EX-12 2 ex12.htm EXHIBIT 12
Hovnanian Enterprises, Inc.
Form 10-K
Exhibit 12
RATIO OF EARNINGS TO FIXED CHARGES

|  | Fiscal Year Ended |
(Dollars In thousands) |  | October 31, 2011 |  |  | October 31, 2010 |  |  | October 31, 2009 |  |  | October 31, 2008 |  |  | October 31, 2007 |
Net income (loss) |  | $ | (286,087 | ) |  | $ | 2,588 |  |  | $ | (716,712 | ) |  | $ | (1,124,590 | ) |  | $ | (627,119 | )
Add: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal and state (benefit) income tax provision |  |  | (5,501 | ) |  |  | (297,870 | ) |  |  | 44,693 |  |  |  | (43,458 | ) |  |  | (19,847 | )
Interest expensed |  |  | 171,845 |  |  |  | 182,359 |  |  |  | 200,469 |  |  |  | 176,336 |  |  |  | 141,754 |
Interest expensed mortgage and financing subsidiaries |  |  | 1,889 |  |  |  | 1,848 |  |  |  | 1,728 |  |  |  | 3,601 |  |  |  | 6,009 |
Distributions of earnings of unconsolidated joint ventures, net of income (loss) from unconsolidated joint ventures |  |  | 10,541 |  |  |  | 1,295 |  |  |  | 50,134 |  |  |  | 44,061 |  |  |  | 32,221 |
Amortization of bond prepaid expenses |  |  | 3,978 |  |  |  | 3,310 |  |  |  | 14,300 |  |  |  | 7,847 |  |  |  | 2,151 |
Amortization of bond discounts |  |  | 2,069 |  |  |  | 1,741 |  |  |  | 1,179 |  |  |  | 821 |  |  |  | 1,084 |
Total (loss) earnings |  | $ | (101,266 | ) |  | $ | (104,729 | ) |  | $ | (404,209 | ) |  | $ | (935,382 | ) |  | $ | (463,747 | )
Fixed Charges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest incurred |  | $ | 156,998 |  |  | $ | 154,307 |  |  | $ | 194,702 |  |  | $ | 190,801 |  |  | $ | 194,547 |
Interest incurred mortgage and financing subsidiaries |  |  | 1,959 |  |  |  | 1,848 |  |  |  | 1,728 |  |  |  | 3,601 |  |  |  | 6,009 |
Amortization of bond prepaid expenses |  |  | 3,978 |  |  |  | 3,310 |  |  |  | 14,300 |  |  |  | 7,847 |  |  |  | 2,151 |
Amortization of bond discounts |  |  | 2,069 |  |  |  | 1,741 |  |  |  | 1,179 |  |  |  | 821 |  |  |  | 1,084 |
Interest included in rent expense (a) |  |  | 6,612 |  |  |  | 7,914 |  |  |  | 12,206 |  |  |  | 15,036 |  |  |  | 17,014 |
Total fixed charges |  | $ | 171,616 |  |  | $ | 169,120 |  |  | $ | 224,115 |  |  | $ | 218,106 |  |  | $ | 220,805 |
Ratio of earnings to fixed charges |  | (b) |  |  | (b) |  |  | (b) |  |  | (b) |  |  | (b) |

RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS

|  | Fiscal Year Ended |
(Dollars In thousands) |  | October 31, 2011 |  |  | October 31, 2 010 |  |  | October 31, 2009 |  |  | October 31, 2008 |  |  | October 31, 2007 |
Total (loss) earnings – above |  | $ | (101,266 | ) |  | $ | (104,729 | ) |  | $ | (404,209 | ) |  | $ | (935,382 | ) |  | $ | (463,747 | )
Total fixed charges – above |  | $ | 171,616 |  |  | $ | 169,120 |  |  | $ | 224,115 |  |  | $ | 218,106 |  |  | $ | 220,805 |
Preferred stock dividends (adjusted to pretax dollars) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 11,012 |
Combined fixed charges and preferred stock dividends |  | $ | 171,616 |  |  | $ | 169,120 |  |  | $ | 224,115 |  |  | $ | 218,106 |  |  | $ | 231,817 |
Ratio of earnings to combined fixed charges and preferred stock dividends |  | (c) |  |  | (c) |  |  | (c) |  |  | (c) |  |  | (c) |

(a) | Management has determined the interest component of rent expense to be 33%.

(b) | Earnings for the year ended October 31, 2011, 2010, 2009, 2008 and 2007 were insufficient to cover fixed charges for such period by $272.9 million, $273.8 million, $628.3 million, $1,153.5 million and $684.6 million, respectively.

(c) | Earnings for the year ended October 31, 2011, 2010, 2009, 2008 and 2007 were insufficient to cover fixed charges and preferred stock dividends for such period by $272.9 million, $273.8 million, $628.3 million, $1,153.5 million and $695.6 million, respectively. Due to restrictions in our indentures on our senior, senior secured, and senior subordinated notes, we are currently prohibited from paying dividends on our preferred stock and did not make any dividend payments in fiscal 2011, 2010, 2009 and 2008. In fiscal 2007, we paid $10.7 million of dividends on our preferred stock.