<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 December 31, 1999
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 B-200, 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 February 11, 1999
----- --------------------------------
Common Stock, $0.01 par value 8,771,972 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,
December 31, 1999 (unaudited) and September 30, 1999 3
Unaudited Condensed Consolidated Statements of Operations,
Three Months Ended December 31, 1999 and 1998 4
Unaudited Condensed Consolidated Statements of Cash Flows,
Three Months Ended December 31, 1999 and 1998 5
Notes to Condensed Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis
of Financial Condition and Results of
Operations 10
PART II OTHER INFORMATION 17
Item 4 Submission of Matters to a Vote of Security Holders
Item 6 Exhibits and Reports on Form 8-K
SIGNATURES 18
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
BEAZER HOMES USA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
December 31, September 30,
1999 1999
---- ----
(unaudited)
<S> <C> <C>
ASSETS
Accounts receivable $ 9,285 $ 21,416
Inventory 575,700 532,559
Property, plant and equipment, net 13,049 13,102
Goodwill, net 7,851 8,051
Other assets 22,190 19,440
---------------- ----------------
Total assets $ 628,075 $ 594,568
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Trade accounts payable $ 32,754 $ 45,984
Other payables and accrued liabilities 82,446 98,922
Revolving credit facility 58,500 ---
Senior notes 215,000 215,000
---------------- ----------------
Total liabilities 388,700 359,906
Stockholders' equity:
Preferred stock (par value $.01 per share, 5,000,000 shares
authorized, no shares issued and outstanding) --- ---
Common stock (par value $.01 per share, 30,000,000 shares
authorized, 12,216,242 issued, 8,758,915 and
8,924,465 outstanding) 123 123
Paid in capital 194,528 194,528
Retained earnings 105,005 97,488
Unearned restricted stock (5,157) (5,494)
Treasury stock (3,457,327 and 3,291,777 shares) (55,124) (51,983)
---------------- ----------------
Total stockholders' equity 239,375 234,662
---------------- ----------------
Total liabilities and stockholders' equity $ 628,075 $ 594,568
================ ================
</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
Ended December 31,
-----------------------------
1999 1998
---- ----
<S> <C> <C>
Total revenue $ 308,745 $ 242,110
Costs and expenses:
Home construction and land sales 255,748 201,167
Interest 5,523 5,035
Selling, general and administrative 34,273 28,246
------------ -------------
Operating income 13,201 7,662
Other expense (878) (48)
------------ -------------
Income before income taxes 12,323 7,614
Provision for income taxes 4,806 2,931
------------ -------------
Net income $ 7,517 $ 4,683
============ =============
Dividends to preferred shareholders $ --- $ 1,000
Net income applicable to common stockholders:
Basic $ 7,517 $ 3,683
Diluted $ 7,517 $ 4,683
Weighted average number of shares (in thousands):
Basic 8,530 5,896
Diluted 8,825 8,868
Net income per common share:
Basic $ 0.88 $ 0.62
Diluted $ 0.85 $ 0.53
</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>
Three Months Ended
December 31,
--------------------------------------
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 7,517 $ 4,683
Adjustments to reconcile net income to
net cash used by operating activities:
Depreciation and amortization 1,763 1,008
Changes in operating assets and liabilities,
net of effects of acquisitions
Increase in inventory (43,141) (30,803)
Decrease in trade accounts payable (13,230) (27,997)
Other changes (6,855) 8,825
---------------- ---------------
Net cash used by operating activities (53,946) (44,284)
---------------- ---------------
Cash flows from investing activities:
Acquisitions, net of cash acquired --- (91,800)
Capital expenditures (1,165) (524)
---------------- ---------------
Net cash used by investing activities (1,165) (92,324)
---------------- ---------------
Cash flows from financing activities:
Changes in revolving credit facility, net 58,500 70,000
Dividends to preferred shareholders --- (1,000)
Common stock repurchases (3,141) ---
Debt issuance costs (248) ---
---------------- ---------------
Net cash provided by financing activities 55,111 69,000
---------------- ---------------
Increase (decrease) in cash and cash equivalents --- (67,608)
Cash and cash equivalents at beginning of period --- 67,608
---------------- ---------------
Cash and cash equivalents at end of period $ --- $ ---
================ ===============
</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") 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. Such financial statements do not include all of the information and
disclosures required by generally accepted accounting principles for complete
financial statements. For further information, refer to our audited consolidated
financial statements incorporated by reference in our Annual Report on Form 10-K
for the year ended September 30, 1999.
In our opinion, all adjustments (consisting of normal recurring
accruals) necessary for a fair presentation have been included in the
accompanying condensed financial statements.
(2) INVENTORY
A summary of inventory is as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, September 30,
1999 1999
---- ----
<S> <C> <C>
Homes under construction................................. $271,017 $253,031
Development projects in progress......................... 263,335 235,077
Unimproved land held for future development.............. 4,019 4,539
Model homes.............................................. 37,329 39,912
-------- --------
$575,700 $532,559
======== ========
</TABLE>
Homes under construction includes homes finished and ready for delivery
and homes in various stages of construction. We had 186 completed homes ($29.3
million) and 162 completed homes ($27.1 million) at December 31, 1999 and
September 30, 1999, respectively, that were not subject to a sales contract,
excluding model homes.
Development projects in progress consist principally of land and land
improvement costs. Certain of the fully developed lots in this category are
reserved by a deposit or sales contract.
(3) INTEREST
The following table sets forth certain information regarding interest:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31,
1999 1998
---- ----
<S> <C> <C>
During the period:
Interest incurred $ 6,631 $ 5,939
Previously capitalized interest
amortized to costs and expenses $ 5,523 $ 5,035
At the end of the period:
Capitalized interest in ending
inventory $ 11,596 $ 9,987
</TABLE>
6
<PAGE>
BEAZER HOMES USA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(4) PREFERRED STOCK TRANSACTIONS
During March and April 1999, we paid $1.3 million in cash to holders of
1,732,460 shares of our Series A Cumulative Convertible Exchangeable Preferred
Stock (the "Preferred Stock") to induce those holders to convert their preferred
shares into 2,273,564 common shares in accordance with the original conversion
terms of the Preferred Stock. On April 19, 1999, we called the remaining
outstanding Preferred Stock for redemption and 265,376 shares of Preferred Stock
were then voluntarily converted into 348,406 common shares. On May 19, 1999, we
redeemed the then remaining outstanding 2,164 shares of Preferred Stock for cash
(including accrued and unpaid dividends) of $26.678 per preferred share. We
currently have no shares of Preferred Stock outstanding.
(5) EARNINGS PER SHARE
Basic and diluted earnings per share were calculated as follows
(dollars in thousands, except per share amounts):
<TABLE>
<CAPTION>
Quarter Ended
December 31,
----------------------------
1999 1998
<S> <C> <C>
Earnings
Net income $ 7,517 $ 4,683
Less: Dividends to preferred shareholders - 1,000
------------ ------------
Net income applicable to common shareholders $ 7,517 $ 3,683
============ ============
BASIC:
Net income applicable to common shareholders $ 7,517 $ 3,683
Weighted average number of common shares outstanding 8,530 5,896
Basic earnings per share $ 0.88 $ 0.62
============ ============
DILUTED:
Net income applicable to common shareholders $ 7,517 $ 3,683
Add back: Payments to preferred shareholders - 1,000
------------ ------------
Adjusted net income applicable to common shareholders $ 7,517 $ 4,683
============ ============
Weighted average number of common shares outstanding 8,530 5,896
Effect of dilutive securities-
Assumed conversion of Preferred Stock - 2,625
Restricted stock 261 243
Options to acquire common stock 34 104
------------ ------------
Diluted weighted common shares outstanding 8,825 8,868
============ ============
Diluted earnings per share $ 0.85 $ 0.53
============ ============
</TABLE>
7
<PAGE>
BEAZER HOMES USA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(6) CREDIT AGREEMENT
We maintain a revolving line of credit with a group of banks. During
December 1999, we amended the credit facility and added two banks to the
group, increasing the facility from $200 million to $250 million of unsecured
borrowings. Borrowings under the credit facility generally bear interest at a
fluctuating rate based upon the corporate base rate of interest announced by
the lead bank, the federal funds rate or LIBOR. All outstanding borrowings
will be due in November 2002. The credit facility contains various operating
and financial covenants. Each of our significant subsidiaries is a guarantor
under the credit facility.
(7) ACQUISITIONS
In December 1998, we acquired the assets of the homebuilding operations
of Trafalgar House Property, Inc. ("THPI") for approximately $90 million in
cash. We funded this acquisition with borrowings under the Credit Facility. We
accounted for the acquisition as a purchase and allocated the purchase price 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.
In October 1998, we acquired the assets of Snow Construction, Inc. in
Orlando, Florida for approximately $1.8 million.
(8) TREASURY STOCK REPURCHASE PROGRAM
In November 1999, our Board of Directors approved a stock repurchase
plan authorizing the purchase of up to 500,000 shares of our outstanding common
stock. During the quarter ended December 31, 1999, we repurchased 165,550
shares for an aggregate purchase price of $3.1 million.
(9) RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 (as now
amended) is effective for fiscal years beginning after June 15, 2000. We have
not yet completed an analysis of the effect of this standard on our financial
statements.
8
<PAGE>
BEAZER HOMES USA, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW:
GENERAL:
HOMEBUILDING: We design, build and sell single family homes in the following
states:
<TABLE>
<CAPTION>
SOUTHEAST SOUTHWEST CENTRAL MID-ATLANTIC
--------- --------- ------- ------------
<S> <C> <C> <C> <C>
Florida Arizona Texas Maryland
Georgia California New Jersey
North Carolina Nevada Pennsylvania
South Carolina Virginia
Tennessee
</TABLE>
We intend, subject to market conditions, to expand in our current
markets and to consider entering new markets either through expansion from
existing markets or through acquisitions of established regional homebuilders.
Most of our homes are designed to appeal to entry-level and first time
move-up homebuyers, and are generally offered for sale in advance of their
construction. Once a sales contract has been signed, the transaction is
considered a "new order." Homes covered by these sales contracts are considered
"backlog." We do not recognize revenue on homes in backlog until the sales are
closed and the risk of ownership has been transferred to the buyer.
ANCILLARY BUSINESSES: We provide mortgage origination services for our
homebuyers through Beazer Mortgage Corp. Beazer Mortgage originates,
processes and sells mortgages to third party investors. The Mortgage Company
does not retain or service the mortgages that it originates. During fiscal
1999 we began providing title insurance services in certain markets through
Homebuilders Title Services, Inc.. We will continue to evaluate opportunities
to provide other ancillary services to our homebuyers.
JOINT VENTURE IN AFFORDABLE HOUSING: We have a minority interest in a joint
venture with Corporacion GEO S.A.CV, the largest builder of affordable homes in
Mexico, to build homes in the United States. The joint venture, which operates
under the name Premier Communities, will focus exclusively on the development,
construction and sale of affordable housing throughout the U.S.
VALUE CREATED: We evaluate our financial performance using VALUE CREATED, a
variation of economic profit or economic value added. VALUE CREATED measures the
extent to which we beat our cost of capital. Most of our employees receive
incentive compensation based upon a combination of VALUE CREATED and the change
in VALUE CREATED. We believe that our VALUE CREATED system encourages managers
to act like owners, rewards profitable growth and focuses attention on long-term
loyalty and performance.
9
<PAGE>
BEAZER HOMES USA, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31,
--------------------------------------
1999 1998
------------------------- ----------
%
AMOUNT CHANGE AMOUNT
---------- ------------ ----------
<S> <C> <C> <C>
NUMBER OF NEW ORDERS,
NET OF CANCELLATIONS(a):
Southeast region 537 (10.1)% 597
Southwest region 620 1.6 610
Central region 88 12.8 78
Mid-Atlantic region 260 306.3 64
---------- ----------
Total 1,505 11.6 1,349
========== ==========
NUMBER OF CLOSINGS:
Southeast region 551 3.0 % 535
Southwest region 685 15.1 595
Central region 122 (10.3) 136
Mid-Atlantic region 253 94.6 130
---------- ----------
Total 1,611 15.4 1,396
========== ==========
TOTAL HOMEBUILDING REVENUE:
Southeast region $ 95,252 8.6 % $ 87,744
Southwest region 132,897 31.7 100,943
Central region 22,096 (11.3) 24,918
Mid-Atlantic region 53,339 103.6 26,192
---------- ----------
Total $ 303,584 26.6 $ 239,797
========== ==========
AVERAGE SALES PRICE PER HOME CLOSED:
Southeast region $ 172.9 5.4 % $ 164.0
Southwest region 194.0 14.3 169.7
Central region 181.1 (1.1) 183.2
Mid-Atlantic region 210.8 4.6 201.5
Total 188.4 9.7 171.8
</TABLE>
(a) New orders for the three months ended December 31, 1998 do not include
555 homes in backlog from businesses acquired.
10
<PAGE>
BEAZER HOMES USA, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------------
1999 1998
------------------------------- ------------
%
AMOUNT CHANGE AMOUNT
----------- ----------------- ------------
<S> <C> <C> <C>
BACKLOG UNITS AT END OF PERIOD:
Southeast region 985 (12.7)% 1,128
Southwest region 721 (4.9) 758
Central region 172 (33.8) 260
Mid-Atlantic region 574 37.0 419
----------- ------------
Total 2,452 (4.4) 2,565
=========== ============
AGGREGATE SALES VALUE OF HOMES IN
BACKLOG AT END OF PERIOD: $ 471,856 0.7 % $ 468,780
=========== ============
NUMBER OF ACTIVE SUBDIVISIONS AT
END OF PERIOD:
Southeast region 111 (1.8)% 113
Southwest region 59 (3.3) 61
Central region 30 0.0 30
Mid-Atlantic region 42 (8.7) 46
----------- ------------
Total 242 (3.2) 250
=========== ============
</TABLE>
NEW ORDERS AND BACKLOG: New orders increased by 12% during the quarter ended
December 31, 1999, despite a 3% decrease in the number of active subdivisions at
December 31, 1999. The increase reflects order strength in our Central and
Southwest Regions. In addition, the increase in our Mid-Atlantic region reflects
the inclusion of that region for a full quarter, compared to the inclusion of
approximately one month of operations subsequent to the acquisition of
Trafalgar House in December 1998. We believe that the increase in new orders
in many of our markets reflects the positive impact of population and
employment growth fueled by immigration, combined with an overall strong
economic environment. New orders declined in most of our Southeast markets,
where increased time to obtain building permits has resulted in delays in
opening new subdivisions. We expect to increase the number of active
subdivisions in all of our regions during the quarter ending March 31, 2000.
The aggregate dollar value of homes in backlog at December 31, 1999 increased
1% from December 31, 1998, reflecting a 5% increase in the average price of
homes in backlog, from $182,800 at December 31, 1998 to $192,400 at December
31, 1999. Partially offsetting the increase in the average price of homes in
backlog was a 4% decline in the number of homes in backlog, which is
consistent with the reduction in our number of active subdivisions. Over the
past year we have raised sales prices in most of our markets. In addition,
the increase in our average price of homes in backlog reflects a higher
portion of homes in backlog in our Mid-Atlantic region, which has a higher
average price than other markets.
11
<PAGE>
BEAZER HOMES USA, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following table provides additional details of revenues and certain expenses
and shows certain items expressed as a percentage of certain components of
revenues (dollars in thousands):
<TABLE>
<CAPTION>
Three Months Ended
December 31,
--------------------------
1999 1998
---- ----
<S> <C> <C>
DETAILS OF REVENUES AND CERTAIN EXPENSES:
REVENUES:
Home sales $ 303,584 $ 239,797
Land and lot sales 3,305 639
Mortgage operations 3,107 2,536
Intercompany elimination - mortgage (1,251) (862)
--------- ---------
Total revenue $ 308,745 $ 242,110
========= =========
COST OF HOME CONSTRUCTION AND LAND SALES
Home sales $ 253,849 $ 201,575
Land and lot sales 3,150 454
Intercompany elimination - mortgage (1,251) (862)
--------- ---------
Total cost of home construction and land sales $ 255,748 $ 201,167
========= =========
SELLING, GENERAL AND ADMINISTRATIVE:
Homebuilding operations $ 32,117 $ 26,512
Mortgage origination operations 2,156 1,734
--------- ---------
Total selling, general and administrative $ 34,273 $ 28,246
========= =========
CERTAIN ITEMS AS A PERCENTAGE OF REVENUES:
AS A PERCENTAGE OF TOTAL REVENUE:
Costs of home construction and land sales 82.8% 83.1%
Amortization of previously capitalized interest 1.8% 2.1%
Selling, general and administrative
Homebuilding operations 10.4% 11.0%
Mortgage operations 0.7% 0.7%
AS A PERCENTAGE OF HOME SALE REVENUE:
Costs of home construction 83.6% 84.1%
</TABLE>
12
<PAGE>
BEAZER HOMES USA, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
REVENUES: Revenues increased by 28% for the quarter ended December 31, 1999,
compared to the prior year's December quarter, reflecting a 15% increase in the
number of homes closed and a 10% increase in the average sales price of homes
closed. The increase in home closings reflects the higher level of backlog at
the beginning of the quarter in most of our markets.
COST OF HOME CONSTRUCTION: The cost of home construction as a percentage of home
sales decreased for the quarter ended December 31, 1999, compared to the quarter
ended December 31, 1998, as a result of our ability to raise prices over the
past year, which has more than offset cost increases.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE: Our selling, general and
administrative ("SG&A") expense decreased as a percentage of total revenues for
the quarter ended December 31, 1999 compared to the same period in the prior
year as a result of higher revenues, giving us greater leverage and operating
efficiency on the fixed portion of such expense.
MORTGAGE ORIGINATION OPERATIONS: Revenues increased for Beazer Mortgage during
the quarter ended December 31, 1999 compared to the same quarter of the prior
year, as a result of both the increase in homebuilding revenues and the
completion of the rollout of Beazer Mortgage to all of our markets other than
the Mid-Atlantic. Beazer Mortgage has just begun closing loans in our
Mid-Atlantic region, which should contribute to increased mortgage revenues
in the balance of fiscal 2000. The increase in SG&A expenses for Beazer
Mortgage include the costs of starting up mortgage operations in the
Mid-Atlantic region.
INCOME TAXES: Our effective income tax rate increased from 38.5% to 39.0% for
the three month period ended December 31, 1999 as a result of a higher
overall state tax rate.
FINANCIAL CONDITION AND LIQUIDITY:
We fulfill our short-term cash requirements with cash generated from operations
and unused funds available from an unsecured revolving credit facility (the
"Credit Facility") with a group of banks. During the quarter ended December 31,
1999, we amended the Credit Facility, adding two banks (now eight banks) and
increasing the facility from $200 million to $250 million. Available borrowings
under the facility are limited to certain percentages of homes under contract,
unsold homes, substantially improved lots and accounts receivable. At December
31, 1999, we had $58.5 million outstanding and additional available borrowings
of $119.7 million under the Credit Facility.
We have $215 million of outstanding senior debt, which is comprised of $100
million of 8 7/8% Senior Notes, due in April 2008 and $115 million of Senior
Notes due in March 2004 (collectively, the "Senior Notes"). All of our
significant subsidiaries are guarantors of the Senior Notes and are jointly and
severally liable for 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 consolidated amounts 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 on a consolidated basis. Neither the Credit Facility nor
the Senior Notes restrict distributions to Beazer Homes USA, Inc. by its
subsidiaries.
13
<PAGE>
BEAZER HOMES USA, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
We have utilized, and will continue to utilize, land options as a method of
controlling and subsequently acquiring land. At December 31, 1999, we had 15,399
lots under option. At December 31, 1999, we had commitments with respect to
option contracts with specific performance obligations of approximately $39.3
million. We expect to exercise all of our option contracts with specific
performance obligations and, subject to market conditions, substantially all of
our options contracts without specific performance obligations.
During March and April 1999, we paid an aggregate of $1.3 million in cash to
holders of 1,732,460 shares of our Series A Cumulative Convertible Exchangeable
Preferred Stock (the "Preferred Stock") to induce those holders to convert their
preferred shares into 2,273,564 common shares in accordance with the original
conversion terms of the Preferred Stock. On April 19, 1999, we called the
remaining outstanding Preferred Stock for redemption and 265,376 shares of
Preferred Stock were voluntarily converted into 348,406 common shares. In May
1999, we redeemed the then remaining outstanding 2,164 shares of Preferred Stock
for cash (including accrued and unpaid dividends) of $26.678 per preferred
share. We currently have no shares of Preferred Stock outstanding.
In November 1999, our Board of Directors approved a stock repurchase plan
authorizing the purchase of up to 500,000 shares of our outstanding common
stock. During the quarter ended December 31, 1999, we repurchased 165,550 shares
for an aggregate purchase price of $3.1 million.
In January 2000, we filed a $300 million universal shelf registration statement
on Form S-3 with the Securities and Exchange Commission. Pursuant to the filing,
the Company may, from time to time over an extended period, offer new debt,
and/or equity securities. This shelf registration will allow the Company to
expediently access capital markets periodically in the future. The timing and
amount of offerings, if any, will depend on market and general business
conditions.
We believe that our current borrowing capacity, together with anticipated cash
flows from operations, is sufficient to meet liquidity needs for the foreseeable
future. There can be no assurance, however, that amounts available in the future
from our sources of liquidity will be sufficient to meet future capital needs.
The amount and types of indebtedness that we may incur may be limited by the
terms of the Indenture governing our Senior Notes and our Credit Agreement. We
continually evaluate expansion opportunities through acquisition of established
regional homebuilders and such opportunities may require us 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>
YEAR 2000 ISSUE DISCLOSURE:
We did not experience any significant malfunctions or errors in our operating
or business systems when the date changed from 1999 to 2000. Based on
operations since January 1, 2000, we do not expect any significant impact to
our ongoing business as a result of the "Year 2000 issue", however it is
possible that the full impact of the date change, which was of concern to
computer programs that use two digits instead of four digits to define years,
has not been fully recognized. For example, it is possible that the Year 2000
or similar issues such as leap year-related problems may occur with payroll
or financial closings at month, quarterly, or year end. We believe that any
such problems are likely to be minor and correctable. In addition, we could
still be negatively affected if our subcontractors or suppliers are adversely
affected by the Year 2000 or similar issues. We currently are not aware of
any significant Year 2000 or similar problems that have arisen for our
subcontractors or suppliers.
OUTLOOK:
Our increased earnings for the quarter ended December 31, 1999 and our current
higher level of dollar backlog make us optimistic about the prospect for
increased earnings in fiscal 2000 compared to fiscal 1999. In addition, as a
result of projected future increases in households and employment, we are
optimistic about the long-term prospects for the US housing market and confident
in our ability to take advantage of those prospects.
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 including projected earnings per share for fiscal 2000,
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
2000, 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
- Shortages of skilled labor or raw materials used in the production of
houses in one of the Company's local markets
- Increased prices for labor, land and raw materials used in the production
of houses
- Increased land development cost on projects under development
- 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
- Delays in land development or home construction resulting from adverse
weather conditions in one of the Company's local markets.
15
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On February 3, 2000, we held our annual meeting of shareholders. At
the annual meeting, the shareholders (i) elected seven members to the Board of
Directors to serve until the next annual meeting and (ii) approved the 1999
Stock Incentive Plan. The results of the voting were as follows (based on
8,864,822 outstanding shares entitled to vote):
<TABLE>
<CAPTION>
Election of Directors:
----------------------
Name For Against Withheld Broker Non-votes
---- --- ------- -------- ----------------
<S> <C> <C> <C> <C>
Brian C. Beazer 8,324,401 0 57,336 0
Thomas B. Howard, Jr. 8,323,701 0 58,036 0
Ian J. McCarthy 8,324,001 0 57,736 0
George W. Mefferd 8,323,701 0 58,036 0
D. E. Mundell 8,324,401 0 57,336 0
Larry T. Solari 8,324,401 0 57,336 0
David S. Weiss 8,324,401 0 57,336 0
</TABLE>
Approval of 1999 Stock Incentive Plan:
----------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
For: 4,599,481 Against: 1,680,175 Abstain: 63,715 Broker Non-votes: 2,038,366
--------- --------- ------ ---------
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27 Financial Data Schedule
(b) Reports on Form 8-K:
On February 1, 2000 we filed a Form 8-K relating to our press release
on our earnings for the three months ended December 31, 1999.
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.
<TABLE>
<S> <C> <C> <C>
Date: February 14, 2000 By: /s/ David S. Weiss
------------------------------ ---------------------------------
Name: David S. Weiss
Executive Vice President and
Chief Financial Officer
</TABLE>
17
<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 DECEMBER 31, 1999
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 9,285
<ALLOWANCES> 0
<INVENTORY> 575,700
<CURRENT-ASSETS> 0<F1>
<PP&E> 13,049
<DEPRECIATION> 0
<TOTAL-ASSETS> 628,075
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 215,000
0
0
<COMMON> 123
<OTHER-SE> 239,252
<TOTAL-LIABILITY-AND-EQUITY> 628,075
<SALES> 308,745
<TOTAL-REVENUES> 308,745
<CGS> 255,748
<TOTAL-COSTS> 295,544
<OTHER-EXPENSES> 878
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 12,323
<INCOME-TAX> 4,806
<INCOME-CONTINUING> 7,517
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,517
<EPS-BASIC> .88
<EPS-DILUTED> .85
<FN>
<F1>THE COMPANY PRESENTS A CONDENSED BALANCE SHEET
</FN>
</TABLE>
