Nicholas Yulico
In the second quarter, Hovnanian wrote off $5.6 million of deposits, equaling a charge of 5 cents a share. The company said on its earnings call that the charges related primarily to the options on two land parcels, one in Minnesota and one in Florida, both of which were purchased within the last 12 months.
Although the company didn't say the options were related to the Town and Country purchase, they very well may have been. Hovnanian executives didn't return a call seeking comment Friday. In its release Friday, Hovnanian said, "We are also renegotiating a significant number of our land option contracts, and we are likely to incur walk-away costs in conjunction with some of these situations." "Although a certain amount of such costs are factored into our guidance for the fourth quarter, we cannot quantify the exact amount or reserve for them until each contract renegotiation is finalized, thus creating an additional variable in our forecasts," management said. This time, management isn't saying that it's confident in its predictions, as it did back in June.
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