OVERVIEW Los Angeles-based KB Home's operating performance improved in the fourth quarter, returning the company to modest profitability. We expect the company to continue to grow in 2013 and further improve overall profitability as the housing recovery strengthens. We revised our outlook to stable from negative and affirmed our 'B' corporate credit rating. The outlook revision reflects our expectations for stronger operating performance in light of the recovery underway and adequate liquidity, supported by the proposed debt and concurrent equity sales which will fund growing inventory investments. We assigned a 'B' issue-level rating and '3' recovery rating to KB Home's proposed $150 million convertible senior notes due 2019. We revised our recovery rating on KB Home's existing notes to '3'
