Supplemental Guarantor Information

Our obligations to pay principal, premium, if any, and interest under our senior notes and the 1.375% Convertible Senior Notes due 2019 and borrowings, if any, under the Credit Facility are guaranteed on a joint and several basis by the Guarantor Subsidiaries. The guarantees are full and unconditional and the Guarantor Subsidiaries are 100% owned by us. Pursuant to the terms of the indenture governing our senior notes and the 1.375% Convertible Senior Notes due 2019, and the terms of the Credit Facility, a Guarantor Subsidiary will be automatically and unconditionally released and discharged from its guaranty of our senior notes, the 1.375% Convertible Senior Notes due 2019 and the Credit Facility if such Guarantor Subsidiary 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, 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 November 30, 2013. The format of the condensed consolidating financial statements has been revised for the periods previously reported in our annual reports to retrospectively reflect (a) the transfer of certain of our subsidiaries from non-guarantor subsidiaries to guarantor subsidiaries as a result of such subsidiaries becoming guarantor subsidiaries during 2013 and (b) the following elective reclassifications which relate solely to transactions between KB Home corporate and its subsidiaries: (i) the reclassification of KB Home corporate, guarantor and non-guarantor intercompany interest, which had previously been included in interest expense, to a separate line item with corresponding offsets in the consolidating adjustments column; (ii) the reclassification of guarantor and non-guarantor intercompany receivables and payables, which had previously been presented on a net basis, with corresponding offsets in the consolidating adjustments column; (iii) the reclassification of the net intercompany funding activity of KB Home corporate, which was previously included in cash flows provided by (used in) financing activities, to cash flows from investing activities with corresponding offsets in the consolidating adjustments column; and (iv) the reclassification of dividends received by KB Home corporate from its subsidiaries to cash provided by (used in) operating activities. Such dividends were previously included in net cash provided by (used in) financing activities. This revised presentation of the condensed consolidating financial statements had no impact or effect on our consolidated financial statements for any periods presented, including our consolidated statements of operations, consolidated statements of comprehensive income (loss), consolidated balance sheets and consolidated statements of cash flows.

Condensed Consolidating Statement of Operations

(in thousands)



	Year Ended November 30, 2013
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Revenues	$	—		$	2,036,340		$	60,790		$	—		$	2,097,130
Homebuilding:
Revenues	$	—		$	2,036,340		$	48,638		$	—		$	2,084,978
Construction and land costs	—			(1,692,525		)	(44,561		)	—			(1,737,086		)
Selling, general and administrative expenses	(60,545		)	(180,344		)	(14,919		)	—			(255,808		)
Operating income (loss)	(60,545		)	163,471			(10,842		)	—			92,084
Interest income	768			18			6			—			792
Interest expense	(143,902		)	(5,199		)	—			86,411			(62,690		)
Intercompany interest	203,096			(117,180		)	495			(86,411		)	—
Equity in loss of unconsolidated joint ventures	—			(2,007		)	—			—			(2,007		)
Homebuilding pretax income (loss)	(583		)	39,103			(10,341		)	—			28,179
Financial services pretax income	—			—			10,184			—			10,184
Total pretax income (loss)	(583		)	39,103			(157		)	—			38,363
Income tax benefit	—			1,500			100			—			1,600
Equity in net income of subsidiaries	40,546			—			—			(40,546		)	—
Net income (loss)	$	39,963		$	40,603		$	(57	)	$	(40,546	)	$	39,963

Condensed Consolidating Statement of Operations

(in thousands)



	Year Ended November 30, 2012
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Revenues	$	—		$	1,506,333		$	53,782		$	—		$	1,560,115
Homebuilding:
Revenues	$	—		$	1,506,333		$	42,099		$	—		$	1,548,432
Construction and land costs	—			(1,291,877		)	(40,168		)	—			(1,332,045		)
Selling, general and administrative expenses	(60,101		)	(163,266		)	(13,276		)	—			(236,643		)
Operating income (loss)	(60,101		)	51,190			(11,345		)	—			(20,256		)
Interest income	480			13			25			—			518
Interest expense	(127,291		)	(5,365		)	—			62,852			(69,804		)
Intercompany interest	176,977			(114,286		)	161			(62,852		)	—
Equity in loss of unconsolidated joint ventures	—			(394		)	—			—			(394		)
Homebuilding pretax loss	(9,935		)	(68,842		)	(11,159		)	—			(89,936		)
Financial services pretax income	—			—			10,883			—			10,883
Total pretax loss	(9,935		)	(68,842		)	(276		)	—			(79,053		)
Income tax benefit	2,500			17,500			100			—			20,100
Equity in net loss of subsidiaries	(51,518		)	—			—			51,518			—
Net loss	$	(58,953	)	$	(51,342	)	$	(176	)	$	51,518		$	(58,953	)

Condensed Consolidating Statement of Operations

(in thousands)



	Year Ended November 30, 2011
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Revenues	$	—		$	1,262,453		$	53,413		$	—		$	1,315,866
Homebuilding:
Revenues	$	—		$	1,262,453		$	43,109		$	—		$	1,305,562
Construction and land costs	—			(1,108,572		)	(48,708		)	—			(1,157,280		)
Selling, general and administrative expenses	(52,784		)	(151,916		)	(15,891		)	—			(220,591		)
Loss on loan guaranty	—			(30,765		)	—			—			(30,765		)
Operating loss	(52,784		)	(28,800		)	(21,490		)	—			(103,074		)
Interest income	715			48			108			—			871
Interest expense	(110,068		)	(3,007		)	1,038			62,833			(49,204		)
Intercompany interest	162,025			(97,623		)	(1,569		)	(62,833		)	—
Equity in income (loss) of unconsolidated joint ventures	—			(55,840		)	1			—			(55,839		)
Homebuilding pretax loss	(112		)	(185,222		)	(21,912		)	—			(207,246		)
Financial services pretax income	—			—			26,078			—			26,078
Total pretax income (loss)	(112		)	(185,222		)	4,166			—			(181,168		)
Income tax benefit	—			2,300			100			—			2,400
Equity in net loss of subsidiaries	(178,656		)	—			—			178,656			—
Net income (loss)	$	(178,768	)	$	(182,922	)	$	4,266		$	178,656		$	(178,768	)

Condensed Consolidating Statements of Comprehensive Income (Loss)

(in thousands)



	Year Ended November 30, 2013
	KB Home Corporate		Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net income (loss)	$	39,963	$	40,603	$	(57	)	$	(40,546	)	$	39,963
Other comprehensive income:
Postretirement benefit plan adjustments	10,442		—		—			—			10,442
Other comprehensive income	10,442		—		—			—			10,442
Comprehensive income (loss)	$	50,405	$	40,603	$	(57	)	$	(40,546	)	$	50,405



	Year Ended November 30, 2012
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments		Total
Net loss	$	(58,953	)	$	(51,342	)	$	(176	)	$	51,518	$	(58,953	)
Other comprehensive loss:
Postretirement benefit plan adjustments	(1,806		)	—			—			—		(1,806		)
Other comprehensive loss	(1,806		)	—			—			—		(1,806		)
Comprehensive loss	$	(60,759	)	$	(51,342	)	$	(176	)	$	51,518	$	(60,759	)



	Year Ended November 30, 2011
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Consolidating Adjustments		Total
Net income (loss)	$	(178,768	)	$	(182,922	)	$	4,266	$	178,656	$	(178,768	)
Other comprehensive loss:
Postretirement benefit plan adjustments	(3,495		)	—			—		—		(3,495		)
Other comprehensive loss	(3,495		)	—			—		—		(3,495		)
Comprehensive income (loss)	$	(182,263	)	$	(182,922	)	$	4,266	$	178,656	$	(182,263	)

Condensed Consolidating Balance Sheet

(in thousands)



	November 30, 2013
	KB Home Corporate		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Total
Assets
Homebuilding:
Cash and cash equivalents	$	476,847	$	41,316	$	11,932	$	—		$	530,095
Restricted cash	41,906		—		—		—			41,906
Receivables	1,472		74,186		91		—			75,749
Inventories	—		2,263,034		35,543		—			2,298,577
Investments in unconsolidated joint ventures	—		130,192		—		—			130,192
Other assets	97,647		9,072		357		—			107,076
	617,872		2,517,800		47,923		—			3,183,595
Financial services	—		—		10,040		—			10,040
Intercompany receivables	2,129,729		—		117,829		(2,247,558		)	—
Investments in subsidiaries	39,955		—		—		(39,955		)	—
Total assets	$	2,787,556	$	2,517,800	$	175,792	$	(2,287,513	)	$	3,193,635
Liabilities and stockholders’ equity
Homebuilding:
Accounts payable, accrued expenses and other liabilities	$	117,875	$	292,220	$	94,363	$	—		$	504,458
Mortgages and notes payable	2,111,773		38,725		—		—			2,150,498
	2,229,648		330,945		94,363		—			2,654,956
Financial services	—		—		2,593		—			2,593
Intercompany payables	21,822		2,186,855		38,881		(2,247,558		)	—
Stockholders’ equity	536,086		—		39,955		(39,955		)	536,086
Total liabilities and stockholders’ equity	$	2,787,556	$	2,517,800	$	175,792	$	(2,287,513	)	$	3,193,635

Condensed Consolidating Balance Sheet

(in thousands)



	November 30, 2012
	KB Home Corporate		Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Assets
Homebuilding:
Cash and cash equivalents	$	457,007	$	54,205	$	13,553		$	—		$	524,765
Restricted cash	42,362		—		—			—			42,362
Receivables	121		64,504		196			—			64,821
Inventories	—		1,688,301		18,270			—			1,706,571
Investments in unconsolidated joint ventures	—		116,793		6,881			—			123,674
Other assets	85,901		15,980		(6,831		)	—			95,050
	585,391		1,939,783		32,069			—			2,557,243
Financial services	—		—		4,455			—			4,455
Intercompany receivables	1,559,712		—		122,580			(1,682,292		)	—
Investments in subsidiaries	38,479		—		—			(38,479		)	—
Total assets	$	2,183,582	$	1,939,783	$	159,104		$	(1,720,771	)	$	2,561,698
Liabilities and stockholders’ equity
Homebuilding:
Accounts payable, accrued expenses and other liabilities	$	134,314	$	221,611	$	102,964		$	—		$	458,889
Mortgages and notes payable	1,645,394		77,421		—			—			1,722,815
	1,779,708		299,032		102,964			—			2,181,704
Financial services	—		—		3,188			—			3,188
Intercompany payables	27,068		1,640,751		14,473			(1,682,292		)	—
Stockholders’ equity	376,806		—		38,479			(38,479		)	376,806
Total liabilities and stockholders’ equity	$	2,183,582	$	1,939,783	$	159,104		$	(1,720,771	)	$	2,561,698

Condensed Consolidating Statement of Cash Flows

(in thousands)



	Year Ended November 30, 2013
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net cash provided by (used in) operating activities	$	4,695		$	(441,236	)	$	(6,945	)	$	—		$	(443,486	)
Cash flows from investing activities:
Contributions to unconsolidated joint ventures	—			(9,368		)	(4,991		)	—			(14,359		)
Purchases of property and equipment, net	(519		)	(1,491		)	(381		)	—			(2,391		)
Intercompany	(517,703		)	—			—			517,703			—
Net cash used in investing activities	(518,222		)	(10,859		)	(5,372		)	517,703			(16,750		)
Cash flows from financing activities:
Change in restricted cash	456			—			—			—			456
Proceeds from issuance of debt	680,000			—			—			—			680,000
Payment of debt issuance costs	(16,525		)	—			—			—			(16,525		)
Repayment of senior notes	(225,394		)	—			—			—			(225,394		)
Payments on mortgages and land contracts due to land sellers and other loans	—			(66,296		)	—			—			(66,296		)
Proceeds from issuance of common stock, net	109,503			—			—			—			109,503
Issuance of common stock under employee stock plans	2,181			—			—			—			2,181
Payments of cash dividends	(8,366		)	—			—			—			(8,366		)
Stock repurchases	(8,488		)	—			—			—			(8,488		)
Intercompany	—			505,502			12,201			(517,703		)	—
Net cash provided by financing activities	533,367			439,206			12,201			(517,703		)	467,071
Net increase (decrease) in cash and cash equivalents	19,840			(12,889		)	(116		)	—			6,835
Cash and cash equivalents at beginning of year	457,007			54,205			14,476			—			525,688
Cash and cash equivalents at end of year	$	476,847		$	41,316		$	14,360		$	—		$	532,523

Condensed Consolidating Statement of Cash Flows

(in thousands)



	Year Ended November 30, 2012
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net cash provided by operating activities	$	11,033		$	4,943		$	18,641		$	—		$	34,617
Cash flows from investing activities:
Return of investments in (contributions to) unconsolidated joint ventures	—			1,922			(933		)	—			989
Purchases of property and equipment, net	(175		)	(1,540		)	(34		)	—			(1,749		)
Intercompany	5,137			—			—			(5,137		)	—
Net cash provided by (used in) investing activities	4,962			382			(967		)	(5,137		)	(760		)
Cash flows from financing activities:
Change in restricted cash	22,119			—			—			—			22,119
Proceeds from issuance of debt	694,831			—			—			—			694,831
Payment of debt issuance costs	(12,445		)	—			—			—			(12,445		)
Repayment of senior notes	(592,645		)	—			—			—			(592,645		)
Payments on mortgages and land contracts due to land sellers and other loans	—			(26,298		)	—			—			(26,298		)
Issuance of common stock under employee stock plans	593			—			—			—			593
Payments of cash dividends	(10,599		)	—			—			—			(10,599		)
Stock repurchases	(1,799		)	—			—			—			(1,799		)
Intercompany	—			22,915			(28,052		)	5,137			—
Net cash provided by (used in) financing activities	100,055			(3,383		)	(28,052		)	5,137			73,757
Net increase (decrease) in cash and cash equivalents	116,050			1,942			(10,378		)	—			107,614
Cash and cash equivalents at beginning of year	340,957			52,263			24,854			—			418,074
Cash and cash equivalents at end of year	$	457,007		$	54,205		$	14,476		$	—		$	525,688

Condensed Consolidating Statement of Cash Flows

(in thousands)



	Year Ended November 30, 2011
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net cash provided by (used in) operating activities	$	9,443		$	(355,165	)	$	(1,823	)	$	—		$	(347,545	)
Cash flows from investing activities:
Return of investments in (contributions to) unconsolidated joint ventures	—			(78,619		)	11,359			—			(67,260		)
Proceeds from sale of operating property	—			80,600			—			—			80,600
Sales (purchases) of property and equipment, net	(200		)	(649		)	607			—			(242		)
Intercompany	(349,081		)	—			—			349,081			—
Net cash provided by (used in) investing activities	(349,281		)	1,332			11,966			349,081			13,098
Cash flows from financing activities:
Change in restricted cash	24,239			26,757			—			—			50,996
Repayment of senior notes	(100,000		)	—			—			—			(100,000		)
Payments on mortgages and land contracts due to land sellers and other loans	3,397			(89,461		)	(3,397		)	—			(89,461		)
Issuance of common stock under employee stock plans	1,796			—			—			—			1,796
Payments of cash dividends	(19,240		)	—			—			—			(19,240		)
Intercompany	—			443,698			(94,617		)	(349,081		)	—
Net cash provided by (used in) financing activities	(89,808		)	380,994			(98,014		)	(349,081		)	(155,909		)
Net increase (decrease) in cash and cash equivalents	(429,646		)	27,161			(87,871		)	—			(490,356		)
Cash and cash equivalents at beginning of year	770,603			25,102			112,725			—			908,430
Cash and cash equivalents at end of year	$	340,957		$	52,263		$	24,854		$	—		$	418,074