Beazer Homes USA has finally filed full financial reports for its 2007 fiscal year, a process that was delayed after independent auditors, looking into allegations that the company committed mortgage fraud, found other accounting errors and irregularities.
Beazer lost $411.1 million, $10.70 a share, during its fiscal year that ended Sept. 30 of last year. Like the balance sheet of other public production builders, that loss was heavily impacted by $611.9 million related to inventory impairments and abandonment of land options. But the company, battered by negative publicity stirred up after The Charlotte Observer newspaper ran a series of stories about high levels of foreclosures in Beazer subdivisions, also logged a $52.8 million hit to its goodwill. There was also $28.6 million in joint venture impairments.
The Atlanta-based company closed 12,020 homes in its fiscal year, compared to 18,361 in the year before, a 35% decrease. It had a backlog of 2,985 homes compared to 5,102 in the year before.
As of Sept. 30, the company had $459.5 million in cash, including $5.2 million of restricted cash. Its debt capitalization was 51.4%. Since its year end, Beazer has repaid approximately $95 million in secured notes, and pledged $107.0 million to collateralize its outstanding letters of credit. As of February 2008, cash pledged to collateralize letters of credit was released and replaced with real estate assets.
The company also spent $21 million paying the holders of its senior debt a fee to agree to give the company until May 15 of this year to file financial reports. Last fall, the debt holders were threatening to call the company's debt because it had not filed financial documents since the spring of '07.
The company has said it will report financial results for the first and second quarters of its 2008 fiscal year by May 15, Thursday.
Monday's filings also put to rest questions about whether the financial errors and irregularities found by auditors would make a significant impact to its balance sheet. As the company predicted, the restatements actually added $24.8 million to its earnings for fiscal years 1998 through 2002.
Still to be resolved is how much of a penalty Beazer will bear for the mortgage origination violations that its own internal investigation determined occurred. The company's mortgage unit, which has since been shut down, is under investigation by the U.S. Attorney's Office as well as other state and federal agencies. The SEC has also sent Beazer a formal order of private investigation to determine whether Beazer Homes and/or other persons or entities involved with Beazer Homes violated federal securities laws.
Beazer is cooperating with the investigators and intends to attempt to negotiate settlements with prosecutors and regulatory authorities related to the mortgage origination issues. The company says it can't estimate how much those settlements will cost.