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Note 13 - Per Share Calculation

9 Months Ended

Jul. 31, 2022

Notes to Financial Statements

Earnings Per Share [Text Block]

13.

Per Share Calculation

Basic earnings per share is computed by dividing net income (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								Nine Months Ended
		July 31,								July 31,
(In thousands, except per share data)		2022				2021				2022				2021

Numerator:
Net earnings attributable to Hovnanian		$	82,614			$	47,702			$	169,857			$	555,337
Less: preferred stock dividends		$	(2,669	)						$	(8,007	)
Less: undistributed earnings allocated to nonvested shares			(9,139	)			(4,426	)			(20,201	)			(54,165	)
Numerator for basic earnings per share		$	70,806			$	43,276			$	141,649			$	501,172
Plus: undistributed earnings allocated to nonvested shares			9,139				4,426				20,202				54,165
Less: undistributed earnings reallocated to nonvested shares			(9,141	)			(4,436	)			(20,214	)			(55,259	)
Numerator for diluted earnings per share		$	70,804			$	43,266			$	141,637			$	500,078
Denominator:
Denominator for basic earnings per share – weighted average shares outstanding			6,485				6,315				6,424				6,263
Effect of dilutive securities:
Share based payments			59				119				83				107
Denominator for diluted earnings per share – weighted average shares outstanding			6,544				6,434				6,507				6,370
Basic earnings per share		$	10.92			$	6.85			$	22.05			$	80.02
Diluted earnings per share		$	10.82			$	6.72			$	21.77			$	78.51

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 80 thousand and 24 thousand for the three and nine months ended July 31, 2022, respectively, and 25 thousand for both the three and nine months ended July 31, 2021 because to do so would have been anti-dilutive for the periods presented.