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Hovnanian Enterprises anticipates 2Q charges for impairments

AP ONLINE

Posted: 2008-05-05 06:33:01

RED BANK, N.J. (AP) - Hovnanian Enterprises Inc. said Monday it expects to record second-quarter charges between $225 million and $275 million for land impairments and write-offs, due to ongoing sales and pricing declines.

The homebuilder is among many in the sector still battling the continued housing slowdown as consumers tighten spending and struggle with diminishing credit options. However, Hovnanian said it achieved positive cash flow in the second quarter, one quarter earlier than estimated, and now sees 2008 positive cash flow of $300 million - triple its prior forecast.

Deliveries for the period ended April 30 fell 21 percent to 2,494 homes, excluding deliveries from unconsolidated joint ventures.

Second-quarter net contracts slid 29 percent to 2,226 homes, excluding joint ventures, according to Hovnanian. Net contracts dropped 27 percent including joint ventures.

However, cancellation rates improved to 29 percent of gross contracts compared with 32 percent in the prior year.

Contract backlog slipped 54 percent to 3,577 homes excluding the joint ventures. Backlog declined 41 percent when excluding backlog from the company's Fort Myers-Cape Coral operations for both periods.