Beazer Homes USA announced late Monday, Nov. 5, that it has suspended its quarterly dividend of $0.10 per share and cut its work force by 650, or 25%, in October to match lower demand and help preserve cash to take it through the downturn.

The dividend suspension should conserve about $16 million per year, and the workforce reduction should save at least $30 million, the company said in its news release.

"The housing industry continues to face the most difficult business conditions in over a decade," said Ian J. McCarthy, Beazer's president and CEO. "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 has cut its staff a total of 50% through layoffs and attrition from its peak levels in March of 2006.

The cuts helped the company improve its cash position during the last quarter of its fiscal year, which ended Sept. 30 with a cash balance of $459.5 million, up from $128.8 million at the end of June 2007.

Beazer used the cash to repay approximately $75 million in secured debt, pledged $107 million to collateralize its outstanding letters of credit, and paid a consent fee to holders of its senior notes and senior convertible notes plus related expenses to the tune of $21 million.

The holders of Beazer's notes had claimed the company was in default of its loan covenants by not providing copies of its financials since the end of June. They agreed to let the company off the hook until next May in return for a payment.

Beazer hasn't reported its full financial results for the past two quarters because an independent auditor has said the company incorrectly accounted for various items for the past few years, requiring the builder to restate its financials for the fiscal years 2004 through 2006 and the interim periods of fiscal 2006 and 2007. The company has said it is working "expeditiously" to complete the restatements as soon as possible.

In the meantime, it has offered some preliminary financial results for the quarter that ended Sept 30. The company closed 3,940 homes, a 39% decline from the same period last year. Its backlog conversion ratio was 66%. Net new-home orders totaled 973, a fall of 53% from last year, because of a cancellation rate of 68%--driven, the company said, by mortgage market tightening in August and September.

The company expects to write off $230 million in charges related to pre-tax charges to abandon land contracts, recognize inventory impairments, and record impairments on land and land option abandonments. It is evaluating the recoverability of its goodwill, which may result in impairment charges.

The numbers were better than what Wall Street expected. Michael Rehaut, home building analyst at J.P. Morgan Securities, pointed out in a research note that although the $230 million in charges was below his estimate of $318 million, Beazer's charges represent 9.8% of equity at quarter's end, above the 7.8% average for other mid-cap builders. Still, Rehaut saw positives in Beazer's report. "Specifically, BZH ended the year with a cash balance of $459.5 million, well above our estimate and company guidance of roughly $300 million," Rehaut wrote. "Moreover, so far in 1Q08, BZH repaid $75 million of secured debt and paid $107 million to secure its [loan covenants], as well as a $21 million consent fee to bondholders. Finally, positively, inventory levels declined strongly, as finished and total specs fell 28% and 35% YOY, respectively, while total lots fell to 62K, down 30% YOY."

However, Rehaut expressed concern that the company faces continued risk of litigation and maintained his "underweight" rating on Beazer's stock.