Standard&Poor's Ratings Services' rating on KB Home primarily reflects the company's "highly leveraged" financial risk profile. The prolonged housing downturn substantially reduced KB Home's revenues and negatively affected profitability and EBITDA-based credit metrics, despite meaningful debt reduction since the downturn began. Our "fair" business risk assessment reflects our view that KB Home's market position in certain key metropolitan areas and investments in new product and communities should contribute to modest volume growth in 2012, but profitability will likely be elusive in the current fiscal year. We lowered our corporate credit rating on KB Home in March 2012 due to weaker-than-expected first-quarter performance related, in part, to mortgage challenges. We attribute the challenges to particularly weak mortgage service and
