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Note 22 - Financial Information of Subsidiary Issuer and Subsidiary Guarantors
 12 Months Ended
Oct. 31, 2011
Condensed Financial Statements Disclosure [Text Block]
22. Financial Information of Subsidiary Issuer and Subsidiary Guarantors

Hovnanian Enterprises, Inc., the parent company (the “Parent”), is the issuer of publicly traded common stock and preferred stock, which is represented by depository shares. One of its wholly owned subsidiaries, K. Hovnanian Enterprises, Inc. (the “Subsidiary Issuer”), acts as a finance entity that as of October 31, 2011, had issued and outstanding approximately $797.0 million of senior secured notes ($786.6 million, net of discount), $807.1 million senior notes ($802.9 million, net of discount), and $13.3 million senior subordinated amortizing notes. The senior secured notes, senior notes, and senior subordinated amortizing notes are fully and unconditionally guaranteed by the Parent.

In addition to the Parent, each of the wholly owned subsidiaries of the Parent other than the Subsidiary Issuer (collectively, the “Guarantor Subsidiaries”), with the exception of our home mortgage subsidiaries, certain of our title insurance subsidiaries, joint ventures, subsidiaries holding interests in our joint ventures and our foreign subsidiary (collectively, the “Nonguarantor Subsidiaries”), have guaranteed fully and unconditionally, on a joint and several basis, the obligations of the Subsidiary Issuer to pay principal and interest under the senior secured notes, senior notes, and senior subordinated amortizing notes (issued as a component of our 7.25% Tangible Equity Units).

In lieu of providing separate audited financial statements for the Guarantor Subsidiaries, we have included the accompanying consolidating condensed financial statements. Management does not believe that separate financial statements of the Guarantor Subsidiaries are material to users of our consolidated financial statements. Therefore, separate financial statements and other disclosures concerning the Guarantor Subsidiaries are not presented.

The following Consolidating Condensed Financial Statements present the results of operations, financial position and cash flows of (i) the Parent, (ii) the Subsidiary Issuer, (iii) the Guarantor Subsidiaries, (iv) the Nonguarantor Subsidiaries and (v) the eliminations to arrive at the information for Hovnanian Enterprises, Inc. on a consolidated basis.

CONSOLIDATING CONDENSED BALANCE SHEET

OCTOBER 31, 2011

(In thousands)
 
Parent
   
Subsidiary
Issuer
   
Guarantor
Subsidiaries
   
Nonguarantor
Subsidiaries
   
Eliminations
   
Consolidated
 
Assets:
                                   
Homebuilding
  $ 12,756     $ 200,281     $ 1,096,594     $ 207,443     $       $ 1,517,074  
Financial services
                    4,537       80,569               85,106  
Investments in and amounts due to and from consolidated subsidiaries
    (467,562 )     2,140,349       (2,435,348 )     (9,364 )     771,925       -  
Total assets
  $ (454,806 )   $ 2,340,630     $ (1,334,217 )   $ 278,648     $ 771,925     $ 1,602,180  
Liabilities and equity:
                                               
Homebuilding
  $ 2,172     $ (33 )   $ 355,191     $ 11,276     $       $ 368,606  
Financial services
                    4,231       60,015               64,246  
Notes payable
            1,623,957       144                       1,624,101  
Income taxes payable
    39,716               2,113                       41,829  
Stockholders’ (deficit) equity
    (496,694 )     716,706       (1,695,896 )     207,265       771,925       (496,694 )
Non-controlling interest in consolidated joint ventures
                            92               92  
Total liabilities and equity
  $ (454,806 )   $ 2,340,630     $ (1,334,217 )   $ 278,648     $ 771,925     $ 1,602,180  

CONSOLIDATING CONDENSED BALANCE SHEET

OCTOBER 31, 2010

(In thousands)
 
Parent
   
Subsidiary
Issuer
   
Guarantor
Subsidiaries
   
Nonguarantor
Subsidiaries
   
Eliminations
   
Consolidated
 
Assets:
                                   
Homebuilding
  $ 14,498     $ 334,551     $ 1,165,877     $ 200,839     $       $ 1,715,765  
Financial services
                    4,435       97,360               101,795  
Investments in and amounts due to and from consolidated subsidiaries
    (330,310 )     2,061,186       (2,202,568 )     2,009       469,683       -  
Total assets
  $ (315,812 )   $ 2,395,737     $ (1,032,256 )   $ 300,208     $ 469,683     $ 1,817,560  
Liabilities and equity:
                                               
Homebuilding
  $ 1,458     $       $ 401,567     $ 4,463     $       $ 407,488  
Financial services
                    4,271       85,514               89,785  
Notes payable
            1,640,144       171                       1,640,315  
Income taxes payable
    21,298               (3,388 )                     17,910  
Stockholders’ (deficit) equity
    (338,568 )     755,593       (1,434,877 )     209,601       469,683       (338,568 )
Non-controlling interest in consolidated joint ventures
                            630               630  
Total liabilities and equity
  $ (315,812 )   $ 2,395,737     $ (1,032,256 )   $ 300,208     $ 469,683     $ 1,817,560  

CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS

TWELVE MONTHS ENDED OCTOBER 31, 2011

(In thousands)
 
Parent
   
Subsidiary
Issuer
   
Guarantor
Subsidiaries
   
Non-Guarantor
Subsidiaries
   
Eliminations
   
Consolidated
 
Revenues:
                                   
Homebuilding
  $ 21     $ (245 )   $ 1,103,249     $ 7,360     $ (4,959 )   $ 1,105,426  
Financial services
                    5,523       23,958               29,481  
Intercompany charges
            114,592       (152,042 )     (655 )     38,105       -  
Total revenues
    21       114,347       956,730       30,663       33,146       1,134,907  
Expenses:
                                               
Homebuilding
    5,704       164,947       1,218,886       1,073       13,084       1,403,694  
Financial services
    307               4,809       16,263       (8 )     21,371  
Total expenses
    6,011       164,947       1,223,695       17,336       13,076       1,425,065  
Gain on extinguishment of debt
            7,528                               7,528  
(Loss) income from unconsolidated joint ventures
                    (712 )     (8,246 )             (8,958 )
(Loss) income before income taxes
    (5,990 )     (43,072 )     (267,677 )     5,081       20,070       (291,588 )
State and federal income taxes
    (20,084 )             14,583                       (5,501 )
Equity in (loss) income from
    subsidiaries
    (300,181 )                             300,181       -  
Net (loss) income
  $ (286,087 )   $ (43,072 )   $ (282,260 )   $ 5,081     $ 320,251     $ (286,087 )

CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS

TWELVE MONTHS ENDED OCTOBER 31, 2010

(In thousands)
 
Parent
   
Subsidiary
Issuer
   
Guarantor
Subsidiaries
   
Non-Guarantor
Subsidiaries
   
Eliminations
   
Consolidated
 
Revenues:
                                   
Homebuilding
  $ 20     $ (350 )   $ 1,340,887     $ 4,272     $ (4,960 )   $ 1,339,869  
Financial services
                    6,353       25,620               31,973  
Intercompany charges
            128,383       (190,616 )     (228 )     62,461       -  
Total revenues
    20       128,033       1,156,624       29,664       57,501       1,371,842  
Expenses:
                                               
Homebuilding
    8,638       173,709       1,473,481       (11,332 )     25,557       1,670,053  
Financial services
    505               5,182       17,905       (518 )     23,074  
Total expenses
    9,143       173,709       1,478,663       6,573       25,039       1,693,127  
Gain on extinguishment of debt
            25,047                               25,047  
(Loss) income from unconsolidated joint ventures
                    (1,023 )     1,979               956  
(Loss) income before income taxes
    (9,123 )     (20,629 )     (323,062 )     25,070       32,462       (295,282 )
State and federal income taxes
    (309,922 )             12,052                       (297,870 )
Equity in (loss) income from subsidiaries
    (298,211 )                             298,211       -  
Net income (loss)
  $ 2,588     $ (20,629 )   $ (335,114 )   $ 25,070     $ 330,673     $ 2,588  

CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS

TWELVE MONTHS ENDED OCTOBER 31, 2009

(In thousands)
 
Parent
   
Subsidiary
Issuer
   
Guarantor
Subsidiaries
   
Non-Guarantor
Subsidiaries
   
Eliminations
   
Consolidated
 
Revenues:
                                   
Homebuilding
  $ 19     $ 3,438     $ 1,560,198     $ 2,044     $ (4,959 )   $ 1,560,740  
Financial services
                    7,743       27,807               35,550  
Intercompany charges
            209,599       (251,402 )     (3,597 )     45,400       -  
Total revenues
    19       213,037       1,316,539       26,254       40,441       1,596,290  
Expenses:
                                               
Homebuilding
    26,309       632,640       1,954,821       1,231       (11,843 )     2,603,158  
Financial services
    639               6,570       22,635       (549 )     29,295  
Total expenses
    26,948       632,640       1,961,391       23,866       (12,392 )     2,632,453  
Gain on extinguishment of debt
            409,929       256                       410,185  
(Loss) income from unconsolidated joint ventures
                    (9,782 )     (36,259 )             (46,041 )
(Loss) income before income taxes
    (26,929 )     (9,674 )     (654,378 )     (33,871 )     52,833       (672,019 )
State and federal income taxes
    44,693       (3,386 )     50,932       (11,919 )     (35,627 )     44,693  
Equity in (loss) income from subsidiaries
    (645,090 )                             645,090          
Net (loss) income
  $ (716,712 )   $ (6,288 )   $ (705,310 )   $ (21,952 )   $ 733,550     $ (716,712 )

CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS

TWELVE MONTHS ENDED OCTOBER 31, 2011

(In thousands)
 
Parent
   
Subsidiary
Issuer
   
Guarantor
Subsidiaries
   
Non-Guarantor
Subsidiaries
   
Eliminations
   
Consolidated
 
Cash flows from operating activities:
                                   
Net income (loss)
  $ (286,087 )   $ (43,072 )   $ (282,260 )   $ 5,081     $ 320,251     $ (286,087 )
Adjustments to reconcile net income to net cash (used in) provided by operating activities
    93,926       (34,441 )     357,401       (17,963 )     (320,251 )     78,672  
Net cash (used in) provided by operating activities
    (192,161 )     (77,513 )     75,141       (12,882 )     -       (207,415 )
Net cash used in investing activities
    -       -       (223 )     1,418       -       1,195  
Net cash (used in) provided by financing activities
    54,899       56,428       2,367       (23,914 )     -       89,780  
Intercompany investing and financing activities - net
    137,252       (79,163 )     (69,462 )     11,373       -       -  
Net (decrease) increase in cash
    (10 )     (100,248 )     7,823       (24,005 )     -       (116,440 )
Cash and cash equivalents balance, beginning of period
    10       212,370       (12,812 )     167,612       -       367,180  
Cash and cash equivalents balance, end of period
  $ -     $ 112,122     $ (4,989 )   $ 143,607     $ -     $ 250,740  

CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS

TWELVE MONTHS ENDED OCTOBER 31, 2010

(In thousands)
 
Parent
   
Subsidiary
Issuer
   
Guarantor
Subsidiaries
   
Non-Guarantor
Subsidiaries
   
Eliminations
   
Consolidated
 
Cash flows from operating activities:
                                   
Net (loss) income
  $ 2,588     $ (20,629 )   $ (335,114 )   $ 25,070     $ 330,673     $ 2,588  
Adjustments to reconcile net income to net cash (used in) provided by operating activities
    (24,192 )     47,439       151,814       185,511       (330,673 )     29,899  
Net cash (used in) provided by operating activities
    (21,604 )     26,810       (183,300 )     210,581       -       32,487  
Net cash (used in) investing activities
                    (1,146 )     1,130               (16 )
Net cash (used in) financing activities
            (113,232 )     3,463       17,786               (91,983 )
Intercompany investing and financing activities - net
    21,604       6,385       183,755       (211,744 )             -  
Net (decrease) increase in cash
    -       (80,037 )     2,772       17,753       -       (59,512 )
Cash and cash equivalents balance, beginning of period
    10       292,407       (15,584 )     149,859               426,692  
Cash and cash equivalents balance, end of period
  $ 10     $ 212,370     $ (12,812 )   $ 167,612     $ -     $ 367,180  

CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS

TWELVE MONTHS ENDED OCTOBER 31, 2009

(In thousands)
 
Parent
   
Subsidiary
Issuer
   
Guarantor
Subsidiaries
   
Non-Guarantor
Subsidiaries
   
Eliminations
   
Consolidated
 
Cash flows from operating activities:
                                   
Net (loss) income
  $ (716,712 )   $ (6,288 )   $ (705,310 )   $ (21,952 )   $ 733,550     $ (716,712 )
Adjustments to reconcile net income to net cash (used in) provided by operating activities
    (197,982 )     (542,328 )     2,158,974       1,870       (733,550 )     686,984  
Net cash (used in) provided by operating activities
    (914,694 )     (548,616 )     1,453,664       (20,082 )     -       (29,728 )
Net cash (used in) provided by investing activities
                    (6,310 )     (13,597 )             (19,907 )
Net cash used in financing activities
            (340,427 )     (2,368 )     (28,934 )             (371,729 )
Intercompany investing and financing activities - net
    914,687       334,955       (1,444,620 )     194,978       -       -  
Net  (decrease) increase in cash
    (7 )     (554,088 )     366       132,365       -       (421,364 )
Cash and cash equivalents balance, beginning of period
    17       846,495       (15,950 )     17,494               848,056  
Cash and cash equivalents balance, end of period
  $ 10     $ 292,407     $ (15,584 )   $ 149,859     $ -     $ 426,692