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Note 21

9 Months Ended

Jul. 31, 2011

Condensed Financial Statements Disclosure [Text Block]

21.  One of Hovnanian Enterprises, Inc.'s (the "Parent"), wholly owned subsidiaries, K. Hovnanian (the “Subsidiary Issuer”), acts as a finance entity that as of July 31, 2011, had issued and outstanding $797.0 million of senior secured notes ($786.2 million, net of discount), $832.7 million of senior notes ($827.7 million, net of discount), and $14.5 million of senior subordinated Tangible Equity Units.  The senior secured notes, senior notes and senior subordinated notes are fully and unconditionally guaranteed by the Parent.

In addition to the Parent, each of the wholly owned subsidiaries of the Parent other than the Subsidiary Issuer (collectively, the “Guarantor Subsidiaries”), with the exception of certain of its home mortgage subsidiaries,  joint ventures, subsidiaries holding interests in its joint ventures, certain of its title insurance subsidiaries and its foreign subsidiary (collectively, the “Nonguarantor Subsidiaries”), have guaranteed fully and unconditionally, on a joint and several basis, the obligations of the Subsidiary Issuer to pay principal, interest and premiums, if any, under the senior secured notes, senior notes, and senior subordinated notes.

In lieu of providing separate financial statements for the Guarantor Subsidiaries, we have included the accompanying condensed consolidating financial statements.  Management does not believe that separate financial statements of the Guarantor Subsidiaries are material to users of our consolidated financial statements.  Therefore, separate financial statements and other disclosures concerning the Guarantor Subsidiaries are not presented.

The following condensed consolidating financial statements present the results of operations, financial position and cash flows of (i) the Parent, (ii) the Subsidiary Issuer, (iii) the Guarantor Subsidiaries, (iv) the Nonguarantor Subsidiaries and (v) the eliminations to arrive at the information for Hovnanian Enterprises, Inc. on a consolidated basis.

HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING BALANCE SHEET

JULY 31, 2011

(In Thousands)

		Parent				Subsidiary Issuer				Guarantor Subsidiaries				Nonguarantor Subsidiaries				Eliminations				Consolidated
ASSETS:
Homebuilding		$	15,549			$	241,492			$	1,168,560			$	203,473			$				$	1,629,074
Financial services											4,577				64,109								68,686
Investments in and amounts due to and from consolidated subsidiaries			(377,353	)			2,144,102				(2,435,297	)			(2,380	)			670,928				-
Total assets		$	(361,804	)		$	2,385,594			$	(1,262,160	)		$	265,202			$	670,928			$	1,697,760
LIABILITIES AND EQUITY:
Homebuilding		$	980			$	282			$	328,852			$	12,231			$				$	342,345
Financial services											4,390				51,345								55,735
Notes payable							1,663,155				101												1,663,256
Income taxes payable			36,672								(890	)											35,782
Stockholders’ (deficit) equity			(399,456	)			722,157				(1,594,613	)			201,528				670,928				(399,456	)
Non-controlling interest in consolidated joint ventures															98								98
Total liabilities and equity		$	(361,804	)		$	2,385,594			$	(1,262,160	)		$	265,202			$	670,928			$	1,697,760

CONDENSED CONSOLIDATING BALANCE SHEET

OCTOBER 31, 2010

(In Thousands)

		Parent				Subsidiary Issuer				Guarantor Subsidiaries				Nonguarantor Subsidiaries				Eliminations				Consolidated
ASSETS:
Homebuilding		$	14,498			$	334,551			$	1,165,877			$	200,839			$				$	1,715,765
Financial services											4,435				97,360								101,795
Investments in and amounts due to and from consolidated subsidiaries			(330,310	)			2,061,186				(2,202,568	)			2,009				469,683				-
Total assets		$	(315,812	)		$	2,395,737			$	(1,032,256	)		$	300,208			$	469,683			$	1,817,560
LIABILITIES AND EQUITY:
Homebuilding		$	1,458			$				$	401,567			$	4,463			$				$	407,488
Financial services											4,271				85,514								89,785
Notes payable							1,640,144				171												1,640,315
Income taxes payable			21,298								(3,388	)											17,910
Stockholders’ (deficit) equity			(338,568	)			755,593				(1,434,877	)			209,601				469,683				(338,568	)
Non-controlling interest in consolidated joint ventures															630								630
Total liabilities and equity		$	(315,812	)		$	2,395,737			$	(1,032,256	)		$	300,208			$	469,683			$	1,817,560

HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

THREE MONTHS JULY 31, 2011

(In Thousands)

						Subsidiary				Guarantor				Nonguarantor
		Parent				Issuer				Subsidiaries				Subsidiaries				Eliminations				Consolidated
Revenues:
Homebuilding		$	17			$	(25	)		$	277,591			$	1,425			$	(1,240	)		$	277,768
Financial services											1,409				6,441								7,850
Intercompany charges							28,679				(31,769	)			(71	)			3,161				-
Total revenues			17				28,654				247,231				7,795				1,921				285,618
Expenses:
Homebuilding			1,159				40,672				291,688				(525	)			(994	)			332,000
Financial services			76								1,241				4,230								5,547
Total expenses			1,235				40,672				292,929				3,705				(994	)			337,547
Loss on extinguishment of debt							(1,391	)															(1,391	)
Loss from unconsolidated joint ventures											(100	)			(2,155	)							(2,255	)
Income (loss) before income taxes			(1,218	)			(13,409	)			(45,798	)			1,935				2,915				(55,575	)
State and federal income tax benefit			(4,631	)							(14	)											(4,645	)
Equity in (loss) income of consolidated subsidiaries			(54,343	)															54,343				-
Net (loss) income		$	(50,930	)		$	(13,409	)		$	(45,784	)		$	1,935			$	57,258			$	(50,930	)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

THREE MONTHS ENDED JULY 31, 2010

(In Thousands)

		Parent				Subsidiary Issuer				Guarantor Subsidiaries				Nonguarantor Subsidiaries				Eliminations				Consolidated
Revenues:
Homebuilding		$	7			$	(89	)		$	369,733			$	3,435			$	(1,239	)		$	371,847
Financial services											1,690				7,063								8,753
Intercompany charges							32,566				(49,356	)			664				16,126				-
Total revenues			7				32,477				322,067				11,162				14,887				380,600
Expenses:
Homebuilding			2,509				38,480				410,146				1,484				6,040				458,659
Financial services			124								1,397				4,804				(157	)			6,168
Total expenses			2,633				38,480				411,543				6,288				5,883				464,827
Gain on extinguishment of debt							5,256																5,256
(Loss) income from unconsolidated joint ventures											(420	)			(451	)							(871	)
(Loss) income before income taxes			(2,626	)			(747	)			(89,896	)			4,423				9,004				(79,842	)
State and federal income tax provision (benefit)			(14,735	)			(1,774	)			305,583				(1,534	)			(294,528	)			(6,988	)
Equity in (loss) income of consolidated subsidiaries			(84,963	)															84,963				-
Net (loss) income		$	(72,854	)		$	1,027			$	(395,479	)		$	5,957			$	388,495			$	(72,854	)

HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

NINE MONTHS ENDED JULY 31, 2011

(In Thousands)

						Subsidiary				Guarantor				Nonguarantor
		Parent				Issuer				Subsidiaries				Subsidiaries				Eliminations				Consolidated
Revenues:
Homebuilding		$	24			$	(223	)		$	773,299			$	3,652			$	(3,719	)		$	773,033
Financial services											3,951				16,298								20,249
Intercompany charges							85,294				(98,066	)			(428	)			13,200				-
Total Revenues			24				85,071				679,184				19,522				9,481				793,282
Expenses:
Homebuilding			4,261				119,657				838,298				330				(1,152	)			961,394
Financial services			246								3,717				12,234				(3	)			16,194
Total expenses			4,507				119,657				842,015				12,564				(1,155	)			977,588
Loss on extinguishment of debt							(3,035	)															(3,035	)
Loss from unconsolidated joint ventures											(801	)			(5,678	)							(6,479	)
(Loss) income before income taxes			(4,483	)			(37,621	)			(163,632	)			1,280				10,636				(193,820	)
State and federal income tax (benefit) provision			(15,599	)							9,518												(6,081	)
Equity in (loss) income of consolidated subsidiaries			(198,855	)															198,855				-
Net (loss) income		$	(187,739	)		$	(37,621	)		$	(173,150	)		$	1,280			$	209,491			$	(187,739	)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

NINE MONTHS ENDED JULY 31, 2010

(In Thousands)

		Parent				Subsidiary Issuer				Guarantor Subsidiaries				Nonguarantor Subsidiaries				Eliminations				Consolidated
Revenues:
Homebuilding		$	15			$	(252	)		$	995,608			$	3,761			$	(3,720	)		$	995,412
Financial services											4,596				18,822								23,418
Intercompany charges							97,125				(139,260	)			(208	)			42,343				-
Total revenues			15				96,873				860,944				22,375				38,623				1,018,830
Expenses:
Homebuilding			6,865				117,599				1,049,760				377				14,019				1,188,620
Financial services			384								4,188				13,131				(509	)			17,194
Total expenses			7,249				117,599				1,053,948				13,508				13,510				1,205,814
Gain on extinguishment of debt							25,047																25,047
(Loss) income from unconsolidated joint ventures											(1,088	)			235								(853	)
(Loss) income before income taxes			(7,234	)			4,321				(194,092	)			9,102				25,113				(162,790	)
State and federal Income tax (benefit) provision			(305,238	)							7,743				4								(297,491	)
Equity in (loss) income of consolidated Subsidiaries			(163,303	)															163,303				-
Net income (loss)		$	134,701			$	4,321			$	(201,835	)		$	9,098			$	188,416			$	134,701

HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED JULY 31, 2011

(In Thousands)

						Subsidiary				Guarantor				Nonguarantor
		Parent				Issuer				Subsidiaries				Subsidiaries				Eliminations				Consolidated
Cash flows from operating activities:
Net (loss) income		$	(187,739	)		$	(37,621	)		$	(173,150	)		$	1,280			$	209,491			$	(187,739	)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities			85,787				(15,216	)			148,195				(777	)			(209,491	)			8,498
Net cash (used in) provided by operating activities			(101,952	)			(52,837	)			(24,955	)			503				-				(179,241	)
Net cash provided by (used in) investing activities											577				(659	)							(82	)
Net cash provided by (used in) financing activities			54,899				71,552				61				(31,984	)							94,528
Intercompany investing and financing activities – net			47,043				(82,916	)			31,484				4,389								-
Net (decrease) increase in cash			(10	)			(64,201	)			7,167				(27,751	)			-				(84,795	)
Cash and cash equivalents balance, beginning of period			10				212,370				(12,812	)			167,612								367,180
Cash and cash equivalents balance, end of period		$	-			$	148,169			$	(5,645	)		$	139,861			$	-			$	282,385

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED JULY 31, 2010

(In Thousands)

		Parent				Subsidiary Issuer				Guarantor Subsidiaries				Nonguarantor Subsidiaries				Eliminations				Consolidated
Cash flows from operating activities:
Net income (loss)		$	134,701			$	4,321			$	(201,835	)		$	9,098			$	188,416			$	134,701
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities			(26,607	)			68,948				(244,452	)			347,767				(188,416	)			(42,760	)
Net cash provided by (used in) operating activities			108,094				73,269				(446,287	)			356,865				-				91,941
Net cash (used in) provided by investing activities											(1,008	)			895								(113	)
Net cash (used in) provided by financing activities							(113,178	)			4,793				101								(108,284	)
Intercompany investing and financing activities – net			(108,094	)			(3,016	)			445,672				(334,562	)							-
Net increase (decrease) in cash			-				(42,925	)			3,170				23,299				-				(16,456	)
Cash and cash equivalents balance, beginning of period			10				292,407				(15,584	)			149,859								426,692
Cash and cash equivalents balance, end of period		$	10			$	249,482			$	(12,414	)		$	173,158			$	-			$	410,236

X

- Definition

Text block that encapsulates the detailed table comprising the condensed financial statements (balance sheet, income statement and statement of cash flows), normally using the registrant (parent) as the sole domain member. If condensed consolidating financial statements are being presented, other domain members (in addition to parent) such as guarantor subsidiaries, non-guarantor subsidiaries, and the consolidation eliminations, will be included in order that the respective monetary amounts for each of the domains will aggregate to the respective amounts on the consolidated financial statements. The line items are the various captions used to compile the condensed financial statements. Using extensions, most, if not all, of the elements representing condensed financial statement captions will be the same as those used for the consolidated financial statements captions.

+ Details

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