Market Overview

Beazer Homes Reports Third Quarter Fiscal 2018 Results

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Beazer Homes USA, Inc. (NYSE:BZH) (www.beazer.com)
today announced its financial results for the three and nine months
ended June 30, 2018.

"Our third quarter results reflected continued growth in revenue and a
substantial increase in net income," said Allan P. Merrill, President
and CEO of Beazer Homes. "Housing demand remains strong across our
markets, driven by rising consumer confidence, steady job growth,
improving wage growth and a limited supply of for-sale homes. These
positive tailwinds have allowed us to balance the impact of rising
mortgage rates and cost pressures for land, labor and materials.

"As we approach the end of our fiscal year, we are positioned to achieve
our multi-year ‘2B-10' goal as well as our planned reduction in
leverage. Looking into fiscal 2019, we remain optimistic about the
fundamentals for our industry. With incremental contributions from the
recently acquired Venture Homes communities, we expect to generate
strong growth in revenue, net income and return on assets while
improving the efficiency of our balance sheet."

Beazer Homes Fiscal Third Quarter 2018 Highlights
and Comparison to Fiscal Third Quarter 2017

  • Net income from continuing operations of $13.4 million, up 88.8%.
    Earnings per share was $0.41, up 86.4%
  • Adjusted EBITDA of $46.6 million, up 5.3%
  • Homebuilding revenue of $507.0 million, up 7.3%, on a slight increase
    in home closings to 1,391 and a 7.0% increase in average selling price
    to $364.5 thousand
  • Homebuilding gross margin was 16.4%, down 30 basis points. Excluding
    impairments, abandonments and interest amortized, homebuilding gross
    margin was 20.8%, down 50 basis points
  • SG&A as a percentage of total revenue was 12.1%, down 30 basis points
  • Unit orders of 1,450, down 9.1% on a 10.3% decrease in
    sales/community/month to 3.1 and a 1.3% increase in average community
    count to 157
  • Dollar value of backlog of $920.7 million, up 7.1%
  • Unrestricted cash at quarter end was $136.3 million

Profitability. Net income from continuing operations was $13.4
million, an increase of $6.3 million from the third quarter of fiscal
2017. Diluted earnings per share was $0.41, which was up 86.4% from the
same period last year. Third quarter Adjusted EBITDA of $46.6 million
was up $2.4 million, or 5.3%, compared to the same period last year.

Orders. Net new orders for the third quarter decreased 9.1% from
the prior year. The drop in net new orders was driven by a decrease in
the absorption rate to 3.1 sales per community per month, down from a
strong 3.4 the previous year, but in line with third quarter absorptions
throughout the upturn. The cancellation rate was 18.6%.

Homebuilding Revenue. Third quarter closings of 1,391 homes were
0.3% above the level achieved in the same period last year. Combined
with a 7.0% increase in the average selling price to $364.5 thousand,
homebuilding revenue rose 7.3% over the prior year to $507.0 million.

Backlog. The dollar value of homes in backlog as of June 30, 2018
increased 7.1% to $920.7 million, or 2,371 homes, which compared to
$859.9 million, or 2,444 homes, at the same time last year. The average
selling price of homes in backlog rose 10.4% year over year to $388.3
thousand.

Homebuilding Gross Margin. Homebuilding gross margin (excluding
impairments, abandonments and interest amortized) was 20.8% for the
third quarter, down 50 basis points from the same period in fiscal 2017.
Our results last year included approximately 30 basis points of warranty
related benefits.

SG&A Expenses. Selling, general and administrative expenses,
as a percentage of total revenue, were 12.1% for the quarter, an
improvement of 30 basis points compared to the prior year.

Liquidity. The Company ended the quarter with approximately
$336.3 million of available liquidity, including $136.3 million of
unrestricted cash and $200.0 million available on its secured revolving
credit facility.

Gatherings

The Company continued to make progress with its Gatherings rollout
during the third quarter of fiscal 2018. In Orlando's Gatherings at Lake
Nona, building one was completed and delivered its first closings in
early July, while construction continued on building two. In addition to
Lake Nona, projects are underway in Dallas, Nashville, and Atlanta. The
Company continues to review a large pipeline of potential communities
spread across its geographic footprint and expects to see Gatherings
acquisition activity accelerate into fiscal 2019.

Venture Homes Acquisition

As previously disclosed, the Company acquired Venture Homes, a leading
private homebuilder in the metropolitan Atlanta area. In the cash
transaction, which closed on July 13, Beazer purchased more than 1,000
lots spread across 9 active communities and 18 future communities, which
are being integrated into the Company's existing operations in Atlanta.
With nearly 500 homes closed during the trailing 12 months, the combined
operation ranks among the top 10 builders in the market. Looking
forward, the acquisition is expected to be accretive to both earnings
per share and return on assets in fiscal 2019.

Summary results for the three and nine months ended June 30, 2018 are as
follows:

    Three Months Ended June 30,
2018     2017     Change*
New home orders, net of cancellations 1,450 1,595 (9.1 )%
Orders per community per month 3.1 3.4 (10.3 )%
Average active community count 157 155 1.3 %
Actual community count at quarter-end 158 154 2.6 %
Cancellation rates 18.6 % 16.9 % 170 bps
 
Total home closings 1,391 1,387 0.3 %
Average selling price (ASP) from closings (in thousands) $ 364.5 $ 340.6 7.0 %
Homebuilding revenue (in millions) $ 507.0 $ 472.4 7.3 %
Homebuilding gross margin 16.4 % 16.7 % -30 bps
Homebuilding gross margin, excluding impairments and abandonments
and interest amortized to cost of sales
20.8 % 21.3 % -50 bps
 
Income from continuing operations before income taxes (in millions) $ 17.7 $ 12.9 $ 4.8
Expense from income taxes (in millions) $ 4.3 $ 5.7 $ (1.5 )
Income from continuing operations (in millions) $ 13.4 $ 7.1 $ 6.3
Basic income per share from continuing operations $ 0.42 $ 0.22 $ 0.20
Diluted income per share from continuing operations $ 0.41 $ 0.22 $ 0.19
 
Income from continuing operations before income taxes (in millions) $ 17.7 $ 12.9 $ 4.8
Inventory impairments and abandonments (in millions) $ 0.2 $ 0.5 $ (0.3 )
Income from continuing operations excluding loss on debt
extinguishment and inventory impairments and abandonments before
income taxes (in millions)
$ 17.9 $ 13.3 $ 4.5
 
Net income $ 13.4 $ 7.1 $ 6.3
Net income excluding loss on debt extinguishment and inventory
impairments and abandonments (in millions)*+
$ 13.5 $ 7.4 $ 6.1
 
Land and land development spending (in millions) $ 155.5 $ 103.8 $ 51.7
 
Adjusted EBITDA (in millions) $ 46.6 $ 44.3 $ 2.4
LTM Adjusted EBITDA (in millions) $ 191.4 $ 167.9 $ 23.6
*   Change and totals are calculated using unrounded numbers.

+

Loss on debt extinguishment was tax-effected at annualized effective
tax rates of 26.7% and 36.7% for the three months ended June 30,
2018 and June 30, 2017, respectively.
"LTM" indicates amounts for the trailing 12 months.
 
   
Nine Months Ended June 30,
2018     2017     Change*
New home orders, net of cancellations 4,239 4,149 2.2 %
LTM orders per community per month 3.0 2.9 3.4 %
Cancellation rates 17.2 % 17.9 % -70 bps
 
Total home closings 3,723 3,621 2.8 %
ASP from closings (in thousands) $ 353.4 $ 339.8 4.0 %
Homebuilding revenue (in millions) $ 1,315.8 $ 1,230.4 6.9 %
Homebuilding gross margin 16.5 % 16.2 % 30 bps
Homebuilding gross margin, excluding impairments and abandonments
and interest amortized to cost of sales
21.0 % 20.9 % 10 bps
 
Income (loss) from continuing operations before income taxes (in
millions)
$ 7.9 $ (3.0 ) $ 10.9
Expense (benefit) from income taxes (in millions) $ 113.4 $ (1.3 ) $ 114.6
Loss from continuing operations (in millions)* $ (105.5 ) $ (1.7 ) $ (103.8 )
Basic and diluted loss per share from continuing operations $ (3.29 ) $ (0.05 ) $ (3.24 )
 
Income (loss) from continuing operations before income taxes (in
millions)
$ 7.9 $ (3.0 ) $ 10.9
Loss on debt extinguishment (in millions) $ 25.9 $ 15.6 $ 10.3
Inventory impairments and abandonments (in millions) $ 0.2 $ 0.8 $ (0.6 )
Write-off of deposit on legacy land investment $ $ 2.7 $ (2.7 )
Income from continuing operations excluding loss on debt
extinguishment, inventory impairments and abandonments and write-off
of deposit before income taxes (in millions)
$ 33.9 $ 16.0 $ 17.9
 
Net loss $ (106.0 ) $ (1.8 ) $ (104.1 )
Net income excluding loss on debt extinguishment, inventory
impairments and abandonments and write-off of deposit (in millions)*+
$ 27.9 $ 10.3 $ 17.6
 
Land and land development spending (in millions) $ 440.6 $ 309.9 $ 130.7
 
Adjusted EBITDA (in millions) $ 114.6 $ 101.9 $ 12.7
*   Change and totals are calculated using unrounded numbers.
+ Loss on debt extinguishment was tax-effected at annualized effective
tax rates of 26.7% and 36.7% for the nine months ended June 30, 2018
and June 30, 2017, respectively.
 

As of June 30, 2018

    As of June 30,
2018     2017     Change
Backlog units 2,371 2,444 (3.0 )%
Dollar value of backlog (in millions) $ 920.7 $ 859.9 7.1 %
ASP in backlog (in thousands) $ 388.3 $ 351.8 10.4 %
Land and lots controlled 22,524 22,481 0.2 %
 

Conference Call

The Company will hold a conference call on July 26, 2018 at 5:00 p.m. ET
to discuss these results. Interested parties may listen to the
conference call and view the Company's slide presentation over the
Internet by visiting the "Investor Relations" section of the Company's
website at www.beazer.com.
To access the conference call by telephone, listeners should dial
800-619-8639 (for international callers, dial 312-470-7002). To be
admitted to the call, enter the passcode "7072668." A replay of the call
will be available shortly after the conclusion of the live call. To
directly access the replay, dial 866-446-5473 (for international
callers, dial 203-369-1147) and enter the passcode "3740" (available
until 11:59 p.m. ET on August 2, 2018), or visit www.beazer.com.
A replay of the webcast will be available at www.beazer.com
for at least 30 days.

Headquartered in Atlanta, Beazer Homes is one of the country's
largest single-family homebuilders. The Company's homes meet or exceed
the benchmark for energy-efficient home construction as established by
ENERGY STAR® and are designed with Choice Plans to meet the personal
preferences and lifestyles of its buyers.
In addition, the
Company is committed to providing a range of preferred lender choices to
facilitate transparent competition between lenders and enhanced customer
service.
The Company offers homes in Arizona, California,
Delaware, Florida, Georgia, Indiana, Maryland, Nevada, North Carolina,
South Carolina, Tennessee, Texas and Virginia.
Beazer
Homes is listed on the New York Stock Exchange under the ticker symbol
"BZH." For more info visit
Beazer.com,
or check out Beazer on
Facebook
and
Twitter.

This press release contains forward-looking statements, including
guidance concerning the remainder of fiscal 2018 and expectations
regarding our performance in fiscal 2019, as well as expectations
regarding Gatherings acquisition activity and the impact of the Venture
Homes acquisition. 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)
economic changes nationally or in local markets, changes in consumer
confidence, declines in employment levels, inflation or increases in the
quantity and decreases in the price of new homes and resale homes on the
market; (ii) the cyclical nature of the homebuilding industry and a
potential deterioration in homebuilding industry conditions; (iii)
factors affecting margins, such as decreased land values underlying land
option agreements, increased land development costs on communities under
development or delays or difficulties in implementing initiatives to
reduce our production and overhead cost structure; (iv) the availability
and cost of land and the risks associated with the future value of our
inventory, such as additional asset impairment charges or writedowns;
(v) shortages of or increased prices for labor, land or raw materials
used in housing production, and the level of quality and craftsmanship
provided by our subcontractors; (vi) estimates related to homes to be
delivered in the future (backlog) are imprecise, as they are subject to
various cancellation risks that cannot be fully controlled; (vii)
increases in mortgage interest rates, disruption in the availability of
mortgage financing, the recent change in tax laws regarding the
deductibility of mortgage interest for tax purposes or an increased
number of foreclosures; (viii) government actions, policies, programs
and regulations directed at or affecting the housing market (including
the Tax Cuts and Jobs Act, the Dodd-Frank Act and the tax benefits
associated with purchasing and owning a home); (ix) changes in existing
tax laws or enacted corporate income tax rates, including pursuant to
the Tax Cuts and Jobs Act; (x) our cost of and ability to access
capital, due to factors such as limitations in the capital markets or
adverse credit market conditions, and otherwise meet our ongoing
liquidity needs, including the impact of any downgrades of our credit
ratings or reductions in our tangible net worth or liquidity levels;
(xi) our ability to reduce our outstanding indebtedness and to comply
with covenants in our debt agreements or satisfy such obligations
through repayment or refinancing; (xii) increased competition or delays
in reacting to changing consumer preferences in home design; (xiii)
weather conditions or other related events that could result in delays
in land development or home construction, increase our costs or decrease
demand in the impacted areas; (xiv) estimates related to the potential
recoverability of our deferred tax assets; (xv) potential delays or
increased costs in obtaining necessary permits as a result of changes
to, or complying with, laws, regulations or governmental policies, and
possible penalties for failure to comply with such laws, regulations or
governmental policies, including those related to the environment; (xvi)
the results of litigation or government proceedings and fulfillment of
any related obligations; (xvii) the impact of construction defect and
home warranty claims; (xviii) the cost and availability of insurance and
surety bonds, as well as the sufficiency of these instruments to cover
potential losses incurred; (xix) the performance of our unconsolidated
entities and our unconsolidated entity partners; (xx) the impact of
information technology failures or data security breaches; (xxi)
terrorist acts, natural disasters, acts of war or other factors over
which the Company has little or no control; (xxii) the impact on
homebuilding in key markets of governmental regulations limiting the
availability of water; (xxiii) the failure to realize the anticipated
benefits of the acquisition of Venture Homes within the time period
currently expected (or at all) for any reason; or (xxiv) the risk that
the integration of Venture Homes' operations into our own will be
materially delayed or will be more costly or difficult than expected.

Any forward-looking statement speaks only as of the date on which such
statement is made and, except as required by law, we undertake no
obligation to update any forward-looking statement to reflect events or
circumstances after the date on which such statement is made or to
reflect the occurrence of unanticipated events. New factors that may
impact the accuracy of the forward-looking statements in this release
emerge from time-to-time, and it is not possible for management to
predict all such factors. Please refer to the risk factors described in
our most recent annual report on Form 10-K for a more detailed
discussion of risks that may affect our business.

-Tables Follow-

 

BEAZER HOMES USA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND
COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share data)

(Unaudited)

 
    Three Months Ended     Nine Months Ended
June 30, June 30,
2018     2017 2018     2017
Total revenue $ 511,521 $ 478,588 $ 1,339,188 $ 1,243,297
Home construction and land sales expenses 428,109 399,675 1,119,870 1,043,041
Inventory impairments and abandonments   168     470     168     752  
Gross profit 83,244 78,443 219,150 199,504
Commissions 19,535 18,773 51,225 48,728
General and administrative expenses 42,473 40,794 120,610 117,282
Depreciation and amortization   3,656     3,307     9,229     9,139  
Operating income 17,580 15,569 38,086 24,355
Equity in income of unconsolidated entities 147 158 302 213
Loss on extinguishment of debt (25,904 ) (15,563 )
Other expense, net   (30 )   (2,871 )   (4,628 )   (12,007 )
Income (loss) from continuing operations before income taxes 17,697 12,856 7,856 (3,002 )
Expense (benefit) from income taxes   4,268     5,742     113,386     (1,262 )
Income (loss) from continuing operations 13,429 7,114 (105,530 ) (1,740 )
(Loss) income from discontinued operations, net of tax   (20 )   9     (450 )   (101 )
Net income (loss) and comprehensive income (loss) $ 13,409   $ 7,123   $ (105,980 ) $ (1,841 )
Weighted average number of shares:
Basic 32,147 31,971 32,113 31,944
Diluted 32,726 32,375 32,113 31,944
Basic earnings (loss) per share:
Continuing operations $ 0.42 $ 0.22 $ (3.29 ) $ (0.05 )
Discontinued operations           (0.01 )    
Total $ 0.42   $ 0.22   $ (3.30 ) $ (0.05 )
Diluted income (loss) per share:
Continuing operations $ 0.41 $ 0.22 $ (3.29 ) $ (0.05 )
Discontinued operations           (0.01 )    
Total $ 0.41   $ 0.22   $ (3.30 ) $ (0.05 )
 
Three Months Ended Nine Months Ended
June 30, June 30,
Capitalized Interest in Inventory 2018 2017 2018 2017
Capitalized interest in inventory, beginning of period $ 149,034 $ 146,916 $ 139,203 $ 138,108
Interest incurred 25,803 26,243 76,850 79,812
Interest expense not qualified for capitalization and included as
other expense
(205 ) (2,934 ) (5,290 ) (12,232 )
Capitalized interest amortized to home construction and land sales
expenses
  (22,450 )   (21,895 )   (58,581 )   (57,358 )
Capitalized interest in inventory, end of period $ 152,182   $ 148,330   $ 152,182   $ 148,330  
 
 

BEAZER HOMES USA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)

 
    June 30, 2018     September 30, 2017
ASSETS
Cash and cash equivalents $ 136,298 $ 292,147
Restricted cash 12,167 12,462
Accounts receivable (net of allowance of $392 and $330, respectively) 28,005 36,323
Income tax receivable 119 88
Owned Inventory 1,767,983 1,542,807
Investments in unconsolidated entities 4,237 3,994
Deferred tax assets, net 195,145 307,896
Property and equipment, net 22,212 17,566
Other assets   10,861     7,712  
Total assets $ 2,177,027   $ 2,220,995  
LIABILITIES AND STOCKHOLDERS' EQUITY
Trade accounts payable $ 143,135 $ 103,484
Other liabilities 124,722 107,659
Total debt (net of premium of $2,833 and $3,413, respectively, and
debt issuance costs of $15,170 and $14,800, respectively)
  1,326,503     1,327,412  
Total liabilities   1,594,360     1,538,555  
Stockholders' equity:
Preferred stock (par value $.01 per share, 5,000,000 shares
authorized, no shares issued)
Common stock (par value $0.001 per share, 63,000,000 shares
authorized, 33,678,305 issued and outstanding and 33,515,768 issued
and outstanding, respectively)
34 34
Paid-in capital 879,270 873,063
Accumulated deficit   (296,637 )   (190,657 )
Total stockholders' equity   582,667     682,440  
Total liabilities and stockholders' equity $ 2,177,027   $ 2,220,995  
 
Inventory Breakdown
Homes under construction $ 641,780 $ 419,312
Development projects in progress 805,619 785,777
Land held for future development 84,813 112,565
Land held for sale 10,128 17,759
Capitalized interest 152,182 139,203
Model homes   73,461     68,191  
Total owned inventory $ 1,767,983   $ 1,542,807  
 
 

BEAZER HOMES USA, INC.

CONSOLIDATED OPERATING AND FINANCIAL DATA – CONTINUING
OPERATIONS

($ in thousands, except otherwise noted)

 
    Three Months Ended June 30,     Nine Months Ended June 30,
SELECTED OPERATING DATA 2018     2017 2018     2017
Closings:
West region 701 624 1,879 1,695
East region 299 346 803 849
Southeast region   391   417     1,041   1,077
Total closings   1,391   1,387     3,723   3,621
 
New orders, net of cancellations:
West region 795 791 2,235 1,941
East region 274 385 854 1,027
Southeast region   381   419     1,150   1,181
Total new orders, net   1,450   1,595     4,239   4,149
 
As of June 30,
Backlog units at end of period: 2018 2017
West region 1,235 1,074
East region 464 622
Southeast region   672   748
Total backlog units   2,371   2,444
Dollar value of backlog at end of period (in millions) $ 920.7 $ 859.9
 
Three Months Ended June 30, Nine Months Ended June 30,
SUPPLEMENTAL FINANCIAL DATA 2018 2017 2018 2017
Homebuilding revenue:
West region $ 241,588 $ 208,004 $ 642,505 $ 564,908
East region 128,880 129,755 318,299 324,284
Southeast region   136,496   134,637     355,029   341,204
Total homebuilding revenue $ 506,964 $ 472,396   $ 1,315,833 $ 1,230,396
 
Revenues:
Homebuilding $ 506,964 $ 472,396 $ 1,315,833 $ 1,230,396
Land sales and other   4,557   6,192     23,355   12,901
Total revenues $ 511,521 $ 478,588   $ 1,339,188 $ 1,243,297
 
Gross profit:
Homebuilding $ 83,043 $ 78,662 $ 217,641 $ 199,190
Land sales and other   201   (219 )   1,509   314
Total gross profit $ 83,244 $ 78,443   $ 219,150 $ 199,504
 

Reconciliation of homebuilding gross profit and the related gross margin
before impairments and abandonments and interest amortized to cost of
sales to homebuilding gross profit and gross margin, the most directly
comparable GAAP measure, is provided for each period discussed below.
Management believes that this information assists investors in comparing
the operating characteristics of homebuilding activities by eliminating
many of the differences in companies' respective level of impairments
and level of debt.

    Three Months Ended June 30,     Nine Months Ended June 30,
2018     2017 2018     2017
Homebuilding gross profit/margin $ 83,043     16.4 % $ 78,662     16.7 % $ 217,641     16.5 % $ 199,190     16.2 %
Inventory impairments and abandonments (I&A)         188
Homebuilding gross profit/margin before I&A 83,043 16.4 % 78,662 16.7 % 217,641 16.5 % 199,378 16.2 %
Interest amortized to cost of sales   22,441   21,895   58,564   57,358
Homebuilding gross profit/margin before I&A and interest amortized
to cost of sales
$ 105,484 20.8 % $ 100,557 21.3 % $ 276,205 21.0 % $ 256,736 20.9 %
 

Reconciliation of Adjusted EBITDA to total company net income (loss),
the most directly comparable GAAP measure, is provided for each period
discussed below. Management believes that Adjusted EBITDA assists
investors in understanding and comparing the operating characteristics
of homebuilding activities by eliminating many of the differences in
companies' respective capitalization, tax position and level of
impairments. These EBITDA measures should not be considered alternatives
to net income determined in accordance with GAAP as an indicator of
operating performance.

The reconciliation of Adjusted EBITDA to total company net income (loss)
below differs from the prior year, as it provides a more simplified
presentation of EBIT, EBITDA and Adjusted EBITDA that excludes certain
non-recurring amounts recorded during the periods presented. Management
believes that this presentation best reflects the operating
characteristics of the Company.

   

Three Months Ended
June 30,

   

Nine Months Ended
June 30,

    LTM Ended June 30,(a)
in thousands 2018     2017 2018     2017 2018     2017
Net income (loss) $ 13,409 $ 7,123 $ (105,980 ) $ (1,841 ) $ (72,326 ) $ (2,695 )
Expense (benefit) from income taxes 4,261 5,740 113,233 (1,332 ) 117,186 13,083
Interest amortized to home construction and land sales expenses and
capitalized interest impaired
22,450 21,895 58,581 57,358 90,043 85,779
Interest expense not qualified for capitalization   205   2,934   5,290     12,232     8,694     18,149  
EBIT 40,325 37,692 71,124 66,417 143,597 114,316
Depreciation and amortization and stock-based compensation
amortization
  6,140   6,117   16,921     16,471     22,623     22,945  
EBITDA 46,465 43,809 88,045 82,888 166,220 137,261
Loss on extinguishment of debt 25,904 15,563 22,971 26,956
Inventory impairments and abandonments (b) 168 470 618 752 2,255 936
Write-off of deposit on legacy land investment           2,700         2,700  
Adjusted EBITDA $ 46,633 $ 44,279 $ 114,567   $ 101,903   $ 191,446   $ 167,853  
(a)   "LTM" indicates amounts for the trailing 12 months.
(b) In periods during which we impaired certain of our inventory assets,
capitalized interest that is impaired is included in the line above
titled "Interest amortized to home construction and land sales
expenses and capitalized interest impaired."

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