Hovnanian Enterprises Reports Fiscal 2016 Third Quarter Results

Reports Pretax Profit for Third Quarter 
Closed Financing Transactions with New Issuances of $150 Million

RED BANK, N.J., Sept. 09, 2016 (GLOBE NEWSWIRE) — Hovnanian Enterprises, Inc. (NYSE:HOV), a leading national homebuilder, reported results for its fiscal third quarter and nine months ended July 31, 2016.

RESULTS FOR THE THREE MONTH AND NINE MONTH PERIODS ENDED JULY 31, 2016:

  • Total revenues were $716.9 million in the third quarter of fiscal 2016, an increase of 32.6% compared with $540.6 million in the third quarter of fiscal 2015. For the nine months ended July 31, 2016, total revenues increased 33.8% to $1.95 billion compared with $1.46 billion in the first nine months of the prior year.
     
  • Total SG&A was $66.6 million, or 9.3% of total revenues, a 330 basis point improvement during the third quarter of fiscal 2016 compared with $67.9 million, or 12.6% of total revenues, in last year’s third quarter. Total SG&A was $199.4 million, or 10.2% of total revenues, a 360 basis point improvement for the first nine months of fiscal 2016 compared with $201.5 million, or 13.8% of total revenues, in the first nine months of the prior year.
     
  • Total interest expense as a percentage of total revenues was 7.2% during both the third quarter of fiscal 2016 and the third quarter of fiscal 2015. For the nine months ended July 31, 2016, total interest expense as a percentage of total revenues declined 70 basis points to 6.9% compared with 7.6% during the same period a year ago.
     
  • Homebuilding gross margin percentage, before interest expense and land charges included in cost of sales, was 16.9% for the third quarter ended July 31, 2016 compared with 17.8% for the third quarter of fiscal 2015 and 16.1% for the second quarter of fiscal 2016. During the first nine months of fiscal 2016, homebuilding gross margin percentage, before interest expense and land charges included in cost of sales, was 16.5% compared with 17.4% in the same period of the previous year.
     
  • Income before income taxes in the third quarter of fiscal 2016 was $1.1 million compared with a loss before income taxes of $10.0 million in the prior year’s third quarter. For the first nine months of fiscal 2016, the loss before income taxes was $29.7 million compared with a loss before income taxes of $59.2 million during the first nine months of fiscal 2015.
     
  • Income before income taxes, excluding land-related charges, in the third quarter of fiscal 2016 was $2.7 million compared with a loss before income taxes, excluding land-related charges, of $8.9 million in the prior year’s third quarter. For the first nine months of fiscal 2016, the loss before income taxes, excluding land-related charges, was $6.8 million compared with a loss before income taxes, excluding land-related charges, of $51.5 million during the first nine months of fiscal 2015.
     
  • The net loss was $0.5 million, or $0.00 per common share, for the third quarter of fiscal 2016, compared with a net loss of $7.7 million, or $0.05 per common share, in the third quarter of the previous year. For the nine months ended July 31, 2016, the net loss was $25.1 million, or $0.17 per common share, compared with a net loss of $41.6 million, or $0.28 per common share, in the first nine months of fiscal 2015.
     
  • For the third quarter of fiscal 2016, Adjusted EBITDA was $56.3 million compared with $32.2 million during the third quarter of 2015, a 74.8% increase. For the first nine months of fiscal 2016, Adjusted EBITDA increased 105.1% to $134.8 million compared with $65.7 million during the first nine months of fiscal 2015.
     
  • Adjusted EBITDA to interest incurred was 1.40x for third quarter of fiscal 2016 compared with 0.77x for the same quarter last year. For the nine-month period ended July 31, 2016, Adjusted EBITDA to interest incurred was 1.07x compared with 0.53x for the same period one year ago.
     
  • Consolidated active selling communities decreased 15.5% from 206 communities at the end of the prior year’s third quarter to 174 communities as of July 31, 2016, which was impacted by the sale of ten communities in Minneapolis and Raleigh and the conversion of four consolidated communities into unconsolidated joint venture communities. As of the end of the third quarter of fiscal 2016, active selling communities, including unconsolidated joint ventures, decreased 9.8% to 193 communities compared with 214 communities at July 31, 2015.
     
  • Consolidated net contracts per active selling community increased 13.5% to 8.4 net contracts per active selling community for the third quarter of fiscal 2016 compared with 7.4 net contracts per active selling community in the third quarter of fiscal 2015. Net contracts per active selling community, including unconsolidated joint ventures, increased 3.9% to 8.0 net contracts per active selling community for the quarter ended July 31, 2016 compared with 7.7 net contracts, including unconsolidated joint ventures, per active selling community in the third quarter of fiscal 2015.
     
  • The dollar value of consolidated net contracts decreased 4.3% to $593.0 million for the three months ended July 31, 2016 compared with $619.4 million during the same quarter a year ago. The dollar value of net contracts, including unconsolidated joint ventures, during the third quarter of fiscal 2016 decreased 8.8% to $633.3 million compared with $694.6 million in last year’s third quarter.
     
  • The dollar value of consolidated net contracts increased 8.5% to $1.98 billion for the first nine months of fiscal 2016 compared with $1.82 billion in the first nine months of the previous year. The dollar value of net contracts, including unconsolidated joint ventures, for the nine months ended July 31, 2016 increased 6.3% to $2.09 billion compared with $1.97 billion in the first nine months of fiscal 2015.
     
  • The number of consolidated net contracts, during the third quarter of fiscal 2016, decreased 4.3% to 1,467 homes compared with 1,533 homes in the prior year’s third quarter. In the third quarter of fiscal 2016, the number of net contracts, including unconsolidated joint ventures, decreased 7.3% to 1,537 homes from 1,658 homes during the third quarter of fiscal 2015.
     
  • The number of consolidated net contracts, during the nine-month period ended July 31, 2016, increased 3.5% to 4,810 homes compared with 4,648 homes in the same period of the previous year. During the first nine months of fiscal 2016, the number of net contracts, including unconsolidated joint ventures, was 4,991 homes, an increase of 1.5% from 4,918 homes during the first nine months of fiscal 2015.
     
  • As of July 31, 2016, the dollar value of contract backlog, including unconsolidated joint ventures, was $1.48 billion, an increase of 7.7% compared with $1.37 billion as of July 31, 2015. The dollar value of consolidated contract backlog, as of July 31, 2016, increased 3.8% to $1.31 billion compared with $1.26 billion as of July 31, 2015.
     
  • As of July 31, 2016, the number of homes in contract backlog, including unconsolidated joint ventures, decreased 1.3% to 3,232 homes compared with 3,275 homes as of July 31, 2015. The number of homes in consolidated contract backlog, as of July 31, 2016, decreased 4.1% to 2,969 homes compared with 3,097 homes as of the end of the third quarter of fiscal 2015.
     
  • Consolidated deliveries were 1,574 homes in the third quarter of fiscal 2016, an 11.8% increase compared with 1,408 homes in the third quarter of fiscal 2015. For the three months ended July 31, 2016, deliveries, including unconsolidated joint ventures, increased 10.3% to 1,627 homes compared with 1,475 homes in the third quarter of the prior year.
     
  • Consolidated deliveries were 4,594 homes in the first nine months of fiscal 2016, a 21.5% increase compared with 3,780 homes in the same period in fiscal 2015. For the nine months ended July 31, 2016, deliveries, including unconsolidated joint ventures, increased 19.0% to 4,740 homes compared with 3,984 homes in the first nine months of the prior year.
     
  • The contract cancellation rate, including unconsolidated joint ventures, for the third quarter of fiscal 2016 was 22%, compared with 20% in the third quarter of fiscal 2015.
     
  • The valuation allowance was $635.4 million as of July 31, 2016. The valuation allowance is a non-cash reserve against the tax assets for GAAP purposes. For tax purposes, the tax deductions associated with the tax assets may be carried forward for 20 years from the date the deductions were incurred.

LIQUIDITY AND INVENTORY AS OF JULY 31, 2016:

  • After paying off $320.0 million of debt that matured in October 2015, January 2016 and May 2016, total liquidity at the end of the third quarter of fiscal 2016 was $187.7 million.
     
  • During the third quarter of fiscal 2016, land and land development spending was $132.3 million compared with $130.0 million in last year’s third quarter.
     
  • As of July 31, 2016, the land position, including unconsolidated joint ventures, was 32,125 lots, consisting of 14,256 lots under option and 17,869 owned lots, compared with a total of 37,442 lots as of July 31, 2015.
     
  • During the third quarter of fiscal 2016, approximately 900 lots, including unconsolidated joint ventures, were put under option or acquired in 20 communities.
     
  • Subsequent to third quarter end, closed financing transactions with certain investment funds managed by affiliates of H/2 Capital Partners LLC by borrowing $75.0 million under a senior secured first lien priority term loan facility, issuing $75.0 million of 10.0% Senior Secured Second Lien Notes due 2018 and issuing $75.0 million of 9.5% Senior Secured First Lien Notes due 2020 in exchange for $75.0 million of 9.125% Senior Secured Second Lien Notes due 2020 held by such investor.  Used a portion of the proceeds to call for redemption all $121.0 million of our 8.625% Senior Notes due 2017.

FINANCIAL GUIDANCE:

  • Assuming no changes in current market conditions and after the impact from exiting two markets, our guidance for all of fiscal 2016 for total revenues is expected to be between $2.7 billion and $2.9 billion. Adjusted EBITDA is expected to be between $200 million and $225 million and income before income taxes, excluding land related charges, gains or losses on extinguishment of debt and other non-recurring items such as legal settlements, is expected to be between $25 million and $35 million for all of fiscal 2016.

COMMENTS FROM MANAGEMENT:

“During our third quarter we made progress towards our goal of improving our profitability by increasing our revenues 33%, growing Adjusted EBITDA by 75%, improving our Adjusted EBITDA coverage to 1.40x from 0.77x, and achieving a pretax profit,” stated Ara K. Hovnanian, Chairman of the Board, President and Chief Executive Officer. “However, we are fully aware that there is even more work to do in order to return the company to higher levels of sustainable profits. We are anticipating a solid fourth quarter with income before income taxes, excluding land related charges, gains or losses on extinguishment of debt and other non-recurring items such as legal settlements, expected to be between $32 million and $42 million.”

“After paying off $320 million of debt since October 15, 2015, we ended the third quarter with $187.7 million of liquidity. Subsequent to the end of the third quarter, we issued $150 million of new debt to refinance debt maturing in 2017. Completing this debt transaction increases our liquidity and allows us to continue land investments that will help return us to higher levels of profitability in the future,” concluded Mr. Hovnanian.

WEBCAST INFORMATION:

Hovnanian Enterprises will webcast its fiscal 2016 third quarter financial results conference call at 11:00 a.m. E.T. on Friday, September 9, 2016. The webcast can be accessed live through the “Investor Relations” section of Hovnanian Enterprises’ website 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 “Past Events” section of the Investor Relations page on the Hovnanian website at http://www.khov.com. The archive will be available for 12 months.

ABOUT HOVNANIAN ENTERPRISES®, INC.:

Hovnanian Enterprises, Inc., founded in 1959 by Kevork S. Hovnanian, 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, Maryland, New Jersey, Ohio, Pennsylvania, South Carolina, Texas, Virginia, Washington, D.C. and West Virginia. The Company’s homes are marketed and sold under the trade names K. Hovnanian® Homes, Brighton Homes® and Parkwood Builders. As the developer of K. Hovnanian’s® Four Seasons communities, the Company is also one of the nation’s largest builders of active lifestyle communities.

Additional information on Hovnanian Enterprises, Inc., including a summary investment profile and the Company’s 2015 annual report, can be accessed through the “Investor Relations” section of the Hovnanian Enterprises’ website at http://www.khov.com. To be added to Hovnanian’s investor e-mail list, please send an e-mail to IR@khov.com or sign up at http://www.khov.com.

NON-GAAP FINANCIAL MEASURES:

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

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

With respect to our expectations under “Financial Guidance” and “Comments from Management” above, for Adjusted EBITDA and income before income taxes excluding land-related charges, gains or losses on extinguishment of debt and other non-recurring items such as legal settlements, a reconciliation to the closest corresponding GAAP financial measures is not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to land-related charges excluded from these non-GAAP financial measures. We expect the variability of these charges to have a potentially unpredictable, and potentially significant, impact on our future GAAP financial results.

Total liquidity is comprised of $181.5 million of cash and cash equivalents, $1.7 million of restricted cash required to collateralize letters of credit and $4.5 million of availability under the unsecured revolving credit facility as of July 31, 2016.

FORWARD-LOOKING STATEMENTS

All statements in this press release that are not historical facts should be considered as “Forward-Looking Statements” within the meaning of the “Safe Harbor” provisions 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 forward-looking statements include but are not limited to statements related to the Company’s goals and expectations with respect to its financial results for the current or future financial periods, including total revenues, Adjusted EBITDA and adjusted income before income taxes. Although we believe that our plans, intentions and expectations reflected in, or suggested by, such forward-looking statements are reasonable, we can give no assurance that such plans, intentions or expectations will be achieved. By their nature, forward-looking statements: (i) speak only as of the date they are made, (ii) are not guarantees of future performance or results and (iii) are subject to risks, uncertainties and assumptions that are difficult to predict or quantify. Therefore, actual results could differ materially and adversely from those forward-looking statements as a result of a variety of factors. Such risks, uncertainties and other factors include, but are not limited to, (1) changes in general and local economic, industry and business conditions and impacts of the sustained homebuilding downturn; (2) adverse weather and other environmental conditions and natural disasters; (3) levels of indebtedness and restrictions on the Company’s operations and activities imposed by the agreements governing the Company’s outstanding indebtedness; (4) the Company’s sources of liquidity; (5) changes in credit ratings; (6) changes in market conditions and seasonality of the Company’s business; (7) the availability and cost of suitable land and improved lots; (8) shortages in, and price fluctuations of, raw materials and labor; (9) regional and local economic factors, including dependency on certain sectors of the economy, and employment levels affecting home prices and sales activity in the markets where the Company builds homes; (10) fluctuations in interest rates and the availability of mortgage financing; (11) changes in tax laws affecting the after-tax costs of owning a home; (12) operations through joint ventures with third parties; (13) government regulation, including regulations concerning development of land, the home building, sales and customer financing processes, tax laws and the environment; (14) product liability litigation, warranty claims and claims made by mortgage investors; (15) levels of competition; (16) availability and terms of financing to the Company; (17) successful identification and integration of acquisitions; (18) significant influence of the Company’s controlling stockholders; (19) availability of net operating loss carryforwards; (20) utility shortages and outages or rate fluctuations; (21) geopolitical risks, terrorist acts and other acts of war; (22) increases in cancellations of agreements of sale; (23) loss of key management personnel or failure to attract qualified personnel; (24) information technology failures and data security breaches; (25) legal claims brought against us and not resolved in our favor; and (26) certain risks, uncertainties and other factors described in detail in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2015 and subsequent filings with the Securities and Exchange Commission. Except as otherwise required by applicable securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.

(Financial Tables Follow)

Hovnanian Enterprises, Inc.              
July 31, 2016              
Statements of Consolidated Operations              
(Dollars in Thousands, Except Per Share Data)              
        Three Months Ended   Nine Months Ended
        July 31,   July 31,
          2016       2015       2016       2015  
        (Unaudited)   (Unaudited)
Total Revenues $ 716,850     $ 540,613     $ 1,947,178     $ 1,455,276  
Costs and Expenses (a)     713,356        550,166       1,971,656       1,516,908  
(Loss) Income from Unconsolidated Joint Ventures     (2,401 )     (448 )     (5,227 )      2,470  
Income (loss) Before Income Taxes   1,093        (10,001 )      (29,705 )      (59,162 )
Income Tax Provision (Benefit)   1,567       (2,317 )     (4,597 )      (17,543 )
Net Loss $ (474 )   $ (7,684 )   $ (25,108 )   $ (41,619 )
                     
Per Share Data:              
Basic:                
  Loss Per Common Share $ (0.00 )   $ (0.05 )   $ (0.17 )   $ (0.28 )
  Weighted Average Number of              
    Common Shares Outstanding (b)     147,412        147,010       147,383       146,846  
Assuming Dilution:              
  Loss Per Common Share $ (0.00 )   $ (0.05 )   $ (0.17 )   $ (0.28 )
  Weighted Average Number of              
    Common Shares Outstanding (b)     147,412        147,010       147,383       146,846  
                     
(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.            
                     
                     
Hovnanian Enterprises, Inc.              
July 31, 2016              
Reconciliation of Income (Loss) Before Income Taxes Excluding Land-Related Charges to Income (Loss) Before Income Taxes
                     
(Dollars in Thousands)              
                     
        Three Months Ended   Nine Months Ended
        July 31,   July 31, 
          2016       2015       2016       2015  
        (Unaudited)   (Unaudited)
Income (Loss) Before Income Taxes $ 1,093     $ (10,001 )   $ (29,705 )   $ (59,162 )
Inventory Impairment Loss and Land Option Write-Offs   1,565         1,077         22,915        7,618  
Income (Loss) Before Income Taxes Excluding Land-Related Charges(a) $ 2,658     $ (8,924 )   $ (6,790 )   $ (51,544 )
                     
(a) Income (Loss) Before Income Taxes Excluding Land-Related Charges is a non-GAAP Financial measure. The most directly comparable GAAP financial measure is Income (Loss) Before Income Taxes.
Hovnanian Enterprises, Inc.                
July 31, 2016                
Gross Margin                
(Dollars in Thousands)            
    Homebuilding Gross Margin Homebuilding Gross Margin
    Three Months Ended   Nine Months Ended
    July 31,   July 31,
      2016       2015       2016       2015  
    (Unaudited)   (Unaudited)
Sale of Homes   $ 640,386     $ 526,156     $ 1,823,318     $ 1,414,799  
Cost of Sales, Excluding Interest and Land Charges (a)      532,116         432,625        1,521,704         1,168,874  
Homebuilding Gross Margin, Excluding Interest and Land Charges   108,270        93,531       301,614       245,925  
Homebuilding Cost of Sales Interest     23,108        16,323       61,291        39,615  
Homebuilding Gross Margin, Including Interest and              
Excluding Land Charges $ 85,162     $ 77,208     $ 240,323     $ 206,310  
                 
Gross Margin Percentage, Excluding Interest and Land Charges   16.9 %     17.8 %     16.5 %     17.4 %
Gross Margin Percentage, Including Interest and                              
Excluding Land Charges   13.3 %     14.7 %     13.2 %     14.6 %
                 
    Land Sales Gross Margin Land Sales Gross Margin
    Three Months Ended Nine Months Ended
    July 31,   July 31,
      2016       2015       2016       2015  
    (Unaudited)   (Unaudited)
Land and Lot Sales   $ 58,897     $     $ 70,051     $ 850  
Cost of Sales, Excluding Interest and Land Charges (a)     51,667             62,275       702  
Land and Lot Sales Gross Margin, Excluding Interest and Land Charges   7,230             7,776       148  
Land and Lot Sales Interest       5,298        –         5,402         39  
Land and Lot Sales Gross Margin, Including Interest and                              
Excluding Land Charges $ 1,932     $     $ 2,374     $ 109  
                 
                 
(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.              
July 31, 2016              
Reconciliation of Adjusted EBITDA to Net Loss              
(Dollars in Thousands)              
  Three Months Ended   Nine Months Ended
  July 31,   July 31,
    2016       2015       2016       2015  
  (Unaudited)   (Unaudited)
Net Loss $ (474 )   $ (7,684 )   $ (25,108 )   $ (41,619 )
Income Tax Provision (Benefit)   1,567       (2,317 )     (4,597 )     (17,543 )
Interest Expense   51,565       38,816       135,161       110,248  
EBIT (a)   52,658       28,815       105,456       51,086  
Depreciation   879       835       2,608       2,553  
Amortization of Debt Costs   1,205       1,491       3,815       4,451  
EBITDA (b)   54,742       31,141       111,879       58,090  
Inventory Impairment Loss and Land Option Write-offs   1,565       1,077       22,915       7,618  
Adjusted EBITDA (c) $ 56,307     $ 32,218     $ 134,794     $ 65,708  
               
Interest Incurred $ 40,300     $ 41,856     $ 126,483     $ 124,031  
               
Adjusted EBITDA to Interest Incurred   1.40       0.77       1.07       0.53  
               
               
               
(a) EBIT is a non-GAAP financial measure. The most directly comparable GAAP financial measure is net loss. EBIT represents earnings before interest expense and income taxes.
(b) EBITDA is a non-GAAP financial measure. The most directly comparable GAAP financial measure is net loss. EBITDA represents earnings before interest expense, income taxes, depreciation and amortization.
(c) Adjusted EBITDA is a non-GAAP financial measure. The most directly comparable GAAP financial measure is net loss. Adjusted EBITDA represents earnings before interest expense, income taxes, depreciation, amortization and inventory impairment loss and land option write-offs.
               
               
Hovnanian Enterprises, Inc.              
July 31, 2016              
Interest Incurred, Expensed and Capitalized              
(Dollars in Thousands)              
  Three Months Ended   Nine Months Ended
  July 31,   July 31,
    2016       2015       2016       2015  
  (Unaudited)   (Unaudited)
Interest Capitalized at Beginning of Period $ 115,809     $ 119,901     $ 123,898     $ 109,158  
Plus Interest Incurred    40,300        41,856         126,483       124,031  
Less Interest Expensed (a)    51,565        38,816         135,161       110,248  
Less Interest Contributed to Unconsolidated Joint Venture (a)    –         –        10,676        
Interest Capitalized at End of Period (b) $ 104,544     $ 122,941     $ 104,544     $ 122,941  
               
(a) Represents capitalized interest which was included as part of the assets contributed to the joint venture the Company entered into in November 2015. There was no impact to the Condensed Consolidated Statement of Operations as a result of this transaction.
(b) Capitalized interest amounts are shown gross before allocating any portion of impairments to capitalized interest.

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

    July 31,
2016
    October 31,
2015
 
    (Unaudited)                  (1 )    
ASSETS              
               
Homebuilding:              
Cash and cash equivalents     $ 181,526       $ 245,398    
Restricted cash and cash equivalents       4,107         7,299    
Inventories:              
Sold and unsold homes and lots under development       989,416         1,307,850    
Land and land options held for future development or sale       196,610         214,503    
Consolidated inventory not owned       280,728         122,225    
Total inventories       1,466,754         1,644,578    
Investments in and advances to unconsolidated joint ventures       87,991         61,209    
Receivables, deposits and notes, net       66,184         70,349    
Property, plant and equipment, net       48,351         45,534    
Prepaid expenses and other assets       74,685         77,671    
Total homebuilding       1,929,598         2,152,038    
               
Financial services:              
Cash and cash equivalents       8,516         8,347    
Restricted cash and cash equivalents       17,055         19,223    
Mortgage loans held for sale at fair value       137,784         130,320    
Other assets       2,530         2,091    
Total financial services       165,885         159,981    
Income taxes receivable – including net deferred tax benefits       293,358         290,279    
Total assets     $ 2,388,841       $ 2,602,298    

(1)  Derived from the audited balance sheet as of October 31, 2015.

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

    July 31, 
2016
  October 31, 
2015
 
    (Unaudited)                  (1 )  
LIABILITIES AND EQUITY              
               
Homebuilding:              
Nonrecourse mortgages secured by inventory     $ 91,319     $ 143,863  
Accounts payable and other liabilities       380,786       348,516  
Customers’ deposits       45,530       44,218  
Nonrecourse mortgages secured by operating properties       14,621       15,511  
Liabilities from inventory not owned       195,755       105,856  
Total homebuilding       728,011       657,964  
               
Financial services:              
Accounts payable and other liabilities       26,383       27,908  
Mortgage warehouse lines of credit       115,656       108,875  
Total financial services       142,039       136,783  
               
Notes payable:              
Revolving credit agreement       52,000       47,000  
Senior secured notes, net of discount       982,468       981,346  
Senior notes, net of discount       521,043       780,319  
Senior amortizing notes       8,094       12,811  
Senior exchangeable notes       76,650       73,771  
Accrued interest       30,479       40,388  
Total notes payable       1,670,734       1,935,635  
Total liabilities       2,540,784       2,730,382  
               
Stockholders’ equity deficit:              
Preferred stock, $0.01 par value – authorized 100,000 shares; issued and outstanding 5,600 shares with a liquidation preference of $140,000 at July 31, 2016 and at October 31, 2015       135,299       135,299  
Common stock, Class A, $0.01 par value – authorized 400,000,000 shares; issued 143,739,513 shares at July 31, 2016 and 143,292,881 shares at October 31, 2015 (including 11,760,763 shares at July 31, 2016 and October 31, 2015 held in treasury)       1,437       1,433  
Common stock, Class B, $0.01 par value (convertible to Class A at time of sale) – authorized 60,000,000 shares; issued 16,010,071 shares at July 31, 2016 and 15,676,829 shares at October 31, 2015 (including 691,748 shares at July 31, 2016 and October 31, 2015 held in treasury)       160       157  
Paid in capital – common stock       704,993       703,751  
Accumulated deficit       (878,472     (853,364 )
Treasury stock – at cost       (115,360     (115,360 )
Total stockholders’ equity deficit       (151,943     (128,084 )
Total liabilities and equity     $ 2,388,841     $ 2,602,298  

(1)  Derived from the audited balance sheet as of October 31, 2015.

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

    Three Months Ended July 31,     Nine Months Ended July 31,  
    2016     2015     2016     2015  
Revenues:                                
Homebuilding:                                
Sale of homes     $ 640,386       $ 526,156       $ 1,823,318       $ 1,414,799  
Land sales and other revenues       59,979         97         72,146         2,538  
Total homebuilding       700,365         526,253         1,895,464         1,417,337  
Financial services       16,485         14,360         51,714         37,939  
Total revenues       716,850         540,613         1,947,178         1,455,276  
                                 
Expenses:                                
Homebuilding:                                
Cost of sales, excluding interest       583,783         432,625         1,583,979         1,169,576  
Cost of sales interest       28,406         16,323         66,693         39,654  
Inventory impairment loss and land option write-offs       1,565         1,077         22,915         7,618  
Total cost of sales       613,754         450,025         1,673,587         1,216,848  
Selling, general and administrative       51,685         51,998         155,560         152,258  
Total homebuilding expenses       665,439         502,023         1,829,147         1,369,106  
                                 
Financial services       8,916         8,244         26,749         23,069  
Corporate general and administrative       14,885         15,874         43,804         49,275  
Other interest       23,159         22,493         68,468         70,594  
Other operations       957         1,532         3,488         4,864  
Total expenses       713,356         550,166         1,971,656         1,516,908  
(Loss) income from unconsolidated joint ventures       (2,401 )       (448 )       (5,227 )       2,470  
Income (loss) before income taxes       1,093         (10,001 )       (29,705 )       (59,162 )
State and federal income tax provision (benefit):                                
State       1,434         999         4,995         3,717  
Federal       133         (3,316 )       (9,592 )       (21,260 )
Total income taxes       1,567         (2,317 )       (4,597 )       (17,543 )
Net loss     $ (474 )     $ (7,684 )     $ (25,108 )     $ (41,619 )
                                 
Per share data:                                
Basic:                                
Loss per common share     $ (0.00 )     $ (0.05 )     $ (0.17 )     $ (0.28 )
Weighted-average number of common shares outstanding       147,412         147,010         147,383         146,846  
Assuming dilution:                                
Loss per common share     $ (0.00 )     $ (0.05 )     $ (0.17 )     $ (0.28 )
Weighted-average number of common shares outstanding       147,412         147,010         147,383         146,846  
HOVNANIAN ENTERPRISES, INC.                    
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)                
(SEGMENT DATA EXCLUDES UNCONSOLIDATED JOINT VENTURES)              
(UNAUDITED)                
          Communities Under Development
Three Months – July 31, 2016
     
    Net Contracts (1) Deliveries Contract
    Three Months Ended Three Months Ended Backlog
    Jul 31, Jul 31, Jul 31,
      2016     2015   % Change   2016     2015   % Change   2016     2015   % Change
Northeast                     
(NJ, PA) Home   128     137     (6.6 )%   136     78     74.4 %   260     286     (9.1 )%
  Dollars $ 61,945   $ 69,410     (10.8 )% $ 66,308   $ 36,109     83.6 % $ 130,800   $ 143,333     (8.7 )%
  Avg. Price $ 483,942   $ 506,642     (4.5 )% $ 487,558   $ 462,932     5.3 % $ 503,079   $ 501,164     0.4 %
Mid-Atlantic                      
(DE, MD, VA, WV) Home   208     242     (14.0 )%   228     243     (6.2 )%   566     473     19.7 %
  Dollars $ 97,338   $ 115,164     (15.5 )% $ 111,579   $ 113,886     (2.0 )% $ 312,698   $ 252,139     24.0 %
  Avg. Price $ 467,969   $ 475,883     (1.7 )% $ 489,382   $ 468,670     4.4 % $ 552,469   $ 533,063     3.6 %
Midwest (2)                    
(IL, MN, OH) Home   176     186     (5.4 )%   193     253     (23.7 )%   464     696     (33.3 )%
  Dollars $ 49,260   $ 70,578     (30.2 )% $ 56,643   $ 82,618     (31.4 )% $ 128,381   $ 211,718     (39.4 )%
  Avg. Price $ 279,885   $ 379,450     (26.2 )% $ 293,487   $ 326,554     (10.1 )% $ 276,683   $ 304,193     (9.0 )%
Southeast (3)                     
(FL, GA, NC, SC) Home   142     176     (19.3 )%   145     176     (17.6 )%   355     331     7.3 %
  Dollars $ 59,242   $ 54,776     8.2 % $ 56,471   $ 57,294     (1.4 )% $ 159,489   $ 110,628     44.2 %
  Avg. Price $ 417,197   $ 311,228     34.0 % $ 389,458   $ 325,534     19.6 % $ 449,265   $ 334,225     34.4 %
Southwest                     
(AZ, TX) Home   638     656     (2.7 )%   671     568     18.1 %   1,008     1,148     (12.2 )%
  Dollars $ 225,929   $ 248,907     (9.2 )% $ 248,228   $ 203,075     22.2 % $ 393,906   $ 469,054     (16.0 )%
  Avg. Price $ 354,121   $ 379,432     (6.7 )% $ 369,937   $ 357,526     3.5 % $ 390,780   $ 408,583     (4.4 )%
West                     
(CA) Home   175     136     28.7 %   201     90     123.3 %   316     163     93.9 %
  Dollars $ 99,284   $ 60,573     63.9 % $ 101,157   $ 33,174     204.9 % $ 186,986   $ 77,480     141.3 %
  Avg. Price $ 567,339   $ 445,387     27.4 % $ 503,269   $ 368,598     36.5 % $ 591,727   $ 475,339     24.5 %
Consolidated Total                    
  Home   1,467     1,533     (4.3 )%   1,574     1,408     11.8 %   2,969     3,097     (4.1 )%
  Dollars $ 592,998   $ 619,408     (4.3 )% $ 640,386   $ 526,156     21.7 % $ 1,312,260   $ 1,264,352     3.8 %
  Avg. Price $ 404,225   $ 404,049     0.0 % $ 406,853   $ 373,691     8.9 % $ 441,987   $ 408,251     8.3 %
Unconsolidated Joint Ventures                    
  Home   70     125     (44.0 )%   53     67     (20.9 )%   263     178     47.8 %
  Dollars $ 40,275   $ 75,225     (46.5 )% $ 30,714   $ 27,286     12.6 % $ 168,135   $ 110,372     52.3 %
  Avg. Price $ 575,361   $ 601,800     (4.4 )% $ 579,511   $ 407,250     42.3 % $ 639,297   $ 620,066     3.1 %
Grand Total                    
  Home   1,537     1,658     (7.3 )%   1,627     1,475     10.3 %   3,232     3,275     (1.3 )%
  Dollars $ 633,273   $ 694,633     (8.8 )% $ 671,100   $ 553,442     21.3 % $ 1,480,395   $ 1,374,724     7.7 %
  Avg. Price $ 412,019   $ 418,958     (1.7 )% $ 412,477   $ 375,215     9.9 % $ 458,043   $ 419,763     9.1 %
                     
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.
(2) The Midwest net contracts include 4 homes and $1.9 million and 53 homes and $21.8 million in 2016 and 2015, respectively, from Minneapolis, MN. Contract backlog as of July 31, 2016 reflects the reduction of 64 homes and $24.1 million, related to the sale of our land portfolio in Minneapolis, MN.
(3) The Southeast net contracts include 25 homes and $7.8 million in 2015 from Raleigh, NC. Contract backlog as of July 31, 2016 reflects the reduction of 67 homes and $33.7 million, related to the sale of our land portfolio in Raleigh, NC.

HOVNANIAN ENTERPRISES, INC.                    
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)                  
(SEGMENT DATA INCLUDES UNCONSOLIDATED JOINT VENTURES)              
(UNAUDITED)                
          Communities Under Development
Three Months – July 31, 2016
     
    Net Contracts (1) Deliveries Contract
    Three Months Ended Three Months Ended Backlog
    Jul 31, Jul 31, Jul 31,
      2016     2015   % Change   2016     2015   % Change   2016     2015   % Change
Northeast                     
(includes unconsolidated joint ventures) Home   130     163     (20.2 )%   140     80     75.0 %   284     326     (12.9 )%
(NJ, PA) Dollars $ 62,339   $ 86,118     (27.6 )% $ 67,715   $ 36,567     85.2 % $ 139,392   $ 164,404     (15.2 )%
  Avg. Price $ 479,533   $ 528,331     (9.2 )% $ 483,676   $ 457,092     5.8 % $ 490,817   $ 504,306     (2.7 )%
Mid-Atlantic                     
(includes unconsolidated joint ventures) Home   226     259     (12.7 )%   240     260     (7.7 )%   610     511     19.4 %
(DE, MD, VA, WV) Dollars $ 111,496   $ 123,947     (10.0 )% $ 116,743   $ 123,749     (5.7 )% $ 342,197   $ 273,140     25.3 %
  Avg. Price $ 493,345   $ 478,559     3.1 % $ 486,429   $ 475,961     2.2 % $ 560,979   $ 534,522     4.9 %
Midwest (2)                     
(includes unconsolidated joint ventures) Home   181     189     (4.2 )%   193     256     (24.6 )%   478     696     (31.3 )%
(IL, MN, OH) Dollars $ 58,709   $ 71,492     (17.9 )% $ 56,643   $ 83,533     (32.2 )% $ 139,608   $ 211,718     (34.1 )%
  Avg. Price $ 324,361   $ 378,265     (14.3 )% $ 293,487   $ 326,299     (10.1 )% $ 292,067   $ 304,193     (4.0 )%
Southeast (3)                     
(includes unconsolidated joint ventures) Home   169     186     (9.1 )%   145     201     (27.9 )%   413     338     22.2 %
(FL, GA, NC, SC) Dollars $ 70,116   $ 58,719     19.4 % $ 56,471   $ 67,796     (16.7 )% $ 189,486   $ 113,368     67.1 %
  Avg. Price $ 414,885   $ 315,696     31.4 % $ 389,458   $ 337,291     15.5 % $ 458,803   $ 335,408     36.8 %
Southwest                     
(includes unconsolidated joint ventures) Home   638     656     (2.7 )%   671     568     18.1 %   1,008     1,148     (12.2 )%
(AZ, TX) Dollars $ 225,929   $ 248,908     (9.2 )% $ 248,227   $ 203,075     22.2 % $ 393,906   $ 469,054     (16.0 )%
  Avg. Price $ 354,121   $ 379,432     (6.7 )% $ 369,937   $ 357,526     3.5 % $ 390,780   $ 408,583     (4.4 )%
West                     
(includes unconsolidated joint ventures) Home   193     205     (5.9 )%   238     110     116.4 %   439     256     71.5 %
(CA) Dollars $ 104,684   $ 105,449     (0.7 )% $ 125,301   $ 38,722     223.6 % $ 275,806   $ 143,040     92.8 %
  Avg. Price $ 542,405   $ 514,384     5.4 % $ 526,473   $ 352,016     49.6 % $ 628,260   $ 558,748     12.4 %
Grand Total                    
  Home   1,537     1,658     (7.3 )%   1,627     1,475     10.3 %   3,232     3,275     (1.3 )%
  Dollars $ 633,273   $ 694,633     (8.8 )% $ 671,100   $ 553,442     21.3 % $ 1,480,395   $ 1,374,724     7.7 %
  Avg. Price $ 412,019   $ 418,958     (1.7 )% $ 412,477   $ 375,215     9.9 % $ 458,043   $ 419,763     9.1 %
Consolidated Total                    
  Home   1,467     1,533     (4.3 )%   1,574     1,408     11.8 %   2,969     3,097     (4.1 )%
  Dollars $ 592,998   $ 619,408     (4.3 )% $ 640,386   $ 526,156     21.7 % $ 1,312,260   $ 1,264,352     3.8 %
  Avg. Price $ 404,225   $ 404,049     0.0 % $ 406,853   $ 373,691     8.9 % $ 441,987   $ 408,251     8.3 %
Unconsolidated Joint Ventures                    
  Home   70     125     (44.0 )%   53     67     (20.9 )%   263     178     47.8 %
  Dollars $ 40,275   $ 75,225     (46.5 )% $ 30,714   $ 27,286     12.6 % $ 168,135   $ 110,372     52.3 %
  Avg. Price $ 575,361   $ 601,800     (4.4 )% $ 579,511   $ 407,250     42.3 % $ 639,297   $ 620,066     3.1 %
                     
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.
(2) The Midwest net contracts include 4 homes and $1.9 million and 53 homes and $21.8 million in 2016 and 2015, respectively, from Minneapolis, MN. Contract backlog as of July 31, 2016 reflects the reduction of 64 homes and $24.1 million, related to the sale of our land portfolio in Minneapolis, MN.
(3) The Southeast net contracts include 25 homes and $7.8 million in 2015 from Raleigh, NC. Contract backlog as of July 31, 2016 reflects the reduction of 67 homes and $33.7 million, related to the sale of our land portfolio in Raleigh, NC.

HOVNANIAN ENTERPRISES, INC.                    
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)                  
(SEGMENT DATA EXCLUDES UNCONSOLIDATED JOINT VENTURES)              
(UNAUDITED)         Communities Under Development      
          Nine Months – July 31, 2016      
    Net Contracts (1) Deliveries Contract
    Nine Months Ended Nine Months Ended Backlog
    Jul 31, Jul 31, Jul 31,
      2016     2015   % Change   2016     2015   % Change   2016     2015   % Change
Northeast                     
(NJ, PA) Home   362     384     (5.7 )%   395     244     61.9 %   260     286     (9.1 )%
  Dollars $ 176,456   $ 195,879     (9.9 )% $ 192,659   $ 125,873     53.1 % $ 130,800   $ 143,333     (8.7 )%
  Avg. Price $ 487,446   $ 510,100     (4.4 )% $ 487,743   $ 515,872     (5.5 )% $ 503,079   $ 501,164     0.4 %
Mid-Atlantic                     
(DE, MD, VA, WV) Home   753     700     7.6 %   628     598     5.0 %   566     473     19.7 %
  Dollars $ 368,603   $ 334,115     10.3 % $ 295,004   $ 270,899     8.9 % $ 312,698   $ 252,139     24.0 %
  Avg. Price $ 489,512   $ 477,308     2.6 % $ 469,751   $ 453,010     3.7 % $ 552,469   $ 533,063     3.6 %
Midwest (2)                       
(IL, MN, OH) Home   599     705     (15.0 )%   706     674     4.7 %   464     696     (33.3 )%
  Dollars $ 184,496   $ 243,366     (24.2 )% $ 225,276   $ 220,243     2.3 % $ 128,381   $ 211,718     (39.4 )%
  Avg. Price $ 308,006   $ 345,200     (10.8 )% $ 319,088   $ 326,769     (2.4 )% $ 276,683   $ 304,193     (9.0 )%
Southeast (3)                     
(FL, GA, NC, SC) Home   560     554     1.1 %   417     455     (8.4 )%   355     331     7.3 %
  Dollars $ 234,166   $ 173,891     34.7 % $ 146,895   $ 144,333     1.8 % $ 159,489   $ 110,628     44.2 %
  Avg. Price $ 418,153   $ 313,882     33.2 % $ 352,268   $ 317,215     11.1 % $ 449,265   $ 334,225     34.4 %
Southwest                     
(AZ, TX) Home   1,929     1,955     (1.3 )%   1,954     1,577     23.9 %   1,008     1,148     (12.2 )%
  Dollars $ 696,915   $ 733,393     (5.0 )% $ 725,721   $ 559,659     29.7 % $ 393,906   $ 469,054     (16.0 )%
  Avg. Price $ 361,284   $ 375,137     (3.7 )% $ 371,403   $ 354,888     4.7 % $ 390,780   $ 408,583     (4.4 )%
West                     
(CA) Home   607     350     73.4 %   494     232     112.9 %   316     163     93.9 %
  Dollars $ 317,862   $ 142,661     122.8 % $ 237,763   $ 93,792     153.5 % $ 186,986   $ 77,480     141.3 %
  Avg. Price $ 523,662   $ 407,603     28.5 % $ 481,301   $ 404,278     19.1 % $ 591,727   $ 475,339     24.5 %
Consolidated Total                    
  Home   4,810     4,648     3.5 %   4,594     3,780     21.5 %   2,969     3,097     (4.1 )%
  Dollars $ 1,978,498   $ 1,823,305     8.5 % $ 1,823,318   $ 1,414,799     28.9 % $ 1,312,260   $ 1,264,352     3.8 %
  Avg. Price $ 411,330   $ 392,277     4.9 % $ 396,891   $ 374,285     6.0 % $ 441,987   $ 408,251     8.3 %
Unconsolidated Joint Ventures                    
  Home   181     270     (33.0 )%   146     204     (28.4 )%   263     178     47.8 %
  Dollars $ 112,530   $ 143,438     (21.5 )% $ 76,477   $ 82,190     (7.0 )% $ 168,135   $ 110,372     52.3 %
  Avg. Price $ 621,713   $ 531,252     17.0 % $ 523,814   $ 402,891     30.0 % $ 639,297   $ 620,066     3.1 %
Grand Total                    
  Home   4,991     4,918     1.5 %   4,740     3,984     19.0 %   3,232     3,275     (1.3 )%
  Dollars $ 2,091,028   $ 1,966,743     6.3 % $ 1,899,795   $ 1,496,989     26.9 % $ 1,480,395   $ 1,374,724     7.7 %
  Avg. Price $ 418,960   $ 399,907     4.8 % $ 400,801   $ 375,750     6.7 % $ 458,043   $ 419,763     9.1 %
                     
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.
(2) The Midwest net contracts include 65 homes and $27.4 million and 192 homes and $75.2 million in 2016 and 2015, respectively, from Minneapolis, MN. Contract backlog as of July 31, 2016 reflects the reduction of 64 homes and $24.1 million, related to the sale of our land portfolio in Minneapolis, MN.
(3) The Southeast net contracts include 70 homes and $31.6 million and 99 homes and $30.2 million in 2016 and 2015, respectively, from Raleigh, NC. Contract backlog as of July 31, 2016 reflects the reduction of 67 homes and $33.7 million, related to the sale of our land portfolio in Raleigh, NC.

HOVNANIAN ENTERPRISES, INC.                    
(DOLLARS IN THOUSANDS EXCEPT AVG. PRICE)                  
(SEGMENT DATA INCLUDES UNCONSOLIDATED JOINT VENTURES)              
(UNAUDITED)         Communities Under Development      
          Nine Months – July 31, 2016      
    Net Contracts (1) Deliveries Contract
    Nine Months Ended Nine Months Ended Backlog
    Jul 31, Jul 31, Jul 31,
      2016     2015   % Change   2016     2015   % Change   2016     2015   % Change
Northeast                     
(includes unconsolidated joint ventures) Home   356     421     (15.4 )%   413     261     58.2 %   284     326     (12.9 )%
(NJ, PA) Dollars $ 168,877   $ 213,375     (20.9 )% $ 197,961   $ 130,551     51.6 % $ 139,392   $ 164,404     (15.2 )%
  Avg. Price $ 474,374   $ 506,829     (6.4 )% $ 479,325   $ 500,197     (4.2 )% $ 490,817   $ 504,306     (2.7 )%
Mid-Atlantic                     
(includes unconsolidated joint ventures) Home   802     762     5.2 %   659     657     0.3 %   610     511     19.4 %
(DE, MD, VA, WV) Dollars $ 406,594   $ 366,591     10.9 % $ 311,303   $ 303,413     2.6 % $ 342,197   $ 273,140     25.3 %
  Avg. Price $ 506,974   $ 481,092     5.4 % $ 472,386   $ 461,814     2.3 % $ 560,979   $ 534,522     4.9 %
Midwest (2)                     
(includes unconsolidated joint ventures) Home   604     708     (14.7 )%   706     694     1.7 %   478     696     (31.3 )%
(IL, MN, OH) Dollars $ 195,722   $ 244,297     (19.9 )% $ 225,276   $ 225,838     (0.2 )% $ 139,608   $ 211,718     (34.1 )%
  Avg. Price $ 324,043   $ 345,052     (6.1 )% $ 319,088   $ 325,416     (1.9 )% $ 292,067   $ 304,193     (4.0 )%
Southeast (3)                     
(includes unconsolidated joint ventures) Home   610     597     2.2 %   418     520     (19.6 )%   413     338     22.2 %
(FL, GA, NC, SC) Dollars $ 259,624   $ 191,544     35.5 % $ 147,281   $ 171,168     (14.0 )% $ 189,486   $ 113,368     67.1 %
  Avg. Price $ 425,612   $ 320,844     32.7 % $ 352,346   $ 329,169     7.0 % $ 458,803   $ 335,408     36.8 %
Southwest                     
(includes unconsolidated joint ventures) Home   1,929     1,955     (1.3 )%   1,954     1,577     23.9 %   1,008     1,148     (12.2 )%
(AZ, TX) Dollars $ 696,916   $ 733,393     (5.0 )% $ 725,721   $ 559,659     29.7 % $ 393,906   $ 469,054     (16.0 )%
  Avg. Price $ 361,284   $ 375,137     (3.7 )% $ 371,403   $ 354,888     4.7 % $ 390,780   $ 408,583     (4.4 )%
West                     
(includes unconsolidated joint ventures) Home   690     475     45.3 %   590     275     114.5 %   439     256     71.5 %
(CA) Dollars $ 363,295   $ 217,543     67.0 % $ 292,253   $ 106,360     174.8 % $ 275,806   $ 143,040     92.8 %
  Avg. Price $ 526,515   $ 457,985     15.0 % $ 495,345   $ 386,764     28.1 % $ 628,260   $ 558,748     12.4 %
Grand Total                    
  Home   4,991     4,918     1.5 %   4,740     3,984     19.0 %   3,232     3,275     (1.3 )%
  Dollars $ 2,091,028   $ 1,966,743     6.3 % $ 1,899,795   $ 1,496,989     26.9 % $ 1,480,395   $ 1,374,724     7.7 %
  Avg. Price $ 418,960   $ 399,907     4.8 % $ 400,801   $ 375,750     6.7 % $ 458,043   $ 419,763     9.1 %
Consolidated Total                    
  Home   4,810     4,648     3.5 %   4,594     3,780     21.5 %   2,969     3,097     (4.1 )%
  Dollars $ 1,978,498   $ 1,823,305     8.5 % $ 1,823,318   $ 1,414,799     28.9 % $ 1,312,260   $ 1,264,352     3.8 %
  Avg. Price $ 411,330   $ 392,277     4.9 % $ 396,891   $ 374,285     6.0 % $ 441,987   $ 408,251     8.3 %
Unconsolidated Joint Ventures                    
  Home   181     270     (33.0 )%   146     204     (28.4 )%   263     178     47.8 %
  Dollars $ 112,530   $ 143,438     (21.5 )% $ 76,477   $ 82,190     (7.0 )% $ 168,135   $ 110,372     52.3 %
  Avg. Price $ 621,713   $ 531,252     17.0 % $ 523,814   $ 402,891     30.0 % $ 639,297   $ 620,066     3.1 %
                     
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.
(2) The Midwest net contracts include 65 homes and $27.4 million and 192 homes and $75.2 million in 2016 and 2015, respectively, from Minneapolis, MN. Contract backlog as of July 31, 2016 reflects the reduction of 64 homes and $24.1 million, related to the sale of our land portfolio in Minneapolis, MN.
(3) The Southeast net contracts include 70 homes and $31.6 million and 99 homes and $30.2 million in 2016 and 2015, respectively, from Raleigh, NC. Contract backlog as of July 31, 2016 reflects the reduction of 67 homes and $33.7 million, related to the sale of our land portfolio in Raleigh, NC.

CONTACT: J. Larry Sorsby
Executive Vice President & CFO
732-747-7800

Jeffrey T. O’Keefe
Vice President, Investor Relations
732-747-7800