KB Home Reports 2007 Fourth Quarter and Full Year Results

LOS ANGELES, — KB Home one of America’s largest homebuilders, today reported financial results for its fourth quarter and fiscal year ended November 30, 2007. Results include:

• Revenues totaled $2.07 billion for the quarter ended November 30, 2007, down from $3.01 billion in the corresponding quarter of 2006, primarily reflecting lower housing revenues. Fourth quarter 2007 housing revenues of $2.02 billion were 31% lower than in the year-earlier period. This decline reflected a 22% year-over-year decrease in new home deliveries to 8,132 in the fourth quarter of 2007 from 10,386 in the 2006 fourth quarter, and a 12% year-over-year decrease in the average selling price to $247,800 in 2007 from $280,000 in 2006.
• The Company reported a loss from continuing operations before income taxes of $399.0 million for the quarter ended November 30, 2007 due to pretax, non-cash charges of $403.4 million associated with inventory and joint venture impairments and the abandonment of certain land option contracts. In the year-earlier quarter, the Company posted a loss from continuing operations before income taxes of $171.1 million due to $343.3 million of pretax, non-cash impairment and abandonment charges.
• During the fourth quarter of 2007, the Company recorded an after-tax, non-cash charge of $514.2 million to establish a valuation allowance related to its deferred tax assets in accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes.” The valuation allowance is reflected as a charge to fourth quarter income tax expense and a reduction of the Company’s deferred tax assets as of November 30, 2007. Including the valuation allowance, the Company recorded a net loss of $772.7 million or $9.99 per diluted share in the fourth quarter of 2007. In the fourth quarter of 2006, the Company’s net loss totaled $49.6 million or $.64 per diluted share.
• The Company delivered 23,743 new homes in fiscal year 2007, down 26% from the 32,124 new homes it delivered in fiscal year 2006. Revenues totaled $6.42 billion in fiscal year 2007, decreasing 32% from $9.38 billion in fiscal year 2006, reflecting fewer new home deliveries and a 9% year-over-year decline in the average selling price to $261,600 from $287,700. The Company posted a loss from continuing operations of $1.41 billion in fiscal year 2007 due to non-cash charges associated with inventory and joint venture impairments and land option contract abandonments; goodwill impairment; and the deferred tax assets valuation allowance. In fiscal year 2006, the Company generated income from continuing operations of $392.9 million. Including the results of its French discontinued operations, the Company posted a net loss of $929.4 million or $12.04 per diluted share in fiscal year 2007 and net income of $482.4 million or $5.82 per diluted share in fiscal year 2006.
• The Company continued to generate positive cash flows in the 2007 fourth quarter, ending the year with a cash balance of $1.33 billion at November 30, 2007. The Company increased its cash balance by $625.2 million from November 30, 2006 in addition to reducing debt by $758.5 million. Furthermore, the Company had no borrowings outstanding under its $1.5 billion revolving credit facility as of November 30, 2007. The Company’s ratio of debt to total capital was 53.9% at November 30, 2007 compared to 50.0% at November 30, 2006. Net of cash, the ratio of debt to total capital improved 12.1 percentage points to 31.1% at November 30, 2007 from 43.2% at November 30, 2006.

Read the entire press release at www.kbhome.com