Beazer Homes USA on Monday said it cut 25 percent of its staff in October, would suspend its dividend and sees at least $230 million in noncash impairment charges in its fiscal fourth quarter.
Beazer, the No. 7 U.S. home builder whose past lending practices are the subject of a federal investigation, has said that as a result of incorrect accounting it would restate prior results. As such, it cannot now report its financial results for the fourth quarter and fiscal year 2007.
Shares of Beazer were trading more than 2 percent lower after markets closed Monday. The stock finished regular trading at $9.52.
As the U.S. housing market has continued to deteriorate, Atlanta-based Beazer has been paying down debt, reducing its land and inventory holdings and cutting expenses to conserve cash and shore up its balance sheet.
"The housing industry continues to face the most difficult business conditions in over a decade," Ian McCarthy, Beazer's chief executive, said in a statement. "We must continue to adapt to the realities of the current market by remaining disciplined in our operating approach and continuing to focus on initiatives aimed at responding to what we believe will continue to be a challenging environment in the near term."
Beazer's board voted to suspend its quarterly dividend of 10 cents per share in order to save $16 million of cash annually. The company also cut 650 jobs, or 25 percent of its employees, in October to save at least $30 million a year.
Beazer said it expects to take noncash charges for inventory impairments and land option abandonments of $230 million, according to preliminary fiscal fourth-quarter results.
It may take additional goodwill impairments during the fiscal fourth quarter ended Sept. 30, 2007.
According to preliminary results, the Atlanta-based company as of Sept. 30, 2007, had a cash balance of $459.5 million, up from $128.8 million at June 30, 2007.
It repaid $75 million in secured debt, pledged $107 million to collateralize its outstanding letters of credit and paid $21 million for a consent fee to holders of its senior notes and senior convertible notes and related expenses.
By the end of the quarter, Beazer controlled 61,974 lots, down 14 percent from the prior quarter and 30 percent from the prior year. The number of unsold finished homes fell 28 percent and unsold homes under construction were down 35 percent from the year-ago quarters.
For fiscal 2007 Beazer spent $835 million on land and land development, down 42 percent from the prior year. The company expects to reduce that even further in the current fiscal year.