795266--2/13/2007--KB_HOME

related topics
{condition, economic, financial}
{gas, price, oil}
{acquisition, growth, future}
{cost, contract, operation}
{operation, international, foreign}
{debt, indebtedness, cash}
{cost, operation, labor}
{stock, price, operating}
{product, market, service}
The value of the land and housing inventory we own or control may fall significantly and our profits may decrease. If new home prices decline, interest rates increase or there is a downturn in the economy, some homebuyers may cancel their home purchases because the required deposits are small and generally refundable. Our success depends on the availability of improved lots and undeveloped land that meet our land investment criteria. Home prices and sales activity in the particular markets and regions in which we do business affect our results of operations because our business is concentrated in these markets. Interest rate increases or changes in federal lending programs could lower demand for our homes. We are subject to substantial legal and regulatory requirements regarding the development of land, the homebuilding process and protection of the environment, which can cause us to suffer delays and incur costs associated with compliance and which can prohibit or restrict homebuilding activity in some regions or areas. We build homes in highly competitive markets, which could hurt our future operating results. The design and construction of high density, mixed use properties in the United States present unique challenges, and we have limited experience in this business. Because of the seasonal nature of our business, our quarterly operating results fluctuate. Our leverage may place burdens on our ability to comply with the terms of our indebtedness, may restrict our ability to operate and may prevent us from fulfilling our obligations. We may have difficulty in continuing to obtain the additional financing required to operate and develop our business. Our future growth may be limited if the economies of the markets in which we currently operate contract, or if we are unable to enter new markets, find appropriate acquisition candidates or adapt our products to meet changes in demand. Our growth may also be limited by the consummation of acquisitions that may not be successfully integrated, or our entry into new markets or our offerings of new products that may not achieve expected benefits. Because we build homes in France, some of our revenues and earnings are subject to foreign currency and economic risks.

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