Exhibit 99
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 THIRD QUARTER
FISCAL 2008 RESULTS
FISCAL 2008 RESULTS
RED BANK, NJ, September 3, 2008 — Hovnanian Enterprises, Inc. (NYSE: HOV), a leading national homebuilder, reported results for its third quarter and nine months ended July 31, 2008.
Results for the Three and Nine Month Periods ended July 31, 2008:
• | Total revenues were $716.5 million for the three months ended July 31, 2008 compared with total revenues of $1.1 billion in the third quarter of the prior year. For the first nine months of fiscal 2008, total revenues were $2.6 billion compared to $3.4 billion for the same period last year. |
• | Deliveries, excluding unconsolidated joint ventures, were 2,185 homes in the third quarter of the current year, a decrease of 31% from 3,179 home deliveries in the fiscal 2007 third quarter. For the first three quarters of fiscal 2008, deliveries were 8,283 homes, excluding unconsolidated joint ventures, a 14% decline from 9,595 home deliveries in the first nine months of last year. |
• | The number of net contracts for the third quarter of fiscal 2008, excluding unconsolidated joint ventures, declined 38% to 1,584 homes compared with last year’s third quarter. For the first nine months of fiscal 2008, the number of net contracts, excluding unconsolidated joint ventures, decreased 35% to 5,321 homes compared with the same period in the prior year. |
• | The cancellation rate, excluding unconsolidated joint ventures, for the third quarter of fiscal 2008 was 32%, compared with the rate of 35% in last year’s third quarter. |
• | Pre-tax land-related charges during the third quarter of fiscal 2008 were $111.7 million, including land impairments of $80.2 million and write-offs of predevelopment costs and land deposits of $30.8 million, as well as $0.7 million representing the equity portion of write-offs and impairment charges in unconsolidated joint ventures. |
• | Excluding land-related charges, the pre-tax loss was $87.7 million and $254.7 million, respectively, for the three month and nine month periods ended July 31, 2008. Including all land-related charges, the pre-tax loss was $199.4 million for the third quarter of fiscal 2008 and $711.6 million for the first nine months of fiscal 2008. |
• | The FAS 109 current and deferred tax valuation allowance charge to earnings during the third quarter of the current year was $98.4 million and $240.2 million year to date. The FAS 109 charge was for GAAP purposes only and is a non-cash valuation allowance against the current and deferred tax asset. For tax purposes, the tax deductions associated with the tax assets may be carried forward for 20 years. |
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• | For the three months ended July 31, 2008, the after tax loss available to common stockholders was $202.5 million, or $2.67 per common share, compared with a net loss of $80.5 million, or $1.27 per common share, in the third quarter of fiscal 2007. For the nine month period, the net loss available to common stockholders was $674.1 million, or $9.98 per common share, compared to a $168.5 million net loss, or $2.67 per common share, in the same period a year ago. |
Cash and Inventory as of July 31, 2008:
• | Cash flow during the third quarter of fiscal 2008 was positive $192.2 million, with $94.7 million from a previously anticipated federal tax refund received in July 2008. At July 31, 2008, homebuilding cash was $677.2 million and the balance on the revolving credit facility was zero. |
• | The total land position, as of July 31, 2008, decreased by 5,773 lots compared to April 30, 2008, reflecting owned and optioned position decreases of 1,700 lots and 4,073 lots, respectively. As of July 31, 2008, lots controlled under option contracts totaled 23,118 and owned lots totaled 23,564. The total land position of 46,682 lots represents a 62% decline from the peak total land position at April 30, 2006. |
• | Started unsold homes and models declined 48%, from 3,242 at July 31, 2007 to 1,677 at July 31, 2008. Excluding model homes, started unsold homes as of the end of the third quarter of fiscal 2008 were 1,365. |
Other Key Operating Data:
• | Contract backlog, as of July 31, 2008, excluding unconsolidated joint ventures, was 2,976 homes with a sales value of $1.0 billion. |
• | At July 31, 2008, there were 354 active selling communities, excluding unconsolidated joint ventures, a decline of 95 active communities, or 21%, from July 31, 2007. |
• | Homebuilding gross margin, before interest expense included in cost of sales, was 8.5% in the third quarter of 2008, compared with 15.9% in the fiscal 2007 third quarter and 6.8% in the second quarter of 2008. |
• | Pretax income from Financial Services in the third quarter was $5.9 million and $13.1 million for the first three quarters of fiscal 2008. |
• | During the third quarter of fiscal 2008, home deliveries through unconsolidated joint ventures were 168 homes, compared with 329 homes in the third quarter of fiscal 2007. For the first nine months of fiscal 2008, deliveries through unconsolidated joint ventures were 519 homes, compared with 893 homes during the same period in 2007. |
Projection:
• | Positive cash flow is expected for the remainder of fiscal 2008, such that the homebuilding cash balance at October 31, 2008 is estimated to be approximately $800 million. |
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Comments From Management:
“As we continue to compete against record foreclosures, higher than normal levels of resale listings and poor consumer confidence, the housing market remains challenging,” commented Ara K. Hovnanian, President and Chief Executive Officer of the Company. “Despite disappointing operating losses, we successfully generated cash during the third quarter and remain on track to end our fiscal year with approximately $800 million of homebuilding cash. We remain focused on generating sufficient liquidity to both weather this housing downturn and to take advantage of opportunities at the bottom of this housing cycle. The recently enacted $7,500 federal tax credit for first-time homebuyers should help spur some short-term demand, but more importantly, the fundamentals that drive long-term homebuilding demand, particularly expectations for household formation, are stronger than ever,” concluded Mr. Hovnanian.
Webcast Information:
Hovnanian Enterprises will webcast its fiscal 2008 third quarter financial results conference call at 11:00 a.m. E.T. on Thursday, September 4, 2008. The webcast can be accessed live through the “Investor Relations” section of Hovnanian Enterprises’ Web site athttp://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 Web site athttp://www.khov.com. The archive will be available for 12 months.
About Hovnanian Enterprises:
Hovnanian Enterprises, Inc., founded in 1959 by Kevork S. Hovnanian, Chairman, 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, Michigan, 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. Hovnanian Homes, Matzel & Mumford, Forecast Homes, Parkside Homes, Brighton Homes, Parkwood Builders, Windward Homes, Cambridge Homes, Town & Country Homes, Oster Homes, First Home Builders of Florida and CraftBuilt Homes. As the developer of K. Hovnanian’s 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 2007 annual report, can be accessed through the “Investor Relations” section of Hovnanian Enterprises’ website athttp://www.khov.com. To be added to Hovnanian’s investor e-mail or fax lists, please send an e-mail toIR@khov.com or sign up athttp://www.khov.com.
Hovnanian Enterprises, Inc. is a member of the Public Home Builders Council of America (“PHBCA”) (http://www.phbca.org), a nonprofit group devoted to improving understanding of the business practices of America’s largest publicly-traded home building companies, the competitive advantages they bring to the home building market, and their commitment to creating value for their home buyers and stockholders. The PHBCA’s 14 member companies build one out of every five homes in the United States.
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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 (“Adjusted EBITDA”) are not U.S. generally accepted accounting principle (GAAP) financial measures. The most directly comparable GAAP financial measure is net income (loss). The reconciliation of EBITDA and Adjusted EBITDA to net income (loss) 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 Consolidated Statement of Cash Flows, excluding changes in mortgage notes receivable at the mortgage company, plus (or minus) the amount of Net Cash provided (or used in) Investing Activities. For the third quarter of 2008, cash flow was $192.1 million of net cash from operating activities excluding the change in mortgage notes receivable ($237.3 million from cash flow from operating activities less the change in mortgage notes receivable of $45.2 million) plus $0.1 million of net cash from investing activities. For the first nine months of 2008, cash flow was $195.8 million of net cash from operating activities excluding the change in mortgage notes receivable ($287.4 million from cash flow from operating activities less the change in mortgage notes receivable of $91.6 million) less $2.5 million of net cash used in investing activities.
(Loss) Income Before Income Taxes Excluding Land Related Charges and Intangible Impairments is a non-GAAP financial measure. The most directly comparable GAAP financial measure is Loss Before Income Taxes. The reconciliation of (Loss) Income Before Income Taxes Excluding Land Related Charges and Intangible Impairments 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 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’sForm 10-K for the year ended October 31, 2007.
(Financial Tables Follow)
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Hovnanian Enterprises, Inc.
July 31, 2008
Statements of Consolidated Operations
(Dollars in Thousands, Except Per Share)
July 31, 2008
Statements of Consolidated Operations
(Dollars in Thousands, Except Per Share)
Three Months Ended, | Nine Months Ended, | |||||||||||||||
July 31, | July 31, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
Total Revenues | $ | 716,541 | $ | 1,130,593 | $ | 2,586,681 | $ | 3,407,052 | ||||||||
Costs and Expenses (a) | 914,974 | 1,253,987 | 3,288,910 | 3,638,313 | ||||||||||||
Loss from Unconsolidated Joint Ventures | (920) | (2,739) | (9,356) | (2,934) | ||||||||||||
Loss Before Income Taxes | (199,353) | (126,133) | (711,585) | (234,195) | ||||||||||||
Income Tax Provision (Benefit) | 3,124 | (48,274) | (37,454) | (73,669) | ||||||||||||
Net Loss | (202,477) | (77,859) | (674,131) | (160,526) | ||||||||||||
Less: Preferred Stock Dividends | — | 2,668 | — | 8,006 | ||||||||||||
Net Loss Available to Common Stockholders | $ | (202,477) | $ | (80,527) | $ | (674,131) | $ | (168,532) | ||||||||
Per Share Data: | ||||||||||||||||
Basic: | ||||||||||||||||
Loss Per Common Share | $ | (2.67) | $ | (1.27) | $ | (9.98) | $ | (2.67) | ||||||||
Weighted Average Number of Common Shares Outstanding | 75,723 | 63,199 | 67,574 | 63,036 | ||||||||||||
Assuming Dilution: | ||||||||||||||||
Loss Per Common Share | $ | (2.67) | $ | (1.27) | $ | (9.98) | $ | (2.67) | ||||||||
Weighted Average Number of Common Shares Outstanding (b) | 75,723 | 63,199 | 67,574 | 63,036 |
(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.
July 31, 2008
Reconciliation of (Loss) Income Before Income Taxes Excluding Land-Related
Charges and Intangible Impairments to Loss Before Income Taxes
(Dollars in Thousands)
July 31, 2008
Reconciliation of (Loss) Income Before Income Taxes Excluding Land-Related
Charges and Intangible Impairments to Loss Before Income Taxes
(Dollars in Thousands)
Three Months Ended, | Nine Months Ended, | |||||||||||||||
July 31, | July 31, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
Loss Before Income Taxes | $ | (199,353) | $ | (126,133) | $ | (711,585) | $ | (234,195) | ||||||||
Inventory Impairment Loss and Land Option Write-Offs | 110,933 | 108,593 | 446,961 | 184,420 | ||||||||||||
Intangible Impairments | — | 3,210 | — | 54,707 | ||||||||||||
Unconsolidated Joint Venture Intangible and Land-Related Charges | 725 | 1,060 | 9,877 | 1,317 | ||||||||||||
(Loss) Income Before Income Taxes Excluding Land Related Charges and Intangible Impairments | $ | (87,695) | $ | (13,270) | $ | (254,747) | $ | 6,249 | ||||||||
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Hovnanian Enterprises, Inc.
July 31, 2008
Gross Margin
(Dollars in Thousands)
July 31, 2008
Gross Margin
(Dollars in Thousands)
Homebuilding Gross Margin | Homebuilding Gross Margin | |||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
July 31, | July 31, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
Sale of Homes | $ | 692,690 | $ | 1,079,226 | $ | 2,500,192 | $ | 3,273,156 | ||||||||
Cost of Sales, Excluding Interest(a) | 634,013 | 907,699 | 2,320,195 | 2,724,965 | ||||||||||||
Homebuilding Gross Margin, Excluding Interest | 58,677 | 171,527 | 179,997 | 548,191 | ||||||||||||
Homebuilding Cost of Sales Interest | 34,182 | 29,833 | 95,248 | 85,227 | ||||||||||||
Homebuilding Gross Margin, Including Interest | $ | 24,495 | $ | 141,694 | $ | 84,749 | $ | 462,964 | ||||||||
Gross Margin Percentage, Excluding Interest | 8.5% | 15.9% | 7.2% | 16.7% | ||||||||||||
Gross Margin Percentage, Including Interest | 3.5% | 13.1% | 3.4% | 14.1% |
Land Sales Gross Margin | Land Sales Gross Margin | |||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
July 31, | July 31, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
Land Sales | $ | 4,950 | $ | 30,554 | $ | 31,443 | $ | 65,848 | ||||||||
Cost of Sales, Excluding Interest(a) | 1,520 | 30,566 | 25,747 | 51,085 | ||||||||||||
Land Sales Gross Margin, Excluding Interest | 3,430 | (12) | 5,696 | 14,763 | ||||||||||||
Land Sales Interest | 1,291 | 24 | 3,385 | 258 | ||||||||||||
Land Sales Gross Margin, Including Interest | $ | 2,139 | $ | (36) | $ | 2,311 | $ | 14,505 | ||||||||
(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 Condensed Consolidated Statements of Operations. |
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Hovnanian Enterprises, Inc.
July 31, 2008
Reconciliation of Adjusted EBITDA to Net Loss
(Dollars in Thousands)
July 31, 2008
Reconciliation of Adjusted EBITDA to Net Loss
(Dollars in Thousands)
Three Months Ended | Nine Months Ended | |||||||||||||||
July 31, | July 31, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
Net Loss | $ | (202,477) | $ | (77,859) | $ | (674,131) | $ | (160,526) | ||||||||
Income Tax Provision (Benefit) | 3,124 | (48,274) | (37,454) | (73,669) | ||||||||||||
Interest Expense | 46,128 | 31,017 | 110,290 | 94,531 | ||||||||||||
EBIT(a) | (153,225) | (95,116) | (601,295) | (139,664) | ||||||||||||
Depreciation | 4,498 | 4,557 | 13,603 | 13,529 | ||||||||||||
Amortization of Debt Costs | 1,224 | 701 | 2,320 | 2,073 | ||||||||||||
Amortization of Intangibles | 293 | 10,150 | 1,520 | 78,424 | ||||||||||||
EBITDA(b) | (147,210) | (79,708) | (583,852) | (45,638) | ||||||||||||
Inventory Impairment Loss and Land Option Write-offs | 110,933 | 108,593 | 446,961 | 184,420 | ||||||||||||
Adjusted EBITDA(c) | $ | (36,277) | $ | 28,885 | $ | (136,891) | $ | 138,782 | ||||||||
Interest Incurred | $ | 51,268 | $ | 49,487 | $ | 137,390 | $ | 148,285 | ||||||||
Adjusted EBITDA to Interest Incurred | (0.71) | 0.58 | (1.00) | 0.94 |
(a) | EBIT is a non-GAAP financial measure. The comparable GAAP financial measure is net income (loss). EBIT represents earnings before interest expense and income taxes. | |
(b) | EBITDA is a non-GAAP financial measure. The comparable GAAP financial measure is net income (loss). EBITDA represents earnings before interest expense, income taxes, depreciation and amortization. | |
(c) | Adjusted EBITDA is a non-GAAP financial measure. The comparable GAAP financial measure is net income (loss). Adjusted EBITDA represents earnings before interest expense, income taxes, depreciation, amortization and inventory impairment loss and land option write-offs. |
Hovnanian Enterprises, Inc.
July 31, 2008
Interest Incurred, Expensed and Capitalized
(Dollars in Thousands)
July 31, 2008
Interest Incurred, Expensed and Capitalized
(Dollars in Thousands)
Three Months Ended | Nine Months Ended | |||||||||||||||
July 31, | July 31, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
Interest Capitalized at Beginning of Period | $ | 177,602 | $ | 138,133 | $ | 155,642 | $ | 102,849 | ||||||||
Plus Interest Incurred | 51,268 | 49,487 | 137,390 | 148,285 | ||||||||||||
Less Interest Expensed | 46,128 | 31,017 | 110,290 | 94,531 | ||||||||||||
Interest Capitalized at End of Period(a) | $ | 182,742 | $ | 156,603 | $ | 182,742 | $ | 156,603 | ||||||||
(a) | The Company incurred significant inventory impairments in recent quarters, which are determined based on total inventory including capitalized interest. |
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HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share Amounts)
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share Amounts)
July 31, | October 31, | |||||||
2008 | 2007 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Homebuilding: | ||||||||
Cash and cash equivalents | $ | 677,213 | $ | 12,275 | ||||
Restricted cash | 5,649 | 6,594 | ||||||
Inventories — at the lower of cost or fair value: | ||||||||
Sold and unsold homes and lots under development | 1,825,233 | 2,792,436 | ||||||
Land and land options held for future development or sale | 584,733 | 446,135 | ||||||
Consolidated inventory not owned: | ||||||||
Specific performance options | 6,895 | 12,123 | ||||||
Variable interest entities | 95,594 | 139,914 | ||||||
Other options | 112,222 | 127,726 | ||||||
Total consolidated inventory not owned | 214,711 | 279,763 | ||||||
Total inventories | 2,624,677 | 3,518,334 | ||||||
Investments in and advances to unconsolidated joint ventures | 164,146 | 176,365 | ||||||
Receivables, deposits, and notes | 89,898 | 109,856 | ||||||
Property, plant, and equipment — net | 96,857 | 106,792 | ||||||
Prepaid expenses and other assets | 172,838 | 174,032 | ||||||
Goodwill | 32,658 | 32,658 | ||||||
Definite life intangibles | 2,704 | 4,224 | ||||||
Total homebuilding | 3,866,640 | 4,141,130 | ||||||
Financial services: | ||||||||
Cash and cash equivalents | 8,452 | 3,958 | ||||||
Restricted cash | 5,318 | 11,572 | ||||||
Mortgage loans held for sale | 91,123 | 182,627 | ||||||
Other assets | 3,145 | 6,851 | ||||||
Total financial services | 108,038 | 205,008 | ||||||
Income taxes receivable — including net deferred tax benefits | 127,030 | 194,410 | ||||||
Total assets | $ | 4,101,708 | $ | 4,540,548 | ||||
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HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share Amounts)
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share Amounts)
July 31, | October 31, | |||||||
2008 | 2007 | |||||||
(unaudited) | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Homebuilding: | ||||||||
Nonrecourse land mortgages | $ | 4,824 | $ | 9,430 | ||||
Accounts payable and other liabilities | 427,061 | 515,422 | ||||||
Customers’ deposits | 43,348 | 65,221 | ||||||
Nonrecourse mortgages secured by operating properties | 22,492 | 22,985 | ||||||
Liabilities from inventory not owned | 150,216 | 189,935 | ||||||
Total homebuilding | 647,941 | 802,993 | ||||||
Financial services: | ||||||||
Accounts payable and other liabilities | 12,053 | 19,597 | ||||||
Mortgage warehouse line of credit | 83,142 | 171,133 | ||||||
Total financial services | 95,195 | 190,730 | ||||||
Notes payable: | ||||||||
Revolving credit agreement | 206,750 | |||||||
Senior secured notes | 594,524 | |||||||
Senior notes | 1,510,950 | 1,510,600 | ||||||
Senior subordinated notes | 400,000 | 400,000 | ||||||
Accrued interest | 31,714 | 43,944 | ||||||
Total notes payable | 2,537,188 | 2,161,294 | ||||||
Total liabilities | 3,280,324 | 3,155,017 | ||||||
Minority interest from inventory not owned | 42,155 | 62,238 | ||||||
Minority interest from consolidated joint ventures | 1,335 | 1,490 | ||||||
Stockholders’ equity: | ||||||||
Preferred stock, $.01 par value-authorized 100,000 shares; issued 5,600 shares at July 31, 2008 and at October 31, 2007 with a liquidation preference of $140,000 | 135,299 | 135,299 | ||||||
Common stock, Class A, $.01 par value-authorized 200,000,000 shares; issued 73,796,543 shares at July 31, 2008 and 59,263,887 shares at October 31, 2007 (including 11,694,720 shares at July 31, 2008 and October 31, 2007 held in Treasury) | 738 | 593 | ||||||
Common stock, Class B, $.01 par value (convertible to Class A at time of sale) authorized 30,000,000 shares; issued 15,335,394 shares at July 31, 2008 and 15,338,840 shares at October 31, 2007 (including 691,748 shares at July 31, 2008 and October 31, 2007 held in Treasury) | 153 | 153 | ||||||
Paid in capital — common stock | 415,797 | 276,998 | ||||||
Retained earnings | 341,164 | 1,024,017 | ||||||
Treasury stock — at cost | (115,257) | (115,257) | ||||||
Total stockholders’ equity | 777,894 | 1,321,803 | ||||||
Total liabilities and stockholders’ equity | $ | 4,101,708 | $ | 4,540,548 | ||||
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HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands Except Per Share Data)
(Unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands Except Per Share Data)
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
July 31, | July 31, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Revenues: | ||||||||||||||||
Homebuilding: | ||||||||||||||||
Sale of homes | $ | 692,690 | $ | 1,079,226 | $ | 2,500,192 | $ | 3,273,156 | ||||||||
Land sales and other revenues | 9,750 | 34,107 | 45,863 | 77,205 | ||||||||||||
Total homebuilding | 702,440 | 1,113,333 | 2,546,055 | 3,350,361 | ||||||||||||
Financial services | 14,101 | 17,260 | 40,626 | 56,691 | ||||||||||||
Total revenues | 716,541 | 1,130,593 | 2,586,681 | 3,407,052 | ||||||||||||
Expenses: | ||||||||||||||||
Homebuilding: | ||||||||||||||||
Cost of sales, excluding interest | 635,533 | 938,265 | 2,345,942 | 2,776,050 | ||||||||||||
Cost of sales interest | 35,473 | 29,857 | 98,633 | 85,485 | ||||||||||||
Inventory impairment loss and land option write-offs | 110,933 | 108,593 | 446,961 | 184,420 | ||||||||||||
Total cost of sales | 781,939 | 1,076,715 | 2,891,536 | 3,045,955 | ||||||||||||
Selling, general and administrative | 90,004 | 132,025 | 287,819 | 401,804 | ||||||||||||
Total homebuilding | 871,943 | 1,208,740 | 3,179,355 | 3,447,759 | ||||||||||||
Financial services | 8,234 | 11,179 | 27,554 | 35,877 | ||||||||||||
Corporate general and administrative | 21,483 | 22,128 | 64,595 | 64,319 | ||||||||||||
Other interest | 10,655 | 1,160 | 11,657 | 9,046 | ||||||||||||
Other operations | 2,366 | 630 | 4,229 | 2,888 | ||||||||||||
Intangible amortization | 293 | 10,150 | 1,520 | 78,424 | ||||||||||||
Total expenses | 914,974 | 1,253,987 | 3,288,910 | 3,638,313 | ||||||||||||
Loss from unconsolidated joint ventures | (920) | (2,739) | (9,356) | (2,934) | ||||||||||||
Loss before income taxes | (199,353) | (126,133) | (711,585) | (234,195) | ||||||||||||
State and federal income tax provision (benefit): | ||||||||||||||||
State | 1,476 | 1,370 | 15,700 | 118 | ||||||||||||
Federal | 1,648 | (49,644) | (53,154) | (73,787) | ||||||||||||
Total taxes | 3,124 | (48,274) | (37,454) | (73,669) | ||||||||||||
Net loss | (202,477) | (77,859) | (674,131) | (160,526) | ||||||||||||
Less: preferred stock dividends | — | 2,668 | — | 8,006 | ||||||||||||
Net loss available to common stockholders | $ | (202,477) | $ | (80,527) | $ | (674,131) | $ | (168,532) | ||||||||
Per share data: | ||||||||||||||||
Basic: | ||||||||||||||||
Loss per common share | $ | (2.67) | $ | (1.27) | $ | (9.98) | $ | (2.67) | ||||||||
Weighted average number of common shares outstanding | 75,723 | 63,199 | 67,574 | 63,036 | ||||||||||||
Assuming dilution: | ||||||||||||||||
Loss per common share | $ | (2.67) | $ | (1.27) | $ | (9.98) | $ | (2.67) | ||||||||
Weighted average number of common shares outstanding | 75,723 | 63,199 | 67,574 | 63,036 |
10
HOVNANIAN ENTERPRISES, INC.
(DOLLARS IN THOUSANDS EXCEPT Avg. Price )
(UNAUDITED)
(DOLLARS IN THOUSANDS EXCEPT Avg. Price )
(UNAUDITED)
Communities Under Development
Three Months — 7/31/2008
Three Months — 7/31/2008
Net Contracts (1) | Deliveries | |||||||||||||||||||||||||||||||||||||
Three Months Ended | Three Months Ended | Contract Backlog | ||||||||||||||||||||||||||||||||||||
July 31, | July 31, | July 31, | ||||||||||||||||||||||||||||||||||||
2008 | 2007 | % Change | 2008 | 2007 | % Change | 2008 | 2007 | % Change | ||||||||||||||||||||||||||||||
Northeast | ||||||||||||||||||||||||||||||||||||||
Homes | 234 | 408 | (42.6 | %) | 347 | 485 | (28.5 | %) | 733 | 1,066 | (31.2 | %) | ||||||||||||||||||||||||||
Dollars | 90,953 | 206,103 | (55.9 | %) | 169,394 | 238,299 | (28.9 | %) | 329,914 | 571,495 | (42.3 | %) | ||||||||||||||||||||||||||
Avg. Price | 388,689 | 505,154 | (23.1 | %) | 488,167 | 491,338 | (0.6 | %) | 450,088 | 536,112 | (16.0 | %) | ||||||||||||||||||||||||||
Mid-Atlantic | ||||||||||||||||||||||||||||||||||||||
Homes | 235 | 268 | (12.3 | %) | 272 | 459 | (40.7 | %) | 570 | 1,015 | (43.8 | %) | ||||||||||||||||||||||||||
Dollars | 82,437 | 126,269 | (34.7 | %) | 115,836 | 215,363 | (46.2 | %) | 247,309 | 497,697 | (50.3 | %) | ||||||||||||||||||||||||||
Avg. Price | 350,795 | 471,153 | (25.5 | %) | 425,868 | 469,200 | (9.2 | %) | 433,876 | 490,342 | (11.5 | %) | ||||||||||||||||||||||||||
Southeast | ||||||||||||||||||||||||||||||||||||||
Homes | 141 | 307 | (54.1 | %) | 271 | 597 | (54.6 | %) | 300 | 2,437 | (87.7 | %) | ||||||||||||||||||||||||||
Dollars | 32,364 | 88,253 | (63.3 | %) | 69,763 | 164,111 | (57.5 | %) | 84,899 | 702,385 | (87.9 | %) | ||||||||||||||||||||||||||
Avg. Price | 229,534 | 287,469 | (20.2 | %) | 257,428 | 274,893 | (6.4 | %) | 282,996 | 288,217 | (1.8 | %) | ||||||||||||||||||||||||||
Southwest | ||||||||||||||||||||||||||||||||||||||
Homes | 533 | 924 | (42.3 | %) | 596 | 861 | (30.8 | %) | 636 | 1,129 | (43.7 | %) | ||||||||||||||||||||||||||
Dollars | 121,223 | 201,579 | (39.9 | %) | 141,970 | 196,681 | (27.8 | %) | 146,282 | 255,498 | (42.7 | %) | ||||||||||||||||||||||||||
Avg. Price | 227,435 | 218,159 | 4.3 | % | 238,205 | 228,433 | 4.3 | % | 230,003 | 226,305 | 1.6 | % | ||||||||||||||||||||||||||
Midwest | ||||||||||||||||||||||||||||||||||||||
Homes | 115 | 239 | (51.9 | %) | 230 | 290 | (20.7 | %) | 474 | 762 | (37.8 | %) | ||||||||||||||||||||||||||
Dollars | 26,261 | 52,386 | (49.9 | %) | 51,003 | 65,563 | (22.2 | %) | 95,418 | 157,594 | (39.5 | %) | ||||||||||||||||||||||||||
Avg. Price | 228,352 | 219,188 | 4.2 | % | 221,752 | 226,079 | (1.9 | %) | 201,303 | 206,816 | (2.7 | %) | ||||||||||||||||||||||||||
West | ||||||||||||||||||||||||||||||||||||||
Homes | 326 | 393 | (17.0 | %) | 469 | 487 | (3.7 | %) | 263 | 717 | (63.3 | %) | ||||||||||||||||||||||||||
Dollars | 97,294 | 145,295 | (33.0 | %) | 144,724 | 199,209 | (27.4 | %) | 91,666 | 299,153 | (69.4 | %) | ||||||||||||||||||||||||||
Avg. Price | 298,448 | 369,707 | (19.3 | %) | 308,580 | 409,053 | (24.6 | %) | 348,540 | 417,229 | (16.5 | %) | ||||||||||||||||||||||||||
Consolidated Total | ||||||||||||||||||||||||||||||||||||||
Homes | 1,584 | 2,539 | (37.6 | %) | 2,185 | 3,179 | (31.3 | %) | 2,976 | 7,126 | (58.2 | %) | ||||||||||||||||||||||||||
Dollars | 450,532 | 819,885 | (45.0 | %) | 692,690 | 1,079,226 | (35.8 | %) | 995,488 | 2,483,822 | (59.9 | %) | ||||||||||||||||||||||||||
Avg. Price | 284,427 | 322,917 | (11.9 | %) | 317,021 | 339,486 | (6.6 | %) | 334,505 | 348,558 | (4.0 | %) | ||||||||||||||||||||||||||
Unconsolidated Joint Ventures | ||||||||||||||||||||||||||||||||||||||
Homes | 105 | 255 | (58.8 | %) | 168 | 329 | (48.9 | %) | 326 | 737 | (55.8 | %) | ||||||||||||||||||||||||||
Dollars | 43,227 | 96,435 | (55.2 | %) | 59,807 | 117,898 | (49.3 | %) | 179,937 | 352,265 | (48.9 | %) | ||||||||||||||||||||||||||
Avg. Price | 411,686 | 378,176 | 8.9 | % | 355,994 | 358,353 | (0.7 | %) | 551,953 | 477,972 | 15.5 | % | ||||||||||||||||||||||||||
Total | ||||||||||||||||||||||||||||||||||||||
Homes | 1,689 | 2,794 | (39.5 | %) | 2,353 | 3,508 | (32.9 | %) | 3,302 | 7,863 | (58.0 | %) | ||||||||||||||||||||||||||
Dollars | 493,759 | 916,320 | (46.1 | %) | 752,497 | 1,197,124 | (37.1 | %) | 1,175,425 | 2,836,087 | (58.6 | %) | ||||||||||||||||||||||||||
Avg. Price | 292,338 | 327,960 | (10.9 | %) | 319,803 | 341,255 | (6.3 | %) | 355,974 | 360,688 | (1.3 | %) |
DELIVERIES INCLUDE EXTRAS
Notes:
(1) | Net contracts are defined as a new contracts signed during the period for the purchase of homes, less cancellations of prior contracts. |
11
HOVNANIAN ENTERPRISES, INC.
(DOLLARS IN THOUSANDS EXCEPT Avg. Price )
(UNAUDITED)
(DOLLARS IN THOUSANDS EXCEPT Avg. Price )
(UNAUDITED)
Communities Under Development
Nine Months — 7/31/2008
Nine Months — 7/31/2008
Net Contracts (1) | Deliveries | |||||||||||||||||||||||||||||||||||||
Nine Months Ended | Nine Months Ended | Contract Backlog | ||||||||||||||||||||||||||||||||||||
July 31, | July 31, | July 31, | ||||||||||||||||||||||||||||||||||||
2008 | 2007 | % Change | 2008 | 2007 | % Change | 2008 | 2007 | % Change | ||||||||||||||||||||||||||||||
Northeast | ||||||||||||||||||||||||||||||||||||||
Homes | 766 | 1,202 | (36.3 | %) | 1,008 | 1,354 | (25.6 | %) | 733 | 1,066 | (31.2 | %) | ||||||||||||||||||||||||||
Dollars | 315,020 | 584,035 | (46.1 | %) | 498,330 | 637,437 | (21.8 | %) | 329,914 | 571,495 | (42.3 | %) | ||||||||||||||||||||||||||
Avg. Price | 411,253 | 485,886 | (15.4 | %) | 494,375 | 470,781 | 5.0 | % | 450,088 | 536,112 | (16.0 | %) | ||||||||||||||||||||||||||
Mid-Atlantic | ||||||||||||||||||||||||||||||||||||||
Homes | 723 | 1,212 | (40.3 | %) | 906 | 1,331 | (31.9 | %) | 570 | 1,015 | (43.8 | %) | ||||||||||||||||||||||||||
Dollars | 262,928 | 558,393 | (52.9 | %) | 375,888 | 627,421 | (40.1 | %) | 247,309 | 497,697 | (50.3 | %) | ||||||||||||||||||||||||||
Avg. Price | 363,662 | 460,720 | (21.1 | %) | 414,887 | 471,391 | (12.0 | %) | 433,876 | 490,342 | (11.5 | %) | ||||||||||||||||||||||||||
Southeast | ||||||||||||||||||||||||||||||||||||||
Homes | 493 | 801 | (38.5 | %) | 2,344 | 2,177 | 7.7 | % | 300 | 2,437 | (87.7 | %) | ||||||||||||||||||||||||||
Dollars | 118,931 | 235,619 | (49.5 | %) | 572,127 | 589,680 | (3.0 | %) | 84,899 | 702,385 | (87.9 | %) | ||||||||||||||||||||||||||
Avg. Price | 241,240 | 294,156 | (18.0 | %) | 244,081 | 270,868 | (9.9 | %) | 282,996 | 288,217 | (1.8 | %) | ||||||||||||||||||||||||||
Southwest | ||||||||||||||||||||||||||||||||||||||
Homes | 1,817 | 2,644 | (31.3 | %) | 1,932 | 2,514 | (23.2 | %) | 636 | 1,129 | (43.7 | %) | ||||||||||||||||||||||||||
Dollars | 414,939 | 589,900 | (29.7 | %) | 449,803 | 572,904 | (21.5 | %) | 146,282 | 255,498 | (42.7 | %) | ||||||||||||||||||||||||||
Avg. Price | 228,365 | 223,109 | 2.4 | % | 232,817 | 227,885 | 2.2 | % | 230,003 | 226,305 | 1.6 | % | ||||||||||||||||||||||||||
Midwest | ||||||||||||||||||||||||||||||||||||||
Homes | 413 | 779 | (47.0 | %) | 698 | 685 | 1.9 | % | 474 | 762 | (37.8 | %) | ||||||||||||||||||||||||||
Dollars | 88,021 | 177,066 | (50.3 | %) | 152,675 | 145,666 | 4.8 | % | 95,418 | 157,594 | (39.5 | %) | ||||||||||||||||||||||||||
Avg. Price | 213,127 | 227,299 | (6.2 | %) | 218,732 | 212,651 | 2.9 | % | 201,303 | 206,816 | (2.7 | %) | ||||||||||||||||||||||||||
West | ||||||||||||||||||||||||||||||||||||||
Homes | 1,109 | 1,587 | (30.1 | %) | 1,395 | 1,534 | (9.1 | %) | 263 | 717 | (63.3 | %) | ||||||||||||||||||||||||||
Dollars | 355,260 | 668,963 | (46.9 | %) | 451,369 | 700,048 | (35.5 | %) | 91,666 | 299,153 | (69.4 | %) | ||||||||||||||||||||||||||
Avg. Price | 320,342 | 421,527 | (24.0 | %) | 323,562 | 456,355 | (29.1 | %) | 348,540 | 417,229 | (16.5 | %) | ||||||||||||||||||||||||||
Consolidated Total | ||||||||||||||||||||||||||||||||||||||
Homes | 5,321 | 8,225 | (35.3 | %) | 8,283 | 9,595 | (13.7 | %) | 2,976 | 7,126 | (58.2 | %) | ||||||||||||||||||||||||||
Dollars | 1,555,099 | 2,813,976 | (44.7 | %) | 2,500,192 | 3,273,156 | (23.6 | %) | 995,488 | 2,483,822 | (59.9 | %) | ||||||||||||||||||||||||||
Avg. Price | 292,257 | 342,125 | (14.6 | %) | 301,846 | 341,131 | (11.5 | %) | 334,505 | 348,558 | (4.0 | %) | ||||||||||||||||||||||||||
Unconsolidated Joint Ventures | ||||||||||||||||||||||||||||||||||||||
Homes | 418 | 500 | (16.4 | %) | 519 | 893 | (41.9 | %) | 326 | 737 | (55.8 | %) | ||||||||||||||||||||||||||
Dollars | 177,088 | 156,047 | 13.5 | % | 196,388 | 329,635 | (40.4 | %) | 179,937 | 352,265 | (48.9 | %) | ||||||||||||||||||||||||||
Avg. Price | 423,656 | 312,094 | 35.7 | % | 378,396 | 369,132 | 2.5 | % | 551,953 | 477,972 | 15.5 | % | ||||||||||||||||||||||||||
Total | ||||||||||||||||||||||||||||||||||||||
Homes | 5,739 | 8,725 | (34.2 | %) | 8,802 | 10,488 | (16.1 | %) | 3,302 | 7,863 | (58.0 | %) | ||||||||||||||||||||||||||
Dollars | 1,732,187 | 2,970,023 | (41.7 | %) | 2,696,580 | 3,602,791 | (25.2 | %) | 1,175,425 | 2,836,087 | (58.6 | %) | ||||||||||||||||||||||||||
Avg. Price | 301,827 | 340,404 | (11.3 | %) | 306,360 | 343,516 | (10.8 | %) | 355,974 | 360,688 | (1.3 | %) |
DELIVERIES INCLUDE EXTRAS
Notes:
(1) | Net contracts are defined as a new contracts signed during the period for the purchase of homes, less cancellations of prior contracts. |
12