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Press release from GlobeNewswire (a Nasdaq OMX company)

Hovnanian Enterprises Reports Fiscal 2011 Results

Thursday, December 15, 2011

Hovnanian Enterprises Reports Fiscal 2011 Results06:00 EST Thursday, December 15, 2011RED BANK, N.J., Dec. 15, 2011 (GLOBE NEWSWIRE) -- Hovnanian Enterprises, Inc. (NYSE:HOV), a leading national homebuilder, reported results for its fourth quarter and year ended October 31, 2011.RESULTS FOR THE THREE AND TWELVE MONTH PERIODS ENDED OCTOBER 31, 2011: Total revenues were $341.6 million during the fourth quarter of 2011 compared with $353.0 million in the same period of the prior year and $285.6 million for the third quarter of fiscal 2011. For the twelve months ended October 31, 2011, total revenues were $1.1 billion compared with $1.4 billion a year ago.   Homebuilding gross margin percentage, before interest expense included in cost of sales, was 15.5% during the fiscal 2011 fourth quarter, compared to 16.9% in last year's fourth quarter and 15.3% for the third quarter of fiscal 2011. For the year ended October 31, 2011, homebuilding gross margin percentage, before interest expense included in cost of sales, was 15.6% compared with 16.8% in the prior year.   Total SG&A, which includes homebuilding selling, general and administrative and corporate general and administrative expenses, was $57.8 million in the fourth quarter compared to $65.4 million in the same period a year ago and $46.5 million for the third quarter of fiscal 2011. The majority of the sequential increase of $11.3 million was from unusually large charges for abandoned leased space, legal reserves and construction defect reserves based on our annual actuarial study.   Consolidated pre-tax land-related charges for the fiscal 2011 fourth quarter were $63.2 million, compared with $80.6 million during the fourth quarter of 2010. For all of fiscal 2011, consolidated pre-tax land-related charges were $105.0 million compared with $135.7 million in fiscal 2010.   During the fourth quarter, $25.6 million of unsecured senior notes were repurchased for $15.1 million in cash, including $1.1 million for accrued interest, an average price of 55%, resulting in a $10.6 million gain on extinguishment of debt.   Excluding land-related charges and gain on extinguishment of debt, the pre-tax loss in the three months ended October 31, 2011 was $45.2 million compared with $51.9 million in the fourth quarter of the prior year. During the entire 2011 fiscal year, the pre-tax loss, excluding land-related charges and gain on extinguishment of debt, was $194.1 million compared with $184.6 million in fiscal 2010.   For the fourth quarter of fiscal 2011, the after-tax net loss was $98.3 million, or $0.90 per common share, compared with $132.1 million, or $1.68 per common share, in the fourth quarter of the prior year. For the year ended October 31, 2011, the after-tax net loss was $286.1 million, or $2.85 per common share, compared with net income of $2.6 million, or $0.03 per fully diluted common share last year, which as a result of tax legislation changes included a federal income tax benefit of $291.3 million.   For the fourth quarter of 2011, Adjusted EBITDA (adjusted for land-related charges and gains from extinguishment of debt) was $8.7 million compared to $2.4 million for last year's fourth quarter and $0.4 million in the third quarter of fiscal 2011.   Net contracts during the fourth quarter of 2011, including unconsolidated joint ventures, increased 3% to 1,175 homes compared with the same period of the prior year. For the year ended October 31, 2011, net contracts, including unconsolidated joint ventures, were 4,488 homes compared with 4,472 homes a year ago.   Net contracts for the month of November 2011 were 325, an increase of 31% over the same month last year.   Contract backlog, as of October 31, 2011, including unconsolidated joint ventures, was 1,663 homes with a sales value of $552.4 million, which was an increase of 19% and 26%, respectively, compared to October 31, 2010.   The contract cancellation rate, excluding unconsolidated joint ventures, during the fiscal 2011 fourth quarter was 21%, compared with 24% in last year's fourth quarter.   At October 31, 2011, there were 214 active selling communities, including unconsolidated joint ventures, compared with 204 active selling communities at October 31, 2010 and 202 active selling communities at July 31, 2011.   Deliveries, including unconsolidated joint ventures, were 1,245 homes in the fiscal 2011 fourth quarter, compared with 1,287 homes in the prior year's fourth quarter and 1,112 homes for the third quarter of fiscal 2011. For all of fiscal 2011, deliveries, including unconsolidated joint ventures, were 4,216 homes compared to 5,009 homes during fiscal 2010.   The valuation allowance was $899.4 million as of October 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 OCTOBER 31, 2011: As of October 31, 2011, homebuilding cash was $302.1 million, including $57.7 million of restricted cash required to collateralize letters of credit, after spending approximately $95 million in the fourth quarter on land and land development and $15.1 million to repurchase debt, compared to $334.2 million, including $60.8 million of restricted cash required to collateralize letters of credit at July 31, 2011.   After spending approximately $95 million of cash to purchase approximately 550 lots and to develop land across the Company, cash flow in the fourth quarter of fiscal 2011 was negative $7.9 million. Cash flow in the third quarter of fiscal 2011 was negative $76.2 million, after spending approximately $105 million of cash to purchase approximately 1,200 lots and to develop land across the Company. Excluding land and land development spending, cash flow would have been approximately $87.1 million positive in the fourth quarter of 2011.   As of October 31, 2011, the land position, including unconsolidated joint ventures, was 30,921 lots, consisting of 9,913 lots under option and 21,008 owned lots.COMMENTS FROM MANAGEMENT: "We were pleased that our fourth quarter deliveries and homebuilding revenues were in line with our expectations. Our fourth quarter gross margin increased slightly from the third quarter, but the increase was not as much as we expected, due primarily to the need to offer additional incentives and lower base prices. This is reflective of a persistently challenging housing market," commented Ara K. Hovnanian, Chairman of the Board, President and Chief Executive Officer. "However, our cash flow in the fourth quarter of 2011, both before and after land spend, was materially better than any of the periods since we began reporting this information five quarters ago." "Following our year end, we announced the successful results of our debt exchange offer. We exchanged $195 million of unsecured debt together with cash payments of approximately $17.5 million, including $3.3 million for accrued interest, for new secured debt that has a lower coupon and extends the maturity to 2021, from the original maturity dates between 2014 and 2017. Our liquidity continues to govern our land investment decisions, as we manage our business to a cash target of $245 million to $170 million, which includes cash used to collateralize letters of credit," concluded Mr. Hovnanian.WEBCAST INFORMATION: Hovnanian Enterprises will webcast its fiscal 2011 fourth quarter financial results conference call at 11:00 a.m. E.T. on Thursday, December 15, 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, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia, Washington, D.C. 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. 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. The Hovnanian Enterprises, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7499NON-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 fourth quarter of 2011, cash flow was negative $7.9 million, which was derived from $28.2 million from net cash used in operating activities plus the change in mortgage notes receivable of $19.0 million plus $1.3 million of net cash provided by 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 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 to Loss Before Income Taxes Excluding Land-Related Charges and 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, warranty claims and claims by mortgage investors, (18) successful identification and integration of acquisitions, (19) significant influence of the Company's controlling stockholders, (20) changes in tax laws affecting the after-tax costs of owning a home, (21) geopolitical risks, terrorist acts and other acts of war, and (22) 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 or 10-Q/A for the quarters ended January 31, 2011, April 30, 2011 and July 31, 2011. 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.October 31, 2011 Statements of Consolidated Operations (Dollars in Thousands, Except Per Share Data)   Three Months Ended October 31, Twelve Months Ended October 31,   2011 2010 2011 2010   (Unaudited) (Unaudited) Total Revenues $341,625 $353,012 $1,134,907 $1,371,842 Costs and Expenses (a) 447,477 487,313  1,425,065  1,693,127 Gain on Extinguishment of Debt  10,563 --  7,528  25,047 (Loss) Gain from Unconsolidated Joint Ventures (2,479) 1,809 (8,958) 956 Loss Before Income Taxes (97,768) (132,492) (291,588) (295,282) Income Tax Provision (Benefit) 580 (379) (5,501) (297,870) Net (Loss) Income  $(98,348)  $(132,113)  $(286,087) $2,588           Per Share Data:         Basic:         (Loss) Income Per Common Share   $(0.90)  $(1.68)  $(2.85) $0.03 Weighted Average Number of Common Shares Outstanding (b) 108,740 78,779  100,444 78,691 Assuming Dilution:         (Loss) Income Per Common Share   $(0.90)  $(1.68)  $(2.85) $0.03 Weighted Average Number of Common Shares Outstanding (b) 108,740 78,779  100,444  79,683           (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.October 31, 2011 Reconciliation of Loss Before Income Taxes Excluding Land-Related Charges and Gain on Extinguishment of Debt to Loss Before Income Taxes (Dollars in Thousands)   Three Months Ended October 31, Twelve Months Ended October 31,   2011 2010 2011 2010   (Unaudited) (Unaudited) Loss Before Income Taxes  $(97,768)  $(132,492)  $(291,588)  $(295,282) Inventory Impairment Loss and Land Option Write-Offs 59,873 80,588 101,749  135,699 Unconsolidated Joint Venture Investment and Land-Related Charges  3,289 --  3,289  --  Gain on Extinguishment of Debt (10,563) --  (7,528) (25,047) Loss Before Income Taxes Excluding Land-Related Charges and Gain on Extinguishment of Debt (a)  $(45,169)  $(51,904)  $(194,078)  $(184,630)           (a) Loss Before Income Taxes Excluding Land-Related Charges 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.October 31, 2011 Gross Margin (Dollars in Thousands)   Homebuilding Gross Margin Three Months Ended October 31, Homebuilding Gross Margin Twelve Months Ended October 31,   2011 2010 2011 2010   (Unaudited) (Unaudited) Sale of Homes $313,136 $339,576 $1,072,474 $1,327,499 Cost of Sales, Excluding Interest (a) 264,747 282,096  905,253  1,103,872 Homebuilding Gross Margin, Excluding Interest 48,389 57,480 167,221 223,627 Homebuilding Cost of Sales Interest 15,345 19,805  57,016 79,095 Homebuilding Gross Margin, Including Interest $33,044 $37,675 $110,205 $144,532           Gross Margin Percentage, Excluding Interest 15.5% 16.9% 15.6% 16.8% Gross Margin Percentage, Including Interest 10.6% 11.1% 10.3% 10.9%             Land Sales Gross Margin Three Months Ended October 31, Land Sales Gross Margin Twelve Months Ended October 31,   2011 2010 2011 2010   (Unaudited) (Unaudited) Land Sales $18,529 $2,999 $26,745 $6,820 Cost of Sales, Excluding Interest (a) 3,005 (843)  8,648 177 Land Sales Gross Margin, Excluding Interest 15,524 3,842 18,097 6,643 Land Sales Interest 15,527 3,858  17,660 5,345 Land Sales Gross Margin, Including Interest  $(3)  $(16) $437 $1,298           (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. October 31, 2011 Reconciliation of Adjusted EBITDA to Net (Loss) Income  (Dollars in Thousands)    Three Months Ended July 31, Three Months Ended October 31, Twelve Months Ended October 31,   2011 2011 2010 2011 2010   (Unaudited) (Unaudited) (Unaudited)  Net (Loss) Income   $(50,930)  $(98,348)  $(132,113)  $(286,087) $2,588  Income Tax Provision (Benefit)  (4,645) 580 (379) (5,501) (297,870)  Interest Expense  39,429 53,962 49,948 171,845 182,359  EBIT (a) (16,146) (43,806) (82,544) (119,743) (112,923)  Depreciation  2,602 2,174 3,487 9,340 12,576  Amortization of Debt Costs  1,080 1,041 844 3,978 3,310  EBITDA (b) (12,464) (40,591) (78,213) (106,425) (97,037)  Inventory Impairment Loss and Land Option Write-offs  11,426 59,873 80,588 101,749 135,699  Loss (Gain) on Extinguishment of Debt  1,391 (10,563)  --  (7,528) (25,047)  Adjusted EBITDA (c) $353 $8,719 $2,375 $(12,204) $13,615              Interest Incurred  $40,051 $39,225 $37,858 $156,998 $154,307              Adjusted EBITDA to Interest Incurred  0.01 0.22 0.06 (0.08) 0.09             (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.October 31, 2011 Interest Incurred, Expensed and Capitalized (Dollars in Thousands)     Three Months Ended October 31, Twelve Months Ended October 31,     2011 2010 2011 2010     (Unaudited) (Unaudited) Interest Capitalized at Beginning of Period   $136,178 $148,378 $136,288 $164,340 Plus Interest Incurred   39,225 37,858 156,998 154,307 Less Interest Expensed   53,962 49,948 171,845 182,359 Interest Capitalized at End of Period (a)   $121,441 $136,288 $121,441 $136,288             (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 SUBSIDIARIESCONSOLIDATED BALANCE SHEETS  (In thousands)  October 31, 2011 October 31, 2010 ASSETS (Unaudited) (1) Homebuilding:     Cash and cash equivalents $244,356 $359,124 Restricted cash 73,539 108,983 Inventories:     Sold and unsold homes and lots under development 720,149 591,729 Land and land options held for future development or sale 245,529 348,474 Consolidated inventory not owned:     Specific performance options 2,434 21,065 Variable interest entities -- 32,710 Other options -- 7,962 Total consolidated inventory not owned 2,434 61,737 Total inventories 968,112 1,001,940 Investments in and advances to unconsolidated joint ventures 57,826 38,000 Receivables, deposits, and notes 52,277 61,023 Property, plant, and equipment - net 53,266 62,767 Prepaid expenses and other assets 67,698 83,928 Total homebuilding 1,517,074 1,715,765 Financial services:     Cash and cash equivalents 6,384 8,056 Restricted cash 4,079 4,022 Mortgage loans held for sale 72,172 86,326 Other assets 2,471 3,391 Total financial services 85,106 101,795 Total assets $1,602,180 $1,817,560       (1) Derived from the audited balance sheet as of October 31, 2010.  HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS (In thousands, except share amounts) October 31, 2011October 31, 2010 LIABILITIES AND EQUITY (Unaudited) (1) Homebuilding:     Nonrecourse land mortgages $26,121 $4,313 Accounts payable and other liabilities 303,633 319,749 Customers' deposits 16,670 9,520 Nonrecourse mortgages secured by operating properties 19,748 20,657 Liabilities from inventory not owned 2,434 53,249 Total homebuilding 368,606 407,488 Financial services:     Accounts payable and other liabilities 14,517 16,142 Mortgage warehouse line of credit 49,729 73,643 Total financial services 64,246 89,785 Notes payable:     Senior secured notes 786,585 784,592 Senior notes 802,862 711,585 Senior subordinated notes --  120,170 TEU senior subordinated amortizing notes 13,323 --  Accrued interest 21,331 23,968 Total notes payable 1,624,101 1,640,315 Income taxes payable 41,829 17,910 Total liabilities 2,098,782 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 October 31, 2011 and 2010 135,299 135,299 Common stock, Class A, $.01 par value - authorized 200,000,000 shares; issued 92,141,492 shares at October 31, 2011 and, 74,809,683 shares at October 31, 2010 (including 11,694,720 shares at October 31, 2011 and 2010 held in Treasury) 921 748 Common stock, Class B, $.01 par value (convertible to Class A at time of sale) - authorized 30,000,000 shares; issued 15,252,212 shares at October 31, 2011 and 15,256,543 shares at October 31, 2010 (including 691,748 shares at October 31, 2011 and 2010 held in Treasury) 153 153 Paid in capital - common stock 591,696 463,908 Accumulated deficit (1,109,506) (823,419) Treasury stock - at cost (115,257) (115,257) Total Hovnanian Enterprises, Inc. stockholders' equity deficit (496,694) (338,568) Noncontrolling interest in consolidated joint ventures 92 630 Total equity deficit (496,602) (337,938) Total liabilities and equity $1,602,180 $1,817,560       (1) Derived from the audited balance sheet as of October 31, 2010.  HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS       Three Months EndedYear Ended(Dollars in thousands except per share data) October 31, 2011 October 31, 2010 October 31, 2011 October 31, 2010   (Unaudited) (Unaudited) (1) Revenues:         Homebuilding:         Sale of homes $313,136 $339,576 $1,072,474 $1,327,499 Land sales and other revenues 19,257 4,881 32,952 12,370 Total homebuilding 332,393 344,457 1,105,426 1,339,869 Financial services 9,232 8,555 29,481 31,973 Total revenues 341,625 353,012 1,134,907 1,371,842 Expenses:         Homebuilding:         Cost of sales, excluding interest 267,752 281,253 913,901 1,104,049 Cost of sales interest 30,872 23,663 74,676 84,440 Inventory impairment loss and land option write-offs 59,873 80,588 101,749 135,699 Total cost of sales 358,497 385,504 1,090,326 1,324,188 Selling, general and administrative 46,512 50,716 161,456 178,331 Total homebuilding expenses 405,009 436,220 1,251,782 1,502,519 Financial services 5,177 5,880 21,371 23,074 Corporate general and administrative 11,329 14,668 49,938 59,900 Other interest 23,090 26,285 97,169 97,919 Other operations 2,872 4,260 4,805 9,715 Total expenses 447,477 487,313 1,425,065 1,693,127 Gain on extinguishment of debt 10,563 --  7,528 25,047 (Loss) income from unconsolidated joint ventures (2,479) 1,809 (8,958) 956 Loss before income taxes (97,768) (132,492) (291,588) (295,282) State and federal income tax provision (benefit):         State 425 (376) (3,924) (6,536) Federal 155 (3) (1,577) (291,334) Total income taxes 580 (379) (5,501) (297,870) Net (loss) income $(98,348) $(132,113) $(286,087) $2,588 Per share data:         Basic:         (Loss) income per common share $(0.90) $(1.68) $(2.85) $0.03 Weighted average number of common shares outstanding 108,740 78,779 100,444 78,691 Assuming dilution:         (Loss) income per common share $(0.90) $(1.68) $(2.85) $0.03 Weighted average number of common shares outstanding 108,740 78,779 100,444 79,683           (1) Derived from the audited statements of operation for the year ended October 31, 2010.  HOVNANIAN ENTERPRISES, INC. (DOLLARS IN THOUSANDS EXCEPT AVG. PRICE) (UNAUDITED)        Communities Under Development           Three Months - 10/31/2011         Net Contracts(1) Three Months Ended October 31,Deliveries Three Months Ended October 31,  Contract Backlog October 31,      20112010% Change20112010% Change20112010% ChangeNortheast               Home 98 116 (15.5)% 117 180 (35.0)% 265 236 12.3%   Dollars $40,014 $42,925 (6.8)% $57,014 $79,040 (27.9)% $108,645 $94,363 15.1%   Avg. Price $408,306 $370,043 10.3% $487,299 $439,111 11.0% $409,981 $399,843 2.5%Mid-Atlantic                  Home 146 164 (11.0)% 129 201 (35.8)% 325 262 24.0%   Dollars $56,269 $64,597 (12.9)% $49,050 $73,654 (33.4)% $137,303 $106,589 28.8%   Avg. Price $385,404 $393,884 (2.2)% $380,233 $366,438 3.8% $422,471 $406,828 3.8%Midwest                  Home 98 84 16.7% 103 148 (30.4)% 226 222 1.8%   Dollars $20,863 $12,111 72.3% $21,249 $29,177 (27.2)% $44,870 $34,188 31.2%   Avg. Price $212,888 $144,179 47.7% $206,301 $197,142 4.6% $198,540 $154,000 28.9%Southeast                  Home 93 83 12.0% 123 76 61.8% 124 82 51.2%   Dollars $20,775 $18,965 9.5% $29,064 $17,472 66.3% $30,080 $20,212 48.8%   Avg. Price $223,387 $228,494 (2.2)% $236,293 $229,895 2.8% $242,581 $246,488 (1.6)%Southwest                  Home 437 498 (12.2)% 502 451 11.3% 331 337 (1.8)%   Dollars $101,549 $111,760 (9.1)% $126,204 $103,190 22.3% $86,388 $88,123 (2.0)%   Avg. Price $232,378 $224,418 3.5% $251,402 $228,803 9.9% $260,991 $261,493 (0.2)%West                  Home 144 133 8.3% 121 148 (18.2)% 116 110 5.5%   Dollars $38,953 $31,571 23.4% $30,555 $37,043 (17.5)% $32,914 $27,304 20.5%   Avg. Price $270,507 $237,376 14.0% $252,521 $250,291 0.9% $283,741 $248,218 14.3%Consolidated Total                     Home 1,016 1,078 (5.8)% 1,095 1,204 (9.1)% 1,387 1,249 11.0%   Dollars $278,423 $281,929 (1.2)% $313,136 $339,576 (7.8)% $440,200 $370,779 18.7%   Avg. Price $274,038 $261,530 4.8% $285,969 $282,040 1.4% $317,375 $296,861 6.9%Unconsolidated Joint Ventures                     Home 159 61 160.7% 150 83 80.7% 276 145 90.3%   Dollars $72,435 $22,252 225.5% $62,909 $35,534 77.0% $112,154 $67,112 67.1%   Avg. Price $455,566 $364,787 24.9% $419,393 $428,120 (2.0)% $406,355 $462,841 (12.2)%Total                       Home 1,175 1,139 3.2% 1,245 1,287 (3.3)% 1,663 1,394 19.3%   Dollars $350,858 $304,181 15.3% $376,045 $375,110 0.2% $552,354 $437,891 26.1%   Avg. Price $298,603 $267,060 11.8% $302,044 $291,461 3.6% $332,143 $314,126 5.7%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         Twelve Months - 10/31/2011     Net Contracts(1) Twelve Months Ended October 31,Deliveries Twelve Months Ended October 31, Contract Backlog October 31,   20112010% Change20112010% Change20112010% ChangeNortheast              Home  449 497 (9.7)% 399 718 (44.4)% 265 236 12.3%   Dollars $191,270 $193,826 (1.3)% $179,866 $296,449 (39.3)% $108,645 $94,363 15.1%   Avg. Price $425,991 $389,992 9.2% $450,792 $412,882 9.2% $409,981 $399,843 2.5%Mid-Atlantic                 Home 616 629 (2.1)% 524 753 (30.4)% 325 262 24.0%   Dollars $238,143 $236,095 0.9% $199,061 $280,132 (28.9)% $137,303 $106,589 28.8%   Avg. Price $386,596 $375,350 3.0% $379,887 $372,021 2.1% $422,471 $406,828 3.8%Midwest                 Home 364 408 (10.8)% 360 439 (18.0)% 226 222 1.8%   Dollars $74,988 $72,347 3.7% $70,465 $91,260 (22.8)% $44,870 $34,188 31.2%   Avg. Price $206,011 $177,321 16.2% $195,736 $207,882 (5.8)% $198,540 $154,000 28.9%Southeast                 Home 381 331 15.1% 339 384 (11.7)% 124 82 51.2%   Dollars $88,061 $76,799 14.7% $79,146 $92,712 (14.6)% $30,080 $20,212 48.8%   Avg. Price $231,131 $232,021 (0.4)% $233,469 $241,438 (3.3)% $242,581 $246,488 (1.6)%Southwest                 Home 1,720 1,753 (1.9)% 1,726 1,767 (2.3)% 331 337 (1.8)%   Dollars $404,715 $393,943 2.7% $418,631 $391,807 6.8% $86,388 $88,123 (2.0)%   Avg. Price $235,299 $224,725 4.7% $242,544 $221,736 9.4% $260,991 $261,493 (0.2)%West                 Home 493 588 (16.2)% 484 668 (27.5)% 116 110 5.5%   Dollars $132,608 $144,782 (8.4)% $125,305 $175,139 (28.5)% $32,914 $27,304 20.5%   Avg. Price $268,982 $246,228 9.2% $258,895 $262,184 (1.3)% $283,741 $248,218 14.3%Consolidated Total                    Home 4,023 4,206 (4.4)% 3,832 4,729 (19.0)% 1,387 1,249 11.0%   Dollars $1,129,785 $1,117,792 1.1% $1,072,474 $1,327,499 (19.2)% $440,200 $370,780 18.7%   Avg. Price $280,831 $265,761 5.7% $279,873 $280,715 (0.3)% $317,375 $296,861 6.9%Unconsolidated Joint Ventures                    Home 465 266 74.8% 384 280 37.1% 276 145 90.3%   Dollars $201,817 $114,740 75.9% $172,343 $124,149 38.8% $112,154 $67,112 67.1%   Avg. Price $434,015 $431,353 0.6% $448,810 $443,389 1.2% $406,355 $462,841 (12.2)%Total                       Home 4,488 4,472 0.4% 4,216 5,009 (15.8)% 1,663 1,394 19.3%   Dollars $1,331,602 $1,232,532 8.0% $1,244,817 $1,451,648 (14.2)% $552,354 $437,892 26.1%   Avg. Price $296,703 $275,611 7.7% $295,260 $289,808 1.9% $332,143 $314,126 5.7%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