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 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 28, 2019.

Condensed Consolidating Statements of Operations (in thousands)



	Three Months Ended February 28, 2019
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Total revenues	$	—		$	744,453		$	67,030		$	—		$	811,483
Homebuilding:
Revenues	$	—		$	744,453		$	64,335		$	—		$	808,788
Construction and land costs	—			(611,041		)	(59,814		)	—			(670,855		)
Selling, general and administrative expenses	(25,382		)	(75,540		)	(5,672		)	—			(106,594		)
Operating income (loss)	(25,382		)	57,872			(1,151		)	—			31,339
Interest income	1,014			—			91			—			1,105
Interest expense	(33,195		)	(321		)	(1,272		)	34,788			—
Intercompany interest	77,972			(41,738		)	(1,446		)	(34,788		)	—
Equity in loss of unconsolidated joint ventures	—			(406		)	—			—			(406		)
Homebuilding pretax income (loss)	20,409			15,407			(3,778		)	—			32,038
Financial services pretax income	—			—			2,473			—			2,473
Total pretax income (loss)	20,409			15,407			(1,305		)	—			34,511
Income tax expense	(700		)	(3,400		)	(400		)	—			(4,500		)
Equity in net income of subsidiaries	10,302			—			—			(10,302		)	—
Net income (loss)	$	30,011		$	12,007		$	(1,705	)	$	(10,302	)	$	30,011



	Three Months Ended February 28, 2018
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Total revenues	$	—		$	794,689		$	76,934		$	—		$	871,623
Homebuilding:
Revenues	$	—		$	794,689		$	74,516		$	—		$	869,205
Construction and land costs	—			(664,096		)	(65,382		)	—			(729,478		)
Selling, general and administrative expenses	(22,166		)	(67,117		)	(6,441		)	—			(95,724		)
Operating income (loss)	(22,166		)	63,476			2,693			—			44,003
Interest income	998			5			—			—			1,003
Interest expense	(37,972		)	(689		)	(1,283		)	39,944			—
Intercompany interest	72,846			(30,954		)	(1,948		)	(39,944		)	—
Equity in loss of unconsolidated joint ventures	—			(845		)	—			—			(845		)
Homebuilding pretax income (loss)	13,706			30,993			(538		)	—			44,161
Financial services pretax income	—			—			1,884			—			1,884
Total pretax income	13,706			30,993			1,346			—			46,045
Income tax expense	(44,700		)	(48,100		)	(24,500		)	—			(117,300		)
Equity in net loss of subsidiaries	(40,261		)	—			—			40,261			—
Net loss	$	(71,255	)	$	(17,107	)	$	(23,154	)	$	40,261		$	(71,255	)

Condensed Consolidating Balance Sheets (in thousands)



	February 28, 2019
	KB Home Corporate		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Total
Assets
Homebuilding:
Cash and cash equivalents	$	415,471	$	80,346	$	15,873	$	—		$	511,690
Receivables	4,291		228,879		80,439		—			313,609
Inventories	—		3,435,361		248,402		—			3,683,763
Investments in unconsolidated joint ventures	—		57,134		—		—			57,134
Property and equipment, net	20,363		32,002		2,965		—			55,330
Deferred tax assets, net	80,339		299,769		53,187		—			433,295
Other assets	84,083		3,419		2,058		—			89,560
	604,547		4,136,910		402,924		—			5,144,381
Financial services	—		—		29,275		—			29,275
Intercompany receivables	3,757,220		—		174,018		(3,931,238		)	—
Investments in subsidiaries	104,040		—		—		(104,040		)	—
Total assets	$	4,465,807	$	4,136,910	$	606,217	$	(4,035,278	)	$	5,173,656
Liabilities and stockholders’ equity
Homebuilding:
Accounts payable, accrued expenses and other liabilities	$	122,161	$	443,269	$	274,966	$	—		$	840,396
Notes payable	2,166,461		12,018		25,110		—			2,203,589
	2,288,622		455,287		300,076		—			3,043,985
Financial services	—		—		1,174		—			1,174
Intercompany payables	48,688		3,666,215		216,335		(3,931,238		)	—
Stockholders’ equity	2,128,497		15,408		88,632		(104,040		)	2,128,497
Total liabilities and stockholders’ equity	$	4,465,807	$	4,136,910	$	606,217	$	(4,035,278	)	$	5,173,656



	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)



	Three Months Ended February 28, 2019
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net cash provided by (used in) operating activities	$	13,062		$	(337,286	)	$	126,014		$	—		$	(198,210	)
Cash flows from investing activities:
Contributions to unconsolidated joint ventures	—			(2,527		)	—			—			(2,527		)
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	(2,068		)	(2,032		)	(5,925		)	—			(10,025		)
Intercompany	(190,765		)	—			—			190,765			—
Net cash provided by (used in) investing activities	(192,833		)	6,246			(5,925		)	190,765			(1,747		)
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	(230,000		)	—			—			—			(230,000		)
Borrowings under revolving credit facility	140,000			—			—			—			140,000
Repayments under revolving credit facility	(140,000		)	—			—			—			(140,000		)
Payments on mortgages and land contracts due to land sellers and other loans	—			(28,020		)	—			—			(28,020		)
Issuance of common stock under employee stock plans	832			—			—			—			832
Tax payments associated with stock-based compensation awards	(3,342		)	—			—			—			(3,342		)
Payments of cash dividends	(2,266		)	—			—			—			(2,266		)
Intercompany	—			325,137			(134,372		)	(190,765		)	—
Net cash provided by (used in) financing activities	165,265			297,117			(134,372		)	(190,765		)	137,245
Net decrease in cash and cash equivalents	(14,506		)	(33,923		)	(14,283		)	—			(62,712		)
Cash and cash equivalents at beginning of period	429,977			114,269			30,873			—			575,119
Cash and cash equivalents at end of period	$	415,471		$	80,346		$	16,590		$	—		$	512,407



	Three Months Ended February 28, 2018
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net cash provided by (used in) operating activities	$	3,066		$	(137,254	)	$	(7,492	)	$	—		$	(141,680	)
Cash flows from investing activities:
Contributions to unconsolidated joint ventures	—			(8,025		)	—			—			(8,025		)
Return of investments in unconsolidated joint ventures	—			1,099			—			—			1,099
Sale (purchases) of property and equipment, net	(1,776		)	(177		)	29			—			(1,924		)
Intercompany	(114,691		)	—			—			114,691			—
Net cash provided by (used in) investing activities	(116,467		)	(7,103		)	29			114,691			(8,850		)
Cash flows from financing activities:
Payments on mortgages and land contracts due to land sellers and other loans	—			(2,442		)	(920		)	—			(3,362		)
Issuance of common stock under employee stock plans	2,946			—			—			—			2,946
Tax payments associated with stock-based compensation awards	(6,787		)	—			—			—			(6,787		)
Payments of cash dividends	(2,322		)	—			—			—			(2,322		)
Intercompany	—			118,004			(3,313		)	(114,691		)	—
Net cash provided by (used in) financing activities	(6,163		)	115,562			(4,233		)	(114,691		)	(9,525		)
Net decrease in cash and cash equivalents	(119,564		)	(28,795		)	(11,696		)	—			(160,055		)
Cash and cash equivalents at beginning of period	575,193			104,120			41,548			—			720,861
Cash and cash equivalents at end of period	$	455,629		$	75,325		$	29,852		$	—		$	560,806