Supplemental Guarantor Information | 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 August 31, 2019 . Condensed Consolidating Statements of Operations (in thousands) 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 Three Months Ended August 31, 2018 KB Home Corporate Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Total revenues $ — $ 1,144,253 $ 81,094 $ — $ 1,225,347 Homebuilding: Revenues $ — $ 1,144,253 $ 77,622 $ — $ 1,221,875 Construction and land costs — (927,346 ) (74,163 ) — (1,001,509 ) Selling, general and administrative expenses (24,688 ) (81,540 ) (8,525 ) — (114,753 ) Operating income (loss) (24,688 ) 135,367 (5,066 ) — 105,613 Interest income 380 — 78 — 458 Interest expense (33,319 ) (669 ) (1,240 ) 35,228 — Intercompany interest 78,519 (40,675 ) (2,616 ) (35,228 ) — Equity in income of unconsolidated joint ventures — 3,493 — — 3,493 Homebuilding pretax income (loss) 20,892 97,516 (8,844 ) — 109,564 Financial services pretax income — — 5,112 — 5,112 Total pretax income (loss) 20,892 97,516 (3,732 ) — 114,676 Income tax expense (3,500 ) (22,700 ) (1,000 ) — (27,200 ) Equity in net income of subsidiaries 70,084 — — (70,084 ) — Net income (loss) $ 87,476 $ 74,816 $ (4,732 ) $ (70,084 ) $ 87,476 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 Nine Months Ended August 31, 2018 KB Home Corporate Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Total revenues $ — $ 2,965,829 $ 232,564 $ — $ 3,198,393 Homebuilding: Revenues $ — $ 2,965,829 $ 223,924 $ — $ 3,189,753 Construction and land costs — (2,436,079 ) (206,152 ) — (2,642,231 ) Selling, general and administrative expenses (73,669 ) (227,480 ) (22,559 ) — (323,708 ) Operating income (loss) (73,669 ) 302,270 (4,787 ) — 223,814 Interest income 2,559 9 171 — 2,739 Interest expense (109,233 ) (1,992 ) (3,871 ) 115,096 — Intercompany interest 226,642 (104,420 ) (7,126 ) (115,096 ) — Equity in income (loss) of unconsolidated joint ventures — 2,327 (1 ) — 2,326 Homebuilding pretax income (loss) 46,299 198,194 (15,614 ) — 228,879 Financial services pretax income — — 10,150 — 10,150 Total pretax income (loss) 46,299 198,194 (5,464 ) — 239,029 Income tax expense (50,600 ) (88,500 ) (26,400 ) — (165,500 ) Equity in net income of subsidiaries 77,830 — — (77,830 ) — Net income (loss) $ 73,529 $ 109,694 $ (31,864 ) $ (77,830 ) $ 73,529 Condensed Consolidating Balance Sheets (in thousands) August 31, 2019 KB Home Corporate Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Assets Homebuilding: Cash and cash equivalents $ 67,247 $ 104,043 $ 12,504 $ — $ 183,794 Receivables 2,368 226,063 63,061 — 291,492 Inventories — 3,623,232 295,844 — 3,919,076 Investments in unconsolidated joint ventures — 57,168 — — 57,168 Property and equipment, net 22,732 38,024 3,363 — 64,119 Deferred tax assets, net 71,939 282,066 48,090 — 402,095 Other assets 81,192 2,773 1,550 — 85,515 245,478 4,333,369 424,412 — 5,003,259 Financial services — — 31,911 — 31,911 Intercompany receivables 3,869,512 — 183,833 (4,053,345 ) — Investments in subsidiaries 159,161 — — (159,161 ) — Total assets $ 4,274,151 $ 4,333,369 $ 640,156 $ (4,212,506 ) $ 5,035,170 Liabilities and stockholders’ equity Homebuilding: Accounts payable, accrued expenses and other liabilities $ 135,855 $ 507,361 $ 267,807 $ — $ 911,023 Notes payable 1,818,169 16,856 25,110 — 1,860,135 1,954,024 524,217 292,917 — 2,771,158 Financial services — — 1,783 — 1,783 Intercompany payables 57,898 3,748,931 246,516 (4,053,345 ) — Stockholders’ equity 2,262,229 60,221 98,940 (159,161 ) 2,262,229 Total liabilities and stockholders’ equity $ 4,274,151 $ 4,333,369 $ 640,156 $ (4,212,506 ) $ 5,035,170 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) 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 Nine Months Ended August 31, 2018 KB Home Corporate Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Net cash provided by (used in) operating activities $ 50,507 $ (78,593 ) $ (21,422 ) $ — $ (49,508 ) Cash flows from investing activities: Contributions to unconsolidated joint ventures — (15,640 ) — — (15,640 ) Return of investments in unconsolidated joint ventures — 9,934 — — 9,934 Purchases of property and equipment, net (3,508 ) (520 ) (109 ) — (4,137 ) Intercompany (80,955 ) — — 80,955 — Net cash used in investing activities (84,463 ) (6,226 ) (109 ) 80,955 (9,843 ) Cash flows from financing activities: Repayment of senior notes (300,000 ) — — — (300,000 ) Borrowings under revolving credit facility 70,000 — — — 70,000 Repayments under revolving credit facility (70,000 ) — — — (70,000 ) 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 17,433 — — — 17,433 Tax payments associated with stock-based compensation awards (6,787 ) — — — (6,787 ) Payments of cash dividends (6,686 ) — — — (6,686 ) Intercompany — 83,560 (2,605 ) (80,955 ) — Net cash provided by (used in) financing activities (296,040 ) 73,986 (3,525 ) (80,955 ) (306,534 ) Net decrease in cash and cash equivalents (329,996 ) (10,833 ) (25,056 ) — (365,885 ) Cash and cash equivalents at beginning of period 575,193 104,120 41,548 — 720,861 Cash and cash equivalents at end of period $ 245,197 $ 93,287 $ 16,492 $ — $ 354,976 |