<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2 ON
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 4, 1998
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 B-200, Atlanta, Georgia 30342
(Address of principal executive offices) (Zip code)
(404) 250-3420
(Registrant's telephone number including area code)
5775 Peachtree Dunwoody Road, Suite C-550, Atlanta, Georgia 30342
(Former name and former address, if
changed since last report)
<PAGE>
This Amendment No. 2 amends Item 7 of the Current Report on Form 8-K/A
dated December 4, 1998 (the "Current Report") of Beazer Homes USA, Inc.
("Beazer" or the "Company") filed with the Securities and Exchange Commission on
December 13, 1998, relating to the Company's acquisition of the residential
assets of Trafalgar House Property, Inc. and subsidiaries ("Trafalgar House"),
the US homebuilding operations of Kvaerner PLC, to include the information set
forth below:
Item 7. Financial Statements, Pro Forma Information and Exhibits
(a) Financial Statements of Business Acquired.
In accordance with Item 7(a), attached as Exhibit 99.1 is
the statement of net assets to be acquired of Trafalgar House
as of December 31, 1997 and the related statement of revenues
and direct expenses for the year ended December 31, 1997 and
independent auditors' report thereon. Attached as Exhibit 99.2
is the unaudited statement of net assets to be acquired of
Trafalgar House as of September 30, 1998, and the related
unaudited statements of revenues and direct expenses for the
nine months ended September 30, 1998 and 1997, and the
accompanying notes.
(b) Pro Forma Financial Information.
In accordance with Item 7(b), attached as Exhibit 99.3 is the
unaudited pro forma condensed combined balance sheet as of
September 30, 1998 and the unaudited pro forma condensed
combined statement of operations for the year ended September 30,
1998.
(c) Exhibits.
23.3 Consent of Arthur Andersen LLP, Independent
Public Accountants
99.1 Statement of net assets to be acquired of Trafalgar
House as of December 31, 1997 and the related audited
statement of revenues and direct expenses for the
year ended December 31, 1997 and independent
auditors' report thereon.
99.2 Unaudited statement of net assets to be acquired of
Trafalgar House as of September 30, 1998, and the
related unaudited statements of revenues and direct
expenses for the nine months ended September 30, 1998
and 1997 and the accompanying notes.
99.3 Unaudited pro forma condensed combined balance sheet
as of September 30, 1998 and the related unaudited
pro forma condensed combined statement of operations
for the year ended September 30, 1998.
<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.
February 15, 1999 By: /s/ David S. Weiss
- --------------------- -------------------------------------------
Date David S. Weiss, Executive Vice President and
Chief Financial Officer
<PAGE>
Exhibit 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
on Trafalgar House Property, Inc. and Subsidiaries--Residential Homebuilding
Operations dated December 15, 1998 for the year ended December 31, 1997 and
to all references to our Firm included in this Form 8-K/A.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
New York, New York
February 15, 1999
<PAGE>
EXHIBIT 99.1
TRAFALGAR HOUSE PROPERTY, INC. AND SUBSIDIARIES
RESIDENTIAL HOMEBUILDING OPERATIONS
FINANCIAL STATEMENTS OF NET ASSETS TO BE ACQUIRED
AS OF DECEMBER 31, 1997
TOGETHER WITH AUDITORS' REPORT
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Trafalgar House Property, Inc.:
We have audited the accompanying statement of net assets to be acquired of the
residential homebuilding operations of Trafalgar House Property, Inc. and
subsidiaries (the "Company"), as of December 31, 1997, and the related statement
of revenues and direct expenses for the year then ended. These statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
As described in Note 1, certain assets of the residential homebuilding
operations of the Company were acquired and certain related liabilities were
assumed by Beazer Homes Corp., in December 1998 pursuant to the Sale and
Purchase Agreement dated October 26, 1998. Accordingly, the accompanying
financial statements were prepared to present the net assets to be acquired and
the related revenues and direct expenses for the purpose of complying with the
rules and regulations of the Securities and Exchange Commission for inclusion in
the Form 8-K of Beazer Homes USA, Inc., and are not intended to be a complete
presentation of the Company's assets, liabilities, revenues and expenses.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets to be acquired of the residential
homebuilding operations of Trafalgar House Property, Inc. and subsidiaries as of
December 31, 1997, and the related revenues and direct expenses for the year
then ended in conformity with generally accepted accounting principles.
/s/ Arthur Andersen
- --------------------
New York, New York
December 15, 1998
<PAGE>
TRAFALGAR HOUSE PROPERTY, INC. AND SUBSIDIARIES
RESIDENTIAL HOMEBUILDING OPERATIONS
STATEMENT OF NET ASSETS TO BE ACQUIRED
DECEMBER 31, 1997
(000's omitted)
<TABLE>
ASSETS
------
<S> <C>
REAL ESTATE DEVELOPMENT:
Residential housing under construction and other development costs $ 67,152
Land and land improvement costs 57,145
FIXED ASSETS, net 372
INVESTMENT IN AND LOANS TO JOINT VENTURE 696
OTHER ASSETS (Note 3) 3,229
------------
Total assets 128,594
------------
------------
LIABILITIES
-----------
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Note 4) 10,631
OTHER LIABILITIES 2,365
------------
Total liabilities 12,996
COMMITMENTS AND CONTINGENCIES (Note 6)
------------
Net assets to be acquired $ 115,598
------------
------------
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
TRAFALGAR HOUSE PROPERTY, INC. AND SUBSIDIARIES
RESIDENTIAL HOMEBUILDING OPERATIONS
STATEMENT OF REVENUES AND DIRECT EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997
(000's omitted)
<TABLE>
<S> <C>
REVENUES:
Residential home sales $ 165,576
Share of joint venture income 975
-------------
Total revenues 166,551
-------------
DIRECT EXPENSES:
Cost of residential home sales 151,556
Selling, general and administrative expenses 9,004
-------------
Total direct expenses 160,560
-------------
Excess of revenues over direct expenses $ 5,991
-------------
-------------
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
TRAFALGAR HOUSE PROPERTY, INC. AND SUBSIDIARIES
RESIDENTIAL HOMEBUILDING OPERATIONS
NOTES TO FINANCIAL STATEMENTS OF NET ASSETS TO BE ACQUIRED
DECEMBER 31, 1997
(000's omitted)
1. ORGANIZATION AND BUSINESS
Trafalgar House Property, Inc. and Subsidiaries (the "Company") is an indirect
wholly owned subsidiary of Kvaerner ASA ("Kvaerner"). The Company's residential
homebuilding operations principally engage in the development and sale of
residential real estate in the states of New Jersey, Pennsylvania, Maryland and
Virginia.
In October 1998, the Company entered into the Sale and Purchase Agreement,
dated October 26, 1998 (the "Sale Agreement") with Beazer Homes Corp.
("Beazer") for Beazer to acquire certain assets and assume certain
liabilities of the residential homebuilding operations of the Company. This
transaction closed on December 4, 1998 for a sales price of approximately
$99,300. Beazer assigned its rights and obligations to acquire certain of the
assets included in the accompanying Statement of Net Assets to be Acquired to
an unaffiliated third party.
2. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying financial statements have been prepared on the accrual basis of
accounting in accordance with U.S. generally accepted accounting principles. The
financial statements were prepared to present the net assets to be acquired by
Beazer of the Company's residential homebuilding operations and the related
revenues and direct expenses for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission for inclusion in the Form
8-K of Beazer Homes USA, Inc.
The abbreviated financial statements of the Company's residential homebuilding
operations to be acquired are presented in lieu of full financial statements of
the Company's entire residential homebuilding business as the Company does not
maintain a stand-alone capital structure for such business and due to the lack
of appropriate and reasonable intercompany management and interest charges. The
Statement of Net Assets to be Acquired excludes any amounts related to the
capitalization of the Company as well as any cash accounts. The Statement of
Revenues and Direct Expenses excludes only those costs not directly involved in
the revenue-producing activities of the residential homebuilding operations,
such as corporate overhead charges, interest and income taxes. Accordingly, the
accompanying financial statements are not intended to be a complete presentation
of the assets, liabilities, revenues and expenses of the Company or of the
Company's residential homebuilding business. Further, the accompanying financial
statements are not indicative of the Company's financial condition or results of
operations on a stand-alone basis and are not indicative of the Company's
financial condition or results of operations under ownership of an entity other
than Kvaerner.
<PAGE>
REAL ESTATE DEVELOPMENT
Residential real estate held for development and sale is carried at historical
cost and reviewed periodically for impairment. All direct costs and allocated
indirect costs incurred during the period of development are capitalized.
Development costs are relieved through cost of sales on a specific
identification basis and a per unit allocation basis, as applicable.
REVENUE RECOGNITION
Revenues from residential home sales are accounted for on the full accrual
method. Under the full accrual method of accounting, revenues are recognized
when a sale is consummated, title is transferred to the buyer and adequate
consideration has been received. Option revenues and lot premiums are recognized
on a lot-specific basis.
OTHER LIABILITIES
Other liabilities represent liabilities for the cost to complete projects where
the last home has been settled. Cost to complete includes site work required to
enable the release of performance bonds and letters of credit related to
development activities and ongoing customer service obligations which arise
during the warranty period.
All homes sold by the Company are enrolled in a homeowner's warranty program
with Residential Warranty Corporation. The Company is responsible for defects
for one full year on the entire house with an additional one-year on mechanical,
heating, ventilating and air-conditioning systems. Residential Warranty
Corporation warrants any structural defects for years three through ten.
INVESTMENT IN JOINT VENTURE
The Company is a 50% partner in the Trafalgar-Astrab Associates joint venture,
which is developing residential real estate for sale. The investment in joint
venture is accounted for under the equity method, after considering priority
distributions to the joint venture partners.
FIXED ASSETS
Fixed assets are recorded at cost and are depreciated using the straight-line
method over the estimated useful lives of the related assets as follows:
Furniture and fixtures 5 years
Equipment and vehicles 4 years
Computer equipment 3 years
USE OF ESTIMATES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities as of the date of the financial statements,
and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
The most significant estimates and assumptions for the Company relate to the
recoverable value of the real estate development assets and the liabilities
associated with certain commitments and contingencies.
<PAGE>
3. OTHER ASSETS
Other assets consisted of the following at December 31, 1997:
<TABLE>
<S> <C>
Land deposits $ 674
Project escrows 2,444
Prepaids and other 111
-----------
$ 3,229
-----------
-----------
</TABLE>
4. ACCOUNTS PAYABLE AND
ACCRUED EXPENSES
Accounts payable and accrued expenses consisted of the following at December 31,
1997:
<TABLE>
<S> <C>
Land creditors $ 304
Sales deposits 1,709
Trade creditors and accrued expenses 8,618
-----------
$ 10,631
-----------
-----------
</TABLE>
Land creditors consist of notes payable to land sellers which are secured by
mortgages on the underlying land. Interest rates range from 0% to 7.75%.
5. CASH FLOW INFORMATION
Cash flow information related to the net assets to be acquired is as follows:
<TABLE>
<S> <C>
Cash flows from operating activities:
Excess of revenues over direct expenses $ 5,991
Adjustments to reconcile excess of revenues
over direct expenses to net cash provided
by operating activities-
Changes in operating assets and liabilities-
Increase in residential housing under construction and
other development costs (1,773)
Decrease in land and land improvement costs 9,257
Increase in other assets (44)
Decrease in accounts payable and accrued expenses (1,536)
Decrease in other liabilities (1,785)
----------
Net cash provided by operating activities 10,110
----------
Cash flows from investing activities:
Purchase of fixed assets (305)
Net distributions from Joint Venture 2,376
----------
Net cash provided by investing activities 2,071
----------
Net cash transferred to the Company $ 12,181
----------
----------
</TABLE>
<PAGE>
6. COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Company owns land parcels for future
development and has made deposits related to option agreements to acquire land
parcels. Land parcels vary in terms of the extent of entitlements obtained that
are necessary to commence development, which will impact the timing and ability
to develop such parcels, and ultimately the Company's ability to recover its
investments. The realization of assets related to nonrefundable deposits,
acquisition costs and capitalized development costs is dependent on the Company
successfully obtaining various government approvals related to entitlements,
sewer access and environmental remediation.
The Company was contingently liable in the amount of $43,100 as of December 31,
1997 in connection with letters of credit and surety bonds created to satisfy
performance bond requirements of certain townships and counties in which the
Company is developing properties and other obligations.
As of December 31, 1997, the Company had costs to complete of approximately
$1,300 and customer service provisions of approximately $500 related to ongoing
projects, which have been recorded as a reduction of residential housing under
construction and other development costs. In addition, as of December 31, 1997,
the Company had project completion liabilities of approximately $1,900 and
customer service liabilities of approximately $500, which primarily represent
the costs to complete projects where the last home has been settled.
<PAGE>
EXHIBIT 99.2
TRAFALGAR HOUSE PROPERTY, INC. AND SUBSIDIARIES
RESIDENTIAL HOMEBUILDING OPERATIONS
FINANCIAL STATEMENTS OF NET ASSETS TO BE ACQUIRED
AS OF SEPTEMBER 30, 1998
(Unaudited)
<PAGE>
TRAFALGAR HOUSE PROPERTY, INC. AND SUBSIDIARIES
RESIDENTIAL HOMEBUILDING OPERATIONS
STATEMENT OF NET ASSETS TO BE ACQUIRED
SEPTEMBER 30, 1998
(000's omitted)
(Unaudited)
<TABLE>
<S> <C>
ASSETS
------
REAL ESTATE DEVELOPMENT:
Residential housing under construction and other development costs $ 73,789
Land and land improvement costs 63,658
FIXED ASSETS, net 312
OTHER ASSETS (Note 3) 3,844
------------
Total assets 141,603
------------
LIABILITIES
-----------
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Note 4) 20,143
OTHER LIABILITIES 1,859
------------
Total liabilities 22,002
COMMITMENTS AND CONTINGENCIES (Note 6)
------------
Net assets to be acquired $ 119,601
------------
------------
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
TRAFALGAR HOUSE PROPERTY, INC. AND SUBSIDIARIES
RESIDENTIAL HOMEBUILDING OPERATIONS
STATEMENTS OF REVENUES AND DIRECT EXPENSES
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(000's omitted)
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
REVENUES:
Residential home sales $ 151,214 $ 124,698
Share of joint venture income 418 616
------------ ------------
Total revenues 151,632 125,314
------------ ------------
DIRECT EXPENSES:
Cost of residential home sales 137,234 114,527
Selling, general and administrative expenses 7,372 7,265
------------ ------------
Total direct expenses 144,606 121,792
------------ ------------
Excess of revenues over direct expenses $ 7,026 $ 3,522
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
TRAFALGAR HOUSE PROPERTY, INC. AND SUBSIDIARIES
RESIDENTIAL HOMEBUILDING OPERATIONS
NOTES TO FINANCIAL STATEMENTS OF NET ASSETS TO BE ACQUIRED
SEPTEMBER 30, 1998
(000's omitted)
(Unaudited)
1. ORGANIZATION AND BUSINESS
Trafalgar House Property, Inc. and Subsidiaries (the "Company") is an indirect
wholly owned subsidiary of Kvaerner ASA ("Kvaerner"). The Company's residential
homebuilding operations principally engage in the development and sale of
residential real estate in the states of New Jersey, Pennsylvania, Maryland and
Virginia.
In October 1998, the Company entered into the Sale and Purchase Agreement
dated October 26, 1998 (the "Sale Agreement") with Beazer Homes Corp.
("Beazer") for Beazer to acquire certain assets and assume certain
liabilities of the residential homebuilding operations of the Company. This
transaction closed on December 4, 1998 for a sales price of approximately
$99,300. Beazer assigned its rights and obligations to acquire certain of the
assets included in the accompanying Statement of Net Assets to be Acquired to
an unaffiliated third party.
2. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying financial statements have been prepared on the accrual basis of
accounting in accordance with U.S. generally accepted accounting principles. The
financial statements were prepared to present the net assets to be acquired by
Beazer of the Company's residential homebuilding operations and the related
revenues and direct expenses for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission for inclusion in the Form
8-K of Beazer Homes USA, Inc.
The abbreviated financial statements of the Company's residential homebuilding
operations to be acquired are presented in lieu of full financial statements of
the Company's entire residential homebuilding business as the Company does not
maintain a stand-alone capital structure for such business and due to the lack
of appropriate and reasonable intercompany management and interest charges. The
Statement of Net Assets to be Acquired excludes any amounts related to the
capitalization of the Company as well as any cash accounts. The Statements of
Revenues and Direct Expenses exclude only those costs not directly involved in
the revenue-producing activities
<PAGE>
of the residential homebuilding operations, such as corporate overhead
charges, interest and income taxes. Accordingly, the accompanying financial
statements are not intended to be a complete presentation of the assets,
liabilities, revenues and expenses of the Company or of the Company's
residential homebuilding business. Further, the accompanying financial
statements are not indicative of the Company's financial condition or results
of operations on a stand-alone basis and are not indicative of the Company's
financial condition or results of operations under ownership of an entity
other than Kvaerner.
REAL ESTATE DEVELOPMENT
Residential real estate held for development and sale is carried at historical
cost and reviewed periodically for impairment. All direct costs and allocated
indirect costs incurred during the period of development are capitalized.
Development costs are relieved through cost of sales on a specific
identification basis or a per unit allocation basis, as applicable.
REVENUE RECOGNITION
Revenues from residential home sales are accounted for on the full accrual
method. Under the full accrual method of accounting, revenues are recognized
when a sale is consummated, title is transferred to the buyer and adequate
consideration has been received. Option revenues and lot premiums are recognized
on a lot-specific basis.
OTHER LIABILITIES
Other liabilities represent liabilities for the cost to complete projects where
the last home has been settled. Cost to complete includes site work required to
enable the release of performance bonds and letters of credit related to
development activities and ongoing customer service obligations which arise
during the warranty period.
All homes sold by the Company are enrolled in a homeowner's warranty program
with Residential Warranty Corporation. The Company is responsible for defects
for one full year on the entire house with an additional one year on mechanical,
heating, ventilating and air-conditioning systems. Residential Warranty
Corporation warrants any structural defects for years three through ten.
INVESTMENT IN JOINT VENTURE
The Company is a 50% partner in the Trafalgar-Astrab Associates joint venture,
which is developing residential real estate for sale. The investment in joint
venture is accounted for under the equity method, after considering priority
distributions to the joint venture partners.
<PAGE>
FIXED ASSETS
Fixed assets are recorded at cost and are depreciated using the straight-line
method over the estimated useful lives of the related assets as follows:
<TABLE>
<S> <C>
Furniture and fixtures 5 years
Equipment and vehicles 4 years
Computer equipment 3 years
</TABLE>
USE OF ESTIMATES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities as of the date of the financial statements,
and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
The most significant estimates and assumptions for the Company relate to the
recoverable value of the real estate development assets and the liabilities
associated with certain commitments and contingencies.
3. OTHER ASSETS
Other assets consisted of the following at September 30, 1998:
<TABLE>
<S> <C>
Land deposits $ 1,212
Project escrows 2,469
Prepaids and other 163
----------
$ 3,844
----------
----------
</TABLE>
4. ACCOUNTS PAYABLE AND
ACCRUED EXPENSES
Accounts payable and accrued expenses consisted of the following at September
30, 1998:
Land creditors $ 1,054
Sales deposits 4,755
Trade creditors and accrued expenses 14,334
----------
$ 20,143
----------
----------
Land creditors consist of notes payable to land sellers which are secured by
mortgages on the underlying land. Interest rates range from 0% to 7.75%.
<PAGE>
5. CASH FLOW INFORMATION
Cash flow information related to the net assets to be acquired is as follows:
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Excess of revenues over direct expenses $ 6,926 $ 3,522
Adjustments to reconcile excess of revenues over direct expenses
to net cash provided by operating activities-
Changes in operating assets and liabilities-
Increase in residential housing under construction and
other development costs (6,637) (848)
(Increase) decrease in land and land improvement costs (6,513) 7,457
Increase in other assets (615) (319)
Increase in accounts payable and accrued expenses 9,512 4,524
Decrease in other liabilities (506) (1,661)
------------ ------------
Net cash provided by operating activities 2,167 12,675
------------ ------------
Cash flows from investing activities:
Purchase of fixed assets (58) (292)
Net distributions from Joint Venture 824 1,270
------------ ------------
Net cash provided by investing activities 766 978
------------ ------------
Net cash transferred to the Company $ 2,933 $ 13,653
------------ ------------
------------ ------------
</TABLE>
6. COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Company owns land parcels for future
development and has made deposits related to option agreements to acquire land
parcels. Land parcels vary in terms of the extent of entitlements obtained that
are necessary to commence development, which will impact the timing and ability
to develop such parcels, and ultimately the Company's ability to recover its
investments. The realization of assets related to nonrefundable deposits,
acquisition costs and capitalized development costs is dependent on the Company
successfully obtaining various government approvals related to entitlements,
sewer access and environmental remediation.
The Company was contingently liable in the amount of $39,000 as of September 30,
1998 in connection with letters of credit and surety bonds created to satisfy
performance bond requirements of certain townships and counties in which the
Company is developing properties and other obligations.
As of September 30, 1998, the Company had costs to complete of approximately
$1,100 and customer service provisions of approximately $600 related to ongoing
projects, which have been recorded as a reduction of residential housing under
construction and other development costs. In addition, as of September 30, 1998,
the Company had project completion liabilities of approximately $1,200 and
customer service liabilities of approximately $600, which primarily represent
the costs to complete projects where the last home has been settled.
<PAGE>
EXHIBIT 99.3
The following unaudited pro forma condensed financial information as
of and for the year ended September 30, 1998 has been prepared to reflect
Beazer's purchase of certain net assets of the residential homebuilding
operations of Trafalgar House Property, Inc. and Subsidiaries ("THPI") on
December 4, 1998 for approximately $90 million in cash (not including $1.8
million of direct acquisition costs), as if this acquisition had occurred at
September 30, 1998 for purposes of the pro forma balance sheet and on October
1, 1997 for purposes of the pro forma statement of operations. The
acquisition has been accounted for as a purchase and, accordingly the
purchase price has been tentatively allocated to reflect the fair value of
assets and liabilities acquired. Such allocation resulted principally in a
reduction in inventory from THPI's historical carrying value and no residual
goodwill. Pro forma adjustments have been made in the accompanying statements
to reflect the impact of purchase accounting and other items that Company
management believes reasonable under the circumstances.
The unaudited pro forma condensed financial information is provided
for comparative purposes only and does not purport to be indicative of the
results that would actually have been obtained had the acquisition been
effected on October 1, 1997, or of the results which may be obtained in the
future. The unaudited pro forma condensed financial information should be
read in conjunction with the historical financial statements and notes
thereto of Beazer, which are incorporated by reference in the Company's
Annual Report on Form 10-K for the year ended September 30, 1998, and the
historical financial statements of THPI included herein.
<PAGE>
BEAZER HOMES USA, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
Beazer
Beazer Pro forma Pro forma
Historical THPI (1) Adjustments Combined
---------- -------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues $ 977,409 $192,869 $ (777) (2) $1,169,501
Costs and expenses:
Home construction and land sales 811,203 174,263 (15,486) (3) 969,980
Interest 19,031 -- 6,700 (4) 25,731
Selling, general and administrative expense 110,259 9,111 8,827 (5) 128,197
---------- -------- ----------- ----------
Operating income 36,916 9,495 (818) 45,593
Other income 578 -- 777 (2) 1,355
---------- -------- ----------- ----------
Income before income taxes 37,494 9,495 (41) 46,948
Income taxes 14,293 -- 3,602 (6) 17,895
---------- -------- ----------- ----------
Net income $ 23,201 $ 9,495 $ (3,643) $ 29,053
---------- -------- ----------- ----------
---------- -------- ----------- ----------
Preferred dividends $ 4,000 $ 4,000
Net income to common shareholders $ 19,201 $ 25,053
Net income per share:
Basic $ 3.27 $ 4.27
---------- ----------
---------- ----------
Diluted $ 2.66 $ 3.33
---------- ----------
---------- ----------
Weighted average shares outstanding, in thousands:
Basic 5,864,182 $5,864,182
Diluted 8,730,863 $8,730,863
</TABLE>
Footnote:
(1) Represents the statement of revenues and direct expenses of the acquired
assets of THPI. The amounts were derived as follows:
<TABLE>
<CAPTION>
Less: Plus:
Year ended 9 months ended 9 months ended Year ended
December 31, September 30, September 30, September 30,
1997 1997 1998 1998
(audited) (unaudited) (unaudited) (unaudited)
------------ --------------- -------------- -------------
<S> <C> <C> <C> <C>
Revenues $ 166,551 $ 125,314 $ 151,632 $ 192,869
Costs and expenses:
Home construction and land sales 151,556 114,527 137,234 174,263
Interest -- -- -- --
Selling, general and administrative expense 9,004 7,265 7,372 9,111
---------- -------- ----------- ----------
Operating income 5,991 3,522 7,026 9,495
Other income -- -- -- --
---------- -------- ----------- ----------
Income before income taxes 5,991 3,522 7,026 9,495
Income taxes -- -- -- --
---------- -------- ----------- ----------
Net income $ 5,991 $ 3,522 $ 7,026 $ 9,495
---------- -------- ----------- ----------
---------- -------- ----------- ----------
</TABLE>
(2) To reclassify THPI joint venture income to other income to conform to
Beazer's presentation.
(3) To adjust cost of home construction and land sales for a) purchase price
adjustments resulting from the acquisition of THPI's net assets at a
price of $29 million below the historical book value of the net assets
acquired (This pro forma adjustment has been computed to adjust THPI's
gross profit margin before interest to Beazer's expected profit margin
of 17.3%) and b) to reclassify $8.9 million from cost of home
construction and land sales to SG&A to conform to Beazer's
classification.
(4) To impute interest expense on the cash purchase price based upon the
Company's effective borrowing rate for the year (7.7 %)
(5) To adjust selling, general and administrative expense to reflect the
reduction in depreciation expense of the combined entity as a result of
certain assets disposed of as a part of the acquisition and to reclassify
certain costs from home construction and land sales into SG&A--see
note 3.
(6) To impute income tax expense based upon Beazer's marginal income tax rate.
<PAGE>
BEAZER HOMES USA, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
Beazer Pro forma Pro forma
Historical THPI (1) Adjustments Combined
---------- --------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $67,608 -- $ (67,608) (2) --
Accounts receivable 16,949 -- -- $ 16,949
Inventory 405,095 $138,659 (37,615) (3) 506,139
Deferred tax asset 3,283 -- -- 3,283
Property, plant and equipment, net 12,332 312 (150) (4) 12,494
Goodwill, net 8,853 -- -- 8,853
Other assets 11,471 2,632 -- 14,103
---------- --------- ----------- ---------
Total Assets $525,591 $141,603 $(105,373) $561,821
---------- --------- ----------- ---------
---------- --------- ----------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Trade accounts payable $61,942 $19,089 -- $ 81,031
Other liabilities 49,425 2,913 -- 52,338
Revolving credit facility -- -- $ 14,228 (2) 14,228
Senior Notes 215,000 -- -- 215,000
---------- --------- ----------- ---------
Total Liabilities 326,367 22,002 14,228 362,597
---------- --------- ----------- ---------
---------- --------- ----------- ---------
Stockholders' Equity:
Preferred stock (par value $0.01 per share,
5,000,000 shares authorized, 2,000,000 issued and
outstanding, $50,000 aggregate liquidation preference) 20 -- -- 20
Common stock (par value $0.01 per share, 30,000,000 shares
authorized, 9,559,200 issued, 6,267,423 outstanding) 93 -- -- 93
Paid-in-capital 192,729 119,601 (119,601) (5) 192,729
Retained earnings 64,003 -- -- 64,003
Unearned restricted stock (5,638) -- -- (5,638)
Treasury stock, at cost (3,291,777 shares) (51,983) -- -- (51,983)
---------- --------- ----------- ---------
Total Stockholders' Equity 199,224 119,601 (119,601) 199,224
---------- --------- ----------- ---------
Total Liabilities and Stockholders' Equity $525,591 $141,603 $(105,373) $561,821
---------- --------- ----------- ---------
---------- --------- ----------- ---------
</TABLE>
Footnotes:
(1) Represents the historical book value of THPI's assets and liabilities.
(2) To reflect the funding of the purchase price of the acquisition including
approximately $1.8 million of transaction costs associated with the
acquisition offset by assets purchased directly from THPI by a third party
- see note 3.
(3) To adjust THPI's acquired inventory to its estimated fair market value. The
historical book value of THPI's inventory is further reduced by
approximately $10.6 million to account for certain parcels of land not
acquired by Beazer, but purchased directly from THPI by a third party .
(4) To adjust THPI's property, plant and equipment to its estimated fair market
value.
(5) To eliminate THPI's historical stockholder's equity.
