Hovnanian Enterprises Reports Fiscal 2012 Results

Hovnanian Enterprises Reports Fiscal 2012 Results

   Fourth Quarter Net Income, Excluding Debt Extinguishment Charge, Exceeds
                              Consensus Estimate

     Reports First Quarterly Pre-Tax Profit, Excluding Gains or Losses on
      Extinguishment of Debt, Since the Industry Downturn Began in 2006

RED BANK, N.J., Dec. 13, 2012 (GLOBE NEWSWIRE) -- Hovnanian Enterprises, Inc.
(NYSE:HOV), a leading national homebuilder, reported results for its fourth
quarter and year ended October 31, 2012.

RESULTS FOR THREE AND TWELVE MONTH PERIODS ENDED OCTOBER 31, 2012:

  *Total revenues were $487.0 million in the fiscal 2012 fourth quarter up
    42.6% compared with $341.6 million in the prior year's fourth quarter. For
    all of fiscal 2012, total revenues were $1.5 billion, up 30.9%, compared
    with $1.1 billion during all of fiscal 2011.
    
  *The dollar value of net contracts, including unconsolidated joint
    ventures, for the fourth quarter ended October 31, 2012 increased 46.3% to
    $513.4 million compared with $350.9 million in the 2011 fourth quarter.
    The number of net contracts increased 22.8% to 1,443 homes for the three
    months ended October 31, 2012 from 1,175 homes in the fourth quarter of
    the prior year.
    
  *In all of fiscal 2012, the dollar value of net contracts, including
    unconsolidated joint ventures, increased 43.9% to $1.9 billion compared
    with $1.3 billion in all of fiscal 2011 and the number of net contracts
    increased 30.1% to 5,838 homes compared with 4,488 homes of the previous
    year.
    
  *Deliveries, including unconsolidated joint ventures, were 1,750 homes
    during the fourth quarter of 2012, up 40.6% compared with 1,245 homes in
    the same period of the prior year. During the twelve months ended October
    31, 2012, deliveries, including unconsolidated joint ventures, were 5,356
    homes compared with 4,216 homes during the twelve month period a year ago,
    an increase of 27.0%.
    
  *Contract backlog, as of October 31, 2012, including unconsolidated joint
    ventures, was $742.2 million for 2,145 homes, which was an increase of
    34.4% and 29.0%, respectively, compared to October 31, 2011.
    
  *Homebuilding gross margin percentage, before interest expense included in
    cost of sales, increased 280 basis points to 18.3% for the fourth quarter
    ended October 31, 2012, compared to 15.5% in last year's fourth quarter.
    The fourth quarter of fiscal 2012 represented the sixth sequential
    increase in quarterly gross margin percentage. During all of 2012,
    homebuilding gross margin percentage, before interest expense included in
    cost of sales, was 17.8% compared with 15.6% in same period of the prior
    year.
    
  *Total SG&A was $48.7 million, or 10.0% of total revenues, for the three
    months ended October 31, 2012 compared to $57.8 million, or 16.9% of total
    revenues, during the same quarter a year ago and $48.1 million, or 12.4%
    of total revenues, in the third quarter of 2012. During all of fiscal
    2012, total SG&A was $190.3 million, or 12.8% of total revenues, compared
    with $211.4 million, or 18.6% of total revenues, last year.
    
  *Consolidated pre-tax land-related charges in the fiscal 2012 fourth
    quarter were $5.3 million compared with $59.9 million in the prior year's
    fourth quarter. For all of fiscal 2012 consolidated pre-tax land-related
    charges were $12.5 million compared with $101.7 million during all of
    2011.
    
  *Excluding land-related charges and gains or losses on extinguishment of
    debt, the pre-tax income in the fiscal 2012 fourth quarter was $8.1
    million compared with a pre-tax loss of $45.2 million in the previous
    year's fourth quarter. After $5.3 million in land-related charges, the
    pre-tax income, excluding gains or losses on extinguishment of debt, was
    $2.8 million for the fourth quarter of fiscal 2012. For the twelve months
    ended October 31, 2012, excluding land-related charges, expenses
    associated with the debt exchange offer and gains or losses on
    extinguishment of debt, the pre-tax loss was $55.0 million compared with
    $194.1 million last year.
    
  *The pre-tax loss for the fourth quarter ended October 31, 2012, including
    an $87.0 million loss on extinguishment of debt, was $84.2 million
    compared with $97.8 million in the 2011 fourth quarter. For the twelve
    months ended October 31, 2012, the pre-tax loss, including gains or losses
    on extinguishment of debt, was $101.2 million compared with $291.6 million
    for all of the prior year.
    
  *The net loss was $84.4 million during the fourth quarter of 2012, or $0.59
    per common share, compared with a net loss of $98.3 million, or $0.90 per
    common share, in the 2011 fourth quarter. For all of fiscal 2012, the net
    loss was $66.2 million, or $0.52 per common share, compared with a net
    loss of $286.1 million, or $2.85 per common share, in the prior year. The
    net loss in the fiscal 2012 fourth quarter and for the full year included
    an $87.0 million loss on extinguishment of debt, associated with the 2012
    fourth quarter $797 million debt refinancing.
    
  *The contract cancellation rate, including unconsolidated joint ventures,
    for the fourth quarter ended October 31, 2012 was 23%, compared with 21%
    in last year's fourth quarter.
    
  *During November of 2012, the dollar value of net contracts and the number
    of net contracts, including unconsolidated joint ventures, increased 38.1%
    and 18.5% respectively to $131.5 million compared with $95.2 million and
    to 385 homes from 325 homes in the same month last year.
    
  *The valuation allowance was $937.9 million as of October 31, 2012. The
    valuation allowance is a non-cash reserve against the tax assets for GAAP
    purposes. For tax purposes, the tax deductions associated with the tax
    assets may be carried forward for 20 years from the date the deductions
    were incurred.

LIQUIDITY AND INVENTORY AS OF OCTOBER 31, 2012:

  *After spending $127.9 million during the fourth quarter of 2012 on land
    and land development, homebuilding cash increased $36.9 million from the
    third quarter to $289.0 million, as of October 31, 2012, including $30.7
    million of restricted cash required to collateralize letters of credit.
    
  *As of October 31, 2012, the land position, including unconsolidated joint
    ventures, was 29,619 lots, consisting of 11,418 lots under option and
    18,201 owned lots.
    
  *Refinanced $797 million of secured senior notes during the fourth quarter
    of fiscal 2012, which reduces annual cash interest payments by
    approximately $17 million and extends the maturity of the refinanced debt
    from 2016 until 2020.
    
  *Announced an increase of our land banking arrangement with GSO Capital
    Partners LP, the credit arm of The Blackstone Group, for up to an
    additional $125 million of total acquisition and future development costs.

COMMENTS FROM MANAGEMENT:

"We are very happy to report a pre-tax profit before debt extinguishment gains
or losses for the first time in 25 quarters.The fourth quarter marked the
sixth sequential increase in our quarterly gross margin percentage, and our
gross margin has improved 350 basis points over that period," said Ara K.
Hovnanian, Chairman of the Board, President and Chief Executive
Officer."During fiscal 2012, we were able to generate significant operating
leverage by holding our total SG&A and interest expenses at a fairly constant
dollar amount, while growing our revenues by more than 30%.As a result, our
SG&A as a percentage of total sales declined to 10.0% during the fourth
quarter, which by historical standards we consider a normalized
level.Furthermore, our sales growth continued with a 46% increase in dollar
value of net contracts for the quarter and a 34% increase in dollar value of
our backlog.

"After the worst downturn that the homebuilding industry has ever seen, I do
not think there is any question that the industry is finally in a period of
modest recovery.Building homes creates jobs for carpenters, electricians,
plumbers and many other trades, as well as jobs in related industries like
manufacturing appliances and home furnishings.A sustained recovery in the
homebuilding sector will help drive overall improvement in the U.S. economy
and that will encourage even more consumers to buy a home," concluded Mr.
Hovnanian.

WEBCAST INFORMATION:

Hovnanian Enterprises will webcast its fiscal 2012 fourth quarter financial
results conference call at 11:00 a.m. E.T. on Thursday, December 13, 2012.The
webcast can be accessed live through the "Investor Relations" section of
Hovnanian Enterprises' Website 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 "Audio Archives" section of the Investor Relations page on
the Hovnanian Website at http://www.khov.com. The archive will be available
for 12 months.

ABOUT HOVNANIAN ENTERPRISES®, INC.:

Hovnanian Enterprises, Inc., founded in 1959 by Kevork S. Hovnanian, is
headquartered in Red Bank, New Jersey.The Company is one of the nation's
largest homebuilders with operations in Arizona, California, Delaware,
Florida, Georgia, Illinois, Maryland, Minnesota, New Jersey, North Carolina,
Ohio, Pennsylvania, South Carolina, Texas, Virginia, Washington, D.C. and West
Virginia.The Company's homes are marketed and sold under the trade names K.
Hovnanian^® Homes^®, Matzel & Mumford, Brighton Homes, Parkwood Builders, Town
& Country Homes and Oster 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 2011 annual report, can be accessed
through the "Investor Relations" section of the Hovnanian Enterprises' website
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.

The Hovnanian Enterprises, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=7499

NON-GAAP FINANCIAL MEASURES:

Consolidated earnings before interest expense and income taxes ("EBIT") and
before depreciation and amortization ("EBITDA") and before inventory
impairment loss and land option write-offs, expenses associated with debt
exchange offer and loss (gain) on extinguishment of debt ("Adjusted EBITDA")
are not U.S. generally accepted accounting principles (GAAP) financial
measures.The most directly comparable GAAP financial measure is net loss.The
reconciliation of EBIT, EBITDA and Adjusted EBITDA to net loss is presented in
a table attached to this earnings release.

Income (Loss) Before Income Taxes Excluding Land-Related Charges, Expenses
Associated with Debt Exchange Offer and Loss (Gain) on Extinguishment of Debt
is a non-GAAP financial measure.The most directly comparable GAAP financial
measure is Loss Before Income Taxes.The reconciliation of Income (Loss)
Before Income Taxes Excluding Land-Related Charges, Expenses Associated with
Debt Exchange Offer and Loss (Gain) on Extinguishment of Debt to Loss Before
Income Taxes is presented in a table attached to this earnings release.

FORWARD-LOOKING STATEMENTS

All statements in this press release that are not historical facts should be
considered as "forward-looking statements." 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. Although we believe that our plans, intentions and
expectations reflected in, or suggested by, such forward looking statements
are reasonable, we can give no assurance that such plans, intentions, or
expectations will be achieved. Such risks, uncertainties and other factors
include, but are not limited to, (1) changes in general and local economic and
industry and business conditions and impacts of the sustained homebuilding
downturn, (2) adverse weather and other environmental conditions and natural
disasters, (3) changes in market conditions and seasonality of the Company's
business, (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 home building, sales and customer
financing processes, tax laws, 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) levels of indebtedness and restrictions on the
Company's operations and activities imposed by the agreements governing the
Company's outstanding indebtedness, (13) the Company's sources of liquidity,
(14) changes in credit ratings, (15) availability of net operating loss
carryforwards, (16) operations through joint ventures with third parties, (17)
product liability litigation, warranty claims and claims by mortgage
investors, (18) successful identification and integration of acquisitions,
(19) significant influence of the Company's controlling stockholders, (20)
changes in tax laws affecting the after-tax costs of owning a home, (21)
geopolitical risks, terrorist acts and other acts of war, and (22) other
factors described in detail in the Company's Annual Report on Form 10-K for
the year ended October 31, 2011 and the Company's Quarterly Report on Form
10-Q for the quarterly period ended April 30, 2012. Except as otherwise
required by applicable securities laws, we undertake no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events, changed circumstances or any other reason.

                          (Financial Tables Follow)

Hovnanian Enterprises, Inc.                                               
October 31, 2012                                                          
Statements of Consolidated Operations                                     
(Dollars in Thousands, Except Per Share Data)                             
                            Three Months Ended  Twelve Months Ended
                             October 31,         October 31,
                            2012      2011      2012       2011
                            (Unaudited)         (Unaudited)           
Total Revenues               $487,045  $341,625  $1,485,353 $1,134,907
Costs and Expenses (a)       487,296   447,477   1,562,936  1,425,065
(Loss) Gain on               (87,033)  10,563    (29,066)   7,528
Extinguishment of Debt
Gain (Loss) from
Unconsolidated Joint         3,077     (2,479)   5,401      (8,958)
Ventures
Loss Before Income Taxes     (84,207)  (97,768)  (101,248)  (291,588)
Income Tax Provision         203       580       (35,051)   (5,501)
(Benefit)
Net Loss                     $(84,410) $(98,348) $(66,197)  $(286,087)
                                                        
Per Share Data:                                          
Basic:                                                   
Loss Per Common Share       $(0.59)   $(0.90)   $(0.52)    $(2.85)
Weighted Average Number of                               
Common Shares Outstanding    142,249   108,740   126,350    100,444
(b)
Assuming Dilution:                                       
Loss Per Common Share       $(0.59)   $(0.90)   $(0.52)    $(2.85)
Weighted Average Number of                               
Common Shares Outstanding    142,249   108,740   126,350    100,444
(b)
                                                        
(a) Includes inventory impairment loss and land option write-offs.       
(b) For periods with a net loss, basic shares are used in accordance   
with GAAP rules.

                                                                         
Hovnanian Enterprises, Inc.                                               
October 31, 2012                                                          
Reconciliation of Income (Loss) Before Income Taxes Excluding          
Land-Related
Charges, Expenses Associated with the Debt Exchange Offer and          
Loss (Gain) on Extinguishment of Debt to Loss Before Income Taxes       
(Dollars in Thousands)                                                    
                       Three Months Ended      Twelve Months Ended
                        October 31,             October 31,
                       2012        2011        2012        2011
                       (Unaudited)             (Unaudited)
Loss Before Income      $(84,207)   $(97,768)   $(101,248)  $(291,588)
Taxes
Inventory Impairment
Loss and Land Option    5,300       59,873      12,530      101,749
Write-Offs
Expenses Associated
with the Debt Exchange  --         --          4,694       --
Offer
Unconsolidated Joint
Venture Investment and  --          3,289       --          3,289
Land-Related Charges
Loss (Gain) on          87,033      (10,563)    29,066      (7,528)
Extinguishment of Debt
Income (Loss) Before
Income Taxes Excluding
Land-Related Charges,
Expenses Associated     $8,126      $(45,169)   $(54,958)   $(194,078)
with the Debt Exchange
Offerand Loss (Gain)
on Extinguishment of
Debt (a)
                                                        
(a) Income (Loss) Before Income Taxes Excluding Land-Related Charges,
Expenses Associated with the Debt Exchange Offer, and Loss (Gain) on
Extinguishment of Debt is a non-GAAP Financial measure. The most
directly comparable GAAP financial measure is Loss Before Income
Taxes.

                                                                         
Hovnanian Enterprises, Inc.                                               
October 31, 2012                                                          
Gross Margin                                                              
(Dollars in Thousands)                                                    
                                          
                   Homebuilding Gross       Homebuilding Gross Margin
                  Margin                   Twelve Months Ended
                   Three Months Ended       October 31,
                   October 31,
                  2012         2011        2012          2011
                  (Unaudited)              (Unaudited)
Sale of Homes      $469,275     $313,136    $1,405,580    $1,072,474
Cost of Sales,
Excluding Interest 383,275      264,747     1,155,643     905,253
(a)
Homebuilding Gross
Margin, Excluding  86,000       48,389      249,937       167,221
Interest
Homebuilding Cost  14,014       15,345      48,843        57,016
of Sales Interest
Homebuilding Gross
Margin, Including  $71,986      $33,044     $201,094      $110,205
Interest
                                                      
Gross Margin
Percentage,        18.3%        15.5%       17.8%         15.6%
Excluding Interest
Gross Margin
Percentage,        15.3%        10.6%       14.3%         10.3%
Including Interest
                                                      
                   Land Sales Gross Margin  Land Sales Gross Margin
                  Three Months Ended       Twelve Months Ended
                   October 31,              October 31,
                  2012         2011        2012          2011
                  (Unaudited)              (Unaudited)
Land Sales         $3,051       $18,529     $31,788       $26,745
Cost of Sales,
Excluding Interest 2,358        3,005       24,158        8,648
(a)
Land Sales Gross
Margin, Excluding  693          15,524      7,630         18,097
Interest
Land Sales         433          15,527      5,695         17,660
Interest
Land Sales Gross
Margin, Including  $260         $(3)        $1,935        $437
Interest
                                                      
(a) Does not include cost associated with walking away from land
options or inventory impairment losses which are recorded as Inventory
impairment loss and land option write-offs in the Consolidated
Statements of Operations.

                                                                         
Hovnanian Enterprises, Inc.                                              
October 31, 2012                                                         
Reconciliation of Adjusted EBITDA to Net Loss                            
(Dollars in Thousands)                                                   
                     Three Months Ended      Twelve Months Ended
                      October 31,             October 31,
                     2012        2011        2012        2011
                     (Unaudited)             (Unaudited)
Net Loss            $(84,410)   $(98,348)   $(66,197)   $(286,087)
Income Tax Provision 203         580         (35,051)    (5,501)
(Benefit)
Interest Expense    39,701      53,962      152,433     171,845
EBIT (a)             (44,506)    (43,806)    51,185      (119,743)
Depreciation        1,513       2,174       6,223       9,340
Amortization of Debt 905         1,041       3,713       3,978
Costs
EBITDA (b)           (42,088)    (40,591)    61,121      (106,425)
Inventory Impairment
Loss and Land Option  5,300       59,873      12,530      101,749
Write-offs
Expenses Associated
with Debt Exchange    --        --        4,694       --
Offer
Loss (Gain) on
Extinguishment of     87,033      (10,563)    29,066      (7,528)
Debt
Adjusted EBITDA (c)  $50,245     $8,719      $107,411    $(12,204)
                                                      
Interest Incurred   $36,733     $39,225     $147,048    $156,998
                                                      
Adjusted EBITDA to   1.37        0.22        0.73        (0.08)
Interest Incurred
                                                      
(a)EBIT is a non-GAAP financial measure. The most directly comparable
GAAP financial measure is net loss.EBIT represents earnings before
interest expense and income taxes.
(b)EBITDA is a non-GAAP financial measure. The most directly
comparable GAAP financial measure is net loss.EBITDA represents
earnings before interest expense, income taxes, depreciation and
amortization.
(c)Adjusted EBITDA is a non-GAAP financial measure. The most directly
comparable GAAP financial measure is net loss.Adjusted EBITDA
represents earnings before interest expense, income taxes,
depreciation, amortization, inventory impairment loss and land option
write-offs, expenses associated with debt exchange offer, and loss
(gain) on extinguishment of debt.

                                                                         
Hovnanian Enterprises, Inc.                                               
October 31, 2012                                                          
Interest Incurred, Expensed and Capitalized                               
(Dollars in Thousands)                                                    
                      Three Months Ended      Twelve Months Ended
                       October 31,             October 31,
                      2012        2011        2012         2011
                      (Unaudited)             (Unaudited)
Interest Capitalized   $119,024    $136,178    $121,441     $136,288
at Beginning of Period
Plus Interest Incurred 36,733      39,225      147,048      156,998
Less Interest Expensed 39,701      53,962      152,433      171,845
Interest Capitalized   $116,056    $121,441    $116,056     $121,441
at End of Period (a)
                                                        
(a) The Company incurred significant inventory impairments in recent
years, which are determined based on total inventory including
capitalized interest.However, the capitalized interest amounts are
shown gross before allocating any portion of impairments to
capitalized interest.

                                                                           
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES                                
CONSOLIDATED BALANCE SHEETS                                                 
(In Thousands)                                                              
                                                             
                                                  October 31, October 31,
                                                   2012        2011
                                                  (Unaudited) (1)
ASSETS                                                        
                                                             
Homebuilding:                                                 
Cash and cash equivalents                          $258,323    $244,356
                                                             
Restricted cash                                    41,732      73,539
                                                             
Inventories:                                                  
Sold and unsold homes and lots under development   671,851     720,149
                                                             
Land and land options held for future development  218,996     245,529
or sale
                                                             
Consolidated inventory not owned:                             
Specific performance options                       --          2,434
Other options                                      90,619      --
                                                             
Total consolidated inventory not owned             90,619      2,434
                                                             
Total inventories                                  981,466     968,112
                                                             
Investments in and advances to unconsolidated      61,083      57,826
joint ventures
                                                             
Receivables, deposits, and notes                   61,794      52,277
                                                             
Property, plant, and equipment – net               48,524      53,266
                                                             
Prepaid expenses and other assets                  66,694      67,698
                                                             
Total homebuilding                                 1,519,616   1,517,074
                                                             
Financial services:                                           
Cash and cash equivalents                          14,909      6,384
Restricted cash                                    22,470      4,079
Mortgage loans held for sale                       117,024     72,172
Other assets                                       10,231      2,471
                                                             
Total financial services                           164,634     85,106
                                                             
Total assets                                       $1,684,250  $1,602,180
                                                             
(1)Derived from the audited balance sheet as of October 31, 2011.          


HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share Amounts)
                                                                 
                                                      October 31, October 31,
                                                       2012        2011
                                                      (Unaudited) (1)
LIABILITIES AND EQUITY                                            
                                                                 
Homebuilding:                                                     
Nonrecourse land mortgages                             $38,302     $26,121
Accounts payable and other liabilities                 296,510     303,633
Customers' deposits                                    23,846      16,670
Nonrecourse mortgages secured by operating properties  18,775      19,748
Liabilities from inventory not owned                   77,791      2,434
                                                                 
Total homebuilding                                     455,224     368,606
                                                                 
Financial services:                                               
Accounts payable and other liabilities                 37,609      14,517
Mortgage warehouse line of credit                      107,485     49,729
                                                                 
Total financial services                               145,094     64,246
                                                                 
Notes payable:                                                    
Senior secured notes                                   977,369     786,585
Senior notes                                           458,736     802,862
Senior amortizing notes                                23,149      --
Senior exchangeable notes                              76,851      --
TEU senior subordinated amortizing notes               6,091       13,323
Accrued interest                                       20,199      21,331
                                                                 
Total notes payable                                    1,562,395   1,624,101
                                                                 
Income taxes payable                                   6,882       41,829
                                                                 
Total liabilities                                      2,169,595   2,098,782
                                                                 
Equity:                                                           
Hovnanian Enterprises, Inc. stockholders' equity                  
deficit:
Preferred stock, $.01 par value - authorized 100,000
shares; issued 5,600 shares with a                     135,299     135,299
liquidationpreference of $140,000 at October 31, 2012
and 2011
Common stock, Class A, $.01 par value – authorized
200,000,000 shares; issued and outstanding 130,055,304
shares at October 31, 2012 and 92,141,492 shares at    1,300       921
October 31, 2011 (including 11,760,763 and 11,694,720
shares at October 31, 2012 and 2011, respectively,
held in Treasury)
Common stock, Class B, $.01 par value (convertible to
Class A at time of sale) – authorized 30,000,000
shares; issued and outstanding 15,350,101 shares at    154         153
October 31, 2012 and 15,252,212 shares at October 31,
2011 (including 691,748 shares at October 31, 2012 and
2011 held in Treasury)
Paid in capital - common stock                         668,735     591,696
Accumulated deficit                                    (1,175,703) (1,109,506)
Treasury stock - at cost                               (115,360)   (115,257)
                                                                 
Total Hovnanian Enterprises, Inc. stockholders' equity (485,575)   (496,694)
deficit
                                                                 
Noncontrolling interest in consolidated joint ventures 230         92
                                                                 
Total equity deficit                                   (485,345)   (496,602)
                                                                 
Total liabilities and equity                           $1,684,250  $1,602,180
                                                                 
(1) Derived from the audited balance sheet as of                  
October 31, 2011.


HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands Except Per Share Data)
(Unaudited)
                                                                                
                                                    Three Months Ended  Twelve Months Ended
                                                     October 31,         October 31,
                                                    2012      2011      2012       2011
Revenues:                                                                        
Homebuilding:                                                                    
Saleofhomes                                        $469,275  $313,136  $1,405,580 $1,072,474
Landsalesandotherrevenues                        5,025     19,257    41,038     32,952
                                                                                
Totalhomebuilding                                   474,300   332,393   1,446,618  1,105,426
Financialservices                                   12,745    9,232     38,735     29,481
                                                                                
Totalrevenues                                       487,045   341,625   1,485,353  1,134,907
                                                                                
Expenses:                                                                        
Homebuilding:                                                                    
Costofsales,excludinginterest                    385,633   267,752   1,179,801  913,901
Costofsalesinterest                               14,447    30,872    54,538     74,676
Inventoryimpairment lossand land optionwrite-offs 5,300     59,873    12,530     101,749
                                                                                
Totalcostofsales                                  405,380   358,497   1,246,869  1,090,326
                                                                                
Selling,generalandadministrative                  37,477    46,512    142,087    161,456
                                                                                
Totalhomebuilding expenses                          442,857   405,009   1,388,956  1,251,782
                                                                                
Financialservices                                   6,998     5,177     23,648     21,371
                                                                                
Corporategeneralandadministrative                 11,271    11,329    48,232     49,938
                                                                                
Otherinterest                                       25,254    23,090    97,895     97,169
                                                                                
Other operations                                     916       2,872     4,205      4,805
                                                                                
Total expenses                                       487,296   447,477   1,562,936  1,425,065
                                                                                
(Loss) gain on extinguishment of debt                (87,033)  10,563    (29,066)   7,528
                                                                                
Income (loss) from unconsolidated joint ventures     3,077     (2,479)   5,401      (8,958)
                                                                                
Loss beforeincometaxes                             (84,207)  (97,768)  (101,248)  (291,588)
                                                                                
Stateandfederalincome tax provision (benefit):                                
State                                                133       425       (35,328)   (3,924)
Federal                                              70        155       277        (1,577)
                                                                                
Totalincome taxes                                   203       580       (35,051)   (5,501)
                                                                                
Net loss                                             $(84,410) $(98,348) $(66,197) $(286,087)
                                                                                
Persharedata:                                                                  
Basic:                                                                           
Loss percommonshare                                $(0.59)   $(0.90)   $(0.52)    $(2.85)
Weighted-averagenumberofcommonsharesoutstanding 142,249   108,740   126,350    100,444
                                                                                
Assuming dilution:                                                               
Loss percommonshare                                $(0.59)   $(0.90)   $(0.52)    $(2.85)
Weighted-averagenumberofcommonsharesoutstanding 142,249   108,740   126,350    100,444

                                                                                         
HOVNANIAN ENTERPRISES, INC.                                                                                          
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)                                                                           
(UNAUDITED)                                                                                                          
                                                                                       
                                                Communities Under
                                             Development              
                                                Three Months - October
                                                31, 2012
                       Net Contracts            Deliveries               Contract
                     Three Months Ending      Three Months Ending      Backlog
                       October 31,              October 31,              October 31,
                     2012     2011     %      2012     2011     %      2012     2011     %
                                         Change                   Change                   Change
Northeast                                                                        
(includes      Home    174      160      8.8%   202      174      16.1%  294      366      (19.7)%
unconsolidated
joint          Dollars $94,408  $75,093  25.7%  $100,906 $87,743  15.0%  $140,954 $163,778 (13.9)%
ventures)
(NJ, PA)      Avg.    $542,575 $469,331 15.6%  $499,535 $504,270 (0.9)% $479,435 $447,481 7.1%
               Price
Mid-Atlantic                                                                     
(includes      Home    203      175      16.0%  275      141      95.0%  366      370      (1.1)%
unconsolidated
joint          Dollars $88,474  $68,491  29.2%  $115,262 $52,470  119.7% $163,198 $153,953 6.0%
ventures)
(DE, MD, VA,   Avg.    $435,833 $391,377 11.4%  $419,135 $372,128 12.6%  $445,896 $416,089 7.2%
VW)           Price
Midwest                                                                          
(includes      Home    176      132      33.3%  215      154      39.6%  499      300      66.3%
unconsolidated
joint          Dollars $48,795  $31,064  57.1%  $52,299  $35,401  47.7%  $115,918 $63,317  83.1%
ventures)
(IL, MN, OH)  Avg.    $277,244 $235,333 17.8%  $243,251 $229,877 5.8%   $232,301 $211,057 10.1%
               Price
Southeast                                                                        
(includes      Home    197      116      69.8%  224      139      61.2%  283      168      68.5%
unconsolidated
joint          Dollars $54,466  $27,646  97.0%  $55,639  $34,180  62.8%  $79,340  $43,570  82.1%
ventures)
(FL, GA, NC,   Avg.    $276,477 $238,328 16.0%  $248,388 $245,899 1.0%   $280,353 $259,345 8.1%
SC)            Price
Southwest                                                                        
(includes      Home    511      437      16.9%  640      502      27.5%  506      331      52.9%
unconsolidated
joint          Dollars $153,700 $101,549 51.4%  $170,913 $126,204 35.4%  $160,840 $86,388  86.2%
ventures)
(AZ, TX)       Avg.    $300,783 $232,378 29.4%  $267,052 $251,402 6.2%   $317,866 $260,991 21.8%
               Price
West                                                                             
(includes      Home    182      155      17.4%  194      135      43.7%  197      128      53.9%
unconsolidated
joint          Dollars $73,566  $47,015  56.5%  $76,143  $40,047  90.1%  $81,973  $41,348  98.3%
ventures)
(CA)           Avg.    $404,209 $303,323 33.3%  $392,490 $296,644 32.3%  $416,107 $323,031 28.8%
               Price
Grand Total                                                                       
(includes      Home    1,443    1,175    22.8%  1,750    1,245    40.6%  2,145    1,663    29.0%
unconsolidated
joint          Dollars $513,409 $350,858 46.3%  $571,162 $376,045 51.9%  $742,223 $552,354 34.4%
ventures)
              Avg.    $355,793 $298,603 19.2%  $326,378 $302,044 8.1%   $346,025 $332,143 4.2%
               Price
Consolidated                                                                      
Total
(excludes      Home    1,289    1,016    26.9%  1,532    1,095    39.9%  1,889    1,387    36.2%
unconsolidated
joint          Dollars $440,865 $278,423 58.3%  $469,275 $313,136 49.9%  $632,318 $440,200 43.6%
ventures)
              Avg.    $342,021 $274,038 24.8%  $306,315 $285,969 7.1%   $334,737 $317,376 5.5%
               Price
Unconsolidated                                                                    
Joint Ventures Home    154      159      (3.1)% 218      150      45.3%  256      276      (7.2)%
              Dollars $72,544  $72,435  0.2%   $101,887 $62,909  62.0%  $109,905 $112,154 (2.0)%
              Avg.    $471,065 $455,566 3.4%   $467,372 $419,393 11.4%  $429,316 $406,355 5.7%
               Price
DELIVERIES INCLUDE EXTRAS                                                                                               
Notes:                                                                                                                
(1) Net contracts are defined as new contracts signed during the period for the purchase of                   
homes, less cancellations of prior contracts.

                                                                                            
HOVNANIAN ENTERPRISES, INC.                                                                                      
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)                                                                        
(UNAUDITED)                                                                                                        
                                                                                           
                                                    Communities Under
                                                 Development                  
                                                    Twelve Months - October 31,
                                                    2012
                       Net Contracts                Deliveries                   Contract
                     Twelve Months Ending         Twelve Months Ending         Backlog
                       October 31,                  October 31,                  October 31,
                     2012       2011       %      2012       2011       %      2012     2011     %
                                             Change                       Change                   Change
Northeast                                                                                
(includes      Home    646        628        2.9%   718        573        25.3%  294      366      (19.7)%
unconsolidated
joint          Dollars $333,788   $286,690   16.4%  $356,611   $276,012   29.2%  $140,954 $163,778 (13.9)%
ventures)
(NJ, PA)      Avg.    $516,700   $456,513   13.2%  $496,673   $481,696   3.1%   $479,435 $447,481 7.1%
               Price
Mid-Atlantic                                                                             
(includes      Home    828        654        26.6%  832        546        52.4%  366      370      (1.1)%
unconsolidated
joint          Dollars $352,048   $252,982   39.2%  $342,802   $205,584   66.7%  $163,198 $153,953 6.0%
ventures)
(DE, MD, VA,   Avg.    $425,179   $386,823   9.9%   $412,022   $376,527   9.4%   $445,896 $416,089 7.2%
WV)           Price
Midwest                                                                                  
(includes      Home    814        493        65.1%  615        479        28.4%  499      300      66.3%
unconsolidated
joint          Dollars $197,040   $109,896   79.3%  $144,439   $103,017   40.2%  $115,918 $63,317  83.1%
ventures)
(IL, MN, OH)  Avg.    $242,064   $222,913   8.6%   $234,860   $215,067   9.2%   $232,301 $211,057 10.1%
               Price
Southeast                                                                                
(includes      Home    681        450        51.3%  566        370        53.0%  283      168      68.5%
unconsolidated
joint          Dollars $176,735   $109,459   61.5%  $140,965   $89,724    57.1%  $79,340  $43,570  82.1%
ventures)
(FL, GA, NC,   Avg.    $259,523   $243,242   6.7%   $249,055   $242,497   2.7%   $280,353 $259,345 8.1%
SC)           Price
Southwest                                                                                
(includes      Home    2,178      1,720      26.6%  2,003      1,726      16.0%  506      331      52.9%
unconsolidated
joint          Dollars $590,208   $404,715   45.8%  $515,757   $418,631   23.2%  $160,840 $86,388  86.2%
ventures)
(AZ, TX)      Avg.    $270,986   $235,299   15.2%  $257,492   $242,544   6.2%   $317,866 $260,991 21.8%
               Price
West                                                                                     
(includes      Home    691        543        27.3%  622        522        19.2%  197      128      53.9%
unconsolidated
joint          Dollars $266,288   $167,860   58.6%  $225,663   $151,849   48.6%  $81,973  $41,348  98.3%
ventures)
(CA)           Avg.    $385,366   $309,134   24.7%  $362,802   $290,898   24.7%  $416,107 $323,031 28.8%
               Price
Grand Total                                                                               
(includes      Home    5,838      4,488      30.1%  5,356      4,216      27.0%  2,145    1,663    29.0%
unconsolidated
joint          Dollars $1,916,107 $1,331,602 43.9%  $1,726,237 $1,244,817 38.7%  $742,223 $552,354 34.4%
ventures)
              Avg.    $328,213   $296,703   10.6%  $322,300   $295,260   9.2%   $346,025 $332,143 4.2%
               Price
Consolidated                                                                              
Total
(excludes      Home    5,137      4,023      27.7%  4,676      3,832      22.0%  1,889    1,387    36.2%
unconsolidated
joint          Dollars $1,597,698 $1,129,785 41.4%  $1,405,580 $1,072,474 31.1%  $632,318 $440,200 43.6%
ventures)
              Avg.    $311,018   $280,831   10.7%  $300,595   $279,873   7.4%   $334,737 $317,376 5.5%
               Price
Unconsolidated                                                                            
Joint Ventures Home    701        465        50.8%  680        384        77.1%  256      276      (7.2)%
              Dollars $318,409   $201,817   57.8%  $320,657   $172,343   86.1%  $109,905 $112,154 (2.0)%
              Avg.    $454,221   $434,015   4.7%   $471,554   $448,810   5.1%   $429,316 $406,355 5.7%
               Price
DELIVERIES INCLUDE EXTRAS                                                                                         
Notes:                                                                                                              
(1) Net contracts are defined as new contracts signed during the period for the purchase of homes, less
cancellations of prior contracts.

CONTACT: J. Larry Sorsby
         Executive Vice President & CFO
         732-747-7800
        
         Jeffrey T. O'Keefe
         Vice President, Investor Relations
         732-747-7800

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