##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 
 x
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number 0-7616
 AVATAR HOLDINGS INC.
 (Exact name of registrant as specified in its charter)
 Delaware(State or other Jurisdiction of Incorporation or Organization)
    
    
    
    23-1739078(I.R.S. Employer Identification No.)
 201 Alhambra Circle, Coral Gables, Florida(Address of Principal Executive Offices)
    
    33134(Zip Code)
 Registrants telephone number, including area code (305) 442-7000
 
  x o
   Large accelerated filer o
    
    Accelerated filer x
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  o x




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##### 



AVATAR HOLDINGS INC. AND SUBSIDIARIES
 INDEX
 PAGEPART I. Financial InformationItem 1. Financial Statements:Consolidated Balance Sheets 
March 31, 2008 (unaudited) and December 31, 2007
    
    
    3Consolidated Statements of Operations (Unaudited) 
Three months ended March 31, 2008 and 2007
    
    
    4Consolidated Statements of Cash Flows (Unaudited) 
Three months ended March 31, 2008 and 2007
    
    
    5Notes to Consolidated Financial Statements (Unaudited)
    
    
    6Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    
    18Item 3. Quantitative and Qualitative Disclosure About Market Risk
    
    
    30Item 4. Controls and Procedures
    
    
    30PART II. Other InformationItem 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    31Item 6. Exhibits
    
    
    34EX-10.3 Restricted Stock Unit AgreementEX-10.4 Restricted Stock Unit AgreementEX-10.5 Restricted Stock Unit AgreementEX-31.1 Section 302 Certification of CEOEX-31.2 Section 302 Certification of CFOEX-32.1 Section 906 Certification of CEOEX-32.2 Section 906 Certification of CFO
  
 2




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##### Table of Contents



PART I   FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 
 AVATAR HOLDINGS INC. AND SUBSIDIARIES
 (Unaudited)March 31,
    
    
    December 31,2008
    
    
    2007AssetsCash and cash equivalents
    
    $
    158,887
    
    
    $
    192,258Restricted cash
    
    
    3,681
    
    
    
    3,161Receivables, net
    
    
    10,069
    
    
    
    7,269Land and other inventories
    
    
    392,694
    
    
    
    389,457Property and equipment, net
    
    
    56,376
    
    
    
    56,502Parkway under development
    
    
    43,003
    
    
    
    31,793Investment in unconsolidated joint ventures
    
    
    8,034
    
    
    
    8,002Prepaid expenses and other assets
    
    
    17,334
    
    
    
    18,099Total Assets
    
    $
    690,078
    
    
    $
    706,541Liabilities and Stockholders EquityLiabilitiesAccounts payable
    
    $
    2,019
    
    
    $
    3,882Accrued and other liabilities
    
    
    11,933
    
    
    
    12,041Customer deposits and deferred revenues
    
    
    5,992
    
    
    
    4,916Deferred income taxes
    
    
    6,395
    
    
    
    6,546Estimated development liability for sold land
    
    
    20,683
    
    
    
    20,687Notes, mortgage notes and other debt:Corporate
    
    
    114,800
    
    
    
    114,800Real estate
    
    
    201
    
    
    
    15,966Total Liabilities
    
    
    162,023
    
    
    
    178,838Commitments and ContingenciesStockholders EquityCommon Stock, par value $1 per shareAuthorized: 50,000,000 sharesIssued: 11,090,004 shares at March 31, 2008
        11,076,644 shares at December 31, 2007
    
    
    11,090
    
    
    
    11,077Additional paid-in capital
    
    
    228,486
    
    
    
    227,591Retained earnings
    
    
    364,468
    
    
    
    365,024604,044
    
    
    
    603,692Treasury stock: at cost, 2,551,232 shares at March 31, 2008
           
         at cost, 2,551,232 shares at December 31, 2007
    
    
    (75,989
    )
    
    
    (75,989
    )Total Stockholders Equity
    
    
    528,055
    
    
    
    527,703Total Liabilities and Stockholders Equity
    
    $
    690,078
    
    
    $
    706,541
  3




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##### Table of Contents



AVATAR HOLDINGS INC. AND SUBSIDIARIES
 Three Months2008
    
    
    2007RevenuesReal estate revenues
    
    $
    29,395
    
    
    $
    90,093Interest income
    
    
    1,014
    
    
    
    2,216Other
    
    
    123
    
    
    
    136Total revenues
    
    
    30,532
    
    
    
    92,445ExpensesReal estate expenses
    
    
    25,870
    
    
    
    69,251General and administrative expenses
    
    
    5,137
    
    
    
    6,059Interest expense
    
    
    357
    
    
    
    Total expenses
    
    
    31,364
    
    
    
    75,310Equity in earnings (loss) from unconsolidated joint ventures
    
    
    (49
    )
    
    
    43Income (loss) before income taxes
    
    
    (881
    )
    
    
    17,178Income tax benefit (expense)
    
    
    325
    
    
    
    (6,070
    )Net income (loss)
    
    
    ($556
    )
    
    $
    11,108Basic Earnings (Loss) Per Share
    
    
    ($0.07
    )
    
    $
    1.35Diluted Earnings (Loss) Per Share
    
    
    ($0.07
    )
    
    $
    1.08
  4




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##### Table of Contents



AVATAR HOLDINGS INC. AND SUBSIDIARIES
 2008
    
    
    2007OPERATING ACTIVITIESNet income (loss)
    
    
    ($556
    )
    
    $
    11,108Adjustments to reconcile net income (loss) to
net cash used in operating activities:Depreciation and amortization
    
    
    992
    
    
    
    896Amortization of stock-based compensation
    
    
    690
    
    
    
    1,249Impairment of land and other inventories
    
    
    
    
    
    
    2,000Distributions (return) of earnings from an unconsolidated joint venture
    
    
    (67
    )
    
    
    Equity in earnings from unconsolidated joint ventures
    
    
    49
    
    
    
    (43
    )Deferred income taxes
    
    
    (131
    )
    
    
    413Excess income tax benefit from exercise of stock options and restricted stock units
    
    
    (20
    )
    
    
    (1,357
    )Changes in operating assets and liabilities:Restricted cash
    
    
    (520
    )
    
    
    175Receivables, net
    
    
    (2,800
    )
    
    
    7,897Land and other inventories
    
    
    (3,639
    )
    
    
    (3,091
    )Prepaid expenses and other assets
    
    
    765
    
    
    
    571Accounts payable and accrued and other liabilities
    
    
    (1,622
    )
    
    
    (24,618
    )Customer deposits and deferred revenues
    
    
    1,076
    
    
    
    (4,383
    )NET CASH USED IN OPERATING ACTIVITIES
    
    
    (5,783
    )
    
    
    (9,183
    )INVESTING ACTIVITIESInvestment in property and equipment
    
    
    (817
    )
    
    
    (867
    )Investment in Parkway under development
    
    
    (11,210
    )
    
    
    (4,539
    )Investment in unconsolidated joint ventures
    
    
    (14
    )
    
    
    (36
    )NET CASH USED IN INVESTING ACTIVITIES
    
    
    (12,041
    )
    
    
    (5,442
    )FINANCING ACTIVITIESPrincipal payments of real estate borrowings
    
    
    (15,765
    )
    
    
    (261
    )Proceeds from exercise of stock options
    
    
    250
    
    
    
    888Excess income tax benefit from exercise of stock options and restricted stock units
    
    
    20
    
    
    
    1,357Payment of withholding taxes related to restricted stock units withheld
    
    
    (52
    )
    
    
    (374
    )NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES
    
    
    (15,547
    )
    
    
    1,610DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (33,371
    )
    
    
    (13,015
    )Cash and cash equivalents at beginning of period
    
    
    192,258
    
    
    
    203,760CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    158,887
    
    
    $
    190,745
  5




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AVATAR HOLDINGS INC. AND SUBSIDIARIES  Notes to Consolidated Financial Statements (Unaudited)  March 31, 2008
(Dollars in thousands except share and per share data)
 Basis of Financial Statement Presentation and Summary of Significant Accounting Policies
     Reclassifications
  Land and Other Inventories
  6




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Notes to Consolidated Financial Statements (dollars in thousands except share and per share
data) (Unaudited)  continued
 Land and Other Inventories  continued
 Accounting for
the Impairment or Disposal of Long-Lived Assets ,
  Housing communities:
 Disclosure about Segments of an Enterprise and
Related Information.
 Land held for future development or sale:
 7




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Notes to Consolidated Financial Statements (dollars in thousands except share and per share
data) (Unaudited)  continued
 Land and Other Inventories  continued
   March 31,2008
    
    
    December 31,(Unaudited)
    
    
    2007Land developed and in process of development
    
    $
    227,804
    
    
    $
    229,526Land held for future development or sale
    
    
    95,547
    
    
    
    95,554Homes completed or under construction
    
    
    68,654
    
    
    
    63,755Other
    
    
    689
    
    
    
    622$
    392,694
    
    
    $
    389,457
    Property and Equipment and Parkway Under Development
   8




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Notes to Consolidated Financial Statements (dollars in thousands except share and per share
data) (Unaudited)  continued
 Property and Equipment and Parkway Under Development  continued
     Notes, Mortgage Notes and Other Debt
  9




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Notes to Consolidated Financial Statements (dollars in thousands except share and per share
data) (Unaudited)  continued
 Notes, Mortgage Notes and Other Debt  continued
     
    
    a reduction in the amount of the facility from $125,000 to $100,000 (the facility is
expandable up to $150,000, subject to certain conditions and lender approval);
    
    an approval for us to obtain financing for the Parkway of up to $140,000, subject to
certain conditions;
    
    modifications to certain covenants including: (i) reducing the minimum adjusted
EBITDA/Debt Service ratio (as defined) from 2.75 to 2.0, and providing for an alternative
requirement of maintaining a maximum leverage ratio and minimum liquidity level if the
minimum adjusted EBITDA/Debt Service ratio cannot be maintained; (ii) reducing the
Leverage Ratio (as defined) from 2.0 to 1.75, and allowing us to net unrestricted cash in
excess of $35,000 against outstanding debt in determining total liabilities; and (iii)
amending our covenant regarding speculative homes and models whereby if we maintain a
Leverage Ratio (as defined) below 1.0, we have no financial covenant as to the number of
speculative homes and models we can maintain; however, if our Leverage Ratio exceeds 1.0,
the number of
 10




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Notes to Consolidated Financial Statements (dollars in thousands except share and per
share data) (Unaudited)  continued
 Notes, Mortgage Notes and Other Debt  continued
 
    
    speculative homes and models cannot exceed 35% of unit closings for the trailing
twelve month period; and
    
    an increased pricing of the facility as follows: (i) the LIBOR Margin is increased
from a range of 1.75% to 2.25% to a range of 2.0% to 2.75%, and depending on our
EBITDA/Debt Service ratio, our rate on outstanding borrowings could be increased up to
an additional 50 basis points; (ii) our fee for outstanding letters of credit increased
from 1% to 50 basis points below our LIBOR Margin; and (iii) our unused fee changed from 25 basis points to a range of 25 basis points to 50 basis points, depending on our usage.
 Debtors Accounting for Changes in Line-of-Credit or
Revolving-Debt Arrangements,
     11




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Notes to Consolidated Financial Statements (dollars in thousands except share and per share
data) (Unaudited)  continued
 Warranty Costs
   Three Months2008
    
    
    2007Accrued warranty reserve, beginning of period
    
    $
    1,134
    
    
    $
    2,319Estimated warranty expense
    
    
    169
    
    
    
    564Amounts charged against warranty reserve
    
    
    (546
    )
    
    
    (1,077
    )Accrued warranty reserve, end of period
    
    $
    757
    
    
    $
    1,806
 Earnings (Loss) Per Share
 Earnings Per Share.
   Three Months2008
    
    
    2007Numerator:Basic earnings (loss) per share  net income (loss)
    
    
    ($556
    )
    
    $
    11,108Interest on 4.50% Notes, net of tax
    
    
    
    
    
    
    816Diluted earnings (loss) per share  net income
(loss)
    
    
    ($556
    )
    
    $
    11,924Denominator:Basic weighted average shares outstanding
    
    
    8,540,195
    
    
    
    8,209,509Effect of dilutive restricted stock units
    
    
    
    
    
    
    473,899Effect of dilutive employee stock options
    
    
    
    
    
    
    47,765Effect of dilutive 4.50% Notes
    
    
    
    
    
    
    2,279,815Diluted weighted average shares outstanding
    
    
    8,540,195
    
    
    
    11,010,988
 12




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Notes to Consolidated Financial Statements (dollars in thousands except share and per share
data) (Unaudited)  continued
 Repurchase and Exchange of Common Stock
  Comprehensive Income
  Share-Based Payments and Other Executive Compensation
      13




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Notes to Consolidated Financial Statements (dollars in thousands except share and per share
data) (Unaudited)  continued
 Income Taxes
   Investments in Unconsolidated Joint Ventures
 Consolidation of Variable Interest Entities),
    14




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Notes to Consolidated Financial Statements (dollars in thousands except share and per share
data) (Unaudited)  continued
 Recently Issued Accounting Pronouncements
 Fair Value Measurements Effective Date of FASB Statement No. 157,
 The Fair Value Option for Financial Assets
and Financial Liabilities
 Applicability of
the Assessment of a Buyers Continuing Investment under FASB Statement No. 66. Accounting for
Sales of Real Estate, for Sales of Condominiums
 Business Combinations Business Combinations
 Noncontrolling Interests in Consolidated
Financial Statements  an amendment of ARB No. 51
 15




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Notes to Consolidated Financial Statements (dollars in thousands except share and per share
data) (Unaudited)  continued
 Recently Issued Accounting Pronouncements  continued
 Disclosures About Derivative Instruments and
Hedging Activities  an amendment of FASB Statement No. 133 Accounting for Derivative Instruments and Hedging
Activities
 Estimated Development Liability for Sold Land
  March 31,
    
    
    December 31,2008
    
    
    2007(Unaudited)Gross estimated unexpended costs
    
    $
    26,730
    
    
    $
    26,737Less costs relating to unsold homesites
    
    
    (6,047
    )
    
    
    (6,050
    )Estimated development liability for sold land
    
    $
    20,683
    
    
    $
    20,687
  Commitments and Contingencies
   16




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Notes to Consolidated Financial Statements (dollars in thousands except share and per share
data) (Unaudited)  continued
 Financial Information Relating To Reportable Segments
  Three Months2008
    
    
    2007Revenues:Segment revenuesPrimary residential
    
    $
    9,805
    
    
    $
    52,322Active adult communities
    
    
    11,625
    
    
    
    31,310Commercial and industrial and other land sales
    
    
    7,428
    
    
    
    5,560Other operations
    
    
    562
    
    
    
    98829,420
    
    
    
    90,180Unallocated revenuesInterest income
    
    
    1,014
    
    
    
    2,216Other
    
    
    98
    
    
    
    49Total revenues
    
    $
    30,532
    
    
    $
    92,445Operating income (loss):Segment operating income (loss)Primary residential
    
    
    ($2,108
    )
    
    $
    11,164Active adult communities
    
    
    163
    
    
    
    6,929Commercial and industrial and other land sales
    
    
    7,070
    
    
    
    4,758Other operations
    
    
    85
    
    
    
    1875,210
    
    
    
    23,038Unallocated income (expenses)Equity in earnings (loss) from unconsolidated joint ventures
    
    
    (49
    )
    
    
    43Interest income
    
    
    1,014
    
    
    
    2,216General and administrative expenses
    
    
    (5,137
    )
    
    
    (6,059
    )Interest expense
    
    
    (357
    )
    
    
    Other real estate expenses
    
    
    (1,562
    )
    
    
    (2,060
    )Income (loss) before income taxes
    
    
    ($881
    )
    
    $
    17,178
 17




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
(dollars in thousands except share and per share data)
    EXECUTIVE SUMMARY
   18




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
(dollars in thousands except share and per share data) continued
 EXECUTIVE SUMMARY
     19




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
(dollars in thousands except share and per share data) continued
 RESULTS OF OPERATIONS
  Three Months2008
    
    
    2007Operating income (loss):Primary residentialRevenues
    
    $
    9,805
    
    
    $
    52,322Expenses
    
    
    11,913
    
    
    
    41,158Segment operating income (loss)
    
    
    (2,108
    )
    
    
    11,164Active adult communitiesRevenues
    
    
    11,625
    
    
    
    31,310Expenses
    
    
    11,462
    
    
    
    24,381Segment operating income
    
    
    163
    
    
    
    6,929Commercial and industrial and other land salesRevenues
    
    
    7,428
    
    
    
    5,560Expenses
    
    
    358
    
    
    
    802Segment operating income
    
    
    7,070
    
    
    
    4,758Other operationsRevenues
    
    
    562
    
    
    
    988Expenses
    
    
    477
    
    
    
    801Segment operating income
    
    
    85
    
    
    
    187Operating income
    
    
    5,210
    
    
    
    23,038Unallocated income (expenses):Equity in earnings (loss) from
unconsolidated joint ventures
    
    
    (49
    )
    
    
    43Interest income
    
    
    1,014
    
    
    
    2,216General and administrative expenses
    
    
    (5,137
    )
    
    
    (6,059
    )Interest expense
    
    
    (357
    )
    
    
    Other real estate expenses
    
    
    (1,562
    )
    
    
    (2,060
    )Income (loss) before income taxes
    
    
    (881
    )
    
    
    17,178Income tax benefit (expense)
    
    
    325
    
    
    
    (6,070
    )Net income (loss)
    
    
    ($556
    )
    
    $
    11,108
 20




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
(dollars in thousands except share and per share data) continued
 RESULTS OF OPERATIONS 
  Number of
    
    
    
    
    
    
    Average PriceUnits
    
    
    Revenues
    
    
    Per UnitFor the three months ended
March 31,2008Primary residential
    
    
    36
    
    
    $
    9,309
    
    
    $
    259Active adult communities
    
    
    29
    
    
    
    8,168
    
    
    $
    282Total
    
    
    65
    
    
    $
    17,477
    
    
    $
    2692007Primary residential
    
    
    154
    
    
    $
    51,350
    
    
    $
    333Active adult communities
    
    
    76
    
    
    
    28,252
    
    
    $
    372Total
    
    
    230
    
    
    $
    79,602
    
    
    $
    346
  Gross Number
    
    
    
    
    
    
    Contracts
    
    
    
    
    
    
    Averageof Contracts
    
    
    
    
    
    
    Signed, Net of
    
    
    
    
    
    
    Price PerSigned
    
    
    Cancellations
    
    
    Cancellations
    
    
    Dollar Value
    
    
    UnitFor the three months ended
March 31,2008Primary residential
    
    
    57
    
    
    
    21
    
    
    
    36
    
    
    $
    9,136
    
    
    $
    254Active adult communities
    
    
    36
    
    
    
    19
    
    
    
    17
    
    
    
    3,137
    
    
    $
    185Total
    
    
    93
    
    
    
    40
    
    
    
    53
    
    
    $
    12,273
    
    
    $
    2322007Primary residential
    
    
    139
    
    
    
    48
    
    
    
    91
    
    
    $
    22,161
    
    
    $
    244Active adult communities
    
    
    66
    
    
    
    15
    
    
    
    51
    
    
    
    15,930
    
    
    $
    312Total
    
    
    205
    
    
    
    63
    
    
    
    142
    
    
    $
    38,091
    
    
    $
    268
 21




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations (dollars in thousands except share and per share data) continued
 RESULTS OF OPERATIONS 
  Number of
    
    
    Dollar
    
    
    Average PriceUnits
    
    
    Volume
    
    
    Per UnitAs of March 31,2008Primary residential
    
    
    72
    
    
    $
    20,888
    
    
    $
    290Active adult communities
    
    
    63
    
    
    
    19,038
    
    
    $
    302Total
    
    
    135
    
    
    $
    39,926
    
    
    $
    2962007Primary residential
    
    
    269
    
    
    $
    86,410
    
    
    $
    321Active adult communities
    
    
    192
    
    
    
    61,371
    
    
    $
    320Total
    
    
    461
    
    
    $
    147,781
    
    
    $
    321
    22




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations (dollars in thousands except share and per share data) continued
 RESULTS OF OPERATIONS
       23




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
(dollars in thousands except share and per share data) continued
 RESULTS OF OPERATIONS
     LIQUIDITY AND CAPITAL RESOURCES
    24




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
(dollars in thousands except share and per share data) continued
 LIQUIDITY AND CAPITAL RESOURCES  continued
      25




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
(dollars in thousands except share and per share data) continued
 LIQUIDITY AND CAPITAL RESOURCES  continued
     
    
    a reduction in the amount of the facility from $125,000 to $100,000 (the facility is
expandable up to $150,000, subject to certain conditions and lender approval);
    
    an approval for us to obtain financing for the Parkway of up to $140,000, subject to
certain conditions;
    
    modifications to certain covenants including: (i) reducing the minimum adjusted
EBITDA/Debt Service ratio (as defined) from 2.75 to 2.0, and providing for an
alternative requirement of maintaining a maximum leverage ratio and minimum liquidity
level if the minimum adjusted EBITDA/Debt Service ratio cannot be maintained; (ii)
reducing the Leverage Ratio (as defined) from 2.0 to 1.75, and allowing us to net
unrestricted cash in excess of $35,000 against outstanding debt in determining total
liabilities; and (iii) amending our covenant regarding speculative homes and models
whereby if we maintain a Leverage Ratio (as defined) below 1.0, we have no financial
covenant as to the number of speculative homes and models we can maintain; however, if
our Leverage Ratio exceeds 1.0, the number of speculative homes and models cannot exceed
35% of unit closings for the trailing twelve month period; and
    
    an increased pricing of the facility as follows: (i) the LIBOR Margin is increased
from a range of 1.75% to 2.25% to a range of 2.0% to 2.75%, and depending on our
EBITDA/Debt Service ratio, our rate on outstanding borrowings could be increased up to
an additional 50 basis points; (ii) our fee for outstanding letters of credit increased
from 1% to 50 basis points below our LIBOR Margin; and (iii) our unused fee changed from 25 basis points to a range of 25 basis points to 50 basis points, depending on our usage.
 Debtors Accounting for Changes in Line-of-Credit or
Revolving-Debt Arrangements,
 26




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
(dollars in thousands except share and per share data) continued
 LIQUIDITY AND CAPITAL RESOURCES  continued
        27




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
(dollars in thousands except share and per share data) continued
 LIQUIDITY AND CAPITAL RESOURCES  continued
   CRITICAL ACCOUNTING POLICIES AND ESTIMATES
  RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
 Fair Value Measurements Effective Date of FASB Statement No. 157,
 The Fair Value Option for Financial Assets
and Financial Liabilities
 28




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
(dollars in thousands except share and per share data) continued
 RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS  continued
  Applicability of
the Assessment of a Buyers Continuing Investment under FASB Statement No. 66. Accounting for
Sales of Real Estate, for Sales of Condominiums
 Business Combinations Business Combinations
 Noncontrolling Interests in Consolidated
Financial Statements  an amendment of ARB No. 51
 Disclosures About Derivative Instruments and
Hedging Activities  an amendment of FASB Statement No. 133 Accounting for Derivative Instruments and Hedging
Activities
 29




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosure About Market Risk
  
 Item 4. Controls and Procedures
   30




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds (dollars in thousands except share and per share data)
 Repurchases of Equity Securities
  Total Numberof Shares
    
    
    MaximumPurchased as
    
    
    Amount ThatPart of a
    
    
    May Yet BeTotal
    
    
    Average
    
    
    Publicly
    
    
    PurchasedNumber
    
    
    Price
    
    
    Announced
    
    
    Under theof Shares
    
    
    Paid Per
    
    
    Plan or
    
    
    Plan orPeriod
    
    Purchased
    
    
    Share
    
    
    Program (1)
    
    
    Program (1)January 1, 2008 to January 31, 2008
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    9,864February 1, 2008 to February 29, 2008
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    9,864March 1, 2008 to March 31, 2008
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    9,864Total
    
    
    
    
    
    $
    
    
    
    
    
 
 (1)
    
    On March 20, 2003, Avatars Board of Directors authorized the expenditure of up to $30,000 to
purchase, from time to time, shares of its common stock and/or 7% Convertible Subordinated
Notes due April 2005 (the 7% Notes), which were subsequently called for redemption, in the
open market, through privately negotiated transactions or otherwise, depending on market and
business conditions and other factors. On June 29, 2005, Avatars Board of Directors amended
the March 20, 2003 repurchase authorization to include the 4.50% Notes in addition to shares
of its common stock. During the three months ended March 31, 2008, Avatar did not repurchase
shares of its common stock and/or the 4.50% Notes. As of March 31, 2008, the remaining
authorization for purchase of shares of Avatars common stock and/or 4.50% Notes was $9,864. 31




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##### Table of Contents



Item 6. Exhibits
 10.1
    
    Amended and Restated Credit Agreement, dated March 27, 2008, by and
among Avatar Holdings Inc. (as Guarantor), Avatar Properties Inc. (as
Borrower), Wachovia Bank, National Association (as Administrative
Agent and Lender), and certain financial institutions as lenders
(filed as Exhibit 10.1 to Form 8-K dated April 2, 2008 (File No.
0-7616), and incorporated herein by reference).10.2
    
    Second Restated Guaranty Agreement, dated as of March 27, 2008,
executed on behalf of Avatar Holdings Inc. (Guarantor) in favor of
the lending institution(s) identified therein and Wachovia Bank,
National Association (filed as Exhibit 10.2 to Form 8-K dated April
2, 2008 (File No. 0-7616), and incorporated herein by reference).10.3
    
    Restricted Stock unit Agreement (2,500 units @ $80.86), dated June
26, 2007, between Avatar Holdings Inc. and Randy Kotler (File No.
0-7616)) (filed herewith).10.4
    
    Restricted Stock unit Agreement (2,500 units @ $84.71), dated June
26, 2007, between Avatar Holdings Inc. and Randy Kotler (File No.
0-7616)) (filed herewith).10.5
    
    Restricted Stock unit Agreement (2,500 units @ $88.56), dated June
26, 2007, between Avatar Holdings Inc. and Randy Kotler (File No.
0-7616)) (filed herewith).31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 (filed herewith).31.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 (filed herewith).32.1
    
    Certification of Chief Executive Officer required by 18 U.S.C.
Section 1350 (as adopted by Section 906 of the Sarbanes-Oxley Act of
2002) (furnished herewith).32.2
    
    Certification of Chief Financial Officer required by 18 U.S.C.
Section 1350 (as adopted by Section 906 of the Sarbanes-Oxley Act of
2002) (furnished herewith).
 32




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##### Table of Contents



SIGNATURES
  AVATAR HOLDINGS INC.Date: May 8, 2008
    By:
    /s/ Randy L. KotlerRandy L. KotlerExecutive Vice President, Chief
Financial Officer and Treasurer Date: May 8, 2008
    By:
    /s/ Michael P. RamaMichael P. RamaController and Chief Accounting Officer 33




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##### Table of Contents



Exhibit Index
 10.1
    
    Amended and Restated Credit Agreement, dated March 27, 2008, by and
among Avatar Holdings Inc. (as Guarantor), Avatar Properties Inc. (as
Borrower), Wachovia Bank, National Association (as Administrative
Agent and Lender), and certain financial institutions as lenders
(filed as Exhibit 10.1 to Form 8-K dated April 2, 2008 (File No.
0-7616), and incorporated herein by reference).10.2
    
    Second Restated Guaranty Agreement, dated as of March 27, 2008,
executed on behalf of Avatar Holdings Inc. (Guarantor) in favor of
the lending institution(s) identified therein and Wachovia Bank,
National Association (filed as Exhibit 10.2 to Form 8-K dated April
2, 2008 (File No. 0-7616), and incorporated herein by reference).10.3
    
    Restricted Stock unit Agreement (2,500 units @ $80.86), dated June
26, 2007, between Avatar Holdings Inc. and Randy Kotler (File No.
0-7616)) (filed herewith).10.4
    
    Restricted Stock unit Agreement (2,500 units @ $84.71), dated June
26, 2007, between Avatar Holdings Inc. and Randy Kotler (File No.
0-7616)) (filed herewith).10.5
    
    Restricted Stock unit Agreement (2,500 units @ $88.56), dated June
26, 2007, between Avatar Holdings Inc. and Randy Kotler (File No.
0-7616)) (filed herewith).31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 (filed herewith).31.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 (filed herewith).32.1
    
    Certification of Chief Executive Officer required by 18 U.S.C.
Section 1350 (as adopted by Section 906 of the Sarbanes-Oxley Act of
2002) (furnished herewith).32.2
    
    Certification of Chief Financial Officer required by 18 U.S.C.
Section 1350 (as adopted by Section 906 of the Sarbanes-Oxley Act of
2002) (furnished herewith).
 34