Supplemental Guarantor Information

6 Months Ended

May 31, 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 May 31, 2020.

Condensed Consolidating Statements of Operations (in thousands)



	Three Months Ended May 31, 2020
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Total revenues	$	—		$	834,137		$	79,833		$	—		$	913,970
Homebuilding:
Revenues	$	—		$	834,137		$	76,143		$	—		$	910,280
Construction and land costs	—			(677,910		)	(66,543		)	—			(744,453		)
Selling, general and administrative expenses	(24,780		)	(83,470		)	(5,988		)	—			(114,238		)
Operating income (loss)	(24,780		)	72,757			3,612			—			51,589
Interest income	407			13			22			—			442
Interest expense	(29,541		)	(58		)	(1,456		)	31,055			—
Intercompany interest	79,978			(44,689		)	(4,234		)	(31,055		)	—
Equity in income of unconsolidated joint ventures	—			8,154			—			—			8,154
Homebuilding pretax income (loss)	26,064			36,177			(2,056		)	—			60,185
Financial services pretax income	—			—			7,604			—			7,604
Total pretax income	26,064			36,177			5,548			—			67,789
Income tax expense	(6,700		)	(7,800		)	(1,300		)	—			(15,800		)
Equity in net income of subsidiaries	32,625			—			—			(32,625		)	—
Net income	$	51,989		$	28,377		$	4,248		$	(32,625	)	$	51,989



	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



	Six Months Ended May 31, 2020
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Total revenues	$	—		$	1,826,682		$	163,223		$	—		$	1,989,905
Homebuilding:
Revenues	$	—		$	1,826,682		$	155,980		$	—		$	1,982,662
Construction and land costs	—			(1,493,468		)	(137,038		)	—			(1,630,506		)
Selling, general and administrative expenses	(52,430		)	(176,482		)	(11,460		)	—			(240,372		)
Operating income (loss)	(52,430		)	156,732			7,482			—			111,784
Interest income	1,291			12			74			—			1,377
Interest expense	(59,096		)	(58		)	(2,863		)	62,017			—
Intercompany interest	160,558			(90,525		)	(8,016		)	(62,017		)	—
Equity in income of unconsolidated joint ventures	—			10,059			—			—			10,059
Homebuilding pretax income (loss)	50,323			76,220			(3,323		)	—			123,220
Financial services pretax income	—			—			13,417			—			13,417
Total pretax income	50,323			76,220			10,094			—			136,637
Income tax expense	(9,800		)	(12,900		)	(2,200		)	—			(24,900		)
Equity in net income of subsidiaries	71,214			—			—			(71,214		)	—
Net income	$	111,737		$	63,320		$	7,894		$	(71,214	)	$	111,737



	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

Condensed Consolidating Balance Sheets (in thousands)



	May 31, 2020
	KB Home Corporate		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Total
Assets
Homebuilding:
Cash and cash equivalents	$	480,206	$	65,410	$	29,390	$	—		$	575,006
Receivables	83,709		167,965		61,254		—			312,928
Inventories	—		3,273,411		334,054		—			3,607,465
Investments in unconsolidated joint ventures	—		57,823		—		—			57,823
Property and equipment, net	27,136		35,328		3,300		—			65,764
Deferred tax assets, net	87,382		169,356		833		—			257,571
Other assets	98,866		20,687		7,035		—			126,588
	777,299		3,789,980		435,866		—			5,003,145
Financial services	—		—		38,857		—			38,857
Intercompany receivables	3,510,856		—		199,368		(3,710,224		)	—
Investments in subsidiaries	129,869		—		—		(129,869		)	—
Total assets	$	4,418,024	$	3,789,980	$	674,091	$	(3,840,093	)	$	5,042,002
Liabilities and stockholders’ equity
Homebuilding:
Accounts payable, accrued expenses and other liabilities	$	137,402	$	343,519	$	302,340	$	—		$	783,261
Notes payable	1,716,558		24,871		25,110		—			1,766,539
	1,853,960		368,390		327,450		—			2,549,800
Financial services	—		—		1,848		—			1,848
Intercompany payables	73,710		3,421,590		214,924		(3,710,224		)	—
Stockholders’ equity	2,490,354		—		129,869		(129,869		)	2,490,354
Total liabilities and stockholders’ equity	$	4,418,024	$	3,789,980	$	674,091	$	(3,840,093	)	$	5,042,002



	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)



	Six Months Ended May 31, 2020
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net cash provided by (used in) operating activities	$	(14,150	)	$	166,394		$	2,450		$	—		$	154,694
Cash flows from investing activities:
Contributions to unconsolidated joint ventures	—			(3,586		)	—			—			(3,586		)
Return of investments in unconsolidated joint ventures	—			500			—			—			500
Purchases of property and equipment, net	(3,111		)	(9,714		)	(2,399		)	—			(15,224		)
Intercompany	153,647			—			—			(153,647		)	—
Net cash provided by (used in) investing activities	150,536			(12,800		)	(2,399		)	(153,647		)	(18,310		)
Cash flows from financing activities:
Payments on mortgages and land contracts due to land sellers and other loans	—			(1,063		)	—			—			(1,063		)
Issuance of common stock under employee stock plans	8,404			—			—			—			8,404
Tax payments associated with stock-based compensation awards	(6,219		)	—			—			—			(6,219		)
Payments of cash dividends	(16,331		)	—			—			—			(16,331		)
Intercompany	—			(152,555		)	(1,092		)	153,647			—
Net cash used in financing activities	(14,146		)	(153,618		)	(1,092		)	153,647			(15,209		)
Net increase (decrease) in cash and cash equivalents	122,240			(24		)	(1,041		)	—			121,175
Cash and cash equivalents at beginning of period	357,966			65,434			31,458			—			454,858
Cash and cash equivalents at end of period	$	480,206		$	65,410		$	30,417		$	—		$	576,033



	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