Tuesday, March 29, 2005

Beazer to Log Goodwill Impairment Charge

Beazer Says 2Q Results to Include Charges From Impairing Goodwill, Class-Action Settlement
ATLANTA (AP) -- Beazer Homes USA Inc. on Tuesday said it plans to record charges from impairing goodwill and a legal settlement in its results for the current quarter.

The homebuilder, however, maintained its forecast for 2005 earnings -- including the settlement but before any impairment costs -- of $6.67 to $7 per share. Analysts polled by Thomson Financial currently see yearly income of $7.09 per share.

About $131 million in goodwill was recorded in April 2002 following its acquisition of Crossmann Communities, Beazer said. Its board decided nearly all of the goodwill allocated to underperforming operations in several locations will likely be written off as part of its strategy to reduce investments in weak markets.

"While the company remains committed to the Indiana, Ohio, Kentucky and Charlotte, N.C., markets, they presently suffer from relatively weak local economics and severe price competition, particularly at entry level price points," the company said in a statement.

The amount of the impairment charge will be finalized and logged as a non-cash item in results for the second quarter, which ends March 31, Beazer said.

Separately, Beazer settled a class-action suit related to water-damage claims against Trinity Homes LLC, which it acquired in the Crossmann deal. Beazer will record a second-quarter charge of about $40 million, which is its best estimate of the total liability from the suit, the company said.

Last year, Beazer earned $5.69 per share on sales of $3.91 billion.

Beazer shares fell $2.15, or 4.1 percent, to $50.05 at the close of trading on the New York Stock Exchange, and sank an additional 65 cents to $49.40 during extended activity.