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Note 21 - Financial Information of Subsidiary Issuer and Subsidiary Guarantors
 3 Months Ended
Jan. 31, 2015
Disclosure Text Block Supplement [Abstract]  
Condensed Financial Statements [Text Block]

21.

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 January 31, 2015, had issued and outstanding approximately $992.0 million of senior secured notes ($980.3 million, net of discount), $841.1 million senior notes ($840.7 million, net of discount) and $15.0 million senior amortizing notes and $71.0 million senior exchangeable notes (issued as components of our 6.0% Exchangeable Note Units). The senior secured notes, senior notes, senior amortizing notes and senior exchangeable 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 and senior amortizing notes. The Guarantor Subsidiaries are directly or indirectly 100% owned subsidiaries of the Parent. The 2021 Notes are guaranteed by the Guarantor Subsidiaries and the members of the Secured Group (see Note 11).


The senior unsecured notes (except for the 2019 Notes), senior amortizing notes and senior exchangeable notes have been registered under the Securities Act of 1933, as amended. The 2019 Notes, 2020 Secured Notes and the 2021 Notes (see Note 11) are not, pursuant to the indentures under which such notes were issued, required to be registered. The Condensed Consolidating Financial Statements presented below are in respect of our registered notes only and not the 2019 Notes, 2020 Secured Notes or the 2021 Notes (however, the Guarantor Subsidiaries for the 2019 Notes and the 2020 Secured Notes are the same as those represented by the accompanying Condensed Consolidating Financial Statements). In lieu of providing separate financial statements for the Guarantor Subsidiaries of our registered notes, we have included the accompanying Condensed Consolidating Financial Statements. Therefore, separate financial statements and other disclosures concerning such Guarantor Subsidiaries are not presented.


The following Condensed Consolidating 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.


   

Parent

   

Subsidiary

Issuer

   

Guarantor

Subsidiaries

   

Nonguarantor

Subsidiaries

   

Eliminations

   

Consolidated

 

ASSETS:

                                   

Homebuilding

  $-     $263,151     $1,393,722     $402,686     $-     $2,059,559  

Financial services

              6,894     104,769           111,663  

Income taxes receivable

  254,444           35,769                 290,213  

Intercompany receivable

        1,447,274                 (1,447,274

)

  -  

Investments in and amounts due from consolidated subsidiaries

              351,918           (351,918

)

  -  

Total assets

  $254,444     $1,710,425     $1,788,303     $507,455     (1,799,192

)

  $2,461,435  
                                     

LIABILITIES AND EQUITY:

                                   

Homebuilding

  $3,184     $31     $512,695     $50,707     $-     $566,617  

Financial services

              6,646     80,015           86,661  

Notes payable

        1,935,129     2,420     592           1,938,141  

Intercompany payable

  307,713           1,115,338     24,223     (1,447,274

)

  -  

Amounts due to consolidated subsidiaries

  73,531     24,711                 (98,242

)

  -  

Stockholders’ (deficit) equity

  (129,984

)

  (249,446

)

  151,204     351,918     (253,676

)

  (129,984

)

Total liabilities and equity

  $254,444     $1,710,425     $1,788,303     $507,455     (1,799,192

)

  $2,461,435  

   

Parent

   

Subsidiary

Issuer

   

Guarantor

Subsidiaries

   

Nonguarantor

Subsidiaries

   

Eliminations

   

Consolidated

 

ASSETS:

                                   

Homebuilding

  $-     $195,177     $1,336,716     $353,151     $ -     $1,855,044  

Financial services

              11,407     108,936           120,343  

Income taxes receivable

  244,391           40,152                 284,543  

Intercompany receivable

        1,275,453           36,161     (1,311,614

)

  -  

Investments in and amounts due from consolidated subsidiaries

              338,044           (338,044

)

  -  

Total assets

  $244,391     $1,470,630     $1,726,319     $498,248     $(1,649,658

)

  $2,289,930  
                                     

LIABILITIES AND EQUITY:

                                   

Homebuilding

  $2,842     $160     $544,088     $71,663     $-     $618,753  

Financial services

              11,210     87,987           99,197  

Notes payable

        1,685,892     3,336     551           1,689,779  

Intercompany payable

  308,700           1,002,914           (1,311,614

)

  -  

Amounts due to consolidated subsidiaries

  50,648     11,902                 (62,550

)

  -  

Stockholders’ (deficit) equity

  (117,799

)

  (227,324

)

  164,771     338,047     (275,494

)

  (117,799

)

Total liabilities and equity

  $244,391     $1,470,630     $1,726,319     $498,248     $(1,649,658

)

  $2,289,930  

   

Parent

   

Subsidiary

Issuer

   

Guarantor

Subsidiaries

   

Nonguarantor

Subsidiaries

   

Eliminations

   

Consolidated

 

Revenues:

                                   

Homebuilding

  $-     $-     $365,189     $69,403     $-     $434,592  

Financial services

              1,833     9,289           11,122  

Intercompany charges

        28,512                 (28,512

)

  -  

Total revenues

  -     28,512     367,022     78,692     (28,512

)

  445,714  
                                     

Expenses:

                                   

Homebuilding

  3,711     37,828     357,509     60,481           459,529  

Financial services

  68           1,573     5,676           7,317  

Intercompany charges

              28,382     130     (28,512

)

  -  

Total expenses

  3,779     37,828     387,464     66,287     (28,512

)

  466,846  

(Loss) income from unconsolidated joint ventures

              (14

)

  1,466           1,452  

(Loss) income before income taxes

  (3,779

)

  (9,316

)

  (20,456

)

  13,871     -     (19,680

)

State and federal income tax (benefit) provision

  (12,286

)

        6,982                 (5,304

)

Equity in (loss) income of consolidated subsidiaries

  (22,883

)

  (12,806

)

  13,871           21,818     -  

Net (loss) income

  $(14,376

)

  $(22,122

)

  $(13,567

)

  $13,871     $21,818     $(14,376

)


   

Parent

   

Subsidiary

Issuer

   

Guarantor

Subsidiaries

   

Nonguarantor

Subsidiaries

   

Eliminations

   

Consolidated

 

Revenues:

                                   

Homebuilding

  $-     $(46

)

  $283,038     $72,962     $-     $355,954  

Financial services

              1,835     6,259           8,094  

Intercompany charges

        21,367     (21,262

)

  (249

)

  144     -  

Total revenues

        21,321     263,611     78,972     144     364,048  
                                     

Expenses:

                                   

Homebuilding

  3,983     31,179     289,618     61,009     (1,952

)

  383,837  

Financial services

  4           1,525     5,143           6,672  

Total expenses

  3,987     31,179     291,143     66,152     (1,952

)

  390,509  

Income from unconsolidated joint ventures

              23     2,548           2,571  

(Loss) income before income taxes

  (3,987

)

  (9,858

)

  (27,509

)

  15,368     2,096     (23,890

)

State and federal income tax (benefit) provision

  (3,592

)

        4,225                 633  

Equity in (loss) income of consolidated subsidiaries

  (24,128

)

  (12,079

)

  15,368           20,839     -  

Net (loss) income

  $(24,523

)

  $(21,937

)

  $(16,366

)

  $15,368     $22,935     $(24,523

)


   

Parent

   

Subsidiary Issuer

   

Guarantor Subsidiaries

   

Nonguarantor Subsidiaries

   

Eliminations

   

Consolidated

 

Cash flows from operating activities:

                                               

Net (loss) income

  $ (14,376 )   $ (22,122 )   $ (13,567 )   $ 13,871     $ 21,818     $ (14,376 )

Adjustments to reconcile net (loss) income to net cash used in operating activities

    (7,520 )     3,248       (39,948 )     (115,203 )     (21,818 )     (181,241 )

Net cash used in operating activities

    (21,896 )     (18,874 )     (53,515 )     (101,332 )     -       (195,617 )

Cash flows from investing activities:

                                               

Proceeds from sale of property and assets

                    156       12               168  

Purchase of property, equipment & other fixed assets and acquisitions

                    (879 )                     (879 )

Decrease in restricted cash related to mortgage company

                            387               387  

Investments in and advances to unconsolidated joint ventures

            81       146       (11,962 )             (11,735 )

Distribution of capital from unconsolidated joint ventures

                            627               627  

Intercompany investing activities

            (159,012 )                     159,012       -  

Net cash used in investing activities

            (158,931 )     (577 )     (10,936 )     159,012       (11,432 )

Cash flows from financing activities:

                                               

Net proceeds from mortgages and notes

                    (10,277 )     6,958               (3,319 )

Net proceeds from model sale leaseback financing programs

                    (5,606 )     (196 )             (5,802 )

Net proceeds from land bank financing programs

                    (6,332 )     (871 )             (7,203 )

Net proceeds from senior notes

            247,938                               247,938  

Net proceeds related to mortgage warehouse lines of credit

                            (8,153 )             (8,153 )

Deferred financing cost from land bank financing program and note issuances

            (4,627 )     (114 )     (270 )             (5,011 )

Intercompany financing activities

    21,896               76,732       60,384       (159,012 )     -  

Net cash provided by financing activities

    21,896       243,311       54,403       57,852       (159,012 )     218,450  

Net increase (decrease) in cash and cash equivalents

    -       65,506       311       (54,416 )     -       11,401  

Cash and cash equivalents balance, beginning of period

            159,508       (4,726 )     107,116               261,898  

Cash and cash equivalents balance, end of period

  $ -     $ 225,014     $ (4,415 )   $ 52,700     $ -     $ 273,299  

   

Parent

   

Subsidiary

Issuer

   

Guarantor

Subsidiaries

   

Nonguarantor

Subsidiaries

   

Eliminations

   

Consolidated

 

Cash flows from operating activities:

                                   

Net (loss) income

  $(24,523

)

  $(21,937

)

  $(16,366

)

  $15,368     $22,935     $(24,523

)

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities

  (3,110

)

  1,280     (114,750

)

  32,986     (22,935

)

  (106,529

)

Net cash (used in) provided by operating activities

  (27,633

)

  (20,657

)

  (131,116

)

  48,354           (131,052

)

Net cash provided by (used in) investing activities

        215     (363

)

  152           4  

Net cash provided by (used in) financing activities

        144,328     10,772     (64,371

)

        90,729  

Intercompany investing and financing activities – net

  27,633     (150,337

)

  119,706     2,998           -  

Net decrease in cash

        (26,451

)

  (1,001

)

  (12,867

)

        (40,319

)

Cash and cash equivalents balance, beginning of period

        243,470     (6,479

)

  92,213           329,204  

Cash and cash equivalents balance, end of period

  $-     $217,019     $(7,480

)

  $79,346     $-     $288,885