Los Angeles-based KB Home (formerly Kaufman Broad) is a leader in the residential construction industry in the United States. The company has enjoyed strong growth during the 1990s and the early 2000s, and there is evidence to suggest that the company recognizes that it can shape the home buying process for first-time homebuyers through aggressive marketing and a mortgage banking sector. KB Home also has operations in France, where it participates in commercial real estate as well as residential construction. Financially, the company is strong, although its long-term debt spiked during the late 1990s. Today, the company takes an aggressive approach toward managing its debt through a more stringent land acquisition process.
KB Home specializes in building and financing homes for first-time homebuyers. These entry-level homes offer low price points relative to the geographic region as a whole, and the company also offers various services (including mortgage banking) to homeowners with 3700 employees. The company is based in Los Angeles and focuses most of its efforts on marketing in the West and Southwest, including California, Nevada, Arizona, New Mexico, Colorado, Texas and Florida. The company has also expanded its operations to France, where it follows the same strategy (targeting first time home buyers) as in the United States through a wholly owned subsidiary.
The company's growth was strong during the latter part of the 1990s, but stagnated somewhat during the 1999 to 2000 period. The company sold 11,443 units in 1997, 15,213 units in 1998, 22,460 units in 1999 and 22,847 in 2000. More than 24,800 units were sold in 2001 (2001 KB Annual Report 30). KB Home's revenues come primarily from its operations in the United States, but the contribution from its foreign operations is significant. In 2001, 13 percent of the company's revenues came from foreign operations, while 36 percent came from the West Coast, 29 percen...