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Note 13 - Per Share Calculation

6 Months Ended

Apr. 30, 2021

Notes to Financial Statements

Earnings Per Share [Text Block]

13.

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. 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. 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:

		Three Months Ended								Six Months Ended
		April 30,								April 30,
(In thousands, except per share data)		2021				2020				2021				2020

Numerator:
Net earnings (loss) attributable to Hovnanian		$	488,676			$	4,079			$	507,635			$	(5,069	)
Less: undistributed earnings allocated to nonvested shares			(44,383	)			(216	)			(46,147	)			-
Numerator for basic earnings (loss) per share		$	444,293			$	3,863			$	461,488			$	(5,069	)
Plus: undistributed earnings allocated to nonvested shares			44,383				216				46,147				-
Less: undistributed earnings reallocated to nonvested shares			(45,170	)			(216	)			(47,338	)			-
Numerator for diluted earnings per share		$	443,506			$	3,863			$	460,297			$	(5,069	)
Denominator:
Denominator for basic earnings per share – weighted average shares outstanding			6,248				6,172				6,236				6,166
Effect of dilutive securities:
Share based payments			120				260				95				-
Denominator for diluted earnings per share – weighted average shares outstanding			6,368				6,432				6,331				6,166
Basic earnings (loss) per share		$	71.11			$	0.63			$	74.00			$	(0.82	)
Diluted earnings (loss) per share		$	69.65			$	0.60			$	72.71			$	(0.82	)

There were 0.3 million incremental shares attributed to nonvested stock and outstanding options to purchase common stock for the six months ended April 30, 2020 which 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 27 thousand and 0.1 million for the three and six months ended April 30, 2021, respectively, and 0.2 million for both the three and six months ended April 30, 2020 because to do so would have been anti-dilutive for the periods presented.