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Note 13 - Per Share Calculation

12 Months Ended

Oct. 31, 2020

Notes to Financial Statements

Earnings Per Share [Text Block]

13. Per Share Calculations

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. 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 Notes Units (which matured and were paid in full in fiscal 2018). 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 in periods when we have net income. 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:

		*Year Ended October 31,*
(In thousands, except per share data)		*2020*				*2019*				*2018*

Numerator:
Net earnings (loss) attributable to Hovnanian		$	50,928			$	(42,117	)		$	4,520
Less: undistributed earnings allocated to nonvested shares			(4,652	)			-				(159	)
Numerator for basic earnings (loss) per share		$	46,276			$	(42,117	)		$	4,361
Plus: undistributed earnings allocated to nonvested shares			4,652				-				159
Less: undistributed earnings reallocated to nonvested shares			(4,652	)			-				(159	)
Numerator for diluted earnings (loss) per share		$	46,276			$	(42,117	)		$	4,361
Denominator:
Denominator for basic earnings per share			6,189				5,968				5,941
Effect of dilutive securities:
Share-based payments			395				-				131
Denominator for diluted earnings per share – weighted-average shares outstanding			6,584				5,968				6,072
Basic earnings (loss) per share		$	7.48			$	(7.06	)		$	0.73
Diluted earnings (loss) per share		$	7.03			$	(7.06	)		$	0.72

Incremental shares attributed to nonvested stock and outstanding options to purchase common stock of 0.3 million for the year ended October 31, 2019, 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. For the year ended October 31, 2018, 33 thousand shares of common stock issuable upon the exchange of our 6% senior exchangeable note units (which were issued in fiscal 2012) were excluded from the computation of diluted earnings per share because they were anti-dilutive.

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 0.2 million for each of the years ended October 31, 2020, 2019 and 2018, because to do so would have been anti-dilutive for the periods presented.