How many times have I said it....Beazer simply cannot master accounting 101.
Now they are compelled to REVERSE a total of $40 million in revenue from previous periods, plus INDEMNIFY HUD in an amount up to $15.....PLUS it may be liable for FRAUD and subject to CIVIL ACTION. NO AMOUNT WAS GIVEN FOR THESE POTENTIAL LIABILITIES, but clearly it will be several millions more.
This stock is worth $5......MAYBE.
Beazer said it may be liable for losses suffered by the mortgage buyer, or HUD, which insured the loans, apparently based on false information. Beazer said it may be liable for fraud and civil action.
The company intends to negotiate a settlement with regulatory authorities, which it estimates could range from $8 million to $15 million, based on similar past cases.
Beazer won't be able to detail the amounts of the charges until the audit, which started in April, is complete. The restatement will not change the company's cash position.
In a separate matter, Beazer said the inquiry uncovered improper accounting for land development costs. The company plans to fix that in the restatements, which will boost pretax earnings by $25 million in periods before 2006, but lower pretax income by $20 million in last year's statement.
The inquiry also found the company improperly accounted for sale-and-leasback transactions for model homes. The result is that certain revenue was booked too soon, which inflated pretax income in the first six months of 2007 by $20 million.
I don't want to rain on the parade, but after having read the news release about BZH this morning I just don't see anything to whoop about. They did not say anything certain other then they would be restating earnigs going back several years. Everything else was speculation. Lots of words like think, may, possible, attainable, hope, in my book there is one word that that can be used to define all the other words 'HYPE'. In fact the worst part of this news was that they can't even state that they will make the deadline for the 10K. I'm not saying they are going to go BK but I have seen companies in the past that pulled these type of news release 'spins' only to be followed by big time bad news. What ever position you want to take on this company I would advise you to be careful. I think they are trying to buy time.