WASHINGTON, D.C.  20549

 

FORM 8-K

 

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): September 7, 2004

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.02.                                              Results of Operations and Financial Condition

 

On September 7, 2004, Hovnanian Enterprises, Inc. issued a press release announcing its preliminary financial results for the fiscal third quarter ended July 31, 2004.  A copy of the Earnings Press Release is attached as Exhibit 99.1.

 

The information in this Current Report on Form 8-K and the Exhibit attached hereto is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

The Earnings Press Release contains information about EBITDA, a non-GAAP financial measure.  The most directly comparable GAAP financial measure to EBITDA is net income.  A reconciliation of EBITDA to net income is contained in the Earnings Press Release.

 

Management believes EBITDA to be relevant and useful information as EBITDA is a standard measure commonly reported and widely used by analysts, investors and others to measure our financial performance and our ability to service our debt obligations.  EBITDA is also one of several metrics used by our management to measure the cash generated from our operations.  EBITDA does not take into account substantial costs of doing business, such as income taxes and interest expense.  While many in the financial community consider EBITDA to be an important measure of comparative operating performance, it should be considered in addition to, but not as a substitute for, income before income taxes, net income, cash flow provided by operating activities and other measures of financial performance prepared in accordance with accounting principles generally accepted in the United States that are presented on the financial statements included in the Company’s reports filed with the Securities and Exchange Commission.  Additionally, our calculation of EBITDA may be different than the calculation used by other companies, and, therefore, comparability may be affected.

 

Item 9.01.                                              Financial Statements and Exhibits

 

(c) Exhibits.

 

Exhibit 99.1

Earnings Press Release – Fiscal Third Quarter Ended July 31, 2004.

 

2

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

	HOVNANIAN ENTERPRISES, INC.
	(Registrant)
	By:	/s/	J. Larry Sorsby
		Name:	J. Larry Sorsby
		Title:	Executive Vice President and Chief Financial Officer
Date:  September 7, 2004

 

3

 

INDEX TO EXHIBITS

 

Exhibit Number		Exhibit
Exhibit 99.1		Earnings Press Release – Fiscal Third Quarter Ended July 31, 2004.

 

4

Exhibit 99.1

 

HOVNANIAN ENTERPRISES, INC.						News Release
Contact:		Kevin C. Hake		Brian A. Cheripka
		Vice President and Treasurer		Assistant Director of Investor Relations
		732-747-7800		732-747-7800

 

HOVNANIAN ENTERPRISES REPORTS 25% INCREASE IN THIRD QUARTER EPS; ACHIEVES RECORD FINANCIAL RESULTS AND RAISES FISCAL 2004 EARNINGS PROJECTION

 

Highlights for the Third Quarter Ended July 31, 2004

 

•                                         Net earnings reached a record $1.33 per fully diluted share for the third quarter, a 25% increase from $1.06 per fully diluted share in the third quarter of fiscal 2003 and exceeded the Company’s most recent projection for the quarter of $1.25 to $1.30 per fully diluted share.

 

•                                         The Company earned $1.46 per fully diluted share, excluding $13.7 million in pre-tax charges related to the discontinuation of the Forecast Homes brand name and the extinguishment of debt, an increase of 36% from last year’s third quarter on a comparable basis.

 

•                                         Total revenues for the third quarter increased 25% to $1.1 billion, and the number of homes delivered in the quarter increased 22% over the prior year’s third quarter.

 

•                                         The Company achieved record net earnings of $86.7 million for the third quarter, of which 96% were generated from the Company’s organic operations, which excludes earnings from acquisitions closed since the beginning of the third quarter of fiscal 2003.

 

•                                         Earnings for the trailing twelve months ended July 31, 2004 represent a return on beginning equity (ROE) of 42.0% and an after tax return on beginning capital (ROC) of 23.0%.

 

•                                         Management is increasing its projection for full year fiscal 2004 earnings to exceed $5.30 per fully diluted share, representing more than a 34% increase from record earnings of $3.93 per fully diluted share in fiscal 2003.

 

•                                         The dollar value of net contracts for the third quarter grew 34% to $1.3 billion on 4,173 homes, compared to $967 million on 3,498 homes in the third quarter of fiscal 2003.

 

•                                         Contract backlog as of July 31, 2004 was 8,501 homes, with a sales value of $2.7 billion, up 68% from the sales value of homes in last year’s third quarter backlog.

 

•                                         Management projects fiscal 2005 earnings to exceed $6.30 per fully diluted share. Management expects quarterly earnings to be more evenly distributed in fiscal 2005, beginning with a strong first quarter.

 

RED BANK, NJ, September 7, 2004 – Hovnanian Enterprises, Inc. (NYSE: HOV), a leading national homebuilder, reported net income of $86.7 million, or $1.33 per fully diluted share, on $1.1 billion in total revenue for the third quarter ended July 31, 2004. Last year’s third quarter net income was $68.8 million, or $1.06 per fully diluted share, on total revenue of $848.8 million.

 

 

The dollar value of net contracts increased 34% in the third quarter to $1.3 billion, including unconsolidated joint ventures, from $967 million in the third quarter of 2003. Deliveries in the third quarter of fiscal 2004 were 3,765 homes, including homes from unconsolidated joint ventures, with an aggregate sales value of $1.1 billion. This compares to 3,075 homes delivered with an aggregate sales value of $832.6 million in the third quarter of fiscal 2003. Contract backlog increased to 8,501 homes, including unconsolidated joint ventures, compared to 5,741 homes in last year’s third quarter.

 

Consolidated earnings before interest expense, income taxes, depreciation and amortization (“EBITDA”) for the third quarter of fiscal 2004 rose 32% to $178.8 million from $135.0 million in the third quarter of 2003.  EBITDA covered the amount of interest incurred in the quarter by 8.3 times, compared to 7.6 times during the same period of fiscal 2003.  The Company’s homebuilding gross margin for the most recent three month period was 25.5%, equal to the 25.5% homebuilding gross margin reported in the prior year’s third quarter despite the effects of increases in lumber, concrete and other material costs, and the impact of lower margins from two acquisitions that closed during the interim time period. Total selling, general and administrative expense, including corporate expense, as a percentage of total revenues decreased to 9.0% in the third quarter of 2004, an 80 basis point decline from 9.8% in the third quarter of 2003.  Shareholders’ equity grew to $1.05 billion at July 31, 2004 from $970.2 million at the end of the second quarter of fiscal 2004.

 

For the nine months ended July 31, 2004, revenue reached $2.8 billion, up 28% compared to $2.2 billion for the year earlier period. Net income for the first nine months of fiscal 2004 increased to $214.9 million, or $3.30 per fully diluted share, compared to $166.1 million, or $2.53 per fully diluted share, in 2003.  The dollar value of year-to-year net contracts during the nine-month period increased by 51% and the number of home deliveries rose by 28%, including the impact of unconsolidated joint ventures.

 

Comments from Management

 

“We are extremely pleased to report record revenues, earnings, deliveries and backlog for the third quarter,” said Ara K. Hovnanian, President and Chief Executive Officer of the Company. “Our 26% growth in earnings and 34% increase in the dollar value of our quarterly net contracts demonstrate the healthy demand for our new homes and the underlying strength of our business. We continue to produce some of the highest returns in the industry and create exceptional value for our shareholders, achieving a 42% return on equity and 23% return on capital over the most recent twelve month period. Our robust financial performance is primarily due to continuing market share gains and our diversified product offerings, in addition to the underlying strength of housing demand driven by household formation,” he said. “While we have achieved industry leading growth for the past three years, we have also successfully implemented strategies designed to improve our profitability, maximize the efficiency of our homebuilding operations and develop a stronger market presence for our Company,” Mr. Hovnanian said.

 

“Current market conditions remain solid, particularly in the heavily regulated markets along the East and West coast, where housing demand continues to exceed the available supply,” Mr. Hovnanian said. “Looking ahead, we are well positioned to meet our growth objectives as our controlled land position of roughly 92,000 lots, more than a six year supply, provides a tremendous competitive advantage and excellent forward earnings visibility,” Mr. Hovnanian continued. “Additionally, as the economy continues to improve, we expect demand for new homes in our markets to remain strong, driven in part by accelerating job growth, on top of the underlying fundamental demand for housing. We are confident that the upward trends in the economy, combined with our ability to leverage our size and reduce costs, will more than offset any impact of rising mortgage rates,” he stated.

 

“Given the strength of our contract backlog, we are well positioned to achieve record financial results in fiscal 2004 and to continue our pattern of growth into fiscal 2005. We are increasing our projection for fiscal 2004 to exceed $5.30 per fully diluted share,” Mr. Hovnanian stated. “This upwardly revised earnings projection represents more than a 34% increase from last year’s record earnings of $3.93 per fully diluted share. Fiscal 2004 revenue is expected to grow more than 28% to over $4.1 billion on deliveries of more than 14,700 homes. Assuming economic conditions remain stable, we are projecting that our fiscal 2005 earnings will increase by nearly 20%, to exceed $6.30 per fully diluted share,” he concluded.

                                                                                                                                                                                                                             

 

“During the quarter we also significantly strengthened our balance sheet by increasing the size of our unsecured revolving credit facility to $900 million from $590 million, and extending the maturity through July 2008,” said J. Larry Sorsby, Executive Vice President and Chief Financial Officer. “The expansion of our credit facility improves our overall liquidity and provides additional flexibility in our capital structure to fund ongoing operations and meet our targeted growth objectives. We deployed capital during the quarter to fund our seasonally high summer backlog of homes under construction and to purchase new land parcels which position us for continued growth in revenues and profits.  Despite this investment of capital, our ratio of net recourse debt-to-capitalization at July 31, 2004 was 51.3%, and we anticipate that the Company’s average net recourse debt-to-capitalization ratio for fiscal 2004 will be at or below 50%, in line with our target,” Mr. Sorsby continued.

 

 “As previously announced, charges associated with changing our Forecast Homes brand name in California to K. Hovnanian Homes, and a charge for the extinguishment of debt, will have a combined impact of $0.20 on earnings per fully diluted share in the third and fourth quarters of fiscal 2004. Excluding these charges, our earnings would have been $1.46 per fully diluted share for the third quarter, or $0.13 higher than reported. Our projected earnings for fiscal 2004 would exceed $5.50 per fully diluted share, excluding these additional charges, which would represent roughly a 40% increase from our earnings per fully diluted share for fiscal 2003,” Mr. Sorsby concluded.

 

In Closing

 

“We are very proud of the continued strength in our financial performance and we are pleased with our recent sales activity.  The efforts of our talented group of associates in executing our business strategies have helped our Company achieve earnings growth and return on invested capital that rank near the top of the housing industry,” commented Mr. Hovnanian. “We remain well positioned to achieve our objectives for growth and return on capital for the remainder of fiscal 2004 and into fiscal 2005,” he concluded.

 

Hovnanian Enterprises will webcast its third quarter earnings conference call at 11:00 a.m. E.D.T. this morning, September 7, 2004, hosted by Ara K. Hovnanian, President and Chief Executive Officer of the Company.  The webcast can be accessed live through the “Investor Relations’” section of Hovnanian Enterprises’ Web site at http://www.khov.com. For those who are not available to listen to the live webcast, an archive of the broadcast will be available under the “Webcast” section of the Investor News page on the Hovnanian Web site at http://www.khov.com. The archive will be available for 12 months.

 

The Company has updated its summary projection for the fiscal year ending October 31, 2004.  The summary projection is available on the Company Projection page of the “Investor Relations” section of the Company’s website at http://www.khov.com.

 

Hovnanian Enterprises, Inc., founded in 1959 by Kevork S. Hovnanian, Chairman, is headquartered in Red Bank, New Jersey.  The Company is one of the nation’s largest homebuilders with operations in Arizona, California, Florida, Maryland, Michigan, Minnesota, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia and West Virginia.  The Company’s homes are marketed and sold under the trade names K. Hovnanian® Homes™, Washington Homes, Goodman Homes, Matzel & Mumford, Diamond Homes, Westminster Homes, Fortis Homes, Forecast Homes, Parkside Homes, Brighton Homes, Parkwood Builders, Great Western Homes and Windward Homes.  As the developer of K. Hovnanian’s® Four Seasons communities, the Company is also one of the nation’s largest builders of active adult homes.

 

 

Additional information on Hovnanian Enterprises, Inc., including a summary investment profile and the Company’s 2003 annual report, can be accessed through the Investors page of the Hovnanian Web site at http://www.khov.com. To be added to Hovnanian’s investor e-mail or fax lists, please send an e-mail to IR@khov.com  or sign up at http://www.khov.com.

 

Non-GAAP Financial Measures:

 

EBITDA is not a generally accepted accounting principle (GAAP) financial measure. The most directly comparable GAAP financial measure is net income. The reconciliation of EBITDA to net income is presented in a table attached to this earnings release.

 

Note:   All statements in this Press Release that are not historical facts should be considered as “forward-looking statements” within the meaning of the Private Securities Litigation Act of 1995.  Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.  Such risks, uncertainties and other factors include, but are not limited to, (1) changes in general and local economic and business conditions, (2) weather conditions, (3) changes in market conditions, (4) changes in home prices and sales activity in the markets where the Company builds homes, (5) government regulation, including regulations concerning development of land, the homebuilding process and the environment, (6) fluctuations in interest rates and the availability of mortgage financing, (7) shortages in and price fluctuations of raw materials and labor, (8) the availability and cost of suitable land and improved lots, (9) levels of competition, (10) availability of financing to the Company, (11) utility shortages and outages or rate fluctuations, (12) geopolitical risks, terrorist acts and other acts of war and (13) other factors described in detail in the Company’s Form 10-K for the year ended October 31, 2003.

 

(Financial Tables Follow)

 

 

Hovnanian Enterprises, Inc.

July 31, 2004

Statements of Consolidated Income

(Dollars in Thousands, Except Per Share)

 

		Three Months Ended, July 31,						Nine Months Ended, July 31,
		2004			2003			2004			2003
		(Unaudited)
Total Revenues		$	1,063,688		$	848,817		$	2,757,711		$	2,156,269
Costs and Expenses		923,672			739,009			2,412,843			1,890,897
Income Before Income Taxes		140,016			109,808			344,868			265,372
Provision for Taxes		53,278			41,006			129,947			99,241
Net Income		$	86,738		$	68,802		$	214,921		$	166,131
Per Share Data:
Basic:
Income per common share		$	1.40		$	1.12		$	3.47		$	2.68
Weighted Average Number of Common Shares Outstanding		62,001			61,260			61,887			62,088
Assuming Dilution:
Income per common share		$	1.33		$	1.06		$	3.30		$	2.53
Weighted Average Number of Common Shares Outstanding		65,115			65,086			65,158			65,612

 

 

Hovnanian Enterprises, Inc.

July 31, 2004

Homebuilding Gross Margin

(Dollars in Thousands)

 

		Homebuilding Gross Margin Three Months Ended July 31,						Homebuilding Gross Margin Nine Months Ended July 31,
		2004			2003			2004			2003
		(Unaudited)
Sale of Homes		$	1,044,610		$	830,734		$	2,702,826		$	2,104,788
Cost of Sales		778,121			618,650			2,014,799			1,572,306
Homebuilding Gross Margin		$	266,489		$	212,084		$	688,027		$	532,482
Gross Margin Percentage		25.5		%	25.5		%	25.5		%	25.3		%

 

		Land Sales Gross Margin Three Months Ended July 31,						Land Sales Gross Margin Nine Months Ended July 31,
		2004			2003			2004			2003
		(Unaudited)
Land and Lot Sales		$	230		$	3,314		$	1,815		$	13,064
Cost of Sales		95			3,247			1,458			9,988
Land and Lot Gross Margin		$	135		$	67		$	357		$	3,076

 

 

Hovnanian Enterprises, Inc.

July 31, 2004

Reconciliation of EBITDA to Net Income

(Dollars in Thousands)

 

		Three Months Ended July 31,						Nine Months Ended July 31,
		2004			2003			2004			2003
		(Unaudited)
Net Income		$	86,738		$	68,802		$	214,921		$	166,131
Income Taxes		53,278			41,006			129,947			99,241
Interest expense		17,725			17,204			53,764			44,308
EBIT(1)		$	157,741		$	127,012		$	398,632		$	309,680
Depreciation		1,603			1,721			4,606			4,946
Amortization Debt Fees		8,955			1,977			10,720			2,614
Amortization of Intangibles		9,716			3,159			19,115			5,465
Other Amortization		792			1,177			2,625			3,500
EBITDA(2)		$	178,807		$	135,046		$	435,698		$	326,205
INTEREST INCURRED		$	21,426		$	17,807		$	65,217		$	48,232
EBITDA TO INTEREST INCURRED		8.3			7.6			6.7			6.8

 

(1)   EBIT is a non-GAAP financial measure. The most directly comparable GAAP financial measure is net income. EBIT represents earnings before interest expense and income taxes.

 

(2)   EBITDA is a non-GAAP financial measure. The most directly comparable GAAP financial measure is net income. EBITDA represents earnings before interest expense, income taxes, depreciation and amortization.

 

Hovnanian Enterprises, Inc.

July 31, 2004

Interest Incurred, Expensed and Capitalized

(Dollars is Thousands)

 

		Three Months Ended July 31,						Nine Months Ended July 31,
		2004			2003			2004			2003
		(Unaudited)
Interest Capitalized at Beginning of Period		$	32,585		$	25,480		$	24,833		$	22,159
Plus Interest Incurred		21,426			17,807			65,217			48,232
Less Interest Expensed		17,725			17,204			53,764			44,308
Interest Capitalized at End of Period		$	36,286		$	26,083		$	36,286		$	26,083

 

 

Hovnanian Enterprises, Inc.

July 31, 2004

Summary Financial Projection

(Dollars in Millions, except per share or where noted)

(Unaudited)

 

		Fiscal Year 10/31/2001			Fiscal Year 10/31/2002			Fiscal Year 10/31/2003			Trailing 12 Mos. 7/31/2004				Projection Fiscal Year 10/31/2004*
Total Revenues ($ Billion)		$	1.7		$	2.6		$	3.2		$	3.8		>	$	4.1
Income Before Income Taxes		$	106.4		$	225.7		$	411.5		$	491.0		>	$	565.0
Pre-tax Margin		6.1		%	8.8		%	12.9		%	12.9		%	>	13.5		%
Net Income		$	63.7		$	137.7		$	257.4		$	306.2		>	$	350.0
Earnings Per Share (fully diluted)		$	1.15		$	2.14		$	3.93		$	4.72		>	$	5.30

 

* 2004 Projection is based on three quarters of actual data and one quarter of projected results.

 

 

HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands)

 

ASSETS		July 31, 2004			October 31, 2003
		(unaudited)
Homebuilding:
Cash and cash equivalents		$	6,667		$	121,913
Inventories - At the lower of cost or fair value:
Sold and unsold homes and lots under development		1,785,771			1,184,907
Land and land options held for future development or sale		357,092			270,502
Consolidated Inventory Not Owned:
Specific performance options		23,076			56,082
Variable interest entities		198,634			100,327
Other options		32,811			48,226
Total Consolidated Inventory Not Owned		254,521			204,635
Total Inventories		2,397,384			1,660,044
Receivables, deposits, and notes		49,614			42,506
Property, plant, and equipment - net		37,647			26,263
Prepaid expenses and other assets		146,174			106,525
Goodwill and indefinite life intangibles		32,658			82,658
Definite life intangibles		122,062			56,978
Total Homebuilding		2,792,206			2,096,887
Financial Services:
Cash and cash equivalents		12,317			6,308
Mortgage loans held for sale		150,782			224,052
Other assets		3,047			3,945
Total Financial Services		166,146			234,305
Income Taxes Receivable - Including deferred tax benefits		21,903			1,179
Total Assets		$	2,980,255		$	2,332,371

 

 

HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands)

 

LIABILITIES AND STOCKHOLDERS’ EQUITY		July 31, 2004			October 31, 2003
		(unaudited)
Homebuilding:
Nonrecourse land mortgages		$	23,066		$	43,795
Accounts payable and other liabilities		290,686			230,696
Customers’ deposits		92,383			58,376
Liabilities from inventory not owned		49,824			94,780
Total Homebuilding		455,959			427,647
Financial Services:
Accounts payable and other liabilities		5,583			5,917
Mortgage warehouse line of credit		144,853			166,711
Total Financial Services		150,436			172,628
Notes Payable:
Revolving and term credit agreements		215,000			115,000
Senior notes		602,589			387,166
Senior subordinated notes		300,000			300,000
Accrued interest		14,546			15,675
Total Notes Payable		1,132,135			817,841
Total Liabilities		1,738,530			1,418,116
Minority interest from inventory not owned		179,255			90,252
Minority interest from consolidated joint ventures		8,731			4,291
Stockholders’ Equity:
Preferred Stock,$.01 par value-authorized 100,000 shares; none issued
Common Stock,Class A,$.01 par value-authorized 200,000,000 shares; issued 56,768,461 shares at July 31, 2004 and 56,036,116 shares at October 31, 2003 (including 10,395,656 shares at July 31, 2004 and 10,780,436 shares at October 31, 2003 held in Treasury)		567			560
Common Stock,Class B,$.01 par value (convertible to Class A at time of sale) authorized 30,000,000 shares; issued 15,379,780 shares at July 31, 2004 and 15,537,016 shares at October 31, 2003 (including 691,748 shares at July 31, 2004 and October 31, 2003 held in Treasury)		154			155
Paid in Capital		184,260			163,355
Retained Earnings		920,103			705,182
Deferred Compensation		(1,295		)
Treasury Stock - at cost		(50,050		)	(49,540		)
Total Stockholders’ Equity		1,053,739			819,712
Total Liabilities and Stockholders’ Equity		$	2,980,255		$	2,332,371

 

 

HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In Thousands Except Per Share Data)

(Unaudited)

 

		Three Months Ended July 31,						Nine Months Ended July 31,
		2004			2003			2004			2003
Revenues:
Homebuilding:
Sale of homes		$	1,044,610		$	830,734		$	2,702,826		$	2,104,788
Land sales and other revenues		5,395			4,441			12,959			16,445
Total Homebuilding		1,050,005			835,175			2,715,785			2,121,233
Financial Services		13,683			13,642			41,926			35,036
Total Revenues		1,063,688			848,817			2,757,711			2,156,269
Expenses:
Homebuilding:
Cost of sales		778,216			621,897			2,016,257			1,582,294
Selling, general and administrative		82,905			66,136			235,210			180,035
Inventory impairment loss		1,438			149			2,230			1,633
Total Homebuilding		862,559			688,182			2,253,697			1,763,962
Financial Services		8,637			7,635			25,334			19,629
Corporate General and Administrative		13,011			16,978			42,229			45,026
Interest		17,725			17,204			53,764			44,308
Expenses Related To Extinguishment Of Debt		8,663			1,619			9,597			1,619
Other Operations		3,361			4,232			9,107			10,888
Intangible Amortization		9,716			3,159			19,115			5,465
Total Expenses		923,672			739,009			2,412,843			1,890,897
Income Before Income Taxes		140,016			109,808			344,868			265,372
State and Federal Income Taxes:
State		7,761			5,439			20,417			11,874
Federal		45,517			35,567			109,530			87,367
Total Taxes		53,278			41,006			129,947			99,241
Net Income		$	86,738		$	68,802		$	214,921		$	166,131
Per Share Data:
Basic:
Income per common share		$	1.40		$	1.12		$	3.47		$	2.68
Weighted average number of common shares outstanding		62,001			61,260			61,887			62,088
Assuming dilution:
Income per common share		$	1.33		$	1.06		$	3.30		$	2.53
Weighted average number of common shares outstanding		65,115			65,086			65,158			65,612

 

 

HOVNANIAN ENTERPRISES, INC.

(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)

(Unaudited)

 

Communities Under Development

Three Months - 7/31/04

 

		Net Contracts(1) Three Months Ended July 31st						Deliveries Three Months Ended July 31st						Contract Backlog July 31st
		2004		2003		% Change		2004		2003		% Change		2004		2003		% Change
Northeast Region
Homes		855		889		(3.8	)%	792		647		22.4	%	2,522		2,266		11.3	%
Dollars		267,692		261,624		2.3	%	261,470		210,039		24.5	%	768,066		613,884		25.1	%
Avg. Price		313,089		294,290		6.4	%	330,139		324,635		1.7	%	304,546		270,911		12.4	%
Southeast Region(2)
Homes		989		865		14.3	%	1,004		689		45.7	%	2,558		1,707		49.9	%
Dollars		293,707		239,817		22.5	%	272,395		165,583		64.5	%	772,073		497,907		55.1	%
Avg. Price		296,974		277,245		7.1	%	271,310		240,324		12.9	%	301,827		291,685		3.5	%
Southwest Region(2)
Homes		998		637		56.7	%	1,045		640		63.3	%	1,207		642		88.0	%
Dollars		179,232		125,292		43.1	%	181,491		129,907		39.7	%	206,540		127,636		61.8	%
Avg. Price		179,591		196,691		(8.7	)%	173,676		202,980		(14.4	)%	171,119		198,810		(13.9	)%
West Region
Homes		1,260		1,093		15.3	%	897		1,090		(17.7	)%	1,933		1,103		75.2	%
Dollars		507,214		336,890		50.6	%	329,254		325,205		1.2	%	777,598		359,821		116.1	%
Avg. Price		402,551		308,225		30.6	%	367,061		298,353		23.0	%	402,275		326,220		23.3	%
Consolidated Total
Homes		4,102		3,484		17.7	%	3,738		3,066		21.9	%	8,220		5,718		43.8	%
Dollars		1,247,843		963,623		29.5	%	1,044,610		830,734		25.7	%	2,524,277		1,599,248		57.8	%
Avg. Price		304,204		276,585		10.0	%	279,457		270,950		3.1	%	307,090		279,687		9.8	%
Unconsolidated Joint Ventures
Homes		71		14		N/A		27		9		N/A		281		23		N/A
Dollars		43,388		3,160		N/A		11,611		1,901		N/A		172,130		4,975		N/A
Avg. Price		N/A		225,749		N/A		N/A		211,171		N/A		N/A		N/A		N/A
Total
Homes		4,173		3,498		19.3	%	3,765		3,075		22.4	%	8,501		5,741		48.1	%
Dollars		1,291,231		966,783		33.6	%	1,056,221		832,635		26.9	%	2,696,407		1,604,223		68.1	%
Avg. Price		309,425		276,382		12.0	%	280,537		270,775		3.6	%	317,187		279,433		13.5	%

 

DELIVERIES INCLUDE EXTRAS

 

Notes:

(1) Net contracts is defined as new contracts signed during the period for the purchase of homes, less cancellations of prior contracts.

(2) The number of net contracts and backlog in the Southwest for quarter ended July 31, 2004 includes the effect of the Great Western Homes acquisition which closed in August 2003. The number of net contracts and backlog in the Southeast for the quarter ended July 31, 2004 includes the effect of the Windward Homes acquisition, which closed in November 2003.

 

 

HOVNANIAN ENTERPRISES, INC.

(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)

(Unaudited)

 

Communities Under Development

Nine Months - 7/31/04

 

		Net Contracts(1) Nine Months Ended July 31st						Deliveries Nine Months Ended July 31st						Contract Backlog July 31st
		2004		2003		% Change		2004		2003		% Change		2004		2003		% Change
Northeast Region(2)
Homes		2,405		1,896		26.8	%	2,101		1,540		36.4	%	2,522		2,266		11.3	%
Dollars		778,303		582,015		33.7	%	661,998		494,957		33.7	%	768,066		613,884		25.1	%
Avg. Price		323,619		306,970		5.4	%	315,087		321,401		(2.0	)%	304,546		270,911		12.4	%
Southeast Region(2)
Homes		3,132		2,400		30.5	%	2,778		1,933		43.7	%	2,558		1,707		49.9	%
Dollars		886,696		637,177		39.2	%	716,942		479,865		49.4	%	772,073		497,907		55.1	%
Avg. Price		283,109		265,490		6.6	%	258,078		248,249		4.0	%	301,827		291,685		3.5	%
Southwest Region(2)
Homes		2,871		1,722		66.7	%	2,653		1,519		74.7	%	1,207		642		88.0	%
Dollars		503,157		338,197		48.8	%	463,869		309,336		50.0	%	206,540		127,636		61.8	%
Avg. Price		175,255		196,398		(10.8	)%	174,847		203,645		(14.1	)%	171,119		198,810		(13.9	)%
West Region
Homes		3,600		2,994		20.2	%	2,460		2,846		(13.6	)%	1,933		1,103		75.2	%
Dollars		1,339,917		882,976		51.8	%	860,017		819,369		5.0	%	777,598		359,821		116.1	%
Avg. Price		372,199		294,915		26.2	%	349,600		287,902		21.4	%	402,275		326,220		23.3	%
Other
Homes		N/A		2		N/A		N/A		9		N/A		N/A		N/A		N/A
Dollars		N/A		313		N/A		N/A		1,261		N/A		N/A		N/A		N/A
Avg. Price		N/A		156,500		N/A		N/A		140,111		N/A		N/A		N/A		N/A
Consolidated Total
Homes		12,008		9,014		33.2	%	9,992		7,847		27.3	%	8,220		5,718		43.8	%
Dollars		3,508,073		2,440,678		43.7	%	2,702,826		2,104,788		28.4	%	2,524,277		1,599,248		57.8	%
Avg. Price		292,145		270,765		7.9	%	270,499		268,228		0.8	%	307,090		279,687		9.8	%
Unconsolidated Joint Ventures
Homes		301		30		N/A		56		30		N/A		281		23		N/A
Dollars		179,174		6,409		N/A		22,921		6,074		N/A		172,130		4,975		N/A
Avg. Price		595,262		213,625		N/A		409,309		202,464		N/A		612,563		216,295		N/A
Total
Homes		12,309		9,044		36.1	%	10,048		7,877		27.6	%	8,501		5,741		48.1	%
Dollars		3,687,247		2,447,087		50.7	%	2,725,747		2,110,862		29.1	%	2,696,407		1,604,223		68.1	%
Avg. Price		299,557		270,576		10.7	%	271,273		267,978		1.2	%	317,187		279,433		13.5	%

 

DELIVERIES INCLUDE EXTRAS

 

Notes:

(1) Net contracts is defined as new contracts signed during the period for the purchase of homes, less cancellations of prior contracts.

(2) The number of net contracts and backlog in the Northeast for the nine months ended July 31, 2004 includes the effect of the Summit Homes acquisition, which closed in April 2003. The number of net contracts and backlog in the Southwest for the nine months ended July 31, 2004 includes the effect of the Brighton Homes and Great Western Homes acquisitions, which closed in December 2002 and August 2003, respectively. The number of net contracts and backlog in the Southeast for the nine months ended July 31, 2004 includes the effect of the Windward Homes acquisition, which closed in November 2003.