UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
Date
of
Report (Date of earliest event reported): February 1, 2008
BEAZER
HOMES USA, INC.
(Exact
name of registrant as specified in its charter)
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DELAWARE
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001-12822
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54-2086934
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(State
or other jurisdiction
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(Commission
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(IRS
Employer
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of
incorporation)
|
File
Number)
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Identification
No.)
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1000
Abernathy Road, Suite 1200
Atlanta
Georgia 30328
(Address
of Principal
Executive
Offices)
(770)
829-3700
(Registrant's
telephone number, including area code)
None
(Former
name or former address, if changed since last report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligations of the registrant under any of the following
provisions:
|
o
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
|
|
o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR
240.14d-2(b))
|
|
o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR
240.13e-4(c))
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Item
1.01. Entry into a Material Definitive Agreement
On
February 1, 2008, Beazer Homes announced that it will discontinue mortgage
origination services through Beazer Mortgage Corporation effective immediately
and has ended its related mortgage services relationship with Homebuilders
Financial Network, LLC (“HFN”). The Company has entered into a new marketing
services arrangement with Countrywide Financial Corporation (NYSE: CFC),
whereby
Beazer Homes will market Countrywide as the preferred mortgage provider to
Beazer Homes’ customers.
Item
1.02. Termination of a Material Definitive Agreement
The
disclosure contained in Item 1.01 is incorporated herein by
reference.
Item
2.01. Results of Operations and Financial Condition
The
Company provided certain unaudited and preliminary financial and operating
data
for the quarter ended December 31, 2007.
As
previously announced, the Company is in the process of restating certain
prior periods’ financial statements
including
interim periods of fiscal 2007
and 2006. As such,
comparisons of preliminary financial and operating data for the quarter ended
December 31, 2007 to the financial and operating data for the quarter ended
December 31, 2006 are prior to the effect of any restatement and, as this
data
is preliminary and unaudited, is subject to change. Other than cash
balances, the Company does not expect to release financial data until the
restatements are complete. The Company is working expeditiously to
complete the restatements and report financial results for the year ended
September 30, 2007 and the quarter ended December 31, 2007 as soon as
practicable. The Company currently believes such restatements can be
completed prior to May 15, 2008.
As
previously announced on January 23, 2007, home closings for the quarter ended
December 31, 2007, totaled 2,010, a 24% decline from the same period in the
prior fiscal year. This resulted in a backlog conversion ratio of
67%, as the Company remained focused on converting its existing backlog for
cash
generation. Net new home orders totaled 1,260, a decline of 29% from the
prior
fiscal year. At 46%, the cancellation rate for the quarter was
comparable to the 43% rate experienced for the same period in the prior fiscal
year and significantly improved from the unusually high rate of 68% in the
fourth quarter of fiscal 2007.
Also
as
previously announced, at December 31, 2007, the Company had a cash balance
in
excess of $325 million, compared to $155 million at December 31, 2006 and
$460
million at September 30, 2007. As previously reported, during the
quarter, the Company repaid approximately $75 million in secured debt, and
paid
a consent fee to holders of its Senior Notes and Senior Convertible Notes
and
related expenses totaling $21 million. The cash balance at December 31, 2007
includes approximately $92 million of restricted cash pledged to collateralize
the Company’s outstanding letters of credit. The Company is
continuing the process of replacing this pledged cash with real property
in the
collateral pool under its secured revolving credit facility. Due to
seasonal patterns, the Company generally experiences a net use of cash in
its
first fiscal quarter, as was the case this year, although the Company continues
to expect that for the whole of fiscal 2008, it will generate net cash from
operations.
2
The
Company continues to reduce its land position and unsold home inventories.
The
Company controlled approximately 58,000 lots at December 31, 2007, reflecting
reductions of 6% and 31%, respectively from previously reported levels as
of
September 30, 2007 and December 31, 2006. As of December 31, 2007,
unsold finished homes and unsold homes under construction declined by 49%
and
37%, respectively, from year-ago levels. The Company remains committed to
aligning its land supply and inventory levels to current expectations for
home
closings, and continues to exercise caution and discipline with respect to
investment in inventory. The Company continues to expect that land
spending in fiscal 2008 will be reduced compared to fiscal 2007, based on
current market conditions.
Item
2.05. Costs Associated with Exit or Disposal Activities
Beazer’s
decision to close Beazer Mortgage Corporation and end its relationship with
HFN
will result in related charges and expenses. The Company does not
believe that the amounts and timing of such expenses will be determinable
until
the Company is able to resolve the previously disclosed mortgage origination
issues identified by the Audit Committee’s investigation.
With
regard to exiting of markets referenced in item 8.01 below, the Company expects
to incur abandonment charges for certain land option positions and will incur
other shut down costs associated with the wind down of operations. Due to
the ongoing restatement, the Company will not be able to quantify the financial
impact of these decisions until restated financial statements are
finalized.
Item
2.06. Material Impairments
The
Company currently expects its results for the first quarter of fiscal 2008
to
include material charges to abandon land option contracts and to recognize
inventory impairments. As the Company is in the process of restating
prior periods’ financial statements, it is unable to quantify the amount of
these charges at this time.
With
regard to exiting of markets referenced in item 8.01 below, at December 31,
2007, the Company expects to reclassify certain assets in these markets as
property held for sale, and to recognize impairment charges to reduce their
carrying value to a value of estimated proceeds less costs to sell.
Item
8.01. Other Events
As
previously announced in July 2007, the Company has undertaken a comprehensive
review of each of its markets in order to refine its overall investment strategy
and optimize its capital and resource allocation to enhance both its financial
position and shareholder value. This review entailed an evaluation of both
external market factors and the Company’s position in each market to determine
how to optimize and prioritize investment across the Company’s existing and
potential geographic footprint.
As
a
result of this review, the Company has decided that it will exit its
homebuilding operations in Charlotte, NC, Cincinnati/Dayton, OH, Columbia,
SC,
Columbus, OH, and Lexington, KY. While specific plans and timetables
for an orderly exit will vary according to the market, the Company intends
to
complete all homes under construction and is committed to maintaining customer
care resources to provide ongoing warranty service to homeowners through
their
warranty periods. The Company is evaluating its current land holdings
and inventory in each of these markets to determine the appropriate methods
and
timing for disposition.
Over
the
next twelve months, the Company expects to generate incremental cash as a
result
of the decision to withdraw from these markets. At December 31, 2007, the
Company expects to reclassify certain assets in these markets as property
held
for sale, and to recognize impairment charges to reduce their carrying value
to
estimated proceeds less costs to sell. In addition, over the next few
months, the Company may incur abandonment charges for certain land option
positions and will incur other shut down costs associated with the wind down
of
operations. Due to the ongoing restatement, the Company will not be able
to quantify the financial impact of these decisions until restated financial
statements are finalized. At June 30th, 2007, approximately 5% of the
Company’s homebuilding assets were invested in the markets affected by today’s
announcement.
3
In
addition, the Company has confirmed plans to enter the Northwest Florida
market
in cooperation with The St. Joe Company (NYSE: JOE). The two
companies entered into a long-term relationship in 2006 under which St. Joe
entitles and sells home sites in a number of the region’s markets to Beazer
Homes. The two companies work together on several projects and together
plan to identify new opportunities as market conditions in the region
improve.
A
copy of
the Company’s press release, dated February 1, 2008, with respect to the above
matters is furnished herewith as Exhibit 99.1.
Item
9.01. Financial Statements and Exhibits.
(d) Exhibits
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99.1
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Press
Release issued February 1, 2008.
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4
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 hereunto duly
authorized.
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BEAZER
HOMES USA, INC.
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Date:
February 1, 2008
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By:
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/s/
Allan P.
Merrill
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Allan
P. Merrill
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|||
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Executive
Vice President and Chief Financial
Officer
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5
Exhibit
99.1
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Press
Release
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For
Immediate Release
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Beazer
Homes Provides Business Update
Company
to Exit Mortgage Origination Business;
Enters
into Marketing Arrangement with Countrywide;
Company
Implements Conclusions from Comprehensive Market Review and Provides Certain
Preliminary First Quarter Operating Data
ATLANTA,
February 1,
2008 -- Beazer
Homes USA, Inc. (NYSE: BZH) (www.beazer.com) today announced the discontinuation
of mortgage origination services through Beazer Mortgage Corporation,
establishment of a new marketing services arrangement with Countrywide Financial
Corporation and conclusions from its previously announced comprehensive review
of the Company’s markets. The Company also provided certain unaudited
and preliminary first quarter financial and operating data.
“We
remain disciplined in our operating approach, responding to what has been
and
what we expect will continue to be a challenging environment for homebuilding,”
said Ian J. McCarthy, President and Chief Executive Officer. “We continue to
make reductions in direct costs, overhead expenses and land spending, as
well as
unsold home inventories and believe the actions we have taken to preserve
liquidity and generate cash will enable us to successfully weather the
downturn. At the same time, we believe the strategic actions we are
announcing today will position us well to take advantage of opportunities
that
will arise when our markets begin to recover. We continue to focus on
differentiating Beazer Homes in the eyes of the consumer and allocating capital
and resources in order to enhance long term shareholder value.”
Mortgage
Origination
Services
The
Company announced that it will discontinue mortgage origination services
through
Beazer Mortgage Corporation effective immediately and has ended its related
mortgage services relationship with Homebuilders Financial Network, LLC (“HFN”).
The Company has entered into a new marketing services arrangement with
Countrywide Financial Corporation (NYSE: CFC), whereby Beazer Homes will
market
Countrywide as the preferred mortgage provider to Beazer Homes’
customers. Under the agreement, Countrywide’s comprehensive array of
mortgage products and services will be made available to Beazer Homes’
homebuyers through dedicated Countrywide loan counselors serving all of Beazer
Homes’ communities.
“We
are
pleased to enter into this arrangement with Countrywide, whose broad
capabilities in the mortgage financing business make it uniquely qualified
to
serve our customers across the country,” said McCarthy. “Through this
agreement, we can continue to focus on what we do best, providing our customers
with homes of superior quality and value. At the same time, given the
increasing complexities in mortgage financing today, we believe working with
an
established leader in mortgage lending makes the most sense for our homebuyers
and our business.”
Beazer’s
decision to close Beazer Mortgage Corporation and end its relationship with
HFN
will result in related charges and expenses. The Company does not
believe that the amounts and timing of such expenses will be determinable
until
the Company is able to resolve the previously disclosed mortgage origination
issues identified by the Audit Committee’s investigation.
Comprehensive
Market
Review
As
previously announced in July 2007, the Company has undertaken a comprehensive
review of each of its markets in order to refine its overall investment strategy
and optimize its capital and resource allocation to enhance both its financial
position and shareholder value. This review entailed an evaluation of both
external market factors and the Company’s position in each market to determine
how to optimize and prioritize investment across the Company’s existing and
potential geographic footprint.
As
a
result of this review, the Company has decided that it will exit its
homebuilding operations in Charlotte, NC, Cincinnati/Dayton, OH, Columbia,
SC,
Columbus, OH, and Lexington, KY. While specific plans and timetables
for an orderly transition will vary according to the market, the Company
intends
to complete all homes under construction and is committed to maintaining
customer care resources to provide ongoing warranty service to homeowners
through their warranty periods. The Company is evaluating its current
land holdings and inventory in each of these markets to determine the
appropriate methods and timing for disposition.
Over
the
next twelve months, the Company expects to generate incremental cash as a
result
of the decision to withdraw from these markets. At December 31, 2007, the
Company expects to reclassify certain assets in these markets as property
held
for sale, and to recognize impairment charges to reduce their carrying value
to
estimated proceeds less costs to sell. The Company also expects to
recognize abandonment charges related to land option positions. In
addition, over the next few months, the Company will incur other shut down
costs
associated with the wind down of operations. Due to the ongoing
restatement, the Company will not be able to quantify the financial impact
of
these decisions until restated financial statements are finalized. At June
30, 2007, approximately 5% of the Company’s homebuilding assets were invested in
the markets affected by today’s announcement.
In
addition, the Company has confirmed plans to enter the Northwest Florida
market
in cooperation with The St. Joe Company (NYSE: JOE). The two
companies entered into a long-term relationship in 2006 under which St. Joe
entitles and sells home sites in a number of the region’s markets to Beazer
Homes. The two companies work together on several projects and together
plan to identify new opportunities as market conditions in the region
improve.
Preliminary
First Quarter
Financial and Operating Data
As
previously announced, the Company is in the process of restating certain
prior periods’ financial statements
including
interim periods of fiscal 2007
and 2006. As such,
comparisons of preliminary financial and operating data for the quarter ended
December 31, 2007 to the financial and operating data for the quarter ended
December 31, 2006 are prior to the effect of any restatement and, as this
data
is preliminary and unaudited, is subject to change. Other than cash
balances, the Company does not expect to release financial data until the
restatements are complete. The Company is working expeditiously to
complete the restatements and report financial results for the year ended
September 30, 2007 and the quarter ended December 31, 2007 as soon as
practicable. The Company currently believes such restatements can be
completed prior to May 15, 2008.
As
previously announced on January 23, 2007, home closings for the quarter ended
December 31, 2007, totaled 2,010, a 24% decline from the same period in the
prior fiscal year. This resulted in a backlog conversion ratio of
67%, as the Company remained focused on converting its existing backlog for
cash
generation. Net new home orders totaled 1,260, a decline of 29% from the
prior
fiscal year. At 46%, the cancellation rate for the quarter was
comparable to the 43% rate experienced for the same period in the prior fiscal
year and significantly improved from the unusually high rate of 68% in the
fourth quarter of fiscal 2007.
Also
as
previously announced, at December 31, 2007, the Company had a cash balance
in
excess of $325 million, compared to $155 million at December 31, 2006 and
$460
million at September 30, 2007. As previously reported, during the
quarter, the Company repaid approximately $75 million in secured debt, and
paid
a consent fee to holders of its Senior Notes and Senior Convertible Notes
and
related expenses totaling $21 million. The cash balance at December 31, 2007
includes approximately $92 million of restricted cash pledged to collateralize
the Company’s outstanding letters of credit. The Company is
continuing the process of replacing this pledged cash with real property
in the
collateral pool under its secured revolving credit facility. Due to
seasonal patterns, the Company generally experiences a net use of cash in
its
first fiscal quarter, as was the case this year, although the Company continues
to expect that for the whole of fiscal 2008, it will generate net cash from
operations.
The
Company continues to reduce its land position and unsold home inventories.
The
Company controlled approximately 58,000 lots at December 31, 2007, reflecting
reductions of 6% and 31%, respectively from previously reported levels as
of
September 30, 2007 and December 31, 2006. As of December 31, 2007,
unsold finished homes and unsold homes under construction declined by 49%
and
37%, respectively, from year-ago levels. The Company remains committed to
aligning its land supply and inventory levels to current expectations for
home
closings, and continues to exercise caution and discipline with respect to
investment in inventory. The Company continues to expect that land
spending in fiscal 2008 will be reduced compared to fiscal 2007, based on
current market conditions.
The
Company currently expects its results for the first quarter of fiscal 2008
to
include material charges to abandon land option contracts and to recognize
inventory impairments. As the Company is in the process of restating
prior periods’ financial statements, it is unable to quantify the amount of
these charges at this time.
Beazer
Homes USA, Inc., headquartered in Atlanta, is one of the country’s ten largest
single-family homebuilders with operations in Arizona, California, Colorado,
Delaware, Florida, Georgia, Indiana, Kentucky, Maryland, Nevada, New Jersey,
New
Mexico, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee,
Texas, Virginia and West Virginia and also provides mortgage origination
and
title services to its homebuyers. Beazer Homes, a Fortune 500 Company, is
listed
on the New York Stock Exchange under the ticker symbol “BZH.”
Forward
Looking
Statements
This
press release contains
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements represent
our
expectations or beliefs concerning future events, and it is possible that
the
results described in this press release will not be achieved. These
forward-looking statements are subject to risks, uncertainties and other
factors, many of which are outside of our control, that could cause actual
results to differ materially from the results discussed in the forward-looking
statements, including, among other things, (i) the risk that additional
information may arise fromthe final conclusions
of the Audit
Committee’s investigation,the preparation of
the Company’s
restated financial statements, including the audit by our independent auditors,
or other subsequent events that would require us to make additional adjustments;
(ii) the risk that additional issues or matters may arise from the pending
United States Attorney, SEC, and other federal and state investigations,
or that
additional governmental proceedings may arise as a result of the matters
subject
to the Audit Committee’s investigation or additional issues or matters, and the
timing, final outcome and consequences of these proceedings, including the
risk
that a settlement of these proceedings may not be achievable without the
payment
of significant fines or penalties or the incurrence of significant sanctions;
(iii) the timing, final outcome and consequences of the putative class action
lawsuits, derivative claims and similar proceedings, including the risk that
additional lawsuits, claims or proceedings may arise as a result of the matters
subject to the Audit Committee’s investigation and that the Company could be
subject to significant legal judgments, fines, penalties, settlements or
sanctions resulting therefrom; (iv) the risk that the Company may not be
able to
complete the restatement and commence timely filing its periodic reports
with
the SEC on or before May 15, 2008, which could result in a claim of default
under most of the Company’s debt, including by the trustees under the indentures
or the requisite bondholders and, if such indenture defaultswere
not cured or waived within the
applicable 60-day grace periodthe risk that these
defaults, could result in an
attempt by the
trustee, the requisite bondholders or the Company’s other lenders to accelerate
the repayment of our outstanding debt obligations; (v) the risk that impairments,
charges and
other potential liabilities associated with the termination of mortgage
origination services and related actions, the exiting of identified
markets and the Company’s other strategic initiatives could be significant; (vi)
any adverse effect
on the
Company’s business and the market price of its securities arising from the
continuing negative publicity related to the restatementand the investigations;
(vii)
any breach by the Company of the
continued listing requirements of the New York Stock Exchange causing the
New
York Stock Exchange to initiate suspension or delisting procedures;
(viii)
the duration and severity of adverse
market conditions nationally and in local markets, including prolonged credit
tightening in the mortgage markets; (ix)
volatility of mortgage interest rates
and inflation; (x)
increased competition; (xi)
shortages of skilled labor or raw
materials used in the production of houses; (xii)
increased prices for labor, land and
raw materials used in the production of houses; (xiii)
increased land development costs on
projects under development; (xiv)
the cost and availability of
insurance, including the availability of insurance for the presence of mold;
(xv)
the impact of construction defect and
home warranty claims; (xvi)
potential delays or increased costs in
obtaining necessary permits as a result of changes to, or complying with,
laws,
regulations or governmental policies; (xvii)
the Company’s ability to maintain
sufficient cash and other liquid resources to meet its liquidity requirements;
and (xviii)
the risk that the Company’s credit
ratings maybe continue
tobe adversely affected
due
to the restatement of the Company’s financial statements or continuing adverse
market conditions.
Any
forward-looking statement speaks
only as of the date on which such statement is made, and, except as required
by
law, we do not undertake any obligation to update or revise any forward-looking
statement, whether as a result of new information, future events or otherwise.
New factors emerge from time to time and it is not possible for management
to
predict all such factors.
CONTACT:
Beazer Homes USA, Inc.
Leslie
H.
Kratcoski
Vice
President,
Investor
Relations & Corporate Communications
770-829-3700
lkratcos@beazer.com