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Note 21 - Financial Information of Subsidiary Issuer and Subsidiary Guarantors | 3 Months Ended
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Jan. 31, 2016
Disclosure Text Block Supplement [Abstract] |
Condensed Financial Statements [Text Block] |
21. | 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 January 31, 2016, had issued and outstanding $992.0 million of senior secured notes ($981.7 million, net of discount), $607.6 million senior notes and $1 0.5 million senior amortizing notes and $74.7 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 7.0% Senior Notes due 2019 (the “2019 Notes”) and the 8.0% Senior Notes due 2019), senior amortizing notes and senior exchangeable notes have been registered under the Securities Act of 1933, as amended (the “Act”). The 2019 Notes, the 8.0% Senior Notes due 2019, the 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 under the Act. The Condensed Consolidating Financial Statements presented below are in respect of our registered notes only and not the 2019 Notes, the 8.0% Senior Notes due 2019, the 2020 Secured Notes or the 2021 Notes (however, the Guarantor Subsidiaries for the 2019 Notes, the 8.0% Senior Notes due 2019 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 Condensed 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. CONDENSED CONSOLIDATING BALANCE SHEET JANUARY 31, 2016 (In Thousands)
|  | Parent |  |  | Subsidiary Issuer |  |  | Guarantor Subsidiaries |  |  | Nonguarantor Subsidiaries |  |  | Eliminations |  |  | Consolidated |
ASSETS: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Homebuilding |  | $- |  |  | $147,194 |  |  | $1,503,913 |  |  | $420,787 |  |  | $- |  |  | $2,071,894 |
Financial services |  |  |  |  |  |  |  | 16,099 |  |  | 177,359 |  |  |  |  |  | 193,458 |
Income taxes receivable |  | 140,493 |  |  | (82,294 | ) |  | 229,167 |  |  | 22 |  |  |  |  |  | 287,388 |
Intercompany receivable |  |  |  |  | 1,471,938 |  |  |  |  |  | 60,268 |  |  | (1,532,206 | ) |  | - |
Investments in and amounts due from consolidated subsidiaries |  |  |  |  |  |  |  | 398,585 |  |  |  |  |  | (398,585 | ) |  | - |
Total assets |  | $140,493 |  |  | $1,536,838 |  |  | $2,147,764 |  |  | $658,436 |  |  | $(1,930,791 | ) |  | $2,552,740 |
LIABILITIES AND EQUITY: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Homebuilding |  | $2,508 |  |  | $112 |  |  | $667,519 |  |  | $106,991 |  |  | $- |  |  | $777,130 |
Financial services |  |  |  |  |  |  |  | 15,633 |  |  | 152,418 |  |  |  |  |  | 168,051 |
Notes payable |  |  |  |  | 1,747,427 |  |  | 2,833 |  |  | 439 |  |  |  |  |  | 1,750,699 |
Intercompany payable |  | 179,839 |  |  |  |  |  | 1,352,367 |  |  |  |  |  | (1,532,206 | ) |  | - |
Amounts due to consolidated subsidiaries |  | 101,286 |  |  | 12,497 |  |  |  |  |  |  |  |  | (113,783 | ) |  | - |
Stockholders’ (deficit) equity |  | (143,140 | ) |  | (223,198 | ) |  | 109,412 |  |  | 398,588 |  |  | (284,802 | ) |  | (143,140 | )
Total liabilities and equity |  | $140,493 |  |  | $1,536,838 |  |  | $2,147,764 |  |  | $658,436 |  |  | $(1,930,791 | ) |  | $2,552,740 |
CONDENSED CONSOLIDATING BALANCE SHEET OCTOBER 31, 2015 (In Thousands)
|  | Parent |  |  | Subsidiary Issuer |  |  | Guarantor Subsidiaries |  |  | Nonguarantor Subsidiaries |  |  | Eliminations |  |  | Consolidated |
ASSETS: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Homebuilding |  | $- |  |  | $230,358 |  |  | $1,553,811 |  |  | $367,869 |  |  | $ - |  |  | $2,152,038 |
Financial services |  |  |  |  |  |  |  | 15,680 |  |  | 144,301 |  |  |  |  |  | 159,981 |
Income taxes receivable |  | 128,176 |  |  | (89,212 | ) |  | 251,293 |  |  | 22 |  |  |  |  |  | 290,279 |
Intercompany receivable |  |  |  |  | 1,575,712 |  |  |  |  |  | 58,280 |  |  | (1,633,992 | ) |  | - |
Investments in and amounts due from consolidated subsidiaries |  |  |  |  | 1,013 |  |  | 383,032 |  |  |  |  |  | (384,045 | ) |  | - |
Total assets |  | $128,176 |  |  | $1,717,871 |  |  | $2,203,816 |  |  | $570,472 |  |  | $(2,018,037 | ) |  | $2,602,298 |
LIABILITIES AND EQUITY: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Homebuilding |  | $3,076 |  |  | $87 |  |  | $588,854 |  |  | $65,947 |  |  | $- |  |  | $657,964 |
Financial services |  |  |  |  |  |  |  | 15,677 |  |  | 121,106 |  |  |  |  |  | 136,783 |
Notes payable |  |  |  |  | 1,933,119 |  |  | 2,132 |  |  | 384 |  |  |  |  |  | 1,935,635 |
Intercompany payable |  | 180,681 |  |  |  |  |  | 1,453,311 |  |  |  |  |  | (1,633,992 | ) |  | - |
Amounts due to consolidated subsidiaries |  | 72,503 |  |  |  |  |  |  |  |  |  |  |  | (72,503 | ) |  | - |
Stockholders’ (deficit) equity |  | (128,084 | ) |  | (215,335 | ) |  | 143,842 |  |  | 383,035 |  |  | (311,542 | ) |  | (128,084 | )
Total liabilities and equity |  | $128,176 |  |  | $1,717,871 |  |  | $2,203,816 |  |  | $570,472 |  |  | $(2,018,037 | ) |  | $2,602,298 |
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS THREE MONTHS ENDED JANUARY 31, 2016 (In Thousands)
|  | Parent |  |  | Subsidiary Issuer |  |  | Guarantor Subsidiaries |  |  | Nonguarantor Subsidiaries |  |  | Eliminations |  |  | Consolidated |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Homebuilding |  | $- |  |  | $- |  |  | $474,910 |  |  | $82,469 |  |  | $- |  |  | $557,379 |
Financial services |  |  |  |  |  |  |  | 2,245 |  |  | 15,981 |  |  |  |  |  | 18,226 |
Intercompany charges |  |  |  |  | 34,540 |  |  |  |  |  |  |  |  | (34,540 | ) |  | - |
Total revenues |  | - |  |  | 34,540 |  |  | 477,155 |  |  | 98,450 |  |  | (34,540 | ) |  | 575,605 |
Expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Homebuilding |  | 1,940 |  |  | 35,811 |  |  | 466,620 |  |  | 74,733 |  |  |  |  |  | 579,104 |
Financial services |  |  |  |  |  |  |  | 1,624 |  |  | 6,591 |  |  |  |  |  | 8,215 |
Intercompany charges |  |  |  |  |  |  |  | 34,463 |  |  | 77 |  |  | (34,540 | ) |  | - |
Total expenses |  | 1,940 |  |  | 35,811 |  |  | 502,707 |  |  | 81,401 |  |  | (34,540 | ) |  | 587,319 |
(Loss) income from unconsolidated joint ventures |  |  |  |  |  |  |  | 16 |  |  | (1,496 | ) |  |  |  |  | (1,480 | )
(Loss) income before income taxes |  | (1,940 | ) |  | (1,271 | ) |  | (25,536 | ) |  | 15,553 |  |  | - |  |  | (13,194 | )
State and federal income tax provision (benefit) |  | (14,550 | ) |  | (6,918 | ) |  | 24,447 |  |  |  |  |  |  |  |  | 2,979 |
Equity in (loss) income of consolidated subsidiaries |  | (28,783 | ) |  | (13,510 | ) |  | 15,553 |  |  |  |  |  | 26,740 |  |  | - |
Net (loss) income |  | $(16,173 | ) |  | $(7,863 | ) |  | $(34,430 | ) |  | $15,553 |  |  | $26,740 |  |  | $(16,173 | )
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS THREE MONTHS ENDED JANUARY 31, 2015 (In Thousands)
|  | Parent |  |  | Subsidiary Issuer |  |  | Guarantor Subsidiaries |  |  | Nonguarantor Subsidiaries |  |  | Eliminations |  |  | Consolidated |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Homebuilding |  | $- |  |  | $- |  |  | $365,189 |  |  | $69,403 |  |  | $- |  |  | $434,592 |
Financial services |  |  |  |  |  |  |  | 1,833 |  |  | 9,289 |  |  |  |  |  | 11,122 |
Intercompany charges |  |  |  |  | 28,512 |  |  |  |  |  |  |  |  | (28,512 | ) |  | - |
Total revenues |  | - |  |  | 28,512 |  |  | 367,022 |  |  | 78,692 |  |  | (28,512 | ) |  | 445,714 |
Expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Homebuilding |  | 3,711 |  |  | 37,828 |  |  | 357,509 |  |  | 60,481 |  |  |  |  |  | 459,529 |
Financial services |  | 68 |  |  |  |  |  | 1,573 |  |  | 5,676 |  |  |  |  |  | 7,317 |
Intercompany charges |  |  |  |  |  |  |  | 28,382 |  |  | 130 |  |  | (28,512 | ) |  | - |
Total expenses |  | 3,779 |  |  | 37,828 |  |  | 387,464 |  |  | 66,287 |  |  | (28,512 | ) |  | 466,846 |
Income (loss) from unconsolidated joint ventures |  |  |  |  |  |  |  | (14 | ) |  | 1,466 |  |  |  |  |  | 1,452 |
(Loss) income before income taxes |  | (3,779 | ) |  | (9,316 | ) |  | (20,456 | ) |  | 13,871 |  |  | - |  |  | (19,680 | )
State and federal income tax (benefit) provision |  | (12,286 | ) |  |  |  |  | 6,982 |  |  |  |  |  |  |  |  | (5,304 | )
Equity in (loss) income of consolidated subsidiaries |  | (22,883 | ) |  | (12,806 | ) |  | 13,871 |  |  |  |  |  | 21,818 |  |  | - |
Net (loss) income |  | $(14,376 | ) |  | $(22,122 | ) |  | $(13,567 | ) |  | $13,871 |  |  | $21,818 |  |  | $(14,376 | )
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS THREE MONTHS ENDED JANUARY 31, 2016 (In Thousands)
|  | Parent |  |  | Subsidiary Issuer |  |  | Guarantor Subsidiaries |  |  | Nonguarantor Subsidiaries |  |  | Eliminations |  |  | Consolidated |
Cash flows from operating activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net (loss) income |  | $(16,173 | ) |  | $(7,863 | ) |  | $(34,430 | ) |  | $15,553 |  |  | $26,740 |  |  | $(16,173 | )
Adjustments to reconcile net (loss) income to net cash used in operating activities |  | (11,768 | ) |  | (16,045 | ) |  | 80,623 |  |  | (74,978 | ) |  | (26,740 | ) |  | (48,908 | )
Net cash (used in) provided by operating activities |  | (27,941 | ) |  | (23,908 | ) |  | 46,193 |  |  | (59,425 | ) |  | - |  |  | (65,081 | )
Cash flows from investing activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Proceeds from sale of property and assets |  |  |  |  |  |  |  | 72 |  |  | 21 |  |  |  |  |  | 93 |
Purchase of property, equipment & other fixed assets and acquisitions |  |  |  |  |  |  |  | (1,223 | ) |  | (30 | ) |  |  |  |  | (1,253 | )
Increase in restricted cash related to mortgage company |  |  |  |  |  |  |  |  |  |  | (81 | ) |  |  |  |  | (81 | )
Decrease in restricted cash related to letters of credit |  |  |  |  | 52 |  |  |  |  |  |  |  |  |  |  |  | 52 |
Investments in and advances to unconsolidated joint ventures |  |  |  |  | (130 | ) |  | (865 | ) |  | (10,502 | ) |  |  |  |  | (11,497 | )
Distributions of capital from unconsolidated joint ventures |  |  |  |  |  |  |  | 80 |  |  | 2,052 |  |  |  |  |  | 2,132 |
Intercompany investing activities |  |  |  |  | 117,284 |  |  |  |  |  |  |  |  | (117,284 | ) |  | - |
Net cash (used in) provided by investing activities |  | - |  |  | 117,206 |  |  | (1,936 | ) |  | (8,540 | ) |  | (117,284 | ) |  | (10,554 | )
Cash flows from financing activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net payments from mortgages and notes |  |  |  |  |  |  |  | (10,035 | ) |  | (5,358 | ) |  |  |  |  | (15,393 | )
Net proceeds from model sale leaseback financing programs |  |  |  |  |  |  |  | 2,118 |  |  | 111 |  |  |  |  |  | 2,229 |
Net proceeds from land bank financing programs |  |  |  |  |  |  |  | 106,813 |  |  | 28,261 |  |  |  |  |  | 135,074 |
Payments related to senior notes and senior amortizing notes |  |  |  |  | (175,040 | ) |  |  |  |  |  |  |  |  |  |  | (175,040 | )
Net proceeds related to mortgage warehouse lines of credit |  |  |  |  |  |  |  |  |  |  | 31,481 |  |  |  |  |  | 31,481 |
Deferred financing cost from land bank financing program and note issuances |  |  |  |  |  |  |  | (2,496 | ) |  | (1,387 | ) |  |  |  |  | (3,883 | )
Intercompany financing activities |  | 27,941 |  |  |  |  |  | (143,237 | ) |  | (1,988 | ) |  | 117,284 |  |  | - |
Net cash (used in) provided by financing activities |  | 27,941 |  |  | (175,040 | ) |  | (46,837 | ) |  | 51,120 |  |  | 117,284 |  |  | (25,532 | )
Net decrease in cash |  | - |  |  | (81,742 | ) |  | (2,580 | ) |  | (16,845 | ) |  | - |  |  | (101,167 | )
Cash and cash equivalents balance, beginning of period |  |  |  |  | 199,318 |  |  | (4,800 | ) |  | 59,227 |  |  |  |  |  | 253,745 |
Cash and cash equivalents balance, end of period |  | $- |  |  | $117,576 |  |  | $(7,380 | ) |  | $42,382 |  |  | $- |  |  | $152,578 |
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS THREE MONTHS ENDED JANUARY 31, 2015 (In Thousands)
|  | Parent |  |  | Subsidiary Issuer |  |  | Guarantor Subsidiaries |  |  | Nonguarantor Subsidiaries |  |  | Eliminations |  |  | Consolidated |
Cash flows from operating activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net (loss) income |  | $(14,376 | ) |  | $(22,122 | ) |  | $(13,567 | ) |  | $13,871 |  |  | $21,818 |  |  | $(14,376 | )
Adjustments to reconcile net (loss) income to net cash used in operating activities |  | (7,520 | ) |  | 3,248 |  |  | (39,948 | ) |  | (115,203 | ) |  | (21,818 | ) |  | (181,241 | )
Net cash used in operating activities |  | (21,896 | ) |  | (18,874 | ) |  | (53,515 | ) |  | (101,332 | ) |  | - |  |  | (195,617 | )
Cash flows from investing activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Proceeds from sale of property and assets |  |  |  |  |  |  |  | 156 |  |  | 12 |  |  |  |  |  | 168 |
Purchase of property, equipment & other fixed assets and acquisitions |  |  |  |  |  |  |  | (879 | ) |  |  |  |  |  |  |  | (879 | )
Decrease in restricted cash related to mortgage company |  |  |  |  |  |  |  |  |  |  | 387 |  |  |  |  |  | 387 |
Investments in and advances to unconsolidated joint ventures |  |  |  |  | 81 |  |  | 146 |  |  | (11,962 | ) |  |  |  |  | (11,735 | )
Distribution of capital from unconsolidated joint ventures |  |  |  |  |  |  |  |  |  |  | 627 |  |  |  |  |  | 627 |
Intercompany investing activities |  |  |  |  | (159,012 | ) |  |  |  |  |  |  |  | 159,012 |  |  | - |
Net cash used in investing activities |  |  |  |  | (158,931 | ) |  | (577 | ) |  | (10,936 | ) |  | 159,012 |  |  | (11,432 | )
Cash flows from financing activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net proceeds from mortgages and notes |  |  |  |  |  |  |  | (10,277 | ) |  | 6,958 |  |  |  |  |  | (3,319 | )
Net proceeds from model sale leaseback financing programs |  |  |  |  |  |  |  | (5,606 | ) |  | (196 | ) |  |  |  |  | (5,802 | )
Net proceeds from land bank financing programs |  |  |  |  |  |  |  | (6,332 | ) |  | (871 | ) |  |  |  |  | (7,203 | )
Net proceeds from senior notes |  |  |  |  | 247,938 |  |  |  |  |  |  |  |  |  |  |  | 247,938 |
Net proceeds related to mortgage warehouse lines of credit |  |  |  |  |  |  |  |  |  |  | (8,153 | ) |  |  |  |  | (8,153 | )
Deferred financing cost from land bank financing program and note issuances |  |  |  |  | (4,627 | ) |  | (114 | ) |  | (270 | ) |  |  |  |  | (5,011 | )
Intercompany financing activities |  | 21,896 |  |  |  |  |  | 76,732 |  |  | 60,384 |  |  | (159,012 | ) |  | - |
Net cash provided by financing activities |  | 21,896 |  |  | 243,311 |  |  | 54,403 |  |  | 57,852 |  |  | (159,012 | ) |  | 218,450 |
Net increase (decrease) in cash and cash equivalents |  | - |  |  | 65,506 |  |  | 311 |  |  | (54,416 | ) |  | - |  |  | 11,401 |
Cash and cash equivalents balance, beginning of period |  |  |  |  | 159,508 |  |  | (4,726 | ) |  | 107,116 |  |  |  |  |  | 261,898 |
Cash and cash equivalents balance, end of period |  | $- |  |  | $225,014 |  |  | $(4,415 | ) |  | $52,700 |  |  | $- |  |  | $273,299 |

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