Good day everyone, and welcome to KB Home's Second Quarter Earnings Call. As a reminder, today's conference is being recorded and webcast on KB Home's website at kbhome.com. The recording will also be available via telephone replay until July 5, 2007 at midnight. You can access this recording by dialing 719-457-0820 or 888-203-1112 and entering the replay pass code of 7248630. KB Home's discussion today may include certain predictions and other forward-looking statements regarding market or economic conditions and about KB Home's business and prospects, future financial and operational performance and future actions and their expected results. These are based on management's current expectations and projections about future events, but should not be considered guarantees of future performance. Please be aware that KB Home's actual results may differ from those that are expressed, forecasted or implied by the predictions and forward-looking statements that may be made today, due to a number of risks, assumptions, uncertainties and events outside of the company’s control, and that the differences may be material. Many of these risk factors are identified in the company’s periodic reports and other filings with the SEC, and the company urges you to read them. For opening remarks and introductions, I would now like to turn the call over to KB Home's President and Chief Executive Officer, Mr. Jeffrey Mezger. Please go ahead, sir.

Thank you. Good morning, everyone. Thank you for joining us today for an update on our business and the financial results for our second quarter of 2007. With me this morning are Dom Cecere, our Executive Vice President and CFO; Bill Hollinger, our Senior Vice President and Chief Accounting Officer, and Kelly Masuda, our Senior Vice President of Investor Relations and Treasurer. In May, after a competitive bidding process launched earlier in the year, we announced that we had entered into an agreement to sell our 49% ownership interest in Kaufman & Broad S.A. to PAI, a French private equity firm headquartered in Paris, France for approximately $800 million. We expect the transaction to close in the next couple of weeks, following the receipt of EU antitrust clearance. As we've shared in the past, we will continue our strategy to have a balanced approach to the use of cash. Proceeds from the sale of KBSA along with free cash flow from operations will be used to strengthen our balance sheet, pay down debt, repurchase shares of our common stock, and reinvest in opportunities in our business where appropriate. Additionally, we have announced that we are redeeming $250 million of 9.5% senior subordinated notes. The redemption should be completed in approximately 30 days. Here in the U.S., market conditions continue to remain challenging, affordability remains an issue, and it is too early to determine when the housing market will begin to stabilize. Based on the home sales data released this week, the inventory of existing unsold homes increased in May to an 8.9 month supply, and new home inventory increased to over a seven month supply. Housing starts have been declining for at least 12 months now; however, the contraction of new home completions really just began in the first quarter…

Thanks Jeff. First, let me share with you the expected financial impact from the sale of our 49% stake in Kaufman & Broad S.A. Gross cash proceeds will be approximately $800 million. After-tax net cash proceeds will be approximately $550 million. Debt-to-total capital was just over 50% at the end of the second quarter. On a pro forma basis after the sale of our KBSA stock, our book equity is expected to increase by approximately $400 million to over $3 billion. Debt-to-total capitalization net of cash is anticipated to approximate 41% when taking into account the $400 million after-tax gain from the sale of France, the $550 million in proceeds from the sale and the $272 million in cash on the balance sheet at the end of the second quarter. Net orders for new homes were down 3% on a year-over-year basis with 18% fewer active selling communities. Orders for new homes on the West Coast were up 3% from a year ago. Orders in the Southwest were up 16%, and orders in the Southeast were up 19%, while orders in the Central region were down 30% driven primarily by a 35% reduction in the number of active selling communities in this region, primarily in Texas and Colorado. Even with the tightening of credit standards and subprime fallout, cancellation rates have been at normalized levels relative to historical rates for the last two quarters, and the second quarter cancellation rates were 34% of gross orders, improving from 41% of gross orders one year ago. Compared to beginning backlog, cancellation rates were 30% in Q4 of 2006, 28% in Q1 and 33% in Q2 of 2007. Community counts this quarter were down 18% from the prior year quarter with 342 active selling communities, compared to 419 active selling communities in the…

Thanks Dom. This time last year, we reviewed several operating strategies with many of you at our Investor Conference in New York, and also on our Q2 earnings call. At that time, we referenced the declined in new home demand and increase in new and existing home supply, with higher cancellation rates negatively impacting orders for new homes. Our response to the changing market conditions translated into several well-defined operating strategies, and I want to take a moment to outline our results versus those strategic initiatives we identified. The strategies included, being much more selective in land investments, a focus on reducing the cycle time to build a home, lowering the direct costs of construction, aligning our overhead cost to projected revenues going forward, and generating free cash flow with a strong and liquid balance sheet. At that time, we targeted $1 billion in free cash flow over the ensuing 18 months. One year later, we are definitely seeing the benefits of implementing these strategies, in what has turned out to be a more dramatic market correction than anyone anticipated. Inventories are now down by $1.7 billion, from $6.9 billion at the end of the second quarter of '06 to $5.2 billion at the end of this quarter. Unfortunately, approximately $630 million of the reduction came from impairment and abandonment charges. However, we did unlock over $1 billion of cash from working capital by reducing our investments in under performing communities, improving cycle times, and lowering our land pipeline by 44%. The cycle time to build a home has been reduced by approximately 40 days from one year ago, causing a 20% improvement in our conversion of backlog and we have reduced our work in process by 39% from over 18,000 homes under construction at this time last year to…

(Operator Instructions). First up from Citigroup this is Stephen Kim.

Hi Steve. We lost him.

Mr. Kim you may be muted, we can't hear you right now.

Hi guys. Can you hear me, okay?

Yes, good morning Steve.

Okay. Good morning. I guess my first question is related to the specific number of options that you may have abandoned in the quarter. Could you give us an update on that?

There were no options abandoned in the quarter, this was all mostly impairments, joint venture and inventory owned.

Okay. And so can you remind us how much, over the last let's say 12 months that you have abandoned in terms of lot option?

I think the dollar amount is about $100 million worth, and it's somewhere between 45,000 and 50,000 lots.

And would you say at this point that...

About 3 grand a lot, under 3 grand a lot I believe.

Okay. And do you think at this point may be pretty much through the option abandonment? I mean at this point you are also not signing a whole lot of new ones except for unusual circumstances like what you laid out. But would you say at this point that pretty much what you've got, and most likely you probably going to follow-up through given the valuation on those options?

Yes. I think that's correct Steve, because with the option cost now down just somewhere around 30,000, 40,000 lots so.

Right, exactly. Okay.

There wouldn't be much impairments left.

Okay.

Abandonment cost or options anyways.

Okay. Great. Thanks very much.

You're welcome.

Moving on now to Greg Gieber at A.G. Edwards.

Morning guys.

Good morning, Greg.

Jeff, I wonder if you could go into more detail on the comment you made that by the end of the year, 75% of your products have been replaced with new lower priced products. Just roughly what kind of price reductions are you putting in place? How much of these are physically smaller or less specified? And as you move to these smaller or lower priced houses what is the implication for your gross margins?

Okay. You just asked a lot of questions, Greg. Since the conference call last year, we've turned approximately a 160 communities down already and we have another 150 to open in the next 12 months. I think that was your number. But what we've been doing Greg is, retooling our products to smaller, on average across the company, the average size is probably 200 to 300 square feet less. So, there is a direct correlation in your cost to build due to just the smaller homes that you are constructing. We've lowered spec levels based on lower price product, which again would lower your cost. We've been value engineering and re-bidding our products along the way. And as we end this year through all of those processes we'll have turned 75% of our community since the investor conference last spring. As to impact on margins, it's a community specific strategy. Our margins right now are in a 14.9 range I think we reported for this quarter, and building a smaller on an expensive lot does impact your margin but allows you to sell a real lot and turn the inventory.

Okay. Any idea on just what the price reduction is, I mean, affordability is really the big issue, that's what creating a large amount of this inventory overhang.

If I had to tell you a number I would say 10%, if they would select a smaller home.

Okay. That sounds fine.

And that's part of the beauty of our biz model, Greg. We're offering a lower product, but there are still buyers taking a larger product in the same community. We are spreading our product lines in order to offer more affordability while holding the current products for those who have taken.

Okay. Well, that's a good strategy. If I could follow just one question related to all this, your studios, is the cash spend in your studios, is that falling as apart, putting pressure on ASPs?

As we've shared in '06, we actually saw an increase versus '05 in a pretty difficult market condition. In '07 to date sales per unit are about flat year-over-year on base prices that are actually down. So as a percent of revenue it’s a bigger component than it was a year ago.

Okay. Thank you.

Thanks, Greg.

Question now from Dan Oppenheim at BoA Securities.

Thanks very much. I wanted to ask you about your comments there in terms of the slowing community growth. That seems to be in contrast with lot of other builders who have said recently, where they talk about how land doesn’t really improve over time in this competitive market. Can you talk about how you are viewing that and how much you would plan to slow your community growth? And are there specific markets where you would want to burn through that land where it's in the midst of a lot of competitive pressure there, just how you are viewing that overall?

Our community count growth, Dan, with our current lot pipeline is, our community count is pretty much in balance with our lots that are owned and controlled. What we are referring to is reinvesting in communities and that we are only going to invest dollars if we can get to returns; we are not going to grow community count just for growth’s sake.

And Dan, we only own less than 60,000 lots, so we are not faced with the problem as how do we get rid of an eight-year supply of land or seven-year supply of land that may be owned. We are really down to around two-year supply of land. So, there is no reason to invest significantly and having more communities opened in the market where demand is down, just to push land through the pipeline.

Right. But, I guess two years or eight years, if the home prices in those markets are falling, wouldn’t you want to try generating cash from those markets?

Its community specific and market specific, Dan. If we are in a land constrained market where there is no opportunity to replace it and it’s a decent land base, we’ll park it instead of investing the improvement dollars, the model investment, all other cost to run the community and we will wait for another day, and we do have some of that. So, we are being strategic and selective in turning some assets, parking some assets, and the key in our community count growth will be at what pace we reinvest going forward.

Dan, it's almost the opposite if you think about it when you talked about cash. Our order growth has tracked quite well against the other public builders. Yeah, we’ve done it with fewer communities. So, we are putting less cash in the ground and still moving as much inventory as everyone else, we are just doing it in a fewer communities.

Okay. And just one just follow-up. You talked about buying land and the foreclosure from the bank, expecting more of that. If you are expecting more of that, it probably means you would have more impairments comes on your land. How much are you factoring in there for the remainder of this year in terms of your comment that you expect it to be?

Actually Dan, we are not suggesting more impairments, that’s a quarterly review tied to the market conditions. What we are illustrating is that there is already some difficulties with some small developers, smaller builders where banks are taking back assets and then offloading them to get them out of their portfolio. It's not tied to impairments. In this example it was bank, just wanting to move asset off their books. The price for our product hasn’t changed in that submarket.

I mean you are just getting 10, 15 points a margin better than you do if you had asset on the books that’s not impaired, but there are minimum margins.

Thanks, very much.

Moving on now to a question for Jim Wilson at JMP Securities

Great, thanks. Good morning, guys. So, two questions, one, Jeff a little more color on your 40-day cycle time improvement. I know you talked about how you would improve the cost per square foot, but could you give a little more color further on how you've been able to further reduce cycle time? And then the second question is just, I got on a few minutes late, so I don’t know if you have addressed it, but a little more specific regional color on your order trends like different parts of California or different parts of the Southeast, how they looked compared to other parts of those regions?

Sure. Jim, the cycle time reductions primarily have been through focus, and as the market have cooled in activity the subs are more available, and we’re back to, frankly, historical levels. What we are building at in '03 and '04, we have to continue to pursue additional reductions because it helps our inventory turn. But, it's working and partnering with our contractors and being smart, frankly and more focused. So, across the system it's been a 40-day reduction, which is a big help in inventory turn. Don can again give you the regional color. We don’t get into specifics within the region, but if you want to share that again Dom?

I mean, we did talk about it, but you will notice that in the community counts that we were down 18% in community counts, and on the West Coast and Southwest it’s been flat year-over-year, and then in the Southwest and the Central region, it's been down around 25%. And order trends have really followed on the gross sort of trends, have really followed community counts. And net orders are only down 3% in our business because our cancellation rates have come back to normal levels. But I mean, business overall across the whole country has been pretty much down the same everywhere.

Okay, alright. Thanks.

Question now from Ken Zener at Merrill Lynch.

Good morning.

Good morning, Ken.

Good morning, Ken.

Just a follow-up, little follow-up on this land that you guys got. Is that common?

We are starting to see it Ken. The terms softened last year. So, terms were much more favorable and we've been working quite a bit even on our current pipeline to continue to negotiate better terms. Prices, we are just now starting to see some movement and it varies by market. The land-constrained markets where large builders and large land developers control the percentage that’s in the pipeline, we are not seen as much movement as we are in the markets that are more free to answer. Like a Phoenix, for instance, there is a lot of reduction in a lot prices available there and get in more land-constrained urban areas of California, we haven't see as much movement.

Does that -- within the context of, you haven't seen a lot of movement, but clearly prices have come down and I'm thinking let's say Riverside, which is a very -- affordability is worse than it was during their early 90 recession. Do you think the absence of price declines -- is that creating a another big market where assets are higher than they would be otherwise on your guidance?

I think Riverside is a good example where you will see prices come down, because it's a more of a commuter market and has values reset closer in, prices have to come down out there for the offset of own-a-home and drive-to-work, that balance we've always talked about over the years. I think in part, it's been an interesting dynamic in that the builders really haven't been in the market to any degree on the acquisition side. So, prices haven't come down because no one's been offering to buy land, and as where we are engaging in the markets, and poking around out there, we are seeing willingness on the seller, once they know they have a legitimate buyer to move their asset.

Alright. Okay. And I guess, this is my follow-up question is going to be related to the derivative of pricing, last quarter -- can you guys break out margins by your segment, because you had big --

No, I don't really have it. I don’t have the margins by segment in front of me..

It will be in the queue.

Yeah, yeah.

So, you will get it in the queue.

Because, what was interesting last quarter is your South West was actually your strongest division which is basically comprised of Vegas and Phoenix along with some other smaller communities. You had 9% margin there. Could you kind of discuss the trends that we are seeing, I mean, here could we say that's going to be going down a lot, given all the inventory? Because that would contrast with Central which is largely Texas for you guys, which was already at a negative margin ex-charges. I'm just trying to get a flavor of how the regional margins are moving.

I don't thing there is any big swings quarter-to-quarter in regional margins, I will doubt that when you see the Q2, it's going to be much different than the Q1 with the exception that we lost another couple of points of margin.

So, region-to-region there will be the same relativity, but across regions down.

Well, would the Central be picking up since you are closing down? I've seen your less profitable communities out there, or is that -- why is that operating at such a low level, negative 6%? Thank you.

In theory over time, we've been closing out of a lot of communities in the Central region and frankly haven't been reinvesting because we couldn't hit our return hurdles, but it's not like you turn the switch and it flows through to your bottom line at the same time. It takes time for the overhead to flow through; it takes time for the community to get built out and the margins to go away. So, you won't see it in a month or three months, but you certainly will see the trends over six months to nine months.

Moving on now to a question from J.P. Morgan's Michael Rehaut

Hi, thanks. Good morning.

Good morning, Michael.

Good morning, Michael. A question on the orders, it was a lot stronger than we were anticipating and other builders have actually seen absorptions continue to remain. We could deteriorate and for you, actually you had an absorption up 19% year-over-year. So, the question is what drove that, have you been more aggressive? Do you feel relative to your competition in terms of incentives, or even asides from just a competition, have your incentives got larger as you went throughout the quarter? That’s my last question?

This is Dom. You know when I first saw the orders, my thought was, boy, our absorptions communities are way up, but then when I went back and looked at it, I realized that was not the case. First of all, it was an easy comp over last year where our orders in the U.S. were down 27%. But actually gross orders per community were about the same first quarter to second quarter, what caused the net orders to be down only 3% was nothing more than the cancellation rates coming down. So, what we ended up seeing was, it was a cancellation rate that made it look like orders were only down 3%, but actually gross orders were down about the same quarter-to-quarter. Actually for the last four or five quarters our gross orders have been down somewhere between 15% to 20%, and things that really has swung that orders has been cans.

And as our cans of normalized net orders have come back up.

Right. In terms of incentives, could you comment on the direction during the quarter, and have you gotten materially more aggressive relative to the marketplace and just within your own business?

Michael, first off again let me reinforce that the focus in our business model is best price not best incentives. So, in most case, I'm not saying we don't have incentives because we do. But we will focus on offering to the buyer the best price we can for the home, and in some communities we have in fact lower prices as you know. But through that we price to the market and let the market dictate. And our sales rates are targeted in our strategy to what the market will give us. So, it's the price that the market will give us, we don't necessarily throw a bunch of incentives out in the marketplace. And I would say on average our prices are down as reflected in our average sales price going up.

Your average order price is by region is actually up sequentially for all of your four regions?

You have to be careful looking at order price by backing into it, because it's a strange number at times.

Well, yeah.

[No one] knows Michael because in our backlog there is a component that hasn't been to the studio yet and finalized. So, you can't look at the backlog what closed, because what closes is fully loaded from the studio versus backlog where one-third of it is still finalizing going forward.

Our average prices are just hovering right around $270,000 which is right at the average price per resale home. And I am sure with the price pressure it's going to trend down a little bit.

The second question I have and thank you for that. The second question I have is the transaction that you described with the 139 lots. If you could just tell us which market was that in and are you seeing aggravated levels of distress from some of the smaller home builders in other regions there across the country. And where would you say the breaking point is for a material number of some of this less capitalized builders you are starting to exit the market.

The acquisition we outlined is in Colorado. The squeeze on the smaller and mid sized builders continues Michael. These impairments that we are taking are in a different way also affecting the privates, and that their property gets reappraised and the bank gives them a capital call and they don't have the cash for the capital cost. So, they are feeling the same pressures in a different way that we are. And what we are finding is with the available credit that was out there over the last few years you have small builders with a much larger lot pipeline than they would need for their business. So, in effect they were land speculators or developers as well. And as things get tighter for them, we do see them offering up lots for sale to help them as they recapitalize and there are opportunities out there.

We have a question now from Timothy Jones, Wasserman & Associates Timothy Jones - Wasserman & Associates: Hi, good morning.

Good morning, Tim. Timothy Jones - Wasserman & Associates: Very informative presentation. First question, I was wondering, you only took $9 million of impairments in the first quarter and like $308 million in the second quarter, and you had taken impairments in several quarters ago before that. Why so few in the previous quarter and so much in this quarter? Why wasn’t it more evened out?

Tim it's a quarterly review as we [step] in. And what happened in the second quarter, we don’t give color on our sales month-to-month, but we did see significant pressure on pricing and a lot of competitive moves in April and May that accelerated through the quarter that frankly didn’t occur in the first quarter. So, there was a lot more pressure on pricing coming out of the second quarter and that's what triggered the impairments. Timothy Jones - Wasserman & Associates: Okay, thank you for that answer. And the second question, How many, and I think I said at the last fiscal year subprime was about 12% of their business and the latest quarter had decreased to 3%. Could you give me some kind of a similar number?

I think in our second quarter Tim, it was about 6% of our business and its going down very quickly. Timothy Jones - Wasserman & Associates: What would you say last year just as a guess, what it was?

16. Timothy Jones - Wasserman & Associates: It went to 16 to 6, thank you so much.

Mostly in the Central region. Timothy Jones - Wasserman & Associates: Really, not California?

No central region. Timothy Jones - Wasserman & Associates: Okay, thank you.

Moving on now to a question from Alex Barron at Agency Trading Group.

Thanks guys. I wanted to focus a little bit on your impairments. Can you talk about how many communities you impaired this quarter, and do you have a breakdown by region? And are any of these communities repeats from previous quarters? Thanks.

Well, first of all Alex none are repeats. All I know you should say none. Only a handful are repeats. And I think this quarter was about 42 communities that were impaired about 11% of our community account. Last year it was around 29 communities about 7% were impaired.

Okay, and how about some kind of breakdown by region?

Over half was in California, and the second largest portion was in the Southeast, then the smaller amounts in the -- less than 10% in the Southwest and the Central.

Okay, got it. And I guess the second question I wanted to ask is, what are your use of the France proceeds? Is it you think mostly to pay down debt?

I think there are two comments I would like to make out, if I could just jump down. One is, we’ve already generated $1 billion in cash and now we are going to generate another $1 billion of cash. And I think where the market is the first way will be to continue to reduce our debt. But, we are looking at not just the French cash, but the fact that we are going to have $1 billion in the next six months. And we will make the first decision to reduce some debt, the second decision we will make it in the fourth depending on what the market looks like and how is repurchased invest in the business, so we will continue debt reduction.

Okay and one last one. What’s your headcount down from peak levels?

Over the last 12 months in excess of 30%.

Okay. Thanks a lot.

Tony Campbell at Dorset Management is next.

Hi guys. Most of the builders are saying the business sort of got worse through the quarter, is that been your experience? I am just surprised that your can rates are stable, because that’s not what other folks have been reporting and I’m just little confused there.

Yeah. I cant speak to the other builders, Tony, but as I told Tim, we did see a lot of margin pressure in the later half of the second quarter, which would suggest that the markets are getting tougher. And still there's a big inventory overhang that has to clear. So, I think you will see additional pressure going forward on pricing and margins. But, it did get worse through the later half of the quarter.

Thank you.

Next from Goldman Sachs, this is Keith Wiley.

Yes, thank you. You finished the quarter with about $2.8 billion of debt and gross debt and I am just trying to think as you collect over about $1 billion over the next six months of cash, could we assume or is it safe to assume may be $500 million of that goes to reduce your gross debt levels or do you have a target for gross debt over the next six to 12 months?

That’s probably not a bad a number to start with. And again, I think how much goes to debt reduction will really depend for us on what we think the business looks like going in to 2008. But, clearly we remember we only took $800 million in debt out in the last 12 months and in the next wave we’ll continue to take debt down. And, but, at this point we have nothing outstanding in our revolver and the one thing really left to reduce is you could take out your $400 million term loan and $300 million of seven and three quarters of subordinate debt and that's about it.

Okay. And then one follow-up question, if I will on impairments. Lot of your inventories are, you know, significant portion of your inventories would be land that you haven't started construction on. Is that stuff that you look at for impairments as well and do you have a forecast of revenues for land that you haven’t even started to develop?

Yeah, of course. I mean we do in all of our land, all the land that we own, as well as that are under development and…

So, are most of your impairments on the stuff that’s closer to selling or is it pretty evenly distributed between the two or how do I think about that?

What do you think Dom, how would you say it?

Well, again I would say just what you said is, we look at everything. I don't think we distinguish between what's closer or what's farther. I mean it's all evaluated. And impairments are taken as needed.

We don’t have a ton of raw land that we are just sitting on. So, remember we only have a two-year supply, so we have some it already under development for the next two years or so.

Okay, excellent. Thank you.

Question now from Joel Locker at SBM Securities.

Hi, guys, just wanted to get your dollars from your buyers of total deposits against the $3.7 billion in backlog.

It varies around the company, Joel, but on a average it's between 2% and 3% of the price, sold.

Did you have a total number of capital of buyer’s deposits on hand right now?

I don't know what it is, went off the top of my head.

I mean, it's not a huge number.

Right. All right.

Bill is looking up and see if he can find it for you.

Has that changed any year-over-year, or is that pretty similar as a percentage?

Well, the volume is down, so I would say as a percentage it’s similar, but the…

Right.

I assume it would be slightly up, but the dollar amount is probably down.

Right.

Because volume is down 35% to 40%.

Right. And just the orders in the Central region being down about 30%, I mean that seems to be…

Community counts were down 35% in the Central region.

Alright, so…

It was community count driven.

On a community basis. And then communities in the West, is that flattish from last year or is that down?

That’s relatively flat year-over-year.

All right. So, that's just pretty much the change in orders or the deviation of…

Our community counts and orders and traffic have all tracked fairly close in over the last four or five quarters. What's swung has been net orders, because of the swing in the cancellation rates, which will now come back to normal levels.

Right. All right, thanks a lot.

You are welcome.

And then I will just ask you the other number from you later.

We have a follow-up question now from Stephen Kim at Citigroup.

Hi, Steven.

And again Stephen you may be muted. We can't hear you.

Yeah. Got you, is that okay. Can you hear me now?

Yeah.

Yes.

Okay. There was a question regarding the percent share of subprime, I guess I was interested in the share of FHA/VA. I think last year when we went and visited you, you had indicated that your share of VA had dropped from or FHA/VA had dropped from something like 50% to 3% by 2006. Can you give us a sense as to where that is now and where it was in the most recent quarter?

Stephen, as we predicated on the last call, we are continuing to see an increase in FHA business. It was very minimal a year ago. In the second quarter it was -- I don't know, 8% or 9%, and heading here into the third quarter and our backlog is about 15%.

Great, and the second question I had relates to that. I think when we went and visited you again last year, you had indicated that at the time 60% or so of your communities were FHA qualified. Would you say that that percentage is about the same today, or has it increased?

Yeah, I think it's actually up a little bit from there, Stephen, closer to 70%.

Okay, great. That was my question. Thanks.

Thanks Steve.

Next, another follow-up from Greg Gieber at A.G. Edwards.

My question has been largely answered, I just want to get a point or so -- what is your target debt-to-cap? At what point would it get down low enough that you use the money either to increase the dividend or buyback, get aggressive on share buyback.

Well in the presentation that we just made I said, after the France transaction on a pro forma basis our debt-to-total cap is at 41%, I think that's low enough.

So you're satisfied with 41%, because a lot of the builders are down in the low 30's. That's why I just wanted to clarify that point. Any comments on your dividend policy?

It's not changing to my knowledge.

Are you going to continue --

Seriously, we deal with the Board annually and that’s just usually at the end of the year, I am sure, well, we'll do it again.

Okay, thank you.

With that, ladies and gentleman, we will conclude the question-and-answer session. I will hand things back over to our speakers for any additional or closing remarks.

Thank you. I would like to thank all of you for joining us today for our second quarter 2007 earnings call, and we look forward to talking to you again in the near future. Have a great day.

Thanks again for joining us everyone. That concludes today's conference call. Again, have a good day.