Postretirement Benefits

12 Months Ended

Nov. 30, 2016

Compensation and Retirement Disclosure [Abstract]

We have a supplemental non-qualified, unfunded retirement plan, the KB Home Retirement Plan (“Retirement Plan”), effective as of July 11, 2002, pursuant to which we have offered to pay supplemental pension benefits to certain designated individuals (consisting of current and former employees) in connection with their retirement. The Retirement Plan was closed to new participants in 2004. We also have an unfunded death benefit plan, the KB Home Death Benefit Only Plan (“DBO Plan”), implemented on November 1, 2001, for certain designated individuals (consisting of current and former employees). The DBO Plan was closed to new participants in 2006.

In connection with these plans, we have purchased cost recovery life insurance contracts on the lives of the designated individuals. The insurance contracts associated with the plans are held by a trust. The trust is the owner and beneficiary of such insurance contracts. The amount of the insurance coverage under the contracts is designed to provide sufficient funds to cover all costs of the plans if assumptions made as to employment term, mortality experience, policy earnings and other factors, as applicable, are realized. The cash surrender value of the Retirement Plan life insurance contracts was $44.4 million at November 30, 2016 and $45.5 million at November 30, 2015. We recognized investment gains on the cash surrender value of the Retirement Plan life insurance contracts of $.4 million in 2016 and $1.8 million in 2014, and an investment loss of $1.3 million in 2015. In 2016, 2015, and 2014, we paid $1.4 million, $1.4 million and $1.2 million, respectively, in benefits under the Retirement Plan to eligible former employees. The cash surrender value of the DBO Plan life insurance contracts was $17.0 million at November 30, 2016 and $16.8 million at November 30, 2015. We recognized investment gains on the cash surrender value of the DBO Plan life insurance contracts of $.2 million in 2016 and $.7 million in 2014, and an investment loss of $.3 million in 2015. We have not paid out any benefits under the DBO Plan.

The net periodic benefit cost of our Retirement Plan and DBO Plan consisted of the following (in thousands):



	Years Ended November 30,
	2016		2015		2014
Interest cost	$	2,285	$	2,270	$	2,456
Amortization of prior service cost	1,556		1,556		1,556
Service cost	1,045		1,142		1,184
Amortization of net actuarial loss	79		848		357
Total	$	4,965	$	5,816	$	5,553

The liabilities related to these plans were $62.2 million at November 30, 2016 and $60.8 million at November 30, 2015, and are included in accrued expenses and other liabilities in the consolidated balance sheets. For each of the years ended November 30, 2016 and 2015, the discount rate we used for the plans was 3.6%.

Benefit payments under our Retirement Plan and DBO Plan are expected to be paid during each year ended November 30 as follows: 2017 — $1.8 million; 2018 — $2.0 million; 2019 — $2.5 million; 2020 — $2.8 million; 2021 — $3.5 million; and for the five years ended November 30, 2026 — $19.7 million in the aggregate.