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Note 23 - Financial Information of Subsidiary Issuer and Subsidiary Guarantors
 9 Months Ended
Jul. 31, 2014
Disclosure Text Block Supplement [Abstract]  
Condensed Financial Statements [Text Block]

23.

Financial Information of Subsidiary Issuer and Subsidiary Guarantors


Hovnanian Enterprises, Inc., the parent company (the “Parent”), is the issuer of publicly traded common stock and preferred stock, which is represented by depository shares. One of its wholly owned subsidiaries, K. Hovnanian Enterprises, Inc. (the “Subsidiary Issuer”), acts as a finance entity that, as of July 31, 2014, had issued and outstanding approximately $992.0 million of senior secured notes ($979.6 million, net of discount), $591.1 million senior notes ($590.3 million, net of discount) and $17.0 million senior amortizing notes and $69.2 million senior exchangeable notes (issued as components of our 6.0% Exchangeable Note Units). The senior secured notes, senior notes, senior amortizing notes and senior exchangeable 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, “Guarantor Subsidiaries”), with the exception of our home mortgage subsidiaries, certain of our title insurance subsidiaries, joint ventures, subsidiaries holding interests in our joint ventures and our 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 and interest under the senior secured notes (other than the 2021 Notes), senior notes, senior exchangeable notes and senior amortizing notes. The Guarantor Subsidiaries are directly or indirectly 100% owned subsidiaries of the Parent. The 2021 Notes are guaranteed by the Guarantor Subsidiaries and the members of the Secured Group (see Note 11).


The senior unsecured notes (except for the 2019 Notes), senior amortizing notes and senior exchangeable notes have been registered under the Securities Act of 1933, as amended. The 2019 Notes, 2020 Secured Notes and the 2021 Notes (see Note 11) are not, pursuant to the indentures under which such notes were issued, required to be registered. The Condensed Consolidating Financial Statements presented below are in respect of our registered notes only and not the 2019 Notes, 2020 Secured Notes or the 2021 Notes (however, the Guarantor Subsidiaries for the 2019 Notes and the 2020 Secured Notes are the same as those represented by the accompanying Condensed Consolidating Financial Statements). In lieu of providing separate financial statements for the Guarantor Subsidiaries of our registered notes, we have included the accompanying Condensed Consolidating Financial Statements. Therefore, separate financial statements and other disclosures concerning such 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, 2014


(In Thousands)


   

Parent

   

Subsidiary Issuer

   

Guarantor Subsidiaries

   

Nonguarantor Subsidiaries

   

Eliminations

   

Consolidated

 

ASSETS:

                                   

Homebuilding

        $133,018     $1,335,404     $341,047     $(14,202

)

  $1,795,267  

Financial services

              8,937     89,524           98,461  

Intercompany receivable (payable)

        1,337,515           26,918     (1,364,433

)

  -  

Investments in and amounts due to and from consolidated subsidiaries

  $(78,621

)

  (34,333

)

  332,636           (219,682

)

  -  

Total assets

  $(78,621

)

  $1,436,200     $1,676,977     $457,489     $(1,598,317

)

  $1,893,728  
                                     

LIABILITIES AND EQUITY:

                                   

Homebuilding

  $2,685     $73     $514,778     $55,722           $573,258  

Financial services

              8,837     68,862           77,699  

Notes payable

        1,679,668     3,243     269           1,683,180  

Intercompany payable (receivable)

  323,179           1,085,902           $(1,409,081

)

  -  

Income taxes payable (receivable)

  38,635           (35,924

)

              2,711  

Stockholders’ (deficit) equity

  (443,120

)

  (243,541

)

  100,141     332,636     (189,236

)

  (443,120

)

Noncontrolling interest in consolidated joint ventures

                                 -  

Total liabilities and equity

  $(78,621

)

  $1,436,200     $1,676,977     $457,489     $(1,598,317

)

  $1,893,728  

HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


CONDENSED CONSOLIDATING BALANCE SHEET


OCTOBER 31, 2013


(In Thousands)


   

Parent

   

Subsidiary Issuer

   

Guarantor Subsidiaries

   

Nonguarantor Subsidiaries

   

Eliminations

   

Consolidated

 

ASSETS:

                                   

Homebuilding

        $277,800     $1,020,435     $312,042           $1,610,277  

Financial services

              14,570     134,283           148,853  

Intercompany receivable

        1,093,906           14,489     $(1,108,395

)

  -  

Investments in and amounts due to and from consolidated subsidiaries

  $(62,298

)

  2,275     286,216           (226,193

)

  -  

Total assets

  $(62,298

)

  $1,373,981     $1,321,221     $460,814     $(1,334,588

)

  $1,759,130  
                                     

LIABILITIES AND EQUITY:

                                   

Homebuilding

  $3,798     $491     $437,767     $64,329           $506,385  

Financial services

              14,789     109,748           124,537  

Notes payable

        1,555,336     2,276     94           1,557,706  

Intercompany payable

  326,262           805,774           $(1,132,036

)

  -  

Income taxes payable (receivable)

  40,868           (37,567

)

              3,301  

Stockholders’ (deficit) equity

  (433,226

)

  (181,846

)

  98,182     286,216     (202,552

)

  (433,226

)

Noncontrolling interest in consolidated joint ventures

                    427           427  

Total liabilities and equity

  $(62,298

)

  $1,373,981     $1,321,221     $460,814     $(1,334,588

)

  $1,759,130  

HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS


THREE MONTHS ENDED JULY 31, 2014


(In Thousands)


   

Parent

   

Subsidiary Issuer

   

Guarantor Subsidiaries

   

Nonguarantor Subsidiaries

   

Eliminations

   

Consolidated

 

Revenues:

                                   

Homebuilding

        $(52

)

  $436,085     $103,870           $539,903  

Financial services

              2,396     8,710           11,106  

Intercompany charges

        26,411     (28,110

)

  (42

)

  $1,741     -  

Total revenues

   -     26,359     410,371     112,538     1,741     551,009  
                                     

Expenses:

                                   

Homebuilding

  $3,098     32,751     406,479     86,894     (586

)

  528,636  

Financial services

  6           1,699     5,507           7,212  

Total expenses

  3,104     32,751     408,178     92,401     (586

)

  535,848  

Income from unconsolidated joint ventures

              10     201           211  

(Loss) income before income taxes

  (3,104 )   (6,392

)

  2,203     20,338     2,327     15,372  

State and federal income tax (benefit) provision

  (4,213 )         2,480                 (1,733

)

Equity in income (loss) of consolidated subsidiaries

  15,996     (12,584

)

  20,338           (23,750

)

  -  

Net income (loss)

  $17,105     $(18,976

)

  $20,061     $20,338     $(21,423

)

  $17,105  

HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS


THREE MONTHS ENDED JULY 31, 2013


(In Thousands)


   

Parent

   

Subsidiary Issuer

   

Guarantor Subsidiaries

   

Nonguarantor Subsidiaries

   

Eliminations

   

Consolidated

 

Revenues:

                                   

Homebuilding

        $(76

)

  $372,416     $94,385     $(1,246

)

  $465,479  

Financial services

              3,080     9,798           12,878  

Intercompany charges

        20,760     (24,931

)

  (37

)

  4,208     -  

Total revenues

  -     20,684     350,565     104,146     2,962     478,357  
                                     

Expenses:

                                   

Homebuilding

  $3,177     30,389     351,903     77,409     2,141     465,019  

Financial services

  4           2,052     4,584           6,640  

Total expenses

  3,181     30,389     353,955     81,993     2,141     471,659  

Income from unconsolidated joint ventures

              34     3,656           3,690  

(Loss) income before income taxes

  (3,181

)

  (9,705

)

  (3,356

)

  25,809     821     10,388  
State and federal income tax (benefit) provision   (2,233 )         4,155                 1,922  

Equity in income (loss) of consolidated subsidiaries

  9,414     (10,887

)

  25,809           (24,336

)

  -  

Net income (loss)

  $8,466     $(20,592

)

  $18,298     $25,809     $(23,515

)

  $8,466  

HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS


NINE MONTHS ENDED JULY 31, 2014


(In Thousands)


   

Parent

   

Subsidiary Issuer

   

Guarantor Subsidiaries

   

Nonguarantor Subsidiaries

   

Eliminations

   

Consolidated

 

Revenues:

                                   

Homebuilding

        $(129

)

  $1,085,275     $251,228           $1,336,374  

Financial services

              6,467     22,145           28,612  

Intercompany charges

        72,966     (76,391

)

  (42

)

  $3,467     -  

Total revenues

  -     72,837     1,015,351     273,331     3,467     1,364,986  
                                     

Expenses:

                                   

Homebuilding

  $9,023     96,769     1,045,419     215,032     (3,338

)

  1,362,905  

Financial services

  15           4,918     15,658           20,591  

Total expenses

  9,038     96,769     1,050,337     230,690     (3,338

)

  1,383,496  

Loss on extinguishment of debt

        (1,155

)

                    (1,155

)

Income from unconsolidated joint ventures

              70     3,779           3,849  

(Loss) income before income taxes

  (9,038

)

  (25,087

)

  (34,916

)

  46,420     6,805     (15,816

)

State and federal income tax (benefit) provision

  (10,041

)

        9,545                 (496

)

Equity in (loss) income of consolidated subsidiaries

  (16,323

)

  (36,608

)

  46,420           6,511     -  

Net (loss) income

  $(15,320

)

  $(61,695

)

  $1,959     $46,420     $13,316     $(15,320

)


HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS


NINE MONTHS ENDED JULY 31, 2013


(In Thousands)


   

Parent

   

Subsidiary Issuer

   

Guarantor Subsidiaries

   

Nonguarantor Subsidiaries

   

Eliminations

   

Consolidated

 

Revenues:

                                   

Homebuilding

  $3     $(175

)

  $1,033,927     $194,333     $(3,741

)

  $1,224,347  

Financial services

              7,743     27,476           35,219  

Intercompany charges

        61,167     (75,265

)

  (1,788

)

  15,886     -  

Total revenues

  3     60,992     966,405     220,021     12,145     1,259,566  
                                     

Expenses:

                                   

Homebuilding

  5,921     90,088     994,979     161,304     4,554     1,256,846  

Financial services

  13           5,742     15,450           21,205  

Total expenses

  5,934     90,088     1,000,721     176,754     4,554     1,278,051  

(Loss) gain on extinguishment of debt

        (770,009

)

  770,009                 -  

Income from unconsolidated joint ventures

              2,293     4,513           6,806  

(Loss) income before income taxes

  (5,931

)

  (799,105

)

  737,986     47,780     7,591     (11,679

)

State and federal income tax (benefit) provision

  (19,308

)

        9,153                 (10,155

)

Equity in (loss) income of consolidated subsidiaries

  (14,901

)

  (33,606

)

  47,780           727     -  

Net (loss) income

  $(1,524

)

  $(832,711

)

  $776,613     $47,780     $8,318     $(1,524

)


HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS


NINE MONTHS ENDED JULY 31, 2014


(In Thousands)


   

Parent

   

Subsidiary Issuer

   

Guarantor Subsidiaries

   

Nonguarantor Subsidiaries

   

Eliminations

   

Consolidated

 

Cash flows from operating activities:

                                   

Net (loss) income

  $(15,320

)

  $(61,695

)

  $1,959     $46,420     $13,316     $(15,320

)

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities

  2,080     6,913     (251,746

)

  11,846     (13,316

)

  (244,223

)

Net cash (used in) provided by operating activities

  (13,240

)

  (54,782

)

  (249,787

)

  58,266     -     (259,543

)

Net cash (used in) investing activities

              (1,009

)

  (8,306

)

        (9,315

)

Net cash provided by (used in) financing activities

        118,599     45,442     (40,666

)

        123,375  

Intercompany investing and financing activities – net

  13,240     (207,001

)

  206,190     (12,429

)

        -  

Net (decrease) increase in cash

  -     (143,184

)

  836     (3,135

)

  -     (145,483

)

Cash balance, beginning of period

        243,470     (6,479

)

  92,213           329,204  

Cash balance, end of period

  $-     $100,286     $(5,643

)

  $89,078     $-     $183,721  

HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS


NINE MONTHS ENDED JULY 31, 2013


(In Thousands)


   

Parent

   

Subsidiary Issuer

   

Guarantor Subsidiaries

   

Nonguarantor Subsidiaries

   

Eliminations

   

Consolidated

 

Cash flows from operating activities:

                                   

Net (loss) income

  $(1,524

)

  $(832,711

)

  $776,613     $47,780     $8,318     $(1,524

)

Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities

  20,418     789,831     (842,439

)

  (5,365

)

  (8,318

)

  (45,873

)

Net cash provided by (used in) operating activities

  18,894     (42,880

)

  (65,826

)

  42,415     -     (47,397

)

Net cash provided by investing activities

        298     12,357     6,121           18,776  

Net cash (used in) provided by financing activities

        (5,460

)

  48,090     (59,983

)

        (17,353

)

Intercompany investing and financing activities – net

  (18,894

)

  6,404     1,009     11,481           -  

Net (decrease) increase in cash

  -     (41,638

)

  (4,370

)

  34     -     (45,974

)

Cash balance, beginning of period

        197,097     (2,017

)

  78,152           273,232  

Cash balance, end of period

  $-     $155,459     $(6,387

)

  $78,186     $-     $227,258