Good morning, and thank you for joining us today for Hovnanian Enterprises fiscal 2010 first quarter earnings conference call. An archive of the web cast will be available after the completion of the call and run for 12 months. (Operator instructions) Before we begin, I would like to remind everyone that the cautionary language about forward-looking statements contained in the press release also applies to any comments made during this conference call and to the information in the slide presentation. I would now like to turn over the conference call to Ara Hovnanian, Chairman, President and Chief Executive Officer of Hovnanian Enterprises. Ara, please go ahead sir.

Good morning and thank you for participating in today’s call to review the results of our first quarter ended January 31, 2010. Joining me on the call from the company are Larry Sorsby, Executive Vice President and Chief Financial Officer; Paul Buchanan, Senior Vice President and Chief Accounting Officer; Brad O’Connor, Vice President and Corporate Controller; David Valiaveedan, Vice President Finance and Treasurer; and Jeff O’Keefe, Director of Investor Relations. On slide 3, you can see a brief summary of our first quarter results. In general, the first quarter pretty much went as expected. There were not many surprises. The net income that we reported is primarily due to the income tax benefit that we booked in our first quarter. On our fourth quarter conference call, I laid out the three pieces of a puzzle that we needed to work on in order to get us back to profitability, as you saw on slide 4. We made progress on each of these fronts during the first quarter, including a better year-over-year sales pace, continued improvements in gross margin and further success in new land purchases and signing new lot option contracts. Our absolute number of net contracts was down slightly at negative 5%, but this was primarily the result of our communities being down 27% year-over-year. In two of the three months of the quarter, our net contract matched or exceeded the net contracts we signed in the same month on a per community basis last year. On slide 5, we show community counts at its peak in July of ’07 at 449 communities. Even though our community count was down 27% year-over-year, we finally ended our nine quarter community reduction streak, holding our community count steady at 179 at the end of the quarter. In the first quarter, we…

Thanks Ara. Let me start with a discussion of our current inventory from a couple of different perspectives. If you turn to slide 16, you see our owned and optioned land position broken out by our publicly reported segments. Based on a trailing 12 month delivery basis, we own slightly more than three years worth of land. The good news is each quarter; we worked through the land we purchased at higher prices during the crest of the housing cycle. At some point in the future, we will have worked through much of this legacy land, and will have reloaded our land supply with lots that are purchased at today's lower market prices, and this combination will lead to sustainable gross margins back in the 20% range. We do not need to have home price appreciation to see further improvements in our gross margin, just a shift in the mix of lots that we own to be more heavily weighted to our newer land purchases. While this will not happen overnight, we have started down the road to achieving this objective. The pricing power does return, then getting back to a normalized gross margin could happen even sooner. As seen on the right-hand side of slide 17, for the first time in 14 quarters, our owned lot position increased sequentially due primarily to new acquisitions. While it only increased by about 1000 lots during the quarter, it was a step in the right direction. During the first quarter, we delivered approximately 1100 homes and bought about 2100 new lots. On the optioned side of the equation, we saw a sequential decrease of about 400 lots during the first quarter. We walked away from 300 lots, and we took down 1500 lots that were previously optioned, and we signed new option…

Thanks Larry. As I stated at the beginning of the call, there were not any surprises during the quarter. We were pleased with the progress we are making with respect to increased absorption rates, improving margins and identifying new land parcels. These components need to come together so that we can once again reach profitability. Additionally, the market environments of the past few years has demanded that we make some changes to our operations in order for it to become more efficient and to become more competitive. To assist us in this front, we recently promoted Tom Pellerito to Chief Operating officer. Tom has more than 30 years of experience in the home-building business, and most recently he was one of our group presidents responsible for our operations from the mid-Atlantic – in the mid-Atlantic from Delaware all the way down through Georgia. We are counting on Tom to help us achieve some of the long-term changes necessary to achieve an even higher level of efficiency. Let me close by addressing two issues that are on everyone’s mind today. The first issue, what if the housing market takes years to recover. Well, as a reminder prior to this slowdown in the worst housing downturns since world War two housing fell to a million starts. You can see this if you turn to slide 30, and we circled in blue the troughs of the worst housing downturns in the last 50 plus years. Well if two years from today housing was only at a million starts, again the historical troughs of the worst housing downturns, it would be almost double the current level of activity. Combine that with the fact that half of the builders in this country are gone and many that have survived are dependent on bank financing, which…

(Operator instructions) And our first question comes from the line of David Goldberg with UBS. Please proceed.

Thanks. Good afternoon everybody.

Good afternoon.

First question, I wonder if you could talk to us about on the new land that you are purchasing, I'm wondering the timing between the cash outlays to buy the land, and then the cash and then the conversion back to cash for use for actual delivery of the home, how long do you think there is on average on the land you are purchasing. And if it is easier to maybe break that out by what you are purchasing is finished lots versus maybe what you had to do some development work on that would work too?

Sure. Well, most of the ones that we recently purchased are developed. We have purchased a couple that are not. In the Texas market and one or two in Tampa and in Phoenix we bought rolling lot options. In those cases obviously the cash comes back very quickly, and doesn't take a lot of cash. In general, the purchases we've made are smaller purchases. I'd say on average a year and a half to two years worth of absorption. So that cash will really be coming back fairly quickly, not just the cash in terms of the land outlay, but the profitability cash as well. So on the whole most of our cash outlays are going to be coming back fairly quickly.

Great. And then just my follow up question was about the decision to repurchase debt, of the $22 million in a quarter, and then I think Larry mentioned that there was another 80 million and changed subsequent, or excuse me, $70 million subsequent in February. I'm just trying to get an idea of how you are balancing the purchase of debt, especially for maturities that might be out to 3 years from now relative to the need to increase the community count, get some real operating leverage out of the business, how are you thinking about balancing the two as you are considering the debt repurchases?

Sure. Well, I know there is a lot of concern obviously just to make sure that we have sufficient liquidity. Suffice to say we've done a variety of different models that stressed the different assumptions, and basically we feel very comfortable that we've got the cash that we need, and we'll be generating appropriate levels of cash so that we can make the new acquisitions, we can get the growth we want to help us more rapidly achieve profitability and still have plenty left over to retire debt and even retire it early. So, you know, there is a delicate balance and we can't go too crazy, but we clearly are comfortable, you know, with the purchases we've made and that we'll still have plenty of room to do the land purchases that we'd also like. It doesn't give us the capability to do a lot of large parcels, land acquisitions on an all cash basis. I mentioned most of the ones we've done have been either rolling lots or one to two years worth of absorption, but we have been bidding on several of the larger transactions. We've got eager partners that are very willing to team up with us and did team up with us to bid on some of the larger parcels. The problem is we just didn't get the prices that we are hoping for. The partnerships, and our partners are willing to do some transactions that are on very favorable terms for us, and still have good returns for them. So, you know, the long answer to your short question, we are very comfortable with the balance we're reaching right now. We feel we've got plenty of room you know, to purchase more land even large parcels with partners and still have money left over to retire some of our debt early.

Okay, thank you.

Your next question comes from the line of Megan McGrath with Barclays Capital. Please proceed.

Hi, thanks. Good morning. Just wanted to follow up on your comments on community count. It sounds like you think community count should essentially be bottoming here, what are your expectations for the rest of the year in terms of growth, and how should we think about that in terms of SG&A dollars for the year as well?

You know, we really haven't made any projections on where community counts, though we have said that we would like to add additional communities in the future. As you know, as you sell homes we kind of you know, close out some of our older communities that don't have very many lots left in them and we have to replace those with new communities. For the very first time in the first quarter you know, kind of stopped the bleeding so to speak from having a decline. I think it would be our hope to continue to stop the decline, and eventually start to see it grow again, and clearly as we grow community count, one of the benefits is to be able to leverage our fixed overhead costs, and so we would get greater efficiencies on the SG&A front by being able to do this.

Okay, and then just a quick follow-up on some of those regions that you highlighted at the end of your presentation, where you have got we are now seeing the supply below let us say six months of supply. That would be a region from typically historically where we would start to see price appreciation. Are you seeing that actually in those markets or is something different happening now versus historical?

Well, in some of them are actually where I mentioned – well one in Florida, one in Northern California where we were able in the newer communities to raise prices. You know, normally at a two-month supply, frankly as we saw in Sacramento you'd have really significant price increases. We're not seeing that, but we're definitely seeing price stability and the opportunity in small increments to start tweaking our prices. So it's a good first sign. It's early. You know, we are cognizant of the fact that you know, the tax credit is going to be expiring. So you know, we're certainly not popping the champagne corks just yet, but it's definitely a helpful factor right now.

Great. Thank you.

The next question comes from the line of Michael Rehaut of JP Morgan. Please proceed.

Hi guys. This is Reg [ph] for Mike. First question, now with the spring selling season is under way, separate in the box, I wonder if you could comment a little bit more on how the last four regions shaped up on regional basis, and talking about traffic in deposits, it looks like the last year had about 500 orders. I was wondering if February this year was about even with that or above that or below that.

I think, I'll start off and Ara may have some color he wants to add, but clearly we were adversely impacted by the winter storms that we saw in the Washington DC market and our New Jersey, New York Metro market, which are two of our larger markets. So I'm not sure that February results at the end of the day are going to be totally reflective of what's really going on in the market and beyond that what I would say is that we're not seeing, you know, we're pretty much seeing what we would expect to see this time of the year, and we're pretty much on track to our internal budget numbers, even slightly ahead of them, but we have not yet counted up the final tally for the month of February. So I can't give you great clarity on the very specific question you asked.

But on the whole putting weather aside, which certainly hasn't been great, and we're getting snow again today and tomorrow in both DC and New Jersey again, but on the whole it's pretty much been more of the same. It's you know, clearly has picked up from the slowdown we experienced at the end of last year. You know, January things firmed up, and it seems to be continuing in February.

Okay. Have you guys stepped up any of your promotions or incentives at all in the last couple of weeks?

No, we haven't.

Okay, and then just to follow up question on the gross margins. The commentary that you guys need pricing to increase to expand your gross margin, you know, based on what's currently in your backlog right now. You know, what do you kind of see your gross margins trending over the next couple of quarters, you know, they are you know, about 16% ex-charges this past quarter. I mean, can it be stabilized around that level or do you see that increasing over the next couple of quarters?

You know, we've not made any projections on gross margins, but if I was sitting in your chair and trying to do a financial model, you know, probably the only data that you can go by is what our recent trends are and I think that's a reasonable assumption for you to make just a kind of, just assume what's currently happening going forward. Our new communities that are going to have improved margins just aren't going to be a significant percentage of our overall deliveries for fiscal 2010. So you won't really begin to see the positive impact of that in any kind of material way until 2011 and beyond.

Okay, great. Thanks guys.

Our next question comes from the line of Carl Reichardt with Wells Fargo Securities. Please proceed.

Hi guys. How are you? I will start off, on slide 15, the example of newly acquired communities, do you have a pro forma sales base in there, and an actual sales base – is that pro forma sales base to the life of the community or just what you would have expected over the comparable period or is that – I am just curious which it is.

I think I can answer that. Typically, what we pro forma is a flat sales absorption for the first two years at each of the new communities and then a slight pickup in absorption after that gradually getting back to normalized levels, and normalized means less than what we saw in ‘04 and ‘05.

And one of those communities only have 41 home sites across. So that clearly is for the life of the communities. The other one had more. It might be beyond two years. I just can't recall off the top of my head, but if it has any increased absorptions out longer than two years out in the future, it's relatively modest.

Okay, thanks. And then the next question from me is about just what kind of volume you think you might need as you look at your margins and backlog, or expect that margins as your communities turnover. What kind of volume do you think you need to get to GAAP profit, which is called operating profitability in the core homebuilding business. I know it is a tough question to answer, but just maybe you can give us a sense of how to think about it?

Yes, I think we're going to pass on that one just not making projections. I mean, clearly it's more, but I just don't think I might be able to give you specifics. We're just not making those kinds of projections.

I know you're all trying to get us to make a projection from every angle imaginable, but we're pretty much rest assured, whatever angle you try, we like all the home builders are not comfortable doing that in this environment. Rest assured it is going to be not just a matter of volume, it's going to be gross margin as well and what the mix of new communities are, and we'll let all of you make those projections and as we get a little more stability in the market will get back to making projections as well.

Okay, thanks guys.

Good try though.

Our next question comes from the line of Daniel Oppenheim with Credit Suisse. Please proceed.

Thanks very much. Larry, just wondering if you can just let out some comments about the spec homes, earlier you had said that it is basically a temporary increase. Is that to say that basically the increase as of the end of January is at the highest level you expect the specs to go to or is there more still that is coming due in the second quarter?

You know, I wouldn't expect significantly more. It's possible that it might tweak up just a little bit, but what I'm really trying to say is that we modestly increased our spec levels in light of when the tax credit expires and we will tweak in fact down as we approach the expiration date of the tax credit.

Okay, and then secondly wondering about some of the impairments in the mothballed communities. It looks as though the number of lots that were mothballed in both the north-east and the West went up sequentially. Were those the communities where the impairments obviously we are very minimal impairments, and were they taken this quarter. If not how do you look at those communities, when you choose to mothball them?

I don't think the impairments had anything to do with the communities that got mothballed. I think we brought some out of mothball during the quarter, and we put some in to Mothball during the quarter. It's really a function of that each individual community, what's the amount of recovery we can get of our land investment if we have it opened.

The cash recovery is what we focus, not really the book profit recovery. That's our big driver.

Okay, thank you.

Our next question comes from the line of Nishu Sood with Deutsche Bank. Please proceed.

Hi, this is actually Rob [ph] for Nishu. And just regarding the unmothballing, how many lots were on unmothballed, and how many mothballed lots you currently have that are kind of on the bubble to be unmothballed soon?

We might not know that at the top of your heads. We might be able to get back to you and give you that but we don't have it at our fingertips. We did nearly four communities, right. You know, we can get the lots that were unmothballed, but we don’t have that handy. The other question, what's on the bubble –

No, we can’t say what is on the bubble, but I think there is four communities. I think we can give you the lot count here in a second, but we will come back on the call and say that before it's over, but let's go to the next question.

Okay, and then just in terms of the mothballed lots, how does it look in terms of how developed they are?

It's really a mix. Some are developed, but I'd say more of the mothballed lots are undeveloped. I will mention that we are bringing some of the undeveloped mothballed lots back into production right now. So, you know, we're certainly seeing enough, you know, isolated firming of the market to warrant that and I wouldn't be surprised as we get further into the year to see more of it, but we you know, look at it every quarter.

All right, thanks.

And the answer to your first question, we think we unmothballed 176 lots in four communities during the first quarter.

All right, great.

Our next question comes from the line of Jonathan Ellis with Merrill Lynch. Please proceed.

Thank you. My first question is related to pricing. It seems like the south-east and the west fared slightly better than other regions. Was that largely a function of mix, and sort of a related question is if you look at mix in your backlog, is that much different than the delivery profile this quarter?

You know, I'm not –

Do you want to look at Ara, the deliveries and the backlog are the last page of our release. So they can get back data right off of that last page. What our deliveries were by market area and where our backlog is my market area.

No, I understand that but I'm really interested in the profile of deliveries and the orders in terms of different product sites that may be impacting pricing.

Ask your question one more time and maybe we'll understand it better?

So the question is if you look at the types of deliveries in terms of single family, multi-family in this quarter and the types of products that is in your backlog, is that mix much different?

Yes, I don't think it's much different and it's really not necessarily product types that drove the improved margin mix of deliveries, it's community location regardless of whether it's you know, first-time buyer or luxury or is active adult or whatever might be performing better or worse than another one of the exact same product type. So I wouldn't necessarily leap to a conclusion that product type is driving the improvement and margins that we're seeing, I think it's more of where they are located rather than product type, and I think it's a safe assumption again from you trying to give you some insights on how to model. It's just assume that the delivery mix going forward is going to be similar to what we had in the first quarter as you try to model them.

Okay, that is helpful. My second question is I know in the bond issue from last year there was an indenture limited to how much debt you could pay them until you returned to profitability. Just in terms of understanding the mechanics, given the valuation reversal this quarter, does that count towards reaching profitability in order to allow you to pay down more debt, or is that excluded from the definition?

I think it probably counts, but it's not going to be enough to recover all the losses that we've had in recent quarters. So I don't think you should focus too much on that. I think you know, the real answer to what I think your question is I think the indentures are at $119 million in one of the baskets and $50 million in another of the baskets as of October 10th, I think is when we did that offering. So that's still the amount that's available less what we've spent since then.

Great. Thanks guys.

Our next question comes from the line of Joel Locker with FBN Securities. Please proceed.

Hi guys. Just, I wanted to ask about your interest expense. It is around 10.4% of sales for fiscal 2010, at least what I modeled in. I wondered if you have maybe a way to buy back more debt, and actually wanted to ask you if there was any more room or significant room once you got the tax refund back to buy significantly more debt?

I think I just answered that question. We, you know, when we did the last offering we probably disclosed that the total amount of cash we had available to buy back debt was $119 million in one basket, $50 million in another, and that's the total amount of cash we have available to buy back debt.

And is that after you bought the 69 million in the first quarter?

No. That was as of October 10, which was in the fourth quarter of last year. So, all the data that I have given you today was with respect to what we did subsequent to that first quarter of 2010, plus what we did in our second quarter of the month of February.

And the limitations are cash expenditures, not face amount. In general, just regarding our interest expense, I think in the first quarter, expense was about $45 million. We actually incurred only about $40 million, a little more than we are incurring right now.

I was just using the interest incurred and just running that out versus sales obviously it's going to come through interest expense or amortized interest sooner or later, but I was just wondering –

Obviously, when we can get to the point of increased community counts, which would hopefully lead to increased revenues, our interest – we don't plan to borrow anymore. So our interest incurred as a percentage of our revenues will be going down.

Right, so – and at what point would you do some kind of capital raise just to maybe you know, equity, obviously raise equity and raise tax?

You know, I mean clearly it is something we keep in the back of our mind. Right now we're very comfortable with our capital position and our cash flows. We think it will easily allow us to handle our maturities, which are fairly de minimis for the next five years, and still allow us to do good opportunistic land purchases, you know, and as the equity values come back a little bit, we'll think about supplementing our capital position with a little equity raise as well. We're not opposed to doing that. We're just not excited about doing it at today's levels, and don't feel the pressure to do it.

All right. Thanks a lot guys.

Our next question comes from the line of Tim Snerth [ph] with ICAP Equities. Please proceed.

Hi guys. Just a question on the four mothballed communities, where are they located?

Where are the mothballed communities located?

The four ones you are talking about opening up.

They're actually all in the Mid-Atlantic.

There are all on the mid-Atlantic segment. Yes.

Okay, and just another question on the new communities, how much cash is it going to require to I guess bring those up to selling level or is that kind of a new point, if you sell out another 10 communities?

I mean, when we do the modeling that we do, obviously we take that all into account and you know, our focus continues to be to make sure that after we add all these communities and after we add the cost actually to build the homes, and to the extent that we need to complete the land development, after all of that we need to make sure that we have adequate liquidity on hand to pay off any maturities that are coming forward between now and 2015. And as we look forward and do our modeling with the assumptions we are making in terms of adding new communities, you know, we have adequate liquidity to deal with it.

Okay. I guess you are just saying it is – can I make the assumption though if your community count stays flat, it is not going to require any cash as is, I guess I'm saying as you ramp up, is it going to require a lot of cash per community?

There is additional cash that's necessary in order to increase community count both from the perspective of having to buy the land, you know, put in the models for this. So there is an incremental amount of cash, every time you incrementally increase community count, I think the assumption is correct [ph].

Okay, great.

Our next question comes from the line of Dennis McGill for Zelman & Associates. Please proceed. Dennis McGill - Zelman & Associates: Hi guys. Thanks for all the info. Just wanted to try to get a couple of things you have talked about, and maybe ask a little more directly. When we think about the lots that you control, it is 28,000 or so. You will probably deliver some around 5,000 homes this year. You had very little impairment, so take it to mean to all the land you own is properly valued, but you are generating negative cash flow today. So in the press release when you said you must acquire additional land to grow the community count. I guess I'm trying to understand how you think about what you already own as a driver for communities so that you don't necessarily have to put as much cash into that growth and maybe protect the balance sheet and what you have described and many people agree it is still very uncertain as how it kind of continues from here.

Well, I mean one of the things that we need to do in order to return to profitability Dennis is get our SG&A cost back in line with historical norms and after cutting our staffing levels by 75 plus percent, and taking other measures to cut overheads as well, you know, we're not able to get back to normalized kind of SG&A expense as a percent of home building revenues ratios, and the only way we're going to get there is by adding community count. So to get to profitability, although, yes we properly analyzed all of our land that we own for potential of impairment just as we do each and every quarter. In this last quarter it was a very modest amount. When you do those impairments as you will recognize, you don't get back to normalized margins. So we've got to do two things. We've got to grow the community count, which will increase our margins in the future because those new community counts will be back at normalized last margins or we won’t be buying them and two, as we increase community count, we will get some operating efficiencies, being able to spread our overheads over a larger volume and driving down that cost as a percent of revenues. Dennis McGill - Zelman & Associates: So, I guess the way you think about it is that growth coming from new communities can be more profitable growth than opening up communities that are mothballed right now, and so would be a similar type of cash dynamic, so the way you think about it is similar cash flow with better profitability if you go after new projects?

Yes, I think that's right. Dennis McGill - Zelman & Associates: Okay, and then…

Keep in mind that as we are delivering some of our, you know, legacy land that's generating cash and that's you know, generating some of the cash that we'd invest in other properties that would yield not just ultimately cash, but higher book profits as well. Dennis McGill - Zelman & Associates: I think I agree but at the same time you are using cash on a net basis, and have been for the last couple of quarters before the taxes. So that is what prompted the question, but thanks guys.

Okay.

(Operator instructions) Our next question comes from the line of Alex Barron with Housing Research Center. Please proceed.

Hi, thanks guys. I was hoping to go back to that example where you showed those communities that you bought recently, where you were talking about the pro forma sales pace. Can you give us some idea of what kind of gross margins you are achieving on those projects, and just in your underwriting assumptions in general?

Yes, generally speaking the gross margins are in the low 20s typically on those particular asset, low to mid I guess in Florida and you know, in the low 20s work in Northern California. Part of it depends on – we are driven by the IRR. So the larger the land acquisition, typically you need to get a little higher gross margin to get the IRRs, but they're all you know, certainly north of 20 in those examples, you know, and that's bringing more of those is what will bring our average gross margin, which is 16% last quarter up.

Okay. It is helpful. My other question is it seems to me in some markets lot of builders are chasing land deals, and I'm just kind of curious if you guys think people are chasing them land deals, and bidding up the land prices to the point where some of these margins will no longer be sustainable. In other words, are people buying because you got to beat the other builder or are people buying because these things make economic sense these days?

Well, in general what we found frankly is the large widely marketed pools of assets, we found it very hard to pencil at the numbers that they ultimately went for and we didn't bid on those. However, you know, we're focusing in addition to trying to get those because it would be great to get a large slug of land at one time. We're also focused on what we're doing this under the radar assets. You know, they are the assets that the financial investors can't easily get. They can focus on the large parcels but it's hard for them to look at 50 lots in Northern California or 41 indeed. The example, we gave you for Fiddyment earlier today. Those are really focused on those small deals. You need a national infrastructure of local land acquisition and that's really what the homebuilders are looking at. Those make more economic sense today. By the way, the large land portfolios, if you got a very long-term horizon, I'm sure those make perfectly good sense. Our acquisitions are focused on land where we can make a good solid return today with no appreciation. So far we've been finding those deals, but there are just lots of singles and doubles. We're not finding the deals at the right price, you know, that are you know, triples and home runs.

Alex, I think another thing is the land market has always been very, very competitive for home builders, you know, in the best of times. You know, we didn't have an 80% hit rate. Maybe we had a 5% to 10% hit rate. So we had to kiss a lot of frogs to find the prince so to speak, and that's true today. Our hit rate today is probably in that 5% to 10% range still. So there is a lot of deals that we bid on that we're not the successful bidder for, and our discipline is that we will not assume price appreciation in the future to justify a higher price in order to win the bid. So we're staying true to our discipline and I, you know, imagine when you talk to our peers than they're saying similar things. So they maybe have different product that made their ability to bid a little bit more than us and be a winning bidder on one parcel versus the other or some other strategy, but we are going to stay true to our discipline of not assuming future improvements in the market price in order to increase bids. We're staying very true to you know, 25% plus kind of IRR hurdle rate based on today's price, today's place.

Okay. Thanks Ara, thanks Larry.

Yes.

Our last question comes from the line of Michael Smith [ph] with JMP Securities. Please proceed.

Hi guys. So, just real quick what I wanted to ask you about is you said earlier that assuming sort of price stabilization, and I take that is the main – you don't necessarily need to see prices go up to have this happen. You don't see a lot of impairments going forward, and I am wondering talking about eventually reaching profitabilities, does that mean that the way you guys look at it is essentially, you need to burn through, I won't say all, but you know most of your legacy land in order to get to profitability because the kinds of gross margins you are seeing now on the older stuff. If you are not going to impair it any more, I see – it seems difficult to get to a point where you could be profitable. Even in a mix of sort of some of that old land and some of the new land. So I'm just wondering, am I right in assuming that that you are going to have to get rid of most if not all of that legacy in order to get back to profitability?

That's definitely not right. We don't have to get rid of all of it, but right now we've got a very low percentage coming from new land parts as obviously we've only been buying new properties, you know, in the last 9 or 10 months, because we just haven’t been able to make numbers work. Land prices have finally come down enough where we can say we're buying it, but the deliveries right now coming from those new parcels as we just purchased them you know, are not a great percentage of our overall deliveries, but if we can just combine you know, a greater percentage deliveries coming from new parcels with our legacy assets and increase the overall volume at the same time that give us some efficiencies in our operations. We can absolutely achieve profitability without burning through all the legacy assets.

Do you want to venture a rough guess on what kind of mix percentagewise you need in order to get back to profitability as far as the new versus the legacy stuff?

We will let you play with that.

Okay. All right. Thanks guys.

Okay.

We have no further questions at this time. I will now turn the call back over to Ara Hovnanian for any closing remarks.

Great. Thank you very much. We will look forward to reporting continued progress on our goal and quest to return to profitability. Thanks. I look forward to talk again next quarter.

This concludes our conference call for today. Thank you all for participating and have a nice day. All parties may now disconnect.