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Press release from GlobeNewswire (a Nasdaq OMX company)

Hovnanian Enterprises Reports Third Quarter Fiscal 2011 Results

Wednesday, September 07, 2011

Hovnanian Enterprises Reports Third Quarter Fiscal 2011 Results13:30 EDT Wednesday, September 07, 2011RED BANK, N.J., Sept. 7, 2011 (GLOBE NEWSWIRE) -- Hovnanian Enterprises, Inc. (NYSE:HOV), a leading national homebuilder, reported results for its third quarter and nine months ended July 31, 2011.RESULTS FOR THE THREE AND NINE MONTH PERIODS ENDED JULY 31, 2011:   Total revenues were $285.6 million for the third quarter of fiscal 2011 compared with $380.6 million in the third quarter of the prior year and $255.1 million for the second quarter of fiscal 2011. During the nine months ended July 31, 2011, total revenues were $793.3 million compared with $1,018.8 million in the first nine months of last year.   Homebuilding gross margin percentage, before interest expense included in cost of sales, was 15.3% during the third quarter of 2011, compared to 17.1% during the same quarter a year ago and 14.8% for the second quarter of fiscal 2011. For the nine months ended July 31, 2011, homebuilding gross margin percentage, before interest expense included in cost of sales, was 15.6% compared with 16.8% in the same period of the prior year.   Consolidated pre-tax land-related charges during the fiscal 2011 third quarter were $11.4 million, compared with $49.0 million in last year's third quarter and $16.9 million for the second quarter of fiscal 2011. For the first nine months of fiscal 2011, consolidated pre-tax land-related charges were $41.9 million compared with $55.1 million during the first nine months of 2010.   Excluding land-related charges and (loss) gain on extinguishment of debt, the pre-tax loss in the fiscal 2011 third quarter was $42.8 million compared with $36.1 million in the prior year's third quarter and $55.1 million for the second quarter of fiscal 2011. During the first nine months of fiscal 2011, the pre-tax loss, excluding land-related charges and (loss) gain on extinguishment of debt, was $148.9 million compared with $132.7 million in last year's first nine months.   For the fiscal 2011 third quarter, the after-tax net loss was $50.9 million, or $0.47 per common share, compared with $72.9 million, or $0.92 per common share, during the third quarter of 2010 and $72.7 million, or $0.69 per common share, for the second quarter of fiscal 2011. During the nine months ended July 31, 2011, the after-tax net loss was $187.7 million, or $1.92 per common share, compared with net income of $134.7 million, or $1.69 per fully diluted common share in the first nine months of last year, which as a result of tax legislation changes included a federal income tax benefit of $291.3 million.   Net contracts in the third quarter of 2011, including unconsolidated joint ventures, increased 33% to 1,297 homes compared with the 2010 third quarter and increased 11% compared with the second quarter of fiscal 2011. For the nine months ended July 31, 2011, net contracts, including unconsolidated joint ventures, were 3,313 homes, a 1% decrease from the same period of the prior year.   Contract backlog, as of July 31, 2011, including unconsolidated joint ventures, was 1,736 homes with a sales value of $570.8 million, which increased 13% and 14%, respectively, compared to July 31, 2010. Compared to the second quarter of fiscal 2011, contract backlog, including unconsolidated joint ventures, increased 12% on a units basis and 11% on a dollar basis in the third quarter of fiscal 2011.   The contract cancellation rate, excluding unconsolidated joint ventures, for the third quarter ended July 31, 2011 was 18%, compared with 23% in last year's third quarter and 20% for the second quarter of fiscal 2011.   At July 31, 2011, there were 202 active selling communities, including unconsolidated joint ventures, compared with 194 active selling communities at July 31, 2010 and 206 active selling communities at April 30, 2011.   Deliveries, including unconsolidated joint ventures, were 1,112 homes during the third quarter of 2011, compared with 1,396 homes in the same period of the prior year and 967 homes for the second quarter of fiscal 2011. For the nine months ended July 31, 2011, deliveries, including unconsolidated joint ventures, were 2,971 homes compared to 3,722 homes during the same period a year ago.   The valuation allowance was $858.8 million as of July 31, 2011. 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.CASH AND INVENTORY AS OF JULY 31, 2011:  As of July 31, 2011, homebuilding cash was $334.2 million, including $60.8 million of restricted cash required to collateralize letters of credit compared to $415.2 million, including $67.1 million of restricted cash required to collateralize letters of credit at April 30, 2011.   After spending approximately $105 million of cash to purchase approximately 1,200 lots and to develop land across the Company, cash flow in the third quarter of fiscal 2011 was negative $76.2 million. Cash flow in the second quarter of fiscal 2011 was negative $88.5 million, after spending approximately $125 million of cash to purchase approximately 1,440 lots and to develop land across the Company. Excluding land and land development spending, cash flow would have been approximately $28.8 million in the third quarter of 2011.   As of July 31, 2011, the land position, including unconsolidated joint ventures, was 32,058 lots, consisting of 9,960 lots under option and 22,098 owned lots. This compares to the April 30, 2011 land position, including unconsolidated joint ventures, which was 32,546 lots, consisting of 10,542 lots under option and 22,004 owned lots.   For the fiscal 2011 third quarter, approximately 900 of the lots purchased were within 88 newly identified communities (defined as communities controlled subsequent to January 31, 2009). This compares to approximately 1,170 of the lots purchased were within 84 newly identified communities during the second quarter of fiscal 2011.   Approximately 1,500 lots were put under option in 38 newly identified communities during the third quarter of fiscal 2011. This compares to approximately 1,650 lots which were put under option in 41 newly identified communities during the second quarter of fiscal 2011.COMMENTS FROM MANAGEMENT:   "The housing market remains challenging primarily due to uncertainty caused by general domestic economic and political concerns, stock market volatility and turbulent international economic conditions, all of which are taking their toll on consumer confidence," commented Ara K. Hovnanian, Chairman of the Board, President and Chief Executive Officer.  "Despite this difficult backdrop, our deliveries, revenues, gross margin and cash flow for the third quarter were in line with our expectations. However, we see very few indicators that any recovery in the housing market has begun. As such, we are taking appropriate steps to run our business based on current market conditions, with a focus on maintaining adequate liquidity."WEBCAST INFORMATION:   Hovnanian Enterprises will webcast its fiscal 2011 third quarter financial results conference call at 11:00 a.m. E.T. on Thursday, September 8, 2011. 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, 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. Hovnanian® Homes®, Matzel & Mumford, Brighton Homes, Parkwood Builders, Town & Country Homes and Oster 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. The Hovnanian Enterprises, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7499 Additional information on Hovnanian Enterprises, Inc., including a summary investment profile and the Company's 2010 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 loss (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 net (loss) income to EBITDA and Adjusted EBITDA 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 by (or used in) Investing Activities. For the third quarter of 2011, cash flow was negative $76.2 million, which was derived from $83.3 million from net cash used in operating activities plus the change in mortgage notes receivable of $5.8 million plus $1.3 million of net cash provided by investing activities.Loss Before Income Taxes Excluding Land-Related Charges and Loss (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 ofLoss Before Income Taxes to Loss Before Income Taxes Excluding Land-Related Charges and Loss (Gain) on Extinguishment of Debt is presented in a table attached to this earnings release.FORWARD-LOOKING STATEMENTSAll statements in this press release that are not historical facts should be considered as "forward-looking statements". 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 and impacts of the sustained homebuilding downturn, (2) adverse weather and other environmental 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, tax laws, 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) the Company's sources of liquidity, (14) changes in credit ratings, (15) availability of net operating loss carryforwards, (16) operations through joint ventures with third parties, (17) product liability litigation and warranty claims, (18) successful identification and integration of acquisitions, (19) significant influence of the Company's controlling stockholders, (20) geopolitical risks, terrorist acts and other acts of war, and (21) other factors described in detail in the Company's Annual Report on Form 10-K/A for the year ended October 31, 2010 and the Company's quarterly reports on Form 10-Q for the quarters ended January 31, 2011 and July 31, 2011, respectively. Except as otherwise required by applicable securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.  (Financial Tables Follow)Hovnanian Enterprises, Inc.    July 31, 2011     Statements of Consolidated Operations         (Dollars in Thousands, Except Per Share Data)           Three Months Ended Nine Months Ended   July 31, July 31,   2011 2010 2011 2010   (Unaudited) (Unaudited)      Total Revenues $285,618 $380,600 $793,282 $1,018,830 Costs and Expenses (a)  337,547 464,827  977,588 1,205,814 (Loss) Gain on Extinguishment of Debt  (1,391) 5,256  (3,035) 25,047 Loss from Unconsolidated Joint Ventures  (2,255) (871)  (6,479)  (853) Loss Before Income Taxes (55,575)  (79,842) (193,820) (162,790) Income Tax Benefit  (4,645) (6,988) (6,081) (297,491) Net (Loss) Income $(50,930) $(72,854) $(187,739) $134,701           Per Share Data:         Basic:         (Loss) Income Per Common Share $(0.47) $(0.92) $(1.92) $1.71 Weighted Average Number of         Common Shares Outstanding (b)  108,721  78,763 97,648 78,662 Assuming Dilution:         (Loss) Income Per Common Share $(0.47) $(0.92) $(1.92) $1.69 Weighted Average Number of         Common Shares Outstanding (b)  108,721  78,763 97,648 79,873           (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, 2011       Reconciliation of Loss Before Income Taxes to Loss Before Income Taxes         Excluding Land-Related Charges and Loss (Gain) on Extinguishment of Debt         (Dollars in Thousands)           Three Months Ended Nine Months Ended   July 31, July 31,   2011 2010 2011 2010   (Unaudited)  (Unaudited)     Loss Before Income Taxes $(55,575) $(79,842) $(193,820) $(162,790) Inventory Impairment Loss and Land Option Write-Offs 11,426  48,959  41,876  55,111 Loss (Gain) on Extinguishment of Debt  1,391 (5,256)  3,035 (25,047) Loss Before Income Taxes Excluding         Land-Related Charges and Loss (Gain) on Extinguishment of Debt (a) $(42,758) $(36,139) $(148,909) $(132,726)           (a) Loss Before Income Taxes Excluding Land-Related Charges and Loss (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.        July 31, 2011         Gross Margin         (Dollars in Thousands)           Homebuilding Gross Margin Homebuilding Gross Margin   Three Months Ended Nine Months Ended   July 31, July 31,   2011 2010 2011 2010   (Unaudited) (Unaudited) Sale of Homes $276,479 $368,077 $759,338 $987,923 Cost of Sales, Excluding Interest (a)  234,129  305,054  640,507  821,776 Homebuilding Gross Margin, Excluding Interest 42,350 63,023 118,831 166,147 Homebuilding Cost of Sales Interest 14,222 20,918 41,671 59,290 Homebuilding Gross Margin, Including Interest $28,128 $42,105 $77,160 $106,857           Gross Margin Percentage, Excluding Interest 15.3% 17.1% 15.6% 16.8% Gross Margin Percentage, Including Interest 10.2% 11.4% 10.2% 10.8%   Land Sales Gross Margin Land Sales Gross Margin   Three Months Ended Nine Months Ended   July 31, July 31,   2011 2010 2011 2010   (Unaudited) (Unaudited) Land Sales $174 $2,786 $8,217 $3,821 Cost of Sales, Excluding Interest (a)  127 1,000  5,642 1,020 Land Sales Gross Margin, Excluding Interest 47  1,786 2,575  2,801 Land Sales Interest  --  1,266  2,133  1,487 Land Sales Gross Margin, Including Interest $47 $520 $442 $1,314                     (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.          Hovnanian Enterprises, Inc.        July 31, 2011         Reconciliation of Adjusted EBITDA to Net (Loss) Income         (Dollars in Thousands)           Three Months Ended Nine Months Ended   July 31, July 31,   2011 2010 2011 2010   (Unaudited) (Unaudited) Net (Loss) Income  $(50,930) $(72,854) $(187,739) $134,701 Income Tax Benefit (4,645) (6,988) (6,081) (297,491) Interest Expense 39,429 44,855 117,883 132,411 EBIT (a) (16,146) (34,987) (75,937) (30,379) Depreciation 2,602 2,632 7,167 9,089 Amortization of Debt Costs 1,080 845 2,937 2,466 EBITDA (b) (12,464) (31,510) (65,833) (18,824) Inventory Impairment Loss and Land Option Write-offs 11,426 48,959 41,876 55,111 Loss (Gain) on Extinguishment of Debt 1,391  (5,256)  3,035  (25,047) Adjusted EBITDA (c) $353 $12,193 $(20,922) $11,240           Interest Incurred $40,051 $38,107 $117,773 $116,449           Adjusted EBITDA to Interest Incurred 0.01 0.32 (0.18) 0.10           (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 loss (gain) on extinguishment of debt.          Hovnanian Enterprises, Inc.        July 31, 2011         Interest Incurred, Expensed and Capitalized         (Dollars in Thousands)           Three Months Ended Nine Months Ended   July 31, July 31,   2011 2010 2011 2010   (Unaudited) (Unaudited) Interest Capitalized at Beginning of Period $135,556 $155,126 $136,288 $164,340 Plus Interest Incurred  40,051  38,107 117,773  116,449 Less Interest Expensed  39,429 44,855 117,883 132,411 Interest Capitalized at End of Period (a) $136,178 $148,378 $136,178 $148,378           (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)         July 31, 2011 October 31, 2010 ASSETS (Unaudited) (1)       Homebuilding:      Cash and cash equivalents $273,443 $359,124        Restricted cash 79,069 108,983        Inventories:      Sold and unsold homes and lots under development 714,984 591,729        Land and land options held for future development or sale 307,427 348,474        Consolidated inventory not owned:      Specific performance options 2,619 21,065  Variable interest entities -- 32,710  Other options -- 7,962        Total consolidated inventory not owned 2,619 61,737        Total inventories 1,025,030 1,001,940        Investments in and advances to unconsolidated joint ventures 62,493 38,000        Receivables, deposits, and notes 48,783 61,023        Property, plant, and equipment – net 55,531 62,767        Prepaid expenses and other assets 84,725 83,928        Total homebuilding 1,629,074 1,715,765       Financial services:      Cash and cash equivalents 8,942 8,056  Restricted cash 4,214 4,022  Mortgage loans held for sale 53,198 86,326  Other assets 2,332 3,391        Total financial services 68,686 101,795       Total assets $1,697,760 $1,817,560       (1) Derived from the audited balance sheet as of October 31, 2010.       HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS   (In Thousands Except Share Amounts)         July 31, 2011 October 31, 2010 LIABILITIES AND EQUITY (Unaudited) (1)       Homebuilding:      Nonrecourse land mortgages $23,583  $4,313   Accounts payable and other liabilities 280,672  319,749   Customers' deposits 15,490  9,520   Nonrecourse mortgages secured by operating properties 19,981  20,657   Liabilities from inventory not owned 2,619  53,249         Total homebuilding 342,345  407,488        Financial services:      Accounts payable and other liabilities 14,076  16,142   Mortgage warehouse line of credit 41,659  73,643         Total financial services 55,735  89,785        Notes payable:      Senior secured notes 786,214  784,592   Senior notes 827,696  711,585   Senior subordinated notes --  120,170   TEU senior subordinated amortizing notes 14,450  --   Accrued interest 34,896  23,968         Total notes payable 1,663,256  1,640,315         Income taxes payable 35,782  17,910        Total liabilities 2,097,118  2,155,498        Equity:     Hovnanian Enterprises, Inc. stockholders' equity deficit:      Preferred stock, $.01 par value - authorized 100,000 shares;      Issued 5,600 shares with a liquidation preference of $140,000      at July 31, 2011 and at October 31, 2010  135,299  135,299   Common stock, Class A, $.01 par value – authorized      200,000,000 shares; issued 91,587,374 shares at July 31, 2011      and 74,809,683 shares at October 31, 2010 (including 11,694,720      shares at July 31, 2011 and October 31, 2010 held in Treasury) 915  748   Common stock, Class B, $.01 par value (convertible      to Class A at time of sale) – authorized 30,000,000 shares;      Issued 15,253,512 shares at July 31, 2011 and 15,256,543      shares at October 31, 2010 (including 691,748 shares at      July 31, 2011 and October 31, 2010 held in Treasury) 153  153   Paid in capital - common stock 590,592  463,908   Accumulated deficit (1,011,158) (823,419)  Treasury stock - at cost (115,257) (115,257)        Total Hovnanian Enterprises, Inc. stockholders' equity deficit (399,456) (338,568)        Noncontrolling interest in consolidated joint ventures 98  630         Total equity deficit (399,358) (337,938)       Total liabilities and equity $1,697,760  $1,817,560        (1) Derived from the audited balance sheet as of October 31, 2010.         HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  (In Thousands Except Per Share Data) (Unaudited)                       Three Months Ended July 31, Nine Months Ended July 31,   2011 2010 2011 2010 Revenues:          Homebuilding:          Sale of homes $276,479  $368,077  $759,338  $987,923   Land sales and other revenues 1,289  3,770  13,695  7,489             Total homebuilding 277,768  371,847 773,033  995,412   Financial services 7,850  8,753  20,249  23,418             Total revenues 285,618  380,600  793,282  1,018,830            Expenses:          Homebuilding:          Cost of sales, excluding interest 234,256  306,054  646,149  822,796   Cost of sales interest 14,222  22,184  43,804  60,777   Inventory impairment loss and land option write-offs 11,426  48,959  41,876  55,111             Total cost of sales 259,904  377,197  731,829  938,684             Selling, general and administrative 34,900  42,184  114,944  127,615             Total homebuilding expenses 294,804  419,381  846,773  1,066,299             Financial services 5,547  6,168  16,194  17,194             Corporate general and administrative 11,648  14,816  38,609  45,232             Other interest 25,207  22,671  74,079  71,634             Other operations 341  1,791  1,933  5,455             Total expenses 337,547  464,827  977,588  1,205,814            (Loss) gain on extinguishment of debt (1,391) 5,256  (3,035) 25,047             Loss from unconsolidated joint ventures (2,255) (871) (6,479) (853)           Loss before income taxes (55,575) (79,842) (193,820) (162,790)           State and federal income tax benefit:          State (4,642) (6,988) (4,349) (6,160)  Federal (3) -- (1,732) (291,331)            Total income taxes (4,645) (6,988) (6,081) (297,491)           Net (loss) income $(50,930) $(72,854) $(187,739) $134,701            Per share data:         Basic:          (Loss) income per common share $(0.47) $(0.92) $(1.92) $1.71   Weighted-average number of common shares outstanding 108,721  78,763  97,648  78,662           Assuming dilution:          (Loss) income per common share $(0.47) $(0.92) $(1.92) $1.69   Weighted-average number of common shares outstanding 108,721  78,763  97,648  79,873               HOVNANIAN ENTERPRISES, INC.             (DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)               (UNAUDITED)        Communities Under Development                Three Months - 7/31/2011          Net Contracts(1)Deliveries     Three Months EndedThree Months EndedContract Backlog    July 31,July 31,July 31,    20112010% Change20112010% Change20112010% ChangeNortheast                    Home 134 105 27.6% 99 221 (55.2)% 284 300 (5.3)%   Dollars $56,427 $43,314 30.3% $43,443 $91,740 (52.6)% $122,290 $128,424 (4.8)%   Avg. Price $421,097 $412,514 2.1% $438,818 $415,113 5.7% $430,599 $428,080 0.6%Mid-Atlantic                    Home 181 137 32.1% 147 194 (24.2)% 308 299 3.0%   Dollars $73,986 $50,845 45.5% $57,104 $72,767 (21.5)% $130,215 $115,716 12.5%   Avg. Price $408,762 $371,131 10.1% $388,463 $375,088 3.6% $422,776 $387,010 9.2%Midwest                    Home 103 90 14.4% 87 110 (20.9)% 231 286 (19.2)%   Dollars $21,273 $16,526 28.7% $17,716 $22,650 (21.8)% $43,455 $48,680 (10.7)%   Avg. Price $206,534 $183,622 12.5% $203,632 $205,909 (1.1)% $188,117 $170,210 10.5%Southeast                    Home 122 64 90.6% 75 121 (38.0)% 154 75 105.3%   Dollars $28,301 $15,264 85.4% $17,894 $28,522 (37.3)% $37,953 $18,554 104.6%   Avg. Price $231,975 $238,500 (2.7)% $238,587 $235,719 1.2% $246,448 $247,387 (0.4)%Southwest                    Home 482 369 30.6% 461 472 (2.3)% 396 290 36.6%   Dollars $113,370 $88,360 28.3% $107,861 $103,065 4.7% $107,686 $76,721 40.4%   Avg. Price $235,207 $239,458 (1.8)% $233,972 $218,358 7.2% $271,934 $264,555 2.8%West                    Home 147 137 7.3% 124 198 (37.4)% 96 125 (23.2)%   Dollars $38,950 $33,313 16.9% $32,461 $49,333 (34.2)% $25,972 $31,374 (17.2)%   Avg. Price $264,966 $243,161 9.0% $261,782 $249,157 5.1% $270,542 $250,992 7.8%Consolidated Total                    Home 1,169 902 29.6% 993 1,316 (24.5)% 1,469 1,375 6.8%   Dollars $332,307 $247,622 34.2% $276,479 $368,077 (24.9)% $467,571 $419,469 11.5%   Avg. Price $284,266 $274,525 3.5% $278,428 $279,694 (0.5)% $318,292 $305,069 4.3%Unconsolidated Joint Ventures                    Home 128 71 80.3% 119 80 48.8% 267 167 59.9%   Dollars $52,265 $35,764 46.1% $57,609 $34,609 66.5% $103,238 $80,968 27.5%   Avg. Price $408,320 $503,718 (18.9)% $484,109 $432,613 11.9% $386,659 $484,838 (20.2)%Total                     Home 1,297 973 33.3% 1,112 1,396 (20.3)% 1,736 1,542 12.6%   Dollars $384,572 $283,386 35.7% $334,088 $402,686 (17.0)% $570,809 $500,437 14.1%   Avg. Price $296,509 $291,250 1.8% $300,439 $288,457 4.2% $328,807 $324,538 1.3%DELIVERIES INCLUDE EXTRAS                     Notes: (1) Net contracts are defined as new contracts signed during the period for the purchase of homes, less calculations of prior contracts.                                                            HOVNANIAN ENTERPRISES, INC.                 (DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)               (UNAUDITED)    Communities Under Development                Nine Months - 7/31/2011          Net Contracts(1)Deliveries     Nine Months EndedNine Months EndedContract Backlog    July 31,July 31,July 31,    20112010% Change20112010% Change20112010% ChangeNortheast                    Home 351 381 (7.9)% 282 538 (47.6)% 284 300 (5.3)%   Dollars $151,255 $150,901 0.2% $122,852 $217,409 (43.5)% $122,290 $128,424 (4.8)%   Avg. Price $430,926 $396,066 8.8% $435,645 $404,106 7.8% $430,599 $428,080 0.6%Mid-Atlantic                    Home 470 465 1.1% 395 552 (28.4)% 308 299 3.0%   Dollars $181,874 $171,498 6.1% $150,011 $206,477 (27.3)% $130,215 $115,716 12.5%   Avg. Price $386,966 $368,813 4.9% $379,775 $374,053 1.5% $422,776 $387,010 9.2%Midwest                    Home 266 324 (17.9)% 257 291 (11.7)% 231 286 (19.2)%   Dollars $54,125 $60,235 (10.1)% $49,216 $62,083 (20.7)% $43,455 $48,680 (10.7)%   Avg. Price $203,477 $185,914 9.4% $191,502 $213,344 (10.2)% $188,117 $170,210 10.5%Southeast                    Home 288 248 16.1% 216 308 (29.9)% 154 75 105.3%   Dollars $67,286 $57,835 16.3% $50,082 $75,240 (33.4)% $37,953 $18,554 104.6%   Avg. Price $233,632 $233,202 0.2% $231,861 $244,286 (5.1)% $246,448 $247,387 (0.4)%Southwest                    Home 1,283 1,255 2.2% 1,224 1,316 (7.0)% 396 290 36.6%   Dollars $303,166 $282,183 7.4% $292,427 $288,617 1.3% $107,686 $76,721 40.4%   Avg. Price $236,295 $224,847 5.1% $238,911 $219,314 8.9% $271,934 $264,555 2.8%West                    Home 349 455 (23.3)% 363 520 (30.2)% 96 125 (23.2)%   Dollars $93,655 $113,210 (17.3)% $94,750 $138,097 (31.4)% $25,972 $31,374 (17.2)%   Avg. Price $268,352 $248,815 7.9% $261,019 $265,571 (1.7)% $270,542 $250,992 7.8%Consolidated Total                    Home 3,007 3,128 (3.9)% 2,737 3,525 (22.4)% 1,469 1,375 6.8%   Dollars $851,361 $835,862 1.9% $759,338 $987,923 (23.1)% $467,571 $419,469 11.5%   Avg. Price $283,126 $267,219 6.0% $277,434 $280,262 (1.0)% $318,292 $305,069 4.3%Unconsolidated Joint Ventures                       Home 306 205 49.3% 234 197 18.8% 267 167 59.9%   Dollars $129,382 $92,489 39.9% $109,434 $88,615 23.5% $103,238 $80,968 27.5%   Avg. Price $422,817 $451,166 (6.3)% $467,667 $449,822 4.0% $386,659 $484,838 (20.2)%Total                                           Home 3,313 3,333 (0.6)% 2,971 3,722 (20.2)% 1,736 1,542 12.6%   Dollars $980,743 $928,351 5.6% $868,772 $1,076,538 (19.3)% $570,809 $500,437 14.1%   Avg. Price $296,029 $278,533 6.3% $292,417 $289,236 1.1% $328,807 $324,538 1.3%                      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.                                          CONTACT: J. Larry Sorsby Executive Vice President & CFO 732-747-7800 Jeffrey T. O'Keefe Vice President, Investor Relations 732-747-7800