HOV Hovnanian Enterprises Inc

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

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 SUBSIDIARIESCONDENSED 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 SUBSIDIARIESCONDENSED 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 SUBSIDIARIESCONDENSED 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 DevelopmentThree 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 DevelopmentThree 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.

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

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