SEC Comment Letter for HOVNANIAN ENTERPRISES INC (HOV, HOVNP, HOVVB) (CIK 0000357294) (HOV) — Apr 7, 2021
HOVNANIAN ENTERPRISES INC (HOV, HOVNP, HOVVB) (CIK 0000357294)
Date: April 7, 2021 · CIK: 0000357294 · Accession: 0000000000-21-004207
AI Filing Summary & Sentiment
File numbers found in text: 001-08551
Letter
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
FirstName LastNameLarry Sorsby Comapany NameHovnanian Enterprises Inc. April 7, 2021 Page 2 FirstName LastName 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. Sincerely, Division of Corporation Finance Office of Real Estate & Construction
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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
FirstName LastNameLarry Sorsby
Comapany NameHovnanian Enterprises Inc.
April 7, 2021 Page 2
FirstName LastName
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.
Sincerely,
Division of Corporation Finance
Office of Real Estate & Construction