2 0 0 0 A N N U A L R E P O R T
w w w . l e n n a r . c o m
We strive for perfection.
Good is simply not good enough.
We work harder and smarter.
Because We Care…
…We Can Be Even Better!
We’re building America’s best homebuilder,
one home at a time.
(cid:2)
T A B L E O F C O N T E N T S
Caring About Our Company
Caring About Our Shareholders
Caring About Our Customers
Caring About Our Associates
Caring About Our Community
Financial Information
4
12
18
26
32
35
(cid:2)… E v e n B e t t e r
“I Care” to be the best,
“I Care” that I have tried.
“I Care” to look at all we do,
And look at it with pride.
“I Care” is about integrity,
Our character, our way.
It is whether we deliver,
On everything we say.
(cid:2)C a r i n g To B e E v e n B e t t e r
Lennar Corporation began in 1954 as a small, local homebuilder in Miami, Florida. Since then, Lennar has grown from
an initial $10,000 investment to become a $5 billion national homebuilding enterprise. The Company’s initial goal was
to build a better home that customers would cherish for a lifetime. More than forty-six years later, the founding principles
have not changed. The Lennar Family of Builders continues to make building a better home the cornerstone of building
a better Company… because “We Care”.
Today Lennar builds homes for first-time buyers, move-up buyers and active adults. Our unique dual marketing strategies
of “Everything’s IncludedSM” and “Design StudioSM” provide customers with flexibility as to how they would like to
purchase their new home. The Company’s commitment to quality is seen in a “Zero Defect” approach to building and
delivering each home.
Lennar offers additional services to customers through our Financial Services Division. The Company achieves additional
income while making the home buying process simpler for our customers, by providing everything from title, mortgage
and closing services to high speed Internet access, cable television and alarm system installation and monitoring.
But for Lennar, doing a better job for our customer is just the beginning. We’re creating a great place to work for our
associates while reaching out with local community involvement. We’re building a better business that our shareholders
can be very proud to support.
Caring About Our Company…
The Company has grown both internally and through strategic acquisitions of other companies where a strategic fit creates
a better company. Lennar is a leading builder in the nation’s top homebuilding markets including Florida, Texas,
California, Arizona, Colorado, Nevada, Maryland, Virginia, New Jersey and Minnesota.
Caring About Our Customers…
We’ve helped more than 475,000 families turn their dreams of home ownership into reality. From young couples taking
their first big step toward the American dream, to seasoned homebuyers moving up to a larger home, to retirees looking
for a new lifestyle as well as a new home. Quality, value and integrity are built into every Lennar home.
Caring About Our Associates…
With a growing team of more than 7,000 associates, Lennar has one of the largest and most experienced talent pools
in the industry. Our unique culture and commitments to training, support, entrepreneurial spirit and teamwork
creates an exceptionally productive and fun work environment.
Caring About Our Shareholders…
When we care for our Company, our customers and our associates, we know our shareholders receive the best results.
We’ve built a strong reputation on Wall Street with our excellent track record, superior balance sheet, high returns on
capital and equity and our unique ability to identify and capitalize on market inefficiencies.
2
F I N A N C I A L H I G H L I G H T S
NEW HOME DELIVERIES
18,578
12,606
TOTAL REVENUES
($ IN BILLIONS)
$4.7
$3.1
10,777
8,943
$2.4
$1.7
‘97
(pro forma)
‘98
‘99
‘00
‘97
(pro forma)
‘98
‘99
‘00
NET EARNINGS
($ IN MILLIONS)
$229
$173
EBITDA
($ IN MILLIONS)
$519
$373
$144
$77
$313
$170
‘97
(pro forma)
‘98
‘99
‘00
‘97
(pro forma)
‘98
‘99
‘00
SHAREHOLDERS’ EQUITY
($ IN MILLIONS)
EARNINGS PER SHARE
(DILUTED)
$1,229
$881
$3.64
$2.74
$716
$439
$2.49
$1.44
‘97
‘98
‘99
‘00
‘97
(pro forma)
‘98
‘99
‘00
Caring About Our Company
(cid:2)
“I Care” is more than words,
It’s more than attitude,
It filters through our Company,
It’s everything we do.
Dear Shareholders,
What an incredible year! We grew by leaps and bounds in 2000, but also by commitment and caring. We
focused on results and we achieved them. Our success is a tribute to the thousands of associates, old and
new, who make up the Lennar Family. A passion for excellence and a fun, positive atmosphere, loaded with
a unique corporate culture, create an environment where associates working together turn the Company
credo “I Care” into a warm embraced “We Care”. Together we strive to be the best in everything we do.
We accelerated our Company’s growth with the strategic acquisition of U.S. Home, which has turned out
to be a great combination in every way. These two companies were meant to be together. In addition to
being an outstanding financial transaction, the companies have fit together both operationally and
culturally. Associates throughout the Company have joined forces to enable Lennar to benefit from the best
practices of two outstanding programs.
With the integration now complete, Lennar is now more geographically diversified, has a broader product
offering and has two very strong and dynamic marketing strategies in “Everything’s IncludedSM” and
“Design StudioSM”. Additionally, we have enhanced Lennar’s exciting culture with the long-standing and
well-regarded U.S. Home Leadership Development and Training program.
While growing our business we remained focused on financial results. We grew revenues and bottom line
earnings to record levels, while maintaining one of the best balance sheets in the business. We also
continued to grow a more diversified earnings stream as our Financial Services Division added bottom line
growth by providing mortgage, title and closing services to our expanded customer base.
We achieve superior results on a consistent basis…
We achieve superior results on a consistent basis…
Our solid financial performance in 2000 was a testament to the successful execution of a business plan that
remains simple and results-oriented. Successful execution flows directly from a culture of caring about
everything we do. Our 2000 results exceeded even our own expectations:
• total revenues grew 51% to $4.7 billion,
• net earnings increased 33% to $229 million,
• shareholders’ equity increased 39% to $1.2 billion,
• earnings per share grew to $3.64, a 33% increase,
• leveraging our strong financial position to complete the largest acquisition
in the history of the homebuilding industry with the purchase of U.S. Home and
• drove net debt to total capital down to 44% by year end.
5
Our 2000 results do not stand alone. In fact, we have a long history of building
shareholder value. Each year’s success raises the bar for the next year’s even better
performance. We are always striving to be even better. The Lennar process of the way
we manage, the way we grow and the way we achieve results enables us to achieve
uncommon results on a regular basis.
…because we care about managing…
…because we care about managing…
The Lennar managing process starts and ends with people. At
Lennar we have worked very hard over many years to
create a culture that drives everyone to be the best they
can be, while having fun along the way. Lennar is simply
a great place to work. We are quite certain that we have
more laughs, giggles and smiles per hour worked than
anyone in the business. We all wear name badges, we recite the
Focused
Management
“We are bottom-line focused. We don’t confuse
Company poem and we encourage everyone to be a leader. There is a sense of
camaraderie that fills the halls of Lennar that acts as a company support system.
That support system keeps everyone working together, striving for the same high
goals and standards.
We are a Company that loves to learn. Whether through acquisitions or through
studying our peers and markets, we test and incorporate best practices that promote
success. We focus on technology, but have not been distracted by it. We adapt to
change, but never take our eye off the ball.
Simple and consistent corporate controls, goals and bonus programs direct the focus of
our associates. A comprehensive planning, budgeting and review cycle provides
discipline to operations. A clearly defined process followed with discipline reinforces
our Company’s intense focus on return on net assets.
6
Management is the machine that drives our success. We manage our business by
promoting success and longevity. Our Company’s culture promotes working hard
while enjoying what you’re doing, individuality as part of a team, and entrepreneurial
spirit bridled by tight corporate control. Our Company is focused.
…because we care about growing…
…because we care about growing…
The growth process at Lennar starts and ends with a strong
balance sheet.
Building
a Better
Company
Strategic growth at Lennar is very carefully managed and
controlled. It starts with a strong financial position that can comfortably
support a strategic acquisition. We seize market inefficiencies to grow the Company
opportunistically. A good acquisition positions the Company with financial cushion. We
pare down purchased assets and reposition the Company for financial strength again.
activity with prosperity, or size with quality.”
Internally we grow our operating divisions through regular growth planning. Each
operating division has its own growth plan that provides for comfortable organic
expansion that fits the division’s existing management reach and control.
Acquisitions require successful integration to build a better company. The best way to
achieve this is to insist on a cultural fit up front. We spend as much time considering
cultural fit as we spend modeling the financial attributes of an acquisition.
Growth is about strategy and risk management. We do not confuse activity with
prosperity. When we grow effectively we prepare and position our Company for
future successes. We constantly measure downside risk against upside potential. We
refuse to grow just to get big. Bob Strudler, our Vice Chairman and Chief Operating
Officer, constantly reminds us that “Bigger is not better, only better is better.”
Therefore, we grow our operations only as market conditions permit. We do not try
to force growth because growth carries a high degree of risk.
LEONARD MILLER
Founder and Chairman
of the Board
7
…because we care about results…
…because we care about results…
The Lennar process of achieving great results starts and ends
with everyone focused on return on net assets (“RONA”).
Every investment, every sale, every asset and every operation is
measured and evaluated against RONA. We talk about
RONA, we celebrate RONA, we measure RONA monthly and we
advertise RONA internally.
Disciplined
Financial
Management
Our management mantra is very simple and consistent: keep profits higher and assets lower.
A sustainable high return on net assets is the goal of every operating division in the Company
since our Company’s bonus programs are based on achieving high returns.
Many corporate strategies are focused on producing high returns. Our dual marketing
strategies of “Everything’s IncludedSM” and “Design StudioSM” are about increasing land
absorption to increase returns. We sell land positions to competitors to keep asset balances low.
“Bigger is not better,
Simply put, by keeping all of our operations focused on sustainable return on net
assets, Lennar is consistently able to do something that few builders can: produce
consistent earnings per share growth, create high returns on capital and equity,
reduce net debt to total capital and maintain conservative accounting policies – and
do them all simultaneously. Consider these statistics:
1997 – 2000
• average return on beginning shareholders’ equity of 28%,
• grew net earnings to $229 million – a 44% annualized growth rate,
• increased shareholders’ equity to $1.2 billion – a 41% annualized growth rate,
• book value per share increased to $19.58 – a 33% annualized growth rate,
• EBITDA grew to $519 million – a 45% annualized growth rate and
• grew revenues to $4.7 billion – a 39% annualized growth rate.
8
...and we care to be the best!
...and we care to be the best!
The future holds no limits for our Company. As we enter 2001, our Company has
never been better positioned to react, respond and seize opportunity
than we are today. We are financially well-positioned, we are
excited about the opportunities provided by our business,
we are passionate about being the nation’s very best
MANAGE
GROW
homebuilder, and “We Care”!
At Lennar, we believe in what we do because
fundamentally, our business is about dreams; the dreams of
families, communities and investors, and of the associates who
build their careers with us. “We Care” about those dreams because our
THE
LENNAR
WAY
RESULTS
reputation is built on them. With almost half a century behind us, we look forward to
a new millennium in which our focus on quality, simplicity, value, innovation and
caring will help us continue to grow and evolve into an even better Company.
only better is better.”
We would like to thank our customers, our associates and our shareholders for giving
us the opportunity to earn your trust and nurture your dreams.
BOB STRUDLER
Vice Chairman and
Chief Operating Officer
Sincerely,
Stuart A. Miller
President & Chief Executive Officer
9
Coast to Coast and Focused
More than 50% of U.S. new home starts occur in the states
where we build homes.
NEVADA
Deliveries
612
Homesites Available 1,428
2.9%
Market Share
COLORADO
Deliveries
1,559
Homesites Available 8,971
4.2%
Market Share
ARIZONA
2,057
Deliveries
Homesites Available 5,902
4.0%
Market Share
TEXAS
Deliveries
5,591
Homesites Available 23,652
4.8%
Market Share
SACRAMENTO
BAY AREA
LAS
VEGAS
PALM
SPRINGS
LOS ANGELES
INLAND EMPIRE
ORANGE COUNTY
SAN DIEGO
PHOENIX
TEMPE
TUCSON
CALIFORNIA
Deliveries
4,117
Homesites Available 31,625
4.4%
Market Share
MINNESOTA
Deliveries
748
Homesites Available 5,737
2.4%
Market Share
NEW JERSEY
Deliveries
520
Homesites Available 2,550
1.9%
Market Share
MARYLAND/ VIRGINIA
Deliveries
735
Homesites Available 3,729
1.1%
Market Share
FLORIDA
6,425
Deliveries
Homesites Available 44,340
5.5%
Market Share
MINNEAPOLIS
FORT
COLLINS
DENVER
COLORADO
SPRINGS
FORT
WORTH
DALLAS
AUSTIN
CENTRAL
NEW JERSEY
SOUTHERN
NEW JERSEY
WASHINGTON, D.C.
METROPLEX
RIO GRANDE
VALLEY
HOUSTON
TAMPA BAY AREA
SARASOTA
NAPLES/FT. MYERS
ORLANDO
MELBOURNE
PALM BEACH
BROWARD
MIAMI-DADE
(cid:2)Caring About Our Shareholders
“I Care” for lots of people.
They give us all their trust.
It’s our responsibility
To know that they need us.
“Lennar’s penchant for enhancing shareholder value has been demonstrated
repeatedly, and warrants a peer group premium valuation, in our judgment.
Examples include: the early 1990s purchase of distressed portfolio loan pools
from the Resolution Trust Corporation; entrance into Texas/California from
1991-1994; the October 1997 spin-off of LNR Property (and coincident merger
with Pacific Greystone); aggressive share repurchases in 1999; and the
acquisition of U.S. Home at a substantial book value discount in May 2000.
The aforementioned transactions validate our conclusion that “Nobody Does
It Better” than Lennar.”
(cid:2)— Greg Nejmeh, CFA
Homebuilding Equity Analyst
Deutsche Banc Alex. Brown
NOBODY DOES IT BETTER:
EXPANSION AND INTEGRATION
(In millions)
NET INCOME
ANNUAL NATIONAL HOUSING STARTS
ACQUIRED
TEXAS
OPERATIONS
ACQUIRED
COMMERCIAL
PORTFOLIOS
ACQUIRED
DCA
$250
$225
$200
$175
$150
$125
$100
$75
$50
$25
$0
ACQUIRED
U.S. HOME
ACQUIRED
GREYSTONE;
SPUN-OFF LNR
ACQUIRED
CALIFORNIA
OPERATIONS
5.0
4.0
3.0
2.0
1.0
0.0
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
Lennar has consistently produced more shareholder value than any other homebuilder in the country. Lennar’s
process of growth, management and results has produced a consistent track record of strong earnings growth
coupled with a strong balance sheet. Over the past 15 years we have seen shareholders’ equity increase from $142
million to $1.2 billion. Earnings have grown from $12 million to $229 million, and revenues have increased from
$231 million to $4.7 billion. We have accomplished all of this even while we have created additional shareholder
value by spinning off LNR Property Corporation (Oct. 1997) into a separate public company, which today has a
market capitalization approaching $1 billion.
We have expanded our asset base both internally and through acquisitions. Focused management execution and a
disciplined financial management of return on net assets drives the success of our process.
As we look ahead there is good reason to expect continued success. Lennar’s management process produces these
results. It is a process that works because of the focused discipline that is applied to it.
Our relentless focus on improving shareholder value is how “We Care” about our shareholders.
13
The Way We Manage
Lennar’s management model is simple and consistent. We start with managers who are proven
and experienced veterans of the industry and, in most cases, of our Company. These seasoned
managers are aligned with shareholders by a compensation program tied to Return on Net
Assets (“RONA”) and bottom line profitability. We operate under a system of broad local
autonomy harnessed by a simple and consistent group of corporate operating controls.
We constantly review the performance of operations through a Review-Do-
Review system of planning, budgeting and monthly measurement.
Expectations are set and performance is reviewed.
Seasoned
Management Team
The Lennar culture is constantly fostering teamwork and team
achievement. Whether newly purchased operations are being
incorporated, or we are refreshing our long-standing
management team, we use company culture and leadership
Culture and
Leadership
Development
Focused
Management
Simple and
Consistent
Controls
development programs to maintain consistent processes. We have
Review • Do • Review
“We’re building America’s best
integrated the highly regarded U.S. Home Leadership Development and Training program to
help ensure that we are building the deepest management team in the industry.
The Way We Grow
Lennar’s growth model has been proven again and again and again. It starts and
ends with a strong balance sheet. It is the strong financial position that
leaves us prepared to react quickly and decisively when opportunities
present themselves. In the meantime we grow internally, awaiting
Strong Balance Sheet
the right opportunity.
We remain financially prepared at all times and react when we see
market value inefficiency. When values are attractive, we
underwrite to current conditions and then purchase at below
market value. We only purchase when we have adequate reserve
capital to maintain a conservative financial position.
Focus on
Integration
Building a
Better
Company
Identify
Market
Inefficiencies
Purchase Below Market
and Pare Down
14
After making a strategic purchase, whether land assets or a company, we focus on paring
down our investment. This begins the process of restrengthening our balance sheet.
We focus on best practices and the prospect of building a better company. This is why
company acquisitions integrate so quickly and efficiently. This discipline maintains our
financial and operational strength, and positions us to act again.
The Way We Achieve Results
Lennar’s disciplined financial management pulls everything
together. From division to division - from corporate to
field - from associate to associate - everyone is focused on
RONA. From the start of underwriting a new acquisition
to the review of last year’s operational results, from the
Everyone Focused
on Returns
Target Net Debt
to Total Capital
40-50%
Disciplined
Financial
Management
EPS Growth Target
15% or Higher
budget process to the bonus calculation, everything is measured
Carefully Managed
Asset Levels
against RONA. Corporately we target a 13% return on net capital and
a 20% return on beginning shareholders’ equity.
homebuilder, one home at a time.”
By focusing on RONA, our divisions operate as both profit center managers and balance sheet
managers. An example of our intense RONA focus is our dual marketing strategy, which enables
us to accelerate the absorption of existing land. Additionally, our Financial Services Division
improves RONA by maximizing profit per customer while minimizing incremental investment.
We target earnings to grow 15% or higher while carefully managing our asset base, which
keeps operations well-positioned for the future. At the same time we target 40% to 50%
leverage to keep the Company financially well-positioned for opportunities. The successful
management of these elements enables us to produce an enviable financial balance that is the
highest priority at Lennar.
l
a
t
t
C a p i
1 9 9 7 - 2 0 0 0 )
t u r n o n N e
e d N o v .
R e
1 4 %
a n n u a
z
i
l
(
Net Debt to Total Capital
(average Nov. 1997-2000)
43%
EPS Growth
(annualized Nov. 1997-2000)
36%
15
Dual Marketing Strategy
Accelerates Land Use and
E v e r y t h i n g’ s I n c l u d e d S M
• Emphasis on simplicity
• Value to the customer
• Anticipate buyer wants and needs
• Reduced incidence of changes or upgrades
• “Personalized” not “customized” homes
• Expedited production schedule
Improves Return on Capital
D e s i g n S t u d i o S M
• Emphasis on customization
• Utilizes custom design studios
• Buyer can choose interior and
• Longer production schedule and,
exterior features
generally, a higher priced home
(cid:2)Caring About Our Customers
We know a home is everything,
So when we build, we swear,
We’ll build it with our hearts and souls,
We’ll build it with “I Care”.
“From day one, we had nothing but a great experience from
him. And even today, Mark is one of our closest friends. When
we moved in our house the beginning of April, we had what
we call the blessing of our house, where we have a lot of
friends come over and we had dinner served for them. And we
invited Mark and he showed up. So Mark is not only just a
good salesman, but he’s a personal friend of ours.”
– Lonnie and Shelia Irby
Homeowners, Plano, Texas
(cid:2)
Our commitment to each customer is the building block for
our success...
It is based on the belief that while we have grown to a Company that will deliver
approximately 23,000 homes this year, each home is built and designed to fulfill the
needs and dreams of that one buyer who will call this residence “home”. From contract
to closing, our associates understand that “We Care” means we are dedicated to ensuring
our customers that their purchase of a home from the Lennar Family of Builders will be
a positive experience; that their home will be built to the highest quality standard; and
that we fully accept our responsibility to each customer.
A home is more than a simple shelter. It’s an anchor, a dream and a responsibility. For
many people, it’s also the most significant purchase they will ever make. We want the
relationships we forge with our homeowners to last a lifetime. That’s why we work so
hard to treat our customers with care, whether they’re purchasing their first home,
moving up as their family grows, or designing their dream home in one of our Heritage
Active Adult Communities. Our commitment to our customers runs through every
associate, every department and every division of our Company.
A Lennar Family of Builders home for every buyer...
Our commitment to our customer can be described in two simple words: “I Care”.
Caring about our customers starts by having quality, value, and integrity as the
cornerstones of our relationship. These are the most important ingredients of every
Lennar home.
Our “Heightened Awareness” program is a full-time focused initiative designed to objectively
evaluate and measure the quality of construction in our communities. The goal of this
program is to ensure that the homes delivered to our customers meet our high standards.
19
The Clubhouse at The Bridges
Rancho Santa Fe, CA
To accomplish this goal our communities are inspected and reviewed on a regular basis
by a highly trained senior associate. This program is an example of our commitment to
provide the finest home to our customer.
In addition to the “Heightened Awareness” program, we obtain independent
surveys of our customers as another mechanism to further improve our standard of
quality and customer satisfaction.
No matter which of the eleven Lennar Family of Builders a customer chooses, we can
assist them with every part of the home buying process. From finding the best
mortgage financing to the closing and title insurance needs, and often even turning
on the cable television, Lennar is there, because “We Care”.
“I thought the closing would be like having a tooth
a very pleasant experience. Thank you.”
FIRST-TIME BUYERS
Growing in America’s top markets…
32%
As we enter the new millennium, our strategy for
MOVE-UP BUYERS
growth recognizes that to be successful we must
51%
build homes where customers want to live and
ACTIVE ADULTS
17%
where economic conditions provide them an
opportunity to prosper. Our entry into Texas and
California in the early 90’s recognized the
continued economic expansion in these rapidly growing areas. Our acquisition of U.S.
Home allowed us to meet the demands for housing in markets such as Colorado,
Minnesota, New Jersey and Washington, D.C. where limited availability of land for
development makes experience and knowledge of the local market essential. This
acquisition also allows us to better meet the housing needs of the growing number of
baby boomers reaching retirement age.
22
The states in which Lennar builds homes represent over 50% of the housing starts in
America. The Lennar Family of Builders are “Wow-ing” customers from Coast to Coast,
offering America’s families quality homes under the brand names of Lennar Homes, U.S.
Home, Greystone, Village Builders, Renaissance, Orrin Thompson, Lundgren Bros.,
Winncrest, Rutenberg Homes, and our active adult franchises of Heritage and
Greenbriar. Whether a customer chooses an “Everything’s IncludedSM” or “Design StudioSM”
home, every Lennar home is built with our entire team striving for “Zero Defect” in the
whole home buying experience.
Financial Services: caring from start to finish
The personal touch extended by our Financial Services Division makes the one-stop
home buying process simpler and more enjoyable with everything from home mortgage,
pulled. It was more like dinner with friends,
— Harold Bruce Parker, Jr., Customer, Universal American Mortgage Company
title insurance and closing services to cable television and alarm system installation
and monitoring.
Technology has contributed to major changes in these businesses, as we focus on
providing simple and efficient services to customers. Our commitment to technology
supports our Financial Services associates in our effort to make the home buying
experience a pleasant and rewarding one for all of our customers.
Home Mortgage
In 2001, Financial Services announced the combination of Universal American Mortgage
Company (“UAMC”) with U.S. Home Mortgage Corporation. Coupled with the
acquisition of Eagle Home Mortgage in 1999, UAMC is now one of the largest home
loan originators in the United States. Lennar has assembled one of the most talented teams
of experienced “I Care” professionals in mortgage banking today to make the home buying
process a more fun and comfortable experience for our customers.
23
Through state of the art technologies and the development of our Home Loan Call
Centers, we are committed to bring a new definition of convenience and service to our
customers. These call centers will serve to complement our home loan consultants in
offering convenient choices to customers for multi-channel origination over the Internet,
the telephone, as a mail away or through the traditional face-to-face loan application.
Title Services
During the past year, our title companies provided title insurance and closing services to
more than 110,000 residential and commercial transactions in Florida, Texas, Arizona,
Colorado and California. We are now among the largest title service providers in the
United States.
By combining the latest in time and paper saving technology, with old fashioned caring
customer service, our title companies are responding to the challenge of making the
home buying process simple, efficient and enjoyable for all of our customers.
In 2001, all of our title companies from coast to coast will benefit as they begin operating
under the North American Title banner.
Insurance
In our continuing effort to create a one-stop shopping opportunity for our customers,
we have added another Financial Services product. We are now offering our customers
the opportunity to obtain homeowners and other personal lines of insurance. This is
another step in our effort to simplify the home buying process and build a base of
“customers for life”.
Strategic Technologies: caring to connect
The Internet is changing the way the world does business, the way we get information,
the way we shop, and, increasingly, the way we look for a home. Lennar is taking the lead
in using the Internet to simplify the process of buying a home, while leveraging our
brand across the business-to-business and business-to-consumer sectors. Our Strategic
Technologies (“STI”) Division has broadened its cable television, home security systems
and home monitoring businesses in 2000 to include a new focus on high-speed Internet
access and e-commerce.
24
25
(cid:2)Caring About Our Associates
“I Care” with attitude,
It always shines right through.
‘Cause when I give my very best,
My teammates give theirs too!
“I feel that the Company and I have a relationship...it’s definitely a two-way
street between us. They care for me as much as I care for them. The respect
is mutual.” (cid:2)– Stacie Hearn
Dallas Division Sales Manager
Lennar is simply a great place to build a career. From the moment our associates receive their name badges, they are
quickly immersed in the Lennar Way: our corporate culture that emphasizes individual excellence combined with
teamwork, intense focus along with fun, and professional achievement along with camaraderie. Even while we are
exceeding expectations on Wall Street, we like to believe that we have more smiles and more fun per hour worked
than any company in America.
Culture
At Lennar, we understand that the underlying foundation for our success has not been constructed through a
combination of building materials and the acquisition of land, but through the individual contributions of each of
our over 7,000 associates. We are bound together by a common culture which emphasizes the pursuit of excellence
in every aspect of our business; a comprehensive training program which promotes the transfer of knowledge from
one associate to another; and an acknowledgement that fun is good and that the workplace must provide each
associate with a sense of excitement, an opportunity to grow and to be a leader, and a feeling of personal satisfaction.
Culture is the line of communication that drives our Company’s consistency. The foundation of our culture is to
have fun in all that we do. We create opportunities to laugh, sing and dance together. In doing so we open channels
of communication that bring associates together to work as a team, to cheer the successes of the team, and to
support and inspire one another.
To an outsider looking in, Lennar is a strange environment with some very unusual traditions. To those of us who
call Lennar our home, we know that there is a special spirit and enthusiasm, a passion and a vitality that fills the
halls of our Company and makes this a very special place to work.
Best of the Best
We strive for continuous improvement in an atmosphere of inclusion, openmindedness, creativity and trust. We
pride ourselves on being a “Learning Machine”. We listen and we learn from the diverse experiences of every
associate that joins our family. By doing this we achieve the best of the best practices in all that we do.
In combinations or acquisitions we look forward to the many great systems and programs of the acquired company
that we might incorporate in order to strengthen our own. By recognizing the many strengths of an acquired, new
member of the family, we establish a spirit of cooperation that aids in the integration of the new company.
At Lennar everyone is an important member of the team.
27
Leadership Development and Training
Each year as we strive to improve on our prior performance, we consume the very assets on which we built our success.
We move from one community to another and we own no factories. We have no inventory of bricks and lumber, and
our customers change on a daily basis. The only asset which provides us with the ability to grow from year to year is the
knowledge and ability of our associates. It is their knowledge of each local market, of our sales and building process, and
our standards of excellence which provides the basis on which our Company can continue its role as a leader in this
industry. It is for this reason that training at Lennar is an activity of the highest importance.
The training and development of our associates is an integral part of our success. We accomplish this through a variety
of programs including on the job training, formal leadership development sessions and book club readings. Integrating
best practices with continuous learning allows us to create the next generation of leaders that inspire and ignite greatness
in those around them.
The essential element in our training program is the commitment of each associate to being both student and teacher.
It is the obligation of each associate to constantly seek to improve their personal knowledge while at the same time being
willing to participate in those activities which enhance the knowledge of fellow associates. The Company’s Leadership
Development and Training program has been recognized as being one of the foremost training programs in our industry.
It brings together associates from all over the country to meet with senior management and to explore ways to improve
our performance. It is an acknowledgement that the real shortage in our industry is not lumber, concrete or drywall, but
the leaders necessary to inspire continued growth. Each member of our management team understands that they cannot
grow and that they cannot succeed unless they are willing to play a vital role in creating an environment where leadership
capabilities of all associates are enhanced.
l
l d i n g p a r t n e r s
“ I C a r e ” f o r b u i
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W h e n w e t r e a t t h e m w i t h
i n g t h e m “ I C a r e ” .
r e s p e c t
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I t
“ I C a r e ’s ” a b o u t r e l a t i o n s h i p s
E v e r y o n e ’s o u r f r i e n d
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o f u s m u s t k n o w !
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A l
l e a d e r
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I
T h a t ’s p r i n c i p l e n u m b e r O n e .
w o r d s
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C u z w h e n I g i v e m y v e r y b e s t
M y t e a m m a t e s g i v e t h e i r s t o o !
“ I C a r e ” a b o u t m y t e a m
I n e v e r s t a n d a l o n e
F o r T h r e e ,
a n d g u i d e
i v e r i n g e a c h h o m e .
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F o u r t h , “ I C a r e ” f o r c u s t o m e r s
E x p e c t a t i o n s I e x c e e d
l e s s a n d g i v e t h e m m o r e
I p r o m i s e
i s g u a r a n t e e d .
S u c c e s s
“ I C a r e ” s t a n d s f o r t r a i n i n g
t o b e t h e b e s t
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t o g e t S i x
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l
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j o b s i t e s a y s “ I C a r e ”
S e v e n t h
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i m p o r t a n t
i s s o r a r e .
i t
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“ I C a r e ” a b o u t s h a r e h o l d e r s
i n e
i s b o t t o m
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I b u i
W i t h t w e n t y t h o u s a n d h o m e s
We m u s t p r o t e c t o u r n a m e .
e a c h y e a r
l o t s o f p e o p l e
“ I C a r e ” f o r
t h e i r t r u s t
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i t y
l
I t ’s o u r r e s p o n s i b i
To k n o w t h a t t h e y n e e d u s !
i s e v e r y t h i n g
We k n o w a h o m e
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l d ,
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I t ’s m o r e t h a n a t t i t u d e
l t e r s t h r o u g h o u r C o m p a n y
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l d
l
28
Heritage Highlands Golf and Country Club
Clubhouse, Marana, Arizona
Lennar’s Heritage Communities are one of America’s most successful national
retirement community franchises. There are currently 25 existing Heritage
Communities located in 10 states, with another 5 in various planning stages.
(cid:2)Caring About Our Community
“I Care” about relationships,
Everyone’s our friend.
With caring we coordinate,
From beginning to the end.
“It’s where we can give back to the community and say
thanks for all the great things they have done for us. The
Dream Builder Playhouse Campaign is one program that
brings tears of joy to the eyes of a lot of children. It’s
one way that we show genuine interest and concern
towards our community...and it makes me proud.”
– Steve Craddock
Tucson Division President(cid:2)
There is an immense sense of pride felt by our associates as we each look back to the more
than 475,000 homes delivered by the Lennar Family of Builders over the last five decades.
There is also a recognition that we have played a unique role in the creation of
communities in which people raise families, pursue their dreams and enjoy the benefits
of their many years of hard work.
This recognition is at the heart of our belief that each of us must share the benefits we
have derived from this experience with the communities we have helped create.
Whether working with Special Olympians to build homes for Habitat for Humanity
in Dallas and Houston, Texas, or in Tampa, Florida; or our role in building Kevin’s
Lodge in Phoenix, Arizona to provide a campsite for young children stricken with
cancer; or sharing the holidays with 63 children in Tampa, Florida, who need a little
love in their lives; or gathering toys for children in San Diego, California, in order to
make their wishes come true, we understand and are proud of our role not only in
creating communities but in giving something back to these communities.
Giving back makes us all feel proud. Proud to be part of a Company that can grow and
succeed and can still remember community needs that require a different kind of
selfless attention. Proud to be part of a Company that can be intensely focused on
bottom line results and, at the same time, passionate about people who are less
fortunate than ourselves; people who need. Proud to be part of a Company that cares.
Proud to be part of the Lennar Family of Builders.
33
FINANCIAL TABLE OF CONTENTS
Five Year Summary of Selected Financial Data
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
Report of Independent Auditors
Report of Management
Consolidated Balance Sheets
Consolidated Statements of Earnings
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Shareholder Information & Comparative
Common Stock Data
36
37
42
43
44
45
46
47
49
64
39
F I V E Y E A R S U M M A R Y O F S E L E C T E D F I N A N C I A L D A T A
Lennar Corporation and Subsidiaries
At or for the Years Ended November 30,
(Dollars in thousands, except per share amounts)
2000
1999
1998
1997
1996
Results of Operations:
Revenues:
Homebuilding
Financial services
Total revenues
Operating earnings:
Homebuilding
Financial services
Corporate general and administrative expenses
$ 4,390,034
2,849,207
2,204,428
1,208,570
952,648
$ 316,934
269,307
212,437
94,512
89,013
$ 4,706,968
3,118,514
2,416,865
1,303,082
1,041,661
$ 480,796
340,803
283,369
120,240
$
$
43,595
50,155
31,096
37,563
33,335
28,962
Earnings from continuing operations before income taxes
$ 375,635
285,477
240,114
Earnings from continuing operations
Earnings from discontinued operations
Net earnings
Per share amounts (diluted):
Earnings from continuing operations
Earnings from discontinued operations
Net earnings per share
Cash dividends per share – common stock
Cash dividends per share – Class B common stock
$ 229,137
172,714
144,068
$
-
-
-
$ 229,137
172,714
144,068
$
$
$
$
$
3.64
-
3.64
.05
.045
2.74
-
2.74
.05
.045
2.49
-
2.49
.05
.045
35,545
15,850
85,727
50,605
33,826
84,431
1.34
0.89
2.23
.088
.079
91,066
28,650
12,396
84,429
51,502
36,484
87,986
1.42
1.01
2.43
.10
.09
Financial Position:
Total assets
Total debt
Stockholders’ equity
Shares outstanding (000’s)
Stockholders’ equity per share
Delivery and Backlog Information:
Number of homes delivered
Backlog of home sales contracts
Dollar value of backlog
$ 3,777,914
2,057,647
1,917,834
1,343,284
1,589,593
$ 1,703,510
802,295
798,838
661,695
689,159
$ 1,228,580
881,499
715,665
438,999
695,456
62,731
$
19.58
57,917
15.22
58,151
12.31
53,160
8.26
35,928
19.36
18,578
8,363
12,606
2,903
10,777
4,100
6,702
3,318
5,968
1,929
$ 2,072,000
662,000
840,000
665,000
312,000
As a result of the Company’s spin-off of its commercial real estate investment and management business, including the
Investment Division business segment, the selected financial data for 1997 and 1996 reflects the Company’s Investment
Division as a discontinued operation.
36
M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S O F F I N A N C I A L C O N D I T I O N
A N D R E S U L T S O F O P E R A T I O N S
Certain statements contained in the following Management’s
Discussion and Analysis of Financial Condition and Results of
Operations may be "forward-looking statements" as defined in
the Private Securities Litigation Reform Act of 1995. By their
nature, forward-looking statements involve risks, uncertainties
and other factors that may cause actual results to differ
materially from those which are anticipated. With regard to
the Company, these factors include, but are not limited to,
changes in general economic conditions, the market for homes
generally and in areas where the Company has developments,
the availability and cost of land suitable for residential
development, materials prices, labor costs, interest rates,
consumer confidence, competition, environmental factors and
government regulations affecting the Company’s operations.
RESULTS OF OPERATIONS
Overview
Lennar Corporation achieved record revenues, profits and
earnings per share in 2000. The Company’s net earnings in
2000 were $229.1 million, or $3.64 per share diluted,
compared to $172.7 million, or $2.74 per share diluted, in
1999. The increase in net earnings in 2000 primarily resulted
from the Company’s $1.2 billion acquisition of U.S. Home
Corporation (“U.S. Home”) in May 2000. U.S. Home is
primarily a homebuilder, with operations in 13 states. The
acquisition strengthened the Company’s position in several of
its established markets and brought the Company positions of
strength in a number of attractive new markets. As a result of
the successful integration of U.S. Home, the Company
achieved record earnings in 2000 and further strengthened its
balance sheet by reducing its ratio of net homebuilding debt
(homebuilding debt less cash) to total capital from 61%
immediately after it acquired U.S. Home to 44% at year-end.
Homebuilding
The Company’s Homebuilding Division sells and
constructs homes primarily for entry level, move-up, active
adult and retiree homebuyers in 13 states. The Company
markets under its “Everything’s IncludedSM” and “Design
StudioSM” programs. The Company’s land operations include
the purchase, development and sale of land for its
homebuilding activities, as well as the sale of land to third
parties. In certain circumstances, the Company minimizes its
risk by forming joint ventures with other entities. The
following tables set forth selected financial and operational
information for the periods indicated. The results of U.S.
Home are included in the information since its acquisition in
May 2000.
Selected Homebuilding Division Financial Data
(Dollars in thousands,
except average sales price)
Revenues:
Sales of homes
Sales of land and other revenues
Equity in earnings from
$ 4,118,549 2,671,744
157,981
258,145
Years Ended November 30,
1998
1999
2000
2,089,762
83,758
partnerships
Total revenues
Costs and expenses:
Cost of homes sold
Cost of land and other expenses
Selling, general and
administrative
Total costs and expenses
Operating earnings
Gross margin on home sales*
SG&A expenses as a % of
revenues from home sales
Average sales price
$
$
13,340
19,482
4,390,034 2,849,207
30,908
2,204,428
3,277,183 2,105,422
130,432
220,948
1,641,741
69,279
411,107
272,550
3,909,238 2,508,404
480,796
340,803
21.3% 21.2%
210,039
1,921,059
283,369
21.4%
10.0% 10.2%
212,000
226,000
10.1%
194,000
* Fiscal 2000 excludes the effect of purchase accounting related to the
U.S. Home acquisition.
Summary of Home and Backlog Data By Region
(Dollars in thousands)
Deliveries
East
Central
West
Years Ended November 30,
1998
1999
2000
Subtotal
Joint ventures
Total
New Orders
East
Central
West
Subtotal
Joint ventures
Total
Backlog - Homes
East
Central
West
Subtotal
Joint ventures
Total
Backlog Dollar Value
(including JVs)
6,155
5,203
6,878
18,236
342
18,578
4,241
3,107
5,241
12,589
17
12,606
5,676
5,089
6,770
17,535
312
17,847
2,768
1,632
3,451
7,851
512
8,363
3,788
3,056
4,536
11,380
29
11,409
1,091
652
1,148
2,891
12
2,903
3,761
2,484
4,532
10,777
-
10,777
4,010
2,519
4,487
11,016
-
11,016
1,544
703
1,853
4,100
-
4,100
$2,072,000
662,000
840,000
37
M A N A G E M E N T ’ S D I S C U S S I O N A N D A N A L Y S I S O F F I N A N C I A L C O N D I T I O N
A N D R E S U L T S O F O P E R A T I O N S
The Company’s market regions consist of the following states:
East: Primarily Florida and also includes Maryland/Virginia and
New Jersey. Central: Primarily Texas and also includes Minnesota
and Ohio. West: Primarily California and also includes Colorado,
Arizona and Nevada. In addition, the Company has various
partnerships in North Carolina and Michigan.
Revenues from sales of homes increased 54% in 2000 and 28%
in 1999 compared to the previous years primarily as a result of
increases in the number of new home deliveries and the average
sales price. New home deliveries were higher in 2000 compared to
1999 due to the inclusion of U.S. Home’s homebuilding activity
since its acquisition in May 2000. The increase in deliveries in 1999
compared to 1998 reflected growth in California, where the
Company made several acquisitions in 1998, and generally
favorable market conditions
the Company’s
homebuilding markets in the first half of 1999. The higher average
sales price in 2000 compared to 1999 was due primarily to an
increase in the average sales price in most of the Company’s existing
markets, combined with changes in product mix as a result of the
entry into new markets. The higher average sales price in 1999
compared to 1998 reflected both price increases and a shift in
product mix in certain markets.
throughout
Gross profits on home sales increased to $841.4 million in 2000,
compared to $566.3 million in 1999 and $448.0 million in 1998.
Gross profits in 2000 were impacted by purchase accounting
associated with the acquisition of U.S. Home. Gross margin as a
percentage of sales of homes in 2000 was 21.3% (excluding the
effect of purchase accounting), and 20.4% (including the effect of
purchase accounting), compared to 21.2% in 1999 and 21.4% in
1998. Gross margins increased slightly in 2000 excluding the effect
of purchase accounting compared to 1999. The increase was
primarily due to improvements in Florida and success in new
markets entered into since the acquisition of U.S. Home. The slight
decrease in gross margin percentage in 1999 compared to 1998 was
due primarily to the Company’s expansion into inland areas of
California where gross margin percentages are lower than those in
the other areas of California in which the Company operates.
Revenues from land sales totaled $243.5 million in 2000,
compared to $150.3 million in 1999 and $77.2 million in 1998.
Gross profits from land sales totaled $27.6 million, or 11.3%, in
2000, compared to $22.2 million, or 14.8%, in 1999 and $12.6
million, or 16.3%, in 1998. Equity in earnings from partnerships
decreased to $13.3 million in 2000, compared to $19.5 million in
1999 and $30.9 million in 1998. Margins achieved on sales of land
and equity in earnings from partnerships may vary significantly
from period to period depending on the timing of land sales by the
Company and its partnerships.
Selling, general and administrative expenses as a percentage of
revenues from home sales improved 20 basis points in 2000
compared to 1999 and remained nearly unchanged in 1999
compared to 1998. The improvement in 2000 compared to 1999
resulted primarily from the increased volume and efficiencies
realized from the acquisition of U.S. Home in May 2000.
New home orders increased 56% in 2000 and 4% in 1999
compared to the previous years. The significant increase in 2000
was a result of the Company’s acquisition of U.S. Home. The
increase in 1999 reflected higher new orders in the first half of 1999
38
due primarily to expansion in California and strong demand in
Texas. While new home orders rose in fiscal 1999, they were lower
in the second half of the fiscal year compared to the same period in
1998 due primarily to lower new orders in Florida and
Arizona/Nevada, where there were decreases in the average number
of communities and some softening in demand in certain markets.
Backlog dollar value increased 213% to $2.1 billion at November
30, 2000, compared to $0.7 billion at November 30, 1999, due
primarily to the Company’s acquisition of U.S. Home.
Financial Services
The Financial Services Division provides mortgage financing,
title insurance and closing services for Lennar homebuyers and
others. The Division packages and resells residential mortgage
loans and performs mortgage loan servicing activities. The
Division also provides high speed Internet access, cable television
and home monitoring services for both Lennar homebuyers and
other customers. The following table sets forth selected financial
and operational information relating to the Financial Services
Division. The results of U.S. Home Mortgage Corporation are
included in the information since its acquisition in May 2000.
(Dollars in thousands)
Revenues
Costs and expenses
Operating earnings
Dollar value of
mortgages originated
Number of mortgages
originated
Principal balance of
servicing portfolio
2000
Years Ended November 30,
1998
1999
212,437
269,307
179,102
238,211
33,335
31,096
$ 316,934
273,339
43,595
$
$3,240,252
2,162,479
1,031,338
20,800
14,900
7,900
$2,313,336
3,128,234
3,213,235
Number of loans serviced
29,000
38,000
41,000
Number of title
transactions
120,000
139,000
123,000
The 18% increase in revenues from the Financial Services
Division in 2000 compared to 1999 reflected higher mortgage
services revenues as a result of the contribution from U.S. Home
Mortgage Corporation since its acquisition in May 2000 combined
with higher revenues and an increased capture rate from the
Division’s existing mortgage operations. The 27% increase in
revenues from the Financial Services Division in 1999 compared to
1998 reflected higher mortgage services revenues as a result of the
growth in Lennar home deliveries, a higher capture rate of Lennar
homebuyers and acquisitions made in the Division in 1999,
combined with higher title services revenues which resulted from a
higher number of title transactions in the first half of 1999 and
acquisitions made in 1998 and 1999.
Operating earnings from the Financial Services Division were
higher in 2000 compared to 1999 primarily due to the earnings
contribution from U.S. Home Mortgage Corporation. Operating
earnings from the Financial Services Division were lower in 1999
compared to 1998 primarily due to reduced earnings from title
services as a result of a lower level of refinance activity, and a
highly competitive pricing environment in the mortgage business.
Corporate General and Administrative
Corporate general and administrative expenses as a percentage
of total revenues improved to 1.1% in 2000 from 1.2% in both
1999 and 1998. The improvement in 2000 was primarily the result
of a strong corporate infrastructure capable of supporting
additional growth.
Interest
Interest expense was $98.6 million, or 2.1% of total revenues,
in 2000, $48.9 million, or 1.6% of total revenues, in 1999 and $47.6
million, or 2.0% of total revenues, in 1998. The increase in interest
as a percentage of total revenues in 2000 was primarily due to
higher average debt outstanding and higher average cost of debt
following the U.S. Home acquisition, compared to the same period
last year. The decrease in interest as a percentage of total revenues
in 1999 compared to 1998 was mainly due to a lower average
borrowing rate in the first nine months of 1999, primarily as a result
of the Company’s issuance of $229 million of zero-coupon senior
convertible debt securities late in the third quarter of 1998. These
notes have an effective interest rate of 3 7/8%.
FINANCIAL CONDITION AND CAPITAL RESOURCES
In 2000, $479.4 million in cash was provided by the Company’s
operations, compared to $121.3 million in 1999. Cash flows from
operations in 2000 consisted primarily of $229.1 million of net
earnings, $223.3 million of cash received from the sale of
inventories and an increase in accounts payable and other liabilities
of $101.0 million. This generation of cash was primarily offset by
$75.9 million of cash used to increase loans held for sale or
disposition by the Company’s Financial Services Division. Cash
flows from operations in 1999 consisted primarily of $172.7
million of net earnings. This generation of cash was primarily
offset by $77.4 million of cash used to increase inventories through
land purchases, land development and construction and $41.2
million of cash used to reduce accounts payable and other
liabilities.
Earnings before interest, income taxes, depreciation and
amortization (“EBITDA”) were $518.5 million in 2000, $373.3
million in 1999 and $313.0 million in 1998.
Cash used in investing activities totaled $186.7 million in 2000,
compared to cash used in investing activities of $28.5 million in
1999. In 2000, $158.4 million of cash was used in the acquisitions
of properties and businesses, which includes $152.4 million used
for the acquisition of U.S. Home. In 1999, $19.7 million of cash
was used in the acquisitions of properties and businesses.
The Company finances its land acquisition and development
activities, construction activities, financial services activities and
general operating needs primarily from cash generated from
operations as well as from revolving lines of credit, public debt and
equity, financial institution borrowings and purchase money notes.
The Company also buys land under option agreements. Option
agreements permit the Company to acquire portions of properties
when it is ready to build homes on them. The financial risk of
adverse market conditions associated with longer-term land
holdings is managed by prudent underwriting of land purchases in
areas that the Company views as desirable growth markets,
diversification of risk through partnerships with other entities and
careful management of the land development process.
In May 2000, the Company entered into new financing
arrangements related to the acquisition of U.S. Home, for working
capital and for future growth. The financings include senior
secured credit facilities with a group of financial institutions which
will provide the Company with up to $1.4 billion of financing. The
credit facilities consist of a $700 million five-year revolving credit
facility, a $300 million 364-day revolving credit facility and a $400
million term loan B. The Company may elect to convert
borrowings under the 364-day revolving credit facility to a term
loan which would mature in May 2005. At November 30, 2000,
there was $399 million outstanding under the term loan B and there
were no amounts outstanding under the revolving credit facilities.
As a result of the U.S. Home acquisition, holders of U.S.
Home’s publicly-held notes totaling $525 million were entitled to
require U.S. Home to repurchase the notes for 101% of their
principal amount within 90 days after the transaction was
completed. Independent of that requirement, in April 2000, the
Company made a tender offer for all of the notes and a solicitation
of consents to modify provisions of the indentures relating to the
notes. As a result of the tender offer and required repurchases after
the acquisition, the Company paid approximately $520 million,
which includes tender and consent fees, for $508 million of U.S.
Home’s notes.
In May 2000, the Company issued $325 million of 9.95%
senior notes due 2010 at a price of 92.313% for the purpose of
purchasing U.S. Home’s publicly-held notes that were tendered in
response to the Company’s offer and consent solicitation in April
2000, and to pay associated costs and expenses. Proceeds from the
offering, after underwriting discount and expenses, were
approximately $295 million. At November 30, 2000, the book
value was $300.0 million.
In February 1999, the Company issued $282 million of 7 5/8%
senior notes. The senior notes are due in 2009 and were issued for
the purpose of reducing amounts outstanding under revolving
credit facilities and redeeming outstanding 10 3/4% notes.
Proceeds from the offering, after underwriting and market
discounts, expenses and settlement of a related interest rate hedge
agreement, were approximately $266 million. In March 1999, the
Company redeemed all of the outstanding 10 3/4% senior notes due
2004 of one of its subsidiaries, Greystone Homes, Inc., at a price of
105.375% of the principal amount outstanding plus accrued
interest. Cash paid to redeem the notes was $132 million, which
approximated their carrying value. At November 30, 2000, the
book value related to the 7 5/8% senior notes was $270.5 million.
In July 1998, the Company issued, for $229 million, zero-
coupon senior convertible debentures due 2018 (the “Debentures”)
with a face amount at maturity of $493 million. The Debentures
have an effective interest rate of 3 7/8%. The Debentures are
convertible at any time into the Company’s common stock at the
rate of 12.3768 shares per $1,000 face amount at maturity. If the
Debentures are converted during the first five years, the Company
may elect to pay cash equal to the fair value of the common stock
at the time of the conversion. Holders have the option to require
the Company to repurchase the Debentures on any of the fifth,
tenth or fifteenth anniversary dates from the issue date for the
initial issue price plus accrued original issue discount. The
Company has the option to satisfy the repurchases with any
39
combination of cash and/or shares of the Company’s common
stock. The Company will have the option to redeem the
Debentures, in cash, at any time after the fifth anniversary date for
the initial issue price plus accrued original issue discount. At
November 30, 2000, the amount outstanding, net of unamortized
original issue discount, was $247.2 million.
The Company’s ratio of net homebuilding debt to total capital
was 44.0% at November 30, 2000, compared to 33.3% at November
30, 1999. The increase resulted in part from repurchases of the
Company’s outstanding common stock and in part from the new
financings related to the acquisition of U.S. Home. In addition to
the use of capital in the Company’s ordinary homebuilding and
financial services activities, the Company will continue to actively
evaluate various other uses of capital which fit into its homebuilding
and financial services strategies and meet its profitability and return
on capital requirements. This may include acquisitions of or
investments in other entities. These activities may be funded
through any combination of the Company’s credit facilities, cash
generated from operations, sales of assets or the issuance of public
debt, common stock or preferred stock under existing and future
shelf registrations.
The Financial Services Division finances its mortgage loan and
servicing activities by pledging them as collateral for borrowings
under lines of credit totaling $360 million. Total borrowings under
the financial services lines of credit were $339.4 million and $236.6
million at November 30, 2000 and 1999, respectively.
The Company utilizes interest rate swap agreements to manage
interest costs and hedge against risks associated with changing
interest rates. At November 30, 2000, the Company had six interest
rate swap agreements outstanding with a total notional amount of
$400 million, which mature at various dates through 2007. These
agreements fixed the LIBOR index (to which certain of the
Company’s debt interest rates are tied) at an average interest rate of
6.6% at November 30, 2000. The Financial Services Division, in the
normal course of business, also uses derivative financial instruments
to reduce its exposure to fluctuations in interest rates. Counterparties
to each of the above agreements are major financial institutions.
Credit loss from counterparty non-performance is not anticipated.
The Company’s 2000 Stock Option and Restricted Stock Plan
(the “Plan”), which is subject to stockholder approval at the 2001
annual meeting of the Company’s stockholders, provides for the
granting of stock options and awards of restricted stock to certain
officers, employees and directors. In the third quarter of 2000,
860,000 shares of restricted stock were awarded under the Plan.
The stock was valued based on its market price on the date of grant.
Unearned compensation arising from the restricted stock grants is
amortized to expense over the period of the restrictions. The grants
vest over 5 years.
In September 1999, the Company’s Board of Directors approved
the repurchase of up to 10 million shares of the Company’s
outstanding common stock from time-to-time, subject to market
conditions. In February 2000, the Company’s Board of Directors
approved the repurchase of an additional 5 million shares of the
Company’s outstanding common stock. As of November 30, 2000,
under these approvals, the Company had repurchased approximately
9.8 million shares of its outstanding common stock for an aggregate
purchase price of approximately $158.9 million, or $16 per share.
In July 2000 and March 1999, the Company filed shelf
registration statements with the Securities and Exchange
Commission (“SEC”) under which it may offer, from time-to-time,
its common stock, preferred stock, depositary shares, debt
securities or warrants at an aggregate initial offering price not to
exceed $1 billion in total. Proceeds can be used for repayment of
debt, acquisitions and general corporate purposes. As of
November 30, 2000, no securities had been issued under these two
registration statements.
The Company has maintained excellent relationships with the
financial institutions participating in its financing arrangements and
has no reason to believe that such relationships will not continue in
the future. Based on the Company's current financial condition and
credit relationships, Lennar believes that its operations and
borrowing resources will provide for its current and long-term
capital requirements at the Company's anticipated levels of growth.
BACKLOG
Backlog represents the number of homes subject to pending
sales contracts. Homes are sold using sales contracts which are
usually accompanied by sales deposits. Before entering into sales
contracts, the Company generally prequalifies its customers. In
some instances, purchasers are permitted to cancel sales contracts
if they are unable to close on the sale of their existing home or fail
to qualify for financing and under certain other circumstances. The
Company experienced a cancellation rate of 21% in 2000 and 20%
in both 1999 and 1998. Although cancellations can delay the sales
of the Company’s homes, they have not had a material impact on
sales, operations or liquidity, because the Company closely
monitors the progress of prospective buyers in obtaining financing
and monitors and adjusts construction start plans to match the level
of demand for homes. The Company does not recognize revenue
on homes covered by pending sales contracts until the sales are
closed and title passes to the new homeowners.
SEASONALITY
The Company has historically experienced variability in results
of operations from quarter to quarter due to the seasonal nature of
the homebuilding business. The Company typically experiences the
highest rate of orders for new homes in the first half of the calendar
year although the rate of orders for new homes is highly dependent
on the number of active communities and the timing of new
community openings. Because new home deliveries trail orders for
new homes by several months, the Company typically has a greater
percentage of new home deliveries in the second half of its fiscal
year compared to the first half. As a result, the Company’s earnings
from sales of homes are generally higher in the second half of the
fiscal year.
INTEREST RATES AND CHANGING PRICES
Inflation can have a long-term impact on the Company because
increasing costs of land, materials and labor result in a need to
increase the sales prices of homes. In addition, inflation is often
accompanied by higher interest rates, which can have a negative
impact on housing demand and the costs of financing land
development activities and housing construction. Increased
construction costs, rising interest rates, as well as increased material
40
s and labor costs, may reduce gross margins. In recent years the
increases in these costs have followed the general rate of inflation
and hence have not had a significant adverse impact on the
Company. In addition, deflation can impact the value of real estate.
There can be no assurance that changing prices will not have a
material adverse impact on the Company’s future results of
operations.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board
(“FASB”) issued Statement of Financial Accounting Standards
(“SFAS”) No. 133, Accounting for Derivative Instruments
and Hedging Activities, as amended by SFAS No. 137 and
SFAS No. 138, which is required to be adopted for fiscal years
beginning after June 15, 2000. SFAS No. 133 will require the
Company to recognize all derivatives on the balance sheet at fair
value. Derivatives that are not hedges must be adjusted to fair
value through income. If the derivative is a hedge, depending on
the nature of the hedge, a change in the fair value of the derivative
will either be offset against the change in the fair value of the
hedged asset, liability, or firm commitment through earnings or
recognized in other comprehensive income until the hedged item is
recognized in earnings. The implementation of SFAS No. 133 will
not have a material impact on the Company’s results of operations
or financial position.
In December 1999, the SEC issued Staff Accounting Bulletin
(“SAB”) No. 101, Revenue Recognition in Financial
Statements, which provides guidance on the recognition,
presentation and disclosure of revenue in financial statements filed
with the SEC. SAB No. 101 is applicable for the Company
beginning in the fourth quarter of the year ending November 30,
the
2001. Management does not currently believe
implementation of SAB No. 101 will have a material impact on the
Company’s results of operations or financial position.
that
In September 2000, the FASB issued SFAS No. 140,
Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities. SFAS No. 140
replaces SFAS No. 125, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of
Liabilities. SFAS No. 140 revises the standards for accounting for
securitizations and other transfers of financial assets and collateral
and requires certain disclosures, but it carries over most of SFAS
No. 125’s provisions without reconsideration. SFAS No. 140 is
effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after March 31, 2001.
Management does not currently believe that the implementation of
SFAS No. 140 will have a material impact on the Company’s results
of operations or financial position.
41
R E P O R T O F I N D E P E N D E N T A U D I T O R S
To the Board of Directors and Stockholders of Lennar Corporation:
We have audited the accompanying consolidated balance sheets of Lennar Corporation and subsidiaries
(the “Company”) as of November 30, 2000 and 1999, and the related consolidated statements of
earnings, stockholders' equity and cash flows for each of the three years in the period ended November
30, 2000. These financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States
of America. Those standards require that we plan and perform the audits to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of the Company as of November 30, 2000 and 1999, and the results of its
operations and its cash flows for each of the three years in the period ended November 30, 2000, in
conformity with accounting principles generally accepted in the United States of America.
Miami, Florida
January 9, 2001
42
R E P O R T O F M A N A G E M E N T
The accompanying consolidated financial statements are the responsibility of management. The statements
have been prepared in accordance with accounting principles generally accepted in the United States of
America and include amounts that are based on management’s best judgments and estimates. Management
relies on internal accounting controls, among other things, to produce records suitable for the preparation
of financial statements. The Company employs internal auditors whose work includes evaluating and
testing internal accounting controls.
The responsibility of our independent auditors for the financial statements is limited to their expressed
opinion on the fairness of the consolidated financial statements taken as a whole. Their examination is
performed in accordance with auditing standards generally accepted in the United States of America which
include tests of our accounting records and internal accounting controls and evaluation of estimates and
judgments used to prepare the financial statements.
An Audit Committee of outside members of the Board of Directors periodically meets with management,
the external auditors and internal auditors to evaluate the scope of auditing activities and review results.
Both the external and internal auditors have full and free access to the Committee, without management
present, to discuss any appropriate matters.
Bruce E. Gross
Vice President and Chief Financial Officer
Diane J. Bessette
Vice President and Controller
43
C O N S O L I D A T E D B A L A N C E S H E E T S
Lennar Corporation and Subsidiaries
November 30, 2000 and 1999
(In thousands, except per share amounts)
2000
1999
$
287,627
42,270
83,256
11,162
2,284,548
17,036
2,301,584
257,639
277,794
3,166,914
611,000
1,234,213
40,338
1,274,551
173,310
97,826
1,640,105
417,542
$
3,777,914
2,057,647
$
778,238
1,254,650
2,032,888
516,446
2,549,334
333,532
523,661
857,193
318,955
1,176,148
–
–
6,273
4,851
985
812,501
582,299
(14,535)
985
525,623
356,058
–
(158,943)
1,228,580
3,777,914
$
(6,018)
881,499
2,057,647
ASSETS
Homebuilding:
Cash
Receivables, net
Inventories:
Construction in progress and model homes
Land held for development
Total inventories
Investments in partnerships
Other assets
Financial services
LIABILITIES AND STOCKHOLDERS’ EQUITY
Homebuilding:
Accounts payable and other liabilities
Mortgage notes and other debts payable, net
Financial services
Total liabilities
Stockholders’ equity:
Preferred stock
Common stock of $0.10 par value per share
Authorized 100,000 shares;
Issued: 2000 – 62,731; 1999 – 48,511
Class B common stock of $0.10 par value per share
Authorized 30,000 shares;
Issued: 2000 – 9,848; 1999 – 9,848
Additional paid-in capital
Retained earnings
Unearned restricted stock
Treasury stock, at cost;
2000 – 9,848 common shares; 1999 – 442 common shares
Total stockholders’ equity
See accompanying notes to consolidated financial statements.
44
C O N S O L I D A T E D S T A T E M E N T S O F E A R N I N G S
Lennar Corporation and Subsidiaries
Years Ended November 30, 2000, 1999 and 1998
(In thousands, except per share amounts)
2000
1999
1998
Revenues:
Homebuilding
Financial services
Total revenues
Costs and expenses:
Homebuilding
Financial services
Corporate general and administrative
Interest expense
Total costs and expenses
Earnings before provision for income taxes
Provision for income taxes
Net earnings
Earnings per share:
Basic
Diluted
See accompanying notes to consolidated financial statements.
$ 4,390,034
316,934
4,706,968
3,909,238
273,339
50,155
98,601
2,849,207
269,307
3,118,514
2,508,404
238,211
37,563
48,859
2,204,428
212,437
2,416,865
1,921,059
179,102
28,962
47,628
4,331,333
2,833,037
2,176,751
375,635
146,498
$
229,137
$
$
4.00
3.64
285,477
112,763
172,714
2.97
2.74
240,114
96,046
144,068
2.59
2.49
45
C O N S O L I D A T E D S T A T E M E N T S O F S T O C K H O L D E R S ’ E Q U I T Y
Lennar Corporation and Subsidiaries
Years Ended November 30, 2000, 1999 and 1998
(In thousands)
Common stock:
Beginning balance
Shares issued – U.S. Home acquisition
Shares issued – acquisitions
Shares issued – equity draw-down agreement
Shares issued – employee stock plans and restricted stock grants
Conversion of Class B common stock
Balance at November 30
Class B common stock:
Beginning balance
Conversion to common stock
Balance at November 30
Additional paid-in capital:
Beginning balance
Shares issued – U.S. Home acquisition
Shares issued – acquisitions
Payment made under acquisition agreement
Shares issued – equity draw-down agreement
Shares issued – employee stock plans and restricted stock grants
Balance at November 30
Retained earnings:
Beginning balance
Net earnings
Cash dividends – common stock
Cash dividends – Class B common stock
Balance at November 30
Unearned restricted stock:
Beginning balance
Restricted stock grants
Amortization of unearned restricted stock
Balance at November 30
Treasury stock, at cost:
Beginning balance
Repurchases of common stock
Balance at November 30
Total stockholders’ equity
See accompanying notes to consolidated financial statements.
2000
1999
1998
$
4,851)
1,298)
–)
–)
124)
–)
6,273)
985)
–)
985)
525,623)
265,569)
–)
–)
–)
21,309)
812,501)
356,058)
229,137)
(2,453)
(443)
4,824)
4,322)
–)
–)
–)
21)
6)
–)
350)
114)
35)
3)
4,851)
4,824)
991)
(6)
985)
994)
(3)
991)
523,645)
388,797)
–)
–)
(1,252))
–)
3,230)
525,623)
186,205)
172,714)
(2,418)
(443)
–)
93,746)
–)
35,957)
5,145)
523,645)
44,886)
144,068)
(2,302)
(447)
582,299)
356,058)
186,205)
–)
(15,856)
1,321)
(14,535)
(6,018)
(152,925)
(158,943)
–)
–)
–)
–)
–)
(6,018)
(6,018)
–)
–)
–)
–)
–)
–)
–)
$
1,228,580)
881,499)
715,665)
5046
C O N S O L I D A T E D S T A T E M E N T S O F C A S H F L O W S
Lennar Corporation and Subsidiaries
Years Ended November 30, 2000, 1999 and 1998
(In thousands)
Cash flows from operating activities:
Net earnings
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization
Amortization of discount/premium on debt, net
Equity in earnings from partnerships
Increase (decrease) in deferred income taxes
Changes in assets and liabilities, net of effects from acquisitions:
(Increase) decrease in receivables
(Increase) decrease in inventories
Increase in other assets
(Increase) decrease in financial services loans held for sale or disposition
Increase (decrease) in accounts payable and other liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Operating properties and equipment:
Additions
Sales
(Increase) decrease in investments in partnerships, net
(Increase) decrease in financial services mortgage loans
Purchases of investment securities
Receipts from investment securities
Acquisition of U.S. Home Corporation, net of cash acquired
Acquisition of properties and businesses, net of cash acquired
Net cash used in investing activities
Cash flows from financing activities:
Net repayments under revolving credit facilities
Net borrowings (repayments) under financial services short-term debt
Payments for tender of U.S. Home Corporation’s senior notes
Net proceeds from issuance of 9.95% senior notes
Net proceeds from issuance of 7 5/8% senior notes
Net proceeds from issuance of zero-coupon senior convertible debentures
Proceeds from other borrowings
Principal payments on other borrowings
Limited-purpose finance subsidiares, net
Common stock:
Issuance
Payment made under acquisition agreement
Repurchases
Dividends
Net cash provided by (used in) financing activities
2000
1999
1998
$
229,137)
172,714)
144,068)
44,267)
14,264)
(13,340)
(17,223)
(11,912)
223,255)
(14,179)
(75,871)
101,001)
479,399)
(16,022)
5,520)
(2,857)
(11,834)
(18,112)
14,946)
(152,386)
(5,971)
(186,716)
153,155)
(519,759)
294,988)
–)
–)
424,783)
(279,941)
45)
5,577)
–)
(152,925)
(2,896)
(76,973)
38,956)
8,774)
(19,482)
28,125)
8,173)
(77,428)
(3,639)
6,293)
(41,196)
121,290)
25,264)
(885)
(30,908)
12,469)
8,636)
(112,347)
(1,970)
(111,582)
130,451)
63,196)
(15,328)
(13,233)
–)
6,524)
1,548)
(13,119)
11,600)
–)
(19,747)
(28,522)
(856)
–)
–)
266,153)
–)
1,856)
51)
(6,724)
286)
(3,361)
3,733)
–
(190,524)
(209,772)
(239,850)
136,205)
–)
–)
–)
222,960)
114,581)
(160,570)
(127,571)
769)
727)
3,251)
(1,252)
(6,018)
(2,861)
(36,178)
41,251)
–)
–)
(2,749)
145,554)
47
–)
(136,650)
C O N S O L I D A T E D S T A T E M E N T S O F C A S H F L O W S ( C O N T I N U E D )
(In thousands)
Net increase (decrease) in cash
Cash at beginning of year
Cash at end of year
Summary of cash:
Homebuilding
Financial services
Supplemental disclosures of cash flow information:
Cash paid for interest, net of amounts capitalized
Cash paid for income taxes
Supplemental disclosures of non-cash investing and financing activities:
Assumption of mortgages related to acquisitions of properties
Common stock issued in 1998 acquisitions
Acquisition of U.S. Home Corporation:
Fair value of assets acquired, inclusive of cash of $90,997
Goodwill recorded
Liabilities assumed
Common stock issued
Cash paid
Total consideration
See accompanying notes to consolidated financial statements.
2000
215,710)
118,167)
333,877)
287,627)
46,250)
333,877)
1,157)
91,742)
5,529)
–)
$
$
$
$
$
$
$
$
1,654,444)
47,809)
(1,192,004)
$
$
$
510,249)
266,867)
243,382)
510,249)
1999
56,590)
61,577)
118,167)
83,256)
34,911)
118,167)
9,647)
108,845)
29,342)
–)
–)
–)
–)
–)
–)
–)
–)
1998
(1,022)
62,599)
61,577)
34,677)
26,900)
61,577)
15,254)
60,157)
28,913)
94,096)
–)
–)
–)
–)
–)
–)
–)
48
N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Lennar Corporation and S ubsidiaries
1. Summary of Significant Accounting Policies
included in its respective costs and expenses.
Basis of Consolidation
The accompanying consolidated financial statements include
the accounts of Lennar Corporation and all subsidiaries and
partnerships in which a controlling interest is held (the
"Company"). The Company's investments in partnerships (and
similar entities) in which a significant, but less than controlling,
interest is held are accounted for by the equity method. All
significant intercompany transactions and balances have been
eliminated.
Use of Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management
to make estimates and
assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ
from those estimates.
Revenue Recognition
Revenues from sales of homes are recognized when the sales
are closed and title passes to the new homeowners. Revenues
from sales of other real estate (including the sales of land and
operating properties) are recognized when a significant down
payment is received, the earnings process is complete and the
collection of any remaining receivables is reasonably assured.
Cash
The Company considers all highly liquid investments
purchased with a maturity of three months or less to be cash
equivalents. Due to the short maturity period of the cash
equivalents,
instruments
approximates their fair values. Cash as of November 30, 2000
and 1999 included $65.9 million and $33.5 million, respectively,
of cash held in escrow for periods of up to three days.
the carrying amount of
these
Inventories
Inventories are stated at cost unless the inventory within a
community is determined to be impaired, in which case the
impaired inventory is written down to fair value. The Company
evaluates long-lived assets for impairment based on the
undiscounted future cash flows of the assets. Write-downs of
inventories deemed to be impaired are recorded as adjustments
to the cost basis of the respective inventories. No impairment
existed at November 30, 2000 or 1999.
Start-up costs, construction overhead and selling expenses
are expensed as incurred. Homes held for sale are classified as
construction
land
development, amenities and other costs are accumulated by
specific area and allocated proportionately to homes within the
respective area.
in progress until delivered. Land,
Interest and Real Estate Taxes
Interest and real estate taxes attributable to land, homes and
operating properties are capitalized and added to the cost of
those properties as long as the properties are being actively
developed. Interest related to homebuilding, including interest
costs relieved from inventories, is included in interest expense.
Interest expense relating to the financial services operations is
During 2000, 1999 and 1998, interest costs of $128.8
million, $62.9 million and $55.7 million, respectively
(excluding the limited-purpose finance subsidiaries), were
incurred and $117.7 million, $54.8 million and $45.9 million,
respectively, were capitalized by the Company's homebuilding
operations. Capitalized interest charged to expense in 2000,
1999 and 1998 was $98.6 million, $49.0 million and $43.1
million, respectively.
Operating Properties and Equipment
Operating properties and equipment are recorded at cost and
are included in other assets in the consolidated balance sheets.
Depreciation is calculated to amortize the cost of depreciable
assets over their estimated useful lives using the straight-line
method. The estimated useful life for operating properties is 30
years and for equipment is 2 to 10 years.
Investment Securities
Investment securities that have determinable fair values are
classified as available-for-sale unless they are classified as held-
to-maturity. Securities classified as held-to-maturity are carried
at amortized cost because they are purchased with the intent and
ability to hold to maturity. Available-for-sale securities are
recorded at fair value. Any unrealized holding gains or losses on
available-for-sale securities are reported
in a separate
component of stockholders' equity, net of tax effects, until
realized.
At November 30, 2000 and 1999, investment securities
classified as held-to-maturity totaled $12.5 million and $8.9
million, respectively, and were included in other assets of the
Financial Services Division. There were no other investment
securities at November 30, 2000 or 1999.
Derivative Financial Instruments
The Company utilizes interest rate swaps and other
agreements to manage interest costs and hedge against risks
associated with changing interest rates. The Company
designates interest rate swaps and other agreements as hedges of
specific debt instruments or anticipated transactions. Interest
differentials on interest rate swaps are recognized as adjustments
to interest incurred on the related debt instruments. The related
amounts payable to or receivable from counterparties are
included in other liabilities or other assets in the consolidated
balance sheets. The fair values of the interest rate swap
agreements are not recognized in the consolidated financial
statements. Gains or losses on interest rate hedges on
anticipated debt issuances are recorded at the time the debt is
issued as part of the carrying value of the debt and recognized
over the life of the debt as an adjustment to interest incurred.
The Financial Services Division, in the normal course of
business, uses derivative financial instruments to reduce its
exposure to fluctuations in interest rates. The Division enters
into forward commitments and option contracts to protect the
value of loans held for sale or disposition from increases in
market interest rates. Adjustments are made to the carrying
values of these loans based on changes in the market value of
these hedging contracts (see Note 12).
49
N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Lennar Corporation and S ubsidiaries
Goodwill
common stock that then shared in the earnings of the Company.
Goodwill represents the excess of the purchase price over the
fair value of net assets acquired and is amortized by the
Company on a straight-line basis over periods ranging from 15
to 20 years. At November 30, 2000 and 1999, goodwill was
$110.4 million and $61.2 million, respectively (net of
accumulated amortization of $11.6 million and $6.4 million,
respectively). In the event that facts and circumstances indicate
that the carrying value of goodwill may be impaired, an
evaluation of recoverability is performed. If an evaluation is
required, the estimated future undiscounted cash flows
associated with the goodwill would be compared to the carrying
amount to determine if a write-down to fair value based on
discounted cash flows was required. No impairment existed at
November 30, 2000 or 1999. Goodwill is included in other
assets of the Homebuilding Division and the assets of the
Financial Services Division in the consolidated balance sheets.
Income Taxes
Income taxes are accounted for in accordance with Statement
of Financial Accounting Standards ("SFAS") No. 109,
Accounting for Income Taxes. Under SFAS No. 109, deferred tax
assets and liabilities are determined based on differences between
financial reporting and tax bases of assets and liabilities, and are
measured by using enacted tax rates expected to apply to taxable
income in the years in which those differences are expected to
reverse.
Stock-Based Compensation
The Company grants stock options to certain employees for
a fixed number of shares with an exercise price not less than the
fair value of the shares at the date of the grant. The Company
accounts for the stock option grants in accordance with
Accounting Principles Board ("APB") Opinion No. 25,
Accounting for Stock Issued to Employees. No compensation
expense is recognized because all stock options granted have
exercise prices not less than the market value of the Company’s
stock on the date of the grant. The impact of the pro forma
disclosures required by SFAS No. 123, Accounting for Stock-
Based Compensation, is included in Note 11. Restricted stock
grants are valued based on the market price of the common stock
on the date of grant. Unearned compensation arising from the
restricted stock grants is amortized to expense over the period of
the restrictions. The grants vest over 5 years. Unearned
restricted stock is shown as a reduction of stockholders’ equity
in the consolidated balance sheets.
Earnings per Share
In 1998, the Company adopted SFAS No. 128, Earnings per
Share, which requires a dual presentation of basic and diluted
earnings per share on the face of the statement of earnings. Basic
earnings per share is computed by dividing earnings attributable
to common shareholders by the weighted average number of
common shares outstanding for the period. Diluted earnings per
share reflects the potential dilution that could occur if securities
or other contracts to issue common stock were exercised or
converted into common stock or resulted in the issuance of
Financial Services
Mortgage loans held for sale or disposition by the Financial
Services Division are recorded at the lower of cost or market, as
determined on an aggregate basis. Premiums and discounts
recorded on these loans are presented as an adjustment to the
carrying amount of the loans and are not amortized.
When the Division sells loans into the secondary market, a
gain or loss is recognized to the extent that the sales proceeds
exceed, or are less than, the book value of the loans. Loan
origination fees, net of direct origination costs, are deferred and
recognized as a component of the gain or loss when loans are
sold. The Division either retains the servicing on the loans it
sells and recognizes servicing fee income as those services are
performed or sells the servicing rights on the loans it originates.
Upon the sale of a mortgage loan, the book value of the
mortgage loan is allocated to the mortgage servicing right and to
the loan (without the mortgage servicing right) based on its
estimated relative fair value. Mortgage servicing rights are
periodically evaluated for impairment based on the fair value of
these rights. The fair value of mortgage servicing rights is
determined by discounting the estimated future cash flows using
a discount rate commensurate with the risks involved. This
method of valuation incorporates assumptions that market
participants would use in their estimates of future servicing
income and expense, including assumptions about prepayment,
default and interest rates. For purposes of measuring
impairment, the loans underlying the mortgage servicing rights
are stratified on the basis of interest rate and type. The amount
of impairment is the amount by which the mortgage servicing
rights, net of accumulated amortization, exceed their fair value
by strata. Impairment, if any, is recognized through a valuation
allowance and a charge to current operations. Mortgage
servicing rights are amortized in proportion to, and over the
period of, the estimated net servicing income of the underlying
mortgages. The book value and fair value of mortgage servicing
rights was $11.7 million and $13.4 million, respectively, at
November 30, 2000 and $15.6 million and $23.1 million,
respectively, at November 30, 1999. A valuation allowance
related to mortgage servicing rights was not required at or for the
years ended November 30, 2000 and 1999.
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board
issued SFAS No. 133, Accounting for
("FASB")
Derivative Instruments and Hedging Activities, as
amended by SFAS No. 137 and SFAS No. 138, which is required
to be adopted for fiscal years beginning after June 15, 2000.
SFAS No. 133 will require the Company to recognize all
derivatives on the balance sheet at fair value. Derivatives that
are not hedges must be adjusted to fair value through income. If
the derivative is a hedge, depending on the nature of the hedge,
a change in the fair value of the derivative will either be offset
against the change in the fair value of the hedged asset, liability,
or firm commitment through earnings or recognized in other
comprehensive income until the hedged item is recognized
50
in earnings. The implementation of SFAS No. 133 will not
have a material impact on the Company’s results of operations or
financial position.
In December 1999, the Securities and Exchange Commission
("SEC") issued Staff Accounting Bulletin ("SAB") No. 101,
Revenue Recognition in Financial Statements, which
provides guidance on the recognition, presentation and disclosure
of revenue in financial statements filed with the SEC. SAB No.
101 is applicable for the Company beginning in the fourth quarter
of the year ending November 30, 2001. Management does not
currently believe that the implementation of SAB No. 101 will
have a material impact on the Company’s results of operations or
financial position.
In September 2000, the FASB issued SFAS No. 140,
Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities. SFAS No.
140 replaces SFAS No. 125, Accounting for Transfers
and Servicing of Financial Assets and
Extinguishments of Liabilities. SFAS No. 140 revises the
standards for accounting for securitizations and other transfers of
financial assets and collateral and requires certain disclosures,
but it carries over most of SFAS No. 125’s provisions without
reconsideration. SFAS No. 140 is effective for transfers and
servicing of financial assets and extinguishments of liabilities
occurring after March 31, 2001. Management does not currently
believe that the implementation of SFAS No. 140 will have a
material impact on the Company’s results of operations or
financial position.
Reclassification
Certain prior year amounts in the consolidated financial
statements have been reclassified to conform with the 2000
presentation.
2. Acquisitions
On May 3, 2000, the Company acquired U.S. Home
Corporation ("U.S. Home") in a transaction in which U.S. Home
stockholders received a total of approximately $243 million in
cash and 13 million shares of the Company’s common stock
amounting to approximately $267 million. The cash portion of
the acquisition was funded primarily from the Company’s
revolving credit facilities (see Note 7). U.S. Home is primarily
a homebuilder, with operations in 13 states. U.S. Home had
total revenues of $1.8 billion and net income of $72.4 million in
1999, and it delivered 9,246 homes (including joint ventures)
during that year.
The acquisition was accounted for using the purchase
method of accounting. In connection with the transaction, the
Company acquired assets with a fair value of $1.7 billion,
assumed liabilities with a fair value of $1.2 billion and recorded
goodwill of $48 million. Goodwill is being amortized on a
straight-line basis over 20 years. The results of U.S. Home are
included in the Company’s consolidated statements of earnings
since the acquisition date. Revenues and net earnings on an
unaudited pro forma basis would have been $5.5 billion and
$260.4 million, respectively, for the year ended November 30,
2000 and $4.9 billion and $233.2 million, respectively, for the
year ended November 30, 1999, had the acquisition occurred on
December 1, 1998. Pro forma earnings per share would have
been $3.81 per share diluted ($4.15 per share basic) for the year
ended November 30, 2000 and $3.07 per share diluted ($3.28
per share basic) for the year ended November 30, 1999. The pro
forma information gives effect to actual operating results prior to
the acquisition, adjusted for the pro forma effect of interest
expense, amortization of goodwill, and certain other
adjustments, together with their related income tax effect. The
pro forma information does not purport to be indicative of the
results of operations which would have actually been reported
had the acquisition occurred on December 1, 1998.
During the third quarter of 1998, the Company acquired the
properties of two California homebuilders, ColRich Communities
and Polygon Communities. During the first quarter of 1998, the
Company acquired a Northern California homebuilder, Winncrest
Homes, and the North American Asset Development Group of
companies ("NAADC"), which provide title and escrow services
in California, Arizona and Colorado. In September 1998, NAADC
acquired a small escrow company in California. In connection
with these transactions, the Company paid $202 million in cash
(inclusive of cash acquired of $12 million) and issued $94 million
in common stock (3.5 million shares). The cash portion of these
transactions was funded primarily from the Company’s revolving
credit facilities and issuance of zero-coupon senior convertible
debentures. The Company received assets with a fair value of
$335 million and assumed liabilities totaling $47 million in
connection with these transactions. In addition, the Company
recorded goodwill of $8 million relating to the acquisitions of
NAADC, Winncrest and the escrow company. Goodwill is being
amortized on a straight-line basis over 20 years. The acquisitions
were accounted for using the purchase method of accounting. In
1999, the Company paid $1.3 million to the sellers of one of the
properties acquired, under an agreement which set a floor on the
value of a portion of the shares of common stock given to the
sellers as part of the consideration for the acquisition. The
agreement allowed the Company to settle the floor in cash or stock.
As a result, the payment was recorded as a reduction in
stockholders’ equity in 1999. The results of each acquired entity
are included in the Company’s consolidated statements of earnings
since the respective acquisition dates. The pro forma effect of the
acquisitions on the results of operations is not presented as it is not
considered material.
3. Operating and Reporting Segments
In 1999, the Company adopted SFAS No. 131, Disclosures
About Segments of an Enterprise and Related Information,
which establishes new standards for the way that public
enterprises report information about operating and reporting
segments. It also establishes standards for related disclosures
about products and services, geographic areas and major
customers. The implementation of SFAS No. 131 did not have
a significant impact on the Company’s definition of operating
and reporting segments and related disclosures.
The Company has two operating and reporting segments:
Homebuilding and Financial Services. The Company’s
reportable segments are strategic business units that offer
different products and services. The accounting policies of the
51
N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Lennar Corporation and S ubsidiaries
segments are the same as those described in the summary of
4. Receivables
(In thousands)
Accounts receivable
Mortgages and notes receivable
Allowance for doubtful accounts
November 30,
1999
10,826
2,444
13,270
(2,108)
2000
$ 32,327
14,846
47,173
(4,903)
$ 42,270
11,162
5. Investments in Partnerships
Summarized financial information on a combined 100%
basis related to the Company's significant investments in
partnerships and other similar entities (collectively the
"Partnerships") accounted for by the equity method was as
follows:
(In thousands)
Assets:
Cash
Land under development
Other assets
Liabilities and equity:
Accounts payable and other liabilities
Notes and mortgages payable
Equity of:
The Company
Others
November 30,
1999
2000
$
35,504
962,835
145,866
$ 1,144,205
143,257
389,974
117,939
651,170
$
122,597
471,742
47,118
227,271
254,298
295,568
$ 1,144,205
171,960
204,821
651,170
(In thousands)
Revenues
Costs and expenses
Net earnings of partnerships $
Company share of
$
Years Ended November 30,
2000
361,684
295,224
66,460
1999
283,979
219,100
64,879
1998
277,544
192,130
85,414
net earnings
$
13,340
19,482
30,908
At November 30, 2000, the Company's equity interest in
each of these Partnerships ranged from 10% to 50%. At
November 30, 2000, these Partnerships were primarily involved
in the acquisition and development of residential land. The
Company shares in the profits and losses of these Partnerships
and, when appointed the manager of the Partnerships, receives
fees for the management of the assets. Certain of the
Partnerships have partnership interests in other partnerships. The
Company provides limited guarantees on debt of twelve of the
Company’s Partnerships and one second-tier partnership,
amounting to $142.6 million at November 30, 2000.
significant accounting policies in Note 1.
Homebuilding
Homebuilding operations include the sale and construction
of single-family attached and detached homes. These activities
also include the purchase, development and sale of residential
land by the Company and through partnerships in which it has
investments.
The following table sets forth financial
information relating to the homebuilding operations:
(In thousands)
Revenues:
Sales of homes
Sales of land and other
revenues
Equity in earnings from
partnerships
Years Ended November 30,
1998
1999
2000
$4,118,549 2,671,744 2,089,762
258,145
157,981
83,758
13,340
19,482
30,908
Total revenues
4,390,034 2,849,207 2,204,428
Costs and expenses:
Cost of homes sold
Cost of land and other expenses
Selling, general and
3,277,183 2,105,422 1,641,741
69,279
130,432
220,948
administrative
411,107
272,550
210,039
Total costs and expenses
3,909,238 2,508,404 1,921,059
Operating earnings
Depreciation and amortization $
Additions to operating
$ 480,796
33,858
340,803
29,505
283,369
20,762
properties and equipment
$
5,779
2,283
5,987
Financial Services
The Financial Services Division provides mortgage
financing, title insurance and closing services for both the
Company’s homebuyers and others. The Division packages and
resells residential mortgage loans and performs mortgage loan
servicing activities. The Division also provides high speed
Internet access, cable television, and home monitoring services
for both the Company’s homebuyers and other customers. The
following table sets forth financial information relating to the
financial services operations:
(In thousands)
Revenues
Costs and expenses
Operating earnings
Years Ended November 30,
1998
1999
2000
212,437
269,307
179,102
238,211
33,335
31,096
$ 316,934
273,339
43,595
$
Depreciation and amortization $
Interest income, net
$
Additions to operating
10,409
15,707
9,451
12,301
4,502
10,878
properties and equipment
$
10,243
13,045
7,246
52
6. Operating Properties and Equipment
(In thousands)
Furniture, fixtures and equipment
Community recreational facilities
Accumulated depreciation
$
November 30,
1999
2000
16,351
47,043
3,564
2,098
49,141
19,915
(30,556) (14,010)
$
18,585
5,905
Operating properties and equipment are included in other
assets in the consolidated balance sheets.
7. Mortgage Notes and Other Debts Payable
(In thousands)
Zero-coupon senior convertible
debentures due 2018
7 5/8% senior notes due 2009
9.95% senior notes due 2010
Term Loan B due 2007
U.S. Home senior notes due through 2009
Mortgage notes on land with fixed
interest rates from 5.4% to 12.0%
due through 2009
November 30,
1999
2000
$ 247,205
270,480
300,017
399,000
12,913
237,897
269,548
–
–
–
25,035
16,216
$ 1,254,650
523,661
In May 2000, the Company entered into new financing
arrangements related to the acquisition of U.S. Home, for
working capital and for future growth. The financings include
senior secured credit facilities with a group of financial
institutions which provide the Company with up to $1.4 billion of
financing. The credit facilities consist of a $700 million five-year
revolving credit facility, a $300 million 364-day revolving credit
facility and a $400 million term loan B (together the "Facilities").
The Company may elect to convert borrowings under the 364-
day revolving credit facility to a term loan which would mature
in May 2005. The Facilities are collateralized by the outstanding
common stock of certain of the Company’s subsidiaries. Certain
Financial Services Division subsidiaries are co-borrowers under
the Facilities. At November 30, 2000, no borrowings were
allocated to this Division. At November 30, 2000, $399 million
was outstanding under the term loan B and no amounts were
outstanding under the revolving credit facilities. The weighted
average interest rate of the Facilities at November 30, 2000 was
9.2%. The Company utilizes interest rate swap agreements to
manage interest costs and hedge against risks associated with
changing interest rates (see Notes 1 and 12).
As a result of the U.S. Home acquisition, holders of U.S.
Home’s publicly-held notes totaling $525 million were entitled
to require U.S. Home to repurchase the notes for 101% of their
principal amount within 90 days after the transaction was
completed. Independent of that requirement, in April 2000, the
Company made a tender offer for all of the notes and a
solicitation of consents to modify provisions of the indentures
relating to the notes. As a result of the tender offer and required
repurchases after
the Company paid
the acquisition,
approximately $520 million, which includes tender and consent
fees, for $508 million of U.S. Home’s notes.
In May 2000, the Company issued $325 million of 9.95%
senior notes due 2010 at a price of 92.313% for the purpose of
purchasing U.S. Home’s publicly-held notes that were tendered
in response to the Company’s offer and consent solicitation in
April 2000, and to pay associated costs and expenses. The
senior notes are guaranteed on a joint and several basis by
substantially all of the Company’s subsidiaries, other than
subsidiaries engaged in mortgage and reinsurance activities.
Proceeds from the offering, after underwriting discount and
expenses, were approximately $295 million. At November 30,
2000, the book value was $300.0 million.
In February 1999, the Company issued $282 million of
7 5/8% senior notes due 2009 for the purpose of reducing
amounts outstanding under revolving credit facilities and
redeeming outstanding 10 3/4% senior notes. Proceeds from the
offering, after underwriting and market discounts, expenses and
settlement of a related interest rate hedge agreement, were
approximately $266 million. The senior notes are collateralized
by the outstanding common stock of certain of the Company’s
subsidiaries. In March 1999, the Company redeemed all of the
outstanding 10 3/4% senior notes due 2004 of one of its
subsidiaries, Greystone Homes, Inc., at a price of 105.375% of
the principal amount outstanding plus accrued interest. Cash
paid to redeem the notes was $132 million, which approximated
their carrying value. At November 30, 2000, the book value
relating to the 7 5/8% senior notes was $270.5 million.
In July 1998, the Company issued, for $229 million, zero-
(the
coupon senior convertible debentures due 2018
"Debentures") with a face amount at maturity of $493 million.
The Debentures have an effective interest rate of 3 7/8%. The
Debentures are convertible at any time into the Company’s
common stock at the rate of 12.3768 shares per $1,000 face
amount at maturity. If the Debentures are converted during the
first five years, the Company may elect to pay cash equal to the
fair value of the common stock at the time of the conversion.
Holders have the option to require the Company to repurchase
the Debentures on any of the fifth, tenth, or fifteenth anniversary
dates from the issue date for the initial issue price plus accrued
original issue discount. The Company has the option to satisfy
the repurchases with any combination of cash and/or shares of
the Company’s common stock. The Company will have the
option to redeem the Debentures, in cash, at any time after the
fifth anniversary date for the initial issue price plus accrued
original issue discount. The Debentures are collateralized by the
outstanding common stock of certain of the Company’s
subsidiaries. At November 30, 2000, the amount outstanding,
net of unamortized original issue discount, was $247.2 million.
The minimum aggregate principal maturities of mortgage
notes and other debts payable during the five years subsequent
to November 30, 2000 are as follows: 2001 - $14.8 million; 2002
- $19.4 million; 2003 - $5.4 million; 2004 - $5.3 million and
2005 - $6.5 million. The remaining principal obligations are due
subsequent to November 30, 2005. All of the notes secured by
land contain collateral release provisions for accelerated
payment which may be made as necessary to maintain
construction schedules.
53
N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Lennar Corporation and S ubsidiaries
8. Financial Services
The assets and liabilities related to the Company's financial
services operations (as described in Note 3) were as follows:
(In thousands)
Assets:
Cash and receivables, net
Mortgage loans held for sale
or disposition, net
Mortgage loans, net
Mortgage servicing rights, net
Operating properties and equipment, net
Title plants
Goodwill, net
Other
Limited-purpose finance subsidiaries
Liabilities:
Notes and other debts payable
Other
Limited-purpose finance subsidiaries
November 30,
1999
2000
$ 79,025
54,031
376,452
42,504
11,653
18,869
15,530
25,199
21,874
19,894
$ 611,000
229,042
22,562
15,564
21,378
14,587
20,070
14,684
25,624
417,542
$ 428,966
253,010
67,586
19,894
40,321
25,624
$ 516,446
318,955
At November 30, 2000, the Division had two warehouse
lines of credit totaling $360 million to fund the Division's
mortgage loan and servicing activities. Borrowings under these
facilities were $339.4 million and $236.6 million at November
30, 2000 and 1999, respectively, and were collateralized by
mortgage loans with outstanding principal balances of $297.2
million and $221.7 million, respectively, and by servicing rights
relating to approximately $1.8 billion and $2.5 billion of loans,
respectively. There are several interest rate pricing options
which fluctuate with market rates. The borrowing rate has been
reduced to the extent that custodial escrow balances exceeded
required compensating balance levels. The effective interest rate
on these facilities at November 30, 2000 and 1999 was 6.4% and
4.5%, respectively. The warehouse lines of credit mature
through November 2002 at which time the Company expects
these facilities to be renewed. At November 30, 2000, the
Division also had advances under a repurchase agreement
amounting to $51.9 million. Borrowings under the agreement
are collateralized by mortgage loans and had an effective interest
rate of 7.5% at November 30, 2000.
Certain of the Division's servicing agreements require it to
pass through payments on loans even though it is unable to
collect such payments and, in certain instances, be responsible
for losses incurred through foreclosure. Exposure to this credit
risk is minimized through geographical diversification and
review of the mortgage loan servicing created or purchased.
Management believes that it has provided adequate reserves for
expected losses based on the fair value of the underlying
collateral. Provisions for these losses have not been material to
the Company.
In prior years, limited-purpose finance subsidiaries of the
Financial Services Division placed mortgages and other
receivables as collateral for various long-term financings. These
limited-purpose finance subsidiaries pay the principal of, and
interest on, these financings primarily from the cash flows
generated by the related pledged collateral, which includes a
combination of mortgage notes, mortgage-backed securities and
funds held by a trustee. At November 30, 2000 and 1999, the
balances outstanding for the bonds and notes payable were $19.9
million and $25.6 million, respectively. The borrowings mature
in years 2013 through 2018 and carry interest rates ranging from
4.9% to 13.2%. The annual principal repayments are dependent
upon collections on the underlying mortgages, including
prepayments, and cannot be reasonably determined.
9. Income Taxes
The provision for
income
taxes consisted of
the
following:
(In thousands)
Current:
Federal
State
Deferred:
Federal
State
Years Ended November 30,
1999
2000
1998
$146,666
..17,055
163,721
71,091
13,547
84,638
(15,672)
(1,551)
(17,223)
$146,498
24,422
3,703
28,125
112,763
74,739
9,308
84,047
6,493
5,506
11,999
96,046
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of the assets and
liabilities for financial reporting purposes and the amounts used
for income tax purposes. The tax effects of significant temporary
differences that give rise to the net deferred tax asset are as
follows:
(In thousands)
Deferred tax assets:
Acquisition adjustments
Reserves and accruals
Net operating loss and capital loss
carryforwards, tax affected
Investments in partnerships
Deferred gains
Other
Deferred tax assets
Less: valuation allowance
Total deferred tax assets, net
Deferred tax liabilities:
Capitalized expenses
Deferred gains
Installment sales
Other
Total deferred tax liabilities
Net deferred tax asset
November 30,
2000
1999
$75,997
74,972
13,900
37,557
4,466
3,386
1,900
7,412
168,133
(7,117)
161,016
14,922
–
2,281
32,361
49,564
$111,452
5,788
4,099
–
2,923
64,267
(8,508)
55,759
14,538
1,065
2,547
4,634
22,784
32,975
The Homebuilding Division’s net deferred tax asset
amounting to $110.0 million and $33.3 million at November 30,
2000 and 1999, respectively, is included in other assets in the
consolidated balance sheets.
54
At November 30, 2000 and 1999, the Financial Services
Division had a net deferred tax asset of $1.5 million and a net
deferred tax liability of $0.3 million, respectively.
SFAS No. 109 requires the reduction of the deferred tax
assets by a valuation allowance if, based on the weight of
available evidence, it is more likely than not that a portion or all
of the deferred tax asset will not be realized. At November 30,
2000 and 1999, the Company had a valuation allowance of $7.1
million and $8.5 million, respectively, for net operating loss and
capital loss carryforwards and certain acquisition adjustments
which currently are not expected to be realized. Based on
management's assessment, it is more likely than not that the net
deferred tax asset will be realized through future taxable
earnings.
A reconciliation of the statutory rate and the effective tax rate
follows:
Statutory rate
State income taxes, net
of federal income tax benefit
Other
% of Pre-tax Income
1999
35.0
1998
35.0
2000
35.0
3.4
0.6
3.9
0.6
4.0
1.0
Effective rate
39.0
39.5
40.0
10. Earnings Per Share
Basic and diluted earnings per share for the years ended
November 30, 2000, 1999 and 1998 were calculated as follows:
(In thousands,
except per share amounts)
Numerator:
Numerator for basic earnings
2000
1999
1998
per share – net earnings
$ 229,137
172,714 144,068
Interest on zero-coupon
convertible debentures,
net of tax
Numerator for diluted earnings
5,808
5,538
1,732
per share
$ 234,945
178,252 145,800
Denominator:
Denominator for basic earnings
per share – weighted average
shares
Effect of dilutive securities:
Employee stock options and
restricted stock
Zero-coupon convertible
57,341
58,246
55,660
1,053
684
945
debentures
6,105
6,105
2,019
Denominator for diluted earnings
per share – adjusted weighted
average shares and assumed
conversions
64,499
65,035
58,624
Basic earnings per share
Diluted earnings per share
$
$
4.00
3.64
2.97
2.74
2.59
2.49
11. Capital Stock
Preferred Stock
The Company is authorized to issue 500,000 shares of
preferred stock with a par value of $10 per share and 100
million shares of participating preferred stock with a par value
of $0.10 per share. No shares of preferred stock have been
issued as of November 30, 2000.
Common Stock
The Company has two classes of common stock. The
common stockholders have one vote for each share owned in
matters requiring stockholder approval and during both 2000
and 1999 received quarterly dividends of $0.0125 per share.
The Class B common stockholders have ten votes for each
share of stock owned and during both 2000 and 1999 received
quarterly dividends of $0.01125 per share. As of November
30, 2000, Mr. Leonard Miller, Chairman of the Board of the
Company, owned or controlled 9.8 million shares of common
stock and Class B common stock, which represented
approximately 65% voting control of the Company.
In September 1999, the Company’s Board of Directors
approved the repurchase of up to 10 million shares of the
Company’s outstanding common stock. The Company may
repurchase shares, from time-to-time, subject to market
conditions. In February 2000, the Company’s Board of
Directors approved the repurchase of an additional 5 million
shares of the Company’s outstanding common stock. During
2000 and 1999, under these approvals, the Company
repurchased approximately 9,406,000 and 442,000 shares of its
outstanding common stock for an aggregate purchase price of
approximately $152.9 million and $6.0 million, respectively.
In July 2000 and March 1999, the Company filed shelf
registration statements and prospectuses with the SEC to offer,
from time-to-time, its common stock, preferred stock,
depositary shares, debt securities or warrants at an aggregate
initial offering price not to exceed $1 billion in total. Proceeds
can be used for repayment of debt, acquisitions and general
corporate purposes. As of November 30, 2000, no securities
had been issued under these two registration statements.
In March 1998, the Company entered into an equity draw-
down agreement with a major international banking firm (the
"Firm") under which the Company has the option to sell
common stock, up to proceeds of $120 million, to the Firm in
increments of up to $15 million (or such higher amount as may
be agreed to by the parties) per month. In the event the
Company elects to sell common stock, the sales price is equal
to 98% of the average of the daily high and low stock price
from time-to-time. As of November 30, 2000, the Company
had issued 1.1 million shares under the agreement resulting in
proceeds to the Company of $36 million, all of which occurred
in fiscal 1998.
55
N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Lennar Corporation and S ubsidiaries
Restrictions on Payment of Dividends
Other than as required to maintain the financial ratios and net
worth requirements under the revolving credit facilities, there
are no restrictions on the payment of dividends on common
stock by the Company. The cash dividends paid with regard to a
share of Class B common stock in a calendar year may not be
more than 90% of the cash dividends paid with regard to a share
of common stock in that calendar year. There are no agreements
which restrict the payment of dividends by subsidiaries of the
Company other than as required to maintain the financial ratios
and net worth requirements under the Financial Services
Division’s warehouse lines of credit.
Stock Option Plans
The Lennar Corporation 2000 Stock Option and Restricted
Stock Plan (the "2000 Plan"), which is subject to stockholder
approval which will be sought at the 2001 annual meeting of the
Company’s stockholders, provides for the granting of stock
options and awards of restricted stock of the Company’s
common stock to certain officers, employees and directors. No
options granted under the 2000 Plan may be exercisable until at
least six months after the date of the grant. Thereafter, exercises
are permitted in varying installments, on a cumulative basis.
Each stock option and stock appreciation right granted will
expire on a date determined at the time of the grant, but not more
than 10 years after the date of the grant. In the third quarter of
2000, 860,000 shares of restricted stock were awarded under the
2000 Plan. The stock was valued based on its market price on
the date of the grant. The grants vest over 5 years. Unearned
compensation arising from the restricted stock is shown as a
reduction of stockholders’ equity in the consolidated balance
sheets.
The Lennar Corporation 1997 Stock Option Plan (the "1997
Plan") provides for the granting of options or stock appreciation
rights to certain key employees of the Company to purchase
shares at prices not less than market value as of the date of the
grant. No options granted under the 1997 Plan may be
exercisable until at least six months after the date of the grant.
Thereafter, exercises are permitted in varying installments, on a
cumulative basis. Each stock option and stock appreciation right
granted will expire on a date determined at the time of the grant,
but not more than 10 years after the date of the grant.
The Lennar Corporation 1991 Stock Option Plan (the "1991
Plan") provided for the granting of options to certain key
employees of the Company to purchase shares at prices not less
than market value as of the date of the grant. No options granted
under the 1991 Plan may be exercisable until at least six months
after the date of the grant. Thereafter, exercises are permitted in
varying installments, on a cumulative basis. Each stock option
granted will expire on a date determined at the time of the grant,
but not more than 10 years after the date of the grant.
A summary of the Company’s stock option activity for the years ended November 30, 2000, 1999 and 1998 was as follows:
2000
1999 1998
Weighted
Average
Exercise
Price
$ 16.20
$ 17.68
$ 19.43
$ 11.74
$ 16.68
$ 14.14
Stock
Options
3,445,230)
671,000)
(256,652)
(380,895))
3,478,683)
1,422,734)
3,890,822)
Stock
Options
3,679,256)
211,000)
(235,108)
(209,918)
3,445,230)
1,299,743)
1,310,072)
Weighted
Average
Exercise
Price
$ 15.52
$ 23.95
$ 19.83
$ 10.05
$ 16.20
$ 11.87
Stock
Options
2,815,880)
1,372,500)
(201,498)
(307,626))
3,679,256)
1,142,616
1,334,622
Weighted
Average
Exercise
Price
$ 10.60)
$ 24.12)
$ 16.60)
$0 8.41)
$ 15.52)
$ 10.69)
$ 7.84
$ 9.40
$ 9.03
Outstanding, beginning of year
Grants
Terminations
Exercises
Outstanding, end of year
Exercisable, end of year
Available for grant, end of year
Weighted average fair value per share
of options granted during the year
under SFAS No. 123
56
The following table summarizes information about fixed stock options outstanding at November 30, 2000:
Options Outstanding Options Exercisable
Range of
Per Share
Exercise Prices
$ 2.56 – $ 4.56
$ 7.28 – $ 9.97
$10.14 – $18.53
$19.47 – $ 34.13
Number
Outstanding at
November 30,
2000
Weighted Average
Remaining
Contractual
Life
Weighted
Average
Per Share
Exercise Price
Number
Outstanding at
November 30,
2000
Weighted
Average
Per Share
Exercise Price
272,426
384,171
1,641,151
1,180,935
0.6 years
2.3 years
6.4 years
4.1 years
$ 3.27
$ 9.43
$15.03
$24.42
128,250
288,829
683,875
321,780
$ 2.79
$ 9.77
$13.04
$24.94
The Company applies APB Opinion No. 25 and related
Interpretations in accounting for its fixed stock option plans.
No compensation expense is recognized because all stock
options granted have exercise prices not less than the market
value of the Company’s stock on the date of the grant. Under
SFAS No. 123, compensation cost for the Company’s stock-
based compensation plans would be determined based on the
fair value at the grant dates for awards under those plans. Had
the Company adopted SFAS No. 123 in accounting for fixed
stock option plans, the pro forma effect would not be material
to the Company’s reported net earnings and earnings per share
for the years ended November 30, 2000, 1999 and 1998.
The fair value of each option grant was estimated on the
grant date using the Black-Scholes option-pricing model with
the following assumptions:
2000 1999 1998
0.2% - 0.3% 0.2% - 0.3% 0.1% - 0.3%
Dividend yield
Volatility rate
32% - 39%
39%- 44% 40% - 42%
Risk-free interest rate 7.1%- 7.5% 4.8% - 6.1% 4.7% - 6.0%
Expected option life (years) 3.9 - 7.7
3.9 - 7.7
3.9 - 7.7
Employee Stock Ownership/401(k) Plan
Prior to 1998, the Employee Stock Ownership/401(k) Plan
(the "Plan") provided shares of stock to employees who had
completed one year of continuous service with the Company.
During 1998, the Plan was amended to exclude any new shares
from being provided to employees. All prior year contributions
to employees actively employed on or after October 1, 1998
vest at a rate of 20% per year over a five year period. All active
participants in the plan whose employment terminated prior to
October 1, 1998 vested based upon the plan that was active
prior to their termination of employment. Under the 401(k)
portion of the Plan, contributions made by employees can be
invested in a variety of mutual funds, and the Company may
also make contributions for the benefit of employees. The
Company records as compensation expense an amount which
approximates the vesting of the contributions to the Employee
Stock Ownership portion of the Plan, as well as the Company's
contribution to the 401(k) portion of the Plan. This amount was
$4.7 million in 2000, $3.1 million in 1999 and $2.9 million in
1998.
12. Financial Instruments
The following table presents the carrying amounts and
estimated fair values of financial instruments held by the
Company at November 30, 2000 and 1999, using available
market information and appropriate valuation methodologies.
Considerable judgment is required in interpreting market data
to develop the estimates of fair value. Accordingly, the
estimates presented herein are not necessarily indicative of the
amounts that the Company could realize in a current market
exchange. The use of different market assumptions and/or
estimation methodologies may have a material effect on the
estimated fair value amounts. The table excludes cash,
receivables and accounts payable, which had fair values
approximating their carrying values.
57
N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Lennar Corporation and S ubsidiaries
(In thousands)
ASSETS
Financial services:
November 30,
2000
1999
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Mortgage loans held for sale or disposition, net
Mortgage loans, net
Investments held-to-maturity
Limited-purpose finance subsidiaries -
collateral for bonds and notes payable
$ 376,452
42,504
12,488
379,499)
42,014)
12,507)
229,042
22,562
8,902
231,116)
22,112)
8,904)
19,894
20,320)
25,624
26,499)
LIABILITIES
Homebuilding:
Mortgage notes and other debts payable
$1,254,650
1,287,902)
523,661
466,311)
Financial services:
Notes and other debts payable
Limited-purpose finance subsidiaries -
bonds and notes payable
OFF-BALANCE SHEET FINANCIAL INSTRUMENTS
Homebuilding:
Interest rate swap agreements
Financial services:
Commitments to originate loans
Forward commitments to sell loans
$ 428,966
428,966)
253,010
252,865)
19,894
20,169)
25,624
26,638)
$
$
–
–
–
(5,707))
445
(119)
–
–
–
1,724)
(197)
434)
The following methods and assumptions are used by the
Company in estimating fair values:
Mortgage notes and other debts payable: The fair value of
fixed rate borrowings is based on quoted market prices.
Variable rate borrowings are tied to market indices and thereby
approximate fair value.
Financial services assets, liabilities and off-balance sheet
financial instruments: The fair values are based on quoted
market prices, if available. The fair values for instruments
which do not have quoted market prices are estimated by the
Company on the basis of discounted cash flows or other
financial information.
Interest rate swap agreements: The fair value is based on
dealer quotations and generally represents an estimate of the
amount the Company would pay or receive to terminate the
agreement at the reporting date.
The Company utilizes interest rate swap agreements to
manage interest costs and hedge against risks associated with
changing interest rates. Counterparties to these agreements
are major financial institutions. Credit loss from counterparty
non-performance is not anticipated. A majority of the
Company's available variable rate borrowings are based on the
London Interbank Offered Rate ("LIBOR") index. At
November 30, 2000, Lennar had six interest rate swap
agreements outstanding with a total notional amount of $400
million, which will mature at various dates through 2007.
These agreements fixed the LIBOR index at an average
interest rate of 6.6% at November 30, 2000. The effect of the
interest rate swap agreements on interest incurred and on the
average cost of borrowing was a decrease for the year ended
November 30, 2000 of $1.2 million and 0.08% and an increase
of $1.8 million and 0.22% and $0.8 million and 0.11% for the
years ended November 30, 1999 and 1998, respectively.
During 1998, the Company entered into a contract to hedge
the interest rate risk associated with the anticipated issuance of
$200 million of 10-year senior notes. The contract fixed the
yield on the 10-year U.S. Treasury Note (which was used as a
basis for determining the interest rate on the Company’s
issuance of the senior notes) at 5.8%. In February 1999, the
Company issued $282 million of 10-year senior notes (see
Note 7). The payment made to the counterparty to this
agreement at the time the senior notes were issued was $11.2
million. Such amount was recorded as a reduction of the
carrying value of the senior notes and will be amortized as an
adjustment to interest incurred over the life of the senior notes.
As of November 30, 2000, the Financial Services
Division's pipeline of loans in process totaled approximately
$1.2 billion. There is no exposure to credit risk in this type of
commitment until the loans are funded. However, the Division
uses the same credit policies in the approval of the
commitments as are applied to all lending activities. Since a
portion of these commitments is expected to expire without
being exercised by the borrower, the total commitments do not
necessarily represent future cash requirements. There is no
exposure to market risk until a rate commitment is extended
by the Company to a borrower. Loans in the pipeline of loans
in process for which interest rates were committed to the
borrower totaled approximately $106.0 million as of
November 30, 2000. Substantially all of these commitment
58
N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Lennar Corporation and S ubsidiaries
s are for periods of 30 days or less.
Mandatory mortgage-backed securities ("MBS") forward
commitments are used by the Company to hedge its interest
rate exposure during the period from when the Company
extends an interest rate lock to a loan applicant until the time
at which the loan is sold to an investor. These instruments
involve, to varying degrees, elements of credit and interest
rate risk. Credit risk is managed by the Company by entering
into agreements with investment bankers with primary dealer
status and with permanent investors meeting the credit
standards of the Company. At any time, the risk to the
Company, in the event of default by the purchaser, is the
difference between the contract price and current market
value. At November 30, 2000, the Company had open
commitments amounting to $360.1 million to sell MBS with
varying settlement dates through February 2001.
13. Commitments and Contingent Liabilities
The Company and certain subsidiaries are parties to
various claims, legal actions and complaints arising in the
ordinary course of business. In the opinion of management,
the disposition of these matters will not have a material
adverse effect on the financial condition of the Company.
The Company is subject to the usual obligations associated
with entering into contracts for the purchase (including option
contracts), development and sale of real estate in the routine
conduct of its business. Option contracts for the purchase of
land permit the Company to acquire portions of properties when
it is ready to build homes on them. The use of option contracts
allows the Company to manage the financial risk of adverse
market conditions associated with longer-term land holdings.
The Company has entered into agreements to lease certain
office facilities and equipment under operating leases. Future
minimum payments under the noncancelable leases are as
follows: 2001 - $26.2 million; 2002 - $20.3 million; 2003 -
$14.9 million; 2004 - $10.2 million; 2005 - $5.7 million and
thereafter - $14.4 million. Rental expense for the years ended
November 30, 2000, 1999 and 1998 was $36.6 million, $24.3
million and $14.3 million, respectively.
The Company is committed, under various letters of credit,
to perform certain development and construction activities and
provide certain guarantees in the normal course of business.
Outstanding letters of credit under these arrangements totaled
$98.8 million at November 30, 2000. The Company also had
outstanding performance and surety bonds with estimated
costs to complete of $622.4 million related principally to its
obligations for site improvements at various projects at
November 30, 2000. The Company does not believe that any
such bonds are likely to be drawn upon.
14. Supplemental Financial Information
As discussed in Note 7, the Company issued $325 million
of 9.95% senior notes due 2010. The Company's obligations
to pay principal, premium, if any, and interest under the notes
are guaranteed on a joint and several basis by substantially all
of its subsidiaries, other than subsidiaries engaged in mortgage
and title reinsurance activities. The Company has determined
that separate, full financial statements of the guarantors would
not be material to investors and, accordingly, supplemental
financial information for the guarantors is presented.
Consolidating statements of cash flows are not presented
because cash flows for the non-guarantor subsidiaries were not
significant for any of the periods presented.
59
N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Lennar Corporation and S ubsidiaries
(In thousands)
ASSETS
Homebuilding:
Cash and receivables, net
Inventories
Investments in partnerships
Other assets
Investments in subsidiaries
Financial services
Consolidating Balance Sheet
November 30, 2000
Lennar
Corporation
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries Eliminations
Total
$ 211,635
117,649
–
–
2,295,191
257,639
85,936
191,858
1,495,680
200,488
613
6,393
–
–
–
–
–
–
–
329,897
2,301,584
257,639
277,794
(1,696,168)
–
1,793,251
3,062,825
7,006
(1,696,168) 3,166,914
–
16,604
594,396
–
611,000
$ 1,793,251
3,079,429
601,402
(1,696,168) 3,777,914
LIABILITIES AND STOCKHOLDERS’ EQUITY
Homebuilding:
Accounts payable and other liabilities
$ 225,362
550,659
2,217
Mortgage notes and other debts payable, net
1,216,703
37,947
–
(877,394)
993,477
(116,083)
564,671
1,582,083
(113,866)
–
1,666
514,780
564,671
1,583,749
400,914
–
–
–
–
–
–
778,238
1,254,650
–
2,032,888
516,446
2,549,334
1,228,580
1,495,680
200,488
(1,696,168) 1,228,580
$ 1,793,251
3,079,429
601,402
(1,696,168) 3,777,914
Intercompany
Financial services
Total liabilities
Stockholders’ equity
60
(In thousands)
ASSETS
Homebuilding:
Cash and receivables, net
Inventories
Investments in partnerships
Other assets
Investments in subsidiaries
Financial services
Consolidating Balance Sheet
November 30, 1999
Lennar
Corporation
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries Eliminations
Total
$
48,343
45,534
–
–
1,267,050
173,310
63,143
34,683
573,291
107,900
541
7,501
–
–
–
–
–
–
–
94,418
1,274,551
173,310
97,826
(681,191)
–
684,777
1,628,477
8,042
(681,191) 1,640,105
–
26,132
391,410
–
417,542
$ 684,777
1,654,609
399,452
(681,191) 2,057,647
LIABILITIES AND STOCKHOLDERS’ EQUITY
Homebuilding:
Accounts payable and other liabilities
$ 103,002
228,421
2,109
Mortgage notes and other debts payable, net
Intercompany
Financial services
Total liabilities
Stockholders’ equity
507,445
16,216
–
(807,169)
827,316
(196,722) 1,071,953
(20,147)
(18,038)
–
9,365
309,590
(196,722) 1,081,318
291,552
–
–
–
–
–
–
333,532
523,661
–
857,193
318,955
1,176,148
881,499
573,291
107,900
(681,191)
881,499
$ 684,777
1,654,609
399,452
(681,191) 2,057,647
61
N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
Lennar Corporation and S ubsidiaries
Consolidating Statement of Earnings
Year Ended November 30, 2000
Lennar
Corporation
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries Eliminations
Total
$
–)
–)
–)
_)
–)
4,387,157
2,877
47,818
269,116
4,434,975
271,993
–
–
4,390,034
316,934
–) 4,706,968
3,906,772
2,466
–) 3,909,238
52,533
220,806
50,155)
–
–)
98,601
–
–
50,155)
4,057,906
223,272
(50,155)
377,069
(20,298)
147,057
48,721
19,739
–
–
–
–
–
–
273,339
50,155
98,601
4,331,333
375,635
146,498
258,994)
28,982
–
(287,976)
–
$ 229,137
258,994
28,982
(287,976)
229,137
Consolidating Statement of Earnings
Year Ended November 30, 1999
Lennar
Corporation
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries Eliminations
Total
$
–)
–)
–)
_)
–)
2,848,105
1,102
31,025
238,282
2,879,130
239,384
–
–
2,849,207
269,307
–) 3,118,514
2,506,332
2,072
–) 2,508,404
34,115
204,096
37,563)
–
–)
48,859
–
–
37,563)
2,589,306
206,168
(37,563)
289,824
(15,823)
114,480
33,216
14,106
–
–
–
–
–
–
238,211
37,563
48,859
2,833,037
285,477
112,763
194,454)
19,110
–
(213,564)
–
$ 172,714
194,454
19,110
(213,564)
172,714
(In thousands)
Revenues:
Homebuilding
Financial services
Total revenues
Costs and expenses:
Homebuilding
Financial services
Corporate general and administrative
Interest
Total costs and expenses
Earnings (loss) before income taxes
Provision (benefit) for income taxes
Equity in earnings from subsidiaries
Net earnings
(In thousands)
Revenues:
Homebuilding
Financial services
Total revenues
Costs and expenses:
Homebuilding
Financial services
Corporate general and administrative
Interest
Total costs and expenses
Earnings (loss) before income taxes
Provision (benefit) for income taxes
Equity in earnings from subsidiaries
Net earnings
62
(In thousands)
Revenues:
Homebuilding
Financial services
Total revenues
Costs and expenses:
Homebuilding
Financial services
Corporate general and administrative
Interest
Total costs and expenses
Earnings (loss) before income taxes
Provision (benefit) for income taxes
Equity in earnings from subsidiaries
Net earnings
15. Quarterly Data (unaudited)
(In thousands, except per share amounts)
2000
Revenues
Earnings before income taxes
Net earnings
Earnings per share:
Basic
Diluted
1999
Revenues
Earnings before income taxes
Net earnings
Earnings per share:
Basic
Diluted
Consolidating Statement of Earnings
Year Ended November 30, 1998
Lennar
Corporation
Guarantor
Subsidiaries
Non-
Guarantor
Subsidiaries Eliminations
Total
$
–)
–)
–)
_)
–)
2,167,869
36,559
19,889
192,548
2,187,758
229,107
–
–
2,204,428
212,437
–) 2,416,865
1,890,532
30,527
–) 1,921,059
23,674
155,428
28,962)
–
–)
47,628
–
–
28,962)
1,961,834
185,955
(28,962)
225,924
(11,472)
161,558)
90,369
26,003
43,152
17,149
–
–
–
–
–
–
179,102
28,962
47,628
2,176,751
240,114
96,046
–
(187,561)
–
$ 144,068
161,558
26,003
(187,561)
144,068
First
Second
Third
Fourth
$
$
$
$
$
$
$
$
$
$
640,367
36,412
22,211
0.42
0.40
590,599
46,053
27,862
0.48
0.45
968,180
59,739
36,441
0.69
0.64
738,357
65,440
39,591
0.68
0.63
1,376,215
100,011
61,007
1,722,206
179,473
109,478
0.99
0.90
819,497
75,162
45,473
0.78
0.72
1.77
1.59
970,061
98,822
59,788
1.03
0.95
Quarterly and year-to-date computations of per share amounts are made independently. Therefore, the sum of per share amounts
for the quarters may not agree with per share amounts for the year.
63
S H A R E H O L D E R I N F O R M A T I O N
Lennar Corporation and S ubsidiaries
Annual Meeting
The Annual Stockholders' Meeting will be
held at 11:00 a.m. on April 3, 2001
at the Doral Park Golf and Country Club,
5001 N.W. 104th Avenue
Miami, Florida 33178
Registrar and Transfer Agent
BankBoston, N.A.
EquiServe L.P.
150 Royall Street
Canton, Massachusetts 02021
Listing
New York Stock Exchange (LEN)
Corporate Counsel
Clifford Chance Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
Independent Auditors
Deloitte & Touche LLP
200 South Biscayne Boulevard, Suite 400
Miami, Florida 33131
Form 10-K Available
A copy of the Company's Annual Report on
Form 10-K as filed with the Securities and Exchange
Commission is available without charge to any stockholder
upon written request to:
Investor Relations
Lennar Corporation
700 N.W. 107th Avenue
Miami, Florida 33172
Telephone: (305) 559-4000
C O M P A R A T I V E C O M M O N S T O C K D A T A
Fiscal
Quarter
First
Second
Third
Fourth
Common Stock Prices
New York Stock Exchange
High/Low Price
2000
1999
$18.63 – 15.25
21.75 – 16.25
29.44 – 17.88
34.88 – 25.63
27.88 – 21.63
27.81 – 20.50
24.94 – 17.50
19.44 – 13.06
Cash Dividends
Per Share
Common Stock
1999
2000
11/4 ¢
11/4 ¢
11/4 ¢
11/4 ¢
11/4 ¢
11/4 ¢
11/4 ¢
11/4 ¢
Class B
2000
11/8 ¢
11/8 ¢
11/8 ¢
11/8 ¢
1999
11/8 ¢
11/8 ¢
11/8 ¢
11/8 ¢
As of November 30, 2000, there were approximately 2,200 holders of record of the Company’s common stock.
64
Directors
LEONARD MILLER
Chairman of the Board, Lennar Corporation
STUART A. MILLER
President and Chief Executive Officer, Lennar Corporation
ROBERT J. STRUDLER
Vice Chairman and Chief Operating Officer, Lennar
Corporation
IRVING BOLOTIN
Retired Senior Vice President, Lennar Corporation
STEVEN L. GERARD
Chief Executive Officer of Century Business Services, Inc.
JONATHAN M. JAFFE
Vice President and Regional President,
Lennar Corporation
R. KIRK LANDON
Chairman of the Board, Innovative Surveillance
Technology; Former Chairman of the Board, American
Bankers Insurance Group
SIDNEY LAPIDUS
Managing Director, E.M. Warburg, Pincus & Co., LLC
HERVÉ RIPAULT
Associate of Optigestiom S. A.
ARNOLD P. ROSEN
Retired Executive Vice President, Lennar Corporation
STEVEN J. SAIONTZ
Chief Executive Officer, LNR Property Corporation
Officers and Senior Management
LENNAR CORPORATE
STUART A. MILLER
President and Chief Executive
Officer
ROBERT J. STRUDLER
Vice Chairman and Chief
Operating Officer
BRUCE E. GROSS
Vice President and Chief Financial
Officer
MARSHALL AMES
Vice President
DIANE J. BESSETTE
Vice President and Controller
CRAIG M. JOHNSON
Vice President, Community
Development; President, Strategic
Technologies, Inc.
WAYNEWRIGHT MALCOLM
Vice President and Treasurer
DAVID B. McCAIN
Vice President, General Counsel
and Secretary
FRANK MATTHEWS
Director - Human Resources
JOHN R. NYGARD, III
Chief Information Officer
LENNAR HOMEBUILDING
JONATHAN M. JAFFE
Vice President, Lennar
Corporation; Regional President
SAM B. CRIMALDI
Regional President
EMILE HADDAD
Regional President
CHRISTOPHER B. REDIGER
Regional President
MICHAEL T. RICHARDSON
Regional President
JEFF ROOS
Regional President
MARK SHEVORY
Regional President
PHILIP J. WALSH, III
Regional President
RONALD L. GEORGE
Director - Tax
JAY WISSINK
Regional President
MARC CHASMAN
Senior Vice President, Lennar
Homes of California, Inc.
LENNAR FINANCIAL SERVICES
ALLAN J. PEKOR
Vice President, Lennar Corporation;
President, Lennar Financial
Services, Inc.
JAMES R. PETTY
President, Universal American
Mortgage Company
NANCY A. KAMINSKY
Executive Vice President and Chief
Financial Officer, Lennar Financial
Services, Inc.
LINDA REED
Executive Vice President, Lennar
Financial Services, Inc.; President,
Lennar Title Services, Inc.
PETER STRAWSER
Executive Vice President,
Operations, Universal American
Mortgage Company
Statement Regarding Forward-Looking Information
Certain statements contained in this annual report may be “forward-looking statements” as defined in the Private Securities Litigation Reform
Act of 1995. By their nature, forward-looking statements involve risks, uncertainties and other factors that may cause actual results to differ
materially from those which are anticipated. With regard to the Company, these factors include, but are not limited to, changes in general
economic conditions, the market for homes generally and in areas where the Company has developments, the availability and cost of land
suitable for residential development, materials prices, labor costs, interest rates, consumer confidence, competition, environmental factors and
government regulations affecting the Company’s operations.
7 0 0 N . W . 1 0 7 t h A v e n u e , M i a m i , F L 3 3 1 7 2
w w w . l e n n a r . c o m
3890-AR-01