<PAGE>
Filed by Hovnanian Enterprises, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Hovnanian Enterprises, Inc.
Commission File No. 001-08551
PRESS RELEASE
HOVNANIAN ENTERPRISES REPORTS THIRD QUARTER RESULTS
HIGHLIGHTS FOR THE QUARTER ENDED JULY 31, 2000
- Reported earnings of $0.37 per fully diluted share, slightly ahead of
analyst estimates and last year's results, and significantly above
first and second quarter results.
- Deliveries increased 14.0% to 1,086 homes. Net contracts climbed to
1,113 homes valued at $271.9 million, an increase of 20.8% in number of
homes and 35.3% in dollar value from last year's third quarter results.
- Contract backlog as of July 31, 2000 stood at 2,270 homes with a sales
value of $584.0 million versus last year's 1,725 homes with a sales
value of $395.0 million, an increase of 31.6% in number of homes and
47.9% in value. Excluding the Texas acquisition, the backlog value
increased 32.3%.
- Management forecast fiscal 2000 earnings of $1.50 to $1.55 per share.
- Announced merger with Washington Homes, Inc. (NYSE: WHI). This will
significantly enhance the Company's market position in Metro D.C. and
North Carolina. The transaction is expected to be accretive to earnings
per share in fiscal 2001.
RED BANK, NJ, September 7, 2000 -- Hovnanian Enterprises, Inc. (ASE: HOV), a
leading national homebuilder, reported net income of $8.1 million, or $0.37 per
fully diluted share, on $285.0 million in revenue for the third quarter ended
July 31, 2000. This compares with net income of $7.6 million, or $0.36 per
share, on revenue of $236.3 million in last year's third quarter. Deliveries in
2000's third quarter were 1,086 homes or $258.0 million compared to 953 homes or
$207.5 million in 1999. Homebuilding gross margin, excluding land sales,
increased to 20.9% in the third quarter, continuing a trend of improvement from
18.2% in the first quarter and 20.2% in the second quarter.
During the nine months ended July 31, 2000, revenue reached $784.0 million
compared to $648.3 million in the year earlier period. Net income for the first
nine months of fiscal 2000 was $15.0 million, or $.68 per share compared to
$21.2 million, or $.99 per share in 1999. As was anticipated, fiscal 2000 has a
significant bunching of deliveries in the fourth quarter. This skews earnings to
the end of the year, unlike the two prior fiscal years, which showed greater
balance between quarters. Year-to-year net contracts during the nine months
increased by 28.8% in homes and 43.9% in dollars, and deliveries rose by 17.7%
in homes and 22.9% in dollar value. Excluding Texas, the value of contracts was
19.5% higher and the value of deliveries increased 1.3%.
<PAGE>
COMMENTS FROM MANAGEMENT
"We're pleased to report a solid third quarter performance in line with our
projections, despite the impact of a slowing economy," says Ara K. Hovnanian,
President and Chief Executive Officer of the Company. "We are looking forward
with anticipation to our fourth quarter and fiscal 2001. In most markets, our
sales pace remains robust. We have the contract backlog in place to deliver a
strong fourth quarter performance. Although the Northeast has experienced a
tremendous amount of precipitation this summer, which has not been conducive to
construction, we believe we will still achieve a record 4,400 deliveries with
revenue approaching $1.15 billion during fiscal 2000.
"All of the Company's 1999 acquisitions are meeting or exceeding their business
plans," adds Mr. Hovnanian. "Our results in the fourth quarter and fiscal 2001
will begin to benefit fully from approximately 55 community and model openings
that occurred in the first nine months of this year. As we enter the fourth
quarter, our refined projections call for record earnings of between $1.50 and
$1.55 per fully diluted share this year. We expect to report further
improvements in our fiscal 2001 performance, and we are developing a significant
backlog for the first and second quarters which should lead to much better
performance in these periods during fiscal 2001."
MERGER WITH WASHINGTON HOMES, INC.
Last week, Hovnanian added further momentum by announcing a merger agreement
with Washington Homes, Inc. (NYSE: WHI). The transaction is expected to be
accretive to earnings per share in fiscal 2001 and will drive further
profitability improvements in the years to come. Subsequent to the merger,
Hovnanian will maintain its current position as the largest builder in New
Jersey and will become the second-largest builder in Metro-Washington, DC and
the largest builder in North Carolina. With shareholders' equity exceeding $300
million and total assets approaching $1.0 billion, the Company will attain a
more substantial market capitalization and will add liquidity to its stock. In
conjunction with the merger of Hovnanian and Washington Homes, the Company will
issue approximately 5.5 million additional class A common shares, based on
Hovnanian's closing share price of $7-1/16 on Friday, August 25, 2000. The
actual number of shares issued is subject to certain adjustments as defined in
the merger agreement.
"Depending on the timing of regulatory and shareholder approval, we will combine
our company with Washington Homes sometime near the end of the calendar year,
and will begin to push our performance to the next level," adds Mr. Hovnanian.
"Once we combine the performance of Washington Homes with our own operations in
fiscal 2001, we expect our earnings per share to increase by $.05 to $.10. And
the accretion should be substantially greater in subsequent years as we realize
the full benefits and efficiencies of market concentration resulting from the
merger."
OTHER INITIATIVES
"We expect our enterprise-wide software system to roll out to all new
single-family communities, beginning in our Northeast Region, in February 2001,"
says Mr. Hovnanian.
<PAGE>
"Multi-family community rollouts should commence in July. In the meantime, we
are making solid progress on improving the performance of our operations -
through our initiatives in process and product standardization, even- flow
construction, implementation of hand-held technology in the field, and our
training programs. These significant refinements to our operating methodology
position us in the forefront of the changes that are revolutionizing America's
homebuilding industry today," says Mr. Hovnanian.
The Company's website -- www.khov.com -- has experienced a 135.2% increase in
traffic and has become the second leading source of sales for the Northeast
Region in the first nine months of fiscal 2000. Visitors can now take 360-degree
tours through select model homes "virtually," and can "visit" all of the
Company"s communities nationwide through the website.
IN CLOSING
"We are making tremendous progress on our path to becoming a better homebuilding
company," says Mr. Hovnanian. "We believe the recent price of our shares
continues to grossly undervalue our Company. We are confident that our shares
represent an excellent investment for all our shareholders at current price
levels." During the quarter ended July 31, 2000, the Company purchased 440,000
shares of its common stock at an average cost of $5.96 per share.
Hovnanian Enterprises, Inc. designs, constructs and markets single-family homes,
townhomes and condominiums in planned residential communities in New Jersey,
North Carolina, Pennsylvania, Virginia, Maryland, New York, California, Texas
and Florida in the United States, and in Poland.
FORWARD-LOOKING STATEMENTS This release contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. Any
such statements may involve unstated risks, uncertainties and other factors that
may cause actual results to differ materially from those described in any
forward-looking statements. Any such risks, uncertainties and other factors
include, but are not limited to, the risk that the businesses of Hovnanian and
Washington Homes will not be combined successfully, the risk that the growth
opportunities and cost savings from the merger may not be fully realized or may
take longer to realize than expected, changes in general economic conditions,
fluctuations in interest rates, increases in costs of materials, supplies and
labor, adverse governmental or regulatory policies, and general competitive
conditions. This list of risk factors may not be exhaustive. Actual results
could differ materially from those set forth in any forward-looking statements
for many reasons, including the risk factors listed above. Any forward-looking
statements speak only as of the date they are made, and Hovnanian disclaims any
obligation to provide updates or revise any forward-looking statements.
In connection with the proposed merger, Hovnanian and Washington Homes
have filed with the SEC a preliminary joint proxy statement describing the
proposed merger of Washington Homes and Hovnanian and the proposed terms and
conditions of the merger. Additionally,
<PAGE>
Hovnanian will file with the SEC a registration statement on SEC Form S-4,
containing the definitive joint proxy statement/prospectus, which describes the
proposed merger and the proposed terms and conditions of the merger.
Stockholders are urged to read the definitive joint proxy statement/prospectus
when it becomes available because it will contain important information. The
preliminary joint proxy statement filed by Hovnanian and Washington Homes is
available for free, and the registration statement to be filed by Hovnanian,
including the definitive joint proxy statement/prospectus and the SEC filings
that will be incorporated by reference in the definitive joint proxy
statement/prospectus, will be available for free after it is filed, both on the
SEC's web site (www.sec.gov) and by contacting either Washington Homes, Inc,
1802 Brightseat Road, Landover, Maryland 20785-4235, Attention: Christopher
Spendley, telephone (301) 772-8900; or Hovnanian Enterprises, Inc., 10 Highway
35, P.O. Box 500, Red Bank, New Jersey 07701, Attention: J. Larry Sorsby,
telephone (732) 747-7800.
