KBH Company Profile

Certain elements of the KBnxt operational business model include achieving an in-depth understanding of customer desires and preferences through detailed market surveys and providing a wide spectrum of choice to customers in terms of location, design and options. Our communities offer homebuyers an abundance of choices and options which allow customers to customize their home to an extent not typically available with private builders. After selecting a floorplan and homesite that meet their needs, our buyers visit one of our KB Home Studios to select options for their home, the incremental cost of which may be rolled into their new home mortgage. Our KB Home Studios, which are typically 'retail'-type locations of approximately 10,000'square feet but can be as large as our 21,000 square foot facility in Las Vegas, Nevada, are typically located separately from our divisional business offices. These studios offer customers more than 5,000 options'' from floor plans to fireplaces to garage doors'' in a retail environment convenient to multiple communities. Our personnel are available at the studios to assist homebuyers in selecting options and upgrades.

One of our key competitive advantages is our unified, national brand. Unlike many builders, we operate under a single name in every one of our markets utilizing marketing programs from our centralized in-house advertising agency. This means that whether you are in Charlotte, Sacramento, Tampa or Tucson, you will recognize KB'Home as one of the nation's most trusted and premier homebuilders. This strategy not only gives us terrific brand recognition in our existing markets, it also allows us to transition seamlessly with the strength of a leading brand in new market entries, whether through acquisition or de novo growth, including our expansions into the Midwest and Southeast. In addition, we are able to capitalize on today's more mobile society, where one homebuyer may live in several major homebuilding markets in his or her lifetime.

Our geographic diversity and large national reach also allow us to pool the collective marketing resources of our operating divisions across the country for partnerships and promotions. In 2003, we partnered with ABC Television and its top-rated morning show, Live with Regis and Kelly, for a groundbreaking promotion to build a home in the heart of New York City'' in front of America's families'' and give it away to one lucky viewer. This partnership gave us unprecedented national reach, with hours of dedicated on-air time during prime May sweeps valued at millions of dollars in media exposure. But the brand-name exposure was only one of the benefits; even for those consumers already familiar with us, we were able to demonstrate one of our most central marketing messages'' the powerful impact of our unique KB'Home Studio and customization abilities.

In 2003, we took our online marketing efforts to the next level by bringing our primary consumer web site, www.kbhome.com, in-house for greater cost efficiencies and faster time to market for upgrades and new features. The new web site has seen a significant increase in online traffic and qualified leads generated from the site. The web site continues to be fully integrated with our houseCALLTM Center, our phone service center, which is designed to bring potential buyers to our communities while also simplifying the homebuying process for the consumer. The houseCALLTM Center can be reached at 888-KB-HOMES AND 888-KB-CASAS.

We believe the use of our KBnxt operational business model, particularly the aspects that involve gaining a deeper understanding of customer interests and needs and offering a wide range of choice to homebuyers, provides us with long-term competitive advantages. The housing industry is highly competitive, and we compete with numerous housing producers ranging from regional and national firms to small local builders primarily on the basis of price, location, financing, design, reputation, quality and amenities. In addition, we compete with housing alternatives other than new production homes, including existing homes and rental housing. In certain markets and at times when housing demand is high, we also compete with other builders to hire subcontractors.