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Note 22 - Financial Information of Subsidiary Issuer and Subsidiary Guarantors
 12 Months Ended
Oct. 31, 2012
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, preferred stock, which is represented by depository shares, and 7.25% Tangible Equity Units. One of its wholly owned subsidiaries, K. Hovnanian Enterprises, Inc. (the “Subsidiary Issuer”), acts as a finance entity that as of October 31, 2012, had issued and outstanding approximately $992.0 million of senior secured notes ($977.4 million, net of discount), $460.6 million senior notes ($458.7 million, net of discount), $23.1 million senior amortizing notes and $76.9 million senior exchangeable notes (issued as components of our 6.0% exchangeable note units) and $6.1 million senior subordinated amortizing notes (issued as a component of our 7.25% Tangible Equity Units). The senior secured notes, senior notes, senior amortizing notes, senior exchangeable 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, “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 (other than the 2021 Notes), senior notes, senior exchangeable notes, senior amortizing notes and senior subordinated amortizing notes.  The 2021 Notes are guaranteed by the Guarantor Subsidiaries and the members of the Secured Group (see Note 9).

The senior notes, senior amortizing notes, senior exchangeable notes and senior subordinated amortizing notes have been registered under the Securities Act of 1933, as amended. The 2020 Secured Notes (see Note 9) and the 2021 Notes are not, pursuant to the indentures under which such notes were issued, required to be registered.  The Consolidating Condensed Financial Statements presented below are in respect of our registered notes only and not the 2020 Secured Notes or the 2021 Notes (however, the Guarantor Subsidiaries for the 2020 Secured Notes are the same as those represented by the accompanying Consolidating Condensed Financial Statements). In lieu of providing separate financial statements for the Guarantor Subsidiaries of our registered notes, we have included the accompanying Consolidating Condensed Financial Statements. Therefore, separate financial statements and other disclosures concerning such 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, 2012

(In thousands)
 
Parent
   
Subsidiary
Issuer
   
Guarantor
Subsidiaries
   
Nonguarantor
Subsidiaries
   
Eliminations
   
Consolidated
 
Assets:
                                   
Homebuilding
 
$
6,155
   
$
259,339
   
$
976,836
   
$
277,286
   
$
     
$
1,519,616
 
Financial services
                   
23,669
     
140,965
             
164,634
 
Investments in consolidated subsidiaries
   
25
 
   
15,311
     
70,067
 
   
 
     
(85,403
)    
-
 
Total assets
 
$
6,180
 
 
$
274,650
   
$
1,070,572
 
 
$
418,251
   
$
(85,403
)  
$
1,684,250
 
Liabilities and equity:
                                               
Homebuilding
 
$
1,671
   
$
125
   
$
391,628
   
$
61,800
   
$
     
$
455,224
 
Financial services
                   
23,070
     
122,024
             
145,094
 
Notes payable
           
1,561,635
     
271
     
489
             
1,562,395
 
Income taxes payable
   
40,551
             
(33,669
)
                   
6,882
 
Intercompany     449,533       (1,930,998 )     1,494,224       (12,759 )             -  
Stockholders’ (deficit) equity
   
(485,575
)
   
643,888
     
(804,952
)
   
246,467
     
(85,403
)    
(485,575
)
Non-controlling interest in consolidated joint ventures
                           
230
             
230
 
Total liabilities and equity
 
$
6,180
 
 
$
274,650
   
$
1,070,572
 
 
$
418,251
   
$
(85,403
)  
$
1,684,250
 

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 STATEMENT OF OPERATIONS

TWELVE MONTHS ENDED OCTOBER 31, 2012

(In thousands)
 
Parent
   
Subsidiary
Issuer
   
Guarantor
Subsidiaries
   
Non-Guarantor
Subsidiaries
   
Eliminations
   
Consolidated
 
Revenues:
                                   
Homebuilding
 
$
9
   
$
(270
)
 
$
1,364,733
   
$
87,124
   
$
(4,978
)
 
$
1,446,618
 
Financial services
                   
8,082
     
30,653
             
38,735
 
Intercompany charges
           
98,805
     
(120,094
)
   
(3,590
)
   
24,879
     
-
 
Total revenues
   
9
     
98,535
     
1,252,721
     
114,187
     
19,901
     
1,485,353
 
Expenses:
                                               
Homebuilding
   
3,030
     
150,297
     
1,300,728
     
79,899
     
5,334
     
1,539,288
 
Financial services
   
(28
)
           
5,737
     
17,951
     
(12
)
   
23,648
 
Total expenses
   
3,002
     
150,297
     
1,306,465
     
97,850
     
5,322
     
1,562,936
 
Loss on extinguishment of debt
           
(29,066
)
                           
(29,066
)
Income from unconsolidated joint ventures
                   
561
     
4,840
             
5,401
 
(Loss) income before income taxes
   
(2,993
)
   
(80,828
)
   
(53,183
)
   
21,177
     
14,579
     
(101,248
)
State and federal income tax (benefit) provision
   
(17,495
)
           
(17,580
)
   
24
             
(35,051
)
Equity in (loss) income from subsidiaries
   
(80,699
)
                           
80,699
     
-
 
Net (loss) income
 
$
(66,197
)
 
$
(80,828
)
 
$
(35,603
)
 
$
21,153
   
$
95,278
   
$
(66,197
)

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 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 tax (benefit) provision
   
(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
 
Income (loss) 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 tax (benefit) provision
   
(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 CASH FLOWS

TWELVE MONTHS ENDED OCTOBER 31, 2012

(In thousands)
 
Parent
   
Subsidiary
Issuer
   
Guarantor
Subsidiaries
   
Non-Guarantor
Subsidiaries
   
Eliminations
   
Consolidated
 
Cash flows from operating activities:
                                   
Net (loss) income
 
$
(66,197
)
 
$
(80,828
)
 
$
(35,603
)
 
$
21,153
   
$
95,278
   
$
(66,197
)
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities
   
37,030
     
51,593
     
146,028
     
(140,174
)
   
(95,278
)
   
(801
)
Net cash (used in) provided by operating activities
   
(29,167
)
   
(29,235
)
   
110,425
     
(119,021
)
   
-
     
(66,998
)
Net cash provided by (used in) investing activities
   
-
     
146
     
(3,260
)
   
1,614
     
-
     
(1,500
)
Net cash provided by (used in) financing activities
   
47,221
     
(79,976
)
   
49,670
     
74,075
     
-
     
90,990
 
Intercompany financing activities - net
   
(18,054
) 
   
194,040
     
(153,863
)
   
(22,123
)
   
-
     
-
 
Net increase (decrease) in cash
   
-
     
84,975
     
2,972
     
(65,455
)
   
-
     
22,492
 
Cash and cash equivalents balance, beginning of period
   
-
     
112,122
     
(4,989
)
   
143,607
     
-
     
250,740
 
Cash and cash equivalents balance, end of period
 
$
-
   
$
197,097
   
$
(2,017
)
 
$
78,152
   
$
-
   
$
273,232
 

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 (loss) income
 
$
(286,087
)
 
$
(43,072
)
 
$
(282,260
)
 
$
5,081
   
$
320,251
   
$
(286,087
)
Adjustments to reconcile net (loss) income to net cash provided by (used in) 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 provided by (used in) investing activities
   
-
     
-
     
(223
)
   
1,418
     
-
     
1,195
 
Net cash provided by (used in) financing activities
   
54,899
     
56,428
     
2,367
     
(23,914
)
   
-
     
89,780
 
Intercompany 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 income (loss)
 
$
2,588
   
$
(20,629
)
 
$
(335,114
)
 
$
25,070
   
$
330,673
   
$
2,588
 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
   
(24,192
)
   
47,439
     
151,814
     
185,511
     
(330,673
)
   
29,899
 
Net cash provided by (used in)  operating activities
   
(21,604
)
   
26,810
     
(183,300
)
   
210,581
     
-
     
32,487
 
Net cash (used in) provided by investing activities
                   
(1,146
)
   
1,130
             
(16
)
Net cash (used in) provided by financing activities
           
(113,232
)
   
3,463
     
17,786
             
(91,983
)
Intercompany 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