KB Home (KBH) 8-K Results of Operations and Financial Condition

Exhibit 99.1

FOR RELEASE, Thursday, September 22, 2005	For Further Information Contact:
4:00 a.m. Pacific Daylight Time	Kelly Masuda, Investor Contact
	(310) 893-7434 or kmasuda@kbhome.com
	Shaun Rachau, Media Contact
	(310) 231-4011 or srachau@kbhome.com

KB HOME REPORTS RECORD THIRD QUARTER 2005 RESULTS
Revenues of $2.53 Billion, Up 44%; Net Income of $227.5 million, Up 93%
Backlog Grows 47% to $7.06 Billion; Net Orders Increase 17%;
Company Raises 2005 Earnings Guidance to $9.30 Per Diluted Share

          Los Angeles, CA, September 22, 2005– KB Home (NYSE: KBH), one of the largest homebuilders in the United States and France, today reported financial results for its third quarter ended August 31, 2005. Highlights include:

• Total revenues rose 44% in the third quarter of 2005 to $2.53 billion, up from $1.75 billion in the year-earlier quarter. Revenue growth was driven by a 45% increase in housing revenues during the quarter to $2.49 billion, up from $1.72 billion in the prior year’s third quarter, the result of double-digit growth in both unit volume and average selling price. Company-wide unit deliveries in the third quarter of 2005 rose 22% to 9,812 from 8,041 in the third quarter of 2004 with each of the Company’s five geographic regions generating year-over-year growth in unit delivery volume.

• Net income rose 93% to $227.5 million in the third quarter of 2005 from $117.9 million in the year-earlier period. Strong revenue growth combined with an improved operating margin drove the robust increase in earnings. Diluted earnings per share for the period grew 80% to $2.55 from $1.42 a year ago. All per share amounts reflect the Company’s 2-for-1 stock split, which became effective on April 28, 2005.

• Backlog at August 31, 2005, in both units and dollars, rose to the highest level of any quarter-end in the Company’s history. The dollar value of backlog increased 47% to $7.06 billion on 27,744 units, up from $4.82 billion on 21,928 units at August 31, 2004. All the Company’s geographic regions reported favorable year-over-year backlog comparisons as of August 31, 2005. Strong third-quarter net orders, which increased 17% to 10,467 in 2005 from 8,982 in 2004, propelled backlog to new highs.

• The Company raised its earnings expectations for 2005 to $9.30 per diluted share, up from previous guidance of $9.00 per diluted share. The new estimate represents a 63% increase from 2004 diluted earnings per share of $5.70 and reflects the Company’s strong year-to-date performance, favorable backlog levels and positive outlook for the remainder of 2005.

• On September 1, 2005, the Company completed the formation of Countrywide KB Home Loans, a 50-50 joint venture with the nation’s leading home loan lender, Countrywide Financial Corporation. This new enterprise, which marks the first time a national builder has collaborated with a national lender on this scale and scope, will offer the Company’s customers one of the broadest and strongest array of home financing options available in the marketplace today. Countrywide KB Home Loans replaces KB Home Mortgage Company, a wholly-owned subsidiary that has provided mortgage services to the Company’s homebuyers in the past.

          “We achieved tremendous growth in nearly every facet of our business during the third quarter as we continued to fulfill the dream of homeownership for customers across the U.S. and in France,” said Bruce Karatz, chairman and chief executive officer. “By offering a wide variety of products that appeal to diverse homebuyers, we are achieving deeper penetration in all our markets. The resulting higher delivery volumes, coupled with rising average selling prices, generated a significant increase in total revenues during the third quarter. Meanwhile, the synergies created by our proven operating business model continue to enhance our operating margins, contributing to net earnings nearly doubling in the quarter.”

          Company-wide revenues reached $2.53 billion for the quarter ended August 31, 2005, increasing 44% from $1.75 billion in the year-earlier quarter as a result of strong revenue growth in the Company’s homebuilding operations. Housing revenues in the quarter increased 45% to $2.49 billion, up from $1.72 billion in the year-earlier period, as unit deliveries grew 22% to 9,812 from 8,041 in 2004 and the overall average selling price rose 19%. The Company’s overall average selling price jumped to $254,100 in the third quarter of 2005 from $214,400 in the 2004 third quarter, reflecting a strong pricing environment across its geographically diverse operations in the United States and France. On a year-over-year basis, average selling prices rose in each of the Company’s five geographic regions.

          Higher housing revenues and a significantly improved operating margin boosted construction operating income by 96% to $373.8 million in the third quarter, up from $190.8 million in the year-earlier quarter. The Company’s third-quarter construction operating income margin rose to 14.9% from 11.0% in the year-ago quarter. The increase reflected a 330 basis point improvement in housing gross margin to 27.4% in the third quarter of 2005 from 24.1% in the corresponding quarter of 2004, and lower selling, general and administrative expenses as a percentage of housing revenues to 12.6% from 13.3%. The Company’s pretax income more than doubled to $352.7 million in the third quarter of 2005 from $176.0 million in the year-earlier period, largely due to higher revenues and a higher operating margin. Earnings per diluted share in the third quarter rose 80% to $2.55, up from $1.42 in the prior year’s period, as the impact of higher pretax earnings was partially offset by increases in the Company’s effective income tax rate and the average number of diluted shares outstanding.

          “Net orders continued to show strength within our operating regions,” said Karatz, “providing important evidence of the fundamental health of our business. We continue to see high levels of demand in each of our product

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offerings—first-time, move-up, luxury and active adult buyers—particularly in markets where housing supply remains constrained. With a third-quarter-end backlog totaling more than $7.0 billion, built on year-over-year increases in all five of our geographic regions, KB Home is well-positioned for a strong 2005.”

          The Company generated 10,467 net orders in the third quarter, up 17% from 8,982 net orders in the year-earlier period as four of the Company’s five regions posted double-digit growth. Backlog value grew by $2.24 billion, or 47%, to approximately $7.06 billion at August 31, 2005 from approximately $4.82 billion at August 31, 2004. Unit backlog rose 27% to 27,744 units at August 31, 2005 from 21,928 units at August 31, 2004. Quarter-end backlog levels were up in all of the Company’s regions in the U.S. and France.

          For the nine months ended August 31, 2005, KB Home delivered 25,194 homes, an 18% increase from 21,361 homes delivered in the first nine months of 2004. Total revenues for the period reached $6.29 billion, up 35% from $4.67 billion in the corresponding period of 2004. Net income increased 81% to $531.8 million, up from $294.2 million a year ago. Diluted earnings per share for the period rose 72% to $6.02, up from $3.49 per diluted share in 2004.

          “The strength of our financial results to date, the record backlog levels underpinning our projections, and a favorable outlook for our markets going forward have led us to increase our 2005 earnings guidance to $9.30 per diluted share,” said Karatz. “That represents a 63% increase from 2004’s EPS of $5.70.”

          “Looking forward, our strong homebuilding business is expected to continue to drive growth at KB Home, while the evolution of our mortgage banking business creates a new opportunity to enhance customer services and reduce business risk,” said Karatz. “We view our new partnership with Countrywide as an exciting next step in the track record of growth and innovation at KB Home, one that will allow us to provide our homebuyers with the highest quality mortgage banking services available in the marketplace today. We believe the partnership is aligned with our focus on providing high quality service and a wide array of choices to our customers.”

The Conference Call on the Third Quarter 2005 earnings will be broadcast live TODAY at 6:00 a.m. Pacific Daylight Time, 9:00 a.m. Eastern Daylight Time. To listen, please go to the Investor Relations section of the Company’s Web site atkbhome.com.

Building homes for nearly half a century, KB Home is one of America’s premier homebuilders with domestic operating divisions in some of the fastest-growing regions and states: West Coast—California; Southwest—Arizona, Nevada and New Mexico; Central—Colorado, Illinois, Indiana and Texas; and Southeast—Florida, Georgia, Maryland, North Carolina, South Carolina and Virginia. Kaufman & Broad S.A., the Company’s publicly-traded French subsidiary, is one of the largest homebuilders in France. In fiscal 2004, the Company delivered homes to 31,646 families in the United States and France. KB Home also offers complete mortgage services through Countrywide KB Home Loans, a joint venture with Countrywide Financial Corporation. Founded in 1957, and winner of the 2004 American Business Award for Best Overall Company, KB Home is a Fortune 500 company listed on the New York Stock Exchange under the ticker symbol “KBH.” For more information about any of KB Home’s new home communities, call 888-KB-HOMES or visit http://www.kbhome.com.

Except for the historical information contained herein, certain matters discussed in this press release are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995, including any statements concerning future financial performance, business and prospects, and future Company actions and their expected results. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions including, but not limited to, changes in national, regional, local or general economic conditions, conditions in the

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capital, credit and homebuilding markets, material prices and availability, labor costs and availability, interest rates and the Company’s debt levels, the secondary market for loans, consumer confidence, competition, currency exchange rates (insofar as they affect the Company’s operations in France), environmental factors (including weather, natural disasters or similar environmental events), government regulations affecting the Company’s operations, the availability and cost of land in desirable areas, and the continued impact of terrorist activities and U.S. response, unanticipated violations of Company policy, unanticipated legal or regulatory proceedings or claims or other events outside of the Company’s control. See the Company’s Annual Report on Form 10-K and its Annual Report to Shareholders for the year ended November 30, 2004 and its other public filings with the Securities and Exchange Commission for a further discussion of these and other risks and uncertainties applicable to the Company’s business. The Company does not have a specific policy or intent of updating or revising forward-looking statements.

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(Tables Follow)
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KB HOME

CONSOLIDATED STATEMENTS OF INCOME
For the Nine Months and Three Months Ended August 31, 2005 and 2004
(In Thousands, Except Per Share Amounts — Unaudited)

	Nine Months						Three Months
	2005			2004			2005			2004
Total revenues	$	6,291,510		$	4,672,087		$	2,525,064		$	1,748,292
Construction:
Revenues	$	6,264,609		$	4,639,509		$	2,515,803		$	1,739,538
Costs and expenses		(5,400,427	)		(4,162,432	)		(2,141,993	)		(1,548,757	)
Operating income		864,182			477,077			373,810			190,781
Interest income		3,032			2,978			1,261			782
Interest expense, net of amounts capitalized		(10,727	)		(14,633	)		(4,310	)		(3,827	)
Minority interests		(55,547	)		(41,174	)		(22,121	)		(18,535	)
Equity in pretax of unconsolidated joint ventures		10,453			9,264			2,674			5,600
Construction pretax income		811,393			433,512			351,314			174,801
Mortgage banking:
Revenues:
Interest income		7,597			7,930			2,547			2,935
Other		19,304			24,648			6,714			5,819
		26,901			32,578			9,261			8,754
Expenses:
Interest		(4,849	)		(3,069	)		(1,720	)		(1,104	)
General and administrative		(19,667	)		(23,853	)		(6,134	)		(6,497	)
Mortgage banking pretax income		2,385			5,656			1,407			1,153
Total pretax income		813,778			439,168			352,721			175,954
Income taxes		(282,000	)		(145,000	)		(125,200	)		(58,100	)
Net income	$	531,778		$	294,168		$	227,521		$	117,854
Basic earnings per share	$	6.52		$	3.75		$	2.75		$	1.51
Diluted earnings per share	$	6.02		$	3.49		$	2.55		$	1.42
Basic average shares outstanding		81,541			78,372			82,735			77,832
Diluted average shares outstanding		88,322			84,300			89,243			82,988

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KB HOME

CONSOLIDATED BALANCE SHEETS
(In Thousands — Unaudited)

	August 31,		November 30,		August 31,
	2005		2004		2004
ASSETS
Construction:
Cash and cash equivalents	$	60,153	$	190,660	$	1,947
Receivables		492,870		513,974		400,593
Inventories		5,743,820		4,143,254		4,059,936
Investments in unconsolidated joint ventures		240,666		168,425		122,440
Deferred income taxes		207,439		217,618		155,912
Goodwill		245,030		249,313		244,315
Other assets		147,368		142,252		149,661
		7,137,346		5,625,496		5,134,804
Mortgage banking:
Cash and cash equivalents		41,174		43,536		36,821
Receivables		44,121		150,726		190,256
Other assets		15,559		16,198		13,893
		100,854		210,460		240,970
Total assets	$	7,238,200	$	5,835,956	$	5,375,774
LIABILITIES AND STOCKHOLDERS’ EQUITY
Construction:
Accounts payable	$	788,480	$	749,050	$	598,359
Accrued expenses and other liabilities		946,977		810,913		621,091
Mortgages and notes payable		2,701,430		1,975,600		2,030,606
		4,436,887		3,535,563		3,250,056
Mortgage banking:
Accounts payable and accrued expenses		56,367		45,025		82,056
Notes payable		3,288		71,629		97,328
Collateralized mortgage obligations secured by mortgage-backed securities		748		1,018		5,140
		60,403		117,672		184,524
Minority interests		136,951		127,040		116,068
Stockholders’ equity		2,603,959		2,055,681		1,825,126
Total liabilities and stockholders’ equity	$	7,238,200	$	5,835,956	$	5,375,774

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KB HOME

SUPPLEMENTAL INFORMATION
For the Nine Months and Three Months Ended August 31, 2005 and 2004
(In Thousands — Unaudited)

	Nine Months				Three Months
	2005		2004		2005		2004
Construction revenues:
Housing	$	6,226,089	$	4,600,145	$	2,493,178	$	1,723,861
Commercial		5,202		16,726		2,404		7,602
Land		33,318		22,638		20,221		8,075
Total	$	6,264,609	$	4,639,509	$	2,515,803	$	1,739,538

	Nine Months				Three Months
	2005		2004		2005		2004
Costs and expenses:
Construction and land costs
Housing	$	4,563,659	$	3,520,683	$	1,808,832	$	1,308,487
Commercial		3,077		12,976		1,735		5,764
Land		26,414		19,100		17,932		5,136
Subtotal		4,593,150		3,552,759		1,828,499		1,319,387
Selling, general and administrative expenses		807,277		609,673		313,494		229,370
Total	$	5,400,427	$	4,162,432	$	2,141,993	$	1,548,757

	Nine Months						Three Months
	2005			2004			2005			2004
Interest expense:
Interest incurred	$	132,556		$	101,605		$	47,189		$	37,325
Interest capitalized		(121,829	)		(86,972	)		(42,879	)		(33,498	)
Interest expense	$	10,727		$	14,633		$	4,310		$	3,827

	Nine Months				Three Months
	2005		2004		2005		2004
Other information:
Depreciation and amortization	$	15,643	$	15,469	$	5,482	$	5,021
Amortization of previously capitalized interest		67,707		54,184		29,328		19,684

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KB HOME

SUPPLEMENTAL INFORMATION
For the Nine Months and Three Months Ended August 31, 2005 and 2004
(Unaudited)

	Nine Months				Three Months
	2005		2004		2005		2004
Average sales price:
West Coast	$	453,500	$	399,500	$	458,900	$	407,900
Southwest		258,000		198,100		277,400		199,600
Central		154,900		148,400		154,700		148,800
Southeast		206,100		169,200		216,700		172,000
France		212,000		206,800		204,800		199,200
Total	$	247,100	$	215,400	$	254,100	$	214,400

	Nine Months				Three Months
	2005		2004		2005		2004
Unit deliveries:
West Coast		4,293		3,643		1,781		1,333
Southwest		5,548		5,337		1,943		1,884
Central		6,628		5,974		2,638		2,432
Southeast		4,850		3,308		1,871		1,263
France		3,875		3,099		1,579		1,129
Total		25,194		21,361		9,812		8,041
Unconsolidated joint ventures:		428		601		75		277

	Nine Months				Three Months
	2005		2004		2005		2004
Net orders:
West Coast		5,718		4,720		1,836		1,526
Southwest		6,527		6,430		1,930		2,025
Central		8,602		7,606		2,860		2,204
Southeast		6,535		5,277		2,171		1,892
France		5,276		3,729		1,670		1,335
Total		32,658		27,762		10,467		8,982
Unconsolidated joint ventures:		156		748		60		148

	August 31, 2005				August 31, 2004
(Dollars in thousands)	Backlog Units		Backlog Value		Backlog Units		Backlog Value
Backlog data:
West Coast		4,892	$	2,228,977		3,718	$	1,522,970
Southwest		5,531		1,509,186		4,956		987,632
Central		6,032		906,352		5,357		806,894
Southeast		5,965		1,324,161		4,201		765,654
France		5,324		1,091,420		3,696		735,504
Total		27,744	$	7,060,096		21,928	$	4,818,654
Unconsolidated joint ventures:		223	$	38,360		838	$	147,233

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