Beazer Cuts Jobs, Suspends Dividend

Atlanta, GA, November 6, 2007--Beazer Homes USA said Monday that it cut 25% of its staff, would suspend its dividend and sees at least $230 million in noncash impairment charges in its fiscal fourth quarter.

Beazer, 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 report its financial results for the fourth quarter and fiscal year 2007.

As the housing market has continued to deteriorate, 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.

The company also cut 650 jobs, or 25% of its employees, in October to save at least $30 million a year. Since head count peaked in March 2006, Beazer has cut half its work force.

Beazer's board voted to suspend its quarterly dividend of $.10 per share in order to save $16 million in cash annually.

Beazer said it expects to take noncash charges for inventory impairments and land option refusals of $230 million. It may take additional goodwill impairments during the fiscal fourth quarter ended Sept. 30.

JMP Securities analyst Jim Wilson said Beazer will have to take further impairments to bring itself in line with other builders. He said the job and dividend cuts were positive steps, but the company remained hobbled by its lower-end product.

"It's still driven by where and what they have," he said. "I don't see anything terribly encouraging."

Last month, Beazer said sales for the quarter fell 39% to 3,940 homes. Net new home orders fell 53% to 973, and the cancellation rate soared to 6 %.

According to preliminary results, the company had a cash balance of $459.5 million, up from $128.8 million at June 30, 2007.

By the end of the quarter, Beazer controlled 61,974 lots, down 14 % from the prior quarter and 30% from the prior year. The number of unsold finished homes fell 28% and unsold homes under construction were down 35% from the year-ago quarters.