Hovnanian Enterprises Reports Second Quarter Fiscal 2008 Results

RED BANK, N.J., June 3 /PRNewswire-FirstCall/ -- Hovnanian Enterprises, Inc. (NYSE:HOV), a leading national homebuilder, reported results for its second quarter and six months ended April 30, 2008.

Results for the Three and Six Month Periods ended April 30, 2008:

-- Total revenues were $776.4 million for the second quarter of fiscal
2008 compared with total revenues of $1.1 billion in the same quarter a
year ago. For the first half of fiscal 2008, total revenues were $1.9
billion compared to $2.3 billion for the same period last year.

-- Excluding unconsolidated joint ventures, the Company delivered 2,494
homes in the second quarter of fiscal 2008, a decrease of 21% from
3,150 home deliveries in the fiscal 2007 second quarter. For the first
six months of fiscal 2008, the Company delivered 6,098 homes, excluding
unconsolidated joint ventures, a 5% decline from 6,416 home deliveries
in the first half of last year.

-- The number of net contracts for the second quarter of fiscal 2008,
excluding unconsolidated joint ventures, declined 29% to 2,226 homes
compared with last year's second quarter. For the first half of fiscal
2008, the number of net contracts, excluding unconsolidated joint
ventures, decreased 34% to 3,737 homes compared with the same period in
the prior year.

-- The Company's contract cancellation rate, excluding unconsolidated
joint ventures, for the second quarter of fiscal 2008 was 29%, compared
with the rate of 38% reported for the first quarter of fiscal 2008 and
32% in the second quarter of fiscal 2007.

-- During the second quarter of fiscal 2008, the Company incurred a total
of $251.0 million of pre-tax land-related charges including land
impairments of $226.4 million and write-offs of predevelopment costs
and land deposits of $19.5 million, as well as $5.1 million
representing its equity portion of write-offs and impairment charges in
unconsolidated joint ventures.

-- Excluding land-related charges, the Company reported a pre-tax loss of
$92.4 million and $167.1 million, respectively, for the three month and
six month periods ended April 30, 2008. Including all land-related
charges, the Company reported a pre-tax loss of $343.4 million for the
second quarter of fiscal 2008 and $512.2 million for the first six
months of fiscal 2008.

-- The Company recorded a $120.6 million FAS 109 deferred tax valuation
allowance charge during the second quarter and a $141.8 million charge
year to date.

-- For the second quarter of fiscal 2008, the Company reported an after
tax loss of $340.7 million, or $5.29 per common share, compared with a
net loss of $30.7 million, or $0.49 per common share, in the second
quarter of fiscal 2007. For the six month period, the Company reported
a net loss of $471.7 million, or $7.43 per common share, compared to an
$88.0 million net loss, or $1.40 per common share, in the same period a
year ago.

Balance Sheet as of April 30, 2008:

-- The Company generated $56.1 million of positive cash flow during the
second quarter of fiscal 2008. At April 30, 2008, the Company had
$119.9 million of homebuilding cash and the balance on the Company's
revolving credit facility was $325.0 million.

-- Hovnanian's total land position decreased by 6,646 lots compared to
January 31, 2008, reflecting owned and optioned position decreases of
2,108 lots and 4,538 lots, respectively. As of April 30, 2008, the
Company had 27,191 lots controlled under option contracts and owned
25,264 lots. The total land position of 52,455 lots represents a 57%
decline from the peak total land position at April 30, 2006.

-- The Company realized a 19% decline in started unsold homes and models,
from 2,321 at January 31, 2008 to 1,885 at April 30, 2008. Excluding
model homes, the Company had 1,503 started unsold homes as of the end
of the second quarter of fiscal 2008.

Other Key Operating Data:

-- Homebuilding gross margin, before interest expense included in cost of
sales, was 6.8% in the 2008 second quarter, compared with 16.3% in the
second quarter of 2007 and 6.7% in the first quarter of 2008.

-- Pretax income from Financial Services in the second quarter of fiscal
2008 was $4.1 million and $7.2 million for the first six months of
fiscal 2008.

-- The Company had 379 active selling communities on April 30, 2008,
excluding unconsolidated joint ventures, a decline of 25 active
communities, or 6%, from January 31, 2008. The Company had 437 active
selling communities on April 30, 2007, excluding unconsolidated joint
ventures.

-- During the second quarter of fiscal 2008, the Company delivered 196
homes through unconsolidated joint ventures, compared with 275 homes in
last year's second quarter. The Company delivered 351 homes through
unconsolidated joint ventures during the first half of 2008 compared
with 564 homes during the same period in 2007.

-- Contract backlog, as of April 30, 2008, excluding unconsolidated joint
ventures, was 3,577 homes with a sales value of $1.2 billion, a
decrease of 54% from the same period a year ago. Excluding backlog
from the Company's Fort Myers-Cape Coral operations in both periods,
backlog decreased 41%.

Recent Capital Markets Activity During May 2008:

-- During May 2008, subsequent to the end of the second fiscal quarter,
the Company completed the following transactions:

-- Raised $126 million from issuing 14.0 million shares of Class A
Common Stock offering at $9.50 per share; and

-- Issued $600 million aggregate principal amount of 11 1/2% Senior
Secured Notes due May 1, 2013.

-- Net proceeds from these offerings of approximately $705 million were
used to pay off outstandings under the corporate credit facility and
the excess will be used for general corporate purposes. After giving
effect to these transactions, the Company would have had approximately
$500 million in homebuilding cash and no borrowings on its revolving
credit agreement as of April 30, 2008.

-- In addition, during May 2008, the Company amended its revolving credit
agreement to substantially eliminate financial maintenance covenants
and reduced total commitments to $300 million from $900 million,
leaving the facility in place largely for the issuance of letters of
credit, which at April 30, 2008 were $219.3 million. The maturity of
the credit facility remains unchanged at May 2011.

Projections for Fiscal 2008:

-- The Company continues to project positive cash flow for fiscal 2008,
such that the Company's homebuilding cash balance at October 31, 2008
is projected to exceed $800 million, including the cumulative cash flow
from the first two quarters, which was roughly breakeven.

Comments From Management:

"Despite a persistently challenging market environment, we successfully achieved positive cash flow one quarter earlier than we originally expected at the outset of the year," commented Ara K. Hovnanian, President and Chief Executive Officer of the Company. "Through diligent focus and effort, we reduced our prospective land-purchase and land-development expenditures, which gave us the confidence to project homebuilding cash in excess of $800 million at October 31, 2008. Through the combination of our recent capital market activity and increased cash flow expectations, we now believe that we have ample liquidity to weather the current downturn. In each of the downturns we have been through during the past 49 years, we emerged as a better and stronger Company. We expect to persevere through the current downturn and we will be in position to thrive again once the housing markets begin to recover," concluded Mr. Hovnanian.

Hovnanian Enterprises will webcast its fiscal 2008 second quarter financial results conference call at 11:00 a.m. E.T. on Wednesday, June 4, 2008. The webcast can be accessed live through the "Investor Relations" section of Hovnanian Enterprises' Web site at http://www.khov.com/. For those who are not available to listen to the live webcast, an archive of the broadcast will be available under the "Audio Archives" section of the Investor Relations page on the Hovnanian Web site at
About Hovnanian Enterprises:

Hovnanian Enterprises, Inc., founded in 1959 by Kevork S. Hovnanian, Chairman, is headquartered in Red Bank, New Jersey. The Company is one of the nation's largest homebuilders with operations in Arizona, California, Delaware, Florida, Georgia, Illinois, Kentucky, Maryland, Michigan, Minnesota, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia and West Virginia. The Company's homes are marketed and sold under the trade names K. Hovnanian Homes, Matzel & Mumford, Forecast Homes, Parkside Homes, Brighton Homes, Parkwood Builders, Windward Homes, Cambridge Homes, Town & Country Homes, Oster Homes, First Home Builders of Florida and CraftBuilt Homes. As the developer of K. Hovnanian's Four Seasons communities, the Company is also one of the nation's largest builders of active adult homes.

Additional information on Hovnanian Enterprises, Inc., including a summary investment profile and the Company's 2007 annual report, can be accessed through the "Investor Relations" section of Hovnanian Enterprises' website at http://www.khov.com/. To be added to Hovnanian's investor e-mail or fax lists, please send an e-mail to IR@khov.com or sign up at
Hovnanian Enterprises, Inc. is a member of the Public Home Builders Council of America ("PHBCA") (http://www.phbca.org/), a nonprofit group devoted to improving understanding of the business practices of America's largest publicly-traded home building companies, the competitive advantages they bring to the home building market, and their commitment to creating value for their home buyers and stockholders. The PHBCA's 14 member companies build one out of every five homes in the United States.

Non-GAAP Financial Measures:

Consolidated earnings before interest expense, income taxes, depreciation and amortization ("EBITDA") and before inventory impairment loss and land option write-offs ("Adjusted EBITDA") are not U.S. generally accepted accounting principle (GAAP) financial measures. The most directly comparable GAAP financial measure is net income (loss). The reconciliation of EBITDA and Adjusted EBITDA to net income (loss) is presented in a table attached to this earnings release.

Cash flow is a non-GAAP financial measure. The most directly comparable GAAP financial measure is Cash Flow from Operating Activities. The Company uses cash flow to mean cash flow from operating activities and cash flow from investing activities excluding changes in mortgage notes receivable at the mortgage company. For the second quarter of 2008 cash flow was $65.7 million of net cash from operating activities excluding the change in mortgage notes receivable ($34.1 million from cash flow from operating activities plus the change in mortgage notes receivable of $31.6 million) less $9.6 million of net cash used in investing activities. For the first six months of 2008 cash flow was $3.7 million of net cash from operating activities excluding the change in mortgage notes receivable ($50.1 million from cash flow from operating activities less the change in mortgage notes receivable of $46.4 million) less $2.5 million of net cash used in investing activities.

(Loss) Income Before Income Taxes Excluding Land Related Charges and Intangible Impairments is a non-GAAP financial measure. The most directly comparable GAAP financial measure is Loss Before Income Taxes. The reconciliation of (Loss) Income Before Income Taxes Excluding Land Related Charges and Intangible Impairments to Loss Before Income Taxes is presented in a table attached to this earnings release.

Note: All statements in this Press Release that are not historical facts should be considered as "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such risks, uncertainties and other factors include, but are not limited to, (1) changes in general and local economic and industry and business conditions, (2) adverse weather conditions and natural disasters, (3) changes in market conditions and seasonality of the Company's business, (4) changes in home prices and sales activity in the markets where the Company builds homes, (5) government regulation, including regulations concerning development of land, the home building, sales and customer financing processes, and the environment, (6) fluctuations in interest rates and the availability of mortgage financing, (7) shortages in, and price fluctuations of, raw materials and labor, (8) the availability and cost of suitable land and improved lots, (9) levels of competition, (10) availability of financing to the Company, (11) utility shortages and outages or rate fluctuations, (12) levels of indebtedness and restrictions on the Company's operations and activities imposed by the agreements governing the Company's outstanding indebtedness, (13) operations through joint ventures with third parties, (14) product liability litigation and warranty claims, (15) successful identification and integration of acquisitions, (16) significant influence of the Company's controlling stockholders, (17) geopolitical risks, terrorist acts and other acts of war and (18) other factors described in detail in the Company's Form 10-K for the year ended October 31, 2007.

(Financial Tables Follow)

Hovnanian Enterprises, Inc.
April 30, 2008
Statements of Consolidated Operations
(Dollars in Thousands, Except Per Share)

Three Months Ended, Six Months Ended,
April 30, April 30,
---------------------- ---------------------- 2008 2007 2008 2007
---------- ---------- ---------- ----------- (Unaudited) (Unaudited)

Total Revenues $776,439 $1,110,658 $1,870,140 $2,276,459

Costs and Expenses (a) 1,116,480 1,149,931 2,373,936 2,384,326

Loss from Unconsolidated
Joint Ventures (3,397) (2,160) (8,436) (195)
---------- ---------- ---------- -----------
Loss Before Income Taxes (343,438) (41,433) (512,232) (108,062)

Income Tax Benefit (2,727) (13,374) (40,578) (25,395)
---------- ---------- ---------- ----------- Net Loss (340,711) (28,059) (471,654) (82,667)
---------- ---------- ---------- -----------
Less: Preferred Stock
Dividends - 2,669 - 5,338
---------------------------------------------- Net Loss Available to
Common Stockholders $(340,711) $(30,728) $(471,654) $(88,005)

Per Share Data:
Basic:
Loss Per Common Share $(5.29) $(0.49) $(7.43) $(1.40)
Weighted Average
Number of Common
Shares Outstanding 64,410 63,004 63,455 62,953

Assuming Dilution:
Loss Per Common Share $(5.29) $(0.49) $(7.43) $(1.40)
Weighted Average
Number of Common
Shares Outstanding(b) 64,410 63,004 63,455 62,953

(a) Includes inventory impairment loss and land option write-offs.
(b) For periods with a net loss, basic shares are used in accordance with
GAAP rules.

Reconciliation of (Loss) Income Before Income Taxes
Excluding Land Related Charges and Intangible Impairments to Loss
Before Income Taxes
(Dollars in Thousands)

Three Months Ended, Six Months Ended,
April 30, April 30,
---------------------- ---------------------- 2008 2007 2008 2007
---------- ---------- ---------- ----------- (Unaudited) (Unaudited)

Loss Before Income Taxes $(343,438) $(41,433) $(512,232) $(108,062)
Inventory Impairment
Loss and Land Option
Write-Offs 245,860 34,353 336,028 75,827
Intangible Impairments - - - 51,497
Unconsolidated Joint
Venture Intangible and
Land-Related Charges 5,145 257 9,152 257
---------------------------------------------- (Loss) Income Before
Income Taxes Excluding
Land Related Charges
and Intangible
Impairments $(92,433) $(6,823) $(167,052) $19,519

Hovnanian Enterprises, Inc.
April 30, 2008
Gross Margin
(Dollars in Thousands)

Homebuilding Gross Homebuilding Gross
Margin Margin
Three Months Ended Six Months Ended
April 30, April 30,
-------------------- ---------------------- 2008 2007 2008 2007
--------- --------- ---------- ---------- (Unaudited) (Unaudited)

Sale of Homes $755,684 $1,058,014 $1,807,502 $2,193,930
Cost of Sales, Excluding
Interest (a) 704,613 885,783 1,686,181 1,817,266
--------- ---------- ---------- ---------- Homebuilding Gross Margin,
Excluding Interest 51,071 172,231 121,321 376,664
Homebuilding Cost of Sales
Interest 33,103 28,578 61,066 55,394
--------- ---------- ---------- ---------- Homebuilding Gross Margin,
Including Interest $17,968 $143,653 $60,255 $321,270

Gross Margin Percentage,
Excluding Interest 6.8% 16.3% 6.7% 17.2%
Gross Margin Percentage,
Including Interest 2.4% 13.6% 3.3% 14.6%

Land Sales Gross Land Sales Gross
Margin Margin
Three Months Ended Six Months Ended
April 30, April 30,
-------------------- ---------------------- 2008 2007 2008 2007
--------- --------- ---------- ---------- (Unaudited) (Unaudited)

Land Sales $3,740 $31,695 $26,493 $35,294
Cost of Sales, Excluding
Interest (a) 2,232 18,027 24,228 20,519
--------- --------- ---------- ---------- Land Sales Gross Margin,
Excluding Interest 1,508 13,668 2,265 14,775
Land Sales Interest 1,469 178 2,094 234
--------- --------- ---------- ---------- Land Sales Gross Margin,
Including Interest $39 $13,490 $171 $14,541

(a) Does not include cost associated with walking away from land options
or inventory impairment losses which are recorded as Inventory
impairment loss and land option write-offs in the Condensed
Consolidated Statements of Operations.

Hovnanian Enterprises, Inc.
April 30, 2008
Reconciliation of Adjusted EBITDA to Net Loss
(Dollars in Thousands)

Three Months Ended Six Months Ended
April 30, April 30,
------------------- -------------------- 2008 2007 2008 2007
---------- -------- ---------- --------- (Unaudited) (Unaudited)

Net Loss $(340,711) $(28,059) $(471,654) $(82,667)
Income Tax Benefit (2,727) (13,374) (40,578) (25,395)
Interest Expense 35,034 35,422 64,162 63,514
---------- --------- ---------- --------- EBIT (a) (308,404) (6,011) (448,070) (44,548)
Depreciation 4,508 4,588 9,105 8,972
Amortization of Debt Costs 503 672 1,096 1,372
Amortization of Intangibles 292 6,718 1,227 68,274
---------- --------- ---------- --------- EBITDA (b) (303,101) 5,967 (436,642) 34,070
Inventory Impairment Loss and
Land Option Write-Offs 245,860 34,353 336,028 75,827
---------- --------- ---------- --------- Adjusted EBITDA (c) $(57,241) $40,320 $(100,614) $109,897

INTEREST INCURRED $41,206 $53,501 $86,122 $98,798

ADJUSTED EBITDA TO INTEREST INCURRED (1.39) 0.75 (1.17) 1.11

(a) EBIT is a non-GAAP financial measure. The comparable GAAP financial
measure is net income (loss). EBIT represents earnings before interest
expense and income taxes.
(b) EBITDA is a non-GAAP financial measure. The comparable GAAP financial
measure is net income (loss). EBITDA represents earnings before
interest expense, income taxes, depreciation and amortization.
(c) Adjusted EBITDA is a non-GAAP financial measure. The comparable GAAP
financial measure is net income (loss). Adjusted EBITDA represents
earnings before interest expense, income taxes, depreciation,
amortization and inventory impairment loss and land option write-offs.

Hovnanian Enterprises, Inc.
April 30, 2008
Interest Incurred, Expensed and Capitalized
(Dollars in Thousands)

Three Months Ended Six Months Ended
April 30, April 30,
------------------- -------------------- 2008 2007 2008 2007
---------- -------- ---------- --------- (Unaudited) (Unaudited)
Interest Capitalized at
Beginning of Period $171,430 $120,054 $155,642 $102,849
Plus Interest Incurred 41,206 53,501 86,122 98,798
Less Interest Expensed 35,034 35,422 64,162 63,514
---------- -------- ---------- --------- Interest Capitalized at
End of Period (a) $177,602 $138,133 $177,602 $138,133

(a) The Company incurred significant inventory impairments in recent
quarters, which are determined based on total inventory including
capitalized interest. However, in accordance with GAAP, the Company
is not able to reduce the capitalized interest balance by allocating
any portion of the impairments to capitalized interest.

HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share Amounts)

April 30, October 31,
2008 2007
-------------- -------------- ASSETS
(unaudited)
Homebuilding:
Cash and cash equivalents $119,910 $12,275
-------------- -------------- Restricted cash 4,461 6,594
-------------- -------------- Inventories - at the lower of cost
or fair value:
Sold and unsold homes and lots
under development 2,039,797 2,792,436
-------------- -------------- Land and land options held for future
development or sale 624,614 446,135
-------------- -------------- Consolidated inventory not owned:
Specific performance options 7,582 12,123
Variable interest entities 102,807 139,914
Other options 116,111 127,726
-------------- -------------- Total consolidated inventory
not owned 226,500 279,763
-------------- -------------- Total inventories 2,890,911 3,518,334
-------------- -------------- Investments in and advances to
unconsolidated joint ventures 166,408 176,365
-------------- -------------- Receivables, deposits, and notes 113,638 109,856
-------------- -------------- Property, plant, and equipment - net 101,169 106,792
-------------- -------------- Prepaid expenses and other assets 156,886 174,032
-------------- -------------- Goodwill 32,658 32,658
-------------- -------------- Definite life intangibles 2,996 4,224
-------------- -------------- Total homebuilding 3,589,037 4,141,130
-------------- -------------- Financial services:
Cash and cash equivalents 3,982 3,958
Restricted cash 6,149 11,572
Mortgage loans held for sale 136,294 182,627
Other assets 3,906 6,851
-------------- -------------- Total financial services 150,331 205,008
-------------- -------------- Income taxes receivable - including net
deferred tax benefits 223,223 194,410
-------------- -------------- Total assets $3,962,591 $4,540,548

HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands Except Share Amounts)

April 30, October 31,
2008 2007
----------- ----------- LIABILITIES AND STOCKHOLDERS' EQUITY (unaudited)

Homebuilding:
Nonrecourse land mortgages $4,871 $9,430
Accounts payable and other liabilities 413,736 515,422
Customers' deposits 48,790 65,221
Nonrecourse mortgages secured by operating
properties 22,618 22,985
Liabilities from inventory not owned 164,887 189,935
----------- -----------
Total homebuilding 654,902 802,993
----------- ----------- Financial services:
Accounts payable and other liabilities 13,349 19,597
Mortgage warehouse line of credit 123,142 171,133
----------- -----------
Total financial services 136,491 190,730
----------- -----------
Notes payable:
Revolving credit agreement 325,000 206,750
Senior notes 1,510,832 1,510,600
Senior subordinated notes 400,000 400,000
Accrued interest 45,274 43,944
----------- -----------
Total notes payable 2,281,106 2,161,294
----------- -----------
Total liabilities 3,072,499 3,155,017
----------- -----------
Minority interest from inventory not owned 38,552 62,238
----------- -----------
Minority interest from consolidated joint
ventures 1,380 1,490
----------- -----------
Stockholders' equity:
Preferred stock, $.01 par value-authorized
100,000 shares; issued 5,600 shares at
April 30, 2008 and at October 31, 2007
with a liquidation preference of $140,000 135,299 135,299
Common stock, Class A, $.01 par value-authorized
200,000,000 shares; issued 59,713,441 shares
at April 30, 2008 and 59,263,887 shares at
October 31, 2007 (including 11,694,720
shares at April 30, 2008 and October 31, 2007
held in Treasury) 597 593
Common stock, Class B, $.01 par value
(convertible to Class A at time of sale)
authorized 30,000,000 shares; issued
15,337,350 shares at April 30, 2008
and 15,338,840 shares at October 31, 2007
(including 691,748 shares at April 30, 2008
and October 31, 2007 held in Treasury) 153 153
Paid in capital - common stock 285,727 276,998
Retained earnings 543,641 1,024,017
Treasury stock - at cost (115,257) (115,257)
----------- -----------
Total stockholders' equity 850,160 1,321,803
----------- -----------
Total liabilities and stockholders' equity $3,962,591 $4,540,548

HOVNANIAN ENTERPRISES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands Except Per Share Data)
(Unaudited)

Three Months Ended Six Months Ended
April 30, April 30,
2008 2007 2008 2007
-------- ---------- ---------- ----------
Revenues:
Homebuilding:
Sale of homes $755,684 $1,058,014 $1,807,502 $2,193,930
Land sales and other
revenues 8,203 34,761 36,113 43,098
-------- ---------- ---------- ----------
Total homebuilding 763,887 1,092,775 1,843,615 2,237,028
Financial services 12,552 17,883 26,525 39,431
-------- ---------- ---------- ----------
Total revenues 776,439 1,110,658 1,870,140 2,276,459
-------- ---------- ---------- ----------
Expenses:
Homebuilding:
Cost of sales, excluding
interest 706,845 903,810 1,710,409 1,837,785
Cost of sales interest 34,572 28,756 63,160 55,628
Inventory impairment loss
and land option
write-offs 245,860 34,353 336,028 75,827
-------- ---------- ---------- ----------

Total cost of sales 987,277 966,919 2,109,597 1,969,240

Selling, general and
administrative 97,646 137,637 197,815 269,779
-------- ---------- ---------- ----------
Total homebuilding 1,084,923 1,104,556 2,307,412 2,239,019

Financial services 8,450 11,628 19,320 24,698

Corporate general and
administrative 21,296 19,558 43,112 42,191

Other interest 462 6,666 1,002 7,886

Other operations 1,057 805 1,863 2,258

Intangible amortization 292 6,718 1,227 68,274
-------- ---------- ---------- ----------
Total expenses 1,116,480 1,149,931 2,373,936 2,384,326
-------- ---------- ---------- ----------
Loss from unconsolidated
joint ventures (3,397) (2,160) (8,436) (195)
--------- ----------- ----------- -----------
Loss before income taxes (343,438) (41,433) (512,232) (108,062)
--------- ----------- ----------- -----------
State and federal income tax
(benefit) provision:
State 11,942 1,094 14,225 (1,252)
Federal (14,669) (14,468) (54,803) (24,143)
--------- ----------- ----------- -----------
Total taxes (2,727) (13,374) (40,578) (25,395)
--------- ----------- ----------- -----------
Net loss (340,711) (28,059) (471,654) (82,667)
Less: preferred stock
dividends - 2,669 - 5,338
--------- ----------- ----------- -----------
Net loss available to common
Stockholders $(340,711) $(30,728) $(471,654) $(88,005)

Per share data:
Basic:
Loss per common share $(5.29) $(0.49) $(7.43) $(1.40)
Weighted average number of
common shares
outstanding 64,410 63,004 63,455 62,953
Assuming dilution:
Loss per common share $(5.29) $(0.49) $(7.43) $(1.40)
Weighted average number of
common shares
outstanding 64,410 63,004 63,455 62,953

HOVNANIAN ENTERPRISES, INC.
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)
(UNAUDITED)
Communities Under Development
Three Months - 4/30/2008

Net Contracts (1)
Three Months Ended
April 30,
2008 2007 % Change
Northeast
Homes 334 408 (18.1%)
Dollars 140,651 202,884 (30.7%)
Avg. Price 421,111 497,265 (15.3%)
Mid-Atlantic
Homes 287 513 (44.1%)
Dollars 107,067 239,485 (55.3%)
Avg. Price 373,056 466,832 (20.1%)
Southeast
Homes 197 350 (43.7%)
Dollars 44,144 107,345 (58.9%)
Avg. Price 224,080 306,700 (26.9%)
Southwest
Homes 739 989 (25.3%)
Dollars 169,331 222,119 (23.8%)
Avg. Price 229,135 224,589 2.0%
Midwest
Homes 196 286 (31.5%)
Dollars 43,023 68,735 (37.4%)
Avg. Price 219,506 240,332 (8.7%)
West
Homes 473 570 (17.0%)
Dollars 142,561 248,815 (42.7%)
Avg. Price 301,398 436,518 (31.0%)
Consolidated Total
Homes 2,226 3,116 (28.6%)
Dollars 646,777 1,089,383 (40.6%)
Avg. Price 290,556 349,609 (16.9%)
Unconsolidated Joint
Ventures
Homes 205 202 1.5%
Dollars 81,114 61,782 31.3%
Avg. Price 395,680 305,851 29.4%
Total
Homes 2,431 3,318 (26.7%)
Dollars 727,891 1,151,165 (36.8%)
Avg. Price 299,420 346,945 (13.7%)

Deliveries
Three Months Ended
April 30,
2008 2007 % Change
Northeast
Homes 347 409 (15.2%)
Dollars 168,590 185,852 (9.3%)
Avg. Price 485,850 454,406 6.9%
Mid-Atlantic
Homes 337 402 (16.2%)
Dollars 134,494 189,370 (29.0%)
Avg. Price 399,092 471,070 (15.3%)
Southeast
Homes 444 766 (42.0%)
Dollars 109,182 207,844 (47.5%)
Avg. Price 245,905 271,337 (9.4%)
Southwest
Homes 645 866 (25.5%)
Dollars 143,649 200,053 (28.2%)
Avg. Price 222,712 231,008 (3.6%)
Midwest
Homes 257 199 29.1%
Dollars 55,092 41,524 32.7%
Avg. Price 214,366 208,663 2.7%
West
Homes 464 508 (8.7%)
Dollars 144,677 233,371 (38.0%)
Avg. Price 311,804 459,392 (32.1%)
Consolidated Total
Homes 2,494 3,150 (20.8%)
Dollars 755,684 1,058,014 (28.6%)
Avg. Price 303,001 335,877 (9.8%)
Unconsolidated Joint
Ventures
Homes 196 275 (28.7%)
Dollars 70,013 103,241 (32.2%)
Avg. Price 357,209 375,422 (4.9%)
Total
Homes 2,690 3,425 (21.5%)
Dollars 825,697 1,161,255 (28.9%)
Avg. Price 306,951 339,053 (9.5%)

Contract Backlog
April 30,
2008 2007 % Change
Northeast
Homes 846 1,143 (26.0%)
Dollars 406,002 592,250 (31.4%)
Avg. Price 479,908 518,154 (7.4%)
Mid-Atlantic
Homes 607 1,206 (49.7%)
Dollars 280,566 587,339 (52.2%)
Avg. Price 462,218 487,014 (5.1%)
Southeast
Homes 430 2,727 (84.2%)
Dollars 122,663 785,921 (84.4%)
Avg. Price 285,263 288,200 (1.0%)
Southwest
Homes 699 1,066 (34.4%)
Dollars 163,929 245,148 (33.1%)
Avg. Price 234,520 229,970 2.0%
Midwest
Homes 589 813 (27.6%)
Dollars 117,474 167,350 (29.8%)
Avg. Price 199,447 205,843 (3.1%)
West
Homes 406 811 (49.9%)
Dollars 137,054 357,982 (61.7%)
Avg. Price 337,572 441,408 (23.5%)
Consolidated Total
Homes 3,577 7,766 (53.9%)
Dollars 1,227,688 2,735,990 (55.1%)
Avg. Price 343,217 352,304 (2.6%)
Unconsolidated Joint
Ventures
Homes 389 811 (52.0%)
Dollars 197,607 370,634 (46.7%)
Avg. Price 507,987 457,009 11.2%
Total
Homes 3,966 8,577 (53.8%)
Dollars 1,425,295 3,106,624 (54.1%)
Avg. Price 359,378 362,204 (0.8%)

DELIVERIES INCLUDE EXTRAS
Notes:
(1) Net contracts are defined as new contracts signed during the period
for the purchase of homes, less cancellations of prior contracts.

HOVNANIAN ENTERPRISES, INC.
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)
(UNAUDITED)
Communities Under Development
Six Months - 4/30/2008

Net Contracts (1)
Six Months Ended
April 30,
2008 2007 % Change
Northeast
Homes 532 794 (33.0%)
Dollars 224,067 377,932 (40.7%)
Avg. Price 421,178 475,985 (11.5%)
Mid-Atlantic
Homes 488 944 (48.3%)
Dollars 180,491 432,124 (58.2%)
Avg. Price 369,859 457,758 (19.2%)
Southeast
Homes 352 494 (28.7%)
Dollars 86,567 147,366 (41.3%)
Avg. Price 245,929 298,312 (17.6%)
Southwest
Homes 1,284 1,720 (25.3%)
Dollars 293,716 388,321 (24.4%)
Avg. Price 228,751 225,768 1.3%
Midwest
Homes 298 540 (44.8%)
Dollars 61,760 124,680 (50.5%)
Avg. Price 207,248 230,889 (10.2%)
West
Homes 783 1,194 (34.4%)
Dollars 257,966 523,668 (50.7%)
Avg. Price 329,459 438,583 (24.9%)
Consolidated Total
Homes 3,737 5,686 (34.3%)
Dollars 1,104,567 1,994,091 (44.6%)
Avg. Price 295,576 350,702 (15.7%)
Unconsolidated Joint
Ventures
Homes 313 245 27.8%
Dollars 133,861 59,612 124.6%
Avg. Price 427,670 243,314 75.8%
Total
Homes 4,050 5,931 (31.7%)
Dollars 1,238,428 2,053,703 (39.7%)
Avg. Price 305,785 346,266 (11.7%)

Deliveries
Six Months Ended
April 30,
2008 2007 % Change
Northeast
Homes 661 869 (23.9%)
Dollars 328,936 399,138 (17.6%)
Avg. Price 497,634 459,307 8.3%
Mid-Atlantic
Homes 634 872 (27.3%)
Dollars 260,052 412,058 (36.9%)
Avg. Price 410,177 472,544 (13.2%)
Southeast
Homes 2,073 1,580 31.2%
Dollars 502,364 425,569 18.0%
Avg. Price 242,337 269,347 (10.0%)
Southwest
Homes 1,336 1,653 (19.2%)
Dollars 307,833 376,223 (18.2%)
Avg. Price 230,414 227,600 1.2%
Midwest
Homes 468 395 18.5%
Dollars 101,672 80,103 26.9%
Avg. Price 217,248 202,792 7.1%
West
Homes 926 1,047 (11.6%)
Dollars 306,645 500,839 (38.8%)
Avg. Price 331,150 478,356 (30.8%)
Consolidated Total
Homes 6,098 6,416 (5.0%)
Dollars 1,807,502 2,193,930 (17.6%)
Avg. Price 296,409 341,947 (13.3%)
Unconsolidated Joint
Ventures
Homes 351 564 (37.8%)
Dollars 136,581 211,737 (35.5%)
Avg. Price 389,119 375,420 3.6%
Total
Homes 6,449 6,980 (7.6%)
Dollars 1,944,083 2,405,667 (19.2%)
Avg. Price 301,455 344,651 (12.5%)

DELIVERIES INCLUDE EXTRAS
Notes:
(1) Net contracts are defined as new contracts signed during the period
for the purchase of homes, less cancellations of prior contracts.

First Call Analyst:
FCMN Contact: droberts@khov.com

Source: Hovnanian Enterprises, Inc.

CONTACT: Kevin C. Hake, Senior Vice President, Finance and Treasurer, or
Jeffrey T. O'Keefe, Director of Investor Relations, both of Hovnanian
Enterprises, Inc., +1-732-747-7800

Web site: http://www.khov.com/

2008-06-03 18:53:15 0376781 PRNEWSWIRE

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