KB Home Form 11-K
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 11-K

     
[X]   ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2002.

or

     
[   ]   TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from [          ] to [          ].

Commission File No. 1-9195

A.   Full title of the plan and the address of the plan, if different from that of the issuer named below:

KB Home
401(k) Savings Plan

B.   Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

KB Home
10990 Wilshire Boulevard
Los Angeles, California 90024

 

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F I N A N C I A L   S T A T E M E N T S   A N D   S U P P L E M E N T A L   S C H E D U L E
KB Home 401(k) Savings Plan
Years ended December 31, 2002 and 2001
with Report of Independent Auditors

 

TABLE OF CONTENTS

Report of Independent Auditors
Statements of Net Assets Available for Benefits
Statements of Changes in Net Assets Available for Benefits
Notes to Financial Statements
Schedule H, Line 4i — Schedule of Assets (Held at End of Year)
SIGNATURES
EXHIBIT INDEX
EXHIBIT 23.1

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KB Home 401(k) Savings Plan

Audited Financial Statements and Supplemental Schedule

Years ended December 31, 2002 and 2001

Contents

         
Report of Independent Auditors
    1  
Audited Financial Statements:
        
Statements of Net Assets Available for Benefits as of December 31, 2002 and 2001
    2  
Statements of Changes in Net Assets Available for Benefits for the years ended December 31, 2002 and 2001
     3  
Notes to Financial Statements
    4  
Supplemental Schedule:
        
Schedule H, Line 4i – Schedule of Assets (Held at End of Year)
     8  

 

Table of Contents

Report of Independent Auditors

To the Administrative Committee, as Plan Administrator
of the KB Home 401(k) Savings Plan

We have audited the accompanying statements of net assets available for benefits of the KB Home 401(k) Savings Plan as of December 31, 2002 and 2001, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2002 and 2001, and the changes in its net assets available for benefits for the years then ended, in conformity with accounting principles generally accepted in the United States.

Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2002, is presented for purposes of additional analysis and is not a required part of the financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the financial statements taken as a whole.

Los Angeles, California
May 5, 2003

1

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KB Home 401(k) Savings Plan

Statements of Net Assets Available for Benefits

                 
    December 31,
    2002   2001
   
 
Assets
                
Investments, at fair value
   $ 71,020,164     $ 72,103,311  
Receivables
     –       47,292  
 
    
     
 
Net assets available for benefits
   $ 71,020,164     $ 72,150,603  
 
    
     
 

See accompanying notes.

2

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KB Home 401(k) Savings Plan

Statements of Changes in Net Assets Available for Benefits

                   
      Year ended December 31,
      2002   2001
     
 
Additions:
                
Contributions from:
                
 
Plan participants
   $ 10,910,432     $ 9,420,291  
 
Employer, net of forfeitures
     5,444,195       4,467,567  
 
 
    
     
 
 
     16,354,627       13,887,858  
Investment income (loss):
                
 
Interest and dividends
     1,153,128       1,725,949  
 
Net depreciation in fair value of investments
     (9,820,262 )     (6,835,066 )
 
 
    
     
 
 
     (8,667,134 )     (5,109,117 )
 
 
    
     
 
Total additions
     7,687,493       8,778,741  
 
                
Deductions:
                
Benefits paid to participants
     8,777,879       8,040,375  
Administrative expenses
     40,053       39,919  
 
 
    
     
 
Total deductions
     8,817,932       8,080,294  
 
 
    
     
 
Net (decrease) increase in net assets available for benefits
     (1,130,439 )     698,447  
Net assets available for benefits:
                
 
Beginning of year
     72,150,603       71,452,156  
 
 
    
     
 
 
End of year
   $ 71,020,164     $ 72,150,603  
 
 
    
     
 

See accompanying notes.

3

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KB Home 401(k) Savings Plan

Notes to Financial Statements

December 31, 2002

1.     General Description of the Plan

The KB Home 401(k) Savings Plan (the Plan), formerly Kaufman and Broad Home Corporation Amended and Restated 401(k) Savings Plan, is a defined contribution plan in which salaried employees of KB Home (the Company) were eligible to enroll on January 1, April 1, July 1 or October 1 following the completion of 1,000 hours of service with the Company computed from the date of employment, or full-time employment for six months. Effective September 1, 2001, all employees are eligible to participate on the first day of the month following the date of hire.

Participants electing to participate in the Plan may contribute up to 15% of their annual compensation, on a pretax basis, by means of payroll deduction. Participants may also contribute up to an additional 9% of their annual compensation, on an after tax basis, also by means of payroll deduction. All contributions must be in whole percentages. Pretax contributions are eligible for tax deferred treatment up to the limits provided by the Tax Reform Act of 1986, as adjusted for cost of living.

Unless otherwise elected by the Board of Directors, the Company will match the participant’s pretax contribution up to 6% of annual base salary (determined without regard to bonuses and a maximum of $50,000 of regular earnings for commission employees). Company matching contributions and related investment income vest to participants over five years.

Plan assets are held by Fidelity Management Trust Company, Inc. (the Trustee). Plan participants may direct the investment of their funds among one or more of the several fund options offered by the Plan.

Terminating participants may elect (with spousal consent) to withdraw their contributions, vested Company contributions and related investment income as a lump-sum payment. In the absence of a valid election, the participant’s vested benefits will be distributed in the form of a Qualified Joint and Survivor Annuity or a Qualified Preretirement Survivor Annuity, or in a lump sum if the actuarial equivalent is not more than $5,000. Effective December 1, 2001, the participant is able to withdraw their vested Company contributions and related income as a lump sum without spousal consent.

Nonvested Company contributions for terminated employees are forfeited and used by the Company to reduce future employer contributions. For the years ended December 31, 2002 and 2001, the Company used $656,996 and $1,052,626, respectively, of forfeitures to reduce employer contributions. The forfeiture balances available to offset future employer contributions were $86,431 and $157,915 at December 31, 2002 and 2001, respectively.

4

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KB Home 401(k) Savings Plan

Notes to Financial Statements (continued)

1.     General Description of the Plan (continued)

The Plan allows participant loans and hardship withdrawals subject to certain limitations.

In the event of Plan termination, benefits of all affected participants, if not already so, shall become 100% vested and nonforfeitable.

2.     Summary of Significant Accounting Policies

The financial statements of the Plan are prepared on an accrual basis. Investment income is recorded as earned. Distributions of Plan benefits to withdrawn participants are recorded when distributed. Expenses incurred in the administration of the Plan are paid by the Company. Expenses incurred related to terminated participants and participant loans are paid by the Plan.

The financial statements are based on information provided to the Company and certified as complete and accurate by the Trustee. Certain adjustments have been made to the financial statements provided by the Trustee in order for them to conform to the accrual basis of accounting. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that could affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

3.     Differences Between Financial Statements and Form 5500

The following is a reconciliation of net assets available for benefits between the financial statements and the Form 5500:

                 
    December 31,
    2002   2001
   
 
Net assets available for benefits per financial statements
   $ 71,020,164     $ 72,150,603  
Liability recorded in the Form 5500 for amounts due to withdrawn participants
     —       (1,804 )
 
    
     
 
Net assets available for benefits per the Form 5500
   $ 71,020,164     $ 72,148,799  
 
    
     
 

5

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KB Home 401(k) Savings Plan

Notes to Financial Statements (continued)

3.     Differences Between Financial Statements and Form 5500 (continued)

The following is a reconciliation of benefits paid to participants between the financial statements and Form 5500:
                 
    December 31,
    2002   2001
   
 
Benefits paid to participants per financial statements
   $ 8,777,879     $ 8,040,375  
Add amounts related to withdrawn participants at year end
     —       1,804  
Less amounts related to withdrawn participants from previous year
     (1,804 )     —  
 
    
     
 
Benefits paid to participants per the Form 5500
   $ 8,776,075     $ 8,042,179  
 
    
     
 

4.     Investments

Investments are valued at fair value, which is determined daily by the Trustee through reference to published market information using closing prices on the valuation date.

The fair value of the Plan’s individual investments that represent five percent or more of the Plan’s net assets as of December 31, 2002 and 2001, was as follows:

                 
    December 31,
    2002   2001
   
 
Fidelity Asset Manager
   $ 4,611,908     $ 5,133,598  
Fidelity Contrafund
     8,163,624       9,051,965  
Fidelity Equity Income
     7,094,087       8,039,048  
Fidelity Intermediate Bond
     6,228,396       *  
Fidelity Low Priced Stock
     5,010,813       3,649,798  
Fidelity Magellan
     11,996,323       16,111,972  
Fidelity Retirement Money Market
     9,914,685       9,428,050  
Strong Growth
     4,292,297       5,108,168  
KB Home Common Stock
     4,785,702       *  

*Investment balance was less than 5% of the Plan’s net assets

6

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KB Home 401(k) Savings Plan

Notes to Financial Statements (continued)

4.     Investments (continued)

Net appreciation (depreciation) of the Plan’s investments (including investments bought, sold, and held during the year) during the years ended December 31, 2002 and 2001, was as follows:

                 
    Year ended
    December 31,
    2002   2001
   
 
Mutual funds
   $ (11,177,280 )   $ (7,425,117 )
Common stock
     1,357,018       590,051  
 
    
     
 
 
   $ (9,820,262 )   $ (6,835,066 )
 
    
     
 

5.     Tax Status of the Plan

The Plan has received a determination letter from the Internal Revenue Service dated February 28, 2002, stating that the Plan is qualified, in form, under Section 401(a) of the Internal Revenue Code (the Code) and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The Plan Administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan is qualified and the related trust is tax exempt.

7

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KB Home 401(k) Savings Plan

Schedule H, Line 4i – Schedule of Assets (Held at End of Year)

Employer Identification #95-3666267, Plan #001

December 31, 2002

                   
      Description   Current
Identity of Issue   of Asset   Value
 
 
Fidelity Mutual Funds*:
                
 
Fidelity Asset Manager
   334,196 shares         $ 4,611,908  
 
Fidelity Consumer Index
   1,056 shares           20,368  
 
Fidelity Contrafund
   211,493 shares           8,163,624  
 
Fidelity Cyclical Index
   2,982 shares           35,516  
 
Fidelity Equity Income
   178,828 shares           7,094,087  
 
Fidelity Financial
   1,529 shares           135,760  
 
Fidelity Freedom Income
   9,077 shares           96,220  
 
Fidelity Freedom 2000
   3,755 shares           41,340  
 
Fidelity Freedom 2010
   26,326 shares           301,168  
 
Fidelity Freedom 2020
   32,019 shares           340,682  
 
Fidelity Freedom 2030
   23,516 shares           240,806  
 
Fidelity Freedom 2040
   19,606 shares           114,894  
 
Fidelity Healthcare
   1,487 shares           151,670  
 
Fidelity Intermediate Bond
   580,466 shares           6,228,396  
 
Fidelity Low-Priced Stock
   199,079 shares           5,010,813  
 
Fidelity Magellan
   151,929 shares           11,996,323  
 
Fidelity Natural Resources
   1,722 shares           19,045  
 
Fidelity Overseas
   56,933 shares           1,252,517  
 
Fidelity Retirement Money Market
   9,914,685 shares           9,914,685  
 
Fidelity Technology
   7,029 shares           265,002  
 
Fidelity Utilities GR
   1,531 shares           40,406  
 
Spartan US Equity Index
   78,402 shares           2,442,236  
Franklin Templeton –Developing Markets Trust I
   89,909 shares           899,087  
Strong Capital Management – Strong Growth Fund
   324,928 shares           4,292,297  
KB Home Stock Fund:
                
 
Common Stock*
   111,685 shares           4,785,702  
 
Cash
   263,287 shares           324,466  
Participant loans*
   Interest rates ranging        
 
   from 5.75% to 10.5%        
 
   with maturity dates        
 
   through 2031     2,201,146  
 
 
            
 
 
           $ 71,020,164  
 
 
            
 

*Party-in-interest to the Plan.

8

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

     
    KB Home
401 (k) Savings Plan
     
Dated: June 26, 2003   By: /s/ Domenico Cecere
    Domenico Cecere
    Senior Vice President and Chief Financial Officer

 

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EXHIBIT INDEX

             
        Sequentially
Exhibit No.   Description   Numbered Page
 
 
23.1   Consent of Independent Auditors