We've predicted for some time that even though they didn't want to, even though they wanted to wait until their CEOs could sell more shares, and even though they are legally required to by Sarbanes-Oxley, the homebuilders would FINALLY have to write down the inflated value of land and property on their books to correct market value.
Well, HOV announced today they were going to do just that, to the tune of $300 Million. Whoopsie! Our mistake!
Homebuilder Hovnanian Enterprises will record $300 million in charges in the fourth quarter, resulting in a loss for the period.
Roughly half the charges are associated with inventory impairments, while the other half comprises land option deposit write-off charges.
The company said it renegotiated a number of land option contracts in the third and fourth quarters, and walked away from deposits and pre-development costs on many other option contracts, because it did not make financial sense to continue, Ara Hovnanian, president and CEO, said in a press release Tuesday.
"Our financial results for the fourth quarter continued to be negatively impacted by high cancellation rates and increased use of concessions and incentives, particularly on the resale of those homes which experienced contract cancellations," Hovnanian said.
November 09, 2006
Homebuilder march to bankruptcy continues: Hovnanian takes $300 Million hit, first of many builders to correct cooked books
Posted by blogger at 11/09/2006