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Note 21 - Financial Information of Subsidiary Issuer and Subsidiary Guarantors
 3 Months Ended
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 $10.5 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