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

For the fiscal year ended November 30, 20062008

Commission file number 1-11749

Lennar Corporation

(Exact name of registrant as specified in its charter)

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:

Securities registered pursuant to Section 12(g) of the Act:

NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

YES  þ  NO¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  YES  ¨  NO  þ

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  þ  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.  þ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  YES  ¨  NO  þ

The aggregate market value of the registrant’s Class A and Class B common stock held by non-affiliates of the registrant (124,270,835(125,042,232 Class A shares and 10,843,1799,731,683 Class B shares) as of May 31, 2006,2008, based on the closing sale price per share as reported by the New York Stock Exchange on such date, was $6,431,999,899.$2,258,050,557.

As of JanuaryDecember 31, 2007,2008, the registrant had outstanding 127,302,839129,251,272 shares of Class A common stock and 31,234,56331,284,003 shares of Class B common stock.

DOCUMENTS INCORPORATED BY REFERENCE:

PART I

Item 1.    Business.

Overview of Lennar Corporation

We are one of the nation’s largest homebuilders and a provider of financial services. Our homebuilding operations include the construction and sale of single-family attached and detached homes, and to a lesser extent multi-level residential buildings, as well as the purchase, development and sale of residential land directly and through unconsolidated entities in which we have investments. We have grouped our homebuilding activities into threefour reportable segments, which we refer to as Homebuilding East, Homebuilding Central, Homebuilding West and Homebuilding West.Houston. Information about homebuilding activities in states in which our homebuilding activities are not economically similar to those in other states in the same geographic area is grouped under “Homebuilding Other.” Our reportable homebuilding segments and Homebuilding Other have divisionsoperations located in the following states:in:

East:Florida, Maryland, New Jersey and Virginia

Central:Arizona, Colorado and Texas (1)

West:California and Nevada

Houston: Houston, Texas

Other:Illinois, Minnesota, New York, North Carolina and South Carolina

We have one Financial Services reportable segment that provides mortgage financing, title insurance, closing services and other ancillary services (including personal lines insurance, high-speed Internet and cable television) for both buyers of our homes and others. We sell substantiallySubstantially all of the loans that we originate are sold in the secondary mortgage market.market on a servicing released, non-recourse basis; although, we remain liable for certain limited representations and warranties related to loan sales. Our Financial Services segment operates generally in the same states as our homebuilding segments,operations, as well as in other states. For financial information about both our homebuilding and financial services operations, you should review Management’s Discussion and Analysis of Financial Condition and Results of Operations, which is Item 7 of this Report, and our consolidated financial statements and the notes to our consolidated financial statements, which are included in Item 8 of this Report.

A Brief History of Our GrowthCompany

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2006Recent Business Developments

During the second half of 2006, theThroughout 2007 and 2008, market conditions in the homebuilding industry deteriorated. As a result,were negatively impacted by broad-based pressures such as rising unemployment, falling home prices, increased foreclosures, tighter credit and volatile equity markets, which further eroded consumer confidence and depressed home sales. These market conditions resulted in higher than historical cancellation rates (26% and 30%, respectively, in 2008 and 2007) and lower net new orders (new orders were down 48% and 39%, respectively, in 2008 and 2007) for our company despite our continued use of sales incentives. The market has continued to become more competitive and we evaluatedhave responded to competitive market pressure to reduce prices through the use of sales incentives and price reductions, as well as, consolidating divisions, repositioning our product and reducing land purchases, construction costs and overhead. During 2008, we filed net operating loss (“ NOL”) carryback claims and received $877.0 million of federal and state tax refunds, net. In addition, we have received $251.0 million of federal tax refunds subsequent to November 30, 2008.

We continued evaluating our balance sheet quarterly for impairment on an asset-by-asset basis. Based on this assessment, induring the years ended November 30, 2008, 2007 and 2006, we recorded $340.5 million, $2,445.1 million and $501.8 million, respectively, of inventory adjustments, which included $195.5 million, $747.8 million and $280.5 million, respectively, in 2008, 2007 and 2006 of Statement of Financial Accounting Standards (“SFAS”) No. 144,Accounting for the Impairment of Long-lived Assets,(“SFAS 144”) valuation adjustments to finished homes, construction in progress and $126.4land on which we intend to build homes, $47.8 million, $1,167.3 million and $69.1

million, respectively, in 2008, 2007 and 2006 of SFAS 144 valuation adjustments to land we intend to sell or have sold to third parties and $97.2 million, $530.0 million and $152.2 million, respectively, in 2008, 2007 and 2006 of write-offs of deposits and pre-acquisition costs. The $1,167.3 million of valuation adjustments recorded in 2007 to land we intend to sell or have sold to third parties included $740.4 million of SFAS 144 valuation adjustments related to a portfolio of land we sold to a strategic land investment venture with Morgan Stanley Real Estate Fund II, L.P., an affiliate of Morgan Stanley & Co., Inc., which was formed in November 2007 and in which we have a 20% ownership interest. See Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of this Report for further details on the aforementioned transaction and land investment venture.

Additionally, during the years ended November 30, 2008, 2007 and 2006, we recorded $205.0 million, $496.4 million and $140.9 million, respectively, of valuation adjustments to our investments in unconsolidated entities. Thisentities, which included $32.2 million, $364.2 million and $126.4 million, respectively, in 2008, 2007 and 2006 of our share of SFAS 144 valuation adjustments related to assets of our unconsolidated entities and $172.8 million, $132.2 million and $14.5 million, respectively, in 2008, 2007 and 2006 of valuation adjustments to our investments in unconsolidated entities in accordance with Accounting Principles Board Opinion No. 18,The Equity Method of Accounting for Investments in Common Stock (“APB 18”).

The valuation adjustments recorded were estimated based on market deterioration was driven primarilyconditions and assumptions made by excess supply as speculators reduced purchasesmanagement at the time the valuation adjustments were recorded, which may differ materially from actual results if market conditions or our assumptions change.

In June 2008, our LandSource Communities Development LLC (“LandSource”) unconsolidated joint venture and returned homesa number of its subsidiaries commenced proceedings under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. We own 16% of LandSource, and until 2007, we had owned 50%. In November 2008, our land purchase options with LandSource were terminated, thus we recognized a deferred profit of $101.3 million (net of $31.8 million of write-offs of option deposits and pre-acquisition costs and other write-offs) related to the market as well as negative customer sentiment surrounding2007 recapitalization of LandSource in which our ownership interest was reduced to 16%. The bankruptcy filing could result in LandSource losing some or all of the general homebuilding market. We also experienced slower sales (down 3% in 2006) and higher cancellation rates (29% in 2006) which have impacted mostproperties it owns, termination of our marketsmanagement agreement with LandSource, claims against us and therefore,a substantial reduction (or total elimination) of our 16% ownership interest in LandSource, which had a carrying value of zero at November 30, 2008.

For a number of years, we made greatercreated and participated in joint ventures that acquired and developed land for our homebuilding operations, for sale to third parties or for use of sales incentivesin their own homebuilding operations. Through these joint ventures, we reduced the amount we had to generate salesinvest in order to build-outassure access to potential future homesites, thereby mitigating certain risks associated with land acquisitions, and, in some instances, we obtained access to land to which we could not otherwise have obtained access or could not have obtained access on as favorable terms. Although these ventures served their initial intended purpose of risk mitigation, as the homebuilding market deteriorated from 2006 through 2008 and asset impairments resulted in the loss of equity, some of our inventory, deliverjoint venture partners became financially unable or unwilling to fulfill their obligations. As a result, during 2007 and 2008, we re-evaluated all of our backlogjoint venture arrangements, with particular focus on those ventures with recourse indebtedness, and convert inventory into cash. The usebegan to reduce the number of these sales incentivesjoint ventures in which we were participating and the recourse indebtedness of those joint ventures. As of November 30, 2008, we had a negative impact on gross margins.reduced the number of unconsolidated joint ventures in which we were participating to 116 from 261 unconsolidated joint ventures at November 30, 2006. As of November 30, 2008, we had also reduced our net recourse exposure related to unconsolidated joint ventures to $392.5 million from $1,102.9 million at November 30, 2006.

Homebuilding Operations

Overview

We primarily sell single-family attached and detached homes, and to a lesser extent, multi-level residential buildings, in communities targeted to first-time, move-up and active adult homebuyers. The average sales price of a Lennar home was $315,000$270,000 in fiscal 2006.2008, compared to $297,000 in fiscal 2007. We operate primarily under the Lennar brand name and market our homes primarily under our Everything’s Included^® program.name.

Through our own efforts and unconsolidated entities in which we have investments, we are involved in all phases of planning and building in our residential communities including land acquisition, site planning, preparation and improvement of land and design, construction and marketing of homes. We view unconsolidated entities as a means to both expand our market opportunities and manage our risks. For additional information about our investments in and relationships with unconsolidated entities, see Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of this Report.

Management and Operating Structure

We balance a local operating structure with centralized corporate level management. Decisions related to our overall strategy, acquisitions of land and businesses, risk management, financing, cash management and information systems are centralized at the corporate level. Our local operating structure encompasses both land and homebuildingconsists of divisions, which are managed by individuals who generally have significant experience in the homebuilding industry and, in most instances, in their particular markets. Our land divisionsThey are responsible for

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operating decisions regarding land identification, entitlement and development, and the management of inventory levels for our planned growth. Our homebuilding divisions are responsible forcurrent volume levels, community development, home design, evenflow construction and marketing our homes primarily under our Everything’s Included^® program.homes.

Diversified Program of Property Acquisition

During 2008, we significantly reduced our property acquisitions. We generally acquire land for development and for the construction of homes that we sell to homebuyers. Land is subject to specified underwriting criteria and is acquired through our diversified program of property acquisition consisting of the following:

At November 30, 2006,2008, we owned 92,32574,681 homesites and had access through option contracts to an additional 189,27938,589 homesites, of which 94,75812,718 were through option contracts with third parties and 94,52125,871 were through option contracts with unconsolidated entities in which we have investments. At November 30, 2005,2007, we owned 102,68762,801 homesites and had access through option contracts to an additional 222,11985,870 homesites, of which 127,01322,877 were through option contracts with third parties and 95,10662,993 were through option contracts with unconsolidated entities in which we have investments.

Construction and Development

We generally supervise and control the development of land and the design and building of our residential communities with a relatively small labor force. We hire subcontractors for site improvements and virtually all of the work involved in the construction of homes. Generally, arrangements with our subcontractors provide that our subcontractors will complete specified work in accordance with price schedules and applicable building codes and laws. The price schedules may be subject to change to meet changes in labor and material costs or for other reasons. We believe that the sources and availability of raw materials to our subcontractors are adequate for our current and planned levels of operation. We generally do not own heavy construction equipment. We finance construction and land development activities primarily with cash generated from operations and public debt issuances, as well as cash borrowed under our revolving credit facility, commercial paper program and unsecured, fixed-rate notes.facility.

Marketing

We offer a diversified line of homes for first-time, move-up and active adult homebuyers. With homes priced from under $100,000 to above $1,000,000 andhomebuyers available in a variety of environments ranging from urban infill communities to golf course communities, we are focused on providing homes for a wide spectrum of buyers. Our Everything’s Included^® marketing program simplifies the homebuying experience by including desirable features as standard items. This marketing program enables us to differentiate our homes from those of our competitors by creating value through standard upgrades and competitive pricing, while reducing construction and overhead costs through a simplified manufacturing process, product standardization and volume purchasing.communities. We sell our homes primarily from models that we have designed and constructed. During 2008, those homes had an average sales price of $270,000.

We employ sales associates who are paid salaries, commissions or both to complete on-site sales of homes. We also sell homes through independent brokers. We advertise our communities in newspapers, radio advertisements and other local and regional publications, on billboards and on the Internet, including our website, www.lennar.com. In addition, we advertise our active adult communities in areas where prospective active adult homebuyers live.

We have historically participated in charitable down-payment assistance programs for a small percentage of our homebuyers.programs. Through these programs, we make a donationmade donations to a non-profit organizationorganizations that providesprovided financial assistance to a homebuyer who would not otherwise have sufficient funds for a down payment. During 2008, 35% of our homebuyers utilized the charitable down-payment assistance programs. The FHA Modernization Act of 2008 eliminated these programs after September 30, 2008 and their elimination has had an adverse impact on home sales since that point.

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Quality Service

We strive to continually improve homeowner customer satisfaction throughout the pre-sale, sale, construction, closing and post-closing periods. Through the participation of sales associates, on-site construction supervisors and customer care associates, all working in a team effort, we strive to create a quality homebuying experience for our customers, which we believe leads to enhanced customer retention and referrals.

The quality of our homes is substantially affected by the efforts of on-site management and others engaged in the construction process, by the materials we use in particular homes or by other similar factors. Currently, mostTo the extent bonuses have been paid, management team members’ bonus plans are, in part,incentives programs have consistently been contingent upon achieving certain customer satisfaction standards.

We currently have a “Heightened Awareness” program, which is a focused initiative designed to objectively evaluate and measure the quality of construction in our communities. In addition to our “Heightened Awareness” program, we have a quality assurance program in certain markets in which we employ third-party consultants to inspect our homes during the construction process. These inspectors provide us with inspection reports and follow-up verification. We also obtain independent surveys of selected customers through a third-party consultant and use the survey results to further improve our standard of quality and customer satisfaction.

We warrant our new homes against defective materialmaterials and workmanship for a minimum period of one year after the date of closing. Although we subcontract virtually all segments of construction to others and our contracts call for the subcontractors to repair or replace any deficient items related to their trade,trades, we are primarily responsible to the homebuyerhomebuyers for the correction of any deficiencies.

Deliveries

The table below indicates the number of deliveries for each of our homebuilding segments and Homebuilding Other during our last three fiscal years:

Of the total home deliveries listed above, 2,536, 1,477391, 1,701 and 1,015,2,536, respectively, represent deliveries from unconsolidated entities for the years ended November 30, 2006, 20052008, 2007 and 2004.

Despite the fact that deliveries for the full fiscal 2006 year increased in each of our homebuilding segments and Homebuilding Other, during the fourth quarter of 2006, deliveries were lower in our Homebuilding Central and West segments and Homebuilding Other, compared to the fourth quarter of 2005.2006.

Backlog

Backlog represents the number of homes under sales contracts. Homes are sold using sales contracts, which are generally accompanied by sales deposits. In some instances, purchasers are permitted to cancel sales contracts if they fail to qualify for financing or under certain other circumstances. We experienced a cancellation rate of 29%26% in 2006,2008, compared to 17%30% and 16%29%, respectively, in 20052007 and 2004. Although we experienced a significant increase2006. Substantially all homes currently in our cancellation rate during 2006, we remain focused on reselling these homes, which, in many instances, includes the use of higher sales incentives, to avoid the build up of excess inventory.backlog will be delivered within fiscal year 2009. We do not recognize revenue on homes under sales contracts until the sales are closed and title passes to the new homeowners, except for our multi-level residential buildings under construction for which revenue iswas recognized under percentage-of-completion accounting.

4accounting during 2006 and 2007. In 2008, we stopped recognizing revenues and expenses under percentage-of-completion accounting for our multi-level residential buildings under construction as a result of Emerging Issues Task Force 06-8,Applicability of the Assessment of a Buyer’s Continuing Investment under FASB Statement No. 66 for Sales of Condominiums (“EITF 06-8”) (see Note 1 in Item 8 of this Report).

The table below indicates the backlog dollar value for each of our homebuilding segments and Homebuilding Other as of the end of our last three fiscal years:

Of the dollar value of homes in backlog listed above, $478,707, $590,129$12,460, $182,664 and $644,839,$478,707, respectively, represent the backlog dollar value from unconsolidated entities at November 30, 2006, 20052008, 2007 and 2004.

As of December 31, 2006 and 2005, the backlog dollar value was $3.6 billion and $6.7 billion, respectively, of which $0.5 billion in 2006 and 2005 represents the backlog dollar value from unconsolidated entities.2006.

Financial Services Operations

Mortgage Financing

We provide a full spectrum ofprimarily originate conforming conventional, FHA-insured, and VA-guaranteed first and second lien residential mortgage loan products and other products to our homebuyers and others through our financial services subsidiaries, Universal American Mortgage Company, LLC and Eagle Home Mortgage, LLC, located generally in the same states as our homebuilding segments and Homebuilding Other,operations as well as other states. In 2006,2008, our financial services subsidiaries provided loans to 66%85% of our homebuyers who obtained mortgage financing in areas where we offered services. Because of the availability of mortgage loans from our financial services subsidiaries, as well as independent mortgage lenders, we believe access to financing has not been, and is not, a significant obstacle for most creditworthy purchasers of our homes.homes have access to financing.

During 2006,2008, we originated approximately 41,80018,300 mortgage loans totaling $10.5 billion.$4.3 billion, compared to 30,900 mortgage loans totaling $7.7 billion during 2007. Substantially all of thosethe loans werewe originate are sold within a short period in the secondary mortgage market on a servicing released, non-recourse basis; however,although, we remain liable for certain limited representations and warrantiesrepresentations. Therefore, we have little direct exposure related to loan sales.the residential mortgages we sell.

We have a corporate risk management policy under which we hedge our interest rate risk on rate-locked loan commitments and loans held-for-sale to mitigate exposure to interest rate fluctuations. We finance our mortgage loan activities with borrowings under our financial services subsidiaries’ warehouse lines of creditfacilities or from our general corporateoperating funds. Our syndicated warehouse repurchase facility matures in April 2009 ($125 million, plus a $50 million temporary accordion feature that expired in December 2008) and our warehouse repurchase facility matures in June 2009 ($150 million). We expect both facilities to be renewed or replaced with other facilities when they mature. Additionally, we recently entered into an on going 60-day committed repurchase facility for $75 million.

Title Insurance and Closing Services

We provide title insurance and title and closing services andas well as other ancillary services to our homebuyers and others. WeDuring 2008, we provided title and closing services for approximately 161,300105,900 real estate transactions, and issued approximately 195,70096,700 title insurance policies and provided title insurance underwriting during 2006 through subsidiaries ofour underwriter, North American Title Insurance Company. Title and closing services and title insurance underwriting are provided by agency subsidiaries in Arizona, California, Colorado, District of Columbia, Florida, Illinois, Maryland, Minnesota, Nevada, New Jersey, New York, Pennsylvania, Texas, Virginia and Wisconsin.Wisconsin.Title insurance services are provided in these same states, as well, as in Delaware and the Carolinas.

Communication Services

Lennar Communications Ventures oversees our interests and activities in relationships with providers of advanced communication services and provides cable television and high-speed Internet services to residents of our communities and others.others and oversees our interests and activities in relationships with providers of advanced communication services. We exited the Sacramento, California market during 2008. At December 31, 2006,2008, we had approximately 11,3003,100 subscribers across California, Florida andin Texas.

Seasonality

We have historically experienced variability in our results of operations from quarter-to-quarter due to the seasonal nature of the homebuilding business. Currently,Due to deteriorating market conditions, we are currently focusing our efforts, in all quarters, on assetinventory management and our homebuilding manufacturing process, in order to achieve a more evenflow production of home deliveries

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throughout the year. Evenflow production involves determining the appropriate production levels based on demand in the market,deliver inventory and is driven by a defined production schedule designed to produce a more consistent level of starts and deliveries throughout the year in order to gain production efficiencies. If our efforts at evenflow production are successful, the result should be a reduction in inventory cycle time and more consistent start, completion and delivery dates.generate cash.

Competition

The residential homebuilding industry is highly competitive. We compete for homebuyers in each of the market regions where we operate with numerous national, regional and local homebuilders, as well as with resales of existing homes and with the rental housing market. Recently, lenders’ efforts to sell foreclosed homes have become an increasingly competitive factor. We compete for homebuyers on the basis of a number of interrelated factors including location, price, reputation, amenities, design, quality and financing. In addition to competition for homebuyers, we also compete with other homebuilders for desirable properties, raw materials and reliable, skilled labor. We compete for land buyers with third parties in our efforts to sell land to homebuilders and others. We believe we are competitive in the market regions where we operate primarily due to our:

Our financial services operations compete with other mortgage lenders, including national, regional and local mortgage bankers and brokers, banks, savings and loan associations and other financial institutions, in the origination and sale of mortgage loans. Principal competitive factors include interest rates and other features of mortgage loan products available to the consumer. We compete with other title insurance agencies and underwriters for closing services and title insurance. Principal competitive factors include service and price. We compete with other communication service providers in the sale of high-speed Internet and cable television services. Principal competitive factors include price, quality, service and availability.

Regulation

Homes and residential communities that we build must comply with state and local laws and regulations relating to, among other things, zoning, construction permits or entitlements, construction material requirements, density requirements, and requirements relating to building design and property elevation, building codes and handling of waste. These include laws requiring the use of construction materials that reduce the need for energy-consuming heating and cooling systems. These laws and regulations are subject to frequent change and often increase construction costs. In some instances, we must comply with laws that require commitments from us to provide roads and other offsite infrastructure to be in place prior to the commencement of new construction. These laws and regulations are usually administered by counties and municipalities and may result in fees and assessments or building moratoriums. In addition, certain new development projects are subject to assessments for schools, parks, streets and highways and other public improvements, the costs of which can be substantial.

The residential homebuilding industry is also subject to a variety of local, state and federal statutes, ordinances, rules and regulations concerning the protection of health and the environment. These environmental laws include such areas as storm water and surface water management, soil, groundwater and wetlands protection, subsurface conditions and air quality protection and enhancement. Environmental laws and existing conditions may result in delays, may cause us to incur substantial compliance and other costs and may prohibit or severely restrict homebuilding activity in environmentally sensitive regions or areas.

In recent years, several cities and counties in which we have developments have submitted to voters “slow growth” initiatives and other ballot measures that could impact the affordability and availability of land suitable for residential development within those localities. Although many of these initiatives have been defeated, we believe that if similar initiatives were approved, residential construction by us and others within certain cities or counties could be seriously impacted.

In order to make it possible for some of our homebuyers to obtain FHA-insured or VA-guaranteed mortgages, we must construct the homes they buy in compliance with regulations promulgated by those agencies.

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Various states have statutory disclosure requirements relating to the marketing and sale of new homes. These disclosure requirements vary widely from state-to-state. In addition, some states require that each new home be registered with the state at or before the time title is transferred to a buyer (e.g., the Texas Residential Construction Commission Act).

In some states, we are required to be registered as a licensed contractor and comply with applicable rules and regulations. In various states, our new home consultants are required to be registered as licensed real estate agents and to adhere to the laws governing the practices of real estate agents.

Our mortgage and title subsidiaries must comply with applicable real estate laws and regulations. The subsidiaries are licensed in the states in which they do business and must comply with laws and regulations in those states. These laws and regulations include provisions regarding capitalization, operating procedures, investments, lending and privacy disclosures, forms of policies and premiums.

Our cable subsidiary is generally required to both secure a franchise agreement with each locality in which it operates and to satisfy requirements of the Federal Communications Commission in the ordinary conduct of its business.

A subsidiary of The Newhall Land and Farming Company, (“Newhall”) of which we currently, indirectly own 50%16%, provides water to a portion of Los Angeles County, California. This subsidiary is subject to extensive regulation by the California Public Utilities Commission. In December 2006, subsequent

Compliance Policy

We have a Code of Business and Ethics that requires every associate (i.e., employee) and officer to at all times deal fairly with the Company’s customers, subcontractors, suppliers, competitors and associates, and says that all our associates, officers and directors are expected to comply at all times with all applicable laws, rules and regulations. Despite this, there are instances in which subcontractors or others through which we do business engage in practices that do not comply with applicable regulations and guidelines. There have been instances in which some of our employees were aware of these practices and did not take steps to prevent them. When we learn of practices relating to homes we build or financing we provide that do not comply with applicable regulations or guidelines, we move actively to stop the non-complying practices as soon as possible and we have taken disciplinary action with regard to our fiscal year end, weemployees who were aware of the practices, including in some instances terminating their employment. Our Code of Business and LNR Property Corporation entered into an agreementEthics also has procedures in place that allows whistleblowers to admit a new strategic partner intosubmit their concerns regarding our LandSource joint venture, which owns Newhall (See Note 22operations, financial reporting, business integrity or any other related matter to the Audit Committee of our consolidated financial statements in Item 8Board of this Report).Directors and/or to the non-management directors of our Board of Directors, thus ensuring their protection from retaliation.

Employees

At December 31, 2006,2008, we employed 12,6054,704 individuals of whom 9,0182,940 were involved in our homebuilding operations and 3,5871,764 were involved in our financial services operations. We believeoperations, compared to November 30, 2007, when we employed 7,745 individuals of whom 5,150 were involved in our relations withhomebuilding operations and 2,595 were involved in our employees are good.financial services operations. We do not have collective bargaining agreements relating to any of our employees. However, we subcontract many phases of our homebuilding operations and some of the subcontractors we use have employees who are represented by labor unions.

Relationship with LNR Property Corporation

In 1997, we transferred our commercial real estate investment and management business to LNR Property Corporation (“LNR”), and spun-off LNR to our stockholders. As a result, LNR became a publicly-traded company, and the family of Stuart A. Miller, our President, Chief Executive Officer and a Director, which had voting control of us, became the controlling shareholder of LNR.

Since the spin-off, we have entered into a number of joint ventures and other transactions with LNR. Many of the joint ventures were formed to acquire and develop land, part of which was subsequently sold to us or other homebuilders for residential building and part of which was subsequently sold to LNR for commercial development. Because for a number of years after the spin-off LNR was controlled by Mr. Miller and his family, all significant transactions we or our subsidiaries engaged in with LNR or entities in which it had an interest were reviewed and approved by the Independent Directors Committee of our Board of Directors.

In January 2004, a company of which we and LNR each own 50% acquired The Newhall Land and Farming Company (“Newhall”) for approximately $1 billion. The purchase price was paid with (1) approximately $200 million we contributed to the jointly-owned company, (2) approximately $200 million LNR contributed to the jointly-owned company, (3) a $400 million term loan borrowed under $600 million of bank financing obtained by the jointly-owned company and another company of which we and LNR each owned 50% and (4) approximately $217 million from the proceeds of a sale by Newhall of income-producing properties to LNR. Newhall owns approximately 48,000 acres in California, including approximately 34,000 acres in north Los Angeles County that includes two master-planned communities. In connection with the acquisition, we agreed to purchase 687 homesites and received options to purchase an additional 623 homesites from Newhall.

On November 30, 2004, we and LNR each transferred our interests in most of our joint ventures to the jointly-owned company that had acquired Newhall, and that company was renamed LandSource Communities Development LLC (“LandSource”). In December 2006, subsequent to our fiscal year end, we and LNR entered into an agreement to admit a new strategic partner into our LandSource joint venture (See Note 22 to our consolidated financial statements in Item 8 of this Report).

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In February 2005, LNR was acquired by a privately-owned entity. Although Mr. Miller’s family acquiredwas required to purchase a 20.4% financial interest in that privately-owned entity, this interest is non-voting and neither Mr. Miller nor anybodyanyone else in his family is an officer or director, or otherwise is involved in the management, of LNR or its parent. Nonetheless, because the Miller family has a 20.4% financial, non-voting, interest in LNR’s parent, significant transactions with LNR, or entities in which it has an interest, are stillhave historically been and continued to be reviewed and approved by the Independent Directors Committee of our Board of Directors.

LandSource Transactions

In January 2004, a company of which we and LNR each owned 50% acquired The Newhall Land and Farming Company (“Newhall”) for approximately $1 billion, including $200 million we contributed and $200 million that LNR contributed (the remainder came from borrowings and sales of properties to LNR). Subsequently, we and LNR each transferred our interests in most of our joint ventures to the jointly-owned company that had acquired Newhall, and that company was renamed LandSource Communities Development LLC (“LandSource”).

In February 2007, LandSource admitted MW Housing Partners as a new strategic partner. As part of the transaction, the joint venture obtained $1.6 billion of non-recourse financing, which consisted of a $200 million five-year Revolving Credit Facility, a $1.1 billion six-year Term Loan B Facility and a $244 million seven-year Second Lien Term Facility. The transaction resulted in a cash distribution to us of $707.6 million. Our resulting ownership of LandSource was 16%. As a result of the recapitalization, we recognized a pretax financial statement gain of $175.9 million in 2007.

In June 2008, our LandSource unconsolidated joint venture and a number of its subsidiaries commenced proceedings under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. In November 2008, our land purchase options with LandSource were terminated, thus we recognized a deferred profit of $101.3 million (net of $31.8 million of write-offs of option deposits and pre-acquisition costs and other write-offs) related to the 2007 recapitalization of LandSource. The bankruptcy filing could result in LandSource losing some or all of the properties it owns, termination of our management agreement with LandSource, claims against us and a substantial reduction (or total elimination) of our 16% ownership interest in LandSource, which had a carrying value of zero at November 30, 2008.

NYSE CertificationsCertification

We submitted our 20052007 Annual CEO Certification to the New York Stock Exchange on April 20, 2006.14, 2008. The certification was not qualified in any respect.

Available Information

Our corporate website is www.lennar.com. We make available on our website, free of charge, our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to these reports, as soon as reasonably practicable after we electronically file these documents with, or furnish them to, the Securities and Exchange Commission. Information on our website is not part of this document.

Our website also includes printable versions of our Corporate Governance Guidelines, our Code of Business Conduct and Ethics and the charters for each of our Audit, Compensation and Nominating and Corporate Governance Committees of our Board of Directors. Each of these documents is also available in print to any stockholder who requests a copy by addressing a request to:

Lennar Corporation

Attention: Office of the General Counsel

700 Northwest 107^th Avenue

Miami, Florida 33172

Item 1A.    Risk Factors.

If any of theThe following risks develop into actual events,may cause a material adverse effect upon our business, financial condition, results of operations, cash flows, strategies and prospects could be materially adversely affected.prospects.

Homebuilding Market and Economic Risks

The homebuilding industry is in the midst of a significant downturn. A significantcontinuing decline in demand for new homes coupled with an increase in the inventory of available new homes and alternatives to new homes could adversely affectsaffect our sales volume and pricing.pricing even more than has occurred to date.

In 2006,The homebuilding industry is in the homebuilding industrymidst of a significant downturn. As a result, we have experienced a significant decline in demand for newly built homes in manyalmost all of our markets. The decline followed an unusually long periodHomebuilders’ inventories of strong demand for new homes. Some of this strong demand resulted from “speculators” purchasing

unsold new homes with the intention of selling them at a profit, rather than with the intention of living in them. In many instances, the speculators do not have the financial resources to retain the purchased homes, and are selling these homes at depressed prices. Inventories of new homes have also increased as a result of increased cancellation rates on pending contracts as new homebuyers sometimes find it more advantageous to forfeit a deposit than to complete the purchase of the home. In addition, an oversupply of alternatives to new homes, such as rental properties and used homes (including foreclosed homes), has depressed prices and reduced margins. This combination of lower demand and higher inventories affects both the number of homes we can sell and the prices at which we can sell them. In 2007 and 2008, we experienced a significant decline in our sales results, significant reductions in our margins as a result of higher levels of sales incentives and price concessions, and a higher than normal cancellation rate. We have no basis for predicting how long demand and supply will remain out of balance in markets where we operate or whether, even if demand and supply come back in balance, sales volumes or pricing will return to prior levels.

Demand for new homes is sensitive to economic conditions over which we have no control.control, such as the availability of mortgage financing and the level of employment.

Demand for homes is sensitive to changes in economic conditions such as the level of employment, consumer confidence, consumer income, the availability of financing and interest rate levels. During 2007 and 2008, the mortgage lending industry experienced significant instability. As a result of increased default rates, particularly (but not entirely) with regard to sub-prime and other non-conforming loans, many lenders have reduced their willingness to make, and tightened their credit requirements with regard to, residential mortgage loans. Fewer loan products and stricter loan qualification standards have made it more difficult for some borrowers to finance the purchase of our homes. Although our finance company subsidiaries offer mortgage loans to potential buyers of most of the market experiencedhomes we build, we may no longer be able to offer financing terms that are attractive to our potential buyers. Lack of availability of mortgage financing at acceptable rates reduces demand for the homes we build, including in some increase in mortgage interest rates during 2006, mortgage interest rates remain lower than their historical averages. If mortgage interest rates increase or if anyinstances causing potential buyers to cancel contracts they have signed.

There has also been a substantial loss of these other economic factors adversely change nationally, orjobs in the markets where we operate, the abilityUnited States during 2008. People who are not employed or willingnessare concerned about loss of prospective buyerstheir jobs are unlikely to purchase new homes couldand may be forced to try to sell the homes they owned. Therefore, the current employment situation can adversely affectedaffect us both by reducing demand for the homes we build and cancellationsby increasing the supply of pending contracts could further increase, resulting in a decrease in our revenues and earnings.homes for sale.

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Increasing interest rates could causeMortgage defaults forby homebuyers who financed homes using non-traditional financing products which could increaseare increasing the number of homes available for resale.

During the recent timeperiod of high demand in the homebuilding industry, many homebuyers financed their purchases using non-traditional adjustable rate or interest only mortgages or other mortgages, including sub-prime mortgages that involveinvolved at least during initial years, monthly payments that were significantly lower initial monthly payments.than those required by conventional fixed rate mortgages. As a result, new homes have beenbecame more affordable in recent years.affordable. However, as monthly payments for these homes increase either as a result of increasing adjustable interest rates or as a result of principal payments coming due, some of these homebuyers could defaulthave defaulted on their payments and havehad their homes foreclosed, which would increasehas increased the inventory of homes available for resale. This is likely to continue. Foreclosure sales and other distress sales may result in further declines in market prices for homes. In an environment of declining prices, many homebuyers may delay purchases of homes in anticipation of lower prices in the future. In addition, ifas lenders perceive deterioration in credit quality among homebuyers, lenders may eliminatehave been eliminating some of the available non-traditional and sub-prime financing products or increaseand increasing the qualifications needed for mortgages or adjustadjusting their terms to address any increased credit risk. In general, ifto the extent mortgage rates increase or lenders make it more difficult for prospective buyers to finance home purchases, it could becomebecomes more difficult or costly for customers to purchase our homes, which would havehas an adverse affecteffect on our sales volume.

We sell substantially allhave had to take significant write-downs of the loanscarrying values of the land we originate withinown and of our investments in unconsolidated entities, and a short periodcontinuing decline in land values could result in additional write-downs.

Some of the land we currently own was purchased at high prices. Also, we obtained options to purchase land at prices that no longer are attractive, and in connection with those options we made non-refundable deposits and, in some instances, agreed to incur pre-acquisition land development costs. When demand fell, we were required to take substantial write-downs of the carrying value of our land inventory and we elected not to exercise high price options, even though that required us to forfeit deposits and write-off pre-acquisition land development costs.

Additionally, as a result of these market conditions, we recorded significant valuation adjustments relating to our investments in unconsolidated entities. The valuation adjustments were SFAS 144 valuation adjustments to assets of our unconsolidated entities and APB 18 valuation adjustments to our investments in unconsolidated entities.

The combination of land value write-downs and forfeitures in addition to valuation adjustments relating to our investments in unconsolidated entities had a material negative effect on our operating results for fiscal 2006, 2007 and 2008, contributing to most of our net losses in fiscal 2007 and 2008. If market conditions continue to deteriorate, some of our assets may be subject to further write-downs in the secondary mortgage marketfuture, decreasing the assets reflected on a servicing released, non-recourse basis; however, we remain liable for certain limited representationsour balance sheet and warranties related to loan sales and certain limited repurchase obligations in the event of early borrower default.adversely affecting our stockholders’ equity.

Inflation can adversely affect us, particularly in a period of declining home sale prices.

Inflation can have a long-term impact on us because increasing costs of land, materials and labor may require us to attempt to increase the sale prices of homes in order to maintain satisfactory margins. However,Although an excess of supply over demand for new homes, such as the increased inventory of new homesone we are currently experiencing, requires that we decreasereduce prices, rather than increasing them, it does not necessarily result in orderreductions, or prevent increases, in the costs of materials and labor. Under those circumstances, the effect of cost increases is to attempt to maintain sales volume. This deflation in sales price, in addition to impacting ourreduce the margins on newthe homes also reduces the value of our land inventory andwe sell. That makes it more difficult for us to recover the full cost of previously purchased land, in new home sales prices or, if we choose,and has contributed to dispose of land assets. In addition, depressed land values may cause us to walk away from deposits on option contracts if we cannot satisfactorily renegotiate the purchase price of the optioned land.

A declinesignificant reductions in land values could result in impairment write-downs.

Some of the land we currently own was purchased at prices that reflected the recent high demand cycle in the homebuilding industry. As a result, during the fourth quarter of 2006 we recorded material inventory valuation adjustments. If market conditions continue to deteriorate, some of these assets may be subject to future impairment write-downs, decreasing the value of our assets as reflected on our balance sheet and adversely affecting our stockholders’ equity.land inventory.

We face significant competition in our efforts to sell homes.

The homebuilding industry is highly competitive. We compete in each of our markets with numerous national, regional and local homebuilders. This competition with other homebuilders could reduce the number of homes we deliver or cause us to accept reduced margins in order to maintain sales volume.

We also compete with the resale of existing homes, including foreclosed homes, sales by housing speculators and available rental housing. As demand for homes has slowed, competition, including competition with homes purchased for speculation rather than as places to live and competition with foreclosed homes, has created increased downward pressure on the prices at which we are able to sell homes, as well as upon the number of homes we can sell.

Operational Risks

Homebuilding is subject to warranty and liability claims in the ordinary course of business that can be significant.

As a homebuilder, we are subject to home warranty and construction defect claims arising in the ordinary course of business. We are also subject to liability claims arising in the course of construction activities. We record warranty and other reserves for the homes we sell based on historical experience in our markets and our judgment of the qualitative risks associated with the types of homes we built. We have, and many of our subcontractors have, general liability, property, errors and omissions, workers compensation and other business insurance. These insurance policies protect us against a portion of our risk of loss from claims, subject to certain self-insured retentions, deductibles and other coverage limits. However, because of the uncertainties inherent in these matters, we cannot provide assurance that our insurance coverage or our subcontractor arrangementssubcontractors’ insurance and financial resources will be adequate to address all warranty, construction defect and liability claims in the future. Additionally, the coverage offered by and the availability of general liability insurance for construction defects are currently limited and costly. As a result, an increasing number of our subcontractors are unable to obtain insurance, and we have in many cases waived our customary insurance requirements. There can be no assurance that coverage will not be further restricted and become even more costly.

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Natural disasters and severe weather conditions could delay deliveries, increase costs and decrease demand for new homes in affected areas.

OurMany of our homebuilding operations are locatedconducted in many areas that are subject to natural disasters and severe weather. The occurrence of natural disasters or severe weather conditions can delay new home deliveries, increase costs by damaging inventories and negatively impact the demand for new homes in affected areas. Furthermore, if our insurance does not fully cover business interruptions or losses resulting from these events, our earnings,results of operations, liquidity or capital resources could be adversely affected.

Supply shortages and other risks related to the demand for skilled labor and building materials could increase costs and delay deliveries.

Increased costs or shortages of skilled labor and/or lumber, framing, concrete, steel and other building materials could cause increases in construction costs and construction delays. We generally are unable to pass on increases in construction costs to customers who have already entered into sales contracts, as those sales contracts generally fix the price of the homes at the time the contracts are signed, which may be well in advance of the construction of the home. Sustained increases in construction costs may, over time, erode our margins, particularly if pricing competition restricts our ability to pass on any additional costs of materials or labor, thereby decreasing our margins.

We may not be able to acquire land suitable for residential homebuilding at reasonable prices, which could increase our costs and reduce our revenues, earnings and margins.

Our long-term ability to build homes depends upon our acquiring land suitable for residential building at reasonable prices in locations where we want to build. During the past few years, we have experienced an increase in competition for suitable land as a result of land constraints in many of our markets. As competition for suitable land increases, and as available land is developed, the cost of acquiring additional suitable land could rise, and in some areas no suitable land may be available at reasonable prices. Any land shortages or any decrease in the supply of suitable land at reasonable prices could limit our ability to develop new communities or result in increased land costs that we are not able to pass through to our customers. This could adversely impact our revenues, earnings and margins.

Reduced numbers of home sales force us to absorb additional costs.

We incur many costs even before we begin to build homes in a community. These include costs of preparing land and installing roads, sewage and other utilities, as well as taxes and other costs related to ownership of the land on which we plan to build homes. Reducing the rate at which we build homes extends the length of time it takes us to recover these costs. Also, we frequently acquire options to purchase land and make deposits that will be forfeited if we do not exercise the options within specified periods. Because of current market conditions, we have had to terminate somea number of these options, resulting in forfeituresignificant forfeitures of deposits we made with regard to the options.

If our financial performance further declines, we may not be able to maintain compliance with the covenants in our credit facilities and senior debt securities.

Our credit facility imposes certain restrictions on our operations. The most significant restrictions relate to debt incurrence, sales of assets, cash distributions and investments by us and certain of our subsidiaries. In addition, our credit facility requires compliance with certain financial covenants, including a minimum adjusted consolidated tangible net worth requirement and a maximum permitted leverage ratio. Also, because we currently do not have investment grade debt ratings, we can only borrow up to specified percentages of the book values of various types of our assets, referred to in the credit agreement as our borrowing base. In January and November 2008, we completed amendments to the credit facility that modified the minimum adjusted consolidated tangible net worth requirement and restructured the borrowing base among other changes. The amendments also limit the amount of permissible joint venture recourse obligations, requiring that those obligations be reduced quarterly through July 2011. Under the November 2008 amendment, the commitment was reduced from $1.5 billion to $1.1 billion.

While $1.1 billion of borrowing capacity should be sufficient in the current depressed market, if markets strengthen, we might have to seek increased borrowing capacity.

While we currently are in compliance with the financial covenants in the amended credit agreement, if we had to record significant additional impairments in the future, they could cause us to fail to comply with the amended credit agreement debt covenants. In addition, if we default in the payment or performance of certain obligations relating to the debt of unconsolidated entities above a specified threshold amount, we would be in default under the amended credit agreement. Either of those events would give the lenders the right to cause any amounts we owe under that credit facility to become immediately due. If we were unable to repay the borrowings when they became due, that could entitle the holders of $2.2 billion of debt securities we have sold into the capital markets to cause the sums evidenced by those debt securities to become due immediately. We would not be able to repay those amounts without selling substantial assets, which we might have to do at prices well below the long term fair values, and the carrying values, of the assets.

We may be unable to obtain suitable financing and bonding for the development of our communities.

Our business requires that we are abledepends upon our ability to obtain financing for the development of our residential communities and to provide bonds to ensure the completion of our projects. We currently use our $2.7 billion credit facility to provide some of the financing we need. In addition, we have from time-to-time raised funds by selling debt securities into public and private capital markets.markets although this would be difficult to do under current market conditions. As is noted above, a recent amendment to our credit agreement reduced the commitment to $1.1 billion. The willingness of lenders to make funds available to us could behas been affected both by reductionsfactors relating to us as a borrower, and by a decrease in the amounts they are willingwillingness of banks and other lenders to lend to homebuilders generally, even if we continue to maintain a strong balance sheet.generally. If we were unable to finance the development of our communities through our credit facility or other debt, or if we were unable to provide required surety bonds for our projects, our business operations and revenues could suffer materially.

Our ability to continue to grow our business and operations in a profitable manner depends to a significant extent upon our ability to access capital on favorable terms.

Our ability to access capital on favorable terms has been an important factor in growing our business and operations in a profitable manner. Recently, each of the principal credit rating agencies lowered our credit rating, and we no longer have investment grade ratings. This will make it more difficult and costly for us to access the debt capital markets for funds we may require in order to implement our business plans and achieve our growth objectives. If we are subject to a further downgrade, it would exacerbate such difficulties.

The credit facilities of our Financial Services segment will expire in 2009.

Our Financial Services segment has a syndicated warehouse repurchase facility, which matures in April 2009 ($125 million, plus a $50 million temporary accordion feature that expired in December 2008) and a warehouse repurchase facility, which matures in June 2009 ($150 million). The Financial Services segment uses these facilities to finance its mortgage lending activities until the mortgage loans are sold to investors and expects both facilities to be renewed or replaced with other facilities when they mature. If we are unable to renew or replace these facilities when they mature in April 2009 and June 2009, it could seriously impede the activities of our Financial Services segment. The risk of inability to renew or replace these facilities may be significant if, as currently is the case, capital market participants are reluctant to purchase securities backed by residential mortgages.

Our competitive position could suffer if we were unable to take advantage of acquisition opportunities.

Our growth strategy depends in part on our ability to identify and purchase suitable acquisition candidates, as well as our ability to successfully integrate acquired operations into our business. Given current market conditions, executing this strategy by identifying opportunities to purchase at favorable prices companies that are having problems contending with the current difficult homebuilding environment may be particularly important. Not properly executing this strategy could put us at a disadvantage in our efforts to compete with other major homebuilders who are able to take advantage of such favorable acquisition opportunities.

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Our ability to continue to grow our business and operations in a profitable manner depends to a significant extent upon our ability to access capital on favorable terms.

At present, our access to capital is enhanced by the fact that our senior debt securities have an investment-grade credit rating from each of the principal credit rating agencies. If we were to lose our investment-grade credit rating for any reason, it would become more difficult and costly for us to access the capital that is required in order to implement our business plans and achieve our growth objectives.

We might have difficulty integrating acquired companies into our operations.

The integration of operations of acquired companies with our operations, including the consolidation of systems, procedures, personnel and facilities, the relocation of staff, and the achievement of anticipated cost savings, economies of scale and other business efficiencies, presents significant challenges to our management, particularly if several acquisitions occur at the same time.

The performanceWe conduct some of our operations through unconsolidated joint ventures with independent third parties in which we do not have a controlling interest and we can be adversely impacted by joint venture partners’ failure to fulfill their obligations.

For a number of years, we created and participated in joint ventures that acquired and developed land for our homebuilding operations, for sale to third parties or for use in their own homebuilding operations. Through these joint ventures, we reduced the amount we had to invest in order to assure access to potential future homesites, and, in some instances, we obtained access to land to which we could not otherwise have obtained access or could not have obtained access on as favorable terms. However, as the homebuilding market deteriorated from 2006 through 2008, many of our joint venture partners is importantbecame financially unable or unwilling to fulfill their obligations.

Most joint ventures borrowed money to help finance their activities, and although recourse on the loans was generally limited to the continued success ofjoint ventures and their properties, frequently we and our joint venture strategies.partners were required to provide maintenance guarantees (guarantees that the values of the joint ventures’ assets would be at least specified percentages of their borrowings) or limited repayment guarantees.

Our joint venture strategy depends in large part on the ability of our joint venture partners to perform their obligations under our agreements with them. If a joint venture partner does not perform its obligations, we may be required to make significant financial expenditures or otherwise undertake the performance of obligations not satisfied by our partner at significant cost to us. Also, when we have guaranteed joint venture obligations, we have been given the right to be reimbursed by our joint venture partners for any amounts by which we pay more than our pro rata share of the joint ventures’ obligations. However, particularly if our joint venture partners are having financial problems, we may have difficulty collecting the sums they owe us, and therefore, we may be

required to pay a disproportionately large portion of the guaranteed amounts. In addition, because we lack a controlling interest in these joint ventures, we are usually unable to require that they sell assets, return invested capital or take any other action without the consent of at least one of our joint venture partners. As a result, without joint venture partner consent, we may be unable to liquidate our joint venture investments to generate cash. Even if we are able to liquidate joint venture investments, the amounts received upon liquidation may be insufficient to cover the costs we have incurred in satisfying joint venture obligations.

During 2007 and 2008, we began to reduce the number of joint ventures in which we participate and the recourse indebtedness of such joint ventures. However, the risks to us from joint ventures in which we are a participant are likely to continue at least as long as the value of residential properties continues to decline.

The unconsolidated entities in which we have investments may not be able to modify the terms of their debt arrangements.

Some of the unconsolidated entities’ debt arrangements contain financial covenants they may not be able to meet. Additionally, certain joint venture loan agreements have minimum number of homesite takedown requirements in which the joint ventures are required to sell a minimum amount of homesites over a stated amount of time. Due to the deterioration of the homebuilding market, many of the joint ventures are in the process of repaying, refinancing, renegotiating or extending our joint venture loans. This action may be required, for example, in the case of an expired maturity date or a failure to comply with the loan’s covenants. There can be no assurance that we will be able to successfully finance, refinance, renegotiate or extend, on terms we deem acceptable, all of the joint venture loans that we are currently in the process of negotiating. If we were unsuccessful in these efforts, we could be required to repay one or more of these loans.

We could be hurtinjured by the LandSource Chapter 11 filing.

LandSource was the largest joint venture in which we were a participant. Originally, we owned 50% of LandSource. However, in February 2007, LandSource admitted a new strategic partner and LandSource was recapitalized, which resulted in a cash distribution to us of $707.6 million, but reduced our ownership to 16%. In connection with the recapitalization, we entered into a new agreement to manage LandSource and received land purchase options from LandSource.

In June 2008, LandSource and a number of its subsidiaries commenced proceedings under Chapter 11 of the Bankruptcy Code. In November 2008, our land purchase options with LandSource were terminated (which resulted in us recognizing a deferred profit of $101.3 million, net of $31.8 million of write-offs, related to the 2007 recapitalization). It is possible that LandSource will seek to disaffirm our management agreement as well. It is also possible that LandSource will seek to recover at least some of what was distributed to us in the recapitalization.

We could be adversely impacted by the loss of key management personnel.

Our future success depends, to a significant degree, on the efforts of our senior management. Our operations could be adversely affected if key members of senior management cease to be active in our company. As a result of a decline in our stock price, previous retention mechanisms, such as equity awards, have diminished in value.

If our ability to resell mortgages to investors is impaired, we may be required to broker loans or fund them ourselves.

We sell substantially all of the loans we originate within a short period in the secondary mortgage market on a servicing released, non-recourse basis; although, we remain liable for certain limited representations and warranties related to loan sales. If there is a decline in the secondary mortgage market, our ability to sell mortgages could be adversely impacted and we could be required to fund our commitments to our buyers with our own financial resources or require our buyers to find other sources of financing. If we became unable to sell loans into the secondary mortgage market or directly to the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”), we would either have to curtail our origination of mortgage loans, which among other things, could significantly reduce our ability to sell homes, or to commit our own funds to long term investments in mortgage loans, which could, among other things, delay the time when we recognize revenues from home sales on our statements of operations.

Our Financial Services segment could have difficulty financing its activities.be adversely affected by reduced demand for our homes.

A majority of the mortgage loans made by our Financial Services segment are made to buyers of homes we build. Therefore, a decrease in the demand for our homes adversely affects the financial results of this segment of our business.

If housing markets improve, we may not be able to acquire land suitable for residential homebuilding at reasonable prices, which could increase our costs and reduce our revenues, earnings and margins.

Our Financial Services segment has warehouse lineslong-term ability to build homes depends upon our acquiring land suitable for residential building at reasonable prices in locations where we want to build. For a number of credit totaling $1.4 billion. It usesyears, we experienced an increase in competition for suitable land as a result of land constraints in many of our markets. That increased the price we had to pay to acquire land. Then, when demand for new homes began to drop beginning in 2006, we started to reduce our land inventory to bring it in line with the reduced rate at which we were absorbing land into our operations. While the current low demand for new single family homes is making it possible to purchase land at prices far below those lineswe were required to finance its lending activities until it accumulates sufficient mortgage loanspay prior to 2006, in the long term, competition for suitable land is likely to increase again, and as available land is developed, the cost of acquiring additional suitable land could rise, and in some areas suitable land might not be available at reasonable prices. Any land shortages or any decrease in the supply of suitable land at reasonable prices could limit our ability to develop new communities or result in increased land costs that we are not able to sell them into the capital markets. These warehouse lines of credit mature in September 2007 ($700 million)pass through to our customers. This could adversely impact our revenues, earnings and in April 2008 ($670 million). If we are unable to renew or extend these debt arrangements when they mature, our Financial Services segment’s mortgage lending activities may be adversely affected.margins.

Regulatory Risks

Federal laws and regulations that adversely affect liquidity in the secondary mortgage market could hurt our business.

RecentChanges in federal laws and regulations could have the effect of curtailing the activities of the Federal National Mortgage Association (Fannie Mae)Fannie Mae and the Federal Home Loan Mortgage Corporation (Freddie Mac).Freddie Mac. These organizations provide significant liquidity to the secondary mortgage market. Any curtailment of their activities could increase mortgage interest rates and increase the effective cost of our homes, which could reduce demand for our homes and adversely affect our results of operations.

The federal financial institution agencies recently issued their final Interagency Guidance on Nontraditional Mortgage Products (“Guidance”). This Guidance applies to credit unions, banks and savings associations and their subsidiaries, and bank and savings association holding companies and their subsidiaries. Although the Guidance does not apply to independent mortgage companies, it likely will affect the origination operations of many mortgage companies that broker or sell nontraditional mortgage loan products to such entities. This Guidance could reduce the number of potential customers who could qualify for loans to purchase homes from us and others.

Government entities in regions where we operate have adopted or may adopt, slow or no growth initiatives, which could adversely affect our ability to build or timely build in these areas.

Some state and local governments in areas where we operate have approved, and others where we operate may approve, various slow growth or no growth homebuilding initiatives and other ballot measures that could negatively impact the availability of land and building opportunities within those jurisdictions. Approval of slow

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growth, no growth or similar initiatives (including the effect of these initiatives on existing entitlements and zoning) could adversely affect our ability to build or timely build and sell homes in the affected markets and/or create additional administrative and regulatory requirements and costs, which, in turn, could have an adverse effect on our future revenues and earnings.

Compliance with federal, state and local regulations related to our business could create substantial costs both in time and money, and some regulations could prohibit or restrict some homebuilding ventures.

We are subject to extensive and complex laws and regulations that affect the land development and homebuilding process, including laws and regulations related to zoning, permitted land uses, levels of density, building design, elevation of properties, water and waste disposal and use of open spaces. In addition, we are subject to laws and regulations related to workers’ health and safety. We also are subject to a variety of local, state and federal laws and regulations concerning the protection of health and the environment. In some of the markets where we operate, we are required by law to pay environmental impact fees, use energy-saving construction materials and give commitments to municipalities to provide certain infrastructure such as roads and sewage systems. We generally are required to obtain permits, entitlements and approvals from local authorities to commence and carry out residential development or home construction. Such permits, entitlements and approvals may, from time-to-time, be opposed or challenged by local governments, neighboring property owners or other interested parties, adding delays, costs and risks of non-approval to the process. Our obligation to comply with the laws and regulations under which we operate, and our obligation to ensure that our employees, subcontractors and other agents comply with these laws and regulations, could result in delays in construction and land development, cause us to incur substantial costs and prohibit or restrict land development and homebuilding activity in certain areas in which we operate.

We can be injured by failures of persons who act on our behalf to comply with applicable regulations and guidelines.

Although we expect all of our associates (i.e., employees), officers and directors to comply at all times with all applicable laws, rules and regulations, there are instances in which subcontractors or others through whom we do business engage in practices that do not comply with applicable regulations or guidelines. Sometimes our employees have been aware of these practices but did not take steps to prevent them. When we learn of practices relating to homes we build or financing we provide that do not comply with applicable regulations or guidelines, we move actively to stop the non-complying practices as soon as possible and we have taken disciplinary action with regard to our employees who were aware of the practices, including in some instances terminating their employment. However, regardless of the steps we take after we learn of practices that do not comply with applicable regulations or guidelines, we can in some instances be subject to fines or other governmental penalties, and our reputation can be injured, due to the practices having taken place.

Tax law changes could make home ownership more expensive or less attractive.

Significant expenses of owning a home, including mortgage interest expense and real estate taxes, generally are deductible expenses for the purpose of calculating an individual’s federal, and in some cases state, taxable income, subject to various limitations under current tax law and policy.income. If the federal government or a state governmentwere to make changes to income tax laws as has been discussed recently, tothat eliminate or substantially reduce these income tax deductions, then the after-tax cost of owning a new home would increase substantially. This could adversely impact demand for, and/or sales prices of, new homes.

Recent proposed rule change by HUD could negatively impact our operations and revenue.

On November 17, 2008, the United States Department of Housing and Urban Development (“HUD”) issued a final rule (“Final Rule”) that amended the regulations pertaining to permissible affiliated business arrangements under the Real Estate Settlement Procedures Act (“RESPA”). The Final Rule has the effect of prohibiting homebuilders from providing incentives to their buyers for their buyers to use affiliated businesses. The Final Rule was to go into effect on January 16, 2009. A lawsuit has been filed against HUD alleging among other things that HUD did not have the statutory authority to prohibit such incentives. HUD has agreed to delay the implementation of the Final Rule until at least April 16, 2009 in order to give the court time to decide the legality of the Final Rule. If the Final Rule is implemented, it could have an adverse impact on our homebuilding, mortgage lending and title company operations.

Other Risks

We have a stockholder who can exercise significant influence over matters that are brought to a vote of our stockholders.

Stuart A. Miller, our President, Chief Executive Officer and a Director, has voting control, through personal holdings and family-owned entities, of Class A and Class B common stock that enables Mr. Miller to cast approximately 49% of the votes that may be cast by the holders of our outstanding Class A and Class B common stock combined. That probablyeffectively gives Mr. Miller the power to control the election of our directors and the approval of matters that are presented to our stockholders. Mr. Miller’s voting power might discourage someone from acquiring us or from making a significant equity investment in us, even if we needed the investment to meet our obligations and to operate our business. Also, because of his voting power, Mr. Miller may be able to authorize actions in matters that are contrary to our other stockholders’ desires.

Item 1B.    Unresolved Staff Comments.

Not applicable.

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Executive Officers of Lennar Corporation

Robert J. Strudler, who served as Chairman of our Board of Directors since 2004, passed away on November 7, 2006. Prior to Mr. Strudler’s appointment as Chairman in December 2004, he served as Lennar’s Vice Chairman and Chief Operating Officer from May 2000 through November 2004. As of the date of this Report, our Board of Directors has not appointed a new Chairman.

The following individuals are our executive officers as of February 8, 2007:January 26, 2009:

Mr. Miller has served as our President and Chief Executive Officer since 1997 and is one of our Directors. Before 1997, Mr. Miller held various executive positions with us.

Mr. Jaffe has served as Vice President since 1994 and has served as our Chief Operating Officer since December 2004. Before that time, Mr. Jaffe served as a Regional President in our Homebuilding Division.operations. Additionally, prior to his appointment as Chief Operating Officer, Mr. Jaffe was one of our Directors from 1997 through June 2004.

Mr. Beckwitt has served as our Executive Vice President since March 2006. In this position, Mr. Beckwitt is involved in all operational aspects of our company, with a focus on new business and strategic growth opportunities.company. Mr. Beckwitt served on the Board of Directors of D.R. Horton, Inc. from 1993 to November 2003. From 1993 to March 2000, he held various executive officer positions at D.R. Horton, including President of the company.

Mr. Gross has served as Vice President and our Chief Financial Officer since 1997. Before that, Mr. Gross was Senior Vice President, Controller and Treasurer of Pacific Greystone Corporation.

Mr. Ames has served as Vice President since 1982 and has been responsible for Investor Relations since 2000.

Ms. Bessette joined us in 1995 and served as our Controller from 1997 to 2008. Since February 2008, she has served as our Controller since 1997.Treasurer. She was appointed a Vice President in 2000.

Mr. Sustana has served as our Secretary and General Counsel since 2005. Before joining Lennar, Mr. Sustana held various legal positions at GenTek, Inc., a manufacturer of communication products, industrial components and performance chemicals.

Mr. Collins joined us in 1998 and has served as our Controller since February 2008. Before becoming Controller, Mr. Collins served as our Executive Director of Financial Reporting.

Item 2.    Properties.

We lease and maintain our executive offices in an office complex in Miami, Florida. We also lease and maintain regional offices in California and Texas. Our homebuilding and financial services offices are located in the markets where we conduct business, primarily in leased space. We believe that our existing facilities are adequate for our current and planned levels of operation.

Because of the nature of our homebuilding operations, significant amounts of property are held as inventory in the ordinary course of our homebuilding business. We discuss these properties in the discussion of our homebuilding operations in Item 1 of this Report.

13Item 3.    Legal Proceedings.

We are party to various claims and lawsuits which arise in the ordinary course of business.business, but we do not consider the volume of our claims and lawsuits unusual given the number of homes we deliver and the fact that the lawsuits often relate to homes delivered several years before the lawsuits are commenced. Although the specific allegations in the lawsuits differ, they most of themcommonly involve claims that we failed to construct homes in particular communities in accordance with plans and specifications or applicable construction codes and seek reimbursement for sums allegedly needed to remedy the alleged deficiencies, assert contract issues or relate to personal injuries. Lawsuits of these types are common within the homebuilding industry. We are a plaintiff in many cases in which we seek contribution from our subcontractors for home repair costs. The costs incurred by us in construction defect lawsuits are offset by warranty reserves, our third party insurers, subcontractor insurers and indemnity contributions from subcontractors. We do not believe that the ultimate resolution of these claims

or lawsuits will have a material adverse effect on our business, financial position, results of operations or cash flows. From time-to-time, we also receive notices from environmental agencies regarding alleged violations of environmental laws. We typically settle these matters before they reach litigation for amounts that are not material to us.

In May 2008, we were named as the nominal defendant in a derivative suit in the United States District Court for the Southern District of Florida, Miami Division, entitledDoris Staehr, Derivatively on Behalf of Lennar Corporation v. Stuart A. Miller, et al., Case No. 08-20990-CIV, in which the plaintiff purports to assert claims for our benefit against some of our current and former officers and directors, primarily relating to allegedly inadequate or incorrect disclosures about the likelihood of a decline in the housing market and the effects it would have on us. We have moved to dismiss an amended complaint on the ground that the plaintiff failed to make a demand on our directors that under most circumstances is a prerequisite to a derivative suit. The actual defendants have moved to dismiss for that and other reasons. Because the suit is allegedly brought for our benefit, it does not seek any damages from us.

The following table discloses as of January 22, 2009, the approximate number of pending adversarial proceedings against us (including counterclaims against us in suits we brought) and the approximate number of pending suits by us, to the best of our knowledge. The table excludes simple mortgage foreclosures in which we have no interest and ordinary course disputes involving North American Title Group, Inc. It groups the proceedings against us by the amounts demanded in the complaints or a post-complaint demand. However, some complaints demand only the minimum amount required to bring suit in a particular forum, with the plaintiff intending to amend at a later point to insert a more specific claim for damages or to make some other damages assertion. Other complaints seek amounts many times the maximum conceivable damages. Accordingly, the groupings are not necessarily indicative of the amounts involved in the litigations.

Claims Against Lennar (and Lennar Claims Against Others) in Active Litigation or Arbitration as of January 22, 2009

Item 4.    Submission of Matters to a Vote of Security Holders.

Not applicable.

14

PART II

Item 5.    Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our Class A and Class B common stock are listed on the New York Stock Exchange under the symbols “LEN” and “LEN.B,” respectively. The following table shows the high and low sales prices for our Class A and Class B common stock for the periods indicated, as reported by the NYSE, and cash dividends declared per share:

As of JanuaryDecember 31, 2007,2008, the last reported sale price of our Class A common stock was $54.38$8.67 and the last reported sale price of our Class B common stock was $50.56.$6.48. As of JanuaryDecember 31, 2007,2008, there were approximately 1,1001,000 and 800700 holders of record, respectively, of our Class A and Class B common stock.

On January 10, 2007,13, 2009, our Board of Directors declared a quarterly cash dividend of $0.16$0.04 per share for both our Class A and Class B common stock, which is payable on February 15, 200713, 2009 to holders of record at the close of business on February 5, 2007.3, 2009. We regularly pay quarterly dividends as set forth inevaluate with our Board of Directors the table above. We currently expect that comparable cash dividends will continuedecision whether to be paid indeclare a dividend and the future although we have no commitment to do that.amount of the dividend.

In June 2001, our Board of Directors authorized a stock repurchase program to permit future purchases of up to 20 million shares of our outstanding common stock. During the three months and year ended November 30, 2006, we2008, there were no shares repurchased the following shares of our Class A and Class B common stock (table and footnote amounts in thousands, except per share amounts):under this program.

The information required by Item 201(d) of Regulation S-K is provided underin Item 12 of this document.Report.

Performance Graph

15

Comparison of Five - Year Cumulative Total Return

Fiscal Year Ended November 30

(2003=$100)

Item 6.    Selected Financial Data.

The following table sets forth our selected consolidated financial and operating information as of or for each of the years ended November 30, 20022004 through 2006.2008. The information presented below is based upon our historical financial statements, except for the results of operations of a subsidiary of the Financial Services segment’s title company that was sold in May 2005, which have been classified as discontinued operations. Share and per share amounts have been retroactively adjusted to reflect the effect of our April 2003 10% Class B common stock distribution and our January 2004 two-for-one stock split.

(2)

Homebuilding operating earnings (loss) from continuing operations include $340.5 million, $2,445.1 million, $501.8 million and $20.5 million, respectively, of SFAS 144 valuation adjustments for the years ended November 30, 2008, 2007, 2006 and 2005. In addition, it includes $32.2 million, $364.2 million and $126.4 million, respectively, of SFAS 144 valuation adjustments related to assets of our investments in unconsolidated entities for the years ended November 30, 2008, 2007 and 2006, and $172.8 million, $132.2 million and $14.5 million, respectively of APB 18 valuation adjustments to our investments in unconsolidated entities for the years ended November 30, 2008, 2007 and 2006. During the year ended November 30, 2007, homebuilding operating earnings (loss) from continuing operations also includes $190.2 million of goodwill impairments. There were no other material valuation adjustments for the years ended November 30, 2005 and 2004.

(3)

Financial Services operating loss from continuing operations for the year ended November 30, 2008 includes a $27.2 million impairment of the Financial Services segment’s goodwill.

(4)

Earnings from discontinued operations before provision for income taxes includes a gain of $15.8 million for the year ended November 30, 2005 related to the sale of a subsidiary of the Financial Services segment’s title company.

(3)(5)

Earnings (loss) from continuing operations for the year ended November 30, 2008 includes a $730.8 million valuation allowance recorded against our deferred tax assets.

(6)

As of November 30, 2004, 2003 and 2002, the Financial Services segment had assets of discontinued operations of $1.0 million $1.3 million and $0.4 million, respectively, related to a subsidiary of the segment’s title company that was sold in May 2005.

16

Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with “Selected Financial Data” and our audited consolidated financial statements and accompanying notes included elsewhere in this Report.

Special Note Regarding Forward-Looking Statements

Some of the statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, and elsewhere in this Annual Report on Form 10-K, are “forward-looking statements,” as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding our business, financial condition, results of operations, cash flows, strategies and prospects. You can identify forward-looking statements by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include those described under the caption “Risk Factors” in Item 1A of this Report. We do not undertake any obligation to update forward-looking statements.statements, except as required by Federal securities laws.

Outlook

DuringThe housing market continues to be compromised by the second halfmost significant domestic economic downturn in recent history. General economic pressures continue to drive down the volume and prices of 2006,homes being sold, as rising levels of foreclosures add inventory to an already saturated marketplace. Overall consumer sentiment has continued to deteriorate, resulting in fewer potential home purchasers willing to enter the market. These conditions have fostered a competitive need amongst homebuilders to drive pricing downward through the use of incentives, price reductions and incentivized brokerage fees. Although there is optimism that the new administration taking federal office will offer stimulus to fix the sliding housing environment, we currently do not have visibility as to when these deteriorating market conditions will subside. Whether or not there is additional federal stimulus, there could be further deterioration in market conditions, which may lead to additional valuation adjustments in the homebuilding industry deteriorated and we have not yet seen a recovery as we entered the first quarter of 2007. This market weakness is driven primarily by excess supply as speculators reduce purchases and return homes to the market as well as negative customer sentiment surrounding the general homebuilding market. We are experiencing slower sales (down 3% in 2006) and higher cancellations (29% in 2006) which have impacted most of our markets and, therefore, we are making greater use of sales incentives to generate sales in order to build-out our inventory, deliver our backlog and convert inventory into cash.future.

In ordermidst of this environment, we remained balance sheet focused with great emphasis on liquidity and positioning ourselves for future opportunities. We continued to reduce overhead in an effort to be “right-sized” for anticipated lower volume levels in fiscal 2009. In addition, we continued to carefully manage under these difficult conditions,our inventory levels through curtailing land purchases, reducing home starts and adjusting prices to deliver completed homes.

We also have diligently worked on restructuring, repositioning and reducing our joint ventures. We have reduced the number of joint ventures in which we have focused on generating cash flow and maintaining an “inventory neutral” position, which has created liquidity on our balance sheet.participate to 116 unconsolidated joint ventures at November 30, 2008, compared to 270 unconsolidated joint ventures at the peak in 2006. We have also renegotiatedreduced our net recourse indebtedness exposure with regard to joint ventures to $392.5 million at November 30, 2008, compared to $1.1 billion at the prices at which we have options or agreementspeak in 2006.

In 2009, cash generation will continue to purchase land, to bring them in line with current market prices. In order to generate cash flow, we have pricedbe our top priority. We will convert inventory to market; however, this has resulted in higher than normal sales incentives, leading to lower gross margins on home sales. As we look ahead to 2007, the strength ofcash and reduce both our balance sheet, together with our renegotiated land positions that reflect current market conditions, provide the foundation from whichpurchases and homebuilding starts. In addition, we will tryreduce our cash outflows by continuing to rebuildright-size our margins. Steps we expect to takeoverhead to improve margins include reducingour selling, general and administrative expenses to match current volume and reflect available efficiencies, reducing construction costs by negotiating lower prices, redesigning products to meet current market demand, and building on land at current market prices. We will also continue to carefully match our starts to demand, which we expect will cause deliveries in 2007 to be at least 20% lower than they were in 2006.as a percentage of revenues.

Results of Operations

Overview

Our net earnings from continuing operationsloss in 2006 were $593.9 million,2008 was $1.1 billion, or $3.69$7.00 per basic and diluted share, ($3.76compared to a net loss of $1.9 billion, or $12.31 per basic share), compared to $1.3 billion, or $8.17 perand diluted share, ($8.65 per basic share), in 2005.2007. The decrease incurrent year net earningsloss was attributable to depressedweakness in the housing market conditionsthat has persisted during 2006 that2008 and has impacted all of our Homebuilding segments’ operations. WhileOur gross margin percentage increased due to our deliverieslower inventory basis and continued focus on repositioning our product and reducing construction costs, despite Statement of Financial Accounting Standards (“SFAS”) No. 144,Accounting for the Impairment of Long-lived Assets, (“SFAS 144”) valuation adjustments and a decrease in the average sales price onof homes delivered increased, our gross margins decreased due to inventory valuation adjustments during the second half of 2006 and higher sales incentives offered to homebuyers in 2006,2008, compared to 2005.

172007. Our 2008 results were also impacted by a non-cash SFAS 109,Accounting for Income Taxes, (“SFAS 109”) valuation allowance of $730.8 million, or $4.61 per basic and diluted share, recorded against our deferred tax assets.

The following table sets forth financial and operational information for the years indicated related to our continuing operations. The results of operations of the homebuilders we acquired during these years2006 were not material to our consolidated financial statements and are included in the tables since the respective dates of the acquisitions.

20062008 versus 20052007

Revenues from home sales increased 17%decreased 56% in the year ended November 30, 20062008 to $14.9$4.2 billion from $12.7$9.5 billion in 2005.2007. Revenues were higherlower primarily due to a 15% increase51% decrease in the number of home deliveries and a 9% decrease in 2006.the average sales price of homes delivered in 2008. New home deliveries, excluding unconsolidated entities, increaseddecreased to 47,03215,344 homes in the year ended November 30, 20062008 from 40,88231,582 homes last year. In the year ended November 30, 2006,2008, new home deliveries were higherlower in each of our homebuilding segments and Homebuilding Other, compared to 2005.2007. The average sales price of homes delivered increaseddecreased to $315,000$270,000 in the year ended November 30, 20062008 from $311,000$297,000 in 2005 despite higher sales2007, due to reduced pricing. Sales incentives offered to homebuyers ($32,000were $48,700 and $48,000 per home delivered, respectively, in 2006, compared to $9,000 per home delivered in 2005).the years ended November 30, 2008 and 2007.

Despite the full year increases, there was a significant slowdown in new home sales throughout the country as the year progressed. As a result, during the fourth quarter of the year, revenues from home sales declined by 14%, new home deliveries declined by 4%, excluding unconsolidated entities, and the average sales price declined by 11%, compared with the same period of the prior year. The decline in average sales price resulted from our use of higher sales incentives.

Gross margins on home sales excluding inventorySFAS 144 valuation adjustments were $3.0 billion,$705.1 million, or 20.3%17.0%, in the year ended November 30, 2006,2008, compared to $3.3$1.3 billion, or 26.0%13.9%, in 2005.2007. Gross margin percentage on home sales, decreasedexcluding SFAS 144 valuation adjustments, improved compared to last year in all of our homebuilding segments and Homebuilding Other primarily due to higher sales incentives offered to homebuyers.our lower inventory basis and continued focus on repositioning our product and reducing construction costs. Gross margins on home sales including inventory valuation

18

adjustments were $2.7 billion,$509.6 million, or 18.4%12.3%, in the year ended November 30, 2006 due to $280.52008, which included $195.5 million of inventorySFAS 144 valuation adjustments, ($157.0compared to gross margins on home sales of $570.7 million, $27.1or 6.0%, in the year ended November 30, 2007, which included $747.8 million $79.0 millionof SFAS 144 valuation adjustments. Gross margins on home sales excluding SFAS 144 valuation adjustments is a non-GAAP financial measure disclosed by certain of our competitors and $17.4 million, respectively,has been presented because we find it useful in evaluating our Homebuilding East, Centralperformance and West segments and Homebuilding Other).believe that it helps readers of our financial statements compare our operations with those of our competitors.

Homebuilding interest expense (primarily included in cost of homes sold and cost of land sold) was $241.1$130.4 million in 2006,2008, compared to $187.2$203.7 million in 2005.2007. The increasedecrease in interest expense was due to higherlower interest costs resulting from higherlower average debt during 2006,2008, as well as increaseddecreased deliveries during 2006,2008, compared to 2005.2007. Our homebuilding debt to total capital ratio as of November 30, 20062008 was 31.4%49.2%, compared to 33.1%37.5% as of November 30, 2005.2007. Our net homebuilding debt to total capital ratio as of November 30, 2008 was 35.7% compared to 30.2% as of November 30, 2007. The net homebuilding debt to total capital ratio consists of net homebuilding debt (homebuilding debt less homebuilding cash) divided by total capital (net homebuilding debt plus stockholders’ equity).

Selling, general and administrative expenses aswere reduced by $713.1 million, or 52%, in the year ended November 30, 2008, compared to last year, primarily due to the consolidation of divisions, which resulted in reductions in associate headcount, variable selling expense and fixed costs. As a percentage of revenues from home sales, were 11.9%selling, general and 11.1%, respectively, for the years ended November 30, 2006 and 2005. The 80 basis point increase was primarily dueadministrative expenses increased to increases15.8% in broker commissions and advertising expenses, partially offset by lower incentive compensation expenses. Management fees of $37.4 million received during the year ended November 30, 20052008, from unconsolidated entities14.5% in which we had investments, which were previously recorded as a reduction of selling, general and administrative expenses, have been reclassified2007, due to management fees and other income, net in order to conform to the 2006 presentation.lower revenues.

LossLosses on land sales totaled $30.0$133.2 million in the year ended November 30, 2006, net2008, which included $47.8 million of $152.2SFAS 144 valuation adjustments and $97.2 million of write-offs of deposits and pre-acquisition costs ($80.5 million, $2.9 million, $44.0 million and $24.8 million, respectively, in our Homebuilding East, Central and West segments and Homebuilding Other) related to 24,235approximately 8,200 homesites under option that we do not intend to purchase and $69.1purchase. In the year ended November 30, 2007, losses on land sales totaled $1,661.1 million, which included $1,167.3 million of inventorySFAS 144 valuation adjustments ($24.7and $530.0 million $17.3 millionof write-offs of deposits and $27.1 million, respectively, in our Homebuilding East and Central segments and Homebuilding Other), comparedpre-acquisition costs related to gross profit from land sales of $200.8 million in 2005. approximately 36,900 homesites that were under option.

Equity in earnings (loss)loss from unconsolidated entities was ($12.5)$59.2 million in the year ended November 30, 2006,2008, which included $126.4$32.2 million of our share of SFAS 144 valuation adjustments ($25.5 million, $92.8 million and $8.1 million, respectively,related to assets of unconsolidated entities in our Homebuilding East and West segments and Homebuilding Other) to ourwhich we have investments, in unconsolidated entities, compared to equity in earningsloss from unconsolidated entities of $133.8 million last year. Management fees and other income, net, totaled $66.6$362.9 million in the year ended November 30, 2006, compared2007, which included $364.2 million of our share of SFAS 144 valuation adjustments related to $99.0assets of unconsolidated entities in which we have investments.

Management fees and other income (expense), net totaled ($200.0) million in 2005. Minority interest expense, net was $13.4 million and $45.0 million, respectively, in the yearsyear ended November 30, 20062008, which included $172.8 million of APB 18 valuation adjustments to our investments in unconsolidated entities and 2005. $25.0 million of write-offs of notes receivable, compared to management fees and other income (expense), net of ($76.0) million in the year ended November 30, 2007, which included $132.2 million of APB 18 valuation adjustments to our investments in unconsolidated entities.

Minority interest income (expense), net was $4.1 million in the year ended November 30, 2008, compared to minority interest income (expense), net of ($1.9) million in the year ended November 30, 2007.

Due to the termination of our rights to purchase certain assets from our LandSource unconsolidated joint venture, we recognized deferred profit of $101.3 million in the year ended November 30, 2008 (net of $31.8 million of write-offs of option deposits and pre-acquisition costs and other write-offs) related to the 2007 recapitalization of LandSource.

Sales of land, equity in earnings (loss)loss from unconsolidated entities, management fees and other income (expense), net and minority interest expense,income (expense), net may vary significantly from period to period depending on the timing of land sales and other transactions entered into by us and unconsolidated entities in which we have investments.

Operating earnings from continuing operationsloss for the Financial Services segment were $149.8was $31.0 million in the year ended November 30, 2006,2008, compared to $104.8operating earnings of $6.1 million in the same period last year. The increasedecline in profitability was

primarily due to a $17.7goodwill impairment of $27.2 million pretax gain generated from monetizing the segment’s personal lines insurance policies, as well as increased profitability fromrelated to the segment’s mortgage operations as a result of increased volume and profit per loan. Thefewer transactions in the segment’s title and mortgage capture rate (i.e., the percentage of our homebuyers, excluding cash settlements, who obtained mortgage financing from us in areas where we offered services) was 66% in both the years ended November 30, 2006 and 2005.operations.

Corporate general and administrative expenses aswere reduced by $43.5 million, or 25%, for the year ended November 30, 2008, compared to 2007. As a percentage of total revenues, were 1.2%corporate general and administrative expenses increased to 2.8% in the year ended November 30, 2006, compared to 1.4%2008, from 1.7% in the same period last year.year, due to lower revenues.

SFAS 109 requires a reduction of the carrying amounts of deferred tax assets by a valuation allowance, if based on available evidence, it is more likely than not that such assets will not be realized. As a result of our operational results for the year ended November 30, 2008, we have now incurred cumulative losses over the evaluation period we established in accordance with SFAS 109. Accordingly, based on our evaluation of available evidence including our cumulative losses in the evaluation period, our current level of profits and losses and current market conditions, we have recorded a $730.8 million non-cash valuation allowance against our deferred tax assets during the year ended November 30, 2008. In future periods, this valuation allowance could be reduced based on sufficient evidence indicating that it is more likely than not that a portion of the our deferred tax assets will be realized.

At November 30, 2006,2008, we owned 92,32574,681 homesites and had access to an additional 189,27938,589 homesites through either option contracts with third parties or agreements with unconsolidated entities in which we have investments. At November 30, 2006, 10%2008, 2% of the homesites we owned were subject to home purchase contracts. Our backlog of sales contracts was 11,6081,599 homes ($4.0 billion)456.3 million) at November 30, 2006,2008, compared to 18,5654,009 homes ($6.9 billion)1,384.1 million) at November 30, 2005. As a result of pricing our homes to market through the use of higher sales incentives, building out our inventory and delivering our backlog in an effort to maintain an “inventory neutral” position, our backlog declined in 2006.2007. The lower backlog was also attributable to the depressedchallenged market conditions during 2006,that persisted throughout 2008, which resulted in lower new orders in 2006,2008, compared to 2005. At November 30, 2006, our inventory balance was consistent with the balance at November 30, 2005.2007.

19

20052007 versus 20042006

Revenues from home sales increased 33%decreased 36% in 2005the year ended November 30, 2007 to $12.7$9.5 billion from $9.6$14.9 billion in 2004.2006. Revenues were higherlower primarily due to a 16% increase33% decrease in the number of home deliveries and a 15% increase6% decrease in the average sales price of homes delivered in 2005.2007. New home deliveries, excluding unconsolidated entities, increaseddecreased to 40,88231,582 homes in the year ended November 30, 20052007 from 35,18947,032 homes in 2004.2006. In 2005,the year ended November 30, 2007, new home deliveries were higherlower in each of our homebuilding segments and Homebuilding Other, compared to 2004.2006. The average sales price of homes delivered increaseddecreased to $311,000$297,000 in the year ended November 30, 20052007 from $272,000$315,000 in 2004.2006, primarily due to higher sales incentives offered to homebuyers ($48,000 per home delivered in 2007, compared to $32,000 per home delivered in 2006).

Gross margins on home sales excluding SFAS 144 valuation adjustments were $3.3$1.3 billion, or 26.0%13.9%, in the year ended November 30, 2005,2007, compared to $2.3$3.0 billion, or 23.9%20.3%, in 2004.2006. Gross margin percentage on home sales increased 210 basis pointsdecreased compared to 2006 in all of our homebuilding segments primarily due to higher sales incentives offered to homebuyers. Gross margins on home sales were $570.7 million, or 6.0%, in the year ended November 30, 2007, which included $747.8 million of SFAS 144 valuation adjustments, compared to gross margins on home sales of $2,740.4 million, or 18.4%, in the year ended November 30, 2006, which included $280.5 million of SFAS 144 inventory valuation adjustments. Gross margins on home sales excluding SFAS 144 valuation adjustments is a product mix favoringnon-GAAP financial measure disclosed by certain of our higher margin states, as well as a significant gross margin percentage improvementcompetitors and has been presented because we find it useful in Arizona, Californiaevaluating its performance and Florida.believe that it helps readers of our financial statements compare our operations with those of our competitors.

Homebuilding interest expense (primarily included in cost of homes sold and cost of land sold) was $187.2$203.7 million in 2005,2007, compared to $134.2$241.1 million in 2004.2006. The increasedecrease in interest expense was due to higherlower interest costs resulting from higherlower average debt during 2007, as well as increaseddecreased deliveries during 2005,2007, compared to 2004, due to the growth in our homebuilding operations.2006. Our homebuilding debt to total capital ratio as of November 30, 20052007 was 33.1%37.5%, compared to 33.3%31.4% as of November 30, 2004.2006. Our net homebuilding debt to total capital ratio as of November 30, 2007 was 30.2% compared to 25.5% as of November 30, 2006. The net homebuilding debt to total capital ratio consists of net homebuilding debt (homebuilding debt less homebuilding cash) divided by total capital (net homebuilding debt plus stockholders’ equity).

Selling, general and administrative expenses aswere reduced by $396.6 million, or 22%, in the year ended November 30, 2007, compared to 2006, primarily due to reductions in associate headcount and variable selling expenses. As a percentage of revenues from home sales, were 11.1%selling, general and administrative expenses increased to 14.5% in the year ended November 30, 2005, compared2007, from 11.9% in 2006. The 260 basis point increase was primarily due to 11.2% in the year ended November 30, 2004. Management fees of $37.4 million and $28.4 million received during the years ended November 30, 2005 and 2004, respectively, from unconsolidated entities in which we had investments, which were previously recorded as a reduction of selling, general and administrative expenses, have been reclassified to management fees and other income, net in order to conform to the 2006 presentation.lower revenues.

Gross profitLoss on land sales totaled $200.8$1,661.1 million in the year ended November 30, 2005,2007, which included $740.4 million of SFAS 144 valuation adjustments on the inventory acquired by the Morgan Stanley land investment venture discussed below, $426.9 million of SFAS 144 valuation adjustments and $530.0 million of write-offs of deposits and pre-acquisition costs related to 36,900 homesites under option that we do not intend to purchase. In the year ended November 30, 2006, loss on land sales totaled $30.0 million, which included $69.1 million of SFAS 144 valuation adjustments and $152.2 million of write-offs of deposits and pre-acquisition costs related to 24,200 homesites that were under option.

In November 2007, we and Morgan Stanley Real Estate Fund II, L.P., an affiliate of Morgan Stanley & Co., Inc., formed a strategic land investment venture to acquire, develop, manage and sell residential real estate. We acquired a 20% ownership interest and 50% voting rights in the land investment venture. Concurrent with the formation of the land investment venture, we sold a diversified portfolio of our land to the venture for $525 million. The properties acquired by the new entity consist of approximately 11,000 homesites in 32 communities located throughout the country. The properties sold by us had a net book value of approximately $1.3 billion. As part of the transaction, we entered into option agreements and obtained rights of first offer providing us the opportunity to purchase certain finished homesites. The exercise price of the options is based on a fixed percentage of the future home price. We have no obligation to exercise these options and cannot acquire a majority of the entity’s assets. We are managing the land investment venture’s operations and receive fees for our services. We will also receive disproportionate distributions if the investment venture exceeds certain financial targets.

Due to our continuing involvement, the transaction did not qualify as a sale under GAAP; thus, the inventory remained on our balance sheet in consolidated inventory not owned as of November 30, 2007. Additionally, the $445 million of net cash received from the transaction was recorded in liabilities related to consolidated inventory not owned in the consolidated balance sheet and classified as cash flows from financing activities in the consolidated statement of cash flows. In connection with the transaction, we recorded a SFAS 144 valuation adjustment of $740.4 million on the inventory sold to the land investment venture.

Equity in loss from unconsolidated entities was $362.9 million in the year ended November 30, 2007, which included $364.2 million of our share of SFAS 144 valuation adjustments related to the assets of our investments in unconsolidated entities, compared to $159.4equity in loss from unconsolidated entities of $12.5 million in 2004. Somethe year ended November 30, 2006, which included $126.4 million of these land sales were from consolidated joint ventures,our share of SFAS 144 valuation adjustments related to the assets of our investments in unconsolidated entities.

During the year ended November 30, 2007, we recorded goodwill impairments of $190.2 million related to our homebuilding operations.

Management fees and other income (expense), net, totaled ($76.0) million in the year ended November 30, 2007, which resultedincluded $132.2 million of APB 18 valuation adjustments to our investments in minority interest expense. unconsolidated entities, compared to management fees and other income (expense), net, of $66.6 million in the year ended November 30, 2006, net of $14.5 million of APB 18 valuation adjustments to our investments in unconsolidated entities.

Minority interest expense,income (expense), net from these land sales and other activities of the consolidated joint ventures was $45.0($1.9) million and $10.8($13.4) million, respectively, in the years ended November 30, 20052007 and 2004. Management fees and other income, net, totaled $99.0 million2006.

Sales of land, equity in the year ended November 30, 2005, compared to $97.7 million in 2004. Equity in earningsloss from unconsolidated entities, was $133.8 million in the year ended November 30, 2005, compared to $90.7 million in 2004. Sales of land, minority interest expense, net, management fees and other income (expense), net and equity in earnings from unconsolidated entitiesminority interest income (expense), net may vary significantly from period to period depending on the timing of land sales and other transactions entered into by us and unconsolidated entities in which we have investments.

In February 2007, our LandSource joint venture admitted MW Housing Partners as a new strategic partner. As part of the transaction, the joint venture obtained $1.6 billion of non-recourse financing, which consisted of a $200 million five-year Revolving Credit Facility, a $1.1 billion six-year Term Loan B Facility and a $244 million seven-year Second Lien Term Facility. The transaction resulted in a cash distribution to us of $707.6 million, but reduced our resulting ownership of LandSource to 16%. As a result of the recapitalization, we recognized a pretax gain of $175.9 million in 2007.

Operating earnings from continuing operations for the Financial Services segment were $104.8$6.1 million in the year ended November 30, 2005,2007, compared to $110.7$149.8 million in 2004.2006. The decrease was primarily due to reduceda decline in profitability from both the segment’s mortgage operations as a result of a more competitive mortgage environment in 2005, as well as a $6.5 million pretax gain generated from monetizing a majority of the segment’s alarm monitoring contracts in 2004. This decrease was partially offset by improved profitability from the segment’sand title operations and $28.4 million of partial write-offs of land seller notes receivable.

The decline in 2005. The segment’s mortgage capture rate (i.e.,profitability was due to the percentage of our homebuyers, excluding cash settlements, who obtained mortgage financing from us in areas where we offered services) was 66%overall weakness in the year ended November 30, 2005,housing market, which led to a decrease in volume and transactions for the mortgage and title operations compared to 71% in 2004. The decrease in the capture rate was a result of a more competitive mortgage environment. During 2005, we sold North American Exchange Company (“NAEC”), a subsidiary of the Financial Services’ title company, which generated a $15.8 million pretax gain.2006.

Corporate general and administrative expenses aswere reduced by $20.1 million, or 10%, in the year ended November 30, 2007, compared to 2006. As a percentage of total revenues, were 1.4%corporate general and 1.3%, respectively,administrative expenses increased to 1.7% in the yearsyear ended November 30, 2005 and 2004.2007, compared to 1.2% in 2006, primarily due to lower revenues.

At November 30, 2005,2007, we owned 102,68762,801 homesites and had access to an additional 222,11985,870 homesites through either option contracts with third parties or agreements with unconsolidated entities in which we have investments. At November 30, 2005, 14%2007, 5% of the homesites we owned were subject to home purchase contracts. Our backlog of sales contracts was 18,5654,009 homes ($6.91.4 billion) at November 30, 2005,2007, compared to 15,54611,608 homes ($5.14.0 billion) at November 30, 2004.2006. The higherlower backlog was primarily attributable to our growth and strong demand for our homes,weak market conditions that persisted during 2007, which resulted in higherlower new orders in 2005,2007, compared to 2004. As a result of acquisitions combined with our organic growth, inventories increased 53% during 2005, while revenues from sales of homes increased 33% for the year ended November 30, 2005, compared to 2004.2006.

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Homebuilding Segments

Our Homebuilding operations construct and sell homes primarily for first-time, move-up and active adult homebuyers primarily under our Everything’s Included^® program. Our land operations include the purchase, development and sale of land forLennar brand name. In addition, our homebuilding activities, as well as the sale ofoperations also purchase, develop and sell land to third parties. In certain circumstances, we diversify our operations through strategic alliances and minimize our risks by investing with third parties in joint ventures.

We have disaggregated our Houston homebuilding division from our Homebuilding Central reportable segment and have presented Houston as a separate reportable segment due to the division achieving a quantitative threshold set forth in SFAS No. 131,Disclosures About Segments of an Enterprise and Related Information(“SFAS 131”) as of and for the year ended November 30, 2008. All segment information related to prior years has been restated to conform to the fiscal 2008 presentation. The change in reportable segments has no effect on our consolidated financial position, results of operations or cash flows.

We have grouped our homebuilding activities into three reportable segments, which we refer to as Homebuilding East, Homebuilding Central and Homebuilding West. Information about homebuilding activities in states that doin which our homebuilding activities are not have economic characteristics that areeconomically similar to those in other states in the same geographic area is grouped under “Homebuilding Other.” References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to homebuilding segments are to those reportable segments.

At November 30, 2006,2008, our revised reportable homebuilding segments and Homebuilding Other consisted of homebuilding divisionsoperations located in the following states:in:

East:Florida, Maryland, New Jersey and Virginia.

Central:Arizona, Colorado and Texas. (1)

West:California and Nevada.

Houston: Houston, Texas.

Other:Illinois, Minnesota, New York, North Carolina and South Carolina.

The following tables set forth selected financial and operational information related to our homebuilding operations for the years indicated:

Selected Financial and Operational Data

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