##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
 For the quarterly period ended August 31, 2009.
 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
  Delaware
(State of incorporation)
    
    95-3666267
(IRS employer identification number)
 
   þ o
  o o
 12b-2
 Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ




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##### 



KB HOME
FORM 10-Q
INDEX
 PageNumberPART I. FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Statements of Operations   
Nine Months and Three Months Ended August 31, 2009 and 2008
    
    
    3Consolidated Balance Sheets   
August 31, 2009 and November 30, 2008
    
    
    4Consolidated Statements of Cash Flows   
Nine Months Ended August 31, 2009 and 2008
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    33Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    57Item 4. Controls and Procedures
    
    
    57PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    58Item 1A. Risk Factors
    
    
    58Item 6. Exhibits
    
    
    60SIGNATURES
    
    
    61INDEX OF EXHIBITS
    
    
    62Exhibit 10.52Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 KB HOME
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Nine Months Ended August 31,
    
    
    Three Months Ended August 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Total revenues
    
    $
    1,150,282
    
    
    $
    2,114,899
    
    
    $
    458,451
    
    
    $
    681,610Homebuilding:Revenues
    
    $
    1,145,014
    
    
    $
    2,107,517
    
    
    $
    456,348
    
    
    $
    679,115Construction and land costs
    
    
    (1,082,343
    )
    
    
    (2,322,213
    )
    
    
    (414,575
    )
    
    
    (653,732
    )Selling, general and administrative expenses
    
    
    (217,647
    )
    
    
    (379,914
    )
    
    
    (83,878
    )
    
    
    (133,211
    )Goodwill impairment
    
    
    
    
    
    
    (24,570
    )
    
    
    
    
    
    
    Operating loss
    
    
    (154,976
    )
    
    
    (619,180
    )
    
    
    (42,105
    )
    
    
    (107,828
    )Interest income
    
    
    6,410
    
    
    
    29,240
    
    
    
    1,131
    
    
    
    6,686Loss on early redemption/interest expense, net
of amounts capitalized
    
    
    (35,502
    )
    
    
    (10,388
    )
    
    
    (15,379
    )
    
    
    (10,388
    )Equity in loss of unconsolidated joint ventures
    
    
    (47,811
    )
    
    
    (91,564
    )
    
    
    (26,315
    )
    
    
    (46,203
    )Homebuilding pretax loss
    
    
    (231,879
    )
    
    
    (691,892
    )
    
    
    (82,668
    )
    
    
    (157,733
    )Financial services:Revenues
    
    
    5,268
    
    
    
    7,382
    
    
    
    2,103
    
    
    
    2,495Expenses
    
    
    (2,569
    )
    
    
    (3,317
    )
    
    
    (915
    )
    
    
    (1,085
    )Equity in income of unconsolidated joint
venture
    
    
    8,977
    
    
    
    12,880
    
    
    
    4,432
    
    
    
    4,578Financial services pretax income
    
    
    11,676
    
    
    
    16,945
    
    
    
    5,620
    
    
    
    5,988Total pretax loss
    
    
    (220,203
    )
    
    
    (674,947
    )
    
    
    (77,048
    )
    
    
    (151,745
    )Income tax benefit
    
    
    17,700
    
    
    
    6,100
    
    
    
    11,000
    
    
    
    7,000Net loss
    
    $
    (202,503
    )
    
    $
    (668,847
    )
    
    $
    (66,048
    )
    
    $
    (144,745
    )Basic and diluted loss per share
    
    $
    (2.64
    )
    
    $
    (8.63
    )
    
    $
    (.87
    )
    
    $
    (1.87
    )Basic and diluted average shares outstanding
    
    
    76,656
    
    
    
    77,464
    
    
    
    76,329
    
    
    
    77,565Cash dividends declared per common share
    
    $
    .1875
    
    
    $
    .75
    
    
    $
    .0625
    
    
    $
    
   3




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##### Table of Contents



KB HOME
 
 CONSOLIDATED BALANCE SHEETS
 August 31,
    
    
    November 30,2009
    
    
    2008AssetsHomebuilding:Cash and cash equivalents
    
    $
    953,510
    
    
    $
    1,135,399Restricted cash
    
    
    104,180
    
    
    
    115,404Receivables
    
    
    137,836
    
    
    
    357,719Inventories
    
    
    1,911,317
    
    
    
    2,106,716Investments in unconsolidated joint ventures
    
    
    172,147
    
    
    
    177,649Other assets
    
    
    87,814
    
    
    
    99,2613,366,804
    
    
    
    3,992,148Financial services
    
    
    26,480
    
    
    
    52,152Total assets
    
    $
    3,393,284
    
    
    $
    4,044,300Liabilities and stockholders equityHomebuilding:Accounts payable
    
    $
    427,463
    
    
    $
    541,294Accrued expenses and other liabilities
    
    
    528,683
    
    
    
    721,397Mortgages and notes payable
    
    
    1,812,839
    
    
    
    1,941,5372,768,985
    
    
    
    3,204,228Financial services
    
    
    10,787
    
    
    
    9,467Common stock
    
    
    115,120
    
    
    
    115,120Paid-in capital
    
    
    863,562
    
    
    
    865,123Retained earnings
    
    
    710,526
    
    
    
    927,324Accumulated other comprehensive loss
    
    
    (17,402
    )
    
    
    (17,402
    )Grantor stock ownership trust, at cost
    
    
    (127,444
    )
    
    
    (129,326
    )Treasury stock, at cost
    
    
    (930,850
    )
    
    
    (930,234
    )Total stockholders equity
    
    
    613,512
    
    
    
    830,605Total liabilities and stockholders equity
    
    $
    3,393,284
    
    
    $
    4,044,300
   4




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##### Table of Contents



KB HOME
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Nine Months Ended August 31,2009
    
    
    2008Cash flows from operating activities:Net loss
    
    $
    (202,503
    )
    
    $
    (668,847
    )Adjustments to reconcile net loss to net cash provided by
operating activities:Equity in loss of unconsolidated joint ventures
    
    
    38,834
    
    
    
    78,684Distributions of earnings from unconsolidated joint ventures
    
    
    7,662
    
    
    
    9,125Amortization of discounts and issuance costs
    
    
    1,111
    
    
    
    2,942Depreciation and amortization
    
    
    4,243
    
    
    
    7,542Loss on early redemption of debt
    
    
    976
    
    
    
    10,388Tax benefits from stock-based compensation
    
    
    4,093
    
    
    
    2,097Stock-based compensation expense
    
    
    2,218
    
    
    
    3,830Inventory impairments and land option contract abandonments
    
    
    91,469
    
    
    
    401,073Goodwill impairment
    
    
    
    
    
    
    24,570Change in assets and liabilities:Receivables
    
    
    236,305
    
    
    
    109,032Inventories
    
    
    170,070
    
    
    
    230,307Accounts payable, accrued expenses and other liabilities
    
    
    (249,674
    )
    
    
    (196,540
    )Other, net
    
    
    8,413
    
    
    
    16,040Net cash provided by operating activities
    
    
    113,217
    
    
    
    30,243Cash flows from investing activities:Investments in unconsolidated joint ventures
    
    
    (19,971
    )
    
    
    (61,464
    )Sales (purchases) of property and equipment, net
    
    
    (1,245
    )
    
    
    6,124Net cash used by investing activities
    
    
    (21,216
    )
    
    
    (55,340
    )Cash flows from financing activities:Change in restricted cash
    
    
    11,224
    
    
    
    Proceeds from issuance of senior notes
    
    
    259,737
    
    
    
    Payment of senior notes issuance costs
    
    
    (4,294
    )
    
    
    Repayment of senior and senior subordinated notes
    
    
    (453,105
    )
    
    
    (305,814
    )Payments on mortgages, land contracts and other loans
    
    
    (78,983
    )
    
    
    (3,066
    )Issuance of common stock under employee stock plans
    
    
    2,196
    
    
    
    5,111Payments of cash dividends
    
    
    (14,295
    )
    
    
    (58,102
    )Repurchases of common stock
    
    
    (616
    )
    
    
    (557
    )Net cash used by financing activities
    
    
    (278,136
    )
    
    
    (362,428
    )Net decrease in cash and cash equivalents
    
    
    (186,135
    )
    
    
    (387,525
    )Cash and cash equivalents at beginning of period
    
    
    1,141,518
    
    
    
    1,343,742Cash and cash equivalents at end of period
    
    $
    955,383
    
    
    $
    956,217
   5




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##### Table of Contents



KB HOME
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1.
    
    Basis of Presentation and Significant Accounting Policies
   Use of Estimates
  Loss per share
  Comprehensive loss
  Reclassifications
   6




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##### Table of Contents



KB HOME
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 2.
    
    Stock-Based Compensation
  Stock Options
  WeightedAverage ExerciseOptions
    
    
    PriceOptions outstanding at beginning of period
    
    
    7,847,402
    
    
    $
    30.11Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Cancelled
    
    
    (3,535,110
    )
    
    
    28.68Options outstanding at end of period
    
    
    4,312,292
    
    
    $
    31.28Options exercisable at end of period
    
    
    4,003,926
    
    
    $
    31.09
   Other Stock-Based Awards
   7




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##### Table of Contents



KB HOME
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 3.
    
    Segment Information
           Nine Months Ended August 31,
    
    
    Three Months Ended August 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues:West Coast
    
    $
    495,249
    
    
    $
    700,301
    
    
    $
    205,071
    
    
    $
    259,362Southwest
    
    
    149,214
    
    
    
    459,672
    
    
    
    52,768
    
    
    
    95,471Central
    
    
    277,444
    
    
    
    442,650
    
    
    
    116,689
    
    
    
    142,175Southeast
    
    
    223,107
    
    
    
    504,894
    
    
    
    81,820
    
    
    
    182,107Total homebuilding revenues
    
    
    1,145,014
    
    
    
    2,107,517
    
    
    
    456,348
    
    
    
    679,115Financial services
    
    
    5,268
    
    
    
    7,382
    
    
    
    2,103
    
    
    
    2,495Total revenues
    
    $
    1,150,282
    
    
    $
    2,114,899
    
    
    $
    458,451
    
    
    $
    681,610
 
  8




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##### Table of Contents



KB HOME
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 3.
    
    Segment Information (continued)
 Nine Months Ended August 31,
    
    
    Three Months Ended August 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Pretax income (loss):West Coast
    
    $
    (49,573
    )
    
    $
    (191,455
    )
    
    $
    2,848
    
    
    $
    (18,020
    )Southwest
    
    
    (31,113
    )
    
    
    (186,634
    )
    
    
    (5,167
    )
    
    
    (68,553
    )Central
    
    
    (27,123
    )
    
    
    (48,850
    )
    
    
    (16,610
    )
    
    
    (7,070
    )Southeast
    
    
    (60,331
    )
    
    
    (185,783
    )
    
    
    (30,690
    )
    
    
    (40,891
    )Corporate and other (a)
    
    
    (63,739
    )
    
    
    (79,170
    )
    
    
    (33,049
    )
    
    
    (23,199
    )Total homebuilding pretax loss
    
    
    (231,879
    )
    
    
    (691,892
    )
    
    
    (82,668
    )
    
    
    (157,733
    )Financial services
    
    
    11,676
    
    
    
    16,945
    
    
    
    5,620
    
    
    
    5,988Total pretax loss
    
    $
    (220,203
    )
    
    $
    (674,947
    )
    
    $
    (77,048
    )
    
    $
    (151,745
    )Equity in income (loss)
of unconsolidated
joint ventures:West Coast
    
    $
    (7,852
    )
    
    $
    (17,346
    )
    
    $
    188
    
    
    $
    (6,540
    )Southwest
    
    
    (13,346
    )
    
    
    (24,330
    )
    
    
    (3,404
    )
    
    
    (18,314
    )Central
    
    
    506
    
    
    
    (4,519
    )
    
    
    
    
    
    
    75Southeast
    
    
    (27,119
    )
    
    
    (45,369
    )
    
    
    (23,099
    )
    
    
    (21,424
    )Total
    
    $
    (47,811
    )
    
    $
    (91,564
    )
    
    $
    (26,315
    )
    
    $
    (46,203
    )Inventory impairments:West Coast
    
    $
    16,182
    
    
    $
    134,776
    
    
    $
    7,779
    
    
    $
    1,807Southwest
    
    
    13,267
    
    
    
    140,181
    
    
    
    
    
    
    
    37,318Central
    
    
    16,286
    
    
    
    20,539
    
    
    
    14,669
    
    
    
    Southeast
    
    
    7,193
    
    
    
    77,900
    
    
    
    333
    
    
    
    Total
    
    $
    52,928
    
    
    $
    373,396
    
    
    $
    22,781
    
    
    $
    39,125Inventory abandonments:West Coast
    
    $
    27,679
    
    
    $
    9,186
    
    
    $
    
    
    
    $
    Southwest
    
    
    
    
    
    
    187
    
    
    
    
    
    
    
    Central
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Southeast
    
    
    10,862
    
    
    
    18,304
    
    
    
    1,708
    
    
    
    Total
    
    $
    38,541
    
    
    $
    27,677
    
    
    $
    1,708
    
    
    $
    Joint venture impairments:West Coast
    
    $
    7,190
    
    
    $
    13,757
    
    
    $
    
    
    
    $
    5,651Southwest
    
    
    5,426
    
    
    
    21,311
    
    
    
    
    
    
    
    16,367Central
    
    
    
    
    
    
    2,629
    
    
    
    
    
    
    
    Southeast
    
    
    25,369
    
    
    
    43,934
    
    
    
    23,183
    
    
    
    21,099Total
    
    $
    37,985
    
    
    $
    81,631
    
    
    $
    23,183
    
    
    $
    43,117
 (a)
    
    Corporate and other includes corporate general and administrative expenses. 
  9




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##### Table of Contents



KB HOME
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 3.
    
    Segment Information (continued)
 August 31,
    
    
    November 30,2009
    
    
    2008Assets:West Coast
    
    $
    998,038
    
    
    $
    1,086,503Southwest
    
    
    436,327
    
    
    
    497,034Central
    
    
    405,488
    
    
    
    443,168Southeast
    
    
    413,996
    
    
    
    453,771Corporate and other
    
    
    1,112,955
    
    
    
    1,511,672Total homebuilding assets
    
    
    3,366,804
    
    
    
    3,992,148Financial services
    
    
    26,480
    
    
    
    52,152Total assets
    
    $
    3,393,284
    
    
    $
    4,044,300Investments in unconsolidated joint ventures:West Coast
    
    $
    55,761
    
    
    $
    55,856Southwest
    
    
    108,871
    
    
    
    113,564Central
    
    
    
    
    
    
    3,339Southeast
    
    
    7,515
    
    
    
    4,890Total
    
    $
    172,147
    
    
    $
    177,649
 4.
    
    Financial Services  Nine Months Ended August 31,
    
    
    Three Months Ended August 31,2009
    
    
    2008
    
    
    2009
    
    
    2008RevenuesInterest income
    
    $
    29
    
    
    $
    155
    
    
    $
    1
    
    
    $
    50Title services
    
    
    740
    
    
    
    1,557
    
    
    
    292
    
    
    
    574Insurance commissions
    
    
    4,499
    
    
    
    5,670
    
    
    
    1,810
    
    
    
    1,871Total
    
    
    5,268
    
    
    
    7,382
    
    
    
    2,103
    
    
    
    2,495ExpensesGeneral and administrative
    
    
    (2,569
    )
    
    
    (3,317
    )
    
    
    (915
    )
    
    
    (1,085
    )Operating income
    
    
    2,699
    
    
    
    4,065
    
    
    
    1,188
    
    
    
    1,410Equity in income of unconsolidated
joint venture
    
    
    8,977
    
    
    
    12,880
    
    
    
    4,432
    
    
    
    4,578Pretax income
    
    $
    11,676
    
    
    $
    16,945
    
    
    $
    5,620
    
    
    $
    5,988
  10




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##### Table of Contents



KB HOME
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 4.
    
    Financial Services (continued)
 August 31,
    
    
    November 30,2009
    
    
    2008AssetsCash and cash equivalents
    
    $
    1,873
    
    
    $
    6,119Receivables
    
    
    851
    
    
    
    1,240Investment in unconsolidated joint venture
    
    
    23,710
    
    
    
    44,733Other assets
    
    
    46
    
    
    
    60Total assets
    
    $
    26,480
    
    
    $
    52,152LiabilitiesAccounts payable and accrued expenses
    
    $
    10,787
    
    
    $
    9,467Total liabilities
    
    $
    10,787
    
    
    $
    9,467
 5.
    
    Inventories
  August 31,
    
    
    November 30,2009
    
    
    2008Homes, lots and improvements in production
    
    $
    1,476,630
    
    
    $
    1,649,838Land under development
    
    
    434,687
    
    
    
    456,878Total
    
    $
    1,911,317
    
    
    $
    2,106,716
  Nine Months Ended August 31,
    
    
    Three Months Ended August 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Capitalized interest at beginning of period
    
    $
    361,619
    
    
    $
    348,084
    
    
    $
    355,401
    
    
    $
    370,091Interest incurred (a)
    
    
    88,168
    
    
    
    123,029
    
    
    
    30,891
    
    
    
    46,124Loss on early redemption/interest expensed
    
    
    (35,502
    )
    
    
    (10,388
    )
    
    
    (15,379
    )
    
    
    (10,388
    )Interest amortized
    
    
    (78,832
    )
    
    
    (86,258
    )
    
    
    (35,460
    )
    
    
    (31,360
    )Capitalized interest at end of period (b)
    
    $
    335,453
    
    
    $
    374,467
    
    
    $
    335,453
    
    
    $
    374,467
 (a)
    
    Amounts include loss on early redemption of debt of $1.0 million for the three months
and nine months ended August 31, 2009 and $10.4 million for the three months and nine
months ended August 31, 2008.(b)
    
    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 generally not allocated to specific
components of inventory.  11




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##### Table of Contents



KB HOME
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 6.
    
    Inventory Impairments and Abandonments
        12




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##### Table of Contents



KB HOME
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 7.
    
    Fair Value Disclosures
  Level 1
    
    Fair value determined based on quoted prices in active markets for identical assets or
liabilities.
 Level 2
    
    Fair value determined using significant observable inputs, such as quoted prices for
similar assets or liabilities or quoted prices for identical or similar assets or
liabilities in markets that are not active, inputs other than quoted prices that are
observable for the asset or liability, or inputs that are derived principally from or
corroborated by observable market data, by correlation or other means.
 Level 3
    
    Fair value determined using significant unobservable inputs, such as pricing models,
discounted cash flows, or similar techniques.
  Fair Value Measurements UsingQuoted
    
    
    SignificantPrices in
    
    
    Other
    
    
    SignificantNine Months
    
    
    Active
    
    
    Observable
    
    
    UnobservableEnded
    
    
    Markets
    
    
    Inputs
    
    
    Inputs
    
    
    Total GainsDescription
    
    August 31, 2009 (a)
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    (Losses)Long-lived assets
held and used
    
    $
    60,786
    
    
    $
    
    
    
    $
    12,236
    
    
    $
    48,550
    
    
    $
    (52,928
    )
 (a)
    
    Amounts represent the aggregate fair values for communities where the Company recognized
noncash inventory impairment charges during the period, as of the date that the fair value
measurements were made. The carrying value for these communities may have subsequently
increased or decreased from the fair value reflected due to activity that has occurred since
the measurement date.   
  13




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##### Table of Contents



KB HOME
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 7.
    
    Fair Value Disclosures (continued)
  August 31, 2009Carrying
    
    
    EstimatedValue
    
    
    Fair ValueFinancial Liabilities:Senior notes due 2011 at 6 3/8%
    
    $
    99,772
    
    
    $
    100,625Senior notes due 2014 at 5 3/4%
    
    
    249,325
    
    
    
    225,000Senior notes due 2015 at 5 7/8%
    
    
    298,828
    
    
    
    271,500Senior notes due 2015 at 6 1/4%
    
    
    449,686
    
    
    
    409,500Senior notes due 2017 at 9.1%
    
    
    259,774
    
    
    
    270,300Senior notes due 2018 at 7 1/4%
    
    
    298,762
    
    
    
    273,000
   8.
    
    Consolidation of Variable Interest Entities
      14




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##### Table of Contents



KB HOME
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 8.
    
    Consolidation of Variable Interest Entities (continued)
    9.
    
    Investments in Unconsolidated Joint Ventures
     15




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##### Table of Contents



KB HOME
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 9.
    
    Investments in Unconsolidated Joint Ventures (continued)
   Nine Months Ended August 31,
    
    
    Three Months Ended August 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues
    
    $
    47,810
    
    
    $
    85,232
    
    
    $
    13,603
    
    
    $
    29,947Construction and land costs
    
    
    (100,911
    )
    
    
    (191,910
    )
    
    
    (50,540
    )
    
    
    (41,613
    )Other expenses, net
    
    
    (39,216
    )
    
    
    (38,918
    )
    
    
    (16,123
    )
    
    
    (16,377
    )Loss
    
    $
    (92,317
    )
    
    $
    (145,596
    )
    
    $
    (53,060
    )
    
    $
    (28,043
    )
   August 31,
    
    
    November 30,2009
    
    
    2008AssetsCash
    
    $
    9,813
    
    
    $
    29,194Receivables
    
    
    143,115
    
    
    
    143,926Inventories
    
    
    784,758
    
    
    
    1,029,306Other assets
    
    
    58,388
    
    
    
    55,289Total assets
    
    $
    996,074
    
    
    $
    1,257,715Liabilities and equityAccounts payable and other liabilities
    
    $
    103,844
    
    
    $
    85,064Mortgages and notes payable
    
    
    561,519
    
    
    
    871,279Equity
    
    
    330,711
    
    
    
    301,372Total liabilities and equity
    
    $
    996,074
    
    
    $
    1,257,715
 
  16




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KB HOME
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 9.
    
    Investments in Unconsolidated Joint Ventures (continued)
  August 31,
    
    
    November 30,2009
    
    
    2008Number of investments in unconsolidated joint ventures:With recourse debt (a)
    
    
    
    
    
    
    1With limited recourse debt (b)
    
    
    3
    
    
    
    4With non-recourse debt (c)
    
    
    5
    
    
    
    10Other (d)
    
    
    8
    
    
    
    10Total
    
    
    16
    
    
    
    25Investments in unconsolidated joint ventures:With recourse debt
    
    $
    
    
    
    $
    3,339With limited recourse debt
    
    
    3,163
    
    
    
    1,360With non-recourse debt
    
    
    19,056
    
    
    
    24,590Other
    
    
    149,928
    
    
    
    148,360Total
    
    $
    172,147
    
    
    $
    177,649Outstanding debt of unconsolidated joint ventures:With recourse debt
    
    $
    
    
    
    $
    3,249With limited recourse debt
    
    
    22,346
    
    
    
    112,700With non-recourse debt
    
    
    166,224
    
    
    
    381,393Other
    
    
    372,949
    
    
    
    373,937Total (e)
    
    $
    561,519
    
    
    $
    871,279
 (a)
    
    This category consisted of an unconsolidated joint venture as to which the Company
entered into a several guaranty with respect to the repayment of a portion of the
unconsolidated joint ventures outstanding debt. This unconsolidated joint venture was
dissolved during the quarter ended May 31, 2009.(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
(which collateral includes any letters of credit) underlying such unconsolidated joint
ventures respective outstanding secured debt.(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.
This guaranty, 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. 
  17




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KB HOME
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 9.
    
    Investments in Unconsolidated Joint Ventures (continued)
  (e)
    
    The Total amounts represent the aggregate outstanding debt of the unconsolidated
joint ventures in which the Company participates. These amounts do not represent the
Companys potential responsibility for such debt, if any. In most cases, 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.      18




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KB HOME
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 9.
    
    Investments in Unconsolidated Joint Ventures (continued)
       19




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KB HOME
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 10.
    
    Mortgages and Notes Payable
  August 31,
    
    
    November 30,2009
    
    
    2008Mortgages and land contracts due to land sellers and other loans
    
    $
    156,692
    
    
    $
    96,368Senior subordinated notes due December 15, 2008 at 8 5/8%
    
    
    
    
    
    
    200,000Senior notes due 2011 at 6 3/8%
    
    
    99,772
    
    
    
    348,908Senior notes due 2014 at 5 3/4%
    
    
    249,325
    
    
    
    249,227Senior notes due 2015 at 5 7/8%
    
    
    298,828
    
    
    
    298,692Senior notes due 2015 at 6 1/4%
    
    
    449,686
    
    
    
    449,653Senior notes due 2017 at 9.1%
    
    
    259,774
    
    
    
    Senior notes due 2018 at 7 1/4%
    
    
    298,762
    
    
    
    298,689Total
    
    $
    1,812,839
    
    
    $
    1,941,537
      20




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##### Table of Contents



KB HOME
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 10.
    
    Mortgages and Notes Payable (continued)
  11.
    
    Commitments and Contingencies
   Nine Months Ended August 31,
    
    
    Three Months Ended August 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Balance at beginning of period
    
    $
    145,369
    
    
    $
    151,525
    
    
    $
    137,690
    
    
    $
    146,050Warranties issued
    
    
    12,380
    
    
    
    16,952
    
    
    
    8,154
    
    
    
    6,183Payments and adjustments
    
    
    (17,945
    )
    
    
    (22,645
    )
    
    
    (6,040
    )
    
    
    (6,401
    )Balance at end of period
    
    $
    139,804
    
    
    $
    145,832
    
    
    $
    139,804
    
    
    $
    145,832
    21




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KB HOME
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 11.
    
    Commitments and Contingencies (continued)
       12.
    
    Legal Matters
 ERISA Litigation
   22




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KB HOME
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 12.
    
    Legal Matters (continued)
 Bagley et al., v. KB Home,
et al.
  Other Matters
   13.
    
    Stockholders Equity
   23




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KB HOME
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 13.
    
    Stockholders Equity (continued)
      14.
    
    Recent Accounting Pronouncements
 In December 2007, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards No. 141 (revised 2007), Business Combinations
(SFAS No. 141(R)).
  24




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KB HOME
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 14.
    
    Recent Accounting Pronouncements (continued)
        25




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##### Table of Contents



KB HOME
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 14.
    
    Recent Accounting Pronouncements (continued)
  15.
    
    Income Taxes
      26




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##### Table of Contents



KB HOME
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 16.
    
    Supplemental Disclosure to Consolidated Statements of Cash Flows
  Nine Months Ended August 31,2009
    
    
    2008Summary of cash and cash equivalents:Homebuilding
    
    $
    953,510
    
    
    $
    942,451Financial services
    
    
    1,873
    
    
    
    13,766Total
    
    $
    955,383
    
    
    $
    956,217Supplemental disclosures of cash flow information:Interest paid, net of amounts capitalized
    
    $
    67,833
    
    
    $
    48,386Income taxes refunded
    
    
    (231,483
    )
    
    
    (105,102
    )Supplemental disclosure of noncash activities:Increase in inventories in connection with consolidation of
joint ventures
    
    $
    97,550
    
    
    $
    Increase in secured debt in connection with consolidation of
joint ventures
    
    
    133,051
    
    
    
    Cost of inventories acquired through seller financing
    
    
    8,964
    
    
    
    16,320Decrease in consolidated inventories not owned
    
    
    (40,374
    )
    
    
    (134,678
    )
 17.
    
    Supplemental Guarantor Information
   27




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##### Table of Contents



KB HOME
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 17.
    
    Supplemental Guarantor Information (continued)
 
 KB Home
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    ConsolidatingCorporate
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalRevenues
    
    $
    
    
    
    $
    1,012,120
    
    
    $
    138,162
    
    
    $
    
    
    
    $
    1,150,282Homebuilding:Revenues
    
    $
    
    
    
    $
    1,012,120
    
    
    $
    132,894
    
    
    $
    
    
    
    $
    1,145,014Construction and land costs
    
    
    
    
    
    
    (956,354
    )
    
    
    (125,989
    )
    
    
    
    
    
    
    (1,082,343
    )Selling, general and
administrative expenses
    
    
    (54,883
    )
    
    
    (134,632
    )
    
    
    (28,132
    )
    
    
    
    
    
    
    (217,647
    )Operating loss
    
    
    (54,883
    )
    
    
    (78,866
    )
    
    
    (21,227
    )
    
    
    
    
    
    
    (154,976
    )Interest income
    
    
    5,233
    
    
    
    572
    
    
    
    605
    
    
    
    
    
    
    
    6,410Loss on early redemption/interest expense,
net of amounts capitalized
    
    
    25,186
    
    
    
    (56,293
    )
    
    
    (4,395
    )
    
    
    
    
    
    
    (35,502
    )Equity in loss of
unconsolidated joint ventures
    
    
    
    
    
    
    (20,699
    )
    
    
    (27,112
    )
    
    
    
    
    
    
    (47,811
    )Homebuilding pretax loss
    
    
    (24,464
    )
    
    
    (155,286
    )
    
    
    (52,129
    )
    
    
    
    
    
    
    (231,879
    )Financial services pretax income
    
    
    
    
    
    
    
    
    
    
    11,676
    
    
    
    
    
    
    
    11,676Total pretax loss
    
    
    (24,464
    )
    
    
    (155,286
    )
    
    
    (40,453
    )
    
    
    
    
    
    
    (220,203
    )Income tax benefit
    
    
    2,000
    
    
    
    12,400
    
    
    
    3,300
    
    
    
    
    
    
    
    17,700Equity in net loss of subsidiaries
    
    
    (180,039
    )
    
    
    
    
    
    
    
    
    
    
    180,039
    
    
    
    Net loss
    
    $
    (202,503
    )
    
    $
    (142,886
    )
    
    $
    (37,153
    )
    
    $
    180,039
    
    
    $
    (202,503
    )
 
 KB Home
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    ConsolidatingCorporate
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalRevenues
    
    $
    
    
    
    $
    1,620,364
    
    
    $
    494,535
    
    
    $
    
    
    
    $
    2,114,899Homebuilding:Revenues
    
    $
    
    
    
    $
    1,620,364
    
    
    $
    487,153
    
    
    $
    
    
    
    $
    2,107,517Construction and land costs
    
    
    
    
    
    
    (1,781,778
    )
    
    
    (540,435
    )
    
    
    
    
    
    
    (2,322,213
    )Selling, general and
administrative expenses
    
    
    (59,467
    )
    
    
    (221,123
    )
    
    
    (99,324
    )
    
    
    
    
    
    
    (379,914
    )Goodwill impairment
    
    
    (24,570
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,570
    )Operating loss
    
    
    (84,037
    )
    
    
    (382,537
    )
    
    
    (152,606
    )
    
    
    
    
    
    
    (619,180
    )Interest income
    
    
    26,700
    
    
    
    2,231
    
    
    
    309
    
    
    
    
    
    
    
    29,240Loss on early redemption of debt
    
    
    42,542
    
    
    
    (28,368
    )
    
    
    (24,562
    )
    
    
    
    
    
    
    (10,388
    )Equity in loss of
unconsolidated joint ventures
    
    
    
    
    
    
    (6,586
    )
    
    
    (84,978
    )
    
    
    
    
    
    
    (91,564
    )Homebuilding pretax loss
    
    
    (14,795
    )
    
    
    (415,260
    )
    
    
    (261,837
    )
    
    
    
    
    
    
    (691,892
    )Financial services pretax income
    
    
    
    
    
    
    
    
    
    
    16,945
    
    
    
    
    
    
    
    16,945Total pretax loss
    
    
    (14,795
    )
    
    
    (415,260
    )
    
    
    (244,892
    )
    
    
    
    
    
    
    (674,947
    )Income tax benefit
    
    
    100
    
    
    
    3,700
    
    
    
    2,300
    
    
    
    
    
    
    
    6,100Equity in net loss of subsidiaries
    
    
    (654,152
    )
    
    
    
    
    
    
    
    
    
    
    654,152
    
    
    
    Net loss
    
    $
    (668,847
    )
    
    $
    (411,560
    )
    
    $
    (242,592
    )
    
    $
    654,152
    
    
    $
    (668,847
    )
  28




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##### Table of Contents



KB HOME
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 17.
    
    Supplemental Guarantor Information (continued)
 
 KB Home
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    ConsolidatingCorporate
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalRevenues
    
    $
    
    
    
    $
    410,438
    
    
    $
    48,013
    
    
    $
    
    
    
    $
    458,451Homebuilding:Revenues
    
    $
    
    
    
    $
    410,438
    
    
    $
    45,910
    
    
    $
    
    
    
    $
    456,348Construction and land costs
    
    
    
    
    
    
    (372,539
    )
    
    
    (42,036
    )
    
    
    
    
    
    
    (414,575
    )Selling, general and
administrative expenses
    
    
    (27,834
    )
    
    
    (49,775
    )
    
    
    (6,269
    )
    
    
    
    
    
    
    (83,878
    )Operating loss
    
    
    (27,834
    )
    
    
    (11,876
    )
    
    
    (2,395
    )
    
    
    
    
    
    
    (42,105
    )Interest income
    
    
    887
    
    
    
    155
    
    
    
    89
    
    
    
    
    
    
    
    1,131Loss on early redemption/interest expense,
net of amounts capitalized
    
    
    4,487
    
    
    
    (17,098
    )
    
    
    (2,768
    )
    
    
    
    
    
    
    (15,379
    )Equity in loss of
unconsolidated joint ventures
    
    
    
    
    
    
    (3,218
    )
    
    
    (23,097
    )
    
    
    
    
    
    
    (26,315
    )Homebuilding pretax loss
    
    
    (22,460
    )
    
    
    (32,037
    )
    
    
    (28,171
    )
    
    
    
    
    
    
    (82,668
    )Financial services pretax income
    
    
    
    
    
    
    
    
    
    
    5,620
    
    
    
    
    
    
    
    5,620Total pretax loss
    
    
    (22,460
    )
    
    
    (32,037
    )
    
    
    (22,551
    )
    
    
    
    
    
    
    (77,048
    )Income tax benefit
    
    
    3,200
    
    
    
    4,600
    
    
    
    3,200
    
    
    
    
    
    
    
    11,000Equity in net loss of subsidiaries
    
    
    (46,788
    )
    
    
    
    
    
    
    
    
    
    
    46,788
    
    
    
    Net loss
    
    $
    (66,048
    )
    
    $
    (27,437
    )
    
    $
    (19,351
    )
    
    $
    46,788
    
    
    $
    (66,048
    )
 
 KB Home
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    ConsolidatingCorporate
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalRevenues
    
    $
    
    
    
    $
    516,431
    
    
    $
    165,179
    
    
    $
    
    
    
    $
    681,610Homebuilding:Revenues
    
    $
    
    
    
    $
    516,431
    
    
    $
    162,684
    
    
    $
    
    
    
    $
    679,115Construction and land costs
    
    
    
    
    
    
    (506,871
    )
    
    
    (146,861
    )
    
    
    
    
    
    
    (653,732
    )Selling, general and
administrative expenses
    
    
    (22,035
    )
    
    
    (79,750
    )
    
    
    (31,426
    )
    
    
    
    
    
    
    (133,211
    )Operating loss
    
    
    (22,035
    )
    
    
    (70,190
    )
    
    
    (15,603
    )
    
    
    
    
    
    
    (107,828
    )Interest income
    
    
    6,234
    
    
    
    337
    
    
    
    115
    
    
    
    
    
    
    
    6,686Loss on early redemption of debt
    
    
    2,480
    
    
    
    (5,914
    )
    
    
    (6,954
    )
    
    
    
    
    
    
    (10,388
    )Equity in loss of
unconsolidated joint ventures
    
    
    
    
    
    
    (2,471
    )
    
    
    (43,732
    )
    
    
    
    
    
    
    (46,203
    )Homebuilding pretax loss
    
    
    (13,321
    )
    
    
    (78,238
    )
    
    
    (66,174
    )
    
    
    
    
    
    
    (157,733
    )Financial services pretax income
    
    
    
    
    
    
    
    
    
    
    5,988
    
    
    
    
    
    
    
    5,988Total pretax loss
    
    
    (13,321
    )
    
    
    (78,238
    )
    
    
    (60,186
    )
    
    
    
    
    
    
    (151,745
    )Income tax expense
    
    
    600
    
    
    
    3,300
    
    
    
    3,100
    
    
    
    
    
    
    
    7,000Equity in net loss of subsidiaries
    
    
    (132,024
    )
    
    
    
    
    
    
    
    
    
    
    132,024
    
    
    
    Net loss
    
    $
    (144,745
    )
    
    $
    (74,938
    )
    
    $
    (57,086
    )
    
    $
    132,024
    
    
    $
    (144,745
    )
 
  29




---



##### Table of Contents



KB HOME
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 17.
    
    Supplemental Guarantor Information (continued)
 
 KB Home
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    ConsolidatingCorporate
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalAssetsHomebuilding:Cash and cash equivalents
    
    $
    819,004
    
    
    $
    21,044
    
    
    $
    113,462
    
    
    $
    
    
    
    $
    953,510Restricted cash
    
    
    104,180
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    104,180Receivables
    
    
    3,739
    
    
    
    111,852
    
    
    
    22,245
    
    
    
    
    
    
    
    137,836Inventories
    
    
    
    
    
    
    1,751,457
    
    
    
    159,860
    
    
    
    
    
    
    
    1,911,317Investments in unconsolidated joint ventures
    
    
    
    
    
    
    168,484
    
    
    
    3,663
    
    
    
    
    
    
    
    172,147Other assets
    
    
    72,993
    
    
    
    14,573
    
    
    
    248
    
    
    
    
    
    
    
    87,814999,916
    
    
    
    2,067,410
    
    
    
    299,478
    
    
    
    
    
    
    
    3,366,804Financial services
    
    
    
    
    
    
    
    
    
    
    26,480
    
    
    
    
    
    
    
    26,480Investments in subsidiaries
    
    
    (33,168
    )
    
    
    
    
    
    
    
    
    
    
    33,168
    
    
    
    Total assets
    
    $
    966,748
    
    
    $
    2,067,410
    
    
    $
    325,958
    
    
    $
    33,168
    
    
    $
    3,393,284Liabilities and stockholders equityHomebuilding:Accounts payable, accrued expenses and
other liabilities
    
    $
    112,494
    
    
    $
    676,460
    
    
    $
    167,192
    
    
    $
    
    
    
    $
    956,146Mortgages and notes payable
    
    
    1,656,147
    
    
    
    156,692
    
    
    
    
    
    
    
    
    
    
    
    1,812,8391,768,641
    
    
    
    833,152
    
    
    
    167,192
    
    
    
    
    
    
    
    2,768,985Financial services
    
    
    
    
    
    
    
    
    
    
    10,787
    
    
    
    
    
    
    
    10,787Intercompany
    
    
    (1,415,405
    )
    
    
    1,266,105
    
    
    
    149,300
    
    
    
    
    
    
    
    Stockholders equity
    
    
    613,512
    
    
    
    (31,847
    )
    
    
    (1,321
    )
    
    
    33,168
    
    
    
    613,512Total liabilities and stockholders equity
    
    $
    966,748
    
    
    $
    2,067,410
    
    
    $
    325,958
    
    
    $
    33,168
    
    
    $
    3,393,284
 
 KB 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
  30




---



##### Table of Contents



KB HOME
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 17.
    
    Supplemental Guarantor Information (continued)
 
 KB Home
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    ConsolidatingCorporate
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalCash flows from operating activities:Net loss
    
    $
    (202,503
    )
    
    $
    (142,886
    )
    
    $
    (37,153
    )
    
    $
    180,039
    
    
    $
    (202,503
    )Adjustments to reconcile net loss to net cash provided
(used) by operating activities:Inventory impairments and land option contract
abandonments
    
    
    
    
    
    
    86,541
    
    
    
    4,928
    
    
    
    
    
    
    
    91,469Changes in assets and liabilities:Receivables
    
    
    214,861
    
    
    
    30,894
    
    
    
    (9,450
    )
    
    
    
    
    
    
    236,305Inventories
    
    
    
    
    
    
    (23,295
    )
    
    
    193,365
    
    
    
    
    
    
    
    170,070Accounts payable, accrued expenses and other liabilities
    
    
    (82,054
    )
    
    
    (50,650
    )
    
    
    (116,970
    )
    
    
    
    
    
    
    (249,674
    )Other, net
    
    
    20,959
    
    
    
    20,926
    
    
    
    25,665
    
    
    
    
    
    
    
    67,550Net cash provided (used) by operating activities
    
    
    (48,737
    )
    
    
    (78,470
    )
    
    
    60,385
    
    
    
    180,039
    
    
    
    113,217Cash flows from investing activities:Investments in unconsolidated joint ventures
    
    
    
    
    
    
    (14,811
    )
    
    
    (5,160
    )
    
    
    
    
    
    
    (19,971
    )Sales (purchases) of property and equipment, net
    
    
    (65
    )
    
    
    (1,444
    )
    
    
    264
    
    
    
    
    
    
    
    (1,245
    )Net cash used by investing activities
    
    
    (65
    )
    
    
    (16,255
    )
    
    
    (4,896
    )
    
    
    
    
    
    
    (21,216
    )Cash flows from financing activities:Change in restricted cash
    
    
    11,224
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,224Proceeds from issuance of senior notes
    
    
    259,737
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    259,737Payment of senior notes issuance costs
    
    
    (4,294
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,294
    )Repayment of senior and senior subordinated notes
    
    
    (453,105
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (453,105
    )Payments on mortgages, land contracts and other loans
    
    
    
    
    
    
    (78,983
    )
    
    
    
    
    
    
    
    
    
    
    (78,983
    )Issuance of common stock under employee stock plans
    
    
    2,196
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,196Payments of cash dividends
    
    
    (14,295
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,295
    )Repurchases of common stock
    
    
    (616
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (616
    )Intercompany
    
    
    79,902
    
    
    
    169,685
    
    
    
    (69,548
    )
    
    
    (180,039
    )
    
    
    Net cash provided (used) by financing activities
    
    
    (119,251
    )
    
    
    90,702
    
    
    
    (69,548
    )
    
    
    (180,039
    )
    
    
    (278,136
    )Net decrease in cash and cash equivalents
    
    
    (168,053
    )
    
    
    (4,023
    )
    
    
    (14,059
    )
    
    
    
    
    
    
    (186,135
    )Cash and cash equivalents at beginning of period
    
    
    987,057
    
    
    
    25,067
    
    
    
    129,394
    
    
    
    
    
    
    
    1,141,518Cash and cash equivalents at end of period
    
    $
    819,004
    
    
    $
    21,044
    
    
    $
    115,335
    
    
    $
    
    
    
    $
    955,383
  31




---



##### Table of Contents



KB HOME
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 17.
    
    Supplemental Guarantor Information (continued)
 
 KB Home
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    ConsolidatingCorporate
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalCash flows from operating activities:Net loss
    
    $
    (668,847
    )
    
    $
    (411,560
    )
    
    $
    (242,592
    )
    
    $
    654,152
    
    
    $
    (668,847
    )Adjustments to reconcile net loss to net cash provided
(used) by operating activities:Inventory impairments and land option contract
abandonments
    
    
    
    
    
    
    303,981
    
    
    
    97,092
    
    
    
    
    
    
    
    401,073Goodwill impairment
    
    
    24,570
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,570Changes in assets and liabilities:Receivables
    
    
    99,209
    
    
    
    13,663
    
    
    
    (3,840
    )
    
    
    
    
    
    
    109,032Inventories
    
    
    
    
    
    
    149,701
    
    
    
    80,606
    
    
    
    
    
    
    
    230,307Accounts payable, accrued expenses and other liabilities
    
    
    (48,130
    )
    
    
    (132,593
    )
    
    
    (15,817
    )
    
    
    
    
    
    
    (196,540
    )Other, net
    
    
    32,384
    
    
    
    12,555
    
    
    
    85,709
    
    
    
    
    
    
    
    130,648Net cash provided (used) by operating activities
    
    
    (560,814
    )
    
    
    (64,253
    )
    
    
    1,158
    
    
    
    654,152
    
    
    
    30,243Cash flows from investing activities:Investments in unconsolidated joint ventures
    
    
    
    
    
    
    (1,821
    )
    
    
    (59,643
    )
    
    
    
    
    
    
    (61,464
    )Sales (purchases) of property and equipment, net
    
    
    5,869
    
    
    
    (28
    )
    
    
    283
    
    
    
    
    
    
    
    6,124Net cash provided (used) by investing activities
    
    
    5,869
    
    
    
    (1,849
    )
    
    
    (59,360
    )
    
    
    
    
    
    
    (55,340
    )Cash flows from financing activities:Redemption of senior subordinated notes
    
    
    (305,814
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (305,814
    )Payments on mortgages, land contracts and other loans
    
    
    
    
    
    
    (3,066
    )
    
    
    
    
    
    
    
    
    
    
    (3,066
    )Issuance of common stock under employee stock plans
    
    
    5,111
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,111Payments of cash dividends
    
    
    (58,102
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (58,102
    )Repurchases of common stock
    
    
    (557
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (557
    )Intercompany
    
    
    607,099
    
    
    
    25,594
    
    
    
    21,459
    
    
    
    (654,152
    )
    
    
    Net cash provided (used) by financing activities
    
    
    247,737
    
    
    
    22,528
    
    
    
    21,459
    
    
    
    (654,152
    )
    
    
    (362,428
    )Net decrease in cash and cash equivalents
    
    
    (307,208
    )
    
    
    (43,574
    )
    
    
    (36,743
    )
    
    
    
    
    
    
    (387,525
    )Cash and cash equivalents at beginning of period
    
    
    1,104,429
    
    
    
    71,519
    
    
    
    167,794
    
    
    
    
    
    
    
    1,343,742Cash and cash equivalents at end of period
    
    $
    797,221
    
    
    $
    27,945
    
    
    $
    131,051
    
    
    $
    
    
    
    $
    956,217
 18.
    
    Subsequent Events
   32




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Results of Operations
 OVERVIEW
  Nine Months Ended August 31,
    
    
    Three Months Ended August 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues:Homebuilding
    
    $
    1,145,014
    
    
    $
    2,107,517
    
    
    $
    456,348
    
    
    $
    679,115Financial services
    
    
    5,268
    
    
    
    7,382
    
    
    
    2,103
    
    
    
    2,495Total
    
    $
    1,150,282
    
    
    $
    2,114,899
    
    
    $
    458,451
    
    
    $
    681,610Pretax loss:Homebuilding
    
    $
    (231,879
    )
    
    $
    (691,892
    )
    
    $
    (82,668
    )
    
    $
    (157,733
    )Financial services
    
    
    11,676
    
    
    
    16,945
    
    
    
    5,620
    
    
    
    5,988Total pretax loss
    
    
    (220,203
    )
    
    
    (674,947
    )
    
    
    (77,048
    )
    
    
    (151,745
    )Income tax benefit
    
    
    17,700
    
    
    
    6,100
    
    
    
    11,000
    
    
    
    7,000Net loss
    
    $
    (202,503
    )
    
    $
    (668,847
    )
    
    $
    (66,048
    )
    
    $
    (144,745
    )Basic and diluted loss per share
    
    $
    (2.64
    )
    
    $
    (8.63
    )
    
    $
    (.87
    )
    
    $
    (1.87
    )
     33




---



##### Table of Contents



The Open Series
 The Open Series
      34




---



##### Table of Contents



The Open Series
 HOMEBUILDING
   Nine Months Ended August 31,
    
    
    Three Months Ended August 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues:Housing
    
    $
    1,139,472
    
    
    $
    2,031,725
    
    
    $
    454,212
    
    
    $
    668,292Land
    
    
    5,542
    
    
    
    75,792
    
    
    
    2,136
    
    
    
    10,823Total
    
    
    1,145,014
    
    
    
    2,107,517
    
    
    
    456,348
    
    
    
    679,115Costs and expenses:Construction and land costsHousing
    
    
    1,066,882
    
    
    
    2,162,558
    
    
    
    404,006
    
    
    
    642,467Land
    
    
    15,461
    
    
    
    159,655
    
    
    
    10,569
    
    
    
    11,265Total
    
    
    1,082,343
    
    
    
    2,322,213
    
    
    
    414,575
    
    
    
    653,732Selling, general and
administrative expenses
    
    
    217,647
    
    
    
    379,914
    
    
    
    83,878
    
    
    
    133,211Goodwill impairment
    
    
    
    
    
    
    24,570
    
    
    
    
    
    
    
    Total
    
    
    1,299,990
    
    
    
    2,726,697
    
    
    
    498,453
    
    
    
    786,943Operating loss
    
    $
    (154,976
    )
    
    $
    (619,180
    )
    
    $
    (42,105
    )
    
    $
    (107,828
    )
  35




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##### Table of Contents



Nine Months Ended August 31,
    
    
    Three Months Ended August 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Homes delivered
    
    
    5,446
    
    
    
    8,526
    
    
    
    2,240
    
    
    
    2,788Average selling price
    
    $
    209,200
    
    
    $
    238,300
    
    
    $
    202,800
    
    
    $
    239,700Housing gross margin
    
    
    6.4
    %
    
    
    -6.4
    %
    
    
    11.1
    %
    
    
    3.9
    %Selling, general and
administrative expenses as a
percent of housing revenues
    
    
    19.1
    %
    
    
    18.7
    %
    
    
    18.5
    %
    
    
    19.9
    %Operating loss as a percent of
homebuilding revenues
    
    
    -13.5
    %
    
    
    -29.4
    %
    
    
    -9.2
    %
    
    
    -15.9
    %
  Three Months Ended August 31,Homes Delivered
    
    
    Net Orders
    
    
    Cancellation RatesSegment
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008West Coast
    
    
    669
    
    
    
    731
    
    
    
    591
    
    
    
    361
    
    
    
    23
    %
    
    
    48
    %Southwest
    
    
    314
    
    
    
    425
    
    
    
    355
    
    
    
    282
    
    
    
    20
    
    
    
    37Central
    
    
    783
    
    
    
    745
    
    
    
    808
    
    
    
    506
    
    
    
    28
    
    
    
    43Southeast
    
    
    474
    
    
    
    887
    
    
    
    404
    
    
    
    180
    
    
    
    32
    
    
    
    74Total
    
    
    2,240
    
    
    
    2,788
    
    
    
    2,158
    
    
    
    1,329
    
    
    
    27
    %
    
    
    51
    %Unconsolidated joint ventures
    
    
    37
    
    
    
    45
    
    
    
    17
    
    
    
    39
    
    
    
    32
    %
    
    
    57
    %
 Nine Months Ended August 31,Homes Delivered
    
    
    Net Orders
    
    
    Cancellation RatesSegment
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008West Coast
    
    
    1,589
    
    
    
    1,948
    
    
    
    1,978
    
    
    
    1,877
    
    
    
    21
    %
    
    
    37
    %Southwest
    
    
    822
    
    
    
    1,699
    
    
    
    936
    
    
    
    1,228
    
    
    
    21
    
    
    
    33Central
    
    
    1,755
    
    
    
    2,507
    
    
    
    2,478
    
    
    
    1,701
    
    
    
    25
    
    
    
    44Southeast
    
    
    1,280
    
    
    
    2,372
    
    
    
    1,503
    
    
    
    2,172
    
    
    
    28
    
    
    
    42Total
    
    
    5,446
    
    
    
    8,526
    
    
    
    6,895
    
    
    
    6,978
    
    
    
    24
    %
    
    
    40
    %Unconsolidated joint ventures
    
    
    115
    
    
    
    194
    
    
    
    90
    
    
    
    218
    
    
    
    38
    %
    
    
    38
    %
 August 31,Backlog - ValueBacklog - Homes
    
    
    (In Thousands)Segment
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008West Coast
    
    
    970
    
    
    
    1,119
    
    
    $
    293,329
    
    
    $
    391,525Southwest
    
    
    462
    
    
    
    835
    
    
    
    75,439
    
    
    
    190,279Central
    
    
    1,444
    
    
    
    1,205
    
    
    
    218,430
    
    
    
    230,154Southeast
    
    
    846
    
    
    
    1,615
    
    
    
    146,896
    
    
    
    321,321Total
    
    
    3,722
    
    
    
    4,774
    
    
    $
    734,094
    
    
    $
    1,133,279Unconsolidated joint ventures
    
    
    42
    
    
    
    233
    
    
    $
    15,456
    
    
    $
    136,918
  36




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Revenues.
    Operating Loss.
   37




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The Open Series
       38




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##### Table of Contents



Interest Income.
 Loss on Early Redemption/Interest Expense, Net of Amounts Capitalized.
  Equity in Loss of Unconsolidated Joint Ventures.
  39




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HOMEBUILDING SEGMENTS
  Nine Months Ended August 31,
    
    
    Three Months Ended August 31,2009
    
    
    2008
    
    
    2009
    
    
    2008West Coast:Revenues
    
    $
    495,249
    
    
    $
    700,301
    
    
    $
    205,071
    
    
    $
    259,362Construction and land costs
    
    
    (466,599
    )
    
    
    (794,169
    )
    
    
    (176,889
    )
    
    
    (238,564
    )Selling, general and
administrative expenses
    
    
    (55,638
    )
    
    
    (88,761
    )
    
    
    (20,709
    )
    
    
    (32,620
    )Operating income (loss)
    
    
    (26,988
    )
    
    
    (182,629
    )
    
    
    7,473
    
    
    
    (11,822
    )Other, net
    
    
    (22,585
    )
    
    
    (8,826
    )
    
    
    (4,625
    )
    
    
    (6,198
    )Pretax income (loss)
    
    $
    (49,573
    )
    
    $
    (191,455
    )
    
    $
    2,848
    
    
    $
    (18,020
    )Southwest:Revenues
    
    $
    149,214
    
    
    $
    459,672
    
    
    $
    52,768
    
    
    $
    95,471Construction and land costs
    
    
    (139,570
    )
    
    
    (566,094
    )
    
    
    (44,197
    )
    
    
    (126,402
    )Selling, general and
administrative expenses
    
    
    (23,664
    )
    
    
    (54,109
    )
    
    
    (8,409
    )
    
    
    (16,693
    )Operating income (loss)
    
    
    (14,020
    )
    
    
    (160,531
    )
    
    
    162
    
    
    
    (47,624
    )Other, net
    
    
    (17,093
    )
    
    
    (26,103
    )
    
    
    (5,329
    )
    
    
    (20,929
    )Pretax loss
    
    $
    (31,113
    )
    
    $
    (186,634
    )
    
    $
    (5,167
    )
    
    $
    (68,553
    )Central:Revenues
    
    $
    277,444
    
    
    $
    442,650
    
    
    $
    116,689
    
    
    $
    142,175Construction and land costs
    
    
    (254,716
    )
    
    
    (409,674
    )
    
    
    (114,688
    )
    
    
    (123,513
    )Selling, general and
administrative expenses
    
    
    (42,154
    )
    
    
    (72,790
    )
    
    
    (15,450
    )
    
    
    (23,465
    )Operating loss
    
    
    (19,426
    )
    
    
    (39,814
    )
    
    
    (13,449
    )
    
    
    (4,803
    )Other, net
    
    
    (7,697
    )
    
    
    (9,036
    )
    
    
    (3,161
    )
    
    
    (2,267
    )Pretax loss
    
    $
    (27,123
    )
    
    $
    (48,850
    )
    
    $
    (16,610
    )
    
    $
    (7,070
    )Southeast:Revenues
    
    $
    223,107
    
    
    $
    504,894
    
    
    $
    81,820
    
    
    $
    182,107Construction and land costs
    
    
    (214,452
    )
    
    
    (543,724
    )
    
    
    (76,138
    )
    
    
    (161,791
    )Selling, general and
administrative expenses
    
    
    (30,411
    )
    
    
    (92,159
    )
    
    
    (8,082
    )
    
    
    (34,492
    )Operating loss
    
    
    (21,756
    )
    
    
    (130,989
    )
    
    
    (2,400
    )
    
    
    (14,176
    )Other, net
    
    
    (38,575
    )
    
    
    (54,794
    )
    
    
    (28,290
    )
    
    
    (26,715
    )Pretax loss
    
    $
    (60,331
    )
    
    $
    (185,783
    )
    
    $
    (30,690
    )
    
    $
    (40,891
    )
 West Coast
   40




---



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Southwest
    41




---



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Central
     42




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Southeast
    FINANCIAL SERVICES
   43




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##### Table of Contents



Nine Months Ended August 31,
    
    
    Three Months Ended August 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues
    
    $
    5,268
    
    
    $
    7,382
    
    
    $
    2,103
    
    
    $
    2,495Expenses
    
    
    (2,569
    )
    
    
    (3,317
    )
    
    
    (915
    )
    
    
    (1,085
    )Equity in income of unconsolidated
joint venture
    
    
    8,977
    
    
    
    12,880
    
    
    
    4,432
    
    
    
    4,578Pretax income
    
    $
    11,676
    
    
    $
    16,945
    
    
    $
    5,620
    
    
    $
    5,988Total originations (a):Loans
    
    
    4,610
    
    
    
    7,010
    
    
    
    1,990
    
    
    
    2,215Principal
    
    $
    858,156
    
    
    $
    1,454,475
    
    
    $
    359,707
    
    
    $
    464,734% of homebuyers using KB Home
Mortgage
    
    
    83
    %
    
    
    79
    %
    
    
    86
    %
    
    
    80
    %Loans sold to third parties (a):Loans
    
    
    4,307
    
    
    
    8,045
    
    
    
    1,903
    
    
    
    2,277Principal
    
    $
    800,649
    
    
    $
    1,683,551
    
    
    $
    343,604
    
    
    $
    475,524
 (a)
    
    Loan originations and sales occur within KB Home Mortgage. Revenues
 Expenses
 Equity in Income of Unconsolidated Joint Venture
  INCOME TAXES
   44




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Liquidity and Capital Resources
 Overview.
  Capital Resources.
   45




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46




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August 31, 2009CovenantFinancial Covenant
    
    Requirement
    
    ActualMinimum consolidated tangible net worth
    
    $278.2 million
    
    $607.0 millionCoverage Ratio
    
    (a)
    
    (a)Leverage Ratio (b)
    
    <1.00
    
    .58Investment 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)
    
    >$0
    
    $547.4 million
 (a)
    
    Our Coverage Ratio of .76 was less than 1.00 to 1.00 as of August 31, 2009. With our
Leverage Ratio as of November 30, 2008 below 1.00 to 1.00, we maintained an Interest Reserve
Account through the 2009 third quarter to remain in compliance with the terms of the Credit
Facility. The Interest Reserve Account had a balance of $104.2 million at August 31, 2009.
With our Leverage Ratio as of August 31, 2009 below 1.00 to 1.00, we will continue to
maintain the Interest Reserve Account in the fourth quarter of 2009, but the balance is
expected to increase to $114.3 million by the end of that period, reflecting an increase in
our consolidated interest expense.(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.  November 30, 2008CovenantFinancial Covenant
    
    Requirement
    
    ActualMinimum consolidated tangible net worth
    
    $278.2 million
    
    $827.9 millionCoverage Ratio
    
    (a)
    
    (a)Leverage Ratio
    
    <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)
    
    >$0
    
    $825.0 million
 (a)
    
    Our Coverage Ratio of negative .27 was less than 1.00 to 1.00 as of November 30, 2008.
With our Leverage Ratio as of August 31, 2008 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.    47




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Consolidated Cash Flows.
 Operating Activities
   48




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Investing Activities
 Financing Activities
  Shelf Registration Statement.
 Share Repurchase Program.
  Off-Balance Sheet Arrangements, Contractual Obligations and Commercial Commitments
    49




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50




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##### Table of Contents



51




---



##### Table of Contents



Critical Accounting Policies
  Inventory Impairments and Abandonments
    52




---



##### Table of Contents



Warranty Costs
   53




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##### Table of Contents



Insurance
  Outlook
 The Open Series
    54




---



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The Open
Series
 The Open Series
 The Open Series i.e.
 The Open
Series TM
   55




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Forward-Looking Statements
  The Open Series
  56




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Item 3. Quantitative and Qualitative Disclosures About Market Risk
   Weighted AverageFiscal Year of Expected Maturity
    
    Fixed Rate Debt
    
    
    Interest Rate2009
    
    $
    
    
    
    
    
    %2010
    
    
    
    
    
    
    2011
    
    
    99,772
    
    
    
    6.42012
    
    
    
    
    
    
    2013
    
    
    
    
    
    
    Thereafter
    
    
    1,556,375
    
    
    
    6.8Total
    
    $
    1,656,147
    
    
    
    6.7
    %Fair value at August 31, 2009
    
    $
    1,549,925
  
 Item 4. Controls and Procedures
   57




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PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
 ERISA Litigation
 Bagley et al., v. KB Home, et al
  Other Matters
   
 Item 1A. Risk Factors
  Our ability to obtain external financing could be adversely affected by a negative change in our
credit rating by a third party rating agency.
  Our results of operations could be adversely affected if we are unable to obtain performance
bonds.
   58




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Item 6. Exhibits
 Exhibits4.19
    
    
    Specimen of 9.100% Senior Notes due 2017, filed as an exhibit to the Companys Current
Report on Form 8-K dated July 30, 2009, is incorporated by reference herein.4.20
    
    
    Form of officers certificates and guarantors certificates establishing the terms of the
9.100% Senior Notes due 2017, filed as an exhibit to the Companys Current Report on Form
8-K dated July 30, 2009, is incorporated by reference herein.10.52
    
    
    Amendment to Trust Agreement by and between KB Home and Wachovia Bank, N.A., dated
August 24, 2009.31.1
    
    
    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 Raymond P. Silcock, Executive Vice President and Chief Financial 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 Raymond P. Silcock, Executive Vice President and Chief Financial 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.
  60




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SIGNATURES
  KB HOME
RegistrantDated      October 9, 2009
    /s/ JEFFREY T. MEZGERJeffrey T. MezgerPresident and Chief Executive Officer
(Principal Executive Officer)Dated      October 9, 2009
    /s/ RAYMOND P. SILCOCKRaymond P. SilcockExecutive Vice President and Chief Financial Officer

(Principal Financial Officer)  61




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##### Table of Contents



INDEX OF EXHIBITS
 Page of SequentiallyNumbered Pages4.19
    
    
    Specimen of 9.100% Senior Notes due 2017, filed as an exhibit to the Companys
Current Report on Form 8-K dated July 30, 2009, is incorporated by reference herein.4.20
    
    
    Form of officers certificates and guarantors certificates establishing the terms of the
9.100% Senior Notes due 2017, filed as an exhibit to the Companys Current Report
on Form 8-K dated July 30, 2009, is incorporated by reference herein.10.52
    
    
    Amendment to Trust Agreement by and between KB Home and Wachovia Bank, N.A.,
dated August 24, 2009.31.1
    
    
    Certification of Jeffrey T. Mezger, President and Chief Executive Officer of KB Home
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
    
    
    6331.2
    
    
    Certification of Raymond P. Silcock, Executive Vice President and Chief Financial
Officer of KB Home Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
    
    
    6432.1
    
    
    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.
    
    
    6532.2
    
    
    Certification of Raymond P. Silcock, Executive Vice President and Chief Financial
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.
    
    
    66
  62