-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GEsNHLX/f91mOiT7SgPv47jj78lITcuVoqJUEmXSNvstYJwysG/NAu4Ixs7x7OpG efA5DxutQa2Pz7xklUDJaQ== 0000950170-96-000064.txt : 19960229 0000950170-96-000064.hdr.sgml : 19960229 ACCESSION NUMBER: 0000950170-96-000064 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19951130 FILED AS OF DATE: 19960228 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LENNAR CORP CENTRAL INDEX KEY: 0000058696 STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531] IRS NUMBER: 591281887 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-06643 FILM NUMBER: 96527319 BUSINESS ADDRESS: STREET 1: 700 NW 107TH AVE CITY: MIAMI STATE: FL ZIP: 33172 BUSINESS PHONE: 3055594000 10-K405 1 LENNAR CORPORATION ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) For the fiscal year ended November 30, 1995 Commission file number 1-6643 LENNAR CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 59-1281887 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 700 NORTHWEST 107TH AVENUE, MIAMI, FLORIDA 33172 (Address of principal executive offices) (Zip Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (305) 559-4000 SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED - ------------------- --------------------- Common Stock, par value 10(cent) New York Stock Exchange SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [x] NO ____ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. YES [x] NO ____ As of February 5, 1996, registrant had outstanding 25,901,227 shares of common stock and 9,985,731 shares of Class B common stock (which can be converted into common stock). Of the total shares outstanding 25,430,354 shares of common stock and 40,601 shares of Class B common stock, having a combined aggregate market value (assuming the Class B shares were converted) on that date of $674,980,308, were held by non-affiliates of the registrant. Documents incorporated by reference: RELATED SECTION DOCUMENTS - ------------------------------------------------------------------------------- II Pages 19 through 40 of the Annual Report to Stockholders for the year ended November 30, 1995. III Definitive Proxy Statement to be filed pursuant to Regulation 14 A on or before March 29, 1996. =============================================================================== PART I ITEM 1. BUSINESS. GENERAL DEVELOPMENT OF BUSINESS Lennar Corporation (together with its subsidiaries, the "Company") is a diversified national real estate company with three principal businesses: homebuilding, real estate investment and financial services. The Company's homebuilding operations include the construction and sale of homes, as well as the purchase, development and sale of residential land. The Investment Division is involved in the ownership, development, management and leasing, as well as the acquisition and sale, of commercial real estate and other real estate related assets. The financial services operations consist of mortgage loan origination and servicing, closing and title services and investments in rated commercial real estate mortgage-backed securities. For more than 25 years, Lennar has owned and managed commercial and residential rental properties. Since 1992, the Company, through its Investment Division, began acquiring portfolios of commercial real estate assets, including real estate related loans, which it believed it could liquidate at a profit. As of November 30, 1995, the Company had entered into a total of eleven partnerships, all of which have been formed to acquire and manage portfolios of assets. Five new partnerships were formed during 1995. The Company shares in the profits and losses of the partnerships and also receives fees for the management and disposition of the partnerships' assets. Beginning in 1994, the Company also began acquiring, at a discount, portions of commercial real estate mortgage-backed securities. The Company's Investment Division invests in the unrated portions of these securities and the Financial Services Division generally invests in the rated portions. The Company's Investment Division partnerships also retain portions of these securities when they are the issuer of the securities. The Company's Investment Division is the special servicer on behalf of all the certificate holders (the majority of which are not Lennar entities) of the commercial mortgage-backed securities which are held by the Company and its partnerships. Since 1991, the Company has expanded its homebuilding operations by entering the following new markets: Dallas, Texas in 1991; Houston, Texas and Port St. Lucie, Florida in 1992 and Sarasota, Florida in 1994. In addition, the Company began the development of an adult-community in the Orlando, Florida area in 1995. On December 29, 1995, the Company acquired the residential business of Friendswood Development Company, the real estate subsidiary of Exxon Corporation, for approximately $110 million. Friendswood Development Company is based in Houston, Texas and its operations include the development of master-planned communities, as well as Village Builders, its homebuilding division. During 1995, the Company acquired mortgages receivable for approximately $47 million from the secured creditors of Bramalea of California, Inc. ("BCI") after BCI had filed for bankruptcy protection. The Company acquired these mortgages (at significant discounts from their face values) in order to convert them into an ownership interest when BCI is reorganized out of bankruptcy which is anticipated in 1996. The collateral for these mortgages consists of real property located in California. FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS The Company operates in three industry segments - homebuilding, real estate investment and financial services. The financial information related to these industry segments is contained in the financial statements incorporated by reference to pages 26 through 39 of the Company's 1995 Annual Report to Stockholders. 1 NARRATIVE DESCRIPTION OF BUSINESS HOMEBUILDING The Company and its predecessor have been building homes since 1954. The Company believes that, since its acquisition of Development Corporation of America in 1986, it has each year delivered more homes in Florida than any other homebuilder. The Company has been building homes in Arizona since 1972, where it currently is one of the leading homebuilders. In 1991, the Company began building homes in the Dallas/Fort Worth area of Texas. In 1992, it started homebuilding operations in Houston, Texas and Port St. Lucie, Florida. In late 1994, the Company began homebuilding operations in Sarasota, Florida and in 1995 it started development of an adult-community in the Orlando, Florida area. The Company has constructed and sold over 125,000 homes to date. The Company's homebuilding activities in Florida are principally conducted through Lennar Homes, Inc. In Arizona and Texas, these activities are conducted through Lennar Homes of Arizona, Inc. and Lennar Homes of Texas, Inc., respectively. Effective with the acquisition of Friendswood Development Company, the Company will also be conducting business in Texas through Village Builders, Inc. and Friendswood Development Company. The Company is involved in all phases of planning and building in its residential communities, including land acquisition, site planning, preparation of land, improvement of undeveloped and partially developed acreage, and design, construction and marketing of homes. The Company subcontracts virtually all segments of development and construction to others. The Company sells single-family attached and detached homes and condominiums in buildings generally one to five stories in height. Homes sold by the Company are primarily in the moderate price range for the areas in which they are located. They are targeted primarily at first time homebuyers, move-up homebuyers and, in some communities, retirees. The average sales price of a Lennar home was $138,200 in fiscal 1995. CURRENT HOMEBUILDING ACTIVITIES The table on the following page summarizes information about the Company's recent homebuilding activities: 2
LENNAR CORPORATION AND CONSOLIDATED SUBSIDIARIES Real Estate Activities NOVEMBER 30, 1995 -------------------------------------------------------- HOMES DELIVERED HOMES COMPLETED ESTIMATED NUMBER IN YEARS ENDED OR UNDER CONSTRUCTION OF HOMES THAT COULD NOVEMBER 30, ----------------------- SOLD HOMES BE CONSTRUCTED ON REGION AND TYPE OF --------------------------------- AVAILABLE FOR NOT YET LAND CURRENTLY PRODUCTS 1995 1994 1993 SOLD (1) SALE STARTED (1) OWNED (2) (3) (4) - ------------------ ---- ---- ---- -------- ------------- ----------- ------------------- Florida Single-family detached 2,400 2,471 2,155 658 329 363 14,680 Single-family attached 437 426 796 77 91 23 2,280 Multi-family 558 820 772 119 187 77 7,310 Arizona Single-family detached 466 586 596 228 108 73 1,990 Single-family attached 38 46 11 1 8 -- -- Multi-family -- -- -- -- -- -- 330 Texas Single-family detached 781 616 304 162 152 21 2,930 Single-family attached -- -- -- -- -- -- -- Multi-family -- -- -- -- -- -- -- ------ ------ ------ ------ ------ ------ ------ Totals 4,680 4,965 4,634 1,245 875 557 29,520 ====== ====== ====== ====== ====== ====== ====== Notes: (1) Although firm contracts relating to these homes were executed, there can be no assurance that purchasers will meet their obligations under the contracts. (2) Based on current management estimates, which are subject to change. (3) The Company owns additional property, which it may decide to develop or sell in the future. (4) As of November 30, 1995, the Company had contracts or options to purchase approximately 8,000 additional homesites.
3 PROPERTY ACQUISITION The Company continuously considers the purchase of, and from time to time acquires, land for its development and sales programs. It generally does not acquire land for speculation. In some instances, the Company acquires land by acquiring options enabling it to purchase parcels as they are needed. Although some of the Company's land is held subject to purchase money mortgages or is mortgaged to secure $85 million of term loans, most of the Company's land (including most of the land on which it is currently building or expects to build during the next year) is not subject to mortgages. The Company believes its land inventory gives it a competitive advantage, particularly in Florida. CONSTRUCTION AND DEVELOPMENT The Company supervises and controls the development and building of its own residential communities. It employs subcontractors for site improvements and virtually all of the work involved in the construction of homes. In almost all instances, the arrangements between the Company and the subcontractors commit the subcontractors to complete specified work in accordance with written price schedules. These price schedules normally change to meet changes in labor and material costs. The Company does not own heavy construction equipment and generally has only a small labor force used to supervise development and construction and perform routine maintenance and minor amounts of other work. The Company generally finances construction with its own funds or borrowings under its unsecured working capital lines, not with secured construction loans. MARKETING The Company always has an inventory of homes under construction. A majority of these homes are sold (I.E., the Company has received executed sales contracts and deposits) before the Company starts construction. The Company employs sales associates who are paid salaries, commissions or both to make onsite sales of the Company's homes. The Company also sells through independent brokers. The Company advertises its residential communities through local media and sells primarily from models that it has designed and constructed. In addition, the Company advertises its retirement communities in areas where potential retirees live. MORTGAGE FINANCING The Company's financial services subsidiaries make conventional, FHA-insured and VA-guaranteed mortgage loans available to qualified purchasers of the Company's homes. Because of the availability of mortgage loans from the Company's financial services subsidiaries, as well as independent mortgage lenders, the Company believes access to financing has not been, and is not, a significant problem for most purchasers of the Company's homes. COMPETITION The housing industry is highly competitive. In its activities, the Company competes with other developers and builders in and near the areas where the Company's communities are located, including a number of homebuilders with nationwide operations. The Company has for the past 25 years been one of the largest homebuilders in South Florida and for the past several years has delivered more homes in the State of Florida than any other homebuilder. The Company is also a leading homebuilder in Arizona and in Texas. Nonetheless, the Company is subject to intense competition from a large number of homebuilders in all of its market areas. INVESTMENT The Company has been engaged for more than 25 years in developing and managing commercial and residential income-producing properties. Currently, through its Investment Division, the Company owns and manages more than 2,800 rental apartment units (which are approximately 86% occupied) and more than 2.2 million square feet of office buildings, 4 warehouses and neighborhood retail centers (which are approximately 86% occupied), as well as two hotels consisting of 462 rooms, a mobile home park, and golf and other recreational facilities in various communities. At times, when properties reach what the Company believes to be optimum value, the Company sells them. Since 1992, the Investment Division has been acquiring, by itself and through partnerships, portfolios of real estate assets which it believes it can liquidate at a profit and from which it can generate rental, interest and other income during the liquidation process which can last several years. As of November 30, 1995, the Investment Division had entered into eleven partnerships. The Company's equity interests in these partnerships range from 25% to 50% (which in one instance includes an investment by the Company's Financial Services Division). In addition to the Company participating in the partnerships' purchases of portfolios of real estate assets, the Investment Division oversees the management of those portfolios, for which it receives management fees. A portfolio may consist of a combination of performing loans, non-performing loans and real estate. With regard to performing loans, principal and interest payments are collected until the loans are paid in full, or the loans are used as collateral for non-recourse debt (which has the effect of accelerating the partnerships' cash realization). With regard to non-performing loans, the partnerships attempt to renegotiate the terms with the borrowers or pursue other remedies, depending on the circumstances. These loans either become performing, are paid off, or the partnerships become the owners of the underlying real estate. This real estate is then managed and value enhanced until it is sold. In several instances, loans held by partnerships have been grouped into pools, which have obtained funding by issuing rated and unrated securities entitling the holders to the future proceeds of the loans. Often, the partnerships retain the unrated portions of the securities issued. Since 1994, the Investment Division began acquiring, at substantial discounts from their face amounts, unrated portions of commercial mortgage-backed securities issued by others. The Investment Division is the special servicer on behalf of all certificate holders of these securities, both those issued by the partnerships and by others. The principal business of the special servicer is the management of real estate loans requiring attention. FINANCIAL SERVICES The Company's financial services subsidiaries originate mortgage loans, service mortgage loans which they and other lenders originate, purchase and re-sell mortgage loan pools, arrange title insurance and provide closing services for homebuyers. This division also invests in issues of rated portions of commercial real estate mortgage-backed securities for which Lennar's Investment Division is the special servicer and an investor in the unrated portions of those securities. MORTGAGE ORIGINATION Through two of the financial services subsidiaries, Universal American Mortgage Company and AmeriStar Financial Services, Inc., the Company provides conventional, FHA-insured and VA-guaranteed mortgage loans to buyers of the Company's homes and others from offices located in Florida, California, Arizona, Texas, North Carolina and Maryland. In 1995, loans to buyers of the Company's homes represented approximately 20% of the Company's $650 million of loan originations. The Company sells the loans it originates in the secondary mortgage market, generally on a non-recourse basis, and retains most of the servicing rights. The Company has an interest rate risk management policy under which it hedges its interest rate locked loan commitments and loans held for sale against exposure to interest rate fluctuations. The Company finances its loans held for sale with borrowings under the financial services subsidiaries' $80 million lines of credit (secured by the loans and by certain servicing rights) or from Lennar Corporation when, on a consolidated basis, the Company can minimize its overall cost of funds. MORTGAGE SERVICING The Company obtains significant earnings from servicing loans originated or acquired by its financial services subsidiaries. The Company services loans for the Government National Mortgage Association (Ginnie Mae), the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) and other mortgage investors. At 5 November 30, 1995, it had a servicing portfolio of approximately 44,300 loans with an unpaid principal balance of approximately $3.4 billion. Revenues from servicing mortgage loans include servicing fees, late charges and other ancillary fees and all, or in some states, part of the interest on sums held in escrow for tax, insurance and other payments. ASSET ACQUISITION AND DISPOSITION The Company, from time to time, purchases pools of mortgage loans originated by financial institutions and then re-sells the loans in the secondary market. The benefits to the Company from these transactions include gains from the sales of the loans and retention of the right to service the loans after they are sold in the secondary market. In 1994, the Financial Services Division expanded its investment activities by acquiring rated portions of commercial mortgage-backed securities for which Lennar's Investment Division is the special servicer. TITLE INSURANCE AND CLOSING SERVICES The Company arranges title insurance for, and provides closing services to, buyers of the Company's homes and others in Florida. It provided these services in connection with approximately 4,100 real estate transactions during 1995. During 1994, the Company formed TitleAmerica Insurance Corporation, a title insurance underwriter, which provides title insurance to buyers of the Company's homes and others. OTHER ACTIVITIES The Company has a number of limited-purpose finance subsidiaries which have placed mortgages and other receivables as collateral for various long-term financings. These subsidiaries pay the debt service on the long-term borrowings primarily from the cash flows generated by the related pledged collateral. The Company believes that the cash flows generated by these subsidiaries will be adequate to meet the required debt payment schedules. REGULATION Homes and residential communities built by the Company must comply with state and local regulations relating to, among other things, zoning, treatment of waste, construction materials which must be used, certain aspects of building design and minimum elevation of properties and other local ordinances. These include laws in Florida and other states requiring use of construction materials which reduce the need for energy-consuming heating and cooling systems. The State of Florida has also adopted a law which requires that commitments to provide roads and other offsite infrastructure be in place prior to the commencement of new construction. The provisions of this law are implemented and administered by individual counties and municipalities throughout the state and may result in additional fees and assessments or building moratoriums. It is difficult to predict the impact of this law on future operations, or what changes may take place in the law in the future. However, the Company believes that most of its Florida land presently meets the criteria under the law, and it has the financial resources to provide for development of the balance of its land in compliance with the law. Recently, there have been changes to various building codes within Florida. These changes have resulted in higher construction costs. These additional costs have been recoverable through increased selling prices without any significant effect on sales volume. Virtually all areas of the United States have adopted regulations intended to assure that construction and other activities will not have an adverse effect on local environmental conditions. These regulations have had an effect on the manner in which the Company has developed certain properties and may have a continuing influence on the Company's development activities in the future. 6 In order to make it possible for purchasers of some of the Company's homes to obtain FHA-insured or VA-guaranteed mortgages, the Company must construct those homes in compliance with regulations promulgated by those agencies. The Company has registered condominium communities with the appropriate authorities in Florida. It has registered some of its Florida communities with authorities in New Jersey and New York. Sales in other states would require compliance with laws in those states regarding sales of condominium homes. The Company's title insurance agency subsidiary must comply with applicable insurance laws and regulations. The Company's subsidiary which underwrites title insurance is licensed in the State of Florida, and must comply with Florida laws and regulations regarding title insurance companies. These laws and regulations include provisions regarding capitalization, investments, forms of policies and premiums. EMPLOYEES At November 30, 1995, the Company employed 1,552 individuals, of whom 335 were management, supervisory and other professional personnel, 176 were construction supervisory personnel, 271 were real estate salespersons, 153 were hospitality personnel and 617 were professional support personnel, accounting, office clerical and skilled workers. Some of the subcontractors utilized by the Company may employ members of labor unions. The Company does not have collective bargaining agreements relating to its employees. ITEM 2. PROPERTIES. For information about properties owned by the Company for use in its residential and commercial activities, see Item 1. The Company maintains its executive offices, financial services subsidiary headquarters, Investment Division headquarters, Dade County Homebuilding Division offices and Dade County mortgage and title company branch offices at 700 and 730 Northwest 107th Avenue, Miami, Florida in office buildings built and owned by the Company. These offices occupy approximately 60,000 square feet. Other Company offices are located in Company-owned communities or retail centers, or in leased space. ITEM 3. LEGAL PROCEEDINGS. The Company is a defendant in various lawsuits brought by condominium and homeowner associations in communities constructed by the Company. Although the specific allegations in the lawsuits differ, in general, each of the lawsuits asserts that the Company failed to construct buildings in the community involved in accordance with plans and specifications and applicable construction codes, and each of them seeks reimbursement for sums the plaintiff association claims it will have to spend to remedy the alleged construction deficiencies. Associations in other communities have threatened similar suits. Suits of this type are common within the homebuilding industry. The Company does not believe that these lawsuits or threatened lawsuits will have a material effect upon the Company. The Company had a number of claims for damages relating to a hurricane which occurred in 1992. Most have been settled and to date, the Company's insurers have made all payments required under settlements. Even if the Company were required to make any payments with regard to the remaining hurricane related claims, the Company believes that the amount it would pay would not be material. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. No matters were submitted to a vote of security holders during the fourth quarter of fiscal 1995. 7 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS. Information concerning the market data for the Company's common stock and related security holder matters is incorporated by reference to page 40 of the Company's 1995 Annual Report to Stockholders. ITEM 6. SELECTED FINANCIAL DATA. Selected financial data is incorporated by reference to page 19 of the Company's 1995 Annual Report to Stockholders. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Management's discussion and analysis of financial condition and results of operations is incorporated by reference to pages 20 through 24 of the Company's 1995 Annual Report to Stockholders. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Consolidated financial statements and supplementary data about the Company are incorporated by reference to pages 26 through 39 of the Company's 1995 Annual Report to Stockholders. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Not applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. Information about the Company's directors is incorporated by reference to the Company's definitive proxy statement, which will be filed with the Securities and Exchange Commission not later than March 29, 1996 (120 days after the end of the Company's fiscal year). The following people were the executive officers of Lennar Corporation on February 5, 1996: NAME/POSITION AGE YEAR OF ELECTION ------------- --- ---------------- Leonard Miller, Chairman of the Board and President 63 1969 Robert B. Cole, Secretary 85 1969 Irving Bolotin, Senior Vice President 63 1969 Allan J. Pekor, Financial Vice President 59 1979 Sherman J. Kronick, Vice President 70 1979 Marshall H. Ames, Vice President 52 1982 Stuart A. Miller, Vice President 38 1985 Jeffrey P. Krasnoff, Vice President 40 1986 Jonathan M. Jaffe Vice President 36 1994 8 NAME/POSITION AGE YEAR OF ELECTION ------------- --- ---------------- M. Eugene Saleda, Treasurer 60 1977 James T. Timmons, Controller 30 1993 Steven J. Saiontz, President, Lennar Financial Services, Inc. 37 1987 Mr. Leonard Miller has been the Chief Executive Officer and a director of the Company since it was founded. Mr. Cole was formerly a member of Mershon, Sawyer, Johnston, Dunwody & Cole, a firm of attorneys in Miami, Florida. Since 1983, he has been a consultant to the Company on business and legal affairs, as well as Chairman of the Company's Executive Committee and General Counsel. Messrs. Bolotin, Pekor, Kronick, Ames, Krasnoff and Saleda have each held substantially their present positions with the Company for more than five years. Mr. Stuart Miller (who is the son of Leonard Miller) and Mr. Jaffe have held various executive positions with the Company for more than five years. Mr. Stuart Miller has been a Vice President since 1985, and currently heads the Company's Homebuilding and Investment Divisions. Mr. Jaffe has been a Vice President since 1994 and serves as a Regional President in the Company's Homebuilding Division. Mr. Timmons has been employed by the Company since 1992. He became its Controller in 1993. Prior to joining the Company, Mr. Timmons was employed as a Financial Auditor with Burger King Corporation and, before that, was employed by KPMG Peat Marwick. Mr. Saiontz (who is the son-in-law of Leonard Miller) has been employed by the Company since 1984 and has been the President of Lennar Financial Services, Inc. since 1987. ITEM 11. EXECUTIVE COMPENSATION. The information called for by this item is incorporated by reference to the Company's definitive proxy statement, which will be filed with the Securities and Exchange Commission not later than March 29, 1996 (120 days after the end of the Company's fiscal year). ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The information called for by this item is incorporated by reference to the Company's definitive proxy statement, which will be filed with the Securities and Exchange Commission not later than March 29, 1996 (120 days after the end of the Company's fiscal year). ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. The information called for by this item is incorporated by reference to the Company's definitive proxy statement, which will be filed with the Securities and Exchange Commission not later than March 29, 1996 (120 days after the end of the Company's fiscal year). 9 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a) Documents filed as part of this Report. 1. The following financial statements are incorporated by reference in Item 8:
PAGE IN 1995 ANNUAL FINANCIAL STATEMENT REPORT TO STOCKHOLDERS ------------------- ----------------------- Independent Auditors' Report 25 Consolidated Balance Sheets as of November 30, 1995 and 1994 26 Consolidated Statements of Earnings for the years ended November 30, 1995, 1994 and 1993 27 Consolidated Statements of Cash Flows for the years ended November 30, 1995, 1994 and 1993 28 Consolidated Statements of Stockholders' Equity for the years ended November 30, 1995, 1994 and 1993 29 Notes to Consolidated Financial Statements 30 - 39
2. Predecessor Independent Auditors' Report on the financial statements and financial statement schedules is included in this report on page 15. 3. The following financial statement schedules are included in this Report:
FINANCIAL STATEMENT SCHEDULE PAGE IN THIS REPORT ---------------------------- ------------------- Independent Auditors' Report on Schedules 14 VIII - Valuation and Qualifying Accounts 16 XI - Real Estate and Accumulated 17 Depreciation XII - Mortgage Loans on Real Estate 18
Information required by other schedules has either been incorporated in the financial statements and accompanying notes, or is not applicable to the Company. 10 4. The following exhibits are filed with this Report or incorporated by reference: 3(a). Certificate of Incorporation - Incorporated by reference to Registration Statement No. 2-36239 and definitive proxy statements dated February 29, 1980, March 6, 1985, March 24, 1987, March 1, 1989 and March 1, 1994. 3(b). Bylaws - Incorporated by reference to Annual Report on Form 10-K for the year ended November 30, 1989. 10(a). Lennar Corporation 1980 Stock Option Plan - Incorporated by reference to Registration Statement No. 2-73630. 10(b). Lennar Corporation 1991 Stock Option Plan - Incorporated by reference to Registration Statement No. 33-45442. 10(c). Lennar Corporation Employee Stock Ownership Plan and Trust - Incorporated by reference to Registration Statement No. 2-89104. 10(d). Amendment dated December 13, 1989 to Lennar Corporation Employee Stock Ownership Plan - Incorporated by reference to Annual Report on Form 10-K for the year ended November 30, 1990. 10(e). Lennar Corporation Employee Stock Ownership/401k Trust Agreement dated December 13, 1989 - Incorporated by reference to Annual Report on Form 10-K for the year ended November 30, 1990. 10(f). Amendment dated April 18, 1990 to Lennar Corporation Employee Stock Ownership/401k Plan - Incorporated by reference to Annual Report on Form 10-K for the year ended November 30, 1990. 10(g). Term Loan Agreement between Lennar Corporation and NCNB National Bank of Florida dated April 14, 1988 - Incorporated by reference to Annual Report on Form 10-K for the year ended November 30, 1992. 10(h). Term Loan Agreement between Lennar Corporation and SunBank/ Miami, National Association dated April 27, 1988 - Incorporated by reference to Annual Report on Form 10-K for the year ended November 30, 1992. 10(i). Term Loan Agreement between Lennar Corporation and The First National Bank of Chicago dated May 3, 1988 - Incorporated by reference to Annual Report on Form 10-K for the year ended November 30, 1992. 10(j). Revolving Credit Agreement dated July 29, 1994 between The First National Bank of Chicago, as agent, and Lennar Corporation and certain subsidiaries - Incorporated by reference to Annual Report on Form 10-K for the year ended November 30, 1994. 10(k). First Amendment to Revolving Credit Agreement dated January 31, 1995 amending the Revolving Credit Agreement dated July 29, 1994. 11 10(l). Second Amendment to Revolving Credit Agreement dated April 6, 1995 amending the Revolving Credit Agreement dated July 29, 1994. 13. Pages 19 through 40 of the 1995 Annual Report to Stockholders. 21. List of subsidiaries. 23. Independent Auditors' Consents. 27. Financial Data Schedule. (b) Reports on Form 8-K filed during the quarter ended November 30, 1995. None. (c) The exhibits to this Report are listed in Item 14(a)3. (d) The financial statement schedules required by Regulation S-X which are excluded from the Annual Report to Stockholders as permitted by Rule 14a-3(b)(1) are listed in Item 14(a)2. 12 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. LENNAR CORPORATION Leonard Miller /S/ LEONARD MILLER Chairman of the Board and President ----------------------------------- Date: February 27, 1996 Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated: Principal Executive Officer: Leonard Miller /S/ LEONARD MILLER Chairman of the Board and President ---------------------------------- Date: February 27, 1996 Principal Financial Officer: Allan J. Pekor /S/ ALLAN J. PEKOR Financial Vice President ---------------------------------- Date: February 26, 1996 Principal Accounting Officer: James T. Timmons /S/ JAMES T. TIMMONS Controller ----------------------------------- Date: February 26, 1996 Directors: Charles I. Babcock, Jr. /S/ CHARLES I. BABCOCK, JR. ---------------------------------- Date: February 27, 1996 Irving Bolotin /S/ IRVING BOLOTIN ---------------------------------- Date: February 26, 1996 Robert B. Cole /S/ ROBERT B. COLE ---------------------------------- Date: February 26, 1996 Richard W. McEwen ---------------------------------- Date: February , 1996 James W. McLamore /S/ JAMES W. MCLAMORE ---------------------------------- Date: February 27, 1996 Stuart A. Miller /S/ STUART A. MILLER ---------------------------------- Date: February 26, 1996 Arnold P. Rosen /S/ ARNOLD P. ROSEN ---------------------------------- Date: February 26, 1996 Steven J. Saiontz /S/ STEVEN J. SAIONTZ ---------------------------------- Date: February 26, 1996 13 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholders of the Lennar Corporation: We have audited the consolidated financial statements of Lennar Corporation (the "Corporation") as of November 30, 1995 and 1994, and for the years then ended, and have issued our report thereon dated January 11, 1996; such financial statements and report are included in your 1995 Annual Report to Shareholders and are incorporated herein by reference. Our audit also included the financial statement schedules of Lennar Corporation, listed in Item 14 as of November 30, 1995 and 1994 and for the years then ended. These financial statement schedules are the responsibility of the Corporation's management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein. /s/ DELOITTE & TOUCHE LLP DELOITTE & TOUCHE LLP Certified Public Accountants Miami, Florida January 11, 1996 14 INDEPENDENT AUDITOR'S REPORT The Board of Directors Lennar Corporation: We have audited the consolidated statements of earnings, cash flows and stockholders' equity of Lennar Corporation and subsidiaries for the year ended November 30, 1993. These consolidated financial statements are incorporated by reference in the annual report on Form 10-K for the year 1995. In connection with our audit of the consolidated financial statements, we also have audited the financial statement schedules. These consolidated financial statements and financial related statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedules based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit 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 audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of operations and cash flows of Lennar Corporation and subsidiaries for the year ended November 30, 1993, in conformity with generally accepted accounting principles. Also in our opinion, the related financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein. /s/ KPMG PEAT MARWICK LLP January 18, 1994 15
SCHEDULE VIII LENNAR CORPORATION AND CONSOLIDATED SUBSIDIARIES Valuation and Qualifying Accounts Years ended November 30, 1995, 1994 and 1993 ADDITIONS ---------------------------- CHARGED CHARGED BEGINNING TO COSTS (CREDITED) TO ENDING DESCRIPTION BALANCE AND EXPENSES OTHER ACCOUNTS (DEDUCTIONS) BALANCE - ------------------------------------------------ ------------- ------------ -------------- ------------- ----------- Year ended November 30, 1995 Allowances deducted from assets to which they apply: Allowances for doubtful accounts and notes receivables $ 1,528,000 2,209,000 1,000 (1,366,000) 2,372,000 ============= ============= ============= ============= =========== Deferred income and unamortized discounts $ 2,361,000 -- (681,000) (1,079,000)(A) 601,000 ============= ============= ============= ============= =========== Loan loss reserve $ 3,534,000 1,271,000 -- (1,075,000) 3,730,000 ============= ============= ============= ============= =========== Valuation allowance $ -- 1,581,000 -- (295,000) 1,286,000 ============= ============= ============= ============= =========== Year ended November 30, 1994 Allowances deducted from assets to which they apply: Allowances for doubtful accounts and notes receivable $ 1,323,000 1,091,000 (66,000) (820,000) 1,528,000 ============= ============= ============= ============= =========== Deferred income and unamortized discounts $ 1,261,000 -- 1,137,000(B) (37,000)(A) 2,361,000 ============= ============= ============= ============= =========== Loan loss reserve $ 3,595,000 472,000 -- (533,000) 3,534,000 ============= ============= ============= ============= =========== Year ended November 30, 1993 Allowances deducted from assets to which they apply: Allowances for doubtful accounts and notes receivable $ 603,000 1,062,000 15,000 (357,000) 1,323,000 ============= ============= ============= ============= =========== Deferred income and unamortized discounts $ 1,688,000 -- (342,000) (85,000)(A) 1,261.000 ============= ============= ============= ============= =========== Loan loss reserve $ 151,000 416,000 3,717,000 (689,000) 3,595,000 ============= ============= ============= ============= =========== Loan loss reserve included in liabilities (C) $ 3,717,000 -- (3,717,000) -- -- ============= ============= ============= ============= =========== Notes: (A) Amortization of discounts and recognition of deferred income. (B) Includes discounts on mortgages purchased. (C) Loan loss reserves relating to loans serviced for others are included in liabilities in the balance sheet.
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Schedule XI LENNAR CORPORATION AND CONSOLIDATED SUBSIDIARIES Real Estate and Accumulated Depreciation (D) Year ended November 30, 1995 COSTS CAPITALIZED INITIAL COST SUBSEQUENT TO GROSS AMOUNT AT WHICH TO COMPANY ACQUISITION CARRIED AT CLOSE OF PERIOD ----------------------- ---------------------- ----------------------------------- BUILDING AND CARRYING DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS IMPROVEMENTS COSTS LAND (A) BUILDINGS (A) TOTAL (C) - ------------------------ ---------- ----------- ----------- ---------- ---------- ----------- ----------- ---------- Rental apartment property: Dade County, Florida $ 21,397,000 1,872,000 9,063,000 4,623,000 360,000 2,046,000 13,872,000 15,918,000 Rental office property: Dade County, Florida 17,301,000 1,779,000 -- 13,577,000 1,959,000 4,319,000 12,996,000 17,315,000 Hotel: Broward County, Florida -- 1,000,000 3,478,000 8,824,000 367,000 1,367,000 12,302,000 13,669,000 Rental apartment property: Dade County, Florida -- 3,526,000 9,999,000 -- -- 3,526,000 9,999,000 13,525,000 Rental office property: Orange County, California -- 3,839,000 15,356,000 -- 120,000 3,862,000 15,453,000 19,315,000 Shopping center: Maricopa County, Arizona -- 2,381,000 9,524,000 -- 7,000 2,381,000 9,531,000 11,912,000 Other miscellaneous properties which are individually less than 5% of total 33,088,000 33,018,000 63,177,000 24,694,000 2,367,000 36,825,000 86,431,000 123,256,000 ---------- ----------- ----------- ---------- --------- ---------- ----------- ----------- $ 71,786,000 47,415,000 110,597,000 51,718,000 5,180,000 54,326,000 160,584,000 214,910,000 ========== =========== =========== ========== ========= ========== =========== =========== DATE OF ACCUMULATED COMPLETION OF DATE DESCRIPTION DEPRECIATION (B) CONSTRUCTION ACQUIRED - ------------------------ ---------------- ------------ --------- Rental apartment property: Dade County, Florida 9,298,000 1979 1977 Rental office property: Dade County, Florida 2,442,000 Various 1980 Hotel: Broward County, Florida 2,401,000 Various 1987 Rental apartment property: Dade County, Florida 1,510,000 Various 1991 Rental office property: Orange County, California 429,000 1989 1994 Shopping center: Maricopa County, Arizona 265,000 1988 1994 Other miscellaneous properties which are individually less than 5% of total 13,301,000 Various Various ---------- $29,646,000 =========== Notes: (A) Includes related improvements and capitalized carrying costs. (B) Depreciation is calculated using the straight-line method over the estimated useful lives which vary from 15 to 40 years. (C) The aggregate cost of the listed property for Federal income tax purposes was $160,436,000 at November 30, 1995. (D) The listed real estate includes operating properties completed or under construction. Real estate inventories, held for resale in the ordinary course of business, have been excluded from this schedule. (E) Reference is made to notes 1, 9 and 10 of the consolidated financial statements. (F) The changes in the total cost of investment properties and accumulated depreciation for the years ended November 30, 1995, 1994 and 1993 are as follows (in thousands):
1995 1994 1993 ----------- ----------- ---------- Cost: Balance at beginning of year $ 215,856 175,144 122,709 Additions, at cost 7,103 53,340 40,557 Accounting change -- 7,482 -- Acquisitions through foreclosure -- -- 14,410 Cost of real estate sold (8,304) (11,802) -- Transfers 255 (8,308) (2,532) ------------ ------- ------- Balance at end of year $ 214,910 215,856 175,144 ============ ======= ======= Accumulated depreciation: Balance at beginning of year $ 26,423 22,508 19,834 Depreciation and amortization charged against earnings 5,292 4,338 3,639 Accounting change -- 165 -- Depreciation on real estate sold (2,069) (351) -- Depreciation on transfers -- (237) (965) ------------ ------- ------- Balance at end of year $ 29,646 26,423 22,508 ============ ======= =======
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SCHEDULE XII LENNAR CORPORATION AND CONSOLIDATED SUBSIDIARIES Mortgage Loans on Real Estate November 30, 1995 PRINCIPAL AMOUNT OF LOANS SUBJECT TO FINAL PERIODIC FACE CARRYING DELINQUENT INTEREST MATURITY PAYMENT PRIOR AMOUNT OF AMOUNT OF PRINCIPAL DESCRIPTION RATE DATE TERMS LIENS MORTGAGES MORTGAGES (A) OR INTEREST - ------------------------ -------- --------- --------- -------- ---------- --------------- ------------- First mortgage notes secured by real estate: Residential land - Los Angeles County, California 6.6% 1991 Varying $ -- 55,000,000 12,850,000 12,850,000 (C) payment Residential land - Riverside County, California 6.6% 1994 Varying -- 28,274,000 7,850,000 7,850,000 (C) payment Residential land - Orange County, California 7.6% 1992 Varying -- 29,026,000 6,729,000 6,729,000 (C) payment Residential land - San Diego County, California 6.8% 1992 Varying -- 11,826,000 6,200,000 6,200,000 (C) payment Residential land - Orange County, California 6.6% 1994 Varying -- 18,985,000 3,600,000 3,600,000 (C) payment Retail shopping center - Harris County, Texas 9.5% 1996 Single payment -- 3,704,000 3,355,000 -- Residential land - Broward County, Florida 9.8% 1996 Level payment -- 1,915,000 1,915,000 -- Commercial land - Gwinnett County, Georgia 7.0% 1996 Level payment -- 1,746,000 1,630,000 -- Office building - San Bernardino County, California 8.5% 1994 Level payment -- 1,707,000 1,535,000 1,535,000 Other 7.5-10.0% 1990-2022 Various -- 11,077,000 2,238,000 373,000 (C) ---------- ----------- ---------- --------- $ -- 163,260,000 47,902,000 39,137,000 ========== =========== ========== ========== Notes: (A) For Federal income tax purposes, the aggregate basis of the listed mortgages was $47,902,000 at November 30, 1995. (B) This schedule does not include mortgages held by Lennar Financial Services, Inc. (C) During 1995, the Company acquired first mortgage notes from the secured creditors of a company that had filed for bankruptcy protection. The Company acquired these mortgages (at significant discounts from their face amounts) in order to convert them into an ownership interest after bankruptcy proceedings are completed. (D) The changes in the carrying amounts of mortgages for the years ended November 30, 1995, 1994 and 1993 are as follows (in thousands):
1995 1994 1993 ----------- ----------- ------------ Balance at beginning of year $18,360 26,605 15,520 Additions (deductions): New mortgage loans, net 45,877 14,293 28,929 Collections of principal (9,788) (12,454) (4,099) Transfers to Lennar Financial Services, Inc. -- (11,151) -- Foreclosures (8,017) -- (14,576) Amortization of discount 14 31 40 Deferred income recognized 1,065 6 45 Other 391 1,030 746 ------- ------ ------ Balance at end of year $47,902 18,360 26,605 ======= ====== ====== 18 EX-99 2 EXHIBIT 99 LENNAR CORPORATION EXHIBITS TO FORM 10K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 FISCAL YEAR ENDED NOVEMBER 30, 1995 INDEX TO EXHIBITS EXHIBITS 3(a). Certificate of Incorporation - Incorporated by reference to Registration Statement No. 2-36239 and definitive proxy statements dated February 29, 1980, March 6, 1985, March 24, 1987, March 1, 1989 and March 1, 1994. 3(b). Bylaws - Incorporated by reference to Annual Report on Form 10-K for the year ended November 30, 1989. 10(a). Lennar Corporation 1980 Stock Option Plan - Incorporated by reference to Registration Statement No. 2-73630. 10(b). Lennar Corporation 1991 Stock Option Plan - Incorporated by reference to Registration Statement No. 33-45442. 10(c). Lennar Corporation Employee Stock Ownership Plan and Trust - Incorporated by reference to Registration Statement No. 2-89104. 10(d). Amendment dated December 13, 1989 to Lennar Corporation Employee Stock Ownership Plan-Incorporated by reference to Annual Report on Form 10-K for the year ended November 30, 1990. 10(e). Lennar Corporation Employee Stock Ownership/401k Trust Agreement dated December 13, 1989 Incorporated by reference to Annual Report on Form 10-K for the year ended November 30, 1990. 10(f). Amendment dated April 18, 1990 to Lennar Corporation Employee Stock Ownership/401k Plan-Incorporated by reference to Annual Report on Form 10-K for the year ended November 30, 1990. 10(g). Term Loan Agreement between Lennar Corporation and NCNB National Bank of Florida dated April 14, 1988 - Incorporated by reference to Annual Report on Form 10-K for the year ended November 30, 1992. 10(h). Term Loan Agreement between Lennar Corporation and SunBank/Miami, National Association dated April 27, 1988 - Incorporated by reference to Annual Report on Form 10-K for the year ended November 30, 1992. 10(i). Term Loan Agreement between Lennar Corporation and The First National Bank of Chicago dated May 3, 1988 - Incorporated by reference to Annual Report on Form 10-K for the year ended November 30, 1992. 10(j). Revolving Credit Agreement dated July 29, 1994 between The First National Bank of Chicago, as agent, and Lennar Corporation and certain subsidiaries - Incorporated by reference to Annual Report on Form 10-K for the year ended November 30, 1994. 10(k). First Amendment to Revolving Credit Agreement dated January 31, 1995 amending the Revolving Credit Agreement dated July 29, 1994. 10(l). Second Amendment to Revolving Credit Agreement dated April 6, 1995 amending the Revolving Credit Agreement dated July 29, 1994. 13. Pages 19-40 of the 1995 Annual Report to Stockholders. 21. List of subsidiaries. 23. Independent Auditors' Consents. 27. Financial Data Schedule. EX-10.(K) 3 FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT First Amendment to Revolving Credit Agreement ("Amendment"), dated as of January 31, 1995, by and among LENNAR CORPORATION, a corporation organized and existing under the laws of the State of Delaware (the "Company"), the Subsidiaries of the Company listed in Schedule I (said Subsidiaries, together with the Company, hereinafter individually and collectively referred to as the "Borrower") to the Agreement (as hereinafter defined), the lenders listed in Schedule II to the Agreement (hereinafter such lenders, together with any additional lenders as provided in Section 2.21 of the Agreement, are collectively referred to as the "Lenders"), and THE FIRST NATIONAL BANK OF CHICAGO, as Agent (the "Agent"), amending the Revolving Credit Agreement (the "Agreement"), dated July 29, 1994, by and among the Borrower, the Lenders and the Agent. RECITAL The Borrower has requested that the Lenders amend the Agreement, and the Lenders are willing to make such amendment, all upon the terms and subject to the conditions set forth herein. AGREEMENT In consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, the parties hereto agree as follows: 1. CAPITALIZED TERMS. Capitalized terms used in this Amendment and not otherwise defined herein, shall have the meanings ascribed to them in the Agreement. 2. MAXIMUM CREDIT FACILITIES. (a) Section 2.01(c) of the Agreement is deleted in its entirety and replaced with the following: (c) Notwithstanding anything to the contrary contained in this Agreement, the maximum principal amount of outstanding Advances shall not at any time exceed $300,000,000. (b) Section 2.21(a) of the Agreement is modified by replacing the reference therein to $250,000,000" with $300,000,000". 3. CERTAIN DEFINED TERMS. Section 1.01 of the Agreement is modified by adding each of the following defined terms, each of which defined terms shall supersede such defined term if set forth in the Agreement: "APPLICABLE MARGIN", in the event that the Company or the Company's senior unsecured long-term debt is rated without regard to credit enhancement by both Standard & Poor's and Moody's, shall be determined in accordance with the following table, such Applicable Margin to remain in effect for each Interest Period (with respect to Fixed Rate Loans) during all of which the applicable rating Level shall remain in effect:
LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V - ----------------------------------------------------------------------------------------------------------------------------- Credit If the Company or If the Company or If the Company or If the Company or All other ratings Quality the Company's the Company's se- the Company's the Company's apply or no ratings senior unsecured nior unsecured senior unsecured senior unsecured exist long-term debt rating long-term debt long-term debt rating long-term debt is equal to or better rating is equal to is equal to or better rating is equal to or than BBB+ from or better than than BBB- from better than BB+ S&P or Baa1 from BBB from S&P to S&P or Baa3 from from S&P or Ba1 Moody's Baa2 from Moody's, but from Moody's, but Moody's, but insufficient to insufficient to insufficient to achieve Level II achieve Level III achieve Level I - ----------------------------------------------------------------------------------------------------------------------------- Applicable 0% per annum 0% per annum 0% per annum 0% per annum 0% per annum Margin For Floating Rate Loans - ----------------------------------------------------------------------------------------------------------------------------- Applicable .40% per annum .50% per annum .75% per annum 1.00% per annum 1.25% per annum Margin For Eurodollar Loans - ----------------------------------------------------------------------------------------------------------------------------- Applicable .40% per annum .50% per annum .75% per annum 1.00% per annum 1.25% per annum Margin For Fixed CD Rate Loans - -----------------------------------------------------------------------------------------------------------------------------
-2- Notwithstanding the foregoing, if such applicable rating Level by Moody's is more than one Level different from the applicable rating Level by Standard & Poor's, the Applicable Margin shall correspond to that of one Level higher than the lower of such Levels (E.G., if Moody's rating is Baa1 (Level I) and Standard & Poor's rating is BB+ (Level IV), the applicable rating Level would be Level II). If the Company or the Company's senior unsecured long-term debt is rated without regard to credit enhancement by either Standard & Poor's or Moody's (but not both), the Applicable Margin for Eurodollar Loans and Fixed CD Rate Loans shall be determined in accordance with the foregoing table, but increased by .125% if Levels I, II, III or IV are applicable and 0% if Level V is applicable. If the Company or the Company's senior unsecured long-term debt is not rated without regard to credit enhancement by either Moody's or Standard & Poor's, the Applicable Margin for Eurodollar Loans and Fixed CD Rate Loans shall be determined in accordance with the foregoing table as if Level V was applicable. Borrower acknowledges that the Company is currently rated BBB- by Standard & Poor's and unrated by Moody's; and, accordingly, .875% per annum is currently the Applicable Margin for Fixed Rate Loans. Any change in such ratings shall result in a change in the Applicable Margin as of the beginning of the next succeeding applicable Interest Period for Fixed Rate Loans, and Borrower shall notify Agent of any such rate change within five days thereof. If, within sixty (60) days following any anniversary of the Effective Date, the Company has not delivered to Agent written confirmation by each such rating agency of such agency's rating of the Company or the Company's senior unsecured long-term debt as of such anniversary, then the Applicable Margin shall be calculated retroactively from such anniversary as if neither the Company nor such debt were rated by such agency. -3- "BORROWING BASE" means, from time to time, the sum of the following amounts, all as reflected from time to time in accordance with United States generally accepted accounting principles consistently applied in the consolidated balance sheet of the Borrower: (i) 100% of Borrower's unrestricted cash up to a maximum of $10,000,000 (with any excess cash being excluded from the Borrowing Base); (ii) 100% of the Net Proceeds due to Borrower at closing as a result of the consummation of the sale of any Housing Unit, which Net Proceeds have been paid to the closing agent handling such sale but which have not yet been received by Borrower; PROVIDED, HOWEVER, that if, and to the extent that, such Net Proceeds which are reported as outstanding on the last day of any fiscal quarter of Borrower are not received by Borrower on or before the tenth (10th) day following the end of any such fiscal quarter, such Net Proceeds shall not be included in the Borrowing Base; (iii) 75% of the Net Book Value of all Housing Units under Contract; (iv) 65% of the Net Book Value of all Housing Units owned by Borrower (including, without limitation, model Housing Units) that are not subject to a contract for sale, PROVIDED that the amount determined pursuant to this clause (iv) shall not exceed 30% of the Aggregate Commitment (with any excess being excluded from the Borrowing Base); (v) the lower of (A) 100% of the Net Book Value of all Income Producing Properties (on an asset-by-asset basis), or (B) six and one-half (6 1/2) times the Net Operating Income for the four fiscal quarters immediately preceding the date as of which Net Operating Income is to be determined, PROVIDED that the amount determined pursuant to this clause (v) shall not exceed 30% of the Aggregate Commitment (with any excess being excluded from the Borrowing Base); (vi) 50% of the Net Book Value of all substantially improved land owned by the Borrower, PROVIDED that the amount determined pursuant to this clause (vi) shall not exceed 25% of the Aggregate Commitment (with any excess being excluded from the Borrowing Base); and (vii) 50% of Borrower's Net Cash Invested, PROVIDED, that the amount determined pursuant to this clause (vii) shall not exceed the lesser of (X) 20% of the Aggregate Commitment, (Y) $60,000,000 or (Z) 10% of consolidated shareholders' equity of the Company and its Subsidiaries as of the end of the most recently completed fiscal quarter next preceding the date as of which the Borrowing Base is to be determined (with any excess being excluded from the Borrowing Base); PROVIDED, HOWEVER, that notwithstanding anything to the contrary provided herein, any asset which is encumbered by a Lien -4- shall not be included in the calculation of the Borrowing Base pursuant to clauses (i) - (vii) above and the Discontinued Assets shall also be disregarded in computation of the Borrowing Base. For purposes of clause (vi) above, "substantially improved land" shall mean land with respect to which at least 80% of the standard improvements (including zoning and platting, engineering design and permits, filling to grade, main water distribution and sewage collection systems and drainage system installation, but excluding sidewalks, landscaping and sodding, decorative and privacy walls, recreation facilities, guardhouse and street lights) have been completed. For purposes of clause (vii) above, (A) "Net Cash Invested" shall mean with respect to any Pool (as hereinafter defined) the aggregate amount of cash invested by the Borrower in such Pool (but in no event more than $30,000,000 with respect to each Pool) less the cumulative amount of distributions received by the Borrower from such Pool, less Borrower's pro rata portion of cumulative net losses, if any, of such Pool for the period during which Borrower or an Unconsolidated Joint Venture Subsidiary was a partner in the Pool, but without regard to the Borrower's equity in cumulative undistributed net earnings, if any, of such Pool for the period during which Borrower or an Unconsolidated Joint Venture Subsidiary was a partner in the Pool, and (B) "Pools" shall mean partnerships and joint ventures in which the Borrower has invested cash and the business of which is limited to investing in distressed real estate properties and/or mortgage loans, PROVIDED that Pools shall not include any joint venture or partnership which has been in existence for five or more years or which has not made distributions to its venturers or partners for two (2) consecutive years. "EFFECTIVE DATE" means January 31, 1995. "TERMINATION DATE" means January 31, 2000, subject, however, to earlier termination in whole of the Aggregate Commitment pursuant to the terms of this Agreement. -5- "UNCONSOLIDATED JOINT VENTURE" shall mean a joint venture (whether in the form of a corporation, a partnership or otherwise) (i) to which the Borrower or an Unconsolidated Joint Venture Subsidiary is or becomes a party (other than the tenancies in common listed in Schedule VII annexed hereto), (ii) which Borrower is not required to consolidate in its financial statements in accordance with United States generally accepted accounting principles, and (iii) in which the Borrower has or will have a total investment exceeding $25,000 or which has total assets plus contingent liabilities exceeding $100,000. For the purposes of this definition, the Borrower's investment in a joint venture shall be deemed to include any Securities of the joint venture owned by the Borrower, any loans, advances or accounts receivable by the Borrower from the joint venture, any commitments, arrangement or other agreement by the Borrower to provide funds or credit to the joint venture and the Borrower's share of the undistributed profits of the joint venture. "UNCONSOLIDATED JOINT VENTURE SUBSIDIARY" means a Subsidiary of the Company which is a partner, shareholder or other equity owner in an Unconsolidated Joint Venture, which is not a Borrower but all of the issued and outstanding equity Securities of which Subsidiary are pledged to the Lenders pursuant to Section 7.05. 4. COMMITMENT FEE AND REDUCTION OF COMMITMENTS. Section 2.06 of the Agreement is deleted in its entirety and replaced with the following: Section 2.06. COMMITMENT FEE AND REDUCTION OF COMMITMENTS. The Borrower agrees to pay to the Agent for the account of each Lender a commitment fee per annum on the daily unborrowed and unused portion of such Lender's Commitment (I.E., after deducting from the Commitment of such Lender the outstanding amount of all Loans made by such Lender) from the Effective Date to and including the Termination Date, payable in arrears on each Quarterly Payment Date thereafter and on the Termination Date. Such commitment fee shall be determined on the first day of each fiscal quarter in accordance with the following table, if the Company or the Company's senior unsecured long-term debt is rated without regard to credit enhancement by both Standard & Poor's and Moody's, such fee to remain in effect throughout such quarter: -6-
LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V - ----------------------------------------------------------------------------------------------------------------------------- Credit If the Company or If the Company or If the Company or If the Company or All other ratings Quality the Company's the Company's se- the Company's the Company's apply or no ratings senior unsecured nior unsecured senior unsecured senior unsecured exist long-term debt rating long-term debt long-term debt rating long-term debt is equal to or better rating is equal to is equal to or better rating is equal to or than BBB+ from or better than than BBB- from better than BB+ S&P or Baa1 from BBB from S&P or S&P or Baa3 from from S&P or Ba1 Moody's Baa2 from Moody's, but from Moody's, but Moody's, but insufficient to insufficient to insufficient to achieve Level II achieve Level III achieve Level I - ----------------------------------------------------------------------------------------------------------------------------- Commitment .15% .20% .25% .35% .375% Fee - -----------------------------------------------------------------------------------------------------------------------------
Notwithstanding the foregoing, if such applicable rating Level by Moody's is more than one Level different from the applicable rating Level by Standard & Poor's, the applicable commitment fee shall correspond to that of one Level higher than the lower of such Levels. If the Company or the Company's senior unsecured long-term debt is rated without regard to credit enhancement by either Standard & Poor's or Moody's (but not both), then the applicable commitment fee shall be determined in accordance with the foregoing table, but increased by .05% if Levels I, II, III or IV are applicable and by 0% if Level V is applicable. If the Company or the Company's senior unsecured long-term debt is not rated without regard to credit enhancement by either Standard & Poor's or Moody's, the applicable commitment fee shall be determined in accordance with the foregoing table as if Level V was applicable. Borrower acknowledges that the Company is currently rated BBB- by Standard & Poor's and unrated by Moody's; and, accordingly, .30% per annum is currently the applicable commitment fee. If, within sixty (60) days following any anniversary of the Effective Date, the Company has not delivered to the Agent written confirmation by each such rating agency of such agency's rating of the Company or the Company's senior unsecured long-term debt as of such anniversary, then the commitment fee shall be calculated retroactively from such anniversary as if such debt were not rated by such agency. The Borrower may permanently reduce the Aggregate Commitment in whole, or in part ratably among the Lenders in integral multiples of $1,000,000, upon at least three Business Days' written notice to the Agent, which notice shall specify the amount of any such reduction, PROVIDED, -7- HOWEVER, that the amount of the Aggregate Commitment may not be reduced below the aggregate principal amount of the outstanding Advances. All accrued commitment fees under this Section 2.06 shall be payable on the effective date of any termination of the obligations of the Lenders to make Loans hereunder. The fees payable under this Section 2.06, once paid, shall not be refundable for any reason. 5. UP FRONT FEE. Section 2.07 of the Agreement is deleted in its entirety and replaced with the following: Section 2.07. UP FRONT FEE. On the Effective Date, the Borrower agrees to pay to the Agent for the account of each Lender an up front fee equal to .075% of the Aggregate Commitment as of the Effective Date. 6. FINANCIAL STATEMENTS. Section 4.03 of the Agreement is deleted in its entirety and replaced with the following: Section 4.03. FINANCIAL STATEMENTS. The Borrower heretofore has provided to the Lenders (i) the consolidated balance sheet of the Company and its Subsidiaries as of November 30, 1993, and the related consolidated statements of earnings, stockholders' equity and cash flows for the 12-month period ended on that date, audited and reported upon by KPMG Peat Marwick, independent certified public accountants (the "Audited Financial Statements"), and (ii) a consolidated balance sheet of the Borrower as of August 31, 1994 and a consolidated statement of earnings of the Borrower for the nine-month period ended on that date, both unaudited, but certified to be true and accurate (subject to normal year-end audit adjustments) by the President and the chief financial officer of the Company (the "Unaudited Financial Statements"). Those financial statements and reports (subject, in the case of the Unaudited Financial Statements, to normal year-end audit adjustments), and the related notes and schedules (if any), (a) were prepared in accordance with United States generally accepted accounting principles consistently applied throughout the respective periods covered thereby, (b) present fairly the consolidated financial condition of the Company and its Subsidiaries as of the respective dates thereof, (c) show all material liabilities, direct or contingent, of the Company and its Subsidiaries as of those dates (including, without limitation, liabilities for taxes and material commitments), and (d) -8- present fairly the consolidated results of operations of the Company and its Subsidiaries for the respective periods covered thereby. 7. ACCOUNTS AND REPORTS. Section 6.04 of the Agreement is amended by deleting the period at the end of paragraph (p) thereof and adding a semicolon thereto and adding the following to the end thereof: (q) as soon available and in any event within 120 days after the end of each fiscal year of each Pool (as defined in the definition of "Borrowing Base"), a balance sheet of such Pool as of the end of such fiscal year and the related statements of earnings, partners' equity and cash flows for such fiscal year, all with accompanying notes and schedules, prepared in accordance with United States generally accepted accounting principles consistently applied and either (i) audited and reported on by an independent firm of certified public accountants of national standing or (ii) unaudited but certified to be true and accurate by the chief financial officer of the Company to the best of his knowledge; (r) as soon as available and in any event within 60 days after the end of each of the first three fiscal quarters and within 120 days after the end of the fourth fiscal quarter of each fiscal year of each Pool, a balance sheet of each such Pool as of the end of such quarter and the related statements of earnings and partners' equity of each such Pool for the period from the beginning of the fiscal year to the end of such quarter, certified to be true and accurate, subject to normal year-end audit adjustments, by the chief financial officer of the Company to the best of his knowledge; and (s) prior to or contemporaneously with the making of any investment in any Unconsolidated Joint Venture, copies of each proposed shareholders' agreement, certificate or articles of incorporation, partnership agreement, joint venture agreement or similar organizational instrument or agreement, relating to the formation of each Unconsolidated Joint Venture, and each material restatement, modification, amendment or supplement thereto. 8. FINANCING; NEW INVESTMENTS. The last sentence of Section 6.07 of the Agreement is amended in its entirety and replaced with the following: As used in this Section 6.07, the term "Significant Subsidiary" means a -9- Subsidiary of one or more entities comprising the Borrower in which the Borrower makes investments (whether through the purchase of capital stock or instruments evidencing debt, advances or loans to such Subsidiary or by the guaranty of indebtedness of such Subsidiary) in a cumulative amount in excess of $1,000,000 but shall not include any Subsidiary all of the issued and outstanding equity Securities of which are pledged to the Lenders pursuant to Section 7.05 hereof. 9. TANGIBLE NET WORTH. Section 7.01 of the Agreement is deleted in its entirety and replaced with the following: Section 7.01. TANGIBLE NET WORTH. Permit the consolidated Tangible Net Worth of (i) the Borrower and (ii) each Subsidiary whose equity Securities are pledged to the Lenders pursuant to the Pledge Agreement referred to in Section 7.05 hereof at any time to be less than the sum of (a) $425,000,000, and (b) an amount equal to 50% of the result obtained by subtracting the after tax net income of the Mortgage Banking Subsidiaries, the Limited Purpose Finance Subsidiaries, STI and TIC from the aggregate net income of the Company and its Subsidiaries, for each fiscal quarter of the Company ending after August 31, 1994 for which the Company and its Subsidiaries, taken as a whole, had net income, and (c) the aggregate net proceeds received by the Borrower after August 31, 1994 from the sale of any of its equity Securities. 10. GUARANTIES. Clause (d) of Section 7.03 of the Agreement is deleted in its entirety and replaced with the following: (d) guaranties of liabilities incurred by Unconsolidated Joint Ventures to which the Borrower or an Unconsolidated Joint Venture Subsidiary is a party, PROVIDED that all such guaranties outstanding at any one time, when aggregated with all then outstanding investments in and loans or advances to Unconsolidated Joint Ventures of the type referred to in clause (i) of Section 7.05 hereof, do not exceed $50,000,000 for any single Unconsolidated Joint Venture or $150,000,000 for all Unconsolidated Joint Ventures. 11. LIMITATION ON INVESTMENTS. (a) Clause (i) of Section 7.05 of the Agreement is deleted in its entirety and replaced with the following: -10- (i) investments in or loans or advances to Unconsolidated Joint Ventures to which the Borrower or a Subsidiary is a party, PROVIDED that (A) all such investments, loans and advances outstanding at any time, when aggregated with all then outstanding guaranties of the obligations of Unconsolidated Joint Ventures of the type referred to in clause (d) of Section 7.03 hereof do not exceed $50,000,000 for any single Unconsolidated Joint Venture or $150,000,000 in the aggregate for all Unconsolidated Joint Ventures, and (B) with respect to investments, loans and advances by each Subsidiary which is not a Borrower, all of the issued and outstanding equity Securities of such Subsidiary shall have been pledged to the Agent pursuant to the terms and provisions of a Pledge Agreement, which is in form and substance satisfactory to the Required Lenders in their sole discretion, and such pledge shall not be prohibited by, or result in a breach or violation of, any agreement, indenture or other instrument to which the Company or any Subsidiary is a party or is bound; (b) The amendment set forth in paragraph (a) of this Section 11 shall be effective on and after July 29, 1994, as if originally included in the Agreement on such date, and shall continue in effect from and after the Effective Date; PROVIDED, HOWEVER, that notwithstanding the forgoing and the provisions of paragraph (a) of this Section 11, if the Company and the Required Lenders shall not have agreed upon the form, terms and provisions of a Pledge Agreement relating to the pledge of all of the issued and outstanding equity Securities of the following Subsidiaries, to wit: Lennar Central Holdings, Inc., Lennar Gotham Holdings, Inc., Lennar Northeast Holdings, Inc., Lennar Florida Holdings, Inc. and Lennar Metro Holdings, Inc., within 30 days after the Effective Date, the amendment effected by this Section 11 shall be terminated effective on such 30th day and shall not be in effect thereafter. 12. LIMITATION ON UNSECURED DEBT. Section 7.10 of the Agreement is deleted in its entirety and replaced with the following: Section 7.10. LIMITATION ON UNSECURED DEBT. At any time, permit the aggregate outstanding amount of the sum of (i) all outstanding Indebtedness under the Notes plus (ii) all other unsecured Indebtedness of the Borrower in excess of $20,000,000 to exceed the Borrowing Base at such time. -11- 13. LIENS AND ENCUMBRANCES. The following is inserted after Section 7.15 of the Agreement: Section 7.16. LIENS AND ENCUMBRANCES. Agree with any third party not to create, assume or suffer to exist any Lien securing a charge or obligation, on or of any of its property, real or personal, whether now owned or hereafter acquired. 14. ASSIGNMENTS. (a) Section 12.01 of the Agreement (SUCCESSORS AND PERMITTED ASSIGNS) is amended by adding a new sentence at the end thereof to read as follows: A Lender may not assign less than the lesser of its Commitment or $10,000,000. (b) Section 12.03(b) (EFFECT; EFFECTIVE DATE) of the Agreement is amended by replacing the reference therein to "$2,500" with "$4,000". 15. JOINDER AND ASSUMPTION. (a) ADDITIONAL SUBSIDIARY BORROWERS. Each Subsidiary listed on Schedule I to this Amendment which is not listed on Schedule I to the Agreement hereby joins in the Agreement as one of the corporations constituting the Borrower and hereby assumes all the obligations of the Borrower thereunder, jointly and severally with the Company and all other Subsidiaries constituting the Borrower. (b) ADDITIONAL LENDERS. Each of the banks whose name appears on a signature page to this Amendment and which is not a party to the Agreement as originally executed on July 29, 1994, is hereby admitted as an additional Lender under the Agreement as provided in Section 2.21 of the Agreement, and each such bank agrees, on the terms and conditions set forth in the Agreement, to make Loans to the Borrower from time to time in amounts not to exceed, in the aggregate at any one time outstanding, the amount of the Commitment set forth next to the name of such bank on such signature page. Contemporaneously herewith, the Borrower is executing and delivering to each such additional Lender a Note in the principal amount of its Commitment. -12- (c) ADDITIONAL COMMITMENTS. If, and to the extent that, any existing Lender is increasing the amount of its Commitment, such increased Commitment is reflected in the Commitment set forth next to the name of such Lender on a signature page to this Amendment. Contemporaneously herewith, the Borrower is executing and delivering to each such Lender a Note in the principal amount of its increased Commitment, which Note is to be in exchange for, and cancellation of, the Note presently held by such Lender. 16. CONDITIONS OF EFFECTIVENESS. This Amendment shall become effective when the Agent shall have received counterparts of this Amendment executed by the Borrower and each of the Lenders and each of the documents specified in subsections (a) - (h) below (with all documents required below, except as otherwise specified, to be dated the date of receipt thereof by the Agent, which date shall be the same for all such documents, and each of such documents to be in form and substance satisfactory to the Agent), and the conditions specified in subsection (i) below shall have been satisfied: (a) The favorable written opinion by Mershon, Sawyer, Johnston, Dunwody & Cole, counsel for the Borrower, dated the Effective Date, addressed to the Lenders and in form and substance satisfactory to the Agent, (i) confirming the accuracy of the representations and warranties set forth in Sections 4.01 (excluding clause (ii) thereof, and limited, in the case of clause (iii) thereof, to the jurisdictions listed under the heading "Where Qualified" in Schedule VI to the Agreement), 4.02, 4.06, 4.11, 4.12 and the second sentence of Section 4.08 of the Agreement (which opinion, as to the representations set forth in clauses (ii)(b), (iii) and (iv) of Section 4.02, Sections 4.06, 4.11, 4.12 and the second sentence of Section 4.08 of the Agreement, may be to the best knowledge of such counsel, and may in its entirety be limited to Florida, Arizona, Delaware, Texas and United States federal law); and (ii) to the effect that this Amendment has been duly authorized, executed and delivered by the Borrower. Such counsel may rely, in its opinion, on the opinions of special counsel to the Borrower referred to in subsection (b) below, as to matters of law of the State of Illinois, and on the opinion of Fennemore, Craig of Phoenix, Arizona as to matters of law of the State of Arizona, and the opinion of Arter & Hadden as to matters of law of the State of Texas. The Borrower hereby instructs its counsel to prepare its opinion and deliver it to Lenders for their benefit, and such opinion shall contain a statement to such effect. (b) The favorable written opinion of Rudnick & Wolfe, special counsel -13- to the Borrower, dated the Effective Date, that (i) no authorization, consent, approval, license or exemption of, or filing or registration with or other action by any Illinois, United States federal or Delaware governmental department, commission, board, bureau, regulatory body, agency or instrumentality or to the best knowledge of such counsel, any court is or will be necessary for the execution, delivery and performance by the Borrower of this Amendment and (ii) this Amendment constitutes the legal, valid and binding obligation of the Borrower, enforceable in accordance with its terms, except as the rights and remedies of the Lenders hereunder may be limited by (A) applicable bankruptcy, reorganization, insolvency and other laws affecting creditors' rights generally from time to time in effect, (B) the exercise of the discretionary powers of the court before which any proceeding seeking equitable remedies (including, without limitation, specific performance and injunctive relief) may be brought, and (C) such other qualifications expressed in the opinion provided that such qualifications are acceptable to Agent. Such counsel may rely on the opinion of counsel to the Borrower delivered pursuant to subsection (a), above, relating to the representations set forth in Sections 4.01 and 4.02 of the Agreement. The Borrower hereby instructs its special counsel to prepare its opinion and deliver it to Lenders for their benefit, and such opinion shall contain a statement to such effect. (c) The favorable written opinion of Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A., special counsel to the Agent and the Lenders, dated the Effective Date, addressed to the Lenders to the effect that: while it has not independently considered the matters covered by the opinions provided pursuant to subsections (a) and (b) above, to the extent necessary to enable it to express the conclusions stated therein, those opinions of counsel and the other documents provided pursuant to this Section 16 are substantially responsive to the requirements of this Amendment. (d) The following supporting documents with respect to each Borrower: (i) a copy of its certificate of incorporation, certified as of a date reasonably close to the Effective Date to be a true and accurate copy by the Secretary of State of its state of incorporation, or a certificate of its Secretary or Assistant Secretary to the effect that there have been no amendments to its certificate of incorporation since July 29, 1994; (ii) a certificate of the Secretary of State of its state of incorporation, dated as of a date reasonably close to the Effective Date, as to its existence and (if available) good standing; (iii) a certificate of the Secretary of State of each jurisdiction, other than its state of incorporation, in which it does business, as to its qualification as a foreign corporation, dated as of a date reasonably close to the Effective Date; (iv) a copy of its -14- by-laws, certified by its Secretary or Assistant Secretary to be a true and accurate copy of its by-laws in effect on the Effective Date, or a certificate of its Secretary or Assistant Secretary to the effect that there have been no amendments thereto since July 29, 1994; (v) a certificate of its Secretary or Assistant Secretary, dated the Effective Date, as to the incumbency and signatures of its officers who have executed any documents in connection with the transactions contemplated by this Amendment; (vi) a copy of resolutions of its Board of Directors or the Executive Committee of its Board of Directors, certified by its Secretary or Assistant Secretary to be a true and accurate copy of resolutions duly adopted by such Board of Directors or Executive Committee that are in full force and effect on the Effective Date, authorizing the execution and delivery by it of this Amendment, and the other Loan Documents and the performance by it of all its obligations thereunder; and (vii) such additional supporting documents and other information with respect to its operations and affairs as the Agent may reasonably request. (e) A certificate signed by a duly authorized officer of each Borrower stating that: (i) the representations and warranties of the Borrower contained in Article IV of the Agreement and in Section 6 of this Amendment are correct and accurate on and as of the Effective Date as though made on and as of that date and (ii) no event has occurred and is continuing which constitutes an Event of Default or Unmatured Default under the Agreement. (f) A certificate signed by the President or Chief Financial Officer of the Company that attests to the existence and adequacy of, and summarizes, the property, casualty, and liability insurance programs carried by the Borrower and that has been furnished by the Borrower to the Agent and the Lenders, is complete and accurate. This summary includes the insurer's or insurers' name(s), policy number(s), expiration date(s), amount(s) of coverage, type(s) of coverage, exclusion(s), and deductibles. This summary also includes similar information, and describes any reserves, relating to any self-insurance program that is in effect. (g) A new Note, substantially in the form of EXHIBIT A annexed to this Amendment, issued to each current Lender in replacement of such Lender's Note and for a principal amount equal to such Lender's Commitment. (h) Such other documents as any Lender or its counsel may reasonably request. -15- (i) There shall not have occurred any changes in the consolidated financial condition or results of operations of the Borrower from that reflected in the financial statements dated November 30, 1993 which has or reasonably could be expected to have, in the judgment of the Required Lenders, a Material Adverse Effect on the Borrower's operations, taken as a whole. 17. LOCATION OF EXECUTION. This Amendment has been executed and delivered to the Agent in Atlanta, Georgia. The Borrower reaffirms its obligation to reimburse and indemnify the Lenders for any documentary stamp tax or other taxes which may be imposed upon the Lenders in respect of the Agreement or any Loan Documents. 18. NO OTHER MODIFICATIONS. Except as expressly amended or modified by the terms hereof, the Agreement shall remain in full force and effect. This Amendment shall not affect, modify or diminish the obligations of Borrower which have accrued prior to the Effective Date including, but not limited to, obligations to pay commitment fees and interest at the levels and rates as in effect prior to the Effective Date. 19. REPRESENTATIONS AND WARRANTIES TRUE AND CORRECT. The Borrower hereby certifies that the representations and warranties contained in the Agreement continue to be true and correct and that no Event of Default or Unmatured Default has occurred. 20. CHOICE OF LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to Revolving Credit Agreement to be duly executed, sealed and delivered the day and year first above written. BORROWER: LENNAR CORPORATION AND EACH OF THE SUBSIDIARIES LISTED ON SCHEDULE I OTHER THAN ATLANTIC HOLDINGS, INC. -16- By: /s/ ALLAN J. PEKOR ------------------------------------------------ Allan J. Pekor as Vice President of each of such corporations Attest: /s/ MORRIS J. WATSKY -------------------------------------------- Morris J. Watsky as Assistant Secretary of each of such corporations ATLANTIC HOLDINGS, INC. By: /s/ ALLAN J. PEKOR ------------------------------------------------ Allan J. Pekor, authorized signatory Attest: /s/ LORY SMITH -------------------------------------------- Lori Smith, Assistant Secretary Address: Lennar Corporation 700 Northwest 107th Avenue Miami, Florida 33172 Attention: Leonard Miller, President COMMITMENTS: LENDERS: $40,000,000 THE FIRST NATIONAL BANK OF CHICAGO, Individually and as Agent By: /s/ JAMES C. ROZEK ------------------------------------------------- James C. Rozek, Vice President -17- Address: The First National Bank of Chicago One First National Plaza 14th Floor, Suite 0151 Chicago, Illinois 60670-0151 Attention: James C. Rozek, Vice President with a copy to: The First National Bank of Chicago One First National Plaza Suite 0801 Chicago, Illinois 60670-0801 Attention: Law Department $35,000,000 THE FIRST NATIONAL BANK OF BOSTON By: /s/ LINDA CARTER ------------------------------------------------- Address: 400 Perimeter Center Terrace Suite 745 Atlanta, Georgia 30346 Attention: Linda Carter, Vice President -18- $35,000,000 CREDIT LYONNAIS ATLANTA AGENCY By: /s/ DAVID M. CAWRSE ------------------------------------------------- Address: Suite 1700 235 Peachtree Street, N.E. Atlanta, Georgia 30303 Attention: Pascal Seris, Vice President CREDIT LYONNAIS CAYMAN ISLAND BRANCH By: /s/ DAVID M. CAWRSE ------------------------------------------------- Address: c/o Credit Lyonnais Atlanta Agency Suite 1700 235 Peachtree Street, N.E. Atlanta, Georgia 30303 Attention: Pascal Seris, Vice President -19- $5,000,000 INTERCONTINENTAL BANK By: /s/ KAREN B. GILMORE ------------------------------------------------- Address: 6th Floor 200 S.E. First Street Miami, Florida 33131 Attention: Karen B. Gilmore, Senior Vice President $35,000,000 COMERICA BANK By: /s/ MICHEL KRZYSTOWCZYK ------------------------------------------------- Address: One Detroit Center 500 Woodward Avenue, 9th Floor Detroit, Michigan 48267 Attention: Michael Krzystowczyk, Vice President $35,000,000 NATIONSBANK OF FLORIDA, N.A. By: /s/ DESPINA Z. SIBLEY ------------------------------------------------- Address: 150 S.E. Third Avenue, Room 524 Miami, Florida 33131 Attention: Despina Z. Sibley, Vice President -20- $15,000,000 THE FUJI BANK, LIMITED NEW YORK BRANCH By: /s/ KATSUNORI NOZAWA ------------------------------------------------- Norimasa Kuroda, Joint General Manager Address: Two World Trade Center, 79th Floor New York, New York 10048 Attention: Vincent Ingato, Vice President $20,000,000 BARNETT BANK OF SOUTH FLORIDA, N.A. By: /s/ CLAY F. WILSON ------------------------------------------------- Address: 701 Brickell Avenue, 6th Floor Miami, Florida 33131 Attention: Clay F. Wilson, Vice President -21- $25,000,000 NBD BANK By: /s/ RICHARD J. JOHNSEN ------------------------------------------------- Address: Financial Services Division 611 Woodward Avenue Detroit, Michigan 48226-3497 Attention: Pat Power, Second Vice President $30,000,000 BANK OF AMERICA ILLINOIS By: /s/ MARK LARIVIERE ------------------------------------------------- Address: 231 S. LaSalle, 15th Floor Chicago, Illinois 60697 Attention: Mark Lariviere, Vice President -22- EX-10.(L) 4 SECOND AMENDMENT TO REVOLVING CREDIT AGREEMENT Amendment to Revolving Credit Agreement ("Amendment"), dated as of April 6, 1995 (the "Amendment Date"), by and among LENNAR CORPORATION, a corporation organized and existing under the laws of the State of Delaware (the "Company"), THE SUBSIDIARIES OF THE COMPANY LISTED IN SCHEDULE I (said Subsidiaries, together with the Company, hereinafter individually and collectively referred to as the "Borrower") to the Credit Agreement (as hereinafter defined), THE LENDERS LISTED IN SCHEDULE II TO THE CREDIT AGREEMENT (hereinafter such lenders, together with any additional lenders as provided in Section 2.21 of the Credit Agreement, are collectively referred to as the "Lenders"), and THE FIRST NATIONAL BANK OF CHICAGO, as Agent, amending the Revolving Credit Agreement, dated July 29, 1994, by and among the Borrower, the Lenders and the Agent, as amended by First Amendment to Revolving Credit Agreement, dated as of January 31, 1995, among such parties (as so amended, the "Credit Agreement"). RECITAL The Borrower has requested that the Lenders amend the Credit Agreement, and the Lenders are willing to make such amendment, all upon the terms and subject to the conditions set forth herein. AGREEMENT In consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, the parties hereto agree as follows: 1. CAPITALIZED TERMS. Capitalized terms used in this Amendment and not otherwise defined herein, shall have the meanings ascribed to them in the Credit Agreement. 2. MAXIMUM CREDIT FACILITIES. (a) The Recital on page 1 of the Credit Agreement is deleted in its entirety and replaced with the following: The Borrower desires to obtain from the Lenders and the Lenders are willing to provide to the Borrower revolving credit loans in an aggregate principal amount outstanding from time to time not exceeding $310,000,000, upon the terms and subject to the conditions hereinafter set forth. (b) Section 2.01(c) of the Credit Agreement is deleted in its entirety and replaced with the following: (c) Notwithstanding anything to the contrary contained in this Agreement, the maximum principal amount of outstanding Advances shall not at any time exceed $310,000,000. (c) Section 2.21(a) of the Credit Agreement is modified by replacing the reference therein to "$300,000,000" with "$310,000,000". (d) The Commitment set forth alongside the name of each Lender on the signature page of this Amendment bearing the name of such Lender shall reflect the Commitment of such Lender under the Credit Agreement. 3. JOINDER AND ASSUMPTION. (a) ADDITIONAL SUBSIDIARY BORROWERS. Each Subsidiary listed on Schedule I to this Amendment which is not listed on Schedule I to the Credit Agreement hereby joins in the Credit Agreement as one of the corporations constituting the Borrower and hereby assumes all the obligations of the Borrower thereunder, jointly and severally with the Company and all other Subsidiaries constituting the Borrower. (b) ADDITIONAL LENDERS. Each of the banks (a "New Lender") whose name appears on a signature page to this Amendment and which is not a party to the Credit Agreement is hereby admitted as an additional Lender under the Credit Agreement as provided in Section 2.21 of the Credit Agreement, and each such New Lender agrees, on the terms and conditions set forth in the Credit Agreement, as amended hereby, to make Loans to the Borrower from time to time in amounts not to exceed, in the aggregate at any one time outstanding, the amount of the Commitment set forth next to the name of such New Lender on its signature page to this Amendment. Contemporaneously herewith, the Borrower is executing and delivering to each New Lender a Note (each, a "Note") in the principal amount of its Commitment. Each New Lender and the Agent hereby acknowledge that the form and substance of such Note is acceptable. Notwithstanding the issuance of a Note for the entire principal amount of a New Lender's Commitment, each New Lender hereby agrees to fund its Pro Rata Share of all Loans outstanding on the Amendment Date as follows: On the Amendment Date, each New Lender is funding its Pro Rata Share of all Floating Rate Loans which are outstanding on the Amendment Date ("Amendment Date Floating Rate Loans"); subsequent to the Amendment Date each New Bank will fund its Pro Rata Share of each Eurodollar Loan outstanding on the Amendment Date, with such funding to take place on each date that a Eurodollar Interest Period expires with respect to such Eurodollar Loan. For purposes of determining a New Lender's Pro Rata Share, the Commitment of such New Lender shall be deemed at all times equal to its total Commitment as -2- specified alongside its name on its signature page of this Amendment; PROVIDED, HOWEVER, that solely for purposes of determining a New Lender's entitlement at any time to the commitment fee pursuant to Section 2.06 of the Credit Agreement, "Commitment" shall mean at such time the amount, if any, by which (i) the New Lender's total Commitment exceeds (ii) the aggregate amount of the then outstanding Loans actually advanced by the New Lender, until such time as the New Lender shall have funded its Pro Rata Share of all outstanding Loans. To the extent that the penultimate sentence of Section 2.21(b) of the Credit Agreement is inconsistent with the provisions of this section, this section shall control. (c) DELETION OF SUBSIDIARY BORROWER. LGP II Holdings, Inc. is removed as of January 31, 1995 from Schedule I and shall not be a Borrower. Such corporation is deemed to be an Unconsolidated Joint Venture Subsidiary as of such date. 4. CONDITIONS OF EFFECTIVENESS. This Amendment shall become effective when the Agent shall have received counterparts of this Amendment executed by the Borrower and each of the Lenders and each of the documents specified in subsections (a) - (f) below (with all documents required below, except as otherwise specified, to be dated the date of receipt thereof by the Agent, which date shall be the same for all such documents, and each of such documents to be in form and substance satisfactory to the Agent), and the conditions specified in subsection (g) below shall have been satisfied: (a) The favorable written opinion by Mershon, Sawyer, Johnston, Dunwody & Cole, counsel for the Borrower, dated the Amendment Date, addressed to the Lenders and in form and substance satisfactory to the Agent, (i) confirming the accuracy of the representations and warranties set forth in Sections 4.01 (excluding clause (ii) thereof, and limited, in the case of clause (iii) thereof, to the jurisdictions listed under the heading "Where Qualified" in Schedule VI to the Credit Agreement), 4.02, 4.06, 4.11, 4.12 and the second sentence of Section 4.08 of the Credit Agreement (which opinion, as to the representations set forth in clauses (ii)(b), (iii) and (iv) of Section 4.02, Sections 4.06, 4.11, 4.12 and the second sentence of Section 4.08 of the Credit Agreement, may be to the best knowledge of such counsel, and may in its entirety be limited to Florida, Arizona, Delaware, Texas and United States federal law); and (ii) to the effect that this Amendment has been duly authorized, executed and delivered by the Borrower. Such counsel may rely, in its opinion, on the opinions of special counsel to the Borrower referred to in subsection (b) below, as to matters of law of the State of Illinois, and on the opinion of Fennemore, Craig of Phoenix, Arizona as to matters of -3- law of the State of Arizona, and the opinion of Arter & Hadden as to matters of law of the State of Texas. The Borrower hereby instructs its counsel to prepare its opinion and deliver it to Lenders for their benefit, and such opinion shall contain a statement to such effect. (b) The favorable written opinion of Rudnick & Wolfe, special counsel to the Borrower, dated the Amendment Date, that (i) no authorization, consent, approval, license or exemption of, or filing or registration with or other action by any Illinois, United States federal or Delaware governmental department, commission, board, bureau, regulatory body, agency or instrumentality or to the best knowledge of such counsel, any court is or will be necessary for the execution, delivery and performance by the Borrower of this Amendment and (ii) this Amendment constitutes the legal, valid and binding obligation of the Borrower, enforceable in accordance with its terms, except as the rights and remedies of the Lenders hereunder may be limited by (A) applicable bankruptcy, reorganization, insolvency and other laws affecting creditors' rights generally from time to time in effect, (B) the exercise of the discretionary powers of the court before which any proceeding seeking equitable remedies (including, without limitation, specific performance and injunctive relief) may be brought, and (C) such other qualifications expressed in the opinion provided that such qualifications are acceptable to Agent. Such counsel may rely on the opinion of counsel to the Borrower delivered pursuant to subsection (a), above, relating to the representations set forth in Sections 4.01 and 4.02 of the Credit Agreement. The Borrower hereby instructs its special counsel to prepare its opinion and deliver it to Lenders for their benefit, and such opinion shall contain a statement to such effect. (c) The favorable written opinion of Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A., special counsel to the Agent and the Lenders, dated the Amendment Date, addressed to the Lenders to the effect that: while it has not independently considered the matters covered by the opinions provided pursuant to subsections (a) and (b) above, to the extent necessary to enable it to express the conclusions stated therein, those opinions of counsel and the other documents provided pursuant to this Section 4 are substantially responsive to the requirements of this Amendment. (d) The following supporting documents with respect to each Borrower: (i) a certificate of its Secretary or Assistant Secretary to the effect that there have been no amendments to its certificate of incorporation since January 31, 1995; (ii) a certificate of the Secretary of State of its state of incorporation, dated as of a date reasonably close to the Amendment Date, as to its existence and (if available) good standing; (iii) a -4- certificate of the Secretary of State of each jurisdiction, other than its state of incorporation, in which it does business, as to its qualification as a foreign corporation, dated as of a date reasonably close to the Amendment Date; (iv) a certificate of its Secretary or Assistant Secretary to the effect that there have been no amendments thereto since January 31, 1995; (v) a certificate of its Secretary or Assistant Secretary, dated the Amendment Date, as to the incumbency and signatures of its officers who have executed any documents in connection with the transactions contemplated by this Amendment; (vi) a copy of resolutions of its Board of Directors or the Executive Committee of its Board of Directors, certified by its Secretary or Assistant Secretary to be a true and accurate copy of resolutions duly adopted by such Board of Directors or Executive Committee that are in full force and effect on the Amendment Date, authorizing the execution and delivery by it of this Amendment, and the other Loan Documents and the performance by it of all its obligations thereunder; and (vii) such additional supporting documents and other information with respect to its operations and affairs as the Agent may reasonably request. (e) A certificate signed by a duly authorized officer of each Borrower stating that: (i) the representations and warranties of the Borrower contained in Article IV of the Credit Agreement are correct and accurate on and as of the Amendment Date as though made on and as of that date and (ii) no event has occurred and is continuing which constitutes an Event of Default or Unmatured Default under the Credit Agreement. (f) Such other documents as any Lender or its counsel may reasonably request. (g) There shall not have occurred any changes in the consolidated financial condition or results of operations of the Borrower from that reflected in the financial statements dated November 30, 1994 which has or reasonably could be expected to have, in the judgment of the Required Lenders, a Material Adverse Effect on the Borrower's operations, taken as a whole. 5. LOCATION OF EXECUTION. This Amendment has been executed and delivered to the Agent in Atlanta, Georgia. The Borrower reaffirms its obligation to reimburse and indemnify the Lenders for any documentary stamp tax or other taxes which may be imposed upon the Lenders in respect of the Credit Agreement or any Loan Documents. 6. NO OTHER MODIFICATIONS. Except as expressly amended or modified by the terms hereof, the Credit Agreement shall remain in full force and effect. This Amendment shall not affect, modify or -5- diminish the obligations of Borrower which have accrued prior to the Amendment Date including, but not limited to, obligations to pay commitment fees and interest at the levels and rates as in effect prior to the Amendment Date. 7. REPRESENTATIONS AND WARRANTIES TRUE AND CORRECT. The Borrower hereby certifies that the representations and warranties contained in the Credit Agreement continue to be true and correct and that no Event of Default or Unmatured Default has occurred. 8. CHOICE OF LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to Revolving Credit Agreement to be duly executed, sealed and delivered the day and year first above written. BORROWER: LENNAR CORPORATION AND EACH OF THE SUBSIDIARIES LISTED ON SCHEDULE I OTHER THAN ATLANTIC HOLDINGS, INC. By: /s/ ALLAN J. PEKOR ------------------------------------------ Allan J. Pekor as Vice President of each of such corporations Attest: /s/ MORRIS J. WATSKY -------------------------------------- Morris J. Watsky as Assistant Secretary of each of such corporations ATLANTIC HOLDINGS, INC. By: /s/ ALLAN J. PEKOR ------------------------------------------ Allan J. Pekor, authorized signatory Attest: /s/ LORI SMITH -------------------------------------- Lori Smith, Assistant Secretary -6- Address: Lennar Corporation 700 Northwest 107th Avenue Miami, Florida 33172 Attention: Leonard Miller, President COMMITMENTS: LENDERS: $40,000,000 THE FIRST NATIONAL BANK OF CHICAGO, Individually and as Agent By: /s/ JAMES C. ROZEK ------------------------------------------ James C. Rozek, Vice President Address: The First National Bank of Chicago One First National Plaza 14th Floor, Suite 0151 Chicago, Illinois 60670-0151 Attention: James C. Rozek, Vice President with a copy to: The First National Bank of Chicago One First National Plaza Suite 0801 Chicago, Illinois 60670-0801 Attention: Law Department $35,000,000 THE FIRST NATIONAL BANK OF BOSTON By: /s/ LINDA CARTER ------------------------------------------ ---------------------, ------------------- Address: 400 Perimeter Center Terrace Suite 745 Atlanta, Georgia 30346 Attention: Linda Carter, Vice President -7- $35,000,000 CREDIT LYONNAIS ATLANTA AGENCY By: /s/ DAVID M. CAWRSE ------------------------------------------ ---------------------, ------------------- Address: Suite 1700 235 Peachtree Street, N.E. Atlanta, Georgia 30303 Attention: Pascal Seris, Vice President CREDIT LYONNAIS CAYMAN ISLAND BRANCH By: /s/ DAVID M. CAWRSE ------------------------------------------ ---------------------, ------------------- Address: c/o Credit Lyonnais Atlanta Agency Suite 1700 235 Peachtree Street, N.E. Atlanta, Georgia 30303 Attention: Pascal Seris, Vice President $5,000,000 INTERCONTINENTAL BANK By: /s/ KAREN B. GILMORE ------------------------------------------ ---------------------, ------------------- Address: 6th Floor 200 S.E. First Street Miami, Florida 33131 Attention: Karen B. Gilmore, Senior Vice President $35,000,000 COMERICA BANK By: /s/ MICHAEL KRZYSTOWCZYK ------------------------------------------ ---------------------, ------------------- Address: One Detroit Center 500 Woodward Avenue, 9th Floor Detroit, Michigan 48267 Attention: Michael Krzystowczyk, Vice President -8- $35,000,000 NATIONSBANK OF FLORIDA, N.A. By: /s/ DESPINA Z. SIBLEY ------------------------------------------ ---------------------, ------------------- Address: 150 S.E. Third Avenue, Room 524 Miami, Florida 33131 Attention: Despina Z. Sibley, Vice President $15,000,000 THE FUJI BANK, LIMITED NEW YORK BRANCH By: /s/ KATSUNORI NOZAWA ------------------------------------------ Norimasa Kuroda, Joint General Manager Address: Two World Trade Center, 79th Floor New York, New York 10048 Attention: Vincent Ingato, Vice President $20,000,000 BARNETT BANK OF SOUTH FLORIDA, N.A. By: /s/ CLAY F. WILSON ------------------------------------------ ---------------------, ------------------- Address: 701 Brickell Avenue, 6th Floor Miami, Florida 33131 Attention: Clay F. Wilson, Vice President -9- $25,000,000 NBD BANK By: /s/ RICHARD J. JOHNSEN ------------------------------------------ ---------------------, ------------------- Address: Financial Services Division 611 Woodward Avenue Detroit, Michigan 48226-3497 Attention: Pat Power, Second Vice President $30,000,000 BANK OF AMERICA ILLINOIS By: /s/ MARK LARIVIERE ------------------------------------------ ---------------------, ------------------- Address: 231 S. LaSalle, 15th Floor Chicago, Illinois 60697 Attention: Mark Lariviere, Vice President $15,000,000 THE DAI-ICHI KANGYO BANK, LTD. ATLANTA AGENCY By: /s/ RYUJI NAKAMURA ------------------------------------------ ----------------------, ------------------ Address: Marquis Two Tower, Suite 2400 285 Peachtree Center Avenue, N.E. Atlanta, Georgia 30303 Attention: David Smith, First Vice President -10- $20,000,000 THE INDUSTRIAL BANK OF JAPAN, LIMITED, ATLANTA AGENCY By: /s/ SHUSAI NAGAI ------------------------------------------ ----------------------, ------------------ Address: 191 Peachtree Street, N.E. Suite 3600 Atlanta, Georgia 30303 Attention: James H. Medders, Vice President -11- SCHEDULE II - LENDERS THE FIRST NATIONAL BANK OF CHICAGO, THE FIRST NATIONAL BANK OF BOSTON, CREDIT LYONNAIS ATLANTA AGENCY, CREDIT LYONNAIS CAYMAN ISLAND BRANCH, INTERCONTINENTAL BANK, COMERICA BANK, NATIONSBANK OF FLORIDA, N.A. THE FUJI BANK, LIMITED, NEW YORK BRANCH, BARNETT BANK OF SOUTH FLORIDA, N.A., NBD BANK BANK OF AMERICA ILLINOIS THE DAI-ICHI KANGYO BANK, LTD., ATLANTA AGENCY THE INDUSTRIAL BANK OF JAPAN, LIMITED, ATLANTA AGENCY EX-13 5 EXHIBIT 13
FIVE YEAR SUMMARY OF SELECTED FINANCIAL DATA Lennar Corporation and Subsidiaries Years Ended November 30, (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1995 1994 1993 1992 1991 ---------- ------- ------- ------- ------- RESULTS OF OPERATIONS: Revenues: Homebuilding $ 665,510 647,750 532,150 308,983 224,186 Investment $ 139,482 106,343 58,955 40,164 35,188 Financial services $ 57,787 54,348 59,204 56,723 37,688 Limited-purpose finance subsidiaries $ 7,689 9,485 14,355 21,164 26,070 Total revenues $ 870,468 817,926 664,664 427,034 323,132 Operating earnings - business segments: Homebuilding $ 58,530 70,645 60,207 38,063 23,041 Investment $ 67,688 51,904 28,497 16,992 10,419 Financial services $ 19,013 14,844 15,104 16,411 15,830 Corporate general and administrative expenses $ 10,523 10,309 8,670 8,833 7,921 Earnings before income taxes and cumulative effect of changes in accounting principles $ 115,455 111,746 82,054 45,363 33,043 Net earnings $ 70,427 69,126 52,511 29,146 21,148 Per share amounts: Earnings before cumulative effect of changes in accounting principles $ 1.95 1.89 1.51 .95 .70 Net earnings $ 1.95 1.92 1.51 .95 .70 Cash dividends - common stock $ .10 .095 .08 .08 .08 Cash dividends - Class B common stock $ .09 .084 .067 .067 .067 FINANCIAL POSITION: Total assets $1,442,362 1,293,223 1,195,490 980,261 862,273 Total debt $ 635,761 566,312 531,480 496,205 426,150 Stockholders' equity $ 607,794 534,088 467,473 319,330 291,237 Shares outstanding (000's) 35,864 35,768 35,716 30,440 30,312 Stockholders' equity per share $ 16.95 14.93 13.09 10.49 9.61 DELIVERY AND BACKLOG INFORMATION: Number of homes delivered 4,680 4,965 4,634 3,039 2,480 Backlog of home sales contracts 1,802 1,703 2,105 1,788 1,039 Dollar value of backlog $ 255,141 247,006 264,342 190,722 106,488
19 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS OVERVIEW Lennar's earnings increased in 1995 to $70.4 million ($1.95 per share) from 1994 earnings of $69.1 million ($1.92 per share) on total revenues in 1995 of $870.5 million, compared to $817.9 million of revenues in 1994. Fiscal 1994 earnings had increased from 1993 earnings of $52.5 million ($1.51 per share), and revenues in 1994 had increased from 1993 revenues of $664.7 million. HOMEBUILDING The Homebuilding Division constructs and sells single- family attached and detached and multi-family homes. These activities also include the purchase, development and sale of residential land. The following tables set forth selected financial and operational information for the periods indicated: SELECTED HOMEBUILDING DIVISION FINANCIAL DATA (DOLLARS IN THOUSANDS, Years Ended November 30, EXCEPT AVERAGE SALES PRICES) 1995 1994 1993 - ----------------------------------------------------------------------- Sales of homes $646,986 626,341 513,503 Other 18,524 21,409 18,647 - ----------------------------------------------------------------------- Total revenues $665,510 647,750 532,150 Gross profit - home sales $123,958 128,209 113,344 Gross profit percentage 19.2% 20.5% 22.1% Selling, general & administrative expenses $ 70,004 63,204 55,482 S,G&A as a percentage of homebuilding revenues 10.5% 9.8% 10.4% Operating earnings $ 58,530 70,645 60,207 Average sales price $138,200 126,200 111,100 - ----------------------------------------------------------------------- SUMMARY OF HOME AND BACKLOG DATA DELIVERIES 1995 1994 1993 - ----------------------------------------------------------------------- Florida 3,395 3,717 3,723 Arizona 504 632 607 Texas 781 616 304 - ----------------------------------------------------------------------- 4,680 4,965 4,634 ======================================================================= NEW ORDERS - ----------------------------------------------------------------------- Florida 3,390 3,361 3,921 Arizona 568 530 721 Texas 821 672 309 - ----------------------------------------------------------------------- 4,779 4,563 4,951 ======================================================================= BACKLOG - HOMES - ----------------------------------------------------------------------- Florida 1,317 1,322 1,678 Arizona 302 238 340 Texas 183 143 87 - ----------------------------------------------------------------------- 1,802 1,703 2,105 ======================================================================= BACKLOG - DOLLAR VALUE (IN THOUSANDS) $255,141 247,006 264,342 ======================================================================= Revenues from homebuilding operations were $665.5 million in 1995, $647.8 million in 1994 and $532.2 million in 1993. The increased revenues in both years were primarily the result of additional revenues from home sales. Revenues from the sales of homes increased 3% in 1995 and 22% in 1994. The increase in 1995 was due to an increase in the average price of a home delivered, partially offset by a decrease in the number of deliveries. In 1994, the increase was attributable to both an increase in the number of new home deliveries and an increase in the average sales price. The higher average sales prices in 1995 and 1994 were due to price increases for existing products, as well as a proportionately greater number of sales of higher-priced homes. Other Homebuilding Division revenues consisted primarily of residential land sales in 1995 and 1994. In 1995, 1994 and 1993, sales of residential land totaled $16.2 million, $18.8 million and $1.8 million, respectively. In 1993, other revenues included $13.7 million from the repairing or rebuilding of homes in south Dade County communities that were damaged by Hurricane Andrew. The rebuilding activities did not have a significant impact on the Company's net earnings during 1993 and were substantially completed by November 30, 1993. New sales orders for fiscal 1995 increased by 5% when compared to 1994, which had decreased by 8% from 1993. The increase in 1995 resulted in an increase of 6% in the Company's backlog of home sales contracts to 1,802 at November 30, 1995, as compared to a backlog of 1,703 contracts a year earlier. The dollar value of contracts in backlog increased 3% to $255.1 million at November 30, 1995 from $247.0 million a year earlier. The gross profit percentages from the sales of homes were 19.2% in 1995, 20.5% in 1994 and 22.1% in 1993. The decreases in the gross profit percentages were mainly attributable to increased competition in many of the Company's markets, increases in construction costs due to additional building code requirements in several counties throughout Florida, as well as increased land costs related to the mix of homes delivered. Gross profit percentages are not significantly different for the various types of homes which the Company builds and are at the high end of the range of gross profit percentages among the Company's major competitors. Selling, general and administrative expenses increased by $6.8 million in 1995 and $7.7 million in 1994. The higher level of expenses in 1995 was primarily attributable to general increases in operating costs. The higher level of expenses in 1994 was primarily attributable to increases in volume-related expenses such as sales commissions and outside brokers' 20 commissions. Selling, general and administrative expenses as a percentage of total homebuilding revenues increased to 10.5% in 1995 from 9.8% in 1994, which was a decrease from the 10.4% reported in 1993. The higher percentages in 1995 and 1993, when compared to 1994, were primarily due to selling, general and administrative expenses being absorbed by fewer homes delivered in 1995 and 1993. INVESTMENT The Investment Division is involved in the development, management and leasing, as well as the acquisition and sale, of commercial and residential rental properties and land. During the past four years, this division became a participant and manager in eleven partnerships which acquired portfolios of commercial mortgage loans and real estate. The division shares in the profits or losses of the partnerships and also receives fees for the management and disposition of the partnerships' assets. The division's interests in these partnerships range from 9.9% to 50%. These partnerships are capitalized primarily by long-term debt of which none is guaranteed by the Company. During 1994, this division also began acquiring, at a discount, issues of the unrated portions of debt securities which are collateralized by real estate loans. The division has only invested in securities for which it is the special servicer on behalf of all the certificate holders of the security. The Company earns interest on these investments as well as fees for the special servicing activities. The following table provides selected financial information regarding the Investment Division: Years Ended November 30, (IN THOUSANDS) 1995 1994 1993 - -------------------------------------------------------------------------------- REVENUES Rental income $ 49,439 43,487 37,708 Equity in earnings of partnerships 30,852 20,710 7,046 Management fees 10,274 12,390 6,714 Sales of real estate 38,173 21,518 45 Other 10,744 8,238 7,442 - -------------------------------------------------------------------------------- Total revenues 139,482 106,343 58,955 COST OF SALES AND EXPENSES 71,794 54,439 30,458 - -------------------------------------------------------------------------------- OPERATING EARNINGS $ 67,688 51,904 28,497 ================================================================================ Investment Division revenues increased in 1995 to $139.5 million from $106.3 million in 1994. The higher revenues were partially the result of additional earnings from the division's partnerships, higher rental income on operating properties owned directly by the Company and higher other income which was primarily the result of the division's additional investment in commercial mortgage-backed securities. Also, contributing to the increased revenues in 1995 was an increase in sales of real estate. These sales totaled $38.2 million in 1995, compared to $21.5 million in 1994. The increases in revenues discussed above were partially offset by lower management fees in 1995, which decreased to $10.3 million from $12.4 million in 1994. Investment Division revenues increased to $106.3 million in 1994 from $59.0 million in 1993, primarily as a result of increases in earnings from partnerships, management fees, rental income, interest income and a higher level of sales of real estate. Operating earnings for the Investment Division increased to $67.7 million in 1995 from $51.9 million in 1994 and $28.5 million in 1993. These increases were due primarily to increases in earnings from partnerships, increases in rental income and an increase in gains on sales of other real estate. Gains on other real estate sales in the Investment Division were $15.8 million in 1995, compared to $9.3 million in 1994. There were no material gains from the sales of real estate in 1993. FINANCIAL SERVICES Financial services activities are conducted primarily through Lennar Financial Services, Inc. ("LFS") and five principal subsidiaries. LFS subsidiaries perform mortgage servicing activities and provide mortgage financing, title insurance and closing services for a wide variety of borrowers and homebuyers. This division also invests in issues of rated portions of commercial real estate mortgage-backed securities for which Lennar's Investment Division is the special servicer and an investor in the unrated portion of those securities. The following table sets forth selected financial and operational information relating to the Financial Services Division: Years Ended November 30, (DOLLARS IN THOUSANDS) 1995 1994 1993 - ---------------------------------------------------------------------------- REVENUES $ 57,787 54,348 59,204 COSTS AND EXPENSES 38,774 39,504 44,100 INTERCOMPANY INTEREST EXPENSE 2,313 3,144 2,244 - ---------------------------------------------------------------------------- OPERATING EARNINGS $ 16,700 11,700 12,860 ============================================================================ Dollar volume of mortgages originated $ 650,074 941,351 1,290,836 ============================================================================ Number of mortgages originated 5,900 9,000 12,100 ============================================================================ Principal balance of servicing portfolio $3,400,120 3,392,071 3,410,829 ============================================================================ Number of loans serviced 44,300 45,200 47,000 ============================================================================ Operating earnings of the Financial Services Division increased in 1995 to $16.7 million from $11.7 million in 1994. The increase in earnings was primarily the result of 21 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS earnings from the division's investment in the rated portion of commercial mortgage-backed securities. The division began acquiring these investments during the third quarter of 1994. Consequently, earnings from these investments in 1995 were significantly greater than earnings from these activities in 1994. Additionally, earnings from the division's title and closing services operations increased during 1995 due to the expansion of insurance services provided by the division. The increases in operating earnings during 1995 were partially offset by lower gains from bulk sales of mortgage servicing rights, which were $1.1 million in 1995, compared to $2.5 million in 1994. Financial services' operating earnings decreased to $11.7 million in 1994 from $12.9 million in 1993. The decrease in 1994 earnings was partially attributable to lower gains from bulk sales of mortgage servicing rights. In 1994, these gains totaled $2.5 million, compared to $3.3 million during 1993. Also contributing to the lower operating earnings in 1994, was a decline in mortgage loan originations and a reduction in servicing revenues. Partially offsetting these decreases was a reduction of amortization expense for purchased mortgage servicing rights. This amortization decreased as a result of a change in the method of accounting for purchased mortgage servicing rights during 1994. This change in accounting reduced the carrying value of the purchased mortgage servicing rights and the related amortization. INTEREST EXPENSE During 1995, 1994 and 1993, interest costs of $35.8 million, $25.0 million and $19.7 million, respectively, were incurred (excluding the limited-purpose finance subsidiaries) and $23.4 million, $22.1 million and $17.1 million, respectively, were capitalized by the Company's homebuilding and investment operations. Previously capitalized interest charged to expense was $17.8 million in 1995, $15.4 million in 1994 and $13.1 million in 1993. Interest amounts incurred and charged to expense in 1995 were greater than those incurred in 1994 and 1993 due to higher debt levels and interest rates. The higher debt at November 30, 1995 is a reflection of the expansion in each of the Company's business segments. The higher interest charged to expense in 1994, when compared to 1993, was primarily the result of the higher volume of homes delivered and land sales during 1994. The amount of interest capitalized by the Company's real estate operations in any one year is a function of the assets under development, outstanding debt levels and interest rates. INCOME TAXES The provision for income taxes in 1995 and 1994 was 39.0% of pre-tax income, compared to 36.0% in 1993. The 1995 and 1994 provisions for income taxes were higher due primarily to the adoption of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes", which required the Company to adjust the assets and liabilities for prior business combinations from their net-of-tax to pre-tax amounts. IMPACT OF ECONOMIC CONDITIONS The Company finances its land acquisition and development activities, construction activities, mortgage banking activities and general operating needs primarily from its own base of $607.8 million of equity at November 30, 1995, as well as from commercial bank borrowings. The Company has maintained excellent relationships with the commercial banks participating in its financing arrangements and has no reason to believe that such relationships will not continue in the future. The Company anticipates that there will be adequate mortgage financing available for the purchasers of its homes during 1996 through the Company's own financial services subsidiaries as well as from external sources. Total revenues and earnings in 1996 will be affected by both the new home sales order rate during the year and the backlog of home sales contracts at the beginning of the year. As interest rates declined during the latter part of 1995, the Company experienced an increase in the demand for its homes and the Company is entering fiscal 1996 with a backlog of $255.1 million, which is 3% higher than at the beginning of the prior fiscal year. In addition, the Company added approximately $38 million to backlog when it aquired the Houston-based residential business of Friendswood Development Company on December 29, 1995. This acquisition should positively affect revenues and earnings in 1996. 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. In general, in recent years the increases in these costs have followed the rate of inflation and have not had a significant adverse impact on the Company. GOVERNMENT REGULATIONS Governmental bodies in the areas where the Company conducts its business have at times imposed laws and other 22 regulations that affect the development of real estate. These laws and regulations are often subject to frequent change. The State of Florida has adopted a law which requires that commitments to provide roads and other offsite infrastructure be in place prior to the commencement of new construction. This law is being administered by individual counties and municipalities throughout the State and may result in additional fees and assessments, or building moratoriums. It is difficult to predict the impact of this law on future operations, or what changes may take place in the law in the future. The Company may have a competitive advantage in that it believes that most of its Florida land presently meets the criteria under the law, and it has the financial resources to provide for development of the balance of its land in compliance with the law. Recently, there have been changes to the various building codes within Florida which have resulted in higher construction costs. The Company believes these additional costs have generally been recoverable through increased selling prices without any significant effect on sales volume. FINANCIAL CONDITION AND CAPITAL RESOURCES Lennar meets the majority of its short-term financing needs with cash generated from operations and funds available under its unsecured revolving credit agreement. During 1995, the Company extended and increased its revolving credit agreement. The agreement, which is with twelve banks, provides a financing commitment of up to $310 million for five years. At November 30, 1995, there was $171.2 million outstanding under the Company's revolving credit agreement, compared to $175.7 million outstanding under the agreement as of the same date last year. In January 1996, the Company entered into an additional $100 million unsecured revolving credit agreement with a one year term. During 1995, $13.1 million in cash was used in the Company's operations, compared to $101.8 million provided by operations in fiscal 1994. In 1995, $35.6 million in cash was used to increase inventories through land purchases, land development and construction and $17.0 million was used to increase receivables. The increase in receivables was primarily attributable to the acquisition of $39.6 million of mortgages receivable from the secured creditors of Bramalea of California, Inc. ("BCI") after BCI had filed for bankruptcy protection. The Company acquired this debt (at a significant discount from its face amount) in order to convert these receivables into an ownership interest when BCI is reorganized out of bankruptcy. The uses of cash in 1995 were partially offset by $14.1 million provided by an increase in accounts payable and accrued liabilities. The primary source of cash flow from operations in 1994, in addition to net earnings, was a $119.1 million reduction in loans held for sale or disposition by the Company's Financial Services Division. This was partially offset by $34.3 million used to increase inventories, $13.9 million used to decrease accounts payable and accrued liabilities and $7.9 million used to increase receivables. Cash used in investing activities totaled $31.2 million in 1995, compared to $124.2 million in 1994. In 1995, $57.5 million was used to purchase investment securities (commercial mortgage-backed securities) in both the Investment and Financial Services Divisions, $7.4 million was used to increase financial services' loans held for investments and $3.7 million was used to increase the Company's investments in partnerships. These uses of cash were partially offset by $38.2 million provided by the sale of operating properties and land held for investment, as well as $16.3 million provided by receipts from investment securities. In 1994, the primary uses of cash for investing activities consisted of $55.1 million used to purchase operating properties, $46.9 million used to purchase investment securities and $43.6 million used to increase the Company's investments in partnerships. These uses were partially offset by $20.0 million provided by the sale of operating properties. HOMEBUILDING AND INVESTMENT OPERATIONS The Company finances its land acquisitions with its revolving lines of credit or purchase money mortgages or 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 strategic purchasing in areas that the Company has identified as desirable growth markets along with careful management of the land development process. The Company believes that its land inventories give it a competitive advantage, especially in Florida, where developers face government constraints and regulations which will limit the number of available homesites in future years. Based on its current financing capabilities, the Company does not believe that its land holdings have an adverse effect on its liquidity. The Company has supplemented its short-term borrowings with secured term loans. Total secured borrowings, which include term loan debt, as well as mortgage notes payable on certain operating properties and land, were $170.6 million at fiscal year-end 1995 and $136.2 million at November 30, 1994. A significant portion of inventories, 23 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS land held for investment, model homes and operating properties remained unencumbered at the end of the current fiscal year. Total real estate borrowings increased to $336.6 million at November 30, 1995 from $328.9 million at November 30, 1994. This increase was attributable to increases in construction in progress, land inventories and partnership investments. FINANCIAL SERVICES Lennar Financial Services subsidiaries finance their mortgage loans held for sale on a short-term basis by either pledging them as collateral for borrowings under two lines of credit totaling $80 million or borrowing funds from Lennar Corporation in instances where, on a consolidated basis, this minimizes the overall cost of funds. Total borrowings under the two lines of credit were $54.9 million and $54.6 million at November 30, 1995 and 1994, respectively. The Financial Services Division utilizes revolving credit lines and repurchase agreements to finance certain mortgage-backed securities. The revolving credit lines total $75 million with total borrowings as of November 30, 1995 of $67.4 million. LFS also has two uncommitted short-term bank credit lines totaling $35 million under which the entire amount was outstanding as of November 30, 1995. LFS subsidiaries sell the mortgage loans they originate within thirty to sixty days of origination. At November 30, 1995, the balance of loans held for sale or disposition was $123.8 million, compared to $124.3 million one year earlier. LIMITED-PURPOSE FINANCE SUBSIDIARIES Limited-purpose finance subsidiaries of LFS have placed mortgage loans and other receivables as collateral for various long-term financings. These subsidiaries pay the debt service on the long-term borrowings primarily from the cash flows generated by the related pledged collateral. Therefore, the related interest income and interest expense, for the most part, offset one another in each of the years in the three-year period ended November 30, 1995. The Company believes that the cash flows generated by these subsidiaries will be adequate to meet the required debt payment schedules. 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. NEW ACCOUNTING PRONOUNCEMENTS In March 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". SFAS No. 121 requires companies to evaluate long-lived assets for impairment based on the undiscounted future cash flows of the asset. If a long-lived asset is identified as impaired, the value of the asset must be reduced to its fair value. The Company's land holdings and operating properties would be considered long-lived assets under this pronouncement. In May 1995, the Financial Accounting Standards Board issued SFAS No. 122, "Accounting for Mortgage Servicing Rights". SFAS No. 122, among other provisions, requires the recognition of originated mortgage servicing rights as assets by allocating total costs incurred in originating a loan between the loan and the servicing rights based on their relative fair values. Presently, the cost of originated mortgage servicing rights is included with the cost of the related loans and written off against income when the loans are sold. Also, under SFAS No. 122, all capitalized mortgage servicing rights are evaluated for impairment based on the excess of the carrying amount of the mortgage servicing rights over their fair value. These statements are effective for fiscal years beginning after December 15, 1995. The Company plans to adopt these statements in the first quarter of its fiscal year ending November 30, 1997. The actual effects of implementing these new standards have not been determined. However, their adoption is not expected to have any material adverse affect on the Company's financial position or results of operations. 24 DELOITTE & TOUCH LLP - ---------- --------------------------------------------------------- [LOGO] Certified Public Accountants Suite 2500 100 Southeast Second Street Miami, Florida 33131-2135 Telephone: (305) 358-4141 Facsimile: (305) 372-3160 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, 1995 and 1994 and the related consolidated statements of earnings, cash flows and stockholders' equity for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. The consolidated financial statements of the Company for the year ended November 30, 1993 were audited by other auditors, whose report dated January 18, 1994, expressed an unqualified opinion on those statements. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform our audit 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 provides 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 Lennar Corporation and subsidiaries at November 30, 1995 and 1994, and the results of their operations and their cash flows for the years then ended, in conformity with generally accepted accounting principles. As discussed in Note 4 to the consolidated financial statements, effective December 1, 1993, the Company changed its method of accounting for income taxes to conform to Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes", and its method of evaluating purchased mortgage servicing rights for impairment. As discussed in Note 1 to the consolidated financial statements, effective December 1, 1994, the Company changed its method of accounting for its investments in debt securities to conform with Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities". /s/ DELOITTE & TOUCHE LLP January 11, 1996 - --------------- DELOITTE TOUCHE TOHMATSU INTERNATIONAL - --------------- 25
CONSOLIDATED BALANCE SHEETS Lennar Corporation and Subsidiaries November 30, 1995 and 1994 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1995 1994 - ---------------------------------------------------------------------------------------------------------- ASSETS HOMEBUILDING, INVESTMENT AND FINANCIAL SERVICES: Homebuilding and investment assets: Cash and cash equivalents $ 21,870 16,801 Receivables, net 70,202 48,165 Inventories: Construction in progress and model homes 199,774 175,547 Land held for development 304,630 300,488 ----------------------- Total inventories 504,404 476,035 Land held for investment 72,976 80,747 Operating properties and equipment, net 189,341 193,621 Investments in and advances to partnerships 114,240 106,637 Other assets 40,792 29,598 Financial services assets 353,809 252,195 - ---------------------------------------------------------------------------------------------------------- Total assets - homebuilding, investment and financial services 1,367,634 1,203,799 - ---------------------------------------------------------------------------------------------------------- LIMITED-PURPOSE FINANCE SUBSIDIARIES - COLLATERAL FOR BONDS AND NOTES PAYABLE 74,728 89,424 - ---------------------------------------------------------------------------------------------------------- $1,442,362 1,293,223 ========================================================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY HOMEBUILDING, INVESTMENT AND FINANCIAL SERVICES: Homebuilding and investment liabilities: Accounts payable and accrued liabilities $ 114,833 102,582 Customer deposits 14,441 15,271 Income taxes: Currently payable 12,219 10,205 Deferred 42,611 50,796 Mortgage notes and other debts payable 336,633 328,936 Financial services liabilities 243,191 168,348 - ---------------------------------------------------------------------------------------------------------- Total liabilities - homebuilding, investment and financial services 763,928 676,138 - ---------------------------------------------------------------------------------------------------------- LIMITED-PURPOSE FINANCE SUBSIDIARIES - BONDS AND NOTES PAYABLE 70,640 82,997 - ---------------------------------------------------------------------------------------------------------- STOCKHOLDERS' EQUITY: Common stock of $.10 par value per share Authorized 100,000 shares; issued and outstanding: 1995 - 25,878; 1994 - 25,781 2,588 2,578 Class B common stock of $.10 par value per share Authorized 30,000 shares; issued and outstanding: 1995 - 9,986; 1994 - 9,987 999 999 Additional paid-in capital 170,586 169,605 Retained earnings 427,851 360,906 Unrealized gain on securities available-for-sale, net 5,770 - - ---------------------------------------------------------------------------------------------------------- Total stockholders' equity 607,794 534,088 - ---------------------------------------------------------------------------------------------------------- $1,442,362 1,293,223 ==========================================================================================================
See accompanying notes to consolidated financial statements. 26 CONSOLIDATED STATEMENTS OF EARNINGS Lennar Corporation and Subsidiaries Years Ended November 30, 1995, 1994 and 1993 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1995 1994 1993 - -------------------------------------------------------------------------------- REVENUES: Homebuilding $665,510 647,750 532,150 Investment 139,482 106,343 58,955 Financial services 57,787 54,348 59,204 Limited-purpose finance subsidiaries 7,689 9,485 14,355 - -------------------------------------------------------------------------------- Total revenues 870,468 817,926 664,664 - -------------------------------------------------------------------------------- COSTS AND EXPENSES: Homebuilding 606,980 577,105 471,943 Investment 71,794 54,439 30,458 Financial services 38,774 39,504 44,100 Limited-purpose finance subsidiaries 7,687 9,441 14,351 Corporate general and administrative 10,523 10,309 8,670 Interest 19,255 15,382 13,088 - -------------------------------------------------------------------------------- Total costs and expenses 755,013 706,180 582,610 - -------------------------------------------------------------------------------- EARNINGS BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES 115,455 111,746 82,054 INCOME TAXES 45,028 43,581 29,543 - -------------------------------------------------------------------------------- EARNINGS BEFORE CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES 70,427 68,165 52,511 CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES FOR: Income taxes - 4,745 - Purchased mortgage servicing rights - (3,784) - - -------------------------------------------------------------------------------- NET EARNINGS $ 70,427 69,126 52,511 ================================================================================ NET EARNINGS PER SHARE: BEFORE CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES $ 1.95 1.89 1.51 CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES - .03 - - -------------------------------------------------------------------------------- NET EARNINGS PER SHARE $ 1.95 1.92 1.51 ================================================================================ See accompanying notes to consolidated financial statements. 27
CONSOLIDATED STATEMENTS OF CASH FLOWS Lennar Corporation and Subsidiaries Years Ended November 30, 1995, 1994 and 1993 (IN THOUSANDS) 1995 1994 1993 - -------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 70,427 69,126 52,511 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization 10,274 8,396 9,976 Equity in earnings of partnerships (31,203) (20,710) (7,046) Gain on sales of other real estate (15,776) (11,930) (548) Decrease in deferred income taxes (8,185) (9,324) (2,296) Changes in assets and liabilities, net of effects from accounting changes: Increase in receivables (17,009) (7,861) (16,325) Increase in inventories (35,581) (34,261) (87,439) Decrease (increase) in financial services' loans held for sale or disposition 30 119,071 (49,653) Increase (decrease) in accounts payable and accrued liabilities 14,140 (13,890) 27,227 Other, net (248) 3,192 5,126 - -------------------------------------------------------------------------------------- Net cash provided by (used in) operating activities (13,131) 101,809 (68,467) - -------------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Operating properties and equipment: Additions (10,053) (55,125) (21,366) Sales 21,813 20,007 - Sales of land held for investment 16,365 1,530 - Increase in investments in and advances to partnerships (3,701) (43,639) (20,180) Increase in financial services' loans held for investment (7,416) (6,704) (4,623) Purchase of investment securities (57,450) (46,884) - Receipts from investment securities 16,279 3,994 - Purchase of interest in joint ventures, net of cash acquired - - (4,782) Other, net (7,082) 2,631 (6,129) - -------------------------------------------------------------------------------------- Net cash used in investing activities (31,245) (124,190) (57,080) - -------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings (repayments) under revolving credit agreement (4,500) 46,000 84,800 Net borrowings (repayments) under financial services' short-term debt (11,234) (113,447) 23,159 Mortgage notes and other debts payable: Proceeds from borrowings 159,039 116,940 17,241 Principal payments (85,377) (23,232) (92,209) Limited-purpose finance subsidiaries: Principal reduction of mortgage loans and other receivables 14,058 39,777 55,464 Principal reduction of bonds and notes payable (12,818) (37,429) Common stock: Issuance 991 778 98,251 Dividends (3,482) (3,289) (2,619) - -------------------------------------------------------------------------------------- Net cash provided by financing activities 56,677 26,098 132,420 - -------------------------------------------------------------------------------------- Net increase in cash and cash equivalents 12,301 3,717 6,873 Cash and cash equivalents at beginning of year 17,942 14,225 7,352 - -------------------------------------------------------------------------------------- Cash and cash equivalents at end of year $ 30,243 17,942 14,225 ====================================================================================== Summary of cash and cash equivalent balances: Homebuilding and investment $ 21,870 16,801 10,606 Financial services 8,373 1,141 3,619 - -------------------------------------------------------------------------------------- $ 30,243 17,942 14,225 ====================================================================================== Supplemental disclosures of cash flow information: Cash paid for interest, net of amounts capitalized $ 20,815 12,303 17,692 Cash paid for income taxes $ 47,028 46,443 28,666
See accompanying notes to consolidated financial statements. 28
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Lennar Corporation and Subsidiaries Years Ended November 30, 1995, 1994 and 1993 (IN THOUSANDS) 1995 1994 1993 - -------------------------------------------------------------------------------- COMMON STOCK: Beginning balance $ 2,578 1,715 1,364 Shares issued under public offering - - 345 Three-for-two stock split effected in the form of a 50% stock dividend - 859 - Shares issued under employee stock plans 10 4 6 - -------------------------------------------------------------------------------- Balance at November 30 2,588 2,578 1,715 - -------------------------------------------------------------------------------- CLASS B COMMON STOCK: Beginning balance 999 666 666 Three-for-two stock split effected in the form of a 50% stock dividend - 333 - - -------------------------------------------------------------------------------- Balance at November 30 999 999 666 - -------------------------------------------------------------------------------- ADDITIONAL PAID-IN CAPITAL: Beginning balance 169,605 170,023 72,123 Shares issued under public offering - - 96,747 Three-for-two stock split effected in the form of a 50% stock dividend - (1,192) - Shares issued under employee stock plans 981 774 1,153 - -------------------------------------------------------------------------------- Balance at November 30 170,586 169,605 170,023 - -------------------------------------------------------------------------------- RETAINED EARNINGS: Beginning balance 360,906 295,069 245,177 Net earnings 70,427 69,126 52,511 Cash dividends - common stock (2,583) (2,448) (1,953) Cash dividends - Class B common stock (899) (841) (666) - -------------------------------------------------------------------------------- Balance at November 30 427,851 360,906 295,069 - -------------------------------------------------------------------------------- UNREALIZED GAIN ON SECURITIES AVAILABLE-FOR-SALE, NET: Beginning balance - - - Net unrealized gains for the year 5,770 - - - -------------------------------------------------------------------------------- Balance at November 30 5,770 - - - -------------------------------------------------------------------------------- Total stockholders' equity $607,794 534,088 467,473 ================================================================================
See accompanying notes to consolidated financial statements. 29 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Lennar Corporation and Subsidiaries 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF CONSOLIDATION The accompanying consolidated financial statements include the accounts of Lennar Corporation and all wholly-owned subsidiaries (the "Company"). The Company's investments in partnerships are accounted for by the equity method. All significant intercompany transactions and balances have been eliminated. 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 AND CASH EQUIVALENTS 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, the carrying amount of these instruments approximates their fair values. INVENTORIES Inventories are stated at the lower of accumulated costs or net realizable value. Net realizable value is evaluated at the community level and is defined as the estimated proceeds upon disposition less all future costs to complete and sell. Inventory adjustments to net realizable value in 1995, 1994 and 1993 were not material to the Company. Start-up costs, construction overhead and selling expenses are expensed as incurred. Homes held for sale are classified as construction in progress until delivered. Land, land development, amenities and other costs are accumulated by specific area and allocated proportionately to homes within the respective area. 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 expense relating to financial services operations and limited-purpose finance subsidiaries is included in their respective costs and expenses. Interest related to homebuilding and investment operations, including interest costs relieved from inventories, is included in interest expense. During 1995, 1994 and 1993, interest costs of $35.8 million, $25.0 million and $19.7 million, respectively, (excluding the limited-purpose finance subsidiaries) were incurred and $23.4 million, $22.1 million and $17.1 million, respectively, were capitalized by the Company's homebuilding and investment operations. Previously capitalized interest charged to expense in 1995, 1994 and 1993 was $17.8 million, $15.4 million and $13.1 million, respectively. OPERATING PROPERTIES AND EQUIPMENT Operating properties and equipment are recorded at cost. Depreciation is calculated to amortize the cost of depreciable assets over their estimated useful lives using the straight-line method. The range of estimated useful lives for operating properties is 15 to 40 years and for equipment is 2 to 10 years. INVESTMENT SECURITIES Effective December 1, 1994, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity Securities". This new standard requires that debt and equity securities that have determinable fair values be 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 in the balance sheet. 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. WARRANTIES Warranty liabilities are not significant as the Company subcontracts virtually all segments of construction to others and its contracts call for the subcontractors to repair or replace any deficient items related to their trade. Extended warranties are offered in some communities through independent homeowner warranty insurance companies. The costs of these warranties are fixed to the Company and are expensed in the period the homes are delivered. 30 INCOME TAXES Effective December 1, 1993, the Company adopted the provisions of 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 using enacted tax rates expected to apply to taxable income in the years in which those differences are expected to reverse. Prior to December 1, 1993, the Company utilized the deferred method of accounting for income taxes under which deferred income taxes were recognized for income and expense items that were reported in different years for financial reporting purposes and income tax purposes using the tax rate applicable for the year of the calculation. NET EARNINGS PER SHARE Net earnings per share is calculated by dividing net earnings by the weighted average number of the total of common shares, Class B common shares and common share equivalents outstanding during each year. The weighted average number of shares outstanding was 36,100,000, 36,086,000 and 34,709,000 in 1995, 1994 and 1993, respectively. 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. Discounts recorded on these loans are presented as a reduction of the carrying amount of the loans and are not amortized. This division enters into forward sales and option contracts to protect the value of loans held for sale or disposition from increases in market interest rates. Adjustments are made to these loans based on changes in the market value of these hedging contracts (see Note 15). When the division sells loans or mortgage-backed securities in 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 or the securities. 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 generally retains the servicing on the loans and mortgage-backed securities it sells and recognizes servicing fee income as those services are performed. NEW ACCOUNTING PRONOUNCEMENTS In March 1995, the Financial Accounting Standards Board issued SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". SFAS No. 121 requires companies to evaluate long-lived assets for impairment based on the undiscounted future cash flows of the asset. If a long-lived asset is identified as impaired, the value of the asset must be reduced to its fair value. The Company's land holdings and operating properties would be considered long-lived assets under this pronouncement. In May 1995, the Financial Accounting Standards Board issued SFAS No. 122, "Accounting for Mortgage Servicing Rights". SFAS No. 122, among other provisions, requires the recognition of originated mortgage servicing rights as assets by allocating total costs incurred in originating a loan between the loan and the servicing rights based on their relative fair values. Presently, the cost of originated mortgage servicing rights is included with the cost of the related loans and written off against income when the loans are sold. Also, under SFAS No. 122, all capitalized mortgage servicing rights are evaluated for impairment based on the excess of the carrying amount of the mortgage servicing rights over their fair value. These statements are effective for fiscal years beginning after December 15, 1995. The Company plans to adopt these statements in the first quarter of its fiscal year ending November 30, 1997. The actual effects of implementing these new standards have not been determined. However, their adoption is not expected to have any material adverse affect on the Company's financial position or results of operations. RECLASSIFICATIONS Certain prior year amounts in the consolidated financial statements have been reclassified to conform with the 1995 presentation. 2. BUSINESS SEGMENTS The Company has three business segments: Homebuilding, Investment and Financial Services. The limited-purpose finance subsidiaries are not considered a business segment and are not included in the following tables. HOMEBUILDING Homebuilding operations include the construction and sale of single-family and multi-family homes. These activities also include the purchase, development and sale of residential land. The following table sets forth financial information relating to the homebuilding operations: 31 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Lennar Corporation and Subsidiaries Years Ended November 30, (IN THOUSANDS) 1995 1994 1993 - ---------------------------------------------------------------------- REVENUES: Sales of homes $646,986 626,341 513,503 Other 18,524 21,409 18,647 - ---------------------------------------------------------------------- Total revenues 665,510 647,750 532,150 COSTS AND EXPENSES: Cost of homes sold 523,028 498,132 400,159 Cost of other revenues 13,948 15,769 16,302 Selling, general & administrative 70,004 63,204 55,482 - ---------------------------------------------------------------------- Total costs and expenses 606,980 577,105 471,943 - ---------------------------------------------------------------------- OPERATING EARNINGS $ 58,530 70,645 60,207 - ---------------------------------------------------------------------- IDENTIFIABLE ASSETS $541,266 531,330 500,507 - ---------------------------------------------------------------------- DEPRECIATION AND AMORTIZATION $ 1,842 1,522 1,037 - ---------------------------------------------------------------------- INVESTMENT The Investment Division is involved in the development, management and leasing, as well as the acquisition and sale, of commercial and residential properties and land. This division also participates in and manages partnerships with financial institutions. During 1994, this division began acquiring, at a discount, issues of the unrated portion of debt securities which are collateralized by real estate loans. The following table sets forth financial information relating to the Investment Division's operations: Years Ended November 30, (IN THOUSANDS) 1995 1994 1993 - ------------------------------------------------------------------------- REVENUES: Rental income $ 49,439 43,487 37,708 Equity in earnings of partnerships 30,852 20,710 7,046 Management fees 10,274 12,390 6,714 Sales of real estate 38,173 21,518 45 Other 10,744 8,238 7,442 - ------------------------------------------------------------------------- Total revenues 139,482 106,343 58,955 COST OF SALES AND EXPENSES 71,794 54,439 30,458 - ------------------------------------------------------------------------- OPERATING EARNINGS $ 67,688 51,904 28,497 - ------------------------------------------------------------------------- IDENTIFIABLE ASSETS $453,483 411,366 281,883 - ------------------------------------------------------------------------- CAPITAL EXPENDITURES $ 7,867 53,646 42,102 - ------------------------------------------------------------------------- DEPRECIATION AND AMORTIZATION $ 5,483 5,010 4,130 - ------------------------------------------------------------------------- FINANCIAL SERVICES The Financial Services Division's activities are conducted primarily through Lennar Financial Services, Inc. and five subsidiaries: Universal American Mortgage Company, AmeriStar Financial Services, Inc., Universal Title Insurors, Inc., Lennar Capital Corporation and TitleAmerica Insurance Corporation. These companies arrange mortgage financing, title insurance and closing services for Lennar homebuyers and others; acquire, package and resell home mortgage loans; and perform mortgage loan servicing activities. This division also invests in issues of rated portions of commercial real estate mortgage-backed securities for which Lennar's Investment Division is the special servicer and an investor in the unrated portions of those securities. The following table sets forth financial information relating to the financial services operations: Years Ended November 30, (IN THOUSANDS) 1995 1994 1993 - ------------------------------------------------------- REVENUES $ 57,787 54,348 59,204 COSTS AND EXPENSES 38,774 39,504 44,100 INTERCOMPANY INTEREST EXPENSE* 2,313 3,144 2,244 - ------------------------------------------------------- OPERATING EARNINGS $ 16,700 11,700 12,860 - ------------------------------------------------------- IDENTIFIABLE ASSETS $353,809 252,195 284,391 - ------------------------------------------------------- DEPRECIATION AND AMORTIZATION $ 2,196 1,450 4,886 - ------------------------------------------------------- * Intercompany interest expense is reflected above to show interest expense on intercompany debt of the financial services operations. 3. SUBSEQUENT EVENT-ACQUISITION On December 29, 1995, the Company purchased the assets and operations of the residential business of Friendswood Development Company, the real estate subsidiary of Exxon Corporation, for approximately $110 million in cash, subject to certain post-closing adjustments. The Company financed this transaction through borrowings under its existing revolving credit agreement. The acquisition of these assets and operations will be accounted for in fiscal 1996 using the purchase method of accounting. 4. ACCOUNTING CHANGES Effective December 1, 1993, the Company adopted the provisions of SFAS No. 109, "Accounting for Income Taxes". This change in accounting principle resulted in an increase to net earnings of $4.7 million in the first quarter of 1994. The change in accounting for income taxes did not have a significant effect on the Company's results of operations. The first quarter of 1994 also included a charge of $3.8 million (net of income tax effect of $2.4 million) for the cumulative effect on prior years of a change in accounting for purchased mortgage servicing rights. During the first quarter of 1994, the Company changed the way in which it evaluates these assets for impairment from an undiscounted and disaggregated cash flow basis to a discounted and disaggregated cash flow basis. 32 5. RESTRICTED CASH Cash includes restricted deposits of $3.1 million and $3.7 million as of November 30, 1995 and 1994, respectively. These balances are comprised primarily of escrow deposits held related to condominium purchases and security deposits from tenants of commercial and apartment properties. 6. SUMMARY OF NON-CASH INVESTING AND FINANCING ACTIVITIES During 1995, the Company acquired commercial mortgage-backed securities for $81.7 million. Of this amount, $57.5 million was paid in cash and $24.2 million was financed by the sellers. During 1994, the Company's Financial Services Division acquired commercial mortgage-backed securities for $72.4 million. Of this amount, $25.4 million was paid in cash and the balance of $47.0 million was financed by the sellers. During 1993, the Company acquired a portfolio of loans from the Resolution Trust Corporation for $24.8 million. Of this amount, $5.0 million was paid in cash and the Company issued a non-recourse note in the amount of $19.8 million for the remainder. Also during 1993, the Company purchased the other partners' interests in three of its joint ventures. As a result, the operations of these ventures were consolidated into the accounts of the Company as of the respective dates of acquisition. The net result of these transactions was to decrease investments in and advances to partnerships by $34.9 million, increase all other assets by $73.7 million and increase liabilities by $38.8 million. 7. RECEIVABLES November 30, (IN THOUSANDS) 1995 1994 - ----------------------------------------------------------------- Accounts receivable $24,516 31,253 Mortgage and notes receivable 48,659 20,801 - ----------------------------------------------------------------- 73,175 52,054 Allowance for doubtful accounts (2,372) (1,528) Deferred income and unamortized discounts (601) (2,361) - ----------------------------------------------------------------- $70,202 48,165 ================================================================= 8. INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS Summarized financial information on a combined 100% basis related to the Company's significant partnerships accounted for by the equity method follows: November 30, (IN THOUSANDS) 1995 1994 - ----------------------------------------------------------------- ASSETS: Cash $ 66,927 96,046 Portfolio investments 1,078,841 1,286,375 Other assets 22,160 61,722 - ----------------------------------------------------------------- 1,167,928 1,444,143 ================================================================= LIABILITIES AND EQUITY: Accounts payable and other liabilities $ 77,424 93,943 Notes and mortgages payable 570,882 737,344 Equity of: The Company 149,174 105,537 Others 370,448 507,319 - ----------------------------------------------------------------- $1,167,928 1,444,143 ================================================================= Portfolio investments consist primarily of mortgage loans and business loans collateralized by real property, as well as commercial properties and land held for investment or sale. The Company's share of the partnerships' equity at November 30, 1995 includes $113.6 million and $35.6 million related to the Investment Division's and Financial Services Division's investments in partnerships, respectively. Years Ended November 30, (IN THOUSANDS) 1995 1994 1993 - ----------------------------------------------------------------- Revenues $280,286 246,236 112,692 Costs and expenses 115,269 128,784 78,653 - ----------------------------------------------------------------- Pre-tax earnings of partnerships $165,017 117,452 34,039 ================================================================= The Company's share of pre-tax earnings $ 31,203 20,710 7,046 ================================================================= The Company's investments in partnerships consist primarily of its Investment Division partnerships. At November 30, 1995, the Company's equity interests in these partnerships ranged from 25% to 50% (which in one instance includes an investment by the Company's Financial Services Division). These partnerships are involved in the acquisition and management of portfolios of real estate loans and assets. The Company shares in the profits and losses of these partnerships and, as the manager of the partnerships, receives fees for the management and disposition of the assets. The outstanding debt of these partnerships is not guaranteed by the Company. 33 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Lennar Corporation and Subsidiaries 9. OPERATING PROPERTIES AND EQUIPMENT November 30, (IN THOUSANDS) 1995 1994 - ---------------------------------------------------------------- Rental apartment properties $ 69,027 66,818 Retail centers 62,952 62,639 Office buildings 39,718 41,740 Community recreational facilities 9,693 14,207 Other 33,520 30,452 - ---------------------------------------------------------------- Total land and buildings 214,910 215,856 Furniture, fixtures and equipment 10,615 9,790 - ---------------------------------------------------------------- Total 225,525 225,646 Accumulated depreciation (36,184) (32,025) - ---------------------------------------------------------------- $189,341 193,621 ================================================================ The Company leases retail, office and other facilities under non-cancellable operating leases with terms in excess of twelve months. The future minimum rental revenues under these leases for the five years subsequent to November 30, 1995, are as follows (in thousands): 1996-$13,078; 1997-$12,169; 1998-$9,900; 1999-$8,000 and 2000-$6,453. 10. MORTGAGE NOTES AND OTHER DEBTS PAYABLE November 30, (DOLLARS IN THOUSANDS) 1995 1994 - -------------------------------------------------------------------------------- Secured without recourse to the Company: Mortgage notes on operating properties and land with fixed interest rates from 6.8% to 9.5%, due through 2003 $ 25,616 25,169 Other secured debt: Term loan notes with floating interest rates (6.6% to 6.8% at November 30, 1995), secured by certain real estate and operating properties, due through 2002 84,960 50,000 Mortgage notes on operating properties and land with interest rates from 4.0% to 8.3%, due through 2015 60,002 61,057 Unsecured revolving credit notes payable with floating interest rates 117,225 122,735 Other notes payable with floating interest rates (6.7% to 8.8% at November 30, 1995), due in 1996 48,830 13,500 Unsecured term loan note with floating interest rate - 56,475 - -------------------------------------------------------------------------------- $336,633 328,936 ================================================================================ During 1995, the Company amended its unsecured revolving credit agreement by extending the term to five years and increasing the commitment to $310 million. This agreement is with twelve banks. Certain Financial Services Division subsidiaries are co-borrowers under this facility and at November 30, 1995 and 1994 their borrowings under this agreement amounted to $54.0 million and $53.0 million, respectively. The total amount outstanding under the Company's revolving credit agreement at November 30, 1995 and 1994 was $171.2 million and $175.7 million, respectively. In January 1996, the Company entered into an additional $100 million unsecured revolving credit agreement which expires in January 1997. The Company utilizes interest rate swap agreements to manage interest costs and hedge against risks associated with changing interest rates (see Note 15). The minimum aggregate principal maturities of mortgage notes and other debts payable during the five years subsequent to November 30, 1995, are as follows (in thousands): 1996-$94,024; 1997-$12,439; 1998-$24,492; 1999-$1,005 and 2000 -$844. All of the notes secured by land contain collateral release provisions for accelerated payment which may be made as necessary to maintain construction schedules. 34 11. FINANCIAL SERVICES The assets and liabilities related to the Company's financial services operations (as described in Note 2) are summarized as follows: November 30, (IN THOUSANDS) 1995 1994 - -------------------------------------------------------------------------------- ASSETS: Loans held for sale or disposition, net $123,842 124,324 Investment securities available-for-sale 141,832 - Loans and mortgage-backed securities held for investment, net 43,506 107,989 Investments in and advances to partnerships 27,301 - Cash and receivables, net 14,416 11,579 Servicing acquisition costs 2,329 3,949 Other 583 4,354 - -------------------------------------------------------------------------------- $353,809 252,195 ================================================================================ LIABILITIES: Notes and other debts payable $228,488 154,379 Other 14,703 13,969 - -------------------------------------------------------------------------------- $243,191 168,348 ================================================================================ Investments in and advances to partnerships consist primarily of a 15.1% equity interest, acquired in the fourth quarter of 1995, in a partnership in which the Investment Division owns a 9.9% equity interest (see Note 8). The Financial Services Division finances its activities through various lines of credit, borrowings under short-term repurchase agreements or borrowings from Lennar Corporation, when on a consolidated basis the Company can minimize its cost of funds. Warehouse lines of credit with banks are used to fund the division's mortgage loan activity. Borrowings under these agreements were $54.9 million and $54.6 million at November 30, 1995 and 1994, respectively, and were collateralized by mortgage loans with outstanding principal balances of $57.0 million and $57.9 million, respectively, and by servicing rights to approximately $1.5 billion of loans serviced by the division. 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 agreements at November 30, 1995 was 0.8%. On December 22, 1995, the Company entered into a new warehouse line of credit facility totaling $125 million that expires December 20, 1996, unless otherwise extended. The division has two revolving lines of credit to finance certain mortgage-backed securities which provide for aggregate borrowings of $75 million, expiring in 1998. Borrowings under these agreements were $67.4 million at November 30, 1995 and were collateralized by mortgage-backed securities with an aggregate carrying value of $101.1 million. The weighted average interest rate at November 30, 1995 was 5.8%. The division also utilizes short-term financing arrangements to sell mortgage-backed securities under agreements to repurchase them with securities dealers in the business of providing such financing. At November 30, 1995 and 1994, repurchase agreements outstanding totaled $17.2 million and $46.8 million, respectively, and had a weighted average borrowing rate of 6.8% and 6.5%, respectively. During 1995, the division entered into two uncommitted, short-term bank credit lines which provide for aggregate borrowings of $35.0 million. As of November 30, 1995, $35.0 million was outstanding at an interest rate of 6.4%. Advances generally mature within 90 days and are unsecured. Certain subsidiaries of the Financial Services Division are co-borrowers in the Company's revolving credit agreement (see Note 10). As of November 30, 1995 and 1994, the division's borrowings under this agreement amounted to $54.0 million and $53.0 million, respectively. 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 net realizable value of the underlying collateral. Provisions for these losses have not been material to the Company. The division is also subject to prepayment risk on the servicing portfolio. Exposure to prepayment risk is managed by the division's ongoing evaluation of prepayment possibilities. 12. LIMITED-PURPOSE FINANCE SUBSIDIARIES 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 trustee. At November 30, 1995 and 1994, the balances outstanding for the bonds and notes payable were $70.6 and $83.0 million, respectively. The borrowings mature in years 2013 through 2018 and carry interest rates ranging from 7.1% to 14.3%. The annual principal repayments are dependent upon collections on the underlying mortgages, including prepayments, and cannot be reasonably determined. 35 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Lennar Corporation and Subsidiaries 13. INCOME TAXES The provisions (benefits) for income taxes consist of the following: Years Ended November 30, (IN THOUSANDS) 1995 1994 1993 - ---------------------------------------------------------------------- Current: Federal $ 47,857 44,092 28,620 State 6,787 8,337 5,400 - ---------------------------------------------------------------------- 54,644 52,429 34,020 - ---------------------------------------------------------------------- Deferred: Federal (9,982) (7,443) (4,013) State 366 (1,405) (464) - ---------------------------------------------------------------------- (9,616) (8,848) (4,477) - ---------------------------------------------------------------------- Total expense $ 45,028 43,581 29,543 ====================================================================== 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 which comprise the net deferred tax liability are as follows: November 30, (IN THOUSANDS) 1995 1994 - -------------------------------------------------------------------------------- Deferred tax liabilities: Capitalized expenses $36,818 36,447 Acquisition adjustments 15,154 15,913 Deferred gains 16,973 13,307 Installment sales 4,649 5,801 Unrealized gain on securities available-for-sale 3,689 - Other 3,531 2,592 - -------------------------------------------------------------------------------- Total deferred tax liabilities 80,814 74,060 - -------------------------------------------------------------------------------- Deferred tax assets: Reserves and accruals 18,404 16,409 Investments in partnerships 14,086 6,185 Investment securities income 4,193 2,052 Other 1,151 507 - -------------------------------------------------------------------------------- Total deferred tax assets 37,834 25,153 - -------------------------------------------------------------------------------- Net deferred tax liability $42,980 48,907 ================================================================================ At November 30, 1995 and 1994, the Financial Services Division and the limited-purpose finance subsidiaries had net deferred tax assets (liabilities) of $(.4) million and $1.9 million, respectively. For the year ended November 30, 1993, a deferred income tax credit of $4.5 million resulted from timing differences in the recognition of income and expenses for income tax and financial reporting purposes. The sources and tax effects of those timing differences are presented below: Income Tax Expense (Credit) ---------------- (IN THOUSANDS) 1993 - ----------------------------------------------------------------- Installment and deferred profit recognition on sales of real estate $(2,947) Capitalized expenses (2,216) Tax expense in excess of book deductions on general and administrative expenses 484 Net change in financial services' loan loss reserve 428 Recognition of joint venture income 318 Other, net (544) - ----------------------------------------------------------------- Total $(4,477) ================================================================= A reconciliation of the statutory rate with the effective tax rate follows: % of Pre-tax Income ---------------------- 1995 1994 1993 - ----------------------------------------------------------------- Statutory rate 35.0 35.0 35.0 State income taxes, net of federal income tax benefit 4.0 4.0 3.9 Other - - (2.9) - ----------------------------------------------------------------- Effective rate 39.0 39.0 36.0 ================================================================= 14. CAPITAL STOCK 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 1995 received quarterly dividends of $.025 per share. Class B common stockholders have ten votes for each share of stock owned and during 1995 received quarterly dividends of $.0225 per share. As of November 30, 1995, Mr. Leonard Miller, Chairman of the Board and President of the Company, owned or controlled 9.9 million shares of Class B common stock, which represents approximately 79% voting control of the Company. Stock Option Plans The Lennar Corporation 1980 Stock Option Plan ("1980 Plan") expired on December 8, 1990. However, under the terms of the 1980 Plan, certain options granted prior to the plan termination date were still outstanding during the periods presented. The last options granted under the 1980 Plan were exercised in November 1995. 36 14. CAPITAL STOCK (CONTINUED) The following table summarizes the status of the 1980 Plan: 1995 1994 1993 - ------------------------------------------------------------------------------- Option shares exercised 52,650 27,600 83,250 Option price per share exercised (range) $4.33 - 6.57 4.33 - 7.09 4.33 - 7.09 Shares under option - 52,650 84,000 Option price per share (range) - 4.33 - 6.57 4.33 - 7.09 Shares under option - exercisable - 34,650 21,750 - ------------------------------------------------------------------------------- The Lennar Corporation 1991 Stock Option Plan ("1991 Plan") provides 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. The following table summarizes the status of the 1991 Plan: 1995 1994 1993 - -------------------------------------------------------------------------------- Option shares exercised 22,500 10,650 17,550 Option price per share exercised (range) $6.54 - 14.33 7.71 - 14.37 6.54 - 11.17 Shares under option 995,250 958,750 984,900 Option price per share (range) $6.54 - 22.55 6.54 - 22.55 6.54 - 22.55 Shares under option - exercisable 203,600 147,187 79,875 - -------------------------------------------------------------------------------- EMPLOYEE STOCK OWNERSHIP/401(K) PLAN The Employee Stock Ownership/401(k) Plan ("Plan") provides shares of stock to employees who have completed one year of continuous service with the Company. All contributions for employees with five years or more of service are fully vested. The Plan was amended in 1989 to add a cash or deferred program under Section 401(k) of the Internal Revenue Code. Under the 401(k) portion of the Plan, employees may make contributions which are invested on their behalf, 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 (in thousands): $847 in 1995, $625 in 1994 and $361 in 1993. In 1995, 1994 and 1993, 15,332, 22,249 and 13,800 shares, respectively, were contributed to participants' accounts. RESTRICTIONS ON PAYMENT OF DIVIDENDS Other than as required to maintain the financial ratios and net worth requirements under the revolving credit and term loan agreements, 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. Furthermore, there are no agreements which restrict the payment of dividends by subsidiaries to the Company. - -------------------------------------------------------------------------------- 15. FINANCIAL INSTRUMENTS The following table presents the carrying amounts and estimated fair values of financial instruments held by the Company at November 30, 1995 and 1994, 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 and cash equivalents, accounts receivable and accounts payable, which had fair values approximating their carrying values. 37 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Lennar Corporation and Subsidiaries 15. FINANCIAL INSTRUMENTS (CONTINUED)
November 30, (IN THOUSANDS) 1995 1994 - ------------------------------------------------------------------------------------ CARRYING FAIR Carrying Fair AMOUNT VALUE Amount Value - ------------------------------------------------------------------------------------ ASSETS HOMEBUILDING AND INVESTMENT: Notes and mortgages receivable, net $ 48,058 48,058 18,440 18,440 Other assets - investment securities held to maturity 21,460 21,460 16,102 16,102 FINANCIAL SERVICES: Loans held for sale or disposition, net 123,842 123,842 124,324 124,324 Investment securities available-for-sale 141,832 141,832 - - Loans and mortgage-backed securities held for investment, net 43,506 47,897 107,989 109,370 LIMITED-PURPOSE FINANCE SUBSIDIARIES: Collateral for bonds and notes payable 74,728 78,932 89,424 92,062 LIABILITIES HOMEBUILDING AND INVESTMENT: Mortgage notes and other debts payable 336,633 336,633 328,936 328,936 FINANCIAL SERVICES: Notes and other debts payable 228,488 228,488 154,379 154,379 LIMITED-PURPOSE FINANCE SUBSIDIARIES: Bonds and notes payable 70,640 74,067 82,997 83,923 OFF-BALANCE SHEET FINANCIAL INSTRUMENTS HOMEBUILDING AND INVESTMENT: Interest rate swap agreements - (3,723) - (300) FINANCIAL SERVICES: Commitments to originate loans - 71 - (155) Commitments to sell loans - (531) - 114 - ------------------------------------------------------------------------------------
The following methods and assumptions were used by the Company in estimating fair values: Notes and mortgages receivable: The fair values are based on discounting future cash flows using the current interest rates at which similar loans would be made or are estimated by the Company on the basis of financial or other information. Notes, mortgage notes and other debts payable: The fair value of fixed rate borrowings is based on discounting future cash flows using the Company's incremental borrowing rate. Variable rate borrowings are tied to market indices and thereby, approximate fair value. Investment securities, loans held for sale or disposition, loans and mortgage-backed securities held for investment, collateral for bonds and notes payable, bonds and notes payable and loan commitments: 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 financial and other information. Interest rate swap agreements: The fair value is based on dealer quotes and generally represents an estimate of the amount the Company would pay 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. The Company designates interest rate swaps as hedges of specific debt instruments and recognizes interest differentials as adjustments to interest expense as the differentials occur. Counterparties to these agreements are major financial institutions. Credit loss from counterparty non-performance is not anticipated. A majority of the Company's variable rate borrowings are based on the London Interbank Offering Rate ("LIBOR") index. At November 30,1995, Lennar had four interest rate swap agreements outstanding with a total notional amount of $220 million, of which $200 million will mature in 2002 and $20 million will mature in 1996. The agreement maturing in 2002 fixed the LIBOR index at 6.0% to 6.1% and the agreements maturing in 1996 fixed the LIBOR index at 8.7%. As of November 30, 1995, the Financial Services Division's pipeline of loans in process totaled approximately $33.9 million. There is no exposure to credit risk in this type 38 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 $21.3 million as of November 30, 1995. Substantially all of these commitments 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 in 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, 1995, the Company had open commitments amounting to $68.2 million to sell MBS with varying settlement dates through January 22, 1996. The mortgage loan inventory and pipeline will be used to form the MBS that will fill the forward delivery contracts. 16. 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 had a number of claims for damages relating to a hurricane which occurred in 1992. Most have been settled and to date, the Company's insurers have made all payments required under settlements. Even if the Company were required to make any payments with regard to the remaining hurricane related claims, the Company believes that the amount it would pay would not be material. The Company is subject to the usual obligations associated with entering into contracts for the purchase, development and sale of real estate in the routine conduct of its business. 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 approximately $77.2 million at November 30, 1995. - ------------------------------------------------------------------------------- 17. QUARTERLY DATA (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) First Second Third Fourth - ------------------------------------------------------------------------------- 1995 Revenues $181,183 210,532 204,730 274,023 Earnings before income taxes $ 24,602 32,257 25,761 32,835 Net earnings $ 15,007 19,677 15,714 20,029 Net earnings per share $ .42 .55 .44 .55 =============================================================================== 1994 Revenues $191,826 207,318 199,424 219,358 Earnings before income taxes and cumulative effect of changes in accounting principles $ 24,184 29,543 30,255 27,764 Earnings before cumulative effect of changes in accounting principles $ 14,752 18,021 18,456 16,936 Net earnings $ 15,713 18,021 18,456 16,936 Net earnings per share before cumulative effect of changes in accounting principles $ .41 .50 .51 .47 Net earnings per share $ .44 .50 .51 .47 =============================================================================== 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. 39 SHAREHOLDER INFORMATION LENNAR CORPORATION AND SUBSIDIARIES ANNUAL MEETING The Annual Stockholders' Meeting will be held at 11:00 a.m. on April 2, 1996 at the Doral Park Golf and Country Club, 5001 N.W. 104th Avenue, Miami, Florida REGISTRAR AND TRANSFER AGENT The First National Bank of Boston 150 Royall Street Canton, Massachusetts 02021 LISTING New York Stock Exchange (LEN) GENERAL COUNSEL Robert B. Cole, Esq. 700 N.W. 107th Avenue Miami, Florida 33172 INDEPENDENT AUDITORS Deloitte & Touche LLP 100 Southeast Second Street 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: Corporate Relations Lennar Corporation 700 N.W. 107th Avenue Miami, Florida 33172 Telephone: (305) 559-4000
COMPARATIVE COMMON STOCK DATA - ---------------------------------------------------------------------------------------------------- COMMON STOCK PRICES CASH DIVIDENDS NEW YORK STOCK EXCHANGE PER SHARE - ---------------------------------------------------------------------------------------------------- FISCAL HIGH/LOW PRICE COMMON STOCK CLASS B QUARTER 1995 1994 1995 1994 1995 1994 - ---------------------------------------------------------------------------------------------------- First $17.50 - 15.12 $25.17 - 19.92 2 1/2(cent) 2 (cent) 2 1/4 (cent) 1 2/3 (cent) Second 20.88 - 15.38 23.50 - 17.88 2 1/2(cent) 2 1/2(cent) 2 1/4 (cent) 2 1/4 (cent) Third 21.38 - 17.75 22.00 - 17.88 2 1/2(cent) 2 1/2(cent) 2 1/4 (cent) 2 1/4 (cent) Fourth 23.75 - 19.25 20.75 - 14.25 2 1/2(cent) 2 1/2(cent) 2 1/4 (cent) 2 1/4 (cent) ====================================================================================================
As of November 30, 1995, there were approximately 1,000 holders of record of the Company's common stock. 40 EX-21 6 EXHIBIT 21 LENNAR CORPORATION AND SUBSIDIARIES STATE OF INCORPORATION ---------------------- LENNAR CORPORATION Delaware - -------------------------------------------------------------------- SUBSIDIARIES: - ------------- Adjustable Mortgage Finance Corporation Florida Ameristar Financial Services, Inc. California Atlantic Holdings, Inc. Louisiana Bert L. Smokler & Company Delaware Boca Greens, Inc. Florida Boca Isles Club, Inc. Florida Boca Isles South Club, Inc. Florida Club Pembroke Isles, Inc. Florida DCA Acceptance Corporation Florida DCA at Banyan Tree, Inc. Florida DCA at North Lauderdale, Inc. Florida DCA at Pembroke Pointe, Inc. Florida DCA at Wiggins Bay, Inc. Florida DCA Builder Issuer, Inc. Florida DCA CML Acceptance, Inc. Florida DCA Financial Corporation Florida DCA General Contractors, Inc. Florida DCA Homes, Inc. Florida DCA Homes of Central Florida, Inc Florida DCA Management Corporation Florida DCA NJ Realty, Inc. New Jersey DCA of Broward County, Inc. Florida DCA of Fort Worth, Inc. Texas DCA of Hialeah, Inc. Florida DCA of Lake Worth, Inc. Florida DCA of New Jersey, Inc. New Jersey DCA of Texas, Inc. Texas DCA of West Virginia, Inc. West Virginia DCA Oil of Texas, Inc. Texas Devco Land Corp. Florida Devco Shopping Centers, Inc. Florida Development Corporation of America Florida Dreyfus Interstate Development Corp., The Delaware Dyeing & Finishing, Inc. Florida First Atlantic Building Corp. Florida Friendswood Development Company Florida H. Miller & Sons Inc. Florida H. Miller & Sons of Florida, Inc. Florida HMS Realty, Inc. Florida Hillside, Inc. Florida Inactive Corporations, Inc. Florida Institutional Mortgages, Inc. Florida Kings Isle Recreation Corp. Florida LENNAR CORPORATION AND SUBSIDIARIES, continued SUBSIDIARIES: STATE OF INCORPORATION - ------------- ---------------------- LC Financial Corporation Florida LCP-II Holdings, Inc. Florida Leisure Colony Management Corp. Florida Leisure Communities Management, Inc. Florida Len Acquisition Corporation Florida Lennar Affiliate Purchaser Corporation Florida Lennar Atlantic Holdings, Inc. Florida Lennar Beverly Holdings, Inc. Nevada Lennar Capital Corporation Florida Lennar-Carson, Inc. Florida Lennar Central Holdings, Inc. Florida Lennar Commercial Properties, Inc. Florida Lennar Communities Development, Inc. Delaware Lennar Corporate Center, Inc. Florida Lennar-Corry, Inc. Florida Lennar Domestic Holdings, Inc. Florida Lennar Eastern Holdings, Inc. Florida Lennar Financial Services, Inc. Florida Lennar Florida Holdings, Inc. Florida Lennar Funding Corporation Florida Lennar Homes of Arizona, Inc. Arizona Lennar Homes of Texas, Inc. Texas Lennar Homes, Inc. Florida Lennar Kearny Holdings, Inc. Nevada Lennar L.W. Assets, Inc. Florida Lennar Management Corporation Florida Lennar Management, Inc. California Lennar Mayfair Holdings, Inc. Florida Lennar Metro Holdings, Inc. Florida Lennar Mortgage Holdings Corporation Florida Lennar Mortgage Holdings I, Inc. Florida Lennar Mote Ranch, Inc. Florida Lennar MSW-II Holdings, Inc. Florida Lennar Northeast Holdings, Inc. Florida Lennar Park J.V., Inc. Florida Lennar Partners, Inc. Florida Lennar Partners of California, Inc. Florida Lennar Qualified Affiliate II Corporation Florida Lennar Real Estate Holdings, Inc. Florida Lennar Realty Inc. Florida Lennar Rolling Ridge, Inc. California Lennar Seaboard Holdings, Inc. Florida Lennar Securities Holdings, Inc. Florida Lennar Texas Properties, Inc. Texas Lennar Transamerica Holdings, Inc. Florida Lennar U. S. Holdings, Inc. Florida Lennar Wilshire Holdings, Inc. Nevada Lentex Development Corporation Texas LFH Sub I, Inc. Florida LFS Asset Corp. Nevada LENNAR CORPORATION AND SUBSIDIARIES, continued SUBSIDIARIES: STATE OF INCORPORATION - ------------- ---------------------- LFS CMBS Investments, Inc. Nevada LGP-II Holdings, Inc. Florida Loan Funding, Inc. Florida Lucerne Greens, Inc. Florida Lucerne Merged Condominiums, Inc. Florida MAP Builders, Inc. Florida M.A.P. Vineyards of Plantation, Inc. Florida Midwest Management Company, Inc. Michigan Miller's Plantation Development Company Florida Monterey Village Development Corp. Florida MSWH SUB I, Inc. Florida Multi-Builder Acceptance Corp. Alabama NGMC Finance Corporation Florida NGMC Finance Corporation, IV Florida Parkview at Pembroke Pointe, Inc. Florida P-G & H, Inc. West Virginia Quality Roof Truss Company Florida Riviera Land Corp. Florida Satisfaction, Inc. Florida South Dade Utilities, Inc. Florida Springs Development Corporation Florida State Home Acceptance Corporation Florida Strategic Technologies, Inc. Florida Sunrise Hotel Corp. Florida Superior Realty & Marketing, Inc. Florida Talladega Manufacturing, Inc. Alabama TitleAmerica Insurance Corporation Florida UAMC Asset Corp. Nevada Universal American Finance Corp., I Florida Universal American Mortgage Company Florida Universal American Realty Corporation Delaware Universal Title Insurors, Inc. Florida Vista Del Lago Apartments, Inc. Florida West Coast Mortgage Holdings, Inc. Florida W. B. Homes, Inc. Florida EX-23 7 EXHIBIT 23 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement No. 33-53003 of Lennar Corporation on Form S-3 of our reports dated January 11, 1996, appearing in and incorporated by reference in this Annual Report on Form 10-K of Lennar Corporation for the year ended November 30, 1995. /s/ DELOITTE & TOUCHE LLP DELOITTE & TOUCHE LLP Certified Public Accountants Miami, Florida February 27, 1996 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statements No. 33-45442, No. 2-73630 and No. 2-89104 of Lennar Corporation on Form S-8 of our reports dated January 11, 1996, appearing in and incorporated by reference in this Annual Report on Form 10-K of Lennar Corporation for the year ended November 30, 1995. /s/ DELOITTE & TOUCHE LLP DELOITTE & TOUCHE LLP Certified Public Accountants Miami, Florida February 27, 1996 INDEPENDENT AUDITORS' CONSENT The Board of Directors Lennar Corporation: We consent to incorporation by reference in the Registration Statement (No. 33-45442, No. 2-73630 and No. 2-89104) on Form S-8 and (No. 33-53003) on Form S-3 of Lennar Corporation of our report dated January 18, 1994, relating to the consolidated statements of earnings, cash flows and stockholders equity of Lennar Corporation and subsidiaries for the year ended November 30, 1993. /s/ KPMG PEAT MARWICK LLP February 26, 1996 Miami, Florida EX-27 8
5 1,000 YEAR NOV-30-1995 NOV-30-1995 21,870 0 70,202 0 504,404 596,476 225,525 (36,184) 1,442,362 156,196 635,761 0 0 3,587 604,207 1,442,362 646,986 870,468 523,028 608,770 126,988 0 19,255 115,455 45,028 70,427 0 0 0 70,427 1.95 1.95
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