10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended February 28, 2019.

or

☐ 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  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).    Yes  ☒    No  ☐

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

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of February 28, 2019.

There were 87,134,108 shares of the registrant’s common stock, par value $1.00 per share, outstanding on February 28, 2019. The registrant’s grantor stock ownership trust held an additional 7,859,975 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, 2019 and 2018	3
Consolidated Balance Sheets - February 28, 2019 and November 30, 2018	4
Consolidated Statements of Cash Flows - Three Months Ended February 28, 2019 and 2018	5
Notes to Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3. Quantitative and Qualitative Disclosures About Market Risk	54
Item 4. Controls and Procedures	54
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	54
Item 1A. Risk Factors	54
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	55
Item 6. Exhibits	55
SIGNATURES	56

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,
	2019			2018
Total revenues	$	811,483		$	871,623
Homebuilding:
Revenues	$	808,788		$	869,205
Construction and land costs	(670,855		)	(729,478		)
Selling, general and administrative expenses	(106,594		)	(95,724		)
Operating income	31,339			44,003
Interest income	1,105			1,003
Equity in loss of unconsolidated joint ventures	(406		)	(845		)
Homebuilding pretax income	32,038			44,161
Financial services:
Revenues	2,695			2,418
Expenses	(1,024		)	(953		)
Equity in income of unconsolidated joint ventures	802			419
Financial services pretax income	2,473			1,884
Total pretax income	34,511			46,045
Income tax expense	(4,500		)	(117,300		)
Net income (loss)	$	30,011		$	(71,255	)
Earnings (loss) per share:
Basic	$	.34		$	(.82	)
Diluted	$	.31		$	(.82	)
Weighted average shares outstanding:
Basic	86,972			87,155
Diluted	96,962			87,155
Cash dividends declared per common share	$	.025		$	.025

See accompanying notes.

3

KB HOME

CONSOLIDATED BALANCE SHEETS

(In Thousands – Unaudited)

	February 28, 2019			November 30, 2018
Assets
Homebuilding:
Cash and cash equivalents	$	511,690		$	574,359
Receivables	313,609			292,830
Inventories	3,683,763			3,582,839
Investments in unconsolidated joint ventures	57,134			61,960
Property and equipment, net	55,330			24,283
Deferred tax assets, net	433,295			441,820
Other assets	89,560			83,100
	5,144,381			5,061,191
Financial services	29,275			12,380
Total assets	$	5,173,656		$	5,073,571
Liabilities and stockholders’ equity
Homebuilding:
Accounts payable	$	209,015		$	258,045
Accrued expenses and other liabilities	631,381			666,268
Notes payable	2,203,589			2,060,263
	3,043,985			2,984,576
Financial services	1,174			1,495
Stockholders’ equity:
Common stock	119,258			119,196
Paid-in capital	755,341			753,570
Retained earnings	1,936,523			1,897,168
Accumulated other comprehensive loss	(9,565		)	(9,565		)
Grantor stock ownership trust, at cost	(85,246		)	(88,472		)
Treasury stock, at cost	(587,814		)	(584,397		)
Total stockholders’ equity	2,128,497			2,087,500
Total liabilities and stockholders’ equity	$	5,173,656		$	5,073,571

See accompanying notes.

4

KB HOME

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands – Unaudited)

	Three Months Ended February 28,
	2019			2018
Cash flows from operating activities:
Net income (loss)	$	30,011		$	(71,255	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Equity in (income) loss of unconsolidated joint ventures	(396		)	426
Distributions of earnings from unconsolidated joint ventures	2,400			1,300
Amortization of discounts, premiums and issuance costs	1,468			1,552
Depreciation and amortization	6,446			628
Deferred income taxes	4,501			117,068
Stock-based compensation	4,152			3,829
Inventory impairments and land option contract abandonments	3,555			4,985
Changes in assets and liabilities:
Receivables	(19,495		)	(6,024		)
Inventories	(154,083		)	(135,311		)
Accounts payable, accrued expenses and other liabilities	(70,057		)	(54,016		)
Other, net	(6,712		)	(4,862		)
Net cash used in operating activities	(198,210		)	(141,680		)
Cash flows from investing activities:
Contributions to unconsolidated joint ventures	(2,527		)	(8,025		)
Return of investments in unconsolidated joint ventures	5,001			1,099
Proceeds from sale of building	5,804			—
Purchases of property and equipment, net	(10,025		)	(1,924		)
Net cash used in investing activities	(1,747		)	(8,850		)
Cash flows from financing activities:
Proceeds from issuance of debt	405,250			—
Payment of debt issuance costs	(5,209		)	—
Repayment of senior notes	(230,000		)	—
Borrowings under revolving credit facility	140,000			—
Repayments under revolving credit facility	(140,000		)	—
Payments on mortgages and land contracts due to land sellers and other loans	(28,020		)	(3,362		)
Issuance of common stock under employee stock plans	832			2,946
Tax payments associated with stock-based compensation awards	(3,342		)	(6,787		)
Payments of cash dividends	(2,266		)	(2,322		)
Net cash provided by (used in) financing activities	137,245			(9,525		)
Net decrease in cash and cash equivalents	(62,712		)	(160,055		)
Cash and cash equivalents at beginning of period	575,119			720,861
Cash and cash equivalents at end of period	$	512,407		$	560,806

See accompanying notes.

5

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 U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with GAAP have been condensed or omitted.

In our opinion, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly our consolidated financial position as of February 28, 2019, the results of our consolidated operations for the three months endedFebruary 28, 2019 and 2018, and our consolidated cash flows for the three months endedFebruary 28, 2019 and 2018. The results of our consolidated operations for the three months endedFebruary 28, 2019 are not necessarily indicative of the results to be expected for the full year due to seasonal variations in operating results and other factors. The consolidated balance sheet at November 30, 2018 has been taken from the audited consolidated financial statements as of that date. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended November 30, 2018, which are contained in our Annual Report on Form 10-K for that period.

Unless the context indicates otherwise, the terms “we,” “our,” and “us” used in this report refer to KB Home, a Delaware corporation, and its subsidiaries.

Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Cash and Cash Equivalents. We consider all highly liquid short-term investments purchased with an original maturity of three months or less to be cash equivalents. Our cash equivalents totaled $367.3 million at February 28, 2019 and $385.2 million at November 30, 2018. At February 28, 2019 and November 30, 2018, the majority of our cash and cash equivalents was invested in interest-bearing bank deposit accounts.

Comprehensive Income (Loss). Our comprehensive income was $30.0 million for the three months ended February 28, 2019. For the three months ended February 28, 2018, our comprehensive loss was $71.3 million. Our comprehensive income (loss) for each of the three-month periods ended February 28, 2019 and 2018 was equal to our net income (loss) for the respective periods.

Adoption of New Accounting Pronouncement. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 supersedes the revenue guidance in Accounting Standards Codification Topic 605, “Revenue Recognition,” and most industry-specific revenue and cost guidance in the accounting standards codification, including some cost guidance related to construction-type and production-type contracts. The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

On December 1, 2018, we adopted ASU 2014-09 and its related amendments (collectively, “ASC 606”), using the modified retrospective method applied to contracts that were not completed as of the adoption date. Results for reporting periods beginning December 1, 2018 and after are presented under ASC 606, while results for prior reporting periods have not been adjusted and continue to be presented under the accounting guidance in effect for those periods. We recorded the following cumulative effect adjustment to increase beginning retained earnings as of December 1, 2018 (in thousands):

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Balance Sheet	Balance at November 30, 2018		Adjustments due to ASC 606			Balance at December 1, 2018
Assets
Homebuilding:
Inventories	$	3,582,839	$	(35,288	)	$	3,547,551
Deferred tax assets, net	441,820		(4,024		)	437,796
Property and equipment, net	24,283		31,194			55,477
Financial services	12,380		19,728			32,108
Stockholders’ equity:
Retained earnings	1,897,168		11,610			1,908,778

Within our homebuilding operations, ASC 606 impacts the classification and timing of recognition in our consolidated financial statements of certain community sales office and other marketing- and model home-related costs, which we previously capitalized to inventories and amortized through construction and land costs with each home delivered in a community. With our adoption of ASC 606, these costs are capitalized to property and equipment and depreciated to selling, general and administrative expenses, or expensed to selling, general and administrative expenses as incurred. Upon adopting ASC 606, we reclassified these community sales office and other marketing- and model home-related costs and related accumulated amortization from inventories to either property and equipment, net or retained earnings in our consolidated balance sheet. Forfeited deposits related to cancelled home sale and land sale contracts, which were previously reflected as other income within selling, general and administrative expenses, are included in homebuilding revenues under ASC 606.

Within our financial services operations, ASC 606 impacts the timing of recognition in our consolidated financial statements of insurance commissions for insurance policy renewals. We previously recognized such insurance commissions as revenue when policies were renewed. With our adoption of ASC 606, insurance commissions for future policy renewals are estimated and recognized as revenue when the insurance carrier issues an initial insurance policy to our homebuyer, which generally occurs at the time each applicable home sale is closed. Upon adopting ASC 606, we recognized contract assets for the estimated future renewal commissions related to existing insurance policies as of December 1, 2018.

There were no significant changes to our business processes or internal control over financial reporting as a result of adopting ASC 606.

The impacts of adopting ASC 606 on our consolidated statement of operations for the three months ended February 28, 2019 and consolidated balance sheet as of February 28, 2019 were as follows (in thousands, except per share amounts):

	Three Months Ended February 28, 2019
Statement of Operations	As Reported			Amounts without the Adoption of ASC 606			Effect of Change Higher/(Lower)
Homebuilding:
Revenues	$	808,788		$	808,155		$	633
Construction and land costs	(670,855		)	(676,115		)	(5,260		)
Selling, general and administrative expenses	(106,594		)	(99,281		)	7,313
Operating income	31,339			32,759			(1,420		)
Financial services:
Revenues	2,695			2,590			105
Total pretax income	34,511			35,826			(1,315		)
Income tax expense	(4,500		)	(4,800		)	(300		)
Net income	30,011			31,026			(1,015		)
Diluted earnings per share	.31			.32			(.01		)

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	As of February 28, 2019
Balance Sheet	As Reported		Amounts without the Adoption of ASC 606		Effect of Change Higher/(Lower)
Assets
Homebuilding:
Inventories	$	3,683,763	$	3,722,475	$	(38,712	)
Deferred tax assets, net	433,295		437,019		(3,724		)
Property and equipment, net	55,330		22,132		33,198
Financial services	29,275		9,442		19,833
Stockholders’ equity:
Retained earnings	1,936,523		1,925,928		10,595

As a result of our adoption of ASC 606, we updated our significant accounting policies as follows:

Homebuilding Revenues. We apply the following steps in determining the timing and amount of revenue to recognize: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract, if applicable; and (5) recognize revenue when (or as) we satisfy a performance obligation.

Our home sale transactions are made pursuant to contracts under which we typically have a single performance obligation to deliver a completed home to the homebuyer when closing conditions are met. Revenues from home sales are recognized when we have satisfied the performance obligation within the sales contract, which is generally when title to and possession of the home and the risks and rewards of ownership are transferred to the homebuyer on the closing date. Under our home sale contracts, we typically receive an initial cash deposit from the homebuyer at the time the sales contract is executed and receive the remaining consideration to which we are entitled, through a third-party escrow agent, at closing. Customer deposits related to sold but undelivered homes, totaled $20.1 million and $19.5 million at February 28, 2019 and November 30, 2018, respectively, and are included in accrued expenses and other liabilities.

Concurrent with the recognition of revenues in our consolidated statements of operations, sales incentives in the form of price concessions on the selling price of a home are recorded as a reduction of revenues, while the costs of sales incentives in the form of free or discounted products or services to homebuyers, including option upgrades and closing cost allowances used to cover a portion of the fees and costs charged to a homebuyer, are reflected as construction and land costs. Cash proceeds from home sale closings held by third-party escrow agents for our benefit, typically for less than five days, are considered deposits in-transit and classified as cash.

Land sale transactions are made pursuant to contracts under which we typically have a performance obligation(s) to deliver specified land parcels to the buyer when closing conditions are met. Revenues from land sales are recognized when we have satisfied the performance obligation(s) within the sales contract, which is generally when title to and possession of the land and the risks and rewards of ownership are transferred to the land buyer on the closing date. Under our land sale contracts, we typically receive an initial cash deposit from the buyer at the time the contract is executed and receive the remaining consideration to which we are entitled, through a third-party escrow agent, at closing. In limited circumstances where we provide financing to the land buyer, we determine that collectibility of the receivable is reasonably assured before we recognize revenue.

In instances where we have a material performance obligation(s) under a land sale contract to perform land development work after the closing date, a portion of the transaction price is allocated to such performance obligation(s) and is recognized as revenue when and as such obligation(s) is (are) completed. While the payment terms for such a performance obligation(s) vary, the final payment is generally received when we have completed our land development work and it has been accepted by the land buyer.

Homebuilding revenues include forfeited deposits, which occur when home sale or land sale contracts that include a nonrefundable deposit are cancelled. Revenues from forfeited deposits are immaterial.

Within our homebuilding operations, substantially all of our contracts with customers and the related performance obligations have an original expected duration of one year or less.

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Community Sales Office and Other Marketing- and Model Home-Related Costs. Community sales office and other marketing- and model home-related costs are either recorded as inventories, capitalized as property and equipment, or expensed to selling, general and administrative expenses as incurred. Costs related to the construction of a model home, inclusive of upgrades that will be sold as part of the home, are recorded as inventories and recognized as construction and land costs when the model home is delivered to a homebuyer. Costs to furnish and ready a model home or on-site community sales facility that will not be sold as part of the model home, such as model furnishings, community sales office and model complex grounds, sales office construction and sales office furniture and equipment, are capitalized as property and equipment under “model furnishings and sales office improvements.” Model furnishings and sales office improvements are depreciated to selling, general and administrative expenses over their estimated useful lives. Other costs incurred related to the marketing of a community, removing the on-site community sales facility and readying a completed (model) home for sale are expensed to selling, general and administrative expenses as incurred.

Financial Services Revenues. Our financial services reporting segment generates revenues primarily from title services and insurance commissions. Revenues from title services are recognized when policies are issued, which generally occurs at the time each applicable home sale is closed. We receive insurance commissions from various third-party insurance carriers for arranging for the carriers to provide homeowner and other insurance policies for our homebuyers that elect to obtain such coverage. In addition, each time a homebuyer renews their insurance policy with the insurance carrier, we receive a renewal commission. Revenues from insurance commissions are recognized when the insurance carrier issues an initial insurance policy to our homebuyer, which generally occurs at the time each applicable home sale is closed. As our performance obligations for policy renewal commissions are satisfied upon issuance of the initial insurance policy, insurance commissions for renewals are considered variable consideration under ASC 606. Accordingly, we estimate the probable future renewal commissions when an initial policy is issued and record a corresponding contract asset and insurance commission revenues. We estimate the amount of variable consideration based on historical renewal trends and constrain the estimate such that it is probable that a significant reversal of cumulative recognized revenue will not occur. We also consider the likelihood and magnitude of a potential future reversal of revenue and update our assessment at the end of each reporting period. The contract assets for estimated future renewal commissions are included in other assets within financial services and totaled $19.8 million at February 28, 2019. Contract assets totaling $19.7 million were recognized on December 1, 2018 in connection with the adoption of ASC 606.

Disaggregation of Revenues. Our homebuilding operations accounted for 99.7% of our total revenues for the year ended November 30, 2018, with most of those revenues generated from home sale contracts with customers. Our financial services operations accounted for the remaining .3% of total revenues for the year ended November 30, 2018. Due to the nature of our revenue-generating activities, we believe the disaggregation of revenues as reported in our consolidated statement of operations, and as disclosed by homebuilding reporting segment in Note 2 – Segment Information and for our financial services reporting segment in Note 3 – Financial Services, fairly depict how the nature, amount, timing and uncertainty of cash flows are affected by economic factors.

Recent Accounting Pronouncements Not Yet Adopted. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). ASU 2016-02 will require lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Under this guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Lessor accounting remains substantially similar to current GAAP. In addition, disclosures of leasing activities are to be expanded to include qualitative along with specific quantitative information. ASU 2016-02 is effective for us beginning December 1, 2019 (with early adoption permitted). Originally, entities were required to adopt ASU 2016-02 using a modified retrospective transition method. However, in July 2018, the FASB issued Accounting Standards Update No. 2018-11, “Leases (Topic 842): Targeted Improvements” (“ASU 2018-11”), which provides entities with an additional transition method. Under ASU 2018-11, entities have the option of recognizing the cumulative effect of applying the new standard as an adjustment to beginning retained earnings in the year of adoption while continuing to present all prior periods under previous lease accounting guidance. In July 2018, the FASB also issued Accounting Standards Update No. 2018-10, “Codification Improvements to Topic 842, Leases” (“ASU 2018-10”), which clarifies how to apply certain aspects of ASU 2016-02. We expect to adopt ASU 2016-02, ASU 2018-10 and ASU 2018-11 beginning December 1, 2019. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

In February 2018, the FASB issued Accounting Standards Update No. 2018-02, “Income Statement — Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU 2018-02”), which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (“TCJA”), and requires certain disclosures about stranded tax effects. ASU 2018-02 is effective for us beginning December 1, 2019 (with early adoption permitted), and shall be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the corporate

9

income tax rate in the TCJA is recognized. We expect to adopt ASU 2018-02 beginning December 1, 2019. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

Reclassifications. Certain amounts in our consolidated financial statements of prior periods have been reclassified to conform to the current period presentation.

2. Segment Information

We have identified five operating reporting segments, comprised of four homebuilding reporting segments and one financial services reporting segment. As of February 28, 2019, our homebuilding reporting segments conducted ongoing operations in the following states:

West Coast: California and Washington

Southwest: Arizona and Nevada

Central: Colorado and Texas

Southeast: Florida and North Carolina

Our homebuilding reporting segments are engaged in the acquisition and development of land primarily for residential purposes and offer a wide variety of homes that are designed to appeal to first-time, first move-up and active adult homebuyers. Our homebuilding operations generate most of their revenues from the delivery of completed homes to homebuyers. They also earn revenues from the sale of land.

Our 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. Management evaluates 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 located within our Central and Southeast homebuilding reporting segments. This segment earns revenues primarily from insurance commissions and from the provision of title services.

We offer mortgage banking services, including residential consumer mortgage loan (“mortgage loan”) originations, to our homebuyers indirectly through KBHS Home Loans, LLC (“KBHS”), an unconsolidated joint venture we formed with Stearns Lending, LLC (“Stearns”). We and Stearns each have a 50.0% ownership interest, with Stearns providing management oversight of KBHS’ operations. The financial services reporting segment is separately reported in our consolidated financial statements.

Corporate and other is a non-operating segment that develops and oversees the implementation of company-wide strategic initiatives and provides support to our reporting segments by centralizing certain administrative functions. Corporate management is responsible for, among other things, evaluating and selecting the geographic markets in which we operate, consistent with our overall business strategy; allocating capital resources to markets for land acquisition and development activities; making major personnel decisions related to employee compensation and benefits; and monitoring the financial and operational performance of our divisions. 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 our homebuilding reporting segments.

Our reporting segments follow the same accounting policies used for our consolidated financial statements. The results of each reporting segment are not necessarily indicative of the results that would have occurred had the segment been an independent, stand-alone entity during the periods presented, nor are they indicative of the results to be expected in future periods.

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

	Three Months Ended February 28,
	2019			2018
Revenues:
West Coast	$	305,810		$	386,652
Southwest	157,656			151,899
Central	241,592			244,181
Southeast	103,730			86,473
Total	$	808,788		$	869,205
Pretax income (loss):
West Coast	$	17,916		$	31,593
Southwest	22,072			14,977
Central	18,583			19,095
Southeast	(545		)	1,320
Corporate and other	(25,988		)	(22,824		)
Total	$	32,038		$	44,161

Inventory impairment charges:
West Coast	$	3,196	$	4,699
Southwest	—		—
Central	—		—
Southeast	—		—
Total	$	3,196	$	4,699
Land option contract abandonment charges:
West Coast	$	55	$	208
Southwest	59		—
Central	245		78
Southeast	—		—
Total	$	359	$	286

	February 28, 2019		November 30, 2018
Inventories:
Homes under construction
West Coast	$	560,514	$	514,099
Southwest	170,760		173,036
Central	319,931		312,366
Southeast	138,705		125,651
Subtotal	1,189,910		1,125,152

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	February 28, 2019		November 30, 2018
Land under development
West Coast	1,053,533		1,059,432
Southwest	426,106		404,201
Central	561,979		543,472
Southeast	209,351		212,831
Subtotal	2,250,969		2,219,936
Land held for future development or sale
West Coast	159,644		154,462
Southwest	30,761		21,137
Central	7,835		9,346
Southeast	44,644		52,806
Subtotal	242,884		237,751
Total	$	3,683,763	$	3,582,839

Assets:
West Coast	$	1,983,539	$	1,880,516
Southwest	672,264		631,509
Central	1,021,616		1,017,490
Southeast	442,982		463,224
Corporate and other	1,023,980		1,068,452
Total	$	5,144,381	$	5,061,191

3. Financial Services

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

	Three Months Ended February 28,
	2019			2018
Revenues
Insurance commissions	$	1,472		$	1,352
Title services	1,217			1,066
Interest income	6			—
Total	2,695			2,418
Expenses
General and administrative	(1,024		)	(953		)
Operating income	1,671			1,465
Equity in income of unconsolidated joint ventures	802			419
Pretax income	$	2,473		$	1,884

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	February 28, 2019		November 30, 2018
Assets
Cash and cash equivalents	$	717	$	760
Receivables	1,602		2,885
Investments in unconsolidated joint ventures	6,995		8,594
Other assets (a)	19,961		141
Total assets	$	29,275	$	12,380
Liabilities
Accounts payable and accrued expenses	$	1,174	$	1,495
Total liabilities	$	1,174	$	1,495

(a) Other assets at February 28, 2019 included $19.8 million of contract assets for estimated future renewal commissions due to our adoption of ASC 606 effective December 1, 2018, as described in Note 1 – Basis of Presentation and Significant Accounting Policies.

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,
	2019			2018
Numerator:
Net income (loss)	$	30,011		$	(71,255	)
Less: Distributed earnings allocated to nonvested restricted stock	(14		)	—
Less: Undistributed earnings allocated to nonvested restricted stock	(176		)	—
Numerator for basic earnings (loss) per share	29,821			(71,255		)
Effect of dilutive securities:
Interest expense and amortization of debt issuance costs associated with convertible senior notes, net of taxes	541			—
Add: Undistributed earnings allocated to nonvested restricted stock	176			—
Less: Undistributed earnings reallocated to nonvested restricted stock	(158		)	—
Numerator for diluted earnings (loss) per share	$	30,380		$	(71,255	)
Denominator:
Weighted average shares outstanding — basic	86,972			87,155
Effect of dilutive securities:
Share-based payments	4,202			—
Convertible senior notes	5,788			—
Weighted average shares outstanding — diluted	96,962			87,155
Basic earnings (loss) per share	$	.34		$	(.82	)
Diluted earnings (loss) per share	$	.31		$	(.82	)

We compute earnings (loss) per share using the two-class method, which is an allocation of earnings (losses) 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, 2019 or 2018.

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For the three-month period ended February 28, 2019, outstanding stock options to purchase .8 million shares of our common stock were excluded from the diluted earnings per share calculation because the effect of their inclusion would be antidilutive. The diluted earnings per share calculation for the three months ended February 28, 2019 included the dilutive effect of the $230.0 million in aggregate principal amount of our 1.375% convertible senior notes due 2019 (“1.375% Convertible Senior Notes due 2019”) based on the number of days they were outstanding during the period. We repaid the notes at their February 1, 2019 maturity.

For the three months ended February 28, 2018, all outstanding stock options, contingently issuable shares associated with outstanding performance-based restricted stock units (each, a “PSU”), and the impact of our 1.375% Convertible Senior Notes due 2019 were excluded from the diluted loss per share calculation because the effect of their inclusion would have been antidilutive. Contingently issuable shares associated with outstanding PSUs were not included in the basic earnings per share calculations for the periods presented as the applicable vesting conditions had not been satisfied.

5. Receivables

Receivables consisted of the following (in thousands):

	February 28, 2019			November 30, 2018
Recoveries related to self-insurance and other legal claims	$	149,719		$	138,261
Due from utility companies, improvement districts and municipalities	115,250			113,434
Refundable deposits and bonds	13,734			14,115
Recoveries related to warranty and other claims	4,111			4,750
Other	42,086			33,775
Subtotal	324,900			304,335
Allowance for doubtful accounts	(11,291		)	(11,505		)
Total	$	313,609		$	292,830

6. Inventories

Inventories consisted of the following (in thousands):

	February 28, 2019		November 30, 2018
Homes under construction	$	1,189,910	$	1,125,152
Land under development	2,250,969		2,219,936
Land held for future development or sale (a)	242,884		237,751
Total	$	3,683,763	$	3,582,839

(a)    Land held for sale totaled $27.8 million at February 28, 2019 and $9.8 million at November 30, 2018.

Interest is capitalized to inventories while the related communities or land parcels are being actively developed and until homes are completed or the land is available for immediate sale. Capitalized interest is amortized to construction and land costs as the related inventories are delivered to homebuyers or land buyers (as applicable). For land held for future development or sale, applicable interest is expensed as incurred.

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Our interest costs were as follows (in thousands):

	Three Months Ended February 28,
	2019			2018
Capitalized interest at beginning of period	$	209,129		$	262,191
Interest incurred	34,788			39,944
Interest amortized to construction and land costs (a)	(30,547		)	(42,350		)
Capitalized interest at end of period (b)	$	213,370		$	259,785

(a) Interest amortized to construction and land costs for the three months ended February 28, 2019 and 2018 included $.6 million and $1.0 million, respectively, related to land sales during the periods.

(b) Capitalized interest amounts reflect the gross amount of capitalized interest, as inventory impairment charges recognized, if any, are not generally allocated to specific components of inventory.

7. Inventory Impairments and Land Option Contract Abandonments

Each community or land parcel in our owned inventory is assessed on a quarterly basis to determine if indicators of potential impairment exist. We record an inventory impairment charge on a community or land parcel that is active or held for future development when indicators of potential impairment exist and the carrying value of the real estate asset is greater than the undiscounted future net cash flows the asset is expected to generate. These real estate assets are written down to fair value, which is primarily determined based on the estimated future net cash flows discounted for inherent risk associated with each such asset, or other valuation techniques. We record an inventory impairment charge on land held for sale when the carrying value of a land parcel is greater than its fair value. These real estate assets are written down to fair value, less associated costs to sell. The estimated fair values of such assets are generally based on bona fide letters of intent from outside parties, executed sales contracts, broker quotes or similar information.

We evaluated 18 and 29 communities or land parcels for recoverability during the three months endedFebruary 28, 2019 and 2018, respectively. The carrying value of those communities or land parcels evaluated during the three months endedFebruary 28, 2019 and 2018 was $96.2 million and $200.1 million, respectively. The communities or land parcels evaluated during the three months endedFebruary 28, 2019 and 2018 included certain communities or land parcels previously held for future development that were reactivated as part of our efforts to improve our asset efficiency under our Returns-Focused Growth Plan.

Based on the results of our evaluations, we recognized inventory impairment charges of $3.2 million for the three months ended February 28, 2019 and $4.7 million for the three months ended February 28, 2018. The impairment charges for the three-month periods ended February 28, 2019 and 2018 reflected our decisions to make changes in our operational strategies aimed at more quickly monetizing our investment in certain communities by accelerating the overall pace for selling, building and delivering homes on land previously held for future development.

The following table summarizes significant quantitative unobservable inputs we utilized in our fair value measurements with respect to the impaired communities written down to fair value during the periods presented:

	Three Months Ended February 28,
Unobservable Input	2019	2018
Average selling price	$1,045,400	$774,100
Deliveries per month	1	3
Discount rate	17%	18%

As of February 28, 2019, the aggregate carrying value of our inventory that had been impacted by inventory impairment charges was $159.1 million, representing 22 communities and various other land parcels. As of November 30, 2018, the aggregate carrying value of our inventory that had been impacted by inventory impairment charges was $156.1 million, representing 22 communities and various other land parcels.

Our inventory controlled under land option contracts and other similar contracts is assessed on a quarterly basis to determine whether it continues to meet our investment return standards. When a decision is made not to exercise certain land option contracts and other similar contracts due to market conditions and/or changes in our marketing strategy, we write off the

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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 and $.3 million for the three-month periods ended February 28, 2019 and 2018, respectively.

Due to the judgment and assumptions applied in our inventory impairment and land option contract abandonment assessment processes, particularly as to land held for future development, it is possible that actual results could differ substantially from those estimated.

8. Variable Interest Entities

Unconsolidated Joint Ventures. We participate in joint ventures from time to time that conduct land acquisition, land development and/or other homebuilding activities in various markets where our homebuilding operations are located. Our investments in these joint ventures may create a variable interest in a variable interest entity (“VIE”), depending on the contractual terms of the arrangement. We analyze our joint ventures under the variable interest model to determine whether they are VIEs and, if so, whether we are the primary beneficiary. Based on our analyses, we determined that one of our joint ventures at February 28, 2019 and November 30, 2018 was a VIE, but we were not the primary beneficiary of the VIE. All of our joint ventures at February 28, 2019 and November 30, 2018 were unconsolidated and accounted for under the equity method because we did not have a controlling financial interest.

Land Option Contracts and Other Similar Contracts. In the ordinary course of our business, we enter into land option contracts and other similar contracts with third parties and unconsolidated entities to acquire rights to land for the construction of homes. Under these contracts, we typically make a specified option payment or earnest money deposit in consideration for the right to purchase land in the future, usually at a predetermined price. We analyze each of our land option contracts and other similar contracts under the variable interest model to determine whether the land seller is a VIE and, if so, whether we are the primary beneficiary. Although we do not have legal title to the underlying land, we are required to consolidate a VIE if we are the primary beneficiary. As a result of our analyses, we determined that as of February 28, 2019 and November 30, 2018, we were not the primary beneficiary of any VIEs from which we have acquired rights to land under land option contracts and other similar contracts. We perform ongoing reassessments of whether we are the primary beneficiary of a VIE.

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

	February 28, 2019				November 30, 2018
	Cash Deposits		Aggregate Purchase Price		Cash Deposits		Aggregate Purchase Price
Unconsolidated VIEs	$	22,733	$	758,458	$	26,542	$	784,334
Other land option contracts and other similar contracts	27,069		475,740		27,288		586,904
Total	$	49,802	$	1,234,198	$	53,830	$	1,371,238

In addition to the cash deposits presented in the table above, our exposure to loss related to our land option contracts and other similar contracts with third parties and unconsolidated entities consisted of pre-acquisition costs of $43.6 million at February 28, 2019 and $46.9 million at November 30, 2018. These pre-acquisition costs and cash deposits were included in inventories in our consolidated balance sheets.

For land option contracts and other similar contracts where the land seller entity is not required to be consolidated under the variable interest model, we consider whether such contracts should be accounted for as financing arrangements. Land option contracts and other similar contracts that may be considered financing arrangements include those we enter into with third-party land financiers or developers in conjunction with such third parties acquiring a specific land parcel(s) on our behalf, at our direction, and those with other landowners where we or our designee make improvements to the optioned land parcel(s) during the applicable option period. For these land option contracts and other similar contracts, we record the remaining purchase price of the associated land parcel(s) in inventories in our consolidated balance sheets with a corresponding financing obligation if we determine that we are effectively compelled to exercise the option to purchase the land parcel(s). In making this determination with respect to a land option contract or other similar contract, we consider the non-refundable deposit(s) we have made and any non-reimbursable expenditures we have incurred for land improvement activities or other items up to the assessment date; additional costs associated with abandoning the contract; and our commitments, if any, to incur non-reimbursable costs associated with the contract. As a result of our evaluations of land option contracts and other similar contracts for financing arrangements, we recorded inventories in our consolidated balance sheets, with a corresponding increase to accrued expenses and other liabilities, of $5.5 million at February 28, 2019 and $21.8 million at November 30, 2018.

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9. Investments in Unconsolidated Joint Ventures

We have investments in unconsolidated joint ventures that conduct land acquisition, land development and/or other homebuilding activities in various markets where our homebuilding operations are located. We and our unconsolidated joint venture partners make initial and/or ongoing capital contributions to these unconsolidated joint ventures, typically on a pro rata basis, according to our respective equity interests. The obligations to make capital contributions are governed by each such unconsolidated joint venture’s respective operating agreement and related governing documents. For distributions we receive from these unconsolidated joint ventures, we have elected to use the cumulative earnings approach for our consolidated statements of cash flows. Under the cumulative earnings approach, distributions up to the amount of cumulative equity in earnings recognized are treated as returns on investment within operating cash flows and those in excess of that amount are treated as returns of investment within investing cash flows.

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 (losses) until a home sale is closed and title passes to a homebuyer, at which time we account for those earnings (losses) as a reduction (increase) to the cost of purchasing the land from the unconsolidated joint venture. We defer recognition of our share of such unconsolidated joint venture losses only to the extent profits are to be generated from the sale of the home to a homebuyer.

We share in the earnings (losses) of these unconsolidated joint ventures generally in accordance with our respective equity interests. In some instances, we recognize earnings (losses) related to our investment in an unconsolidated joint venture that differ from our equity interest in the unconsolidated joint venture. This typically arises from our deferral of the unconsolidated joint venture’s earnings (losses) from land sales to us, or other items.

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

	Three Months Ended February 28,
	2019			2018
Revenues	$	12,192		$	8,797
Construction and land costs	(12,220		)	(8,816		)
Other expense, net	(628		)	(1,372		)
Loss	$	(656	)	$	(1,391	)

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

	February 28, 2019		November 30, 2018
Assets
Cash	$	16,598	$	18,567
Inventories	127,377		131,074
Other assets	446		530
Total assets	$	144,421	$	150,171
Liabilities and equity
Accounts payable and other liabilities	$	11,254	$	11,374
Notes payable (a)	22,045		17,956
Equity	111,122		120,841
Total liabilities and equity	$	144,421	$	150,171

(a) As of February 28, 2019 and November 30, 2018, one of our unconsolidated joint ventures had a construction loan agreement with a third-party lender to finance its land development activities, with the outstanding debt secured by the underlying property and related project assets and non-recourse to us. All of the outstanding secured debt at February 28,

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2019 is scheduled to mature in February 2020. None of our other unconsolidated joint ventures had outstanding debt at February 28, 2019 or November 30, 2018.

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

	February 28, 2019		November 30, 2018
Number of investments in unconsolidated joint ventures	6		6
Investments in unconsolidated joint ventures	$	57,134	$	61,960
Number of unconsolidated joint venture lots controlled under land option contracts and other similar contracts	25		36

We and our partner in the unconsolidated joint venture that has the above-noted outstanding construction loan agreement at February 28, 2019 provide certain guarantees and indemnities to the lender, including a guaranty to complete the construction of improvements for the project; a guaranty against losses the lender suffers due to certain bad acts or failures to act by the unconsolidated joint venture or its partners; and an indemnity of the lender from environmental issues. Our actual responsibility under the foregoing guaranty and indemnity obligations is limited to our pro rata interest in the unconsolidated joint venture. We do not have a guaranty or any other obligation to repay or to support the value of the collateral underlying the outstanding secured debt. However, various financial and non-financial covenants apply with respect to the outstanding secured debt and the related guaranty and indemnity obligations, and a failure to comply with such covenants could result in a default and cause the lender to seek to enforce such guaranty and indemnity obligations, if and as may be applicable. As of February 28, 2019, we were in compliance with the applicable terms of our relevant covenants with respect to the construction loan agreement. We do not believe that our existing exposure under our guaranty and indemnity obligations related to the outstanding secured debt is material to our consolidated financial statements.

We are committed to purchase all 25 unconsolidated joint venture lots controlled under land option and other similar contracts at February 28, 2019 from one of our unconsolidated joint ventures. The purchase will be made in quarterly takedowns over the next year for an aggregate purchase price of $11.8 million under agreements that we entered into with the unconsolidated joint venture in 2016.

10. Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

	February 28, 2019			November 30, 2018
Computer software and equipment	$	22,953		$	20,940
Model furnishings and sales office improvements (a)	61,747			—
Leasehold improvements, office furniture and equipment (b)	15,385			23,491
Subtotal	100,085			44,431
Less accumulated depreciation (a)	(44,755		)	(20,148		)
Total	$	55,330		$	24,283

(a) The balance at February 28, 2019 reflects a change in the classification of certain community sales office and marketing- and model home-related costs and related accumulated amortization from inventories to property and equipment, net due to our adoption of ASC 606 effective December 1, 2018, as described in Note 1 – Basis of Presentation and Significant Accounting Policies.

(b) In January 2019, we completed the sale and leaseback of our office building in San Antonio, Texas. The sale generated net cash proceeds of $5.8 million and a gain of $2.2 million, which will be recognized on a straight-line basis over a 10-year lease term until our adoption of ASU 2016-02, when the remaining gain will be recognized as a transition adjustment to retained earnings.

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11. Other Assets

Other assets consisted of the following (in thousands):

	February 28, 2019		November 30, 2018
Cash surrender value of corporate-owned life insurance contracts	$	74,649	$	73,721
Prepaid expenses and other	14,911		9,379
Total	$	89,560	$	83,100

12. Accrued Expenses and Other Liabilities

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

	February 28, 2019		November 30, 2018
Self-insurance and other litigation liabilities	$	297,361	$	283,651
Employee compensation and related benefits	101,444		148,549
Warranty liability	84,191		82,490
Accrued interest payable	46,498		31,180
Inventory-related obligations (a)	23,319		40,892
Customer deposits	20,122		19,491
Real estate and business taxes	9,529		16,639
Other	48,917		43,376
Total	$	631,381	$	666,268

(a) Represents liabilities for financing arrangements discussed in Note 8 – Variable Interest Entities, as well as liabilities for fixed or determinable amounts associated with tax increment financing entity (“TIFE”) assessments. As homes are delivered, our obligation to pay the remaining TIFE assessments associated with each underlying lot is transferred to the homebuyer. As such, these assessment obligations will be paid by us only to the extent we do not deliver homes on applicable lots before the related TIFE obligations mature.

13. Income Taxes

Income Tax Expense. Our income tax expense and effective tax rates were as follows (dollars in thousands):

	Three Months Ended February 28,
	2019			2018
Income tax expense	$	4,500		$	117,300
Effective tax rate	13.0		%	254.8		%

Our income tax expense and effective tax rate for the three months ended February 28, 2019 included the favorable effects of a $3.3 million reversal of a deferred tax asset valuation allowance and $2.0 million of excess tax benefits related to stock-based compensation, which were partly offset by $.8 million of other items.

Our income tax expense and effective tax rate for the three months ended February 28, 2018 included a non-cash charge of $111.2 million for the estimated impacts of the TCJA, which was enacted into law on December 22, 2017. Of the total charge, $107.9 million related to the accounting re-measurement of our deferred tax assets based on the reduction in the federal corporate income tax rate from 35% to 21%, effective January 1, 2018, under the TCJA. The remaining $3.3 million was due to our establishing a federal deferred tax asset valuation allowance for the sequestration of refundable alternative minimum tax (“AMT”) credits. Our income tax expense and effective tax rate for the three months ended February 28, 2018 also reflected the favorable net impacts of federal energy tax credits of $4.0 million and excess tax benefits of $2.2 million related to stock-based compensation. The federal energy tax credits for the three-month period ended February 28, 2018 resulted from legislation enacted on February 9, 2018, which among other things, extended the availability of a business tax credit for

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building new energy efficient homes through December 31, 2017. Prior to this legislation, the tax credit expired on December 31, 2016.

Deferred Tax Asset Valuation Allowance. We evaluate our deferred tax assets quarterly to determine if adjustments to our valuation allowance are required based on the consideration of all available positive and negative evidence using a “more likely than not” standard with respect to whether deferred tax assets will be realized. Our evaluation considers, among other factors, our historical operating results, our expectation of future profitability, the duration of the applicable statutory carryforward periods, and conditions in the housing market and the broader economy. The ultimate realization of our deferred tax assets depends primarily on our ability to generate future taxable income during the periods in which the related deferred tax assets become deductible. The value of our deferred tax assets depends on applicable income tax rates.

Our deferred tax assets of $453.6 million as of February 28, 2019 and $465.4 million as of November 30, 2018 were partly offset by valuation allowances of $20.3 million and $23.6 million, respectively. During the three-month period ended February 28, 2019, we reversed the above-mentioned $3.3 million federal deferred tax asset valuation allowance due to the Internal Revenue Service’s announcement in January 2019 that refundable AMT credits will not be subject to sequestration for taxable years beginning after December 31, 2017. The deferred tax asset valuation allowances as of February 28, 2019 and November 30, 2018 were primarily related to certain state net operating losses (“NOLs”) that had not met the “more likely than not” realization standard at those dates. Based on our evaluation of our deferred tax assets as of February 28, 2019, we determined that most of our deferred tax assets would be realized. Therefore, other than the $3.3 million reversal discussed above, no adjustments to our deferred tax valuation allowance were needed for the three months endedFebruary 28, 2019.

We will continue to evaluate both the positive and negative evidence on a quarterly basis in determining the need for a valuation allowance with respect to our deferred tax assets. The accounting for deferred tax assets is based upon estimates of future results. Changes in positive and negative evidence, including differences between estimated and actual results, could result in changes in the valuation of our deferred tax assets that could have a material impact on our consolidated financial statements. Changes in existing federal and state tax laws and corporate income tax rates could also affect actual tax results and the realization of deferred tax assets over time.

Unrecognized Tax Benefits. As of February 28, 2019 and November 30, 2018, we had no gross unrecognized tax benefits (including interest and penalties). The fiscal years ending 2015 and later remain open to federal examinations, while 2014 and later remain open to state examinations.

14. Notes Payable

Notes payable consisted of the following (in thousands):

	February 28, 2019		November 30, 2018
Mortgages and land contracts due to land sellers and other loans	$	12,018	$	40,038
4.75% Senior notes due May 15, 2019	399,764		399,483
8.00% Senior notes due March 15, 2020	348,199		347,790
7.00% Senior notes due December 15, 2021	447,554		447,359
7.50% Senior notes due September 15, 2022	347,861		347,731
7.625% Senior notes due May 15, 2023	352,081		248,074
6.875% Senior notes due June 15, 2027	296,112		—
1.375% Convertible senior notes due February 1, 2019	—		229,788
Total	$	2,203,589	$	2,060,263

The carrying amounts of our senior notes listed above are net of unamortized debt issuance costs, premiums and discounts, which totaled $8.4 million at February 28, 2019 and $9.8 million at November 30, 2018.

Unsecured Revolving Credit Facility. We have a $500.0 million unsecured revolving credit facility with various banks (“Credit Facility”) that will mature on July 27, 2021. The Credit Facility contains an uncommitted accordion feature under which the aggregate principal amount of available loans can be increased to a maximum of $600.0 million under certain conditions, including obtaining additional bank commitments. The Credit Facility also contains a sublimit of $250.0 million for the issuance of letters of credit. Interest on amounts borrowed under the Credit Facility is payable at least quarterly in arrears at

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a rate based on either a Eurodollar or a base rate, plus a spread that depends on our consolidated leverage ratio (“Leverage Ratio”), as defined under the Credit Facility. The Credit Facility also requires the payment of a commitment fee at a per annum rate ranging from .30% to .45% of the unused commitment, based on our 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 a consolidated interest coverage ratio (“Interest Coverage Ratio”) or minimum level of liquidity, each as defined therein. The amount of the Credit Facility available for cash borrowings or the issuance of letters of credit depends on the total cash borrowings and letters of credit outstanding under the Credit Facility and the maximum available amount under the terms of the Credit Facility. As of February 28, 2019, we had no cash borrowings and $33.1 million of letters of credit outstanding under the Credit Facility. Therefore, as of February 28, 2019, we had $466.9 million available for cash borrowings under the Credit Facility, with up to $216.9 million of that amount available for the issuance of letters of credit.

Letter of Credit Facilities. On February 13, 2019,we entered into a new unsecured letter of credit agreement with a financial institution (“New LOC Facility”). Under the New LOC Facility, which expires on February 13, 2022, we may issue up to $50.0 million of letters of credit. We maintain the New LOC Facility and a cash-collateralized letter of credit facility (together, the “LOC Facilities”) to obtain letters of credit from time to time in the ordinary course of operating our business. As of February 28, 2019, we had $.3 million letters of credit outstanding under the LOC Facilities. We had no letters of credit outstanding under the LOC Facilities at November 30, 2018.

Mortgages and Land Contracts Due to Land Sellers and Other Loans. As of February 28, 2019, inventories having a carrying value of $138.2 million were pledged to collateralize mortgages and land contracts due to land sellers and other loans.

Shelf Registration. We have an automatically effective universal shelf registration statement that was filed with the SEC on July 14, 2017 (“2017 Shelf Registration”). Issuances of securities under our 2017 Shelf Registration require the filing of a prospectus supplement identifying the amount and terms of the securities to be issued. Our ability to issue securities is subject to market conditions and other factors impacting our borrowing capacity.

Senior Notes. On February 1, 2019, we repaid the entire $230.0 million in aggregate principal amount of our 1.375% Convertible Senior Notes due 2019 at their maturity.

On February 20, 2019, pursuant to the 2017 Shelf Registration, we completed concurrent public offerings of $300.0 million in aggregate principal amount of 6.875% senior notes due 2027 (“6.875% Senior Notes due 2027”) at 100.000% of their aggregate principal amount, and an additional $100.0 million in aggregate principal amount of our existing series of 7.625% senior notes due 2023 (“7.625% Senior Notes due 2023”) at 105.250% of their aggregate principal amount plus accrued interest from November 15, 2018 (the last date on which interest was paid on the existing 2023 senior notes) to the date of delivery. Net proceeds from these offerings totaled $400.0 million, after deducting the underwriting discount and our expenses relating to the offerings, and were applied towards the optional redemption of the entire $400.0 million in aggregate principal amount of our 4.75% senior notes due 2019 (“4.75% Senior Notes due 2019”) before their May 15, 2019 maturity date, which redemption we announced on February 5, 2019 and completed on March 8, 2019.

All of our senior notes outstanding at February 28, 2019 and November 30, 2018 represent senior unsecured obligations that are guaranteed on an unsecured basis by certain of our subsidiaries that guarantee our obligations under the Credit Facility and rank equally in right of payment with all of our other unsecured and unsubordinated indebtedness. Interest on each of these senior notes is payable semi-annually.

The indenture governing our senior notes does not contain any financial covenants. Subject to specified exceptions, the indenture contains certain restrictive covenants that, among other things, limit our ability to incur secured indebtedness, or engage in sale and leaseback transactions involving property above a certain specified value. In addition, the indenture contains certain limitations related to mergers, consolidations, and sales of assets.

As of February 28, 2019, we were in compliance with the applicable terms of all our covenants and other requirements under the Credit Facility, the senior notes, the indenture, and the mortgages and land contracts due to land sellers and other loans. Our ability to access the Credit Facility for cash borrowings and letters of credit and our ability to secure future debt financing depend, in part, on our ability to remain in such compliance.

As of February 28, 2019, principal payments on senior notes, mortgages and land contracts due to land sellers and other loans are due as follows: 2019 – $412.0 million; 2020 – $350.0 million; 2021 – $0; 2022 – $800.0 million; 2023 – $350.0 million; and thereafter – $300.0 million.

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15. Fair Value Disclosures

Fair value measurements of assets and liabilities are categorized based on the following hierarchy:

Level 1	Fair value determined based on quoted prices in active markets for identical assets or liabilities.
Level 2	Fair value determined using significant observable inputs, such as quoted prices for similar assets or liabilities or quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, or inputs that are derived principally from or corroborated by observable market data, by correlation or other means.
Level 3	Fair value determined using significant unobservable inputs, such as pricing models, discounted cash flows, or similar techniques.

Fair value measurements are used for inventories on a nonrecurring basis when events and circumstances indicate that their carrying value is not recoverable. The following table presents the fair value hierarchy, pre-impairment value, inventory impairment charges and fair value for our assets measured at fair value on a nonrecurring basis for the three months endedFebruary 28, 2019 and the year ended November 30, 2018 (in thousands):

		February 28, 2019							November 30, 2018
Description	Fair Value Hierarchy	Pre-Impairment Value		Inventory Impairment Charges			Fair Value (a)		Pre-Impairment Value		Inventory Impairment Charges			Fair Value (a)
Inventories	Level 3	$	9,917	$	(3,196	)	$	6,721	$	70,156	$	(26,104	)	$	44,052

(a) Amounts represent the aggregate fair value for real estate assets impacted by inventory impairment charges during the applicable period as of the date the fair value measurements were made. The carrying value for these real estate assets may have subsequently increased or decreased from the fair value reflected due to activity that has occurred since the measurement date.

The fair values for inventories that were determined using Level 3 inputs were based on the estimated future net cash flows discounted for inherent risk associated with each underlying asset.

The following table presents the fair value hierarchy, carrying values and estimated fair values of our financial instruments, except those for which the carrying values approximate fair values (in thousands):

		February 28, 2019				November 30, 2018
	Fair Value Hierarchy	Carrying Value (a)		Estimated Fair Value		Carrying Value (a)		Estimated Fair Value
Financial Liabilities:
Senior notes	Level 2	$	2,191,571	$	2,298,750	$	1,790,437	$	1,853,438
Convertible senior notes	Level 2	—		—		229,788		229,425

(a) The carrying values for the senior notes and convertible senior notes, as presented, include unamortized debt issuance costs. Debt issuance costs are not factored into the estimated fair values of these notes.

The fair values of our senior notes and convertible senior notes are generally estimated based on quoted market prices for these instruments. The carrying values reported for cash and cash equivalents, and mortgages and land contracts due to land sellers and other loans approximate fair values. The carrying value of corporate-owned life insurance is based on the cash surrender value of the policies and, accordingly, approximates fair value.

16. 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,

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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 of certain conditions or defects, including claims where we could have liability under applicable state statutes or tort law for a defective condition in or damages to a home. Our warranty liability covers our costs of repairs associated with homeowner claims made under our limited warranty program. These claims are generally made directly by a homeowner and involve their individual home.

We estimate the costs that may be incurred under each limited warranty and record a liability in the amount of such costs at the time the revenue associated with the sale of each home is recognized. Our primary assumption in estimating the amounts we accrue for warranty costs is that historical claims experience is a strong indicator of future claims experience. Factors that affect our warranty liability include the number of homes delivered, historical and anticipated rates of warranty claims, and cost per claim. We periodically assess the adequacy of our accrued warranty liability, which is included in accrued expenses and other liabilities in our consolidated balance sheets, and adjust the amount as necessary based on our assessment. Our assessment includes the review of our actual warranty costs incurred to identify trends and changes in our warranty claims experience, and considers our home construction quality and customer service initiatives and outside events. While we believe the warranty liability currently reflected in our consolidated balance sheets to be adequate, unanticipated changes or developments in the legal environment, local weather, land or environmental conditions, quality of materials or methods used in the construction of homes or customer service practices and/or our warranty claims experience could have a significant impact on our actual warranty costs in future periods and such amounts could differ significantly from our current estimates.

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

	Three Months Ended February 28,
	2019			2018
Balance at beginning of period	$	82,490		$	69,798
Warranties issued	6,294			7,764
Payments	(4,593		)	(5,717		)
Balance at end of period	$	84,191		$	71,845

Guarantees. In the normal course of our business, we issue certain representations, warranties and guarantees related to our home sales and land sales. Based on historical experience, we do not believe any potential liability with respect to these representations, warranties or guarantees would be material to our consolidated financial statements.

Self-Insurance. We maintain, and require the majority of our independent subcontractors to maintain, general liability insurance (including construction defect and bodily injury coverage) and workers’ compensation insurance. These insurance policies protect us against a portion of our risk of loss from claims related to our homebuilding activities, subject to certain self-insured retentions, deductibles and other coverage limits. We also maintain certain other insurance policies. In Arizona, California, Colorado and Nevada, our subcontractors’ general liability insurance primarily takes the form of a wrap-up policy under a program where eligible independent subcontractors are enrolled as insureds on each community. Enrolled subcontractors contribute toward the cost of the insurance and agree to pay a contractual amount in the future if there is a claim related to their work. To the extent provided under the wrap-up program, we absorb the enrolled subcontractors’ general liability associated with the work performed on our homes within the applicable community as part of our overall general liability insurance and our self-insurance.

We self-insure a portion of our overall risk through the use of a captive insurance subsidiary, which provides coverage for our exposure to construction defect, bodily injury and property damage claims and related litigation or regulatory actions, up to certain limits. Our self-insurance liability generally covers the costs of settlements and/or repairs, if any, as well as our costs to defend and resolve the following types of claims:

• Construction defect: Construction defect claims, which represent the largest component of our self-insurance liability, typically originate through a legal or regulatory process rather than directly by a homeowner and involve the alleged occurrence of a condition affecting two or more homes within the same community, or they involve a common area or homeowners association property within a community. These claims typically involve higher costs to resolve than individual homeowner warranty claims, and the rate of claims is highly variable.

• Bodily injury: Bodily injury claims typically involve individuals (other than our employees) who claim they were injured while on our property or as a result of our operations.

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• Property damage: Property damage claims generally involve claims by third parties for alleged damage to real or personal property as a result of our operations. Such claims may occasionally include those made against us by owners of property located near our communities.

Our self-insurance liability at each reporting date represents the estimated costs of reported claims, claims incurred but not yet reported, and claim adjustment expenses. The amount of our self-insurance liability is based on an analysis performed by a third-party actuary that uses our historical claim and expense data, as well as industry data to estimate these overall costs. Key assumptions used in developing these estimates include claim frequencies, severities and resolution patterns, which can occur over an extended period of time. These estimates are subject to variability due to the length of time between the delivery of a home to a homebuyer and when a construction defect claim is made, and the ultimate resolution of such claim; uncertainties regarding such claims relative to our markets and the types of product we build; and legal or regulatory actions and/or interpretations, among other factors. Due to the degree of judgment involved and the potential for variability in these underlying assumptions, our actual future costs could differ from those estimated. In addition, changes in the frequency and severity of reported claims and the estimates to resolve claims can impact the trends and assumptions used in the actuarial analysis, which could be material to our consolidated financial statements. Though state regulations vary, construction defect claims are reported and resolved over a long period of time, which can extend for 10 years or more. As a result, the majority of the estimated self-insurance liability based on the actuarial analysis relates to claims incurred but not yet reported. Therefore, adjustments related to individual existing claims generally do not significantly impact the overall estimated liability. Adjustments to our liabilities related to homes delivered in prior years are recorded in the period in which a change in our estimate occurs.

Our self-insurance liability is presented on a gross basis without consideration of insurance recoveries and amounts we have paid on behalf of and expect to recover from other parties, if any. Estimated probable insurance and other recoveries of $57.2 million and $56.9 million are included in receivables in our consolidated balance sheets at February 28, 2019 and November 30, 2018, respectively. These self-insurance recoveries are principally based on actuarially determined amounts and depend on various factors, including, among other things, the above-described claim cost estimates, our insurance policy coverage limits for the applicable policy year(s), historical third-party recovery rates, insurance industry practices, the regulatory environment, and legal precedent, and are subject to a high degree of variability from period to period. Because of the inherent uncertainty and variability in these assumptions, our actual insurance recoveries could differ significantly from amounts currently estimated.

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

	Three Months Ended February 28,
	2019			2018
Balance at beginning of period	$	176,841		$	177,695
Self-insurance expense (a)	3,747			4,401
Payments (b)	(2,726		)	(1,401		)
Balance at end of period	$	177,862		$	180,695

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

(b) Includes net changes in estimated probable insurance and other recoveries, which are recorded in receivables, to present our self-insurance liability on a gross basis.

For most of our claims, there is no interaction between our warranty liability and self-insurance liability. Typically, if a matter is identified at its outset as either a warranty or self-insurance claim, it remains as such through its resolution. However, there can be instances of interaction between the liabilities, such as where individual homeowners in a community separately request warranty repairs to their homes to address a similar condition or issue and subsequently join together to initiate, or potentially initiate, a legal process with respect to that condition or issue and/or the repair work we have undertaken. In these instances, the claims and related repair work generally are initially covered by our warranty liability, and the costs associated with resolving the legal matter (including any additional repair work) are covered by our self-insurance liability.

The payments we make in connection with claims and related repair work, whether covered within our warranty liability and/or our self-insurance liability, may be recovered from our insurers to the extent such payments exceed the self-insured retentions or deductibles under our general liability insurance policies. Also, in certain instances, in the course of resolving a claim, we pay amounts in advance of and/or on behalf of a subcontractor(s) or their insurer(s) and believe we will be reimbursed for

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such payments. Estimates of all such amounts, if any, are recorded as receivables in our consolidated balance sheets when any such recovery is considered probable. Such receivables associated with our warranty and other claims totaled $4.1 million at February 28, 2019 and $4.8 million at November 30, 2018. We believe the collection of these receivables is probable based on our history of collections for similar claims.

Northern California Claims. In the 2017 third quarter, we received claims from a homeowners association alleging approximately $100.0 million of damages from purported construction defects at a completed townhome community in Northern California. We continue to investigate these allegations, and to exchange information with the association, whose claims for damages have increased to $142.0 million in December 2018. Arbitral discovery begins in the second quarter of 2019 and we will be evaluating information revealed in discovery in the second and third quarters of 2019. At February 28, 2019, we had an accrual for our estimated probable loss in this matter and a receivable for estimated probable insurance recoveries. While it is reasonably possible that our loss could exceed the amount accrued and our recoveries could be less than the amount recorded, at this stage of our investigation into these allegations, we are unable to estimate the total amount of the loss in excess of the accrued amount and/or associated with a shortfall in the recoveries that is reasonably possible. Our investigation has involved identifying potentially responsible parties, including insurers, to pay for or perform any necessary repairs. In September 2018, a binding arbitration proceeding on this matter was scheduled to begin on July 1, 2019.

Florida Chapter 558 Actions (Individual and Homeowner Association Claims). We and certain of our subcontractors have received a growing number of claims from attorneys on behalf of individual owners of our homes and/or homeowners’ associations that allege, pursuant to Chapter 558 of the Florida Statutes, various construction defects, with most relating to stucco and water-intrusion issues. The claims primarily involve homes in our Jacksonville, Orlando, and Tampa operations. Under Chapter 558, homeowners must serve written notice of a construction defect(s) and provide the served construction and/or design contractor(s) with an opportunity to respond to the noticed issue(s) before they can file a lawsuit. Although we have resolved many of these claims without litigation, and a number of others have been resolved with applicable subcontractors or their insurers covering the related costs, as of February 28, 2019, we had approximately 560 outstanding noticed claims, and some are scheduled for trial over the next few quarters and beyond. In addition, some of our subcontractors’ insurers in some of these cases have informed us of their inability to continue to pay claims-related costs. At February 28, 2019, we had an accrual for our estimated probable loss for these matters and a receivable for estimated probable insurance recoveries. While it is reasonably possible that our loss could exceed the amount accrued and our recoveries could be less than the amount recorded, at this time, we are unable to estimate the total amount of the loss in excess of the accrued amount and/or associated with a shortfall in the recoveries that is reasonably possible.

Performance Bonds and Letters of Credit. We are often required to provide to various municipalities and other government agencies performance bonds and/or letters of credit to secure the completion of our projects and/or in support of obligations to build community improvements such as roads, sewers, water systems and other utilities, and to support similar development activities by certain of our unconsolidated joint ventures. At February 28, 2019, we had $707.6 million of performance bonds and $33.4 million of letters of credit outstanding. At November 30, 2018, we had $689.3 million of performance bonds and $28.0 million of letters of credit outstanding. If any such performance bonds or letters of credit are called, we would be obligated to reimburse the issuer of the performance bond or letter of credit. We do not believe that a material amount of any currently outstanding performance bonds or letters of credit will be called. Performance bonds do not have stated expiration dates. Rather, we are released from the performance bonds as the underlying performance is completed. The expiration dates of some letters of credit issued in connection with community improvements coincide with the expected completion dates of the related projects or obligations. Most letters of credit, however, are issued with an initial term of one year and are typically extended on a year-to-year basis until the related performance obligations are completed.

Land Option Contracts and Other Similar Contracts. In the ordinary course of our business, we enter into land option contracts and other similar contracts to acquire rights to land for the construction of homes. At February 28, 2019, we had total cash deposits of $49.8 million to purchase land having an aggregate purchase price of $1.23 billion. Our land option contracts and other similar contracts generally do not contain provisions requiring our specific performance.

17. Legal Matters

We are involved in litigation and regulatory proceedings incidental to our business that are in various procedural stages. We believe that the accruals we have recorded for probable and reasonably estimable losses with respect to these proceedings are adequate and that, as of February 28, 2019, it was not reasonably possible that an additional material loss had been incurred in an amount in excess of the estimated amounts already recognized or disclosed 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

25

have become probable and reasonably estimable at the time an evaluation is made. Our accruals for litigation and regulatory proceedings are presented on a gross basis without consideration of recoveries and amounts we have paid on behalf of and expect to recover from other parties, if any. Estimates of recoveries and amounts we have paid on behalf of and expect to recover from other parties, if any, are recorded as receivables when such recoveries are considered probable. 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 an accrual had not been made, could be material to our consolidated financial statements.

18. Stockholders’ Equity

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

	Three Months Ended February 28, 2019
	Number of Shares
	Common Stock	Grantor Stock Ownership Trust		Treasury Stock		Common Stock		Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Grantor Stock Ownership Trust			Treasury Stock			Total Stockholders’ Equity
Balance at November 30, 2018	119,196	(8,157	)	(24,113	)	$	119,196	$	753,570		$	1,897,168		$	(9,565	)	$	(88,472	)	$	(584,397	)	$	2,087,500
Cumulative effect of adoption of ASC 606	—	—		—		—		—			11,610			—			—			—			11,610
Net income	—	—		—		—		—			30,011			—			—			—			30,011
Dividends on common stock	—	—		—		—		—			(2,266		)	—			—			—			(2,266		)
Employee stock options/other	62	—		—		62		770			—			—			—			—			832
Stock awards	—	297		(151	)	—		(3,151		)	—			—			3,226			(75		)	—
Stock-based compensation	—	—		—		—		4,152			—			—			—			—			4,152
Tax payments associated with stock-based compensation awards	—	—		—		—		—			—			—			—			(3,342		)	(3,342		)
Balance at February 28, 2019	119,258	(7,860	)	(24,264	)	$	119,258	$	755,341		$	1,936,523		$	(9,565	)	$	(85,246	)	$	(587,814	)	$	2,128,497
	Three Months Ended February 28, 2018
	Number of Shares
	Common Stock	Grantor Stock Ownership Trust		Treasury Stock		Common Stock		Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Grantor Stock Ownership Trust			Treasury Stock			Total Stockholders’ Equity
Balance at November 30, 2017	117,946	(8,898	)	(22,021	)	$	117,946	$	727,483		$	1,735,695		$	(16,924	)	$	(96,509	)	$	(541,380	)	$	1,926,311
Net loss	—	—		—		—		—			(71,255		)	—			—			—			(71,255		)
Dividends on common stock	—	—		—		—		—			(2,322		)	—			—			—			(2,322		)
Employee stock options/other	268	—		—		268		2,678			—			—			—			—			2,946
Stock awards	—	438		(10	)	—		(4,551		)	—			—			4,749			(198		)	—
Stock-based compensation	—	—		—		—		3,829			—			—			—			—			3,829
Tax payments associated with stock-based compensation awards	—	—		(217	)	—		—			—			—			—			(6,787		)	(6,787		)
Balance at February 28, 2018	118,214	(8,460	)	(22,248	)	$	118,214	$	729,439		$	1,662,118		$	(16,924	)	$	(91,760	)	$	(548,365	)	$	1,852,722

On February 15, 2019, the management development and compensation committee of our board of directors approved the payout of 297,260 shares of our common stock in connection with the vesting of PSUs that were granted to certain employees on October 8, 2015. The shares paid out under the PSUs reflected our achievement of certain performance measures that were based on average return on invested capital and cumulative earnings per share, and revenue growth relative to a peer group of high-production public homebuilding companies over the three-year period from December 1, 2015 through November 30, 2018. Of the shares of common stock paid out, 147,382 shares or $3.3 million, were purchased by us in the 2019 first quarter to satisfy the recipients’ withholding taxes on the vesting of the PSUs. The shares purchased were not considered repurchases under the authorizations described below.

As of February 28, 2019, we were authorized to repurchase 2,193,947 shares of our common stock under a board of directors approved share repurchase program. We did not repurchase any of our common stock under this program in the three months ended February 28, 2019.

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Unrelated to the share repurchase program, our board of directors authorized in 2014 the repurchase of not more than 680,000 shares of our outstanding common stock, and also authorized potential future grants of up to 680,000 stock payment awards under the KB Home 2014 Equity Incentive Plan (“2014 Plan”), in each case solely as necessary to settle outstanding stock appreciation rights awards granted under our Non-Employee Directors Compensation Plan. As of February 28, 2019, we have not repurchased any shares and no stock payment awards have been granted under the 2014 Plan pursuant to the board of directors authorization.

During each of the three-month periods ended February 28, 2019 and 2018, our board of directors declared, and we paid, a quarterly cash dividend of $.025 per share of common stock.

19. Stock-Based Compensation

Stock Options. We estimate the grant-date fair value of stock options using the Black-Scholes option-pricing model. The following table summarizes stock option transactions for the three months endedFebruary 28, 2019:

	Options		Weighted Average Exercise Price
Options outstanding at beginning of period	7,237,544		$	16.02
Granted	—		—
Exercised	(62,292	)	13.36
Cancelled	—		—
Options outstanding at end of period	7,175,252		$	16.04
Options exercisable at end of period	6,886,378		$	16.04

As of February 28, 2019, the weighted average remaining contractual life of stock options outstanding and stock options exercisable was 3.8 years and 3.6 years, respectively. There was $.1 million of total unrecognized compensation expense related to unvested stock option awards as of February 28, 2019 that is expected to be recognized over a weighted average period of 0.6 years. For the three months ended February 28, 2019, stock-based compensation expense was nominal compared to $.2 million for the three months ended February 28, 2018. The aggregate intrinsic values of stock options outstanding and stock options exercisable were $62.3 million and $60.4 million, respectively, at February 28, 2019. (The intrinsic value of a stock option is the amount by which the market value of a share of the underlying common stock exceeds the exercise price of the stock option.)

Other Stock-Based Awards. From time to time, we grant restricted stock and PSUs to various employees as a compensation benefit. We recognized total compensation expense of $4.1 million and $3.7 million for the three months ended February 28, 2019 and 2018, respectively, related to restricted stock and PSUs.

20. 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,
	2019			2018
Summary of cash and cash equivalents at end of period:
Homebuilding	$	511,690		$	560,255
Financial services	717			551
Total	$	512,407		$	560,806
Supplemental disclosures of cash flow information:
Interest paid, net of amounts capitalized	$	(15,318	)	$	(9,696	)
Income taxes paid	113			1,639

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	Three Months Ended February 28,
	2019			2018
Supplemental disclosures of non-cash activities:
Decrease in inventories due to adoption of ASC 606	$	(35,288	)	$	—
Increase in property and equipment, net due to adoption of ASC 606	31,194			—
Increase (decrease) in consolidated inventories not owned	(16,262		)	8,466
Increase in inventories due to distributions of land and land development from an unconsolidated joint venture	1,946			2,699
Inventories acquired through seller financing	—			36,697

21. Supplemental Guarantor Information

Our obligations to pay principal, premium, if any, and interest on the senior notes and borrowings, if any, under the Credit Facility are guaranteed on a joint and several basis by certain of our subsidiaries (“Guarantor Subsidiaries”). The guarantees are full and unconditional and the Guarantor Subsidiaries are 100% owned by us. Pursuant to the terms of the indenture governing the senior notes and the terms of the Credit Facility, if any of the Guarantor Subsidiaries ceases to be a “significant subsidiary” as defined by Rule 1-02 of Regulation S-X using a 5% rather than a 10% threshold (provided that the assets of our non-guarantor subsidiaries do not in the aggregate exceed 10% of an adjusted measure of our consolidated total assets), it will be automatically and unconditionally released and discharged from its guaranty of the senior notes and the Credit Facility so long as all guarantees by such Guarantor Subsidiary of any other of our or our subsidiaries’ indebtedness are terminated at or prior to the time of such release. We have determined that separate, full financial statements of the Guarantor Subsidiaries would not be material to investors and, accordingly, supplemental financial information for the Guarantor Subsidiaries is presented.

The supplemental financial information for all periods presented below reflects the relevant subsidiaries that were Guarantor Subsidiaries as of February 28, 2019.

Condensed Consolidating Statements of Operations (in thousands)

	Three Months Ended February 28, 2019
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Total revenues	$	—		$	744,453		$	67,030		$	—		$	811,483
Homebuilding:
Revenues	$	—		$	744,453		$	64,335		$	—		$	808,788
Construction and land costs	—			(611,041		)	(59,814		)	—			(670,855		)
Selling, general and administrative expenses	(25,382		)	(75,540		)	(5,672		)	—			(106,594		)
Operating income (loss)	(25,382		)	57,872			(1,151		)	—			31,339
Interest income	1,014			—			91			—			1,105
Interest expense	(33,195		)	(321		)	(1,272		)	34,788			—
Intercompany interest	77,972			(41,738		)	(1,446		)	(34,788		)	—
Equity in loss of unconsolidated joint ventures	—			(406		)	—			—			(406		)
Homebuilding pretax income (loss)	20,409			15,407			(3,778		)	—			32,038
Financial services pretax income	—			—			2,473			—			2,473
Total pretax income (loss)	20,409			15,407			(1,305		)	—			34,511
Income tax expense	(700		)	(3,400		)	(400		)	—			(4,500		)
Equity in net income of subsidiaries	10,302			—			—			(10,302		)	—
Net income (loss)	$	30,011		$	12,007		$	(1,705	)	$	(10,302	)	$	30,011

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	Three Months Ended February 28, 2018
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Total revenues	$	—		$	794,689		$	76,934		$	—		$	871,623
Homebuilding:
Revenues	$	—		$	794,689		$	74,516		$	—		$	869,205
Construction and land costs	—			(664,096		)	(65,382		)	—			(729,478		)
Selling, general and administrative expenses	(22,166		)	(67,117		)	(6,441		)	—			(95,724		)
Operating income (loss)	(22,166		)	63,476			2,693			—			44,003
Interest income	998			5			—			—			1,003
Interest expense	(37,972		)	(689		)	(1,283		)	39,944			—
Intercompany interest	72,846			(30,954		)	(1,948		)	(39,944		)	—
Equity in loss of unconsolidated joint ventures	—			(845		)	—			—			(845		)
Homebuilding pretax income (loss)	13,706			30,993			(538		)	—			44,161
Financial services pretax income	—			—			1,884			—			1,884
Total pretax income	13,706			30,993			1,346			—			46,045
Income tax expense	(44,700		)	(48,100		)	(24,500		)	—			(117,300		)
Equity in net loss of subsidiaries	(40,261		)	—			—			40,261			—
Net loss	$	(71,255	)	$	(17,107	)	$	(23,154	)	$	40,261		$	(71,255	)

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Condensed Consolidating Balance Sheets (in thousands)

	February 28, 2019
	KB Home Corporate		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Total
Assets
Homebuilding:
Cash and cash equivalents	$	415,471	$	80,346	$	15,873	$	—		$	511,690
Receivables	4,291		228,879		80,439		—			313,609
Inventories	—		3,435,361		248,402		—			3,683,763
Investments in unconsolidated joint ventures	—		57,134		—		—			57,134
Property and equipment, net	20,363		32,002		2,965		—			55,330
Deferred tax assets, net	80,339		299,769		53,187		—			433,295
Other assets	84,083		3,419		2,058		—			89,560
	604,547		4,136,910		402,924		—			5,144,381
Financial services	—		—		29,275		—			29,275
Intercompany receivables	3,757,220		—		174,018		(3,931,238		)	—
Investments in subsidiaries	104,040		—		—		(104,040		)	—
Total assets	$	4,465,807	$	4,136,910	$	606,217	$	(4,035,278	)	$	5,173,656
Liabilities and stockholders’ equity
Homebuilding:
Accounts payable, accrued expenses and other liabilities	$	122,161	$	443,269	$	274,966	$	—		$	840,396
Notes payable	2,166,461		12,018		25,110		—			2,203,589
	2,288,622		455,287		300,076		—			3,043,985
Financial services	—		—		1,174		—			1,174
Intercompany payables	48,688		3,666,215		216,335		(3,931,238		)	—
Stockholders’ equity	2,128,497		15,408		88,632		(104,040		)	2,128,497
Total liabilities and stockholders’ equity	$	4,465,807	$	4,136,910	$	606,217	$	(4,035,278	)	$	5,173,656

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	November 30, 2018
	KB Home Corporate		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Total
Assets
Homebuilding:
Cash and cash equivalents	$	429,977	$	114,269	$	30,113	$	—		$	574,359
Receivables	5,135		198,465		89,230		—			292,830
Inventories	—		3,314,386		268,453		—			3,582,839
Investments in unconsolidated joint ventures	—		61,960		—		—			61,960
Property and equipment, net	18,450		5,523		310		—			24,283
Deferred tax assets, net	84,564		303,669		53,587		—			441,820
Other assets	77,288		4,007		1,805		—			83,100
	615,414		4,002,279		443,498		—			5,061,191
Financial services	—		—		12,380		—			12,380
Intercompany receivables	3,569,422		—		158,760		(3,728,182		)	—
Investments in subsidiaries	67,657		—		—		(67,657		)	—
Total assets	$	4,252,493	$	4,002,279	$	614,638	$	(3,795,839	)	$	5,073,571
Liabilities and stockholders’ equity
Homebuilding:
Accounts payable, accrued expenses and other liabilities	$	126,176	$	584,321	$	213,816	$	—		$	924,313
Notes payable	1,995,115		40,038		25,110		—			2,060,263
	2,121,291		624,359		238,926		—			2,984,576
Financial services	—		—		1,495		—			1,495
Intercompany payables	43,702		3,377,920		306,560		(3,728,182		)	—
Stockholders’ equity	2,087,500		—		67,657		(67,657		)	2,087,500
Total liabilities and stockholders’ equity	$	4,252,493	$	4,002,279	$	614,638	$	(3,795,839	)	$	5,073,571

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Condensed Consolidating Statements of Cash Flows (in thousands)

	Three Months Ended February 28, 2019
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net cash provided by (used in) operating activities	$	13,062		$	(337,286	)	$	126,014		$	—		$	(198,210	)
Cash flows from investing activities:
Contributions to unconsolidated joint ventures	—			(2,527		)	—			—			(2,527		)
Return of investments in unconsolidated joint ventures	—			5,001			—			—			5,001
Proceeds from sale of building	—			5,804			—			—			5,804
Purchases of property and equipment, net	(2,068		)	(2,032		)	(5,925		)	—			(10,025		)
Intercompany	(190,765		)	—			—			190,765			—
Net cash provided by (used in) investing activities	(192,833		)	6,246			(5,925		)	190,765			(1,747		)
Cash flows from financing activities:
Proceeds from issuance of debt	405,250			—			—			—			405,250
Payment of debt issuance costs	(5,209		)	—			—			—			(5,209		)
Repayment of senior notes	(230,000		)	—			—			—			(230,000		)
Borrowings under revolving credit facility	140,000			—			—			—			140,000
Repayments under revolving credit facility	(140,000		)	—			—			—			(140,000		)
Payments on mortgages and land contracts due to land sellers and other loans	—			(28,020		)	—			—			(28,020		)
Issuance of common stock under employee stock plans	832			—			—			—			832
Tax payments associated with stock-based compensation awards	(3,342		)	—			—			—			(3,342		)
Payments of cash dividends	(2,266		)	—			—			—			(2,266		)
Intercompany	—			325,137			(134,372		)	(190,765		)	—
Net cash provided by (used in) financing activities	165,265			297,117			(134,372		)	(190,765		)	137,245
Net decrease in cash and cash equivalents	(14,506		)	(33,923		)	(14,283		)	—			(62,712		)
Cash and cash equivalents at beginning of period	429,977			114,269			30,873			—			575,119
Cash and cash equivalents at end of period	$	415,471		$	80,346		$	16,590		$	—		$	512,407

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	Three Months Ended February 28, 2018
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net cash provided by (used in) operating activities	$	3,066		$	(137,254	)	$	(7,492	)	$	—		$	(141,680	)
Cash flows from investing activities:
Contributions to unconsolidated joint ventures	—			(8,025		)	—			—			(8,025		)
Return of investments in unconsolidated joint ventures	—			1,099			—			—			1,099
Sale (purchases) of property and equipment, net	(1,776		)	(177		)	29			—			(1,924		)
Intercompany	(114,691		)	—			—			114,691			—
Net cash provided by (used in) investing activities	(116,467		)	(7,103		)	29			114,691			(8,850		)
Cash flows from financing activities:
Payments on mortgages and land contracts due to land sellers and other loans	—			(2,442		)	(920		)	—			(3,362		)
Issuance of common stock under employee stock plans	2,946			—			—			—			2,946
Tax payments associated with stock-based compensation awards	(6,787		)	—			—			—			(6,787		)
Payments of cash dividends	(2,322		)	—			—			—			(2,322		)
Intercompany	—			118,004			(3,313		)	(114,691		)	—
Net cash provided by (used in) financing activities	(6,163		)	115,562			(4,233		)	(114,691		)	(9,525		)
Net decrease in cash and cash equivalents	(119,564		)	(28,795		)	(11,696		)	—			(160,055		)
Cash and cash equivalents at beginning of period	575,193			104,120			41,548			—			720,861
Cash and cash equivalents at end of period	$	455,629		$	75,325		$	29,852		$	—		$	560,806

22. Subsequent Event

On March 8, 2019, we optionally redeemed the entire $400.0 million in aggregate principal amount of our 4.75% Senior Notes due 2019, which were scheduled to mature on May 15, 2019.

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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,
	2019			2018			Variance
Revenues:
Homebuilding	$	808,788		$	869,205		(7)	%
Financial services	2,695			2,418			11
Total revenues	$	811,483		$	871,623		(7)	%
Pretax income:
Homebuilding	$	32,038		$	44,161		(27)	%
Financial services	2,473			1,884			31
Total pretax income	34,511			46,045			(25	)
Income tax expense	(4,500		)	(117,300		)	(96)	%
Net income (loss)	$	30,011		$	(71,255	)	(a)
Basic earnings (loss) per share	$	.34		$	(.82	)	(a)
Diluted earnings (loss) per share	$	.31		$	(.82	)	(a)

(a) Percentage not meaningful.

While fundamental housing market factors were generally favorable in the 2019 first quarter, with strong employment levels, relatively high consumer confidence and a limited supply of homes available for sale, affordability concerns, stemming from several years of home price appreciation and a rise in mortgage interest rates, that emerged in the latter part of 2018 continued to temper homebuyer demand. The year-over-year decline in our net order and backlog values for the second half of 2018, which primarily resulted from our lower overall average community count for the year, together with the related homebuyer demand dynamics, negatively impacted our results for the 2019 first quarter compared to the year-earlier quarter, including with respect to our homes delivered, revenues, pretax income, net orders and backlog. In light of consumers’ heightened affordability concerns, we are implementing targeted product refinements in certain communities, including the addition of smaller square footage plans that offer comparable room count and livability, while retaining a wide range of choice for our customers. At the same time, we are encouraged that our net order activity improved over the course of the quarter as mortgage interest rates stabilized and moderated. We believe a continuation of these trends would enable us to generate year over year revenue growth in the 2019 second half.

Within our homebuilding operations, housing revenues for the 2019 first quarter declined 8% year over year to $798.2 million, as the number of homes we delivered decreased 3% to 2,152 and the overall average selling price of those homes declined 5% to $370,900. Homebuilding operating income for the quarter decreased 29% year over year to $31.3 million, and, as a percentage of related revenues, declined 120 basis points to 3.9%. Our housing gross profits for the quarter decreased compared to the year-earlier period mainly due to the lower volume of homes delivered and corresponding lower housing revenues, partially offset by a 100 basis point increase in our housing gross profit margin to 17.1%. The expansion of our housing gross profit margin primarily reflected a reduction in the amortization of previously capitalized interest and accounting changes resulting from our adoption of ASC 606, effective December 1, 2018, partly offset by other items. Our selling, general and administrative expense ratio increased 240 basis points to 13.4% of housing revenues, also reflecting our adoption of ASC 606, as well as increased marketing expenses to support new community openings in the quarter and the impact of legal recoveries and favorable legal settlements in the prior-year quarter. Further information regarding the accounting impacts resulting from our adoption of ASC 606 is provided in Note 1 – Basis of Presentation and Significant Accounting Policies in the Notes to Consolidated Financial Statements in this report.

Reflecting the continued effective execution of our three-year Returns-Focused Growth Plan, which is centered around enhancing asset efficiency, reducing leverage and improving returns, we invested $384.2 million in land and land development during the

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2019 first quarter and repaid the entire $230.0 million in aggregate principal amount of our 1.375% Convertible Senior Notes due 2019 at their February 1, 2019 maturity.

On February 20, 2019, we completed concurrent public offerings of $300.0 million in aggregate principal amount of 6.875% Senior Notes due 2027 and an additional $100.0 million in aggregate principal amount of our existing series of 7.625% Senior Notes due 2023. Net proceeds from these offerings totaled $400.0 million, after deducting the underwriting discount and our expenses relating to the offerings, and were applied towards the optional redemption of the entire $400.0 million in aggregate principal amount of our 4.75% Senior Notes due 2019 before their May 15, 2019 maturity date, which redemption we announced on February 5, 2019 and completed on March 8, 2019.

Our financial leverage, as measured by the ratio of debt to capital, was 50.9% at February 28, 2019, compared to 49.7% at November 30, 2018. Our ratio of net debt to capital (a calculation that is described below under “Non-GAAP Financial Measures”) at February 28, 2019 was 44.3%, compared to 41.6% at November 30, 2018, within the targeted range of 35% to 45% under our Returns-Focused Growth Plan.

The following table presents information concerning our net orders, cancellation rates, ending backlog and community count for the three-month periods ended February 28, 2019 and 2018 (dollars in thousands):

	Three Months Ended February 28,
	2019			2018
Net orders	2,675			2,784
Net order value (a)	$	1,022,087		$	1,173,092
Cancellation rates (b)	20		%	20		%
Ending backlog — homes	4,631			4,972
Ending backlog — value	$	1,658,284		$	1,966,683
Ending community count	248			219
Average community count	244			222

(a) Net order value represents the potential future housing revenues associated with net orders generated during a period, as well as homebuyer selections of lot and product premiums and design studio options and upgrades for homes in backlog during the same period.

(b) Cancellation rates represent the total number of contracts for new homes cancelled during a period divided by the total (gross) orders for new homes generated during the same period.

Net Orders. For the three months ended February 28, 2019, net orders from our homebuilding operations declined 4% from the year-earlier period, reflecting a 12% decrease in monthly net orders per community to 3.7, partly offset by a 10% increase in our overall average community count. The combination of fewer net orders and a 9% decrease in the overall average selling price of those orders, mainly stemming from a shift in geographic mix, resulted in the value of our 2019 first quarter net orders decreasing 13% from the year-earlier quarter. The year-over-year decline in overall net order value reflected decreases in our West Coast, Southwest and Central homebuilding reporting segments that were partly offset by a 27% increase in our Southeast segment. The largest decrease occurred in our West Coast segment, which posted a 28% year-over-year decline in net order value, reflecting a 13% decrease in net orders and a 16% decline in the average selling price of those orders mainly due to a mix shift, with a higher percentage of net orders generated from markets with lower average selling prices, and the close-out of certain higher priced communities in 2018. While the average community count in our West Coast segment increased, the decline in net orders reflected a 26% year-over-year decrease in net orders per community that was partly due to softer market conditions amid consumer affordability concerns. The year-over-year increase in net order value in our Southeast segment reflected 25% growth in net orders due to the higher average community count in the segment and a slight increase in the average selling price of those orders. Our cancellation rate as a percentage of gross orders for the three months ended February 28, 2019 was flat with the year-earlier quarter.

Backlog. The number of homes in our backlog at February 28, 2019 decreased 7% from February 28, 2018. The potential future housing revenues in our backlog at February 28, 2019 declined 16% from the prior-year period, reflecting the lower number of homes in our backlog and a 9% decrease in the average selling price of those homes primarily due to a shift in geographic mix. The decline in our backlog value reflected year-over-year decreases in our West Coast, Southwest and Central homebuilding reporting segments, partly offset by an increase in our Southeast segment. Our backlog value declined largely as a result of the 14% year-over-year decrease we had at the beginning of the quarter, which primarily reflected our lower overall average community

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count for 2018, along with the impact from certain West Coast segment communities with average selling prices of $1.1 million to $1.8 million that closed out in 2018.

Community Count. We use the term “community count” to refer to the number of communities with at least five homes/lots left to sell at the end of a reporting period. Our average community count for the 2019 first quarter increased 10% from the year-earlier period, with increases in all four of our homebuilding reporting segments. Our ending community count rose 13% year over year, with increases in all four of our homebuilding reporting segments, ranging from 4% in our Central segment to 26% in our Southeast segment. Sequentially, our overall 2019 first quarter average community count increased 5% and ending community count increased 3%, both as compared to the 2018 fourth quarter.

To drive future community openings in the remainder of 2019 and beyond, we invested $384.2 million in land and land development during the three months endedFebruary 28, 2019, compared to $465.0 million in the corresponding 2018 period.

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,
	2019			2018
Revenues:
Housing	$	798,171		$	866,540
Land	10,617			2,665
Total	808,788			869,205
Costs and expenses:
Construction and land costs
Housing	(661,328		)	(727,080		)
Land	(9,527		)	(2,398		)
Total	(670,855		)	(729,478		)
Selling, general and administrative expenses	(106,594		)	(95,724		)
Total	(777,449		)	(825,202		)
Operating income	$	31,339		$	44,003
Homes delivered	2,152			2,223
Average selling price	$	370,900		$	389,800
Housing gross profit margin as a percentage of housing revenues	17.1		%	16.1		%
Housing gross profit margin excluding inventory-related charges as a percentage of housing revenues	17.6		%	16.7		%
Adjusted housing gross profit margin as a percentage of housing revenues	21.3		%	21.4		%
Selling, general and administrative expenses as a percentage of housing revenues	13.4		%	11.0		%
Operating income as a percentage of homebuilding revenues	3.9		%	5.1		%

For reporting purposes, we organize our homebuilding operations into four segments — West Coast, Southwest, Central and Southeast. As of February 28, 2019, our homebuilding reporting segments consisted of ongoing operations located in the following states: West Coast — California and Washington; Southwest — Arizona and Nevada; Central — Colorado and Texas; and Southeast — Florida and North Carolina. The following tables present homes delivered, net orders, cancellation rates as a percentage of gross orders, net order value, average community count and ending backlog (number of homes and value) by homebuilding reporting segment (dollars in thousands):

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	Three Months Ended February 28,
	Homes Delivered				Net Orders				Cancellation Rates
Segment	2019		2018		2019		2018		2019			2018
West Coast	497		592		699		807		20		%	12	%
Southwest	483		500		533		568		13			16
Central	824		821		926		996		24			26
Southeast	348		310		517		413		20			22
Total	2,152		2,223		2,675		2,784		20		%	20	%
	Net Order Value						Average Community Count
Segment	2019		2018		Variance		2019		2018			Variance
West Coast	$	420,461	$	580,422	(28)	%	61		52			17	%
Southwest	170,839		176,942		(3	)	38		36			6
Central	284,266		299,928		(5	)	95		94			1
Southeast	146,521		115,800		27		50		40			25
Total	$	1,022,087	$	1,173,092	(13)	%	244		222			10	%
	February 28,
	Backlog – Homes						Backlog – Value
Segment	2019		2018		Variance		2019		2018			Variance
West Coast	917		1,097		(16)	%	$	533,076	$	800,065		(33)	%
Southwest	976		1,156		(16	)	315,797		352,560			(10	)
Central	1,816		1,957		(7	)	537,351		599,690			(10	)
Southeast	922		762		21		272,060		214,368			27
Total	4,631		4,972		(7)	%	$	1,658,284	$	1,966,683		(16)	%

Revenues. Homebuilding revenues for the three months ended February 28, 2019 declined 7% from the year-earlier period to $808.8 million due to a decrease in housing revenues that was partly offset by an increase in land sale revenues.

Housing revenues for the three months ended February 28, 2019 decreased 8% year over year to $798.2 million due to a lower number of homes delivered and a decrease in the overall average selling price of those homes. We delivered 2,152 homes in the 2019 first quarter, down 3%, largely due to the 7% lower backlog level we had at the beginning of the quarter as compared to the year-earlier quarter, which reflected our lower overall average community count for 2018. The lower number of homes delivered was primarily from our West Coast homebuilding reporting segment due to softer market conditions amid consumer affordability concerns that impacted net orders in the latter half of 2018, along with specific community mix impacts. The overall average selling price of homes delivered decreased 5%, reflecting a shift in the geographic mix of homes delivered, with increases in both our Southwest and Southeast homebuilding reporting segments that were more than offset by a lower proportion of homes delivered from our West Coast segment, and the absence of certain West Coast segment communities with average selling prices of $1.1 million to $1.8 million that closed out in 2018. In addition, there was a mix shift within our Central segment, with a lower proportion of deliveries from our Colorado operations.

Land sale revenues totaled $10.6 million for the three months ended February 28, 2019 and $2.7 million for the three months ended February 28, 2018. 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 business strategy, the strength and number of developers and other land buyers in particular markets at given points in time, the availability of opportunities to sell land at acceptable prices and prevailing market conditions.

Operating Income. Our homebuilding operating income decreased 29% year over year to $31.3 million for the three months ended February 28, 2019. Homebuilding operating income for the 2019 first quarter included total inventory-related charges of $3.6 million, compared to $5.0 million in the corresponding 2018 quarter. As a percentage of homebuilding revenues, our

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homebuilding operating income for the three months ended February 28, 2019 declined 120 basis points year over year to 3.9%. Excluding inventory-related charges, our homebuilding operating income margin was 4.3% for the three months ended February 28, 2019 and 5.6% for the three months ended February 28, 2018.

The year-over-year decline in our homebuilding operating income for the three months ended February 28, 2019 primarily reflected lower housing gross profits and higher selling, general and administrative expenses.

Housing gross profits of $136.8 million for the three months ended February 28, 2019 decreased 2% from $139.5 million for the year-earlier period, reflecting decreases in the number of homes delivered and housing revenues that were partly offset by a higher housing gross profit margin. Our housing gross profit margin for the 2019 first quarter increased 100 basis points year over year to 17.1%. The improvement in our housing gross profit margin reflected a decrease in the amortization of previously capitalized interest as a percentage of housing revenues resulting from a reduction in interest incurred (approximately 100 basis points), the impact of our adoption of ASC 606 (approximately 70 basis points) and a decrease in inventory-related charges (approximately 10 basis points), partly offset by decreased operating leverage on fixed costs (approximately 60 basis points) and an increase in sales incentives (approximately 20 basis points). In addition, the improvement partly resulted from shifts in the geographic mix of homes delivered between and within our homebuilding reporting segments.

We incur interest principally from our borrowings to finance land acquisitions, land development, home construction and other operating and capital needs. Interest incurred decreased to $34.8 million for the three months ended February 28, 2019 from $39.9 million for the year-earlier period, largely due to our lower average debt level. All interest incurred during the three-month periods ended February 28, 2019 and 2018 was capitalized as the average amount of our inventory qualifying for interest capitalization was higher than our average debt level for the period. As a result, we had no interest expense for these periods.

Interest amortized to construction and land costs associated with housing operations was $30.0 million and $41.4 million for the three-month periods ended February 28, 2019 and 2018, respectively. As a percentage of housing revenues, the amortization of previously capitalized interest associated with housing operations was 3.7% and 4.7% for the three months ended February 28, 2019 and 2018, respectively.

Excluding the amortization of previously capitalized interest associated with housing operations and the above-mentioned inventory-related charges in the three months ended February 28, 2019 and 2018, our adjusted housing gross profit margin declined 10 basis points from the year-earlier quarter to 21.3%. 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.”

Selling, general and administrative expenses for the 2019 first quarter rose to $106.6 million from $95.7 million for the year-earlier quarter, mainly due to the above-mentioned accounting changes resulting from the adoption of ASC 606, increased marketing expenses to support new community openings in the quarter and the impact of legal recoveries and favorable legal settlements in the prior-year quarter. As a percentage of housing revenues, our selling, general and administrative expenses increased 240 basis points to 13.4%, reflecting lower housing revenues and higher expenses in the 2019 first quarter as compared to the year-earlier quarter.

Land sale profits totaled $1.1 million for the three months ended February 28, 2019, compared to $.3 million for the year-earlier period.

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, based on current market conditions and expected delivery timelines, we estimate our inventory assets’ remaining operating lives to range generally from one year to in excess of 10 years and expect to realize, on an overall basis, the majority of our inventory balance as of February 28, 2019 within five years. The following table presents as of February 28, 2019, the estimated timeframe of delivery for the last home in an applicable community or land parcel and the corresponding percentage of total inventories such categories represent within our inventory balance (dollars in millions):

	0-2 years				3-5 years				6-10 years				Greater than 10 years
	$		%		$		%		$		%		$		%		Total
Inventories	$	1,867.1	50	%	$	1,538.3	42	%	$	259.6	7	%	$	18.8	1	%	$	3,683.8

The inventory balances in the 0-2 years and 3-5 years categories were located in all of our homebuilding reporting segments, though mostly in our West Coast and Central segments. These categories collectively represented 92% of our total inventories at February 28, 2019, compared to 91% at November 30, 2018. The inventory balances in the 6-10 years and greater than 10 years

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categories were primarily located in our West Coast, Southwest and Central homebuilding reporting segments, and together totaled $278.4 million at February 28, 2019, compared to $309.7 million at November 30, 2018. The inventories in the 6-10 years and greater than 10 years categories were generally comprised of land held for future development and active, multi-phase communities with large remaining land positions.

Due to the judgment and assumptions applied in our inventory impairment and land option contract abandonment assessment processes, and in our estimations of the remaining operating lives of our inventory assets and the realization of our inventories, particularly as to land held for future development, it is possible that actual results could differ substantially from those estimated.

Deterioration in the supply and demand factors in the overall housing market or in an individual market or submarket, or changes to our operational or selling strategy at certain communities may lead to additional inventory impairment charges, future charges associated with land sales or the abandonment of land option contracts or other similar contracts related to certain assets. Due to the nature or location of the projects, land held for future development that we activate as part of our strategic growth initiatives or to accelerate sales and/or our return on investment, or that we otherwise monetize to help increase our asset efficiency, may have a somewhat greater likelihood of being impaired than other of our active inventory.

We believe that the carrying value of our inventory balance as of February 28, 2019 is recoverable. Our considerations in making this determination include the factors and trends incorporated into our inventory impairment analyses and, as applicable, the prevailing regulatory environment, competition from other homebuilders, inventory levels and sales activity of resale homes, and the local economic conditions where an asset is located. In addition, we consider the financial and operational status and expectations of our inventories as well as unique attributes of each community or land parcel that could be indicators for potential future impairments. However, if conditions in the overall housing market or in a specific market or submarket worsen in the future beyond our current expectations, if future changes in our business 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 $1.1 million for the three months ended February 28, 2019 and $1.0 million for the three months ended February 28, 2018. 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.

Equity in Loss of Unconsolidated Joint Ventures. Our equity in loss of unconsolidated joint ventures improved slightly to $.4 million for the three months ended February 28, 2019, compared to $.8 million for the three months ended February 28, 2018. Further information regarding our investments in unconsolidated joint ventures is provided in Note 9 – Investments in Unconsolidated Joint Ventures in the Notes to Consolidated Financial Statements in this report.

NON-GAAP FINANCIAL MEASURES

This report contains information about our adjusted housing gross profit margin, adjusted income tax expense, adjusted net income, adjusted diluted earnings per share, adjusted effective tax rate and ratio of net debt to capital, none of which are 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 they are not calculated in accordance with GAAP, these non-GAAP 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.

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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,
	2019			2018
Housing revenues	$	798,171		$	866,540
Housing construction and land costs	(661,328		)	(727,080		)
Housing gross profits	136,843			139,460
Add:    Inventory-related charges (a)	3,555			4,985
Housing gross profits excluding inventory-related charges	140,398			144,445
Add:    Amortization of previously capitalized interest (b)	29,986			41,369
Adjusted housing gross profits	$	170,384		$	185,814
Housing gross profit margin as a percentage of housing revenues	17.1		%	16.1		%
Housing gross profit margin excluding inventory-related charges as a percentage of housing revenues	17.6		%	16.7		%
Adjusted housing gross profit margin as a percentage of housing revenues	21.3		%	21.4		%

(a) Represents inventory impairment and land option contract abandonment charges associated with housing operations.

(b) Represents the amortization of previously capitalized interest associated with housing operations.

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 (1) housing inventory impairment and land option contract abandonment charges (as applicable) recorded during a given period and (2) amortization of previously capitalized interest associated with housing operations, 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 profits we generated specifically on the homes delivered during a given period. This non-GAAP financial measure isolates the impact that the housing inventory impairment and land option contract abandonment charges, and the amortization of previously capitalized interest associated with housing operations, have on housing gross profit margins, and allows investors to make comparisons with our competitors that adjust housing gross profit margins in a similar manner. 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 housing inventory impairment and land option contract abandonment charges, and amortization of previously capitalized interest associated with housing operations. This financial measure assists us in making strategic decisions regarding community location and product mix, product pricing and construction pace.

Adjusted Income Tax Expense, Adjusted Net Income, Adjusted Diluted Earnings Per Share and Adjusted Effective Tax Rate. The following table reconciles our income tax expense, net income (loss), diluted earnings (loss) per share and effective tax rate calculated in accordance with GAAP to the non-GAAP financial measures of our adjusted income tax expense, adjusted net income, adjusted diluted earnings per share and adjusted effective tax rate, respectively (in thousands, except per share amounts and percentages):

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	Three Months Ended February 28,
	2019			2018
	As Reported			As Reported			TCJA Adjustment		As Adjusted
Total pretax income	$	34,511		$	46,045		$	—	$	46,045
Income tax expense (a)	(4,500		)	(117,300		)	111,200		(6,100		)
Net income (loss)	$	30,011		$	(71,255	)	$	111,200	$	39,945
Diluted earnings (loss) per share	$	.31		$	(.82	)			$	.40
Weighted average shares outstanding — diluted	96,962			87,155					101,401
Effective tax rate (a)	13.0		%	254.8		%			13.2		%

(a) For the three months ended February 28, 2019, income tax expense and the related effective tax rate included the favorable impacts of a $3.3 million reversal of a deferred tax asset valuation allowance and $2.0 million of excess tax benefits from stock-based compensation, partly offset by $.8 million of other items. For the three months ended February 28, 2018, income tax expense and adjusted income tax expense, as well as the related effective tax rate and adjusted effective tax rate, included the favorable impacts of $4.0 million of federal energy tax credits we earned from building energy efficient homes and $2.2 million of excess tax benefits from stock-based compensation.

Our adjusted income tax expense, adjusted net income, adjusted diluted earnings per share and adjusted effective tax rate are non-GAAP financial measures, which we calculate by excluding a non-cash charge of $111.2 million recorded in the 2018 first quarter from our reported income tax expense, net loss, diluted loss per share and effective tax rate, respectively. This charge was primarily due to our accounting re-measurement of our deferred tax assets based on the reduction in the federal corporate income tax rate from 35% to 21%, effective January 1, 2018, under the TCJA. The most directly comparable GAAP financial measures are our income tax expense, net income (loss), diluted earnings (loss) per share and effective tax rate. We believe these non-GAAP measures are meaningful to investors as they allow for an evaluation of our operating results without the impact of the TCJA-related charge.

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

	February 28, 2019			November 30, 2018
Notes payable	$	2,203,589		$	2,060,263
Stockholders’ equity	2,128,497			2,087,500
Total capital	$	4,332,086		$	4,147,763
Ratio of debt to capital	50.9		%	49.7		%
Notes payable	$	2,203,589		$	2,060,263
Less:    Cash and cash equivalents	(511,690		)	(574,359		)
Net debt	1,691,899			1,485,904
Stockholders’ equity	2,128,497			2,087,500
Total capital	$	3,820,396		$	3,573,404
Ratio of net debt to capital	44.3		%	41.6		%

The ratio of net debt to capital is a non-GAAP financial measure, which we calculate by dividing notes payable, net of homebuilding cash and cash equivalents, by capital (notes payable, net of homebuilding cash and cash equivalents, plus stockholders’ equity). The most directly comparable GAAP financial measure is the ratio of debt to capital. We believe the ratio of net debt to 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

Below is a discussion of the financial results for each of our homebuilding reporting segments. Further information regarding these segments, including their pretax income (loss), is included in Note 2 – Segment Information in the Notes to Consolidated Financial Statements in this report. The difference between each homebuilding reporting segment’s operating income (loss) and pretax income (loss) is generally due to the equity in income (loss) of unconsolidated joint ventures and/or interest income and expense.

West Coast. The following table presents financial information related to our West Coast segment for the periods indicated (dollars in thousands, except average selling price):

	Three Months Ended February 28,
	2019			2018			Variance
Revenues	$	305,810		$	386,652		(21)	%
Construction and land costs	(259,013		)	(327,760		)	21
Selling, general and administrative expenses	(28,721		)	(26,997		)	(6	)
Operating income	$	18,076		$	31,895		(43)	%
Homes delivered	497			592			(16)	%
Average selling price	$	607,500		$	652,800		(7)	%
Housing gross profit margin	15.5		%	15.2		%	30	bps

This segment’s revenues for the three months ended February 28, 2019 and February 28, 2018 were generated from both housing operations and land sales. Housing revenues for the 2019 first quarter declined 22% to $301.9 million, from $386.5 million for the year-earlier quarter, reflecting decreases in both the number of homes delivered and the average selling price of those homes. The decrease in the number of homes delivered was primarily due to the 19% lower number of homes in backlog at the beginning of the 2019 first quarter, compared to the prior-year period, which resulted from the lower average community count and softer market conditions amid consumer affordability concerns that impacted net orders in the second half of 2018. The decline in the average selling price of homes delivered was due to a shift in product and geographic mix, particularly the absence of certain communities with average selling prices between $1.1 million and $1.8 million that closed out in 2018. Land sale revenues totaled $3.9 million and $.2 million for the three-month periods ended February 28, 2019 and 2018, respectively.

Operating income for the three months ended February 28, 2019 decreased by $13.8 million, or 43%, from the year-earlier period, primarily reflecting a decline in housing gross profits and an increase in selling, general and administrative expenses. Housing gross profits decreased as a result of a decline in both the number of homes delivered and the average selling price of those homes, partly offset by a 30 basis point improvement in the housing gross profit margin. The growth in the housing gross profit margin mainly reflected a reduction in the amortization of previously capitalized interest, accounting changes resulting from the above-described adoption of ASC 606 and a decrease in inventory-related charges impacting the housing gross profit margin to $3.3 million in the 2019 first quarter, compared to $4.9 million in the year-earlier quarter. These favorable impacts on housing gross profit margin were largely offset by an increase in construction and land costs as a percentage of housing revenues and decreased operating leverage on fixed costs due to the lower volume of homes delivered and corresponding lower housing revenues. Sales incentives as a percentage of housing revenues in the 2019 first quarter also increased from the year-earlier quarter. Land sales generated break-even results in the 2019 first quarter, compared to profits of $.2 million in the 2018 first quarter. Selling, general and administrative expenses for the three months ended February 28, 2019 increased from the year-earlier period, primarily due to the above-described adoption of ASC 606 and increased marketing expenses to support new community openings, partly offset by lower variable expenses associated with reduced housing revenues.

Southwest. The following table presents financial information related to our Southwest segment for the periods indicated (dollars in thousands, except average selling price):

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	Three Months Ended February 28,
	2019			2018			Variance
Revenues	$	157,656		$	151,899		4	%
Construction and land costs	(121,218		)	(124,608		)	3
Selling, general and administrative expenses	(14,120		)	(11,774		)	(20	)
Operating income	$	22,318		$	15,517		44	%
Homes delivered	483			500			(3	) %
Average selling price	$	326,400		$	303,800		7	%
Housing gross profit margin	23.1		%	18.0		%	510	bps

This segment’s revenues for the three months ended February 28, 2019 and 2018 were generated solely from housing operations. Housing revenues for the 2019 first quarter increased from the corresponding year-earlier period, reflecting an increase in the average selling price that was partly offset by a decrease in the number of homes delivered. The average selling price rose primarily due to a shift in product and geographic mix and generally favorable market conditions. The decline in the number of homes delivered was primarily due to the 15% lower number of homes in backlog at the beginning of the 2019 first quarter compared to the prior-year period, which primarily resulted from the lower average community count for 2018, and was attributable to our Arizona operations.

Operating income for the three months ended February 28, 2019 increased from the corresponding 2018 period due to higher housing gross profits, partly offset by higher selling, general and administrative expenses. The increase in housing gross profits primarily reflected a higher average selling price and a 510 basis point increase in the housing gross profit margin. The increase in the housing gross profit margin was largely due to a greater proportion of homes delivered from newer, higher-margin communities, a decrease in construction and land costs as a percentage of housing revenues, a decrease in the number of homes delivered from reactivated communities which typically have lower margins, a reduction in the amortization of previously capitalized interest and the above-described adoption of ASC 606. Inventory-related charges impacting the housing gross profit margin totaled $.1 million for the three months ended February 28, 2019, compared to no such charges in the year-earlier period. Selling, general and administrative expenses for the 2019 first quarter increased from the corresponding 2018 quarter, mainly due to the above-described adoption of ASC 606 and increased marketing expenses to support new community openings. In addition, selling, general and administrative expenses for the 2018 first quarter also included legal recoveries.

Central. The following table presents financial information related to our Central segment for the periods indicated (dollars in thousands, except average selling price):

	Three Months Ended February 28,
	2019			2018			Variance
Revenues	$	241,592		$	244,181		(1	) %
Construction and land costs	(198,104		)	(201,134		)	2
Selling, general and administrative expenses	(24,905		)	(23,954		)	(4	)
Operating income	$	18,583		$	19,093		(3	) %
Homes delivered	824			821			—
Average selling price	$	285,000		$	294,700		(3	) %
Housing gross profit margin	18.1		%	17.8		%	30	bps

This segment’s revenues for the three months ended February 28, 2019 and 2018 were generated from both housing operations and land sales. Housing revenues for the 2019 first quarter declined 3% to $234.8 million from $241.9 million for the year-earlier quarter, primarily reflecting a decrease in the average selling price of homes delivered as the number of homes delivered was essentially flat. The average selling price declined primarily due to a shift in product mix and a lower proportion of deliveries from our Colorado operations. Land sale revenues totaled $6.8 million for the three months ended February 28, 2019, compared to $2.3 million for the year-earlier period.

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Operating income for the three months ended February 28, 2019 decreased $.5 million from the year-earlier period, mainly due to higher selling, general and administrative expenses and a slight decrease in housing gross profits, partly offset by increased profits from land sales. Housing gross profits decreased due to a lower average selling price, partly offset by an increase in the housing gross profit margin as the number of homes delivered was flat year over year. The housing gross profit margin improved primarily due to the above-described adoption of ASC 606 and a reduction in the amortization of previously capitalized interest, partly offset by decreased operating leverage on fixed costs as a percentage of housing revenues. In addition, inventory-related charges impacting the housing gross profit margin totaled $.2 million for the three months ended February 28, 2019, compared to $.1 million in the year-earlier period. Land sales generated profits of $1.1 million and $.1 million in the three months ended February 28, 2019 and 2018, respectively. Selling, general and administrative expenses for the 2019 first quarter increased from the year-earlier quarter, mainly due to the above-described adoption of ASC 606.

Southeast. The following table presents financial information related to our Southeast segment for the periods indicated (dollars in thousands, except average selling price):

	Three Months Ended February 28,
	2019			2018			Variance
Revenues	$	103,730		$	86,473		20	%
Construction and land costs	(90,778		)	(74,322		)	(22	)
Selling, general and administrative expenses	(13,497		)	(10,831		)	(25	)
Operating income (loss)	$	(545	)	$	1,320		(a)
Homes delivered	348			310			12	%
Average selling price	$	298,100		$	278,200		7	%
Housing gross profit margin	12.5		%	14.1		%	(160	)bps

(a) Percentage not meaningful.

This segment’s revenues for the three months ended February 28, 2019 were generated solely from housing operations. Revenues for the three months ended February 28, 2018 were generated from both housing operations and land sales. Housing revenues for the three months ended February 28, 2019 rose 20% year over year from $86.3 million for the 2018 first quarter, reflecting increases in both the number of homes delivered and the average selling price of those homes, largely attributable to our Florida operations. The growth in the number of homes delivered was primarily due to the 14% increase in the number of homes in backlog at the beginning of the 2019 first quarter as compared to the year-earlier quarter and an increase in homes delivered from newer communities. The increase in the average selling price was mainly due to a greater proportion of homes delivered from higher-priced communities. Land sale revenues for the three months ended February 28, 2018 totaled $.2 million.

This segment generated an operating loss for the three months ended February 28, 2019, compared to operating income in the year-earlier period mainly due to an increase in selling, general and administrative expenses. Housing gross profits increased slightly from the prior-year period as a 160 basis point decline in the housing gross profit margin was more than offset by an increase in the number of homes delivered and a higher average selling price. The housing gross profit margin decreased mainly due to higher construction and land costs as a percentage of housing revenues, partly offset by a reduction in the amortization of previously capitalized interest and the above-described adoption of ASC 606. Sales incentives as a percentage of housing revenues in the 2019 first quarter increased slightly from the year-earlier quarter. Land sales generated nominal income for the 2018 first quarter. Selling, general and administrative expenses increased in the 2019 first quarter from the year-earlier period, primarily due to the above-described adoption of ASC 606 as well as increased variable expenses associated with higher housing revenues, higher marketing costs from opening a greater number of new communities in the current period, the recent expansion of our Jacksonville, Florida operations and the impact of favorable legal settlements in the prior-year quarter.

FINANCIAL SERVICES REPORTING SEGMENT

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

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	Three Months Ended February 28,
	2019			2018
Revenues	$	2,695		$	2,418
Expenses	(1,024		)	(953		)
Equity in income of unconsolidated joint ventures	802			419
Pretax income	$	2,473		$	1,884
Total originations:
Loans	1,209			1,003
Principal	$	339,264		$	273,305
Percentage of homebuyers using KBHS	64		%	50		%
Average FICO score	718			720
Loans sold:
Loans sold to Stearns	1,161			1,039
Principal	$	333,353		$	295,698
Loans sold to third parties	244			138
Principal	$	62,355		$	37,090

Revenues. Financial services revenues for the three months ended February 28, 2019 rose to $2.7 million from $2.4 million for the year-earlier period, primarily due to an increase in title services revenues and insurance commissions.

Expenses. General and administrative expenses totaled $1.0 million for each of the three-month periods ended February 28, 2019 and 2018.

Equity in Income of Unconsolidated Joint Ventures. The equity in income of unconsolidated joint ventures was $.8 million for the three months ended February 28, 2019 and $.4 million for the three months ended February 28, 2018.

INCOME TAXES

Income Tax Expense. Our income tax expense and effective tax rates were as follows (dollars in thousands):

	Three Months Ended February 28,
	2019			2018
Income tax expense	$	4,500		$	117,300
Effective tax rate	13.0		%	254.8		%

Our income tax expense and effective tax rate for the three months ended February 28, 2019 included the favorable effects of a $3.3 million reversal of a deferred tax asset valuation allowance and $2.0 million of excess tax benefits related to stock-based compensation, which were partly offset by $.8 million of other items. Excluding all of these items, our effective tax rate for the three months ended February 28, 2019 was approximately 26%. For the three months ended February 28, 2018, our income tax expense and effective tax rate included a non-cash charge of $111.2 million for TCJA-related impacts, as discussed in Note 13 – Income Taxes in the Notes to Consolidated Financial Statements in this report; the favorable net impact of federal energy tax credits of $4.0 million; and excess tax benefits of $2.2 million related to stock-based compensation. The federal energy tax credits for the three-month period ended February 28, 2018 resulted from legislation enacted on February 9, 2018, which among other things, extended the availability of a business tax credit for building new energy efficient homes through December 31, 2017. Prior to this legislation, the tax credit expired on December 31, 2016.

Excluding the above-mentioned charge of $111.2 million, our adjusted income tax expense and adjusted effective tax rate for the three months ended February 28, 2018 were $6.1 million and 13.2%, respectively. The calculations of our adjusted income tax expense and adjusted effective tax rate are described above under “Non-GAAP Financial Measures.” Without the above-mentioned federal energy tax credits and excess stock-based compensation tax benefits, our adjusted effective tax rate for the three months ended February 28, 2018 would have approximated 27%.

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At February 28, 2019 and November 30, 2018, we had deferred tax assets of $453.6 million and $465.4 million, respectively, that were partly offset by valuation allowances of $20.3 million and $23.6 million, respectively. During the three-month period ended February 28, 2019, we reversed the $3.3 million federal deferred tax asset valuation allowance established in the 2018 first quarter due to the Internal Revenue Service’s announcement in January 2019 that refundable AMT credits will not be subject to sequestration for taxable years beginning after December 31, 2017. The deferred tax asset valuation allowances as of February 28, 2019 and November 30, 2018 were primarily related to certain state NOLs that had not met the “more likely than not” realization standard at those dates.

Further information regarding our income taxes is provided in Note 13 – Income Taxes in the Notes to Consolidated Financial Statements in this report.

Liquidity and Capital Resources

Overview. We have funded our homebuilding and financial services activities over the last several years with:

• internally generated cash flows;

• borrowings under the Credit Facility;

• public issuances of our common stock;

• public issuances of debt securities;

• land option contracts and other similar contracts and seller notes; and

• letters of credit and performance bonds.

We manage our use of cash in the operation of our business to support the execution of our primary strategic goals. Over the past several years, we have primarily used cash for:

• land acquisition and land development;

• home construction;

• operating expenses;

• principal and interest payments on notes payable; and

• repayments of borrowings under the Credit Facility.

Our investments in land and land development decreased 17% to $384.2 million for the three months endedFebruary 28, 2019, compared to $465.0 million for the corresponding 2018 period. Approximately 49% of our total investments in the three months endedFebruary 28, 2019 related to land acquisition, compared to approximately 61% in the year-earlier period. While we made strategic investments in land and land development in each of our homebuilding reporting segments during the first three months of 2019 and 2018, approximately 50% and 68%, respectively, of these investments for each period were made in our West Coast homebuilding reporting segment. Our investments in land and land development in the future will depend significantly on market conditions and available opportunities that meet our investment return standards to support home delivery and revenue growth in the remainder of 2019 and beyond.

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

	February 28, 2019			November 30, 2018			Variance
Segment	Lots	$		Lots	$		Lots		$
West Coast	12,611	$	1,773,691	12,680	$	1,727,993	(69	)	$	45,698
Southwest	9,616	627,627		9,815	598,374		(199	)	29,253
Central	23,025	889,745		22,237	865,184		788		24,561
Southeast	9,492	392,700		8,895	391,288		597		1,412
Total	54,744	$	3,683,763	53,627	$	3,582,839	1,117		$	100,924

The carrying value of the lots owned or controlled under land option contracts and other similar contracts at February 28, 2019 increased from November 30, 2018 primarily due to the investments in land and land development we made during the three months endedFebruary 28, 2019, and an increase in the number of homes under construction. Overall, the number of lots we controlled under land option contracts and other similar contracts as a percentage of total lots was 26% at both February 28, 2019 and November 30, 2018. Generally, this percentage fluctuates with our decisions to control (or abandon) lots under land option contracts and other similar contracts or to purchase (or sell owned) lots based on available opportunities and our investment return standards.

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Liquidity. The table below summarizes our total cash and cash equivalents, and total liquidity (in thousands):

	February 28, 2019			November 30, 2018
Total cash and cash equivalents	$	511,690		$	574,359
Credit Facility commitment	500,000			500,000
Letters of credit outstanding under the Credit Facility	(33,144		)	(28,010		)
Credit Facility availability	466,856			471,990
Total liquidity	$	978,546		$	1,046,349

The majority of our cash and cash equivalents at February 28, 2019 and November 30, 2018 was invested in interest-bearing bank deposit accounts.

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

	February 28, 2019		November 30, 2018		Variance
Mortgages and land contracts due to land sellers and other loans	$	12,018	$	40,038	$	(28,020	)
Senior notes	2,191,571		1,790,437		401,134
Convertible senior notes	—		229,788		(229,788		)
Total	$	2,203,589	$	2,060,263	$	143,326

The change in our notes payable balance at February 28, 2019 compared to November 30, 2018 primarily reflected our completion of the following financing activities in the 2019 first quarter:

• On February 1, 2019, we repaid the entire $230.0 million in aggregate principal amount of our 1.375% Convertible Senior Notes due 2019 at their maturity.

• On February 20, 2019, pursuant to the 2017 Shelf Registration, we completed concurrent public offerings of $300.0 million in aggregate principal amount of 6.875% Senior Notes due 2027 and an additional $100.0 million in aggregate principal amount of our existing series of 7.625% Senior Notes due 2023. Net proceeds from these offerings totaled $400.0 million, after deducting the underwriting discount and our expenses relating to the offering, and were applied towards the optional redemption of the entire $400.0 million in aggregate principal amount of our 4.75% Senior Notes due 2019 before their May 15, 2019 maturity date, which redemption we announced on February 5, 2019 and completed on March 8, 2019.

Further information regarding our notes payable is provided in Note 14 – Notes Payable in the Notes to Consolidated Financial Statements in this report.

Our financial leverage, as measured by the ratio of debt to capital, was 50.9% at February 28, 2019, compared to 49.7% at November 30, 2018. Our ratio of net debt to capital (a calculation that is described above under “Non-GAAP Financial Measures”) at February 28, 2019 was 44.3%, compared to 41.6% at November 30, 2018.

LOC Facilities. We had $.3 million of letters of credit outstanding under the LOC Facilities at February 28, 2019 and no letters of credit outstanding under the LOC Facilities at November 30, 2018. Further information regarding our LOC Facilities is provided in Note 14 – Notes Payable in the Notes to Consolidated Financial Statements in this report.

Unsecured Revolving Credit Facility. We have a $500.0 million Credit Facility that will mature on July 27, 2021. The amount of the Credit Facility available for cash borrowings and 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, 2019, we had no cash borrowings and $33.1 million of letters of credit outstanding under the Credit Facility. Therefore, as of February 28, 2019, we had $466.9 million available for cash borrowings under the Credit Facility, with up to $216.9 million of that amount available for the issuance of additional letters of credit. The Credit Facility is further described in Note 14 – Notes Payable in the Notes to Consolidated Financial Statements in this report.

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There have been no changes to the terms of the Credit Facility during the three months ended February 28, 2019 from those disclosed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section in our Annual Report on Form 10-K for the year ended November 30, 2018.

The covenants and other requirements under the Credit Facility represent the most restrictive covenants that we are subject to with respect to our notes payable. The following table summarizes the 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, 2019:

Financial Covenants and Other Requirements	Covenant Requirement		Actual
Consolidated tangible net worth	>	$1.46 billion	$2.13 billion
Leverage Ratio	<	.650	.509
Interest Coverage Ratio (a)	>	1.500	4.158
Minimum liquidity (a)	>	$140.2 million	$511.7 million
Investments in joint ventures and non-guarantor subsidiaries	<	$530.5 million	$145.8 million
Borrowing base in excess of borrowing base indebtedness (as defined)		n/a	$799.3 million

(a) Under the terms of the Credit Facility, we are required to maintain either a minimum Interest Coverage Ratio or a minimum level of liquidity, but not both. As of February 28, 2019, we met both the Interest Coverage Ratio and the minimum liquidity requirements.

The indenture governing our senior notes does not contain any financial covenants. Subject to specified exceptions, the indenture contains certain restrictive covenants that, among other things, limit our ability to incur secured indebtedness, or engage in sale and leaseback transactions involving property above a certain specified value. In addition, the indenture contains certain limitations related to mergers, consolidations and sales of assets.

Our obligations to pay principal, premium, if any, and interest under our senior notes 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 21 – Supplemental Guarantor Information in the Notes to Consolidated Financial Statements in this report.

As of February 28, 2019, we were in compliance with the applicable terms of all our covenants and other requirements under the Credit Facility, the senior notes, the indenture, and the mortgages and land contracts due to land sellers and other loans. Our ability to access the Credit Facility for cash borrowings and letters of credit and our ability to secure future debt financing depend, in part, on our ability to remain in such compliance. There are no agreements that restrict our payment of dividends other than the Credit Facility, which would restrict our payment of dividends (other than common stock 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 (other than dividends paid within 60 days after declaration, if there was no default at the time of declaration).

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, 2019, we had outstanding mortgages and land contracts due to land sellers and other loans payable in connection with such financing of $12.0 million, secured primarily by the underlying property, which had an aggregate carrying value of $138.2 million.

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

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	Three Months Ended February 28,
	2019			2018
Net cash provided by (used in):
Operating activities	$	(198,210	)	$	(141,680	)
Investing activities	(1,747		)	(8,850		)
Financing activities	137,245			(9,525		)
Net decrease in cash and cash equivalents	$	(62,712	)	$	(160,055	)

Operating Activities. Operating activities used net cash of $198.2 million in the three months endedFebruary 28, 2019 and $141.7 million in the three months endedFebruary 28, 2018. Generally, our net operating cash flows fluctuate primarily based on changes in our inventories and our profitability.

Our net cash used by operating activities for the three months endedFebruary 28, 2019 primarily reflected net cash of $154.1 million used for investments in inventories, a net decrease in accounts payable, accrued expenses and other liabilities of $70.1 million and a net increase in receivables of $19.5 million, partly offset by net income of $30.0 million. In the three months endedFebruary 28, 2018, our net cash used by operating activities mainly reflected net cash of $135.3 million used for investments in inventories, a net decrease in accounts payable, accrued expenses and other liabilities of $54.0 million, and a net increase in receivables of $6.0 million, partly offset by our net loss of $71.3 million adjusted for various non-cash items, including a net decrease of $117.1 million in our deferred tax assets.

Investing Activities. Investing activities used net cash of $1.7 million in the three months endedFebruary 28, 2019 and $8.9 million in the year-earlier period. In the three months endedFebruary 28, 2019, our uses of cash included $10.0 million for net purchases of property and equipment and $2.5 million for contributions to unconsolidated joint ventures. These uses of cash were partially offset by $5.8 million of proceeds from the sale of a building and a $5.0 million return of investments in unconsolidated joint ventures. In the three months endedFebruary 28, 2018, the net cash used for investing activities reflected $8.0 million for contributions to unconsolidated joint ventures and $1.9 million for net purchases of property and equipment, which were partially offset by a $1.1 million return of investments in unconsolidated joint ventures.

Financing Activities. Financing activities provided net cash of $137.2 million in the three months endedFebruary 28, 2019 and used net cash of $9.5 million in the three months endedFebruary 28, 2018. The year-over-year change was mainly due to our concurrent public offerings of senior notes in the 2019 first quarter, partly offset by our repayment of the 1.375% Convertible Senior Notes due 2019. In the three months endedFebruary 28, 2019, net cash was provided by our concurrent public offerings of $300.0 million in aggregate principal amount of 6.875% Senior Notes due 2027 and an additional $100.0 million in aggregate principal amount of our existing series of 7.625% Senior Notes due 2023, and $.8 million of issuances of common stock under employee stock plans. The cash provided was partially offset by cash used for our repayment of $230.0 million in aggregate principal amount of 1.375% Convertible Senior Notes due 2019, payments on mortgages and land contracts due to land sellers and other loans of $28.0 million, tax payments associated with stock-based compensation awards of $3.3 million, and dividend payments on our common stock of $2.3 million. In the three months endedFebruary 28, 2018, cash was used for tax payments associated with stock-based compensation awards of $6.8 million, payments on mortgages and land contracts due to land sellers and other loans of $3.4 million, and dividend payments on our common stock of $2.3 million. The cash used was partly offset by $2.9 million of issuances of common stock under employee stock plans.

During the three months ended February 28, 2019 and 2018, our board of directors declared, and we paid, a quarterly cash dividend of $.025 per share of common stock. The declaration and payment of future cash dividends on our common stock, whether at current levels or at all, are at the discretion of our board of directors and depend upon, among other things, our expected future earnings, cash flows, capital requirements, access to external financing, debt structure and any adjustments thereto, operational and financial investment strategy and general financial condition, as well as general business conditions.

We believe we have adequate capital resources and sufficient access to the credit and capital markets and external financing sources to satisfy our current and reasonably anticipated long-term requirements for funds to acquire assets and land, to use and/or develop acquired assets and land, to construct homes, to finance our financial services operations and to meet other needs in the ordinary course of our business. In addition to acquiring and/or developing land that meets our investment return standards, in the remainder of 2019, we may use or redeploy our cash resources or cash borrowings under the Credit Facility to support other business purposes that are aligned with our primary strategic growth goals. We may also arrange or engage in capital markets, bank loan, project debt or other financial transactions. These transactions may include repurchases from time to time of our outstanding common stock. They may also include repurchases from time to time of our outstanding senior notes or other debt through redemptions, tender offers, exchange offers, private exchanges, open market or private purchases or other means, as well as potential new

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issuances of equity or senior or convertible senior notes or other debt through public offerings, private placements or other arrangements to raise or access additional capital to support our current land and land development investment targets, to complete strategic transactions and for other business purposes and/or to effect repurchases or additional redemptions of our outstanding senior notes or other debt. The amounts involved in these transactions, if any, may be material. As necessary or desirable, we may adjust or amend the terms of and/or expand the capacity of the Credit Facility or the LOC Facilities, or enter into additional letter of credit facilities, or other similar facility arrangements, in each case with the same or other financial institutions, or allow any such facilities to mature or expire. Our ability to engage in such transactions, however, may be constrained by economic, capital, credit and/or financial market conditions, investor interest and/or our current 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 9 – Investments in Unconsolidated Joint Ventures in the Notes to Consolidated Financial Statements in this report, we have investments in unconsolidated joint ventures in various markets where our homebuilding operations are located. Our unconsolidated joint ventures had total combined assets of $144.4 million at February 28, 2019 and $150.2 million at November 30, 2018. Our investments in unconsolidated joint ventures totaled $57.1 million at February 28, 2019 and $62.0 million at November 30, 2018. At February 28, 2019, one of our unconsolidated joint ventures had outstanding secured debt totaling $22.0 million under a construction loan agreement with a third-party lender to finance its land development activities, with the outstanding debt secured by the underlying property and related project assets and non-recourse to us. At November 30, 2018, this unconsolidated joint venture had outstanding debt totaling $18.0 million. The secured debt is scheduled to mature in February 2020. None of our other unconsolidated joint ventures had outstanding debt at February 28, 2019 or November 30, 2018. While we and our partner in the unconsolidated joint venture that has the outstanding construction loan agreement at February 28, 2019 provide certain guarantees and indemnities to the lender, we do not have a guaranty or any other obligation to repay or to support the value of the collateral underlying the outstanding secured debt. We do not believe that our existing exposure under our guaranty and indemnity obligations related to the outstanding secured debt is material to our consolidated financial statements. As discussed in Note 8 – Variable Interest Entities in the Notes to Consolidated Financial Statements in this report, we determined that one of our joint ventures at February 28, 2019 and November 30, 2018 was a VIE, but we were not the primary beneficiary of this VIE. All of our joint ventures were unconsolidated and accounted for under the equity method because we did not have a controlling financial interest.

We are committed to purchase all 25 unconsolidated joint venture lots controlled under land option and other similar contracts at February 28, 2019 from one of our unconsolidated joint ventures. The purchase will be made in quarterly takedowns over the next year for an aggregate purchase price of approximately $11.8 million under agreements that we entered into with the joint venture in 2016.

Land Option Contracts and Other Similar Contracts. As discussed in Note 8 – 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 with third parties and unconsolidated entities to acquire rights to land for the construction of homes. At February 28, 2019, we had total cash deposits of $49.8 million to purchase land having an aggregate purchase price of $1.23 billion. At November 30, 2018, we had total deposits of $53.8 million to purchase land having an aggregate purchase price of $1.37 billion. Our land option contracts and other similar contracts generally do not contain provisions requiring our specific performance. Our decision to exercise a particular land option contract or other similar contract depends on the results of our due diligence reviews and ongoing market and project feasibility analysis that we conduct after entering into such a contract. In some cases, our decision to exercise a land option contract or other similar contract may be conditioned on the land seller obtaining necessary entitlements, such as zoning rights and environmental and development approvals, and/or physically developing the underlying land by a pre-determined date. We typically have the ability not to exercise our rights to the underlying land for any reason and forfeit our deposits without further penalty or obligation to the sellers. If we were to acquire all of the land we controlled under our land option contracts and other similar contracts at February 28, 2019, we estimate the remaining purchase price to be paid would be as follows: 2019 – $523.0 million; 2020 – $260.9 million; 2021 – $239.8 million; 2022 – $46.2 million; 2023 – $39.5 million; and thereafter – $75.0 million.

In addition to the cash deposits, our exposure to loss related to our land option contracts and other similar contracts consisted of pre-acquisition costs of $43.6 million at February 28, 2019 and $46.9 million at November 30, 2018. These pre-acquisition costs and cash deposits were included in inventories in our consolidated balance sheets.

We determined that as of February 28, 2019 and November 30, 2018 we were not the primary beneficiary of any VIEs from which we have acquired rights to land under land option contracts and other similar contracts. We also evaluated our land option contracts and other similar contracts for financing arrangements 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 $5.5 million at February 28, 2019 and

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$21.8 million at November 30, 2018, as further discussed in Note 8 – Variable Interest Entities in the Notes to Consolidated Financial Statements in this report.

Contractual Obligations. Due to our repayment of the entire $230.0 million in aggregate principal amount of our 1.375% Convertible Senior Notes due 2019 upon maturity, and our completion of concurrent public offerings of $300.0 million in aggregate principal amount of 6.875% Senior Notes due 2027 and an additional $100.0 million in aggregate principal amount of our existing series of 7.625% Senior Notes due 2023, all of which are further described in Note 14 – Notes Payable in the Notes to Consolidated Financial Statements in this report, our contractual obligations as of February 28, 2019 have changed materially from those reported in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section in our Annual Report on Form 10-K for the year ended November 30, 2018. The following table sets forth our future cash requirements related to the contractual obligations of our long-term debt and interest as of February 28, 2019 (in millions):

	Total		2019		2020-2021		2022-2023		Thereafter
Contractual obligations:
Long-term debt	$	2,212.0	$	412.0	$	350.0	$	1,150.0	$	300.0
Interest	546.5		122.8		227.4		123.3		73.0
Total	$	2,758.5	$	534.8	$	577.4	$	1,273.3	$	373.0

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” section in our Annual Report on Form 10-K for the year ended November 30, 2018.

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. Except for accounting policies related to our adoption of ASC 606, as described in Note 1 – Basis of Presentation and Significant Accounting Policies in the Notes to Consolidated Financial Statements in this report, there have been no significant changes to our critical accounting policies and estimates during the three months endedFebruary 28, 2019 from those disclosed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section in our Annual Report on Form 10-K for the year ended November 30, 2018.

Recent Accounting Pronouncements

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

Outlook

For the remainder of 2019, we intend to continue to execute on our Returns-Focused Growth Plan, which is described in the “Business” section of our Annual Report on Form 10-K for the year ended November 30, 2018. We believe that doing so will enable us to generate cash flows that we can deploy in a targeted manner to support our business and enhance our return on invested capital, as well as manage our debt, with the principal aim of driving long-term stockholder value. Our present 2019 second quarter outlook is as follows:

2019 Second Quarter:

• We expect to generate housing revenues in the range of $900.0 million to $950.0 million, compared to $1.09 billion in the year-earlier quarter, and anticipate our average selling price to be in the range of $375,000 to $380,000, representing a decrease in the range of 5% to 7% as compared to the year-earlier period.

• We expect our housing gross profit margin to be in the range of 17.0% to 17.6%, assuming no inventory-related charges.

• We expect our selling, general and administrative expenses as a percentage of housing revenues to be in the range of 12.3% to 12.9%.

• We expect our homebuilding operating income margin, excluding inventory-related charges, to range from 4.2% to 5.2%.

• We expect an effective tax rate, excluding potential impacts from stock-based compensation and/or tax credits, of approximately 26%.

• We expect a diluted weighted average share count of approximately 92 million.

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• We expect our average community count will be up approximately 15% to 20% from the 2018 second quarter.

We believe we are well positioned for 2019 due to, among other things, our planned new home community openings, community reactivations, investments in land and land development and current positive economic and demographic trends, to varying degrees, in many of our served markets, and that we will be able to grow our average community count in the range of 10% to 15% for the 2019 full year. However, in the latter part of 2018, the homebuilding industry and our business saw a distinct tempering of homebuyer demand largely driven by several years of home price appreciation coupled with rising mortgage interest rates. In turn, the decrease in demand has increased new home inventories. In addition, the industry is experiencing labor constraints and volatile raw material prices, exacerbated by U.S. trade policies, including the imposition of tariffs and duties on homebuilding materials and products. If these demand, inventory and cost trends continue for an extended period beyond the 2019 first quarter, or worsen during 2019, our business would be negatively impacted. In this regard, we believe the strength of the full spring selling season will be an important factor for our overall performance for the year and with respect to our Returns-Focused Growth Plan, and we are encouraged by signs of improving demand and the moderation of mortgage interest rates in recent weeks.

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.

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 “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “hope,” 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 community, expenses, expense ratios, housing gross profits, housing gross profit margins, earnings or earnings per share, or growth or growth 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 other 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. In addition, forward-looking and other statements in this report and in other public or oral disclosures that express or contain opinions, views or assumptions about market or economic conditions; the success, performance, effectiveness and/or relative positioning of our strategies, initiatives or operational activities; and other matters, may be based in whole or in part on general observations of our management, limited or anecdotal evidence and/or business or industry experience without in-depth or any particular empirical investigation, inquiry or analysis.

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;

• conditions in the capital, credit and financial markets;

• our ability to access external financing sources and raise capital through the issuance of common stock, debt or other securities, and/or project financing, on favorable terms;

• the execution of any share repurchases pursuant to our board of directors’ authorization;

• material and trade costs and availability;

• changes in interest rates;

• our debt level, including our ratio of debt to capital, and our ability to adjust our debt level and maturity schedule;

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• our compliance with the terms of the Credit Facility;

• volatility in the market price of our common stock;

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

• competition from other sellers of new and resale homes;

• weather events, significant natural disasters and other climate and environmental factors;

• any failure of lawmakers to agree on a budget or appropriation legislation to fund the federal government’s operations, and financial markets’ and businesses’ reactions to that failure;

• government actions, policies, programs and regulations directed at or affecting the housing market (including the TCJA, the Dodd-Frank Act, tax benefits associated with purchasing and owning a home, and the standards, fees and size limits applicable to the purchase or insuring of mortgage loans by government-sponsored enterprises and government agencies), the homebuilding industry, or construction activities;

• changes in existing tax laws or enacted corporate income tax rates, including those resulting from regulatory guidance and interpretations issued with respect to the TCJA;

• changes in U.S. trade policies, including the imposition of tariffs and duties on homebuilding materials and products, and related trade disputes with and retaliatory measures taken by other countries;

• the availability and cost of land in desirable areas and our ability to timely develop acquired land parcels and open new home communities;

• our warranty claims experience with respect to homes previously delivered and actual warranty costs incurred;

• costs and/or charges arising from regulatory compliance requirements or from legal, arbitral or regulatory proceedings, investigations, claims or settlements, including unfavorable outcomes in any such matters resulting in actual or potential monetary damage awards, penalties, fines or other direct or indirect payments, or injunctions, consent decrees or other voluntary or involuntary restrictions or adjustments to our business operations or practices that are beyond our current expectations and/or accruals;

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

• our ability to successfully implement our current and planned strategies and initiatives related to our product, geographic and market positioning, gaining share and scale in our served markets and in entering into new markets;

• our operational and investment concentration in markets in California;

• consumer interest in our new home communities and products, particularly from first-time homebuyers andhigher-income consumers;

• our ability to generate orders andconvert our backlog of orders to home deliveries and revenues, particularly in key markets in California;

• our ability to successfully implement our Returns-Focused Growth Plan and achieve the associated revenue, margin, profitability, cash flow, community reactivation, land sales, business growth, asset efficiency, return on invested capital, return on equity, net debt to capital ratio and other financial and operational targets and objectives;

• income tax expense volatility associated with stock-based compensation;

• the ability of our homebuyers to obtain residential mortgage loans and mortgage banking services;

• the performance of mortgage lenders to our homebuyers;

• the performance of KBHS;

• information technology failures and data security breaches; and

• other events outside of our control.

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Please see our Annual Report on Form 10-K for the year ended November 30, 2018 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

We enter into debt obligations primarily to support general corporate purposes, including the operations of our subsidiaries. We are subject to interest rate risk on our senior notes. For fixed rate debt, changes in interest rates generally affect the fair value of the debt instrument, but not our earnings or cash flows. We generally have no obligation to prepay our debt before maturity, and, as a result, interest rate risk and changes in fair market value should not have a significant impact on our fixed rate debt until we are required or elect to refinance or repurchase such debt. Under our current policies, we do not use interest rate derivative instruments to manage our exposure to changes in interest rates.

The following table presents principal cash flows by scheduled maturity, weighted average effective interest rates and the estimated fair value of our long-term fixed rate debt obligations as of February 28, 2019 (dollars in thousands):

Fiscal Year of Expected Maturity	Fixed Rate Debt		Weighted Average Effective Interest Rate
2019	$	400,000	5.0	%
2020	350,000		8.5
2021	—		—
2022	800,000		7.4
2023	350,000		7.6
Thereafter	300,000		7.1
Total	$	2,200,000	7.1
Fair value at February 28, 2019	$	2,298,750

For additional information regarding our market risk, refer to the “Quantitative and Qualitative Disclosures About Market Risk” section of our Annual Report on Form 10-K for the year ended November 30, 2018.

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, as amended (“Exchange Act”) 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 our Chief Executive Officer (“Principal Executive Officer”) and Chief Financial Officer (“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 Exchange Act. 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, 2019.

There were no changes in our internal control over financial reporting during the quarter ended February 28, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

For a discussion of our legal proceedings, see Note 17 – Legal Matters in the Notes to Consolidated Financial Statements in this report.

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, 2018.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table summarizes our purchases of our own equity securities during the three months ended February 28, 2019:

Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs
December 1-31	—	$	—	—	2,193,947
January 1-31	—	—		—	2,193,947
February 1-28	147,382	22.67		—	2,193,947
Total	147,382	$	22.67	—

In January 2016, our board of directors authorized us to repurchase a total of up to 10,000,000 shares of our outstanding common stock. As of November 30, 2016, we had repurchased 8,373,000 shares of our common stock pursuant to this authorization, at a total cost of $85.9 million. On May 14, 2018 our board of directors reaffirmed the remainder of the 2016 authorization and approved and authorized the repurchase of 2,373,000 additional shares of our outstanding common stock, for a total of up to 4,000,000 shares authorized for repurchase. As of November 30, 2018, we had repurchased 1,806,053 shares of our common stock pursuant to this authorization, at a total cost of $35.0 million. During the three months ended February 28, 2019, no shares were repurchased pursuant to this authorization.

The shares purchased during the three months ended February 28, 2019, as reflected in the above table, were previously issued shares delivered to us by employees to satisfy withholding taxes on the vesting of PSUs. These transactions are not considered repurchases under the board of directors’ authorization.

Item 6.    Exhibits

Exhibits
4.22	Form of officers’ certificates and guarantors’ officers’ certificates establishing the form and terms of the 6.875% Senior Notes due 2027, filed as an exhibit to our Current Report on Form 8-K dated February 20, 2019 (File No. 001-09195), is incorporated by reference herein.
4.23	Form of officers’ certificates and guarantors’ officers’ certificates establishing the form and terms of the 7.625% Senior Notes due 2023, filed as an exhibit to our Current Report on Form 8-K dated February 20, 2019 (File No. 001-09195), is incorporated by reference herein.
4.24	Form of 6.875% Senior Notes due 2027, filed as an exhibit to our Current Report on Form 8-K dated February 20, 2019 (File No. 001-09195), is incorporated by reference herein.
4.25	Form of 7.625% Senior Notes due 2023, filed as an exhibit to our Current Report on Form 8-K dated February 20, 2019 (File No. 001-09195), is incorporated by reference herein.
31.1	Certification of Jeffrey T. Mezger, Chairman, President and Chief Executive Officer of KB Home Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Jeff J. Kaminski, Executive Vice President and Chief Financial Officer of KB Home Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Jeffrey T. Mezger, Chairman, President and Chief Executive Officer of KB Home Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Jeff J. Kaminski, Executive Vice President and Chief Financial Officer of KB Home Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials from KB Home’s Quarterly Report on Form 10-Q for the quarter ended February 28, 2019, formatted in eXtensible Business Reporting Language (XBRL): (a) Consolidated Statements of Operations for the three months ended February 28, 2019 and 2018, (b) Consolidated Balance Sheets as of February 28, 2019 and November 30, 2018, (c) Consolidated Statements of Cash Flows for the three months ended February 28, 2019 and 2018, 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 5, 2019	By:	/s/ JEFF J. KAMINSKI
			Jeff J. Kaminski Executive Vice President and Chief Financial Officer (Principal Financial Officer)

Dated	April 5, 2019	By:	/s/ WILLIAM R. HOLLINGER
			William R. Hollinger Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)

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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 5, 2019	/s/ JEFFREY T. MEZGER
		Jeffrey T. Mezger
		Chairman, 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 5, 2019	/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, 2019 (the “Report”), I, Jeffrey T. Mezger, Chairman, 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 5, 2019	/s/ JEFFREY T. MEZGER
		Jeffrey T. Mezger
		Chairman, 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, 2019 (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 5, 2019	/s/ JEFF J. KAMINSKI
		Jeff J. Kaminski
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

XML

Document and Entity Information	3 Months Ended
	Feb. 28, 2019 shares
Document and Entity Information [Abstract]
Entity Registrant Name	KB HOME
Trading Symbol	KBH
Entity Central Index Key	0000795266
Document Type	10-Q
Document Period End Date	Feb. 28, 2019
Amendment Flag	false
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--11-30
Entity Filer Category	Large Accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Common Stock Shares Outstanding	87,134,108

XML

Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Feb. 28, 2019	Feb. 28, 2018
Total revenues	$ 811,483	$ 871,623
Equity in income of unconsolidated joint ventures	396	(426)
Total pretax income	34,511	46,045
Income tax expense	(4,500)	(117,300)
Net income (loss)	$ 30,011	$ (71,255)
Earnings (loss) per share:
Basic (in dollars per share)	$ 0.34	$ (0.82)
Diluted (in dollars per share)	$ 0.31	$ (0.82)
Weighted average shares outstanding:
Basic (in shares)	86,972	87,155
Diluted (in shares)	96,962	87,155
Cash dividends declared per common share (in dollars per share)	$ 0.025	$ 0.0250
Home Building [Member]
Total revenues	$ 808,788	$ 869,205
Costs of goods and services sold	(670,855)	(729,478)
Selling, general and administrative expenses	(106,594)	(95,724)
Operating income	31,339	44,003
Interest income	1,105	1,003
Equity in income of unconsolidated joint ventures	(406)	(845)
Total pretax income	32,038	44,161
Financial Service [Member]
Total revenues	2,695	2,418
Selling, general and administrative expenses	(1,024)	(953)
Operating income	1,671	1,465
Equity in income of unconsolidated joint ventures	802	419
Total pretax income	$ 2,473	$ 1,884

XML

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands		Feb. 28, 2019	Nov. 30, 2018
Assets
Cash and cash equivalents		$ 512,407	$ 575,119
Receivables		313,609	292,830
Inventories		3,683,763	3,582,839
Investments in unconsolidated joint ventures		57,134	61,960
Property and equipment, net		55,330	24,283
Other assets		89,560	83,100
Total assets		5,173,656	5,073,571
Liabilities and stockholders’ equity
Accrued expenses and other liabilities		631,381	666,268
Mortgages and notes payable		2,203,589	2,060,263
Common stock		119,258	119,196
Paid-in capital		755,341	753,570
Retained earnings		1,936,523	1,897,168
Accumulated other comprehensive loss		(9,565)	(9,565)
Grantor stock ownership trust, at cost		(85,246)	(88,472)
Treasury stock, at cost		(587,814)	(584,397)
Total stockholders’ equity		2,128,497	2,087,500
Total liabilities and stockholders’ equity		5,173,656	5,073,571
Home Building [Member]
Assets
Cash and cash equivalents		511,690	574,359
Receivables		313,609	292,830
Inventories		3,683,763	3,582,839
Investments in unconsolidated joint ventures		57,134	61,960
Property and equipment, net		55,330	24,283
Deferred tax assets, net		433,295	441,820
Other assets		89,560	83,100
Total assets		5,144,381	5,061,191
Liabilities and stockholders’ equity
Accounts payable		209,015	258,045
Accrued expenses and other liabilities		631,381	666,268
Mortgages and notes payable		2,203,589	2,060,263
Total Liabilities		3,043,985	2,984,576
Financial Service [Member]
Assets
Cash and cash equivalents		717	760
Receivables		1,602	2,885
Investments in unconsolidated joint ventures		6,995	8,594
Other assets	[1]	19,961	141
Total assets		29,275	12,380
Liabilities and stockholders’ equity
Financial services		$ 1,174	$ 1,495

[1] Other assets at February 28, 2019 included $19.8 million of contract assets for estimated future renewal commissions due to our adoption of ASC 606 effective December 1, 2018, as described in Note 1 – Basis of Presentation and Significant Accounting Policies.

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Feb. 28, 2019	Feb. 28, 2018
Cash flows from operating activities:
Net income (loss)	$ 30,011	$ (71,255)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Equity in (income) loss of unconsolidated joint ventures	(396)	426
Distributions of earnings from unconsolidated joint ventures	2,400	1,300
Amortization of discounts, premiums and issuance costs	1,468	1,552
Depreciation and amortization	6,446	628
Deferred income taxes	4,501	117,068
Stock-based compensation	4,152	3,829
Inventory impairments and land option contract abandonments	3,555	4,985
Changes in assets and liabilities:
Receivables	(19,495)	(6,024)
Inventories	(154,083)	(135,311)
Accounts payable, accrued expenses and other liabilities	(70,057)	(54,016)
Other, net	(6,712)	(4,862)
Net cash used in operating activities	(198,210)	(141,680)
Cash flows from investing activities:
Contributions to unconsolidated joint ventures	(2,527)	(8,025)
Return of investments in unconsolidated joint ventures	5,001	1,099
Proceeds from sale of building	5,804	0
Purchases of property and equipment, net	(10,025)	(1,924)
Net cash used in investing activities	(1,747)	(8,850)
Cash flows from financing activities:
Proceeds from issuance of debt	405,250	0
Issuance costs for unsecured revolving credit facility	(5,209)	0
Repayment of senior notes	(230,000)	0
Borrowings under revolving credit facility	140,000	0
Repayments under revolving credit facility	(140,000)	0
Payments on mortgages and land contracts due to land sellers and other loans	(28,020)	(3,362)
Issuance of common stock under employee stock plans	832	2,946
Tax payments associated with stock-based compensation awards	(3,342)	(6,787)
Payments of cash dividends	(2,266)	(2,322)
Net cash provided by (used in) financing activities	137,245	(9,525)
Net decrease in cash and cash equivalents	(62,712)	(160,055)
Cash and cash equivalents at beginning of period	575,119	720,861
Cash and cash equivalents at end of period	$ 512,407	$ 560,806

XML

Basis of Presentation and Significant Accounting Policies

3 Months Ended

Feb. 28, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation and Significant Accounting Policies

Basis of Presentation and Significant Accounting Policies

Basis of Presentation. The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with GAAP have been condensed or omitted.

In our opinion, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly our consolidated financial position as of February 28, 2019, the results of our consolidated operations for the three months endedFebruary 28, 2019 and 2018, and our consolidated cash flows for the three months endedFebruary 28, 2019 and 2018. The results of our consolidated operations for the three months endedFebruary 28, 2019 are not necessarily indicative of the results to be expected for the full year due to seasonal variations in operating results and other factors. The consolidated balance sheet at November 30, 2018 has been taken from the audited consolidated financial statements as of that date. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended November 30, 2018, which are contained in our Annual Report on Form 10-K for that period.

Unless the context indicates otherwise, the terms “we,” “our,” and “us” used in this report refer to KB Home, a Delaware corporation, and its subsidiaries.

Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Cash and Cash Equivalents. We consider all highly liquid short-term investments purchased with an original maturity of three months or less to be cash equivalents. Our cash equivalents totaled $367.3 million at February 28, 2019 and $385.2 million at November 30, 2018. At February 28, 2019 and November 30, 2018, the majority of our cash and cash equivalents was invested in interest-bearing bank deposit accounts.

Comprehensive Income (Loss). Our comprehensive income was $30.0 million for the three months ended February 28, 2019. For the three months ended February 28, 2018, our comprehensive loss was $71.3 million. Our comprehensive income (loss) for each of the three-month periods ended February 28, 2019 and 2018 was equal to our net income (loss) for the respective periods.

Adoption of New Accounting Pronouncement. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 supersedes the revenue guidance in Accounting Standards Codification Topic 605, “Revenue Recognition,” and most industry-specific revenue and cost guidance in the accounting standards codification, including some cost guidance related to construction-type and production-type contracts. The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

On December 1, 2018, we adopted ASU 2014-09 and its related amendments (collectively, “ASC 606”), using the modified retrospective method applied to contracts that were not completed as of the adoption date. Results for reporting periods beginning December 1, 2018 and after are presented under ASC 606, while results for prior reporting periods have not been adjusted and continue to be presented under the accounting guidance in effect for those periods. We recorded the following cumulative effect adjustment to increase beginning retained earnings as of December 1, 2018 (in thousands):

Balance Sheet	Balance at November 30, 2018		Adjustments due to ASC 606			Balance at December 1, 2018
Assets
Homebuilding:
Inventories	$	3,582,839	$	(35,288	)	$	3,547,551
Deferred tax assets, net	441,820		(4,024		)	437,796
Property and equipment, net	24,283		31,194			55,477
Financial services	12,380		19,728			32,108
Stockholders’ equity:
Retained earnings	1,897,168		11,610			1,908,778

Within our homebuilding operations, ASC 606 impacts the classification and timing of recognition in our consolidated financial statements of certain community sales office and other marketing- and model home-related costs, which we previously capitalized to inventories and amortized through construction and land costs with each home delivered in a community. With our adoption of ASC 606, these costs are capitalized to property and equipment and depreciated to selling, general and administrative expenses, or expensed to selling, general and administrative expenses as incurred. Upon adopting ASC 606, we reclassified these community sales office and other marketing- and model home-related costs and related accumulated amortization from inventories to either property and equipment, net or retained earnings in our consolidated balance sheet. Forfeited deposits related to cancelled home sale and land sale contracts, which were previously reflected as other income within selling, general and administrative expenses, are included in homebuilding revenues under ASC 606.

Within our financial services operations, ASC 606 impacts the timing of recognition in our consolidated financial statements of insurance commissions for insurance policy renewals. We previously recognized such insurance commissions as revenue when policies were renewed. With our adoption of ASC 606, insurance commissions for future policy renewals are estimated and recognized as revenue when the insurance carrier issues an initial insurance policy to our homebuyer, which generally occurs at the time each applicable home sale is closed. Upon adopting ASC 606, we recognized contract assets for the estimated future renewal commissions related to existing insurance policies as of December 1, 2018.

There were no significant changes to our business processes or internal control over financial reporting as a result of adopting ASC 606.

The impacts of adopting ASC 606 on our consolidated statement of operations for the three months ended February 28, 2019 and consolidated balance sheet as of February 28, 2019 were as follows (in thousands, except per share amounts):

	Three Months Ended February 28, 2019
Statement of Operations	As Reported			Amounts without the Adoption of ASC 606			Effect of Change Higher/(Lower)
Homebuilding:
Revenues	$	808,788		$	808,155		$	633
Construction and land costs	(670,855		)	(676,115		)	(5,260		)
Selling, general and administrative expenses	(106,594		)	(99,281		)	7,313
Operating income	31,339			32,759			(1,420		)
Financial services:
Revenues	2,695			2,590			105
Total pretax income	34,511			35,826			(1,315		)
Income tax expense	(4,500		)	(4,800		)	(300		)
Net income	30,011			31,026			(1,015		)
Diluted earnings per share	.31			.32			(.01		)

	As of February 28, 2019
Balance Sheet	As Reported		Amounts without the Adoption of ASC 606		Effect of Change Higher/(Lower)
Assets
Homebuilding:
Inventories	$	3,683,763	$	3,722,475	$	(38,712	)
Deferred tax assets, net	433,295		437,019		(3,724		)
Property and equipment, net	55,330		22,132		33,198
Financial services	29,275		9,442		19,833
Stockholders’ equity:
Retained earnings	1,936,523		1,925,928		10,595

As a result of our adoption of ASC 606, we updated our significant accounting policies as follows:

Homebuilding Revenues. We apply the following steps in determining the timing and amount of revenue to recognize: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract, if applicable; and (5) recognize revenue when (or as) we satisfy a performance obligation.

Our home sale transactions are made pursuant to contracts under which we typically have a single performance obligation to deliver a completed home to the homebuyer when closing conditions are met. Revenues from home sales are recognized when we have satisfied the performance obligation within the sales contract, which is generally when title to and possession of the home and the risks and rewards of ownership are transferred to the homebuyer on the closing date. Under our home sale contracts, we typically receive an initial cash deposit from the homebuyer at the time the sales contract is executed and receive the remaining consideration to which we are entitled, through a third-party escrow agent, at closing. Customer deposits related to sold but undelivered homes, totaled $20.1 million and $19.5 million at February 28, 2019 and November 30, 2018, respectively, and are included in accrued expenses and other liabilities.

Concurrent with the recognition of revenues in our consolidated statements of operations, sales incentives in the form of price concessions on the selling price of a home are recorded as a reduction of revenues, while the costs of sales incentives in the form of free or discounted products or services to homebuyers, including option upgrades and closing cost allowances used to cover a portion of the fees and costs charged to a homebuyer, are reflected as construction and land costs. Cash proceeds from home sale closings held by third-party escrow agents for our benefit, typically for less than five days, are considered deposits in-transit and classified as cash.

Land sale transactions are made pursuant to contracts under which we typically have a performance obligation(s) to deliver specified land parcels to the buyer when closing conditions are met. Revenues from land sales are recognized when we have satisfied the performance obligation(s) within the sales contract, which is generally when title to and possession of the land and the risks and rewards of ownership are transferred to the land buyer on the closing date. Under our land sale contracts, we typically receive an initial cash deposit from the buyer at the time the contract is executed and receive the remaining consideration to which we are entitled, through a third-party escrow agent, at closing. In limited circumstances where we provide financing to the land buyer, we determine that collectibility of the receivable is reasonably assured before we recognize revenue.

In instances where we have a material performance obligation(s) under a land sale contract to perform land development work after the closing date, a portion of the transaction price is allocated to such performance obligation(s) and is recognized as revenue when and as such obligation(s) is (are) completed. While the payment terms for such a performance obligation(s) vary, the final payment is generally received when we have completed our land development work and it has been accepted by the land buyer.

Homebuilding revenues include forfeited deposits, which occur when home sale or land sale contracts that include a nonrefundable deposit are cancelled. Revenues from forfeited deposits are immaterial.

Within our homebuilding operations, substantially all of our contracts with customers and the related performance obligations have an original expected duration of one year or less.

Community Sales Office and Other Marketing- and Model Home-Related Costs. Community sales office and other marketing- and model home-related costs are either recorded as inventories, capitalized as property and equipment, or expensed to selling, general and administrative expenses as incurred. Costs related to the construction of a model home, inclusive of upgrades that will be sold as part of the home, are recorded as inventories and recognized as construction and land costs when the model home is delivered to a homebuyer. Costs to furnish and ready a model home or on-site community sales facility that will not be sold as part of the model home, such as model furnishings, community sales office and model complex grounds, sales office construction and sales office furniture and equipment, are capitalized as property and equipment under “model furnishings and sales office improvements.” Model furnishings and sales office improvements are depreciated to selling, general and administrative expenses over their estimated useful lives. Other costs incurred related to the marketing of a community, removing the on-site community sales facility and readying a completed (model) home for sale are expensed to selling, general and administrative expenses as incurred.

Financial Services Revenues. Our financial services reporting segment generates revenues primarily from title services and insurance commissions. Revenues from title services are recognized when policies are issued, which generally occurs at the time each applicable home sale is closed. We receive insurance commissions from various third-party insurance carriers for arranging for the carriers to provide homeowner and other insurance policies for our homebuyers that elect to obtain such coverage. In addition, each time a homebuyer renews their insurance policy with the insurance carrier, we receive a renewal commission. Revenues from insurance commissions are recognized when the insurance carrier issues an initial insurance policy to our homebuyer, which generally occurs at the time each applicable home sale is closed. As our performance obligations for policy renewal commissions are satisfied upon issuance of the initial insurance policy, insurance commissions for renewals are considered variable consideration under ASC 606. Accordingly, we estimate the probable future renewal commissions when an initial policy is issued and record a corresponding contract asset and insurance commission revenues. We estimate the amount of variable consideration based on historical renewal trends and constrain the estimate such that it is probable that a significant reversal of cumulative recognized revenue will not occur. We also consider the likelihood and magnitude of a potential future reversal of revenue and update our assessment at the end of each reporting period. The contract assets for estimated future renewal commissions are included in other assets within financial services and totaled $19.8 million at February 28, 2019. Contract assets totaling $19.7 million were recognized on December 1, 2018 in connection with the adoption of ASC 606.

Disaggregation of Revenues. Our homebuilding operations accounted for 99.7% of our total revenues for the year ended November 30, 2018, with most of those revenues generated from home sale contracts with customers. Our financial services operations accounted for the remaining .3% of total revenues for the year ended November 30, 2018. Due to the nature of our revenue-generating activities, we believe the disaggregation of revenues as reported in our consolidated statement of operations, and as disclosed by homebuilding reporting segment in Note 2 – Segment Information and for our financial services reporting segment in Note 3 – Financial Services, fairly depict how the nature, amount, timing and uncertainty of cash flows are affected by economic factors.

Recent Accounting Pronouncements Not Yet Adopted. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). ASU 2016-02 will require lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Under this guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Lessor accounting remains substantially similar to current GAAP. In addition, disclosures of leasing activities are to be expanded to include qualitative along with specific quantitative information. ASU 2016-02 is effective for us beginning December 1, 2019 (with early adoption permitted). Originally, entities were required to adopt ASU 2016-02 using a modified retrospective transition method. However, in July 2018, the FASB issued Accounting Standards Update No. 2018-11, “Leases (Topic 842): Targeted Improvements” (“ASU 2018-11”), which provides entities with an additional transition method. Under ASU 2018-11, entities have the option of recognizing the cumulative effect of applying the new standard as an adjustment to beginning retained earnings in the year of adoption while continuing to present all prior periods under previous lease accounting guidance. In July 2018, the FASB also issued Accounting Standards Update No. 2018-10, “Codification Improvements to Topic 842, Leases” (“ASU 2018-10”), which clarifies how to apply certain aspects of ASU 2016-02. We expect to adopt ASU 2016-02, ASU 2018-10 and ASU 2018-11 beginning December 1, 2019. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

In February 2018, the FASB issued Accounting Standards Update No. 2018-02, “Income Statement — Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU 2018-02”), which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (“TCJA”), and requires certain disclosures about stranded tax effects. ASU 2018-02 is effective for us beginning December 1, 2019 (with early adoption permitted), and shall be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the corporate income tax rate in the TCJA is recognized. We expect to adopt ASU 2018-02 beginning December 1, 2019. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

Reclassifications. Certain amounts in our consolidated financial statements of prior periods have been reclassified to conform to the current period presentation.

XML

Segment Information

3 Months Ended

Feb. 28, 2019

Segment Reporting [Abstract]

Segment Information

Segment Information

We have identified five operating reporting segments, comprised of four homebuilding reporting segments and one financial services reporting segment. As of February 28, 2019, our homebuilding reporting segments conducted ongoing operations in the following states:

West Coast: California and Washington

Southwest: Arizona and Nevada

Central: Colorado and Texas

Southeast: Florida and North Carolina

Our homebuilding reporting segments are engaged in the acquisition and development of land primarily for residential purposes and offer a wide variety of homes that are designed to appeal to first-time, first move-up and active adult homebuyers. Our homebuilding operations generate most of their revenues from the delivery of completed homes to homebuyers. They also earn revenues from the sale of land.

Our 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. Management evaluates 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 located within our Central and Southeast homebuilding reporting segments. This segment earns revenues primarily from insurance commissions and from the provision of title services.

We offer mortgage banking services, including residential consumer mortgage loan (“mortgage loan”) originations, to our homebuyers indirectly through KBHS Home Loans, LLC (“KBHS”), an unconsolidated joint venture we formed with Stearns Lending, LLC (“Stearns”). We and Stearns each have a 50.0% ownership interest, with Stearns providing management oversight of KBHS’ operations. The financial services reporting segment is separately reported in our consolidated financial statements.

Corporate and other is a non-operating segment that develops and oversees the implementation of company-wide strategic initiatives and provides support to our reporting segments by centralizing certain administrative functions. Corporate management is responsible for, among other things, evaluating and selecting the geographic markets in which we operate, consistent with our overall business strategy; allocating capital resources to markets for land acquisition and development activities; making major personnel decisions related to employee compensation and benefits; and monitoring the financial and operational performance of our divisions. 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 our homebuilding reporting segments.

Our reporting segments follow the same accounting policies used for our consolidated financial statements. The results of each reporting segment are not necessarily indicative of the results that would have occurred had the segment been an independent, stand-alone entity during the periods presented, nor are they indicative of the results to be expected in future periods.

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

	Three Months Ended February 28,
	2019			2018
Revenues:
West Coast	$	305,810		$	386,652
Southwest	157,656			151,899
Central	241,592			244,181
Southeast	103,730			86,473
Total	$	808,788		$	869,205
Pretax income (loss):
West Coast	$	17,916		$	31,593
Southwest	22,072			14,977
Central	18,583			19,095
Southeast	(545		)	1,320
Corporate and other	(25,988		)	(22,824		)
Total	$	32,038		$	44,161

Inventory impairment charges:
West Coast	$	3,196	$	4,699
Southwest	—		—
Central	—		—
Southeast	—		—
Total	$	3,196	$	4,699
Land option contract abandonment charges:
West Coast	$	55	$	208
Southwest	59		—
Central	245		78
Southeast	—		—
Total	$	359	$	286

	February 28, 2019		November 30, 2018
Inventories:
Homes under construction
West Coast	$	560,514	$	514,099
Southwest	170,760		173,036
Central	319,931		312,366
Southeast	138,705		125,651
Subtotal	1,189,910		1,125,152

	February 28, 2019		November 30, 2018
Land under development
West Coast	1,053,533		1,059,432
Southwest	426,106		404,201
Central	561,979		543,472
Southeast	209,351		212,831
Subtotal	2,250,969		2,219,936
Land held for future development or sale
West Coast	159,644		154,462
Southwest	30,761		21,137
Central	7,835		9,346
Southeast	44,644		52,806
Subtotal	242,884		237,751
Total	$	3,683,763	$	3,582,839

Assets:
West Coast	$	1,983,539	$	1,880,516
Southwest	672,264		631,509
Central	1,021,616		1,017,490
Southeast	442,982		463,224
Corporate and other	1,023,980		1,068,452
Total	$	5,144,381	$	5,061,191

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Financial Services

3 Months Ended

Feb. 28, 2019

Segment Reporting [Abstract]

Financial Services

Financial Services

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

	Three Months Ended February 28,
	2019			2018
Revenues
Insurance commissions	$	1,472		$	1,352
Title services	1,217			1,066
Interest income	6			—
Total	2,695			2,418
Expenses
General and administrative	(1,024		)	(953		)
Operating income	1,671			1,465
Equity in income of unconsolidated joint ventures	802			419
Pretax income	$	2,473		$	1,884

	February 28, 2019		November 30, 2018
Assets
Cash and cash equivalents	$	717	$	760
Receivables	1,602		2,885
Investments in unconsolidated joint ventures	6,995		8,594
Other assets (a)	19,961		141
Total assets	$	29,275	$	12,380
Liabilities
Accounts payable and accrued expenses	$	1,174	$	1,495
Total liabilities	$	1,174	$	1,495

(a) Other assets at February 28, 2019 included $19.8 million of contract assets for estimated future renewal commissions due to our adoption of ASC 606 effective December 1, 2018, as described in Note 1 – Basis of Presentation and Significant Accounting Policies.

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Earnings Per Share

3 Months Ended

Feb. 28, 2019

Earnings Per Share, Basic and Diluted [Abstract]

Earnings Per Share

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,
	2019			2018
Numerator:
Net income (loss)	$	30,011		$	(71,255	)
Less: Distributed earnings allocated to nonvested restricted stock	(14		)	—
Less: Undistributed earnings allocated to nonvested restricted stock	(176		)	—
Numerator for basic earnings (loss) per share	29,821			(71,255		)
Effect of dilutive securities:
Interest expense and amortization of debt issuance costs associated with convertible senior notes, net of taxes	541			—
Add: Undistributed earnings allocated to nonvested restricted stock	176			—
Less: Undistributed earnings reallocated to nonvested restricted stock	(158		)	—
Numerator for diluted earnings (loss) per share	$	30,380		$	(71,255	)
Denominator:
Weighted average shares outstanding — basic	86,972			87,155
Effect of dilutive securities:
Share-based payments	4,202			—
Convertible senior notes	5,788			—
Weighted average shares outstanding — diluted	96,962			87,155
Basic earnings (loss) per share	$	.34		$	(.82	)
Diluted earnings (loss) per share	$	.31		$	(.82	)

We compute earnings (loss) per share using the two-class method, which is an allocation of earnings (losses) 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, 2019 or 2018.

For the three-month period ended February 28, 2019, outstanding stock options to purchase .8 million shares of our common stock were excluded from the diluted earnings per share calculation because the effect of their inclusion would be antidilutive. The diluted earnings per share calculation for the three months ended February 28, 2019 included the dilutive effect of the $230.0 million in aggregate principal amount of our 1.375% convertible senior notes due 2019 (“1.375% Convertible Senior Notes due 2019”) based on the number of days they were outstanding during the period. We repaid the notes at their February 1, 2019 maturity.

For the three months ended February 28, 2018, all outstanding stock options, contingently issuable shares associated with outstanding performance-based restricted stock units (each, a “PSU”), and the impact of our 1.375% Convertible Senior Notes due 2019 were excluded from the diluted loss per share calculation because the effect of their inclusion would have been antidilutive. Contingently issuable shares associated with outstanding PSUs were not included in the basic earnings per share calculations for the periods presented as the applicable vesting conditions had not been satisfied.

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Receivables

3 Months Ended

Feb. 28, 2019

Receivables [Abstract]

Receivables

Receivables

Receivables consisted of the following (in thousands):

	February 28, 2019			November 30, 2018
Recoveries related to self-insurance and other legal claims	$	149,719		$	138,261
Due from utility companies, improvement districts and municipalities	115,250			113,434
Refundable deposits and bonds	13,734			14,115
Recoveries related to warranty and other claims	4,111			4,750
Other	42,086			33,775
Subtotal	324,900			304,335
Allowance for doubtful accounts	(11,291		)	(11,505		)
Total	$	313,609		$	292,830

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Inventories

3 Months Ended

Feb. 28, 2019

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories consisted of the following (in thousands):

	February 28, 2019		November 30, 2018
Homes under construction	$	1,189,910	$	1,125,152
Land under development	2,250,969		2,219,936
Land held for future development or sale (a)	242,884		237,751
Total	$	3,683,763	$	3,582,839

(a)    Land held for sale totaled $27.8 million at February 28, 2019 and $9.8 million at November 30, 2018.

Interest is capitalized to inventories while the related communities or land parcels are being actively developed and until homes are completed or the land is available for immediate sale. Capitalized interest is amortized to construction and land costs as the related inventories are delivered to homebuyers or land buyers (as applicable). For land held for future development or sale, applicable interest is expensed as incurred.

Our interest costs were as follows (in thousands):

	Three Months Ended February 28,
	2019			2018
Capitalized interest at beginning of period	$	209,129		$	262,191
Interest incurred	34,788			39,944
Interest amortized to construction and land costs (a)	(30,547		)	(42,350		)
Capitalized interest at end of period (b)	$	213,370		$	259,785

(a) Interest amortized to construction and land costs for the three months ended February 28, 2019 and 2018 included $.6 million and $1.0 million, respectively, related to land sales during the periods.

(b) Capitalized interest amounts reflect the gross amount of capitalized interest, as inventory impairment charges recognized, if any, are not generally allocated to specific components of inventory.

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Inventory Impairments and Land Option Contract Abandonments

3 Months Ended

Feb. 28, 2019

Inventory Impairments and Land Option Contract Abandonments [Abstract]

Inventory Impairments and Land Option Contract Abandonments

Inventory Impairments and Land Option Contract Abandonments

Each community or land parcel in our owned inventory is assessed on a quarterly basis to determine if indicators of potential impairment exist. We record an inventory impairment charge on a community or land parcel that is active or held for future development when indicators of potential impairment exist and the carrying value of the real estate asset is greater than the undiscounted future net cash flows the asset is expected to generate. These real estate assets are written down to fair value, which is primarily determined based on the estimated future net cash flows discounted for inherent risk associated with each such asset, or other valuation techniques. We record an inventory impairment charge on land held for sale when the carrying value of a land parcel is greater than its fair value. These real estate assets are written down to fair value, less associated costs to sell. The estimated fair values of such assets are generally based on bona fide letters of intent from outside parties, executed sales contracts, broker quotes or similar information.

We evaluated 18 and 29 communities or land parcels for recoverability during the three months endedFebruary 28, 2019 and 2018, respectively. The carrying value of those communities or land parcels evaluated during the three months endedFebruary 28, 2019 and 2018 was $96.2 million and $200.1 million, respectively. The communities or land parcels evaluated during the three months endedFebruary 28, 2019 and 2018 included certain communities or land parcels previously held for future development that were reactivated as part of our efforts to improve our asset efficiency under our Returns-Focused Growth Plan.

Based on the results of our evaluations, we recognized inventory impairment charges of $3.2 million for the three months ended February 28, 2019 and $4.7 million for the three months ended February 28, 2018. The impairment charges for the three-month periods ended February 28, 2019 and 2018 reflected our decisions to make changes in our operational strategies aimed at more quickly monetizing our investment in certain communities by accelerating the overall pace for selling, building and delivering homes on land previously held for future development.

The following table summarizes significant quantitative unobservable inputs we utilized in our fair value measurements with respect to the impaired communities written down to fair value during the periods presented:

	Three Months Ended February 28,
Unobservable Input	2019	2018
Average selling price	$1,045,400	$774,100
Deliveries per month	1	3
Discount rate	17%	18%

As of February 28, 2019, the aggregate carrying value of our inventory that had been impacted by inventory impairment charges was $159.1 million, representing 22 communities and various other land parcels. As of November 30, 2018, the aggregate carrying value of our inventory that had been impacted by inventory impairment charges was $156.1 million, representing 22 communities and various other land parcels.

Our inventory controlled under land option contracts and other similar contracts is assessed on a quarterly basis to determine whether it continues to meet our investment return standards. When a decision is made not to exercise certain land option contracts and other similar contracts due to market conditions and/or changes in our marketing strategy, we write off the related inventory costs, including non-refundable deposits and unrecoverable pre-acquisition costs. Based on the results of our assessments, we recognized land option contract abandonment charges of $.4 million and $.3 million for the three-month periods ended February 28, 2019 and 2018, respectively.

Due to the judgment and assumptions applied in our inventory impairment and land option contract abandonment assessment processes, particularly as to land held for future development, it is possible that actual results could differ substantially from those estimated.

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Variable Interest Entities

3 Months Ended

Feb. 28, 2019

Variable Interest Entities [Abstract]

Variable Interest Entities

Variable Interest Entities

Unconsolidated Joint Ventures. We participate in joint ventures from time to time that conduct land acquisition, land development and/or other homebuilding activities in various markets where our homebuilding operations are located. Our investments in these joint ventures may create a variable interest in a variable interest entity (“VIE”), depending on the contractual terms of the arrangement. We analyze our joint ventures under the variable interest model to determine whether they are VIEs and, if so, whether we are the primary beneficiary. Based on our analyses, we determined that one of our joint ventures at February 28, 2019 and November 30, 2018 was a VIE, but we were not the primary beneficiary of the VIE. All of our joint ventures at February 28, 2019 and November 30, 2018 were unconsolidated and accounted for under the equity method because we did not have a controlling financial interest.

Land Option Contracts and Other Similar Contracts. In the ordinary course of our business, we enter into land option contracts and other similar contracts with third parties and unconsolidated entities to acquire rights to land for the construction of homes. Under these contracts, we typically make a specified option payment or earnest money deposit in consideration for the right to purchase land in the future, usually at a predetermined price. We analyze each of our land option contracts and other similar contracts under the variable interest model to determine whether the land seller is a VIE and, if so, whether we are the primary beneficiary. Although we do not have legal title to the underlying land, we are required to consolidate a VIE if we are the primary beneficiary. As a result of our analyses, we determined that as of February 28, 2019 and November 30, 2018, we were not the primary beneficiary of any VIEs from which we have acquired rights to land under land option contracts and other similar contracts. We perform ongoing reassessments of whether we are the primary beneficiary of a VIE.

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

	February 28, 2019				November 30, 2018
	Cash Deposits		Aggregate Purchase Price		Cash Deposits		Aggregate Purchase Price
Unconsolidated VIEs	$	22,733	$	758,458	$	26,542	$	784,334
Other land option contracts and other similar contracts	27,069		475,740		27,288		586,904
Total	$	49,802	$	1,234,198	$	53,830	$	1,371,238

In addition to the cash deposits presented in the table above, our exposure to loss related to our land option contracts and other similar contracts with third parties and unconsolidated entities consisted of pre-acquisition costs of $43.6 million at February 28, 2019 and $46.9 million at November 30, 2018. These pre-acquisition costs and cash deposits were included in inventories in our consolidated balance sheets.

For land option contracts and other similar contracts where the land seller entity is not required to be consolidated under the variable interest model, we consider whether such contracts should be accounted for as financing arrangements. Land option contracts and other similar contracts that may be considered financing arrangements include those we enter into with third-party land financiers or developers in conjunction with such third parties acquiring a specific land parcel(s) on our behalf, at our direction, and those with other landowners where we or our designee make improvements to the optioned land parcel(s) during the applicable option period. For these land option contracts and other similar contracts, we record the remaining purchase price of the associated land parcel(s) in inventories in our consolidated balance sheets with a corresponding financing obligation if we determine that we are effectively compelled to exercise the option to purchase the land parcel(s). In making this determination with respect to a land option contract or other similar contract, we consider the non-refundable deposit(s) we have made and any non-reimbursable expenditures we have incurred for land improvement activities or other items up to the assessment date; additional costs associated with abandoning the contract; and our commitments, if any, to incur non-reimbursable costs associated with the contract. As a result of our evaluations of land option contracts and other similar contracts for financing arrangements, we recorded inventories in our consolidated balance sheets, with a corresponding increase to accrued expenses and other liabilities, of $5.5 million at February 28, 2019 and $21.8 million at November 30, 2018.

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Investments in Unconsolidated Joint Ventures

3 Months Ended

Feb. 28, 2019

Equity Method Investments and Joint Ventures [Abstract]

Investments in Unconsolidated Joint Ventures

Investments in Unconsolidated Joint Ventures

We have investments in unconsolidated joint ventures that conduct land acquisition, land development and/or other homebuilding activities in various markets where our homebuilding operations are located. We and our unconsolidated joint venture partners make initial and/or ongoing capital contributions to these unconsolidated joint ventures, typically on a pro rata basis, according to our respective equity interests. The obligations to make capital contributions are governed by each such unconsolidated joint venture’s respective operating agreement and related governing documents. For distributions we receive from these unconsolidated joint ventures, we have elected to use the cumulative earnings approach for our consolidated statements of cash flows. Under the cumulative earnings approach, distributions up to the amount of cumulative equity in earnings recognized are treated as returns on investment within operating cash flows and those in excess of that amount are treated as returns of investment within investing cash flows.

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 (losses) until a home sale is closed and title passes to a homebuyer, at which time we account for those earnings (losses) as a reduction (increase) to the cost of purchasing the land from the unconsolidated joint venture. We defer recognition of our share of such unconsolidated joint venture losses only to the extent profits are to be generated from the sale of the home to a homebuyer.

We share in the earnings (losses) of these unconsolidated joint ventures generally in accordance with our respective equity interests. In some instances, we recognize earnings (losses) related to our investment in an unconsolidated joint venture that differ from our equity interest in the unconsolidated joint venture. This typically arises from our deferral of the unconsolidated joint venture’s earnings (losses) from land sales to us, or other items.

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

	Three Months Ended February 28,
	2019			2018
Revenues	$	12,192		$	8,797
Construction and land costs	(12,220		)	(8,816		)
Other expense, net	(628		)	(1,372		)
Loss	$	(656	)	$	(1,391	)

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

	February 28, 2019		November 30, 2018
Assets
Cash	$	16,598	$	18,567
Inventories	127,377		131,074
Other assets	446		530
Total assets	$	144,421	$	150,171
Liabilities and equity
Accounts payable and other liabilities	$	11,254	$	11,374
Notes payable (a)	22,045		17,956
Equity	111,122		120,841
Total liabilities and equity	$	144,421	$	150,171

(a) As of February 28, 2019 and November 30, 2018, one of our unconsolidated joint ventures had a construction loan agreement with a third-party lender to finance its land development activities, with the outstanding debt secured by the underlying property and related project assets and non-recourse to us. All of the outstanding secured debt at February 28, 2019 is scheduled to mature in February 2020. None of our other unconsolidated joint ventures had outstanding debt at February 28, 2019 or November 30, 2018.

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

	February 28, 2019		November 30, 2018
Number of investments in unconsolidated joint ventures	6		6
Investments in unconsolidated joint ventures	$	57,134	$	61,960
Number of unconsolidated joint venture lots controlled under land option contracts and other similar contracts	25		36

We and our partner in the unconsolidated joint venture that has the above-noted outstanding construction loan agreement at February 28, 2019 provide certain guarantees and indemnities to the lender, including a guaranty to complete the construction of improvements for the project; a guaranty against losses the lender suffers due to certain bad acts or failures to act by the unconsolidated joint venture or its partners; and an indemnity of the lender from environmental issues. Our actual responsibility under the foregoing guaranty and indemnity obligations is limited to our pro rata interest in the unconsolidated joint venture. We do not have a guaranty or any other obligation to repay or to support the value of the collateral underlying the outstanding secured debt. However, various financial and non-financial covenants apply with respect to the outstanding secured debt and the related guaranty and indemnity obligations, and a failure to comply with such covenants could result in a default and cause the lender to seek to enforce such guaranty and indemnity obligations, if and as may be applicable. As of February 28, 2019, we were in compliance with the applicable terms of our relevant covenants with respect to the construction loan agreement. We do not believe that our existing exposure under our guaranty and indemnity obligations related to the outstanding secured debt is material to our consolidated financial statements.

We are committed to purchase all 25 unconsolidated joint venture lots controlled under land option and other similar contracts at February 28, 2019 from one of our unconsolidated joint ventures. The purchase will be made in quarterly takedowns over the next year for an aggregate purchase price of $11.8 million under agreements that we entered into with the unconsolidated joint venture in 2016.

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Property and Equipment, Net Property and Equipment, Net

3 Months Ended

Feb. 28, 2019

Property, Plant and Equipment [Abstract]

Property and Equipment, Net

Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

	February 28, 2019			November 30, 2018
Computer software and equipment	$	22,953		$	20,940
Model furnishings and sales office improvements (a)	61,747			—
Leasehold improvements, office furniture and equipment (b)	15,385			23,491
Subtotal	100,085			44,431
Less accumulated depreciation (a)	(44,755		)	(20,148		)
Total	$	55,330		$	24,283

(a) The balance at February 28, 2019 reflects a change in the classification of certain community sales office and marketing- and model home-related costs and related accumulated amortization from inventories to property and equipment, net due to our adoption of ASC 606 effective December 1, 2018, as described in Note 1 – Basis of Presentation and Significant Accounting Policies.

(b) In January 2019, we completed the sale and leaseback of our office building in San Antonio, Texas. The sale generated net cash proceeds of $5.8 million and a gain of $2.2 million, which will be recognized on a straight-line basis over a 10-year lease term until our adoption of ASU 2016-02, when the remaining gain will be recognized as a transition adjustment to retained earnings.

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Other Assets

3 Months Ended

Feb. 28, 2019

Other Assets [Abstract]

Other Assets

Other Assets

Other assets consisted of the following (in thousands):

	February 28, 2019		November 30, 2018
Cash surrender value of corporate-owned life insurance contracts	$	74,649	$	73,721
Prepaid expenses and other	14,911		9,379
Total	$	89,560	$	83,100

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Accrued Expenses and Other Liabilities

3 Months Ended

Feb. 28, 2019

Payables and Accruals [Abstract]

Accrued Expenses and Other Liabilities

Accrued Expenses and Other Liabilities

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

	February 28, 2019		November 30, 2018
Self-insurance and other litigation liabilities	$	297,361	$	283,651
Employee compensation and related benefits	101,444		148,549
Warranty liability	84,191		82,490
Accrued interest payable	46,498		31,180
Inventory-related obligations (a)	23,319		40,892
Customer deposits	20,122		19,491
Real estate and business taxes	9,529		16,639
Other	48,917		43,376
Total	$	631,381	$	666,268

(a) Represents liabilities for financing arrangements discussed in Note 8 – Variable Interest Entities, as well as liabilities for fixed or determinable amounts associated with tax increment financing entity (“TIFE”) assessments. As homes are delivered, our obligation to pay the remaining TIFE assessments associated with each underlying lot is transferred to the homebuyer. As such, these assessment obligations will be paid by us only to the extent we do not deliver homes on applicable lots before the related TIFE obligations mature.

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Income Taxes

3 Months Ended

Feb. 28, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income Tax Expense. Our income tax expense and effective tax rates were as follows (dollars in thousands):

	Three Months Ended February 28,
	2019			2018
Income tax expense	$	4,500		$	117,300
Effective tax rate	13.0		%	254.8		%

Our income tax expense and effective tax rate for the three months ended February 28, 2019 included the favorable effects of a $3.3 million reversal of a deferred tax asset valuation allowance and $2.0 million of excess tax benefits related to stock-based compensation, which were partly offset by $.8 million of other items.

Our income tax expense and effective tax rate for the three months ended February 28, 2018 included a non-cash charge of $111.2 million for the estimated impacts of the TCJA, which was enacted into law on December 22, 2017. Of the total charge, $107.9 million related to the accounting re-measurement of our deferred tax assets based on the reduction in the federal corporate income tax rate from 35% to 21%, effective January 1, 2018, under the TCJA. The remaining $3.3 million was due to our establishing a federal deferred tax asset valuation allowance for the sequestration of refundable alternative minimum tax (“AMT”) credits. Our income tax expense and effective tax rate for the three months ended February 28, 2018 also reflected the favorable net impacts of federal energy tax credits of $4.0 million and excess tax benefits of $2.2 million related to stock-based compensation. The federal energy tax credits for the three-month period ended February 28, 2018 resulted from legislation enacted on February 9, 2018, which among other things, extended the availability of a business tax credit for building new energy efficient homes through December 31, 2017. Prior to this legislation, the tax credit expired on December 31, 2016.

Deferred Tax Asset Valuation Allowance. We evaluate our deferred tax assets quarterly to determine if adjustments to our valuation allowance are required based on the consideration of all available positive and negative evidence using a “more likely than not” standard with respect to whether deferred tax assets will be realized. Our evaluation considers, among other factors, our historical operating results, our expectation of future profitability, the duration of the applicable statutory carryforward periods, and conditions in the housing market and the broader economy. The ultimate realization of our deferred tax assets depends primarily on our ability to generate future taxable income during the periods in which the related deferred tax assets become deductible. The value of our deferred tax assets depends on applicable income tax rates.

Our deferred tax assets of $453.6 million as of February 28, 2019 and $465.4 million as of November 30, 2018 were partly offset by valuation allowances of $20.3 million and $23.6 million, respectively. During the three-month period ended February 28, 2019, we reversed the above-mentioned $3.3 million federal deferred tax asset valuation allowance due to the Internal Revenue Service’s announcement in January 2019 that refundable AMT credits will not be subject to sequestration for taxable years beginning after December 31, 2017. The deferred tax asset valuation allowances as of February 28, 2019 and November 30, 2018 were primarily related to certain state net operating losses (“NOLs”) that had not met the “more likely than not” realization standard at those dates. Based on our evaluation of our deferred tax assets as of February 28, 2019, we determined that most of our deferred tax assets would be realized. Therefore, other than the $3.3 million reversal discussed above, no adjustments to our deferred tax valuation allowance were needed for the three months endedFebruary 28, 2019.

We will continue to evaluate both the positive and negative evidence on a quarterly basis in determining the need for a valuation allowance with respect to our deferred tax assets. The accounting for deferred tax assets is based upon estimates of future results. Changes in positive and negative evidence, including differences between estimated and actual results, could result in changes in the valuation of our deferred tax assets that could have a material impact on our consolidated financial statements. Changes in existing federal and state tax laws and corporate income tax rates could also affect actual tax results and the realization of deferred tax assets over time.

Unrecognized Tax Benefits. As of February 28, 2019 and November 30, 2018, we had no gross unrecognized tax benefits (including interest and penalties). The fiscal years ending 2015 and later remain open to federal examinations, while 2014 and later remain open to state examinations.

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Notes Payable

3 Months Ended

Feb. 28, 2019

Debt Disclosure [Abstract]

Notes Payable

Notes Payable

Notes payable consisted of the following (in thousands):

	February 28, 2019		November 30, 2018
Mortgages and land contracts due to land sellers and other loans	$	12,018	$	40,038
4.75% Senior notes due May 15, 2019	399,764		399,483
8.00% Senior notes due March 15, 2020	348,199		347,790
7.00% Senior notes due December 15, 2021	447,554		447,359
7.50% Senior notes due September 15, 2022	347,861		347,731
7.625% Senior notes due May 15, 2023	352,081		248,074
6.875% Senior notes due June 15, 2027	296,112		—
1.375% Convertible senior notes due February 1, 2019	—		229,788
Total	$	2,203,589	$	2,060,263

The carrying amounts of our senior notes listed above are net of unamortized debt issuance costs, premiums and discounts, which totaled $8.4 million at February 28, 2019 and $9.8 million at November 30, 2018.

Unsecured Revolving Credit Facility. We have a $500.0 million unsecured revolving credit facility with various banks (“Credit Facility”) that will mature on July 27, 2021. The Credit Facility contains an uncommitted accordion feature under which the aggregate principal amount of available loans can be increased to a maximum of $600.0 million under certain conditions, including obtaining additional bank commitments. The Credit Facility also contains a sublimit of $250.0 million for the issuance of letters of credit. Interest on amounts borrowed under the Credit Facility is payable at least quarterly in arrears at a rate based on either a Eurodollar or a base rate, plus a spread that depends on our consolidated leverage ratio (“Leverage Ratio”), as defined under the Credit Facility. The Credit Facility also requires the payment of a commitment fee at a per annum rate ranging from .30% to .45% of the unused commitment, based on our 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 a consolidated interest coverage ratio (“Interest Coverage Ratio”) or minimum level of liquidity, each as defined therein. The amount of the Credit Facility available for cash borrowings or the issuance of letters of credit depends on the total cash borrowings and letters of credit outstanding under the Credit Facility and the maximum available amount under the terms of the Credit Facility. As of February 28, 2019, we had no cash borrowings and $33.1 million of letters of credit outstanding under the Credit Facility. Therefore, as of February 28, 2019, we had $466.9 million available for cash borrowings under the Credit Facility, with up to $216.9 million of that amount available for the issuance of letters of credit.

Letter of Credit Facilities. On February 13, 2019,we entered into a new unsecured letter of credit agreement with a financial institution (“New LOC Facility”). Under the New LOC Facility, which expires on February 13, 2022, we may issue up to $50.0 million of letters of credit. We maintain the New LOC Facility and a cash-collateralized letter of credit facility (together, the “LOC Facilities”) to obtain letters of credit from time to time in the ordinary course of operating our business. As of February 28, 2019, we had $.3 million letters of credit outstanding under the LOC Facilities. We had no letters of credit outstanding under the LOC Facilities at November 30, 2018.

Mortgages and Land Contracts Due to Land Sellers and Other Loans. As of February 28, 2019, inventories having a carrying value of $138.2 million were pledged to collateralize mortgages and land contracts due to land sellers and other loans.

Shelf Registration. We have an automatically effective universal shelf registration statement that was filed with the SEC on July 14, 2017 (“2017 Shelf Registration”). Issuances of securities under our 2017 Shelf Registration require the filing of a prospectus supplement identifying the amount and terms of the securities to be issued. Our ability to issue securities is subject to market conditions and other factors impacting our borrowing capacity.

Senior Notes. On February 1, 2019, we repaid the entire $230.0 million in aggregate principal amount of our 1.375% Convertible Senior Notes due 2019 at their maturity.

On February 20, 2019, pursuant to the 2017 Shelf Registration, we completed concurrent public offerings of $300.0 million in aggregate principal amount of 6.875% senior notes due 2027 (“6.875% Senior Notes due 2027”) at 100.000% of their aggregate principal amount, and an additional $100.0 million in aggregate principal amount of our existing series of 7.625% senior notes due 2023 (“7.625% Senior Notes due 2023”) at 105.250% of their aggregate principal amount plus accrued interest from November 15, 2018 (the last date on which interest was paid on the existing 2023 senior notes) to the date of delivery. Net proceeds from these offerings totaled $400.0 million, after deducting the underwriting discount and our expenses relating to the offerings, and were applied towards the optional redemption of the entire $400.0 million in aggregate principal amount of our 4.75% senior notes due 2019 (“4.75% Senior Notes due 2019”) before their May 15, 2019 maturity date, which redemption we announced on February 5, 2019 and completed on March 8, 2019.

All of our senior notes outstanding at February 28, 2019 and November 30, 2018 represent senior unsecured obligations that are guaranteed on an unsecured basis by certain of our subsidiaries that guarantee our obligations under the Credit Facility and rank equally in right of payment with all of our other unsecured and unsubordinated indebtedness. Interest on each of these senior notes is payable semi-annually.

The indenture governing our senior notes does not contain any financial covenants. Subject to specified exceptions, the indenture contains certain restrictive covenants that, among other things, limit our ability to incur secured indebtedness, or engage in sale and leaseback transactions involving property above a certain specified value. In addition, the indenture contains certain limitations related to mergers, consolidations, and sales of assets.

As of February 28, 2019, we were in compliance with the applicable terms of all our covenants and other requirements under the Credit Facility, the senior notes, the indenture, and the mortgages and land contracts due to land sellers and other loans. Our ability to access the Credit Facility for cash borrowings and letters of credit and our ability to secure future debt financing depend, in part, on our ability to remain in such compliance.

As of February 28, 2019, principal payments on senior notes, mortgages and land contracts due to land sellers and other loans are due as follows: 2019 – $412.0 million; 2020 – $350.0 million; 2021 – $0; 2022 – $800.0 million; 2023 – $350.0 million; and thereafter – $300.0 million.

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Fair Value Disclosures

3 Months Ended

Feb. 28, 2019

Fair Value Disclosures [Abstract]

Fair Value Disclosures

Fair Value Disclosures

Fair value measurements of assets and liabilities are categorized based on the following hierarchy:

Level 1	Fair value determined based on quoted prices in active markets for identical assets or liabilities.
Level 2	Fair value determined using significant observable inputs, such as quoted prices for similar assets or liabilities or quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, or inputs that are derived principally from or corroborated by observable market data, by correlation or other means.
Level 3	Fair value determined using significant unobservable inputs, such as pricing models, discounted cash flows, or similar techniques.

Fair value measurements are used for inventories on a nonrecurring basis when events and circumstances indicate that their carrying value is not recoverable. The following table presents the fair value hierarchy, pre-impairment value, inventory impairment charges and fair value for our assets measured at fair value on a nonrecurring basis for the three months endedFebruary 28, 2019 and the year ended November 30, 2018 (in thousands):

		February 28, 2019							November 30, 2018
Description	Fair Value Hierarchy	Pre-Impairment Value		Inventory Impairment Charges			Fair Value (a)		Pre-Impairment Value		Inventory Impairment Charges			Fair Value (a)
Inventories	Level 3	$	9,917	$	(3,196	)	$	6,721	$	70,156	$	(26,104	)	$	44,052

(a) Amounts represent the aggregate fair value for real estate assets impacted by inventory impairment charges during the applicable period as of the date the fair value measurements were made. The carrying value for these real estate assets may have subsequently increased or decreased from the fair value reflected due to activity that has occurred since the measurement date.

The fair values for inventories that were determined using Level 3 inputs were based on the estimated future net cash flows discounted for inherent risk associated with each underlying asset.

The following table presents the fair value hierarchy, carrying values and estimated fair values of our financial instruments, except those for which the carrying values approximate fair values (in thousands):

		February 28, 2019				November 30, 2018
	Fair Value Hierarchy	Carrying Value (a)		Estimated Fair Value		Carrying Value (a)		Estimated Fair Value
Financial Liabilities:
Senior notes	Level 2	$	2,191,571	$	2,298,750	$	1,790,437	$	1,853,438
Convertible senior notes	Level 2	—		—		229,788		229,425

(a) The carrying values for the senior notes and convertible senior notes, as presented, include unamortized debt issuance costs. Debt issuance costs are not factored into the estimated fair values of these notes.

The fair values of our senior notes and convertible senior notes are generally estimated based on quoted market prices for these instruments. The carrying values reported for cash and cash equivalents, and mortgages and land contracts due to land sellers and other loans approximate fair values. The carrying value of corporate-owned life insurance is based on the cash surrender value of the policies and, accordingly, approximates fair value.

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Commitments and Contingencies

3 Months Ended

Feb. 28, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Commitments and contingencies include typical obligations of homebuilders for the completion of contracts and those incurred in the ordinary course of business.

Warranty. We provide a limited warranty on all of our homes. The specific terms and conditions of our limited warranty program vary depending upon the markets in which we do business. We generally provide a structural warranty of 10 years, a warranty on electrical, heating, cooling, plumbing and certain other building systems each varying from two to five years based on geographic market and state law, and a warranty of one year for other components of the home. Our limited warranty program is ordinarily how we respond to and account for homeowners’ requests to local division offices seeking repairs of certain conditions or defects, including claims where we could have liability under applicable state statutes or tort law for a defective condition in or damages to a home. Our warranty liability covers our costs of repairs associated with homeowner claims made under our limited warranty program. These claims are generally made directly by a homeowner and involve their individual home.

We estimate the costs that may be incurred under each limited warranty and record a liability in the amount of such costs at the time the revenue associated with the sale of each home is recognized. Our primary assumption in estimating the amounts we accrue for warranty costs is that historical claims experience is a strong indicator of future claims experience. Factors that affect our warranty liability include the number of homes delivered, historical and anticipated rates of warranty claims, and cost per claim. We periodically assess the adequacy of our accrued warranty liability, which is included in accrued expenses and other liabilities in our consolidated balance sheets, and adjust the amount as necessary based on our assessment. Our assessment includes the review of our actual warranty costs incurred to identify trends and changes in our warranty claims experience, and considers our home construction quality and customer service initiatives and outside events. While we believe the warranty liability currently reflected in our consolidated balance sheets to be adequate, unanticipated changes or developments in the legal environment, local weather, land or environmental conditions, quality of materials or methods used in the construction of homes or customer service practices and/or our warranty claims experience could have a significant impact on our actual warranty costs in future periods and such amounts could differ significantly from our current estimates.

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

	Three Months Ended February 28,
	2019			2018
Balance at beginning of period	$	82,490		$	69,798
Warranties issued	6,294			7,764
Payments	(4,593		)	(5,717		)
Balance at end of period	$	84,191		$	71,845

Guarantees. In the normal course of our business, we issue certain representations, warranties and guarantees related to our home sales and land sales. Based on historical experience, we do not believe any potential liability with respect to these representations, warranties or guarantees would be material to our consolidated financial statements.

Self-Insurance. We maintain, and require the majority of our independent subcontractors to maintain, general liability insurance (including construction defect and bodily injury coverage) and workers’ compensation insurance. These insurance policies protect us against a portion of our risk of loss from claims related to our homebuilding activities, subject to certain self-insured retentions, deductibles and other coverage limits. We also maintain certain other insurance policies. In Arizona, California, Colorado and Nevada, our subcontractors’ general liability insurance primarily takes the form of a wrap-up policy under a program where eligible independent subcontractors are enrolled as insureds on each community. Enrolled subcontractors contribute toward the cost of the insurance and agree to pay a contractual amount in the future if there is a claim related to their work. To the extent provided under the wrap-up program, we absorb the enrolled subcontractors’ general liability associated with the work performed on our homes within the applicable community as part of our overall general liability insurance and our self-insurance.

We self-insure a portion of our overall risk through the use of a captive insurance subsidiary, which provides coverage for our exposure to construction defect, bodily injury and property damage claims and related litigation or regulatory actions, up to certain limits. Our self-insurance liability generally covers the costs of settlements and/or repairs, if any, as well as our costs to defend and resolve the following types of claims:

• Construction defect: Construction defect claims, which represent the largest component of our self-insurance liability, typically originate through a legal or regulatory process rather than directly by a homeowner and involve the alleged occurrence of a condition affecting two or more homes within the same community, or they involve a common area or homeowners association property within a community. These claims typically involve higher costs to resolve than individual homeowner warranty claims, and the rate of claims is highly variable.

• Bodily injury: Bodily injury claims typically involve individuals (other than our employees) who claim they were injured while on our property or as a result of our operations.

• Property damage: Property damage claims generally involve claims by third parties for alleged damage to real or personal property as a result of our operations. Such claims may occasionally include those made against us by owners of property located near our communities.

Our self-insurance liability at each reporting date represents the estimated costs of reported claims, claims incurred but not yet reported, and claim adjustment expenses. The amount of our self-insurance liability is based on an analysis performed by a third-party actuary that uses our historical claim and expense data, as well as industry data to estimate these overall costs. Key assumptions used in developing these estimates include claim frequencies, severities and resolution patterns, which can occur over an extended period of time. These estimates are subject to variability due to the length of time between the delivery of a home to a homebuyer and when a construction defect claim is made, and the ultimate resolution of such claim; uncertainties regarding such claims relative to our markets and the types of product we build; and legal or regulatory actions and/or interpretations, among other factors. Due to the degree of judgment involved and the potential for variability in these underlying assumptions, our actual future costs could differ from those estimated. In addition, changes in the frequency and severity of reported claims and the estimates to resolve claims can impact the trends and assumptions used in the actuarial analysis, which could be material to our consolidated financial statements. Though state regulations vary, construction defect claims are reported and resolved over a long period of time, which can extend for 10 years or more. As a result, the majority of the estimated self-insurance liability based on the actuarial analysis relates to claims incurred but not yet reported. Therefore, adjustments related to individual existing claims generally do not significantly impact the overall estimated liability. Adjustments to our liabilities related to homes delivered in prior years are recorded in the period in which a change in our estimate occurs.

Our self-insurance liability is presented on a gross basis without consideration of insurance recoveries and amounts we have paid on behalf of and expect to recover from other parties, if any. Estimated probable insurance and other recoveries of $57.2 million and $56.9 million are included in receivables in our consolidated balance sheets at February 28, 2019 and November 30, 2018, respectively. These self-insurance recoveries are principally based on actuarially determined amounts and depend on various factors, including, among other things, the above-described claim cost estimates, our insurance policy coverage limits for the applicable policy year(s), historical third-party recovery rates, insurance industry practices, the regulatory environment, and legal precedent, and are subject to a high degree of variability from period to period. Because of the inherent uncertainty and variability in these assumptions, our actual insurance recoveries could differ significantly from amounts currently estimated.

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

	Three Months Ended February 28,
	2019			2018
Balance at beginning of period	$	176,841		$	177,695
Self-insurance expense (a)	3,747			4,401
Payments (b)	(2,726		)	(1,401		)
Balance at end of period	$	177,862		$	180,695

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

(b) Includes net changes in estimated probable insurance and other recoveries, which are recorded in receivables, to present our self-insurance liability on a gross basis.

For most of our claims, there is no interaction between our warranty liability and self-insurance liability. Typically, if a matter is identified at its outset as either a warranty or self-insurance claim, it remains as such through its resolution. However, there can be instances of interaction between the liabilities, such as where individual homeowners in a community separately request warranty repairs to their homes to address a similar condition or issue and subsequently join together to initiate, or potentially initiate, a legal process with respect to that condition or issue and/or the repair work we have undertaken. In these instances, the claims and related repair work generally are initially covered by our warranty liability, and the costs associated with resolving the legal matter (including any additional repair work) are covered by our self-insurance liability.

The payments we make in connection with claims and related repair work, whether covered within our warranty liability and/or our self-insurance liability, may be recovered from our insurers to the extent such payments exceed the self-insured retentions or deductibles under our general liability insurance policies. Also, in certain instances, in the course of resolving a claim, we pay amounts in advance of and/or on behalf of a subcontractor(s) or their insurer(s) and believe we will be reimbursed for such payments. Estimates of all such amounts, if any, are recorded as receivables in our consolidated balance sheets when any such recovery is considered probable. Such receivables associated with our warranty and other claims totaled $4.1 million at February 28, 2019 and $4.8 million at November 30, 2018. We believe the collection of these receivables is probable based on our history of collections for similar claims.

Northern California Claims. In the 2017 third quarter, we received claims from a homeowners association alleging approximately $100.0 million of damages from purported construction defects at a completed townhome community in Northern California. We continue to investigate these allegations, and to exchange information with the association, whose claims for damages have increased to $142.0 million in December 2018. Arbitral discovery begins in the second quarter of 2019 and we will be evaluating information revealed in discovery in the second and third quarters of 2019. At February 28, 2019, we had an accrual for our estimated probable loss in this matter and a receivable for estimated probable insurance recoveries. While it is reasonably possible that our loss could exceed the amount accrued and our recoveries could be less than the amount recorded, at this stage of our investigation into these allegations, we are unable to estimate the total amount of the loss in excess of the accrued amount and/or associated with a shortfall in the recoveries that is reasonably possible. Our investigation has involved identifying potentially responsible parties, including insurers, to pay for or perform any necessary repairs. In September 2018, a binding arbitration proceeding on this matter was scheduled to begin on July 1, 2019.

Florida Chapter 558 Actions (Individual and Homeowner Association Claims). We and certain of our subcontractors have received a growing number of claims from attorneys on behalf of individual owners of our homes and/or homeowners’ associations that allege, pursuant to Chapter 558 of the Florida Statutes, various construction defects, with most relating to stucco and water-intrusion issues. The claims primarily involve homes in our Jacksonville, Orlando, and Tampa operations. Under Chapter 558, homeowners must serve written notice of a construction defect(s) and provide the served construction and/or design contractor(s) with an opportunity to respond to the noticed issue(s) before they can file a lawsuit. Although we have resolved many of these claims without litigation, and a number of others have been resolved with applicable subcontractors or their insurers covering the related costs, as of February 28, 2019, we had approximately 560 outstanding noticed claims, and some are scheduled for trial over the next few quarters and beyond. In addition, some of our subcontractors’ insurers in some of these cases have informed us of their inability to continue to pay claims-related costs. At February 28, 2019, we had an accrual for our estimated probable loss for these matters and a receivable for estimated probable insurance recoveries. While it is reasonably possible that our loss could exceed the amount accrued and our recoveries could be less than the amount recorded, at this time, we are unable to estimate the total amount of the loss in excess of the accrued amount and/or associated with a shortfall in the recoveries that is reasonably possible.

Performance Bonds and Letters of Credit. We are often required to provide to various municipalities and other government agencies performance bonds and/or letters of credit to secure the completion of our projects and/or in support of obligations to build community improvements such as roads, sewers, water systems and other utilities, and to support similar development activities by certain of our unconsolidated joint ventures. At February 28, 2019, we had $707.6 million of performance bonds and $33.4 million of letters of credit outstanding. At November 30, 2018, we had $689.3 million of performance bonds and $28.0 million of letters of credit outstanding. If any such performance bonds or letters of credit are called, we would be obligated to reimburse the issuer of the performance bond or letter of credit. We do not believe that a material amount of any currently outstanding performance bonds or letters of credit will be called. Performance bonds do not have stated expiration dates. Rather, we are released from the performance bonds as the underlying performance is completed. The expiration dates of some letters of credit issued in connection with community improvements coincide with the expected completion dates of the related projects or obligations. Most letters of credit, however, are issued with an initial term of one year and are typically extended on a year-to-year basis until the related performance obligations are completed.

Land Option Contracts and Other Similar Contracts. In the ordinary course of our business, we enter into land option contracts and other similar contracts to acquire rights to land for the construction of homes. At February 28, 2019, we had total cash deposits of $49.8 million to purchase land having an aggregate purchase price of $1.23 billion. Our land option contracts and other similar contracts generally do not contain provisions requiring our specific performance.

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Legal Matters

3 Months Ended

Feb. 28, 2019

Commitments and Contingencies Disclosure [Abstract]

Legal Matters

Legal Matters

We are involved in litigation and regulatory proceedings incidental to our business that are in various procedural stages. We believe that the accruals we have recorded for probable and reasonably estimable losses with respect to these proceedings are adequate and that, as of February 28, 2019, it was not reasonably possible that an additional material loss had been incurred in an amount in excess of the estimated amounts already recognized or disclosed 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. Our accruals for litigation and regulatory proceedings are presented on a gross basis without consideration of recoveries and amounts we have paid on behalf of and expect to recover from other parties, if any. Estimates of recoveries and amounts we have paid on behalf of and expect to recover from other parties, if any, are recorded as receivables when such recoveries are considered probable. 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 an accrual had not been made, could be material to our consolidated financial statements.

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Stockholders' Equity

3 Months Ended

Feb. 28, 2019

Equity [Abstract]

Stockholders’ Equity

Stockholders’ Equity

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

	Three Months Ended February 28, 2019
	Number of Shares
	Common Stock	Grantor Stock Ownership Trust		Treasury Stock		Common Stock		Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Grantor Stock Ownership Trust			Treasury Stock			Total Stockholders’ Equity
Balance at November 30, 2018	119,196	(8,157	)	(24,113	)	$	119,196	$	753,570		$	1,897,168		$	(9,565	)	$	(88,472	)	$	(584,397	)	$	2,087,500
Cumulative effect of adoption of ASC 606	—	—		—		—		—			11,610			—			—			—			11,610
Net income	—	—		—		—		—			30,011			—			—			—			30,011
Dividends on common stock	—	—		—		—		—			(2,266		)	—			—			—			(2,266		)
Employee stock options/other	62	—		—		62		770			—			—			—			—			832
Stock awards	—	297		(151	)	—		(3,151		)	—			—			3,226			(75		)	—
Stock-based compensation	—	—		—		—		4,152			—			—			—			—			4,152
Tax payments associated with stock-based compensation awards	—	—		—		—		—			—			—			—			(3,342		)	(3,342		)
Balance at February 28, 2019	119,258	(7,860	)	(24,264	)	$	119,258	$	755,341		$	1,936,523		$	(9,565	)	$	(85,246	)	$	(587,814	)	$	2,128,497
	Three Months Ended February 28, 2018
	Number of Shares
	Common Stock	Grantor Stock Ownership Trust		Treasury Stock		Common Stock		Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Grantor Stock Ownership Trust			Treasury Stock			Total Stockholders’ Equity
Balance at November 30, 2017	117,946	(8,898	)	(22,021	)	$	117,946	$	727,483		$	1,735,695		$	(16,924	)	$	(96,509	)	$	(541,380	)	$	1,926,311
Net loss	—	—		—		—		—			(71,255		)	—			—			—			(71,255		)
Dividends on common stock	—	—		—		—		—			(2,322		)	—			—			—			(2,322		)
Employee stock options/other	268	—		—		268		2,678			—			—			—			—			2,946
Stock awards	—	438		(10	)	—		(4,551		)	—			—			4,749			(198		)	—
Stock-based compensation	—	—		—		—		3,829			—			—			—			—			3,829
Tax payments associated with stock-based compensation awards	—	—		(217	)	—		—			—			—			—			(6,787		)	(6,787		)
Balance at February 28, 2018	118,214	(8,460	)	(22,248	)	$	118,214	$	729,439		$	1,662,118		$	(16,924	)	$	(91,760	)	$	(548,365	)	$	1,852,722

On February 15, 2019, the management development and compensation committee of our board of directors approved the payout of 297,260 shares of our common stock in connection with the vesting of PSUs that were granted to certain employees on October 8, 2015. The shares paid out under the PSUs reflected our achievement of certain performance measures that were based on average return on invested capital and cumulative earnings per share, and revenue growth relative to a peer group of high-production public homebuilding companies over the three-year period from December 1, 2015 through November 30, 2018. Of the shares of common stock paid out, 147,382 shares or $3.3 million, were purchased by us in the 2019 first quarter to satisfy the recipients’ withholding taxes on the vesting of the PSUs. The shares purchased were not considered repurchases under the authorizations described below.

As of February 28, 2019, we were authorized to repurchase 2,193,947 shares of our common stock under a board of directors approved share repurchase program. We did not repurchase any of our common stock under this program in the three months ended February 28, 2019.

Unrelated to the share repurchase program, our board of directors authorized in 2014 the repurchase of not more than 680,000 shares of our outstanding common stock, and also authorized potential future grants of up to 680,000 stock payment awards under the KB Home 2014 Equity Incentive Plan (“2014 Plan”), in each case solely as necessary to settle outstanding stock appreciation rights awards granted under our Non-Employee Directors Compensation Plan. As of February 28, 2019, we have not repurchased any shares and no stock payment awards have been granted under the 2014 Plan pursuant to the board of directors authorization.

During each of the three-month periods ended February 28, 2019 and 2018, our board of directors declared, and we paid, a quarterly cash dividend of $.025 per share of common stock.

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Stock-Based Compensation

3 Months Ended

Feb. 28, 2019

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

Stock-Based Compensation

Stock-Based Compensation

Stock Options. We estimate the grant-date fair value of stock options using the Black-Scholes option-pricing model. The following table summarizes stock option transactions for the three months endedFebruary 28, 2019:

	Options		Weighted Average Exercise Price
Options outstanding at beginning of period	7,237,544		$	16.02
Granted	—		—
Exercised	(62,292	)	13.36
Cancelled	—		—
Options outstanding at end of period	7,175,252		$	16.04
Options exercisable at end of period	6,886,378		$	16.04

As of February 28, 2019, the weighted average remaining contractual life of stock options outstanding and stock options exercisable was 3.8 years and 3.6 years, respectively. There was $.1 million of total unrecognized compensation expense related to unvested stock option awards as of February 28, 2019 that is expected to be recognized over a weighted average period of 0.6 years. For the three months ended February 28, 2019, stock-based compensation expense was nominal compared to $.2 million for the three months ended February 28, 2018. The aggregate intrinsic values of stock options outstanding and stock options exercisable were $62.3 million and $60.4 million, respectively, at February 28, 2019. (The intrinsic value of a stock option is the amount by which the market value of a share of the underlying common stock exceeds the exercise price of the stock option.)

Other Stock-Based Awards. From time to time, we grant restricted stock and PSUs to various employees as a compensation benefit. We recognized total compensation expense of $4.1 million and $3.7 million for the three months ended February 28, 2019 and 2018, respectively, related to restricted stock and PSUs.

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Supplemental Disclosure to Consolidated Statements of Cash Flows

3 Months Ended

Feb. 28, 2019

Supplemental Cash Flow Information [Abstract]

Supplemental Disclosure to Consolidated Statements of Cash Flows

Supplemental Disclosure to Consolidated Statements of Cash Flows

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

	Three Months Ended February 28,
	2019			2018
Summary of cash and cash equivalents at end of period:
Homebuilding	$	511,690		$	560,255
Financial services	717			551
Total	$	512,407		$	560,806
Supplemental disclosures of cash flow information:
Interest paid, net of amounts capitalized	$	(15,318	)	$	(9,696	)
Income taxes paid	113			1,639

	Three Months Ended February 28,
	2019			2018
Supplemental disclosures of non-cash activities:
Decrease in inventories due to adoption of ASC 606	$	(35,288	)	$	—
Increase in property and equipment, net due to adoption of ASC 606	31,194			—
Increase (decrease) in consolidated inventories not owned	(16,262		)	8,466
Increase in inventories due to distributions of land and land development from an unconsolidated joint venture	1,946			2,699
Inventories acquired through seller financing	—			36,697

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Supplemental Guarantor Information

3 Months Ended

Feb. 28, 2019

Guarantees [Abstract]

Supplemental Guarantor Information

Supplemental Guarantor Information

Our obligations to pay principal, premium, if any, and interest on the senior notes and borrowings, if any, under the Credit Facility are guaranteed on a joint and several basis by certain of our subsidiaries (“Guarantor Subsidiaries”). The guarantees are full and unconditional and the Guarantor Subsidiaries are 100% owned by us. Pursuant to the terms of the indenture governing the senior notes and the terms of the Credit Facility, if any of the Guarantor Subsidiaries ceases to be a “significant subsidiary” as defined by Rule 1-02 of Regulation S-X using a 5% rather than a 10% threshold (provided that the assets of our non-guarantor subsidiaries do not in the aggregate exceed 10% of an adjusted measure of our consolidated total assets), it will be automatically and unconditionally released and discharged from its guaranty of the senior notes and the Credit Facility so long as all guarantees by such Guarantor Subsidiary of any other of our or our subsidiaries’ indebtedness are terminated at or prior to the time of such release. We have determined that separate, full financial statements of the Guarantor Subsidiaries would not be material to investors and, accordingly, supplemental financial information for the Guarantor Subsidiaries is presented.

The supplemental financial information for all periods presented below reflects the relevant subsidiaries that were Guarantor Subsidiaries as of February 28, 2019.

Condensed Consolidating Statements of Operations (in thousands)

	Three Months Ended February 28, 2019
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Total revenues	$	—		$	744,453		$	67,030		$	—		$	811,483
Homebuilding:
Revenues	$	—		$	744,453		$	64,335		$	—		$	808,788
Construction and land costs	—			(611,041		)	(59,814		)	—			(670,855		)
Selling, general and administrative expenses	(25,382		)	(75,540		)	(5,672		)	—			(106,594		)
Operating income (loss)	(25,382		)	57,872			(1,151		)	—			31,339
Interest income	1,014			—			91			—			1,105
Interest expense	(33,195		)	(321		)	(1,272		)	34,788			—
Intercompany interest	77,972			(41,738		)	(1,446		)	(34,788		)	—
Equity in loss of unconsolidated joint ventures	—			(406		)	—			—			(406		)
Homebuilding pretax income (loss)	20,409			15,407			(3,778		)	—			32,038
Financial services pretax income	—			—			2,473			—			2,473
Total pretax income (loss)	20,409			15,407			(1,305		)	—			34,511
Income tax expense	(700		)	(3,400		)	(400		)	—			(4,500		)
Equity in net income of subsidiaries	10,302			—			—			(10,302		)	—
Net income (loss)	$	30,011		$	12,007		$	(1,705	)	$	(10,302	)	$	30,011

	Three Months Ended February 28, 2018
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Total revenues	$	—		$	794,689		$	76,934		$	—		$	871,623
Homebuilding:
Revenues	$	—		$	794,689		$	74,516		$	—		$	869,205
Construction and land costs	—			(664,096		)	(65,382		)	—			(729,478		)
Selling, general and administrative expenses	(22,166		)	(67,117		)	(6,441		)	—			(95,724		)
Operating income (loss)	(22,166		)	63,476			2,693			—			44,003
Interest income	998			5			—			—			1,003
Interest expense	(37,972		)	(689		)	(1,283		)	39,944			—
Intercompany interest	72,846			(30,954		)	(1,948		)	(39,944		)	—
Equity in loss of unconsolidated joint ventures	—			(845		)	—			—			(845		)
Homebuilding pretax income (loss)	13,706			30,993			(538		)	—			44,161
Financial services pretax income	—			—			1,884			—			1,884
Total pretax income	13,706			30,993			1,346			—			46,045
Income tax expense	(44,700		)	(48,100		)	(24,500		)	—			(117,300		)
Equity in net loss of subsidiaries	(40,261		)	—			—			40,261			—
Net loss	$	(71,255	)	$	(17,107	)	$	(23,154	)	$	40,261		$	(71,255	)

Condensed Consolidating Balance Sheets (in thousands)

	February 28, 2019
	KB Home Corporate		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Total
Assets
Homebuilding:
Cash and cash equivalents	$	415,471	$	80,346	$	15,873	$	—		$	511,690
Receivables	4,291		228,879		80,439		—			313,609
Inventories	—		3,435,361		248,402		—			3,683,763
Investments in unconsolidated joint ventures	—		57,134		—		—			57,134
Property and equipment, net	20,363		32,002		2,965		—			55,330
Deferred tax assets, net	80,339		299,769		53,187		—			433,295
Other assets	84,083		3,419		2,058		—			89,560
	604,547		4,136,910		402,924		—			5,144,381
Financial services	—		—		29,275		—			29,275
Intercompany receivables	3,757,220		—		174,018		(3,931,238		)	—
Investments in subsidiaries	104,040		—		—		(104,040		)	—
Total assets	$	4,465,807	$	4,136,910	$	606,217	$	(4,035,278	)	$	5,173,656
Liabilities and stockholders’ equity
Homebuilding:
Accounts payable, accrued expenses and other liabilities	$	122,161	$	443,269	$	274,966	$	—		$	840,396
Notes payable	2,166,461		12,018		25,110		—			2,203,589
	2,288,622		455,287		300,076		—			3,043,985
Financial services	—		—		1,174		—			1,174
Intercompany payables	48,688		3,666,215		216,335		(3,931,238		)	—
Stockholders’ equity	2,128,497		15,408		88,632		(104,040		)	2,128,497
Total liabilities and stockholders’ equity	$	4,465,807	$	4,136,910	$	606,217	$	(4,035,278	)	$	5,173,656

	November 30, 2018
	KB Home Corporate		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Total
Assets
Homebuilding:
Cash and cash equivalents	$	429,977	$	114,269	$	30,113	$	—		$	574,359
Receivables	5,135		198,465		89,230		—			292,830
Inventories	—		3,314,386		268,453		—			3,582,839
Investments in unconsolidated joint ventures	—		61,960		—		—			61,960
Property and equipment, net	18,450		5,523		310		—			24,283
Deferred tax assets, net	84,564		303,669		53,587		—			441,820
Other assets	77,288		4,007		1,805		—			83,100
	615,414		4,002,279		443,498		—			5,061,191
Financial services	—		—		12,380		—			12,380
Intercompany receivables	3,569,422		—		158,760		(3,728,182		)	—
Investments in subsidiaries	67,657		—		—		(67,657		)	—
Total assets	$	4,252,493	$	4,002,279	$	614,638	$	(3,795,839	)	$	5,073,571
Liabilities and stockholders’ equity
Homebuilding:
Accounts payable, accrued expenses and other liabilities	$	126,176	$	584,321	$	213,816	$	—		$	924,313
Notes payable	1,995,115		40,038		25,110		—			2,060,263
	2,121,291		624,359		238,926		—			2,984,576
Financial services	—		—		1,495		—			1,495
Intercompany payables	43,702		3,377,920		306,560		(3,728,182		)	—
Stockholders’ equity	2,087,500		—		67,657		(67,657		)	2,087,500
Total liabilities and stockholders’ equity	$	4,252,493	$	4,002,279	$	614,638	$	(3,795,839	)	$	5,073,571

Condensed Consolidating Statements of Cash Flows (in thousands)

	Three Months Ended February 28, 2019
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net cash provided by (used in) operating activities	$	13,062		$	(337,286	)	$	126,014		$	—		$	(198,210	)
Cash flows from investing activities:
Contributions to unconsolidated joint ventures	—			(2,527		)	—			—			(2,527		)
Return of investments in unconsolidated joint ventures	—			5,001			—			—			5,001
Proceeds from sale of building	—			5,804			—			—			5,804
Purchases of property and equipment, net	(2,068		)	(2,032		)	(5,925		)	—			(10,025		)
Intercompany	(190,765		)	—			—			190,765			—
Net cash provided by (used in) investing activities	(192,833		)	6,246			(5,925		)	190,765			(1,747		)
Cash flows from financing activities:
Proceeds from issuance of debt	405,250			—			—			—			405,250
Payment of debt issuance costs	(5,209		)	—			—			—			(5,209		)
Repayment of senior notes	(230,000		)	—			—			—			(230,000		)
Borrowings under revolving credit facility	140,000			—			—			—			140,000
Repayments under revolving credit facility	(140,000		)	—			—			—			(140,000		)
Payments on mortgages and land contracts due to land sellers and other loans	—			(28,020		)	—			—			(28,020		)
Issuance of common stock under employee stock plans	832			—			—			—			832
Tax payments associated with stock-based compensation awards	(3,342		)	—			—			—			(3,342		)
Payments of cash dividends	(2,266		)	—			—			—			(2,266		)
Intercompany	—			325,137			(134,372		)	(190,765		)	—
Net cash provided by (used in) financing activities	165,265			297,117			(134,372		)	(190,765		)	137,245
Net decrease in cash and cash equivalents	(14,506		)	(33,923		)	(14,283		)	—			(62,712		)
Cash and cash equivalents at beginning of period	429,977			114,269			30,873			—			575,119
Cash and cash equivalents at end of period	$	415,471		$	80,346		$	16,590		$	—		$	512,407

	Three Months Ended February 28, 2018
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net cash provided by (used in) operating activities	$	3,066		$	(137,254	)	$	(7,492	)	$	—		$	(141,680	)
Cash flows from investing activities:
Contributions to unconsolidated joint ventures	—			(8,025		)	—			—			(8,025		)
Return of investments in unconsolidated joint ventures	—			1,099			—			—			1,099
Sale (purchases) of property and equipment, net	(1,776		)	(177		)	29			—			(1,924		)
Intercompany	(114,691		)	—			—			114,691			—
Net cash provided by (used in) investing activities	(116,467		)	(7,103		)	29			114,691			(8,850		)
Cash flows from financing activities:
Payments on mortgages and land contracts due to land sellers and other loans	—			(2,442		)	(920		)	—			(3,362		)
Issuance of common stock under employee stock plans	2,946			—			—			—			2,946
Tax payments associated with stock-based compensation awards	(6,787		)	—			—			—			(6,787		)
Payments of cash dividends	(2,322		)	—			—			—			(2,322		)
Intercompany	—			118,004			(3,313		)	(114,691		)	—
Net cash provided by (used in) financing activities	(6,163		)	115,562			(4,233		)	(114,691		)	(9,525		)
Net decrease in cash and cash equivalents	(119,564		)	(28,795		)	(11,696		)	—			(160,055		)
Cash and cash equivalents at beginning of period	575,193			104,120			41,548			—			720,861
Cash and cash equivalents at end of period	$	455,629		$	75,325		$	29,852		$	—		$	560,806

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Subsequent Event Subsequent Event

3 Months Ended

Feb. 28, 2019

Subsequent Events [Abstract]

Subsequent Event

22. Subsequent Event

On March 8, 2019, we optionally redeemed the entire $400.0 million in aggregate principal amount of our 4.75% Senior Notes due 2019, which were scheduled to mature on May 15, 2019.

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Basis of Presentation and Significant Accounting Policies (Policies)

3 Months Ended

Feb. 28, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Cash and Cash Equivalents and Restricted Cash

We consider all highly liquid short-term investments purchased with an original maturity of three months or less to be cash equivalents. Our cash equivalents totaled $367.3 million at February 28, 2019 and $385.2 million at November 30, 2018. At February 28, 2019 and November 30, 2018, the majority of our cash and cash equivalents was invested in interest-bearing bank deposit accounts.

Comprehensive Income (Loss)

Our comprehensive income was $30.0 million for the three months ended February 28, 2019. For the three months ended February 28, 2018, our comprehensive loss was $71.3 million. Our comprehensive income (loss) for each of the three-month periods ended February 28, 2019 and 2018 was equal to our net income (loss) for the respective periods.

Adoption of New Accounting Pronouncement and Recent Accounting Pronouncements

Adoption of New Accounting Pronouncement. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 supersedes the revenue guidance in Accounting Standards Codification Topic 605, “Revenue Recognition,” and most industry-specific revenue and cost guidance in the accounting standards codification, including some cost guidance related to construction-type and production-type contracts. The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

On December 1, 2018, we adopted ASU 2014-09 and its related amendments (collectively, “ASC 606”), using the modified retrospective method applied to contracts that were not completed as of the adoption date. Results for reporting periods beginning December 1, 2018 and after are presented under ASC 606, while results for prior reporting periods have not been adjusted and continue to be presented under the accounting guidance in effect for those periods. We recorded the following cumulative effect adjustment to increase beginning retained earnings as of December 1, 2018 (in thousands):

Balance Sheet	Balance at November 30, 2018		Adjustments due to ASC 606			Balance at December 1, 2018
Assets
Homebuilding:
Inventories	$	3,582,839	$	(35,288	)	$	3,547,551
Deferred tax assets, net	441,820		(4,024		)	437,796
Property and equipment, net	24,283		31,194			55,477
Financial services	12,380		19,728			32,108
Stockholders’ equity:
Retained earnings	1,897,168		11,610			1,908,778

Within our homebuilding operations, ASC 606 impacts the classification and timing of recognition in our consolidated financial statements of certain community sales office and other marketing- and model home-related costs, which we previously capitalized to inventories and amortized through construction and land costs with each home delivered in a community. With our adoption of ASC 606, these costs are capitalized to property and equipment and depreciated to selling, general and administrative expenses, or expensed to selling, general and administrative expenses as incurred. Upon adopting ASC 606, we reclassified these community sales office and other marketing- and model home-related costs and related accumulated amortization from inventories to either property and equipment, net or retained earnings in our consolidated balance sheet. Forfeited deposits related to cancelled home sale and land sale contracts, which were previously reflected as other income within selling, general and administrative expenses, are included in homebuilding revenues under ASC 606.

Within our financial services operations, ASC 606 impacts the timing of recognition in our consolidated financial statements of insurance commissions for insurance policy renewals. We previously recognized such insurance commissions as revenue when policies were renewed. With our adoption of ASC 606, insurance commissions for future policy renewals are estimated and recognized as revenue when the insurance carrier issues an initial insurance policy to our homebuyer, which generally occurs at the time each applicable home sale is closed. Upon adopting ASC 606, we recognized contract assets for the estimated future renewal commissions related to existing insurance policies as of December 1, 2018.

There were no significant changes to our business processes or internal control over financial reporting as a result of adopting ASC 606.

The impacts of adopting ASC 606 on our consolidated statement of operations for the three months ended February 28, 2019 and consolidated balance sheet as of February 28, 2019 were as follows (in thousands, except per share amounts):

	Three Months Ended February 28, 2019
Statement of Operations	As Reported			Amounts without the Adoption of ASC 606			Effect of Change Higher/(Lower)
Homebuilding:
Revenues	$	808,788		$	808,155		$	633
Construction and land costs	(670,855		)	(676,115		)	(5,260		)
Selling, general and administrative expenses	(106,594		)	(99,281		)	7,313
Operating income	31,339			32,759			(1,420		)
Financial services:
Revenues	2,695			2,590			105
Total pretax income	34,511			35,826			(1,315		)
Income tax expense	(4,500		)	(4,800		)	(300		)
Net income	30,011			31,026			(1,015		)
Diluted earnings per share	.31			.32			(.01		)

	As of February 28, 2019
Balance Sheet	As Reported		Amounts without the Adoption of ASC 606		Effect of Change Higher/(Lower)
Assets
Homebuilding:
Inventories	$	3,683,763	$	3,722,475	$	(38,712	)
Deferred tax assets, net	433,295		437,019		(3,724		)
Property and equipment, net	55,330		22,132		33,198
Financial services	29,275		9,442		19,833
Stockholders’ equity:
Retained earnings	1,936,523		1,925,928		10,595

As a result of our adoption of ASC 606, we updated our significant accounting policies as follows:

Homebuilding Revenues. We apply the following steps in determining the timing and amount of revenue to recognize: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract, if applicable; and (5) recognize revenue when (or as) we satisfy a performance obligation.

Our home sale transactions are made pursuant to contracts under which we typically have a single performance obligation to deliver a completed home to the homebuyer when closing conditions are met. Revenues from home sales are recognized when we have satisfied the performance obligation within the sales contract, which is generally when title to and possession of the home and the risks and rewards of ownership are transferred to the homebuyer on the closing date. Under our home sale contracts, we typically receive an initial cash deposit from the homebuyer at the time the sales contract is executed and receive the remaining consideration to which we are entitled, through a third-party escrow agent, at closing. Customer deposits related to sold but undelivered homes, totaled $20.1 million and $19.5 million at February 28, 2019 and November 30, 2018, respectively, and are included in accrued expenses and other liabilities.

Concurrent with the recognition of revenues in our consolidated statements of operations, sales incentives in the form of price concessions on the selling price of a home are recorded as a reduction of revenues, while the costs of sales incentives in the form of free or discounted products or services to homebuyers, including option upgrades and closing cost allowances used to cover a portion of the fees and costs charged to a homebuyer, are reflected as construction and land costs. Cash proceeds from home sale closings held by third-party escrow agents for our benefit, typically for less than five days, are considered deposits in-transit and classified as cash.

Land sale transactions are made pursuant to contracts under which we typically have a performance obligation(s) to deliver specified land parcels to the buyer when closing conditions are met. Revenues from land sales are recognized when we have satisfied the performance obligation(s) within the sales contract, which is generally when title to and possession of the land and the risks and rewards of ownership are transferred to the land buyer on the closing date. Under our land sale contracts, we typically receive an initial cash deposit from the buyer at the time the contract is executed and receive the remaining consideration to which we are entitled, through a third-party escrow agent, at closing. In limited circumstances where we provide financing to the land buyer, we determine that collectibility of the receivable is reasonably assured before we recognize revenue.

In instances where we have a material performance obligation(s) under a land sale contract to perform land development work after the closing date, a portion of the transaction price is allocated to such performance obligation(s) and is recognized as revenue when and as such obligation(s) is (are) completed. While the payment terms for such a performance obligation(s) vary, the final payment is generally received when we have completed our land development work and it has been accepted by the land buyer.

Homebuilding revenues include forfeited deposits, which occur when home sale or land sale contracts that include a nonrefundable deposit are cancelled. Revenues from forfeited deposits are immaterial.

Within our homebuilding operations, substantially all of our contracts with customers and the related performance obligations have an original expected duration of one year or less.

Community Sales Office and Other Marketing- and Model Home-Related Costs. Community sales office and other marketing- and model home-related costs are either recorded as inventories, capitalized as property and equipment, or expensed to selling, general and administrative expenses as incurred. Costs related to the construction of a model home, inclusive of upgrades that will be sold as part of the home, are recorded as inventories and recognized as construction and land costs when the model home is delivered to a homebuyer. Costs to furnish and ready a model home or on-site community sales facility that will not be sold as part of the model home, such as model furnishings, community sales office and model complex grounds, sales office construction and sales office furniture and equipment, are capitalized as property and equipment under “model furnishings and sales office improvements.” Model furnishings and sales office improvements are depreciated to selling, general and administrative expenses over their estimated useful lives. Other costs incurred related to the marketing of a community, removing the on-site community sales facility and readying a completed (model) home for sale are expensed to selling, general and administrative expenses as incurred.

Financial Services Revenues. Our financial services reporting segment generates revenues primarily from title services and insurance commissions. Revenues from title services are recognized when policies are issued, which generally occurs at the time each applicable home sale is closed. We receive insurance commissions from various third-party insurance carriers for arranging for the carriers to provide homeowner and other insurance policies for our homebuyers that elect to obtain such coverage. In addition, each time a homebuyer renews their insurance policy with the insurance carrier, we receive a renewal commission. Revenues from insurance commissions are recognized when the insurance carrier issues an initial insurance policy to our homebuyer, which generally occurs at the time each applicable home sale is closed. As our performance obligations for policy renewal commissions are satisfied upon issuance of the initial insurance policy, insurance commissions for renewals are considered variable consideration under ASC 606. Accordingly, we estimate the probable future renewal commissions when an initial policy is issued and record a corresponding contract asset and insurance commission revenues. We estimate the amount of variable consideration based on historical renewal trends and constrain the estimate such that it is probable that a significant reversal of cumulative recognized revenue will not occur. We also consider the likelihood and magnitude of a potential future reversal of revenue and update our assessment at the end of each reporting period. The contract assets for estimated future renewal commissions are included in other assets within financial services and totaled $19.8 million at February 28, 2019. Contract assets totaling $19.7 million were recognized on December 1, 2018 in connection with the adoption of ASC 606.

Disaggregation of Revenues. Our homebuilding operations accounted for 99.7% of our total revenues for the year ended November 30, 2018, with most of those revenues generated from home sale contracts with customers. Our financial services operations accounted for the remaining .3% of total revenues for the year ended November 30, 2018. Due to the nature of our revenue-generating activities, we believe the disaggregation of revenues as reported in our consolidated statement of operations, and as disclosed by homebuilding reporting segment in Note 2 – Segment Information and for our financial services reporting segment in Note 3 – Financial Services, fairly depict how the nature, amount, timing and uncertainty of cash flows are affected by economic factors.

Recent Accounting Pronouncements Not Yet Adopted. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). ASU 2016-02 will require lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Under this guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Lessor accounting remains substantially similar to current GAAP. In addition, disclosures of leasing activities are to be expanded to include qualitative along with specific quantitative information. ASU 2016-02 is effective for us beginning December 1, 2019 (with early adoption permitted). Originally, entities were required to adopt ASU 2016-02 using a modified retrospective transition method. However, in July 2018, the FASB issued Accounting Standards Update No. 2018-11, “Leases (Topic 842): Targeted Improvements” (“ASU 2018-11”), which provides entities with an additional transition method. Under ASU 2018-11, entities have the option of recognizing the cumulative effect of applying the new standard as an adjustment to beginning retained earnings in the year of adoption while continuing to present all prior periods under previous lease accounting guidance. In July 2018, the FASB also issued Accounting Standards Update No. 2018-10, “Codification Improvements to Topic 842, Leases” (“ASU 2018-10”), which clarifies how to apply certain aspects of ASU 2016-02. We expect to adopt ASU 2016-02, ASU 2018-10 and ASU 2018-11 beginning December 1, 2019. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

In February 2018, the FASB issued Accounting Standards Update No. 2018-02, “Income Statement — Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU 2018-02”), which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (“TCJA”), and requires certain disclosures about stranded tax effects. ASU 2018-02 is effective for us beginning December 1, 2019 (with early adoption permitted), and shall be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the corporate income tax rate in the TCJA is recognized. We expect to adopt ASU 2018-02 beginning December 1, 2019. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

Reclassifications. Certain amounts in our consolidated financial statements of prior periods have been reclassified to conform to the current period presentation.

Segment Reporting (ASC 280)

We have identified five operating reporting segments, comprised of four homebuilding reporting segments and one financial services reporting segment. As of February 28, 2019, our homebuilding reporting segments conducted ongoing operations in the following states:

West Coast: California and Washington

Southwest: Arizona and Nevada

Central: Colorado and Texas

Southeast: Florida and North Carolina

Our homebuilding reporting segments are engaged in the acquisition and development of land primarily for residential purposes and offer a wide variety of homes that are designed to appeal to first-time, first move-up and active adult homebuyers. Our homebuilding operations generate most of their revenues from the delivery of completed homes to homebuyers. They also earn revenues from the sale of land.

Our 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. Management evaluates 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 located within our Central and Southeast homebuilding reporting segments. This segment earns revenues primarily from insurance commissions and from the provision of title services.

We offer mortgage banking services, including residential consumer mortgage loan (“mortgage loan”) originations, to our homebuyers indirectly through KBHS Home Loans, LLC (“KBHS”), an unconsolidated joint venture we formed with Stearns Lending, LLC (“Stearns”). We and Stearns each have a 50.0% ownership interest, with Stearns providing management oversight of KBHS’ operations. The financial services reporting segment is separately reported in our consolidated financial statements.

Corporate and other is a non-operating segment that develops and oversees the implementation of company-wide strategic initiatives and provides support to our reporting segments by centralizing certain administrative functions. Corporate management is responsible for, among other things, evaluating and selecting the geographic markets in which we operate, consistent with our overall business strategy; allocating capital resources to markets for land acquisition and development activities; making major personnel decisions related to employee compensation and benefits; and monitoring the financial and operational performance of our divisions. 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 our homebuilding reporting segments.

Our reporting segments follow the same accounting policies used for our consolidated financial statements. The results of each reporting segment are not necessarily indicative of the results that would have occurred had the segment been an independent, stand-alone entity during the periods presented, nor are they indicative of the results to be expected in future periods.

Earnings Per Share (ASC 260)

We compute earnings (loss) per share using the two-class method, which is an allocation of earnings (losses) 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, 2019 or 2018.

Property, Plant and Equipment (ASC 360)

Each community or land parcel in our owned inventory is assessed on a quarterly basis to determine if indicators of potential impairment exist. We record an inventory impairment charge on a community or land parcel that is active or held for future development when indicators of potential impairment exist and the carrying value of the real estate asset is greater than the undiscounted future net cash flows the asset is expected to generate. These real estate assets are written down to fair value, which is primarily determined based on the estimated future net cash flows discounted for inherent risk associated with each such asset, or other valuation techniques. We record an inventory impairment charge on land held for sale when the carrying value of a land parcel is greater than its fair value. These real estate assets are written down to fair value, less associated costs to sell. The estimated fair values of such assets are generally based on bona fide letters of intent from outside parties, executed sales contracts, broker quotes or similar information.

Consolidation (ASC 810)

We participate in joint ventures from time to time that conduct land acquisition, land development and/or other homebuilding activities in various markets where our homebuilding operations are located. Our investments in these joint ventures may create a variable interest in a variable interest entity (“VIE”), depending on the contractual terms of the arrangement. We analyze our joint ventures under the variable interest model to determine whether they are VIEs and, if so, whether we are the primary beneficiary. Based on our analyses, we determined that one of our joint ventures at February 28, 2019 and November 30, 2018 was a VIE, but we were not the primary beneficiary of the VIE. All of our joint ventures at February 28, 2019 and November 30, 2018 were unconsolidated and accounted for under the equity method because we did not have a controlling financial interest.

Land Option Contracts and Other Similar Contracts. In the ordinary course of our business, we enter into land option contracts and other similar contracts with third parties and unconsolidated entities to acquire rights to land for the construction of homes. Under these contracts, we typically make a specified option payment or earnest money deposit in consideration for the right to purchase land in the future, usually at a predetermined price. We analyze each of our land option contracts and other similar contracts under the variable interest model to determine whether the land seller is a VIE and, if so, whether we are the primary beneficiary. Although we do not have legal title to the underlying land, we are required to consolidate a VIE if we are the primary beneficiary. As a result of our analyses, we determined that as of February 28, 2019 and November 30, 2018, we were not the primary beneficiary of any VIEs from which we have acquired rights to land under land option contracts and other similar contracts.

Debt (ASC 470)

For land option contracts and other similar contracts where the land seller entity is not required to be consolidated under the variable interest model, we consider whether such contracts should be accounted for as financing arrangements. Land option contracts and other similar contracts that may be considered financing arrangements include those we enter into with third-party land financiers or developers in conjunction with such third parties acquiring a specific land parcel(s) on our behalf, at our direction, and those with other landowners where we or our designee make improvements to the optioned land parcel(s) during the applicable option period. For these land option contracts and other similar contracts, we record the remaining purchase price of the associated land parcel(s) in inventories in our consolidated balance sheets with a corresponding financing obligation if we determine that we are effectively compelled to exercise the option to purchase the land parcel(s). In making this determination with respect to a land option contract or other similar contract, we consider the non-refundable deposit(s) we have made and any non-reimbursable expenditures we have incurred for land improvement activities or other items up to the assessment date; additional costs associated with abandoning the contract; and our commitments, if any, to incur non-reimbursable costs associated with the contract. As a result of our evaluations of land option contracts and other similar contracts for financing arrangements, we recorded inventories in our consolidated balance sheets, with a corresponding increase to accrued expenses and other liabilities, of $5.5 million at February 28, 2019 and $21.8 million at November 30, 2018.

Income Taxes (ASC 740)

We evaluate our deferred tax assets quarterly to determine if adjustments to our valuation allowance are required based on the consideration of all available positive and negative evidence using a “more likely than not” standard with respect to whether deferred tax assets will be realized. Our evaluation considers, among other factors, our historical operating results, our expectation of future profitability, the duration of the applicable statutory carryforward periods, and conditions in the housing market and the broader economy. The ultimate realization of our deferred tax assets depends primarily on our ability to generate future taxable income during the periods in which the related deferred tax assets become deductible. The value of our deferred tax assets depends on applicable income tax rates.

Fair Value Measurements and Disclosures (ASC 820)

Fair value measurements of assets and liabilities are categorized based on the following hierarchy:

Level 1	Fair value determined based on quoted prices in active markets for identical assets or liabilities.
Level 2	Fair value determined using significant observable inputs, such as quoted prices for similar assets or liabilities or quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, or inputs that are derived principally from or corroborated by observable market data, by correlation or other means.
Level 3	Fair value determined using significant unobservable inputs, such as pricing models, discounted cash flows, or similar techniques.

Guarantees (ASC 460)

Guarantees. In the normal course of our business, we issue certain representations, warranties and guarantees related to our home sales and land sales. Based on historical experience, we do not believe any potential liability with respect to these representations, warranties or guarantees would be material to our consolidated financial statements.

Self-Insurance

Self-Insurance. We maintain, and require the majority of our independent subcontractors to maintain, general liability insurance (including construction defect and bodily injury coverage) and workers’ compensation insurance. These insurance policies protect us against a portion of our risk of loss from claims related to our homebuilding activities, subject to certain self-insured retentions, deductibles and other coverage limits. We also maintain certain other insurance policies. In Arizona, California, Colorado and Nevada, our subcontractors’ general liability insurance primarily takes the form of a wrap-up policy under a program where eligible independent subcontractors are enrolled as insureds on each community. Enrolled subcontractors contribute toward the cost of the insurance and agree to pay a contractual amount in the future if there is a claim related to their work. To the extent provided under the wrap-up program, we absorb the enrolled subcontractors’ general liability associated with the work performed on our homes within the applicable community as part of our overall general liability insurance and our self-insurance.

We self-insure a portion of our overall risk through the use of a captive insurance subsidiary, which provides coverage for our exposure to construction defect, bodily injury and property damage claims and related litigation or regulatory actions, up to certain limits. Our self-insurance liability generally covers the costs of settlements and/or repairs, if any, as well as our costs to defend and resolve the following types of claims:

• Construction defect: Construction defect claims, which represent the largest component of our self-insurance liability, typically originate through a legal or regulatory process rather than directly by a homeowner and involve the alleged occurrence of a condition affecting two or more homes within the same community, or they involve a common area or homeowners association property within a community. These claims typically involve higher costs to resolve than individual homeowner warranty claims, and the rate of claims is highly variable.

• Bodily injury: Bodily injury claims typically involve individuals (other than our employees) who claim they were injured while on our property or as a result of our operations.

• Property damage: Property damage claims generally involve claims by third parties for alleged damage to real or personal property as a result of our operations. Such claims may occasionally include those made against us by owners of property located near our communities.

Our self-insurance liability at each reporting date represents the estimated costs of reported claims, claims incurred but not yet reported, and claim adjustment expenses. The amount of our self-insurance liability is based on an analysis performed by a third-party actuary that uses our historical claim and expense data, as well as industry data to estimate these overall costs. Key assumptions used in developing these estimates include claim frequencies, severities and resolution patterns, which can occur over an extended period of time. These estimates are subject to variability due to the length of time between the delivery of a home to a homebuyer and when a construction defect claim is made, and the ultimate resolution of such claim; uncertainties regarding such claims relative to our markets and the types of product we build; and legal or regulatory actions and/or interpretations, among other factors. Due to the degree of judgment involved and the potential for variability in these underlying assumptions, our actual future costs could differ from those estimated. In addition, changes in the frequency and severity of reported claims and the estimates to resolve claims can impact the trends and assumptions used in the actuarial analysis, which could be material to our consolidated financial statements. Though state regulations vary, construction defect claims are reported and resolved over a long period of time, which can extend for 10 years or more. As a result, the majority of the estimated self-insurance liability based on the actuarial analysis relates to claims incurred but not yet reported. Therefore, adjustments related to individual existing claims generally do not significantly impact the overall estimated liability. Adjustments to our liabilities related to homes delivered in prior years are recorded in the period in which a change in our estimate occurs.

Our self-insurance liability is presented on a gross basis without consideration of insurance recoveries and amounts we have paid on behalf of and expect to recover from other parties, if any. Estimated probable insurance and other recoveries of $57.2 million and $56.9 million are included in receivables in our consolidated balance sheets at February 28, 2019 and November 30, 2018, respectively. These self-insurance recoveries are principally based on actuarially determined amounts and depend on various factors, including, among other things, the above-described claim cost estimates, our insurance policy coverage limits for the applicable policy year(s), historical third-party recovery rates, insurance industry practices, the regulatory environment, and legal precedent, and are subject to a high degree of variability from period to period. Because of the inherent uncertainty and variability in these assumptions, our actual insurance recoveries could differ significantly from amounts currently estimated.

Warranty

Warranty. We provide a limited warranty on all of our homes. The specific terms and conditions of our limited warranty program vary depending upon the markets in which we do business. We generally provide a structural warranty of 10 years, a warranty on electrical, heating, cooling, plumbing and certain other building systems each varying from two to five years based on geographic market and state law, and a warranty of one year for other components of the home. Our limited warranty program is ordinarily how we respond to and account for homeowners’ requests to local division offices seeking repairs of certain conditions or defects, including claims where we could have liability under applicable state statutes or tort law for a defective condition in or damages to a home. Our warranty liability covers our costs of repairs associated with homeowner claims made under our limited warranty program. These claims are generally made directly by a homeowner and involve their individual home.

We estimate the costs that may be incurred under each limited warranty and record a liability in the amount of such costs at the time the revenue associated with the sale of each home is recognized. Our primary assumption in estimating the amounts we accrue for warranty costs is that historical claims experience is a strong indicator of future claims experience. Factors that affect our warranty liability include the number of homes delivered, historical and anticipated rates of warranty claims, and cost per claim. We periodically assess the adequacy of our accrued warranty liability, which is included in accrued expenses and other liabilities in our consolidated balance sheets, and adjust the amount as necessary based on our assessment. Our assessment includes the review of our actual warranty costs incurred to identify trends and changes in our warranty claims experience, and considers our home construction quality and customer service initiatives and outside events. While we believe the warranty liability currently reflected in our consolidated balance sheets to be adequate, unanticipated changes or developments in the legal environment, local weather, land or environmental conditions, quality of materials or methods used in the construction of homes or customer service practices and/or our warranty claims experience could have a significant impact on our actual warranty costs in future periods and such amounts could differ significantly from our current estimates.

Stock-Based Compensation (ASC 718)

We estimate the grant-date fair value of stock options using the Black-Scholes option-pricing model.

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Basis of Presentation and Significant Accounting Policies Basis of Presentation and Significant Accounting Policies (Tables)

3 Months Ended

Feb. 28, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of New Accounting Pronouncements

Balance Sheet	Balance at November 30, 2018		Adjustments due to ASC 606			Balance at December 1, 2018
Assets
Homebuilding:
Inventories	$	3,582,839	$	(35,288	)	$	3,547,551
Deferred tax assets, net	441,820		(4,024		)	437,796
Property and equipment, net	24,283		31,194			55,477
Financial services	12,380		19,728			32,108
Stockholders’ equity:
Retained earnings	1,897,168		11,610			1,908,778

The impacts of adopting ASC 606 on our consolidated statement of operations for the three months ended February 28, 2019 and consolidated balance sheet as of February 28, 2019 were as follows (in thousands, except per share amounts):

	Three Months Ended February 28, 2019
Statement of Operations	As Reported			Amounts without the Adoption of ASC 606			Effect of Change Higher/(Lower)
Homebuilding:
Revenues	$	808,788		$	808,155		$	633
Construction and land costs	(670,855		)	(676,115		)	(5,260		)
Selling, general and administrative expenses	(106,594		)	(99,281		)	7,313
Operating income	31,339			32,759			(1,420		)
Financial services:
Revenues	2,695			2,590			105
Total pretax income	34,511			35,826			(1,315		)
Income tax expense	(4,500		)	(4,800		)	(300		)
Net income	30,011			31,026			(1,015		)
Diluted earnings per share	.31			.32			(.01		)

	As of February 28, 2019
Balance Sheet	As Reported		Amounts without the Adoption of ASC 606		Effect of Change Higher/(Lower)
Assets
Homebuilding:
Inventories	$	3,683,763	$	3,722,475	$	(38,712	)
Deferred tax assets, net	433,295		437,019		(3,724		)
Property and equipment, net	55,330		22,132		33,198
Financial services	29,275		9,442		19,833
Stockholders’ equity:
Retained earnings	1,936,523		1,925,928		10,595

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Segment Information (Tables)

3 Months Ended

Feb. 28, 2019

Segment Reporting [Abstract]

Financial Information Relating to Company Reporting Segments

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

	Three Months Ended February 28,
	2019			2018
Revenues:
West Coast	$	305,810		$	386,652
Southwest	157,656			151,899
Central	241,592			244,181
Southeast	103,730			86,473
Total	$	808,788		$	869,205
Pretax income (loss):
West Coast	$	17,916		$	31,593
Southwest	22,072			14,977
Central	18,583			19,095
Southeast	(545		)	1,320
Corporate and other	(25,988		)	(22,824		)
Total	$	32,038		$	44,161

Inventory impairment charges:
West Coast	$	3,196	$	4,699
Southwest	—		—
Central	—		—
Southeast	—		—
Total	$	3,196	$	4,699
Land option contract abandonment charges:
West Coast	$	55	$	208
Southwest	59		—
Central	245		78
Southeast	—		—
Total	$	359	$	286

	February 28, 2019		November 30, 2018
Inventories:
Homes under construction
West Coast	$	560,514	$	514,099
Southwest	170,760		173,036
Central	319,931		312,366
Southeast	138,705		125,651
Subtotal	1,189,910		1,125,152

	February 28, 2019		November 30, 2018
Land under development
West Coast	1,053,533		1,059,432
Southwest	426,106		404,201
Central	561,979		543,472
Southeast	209,351		212,831
Subtotal	2,250,969		2,219,936
Land held for future development or sale
West Coast	159,644		154,462
Southwest	30,761		21,137
Central	7,835		9,346
Southeast	44,644		52,806
Subtotal	242,884		237,751
Total	$	3,683,763	$	3,582,839

Assets:
West Coast	$	1,983,539	$	1,880,516
Southwest	672,264		631,509
Central	1,021,616		1,017,490
Southeast	442,982		463,224
Corporate and other	1,023,980		1,068,452
Total	$	5,144,381	$	5,061,191

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Financial Services (Tables)

3 Months Ended

Feb. 28, 2019

Segment Reporting Information [Line Items]

Financial Services Income (Loss)

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

	Three Months Ended February 28,
	2019			2018
Revenues
Insurance commissions	$	1,472		$	1,352
Title services	1,217			1,066
Interest income	6			—
Total	2,695			2,418
Expenses
General and administrative	(1,024		)	(953		)
Operating income	1,671			1,465
Equity in income of unconsolidated joint ventures	802			419
Pretax income	$	2,473		$	1,884

Financial Service [Member]

Segment Reporting Information [Line Items]

Schedule of Financial Services Assets and Liabilities

	February 28, 2019		November 30, 2018
Assets
Cash and cash equivalents	$	717	$	760
Receivables	1,602		2,885
Investments in unconsolidated joint ventures	6,995		8,594
Other assets (a)	19,961		141
Total assets	$	29,275	$	12,380
Liabilities
Accounts payable and accrued expenses	$	1,174	$	1,495
Total liabilities	$	1,174	$	1,495

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Earnings Per Share (Tables)

3 Months Ended

Feb. 28, 2019

Earnings Per Share, Basic and Diluted [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

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

	Three Months Ended February 28,
	2019			2018
Numerator:
Net income (loss)	$	30,011		$	(71,255	)
Less: Distributed earnings allocated to nonvested restricted stock	(14		)	—
Less: Undistributed earnings allocated to nonvested restricted stock	(176		)	—
Numerator for basic earnings (loss) per share	29,821			(71,255		)
Effect of dilutive securities:
Interest expense and amortization of debt issuance costs associated with convertible senior notes, net of taxes	541			—
Add: Undistributed earnings allocated to nonvested restricted stock	176			—
Less: Undistributed earnings reallocated to nonvested restricted stock	(158		)	—
Numerator for diluted earnings (loss) per share	$	30,380		$	(71,255	)
Denominator:
Weighted average shares outstanding — basic	86,972			87,155
Effect of dilutive securities:
Share-based payments	4,202			—
Convertible senior notes	5,788			—
Weighted average shares outstanding — diluted	96,962			87,155
Basic earnings (loss) per share	$	.34		$	(.82	)
Diluted earnings (loss) per share	$	.31		$	(.82	)

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Receivables (Tables)

3 Months Ended

Feb. 28, 2019

Receivables [Abstract]

Schedule of Receivables

Receivables consisted of the following (in thousands):

	February 28, 2019			November 30, 2018
Recoveries related to self-insurance and other legal claims	$	149,719		$	138,261
Due from utility companies, improvement districts and municipalities	115,250			113,434
Refundable deposits and bonds	13,734			14,115
Recoveries related to warranty and other claims	4,111			4,750
Other	42,086			33,775
Subtotal	324,900			304,335
Allowance for doubtful accounts	(11,291		)	(11,505		)
Total	$	313,609		$	292,830

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Inventories (Tables)

3 Months Ended

Feb. 28, 2019

Inventory Disclosure [Abstract]

Schedule of Inventories

Inventories consisted of the following (in thousands):

	February 28, 2019		November 30, 2018
Homes under construction	$	1,189,910	$	1,125,152
Land under development	2,250,969		2,219,936
Land held for future development or sale (a)	242,884		237,751
Total	$	3,683,763	$	3,582,839

(a)    Land held for sale totaled $27.8 million at February 28, 2019 and $9.8 million at November 30, 2018

Schedule of Capitalized Interest Costs

Our interest costs were as follows (in thousands):

	Three Months Ended February 28,
	2019			2018
Capitalized interest at beginning of period	$	209,129		$	262,191
Interest incurred	34,788			39,944
Interest amortized to construction and land costs (a)	(30,547		)	(42,350		)
Capitalized interest at end of period (b)	$	213,370		$	259,785

(a) Interest amortized to construction and land costs for the three months ended February 28, 2019 and 2018 included $.6 million and $1.0 million, respectively, related to land sales during the periods.

(b) Capitalized interest amounts reflect the gross amount of capitalized interest, as inventory impairment charges recognized, if any, are not generally allocated to specific components of inventory.

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Inventory Impairments and Land Option Contract Abandonments (Tables)

3 Months Ended

Feb. 28, 2019

Inventory Impairments and Land Option Contract Abandonments [Abstract]

Schedule of Significant Unobservable Inputs

The following table summarizes significant quantitative unobservable inputs we utilized in our fair value measurements with respect to the impaired communities written down to fair value during the periods presented:

	Three Months Ended February 28,
Unobservable Input	2019	2018
Average selling price	$1,045,400	$774,100
Deliveries per month	1	3
Discount rate	17%	18%

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Variable Interest Entities (Tables)

3 Months Ended

Feb. 28, 2019

Variable Interest Entities [Abstract]

Summary of Interests in Land Option Contracts

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

	February 28, 2019				November 30, 2018
	Cash Deposits		Aggregate Purchase Price		Cash Deposits		Aggregate Purchase Price
Unconsolidated VIEs	$	22,733	$	758,458	$	26,542	$	784,334
Other land option contracts and other similar contracts	27,069		475,740		27,288		586,904
Total	$	49,802	$	1,234,198	$	53,830	$	1,371,238

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Investments in Unconsolidated Joint Ventures (Tables)

3 Months Ended

Feb. 28, 2019

Equity Method Investments and Joint Ventures [Abstract]

Statements of Operations of Unconsolidated Joint Ventures

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

	Three Months Ended February 28,
	2019			2018
Revenues	$	12,192		$	8,797
Construction and land costs	(12,220		)	(8,816		)
Other expense, net	(628		)	(1,372		)
Loss	$	(656	)	$	(1,391	)

Balance Sheets of Unconsolidated Joint Ventures

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

	February 28, 2019		November 30, 2018
Assets
Cash	$	16,598	$	18,567
Inventories	127,377		131,074
Other assets	446		530
Total assets	$	144,421	$	150,171
Liabilities and equity
Accounts payable and other liabilities	$	11,254	$	11,374
Notes payable (a)	22,045		17,956
Equity	111,122		120,841
Total liabilities and equity	$	144,421	$	150,171

(a) As of February 28, 2019 and November 30, 2018, one of our unconsolidated joint ventures had a construction loan agreement with a third-party lender to finance its land development activities, with the outstanding debt secured by the underlying property and related project assets and non-recourse to us. All of the outstanding secured debt at February 28, 2019 is scheduled to mature in February 2020. None of our other unconsolidated joint ventures had outstanding debt at February 28, 2019 or November 30, 2018

Information Related Investments in Unconsolidated Joint Ventures

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

	February 28, 2019		November 30, 2018
Number of investments in unconsolidated joint ventures	6		6
Investments in unconsolidated joint ventures	$	57,134	$	61,960
Number of unconsolidated joint venture lots controlled under land option contracts and other similar contracts	25		36

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Property and Equipment, Net (Tables)

3 Months Ended

Feb. 28, 2019

Property, Plant and Equipment [Abstract]

Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

	February 28, 2019			November 30, 2018
Computer software and equipment	$	22,953		$	20,940
Model furnishings and sales office improvements (a)	61,747			—
Leasehold improvements, office furniture and equipment (b)	15,385			23,491
Subtotal	100,085			44,431
Less accumulated depreciation (a)	(44,755		)	(20,148		)
Total	$	55,330		$	24,283

(a) The balance at February 28, 2019 reflects a change in the classification of certain community sales office and marketing- and model home-related costs and related accumulated amortization from inventories to property and equipment, net due to our adoption of ASC 606 effective December 1, 2018, as described in Note 1 – Basis of Presentation and Significant Accounting Policies.

(b) In January 2019, we completed the sale and leaseback of our office building in San Antonio, Texas. The sale generated net cash proceeds of $5.8 million and a gain of $2.2 million, which will be recognized on a straight-line basis over a 10-year lease term until our adoption of ASU 2016-02, when the remaining gain will be recognized as a transition adjustment to retained earnings.

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Other Assets (Tables)

3 Months Ended

Feb. 28, 2019

Other Assets [Abstract]

Schedule of Other Assets

Other assets consisted of the following (in thousands):

	February 28, 2019		November 30, 2018
Cash surrender value of corporate-owned life insurance contracts	$	74,649	$	73,721
Prepaid expenses and other	14,911		9,379
Total	$	89,560	$	83,100

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Accrued Expenses and Other Liabilities (Tables)

3 Months Ended

Feb. 28, 2019

Payables and Accruals [Abstract]

Schedule of Accrued Expenses and Other Liabilities

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

	February 28, 2019		November 30, 2018
Self-insurance and other litigation liabilities	$	297,361	$	283,651
Employee compensation and related benefits	101,444		148,549
Warranty liability	84,191		82,490
Accrued interest payable	46,498		31,180
Inventory-related obligations (a)	23,319		40,892
Customer deposits	20,122		19,491
Real estate and business taxes	9,529		16,639
Other	48,917		43,376
Total	$	631,381	$	666,268

(a) Represents liabilities for financing arrangements discussed in Note 8 – Variable Interest Entities, as well as liabilities for fixed or determinable amounts associated with tax increment financing entity (“TIFE”) assessments. As homes are delivered, our obligation to pay the remaining TIFE assessments associated with each underlying lot is transferred to the homebuyer. As such, these assessment obligations will be paid by us only to the extent we do not deliver homes on applicable lots before the related TIFE obligations mature.

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Income Taxes (Tables)

3 Months Ended

Feb. 28, 2019

Income Tax Disclosure [Abstract]

Income tax benefit computed at the statutory U.S federal income tax rate and income tax benefit (expense) provided in the consolidated statements of operations

Our income tax expense and effective tax rates were as follows (dollars in thousands):

	Three Months Ended February 28,
	2019			2018
Income tax expense	$	4,500		$	117,300
Effective tax rate	13.0		%	254.8		%

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Notes Payable (Tables)

3 Months Ended

Feb. 28, 2019

Debt Disclosure [Abstract]

Schedule of Mortgages and Notes Payable

Notes payable consisted of the following (in thousands):

	February 28, 2019		November 30, 2018
Mortgages and land contracts due to land sellers and other loans	$	12,018	$	40,038
4.75% Senior notes due May 15, 2019	399,764		399,483
8.00% Senior notes due March 15, 2020	348,199		347,790
7.00% Senior notes due December 15, 2021	447,554		447,359
7.50% Senior notes due September 15, 2022	347,861		347,731
7.625% Senior notes due May 15, 2023	352,081		248,074
6.875% Senior notes due June 15, 2027	296,112		—
1.375% Convertible senior notes due February 1, 2019	—		229,788
Total	$	2,203,589	$	2,060,263

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Fair Value Disclosures (Tables)

3 Months Ended

Feb. 28, 2019

Fair Value Disclosures [Abstract]

Schedule of Assets Measured at Fair Value on Nonrecurring Basis

The following table presents the fair value hierarchy, pre-impairment value, inventory impairment charges and fair value for our assets measured at fair value on a nonrecurring basis for the three months endedFebruary 28, 2019 and the year ended November 30, 2018 (in thousands):

		February 28, 2019							November 30, 2018
Description	Fair Value Hierarchy	Pre-Impairment Value		Inventory Impairment Charges			Fair Value (a)		Pre-Impairment Value		Inventory Impairment Charges			Fair Value (a)
Inventories	Level 3	$	9,917	$	(3,196	)	$	6,721	$	70,156	$	(26,104	)	$	44,052

(a) Amounts represent the aggregate fair value for real estate assets impacted by inventory impairment charges during the applicable period as of the date the fair value measurements were made. The carrying value for these real estate assets may have subsequently increased or decreased from the fair value reflected due to activity that has occurred since the measurement date.

Schedule of Fair Value Hierarchy, Carrying Values, and Estimated Fair Values of Financial Instruments

The following table presents the fair value hierarchy, carrying values and estimated fair values of our financial instruments, except those for which the carrying values approximate fair values (in thousands):

		February 28, 2019				November 30, 2018
	Fair Value Hierarchy	Carrying Value (a)		Estimated Fair Value		Carrying Value (a)		Estimated Fair Value
Financial Liabilities:
Senior notes	Level 2	$	2,191,571	$	2,298,750	$	1,790,437	$	1,853,438
Convertible senior notes	Level 2	—		—		229,788		229,425

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Commitments and Contingencies (Tables)

3 Months Ended

Feb. 28, 2019

Commitments and Contingencies Disclosure [Abstract]

Changes in the Warranty Liability

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

	Three Months Ended February 28,
	2019			2018
Balance at beginning of period	$	82,490		$	69,798
Warranties issued	6,294			7,764
Payments	(4,593		)	(5,717		)
Balance at end of period	$	84,191		$	71,845

Schedule of Self-Insurance Liability

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

	Three Months Ended February 28,
	2019			2018
Balance at beginning of period	$	176,841		$	177,695
Self-insurance expense (a)	3,747			4,401
Payments (b)	(2,726		)	(1,401		)
Balance at end of period	$	177,862		$	180,695

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

(b) Includes net changes in estimated probable insurance and other recoveries, which are recorded in receivables, to present our self-insurance liability on a gross basis.

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Stockholders' Equity (Tables)

3 Months Ended

Feb. 28, 2019

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, 2019
	Number of Shares
	Common Stock	Grantor Stock Ownership Trust		Treasury Stock		Common Stock		Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Grantor Stock Ownership Trust			Treasury Stock			Total Stockholders’ Equity
Balance at November 30, 2018	119,196	(8,157	)	(24,113	)	$	119,196	$	753,570		$	1,897,168		$	(9,565	)	$	(88,472	)	$	(584,397	)	$	2,087,500
Cumulative effect of adoption of ASC 606	—	—		—		—		—			11,610			—			—			—			11,610
Net income	—	—		—		—		—			30,011			—			—			—			30,011
Dividends on common stock	—	—		—		—		—			(2,266		)	—			—			—			(2,266		)
Employee stock options/other	62	—		—		62		770			—			—			—			—			832
Stock awards	—	297		(151	)	—		(3,151		)	—			—			3,226			(75		)	—
Stock-based compensation	—	—		—		—		4,152			—			—			—			—			4,152
Tax payments associated with stock-based compensation awards	—	—		—		—		—			—			—			—			(3,342		)	(3,342		)
Balance at February 28, 2019	119,258	(7,860	)	(24,264	)	$	119,258	$	755,341		$	1,936,523		$	(9,565	)	$	(85,246	)	$	(587,814	)	$	2,128,497
	Three Months Ended February 28, 2018
	Number of Shares
	Common Stock	Grantor Stock Ownership Trust		Treasury Stock		Common Stock		Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Grantor Stock Ownership Trust			Treasury Stock			Total Stockholders’ Equity
Balance at November 30, 2017	117,946	(8,898	)	(22,021	)	$	117,946	$	727,483		$	1,735,695		$	(16,924	)	$	(96,509	)	$	(541,380	)	$	1,926,311
Net loss	—	—		—		—		—			(71,255		)	—			—			—			(71,255		)
Dividends on common stock	—	—		—		—		—			(2,322		)	—			—			—			(2,322		)
Employee stock options/other	268	—		—		268		2,678			—			—			—			—			2,946
Stock awards	—	438		(10	)	—		(4,551		)	—			—			4,749			(198		)	—
Stock-based compensation	—	—		—		—		3,829			—			—			—			—			3,829
Tax payments associated with stock-based compensation awards	—	—		(217	)	—		—			—			—			—			(6,787		)	(6,787		)
Balance at February 28, 2018	118,214	(8,460	)	(22,248	)	$	118,214	$	729,439		$	1,662,118		$	(16,924	)	$	(91,760	)	$	(548,365	)	$	1,852,722

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Stock-Based Compensation (Tables)

3 Months Ended

Feb. 28, 2019

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 endedFebruary 28, 2019:

	Options		Weighted Average Exercise Price
Options outstanding at beginning of period	7,237,544		$	16.02
Granted	—		—
Exercised	(62,292	)	13.36
Cancelled	—		—
Options outstanding at end of period	7,175,252		$	16.04
Options exercisable at end of period	6,886,378		$	16.04

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Supplemental Disclosure to Consolidated Statements of Cash Flows (Tables)

3 Months Ended

Feb. 28, 2019

Supplemental Cash Flow Information [Abstract]

Schedule of Supplemental Cash Flow Disclosures

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

	Three Months Ended February 28,
	2019			2018
Summary of cash and cash equivalents at end of period:
Homebuilding	$	511,690		$	560,255
Financial services	717			551
Total	$	512,407		$	560,806
Supplemental disclosures of cash flow information:
Interest paid, net of amounts capitalized	$	(15,318	)	$	(9,696	)
Income taxes paid	113			1,639

	Three Months Ended February 28,
	2019			2018
Supplemental disclosures of non-cash activities:
Decrease in inventories due to adoption of ASC 606	$	(35,288	)	$	—
Increase in property and equipment, net due to adoption of ASC 606	31,194			—
Increase (decrease) in consolidated inventories not owned	(16,262		)	8,466
Increase in inventories due to distributions of land and land development from an unconsolidated joint venture	1,946			2,699
Inventories acquired through seller financing	—			36,697

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Supplemental Guarantor Information (Tables)

3 Months Ended

Feb. 28, 2019

Guarantees [Abstract]

Condensed Consolidated Statements of Operations

Condensed Consolidating Statements of Operations (in thousands)

	Three Months Ended February 28, 2019
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Total revenues	$	—		$	744,453		$	67,030		$	—		$	811,483
Homebuilding:
Revenues	$	—		$	744,453		$	64,335		$	—		$	808,788
Construction and land costs	—			(611,041		)	(59,814		)	—			(670,855		)
Selling, general and administrative expenses	(25,382		)	(75,540		)	(5,672		)	—			(106,594		)
Operating income (loss)	(25,382		)	57,872			(1,151		)	—			31,339
Interest income	1,014			—			91			—			1,105
Interest expense	(33,195		)	(321		)	(1,272		)	34,788			—
Intercompany interest	77,972			(41,738		)	(1,446		)	(34,788		)	—
Equity in loss of unconsolidated joint ventures	—			(406		)	—			—			(406		)
Homebuilding pretax income (loss)	20,409			15,407			(3,778		)	—			32,038
Financial services pretax income	—			—			2,473			—			2,473
Total pretax income (loss)	20,409			15,407			(1,305		)	—			34,511
Income tax expense	(700		)	(3,400		)	(400		)	—			(4,500		)
Equity in net income of subsidiaries	10,302			—			—			(10,302		)	—
Net income (loss)	$	30,011		$	12,007		$	(1,705	)	$	(10,302	)	$	30,011

	Three Months Ended February 28, 2018
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Total revenues	$	—		$	794,689		$	76,934		$	—		$	871,623
Homebuilding:
Revenues	$	—		$	794,689		$	74,516		$	—		$	869,205
Construction and land costs	—			(664,096		)	(65,382		)	—			(729,478		)
Selling, general and administrative expenses	(22,166		)	(67,117		)	(6,441		)	—			(95,724		)
Operating income (loss)	(22,166		)	63,476			2,693			—			44,003
Interest income	998			5			—			—			1,003
Interest expense	(37,972		)	(689		)	(1,283		)	39,944			—
Intercompany interest	72,846			(30,954		)	(1,948		)	(39,944		)	—
Equity in loss of unconsolidated joint ventures	—			(845		)	—			—			(845		)
Homebuilding pretax income (loss)	13,706			30,993			(538		)	—			44,161
Financial services pretax income	—			—			1,884			—			1,884
Total pretax income	13,706			30,993			1,346			—			46,045
Income tax expense	(44,700		)	(48,100		)	(24,500		)	—			(117,300		)
Equity in net loss of subsidiaries	(40,261		)	—			—			40,261			—
Net loss	$	(71,255	)	$	(17,107	)	$	(23,154	)	$	40,261		$	(71,255	)

Condensed Consolidated Balance Sheets

Condensed Consolidating Balance Sheets (in thousands)

	February 28, 2019
	KB Home Corporate		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Total
Assets
Homebuilding:
Cash and cash equivalents	$	415,471	$	80,346	$	15,873	$	—		$	511,690
Receivables	4,291		228,879		80,439		—			313,609
Inventories	—		3,435,361		248,402		—			3,683,763
Investments in unconsolidated joint ventures	—		57,134		—		—			57,134
Property and equipment, net	20,363		32,002		2,965		—			55,330
Deferred tax assets, net	80,339		299,769		53,187		—			433,295
Other assets	84,083		3,419		2,058		—			89,560
	604,547		4,136,910		402,924		—			5,144,381
Financial services	—		—		29,275		—			29,275
Intercompany receivables	3,757,220		—		174,018		(3,931,238		)	—
Investments in subsidiaries	104,040		—		—		(104,040		)	—
Total assets	$	4,465,807	$	4,136,910	$	606,217	$	(4,035,278	)	$	5,173,656
Liabilities and stockholders’ equity
Homebuilding:
Accounts payable, accrued expenses and other liabilities	$	122,161	$	443,269	$	274,966	$	—		$	840,396
Notes payable	2,166,461		12,018		25,110		—			2,203,589
	2,288,622		455,287		300,076		—			3,043,985
Financial services	—		—		1,174		—			1,174
Intercompany payables	48,688		3,666,215		216,335		(3,931,238		)	—
Stockholders’ equity	2,128,497		15,408		88,632		(104,040		)	2,128,497
Total liabilities and stockholders’ equity	$	4,465,807	$	4,136,910	$	606,217	$	(4,035,278	)	$	5,173,656

	November 30, 2018
	KB Home Corporate		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Total
Assets
Homebuilding:
Cash and cash equivalents	$	429,977	$	114,269	$	30,113	$	—		$	574,359
Receivables	5,135		198,465		89,230		—			292,830
Inventories	—		3,314,386		268,453		—			3,582,839
Investments in unconsolidated joint ventures	—		61,960		—		—			61,960
Property and equipment, net	18,450		5,523		310		—			24,283
Deferred tax assets, net	84,564		303,669		53,587		—			441,820
Other assets	77,288		4,007		1,805		—			83,100
	615,414		4,002,279		443,498		—			5,061,191
Financial services	—		—		12,380		—			12,380
Intercompany receivables	3,569,422		—		158,760		(3,728,182		)	—
Investments in subsidiaries	67,657		—		—		(67,657		)	—
Total assets	$	4,252,493	$	4,002,279	$	614,638	$	(3,795,839	)	$	5,073,571
Liabilities and stockholders’ equity
Homebuilding:
Accounts payable, accrued expenses and other liabilities	$	126,176	$	584,321	$	213,816	$	—		$	924,313
Notes payable	1,995,115		40,038		25,110		—			2,060,263
	2,121,291		624,359		238,926		—			2,984,576
Financial services	—		—		1,495		—			1,495
Intercompany payables	43,702		3,377,920		306,560		(3,728,182		)	—
Stockholders’ equity	2,087,500		—		67,657		(67,657		)	2,087,500
Total liabilities and stockholders’ equity	$	4,252,493	$	4,002,279	$	614,638	$	(3,795,839	)	$	5,073,571

Condensed Consolidated Statements of Cash Flows

Condensed Consolidating Statements of Cash Flows (in thousands)

	Three Months Ended February 28, 2019
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net cash provided by (used in) operating activities	$	13,062		$	(337,286	)	$	126,014		$	—		$	(198,210	)
Cash flows from investing activities:
Contributions to unconsolidated joint ventures	—			(2,527		)	—			—			(2,527		)
Return of investments in unconsolidated joint ventures	—			5,001			—			—			5,001
Proceeds from sale of building	—			5,804			—			—			5,804
Purchases of property and equipment, net	(2,068		)	(2,032		)	(5,925		)	—			(10,025		)
Intercompany	(190,765		)	—			—			190,765			—
Net cash provided by (used in) investing activities	(192,833		)	6,246			(5,925		)	190,765			(1,747		)
Cash flows from financing activities:
Proceeds from issuance of debt	405,250			—			—			—			405,250
Payment of debt issuance costs	(5,209		)	—			—			—			(5,209		)
Repayment of senior notes	(230,000		)	—			—			—			(230,000		)
Borrowings under revolving credit facility	140,000			—			—			—			140,000
Repayments under revolving credit facility	(140,000		)	—			—			—			(140,000		)
Payments on mortgages and land contracts due to land sellers and other loans	—			(28,020		)	—			—			(28,020		)
Issuance of common stock under employee stock plans	832			—			—			—			832
Tax payments associated with stock-based compensation awards	(3,342		)	—			—			—			(3,342		)
Payments of cash dividends	(2,266		)	—			—			—			(2,266		)
Intercompany	—			325,137			(134,372		)	(190,765		)	—
Net cash provided by (used in) financing activities	165,265			297,117			(134,372		)	(190,765		)	137,245
Net decrease in cash and cash equivalents	(14,506		)	(33,923		)	(14,283		)	—			(62,712		)
Cash and cash equivalents at beginning of period	429,977			114,269			30,873			—			575,119
Cash and cash equivalents at end of period	$	415,471		$	80,346		$	16,590		$	—		$	512,407

	Three Months Ended February 28, 2018
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net cash provided by (used in) operating activities	$	3,066		$	(137,254	)	$	(7,492	)	$	—		$	(141,680	)
Cash flows from investing activities:
Contributions to unconsolidated joint ventures	—			(8,025		)	—			—			(8,025		)
Return of investments in unconsolidated joint ventures	—			1,099			—			—			1,099
Sale (purchases) of property and equipment, net	(1,776		)	(177		)	29			—			(1,924		)
Intercompany	(114,691		)	—			—			114,691			—
Net cash provided by (used in) investing activities	(116,467		)	(7,103		)	29			114,691			(8,850		)
Cash flows from financing activities:
Payments on mortgages and land contracts due to land sellers and other loans	—			(2,442		)	(920		)	—			(3,362		)
Issuance of common stock under employee stock plans	2,946			—			—			—			2,946
Tax payments associated with stock-based compensation awards	(6,787		)	—			—			—			(6,787		)
Payments of cash dividends	(2,322		)	—			—			—			(2,322		)
Intercompany	—			118,004			(3,313		)	(114,691		)	—
Net cash provided by (used in) financing activities	(6,163		)	115,562			(4,233		)	(114,691		)	(9,525		)
Net decrease in cash and cash equivalents	(119,564		)	(28,795		)	(11,696		)	—			(160,055		)
Cash and cash equivalents at beginning of period	575,193			104,120			41,548			—			720,861
Cash and cash equivalents at end of period	$	455,629		$	75,325		$	29,852		$	—		$	560,806

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Basis of Presentation and Significant Accounting Policies (Narratives) (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Nov. 30, 2018	Dec. 01, 2018
Cash equivalents	$ 367,300		$ 385,200
Other comprehensive income (loss)	30,000	$ (71,300)
Retained earnings	1,936,523		1,897,168	$ 1,908,778
Customer deposits	20,100		$ 19,500
Financial Service [Member]
Contract assets	19,800			19,700
Financial Service [Member] | Product Concentration Risk [Member] | Total Revenues [member]
Percentage of total revenue			0.30%
Home Building [Member] | Product Concentration Risk [Member] | Total Revenues [member]
Percentage of total revenue			99.70%
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 [Member]
Retained earnings	$ 10,595			11,610
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 [Member] | Financial Service [Member]
Contract assets				$ 19,728

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Basis of Presentation and Significant Accounting Policies (Cumulative Effect of Changes on Consolidated Balance Sheets Resulting From Adoption of ASC 606) (Details) - USD ($) $ in Thousands	Feb. 28, 2019	Dec. 01, 2018	Nov. 30, 2018	Feb. 28, 2018
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Inventories	$ 3,683,763		$ 3,582,839
Property and equipment, net	55,330		24,283
Total assets	5,173,656		5,073,571
Retained earnings	1,936,523	$ 1,908,778	1,897,168
Accounting Standards Update 2014-09 [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Inventories		(35,288)		$ 0
Property and equipment, net		31,194		$ 0
Calculated under Revenue Guidance in Effect before Topic 606 [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Retained earnings	1,925,928		1,897,168
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Retained earnings	10,595	11,610
Home Building [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Inventories	3,683,763	3,547,551	3,582,839
Deferred tax assets, net	433,295	437,796	441,820
Property and equipment, net	55,330	55,477	24,283
Total assets	5,144,381		5,061,191
Home Building [Member] | Calculated under Revenue Guidance in Effect before Topic 606 [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Inventories	3,722,475		3,582,839
Deferred tax assets, net	437,019		441,820
Property and equipment, net	22,132		24,283
Home Building [Member] | Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Inventories	(38,712)	(35,288)
Deferred tax assets, net	(3,724)	(4,024)
Property and equipment, net	33,198	31,194
Financial Service [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Total assets	29,275	32,108	12,380
Contract assets	19,800	19,700
Financial Service [Member] | Calculated under Revenue Guidance in Effect before Topic 606 [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Total assets	9,442		$ 12,380
Financial Service [Member] | Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Accounting Standards Update 2014-09 [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Total assets	$ 19,833
Contract assets		$ 19,728

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Basis of Presentation and Significant Accounting Policies (Impacts of Adopting ASC 606) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Dec. 01, 2018	Nov. 30, 2018
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Total revenues	$ 811,483	$ 871,623
Total pretax income	34,511	46,045
Income tax expense	(4,500)	(117,300)
Net income (loss)	$ 30,011	$ (71,255)
Diluted earnings per share (in dollars per share)	$ 0.31	$ (0.82)
Assets
Inventories	$ 3,683,763			$ 3,582,839
Property and equipment, net	55,330			24,283
Total assets	5,173,656			5,073,571
Stockholders’ equity:
Retained earnings	1,936,523		$ 1,908,778	1,897,168
Calculated under Revenue Guidance in Effect before Topic 606 [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Total pretax income	35,826
Income tax expense	4,800
Net income (loss)	$ 31,026
Diluted earnings per share (in dollars per share)	$ 0.32
Stockholders’ equity:
Retained earnings	$ 1,925,928			1,897,168
Financial Service [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Contract assets	19,800		19,700
Total revenues	2,695	$ 2,418
Selling, general and administrative expenses	(1,024)	(953)
Operating income	1,671	1,465
Total pretax income	2,473	1,884
Assets
Total assets	29,275		32,108	12,380
Financial Service [Member] | Calculated under Revenue Guidance in Effect before Topic 606 [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Total revenues	2,590
Assets
Total assets	9,442			12,380
Home Building [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Total revenues	808,788	869,205
Construction and land costs	(670,855)	(729,478)
Selling, general and administrative expenses	(106,594)	(95,724)
Operating income	31,339	44,003
Total pretax income	32,038	44,161
Assets
Inventories	3,683,763		3,547,551	3,582,839
Deferred tax assets, net	433,295		437,796	441,820
Property and equipment, net	55,330		55,477	24,283
Total assets	5,144,381			5,061,191
Home Building [Member] | Calculated under Revenue Guidance in Effect before Topic 606 [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Total revenues	808,155
Construction and land costs	(676,115)
Selling, general and administrative expenses	(99,281)
Operating income	32,759
Assets
Inventories	3,722,475			3,582,839
Deferred tax assets, net	437,019			441,820
Property and equipment, net	22,132			$ 24,283
Accounting Standards Update 2014-09 [Member]
Assets
Inventories		0	(35,288)
Property and equipment, net		$ 0	31,194
Accounting Standards Update 2014-09 [Member] | Difference between Revenue Guidance in Effect before and after Topic 606 [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Total pretax income	(1,315)
Income tax expense	(300)
Net income (loss)	$ (1,015)
Diluted earnings per share (in dollars per share)	$ (0.01)
Stockholders’ equity:
Retained earnings	$ 10,595		11,610
Accounting Standards Update 2014-09 [Member] | Financial Service [Member] | Difference between Revenue Guidance in Effect before and after Topic 606 [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Contract assets			19,728
Total revenues	105
Assets
Total assets	19,833
Accounting Standards Update 2014-09 [Member] | Home Building [Member] | Difference between Revenue Guidance in Effect before and after Topic 606 [Member]
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Total revenues	633
Construction and land costs	(5,260)
Selling, general and administrative expenses	7,313
Operating income	(1,420)
Assets
Inventories	(38,712)		(35,288)
Deferred tax assets, net	(3,724)		(4,024)
Property and equipment, net	$ 33,198		$ 31,194

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Segment Information (Narratives) (Details)	3 Months Ended
	Feb. 28, 2019 segment
Schedule of Equity Method Investments [Line Items]
Number of reporting segments	5
KBHS, LLC [Member]
Schedule of Equity Method Investments [Line Items]
Ownership interest in the venture	50.00%
KBHS, LLC [Member] | Stearns Lending, LLC [Member]
Schedule of Equity Method Investments [Line Items]
Ownership interest in the venture	50.00%
Home Building [Member]
Schedule of Equity Method Investments [Line Items]
Number of reporting segments	4
Financial Service [Member]
Schedule of Equity Method Investments [Line Items]
Number of reporting segments	1

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Segment Information (Segment Financial Information) (Details) - USD ($) $ in Thousands		3 Months Ended
		Feb. 28, 2019	Feb. 28, 2018	Dec. 01, 2018	Nov. 30, 2018
Revenues:
Total revenues		$ 811,483	$ 871,623
Pretax income (loss):
Pretax income (loss)		34,511	46,045
Inventory impairment charges		3,200	4,700
Inventories: Homes under Construction		1,189,910			$ 1,125,152
Inventories: Land under development		2,250,969			2,219,936
Inventories: Land held for future development or sale	[1]	242,884			237,751
Inventories		3,683,763			3,582,839
Assets
Total assets		5,173,656			5,073,571
Land Option Contract Abandonment [Member]
Pretax income (loss):
Land option contract abandonment charges		400	300
Home Building [Member]
Revenues:
Total revenues		808,788	869,205
Pretax income (loss):
Pretax income (loss)		32,038	44,161
Inventory impairment charges		3,196	4,699
Inventories: Homes under Construction		1,189,910			1,125,152
Inventories: Land under development		2,250,969			2,219,936
Inventories: Land held for future development or sale		242,884			237,751
Inventories		3,683,763		$ 3,547,551	3,582,839
Assets
Total assets		5,144,381			5,061,191
Home Building [Member] | West Coast [Member]
Revenues:
Total revenues		305,810	386,652
Pretax income (loss):
Pretax income (loss)		17,916	31,593
Inventory impairment charges		3,196	4,699
Inventories: Homes under Construction		560,514			514,099
Inventories: Land under development		1,053,533			1,059,432
Inventories: Land held for future development or sale		159,644			154,462
Assets
Total assets		1,983,539			1,880,516
Home Building [Member] | Southwest [Member]
Revenues:
Total revenues		157,656	151,899
Pretax income (loss):
Pretax income (loss)		22,072	14,977
Inventory impairment charges		0	0
Inventories: Homes under Construction		170,760			173,036
Inventories: Land under development		426,106			404,201
Inventories: Land held for future development or sale		30,761			21,137
Assets
Total assets		672,264			631,509
Home Building [Member] | Central [Member]
Revenues:
Total revenues		241,592	244,181
Pretax income (loss):
Pretax income (loss)		18,583	19,095
Inventory impairment charges		0	0
Inventories: Homes under Construction		319,931			312,366
Inventories: Land under development		561,979			543,472
Inventories: Land held for future development or sale		7,835			9,346
Assets
Total assets		1,021,616			1,017,490
Home Building [Member] | Southeast [Member]
Revenues:
Total revenues		103,730	86,473
Pretax income (loss):
Pretax income (loss)		(545)	1,320
Inventory impairment charges		0	0
Inventories: Homes under Construction		138,705			125,651
Inventories: Land under development		209,351			212,831
Inventories: Land held for future development or sale		44,644			52,806
Assets
Total assets		442,982			463,224
Home Building [Member] | Corporate and Other [Member]
Pretax income (loss):
Pretax income (loss)		(25,988)	(22,824)
Assets
Total assets		1,023,980			$ 1,068,452
Home Building [Member] | Land Option Contract Abandonment [Member]
Pretax income (loss):
Land option contract abandonment charges		359	286
Home Building [Member] | Land Option Contract Abandonment [Member] | West Coast [Member]
Pretax income (loss):
Land option contract abandonment charges		55	208
Home Building [Member] | Land Option Contract Abandonment [Member] | Southwest [Member]
Pretax income (loss):
Land option contract abandonment charges		59	0
Home Building [Member] | Land Option Contract Abandonment [Member] | Central [Member]
Pretax income (loss):
Land option contract abandonment charges		245	78
Home Building [Member] | Land Option Contract Abandonment [Member] | Southeast [Member]
Pretax income (loss):
Land option contract abandonment charges		$ 0	$ 0

[1] Land held for sale totaled $27.8 million at February 28, 2019 and $9.8 million at November 30, 2018.

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Financial Services (Schedule of Income (Loss)) (Details) - USD ($) $ in Thousands	3 Months Ended
	Feb. 28, 2019	Feb. 28, 2018
Revenues
Revenue from Contract with Customer, Excluding Assessed Tax	$ 811,483	$ 871,623
Expenses
Equity in income of unconsolidated joint ventures	396	(426)
Pretax income	34,511	46,045
Financial Service [Member]
Revenues
Insurance commissions	1,472	1,352
Title services	1,217	1,066
Interest income	6	0
Revenue from Contract with Customer, Excluding Assessed Tax	2,695	2,418
Selling, General and Administrative Expense	1,024	953
Expenses
Operating income	1,671	1,465
Equity in income of unconsolidated joint ventures	802	419
Pretax income	$ 2,473	$ 1,884

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Financial Services (Schedule of Assets and Liabilities) (Details) - USD ($) $ in Thousands		Feb. 28, 2019	Dec. 01, 2018	Nov. 30, 2018	Feb. 28, 2018	Nov. 30, 2017
Assets
Cash and cash equivalents		$ 512,407		$ 575,119	$ 560,806	$ 720,861
Receivables		313,609		292,830
Investments in unconsolidated joint ventures		57,134		61,960
Other assets		89,560		83,100
Total assets		5,173,656		5,073,571
Financial Service [Member]
Assets
Cash and cash equivalents		717		760	$ 551
Receivables		1,602		2,885
Investments in unconsolidated joint ventures		6,995		8,594
Other assets	[1]	19,961		141
Total assets		29,275	$ 32,108	12,380
Liabilities
Accounts payable and accrued expenses		1,174		1,495
Total liabilities		1,174		$ 1,495
Contract assets		$ 19,800	$ 19,700

[1] Other assets at February 28, 2019 included $19.8 million of contract assets for estimated future renewal commissions due to our adoption of ASC 606 effective December 1, 2018, as described in Note 1 – Basis of Presentation and Significant Accounting Policies.

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Earnings Per Share (Basic and Diluted Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 01, 2019	Nov. 30, 2018
Numerator:
Net income (loss)	$ 30,011	$ (71,255)
Less: Distributed earnings allocated to nonvested restricted stock	(14)	0
Less: Undistributed earnings allocated to nonvested restricted stock	(176)	0
Numerator for basic earnings (loss) per share	29,821	(71,255)
Interest expense and amortization of debt issuance costs associated with convertible senior notes, net of taxes	541	0
Add: Undistributed earnings allocated to nonvested restricted stock	176	0
Less: Undistributed earnings reallocated to nonvested restricted stock	(158)	0
Numerator for diluted earnings (loss) per share	$ 30,380	$ (71,255)
Denominator:
Weighted average shares outstanding — basic (in shares)	86,972	87,155
Effect of dilutive securities: Share-based payments (in shares)	4,202	0
Effect of dilutive securities: Convertible senior notes (in shares)	5,788	0
Weighted average shares outstanding — diluted (in shares)	96,962	87,155
Basic earnings (loss) per share (in dollars per share)	$ 0.34	$ (0.82)
Diluted earnings (loss) per share (in dollars per share)	$ 0.31	$ (0.82)
Antidilutive securities excluded from computation of earnings per share (in shares)	800
Mortgages and notes payable	$ 2,203,589			$ 2,060,263
1.375% Convertible senior notes due February 1, 2019 [Member] | Convertible Notes Payable [Member]
Mortgages and notes payable	$ 0		$ 230,000	$ 229,788
Senior notes, rate			1.375%	1.375%

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Receivables (Details) - USD ($) $ in Thousands	Feb. 28, 2019	Nov. 30, 2018
Accounts, Notes, Loans and Financing Receivable [Line Items]
Due from utility companies, improvement districts and municipalities	$ 115,250	$ 113,434
Refundable deposits and bonds	13,734	14,115
Other	42,086	33,775
Subtotal	324,900	304,335
Allowance for doubtful accounts	(11,291)	(11,505)
Total	313,609	292,830
Self Insurance and Other Legal Claims [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recoveries related to self-insurance and other legal claims	149,719	138,261
Recoveries related to warranty and other claims [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recoveries related to warranty and other claims	$ 4,111	$ 4,750

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Inventories (Schedule of Inventories) (Details) - USD ($) $ in Thousands		Feb. 28, 2019	Nov. 30, 2018
Inventories
Homes under construction		$ 1,189,910	$ 1,125,152
Land under development		2,250,969	2,219,936
Land held for future development	[1]	242,884	237,751
Total		3,683,763	3,582,839
Inventory, Land Held-for-sale		$ 27,800	$ 9,800

[1] Land held for sale totaled $27.8 million at February 28, 2019 and $9.8 million at November 30, 2018.

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Inventories (Schedule of Capitalized Interest Costs) (Details) - USD ($) $ in Thousands		3 Months Ended
		Feb. 28, 2019	Feb. 28, 2018
Interest Costs
Capitalized interest at beginning of period		$ 209,129	$ 262,191
Interest incurred		34,788	39,944
Interest amortized to construction and land costs	[1]	(30,547)	(42,350)
Capitalized interest at end of period	[2]	213,370	259,785
Land [Member]
Interest Costs
Interest amortized to construction and land costs		$ (600)	$ (1,000)

[1] Land held for sale totaled $27.8 million at February 28, 2019 and $9.8 million at November 30, 2018.

[2] b)Capitalized interest amounts reflect the gross amount of capitalized interest, as inventory impairment charges recognized, if any, are not generally allocated to specific components of inventory.

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Inventory Impairments and Land Option Contract Abandonments (Narratives) (Details)	3 Months Ended
	Feb. 28, 2019 USD ($) property lot delivery Rate	Feb. 28, 2018 USD ($) property delivery Rate	Nov. 30, 2018 USD ($) property
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Number of land parcels or communities evaluated for recoverability | property	18	29
Carrying value of communities or land parcels evaluated for impairment	$ 96,200,000	$ 200,100,000
Inventory impairment charges	3,200,000	4,700,000
Aggregate carrying value of inventory impacted by pretax, noncash inventory impairment charges	$ 159,100,000		$ 156,100,000
Number of communities and various other land parcels impacted by pretax, noncash inventory impairment charges	22		22
Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Average selling price	$ 1,045,400	$ 774,100
Deliveries per month | delivery	1	3
Minimum [Member] | Measurement Input, Discount Rate [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Discount Rate, Percent | Rate	17.00%	18.00%
Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Average selling price	$ 1,045,400	$ 774,100
Deliveries per month | delivery	1	3
Maximum [Member] | Measurement Input, Discount Rate [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Discount Rate, Percent | Rate	17.00%	18.00%
Land Option Contract Abandonment [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31)
Land option contract abandonment charges	$ 400,000	$ 300,000

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Variable Interest Entities (Details) $ in Thousands	Feb. 28, 2019 USD ($) joint_venture	Nov. 30, 2018 USD ($) joint_venture
Variable Interest Entity [Line Items]
Number of investments in unconsolidated joint ventures | joint_venture	6	6
Cash Deposits	$ 49,802	$ 53,830
Aggregate Purchase Price	1,234,198	1,371,238
Pre-acquisition costs related to land option contracts and other similar contracts	43,600	46,900
Increase in inventories and accrued expenses and other liabilities	$ 5,500	$ 21,800
Variable Interest Entity, Not Primary Beneficiary [Member]
Variable Interest Entity [Line Items]
Number of investments in unconsolidated joint ventures | joint_venture	1	1
Cash Deposits	$ 22,733	$ 26,542
Aggregate Purchase Price	758,458	784,334
Other land option contracts and other similar contracts [Member]
Variable Interest Entity [Line Items]
Cash Deposits	27,069	27,288
Aggregate Purchase Price	$ 475,740	$ 586,904

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Investments in Unconsolidated Joint Ventures (Financial Information for Unconsolidated Joint Ventures) (Details) - USD ($) $ in Thousands		3 Months Ended
		Feb. 28, 2019	Feb. 28, 2018	Nov. 30, 2018
Statements of operations of unconsolidated joint venture
Revenues		$ 12,192	$ 8,797
Construction and land costs		(12,220)	(8,816)
Other expense, net		(628)	(1,372)
Loss		(656)	$ (1,391)
Assets
Cash		16,598		$ 18,567
Inventories		127,377		131,074
Other assets		446		530
Total assets		144,421		150,171
Liabilities and equity
Accounts payable and other liabilities		11,254		11,374
Notes payable	[1]	22,045		17,956
Equity		111,122		120,841
Total liabilities and equity		$ 144,421		$ 150,171

[1] As of February 28, 2019 and November 30, 2018, one of our unconsolidated joint ventures had a construction loan agreement with a third-party lender to finance its land development activities, with the outstanding debt secured by the underlying property and related project assets and non-recourse to us. All of the outstanding secured debt at February 28, 2019 is scheduled to mature in February 2020. None of our other unconsolidated joint ventures had outstanding debt at February 28, 2019 or November 30, 2018.

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Investments in Unconsolidated Joint Ventures (Information for Investments in Unconsolidated Joint Ventures) (Details) $ in Thousands	3 Months Ended
	Feb. 28, 2019 USD ($) lot joint_venture	Nov. 30, 2018 USD ($) lot joint_venture
Schedule of Equity Method Investments [Line Items]
Number of investments in unconsolidated joint ventures	6	6
Investments in unconsolidated joint ventures | $	$ 57,134	$ 61,960
Number of Unconsolidated Joint Venture Lots Controlled Under Land Option Contracts | lot	25	36
Number of Units in Real Estate Property | lot	25
Long-term Purchase, Commitment, Amount | $	$ 11,800
Investments in Unconsolidated Joint Ventures with Debt [Member]
Schedule of Equity Method Investments [Line Items]
Number of investments in unconsolidated joint ventures		1
Investments in Unconsolidated Joint Ventures with Purchase Commitments [Member]
Schedule of Equity Method Investments [Line Items]
Number of investments in unconsolidated joint ventures	1

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Property and Equipment, Net (Details) - USD ($) $ in Thousands		3 Months Ended
		Feb. 28, 2019	Feb. 28, 2018	Nov. 30, 2018
Property, Plant and Equipment [Abstract]
Computer software and equipment		$ 22,953		$ 20,940
Model furnishings and sales office improvements	[1]	61,747		0
Leasehold improvements, office furniture and equipment	[2]	15,385		23,491
Subtotal		100,085		44,431
Less accumulated depreciation	[1]	(44,755)		(20,148)
Total		55,330		$ 24,283
Proceeds from sale of building		5,804	$ 0
Deferred gain on sale of property		$ 2,200

[1] The balance at February 28, 2019 reflects a change in the classification of certain community sales office and marketing- and model home-related costs and related accumulated amortization from inventories to property and equipment, net due to our adoption of ASC 606 effective December 1, 2018, as described in Note 1 – Basis of Presentation and Significant Accounting Policies.

[2] In January 2019, we completed the sale and leaseback of our office building in San Antonio, Texas. The sale generated net cash proceeds of $5.8 million and a gain of $2.2 million, which will be recognized on a straight-line basis over a 10-year lease term until our adoption of ASU 2016-02, when the remaining gain will be recognized as a transition adjustment to retained earnings.

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Other Assets (Details) - USD ($) $ in Thousands	Feb. 28, 2019	Nov. 30, 2018
Other Assets [Abstract]
Cash surrender value of corporate-owned life insurance contracts	$ 74,649	$ 73,721
Prepaid expenses and other	14,911	9,379
Total	$ 89,560	$ 83,100

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Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands		Feb. 28, 2019	Nov. 30, 2018	Feb. 28, 2018	Nov. 30, 2017
Payables and Accruals [Abstract]
Self-insurance and other litigation liabilities		$ 297,361	$ 283,651
Employee compensation and related benefits		101,444	148,549
Warranty liability		84,191	82,490	$ 71,845	$ 69,798
Accrued interest payable		46,498	31,180
Inventory-related liabilities	[1]	23,319	40,892
Customer deposits		20,122	19,491
Real estate and business taxes		9,529	16,639
Other		48,917	43,376
Total		$ 631,381	$ 666,268

[1] Represents liabilities for financing arrangements discussed in Note 8 – Variable Interest Entities, as well as liabilities for fixed or determinable amounts associated with tax increment financing entity (“TIFE”) assessments. As homes are delivered, our obligation to pay the remaining TIFE assessments associated with each underlying lot is transferred to the homebuyer. As such, these assessment obligations will be paid by us only to the extent we do not deliver homes on applicable lots before the related TIFE obligations mature.

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Income Taxes (Details) - USD ($)	3 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Nov. 30, 2018
Income Tax Expense (Benefit), Continuing Operations [Abstract]
Income tax expense	$ 4,500,000	$ 117,300,000
Effective tax rate	13.00%	254.80%
Net (increase) reduction in valuation allowance	$ 3,300,000	$ (3,300,000)
Excess tax benefits related to stock-based compensation	(2,000,000)	(2,200,000)
Tax cuts and jobs act, non-cash charge		111,200,000
Tax cuts and jobs act, re-measurement of deferred tax assets		107,900,000
Tax credits	800,000	$ 4,000,000
Deferred tax assets	453,600,000		$ 465,400,000
Valuation allowance	20,300,000		23,600,000
Adjustments to deferred tax valuation allowance	0
Gross unrecognized taxe benefits (including interest and penalties)	$ 0		$ 0

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Notes Payable (Schedule Notes Payable) (Details) - USD ($) $ in Thousands	Feb. 28, 2019	Feb. 01, 2019	Nov. 30, 2018
Debt Instrument [Line Items]
Mortgages and notes payable	$ 2,203,589		$ 2,060,263
Mortgages and land contracts due to land sellers and other loans
Debt Instrument [Line Items]
Mortgages and notes payable	$ 12,018		$ 40,038
Senior Notes [Member] | 4.75% Senior notes due May 15, 2019 [Member]
Debt Instrument [Line Items]
Senior notes, rate	4.75%		4.75%
Mortgages and notes payable	$ 399,764		$ 399,483
Senior Notes [Member] | 8.00% Senior notes due March 15, 2020 [Member]
Debt Instrument [Line Items]
Senior notes, rate	8.00%		8.00%
Mortgages and notes payable	$ 348,199		$ 347,790
Senior Notes [Member] | 7.00% Senior notes due December 15, 2021 [Member]
Debt Instrument [Line Items]
Senior notes, rate	7.00%		7.00%
Mortgages and notes payable	$ 447,554		$ 447,359
Senior Notes [Member] | 7.50% Senior notes due September 15, 2022 [Member]
Debt Instrument [Line Items]
Senior notes, rate	7.50%		7.50%
Mortgages and notes payable	$ 347,861		$ 347,731
Senior Notes [Member] | 7.625% Senior notes due May 15, 2023 [Member]
Debt Instrument [Line Items]
Senior notes, rate	7.625%		7.625%
Mortgages and notes payable	$ 352,081		$ 248,074
Senior Notes [Member] | 6.875% Senior notes due June 15, 2027 [Member]
Debt Instrument [Line Items]
Senior notes, rate	6.875%
Mortgages and notes payable	$ 296,112		$ 0
Convertible Notes Payable [Member] | 1.375% Convertible senior notes due February 1, 2019 [Member]
Debt Instrument [Line Items]
Senior notes, rate		1.375%	1.375%
Mortgages and notes payable	$ 0	$ 230,000	$ 229,788

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Notes Payable (Narratives) (Details) - USD ($)				3 Months Ended
	Mar. 08, 2019	Feb. 20, 2019	Feb. 01, 2019	Feb. 28, 2019	Feb. 28, 2018	Nov. 30, 2018
Debt Instrument [Line Items]
Unamortized debt issuance costs, premiums and discounts				$ 8,400,000		$ 9,800,000
Letters of credit outstanding				33,400,000		$ 28,000,000
Inventories pledged to collateralize mortgages and land contracts, carrying value				138,200,000
Repayment of senior notes				230,000,000	$ 0
Proceeds from issuance of debt		$ 400,000,000		405,250,000	$ 0
Repayments of principal, 2019				412,000,000
Repayments of principal, 2020				350,000,000
Repayments of principal, 2021				0
Repayments of principal, 2022				800,000,000
Repayments of principal, 2023				350,000,000
Repayments of principal, thereafter				$ 300,000,000
1.375% Convertible senior notes due February 1, 2019 [Member] | Convertible Notes Payable [Member]
Debt Instrument [Line Items]
Repayment of senior notes			$ 230,000,000
Senior notes, rate			1.375%			1.375%
6.875% Senior notes due June 15, 2027 [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Senior notes, rate				6.875%
Proceeds from issuance of debt		300,000,000
Debt Instrument, Redemption Price, Percentage				100.00%
7.625% Senior notes due May 15, 2023 [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Senior notes, rate				7.625%		7.625%
Proceeds from issuance of debt		$ 100,000,000
Debt Instrument, Redemption Price, Percentage				105.25%
4.75% Senior notes due May 15, 2019 [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Senior notes, rate				4.75%		4.75%
4.75% Senior notes due May 15, 2019 [Member] | Senior Notes [Member] | Subsequent Event [Member]
Debt Instrument [Line Items]
Repayment of senior notes	$ 400,000,000
Senior notes, rate	4.75%
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Unsecured revolving credit facility, borrowing capacity				$ 500,000,000
Unsecured revolving credit facility, expiration date				Jul. 27, 2021
Unsecured revolving credit facility, maximum borrowing capacity				$ 600,000,000
Credit facility, letters of credit outstanding				0
Unsecured revolving credit facility, remaining borrowing capacity				$ 466,900,000
Revolving Credit Facility [Member] | Minimum [Member]
Debt Instrument [Line Items]
Line of credit facility, unused capacity, commitment fee percentage				0.30%
Revolving Credit Facility [Member] | Maximum [Member]
Debt Instrument [Line Items]
Line of credit facility, unused capacity, commitment fee percentage				0.45%
Letter of Credit [Member]
Debt Instrument [Line Items]
Unsecured revolving credit facility, maximum borrowing capacity				$ 250,000,000
Credit facility, letters of credit outstanding				33,100,000
Unsecured revolving credit facility, remaining borrowing capacity				216,900,000
LOC Facilities [Member]
Debt Instrument [Line Items]
Unsecured revolving credit facility, borrowing capacity				50,000,000
Letters of credit outstanding				$ 270,000.000		$ 0

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Fair Value Disclosures (Assets Measured at Fair Value on Nonrecurring Basis) (Details) - USD ($) $ in Thousands		3 Months Ended		12 Months Ended
		Feb. 28, 2019	Feb. 28, 2018	Nov. 30, 2018
Assets measured at fair value on a nonrecurring basis
Inventory Impairment Charges		$ (3,200)	$ (4,700)
Fair Value, Measurements, Nonrecurring [Member] | Level 3
Assets measured at fair value on a nonrecurring basis
Pre-Impairment Value		9,917		$ 70,156
Inventory Impairment Charges		(3,196)		(26,104)
Fair Value	[1]	$ 6,721		$ 44,052

[1] Amounts represent the aggregate fair value for real estate assets impacted by inventory impairment charges during the applicable period as of the date the fair value measurements were made. The carrying value for these real estate assets may have subsequently increased or decreased from the fair value reflected due to activity that has occurred since the measurement date.

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Fair Value Disclosures (Fair Value Hierarchy, Carrying Values, and Estimated Fair Values of Financial Instruments) (Details) - Level 2 - USD ($) $ in Thousands		Feb. 28, 2019	Nov. 30, 2018
Carrying Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Convertible senior notes	[1]	$ 0	$ 229,788
Carrying Value [Member] | Senior Notes [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Senior notes	[1]	2,191,571	1,790,437
Estimate of Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Convertible senior notes		0	229,425
Estimate of Fair Value [Member] | Senior Notes [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Senior notes		$ 2,298,750	$ 1,853,438

[1] The carrying values for the senior notes and convertible senior notes, as presented, include unamortized debt issuance costs. Debt issuance costs are not factored into the estimated fair values of these notes.

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Commitments and Contingencies (Narratives) (Details) $ in Thousands	3 Months Ended
	Feb. 28, 2019 USD ($) Home claim_filed	Aug. 31, 2017 USD ($)	Nov. 30, 2018 USD ($)
Loss Contingencies [Line Items]
Minimum warranty on electrical and other building systems (in years)	2 years
Maximum warranty on electrical and other building systems (in years)	5 years
Warranty for other components of the home (in years)	1 year
Performance bonds	$ 707,600		$ 689,300
Letters of credit outstanding	$ 33,400		28,000
Warranty for other components of a home (in years)	1 year
Cash deposits	$ 49,802		53,830
Aggregate purchase price of land	$ 1,234,198		1,371,238
Damages from Product Defects [Member]
Loss Contingencies [Line Items]
Structural warranty provided by the company (in years)	10 years
Minimum number of affected homes for construction defect claims | Home	2
Warranty Obligations [Member]
Loss Contingencies [Line Items]
Structural warranty provided by the company (in years)	10 years
Self Insurance [Member]
Loss Contingencies [Line Items]
Recoveries related to warranty and other claims	$ 57,200		56,900
Warranty and other [Member]
Loss Contingencies [Line Items]
Recoveries related to warranty and other claims	4,100		$ 4,800
Northern California Townhome Community [Member]
Loss Contingencies [Line Items]
Claims for damages	$ 142,000	$ 100,000
Chapter 558 of the Florida Statutes [Member]
Loss Contingencies [Line Items]
Outstanding noticed claims | claim_filed	560

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Commitments and Contingencies (Changes in the Warranty and Self-Insurance Liability) (Details) - USD ($) $ in Thousands		3 Months Ended
		Feb. 28, 2019	Feb. 28, 2018
Changes in the Warranty Liability
Balance at beginning of period		$ 82,490	$ 69,798
Warranties issued		6,294	7,764
Payments		(4,593)	(5,717)
Balance at end of period		84,191	71,845
Movement In Self Insurance Reserve [Roll Forward]
Balance at beginning of period		176,841	177,695
Self-insurance expense	[1]	3,747	4,401
Payments	[2]	(2,726)	(1,401)
Balance at end of period		$ 177,862	$ 180,695

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

[2] (b)Includes net changes in estimated probable insurance and other recoveries, which are recorded in receivables, to present our self-insurance liability on a gross basis.

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Stockholders' Equity (Details) - USD ($) $ in Thousands	3 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Dec. 01, 2018
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance	$ 2,087,500	$ 1,926,311
Cumulative effect of adoption of ASC 606	11,610
Net income	30,011	(71,255)
Dividends on common stock	$ (2,266)	(2,322)
Employee stock options/other (in shares)	(62,292)
Employee stock options/other	$ 832	2,946
Stock awards	0	0
Stock-based compensation	4,152	3,829
Tax payments associated with stock-based compensation awards	(3,342)	(6,787)
Ending balance	$ 2,128,497	$ 1,852,722
Common Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance (in shares)	(119,196,000)	(117,946,000)
Beginning balance	$ 119,196	$ 117,946
Employee stock options/other (in shares)	(62,000)	(268,000)
Employee stock options/other	$ 62	$ 268
Ending balance (in shares)	(119,258,000)	(118,214,000)
Ending balance	$ 119,258	$ 118,214
Paid-in Capital
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance	753,570	727,483
Employee stock options/other	770	2,678
Stock awards	(3,151)	(4,551)
Stock-based compensation	4,152	3,829
Ending balance	755,341	729,439
Retained Earnings
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance	1,897,168	1,735,695
Cumulative effect of adoption of ASC 606			$ 11,610
Net income	30,011	(71,255)
Dividends on common stock	(2,266)	(2,322)
Ending balance	1,936,523	1,662,118
Accumulated Other Comprehensive Income
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance	(9,565)	(16,924)
Ending balance	$ (9,565)	$ (16,924)
Grantor Stock Ownership Trust
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance (in shares)	(8,157,000)	(8,898,000)
Beginning balance	$ (88,472)	$ (96,509)
Stock awards (in shares)	(297,000)	(438,000)
Stock awards	$ 3,226	$ 4,749
Ending balance (in shares)	(7,860,000)	(8,460,000)
Ending balance	$ (85,246)	$ (91,760)
Treasury Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance (in shares)	(24,113,000)	(22,021,000)
Beginning balance	$ (584,397)	$ (541,380)
Stock awards (in shares)	(151,000)	(10,000)
Stock awards	$ (75)	$ (198)
Tax payments associated with stock-based compensation awards (in shares)		(217,000)
Tax payments associated with stock-based compensation awards	$ (3,342)	$ (6,787)
Ending balance (in shares)	(24,264,000)	(22,248,000)
Ending balance	$ (587,814)	$ (548,365)

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Stockholders' Equity (Narratives) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 15, 2019	Feb. 01, 2019	Nov. 30, 2018	Jul. 17, 2014
Debt Instrument [Line Items]
Cash dividends declared per common share (in dollars per share)	$ 0.025	$ 0.0250
Payments Related to Tax Withholding for Share-based Compensation	$ 3,342	$ 6,787
Dividend paid in each quarter (in dollars per share)	$ 0.0250	$ 0.0250
January 2016 Stock Repurchase Program [Member]
Debt Instrument [Line Items]
Number of common stock, authorized, approved under a board approved stock repurchase program (in shares)	2,193,947
Shares Withheld to Pay Taxes [Member]
Debt Instrument [Line Items]
Common stock repurchased (in shares)	147,382
Payments Related to Tax Withholding for Share-based Compensation	$ 3,300
PSU 2014 [Domain] | Performance Shares [Member]
Debt Instrument [Line Items]
Common Stock, Shares, Issued (in shares)			297,260
Director Plan SARs [Domain]
Debt Instrument [Line Items]
Number of common stock, authorized, approved under a board approved stock repurchase program (in shares)						680,000
2014 Equity Incentive Plan [Domain]
Debt Instrument [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	680,000
Convertible Notes Payable [Member] | 1.375% Convertible senior notes due February 1, 2019 [Member]
Debt Instrument [Line Items]
Senior notes, rate				1.375%	1.375%

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Stock-Based Compensation (Outstanding and Exercisable Stock Options) (Details)	3 Months Ended
	Feb. 28, 2019 $ / shares shares
Options
Options outstanding at beginning of period, options (in shares) | shares	7,237,544
Granted, options (in shares) | shares	0
Exercised, options (in shares) | shares	(62,292)
Cancelled, options (in shares) | shares	0
Options outstanding at end of period, options (in shares) | shares	7,175,252
Options exercisable at end of period (in shares) | shares	6,886,378
Weighted Average Exercise Price in dollars per share
Options outstanding at beginning of period, weighted average exercise price (in dollars per share) | $ / shares	$ 16.02
Granted, weighted average exercise price (in dollars per share) | $ / shares	0.00
Exercised, weighted average exercise price (in dollars per share) | $ / shares	13.36
Cancelled, weighted average exercise price (in dollars per share) | $ / shares	0.00
Options outstanding at end of period, weighted average exercise price (in dollars per share) | $ / shares	16.04
Options exercisable at end of period (in dollars per share) | $ / shares	$ 16.04

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Stock-Based Compensation (Narratives) (Details) - USD ($) $ in Millions	3 Months Ended
	Feb. 28, 2019	Feb. 28, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average remaining contractual life of stock options outstanding	3 years 9 months 10 days
Weighted average remaining contractual life of stock options exercisable	3 years 7 months 15 days
Aggregate intrinsic value of stock options outstanding	$ 62.3
Aggregate intrinsic value of stock options exercisable	60.4
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost, total	$ 0.1
Period for recognition	7 months 7 days
Stock-based compensation expense (income) associated with stock options, total		$ 0.2
Restricted Stock and Performance Unit Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense (income) associated with stock options, total	$ 4.1	$ 3.7

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Supplemental Disclosure to Consolidated Statements of Cash Flows (Details) - USD ($) $ in Thousands	3 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Dec. 01, 2018	Nov. 30, 2018	Nov. 30, 2017
Summary of cash and cash equivalents at end of period:
Cash and cash equivalents	$ 512,407	$ 560,806		$ 575,119	$ 720,861
Supplemental disclosures of cash flow information:
Interest paid, net of amounts capitalized	(15,318)	(9,696)
Income taxes paid	113	1,639
Supplemental disclosures of non-cash activities:
Decrease in inventories due to adoption of ASC 606	3,683,763			3,582,839
Increase in property and equipment, net due to adoption of ASC 606	55,330			24,283
Increase (decrease) in consolidated inventories not owned	(16,262)	8,466
Inventories acquired through seller financing	0	36,697
Inspirada Builders LLC
Supplemental disclosures of non-cash activities:
Increase in inventories due to distributions of land and land development from an unconsolidated joint venture	1,946	2,699
Accounting Standards Update 2014-09 [Member]
Supplemental disclosures of non-cash activities:
Decrease in inventories due to adoption of ASC 606		0	$ (35,288)
Increase in property and equipment, net due to adoption of ASC 606		0	31,194
Home Building [Member]
Summary of cash and cash equivalents at end of period:
Cash and cash equivalents	511,690	560,255		574,359
Supplemental disclosures of non-cash activities:
Decrease in inventories due to adoption of ASC 606	3,683,763		3,547,551	3,582,839
Increase in property and equipment, net due to adoption of ASC 606	55,330		$ 55,477	24,283
Financial Service [Member]
Summary of cash and cash equivalents at end of period:
Cash and cash equivalents	$ 717	$ 551		$ 760

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Supplemental Guarantor Information (Narrative) (Details)	3 Months Ended
	Feb. 28, 2019
Guarantees [Abstract]
Ownership share in guarantor subsidiaries, percent	100.00%
Line of credit facility, significant subsidiary threshold, percent	5.00%
Line of credit facility, non guarantor subsidiary threshold, percent	10.00%

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Supplemental Guarantor Information (Condensed Consolidated Statements of Operations) (Details) - USD ($) $ in Thousands	3 Months Ended
	Feb. 28, 2019	Feb. 28, 2018
Condensed Consolidated Statements of Operations
Total revenues	$ 811,483	$ 871,623
Homebuilding:
Equity in income of unconsolidated joint ventures	396	(426)
Total pretax income	34,511	46,045
Income tax expense	(4,500)	(117,300)
Equity in net income of subsidiaries	0	0
Net income (loss)	30,011	(71,255)
Reportable Legal Entities [Member] | KB Home Corporate [Member]
Condensed Consolidated Statements of Operations
Total revenues	0	0
Homebuilding:
Total pretax income	20,409	13,706
Income tax expense	(700)	(44,700)
Equity in net income of subsidiaries	10,302	(40,261)
Net income (loss)	30,011	(71,255)
Reportable Legal Entities [Member] | Guarantor Subsidiaries [Member]
Condensed Consolidated Statements of Operations
Total revenues	744,453	794,689
Homebuilding:
Total pretax income	15,407	30,993
Income tax expense	(3,400)	(48,100)
Equity in net income of subsidiaries	0	0
Net income (loss)	12,007	(17,107)
Reportable Legal Entities [Member] | Non-Guarantor Subsidiaries [Member]
Condensed Consolidated Statements of Operations
Total revenues	67,030	76,934
Homebuilding:
Total pretax income	(1,305)	1,346
Income tax expense	(400)	(24,500)
Equity in net income of subsidiaries	0	0
Net income (loss)	(1,705)	(23,154)
Consolidating Adjustments [Member]
Condensed Consolidated Statements of Operations
Total revenues	0	0
Homebuilding:
Total pretax income	0	0
Income tax expense	0	0
Equity in net income of subsidiaries	(10,302)	40,261
Net income (loss)	(10,302)	40,261
Home Building [Member]
Condensed Consolidated Statements of Operations
Total revenues	808,788	869,205
Homebuilding:
Construction and land costs	(670,855)	(729,478)
Selling, general and administrative expenses	(106,594)	(95,724)
Operating income	31,339	44,003
Interest income	1,105	1,003
Interest expense	0	0
Intercompany interest	0	0
Equity in income of unconsolidated joint ventures	(406)	(845)
Total pretax income	32,038	44,161
Home Building [Member] | Reportable Legal Entities [Member] | KB Home Corporate [Member]
Condensed Consolidated Statements of Operations
Total revenues	0	0
Homebuilding:
Construction and land costs	0	0
Selling, general and administrative expenses	(25,382)	(22,166)
Operating income	(25,382)	(22,166)
Interest income	1,014	998
Interest expense	(33,195)	(37,972)
Intercompany interest	77,972	72,846
Equity in income of unconsolidated joint ventures	0	0
Total pretax income	20,409	13,706
Home Building [Member] | Reportable Legal Entities [Member] | Guarantor Subsidiaries [Member]
Condensed Consolidated Statements of Operations
Total revenues	744,453	794,689
Homebuilding:
Construction and land costs	(611,041)	(664,096)
Selling, general and administrative expenses	(75,540)	(67,117)
Operating income	57,872	63,476
Interest income	0	5
Interest expense	(321)	(689)
Intercompany interest	(41,738)	(30,954)
Equity in income of unconsolidated joint ventures	(406)	(845)
Total pretax income	15,407	30,993
Home Building [Member] | Reportable Legal Entities [Member] | Non-Guarantor Subsidiaries [Member]
Condensed Consolidated Statements of Operations
Total revenues	64,335	74,516
Homebuilding:
Construction and land costs	(59,814)	(65,382)
Selling, general and administrative expenses	(5,672)	(6,441)
Operating income	(1,151)	2,693
Interest income	91	0
Interest expense	(1,272)	(1,283)
Intercompany interest	(1,446)	(1,948)
Equity in income of unconsolidated joint ventures	0	0
Total pretax income	(3,778)	(538)
Home Building [Member] | Consolidating Adjustments [Member]
Condensed Consolidated Statements of Operations
Total revenues	0	0
Homebuilding:
Construction and land costs	0	0
Selling, general and administrative expenses	0	0
Operating income	0	0
Interest income	0	0
Interest expense	34,788	39,944
Intercompany interest	(34,788)	(39,944)
Equity in income of unconsolidated joint ventures	0	0
Total pretax income	0	0
Financial Service [Member]
Condensed Consolidated Statements of Operations
Total revenues	2,695	2,418
Homebuilding:
Selling, general and administrative expenses	(1,024)	(953)
Operating income	1,671	1,465
Equity in income of unconsolidated joint ventures	802	419
Total pretax income	2,473	1,884
Financial Service [Member] | Reportable Legal Entities [Member] | KB Home Corporate [Member]
Homebuilding:
Total pretax income	0	0
Financial Service [Member] | Reportable Legal Entities [Member] | Guarantor Subsidiaries [Member]
Homebuilding:
Total pretax income	0	0
Financial Service [Member] | Reportable Legal Entities [Member] | Non-Guarantor Subsidiaries [Member]
Homebuilding:
Total pretax income	2,473	1,884
Financial Service [Member] | Consolidating Adjustments [Member]
Homebuilding:
Total pretax income	$ 0	$ 0

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Supplemental Guarantor Information (Condensed Consolidated Balance Sheets) (Details) - USD ($) $ in Thousands		Feb. 28, 2019	Dec. 01, 2018	Nov. 30, 2018	Feb. 28, 2018	Nov. 30, 2017
Assets
Cash and cash equivalents		$ 512,407		$ 575,119	$ 560,806	$ 720,861
Receivables		313,609		292,830
Inventories		3,683,763		3,582,839
Investments in unconsolidated joint ventures		57,134		61,960
Property and equipment, net		55,330		24,283
Other assets		89,560		83,100
Total assets		5,173,656		5,073,571
Liabilities and stockholders’ equity
Mortgages and notes payable		2,203,589		2,060,263
Intercompany payables		0		0
Stockholders’ equity		2,128,497		2,087,500	1,852,722	1,926,311
Total liabilities and stockholders’ equity		5,173,656		5,073,571
Reportable Legal Entities [Member] | KB Home Corporate [Member]
Assets
Cash and cash equivalents		415,471		429,977	455,629	575,193
Total assets		4,465,807		4,252,493
Liabilities and stockholders’ equity
Intercompany payables		48,688		43,702
Stockholders’ equity		2,128,497		2,087,500
Total liabilities and stockholders’ equity		4,465,807		4,252,493
Reportable Legal Entities [Member] | Guarantor Subsidiaries [Member]
Assets
Cash and cash equivalents		80,346		114,269	75,325	104,120
Total assets		4,136,910		4,002,279
Liabilities and stockholders’ equity
Intercompany payables		3,666,215		3,377,920
Stockholders’ equity		15,408		0
Total liabilities and stockholders’ equity		4,136,910		4,002,279
Reportable Legal Entities [Member] | Non-Guarantor Subsidiaries [Member]
Assets
Cash and cash equivalents		16,590		30,873	29,852	41,548
Total assets		606,217		614,638
Liabilities and stockholders’ equity
Intercompany payables		216,335		306,560
Stockholders’ equity		88,632		67,657
Total liabilities and stockholders’ equity		606,217		614,638
Consolidating Adjustments [Member]
Assets
Cash and cash equivalents		0		0	0	$ 0
Total assets		(4,035,278)		(3,795,839)
Liabilities and stockholders’ equity
Intercompany payables		(3,931,238)		(3,728,182)
Stockholders’ equity		(104,040)		(67,657)
Total liabilities and stockholders’ equity		(4,035,278)		(3,795,839)
Home Building [Member]
Assets
Cash and cash equivalents		511,690		574,359	560,255
Receivables		313,609		292,830
Inventories		3,683,763	$ 3,547,551	3,582,839
Investments in unconsolidated joint ventures		57,134		61,960
Property and equipment, net		55,330	55,477	24,283
Deferred tax assets, net		433,295	437,796	441,820
Other assets		89,560		83,100
Intercompany receivables		0		0
Investments in subsidiaries		0		0
Total assets		5,144,381		5,061,191
Liabilities and stockholders’ equity
Accounts payable and accrued expenses		840,396		924,313
Mortgages and notes payable		2,203,589		2,060,263
Total Liabilities		3,043,985		2,984,576
Home Building [Member] | Reportable Legal Entities [Member] | KB Home Corporate [Member]
Assets
Cash and cash equivalents		415,471		429,977
Receivables		4,291		5,135
Inventories		0		0
Investments in unconsolidated joint ventures		0		0
Property and equipment, net		20,363		18,450
Deferred tax assets, net		80,339		84,564
Other assets		84,083		77,288
Intercompany receivables		3,757,220		3,569,422
Investments in subsidiaries		104,040		67,657
Total assets		604,547		615,414
Liabilities and stockholders’ equity
Accounts payable and accrued expenses		122,161		126,176
Mortgages and notes payable		2,166,461		1,995,115
Total Liabilities		2,288,622		2,121,291
Home Building [Member] | Reportable Legal Entities [Member] | Guarantor Subsidiaries [Member]
Assets
Cash and cash equivalents		80,346		114,269
Receivables		228,879		198,465
Inventories		3,435,361		3,314,386
Investments in unconsolidated joint ventures		57,134		61,960
Property and equipment, net		32,002		5,523
Deferred tax assets, net		299,769		303,669
Other assets		3,419		4,007
Intercompany receivables		0		0
Investments in subsidiaries		0		0
Total assets		4,136,910		4,002,279
Liabilities and stockholders’ equity
Accounts payable and accrued expenses		443,269		584,321
Mortgages and notes payable		12,018		40,038
Total Liabilities		455,287		624,359
Home Building [Member] | Reportable Legal Entities [Member] | Non-Guarantor Subsidiaries [Member]
Assets
Cash and cash equivalents		15,873		30,113
Receivables		80,439		89,230
Inventories		248,402		268,453
Investments in unconsolidated joint ventures		0		0
Property and equipment, net		2,965		310
Deferred tax assets, net		53,187		53,587
Other assets		2,058		1,805
Intercompany receivables		174,018		158,760
Investments in subsidiaries		0		0
Total assets		402,924		443,498
Liabilities and stockholders’ equity
Accounts payable and accrued expenses		274,966		213,816
Mortgages and notes payable		25,110		25,110
Total Liabilities		300,076		238,926
Home Building [Member] | Consolidating Adjustments [Member]
Assets
Cash and cash equivalents		0		0
Receivables		0		0
Inventories		0		0
Investments in unconsolidated joint ventures		0		0
Property and equipment, net		0		0
Deferred tax assets, net		0		0
Other assets		0		0
Intercompany receivables		(3,931,238)		(3,728,182)
Investments in subsidiaries		(104,040)		(67,657)
Total assets		0		0
Liabilities and stockholders’ equity
Accounts payable and accrued expenses		0		0
Mortgages and notes payable		0		0
Total Liabilities		0		0
Financial Service [Member]
Assets
Cash and cash equivalents		717		760	$ 551
Receivables		1,602		2,885
Investments in unconsolidated joint ventures		6,995		8,594
Other assets	[1]	19,961		141
Total assets		29,275	$ 32,108	12,380
Liabilities and stockholders’ equity
Accounts payable and accrued expenses		1,174		1,495
Financial services		1,174		1,495
Financial Service [Member] | Reportable Legal Entities [Member] | KB Home Corporate [Member]
Assets
Total assets		0		0
Liabilities and stockholders’ equity
Financial services		0		0
Financial Service [Member] | Reportable Legal Entities [Member] | Guarantor Subsidiaries [Member]
Assets
Total assets		0		0
Liabilities and stockholders’ equity
Financial services		0		0
Financial Service [Member] | Reportable Legal Entities [Member] | Non-Guarantor Subsidiaries [Member]
Assets
Total assets		29,275		12,380
Liabilities and stockholders’ equity
Financial services		1,174		1,495
Financial Service [Member] | Consolidating Adjustments [Member]
Assets
Total assets		0		0
Liabilities and stockholders’ equity
Financial services		$ 0		$ 0

[1] Other assets at February 28, 2019 included $19.8 million of contract assets for estimated future renewal commissions due to our adoption of ASC 606 effective December 1, 2018, as described in Note 1 – Basis of Presentation and Significant Accounting Policies.

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Supplemental Guarantor Information (Condensed Consolidated Statements of Cash Flows) (Details) - USD ($) $ in Thousands		3 Months Ended
	Feb. 20, 2019	Feb. 28, 2019	Feb. 28, 2018
Cash flows from operating activities:
Net cash provided by (used in) operating activities		$ (198,210)	$ (141,680)
Cash flows from investing activities:
Contributions to unconsolidated joint ventures		(2,527)	(8,025)
Return of investments in unconsolidated joint ventures		5,001	1,099
Proceeds from sale of building		5,804	0
Purchases of property and equipment, net		(10,025)	(1,924)
Intercompany		0	0
Net cash used in investing activities		(1,747)	(8,850)
Cash flows from financing activities:
Proceeds from issuance of debt	$ 400,000	405,250	0
Issuance costs for unsecured revolving credit facility		(5,209)	0
Repayment of senior notes		(230,000)	0
Borrowings under revolving credit facility		140,000	0
Repayments under revolving credit facility		(140,000)	0
Payments on mortgages and land contracts due to land sellers and other loans		(28,020)	(3,362)
Issuance of common stock under employee stock plans		832	2,946
Payments of cash dividends		(2,266)	(2,322)
Tax payments associated with stock-based compensation awards		(3,342)	(6,787)
Intercompany		0	0
Net cash provided by (used in) financing activities		137,245	(9,525)
Net decrease in cash and cash equivalents		(62,712)	(160,055)
Cash and cash equivalents at beginning of period		575,119	720,861
Cash and cash equivalents at end of period		512,407	560,806
Reportable Legal Entities [Member] | KB Home Corporate [Member]
Cash flows from operating activities:
Net cash provided by (used in) operating activities		13,062	3,066
Cash flows from investing activities:
Contributions to unconsolidated joint ventures		0	0
Return of investments in unconsolidated joint ventures		0	0
Proceeds from sale of building		0
Purchases of property and equipment, net		(2,068)	(1,776)
Intercompany		(190,765)	(114,691)
Net cash used in investing activities		(192,833)	(116,467)
Cash flows from financing activities:
Proceeds from issuance of debt		405,250
Issuance costs for unsecured revolving credit facility		(5,209)
Repayment of senior notes		(230,000)
Borrowings under revolving credit facility		140,000
Repayments under revolving credit facility		(140,000)
Payments on mortgages and land contracts due to land sellers and other loans		0	0
Issuance of common stock under employee stock plans		832	2,946
Payments of cash dividends		(2,266)	(2,322)
Tax payments associated with stock-based compensation awards		(3,342)	(6,787)
Intercompany		0	0
Net cash provided by (used in) financing activities		165,265	(6,163)
Net decrease in cash and cash equivalents		(14,506)	(119,564)
Cash and cash equivalents at beginning of period		429,977	575,193
Cash and cash equivalents at end of period		415,471	455,629
Reportable Legal Entities [Member] | Guarantor Subsidiaries [Member]
Cash flows from operating activities:
Net cash provided by (used in) operating activities		(337,286)	(137,254)
Cash flows from investing activities:
Contributions to unconsolidated joint ventures		(2,527)	(8,025)
Return of investments in unconsolidated joint ventures		5,001	1,099
Proceeds from sale of building		5,804
Purchases of property and equipment, net		(2,032)	(177)
Intercompany		0	0
Net cash used in investing activities		6,246	(7,103)
Cash flows from financing activities:
Proceeds from issuance of debt		0
Issuance costs for unsecured revolving credit facility		0
Repayment of senior notes		0
Borrowings under revolving credit facility		0
Repayments under revolving credit facility		0
Payments on mortgages and land contracts due to land sellers and other loans		(28,020)	(2,442)
Issuance of common stock under employee stock plans		0	0
Payments of cash dividends		0	0
Tax payments associated with stock-based compensation awards		0	0
Intercompany		325,137	118,004
Net cash provided by (used in) financing activities		297,117	115,562
Net decrease in cash and cash equivalents		(33,923)	(28,795)
Cash and cash equivalents at beginning of period		114,269	104,120
Cash and cash equivalents at end of period		80,346	75,325
Reportable Legal Entities [Member] | Non-Guarantor Subsidiaries [Member]
Cash flows from operating activities:
Net cash provided by (used in) operating activities		126,014	(7,492)
Cash flows from investing activities:
Contributions to unconsolidated joint ventures		0	0
Return of investments in unconsolidated joint ventures		0	0
Proceeds from sale of building		0
Purchases of property and equipment, net		(5,925)	29
Intercompany		0	0
Net cash used in investing activities		(5,925)	29
Cash flows from financing activities:
Proceeds from issuance of debt		0
Issuance costs for unsecured revolving credit facility		0
Repayment of senior notes		0
Borrowings under revolving credit facility		0
Repayments under revolving credit facility		0
Payments on mortgages and land contracts due to land sellers and other loans		0	(920)
Issuance of common stock under employee stock plans		0	0
Payments of cash dividends		0	0
Tax payments associated with stock-based compensation awards		0	0
Intercompany		(134,372)	(3,313)
Net cash provided by (used in) financing activities		(134,372)	(4,233)
Net decrease in cash and cash equivalents		(14,283)	(11,696)
Cash and cash equivalents at beginning of period		30,873	41,548
Cash and cash equivalents at end of period		16,590	29,852
Consolidating Adjustments [Member]
Cash flows from operating activities:
Net cash provided by (used in) operating activities		0	0
Cash flows from investing activities:
Contributions to unconsolidated joint ventures		0	0
Return of investments in unconsolidated joint ventures		0	0
Proceeds from sale of building		0
Purchases of property and equipment, net		0	0
Intercompany		190,765	114,691
Net cash used in investing activities		190,765	114,691
Cash flows from financing activities:
Proceeds from issuance of debt		0
Issuance costs for unsecured revolving credit facility		0
Repayment of senior notes		0
Borrowings under revolving credit facility		0
Repayments under revolving credit facility		0
Payments on mortgages and land contracts due to land sellers and other loans		0	0
Issuance of common stock under employee stock plans		0	0
Payments of cash dividends		0	0
Tax payments associated with stock-based compensation awards		0	0
Intercompany		(190,765)	(114,691)
Net cash provided by (used in) financing activities		(190,765)	(114,691)
Net decrease in cash and cash equivalents		0	0
Cash and cash equivalents at beginning of period		0	0
Cash and cash equivalents at end of period		$ 0	$ 0

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Subsequent Event Subsequent Event (Details) - USD ($) $ in Thousands		3 Months Ended
	Mar. 08, 2019	Feb. 28, 2019	Feb. 28, 2018	Nov. 30, 2018
Subsequent Event [Line Items]
Repayment of senior notes		$ 230,000	$ 0
4.75% Senior notes due May 15, 2019 [Member] | Senior Notes [Member]
Subsequent Event [Line Items]
Senior notes, rate		4.75%		4.75%
4.75% Senior notes due May 15, 2019 [Member] | Senior Notes [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Repayment of senior notes	$ 400,000
Senior notes, rate	4.75%