim related to their work. For those enrolled subcontractors, we absorb their general liability associated with the work performed on our homes within the applicable projects as part of our overall general liability insurance and our self-insurance through our captive insurance subsidiary. We record expenses and liabilities based on the estimated costs required to cover our self-insured retention and deductible amounts under our insurance policies, and the estimated costs of potential claims and claim adjustment expenses that are above our coverage limits or that are not covered by our insurance policies. These estimated costs are based on an analysis of our historical claims and industry data, and include an estimate of claims incurred but not yet reported.

We engage a third-party actuary that uses our historical claim and expense data, as well as industry data, to estimate our liabilities related to unpaid claims, claim adjustment expenses, third-party recoveries and incurred but not yet reported claims associated with the risks that we are assuming under our self-insurance. These estimates are subject to uncertainty due to a variety of factors, the most significant being the long period of time between the delivery of a home to a homebuyer and when a structural warranty or construction defect claim is made, and the ultimate resolution of the construction defect claim. Though state regulations vary, construction defect claims are reported and resolved over a prolonged period of time, which can extend for 10 years or longer. As a result, the majority of the estimated liability relates to incurred but not yet reported claims. Because the majority of our estimated liabilities relate to incurred but not yet reported claims, 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.

The changes in our self-insurance liability are as follows (in thousands):

	Three Months Ended February 28,
	2014			2013
Balance at beginning of period	$	92,214		$	93,349
Self-insurance expense (a)	2,616			1,809
Payments, net of recoveries (b)	(4,414		)	(3,435		)
Balance at end of period	$	90,416		$	91,723

(a) These expenses are included in selling, general and administrative expenses and are largely offset by contributions from subcontractors participating in the wrap-up policy.

(b) Recoveries are reflected at the time we receive funds from subcontractors and/or their insurers.

The projection of losses related to these liabilities requires actuarial assumptions that are subject to variability due to uncertainties regarding construction defect claims relative to our markets and the types of product we build, insurance industry practices and legal or regulatory interpretations, among other factors. Key assumptions used in these estimates include claim frequencies, severities and settlement patterns, which can occur over an extended period of time. In addition, changes in the frequency and severity of reported claims and the estimates to settle claims can impact the trends and assumptions used in the actuarial analysis, which could be material to our consolidated financial statements. Due to the degree of judgment required and the potential for variability in these underlying assumptions, our actual future costs could differ from those estimated, and the difference could be material to our consolidated financial statements.

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 February 28, 2014, we had $427.0 million of performance bonds and $41.7 million of letters of credit outstanding. At November 30, 2013, we had $410.8 million of performance bonds and $41.5 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 obligations are 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. In the ordinary course of business, we enter into land option contracts and other similar contracts to acquire rights to land for the construction of homes. At February 28, 2014, we had total deposits of $55.7 million, comprised of $55.6 million of cash deposits and $.1 million of letters of credit, to purchase land having an aggregate purchase price of $1.09 billion. Our land option contracts and other similar contracts generally do not contain provisions requiring our specific performance.

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Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Feb. 28, 2014	Feb. 28, 2013
Cash flows from operating activities:
Net loss	$ 10,563	$ (12,458)
Adjustments to reconcile net loss to net cash used in operating activities:
Equity in income (loss) of unconsolidated joint venture	(2,584)	(656)
Distributions of earnings from unconsolidated joint ventures	0	1,438
Amortization of discounts and issuance costs	1,600	971
Depreciation and amortization	467	465
Stock-based compensation	1,779	1,013
Land Option Contract Abandonment Charges	433	0
Change in assets and liabilities:
Receivables	(10,221)	326
Inventories	(205,037)	(198,761)
Accounts payable, accrued expenses and other liabilities	(14,514)	(2,413)
Other, net	(3,549)	(957)
Net cash used in operating activities	(221,063)	(211,032)
Cash flows from investing activities:
Return of investments in (contributions to) unconsolidated joint ventures	(8,618)	(304)
Proceeds from Sale of Equity Method Investments	10,110	0
Purchases of property and equipment, net	(1,576)	(430)
Net cash provided by (used in) investing activities	(84)	(734)
Cash flows from financing activities:
Change in restricted cash	(177)	(2,257)
Proceeds from issuance of debt	0	230,000
Payment of debt issuance costs	0	(6,878)
Payments on mortgages and land contracts due to land sellers and other loans	(2,655)	(17,003)
Proceeds from issuance of common stock, net	0	109,811
Issuance of common stock under employee stock plans	0	52
Payments of cash dividends	(2,094)	(2,089)
Net cash provided by (used in) financing activities	(4,926)	311,636
Net increase (decrease) in cash and cash equivalents	(226,073)	99,870
Cash and cash equivalents at beginning of period	532,523	525,688
Cash and cash equivalents at end of period	$ 306,450	$ 625,558

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Investments in Unconsolidated Joint Ventures

3 Months Ended

Feb. 28, 2014

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. Our partners in these unconsolidated joint ventures are unrelated homebuilders and/or land developers and other real estate entities, or commercial enterprises. These investments are designed primarily to reduce market and development risks and to increase the number of lots we own or control. In some instances, participating in unconsolidated joint ventures has enabled us to acquire and develop land that we might not otherwise have had access to due to a project’s size, financing needs, duration of development or other circumstances. While we consider our participation in unconsolidated joint ventures as potentially beneficial to our homebuilding activities, we do not view such participation as essential.

We typically have obtained rights to acquire portions of the land held by the unconsolidated joint ventures in which we currently participate. When an unconsolidated joint venture sells land to our homebuilding operations, we defer recognition of our share of such unconsolidated joint venture’s earnings until a home sale is closed and title passes to a homebuyer, at which time we account for those earnings as a reduction of the cost of purchasing the land from the unconsolidated joint venture.

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, equal 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.

Each unconsolidated joint venture is obligated to maintain financial statements in accordance with GAAP. We share in the profits and losses of these unconsolidated joint ventures generally in accordance with our respective equity interests. In some instances, we recognize profits and losses related to our investment in an unconsolidated joint venture that differ from our equity interest in the unconsolidated joint venture. This may arise from impairments that we recognize related to our investment that differ from the impairments the unconsolidated joint venture recognizes with respect to the unconsolidated joint venture’s assets; differences between our basis in assets we have transferred to the unconsolidated joint venture and the unconsolidated joint venture’s basis in those assets; our deferral of the unconsolidated joint venture earnings from land sales made to our homebuilding operations; or other items. With respect to our investments in unconsolidated joint ventures, our equity in income (loss) of unconsolidated joint ventures included no impairment charges for the three months endedFebruary 28, 2014 or 2013.

The following table presents combined condensed information from the statements of operations of our unconsolidated joint ventures (in thousands):

	Three Months Ended February 28,
	2014			2013
Revenues	$	6,118		$	—
Construction and land costs	(3,523		)	—
Other expenses, net	(1,130		)	(855		)
Income (loss)	$	1,465		$	(855	)

The revenues and construction and land costs for the three months ended February 28, 2014 were solely related to the sale of land by one of our unconsolidated joint ventures.

The following table presents combined condensed balance sheet information for our unconsolidated joint ventures (in thousands):

	February 28, 2014		November 30, 2013
Assets
Cash	$	17,958	$	18,752
Receivables	4,619		4,902
Inventories	165,133		381,195
Other assets	149		1,183
Total assets	$	187,859	$	406,032
Liabilities and equity
Accounts payable and other liabilities	$	22,843	$	85,386
Equity	165,016		320,646
Total liabilities and equity	$	187,859	$	406,032

The following table presents information relating to our investments in unconsolidated joint ventures (dollars in thousands):

	February 28, 2014		November 30, 2013
Number of investments in unconsolidated joint ventures	7		9
Investments in unconsolidated joint ventures	$	60,648	$	130,192
Number of unconsolidated joint venture lots controlled under land option contracts or other similar contracts	673		5,367

As of February 28, 2014, the combined inventories of our unconsolidated joint ventures and the number of unconsolidated joint venture lots controlled under land option contracts or other similar contracts each decreased from November 30, 2013, partly due to a distribution of $70.6 million of land we received from Inspirada Builders, LLC (“Inspirada”), our unconsolidated joint venture in Las Vegas, during the three months ended February 28, 2014. In addition, we sold our interest in an unconsolidated joint venture in Maryland for $10.1 million, which resulted in a gain of $3.2 million that is included in equity in income of unconsolidated joint ventures in our consolidated statements of operations. The decrease in the combined inventories of our unconsolidated joint ventures also reflected the transfer of a $33.2 million inventory-related obligation to us in connection with the distribution of land we received from Inspirada, as discussed below in Note 10. Accrued Expenses and Other Liabilities. This transfer also contributed to the decrease in the combined accounts payable and other liabilities of our unconsolidated joint ventures during the three months ended February 28, 2014.

The decrease in our investments in unconsolidated joint ventures at February 28, 2014, compared to November 30, 2013, reflected the above-mentioned transactions, partly offset by capital contributions made to various unconsolidated joint ventures.

None of our unconsolidated joint ventures had outstanding debt at February 28, 2014 or November 30, 2013.

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Variable Interest Entities

3 Months Ended

Feb. 28, 2014

Variable Interest Entities [Abstract]

Variable Interest Entities

Variable Interest Entities

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 in accordance with Accounting Standards Codification Topic No. 810, “Consolidation” (“ASC 810”), to determine whether they are VIEs and, if so, whether we are the primary beneficiary. None of our joint ventures at February 28, 2014 and November 30, 2013 were determined under the provisions of ASC 810 to be VIEs. All of our joint ventures were unconsolidated and accounted for under the equity method because we did not have a controlling financial interest.

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. The use of such land option contracts and other similar contracts to control land generally allows us to reduce the market risks associated with direct land ownership and development, and to reduce our capital and financial commitments, including interest and other carrying costs. Under such contracts, we typically pay a specified option 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 provisions of ASC 810 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, ASC 810 requires us to consolidate a VIE if we are determined to be the primary beneficiary. In determining whether we are the primary beneficiary, we consider, among other things, whether we have the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance. Such activities would include, among other things, determining or limiting the scope or purpose of the VIE, selling or transferring property owned or controlled by the VIE, or arranging financing for the VIE. As a result of our analyses, we determined that as of February 28, 2014 and November 30, 2013 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. In accordance with ASC 810, 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):

	February 28, 2014				November 30, 2013
	Cash Deposits		Aggregate Purchase Price		Cash Deposits		Aggregate Purchase Price
Unconsolidated VIEs	$	25,031	$	589,713	$	11,063	$	616,000
Other land option contracts and other similar contracts	30,603		500,853		30,502		535,496
Total	$	55,634	$	1,090,566	$	41,565	$	1,151,496

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 $34.7 million at February 28, 2014 and $31.0 million at November 30, 2013. These pre-acquisition costs and cash deposits were included in inventories in our consolidated balance sheets. We also had outstanding letters of credit of $.1 million at both February 28, 2014 and November 30, 2013 in lieu of cash deposits under certain land option contracts and other similar contracts.

We also evaluate our land option contracts and other similar contracts for financing arrangements in accordance with Accounting Standards Codification Topic No. 470, “Debt” (“ASC 470”), and, as a result of our evaluations, increased inventories, with a corresponding increase to accrued expenses and other liabilities, in our consolidated balance sheets by $9.8 million at February 28, 2014 and $8.9 million at November 30, 2013.

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Supplemental Guarantor Information

3 Months Ended

Feb. 28, 2014

Guarantees [Abstract]

Supplemental Guarantor Information

Supplemental Guarantor Information

Our obligations to pay principal, premium, if any, and interest under our senior notes and the 1.375% Convertible Senior Notes due 2019 and borrowings, if any, under the Credit Facility are guaranteed on a joint and several basis by certain of our subsidiaries (the “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 our senior notes and the 1.375% Convertible Senior Notes due 2019, 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 (as in effect on June 1, 1996) 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 our senior notes, the 1.375% Convertible Senior Notes due 2019 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 February 28, 2014. The format of the condensed consolidating financial statements has been revised for the periods previously reported in our quarterly reports to retrospectively reflect (a) the transfer of certain of our subsidiaries from non-guarantor subsidiaries to guarantor subsidiaries as a result of such subsidiaries becoming guarantor subsidiaries during 2013 and (b) the following elective reclassifications which relate solely to transactions between KB Home corporate and its subsidiaries: (i) the reclassification of KB Home corporate, guarantor and non-guarantor intercompany interest, which had previously been included in interest expense, to a separate line item with corresponding offsets in the consolidating adjustments column; (ii) the reclassification of the net intercompany funding activity of KB Home corporate, which was previously included in cash flows provided by (used in) financing activities, to cash flows from investing activities with corresponding offsets in the consolidating adjustments column; and (iii) the reclassification of dividends received by KB Home corporate from its subsidiaries to cash provided by (used in) operating activities. Such dividends were previously included in net cash provided by (used in) financing activities. This revised presentation of the condensed consolidating financial statements had no impact or effect on our consolidated financial statements for any periods presented, including our consolidated statements of operations, consolidated balance sheets and consolidated statements of cash flows.

Condensed Consolidating Statement of Operations

Three Months Ended February 28, 2014 (in thousands)

	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Revenues	$	—		$	435,849		$	14,838		$	—		$	450,687
Homebuilding:
Revenues	$	—		$	435,849		$	12,418		$	—		$	448,267
Construction and land costs	—			(358,092		)	(11,182		)	—			(369,274		)
Selling, general and administrative expenses	(15,744		)	(41,972		)	(3,558		)	—			(61,274		)
Operating income (loss)	(15,744		)	35,785			(2,322		)	—			17,719
Interest income	167			1			—			—			168
Interest expense	(38,008		)	(1,272		)	—			28,004			(11,276		)
Intercompany interest	59,722			(32,096		)	378			(28,004		)	—
Equity in income of unconsolidated joint ventures	—			2,590			—			—			2,590
Homebuilding pretax income (loss)	6,137			5,008			(1,944		)	—			9,201
Financial services pretax income	—			—			1,562			—			1,562
Total pretax income (loss)	6,137			5,008			(382		)	—			10,763
Income tax expense	(100		)	(100		)	—			—			(200		)
Equity in net income of subsidiaries	4,526			—			—			(4,526		)	—
Net income (loss)	$	10,563		$	4,908		$	(382	)	$	(4,526	)	$	10,563

Condensed Consolidating Statement of Operations

Three Months Ended February 28, 2013 (in thousands)

	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Revenues	$	—		$	393,228		$	11,991		$	—		$	405,219
Homebuilding:
Revenues	$	—		$	393,228		$	9,588		$	—		$	402,816
Construction and land costs	—			(334,498		)	(8,767		)	—			(343,265		)
Selling, general and administrative expenses	(14,823		)	(40,809		)	(3,465		)	—			(59,097		)
Operating income (loss)	(14,823		)	17,921			(2,644		)	—			454
Interest income	201			1			2			—			204
Interest expense	(31,847		)	(1,575		)	—			18,182			(15,240		)
Intercompany interest	45,356			(28,134		)	960			(18,182		)	—
Equity in loss of unconsolidated joint ventures	—			(435		)	—			—			(435		)
Homebuilding pretax loss	(1,113		)	(12,222		)	(1,682		)	—			(15,017		)
Financial services pretax income	—			—			2,659			—			2,659
Total pretax income (loss)	(1,113		)	(12,222		)	977			—			(12,358		)
Income tax expense	—			(100		)	—			—			(100		)
Equity in net loss of subsidiaries	(11,345		)	—			—			11,345			—
Net income (loss)	$	(12,458	)	$	(12,322	)	$	977		$	11,345		$	(12,458	)

Condensed Consolidating Balance Sheet

February 28, 2014 (in thousands)

	KB Home Corporate		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Total
Assets
Homebuilding:
Cash and cash equivalents	$	234,234	$	61,043	$	7,992	$	—		$	303,269
Restricted cash	42,083		—		—		—			42,083
Receivables	1,446		85,659		250		—			87,355
Inventories	—		2,600,119		34,825		—			2,634,944
Investments in unconsolidated joint ventures	—		60,648		—		—			60,648
Other assets	97,477		11,574		1,436		—			110,487
	375,240		2,819,043		44,503		—			3,238,786
Financial services	—		—		9,386		—			9,386
Intercompany receivables	2,397,174		—		113,059		(2,510,233		)	—
Investments in subsidiaries	42,004		—		—		(42,004		)	—
Total assets	$	2,814,418	$	2,819,043	$	166,948	$	(2,552,237	)	$	3,248,172
Liabilities and stockholders’ equity
Homebuilding:
Accounts payable, accrued expenses and other liabilities	$	134,679	$	295,212	$	94,407	$	—		$	524,298
Mortgages and notes payable	2,112,110		63,080		—		—			2,175,190
	2,246,789		358,292		94,407		—			2,699,488
Financial services	—		—		2,350		—			2,350
Intercompany payables	21,295		2,455,743		33,195		(2,510,233		)	—
Stockholders’ equity	546,334		5,008		36,996		(42,004		)	546,334
Total liabilities and stockholders’ equity	$	2,814,418	$	2,819,043	$	166,948	$	(2,552,237	)	$	3,248,172

Condensed Consolidating Balance Sheet

November 30, 2013 (in thousands)

	KB Home Corporate		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Total
Assets
Homebuilding:
Cash and cash equivalents	$	476,847	$	41,316	$	11,932	$	—		$	530,095
Restricted cash	41,906		—		—		—			41,906
Receivables	1,472		74,186		91		—			75,749
Inventories	—		2,263,034		35,543		—			2,298,577
Investments in unconsolidated joint ventures	—		130,192		—		—			130,192
Other assets	97,647		9,072		357		—			107,076
	617,872		2,517,800		47,923		—			3,183,595
Financial services	—		—		10,040		—			10,040
Intercompany receivables	2,129,729		—		117,829		(2,247,558		)	—
Investments in subsidiaries	39,955		—		—		(39,955		)	—
Total assets	$	2,787,556	$	2,517,800	$	175,792	$	(2,287,513	)	$	3,193,635
Liabilities and stockholders’ equity
Homebuilding:
Accounts payable, accrued expenses and other liabilities	$	117,875	$	292,220	$	94,363	$	—		$	504,458
Mortgages and notes payable	2,111,773		38,725		—		—			2,150,498
	2,229,648		330,945		94,363		—			2,654,956
Financial services	—		—		2,593		—			2,593
Intercompany payables	21,822		2,186,855		38,881		(2,247,558		)	—
Stockholders’ equity	536,086		—		39,955		(39,955		)	536,086
Total liabilities and stockholders’ equity	$	2,787,556	$	2,517,800	$	175,792	$	(2,287,513	)	$	3,193,635

Condensed Consolidating Statement of Cash Flows

Three Months Ended February 28, 2014 (in thousands)

	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net cash provided by (used in) operating activities	$	25,225		$	(238,483	)	$	(7,805	)	$	—		$	(221,063	)
Cash flows from investing activities:
Contributions to unconsolidated joint ventures	—			(8,618		)	—			—			(8,618		)
Proceeds from sale of investment in unconsolidated joint venture	—			10,110			—			—			10,110
Purchases of property and equipment, net	(70		)	(1,455		)	(51		)	—			(1,576		)
Intercompany	(265,497		)	—			—			265,497			—
Net cash provided by (used in) investing activities	(265,567		)	37			(51		)	265,497			(84		)
Cash flows from financing activities:
Change in restricted cash	(177		)	—			—			—			(177		)
Payments on mortgages and land contracts due to land sellers and other loans	—			(2,655		)	—			—			(2,655		)
Payments of cash dividends	(2,094		)	—			—			—			(2,094		)
Intercompany	—			260,828			4,669			(265,497		)	—
Net cash provided by (used in) financing activities	(2,271		)	258,173			4,669			(265,497		)	(4,926		)
Net increase (decrease) in cash and cash equivalents	(242,613		)	19,727			(3,187		)	—			(226,073		)
Cash and cash equivalents at beginning of period	476,847			41,316			14,360			—			532,523
Cash and cash equivalents at end of period	$	234,234		$	61,043		$	11,173		$	—		$	306,450

Condensed Consolidating Statement of Cash Flows

Three Months Ended February 28, 2013 (in thousands) 

	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net cash provided by (used in) operating activities	$	8,208		$	(206,425	)	$	(12,815	)	$	—		$	(211,032	)
Cash flows from investing activities:
Contributions to unconsolidated joint ventures	—			(94		)	(210		)	—			(304		)
Purchases of property and equipment, net	(96		)	(318		)	(16		)	—			(430		)
Intercompany	(239,211		)	—			—			239,211			—
Net cash used in investing activities	(239,307		)	(412		)	(226		)	239,211			(734		)
Cash flows from financing activities:
Change in restricted cash	(2,257		)	—			—			—			(2,257		)
Proceeds from issuance of debt	230,000			—			—			—			230,000
Payment of debt issuance costs	(6,878		)	—			—			—			(6,878		)
Payments on mortgages and land contracts due to land sellers and other loans	—			(17,003		)	—			—			(17,003		)
Proceeds from issuance of common stock, net	109,811			—			—			—			109,811
Issuance of common stock under employee stock plans	52			—			—			—			52
Payments of cash dividends	(2,089		)	—			—			—			(2,089		)
Intercompany	—			230,182			9,029			(239,211		)	—
Net cash provided by financing activities	328,639			213,179			9,029			(239,211		)	311,636
Net increase (decrease) in cash and cash equivalents	97,540			6,342			(4,012		)	—			99,870
Cash and cash equivalents at beginning of period	457,007			54,205			14,476			—			525,688
Cash and cash equivalents at end of period	$	554,547		$	60,547		$	10,464		$	—		$	625,558

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Legal Matters

3 Months Ended

Feb. 28, 2014

Commitments and Contingencies Disclosure [Abstract]

Legal Matters

Legal Matters

Nevada Development Contract Litigation. KB HOME Nevada Inc., a wholly owned subsidiary of ours (“KB Nevada”), is a defendant in a case in the Eighth Judicial District Court in Clark County, Nevada entitled Las Vegas Development Associates, LLC, Essex Real Estate Partners, LLC, et al. v. KB HOME Nevada Inc. In 2007, Las Vegas Development Associates, LLC (“LVDA”) agreed to purchase from KB Nevada approximately 83 acres of land located near Las Vegas, Nevada. LVDA subsequently assigned its rights to Essex Real Estate Partners, LLC (“Essex”). KB Nevada and Essex entered into a development agreement relating to certain major infrastructure improvements. LVDA’s and Essex’s complaint, initially filed in 2008, alleged that KB Nevada breached the development agreement, and also alleged that KB Nevada fraudulently induced them to enter into the purchase and development agreements. LVDA’s and Essex’s lenders subsequently filed related actions that were consolidated into the LVDA/Essex matter. The consolidated plaintiffs sought rescission of the agreements or, in the alternative, compensatory damages of $55 million plus unspecified punitive damages and other damages, and interest charges in excess of $41 million (the “Claimed Damages”). KB Nevada has denied the allegations, and believes it has meritorious defenses to the consolidated plaintiffs’ claims. At a November 19, 2012 hearing, the court denied all of the consolidated plaintiffs’ motions for summary judgment on their claims. In addition, the court granted several of KB Nevada’s motions for summary judgment, eliminating, among other of the consolidated plaintiffs’ claims, all claims for fraud, negligent misrepresentation, and punitive damages. With the court’s decisions, the only remaining claims against KB Nevada are for contract damages and rescission. In August 2013, the court granted motions that further narrowed the scope of the Claimed Damages. While the ultimate outcome is uncertain — we believe it is reasonably possible that the loss in this matter could range from zero to approximately $55 million plus prejudgment interest, which could be material to our consolidated financial statements — KB Nevada believes it will be successful in defending against the consolidated plaintiffs’ remaining claims and that the consolidated plaintiffs will not be awarded rescission or damages. The non-jury trial, originally set for September 2012, has been continued to May 20, 2014.

Other Matters. In addition to the specific proceedings described above, we are involved in other 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 February 28, 2014, it was not reasonably possible that an additional material loss had been incurred in an amount in excess of the estimated amounts already recognized in our consolidated financial statements. We evaluate our accruals for litigation and regulatory proceedings at least quarterly and, as appropriate, adjust them to reflect (a) the facts and circumstances known to us at the time, including information regarding negotiations, settlements, rulings and other relevant events and developments; (b) the advice and analyses of counsel; and (c) the assumptions and judgment of management. Similar factors and considerations are used in establishing new accruals for proceedings as to which losses have become probable and reasonably estimable at the time an evaluation is made. Based on our experience, we believe that the amounts that may be claimed or alleged against us in these proceedings are not a meaningful indicator of our potential liability. The outcome of any of these proceedings, including the defense and other litigation-related costs and expenses we may incur, however, is inherently uncertain and could differ significantly from the estimate reflected in a related accrual, if made. Therefore, it is possible that the ultimate outcome of any proceeding, if in excess of a related accrual or if no accrual had been made, could be material to our consolidated financial statements.

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Income Taxes

3 Months Ended

Feb. 28, 2014

Income Tax Disclosure [Abstract]

Income Taxes

11. Income Taxes

Income Tax Expense. Our income tax expense totaled $.2 million for the three months ended February 28, 2014 and $.1 million for the three months ended February 28, 2013. Due to the effects of the deferred tax asset valuation allowance, our effective tax rates for the three months ended February 28, 2014 and 2013 are not meaningful items as our income tax amounts are not directly correlated to the amount of our pretax income (loss) for those periods.

Deferred Tax Asset Valuation Allowance. In accordance with Accounting Standards Codification Topic No. 740, “Income Taxes” (“ASC 740”), we evaluate our deferred tax assets quarterly to determine if adjustments to the valuation allowance are required. ASC 740 requires that companies assess whether a valuation allowance should be established 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. The ultimate realization of deferred tax assets depends primarily on the generation of future taxable income. The value of our deferred tax assets will depend on applicable income tax rates. During the three months ended February 28, 2014, we reduced our deferred tax asset valuation allowance by $4.4 million to account for adjustments to our deferred tax assets associated with the pretax income generated during the period. During the three months ended February 28, 2013, we reduced our deferred tax asset valuation allowance by $.7 million to account for adjustments to our deferred tax assets associated with the vesting of equity-based awards. One of the primary pieces of negative evidence that we consider in evaluating the need for a valuation allowance is our three-year cumulative loss position, which is largely the result of our pretax losses in 2012 and 2011, as we generated pretax income for the year ended November 30, 2013. In the first quarter of 2014, we reported our third consecutive quarter of pretax income and experienced year-over-year increases in our revenues, housing gross profit margin, net orders and backlog. If such positive trends in our business continue, together with improvements in housing markets and the homebuilding industry, and we are profitable on a sustained basis, we believe that there could be sufficient positive evidence to support reducing a large portion of our valuation allowance during 2014.

We had no net deferred tax assets at February 28, 2014 or November 30, 2013 as we maintained a full valuation allowance against our deferred tax assets. The deferred tax asset valuation allowance decreased to $855.0 million at February 28, 2014 from $859.4 million at November 30, 2013, reflecting the $4.4 million valuation allowance adjustment recorded during the three months endedFebruary 28, 2014.

Unrecognized Tax Benefits. During the three months ended February 28, 2014, our total gross unrecognized tax benefits remained unchanged at $.3 million. The total amount of gross unrecognized tax benefits, including interest and penalties, that would affect the effective tax rate was $.3 million as of February 28, 2014. We anticipate that these gross unrecognized tax benefits will decrease by an amount ranging from $.1 million to $.3 million during the 12 months from this reporting date due to various state tax filings associated with the resolution of a federal tax audit. Our fiscal years ending 2010 and later remain open to federal and state examinations.

The benefits of our net operating losses (“NOL”), built-in losses and tax credits would be reduced or potentially eliminated if we experienced an “ownership change” under Internal Revenue Code Section 382 (“Section 382”). Based on our analysis performed as of February 28, 2014, we do not believe we have experienced an ownership change as defined by Section 382, and, therefore, the NOL, built-in losses and tax credits we have generated should not be subject to a Section 382 limitation as of this reporting date.

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Fair Value Disclosures (Assets Measured at Fair Value on Nonrecurring Basis) (Details) (Fair Value, Measurements, Nonrecurring, Level 3, USD $) In Thousands, unless otherwise specified	3 Months Ended		12 Months Ended
	Feb. 28, 2014		Nov. 30, 2013
Fair Value, Measurements, Nonrecurring | Level 3
Assets measured at fair value on a nonrecurring basis
Post Impairment Fair Value	$ 0	[1]	$ 1,143	[1]

[1] Amounts represent the aggregate fair value for communities or land parcels where we recognized inventory impairment charges during the period, as of the date that the fair value measurements were made. The carrying value for these communities or land parcels may have subsequently increased or decreased from the fair value reflected due to activity that has occurred since the measurement date.

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Other Assets

3 Months Ended

Feb. 28, 2014

Other Assets [Abstract]

Other Assets

Other Assets

Other assets consisted of the following (in thousands):

	February 28, 2014		November 30, 2013
Cash surrender value of insurance contracts	$	69,443	$	68,534
Debt issuance costs	26,103		27,366
Property and equipment, net	9,571		8,460
Prepaid expenses	5,370		2,716
Total	$	110,487	$	107,076

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Accrued Expenses and Other Liabilities

3 Months Ended

Feb. 28, 2014

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):

	February 28, 2014		November 30, 2013
Self-insurance and other litigation liabilities	$	94,939	$	99,612
Employee compensation and related benefits	87,519		99,332
Accrued interest payable	64,971		45,562
Inventory-related obligations (a)	62,748		29,517
Warranty liability	43,419		48,704
Real estate and business taxes	6,106		8,131
Other	26,383		25,318
Total	$	386,085	$	356,176

(a) The increase in inventory-related obligations at February 28, 2014, compared to November 30, 2013, reflected a $33.2 million liability we recorded for fixed or determinable amounts associated with tax increment financing entities (“TIFE”) in connection with the distribution of land we received from Inspirada during the three months ended February 28, 2014. As homes are delivered, the obligation to pay the remaining TIFE assessments associated with each underlying lot is transferred to the homebuyer. As such, these assessment obligations will be paid by us only to the extent we do not deliver homes to homebuyers on the applicable lots before the related TIFE obligations mature.

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Mortgages and Notes Payable

3 Months Ended

Feb. 28, 2014

Debt Disclosure [Abstract]

Mortgages and Notes Payable

Mortgages and Notes Payable

Mortgages and notes payable consisted of the following (in thousands):

	February 28, 2014		November 30, 2013
Mortgages and land contracts due to land sellers and other loans	$	37,970	$	13,615
6 1/4% Senior notes due June 15, 2015	199,870		199,864
9.10% Senior notes due September 15, 2017	262,213		262,048
7 1/4% Senior notes due June 15, 2018	299,295		299,261
8.00% Senior notes due March 15, 2020	345,842		345,710
7.00% Senior notes due December 15, 2021	450,000		450,000
7.50% Senior notes due September 15, 2022	350,000		350,000
1.375% Convertible senior notes due February 1, 2019	230,000		230,000
Total	$	2,175,190	$	2,150,498

Unsecured Revolving Credit Facility. We have a $200.0 million unsecured revolving credit facility with a syndicate of financial institutions (as amended, the “Credit Facility”) that will mature on March 12, 2016. The Credit Facility contains an uncommitted accordion feature under which its aggregate principal amount can be increased to up to$300.0 million under certain conditions and the availability of additional bank commitments, as well as a sublimit of $100.0 million for the issuance of letters of credit, which may be utilized in combination with or to replace our LOC Facilities. Interest on amounts borrowed under the Credit Facility is payable quarterly in arrears at a rate based on either the London Interbank Offered Rate or a base rate, plus a spread that depends on our debt rating and consolidated leverage ratio (“Leverage Ratio”), as defined under the Credit Facility. The Credit Facility also requires the payment of a commitment fee ranging from .50% to .75% of the unused commitment, based on our debt rating and Leverage Ratio. 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 an interest coverage ratio or a 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 February 28, 2014, we had no cash borrowings or letters of credit outstanding under the Credit Facility and we had $200.0 million available for cash borrowings, with up to $100.0 million of that amount available for the issuance of letters of credit.

Letter of Credit Facilities. We maintain the LOC Facilities with various financial institutions to obtain letters of credit in the ordinary course of operating our business. As of February 28, 2014 and November 30, 2013, we had $41.7 million and $41.5 million, respectively, of letters of credit outstanding under the LOC Facilities. The LOC Facilities require us to deposit and maintain cash with the issuing financial institutions as collateral for our letters of credit outstanding. We may maintain, revise or, if necessary or desirable, enter into additional or expanded letter of credit facilities, or other similar facility arrangements, with the same or other financial institutions.

Mortgages and Land Contracts Due to Land Sellers and Other Loans. As of February 28, 2014, inventories having a carrying value of $101.6 million were pledged to collateralize mortgages and land contracts due to land sellers and other loans totaling $38.0 million.

Shelf Registration. We have an automatically effective universal shelf registration statement on file with the SEC, which was filed on September 20, 2011 (the “2011 Shelf Registration”). The 2011 Shelf Registration registers the offering of debt and equity securities that we may issue from time to time in amounts to be determined.

Senior Notes. All of our senior notes outstanding at February 28, 2014 and November 30, 2013 represent senior unsecured obligations and rank equally in right of payment with all of our existing and future indebtedness. Interest on each of these senior notes is payable semi-annually. At our option, these notes may be redeemed, in whole at any time or from time to time in part, at a redemption price equal to the greater of (a) 100% of the principal amount of the notes being redeemed and (b) the sum of the present values of the remaining scheduled payments of principal and interest on the notes being redeemed discounted

to the redemption date at a defined rate, plus, in each case, accrued and unpaid interest on the notes being redeemed to the applicable redemption date.

Convertible Senior Notes. On January 29, 2013 and February 4, 2013, pursuant to the 2011 Shelf Registration, we issued in an underwritten public offering the 1.375% Convertible Senior Notes due 2019 at 100% of the $230.0 million in aggregate principal amount of these notes. The issuance on February 4, 2013 was made pursuant to the exercise of an option granted to the underwriters to purchase such notes to cover over-allotments. Interest on the 1.375% Convertible Senior Notes due 2019, which represent senior unsecured obligations of ours and rank equally in right of payment with all of our other senior unsecured indebtedness, is payable semi-annually in arrears on February 1 and August 1. We will also pay interest on November 1, 2018. The 1.375% Convertible Senior Notes due 2019 will mature on February 1, 2019, unless converted earlier by the holders, at their option, or redeemed by us, or purchased by us at the option of the holders following the occurrence of a fundamental change, as defined in the instruments governing the 1.375% Convertible Senior Notes due 2019.

At any time prior to the close of business on the business day immediately preceding the maturity date, holders may convert all or any portion of their 1.375% Convertible Senior Notes due 2019. The 1.375% Convertible Senior Notes due 2019 are initially convertible into shares of our common stock at a conversion rate of 36.5297 shares for each $1,000 principal amount of the notes, which represents an initial conversion price of approximately $27.37 per share and a conversion premium of approximately 47% based on the closing price of our common stock on January 29, 2013, which was $18.62 per share. This initial conversion rate equates to 8,401,831 shares of our common stock. The conversion rate is subject to adjustment upon the occurrence of certain events, including: subdivisions and combinations of our common stock; the issuance of stock dividends, or certain rights, options or warrants, capital stock, indebtedness, assets or cash dividends to all or substantially all holders of our common stock; and certain tender or exchange offers by us. The conversion rate will not, however, be adjusted for other events, such as a third party tender or exchange offer or an issuance of common stock for cash or an acquisition, that may adversely affect the trading price of the notes or our common stock. On conversion, holders of the 1.375% Convertible Senior Notes due 2019 will not be entitled to receive cash in lieu of shares of our common stock, except for cash in lieu of fractional shares.

We may not redeem the 1.375% Convertible Senior Notes due 2019 prior to November 6, 2018. On or after November 6, 2018, and prior to the stated maturity date, we may at our option redeem all or part of the 1.375% Convertible Senior Notes due 2019 for a cash price equal to 100% of the principal amount of the notes being redeemed, plus accrued and unpaid interest to, but not including, the redemption date. If a fundamental change, as defined in the instruments governing the 1.375% Convertible Senior Notes due 2019, occurs prior to the stated maturity date, the holders may require us to purchase for cash all or any portion of their 1.375% Convertible Senior Notes due 2019 at 100% of the principal amount of the notes, plus accrued and unpaid interest to, but not including, the fundamental change purchase date.

We used the $223.1 million in total net proceeds from the issuance of the 1.375% Convertible Senior Notes due 2019 together with the total net proceeds from a concurrent underwritten public offering of our common stock, which is described in Note 16. Stockholders’ Equity, for general corporate purposes, including for investments in land and land development.

The indenture governing the senior notes and the 1.375% Convertible Senior Notes due 2019 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-leaseback transactions involving property or assets above a certain specified value. In addition, the 1.375% Convertible Senior Notes due 2019 and all of the senior notes (with the exception of the 6 1/4% senior notes due 2015 and the 7 1/4% senior notes due 2018) contain certain limitations related to mergers, consolidations, and sales of assets.

As of February 28, 2014, we were in compliance with the applicable terms of all our covenants under the Credit Facility, the senior notes, the 1.375% Convertible Senior Notes due 2019, 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.

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Commitments and Contingencies (Changes in the Warranty Liability) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Feb. 28, 2014		Feb. 28, 2013		Nov. 30, 2013	Nov. 30, 2012
Loss Contingencies [Line Items]
Self Insurance Reserve	$ 90,416		$ 91,723		$ 92,214	$ 93,349
Expenses Associated with Self Insurance	2,616	[1]	1,809	[1]
Payments, Net of Recoveries for Self Insurance	(4,414)	[2]	(3,435)	[2]
Changes in the Warranty Liability
Balance at beginning of period	48,704		47,822
Warranties issued	3,426		2,766
Payments	(8,711)		(8,929)
Adjustments	0		1,674
Balance at end of period	$ 43,419		$ 43,333

[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)Recoveries are reflected at the time we receive funds from subcontractors and/or their insurers.

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Stockholders' Equity (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	0 Months Ended	3 Months Ended						3 Months Ended								3 Months Ended			3 Months Ended
	Jan. 29, 2013	Feb. 28, 2014	Feb. 28, 2013	Feb. 28, 2014 Common Stock	Nov. 30, 2013 Common Stock	Feb. 28, 2013 Common Stock	Nov. 30, 2012 Common Stock	Feb. 28, 2014 Paid-in Capital	Feb. 28, 2013 Paid-in Capital	Feb. 28, 2014 Retained Earnings	Feb. 28, 2013 Retained Earnings	Feb. 28, 2014 Accumulated Other Comprehensive Income	Nov. 30, 2013 Accumulated Other Comprehensive Income	Feb. 28, 2013 Accumulated Other Comprehensive Income	Nov. 30, 2012 Accumulated Other Comprehensive Income	Feb. 28, 2013 Trust for Benefit of Employees [Member]	Feb. 28, 2014 Trust for Benefit of Employees [Member]	Nov. 30, 2013 Trust for Benefit of Employees [Member]	Feb. 28, 2013 Treasury Stock	Feb. 28, 2014 Treasury Stock	Nov. 30, 2013 Treasury Stock
Equity [Abstract]
Treasury Stock Acquired, Average Cost Per Share	$ 18.25
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance		$ 536,086	$ 376,806	$ 115,296	$ 115,296	$ 115,178	$ 115,178	$ 788,893	$ 888,579	$ 481,889	$ 450,292	$ (17,516)	$ (17,516)	$ (27,958)	$ (27,958)	$ (115,149)	$ (113,911)	$ (113,911)	$ (934,136)	$ (718,565)	$ (718,565)
Net income (loss)		10,563	(12,458)							10,563	(12,458)
Dividends on common stock		(2,094)	(2,089)							(2,094)	(2,089)
Stock-based compensation		1,779	1,013					1,779	1,013
Stock Issued During Period, Value, Treasury Stock Reissued			109,811						(106,314)										216,125
Grantor stock ownership trust			52						20							32
Ending balance		$ 546,334	$ 473,135	$ 115,296	$ 115,296	$ 115,178	$ 115,178	$ 790,672	$ 783,298	$ 490,358	$ 435,745	$ (17,516)	$ (17,516)	$ (27,958)	$ (27,958)	$ (115,117)	$ (113,911)	$ (113,911)	$ (718,011)	$ (718,565)	$ (718,565)

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Commitments and Contingencies (Narratives) (Details) (USD $)	3 Months Ended
	Feb. 28, 2014	Feb. 28, 2013	Nov. 30, 2013
Loss Contingencies [Line Items]
Structural warranty provided by the company (in years)	10 years
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 a home (in years)	1 year
Payments	$ (8,711,000)	$ (8,929,000)
Adjustment to increase warranty liability	0	1,674,000
Performance bonds	427,000,000		410,800,000
Letters of credit outstanding	41,700,000		41,500,000
Total deposits	55,700,000
Cash deposits	55,634,000		41,565,000
Letters of credit	100,000		100,000
Aggregate purchase price of land	1,090,566,000		1,151,496,000
Water Intrusion [Member]
Loss Contingencies [Line Items]
Warranty Liability Associated with Water Intrusion	22,900,000		28,900,000
Number of Homes Affected by Water Intrusion	352		710
Number of Affected Homes on which Repairs Were Resolved	371
Accumulated number of affected homes on which repairs were resolved	1,125
Payments	(6,000,000)	(5,400,000)
Accumulated Number of Affected Homes	1,477
Payments made as repair costs for homes with Water Intrusion	42,700,000
Estimated repair costs for homes with Water Intrusion	65,600,000
Number of Affected Attached Home Communities	2
Number Of Affected Homes, Period Increase (Decrease)	13
Product Liability Contingency, Loss Exposure Not Accrued, Best Estimate	$ 6,000,000

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Mortgages and Notes Payable (Tables)

3 Months Ended

Feb. 28, 2014

Debt Disclosure [Abstract]

Schedule of Mortgages and Notes Payable

Mortgages and notes payable consisted of the following (in thousands):

	February 28, 2014		November 30, 2013
Mortgages and land contracts due to land sellers and other loans	$	37,970	$	13,615
6 1/4% Senior notes due June 15, 2015	199,870		199,864
9.10% Senior notes due September 15, 2017	262,213		262,048
7 1/4% Senior notes due June 15, 2018	299,295		299,261
8.00% Senior notes due March 15, 2020	345,842		345,710
7.00% Senior notes due December 15, 2021	450,000		450,000
7.50% Senior notes due September 15, 2022	350,000		350,000
1.375% Convertible senior notes due February 1, 2019	230,000		230,000
Total	$	2,175,190	$	2,150,498

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Variable Interest Entities (Details) (USD $)	Feb. 28, 2014	Nov. 30, 2013
Variable Interest Entity [Line Items]
Cash Deposits	$ 55,634,000	$ 41,565,000
Aggregate Purchase Price	1,090,566,000	1,151,496,000
Pre-acquisition costs related to land option contracts and other similar contracts	34,700,000	31,000,000
Outstanding letters of credit	100,000	100,000
Increase in inventories and accrued expenses and other liabilities	9,800,000	8,900,000
Variable Interest Entity, Not Primary Beneficiary [Member]
Variable Interest Entity [Line Items]
Cash Deposits	25,031,000	11,063,000
Aggregate Purchase Price	589,713,000	616,000,000
Non-VIE Other land option contracts and other similar contracts [Member]
Variable Interest Entity [Line Items]
Cash Deposits	30,603,000	30,502,000
Aggregate Purchase Price	$ 500,853,000	$ 535,496,000

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Stock-Based Compensation

3 Months Ended

Feb. 28, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

Stock-Based Compensation

We measure and recognize compensation expense associated with our grant of equity-based awards in accordance with Accounting Standards Codification Topic No. 718, “Compensation — Stock Compensation” (“ASC 718”). ASC 718 requires that companies measure and recognize compensation expense at an amount equal to the fair value of share-based payments granted under compensation arrangements over the vesting period. Compensation expense related to equity-based awards is included in selling, general and administrative expense in our consolidated statements of operations.

Stock Options. In accordance with ASC 718, we estimate the grant-date fair value of stock options using the Black-Scholes option-pricing model, which takes into account assumptions regarding an expected dividend yield, a risk-free interest rate, an expected volatility factor for the market price of our common stock and an expected term of the stock options. The following table summarizes stock option transactions for the three months ended February 28, 2014:

	Options		Weighted Average Exercise Price
Options outstanding at beginning of period	10,531,938		$	21.11
Granted	—		—
Exercised	—		—
Cancelled	(4,947	)	33.72
Options outstanding at end of period	10,526,991		$	21.11
Options exercisable at end of period	9,414,988		$	22.24

As of February 28, 2014, the weighted average remaining contractual life of stock options outstanding and stock options exercisable was 5.3 years and 4.9 years, respectively. There was $2.8 million of total unrecognized compensation expense related to unvested stock option awards as of February 28, 2014. For the three months ended February 28, 2014 and 2013, stock-based compensation expense associated with stock options totaled $.6 million and $.4 million, respectively. The aggregate intrinsic value of stock options outstanding was $48.0 million at February 28, 2014. The aggregate intrinsic value of stock options exercisable was $38.0 million at February 28, 2014. (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. We recognized total compensation expense of $1.2 million for the three months ended February 28, 2014 and $.6 million for the three months ended February 28, 2013 related to restricted stock and PSUs.

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Segment Information (Tables)

3 Months Ended

Feb. 28, 2014

Segment Reporting [Abstract]

Financial Information Relating to Company Reporting Segments

The following tables present financial information relating to our segments (in thousands):

	Three Months Ended February 28,
	2014			2013
Revenues:
West Coast	$	181,721		$	206,104
Southwest	46,115			31,831
Central	125,162			106,492
Southeast	95,269			58,389
Total homebuilding revenues	448,267			402,816
Financial services	2,420			2,403
Total	$	450,687		$	405,219
Pretax income (loss):
West Coast	$	18,365		$	9,842
Southwest	1,285			(749		)
Central	2,776			136
Southeast	3,841			(8,324		)
Corporate and other	(17,066		)	(15,922		)
Total homebuilding pretax income (loss)	9,201			(15,017		)
Financial services	1,562			2,659
Total	$	10,763		$	(12,358	)

Equity in income (loss) of unconsolidated joint ventures:
West Coast	$	(38	)	$	(33	)
Southwest	(663		)	(525		)
Central	—			—
Southeast	3,291			123
Total	$	2,590		$	(435	)

Land option contract abandonments:
West Coast	$	—	$	—
Southwest	—		—
Central	433		—
Southeast	—		—
Total	$	433	$	—

	February 28, 2014		November 30, 2013
Inventories:
Homes under construction
West Coast	$	321,787	$	275,516
Southwest	34,278		39,661
Central	173,194		157,572
Southeast	104,137		113,690
Subtotal	633,396		586,439
Land under development
West Coast	659,753		560,032
Southwest	237,788		106,654
Central	285,407		238,311
Southeast	180,392		161,919
Subtotal	1,363,340		1,066,916
Land held for future development
West Coast	306,902		308,636
Southwest	147,865		157,924
Central	23,746		15,193
Southeast	159,695		163,469
Subtotal	638,208		645,222
Total	$	2,634,944	$	2,298,577
Investments in unconsolidated joint ventures:
West Coast	$	44,598	$	40,246
Southwest	13,549		80,877
Central	—		—
Southeast	2,501		9,069
Total	$	60,648	$	130,192
Assets:
West Coast	$	1,395,759	$	1,230,761
Southwest	453,062		402,443
Central	546,222		465,547
Southeast	461,442		456,965
Corporate and other	382,301		627,879
Total homebuilding assets	3,238,786		3,183,595
Financial services	9,386		10,040
Total	$	3,248,172	$	3,193,635

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Inventories (Schedule of Capitalized Interest Costs) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Feb. 28, 2014		Feb. 28, 2013
Interest Costs
Capitalized interest at beginning of period	$ 216,681		$ 217,684
Interest incurred	39,280		33,422
Interest Expense	(11,276)		(15,240)
Interest amortized to construction and land costs	(17,485)		(18,705)
Capitalized interest at end of period	$ 227,200	[1]	$ 217,161	[1]

[1] (a)Inventory impairment charges are recognized against all inventory costs of a community, such as land acquisition, land development, cost of home construction and capitalized interest. Capitalized interest amounts presented in the table reflect the gross amount of capitalized interest as impairment charges recognized are not generally allocated to specific

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Basis of Presentation and Significant Accounting Policies (Narratives) (Details) (USD $) Share data in Millions, unless otherwise specified	3 Months Ended
	Feb. 28, 2014	Feb. 28, 2013	Nov. 30, 2013	Jan. 29, 2013 Convertible Notes Payable [Member] Convertible Senior Notes Due Two Thousand Nineteen At One Point Three Seven Five Percent [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage				1.375%
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	5.2
Cash equivalents	$ 124,200,000		$ 436,200,000
Restricted cash	42,083,000		41,906,000
Comprehensive Income (Loss), Net of Tax, Attributable to Parent	$ 10,600,000	$ (12,500,000)

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Basis of Presentation and Significant Accounting Policies

3 Months Ended

Feb. 28, 2014

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 accounting principles generally accepted in the U.S. 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 U.S. generally accepted accounting principles (“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 February 28, 2014, the results of our consolidated operations for the three months endedFebruary 28, 2014 and 2013, and our consolidated cash flows for the three months endedFebruary 28, 2014 and 2013. The results of our consolidated operations for the three months endedFebruary 28, 2014 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, 2013 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, 2013, 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 informed estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from these 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 $124.2 million at February 28, 2014 and $436.2 million at November 30, 2013. The majority of our cash and cash equivalents were invested in money market funds and interest-bearing bank deposit accounts.

Restricted cash of $42.1 million at February 28, 2014 and $41.9 million at November 30, 2013 consisted of cash deposited with various financial institutions that was required as collateral for our cash-collateralized letter of credit facilities (“LOC Facilities”).

Comprehensive Income (Loss). Our comprehensive income for the three months ended February 28, 2014 was $10.6 million. For the three months ended February 28, 2013, our comprehensive loss was $12.5 million. Our comprehensive income (loss) for each of the three-month periods ended February 28, 2014 and 2013 was equal to our net income (loss) for the same periods. The accumulated other comprehensive loss in our consolidated balance sheets as of February 28, 2014 and November 30, 2013 was comprised solely of adjustments recorded directly to accumulated other comprehensive loss in accordance with Accounting Standards Codification Topic No. 715, “Compensation – Retirement Benefits” (“ASC 715”). Such adjustments are made annually as of November 30, when our benefit plan obligations are remeasured. ASC 715 requires an employer to recognize the funded status of defined postretirement benefit plans as an asset or liability on the balance sheet and requires any unrecognized prior service costs and actuarial gains/losses to be recognized in accumulated other comprehensive income (loss). 

Recent Accounting Pronouncements. In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force)” (“ASU 2013-11”), which states that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. ASU 2013-11 applies to all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. The amendments in ASU 2013-11 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Early adoption is permitted. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. We believe the adoption of this guidance will not have a material impact on our consolidated financial statements.

Reclassifications. Certain amounts in the consolidated financial statements of prior years have been reclassified to conform to the 2014 presentation.

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Inventory Impairments and Land Option Contract Abandonments

3 Months Ended

Feb. 28, 2014

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 to determine if indicators of potential impairment exist. Impairment indicators are assessed separately for each community or land parcel on a quarterly basis and include, but are not limited to, the following: significant decreases in net orders, average selling prices, volume of homes delivered, gross profit margins on homes delivered or projected gross profit margins on homes in backlog or future housing sales; significant increases in budgeted land development and home construction costs or cancellation rates; or projected losses on expected future land sales. If indicators of potential impairment exist for a community or land parcel, the identified asset is evaluated for recoverability in accordance with Accounting Standards Codification Topic No. 360, “Property, Plant, and Equipment” (“ASC 360”). We evaluated 11 and 20 communities or land parcels for recoverability during the three months endedFebruary 28, 2014 and 2013, respectively.

When an indicator of potential impairment is identified for a community or land parcel, we test the asset for recoverability by comparing the carrying value of the asset to the undiscounted future net cash flows expected to be generated by the asset. The undiscounted future net cash flows are impacted by then-current conditions and trends in the market in which the asset is located as well as factors known to us at the time the cash flows are calculated. With the undiscounted future net cash flows, we also consider recent trends in our orders, backlog, cancellation rates and volume of homes delivered, as well as our expectations related to the following: product offerings; market supply and demand, including estimated average selling prices and related price appreciation; and land development, home construction and overhead costs to be incurred and related cost inflation. With respect to the three months endedFebruary 28, 2014 and 2013, these expectations reflected our experience that notwithstanding fluctuations in our company-wide net orders, backlog levels, homes delivered and housing gross profit margin, on a year-over-year basis, market conditions for each of our assets in inventory where impairment indicators were identified have been generally stable or improved, with no significant deterioration identified as to revenue and cost drivers that would prevent or otherwise impact recoverability. Based on this experience, and taking into account the generally favorable conditions in many of our served markets for new home sales, our inventory assessments as of February 28, 2014 considered an expected steady overall sales pace and average selling price performance for the remainder of 2014 relative to the improving trends in pace and performance in recent quarters.

Given the inherent challenges and uncertainties in forecasting future results, our inventory assessments at the time they are made take into consideration whether a community or land parcel is active, meaning whether it is open for sales and/or undergoing development, or whether it is being held for future development. Due to the short-term nature of active communities and land parcels as compared to land held for future development, our inventory assessments generally assume the continuation of then-current market conditions, subject to identifying information suggesting significant sustained changes in such conditions. These assessments, at the time made, generally anticipate net orders, average selling prices, volume of homes delivered and costs for land development and home construction to continue at or near then-current levels through the particular asset’s estimated remaining life. Inventory assessments for our land held for future development consider then-current market conditions as well as subjective forecasts regarding the timing and costs of land development and home construction and related cost inflation; the product(s) to be offered; and the net orders, volume of homes delivered, and selling prices and related price appreciation of the offered product(s) when an associated community is expected to open for sales. We evaluate various factors to develop these forecasts, including the availability of and demand for homes and finished lots within the relevant marketplace; historical, current and expected future sales trends for the marketplace; and third-party data, if available. These various estimates, trends, expectations and assumptions used in each of our inventory assessments are specific to each community or land parcel based on what we believe are reasonable forecasts for performance and may vary among communities or land parcels and may vary over time.

We record an inventory impairment charge when the carrying value of a 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 based on the estimated future net cash flows discounted for inherent risk associated with each such asset. Inputs used in our calculation of estimated discounted future net cash flows are specific to each affected community or land parcel and are based on our expectations for each such asset as of the applicable measurement date, including, among others, expectations related to average selling prices and delivery rates. The discount rates we used were impacted by the following at the time each calculation was made: the risk-free rate of return; expected risk premium based on estimated land development, home construction and delivery timelines; market risk from potential future price erosion; cost uncertainty due to land development or home construction cost increases; and other risks specific to the affected asset or conditions in the market in which the asset was located. Based on the results of our evaluations, we recognized no inventory impairment charges for the three months ended February 28, 2014 or 2013.

As of February 28, 2014, the aggregate carrying value of our inventory that had been impacted by inventory impairment charges was $284.5 million, representing 39 communities and various other land parcels. As of November 30, 2013, the aggregate carrying value of our inventory that had been impacted by inventory impairment charges was $293.1 million, representing 42 communities and various other land parcels.

Our inventory controlled under land option contracts and other similar contracts is assessed to determine whether it continues to meet our internal investment and marketing standards. Assessments are made separately for each optioned land parcel on a quarterly basis and are affected by the following factors relative to the market in which the asset is located, among others: current and/or anticipated net orders, average selling prices and volume of homes delivered; estimated land development and home construction costs; and projected profitability on expected future housing or land sales. 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 $.4 million of land option contract abandonment charges corresponding to 650 lots for the three months ended February 28, 2014 and no such charges for the three months ended February 28, 2013. We sometimes walk away from land option contracts or other similar contracts when we have incurred costs of less than $100,000; such costs and the corresponding lots, which totaled 3,380 lots in the three months ended February 28, 2014, are not included in the amounts above. Land option contract abandonment charges are included in construction and land costs in our consolidated statements of operations.

The estimated remaining life of each community or land parcel in our inventory depends on various factors, such as the total number of lots remaining; the expected timeline to acquire and entitle land and develop lots to build homes; the anticipated future net order and cancellation rates; and the expected timeline to build and deliver homes sold. While it is difficult to determine a precise timeframe for any particular inventory asset, we estimate our inventory assets’ remaining operating lives under current and expected future market conditions to range generally from one year to in excess of 10 years. Based on current market conditions and anticipated delivery timelines, we expect to realize, on an overall basis, the majority of our current inventory balance within five years.

Due to the judgment and assumptions applied in the estimation process with respect to inventory impairments, land option contract abandonments, the remaining operating lives of our inventory assets and the realization of our inventory balances, it is possible that actual results could differ substantially from those estimated.

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Mortgages and Notes Payable (Schedule Mortgages and Notes Payable) (Details) (USD $)	Feb. 28, 2014	Nov. 30, 2013	Jan. 29, 2013
Debt Instrument [Line Items]
Mortgages and notes payable	$ 2,175,190,000	$ 2,150,498,000
Convertible Senior Notes Due Two Thousand Nineteen At One Point Three Seven Five Percent [Member] [Member]
Debt Instrument [Line Items]
Senior notes, rate			1.375%
Mortgages and Land Contracts Due to Land Sellers and Other Loans [Member]
Debt Instrument [Line Items]
Mortgages and notes payable	37,970,000	13,615,000
Senior Notes [Member] | Senior notes due February 1, 2014 at 5 3/4%
Debt Instrument [Line Items]
Senior notes, rate		5.75%
Senior Notes [Member] | Senior notes due January 15, 2015 at 5 7/8%
Debt Instrument [Line Items]
Senior notes, rate		5.875%
Senior Notes [Member] | Senior notes due June 15, 2015 at 6 1/4%
Debt Instrument [Line Items]
Senior notes, rate	6.25%	6.25%
Mortgages and notes payable	199,870,000	199,864,000
Senior Notes [Member] | Senior notes due September 15, 2017 at 9.10%
Debt Instrument [Line Items]
Senior notes, rate	9.10%	9.10%
Mortgages and notes payable	262,213,000	262,048,000
Senior Notes [Member] | Senior notes due June 15, 2018 at 7 1/4%
Debt Instrument [Line Items]
Senior notes, rate	7.25%	7.25%
Mortgages and notes payable	299,295,000	299,261,000
Senior Notes [Member] | Senior notes due March 15, 2020 at 8.00%
Debt Instrument [Line Items]
Senior notes, rate	8.00%	8.00%
Mortgages and notes payable	345,842,000	345,710,000
Senior Notes [Member] | Senior Notes due December 15, 2021 at 7.00%
Debt Instrument [Line Items]
Senior notes, rate	7.00%	7.00%
Mortgages and notes payable	450,000,000	450,000,000
Senior Notes [Member] | Senior notes due September 15, 2022 at 7.50%
Debt Instrument [Line Items]
Senior notes, rate	7.50%	7.50%
Mortgages and notes payable	350,000,000	350,000,000
Convertible Notes Payable [Member] | Convertible Senior Notes Due Two Thousand Nineteen At One Point Three Seven Five Percent [Member] [Member]
Debt Instrument [Line Items]
Senior notes, rate			1.375%
Mortgages and notes payable	230,000,000	230,000,000
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Amount Outstanding	$ 0

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Stock-Based Compensation (Narratives) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Feb. 28, 2014	Feb. 28, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average remaining contractual life of stock options outstanding (in years)	5 years 3 months 0 days
Weighted average remaining contractual life of stock options exercisable (in years)	4 years 11 months 0 days
Intrinsic value of stock options outstanding	$ 48.0
Intrinsic value of stock options exercisable	38.0
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost, total	2.8
Stock-based compensation expense (income) associated with stock options, total	0.6	0.4
Restricted Stock, Performance Unit sand Phantom Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense (income) associated with stock options, total	$ 1.2	$ 0.6

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Financial Services (Tables)

3 Months Ended

Feb. 28, 2014

Segment Reporting Information [Line Items]

Schedule of Financial Services Income (Loss)

The following tables present financial information relating to our financial services reporting segment (in thousands):

	Three Months Ended February 28,
	2014			2013
Revenues
Insurance commissions	$	1,262		$	1,303
Title services	708			649
Marketing services fees	450			450
Interest income	—			1
Total	2,420			2,403
Expenses
General and administrative	(852		)	(835		)
Operating income	1,568			1,568
Equity in income (loss) of unconsolidated joint ventures (a)	(6		)	1,091
Pretax income	$	1,562		$	2,659

Schedule of Financial Services Assets and Liabilities

	February 28, 2014		November 30, 2013
Assets
Cash and cash equivalents	$	3,181	$	2,428
Receivables	699		2,084
Investments in unconsolidated joint ventures	5,484		5,490
Other assets	22		38
Total assets	$	9,386	$	10,040
Liabilities
Accounts payable and accrued expenses	$	2,350	$	2,593
Total liabilities	$	2,350	$	2,593

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Supplemental Guarantor Information (Condensed Consolidated Statements of Cash Flows) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Feb. 28, 2014	Feb. 28, 2013
Cash flows from operating activities:
Net income (loss)	$ 10,563	$ (12,458)
Adjustments to reconcile net loss to net cash used in operating activities:
Equity in income (loss) of unconsolidated joint ventures	(2,584)	(656)
Change in assets and liabilities:
Receivables	(10,221)	326
Inventories	(205,037)	(198,761)
Accounts payable, accrued expenses and other liabilities	(14,514)	(2,413)
Net cash used in operating activities	(221,063)	(211,032)
Cash flows from investing activities:
Return of investments in (contributions to) unconsolidated joint ventures	(8,618)	(304)
Proceeds from Sale of Equity Method Investments	10,110	0
Purchases of property and equipment, net	(1,576)	(430)
Payments for (Proceeds from) Intercompany Transactions, Investing Activities	0	0
Net cash provided by (used in) investing activities	(84)	(734)
Cash flows from financing activities:
Change in restricted cash	(177)	(2,257)
Proceeds from issuance of debt	0	230,000
Payment of debt issuance costs	0	(6,878)
Payments on mortgages and land contracts due to land sellers and other loans	(2,655)	(17,003)
Proceeds from issuance of common stock, net	0	109,811
Issuance of common stock under employee stock plans	0	52
Payments of cash dividends	(2,094)	(2,089)
Intercompany	0	0
Net cash provided by (used in) financing activities	(4,926)	311,636
Net increase (decrease) in cash and cash equivalents	(226,073)	99,870
Cash and cash equivalents at beginning of period	532,523	525,688
Cash and cash equivalents at end of period	306,450	625,558
KB Home Corporate
Cash flows from operating activities:
Net income (loss)	10,563	(12,458)
Change in assets and liabilities:
Net cash used in operating activities		8,208
Cash flows from investing activities:
Return of investments in (contributions to) unconsolidated joint ventures	0	0
Proceeds from Sale of Equity Method Investments	0
Purchases of property and equipment, net	(70)	(96)
Payments for (Proceeds from) Intercompany Transactions, Investing Activities	(265,497)	(239,211)
Net cash provided by (used in) investing activities	(265,567)	(239,307)
Cash flows from financing activities:
Change in restricted cash	(177)	(2,257)
Proceeds from issuance of debt		230,000
Payment of debt issuance costs		(6,878)
Payments on mortgages and land contracts due to land sellers and other loans	0	0
Proceeds from issuance of common stock, net		109,811
Issuance of common stock under employee stock plans		52
Payments of cash dividends	(2,094)	(2,089)
Intercompany	0	0
Net cash provided by (used in) financing activities	(2,271)	328,639
Net increase (decrease) in cash and cash equivalents	(242,613)	97,540
Cash and cash equivalents at beginning of period	476,847	457,007
Cash and cash equivalents at end of period	234,234	554,547
Guarantor Subsidiaries
Cash flows from operating activities:
Net income (loss)	4,908	(12,322)
Change in assets and liabilities:
Net cash used in operating activities		(206,425)
Cash flows from investing activities:
Return of investments in (contributions to) unconsolidated joint ventures	(8,618)	(94)
Proceeds from Sale of Equity Method Investments	10,110
Purchases of property and equipment, net	(1,455)	(318)
Payments for (Proceeds from) Intercompany Transactions, Investing Activities	0	0
Net cash provided by (used in) investing activities	37	(412)
Cash flows from financing activities:
Change in restricted cash	0	0
Proceeds from issuance of debt		0
Payment of debt issuance costs		0
Payments on mortgages and land contracts due to land sellers and other loans	(2,655)	(17,003)
Proceeds from issuance of common stock, net		0
Issuance of common stock under employee stock plans		0
Payments of cash dividends	0	0
Intercompany	260,828	230,182
Net cash provided by (used in) financing activities	258,173	213,179
Net increase (decrease) in cash and cash equivalents	19,727	6,342
Cash and cash equivalents at beginning of period	41,316	54,205
Cash and cash equivalents at end of period	61,043	60,547
Non-Guarantor Subsidiaries
Cash flows from operating activities:
Net income (loss)	(382)	977
Change in assets and liabilities:
Net cash used in operating activities		(12,815)
Cash flows from investing activities:
Return of investments in (contributions to) unconsolidated joint ventures	0	(210)
Proceeds from Sale of Equity Method Investments	0
Purchases of property and equipment, net	(51)	(16)
Payments for (Proceeds from) Intercompany Transactions, Investing Activities	0	0
Net cash provided by (used in) investing activities	(51)	(226)
Cash flows from financing activities:
Change in restricted cash	0	0
Proceeds from issuance of debt		0
Payment of debt issuance costs		0
Payments on mortgages and land contracts due to land sellers and other loans	0	0
Proceeds from issuance of common stock, net		0
Issuance of common stock under employee stock plans		0
Payments of cash dividends	0	0
Intercompany	4,669	9,029
Net cash provided by (used in) financing activities	4,669	9,029
Net increase (decrease) in cash and cash equivalents	(3,187)	(4,012)
Cash and cash equivalents at beginning of period	14,360	14,476
Cash and cash equivalents at end of period	11,173	10,464
Consolidating Adjustments
Cash flows from operating activities:
Net income (loss)	(4,526)	11,345
Change in assets and liabilities:
Net cash used in operating activities		0
Cash flows from investing activities:
Return of investments in (contributions to) unconsolidated joint ventures	0	0
Purchases of property and equipment, net	0	0
Payments for (Proceeds from) Intercompany Transactions, Investing Activities	265,497	239,211
Net cash provided by (used in) investing activities	265,497	239,211
Cash flows from financing activities:
Change in restricted cash	0	0
Proceeds from issuance of debt		0
Payment of debt issuance costs		0
Payments on mortgages and land contracts due to land sellers and other loans	0	0
Proceeds from issuance of common stock, net		0
Issuance of common stock under employee stock plans		0
Payments of cash dividends	0	0
Intercompany	(265,497)	(239,211)
Net cash provided by (used in) financing activities	(265,497)	(239,211)
Net increase (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

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Stock-Based Compensation (Tables)

3 Months Ended

Feb. 28, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Outstanding and Exercisable Stock Options

The following table summarizes stock option transactions for the three months ended February 28, 2014:

	Options		Weighted Average Exercise Price
Options outstanding at beginning of period	10,531,938		$	21.11
Granted	—		—
Exercised	—		—
Cancelled	(4,947	)	33.72
Options outstanding at end of period	10,526,991		$	21.11
Options exercisable at end of period	9,414,988		$	22.24

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Stockholders' Equity

3 Months Ended

Feb. 28, 2014

Equity [Abstract]

Stockholders’ Equity

Stockholders’ Equity

A summary of changes in stockholders’ equity is presented below (in thousands):

	Three Months Ended February 28, 2014
	Common Stock		Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Grantor Stock Ownership Trust			Treasury Stock			Total Stockholders’ Equity
Balance at November 30, 2013	$	115,296	$	788,893	$	481,889		$	(17,516	)	$	(113,911	)	$	(718,565	)	$	536,086
Net income	—		—		10,563			—			—			—			10,563
Dividends on common stock	—		—		(2,094		)	—			—			—			(2,094		)
Stock-based compensation	—		1,779		—			—			—			—			1,779
Balance at February 28, 2014	$	115,296	$	790,672	$	490,358		$	(17,516	)	$	(113,911	)	$	(718,565	)	$	546,334

	Three Months Ended February 28, 2013
	Common Stock		Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Grantor Stock Ownership Trust			Treasury Stock			Total Stockholders’ Equity
Balance at November 30, 2012	$	115,178	$	888,579		$	450,292		$	(27,958	)	$	(115,149	)	$	(934,136	)	$	376,806
Net loss	—		—			(12,458		)	—			—			—			(12,458		)
Dividends on common stock	—		—			(2,089		)	—			—			—			(2,089		)
Stock-based compensation	—		1,013			—			—			—			—			1,013
Issuance of common stock	—		(106,314		)	—			—			—			216,125			109,811
Grantor stock ownership trust	—		20			—			—			32			—			52
Balance at February 28, 2013	$	115,178	$	783,298		$	435,745		$	(27,958	)	$	(115,117	)	$	(718,011	)	$	473,135

On January 29, 2013, pursuant to the 2011 Shelf Registration, we issued 6,325,000 shares of our common stock, par value $1.00 per share, in an underwritten public offering at a price of $18.25 per share (the “Common Stock Offering”). We used 6,325,000 shares of treasury stock for the issuance and received net proceeds of $109.8 million after underwriting discounts, commissions and transaction expenses.

In connection with the issuance of the 1.375% Convertible Senior Notes due 2019, which is discussed in Note 12. Mortgages and Notes Payable, we established a common stock reserve account with our transfer agent to reserve the maximum number of shares of our common stock potentially deliverable upon conversion to holders of the 1.375% Convertible Senior Notes due 2019 based on the terms of the instruments governing these notes. Accordingly, the common stock reserve account had a balance of 12,602,735 shares at February 28, 2014. The maximum number of shares would potentially be deliverable to holders only in certain limited circumstances as set forth in the instruments governing the 1.375% Convertible Senior Notes due 2019.

As of February 28, 2014, we were authorized to repurchase 4,000,000 shares of our common stock under a board-approved share repurchase program. We did not repurchase any of our common stock under this program in the three months ended February 28, 2014. We did not repurchase any shares pursuant to this common stock repurchase plan in 2013 or 2012. Any resumption of such stock repurchases under this program or any other program will be at the discretion of our board of directors.

During the three months ended February 28, 2014, our board of directors declared a cash dividend of $.0250 per share of common stock, which was paid on February 20, 2014 to stockholders of record on February 6, 2014. During the three months ended February 28, 2013, our board of directors declared a cash dividend of $.0250 per share of common stock, which was paid on February 21, 2013 to stockholders of record on February 7, 2013.