-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, G7NXZausyobRFoe7p2RCoL6/jlsIzz1O3aIgZVjKrMxBJx3bxJYv9+gtagxFeYLd rrt7lEtRZFSPORhgiE6AmA== 0000912057-00-006363.txt : 20000215 0000912057-00-006363.hdr.sgml : 20000215 ACCESSION NUMBER: 0000912057-00-006363 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BEAZER HOMES USA INC CENTRAL INDEX KEY: 0000915840 STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531] IRS NUMBER: 582086934 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12822 FILM NUMBER: 539990 BUSINESS ADDRESS: STREET 1: 5775 PEACHTREE DUNW00DY RD STREET 2: STE B 200 CITY: ATLANTA STATE: GA ZIP: 30342 BUSINESS PHONE: 4042503420 MAIL ADDRESS: STREET 1: 5775 PEACHTREE DUNWOODY RD STREET 2: STE C-200 CITY: ATLANTA STATE: GA ZIP: 30342 10-Q 1 10-Q 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 BEAZER HOMES USA, INC. FORM 10-Q INDEX
Page No. -------- 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
2 PART I. FINANCIAL INFORMATION BEAZER HOMES USA, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
December 31, September 30, 1999 1999 ---- ---- (unaudited) 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 ================ ================
See Notes to Condensed Consolidated Financial Statements 3 BEAZER HOMES USA, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended December 31, ----------------------------- 1999 1998 ---- ---- 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
See Notes to Condensed Consolidated Financial Statements 4 BEAZER HOMES USA, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS)
Three Months Ended December 31, -------------------------------------- 1999 1998 ---- ---- 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 $ --- $ --- ================ ===============
See Notes to Condensed Consolidated Financial Statements 5 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):
DECEMBER 31, September 30, 1999 1999 ---- ---- 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 ======== ========
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:
THREE MONTHS ENDED DECEMBER 31, 1999 1998 ---- ---- 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
6 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):
Quarter Ended December 31, ---------------------------- 1999 1998 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 ============ ============
7 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 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:
SOUTHEAST SOUTHWEST CENTRAL MID-ATLANTIC --------- --------- ------- ------------ Florida Arizona Texas Maryland Georgia California New Jersey North Carolina Nevada Pennsylvania South Carolina Virginia Tennessee
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 BEAZER HOMES USA, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS:
THREE MONTHS ENDED DECEMBER 31, -------------------------------------- 1999 1998 ------------------------- ---------- % AMOUNT CHANGE AMOUNT ---------- ------------ ---------- 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
(a) New orders for the three months ended December 31, 1998 do not include 555 homes in backlog from businesses acquired. 10 BEAZER HOMES USA, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
DECEMBER 31, ----------------------------------------------- 1999 1998 ------------------------------- ------------ % AMOUNT CHANGE AMOUNT ----------- ----------------- ------------ 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 =========== ============
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 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):
Three Months Ended December 31, -------------------------- 1999 1998 ---- ---- 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%
12 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 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 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 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):
Election of Directors: ---------------------- Name For Against Withheld Broker Non-votes ---- --- ------- -------- ---------------- 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
Approval of 1999 Stock Incentive Plan: ----------------------------------------------
For: 4,599,481 Against: 1,680,175 Abstain: 63,715 Broker Non-votes: 2,038,366 --------- --------- ------ ---------
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 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: February 14, 2000 By: /s/ David S. Weiss ------------------------------ --------------------------------- Name: David S. Weiss Executive Vice President and Chief Financial Officer
17 EX-27 2 EX-27
5 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. 1,000 3-MOS SEP-30-2000 OCT-01-1999 DEC-31-1999 0 0 9,285 0 575,700 0 13,049 0 628,075 0 215,000 0 0 123 239,252 628,075 308,745 308,745 255,748 295,544 878 0 0 12,323 4,806 7,517 0 0 0 7,517 .88 .85 THE COMPANY PRESENTS A CONDENSED BALANCE SHEET
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