During the first quarter of 2000, the Company’s French subsidiary, Kaufman & Broad S.A. (KBSA), completed an initial public offering of its common shares, a transaction which generated net proceeds of approximately $113 million. A portion of the net proceeds were used for the payment of a dividend of approximately $83 million to the parent company. The remainder of the net proceeds will be used primarily by KBSA to support its growth strategies. The Company continues to hold a majority interest in KBSA and will continue to consolidate these operations in its financial statements.

In addition to the French IPO gain, the increase in earnings per share in the first quarter of 2000 reflected a 9.6 percent increase in unit deliveries, a 90 basis point improvement in housing gross margin, a 30 basis point improvement in the ratio of selling, general and administrative expenses (SG&A) to housing revenues, and a 5.1 percent reduction in diluted shares outstanding.

"We continue to deliver on our commitment to increase shareholder value. The successful completion of the French IPO, combined with our ongoing share repurchase program and strong commitment to reducing costs, has positioned the Company for continued earnings growth in 2000," said Bruce Karatz, chairman and chief executive officer.

Construction revenues for the first quarter of 2000 were $786.2 million, an increase of 15.3 percent over the prior year’s quarter. Construction revenues rose as a result of higher unit volume and a 6.6 percent increase in the average selling price. The Company’s average selling price in the first quarter of 2000 was $168,900 compared with $158,500 in the same quarter of 1999. The average selling prices in the Company’s California and Other U.S. operations increased 9.6 percent and 9.1 percent, respectively.

Construction operating income for the first quarter of 2000 was $41.7 million compared with $28.9 million in the year ago quarter, an increase of 44.2 percent. Construction operating income margin was 5.3 percent compared with 4.2 percent in the year ago quarter. In the first quarter of 2000, housing gross margin was 18.9 percent compared with 18.0 percent in the first quarter of 1999, reflecting the improved pricing environment in the latter part of 1999, as well as the reduced impact related to purchase accounting for the Company’s 1999 acquisition of Lewis Homes.

SG&A as a percent of housing revenues was 13.5 percent in the first quarter of 2000 compared with 13.8 percent a year ago, an improvement of 30 basis points. This improvement reflects the Company’s reduced reliance on sales incentives and its commitment to leverage its size to reduce overhead costs.

"Our Company-wide effort to improve the SG&A ratio is beginning to produce results. Operating big businesses in big markets allows us to leverage our fixed costs. We are pleased with the progress we made during the first quarter and continue to work to identify opportunities to further improve this ratio," Karatz said.

Construction earnings before interest, taxes, depreciation and amortization (EBITDA) in the first quarter of 2000 were $71.2 million, or 9.1 percent of construction revenues (before the French IPO gain), compared with $47.4 million, or 6.9 percent of construction revenues, in the year ago quarter. Goodwill amortization and depreciation in the first quarter of 2000 were $6.8 million and $3.1 million, respectively. There were no commercial transactions in the first quarter of 2000 and land sales generated break-even results.

Construction interest expense in the first quarter of 2000 totaled $6.1 million. Minority interests in the period reflected the impact of the French IPO.

Mortgage banking pretax income for the first quarter of 2000 totaled $5.6 million compared with $5.2 million in the year ago quarter, an increase of 7.2 percent. This increase primarily reflects an increase in loan closings. The ratio of fixed rate loans to total loan originations was 74 percent in the first quarter of 2000 versus 90 percent in the year ago quarter, reflecting buyers’ reaction to increases in fixed mortgage rates. The benefit of increased loan closings was partially offset by adverse effects of the more competitive pricing environment and changes in the loan mix.

Net orders in the first quarter of 2000 were 5,440 compared with 5,621 net orders in the year ago quarter, a decrease of 3.2 percent. Backlog at the end of the first quarter was 9,684 units, or $1.6 billion, compared with 9,216 units, or $1.4 billion, in the year ago quarter, an increase of 5.1 percent in unit backlog.

Inventories at the end of the first quarter of 2000 totaled $1.68 billion compared with $1.52 billion at year end 1999. The Company’s net construction debt to total capitalization at February 29, 2000 was 52.3 percent compared with 51.0 percent a year ago.

The Company continues to execute its asset repositioning strategy, which includes the expected sale of its multi-housing operations, the sale or wind-up of certain other businesses and selected land positions, as well as a reduction in purchases of land. Proceeds generated from this strategy are expected to be used to reduce debt and/or repurchase stock. To date, the Company has repurchased approximately 7.6 million shares in total under its share repurchase program and has approximately 2.9 million shares remaining under its share repurchase authorization.

Kaufman and Broad Home Corporation is one of the largest homebuilders in the United States. Headquartered in Los Angeles, the Company has operating divisions in Arizona, California, Colorado, Nevada, New Mexico and Texas. Kaufman & Broad S.A., the Company’s majority owned subsidiary, is also one of the largest homebuilders in France.

Except for the historical information contained herein, certain matters discussed in this press release are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995, including any statements concerning future financial performance, business and prospects, and future Company actions and their expected results. These forward-looking statements are based on current expectations and projections and are not guarantees of future performance, which could be materially different. These forward-looking statements are subject to risks, uncertainties and assumptions including, but not limited to, changes in general economic conditions, material prices, labor costs, interest rates, the secondary market for loans, consumer confidence, competition, currency exchange rates (insofar as they affect the Company’s operations in France and Mexico), environmental factors, government regulations affecting the Company’s operations, the availability and cost of land in desirable areas, unanticipated violations of Company policy, unanticipated legal proceedings, and conditions in the capital, credit and homebuilding markets. See the Company’s Annual Report on Form 10-K and its Annual Report to Shareholders for the year ended November 30, 1999 for a further discussion of these and other risks and uncertainties applicable to the Company’s business.

(Financials Follow)

KAUFMAN AND BROAD HOME CORPORATION CONSOLIDATED STATEMENTS OF INCOME For the Three Months Ended February 29, 2000 and February 28, 1999 (In Thousands, Except Per Share Amounts - Unaudited)

KAUFMAN AND BROAD HOME CORPORATION CONSOLIDATED BALANCE SHEETS
(In Thousands - Unaudited)