Exhibit 99.1
HOVNANIAN ENTERPRISES, INC. News Release
_______________________________________________________________________________
Contact: At the Company At The Financial Relations Board
Kevin C. Hake Amy F. Glynn, CFA
Vice President, Finance 675 Third Avenue
and Treasurer 212-661-8030
732-747-7800
_______________________________________________________________________________
HOVNANIAN ENTERPRISES AND WASHINGTON HOMES COMPLETE MERGER
RED BANK, NJ, January 24, 2001 -- Hovnanian Enterprises, Inc. (ASE: HOV)
and Washington Homes, Inc. (formerly NYSE: WHI) announced that, having
received shareholder approvals, they closed on their merger on January
23. As a result, Washington Homes, Inc. has been merged with and into a
wholly owned subsidiary of Hovnanian. Washington Homes, Inc. is no
longer listed as a separate company on the NYSE effective as of the close
of trading yesterday. Hovnanian is now expected to rank among the top-
ten homebuilders in the United States, with total assets approaching $1.0
billion. Fiscal 2001 revenue is expected to climb more than 40% to
approximately $1.65 billion and deliveries are anticipated to exceed
6,700 homes. The merger resulted in the issuance of an additional 6.4
million Hovnanian common shares, boosting shareholders' equity above $300
million and adding significant liquidity for shareholders by increasing
the publicly-held float almost 50%.
"With the merger completed, we can now focus on achieving the many
benefits the combination of our two companies will allow," said Kevork S.
Hovnanian, Chairman and Founder of Hovnanian Enterprises, Inc. "This
combination is a perfect fit with our strategy of having a dominant
presence in a handful of select markets. It greatly enhances the
Company's market position in Metro-Washington D.C. and North Carolina,
adds depth to our management team, increases our market capitalization,
and further diversifies our earnings," he added. "Our increased size and
focused market concentration will provide powers and economies of scale
that should lead to superior returns for our shareholders." Subsequent
to the merger, Hovnanian Enterprises, Inc. will maintain its current
position as the largest builder in New Jersey and will become the second-
largest builder in Metro-Washington, D.C. and the largest builder in
North Carolina. In addition, Hovnanian will continue to have a
significant presence in Dallas, Texas and Southern California, will be a
top-five builder in Nashville, Tennessee and the market leader in
Huntsville, Alabama and the Gulf Coast of Mississippi.
"We are extremely pleased to join together with the Hovnanian
organization," said Geaton A. DeCesaris, Jr., former President and CEO of
Washington Homes, Inc. "The merger has achieved our objective of
providing greater liquidity for our shareholders and it will give all of
our associates in the combined Company a more advantageous environment in
which to flourish," said Mr. DeCesaris, who is now the President of
Homebuilding Operations and Chief Operating Officer for Hovnanian
Enterprises. "The growth prospects and increased market presence for the
Company have improved the opportunities for our combined teams in North
Carolina and Washington D.C.," he added.
"We plan to implement our extensive training and career development
programs to cover our new associates," commented Ara K. Hovnanian,
President and CEO of the combined Company. A joint team has already
developed an integration plan to build on the market strength the Company
has gained in North Carolina and Metro-Washington, D.C. The plan
includes leveraging the most powerful local brands and national
purchasing contracts, combining redundant offices, eliminating duplicate
design centers and consolidating sales and marketing efforts wherever
possible. "We are finding additional synergies as we implement our
integration plan," noted Mr. Hovnanian.
"Washington Homes is expected to add between $.05 to $.10 per share to
this year's earnings," said Ara Hovnanian. "Year to date, we have
already delivered or sold more than 60% of the Company's projected fiscal
2001 deliveries. We are confident that we will meet or exceed analyst
estimates of approximately $1.80 per share for fiscal 2001, representing
a 20% increase from our record performance in fiscal 2000," he said.
"Our earnings estimates are prior to the effect of any special charges
related to the merger that will be taken in the first quarter ending
January 31st, 2001," Mr. Hovnanian added.
The total equity value of the merger consideration was $94.8 million,
paid 40% in cash and the balance in Hovnanian Class A common shares, in
accordance with the terms of the Agreement and Plan of Merger.
Approximately 4.6 million of the 8.3 million outstanding Washington Homes
shares were converted into Hovnanian shares. Hovnanian also refinanced
the outstanding debt of Washington Homes under the Company's $375 million
revolving credit agreement, as anticipated.
Washington Homes shareholders who elected to receive all cash as
consideration for their shares or who failed to properly deliver an
election form by the announced deadline will receive $10.08 in cash for
each share of Washington Homes stock. Washington Homes shareholders who
elected to receive all stock as consideration will receive, as a result
of pro-ration, 1.0287 shares of Hovnanian Class A common stock and $2.62
in cash for each share of Washington Homes stock.
"Most of our communities continue to experience strong demand," Ara
Hovnanian noted. "The increasingly difficult environment for regulatory
approvals in nearly all areas of the country has kept the supply of new
housing from meeting demand in many of our markets. This gives us
confidence that the housing market will support our business plan, even
if there is a moderate downturn in job creation," he said. "With the
addition of Washington Homes, Hovnanian now controls more than 40,000
lots in attractive locations. Over 70% of these lots are controlled
under rolling option contracts. The merger will also allow us to
continue to apply our standardized processes and operating strategies
across a wider universe, in order to further enhance our returns," he
concluded.
Hovnanian Enterprises, Inc. designs, constructs and markets single-family
homes, townhomes and condominiums in planned residential communities in
New Jersey, North Carolina, Pennsylvania, Virginia, Maryland, New York,
California, Texas, Tennessee, Alabama and Mississippi in the United
States, and in Poland.
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 Act of 1995. Such statements
involve known and unknown risks, uncertainties and other factors that
may cause actual results to differ materially. Such risks,
uncertainties and other factors include, but are not limited to, changes
in general economic conditions, fluctuations in interest rates,
increases in raw materials and labor costs, levels of competition and
other factors described in detail in the Company's Form 10-K for the
year ended October 31, 1999.