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 May 31, 2019.

Condensed Consolidating Statements of Operations (in thousands)



	Three Months Ended May 31, 2019
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Total revenues	$	—		$	932,945		$	88,858		$	—		$	1,021,803
Homebuilding:
Revenues	$	—		$	932,945		$	85,726		$	—		$	1,018,671
Construction and land costs	—			(756,055		)	(87,689		)	—			(843,744		)
Selling, general and administrative expenses	(27,506		)	(97,590		)	2,268			—			(122,828		)
Operating income (loss)	(27,506		)	79,300			305			—			52,099
Interest income	395			—			44			—			439
Interest expense	(35,080		)	(134		)	(1,330		)	36,544			—
Intercompany interest	82,238			(42,578		)	(3,116		)	(36,544		)	—
Equity in loss of unconsolidated joint ventures	—			(369		)	—			—			(369		)
Homebuilding pretax income (loss)	20,047			36,219			(4,097		)	—			52,169
Financial services pretax income	—			—			4,592			—			4,592
Total pretax income	20,047			36,219			495			—			56,761
Income tax expense	(2,800		)	(3,000		)	(3,500		)	—			(9,300		)
Equity in net income of subsidiaries	30,214			—			—			(30,214		)	—
Net income (loss)	$	47,461		$	33,219		$	(3,005	)	$	(30,214	)	$	47,461



	Three Months Ended May 31, 2018
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Total revenues	$	—		$	1,026,887		$	74,536		$	—		$	1,101,423
Homebuilding:
Revenues	$	—		$	1,026,887		$	71,786		$	—		$	1,098,673
Construction and land costs	—			(844,637		)	(66,607		)	—			(911,244		)
Selling, general and administrative expenses	(26,815		)	(78,823		)	(7,593		)	—			(113,231		)
Operating income (loss)	(26,815		)	103,427			(2,414		)	—			74,198
Interest income	1,181			4			93			—			1,278
Interest expense	(37,942		)	(634		)	(1,348		)	39,924			—
Intercompany interest	75,277			(32,791		)	(2,562		)	(39,924		)	—
Equity in loss of unconsolidated joint ventures	—			(321		)	(1		)	—			(322		)
Homebuilding pretax income (loss)	11,701			69,685			(6,232		)	—			75,154
Financial services pretax income	—			—			3,154			—			3,154
Total pretax income (loss)	11,701			69,685			(3,078		)	—			78,308
Income tax expense	(2,400		)	(17,700		)	(900		)	—			(21,000		)
Equity in net income of subsidiaries	48,007			—			—			(48,007		)	—
Net income (loss)	$	57,308		$	51,985		$	(3,978	)	$	(48,007	)	$	57,308



	Six Months Ended May 31, 2019
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Total revenues	$	—		$	1,677,398		$	155,888		$	—		$	1,833,286
Homebuilding:
Revenues	$	—		$	1,677,398		$	150,061		$	—		$	1,827,459
Construction and land costs	—			(1,367,096		)	(147,503		)	—			(1,514,599		)
Selling, general and administrative expenses	(52,888		)	(173,130		)	(3,404		)	—			(229,422		)
Operating income (loss)	(52,888		)	137,172			(846		)	—			83,438
Interest income	1,409			—			135			—			1,544
Interest expense	(68,275		)	(455		)	(2,602		)	71,332			—
Intercompany interest	160,210			(84,316		)	(4,562		)	(71,332		)	—
Equity in loss of unconsolidated joint ventures	—			(775		)	—			—			(775		)
Homebuilding pretax income (loss)	40,456			51,626			(7,875		)	—			84,207
Financial services pretax income	—			—			7,065			—			7,065
Total pretax income (loss)	40,456			51,626			(810		)	—			91,272
Income tax expense	(3,500		)	(6,400		)	(3,900		)	—			(13,800		)
Equity in net income of subsidiaries	40,516			—			—			(40,516		)	—
Net income (loss)	$	77,472		$	45,226		$	(4,710	)	$	(40,516	)	$	77,472



	Six Months Ended May 31, 2018
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Total revenues	$	—		$	1,821,576		$	151,470		$	—		$	1,973,046
Homebuilding:
Revenues	$	—		$	1,821,576		$	146,302		$	—		$	1,967,878
Construction and land costs	—			(1,508,733		)	(131,989		)	—			(1,640,722		)
Selling, general and administrative expenses	(48,981		)	(145,940		)	(14,034		)	—			(208,955		)
Operating income (loss)	(48,981		)	166,903			279			—			118,201
Interest income	2,179			9			93			—			2,281
Interest expense	(75,914		)	(1,323		)	(2,631		)	79,868			—
Intercompany interest	148,123			(63,745		)	(4,510		)	(79,868		)	—
Equity in loss of unconsolidated joint ventures	—			(1,166		)	(1		)	—			(1,167		)
Homebuilding pretax income (loss)	25,407			100,678			(6,770		)	—			119,315
Financial services pretax income	—			—			5,038			—			5,038
Total pretax income (loss)	25,407			100,678			(1,732		)	—			124,353
Income tax expense	(47,100		)	(65,800		)	(25,400		)	—			(138,300		)
Equity in net income of subsidiaries	7,746			—			—			(7,746		)	—
Net income (loss)	$	(13,947	)	$	34,878		$	(27,132	)	$	(7,746	)	$	(13,947	)

Condensed Consolidating Balance Sheets (in thousands)



	May 31, 2019
	KB Home Corporate		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Total
Assets
Homebuilding:
Cash and cash equivalents	$	94,391	$	71,436	$	13,049	$	—		$	178,876
Receivables	4,192		225,448		70,068		—			299,708
Inventories	—		3,496,318		284,535		—			3,780,853
Investments in unconsolidated joint ventures	—		56,446		—		—			56,446
Property and equipment, net	21,382		36,420		3,419		—			61,221
Deferred tax assets, net	78,039		296,769		49,587		—			424,395
Other assets	82,905		2,889		1,940		—			87,734
	280,909		4,185,726		422,598		—			4,889,233
Financial services	—		—		30,720		—			30,720
Intercompany receivables	3,802,227		—		177,745		(3,979,972		)	—
Investments in subsidiaries	95,776		—		—		(95,776		)	—
Total assets	$	4,178,912	$	4,185,726	$	631,063	$	(4,075,748	)	$	4,919,953
Liabilities and stockholders’ equity
Homebuilding:
Accounts payable, accrued expenses and other liabilities	$	114,162	$	484,752	$	269,822	$	—		$	868,736
Notes payable	1,817,428		12,018		25,110		—			1,854,556
	1,931,590		496,770		294,932		—			2,723,292
Financial services	—		—		1,451		—			1,451
Intercompany payables	52,112		3,688,956		238,904		(3,979,972		)	—
Stockholders’ equity	2,195,210		—		95,776		(95,776		)	2,195,210
Total liabilities and stockholders’ equity	$	4,178,912	$	4,185,726	$	631,063	$	(4,075,748	)	$	4,919,953



	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)



	Six Months Ended May 31, 2019
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net cash provided by (used in) operating activities	$	35,547		$	(308,291	)	$	92,410		$	—		$	(180,334	)
Cash flows from investing activities:
Contributions to unconsolidated joint ventures	—			(4,245		)	—			—			(4,245		)
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	(3,241		)	(11,360		)	(7,663		)	—			(22,264		)
Intercompany	(196,595		)	—			—			196,595			—
Net cash used in investing activities	(199,836		)	(4,800		)	(7,663		)	196,595			(15,704		)
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	330,000			—			—			—			330,000
Repayments under revolving credit facility	(280,000		)	—			—			—			(280,000		)
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	16,462			—			—			—			16,462
Tax payments associated with stock-based compensation awards	(3,345		)	—			—			—			(3,345		)
Payments of cash dividends	(4,455		)	—			—			—			(4,455		)
Intercompany	—			298,278			(101,683		)	(196,595		)	—
Net cash provided by (used in) financing activities	(171,297		)	270,258			(101,683		)	(196,595		)	(199,317		)
Net decrease in cash and cash equivalents	(335,586		)	(42,833		)	(16,936		)	—			(395,355		)
Cash and cash equivalents at beginning of period	429,977			114,269			30,873			—			575,119
Cash and cash equivalents at end of period	$	94,391		$	71,436		$	13,937		$	—		$	179,764



	Six Months Ended May 31, 2018
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net cash provided by (used in) operating activities	$	18,931		$	(15,092	)	$	(23,208	)	$	—		$	(19,369	)
Cash flows from investing activities:
Contributions to unconsolidated joint ventures	—			(11,600		)	—			—			(11,600		)
Return of investments in unconsolidated joint ventures	—			1,099			—			—			1,099
Sale (purchases) of property and equipment, net	(3,102		)	(329		)	4			—			(3,427		)
Intercompany	(42,380		)	—			—			42,380			—
Net cash provided by (used in) investing activities	(45,482		)	(10,830		)	4			42,380			(13,928		)
Cash flows from financing activities:
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	4,771			—			—			—			4,771
Tax payments associated with stock-based compensation awards	(6,787		)	—			—			—			(6,787		)
Payments of cash dividends	(4,500		)	—			—			—			(4,500		)
Intercompany	—			26,807			15,573			(42,380		)	—
Net cash provided by (used in) financing activities	(6,516		)	17,233			14,653			(42,380		)	(17,010		)
Net decrease in cash and cash equivalents	(33,067		)	(8,689		)	(8,551		)	—			(50,307		)
Cash and cash equivalents at beginning of period	575,193			104,120			41,548			—			720,861
Cash and cash equivalents at end of period	$	542,126		$	95,431		$	32,997		$	—		$	670,554