<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, 2000
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 May 5, 2000
----- ---------------------------
Common Stock, $0.01 par value 8,473,872 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>
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Condensed Consolidated Balance Sheets,
March 31, 2000 (unaudited) and September 30, 1999 3
Unaudited Condensed Consolidated Statements of Operations,
Three and Six Months Ended March 31, 2000 and 1999 4
Unaudited Condensed Consolidated Statements of Cash Flows,
Six Months Ended March 31, 2000 and 1999 5
Notes to Unaudited Condensed Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis
of Financial Condition and Results of
Operations 9
PART II OTHER INFORMATION 16
Item 6 Exhibits and Reports on Form 8-K
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,
2000 1999
--------- -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash $ 6,305 $ --
Accounts receivable 13,301 21,416
Inventory 611,604 532,559
Property, plant and equipment, net 12,995 13,102
Goodwill, net 7,651 8,051
Other assets 21,947 19,440
--------- ---------
Total assets $ 673,803 $ 594,568
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Trade accounts payable $ 46,647 $ 45,984
Other payables and accrued liabilities 74,688 98,922
Revolving credit facility 95,000 --
Senior notes 215,000 215,000
--------- ---------
Total liabilities 431,335 359,906
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,
8,424,215 and 8,924,465 outstanding) 123 123
Paid in capital 194,528 194,528
Retained earnings 113,831 97,488
Unearned restricted stock (4,810) (5,494)
Treasury stock (3,792,027 and 3,291,777 shares) (61,204) (51,983)
--------- ---------
Total stockholders' equity 242,468 234,662
--------- ---------
Total liabilities and stockholders' equity $ 673,803 $ 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 SIX MONTHS
ENDED MARCH 31, ENDED MARCH 31,
-------------------- --------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Total revenue $ 332,961 $ 327,345 $ 641,706 $ 569,455
Costs and expenses:
Home construction and land sales 275,723 272,021 531,471 473,186
Interest 6,072 6,262 11,595 11,297
Selling, general and administrative 36,187 35,871 70,460 64,118
-------- -------- -------- --------
Operating income 14,979 13,191 28,180 20,854
Other expense (510) (45) (1,388) (92)
-------- -------- -------- --------
Income before income taxes 14,469 13,146 26,792 20,762
Provision for income taxes 5,643 5,061 10,449 7,993
-------- -------- -------- --------
Net income $ 8,826 $ 8,085 $ 16,343 $ 12,769
======== ======== ======== ========
Dividends and other payments to preferred
shareholders $ -- $ 2,009 $ -- $ 3,009
Net income applicable to common stockholders:
Basic $ 8,826 $ 6,076 $ 16,343 $ 9,760
Diluted $ 8,826 $ 6,290 $ 16,343 $ 10,187
Weighted average number of shares (in thousands):
Basic 8,308 6,550 8,403 6,219
Diluted 8,619 7,471 8,710 7,139
Net income per common share:
Basic $ 1.06 $ 0.93 $ 1.94 $ 1.57
Diluted $ 1.02 $ 0.84 $ 1.88 $ 1.43
</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,
---------------------------
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 16,343 $ 12,769
Adjustments to reconcile net income to
net cash used by operating activities:
Depreciation and amortization 3,493 2,061
Changes in operating assets and liabilities,
net of effects of acquisitions
Increase in inventory (79,045) (43,585)
Increase (decrease) in trade accounts payable 663 (25,887)
Other changes (18,384) 10,136
-------- --------
Net cash used by operating activities (76,930) (44,506)
-------- --------
Cash flows from investing activities:
Acquisitions, net of cash acquired -- (91,800)
Capital expenditures (2,296) (1,472)
-------- --------
Net cash used by investing activities (2,296) (93,272)
-------- --------
Cash flows from financing activities:
Changes in revolving credit facilities, net 95,000 75,000
Dividends and other payments
to preferred shareholders -- (3,272)
Common stock repurchases (9,221) --
Debt issuance costs (248) --
-------- --------
Net cash provided by financing activities 85,531 71,728
-------- --------
Increase (decrease) in cash and cash equivalents 6,305 (66,050)
Cash and cash equivalents at beginning of period -- 67,608
-------- --------
Cash and cash equivalents at end of period $ 6,305 $ 1,558
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
5
<PAGE>
BEAZER HOMES USA, INC.
NOTES TO UNAUDITED 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. In our opinion, all adjustments (consisting of normal
recurring accruals) necessary for a fair presentation have been included in
the accompanying condensed 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.
(2) INVENTORY
A summary of inventory is as follows (in thousands):
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
2000 1999
--------- -------------
<S> <C> <C>
Homes under construction................................. $286,508 $253,031
Development projects in progress......................... 279,863 235,077
Unimproved land held for future development.............. 6,660 4,539
Model homes.............................................. 38,573 39,912
-------- --------
$611,604 $532,559
======== ========
</TABLE>
Homes under construction includes homes finished and ready for delivery
and homes in various stages of construction. We had 194 completed homes ($31.7
million) and 162 completed homes ($27.1 million) at March 31, 2000 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 SIX MONTHS ENDED
MARCH 31, MARCH 31,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
During the period:
Interest incurred $ 7,659 $ 7,080 $14,290 $13,019
Previously capitalized interest
amortized to costs and expenses $ 6,072 $ 6,262 $11,595 $11,297
At the end of the period:
Capitalized interest in ending
inventory $13,183 $11,535 $13,183 $11,535
</TABLE>
6
<PAGE>
BEAZER HOMES USA, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(4) PREFERRED STOCK TRANSACTIONS
During 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. We also called the remaining outstanding Preferred
Stock for redemption, of which 265,376 shares were voluntarily converted into
348,406 common shares and the remaining 2,164 shares of Preferred Stock were
redeemed for cash (including accrued and unpaid dividends) at $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 SIX MONTHS ENDED
MARCH 31, MARCH 31,
---------------------------- --------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Earnings
Net income $ 8,826 $ 8,085 $16,343 $12,769
Less: Dividends and other payments to
preferred shareholders - 2,009 - 3,009
---------------------------- --------------------------
Net income applicable to common shareholders $ 8,826 $ 6,076 $16,343 $ 9,760
============================ ==========================
BASIC:
Net income applicable to common shareholders $ 8,826 $ 6,076 $16,343 $ 9,760
Weighted average number of common
shares outstanding 8,308 6,550 8,403 6,219
---------------------------- --------------------------
Basic earnings per share $ 1.06 $ 0.93 $ 1.94 $ 1.57
---------------------------- --------------------------
DILUTED:
Net income applicable to common shareholders $ 8,826 $ 6,076 $16,343 $ 9,760
Add back: Certain payments to preferred shareholders - 214 - 427
---------------------------- --------------------------
Adjusted net income applicable to
common shareholders $ 8,826 $ 6,290 $16,343 $10,187
---------------------------- --------------------------
Weighted average number of common
shares outstanding 8,308 6,550 8,403 6,219
Effect of dilutive securities-
Assumed conversion of Preferred Stock - 561 - 561
Restricted stock 262 254 262 254
Options to acquire common stock 49 106 45 105
---------------------------- --------------------------
Diluted weighted common shares outstanding 8,619 7,471 8,710 7,139
---------------------------- --------------------------
Diluted earnings per share $ 1.02 $ 0.84 $ 1.88 $ 1.43
---------------------------- --------------------------
</TABLE>
7
<PAGE>
BEAZER HOMES USA, INC.
NOTES TO UNAUDITED 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 are 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.
(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 six months ended March 31, 2000, we completed the plan and
repurchased 500,000 shares for an aggregate purchase price of $9.2 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>
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. Beazer 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, focuses 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 SIX MONTHS ENDED
MARCH 31, MARCH 31,
------------------------------ ----------------------------
2000 1999 2000 1999
------------------- -------- ------------------ --------
% %
AMOUNT CHANGE AMOUNT AMOUNT CHANGE AMOUNT
-------- -------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
NUMBER OF NEW ORDERS,
NET OF CANCELLATIONS: (a)
Southeast region 990 3.3% 958 1,527 (1.8)% 1,555
Southwest region 981 13.3 866 1,601 8.5 1,476
Central region 200 53.8 130 288 38.5 208
Mid-Atlantic region 368 (8.9) 404 628 34.2 468
-------- -------- -------- --------
Total 2,539 7.7 2,358 4,044 9.1 3,707
======== ======== ======== ========
NUMBER OF CLOSINGS:
Southeast region 664 (6.2)% 708 1,215 (2.3)% 1,243
Southwest region 706 (2.6) 725 1,391 5.4 1,320
Central region 129 0.8 128 251 (4.9) 264
Mid-Atlantic region 250 4.2 240 503 35.9 370
-------- -------- -------- --------
Total 1,749 (2.9) 1,801 3,360 5.1 3,197
======== ======== ======== ========
TOTAL HOMEBUILDING REVENUE:
Southeast region $107,690 (9.5)% $118,933 $202,943 (1.8)% $206,677
Southwest region 139,325 6.5 130,796 272,222 17.5 231,739
Central region 24,849 9.3 22,730 46,945 (1.5) 47,648
Mid-Atlantic region 53,748 1.8 52,785 107,086 35.6 78,977
-------- -------- -------- --------
Total $325,612 0.1 $325,244 $629,196 11.4 $565,041
======== ======== ======== ========
AVERAGE SALES PRICE PER HOME CLOSED:
Southeast region $ 162.2 (3.5)% $ 168.0 $ 167.0 0.5% $ 166.3
Southwest region 197.3 9.4 180.4 195.7 11.5 175.6
Central region 192.6 8.5 177.6 187.0 3.6 180.5
Mid-Atlantic region 215.0 (2.2) 219.9 212.9 (0.3) 213.5
Total 186.2 3.1 180.6 187.3 6.0 176.7
</TABLE>
(a) New orders for the six months ended March 31, 1999 do not include 555
homes in backlog acquired in a business acquisition.
10
<PAGE>
BEAZER HOMES USA, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (Continued):
<TABLE>
<CAPTION>
MARCH 31,
------------------------------
2000 1999
------------------- --------
%
AMOUNT CHANGE AMOUNT
-------- -------- --------
<S> <C> <C> <C>
BACKLOG UNITS AT END OF PERIOD:
Southeast region 1,311 (4.9)% 1,378
Southwest region 996 10.8 899
Central region 243 (7.3) 262
Mid-Atlantic region 692 18.7 583
-------- --------
Total 3,242 3.8 3,122
======== ========
AGGREGATE SALES VALUE OF HOMES IN
BACKLOG AT END OF PERIOD: $635,328 9.7% $579,332
======== ========
NUMBER OF ACTIVE SUBDIVISIONS AT
END OF PERIOD:
Southeast region 114 (6.6)% 122
Southwest region 68 4.6 65
Central region 25 (21.9) 32
Mid-Atlantic region 42 0.0 42
-------- --------
Total 249 (4.6) 261
-------- --------
</TABLE>
NEW ORDERS AND BACKLOG: New orders increased by 8% and 9% during the three and
six month periods ended March 31, 2000, respectively, despite a 5% decrease in
the number of active subdivisions at March 31, 2000. The increase reflects order
strength in our Central and Southwest Regions. In addition, the increase in our
Mid-Atlantic region for the six months ended March 31, 2000 reflects the
inclusion of that region for a full six months, compared to the inclusion of
approximately four months 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 for the three and six months ended March 31, 2000
declined in most of our Southeast markets, where increased time to obtain
building permits resulted in delays in opening new subdivisions.
The aggregate dollar value of homes in backlog at March 31, 2000 increased 10%
from March 31, 1999, reflecting a 4% increase in the number of homes in backlog
and a 6% increase in the average price of homes in backlog, from $185,600 at
March 31, 1999 to $196,000 at March 31, 2000. The increased average price of
homes in backlog reflects our continued ability to raise prices in most of our
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 SIX MONTHS ENDED
MARCH 31, MARCH 31,
---------------------- --------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
DETAILS OF REVENUES AND CERTAIN EXPENSES:
REVENUES:
Home sales $325,612 $325,244 $629,196 $565,041
Land and lot sales 5,151 363 8,456 1,002
Mortgage operations 3,627 3,314 6,734 5,850
Intercompany elimination--mortgage (1,429) (1,576) (2,680) (2,438)
-------- -------- -------- --------
Total revenue $332,961 $327,345 $641,706 $569,455
======== ======== ======== ========
COST OF HOME CONSTRUCTION AND LAND SALES
Home sales $273,336 $273,260 $526,074 $474,835
Land and lot sales 3,816 337 8,077 791
Intercompany elimination--mortgage (1,429) (1,576) (2,680) (2,438)
-------- -------- -------- --------
Total cost of home construction and
land sales $275,723 $272,021 $531,471 $473,188
======== ======== ======== ========
SELLING, GENERAL AND ADMINISTRATIVE:
Homebuilding operations $ 33,767 $ 33,778 $ 66,176 $ 60,291
Mortgage origination operations 2,420 2,093 4,285 3,827
-------- -------- -------- --------
Total selling, general and administrative $ 36,187 $ 35,871 $ 70,461 $ 64,118
======== ======== ======== ========
CERTAIN ITEMS AS A PERCENTAGE OF REVENUES:
AS A PERCENTAGE OF TOTAL REVENUE:
Costs of home construction and land sales 82.8% 83.1% 82.8% 83.1%
Amortization of previously capitalized
interest 1.8% 1.9% 1.8% 2.0%
Selling, general and administrative
Homebuilding operations 10.1% 10.3% 10.3% 10.6%
Mortgage operations 0.7% 0.6% 0.7% 0.7%
AS A PERCENTAGE OF HOME SALE REVENUE:
Costs of home construction 83.9% 84.0% 83.6% 84.0%
</TABLE>
REVENUES: Revenues increased by 2% for the three months ended March 31, 2000
compared to the same period in the prior year., reflecting a 3% increase in the
average sales price of homes closed and an increase in revenues from land sales,
offset by a 3% decrease in the number of homes closed. The decrease in home
closings reflects the lower level of backlog at the beginning of the quarter.
The 13% increase in revenues for the six months ended March 31, 2000 reflects a
5% increase in the number of homes closed and 6% increase in the average price.
12
<PAGE>
BEAZER HOMES USA, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
COST OF HOME CONSTRUCTION: The cost of home construction as a percentage of home
sales decreased for the three and six months ended March 31, 2000, compared to
the same periods of the prior year, as a result of our ability to raise prices,
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 three and six months ended March 31, 2000, compared to the same periods of
the prior year, as a result of higher revenues, giving us greater leverage and
operating efficiency on the fixed portion of such expense, and the completion of
the integration of our Mid-Atlantic division, acquired in 1999.
MORTGAGE ORIGINATION OPERATIONS: Revenues increased for Beazer Mortgage during
the three and six months ended March 31, 2000, compared to the same periods 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. 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
both the three and six month periods ended March 31, 2000 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. In December 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 March 31, 2000, we had
$95 million outstanding and additional available borrowings of $125 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 March 31, 2000, we had 15,007
lots under option. At March 31, 2000, we had commitments with respect to option
contracts with specific performance obligations of approximately $35.6 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 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. We also called the remaining outstanding Preferred Stock for
redemption, of which 265,376 shares were voluntarily converted into 348,406
common shares and the remaining 2,164 shares of Preferred Stock were redeemed
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 six months ended March 31, 2000, we completed the plan and
repurchased 500,000 shares for an aggregate purchase price of $9.2 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.
OUTLOOK:
Our increased earnings for the six months ended March 31, 2000 and our current
higher level of 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. Further, we believe that a
number of e-business initiatives that we are currently implementing will enhance
our ability to take advantage of these prospects and will ultimately improve our
profitability.
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 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 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27 Financial Data Schedule
(b) Reports on Form 8-K:
We did not file any reports on Form 8-K during the quarter
ended March 31, 2000.
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 8, 2000 By: /s/ David S. Weiss
---------------------- ----------------------------
Name: David S. Weiss
Executive Vice President and
Chief Financial Officer
17
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2000
</LEGEND>
<RESTATED>
<CIK>0000915840
<NAME> BEAZER
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1.00
<CASH> 6,305
<SECURITIES> 0
<RECEIVABLES> 13,301
<ALLOWANCES> 0
<INVENTORY> 611,604
<CURRENT-ASSETS> 0<F1>
<PP&E> 12,995
<DEPRECIATION> 0
<TOTAL-ASSETS> 673,803
<CURRENT-LIABILITIES> 0<F2>
<BONDS> 215,000
0
0
<COMMON> 123
<OTHER-SE> 242,345
<TOTAL-LIABILITY-AND-EQUITY> 673,803
<SALES> 332,961
<TOTAL-REVENUES> 332,961
<CGS> 275,723
<TOTAL-COSTS> 317,982
<OTHER-EXPENSES> 510
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 14,469
<INCOME-TAX> 5,643
<INCOME-CONTINUING> 8,826
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,826
<EPS-BASIC> $1.06
<EPS-DILUTED> $1.06
<FN>
<F1>THE COMPANY PRESENTS A CONDENSED BALANCE SHEET
<F2>THE COMPANY PRESENTS A CONDENSED BALANCE SHEET
</FN>
</TABLE>
