XML 65 R27.htm IDEA: XBRL DOCUMENT v3.5.0.2
Note 21 - Financial Information of Subsidiary Issuer and Subsidiary Guarantors
 9 Months Ended
Jul. 31, 2016
Notes to Financial Statements  
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 July 31, 2016, had issued and outstanding $992.0 million of senior secured notes ($982.5 million, net of discount), $521.0 million senior notes, and $8.1 million senior amortizing notes and $76.7 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 January 2017 Notes, senior amortizing notes and senior exchangeable notes have been registered under the Securities Act of 1933, as amended (the “Act”). The 7.0% Notes, the 8.0% Senior Notes due 2019, the 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 under the Act. The Condensed Consolidating Financial Statements presented below are in respect of our registered notes only and not the 7.0% Notes, the 8.0% Senior Notes due 2019, the 2020 Secured Notes or the 2021 Notes (however, the Guarantor Subsidiaries for the 7.0% Notes, the 8.0% Senior Notes due 2019 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.
  
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING BALANCE SHEET
JULY 31, 2016
(In Thousands)
 
   
Parent
    
Subsidiary Issuer
    
Guarantor Subsidiaries
    
Nonguarantor Subsidiaries
    
Eliminations
    
Consolidated
  
ASSETS:
                                    
Homebuilding
   $-     $152,404     $1,356,452     $420,742     $-     $1,929,598  
Financial services
               13,023     152,862           165,885  
Income taxes receivable
   138,604     (66,948
)
   221,680     22           293,358  
Intercompany receivable
         1,371,437           78,344     (1,449,781
)
    -  
Investments in and amounts due from consolidated subsidiaries
               419,419           (419,419
)
    -  
Total assets
   $138,604     $1,456,893     $2,010,574     $651,970     $(1,869,200
)
   $2,388,841  
                                     
LIABILITIES AND EQUITY:
                                    
Homebuilding
   $3,166     $113     $622,053     $102,679     $-     $728,011  
Financial services
               13,085     128,954           142,039  
Notes payable
         1,664,756     5,063     915           1,670,734  
Intercompany payable
   172,741           1,277,040           (1,449,781
)
    -  
Amounts due to consolidated subsidiaries
   114,640     25,966                 (140,606
)
   -  
Stockholders’ (deficit) equity
   (151,943
)
   (233,942
)
   93,333     419,422     (278,813
)
   (151,943
)
Total liabilities and equity
   $138,604     $1,456,893     $2,010,574     $651,970     $(1,869,200
)
   $2,388,841  
 
 
 
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING BALANCE SHEET
OCTOBER 31, 2015
(In Thousands)
 
   
Parent
    
Subsidiary Issuer
    
Guarantor Subsidiaries
    
Nonguarantor Subsidiaries
    
Eliminations
    
Consolidated
  
ASSETS:
                                    
Homebuilding
   $-     $230,358     $1,553,811     $367,869     $-     $2,152,038  
Financial services
               15,680     144,301           159,981  
Income taxes receivable
   128,176     (89,212
)
   251,293     22           290,279  
Intercompany receivable
         1,575,712           58,280     (1,633,992
)
   -  
Investments in and amounts due from consolidated subsidiaries
         1,013     383,032           (384,045
)
   -  
Total assets
   $128,176     $1,717,871     $2,203,816     $570,472     $(2,018,037
)
   $2,602,298  
                                     
LIABILITIES AND EQUITY:
                                    
Homebuilding
   $3,076     $87     $588,854     $65,947     $-     $657,964  
Financial services
               15,677     121,106           136,783  
Notes payable
         1,933,119     2,132     384           1,935,635  
Intercompany payable
   180,681           1,453,311           (1,633,992
)
   -  
Amounts due to consolidated subsidiaries
   72,503                       (72,503
)
   -  
Stockholders’ (deficit) equity
   (128,084
)
   (215,335
)
   143,842     383,035     (311,542
)
   (128,084
)
Total liabilities and equity
   $128,176     $1,717,871     $2,203,816     $570,472     $(2,018,037
)
   $2,602,298  
 
 
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JULY 31, 2016
(In Thousands)
 
   
Parent
    
Subsidiary Issuer
    
Guarantor Subsidiaries
    
Nonguarantor Subsidiaries
    
Eliminations
    
Consolidated
  
Revenues:
                                    
Homebuilding
   $-     $-     $595,124     $105,241     $-     $700,365  
Financial services
               2,645     13,840           16,485  
Intercompany charges
         26,433                 (26,433
)
   -  
Total revenues
   -     26,433     597,769     119,081     (26,433
)
   716,850  
                                     
Expenses:
                                    
Homebuilding
   1,277     32,225     565,447     105,491           704,440  
Financial services
   16           1,761     7,139           8,916  
Intercompany charges
               27,239     (806
)
   (26,433
)
   -  
Total expenses
   1,293     32,225     594,447     111,824     (26,433
)
   713,356  
Income (loss) from unconsolidated joint ventures
               17     (2,418
)
         (2,401
)
(Loss) income before income taxes
   (1,293
)
   (5,792
)
   3,339     4,839     -     1,093  
State and federal income tax (benefit) provision
   (484
)
   (6,936
)
   8,987                 1,567  
Equity in income (loss) of consolidated subsidiaries
   335     93     4,839           (5,267
)
   -  
Net (loss) income
   $(474
)
   $1,237     $(809
)
   $4,839     $(5,267
)
   $(474
)
 
 
 
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JULY 31, 2015
(In Thousands)
 
   
Parent
    
Subsidiary Issuer
    
Guarantor Subsidiaries
    
Nonguarantor Subsidiaries
    
Eliminations
    
Consolidated
  
Revenues:
                                    
Homebuilding
   $-     $-     $446,581     $79,672     $-     $526,253  
Financial services
               2,146     12,214           14,360  
Intercompany charges
         31,246           64     (31,310
)
   -  
Total revenues
   -     31,246     448,727     91,950     (31,310
)
   540,613  
                                     
Expenses:
                                    
Homebuilding
   2,416     38,284     431,816     69,406           541,922  
Financial services
   16           1,618     6,610           8,244  
Intercompany charges
               31,310           (31,310
)
   -  
Total expenses
   2,432     38,284     464,744     76,016     (31,310
)
   550,166  
Income (loss) from unconsolidated joint ventures
               12     (460
)
         (448
)
(Loss) income before income taxes
   (2,432
)
   (7,038
)
   (16,005
)
   15,474     -     (10,001
)
State and federal income tax provision (benefit)
   224           (2,541
)
               (2,317
)
Equity in (loss) income of consolidated subsidiaries
   (5,028
)
   (13,855
)
   15,474           3,409     -  
Net (loss) income
   $(7,684
)
   $(20,893
)
   $2,010     $15,474     $3,409     $(7,684
)
  
 
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
NINE MONTHS ENDED JULY 31, 2016
(In Thousands)
 
   
Parent
    
Subsidiary Issuer
    
Guarantor Subsidiaries
    
Nonguarantor Subsidiaries
    
Eliminations
    
Consolidated
  
Revenues:
                                    
Homebuilding
   $-     $-     $1,593,452     $302,012     $-     $1,895,464  
Financial services
               7,566     44,148           51,714  
Intercompany charges
         87,540                 (87,540
)
   -  
Total revenues
   -     87,540     1,601,018     346,160     (87,540
)
   1,947,178  
                                     
Expenses:
                                    
Homebuilding
   2,874     101,432     1,557,620     282,981           1,944,907  
Financial services
   16           5,208     21,525           26,749  
Intercompany charges
               87,540           (87,540
)
   -  
Total expenses
   2,890     101,432     1,650,368     304,506     (87,540
)
   1,971,656  
Income (loss) from unconsolidated joint ventures
               40     (5,267
)
         (5,227
)
(Loss) income before income taxes
   (2,890
)
   (13,892
)
   (49,310
)
   36,387     -     (29,705
)
State and federal income tax (benefit) provision
   (19,919
)
   (22,264
)
   37,586                 (4,597
)
Equity in (loss) income of consolidated subsidiaries
   (42,137
)
   (26,979
)
   36,387           32,729     -  
Net (loss) income
   $(25,108
)
   $(18,607
)
   $(50,509
)
   $36,387     $32,729     $(25,108
)
 
 
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
NINE MONTHS ENDED JULY 31, 2015
(In Thousands)
 
   
Parent
    
Subsidiary Issuer
    
Guarantor Subsidiaries
    
Nonguarantor Subsidiaries
    
Eliminations
    
Consolidated
  
Revenues:
                                    
Homebuilding
   $-     $-     $1,202,668     $214,669     $-     $1,417,337  
Financial services
               5,914     32,025           37,939  
Intercompany charges
         91,631                 (91,631
)
   -  
Total revenues
   -     91,631     1,208,582     246,694     (91,631
)
   1,455,276  
                                     
Expenses:
                                    
Homebuilding
   9,209     114,499     1,181,860     188,271           1,493,839  
Financial services
   104           4,747     18,218           23,069  
Intercompany charges
               91,631           (91,631
)
   -  
Total expenses
   9,313     114,499     1,278,238     206,489     (91,631
)
   1,516,908  
(Loss) income from unconsolidated joint ventures
               (2
)
   2,472           2,470  
(Loss) income before income taxes
   (9,313
)
   (22,868
)
   (69,658
)
   42,677     -     (59,162
)
State and federal income tax (benefit) provision
   (17,968
)
         425                 (17,543
)
Equity in (loss) income of consolidated subsidiaries
   (50,274
)
   (40,219
)
   42,677           47,816     -  
Net (loss) income
   $(41,619
)
   $(63,087
)
   $(27,406
)
   $42,677     $47,816     $(41,619
)
 
 
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED JULY 31, 2016
(In Thousands)
 
   
Parent
    
Subsidiary Issuer
    
Guarantor Subsidiaries
    
Nonguarantor Subsidiaries
    
Eliminations
    
Consolidated
  
Cash flows from operating activities:
                                    
Net (loss) income
   $(25,108
)
   $(18,607
)
   $(50,509
)
   $36,387     $32,729     $(25,108
)
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities
   (9,089
)
   (25,300
)
   289,872     (3,090
)
   (32,729
)
   219,664  
Net cash (used in) provided by operating activities
   (34,197
)
   (43,907
)
   239,363     33,297     -     194,556  
Cash flows from investing activities:
                                    
Proceeds from sale of property and assets
               622     21           643  
Purchase of property, equipment & other fixed assets and acquisitions
               (5,064
)
   (30
)
         (5,094
)
Decrease in restricted cash related to mortgage company
                     88           88  
Decrease in restricted cash related to letters of credit
         873                       873  
Investments in and advances to unconsolidated joint ventures
         (110
)
   (1,395
)
   (37,584
)
         (39,089
)
Distributions of capital from unconsolidated joint ventures
         (186
)
   1,087     5,502           6,403  
Intercompany investing activities
         231,254                 (231,254
)
   -  
Net cash provided by (used in) investing activities
   -     231,831     (4,750
)
   (32,003
)
   (231,254
)
   (36,176
)
Cash flows from financing activities:
                                    
Net payments related to mortgages and notes
               (53,780
)
   677           (53,103
)
Net proceeds from model sale leaseback financing programs
               (977
)
   357           (620
)
Net borrowings from land bank financing programs
               69,388     22,331           91,719  
Net proceeds from revolving credit facility
         5,000                       5,000  
Payments for senior notes and senior amortizing notes
         (263,994
)
                     (263,994
)
Net proceeds related to mortgage warehouse lines of credit
                     6,781           6,781  
Deferred financing costs from land bank financing programs and note issuances
         (2,139
)
   (4,180
)
   (1,547
)
         (7,866
)
Intercompany financing activities
   34,197           (245,387
)
   (20,064
)
   231,254     -  
Net cash provided by (used in) financing activities
   34,197     (261,133
)
   (234,936
)
   8,535     231,254     (222,083
)
Net (decrease) increase in cash
   -     (73,209
)
   (323
)
   9,829     -     (63,703
)
Cash and cash equivalents balance, beginning of period
         199,318     (4,800
)
   59,227           253,745  
Cash and cash equivalents balance, end of period
   $-     $126,109     $(5,123
)
   $69,056     $-     $190,042  
 
 
HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED JULY 31, 2015
(In Thousands)
    
   
Parent
    
Subsidiary Issuer
    
Guarantor Subsidiaries
    
Nonguarantor Subsidiaries
    
Eliminations
    
Consolidated
  
Cash flows from operating activities:
                                    
Net (loss) income
   $(41,619
)
   $(63,087
)
   $(27,406
)
   $42,677     $47,816     $(41,619
)
Adjustments to reconcile net (loss) income to net cash used in operating activities
   (3,128
)
   12,191     (154,619
)
   (97,689
)
   (47,816
)
   (291,061
)
Net cash used in operating activities
   (44,747
)
   (50,896
)
   (182,025
)
   (55,012
)
   -     (332,680
)
Cash flows from investing activities:
                                    
Proceeds from sale of property and assets
               1,112     31           1,143  
Purchase of property, equipment & other fixed assets and acquisitions
               (1,653
)
               (1,653
)
Decrease in restricted cash related to mortgage company
                     1,466           1,466  
Investments in and advances to unconsolidated joint ventures
         81     184     (17,266
)
         (17,001
)
Distributions of capital from unconsolidated joint ventures
         315     646     9,760           10,721  
Intercompany investing activities
         (189,879
)
               189,879     -  
Net cash (used in) provided by investing activities
   -     (189,483
)
   289     (6,009
)
   189,879     (5,324
)
Cash flows from financing activities:
                                    
Net proceeds from mortgages and notes
               18,682     12,103           30,785  
Net proceeds from model sale leaseback financing programs
               17,918     1,846           19,764  
Net payments related to land bank financing programs
               (10,065
)
   (311
)
         (10,376
)
Proceeds from senior notes
         250,000                       250,000  
Net proceeds related to mortgage warehouse lines of credit
                     11,635           11,635  
Deferred financing costs from land bank financing programs and note issuances
         (4,689
)
   (1,781
)
   (1,057
)
         (7,527
)
                                     
Principal payments and debt repurchases
         (4,238
)
                     (4,238
)
Intercompany financing activities
   44,747           157,306     (12,174
)
   (189,879
)
   -  
Net cash provided by (used in) financing activities
   44,747     241,073     182,060     12,042     (189,879
)
   290,043  
Net (decrease) increase in cash and cash equivalents
   -     694     324     (48,979
)
   -     (47,961
)
Cash and cash equivalents balance, beginning of period
         159,508     (4,726
)
   107,116           261,898  
Cash and cash equivalents balance, end of period
   $-     $160,202     $(4,402
)
   $58,137     $-     $213,937