Financial Services

9 Months Ended

Aug. 31, 2019

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



	Three Months Ended August 31,				Nine Months Ended August 31,
	2019		2018		2019		2018
Revenues
Insurance commissions	$	2,224	$	1,928	$	5,342	$	4,743
Title services	1,707		1,544		4,410		3,897
Interest income	—		—		6		—
Total	3,931		3,472		9,758		8,640



	Three Months Ended August 31,						Nine Months Ended August 31,
	2019			2018			2019			2018

Expenses
General and administrative	(1,003		)	(945		)	(3,067		)	(2,855		)
Operating income	2,928			2,527			6,691			5,785
Equity in income of unconsolidated joint ventures	3,716			2,585			7,018			4,365
Pretax income	$	6,644		$	5,112		$	13,709		$	10,150



	August 31, 2019		November 30, 2018
Assets
Cash and cash equivalents	$	1,043	$	760
Receivables	1,435		2,885
Investments in unconsolidated joint ventures	9,162		8,594
Other assets (a)	20,271		141
Total assets	$	31,911	$	12,380
Liabilities
Accounts payable and accrued expenses	$	1,783	$	1,495
Total liabilities	$	1,783	$	1,495


(a)	Other assets at August 31, 2019 included $20.1 million of contract assets for estimated future renewal commissions due to our adoption of ASC 606 effective December 1, 2018, as described in Note 1 – Basis of Presentation and Significant Accounting Policies.

On July 9, 2019, the parent company of Stearns, our partner in KBHS, filed a voluntary bankruptcy petition in the United States Bankruptcy Court, Southern District of New York, with Stearns included as a debtor in the case. KBHS is not included in the filing and there are no known plans for it to be included as a debtor. The debtors obtained authority from the court to continue Stearns’ business with respect to KBHS in the ordinary course. On September 11, 2019, Stearns’ parent company announced it will seek confirmation of a modified plan of reorganization supported by its largest noteholders at a hearing scheduled for October 24, 2019. We are monitoring the status of the bankruptcy proceedings. We believe KBHS is, at present, financially and operationally able to continue to provide mortgage banking services to our homebuyers. However, the ultimate resolution and timing of the bankruptcy process is uncertain and could be disruptive to KBHS’ operations, which may, in turn, adversely impact the number of homes we deliver in future periods. We are currently unable to estimate the effect, if any, this event may have on our consolidated financial statements.