##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
 þ  Annual
    Report Pursuant to Section 13 or 15(d)
    of
 the Securities Exchange Act of 1934
 For the fiscal year ended November 30, 2008
 or
 o  Transition
    Report Pursuant to Section 13 or 15(d) of
 the Securities Exchange Act of 1934
 For the transition period from
    ­
    ­
    to
    ­
    ­.
 Commission File No. 001-09195
 KB HOME
 (Exact name of registrant as
    specified in its charter)
 Delaware(State or other jurisdiction of
    incorporation or organization)

95-3666267(I.R.S. Employer
    Identification No.)   10990 Wilshire Boulevard, Los Angeles, California 90024
 (Address of principal executive
    offices)
 Registrants telephone number, including area
    code:  (310) 231-4000
  Securities Registered Pursuant to Section 12(b) of the
    Act:
  Name of each exchangeTitle
    of each class

on which registeredCommon Stock (par value $1.00 per share)

New York Stock ExchangeRights to Purchase Series A Participating Cumulative
    Preferred Stock

New York Stock Exchange  Securities Registered Pursuant to Section 12(g) of the Act:
    None
  Yes þ
     No o
  Yes o 
    No þ
  Yes þ
      No o
  S-K 10-K Form 10-K. þ
  12b-2
 Large
    accelerated
    filerþ
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller
    reporting
    company o  Rule 12b-2 Yes o  No þ
      Documents Incorporated by Reference
  Portions of the registrants definitive Proxy Statement
    for the 2009 Annual Meeting of Stockholders (incorporated into
    Part III).




---



##### 



KB
    HOME
 FORM 10-K
 FOR THE YEAR ENDED NOVEMBER 30, 2008
  TABLE OF CONTENTS
  PageNumberPART IItem 1.

Business


1Item 1A.

Risk Factors


12Item 1B.

Unresolved Staff Comments


20Item 2.

Properties


20Item 3.

Legal Proceedings


20Item 4.

Submission of Matters to a Vote of Security
    Holders


21PART IIItem 5.

Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


23Item 6.

Selected Financial Data


25Item 7.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


26Item 7A.

Quantitative and Qualitative Disclosures About
    Market Risk


54Item 8.

Financial Statements and Supplementary Data


55Item 9.

Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


96Item 9A.

Controls and Procedures


96Item 9B.

Other Information


97PART IIIItem 10.

Directors, Executive Officers and Corporate
    Governance


98Item 11.

Executive Compensation


98Item 12.

Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


98Item 13.

Certain Relationships and Related Transactions,
    and Director Independence


99Item 14.

Principal Accountant Fees and Services


99PART IVItem 15.

Exhibits and Financial Statement Schedules


100Signatures


105EX-10.3EX-10.4EX-10.5EX-10.8EX-10.11EX-10.14EX-10.22EX-10.26EX-10.27EX-10.29EX-10.30EX-10.31EX-10.39EX-12.1EX-21EX-23EX-31.1EX-31.2EX-32.1EX-32.2




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##### Table of Contents



PART
    I
  Item
    1. BUSINESS
  General
      move-up
      (310) 231-4000 KB-HOMES.
 1




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##### Table of Contents



Markets
    Segment

State(s)

Major Market(s)West Coast

California

Fresno, Los Angeles/Ventura, Orange County, Riverside,
    Sacramento, San Bernardino, San Diego, San
    Jose/Oakland and StocktonSouthwest

Arizona

Phoenix and TucsonNevada

Las Vegas and RenoCentral

Colorado

DenverTexas

Austin, Dallas/Fort Worth, Houston and San AntonioSoutheast

Florida

Daytona Beach, Jacksonville, Lakeland, Orlando, Sarasota and
    TampaNorth Carolina

Charlotte and RaleighSouth Carolina

Bluffton/Hilton Head, Charleston and Columbia   Segment Operating Information.
  Years Ended November 30,2008


2007


2006West Coast:Homes delivered


2,972



4,957



7,213Percent of total homes delivered


24
%


21
%


22
%Average selling price

$
354,700


$
433,600


$
489,500Total revenues (in millions) (a)

$
1,055.1


$
2,203.3


$
3,531.3Southwest:Homes delivered


2,393



4,855



7,011Percent of total homes delivered


19
%


20
%


22
%Average selling price

$
229,200


$
258,500


$
306,900Total revenues (in millions) (a)

$
618.0


$
1,349.6


$
2,183.8Central:Homes delivered


3,348



6,310



9,613Percent of total homes delivered


27
%


27
%


30
%Average selling price

$
175,000


$
167,800


$
159,800Total revenues (in millions) (a)

$
594.3


$
1,077.3


$
1,553.3Southeast:Homes delivered


3,725



7,621



8,287Percent of total homes delivered


30
%


32
%


26
%Average selling price

$
201,800


$
229,400


$
244,300Total revenues (in millions) (a)

$
755.8


$
1,770.4


$
2,091.4Total:Homes delivered


12,438



23,743



32,124Average selling price

$
236,400


$
261,600


$
287,700Total revenues (in millions) (a)

$
3,023.2


$
6,400.6


$
9,359.8     (a)
    Total revenues include revenues from housing and land sales.  Unconsolidated Joint Ventures.
 2




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##### Table of Contents



Strategy
      KBnxt Operational Business Model.
  
    gaining a detailed understanding of consumer location and
    product preferences through regular surveys;
    managing our working capital and reducing our operating risks by
    acquiring developed and entitled land at reasonable prices in
    markets with high growth potential and disposing of land and
    interests in land that no longer meet our strategic or
    investment goals;
    using our knowledge of consumer preferences to design, construct
    and deliver the products homebuyers desire;
    in general, commencing construction of a home only after a
    purchase contract has been signed;
    building a backlog of net orders and reducing the time from
    initial construction to final delivery of homes to customers;
    establishing an even flow of production of high quality homes at
    the lowest possible cost; and
    offering customers affordable base prices and the opportunity to
    customize their homes through choice of location, floor plans
    and interior design options.     3




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##### Table of Contents



Strategic Objectives.
  
    Maintaining a balanced geographic footprint and focusing on
    potential growth opportunities in our existing served markets.
    We believe this will allow us to efficiently capitalize on the
    different rates at which we expect our served markets to
    stabilize. We also believe that our existing served markets
    offer the most attractive long-term growth prospects.
    Providing the best value and choice in homes and options for the
    first-time, first move-up and active adult homebuyer. By
    promoting value and choice through an affordable base price and
    product customization, we believe we can stand out from other
    homebuilders among our core customer base.
    Generating high levels of customer satisfaction and producing
    high quality homes. Achieving high customer satisfaction levels
    is a key driver to our long-term success and delivering quality
    homes is critical to achieving high customer satisfaction.
    Maintaining ownership or control over a forecasted
    three-to-four-year supply of developable land. Keeping our
    inventory in line with our future sales expectations maximizes
    the use of our working capital, enhances our liquidity and helps
    us maintain a strong balance sheet to support long-term
    strategic investments.
    Improving the affordability of our homes and lowering our
    production costs by redesigning and reengineering our products,
    building smaller homes, reducing production cycle times and
    direct construction costs, and targeting our pricing to median
    income levels in our served markets. We believe making our homes
    more affordable to our core customer base, with corresponding
    decreases in our production costs, will help us compete with
    resales and foreclosures, generate revenues and maintain our
    margins during the current housing market downturn and position
    us for longer-term profit growth.
    Restoring the profitability of our homebuilding operations by
    continuing to align our cost structure with the expected size
    and growth of our business, generating and preserving free cash
    flow and maximizing the performance of our invested capital.  Marketing Strategy. TM
    My Home. My
    Earth. ® TM
  move-up
 4




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##### Table of Contents



Sales Strategy.
  Customer
    Service and Quality Control
      Local
    Expertise
    Community
    Development and Land Inventory Management
      Land Acquisition and Land Development.
 5




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##### Table of Contents



in-house
        after-tax
   6




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##### Table of Contents



Total LotsHomes/Lots in


Land Under


Lots Under


Owned orProduction


Development


Option


Under Option2008


2007


2008


2007


2008


2007


2008


2007West Coast


7,257



8,174



1,826



2,961



1,018



3,598



10,101



14,733Southwest


4,853



7,059



1,784



2,866



3,551



5,743



10,188



15,668Central


7,643



9,944



2,454



3,257



1,840



2,472



11,937



15,673Southeast


5,326



7,916



4,369



2,888



5,102



8,830



14,797



19,634Total


25,079



33,093



10,433



11,972



11,511



20,643



47,023



65,708       Total LotsHomes/Lots in


Land Under


Lots Under


Owned orProduction


Development


Option


Under Option2008


2007


2008


2007


2008


2007


2008


2007West Coast

$
854,522


$
1,020,637


$
52,339


$
192,790


$
68,600


$
199,396


$
975,461


$
1,412,823Southwest


192,530



491,098



96,073



161,820



24,673



34,357



313,276



687,275Central


300,454



420,811



38,688



59,802



53,358



53,248



392,500



533,861Southeast


252,541



464,922



127,241



131,009



45,697



82,530



425,479



678,461Total

$
1,600,047


$
2,397,468


$
314,341


$
545,421


$
192,328


$
369,531


$
2,106,716


$
3,312,420   Home Construction and Sale.
  My Home. My
    Earth. even-flow
  Backlog
   7




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##### Table of Contents



8




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##### Table of Contents



UnconsolidatedWest Coast


Southwest


Central


Southeast


Total


Joint VenturesHomes delivered2008First


614



740



899



675



2,928



75Second


603



534



863



810



2,810



74Third


731



425



745



887



2,788



45Fourth


1,024



694



841



1,353



3,912



68Total


2,972



2,393



3,348



3,725



12,438



2622007First


895



1,185



1,427



1,629



5,136



8Second


950



1,061



1,236



1,529



4,776



11Third


1,252



1,133



1,433



1,881



5,699



13Fourth


1,860



1,476



2,214



2,582



8,132



95Total


4,957



4,855



6,310



7,621



23,743



127Net orders2008First


539



186



231



493



1,449



48Second


977



760



964



1,499



4,200



131Third


361



282



506



180



1,329



39Fourth


375



207



353



361



1,296



17Total


2,252



1,435



2,054



2,533



8,274



2352007First


1,467



1,108



1,333



1,836



5,744



85Second


1,673



1,437



1,903



2,252



7,265



109Third


713



604



1,370



1,220



3,907



79Fourth


679



482



660



753



2,574



9Total


4,532



3,631



5,266



6,061



19,490



282Cancellation Rates2008First


41%



56%



70%



50%



53%



45%Second


29%



21%



31%



26%



27%



24%Third


48%



37%



43%



74%



51%



57%Fourth


42%



40%



48%



50%



46%



71%Total


38%



34%



45%



43%



41%



43%2007First


28%



34%



40%



34%



34%



19%Second


30%



30%



39%



33%



34%



25%Third


57%



51%



47%



49%



50%



43%Fourth


58%



55%



61%



57%



58%



92%Total


41%



40%



45%



41%



42%



44%Ending backlog  homes2008First


1,115



752



1,343



1,633



4,843



182Second


1,489



978



1,444



2,322



6,233



239Third


1,119



835



1,205



1,615



4,774



233Fourth (a)


581



348



717



623



2,269



712007First


2,187



2,453



2,961



3,582



11,183



131Second


2,910



2,829



3,628



4,305



13,672



229Third


2,371



2,300



3,565



3,644



11,880



295Fourth


1,190



1,306



2,011



1,815



6,322



209 9




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##### Table of Contents



UnconsolidatedWest Coast


Southwest


Central


Southeast


Total


Joint VenturesEnding backlog  value, in thousands2008First

$
438,505


$
179,114


$
236,725


$
376,872


$
1,231,216


$
77,196Second


516,073



222,279



260,404



467,141



1,465,897



101,748Third


391,525



190,279



230,154



321,321



1,133,279



136,918Fourth (a)


211,713



74,488



120,954



114,231



521,386



33,1922007First

$
1,054,825


$
640,856


$
494,429


$
846,070


$
3,036,180


$
42,401Second


1,357,973



733,211



633,775



1,012,098



3,737,057



84,773Third


1,042,194



590,711



599,400



834,588



3,066,893



108,821Fourth


466,726



313,120



312,952



406,037



1,498,835



80,523     (a)
    
    Ending backlog amounts have been adjusted to reflect the
    consolidation of previously unconsolidated joint ventures during
    the fourth quarter of 2008.  Land and
    Raw Materials
    pre-made,
  Customer
    Financing
    Discontinued
    Operations
   10




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##### Table of Contents



Employees
      Competition
    and Other Factors
      Financing
    Regulation
    and Environmental Matters
   11




---



##### Table of Contents



Access to
    Our Information
  1-800-SEC-0330
 Item 1A.  RISK
    FACTORS    The homebuilding industry is experiencing a prolonged and
    severe downturn that may continue for an indefinite period and
    adversely affect our business and results of operations compared
    to prior periods.
      Further tightening of mortgage lending or mortgage
    financing requirements or further turmoil in credit and mortgage
    lending markets could adversely affect the availability of
    credit for some potential purchasers of our homes and thereby
    reduce our sales.
  move-up
 12




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##### Table of Contents



Our
    strategies in responding to the adverse conditions in the
    homebuilding industry have had limited success, and the
    continued implementation of these and other strategies may not
    be successful.
    Our
    business is cyclical and is significantly affected by changes in
    general and local economic conditions.
    
    short- and long-term interest rates;
    the availability of financing for homebuyers;
    consumer confidence generally and the confidence of potential
    homebuyers in particular;
    U.S. and global financial system and credit market stability;
    private and federal mortgage financing programs and federal and
    state regulation of lending practices;
    federal and state income tax provisions, including provisions
    for the deduction of mortgage interest payments;
    housing demand from population growth and demographic changes,
    among other factors;
    the supply of available new or existing homes and other housing
    alternatives, such as apartments and other residential rental
    property;
    employment levels and job and personal income growth; and
    real estate taxes.     13




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##### Table of Contents



Supply
    shortages and other risks related to demand for building
    materials
    and/or
    skilled labor could increase costs and delay
    deliveries.
    Inflation
    may adversely affect us by increasing costs that we may not be
    able to recover, particularly if sales prices
    decrease.
    Reduced
    home sales may impair our ability to recoup development costs or
    force us to absorb additional costs.
    The value of the land and housing inventory we own or
    control may fall significantly and our profits may
    decrease.
   14




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##### Table of Contents



Some homebuyers may cancel their home purchases because
    the required deposits are small and generally refundable.
    Our long-term success depends on the availability of
    improved lots and undeveloped land that meet our land investment
    criteria.
    Home
    prices and sales activity in the particular markets and regions
    in which we do business affect our results of operations because
    our business is concentrated in these markets.
    Interest
    rate increases or changes in federal lending programs or
    regulation could lower demand for our homes.
        Tax
    law changes could make home ownership more expensive or less
    attractive.
   15




---



##### Table of Contents



We are subject to substantial legal and regulatory
    requirements regarding the development of land, the homebuilding
    process and protection of the environment, which can cause us to
    suffer delays and incur costs associated with compliance and
    which can prohibit or restrict homebuilding activity in some
    regions or areas.
            Homebuilding and financial services are very competitive,
    and competitive conditions could adversely affect our business
    or our financial results.
    
    our delivering fewer homes;
    our selling homes at lower selling prices;
    our offering or increasing sales incentives, discounts or price
    concessions; 16




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##### Table of Contents




    our experiencing lower profit margins;
    declining new home sales or increasing cancellations by
    homebuyers of their home purchase contracts with us;
    impairments in the value of our inventory and other assets;
    difficulty in acquiring desirable land that meets our investment
    return criteria, and in selling our interests in land that no
    longer meet such criteria on favorable terms;
    difficulty in our acquiring raw materials and skilled management
    and labor at acceptable prices; or
    delays in construction of our homes.    Homebuilding
    is subject to warranty and liability claims in the ordinary
    course of business that can be significant.
    Because
    of the seasonal nature of our business, our quarterly operating
    results fluctuate.
    Failure
    to comply with the covenants and conditions imposed by the
    agreements governing our indebtedness could restrict future
    borrowing or cause our debt to become immediately due and
    payable.
   17




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##### Table of Contents



We
    participate in certain unconsolidated joint ventures where we
    may be adversely impacted by the failure of the unconsolidated
    joint venture or the other partners in the unconsolidated joint
    venture to fulfill their obligations.
    The
    downturn in the housing market and the continuation of the
    disruptions in the credit markets could limit our ability to
    access capital and increase our costs of capital or stockholder
    dilution.
    5 8
    Our
    net operating loss carryforwards could be substantially limited
    if we experience an ownership change as defined in the Internal
    Revenue Code.
   18




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##### Table of Contents



A decline in our tangible net worth and the resulting
    increase in our leverage ratio may place burdens on our ability
    to comply with the terms of our indebtedness, may restrict our
    ability to operate and may prevent us from fulfilling our
    obligations.
    
    limit our ability to obtain future financing for working
    capital, capital expenditures, acquisitions, debt service
    requirements or other requirements;
    require us to dedicate a substantial portion of our cash flow
    from operations to the payment of our debt and reduce our
    ability to use our cash flow for other purposes;
    impact our flexibility in planning for, or reacting to, changes
    in our business;
    place us at a competitive disadvantage because we have more debt
    than some of our competitors; and
    make us more vulnerable in the event of a further downturn in
    our business or in general economic conditions.      We may have difficulty in continuing to obtain the
    additional financing required to operate and develop our
    business.
   19




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##### Table of Contents



Item 1B.  UNRESOLVED
    STAFF COMMENTS   Item 2.  PROPERTIES     Item 3.  LEGAL
    PROCEEDINGS  Derivative
    Litigation
      ERISA
    Litigation
   20




---



##### Table of Contents



Other
    Matters
   Item 4.  SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   21




---



##### Table of Contents



EXECUTIVE
    OFFICERS OF THE REGISTRANT
    Year


YearsAssumed


at

Other Positions and OtherPresent


KB

Business Experience within theName

Age


Present Position

Position


Home

Last Five Years (a)

From  ToJeffrey T. Mezger


53


President and Chief
    Executive Officer (b)


2006



15


Executive Vice President and Chief Operating Officer

1999-2006Wendy C. Shiba


58


Executive Vice President, General Counsel and Secretary


2007



1


Senior Vice President, Chief Legal Officer and Secretary,
    Polyone Corporation (a global provider of specialized polymer
    materials, services and solutions)

2006-2007Vice President, Chief Legal Officer and Secretary, Polyone
    Corporation

2001-2006Glen Barnard


64


Senior Vice President, KBnxt Group


2006



10


Regional General Manager (c)

2004-2006Chief Executive Officer, Constellation Real Technologies (real
    estate consortium)

2001-2003William R. Hollinger


50


Senior Vice President and


2007



21


Senior Vice President and Controller

2001-2006Chief Accounting OfficerKelly Masuda


41


Senior Vice President and
    Treasurer


2005



5


Senior Vice President, Capital Markets and Treasurer

2005Vice President, Capital Markets and Treasurer

2003-2005Thomas F. Norton


38


Senior Vice President, Human Resources


2009






Chief Human Resources Officer, BJs Restaurants, Inc.
    (owner and operator of restaurants)

2006-2009Senior Vice President of Human Resources, American Golf
    Corporation (golf course management firm)

2003-2006   (a)
    All positions described were with us, unless otherwise indicated.  (b)
    Mr. Mezger has served as a director since 2006.  (c)
    Mr. Barnard was a senior executive with us from 1996-2001, and
    rejoined us in 2004.   22




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##### Table of Contents



PART II  Item 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES    2008


2007Dividends


Dividends








Dividends


DividendsHigh


Low


Declared


Paid


High


Low


Declared


PaidFirst Quarter

$
28.99


$
15.76


$
.25


$
.25


$
56.08


$
47.69


$
.25


$
.25Second Quarter


28.93



19.62



.50



.25



50.90



40.89



.25



.25Third Quarter


21.93



13.16







.25



47.57



28.00



.25



.25Fourth Quarter


25.43



6.90



.0625



.0625



31.69



18.44



.25



.25          MaximumNumber of SharesTotal Number of


That May Yet beShares Purchased as


PurchasedTotal Number


Average


Part of Publicly


Under theof Shares


Price Paid


Announced


Plans orPeriod

Purchased


per Share


Plans or Programs


ProgramsSeptember 1 - 30





$








4,000,000October 1 - 31


28,465



14.37







4,000,000November 1 - 30














4,000,000Total


28,465


$
14.37



    23




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##### Table of Contents



Stock
    Performance Graph
    Comparison
    of Five-Year Cumulative Total Return
    Among KB Home, S&P 500 Index, S&P Homebuilding
    Index and Dow Jones Home Construction Index
  
  st
 24




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##### Table of Contents



Item 6.  SELECTED
    FINANCIAL DATA    KB
    HOME
 SELECTED FINANCIAL INFORMATION
 (In Thousands, Except Per Share Amounts)
  Years Ended November 30,2008


2007


2006


2005


2004Homebuilding:Revenues

$
3,023,169


$
6,400,591


$
9,359,843


$
8,123,313


$
5,974,496Operating income (loss)


(860,643
)


(1,358,335
)


570,316



1,188,935



637,229Total assets


3,992,148



5,661,564



7,825,339



6,881,486



4,760,288Mortgages and notes payable


1,941,537



2,161,794



2,920,334



2,211,935



1,771,962Financial services:Revenues

$
10,767


$
15,935


$
20,240


$
31,368


$
44,417Operating income


6,278



11,139



14,317



10,968



8,688Total assets


52,152



44,392



44,024



29,933



210,460Notes payable


















71,629Discontinued operations:Total assets

$



$



$
1,394,375


$
1,102,898


$
1,020,082Consolidated:Revenues

$
3,033,936


$
6,416,526


$
9,380,083


$
8,154,681


$
6,018,913Operating income (loss)


(854,365
)


(1,347,196
)


584,633



1,199,903



645,917Income (loss) from continuing operations


(976,131
)


(1,414,770
)


392,947



754,534



430,384Income from discontinued operations, net of income taxes (a)






485,356



89,404



69,178



43,652Net income (loss)


(976,131
)


(929,414
)


482,351



823,712



474,036Total assets


4,044,300



5,705,956



9,263,738



8,014,317



5,990,830Mortgages and notes payable


1,941,537



2,161,794



2,920,334



2,211,935



1,843,591Stockholders equity


830,605



1,850,687



2,922,748



2,773,797



2,039,390Basic earnings (loss) per share:Continuing operations

$
(12.59
)

$
(18.33
)

$
4.99


$
9.21


$
5.49Discontinued operations






6.29



1.13



.85



.56Basic earnings (loss) per share

$
(12.59
)

$
(12.04
)

$
6.12


$
10.06


$
6.05Diluted earnings (loss) per share:Continuing operations

$
(12.59
)

$
(18.33
)

$
4.74


$
8.54


$
5.10Discontinued operations






6.29



1.08



.78



.52Diluted earnings (loss) per share

$
(12.59
)

$
(12.04
)

$
5.82


$
9.32


$
5.62Cash dividends declared per common share

$
.8125


$
1.00


$
1.00


$
.75


$
.50   (a)
    Discontinued operations consist only of our French operations,
    which have been presented as discontinued operations for all
    periods presented. Income from discontinued operations, net of
    income taxes, in 2007 includes a gain of $438.1 million
    realized on the sale of our French operations. 25




---



##### Table of Contents



Item 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
    RESULTS OF OPERATIONS  RESULTS
    OF OPERATIONS
  Overview.
  Years ended November 30,2008


2007


2006Revenues:Homebuilding

$
3,023,169


$
6,400,591


$
9,359,843Financial services


10,767



15,935



20,240Total

$
3,033,936


$
6,416,526


$
9,380,083Pretax income (loss):Homebuilding

$
(991,749
)

$
(1,494,606
)

$
538,311Financial services


23,818



33,836



33,536Income (loss) from continuing operations before income taxes


(967,931
)


(1,460,770
)


571,847Income tax benefit (expense)


(8,200
)


46,000



(178,900
)Income (loss) from continuing operations


(976,131
)


(1,414,770
)


392,947Income from discontinued operations, net of income taxes






47,252



89,404Gain on sale of discontinued operations, net of income taxes






438,104



Net income (loss)

$
(976,131
)

$
(929,414
)

$
482,351Basic earnings (loss) per share:Continuing operations

$
(12.59
)

$
(18.33
)

$
4.99Discontinued operations






6.29



1.13Basic earnings (loss) per share

$
(12.59
)

$
(12.04
)

$
6.12Diluted earnings (loss) per share:Continuing operations

$
(12.59
)

$
(18.33
)

$
4.74Discontinued operations






6.29



1.08Diluted earnings (loss) per share

$
(12.59
)

$
(12.04
)

$
5.82        26




---



##### Table of Contents



27




---



##### Table of Contents



3 4
  HOMEBUILDING
      Years ended November 30,2008


2007


2006Revenues:Housing

$
2,940,241


$
6,211,563


$
9,243,236Land


82,928



189,028



116,607Total


3,023,169



6,400,591



9,359,843Costs and expenses:Construction and land costsHousing


(3,149,083
)


(6,563,082
)


(7,456,003
)Land


(165,732
)


(263,297
)


(210,016
)Total


(3,314,815
)


(6,826,379
)


(7,666,019
)Selling, general and administrative expenses


(501,027
)


(824,621
)


(1,123,508
)Goodwill impairment


(67,970
)


(107,926
)


Total


(3,883,812
)


(7,758,926
)


(8,789,527
)Operating income (loss)

$
(860,643
)

$
(1,358,335
)

$
570,316Homes delivered


12,438



23,743



32,124Average selling price

$
236,400


$
261,600


$
287,700Housing gross margin


(7.1
)%


(5.7
)%


19.3
%Selling, general and administrative expenses as a percent of
    housing revenues


17.0
%


13.3
%


12.2
%Operating income (loss) as a percent of homebuilding revenues


(28.5
)%


(21.2
)%


6.1
%  28




---



##### Table of Contents



Revenues.
              Operating Income (Loss).
   29




---



##### Table of Contents



and/or
   30




---



##### Table of Contents



Goodwill Impairment.
  company-wide
    Interest Income.
  Loss on Early Redemption/Interest Expense, Net of Amounts
    Capitalized.
  1 2
   31




---



##### Table of Contents



Equity in Loss of Unconsolidated Joint
    Ventures.
  HOMEBUILDING
    SEGMENTS
    Years Ended November 30,2008


2007


2006West Coast:Revenues

$
1,055,021


$
2,203,303


$
3,531,279Construction and land costs


(1,202,054
)


(2,635,415
)


(2,879,509
)Selling, general and administrative expenses


(120,446
)


(213,133
)


(299,464
)Operating income (loss)


(267,479
)


(645,245
)


352,306Other, net


(30,568
)


(20,600
)


7,558Pretax income (loss)

$
(298,047
)

$
(665,845
)

$
359,864Southwest:Revenues

$
618,014


$
1,349,570


$
2,183,830Construction and land costs


(722,643
)


(1,492,933
)


(1,616,458
)Selling, general and administrative expenses


(69,865
)


(124,462
)


(193,472
)Operating income (loss)


(174,494
)


(267,825
)


373,900Other, net


(37,700
)


(19,514
)


(8,802
)Pretax income (loss)

$
(212,194
)

$
(287,339
)

$
365,098Central:Revenues

$
594,317


$
1,077,304


$
1,553,309Construction and land costs


(570,512
)


(970,912
)


(1,368,530
)Selling, general and administrative expenses


(96,306
)


(163,689
)


(223,452
)Operating loss


(72,501
)


(57,297
)


(38,673
)Other, net


(10,288
)


(6,913
)


(16,076
)Pretax loss

$
(82,789
)

$
(64,210
)

$
(54,749
) 32




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##### Table of Contents



Years Ended November 30,2008


2007


2006Southeast:Revenues

$
755,817


$
1,770,414


$
2,091,425Construction and land costs


(808,354
)


(1,718,548
)


(1,794,326
)Selling, general and administrative expenses


(125,798
)


(213,536
)


(241,674
)Operating income (loss)


(178,335
)


(161,670
)


55,425Other, net


(80,233
)


(68,750
)


(16,492
)Pretax income (loss)

$
(258,568
)

$
(230,420
)

$
38,933     Percent





Percentof





ofTotal





Total


AverageHousing


Housing


Homes


Homes


SellingYears Ended November 30,

Revenues


Revenues


Delivered


Delivered


Price(in thousands)2008West Coast

$
1,054,256



36%



2,972



24%


$
354,700Southwest


548,544



19



2,393



19



229,200Central


585,826



20



3,348



27



175,000Southeast


751,615



25



3,725



30



201,800Total

$
2,940,241



100%



12,438



100%


$
236,4002007West Coast

$
2,149,547



35%



4,957



21%


$
433,600Southwest


1,254,932



20



4,855



20



258,500Central


1,058,985



17



6,310



27



167,800Southeast


1,748,099



28



7,621



32



229,400Total

$
6,211,563



100%



23,743



100%


$
261,6002006West Coast

$
3,530,679



38%



7,213



22%


$
489,500Southwest


2,151,908



23



7,011



22



306,900Central


1,536,075



17



9,613



30



159,800Southeast


2,024,574



22



8,287



26



244,300Total

$
9,243,236



100%



32,124



100%


$
287,700   West Coast
   33




---



##### Table of Contents



Southwest
       34




---



##### Table of Contents



Central
        Southeast
   35




---



##### Table of Contents



FINANCIAL
    SERVICES SEGMENT
      Years Ended November 30,2008


2007


2006Revenues

$
10,767


$
15,935


$
20,240Expenses


(4,489
)


(4,796
)


(5,923
)Equity in income of unconsolidated joint venture


17,540



22,697



19,219Pretax income

$
23,818


$
33,836


$
33,536Total originations (a):Loans


10,141



16,869



15,740Principal

$
2,073,382


$
3,934,336


$
3,843,793Retention rate


80
%


72
%


57
%Loans sold to third parties (a):Loans


11,289



16,909



15,613Principal

$
2,328,702


$
3,969,827


$
3,787,597     (a)
    Loan originations and sales are within Countrywide KB Home Loans.  Revenues.
 36




---



##### Table of Contents



Expenses.
  Equity in Income of Unconsolidated Joint
    Venture.
  contract-by-contract
  INCOME
    TAXES
     37




---



##### Table of Contents



DISCONTINUED
    OPERATIONS
      LIQUIDITY
    AND CAPITAL RESOURCES
  Overview.
    Capital Resources.
  3 8
 38




---



##### Table of Contents



39




---



##### Table of Contents



November 30, 2008CovenantFinancial Covenant

Requirement


ActualMinimum consolidated tangible net worth

$
278.2 million


$
827.9 millionCoverage Ratio


(a)



(a)Leverage Ratio (b)


≤1.00



.47Investment in subsidiaries and joint ventures as a percent of
    Adjusted Consolidated Tangible Net Worth


<35
%


15
%Borrowing base in excess of senior indebtedness (as defined)


Greater than zero


$
825.0 million     (a)
    
    Our Coverage Ratio of negative .27 was less than 1.00 to 1.00 as
    of November 30, 2008. Because our Leverage Ratio as of
    August 31, 2008 was below 1.00 to 1.00, we established an
    Interest Reserve Account of $115.4 million in the fourth
    quarter of 2008 to remain in compliance with the terms of the
    Credit Facility. The Interest Reserve Account had a balance of
    $115.4 million at November 30, 2008. Because our
    Leverage Ratio as of November 30, 2008 was below 1.00 to
    1.00, we will continue to maintain the Interest Reserve Account,
    but the balance will be reduced to $111.2 million in the
    first quarter of 2009.(b)
    
    The Leverage Ratio requirement varies based on our Coverage
    Ratio. If our Coverage Ratio is greater than or equal to 1.50 to
    1.00, the Leverage Ratio requirement is less than 2.00 to 1.00.
    If our Coverage Ratio is between 1.00 and 1.50 to 1.00, the
    Leverage Ratio requirement is less than 1.25 to 1.00. If our
    Coverage Ratio is less than 1.00 to 1.00, the Leverage Ratio
    requirement is less than or equal to 1.00 to 1.00.           40




---



##### Table of Contents



Consolidated Cash Flows.
  Operating Activities. year-over-year
      Investing Activities.
    Financing Activities.
 41




---



##### Table of Contents



1 4 1 4
  Shelf Registration Statement. Form 10-K,
  Share Repurchase Program.
    OFF-BALANCE
    SHEET ARRANGEMENTS
  and/or
  and/or
 42




---



##### Table of Contents



and/or and/or and/or
       43




---



##### Table of Contents



44




---



##### Table of Contents



CONTRACTUAL
    OBLIGATIONS AND COMMERCIAL COMMITMENTS
    Payments due by PeriodTotal


2009


2010-2011


2012-2013


ThereafterContractual obligations:Long-term debt

$
1,941,537


$
279,522


$
365,754


$



$
1,296,261Interest


643,579



112,813



201,867



163,750



165,149Operating lease obligations


61,743



18,957



26,317



11,712



4,757Total

$
2,646,859


$
411,292


$
593,938


$
175,462


$
1,466,167     CRITICAL
    ACCOUNTING POLICIES
    Homebuilding Revenue Recognition. Form 10-K,
  Inventories and Cost of Sales. Form 10-K,
 45




---



##### Table of Contents



Inventory Impairments and Abandonments. Form 10-K,
    and/or and/or
   46




---



##### Table of Contents



Warranty Costs. Form 10-K,
  Stock-Based Compensation. share-based
  Insurance. Form 10-K,
 47




---



##### Table of Contents



Goodwill. Form 10-K,
           48




---



##### Table of Contents



Income Taxes. Form 10-K, and/or
  Form 10-K,
    and/or
  RECENT
    ACCOUNTING PRONOUNCEMENTS
  FAS 157-2, 157-2),
   49




---



##### Table of Contents



03-6-1, EITF 03-6-1). EITF 03-6-1, EITF 03-6-1 EITF 03-6-1
  No. FAS 157-3, FAS 157-3). FAS 157-3 FAS 157-3 FAS 157-3
  No. FAS 140-4 FIN 46-(R)-8, No. FAS 140-4 No. FAS 140-4 , No. FAS 140-4
  OUTLOOK
   50




---



##### Table of Contents



Form 10-K,
     51




---



##### Table of Contents



tm
        FORWARD-LOOKING
    STATEMENTS
   52




---



##### Table of Contents



53




---



##### Table of Contents



Item 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK      Fair Value atAs of November 30, 2008 for the Years Ended November
    30,


November 30,2009


2010


2011


2012


2013


Thereafter


Total


2008Long-term debt (a)Fixed Rate

$
200,000


$



$
348,908


$



$



$
1,296,261


$
1,845,169


$
1,270,979Weighted Average Interest Rate


8.6
%



%


6.4
%



%



%


6.3
%   (a)The fixed rate debt expected to
    mature in our 2009 fiscal year matured on December 15,
    2008 and was redeemed by us.
  Fair Value atAs of November 30, 2007 for the Years Ended November
    30,


November 30,2008


2009


2010


2011


2012


Thereafter


Total


2007Long-term debtFixed Rate

$



$
200,000


$
298,273


$
348,549


$



$
1,295,832


$
2,142,654


$
1,921,042Weighted Average Interest Rate



%


8.6
%


7.8
%


6.4
%



%


6.3
%  54




---



##### Table of Contents



Item
    8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY
    DATA  KB
    HOME
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
   
 PageNumberConsolidated Statements of Operations for the
    Years Ended November 30, 2008, 2007 and 2006


56Consolidated Balance Sheets as of November 30,
    2008 and 2007


57Consolidated Statements of Stockholders
    Equity for the Years Ended November 30, 2008, 2007 and
    2006


58Consolidated Statements of Cash Flows for the
    Years Ended November 30, 2008, 2007 and 2006


59Notes to Consolidated Financial Statements


60Report of Independent Registered Public
    Accounting Firm


95    Rule 3-09 S-X.
 55




---



##### Table of Contents



KB
    HOME
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (In Thousands, Except Per Share Amounts)
  Years Ended November 30,2008


2007


2006Total revenues

$
3,033,936


$
6,416,526


$
9,380,083Homebuilding:Revenues

$
3,023,169


$
6,400,591


$
9,359,843Construction and land costs


(3,314,815
)


(6,826,379
)


(7,666,019
)Selling, general and administrative expenses


(501,027
)


(824,621
)


(1,123,508
)Goodwill impairment


(67,970
)


(107,926
)


Operating income (loss)


(860,643
)


(1,358,335
)


570,316Interest income


34,610



28,636



5,503Loss on early redemption/interest expense, net of amounts
    capitalized


(12,966
)


(12,990
)


(16,678
)Equity in loss of unconsolidated joint ventures


(152,750
)


(151,917
)


(20,830
)Homebuilding pretax income (loss)


(991,749
)


(1,494,606
)


538,311Financial services:Revenues


10,767



15,935



20,240Expenses


(4,489
)


(4,796
)


(5,923
)Equity in income of unconsolidated joint venture


17,540



22,697



19,219Financial services pretax income


23,818



33,836



33,536Income (loss) from continuing operations before income taxes


(967,931
)


(1,460,770
)


571,847Income tax benefit (expense)


(8,200
)


46,000



(178,900
)Income (loss) from continuing operations


(976,131
)


(1,414,770
)


392,947Income from discontinued operations, net of income taxes






47,252



89,404Gain on sale of discontinued operations, net of income taxes






438,104



Net income (loss)

$
(976,131
)

$
(929,414
)

$
482,351Basic earnings (loss) per share:Continuing operations

$
(12.59
)

$
(18.33
)

$
4.99Discontinued operations






6.29



1.13Basic earnings (loss) per share

$
(12.59
)

$
(12.04
)

$
6.12Diluted earnings (loss) per share:Continuing operations

$
(12.59
)

$
(18.33
)

$
4.74Discontinued operations






6.29



1.08Diluted earnings (loss) per share

$
(12.59
)

$
(12.04
)

$
5.82    56




---



##### Table of Contents



KB
    HOME
 CONSOLIDATED BALANCE SHEETS
 (In Thousands, Except Shares)
  November 30,2008


2007AssetsHomebuilding:Cash and cash equivalents

$
1,135,399


$
1,325,255Restricted cash


115,404



Receivables


357,719



295,739Inventories


2,106,716



3,312,420Investments in unconsolidated joint ventures


177,649



297,010Deferred income taxes


1,152



222,458Goodwill






67,970Other assets


98,109



140,7123,992,148



5,661,564Financial services


52,152



44,392Total assets

$
4,044,300


$
5,705,956Liabilities and stockholders equityHomebuilding:Accounts payable

$
541,294


$
699,851Accrued expenses and other liabilities


721,397



975,828Mortgages and notes payable


1,941,537



2,161,7943,204,228



3,837,473Financial services


9,467



17,796Stockholders equity:Preferred stock  $1.00 par value; authorized,
    10,000,000 shares; none issued






Common stock  $1.00 par value; authorized,
    290,000,000 shares at November 30, 2008 and 2007;
    115,120,305 and 114,976,285 shares issued at
    November 30, 2008 and 2007, respectively


115,120



114,976Paid-in capital


865,123



851,628Retained earnings


927,324



1,968,881Accumulated other comprehensive loss


(17,402
)


(22,923
)Grantor stock ownership trust, at cost: 11,901,382 and
    12,203,282 shares at November 30, 2008 and 2007,
    respectively


(129,326
)


(132,608
)Treasury stock, at cost: 25,512,386 and 25,451,107 shares
    at November 30, 2008 and 2007, respectively


(930,234
)


(929,267
)Total stockholders equity


830,605



1,850,687Total liabilities and stockholders equity

$
4,044,300


$
5,705,956    57




---



##### Table of Contents





KB
    HOME
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS
    EQUITY
 (In Thousands)
  Years Ended November 30, 2008, 2007 and 2006Number of Shares











AccumulatedGrantor














Other





GrantorStock














Comprehensive





Stock





TotalCommon


Ownership


Treasury


Common


Paid-in


Retained


Income


Deferred


Ownership


Treasury


StockholdersStock


Trust


Stock


Stock


Capital


Earnings


(Loss)


Compensation


Trust


Stock


EquityBalance at November 30, 2005


113,905



(13,000
)


(19,021
)

$
113,905


$
742,978


$
2,571,372


$
28,704


$
(13,605
)

$
(141,266
)

$
(528,291
)

$
2,773,797Comprehensive income:Net income






















482,351



















482,351Foreign currency translation


























34,493















34,493Total comprehensive income










































516,844Dividends on common stock






















(78,258
)


















(78,258
)Exercise of employee stock options


744











744



34,723























35,467Restricted stock awards






537











32,726















5,839







38,565Restricted stock amortization


















4,649























4,649Stock-based compensation


















19,358























19,358Grantor stock ownership trust






118











5,129















1,277







6,406Treasury stock










(6,253
)


























(394,080
)


(394,080
)Reclass due to SFAS No. 123(R) implementation


















(13,605
)










13,605











Balance at November 30, 2006


114,649



(12,345
)


(25,274
)


114,649



825,958



2,975,465



63,197







(134,150
)


(922,371
)


2,922,748Comprehensive loss:Net loss






















(929,414
)


















(929,414
)Foreign currency translation


























(63,197
)














(63,197
)Total comprehensive loss










































(992,611
)Postretirement benefits adjustment


























(22,923
)














(22,923
)Dividends on common stock






















(77,170
)


















(77,170
)Exercise of employee stock options


327











327



9,718























10,045Restricted stock amortization


















4,993























4,993Stock-based compensation


















9,354























9,354Grantor stock ownership trust






142











1,605















1,542







3,147Treasury stock










(177
)


























(6,896
)


(6,896
)Balance at November 30, 2007


114,976



(12,203
)


(25,451
)


114,976



851,628



1,968,881



(22,923
)






(132,608
)


(929,267
)


1,850,687Comprehensive loss:Net loss






















(976,131
)


















(976,131
)Postretirement benefits adjustment


























5,521















5,521Total comprehensive loss










































(970,610
)Dividends on common stock






















(62,967
)


















(62,967
)FASB Interpretation No. 48 adjustment






















(2,459
)


















(2,459
)Exercise of employee stock options


144











144



1,443























1,587Restricted stock amortization


















4,946























4,946Stock-based compensation


















5,018























5,018Grantor stock ownership trust






302











2,088















3,282







5,370Treasury stock










(61
)


























(967
)


(967
)Balance at November 30, 2008


115,120



(11,901
)


(25,512
)

$
115,120


$
865,123


$
927,324


$
(17,402
)

$



$
(129,326
)

$
(930,234
)

$
830,605


58




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##### Table of Contents



KB
    HOME
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In Thousands)
  Years Ended November 30,2008


2007


2006Cash flows from operating activities:Net income (loss)

$
(976,131
)

$
(929,414
)

$
482,351Income from discontinued operations, net of income taxes






(47,252
)


(89,404
)Gain on sale of discontinued operations, net of income taxes






(438,104
)


Adjustments to reconcile net income (loss) to net cash provided
    by
    operating activities:Equity in loss of unconsolidated joint ventures


135,210



129,220



1,611Distributions of earnings from unconsolidated joint ventures


22,183



42,356



13,553Gain on sale of investment in unconsolidated joint venture










(27,612
)Amortization of discounts and issuance costs


2,062



2,478



2,441Depreciation and amortization


9,317



17,274



18,091Loss on early redemption of debt


10,388



12,990



Deferred income taxes


221,306



208,348



(189,047
)Tax benefit associated with exercise of stock options


2,097



(882
)


(15,384
)Stock-based compensation expense


5,018



9,354



19,358Inventory impairments and land option contract abandonments


606,791



1,253,982



372,637Goodwill impairment


67,970



107,926



Changes in assets and liabilities:Receivables


(60,565
)


(71,406
)


(23,529
)Inventories


545,850



779,875



(356,342
)Accounts payable, accrued expenses and other liabilities


(282,781
)


(340,630
)


205,707Other, net


32,607



13,387



7,182Net cash provided by operating activities  continuing
    operations


341,322



749,502



421,613Net cash provided by operating activities  discontinued
    operations






297,397



229,505Net cash provided by operating activities


341,322



1,046,899



651,118Cash flows from investing activities:Sale of discontinued operations, net of cash divested






739,764



Sale of investment in unconsolidated joint venture










57,767Change in restricted cash


(115,404
)






Investments in unconsolidated joint ventures


(59,625
)


(85,188
)


(179,184
)Sales (purchases) of property and equipment, net


7,073



685



(17,638
)Other, net










772Net cash provided (used) by investing activities 
    continuing operations


(167,956
)


655,261



(138,283
)Net cash used by investing activities  discontinued
    operations






(12,112
)


(4,477
)Net cash provided (used) by investing activities


(167,956
)


643,149



(142,760
)Cash flows from financing activities:Net payments on credit agreements and other short-term borrowings










(84,100
)Proceeds from (redemption of) term loan






(400,000
)


400,000Redemption of senior subordinated notes


(305,814
)


(258,968
)


Proceeds from issuance of senior notes










298,458Payments on mortgages, land contracts and other loans


(12,800
)


(114,119
)


(36,595
)Issuance of common stock under employee stock plans


6,958



12,310



65,052Excess tax benefit associated with exercise of stock options






882



15,384Payments of cash dividends


(62,967
)


(77,170
)


(78,258
)Repurchases of common stock


(967
)


(6,896
)


(394,080
)Net cash provided (used) by financing activities 
    continuing operations


(375,590
)


(843,961
)


185,861Net cash used by financing activities  discontinued
    operations






(306,527
)


(215,010
)Net cash used by financing activities


(375,590
)


(1,150,488
)


(29,149
)Net increase (decrease) in cash and cash equivalents


(202,224
)


539,560



479,209Cash and cash equivalents at beginning of year


1,343,742



804,182



324,973Cash and cash equivalents at end of year

$
1,141,518


$
1,343,742


$
804,182   59




---



##### Table of Contents



KB
    HOME
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Note 1.
    Summary
    of Significant Accounting Policies  Operations.
  Basis of Presentation.
    Use of Estimates.
  Cash and Cash Equivalents, and Restricted
    Cash.
  Goodwill.
  Property and Equipment and
    Depreciation.
  Foreign Currency Translation.
 60




---



##### Table of Contents



Homebuilding Operations.
      Financial Services Operations.
  Stock-Based Compensation.
    Advertising Costs.
  Insurance.
 61




---



##### Table of Contents



Income Taxes.
  Accumulated Other Comprehensive Income
    (Loss).
  Earnings (Loss) Per Share.
  Years Ended November 30,2008


2007


2006Basic average shares outstanding


77,509



77,172



78,829Net effect of stock options assumed to be exercised










4,027Diluted average shares outstanding


77,509



77,172



82,856   Recent Accounting Pronouncements. No. FAS 157-2,
   62




---



##### Table of Contents



EITF 03-6-1. EITF 03-6-1, FSP No. EITF 03-6-1 EITF 03-6-1
  157-3, 157-3
  140-4 140-4
  Reclassifications.
  Note 2.
    Segment
    Information            63




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##### Table of Contents



Years Ended November 30,2008


2007


2006Revenues:West Coast

$
1,055,021


$
2,203,303


$
3,531,279Southwest


618,014



1,349,570



2,183,830Central


594,317



1,077,304



1,553,309Southeast


755,817



1,770,414



2,091,425Total homebuilding revenues


3,023,169



6,400,591



9,359,843Financial services


10,767



15,935



20,240Total revenues

$
3,033,936


$
6,416,526


$
9,380,083Income (loss) from continuing operations before income taxes:West Coast

$
(298,047
)

$
(665,845
)

$
359,864Southwest


(212,194
)


(287,339
)


365,098Central


(82,789
)


(64,210
)


(54,749
)Southeast


(258,568
)


(230,420
)


38,933Corporate and other (a)


(140,151
)


(246,792
)


(170,835
)Total homebuilding income (loss) from continuing operations
    before income taxes


(991,749
)


(1,494,606
)


538,311Financial services


23,818



33,836



33,536Total income (loss) from continuing operations before income
    taxes

$
(967,931
)

$
(1,460,770
)

$
571,847Interest cost:West Coast

$
43,140


$
63,902


$
20,160Southwest


32,953



45,827



49,622Central


23,836



21,184



37,518Southeast


38,955



44,364



31,850Corporate and other


3,983



9,209



20,777Total (b)

$
142,867


$
184,486


$
159,927 64




---



##### Table of Contents



Years Ended November 30,2008


2007


2006Equity in income (loss) of unconsolidated joint ventures:West Coast

$
(45,180
)

$
(64,886
)

$
(25,732
)Southwest


(35,633
)


(15,734
)


(26
)Central


(4,515
)


(6,916
)


(3,829
)Southeast


(67,422
)


(64,381
)


(12,290
)Corporate and other










21,047Total

$
(152,750
)

$
(151,917
)

$
(20,830
)Inventory impairments:West Coast

$
229,059


$
631,399


$
113,022Southwest


160,574



337,889



17,343Central


51,518



24,662



30,592Southeast


124,726



116,023



67,808Total

$
565,877


$
1,109,973


$
228,765Inventory abandonments:West Coast

$
17,475


$
28,011


$
65,740Southwest


187



16,479



22,069Central






9,783



18,198Southeast


23,252



89,736



37,865Total

$
40,914


$
144,009


$
143,872Joint venture impairments:West Coast

$
43,116


$
57,030


$
34,401Southwest


30,434



31,049



Central


2,629



4,483



Southeast


65,671



63,801



24,201Total

$
141,850


$
156,363


$
58,602     (a)
    
    Corporate and other includes corporate general and
    administrative expenses and goodwill impairment.  (b)
    
    Interest cost for 2008 included $129.9 million of interest
    amortized in construction and land costs, $2.6 million of
    interest expense, $7.1 million related to the loss on early
    redemption of debt and $3.3 million of unamortized fees
    that were written off in connection with an amendment of the
    Credit Facility. Interest cost for 2007 included
    $171.5 million of interest amortized in construction and
    land costs and $13.0 million related to the loss on early
    redemption of debt. Interest cost for 2006 included
    $143.2 million of interest amortized in construction and
    land costs and $16.7 million of interest expense.  November 30,2008


2007Assets:West Coast

$
1,086,503


$
1,542,948Southwest


497,034



887,361Central


443,168



643,599Southeast


453,771



845,679Corporate and other


1,511,672



1,741,977Total homebuilding assets


3,992,148



5,661,564Financial services


52,152



44,392Total assets

$
4,044,300


$
5,705,956 65




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##### Table of Contents



November 30,2008


2007Investments in unconsolidated joint ventures:West Coast

$
55,856


$
63,450Southwest


113,564



134,082Central


3,339



7,230Southeast


4,890



92,248Total

$
177,649


$
297,010   Note 3.  Financial
    Services
     Years Ended November 30,2008


2007


2006RevenuesInterest income

$
209


$
158


$
230Title services


2,369



5,977



7,205Insurance commissions


8,189



9,193



9,410Escrow coordination fees






607



3,395Total


10,767



15,935



20,240ExpensesInterest










(49
)General and administrative


(4,489
)


(4,796
)


(5,874
)Operating income


6,278



11,139



14,317Equity in income of unconsolidated joint venture


17,540



22,697



19,219Pretax income

$
23,818


$
33,836


$
33,536   November 30,2008


2007AssetsCash and cash equivalents

$
6,119


$
18,487Receivables


1,240



2,655Investment in unconsolidated joint venture


44,733



23,140Other assets


60



110Total assets

$
52,152


$
44,392LiabilitiesAccounts payable and accrued expenses

$
9,467


$
17,796Total liabilities

$
9,467


$
17,796     Note 4.
    Receivables  1 4
 66




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##### Table of Contents



Note 5.
    Inventories    November 30,2008


2007Homes, lots and improvements in production

$
1,649,838


$
2,473,980Land under development


456,878



838,440Total

$
2,106,716


$
3,312,420       Years Ended November 30,2008


2007


2006Capitalized interest at beginning of year

$
348,084


$
333,020


$
255,195Interest incurred


156,402



199,550



237,752Loss on early redemption/interest expensed


(12,966
)


(12,990
)


(16,678
)Interest amortized to construction and land costs


(129,901
)


(171,496
)


(143,249
)Capitalized interest at end of year (a)

$
361,619


$
348,084


$
333,020     (a)
    
    Inventory impairment charges are recognized against all
    inventory costs of a community, such as land, land improvements,
    cost of home construction and capitalized interest. Capitalized
    interest amounts presented in the table reflect the gross amount
    of capitalized interest as impairment charges recognized are not
    generally allocated to specific components of inventory.  Note 6.
    Inventory
    Impairments and Abandonments     67




---



##### Table of Contents



and/or and/or
        Note 7.
    Consolidation
    of Variable Interest Entities         68




---



##### Table of Contents



Note 8.
    Investments
    in Unconsolidated Joint Ventures  and/or
  and/or
        Years Ended November 30,2008


2007


2006Revenues

$
112,767


$
662,705


$
167,536Construction and land costs


(458,168
)


(670,133
)


(189,507
)Other expenses, net


(38,170
)


(44,126
)


(26,598
)Loss

$
(383,571
)

$
(51,554
)

$
(48,569
)  69




---



##### Table of Contents



November 30,2008


2007AssetsCash

$
29,194


$
51,249Receivables


143,926



234,265Inventories


1,029,306



2,209,907Other assets


55,289



15,513Total assets

$
1,257,715


$
2,510,934Liabilities and equityAccounts payable and other liabilities

$
85,064


$
68,217Mortgages and notes payable


871,279



1,540,931Equity


301,372



901,786Total liabilities and equity

$
1,257,715


$
2,510,934     November 30,2008


2007Number of investments in unconsolidated joint ventures:With recourse debt (a)


1



1With limited recourse debt (b)


4



7With non-recourse debt (c)


10



14Other (d)


10



13Total


25



35Investments in unconsolidated joint ventures:With recourse debt

$
3,339


$
1,855With limited recourse debt


1,360



17,342With non-recourse debt


24,590



161,721Other


148,360



116,092Total

$
177,649


$
297,010Aggregate outstanding debt of unconsolidated joint ventures:With recourse debt

$
3,249


$
6,317With limited recourse debt


112,700



276,553With non-recourse debt


381,393



894,115Other


373,937



363,946Total (e)

$
871,279


$
1,540,931  70




---



##### Table of Contents



(a)
    
    This category consists of an unconsolidated joint venture as to
    which the Company has entered into a several guaranty with
    respect to the repayment of a portion of the unconsolidated
    joint ventures outstanding debt.(b)
    
    This category consists of unconsolidated joint ventures as to
    which the Company has entered into a loan-to-value maintenance
    guaranty with respect to a portion of each such unconsolidated
    joint ventures outstanding secured debt.(c)
    
    This category consists of unconsolidated joint ventures as to
    which the Company does not have a guaranty or any other
    obligation to repay or to support the value of the collateral
    (including letters of credit) underlying such unconsolidated
    joint ventures respective outstanding secured debt
    (excluding any potential responsibility under a carve-out
    guaranty).(d)
    
    This category consists of unconsolidated joint ventures with no
    outstanding debt and an unconsolidated joint venture as to which
    the Company has entered into a several guaranty that, by its
    terms, purports to require the Company to guarantee the
    repayment of a portion of the unconsolidated joint
    ventures outstanding debt in the event an involuntary
    bankruptcy proceeding is filed against the unconsolidated joint
    venture that is not dismissed within 60 days or for which
    an order approving relief under bankruptcy law is entered, even
    if the unconsolidated joint venture or its partners do not
    collude in the filing and the unconsolidated joint venture
    contests the filing, as further described below.In some cases, the Company may have also entered into a
    completion guaranty and/or a carve-out guaranty with the lenders
    for the unconsolidated joint ventures identified in categories
    (a) through (d).(e)
    
    The Total amounts represent the aggregate
    outstanding debt of the unconsolidated joint ventures in which
    the Company participates. The amounts do not represent the
    Companys potential responsibility for such debt, if any.
    The Companys maximum potential responsibility for any
    portion of such debt, if any, is limited to either a specified
    maximum amount or an amount equal to its pro rata interest in
    the relevant unconsolidated joint venture, as further described
    below.    and/or and/or and/or
   71




---



##### Table of Contents



72




---



##### Table of Contents



Note 9.
    Goodwill     Years Ended November 30,2008


2007Balance at beginning of year

$
67,970


$
177,333Impairments


(67,970
)


(107,926
)Other






(1,437
)Balance at end of year

$



$
67,970              73




---



##### Table of Contents



Note 10.
    Mortgages
    and Notes Payable    November 30,2008


2007Mortgages and land contracts due to land sellers and other loans
    (41/4%
    to 8% in 2008 and 4% to 10% in 2007)

$
96,368


$
19,140Senior subordinated notes due December 15, 2008 at
    85/8%


200,000



200,000Senior subordinated notes due 2010 at
    73/4%






298,273Senior notes due 2011 at
    63/8%


348,908



348,549Senior notes due 2014 at
    53/4%


249,227



249,102Senior notes due 2015 at
    57/8%


298,692



298,521Senior notes due 2015 at
    61/4%


449,653



449,612Senior notes due 2018 at
    71/4%


298,689



298,597Total

$
1,941,537


$
2,161,794          74




---



##### Table of Contents



Form 10-K,
  3 8
    3 4
  7 8 7 8 7 8 7 8 7 8
 75




---



##### Table of Contents



1 4
  1 4 1 4 1 4
          Note 11.
    Fair
    Values of Financial Instruments   76




---



##### Table of Contents



November 30,2008


2007Estimated Fair





Estimated FairCarrying Value


Value


Carrying Value


ValueFinancial liabilities85/8% Senior
    subordinated notes

$
200,000


$
199,500


$
200,000


$
194,75073/4% Senior
    subordinated notes










298,273



277,39463/8% Senior
    notes


348,908



274,765



348,549



319,35853/4% Senior
    notes


249,227



165,113



249,102



216,09657/8% Senior
    notes


298,692



182,949



298,521



256,72861/4% Senior
    notes


449,653



275,412



449,612



388,35271/4% Senior
    notes


298,689



173,240



298,597



268,364         Note 12.
    Commitments
    and Contingencies        Years Ended November 30,2008


2007


2006Balance at beginning of year

$
151,525


$
141,060


$
122,503Warranties issued


25,324



60,620



78,527Payments and adjustments


(31,480
)


(50,155
)


(59,970
)Balance at end of year

$
145,369


$
151,525


$
141,060      77




---



##### Table of Contents



Note 13.
    Legal
    Matters  Derivative Litigation.
   78




---



##### Table of Contents



ERISA Litigation. Bagley et al., v. KB Home, et al.
  Other Matters.
  Note 14.
    Stockholders
    Equity  Preferred Stock.
 79




---



##### Table of Contents



Common Stock.
      Note 15.
    Employee
    Benefit and Stock Plans      Stock
    Options. Stock
    option transactions are summarized as follows:
  Years Ended November 30,2008


2007


2006Weighted





Weighted





WeightedAverage





Average





AverageExercise





Exercise





ExerciseOptions


Price


Options


Price


Options


PriceOptions outstanding at beginning of year


8,173,464


$
30.17



8,354,276


$
28.71



9,176,253


$
28.16Granted










787,600



34.78



85,569



67.53Exercised


(144,020
)


18.31



(327,681
)


24.27



(743,481
)


24.19Cancelled


(182,042
)


42.33



(640,731
)


37.04



(164,065
)


38.63Options outstanding at end of year


7,847,402


$
30.11



8,173,464


$
30.17



8,354,276


$
28.71Options exercisable at end of year


7,321,170


$
29.77



7,238,598


$
28.98



7,428,952


$
26.46Options available for grant at end of year


593,897







501,892







1,016,199    80




---



##### Table of Contents



Options Outstanding


Options ExercisableWeighted








WeightedWeighted


Average





Weighted


AverageAverage


Remaining





Average


RemainingExercise


Contractual





Exercise


ContractualRange of Exercise Price

Options


Price


Life


Options


Price


Life$ 8.88 to $15.64


1,519,401


$
14.76



7.83



1,519,401


$
14.76$15.65 to $21.51


1,863,452



21.36



8.79



1,863,452



21.36$21.52 to $34.05


1,943,963



31.80



9.66



1,852,297



31.98$34.06 to $40.90


1,674,766



39.01



9.87



1,241,366



40.00$40.91 to $69.63


845,820



55.47



8.79



844,654



55.47$ 8.88 to $69.63


7,847,402


$
30.11



9.05



7,321,170


$
29.77



9.10          Other Stock-Based Awards.
   81




---



##### Table of Contents



Grantor Stock Ownership Trust.
    Note 16.
    Postretirement
    Benefits     82




---



##### Table of Contents



Note 17.
    Income
    Taxes    Federal


State


Total2008Current

$
(18,704
)

$
10,504


$
(8,200
)Deferred










Income tax benefit (expense)

$
(18,704
)

$
10,504


$
(8,200
)2007Current

$
236,961


$
27,195


$
264,156Deferred


(156,772
)


(61,384
)


(218,156
)Income tax benefit (expense)

$
80,189


$
(34,189
)

$
46,0002006Current

$
(277,960
)

$
(9,476
)

$
(287,436
)Deferred


80,555



27,981



108,536Income tax benefit (expense)

$
(197,405
)

$
18,505


$
(178,900
)     November 30,2008


2007Deferred tax liabilities:Capitalized expenses

$
137,975


$
131,147State taxes


36,699



56,751Other


398



647Total

$
175,072


$
188,545 83




---



##### Table of Contents



November 30,2008


2007Deferred tax assets:Inventory impairments and land option contract abandonments

$
483,199


$
479,7162008 net operating loss


52,841



Warranty, legal and other accruals


191,209



198,118Employee benefits


90,521



103,525Partnerships and joint ventures


107,838



59,035Depreciation and amortization


49,909



41,558Capitalized expenses


9,039



19,530Tax credits


59,676



18,823Deferred income


2,741



9,411Other


8,029



4,140Total


1,055,002



933,856Valuation allowance


(878,778
)


(522,853
)Total


176,224



411,003Net deferred tax assets

$
1,152


$
222,458     Years Ended November 30,2008


2007


2006Income tax benefit (expense) computed at statutory rate

$
338,776


$
511,270


$
(200,148
)Increase (decrease) resulting from:State taxes, net of federal income tax benefit


25,142



46,116



12,028Non-deductible stock-based and other compensation and related
    expenses






(3,574
)


(3,871
)Internal Revenue Code Section 199 manufacturing deduction










6,265Tax credits


(3,984
)


(3,594
)


4,625Valuation allowance for deferred tax assets


(358,159
)


(514,234
)


Other, net


(9,975
)


10,016



2,201Income tax benefit (expense)

$
(8,200
)

$
46,000


$
(178,900
)      84




---



##### Table of Contents



Year EndedNovember 30, 2008Balance at beginning of year

$
27,617Additions for tax positions related to prior years


Reductions for tax positions of prior years


199Settlements


(9,484
)Balance at end of year

$
18,332     2004-2007
 85




---



##### Table of Contents



Note
    18.
    Supplemental
    Disclosure to Consolidated Statements of Cash Flows    Years Ended November 30,2008


2007


2006Summary of cash and cash equivalents:Homebuilding

$
1,135,399


$
1,325,255


$
700,041Financial services


6,119



18,487



15,417Discontinued operations










88,724Total

$
1,141,518


$
1,343,742


$
804,182Supplemental disclosures of cash flow information:Interest paid, net of amounts capitalized

$
20,726


$
29,572


$
Income taxes paid


(122,872
)


131,329



322,983Supplemental disclosures of noncash activities:Cost of inventories acquired through seller financing

$
90,028


$
4,139


$
128,726Decrease in consolidated inventories not owned


(143,091
)


(409,505
)


(18,130
)   Note
    19.
    Discontinued
    Operations        Years Ended November 30,2007


2006Revenues

$
911,841


$
1,623,709Construction and land costs


(680,234
)


(1,187,484
)Selling, general and administrative expenses


(129,407
)


(251,104
)Operating income


102,200



185,121Interest income


1,199



643Interest expense, net of amounts capitalized






(2,045
)Minority interests


(38,665
)


(68,020
)Equity in income of unconsolidated joint ventures


4,118



10,505Income from discontinued operations before income taxes


68,852



126,204Income tax expense


(21,600
)


(36,800
)Income from discontinued operations, net of income taxes

$
47,252


$
89,404  86




---



##### Table of Contents



Note 20.
    Quarterly
    Results (unaudited)    First


Second


Third


Fourth2008Revenues

$
794,224


$
639,065


$
681,610


$
919,037Gross profit (loss)


(121,333
)


(118,746
)


25,383



(76,950
)Loss from continuing operations


(268,172
)


(255,930
)


(144,745
)


(307,284
)Net loss


(268,172
)


(255,930
)


(144,745
)


(307,284
)Basic loss per share

$
(3.47
)

$
(3.30
)

$
(1.87
)

$
(3.96
)Diluted loss per share

$
(3.47
)

$
(3.30
)

$
(1.87
)

$
(3.96
)2007Revenues

$
1,388,838


$
1,413,208


$
1,543,900


$
2,070,580Gross profit (loss)


208,370



(69,419
)


(461,774
)


(102,965
)Income (loss) from continuing operations


10,655



(174,152
)


(478,620
)


(772,653
)Income from discontinued operations, net of income taxes (a)


16,882



25,466



443,008



Net income (loss)


27,537



(148,686
)


(35,612
)


(772,653
)Basic earnings (loss) per share:Continuing operations

$
.14


$
(2.26
)

$
(6.19
)

$
(9.99
)Discontinued operations


.22



.33



5.73



Basic earnings (loss) per share

$
.36


$
(1.93
)

$
(.46
)

$
(9.99
)Diluted earnings (loss) per share:Continuing operations

$
.13


$
(2.26
)

$
(6.19
)

$
(9.99
)Discontinued operations


.21



.33



5.73



Diluted earnings (loss) per share

$
.34


$
(1.93
)

$
(.46
)

$
(9.99
)     (a)
    
    Discontinued operations consist only of the Companys
    French operations, which have been presented as discontinued
    operations for all periods presented. Income from discontinued
    operations, net of income taxes, in 2007 includes a gain of
    $438.1 million realized on the sale of the French
    operations.     87




---



##### Table of Contents



year-to-date
  Note 21.
    Supplemental
    Guarantor Information   88




---



##### Table of Contents



CONDENSED
    CONSOLIDATING STATEMENTS OF OPERATIONS
 (In Thousands)
  Year Ended November 30, 2008KB Home


Guarantor


Non-Guarantor


ConsolidatingCorporate


Subsidiaries


Subsidiaries


Adjustments


TotalRevenues

$



$
2,331,771


$
702,165


$



$
3,033,936Homebuilding:Revenues

$



$
2,331,771


$
691,398


$



$
3,023,169Construction and land costs






(2,555,911
)


(758,904
)






(3,314,815
)Selling, general and administrative expenses


(74,075
)


(296,964
)


(129,988
)






(501,027
)Goodwill impairment


(67,970
)














(67,970
)Operating loss


(142,045
)


(521,104
)


(197,494
)






(860,643
)Interest income


31,666



2,524



420







34,610Loss on early redemption/interest expense, net of amounts
    capitalized


56,541



(34,946
)


(34,561
)






(12,966
)Equity in loss of unconsolidated joint ventures






(10,742
)


(142,008
)






(152,750
)Homebuilding pretax loss


(53,838
)


(564,268
)


(373,643
)






(991,749
)Financial services pretax income










23,818







23,818Total pretax loss


(53,838
)


(564,268
)


(349,825
)






(967,931
)Income tax expense


(400
)


(4,600
)


(3,200
)






(8,200
)Equity in net loss of subsidiaries


(921,893
)










921,893



Net loss

$
(976,131
)

$
(568,868
)

$
(353,025
)

$
921,893


$
(976,131
)Year Ended November 30, 2007KB Home


Guarantor


Non-Guarantor


ConsolidatingCorporate


Subsidiaries


Subsidiaries


Adjustments


TotalRevenues

$



$
4,752,649


$
1,663,877


$



$
6,416,526Homebuilding:Revenues

$



$
4,752,649


$
1,647,942


$



$
6,400,591Construction and land costs






(5,299,357
)


(1,527,022
)






(6,826,379
)Selling, general and administrative expenses


(104,646
)


(518,912
)


(201,063
)






(824,621
)Goodwill impairment


(107,926
)














(107,926
)Operating loss


(212,572
)


(1,065,620
)


(80,143
)






(1,358,335
)Interest income


21,869



6,193



574







28,636Loss on early redemption/interest expense, net of amounts
    capitalized


179,100



(146,204
)


(45,886
)






(12,990
)Equity in loss of unconsolidated joint ventures






(26,105
)


(125,812
)






(151,917
)Homebuilding pretax loss


(11,603
)


(1,231,736
)


(251,267
)






(1,494,606
)Financial services pretax income










33,836







33,836Loss from continuing operations before income taxes


(11,603
)


(1,231,736
)


(217,431
)






(1,460,770
)Income tax benefit


400



38,800



6,800







46,000Loss from continuing operations before equity in net loss of
    subsidiaries


(11,203
)


(1,192,936
)


(210,631
)






(1,414,770
)Income from discontinued operations, net of income taxes










485,356







485,356Income (loss) before equity in net income (loss) of subsidiaries


(11,203
)


(1,192,936
)


274,725







(929,414
)Equity in net income (loss) of subsidiaries:Continuing operations


(1,403,567
)










1,403,567



Discontinued operations


485,356











(485,356
)


Net income (loss)

$
(929,414
)

$
(1,192,936
)

$
274,725


$
918,211


$
(929,414
)   89




---



##### Table of Contents



Year Ended November 30, 2006KB Home


Guarantor


Non-Guarantor


ConsolidatingCorporate


Subsidiaries


Subsidiaries


Adjustments


TotalRevenues

$



$
7,386,128


$
1,993,955


$



$
9,380,083Homebuilding:Revenues

$



$
7,386,128


$
1,973,715


$



$
9,359,843Construction and land costs






(5,875,431
)


(1,790,588
)






(7,666,019
)Selling, general and administrative expenses


(156,099
)


(713,519
)


(253,890
)






(1,123,508
)Operating income (loss)


(156,099
)


797,178



(70,763
)






570,316Interest income


1,256



3,485



762







5,503Loss on early redemption/interest expense, net of amounts
    capitalized


201,837



(153,141
)


(65,374
)






(16,678
)Equity in income (loss) of unconsolidated joint ventures


27,653



(25,272
)


(23,211
)






(20,830
)Homebuilding pretax income (loss)


74,647



622,250



(158,586
)






538,311Financial services pretax income










33,536







33,536Income (loss) from continuing operations before income taxes


74,647



622,250



(125,050
)






571,847Income tax benefit (expense)


(23,400
)


(194,600
)


39,100







(178,900
)Income (loss) from continuing operations before equity in net
    income of subsidiaries


51,247



427,650



(85,950
)






392,947Income from discontinued operations, net of income taxes










89,404







89,404Income before equity in net income of subsidiaries


51,247



427,650



3,454







482,351Equity in net income of subsidiaries:Continuing operations


341,700











(341,700
)


Discontinued operations


89,404











(89,404
)


Net income

$
482,351


$
427,650


$
3,454


$
(431,104
)

$
482,351  90




---



##### Table of Contents



CONDENSED
    CONSOLIDATING BALANCE SHEETS
 (In Thousands)
  November 30, 2008KB Home


Guarantor


Non-Guarantor


ConsolidatingCorporate


Subsidiaries


Subsidiaries


Adjustments


TotalAssetsHomebuilding:Cash and cash equivalents

$
987,057


$
25,067


$
123,275


$



$
1,135,399Restricted cash


115,404















115,404Receivables


218,600



126,713



12,406







357,719Inventories






1,748,526



358,190







2,106,716Investments in unconsolidated joint ventures






176,290



1,359







177,649Other assets


83,028



13,954



2,279







99,2611,404,089



2,090,550



497,509







3,992,148Financial services










52,152







52,152Investments in subsidiaries


51,848











(51,848
)


Total assets

$
1,455,937


$
2,090,550


$
549,661


$
(51,848
)

$
4,044,300Liabilities and stockholders equityHomebuilding:Accounts payable, accrued expenses and other liabilities

$
190,455


$
786,717


$
285,519


$



$
1,262,691Mortgages and notes payable


1,845,169



96,368











1,941,5372,035,624



883,085



285,519







3,204,228Financial services










9,467







9,467Intercompany


(1,410,292
)


1,207,465



202,827







Stockholders equity


830,605







51,848



(51,848
)


830,605Total liabilities and stockholders equity

$
1,455,937


$
2,090,550


$
549,661


$
(51,848
)

$
4,044,300   November 30, 2007KB Home


Guarantor


Non-Guarantor


ConsolidatingCorporate


Subsidiaries


Subsidiaries


Adjustments


TotalAssetsHomebuilding:Cash and cash equivalents

$
1,104,429


$
71,519


$
149,307


$



$
1,325,255Receivables


126,531



151,089



18,119







295,739Inventories






2,670,155



642,265







3,312,420Investments in unconsolidated joint ventures






199,254



97,756







297,010Other assets


405,306



19,892



5,942







431,1401,636,266



3,111,909



913,389







5,661,564Financial services










44,392







44,392Investments in subsidiaries


64,148











(64,148
)


Total assets

$
1,700,414


$
3,111,909


$
957,781


$
(64,148
)

$
5,705,956Liabilities and stockholders equityHomebuilding:Accounts payable, accrued expenses and other liabilities

$
210,697


$
1,130,047


$
334,935


$



$
1,675,679Mortgages and notes payable


2,142,654



19,140











2,161,7942,353,351



1,149,187



334,935







3,837,473Financial services










17,796







17,796Intercompany


(2,503,624
)


1,962,722



540,902







Stockholders equity


1,850,687







64,148



(64,148
)


1,850,687Total liabilities and stockholders equity

$
1,700,414


$
3,111,909


$
957,781


$
(64,148
)

$
5,705,956  91




---



##### Table of Contents



CONDENSED
    CONSOLIDATING STATEMENTS OF CASH FLOWS
 (In Thousands)
 Year Ended November 30, 2008KB Home


Guarantor


Non-Guarantor


ConsolidatingCorporate


Subsidiaries


Subsidiaries


Adjustments


TotalCash flows from operating activities:Net loss

$
(976,131
)

$
(568,868
)

$
(353,025
)

$
921,893


$
(976,131
)Adjustments to reconcile net loss to net cash provided (used) by
    operating activities:Deferred income taxes


221,306















221,306Inventory impairments and land option contract abandonments






469,017



137,774







606,791Goodwill impairment


67,970















67,970Changes in assets and liabilities:Receivables


(92,069
)


24,376



7,128







(60,565
)Inventories






409,629



136,221







545,850Accounts payable, accrued expenses and other liabilities


(20,246
)


(210,319
)


(52,216
)






(282,781
)Other, net


48,519



19,978



150,385







218,882Net cash provided (used) by operating activities


(750,651
)


143,813



26,267



921,893



341,322Cash flows from investing activities:Change in restricted cash


(115,404
)














(115,404
)Investments in unconsolidated joint ventures






8,985



(68,610
)






(59,625
)Sales (purchases) of property and equipment, net


5,837



(55
)


1,291







7,073Net cash provided (used) by investing activities


(109,567
)


8,930



(67,319
)






(167,956
)Cash flows from financing activities:Redemption of senior subordinated notes


(305,814
)














(305,814
)Payments on mortgages, land contracts and other loans






(12,800
)










(12,800
)Payments of cash dividends


(62,967
)














(62,967
)Repurchase of common stock


(967
)














(967
)Other, net


6,958















6,958Intercompany


1,105,636



(186,395
)


2,652



(921,893
)


Net cash provided (used) by financing activities


742,846



(199,195
)


2,652



(921,893
)


(375,590
)Net decrease in cash and cash equivalents


(117,372
)


(46,452
)


(38,400
)






(202,224
)Cash and cash equivalents at beginning of year


1,104,429



71,519



167,794







1,343,742Cash and cash equivalents at end of year

$
987,057


$
25,067


$
129,394


$



$
1,141,518  92




---



##### Table of Contents



Year Ended November 30, 2007KB Home


Guarantor


Non-Guarantor


ConsolidatingCorporate


Subsidiaries


Subsidiaries


Adjustments


TotalCash flows from operating activities:Net loss

$
(929,414
)

$
(1,192,936
)

$
(210,631
)

$
1,403,567


$
(929,414
)Income from discontinued operations, net of income taxes










(47,252
)






(47,252
)Gain on sale of discontinued operations, net of income taxes


(438,104
)














(438,104
)Adjustments to reconcile net loss to net cash provided (used) by
    operating activities:Deferred income taxes


208,348















208,348Inventory impairments and land option contract abandonments






1,173,855



80,127







1,253,982Goodwill impairment


107,926















107,926Changes in assets and liabilities:Receivables


(121,225
)


41,726



8,093







(71,406
)Inventories






367,142



412,733







779,875Accounts payable, accrued expenses and other liabilities


(199,306
)


62,000



(203,324
)






(340,630
)Other, net


(151,042
)


53,528



323,691







226,177Net cash provided (used) by operating activities 
    continuing operations


(1,522,817
)


505,315



363,437



1,403,567



749,502Net cash provided by operating activities 
    discontinued operations










297,397







297,397Net cash provided (used) by operating activities


(1,522,817
)


505,315



660,834



1,403,567



1,046,899Cash flows from investing activities:Sale of discontinued operations, net of cash divested


739,764















739,764Investments in unconsolidated joint ventures






(35,227
)


(49,961
)






(85,188
)Sales (purchases) of property and equipment, net


(558
)


(201
)


1,444







685Net cash provided (used) by investing activities 
    continuing operations


739,206



(35,428
)


(48,517
)






655,261Net cash used by investing activities  discontinued
    operations










(12,112
)






(12,112
)Net cash provided (used) by investing activities


739,206



(35,428
)


(60,629
)






643,149Cash flows from financing activities:Redemption of term loan


(400,000
)














(400,000
)Redemption of senior subordinated notes


(258,968
)














(258,968
)Payments on mortgages, land contracts and other loans






(87,566
)


(26,553
)






(114,119
)Payments of cash dividends


(77,170
)














(77,170
)Repurchases of common stock


(6,896
)














(6,896
)Other, net


13,192















13,192Intercompany


2,170,661



(461,631
)


(305,463
)


(1,403,567
)


Net cash provided (used) by financing activities 
    continuing operations


1,440,819



(549,197
)


(332,016
)


(1,403,567
)


(843,961
)Net cash used by financing activities  discontinued
    operations










(306,527
)






(306,527
)Net cash provided (used) by financing activities


1,440,819



(549,197
)


(638,543
)


(1,403,567
)


(1,150,488
)Net increase (decrease) in cash and cash equivalents


657,208



(79,310
)


(38,338
)






539,560Cash and cash equivalents at beginning of year


447,221



150,829



206,132







804,182Cash and cash equivalents at end of year

$
1,104,429


$
71,519


$
167,794


$



$
1,343,742   93




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##### Table of Contents



Year Ended November 30, 2006KB Home


Guarantor


Non-Guarantor


ConsolidatingCorporate


Subsidiaries


Subsidiaries


Adjustments


TotalCash flows from operating activities:Net income (loss)

$
482,351


$
427,650


$
(85,950
)

$
(341,700
)

$
482,351Income from discontinued operations, net of income taxes










(89,404
)






(89,404
)Adjustments to reconcile net income (loss) to net cash provided
    (used) by operating activities:Deferred income taxes


(189,047
)














(189,047
)Inventory impairments and land option contract abandonments






252,642



119,995







372,637Changes in assets and liabilities:Receivables


1,464



(10,126
)


(14,867
)






(23,529
)Inventories






(156,135
)


(200,207
)






(356,342
)Accounts payable, accrued expenses and other liabilities


(63,541
)


125,535



143,713







205,707Other, net


96,937



35,116



(112,813
)






19,240Net cash provided (used) by operating activities 
    continuing operations


328,164



674,682



(239,533
)


(341,700
)


421,613Net cash provided by operating activities 
    discontinued operations










229,505







229,505Net cash provided (used) by operating activities


328,164



674,682



(10,028
)


(341,700
)


651,118Cash flows from investing activities:Sale of investment in unconsolidated joint venture


57,767















57,767Investments in unconsolidated joint ventures


22,587



(98,505
)


(103,266
)






(179,184
)Purchases of property and equipment, net


(3,146
)


(8,674
)


(5,818
)






(17,638
)Other, net










772







772Net cash provided (used) by investing activities 
    continuing operations


77,208



(107,179
)


(108,312
)






(138,283
)Net cash used by investing activities  discontinued
    operations










(4,477
)






(4,477
)Net cash provided (used) by investing activities


77,208



(107,179
)


(112,789
)






(142,760
)Cash flows from financing activities:Net payments on credit agreements and
    other short-term borrowings


(84,100
)














(84,100
)Proceeds from issuance of senior notes and term loan


698,458















698,458Payments of cash dividends


(78,258
)














(78,258
)Repurchases of common stock


(394,080
)














(394,080
)Other, net


89,571



(33,494
)


(12,236
)






43,841Intercompany


(244,421
)


(519,129
)


421,850



341,700



Net cash provided (used) by financing activities 
    continuing operations


(12,830
)


(552,623
)


409,614



341,700



185,861Net cash used by financing activities  discontinued
    operations










(215,010
)






(215,010
)Net cash provided (used) by financing activities


(12,830
)


(552,623
)


194,604



341,700



(29,149
)Net increase in cash and cash equivalents


392,542



14,880



71,787







479,209Cash and cash equivalents at beginning of year


54,679



135,949



134,345







324,973Cash and cash equivalents at end of year

$
447,221


$
150,829


$
206,132


$



$
804,182   Note 22.  Subsequent
    Events
    Form 10-K.
 94




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM              
    95




---



##### Table of Contents



Item
    9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE   Item
    9A.  CONTROLS AND PROCEDURES  Disclosure
    Controls and Procedures
    Internal
    Control Over Financial Reporting
  (a)  Managements
    Annual Report on Internal Control Over Financial
    Reporting
  Rule 13a-15(f) Internal Control-Integrated Framework
    (b)  Report
    of Independent Registered Public Accounting Firm
         96




---



##### Table of Contents



(c)  Changes
    in Internal Control Over Financial Reporting
    Item
    9B.
    OTHER
    INFORMATION   97




---



##### Table of Contents



PART
    III
  Item 10.  DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    Ethics
    Policy
    KB HomeAttention: Investor Relations10990 Wilshire BoulevardLos Angeles, California 90024(310) 231-4000investorrelations@kbhome.com     Corporate
    Governance Principles
    New York
    Stock Exchange Annual Certification
   Item
    11.  EXECUTIVE COMPENSATION    Item
    12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS   98




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##### Table of Contents



Equity Compensation Plan InformationNumber of commonNumber of





shares remainingcommon shares to





available for futurebe issued upon





issuance under equityexercise of


Weighted-average


compensation plansoutstanding options,


exercise price of


(excluding commonwarrants and


outstanding options,


shares reflected inrights


warrants and rights


column(a))Plan category

(a)


(b)


(c)Equity compensation plans approved by stockholders


7,847,402


$
30.11



593,897Equity compensation plans not approved by stockholders











(d)Total


7,847,402


$
30.11



593,897     (d)
    Represents the Non-Employee Directors Stock Plan. The
    Non-Employee Directors Stock Plan provides for an unlimited
    number of grants of deferred common stock units or stock options
    to our non-employee directors. The terms of the stock units and
    options granted under the Non-Employee Directors Stock Plan are
    described in the Director Compensation section of
    our 2009 Proxy Statement, which is incorporated herein. Although
    we may purchase shares of our common stock on the open market to
    satisfy the payment of stock awards under the Non-Employee
    Directors Stock Plan, to date, all stock awards under the
    Non-Employee Directors Stock Plan have been settled in cash. In
    addition, because of the irrevocable election of each of our
    non-employee
    directors to receive payouts in cash of all outstanding
    stock-based awards granted to them under the Non-Employee
    Directors Stock Plan, we do not intend to issue any shares of
    common stock under the plan. Therefore, we consider the
    Non-Employee
    Directors Stock Plan as having no available capacity to issue
    shares of our common stock.  Item 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE    Item 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES   99




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##### Table of Contents



PART IV  Item 15.
    EXHIBITS
    AND FINANCIAL STATEMENT SCHEDULES  Financial
    Statements
  Form 10-K.
  Exhibits
  ExhibitNumber

Description2
.1

Share Purchase Agreement, dated May 22, 2007, by and
    between KB Home, Kaufman and Broad Development Group,
    International Mortgage Acceptance Corporation, Kaufman and Broad
    International, Inc. and Financière Gaillon 8 S.A.S., filed
    as an exhibit to the Companys Current Report on
    Form 8-K
    dated May 22, 2007, is incorporated by reference herein.3
.1

Restated Certificate of Incorporation, filed as an exhibit to
    the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended February 28, 2007, is incorporated by
    reference herein.3
.2

Certificate of Designation of Series A Participating Cumulative
    Preferred Stock, dated as of January 22, 2009, filed as an
    exhibit to the Companys Current Report on Form 8-K/A dated
    January 28, 2009, is incorporated by reference herein.3
.3

By-Laws, as amended and restated on April 5, 2007, filed as an
    exhibit to the Companys Quarterly Report on Form 10-Q for
    the quarter ended February 28, 2007, is incorporated by
    reference herein.4
.1

Rights Agreement between the Company and Mellon Investor
    Services LLC, as rights agent, dated January 22, 2009,
    filed as an exhibit to the Companys Current Report on Form
    8-K/A dated January 28, 2009, is incorporated by reference
    herein.4
.2

Rights Agreement between the Company and ChaseMellon Shareholder
    Services, L.L.C., as rights agent, dated February 4, 1999, filed
    as an exhibit to the Companys Current Report on Form 8-K
    dated February 4, 1999, is incorporated by reference herein.4
.3

First Amendment, dated as of April 29, 2005, to the Rights
    Agreement, dated as of February 4, 1999, between the Company and
    Mellon Investor Services LLC, as rights agent, filed as an
    exhibit to the Companys Quarterly Report on Form 10-Q for
    the quarter ended May 31, 2005, is incorporated by reference
    herein.4
.4

Second Amendment, dated as of January 22, 2009, to the Rights
    Agreement, dated as of February 4, 1999 and amended as of April
    29, 2005, between the Company and Mellon Investor  Services LLC,
    as rights agent, filed as an exhibit to the Companys
    Current Report on Form 8-K/A dated January 28, 2009, is
    incorporated by reference herein.4
.5

Indenture and Supplemental Indenture relating to
    53/4% Senior
    Notes due 2014 among the Company, the Guarantors and Sun
    Trust Bank, Atlanta, each dated January 28, 2004,
    filed as exhibits to the Companys Registration Statement
    No. 333-114761
    on
    Form S-4,
    are incorporated by reference herein.4
.6

Second Supplemental Indenture relating to
    63/8% Senior
    Notes due 2011 among the Company, the Guarantors and Sun
    Trust Bank, Atlanta, dated June 30, 2004, filed as an
    exhibit to the Companys registration statement
    No. 333-119228
    on
    Form S-4,
    is incorporated by reference herein.4
.7

Third Supplemental Indenture relating to the Companys
    Senior Notes by and between the Company, the Guarantors named
    therein, the Subsidiary Guarantor named therein and SunTrust
    Bank, dated as of May 1, 2006, filed as an exhibit to the
    Companys Current Report on
    Form 8-K
    dated May 3, 2006, is incorporated by reference herein.4
.8

Fourth Supplemental Indenture relating to the Companys
    Senior Notes by and between the Company, the Guarantors named
    therein and U.S. Bank National Association, dated as of
    November 9, 2006, filed as an exhibit to the Companys
    Current Report on
    Form 8-K
    dated November 13, 2006, is incorporated by reference
    herein.4
.9

Fifth Supplemental Indenture, dated August 17, 2007,
    relating to the Companys Senior Notes by and between the
    Company, the Guarantors, and the Trustee, filed as an exhibit to
    the Companys Current Report on
    Form 8-K
    dated August 22, 2007, is incorporated by reference herein.4
.10

Specimen of
    53/4% Senior
    Notes due 2014, filed as an exhibit to the Companys
    Registration Statement
    No. 333-114761
    on
    Form S-4,
    is incorporated by reference herein. 100




---



##### Table of Contents



ExhibitNumber

Description4
.11

Specimen of
    57/8% Senior
    Notes due 2015, filed as an exhibit to the Companys
    Current Report on
    Form 8-K
    dated December 15, 2004, is incorporated by reference
    herein.4
.12

Form of officers certificates and guarantors
    certificates establishing the terms of the
    57/8% Senior
    Notes due 2015, filed as an exhibit to the Companys
    Current Report on
    Form 8-K
    dated December 15, 2004, is incorporated by reference
    herein.4
.13

Specimen of
    61/4%
    Senior Notes due 2015, filed as an exhibit to the Companys
    Current Report on
    Form 8-K
    dated June 2, 2005, is incorporated by reference herein.4
.14

Form of officers certificates and guarantors
    certificates establishing the terms of the
    61/4%
    Senior Notes due 2015, filed as an exhibit to the Companys
    Current Report on Form 8-K dated June 2, 2005, is
    incorporated by reference herein.4
.15

Specimen of
    61/4%
    Senior Notes due 2015, filed as an exhibit to the Companys
    Current Report on
    Form 8-K
    dated June 27, 2005, is incorporated by reference herein.4
.16

Form of officers certificates and guarantors
    certificates establishing the terms of the
    61/4%
    Senior Notes due 2015, filed as an exhibit to the Companys
    Current Report on Form 8-K dated June 27, 2005, is
    incorporated by reference herein.4
.17

Specimen of
    71/4% Senior
    Notes due 2018, filed as an exhibit to the Companys
    Current Report on
    Form 8-K
    dated April 3, 2006, is incorporated by reference herein.4
.18

Form of officers certificates and guarantors
    certificates establishing the terms of the
    71/4% Senior
    Notes due 2018, filed as an exhibit to the Companys
    Current Report on
    Form 8-K
    dated April 3, 2006, is incorporated by reference herein.10
.1

Consent Order, Federal Trade Commission Docket No. C-2954,
    dated February 12, 1979, filed as an exhibit to the
    Companys Registration Statement No. 33-6471 on
    Form S-1, is incorporated by reference herein.10
.2*

Kaufman and Broad, Inc. Executive Deferred Compensation Plan,
    effective as of July 11, 1985, filed as an exhibit to the
    Companys 2007 Annual Report on
    Form 10-K,
    is incorporated by reference herein.10
.3*

Amendment to Kaufman and Broad, Inc. Executive Deferred
    Compensation Plan for amounts earned or vested on or after
    January 1, 2005, effective January 1, 2009.10
.4*

KB Home 1986 Stock Option Plan, as amended and restated on
    October 2, 2008.10
.5*

KB Home 1988 Employee Stock Plan, as amended and restated on
    October 2, 2008.10
.6*

Kaufman and Broad Home Corporation Directors Deferred
    Compensation Plan established effective as of July 27, 1989,
    filed as an exhibit to the Companys 2007 Annual Report on
    Form 10-K,
    is incorporated by reference herein.10
.7

Consent decree, dated July 2, 1991, relating to Federal
    Trade Commission Consent Order, filed as an exhibit to the
    Companys 2007 Annual Report on
    Form 10-K,
    is incorporated by reference herein.10
.8*

KB Home Performance-Based Incentive Plan for Senior Management,
    as amended and restated on October 2, 2008.10
.9*

Form of Stock Option Agreement under KB Home Performance-Based
    Incentive Plan for Senior Management, filed as an exhibit to the
    Companys 1995 Annual Report on
    Form 10-K,
    is incorporated by reference herein.10
.10*

KB Home Unit Performance Program, filed as an exhibit to the
    Companys 1996 Annual Report on Form 10-K, is
    incorporated by reference herein.10
.11*

KB Home 1998 Stock Incentive Plan, as amended and restated on
    October 2, 2008.10
.12

KB Home Directors Legacy Program, as amended
    January 1, 1999, filed as an exhibit to the Companys
    1998 Annual Report on
    Form 10-K,
    is incorporated by reference herein.10
.13

Trust Agreement between Kaufman and Broad Home Corporation and
    Wachovia Bank, N.A. as Trustee, dated as of August 27,
    1999, filed as an exhibit to the Companys 1999 Annual
    Report on
    Form 10-K,
    is incorporated by reference herein.10
.14*

Amended and Restated KB Home 1999 Incentive Plan, as amended and
    restated on October 2, 2008.10
.15*

Form of Non-Qualified Stock Option Agreement under the
    Companys Amended and Restated 1999 Incentive Plan, filed
    as an exhibit to the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended May 31, 2006, is incorporated by
    reference herein. 101




---



##### Table of Contents



ExhibitNumber

Description10
.16*

Form of Incentive Stock Option Agreement under the
    Companys Amended and Restated 1999 Incentive Plan, filed
    as an exhibit to the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended May 31, 2006, is incorporated by
    reference herein.10
.17*

Form of Restricted Stock Agreement under the Companys
    Amended and Restated 1999 Incentive Plan, filed as an exhibit to
    the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended May 31, 2006, is incorporated by
    reference herein.10
.18*

Form of Amended and Restated 1999 Incentive Plan Stock
    Appreciation Right Agreement, filed as an exhibit to the
    Companys Current Report on
    Form 8-K
    dated July 18, 2007, is incorporated by reference herein.10
.19*

Form of Amended and Restated 1999 Incentive Plan Phantom Share
    Agreement, filed as an exhibit to the Companys Current
    Report on
    Form 8-K
    dated July 18, 2007, is incorporated by reference herein.10
.20*

Amended and Restated Employment Agreement of Bruce Karatz, dated
    July 11, 2001, filed as an exhibit to the Companys
    Quarterly Report on Form 10-Q for the quarter ended
    August 31, 2001, is incorporated by reference herein.10
.21*

Tolling Agreement, dated as of November 12, 2006, by and
    between the Company and Bruce Karatz, filed as an exhibit to the
    Companys Current Report on
    Form 8-K
    dated November 13, 2006, is incorporated by reference
    herein.10
.22*

KB Home 2001 Stock Incentive Plan, as amended and restated on
    October 2, 2008.10
.23*

Form of Stock Option Agreement under the Companys 2001
    Stock Incentive Plan, filed as an exhibit to the Companys
    2006 Annual Report on
    Form 10-K,
    is incorporated by reference herein.10
.24*

Form of Stock Restriction Agreement under the Companys
    2001 Stock Incentive Plan, filed as an exhibit to the
    Companys 2006 Annual Report on
    Form 10-K,
    is incorporated by reference herein.10
.25*

KB Home Nonqualified Deferred Compensation Plan with respect to
    deferrals prior to January 1, 2005, effective March 1,
    2001, filed as an exhibit to the Companys 2001 Annual
    Report on
    Form 10-K,
    is incorporated by reference herein.10
.26*

KB Home Nonqualified Deferred Compensation Plan with respect to
    deferrals on and after January 1, 2005, effective
    January 1, 2009.10
.27*

KB Home Change in Control Severance Plan, as amended and
    restated effective January 1, 2009.10
.28*

KB Home Death Benefit Only Plan, filed as an exhibit to the
    Companys 2001 Annual Report on Form 10-K, is
    incorporated by reference herein.10
.29*

Amendment No. 1 to the KB Home Death Benefit Only Plan,
    effective as of January 1, 2009.10
.30*

KB Home Retirement Plan, as amended and restated effective
    January 1, 2009.10
.31

KB Home Non-Employee Directors Stock Plan, as amended and
    restated effective January 1, 2009.10
.32

Revolving Loan Agreement, dated as of November 22, 2005,
    filed as an exhibit to the Companys Current Report on
    Form 8-K
    dated November 23, 2005, is incorporated by reference
    herein.10
.33

First Amendment, dated as of October 10, 2006, to the
    Revolving Loan Agreement dated as of November 22, 2005
    among the Company, the lenders party thereto and Bank of
    America, N.A., filed as an exhibit to the Companys Current
    Report on
    Form 8-K
    dated October 19, 2006, is incorporated by reference herein.10
.34

Second Amendment to the Revolving Loan Agreement dated as of
    November 22, 2005 among KB Home, the lenders party thereto,
    and Bank of America, N.A., as administrative agent, filed as an
    exhibit to the Companys Current Report on
    Form 8-K
    dated December 12, 2006, is incorporated by reference
    herein.10
.35

Third Amendment Agreement, dated August 17, 2007, to
    Revolving Loan Agreement, dated as of November 22, 2005,
    between the Company, as Borrower, the banks party thereto, and
    Bank of America, N.A., as Administrative Agent, filed as an
    exhibit to the Companys Current Report on
    Form 8-K
    dated August 22, 2007, is incorporated by reference herein.10
.36

Fourth Amendment Agreement, dated January 25, 2008, to
    Revolving Loan Agreement, dated as of November 22, 2005,
    between the Company, as Borrower, the banks party thereto, and
    Bank of America, N.A., as Administrative Agent, filed as an
    exhibit to the Companys Current Report on
    Form 8-K
    dated January 28, 2008, is incorporated by reference
    herein. 102




---



##### Table of Contents



ExhibitNumber

Description10
.37

Fifth Amendment, dated August 28, 2008, to Revolving Loan
    Agreement, dated as of November 22, 2005, among the
    Company, as Borrower, the banks party thereto, and Bank of
    America, N.A., as Administrative Agent, filed as an exhibit to
    the Companys Current Report on
    Form 8-K
    dated August 29, 2008, is incorporated by reference herein.10
.38*

Employment Agreement of Jeffrey T. Mezger, dated
    February 28, 2007, filed as an exhibit to the
    Companys Current Report on
    Form 8-K
    dated March 6, 2007, is incorporated by reference herein.10
.39*

Amendment to the Employment Agreement of Jeffrey T. Mezger,
    dated December 24, 2008.10
.40*

Amended and Restated 1999 Incentive Plan Performance Stock
    Agreement between the Company and Jeffrey T. Mezger, filed
    as an exhibit to the Companys Current Report on Form 8-K
    dated July 18, 2007, is incorporated by reference herein.10
.41*

Form of Stock Option Agreement under the Employment Agreement
    between the Company and Jeffrey T. Mezger dated as of
    February 28, 2007, filed as an exhibit to the
    Companys Current Report on
    Form 8-K
    dated July 18, 2007, is incorporated by reference herein.10
.42*

Form of Stock Option Agreement under the Amended and Restated
    1999 Incentive Plan for stock option grant to Jeffrey T.
    Mezger, filed as an exhibit to the Companys Quarterly
    Report on Form 10-Q for the quarter ended August 31,
    2007, is incorporated by reference herein.10
.43*

Form of Phantom Share Agreement for Non-Senior Management, filed
    as an exhibit to the Companys Current Report on
    Form 8-K
    dated July 18, 2007, is incorporated by reference herein.10
.44*

Form of Over Cap Phantom Share Agreement, filed as an exhibit to
    the Companys Current Report on
    Form 8-K
    dated July 18, 2007, is incorporated by reference herein.10
.45*

Description of fiscal year 2007 bonus arrangements with the
    Companys Named Executive Officers and description of
    fiscal year 2008 annual incentive compensation arrangements with
    executive officers, each determined on January 22, 2008,
    filed on the Companys Current Report on
    Form 8-K
    dated January 25, 2008, is incorporated by reference herein.10
.46*

Policy Regarding Stockholder Approval of Certain Severance
    Payments, adopted July 10, 2008, filed as an exhibit to the
    Companys Current Report on Form 8-K dated
    July 15, 2008, is incorporated by reference herein.10
.47*

KB Home Executive Severance Plan, filed as an exhibit to the
    Companys Quarterly Report on
    Form 10-Q
    for the quarter ended August 31, 2008, is incorporated by
    reference herein.10
.48*

Description of Fiscal Year 2009 Long-Term Incentive Awards to
    the Companys Named Executive Officers granted on
    October 2, 2008, filed on the Companys Current Report
    on
    Form 8-K
    dated October 8, 2008, is incorporated by reference herein.10
.49*

Form of Fiscal Year 2009 Stock Appreciation Rights Agreement,
    filed as an exhibit to the Companys Current Report on
    Form 8-K
    dated October 8, 2008, is incorporated by reference herein.10
.50*

Form of Fiscal Year 2009 Phantom Shares Agreement, filed as an
    exhibit to the Companys Current Report on
    Form 8-K
    dated October 8, 2008, is incorporated by reference herein.12
.1

Computation of Ratio of Earnings to Fixed Charges.21


Subsidiaries of the Registrant.23


Consent of Independent Registered Public Accounting Firm.31
.1

Certification of Jeffrey T. Mezger, President and Chief
    Executive Officer of KB Home Pursuant to Section 302
    of the
    Sarbanes-Oxley
    Act of 2002.31
.2

Certification of William R. Hollinger, Senior Vice President and
    Chief Accounting Officer of KB Home Pursuant to Section 302
    of the
    Sarbanes-Oxley
    Act of 2002.32
.1

Certification of Jeffrey T. Mezger, President and Chief
    Executive Officer of KB Home Pursuant to 18 U.S.C.
    Section 1350, as Adopted Pursuant to Section 906 of
    the
    Sarbanes-Oxley
    Act of 2002.32
.2

Certification of William R. Hollinger, Senior Vice President and
    Chief Accounting Officer of KB Home Pursuant to 18 U.S.C.
    Section 1350, as Adopted Pursuant to Section 906 of
    the
    Sarbanes-Oxley
    Act of 2002.       103




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##### Table of Contents



Financial
    Statement Schedules
   104




---



##### Table of Contents



SIGNATURES      By:
    /s/  WILLIAM
    R. HOLLINGER        Signature

Title

Date/s/  JEFFREY T. MEZGERJeffrey T. Mezger

Director, President and
    Chief Executive Officer
    (Principal Executive Officer)

January 22, 2009/s/  WILLIAM R. HOLLINGERWilliam R. Hollinger

Senior Vice President and
    Chief Accounting Officer
    (Principal Financial and Accounting Officer)

January 22, 2009/s/  STEPHEN F. BOLLENBACHStephen F. Bollenbach

Chairman of the Board and Director

January 22, 2009/s/  RONALD W. BURKLERonald W. Burkle

Director

January 22, 2009/s/  TIMOTHY W. FINCHEMTimothy W. Finchem

Director

January 22, 2009/s/  KENNETH M. JASTROW, IIKenneth M. Jastrow, II

Director

January 22, 2009/s/  ROBERT L. JOHNSONRobert L. Johnson

Director

January 22, 2009/s/  MELISSA LORAMelissa Lora

Director

January 22, 2009/s/  MICHAEL G. MCCAFFERYMichael G. McCaffery

Director

January 22, 2009/s/  LESLIE MOONVESLeslie Moonves

Director

January 22, 2009/s/  LUIS G. NOGALESLuis G. Nogales

Director

January 22, 2009  105




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##### Table of Contents



LIST OF
    EXHIBITS FILED
  SequentialExhibit



PageNumber

Description

Number2
.1

Share Purchase Agreement, dated May 22, 2007, by and
    between KB Home, Kaufman and Broad Development Group,
    International Mortgage Acceptance Corporation, Kaufman and Broad
    International, Inc. and Financière Gaillon 8 S.A.S., filed
    as an exhibit to the Companys Current Report on
    Form 8-K
    dated May 22, 2007, is incorporated by reference herein.3
.1

Restated Certificate of Incorporation, filed as an exhibit to
    the Companys Quarterly Report on Form 10-Q for the quarter
    ended February 28, 2007, is incorporated by reference
    herein.3
.2

Certificate of Designation of Series A Participating Cumulative
    Preferred Stock, dated as of January 22, 2009, filed as an
    exhibit to the Companys Current Report on Form 8-K/A
    dated January 28, 2009, is incorporated by reference herein.3
.3

By-Laws, as amended and restated on April 5, 2007, filed as an
    exhibit to the Companys Quarterly Report on Form 10-Q for
    the quarter ended February 28, 2007, is incorporated by
    reference herein.4
.1

Rights Agreement between the Company and Mellon Investor
    Services LLC, as rights agent, dated January 22, 2009,
    filed as an exhibit to the Companys Current Report on
    Form 8-K/A dated January 28, 2009, is incorporated by
    reference herein.4
.2

Rights Agreement between the Company and ChaseMellon Shareholder
    Services, L.L.C., as rights agent, dated February 4, 1999, filed
    as an exhibit to the Companys Current Report on Form 8-K
    dated February 4, 1999, is incorporated by reference herein.4
.3

First Amendment, dated as of April 29, 2005, to the Rights
    Agreement, dated as of February 4, 1999, between the Company and
    Mellon Investor Services LLC, as rights agent, filed as an
    exhibit to the Companys Quarterly Report on Form 10-Q for
    the quarter ended May 31, 2005, is incorporated by reference
    herein.4
.4

Second Amendment, dated as of January 22, 2009, to the Rights
    Agreement, dated as of February 4, 1999 and amended as of April
    29, 2005, between the Company and Mellon Investor  Services LLC,
    as rights agent, filed as an exhibit to the Companys
    Current Report on Form 8-K/A dated January 28, 2009, is
    incorporated by reference herein.4
.5

Indenture and Supplemental Indenture relating to
    53/4% Senior
    Notes due 2014 among the Company, the Guarantors and Sun
    Trust Bank, Atlanta, each dated January 28, 2004,
    filed as exhibits to the Companys Registration Statement
    No. 333-114761
    on
    Form S-4,
    are incorporated by reference herein.4
.6

Second Supplemental Indenture relating to
    63/8% Senior
    Notes due 2011 among the Company, the Guarantors and Sun
    Trust Bank, Atlanta, dated June 30, 2004, filed as an
    exhibit to the Companys registration statement
    No. 333-119228
    on
    Form S-4,
    is incorporated by reference herein.4
.7

Third Supplemental Indenture relating to the Companys
    Senior Notes by and between the Company, the Guarantors named
    therein, the Subsidiary Guarantor named therein and SunTrust
    Bank, dated as of May 1, 2006, filed as an exhibit to the
    Companys Current Report on
    Form 8-K
    dated May 3, 2006, is incorporated by reference herein.4
.8

Fourth Supplemental Indenture relating to the Companys
    Senior Notes by and between the Company, the Guarantors named
    therein and U.S. Bank National Association, dated as of
    November 9, 2006, filed as an exhibit to the Companys
    Current Report on
    Form 8-K
    dated November 13, 2006, is incorporated by reference
    herein.4
.9

Fifth Supplemental Indenture, dated August 17, 2007,
    relating to the Companys Senior Notes by and between the
    Company, the Guarantors, and the Trustee, filed as an exhibit to
    the Companys Current Report on
    Form 8-K
    dated August 22, 2007, is incorporated by reference herein.




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##### Table of Contents



SequentialExhibit



PageNumber

Description

Number4
.10

Specimen of
    53/4% Senior
    Notes due 2014, filed as an exhibit to the Companys
    Registration Statement
    No. 333-114761
    on
    Form S-4,
    is incorporated by reference herein.4
.11

Specimen of
    57/8% Senior
    Notes due 2015, filed as an exhibit to the Companys
    Current Report on
    Form 8-K
    dated December 15, 2004, is incorporated by reference
    herein.4
.12

Form of officers certificates and guarantors
    certificates establishing the terms of the
    57/8% Senior
    Notes due 2015, filed as an exhibit to the Companys
    Current Report on
    Form 8-K
    dated December 15, 2004, is incorporated by reference
    herein.4
.13

Specimen of
    61/4%
    Senior Notes due 2015, filed as an exhibit to the Companys
    Current Report on Form 8-K dated June 2, 2005, is
    incorporated by reference herein.4
.14

Form of officers certificates and guarantors
    certificates establishing the terms of the
    61/4%
    Senior Notes due 2015, filed as an exhibit to the Companys
    Current Report on Form 8-K dated June 2, 2005, is
    incorporated by reference herein.4
.15

Specimen of
    61/4%
    Senior Notes due 2015, filed as an exhibit to the Companys
    Current Report on Form 8-K dated June 27, 2005, is
    incorporated by reference herein.4
.16

Form of officers certificates and guarantors
    certificates establishing the terms of the
    61/4%
    Senior Notes due 2015, filed as an exhibit to the Companys
    Current Report on Form 8-K dated June 27, 2005, is
    incorporated by reference herein.4
.17

Specimen of
    71/4% Senior
    Notes due 2018, filed as an exhibit to the Companys
    Current Report on
    Form 8-K
    dated April 3, 2006, is incorporated by reference herein.4
.18

Form of officers certificates and guarantors
    certificates establishing the terms of the
    71/4% Senior
    Notes due 2018, filed as an exhibit to the Companys
    Current Report on
    Form 8-K
    dated April 3, 2006, is incorporated by reference herein.10
.1

Consent Order, Federal Trade Commission Docket No. C-2954,
    dated February 12, 1979, filed as an exhibit to the
    Companys Registration Statement No. 33-6471 on
    Form S-1, is incorporated by reference herein.10
.2*

Kaufman and Broad, Inc. Executive Deferred Compensation Plan,
    effective as of July 11, 1985, filed as an exhibit to the
    Companys 2007 Annual Report on
    Form 10-K,
    is incorporated by reference herein.10
.3*

Amendment to Kaufman and Broad, Inc. Executive Deferred
    Compensation Plan for amounts earned or vested on or after
    January 1, 2005, effective January 1, 2009.10
.4*

KB Home 1986 Stock Option Plan, as amended and restated on
    October 2, 2008.10
.5*

KB Home 1988 Employee Stock Plan, as amended and restated on
    October 2, 2008.10
.6*

Kaufman and Broad Home Corporation Directors Deferred
    Compensation Plan established effective as of July 27, 1989,
    filed as an exhibit to the Companys 2007 Annual Report on
    Form 10-K, is incorporated by reference herein.10
.7

Consent decree, dated July 2, 1991, relating to Federal
    Trade Commission Consent Order, filed as an exhibit to the
    Companys 2007 Annual Report on Form 10-K, is incorporated
    by reference herein.10
.8*

KB Home Performance-Based Incentive Plan for Senior Management,
    as amended and restated on October 2, 2008.10
.9*

Form of Stock Option Agreement under KB Home Performance-Based
    Incentive Plan for Senior Management, filed as an exhibit to the
    Companys 1995 Annual Report on
    Form 10-K,
    is incorporated by reference herein.10
.10*

KB Home Unit Performance Program, filed as an exhibit to the
    Companys 1996 Annual Report on Form 10-K, is
    incorporated by reference herein.10
.11*

KB Home 1998 Stock Incentive Plan, as amended and restated on
    October 2, 2008.




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##### Table of Contents



SequentialExhibit



PageNumber

Description

Number10
.12

KB Home Directors Legacy Program, as amended
    January 1, 1999, filed as an exhibit to the Companys
    1998 Annual Report on
    Form 10-K,
    is incorporated by reference herein.10
.13

Trust Agreement between Kaufman and Broad Home Corporation and
    Wachovia Bank, N.A. as Trustee, dated as of August 27,
    1999, filed as an exhibit to the Companys 1999 Annual
    Report on
    Form 10-K,
    is incorporated by reference herein.10
.14*

Amended and Restated KB Home 1999 Incentive Plan, as amended and
    restated on October 2, 2008.10
.15*

Form of Non-Qualified Stock Option Agreement under the
    Companys Amended and Restated 1999 Incentive Plan, filed
    as an exhibit to the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended May 31, 2006, is incorporated by
    reference herein.10
.16*

Form of Incentive Stock Option Agreement under the
    Companys Amended and Restated 1999 Incentive Plan, filed
    as an exhibit to the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended May 31, 2006, is incorporated by
    reference herein.10
.17*

Form of Restricted Stock Agreement under the Companys
    Amended and Restated 1999 Incentive Plan, filed as an exhibit to
    the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended May 31, 2006, is incorporated by
    reference herein.10
.18*

Form of Amended and Restated 1999 Incentive Plan Stock
    Appreciation Right Agreement, filed as an exhibit to the
    Companys Current Report on
    Form 8-K
    dated July 18, 2007, is incorporated by reference herein.10
.19*

Form of Amended and Restated 1999 Incentive Plan Phantom Share
    Agreement, filed as an exhibit to the Companys Current
    Report on
    Form 8-K
    dated July 18, 2007, is incorporated by reference herein.10
.20*

Amended and Restated Employment Agreement of Bruce Karatz, dated
    July 11, 2001, filed as an exhibit to the Companys
    Quarterly Report on Form 10-Q for the quarter ended
    August 31, 2001, is incorporated by reference herein.10
.21*

Tolling Agreement, dated as of November 12, 2006, by and
    between the Company and Bruce Karatz, filed as an exhibit to the
    Companys Current Report on
    Form 8-K
    dated November 13, 2006, is incorporated by reference
    herein.10
.22*

KB Home 2001 Stock Incentive Plan, as amended and restated on
    October 2, 2008.10
.23*

Form of Stock Option Agreement under the Companys 2001
    Stock Incentive Plan, filed as an exhibit to the Companys
    2006 Annual Report on
    Form 10-K,
    is incorporated by reference herein.10
.24*

Form of Stock Restriction Agreement under the Companys
    2001 Stock Incentive Plan, filed as an exhibit to the
    Companys 2006 Annual Report on
    Form 10-K,
    is incorporated by reference herein.10
.25*

KB Home Nonqualified Deferred Compensation Plan with respect to
    deferrals prior to January 1, 2005, effective March 1,
    2001, filed as an exhibit to the Companys 2001 Annual
    Report on
    Form 10-K,
    is incorporated by reference herein.10
.26*

KB Home Nonqualified Deferred Compensation Plan with respect to
    deferrals on and after January 1, 2005, effective
    January 1, 2009.10
.27*

KB Home Change in Control Severance Plan, as amended and
    restated effective January 1, 2009.10
.28*

KB Home Death Benefit Only Plan, filed as an exhibit to the
    Companys 2001 Annual Report on Form 10-K, is incorporated
    by reference herein.10
.29*

Amendment No. 1 to the KB Home Death Benefit Only Plan,
    effective as of January 1, 2009.10
.30*

KB Home Retirement Plan, as amended and restated effective
    January 1, 2009.10
.31

KB Home Non-Employee Directors Stock Plan, as amended and
    restated effective January 1, 2009.




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##### Table of Contents



SequentialExhibit



PageNumber

Description

Number10
.32

Revolving Loan Agreement, dated as of November 22, 2005,
    filed as an exhibit to the Companys Current Report on
    Form 8-K
    dated November 23, 2005, is incorporated by reference
    herein.10
.33

First Amendment, dated as of October 10, 2006, to the
    Revolving Loan Agreement dated as of November 22, 2005
    among the Company, the lenders party thereto and Bank of
    America, N.A., filed as an exhibit to the Companys Current
    Report on
    Form 8-K
    dated October 19, 2006, is incorporated by reference herein.10
.34

Second Amendment to the Revolving Loan Agreement dated as of
    November 22, 2005 among KB Home, the lenders party thereto,
    and Bank of America, N.A., as administrative agent, filed as an
    exhibit to the Companys Current Report on
    Form 8-K
    dated December 12, 2006, is incorporated by reference
    herein.10
.35

Third Amendment Agreement, dated August 17, 2007, to
    Revolving Loan Agreement, dated as of November 22, 2005,
    between the Company, as Borrower, the banks party thereto, and
    Bank of America, N.A., as Administrative Agent, filed as an
    exhibit to the Companys Current Report on
    Form 8-K
    dated August 22, 2007, is incorporated by reference herein.10
.36

Fourth Amendment Agreement, dated January 25, 2008, to
    Revolving Loan Agreement, dated as of November 22, 2005,
    between the Company, as Borrower, the banks party thereto, and
    Bank of America, N.A., as Administrative Agent, filed as an
    exhibit to the Companys Current Report on
    Form 8-K
    dated January 28, 2008, is incorporated by reference herein.10
.37

Fifth Amendment, dated August 28, 2008, to Revolving Loan
    Agreement, dated as of November 22, 2005, among the
    Company, as Borrower, the banks party thereto, and Bank of
    America, N.A., as Administrative Agent, filed as an exhibit to
    the Companys Current Report on
    Form 8-K
    dated August 29, 2008, is incorporated by reference herein.10
.38*

Employment Agreement of Jeffrey T. Mezger, dated
    February 28, 2007, filed as an exhibit to the
    Companys Current Report on
    Form 8-K
    dated March 6, 2007, is incorporated by reference herein.10
.39*

Amendment to the Employment Agreement of Jeffrey T. Mezger,
    dated December 24, 2008.10
.40*

Amended and Restated 1999 Incentive Plan Performance Stock
    Agreement between the Company and Jeffrey T. Mezger, filed
    as an exhibit to the Companys Current Report on Form 8-K
    dated July 18, 2007, is incorporated by reference herein.10
.41*

Form of Stock Option Agreement under the Employment Agreement
    between the Company and Jeffrey T. Mezger dated as of
    February 28, 2007, filed as an exhibit to the
    Companys Current Report on
    Form 8-K
    dated July 18, 2007, is incorporated by reference herein.10
.42*

Form of Stock Option Agreement under the Amended and Restated
    1999 Incentive Plan for stock option grant to Jeffrey T.
    Mezger, filed as an exhibit to the Companys Quarterly
    Report on Form 10-Q for the quarter ended August 31,
    2007, is incorporated by reference herein.10
.43*

Form of Phantom Share Agreement for Non-Senior Management, filed
    as an exhibit to the Companys Current Report on
    Form 8-K
    dated July 18, 2007, is incorporated by reference herein.10
.44*

Form of Over Cap Phantom Share Agreement, filed as an exhibit to
    the Companys Current Report on
    Form 8-K
    dated July 18, 2007, is incorporated by reference herein.10
.45*

Description of fiscal year 2007 bonus arrangements with the
    Companys Named Executive Officers and description of
    fiscal year 2008 annual incentive compensation arrangements with
    executive officers, each determined on January 22, 2008,
    filed on the Companys Current Report on
    Form 8-K
    dated January 25, 2008, is incorporated by reference
    herein.




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##### Table of Contents



SequentialExhibit



PageNumber

Description

Number10
.46*

Policy Regarding Stockholder Approval of Certain Severance
    Payments, adopted July 10, 2008, filed as an exhibit to the
    Companys Current Report on Form 8-K dated
    July 15, 2008, is incorporated by reference herein.10
.47*

KB Home Executive Severance Plan, filed as an exhibit to the
    Companys Quarterly Report on
    Form 10-Q
    for the quarter ended August 31, 2008, is incorporated by
    reference herein.10
.48*

Description of Fiscal Year 2009 Long-Term Incentive Awards to
    the Companys Named Executive Officers granted on
    October 2, 2008, filed on the Companys Current Report
    on
    Form 8-K
    dated October 8, 2008, is incorporated by reference herein.10
.49*

Form of Fiscal Year 2009 Stock Appreciation Rights Agreement,
    filed as an exhibit to the Companys Current Report on
    Form 8-K
    dated October 8, 2008, is incorporated by reference herein.10
.50*

Form of Fiscal Year 2009 Phantom Shares Agreement, filed as an
    exhibit to the Companys Current Report on
    Form 8-K
    dated October 8, 2008, is incorporated by reference herein.12
.1

Computation of Ratio of Earnings to Fixed Charges.21


Subsidiaries of the Registrant.23


Consent of Independent Registered Public Accounting Firm.31
.1

Certification of Jeffrey T. Mezger, President and Chief
    Executive Officer of KB Home Pursuant to Section 302
    of the
    Sarbanes-Oxley
    Act of 2002.31
.2

Certification of William R. Hollinger, Senior Vice President and
    Chief Accounting Officer of KB Home Pursuant to Section 302
    of the
    Sarbanes-Oxley
    Act of 2002.32
.1

Certification of Jeffrey T. Mezger, President and Chief
    Executive Officer of KB Home Pursuant to 18 U.S.C.
    Section 1350, as Adopted Pursuant to Section 906 of
    the
    Sarbanes-Oxley
    Act of 2002.32
.2

Certification of William R. Hollinger, Senior Vice President and
    Chief Accounting Officer of KB Home Pursuant to 18 U.S.C.
    Section 1350, as Adopted Pursuant to Section 906 of
    the
    Sarbanes-Oxley
    Act of 2002.       
    Document filed with this
    Form 10-K.