What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-01-19 compared with 2023-01-20 · 221 added, 241 removed, 1191 unchanged (28% of the section changed)

20 unchanged sentences

Interest income 13,759 704 1,049

Equity in income (loss) of unconsolidated joint ventures ( 865 ) ( 405 ) 12,474

Equity in loss of unconsolidated joint ventures

( 713 ) ( 865 ) ( 405 )

Loss on early extinguishment of debt — ( 3,598 ) ( 5,075 )

20 unchanged sentences

Net income $ 590,177 $ 816,666 $ 564,746

Other comprehensive income (loss):

Other comprehensive income:

Postretirement benefit plan adjustments:

Net actuarial gain (loss) arising during the period

Net actuarial gain arising during the period

2,720 17,463 2,664

Amortization of net actuarial loss

Amortization of net actuarial (gain) loss

( 112 ) 1,090 1,575

Amortization of prior service cost

Other comprehensive income (loss) before tax 18,553 4,325 ( 7,024 )

Income tax benefit (expense) related to items of other comprehensive income (loss)

Other comprehensive income before tax

2,608 18,553 4,325

Other comprehensive income (loss), net of tax 13,544 3,157 ( 5,127 )

Income tax expense related to items of other comprehensive income

( 704 ) ( 5,009 ) ( 1,168 )

Other comprehensive income, net of tax

1,904 13,544 3,157

Comprehensive income $ 592,081 $ 830,210 $ 567,903

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290,000,000 shares authorized at November 30, 2023 and 2022;

100,711,153 shares issued at November 30, 2022 and 2021

101,275,979 and 100,711,153 shares issued at November 30, 2023 and 2022

101,276 100,711

24 unchanged sentences

Balance at November 30, 2020 99,869 ( 7,124 ) ( 1,107 ) $ 99,869 $ 824,306 $ 1,868,896 $ ( 22,276 ) $ ( 77,265 ) $ ( 27,761 ) $ 2,665,769

Cumulative effect of adoption of ASC 842 — — — — — 1,510 — — — 1,510

Reclassification of stranded tax effects — — — — — 1,643 ( 1,643 ) — — —

Cumulative effect of adoption of ASU 2016-13 — — — — — ( 226 ) — — — ( 226 )

Net income — — — — — 564,746 — — — 564,746

Other comprehensive loss, net of tax — — — — — — ( 5,127 ) — — ( 5,127 )

Other comprehensive income, net of tax

— — — — — — 3,157 — — 3,157

Dividends on common stock — — — — — ( 54,052 ) — — — ( 54,052 )

3 unchanged sentences

Stock-based compensation — — — — 28,904 — — — — 28,904

Stock repurchases — — ( 4,669 ) — — — — — ( 188,175 ) ( 188,175 )

Tax payments associated with stock-based compensation awards

— — ( 208 ) — — — — — ( 12,337 ) ( 12,337 )

Retirement of treasury stock ( 23,488 ) — 23,488 ( 23,488 ) — ( 549,618 ) — — 573,106 —

Balance at November 30, 2021 100,711 ( 6,705 ) ( 5,785 ) 100,711 848,620 2,379,364 ( 19,119 ) ( 72,718 ) ( 217,383 ) 3,019,475

Cumulative effect of adoption of ASU 2016-13 — — — — — ( 226 ) — — — ( 226 )

Net income — — — — — 816,666 — — — 816,666

1 unchanged sentence

Dividends on common stock — — — — — ( 52,452 ) — — — ( 52,452 )

Employee stock options/other

798 — — 798 10,891 — — — — 11,689

Stock awards — — 1,088 — ( 41,824 ) — — — 41,824 —

7 unchanged sentences

Dividends on common stock — — — — — ( 56,831 ) — — — ( 56,831 )

Employee stock options/other

565 — — 565 8,292 — — — — 8,857

Stock awards — — 927 — ( 33,471 ) — — — 33,471 —

Stock-based compensation — — — — 34,612 — — — — 34,612

Stock repurchases — — ( 4,928 ) — — — — — ( 150,000 ) ( 150,000 )

Stock repurchases, including excise tax

— — ( 9,244 ) — — — — — ( 415,136 ) ( 415,136 )

Tax payments associated with stock-based compensation awards

70 unchanged sentences

As of November 30, 2023, we conducted ongoing operations in Arizona, California, Colorado, Florida, Idaho, Nevada, North Carolina, Texas and Washington.

We also offer various insurance products to our homebuyers in the same markets as our homebuilding reporting segments, and provide title services in the majority of our markets located within our Southwest, Central and Southeast homebuilding reporting segments.

We also offer 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 provide title services in the majority of our markets located within our Southwest, Central and Southeast homebuilding reporting segments.

We offer mortgage banking services, including mortgage loan originations, to our homebuyers indirectly through KBHS, which is an unconsolidated joint venture between us and a third party.

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Investments in unconsolidated joint ventures in which we have less than a controlling financial interest are accounted for using the equity method.

Impact of COVID-19 Pandemic on Consolidated Financial Statements.

Since mid-March 2020, the COVID-19 pandemic and related control responses have adversely affected many economic sectors, significantly disrupted the global supply chain and fueled producer price and consumer inflation.

Our business was impacted by these issues in 2020, 2021 and 2022.

We experienced, among other things, ongoing construction services availability constraints, supply chain bottlenecks and rising and volatile raw and other building material prices amid uneven availability.

In addition, we encountered delays related to state and municipal construction permitting, inspection and utility processes, which have been disrupted by key equipment shortages.

All these factors to varying degrees, extended our construction cycle times, delayed home deliveries and community openings and raised our costs.

These factors could also negatively affect our growth, margins and financial results in future periods and result in our recognizing charges for inventory impairments or land option contract abandonments, or both, related to our inventory assets.

The impact of any or all of these, among other factors, could be material to our consolidated financial statements.

In the 2020 second quarter, with the uncertainty surrounding the COVID-19 pandemic, and in prioritizing cash preservation and liquidity, we limited our land investments and curtailed our overhead expenditures, partly through workforce realignment and reductions.

As a result, our selling, general and administrative expenses for 2020 included severance charges of $ 6.7 million.

Use of Estimates.

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Our cash equivalents totaled $ 508.2 million at November 30, 2023 and $ 15.8 million at November 30, 2022.

At November 30, 2022 and 2021, the majority of our cash equivalents was invested in interest-bearing bank deposit accounts.

At November 30, 2023 and 2022, our cash equivalents were mainly invested in interest-bearing bank deposit accounts and money market funds.

We record receivables net of an allowance for doubtful accounts.

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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.

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 sales 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 are included in accrued expenses and other liabilities.

Concurrent with the recognition of revenues in our consolidated statements of operations, sales incentives in the form of price concessions on the selling price of a home are recorded as a reduction of revenues.

The costs of sales incentives in the form of free or discounted products or services provided to homebuyers, including option upgrades and closing cost allowances, are reflected as construction and land costs because such incentives are identified in our home sale contracts with homebuyers as an intrinsic part of our single performance obligation to deliver and transfer title to their home for the transaction price stated in the contracts.

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 or mortgage-related concessions are recorded as a reduction of revenues.

When we provide sales incentives in the form of free products or services to homebuyers, the costs of the free products or services are reflected as construction and land costs because such incentives are identified in our home sales contracts with homebuyers as an intrinsic part of our single performance obligation to deliver and transfer title to their home for the transaction price stated in the contracts.

Sales incentives that we may provide in the form of closing cost allowances are immaterial to the related revenues.

Cash proceeds from home sale closings held by third-party escrow agents for our benefit, typically for less than five days, are considered deposits in-transit and classified as cash.

We may periodically elect to sell parcels of land to third parties if such assets no longer fit into our strategic operating plans or are zoned for non-residential development.

Land sale transactions are made pursuant to contracts under which we typically have a performance obligation(s) to deliver specified land parcels to the buyer when closing conditions are met.

We evaluate each land sale contract to determine our performance obligation(s) under the contract, including whether we have a distinct promise to perform post-closing land development work that is material within the context of the contract, and use objective criteria to determine our completion of the applicable performance obligation(s), whether at a point in time or over time.

We evaluate each land sales contract to determine our performance obligation(s) under the contract, including whether we have a distinct promise to perform post-closing land development work that is material within the context of the contract, and use objective criteria to determine our completion of the applicable performance obligation(s), whether at a point in time or over time.

Revenues from land sales are recognized when we have satisfied the performance obligation(s) within the sales contract, which is generally when title to and possession of the land and the risks and rewards of ownership are transferred to the land buyer on the closing date.

Under our land sale contracts, we typically receive an initial cash deposit from the buyer at the time the contract is executed and receive the remaining consideration to which we are entitled, through a third-party escrow agent, at closing.

Under our land sales contracts, we typically receive an initial cash deposit from the buyer at the time the contract is executed and receive the remaining consideration to which we are entitled, through a third-party escrow agent, at closing.

In the limited circumstances where we provide financing to the land buyer, we determine that collectability of the receivable is reasonably assured before we recognize revenue.

In instances where we have a distinct and material performance obligation(s) within the context of a land sale contract to perform land development work after the closing date, a portion of the transaction price under the contract is allocated to such performance obligation(s) and is recognized as revenue over time based upon our estimated progress toward the satisfaction of the performance obligation(s).

In instances where we have a distinct and material performance obligation(s) within the context of a land sales contract to perform land development work after the closing date, a portion of the transaction price under the contract is allocated to such performance obligation(s) and is recognized as revenue over time based upon our estimated progress toward the satisfaction of the performance obligation(s).

We generally measure our progress based on our costs incurred relative to the total costs expected to satisfy the performance obligation(s).

While the payment terms for such a performance obligation(s) vary, we generally receive the final payment when we have completed our land development work to the specifications detailed in the applicable land sale contract and it has been accepted by the land buyer.

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

While the payment terms for such a performance obligation(s) vary, we generally receive the final payment when we have completed our land development work to the specifications detailed in the applicable land sales contract and it has been accepted by the land buyer.

Homebuilding revenues include forfeited deposits, which occur when home sales or land sales contracts, if any, that involve a nonrefundable deposit are cancelled.

Revenues from forfeited deposits are immaterial.

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Disaggregation of Revenues.

Our homebuilding operations accounted for 99.7 % of our total revenues for each of the years ended November 30, 2022 and 2021, with most of those revenues generated from home sale contracts with customers.

Our homebuilding operations accounted for 99.5 %, 99.7 % and 99.7 % of our total revenues for the years ended November 30, 2023, 2022 and 2021, respectively, with most of those revenues generated from home sales contracts with customers.

Due to the nature of our revenue-generating activities, we believe the disaggregation of revenues as reported in our consolidated statements 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 depicts how the nature, amount, timing and uncertainty of cash flows are affected by economic factors.

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These impairment evaluations are significantly impacted by estimates for the amounts and timing of future revenues, costs and expenses, and other factors.

If the carrying value of a real estate asset is determined not to be recoverable, the impairment charge to be recognized is measured by the

amount by which the carrying value of the affected asset exceeds its estimated fair value.

If the carrying value of a real estate asset is determined not to be recoverable, the impairment charge to be recognized is measured by the amount by which the carrying value of the affected asset exceeds its estimated fair value.

For land held for sale, if the fair value less associated costs to sell exceeds the asset’s carrying value, no impairment charge is recognized.

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For these real estate assets, fair value is determined based on the estimated future net cash flows discounted for inherent risk associated with each such asset, or other valuation techniques.

Our financial instruments consist of cash and cash equivalents, corporate-owned life insurance, outstanding borrowings under the Credit Facility and the Term Loan, senior notes, and mortgages and land contracts due to land sellers and other loans.

Our financial instruments consist of cash and cash equivalents, corporate-owned life insurance, outstanding borrowings under the Credit Facility, if any, and the Term Loan, senior notes, and mortgages and land contracts due to land sellers and

Fair value measurements of financial instruments are determined by various market data and other valuation techniques as appropriate.

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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 costs for model furnishings, community sales office and model complex grounds, sales office construction and sales office furniture and equipment, are capitalized as property and equipment under “model furnishings and sales office improvements.” Model furnishings and sales office improvements are depreciated to selling, general and administrative expenses over their estimated useful lives.

Other costs related to the marketing of a

community, removing the on-site community sales facility and readying a completed (model) home for sale are expensed to selling, general and administrative expenses as incurred.

Other costs related to the marketing of a community, removing the on-site community sales facility and readying a completed (model) home for sale are expensed to selling, general and administrative expenses as incurred.

Advertising Costs.

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We measure and recognize compensation expense associated with our grant of equity-based awards at an amount equal to the fair value of share-based payments granted under compensation arrangements over the vesting period.

We estimate the fair value of stock options granted using the Black-Scholes option-pricing model with assumptions based primarily on historical data.

We estimate the fair value of stock options granted using the Black-Scholes option-pricing model with assumptions

based primarily on historical data.

We estimate the fair value of other equity-based awards using the closing price of our common stock on the grant date.

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Adoption of New Accounting Pronouncements .

In February 2016, the FASB issued Accounting Standards Update No.

2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which requires leases with original lease terms of more than 12 months to be recorded on the balance sheet.

On December 1, 2019, we adopted ASU 2016-02 and its related amendments (collectively, “ASC 842”) using the modified retrospective method.

The adoption of ASC 842 resulted in our recording lease right-of-use assets and lease liabilities of $ 31.2 million on our consolidated balance sheet as of December 1, 2019.

Lease right-of-use assets are classified within other assets on our consolidated balance sheet, and lease liabilities are classified within accrued expenses and other liabilities .

At the December 1, 2019 adoption date, we also recorded a cumulative effect adjustment to increase beginning retained earnings by $ 1.5 million, net of tax, to recognize a previously deferred gain on our sale and leaseback of an office building in 2019.

The adoption of ASC 842 did not materially impact our consolidated statements of operations or consolidated cash flows.

Further information regarding our leases is provided in Note 13 – Leases.

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 (loss) to retained earnings for stranded tax effects resulting from the 2019 Tax Cuts and Jobs Act (“TCJA”), and requires certain disclosures about stranded tax effects.

We adopted ASU 2018-02 effective December 1, 2019 and elected to reclassify the income tax effects of the TCJA from accumulated other comprehensive loss to retained earnings, which resulted in an increase of $ 1.6 million to both retained earnings and accumulated other comprehensive loss, with no impact on total stockholders’ equity.

In June 2016, the FASB issued Accounting Standards Update No.

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No.

2016-13, “Financial Instruments — Credit Losses (Topic 326):

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Recent Accounting Pronouncements Not Yet Adopted.

In March 2020, the FASB issued Accounting Standards Update No.

2020-04, “Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”), which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued because of reference rate reform.

The guidance was effective beginning March 12, 2020 and can be applied prospectively through December 31, 2022.

In January 2021, the FASB issued Accounting Standards Update 2021-01, “Reference Rate Reform (Topic 848):

Scope” (“ASU 2021-01”), which clarified the scope and application of the original guidance.

We are currently evaluating the potential impact of adopting ASU 2020-04 and ASU 2021-01, but do not expect it to have a material impact on our consolidated financial statements.

Reclassifications.

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

In November 2023, the FASB issued Accounting Standards Update No.

2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The guidance is to be applied retrospectively to all prior periods presented in the financial statements.

Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption.

We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.

In December 2023, the FASB issued Accounting Standards Update No.

2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures” (“ASU 2023-09”), which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign).

ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes.

The guidance is effective for annual periods beginning after December 15, 2024.

Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.

ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted.

We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.

Segment Information

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They also earn revenues from the sale of land.

Our financial services reporting segment offers property and casualty insurance and, in certain instances, earthquake, flood and personal property insurance to our homebuyers in the same markets as our homebuilding reporting segments, and provides title services in the majority of our markets located within our Southwest, Central and Southeast homebuilding reporting segments.

Our financial services segment earns revenues primarily from insurance commissions and from the provision of title services.

We offer mortgage banking services, including mortgage loan originations, to our homebuyers indirectly through KBHS, our unconsolidated joint venture with GR Alliance.

Our financial services reporting segment earns revenues primarily from insurance commissions and from the provision of title services.

We offer mortgage banking services, including mortgage loan originations, to our homebuyers indirectly through KBHS, our unconsolidated joint venture with GR Alliance, a subsidiary of Guaranteed Rate, Inc.

We and GR Alliance each have a 50.0 % ownership interest, with GR Alliance providing management oversight of KBHS’ operations.

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$ 6,381,106 $ 6,880,362 $ 5,705,029

Years Ended November 30,

2023 2022 2021

Pretax income (loss):

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$ 590,177 $ 816,666 $ 564,746

Distributed earnings allocated to nonvested restricted stock

Distributed earnings allocated to participating securities

( 413 ) ( 268 ) ( 253 )

Undistributed earnings allocated to nonvested restricted stock

Undistributed earnings allocated to participating securities

( 3,861 ) ( 3,904 ) ( 2,366 )

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Effect of dilutive securities:

Undistributed earnings allocated to nonvested restricted stock

Undistributed earnings allocated to participating securities

3,861 3,904 2,366

Undistributed earnings reallocated to nonvested restricted stock

Undistributed earnings reallocated to participating securities

( 3,744 ) ( 3,796 ) ( 2,286 )

1 unchanged sentence

$ 586,020 $ 812,602 $ 562,207

Years Ended November 30,

2023 2022 2021

Weighted average shares outstanding — basic

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Land held for future development principally relates to land where development activity has been suspended or has not yet begun but is expected to occur in the future.

These assets are generally located in submarkets where conditions do not presently support further investment or development, or are subject to a building permit moratorium or regulatory restrictions, or are portions of larger land parcels that we plan to build out over several years and/or that have not yet been entitled.

At November 30, 2022 and 2021, land under development also included land held for sale of $ 11.4 million and $.6 million, respectively.

These assets are generally located in submarkets where

conditions do not presently support further investment or development, or are subject to a building permit moratorium or regulatory restrictions, or are portions of larger land parcels that we plan to build out over several years and/or that have not yet been entitled.

Our interest costs were as follows (in thousands):

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If indicators of potential impairment exist for a community or land parcel, the identified asset is evaluated for recoverability.

We evaluated five , one and 11 communities or land parcels for recoverability as of November 30, 2022, 2021 and 2020, respectively.

We evaluated five , five and one communities or land parcels for recoverability as of November 30, 2023, 2022 and 2021, respectively.

The carrying values of those communities or land parcels evaluated as of November 30, 2023, 2022 and 2021 were $ 89.3 million, $ 118.7 million and $ 29.9 million, respectively.

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and land development, home construction and overhead costs to be incurred and related cost inflation.

With respect to the year ended

November 30, 2022, these expectations considered the weakening in U.S.

housing demand in the year’s second half, rising interest rates, elevated inflation levels, and significant year-over-year decreases in our net orders per community in the 2022 third and fourth quarters, driven in part by a substantial increase in cancellations.

We also considered our lower year-end backlog, both in number of homes and value;

estimated average selling prices and housing gross profit margins based on the current and anticipated conditions in the markets where assessed assets are located;

Based on these recoverability considerations, we recognized no inventory impairment charges in 2023.

With respect to the year ended November 30, 2022, our expectations considered the weakening in U.S.

housing demand in the year’s second half, rising interest rates and inflation levels, and significant year-over-year decreases in our net orders per community in the 2022 third and fourth quarters, driven in part by a substantial increase in cancellations.

We also considered the year-over-year decline in our year-end backlog, both in number of homes and value;

estimated average selling prices and housing gross profit margins based on the then-current and anticipated conditions in the markets where assessed assets are located;

and ongoing supply chain disruptions and delays with respect to state and municipal permitting, inspection and utility processes on our construction cycle times.

Based on these recoverability considerations, we recognized inventory impairment charges for certain inventory assets in the 2022 fourth quarter, as described below.

With respect to the year ended November 30, 2021, our expectations considered the year-over-year increases in our overall average net orders per community, backlog levels, homes delivered and housing gross profit margin during the period as well as our experience that conditions in the markets where assessed assets were located were relatively stable or improved, with no significant deterioration identified or projected, as to revenue or cost drivers that would prevent or otherwise impact recoverability.

Our inventory is assessed for potential impairment on a quarterly basis, and the assumptions used are reviewed and adjusted, as necessary, to reflect the market conditions and trends and our expectations at the time each assessment is performed.

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Our assessments of active communities, at the time made, generally anticipate net orders, average selling prices, volume of homes delivered and costs for land development and home construction to continue at or near then-current levels through the particular asset’s estimated remaining life.

Inventory assessments for our land held for future development consider then-current market conditions as well as subjective forecasts regarding the timing and costs of land development and home construction and related cost inflation;

Inventory assessments for our land held for future development consider then-current market conditions as well as subjective forecasts regarding the timing and costs of land

development and home construction and related cost inflation;

the product(s) to be offered;

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Unobservable Input (a) 2023 2022 2021

Average selling price $ 475,500 - $ 1,076,200

Average selling price n/a

$ 475,500 - $ 1,076,200

$ 471,000 - $ 949,400

Deliveries per month 2 - 4

Discount rate 17 % - 21 %

Deliveries per month n/a

Discount rate n/a

(a) Ranges of inputs presented primarily reflect differences between the housing markets where each impacted community is located, rather than fluctuations in prevailing market conditions .

Based on the results of our evaluations, we recognized inventory impairment charges of $ 24.1 million in 2022 related to four communities with a post-impairment fair value of $ 41.3 million.

Based on the results of our evaluations, we recognized no inventory impairment charges in 2023.

In 2022, we recognized inventory impairment charges of $ 24.1 million related to four communities with a post-impairment fair value of $ 41.3 million.

In 2021, we recognized inventory impairment charges of $ 9.9 million related to two communities with a post-impairment fair value of $ 18.0 million.

In 2020, we recognized inventory impairment charges of $ 22.7 million related to 10 communities with a post-impairment fair value of $ 46.5 million.

The impairment charges in 2022 and 2021 reflected our decisions to make changes in our operational strategies aimed at more quickly monetizing our investment in certain communities, mainly by accelerating the overall pace for selling, building and delivering homes therein, including communities on land previously held for future development.

If we change our strategy or if there are changes in market conditions for any given asset, it is possible that we may recognize additional inventory impairment charges.

As of November 30, 2023, the aggregate carrying value of our inventory that had been impacted by inventory impairment charges was $ 73.9 million, representing five communities and various other land parcels.

As of November 30, 2022, the aggregate carrying value of our inventory that had been impacted by inventory impairment charges was $ 102.9 million, representing eight communities and various other land parcels.

As of November 30, 2021, the aggregate carrying value of our inventory that had been impacted by inventory impairment charges was $ 87.7 million, representing 11 communities and various other land parcels.

Our inventory controlled under land option contracts and other similar contracts is assessed to determine whether it continues to meet our investment return standards.

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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 $ 13.2 million in 2022, $ 2.1 million in 2021 and $ 5.9 million in 2020.

Based on the results of our assessments, we recognized land option contract abandonment charges of $ 11.4 million in 2023,

$ 13.2 million in 2022 and $ 2.1 million in 2021.

Land option contract abandonment charges are included in construction and land costs in our consolidated statements of operations.

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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 November 30, 2023 within five years .

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 inventory balances, particularly as to land held for future development, it is possible that actual results could differ substantially from those estimated, especially in periods of volatile housing market or economic conditions, such as occurred during the 2022 second half.

Variable Interest Entities

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As a result of our analyses, we determined that as of November 30, 2023 and 2022, 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):

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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.

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).

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This typically arises from our deferral of the unconsolidated joint venture’s earnings (losses) from land sales to us, or other items.

We had investments in six unconsolidated joint ventures as of November 30, 2022 and 2021 and five unconsolidated joint ventures as of November 30, 2020.

We had investments in six unconsolidated joint ventures as of November 30, 2023, 2022 and 2021.

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

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Other expenses, net ( 2,907 ) ( 2,935 ) ( 2,640 )

Income (loss) $ ( 1,559 ) $ ( 220 ) $ 25,258

The combined revenues and construction and land costs for 2021 and 2020 included the results of an unconsolidated joint venture in California, which delivered its last home in the 2021 second quarter.

For the year ended November 30, 2022, combined revenues and construction and land costs were generated from land sales.

$ ( 1,147 ) $ ( 1,559 ) $ ( 220 )

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

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Total liabilities and equity $ 172,832 $ 132,558

(a) As of November 30, 2022, one of our unconsolidated joint ventures had borrowings outstanding under a revolving line of credit it entered into with a third-party lender in April 2022 to finance its land acquisition, development and construction activities.

(a) As of both November 30, 2023 and 2022, one of our unconsolidated joint ventures had borrowings outstanding under a revolving line of credit it entered into with a third-party lender in April 2022 to finance its land acquisition, development and construction activities.

Borrowings under this line of credit, which has a maximum commitment of $ 62.0 million, are secured by the underlying property and related project assets.

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We provide certain guarantees and indemnities to the lender in connection with the above-described revolving line of credit, including a guaranty of interest and carry costs;

a guaranty to complete the construction of phases of the improvements

for the project as such phases are commenced;

a guaranty to complete the construction of phases of the improvements for the project as such phases are commenced;

a guaranty against losses suffered due to certain bad acts or failures to act by the unconsolidated joint venture or its partners;

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Financial Services.

The following table presents combined condensed information from the statements of operations for our financial services unconsolidated joint ventures, primarily comprised of KBHS (in thousands):

The following table presents combined condensed information from the statements of operations for our financial services unconsolidated joint ventures, mostly comprised of KBHS’s activities (in thousands):

Years Ended November 30,

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Gains on the sales of mortgage loans held for sale include the realized and unrealized gains and losses associated with changes in the fair value of such loans and any related derivative financial instruments.

The following table presents combined condensed balance sheet information for our financial services unconsolidated joint ventures, primarily comprised of KBHS (in thousands):

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

Cash and cash equivalents $ 29,163 $ 28,120

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The fair value of IRLCs included in other assets in KBHS’ balance sheets was $ 13.9 million at November 30, 2023 and $ 29.8 million at November 30, 2022.

The changes in the fair value of IRLCs, which

were reported in revenues for the applicable periods, were gains of $ 20.3 million, $ 2.8 million and $ 4.0 million for 2022, 2021 and 2020, respectively.

The changes in the fair value of IRLCs, which were reported in revenues for the applicable periods, were losses of $ 16.0 million for 2023 and gains of $ 20.3 million and $ 2.8 million for 2022 and 2021, respectively.

KBHS manages the interest rate and price risk associated with its outstanding IRLCs by entering into best efforts forward sale commitments under which mortgage loans locked with a borrower are simultaneously committed to a secondary market investor at a fixed price, subject to the underlying mortgage loans being funded.

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Funding facilities .

KBHS maintains warehouse line of credit and master repurchase agreements with various financial institutions to fund its originated mortgage loans, with its mortgage loans held for sale pledged as collateral under these agreements.

KBHS maintains warehouse lines of credit and master repurchase agreements with various financial institutions to fund its originated mortgage loans, with its mortgage loans held for sale pledged as collateral under these agreements.

The agreements contain covenants which include certain financial requirements, including maintenance of minimum tangible net worth, minimum liquid assets, maximum debt to net worth ratio and positive net income, as defined in the agreements.

KBHS was in compliance with these covenants as of November 30, 2023.

KBHS intends to renew these agreements when they expire at various dates in 2023.

The warehouse line of credit and master repurchase agreements are not guaranteed by us or any of our Guarantor Subsidiaries.

In addition to its compliance with these covenants, KBHS also depends on the ability and willingness of the applicable lenders and financial institutions, including any substitute or additional lenders and financial institutions, to extend such credit facilities to KBHS to fund its originated mortgage loans.

KBHS intends to renew these facilities when they expire at various dates in 2024.

The warehouse lines of credit and master repurchase agreements are not guaranteed by us or any of our Guarantor Subsidiaries.

Property and Equipment, Net

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Customer deposits 58,910 76,738

Inventory-related obligations (a) 41,525 19,136

Accrued interest payable 29,391 29,989

Lease liabilities 26,531 27,494

Inventory-related obligations (a) 19,136 36,146

Real estate and business taxes 15,169 17,557

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Our effective tax rates were 23.5 % for 2023, 23.8 % for 2022 and 18.8 % for 2021.

In 2022, our income tax expense and effective tax rate reflected the favorable impacts of $ 22.6 million of federal tax credits we recognized primarily from building energy-efficient homes and $ 1.8 million of excess tax benefits related to stock-based compensation, partly offset by $ 9.7 million of non-deductible executive compensation expense under Internal Revenue Code

Section 162(m).

In 2021, our income tax expense and effective tax rate reflected the favorable impacts of $ 49.5 million of federal tax credits we recognized primarily from building energy-efficient homes and $ 7.1 million of excess tax benefits related to stock-based compensation, partly offset by $ 11.3 million of non-deductible executive compensation expense.

In 2020, our income tax expense and effective tax rate reflected the favorable impacts of $ 18.7 million of federal tax credits we recognized primarily from building energy-efficient homes and $ 12.0 million of excess tax benefits related to stock-based compensation, partly offset by $ 5.7 million of non-deductible executive compensation expense.

In 2023, our income tax expense and effective tax rate included the favorable impacts of $ 25.2 million of Section 45L tax credits we recognized primarily from building energy-efficient homes and $ 5.5 million of excess tax benefits related to stock-based compensation, partly offset by $ 12.2 million of non-deductible executive compensation expense.

In 2022, our income tax expense and effective tax rate reflected the favorable impacts of $ 22.6 million of Section 45L tax credits we recognized primarily from building energy-efficient homes and $ 1.8 million of excess tax benefits related to stock-based compensation, partly offset by $ 9.7 million of non-deductible executive compensation expense.

In 2021, our income tax expense and effective tax rate reflected the favorable impacts of $ 49.5 million of Section 45L tax credits we recognized primarily from building energy-efficient homes and $ 7.1 million of excess tax benefits related to stock-based compensation, partly offset by $ 11.3 million of non-deductible executive compensation expense.

On August 16, 2022, the IRA was enacted into law.

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If applicable, the CAMT will not be effective for us until our fiscal year ending November 30, 2024.

The IRA also extends the federal tax credit for building new energy-efficient homes for homes delivered from January 1, 2022 (retroactively) through December 31, 2032, as well as modifies and increases it starting in 2023.

Previously, the federal tax credit expired for homes delivered after December 31, 2021.

The federal tax credits we recognized in 2022 reflected the impact of the extension under the IRA.

The IRA also extended the Section 45L tax credit for building new energy-efficient homes for homes delivered from January 1, 2022 (retroactively) through December 31, 2032, as well as modified and increased it starting in 2023.

Previously, the Section 45L tax credit expired for homes delivered after December 31, 2021.

The Section 45L tax credits we recognized in 2023 and

2022 reflected the impact of the extension and modifications, as applicable, under the IRA.

We are currently evaluating the other potential effects of the IRA on our consolidated financial statements.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), enacted on March 27, 2020, provided economic and other relief as a result of the COVID-19 pandemic.

Among other things, the CARES Act accelerated the timetable for alternative minimum tax (“AMT”) credit refunds.

As a result, in the 2020 second quarter, we filed a superseding 2019 federal income tax return claiming an additional refund of $ 39.3 million of AMT credits and reclassified this amount from deferred tax assets to receivables.

We received this AMT credit refund in the 2021 first quarter.

In the 2020 fourth quarter, an amended 2019 federal income tax return was filed to expedite our additional refund and to recognize federal tax credits we earned from building energy-efficient homes in 2019.

These credits were in addition to the $ 43.3 million of AMT tax credits that we reclassified from deferred tax assets to receivables in the 2020 first quarter when we filed a preliminary 2019 federal income tax return.

We received the $ 43.3 million AMT credit refund in the 2020 third quarter.

Our accounting policy regarding the balance sheet presentation of AMT credits is to maintain the balance in deferred tax assets until a tax return is filed claiming a refund of a portion of the credit, at which time such amount will be presented in receivables.

The CARES Act also provided an ERC, which is a refundable payroll tax credit that encouraged businesses to keep employees on the payroll during the COVID-19 pandemic.

Eligible employers could qualify for up to $ 5,000 of credit for each employee based on certain wages paid after March 12, 2020 and before January 1, 2021.

Based on our evaluation of this provision and the significant pandemic-related impacts on our operations in 2020, we recognized an ERC of $ 4.3 million as an offset to payroll tax expenses within selling general and administrative expenses in our consolidated statements of operations upon filing for the refund in the 2021 first quarter.

We received the ERC refund in the 2021 fourth quarter.

In June 2020, California enacted tax legislation that approved the suspension of California NOL deductions for tax years 2020, 2021 and 2022.

On February 9, 2022, California enacted legislation restoring the NOL deduction for tax years beginning on or after January 1, 2022, which would be effective for our 2023 fiscal year.

Although the suspension of California NOL deductions did not have an impact on our income tax expense for the years ended November 30, 2022, 2021 or 2020, it contributed to the year-over-year increase in the amount of taxes we paid in 2022 and 2021.

The IRA tied Section 45L tax credit qualification for energy-efficient homes built on and after January 1, 2023 to new homes achieving ENERGY STAR certification.

In late September 2023, the IRS issued Notice 2023-65, which provided guidance on the Section 45L tax credit qualifications for ENERGY STAR homes built on or after January 1, 2023.

This guidance, retroactively effective for the year, resulted in a reduction in our estimated Section 45L tax credits for 2023, primarily due to fewer of the ENERGY STAR homes we built in California meeting the heightened qualifications the IRS selected for homes built in that state relative to other states.

Our income tax expense for the 2023 fourth quarter reflected the cumulative impact of the September 2023 guidance.

On February 9, 2022, California enacted legislation restoring the California NOL deduction for tax years beginning on or after January 1, 2022, which was effective for our 2023 fiscal year.

The California NOL deductions for tax years 2022 and 2021 had been suspended by previous legislation.

Although the restoration of California NOL deductions did not have an impact on our income tax expense for the year ended November 30, 2023, it contributed to the year-over-year decrease in the amount of taxes we paid in 2023.

Deferred Tax Assets, Net.

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Warranty, legal and other accruals 53,805 63,424

NOLs from 2006 through 2022 60,680 73,662

Employee benefits 51,325 55,382

Inventory impairment and land option contract abandonment charges 24,871 30,767

NOLs from 2006 through 2023

33,827 60,680

Capitalized expenses 22,538 24,665

Inventory impairment and land option contract abandonment charges 15,878 24,871

Partnerships and joint ventures 6,193 7,386

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Depending on their applicable statutory period, the state NOL carryforwards of $ 33.8 million, if not utilized, will begin to expire between 2025 and 2043.

State NOL carryforwards of $.1 million, $.2 million and $.4 million expired in 2022, 2021 and 2020, respectively.

State NOL carryforwards of $.1 million and $.2 million expired in 2022 and 2021, respectively.

No state NOL carryforwards expired in 2023.

Unrecognized Tax Benefits.

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Balance at beginning of year $ 975 $ 930 $ —

Increase as a result of tax position taken in prior years 45 930 —

Increase related to prior years’ tax positions

Balance at end of year $ 2,376 $ 975 $ 930

We had unrecognized tax benefits of $ 1.0 million as of November 30, 2022 and $.9 million as of November 30, 2021.

Our unrecognized tax benefits are included in accrued expenses and other liabilities in our consolidated balance sheets.

We had unrecognized tax benefits of $ 2.4 million as of November 30, 2023, $ 1.0 million as of November 30, 2022 and $.9 million as of November 30, 2021.

Our unrecognized tax benefits are included in accrued expenses and other liabilities in

our consolidated balance sheets.

We recognize accrued interest and penalties related to unrecognized tax benefits in our consolidated financial statements as a component of the provision for income taxes.

As of November 30, 2020, we had no gross unrecognized tax benefits.

If these unrecognized tax benefits reverse in the future, they would have a beneficial impact on our effective tax rate at that time.

During the next 12 months, it is possible that the amount of unrecognized tax benefits will change, but we are not able to provide a range of such change.

The potential change will be related to increases due to new tax positions taken and the accrual of interest and penalties.

Our total accrued interest and penalties related to unrecognized income tax benefits was less than $.1 million at November 30, 2022 and zero at 2021.

The potential change, if any, will be related to increases due to new tax positions taken and the accrual of interest and penalties.

Our total accrued interest and penalties related to unrecognized income tax benefits was approximately $.1 million at November 30, 2023 and less than $.1 million at November 30, 2022.

Because of the impact of deferred tax accounting, other than interest and penalties, the disallowance of the shorter deductibility period would not affect our annual effective tax rate but would accelerate the payment of cash to a tax authority to an earlier period.

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Unsecured revolving credit facility $ — $ 150,000

Senior unsecured term loan 357,485 —

Mortgages and land contracts due to land sellers and other loans (at an interest rate of 4.5 % at November 30, 2022 and 2021)

7.50 % Senior notes due September 15, 2022

7.625 % Senior notes due May 15, 2023

Senior unsecured term loan due August 25, 2026

358,156 357,485

6.875 % Senior notes due June 15, 2027

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7.25 % Senior notes due July 15, 2030

346,101 345,663

4.00 % Senior notes due June 15, 2031

386,199 385,778

Mortgages and land contracts due to land sellers and other loans (at an interest rate of 3.0 % to 4.5 % at November 30, 2023 and 4.5 % at November 30, 2022)

Total $ 1,689,898 $ 1,838,511

The carrying amounts of the Term Loan and senior notes listed above are net of debt issuance costs and premiums, if applicable, which totaled $ 16.2 million at November 30, 2022 and $ 10.3 million at November 30, 2021.

The carrying amounts of the Term Loan and senior notes listed above are net of debt issuance costs, which totaled $ 13.9 million at November 30, 2023 and $ 16.2 million at November 30, 2022.

Unsecured Revolving Credit Facility.

On February 18, 2022, we entered into an amendment to our Credit Facility that increased its borrowing capacity from $ 800.0 million to $ 1.09 billion and extended its maturity from October 7, 2023 to February 18, 2027 .

We have a $ 1.09 billion Credit Facility that will mature on February 18, 2027 .

The Credit Facility contains an uncommitted accordion feature under which its aggregate principal amount of available loans can be increased to a maximum of $ 1.29 billion 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 accrues at an adjusted term SOFR rate or a base rate, plus a spread that depends on our Leverage Ratio, as defined under the Credit Facility.

Interest on amounts borrowed under the Credit Facility accrues at an adjusted term SOFR or a base rate, plus a spread that depends on our Leverage Ratio, as defined under the Credit Facility.

Interest is payable quarterly (base rate) or each month or three months (adjusted term SOFR).

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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 November 30, 2022, we had $ 150.0 million cash borrowings and $ 6.7 million of letters of credit outstanding under the Credit Facility.

Therefore, as of November 30, 2022, we had $ 933.3 million available for cash borrowings under the Credit Facility, with up to $ 243.3 million of that amount available for the issuance of letters of credit.

As of November 30, 2023, we had no cash borrowings and $ 6.7 million of letters of credit outstanding under the Credit Facility.

Therefore, as of November 30, 2023, we had $ 1.08 billion available for cash borrowings under the Credit Facility, with up to $ 243.3 million of that amount available for the issuance of letters of credit.

As of November 30, 2022, the weighted average annual interest rate on our outstanding borrowings under the Credit Facility was 5.1 %.

Senior Unsecured Term Loan.

On August 25, 2022, we entered into the Term Loan with the lenders party thereto, and on October 3, 2022 obtained an additional lender commitment thereunder, pursuant to which the lenders committed up to $ 360.0 million.

The Term Loan will mature on August 25, 2026 , or earlier if we secure borrowings under the Credit Facility without similarly securing the Term Loan (subject to certain exceptions).

Interest under the Term Loan generally will be based on either an adjusted term SOFR or a base rate, plus a spread that depends on our Leverage Ratio.

We have a Term Loan with the lenders party thereto.

On November 14, 2022, we borrowed $ 360.0 million under the Term Loan and, on November 15, 2022, we used the proceeds toward the redemption of our then-outstanding $ 350.0 million in aggregate principal amount of 7.625 % Senior Notes due 2023 at par.

The Term Loan will mature

on August 25, 2026 , or earlier if we secure borrowings under the Credit Facility without similarly securing the Term Loan (subject to certain exceptions).

Interest under the Term Loan accrues at an adjusted term SOFR or a base rate, plus a spread that depends on our Leverage Ratio.

Interest is payable quarterly (base rate) or each month or three months (adjusted term SOFR).

The Term Loan contains various covenants that are substantially the same as those under the Credit Facility.

Proceeds drawn under the Term Loan are guaranteed on a joint and several basis by our Guarantor Subsidiaries.

As of November 30, 2022, the weighted average annual interest rate on our outstanding borrowings under the Term Loan was 5.6 %.

On November 14, 2022, we borrowed $ 360.0 million under the Term Loan and, on November 15, 2022, we used the proceeds toward the redemption of our $ 350.0 million in aggregate principal amount of 7.625 % Senior Notes due 2023 at par.

The proceeds drawn under the Term Loan are guaranteed on a joint and several basis by our Guarantor Subsidiaries.

As of November 30, 2023 and 2022, the weighted average annual interest rates on our outstanding borrowings under the Term Loan were 6.8 % and 5.6 %, respectively.

LOC Facility.

We maintain an LOC Facility to obtain letters of credit from time to time in the ordinary course of operating our business.

Under the LOC Facility, which expires on February 13, 2025, we may issue up to $ 75.0 million of letters of credit.

Under the LOC Facility, we may issue up to $ 75.0 million of letters of credit.

On August 10, 2023, we entered into an amendment to our LOC Facility that extended the expiration date from February 13, 2025 to February 18, 2027 .

As of November 30, 2023 and 2022, we had letters of credit outstanding under the LOC Facility of $ 12.5 million and $ 36.4 million, respectively.

Mortgages and Land Contracts Due to Land Sellers and Other Loans.

As of November 30, 2022, inventories having a carrying value of $ 31.3 million were pledged to collateralize mortgages and land contracts due to land sellers and other loans.

Shelf Registration.

Our 2020 Shelf Registration is filed with the SEC.

The 2020 Shelf Registration registers the offering of securities that we may issue from time to time in amounts to be determined.

Our ability to issue securities is subject to market conditions.

Senior Notes.

All the senior notes outstanding at November 30, 2022 and 2021 represent senior unsecured obligations that are guaranteed by certain of our subsidiaries and rank equally in right of payment with all of our existing and future unsecured and unsubordinated indebtedness.

All the senior notes outstanding at November 30, 2023 and 2022 represent senior unsecured obligations that are guaranteed by certain of our subsidiaries and rank equally in right of payment with all of our and our Guarantor Subsidiaries’ existing unsecured and unsubordinated indebtedness.

All of our senior notes were issued in underwritten public offerings.

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Net proceeds from this offering totaled $ 345.5 million, after deducting the underwriting discount and our expenses relating to the offering.

Interest on the 7.25 % Senior Notes due 2030 is payable semi-annually in arrears on January 15 and July 15, commencing on January 15, 2023.

Interest on the 7.25 % Senior Notes due 2030 is payable semi-annually in arrears on January 15 and July 15, and commenced on January 15, 2023.

These notes will mature on July 15, 2030.

On July 7, 2022, we used the net proceeds from the issuance of the 7.25 % Senior Notes due 2030, together with cash on hand, to retire our then-outstanding $ 350.0 million in aggregate principal amount of 7.50 % Senior Notes due 2022 before their September 15, 2022 maturity date, by redemption pursuant to the optional redemption terms specified for such notes.

We paid $ 353.6 million to redeem the notes and recorded a charge of $ 3.6 million for the early extinguishment of debt in the 2022 third quarter, primarily due to a make-whole premium paid to redeem these senior notes.

On June 9, 2021, we completed the underwritten public offering of $ 390.0 million in aggregate principal amount of 4.00 % Senior Notes due 2031 at 100 % of their aggregate principal amount.

Net proceeds from this offering totaled $ 385.2 million, after deducting the underwriting discount and our expenses relating to the offering.

Interest on the 4.00 % Senior Notes due 2031 is payable semi-annually in arrears on June 15 and December 15, commencing on December 15, 2021.

These notes will mature on June 15, 2031.

On June 9, 2021, we used a portion of the net proceeds from the issuance of the 4.00 % Senior Notes due 2031 to purchase, pursuant to a tender offer that expired the previous day, $ 269.8 million in aggregate principal amount of our then-outstanding $ 450.0 million of 7.00 % Senior Notes due 2021.

We paid $ 274.9 million to purchase the notes and recorded a charge of $ 5.1 million for the early extinguishment of debt in the 2021 third quarter due to a premium paid under the tender offer and the unamortized original issue discount associated with the notes.

On September 15, 2021, we redeemed the then-remaining $ 180.2 million in aggregate principal amount of the 7.00 % Senior Notes due 2021 at par value pursuant to their terms.

$ 353.6 million to redeem the notes and recorded a charge of $ 3.6 million for the early extinguishment of debt in the 2022 third quarter, primarily due to a make-whole premium paid to redeem these senior notes.

The indenture governing our senior notes does not contain any financial covenants.

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In addition, the indenture contains certain limitations related to mergers, consolidations, and sales of assets.

As of the date of this report, we were in compliance with the applicable terms of all our covenants and other requirements under the Credit Facility, the Term Loan, the senior notes, the indenture, and the mortgages and land contracts due to land sellers and other loans.

As of the date of this report, we were in compliance with the applicable terms of all our covenants and other requirements under the Credit Facility, the Term Loan, the senior notes, the indenture, the LOC Facility, 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.

Our ability to access the Credit Facility’s full borrowing capacity, as well as the LOC Facility’s full issuance capacity, also depends on the ability and willingness of the applicable lenders and financial institutions, including any substitute or additional lenders and financial institutions, to meet their commitments to fund loans, extend credit or provide payment guarantees to or for us under those instruments.

There are no agreements that restrict our payment of dividends other than the Credit Facility and the Term Loan, which would restrict our payment of certain dividends, such as cash dividends on our common stock, if a default under the Credit Facility or the Term Loan 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).

Mortgages and Land Contracts Due to Land Sellers and Other Loans.

As of November 30, 2023, inventories having a carrying value of $ 30.5 million were pledged to collateralize mortgages and land contracts due to land sellers and other loans.

Shelf Registration.

On July 10, 2023, we filed the 2023 Shelf Registration with the SEC.

As with our prior shelf registration statements, the 2023 Shelf Registration registers the offering of securities that we may issue from time to time in amounts to be determined.

Our ability to issue securities is subject to market conditions and, with respect to debt securities, other factors impacting our borrowing capacity.

We have not made any offerings of securities under the 2023 Shelf Registration.

Principal payments on our notes payable are due during each year ending November 30 as follows:

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2027 — $ 300.0 million;

2027 — $ 450.0 million;

and thereafter — $ 1.04 billion.

Borrowings under the Credit Facility are reflected as principal payments due in 2027, corresponding to the Credit Facility’s maturity date.

Fair Value Disclosures

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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 and our assets measured at fair value on a nonrecurring basis (in thousands):

The following table presents the fair value hierarchy and our assets measured at fair value on a nonrecurring basis for the years ended November 30, 2023 and 2022 (in thousands):

November 30, 2023 November 30, 2022

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(a) Amounts represent the aggregate fair value for real estate assets impacted by inventory impairment charges during the applicable period, as of the date that the fair value measurements were made.

The carrying value for these real estate assets

may have subsequently increased or decreased from the fair value reflected due to activity that has occurred since the measurement date.

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 primarily based on the estimated future net cash flows discounted for inherent risk associated with each underlying asset.

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The fair values of our senior notes are generally estimated based on quoted market prices for these instruments.

The carrying values reported for cash and cash equivalents, outstanding borrowings under the Credit Facility and the Term Loan, and mortgages and land contracts due to land sellers and other loans approximate fair values.

The carrying values reported for cash and cash equivalents, outstanding borrowings under the Credit Facility, if any, and the Term Loan, 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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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.

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To the extent provided under the wrap-up program, we absorb the enrolled contractors’ 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 certain construction defect, bodily injury and property damage claims and related litigation or regulatory actions, up to certain limits.

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:

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Balance at end of year $ 179,832 $ 175,977 $ 189,131

(a) Represents net changes in estimated probable recoveries related to self-insurance, which are recorded in receivables, to present our self-insurance liability on a gross basis;

an adjustment to increase our previously recorded liability by $ 7.0 million in 2022 and $ 6.8 million in 2021;

and an adjustment to reduce our previously recorded liability by $ 4.0 million in 2020.

The 2022 amount primarily reflected a change in the actuarially determined estimate of probable recoveries largely associated with higher self-insured retention levels in our more recent coverage years, and an insurance carrier’s payment of a portion of a townhome claim settlement reached in the 2022 first quarter.

(a) Represents net changes in estimated probable recoveries related to self-insurance, which are recorded in receivables, to present our self-insurance liability on a gross basis, and an adjustment to increase our previously recorded liability by $ 6.5 million in 2023, $ 7.0 million in 2022 and $ 6.8 million in 2021.

The 2022 amount was largely impacted by a change in the actuarially determined estimate of probable recoveries associated with higher self-insured retention levels in our more recent coverage years, and an insurance carrier’s payment of a portion of a townhome claim settlement reached in the 2022 first quarter.

For most of our claims, there is no interaction between our warranty liability and self-insurance liability.

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Estimates of all such amounts, if any, are recorded as receivables in our consolidated balance sheets when any such recovery is considered probable.

In addition to the risk that is effectively self-insured through our captive insurance subsidiary, we often obtain project-specific insurance coverage for construction defect risk on attached projects (e.g., condominiums or townhomes) with policy deductibles generally ranging from $ 50,000 to $ 250,000 .

We record estimated liabilities and recoveries for projected losses related to these projects on a gross basis, including for known claims as well as estimates for claims incurred but not yet reported, to the extent such amounts are considered probable and estimable.

Florida Chapter 558 Actions .

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In addition, some of our trade partners’ insurers in some of these cases have informed us of their inability to continue to pay claims-related costs.

At November 30, 2022, 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.

In addition, although we believe it is probable we will receive additional claims in future periods, we are unable to reasonably estimate the number of such claims or the amount or range of any potential losses associated with such claims as each of these

is dependent on several factors, including the actions of third parties over which we have no control;

At November 30, 2023, we had an accrual for our estimated probable loss for these matters and a receivable for estimated probable insurance recoveries, including an estimate for claims incurred but not yet reported.

While it is reasonably possible that our losses could exceed the amounts accrued and our recoveries could be less than the amounts 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 as each of these is dependent on several factors, including the extent of additional claims to be reported in future periods;

the nature of any specific claims;

and our evaluation of the particular facts surrounding each such claim.

our evaluation of the particular facts surrounding each such claim;

and the actions of third parties over which we have no control.

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 November 30, 2022, we had $ 1.27 billion of performance bonds and $ 43.0 million of letters of credit outstanding.

At November 30, 2023, we had $ 1.32 billion of

performance bonds and $ 19.1 million of letters of credit outstanding.

At November 30, 2022, we had $ 1.27 billion of performance bonds and $ 43.0 million of letters of credit outstanding.

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Our land option contracts and other similar contracts generally do not contain provisions requiring our specific performance.

Civil Subpoena .

On October 2, 2023, we received a subpoena from the U.S.

Department of Justice Civil Division, dated September 27, 2023, to produce certain documents and testimony with respect to the inspection, rating, marketing and advertising of our ENERGY STAR homes, including our contracts and/or communications with U.S.

EPA and third-party ENERGY STAR rating companies, real estate brokers, real estate appraisers, financial institutions and other parties, as well as inspection-related guidelines, instructions, methods, policies, processes and procedures.

We are cooperating with the government, producing documents and information.

As of the date of this report, we are unable to predict what actions the government will take, if any;

the timing or nature of the ultimate outcome in this matter;

or the impact, if any, such outcome may have on our business or consolidated financial statements.

As a result, while a loss or penalty, if any, is reasonably possible in this matter, it is not considered to be probable or estimable .

Legal Matters

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Preferred Stock.

To help protect the benefits of our NOLs and other deferred tax assets from an ownership change under Section 382, on January 22, 2009, we adopted a rights agreement and declared a dividend distribution of one preferred share purchase right for each outstanding share of common stock.

To help protect the benefits of our NOLs and other deferred tax assets from an ownership change under Section 382, we have in place a rights agreement and distributed a dividend of one preferred share purchase right for each outstanding share of common stock.

Subject to the terms, provisions and conditions of the rights agreement, if the rights become exercisable, each right would initially represent the right to purchase from us 1/100th of a share of our Series A Participating Cumulative Preferred Stock for a purchase price of $ 85.00 (“Purchase Price”).

If issued, each fractional share of preferred stock would generally give a stockholder approximately the same dividend, voting and liquidation rights as does one share of our common stock.

However, prior to exercise, a right does not give its holder any rights as a stockholder, including without limitation any dividend, voting or liquidation rights.

However, prior to exercise, a right does not give its holder any rights as a stockholder, including without limitation any dividend, voting

or liquidation rights.

The rights will not be exercisable until the earlier of (a) 10 calendar days after a public announcement by us that a person or group has become an Acquiring Person (as defined under the rights agreement) and (b) 10 business days after the commencement of a tender or exchange offer by a person or group if upon consummation of the offer the person or group would beneficially own 4.9 % or more of our outstanding common stock.

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On April 7, 2022, our board of directors authorized us to repurchase up to $ 300.0 million of our outstanding common stock.

This authorization replaced the prior board of directors authorization, which had 331,400 shares remaining for repurchase.

In 2022, we repurchased 4,927,499 shares of our common stock on the open market pursuant to this authorization at a total cost of $ 150.0 million.

Repurchases under the new authorization may occur periodically through open market purchases, privately negotiated transactions or otherwise, with the timing and amount at management’s discretion and dependent on market, business and other conditions.

This authorization replaced the 2021 board of directors authorization, which had 331,400 shares remaining for repurchase.

In 2022, we repurchased 4,927,499 shares of our common stock on the open market pursuant to the 2022 authorization at a total cost of $ 150.0 million.

As of November 30, 2022, there was $ 150.0 million of remaining availability under this share repurchase authorization.

In the 2023 first quarter, we repurchased 1,965,442 shares of our common stock on the open market pursuant to this authorization at a total cost of approximately $ 75.0 million.

On March 21, 2023, our board of directors authorized us to repurchase up to $ 500.0 million of our outstanding common stock.

This authorization replaced the 2022 board of directors authorization.

In the 2023 second, third and fourth quarters, we repurchased 7,278,995 shares of our common stock on the open market pursuant to the 2023 authorization at a total cost of $ 336.4 million, bringing our total repurchases for the year ended November 30, 2023 to 9,244,437 shares of common stock at a total cost of approximately $ 411.4 million.

Repurchases under the current authorization may occur periodically through open market purchases, privately negotiated transactions or otherwise, with the timing and amount at management’s discretion and dependent on market, business and other conditions.

This share repurchase authorization will continue in effect until fully used or earlier terminated or suspended by our board of directors, and does not obligate us to purchase any shares.

As of November 30, 2022, we were authorized to repurchase up to $ 150.0 million of our outstanding common stock.

On April 7, 2022, our board of directors also terminated a separate stock repurchase authorization it made in 2014 for the repurchase of not more than 680,000 shares of our outstanding common stock, solely as necessary for director elections in respect of Director Plan SARs.

As the remaining outstanding Director Plan SARs expired in April 2022, this stock repurchase authorization was no longer needed.

Our board of directors declared four quarterly cash dividends of $ .15 per share of common stock in 2022 and 2021.

In 2020, our board of directors declared quarterly cash dividends of $ .09 per share of common stock in the first, second and third quarters.

In the 2020 fourth quarter, our board of directors approved an increase in the quarterly cash dividend on our common stock to $ .15 per share and declared a quarterly cash dividend at the new higher rate.

As of November 30, 2023, we were authorized to repurchase up to $ 163.6 million of our outstanding common stock in additional transactions.

In the 2023 first and second quarters, our board of directors declared quarterly cash dividends of $ .15 per share of common stock.

Our board of directors approved a $ .05 per share increase in the quarterly cash dividend on our common stock to $ .20 per share in the 2023 third quarter, and declared quarterly dividends at the new higher rate for the 2023 third and fourth quarters of 2023.

In 2022 and 2021, our board of directors declared four quarterly cash dividends of $ .15 per share.

All dividends declared during 2023, 2022 and 2021 were also paid during those years.

Treasury Stock.

In addition to the shares purchased in 2022 and 2021 pursuant to our share repurchase program, we acquired $ 15.9 million, $ 12.3 million and $ 9.5 million of our common stock in 2022, 2021 and 2020, respectively.

A portion of the common stock acquired in 2022 and 2021 and all the common stock acquired in 2020 consisted of previously issued shares delivered to us by employees to satisfy their withholding tax obligations on the vesting of PSUs and restricted stock awards or of forfeitures of previous restricted stock awards.

In addition to the shares purchased pursuant to our share repurchase program, we acquired $ 14.2 million, $ 15.9 million and $ 12.3 million of our common stock in 2023, 2022 and 2021, respectively.

A portion of the common stock acquired in 2023, 2022 and 2021 consisted of previously issued shares delivered to us by employees to satisfy their withholding tax obligations on the vesting of PSUs and restricted stock awards or of forfeitures of previous restricted stock awards.

Treasury stock is recorded at cost.

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These transactions are not considered repurchases under the share repurchase program described above.

During 2020, we retired 23,487,966 shares of our treasury stock.

Upon the retirement of the treasury stock, we deducted the par value from common stock and reflected the excess of cost over par value as a reduction to retained earnings.

Accumulated Other Comprehensive Loss

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Postretirement benefit plan adjustments

Amortization of net actuarial loss $ 1,090 $ 1,575 $ 963

Amortization of net actuarial (gain) loss

$ ( 112 ) $ 1,090 $ 1,575

Amortization of prior service cost — — 86

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Employee Benefit and Stock Plans

Most of our employees are eligible to participate in the KB Home 401(k) Savings Plan (“401(k) Plan”) under which we partially match employee contributions.

Most of our employees are eligible to participate in the KB Home 401(k) Savings Plan (“401(k) Plan”) under which we match employee contributions up to 6 % of eligible compensation per payroll period.

The aggregate cost of the 401(k) Plan to us was $ 8.3 million in 2023, $ 8.2 million in 2022 and $ 7.2 million in 2021.

The assets of the 401(k) Plan are held by a third-party trustee.

The assets of the 401(k) Plan are held by a third-party trustee, with an affiliate of the trustee managing some fund options offered by the 401(k) Plan.

The 401(k) Plan participants may direct the investment of their funds among one or more of the several fund options offered by the 401(k) Plan.

As of November 30, 2023, 2022 and 2021, approximately 5 %, 3 % and 4 %, respectively, of the 401(k) Plan’s net assets at each period were invested in our common stock.

Equity Incentive Plan.

We maintain one active equity incentive plan with an authorized aggregate issuance of 12,300,000 shares, plus shares available for grant under a prior equity incentive plan, and shares subject to outstanding awards under the prior equity incentive plan that subsequently expire or are canceled, forfeited, tendered or withheld to satisfy tax withholding obligations with respect to full value awards, or settled for cash.

In addition, if an award made under our active equity incentive plan subsequently expires or is canceled, forfeited or settled for cash, then any shares associated with such award may, to the extent of such expiration, cancellation, forfeiture or cash settlement, be used again for new grants under the plan, and shares tendered or withheld to satisfy tax withholding obligations with respect to a full value award may be used again for new grants under the plan.

Under our active equity incentive plan, grants of stock options and other similar awards reduce the plan’s share

capacity on a 1 -for-1 basis, and grants of restricted stock and other similar “full value” awards reduce the share capacity on a 1.78 -for-1 basis.

Approval of the Amended and Restated KB Home 2014 Equity Incentive Plan.

At our Annual Meeting of Stockholders held on April 20, 2023, our stockholders approved the Amended and Restated KB Home 2014 Equity Incentive Plan (“Amended and Restated 2014 Plan”), confirming, among other things, an aggregate share grant capacity for stock-based awards to our employees, non-employee directors and consultants of 18,200,000 shares through approving and incorporating the base amount of 12,300,000 shares under the predecessor Amended KB Home 2014 Equity Incentive Plan and adding 5,900,000 shares.

In addition, if an award made under the Amended and Restated KB Home 2014 Equity Incentive Plan subsequently expires or is canceled, forfeited or settled for cash, then any shares associated with such award may, to the extent of such expiration, cancellation, forfeiture or cash settlement, be used again for new grants under the plan, and shares tendered or withheld to satisfy tax withholding obligations with respect to a full value award may be used again for new grants under the plan.

The Amended and Restated 2014 Plan is our only active equity compensation plan.

As with the Amended KB Home 2014 Equity Incentive Plan, under the Amended and Restated 2014 Plan, grants of stock options and other similar awards reduce the share grant capacity on a 1 -for-1 basis, and grants of restricted stock and other similar “full value” awards reduce the share grant capacity on a 1.78 -for-1 basis.

Any shares that again become available for grant will be added back to the equity incentive plan’s available grant capacity in the same manner in which they were initially deducted ( i.e ., 1-for-1 or 1.78-for-1).

The plan provides that stock options and stock appreciation rights may be awarded for periods of up to 10 years.

It also enables us to grant cash bonuses and other stock-based awards.

The Amended and Restated 2014 Plan provides stock options and SARs may be awarded for periods of up to 10 years, and enables us to grant other stock-based awards and cash bonuses.

Stock-Based Compensation.

With the approval of the management development and compensation committee, consisting entirely of independent members of our board of directors, we have provided compensation benefits to certain of our employees in the form of stock options, restricted stock and PSUs.

Certain stock-based compensation benefits are also provided to our non-employee directors pursuant to the Director Plan.

Certain stock-based compensation benefits are also provided to our non-employee directors pursuant to the Non-Employee Directors Compensation Plan (“Director Plan”).

Compensation expense related to equity-based awards is included in selling, general and administrative expenses in our consolidated statements of operations.

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We have not granted any stock option awards since 2016.

There were no stock options exercised in 2022.

The total intrinsic value of stock options exercised was $ 17.4 million in 2023 and $ 22.1 million in 2021.

The aggregate intrinsic value of stock options outstanding was $ 26.5 million, $ 40.9 million and $ 48.9 million at November 30, 2022, 2021 and 2020, respectively.

The aggregate intrinsic value of stock options exercisable was $ 26.5 million at November 30, 2022, $ 40.9 million at November 30, 2021, and $ 48.9 million at November 30, 2020.

The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the price of the option.

There were no stock options exercised in 2022.

The aggregate intrinsic value of both stock options outstanding and stock options exercisable was $ 40.6 million at November 30, 2023, $ 26.5 million at November 30, 2022, and $ 40.9 million at November 30, 2021.

intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the price of the option.

Stock options outstanding and stock options exercisable at November 30, 2023 are summarized as follows:

Options Outstanding Options Exercisable

Range of Exercise Price Options Weighted

Exercise Price

Options Weighted

Price Weighted

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Price Weighted

$ 6.32 to $ 14.62

44,343 $ 14.62 0.9 44,343 $ 14.62

$ 14.63 to $ 14.92

560,000 14.92 1.9 560,000 14.92

$ 14.93 to $ 16.21

505,224 16.21 2.9 505,224 16.21

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1,109,567 $ 15.50 2.3 1,109,567 $ 15.50 2.3

$ 6.32 to $ 16.63

1,674,393 $ 15.56 2.9 1,674,393 $ 15.56 2.9

At November 30, 2023, there was no unrecognized stock-based compensation expense related to stock option awards as all these awards were fully vested.

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Performance-Based Restricted Stock Units.

On November 14, 2022, we granted PSUs to certain employees.

On October 5, 2023, we granted PSUs to certain employees.

Each PSU grant corresponds to a target amount of our common stock (“Award Shares”).

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The grant date fair value of each such PSU was $ 44.10 .

On October 7, 2021, we granted PSUs to certain employees with similar terms as the 2022 PSU grants, except that the applicable performance period commenced on December 1, 2021 and ends on November 30, 2024.

Upon vesting, each PSU recipient is entitled to receive a proportionate amount of credited cash dividends that are paid in respect of one share of our common stock with a record date between the grant date and the date the compensation committee of our board of directors determines the applicable performance achievements, if any.

On November 14, 2022, we granted PSUs to certain employees with similar terms as the 2023 PSU grants, except that the applicable performance period commenced on December 1, 2022 and ends on November 30, 2025.

The grant date fair value of each such PSU was $ 30.12 .

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Director Awards.

We have granted Director Plan SARs and deferred common stock awards to our non-employee directors pursuant to the terms of the Director Plan and elections made by each director.

We have granted stock appreciation rights (“SARs”) and deferred common stock awards to our non-employee directors pursuant to the terms of the Director Plan and elections made by each director.

All these awards were fully vested as of November 30, 2016.

Director Plan SARs, which have not been granted since April 2014 as they ceased being a component of non-employee director compensation after that date, were stock settled, had terms of up to 15 years and were granted at an exercise price equal to the closing price of our common stock on the date of grant.

There were no remaining Director Plan SARs outstanding at November 30, 2022.

At November 30, 2021 and 2020, the aggregate outstanding Director Plan SARs were 70,849 and 155,569 , respectively.

SARs, which have not been granted since April 2014 as they ceased being a component of non-employee director compensation after that date, were stock settled, had terms of up to 15 years and were granted at an exercise price equal to the closing price of our common stock on the date of grant.

There were no SARs outstanding at November 30, 2023 or 2022.

At November 30, 2021, the aggregate outstanding SARs were 70,849 .

At November 30, 2023, 2022 and 2021, the aggregate outstanding deferred common stock awards granted under the Director Plan were 271,683 , 409,648 and 469,171 , respectively.

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The cash surrender value of the Retirement Plan life insurance contracts was $ 33.1 million at November 30, 2023 and $ 35.3 million at November 30, 2022.

We recognized investment losses on the cash surrender value of the Retirement Plan life insurance contracts of $ 3.1 million and $ 1.1 million in 2022 and 2021, and an investment gain of $.7 million in 2020.

We recognized an investment gain on the cash surrender value of the Retirement Plan life insurance contracts of $.1 million in 2023, and investment losses of $ 3.1 million and $ 1.1 million in 2022 and 2021, respectively.

In 2023, 2022 and 2021, we paid $ 2.3 million, $ 2.0 million and $ 1.9 million, respectively, in benefits under the Retirement Plan to eligible former employees.

The cash surrender value of the DBO Plan life insurance contracts was $ 16.9 million at November 30, 2023 and $ 16.8 million at November 30, 2022.

We recognized investment losses on the cash surrender value of the DBO Plan life insurance contracts of $ 1.5 million in 2022 and $.3 million in 2021, and an investment gain of $.3 million in 2020.

We recognized an investment gain on the cash surrender value of the DBO Plan life insurance contracts of $.1 million in 2023, and investment losses of $ 1.5 million and $.3 million in 2022 and 2021, respectively.

In 2022, we paid $.7 million in benefits under the DBO Plan.

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Service cost 720 1,132 1,152

Amortization of net actuarial loss 998 1,443 912

Amortization of net actuarial (gain) loss

( 112 ) 998 1,443

Total $ 3,492 $ 3,983 $ 4,273

The liabilities related to these plans were $ 60.1 million at November 30, 2023 and $ 61.4 million at November 30, 2022, and are included in accrued expenses and other liabilities in the consolidated balance sheets.

For the years ended November 30, 2022 and 2021, the discount rates we used for the plans were 4.8 % and 2.3 %, respectively.

For the years ended November 30, 2023 and 2022, the discount rates we used for the plans were approximately 5.2 % and 4.8 %, respectively.

Benefit payments under our Retirement Plan and DBO Plan are expected to be paid during each year ending November 30 as follows:

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Inventories acquired through seller financing 2,891 — 2,910

Reclassification of federal tax refund from deferred tax assets to receivables — — 82,617

Increase in operating lease right-of-use assets and lease liabilities due to adoption of ASC 842 — — 31,199

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data