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Note 14 - Per Share Calculation
 9 Months Ended
Jul. 31, 2014
Earnings Per Share [Abstract]  
Earnings Per Share [Text Block]

14.

Per Share Calculation


Basic earnings per share is computed by dividing net income (loss) (the “numerator”) by the weighted-average number of common shares outstanding, adjusted for nonvested shares of restricted stock (the “denominator”) for the period. The basic weighted-average number of shares for the nine months ended July 31, 2014 included 6.1 million shares related to Purchase Contracts (issued as part of our 7.25% Tangible Equity Units) which, as discussed in Note 12, were all issued upon settlement of the Purchase Contracts in February 2014. 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 nonvested 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 nonforfeitable 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”) is considered participating securities.


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


   

Three Months Ended

July 31,

   

Nine Months Ended

July 31,

 

(In thousands, except per share data)

 

2014

   

2013

   

2014

   

2013

 
                         

Numerator:

                       

Net earnings (loss) attributable to Hovnanian

  $17,105     $8,466     $(15,320 )   $(1,524 )

Less: undistributed earnings allocated to nonvested shares

  (386 )   (15 )   -     -  

Numerator for basic earnings per share

  16,719     8,451     (15,320 )   (1,524 )

Plus: undistributed earnings allocated to nonvested shares

  386     15              

Less: undistributed earnings reallocated to nonvested shares

  (386 )   (15 )   -     -  

Plus: interest on Senior Exchangeable Notes

  879     893     -     -  

Numerator for diluted earnings per share

  17,598     9,344     (15,320 )   (1,524 )
Denominator:                        

Denominator for basic earnings per share

  146,365     146,056     146,223     144,840  
Effect of dilutive securities:                        

Share-based payments

  756     1,610     -     -  

Senior Exchangeable Notes

  15,157     15,157     -     -  

Denominator for diluted earnings per share – weighted-average shares outstanding

  162,278     162,823     146,223     144,840  

Basic earnings per share

  $0.11     $0.06     $(0.10 )   $(0.01 )

Diluted earnings per share

  $0.11     $0.06     $(0.10 )   $(0.01 )

Incremental shares attributed to nonvested stock and outstanding options to purchase common stock of 1.3 million and 1.6 million, respectively, for the nine months ended July 31, 2014 and 2013, 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, 15.2 million shares and 16.1 million shares, respectively, for the nine months ended July 31, 2014 and 2013, 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 3.0 million for the three months ended and 2.1 million for the nine months ended July 31, 2014, and 2.2 million for both the three and nine months ended July 31, 2013, because to do so would have been anti-dilutive for the periods presented.