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Supplemental Guarantor Information

6 Months Ended

May 31, 2012

Supplemental Guarantor Information [Abstract]

Supplemental Guarantor Information

19. Supplemental Guarantor Information

The Company’s obligations to pay principal, premium, if any, and interest under its senior notes are guaranteed on a joint and several basis by the Guarantor Subsidiaries. The guarantees are full and unconditional and the Guarantor Subsidiaries are 100% owned by the Company. The Company has 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 the periods presented below reflects the relevant subsidiaries of the Company that were Guarantor Subsidiaries as of and for the respective periods then ended. Accordingly, information for any period presented does not reflect subsequent changes, if any, in the subsidiaries of the Company considered to be Guarantor Subsidiaries.

Condensed Consolidated Statements of Operations

Six Months Ended May 31, 2012 (in thousands)

		KB Home Corporate				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Consolidating Adjustments				Total
Revenues		$	—			$	322,432			$	234,978			$	—			$	557,410
Homebuilding:
Revenues		$	—			$	322,432			$	230,068			$	—			$	552,500
Construction and land costs			—				(278,469	)			(198,558	)			—				(477,027	)
Selling, general and administrative expenses			(28,934	)			(51,428	)			(41,796	)			—				(122,158	)
Operating loss			(28,934	)			(7,465	)			(10,286	)			—				(46,685	)
Interest income			225				4				17				—				246
Interest expense			30,930				(47,517	)			(14,168	)			—				(30,755	)
Equity in loss of unconsolidated joint ventures			—				(292	)			(23	)			—				(315	)
Homebuilding pretax income (loss)			2,221				(55,270	)			(24,460	)			—				(77,509	)
Financial services pretax income			—				—				3,471				—				3,471
Total pretax income (loss)			2,221				(55,270	)			(20,989	)			—				(74,038	)
Income tax benefit (expense)			(100	)			3,100				1,100				—				4,100
Equity in net loss of subsidiaries			(72,059	)			—				—				72,059				—
Net loss		$	(69,938	)		$	(52,170	)		$	(19,889	)		$	72,059			$	(69,938	)
Six Months Ended May 31, 2011 (in thousands)
		KB Home Corporate				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Consolidating Adjustments				Total
Revenues		$	—			$	131,894			$	336,784			$	—			$	468,678
Homebuilding:
Revenues		$	—			$	131,894			$	333,390			$	—			$	465,284
Construction and land costs			—				(114,128	)			(307,049	)			—				(421,177	)
Selling, general and administrative expenses			(33,839	)			(9,935	)			(68,351	)			—				(112,125	)
Loss on loan guaranty			—				—				(37,330	)			—				(37,330	)
Operating income (loss)			(33,839	)			7,831				(79,340	)			—				(105,348	)
Interest income			534				4				115				—				653
Interest expense			23,779				(21,392	)			(26,947	)			—				(24,560	)
Equity in loss of unconsolidated joint ventures			—				(72	)			(55,857	)			—				(55,929	)
Homebuilding pretax loss			(9,526	)			(13,629	)			(162,029	)			—				(185,184	)
Financial services pretax income			—				—				2,254				—				2,254
Total pretax loss			(9,526	)			(13,629	)			(159,775	)			—				(182,930	)
Income tax expense			—				—				(100	)			—				(100	)
Equity in net loss of subsidiaries			(173,504	)			—				—				173,504				—
Net loss		$	(183,030	)		$	(13,629	)		$	(159,875	)		$	173,504			$	(183,030	)

Condensed Consolidated Statements of Operations

Three Months Ended May 31, 2012 (in thousands)

		KB Home Corporate				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Consolidating Adjustments				Total
Revenues		$	—			$	175,943			$	126,909			$	—			$	302,852
Homebuilding:
Revenues		$	—			$	175,943			$	124,662			$	—			$	300,605
Construction and land costs			—				(143,487	)			(106,182	)			—				(249,669	)
Selling, general and administrative expenses			(14,934	)			(30,257	)			(21,281	)			—				(66,472	)
Operating income (loss)			(14,934	)			2,199				(2,801	)			—				(15,536	)
Interest income			100				3				8				—				111
Interest expense			16,810				(23,634	)			(7,645	)			—				(14,469	)
Equity in loss of unconsolidated joint ventures			—				(241	)			(2	)			—				(243	)
Homebuilding pretax income (loss)			1,976				(21,673	)			(10,440	)			—				(30,137	)
Financial services pretax income			—				—				1,501				—				1,501
Total pretax income (loss)			1,976				(21,673	)			(8,939	)			—				(28,636	)
Income tax benefit (expense)			(200	)			3,400				1,300				—				4,500
Equity in net loss of subsidiaries			(25,912	)			—				—				25,912				—
Net loss		$	(24,136	)		$	(18,273	)		$	(7,639	)		$	25,912			$	(24,136	)
Three Months Ended May 31, 2011 (in thousands)
		KB Home Corporate				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Consolidating Adjustments				Total
Revenues		$	—			$	82,687			$	189,051			$	—			$	271,738
Homebuilding:
Revenues		$	—			$	82,687			$	187,296			$	—			$	269,983
Construction and land costs			—				(67,551	)			(182,830	)			—				(250,381	)
Selling, general and administrative expenses			(15,169	)			(11,060	)			(36,291	)			—				(62,520	)
Loss on loan guaranty			—				—				(14,572	)			—				(14,572	)
Operating income (loss)			(15,169	)			4,076				(46,397	)			—				(57,490	)
Interest income			221				—				49				—				270
Interest expense			13,929				(13,085	)			(13,965	)			—				(13,121	)
Equity in loss of unconsolidated joint ventures			—				(29	)			(63	)			—				(92	)
Homebuilding pretax loss			(1,019	)			(9,038	)			(60,376	)			—				(70,433	)
Financial services pretax income			—				—				1,629				—				1,629
Total pretax loss			(1,019	)			(9,038	)			(58,747	)			—				(68,804	)
Income tax expense			—				100				200				—				300
Equity in net loss of subsidiaries			(67,485	)			—				—				67,485				—
Net loss		$	(68,504	)		$	(8,938	)		$	(58,547	)		$	67,485			$	(68,504	)

Condensed Consolidated Balance Sheets

May 31, 2012 (in thousands)

		KB Home Corporate				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Consolidating Adjustments				Total
Assets
Homebuilding:
Cash and cash equivalents		$	273,312			$	17,847			$	23,099			$	—			$	314,258
Restricted cash			63,182				—				—				—				63,182
Receivables			899				29,891				43,238				—				74,028
Inventories			—				1,229,731				497,909				—				1,727,640
Investments in unconsolidated joint ventures			—				107,090				14,318				—				121,408
Other assets			76,609				846				7,742				—				85,197
			414,002				1,385,405				586,306				—				2,385,713
Financial services			—				—				8,292				—				8,292
Investments in subsidiaries			12,710				—				—				(12,710	)			—
Total assets		$	426,712			$	1,385,405			$	594,598			$	(12,710	)		$	2,394,005
Liabilities and stockholders’ equity
Homebuilding:
Accounts payable, accrued expenses and other liabilities		$	118,224			$	154,853			$	163,108			$	—			$	436,185
Mortgages and notes payable			1,539,389				39,348				4,051				—				1,582,788
			1,657,613				194,201				167,159				—				2,018,973
Financial services			—				—				5,501				—				5,501
Intercompany			(1,600,432	)			1,191,204				409,228				—				—
Stockholders’ equity			369,531				—				12,710				(12,710	)			369,531
Total liabilities and stockholders’ equity		$	426,712			$	1,385,405			$	594,598			$	(12,710	)		$	2,394,005
November 30, 2011 (in thousands)
		KB Home Corporate				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Consolidating Adjustments				Total
Assets
Homebuilding:
Cash and cash equivalents		$	340,957			$	32,876			$	41,217			$	—			$	415,050
Restricted cash			64,475				6				—				—				64,481
Receivables			801				29,250				36,128				—				66,179
Inventories			—				1,256,468				475,161				—				1,731,629
Investments in unconsolidated joint ventures			—				113,921				14,005				—				127,926
Other assets			67,059				730				7,315				—				75,104
			473,292				1,433,251				573,826				—				2,480,369
Financial services			—				—				32,173				—				32,173
Investments in subsidiaries			34,235				—				—				(34,235	)			—
Total assets		$	507,527			$	1,433,251			$	605,999			$	(34,235	)		$	2,512,542
Liabilities and stockholders’ equity
Homebuilding:
Accounts payable, accrued expenses and other liabilities		$	121,572			$	181,835			$	175,413			$	—			$	478,820
Mortgages and notes payable			1,533,477				45,925				4,169				—				1,583,571
			1,655,049				227,760				179,582				—				2,062,391
Financial services			—				—				7,494				—				7,494
Intercompany			(1,590,179	)			1,205,491				384,688				—				—
Stockholders’ equity			442,657				—				34,235				(34,235	)			442,657
Total liabilities and stockholders’ equity		$	507,527			$	1,433,251			$	605,999			$	(34,235	)		$	2,512,542

Condensed Consolidated Statements of Cash Flows

Six Months Ended May 31, 2012 (in thousands)

		KB Home Corporate				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Consolidating Adjustments				Total
Cash flows from operating activities:
Net loss		$	(69,938	)		$	(52,170	)		$	(19,889	)		$	72,059			$	(69,938	)
Adjustments to reconcile net loss to net cash used in operating activities:
Equity in (income) loss of unconsolidated joint ventures			—				292				(66	)			—				226
Inventory impairments and land option contract abandonments			—				8,362				8,147				—				16,509
Changes in assets and liabilities:
Receivables			(98	)			(641	)			17,534				—				16,795
Inventories			—				14,765				(30,896	)			—				(16,131	)
Accounts payable, accrued expenses and other liabilities			(4,198	)			(21,719	)			(14,297	)			—				(40,214	)
Other, net			(499	)			181				3,190				—				2,872
Net cash used in operating activities			(74,733	)			(50,930	)			(36,277	)			72,059				(89,881	)
Cash flows from investing activities:
Return of investment in (contributions to) unconsolidated joint ventures			—				4,886				(336	)			—				4,550
Purchases of property and equipment, net			(53	)			(297	)			(242	)			—				(592	)
Net cash provided by (used in) investing activities			(53	)			4,589				(578	)			—				3,958
Cash flows from financing activities:
Change in restricted cash			1,293				6				—				—				1,299
Proceeds from issuance of senior notes			344,831				—				—				—				344,831
Payment of senior notes issuance costs			(6,751	)			—				—				—				(6,751	)
Repayment of senior notes			(340,481	)			—				—				—				(340,481	)
Payments on mortgages and land contracts due to land sellers and other loans			—				(6,577	)			(118	)			—				(6,695	)
Issuance of common stock under employee stock plans			353				—				—				—				353
Payments of cash dividends			(6,746	)			—				—				—				(6,746	)
Intercompany			14,642				37,883				19,534				(72,059	)			—
Net cash provided by (used in) financing activities			7,141				31,312				19,416				(72,059	)			(14,190	)
Net decrease in cash and cash equivalents			(67,645	)			(15,029	)			(17,439	)			—				(100,113	)
Cash and cash equivalents at beginning of period			340,957				32,876				44,241				—				418,074
Cash and cash equivalents at end of period		$	273,312			$	17,847			$	26,802			$	—			$	317,961

Six Months Ended May 31, 2011 (in thousands)

		KB Home Corporate				Guarantor Subsidiaries				Non-Guarantor Subsidiaries				Consolidating Adjustments				Total
Cash flows from operating activities:
Net loss		$	(183,030	)		$	(13,629	)		$	(159,875	)		$	173,504			$	(183,030	)
Adjustments to reconcile net loss to net cash used in operating activities:
Equity in loss of unconsolidated joint ventures			—				72				55,345				—				55,417
Loss on loan guaranty			—				—				37,330				—				37,330
Gain on sale of operating property			—				(8,825	)			—				—				(8,825	)
Inventory impairments and land option contract abandonments			—				663				21,682				—				22,345
Changes in assets and liabilities:
Receivables			340				(3,740	)			1,957				—				(1,443	)
Inventories			—				(60,612	)			(107,180	)			—				(167,792	)
Accounts payable, accrued expenses and other liabilities			4,374				(13,431	)			(19,023	)			—				(28,080	)
Other, net			(512	)			(3,007	)			6,273				—				2,754
Net cash used in operating activities			(178,828	)			(102,509	)			(163,491	)			173,504				(271,324	)
Cash flows from investing activities:
Contributions to unconsolidated joint ventures			—				(1,388	)			(531	)			—				(1,919	)
Proceeds from sale of operating property			—				80,600				—				—				80,600
Sales (purchases) of property and equipment, net			(289	)			(14	)			195				—				(108	)
Net cash provided by (used in) investing activities			(289	)			79,198				(336	)			—				78,573
Cash flows from financing activities:
Change in restricted cash			1,514				—				—				—				1,514
Payments on mortgages and land contracts due to land sellers and other loans			—				(79,471	)			(1,355	)			—				(80,826	)
Issuance of common stock under employee stock plans			442				—				—				—				442
Payments of cash dividends			(9,613	)			—				—				—				(9,613	)
Intercompany			(92,445	)			106,687				159,262				(173,504	)			—
Net cash provided by (used in) financing activities			(100,102	)			27,216				157,907				(173,504	)			(88,483	)
Net increase (decrease) in cash and cash equivalents			(279,219	)			3,905				(5,920	)			—				(281,234	)
Cash and cash equivalents at beginning of period			770,603				3,619				134,208				—				908,430
Cash and cash equivalents at end of period		$	491,384			$	7,524			$	128,288			$	—			$	627,196

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- Definition

The entire disclosure for each guarantee obligation, or each group of similar guarantee obligations, including (a) the nature of the guarantee, including its term, how it arose, and the events or circumstances that would require the guarantor to perform under the guarantee; (b) the maximum potential amount of future payments (undiscounted) the guarantor could be required to make under the guarantee; (c) the current carrying amount of the liability, if any, for the guarantor's obligations under the guarantee; and (d) the nature of any recourse provisions under the guarantee, and any assets held either as collateral or by third parties, and any relevant related party disclosure. Excludes disclosures about product warranties.

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