United States securities and exchange commission logo
April 7, 2021
Larry Sorsby
Chief Financial Officer
Hovnanian Enterprises Inc.
90 Matawan Rd, Fifth Floor
Matawan, NJ 07747
Re: Hovnanian
Enterprises Inc.
Form 10-K for the
year ended October 31, 2020
Filed December 22,
2020
File No. 001-08551
Dear Mr. Sorsby:
We have reviewed your March 24, 2021 response to our comment
letter and have the
following comments. In some of our comments, we may ask you to provide
us with information
so we may better understand your disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your response to these comments, we may have
additional
comments. Unless we note otherwise, our references to prior comments are
to comments in our
February 25, 2021 letter.
Form 10-K for the year ended October 31, 2020
Note 3. Summary of Significant Accounting Policies, page 64
1. We note your response
to comment 1in which you state that you recognize revenue for
home sales in
accordance with ASC 606-10 when the title is conveyed to the buyer,
adequate initial and
continuing investments have been received and there is no continued
involvement. It is
unclear how this policy complies with the provisions of ASC 606-10-
25-3, which requires
revenue to be recognized when control is transferred to a customer.
Please clarify your
disclosure. Additionally, expand your disclosure to discuss how the
Company accounts for
sales commissions paid in advance of closing, to the extent
material. Tell us if
the Company typically offers customers sales incentives and the nature
of those incentives. To
the extent material, expand your disclosure to highlight the
amounts of such
incentives for each of the periods presented and how the Company
Larry Sorsby
Hovnanian Enterprises Inc.
April 7, 2021
Page 2
accounts for such incentives, including their impact on the
determination of transaction
price.
Note 9. Senior Notes and Credit Facilities, page 73
2. We note your response to comment 2. In order to better understand the
Company's
determination that it was experiencing financial difficulties, please
further tell us how you
considered the guidance in ASC 470-60-55-7 through ASC 470-60-55-9.
Notwithstanding your determination that you were experiencing
financial difficulties, tell
us what consideration you gave to including a discussion of the fiscal
year 2020 exchange
and refinancing transactions within the Liquidity and Capital
resources section of your
MD&A to highlight the facts and circumstances that led to such
transactions, including
the reasons for your creditors' willingness to accept such exchange.
Given the
Company's determination that it was experiencing financial
difficulties as defined in ASC
470-60, please confirm to us that in future filings you will fully
address any material
known uncertainties or trends regarding the Company's inability to
obtain financing from
creditors at the then-current market rates. Please refer to Item
303(a) of Regulation S-K.
Note 20. Investments in Unconsolidated Homebuilding and Land Development Joint
Ventures,
page 94
3. We note your response to comment 3. In future filings, please include
clarifying
disclosure similar to what is noted in your response outlining the
reasons for the
significant difference in the amount of your share of net income from
your investments in
unconsolidated entities compared to the aggregate joint venture income
given the
expectation that for such entities your ownership percentages would
typically be between
20% and 50%.
You may contact Ameen Hamady at 202-551-3891 or Kristi Marrone at
202-551-
3429 with any other questions.
FirstName LastNameLarry Sorsby Sincerely,
Comapany NameHovnanian Enterprises Inc.
Division of
Corporation Finance
April 7, 2021 Page 2 Office of Real
Estate & Construction
FirstName LastName