Supplemental Guarantor Information

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 (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 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 February 29, 2016.

Condensed Consolidating Statements of Operations (in thousands)



	Three Months Ended February 29, 2016
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Revenues	$	—		$	601,343		$	77,028		$	—		$	678,371
Homebuilding:
Revenues	$	—		$	601,343		$	74,399		$	—		$	675,742
Construction and land costs	—			(501,866		)	(66,952		)	—			(568,818		)
Selling, general and administrative expenses	(24,340		)	(53,136		)	(10,456		)	—			(87,932		)
Operating income (loss)	(24,340		)	46,341			(3,009		)	—			18,992
Interest income	134			18			—			—			152
Interest expense	(44,370		)	(1,881		)	—			42,554			(3,697		)
Intercompany interest	74,043			(28,063		)	(3,426		)	(42,554		)	—
Equity in loss of unconsolidated joint ventures	—			(603		)	—			—			(603		)
Homebuilding pretax income (loss)	5,467			15,812			(6,435		)	—			14,844
Financial services pretax income	—			—			1,183			—			1,183
Total pretax income (loss)	5,467			15,812			(5,252		)	—			16,027
Income tax benefit (expense)	700			(3,600		)	—			—			(2,900		)
Equity in net income of subsidiaries	6,960			—			—			(6,960		)	—
Net income (loss)	$	13,127		$	12,212		$	(5,252	)	$	(6,960	)	$	13,127



	Three Months Ended February 28, 2015
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Revenues	$	—		$	510,996		$	69,125		$	—		$	580,121
Homebuilding:
Revenues	$	—		$	510,996		$	66,892		$	—		$	577,888
Construction and land costs	—			(430,333		)	(62,085		)	—			(492,418		)
Selling, general and administrative expenses	(15,672		)	(45,622		)	(9,778		)	—			(71,072		)
Operating income (loss)	(15,672		)	35,041			(4,971		)	—			14,398
Interest income	101			1			1			—			103
Interest expense	(43,580		)	(1,460		)	—			39,702			(5,338		)
Intercompany interest	70,468			(26,638		)	(4,128		)	(39,702		)	—
Equity in loss of unconsolidated joint ventures	—			(347		)	—			—			(347		)
Homebuilding pretax income (loss)	11,317			6,597			(9,098		)	—			8,816
Financial services pretax income	—			—			1,683			—			1,683
Total pretax income (loss)	11,317			6,597			(7,415		)	—			10,499
Income tax benefit (expense)	200			(3,100		)	200			—			(2,700		)
Equity in net loss of subsidiaries	(3,718		)	—			—			3,718			—
Net income (loss)	$	7,799		$	3,497		$	(7,215	)	$	3,718		$	7,799

Condensed Consolidating Balance Sheets (in thousands)



	February 29, 2016
	KB Home Corporate		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Total
Assets
Homebuilding:
Cash and cash equivalents	$	257,361	$	58,798	$	6,917	$	—		$	323,076
Restricted cash	4,357		—		—		—			4,357
Receivables	2,829		144,885		4,375		—			152,089
Inventories	—		3,127,883		340,761		—			3,468,644
Investments in unconsolidated joint ventures	—		66,071		2,501		—			68,572
Deferred tax assets, net	191,744		497,554		90,098		—			779,396
Other assets	97,345		12,610		3,105		—			113,060
	553,636		3,907,801		447,757		—			4,909,194
Financial services	—		—		12,862		—			12,862
Intercompany receivables	3,739,159		—		101,267		(3,840,426		)	—
Investments in subsidiaries	49,584		—		—		(49,584		)	—
Total assets	$	4,342,379	$	3,907,801	$	561,886	$	(3,890,010	)	$	4,922,056
Liabilities and stockholders’ equity
Homebuilding:
Accounts payable, accrued expenses and other liabilities	$	144,023	$	395,048	$	111,790	$	—		$	650,861
Notes payable	2,565,155		87,550		—		—			2,652,705
	2,709,178		482,598		111,790		—			3,303,566
Financial services	—		—		1,432		—			1,432
Intercompany payables	16,143		3,409,390		414,893		(3,840,426		)	—
Stockholders’ equity	1,617,058		15,813		33,771		(49,584		)	1,617,058
Total liabilities and stockholders’ equity	$	4,342,379	$	3,907,801	$	561,886	$	(3,890,010	)	$	4,922,056



	November 30, 2015
	KB Home Corporate		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Total
Assets
Homebuilding:
Cash and cash equivalents	$	444,850	$	98,281	$	15,911	$	—		$	559,042
Restricted cash	9,344		—		—		—			9,344
Receivables	39		148,338		4,305		—			152,682
Inventories	—		2,979,617		334,130		—			3,313,747
Investments in unconsolidated joint ventures	—		69,057		2,501		—			71,558
Deferred tax assets, net	190,770		501,454		89,972		—			782,196
Other assets	97,590		11,783		3,401		—			112,774
	742,593		3,808,530		450,220		—			5,001,343
Financial services	—		—		14,028		—			14,028
Intercompany receivables	3,627,150		—		102,103		(3,729,253		)	—
Investments in subsidiaries	39,383		—		—		(39,383		)	—
Total assets	$	4,409,126	$	3,808,530	$	566,351	$	(3,768,636	)	$	5,015,371
Liabilities and stockholders’ equity
Homebuilding:
Accounts payable, accrued expenses and other liabilities	$	136,352	$	442,529	$	118,303	$	—		$	697,184
Notes payable	2,564,762		60,774		—		—			2,625,536
	2,701,114		503,303		118,303		—			3,322,720
Financial services	—		—		1,817		—			1,817
Intercompany payables	17,178		3,305,227		406,848		(3,729,253		)	—
Stockholders’ equity	1,690,834		—		39,383		(39,383		)	1,690,834
Total liabilities and stockholders’ equity	$	4,409,126	$	3,808,530	$	566,351	$	(3,768,636	)	$	5,015,371

Condensed Consolidating Statements of Cash Flows (in thousands)



	Three Months Ended February 29, 2016
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net cash provided by (used in) operating activities	$	13,908		$	(141,026	)	$	(16,195	)	$	—		$	(143,313	)
Cash flows from investing activities:
Contributions to unconsolidated joint ventures	—			(291		)	—			—			(291		)
Purchases of property and equipment, net	(1,129		)	(265		)	(19		)	—			(1,413		)
Intercompany	(115,459		)	—			—			115,459			—
Net cash used in investing activities	(116,588		)	(556		)	(19		)	115,459			(1,704		)
Cash flows from financing activities:
Change in restricted cash	4,987			—			—			—			4,987
Payments on mortgages and land contracts due to land sellers and other loans	—			(5,659		)	—			—			(5,659		)
Payments of cash dividends	(2,270		)	—			—			—			(2,270		)
Stock repurchases	(87,526		)	—			—			—			(87,526		)
Intercompany	—			107,758			7,701			(115,459		)	—
Net cash provided by (used in) financing activities	(84,809		)	102,099			7,701			(115,459		)	(90,468		)
Net decrease in cash and cash equivalents	(187,489		)	(39,483		)	(8,513		)	—			(235,485		)
Cash and cash equivalents at beginning of period	444,850			98,281			17,210			—			560,341
Cash and cash equivalents at end of period	$	257,361		$	58,798		$	8,697		$	—		$	324,856



	Three Months Ended February 28, 2015
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net cash provided by (used in) operating activities	$	5,369		$	(27,884	)	$	(26,394	)	$	—		$	(48,909	)
Cash flows from investing activities:
Contributions to unconsolidated joint ventures	—			(2,414		)	—			—			(2,414		)
Purchases of property and equipment, net	(37		)	(528		)	(21		)	—			(586		)
Intercompany	(80,424		)	—			—			80,424			—
Net cash used in investing activities	(80,461		)	(2,942		)	(21		)	80,424			(3,000		)
Cash flows from financing activities:
Change in restricted cash	(749		)	—			—			—			(749		)
Proceeds from issuance of debt	250,000			—			—			—			250,000
Payment of debt issuance costs	(2,989		)	—			—			—			(2,989		)
Payments on mortgages and land contracts due to land sellers and other loans	—			(2,722		)	—			—			(2,722		)
Payments of cash dividends	(2,299		)	—			—			—			(2,299		)
Stock repurchases	(21		)	—			—			—			(21		)
Intercompany	—			59,593			20,831			(80,424		)	—
Net cash provided by financing activities	243,942			56,871			20,831			(80,424		)	241,220
Net increase (decrease) in cash and cash equivalents	168,850			26,045			(5,584		)	—			189,311
Cash and cash equivalents at beginning of period	303,280			37,112			18,376			—			358,768
Cash and cash equivalents at end of period	$	472,130		$	63,157		$	12,792		$	—		$	548,079