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Item 9A. Controls and Procedures

2025-12-22 compared with 2024-12-18 · 438 added, 516 removed, 1164 unchanged (45% of the section changed)

14 unchanged sentences

OTHER INFORMATION

Appointment of Treasurer

On December 16, 2024, the Company’s Board of Directors appointed Paul Eberly to the

position of Treasurer of the Company, effective January 1, 2025.

O’Connor, the Company’s current Chief

Financial Officer and Treasurer, will serve as Treasurer through December 31,

2024 and will continue to serve as Chief Financial Officer of the Company

following the effective date of Mr.

Eberly’s appointment.

Repurchase Program

On December 18, 2024, our Board of Directors authorized an

incremental increase to our repurchase program.

Under the repurchase

program, as increased by the Board of Directors, inclusive of any amounts

remaining under the existing repurchase authorization initially authorized by

the Board of Directors on September 1, 2022, we are authorized to repurchase up

to $26.5 million of our Class A common stock.

Under the program,

repurchases may be made from time to time in open market transactions, in

privately negotiated transactions or otherwise.

The timing and the actual

dollar amount repurchased will depend on a variety of factors, including legal

requirements, price, future tax implications and economic and market

The repurchase program may be changed, suspended or discontinued at

any time and does not have a specified expiration date.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

4 unchanged sentences

Each executive officer holds such office for a one -year term.

Chairman of the Board, Chief Executive Officer, President and Director of the Company

Chief Financial Officer and Treasurer

Chairman of the Board, Chief Executive Officer and Director of the Company

Chief Financial Officer

Alexander Hovnanian

Executive Vice President, National Homebuilding Operations

Michael Wyatt

Group President

Hovnanian has been Chief Executive Officer since July 1997 after being appointed President in 1988 and Executive Vice President in 1983 .

Hovnanian joined the Company in 1979 and has been a Director of the Company since 1981 and was Vice Chairman from 1998 through November 2009.

Chief Operating Officer

Hovnanian has been Chief Executive Officer since July 1997 and served as President from 1988 until November 2025.

Hovnanian joined the Company in 1979 , was appointed Executive Vice President in 1983, has been a Director of the Company since 1981 and was Vice Chairman from 1998 through November 2009.

In November 2009, he was elected Chairman of the Board following the death of Kevork S.

1 unchanged sentence

O’Connor was appointed Chief Financial Officer in November 2023 and Senior Vice President and Treasurer in April 2020.

He held the position of Chief Accounting Officer from May 2011 until October 2023.

He held the position of Chief Accounting Officer from May 2011 until October 2023 and Treasurer from April 2020 through December 2024.

He joined the Company as Vice President, Associate Corporate Controller in May 2004, and was promoted to Corporate Controller in December 2007.

1 unchanged sentence

O’Connor was the Corporate Controller for Amershem Biosciences, a global biotech company, and was a Senior Manager in the audit practice of PricewaterhouseCoopers LLP.

Alexander Hovnanian has held the position of Executive Vice President, National Homebuilding Operations since March 2020.

Alexander Hovnanian was appointed President in November 2025.

He had held the position of Executive Vice President, National Homebuilding Operations since March 2020.

He joined the Company full-time in 2012 and has held various positions in the Company's homebuilding operations.

2 unchanged sentences

Hovnanian was appointed Area President followed by a promotion to Division President of the Northeast Division in December 2018.

Wyatt has been Group President of the East Group operations since May 2020.

Wyatt was appointed Chief Operating Officer in November 2025.

He had been Group President of the East Group operations since May 2020.

He held the position of Region President of the California Region from June 2019 to May 2020.

16 unchanged sentences

We have adopted charters that apply to the Company’s Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee.

We have posted the text of these charters on our web site at www.khov.com under “Investor Relations/Corporate Governance.”

We have posted the text of these charters on our web site at www.khov.com under “Investor Relations/Corporate Governance/Highlights.”

EXECUTIVE COMPENSATION

3 unchanged sentences

The information called for by Item 12 , except as set forth in this Item 12 , is incorporated herein by reference to our definitive proxy statement to be filed pursuant to Regulation 14 A in connection with our annual meeting of shareholders to be held on March 31, 2026 .

following table provides information as of October 31, 2024, with respect to

compensation plans (including individual compensation arrangements) under which our

equity securities are authorized for issuance.

The following table provides information as of October 31, 2025, with respect to compensation plans (including individual compensation arrangements) under which our equity securities are authorized for issuance.

Number of Class A Common Stock securities to be issued upon exercise of outstanding options, warrants and rights ( 1 )

6 unchanged sentences

Equity compensation plans not approved by security holders:

the maximum number of shares that are potentially issuable under the PSUs

granted in fiscal year 2024 and the maximum number of shares that are

potentially issuable under the 2023 and 2024 Long-Term Incentive programs under the 2020

not take into account 228,257 shares that may be issued upon the vesting of

restricted stock and performance-based awards discussed in (1) above, nor 1,758

shares of restricted stock vested but not yet issued nor 283,511 shares of

restricted stock deferred due to mandatory hold requirements, in each case,

because they have no exercise price.

not take into account 358,015 shares that may be issued upon the vesting of the

performance-based awards discussed in (1) above nor 233,551 shares of

restricted stock deferred due to mandatory hold requirements, in each case,

because they have no exercise price.

Includes the maximum number of shares that are potentially issuable under the PSUs granted in fiscal year 2025 and the maximum number of shares that are potentially issuable under the 2024 and 2025 Long-Term Incentive programs under the Third Amended and Restated 2020 Hovnanian Enterprises, Inc.

Stock Incentive Plan.

Does not take into account 181,264 shares that may be issued upon the vesting of restricted stock and performance-based awards discussed in ( 1 ) above, nor 1,758 shares of restricted stock vested but not yet issued nor 280,443 shares of restricted stock deferred due to mandatory hold requirements, in each case, because they have no exercise price.

Does not take into account 271,771 shares that may be issued upon the vesting of the performance-based awards discussed in ( 1 ) above nor 355,802 shares of restricted stock deferred due to mandatory hold requirements, in each case, because they have no exercise price.

Under the Company’s equity compensation plans, securities may be issued in either Class A Common Stock or Class B Common Stock.

13 unchanged sentences

Restated Certificate of Incorporation of the Registrant (Incorporated by reference to Exhibits to Current Report on Form 8-K of the Registrant filed March 29, 2019).

Amended and Restated Bylaws of the Registrant (Incorporated by reference to Exhibits to Quarterly Report on Form 10-Q for the quarter ended July 31, 2021 of the Registrant filed September 9, 2021).

Second Amended and Restated Bylaws of the

Registrant (incorporated by reference to Exhibits to Current Report on Form 8-K

of the Registrant filed March 29, 2023).

Specimen Class A Common Stock Certificate (Incorporated by reference to Exhibits to Current Report on Form 8-K of the Registrant filed March 29, 2019).

23 unchanged sentences

Hovnanian Enterprises, Inc., Hovnanian Enterprises, Inc., the other guarantors party thereto and Wilmington Trust, National Association, as trustee (Incorporated by reference to Exhibits to Current Report on Form 8-K of the Registrant filed October 31, 2019).

Indenture, dated as of October 5, 2023, relating to the 8.0% Senior Secured 1.125 Lien Notes due 2028, among K.

Hovnanian Enterprises, Inc., Hovnanian Enterprises, Inc., the other guarantors party thereto and Wilmington Trust, National Association, as trustee and collateral agent, including the form of 8.0% Senior Secured 1.125 Lien Notes due 2028 (Incorporated by reference to Exhibits to Current Report on Form 8-K of the Registrant filed September 25, 2023).

Indenture, dated as of October 5, 2023, relating to the 11.75% Senior Secured 1.25 Lien Notes due 2029, among K.

Hovnanian Enterprises, Inc., Hovnanian Enterprises, Inc., the other guarantors party thereto and Wilmington Trust, National Association, as trustee and collateral agent, including the form of 11.75% Senior Secured 1.25 Lien Notes due 2029 (Incorporated by reference to Exhibits to Current Report on Form 8-K of the Registrant filed September 25, 2023).

Description of the Registrant’s securities.

Third Amendment, dated as of September 25, 2023, to the Credit Agreement, dated as of October 31, 2019, among K.

Hovnanian Enterprises, Inc., Hovnanian Enterprises, Inc., the subsidiary guarantors named therein, Wilmington Trust, National Association, as Administrative Agent, and the lenders party thereto (Incorporated by reference to Exhibits to Current Report on Form 8-K of the Registrant filed September 25, 2023).

Indenture, dated as

of September 25, 2025, relating to the 8.000% Senior Notes due 2031

and the 8.375% Senior Notes due 2033, among K.

Hovnanian Enterprises, Inc.,

Hovnanian Enterprises, Inc., the subsidiary guarantors named therein and Wilmington

Trust, National Association, as Trustee, including the forms of the 8.000%

Senior Note due 2031 and the 8.375% Senior Note due 2033 (Incorporated by

reference to Exhibits to Current Report on Form 8-K of the Registrant filed

September 25, 2025).

of the Registrant’s securities (Incorporated by reference to Exhibits to Annual

Report on Form 10-K of the Registrant for the year ended October 31, 2025 filed

September 10, 2025).

Fourth Amendment,

dated as of September 10, 2025, to the Credit Agreement, dated as of October

31, 2019, among K.

Hovnanian Enterprises, Inc., Hovnanian Enterprises, Inc.,

the subsidiary guarantors named therein, Wilmington Trust, National

Association, as Administrative Agent, and the lenders party thereto

(Incorporated by reference to Exhibits to Current Report on Form 8-K of the

Registrant filed September 10, 2025).

Security Agreement, dated as of October 31, 2019, relating to Senior Secured Revolving Credit Facility, made by K.

1 unchanged sentence

and the other guarantors party thereto in favor of Wilmington Trust, National Association, as Administrative Agent and Joint First Lien Collateral Agent (Incorporated by reference to Exhibits to Current Report on Form 8-K of the Registrant filed October 31, 2019).

$212,500,000 Credit Agreement, dated as of January 29, 2018, by and among K.

Hovnanian Enterprises Inc., Hovnanian Enterprises, Inc., the other guarantors party thereto, Wilmington Trust, National Association, as Administrative Agent, and the lenders party thereto (Incorporated by reference to Exhibits to Current Report on Form 8-K of the Registrant filed February 2, 2018).

Credit Agreement, dated as of December 10, 2019, relating to the 1.75 Lien Term Loans, among K.

First Amendment to the Credit Agreement, dated as of May 21, 2024, relating to the 1.75 Lien Term Loans, among K.

Agreement, dated as of October 31, 2019, relating to the Senior Secured

Revolving Credit Facility, made by K.

Hovnanian Enterprises, Inc., Hovnanian

Enterprises, Inc.

and the other guarantors party thereto in favor of Wilmington

Trust, National Association, as Administrative Agent and Joint First Lien

Collateral Agent (Incorporated by reference to Exhibits to Current Report on

Form 8-K of the Registrant filed October 31, 2019).

Management Agreement dated August 12, 1983, for the management of properties by K.

12 unchanged sentences

O’Connor (Incorporated by reference to Exhibits to Quarterly Report on Form 10-Q of the Registrant for the quarter ended January 31, 2012 filed March 8, 2012).

Form of Incentive Stock Option Agreement (2014 grants and thereafter) (Incorporated by reference to Exhibits to Quarterly Report on Form 10-Q of the Registrant for the quarter ended July 31, 2014 filed September 5, 2014).

Form of Stock Option Agreement for Directors (2014 grants and thereafter) (Incorporated by reference to Exhibits to Quarterly Report on Form 10-Q of the Registrant for the quarter ended July 31, 2014 filed September 5, 2014).

1 unchanged sentence

Amended and Restated Stock Incentive Plan (Incorporated by reference to Appendix A to the Registrant’s definitive Proxy Statement on Schedule 14A filed February 4, 2019).

Form of 2020 Long-Term Incentive Program Award Agreement (Incorporated by reference to Exhibits to Quarterly Report on Form 10-Q of the Registrant for the quarter ended July 31, 2020 filed September 4, 2020).

Form of Letter Agreement Relating to Change in Control Severance Protection Agreement entered into with Brad G.

10 unchanged sentences

in favor of Wilmington Trust, National Association, as Administrative Agent (Incorporated by reference to Exhibits to Current Report on Form 8-K of the Registrant filed October 31, 2019).

Security Agreement, dated as of October 5, 2023, by K.

Security Agreement, dated as of October 5, 2023, relating to Senior Secured Revolving Credit Facility, made by K.

HOV IP, II, Inc., in

favor of Wilmington Trust, National Association, as Administrative Agent and as

Joint First Lien Collateral Agent (Incorporated by reference to Exhibits to

favor of Wilmington Trust, National Association, as Administrative Agent (Incorporated by reference to Exhibits to

Annual Report on Form 10-K of the Registrant for the year ended October 31,

2023 filed December 18, 2023).

Security Agreement, dated as of October 5, 2023, by K.

Security Agreement, dated as of October 5, 2023, relating to Senior Secured Revolving Credit Facility, made by K.

HOV IP, II, Inc., in

favor of Wilmington Trust, National Association, as Administrative Agent and as

Joint First Lien Collateral Agent (Incorporated by reference to Exhibits to

Annual Report on Form 10-K of the Registrant for the year ended October 31,

2023 filed December 18, 2023).

Lien Security Agreement, dated as of October 5, 2023, relating to the 8.0%

Senior Secured 1.125 Lien Notes due 2028, made by K.

Hovnanian Enterprises,

Inc., Hovnanian Enterprises, Inc.

and the other guarantors party thereto in

favor of Wilmington Trust, National Association, as 1.125 Lien Collateral Agent

and as Joint First Lien Collateral Agent (Incorporated by reference to Exhibits

to Annual Report on Form 10-K of the Registrant for the year ended October 31,

2023 filed December 18, 2023).

Lien Pledge Agreement, dated as of October 5, 2023, relating to the 8.0% Senior

Secured 1.125 Lien Notes due 2028, given by K.

Hovnanian Enterprises, Inc.,

Hovnanian Enterprises, Inc.

and the other guarantors party thereto in favor of

Wilmington Trust, National Association, as 1.125 Lien Collateral Agent and as

Joint First Lien Collateral Agent (Incorporated by reference to Exhibits to

favor of Wilmington Trust, National Association, as Administrative Agent (Incorporated by reference to Exhibits to

Annual Report on Form 10-K of the Registrant for the year ended October 31,

2023 filed December 18, 2023).

Lien Trademark Security Agreement, dated as of October 5, 2023, by K.

II, Inc., in favor of Wilmington Trust, National Association, as 1.125 Lien

Collateral Agent and as Joint First Lien Collateral Agent (Incorporated by

reference to Exhibits to Annual Report on Form 10-K of the Registrant for the

year ended October 31, 2023 filed December 18, 2023).

Lien Copyright Security Agreement, dated as of October 5, 2023, by K.

II, Inc., in favor of Wilmington Trust, National Association, as 1.125 Lien

Collateral Agent and as Joint First Lien Collateral Agent (Incorporated by

reference to Exhibits to Annual Report on Form 10-K of the Registrant for the

year ended October 31, 2023 filed December 18, 2023).

Lien Security Agreement, dated as of October 5, 2023, relating to the 11.75%

Senior Secured 1.25 Lien Notes due 2029, made by K.

Hovnanian Enterprises,

Inc., Hovnanian Enterprises, Inc.

and the other guarantors party thereto in

favor of Wilmington Trust, National Association, as 1.25 Lien Collateral Agent

and as Joint First Lien Collateral Agent (Incorporated by reference to Exhibits

to Annual Report on Form 10-K of the Registrant for the year ended October 31,

2023 filed December 18, 2023).

Lien Pledge Agreement, dated as of October 5, 2023, relating to the 11.75%

Senior Secured 1.25 Lien Notes due 2029, given by K.

Hovnanian Enterprises,

Inc., Hovnanian Enterprises, Inc.

and the other guarantors party thereto in

favor of Wilmington Trust, National Association, as 1.25 Lien Collateral Agent

and as Joint First Lien Collateral Agent (Incorporated by reference to Exhibits

to Annual Report on Form 10-K of the Registrant for the year ended October 31,

2023 filed December 18, 2023).

Lien Trademark Security Agreement, dated as of October 5, 2023, by K.

II, Inc., in favor of Wilmington Trust, National Association, as 1.25 Lien

Collateral Agent and as Joint First Lien Collateral Agent (Incorporated by

reference to Exhibits to Annual Report on Form 10-K of the Registrant for the

year ended October 31, 2023 filed December 18, 2023).

Lien Copyright Security Agreement, dated as of October 5, 2023, by K.

II, Inc., in favor of Wilmington Trust, National Association, as 1.25 Lien

Collateral Agent and as Joint First Lien Collateral Agent (Incorporated by

reference to Exhibits to Annual Report on Form 10-K of the Registrant for the

year ended October 31, 2023 filed December 18, 2023).

Trademark Security Agreement, dated as of

May 20, 2024, relating to Senior Secured Revolving Credit Facility, made by K.

II, Inc., in favor of Wilmington Trust, National Association, as Administrative

First Lien Collateral Agency Agreement, dated as of October 31, 2019, among K.

Hovnanian Enterprises, Inc., Hovnanian Enterprises, Inc., the other guarantors party thereto and Wilmington Trust, National Association, as Administrative Agent, 1.125 Lien Collateral Agent, 1.25 Lien Collateral Agent, 1.5 Lien Collateral Agent and Joint First Lien Collateral Agent (Incorporated by reference to Exhibits to Current Report on Form 8-K of the Registrant filed October 31, 2019).

First Lien Intercreditor Agreement, dated as of October 31, 2019, among K.

Hovnanian Enterprises, Inc., Hovnanian Enterprises, Inc., the other guarantors party thereto and Wilmington Trust, National Association, as Administrative Agent, 1.125 Lien Trustee, 1.125 Lien Collateral Agent, 1.25 Lien Trustee, 1.25 Lien Collateral Agent, 1.5 Lien Trustee, 1.5 Lien Collateral Agent and Joint First Lien Collateral Agent (Incorporated by reference to Exhibits to Current Report on Form 8-K of the Registrant filed October 31, 2019).

1.75 Lien Security Agreement, dated as of December 10, 2019, relating to the 10.000% Senior Secured 1.75 Lien Notes due 2025 and the 1.75 Lien Term Loans, made by K.

Hovnanian Enterprises, Inc., Hovnanian Enterprises, Inc.

and the subsidiary guarantors named therein in favor of Wilmington Trust, National Association, as 1.75 Pari Passu Lien Collateral Agent, and Wilmington Trust, National Association, as Joint First Lien Collateral Agent, Administrative Agent and 1.75 Lien Collateral Agent (Incorporated by reference to Exhibits to Current Report on Form 8-K of the Registrant filed December 11, 2019).

1.75 Lien Pledge Agreement, dated as of December 10, 2019, relating to the 10.000% Senior Secured 1.75 Lien Notes due 2025 and the 1.75 Lien Term Loans, given by K.

Hovnanian Enterprises, Inc., Hovnanian Enterprises, Inc.

and the subsidiary guarantors named to Wilmington Trust, National Association, as 1.75 Pari Passu Lien Collateral Agent, and Wilmington Trust, National Association, as Joint First Lien Collateral Agent (Incorporated by reference to Exhibits to Current Report on Form 8-K of the Registrant filed December 11, 2019).

1.75 Lien Trademark Security Agreement, dated as of December 10, 2019, by K.

HOV IP, II, Inc., in favor of Wilmington Trust, National Association, as 1.75 Pari Passu Lien Collateral Agent (Incorporated by reference to Exhibits to Current Report on Form 8-K of the Registrant filed December 11, 2019).

1, dated as of December 10, 2019, to the First Lien Intercreditor Agreement and First Lien Collateral Agency Agreement, each dated as of October 31, 2019, among Wilmington Trust, National Association, as 1.75 Lien Trustee and 1.75 Pari Passu Lien Collateral Agent, and acknowledged by Wilmington Trust, National Association, as 1.75 Lien Collateral Agent, with acknowledged receipt by Wilmington Trust, National Association, as Senior Credit Agreement Administrative Agent, 1.125 Lien Trustee, 1.125 Lien Collateral Agent, 1.25 Lien Trustee, 1.25 Lien Collateral Agent, 1.5 Lien Trustee, 1.5 Lien Collateral Agent and Joint First Lien Collateral Agent (Incorporated by reference to Exhibits to Current Report on Form 8-K of the Registrant filed December 11, 2019).

2, dated as of December 10, 2019, to the First Lien Intercreditor Agreement and First Lien Collateral Agency Agreement, each dated as of October 31, 2019, among Wilmington Trust, National Association, as Administrative Agent and 1.75 Pari Passu Lien Collateral Agent, with acknowledged receipt by the Senior Credit Agreement Administrative Agent, 1.125 Lien Trustee, 1.125 Lien Collateral Agent, 1.25 Lien Trustee, 1.25 Lien Collateral Agent, 1.5 Lien Trustee, 1.5 Lien Collateral Agent and Joint First Lien Collateral Agent (Incorporated by reference to Exhibits to Current Report on Form 8-K of the Registrant filed December 11, 2019).

3, dated as of October 5, 2023, to the First Lien Intercreditor Agreement and First Lien Collateral Agency Agreement, each dated as of October 31, 2019, among Wilmington Trust, National Association, as 1.125 Lien Trustee and

1.125 Lien Collateral Agent, with acknowledged receipt by the Senior Credit Agreement Collateral Agent, 1.25 Lien Trustee, 1.25 Lien Collateral Agent, 1.75 Lien Trustee, 1.75 Lien Collateral Agent and Joint First Lien Collateral Agent (Incorporated by reference to Exhibits to Annual Report on Form 10-K of the Registrant for the year ended October 31, 2023 filed December 18,

4, dated as of October 5, 2023, to the First Lien Intercreditor Agreement and First Lien Collateral Agency Agreement, each dated as of October 31, 2019, among Wilmington Trust, National Association, as 1.25 Lien Trustee and 1.25 Lien Collateral Agent, with acknowledged receipt by the Senior Credit Agreement Collateral Agent, 1.125 Lien Trustee, 1.125 Lien Collateral Agent, 1.75 Lien Trustee, 1.75 Lien Collateral Agent and Joint First Lien Collateral Agent (Incorporated by reference to Exhibits to Annual Report on Form 10-K of the Registrant for the year ended October 31, 2023 filed December 18, 2023).

Form of 2020 Performance Share Unit Agreement (Class A) (Incorporated by reference to Exhibits to Quarterly Report on Form 10-Q of the Registrant for the quarter ended July 31, 2020 filed September 4, 2020).

Hovnanian Enterprises, Inc., Hovnanian Enterprises, Inc., the other guarantors party thereto and Wilmington Trust, National Association, as Administrative Agent, Joint First Lien Collateral Agent and in the other capacities set forth therein (Incorporated by reference to Exhibits to Current Report on Form 8-K of the Registrant filed October 31, 2019).

Form of 2020 Performance Share Unit Agreement (Class B) (Incorporated by reference to Exhibits to Quarterly Report on Form 10-Q of the Registrant for the quarter ended July 31, 2020 filed September 4, 2020).

Form of 2020 Associate Restricted Share Unit Agreement (Class A) (Incorporated by reference to Exhibits to Quarterly Report on Form 10-Q of the Registrant for the quarter ended July 31, 2020 filed September 4, 2020).

Form of 2020 Associate Restricted Share Unit Agreement (Class B) (Incorporated by reference to Exhibits to Quarterly Report on Form 10-Q of the Registrant for the quarter ended July 31, 2020 filed September 4, 2020).

Form of Director Restricted Share Unit Agreement (Class A) (Incorporated by reference to Exhibits to Quarterly Report on Form 10-Q of the Registrant for the quarter ended July 31, 2020 filed September 4, 2020).

Form of 2021 Performance Share Unit Agreement - EBIT (Class A) (Incorporated by reference to Exhibits to Quarterly Report on Form 10-Q of the Registrant for the quarter ended July 31, 2021 filed September 9, 2021).

6 unchanged sentences

Form of 2022 Long-Term Incentive Program Award Agreement (Class B) (Incorporated by reference to Exhibits to Quarterly Report on Form 10-Q of the Registrant for the quarter ended January 31, 2022 filed March 7, 2022).

Second Amended and Restated 2020 Hovnanian Enterprises, Inc.

Stock Incentive Plan (Incorporated by reference to Exhibits to Current Report on Form 8-K of the Registrant filed March 29, 2022).

Third Amended and Restated 2020 Hovnanian Enterprises, Inc.

13 unchanged sentences

Form of 2016 Non-Qualified Stock Option Agreement (Class B) (Incorporated by reference to Exhibits to Annual Report on Form 10-K of the Registrant for the year ended October 31, 2022 filed December 19, 2022).

Form of 2021 Associate Restricted Share Unit Agreement (Class A) (Incorporated by reference to Exhibits to Annual Report on Form 10-K of the Registrant for the year ended October 31, 2022 filed December 19, 2022).

Form of 2023 Long-Term Incentive Program Award Agreement (Class A) (Incorporated by reference to Exhibits to Quarterly Report on Form 10-Q of the Registrant for the quarter ended January 31, 2023 filed March 6, 2023).

Form of 2023 Long-Term Incentive Program Award Agreement (Class B) (Incorporated by reference to Exhibits to Quarterly Report on Form 10-Q of the Registrant for the quarter ended January 31, 2023 filed March 6, 2023).

Form of 2024 Long-Term Incentive Program Award Agreement (Class A) (Incorporated by reference to Exhibits to Quarterly Report on Form 10-Q of the Registrant for the quarter ended January 31, 2024 filed March 1, 2024).

Form of 2024 Long-Term Incentive Program Award Agreement (Class B) (Incorporated by reference to Exhibits to Quarterly Report on Form 10-Q of the Registrant for the quarter ended January 31, 2024 filed March 1, 2024).

of 2024 Long-Term Incentive Program Award Agreement (Class A) (Incorporated

by reference to Exhibits to Quarterly Report on Form 10-Q of the Registrant

for the quarter ended January 31, 2024 filed March

of 2024 Long-Term Incentive Program Award Agreement (Class B) (Incorporated

by reference to Exhibits to Quarterly Report on Form 10-Q of the Registrant

for the quarter ended January 31, 2024 filed March 1, 2024).

Form of 2025 Long-Term Incentive Program

Award Agreement (Class A) (Incorporated by reference to Exhibits to Quarterly

Report on Form 10-Q of the Registrant for the quarter ended January 31, 2025

filed February 28, 2025).

Form of 2025 Long-Term Incentive Program

Award Agreement (Class B) (Incorporated by reference to Exhibits to Quarterly

Report on Form 10-Q of the Registrant for the quarter ended January 31, 2025

filed February 28, 2025).

Form of 2023 Long-Term Incentive Program Phantom Share Agreement (Incorporated by reference to Exhibits to Quarterly Report on Form 10-Q of the Registrant for the quarter ended January 31, 2023 filed March 6, 2023).

2 unchanged sentences

the quarter ended January 31, 2024 filed March 1, 2024).

Form of 2025 Associate Phantom Performance Share Unit Agreement EBIT (Incorporated by reference to Exhibits to

Quarterly Report on Form 10-Q of the Registrant for the quarter ended July 31,

2025 filed August 29, 2025).

Form of 2025 Associate Phantom Performance Share Unit Agreement EBIT ROI (Incorporated by reference to Exhibits to

Quarterly Report on Form 10-Q of the Registrant for the quarter ended July 31,

2025 filed August 29, 2025).

Form of 2023 Performance Share Unit Agreement EBIT Class A (Incorporated by reference to Exhibits to Quarterly Report on Form 10-Q of the Registrant for the quarter ended July 31, 2023 filed September 1, 2023).

Form of 2023 Performance Share Unit Agreement EBIT Class B (Incorporated by reference to Exhibits to Quarterly Report on Form 10-Q of the Registrant for the quarter ended July 31, 2023 filed September 1, 2023).

Form of 2024 Performance Share Unit Agreement EBIT Class A (Incorporate by reference to Exhibits to Quarterly Report on Form 10-Q of the Registrant for the quarter ended July 31, 2024 filed August 30, 2024).

of 2024 Performance Share Unit Agreement EBIT Class A (Incorporate by

reference to Exhibits to Quarterly Report on Form 10-Q of the Registrant for

the quarter ended July 31, 2024 filed August 30, 2024).

of 2024 Performance Share Unit Agreement EBIT Class B (Incorporate by reference

1 unchanged sentence

ended July 31, 2024 filed August 30, 2024).

Form of 2025 Performance Share Unit

Agreement EBIT Class A (Incorporate by reference to Exhibits to Quarterly

Report on Form 10-Q of the Registrant for the quarter ended July 31, 2024 filed

August 29, 2025).

Form of 2025 Performance Share Unit

Agreement EBIT Class B (Incorporate by reference to Exhibits to Quarterly

Report on Form 10-Q of the Registrant for the quarter ended July 31, 2024

filed August 29, 2025).

Form of 2023 Performance Share Unit Agreement EBIT ROI Class A (Incorporated by reference to Exhibits to Quarterly Report on Form 10-Q of the Registrant for the quarter ended July 31, 2023 filed September 1, 2023).

3 unchanged sentences

the quarter ended July 31, 2024 filed August 30, 2024).

Form of 2024 Associate Restricted Share Unit Agreement Class A (Incorporated by reference to Exhibits to Quarterly Report on Form 10-Q of the Registrant for the quarter ended July 31, 2024 filed August 30, 2024).

Form of 2024 Performance Share Unit

Agreement EBIT ROI Class B (Incorporated by reference to Exhibits to Quarterly

Report on Form 10-Q of the Registrant for the quarter ended July 31, 2024 filed

August 30, 2024).

Form of 2025 Performance Share Unit

Agreement EBIT ROI Class A (Incorporated by reference to Exhibits to Quarterly

Report on Form 10-Q of the Registrant for the quarter ended July 31, 2025 filed

August 29, 2025).

Form of 2025 Performance Share Unit

Agreement EBIT ROI Class B (Incorporated by reference to Exhibits to Quarterly

Report on Form 10-Q of the Registrant for the quarter ended July 31, 2025 filed

August 29, 2025).

of 2024 Associate Restricted Share Unit Agreement Class A (Incorporated by

reference to Exhibits to Quarterly Report on Form 10-Q of the Registrant for

the quarter ended July 31, 2024 filed August 30, 2024).

of 2024 Director Restricted Share Unit Agreement Class A (Incorporated by

1 unchanged sentence

the quarter ended July 31, 2024 filed August 30, 2024).

Securities Trading Policy.

Securities Trading Policy (Incorporated by reference to Exhibits to Annual Report on Form 10-K of the Registrant for the year ended October 31, 2024 filed December 18, 2024).

Subsidiaries of the Registrant.

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HOVNANIAN ENTERPRISES, INC.

Chairman of the Board, Chief Executive

Officer and President

Chairman of the Board and Chief Executive Officer

December 22, 2025

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant on December 22, 2025, and in the capacities indicated.

Chairman of the Board, Chief Executive Officer, President and Director

Chairman of the Board, Chief Executive Officer and Director

(Principal Executive Officer)

Chief Financial Officer and Treasurer

Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

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Basis for Opinions

The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on these financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

The Company's management is responsible for these financial statements,

for maintaining effective internal control over financial reporting, and for

its assessment of the effectiveness of internal control over financial

reporting, included in the accompanying Management’s Report on Internal Control

over Financial Reporting.

Our responsibility is to express an opinion on these

financial statements and an opinion on the Company's internal control over

financial reporting based on our audits.

We are a public accounting firm

registered with the Public Company Accounting Oversight Board (United States)

(PCAOB) and are required to be independent with respect to the Company in

accordance with the U.S.

federal securities laws and the applicable rules and

regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

Those standards require that we plan and perform the audits to obtain

reasonable assurance about whether the financial statements are free of

material misstatement, whether due to error or fraud, and whether effective

internal control over financial reporting was maintained in all material

Our audits of the financial statements included

performing procedures to assess the risks of material misstatement of the

financial statements, whether due to error or fraud, and performing procedures

to respond to those risks.

Such procedures included examining, on a test basis,

evidence regarding the amounts and disclosures in the financial statements.

audits also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of

the financial statements.

Our audit of internal control over financial

reporting included obtaining an understanding of internal control over

financial reporting, assessing the risk that a material weakness exists, and

testing and evaluating the design and operating effectiveness of internal

control based on the assessed risk.

Our audits also included performing such

other procedures as we considered necessary in the circumstances.

that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

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Total liabilities

Hovnanian Enterprises, Inc.

stockholders’ equity:

Preferred stock, $ 0.01 par value - authorized 100,000 shares;

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Paid in capital - common stock

Retained earnings (accumulated deficit)

Retained earnings

Treasury stock - at cost – 1,348,087 shares of Class A common stock at October 31, 2025 and 1,090,179 shares at October 31, 2024 ;

27,669 shares of Class B common stock at October 31, 2025 and October 31, 2024

Total Hovnanian Enterprises, Inc.

stockholders’ equity

Noncontrolling interest in consolidated joint ventures

Total liabilities and equity

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Total expenses

Gain (loss) on extinguishment of debt, net

(Loss) gain on extinguishment of debt, net

Income from unconsolidated joint ventures

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Weighted-average number of common shares outstanding

( 1 ) Includes gain on consolidation of a joint venture of $ 45.7 million and $ 19.1 million for the year ended October 31, 2024 and 2023 , respectively (see Note 20 ).

( 1 ) Includes gain on consolidation of a joint venture of $ 18.9 million, $ 45.7 million and $ 19.1 million for the years ended October 31, 2025 , 2024 and 2023 , respectively (see Note 20 ).

See notes to consolidated financial statements .

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Noncontrolling

Balance, October 31, 2021

Ba lance, October 31, 2022

Stock options, amortization and issuances

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Conversion of Class B to Class A common stock

Changes in noncontrolling interest in consolidated joint ventures

Share repurchases

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Gain on consolidation of joint ventures

Gain on inventory contributed to joint venture

Income from unconsolidated joint ventures

Distributions of earnings from unconsolidated joint ventures

(Gain) loss on extinguishment of debt

Loss (gain) on extinguishment of debt

Noncontrolling interest in consolidated joint ventures

Inventory impairments and land option write-offs

(Increase) decrease in assets:

Decrease (increase) in assets:

Receivables, deposits and notes

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Payments related to land bank financing programs

Proceeds from partner distributions to consolidated joint venture

Payments for partner distributions to consolidated joint venture

Net proceeds (payments) related to mortgage warehouse lines of credit

Net borrowings from senior secured notes

Payments related to senior secured notes

Proceeds from issuance of unsecured and senior secured notes

Payments related to senior and senior secured notes, senior secured term loans and senior unsecured term loans

Preferred dividends paid

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Net cash used in financing activities

Net (decrease) increase in cash and cash equivalents, and restricted cash and cash equivalents

Net increase (decrease) in cash and cash equivalents, and restricted cash and cash equivalents

Cash and cash equivalents, and restricted cash and cash equivalents balance, beginning of period

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See notes to consolidated financial statements.

Supplemental disclosure of noncash investing and financing activities:

Supplemental disclosure of noncash investing and financing activitie s:

In the second quarter of fiscal 2023, we consolidated the remaining assets of one of our unconsolidated joint ventures, resulting in a $ 10.8 million reduction in our investment in the joint venture, and increases of $ 14.9 million and $ 5.3 million to inventory and accounts payable, respectively.

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In the third quarter of fiscal 2024 , we exchanged $ 64.0 million aggregate principal amount of 13.5 % Senior Notes due February 1, 2026 (the “ 13.5 % Notes”), $ 65.2 million aggregate principal amount of 5.0 % Senior Notes due February 1, 2040 and all of the $ 39.6 million aggregate principal amount of loans under the Senior Unsecured Term Loan Credit Facility due February 1, 2027 (the “Unsecured Term Loan”) and an aggregate cash payment of $ 31.5 million in respect of the 13.5 % Notes and Unsecured Term Loan for an additional $ 93.5 million aggregate principal amount of loans under the Senior Secured 1.75 Lien Term Loan Credit Facility due January 31, 2028 .

In the fourth quarter of fiscal 2025 , we consolidated the remaining assets of one of our unconsolidated joint ventures and two active selling communities from another unconsolidated joint venture, resulting in a $ 67.2 million reduction in our investment in the joint ventures, and increases of $ 82.4 million to inventory, $ 4.7 million to other assets, $ 15.0 million to accounts payable, $ 2.3 million to customer deposits and $ 2.6 million to nonrecourse mortgages and notes, net of debt issuance costs.

HOVNANIAN ENTERPRISES, INC.

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Our homebuilding operations are made up of three reportable segments defined as Northeast, Southeast and West.

Homebuilding operations comprise the substantial part of our business, representing approximately 98 % of consolidated revenues for the years ended October 31, 2024 , 2023 and 2022 , respectively .

Homebuilding operations comprise the substantial part of our business, representing approximately 97 % of consolidated revenues for the year ended October 31, 2025, and approximately 98 % for both of the years ended 2024 and 2023 .

HEI is a Delaware corporation, which through its subsidiaries, was building and selling homes in Arizona, California, Delaware, Florida, Georgia, Maryland, New Jersey, Ohio, Pennsylvania, South Carolina, Texas, Virginia and West Virginia, across 140 consolidated active selling communities at October 31, 2025 .

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We use mandatory investor commitments and forward sales of mortgage-backed securities (“MBS”) to hedge our mortgage-related interest rate exposure on agency and government loans.

These short-term instruments do not require any

payments to be made to third parties in connection with the execution of the

We elected the fair value option for our mortgage loans held for sale in accordance with ASC 825 , “Financial Instruments,” which permits us to measure our loans held for sale at fair value.

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Fair Value of Financial Instruments - The fair value of financial instruments is determined by reference to various market data and other valuation techniques as appropriate.

Our financial instruments consist of cash and cash equivalents, restricted cash and cash equivalents, receivables, deposits and notes, accounts payable and other liabilities, customers ’ deposits, mortgage loans held for sale, nonrecourse mortgages, mortgage warehouse lines of credit, senior secured revolving credit facility, accrued interest, senior secured term loan, senior unsecured term loan credit facility, senior secured notes and senior notes.

The fair value of the senior secured revolving credit facility, senior secured term loan, senior unsecured term loan credit facility, senior secured notes and senior notes is estimated based on the quoted market prices for the same or similar issues or on the current rates offered to us for debt of the same remaining maturities or when not available, are estimated based on third -party broker quotes or management ’ s estimate of the fair value based on available trades for similar debt instruments.

Our financial instruments consist of cash and cash equivalents, restricted cash and cash equivalents, receivables, deposits and notes, accounts payable and other liabilities, customers ’ deposits, mortgage loans held for sale, nonrecourse mortgages, mortgage warehouse lines of credit, credit facilities, accrued interest and senior notes.

The fair value of the credit facilities and senior notes is estimated based on the quoted market prices for the same or similar issues or on the current rates offered to us for debt of the same remaining maturities or when not available, are estimated based on third -party broker quotes or management ’ s estimate of the fair value based on available trades for similar debt instruments.

The fair value of all of our other financial instruments approximates their carrying amounts.

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Because of our options to repurchase these parcels, for accounting purposes, in accordance with ASC 606 , these transactions are considered a financing rather than a sale.

Our Consolidated Balance Sheets, at October 31, 2024 and 2023 , included inventory of $ 164.9 million and $ 183.1 million, respectively, recorded to “Consolidated inventory not owned” with a corresponding amount of $ 94.1 million (net of debt issuance costs) and $ 82.3 million, respectively, recorded to “Liabilities from inventory not owned” for the amount of net cash received from the transactions.

Our Consolidated Balance Sheets at October 31, 2025 and 2024 included inventory of $ 258.6 million and $ 164.9 million, respectively, recorded to “Consolidated inventory not owned” with a corresponding amount of $ 169.1 million (net of debt issuance costs) and $ 94.1 million (net of debt issuance costs), respectively, recorded to “Liabilities from inventory not owned” for the amount of net cash received from the transactions.

The recoverability of inventories and other long-lived assets is assessed in accordance with ASC 360 , “Property, Plant and Equipment.” ASC 360 requires long-lived assets, including inventories, held for development to be evaluated for impairment based on the undiscounted future cash flows of the assets at the lowest level for which there are identifiable cash flows.

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In deciding not to exercise a land option, we take into consideration changes in market conditions, the timing of required land takedowns, the willingness of land sellers to modify terms of the land option contract (including timing of land takedowns), and the availability and best use of our capital, among other factors.

Inventories held for sale are land parcels ready for sale in their current condition, where we have decided not to build homes but are instead actively marketing for sale.

Land parcels held for sale represented $ 5.1 million of our total inventories at October 31, 2024 and are reported at the lower of carrying amount or fair value less costs to sell.

There were no inventories held for sale at October 31, 2023 .

Inventories held for sale consists of parcels ready for sale in their current condition, where we have decided not to build homes but are instead actively marketing the parcels to potential buyers.

As of October 31, 2025, there was no land held

for sale, compared to $ 5.1 million of land held for sale at October 31, 2024 .

Land held for sale is reported at the lower of its carrying amount or fair value less costs to sell.

In determining fair value for land held for sale, management considers, among other things, prices for land in recent comparable sale transactions, market analysis studies, which include the estimated price a willing buyer would pay for the land (other than in a forced liquidation sale) and recent bona fide offers received from outside third parties.

Warranty Costs and Construction Defect Reserves - We accrue warranty costs that are covered under our existing general liability and construction defect policy as part of our general liability insurance deductible.

This accrual is expensed as selling, general and administrative costs.

For homes delivered in fiscal 2024, our deductible under our

general liability insurance was $ 30.0 million, aggregated for construction

defect and warranty claims, and for homes delivered in fiscal 2023,

our deductible under our general liability insurance was $ 25.0 million,

aggregated for construction defect, warranty, and bodily injury claims.

This accrual is expensed in “ Selling, general and administrative ” homebuilding expenses.

For homes delivered in fiscal 2025 and 2024 ,

our deductible under our general liability insurance was $ 30.0 million annually,

aggregated for construction defect and warranty claims.

As of November

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For bodily injury claims, our deductible per occurrence in

fiscal 2024 was $ 0.25 million and $ 0.5 million for action

over claims, both with a $ 30.0 million limit, and for

fiscal 2023 it was $ 0.25 million for all other states and

$ 0.5 million for California, both with a $ 5.0 million limit.

We do not have a deductible on our worker ’ s compensation insurance.

fiscal 2025 and 2024 was $ 0.25 million and

$ 0.5 million for action over claims, respectively, both with a $ 30.0 million limit.

We do not have a deductible on our workers' compensation insurance.

Reserves for estimated losses for construction defects, warranty and bodily injury claims have been established using the assistance of a third -party actuary.

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Does not include interest incurred by our mortgage and finance subsidiaries.

O th e r interest expensed includes interest that does not qualify for interest capitalization because our assets that qualify for interest capitalization (inventory under development) did not exceed our debt, which amounted to $ 17.7 million and $ 28.6 million for the years ended October 31, 2023 and 2022 , respectively.

During the year ended October 31, 2024 , our inventory under development exceeded our debt, therefore, all of the related interest incurred qualified for interest capitalization.

During the years ended October 31, 2025 and 2024 , our inventory under development exceeded our debt, therefore, all of the related interest incurred qualified for interest capitalization.

Other interest also includes interest on completed homes, land in planning and fully developed lots without homes under construction, which does not qualify for capitalization, and therefore, is expensed as incurred.

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There was no impact to the Consolidated Statement of Operations as a result of these capitalized interest transactions.

Capitalized interest amounts are shown gross before allocating any portion of impairments, if any, to capitalized interest.

Capitalized interest amounts are shown gross before the allocation of impairments, if any, to capitalized interest.

Land Options - We have access to land and lots through option contracts.

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(a) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and (b) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

If land and lot options are determined to be with VIEs and we are the primary beneficiary or the options have terms that require us to record it as financing, then we record the land and lots under option on the Consolidated Balance Sheets under “Consolidated inventory not owned” with an offset under “Liabilities from inventory not owned.” We perform on-going re-assessments of VIEs based on subsequent events, such as the modification of contracts or other changes in facts and circumstances, which could cause our consolidation conclusions to change.

If land and lot options are determined to be with VIEs and we are the primary beneficiary or the options have terms that require us to record it as a financing, then we record the land and lots under option on the Consolidated Balance Sheets under “Consolidated inventory not owned” with an offset under “Liabilities from inventory not owned.” We perform on-going re-assessments of VIEs based on subsequent events, such as the modification of contracts or other changes in facts and circumstances, which could cause our consolidation conclusions to change.

Unconsolidated Homebuilding and Land Development Joint Ventures - Investments in unconsolidated entities in which the Company has significant influence over the operating and financial decisions of the entity, but holds less than a controlling financial interest, are accounted for by the equity method.

In all periods presented, our investments in unconsolidated homebuilding and land development joint ventures are accounted for under the equity method

because we are not the primary beneficiary or

de-facto agent, and we have a significant, but less than controlling, interest

in the entities.

Under the equity method, we recognize our proportionate share of income and loss earned by the joint venture upon the delivery of lots or homes to third parties.

Our ownership interests in joint ventures vary but our voting equity interests held are generally 20 % to 50 %.

In determining whether or not we must consolidate joint ventures where we are the managing member of the joint venture, we assess whether the other partners have specific rights to overcome the presumption of control by us as the manager of the joint venture.

In most cases, the presumption is overcome because the joint venture agreements require that both partners agree on establishing the significant operating and capital decisions of the partnership, including budgets, in the ordinary course of business.

The evaluation of whether or not we control a joint venture can require significant judgment.

Specific criteria is used when determining if we are

the primary beneficiary of, or have a controlling interest in, an

unconsolidated entity.

Factors considered in determining whether we have

significant influence, or we have control include risk and reward sharing,

experience and financial condition of the other partner, voting rights,

involvement in day-to-day capital and operating decisions and continuing

The evaluation of whether an entity is a variable interest entity

or a voting interest entity and then whether we are the primary beneficiary or

have control or significant influence can require significant judgment.

believe that the equity method of accounting is appropriate for our investments

in unconsolidated entities where we are not the primary beneficiary and we do

not have a controlling interest but rather share control with our partners.

most cases, the joint venture agreements require that both partners agree on

establishing the significant operating and capital decisions of the

partnership, including budgets, in the ordinary course of business.

In accordance with ASC 323 , “Investments - Equity Method and Joint Ventures,” we assess our investments in unconsolidated joint ventures for recoverability quarterly, and if it is determined that a loss in value of the investment below its carrying amount is other than temporary, we write down the investment to its fair value.

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This process requires significant management judgment and estimates.

There were no write-downs for any periods presented.

Debt Issuance Costs - Costs associated with borrowings under our credit facilities and term loans and the issuance of senior secured and senior notes are capitalized and amortized over the term of each note’s issuance.

The capitalized costs are recorded as a contra liability within our debt balances, except for the revolving credit facility costs, which are recorded as a prepaid expense.

Debt Issued at a Discount /Premium - Debt issued at a discount or premium to the face amount is amortized utilizing the effective interest method over the term of the note and recorded as a component of “ Other interest ” in the Consolidated Statements of Operations.

Debt Issuance Costs - Costs associated with our credit facilities and senior notes are capitalized and amortized over the respective term of the debt.

The capitalized costs are recorded as a contra liability within our debt balances, except for the credit facility costs, which are recorded as a prepaid expense.

Debt Issued at a Discount /Premium - Debt issued at a discount or premium to the face amount is amortized utilizing the effective interest method over the respective term and recorded as a component of “ Other interest ” in the Consolidated Statements of Operations.

Advertising Costs - Advertising costs are expensed as incurred, primarily to “ Selling, general and administrative ” homebuilding expense in the Consolidated Statements of Operations.

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Accrued interest and penalties are included within “ Income taxes payable ” on the Consolidated Balance Sheets.

Prepaid Expenses - Prepaid expenses that relate to specific housing communities (model setup, architectural fees, homeowner warranty program fees, interest rate buydowns, etc.) are amortized to cost of sales as the applicable inventories are sold.

Prepaid Expenses - Prepaid expenses that relate to specific communities (i.e., model setup, architectural fees, homeowner warranty program fees, interest rate buydowns, etc.) are charged to cost of sales as the applicable inventories are sold.

All other prepaid expenses are amortized over a specific time period or as used and charged to overhead expense.

Allowance for Credit Losses – We regularly review our receivable balances, which are included in “ Receivables, deposits and notes, net ” on the Consolidated Balance Sheets, for collectability.

These receivables include receivables from our insurance carriers, receivables from municipalities related to the development of utilities or other infrastructure, and other miscellaneous receivables.

These include receivables from our insurance carriers, receivables from municipalities related to the development of utilities or other infrastructure, and other miscellaneous receivables.

Allowances are maintained for potential credit losses based on historical experience, present economic conditions and other factors considered relevant.

The allowance for credit losses were $ 13.0 million and $ 12.8 million at October 31, 2024 and 2023 , respectively, which primarily related to allowances for receivables from municipalities and an allowance for a receivable for a prior year land sale.

The allowance for credit losses were $ 12.9 million and $ 13.0 million at October 31, 2025 and 2024 , respectively.

Property and Equipment - Property and equipment are recorded at cost.

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The two -class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating securities according to dividends or dividend equivalents and participation rights in undistributed earnings in periods where we have net income.

Recent Accounting Pronouncements - In August 2023, the Financial Accounting Standards Board ( “ FASB ” ) issued Accounting Standards Update ( “ ASU ” ) 2023 - 05 , “Business Combinations - Joint Venture Formations” (“ASU 2023 - 05 ” ), which addresses the accounting for contributions made to a joint venture.

ASU 2023 - 05 requires joint ventures to measure all assets and liabilities upon formation at fair value.

This guidance will be applied prospectively to all joint venture formations with a formation date on or after January 1, 2025.

We are currently evaluating the potential impact, but we do not expect the adoption of this guidance to have a material impact on our Consolidated Financial Statements.

In November 2023, the FASB issued ASU 2023 - 07 , “Improvements to Reportable Segment Disclosures” (“ASU 2023 - 07 ” ).

Recent Accounting Pronouncements - In November 2023, the Financial Accounting Standards Board ( “ FASB ”) issued Accounting Standards Update ( “ ASU ”) 2023 - 07 , “Improvements to Reportable Segment Disclosures” (“ASU 2023 - 07 ” ).

ASU 2023 - 07 requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within the segment measure of profit or loss.

This guidance will be applied retrospectively and is effective for annual reporting periods in fiscal years beginning after December 15, 2023, and interim reporting periods in fiscal years beginning after December 15, 2024.

We are currently evaluating the potential impact, but we do not expect the adoption of this guidance to have a material impact on our Consolidated Financial Statements.

We adopted ASU 2023-07 for the year ended October 31, 2025, and applied it retrospectively to all prior periods presented in our Consolidated Financial Statements (see Note 10).

In December 2023, the FASB issued ASU 2023 - 09 , “Improvements to Income Tax Disclosures” (“ASU 2023 - 09 ”).

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Consolidated Financial Statements.

In September 2025, the FASB issued ASU 2025-06, “ Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software ” (ASU 2025-06 ”) .

ASU 2025-06 modernizes the accounting for the costs of internal-use software by removing all references to software development project stages so that the guidance is neutral to different software development methods.

This guidance is effective for fiscal years beginning after December 15, 2027 and interim reporting periods within those annual reporting periods.

Early adoption is permitted and the amendments in this update may be applied on a retrospective, modified transition, or prospective basis.

We are currently evaluating the potential impact that the adoption of this guidance will have on our Consolidated Financial Statements.

We rent certain office space for use in our operations.

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ROU assets are classified within “ Prepaid expenses and other assets ” on our Consolidated Balance Sheets, while lease liabilities are classified within “ Accounts payable and other liabilities .” We recorded a net increase to both ROU assets and lease liabilities of $ 11.1 million as a result of new leases and lease renewals that commenced during the year ended October 31, 2025 .

We also modified a lease in our Northeast segment to shorten the term during the year ended October 31, 2025, which resulted in a decrease to ROU assets and lease liabilities of $ 7.7 million.

The following table contains additional information about our leases:

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Present value of operating lease liabilities

( 1 ) Lease payments include options to extend lease terms that are reasonably certain of being executed and exclude $ 11.5 million of legally binding minimum lease payments for office leases signed but not yet commenced as of October 31, 2025.

The related ROU assets and lease liabilities are not reflected on the Consolidated Balance Sheets.

Property and Equipment

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Hovnanian Mortgage”), originates mortgage loans, primarily from the sale of our homes.

Such mortgage loans are sold in the secondary mortgage market within a short period of time of origination.

Such mortgage loans and related servicing rights are generally sold in the secondary mortgage market within a short period of time from origination.

Mortgage loans held for sale are collateralized by the underlying property.

Loans held for sale are recorded at fair value with the changes in the value recognized in the Consolidated Statements of Operations in “Financial services” revenue.

We use forward sales of MBS, interest rate commitments from borrowers and mandatory and/or best-efforts forward commitments to sell loans to third -party purchasers to protect us from interest rate fluctuations.

These short-term instruments do not require any payments to be made to the counterparty or purchaser in connection with the execution of the commitments.

At October 31, 2024 and 2023 , $ 145.7 million and $ 127.7 million, respectively, of mortgage loans held for sale were pledged against our mortgage warehouse lines of credit (see Note 8 ).

Loans held for sale are recorded at fair value with changes in the value recognized in the Consolidated Statements of Operations in “Financial services” revenue.

At October 31, 2025 and 2024 , $ 107.6 million and $ 145.7 million, respectively, of mortgages held for sale were pledged against our mortgage warehouse lines of credit (see Note 8 ).

We may incur losses with respect to mortgages that were previously sold that are delinquent and which had underwriting defects, but only to the extent the losses are not covered by mortgage insurance or the resale value of the home.

The reserves for these estimated losses are included in “Financial services” liabilities on the Consolidated Balance Sheets.

At both October 31, 2024 and 2023 , we had reserves specifically for 10 identified mortgage loans as well as reserves for an estimate of future losses on mortgages sold but not yet identified to us.

At October 31, 2025 and 2024 , we had specific reserves for 9 and 10 identified mortgage loans, respectively, as well as reserves for an estimate of future losses on mortgages sold but not yet identified to us.

The activity in our loan origination reserves in fiscal 2025 and 2024 was as follows:

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Loan origination reserves, beginning of period

Provisions for losses during the period

Provisions for estimated losses during the period

Payments/settlements

Adjustments to pre-existing provisions for losses from changes in estimates

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Mortgage Loans

Hovnanian Mortgage originates mortgage loans primarily from the sale of our homes.

Such mortgage loans and related servicing rights are generally sold in the secondary mortgage market within a short period of time.

Hovnanian Mortgage finances the origination of mortgage loans through various master repurchase agreements, which are recorded in “ Financial services ” liabilities on the Consolidated Balance Sheets.

Our secured Master Repurchase Agreement with JPMorgan Chase Bank, N.A.

(“Chase Master Repurchase Agreement”) is a short-term borrowing facility that provides up to $ 50.0 million through its maturity on July 31, 2025 .

(“Chase Master Repurchase Agreement”) is a short-term borrowing facility that provides up to $ 50.0 million through its maturity on April 1, 2026 .

The loan is secured by the mortgages held for sale and is repaid when we sell the underlying mortgage loans to permanent investors.

Interest is payable monthly on outstanding advances at an adjusted Secured Overnight Financing Rate (“SOFR”), plus the applicable margin of 2.00 % to 2.25 %.

As of October 31, 2024 and 2023 , the aggregate principal amount of all borrowings outstanding under the Chase Master Repurchase Agreement was $ 7.3 million and $ 31.4 million, respectively.

Hovnanian Mortgage has another secured Master Repurchase Agreement with Customers Bank (“Customers Master Repurchase Agreement”) which is a short-term borrowing facility that was initially amended on July 24, 2024 to provide up to $ 75.0 million

through August 30, 2024, and up to $ 50.0 million from and after August 31, 2024

to maturity on March 5, 2025.

On August 1, 2024 there was a subsequent amendment to increase the borrowing capacity up to $ 100.0 million through its maturity on March 5, 2025.

Interest is payable monthly on outstanding advances at an adjusted Secured Overnight Financing Rate (“SOFR”), plus an applicable margin of 2.00 % to 2.25 %.

As of October 31, 2025, there were no borrowings outstanding under the Chase Master Repurchase Agreement.

As of October 31, 2024 , the aggregate principal amount of all borrowings outstanding under the Chase Master Repurchase Agreement was $ 7.3 million.

Hovnanian Mortgage has another secured Master Repurchase Agreement with Customers Bank (“Customers Master Repurchase Agreement”), which is a short-term borrowing facility that provides up to $ 100.0 million through its maturity on March 4, 2026 .

The loan is secured by the mortgages held for sale and is repaid when we sell the underlying mortgage loans to permanent investors.

Interest is payable daily or as loans are sold to permanent investors on outstanding advances at the current SOFR, plus the applicable margin ranging from 2.125 % to 4.5 % based on the type of loan and the number of days outstanding on the warehouse line.

Interest is payable daily or as loans are sold to permanent investors on outstanding advances at the current Bloomberg Short Term Bank Yield Index ( “ BSBY ” ) rate or SOFR, plus an applicable margin ranging from 2.125 % to 4.5 % based on the type of loan and the number of days outstanding on the warehouse line.

As of October 31, 2025 and 2024 , the aggregate principal amount of all borrowings outstanding under the Customers Master Repurchase Agreement was $ 17.8 million and $ 78.6 million, respectively.

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Interest is payable monthly on outstanding advances at the One -Month Term SOFR, plus an applicable margin of 1.75 % subject to a floor of 2.75 %.

As of October 31, 2024 , the aggregate principal amount of all borrowings outstanding under the Hinsdale Master Repurchase Agreement was $ 45.5 million.

The Chase Master Repurchase Agreement, Customers Master Repurchase Agreement and Hinsdale Master Repurchase Agreement (together, the “Master Repurchase Agreements”) require K.

As of October 31, 2025 and 2024, the aggregate principal amount of all borrowings outstanding under the Hinsdale Master Repurchase Agreement was $ 35.9 million and $ 45.5 million, respectively.

On June 6, 2025, K.

Hovnanian Mortgage entered into a secured Master Repurchase Agreement with PlainsCapital Bank ( “ PlainsCapital Master Repurchase Agreement ” ).

The short-term borrowing facility provides up to $ 75.0 million through its maturity on May 31, 2026 .

The loan is secured by the mortgages held for sale and is repaid when we sell the underlying mortgage loans to permanent investors.

Interest is payable daily or as loans are sold to permanent investors on outstanding advances at the Daily SOFR, plus an applicable margin of 2.125 % to 9.0 % based upon the number of days outstanding with the warehouse line, subject to a floor of 5.5 %.

As of October 31, 2025, the aggregate principal amount of all borrowings outstanding under the PlainsCapital Master Repurchase Agreement was $ 40.6 million.

The Chase Master Repurchase Agreement, Customers Master Repurchase Agreement, Hinsdale Master Repurchase Agreement and PlainsCapital Master Repurchase Agreement (together, the “Master Repurchase Agreements”) require K.

Hovnanian Mortgage to satisfy and maintain specified financial ratios and other financial condition tests.

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Senior Secured Notes:

10.0 % Senior Secured 1.75 Lien Notes due November 15, 2025 ( 1 )

8.0 % Senior Secured 1.125 Lien Notes due September 30, 2028 ( 1 )

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13.5 % Senior Notes due February 1, 2026 ( 2 )

8.0 % Senior Notes due April 1, 2031 ( 1 )

8.375 % Senior Notes due October 1, 2033 ( 1 )

5.0 % Senior Notes due February 1, 2040

Total Senior Notes

Senior Unsecured Term Loan Credit Facility due February 1, 2027 ( 2 )

Senior Secured 1.75 Lien Term Loan Credit Facility due January 31, 2028 ( 1 )

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Total senior notes and credit facilities, net of discounts, premiums and unamortized debt issuance costs

( 1 ) On November 15, 2023, K.

Hovnanian redeemed all of its $ 113.5 million aggregate principal amount of 10.0 % Senior Secured 1.75 Lien Notes due November 15, 2025 .

( 2 ) On May 21, 2024 , K.

Hovnanian exchanged $ 64.0 million aggregate principal amount of 13.5 % Senior Notes due February 1, 2026 and cash, $ 65.2 million aggregate principal amount of 5.0 % Senior Notes due February 1, 2040 and all of its $ 39.6 million aggregate principal amount of loans under the Senior Unsecured Term Loan Credit Facility due February 1, 2027 and cash for an additional $ 93.5 million aggregate principal amount of loans under the Senior Secured 1.75 Lien Term Loan Credit Facility due January 31, 2028 .

( 1 ) On September 25, 2025 , K.

Hovnanian completed a private placement of $ 450.0 million aggregate principal amount of 8.0 % Senior Notes due April 1, 2031 and $ 450.0 million aggregate principal amount of 8.375 % Senior Notes due October 1, 2033 .

Hovnanian used the net proceeds from the notes issuance, together with cash on hand, to fund (i) the redemption of all of its $ 430.0 million aggregate principal amount of 11.75 % Senior Secured 1.25 Lien Notes due September 30, 2029 and all of its $ 225.0 million aggregate principal amount of 8.0 % Senior Secured 1.125 Lien Notes due September 30, 2028 , and (ii) the payoff in full of its $ 175.0 million Senior Secured 1.75 Lien Term Loan Credit Facility due January 31, 2028 .

( 2 ) On April 30, 2025 , K.

Hovnanian redeemed the remaining $ 26.6 million aggregate principal amount of its 13.5 % Senior Notes due 2026 for a redemption price of $ 27.5 million, which included accrued and unpaid interest.

( 3 ) At October 31, 2025 , provides for up to $ 125.0 million in aggregate amount of senior secured first lien revolving loans.

The revolving loans thereunder have a maturity of June 30, 2026 and borrowings bear interest, at K.

The revolving loans under the revolving credit facility have a maturity of June 30, 2028 and borrowings bear interest, at K.

Hovnanian’s option, at either (i) a term SOFR (subject to a floor of 3.00 %) plus an applicable margin of 4.50 % or (ii) an alternate base rate (subject to a floor of 3.00 %) plus an applicable margin of 3.50 %.

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Except for K.

Hovnanian, the issuer of the notes and borrower under the credit agreements governing our term loans and revolving credit facilities (collectively, the "Credit Facilities"), our home mortgage subsidiaries, certain of our title insurance subsidiaries, joint ventures and subsidiaries holding interests in our joint ventures, we and each of our subsidiaries are guarantors of the Credit Facilities, the senior secured notes and senior notes outstanding at October 31, 2024 ( collectively, the “Notes Guarantors”).

The credit agreements governing the Credit Facilities and the indentures governing the senior secured and senior notes (together, the “ Debt Instruments ” ) outstanding at October 31, 2024, do not contain any financial maintenance covenants, but do contain restrictive covenants that limit, among other things, the ability of HEI and certain of its subsidiaries, including K.

Hovnanian, to incur (including through exchanges or certain other types of transactions) indebtedness, pay dividends and make distributions on common and preferred stock, repay/repurchase certain indebtedness prior to its respective stated maturity, repurchase common and preferred stock, make other restricted payments (including investments), sell certain assets (including in certain land banking transactions), incur liens, consolidate, merge, sell or otherwise dispose of all or substantially all of their assets and enter into certain transactions with affiliates.

The Debt Instruments also contain customary events of default which would permit the lenders or holders thereof to exercise remedies with respect to the collateral (as applicable), declare the loans (the “ Secured Term Loans ” ) made under the Senior Secured 1.75 Lien Term Loan Credit Facility due January 31, 2028 (the “ Secured Term Loan Facility ” ) and loans (the “ Secured Revolving Loans ” ) made under the Senior Secured Revolving Credit Agreement due June 30, 2026 (the “ Secured Credit Agreement ” ) or notes to be immediately due and payable if not cured within applicable grace periods, including the failure to make timely payments on the Secured Term Loans, Secured Revolving Loans or notes or other material indebtedness, cross default to other material indebtedness, the failure to comply with agreements and covenants and specified events of bankruptcy and insolvency, with respect to the Secured Term Loans and Secured Revolving Loans, material inaccuracy of representations and warranties and with respect to the Secured Term Loans and Secured Revolving Loans, a change of control, and, with respect to the Secured Term Loans, Secured Revolving Loans and senior secured notes, the failure of the documents granting security for the obligations under the secured Debt Instruments to be in full force and effect, and the failure of the liens on any material portion of the collateral securing the obligations under the secured Debt Instruments to be valid and perfected.

Hovnanian, the issuer of the notes and borrower under the credit agreement governing our secured revolving credit facility (the “ Secured Credit Facility ” ), our home mortgage subsidiaries, certain of our title insurance subsidiaries, joint ventures and subsidiaries holding interests in our joint ventures, we and each of our subsidiaries are guarantors of the Secured Credit Facility and senior notes outstanding at October 31, 2025 ( collectively, the “Notes Guarantors”).

The credit agreement governing the Secured Credit Facility and the indentures governing the senior notes (together, the “ Debt Instruments ” ) outstanding at October 31, 2025 do not contain any financial maintenance covenants, but do contain restrictive covenants that limit, among other things, the ability of HEI and certain of its subsidiaries, including K.

Hovnanian, to incur (including through exchanges or certain other types of transactions) indebtedness, pay dividends, including on our preferred stock, and make distributions on common and preferred stock, repay/repurchase certain indebtedness prior to its respective stated maturity, repurchase common and preferred stock, make other restricted payments (including investments), sell certain assets (including in certain land banking transactions), incur liens, consolidate, merge, sell or otherwise dispose of all or substantially all of their assets and enter into certain transactions with affiliates.

The Debt Instruments also contain customary events of default which would permit the lenders or holders thereof to exercise remedies with respect to the collateral (as applicable), declare the loans under the Secured Credit Facility (the “ Secured Revolving Loans ” ) made under the Credit Agreement, dated as of October 31, 2019, as amended, by and among K.

Hovnanian, the Company, the other guarantors party thereto, Wilmington Trust, National Association, as administrative agent, and the lenders party thereto (the “ Secured Credit Agreement ” ) or notes to be immediately due and payable if not cured within applicable grace periods, including the failure to make timely payments on the Secured Revolving Loans or notes or other material indebtedness, cross default to other material indebtedness, the failure to comply with agreements and covenants and specified events of bankruptcy and insolvency and, with respect to the Secured Revolving Loans, material inaccuracy of representations and warranties, a change of control, the failure of the documents granting security for the obligations under the Secured Credit Agreement to be in full force and effect, and the failure of the liens on any material portion of the collateral securing the obligations under the Secured Credit Agreement to be valid and perfected.

As of October 31, 2025 , we believe we were in compliance with the covenants of the Debt Instruments.

If our consolidated fixed charge coverage ratio is less than 2.0 to 1.0 , as defined in the applicable Debt Instrument, we are restricted from making certain payments and dividends (in the case of certain of such payments, our secured debt leverage ratio must also be less than 4.0 to 1.0 ), and from incurring indebtedness other than certain permitted indebtedness and nonrecourse indebtedness.

Beginning as of October 31, 2021 , as a result of our improved operating results, we were no longer restricted from paying dividends.

As such, we have made dividend payments of $ 2.7 million to preferred shareholders in every quarter since the first quarter of fiscal 2022 .

Dividends on the Series A preferred stock are not cumulative and, accordingly, if for any reason we do not declare a dividend on the Series A preferred stock for a quarterly dividend period (regardless of our availability of funds), holders of the Series A Preferred Stock will have no right to receive a dividend for that period, and we will have no obligation to pay a dividend for that period.

Under the terms of our Debt Instruments, we have the right to make certain redemptions and prepayments and, depending on market conditions, our strategic priorities and covenant restrictions, may do so from time to time.

We also continue to actively analyze and evaluate our capital structure and explore transactions to simplify our capital structure and to strengthen our balance sheet, including those that reduce leverage, interest rates and/or extend maturities, and will seek to do so with the right opportunity.

We will also continue to analyze and evaluate our capital structure and explore transactions to strengthen our balance sheet, including those that reduce leverage, interest rates and/or extend maturities, and will seek to do so with the right opportunity.

We may also continue to make debt or equity purchases and/or exchanges from time to time through tender offers, exchange offers, redemptions, open market purchases, private transactions, or otherwise, or seek to raise additional debt or equity capital, depending on market conditions and covenant restrictions.

On April 30, 2025 , K.

Hovnanian redeemed the remaining $ 26.6 million aggregate principal amount of its 13.5 % Senior Notes due 2026 (the “ 13.5% 2026 Notes ”) for a redemption price of $ 27.5 million, which included accrued and unpaid interest.

This redemption resulted in a gain on extinguishment of debt of $ 0.4 million for the fiscal year ended October 31, 2025 , including the write-off of unamortized premiums, debt issuance costs and fees.

The gain from the redemption is included in the Consolidated Statement of Operations as "(Loss) gain on extinguishment of debt, net".

On September 25 , 2025 , K.

Hovnanian issued $ 450.0 million aggregate principal amount of 8.0 % Senior Notes due 2031 (the “ 2031 Notes”) and $ 450.0 million aggregate principal amount of 8.375 % Senior Notes due 2033 (the “ 2033 Notes” and , together with the 2031 Notes, the “Notes”) .

The N otes are guaranteed by the Notes Guarantors.

Hovnanian used the net proceeds from the Notes issuance , together with cash on hand, to (i) fund the redemption on September 25, 2025 of the entire outstanding principal amount of its 11.75 % Senior Secured 1.25 Lien Notes due 202 9 at a redemption price equal to 100.0 % of the principal amount thereof plus the applicable “make-whole” premium, plus accrued and unpaid interest to, but excluding, the redemption date , (ii) deposit with Wilmington Trust, National Association, as trustee under the indenture governing its 8.0 % Senior Secured 1.125 Lien Notes due 2028 , funds to satisfy and discharge the 1.125 Lien Notes Indenture and the related security documents and to fund the redemption of the entire outstanding principal amount of its 1.125 Lien Notes at a redemption price equal to 104.0 % of the principal amount thereof , plus accrued and unpaid interest to, but excluding, the redemption date of September 30, 2025 and (i i i) repay in full all outstanding loans (the “ Secured Term Loans ” ) under its Senior Secured 1.75 Lien Term Loan Facility due 2028 (the “ Secured Term Loan Facility ” ) at par plus accrued and unpaid interest to, but excluding, the prepayment date .

These transactions resulted in a loss on extinguishment of debt of $ 33.5 million for the fiscal year ended October 31, 2025 , including the write-off of unamortized premiums, debt issuance costs and fees.

The loss from the redemption is included in the Consolidated Statement of Operations as “ (Loss) gain on extinguishment of debt, net.

In addition, on September 10, 2025 , K.

Hovanian and the Notes Guarantors entered into the Fourth Amendment to the Secured Credit Agreement which became effective on September 25, 2025.

On November 15, 2023 , K.

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This redemption resulted in a gain on extinguishment of debt of $ 1.4 million for the fiscal year ended October 31, 2024 , including the write-off of unamortized premiums, debt issuance costs and fees.

The gain from the redemption is included in “ Gain (loss) on extinguishment of debt, net ” in the Consolidated Statement of Operations.

On May 21, 2024 , K.

Hovnanian and the Notes Guarantors entered into certain exchange agreements, pursuant to which K.

Hovnanian, the Notes Guarantors and affiliates of certain investment managers named therein (collectively in respect of the Exchange Agreements, the “Investors”) completed certain private exchanges (collectively, the “Exchanges”) of (i) $ 64.0 million aggregate principal amount of 13.5 % 2026 Notes (as defined below) and $ 21.5 million in cash for $ 42.5 million aggregate principal amount of additional Secured Term Loans, (ii) $ 65.2 million aggregate principal amount of 5.0 % 2040 Notes (as defined below) for $ 31.4 million aggregate principal amount of additional Secured Term Loans and (iii) $ 39.6 million aggregate principal amount of Unsecured Term Loans and $ 10.0 million in cash for $ 19.6 million aggregate principal amount of additional Secured Term Loans.

Hovnanian, the Notes Guarantors and affiliates of certain investment managers named therein (collectively in respect of the Exchange Agreements, the “Investors”) completed certain private exchanges (collectively, the “Exchanges”) of (i) $ 64.0 million aggregate principal amount of 13.5 % 2026 Notes and $ 21.5 million in cash for $ 42.5 million aggregate principal amount of additional Secured Term Loans, (ii) $ 65.2 million aggregate principal amount of 5.0 % 2040 Notes (as defined below) for $ 31.4 million aggregate principal amount of additional Secured Term Loans and (iii) $ 39.6 million aggregate principal amount of loans under the Senior Unsecured Term Loan

Credit Facility due 2027 (the “ Unsecured Term Loans ” ) and $ 10.0 million in cash for $ 19.6 million aggregate principal amount of additional Secured Term Loans.

Following the consummation of the Exchanges, there are $ 26.6 million aggregate principal amount of 13.5 % 2026 Notes outstanding, $ 25.0 million aggregate principal amount of 5.0 % 2040 Notes outstanding and no Unsecured Term Loans outstanding, in total equaling $ 51.6 million aggregate principal amount of indebtedness under these instruments outstanding (such amount, the “Remaining Unsecured Notes Amount”).

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Hovnanian, the Notes Guarantors and the Investors entered into the First Amendment to the Secured Term Loan Facility (the “First Amendment” and the Secured Term Loan Facility as amended, the “Amended Secured Term Loan Facility”), providing for, among other things, (i) the issuance of the $ 93.5 million aggregate principal amount of additional Secured Term Loans described above and (ii) certain other modifications and amendments, primarily related to indebtedness permitted to be incurred by K.

Hovnanian and the Notes Guarantors thereunder, including providing that the interest rate on all the then outstanding Secured Term Loans shall be increased in certain circumstances when certain priority secured debt is issued, to a weighted-average rate that results from applying (x) an 11.75 % per annum rate to the principal amount of the Secured Terms Loans equal to a specified aggregate principal amount of such priority secured debt and (y) a 10.0 % per annum rate on the remaining principal amount of Secured Term Loans (the “Interest Rate Increase”).

The Secured Term Loans bear interest at a rate equal to 10.0 % per annum (subject to the Interest Rate Increase) and will mature on January 31, 2028 , with interest payable in arrears on the last business day of each fiscal quarter.

Following consummation of the Exchanges, the total outstanding principal amount of Secured Term Loans under the Secured Term Loan Facility is $ 175.0 million.

On May 30, 2023, K.

Hovnanian redeemed $ 100.0 million aggregate principal amount of its 7.75 % Senior Secured 1.125 Lien Notes due 2026 (the “Existing 1.125 Lien Notes”).

The aggregate purchase price for this redemption was $ 104.2 million, which included accrued and unpaid interest and which was funded with cash on hand.

This redemption resulted in a loss on extinguishment of debt of $ 4.1 million for the fiscal year ended October 31, 2023 , including the write-off of unamortized debt issuance costs and fees.

The loss from the redemption is included in the Consolidated Statement of Operations as “Loss on extinguishment of debt, net.”

On August 29, 2023, K.

Hovnanian redeemed an additional $ 100.0 million aggregate principal amount of the Existing 1.125 Lien Notes.

The aggregate purchase price for this redemption was $ 102.2 million, which included accrued and unpaid interest and which was funded with cash on hand.

This redemption resulted in a loss on extinguishment of debt of $ 3.8 million for the fiscal year ended October 31, 2023, including the write-off of unamortized debt issuance costs and fees.

The loss from the redemption is included in the Consolidated Statement of Operations as “Loss on extinguishment of debt, net”.

On September 7, 2023, K.

Hovnanian repurchased in the open market $ 45.0 million aggregate principal amount of its 10.0 % 1.75 Lien Notes due 2025 (the “ 1.75 Lien Notes”).

The aggregate purchase price for this repurchase was $ 46.7 million, which included accrued and unpaid interest and which was funded with cash on hand.

This repurchase resulted in a gain on extinguishment of debt of $ 0.2 million for the fiscal year ended October 31, 2023 , including the write-off of unamortized debt issuance costs and fees.

The gain from the repurchase is included in the Consolidated Statement of Operations as “Loss on extinguishment of debt, net”.

On September 25, 2023, HEI, K.

Hovnanian and the Notes Guarantors entered into the Third Amendment (the “Third Amendment”) to the Secured Credit Agreement, dated as of October 31, 2019 ( as amended by the First Amendment to the Credit Agreement, dated as of November 27, 2019, and by the Second Amendment to the Credit Agreement, dated as of August 19, 2022), by and among K.

Hovnanian, the Company, the other guarantors party thereto, Wilmington Trust, National Association, as administrative agent, and the lenders party thereto, which provides for up to $ 125.0 million in aggregate amount of senior secured first lien revolving loans.

The Third Amendment (i) extended the final scheduled maturity of the Revolving Credit Facility from June 30, 2024 to June 30, 2026 , ( ii) increased the interest rate floor applicable to term secured overnight financing loans from 1.0 % to 3.0 % and (iii) provided for certain other amendments.

Borrowings under the Revolving Credit Facility bear interest, at K.

Hovnanian’s option, at either (a) term SOFR (subject to a floor of 3.0 %) plus an applicable margin of 4.5 % or (b) an alternate base rate (subject to a floor of 4.0 %) plus an applicable margin of 3.5 %.

In addition, K.

Hovnanian pays an unused commitment fee on the undrawn revolving commitments at a rate of 1.0 % per annum.

The foregoing amendments took effect on October 5, 2023.

On October 5, 2023, K.

Hovnanian issued and sold to investment funds, separate accounts and/or other entities owned (in whole or in part), controlled, managed and/or advised by Angelo, Gordon & Co., L.P.

(collectively, “ Angelo Gordon ” ), investment funds, separate accounts and/or other entities owned (in whole or in part), controlled, managed and/or advised by Apollo Capital Management, L.P.

(collectively, “ Apollo ” and, together with Angelo Gordon, the “ Specified Persons ” ), and certain other institutional purchasers, in a private placement, $ 225.0 million aggregate principal amount of 8.0 % Senior Secured 1.125 Lien Notes due 2028 (the “New 1.125 Lien Notes”) and $ 430.0 million aggregate principal amount of 11.75 % Senior Secured 1.25 Lien Notes due 2029 (the “New 1.25 Lien Notes”).

Under the terms of the indentures governing the New 1.125 Lien Notes and the 1.25 Lien Notes, K.

Hovnanian will have the ability to issue additional notes under the indenture that governs the New 1.25 Lien Notes (the “Additional 1.25 Lien Notes”) in exchange for Specified Junior Debt (as defined below) or to purchase certain Specified Junior Debt.

Hovnanian has agreed that the Specified Persons may, at their option from time to time, exchange certain junior lien and/or unsecured indebtedness of K.

Hovnanian (the “Specified Junior Debt”) into a principal amount of Additional 1.25 Lien Notes not to exceed $ 150.0 million in the aggregate.

In any such exchange, K.

Hovnanian will be required to issue a principal amount of Additional 1.25 Lien Notes equal to (i) the price at which the Specified Persons acquired such Specified Junior Debt (the “Specified Person Purchase Price”) plus (ii) 20 % of the difference between the principal amount of such Specified Junior Debt and the Specified Person Purchase Price (such sum, the “Company Acquisition Price”), provided that, the Company Acquisition Price shall be reduced, if applicable, such that the per annum interest expense on the applicable issuance of Additional 1.25 Lien Notes does not exceed the per annum interest expense on the applicable Specified Junior Debt being exchanged.

In addition, K.

Hovnanian will have the option to purchase such Specified Junior Debt in cash at the Company Acquisition Price in lieu of consummating any such exchange.

On October 5, 2023, K.

Hovnanian redeemed with the proceeds from the issuances of the New 1.125 Lien Notes and the New 1.25 Lien Notes all of the remaining (i) $ 50.0 million aggregate principal amount of its Existing 1.125 Lien Notes for a redemption price of $ 51.5 million, which included accrued and unpaid interest, (ii) $ 282.3 million aggregate principal amount of its 10.5 % Senior Secured 1.25 Lien Notes due 2026 (the “Existing 1.25 Lien Notes”) for a redemption price of $ 293.9 million, which included accrued and unpaid interest, and (iii) $ 162.3 million aggregate principal amount of its 11.25 % Senior Secured 1.5 Lien Notes due 2026 (the “ 1.5 Lien Notes”) for a redemption price of $ 164.8 million, which included accrued and unpaid interest.

These redemptions resulted in a loss on extinguishment of debt of $ 17.9 million for the fiscal year ended October 31, 2023 , including the write-off of unamortized debt issuance costs and fees.

The loss from the redemptions is included in the Consolidated Statement of Operations as “Loss on extinguishment of debt, net”.

On October 31, 2023 , K.

Hovnanian redeemed in full all of the $ 26.0 million aggregate principal amount of its 8.0 % 2027 Notes for a redemption price of 100 % of the principal amount thereof, plus accrued and unpaid interest.

The Secured Term Loans bore interest at a rate equal to 10.0 % per annum (subject to the interest rate increase) and had a maturity date of January 31, 2028 , with interest payable in arrears on the last business day of each fiscal quarter.

Following consummation of the Exchanges, the total outstanding principal amount of Secured Term Loans under the Secured Term Loan Facility was $ 175.0 million.

Secured Obligations

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Hovnanian pays an unused commitment fee on the undrawn revolving commitments at a rate of 1.0 % per annum.

The 8.0 % Senior Secured 1.125 Lien Notes due 2028 (the “ New 1.125 Lien Notes ” ) have a maturity of September 30, 2028 and bear interest at a rate of 8.0 % per annum payable semi-annually on March 30 and September 30 of each year to holders of record at the close of business on March 15 and September 15 , as the case may be, immediately preceding such interest payment dates.

The New 1.125 Lien Notes are redeemable in whole or in part at K.

Hovnanian’s option at any time prior to September 30, 2025 at a redemption price equal to 100 % of their principal amount plus an applicable “ Make Whole Amount ” .

Hovnanian may also redeem some or all of the New 1.125 Lien Notes at 104.0 % of their principal amount commencing on September 30, 2025 , at 102.0 % of their principal amount commencing on September 30, 2026 and at 100.0 % of their principal amount commencing September 30, 2027 .

In addition, K.

Hovnanian may also redeem up to 35.0 % of the aggregate principal amount of New 1.125 Lien Notes prior to September 30, 2025 with the net cash proceeds from certain equity offerings at 108.0 % of their principal amount .

The 11.75 % Senior Secured 1.25 Lien Notes due 2029 (the “ New 1.25 Lien Notes ” ) have a maturity of September 30, 2029 and bear interest at a rate of 11.75 % per annum payable semi-annually on March 30 and September 30 of each year to holders of record at the close of business on March 15 and September 15, as the case may be, immediately preceding such interest payment dates.

The New 1.25 Lien Notes are redeemable in whole or in part at K.

Hovnanian’s option at any time prior to March 30, 2026 at a redemption price equal to 100 % of their principal amount plus an applicable “Make Whole Amount”.

Hovnanian may also redeem some or all of the New 1.25 Lien Notes at 105.875 % of their principal amount commencing on March 30, 2026 , at 102.9375 % of their principal amount commencing on September 30, 2027 and at 100.0 % of their principal amount commencing on September 30, 2028 .

In addition, K.

Hovnanian may also redeem up to 35.0 % of the aggregate principal amount of New 1.25 Lien Notes prior to March 30, 2026 , with the net cash proceeds from certain equity offerings at 111.75 % of their principal amount.

The Secured Term Loans bear interest at a rate equal to 10.0 % per annum (subject to increase as described above under “ - Fiscal 2024 ” ) and will mature on January 31, 2028 , with interest payable in arrears on the last business day of each fiscal quarter.

At any time and from time to time after November 15, 2023 , K.

Hovnanian may voluntarily prepay some or all of the Secured Term Loans at a prepayment price equal to 100.0 % of their principal amount.

Each series of secured notes and the guarantees thereof, the Secured Term Loans and the guarantees thereof and the Secured Credit Agreement and the guarantees thereof are secured by the same assets.

Among the secured debt (in each case, with respect to the assets securing such debt) :

the liens securing the Secured Credit Agreement are senior to the liens securing all of K.

Hovnanian’s other secured notes and the Secured Term Loans;

the liens securing the New 1.125 Lien Notes are senior to the liens securing the New 1.25 Lien Notes, the Secured Term Loans and any other future secured obligations that are junior in priority with respect to the assets securing the New 1.125 Lien Notes;

the liens securing the New 1.25 Lien Notes are senior to the liens securing the Secured Term Loans and any other future secured obligations that are junior in priority with respect to the assets securing the New 1.25 Lien Notes;

and the liens securing the Secured Term Loans are senior to any other future secured obligations that are junior in priority with respect to the assets securing the Secured Term Loans.

As of October 31, 2024 , the collateral securing the Secured Credit Agreement, the Secured Term Loan Facility and the senior secured notes included ( 1 ) $ 216.2 million of cash and cash equivalents, which included $ 3.2 million of restricted cash collateralizing certain letters of credit (subsequent to such date, fluctuations as a result of cash uses include general business operations and real estate and other investments along with cash inflow primarily from deliveries);

As of October 31, 2025 , the collateral securing the Secured Credit Agreement included ( 1 ) $ 283.9 million of cash and cash equivalents, which included $ 6.3 million of restricted cash collateralizing certain letters of credit (subsequent to such date, fluctuations as a result of cash uses include general business operations and real estate and other investments along with cash inflow primarily from deliveries);

( 2 ) $ 639.8 million aggregate book value of real property, which does not include the impact of inventory investments, home deliveries or impairments thereafter and which may differ from the value if it were appraised;

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Unsecured Obligations

The 13.5 % Senior Notes due 2026 (the “ 13.5 % 2026 Notes”) bear interest at 13.5 % per annum and mature on February 1, 2026.

Interest on the 13.5 % 2026 Notes is payable semi-annually on February 1 and August 1 of each year to holders of record at the close of business on January 15 or July 15 , as the case may be, immediately preceding each such interest payment date.

The 2031 Notes bear interest at 8.0 % per annum and mature on April 1, 2031 .

The 2033 Notes bear interest at 8.375 % per annum and mature on October 1, 2033 .

Interest on each series of Notes will be payable semi-annually on April 1 and October 1 of each year, beginning on April 1 , 2026 , to holders of record of the applicable series of Notes at the close of business on March 15 or September 15, as the case may be, immediately preceding each such interest payment date.

The 2031 Notes are redeemable, in whole or in part, at K.

Hovnanian’s option at any time prior to February 1, 2025 at a redemption price equal to 100 % of their principal amount plus an applicable “Make Whole Amount”.

At any time and from time to time on or after February 1, 2025 , K.

Hovnanian may also redeem some or all of the 13.5 % 2026 Notes at a redemption price equal to 100.0 % of their principal amount.

Hovnanian’s option at any time prior to April 1 , 2028 at 100.0 % of their principal amount plus an applicable “make-whole ” amount.

Hovnanian may also redeem some or all of the 2031 Notes at 104.0 % of their principal amount commencing on April 1, 2028 , at 102.0 % of their principal amount commencing on April 1 , 2029 and at 100.0 % of their principal amount commencing April 1 , 20 30 .

In addition, K.

Hovnanian may also redeem up to 40.0 % of the aggregate principal amount of 2031 Notes prior to April 1 , 202 8 with the net cash proceeds from certain equity offerings at 108.0 % of their principal amount.

The 2033 Notes are redeemable, in whole or in part, at K.

Hovnanian’s option at any time prior to October 1 , 202 8 at 100.0 % of their principal amount plus an applicable “make-whole ” amount.

Hovnanian may also redeem some or all of the 2033 Notes at 104.188 % of their principal amount commencing on October 1 , 202 8 , at 102.094 % of their principal amount commencing on October 1 , 202 9 and at 100.0 % of their principal amount commencing on October 1 , 20 30 .

In addition, K.

Hovnanian may also redeem up to 40.0 % of the aggregate principal amount of 2033 Notes prior to October 1 , 202 8 with the net cash proceeds from certain equity offerings at 108.375 % of their principal amount.

The 5.0 % Senior Notes due 2040 (the “ 5.0 % 2040 Notes”) bear interest at 5.0 % per annum and mature on February 1, 2040.

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We have certain stand-alone cash collateralized letter of credit agreements and facilities under which there was a total of $ 6.2 million and $ 2.6 million letters of credit outstanding at October 31, 2025 and October 31, 2024 , respectively.

These agreements and facilities require us to maintain specified amounts of cash as collateral in segregated accounts to support the letters of credit issued thereunder, which will affect the amount of cash we have available for other uses.

At October 31, 2024 and October 31, 2023 , the amount of cash collateral in these segregated accounts was $ 3.2 million and $ 5.1 million, respectively, which is reflected in “Restricted cash and cash equivalents” on the Consolidated Balance Sheets.

These agreements and facilities require us to maintain specified amounts of cash as collateral in segregated accounts to support the letters of credit issued thereunder, which is reflected in “Restricted cash and cash equivalents” on the Consolidated Balance Sheets.

Operating and Reporting Segments

HEI’s operating segments are components of the Company’s business for which discrete financial information is available and reviewed regularly by the chief operating decision maker, our Chief Executive Officer, to evaluate performance and make resource allocations.

The Chief Executive

Officer uses income (loss) before income taxes as the key operating metric used

to measure segment profit or loss.

Actual income (loss) before income taxes is reviewed monthly against budgeted amounts from the

semi-annual financial plans.

We currently have homebuilding operations in 13 states that are aggregated into reportable segments based primarily upon geographic proximity.

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Our financial services subsidiaries do not typically retain or service mortgages that we originate but sell the mortgages and related servicing rights to investors.

Corporate and unallocated primarily represents operations at our headquarters in New Jersey.

This includes our executive offices, information services, human resources, corporate accounting, training, treasury, process redesign, internal audit, construction services, administration of insurance, quality and safety.

It also includes interest income and interest expense resulting from interest incurred that cannot be capitalized in inventory in the homebuilding segments, as well as the gains or losses on extinguishment of debt from any debt repurchases or exchanges.

Evaluation of segment performance is based primarily on income (loss) before income taxes.

Income (loss) before income taxes for the homebuilding segments consist of revenues generated from the sales of homes and land, income (loss) from unconsolidated entities, management fees and other income, less the cost of homes and land sold, selling, general and administrative expenses and interest expense.

Income (loss) before income taxes for the financial services segment consist of revenues generated from mortgage financing, title insurance and closing services, less the cost of such services and corporate general and administrative expenses.

Operational results of each segment are not necessarily indicative of the results that would have occurred had the segment been an independent stand-alone entity during the periods presented.

Financial information relating to our reportable segments are as follows:

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(In thousands)

Total homebuilding

Financial Services

Corporate and unallocated

Total revenues

Income before income taxes:

Total homebuilding

Financial services

Homebuilding revenues

Financial services revenues

All other revenues (1)

Cost of sales (2)

Selling, general and administrative

Financial services expenses

Other segment items (3)

Total segment profit

Corporate and unallocated (4)

Income before income taxes

( 1 ) Corporate and unallocated for the year ended October 31, 2024 included corporate general and administrative expenses of $ 139.7 million, gain on extinguishment of debt of $ 1.4 million and $( 39.9 ) million of other (income) expenses, net.

Corporate and unallocated for the year ended October 31, 2023 included corporate general and administrative expenses of $ 103.2 million, interest expense of $ 17.7 million, loss on extinguishment of debt of $ 25.6 million and $( 12.7 ) million of other (income) expenses, net.

Corporate and unallocated for the year ended October 31, 2022 included corporate general and administrative expenses of $ 102.6 million, interest expense of $ 28.6 million, loss on extinguishment of debt of $ 6.8 million and $ 6.5 million of other (income) expenses, net.

(In thousands)

Total homebuilding

Financial services

Corporate and unallocated

(In thousands)

Investments in and advances to unconsolidated joint ventures:

Total homebuilding

Corporate and unallocated

Total investments in and advances to unconsolidated joint ventures

Year Ended October 31, 2024

(In thousands)

Homebuilding interest expense:

Total homebuilding

Financial Services

Homebuilding revenues

Financial services revenues

All other revenues (1)

Cost of sales (2)

Selling, general and administrative

Financial services expenses

Other segment items (3)

Total segment profit

Corporate and unallocated (4)

Financial services interest expense (income) ( 1 )

Total interest expense, net

Financial services interest expense (income) is included in Financial services revenue or expense in the Consolidated Statements of Operations.

Income before income taxes

Year Ended October 31, 2023

(In thousands)

Depreciation:

Total homebuilding

Financial Services

Homebuilding revenues

Financial services revenues

All other revenues (1)

Cost of sales (2)

Selling, general and administrative

Financial services expenses

Other segment items (3)

Total Segment Profit

Corporate and unallocated (4)

Total depreciation

Year Ended October 31,

Income before income taxes

Consists primarily of land sales revenue, interest income, and income from forfeited customer deposits due to contract cancellations.

Consists primarily of homebuilding and land sale costs, amortization of capitalized interest, inventory impairments and land option write-offs.

Consists primarily of other interest expensed, and income (loss) from unconsolidated joint ventures.

Consists primarily of corporate costs and shared services functions that are not allocated to the homebuilding or financial services reportable segments.

(In thousands)

Net additions to property and equipment:

Total homebuilding

Financial services

Corporate and unallocated

Total net additions to property and equipment

Year Ended October 31,

(In thousands)

Equity in earnings from unconsolidated joint ventures:

Total equity in earnings from unconsolidated joint ventures

Investments in and advances to unconsolidated joint ventures:

Income taxes (receivable) payable, including deferred benefits, consists of the following:

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The current state income tax expense is net of the use of state net operating losses totaling $ 14.1 million (tax effected $ 1.0 million), $ 110.0 million (tax effected $ 8.6 million) and $ 113.3 million (tax effected $ 8.3 million) for the years ended October 31, 2025 , 2024 and 2023 , respectively.

The total income tax expense of $ 75.1 million, $ 50.1 million and $ 94.3 million for the years ended October 31, 2024 , 2023 and 2022, respectively, was primarily driven by federal and state tax expense on income before income taxes and non-deductible executive compensation, partially offset by the generation of energy efficient home tax credits.

Income tax expense for fiscal years 2024 and 2023 also includes the favorable impact of releasing state valuation allowances.

The federal tax expense for all periods presented was not paid in cash as it was offset by the use of our existing net operating loss (“NOL”) carryforwards.

The total income tax expense for the years ended October 31, 2025, 2024 and 2023 was $ 22.2 million, $ 75.1 million and $ 50.1 million, respectively.

These amounts were primarily attributable to federal and state taxes on

income before taxes and non-deductible executive compensation, along with less state net operating losses ( “ NOL ”) available to utilize.

These increases were partially offset by energy efficient home

In fiscal 2025, income tax expense was further reduced by the

benefit of deductible losses from our debt extinguishment.

tax expense for fiscal years 2024 and 2023 includes the favorable impact of

releasing state valuation allowances.

The federal tax expense for all periods

presented was not paid in cash as it was offset by the use of our existing

NOL carryforwards.

As of October 31, 2025 , we have remaining federal NOL carryforwards of $ 360.1 million that expire between 2031 and 2038 , and $ 15.7 million have an indefinite carryforward period.

Our total remaining state NOL carryforwards are $ 1.9 billion:

$ 853.6 million that expire between 2025 through 2029 ; $ 694.4 million that expire between 2030 through 2034 ; $ 254.0 million that expire between 2035 through 2039 ; $ 5.6 million that expire between 2040 through 2044 ;

and $ 45.0 million that have an indefinite carryforward period.

Our total remaining state NOL carryforwards are $ 1.8 billion which expire between 2027 and 2045 , and $ 62.3 million that have an indefinite carryforward period.

Our total remaining tax credit carryforwards of $ 32.4 million expire between 2027 through 2045 .

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted and signed into U.S.

The OBBBA modifies or extends provisions enacted by the 2017 Tax Cuts and Jobs Act and introduces new provisions including the repeal of our ability to claim energy efficient home credits for homes that close after June 30, 2026.

While the OBBBA does not have a material impact on our Consolidated Financial Statements, we will continue to monitor additional guidance issued by the U.S.

Treasury Department, the Internal Revenue Service and various state agencies.

The Company recognizes deferred income taxes for deferred tax benefits arising from NOL carryforwards and temporary differences between book and tax income which will be recognized in future years as an offset against future taxable income.

As part of our analysis, we considered both positive and negative factors that impact profitability and whether those factors would lead to a change in estimate of our deferred tax assets (“DTAs”) that may be realized in the future.

As of October 31, 2024, the Company has determined that it is more likely than not that sufficient taxable income will be generated in the future to realize its DTAs, net of any valuation allowance.

At October 31, 2025, the Company has determined that it is more likely than not that sufficient taxable income will be generated in the future to realize its DTAs, net of any state valuation allowances.

Deferred tax assets and liabilities have been recognized on the Consolidated Balance Sheets as follows:

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Non-deductible compensation

Tax-deductible losses from debt extinguishment

Sale of assets to an unconsolidated joint venture

Permanent differences, net

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We had 440 , 469 and 380 communities under development and held for future development or sale at October 31, 2025 , 2024 and 2023 , respectively, which we evaluated for impairment indicators (i.e., those with a projected operating loss).

We identified impairment indicators in 12 of our communities with an aggregate carrying value of $ 75.4 million during the year ended October 31, 2025 .

The impairment analyses resulted in impairment charges of $ 21.4 million.

We identified impairment indicators in four of our communities with an aggregate carrying value of $ 41.1 million during the year ended October 31, 2024 .

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As a result of such analysis, we did not identify any additional impairment for the community.

During the year ended October 31, 2022 , one community, with a carrying value of $ 10.6 million, had an impairment indicator.

The impairment analysis resulted in an impairment charge of $ 8.4 million.

Our aggregate impairment charges are included within “Inventory impairments and land option write-offs” in the Consolidated Statement of Operations and deducted from inventory.

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Diluted earnings per share

There were no anti-dilutive shares in fiscal 2024.

Anti-dilutive shares were immaterial in fiscal 2023 and 2022.

There were no anti-dilutive shares in fiscal 2025 and 2024.

Anti-dilutive shares were immaterial in fiscal 2023.

Capital Stock

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of our Class A common stock.

On December 18, 2024, the Board authorized an

incremental increase to our repurchase program and on April 11, 2025, the Board

authorized another incremental increase to our repurchase

program, such that, inclusive of any amounts remaining under the

existing repurchase authorization, as of April 11, 2025, we were authorized to

repurchase up to $ 30.6 million of our Class A common stock.

of October 31, 2025, $ 26.4 million of our Class A common stock is

available for repurchase under the share repurchase program.

Under the program, repurchases may be

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does not have a specified expiration date.

As of October 31, 2024, $ 6.5 million of our Class A common stock is available for repurchase under the stock repurchase program.

Preferred Stock

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Treasury Stock

During the year ended October 31, 2024 , we repurchased 188,800 shares under our stock repurchase program, with a market value of $ 26.5 million, or $ 140.31 per share, which were added to “Treasury stock” on our Consolidated Balance Sheets as of October 31, 2024 .

During the year ended October 31, 2023 , we repurchased 118,478 shares under our stock repurchase program, with a market value of $ 4.8 million, or $ 40.51 per share .

During the year ended October 31, 2022 , we repurchased 312,471 shares under our stock repurchase program, with a market value of $ 12.2 million, or $ 39.12 per share .

During the year ended October 31, 2025 , we repurchased 257,908 shares of Class A common stock under our stock repurchase program, with a market value of $ 30.1 million, or $ 116.70 per share.

During the year ended October 31, 2024 , we repurchased 188,800 shares of Class A common stock under our stock repurchase program, with a market value of $ 26.5 million, or $ 140.31 per share .

During the year ended October 31, 2023 , we repurchased 118,478 shares of Class A common stock under our stock repurchase program, with a market value of $ 4.8 million, or $ 40.51 per share .

The repurchased shares were added to Treasury stock" on the “ Consolidated Balance Sheets ” .

Stock-Based Compensation Plans

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As of October 31, 2025 , we had 0.3 million shares authorized and remaining for future issuance under our stock incentive plans.

Based on the terms of our stock incentive plans, awards that are forfeited become available to us for future grants.

Based on the terms of our stock incentive plans, awards that are forfeited are available to us for future grants.

Stock Options

Prior to fiscal 2022 , stock options were granted.

There have been no stock option grants during fiscal years 2025 , 2024 or 2023 .

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Non-employee directors’ stock options vest in three equal installments on the first , second and third anniversaries of the date of the grant.

All stock options expire on the tenth anniversary from the date of grant.

All stock options expire on the tenth anniversary from the grant date.

The following table summarizes stock option activity as of October 31, 2025 :

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Stock options exercisable at end of period

The total intrinsic value of stock options exercised during fiscal 2024 was $ 1.4 million and in both fiscal 2023 and 2022, it was $ 0.2 million.

The total intrinsic value of stock options exercised during fiscal 2025 , 2024 and 2023 was $ 0.2 million, $ 1.4 million and $ 0.2 million, respectively.

The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price.

Based on the fair value at the time of grant, the per share weighted-average fair value of stock options vested in fiscal 2024 , 2023 and 2022 was $ 9.50 , $ 6.29 and $ 16.46 , respectively.

Based on the fair value at the time of grant, the per share weighted-average fair value of stock options that vested in fiscal 2024 and 2023 was $ 9.50 and $ 6.29 , respectively.

All outstanding stock options were vested as of October 31, 2024.

RSUs and Performance Units

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Generally, participants aged 60 years or older, or aged 58 with 15 years of service, are eligible to vest in their awards on an accelerated basis upon their retirement.

Grants of market share units (“MSUs”), performance share units (“PSUs”) and the stock portion of long-term incentive plans (“LTIPs”) (each discussed below), are also awarded as compensation.

The following table summarizes nonvested time-based RSU and MSU share activity as of October 31, 2024 :

Grants of performance share units (“PSUs”) and the stock portion of long-term incentive plans (“LTIPs”) (each discussed below) are also awarded as compensation.

The following table summarizes nonvested time-based RSU share activity as of October 31, 2025 :

Weighted-Average Grant Date

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Nonvested time-based at end of period

The following table summarizes nonvested performance-based LTIP, PSU and MSU share activity as of October 31, 2024 :

The following table summarizes nonvested performance-based LTIP and PSU share activity as of October 31, 2025 :

Weighted-Average Grant Date

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historical volatility factor of 66.66 % based on the expected market price of our Class A common stock for the two -year period ending on the valuation date, concluded stock price assumption of 4.54 % equal to the continuously compounded two -year yield and a dividend yield of zero .

There were no MSUs granted in fiscal 2024 , 2023 and 2022 .

The fair value of MSUs is determined using the Monte-Carlo simulation model.

The first 50 % of an MSU grant vests in four equal annual installments, commencing on the second anniversary from the date of grant, subject to stock price performance conditions, pursuant to which the actual number of shares issuable with respect to vested MSUs may range from 0 % to 200 % of the target number of shares under each MSU award, generally depending on the growth in the 60 -day average trading price of the Company’s shares during the period between the grant date and the relevant vesting dates.

The remaining 50 % of an MSU grant is subject to financial performance conditions in addition to the stock price performance conditions.

These remaining MSUs vest in four equal installments with the first installment vesting on the third January 1 st after the grant date, and the remaining annual installments commencing on the third anniversary from the date of grant, except that no portion of the award will vest unless the Board determines the Company achieved certain specified performance goals.

The total grant date fair value of RSU and performance unit awards granted during fiscal 2025 , 2024 and 2023 was $ 12.5 million, $ 14.8 million and $ 10.4 million, respectively.

The total fair value of these awards vested during fiscal 2025 , 2024 and 2023 was $ 15.4 million, $ 21.2 million and $ 25.2 million, respectively.

During the year-ended October 31, 2024 we issued 58,716 RSUs, 34,904 MSUs and 44,887 PSU shares.

As of October 31, 2024 , there was $ 9.3 million of unrecognized stock-based compensation, which is primarily comprised of unrecognized expenses for RSUs, PSUs, and the stock portion of LTIPs.

During the year-ended October 31, 2025 we issued 48,171 RSUs, 45,553 PSUs and 47,936 LTIP shares.

As of October 31, 2025 , there was $ 11.7 million of unrecognized stock-based compensation, which is comprised of unrecognized expenses for RSUs, PSUs, and the stock portion of LTIPs.

The cost is expected to be recognized over a weighted-average period of 2.5 years.

Stock-Based Compensation Expense

For the years ended October 31, 2024 , 2023 and 2022 , stock-based compensation expense was $ 25.3 million ($ 19.3 million post tax), $ 14.2 million ($ 11.4 million post tax) and $ 10.3 million ($ 7.3 million post tax), respectively.

Stock-based compensation for RSUs, MSUs, PSUs, and the stock portion of LTIPs was $ 25.3 million, $ 14.2 million and $ 10.2 million for fiscal 2024 , 2023 and 2022 , respectively.

In addition, stock option compensation expense was $ 5 thousand, $ 27 thousand and $ 0.1 million for the years ended October 31, 2024 , 2023 and 2022 , respectively.

For the years ended October 31, 2025 , 2024 and 2023 , stock-based compensation expense for RSUs, PSUs, and the stock portion of LTIPs was $ 16.7 million ($ 12.3 million post tax), $ 25.3 million ($ 19.3 million post tax) and $ 14.2 million ($ 11.4 million post tax), respectively.

Stock option compensation expense was not material for any period presented.

Warranty Costs

General liability insurance for homebuilding companies and their suppliers and subcontractors is very difficult to obtain.

General liability insurance for homebuilding companies and their suppliers and subcontractors is exceedingly difficult to obtain.

The availability of general liability insurance is limited due to a decreased number of insurance companies willing to underwrite for the industry.

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For the years ended October 31, 2025 and 2024 , we received $ 5.2 million and $ 4.7 million, respectively, from subcontractors related to the owner controlled-insurance program, which we accounted for as reductions to inventory.

Additions and charges in the warranty reserve and general liability reserve for the years ended October 31, 2024 and 2023 were as follows:

The following table represents additions and charges to the warranty reserve and general liability reserve for fiscal 2025 and 2024 :

Year Ended October 31,

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Balance, end of period

Warranty accruals are based upon historical experience.

In fiscal 2024 , we recorded an increase of $ 3.5 million to our construction defect reserves as a result of our claims history.

This increase is reflected in the changes to pre-existing reserves in the table above.

The majority of the charges incurred during fiscal 2024 represented payments for construction defects related to the settlement of one litigation matter.

(1) The majority of the charges incurred during fiscal 2024 represented a payment for construction defects related to the settlement of a litigation matter.

(2) During fiscal 2025, we re corded a decrease of $ 3.4 million to our construction defect reserves as a result of our claims history, which is reflected in the changes to pre-existing reserves.

(3) Includes reserve balances acquired from unconsolidated joint ventures, as discussed in Note 20.

Transactions with Related Parties

During the years ended October 31, 2024 , 2023 and 2022 , an engineering firm owned by Tavit Najarian, a relative of Ara K.

Hovnanian, our Chairman of the Board and our Chief Executive Officer, provided services to the Company totaling $ 1.3 million, $ 1.3 million and $ 1.1 million, respectively.

Neither the Company nor Mr.

Hovnanian has a financial interest in the relative’s company from whom the services were provided.

During fiscal years 2025, 2024 and 2023 , an engineering firm owned by Tavit Najarian, a relative of Ara K.

Hovnanian, our Chairman of the Board and Chief Executive Officer, and Alexander Hovnanian, our President, provided services to the Company totaling $ 0.7 million, $ 1.3 million and $ 1.3 million, respectively.

Neither the Company, nor Ara K.

Hovnanian nor Alexander Hovnanian has a financial interest in the relative’s company from whom the services were provided.

Commitments and Contingent Liabilities

We are involved in litigation arising in the ordinary

course of business, none of which is expected to have a material adverse effect

on our financial position, results of operations or cash flows, and we are

subject to extensive and complex laws and regulations that affect the

development of land and home building, sales and customer financing processes,

including zoning, density, building standards and mortgage

These laws and regulations often provide broad discretion to

the administering governmental authorities.

This can delay or increase the

cost of development or homebuilding.

We are involved in litigation, claims and other proceedings arising in the ordinary

course of business.

The significant majority of our litigation

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construction defect reserves.

We also are subject to a variety of local, state,

federal and foreign laws and regulations concerning protection of health and

the environment, including those regulating the emission or discharge of

materials into the environment, the management of storm water runoff at

construction sites, the handling, use, storage and disposal of hazardous

substances, impacts to wetlands and other sensitive environments, and the

remediation of contamination at properties that we have owned or developed or

currently own or are developing (“environmental laws”).

The particular

environmental laws that apply to a site may vary greatly according to the

community site, for example, due to the community, the environmental conditions

at or near the site, and the present and former uses of the site.

environmental laws may result in delays, may cause us to incur substantial

compliance, remediation and/or other costs, and can prohibit or severely

restrict development and homebuilding activity.

In addition, noncompliance

with these laws and regulations could result in fines and penalties,

obligations to remediate or take corrective action, permit revocations or other

and contamination or other environmental conditions at or in the

vicinity of our developments may result in claims against us for personal

injury, property damage or other losses.

We anticipate that increasingly stringent requirements

will continue to be imposed on developers and homebuilders in the future.

addition, some of these laws and regulations that significantly affect how

certain properties may be developed are contentious, attract intense political

attention, and may be subject to significant changes over time.

regulations governing wetlands permitting under the federal Clean Water Act

have been the subject of extensive rulemakings for many years, resulting in

several major joint rulemakings by the EPA and the U.S.

Army Corps of Engineers

that have expanded and contracted the scope of wetlands subject to regulation;

and such rulemakings have been the subject of many legal challenges, some of

which remain pending.

It is unclear how these and related developments,

including at the state or local level, ultimately may affect the scope of

regulated wetlands where we operate.

Although we cannot reliably predict the

extent of any effect these developments regarding wetlands, or any other

requirements that may take effect, may have on us, they could result in

time-consuming and expensive compliance programs and in substantial

expenditures, which could cause delays and increase our cost of operations.

addition, our ability to obtain or renew permits or approvals and the continued

effectiveness of permits already granted or approvals already obtained is

dependent upon many factors, some of which are beyond our control, such as

changes in policies, rules and regulations and their interpretations and

While the outcome of such contingencies cannot be

predicted with certainty, we do not believe that the resolution of such matters

will have a material adverse impact on our results of financial position, results

of operations or cash flows.

In December 2020, the New Jersey

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Manor property for decades for manufacturing purposes.

In 1998, NJDEP confirmed that groundwater at this site was

(when one of our affiliates purchased the

property and assumed control of its remediation) , NJDEP confirmed that groundwater at this site was

impacted from an off-site source.

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the NJDEP issuing an unconditional site-wide No Further Action determination

letter and Covenant Not to Sue in 1999.

letter ( “ NFA ” ) and Covenant Not to Sue in 1999.

Subsequently, one of our affiliates was

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asserts claims under the New Jersey Spill Act and other state law claims and

alleges that the NJDEP and the Spill Fund have incurred over $ 5.3 million since 2009 to

remediation was not properly completed,

inaccurate reports were provided to NJDEP when the NFA was issued, and

the NJDEP and the Spill Fund have incurred over $ 5.3 million since 2009 to

investigate vapor intrusion at the development and to install vapor mitigation

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Variable Interest Entities

We enter into land and lot option purchase contracts to procure land or lots for the construction of homes.

ASC 810 requires the assessment of whether an

entity is a VIE and, if so, if we are the primary beneficiary at the inception

of the entity or at a reconsideration event.

We are required to consolidate a VIE if we determine that we have a controlling financial interest in the VIE.

financial interests will have both of the following characteristics:

power to direct the activities of a VIE that most significantly impact the VIE’s

economic performance and (b) the obligation to absorb losses of the VIE that

could potentially be significant to the VIE or the right to receive benefits

from the VIE that could potentially be significant to the VIE.

interest in VIEs are in the form of joint ventures and land and lot option

purchase contracts.

We examine specific criteria and use our judgment when

determining if we are the primary beneficiary of a VIE and have a controlling financial interest.

The significant

factors we consider in determining whether we are the primary beneficiary include

risk and reward sharing, experience and financial condition of other

partner(s), voting rights, involvement in day-to-day capital and operating

decisions, representation on a VIE’s executive committee, existence of

unilateral kick-out rights or voting rights, level of economic

disproportionality between us and the other partner(s) and contracts to

purchase property from VIEs.

We also enter into land and lot option purchase contracts to procure land or lots for the construction of homes.

Under these contracts, the Company will fund a stated deposit in consideration for the right, but not the obligation, to purchase land or lots at a future point in time with predetermined terms.

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Under the requirements of ASC 810, certain option purchase contracts may result in the creation of a VIE that owns the land parcel under option.

Although the Company does not have legal title to the underlying land, in compliance with ASC 810, we analyze our option purchase contracts to determine whether the corresponding land and lot sellers are VIEs and, if so, whether we are the primary beneficiary.

The significant factors we consider in determining if the power to direct the activities of a VIE that most significantly impact the VIE ’ s economic performance are shared include, among other things, our ability in determining or limiting the scope or purpose of the VIE, selling or transferring property owned or controlled by the VIE, changing the terms of the contract or arranging financing for the VIE.

As a result of our analyses, we have concluded there are no VIEs that required consolidation at either October 31, 2024 or 2023 because we are not the primary beneficiary of the land or lots under option purchase contracts.

We will continue to secure land and lots using options, some of which are with VIEs where we have determined power is shared among the partners and we do not have a controlling financial interest.

Including deposits on our unconsolidated VIEs, at October 31, 2024 and 2023 , we had total cash deposits amounting to $ 264.8 million and $ 192.3 million, respectively, to purchase land and lots with a total purchase price of $ 3.0 billion and $ 2.2 billion, respectively.

As a result of our analyses, we have concluded we are not the primary beneficiary and do not have a controlling financial interest of any of the land or lots under option purchase contracts at either October 31, 2025 or 2024.

At October 31, 2025 and 2024 , the Company had total cash deposits amounting to $ 333.2 million and $ 264.8 million, respectively, to purchase land and lots with a total purchase price of $ 2.8 billion and $ 3.0 billion, respectively.

The maximum exposure to loss with respect to our land and lot options is limited to the deposits plus any pre-development costs invested in the property, although some deposits are refundable at our request or refundable if certain conditions are not met.

Our investments in homebuilding and land development joint ventures consist of equity interests that, in total, provide us with partner investment returns and management fees.

All major decision making in our joint ventures is shared among all partner(s).

In particular, business plans and budgets are generally required to be unanimously approved by all partner(s).

Usually, management and other fees earned by us are nominal and believed to be at market and there is no significant economic disproportionality between us and our partner(s).

As a result of our analyses, we have concluded we are not the primary beneficiary and do not have a controlling financial interest of any of our homebuilding and land development joint ventures at either October 31, 2025 or 2024.

Investments in Unconsolidated Homebuilding and Land Development Joint Ventures

We enter into homebuilding and land development joint ventures from time to time as a means of accessing lot positions, expanding our market opportunities, establishing strategic alliances, managing our risk profile, leveraging our capital base and enhancing returns on capital.

Our investments in homebuilding and land development joint ventures consist of equity interests that, in total, provide us with partner investment returns and management fees.

During the first quarter of fiscal 2023 , we contributed four communities we owned, including one active selling community, to one new unconsolidated joint venture for $ 41.1 million of net cash.

During the second quarter of fiscal 2023 , one of the Company ’ s unconsolidated joint ventures was dissolved, and we assumed control of the remaining assets and liabilities.

During the third quarter of fiscal 2023 , we contributed 16 communities we owned, including eight active selling communities, to one new unconsolidated joint venture for $ 75.7 million of net cash.

Also, during the third quarter of fiscal 2023 , we assumed control of one of our unconsolidated joint ventures after the partner received their final cash distribution.

We consolidated the remaining assets and liabilities that were in the unconsolidated joint venture at fair value on the date of distribution.

Upon consolidation, we recorded a gain of $ 19.1 million in “Other (income) expense, net.” Subsequent to consolidation, we contributed the same three active selling communities to an unconsolidated joint venture for $ 48.0 million of net cash.

During the second quarter of fiscal 2024 , we contributed 11 communities we owned, including three active selling communities, to a new unconsolidated joint venture for $ 53.8 million of net cash.

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Upon consolidation, we recorded a gain of $ 45.7 million in “Other (income) expense, net."

During the first quarter of fiscal 2025 , we contributed four active selling communities we owned to one new unconsolidated joint venture for $ 20.8 million of net cash and a $ 50.0 million note receivable, resulting in a gain of $ 22.7 million, which was recorded in “Other (income) expense, net.”

During the second half of fiscal 2025 , we contributed five communities in planning to a new unconsolidated joint venture for $ 17.9 million of net cash.

During the fourth quarter of fiscal 2025 , we assumed control of one of our unconsolidated joint ventures after the partner received their final cash distribution.

We consolidated the remaining assets and liabilities that were in the unconsolidated joint venture at fair value on the date of distribution.

We also received a distribution of two active selling communities from an unconsolidated joint venture and recorded these distributions at fair value.

The total gain recorded from the two transactions was $ 18.9 million, which was recorded to “Other (income) expense, net."

The tables set forth below summarize the combined financial information related to our unconsolidated homebuilding and land development joint ventures that are accounted for under the equity method:

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In some cases, our net investment in unconsolidated joint ventures is less than our proportionate share of the equity reflected in the table above because of the differences between asset impairments recorded against our unconsolidated joint venture investments and any impairments recorded in the applicable unconsolidated joint venture.

During the years ended October 31, 2024 and 2023 , we did not write-down any of our unconsolidated joint venture investments.

periods presented, we did not recognize any

write-downs related to our investments in unconsolidated joint ventures .

For The Year Ended October 31, 2025

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The reason “Our share of net income” is higher or lower than the “Joint venture net income” in the tables above is a result of our varying ownership percentages in each investment.

For the years ended October 31, 2024 and 2023 , we had investments in six and eight unconsolidated joint ventures, respectively, and our ownership in these joint ventures ranged from 20 % to over 50 % for both periods.

For the years ended October 31, 2025 and 2024 , we had investments in six unconsolidated joint ventures for both periods and our ownership in these joint ventures ranged from 20 % to over 50 % for both periods.

Therefore, depending on mix, if the unconsolidated joint ventures in which we have higher sharing percentages are more profitable than our other unconsolidated joint ventures, that results in us having a higher overall percentage of income in the aggregate than would occur if all joint ventures had the same sharing percentage;

conversely, if the unconsolidated joint ventures in which we have lower sharing percentages are more profitable than our other unconsolidated joint ventures, that results in us having a lower overall percentage of income in the aggregate than would occur if all joint ventures had the same sharing percentage.

For the year ended October 31, 2024 , “Our share of net income” was less

than the “Joint venture net income” due to five unconsolidated joint

ventures with increased income during the period for which we currently

recognize a lower profit-sharing percentage based on the joint venture

agreements, partially offset by one unconsolidated joint venture with increased

income during the period for which we recognized a higher

profit-sharing percentage based on the joint venture agreements.

For the year ended October 31, 2023 , “ Our share of net income” was lower than the “Joint venture net income” due to four unconsolidated joint ventures with increased income during the period for which we currently recognize a lower profit-sharing percentage as well as a fifth unconsolidated joint venture for which we were recognizing all of the net loss.

For the year ended October 31, 2025 , “Our share of net income” was less than the “ Joint venture net income ” due to two unconsolidated joint ventures with increased income during the period for which we currently recognize a lower profit sharing percentage based on the joint venture agreements, partially offset by one unconsolidated joint venture with increased losses during the period for which the book value of our investment is zero and therefore we did not recognize our share of the losses .

For the year ended October 31, 2024 , “ Our share of net income” was less than the “Joint venture net income” due to five unconsolidated joint ventures with increased income during the period for which we currently recognize a lower profit-sharing percentage based on the joint venture agreements , partially offset by one unconsolidated joint venture with increased income during the period for which we recognized a higher profit-sharing percentage based on the joint venture agreements .

To compensate us for the administrative services we provide as the manager of certain unconsolidated joint ventures, we receive a management fee based on a percentage of the applicable unconsolidated joint venture’s revenue.

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Change in fair value included in financial services revenue

Assets measured at fair value on a nonrecurring basis are those assets for which we have recorded valuation adjustments and write-offs during the year ended October 31, 2024 .

We did not have assets measured at fair value on a nonrecurring basis during the year ended October 31, 2023 .

Assets measured at fair value on a nonrecurring basis are those assets for which we have recorded valuation adjustments and write-offs during the years ended October 31, 2025 and 2024 , respectively.

The assets measured at fair value on a nonrecurring basis are all within our homebuilding operations and are summarized below:

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Land and land options held for future development or sale

October 31, 2024

(In thousands)

Land and land options held for future development or sale

We estimate the fair value of each impaired community by determining the present value of the estimated future cash flows at a discount rate commensurate with the risk of the respective community.

For the year ended October 31, 2025, our discount rates used to determine the fair value ranged from 16.5 % to 20.0 %.

We recorded inventory impairments, which are included in the Consolidated Statements of Operations as “Inventory impairments and land option write-offs” and deducted from inventory of $ 21.4 million and $ 10.0 million for the years ended October 31, 2025 and 2024 , respectively.

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Level 3 measurements are estimated based on third -party broker quotes or management’s estimate of the fair value based on available trades for similar debt instruments.

As shown in the table below, our 8.0 % Senior Secured 1.125 Lien Notes due 2028 , 11.75 % Senior Secured 1.25 Lien Notes due 2029 and 5.0 % Senior Notes due 2040 were a Level 2 measurement at October 31, 2024 due to recent trades for the same notes.

As shown in the table below, our 8.0 % Senior Notes due 2031 , 8.375 % Senior Notes due 2033 and 5.0 % Senior Notes due 2040 were a Level 2 measurement at October 31, 2025 due to recent trades for the same notes.

Fair Value as of October 31, 2025

(In thousands)

Senior Secured Notes:

8.0 % Senior Secured 1.125 Lien Notes due September 30, 2028

11.75 % Senior Secured 1.25 Lien Notes due September 30, 2029

Senior Notes:

13.5 % Senior Notes due February 1, 2026

8.0 % Senior Notes due April 1, 2031

8.375 % Senior Notes due October 1, 2033

5.0 % Senior Notes due February 1, 2040

Senior Credit Facilities:

Senior Secured 1.75 Lien Term Loan Credit Facility due January 31, 2028

Total fair value

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Senior Secured Notes:

10.0 % Senior Secured 1.75 Lien Notes due November 15, 2025

8.0 % Senior Secured 1.125 Lien Notes due September 30, 2028

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Senior Credit Facilities:

Senior Unsecured Term Loan Credit Facility due February 1, 2027

Senior Secured 1.75 Lien Term Loan Credit Facility due January 31, 2028

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The Senior Secured Revolving Credit Facility is not included in the above tables because there were no borrowings outstanding thereunder as of October 31, 2025 and 2024 .

Subsequent Events

During the first quarter of

fiscal 2026, we assumed control of one of our unconsolidated joint ventures

after the partner received their final cash distribution.

We will consolidate

the remaining assets and liabilities from eight active selling

communities that were in the unconsolidated joint venture at fair value on the

date of distribution.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures