The ratings reflect an aggressive financial profile that will weaken as a consequence of an increasingly competitive homebuilding environment, the company's significant exposure to leveraged joint ventures, and its material share repurchases. However, KB Home (KB) maintains a large operating platform and has a sizable backlog of homes scheduled to close over the next year, which should support good liquidity. At present, the ratings are not affected by an informal SEC inquiry and an internal investigation into the company's option granting practices. Los Angeles-based KB is the fifth-largest homebuilder in the U.S. based on fiscal-year 2005 (ended Nov. 30, 2005) closings (37,140) and homebuilding revenues ($9.4 billion). KB sells homes in 16 U.S. states and in France. The company builds
