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8-K - FORM 8K - HOVNANIAN ENTERPRISES INC | d8k043010.htm |
HOVNANIAN
ENTERPRISES,
INC.
|
News
Release
|
Contact:
|
J.
Larry Sorsby
|
Jeffrey
T. O’Keefe
|
Executive
Vice President & CFO
|
Director
of Investor Relations
|
|
732-747-7800
|
732-747-7800
|
|
HOVNANIAN
ENTERPRISES REPORTS SECOND QUARTER FISCAL 2010 RESULTS
RED BANK,
NJ, June 2, 2010 – Hovnanian Enterprises, Inc. (NYSE: HOV), a leading national
homebuilder, reported results for its second quarter and six months ended April
30, 2010.
RESULTS FOR THE THREE AND
SIX MONTH PERIODS ENDED APRIL 30, 2010:
·
|
Total
revenues were $318.6 million for the second quarter of fiscal 2010
compared with $398.0 million in the prior year’s second
quarter. For the first half of fiscal 2010, total revenues were
$638.2 million compared with $771.8 million in the same period last
year.
|
·
|
Homebuilding
gross margin, before interest expense included in cost of sales, increased
for the sixth consecutive quarter to 17.3% during the second quarter of
2010, compared to 8.3% in the fiscal 2009 second quarter and 16.0% in the
2010 first quarter.
|
·
|
The
pre-tax loss in the second quarter of fiscal 2010 was $28.0 million
compared to $97.4 million in the second quarter of fiscal 2009 and $55.0
million in the first quarter of fiscal
2010.
|
·
|
For
the second quarter ended April 30, 2010, the after-tax net loss was $28.6
million, or $0.36 per common share, compared with a net loss of $118.6
million, or $1.50 per common share, in the same quarter a year
ago. The after-tax net income for the first six months of 2010
was $207.6 million, or $2.60 per fully diluted common share, compared with
a net loss of $297.0 million, or $3.80 per common share, in the first half
of fiscal 2009. As a result of tax legislation changes, the
after-tax net income for the first six months of fiscal 2010 included a
federal income tax benefit of $291.3
million.
|
·
|
Pre-tax
land-related charges for the fiscal 2010 second quarter were $1.2 million
of land impairments, compared with $310.2 million of land impairments and
write offs of predevelopment costs and land deposits in the same period
last year.
|
·
|
Net
contracts per active selling community, excluding unconsolidated joint
ventures, were 7.4 in the second quarter of fiscal 2010, unchanged from
the second quarter of the prior year. Net contracts for the
second quarter of fiscal 2010, excluding unconsolidated joint ventures,
decreased 17% to 1,314 homes compared with last year’s second quarter,
primarily due to a 17% decrease in active selling
communities. For the first half of fiscal 2010, net contracts,
excluding unconsolidated joint ventures, decreased 13% to 2,226 compared
with 2,547 net contracts in the first six months of the prior
year.
|
·
|
Deliveries,
excluding unconsolidated joint ventures, were 1,118 homes for the second
quarter of fiscal 2010, a 19% decrease from 1,388 homes in the second
quarter a year ago. For the six months ended April 30, 2010,
deliveries, excluding unconsolidated joint ventures, declined 15% to 2,209
compared with 2,596 home deliveries in the first six months of fiscal
2009.
|
·
|
The
contract cancellation rate, excluding unconsolidated joint ventures, for
the second quarter of fiscal 2010 was 17%, compared with the contract
cancellation rate of 24% in last year’s second
quarter.
|
·
|
During
the second quarter, the tax asset valuation allowance charge to earnings
was $7.6 million. The valuation allowance was $713.7 million as
of April 30, 2010. The valuation allowance is a non-cash
reserve against the tax assets for GAAP purposes. For tax
purposes, the tax deductions associated with the tax assets may be carried
forward for 20 years from the date the deductions were
incurred.
|
·
|
Adjusted
EBITDA was positive for the first time in 11
quarters.
|
·
|
Total
debt was reduced by $87.1 million during the second quarter of fiscal
2010.
|
CASH
AND INVENTORY AS OF APRIL 30, 2010:
·
|
At
April 30, 2010, homebuilding cash was $559.5 million, including restricted
cash required to collateralize letters of
credit.
|
·
|
Cash
flow during the second quarter of fiscal 2010 was $188.2
million. During the quarter, a $274.1 million federal tax
refund was received, $70.0 million of cash was used to repurchase debt and
$72.0 million of cash was spent to purchase approximately 900
lots.
|
·
|
As
of April 30, 2010, the consolidated land position was 28,940 lots,
consisting of 11,532 lots under option and 17,408 owned
lots.
|
·
|
During
the second quarter, approximately 500 lots were purchased within 34 newly
identified communities that were identified and controlled subsequent to
January 31, 2009.
|
·
|
Approximately
1,900 lots were optioned in 28 newly identified communities during the
second quarter.
|
·
|
Started
unsold homes, excluding models, declined 30%, to 626 at April 30, 2010
compared with 892 at the end of the second quarter a year
ago.
|
OTHER
KEY OPERATING DATA:
·
|
Contract
backlog, as of April 30, 2010, excluding unconsolidated joint ventures,
was 1,789 homes with a sales value of $534.6 million, a decrease of 4% and
10%, respectively, compared to April 30,
2009.
|
·
|
During
the second quarter of fiscal 2010, home deliveries through unconsolidated
joint ventures were 79 homes, compared with 71 homes in the second quarter
of the previous year. For the first six months of fiscal 2010,
117 homes were delivered through unconsolidated joint ventures, compared
with 146 homes in the same period last
year.
|
COMMENTS
FROM MANAGEMENT:
“While
our second quarter net contracts were down compared to last year, the decrease
was due primarily to a drop in community count. Net contracts per
community for the quarter were flat at 7.4 this year compared to last
year. Our sales were better than our internal plans in the second
quarter, partially due to the federal homebuyer tax credit,” commented Ara K.
Hovnanian, Chairman of the Board, President and Chief Executive
Officer. “In the month of May, our net contracts per community were
slower than they were the year before. Given the fact that the tax
credit expired at the end of April, 2010, our slower pace of May net contracts
seems to confirm that the tax credit helped pull some sales forward into earlier
months this year. Partially offsetting the expiration of the
federal homebuyer tax credit, California reenacted a $10,000 state tax
credit. In addition, New Jersey’s assembly passed a bill for a
$15,000 state tax credit, which has been sent to the Senate for an upcoming vote
in June.”
“Home
prices have remained stable throughout most of our markets. This
stability is evident in the trends we have seen in our gross margin, which
increased sequentially for the sixth quarter in a row and in our land related
charges, which were only $1.2 million, the lowest they have been since the first
quarter of fiscal 2005. This stability in home prices gives us reason
to believe that we are at or near the bottom of this cyclical housing downturn,”
Mr. Hovnanian continued.
“We
continue to identify and invest in new land parcels that make economic sense
based on today’s sales prices and today’s sales paces,” stated J. Larry Sorsby,
Executive Vice President and Chief Financial Officer. “Since January
31, 2009 when we returned to controlling newly identified land parcels, we have
contracted for or purchased a grand total of approximately 7,100 lots in 98
communities. We purchased about 2,300 lots and optioned an additional
2,900 lots in 86 new communities on a consolidated
basis. Additionally, we purchased 1,900 lots in 12 communities
through joint ventures.”
“While we
expect that less than 10% of our 2010 deliveries will be from newly purchased
communities, we expect that approximately 40% of our 2011 consolidated
deliveries will come from newly identified communities. Deliveries
from these newly acquired communities should generate normalized gross margins
in the 20% range. In addition due to the expected increased volume
from newly identified communities, we should be able to report further
improvements in our ratios of general and administrative and interest costs as a
percent of revenues in future periods. We ended our second quarter
with 178 active selling communities and based on our current sales pace and
anticipated openings of new communities expect to have approximately 200 active
selling communities by the end of this fiscal year. Ultimately,
achieving a community mix more heavily weighted towards newly acquired
communities and increasing our revenues, will help enable us to return to
profitability,” said Mr. Sorsby.
“We still
have much work to do as we strive to return to profitability. We are
encouraged by recent home price stability and improving margins. We
are further encouraged by our ability to acquire and obtain land throughout the
country that makes economic sense and delivers good margins. At the
same time, we recognize that the expiration of the federal homebuyer tax credit,
the lack of job growth and a potential increase in foreclosures all pose risks
to a housing industry recovery. Nonetheless, we see more positive
signs today than negative,” concluded Mr. Hovnanian.
WEBCAST
INFORMATION:
Hovnanian
Enterprises will webcast its fiscal 2010 second quarter financial results
conference call at 11:00 a.m. E.T. on Thursday, June 3, 2010. The
webcast can be accessed live through the “Investor Relations” section of
Hovnanian Enterprises’ Website at http://www.khov.com. For
those who are not available to listen to the live webcast, an archive of the
broadcast will be available under the “Audio Archives” section of the Investor
Relations page on the Hovnanian Website at http://www.khov.com. The
archive will be available for 12 months.
ABOUT
HOVNANIAN ENTERPRISES®
INC.:
Hovnanian
Enterprises, Inc., founded in 1959 by Kevork S. Hovnanian, is headquartered in
Red Bank, New Jersey. The Company is one of the nation’s largest
homebuilders with operations in Arizona, California, Delaware, Florida, Georgia,
Illinois, Kentucky, Maryland, Minnesota, New Jersey, New York, North Carolina,
Ohio, Pennsylvania, South Carolina, Texas, Virginia and West
Virginia. The Company’s homes are marketed and sold under the trade
names K. HovnanianÒ
HomesÒ,
Matzel & Mumford, Brighton Homes, Parkwood Builders, Town & Country
Homes, Oster Homes and CraftBuilt Homes. As the developer of K.
Hovnanian’sÒ
Four Seasons communities, the Company is also one of the nation’s largest
builders of active adult homes.
Additional
information on Hovnanian Enterprises, Inc., including a summary investment
profile and the Company’s 2009 annual report, can be accessed through the
“Investor Relations” section of the Hovnanian Enterprises’ website at http://www.khov.com.
To be added to Hovnanian's investor e-mail or fax lists, please send an e-mail
to IR@khov.com
or sign up at http://www.khov.com.
NON-GAAP
FINANCIAL MEASURES:
Consolidated
earnings before interest expense, income taxes, depreciation and amortization
(“EBITDA”) and before inventory impairment loss and land option write-offs and
gain on extinguishment of debt (“Adjusted EBITDA”) are not U.S. generally
accepted accounting principles (GAAP) financial measures. The most
directly comparable GAAP financial measure is net (loss) income. The
reconciliation of EBITDA and Adjusted EBITDA to net (loss) income is presented
in a table attached to this earnings release.
Cash
flow is a non-GAAP financial measure. The most directly comparable
GAAP financial measure is Net Cash provided by (or used in) Operating
Activities. The Company uses cash flow to mean the amount of Net Cash
provided by (or used in) Operating Activities for the period, as reported on the
Condensed Consolidated Statement of Cash Flows, excluding changes in mortgage
notes receivable at the mortgage company, plus (or minus) the amount of Net Cash
provided by (or used in) Investing Activities. For the second quarter
of 2010, cash flow was positive $188.2 million, which was derived from $177.9
million from net cash provided by operating activities plus the change in
mortgage notes receivable of $11.4 million less $1.1 million of net cash used in
investing activities.
Loss
Before Income Taxes Excluding Land-Related Charges, Intangible Impairments and
Gain on Extinguishment of Debt is a non-GAAP financial measure. The
most directly comparable GAAP financial measure is Loss Before Income
Taxes. The reconciliation of Loss Before Income Taxes Excluding
Land-Related Charges, Intangible Impairments and Gain on Extinguishment of Debt
to Loss Before Income Taxes is presented in a table attached to this earnings
release.
Note:
All statements in this Press Release that are not historical facts should be
considered as "forward-looking statements" within the meaning of the “Safe
Harbor” Provisions of the Private Securities Litigation Reform Act of
1995. Such statements involve known and unknown risks, uncertainties
and other factors that may cause actual results, performance or achievements of
the Company to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements. Such risks, uncertainties and other factors include, but
are not limited to, (1) changes in general and local economic and industry and
business conditions, (2) adverse weather conditions and natural disasters, (3)
changes in market conditions and seasonality of the Company’s business, (4)
changes in home prices and sales activity in the markets where the Company
builds homes, (5) government regulation, including regulations concerning
development of land, the home building, sales and customer financing processes,
and the environment, (6) fluctuations in interest rates and the availability of
mortgage financing, (7) shortages in, and price fluctuations of, raw materials
and labor, (8) the availability and cost of suitable land and improved lots, (9)
levels of competition, (10) availability of financing to the Company, (11)
utility shortages and outages or rate fluctuations, (12) levels of indebtedness
and restrictions on the Company's operations and activities imposed
by the agreements governing the Company's outstanding indebtedness, (13)
operations through joint ventures with third parties, (14) product liability
litigation and warranty claims, (15) successful identification and integration
of acquisitions, (16) significant influence of the Company’s controlling
stockholders, (17) geopolitical risks, terrorist acts and other acts of war and
(18) other factors described in detail in the Company's Form 10-K for the year
ended October 31, 2009.
(Financial
Tables Follow)
Hovnanian
Enterprises, Inc.
|
||||||||||
April
30, 2010
|
||||||||||
Statements
of Consolidated Operations
|
||||||||||
(Dollars
in Thousands, Except Per Share)
|
||||||||||
Three
Months Ended
|
Six
Months Ended
|
|||||||||
April
30,
|
April
30,
|
|||||||||
2010
|
2009
|
2010
|
2009
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||||
Total
Revenues
|
$318,585
|
$397,999
|
$638,230
|
$771,783
|
||||||
Costs
and Expenses (a)
|
364,173
|
796,532
|
740,987
|
1,405,073
|
||||||
Gain
on Extinguishment of Debt
|
17,217
|
311,268
|
19,791
|
390,788
|
||||||
Gain
(Loss) from Unconsolidated Joint Ventures
|
391
|
(10,094)
|
18
|
(32,683)
|
||||||
Loss
Before Income Taxes
|
(27,980)
|
(97,359)
|
(82,948)
|
(275,185)
|
||||||
Income
Tax Provision (Benefit)
|
654
|
21,262
|
(290,503)
|
21,846
|
||||||
Net (Loss)
Income
|
$(28,634)
|
$(118,621)
|
$207,555
|
$(297,031)
|
||||||
Per
Share Data:
|
||||||||||
Basic:
|
||||||||||
(Loss)
Income Per Common Share
|
$(0.36)
|
$(1.50)
|
$2.64
|
$(3.80)
|
||||||
Weighted
Average Number of
|
||||||||||
Common
Shares Outstanding (b)
|
78,668
|
79,146
|
78,610
|
78,154
|
||||||
Assuming
Dilution:
|
||||||||||
(Loss)
Income Per Common Share
|
$(0.36)
|
$(1.50)
|
$2.60
|
$(3.80)
|
||||||
Weighted
Average Number of
|
||||||||||
Common
Shares Outstanding (b)
|
78,668
|
79,146
|
79,794
|
78,154
|
||||||
(a)
Includes inventory impairment loss and land option
write-offs.
|
||||||||||
(b)
For periods with a net loss, basic shares are used in accordance with GAAP
rules.
|
||||||||||
Hovnanian
Enterprises, Inc.
|
||||||||||
April
30, 2010
|
||||||||||
Reconciliation
of Loss Before Income Taxes Excluding Land-Related
|
||||||||||
Charges,
Intangible Impairments and Gain on Extinguishment of Debt to Loss Before
Income Taxes
|
||||||||||
(Dollars
in Thousands)
|
||||||||||
Three
Months Ended
|
Six
Months Ended
|
|||||||||
April
30,
|
April
30,
|
|||||||||
2010
|
2009
|
2010
|
2009
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||||
Loss
Before Income Taxes
|
$(27,980)
|
$(97,359)
|
$(82,948)
|
$(275,185)
|
||||||
Inventory
Impairment Loss and Land Option Write-Offs
|
1,186
|
310,194
|
6,152
|
420,375
|
||||||
Unconsolidated
Joint Venture Investment, Intangible and Land-Related
Charges
|
-
|
8,727
|
-
|
30,551
|
||||||
Gain
on Extinguishment of Debt
|
(17,217)
|
(311,268)
|
(19,791)
|
(390,788)
|
||||||
Loss
Before Income Taxes Excluding
|
||||||||||
Land-Related
Charges, Intangible Impairments and Gain on Extinguishment
of Debt(a)
|
$(44,011)
|
$(89,706)
|
$(96,587)
|
$(215,047)
|
||||||
(a)
Loss Before Income Taxes Excluding Land-Related Charges, Intangible
Impairments and Gain on Extinguishment of Debt is a non-GAAP Financial
measure. The most directly comparable GAAP financial measure is Loss
Before Income Taxes.
|
Hovnanian
Enterprises, Inc.
|
||||||||
April
30, 2010
|
||||||||
Gross
Margin
|
||||||||
(Dollars
in Thousands)
|
||||||||
Homebuilding
Gross Margin
|
Homebuilding
Gross Margin
|
|||||||
Three
Months Ended
|
Six
Months Ended
|
|||||||
April
30,
|
April
30,
|
|||||||
2010
|
2009
|
2010
|
2009
|
|||||
(Unaudited)
|
(Unaudited)
|
|||||||
Sale
of Homes
|
$310,493
|
$381,698
|
$619,846
|
$740,750
|
||||
Cost
of Sales, Excluding Interest (a)
|
256,913
|
350,178
|
516,721
|
688,608
|
||||
Homebuilding
Gross Margin, Excluding Interest
|
53,580
|
31,520
|
103,125
|
52,142
|
||||
Homebuilding
Cost of Sales Interest
|
18,524
|
24,785
|
38,372
|
47,389
|
||||
Homebuilding
Gross Margin, Including Interest
|
$35,056
|
$6,735
|
$64,753
|
$4,753
|
||||
Gross
Margin Percentage, Excluding Interest
|
17.3%
|
8.3%
|
16.6%
|
7.0%
|
||||
Gross
Margin Percentage, Including Interest
|
11.3%
|
1.8%
|
10.4%
|
0.6%
|
||||
Land
Sales Gross Margin
|
Land
Sales Gross Margin
|
|||||||
Three
Months Ended
|
Six
Months Ended
|
|||||||
April
30,
|
April
30,
|
|||||||
2010
|
2009
|
2010
|
2009
|
|||||
(Unaudited)
|
(Unaudited)
|
|||||||
Land
Sales
|
$335
|
$3,101
|
$1,035
|
$5,900
|
||||
Cost
of Sales, Excluding Interest (a)
|
13
|
970
|
21
|
3,215
|
||||
Land
Sales Gross Margin, Excluding Interest
|
322
|
2,131
|
1,014
|
2,685
|
||||
Land
Sales Interest
|
221
|
1,255
|
221
|
1,780
|
||||
Land
Sales Gross Margin, Including Interest
|
$101
|
$876
|
$793
|
$905
|
||||
(a)
Does not include cost associated with walking away from land options or
inventory impairment losses which are recorded as Inventory impairment
loss and land option write-offs in the Consolidated Statements of
Operations.
|
Hovnanian
Enterprises, Inc.
|
|||||||
April
30, 2010
|
|||||||
Reconciliation
of Adjusted EBITDA to Net Income (Loss)
|
|||||||
(Dollars
in Thousands)
|
|||||||
Three
Months Ended
|
Six
Months Ended
|
||||||
April
30,
|
April
30,
|
||||||
2010
|
2009
|
2010
|
2009
|
||||
(Unaudited)
|
(Unaudited)
|
||||||
Net
(Loss) Income
|
$(28,634)
|
$(118,621)
|
$207,555
|
$(297,031)
|
|||
Income
Tax Provision (Benefit)
|
654
|
21,262
|
(290,503)
|
21,846
|
|||
Interest
Expense
|
42,101
|
44,564
|
87,556
|
91,923
|
|||
EBIT
(a)
|
14,121
|
(52,795)
|
4,608
|
(183,262)
|
|||
Depreciation
|
3,071
|
3,988
|
6,457
|
9,286
|
|||
Amortization
of Debt Costs
|
815
|
1,571
|
1,621
|
3,231
|
|||
EBITDA
(b)
|
18,007
|
(47,236)
|
12,686
|
(170,745)
|
|||
Inventory
Impairment Loss and Land Option Write-offs
|
1,186
|
310,194
|
6,152
|
420,375
|
|||
Gain
on Extinguishment of Debt
|
(17,217)
|
(311,268)
|
(19,791)
|
(390,788)
|
|||
Adjusted
EBITDA (c)
|
$1,976
|
$(48,310)
|
$(953)
|
$(141,158)
|
|||
Interest
Incurred
|
$38,201
|
$47,588
|
$78,342
|
$101,098
|
|||
Adjusted
EBITDA to Interest Incurred
|
0.05
|
(1.02)
|
(0.01)
|
(1.40)
|
|||
(a) EBIT
is a non-GAAP financial measure. The most directly comparable GAAP
financial measure is net (loss) income. EBIT represents earnings before
interest expense and income taxes.
|
|||||||
(b) EBITDA
is a non-GAAP financial measure. The most directly comparable GAAP
financial measure is net (loss) income. EBITDA represents earnings before
interest expense, income taxes, depreciation and
amortization.
|
|||||||
(c) Adjusted
EBITDA is a non-GAAP financial measure. The most directly comparable GAAP
financial measure is net (loss) income. Adjusted EBITDA represents
earnings before interest expense, income taxes, depreciation,
amortization, inventory impairment loss and land option write-offs, and
gain on extinguishment of debt.
|
Hovnanian
Enterprises, Inc.
|
|||||||
April
30, 2010
|
|||||||
Interest
Incurred, Expensed and Capitalized
|
|||||||
(Dollars
in Thousands)
|
|||||||
Three
Months Ended
|
Six
Months Ended
|
||||||
April
30,
|
April
30,
|
||||||
2010
|
2009
|
2010
|
2009
|
||||
(Unaudited)
|
(Unaudited)
|
||||||
Interest
Capitalized at Beginning of Period
|
$159,026
|
$176,258
|
$164,340
|
$170,107
|
|||
Plus
Interest Incurred
|
38,201
|
47,588
|
78,342
|
101,098
|
|||
Less
Interest Expensed
|
42,101
|
44,564
|
87,556
|
91,923
|
|||
Interest
Capitalized at End of Period (a)
|
$155,126
|
$179,282
|
$155,126
|
$179,282
|
|||
(a) The
Company incurred significant inventory impairments in recent years, which
are determined based on total inventory including capitalized interest.
However, the capitalized interest amounts are shown gross before
allocating any portion of impairments to capitalized
interest.
|
HOVNANIAN
ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
(In
Thousands Except Share Amounts)
|
April
30,
2010
|
October
31,
2009
|
||
ASSETS
|
(unaudited)
|
(1)
|
|
Homebuilding:
|
|||
Cash and cash equivalents
|
$448,142
|
$419,955
|
|
Restricted cash
|
126,569
|
152,674
|
|
Inventories:
|
|||
Sold and unsold homes and lots under
development
|
617,951
|
631,302
|
|
Land and land options held for future
|
|||
development or sale
|
429,661
|
372,143
|
|
Consolidated inventory not owned:
|
|||
Specific performance options
|
22,028
|
30,534
|
|
Variable interest entities
|
36,839
|
45,436
|
|
Other options
|
19,659
|
30,498
|
|
Total consolidated inventory not owned
|
78,526
|
106,468
|
|
Total inventories
|
1,126,138
|
1,109,913
|
|
Investments in and advances to unconsolidated
|
|||
joint ventures
|
40,307
|
41,260
|
|
Receivables, deposits, and notes
|
55,717
|
44,418
|
|
Property, plant, and equipment
– net
|
68,443
|
73,918
|
|
Prepaid expenses and other assets
|
90,376
|
98,159
|
|
Total homebuilding
|
1,955,692
|
1,940,297
|
|
Financial services:
|
|||
Cash and cash equivalents
|
10,430
|
6,737
|
|
Restricted cash
|
2,541
|
4,654
|
|
Mortgage loans held for sale
or investment
|
58,054
|
69,546
|
|
Other assets
|
2,384
|
3,343
|
|
Total financial services
|
73,409
|
84,280
|
|
Total assets
|
$2,029,101
|
$2,024,577
|
HOVNANIAN
ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
(In
Thousands Except Share Amounts)
|
April
30,
2010
|
October
31,
2009
|
||
LIABILITIES
AND EQUITY
|
(unaudited)
|
(1)
|
|
Homebuilding:
|
|||
Nonrecourse land mortgages
|
$9,083
|
$-
|
|
Accounts payable and other liabilities
|
301,168
|
325,722
|
|
Customers’ deposits
|
14,874
|
18,811
|
|
Nonrecourse mortgages secured by operating
|
|||
properties
|
21,089
|
21,507
|
|
Liabilities from inventory not owned
|
69,805
|
96,908
|
|
Total homebuilding
|
416,019
|
462,948
|
|
Financial services:
|
|||
Accounts payable and other liabilities
|
11,480
|
14,507
|
|
Mortgage warehouse line of credit
|
47,784
|
55,857
|
|
Total financial services
|
59,264
|
70,364
|
|
Notes payable:
|
|||
Senior
secured notes
|
783,852
|
783,148
|
|
Senior notes
|
736,058
|
822,312
|
|
Senior subordinated notes
|
120,170
|
146,241
|
|
Accrued interest
|
24,471
|
26,078
|
|
Total notes payable
|
1,664,551
|
1,777,779
|
|
Income
tax payable
|
26,294
|
62,354
|
|
Total liabilities
|
2,166,128
|
2,373,445
|
|
Equity:
|
|||
Hovnanian
Enterprises, Inc. stockholders’ equity deficit:
|
|||
Preferred stock,
$.01 par value - authorized 100,000
|
|||
shares; issued 5,600
shares at April 30,
|
|||
2010 and at October 31, 2009 with a
|
|||
liquidation preference of $140,000
|
135,299
|
135,299
|
|
Common stock,
Class A, $.01 par value – authorized
|
|||
200,000,000 shares; issued
74,765,527 shares at
|
|||
April
30, 2010 and 74,376,946 shares at
|
|||
October 31, 2009 (including
11,694,720
|
|||
shares at
April 30, 2010 and
|
|||
October 31, 2009 held in Treasury)
|
748
|
744
|
|
Common stock,
Class B, $.01 par value (convertible
|
|||
to Class A at time of sale)
– authorized
|
|||
30,000,000 shares; issued
15,257,143 shares at
|
|||
April
30, 2010 and 15,265,067 shares at
|
|||
October 31, 2009 (including
691,748 shares at
|
|||
April
30, 2010 and October 31, 2009 held in
|
|||
Treasury)
|
153
|
153
|
|
Paid in capital
- common stock
|
459,752
|
455,470
|
|
Accumulated
deficit
|
(618,452)
|
(826,007)
|
|
Treasury stock
- at cost
|
(115,257)
|
(115,257)
|
|
Total Hovnanian
Enterprises, Inc. stockholders’ equity deficit
|
(137,757)
|
(349,598)
|
|
Non-controlling
interest in consolidated joint ventures
|
730
|
730
|
|
Total
equity deficit
|
(137,027)
|
(348,868)
|
|
Total
liabilities and equity
|
$2,029,101
|
$2,024,577
|
(1)
Derived from the audited balance sheet as of October 31, 2009.
HOVNANIAN
ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In
Thousands Except Per Share Data)
(unaudited)
|
Three
Months Ended April 30,
|
Six
Months Ended April 30,
|
||||||
2010
|
2009
|
2010
|
2009
|
||||
Revenues:
|
|||||||
Homebuilding:
|
|||||||
Sale of homes
|
$310,493
|
$381,698
|
$619,846
|
$740,750
|
|||
Land sales and other revenues
|
1,033
|
7,274
|
3,719
|
13,687
|
|||
Total homebuilding
|
311,526
|
388,972
|
623,565
|
754,437
|
|||
Financial services
|
7,059
|
9,027
|
14,665
|
17,346
|
|||
Total revenues
|
318,585
|
397,999
|
638,230
|
771,783
|
|||
Expenses:
|
|||||||
Homebuilding:
|
|||||||
Cost of sales, excluding interest
|
256,926
|
351,148
|
516,742
|
691,823
|
|||
Cost of sales interest
|
18,745
|
26,040
|
38,593
|
49,169
|
|||
Inventory impairment
loss and land option
write-offs
|
1,186
|
310,194
|
6,152
|
420,375
|
|||
Total cost of sales
|
276,857
|
687,382
|
561,487
|
1,161,367
|
|||
Selling, general and administrative
|
42,359
|
60,822
|
85,431
|
131,866
|
|||
Total homebuilding
expenses
|
319,216
|
748,204
|
646,918
|
1,293,233
|
|||
Financial services
|
5,631
|
6,510
|
11,026
|
13,258
|
|||
Corporate general and administrative(1)
|
14,203
|
18,359
|
30,416
|
49,269
|
|||
Other interest(2)
|
23,356
|
18,524
|
48,963
|
42,754
|
|||
Other
operations
|
1,767
|
4,935
|
3,664
|
6,559
|
|||
Total
expenses
|
364,173
|
796,532
|
740,987
|
1,405,073
|
|||
Gain
on extinguishment of debt
|
17,217
|
311,268
|
19,791
|
390,788
|
|||
Income
(loss) from unconsolidated joint
|
|||||||
ventures
|
391
|
(10,094)
|
18
|
(32,683)
|
|||
Loss before income taxes
|
(27,980)
|
(97,359)
|
(82,948)
|
(275,185)
|
|||
State and federal income tax
provision (benefit):
|
|||||||
State
|
657
|
21,221
|
828
|
21,776
|
|||
Federal
|
(3)
|
41
|
(291,331)
|
70
|
|||
Total taxes
|
654
|
21,262
|
(290,503)
|
21,846
|
|||
Net
(loss) income
|
$(28,634)
|
$(118,621)
|
$207,555
|
$(297,031)
|
|||
Per share data:
|
|||||||
Basic:
|
|||||||
(Loss) income
per common share
|
$(0.36)
|
$(1.50)
|
$2.64
|
$(3.80)
|
|||
Weighted average number of common
|
|||||||
shares outstanding
|
78,668
|
79,146
|
78,610
|
78,154
|
|||
Assuming
dilution:
|
|||||||
(Loss) income
per common share
|
$(0.36)
|
$(1.50)
|
$2.60
|
$(3.80)
|
|||
Weighted average number of common
|
|||||||
shares outstanding
|
78,668
|
79,146
|
79,794
|
78,154
|
(1)
Includes expenses related to canceled stock options of $12.3 million for the six
months ended April 30, 2009.
(2)
Beginning in the third quarter of fiscal 2008, our assets that qualify for
interest capitalization (inventory under development) no longer exceeded our
debt and therefore the portion of interest not covered by qualifying assets must
be directly expensed. As our inventory balances have continued to
decrease, the amount of interest required to be directly expensed has
increased.
HOVNANIAN
ENTERPRISES, INC.
|
||||||||||||
(DOLLARS
IN THOUSANDS EXCEPT AVG. PRICE)
|
||||||||||||
(UNAUDITED)
|
Communities
Under Development
|
|||||||||||
Three
Months - 4/30/2010
|
||||||||||||
Net
Contracts(1)
|
Deliveries
|
|||||||||||
Three
Months Ended
|
Three
Months Ended
|
Contract
Backlog
|
||||||||||
April
30,
|
April
30,
|
April
30,
|
||||||||||
2010
|
2009
|
%
Change
|
2010
|
2009
|
%
Change
|
2010
|
2009
|
%
Change
|
||||
Northeast
|
||||||||||||
Home
|
146
|
227
|
(35.7)%
|
149
|
191
|
(22.0)%
|
416
|
478
|
(13.0)%
|
|||
Dollars
|
$ 52,208
|
$ 104,653
|
(50.1)%
|
$ 56,955
|
$ 83,752
|
(32.0)%
|
$ 175,029
|
$ 211,943
|
(17.4)%
|
|||
Avg.
Price
|
$ 357,589
|
$ 461,026
|
(22.4)%
|
$ 382,248
|
$ 438,492
|
(12.8)%
|
$ 420,745
|
$ 443,395
|
(5.1)%
|
|||
Mid-Atlantic
|
||||||||||||
Home
|
202
|
242
|
(16.5)%
|
176
|
199
|
(11.6)%
|
356
|
381
|
(6.6)%
|
|||
Dollars
|
$ 73,704
|
$ 87,208
|
(15.5)%
|
$ 67,634
|
$ 70,887
|
(4.6)%
|
$ 137,805
|
$ 155,537
|
(11.4)%
|
|||
Avg.
Price
|
$ 364,871
|
$ 360,368
|
1.2%
|
$ 384,284
|
$ 356,216
|
7.9%
|
$ 387,093
|
$ 408,234
|
(5.2)%
|
|||
Midwest
|
||||||||||||
Home
|
149
|
156
|
(4.5)%
|
70
|
114
|
(38.6)%
|
306
|
324
|
(5.6)%
|
|||
Dollars
|
$ 27,289
|
$ 33,498
|
(18.5)%
|
$ 16,029
|
$ 23,887
|
(32.9)%
|
$ 53,609
|
$ 66,064
|
(18.9)%
|
|||
Avg.
Price
|
$ 183,148
|
$ 214,731
|
(14.7)%
|
$ 228,986
|
$ 209,535
|
9.3%
|
$ 175,193
|
$ 203,901
|
(14.1)%
|
|||
Southeast
|
||||||||||||
Home
|
112
|
127
|
(11.8)%
|
93
|
141
|
(34.0)%
|
132
|
109
|
21.1%
|
|||
Dollars
|
$ 25,334
|
$ 31,073
|
(18.5)%
|
$ 22,041
|
$ 32,834
|
(32.9)%
|
$ 31,767
|
$ 30,106
|
5.5%
|
|||
Avg.
Price
|
$ 226,205
|
$ 244,669
|
(7.5)%
|
$ 237,000
|
$ 232,865
|
1.8%
|
$ 240,659
|
$ 276,202
|
(12.9)%
|
|||
Southwest
|
||||||||||||
Home
|
530
|
545
|
(2.8)%
|
465
|
520
|
(10.6)%
|
393
|
357
|
10.1%
|
|||
Dollars
|
$ 114,166
|
$ 109,971
|
3.8%
|
$ 103,428
|
$ 113,514
|
(8.9)%
|
$ 89,512
|
$ 75,153
|
19.1%
|
|||
Avg.
Price
|
$ 215,408
|
$ 201,783
|
6.8%
|
$ 222,426
|
$ 218,296
|
1.9%
|
$ 227,766
|
$ 210,513
|
8.2%
|
|||
West
|
||||||||||||
Home
|
175
|
289
|
(39.4)%
|
165
|
223
|
(26.0)%
|
186
|
209
|
(11.0)%
|
|||
Dollars
|
$ 43,857
|
$ 69,205
|
(36.6)%
|
$ 44,406
|
$ 56,824
|
(21.9)%
|
$ 46,926
|
$ 53,973
|
(13.1)%
|
|||
Avg.
Price
|
$ 250,611
|
$ 239,464
|
4.7%
|
$ 269,127
|
$ 254,816
|
5.6%
|
$ 252,290
|
$ 258,244
|
(2.3)%
|
|||
Consolidated
Total
|
||||||||||||
Home
|
1,314
|
1,586
|
(17.2)%
|
1,118
|
1,388
|
(19.5)%
|
1,789
|
1,858
|
(3.7)%
|
|||
Dollars
|
$ 336,558
|
$ 435,608
|
(22.7)%
|
$ 310,493
|
$ 381,698
|
(18.7)%
|
$ 534,648
|
$ 592,776
|
(9.8)%
|
|||
Avg.
Price
|
$ 256,132
|
$ 274,659
|
(6.7)%
|
$ 277,722
|
$ 274,999
|
1.0%
|
$ 298,853
|
$ 319,040
|
(6.3)%
|
|||
Unconsolidated
Joint Ventures
|
||||||||||||
Home
|
85
|
61
|
39.3%
|
79
|
71
|
11.3%
|
176
|
221
|
(20.4)%
|
|||
Dollars
|
$ 33,097
|
$ 24,643
|
34.3%
|
$ 33,106
|
$ 22,522
|
47.0%
|
$ 84,208
|
$ 147,587
|
(42.9)%
|
|||
Avg.
Price
|
$ 389,376
|
$ 403,967
|
(3.6)%
|
$ 419,063
|
$ 317,211
|
32.1%
|
$ 478,455
|
$ 667,814
|
(28.4)%
|
|||
Total
|
||||||||||||
Home
|
1,399
|
1,647
|
(15.1)%
|
1,197
|
1,459
|
(18.0)%
|
1,965
|
2,079
|
(5.5)%
|
|||
Dollars
|
$ 369,655
|
$ 460,251
|
(19.7)%
|
$ 343,599
|
$ 404,220
|
(15.0)%
|
$ 618,856
|
$ 740,363
|
(16.4)%
|
|||
Avg.
Price
|
$ 264,228
|
$ 279,448
|
(5.4)%
|
$ 287,050
|
$ 277,053
|
3.6%
|
$ 314,940
|
$ 356,114
|
(11.6)%
|
|||
DELIVERIES
INCLUDE EXTRAS
|
||||||||||||
Notes:
|
||||||||||||
(1)
Net contracts are defined as new contracts signed during the period for
the purchase of homes, less cancellations of prior
contracts.
|
HOVNANIAN
ENTERPRISES, INC.
|
||||||||||||
(DOLLARS
IN THOUSANDS EXCEPT AVG. PRICE)
|
||||||||||||
(UNAUDITED)
|
Communities
Under Development
|
|||||||||||
Six
Months - 4/30/2010
|
||||||||||||
Net
Contracts(1)
|
Deliveries
|
|||||||||||
Six
Months Ended
|
Six
Months Ended
|
Contract
Backlog
|
||||||||||
April
30,
|
April
30,
|
April
30,
|
||||||||||
2010
|
2009
|
%
Change
|
2010
|
2009
|
%
Change
|
2010
|
2009
|
%
Change
|
||||
Northeast
|
||||||||||||
Home
|
276
|
366
|
(24.6)%
|
317
|
385
|
(17.7)%
|
416
|
478
|
(13.0)%
|
|||
Dollars
|
$ 107,587
|
$ 169,998
|
(36.7)%
|
$ 125,669
|
$ 169,988
|
(26.1)%
|
$ 175,029
|
$ 211,943
|
(17.4)%
|
|||
Avg.
Price
|
$ 389,808
|
$ 464,475
|
(16.1)%
|
$ 396,432
|
$ 441,527
|
(10.2)%
|
$ 420,745
|
$ 443,395
|
(5.1)%
|
|||
Mid-Atlantic
|
||||||||||||
Home
|
328
|
378
|
(13.2)%
|
358
|
382
|
(6.3)%
|
356
|
381
|
(6.6)%
|
|||
Dollars
|
$ 120,653
|
$ 129,467
|
(6.8)%
|
$ 133,710
|
$ 139,882
|
(4.4)%
|
$ 137,805
|
$ 155,537
|
(11.4)%
|
|||
Avg.
Price
|
$ 367,845
|
$ 342,505
|
7.4%
|
$ 373,492
|
$ 366,183
|
2.0%
|
$ 387,093
|
$ 408,234
|
(5.2)%
|
|||
Midwest
|
||||||||||||
Home
|
234
|
260
|
(10.0)%
|
181
|
227
|
(20.3)%
|
306
|
324
|
(5.6)%
|
|||
Dollars
|
$ 43,710
|
$ 52,334
|
(16.5)%
|
$ 39,433
|
$ 50,760
|
(22.3)%
|
$ 53,609
|
$ 66,064
|
(18.9)%
|
|||
Avg.
Price
|
$ 186,795
|
$ 201,285
|
(7.2)%
|
$ 217,862
|
$ 223,612
|
(2.6)%
|
$ 175,193
|
$ 203,901
|
(14.1)%
|
|||
Southeast
|
||||||||||||
Home
|
184
|
244
|
(24.6)%
|
187
|
298
|
(37.2)%
|
132
|
109
|
21.1%
|
|||
Dollars
|
$ 42,570
|
$ 51,136
|
(16.8)%
|
$ 46,718
|
$ 66,849
|
(30.1)%
|
$ 31,767
|
$ 30,106
|
5.5%
|
|||
Avg.
Price
|
$ 231,359
|
$ 209,574
|
10.4%
|
$ 249,829
|
$ 224,326
|
11.4%
|
$ 240,659
|
$ 276,202
|
(12.9)%
|
|||
Southwest
|
||||||||||||
Home
|
886
|
827
|
7.1%
|
844
|
890
|
(5.2)%
|
393
|
357
|
10.1%
|
|||
Dollars
|
$ 193,822
|
$ 170,468
|
13.7%
|
$ 185,552
|
$ 200,119
|
(7.3)%
|
$ 89,512
|
$ 75,153
|
19.1%
|
|||
Avg.
Price
|
$ 218,762
|
$ 206,129
|
6.1%
|
$ 219,848
|
$ 224,853
|
(2.2)%
|
$ 227,766
|
$ 210,513
|
8.2%
|
|||
West
|
||||||||||||
Home
|
318
|
472
|
(32.6)%
|
322
|
414
|
(22.2)%
|
186
|
209
|
(11.0)%
|
|||
Dollars
|
$ 79,898
|
$ 99,724
|
(19.9)%
|
$ 88,764
|
$ 113,152
|
(21.6)%
|
$ 46,926
|
$ 53,973
|
(13.1)%
|
|||
Avg.
Price
|
$ 251,252
|
$ 211,280
|
18.9%
|
$ 275,665
|
$ 273,314
|
0.9%
|
$ 252,290
|
$ 258,244
|
(2.3)%
|
|||
Consolidated
Total
|
||||||||||||
Home
|
2,226
|
2,547
|
(12.6)%
|
2,209
|
2,596
|
(14.9)%
|
1,789
|
1,858
|
(3.7)%
|
|||
Dollars
|
$ 588,240
|
$ 673,127
|
(12.6)%
|
$ 619,846
|
$ 740,750
|
(16.3)%
|
$ 534,648
|
$ 592,776
|
(9.8)%
|
|||
Avg.
Price
|
$ 264,259
|
$ 264,282
|
0.0%
|
$ 280,600
|
$ 285,343
|
(1.7)%
|
$ 298,853
|
$ 319,040
|
(6.3)%
|
|||
Unconsolidated
Joint Ventures
|
||||||||||||
Home
|
134
|
104
|
28.8%
|
117
|
146
|
(19.9)%
|
176
|
221
|
(20.4)%
|
|||
Dollars
|
$ 56,725
|
$ 38,765
|
46.3%
|
$ 54,006
|
$ 47,034
|
14.8%
|
$ 84,208
|
$ 147,587
|
(42.9)%
|
|||
Avg.
Price
|
$ 423,321
|
$ 372,740
|
13.6%
|
$ 461,590
|
$ 322,151
|
43.3%
|
$ 478,455
|
$ 667,814
|
(28.4)%
|
|||
Total
|
||||||||||||
Home
|
2,360
|
2,651
|
(11.0)%
|
2,326
|
2,742
|
(15.2)%
|
1,965
|
2,079
|
(5.5)%
|
|||
Dollars
|
$ 644,965
|
$ 711,892
|
(9.4)%
|
$ 673,852
|
$ 787,784
|
(14.5)%
|
$ 618,856
|
$ 740,363
|
(16.4)%
|
|||
Avg.
Price
|
$ 273,290
|
$ 268,537
|
1.8%
|
$ 289,704
|
$ 287,303
|
0.8%
|
$ 314,940
|
$ 356,114
|
(11.6)%
|
|||
DELIVERIES
INCLUDE EXTRAS
|
||||||||||||
Notes:
|
||||||||||||
(1)
Net contracts are defined as new contracts signed during the period for
the purchase of homes, less cancellations of prior
contracts.
|