11-K 1 kbh-123122x11xk.htm FORM 11-K Document


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, 2022

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)












FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
KB Home 401(k) Savings Plan
As of December 31, 2022 and 2021, and for the Year Ended December 31, 2022



KB Home 401(k) Savings Plan
Audited Financial Statements and Supplemental Schedule
As of December 31, 2022 and 2021, and
For the Year Ended December 31, 2022

Contents







Report of Independent Registered Public Accounting Firm


To the Plan Participants and the Administrative Committee, as Plan Administrator,
of KB Home 401(k) Savings Plan
Opinion on the Financial Statements    
We have audited the accompanying statements of net assets available for benefits of KB Home 401(k) Savings Plan (the Plan) as of December 31, 2022 and 2021, and the related statement of changes in net assets available for benefits for the year ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 2022 and 2021, and the changes in its net assets available for benefits for the year ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on the Plan’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Supplemental Schedule Required by ERISA
The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2022 (referred to as the “supplemental schedule”), has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The information in the supplemental schedule is the
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responsibility of the Plan’s management. Our audit procedures included determining whether the information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental schedule. In forming our opinion on the information, we evaluated whether such information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole.
/s/ Ernst & Young LLP
We have served as the Plan’s auditor since 1991.
Los Angeles, California
June 27, 2023
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KB Home 401(k) Savings Plan
Statements of Net Assets Available for Benefits


December 31,
20222021
Investments, at fair value$282,021,079 $336,100,557 
Notes receivable from participants4,352,643 4,170,487 
Net assets available for benefits$286,373,722 $340,271,044 

See accompanying notes to financial statements.



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KB Home 401(k) Savings Plan
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2022


Additions to (Deductions from) net assets attributed to:
Contributions:
Plan participants
$18,581,514 
Employer, net of forfeitures
8,322,809 
Rollovers
1,247,004 
28,151,327 
Investment income (loss):
Interest and dividends
20,102,439 
Net depreciation in fair value of investments(80,497,026)
(60,394,587)
Interest on notes receivable from participants201,126 
Benefits paid to participants(22,333,860)
Other, net478,672 
Net decrease in net assets available for benefits(53,897,322)
Net assets available for benefits
Beginning of year340,271,044 
End of year$286,373,722 

See accompanying notes to financial statements.


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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 (Plan) provides only general information. Eligible employees of KB Home (Company) who elect to participate in the Plan (each, a Participant) should refer to the governing Plan document and related materials for a more complete description of the Plan, which were most recently amended effective December 1, 2022.

The Plan is a defined contribution plan in which all eligible employees of the Company may participate on their first day of employment. The Plan is administered by the Plan Administrative Committee (Plan Administrator), which is designated by the Company. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA).

Contributions

Each Participant may contribute up to 25% of their annual eligible compensation on a pretax basis and/or into a designated Roth 401(k) account on an after-tax 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, and each Participant may make aggregate annual pretax and after-tax contributions, up to the applicable limits provided by the Internal Revenue Code (Code).

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

Unless otherwise determined by its Board of Directors, the Company matches 100% of a Participant’s pretax and/or after-tax Roth 401(k) account contributions up to 6% of eligible compensation per payroll period (for Participants who are sales representatives, the Company matches contributions up to 6% of eligible compensation per payroll period up to $50,000 of such eligible compensation per year).

The Plan, subject to its provisions, accepts rollover contributions from other qualified retirement plans or individual retirement accounts. In addition, Participants may directly convert all or a portion of their existing Plan account balances, as well as make rollover contributions from other qualified retirement plans or individual retirement accounts, into a designated Roth 401(k) account, subject to the applicable provisions of the Plan. Participants are responsible for paying applicable taxes on such conversions or rollover contributions.

Plan assets are held in trust by Fidelity Management Trust Company, Inc. (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. Contributions made by a Participant who does not make any investment elections are directed to an investment option under the Plan that offers an adjustable asset
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allocation designed for a target retirement date (Target Date Funds) closest to the year in which the Participant turns (or turned) age 65.

A Participant can invest no more than 20% of new Plan contributions in the KB Home Stock Fund, which is described below, and cannot transfer funds from another Plan investment option into the KB Home Stock Fund if the transfer would cause the proportionate value of the Participant’s overall Plan account balance that is invested in the KB Home Stock Fund to exceed 20%.

Participant Accounts

Each Participant’s account is credited with the Participant’s contributions and applicable Company matching contributions, investment earnings and revenue-sharing amounts, if any. Certain administrative expenses arising from a Participant’s individual investment elections or transactions under the Plan are charged to the individual Participant’s account.

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, as defined in the Plan document.

Target Date Funds

The Plan offers 13 Target Date Funds with a range of designated target dates through 2065 that are managed by an affiliate of the Trustee. The Target Date Funds are mutual funds that allocate investments across a combination of equity, fixed income, and short-term mutual funds. The Target Date Fund manager adjusts the asset allocation within each of these investment options over their designated timeframe, as applicable, with the allocation generally becoming more conservative as a relevant target date approaches by reducing equity mutual fund holdings.

KB Home Stock Fund

The Plan offers the Company’s common stock as an investment option to Participants through the KB Home Stock Fund. If elected, a Participant’s contributions to, and transactions in, the KB Home Stock Fund are direct investments and transactions in shares of the Company’s common stock valued at the then-current market price per share. Dividends paid on the Company’s common stock within the KB Home Stock Fund, as held in a Participant’s account, are automatically reinvested into shares of common stock.

Participant-Directed Brokerage Account

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 contribute to the various mutual fund options offered by such affiliate, including mutual funds that are not 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.


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Stable Value Fund

The Plan offers a stable value investment option (Stable Value Fund), which is intended to provide a stable return on investment and protection of principal from changes in market interest rates. The Stable Value Fund is a collective investment trust that invests in a group annuity contract (which has underlying investments in various guaranteed investment contracts, synthetic guaranteed investment contracts and securities) issued by the fund provider. Participant withdrawals from the Stable Value Fund are generally transacted at the fund’s per-share net asset value (NAV). Certain events prompting a withdrawal from the Stable Value Fund may be transacted at the fair value of its underlying investments, which may be less than the NAV. Participants are generally prohibited from transferring their respective balances (in whole or in any part) in the Stable Value Fund directly into other Plan investment options that are considered to be competing investment options. Instead, Participants must first transfer such balances into a non-competing Plan investment option for 90 days before transferring such balances into a competing Plan investment option. There were no unfunded commitments to the Stable Value Fund as of December 31, 2022 or 2021.

Notes Receivable from Participants

Subject to the provisions of the Plan, a Participant may borrow up to 50% of the vested balance in their 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. Each loan is secured by the vested balance in the Participant’s Plan account and bears interest at a fixed rate based on prevailing rates charged by lending institutions on loans made under similar circumstances, as determined by the Plan Administrator. 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 taxable distribution to the Participant. Participants with loans outstanding at termination of employment with the Company may continue to repay the loan after termination.

Distributions and Withdrawals

Participants (or their beneficiaries) are generally eligible to receive distributions of their account balances upon the earlier of reaching 59 ½ years of age, death, or termination of service, as defined in the Plan document. In addition, Participants who terminate their service with the Company may elect to withdraw or rollover their account balances comprised of 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 or in-service withdrawals from their Plan account balances subject to the limitations and requirements of the Plan.

Forfeitures

Participants forfeit the nonvested portion of their Plan account upon termination of employment at the time the account is distributed to the Participant or following five consecutive breaks in service, as defined in the Plan document. The forfeited funds may be used to pay administrative expenses of the Plan with any remaining amounts used to reduce employer contributions payable under the Plan. For the Plan year ended December 31, 2022, the Company used $685,272 of forfeitures to offset employer contributions, with the
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Company generally paying the Plan’s administrative expenses directly. The forfeiture balances at December 31, 2022 and 2021 were $17,194 and $3,939, respectively.

Administrative Expenses and Revenue Credit Account

Plan administrative expenses are paid either by the Company or under the Plan. Certain administrative expenses arising from Participants’ individual investment elections or transactions under the Plan are charged to the applicable Participants’ accounts, as discussed above. The Plan administrative expenses paid directly by the Company are excluded from these financial statements.

Pursuant to a July 2021 amendment to the trust agreement between the Trustee and the Company, on a quarterly basis, the Trustee allocates revenue-sharing credits that may be generated from certain Plan investment options, including those from an affiliate of the Trustee, to the accounts of the Participants invested in such investment options. Unallocated revenue-sharing credits, if any, and the interest earned during the course of implementing investment option transactions under the Plan are deposited by the Trustee into a revenue credit account (RCA). The RCA can be used to pay Plan expenses or be distributed to eligible Participant accounts, no more frequently than quarterly. Prior to July 1, 2021, revenue-sharing credits were also deposited by the Trustee into the RCA. At December 31, 2022, the RCA had a total balance of $8,144. As of December 31, 2021, the RCA balance totaled $725,755, which mainly consisted of revenue-sharing credits generated prior to the July 2021 amendment, and was fully distributed to eligible Participant accounts on April 1, 2022.

Other, net

Other, net for the year ended December 31, 2022 reflected $514,013 of revenue-sharing credits generated, partly offset by $23,341 of expenses charged to Participants’ accounts and $12,000 of ERISA-qualified administrative expenses paid through RCA credits.

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 Plan’s financial statements are prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles (GAAP) and are based on information provided to Plan management by the Trustee.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires Plan management to make informed estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

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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. The NAV per share used as a practical expedient for determining the fair value of the Stable Value Fund is based on the value of the Stable Value Fund’s underlying investments, minus its liabilities, divided by the number of shares outstanding.

Purchases and sales of securities are recorded on a trade-date basis. Investment income (loss) is recorded as earned (incurred). Dividends are recorded on the ex-dividend date. The Plan’s net depreciation in the fair value of investments reflects the net realized losses on investments that were bought and sold during the year, as well as net unrealized depreciation of the investments held at the end of the year.

Notes Receivable from Participants

Notes receivable from Participants represent Participant loans that are recorded at their unpaid principal balance plus accrued but unpaid interest, if any. Interest income on notes receivable from Participants is recorded when earned. There was no allowance for credit losses required as of December 31, 2022 or 2021.

Distributions

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

The fair value measurements of assets and liabilities are categorized based on the following hierarchy:

Level 1Fair value determined based on quoted prices in active markets for identical assets or liabilities.
Level 2Fair 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 3Fair value determined using significant unobservable inputs, such as pricing models, discounted cash flows, or similar techniques.

The mutual funds and money market fund offered under the Plan as investment options are registered with the U.S. Securities and Exchange Commission (SEC) and valued at their daily closing price. As described in Note 1 – Description of the Plan, the Participant-directed brokerage account represents investments among various mutual fund options, including mutual funds that are not otherwise offered as investment options under the Plan. The KB Home Stock Fund represents investments in shares of the Company’s common stock.

The following table presents the Plan’s fair value hierarchy and its financial assets measured at fair value on a recurring basis:
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Fair Value HierarchyDecember 31,
Description20222021
Mutual funds
Target Date fundsLevel 1$175,621,476 $212,762,719 
Domestic fundsLevel 164,782,994 79,922,434 
Fixed income fundsLevel 16,993,741 8,610,584 
International fundsLevel 14,513,881 5,628,478 
Money market fundLevel 113,264,228 9,480,688 
KB Home Stock FundLevel 110,006,840 14,506,631 
Participant-directed brokerage account investments
Level 12,201,757 1,939,315 
277,384,917 332,850,849 
Stable Value Fund, at net asset value4,636,162 3,249,708 
Investments, at fair value$282,021,079 $336,100,557 

The fair values of the mutual funds, money market fund, KB Home Stock Fund, and Participant-directed brokerage account investments are determined based on quoted market prices in active markets and considered Level 1 assets under the above hierarchy as of December 31, 2022 and 2021. The fair value of the Stable Value Fund is measured using the NAV per share practical expedient, as described in Note 2 – Summary of Significant Accounting Policies, and has not been categorized in the fair value hierarchy. The fair value amounts presented in the table above are intended to reconcile the fair value hierarchy table to the amounts presented in the accompanying Statements of Net Assets Available for Benefits.
4.     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 Plan’s financial statements.
5.     Tax Status of the Plan

On December 1, 2022, the Plan adopted a plan document sponsored by the Trustee, along with associated administrative documents, containing terms substantially similar to those in place for the Plan prior to adoption. The Trustee obtained an opinion letter from the IRS dated June 30, 2020 that the form of plan document as the Plan adopted it is qualified under the Code and any employer or plan adopting the form will therefore be considered to have a plan qualified under the Code and exempt from taxation. The Plan Administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes the Plan is qualified and the related trust is tax-exempt.

GAAP requires Plan management to evaluate uncertain tax positions taken by the Plan and recognize a tax liability if Plan management believes it is more likely than not that the Plan has taken a position that, based
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on the technical merits, would not 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, 2022 and 2021, there were no uncertain positions taken or expected to be taken. The Plan is subject to routine audits by taxing jurisdictions; however, there are no audits for any tax periods in progress.
6.     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 option under the Plan includes the KB Home Stock Fund. As of December 31, 2022 and 2021, the Plan held 314,122 and 324,263 shares of KB Home common stock, respectively. The transactions associated with these investments qualify as exempt party-in-interest transactions under ERISA.
7.     Subsequent Events

Plan management evaluated subsequent events for the Plan through June 27, 2023, the date the financial statements were available to be issued.

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Supplemental Schedule






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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, 2022
Identity of Issuer,
Borrower, Lessor,
or Similar Party		Description of Investment Including
Maturity Date, Rate of Interest,
Collateral, Par, or Maturity Value 		Shares/
Units		CostCurrent
Value
American Beacon AdvisorsAmerican Beacon International Equity Fund Class R629,393.758
**
$462,364 
American Beacon AdvisorsAmerican Beacon Small Cap Value Fund Class R679,467.379
**
1,781,659 
Dimensional Fund Advisors
DFA Emerging Markets Core Equity Portfolio Institutional Class
62,187.850
**
1,252,463 
Dimensional Fund Advisors
DFA Five-Year Global Fixed Income Portfolio Institutional Class
57,857.498
**
568,739 
Dimensional Fund Advisors
DFA International Small Company Portfolio Institutional Class
36,843.508
**
641,814 
Dimensional Fund Advisors
DFA US Large Cap Value Portfolio Institutional Class
184,838.192
**
7,670,785 
Dimensional Fund Advisors
DFA US Small Cap Portfolio Institutional Class
114,961.457
**
4,450,158 
Fidelity Investments*
Fidelity 500 Index Fund
122,930.177
**
16,364,465 
Fidelity Investments*
Fidelity BrokerageLink
887,468.781
**
2,201,757 
Fidelity Investments*Fidelity Contrafund K61,679,999.503
**
28,274,392 
Fidelity Investments*
Fidelity Extended Market Index Fund
99,040.550
**
6,241,535 
Fidelity Investments*
Fidelity International Index Fund
52,372.920
**
2,157,240 
Fidelity Investments*Fidelity Freedom Income Fund Class K82,046.410
**
813,900 
Fidelity Investments*Fidelity Freedom 2010 Fund Class K130,867.869
**
1,667,257 
Fidelity Investments*Fidelity Freedom 2015 Fund Class K268,970.021
**
2,767,701 
Fidelity Investments*Fidelity Freedom 2020 Fund Class K783,072.871
**
9,984,179 
Fidelity Investments*Fidelity Freedom 2025 Fund Class K1,979,084.929
**
23,155,294 
Fidelity Investments*Fidelity Freedom 2030 Fund Class K2,368,948.229
**
34,634,023 
Fidelity Investments*Fidelity Freedom 2035 Fund Class K2,639,501.810
**
33,178,538 
Fidelity Investments*Fidelity Freedom 2040 Fund Class K3,193,609.514
**
28,423,125 
Fidelity Investments*Fidelity Freedom 2045 Fund Class K2,248,058.937
**
22,930,201 
Fidelity Investments*Fidelity Freedom 2050 Fund Class K876,291.958
**
9,043,333 
Fidelity Investments*Fidelity Freedom 2055 Fund Class K514,931.247
**
6,163,727 
Fidelity Investments*Fidelity Freedom 2060 Fund Class K214,331.216
**
2,359,787 
Fidelity Investments*Fidelity Freedom 2065 Fund Class K49,643.902
**
500,411 
Fidelity Investments*
Fidelity US Bond Index Fund
247,449.069
**
2,519,031 
Metropolitan West Asset Management
Metropolitan West Total Return Bond Fund Class I
252,610.917
**
2,283,603 
Reliance Trust Company
Reliance Trust New York Life Anchor Account Series I Class 0
7,687.092
**
4,636,162 
Vanguard GroupVanguard Cash Reserves Federal Money Market Fund Admiral Shares13,264,227.700
**
13,264,228 
Vanguard Group
Vanguard Short-Term Inflation-Protected Securities Index Fund Admiral Shares
69,272.780
**
1,622,368 
KB Home*KB Home Stock Fund314,122.009
**
10,006,840 
Notes receivable from Participants*
Individual notes receivable from Participants with interest rates ranging from 4.25% to 9.25% and maturity dates through 2037
4,352,643 
Total$286,373,722 
*    Party-in-interest to the Plan.
**    Participant-directed investments, cost information omitted.
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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 27, 2023By: /s/ WILLIAM R. HOLLINGER
William R. Hollinger
Senior Vice President and Chief Accounting Officer







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INDEX OF EXHIBITS



Exhibit No.DescriptionSequentially Numbered Page
23.1





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