Beazer Homes USA (NYSE:BZH) reported a net loss of $109.7 million, or -$2.85 per share, for its fiscal third quarter of 2008, including impairments and abandonment of land option contracts of $95.5 million, joint venture write-downs of $18.5 million and a charge to goodwill of $4.4 million. The results included a $55.8-million tax carryback refund during the quarter.

Analysts were expecting a loss of $2.34 per share. The company's shares were trading up more than 6% at $6.31 at 10:25 a.m. Both Michael Rehaut of J.P. Morgan and David Goldberg of UBS pointed out a sharp sequential rise in the company's Sales, General & Administrative expense, which was up 90 basis points to 19.6%. Rehaut maintains an underweight rating on Beazer amid a negative sector stance; Goldberg has a neutral rating on the stock.

Revenues were down 41.1% to $455.6 million as home closings fell 36.9% to1,677 and average prices fell 8.8% to $257,400. New orders were off 41.8% to 1,774, and the company's cancellation rate for the quarter was 36.8%, about even with last year's third-quarter rate of 36.3% but up from 33.7% for the second quarter of 2008.

Homes in backlog fell to54.4% to 2,716 homes with a sales value of $668.1 million, a 60.5% drop.

The company ended the quarter with cash on hand of $314.2 million and no cash borrowings outstanding on revolving credit facility. Its net debt-to- capitalization ratio stood at 63.2%.

The write downs included pre-tax charges to abandon land option contracts of$27.8 million and inventory impairments of $67.7 million, plus joint venture impairments of $18.5 million and a goodwill charge of $4.4 million related to the company's shutdown of operations in Colorado. Beazer also decided to exit the Fresno, CA market during the third quarter.

Beazer reduced its inventory of owned and controlled lots to 46,224 (72% owned and 28% controlled under options), a drop of approximately 15% and 36% from levels as of March 31, 2008 and June 30, 2007, respectively. Unsold finished homes totaled 300, down 32% and 65% from the level a year ago and as of September 30, 2007, respectively.

"Potential homebuyers remain reluctant due to eroding consumer confidence amid concerns about employment growth, higher energy costs and the overall economy," said Ian J. McCarthy, president and CEO. "We believe industry conditions will remain challenging for the remainder of this fiscal year and as we enter fiscal 2009."

Beazer said federal and local investigations of its mortgage subsidiary continue. "The company intends to attempt to negotiate a settlement with prosecutors and regulatory authorities with respect to these matters that would allow us to quantify our exposure associated with reimbursement of losses and payment of regulatory and/or criminal fines, if they are imposed," Beazer said in a statement.

The company said it completed on August 7 an amendment to its credit facility affecting its size, covenants and pricing. The amendment eliminated financial covenants related to interest coverage, leverage and land holdings and reduced the consolidated tangible net worth maintenance covenant from $900 million to $100 million. The size of the facility was reduced from $500 million to $400 million, and collateralization requirements (the value of assets secured under the facility in relation to amounts outstanding or drawn as letters of credit) were raised from approximately 2.25x to 3.0x.The company still must maintain minimum liquidity of $120 million, and the facility is subject to further reductions to $250 million and $100 million if the Company's consolidated tangible net worth falls below $350 million and $250 million, respectively.

As of June 30, 2008, the Company's consolidated tangible net worth was $784 million.