Supplemental Guarantor Information

3 Months Ended

Feb. 29, 2020

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 29, 2020.

Condensed Consolidating Statements of Operations (in thousands)



	Three Months Ended February 29, 2020
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Total revenues	$	—		$	992,545		$	83,390		$	—		$	1,075,935
Homebuilding:
Revenues	$	—		$	992,545		$	79,837		$	—		$	1,072,382
Construction and land costs	—			(815,558		)	(70,495		)	—			(886,053		)
Selling, general and administrative expenses	(27,650		)	(93,012		)	(5,472		)	—			(126,134		)
Operating income (loss)	(27,650		)	83,975			3,870			—			60,195
Interest income	884			—			51			—			935
Interest expense	(29,555		)	—			(1,407		)	30,962			—
Intercompany interest	80,580			(45,836		)	(3,782		)	(30,962		)	—
Equity in income of unconsolidated joint ventures	—			1,905			—			—			1,905
Homebuilding pretax income (loss)	24,259			40,044			(1,268		)	—			63,035
Financial services pretax income	—			—			5,813			—			5,813
Total pretax income	24,259			40,044			4,545			—			68,848
Income tax expense	(3,100		)	(5,100		)	(900		)	—			(9,100		)
Equity in net income of subsidiaries	38,589			—			—			(38,589		)	—
Net income	$	59,748		$	34,944		$	3,645		$	(38,589	)	$	59,748



	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

Condensed Consolidating Balance Sheets (in thousands)



	February 29, 2020
	KB Home Corporate		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Total
Assets
Homebuilding:
Cash and cash equivalents	$	309,983	$	92,853	$	26,870	$	—		$	429,706
Receivables	44,583		184,288		68,344		—			297,215
Inventories	—		3,391,612		337,004		—			3,728,616
Investments in unconsolidated joint ventures	—		57,147		—		—			57,147
Property and equipment, net	25,185		36,047		3,221		—			64,453
Deferred tax assets, net	93,510		203,661		14,995		—			312,166
Other assets	102,826		19,198		7,695		—			129,719
	576,087		3,984,806		458,129		—			5,019,022
Financial services	—		—		33,812		—			33,812
Intercompany receivables	3,630,262		—		196,703		(3,826,965		)	—
Investments in subsidiaries	162,105		—		—		(162,105		)	—
Total assets	$	4,368,454	$	3,984,806	$	688,644	$	(3,989,070	)	$	5,052,834
Liabilities and stockholders’ equity
Homebuilding:
Accounts payable, accrued expenses and other liabilities	$	137,855	$	429,680	$	291,004	$	—		$	858,539
Notes payable	1,716,149		7,889		25,110		—			1,749,148
	1,854,004		437,569		316,114		—			2,607,687
Financial services	—		—		2,043		—			2,043
Intercompany payables	71,346		3,507,195		248,424		(3,826,965		)	—
Stockholders’ equity	2,443,104		40,042		122,063		(162,105		)	2,443,104
Total liabilities and stockholders’ equity	$	4,368,454	$	3,984,806	$	688,644	$	(3,989,070	)	$	5,052,834



	November 30, 2019
	KB Home Corporate		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Total
Assets
Homebuilding:
Cash and cash equivalents	$	357,966	$	65,434	$	30,414	$	—		$	453,814
Receivables	1,934		181,047		66,074		—			249,055
Inventories	—		3,400,307		304,295		—			3,704,602
Investments in unconsolidated joint ventures	—		57,038		—		—			57,038
Property and equipment, net	24,250		37,539		3,254		—			65,043
Deferred tax assets, net	96,301		237,877		30,315		—			364,493
Other assets	78,686		2,666		1,689		—			83,041
	559,137		3,981,908		436,041		—			4,977,086
Financial services	—		—		38,396		—			38,396
Intercompany receivables	3,624,081		—		186,022		(3,810,103		)	—
Investments in subsidiaries	115,753		—		—		(115,753		)	—
Total assets	$	4,298,971	$	3,981,908	$	660,459	$	(3,925,856	)	$	5,015,482
Liabilities and stockholders’ equity
Homebuilding:
Accounts payable, accrued expenses and other liabilities	$	139,137	$	453,929	$	288,489	$	—		$	881,555
Notes payable	1,715,748		7,889		25,110		—			1,748,747
	1,854,885		461,818		313,599		—			2,630,302
Financial services	—		—		2,058		—			2,058
Intercompany payables	60,964		3,520,090		229,049		(3,810,103		)	—
Stockholders’ equity	2,383,122		—		115,753		(115,753		)	2,383,122
Total liabilities and stockholders’ equity	$	4,298,971	$	3,981,908	$	660,459	$	(3,925,856	)	$	5,015,482

Condensed Consolidating Statements of Cash Flows (in thousands)



	Three Months Ended February 29, 2020
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net cash provided by (used in) operating activities	$	(21,949	)	$	31,705		$	(19,622	)	$	—		$	(9,866	)
Cash flows from investing activities:
Contributions to unconsolidated joint ventures	—			(1,668		)	—			—			(1,668		)
Return of investments in unconsolidated joint ventures	—			500			—			—			500
Purchases of property and equipment, net	(1,048		)	(4,432		)	(1,191		)	—			(6,671		)
Intercompany	(18,760		)	—			—			18,760			—
Net cash used in investing activities	(19,808		)	(5,600		)	(1,191		)	18,760			(7,839		)
Cash flows from financing activities:
Issuance of common stock under employee stock plans	8,226			—			—			—			8,226
Tax payments associated with stock-based compensation awards	(6,219		)	—			—			—			(6,219		)
Payments of cash dividends	(8,233		)	—			—			—			(8,233		)
Intercompany	—			1,314			17,446			(18,760		)	—
Net cash provided by (used in) financing activities	(6,226		)	1,314			17,446			(18,760		)	(6,226		)
Net increase (decrease) in cash and cash equivalents	(47,983		)	27,419			(3,367		)	—			(23,931		)
Cash and cash equivalents at beginning of period	357,966			65,434			31,458			—			454,858
Cash and cash equivalents at end of period	$	309,983		$	92,853		$	28,091		$	—		$	430,927



	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