1.	Basis of Presentation

Hovnanian Enterprises, Inc. (“HEI”) conducts all of its homebuilding and financial services operations through its subsidiaries (references herein to the “Company,” “we,” “us” or “our” refer to HEI and its consolidated subsidiaries and should be understood to reflect the consolidated business of HEI’s subsidiaries). HEI has reportable segments consisting of

six

Homebuilding segments (Northeast, Mid-Atlantic, Midwest, Southeast, Southwest and West) and the Financial Services segment (see Note

The accompanying unaudited Condensed Consolidated Financial Statements include HEI's accounts and those of all of its consolidated subsidiaries after elimination of all of its significant intercompany balances and transactions. Noncontrolling interest represents the proportionate equity interest in a consolidated joint venture that is

not

100%

owned by the Company. One of HEI's subsidiaries owns a

99%

controlling interest in the consolidated joint venture and therefore HEI is required to consolidate the joint venture within its Condensed Consolidated Financial Statements. The

that we do

not

own is accounted for as noncontrolling interest.

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form

-Q and Article

of Regulation S-

and accordingly, they do

not

include all of the information and footnotes required by GAAP for complete financial statements. These Condensed Consolidated Financial Statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form

-K for the fiscal year ended

October 31, 2018.

In the opinion of management, all adjustments for interim periods presented have been made, which include normal recurring accruals and deferrals necessary for a fair presentation of our condensed consolidated financial position, results of operations and cash flows. The preparation of Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates, and these differences could have a significant impact on the Condensed Consolidated Financial Statements. Results for interim periods are

not

necessarily indicative of the results which might be expected for a full year.

Reclassifications -

Effective

October 31, 2018

we early adopted Accounting Standards Update (“ASU”)

2016

“Statement of Cash Flows (Topic

230

): Restricted Cash” (“ASU

2016

18”

). As a result, restricted cash amounts are

longer shown within the operating and investing activities as these balances are now included in the beginning and ending cash balances in our Condensed Consolidated Statements of Cash Flows. The adoption of ASU

2016

also resulted in the reclassification of restricted cash in operating and investing activities of

$1.0

million and

$23.4

million, respectively, for the

nine

months ended

July 31, 2018.

These amounts are now included in the beginning and ending cash balances for the respective periods. See also the reconciliation of cash, cash equivalents and restricted cash on the Condensed Consolidated Statements of Cash Flows.

Reverse Stock Split – As discussed in Note

14,

March 2019,

the Company's stockholders approved and the Board of Directors determined to effectuate a reverse stock split (the “Reverse Stock Split”) of the Company’s common stock at a ratio of

-for-

25,

and a corresponding decrease in the number of authorized shares of the common stock. The Reverse Stock Split became effective on

March 29, 2019,

and every

issued shares (including treasury shares) of Class A Common Stock, par value

$0.01

per share (the “Class A Common Stock”), were combined into

one

share of Class A Common Stock, and every

issued shares (including treasury shares) of Class B Common Stock, par value

$0.01

per share (the “Class B Common Stock”), were combined into

one

share of Class B Common Stock. All share and per share amounts throughout this report have been retroactively adjusted to reflect the reverse stock split.