EX-99.2 5 a2061071zex-99_2.htm EXHIBIT 99.2 Prepared by MERRILL CORPORATION
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EXHIBIT 99.2

    The following unaudited pro forma condensed combined financial information as of and for the nine months ended June 30, 2001 and for the year ended September 30, 2000 have been prepared to reflect Beazer Homes USA, Inc.'s (Beazer) purchase of the residential homebuilding operations of Sanford Homes of Colorado LLLP (SHOC) and April Corporation (April) on August 1, 2001, as if this acquisition had occurred on June 30, 2001 for purposes of the pro forma condensed combined balance sheet, and on October 1, 1999 for purposes of the pro forma condensed combined statements of operations. The purchase price was approximately $72 million, of which $65 million was paid in cash and approximately $7 million of accounts payable and accrued expenses were assumed by Beazer. The acquisition has been accounted for as a purchase and, accordingly, the purchase price has been tentatively allocated to reflect the fair value of assets and liabilities acquired. Such allocation resulted principally in an increase to inventory to reflect the fair value of assets acquired and an increase to other assets to recognize the goodwill associated with the transaction. Pro forma adjustments have been made in the accompanying statements to reflect the impact of purchase accounting and other items that Beazer management believes reasonable under the circumstances.

    The unaudited pro forma condensed combined financial information is provided for comparative purposes only and does not purport to be indicative of the results that would actually have been obtained had the acquisition been effected on October 1, 1999 or of the results which may be obtained in the future. The unaudited pro forma condensed combined financial information should be read in conjunction with the historical financial statements and notes thereto of Beazer, which are incorporated by reference in Beazer's Annual Report on Form 10-K for the year ended September 30, 2000, Beazer's Quarterly Report on Form 10-Q for the nine months ended June 30, 2001 and the historical combined financial statements of SHOC and April included herein.

BEAZER HOMES USA, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
June 30, 2001
(in thousands, except share data)

 
   Beazer
Historical
   SHOC &
April
Combined
Historical (1)
   Pro Forma
Adjustments
   Beazer
Pro Forma
Combined
  
ASSETS                          
Cash and cash equivalents   $ 11,911   $ 8,312   $ (20,223 )(2) $ —  
Accounts receivable     24,146     1,725     (1,682 )(3)   24,189  
Inventory     785,234     50,302     5,800  (4)   841,336  
Property, plant and equipment, net     11,786     304     —     12,090  
Goodwill, net     6,649     —     4,364  (5)   11,013  
Other assets     31,020     5,993     (1,692 )(6)   35,321  
   
 
 
 
 
  Total assets   $ 870,746   $ 66,636   $ (13,433 ) $ 923,949  
   
 
 
 
 

LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
 
 
 
 
 
 
 
 
 
Trade accounts payable   $ 56,922   $ 3,238   $ —   $ 60,160  
Other payables and accrued liabilities     105,561     3,514     —     109,075  
Other notes payable     99     31,758     (31,758 )(7)   99  
Revolving credit facility     —     —     46,451  (2)   46,451  
Term loan     90,000     —     —     90,000  
Senior notes (net of discount of $4,906)     295,094     —     —     295,094  
   
 
 
 
 
  Total liabilities     547,676     38,510     14,693     600,879  

Minority Interest
 
 
—
 
 
254
 
 
(254
)(3)
 
—
 

Stockholders' equity:
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock (par value $.01 per share, 5,000,000 shares authorized, no shares issued)     —     —     —     —  
Common stock (par value $.01 per share, 30,000,000 shares authorized, 12,358,725 issued, 8,559,721 outstanding)     124     —     —     124  
Paid in capital     196,882     —     —     196,882  
Owners' equity     —     742     (742 )(8)   —  
Retained earnings     192,125     27,130     (27,130 )(8)   192,125  
Unearned restricted stock     (3,665 )   —     —     (3,665 )
Treasury stock (3,799,004 shares)     (61,510 )   —     —     (61,510 )
Accumulated other comprehensive loss     (886 )   —     —     (886 )
   
 
 
 
 
Total stockholders' equity     323,070     27,872     (27,872 )   323,070  
   
 
 
 
 
  Total liabilities and stockholders' equity   $ 870,746   $ 66,636   $ (13,433 ) $ 923,949  
   
 
 
 
 

Pro Forma Adjustments:

(1)
Represents the unaudited June 30, 2001 historical combined financial statements of SHOC and April.
(2)
To reflect the funding of the purchase price of the acquisition including pay off of SHOC & April debt and additional debt incurred by Beazer.
(3)
Represents certain assets and liabilities of SHOC and April which were excluded from the business combination.
(4)
To increase combined acquired inventory by $9.0 million to values approximating estimated selling price less: (a) costs of completion and disposal and (b) a reasonable profit allowance; and to decrease inventory by $3.2 million to account for certain model homes not acquired by Beazer.
(5)
Represents tentative excess of the purchase price over identifiable tangible and intangible net assets of the acquired companies.
(6)
To increase other assets by $1.0 million for the fair value of a non-compete agreement in connection with the business combination and to decrease other assets $2.7 million related to item (3) above.
(7)
Represents a $29.3 million adjustment related to item (2) above and a $2.5 million adjustment related to item (3) above.
(8)
To eliminate SHOC and April combined historical owners' equity.

BEAZER HOMES USA, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
NINE MONTHS ENDED JUNE 30, 2001
(in thousands, except per share data)

 
   Beazer
Historical (1)
   SHOC & April
Combined
Historical (1)
   Pro
Forma
Adjustments
   Beazer
Pro
Forma
Combined
  
Total revenue   $ 1,188,172   $ 95,584   $ —   $ 1,283,756  
Costs and expenses:                          
  Home construction and land sales     948,764     69,243     1,500  (2)   1,019,507  
  Selling, general and administrative     132,742     10,072     593  (3)   143,407  
  Interest     22,715     1,053     2,014  (4)   25,782  
   
 
 
 
 
Operating income     83,951     15,216     (4,107 )   95,060  
Other (expense)/income, net     909     506     —     1,415  
   
 
 
 
 
Income before income taxes and extraordinary item     84,860     15,722     (4,107 )   96,475  
Provision for income taxes     33,096     1,203     3,326  (5)   37,625  
   
 
 
 
 
Net income before extraordinary item     51,764     14,519     (7,433 )   58,850  
Extraordinary item—loss on early extinguishment of debt (net of taxes of $469)     (733 )   —     —     (733 )
   
 
 
 
 
Net income   $ 51,031   $ 14,519   $ (7,433 ) $ 58,117  
   
 
 
 
 
Weighted average number of shares:                          
  Basic     8,149                 8,149  
  Diluted     9,124                 9,124  

Basic
 
 
 
 
 
 
 
 
 
 
 
 
 
  Net income before extraordinary item   $ 6.35               $ 7.22  
  Extraordinary item     0.09                 0.09  
   
             
 
  Net income per common share   $ 6.26               $ 7.13  
   
             
 

Diluted
 
 
 
 
 
 
 
 
 
 
 
 
 
  Net income before extraordinary item   $ 5.67               $ 6.45  
  Extraordinary item     0.08                 0.08  
   
             
 
  Net income per common share   $ 5.59               $ 6.37  
   
             
 

Pro Forma Adjustments:

The above unaudited pro forma condensed combined statement of operations was prepared to reflect Beazer's purchase of the residential homebuilding operations of SHOC and April as if the acquisition had occurred on October 1, 1999.

(1)
For purposes of this pro forma condensed combined statement of operations, the statement of operations of SHOC and April for the nine months ended June 30, 2001 has been combined with Beazer's statement of operations for the nine months ended June 30, 2001.
(2)
To adjust cost of home construction and land sales for the amortization of purchase price adjustments resulting from the acquisition of SHOC and April.
(3)
To recognize the amortization of goodwill of $0.2 million and the non compete agreement of $0.4 million.
(4)
To impute interest of $2.6 million on the aggregate purchase price, to adjust the acquired operations' interest expense to Beazer's average borrowing rate for the nine months ended June 30, 2001 (7.98%), and to eliminate loan guarantee fees paid to an affiliate of $0.6 million.
(5)
To impute income tax expense based on Beazer's effective income tax rate (39%).

BEAZER HOMES USA, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 2000
(in thousands, except per share data)

 
   Beazer
Historical (1)
   SHOC &
April
Combined
Historical (1)
   Pro
Forma
Adjustments
   Beazer
Pro
Forma
Combined
  
Total revenue   $ 1,527,865   $ 138,161   $ —   $ 1,666,026  

Costs and expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
  Home construction and land sales     1,255,918     104,249     7,500  (2)   1,367,667  
  Selling, general and administrative     168,620     15,455     791  (3)   184,866  
  Interest     27,704     1,493     2,472  (4)   31,669  
   
 
 
 
 
Operating income     75,623     16,964     (10,763 )   81,824  
Other (expense)/income, net     (4,138 )   114     —     (4,024 )
   
 
 
 
 
Income before income taxes     71,485     17,078     (10,763 )   77,800  
Provision for income taxes     27,879     1,179     1,284  (5)   30,342  
   
 
 
 
 
Net income   $ 43,606   $ 15,899   $ (12,047 ) $ 47,458  
   
 
 
 
 

Weighted average number of shares:
 
 
 
 
 
 
 
 
 
 
 
 
 
  Basic     8,254                 8,254  
  Diluted     8,630                 8,630  

Net income per common share:
 
 
 
 
 
 
 
 
 
 
 
 
 
  Basic   $ 5.28               $ 5.75  
   
             
 
  Diluted   $ 5.05               $ 5.50  
   
             
 

Pro Forma Adjustments:

The above unaudited pro forma condensed combined statement of operations was prepared to reflect Beazer's purchase of the residential homebuilding operations of SHOC and April as if the acquisition had occurred on October 1, 1999.

(1)
For purposes of this pro forma condensed combined statement of operations, the statement of operations of SHOC and April for the year ended December 31, 2000 has been combined with Beazer's statement of operations for the year ended September 30, 2000.
(2)
To adjust cost of home construction and land sales for the amortization of purchase price adjustments resulting from the acquisition of SHOC and April.
(3)
To recognize the amortization of goodwill of $0.3 million and the non compete agreement of $0.5 million.
(4)
To impute interest of $3.3 million on the aggregate purchase price, to adjust the acquired operations' interest expense to Beazer's average borrowing rate for fiscal 2000 (7.98%), and to eliminate loan guarantee fees paid to an affiliate of $0.8 million.
(5)
To impute income tax expense based on Beazer's effective income tax rate (39%).


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BEAZER HOMES USA, INC. UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET June 30, 2001
BEAZER HOMES USA, INC. UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS NINE MONTHS ENDED JUNE 30, 2001
BEAZER HOMES USA, INC. UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 2000