<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20594
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1997
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 001-12822
BEAZER HOMES USA, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 58-2086934
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
5775 Peachtree Dunwoody Road, Suite C-550, Atlanta, Georgia 30342
(Address of principal executive offices) (Zip Code)
(404) 250-3420
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to the
filing requirements for the past 90 days.
YES X NO
--- ---
CLASS OUTSTANDING AT MAY 14, 1997
----- ---------------------------
Common Stock, $0.01 par value 6,048,180 shares
Series A Cumulative Convertible
Exchangeable Preferred Stock,
$0.01 par value 2,000,000 shares
Page 1 of 17 Pages
Exhibit Index Appears on Page 16
<PAGE>
BEAZER HOMES USA, INC.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PAGE NO.
<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Condensed Consolidated Balance Sheets,
March 31, 1997 (unaudited) and September 30, 1996 3
Unaudited Condensed Consolidated Statements of Operations,
Three and Six Months Ended March 31, 1997 and 1996 4
Unaudited Condensed Consolidated Statements of Cash Flows,
Six Months Ended March 31, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis
of Financial Condition and Results of
Operations 9
PART II OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security
Holders 16
Item 6 Exhibits and Reports on Form 8-K 16
SIGNATURES 17
</TABLE>
2
<PAGE>
Part I. Financial Information
BEAZER HOMES USA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1997 1996
----------- -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and cash equivalents...................................................... $ 5,636 $ 12,942
Accounts receivable............................................................ 4,791 6,473
Inventory...................................................................... 349,495 320,969
Property, plant and equipment, net............................................. 3,303 2,823
Goodwill, net.................................................................. 5,933 6,204
Other assets................................................................... 10,011 7,232
--------- -----------
Total assets............................................................... $ 379,169 $ 356,643
--------- -----------
--------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Trade accounts payable......................................................... $ 22,914 $ 31,431
Other payables and accrued liabilities......................................... 14,964 31,511
Revolving credit facility...................................................... 50,000 --
Senior notes................................................................... 115,000 115,000
--------- -----------
Total liabilities.............................................................. 202,878 177,942
Stockholders' equity:
Preferred stock (par value $.01 per share, 5,000,000 shares
authorized, 2,000,000 issued and outstanding; $50,000 aggregate
liquidation preference)..................................................... 20 20
Common stock (par value $.01 per share, 30,000,000 shares authorized,
9,339,957 and 9,305,200 issued, 6,509,390 and 6,530,933 outstanding)......... 93 93
Paid in capital................................................................ 187,477 187,477
Retained earnings.............................................................. 35,830 37,613
Unearned restricted stock...................................................... (1,284) (1,446)
Less treasury stock, at cost (2,830,567 and 2,774,267 shares).................. (45,845) (45,056)
--------- -----------
Total stockholders' equity..................................................... 176,291 178,701
--------- -----------
Total liabilities and stockholders' equity................................. $ 379,169 $ 356,643
--------- -----------
--------- -----------
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE>
BEAZER HOMES USA, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED MARCH 31, ENDED MARCH 31,
---------------------- ----------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
---------- ---------- ---------- ----------
Total revenue.................................................... $ 177,762 $ 196,505 $ 338,845 $ 354,735
Costs and expenses:
Home construction and land sales............................... 152,412 166,496 287,783 299,833
Interest....................................................... 3,174 3,646 5,914 6,777
Selling, general and administrative............................ 19,983 20,279 38,756 37,208
Write-down of inventory........................................ 6,326 -- 6,326 --
----------- --------- ---------- ----------
Operating income (loss).......................................... (4,133) 6,084 66 10,917
Other income..................................................... 101 21 291 21
----------- --------- ---------- ----------
Income (loss) before income taxes................................ (4,032) 6,105 357 10,938
Provision (benefit) for income taxes............................. (1,572) 2,442 140 4,375
----------- --------- ---------- ----------
Net income (loss)................................................ $ (2,460) $ 3,663 $ 217 $ 6,563
----------- --------- ---------- ----------
----------- --------- ---------- ----------
Preferred dividends.............................................. $ 1,000 $ 1,000 2,000 2,000
Net income (loss) applicable to common stockholders.............. $ (3,460) $ 2,663 $ (1,783) $ 4,563
Weighted average number of shares (in thousands):
Primary...................................................... 6,425 6,487 6,433 6,485
Fully-diluted................................................ n/a 9,112 n/a n/a
Net income (loss) per common share:
Primary...................................................... ($ 0.54) $ 0.41 ($ 0.28) $ 0.70
Fully-diluted................................................ n/a $ 0.40 n/a n/a
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4
<PAGE>
BEAZER HOMES USA, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MARCH 31,
--------------------
<S> <C> <C>
1997 1996
--------- ---------
Cash flows from operating activities:
Net income............................................................. $ 217 $ 6,563
Adjustments to reconcile net income to net cash used by operating
activities:
Depreciation and amortization.......................................... 956 748
Write-down of inventory................................................ 6,326 --
Changes in operating assets and liabilities,
net of effects of acquisitions....................................... (61,236) (47,272)
--------- ---------
Net cash used by operating activities.................................... (53,737) (39,961)
--------- ---------
Cash flows from investing activities:
Capital expenditures................................................... (780) (826)
--------- ---------
Net cash used by investing activities.................................... (780) (826)
--------- ---------
Cash flows from financing activities:
Proceeds from revolving credit facility, net........................... 50,000 16,000
Treasury stock purchased............................................... (789) --
Dividend paid on preferred stock....................................... (2,000) (2,000)
--------- ---------
Net cash provided by financing activities................................ 47,211 14,000
--------- ---------
Decrease in cash and cash equivalents.................................... (7,306) (26,787)
Cash and cash equivalents at beginning of period......................... 12,942 40,407
--------- ---------
Cash and cash equivalents at end of period............................... $ 5,636 $ 13,620
--------- ---------
--------- ---------
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5
<PAGE>
BEAZER HOMES USA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Beazer Homes USA, Inc. ("Beazer" or the "Company") have been prepared in
accordance with generally accepted accounting principles for interim
financial information and in accordance with the instructions to Form 10-Q
and Article 10 of Regulation S-X, and consequently such financial statements
do not include all of the information and disclosures required by generally
accepted accounting principles for complete financial statements.
Accordingly, for further information, the reader of this Form 10-Q should
refer to the audited consolidated financial statements of the Company for the
year ended September 30, 1996 incorporated by reference in the Company's
Annual Report on Form 10-K.
In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included in the accompanying condensed financial statements.
(2) INVENTORY
A summary of inventory is as follows (dollars in thousands):
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1997 1996
----------- -------------
(UNAUDITED)
<S> <C> <C>
Finished homes.................................................... $ 67,952 $ 64,709
Development projects in progress.................................. 219,062 197,984
Unimproved land held for future development....................... 33,451 34,040
Model homes....................................................... 29,030 24,236
----------- -------------
$ 349,495 $ 320,969
----------- -------------
----------- -------------
</TABLE>
Development projects in progress consist principally of land, land
improvement costs and, if applicable, construction costs for houses which are
in various stages of development but not ready for sale. Certain of the
finished homes in inventory are reserved by a deposit or sales contract.
6
<PAGE>
BEAZER HOMES USA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(3) WRITE-DOWN OF INVENTORY
During the quarter ended March 31, 1997, the Company recorded a pretax
charge of $6.3 million ($3.9 million after tax) to write down two properties
located in Nevada to their fair market value (estimated based on the sales
prices of comparable projects). The two Nevada properties, Craig Ranch in
North Las Vegas and Promontory in Reno, had incurred significant development
costs that were not anticipated at the beginning of the projects. As a
result, the estimated future undiscounted cash flows of the projects were
less than their respective current book values.
(4) INTEREST
The following table sets forth certain unaudited information regarding
interest (dollars in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
------------------ -----------------
1997 1996 1997 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
During the period:
Interest incurred.................................. $3,757 $3,605 $6,938 $6,749
------ ------ ------ ------
------ ------ ------ ------
Previously capitalized interest amortized
to costs and expenses......................... $3,174 $3,646 $5,914 $6,777
------ ------ ------ ------
------ ------ ------ ------
At the end of the period:
Capitalized interest in ending inventory........... $6,577 $6,483 $6,577 $6,483
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
(5) EARNINGS PER SHARE
The computation of primary earnings per common share is based upon the
weighted average number of common shares outstanding during the period plus
(in periods in which they have a dilutive effect) the effect of common stock
equivalents, primarily from stock options. Common share equivalents are
computed using the treasury stock method.
Fully diluted earnings per share, which further assumes the conversion of
2.0 million shares of Series A Cumulative Convertible Exchangeable Preferred
Stock ($50.0 million aggregate liquidation preference) issued in August 1995
into 2.6 million shares of common stock at the conversion price of $19.05, is
not presented in the accompanying condensed consolidated statements of
operations for the three and six month periods ended March 31, 1997 and the
six months ended March 31, 1996 since the effect of such conversion is
antidilutive for such periods.
7
<PAGE>
BEAZER HOMES USA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(6) CREDIT AGREEMENT
In October 1996, the Company entered into a $150 million unsecured,
revolving credit agreement (the "Credit Agreement") with a group of banks.
Borrowings under the Credit Agreement generally bear interest at a
fluctuating rate equal to (i ) the sum of a specified margin plus the higher
of (a) the corporate base rate of interest announced by the lead bank (the
"Agent") from time to time or (b) a specified spread above the Federal Funds
Rate or (ii) the sum of a specified margin plus a rate of interest based on
LIBOR determined by the Agent pursuant to a specified formula. All
outstanding indebtedness under the Credit Agreement will be due in October
1999. The Credit Agreement contains various operating and financial
covenants. Each of the Company's significant subsidiaries is a guarantor
under the Credit Agreement.
(7) RECENT ACCOUNTING PRONOUNCEMENTS
In October 1995, the Financial Accounting Standards Board ("FASB") issued
Statement No. 123, "Accounting for Stock-Based Compensation," ("SFAS 123"). SFAS
123 encourages, but does not require companies to record compensation cost for
stock-based employee compensation plans at fair value. The Company has chosen to
continue to account for stock-based compensation using the intrinsic value
method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees," and related Interpretations. Accordingly,
compensation cost for stock options is generally measured as the excess, if any,
of the quoted market price of the Company's stock at the date of the grant over
the amount an employee must pay to acquire the stock. The Company will disclose
the pro-forma impact of adoption of SFAS 123 in its financial statements for the
fiscal year ending September 30, 1997.
In February 1997, the FASB issued Statement No. 128, "Earnings per
Share," ("SFAS 128"). SFAS 128 is effective for financial statements for both
interim and annual periods ending after December 15, 1997 and requires
restatement of all prior period earnings per share ("EPS") data. Earlier
adoption of this standard is not permitted. The implementation of SFAS 128
will not have a material effect on the Company's reported EPS.
8
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The following table presents certain operating and financial data for the
Company (dollars in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
------------------------------------- ---------------------------------
1997 1996 1997 1996
-------------------- ---------- ------------------ ----------
% %
AMOUNT CHANGE AMOUNT AMOUNT CHANGE AMOUNT
---------- ------ ---------- ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
Number of new orders,
net of cancellations:
Southeast Region............... 573 (7.1)% 617 942 (10.5)% 1,053
Southwest Region............... 733 (26.3) 995 1,278 (24.3) 1,689(a)
Central Region................. 228 142.6 94 348 135.1 148
---------- ---------- ---------- ----------
Total.......................... 1,534 (10.1) 1,706 2,568 (11.1) 2,890
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Number of closings:
Southeast Region............... 457 (5.4)% 483 835 (12.0)% 949
Southwest Region................ 627 (25.0) 836 1,227 (14.3) 1,431
Central Region................. 143 210.9 46 278 167.3 104
---------- ---------- ---------- ----------
Total.......................... 1,227 (10.1) 1,365 2,340 (5.8) 2,484
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Total revenue:
Southeast Region............... $ 72,464 1.3% $ 71,519 $ 136,533 (0.7)% $ 137,489
Southwest Region............... 83,309 (29.0) 117,403 159,453 (20.6) 200,722
Central Region................. 21,989 190.0 7,583 42,859 159.4 16,524
---------- ---------- ---------- ----------
Total.......................... $ 177,762 (9.5) $ 196,505 $ 338,845 (4.5) $ 354,735
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Average sales price per home
closed:
Southeast Region............... $ 158.6 7.1% $ 148.1 $ 163.5 12.8% $ 144.9
Southwest Region............... 132.9 (5.3) 140.4 130.0 (7.3) 140.3
Central Region................. 153.8 (6.7) 164.8 154.2 (2.8) 158.6
Total.......................... 144.9 0.6 144.0 144.8 1.4 142.8
Backlog units at end of period:
Southeast Region............... 687 (15.4)% 812
Southwest Region............... 731 (34.1) 1,109
Central Region................. 236 140.8 98
---------- ----------
Total.......................... 1,654 (18.1) 2,019
---------- ----------
---------- ----------
Aggregate sales value of homes in
backlog at end of period:....... $ 250,136 (15.5)% $ 295,877
---------- ----------
---------- ----------
Number of active subdivisions:
Southeast Region............... 100 0.0% 100
Southwest Region............... 64 10.3 58
Central Region................. 32 146.2 13
---------- ----------
Total.......................... 196 14.6 171
---------- ----------
---------- ----------
</TABLE>
(a) New orders do not include 129 homes in backlog acquired from Del Mar
Development, Inc. for the six month period ended March 31, 1996.
9
<PAGE>
BEAZER HOMES USA, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW:
Beazer Homes USA, Inc. (the "Company" and "Beazer") designs, builds and
sells single family homes in the Southeast, Southwest and Central regions of the
United States. The Company's Southeast Region includes Georgia, North Carolina,
South Carolina, Tennessee and Florida, its Southwest Region includes Arizona,
California and Nevada and its Central Region includes Texas. The Company
intends, subject to market conditions, to expand in its current markets and to
consider entering new markets through expansion from existing markets
("satellite expansion") or through acquisitions of established regional
homebuilders.
The Company's homes are designed to appeal primarily to entry-level and
first move-up home buyers, and are generally offered for sale in advance of
their construction. The majority of homes are sold pursuant to standard sales
contracts entered into prior to commencement of construction. Once a contract
has been signed, the Company classifies the transaction as a "new order." Such
sales contracts are usually subject to certain contingencies such as the buyer's
ability to qualify for financing. Homes covered by such sales contracts are
considered by the Company as its "backlog." The Company does not recognize
revenue on homes in backlog until the sales are closed and the risk of ownership
has been transferred to the buyer.
The Company began offering mortgage origination services for its local
homebuilders through branch offices of Beazer Mortgage Corp. ("Beazer Mortgage")
during 1996. Beazer Mortgage originates and processes mortgages on behalf of
third-party investors, but does not retain or service the mortgages that it
originates. Beazer Mortgage currently has branch offices in Arizona, Florida,
Georgia, North Carolina and Texas, and anticipates having branch offices open in
nearly all of the Company's markets by the end of calendar year 1997. The
results of operations for Beazer Mortgage were not significant for the quarters
ended March 31, 1997 and 1996.
New Orders and Backlog: New orders decreased by 10.1% and 11.1% for the
three and six months ended March 31, 1997, respectively, relative to the
comparable periods of the prior year. The Company believes that these reductions
are principally the result of comparisons against unusually strong levels of new
orders in the prior year, as interest rates were dropping in late 1995 and early
1996. During the three and six months ended March 31, 1996, new orders had been
up 48.4% and 67.4%, respectively, relative to the comparable periods of fiscal
1995.
The Company also believes that a reduction in the number of active
subdivisions during the quarter ended December 31, 1996 contributed to the
reductions in new orders for both the three and six month periods ended March
31, 1997. During the quarter ended December 31, 1996, the number of active
subdivisions declined by 30 subdivisions (15.6%) compared to September 30, 1996.
This reduction is the result of the Company's decision not to aggressively
replace subdivisions that were closing out in late 1996.
10
<PAGE>
BEAZER HOMES USA, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
During the quarter ended March 31, 1997, however, the Company opened a
number of new subdivisions and, as a result, the number of active subdivisions
at March 31, 1997 was up by 34 subdivisions (21.0%) compared to December 31,
1996 and 25 subdivisions (14.6%) compared to March 31, 1996. The Company
believes that these new active subdivisions, many of them opened towards the end
of the quarter ended March 31, 1997, will contribute to new orders in the
quarter ending June 30, 1997.
The decreases in the Company's units in backlog and aggregate sales value of
homes in backlog reflect principally the decrease in new orders discussed
previously. The average sales price of homes in backlog has increased reflecting
both the decrease in the percentage of the Company total of new orders in
Arizona where the average sales price is lower than the Company average, and the
increase in Texas where the average sales price is higher than the Company
average.
RESULTS OF OPERATIONS:
The following table shows certain items in the Company's statements of
income expressed as a percentage of total revenue.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
-------------------- --------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
--------- --------- --------- ---------
Total revenue............................................. 100.0% 100.0% 100.0% 100.0%
Costs of home construction and land sales................. 85.7 84.7 84.9 84.5
Interest.................................................. 1.8 1.9 1.7 1.9
Selling, general and administrative....................... 11.2 10.3 11.4 10.5
Write-down of inventory................................... 3.6 -- 1.9 --
Operating income (loss)................................... (2.3) 3.1 -- 3.1
</TABLE>
Revenues: The Company experienced decreases in revenues for the for the
three and six month periods ended March 31, 1997 compared to the three and six
month periods ended March 31, 1996. For the quarter ended March 31, 1997 the
decrease is primarily the result of significantly reduced closings in the
Southwest region partially offset by increased closings in the Central region.
For the six months ended March 31, 1997 the decrease is the result of moderately
reduced closings in both the Southeast and Southwest region partially offset by
increased closings in the Central region. Both the Southeast and Southwest
regions entered the December 1996 and March 1997 quarter with a lower number of
units in backlog than the prior year comparable period.
11
<PAGE>
BEAZER HOMES USA, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Cost of Home Construction and Land Sales: The cost of home construction and
land sales as a percentage of revenues increased for the three and six month
periods ended March 31, 1997 compared to the same periods in 1996. The principal
reason for the increase relates to the Company's Nevada operations where the
cost of home construction and land sales as a percentage of revenues represented
93.4% and 92.0% for the three and six month periods ended March 31, 1997
compared to 88.5% and 87.0% for the same periods of 1996. The Company also
believes that the increase in costs of home construction and land sales as a
percentage of revenues results from a lower mix of closings from certain of the
Company's higher margin markets, such as Arizona.
Write-down of inventory: During the quarter ended March 31, 1997, the
Company recorded a pretax charge of $6.3 million ($3.9 million after tax) to
write down two properties located in Nevada to their fair market value
(estimated based on the sales prices of comparable projects). The two Nevada
properties, Craig Ranch in North Las Vegas and Promontory in Reno, had incurred
significant development costs that were not anticipated at the beginning of the
project. As a result, the estimated future undiscounted cash flows of the
projects were less than their respective current book values. The Company
anticipates recognizing profit margins on these projects consistent with the
Company average in future quarters.
Selling, General and Administrative Expense: Selling, general and
administrative expenses increased significantly as a percentage of total
revenues for the three and six month periods ended March 31, 1997 compared to
the prior year periods. This increase can be attributed to the initial costs of
profitability initiatives that the Company is in the process of implementing
(such as the set up of mortgage origination operations and design centers and
the development and implementation of new information systems) as well as higher
overhead in certain markets that the Company anticipates will provide higher
closing volumes in the subsequent quarters, including the Arizona, Texas and
Florida markets.
Income Taxes: The decrease in the Company's effective income tax rate from
40% for the three and six month periods ended March 31, 1996 compared to 39% for
the same periods at March 31, 1997 is principally the result of a reduction in
the overall state effective income tax rate.
12
<PAGE>
BEAZER HOMES USA, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION AND LIQUIDITY:
In October 1996, the Company entered into a $150 million unsecured,
revolving credit agreement (the "Credit Agreement") with a group of banks to
replace a similar $80 million unsecured, revolving credit agreement the Company
had utilized since January 1995. The Credit Agreement is used primarily to fund
seasonal working capital needs.
At March 31, 1997, the Company had $50 million of borrowings outstanding
under the Credit Agreement, and had available additional borrowings of $40
million. Available borrowings under the Credit Agreement are limited to a
Borrowing Base, as defined in the Credit Agreement, based upon certain
percentages of homes under contract, unsold homes, substantially improved lots
and accounts receivable.
All significant subsidiaries of Beazer Homes USA, Inc. are guarantors of the
Senior Notes and are jointly and severally liable for the Company's obligations
under the Senior Notes. Separate financial statements and other disclosures
concerning each of the significant subsidiaries are not included, as the
aggregate assets, liabilities, earnings and equity of the subsidiaries equal
such amounts for the Company on a consolidated basis and separate subsidiary
financial statements are not considered material to investors. The total assets,
revenues and operating profit of the non-guarantor subsidiaries are in the
aggregate immaterial to the Company on a consolidated basis. Neither the Credit
Agreement nor the Senior Notes restrict distributions to Beazer Homes USA, Inc.
by its subsidiaries.
The Company has utilized, and will continue to utilize, land options as a
method of controlling and subsequently acquiring land. At March 31, 1997, the
Company had 10,016 lots under option. At March 31, 1997, the Company had
commitments with respect to option contracts with specific performance
obligations of approximately $49.4 million. The Company expects to exercise
all of its option contracts with specific performance obligations and,
subject to market conditions, substantially all of its options contracts
without specific performance obligations.
In June 1996, the Company's Board of Directors approved a stock repurchase
plan authorizing the repurchase of up to 10% of the Company's currently
outstanding common stock (the "Stock Repurchase Plan"). Such repurchases, if
completed, would be effected at various prices from time to time in the open
market. The timing of the purchase and the exact number of shares will depend on
market conditions. As of March 31, 1997 the Company had purchased 81,300 shares
for an aggregate purchase price of approximately $1.1 million. Subsequent to
March 31, 1997 the Company has purchased an additional 461,210 shares under the
Stock Repurchase Plan for an aggregate purchase price of approximately $6.1
million.
13
<PAGE>
BEAZER HOMES USA, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Management believes that the Company's current borrowing capacity, cash on
hand at March 31, 1997, and anticipated cash flows from the operations is
sufficient to meet liquidity needs for the foreseeable future. There can be no
assurance, however, that amounts available in the future from the Company's
sources of liquidity will be sufficient to meet the Company's future capital
needs. The amount and types of indebtedness that the Company may incur may be
limited by the terms of the Indenture governing its Senior Notes and its Credit
Agreement. The Company continually evaluates expansion opportunities through
acquisition of established regional homebuilders and such opportunities may
require the Company to seek additional capital in the form of equity or debt
financing from a variety of potential sources, including additional bank
financing and/or securities offerings.
14
<PAGE>
Cautionary Statement Pursuant to Safe Harbor Provisions of the Private
Securities Litigation Reform Act of 1995:
This quarterly report on Form 10-Q contains "forward-looking statements"
within the meaning of the federal securities laws. These forward-looking
statements include, among others, statements concerning the Company's outlook
for future quarters, overall and market specific volume trends, pricing trends
and forces in the industry, cost reduction strategies and their results, the
Company's expectations as to funding its capital expenditures and operations
during 1997, and other statements of expectations, beliefs, future plans and
strategies, anticipated events or trends, and similar expressions concerning
matters that are not historical facts. The forward-looking statements in this
report are subject to risks and uncertainties that could cause actual results to
differ materially from those expressed in or implied by the statements. The most
significant factors that could cause actual results to differ materially from
those expressed in the forward-looking statements include, but are not limited
to, the following:
Economic changes nationally or in one of the Company's local markets
Volatility of mortgage interest rates
Increased competition in some of the Company's local markets
Increased prices for labor, land and raw materials used in the production
of houses
Increased cost in the development of raw land
Any delays in reacting to changing consumer preference in home design
Delays or difficulties in implementing the Company's initiatives to
reduce its production and overhead cost structure.
15
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On February 9, 1997, the Company held its annual meeting of
shareholders. At the annual meeting, the shareholders elected seven members
to the Board of Directors to serve until the next annual meeting. The results
of the voting was as follows:
<TABLE>
<CAPTION>
NAME FOR AGAINST WITHHELD NON-VOTES
- --------------------------- ---------- ------------- --------- -------------
<S> <C> <C> <C> <C>
Brian C. Beazer............ 5,377,218 0 131,641 0
Thomas B. Howard, Jr....... 5,377,218 0 131,241 0
Ian J. McCarthy............ 5,377,218 0 131,241 0
George W. Mefferd.......... 5,384,818 0 123,641 0
D. E. Mundell.............. 5,384,818 0 123,641 0
Larry T. Solari............ 5,384,818 0 123,641 0
David S. Weiss............. 5,377,218 0 131,241 0
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
11 Statement Regarding Computation of Per Share Earnings
27 Financial Data Schedule
(b) Reports on Form 8-K:
The Company did not file any reports on Form 8-K during the quarter
ended March 31, 1997.
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Beazer Homes USA, Inc.
Date: May 14, 1997 By: /s/ David S. Weiss
------------------------------
Name: David S. Weiss
Executive Vice President and
Chief Financial Officer
17
<PAGE>
EXHIBIT 11
BEAZER HOMES USA, INC.
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
----------------------- ----------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
---------- ---------- ---------- ----------
Primary:
Earnings
Net income.................................................... ($ 2,460) $ 3,663 $ 217 $ 6,563
Less: Dividends on preferred shares (a)....................... 1,000 1,000 2,000 2,000
---------- ---------- ---------- ----------
Net income applicable to common shares........................ ($ 3,460) $ 2,663 ($ 1,783) $ 4,563
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Shares
Weighted average number of unrestricted common shares
outstanding................................................ 6,294,800 6,376,100 6,302,639 6,376,100
Weighted average number of restricted common shares
outstanding, net........................................... 127,590 91,973 127,399 89,093
Dilutive effect of outstanding options as determined by the
application of the treasury stock method................... 3,018 19,054 3,232 20,258
---------- ---------- ---------- ----------
Weighted average number of shares outstanding, as adjusted.. 6,425,408 6,487,127 6,433,270 6,485,451
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Primary net income per share................................ ($ 0.54) $ 0.41 ($ 0.28) $ 0.70
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Fully-diluted:
Earnings
Net income.................................................. ($ 2,460) $ 3,663 $ 217 $ 6,563
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Shares
Weighted average number of unrestricted common shares
outstanding................................................ 6,294,800 6,376,100 6,302,639 6,376,100
Weighted average number of restricted common shares
outstanding, net........................................... 127,590 91,973 127,399 89,093
Dilutive effect of outstanding options as determined by the
application of the treasury stock method................... 3,018 19,054 3,232 20,258
Assumed conversion of preferred stock (a)................... 2,624,672 2,624,672 2,624,672 2,624,672
---------- ---------- ---------- ----------
Weighted average number of shares outstanding, as adjusted.. 9,050,080 9,111,799 9,057,942 9,110,123
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net income per share assuming full dilution.................. ($ 0.27)(b) $ 0.40 $ 0.02(b) $ 0.72(b)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
- ------------------------
(a) The Company's Series A Cumulative Convertible Exchangeable Preferred Stock
(2,000,000 shares of $50,000,000 aggregate liquidation preference,
convertible into 2,624,672 shares of common stock), issued in August 1995.
(b) This calculation is submitted in accordance with Regulation S-K item
601(b)(11) although it is contrary to paragraph 40 of APB Opinion No. 15
because it produces an anti-dilutive result.
3
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1996 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000915840
<NAME> BEAZER HOMES U.S.A. INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-1-1996
<PERIOD-END> MAR-31-1997
<CASH> 5636
<SECURITIES> 0
<RECEIVABLES> 4791
<ALLOWANCES> 0
<INVENTORY> 349495
<CURRENT-ASSETS> 0<F1>
<PP&E> 3,303
<DEPRECIATION> 0
<TOTAL-ASSETS> 379169
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 115000
0
20
<COMMON> 93
<OTHER-SE> 176178
<TOTAL-LIABILITY-AND-EQUITY> 379169
<SALES> 338845
<TOTAL-REVENUES> 338845
<CGS> 293697
<TOTAL-COSTS> 338779
<OTHER-EXPENSES> (291)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 357
<INCOME-TAX> 140
<INCOME-CONTINUING> 217
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 217
<EPS-PRIMARY> (0.28)
<EPS-DILUTED> 0
<FN>
<F1>THE COMPANY PRESENTS A CONDENSED BALANCE SHEET.
</FN>
</TABLE>
