Beazer Settles With SEC on Accounting Probe

Atlanta, GA, Sept. 25, 2008--Beazer Homes USA Inc. has settled with the Securities and Exchange Commission in the ongoing investigation into the company's accounting procedures for much of this decade, according to the Atlanta Business Journal.

Beazer neither admitted nor denied the findings of the SEC's investigation and will not pay monetary penalties as a result of the company's cooperation with the investigation.

The SEC's investigation into individual executive's actions during that period is still ongoing.

The Atlanta-based home builder's executives fraudulently managed its earnings results from 2000 to 2007 by "smoothing Beazer's earnings," and improperly recording sale leasebacks that increased Beazer's revenues by roughly $100 million in 2006.

From 2000 to 2005, Beazer reported decreased net income in the form of improper expense charges that were then reversed in 2006 and 2007, alleged the SEC in a Sept. 24 order.

Those reversals helped the company report stronger earnings in those periods than the business actually reflected and meet analysts' expectations for quarterly earnings, the SEC alleged.

In 2006, for example, the company restated net income from $389 million to $369 million, a 5 percent decline. But in 2005 and 2004, the company restated earnings to report a 5 percent gain over what was originally reported.

"This is the true wrong that took place here," said Kit Addleman, regional director of the SEC's Atlanta office. "The company smoothed earnings so investors could not truly see how well it was performing on the upside, but then didn't fully see how poorly the company was really performing when the housing market weakened."