On May 19, 2008, Standard&Poor's Ratings Services lowered its corporate credit and senior note ratings on KB Home to 'BB' from 'BB+'. We also lowered our rating on the company's senior subordinated notes to 'B+' from 'BB-'. The outlook remains negative (see list). The rating actions affect $2.15 billion of rated notes. The rating actions follow the company's weak first quarter and reflect our anticipation that continued very difficult housing market conditions may further stress KB Home's operations, which are concentrated in some of the country's most challenging housing markets. Given the current conditions, KB Home's earnings and profitability, as well as its already weak credit metrics, will likely continue to be pressured. Additionally, the company has one
