Supplemental Guarantor Information

9 Months Ended

Aug. 31, 2019

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

The supplemental financial information for all periods presented below reflects the relevant subsidiaries that were Guarantor Subsidiaries as of August 31, 2019.

Condensed Consolidating Statements of Operations (in thousands)



	Three Months Ended August 31, 2019
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Total revenues	$	—		$	1,061,698		$	99,088		$	—		$	1,160,786
Homebuilding:
Revenues	$	—		$	1,061,698		$	95,157		$	—		$	1,156,855
Construction and land costs	—			(859,733		)	(84,021		)	—			(943,754		)
Selling, general and administrative expenses	(23,619		)	(95,376		)	(8,631		)	—			(127,626		)
Operating income (loss)	(23,619		)	106,589			2,505			—			85,475
Interest income	140			20			41			—			201
Interest expense	(34,488		)	(175		)	(1,361		)	36,024			—
Intercompany interest	84,880			(45,826		)	(3,030		)	(36,024		)	—
Equity in loss of unconsolidated joint ventures	—			(384		)	—			—			(384		)
Homebuilding pretax income (loss)	26,913			60,224			(1,845		)	—			85,292
Financial services pretax income	—			—			6,644			—			6,644
Total pretax income	26,913			60,224			4,799			—			91,936
Income tax expense	(6,900		)	(14,900		)	(2,000		)	—			(23,800		)
Equity in net income of subsidiaries	48,123			—			—			(48,123		)	—
Net income	$	68,136		$	45,324		$	2,799		$	(48,123	)	$	68,136



	Three Months Ended August 31, 2018
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Total revenues	$	—		$	1,144,253		$	81,094		$	—		$	1,225,347
Homebuilding:
Revenues	$	—		$	1,144,253		$	77,622		$	—		$	1,221,875
Construction and land costs	—			(927,346		)	(74,163		)	—			(1,001,509		)
Selling, general and administrative expenses	(24,688		)	(81,540		)	(8,525		)	—			(114,753		)
Operating income (loss)	(24,688		)	135,367			(5,066		)	—			105,613
Interest income	380			—			78			—			458
Interest expense	(33,319		)	(669		)	(1,240		)	35,228			—
Intercompany interest	78,519			(40,675		)	(2,616		)	(35,228		)	—
Equity in income of unconsolidated joint ventures	—			3,493			—			—			3,493
Homebuilding pretax income (loss)	20,892			97,516			(8,844		)	—			109,564
Financial services pretax income	—			—			5,112			—			5,112
Total pretax income (loss)	20,892			97,516			(3,732		)	—			114,676
Income tax expense	(3,500		)	(22,700		)	(1,000		)	—			(27,200		)
Equity in net income of subsidiaries	70,084			—			—			(70,084		)	—
Net income (loss)	$	87,476		$	74,816		$	(4,732	)	$	(70,084	)	$	87,476



	Nine Months Ended August 31, 2019
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Total revenues	$	—		$	2,739,096		$	254,976		$	—		$	2,994,072
Homebuilding:
Revenues	$	—		$	2,739,096		$	245,218		$	—		$	2,984,314
Construction and land costs	—			(2,226,829		)	(231,524		)	—			(2,458,353		)
Selling, general and administrative expenses	(76,507		)	(268,506		)	(12,035		)	—			(357,048		)
Operating income (loss)	(76,507		)	243,761			1,659			—			168,913
Interest income	1,549			20			176			—			1,745
Interest expense	(102,763		)	(630		)	(3,963		)	107,356			—
Intercompany interest	245,090			(130,142		)	(7,592		)	(107,356		)	—
Equity in loss of unconsolidated joint ventures	—			(1,159		)	—			—			(1,159		)
Homebuilding pretax income (loss)	67,369			111,850			(9,720		)	—			169,499
Financial services pretax income	—			—			13,709			—			13,709
Total pretax income	67,369			111,850			3,989			—			183,208
Income tax expense	(10,400		)	(21,300		)	(5,900		)	—			(37,600		)
Equity in net income of subsidiaries	88,639			—			—			(88,639		)	—
Net income (loss)	$	145,608		$	90,550		$	(1,911	)	$	(88,639	)	$	145,608



	Nine Months Ended August 31, 2018
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Total revenues	$	—		$	2,965,829		$	232,564		$	—		$	3,198,393
Homebuilding:
Revenues	$	—		$	2,965,829		$	223,924		$	—		$	3,189,753
Construction and land costs	—			(2,436,079		)	(206,152		)	—			(2,642,231		)
Selling, general and administrative expenses	(73,669		)	(227,480		)	(22,559		)	—			(323,708		)
Operating income (loss)	(73,669		)	302,270			(4,787		)	—			223,814
Interest income	2,559			9			171			—			2,739
Interest expense	(109,233		)	(1,992		)	(3,871		)	115,096			—
Intercompany interest	226,642			(104,420		)	(7,126		)	(115,096		)	—
Equity in income (loss) of unconsolidated joint ventures	—			2,327			(1		)	—			2,326
Homebuilding pretax income (loss)	46,299			198,194			(15,614		)	—			228,879
Financial services pretax income	—			—			10,150			—			10,150
Total pretax income (loss)	46,299			198,194			(5,464		)	—			239,029
Income tax expense	(50,600		)	(88,500		)	(26,400		)	—			(165,500		)
Equity in net income of subsidiaries	77,830			—			—			(77,830		)	—
Net income (loss)	$	73,529		$	109,694		$	(31,864	)	$	(77,830	)	$	73,529

Condensed Consolidating Balance Sheets (in thousands)



	August 31, 2019
	KB Home Corporate		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Total
Assets
Homebuilding:
Cash and cash equivalents	$	67,247	$	104,043	$	12,504	$	—		$	183,794
Receivables	2,368		226,063		63,061		—			291,492
Inventories	—		3,623,232		295,844		—			3,919,076
Investments in unconsolidated joint ventures	—		57,168		—		—			57,168
Property and equipment, net	22,732		38,024		3,363		—			64,119
Deferred tax assets, net	71,939		282,066		48,090		—			402,095
Other assets	81,192		2,773		1,550		—			85,515
	245,478		4,333,369		424,412		—			5,003,259
Financial services	—		—		31,911		—			31,911
Intercompany receivables	3,869,512		—		183,833		(4,053,345		)	—
Investments in subsidiaries	159,161		—		—		(159,161		)	—
Total assets	$	4,274,151	$	4,333,369	$	640,156	$	(4,212,506	)	$	5,035,170
Liabilities and stockholders’ equity
Homebuilding:
Accounts payable, accrued expenses and other liabilities	$	135,855	$	507,361	$	267,807	$	—		$	911,023
Notes payable	1,818,169		16,856		25,110		—			1,860,135
	1,954,024		524,217		292,917		—			2,771,158
Financial services	—		—		1,783		—			1,783
Intercompany payables	57,898		3,748,931		246,516		(4,053,345		)	—
Stockholders’ equity	2,262,229		60,221		98,940		(159,161		)	2,262,229
Total liabilities and stockholders’ equity	$	4,274,151	$	4,333,369	$	640,156	$	(4,212,506	)	$	5,035,170



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

Condensed Consolidating Statements of Cash Flows (in thousands)



	Nine Months Ended August 31, 2019
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net cash provided by (used in) operating activities	$	92,935		$	(335,428	)	$	90,349		$	—		$	(152,144	)
Cash flows from investing activities:
Contributions to unconsolidated joint ventures	—			(7,656		)	—			—			(7,656		)
Return of investments in unconsolidated joint ventures	—			5,001			—			—			5,001
Proceeds from sale of building	—			5,804			—			—			5,804
Purchases of property and equipment, net	(4,728		)	(18,252		)	(9,231		)	—			(32,211		)
Intercompany	(274,010		)	—			—			274,010			—
Net cash used in investing activities	(278,738		)	(15,103		)	(9,231		)	274,010			(29,062		)
Cash flows from financing activities:
Proceeds from issuance of debt	405,250			—			—			—			405,250
Payment of debt issuance costs	(5,209		)	—			—			—			(5,209		)
Repayment of senior notes	(630,000		)	—			—			—			(630,000		)
Borrowings under revolving credit facility	460,000			—			—			—			460,000
Repayments under revolving credit facility	(410,000		)	—			—			—			(410,000		)
Payments on mortgages and land contracts due to land sellers and other loans	—			(32,149		)	—			—			(32,149		)
Issuance of common stock under employee stock plans	18,729			—			—			—			18,729
Tax payments associated with stock-based compensation awards	(3,345		)	—			—			—			(3,345		)
Payments of cash dividends	(12,352		)	—			—			—			(12,352		)
Intercompany	—			372,454			(98,444		)	(274,010		)	—
Net cash provided by (used in) financing activities	(176,927		)	340,305			(98,444		)	(274,010		)	(209,076		)
Net decrease in cash and cash equivalents	(362,730		)	(10,226		)	(17,326		)	—			(390,282		)
Cash and cash equivalents at beginning of period	429,977			114,269			30,873			—			575,119
Cash and cash equivalents at end of period	$	67,247		$	104,043		$	13,547		$	—		$	184,837



	Nine Months Ended August 31, 2018
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net cash provided by (used in) operating activities	$	50,507		$	(78,593	)	$	(21,422	)	$	—		$	(49,508	)
Cash flows from investing activities:
Contributions to unconsolidated joint ventures	—			(15,640		)	—			—			(15,640		)
Return of investments in unconsolidated joint ventures	—			9,934			—			—			9,934
Purchases of property and equipment, net	(3,508		)	(520		)	(109		)	—			(4,137		)
Intercompany	(80,955		)	—			—			80,955			—
Net cash used in investing activities	(84,463		)	(6,226		)	(109		)	80,955			(9,843		)
Cash flows from financing activities:
Repayment of senior notes	(300,000		)	—			—			—			(300,000		)
Borrowings under revolving credit facility	70,000			—			—			—			70,000
Repayments under revolving credit facility	(70,000		)	—			—			—			(70,000		)
Payments on mortgages and land contracts due to land sellers and other loans	—			(9,574		)	(920		)	—			(10,494		)
Issuance of common stock under employee stock plans	17,433			—			—			—			17,433
Tax payments associated with stock-based compensation awards	(6,787		)	—			—			—			(6,787		)
Payments of cash dividends	(6,686		)	—			—			—			(6,686		)
Intercompany	—			83,560			(2,605		)	(80,955		)	—
Net cash provided by (used in) financing activities	(296,040		)	73,986			(3,525		)	(80,955		)	(306,534		)
Net decrease in cash and cash equivalents	(329,996		)	(10,833		)	(25,056		)	—			(365,885		)
Cash and cash equivalents at beginning of period	575,193			104,120			41,548			—			720,861
Cash and cash equivalents at end of period	$	245,197		$	93,287		$	16,492		$	—		$	354,976