KBH - 12.31.13 - 11-K
Table of Contents


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 11-K


þ
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013

OR

¨
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________
Commission File No. 1-09195

KB HOME 401(k) SAVINGS PLAN

(Full title of the plan)

KB HOME
10990 Wilshire Boulevard
Los Angeles, California 90024

(Name of issuer of the securities held pursuant to the plan
and the address of its principal executive office)




Table of Contents









FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
KB Home 401(k) Savings Plan
Years ended December 31, 2013 and 2012




Table of Contents

KB Home 401(k) Savings Plan
Financial Statements and Supplemental Schedule
Years ended December 31, 2013 and 2012

Contents
 
 
 
 
Audited Financial Statements
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 








Table of Contents

Report of Independent Registered Public Accounting Firm
The Administrative Committee, as Plan Administrator
of KB Home 401(k) Savings Plan
We have audited the accompanying statements of net assets available for benefits of KB Home 401(k) Savings Plan as of December 31, 2013 and 2012, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of KB Home 401(k) Savings 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 the standards of the Public Company Accounting Oversight Board (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. We were not engaged to perform an audit of KB Home 401(k) Savings Plan’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of KB Home 401(k) Savings Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and 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 KB Home 401(k) Savings Plan at December 31, 2013 and 2012, and the changes in its net assets available for benefits for the years then ended, in conformity with U.S. generally accepted accounting principles.
 
Our audits were conducted 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, 2013 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.  Such information has been subjected to the auditing procedures applied in the 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
June 25, 2014

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Table of Contents

KB Home 401(k) Savings Plan
Statements of Net Assets Available for Benefits


 
December 31,
 
2013
 
2012
Assets
 
 
 
Investments, at fair value:
 
 
 
Mutual funds
$
116,540,319

 
$
95,785,114

Money market fund
12,486,391

 
13,913,516

Real-time traded employer stock fund
9,453,435

 

Unitized employer stock fund

 
8,763,169

 
138,480,145

 
118,461,799

Receivables:
 
 
 
Notes receivable from participants
3,329,031

 
3,200,897

Participant contributions

 
10,591

Employer contributions

 
6,344

Other

 
12,581

 
3,329,031

 
3,230,413

 
 
 
 
Total assets
141,809,176

 
121,692,212

 
 
 
 
Liabilities
 
 
 
Administrative expenses payable

 
5,027

Total liabilities

 
5,027

Net assets available for benefits
$
141,809,176

 
$
121,687,185


See accompanying notes to financial statements.




2

Table of Contents

KB Home 401(k) Savings Plan

Statements of Changes in Net Assets Available for Benefits


 
Years ended December 31,
 
2013
 
2012
Additions (Deductions)
 
 
 
 
 
 
 
Contributions:
 
 
 
Plan participants
$
6,166,744

 
$
5,168,319

Employer, net of forfeitures
3,432,649

 
2,398,235

Rollovers
334,268

 
175,424

 
9,933,661

 
7,741,978

 
 
 
 
Investment income:
 
 
 
Interest and dividends
5,603,642

 
2,533,477

Net appreciation in fair value of investments
19,315,553

 
16,433,045

 
24,919,195

 
18,966,522

 
 
 
 
 
 
 
 
Interest on notes receivable from participants
136,693

 
143,293

Benefits paid to participants
(14,846,231
)
 
(16,667,189
)
Administrative expenses
(21,327
)
 
(25,773
)
 
 
 
 
Net increase in net assets available for benefits
20,121,991

 
10,158,831

 
 
 
 
Net assets available for benefits
 
 
 
 
 
 
 
Beginning of year
121,687,185

 
111,528,354

End of year
$
141,809,176

 
$
121,687,185


See accompanying notes to financial statements.



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Table of Contents
KB Home 401(k) Savings Plan
Notes to Financial Statements
1.     Description of the Plan

General

The following description of the KB Home 401(k) Savings Plan (the Plan) provides only general information. Eligible employees of KB Home (the Company) who elect to participate in the Plan (each, a Participant) should refer to the governing Plan document for a more complete description of the Plan’s provisions.

The Plan is a defined contribution plan in which all eligible employees of the Company may participate beginning on the first day of the month following their date of hire. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA).

Contributions

Participants may contribute to the Plan up to 25% of their annual eligible compensation on a pretax basis. Participants may also contribute up to an additional 15% of their annual eligible compensation on an after-tax basis. All contributions are made in whole percentages through payroll deductions. Pretax contributions are eligible for tax deferred treatment up to the limits provided by the Internal Revenue Code (the Code).

Each Participant whose designated per payroll period contribution rate is at least 6%, who has attained (or will attain) age 50 before the close of a Plan year and whose contributions for the Plan year will exceed the limits of Code Section 402(g) or other Plan limits, is eligible to make a catch-up contribution in accordance with, and subject to the limitations of, Code Section 414(v).

Unless otherwise determined by its Board of Directors, at each applicable payroll period, the Company will match 100% of a Participant’s pretax contribution up to 6% of their eligible compensation for that payroll period (for Participants who are sales representatives, at each applicable payroll period, the Company will match 100% of pretax contributions up to 6% of their eligible compensation for that payroll period on up to $50,000 of such eligible compensation per year).

The Plan accepts rollover contributions transferred from other qualified retirement plans or from individual retirement accounts, subject to the applicable provisions of the Plan.

Plan assets are held in trust by Fidelity Management Trust Company, Inc. (the Trustee). Participants may direct the investment of their contributions among one or more of the several options offered under the Plan, and may elect to change the investment of their contributions or to transfer all or part of their individual Plan account balances among such options, subject in each case to applicable conditions and limitations established under the Plan.

Effective January 3, 2012, the Plan was amended to, among other things, limit the amount a Participant can contribute and/or transfer from another Plan investment option into the employer stock fund offered under the Plan. A Participant can invest no more than 20% of new Plan contributions in the employer stock fund, and cannot transfer funds from another Plan investment option into the employer stock fund if the transfer would cause the proportionate value of the Participant’s overall Plan account balance that is invested in the employer stock fund to exceed 20%.

4

Table of Contents
KB Home 401(k) Savings Plan
Notes to Financial Statements
1.     Description of the Plan (continued)


Vesting

Participants are immediately vested in their contributions and the earnings thereon. Subject to applicable Internal Revenue Service (IRS) rules and regulations, Company matching contributions and the earnings thereon are 100% vested to Participants after five years of service.

KB Home Stock Fund

On May 9, 2013, the employer stock fund investment option offered under the Plan was converted from a unitized fund to the real-time traded employer stock fund (the KB Home Stock Fund), and Participant Plan account balances invested in the unitized employer stock fund were transferred to the KB Home Stock Fund. With the conversion, Participant Plan account balances in the KB Home Stock Fund represent investments in shares of the common stock of the Company rather than in units composed of such common stock and cash. Participant contributions to and transactions in the KB Home Stock Fund are direct investments and transactions in shares of the common stock of the Company, and investments in the KB Home Stock Fund will be valued at the then-current market price per share instead of a composed unit price. The contribution and intra-Plan transfer limitations described above apply to the KB Home Stock Fund.

Notes Receivable from Participants

Subject to the provisions of the Plan, a Participant may borrow up to 50% of the vested balance in the Participant’s Plan account not to exceed $50,000 in any one-year period. The minimum amount of any such loan is $1,000. Loans must be repaid within five years unless a loan is used to purchase a Participant’s principal residence, in which case, the loan must be repaid within 15 years. The loans are secured by the vested balance in the borrowing Participant’s Plan account and bear interest at the prime rate plus 1%, as of the last day of the preceding calendar quarter in which a loan was made. Loans are generally repaid through payroll deductions. Loans not repaid within the timeframe specified by the Plan are considered to be in default and treated as a distribution to the Participant.

Distributions and Withdrawals

Participants who terminate their employment with the Company may elect to withdraw or rollover their contributions, vested Company matching contributions, and related earnings thereon. Vested Plan account balances totaling $1,000 or less will be distributed as a lump-sum payment, and vested Plan account balances totaling more than $1,000, but less than $5,000 will be rolled into an individual retirement account. Such distributions or rollovers may be processed without a formerly employed Participant’s consent. Vested Plan account balances totaling $5,000 or more may be kept in the Plan. Participants may take hardship withdrawals from their Plan account balances subject to the limitations and requirements of the Plan. Participants must pay any outstanding loans under the Plan in full upon their termination of service with the Company.

5

Table of Contents
KB Home 401(k) Savings Plan
Notes to Financial Statements
1.     Description of the Plan (continued)


Forfeitures

Unvested Company contributions for formerly employed Participants are forfeited and used by the Company in the following order: a) to restore the employer match and profit-sharing subaccounts of former Participants, if any; b) to reduce matching contributions for the Plan year allocated to the Participants’ employer match subaccounts in the same manner as matching contributions are allocated for the Plan year; c) to add to the profit-sharing contributions for the Plan year, if any; and d) to pay expenses of the Plan. For the Plan years ended December 31, 2013 and 2012, the Company used $340,493 and $806,857, respectively, of forfeitures to offset matching contributions. The forfeiture balances available to offset future matching contributions were $13,597 and $553 at December 31, 2013 and 2012, respectively.

Administrative Expenses

Certain administrative expenses of the Plan, such as recordkeeping fees, are paid directly by the Company. Other administrative expenses arising from Participants’ individual investment elections or transactions under the Plan, such as from the administration of Participant loans, Plan account withdrawals, and prior to its conversion, the administration of the unitized employer stock fund, are (or were) paid directly by such Participants.

Plan Termination

As of the date of this report, the Company expects and intends to continue the Plan, but it reserves the right to amend, suspend or terminate the Plan (in whole or in part) at any time. In the event of Plan termination, the Plan account balances of the individuals who are Participants at that time, if not already so, shall become 100% vested and not subject to forfeiture.
2.
Summary of Significant Accounting Policies

Basis of Accounting

The financial statements of the Plan are prepared on the accrual basis of accounting.

The financial statements are based on information provided to Plan management by the Trustee. Certain adjustments have been made to the information provided by the Trustee in order for the financial statements to conform to the accrual basis of accounting and U.S. generally accepted accounting principles (GAAP).

Use of Estimates

The preparation of the financial statements in conformity with GAAP requires Plan 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.


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Table of Contents
KB Home 401(k) Savings Plan
Notes to Financial Statements

2.
Summary of Significant Accounting Policies (continued)

Investment Valuation and Income Recognition

Investments held by the Plan are stated at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Refer to Note 3. Fair Value Measurements for the fair value measurement disclosures associated with the investments held by the Plan.

Purchases and sales of securities are recorded on a trade-date basis. Investment income is recorded as earned. Dividends are recorded on the ex-dividend date.

Notes Receivable from Participants

Notes receivable from Participants represent Participant loans that are recorded at their unpaid principal balance plus any accrued but unpaid interest. Interest income on notes receivable from Participants is recorded when earned.

Distributions

Distributions of Plan benefits to Participants who withdraw from the Plan are recorded when distributed.
3.    Fair Value Measurements

Accounting Standards Codification Topic No. 820, Fair Value Measurement, provides a framework for measuring the fair value of assets and liabilities under GAAP, and establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The fair value hierarchy can be summarized as follows:

Level 1
Fair value determined based on quoted prices in active markets for identical assets or liabilities.
  
Level 2
Fair value determined using significant observable inputs, such as quoted prices for similar assets or liabilities or quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, or inputs that are derived principally from or corroborated by observable market data, by correlation or other means.

Level 3
Fair value determined using significant unobservable inputs, such as pricing models, discounted cash flows, or similar techniques.


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Table of Contents
KB Home 401(k) Savings Plan
Notes to Financial Statements

3.    Fair Value Measurements (continued)

The following table presents the Plan’s fair value hierarchy and its financial assets measured at fair value on a recurring basis as of December 31, 2013 and 2012:

 
 
Fair Value
 
 
 
 
December 31,
Description
 
Hierarchy
 
2013
 
2012
 
 
 
 
 
 
 
Money market fund
 
Level 1
 
$
12,486,391

 
$
13,913,516

Mutual funds:
 
 
 
 
 
 
Domestic stock funds
 
Level 1
 
73,187,752

 
57,010,828

International stock funds
 
Level 1
 
9,914,051

 
9,318,169

Bond funds
 
Level 1
 
11,013,768

 
11,814,476

Balanced funds
 
Level 1
 
21,873,128

 
17,460,053

Participant-directed brokerage account investments
 
Level 1
 
551,620

 
181,588

KB Home stock fund*
 
Level 1
 
9,453,435

 

Unitized employer stock fund:*
 
 
 
 
 
 
KB Home common stock
 
Level 1
 

 
8,363,003

Fidelity interest-bearing cash
 
Level 2
 

 
400,166

Total
 
 
 
$
138,480,145

 
$
118,461,799


* The unitized employer stock fund was converted to the KB Home Stock Fund on May 9, 2013. See Note 1. Description of the Plan for further information.

The fair value of the money market fund, mutual funds (including the Participant-directed brokerage account investments), and the KB Home Stock Fund are determined based on quoted market prices. The fair value of the unitized employer stock fund was determined by the Trustee based on the combined fair value of the fund’s underlying common stock and cash positions. The fair value of the unitized employer stock fund’s underlying common stock position was based on quoted market prices. The fair value of the unitized employer stock fund’s underlying cash position was valued at its carrying value, which approximated market value.

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Table of Contents
KB Home 401(k) Savings Plan
Notes to Financial Statements

4.
Investments

The following table presents the fair value of the individual investments held by the Plan that represent 5% or more of the Plan’s net assets as of December 31, 2013 and 2012:
 
December 31,
 
2013
 
2012
 
 
 
 
Aston/Fairpointe Mid Cap Fund Class
$
9,954,257

 
$
7,647,638

DFA US Large Cap Value Portfolio Institutional Class
11,388,090

 
7,932,287

Fidelity Contrafund
32,027,960

 
25,622,126

Fidelity Trust Retirement Money Market Portfolio
12,486,391

 
13,913,516

PIMCO Total Return Fund Administrative Class
9,793,051

 
11,814,476

Spartan 500 Index Fund – Institutional Class
14,098,879

 
11,567,116

KB Home Stock Fund*
9,453,435

 

Unitized Employer Stock Fund:*
 
 
 
KB Home Common Stock

 
8,363,003


* The unitized employer stock fund was converted to the KB Home Stock Fund on May 9, 2013. See Note 1. Description of the Plan for further information.

The Plan offers a Participant-directed brokerage account as an investment option. If elected, a Participant-directed brokerage account, which is administered by an affiliate of the Trustee, allows a Participant to direct the investment of the Participant’s contributions to the Plan among various mutual fund options offered by an affiliate of the Trustee, including mutual funds that are not otherwise offered as investment options under the Plan, subject to certain minimum investment and withdrawal requirements and an overall investment limit of not more than 50% of the value of the Participant’s Plan account balance. Participant-directed brokerage accounts are not monitored or managed by the Company or the Plan.

The following table presents the net appreciation (depreciation) in fair value of investments held by the Plan (including investments bought, sold, and held during the year) for the Plan years ended December 31, 2013 and 2012:
 
Years ended December 31,
 
2013
 
2012
 
 
 
 
Mutual funds
$
18,097,199

 
$
11,092,652

KB Home stock fund
(3,139,687
)
 

Unitized employer stock fund
4,358,041

 
5,340,393

Total
$
19,315,553

 
$
16,433,045


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Table of Contents
KB Home 401(k) Savings Plan
Notes to Financial Statements

5.
Risks and Uncertainties

The Plan’s concentrations of credit and market risk are dictated by its terms, as well as by ERISA, and the investments directed by individual Participants in various mutual funds and other securities. These investment securities are exposed to various risks, such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect Participants’ individual Plan account balances and the amounts reported in the financial statements of the Plan.

6.
Tax Status of the Plan

The Plan has received a determination letter from the IRS dated January 23, 2009 stating that the Plan is qualified under Code Section 401(a) and, therefore, the related trust is exempt from taxation. The Plan has been amended subsequent to this determination by the IRS. The Plan is required to operate in conformity with the Code to maintain its qualification. Plan management believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, that the Plan is qualified and the related trust is tax exempt. Subsequent to December 31, 2013, the Plan received a determination letter from the IRS dated March 24, 2014 stating that the Plan is qualified under Code Section 401(a).

GAAP requires Plan management to evaluate uncertain tax positions taken by the Plan. The financial statement effects of a tax position are recognized when the position is more likely than not, based on the technical merits, to be sustained upon examination by the IRS. Plan management has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2013, there were no uncertain positions taken or expected to be taken. The Plan has recognized no interest or penalties related to uncertain tax positions. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. Plan management believes the Plan is no longer subject to income tax examinations for years prior to 2010.

7.
Related Party and Party-in-Interest Transactions

Investments held by the Plan include shares of mutual funds managed by an affiliate of the Trustee. The Trustee acts as a trustee for only those investments held by the Plan. An investment held by the Plan also includes the common stock of the Company. The transactions associated with these investments qualify as exempt party-in-interest transactions under ERISA.


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Table of Contents









Supplemental Schedule







11


Table of Contents

KB Home 401(k) Savings Plan
EIN: 95-3666267 Plan Number: 001
Schedule H, Line 4(i) – Schedule of Assets (Held at End of Year)
December 31, 2013

Identity of Issuer,
Borrower, Lessor,
or Similar Party
Description of Investment Including
Maturity Date, Rate of Interest,
Collateral, Par, or Maturity Value
Shares/
Units
Cost
Current
Value
 
 
 
 
 
American Beacon Advisors
American Beacon Small Cap Value Fund Class Institutional
171,690.677
**
$
4,668,270

Aston Asset Management
Aston/Fairpointe Mid Cap Fund Class
222,839.879
**
9,954,257

Dimensional Fund Advisors
DFA US Large Cap Value Portfolio Institutional Class
360,154.645
**
11,388,090

Fidelity Investments*
Fidelity BrokerageLink
185,342.992
**
551,620

Fidelity Investments*
Fidelity Contrafund
333,138.737
**
32,027,960

Fidelity Investments*
Fidelity Freedom Income
90,420.567
**
1,061,538

Fidelity Investments*
Fidelity Freedom 2000
69,127.707
**
859,257

Fidelity Investments*
Fidelity Freedom 2010
105,924.227
**
1,621,700

Fidelity Investments*
Fidelity Freedom 2020
344,822.989
**
5,382,687

Fidelity Investments*
Fidelity Freedom 2030
388,086.727
**
6,325,814

Fidelity Investments*
Fidelity Freedom 2040
695,602.136
**
6,622,132

Fidelity Investments*
Fidelity Trust Retirement Money Market Portfolio
12,486,390.240
**
12,486,391

Harbor Capital Advisors
Harbor International Fund Institutional Class
83,903.392
**
5,957,980

Lazard Asset Management
Lazard Emerging Markets Equity Portfolio Institutional Shares
211,894.529
**
3,956,071

Pacific Investment Management Company
PIMCO Total Return Fund Administrative Class
916,094.590
**
9,793,051

Fidelity Investments*
Spartan 500 Index Fund – Institutional Class
215,282.933
**
14,098,879

Vanguard Group
Vanguard Short-Term Investment-Grade Fund Admiral Shares
114,085.736
**
1,220,717

Wasatch Advisors
Wasatch Small Cap Growth Fund
20,017.077
**
1,050,296

KB Home*
KB Home Stock Fund
517,090.524
**
9,453,435

Notes receivable from Participants*
Individual notes receivable from Participants with interest rates ranging from 4.25% to 9.25% and maturity dates through 2027
 
 
3,329,031

Total
 
 
 
$
141,809,176

* Party-in-interest to the Plan.
** Participant-directed investments, cost information omitted.


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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
By: KB Home
Plan Administrator
 
 
 
 
 
Dated:
June 25, 2014
 
By: /s/ WILLIAM R. HOLLINGER
 
 
 
 
William R. Hollinger
 
 
 
 
Senior Vice President and Chief Accounting Officer








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Table of Contents

EXHIBIT INDEX


                                        
Exhibit No.
 
Description
 
Sequentially Numbered Page
 
 
 
 
 
23.1
 
Consent of Independent Registered Public Accounting Firm
 
15
 
 
 
 
 
 
 
 
 
 






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