Supplemental Guarantor Information

Our obligations to pay principal, premium, if any, and interest on the senior notes and borrowings, if any, under the Amended 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 Amended Credit Facility, if any of the Guarantor Subsidiaries ceases to be a “significant subsidiary” as defined by Rule 1-02 of Regulation S-X (as in effect on June 1, 1996) 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 Amended 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, 2015.

Condensed Consolidating Statements of Operations (in thousands)



	Nine Months Ended August 31, 2015
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Revenues	$	—		$	1,866,015		$	180,232		$	—		$	2,046,247
Homebuilding:
Revenues	$	—		$	1,866,015		$	172,881		$	—		$	2,038,896
Construction and land costs	—			(1,566,720		)	(159,256		)	—			(1,725,976		)
Selling, general and administrative expenses	(63,886		)	(158,403		)	(22,389		)	—			(244,678		)
Operating income (loss)	(63,886		)	140,892			(8,764		)	—			68,242
Interest income	337			3			2			—			342
Interest expense	(136,292		)	(4,497		)	—			122,939			(17,850		)
Intercompany interest	218,684			(88,780		)	(6,965		)	(122,939		)	—
Equity in loss of unconsolidated joint ventures	—			(1,180		)	—			—			(1,180		)
Homebuilding pretax income (loss)	18,843			46,438			(15,727		)	—			49,554
Financial services pretax income	—			—			7,572			—			7,572
Total pretax income (loss)	18,843			46,438			(8,155		)	—			57,126
Income tax benefit (expense)	2,900			(18,700		)	(700		)	—			(16,500		)
Equity in net income of subsidiaries	18,883			—			—			(18,883		)	—
Net income (loss)	$	40,626		$	27,738		$	(8,855	)	$	(18,883	)	$	40,626



	Nine Months Ended August 31, 2014
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Revenues	$	—		$	1,436,822		$	168,086		$	—		$	1,604,908
Homebuilding:
Revenues	$	—		$	1,436,822		$	160,072		$	—		$	1,596,894
Construction and land costs	—			(1,167,762		)	(137,496		)	—			(1,305,258		)
Selling, general and administrative expenses	(47,489		)	(131,443		)	(26,783		)	—			(205,715		)
Operating income (loss)	(47,489		)	137,617			(4,207		)	—			85,921
Interest income	385			7			1			—			393
Interest expense	(122,634		)	(4,408		)	—			100,753			(26,289		)
Intercompany interest	206,943			(99,077		)	(7,113		)	(100,753		)	—
Equity in income (loss) of unconsolidated joint ventures	—			(2,132		)	3,293			—			1,161
Homebuilding pretax income (loss)	37,205			32,007			(8,026		)	—			61,186
Financial services pretax income	—			—			5,162			—			5,162
Total pretax income (loss)	37,205			32,007			(2,864		)	—			66,348
Income tax expense	(100		)	(600		)	(100		)	—			(800		)
Equity in net income of subsidiaries	28,443			—			—			(28,443		)	—
Net income (loss)	$	65,548		$	31,407		$	(2,964	)	$	(28,443	)	$	65,548



	Three Months Ended August 31, 2015
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Revenues	$	—		$	761,783		$	81,374		$	—		$	843,157
Homebuilding:
Revenues	$	—		$	761,783		$	78,421		$	—		$	840,204
Construction and land costs	—			(638,451		)	(70,697		)	—			(709,148		)
Selling, general and administrative expenses	(28,540		)	(58,137		)	(8,397		)	—			(95,074		)
Operating income (loss)	(28,540		)	65,195			(673		)	—			35,982
Interest income	86			1			—			—			87
Interest expense	(45,040		)	(1,547		)	—			42,193			(4,394		)
Intercompany interest	74,501			(30,203		)	(2,105		)	(42,193		)	—
Equity in loss of unconsolidated joint ventures	—			(422		)	—			—			(422		)
Homebuilding pretax income (loss)	1,007			33,024			(2,778		)	—			31,253
Financial services pretax income	—			—			2,701			—			2,701
Total pretax income (loss)	1,007			33,024			(77		)	—			33,954
Income tax benefit (expense)	2,200			(12,100		)	(800		)	—			(10,700		)
Equity in net income of subsidiaries	20,047			—			—			(20,047		)	—
Net income (loss)	$	23,254		$	20,924		$	(877	)	$	(20,047	)	$	23,254



	Three Months Ended August 31, 2014
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Revenues	$	—		$	529,599		$	59,615		$	—		$	589,214
Homebuilding:
Revenues	$	—		$	529,599		$	56,632		$	—		$	586,231
Construction and land costs	—			(429,998		)	(49,426		)	—			(479,424		)
Selling, general and administrative expenses	(15,995		)	(47,653		)	(9,249		)	—			(72,897		)
Operating income (loss)	(15,995		)	51,948			(2,043		)	—			33,910
Interest income	109			1			—			—			110
Interest expense	(42,955		)	(1,648		)	—			38,148			(6,455		)
Intercompany interest	76,512			(35,728		)	(2,636		)	(38,148		)	—
Equity in loss of unconsolidated joint ventures	—			(751		)	—			—			(751		)
Homebuilding pretax income (loss)	17,671			13,822			(4,679		)	—			26,814
Financial services pretax income	—			—			1,847			—			1,847
Total pretax income (loss)	17,671			13,822			(2,832		)	—			28,661
Income tax expense	(50		)	(200		)	(50		)	—			(300		)
Equity in net income of subsidiaries	10,740			—			—			(10,740		)	—
Net income (loss)	$	28,361		$	13,622		$	(2,882	)	$	(10,740	)	$	28,361

Condensed Consolidating Balance Sheets (in thousands)



	August 31, 2015
	KB Home Corporate		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Total
Assets
Homebuilding:
Cash and cash equivalents	$	288,869	$	60,271	$	3,812	$	—		$	352,952
Restricted cash	25,028		—		—		—			25,028
Receivables	284		156,354		2,938		—			159,576
Inventories	—		3,163,292		238,445		—			3,401,737
Investments in unconsolidated joint ventures	—		72,800		—		—			72,800
Deferred tax assets, net	218,954		534,728		56,334		—			810,016
Other assets	98,917		13,448		1,987		—			114,352
	632,052		4,000,893		303,516		—			4,936,461
Financial services	—		—		12,035		—			12,035
Intercompany receivables	3,663,944		—		104,306		(3,768,250		)	—
Investments in subsidiaries	71,219		—		—		(71,219		)	—
Total assets	$	4,367,215	$	4,000,893	$	419,857	$	(3,839,469	)	$	4,948,496
Liabilities and stockholders’ equity
Homebuilding:
Accounts payable, accrued expenses and other liabilities	$	144,782	$	426,452	$	104,528	$	—		$	675,762
Notes payable	2,564,378		66,354		—		—			2,630,732
	2,709,160		492,806		104,528		—			3,306,494
Financial services	—		—		1,776		—			1,776
Intercompany payables	17,829		3,475,060		275,361		(3,768,250		)	—
Stockholders’ equity	1,640,226		33,027		38,192		(71,219		)	1,640,226
Total liabilities and stockholders’ equity	$	4,367,215	$	4,000,893	$	419,857	$	(3,839,469	)	$	4,948,496



	November 30, 2014
	KB Home Corporate		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Total
Assets
Homebuilding:
Cash and cash equivalents	$	303,280	$	38,124	$	14,962	$	—		$	356,366
Restricted cash	27,235		—		—		—			27,235
Receivables	15		123,024		2,449		—			125,488
Inventories	—		2,980,056		238,331		—			3,218,387
Investments in unconsolidated joint ventures	—		79,441		—		—			79,441
Deferred tax assets, net	215,923		552,653		56,656		—			825,232
Other assets	99,099		13,922		1,894		—			114,915
	645,552		3,787,220		314,292		—			4,747,064
Financial services	—		—		10,486		—			10,486
Intercompany receivables	3,582,612		—		112,919		(3,695,531		)	—
Investments in subsidiaries	39,356		—		—		(39,356		)	—
Total assets	$	4,267,520	$	3,787,220	$	437,697	$	(3,734,887	)	$	4,757,550
Liabilities and stockholders’ equity
Homebuilding:
Accounts payable, accrued expenses and other liabilities	$	138,298	$	331,361	$	112,939	$	—		$	582,598
Notes payable	2,513,165		63,360		—		—			2,576,525
	2,651,463		394,721		112,939		—			3,159,123
Financial services	—		—		2,517		—			2,517
Intercompany payables	20,147		3,392,499		282,885		(3,695,531		)	—
Stockholders’ equity	1,595,910		—		39,356		(39,356		)	1,595,910
Total liabilities and stockholders’ equity	$	4,267,520	$	3,787,220	$	437,697	$	(3,734,887	)	$	4,757,550

Condensed Consolidating Statements of Cash Flows (in thousands)



	Nine Months Ended August 31, 2015
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net cash provided by (used in) operating activities	$	41,620		$	(43,447	)	$	(20,257	)	$	—		$	(22,084	)
Cash flows from investing activities:
Contributions to unconsolidated joint ventures	—			(20,954		)	(1		)	—			(20,955		)
Return of investments in unconsolidated joint ventures	—			14,000			—			—			14,000
Purchases of property and equipment, net	(498		)	(1,565		)	(37		)	—			(2,100		)
Intercompany	(96,519		)	—			—			96,519			—
Net cash used in investing activities	(97,017		)	(8,519		)	(38		)	96,519			(9,055		)
Cash flows from financing activities:
Change in restricted cash	2,207			—			—			—			2,207
Proceeds from issuance of debt	250,000			—			—			—			250,000
Payment of debt issuance costs	(4,561		)	—			—			—			(4,561		)
Repayment of senior notes	(199,906		)	—			—			—			(199,906		)
Payments on mortgages and land contracts due to land sellers and other loans	—			(13,736		)	—			—			(13,736		)
Issuance of common stock under employee stock plans	436			—			—			—			436
Payments of cash dividends	(6,890		)	—			—			—			(6,890		)
Stock repurchases	(300		)	—			—			—			(300		)
Intercompany	—			87,849			8,670			(96,519		)	—
Net cash provided by financing activities	40,986			74,113			8,670			(96,519		)	27,250
Net increase (decrease) in cash and cash equivalents	(14,411		)	22,147			(11,625		)	—			(3,889		)
Cash and cash equivalents at beginning of period	303,280			38,124			17,364			—			358,768
Cash and cash equivalents at end of period	$	288,869		$	60,271		$	5,739		$	—		$	354,879



	Nine Months Ended August 31, 2014
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net cash provided by (used in) operating activities	$	66,251		$	(730,397	)	$	(52,516	)	$	—		$	(716,662	)
Cash flows from investing activities:
Contributions to unconsolidated joint ventures	—			(33,786		)	(248		)	—			(34,034		)
Proceeds from sale of investment in unconsolidated joint venture	—			—			10,110			—			10,110
Purchases of property and equipment, net	(131		)	(3,499		)	(528		)	—			(4,158		)
Intercompany	(840,839		)	—			—			840,839			—
Net cash provided by (used in) investing activities	(840,970		)	(37,285		)	9,334			840,839			(28,082		)
Cash flows from financing activities:
Change in restricted cash	9,450			—			—			—			9,450
Proceeds from issuance of debt	400,000			—			—			—			400,000
Payment of debt issuance costs	(5,448		)	—			—			—			(5,448		)
Payments on mortgages and land contracts due to land sellers and other loans	—			(23,292		)	—			—			(23,292		)
Proceeds from issuance of common stock, net	137,045			—			—			—			137,045
Issuance of common stock under employee stock plans	202			—			—			—			202
Payments of cash dividends	(6,682		)	—			—			—			(6,682		)
Stock repurchases	(46		)	—			—			—			(46		)
Intercompany	—			804,809			36,030			(840,839		)	—
Net cash provided by financing activities	534,521			781,517			36,030			(840,839		)	511,229
Net increase (decrease) in cash and cash equivalents	(240,198		)	13,835			(7,152		)	—			(233,515		)
Cash and cash equivalents at beginning of period	476,847			39,952			15,724			—			532,523
Cash and cash equivalents at end of period	$	236,649		$	53,787		$	8,572		$	—		$	299,008