Supplemental Guarantor Information

9 Months Ended

Aug. 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 August 31, 2020.

Condensed Consolidating Statements of Operations (in thousands)



	Three Months Ended August 31, 2020
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Total revenues	$	—		$	908,657		$	90,356		$	—		$	999,013
Homebuilding:
Revenues	$	—		$	908,657		$	86,491		$	—		$	995,148
Construction and land costs	—			(725,215		)	(73,280		)	—			(798,495		)
Selling, general and administrative expenses	(22,699		)	(80,978		)	(4,033		)	—			(107,710		)
Operating income (loss)	(22,699		)	102,464			9,178			—			88,943
Interest income	784			—			2			—			786
Interest expense	(29,552		)	(15		)	(1,487		)	31,054			—
Intercompany interest	78,222			(43,112		)	(4,056		)	(31,054		)	—
Equity in income of unconsolidated joint ventures	—			1,922			—			—			1,922
Homebuilding pretax income	26,755			61,259			3,637			—			91,651
Financial services pretax income	—			—			9,664			—			9,664
Total pretax income	26,755			61,259			13,301			—			101,315
Income tax expense	(6,700		)	(13,300		)	(2,900		)	—			(22,900		)
Equity in net income of subsidiaries	58,360			—			—			(58,360		)	—
Net income	$	78,415		$	47,959		$	10,401		$	(58,360	)	$	78,415



	Three Months Ended August 31, 2019
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Total revenues	$	—		$	1,061,698		$	99,088		$	—		$	1,160,786
Homebuilding:
Revenues	$	—		$	1,061,698		$	95,157		$	—		$	1,156,855
Construction and land costs	—			(859,733		)	(84,021		)	—			(943,754		)
Selling, general and administrative expenses	(23,619		)	(95,376		)	(8,631		)	—			(127,626		)
Operating income (loss)	(23,619		)	106,589			2,505			—			85,475
Interest income	140			20			41			—			201
Interest expense	(34,488		)	(175		)	(1,361		)	36,024			—
Intercompany interest	84,880			(45,826		)	(3,030		)	(36,024		)	—
Equity in loss of unconsolidated joint ventures	—			(384		)	—			—			(384		)
Homebuilding pretax income (loss)	26,913			60,224			(1,845		)	—			85,292
Financial services pretax income	—			—			6,644			—			6,644
Total pretax income	26,913			60,224			4,799			—			91,936
Income tax expense	(6,900		)	(14,900		)	(2,000		)	—			(23,800		)
Equity in net income of subsidiaries	48,123			—			—			(48,123		)	—
Net income	$	68,136		$	45,324		$	2,799		$	(48,123	)	$	68,136



	Nine Months Ended August 31, 2020
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Total revenues	$	—		$	2,735,339		$	253,579		$	—		$	2,988,918
Homebuilding:
Revenues	$	—		$	2,735,339		$	242,471		$	—		$	2,977,810
Construction and land costs	—			(2,218,683		)	(210,318		)	—			(2,429,001		)
Selling, general and administrative expenses	(75,129		)	(257,460		)	(15,493		)	—			(348,082		)
Operating income (loss)	(75,129		)	259,196			16,660			—			200,727
Interest income	2,075			12			76			—			2,163
Interest expense	(88,648		)	(73		)	(4,350		)	93,071			—
Intercompany interest	238,780			(133,637		)	(12,072		)	(93,071		)	—
Equity in income of unconsolidated joint ventures	—			11,981			—			—			11,981
Homebuilding pretax income	77,078			137,479			314			—			214,871
Financial services pretax income	—			—			23,081			—			23,081
Total pretax income	77,078			137,479			23,395			—			237,952
Income tax expense	(16,500		)	(26,200		)	(5,100		)	—			(47,800		)
Equity in net income of subsidiaries	129,574			—			—			(129,574		)	—
Net income	$	190,152		$	111,279		$	18,295		$	(129,574	)	$	190,152



	Nine Months Ended August 31, 2019
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Total revenues	$	—		$	2,739,096		$	254,976		$	—		$	2,994,072
Homebuilding:
Revenues	$	—		$	2,739,096		$	245,218		$	—		$	2,984,314
Construction and land costs	—			(2,226,829		)	(231,524		)	—			(2,458,353		)
Selling, general and administrative expenses	(76,507		)	(268,506		)	(12,035		)	—			(357,048		)
Operating income (loss)	(76,507		)	243,761			1,659			—			168,913
Interest income	1,549			20			176			—			1,745
Interest expense	(102,763		)	(630		)	(3,963		)	107,356			—
Intercompany interest	245,090			(130,142		)	(7,592		)	(107,356		)	—
Equity in loss of unconsolidated joint ventures	—			(1,159		)	—			—			(1,159		)
Homebuilding pretax income (loss)	67,369			111,850			(9,720		)	—			169,499
Financial services pretax income	—			—			13,709			—			13,709
Total pretax income	67,369			111,850			3,989			—			183,208
Income tax expense	(10,400		)	(21,300		)	(5,900		)	—			(37,600		)
Equity in net income of subsidiaries	88,639			—			—			(88,639		)	—
Net income (loss)	$	145,608		$	90,550		$	(1,911	)	$	(88,639	)	$	145,608

Condensed Consolidating Balance Sheets (in thousands)



	August 31, 2020
	KB Home Corporate		Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Assets
Homebuilding:
Cash and cash equivalents	$	649,859	$	43,395	$	28,779		$	—		$	722,033
Receivables	39,475		166,454		63,722			—			269,651
Inventories	—		3,340,657		330,472			—			3,671,129
Investments in unconsolidated joint ventures	—		48,821		—			—			48,821
Property and equipment, net	29,066		32,337		3,216			—			64,619
Deferred tax assets, net	83,027		159,543		(1,399		)	—			241,171
Other assets	95,964		22,625		6,653			—			125,242
	897,391		3,813,832		431,443			—			5,142,666
Financial services	—		—		34,761			—			34,761
Intercompany receivables	3,486,621		—		213,647			(3,700,268		)	—
Investments in subsidiaries	129,869		—		—			(129,869		)	—
Total assets	$	4,513,881	$	3,813,832	$	679,851		$	(3,830,137	)	$	5,177,427
Liabilities and stockholders’ equity
Homebuilding:
Accounts payable, accrued expenses and other liabilities	$	143,912	$	434,064	$	284,374		$	—		$	862,350
Notes payable	1,716,974		5,620		25,110			—			1,747,704
	1,860,886		439,684		309,484			—			2,610,054
Financial services	—		—		2,065			—			2,065
Intercompany payables	87,687		3,312,907		299,674			(3,700,268		)	—
Stockholders’ equity	2,565,308		61,241		68,628			(129,869		)	2,565,308
Total liabilities and stockholders’ equity	$	4,513,881	$	3,813,832	$	679,851		$	(3,830,137	)	$	5,177,427



	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)



	Nine Months Ended August 31, 2020
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net cash provided by operating activities	$	62,684		$	253,483		$	13,044		$	—		$	329,211
Cash flows from investing activities:
Contributions to unconsolidated joint ventures	—			(6,048		)	—			—			(6,048		)
Return of investments in unconsolidated joint ventures	—			8,816			—			—			8,816
Purchases of property and equipment, net	(5,148		)	(12,344		)	(3,662		)	—			(21,154		)
Intercompany	256,600			—			—			(256,600		)	—
Net cash provided by (used in) investing activities	251,452			(9,576		)	(3,662		)	(256,600		)	(18,386		)
Cash flows from financing activities:
Payments on mortgages and land contracts due to land sellers and other loans	—			(20,314		)	—			—			(20,314		)
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	(24,428		)	—			—			—			(24,428		)
Intercompany	—			(245,632		)	(10,968		)	256,600			—
Net cash used in financing activities	(22,243		)	(265,946		)	(10,968		)	256,600			(42,557		)
Net increase (decrease) in cash and cash equivalents	291,893			(22,039		)	(1,586		)	—			268,268
Cash and cash equivalents at beginning of period	357,966			65,434			31,458			—			454,858
Cash and cash equivalents at end of period	$	649,859		$	43,395		$	29,872		$	—		$	723,126



	Nine Months Ended August 31, 2019
	KB Home Corporate			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net cash provided by (used in) operating activities	$	92,935		$	(335,428	)	$	90,349		$	—		$	(152,144	)
Cash flows from investing activities:
Contributions to unconsolidated joint ventures	—			(7,656		)	—			—			(7,656		)
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	(4,728		)	(18,252		)	(9,231		)	—			(32,211		)
Intercompany	(274,010		)	—			—			274,010			—
Net cash used in investing activities	(278,738		)	(15,103		)	(9,231		)	274,010			(29,062		)
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	460,000			—			—			—			460,000
Repayments under revolving credit facility	(410,000		)	—			—			—			(410,000		)
Payments on mortgages and land contracts due to land sellers and other loans	—			(32,149		)	—			—			(32,149		)
Issuance of common stock under employee stock plans	18,729			—			—			—			18,729
Tax payments associated with stock-based compensation awards	(3,345		)	—			—			—			(3,345		)
Payments of cash dividends	(12,352		)	—			—			—			(12,352		)
Intercompany	—			372,454			(98,444		)	(274,010		)	—
Net cash provided by (used in) financing activities	(176,927		)	340,305			(98,444		)	(274,010		)	(209,076		)
Net decrease in cash and cash equivalents	(362,730		)	(10,226		)	(17,326		)	—			(390,282		)
Cash and cash equivalents at beginning of period	429,977			114,269			30,873			—			575,119
Cash and cash equivalents at end of period	$	67,247		$	104,043		$	13,547		$	—		$	184,837