KB Home Form 11-K for the period ended 12/31/01
Table of Contents

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, 2001.
     
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

 

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

Table of Contents

FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
KB Home 401(k) Savings Plan
Years ended December 31, 2001 and 2000
with Report of Independent Auditors

 

Table of Contents

KB Home 401(k) Savings Plan

Audited Financial Statements and Supplemental Schedule

Years ended December 31, 2001 and 2000

Contents

         
Report of Independent Auditors
     1  
Audited Financial Statements:
        
Statements of Net Assets Available for Benefits as of December 31, 2001 and 2000
     2  
Statements of Changes in Net Assets Available for Benefits for the years ended December 31, 2001 and 2000
     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, 2001 and 2000, 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, 2001 and 2000, 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, 2001, 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 15, 2002

1

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KB Home 401(k) Savings Plan

Statements of Net Assets Available for Benefits

                 
    December 31,
   
    2001   2000
   
 
Assets
                
Investments, at fair value
   $ 72,103,311     $ 71,452,156  
Receivables
     47,292       —  
 
    
     
 
Net assets available for benefits
   $ 72,150,603     $ 71,452,156  
 
    
     
 

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,
     
      2001   2000
     
 
Additions:
                
Contributions from:
                
 
Plan participants
   $ 9,420,291     $ 9,226,585  
 
Employer, net of forfeitures
     4,467,567       5,845,557  
 
    
     
 
 
     13,887,858       15,072,142  
Transfers from other plans
     —       17,698,420  
Investment income (loss):
                
 
Interest and dividends
     1,725,949       5,500,770  
 
Net depreciation in fair value of investments
     (6,835,066 )     (8,014,335 )
 
    
     
 
 
     (5,109,117 )     (2,513,565 )
 
    
     
 
Total additions
     8,778,741       30,256,997  
Deductions:
                
Benefits paid to participants
     8,040,375       14,264,844  
Administrative expenses
     39,919       111,149  
 
    
     
 
Total deductions
     8,080,294       14,375,993  
 
    
     
 
Net increase in net assets available for benefits
     698,447       15,881,004  
Net assets available for benefits:
                
 
Beginning of year
     71,452,156       55,571,152  
 
    
     
 
 
End of year
   $ 72,150,603     $ 71,452,156  
 
    
     
 

See accompanying notes.

3

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KB Home 401(k) Savings Plan

Notes to Financial Statements

December 31, 2001

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% (10% in 2000) 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, 2001 and 2000, the Company used $1,052,626 and $638,410, respectively, of forfeitures to reduce employer contributions. The forfeiture balances available to offset future employer contributions were $157,915 and $570,574 at December 31, 2001 and 2000, 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. Transfers From Other Plans

Transfers from other plans consist of transfers of participant account balances from other Company sponsored plans which were merged into the Plan.

4. 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,
   
    2001   2000
   
 
Net assets available for benefits per financial statements
   $ 72,150,603     $ 71,452,156  
Liability recorded in the Form 5500 for amounts due to withdrawn participants
     (1,804 )     —  
 
    
     
 
Net assets available for benefits per the Form 5500
   $ 72,148,799     $ 71,452,156  
 
    
     
 

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Table of Contents

KB Home 401(k) Savings Plan

Notes to Financial Statements (continued)

4. 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,
   
    2001   2000
   
 
Benefits paid to participants per financial statements
   $ 8,040,375     $ 14,264,844  
Add amounts related to withdrawn participants at year end
     1,804       —  
Less amounts related to withdrawn participants from previous year
     —       (2,652,378 )
 
    
     
 
Benefits paid to participants per the Form 5500
   $ 8,042,179     $ 11,612,466  
 
    
     
 

5. 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, 2001 and 2000, was as follows:

                 
    December 31,
   
    2001   2000
   
 
Strong Growth
   $ 5,108,168     $ 7,105,426  
Fidelity Magellan
     16,111,972       17,877,966  
Fidelity Contrafund
     9,051,965       10,452,240  
Fidelity Equity Income
     8,039,048       7,634,983  
Fidelity Asset Manager
     5,133,598       5,235,770  
Fidelity Retirement Money Market
     9,428,050       7,767,083  
Fidelity Low Priced Stock
     3,649,798       *  

*     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)

5. 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, 2001 and 2000, was as follows:

                 
    December 31,
   
    2001   2000
   
 
Mutual funds
   $ (7,425,117 )   $ (8,832,132 )
Common stock
     590,051       817,797  
 
    
     
 
 
   $ (6,835,066 )   $ (8,014,335 )
 
    
     
 

6. 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.

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KB Home 401(k) Savings Plan

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

December 31, 2001

                   
      Description   Current
Identity of Issue   of Asset   Value
 
 
Strong Capital Management — Strong Growth Fund
   288,923 shares   $ 5,108,168  
Franklin Templeton — Templeton Developing Markets Trust I
   73,916 shares     730,298  
KB Home — Common Stock
   87,949 shares     3,526,755  
Fidelity Management Trust Company Institutional Cash Portfolio
             180,907  
Fidelity Mutual Funds:
                
 
Magellan
   154,595 shares     16,111,972  
 
Contrafund
   211,643 shares     9,051,964  
 
Equity Income
   164,836 shares     8,039,048  
 
Intermediate Bond
   407,385 shares     4,204,218  
 
Overseas
   44,706 shares     1,225,844  
 
Asset Manager
   331,200 shares     5,133,598  
 
Low-Priced Stock
   133,107 shares     3,649,798  
 
Fidelity Healthcare
   360 shares     45,861  
 
Fidelity Technology
   3,926 shares     237,925  
 
Fidelity Utilities GR
   87 shares     3,361  
 
Fidelity Financial
   311 shares     31,449  
 
Fidelity Freedom Income
   1,194 shares     13,050  
 
Fidelity Freedom 2000
   88 shares     1,025  
 
Fidelity Freedom 2010
   16,115 shares     203,222  
 
Fidelity Freedom 2020
   10,755 shares     135,304  
 
Fidelity Freedom 2030
   40,036 shares     50,699  
 
Fidelity Natural Resources
   493 shares     6,194  
 
Fidelity Cyclical Index
   1,446 shares     21,525  
 
Fidelity Consumer Index
   63 shares     1,475  
 
Fidelity Retire Money Market
   9,428,049 shares     9,428,050  
 
Spartan US Equity Index
   77,168 shares     3,136,135  
 
Fidelity Freedom 2040
   1,853 shares     13,695  
Participant* loans
  
Interest rates ranging from 6% to 10%
     1,811,771  
 
            
 
 
           $ 72,103,311  
 
            
 

*     Party-in-interest to the Plan.

8

Table of Contents

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 27, 2002 By:  /s/ Cory Cohen
 
  Cory Cohen
Senior Vice President, Tax

9

Table of Contents

Exhibit Index

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

10