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Note 14
 6 Months Ended
Apr. 30, 2013
Earnings Per Share [Text Block]

14. Basic earnings per share is computed by dividing net income (loss) (the “numerator”) by the weighted-average number of common shares, adjusted for non-vested shares of restricted stock (the “denominator”) for the period.  The basic weighted-average number of shares for the three months ended April 30, 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 previously in Note 12, 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 nonvested 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:


 

Three Months Ended

April 30,

Six Months Ended

April 30,

(In thousands, except per share data)

2013

2012

2013

2012

                                 

Numerator:

                               

Net earnings (loss) attributable to Hovnanian

  $ 1,318   $ 1,802   $ (9,990

)

  $ (16,463

)

Less: undistributed earnings allocated to nonvested shares

    (2

)

    (3 )     -       -  

Numerator for basic earnings per share

    1,316     1,799     (9,990

)

    (16,463

)

Plus: undistributed earnings allocated to nonvested shares

    2     3                

Less: undistributed earnings reallocated to nonvested shares

    (2

)

    (3 )     -     -

Numerator for diluted earnings per share

  $ 1,316   $ 1,799   $ (9,990

)

  $ (16,463

)

Denominator:

Denominator for basic earnings per share

    145,948     116,021     144,373     112,338

Effect of dilutive securities:

Share based payments

    1,283     96     -     -

Denominator for diluted earnings per share – weighted average shares outstanding

    147,231     116,117     144,373     112,338

Basic earnings (loss) per share

  $ 0.01   $ 0.02   $ (0.07

)

  $ (0.15

)

Diluted earnings (loss) per share

  $ 0.01   $ 0.02   $ (0.07

)

  $ (0.15

)


Incremental shares attributed to non-vested stock and outstanding options to purchase common stock of 1.4 million and 0.06 million for the six months ended April 30, 2013 and 2012, 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 six months ended April 30, 2013, 16.5 million shares of common stock issuable upon the exchange of our senior exchangeable notes 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 1.3 million and 2.6 million for both the three and six months ended April 30, 2013 and 2012, respectively, because to do so would have been anti-dilutive for the periods presented.