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Note 14 - Per Share Calculations
 12 Months Ended
Oct. 31, 2013
Earnings Per Share [Abstract]  
Earnings Per Share [Text Block]

14. Per Share Calculations


Basic earnings per share is computed by dividing net income (loss) (the “numerator”) by the weighted-average number of common shares outstanding, adjusted for non-vested shares of restricted stock (the “denominator”) for the period. The basic weighted-average number of shares for the twelve months ended October 31, 2013 includes 6.1 million shares related to Purchase Contracts (issued as part of our 7.25% Tangible Equity Units) which are issuable in the future with no additional cash required to be paid by the holders thereof. This number of shares represents the minimum number of shares that will, under all circumstances, be issuable upon settlement of the Purchase Contracts. As discussed in Note 10, the actual number of shares of Class A Common stock we may issue upon settlement of the Purchase Contracts will be between 4.7655 shares (which is the minimum settlement rate) and 5.8140 shares (which is the maximum settlement rate) per Purchase Contract (in each case, subject to customary anti-dilution adjustments) based on the applicable market value, as defined in the purchase contract agreement governing the Purchase Contracts, of our Class A Common Stock. Computing diluted earnings per share is similar to computing basic earnings per share, except that the denominator is increased to include the dilutive effects of options and non-vested shares of restricted stock, as well as common shares issuable upon exchange of our Senior Exchangeable Notes issued as part of our 6.0% Exchangeable Note Units. Any options that have an exercise price greater than the average market price are considered to be anti-dilutive and are excluded from the diluted earnings per share calculation.  


All outstanding non-vested shares that contain non-forfeitable rights to dividends or dividend equivalents that participate in undistributed earnings with common stock are considered participating securities and are included in computing earnings per share pursuant to the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating securities according to dividends or dividend equivalents and participation rights in undistributed earnings. The Company’s restricted common stock (“nonvested shares”) are considered participating securities.


Basic and diluted earnings per share for the periods presented below were calculated as follows:


   

Year Ended October 31,

 

(In thousands, except per share data)

 

2013

   

2012

   

2011

 
                         

Numerator:

                       

Net earnings (loss) attributable to Hovnanian

    $31,295       $(66,197 )     $(286,087 )

Less: undistributed earnings allocated to nonvested shares

    (58

)

               

Numerator for basic earnings per share

    $31,237       $(66,197 )     $(286,087 )

Plus: undistributed earnings allocated to nonvested shares

    58       -       -  

Less: undistributed earnings reallocated to nonvested shares

    (59

)

    -       -  

Plus: interest on senior exchangeable notes

    3,720       -       -  

Numerator for diluted earnings per share

    $34,956       $(66,197 )     $(286,087 )

Denominator:

                       

Denominator for basic earnings per share

    145,087       126,350       100,444  

Effect of dilutive securities:

                       

Share based payments

    1,396       -       -  

Senior exchangeable notes

    15,846       -       -  

Denominator for diluted earnings per share – weighted average shares outstanding

    162,329       126,350       100,444  

Basic earnings (loss) per share

    $0.22       $(0.52 )     $(2.85 )

Diluted earnings (loss) per share

    $0.22       $(0.52 )     $(2.85 )

Incremental shares attributed to non-vested stock and outstanding options to purchase common stock of 0.2 million and 0.3 million for the years ended October 31, 2012 and 2011, respectively, were excluded from the computation of diluted earnings per share because we had a net loss for the period, and any incremental shares would not be dilutive. Also, for the year ended October 31, 2012, 18.6 million shares of common stock issuable upon the exchange of our senior exchangeable notes (which were issued in fiscal 2012) were excluded from the computation of diluted earnings per share because we had a net loss for the period.


In addition, shares related to out-of-the money stock options that could potentially dilute basic earnings per share in the future that were not included in the computation of diluted earnings per share were 2.2 million, 2.5 million and 5.1 million for the years ended October 31, 2013, 2012 and 2011, respectively, because to do so would have been anti-dilutive for the periods presented.