UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~August 31, 2019~~February 29, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from _______ To _______

Commission File Number: 1-11749

Lennar Corporation

(Exact name of registrant as specified in its charter)



Delaware		95-4337490
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

700 Northwest 107th Avenue, Miami, Florida 33172

(Address of principal executive offices) (Zip Code)

(305) 559-4000

(Registrant’s telephone number, including area code)

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



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $.10	LEN	New York Stock Exchange
Class B Common Stock, par value $.10	LEN.B	New York Stock Exchange

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 ý No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	ý	Accelerated filer	¨	Emerging growth company	☐
Non-accelerated filer	¨	Smaller reporting company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý

Common stock outstanding as of ~~August 31, 2019:~~February 29, 2020:

Class A ~~279,880,759~~274,617,591

Class B ~~37,738,347~~37,623,275



LENNAR CORPORATION

FORM 10-Q
For the period ended ~~August 31, 2019~~February 29, 2020

Part I	Financial Information
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of ~~August 31, 2019~~February 29, 2020 and November 30, ~~2018~~2019	3
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three ~~and nine~~ months ended ~~August 31,~~February 29, 2020 and February 28, 2019 ~~and August 31, 2018~~	5
	Condensed Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~August 31,~~February 29, 2020 and February 28, 2019 ~~and August 31, 2018~~	6
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4532
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	7547
Item 4.	Controls and Procedures	7647

Part II	Other Information	7648
Item 1.	Legal Proceedings	7648
Item 1A.	Risk Factors	7648
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7648
Item 3 - 5.	Not Applicable	7648
Item 6.	Exhibits	7749
	Signatures	7850

Part I. Financial Information

Item 1. Financial Statements

Lennar Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(Dollars in thousands)

(unaudited)


	August 31,		November 30,	February 29,		November 30,
	2019 (1)		2018 (1)	2020 (1)		2019 (1)
ASSETS
Homebuilding:
Cash and cash equivalents	$	795,405	1,337,807	$	784,950	1,200,832
Restricted cash	13,238		12,399	8,666		9,698
Receivables, net	295,418		236,841	311,817		329,124
Inventories:
Finished homes and construction in progress	10,256,011		8,681,357	10,110,009		9,195,721
Land and land under development	8,240,076		8,178,388	8,116,047		8,267,647
Consolidated inventory not owned	352,083		208,959	417,424		313,139
Total inventories	18,848,170		17,068,704	18,643,480		17,776,507
Investments in unconsolidated entities	1,002,936		870,201	946,716		1,009,035
Goodwill	3,442,359		3,442,359	3,442,359		3,442,359
Other assets	1,158,325		1,355,782	1,061,852		1,021,684
	25,555,851		24,324,093	25,199,840		24,789,239
Financial Services	2,329,786		2,778,910	2,375,564		3,006,024
Multifamily	1,020,842		874,219	1,113,903		1,068,831
Lennar Other	552,968		588,959	484,392		495,417
Total assets	$	29,459,447	28,566,181	$	29,173,699	29,359,511


(1)	Under certain provisions of Accounting Standards Codification ("ASC") Topic 810, Consolidations, ("ASC 810") the Company is required to separately disclose on its condensed consolidated balance sheets the assets owned by consolidated variable interest entities ("VIEs") and liabilities of consolidated VIEs as to which neither Lennar Corporation, or any of its subsidiaries, has any obligations.

As of ~~August 31, 2019,~~February 29, 2020, total assets include ~~$1.0~~$1.2 billion related to consolidated VIEs of which ~~$15.3~~$12.9 million is included in Homebuilding cash and cash equivalents, $0.1 million in Homebuilding receivables, net, $104.4 million in Homebuilding finished homes and construction in progress, $292.5 million in Homebuilding land and land under development, $406.1 million in Homebuilding consolidated inventory not owned, $2.7 million in Homebuilding investments in unconsolidated entities, $7.3 million in Homebuilding other assets, $259.9 million in Financial Services assets and $74.2 million in Multifamily assets.

As of November 30, 2019, total assets include $980.2 million related to consolidated VIEs of which $15.5 million is included in Homebuilding cash and cash equivalents, $0.2 million in Homebuilding receivables, net, ~~$108.9~~$97.5 million in Homebuilding finished homes and construction in progress, ~~$242.9~~$283.2 million in Homebuilding land and land under development, ~~$352.1~~$301.0 million in Homebuilding consolidated inventory not owned, ~~$4.1~~$2.5 million in Homebuilding investments in unconsolidated entities, ~~$6.0~~$10.0 million in Homebuilding other assets, ~~$222.0~~$221.2 million in Financial Services assets and ~~$50.7~~$49.1 million in Multifamily ~~assets.~~

As of November 30, 2018, total assets include $666.2 million related to consolidated VIEs of which $57.6 million is included in Homebuilding cash and cash equivalents, $0.2 million in Homebuilding receivables, net, $81.7 million in Homebuilding finished homes and construction in progress, $293.1 million in Homebuilding land and land under development, $209.0 million in Homebuilding consolidated inventory not owned, $3.8 million in Homebuilding investments in unconsolidated entities, $10.5 million in Homebuilding other assets and $10.3 million in Lennar Other assets.

Lennar Corporation and Subsidiaries

Condensed Consolidated Balance Sheets (Continued)

(In thousands, except shares and per share amounts)

(unaudited)


	August 31,			November 30,		February 29,			November 30,
	2019 (2)			2018 (2)		2020 (2)			2019 (2)
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable	$	1,092,708		1,154,782		$	1,180,708		1,069,179
Liabilities related to consolidated inventory not owned	298,724			175,590		365,284			260,266
Senior notes and other debts payable	9,075,016			8,543,868
Senior notes and other debts payable, net						8,115,498			7,776,638
Other liabilities	1,833,915			1,902,658		1,733,605			1,900,955
	12,300,363			11,776,898		11,395,095			11,007,038
Financial Services	1,455,456			1,868,202		1,358,723			2,056,450
Multifamily	213,054			170,616		201,992			232,155
Lennar Other	24,627			67,508		24,512			30,038
Total liabilities	13,993,500			13,883,224		12,980,322			13,325,681
Stockholders’ equity:
Preferred stock	��			—		—			—
Class A common stock of $0.10 par value; Authorized: August 31, 2019 and November 30, 2018 - 400,000,000 shares; Issued: August 31, 2019 - 297,089,399 shares and November 30, 2018 - 294,992,562 shares	29,709			29,499
Class B common stock of $0.10 par value; Authorized: August 31, 2019 and November 30, 2018 - 90,000,000 shares; Issued: August 31, 2019 - 39,442,650 shares and November 30, 2018 - 39,442,219 shares	3,944			3,944
Class A common stock of $0.10 par value; Authorized: February 29, 2020 and November 30, 2019 - 400,000,000 shares; Issued: February 29, 2020 - 298,018,470 shares and November 30, 2019 - 297,119,153 shares						29,802			29,712
Class B common stock of $0.10 par value; Authorized: February 29, 2020 and November 30, 2019 - 90,000,000 shares; Issued: February 29, 2020 - 39,443,101 shares and November 30, 2019 - 39,443,064 shares						3,944			3,944
Additional paid-in capital	8,559,704			8,496,677		8,609,944			8,578,219
Retained earnings	7,633,375			6,487,650		8,654,213			8,295,001
Treasury stock, at cost; August 31, 2019 - 17,208,640 shares of Class A common stock and 1,704,303 shares of Class B common stock; November 30, 2018 - 8,498,203 shares of Class A common stock and 1,698,424 shares of Class B common stock	(855,201		)	(435,869	)
Accumulated other comprehensive income (loss)	407			(366	)
Treasury stock, at cost; February 29, 2020 - 23,400,879 shares of Class A common stock and 1,819,826 shares of Class B common stock; November 30, 2019 - 18,964,973 shares of Class A common stock and 1,704,630 shares of Class B common stock						(1,253,756		)	(957,857	)
Accumulated other comprehensive income						452			498
Total stockholders’ equity	15,371,938			14,581,535		16,044,599			15,949,517
Noncontrolling interests	94,009			101,422		148,778			84,313
Total equity	15,465,947			14,682,957		16,193,377			16,033,830
Total liabilities and equity	$	29,459,447		28,566,181		$	29,173,699		29,359,511


(2)	Under certain provisions of ASC 810, the Company is required to separately disclose on its condensed consolidated balance sheets the assets owned by consolidated VIEs and liabilities of consolidated VIEs as to which neither Lennar Corporation, or any of its subsidiaries, has any obligations.

As of ~~August 31, 2019,~~February 29, 2020, total liabilities include ~~$577.7~~$669.4 million related to consolidated VIEs as to which there was no recourse against the Company, of which ~~$7.8~~$8.9 million is included in Homebuilding accounts payable, ~~$47.1 million in Homebuilding senior notes and other debts payable, $298.7~~$353.5 million in Homebuilding liabilities related to consolidated inventory not owned, ~~$4.3~~$68.3 million in Homebuilding senior notes and other debts payable, $8.9 million in Homebuilding other liabilities, $218.5 million in Financial Services liabilities and ~~$1.2~~$11.3 million in Multifamily liabilities.

As of November 30, ~~2018,~~2019, total liabilities include ~~$242.5~~$549.7 million related to consolidated VIEs as to which there was no recourse against the Company, of which ~~$11.4~~$13.7 million is included in Homebuilding accounts payable, ~~$51.9 million in Homebuilding senior notes and other debt payable, $175.6~~$247.5 million in Homebuilding liabilities related to consolidated inventory not owned, ~~$2.6~~$47.1 million in Homebuilding senior notes and other debt payable, $8.9 million in Homebuilding other liabilities, ~~and $1.0~~$231.1 million in ~~Lennar Other~~Financial Services liabilities and $1.4 million in Multifamily liabilities.

Lennar Corporation and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(Dollars in thousands, except per share amounts)

(unaudited)


	Three Months Ended					Nine Months Ended				Three Months Ended
	August 31,					August 31,				February 29,			February 28,
	2019			2018		2019		2018		2020			2019
Revenues:
Homebuilding	$	5,438,998		5,285,742		14,258,318		13,011,832		$	4,172,116		3,623,721
Financial Services	224,502			258,208		572,029		704,004		198,661			143,311
Multifamily	183,958			101,064		428,764		312,013		132,617			97,394
Lennar Other	9,600			27,555		28,919		84,572		1,943			3,656
Total revenues	5,857,058			5,672,569		15,288,030		14,112,421		4,505,337			3,868,082
Costs and expenses:
Homebuilding	4,781,932			4,671,088		12,608,026		11,711,184		3,697,806			3,238,835
Financial Services	149,804			197,693		422,142		561,853		151,344			124,339
Multifamily	181,616			103,187		431,510		317,572		137,348			101,178
Lennar Other	2,734			21,518		7,550		69,883		2,574			1,622
Acquisition and integration costs related to CalAtlantic	—			11,992		—		140,062
Corporate general and administrative	92,615			96,346		248,071		249,071		86,847			79,343
Total costs and expenses	5,208,701			5,101,824		13,717,299		13,049,625		4,075,919			3,545,317
Homebuilding equity in loss from unconsolidated entities	(10,459		)	(16,739	)	(4,601	)	(43,537	)	(4,546		)	(13,756	)
Homebuilding other income (expense), net (1)	12,375			10,839		(35,325	)	190,713
Multifamily equity in earnings (loss) from unconsolidated entities and other gain	7,883			(1,730	)	15,446		15,293
Homebuilding other expense, net										(9,366		)	(1,535	)
Multifamily equity in earnings from unconsolidated entities and other gain										6,516			10,581
Lennar Other equity in earnings from unconsolidated entities	8,903			6,614		12,255		20,129		119			8,330
Lennar Other income (expense), net	24			(3,811	)	(12,900	)	(19,238	)	1,411			(7,261	)
Earnings before income taxes	667,083			565,918		1,545,606		1,226,156		423,552			319,124
Provision for income taxes (2)	(154,440		)	(98,298	)	(374,670	)	(306,870	)
Net earnings (including net earnings (loss) attributable to noncontrolling interests)	512,643			467,620		1,170,936		919,286
Less: Net earnings (loss) attributable to noncontrolling interests	(723		)	14,409		(3,812	)	19,603
Provision for income taxes										(32,329		)	(79,700	)
Net earnings (including net loss attributable to noncontrolling interests)										391,223			239,424
Less: Net loss attributable to noncontrolling interests										(7,229		)	(486	)
Net earnings attributable to Lennar	$	513,366		453,211		1,174,748		899,683		$	398,452		239,910
Other comprehensive income (loss), net of tax:
Net unrealized gain (loss) on securities available-for-sale	$	180		(110	)	949		(1,357	)	$	(46	)	208
Reclassification adjustments for loss included in earnings, net of tax	—			(166	)	(176	)	(292	)
Total other comprehensive income (loss), net of tax	$	180		(276	)	773		(1,649	)	$	(46	)	208
Total comprehensive income attributable to Lennar	$	513,546		452,935		1,175,521		898,034		$	398,406		240,118
Total comprehensive income (loss) attributable to noncontrolling interests	$	(723	)	14,409		(3,812	)	19,603
Total comprehensive loss attributable to noncontrolling interests										$	(7,229	)	(486	)
Basic earnings per share	$	1.60		1.37		3.64		2.95		$	1.27		0.74
Diluted earnings per share	$	1.59		1.37		3.63		2.94		$	1.27		0.74


~~(1)~~	~~Homebuilding other expense, net for the nine months ended August 31, 2019 includes a one-time loss of $48.9 million relating to the consolidation of a previously unconsolidated entity.~~


~~(2)~~	Provision for income taxes for the nine months ended August 31, 2018 includes a non-cash one-time write down of deferred tax assets of $68.6 million resulting from the Tax Cuts and Jobs Act enacted in December 2017.

Lennar Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Continued)

(In thousands)

(unaudited)

Nine Months Ended
August 31,
2019 2018
Cash flows from operating activities:
Net earnings (including net earnings (loss) attributable to noncontrolling interests) $ 1,170,936
919,286
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization 63,822
66,714
Amortization of discount/premium and accretion on debt, net (19,841 ) (17,750 )
Equity in (earnings) loss from unconsolidated entities (12,235 ) 8,115
Distributions of earnings from unconsolidated entities 9,175
90,431
Share-based compensation expense 65,438
55,638
Deferred income tax expense 144,969
188,132
Gain on sale of operating properties and equipment (4,925 ) (5,107 )
Gain on sale of other assets (4,196 ) —
Loss on consolidation of previously unconsolidated entity 48,874
—
Gain on sale of interest in unconsolidated entities and other Multifamily gain (10,865 ) (164,880 )
Gain on sale of Financial Services' businesses (2,368 ) —
Unrealized and realized gains on real estate owned (1,786 ) (2,912 )
Impairments of loans held-for-sale and real estate owned —
8,526
Valuation adjustments and write-offs of option deposits and pre-acquisition costs 15,912
40,531
Changes in assets and liabilities:
Decrease (increase) in receivables 527,990
(13,341 )
Increase in inventories, excluding valuation adjustments and write-offs of option deposits and pre-acquisition costs (1,610,329 ) (725,016 )
Decrease (increase) in other assets 48,263
(193,835 )
Decrease (increase) in loans held-for-sale (14,992 ) 130,528
Increase (decrease) in accounts payable and other liabilities (115,549 ) 341,357
Net cash provided by operating activities 298,293
726,417
Cash flows from investing activities:
Net additions of operating properties and equipment (69,557 ) (81,493 )
Proceeds from the sale of operating properties and equipment and other assets 50,018
22,820
Proceeds from sale of investment in unconsolidated entities 17,790
199,654
Proceeds from sale of Financial Services' businesses 24,446
—
Investments in and contributions to unconsolidated entities (329,858 ) (302,333 )
Distributions of capital from unconsolidated and consolidated entities 250,265
227,754
Proceeds from sales of real estate owned 8,560
28,697
Receipts of principal payments on loans receivable and other 2,152
3,271
Purchases of commercial mortgage-backed securities bonds —
(31,068 )
Acquisitions, net of cash and restricted cash acquired —
(1,078,345 )
Increase in Financial Services loans held-for-investment, net (2,902 ) (2,062 )
Purchases of investment securities (31,879 ) (39,531 )
Proceeds from maturities/sales of investments securities 41,608
34,221
Other payments, net —
(459 )
Net cash used in investing activities $ (39,357 ) (1,018,874 )



	Three Months Ended
	February 29,			February 28,
	2020			2019
Cash flows from operating activities:
Net earnings (including net loss attributable to noncontrolling interests)	$	391,223		239,424
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization	20,414			18,362
Amortization of discount/premium and accretion on debt, net	(6,943		)	(7,048	)
Equity in loss from unconsolidated entities	2,572			5,710
Distributions of earnings from unconsolidated entities	36,922			3,489
Share-based compensation expense	31,855			16,899
Deferred income tax expense	57,006			65,879
Gain on sale of other assets, operating properties and equipment and real estate owned	(2,910		)	(938	)
Gain on sale of interest in unconsolidated entity and other Multifamily gain	(4,661		)	(10,865	)
Gain on sale of Financial Services' businesses	—			(1,663	)
Valuation adjustments and write-offs of option deposits and pre-acquisition costs	24,515			6,910
Changes in assets and liabilities:
Decrease in receivables	245,694			394,682
Increase in inventories, excluding valuation adjustments and write-offs of option deposits and pre-acquisition costs	(777,012		)	(1,073,322	)
(Increase) decrease in other assets	(121,506		)	49,015
Decrease in loans held-for-sale	474,243			156,720
Increase (decrease) in accounts payable and other liabilities	11,564			(387,677	)
Net cash provided by (used in) operating activities	382,976			(524,423	)
Cash flows from investing activities:
Net additions of operating properties and equipment	(17,909		)	(27,395	)
Proceeds from the sale of operating properties and equipment and other assets	13,067			—
Proceeds from sale of investment in unconsolidated entity	—			17,790
Proceeds from sale of Financial Services' businesses	—			24,446
Investments in and contributions to unconsolidated entities	(78,607		)	(133,917	)
Distributions of capital from unconsolidated entities	86,324			70,080
Proceeds from sale of commercial mortgage-backed securities bonds	3,248			—
Decrease (increase) in Financial Services loans held-for-investment, net	2,733			(11,208	)
Purchases of investment securities	(8,107		)	(31,305	)
Proceeds from maturities/sales of investments securities	10,753			9,442
Other receipts, net	1,677			4,079
Net cash provided by (used in) investing activities	$	13,179		(77,988	)

Lennar Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Continued)

(In thousands)

(unaudited)


	Nine Months Ended					Three Months Ended
	August 31,					February 29,			February 28,
	2019			2018		2020			2019
Cash flows from financing activities:
Net borrowings under revolving lines of credit	$	700,000		195,300
Net borrowings under revolving line of credit						$	300,000		725,000
Net repayments under warehouse facilities	(423,123		)	(100,963	)	(755,602		)	(508,655	)
Redemption of senior notes	(500,000		)	(825,000	)
Proceeds from other borrowings	62,634			70,322		27,577			10,452
Principal payments on other borrowings	(154,736		)	(436,035	)
Principal payments on notes payable and other borrowings						(93,250		)	(92,983	)
Payments related to other liabilities	(2,533		)	(3,200	)	(5,480		)	(447	)
Conversions, exchanges and redemption of convertible senior notes	(1,288		)	(59,145	)
Receipts related to noncontrolling interests	27,395			4,008		88,913			8,348
Payments related to noncontrolling interests	(35,689		)	(68,627	)	(16,734		)	(11,297	)
Debt issuance costs	—			(12,459	)
Common stock:
Issuances	388			3,189		—			607
Repurchases	(419,322		)	(49,490	)	(295,988		)	(49,143	)
Dividends	(38,776		)	(35,985	)	(39,240		)	(12,860	)
Net cash used in financing activities	$	(785,050	)	(1,318,085	)
Net cash (used in) provided by financing activities						$	(789,804	)	69,022
Net decrease in cash and cash equivalents and restricted cash	(526,114		)	(1,610,542	)	(393,649		)	(533,389	)
Cash and cash equivalents and restricted cash at beginning of period	1,595,978			2,694,084		1,468,691			1,595,978
Cash and cash equivalents and restricted cash at end of period	$	1,069,864		1,083,542		$	1,075,042		1,062,589
Summary of cash and cash equivalents and restricted cash:
Homebuilding	$	808,643		845,015		$	793,616		865,426
Financial Services	238,406			177,162		260,606			166,751
Multifamily	16,478			13,748		15,790			13,594
Lennar Other	6,337			47,617		5,030			16,818
	$	1,069,864		1,083,542		$	1,075,042		1,062,589
Supplemental disclosures of non-cash investing and financing activities:
Homebuilding and Multifamily:
Purchases of inventories and other assets financed by sellers	$	84,624		52,356		$	75,365		46,144
Non-cash contributions to unconsolidated entities	$	107,368		91,709		$	13,859		—
Conversions and exchanges on convertible senior notes	$	—		217,154
Equity component of acquisition consideration	$	—		5,070,006
Consolidation/deconsolidation of unconsolidated/consolidated entities, net:
Inventories	$	187,506		35,430
Receivables	$	102,959		7,198
Operating properties and equipment and other assets	$	53,412		—		$	(667	)	51,603
Investments in unconsolidated entities	$	67,925		(25,614	)	$	—		(4,755	)
Notes payable	$	(383,212	)	—		$	—		(36,110	)
Other liabilities	$	(19,696	)	(17,014	)	$	182		(1,844	)
Noncontrolling interests	$	(8,894	)	—		$	485		(8,894	)

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)


(1)	Basis of Presentation

Basis of Consolidation

The accompanying condensed consolidated financial statements include the accounts of Lennar Corporation and all subsidiaries, partnerships and other entities in which Lennar Corporation has a controlling interest and variable interest entities ("VIEs") (see Note 1610 of the Notes to the Condensed Consolidated Financial Statements) in which Lennar Corporation is deemed to be the primary beneficiary (the "Company"). The Company’s investments in both unconsolidated entities in which a significant, but less than controlling, interest is held and in VIEs in which the Company is not deemed to be the primary beneficiary, are accounted for by the equity method. All intercompany transactions and balances have been eliminated in consolidation. The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended November 30, ~~2018.~~2019. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for the fair presentation of the accompanying condensed consolidated financial statements have been made.

The Company has historically experienced, and expects to continue to experience, variability in quarterly results. The condensed consolidated statements of operations for the three ~~and nine~~ months ended ~~August 31, 2019~~February 29, 2020 are not necessarily indicative of the results to be expected for the full year.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Cash and Cash Equivalents

Homebuilding cash and cash equivalents as of February 29, 2020 and November 30, 2019 included $502.2 million and $565.8 million, respectively, of cash held in escrow for approximately three days.

Share-based Payments

During the three months ended February 29, 2020, the Company granted employees 0.9 million nonvested shares. During the three months ended February 28, 2019, the Company granted employees an immaterial number of nonvested shares.

Recently Adopted Accounting Pronouncements

In ~~May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2014-09,~~ ~~Revenue from Contracts with Customers~~, ("ASU 2014-09"). ASU 2014-09 provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. ASU 2014-09 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This update creates a five-step model that requires entities to exercise judgment when considering the terms of the contract(s) which include (i) identifying the contract(s) with the customer, (ii) identifying the separate performance obligations in the contract, (iii) determining the transaction price, (iv) allocating the transaction price to the separate performance obligations, and (v) recognizing revenue when each performance obligation is satisfied. ASU 2014-09 became effective for the Company’s fiscal year beginning December 1, 2018 and subsequent interim periods. Subsequent to the issuance of ASU 2014-09, the FASB has issued several ASUs such as ASU 2016-08, ~~Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU 2016-12,~~ ~~Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, and ASU 2017-05,~~ Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets ("ASU 2017-05"), among others. These ASUs do not change the core principle of the guidance stated in ASU 2014-09, instead these amendments are intended to clarify and improve operability of certain topics included within the revenue standard. These ASUs had the same effective date and transition requirements as ASU 2014-09. The Company has adopted the modified retrospective method. The Company elected to use the practical expedient within ASU 2017-05 to apply the standard only to contracts not yet completed as of the date of adoption. This will result in higher gains on future sales of partial real estate interests due to recognizing 100% of the gain on the sale of the partial interest and recording the retained noncontrolling interest at fair value. The Company recorded an immaterial net increase to retained earnings as of December 1, 2018, due to the cumulative impact of adopting ASU 2014-09, with the impact primarily related to the recognition of deferral of net margin from home deliveries.

~~In August~~March 2016, the FASB issued ASU ~~2016-15, Statement of Cash Flows (Topic 230),~~2016-02, ~~Classification of Certain Cash Receipts and Cash Payments~~Leases ("ASU ~~2016-15"~~2016-02")., which provides guidance for accounting for leases. ASU ~~2016-15 reduces~~2016-02 requires lessees to classify leases as either finance or operating leases and to record a right-of-use (“ROU”) asset and a lease liability for all leases with a term greater than 12 months regardless of the ~~existing diversity in practice in financial reporting across all industries by clarifying certain existing principles in ASC 230,~~ ~~Statement~~lease classification. The lease classification determined whether the lease expense was recognized based on an effective interest rate method or on a straight line basis over the term of ~~Cash Flows, including providing additional guidance on how and what an entity should consider in determining~~ the ~~classification of certain cash flows.~~lease. Accounting for lessors remains largely unchanged from current GAAP. ASU

~~Lennar Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)~~

~~2016-15~~ 2016-02 was effective for the ~~Company’s fiscal year~~Company beginning December 1, ~~2018 and subsequent interim periods.~~2019. The Company elected the available practical expedients on adoption. Additionally, in preparation for adoption of ~~ASU 2016-15~~the standard, the Company has implemented internal controls and key system functionality to enable the preparation of financial information. The standard did not have a material ~~effect~~impact on ~~the Company’s condensed consolidated financial statements.~~

~~The Company adopted ASU 2016-18,~~ ~~Statement of Cash Flows (Topic 230), Restricted Cash~~, effective December 1, 2018. The amendments in the standard require that the statement of cash flows explain the change during the period in the total of cash and cash equivalents and restricted cash. As a result, the Company's beginning-of-period and end-of-period cash balances presented in the condensed consolidated statements of cash flows were retrospectively adjusted to include restricted cash with cash and cash equivalents. In accordance with Securities and Exchange Commission ("SEC") Final Rule Release No. 33-10532, Disclosure Update and Simplification, the Company removed the presentation of cash dividends per each Class A and Class B common share from the accompanyingour condensed consolidated statements of operations and comprehensive income (loss)~~. This is now disclosed with the analysis~~ or our condensed consolidated statements of ~~changes in stockholders' equity within Note 5~~cash flows. As a result of the ~~Notes to the Condensed Consolidated Financial Statements.~~

~~In January 2016, the FASB issued ASU 2016-01,~~ ~~Financial Instruments - Overall: Recognition and Measurement~~adoption, as of ~~Financial Assets and Financial Liabilities~~ ("ASU 2016-01"). ASU 2016-01 modifies how entities measure equity investments and present changes in the fair value of financial liabilities. Under the new guidance, entities have to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income unless the investments qualify for the new practicality exception. A practicality exception will apply to those equity investments that do not have a readily determinable fair value and do not qualify for the practical expedient to estimate fair value under ASC 820, Fair Value Measurements, and as such, these investments may be measured at cost. ASU 2016-01 was effective for the Company’s fiscal year beginning December 1, 2018 and subsequent interim periods. The adoption of ASU 2016-01 did not have a material impact on the Company’s condensed consolidated financial statements.

~~In January 2017, the FASB issued ASU 2017-01,~~ ~~Business Combinations (Topic 805), Clarifying the Definition of a Business~~ ("ASU 2017-01"). ASU 2017- 01 clarifies the definition of a business with the objective of addressing whether transactions involving in-substance nonfinancial assets, held directly or in a subsidiary, should be accounted for as acquisitions or disposals of nonfinancial assets or of businesses. ASU 2017-01 was effective for the Company’s fiscal year beginning December 1, 2018 and subsequent interim periods. The adoption of ASU 2017-01 did not have a material impact on the Company’s condensed consolidated financial statements.

~~Revenue Recognition~~

Homebuilding revenues and related profits from sales of homes are recognized at the time of the closing of a sale, when title to and possession of the property are transferred to the homebuyer. The Company’s performance obligation, to deliver the agreed-upon home, is generally satisfied in less than one year from the original contract date. Cash proceeds from home closings held in escrow for the Company’s benefit, typically for approximately three days, are included in Homebuilding cash and cash equivalents in the Condensed Consolidated Balance Sheets and disclosed in Note 11 of the Notes to the Condensed Consolidated Financial Statements. Contract liabilities include customer deposits liabilities related to sold but undelivered homes that are included in other liabilities in the Condensed Consolidated Balance Sheets. The Company periodically elects to sell parcels of land to third parties. Cash consideration from land sales is typically due on the closing date, which is generally when performance obligations are satisfied and revenue is recognized as title to and possession of the property are transferred to the buyer.

The Company’s financial services’ operations recognize revenues as follows: Title premiums on policies issued directly by the Company are recognized as revenue on the effective date of the title policies. Escrow fees and loan origination revenues are recognized at the time the related real estate transactions are completed, usually upon the close of escrow. Revenues from title policies issued by independent agents are recognized as revenue when notice of issuance is received from the agent, which is generally when cash payment is received by the Company.

~~The Company’s Multifamily segment provides management services with respect to the development, construction and property management of rental projects in joint ventures in which~~February 29, 2020, the Company has ~~investments. As a result, the Multifamily segment earns~~recorded $143.7 million of ROU assets and ~~receives fees, which are generally based upon a stated percentage~~$150.8 million of development and construction costs and a percentage of gross rental collections. These fees are recorded over the period in which the services are performed using an input method, which properly depicts the level of effort required to complete the management services. In addition, the Multifamily segment provides general contractor services for the construction of some oflease liabilities on its rental projects and recognizes the revenue over the period in which the services are performed using an input method, which properly depicts the level of effort required to complete the construction services. These customer contracts require the Company to provide management and general contractor services which represents a performance obligation that the Company satisfies over time. Management fees and general contractor services in the Multifamily segment are included in Multifamily revenue.

~~Lennar Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)~~

~~Reclassifications~~

~~Certain prior year amounts in the~~ condensed consolidated ~~financial statements have been reclassified to conform with~~balance sheets within other assets and other liabilities of the 2019 presentation. The Company's segments were adjusted to reflect Rialto Mortgage Finance ("RMF") and certain other Rialto assets within the Financial Services segment effective December 1, 2018. The remaining assets retained related to the Company's former Rialto segment were included in the Lennar Other segment. In addition, the Company's strategic technology investments, which were part of Homebuilding, were reclassified to be included in the Lennar Other segment. These reclassifications were between segments and had no impact on the Company's total assets, total equity, revenue or net income in the condensed consolidated financial statements.respective segments.


(2)	~~Business Acquisitions~~

~~Acquisition of CalAtlantic Group, Inc.~~

On February 12, 2018, the Company completed the acquisition of CalAtlantic Group, Inc. (“CalAtlantic”) through a transaction in which CalAtlantic was merged with and into a wholly-owned subsidiary of the Company (“Merger Sub”), with Merger Sub continuing as the surviving corporation and a wholly-owned subsidiary of the Company (the “Merger”). CalAtlantic was a homebuilder which built homes across the homebuilding spectrum, from entry level to luxury, in 43 metropolitan statistical areas spanning 19 states. CalAtlantic also provided mortgage, title and escrow services. A primary reason for the acquisition was to increase local market concentration in order to generate synergies and efficiencies.

~~Based on an evaluation of the provisions of ASC Topic 805,~~ ~~Business Combinations~~, ("ASC 805"), Lennar Corporation was determined to be the acquirer for accounting purposes. The $3.3 billion allocated to Homebuilding goodwill and the $175 million allocated to Financial Services goodwill is final and represents the excess of the purchase price over the estimated fair value of assets acquired and liabilities assumed.

~~Lennar Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)~~

~~The following table summarizes the purchase price allocation based on the estimated fair value of net assets acquired and liabilities assumed at the date of acquisition:~~

(Dollars in thousands)
CalAtlantic shares of common stock outstanding 118,025,879
CalAtlantic shares electing cash conversion 24,083,091
CalAtlantic shares exchanged 93,942,788
Exchange ratio for Class A common stock 0.885
Exchange ratio for Class B common stock 0.0177
Number of shares of Lennar Class A common stock issued in exchange 83,138,277
Number of shares of Lennar Class B common stock issued in exchange (due to Class B common stock dividend) 1,662,172

Consideration attributable to Class A common stock $ 4,933,425
Consideration attributable to Class B common stock 77,823
Consideration attributable to equity awards that convert upon change of control 58,758
Consideration attributable to cash including fractional shares 1,162,341
Total purchase price $ 6,232,347

(In thousands)
ASSETS
Homebuilding:
Cash and cash equivalents, restricted cash and receivables, net $ 55,191
Inventories 6,239,147
Intangible asset (1) 8,000
Investments in unconsolidated entities 151,900
Goodwill (2) 3,305,792
Other assets 561,151
Total Homebuilding assets 10,321,181
Financial Services (2) 355,128
Total assets 10,676,309
LIABILITIES
Homebuilding:
Accounts payable 306
Senior notes payable and other debts 3,926,152
Other liabilities (3) 374,656
Total Homebuilding liabilities 4,301,114
Financial Services 124,418
Total liabilities 4,425,532
Noncontrolling interests (4) 18,430
Total purchase price $ 6,232,347


~~(1)~~	~~Intangible asset includes trade name. The amortization period for the trade name was six months.~~

~~(2)~~

Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed, and it is generally not deductible for income tax purposes. As of the Merger date, goodwill consisted primarily of expected greater efficiencies and opportunities due to increased concentration of local market share, reduced general and administrative costs and reduced homebuilding costs resulting from the merger and cost savings as a result of additional homebuilding and non-homebuilding synergies. The allocation of goodwill among the Company's reporting segments included $1.1 billion to Homebuilding East, $495.0 million to Homebuilding Central, $342.2 million to Homebuilding Texas, $1.4 billion to Homebuilding West, and $175.4 million to Financial Services.

~~(3)~~

Other liabilities includes contingencies assumed at the Merger date, which includes warranty and legal reserves. Warranty reserves for homes are established at an amount estimated to be adequate to cover potential costs for materials and labor with regard to warranty-type claims expected to be incurred subsequent to the delivery of a home. Warranty reserves are determined based on historical data and trends with respect to similar product types and geographical areas. Consistent with ASC 450, ~~Contingencies,~~ ~~legal reserves are established when a loss is considered probable and the amount of loss can be reasonably estimated.~~


~~(4)~~	~~Fair value of noncontrolling interests was measured using discounted cash flows of expected future contributions and distributions.~~

~~Lennar Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)~~

Homebuilding revenue and net earnings attributable to Lennar for the three and nine months ended August 31, 2018 included $2.2 billion and $4.7 billion, respectively, of home sales revenues, and earnings before income taxes included $209.3 million and $157.3 million, respectively, of a pre-tax earnings from CalAtlantic since the date of acquisition, which included acquisition and integration costs of $12.0 million and $140.1 million, respectively. These transaction expenses were included within acquisition and integration costs related to CalAtlantic in the accompanying condensed consolidated statement of operations for the three and nine months ended August 31, 2018.


~~(3)~~	Operating and Reporting Segments

The Company's homebuilding operations construct and sell homes primarily for first-time, move-up and active adult homebuyers primarily under the Lennar brand name. In addition, the Company's homebuilding operations purchase, develop and sell land to third parties. ~~In connection with the CalAtlantic acquisition, the Company experienced significant growth in its operations. As a result, in 2018, the~~The Company's chief operating decision makers ~~("CODM") reassessed how they evaluate the business and allocate resources. The CODM~~ manage and assess the Company’s performance at a regional level. Therefore, ~~in 2018~~ the Company performed an assessment of its operating segments in accordance with ASC 280, Segment Reporting, ~~(“ASC 280”)~~ and determined that ~~each of its four homebuilding regions, financial services operations, multifamily operations and Rialto operations~~the following are its operating ~~segments. Prior~~and reportable segments:

Lennar Corporation and Subsidiaries

Notes to this change, in accordance with the aggregation criteria defined in ASC 280, the Company’s operating segments were aggregated into reportable segments, based primarily upon similar economic characteristics, geography and product type. In addition, in the first quarter of 2019, as a result of the reclassification of RMF and certain other Rialto assets from the Rialto segment to theCondensed Consolidated Financial Services segment effective December 1, 2018, the Company has renamed the Rialto segment as "Lennar Other" and included in this segment certain strategic technology investments, which were reclassified from Homebuilding to Lennar Other. Prior periods have been reclassified to conform with the 2019 presentation. The Company’s reportable segments consist of:Statements (unaudited) (Continued)

(1) Homebuilding East

(2) Homebuilding Central

(3) Homebuilding Texas

(4) Homebuilding West

(5) Financial Services

(6) Multifamily

(7) Lennar Other

The assets and liabilities related to the Company’s segments were as follows:



(In thousands)	February 29, 2020
Assets:	Homebuilding		Financial Services	Multifamily	Lennar Other	Total
Cash and cash equivalents	$	784,950	246,712	15,790	5,030	1,052,482
Restricted cash	8,666		13,894	—	—	22,560
Receivables, net (1)	311,817		281,941	80,319	—	674,077
Inventories	18,643,480		—	357,051	—	19,000,531
Loans held-for-sale (2)	—		1,170,696	—	—	1,170,696
Loans held-for-investment, net	—		70,763	—	—	70,763
Investments held-to-maturity	—		183,945	—	—	183,945
Investments available-for-sale (3)	—		7,922	—	53,402	61,324
Investments in unconsolidated entities	946,716		—	589,646	406,179	1,942,541
Goodwill	3,442,359		215,516	—	—	3,657,875
Other assets (4)	1,061,852		184,175	71,097	19,781	1,336,905
	$	25,199,840	2,375,564	1,113,903	484,392	29,173,699
Liabilities:
Notes and other debts payable, net	$	8,115,498	990,152	—	15,178	9,120,828
Other liabilities (5)	3,279,597		368,571	201,992	9,334	3,859,494
	$	11,395,095	1,358,723	201,992	24,512	12,980,322



(In thousands)	November 30, 2019
Assets:	Homebuilding		Financial Services	Multifamily	Lennar Other	Total
Cash and cash equivalents	$	1,200,832	234,113	8,711	2,340	1,445,996
Restricted cash	9,698		12,022	—	975	22,695
Receivables, net (1)	329,124		500,847	76,906	—	906,877
Inventories	17,776,507		—	315,107	—	18,091,614
Loans held-for-sale (2)	—		1,644,939	—	—	1,644,939
Loans held-for-investment, net	—		73,867	—	—	73,867
Investments held-to-maturity	—		190,289	—	54,117	244,406
Investments available-for-sale (3)	—		3,732	48,206	—	51,938
Investments in unconsolidated entities	1,009,035		—	561,190	403,688	1,973,913
Goodwill	3,442,359		215,516	—	—	3,657,875
Other assets (4)	1,021,684		130,699	58,711	34,297	1,245,391
	$	24,789,239	3,006,024	1,068,831	495,417	29,359,511
Liabilities:
Notes and other debts payable, net	$	7,776,638	1,745,755	36,125	15,178	9,573,696
Other liabilities (5)	3,230,400		310,695	196,030	14,860	3,751,985
	$	11,007,038	2,056,450	232,155	30,038	13,325,681


(1)	Receivables, net for Financial Services primarily related to loans sold to investors for which the Company had not yet been paid as of February 29, 2020 and November 30, 2019, respectively.


(2)	Loans held-for-sale related to unsold residential and commercial loans carried at fair value.


(3)	Investments available-for-sale are carried at fair value with changes in fair value recorded as a component of accumulated other comprehensive income (loss) on the condensed consolidated balance sheet.

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)


(4)	As of February 29, 2020 and November 30, 2019, Financial Services other assets included mortgage loan commitments carried at fair value of $31.2 million and $16.3 million, respectively, and mortgage servicing rights carried at fair value of $12.6 million and $24.7 million, respectively.

(5)

As of February 29, 2020 and November 30, 2019, Financial Services other liabilities included $62.0 million and $60.7 million, respectively, of certain of the Company’s self-insurance reserves related to construction defects, general liability and workers’ compensation. In addition, as of February 29, 2020 and November 30, 2019, Financial Services other liabilities also included forward contracts carried at fair value of $13.2 million and $3.9 million, respectively.

Financial information relating to the Company’s segments was as follows:



	Three Months Ended February 29, 2020
(In thousands)	Homebuilding		Financial Services	Multifamily	Lennar Other	Corporate and unallocated		Total
Revenues	$	4,172,116	198,661	132,617	1,943	—		4,505,337
Operating earnings	460,398		47,317	1,785	899	—		510,399
Corporate general and administrative expenses	—		—	—	—	86,847		86,847
Earnings before income taxes	460,398		47,317	1,785	899	(86,847	)	423,552

	Three Months Ended February 28, 2019
Revenues	$	3,623,721	143,311	97,394	3,656	—		3,868,082
Operating earnings	369,595		18,972	6,797	3,103	—		398,467
Corporate general and administrative expenses	—		—	—	—	79,343		79,343
Earnings before income taxes	369,595		18,972	6,797	3,103	(79,343	)	319,124

Homebuilding Segments

Information about homebuilding activities in states which are not economically similar to other states in the same geographic area is grouped under "Homebuilding Other," which is not considered a reportable segment.

Evaluation of segment performance is based primarily on operating earnings (loss) before income taxes. Operations of the Company’s Homebuilding segments primarily include the construction and sale of single-family attached and detached homes as well as the purchase, development and sale of residential land directly and through the Company’s unconsolidated entities. Operating earnings (loss) for the Homebuilding segments consist of revenues generated from the sales of homes and land, other revenues from management fees and forfeited deposits, equity in earnings (loss) from unconsolidated entities and other income (expense), net, less the cost of homes sold and land sold, and selling, general and administrative expenses incurred by the segment.

The Company’s reportable Homebuilding segments and all other homebuilding operations not required to be reported separately have homebuilding divisions located in:

East: Florida, New Jersey, North Carolina, Pennsylvania and South Carolina

Central: Georgia, Illinois, Indiana, Maryland, Minnesota and Virginia

Texas: Texas

West: Arizona, California, Colorado, Nevada, Oregon, Utah and Washington

Other: Urban divisions and other homebuilding related investments primarily in California, including FivePoint Holdings, LLC ("FivePoint")

The assets related to the Company’s homebuilding segments were as follows:



(In thousands)
Assets:	East		Central	Texas	West	Other	Corporate and Unallocated	Total Homebuilding
Balance at February 29, 2020	$	6,867,299	2,779,966	2,388,579	11,083,548	1,141,924	938,524	25,199,840
Balance at November 30, 2019	$	6,708,586	2,732,872	2,246,893	10,663,666	1,173,163	1,264,059	24,789,239

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

Financial information relating to the Company’s homebuilding segments was as follows:



	Three Months Ended February 29, 2020
(In thousands)	East		Central	Texas	West	Other		Total Homebuilding
Revenues	$	1,406,866	534,976	473,228	1,748,769	8,277		4,172,116
Operating earnings (loss)	175,005		29,472	53,073	224,907	(22,059	)	460,398

	Three Months Ended February 28, 2019
Revenues	$	1,226,814	435,067	418,517	1,540,896	2,427		3,623,721
Operating earnings (loss)	135,383		30,926	32,278	190,661	(19,653	)	369,595

Financial Services

Operations of the Financial Services segment include primarily mortgage financing, title and closing services primarily for buyers of the Company’s homes. It also includes originating and selling into securitizations commercial mortgage loans through its ~~RMF business.~~LMF Commercial business, formerly Rialto Mortgage Finance ("RMF"). The Financial Services segment sells substantially all of the loans it originates within a short period of time in the secondary mortgage market, the majority of which are sold on a servicing released, non-recourse basis. After the loans are sold, the Company retains potential liability for possible claims by purchasers that it breached certain limited industry-standard representations and warranties in the loan sale agreements. Financial Services’ operating earnings consist of revenues generated primarily from mortgage financing, title and closing services, and property and casualty insurance, less the cost of such services and certain selling, general and administrative expenses incurred by the segment. The Financial Services segment operates generally in the same states as the Company’s homebuilding ~~operations as well as in other states.~~operations.

~~Lennar Corporation~~At February 29, 2020, the Financial Services warehouse facilities were all 364-day repurchase facilities and ~~Subsidiaries~~

~~Notes~~used to ~~Condensed Consolidated Financial Statements (unaudited) (Continued)~~

Operations of the Multifamily segment include revenues generated from the sales of land, revenue from construction activities, and management and promote fees generated from joint ventures and equity in earnings (loss) from unconsolidated entities and other gains (which includes sales of investments), less the cost of sales of land sold, expenses related to construction activities and general and administrative expenses.

~~Operations of the Lennar Other segment include operating earnings (loss) consisting of revenues generated primarily from the Company's share of carried interests in the Rialto~~ fund investments retained after the sale of Rialto's asset and investment management platform, along with equity in earnings (loss) from the Rialto fund investments and strategic technology investments, and other income (expense), net from the remaining assets related to the Company's former Rialto segment.

~~Each reportable segment follows the same accounting policies described in Note 1 – "Summary of Significant Accounting Policies" to the consolidated financial statements in the Company’s Form 10-K~~residential mortgages or commercial mortgages for the year ended November 30, 2018, except that as a result of the adoption of ASC 606 as of December 1, 2018, the Company updated its revenue recognition policies as noted in Note 1 of the Notes to the Condensed Consolidated Financial Statements. The Company's operational results of each segment are not necessarily indicative of the results that would have occurred had the segment been an independent, stand-alone entity during the periods presented.

~~Financial information relating to the Company’s operations was~~LMF Commercial as follows:

(In thousands) August 31,
2019 November 30,
2018
Assets:
Homebuilding East $ 6,996,012
7,183,758
Homebuilding Central 2,866,868
2,522,799
Homebuilding Texas 2,428,952
2,311,760
Homebuilding West 11,003,703
10,291,385
Homebuilding Other 1,202,051
1,013,367
Financial Services 2,329,786
2,778,910
Multifamily 1,020,842
874,219
Lennar Other 552,968
588,959
Corporate and unallocated 1,058,265
1,001,024
Total assets $ 29,459,447
28,566,181
Homebuilding goodwill $ 3,442,359
3,442,359
Financial Services goodwill (1) $ 215,516
237,688



(In thousands)	Maximum Aggregate Commitment
Residential facilities maturing:
March 2020 (1)	$	100,000
May 2020	300,000
June 2020	300,000
October 2020	500,000
Total - Residential facilities	$	1,200,000
LMF Commercial facilities maturing
November 2020	$	200,000
December 2020	650,000
December 2020 (two - one year extensions) (2)	50,000
Total - LMF Commercial facilities	$	900,000
Total	$	2,100,000


(1)	~~Decrease in goodwill related~~Subsequent to February 2020, the ~~Financial Services' segment sale of substantially all of its retail mortgage and its real estate brokerage business.~~

~~Lennar Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)~~

Three Months Ended Nine Months Ended
August 31, August 31,
(In thousands) 2019 2018 2019 2018
Revenues:
Homebuilding East $ 1,843,670
1,701,622
4,807,825
4,181,328
Homebuilding Central 724,753
670,908
1,773,605
1,562,000
Homebuilding Texas 713,376
729,150
1,825,105
1,786,015
Homebuilding West 2,063,323
2,174,564
5,747,243
5,447,133
Homebuilding Other 93,876
9,498
104,540
35,356
Financial Services (1) 224,502
258,208
572,029
704,004
Multifamily 183,958
101,064
428,764
312,013
Lennar Other 9,600
27,555
28,919
84,572
Total revenues (2) $ 5,857,058
5,672,569
15,288,030
14,112,421
Operating earnings (loss) (3):
Homebuilding East $ 256,715
199,205
602,562
454,427
Homebuilding Central 79,209
69,018
165,479
103,192
Homebuilding Texas 78,298
70,742
185,950
122,407
Homebuilding West 259,424
292,050
722,989
656,074
Homebuilding Other (4) (14,664 ) (22,261 ) (66,614 ) 111,724
Total Homebuilding operating earnings 658,982
608,754
1,610,366
1,447,824
Financial Services 74,698
60,515
149,887
142,151
Multifamily 10,225
(3,853 ) 12,700
9,734
Lennar Other 15,793
8,840
20,724
15,580
Corporate and unallocated (5) (92,615 ) (108,338 ) (248,071 ) (389,133 )
Earnings before income taxes $ 667,083
565,918
1,545,606
1,226,156


~~(1)~~	~~Financial Services revenues are lower period over period primarily due~~maturity date was extended to ~~the loss of revenues as a result of the sales of substantially all of the segment's retail mortgage business and the segment's retail agency business and title insurance underwriter.~~March 2021.

(2)

~~Total revenues~~LMF Commercial uses this warehouse repurchase facility to finance the origination of floating rate accrual loans, which are reported as accrual loans within loans held-for-investment, net. There were ~~net~~borrowings under this facility of sales incentives of $330.2 million ($24,400 per home delivered) and $890.7 million ($25,400 per home delivered) for the three and nine months ended August 31, 2019, respectively, compared to $289.0 million ($22,900 per home delivered) and $717.0 million ($22,800 per home delivered) for the three and nine months ended August 31, 2018, respectively.


~~(3)~~	~~All Homebuilding segments were impacted by purchase accounting adjustments that totaled $84.2 million and $376.0 million for the three and nine months ended August 31, 2018, respectively.~~

~~(4)~~

Homebuilding Other operating loss during the nine months ended August 31, 2019 included a one-time loss of $48.9 million from the consolidation of a previously unconsolidated entity. Homebuilding Other operating earnings during the nine months ended August 31, 2018 included $164.9 million related to a gain on the sale of an 80% interest in one of Homebuilding's strategic joint ventures, Treasure Island Holdings.


~~(5)~~	Corporate and unallocated includes corporate, general and administrative expenses, and for the three and nine months ended August 31, 2018, $12.0 million and $140.1 million, respectively, of acquisition and integration costs related to the CalAtlantic acquisition.

~~Lennar Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)~~


~~(4)~~	~~Homebuilding Investments in Unconsolidated Entities~~

~~Summarized condensed financial information on a combined 100% basis related to Homebuilding’s unconsolidated entities that are accounted for by the equity method was as follows:~~

~~Statements of Operations~~

Three Months Ended Nine Months Ended
August 31, August 31,
(In thousands) 2019 2018 2019 2018
Revenues $ 74,939
153,136
231,269
322,277
Costs and expenses 99,611
195,525
313,725
451,627
Other income (1) 513
13,903
76,578
119,095
Net loss of unconsolidated entities $ (24,159 ) (28,486 ) (5,878 ) (10,255 )
Homebuilding equity in loss from unconsolidated entities $ (10,459 ) (16,739 ) (4,601 ) (43,537 )

~~(1)~~

During the nine months ended August 31, 2019, other income was primarily attributable to a $64.9 million gain on the settlement of contingent consideration recorded by one Homebuilding unconsolidated entity, of which the Company's pro-rata share was $25.9 million. During the nine months ended August 31, 2018, other income was primarily due to FivePoint recording income resulting from the Tax Cuts and Jobs Act of 2017’s reduction in its corporate tax rate to reduce its liability pursuant to its tax receivable agreement (“TRA Liability”) with its non-controlling interests. However, the Company has a 70% interest in the FivePoint TRA Liability. Therefore, the Company did not include in Homebuilding’s equity in earnings (loss) from unconsolidated entities its pro-rata share of earnings related to the Company’s portion of the TRA Liability. As a result, the Company’s unconsolidated entities have net earnings, but the Company has an equity in loss from unconsolidated entities.

For the three and nine months ended August 31, 2019, Homebuilding equity in loss from unconsolidated entities was primarily attributable to the Company's share of net operating losses from its unconsolidated entities.

For the three and nine months ended August 31, 2018, Homebuilding equity in loss from unconsolidated entities was primarily attributable to the Company's share of valuation adjustments related to assets of Homebuilding's unconsolidated entities and the Company's share of net operating losses from its unconsolidated entities excluding other income.

~~Balance Sheets~~

(In thousands) August 31,
2019 November 30,
2018
Assets:
Cash and cash equivalents $ 536,251
781,833
Inventories 4,262,446
4,291,470
Other assets 1,012,391
1,045,274
$ 5,811,088
6,118,577
Liabilities and equity:
Accounts payable and other liabilities $ 800,962
874,355
Debt (1) 852,090
1,202,556
Equity 4,158,036
4,041,666
$ 5,811,088
6,118,577
Homebuilding investments in unconsolidated entities (2) $ 1,002,936
870,201


~~(1)~~	~~Debt presented above is net of debt issuance costs of $9.7 million and $12.4~~$11.4 million as of ~~August 31, 2019 and November 30, 2018, respectively. The decrease in debt was primarily related to the Company's consolidation of a previously unconsolidated entity in the second quarter of 2019.~~February 29, 2020.


~~(2)~~	Homebuilding investments in unconsolidated entities as of November 30, 2018, does not include $62.0 million of the negative investment balance for one unconsolidated entity as it was reclassed to other liabilities.

As of August 31, 2019 and November 30, 2018, the Company’s recorded investments in Homebuilding unconsolidated entities were $1.0 billion and $870.2 million, respectively, while the underlying equity in Homebuilding unconsolidated entities partners’ net assets as of August 31, 2019 and November 30, 2018 was $1.3 billion and $1.2 billion, respectively. The basis difference was primarily as a result of the Company contributing its investment in 3 ~~strategic joint ventures with a higher fair value than book value for an investment in the FivePoint entity and deferring equity in earnings~~ on land sales to the Company. Included in the Company's recorded investments in Homebuilding unconsolidated entities is the Company's 40% ownership of FivePoint. As of August 31, 2019 and November 30, 2018, the carrying amount of the Company's investment was $380.5 million and $342.7 million, respectively.

~~Lennar Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)~~

During the nine months ended August 31, 2018, the Company sold 80% of a strategic joint venture to a third-party resulting in a gain of $164.9 million recorded in Homebuilding other income, net within the accompanying Condensed Consolidated Statement of Operations and Comprehensive Income (Loss).

The Homebuilding unconsolidated entities in which the Company has investments usually finance their activities with a combination of partner equity and debt financing. In some instances, the Company and its partners have guaranteed debt of certain unconsolidated entities.

~~The total debt of the Homebuilding unconsolidated entities in which the Company has investments, including Lennar's maximum recourse exposure, were as follows:~~

(Dollars in thousands) August 31,
2019 November 30,
2018
Non-recourse bank debt and other debt (partner’s share of several recourse) $ 49,995
48,313
Non-recourse debt with completion guarantees 154,774
239,568
Non-recourse debt without completion guarantees 647,010
861,371
Non-recourse debt to the Company 851,779
1,149,252
The Company’s maximum recourse exposure (1) 10,036
65,707
Debt issuance costs (9,725 ) (12,403 )
Total debt (1) $ 852,090
1,202,556
The Company’s maximum recourse exposure as a % of total JV debt 1 % 5 %


~~(1)~~	As of August 31, 2019 and November 30, 2018, the Company's maximum recourse exposure was primarily related to the Company providing repayment guarantees on 2 and 4 unconsolidated entities' debt, respectively. The decrease in maximum recourse exposure and total debt was primarily related to the Company's consolidation of a previously unconsolidated entity in the second quarter of 2019.

In most instances in which the Company has guaranteed debt of a Homebuilding unconsolidated entity, the Company’s partners have also guaranteed that debt and are required to contribute their share of the guarantee payments. In a repayment guarantee, the Company and its venture partners guarantee repayment of a portion or all of the debt in the event of default before the lender would have to exercise its rights against the collateral.

In connection with many of the loans to Homebuilding unconsolidated entities, the Company and its joint venture partners (or entities related to them) have been required to give guarantees of completion to the lenders. Those completion guarantees may require that the guarantors complete the construction of the improvements for which the financing was obtained. If the construction is to be done in phases, the guarantee generally is limited to completing only the phases as to which construction has already commenced and for which loan proceeds were used.

If the Company is required to make a payment under any guarantee, the payment would constitute a capital contribution or loan to the Homebuilding unconsolidated entity and increase the Company’s investment in the unconsolidated entity and its share of any funds the unconsolidated entity distributes.

As of both August 31, 2019 and November 30, 2018, the fair values of the repayment guarantees, maintenance guarantees, and completion guarantees were not material. The Company believes that as of August 31, 2019, in the event it becomes legally obligated to perform under a guarantee of the obligation of a Homebuilding unconsolidated entity due to a triggering event under a guarantee, the collateral would be sufficient to repay at least a significant portion of the obligation or the Company and its partners would contribute additional capital into the venture. In certain instances, the Company has placed performance letters of credit and surety bonds with municipalities with regard to obligations of its joint ventures (see Note 12 of the Notes to the Condensed Consolidated Financial Statements).

~~Lennar Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)~~


~~(5)~~	~~Stockholders' Equity~~

The following tables reflect the changes in equity attributable to both Lennar Corporation and the noncontrolling interests of its consolidated subsidiaries in which it has less than a 100% ownership interest for the three and nine months ended August 31, 2019 and 2018:

Three months ended August 31, 2019

(In thousands) Total
Equity Class A
Common Stock Class B
Common Stock Additional
Paid - in Capital Treasury
Stock Accumulated Other Comprehensive Income Retained
Earnings Noncontrolling
Interests
Balance at May 31, 2019 $ 15,246,535
29,503
3,944
8,529,828
(537,106 ) 227
7,132,908
87,231
Net earnings (including net loss attributable to noncontrolling interests) 512,643
—
—
—
—
—
513,366
(723 )
Employee stock and directors plans (22,359 ) 206
—
(400 ) (22,165 ) —
—
—
Purchases of treasury stock (295,930 ) —
—
—
(295,930 ) —
—
—
Amortization of restricted stock 34,048
—
—
34,048
—
—
—
—
Cash dividends (12,899 ) —
—
—
—
—
—
(12,899 ) —
Receipts related to noncontrolling interests 18,458
—
—
—
—
—
—
18,458
Payments related to noncontrolling interests (12,372 ) —
—
—
—
—
—
(12,372 )
Non cash activity related to noncontrolling interests (2,357 ) —
—
(3,772 ) —
—
—
1,415
Total other comprehensive income, net of tax 180
—
—
—
—
180
—
—
Balance at August 31, 2019 $ 15,465,947
29,709
3,944
8,559,704
(855,201 ) 407
7,633,375
94,009

Nine months ended August 31, 2019
(In thousands)
Total
Equity
Class A
Common Stock Class B
Common Stock Additional
Paid - in Capital
Treasury
Stock
Accumulated Other Comprehensive Income (Loss)
Retained
Earnings

Noncontrolling
Interests
Balance at November 30, 2018 $ 14,682,957
29,499
3,944
8,496,677
(435,869 ) (366 ) 6,487,650
101,422
Net earnings (including net loss attributable to noncontrolling interests) 1,170,936
—
—
—
—
—
1,174,748
(3,812 )
Employee stock and directors plans (23,050 ) 210
—
1,361
(24,621 ) —
—
—
Purchases of treasury stock (394,711 ) —
—
—
(394,711 ) —
—
—
Amortization of restricted stock 65,438
—
—
65,438
—
—
—
—
Cash dividends (38,776 ) —
—
—
—
—
(38,776 ) —
Receipts related to noncontrolling interests 27,395
—
—
—
—
—
—
27,395
Payments related to noncontrolling interests (35,689 ) —
—
—
—
—
—
(35,689 )
Non-cash consolidations, net 8,894
—
—
—
—
—
—
8,894
Cumulative-effect of accounting change (see Note 1 to the Notes to the Condensed Consolidated Financial Statements) 9,753
—
—
—
—
—
9,753
—
Non-cash activity related to noncontrolling interests (7,973 ) —
—
(3,772 ) —
—
—
(4,201 )
Total other comprehensive income, net of tax 773
—
—
—
—
773
—
—
Balance at August 31, 2019 $ 15,465,947
29,709
3,944
8,559,704
(855,201 ) 407
7,633,375
94,009

~~Lennar Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)~~

Three months ended August 31, 2018

(In thousands) Total
Equity Class A
Common Stock Class B
Common Stock Additional
Paid - in Capital Treasury
Stock Accumulated Other Comprehensive Loss Retained
Earnings Noncontrolling
Interests
Balance at May 31, 2018 $ 13,698,870
29,373
3,944
8,458,211
(164,552 ) (339 ) 5,264,674
107,559
Net earnings (including net earnings attributable to noncontrolling interests) 467,620
—
—
—
—
—
453,211
14,409
Employee stock and directors plans (20,943 ) 125
—
(95 ) (20,969 ) —
(4 ) —
Amortization of restricted stock 21,918
—
—
21,918
—
—
—
—
Cash dividends (13,205 ) —
—
—
—
—
(13,205 ) —
Receipts related to noncontrolling interests 126
—
—
—
—
—
—
126
Payments related to noncontrolling interests (38,215 ) —
—
—
—
—
—
(38,215 )
Non-cash activity to noncontrolling interests 285
—
—
—
—
—
—
285
Total other comprehensive loss, net of tax (276 ) —
—
—
—
(276 ) —
—
Balance at August 31, 2018 $ 14,116,180
29,498
3,944
8,480,034
(185,521 ) (615 ) 5,704,676
84,164

Nine months ended August 31, 2018
(In thousands)
Total
Equity
Class A
Common Stock Class B
Common Stock Additional
Paid - in Capital
Treasury
Stock
Accumulated Other Comprehensive Income (Loss)
Retained
Earnings

Noncontrolling
Interests
Balance at November 30, 2017 $ 7,986,132
20,543
3,769
3,142,013
(136,020 ) 1,034
4,840,978
113,815
Net earnings (including net earnings attributable to noncontrolling interests) 919,286
—
—
—
—
—
899,683
19,603
Employee stock and directors plans (45,148 ) 182
—
4,171
(49,501 ) —
—
—
Stock issuance in connection with CalAtlantic acquisition 5,070,006
8,408
168
5,061,430
—
—
—
—
Conversion of convertible senior notes to Class A common stock 217,154
365
7
216,782
—
—
—
—
Amortization of restricted stock 55,638
—
—
55,638
—
—
—
—
Cash dividends (35,985 ) —
—
—
—
—
(35,985 ) —
Receipts related to noncontrolling interests 4,008
—
—
—
—
—
—
4,008
Payments related to noncontrolling interests (68,627 ) —
—
—
—
—
—
(68,627 )
Non-cash activity to noncontrolling interests 15,365
—
—
—
—
—
—
15,365
Total other comprehensive loss, net of tax (1,649 ) —
—
—
—
(1,649 ) —
—
Balance at August 31, 2018 $ 14,116,180
29,498
3,944
8,480,034
(185,521 ) (615 ) 5,704,676
84,164

On October 3, 2019, the Company's Board of Directors declared a quarterly cash dividend of $0.04 per share on both its Class A and Class B common stock, payable on November 1, 2019 to holders of record at the close of business on October 18, 2019. On July 25, 2019, the Company paid cash dividends of $0.04 per share on both its Class A and Class B common stock to holders of record at the close of business on July 11, 2019, as declared by its Board of Directors on June 26, 2019. The Company approved and paid cash dividends of $0.04 per share on both its Class A and Class B common stock in each quarter for the year ended November 30, 2018.

In January 2019, the Company's Board of Directors authorized the repurchase of up to the lesser of $1 billion in value, or 25 million in shares of the Company's outstanding Class A and Class B common stock. The repurchase has no expiration date. During the three months ended August 31, 2019, under this repurchase program, the Company repurchased 6.1 million shares of its Class A common stock for approximately $295.9 million at an average share price of $48.41. During the nine months ended August 31, 2019, under this repurchase program, the Company repurchased 8.1 million shares of its Class A common stock for approximately $394.7 million at an average share price of $48.65.

~~Lennar Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)~~


~~(6)~~	~~Income Taxes~~

~~The provision for income taxes and effective tax rate were as follows:~~

Three Months Ended Nine Months Ended
August 31, August 31,
(Dollars in thousands) 2019 2018 2019 2018
Provision for income taxes
$154,440
98,298
374,670
306,870
Effective tax rate (1) 23.1 % 17.8 % 24.2 % 25.4 %

~~(1)~~

For the three and nine months ended August 31, 2019, the effective tax rate included state income tax expense and non-deductible executive compensation, partially offset by energy credits. For the three months ended August 31, 2018, the effective tax rate included tax benefits for tax accounting method changes implemented during the third quarter, energy credits and the domestic production activities deduction. For the nine months ended August 31, 2018, the effective tax rate included a non-cash one-time write down of the deferred tax assets due to the enactment of the Tax Cuts and Jobs Act, offset primarily by tax accounting method changes, energy tax credits and tax benefits for the domestic production activities deduction. Excluding the one-time non-cash deferred tax asset write down of $68.6 million recorded in the first quarter of 2018 due to the tax reform bill and the $34.1 million benefit recorded in the third quarter of 2018, primarily related to tax accounting method changes and energy credits, the tax rate for the nine months ended August 31, 2018 would have been 22.6%.

~~As of August 31, 2019 and November 30, 2018, the Company's deferred tax assets, net, included in the condensed consolidated balance sheets were $370.0 million and $515.5 million, respectively.~~

~~As of both August 31, 2019 and November 30, 2018, the Company had $14.7 million of gross unrecognized tax benefits.~~

At August 31, 2019, the Company had $55.0 million accrued for interest and penalties, which increased $2.1 million during the nine months ended August 31, 2019. At November 30, 2018, the Company had $52.9 million accrued for interest and penalties.


~~(7)~~	~~Earnings Per Share~~

Basic earnings per share is computed by dividing net earnings attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company.

All outstanding nonvested shares that contain non-forfeitable rights to dividends or dividend equivalents that participate in undistributed earnings with common stock are considered participating securities and are included in computing earnings per share pursuant to the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating securities according to dividends or dividend equivalents and participation rights in undistributed earnings. The Company’s restricted common stock ("nonvested shares") is considered participating securities.

~~Lennar Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)~~

~~Basic and diluted earnings per share were calculated as follows:~~

Three Months Ended Nine Months Ended
August 31, August 31,
(In thousands, except per share amounts) 2019 2018 2019 2018
Numerator:
Net earnings attributable to Lennar $ 513,366
453,211
1,174,748
899,683
Less: distributed earnings allocated to nonvested shares 119
105
312
319
Less: undistributed earnings allocated to nonvested shares 4,401
3,633
9,271
7,674
Numerator for basic earnings per share 508,846
449,473
1,165,165
891,690
Less: net amount attributable to noncontrolling interests in Rialto's Carried Interest Incentive Plan (1) 1,498
347
4,655
796
Plus: interest on convertible senior notes —
—
—
80
Plus: undistributed earnings allocated to convertible shares —
—
—
6
Numerator for diluted earnings per share $ 507,348
449,126
1,160,510
890,980
Denominator:
Denominator for basic earnings per share - weighted average common shares outstanding 318,103
327,214
319,924
302,046
Effect of dilutive securities:
Shared based payments 1
23
3
57
Convertible senior notes —
—
—
732
Denominator for diluted earnings per share - weighted average common shares outstanding 318,104
327,237
319,927
302,835
Basic earnings per share $ 1.60
1.37
3.64
2.95
Diluted earnings per share $ 1.59
1.37
3.63
2.94


~~(1)~~	The amounts presented relate to Rialto's Carried Interest Incentive Plan and represent the difference between the advanced tax distributions received from the Rialto funds included in the Lennar Other segment and the amount Lennar is assumed to own.

~~For both the three and nine months ended August 31, 2019 and 2018, there were 0 options to purchase shares of common stock that were outstanding and anti-dilutive.~~

~~Lennar Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)~~


~~(8)~~	~~Financial Services Segment~~

~~The assets and liabilities related to the Financial Services segment were as follows:~~

(In thousands) August 31,
2019 November 30,
2018
Assets:
Cash and cash equivalents $ 228,217
188,485
Restricted cash 10,189
17,944
Receivables, net (1) 255,083
731,169
Loans held-for-sale (2) 1,228,592
1,213,889
Loans held-for-investment, net 73,366
70,216
Investments held-to-maturity 193,268
189,472
Investments available-for-sale (3) 3,597
4,161
Goodwill 215,516
237,688
Other assets (4) 121,958
125,886
$ 2,329,786
2,778,910
Liabilities:
Notes and other debts payable $ 1,156,078
1,558,702
Other liabilities (5) 299,378
309,500
$ 1,455,456
1,868,202


~~(1)~~	~~Receivables, net primarily related to loans sold to investors for which the Company had not yet been paid as of August 31, 2019 and November 30, 2018, respectively.~~


~~(2)~~	~~Loans held-for-sale related to unsold residential and commercial loans carried at fair value.~~


~~(3)~~	Investments available-for-sale are carried at fair value with changes in fair value recorded as a component of accumulated other comprehensive income (loss) on the condensed consolidated balance sheet.


~~(4)~~	As of August 31, 2019 and November 30, 2018, other assets included mortgage loan commitments carried at fair value of $25.9 million and $16.4 million, respectively, and mortgage servicing rights carried at fair value of $23.1 million and $37.2 million, respectively.

~~(5)~~

As of August 31, 2019 and November 30, 2018, other liabilities included $63.4 million and $60.3 million, respectively, of certain of the Company’s self-insurance reserves related to construction defects, general liability and workers’ compensation. In addition, as of August 31, 2019 and November 30, 2018, other liabilities also included forward contracts carried at fair value of $9.6 million and $10.4 million, respectively.

In connection with the sale of the majority of its retail title agency business and title insurance underwriter in the first quarter of 2019, the Company provided seller financing and received a substantial minority equity ownership stake in the buyer. The combination of both the equity and debt components of this transaction caused the transaction not to meet the accounting requirements for sale treatment and, therefore, the Company is required to consolidate the buyer’s results at this time.

At ~~August 31, 2019, the Financial Services warehouse facilities used to fund residential mortgages were as follows:~~

(In thousands) Maximum Aggregate Commitment
364-day warehouse repurchase facility that matures October 2019 (1) $ 500,000
364-day warehouse repurchase facility that matures November 2019 (2) 300,000
364-day warehouse repurchase facility that matures March 2020 (3) 300,000
364-day warehouse repurchase facility that matures June 2020 500,000
Total $ 1,600,000


~~(1)~~	~~Maximum aggregate commitment includes an uncommitted amount of $400 million.~~


~~(2)~~	~~Maximum aggregate commitment includes an uncommitted amount of $300 million.~~


~~(3)~~	~~Maximum aggregate commitment includes an uncommitted amount of $300 million.~~

The Financial Services segment uses ~~these~~the residential facilities to finance its residential lending activities until the mortgage loans are sold to investors and the proceeds are collected. The facilities are non-recourse to the Company and are expected to be renewed or replaced with other facilities when they mature. The LMF Commercial facilities finance LMF Commercial loan originations and securitization activities and were secured by a 75% interest in the originated commercial loans financed.



(In thousands)	February 29, 2020		November 30, 2019
Borrowings under the residential facilities	$	674,848	$	1,374,063
Collateral under the residential facilities	698,369		1,423,650
Borrowings under the LMF Commercial facilities	161,546		216,870

If the facilities are not renewed or replaced, the borrowings under the lines of credit will be ~~paid off~~repaid by selling the mortgage loans held-for-sale to investors and

~~Lennar Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)~~

by collecting receivables on loans sold but not yet paid for. Without the facilities, the Financial Services segment would have to use cash from operations and other funding sources to finance its lending activities.

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

Substantially all of the residential loans the Financial Services segment originates are sold within a short period in the secondary mortgage market on a servicing released, non-recourse basis. After the loans are sold, the Company retains potential liability for possible claims by purchasers that it breached certain limited industry-standard representations and warranties in the loan sale agreements. Purchasers sometimes try to defray losses by purporting to have found inaccuracies related to sellers’ representations and warranties in particular loan sale agreements. Mortgage investors could seek to have the Company buy back mortgage loans or compensate them for losses incurred on mortgage loans that the Company has sold based on claims that the Company breached its limited representations or warranties. The Company’s mortgage operations have established accruals for possible losses associated with mortgage loans previously originated and sold to investors. The Company establishes accruals for such possible losses based upon, among other things, an analysis of repurchase requests received, an estimate of potential repurchase claims not yet received and actual past repurchases and losses through the disposition of affected loans as well as previous settlements. While the Company believes that it has adequately reserved for known losses and projected repurchase requests, given the volatility in the residential mortgage industry and the uncertainty regarding the ultimate resolution of these claims, if either actual repurchases or the losses incurred resolving those repurchases exceed the Company’s expectations, additional recourse expense may be incurred. Loan origination liabilities are included in Financial Services’ liabilities in the Company's condensed consolidated balance sheets.

The activity in the Company’s loan origination liabilities was as follows:


	Three Months Ended					Nine Months Ended				Three Months Ended
	August 31,					August 31,				February 29,			February 28,
(In thousands)	2019			2018		2019		2018		2020			2019
Loan origination liabilities, beginning of period	$	7,424		28,016		48,584		22,543		$	9,364		48,584
Provision for losses	1,006			1,059		2,593		2,696		776			673
Origination liabilities assumed related to CalAtlantic acquisition	—			20,500		—		24,459
Payments/settlements	(109		)	(124	)	(42,856	)	(247	)	(144		)	(42,560	)
Loan origination liabilities, end of period	$	8,321		49,451		8,321		49,451		$	9,996		6,697

~~RMF~~LMF Commercial - loans held-for-sale

During the ~~nine~~three months ended ~~August 31, 2019, RMF~~February 29, 2020, LMF Commercial originated commercial loans with a total principal balance of $984.5 million, of which $969.2 million were recorded as loans held-for-sale, $15.3 million were recorded as loans held-for-investments, and sold $848.3 million of commercial loans into 7 separate securitizations. As of August 31, 2019 and November 30, 2018, there were 0 unsettled transactions.

~~During the nine months ended August 31, 2018, RMF originated commercial loans with a total principal balance of $997.5~~$412.3 million, all of which were recorded as loans held-for-sale and sold ~~$1.1 billion~~$314.4 million of commercial loans into 122 separate securitizations. As of February 29, 2020 there were 0 unsettled transactions.

~~At August 31,~~During the three months ended February 28, 2019, ~~the RMF warehouse facilities were as follows:~~

(In thousands) Maximum Aggregate Commitment
364-day warehouse repurchase facility that matures November 2019 $ 200,000
364-day warehouse repurchase facility that matures December 2019 250,000
364-day warehouse repurchase facility that matures December 2019 200,000
364-day warehouse repurchase facility that matures December 2019 200,000
Total - Loans origination and securitization business $ 850,000
Warehouse repurchase facility that matures December 2019 (two - one year extensions) (1) 50,000
Total $ 900,000


~~(1)~~	RMF uses this warehouse repurchase facility to finance the origination of floating rate accrual loans, which are reported as accrual loans within loans held-for-investment, net. There were borrowings under this facility of $11.4 million as of August 31, 2019. There were 0 borrowings under this facility as of November 30, 2018.

Borrowings under the facilities that finance RMF's commercial loan originations and securitization activities were $113.0 million and $178.8 million as of August 31, 2019 and November 30, 2018, respectively, and were secured by a 75% interest in theLMF Commercial originated commercial loans ~~financed. The facilities require immediate repayment~~with a total principal balance of ~~the 75% interest in the secured~~$270.1 million, all of which were recorded as loans held-for-sale, and sold $200.5 million of commercial loans when the loans are sold in a securitization and the proceeds are collected. These warehouse repurchase facilities are non-recourse to the Company and are expected to be renewed or replaced with other facilities when

~~Lennar Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)~~

they mature. If the facilities are not renewed or replaced, the borrowings under the lines of credit will be paid off by selling the loans held-for-sale to investors. Without the facilities, the Financial Services segment would have to use cash from operations and other funding sources to finance its lending activities.into 2 separate securitizations.

Investments held-to-maturity

At ~~August 31, 2019~~February 29, 2020 and November 30, ~~2018,~~2019, the carrying value of Financial Services' commercial mortgage-backed securities ("CMBS") was ~~$166.7~~$165.3 million and ~~$137.0~~$166.0 million, respectively. These securities were purchased at discounts ranging from 6% to 84% with coupon rates ranging from 2.0% to 5.3%, stated and assumed final distribution dates between October 2027 and December 2028, and stated maturity dates between October 2050 and December 2051. The Financial Services segment reviews changes in estimated cash flows periodically to determine if an other-than-temporary impairment has occurred on its CMBS. Based on the segment’s assessment, 0 impairment charges were recorded during either the three ~~or nine~~ months ended ~~August 31, 2019~~February 29, 2020 or ~~2018.~~February 28, 2019. The Financial Services segment classifies these securities as held-to-maturity based on its intent and ability to hold the securities until maturity. The Company has financing agreements to finance CMBS that have been purchased as investments by the Financial Services segment. At ~~August 31, 2019~~February 29, 2020 and November 30, ~~2018,~~2019, the carrying amount, net of debt issuance costs, of outstanding debt in these agreements was ~~$155.2~~$153.8 million and ~~$123.7~~$154.7 million, respectively and ~~the~~ interest is incurred at a ~~fixed~~ rate of ~~3.2% to 4.1%~~3.4%.

Multifamily


~~(9)~~	~~Multifamily Segment~~

The Company is actively involved, primarily through unconsolidated entities, in the development, construction and property management of multifamily rental properties. The Multifamily segment focuses on developing a geographically diversified portfolio of institutional quality multifamily rental properties in select U.S. markets.

~~The~~Operations of the Multifamily segment include revenues generated from the sales of land, revenue from construction activities, and management and promote fees generated from joint ventures and equity in earnings (loss) from unconsolidated entities and other gains (which includes sales of buildings), less the cost of sales of land sold, expenses related to construction activities and general and administrative expenses.

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

Lennar Other

Lennar Other primarily includes fund interests the Company retained when it sold the Rialto asset and investment management platform, as well as strategic investments in technology companies. Operations of the Lennar Other segment include operating earnings (loss) consisting of revenues generated primarily from the Company's share of carried interests in the Rialto fund investments retained after the sale of Rialto's asset and investment management platform, along with equity in earnings (loss) from the Rialto fund investments and strategic technology investments, and other income (expense), net from the remaining assets ~~and liabilities~~ related to the ~~Multifamily segment were as follows:~~

Company's former Rialto segment.

(In thousands) August 31,
2019 November 30,
2018
Assets:
Cash and cash equivalents $ 16,478
7,832
Receivables (1) 78,016
73,829
Land under development 284,595
277,894
Investments in unconsolidated entities 539,697
481,129
Other assets 102,056
33,535
$ 1,020,842
874,219
Liabilities:
Accounts payable and other liabilities $ 176,914
170,616
Notes payable (2) 36,140
—
$ 213,054
170,616


~~(1)~~(3)	~~Receivables primarily related to general contractor services, net of deferrals and management fee income receivables due from unconsolidated entities.~~Investments in Unconsolidated Entities


~~(2)~~	~~Notes payable are net of debt issuance costs.~~

Homebuilding Unconsolidated Entities

As of February 29, 2020 and November 30, 2019, the Company’s recorded investments in Homebuilding unconsolidated entities were $946.7 million and $1.0 billion, respectively, while the underlying equity in Homebuilding unconsolidated entities partners’ net assets as of both February 29, 2020 and November 30, 2019 was $1.3 billion. The basis difference was primarily as a result of the Company contributing its investment in 3 strategic joint ventures with a higher fair value than book value for an investment in the FivePoint entity and deferring equity in earnings on land sales to the Company. Included in the Company's recorded investments in Homebuilding unconsolidated entities is the Company's 40% ownership of FivePoint. As of February 29, 2020 and November 30, 2019, the carrying amount of the Company's FivePoint investment was $366.8 million and $374.0 million, respectively.

The total debt of the Homebuilding unconsolidated entities in which the Company has investments was $1.1 billion as of both February 29, 2020 and November 30, 2019, of which the Company's maximum recourse exposure was $4.9 million and $10.8 million as of February 29, 2020 and November 30, 2019, respectively. In most instances in which the Company has guaranteed debt of an unconsolidated entity, the Company’s partners have also guaranteed that debt and are required to contribute their share of the guarantee payments. In a repayment guarantee, the Company and its venture partners guarantee repayment of a portion or all of the debt in the event of default before the lender would have to exercise its rights against the collateral.

In connection with many of the loans to Homebuilding unconsolidated entities, the Company and its joint venture partners (or entities related to them) have been required to give guarantees of completion to the lenders. Those completion guarantees may require that the guarantors complete the development or construction of the improvements for which the financing was obtained. If the development or construction is to be done in phases, the guarantee generally is limited to completing only the phases as to which construction has already commenced and for which loan proceeds were used.

As of both February 29, 2020 and November 30, 2019, the fair values of the repayment guarantees, maintenance guarantees, and completion guarantees were not material. The Company believes that as of February 29, 2020, in the event it becomes legally obligated to perform under a guarantee of the obligation of a Homebuilding unconsolidated entity due to a triggering event under a guarantee, the collateral would be sufficient to repay at least a significant portion of the obligation or the Company and its partners would contribute additional capital into the venture. In certain instances, the Company has placed performance letters of credit and surety bonds with municipalities with regard to obligations of its joint ventures (see Note 7 of the Notes to the Condensed Consolidated Financial Statements).

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

Multifamily Unconsolidated Entities

The unconsolidated entities in which the Multifamily segment has investments usually finance their activities with a combination of partner equity and debt financing. In connection with many of the loans to Multifamily unconsolidated entities, the Company (or entities related to them) has been required to give guarantees of completion and cost over-runs to the lenders and partners. Those completion guarantees may require that the guarantors complete the construction of the improvements for which the financing was obtained. Additionally, the Company guarantees the construction costs of the project as construction cost over-runs would be paid by the Company. Generally, these payments would increase the Company's investment in the entities and would increase its share of funds the entities distribute after the achievement of certain thresholds. As of both ~~August 31, 2019~~February 29, 2020 and November 30, ~~2018,~~2019, the fair value of the completion guarantees was immaterial. ~~Additionally, as~~As of ~~August 31, 2019~~February 29, 2020 and November 30, 2018, the Multifamily segment had $1.2 million and $4.6 million, respectively, of letters of credit outstanding primarily for credit enhancements for the bank debt of certain of its unconsolidated entities and deposits on land purchase contracts. These letters of credit are included in the disclosure in Note 12 related to the Company's performance and financial letters of credit. As of August 31, 2019, ~~and November 30, 2018,~~ Multifamily segment's unconsolidated entities had non-recourse debt with completion guarantees of ~~$1.1 billion~~$979.5 million and ~~$1.0 billion,~~$867.3 million, respectively.

In many instances, the Multifamily segment is appointed as the construction, development and property manager for ~~certain of~~ its Multifamily unconsolidated entities and receives fees for performing this function. During the three ~~and nine~~ months ended ~~August 31,~~February 29, 2020 and February 28, 2019, the Multifamily segment recorded fee income, net of deferrals, from its unconsolidated entities

~~Lennar Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)~~

of ~~$14.3~~$13.8 million and $40.7 million, respectively. During the three and nine months ended August 31, 2018, the Multifamily segment recorded fee income, net of deferrals, from its unconsolidated entities of $12.2 million and $36.1$13.1 million, respectively.

The Multifamily segment also provides general contractor services for construction of some of the rental properties owned by unconsolidated entities in which the Company has an investment. During the three ~~and nine~~ months ended ~~August 31,~~February 29, 2020 and February 28, 2019, the Multifamily segment provided general contractor services, net of deferrals, totaling ~~$83.2~~$93.9 million and ~~$264.8~~$82.4 million, respectively, which were partially offset by costs related to those services of ~~$79.9~~$90.2 million and $254.5 million, respectively. During the three and nine months ended August 31, 2018, the Multifamily segment provided general contractor services, net of deferrals, totaling $83.8 million and $262.6 million, respectively, which were partially offset by costs related to those services of $80.5 million and $252.7$79.4 million, respectively.

~~Lennar~~The Multifamily segment includes Multifamily Venture Fund I ~~("LMV~~(the "LMV I") ~~is a~~and Multifamily Venture Fund II LP (the "LMV II"), which are long-term multifamily development investment ~~vehicle~~vehicles involved in the development, construction and property management of class-A multifamily ~~assets with $2.2 billion in equity commitments, including a $504 million co-investment commitment by Lennar comprised~~assets. Details of ~~cash, undeveloped land~~each as of and ~~preacquisition costs. During~~during the ~~nine~~three months ended August 31, 2019, $162.4 million in equity commitments were called, of which the Company contributed its portion of $39.6 million. During the nine months ended August 31, 2019, the Company received $12.3 million of distributions as a return of capital from LMV I. As of August 31, 2019, $2.1 billion of the $2.2 billion in equity commitments had been called, of which the Company had contributed $480.4 million, representing its pro-rata portion of the called equity, resulting in a remaining equity commitment for the Company of $23.6 million. As of August 31, 2019 and November 30, 2018, the carrying value of the Company's investment in LMV I was $397.9 million and $383.4 million, respectively.February 29, 2020 are included below:

In March 2018, the Multifamily segment completed the first closing of a second Multifamily Venture, Lennar Multifamily Venture II LP ("LMV II"), for the development, construction and property management of class-A multifamily assets. In June 2019, the Multifamily segment completed the final closing of LMV II which has approximately $1.3 billion of equity commitments, including a $381 million co-investment commitment by Lennar comprised of cash, undeveloped land and preacquisition costs. During the nine months ended August 31, 2019, $200.8 million in equity commitments were called, of which the Company contributed $54.9 million, which was made up of $132.2 million of inventory and cash contributions, offset by $77.3 million of distributions as a return of capital resulting in a remaining commitment for the Company of $244.9 million. As of August 31, 2019, $452.8 million of the $1.3 billion in equity commitments had been called. As of August 31, 2019 and November 30, 2018, the carrying value of the Company's investment in LMV II was $115.1 million and $63.0 million, respectively. The difference between the Company's net contributions and the carrying value of the Company's investments was related to a basis difference. As of August 31, 2019, LMV II included 13 undeveloped multifamily assets totaling approximately 4,700 apartments with projected project costs of approximately $2.0 billion.



	February 29, 2020
(In thousands)	LMV I		LMV II
Lennar's carrying value of investments	$	365,823	181,479
Equity commitments	2,204,016		1,257,700
Equity commitments called	2,110,545		677,398
Lennar's equity commitments	504,016		381,000
Lennar's equity commitments called	489,655		204,084
Lennar's remaining commitments	14,361		176,916
Distributions to Lennar during the three months ended February 29, 2020	5,646		—

~~Summarized condensed financial information on a combined 100% basis related to Multifamily's investments in unconsolidated entities that are accounted for by the equity method was as follows:~~

~~Balance Sheets~~

(Dollars in thousands) August 31,
2019 November 30,
2018
Assets:
Cash and cash equivalents $ 28,260
61,571
Operating properties and equipment/construction in progress 4,188,948
3,708,613
Other assets 57,298
40,899
$ 4,274,506
3,811,083
Liabilities and equity:
Accounts payable and other liabilities $ 200,850
199,119
Notes payable (1) 1,731,702
1,381,656
Equity 2,341,954
2,230,308
$ 4,274,506
3,811,083
Multifamily investments in unconsolidated entities $ 539,697
481,129


~~(1)~~	~~Notes payable are net of debt issuance costs of $21.5 million and $15.7 million, as of August 31, 2019 and November 30, 2018, respectively.~~

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

~~Statements of Operations~~

Three Months Ended Nine Months Ended
August 31, August 31,
(Dollars in thousands) 2019 2018 2019 2018
Revenues $ 44,338
31,907
118,318
82,980
Costs and expenses 64,423
47,235
175,636
122,512
Other income, net 33,178
13,588
54,578
52,457
Net earnings (loss) of unconsolidated entities $ 13,093
(1,740 ) (2,740 ) 12,925
Multifamily equity in earnings (loss) from unconsolidated entities and other gain (1) $ 7,883
(1,730 ) 15,446
15,293

~~(1)~~(4)

During the three months ended August 31, 2019, the Multifamily segment sold, through its unconsolidated entities, 1 operating property resulting in the segment's $12.6 million share of gain. During the nine months ended August 31, 2019, the Multifamily segment sold, through its unconsolidated entities, 2 operating properties and an investment in an operating property resulting in the segment's $28.1 million share of gains. The gain of $11.9 million recognized on the sale of the investment in an operating property and recognition of the Company's share of deferred development fees that were capitalized at the joint venture level are included in Multifamily equity in earnings (loss) from unconsolidated entities and other gain, and are not included in net earnings (loss) of unconsolidated entities. During the three and nine months ended August 31, 2018, the Multifamily segment sold 1 and 4 operating properties, respectively, through its unconsolidated entities resulting in the segment's $1.7 million ~~and~~ ~~$23.3 million share of gains, respectively.~~

Stockholders' Equity

~~(10)~~ The following tables reflect the changes in equity attributable to both Lennar ~~Other~~

~~Lennar Other primarily includes fund investments~~Corporation and the ~~Company retained when~~noncontrolling interests of its consolidated subsidiaries in which it ~~sold~~has less than a 100% ownership interest for the ~~Rialto asset~~three months ended February 29, 2020 and ~~investment management platform, as well as strategic investments in technology companies.~~

~~The assets and liabilities related to Lennar Other were as follows:~~February 28, 2019:

(In thousands) August 31,
2019 November 30,
2018
Assets:
Cash and cash equivalents $ 5,362
24,334
Restricted cash 975
7,175
Real estate owned, net 2,943
25,632
Investments in unconsolidated entities 447,734
424,104
Investments held-to-maturity 60,803
59,974
Other assets 35,151
47,740
$ 552,968
588,959
Liabilities:
Notes and other debts payable $ 15,131
14,488
Other liabilities 9,496
53,020
$ 24,627
67,508



				Three months ended February 29, 2020
(In thousands)	Total Equity			Class A Common Stock	Class B Common Stock	Additional Paid - in Capital		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Noncontrolling Interests
Balance at November 30, 2019	$	16,033,830		29,712	3,944	8,578,219		(957,857	)	498		8,295,001		84,313
Net earnings (including net loss attributable to noncontrolling interests)	391,223			—	—	—		—		—		398,452		(7,229	)
Employee stock and directors plans	(7,424		)	90	—	(130	)	(7,384	)	—		—		—
Purchases of treasury stock	(288,515		)	—	—	—		(288,515	)	—		—		—
Amortization of restricted stock	31,855			—	—	31,855		—		—		—		—
Cash dividends	(39,240		)	—	—	—		—		—		(39,240	)	—
Receipts related to noncontrolling interests	88,913			—	—	—		—		—		—		88,913
Payments related to noncontrolling interests	(16,734		)	—	—	—		—		—		—		(16,734	)
Non-cash consolidations, net	(485		)	—	—	—		—		—		—		(485	)
Total other comprehensive loss, net of tax	(46		)	—	—	—		—		(46	)	—		—
Balance at February 29, 2020	$	16,193,377		29,802	3,944	8,609,944		(1,253,756	)	452		8,654,213		148,778

~~Investments held-to-maturity~~



				Three months ended February 28, 2019
(In thousands)	Total Equity			Class A Common Stock	Class B Common Stock	Additional Paid - in Capital	Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Noncontrolling Interests
Balance at November 30, 2018	$	14,682,957		29,499	3,944	8,496,677	(435,869	)	(366	)	6,487,650		101,422
Net earnings (including net loss attributable to noncontrolling interests)	239,424			—	—	—	—		—		239,910		(486	)
Employee stock and directors plans	(1,422		)	2	—	725	(2,149	)	—		—		—
Purchases of treasury stock	(46,998		)	—	—	—	(46,998	)	—		—		—
Amortization of restricted stock	16,899			—	—	16,899	—		—		—		—
Cash dividends	(12,860		)	—	—	—	—		—		(12,860	)	—
Receipts related to noncontrolling interests	8,348			—	—	—	—		—		—		8,348
Payments related to noncontrolling interests	(11,297		)	—	—	—	—		—		—		(11,297	)
Non-cash consolidations, net	8,894			—	—	—	—		—		—		8,894
Cumulative-effect of accounting change	9,542			—	—	—	—		—		9,542		—
Total other comprehensive earnings, net of tax	208			—	—	—	—		208		—		—
Balance at February 28, 2019	$	14,893,695		29,501	3,944	8,514,301	(485,016	)	(158	)	6,724,242		106,881

~~At August 31, 2019~~On April 7, 2020, the Company's Board of Directors declared a quarterly cash dividend of $0.125 per share on both its Class A and Class B common stock, payable on May 5, 2020 to holders of record at the close of business on April 21, 2020. On February 7, 2020, the Company paid cash dividends of $0.125 per share on both its Class A and Class B common stock to holders of record at the close of business on January 24, 2020, as declared by its Board of Directors on January 9, 2020. The Company approved and paid cash dividends of $0.04 per share on both its Class A and Class B common stock in each quarter for the year ended November 30, ~~2018,~~2019.

In January 2019, the ~~carrying~~Company's Board of Directors authorized the repurchase of up to the lesser of $1 billion in value, excluding commissions, or 25 million in shares, of ~~Lennar Other's CMBS was $60.8 million~~the Company's outstanding Class A and ~~$60.0 million, respectively. These securities were purchased at discounts ranging from 6.5% to 86.1% with coupon rates ranging from 1.3% to 4.0%, stated~~Class B common stock. The repurchase has no expiration date. The following table represents the repurchase of the Company's Class A and ~~assumed final distribution dates between November~~Class B common stocks, under this program, for the three months ended February 29, 2020 and October 2026, and stated maturity dates between November 2049 and March 2059. The Company reviews changes in estimated cash flows periodically to determine if an other-than-temporary impairment has occurred on its CMBS. Based on the Company’s assessment, 0 impairment charges were recorded during either the three or nine months ended August 31, 2019 or 2018. The Company classifies these securities as held-to-maturity based on its intent and ability to hold the securities until maturity. The Company has financing agreements to finance CMBS that have been purchased as investments by the segment. At August 31, 2019 and November 30, 2018, the carrying amount, net of debt issuance costs, of outstanding debt in these agreements was $13.2 million and $12.6 million, respectively, and the interest is incurred at a rate of 4.2%.

~~(11)~~ ~~Cash and Cash Equivalents and Restricted Cash~~

The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. Due to the short maturity period of cash equivalents, the carrying amounts of these instruments approximate their fair values. Homebuilding restricted cash consists of customer deposits on home sales held in restricted accounts until title transfers to the homebuyer, as required by the state and local governments in which the homes were sold, as well as funds onFebruary 28, 2019:

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

deposit to secure and support performance obligations. Financial Services’ restricted cash primarily consists of cash balances required by certain warehouse lines of credit agreements and proceeds from loan sales not yet remitted to a warehouse bank. Financial Services' restricted cash also includes upfront deposits and application fees RMF receives before originating loans and is recognized as income once the loan has been originated, as well as cash held in escrow by the Company’s loan servicer provider on behalf of customers and lenders that is disbursed in accordance with agreements between the transacting parties.

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported in the condensed consolidated statements of cash flows to the respective condensed consolidated balance sheets:

August 31,
(In thousands) 2019 2018
Homebuilding:
Cash and cash equivalents $ 795,405
833,274
Restricted cash 13,238
11,741
Financial Services:
Cash and cash equivalents 228,217
165,051
Restricted cash 10,189
12,111
Multifamily:
Cash and cash equivalents 16,478
13,748
Lennar Other:
Cash and cash equivalents 5,362
36,343
Restricted cash 975
11,274
Total cash and cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows $ 1,069,864
1,083,542



	Three Months Ended
	February 29, 2020				February 28, 2019
(Dollars in thousands, except price per share)	Class A		Class B		Class A		Class B
Shares repurchased	4,250,000		115,000		1,000,000		—
Principal	$	282,274	$	6,155	$	46,998	$	—
Average price per share	$	66.42	$	53.52	$	46.98	$	—

~~Homebuilding cash~~


(5)	Income Taxes

The provision for income taxes and ~~cash~~effective tax rate were as follows:



	Three Months Ended
	February 29,			February 28,
(Dollars in thousands)	2020			2019
Provision for income taxes		$32,329		79,700
Effective tax rate (1)	7.5		%	24.9	%


(1)	For both the three months ended February 29, 2020 and February 28, 2019, the effective tax rate included state income tax expense and non-deductible executive compensation, partially offset by solar tax credits. For the three months ended February 29, 2020, the effective tax rate also included a $69.2 million benefit due to Congress extending the new energy efficient home credit in December 2019.


(6)	Earnings Per Share

Basic and diluted earnings per share were calculated as follows:



	Three Months Ended
	February 29,		February 28,
(In thousands, except per share amounts)	2020		2019
Numerator:
Net earnings attributable to Lennar	$	398,452	239,910
Less: distributed earnings allocated to nonvested shares	334		99
Less: undistributed earnings allocated to nonvested shares	4,092		1,860
Numerator for basic earnings per share	394,026		237,951
Less: net amount attributable to noncontrolling interests in Rialto's Carried Interest Incentive Plan (1)	—		323
Numerator for diluted earnings per share	$	394,026	237,628
Denominator:
Denominator for basic earnings per share - weighted average common shares outstanding	311,213		321,339
Effect of dilutive securities:
Shared based payments	2		10
Denominator for diluted earnings per share - weighted average common shares outstanding	311,215		321,349
Basic earnings per share	$	1.27	0.74
Diluted earnings per share	$	1.27	0.74


(1)	The amounts presented relate to Rialto's Carried Interest Incentive Plan and represent the difference between the advanced tax distributions received from the Rialto funds included in the Lennar Other segment and the amount Lennar is assumed to own.

For both the three months ended February 29, 2020 and February 28, 2019, there were 0 options to purchase shares of ~~August 31, 2019~~common stock that were outstanding and ~~November 30, 2018 included $492.8 million and $926.1 million, respectively, of cash held in escrow for approximately three days.~~anti-dilutive.

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

~~(12)~~(7)Homebuilding Senior Notes and Other Debts Payable


(Dollars in thousands)	August 31, 2019		November 30, 2018	February 29, 2020		November 30, 2019
Unsecured revolving credit facility	$	700,000	—	$	300,000	—
4.50% senior notes due 2019	599,848		599,176
6.625% senior notes due 2020 (1)	305,684		311,735
6.625% senior notes due 2020				301,651		303,668
2.95% senior notes due 2020	299,275		298,838	299,566		299,421
8.375% senior notes due 2021 (1)	423,119		435,897
8.375% senior notes due 2021				414,600		418,860
4.750% senior notes due 2021	498,697		498,111	499,088		498,893
6.25% senior notes due December 2021 (1)	311,510		315,283
6.25% senior notes due December 2021				308,994		310,252
4.125% senior notes due 2022	597,637		596,894	598,133		597,885
5.375% senior notes due 2022 (1)	258,912		261,055
5.375% senior notes due 2022				257,484		258,198
4.750% senior notes due 2022	571,266		570,564	571,806		571,644
4.875% senior notes due December 2023	396,456		395,759	396,853		396,553
4.500% senior notes due 2024	646,622		646,078	646,984		646,802
5.875% senior notes due 2024 (1)	449,327		452,833
5.875% senior notes due 2024				446,990		448,158
4.750% senior notes due 2025	497,447		497,114	497,669		497,558
5.25% senior notes due 2026 (1)	408,224		409,133
5.00% senior notes due 2027 (1)	352,988		353,275
5.25% senior notes due 2026				407,618		407,921
5.00% senior notes due 2027				352,796		352,892
4.75% senior notes due 2027	892,859		892,297	893,234		893,046
4.500% senior notes due 2019	—		499,585
0.25% convertible senior notes due 2019	—		1,291
Mortgage notes on land and other debt	865,145		508,950	922,032		874,887
	$	9,075,016	8,543,868	$	8,115,498	7,776,638

~~(1)~~

These notes were obligations of CalAtlantic when it was acquired, and were subsequently exchanged in part for notes of Lennar Corporation as follows: $267.7 million principal amount of 6.625% senior notes due 2020, $397.6 million principal amount of 8.375% senior notes due 2021, $292.0 million principal amount of 6.25% senior notes due 2021, $240.8 million principal amount of 5.375% senior notes due 2022, $421.4 million principal amount of 5.875% senior notes due 2024, $395.5 million principal amount of 5.25% senior notes due 2026 and $347.3 million principal amount of 5.00% senior notes due 2027. As part of purchase accounting, the senior notes have been recorded at their fair value as of the date of acquisition (February 12, 2018).

The carrying amounts of the senior notes in the table above are net of debt issuance costs of ~~$24.9~~$21.2 million and ~~$31.2~~$22.9 million as of ~~August 31, 2019~~February 29, 2020 and November 30, ~~2018,~~2019, respectively.

~~In June 2019,~~At February 29, 2020, the Company redeemed $500 million aggregate principal amount of its 4.50% senior notes due June 2019. The redemption price, which was paid in cash, was 100% of the principal amount plus accrued but unpaid interest.

~~In April 2019, the Company amended the credit agreement governing its~~had an unsecured revolving credit facility (the "Credit Facility") ~~to increase the commitments from $2.3~~with maximum borrowings of $2.45 billion ~~to $2.4 billion and extend the maturity one year to April 2024,~~ with $50 million maturing in June ~~2020.~~2020 and the balance due in 2024. The Credit Facility has a $400 million accordion feature, subject to additional commitments, thus the maximum borrowings are $2.8 billion. Subsequent to August 31, 2019, our Credit Facility commitments were increased by $50 million to total commitments of $2.5 billion. The proceeds available under the Credit Facility, which are subject to specified conditions for borrowing, may be used for working capital and general corporate purposes. The credit agreement ~~also~~(the "Credit Agreement") provides that up to $500 million in commitments may be used for letters of credit. The maturity and details of the Credit Facility are unchanged from the disclosure in the Company's Financial Condition and Capital Resources section in its Form 10-K for the year ended November 30, 2019. Under the Credit ~~Facility agreement,~~Agreement, the Company is required to maintain a minimum consolidated tangible net worth, a maximum leverage ratio and either a liquidity or an interest coverage ratio. These ratios are calculated per the Credit Facility agreement, which involves adjustments to GAAP financial measures. The Company believes it was in compliance with its debt covenants at ~~August 31, 2019.~~February 29, 2020. In addition to the Credit Facility, the Company ~~had $305 million of~~has other letter of credit facilities with different financial institutions.

The Company’s performance letters of credit outstanding were $682.3 million and $598.4 million, at August 31, 2019 and November 30, 2018, respectively. The Company’s financial letters of credit outstanding were $180.8 million and $165.4 million, at August 31, 2019 and November 30, 2018, respectively. Performance letters of credit are generally posted with regulatory bodies to guarantee the Company’s performance of certain development and construction activities. Financial letters of credit are generally posted in lieu of cash deposits on option contracts, for insurance risks, credit enhancements and as other collateral. Additionally, at ~~August 31, 2019,~~February 29, 2020, the Company had outstanding surety bonds ~~of $2.9 billion~~ including performance surety bonds related to site improvements at various projects (including certain projects in the Company’s joint ventures) and

~~Lennar Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)~~

financial surety bonds. Although significant development and construction activities have been completed related to these site improvements, these bonds are generally not released until all development and construction activities are completed. ~~As of August 31, 2019, there were approximately $1.4 billion, or 47%, of anticipated future costs to complete related to these site improvements.~~ The Company does not presently anticipate any draws upon these bonds or letters of credit, but if any such draws occur, the Company does not believe they would have a material effect on its financial position, results of operations or cash flows.

The company's letter of credit and surety bond facilities are described below:



	February 29, 2020		November 30, 2019
(In thousands)
Performance letters of credit	$	739,944	715,793
Financial letters of credit	208,871		184,075
Surety bonds	2,966,393		2,946,167
Anticipated future costs related to site improvements related to performance surety bonds	1,440,444		1,427,145

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

The Company's senior notes are guaranteed by substantially all of the Company's 100% owned homebuilding subsidiaries and some of the Company's other subsidiaries. Although the guarantees are full, unconditional and joint and several while they are in effect, (i) a subsidiary will cease to be a guarantor at any time when it is not directly or indirectly guaranteeing at least $75 million of debt of Lennar Corporation (the parent company), and (ii) a subsidiary will be released from its guarantee and any other obligations it may have regarding the senior notes if all or substantially all its assets, or all of its capital stock, are sold or otherwise disposed of.


~~(13)~~(8)	Product Warranty

Warranty and similar reserves for homes are established at an amount estimated to be adequate to cover potential costs for materials and labor with regard to warranty-type claims expected to be incurred subsequent to the delivery of a home. Reserves are determined based on historical data and trends with respect to similar product types and geographical areas. The ~~Company regularly monitors~~activity in the Company’s warranty reserve, ~~and makes adjustments to its pre-existing warranties in order to reflect changes in trends and historical data as information becomes available. Warranty reserves~~which are included in Homebuilding other liabilities ~~in the condensed consolidated balance sheets. The activity in the Company’s warranty reserve~~ was as follows:


	Three Months Ended					Nine Months Ended				Three Months Ended
	August 31,					August 31,				February 29,			February 28,
(In thousands)	2019			2018		2019		2018		2020			2019
Warranty reserve, beginning of the period	$	291,624		294,710		319,109		164,619		$	294,138		319,109
Warranties issued	49,603			48,878		131,429		121,422		38,271			33,971
Adjustments to pre-existing warranties from changes in estimates (1)	1,097			(4,785	)	(6,426	)	5,310		5,904			(9,527	)
Warranties assumed related to acquisitions	—			(5	)	—		117,549
Payments	(51,808		)	(40,575	)	(153,596	)	(110,677	)	(50,900		)	(47,931	)
Warranty reserve, end of period	$	290,516		298,223		290,516		298,223		$	287,413		295,622


(1)	The adjustments to pre-existing warranties from changes in estimates ~~are~~during the three months ended February 29, 2020 and February 28 2019 primarily related to specific claims ~~for~~in certain of the Company's homebuilding communities and other adjustments.


~~(14)~~	~~Share-Based Payments~~

During the three and nine months ended August 31, 2019, the Company granted employees 2.1 million nonvested shares. During the three and nine months ended August 31, 2018, the Company granted employees 1.3 million and 1.7 million nonvested shares, respectively. Compensation expense related to the Company’s nonvested shares for the three and nine months ended August 31, 2019 was $34.0 million and $65.4 million, respectively. Compensation expense related to the Company’s nonvested shares for the three and nine months ended August 31, 2018 was $21.9 million and $55.6 million, respectively.

~~Lennar Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)~~


~~(15)~~(9)	Financial Instruments and Fair Value Disclosures

The following table presents the carrying amounts and estimated fair values of financial instruments held by the Company at ~~August 31, 2019~~February 29, 2020 and November 30, ~~2018~~2019, using available market information and what the Company believes to be appropriate valuation methodologies. Considerable judgment is required in interpreting market data to develop the estimates of fair value. The use of different market assumptions and/or estimation methodologies might have a material effect on the estimated fair value amounts. The table excludes cash and cash equivalents, restricted cash, receivables, net and accounts payable, all of which had fair values approximating their carrying amounts due to the short maturities and liquidity of these instruments.


		August 31, 2019			November 30, 2018			February 29, 2020			November 30, 2019
(In thousands)	Fair Value Hierarchy	Carrying Amount		Fair Value	Carrying Amount	Fair Value	Fair Value Hierarchy	Carrying Amount		Fair Value	Carrying Amount	Fair Value
ASSETS
Financial Services:
Loans held-for-investment, net	Level 3	$	73,366	69,830	70,216	63,794	Level 3	$	70,763	67,266	73,867	69,708
Investments held-to-maturity	Level 3	$	166,672	200,743	136,982	149,767	Level 3	$	165,303	200,787	166,012	195,962
Investments held-to-maturity	Level 2	$	26,596	27,824	52,490	52,220	Level 2	$	18,642	18,680	24,277	24,257
Lennar Other:
Investments held-to-maturity	Level 3	$	60,803	65,888	59,974	72,986	Level 3	$	—	—	54,117	56,415
LIABILITIES
Homebuilding senior notes and other debts payable	Level 2	$	9,075,016	9,461,643	8,543,868	8,336,166
Financial Services notes and other debts payable	Level 2	$	1,156,078	1,157,463	1,558,702	1,559,718
Multifamily notes payable	Level 2	$	36,140	36,140	—	—
Lennar Other notes and other debts payable	Level 2	$	15,131	15,131	14,488	14,488
Homebuilding senior notes and other debts payable, net							Level 2	$	8,115,498	8,535,225	7,776,638	8,144,632
Financial Services notes and other debts payable, net							Level 2	$	990,152	992,011	1,745,755	1,745,782
Multifamily note payable, net							Level 2	$	—	—	36,125	36,125
Lennar Other notes and other debts payable, net							Level 2	$	15,178	15,178	15,178	15,178

The following methods and assumptions are used by the Company in estimating fair values:

Financial Services—The fair values above are based on quoted market prices, if available. The fair values for instruments that do not have quoted market prices are estimated by the Company on the basis of discounted cash flows or other financial information. For notes and other debts payable, the fair values approximate their carrying value due to variable interest pricing terms and the short-term nature of the majority of the borrowings.

Lennar ~~Other—The fair value for investments held-to-maturity is based on discounted cash flows. For notes~~Corporation and ~~other debts payable, the fair values approximate their carrying value due~~Subsidiaries

Notes to ~~their short-term maturities.~~Condensed Consolidated Financial Statements (unaudited) (Continued)

Homebuilding—For senior notes and other debts payable, the fair value of fixed-rate borrowings is primarily based on quoted market prices and the fair value of variable-rate borrowings is based on expected future cash flows calculated using current market forward rates.

Multifamily—For notes payable, the fair values approximate their carrying value due to variable interest pricing terms and the short-term nature of the borrowings.

Lennar Other—The fair value for investments held-to-maturity is based on discounted cash flow. For notes payable, the fair values approximate their carrying value due to variable interest pricing terms and the short-term nature of the borrowings.

Fair Value Measurements:

GAAP provides a framework for measuring fair value, expands disclosures about fair value measurements and establishes a fair value hierarchy which prioritizes the inputs used in measuring fair value summarized as follows:

Level 1: Fair value determined based on quoted prices in active markets for identical assets.

Level 2: Fair value determined using significant other observable inputs.

Level 3: Fair value determined using significant unobservable inputs.

~~Lennar Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)~~

The Company’s financial instruments measured at fair value on a recurring basis are summarized below:

(In thousands)
Fair Value
Hierarchy
Fair Value at
August 31,
2019 Fair Value at
November 30,
2018
Financial Services Assets (Liabilities):
RMF loans held-for-sale (1) Level 3 $ 178,704
61,691
Financial Services residential loans held-for-sale (2) Level 2 $ 1,049,888
1,152,198
Investments available-for-sale Level 1 $ 3,597
4,161
Mortgage loan commitments Level 2 $ 25,871
16,373
Forward contracts Level 2 $ (9,626 ) (10,360 )
Mortgage servicing rights Level 3 $ 23,072
37,206



(In thousands)	Fair Value Hierarchy	Fair Value at February 29, 2020		Fair Value at November 30, 2019
Financial Services Assets:
Residential loans held-for-sale (1)	Level 2	$	870,294	1,447,715
LMF Commercial loans held-for-sale (2)	Level 3	$	300,402	197,224
Mortgage servicing rights	Level 3	$	12,576	24,679
Lennar Other:
Investments available-for-sale	Level 3	$	53,402	—

(1)

The aggregate fair value of ~~RMF~~residential loans held-for-sale of ~~$178.7~~$870.3 million at ~~August 31,~~February 29, 2020 exceeded their aggregate principal balance of $835.6 million by $34.7 million. The aggregate fair value of residential loans held-for-sale of $1.4 billion at November 30, 2019 exceeded their aggregate principal balance of ~~$171.5 million~~$1.4 billion by ~~$7.2 million. The aggregate fair value of RMF loans held-for-sale of $61.7 million at November 30, 2018 exceeded their aggregate principal balance of $61.0 million by $0.7~~$42.2 million.

(2)

The aggregate fair value of ~~Financial Services residential~~LMF Commercial loans held-for-sale of ~~$1.0 billion~~$300.4 million at ~~August 31,~~February 29, 2020 exceeded their aggregate principal balance of $294.1 million by $6.4 million. The aggregate fair value of LMF Commercial loans held-for-sale of $197.2 million at November 30, 2019 exceeded their aggregate principal balance of ~~$1.0 billion~~$196.3 million by ~~$37.7 million. The aggregate fair value of Financial Services residential loans held-for-sale of $1.2 billion at November 30, 2018 exceeded their aggregate principal balance of $1.1 billion by $37.3~~$0.9 million.

~~The estimated~~Financial Services residential loans held-for-sale - Fair value is based on independent quoted market prices, where available, or the prices for other mortgage whole loans with similar characteristics. Management believes carrying loans held-for-sale at fair ~~values~~value improves financial reporting by mitigating volatility in reported earnings caused by measuring the fair value of the ~~Company’s financial~~loans and the derivative instruments ~~have been determined by using available market information and what~~used to economically hedge them without having to apply complex hedge accounting provisions. In addition, the Company ~~believes to be appropriate valuation methodologies. Considerable judgment is required in interpreting market data to develop~~recognizes the ~~estimates of fair value. The use of different market assumptions and/or estimation methodologies might have a material effect on the estimated~~ fair value ~~amounts.~~of its rights to service a mortgage loan as revenue upon entering into an interest rate lock loan commitment with a borrower. The ~~following methods~~fair value of these servicing rights is included in Financial Services’ loans held-for-sale as of February 29, 2020 and ~~assumptions are used by the Company in estimating fair values:~~November 30, 2019. Fair value of servicing rights is determined based on actual sales of servicing rights on loans with similar characteristics.

~~RMF~~LMF Commercial loans held-for-sale - The fair value of loans held-for-sale is calculated from model-based techniques that use discounted cash flow assumptions and the Company’s own estimates of CMBS spreads, market interest rate movements and the underlying loan credit quality. Loan values are calculated by allocating the change in value of an assumed CMBS capital structure to each loan. The value of an assumed CMBS capital structure is calculated, generally, by discounting the cash flows associated with each CMBS class at market interest rates and at the Company’s own estimate of CMBS spreads. The Company estimates CMBS spreads by observing the pricing of recent CMBS offerings, secondary CMBS markets, changes in the CMBX index, and general capital and commercial real estate market conditions. Considerations in estimating CMBS spreads include comparing the Company’s current loan portfolio with comparable CMBS offerings containing loans with similar duration, credit quality and collateral composition. These methods use unobservable inputs in estimating a discount rate that is used to assign a value to each loan. While the cash payments on the loans are contractual, the discount rate used and assumptions regarding the relative size of each class in the CMBS capital structure can significantly impact the valuation. Therefore, the estimates used could differ materially from the fair value determined when the loans are sold to a securitization trust.

~~Financial Services residential loans held-for-sale~~ - Fair value is based on independent quoted market prices, where available, or the prices for other mortgage whole loans with similar characteristics. Management believes carrying loans held-for-sale at fair value improves financial reporting by mitigating volatility in reported earnings caused by measuring the fair value of the loans and the derivative instruments used to economically hedge them without having to apply complex hedge accounting provisions. In addition, the Company recognizes the fair value of its rights to service a mortgage loan as revenue upon entering into an interest rate lock loan commitment with a borrower. The fair value of these servicing rights was included in Financial Services’ loans held-for-sale as of August 31, 2019 and November 30, 2018. Fair value of servicing rights is determined based on actual sales of servicing rights on loans with similar characteristics.

~~Financial Services investments available-for-sale~~ ~~- The fair value of these investments is based on the quoted market prices for similar financial instruments.~~

~~Financial Services mortgage loan commitments~~ - Fair value of commitments to originate loans is based upon the difference between the current value of similar loans and the price at which the Financial Services segment has committed to originate the loans. The fair value of commitments to sell loan contracts is the estimated amount that the Financial Services segment would receive or pay to terminate the commitments at the reporting date based on market prices for similar financial instruments. In addition, the Company recognizes the fair value of its rights to service a mortgage loan as revenue upon entering into an interest rate lock loan commitment with a borrower. The fair value of servicing rights is determined based on actual sales of servicing rights on loans with similar characteristics. The fair value of the mortgage loan commitments and related servicing rights is included in Financial Services’ other assets.

~~Financial Services forward contracts~~ - Fair value is based on quoted market prices for similar financial instruments. The fair value of forward contracts was included in the Financial Services segment's other liabilities as of August 31, 2019 and November 30, 2018.

~~Lennar Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)~~

The Financial Services segment uses mandatory mortgage-backed securities ("MBS") forward commitments, option contracts and investor commitments to hedge its mortgage-related interest rate exposure. These instruments involve, to varying degrees, elements of credit and interest rate risk. Credit risk associated with MBS forward commitments, option contracts and loan sales transactions is managed by limiting the Company’s counterparties to investment banks, federally regulated bank affiliates and other investors meeting the Company’s credit standards. The segment’s risk, in the event of default by the purchaser, is the difference between the contract price and fair value of the MBS forward commitments and option contracts. At August 31, 2019, the segment had open commitments amounting to $1.6 billion to sell MBS with varying settlement dates through November 2019.

~~Financial Services mortgage~~Mortgage servicing rights - Financial Services records mortgage servicing rights when it sells loans on a servicing-retained basis or through the acquisition or assumption of the right to service a financial asset. The fair value of the mortgage

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

servicing rights is calculated using third-party valuations. The key assumptions, which are generally unobservable inputs, used in the valuation of the mortgage servicing rights include mortgage prepayment rates, discount rates and delinquency ~~rates. As of August 31, 2019, the key assumptions used in determining the fair value include a 20.1% mortgage prepayment rate, a 12.4% discount rate~~rates and ~~an 8.4% delinquency rate.~~are noted below:



	Three Months Ended
	February 29, 2020
Unobservable inputs
Mortgage prepayment rate	21%
Discount rate	13%
Delinquency rate	9%

Lennar Other investments available-for-sale - The fair value of ~~mortgage servicing rights~~investments available-for-sale is ~~included~~calculated from model-based techniques that use discounted cash flow assumptions and the Company’s own estimates of CMBS spreads, market interest rate movements and the underlying loan credit quality. Loan values are calculated by allocating the change in value of an assumed CMBS capital structure to each loan. The value of an assumed CMBS capital structure is calculated, generally, by discounting the ~~Financial Services segment's other assets.~~cash flows associated with each CMBS class at market interest rates and at the Company’s own estimate of CMBS spreads.

The changes in fair values for Level 1 and Level 2 financial instruments measured on a recurring basis are shown below by financial instrument and financial statement line item:


	Three Months Ended					Nine Months Ended			Three Months Ended
	August 31,					August 31,			February 29,			February 28,
(In thousands)	2019			2018		2019	2018		2020			2019
Changes in fair value included in Financial Services revenues:
Loans held-for-sale	$	(2,490	)	(692	)	397	(403	)	$	(7,493	)	(10,120	)
Mortgage loan commitments	646			(5,810	)	9,498	9,409		14,895			(259	)
Forward contracts	1,646			3,550		734	(4,326	)	(9,361		)	8,853
Investments available-for-sale	—			166		176	292
Changes in fair value included in other comprehensive income (loss), net of tax:
Financial Services investments available-for-sale	180			(110	)	949	(1,357	)	(46		)	208

Interest on Financial Services loans held-for-sale and ~~RMF~~LMF Commercial loans held-for-sale measured at fair value is calculated based on the interest rate of the loans and recorded as revenues in the Financial Services’ statement of operations.

~~Lennar Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)~~

The following table represents the reconciliation of the beginning and ending balance for the Level 3 recurring fair value ~~measurements:~~measurements in the Company's Financial Services segment:

Three Months Ended August 31,
2019 2018
Financial Services
(In thousands) Mortgage servicing rights RMF loans held-for-sale Mortgage servicing rights RMF loans held-for-sale
Beginning balance $ 29,419
259,599
34,592
325,373
Purchases/loan originations 449
263,888
1,734
333,680
Sales/loan originations sold, including those not settled —
(347,713 ) —
(516,958 )
Disposals/settlements (1,544 ) —
(1,290 ) —
Changes in fair value (1) (5,252 ) 3,502
38
(1,400 )
Interest and principal paydowns —
(572 ) —
23
Ending balance $ 23,072
178,704
35,074
140,718


	Nine Months Ended August 31,
	2019					2018				Three Months Ended
	Financial Services									February 29, 2020					February 28, 2019
(In thousands)	Mortgage servicing rights			RMF loans held-for-sale		Mortgage servicing rights		RMF loans held-for-sale		Mortgage servicing rights			LMF Commercial loans held-for-sale		Mortgage servicing rights		LMF Commercial loans held-for-sale
Beginning balance	$	37,206		61,691		31,163		234,403		$	24,679		197,224		37,206		61,691
Purchases/loan originations	2,707			969,200		5,880		997,515		746			412,250		1,586		270,123
Sales/loan originations sold, including those not settled	—			(848,262	)	—		(1,073,211	)	—			(314,439	)	—		(200,588	)
Disposals/settlements	(3,830		)	(9,920	)	(5,830	)	(19,600	)	(1,289		)	—		(908	)	—
Changes in fair value (1)	(13,011		)	6,825		3,861		1,970		(11,560		)	5,601		(2,436	)	(486	)
Interest and principal paydowns	—			(830	)	—		(359	)	—			(234	)	—		302
Ending balance	$	23,072		178,704		35,074		140,718		$	12,576		300,402		35,448		131,042


(1)	Changes in fair value for ~~RMF~~LMF Commercial loans held-for-sale and Financial Services mortgage servicing rights are included in Financial Services' revenues.

The Company’s assets measured at fair value on a nonrecurring basis are those assets for which the Company has recorded valuation adjustments and write-offs. The fair values included in the table below represent only those assets whose carrying values were adjusted to fair value during the respective periods disclosed. The assets measured at fair value on a nonrecurring basis are summarized below:

Three Months Ended August 31,
2019 2018
(In thousands)
Fair Value
Hierarchy
Carrying Value Fair Value Total Losses, Net (1) Carrying Value Fair Value Total Losses, Net (1)
Non-financial assets
Homebuilding:
Finished homes and construction in progress (1) Level 3 $ 4,922
4,142
(780 ) —
—
—
Land and land under development (1) Level 3 $ 1,300
85
(1,215 ) 25,173
13,373
(11,800 )
Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)


		Nine Months Ended August 31,										Three Months Ended
		2019					2018					February 29, 2020					February 28, 2019
(In thousands)	Fair Value Hierarchy	Carrying Value		Fair Value	Total Losses, Net (1)		Carrying Value	Fair Value	Total Losses, Net (1)		Fair Value Hierarchy	Carrying Value		Fair Value	Total Losses, Net (1)		Carrying Value	Fair Value	Total Losses, Net (1)
Non-financial assets
Homebuilding:
Finished homes and construction in progress (1)	Level 3	$	4,922	4,142	(780	)	—	—	—		Level 3	$	73,006	59,284	(13,722	)	—	—	—
Land and land under development (1)	Level 3	$	8,253	3,085	(5,168	)	91,960	60,059	(31,901	)	Level 3	$	22,453	11,660	(10,793	)	6,954	3,001	(3,953	)


(1)	Valuation adjustments were included in Homebuilding costs and expenses in the Company's condensed consolidated statements of operations and comprehensive income (loss).

~~Lennar Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)~~

Finished homes and construction in progress are included within inventories. Inventories are stated at cost unless the inventory within a community is determined to be impaired, in which case the impaired inventory is written down to fair value. The Company disclosed its accounting policy related to inventories and its review for indicators of impairment in the Summary of Significant Accounting Policies in its Form 10-K for the year ended November 30, ~~2018.~~2019.

The Company estimates the fair value of inventory evaluated for impairment based on market conditions and assumptions made by management at the time the inventory is evaluated, which may differ materially from actual results if market conditions or assumptions change. For example, changes in market conditions and other specific developments or changes in assumptions may cause the Company to re-evaluate its strategy regarding previously impaired inventory, as well as inventory not currently impaired but for which indicators of impairment may arise if market deterioration occurs, and certain other assets that could result in further valuation adjustments and/or additional write-offs of option deposits and pre-acquisition costs due to abandonment of those options contracts.

The Company disclosed its accounting policy related to inventories and its review for indicators of impairment in the Summary of Significant Accounting Policies in its Form 10-K for the year ended November 30, 2019. On a quarterly basis, the Company reviews its active communities for indicators of potential impairments. As of ~~August 31,~~February 29, 2020 and February 28, 2019, ~~and 2018,~~ there were ~~1,295~~1,253 and ~~1,307~~1,287 active communities, excluding unconsolidated entities, respectively. AsThe table below summarizes communities reviewed for indicators of ~~August 31, 2019, the Company identified 47~~impairment and communities with 2,554 homesites and a corresponding carrying value of $331.2 million as having potential indicators of impairment. For the nine months ended August 31, 2019, the Company recorded a valuation adjustment of $2.0 million on 110 homesites in 1 community with a carrying value of $6.2 million.

As of August 31, 2018, the Company identified 15 communities with 843 homesites and a corresponding carrying value of $219.3 million as having potential indicators of impairment. For the nine months ended August 31, 2018, the Company recorded valuation adjustments ~~of $29.4 million on 688 homesites in 5 communities with a carrying value of $56.5 million.~~recorded:



		Communities with valuation adjustments
	# of communities with potential indicator of impairment	# of communities	Fair Value (in thousands)	Valuation Adjustments (in thousands)
Three Months Ended
February 29, 2020	33	6	$45,123	$19,944
February 28, 2019	54	—	—	—

The table below summarizes the most significant unobservable inputs used in the Company's discounted cash flow model to determine the fair value of its communities for which the Company recorded valuation adjustments during the ~~nine~~three months ended ~~August 31, 2019 and August 31, 2018:~~February 29, 2020:


	Nine Months Ended				Three Months Ended
	August 31, 2019	August 31, 2018			February 29, 2020
Unobservable inputs		Range			Range
Average selling price	$167,000	$233,000	-	$843,000	$	201,000	-	$970,000
Absorption rate per quarter (homes)	12	4	-	16	3		-	15
Discount rate	20%	20%			20%


~~(16)~~(10)	Variable Interest Entities

The Company evaluated the joint venture agreements of its joint ventures that were formed or that had reconsideration events, such as changes in the governing documents or to debt arrangements during the ~~nine~~three months ended ~~August 31, 2019.~~February 29, 2020. Based on the Company's evaluation, ~~during the nine months ended August 31, 2019,~~ the Company consolidated ~~5 entities~~1 entity that had a total ~~combined~~ assets and liabilities of ~~$505.2~~$49.4 million and ~~$602.1~~$0.9 million, ~~respectively. During the nine months ended August 31, 2019, there were no VIEs~~respectively and deconsolidated an entity that ~~were deconsolidated.~~had an immaterial amount of assets and liabilities.

~~Consolidated VIEs~~

AsThe carrying amount of ~~August 31, 2019, the carrying amounts of the VIEs’~~our consolidated VIE's assets and non-recourse liabilities ~~that consolidated were $1.0 billion and $577.7 million, respectively. As of November 30, 2018,~~are disclosed in the carrying amounts of the VIEs’ assets and non-recourse liabilities that consolidated were $666.2 million and $242.5 million, respectively. Those assets are owned by, and those liabilities are obligations of, the VIEs, not the Company.

~~The increase in VIEs' assets and non-recourse liabilities during the nine months ended August 31, 2019 was primarily due~~footnote to the consolidation of an unconsolidated entity related to the sale of the majority of the Company's retail title agency business. In connection with the sale of the majority of its retail title agency business and title insurance underwriter in the first quarter of 2019, the Company provided seller financing and received a substantial minority equity ownership stake in the buyer. The combination of both the equity and debt components of this transaction caused the transaction not to meet the accounting requirements for sale treatment and, therefore, the Company is required to consolidate the buyer’s results at this time.condensed consolidated balance sheets.

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

During the second quarter of 2019, the Company consolidated a previously unconsolidated entity, which resulted from a reconsideration event that required the reassessment of a homebuilding unconsolidated entity. The reconsideration event was the change of the entity’s conclusion with respect to future capital calls required to fund operations and debt repayments. Upon reconsideration, the Company determined that the homebuilding entity continued to meet the accounting definition of a VIE and the Company was deemed to be the primary beneficiary. The Company consolidated the previously unconsolidated entity’s net assets at estimated fair value. The determination of fair value of the homebuilding entity’s net assets requires the discounting of estimated cash flows at a rate the Company believes a market participant would determine to be commensurate with the inherent risks associated with the homebuilding entity and related cash flow streams. The Company used a 15% discount rate in determining the fair value of the entity, which was subject to perceived risks associated with the entity’s cash flow streams. There was no non-controlling interest recorded in consolidation. As a result, the Company recorded a one-time loss of $48.9 million from the consolidation which was included in Homebuilding other income (expense), net on the condensed consolidated statements of operations. During the three months ended August 31, 2019, the Company bought out the partner's interest in the entity and therefore at August 31, 2019, the entity is no longer considered a VIE. At August 31, 2019, the consolidated homebuilding entity had total assets and liabilities of $240.5 million and $373.5 million, respectively.

A VIE’s assets can only be used to settle obligations of that VIE. The VIEs are not guarantors of the Company’s senior notes or other debts payable. The assets held by a VIE usually are collateral for that VIE’s debt. The Company and other partners do not generally have an obligation to make capital contributions to a VIE unless the Company and/or the other partner(s) have entered into debt guarantees with a VIE’s banks. Other than debt guarantee agreements with a VIE’s banks, there are no liquidity arrangements or agreements to fund capital or purchase assets that could require the Company to provide financial support to a VIE. While the Company has option contracts to purchase land from certain of its VIEs, the Company is not required to purchase the assets and could walk away from the contracts.

Unconsolidated VIEs

At ~~August 31, 2019~~February 29, 2020 and November 30, ~~2018,~~2019, the Company’s recorded investments in VIEs that are unconsolidated and its estimated maximum exposure to loss were as follows:


	August 31, 2019			November 30, 2018		February 29, 2020			November 30, 2019
(In thousands)	Investments in Unconsolidated VIEs		Lennar’s Maximum Exposure to Loss	Investments in Unconsolidated VIEs	Lennar’s Maximum Exposure to Loss	Investments in Unconsolidated VIEs		Lennar’s Maximum Exposure to Loss (1)	Investments in Unconsolidated VIEs	Lennar’s Maximum Exposure to Loss (1)
Homebuilding ~~(1)~~	$	84,772	84,973	123,064	184,945	$	78,213	78,379	80,939	81,118
Multifamily (2)	520,786		797,167	463,534	710,754	556,271		757,902	533,018	768,651
Financial Services ~~(3)~~	166,672		166,672	136,982	136,982	165,303		165,303	166,012	166,012
Lennar Other ~~(4)~~	67,583		67,583	63,919	63,919	6,765		6,765	60,882	60,882
	$	839,813	1,116,395	787,499	1,096,600	$	806,552	1,008,349	840,851	1,076,663

(1)

~~As of August 31, 2019, the maximum exposure~~Limited to ~~loss of Homebuilding’s~~ investments in unconsolidated VIEs, was limited primarily to its investments in the unconsolidated VIEs. As of November 30, 2018, the maximum exposure to loss of Homebuilding’s investments in unconsolidated VIEs was limited to its investments in the unconsolidated VIEs, except ~~with regard to repayment guarantees of one unconsolidated entity's debt of $54.8 million.~~as noted below.

(2)

As of ~~August 31, 2019~~February 29, 2020 and November 30, ~~2018,~~2019, the maximum exposure to loss of Multifamily's investments in unconsolidated VIEs was primarily limited to its investments in the unconsolidated VIEs, except with regard to the remaining equity commitment of ~~$268.6~~$191.3 million and ~~$237.0~~$224.2 million, respectively, to fund LMV I and LMV II for future expenditures related to the construction and development of its projects and $1.2 million and $4.6 million, respectively, of letters of credit outstanding for certain of the unconsolidated VIEs that could be drawn upon in the event of default under their debt agreements.


~~(3)~~	At both August 31, 2019 and November 30, 2018, the maximum recourse exposure to loss of the Financial Services segment was limited to its investments in the unconsolidated VIEs, which included $166.7 million and $137.0 million, respectively, related to the Financial Services' CMBS investments held-to-maturity.


~~(4)~~	At both August 31, 2019 and November 30, 2018, the maximum recourse exposure to loss of the Lennar Other segment was limited to its investments in the unconsolidated VIEs, which included $60.8 million and $60.0 million, respectively, related to the Lennar Other segment's CMBS investments held-to-maturity.projects.

While these entities are VIEs, the Company has determined that the power to direct the activities of the VIEs that most significantly impact the VIEs’ economic performance is generally shared and the Company and its partners are not de-facto agents. While the Company generally manages the day-to-day operations of the VIEs, each of these VIEs has an executive committee made up of representatives from each partner. The members of the executive committee have equal votes and major decisions require unanimous consent and approval from all members. The Company does not have the unilateral ability to exercise participating voting rights without partner consent.

As of August 31, 2019, the Company and other partners did not have an obligation to make capital contributions to the VIEs, except for $268.6 million remaining equity commitment to fund LMV I and LMV II for future expenditures related to the construction and development of the projects and $1.2 million of letters of credit outstanding for certain Multifamily

~~Lennar Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)~~

~~unconsolidated VIEs that could be drawn upon in the event of default under their debt agreements. In addition, there~~There are no liquidity arrangements or agreements to fund capital or purchase assets that could require the Company to provide financial support to the VIEs. Except for the unconsolidated VIEs discussed above, the Company and the other partners did not guarantee any debt of the other unconsolidated VIEs. While the Company has option contracts to purchase land from certain of its unconsolidated VIEs, the Company is not required to purchase the assets and could walk away from the contracts.

Option Contracts

The Company has access to land through option contracts, which generally enable it to control portions of properties owned by third parties (including land funds) and unconsolidated entities until the Company has determined whether to exercise the options.

The Company evaluates all option contracts for land to determine whether they are VIEs and, if so, whether the Company is the primary beneficiary of certain of these option contracts. Although the Company does not have legal title to the optioned land, if the Company is deemed to be the primary beneficiary or makes a significant deposit for optioned land, it may need to consolidate the land under option at the purchase price of the optioned land.

During the ~~nine~~three months ended ~~August 31, 2019,~~February 29, 2020, consolidated inventory not owned increased by ~~$143.1~~$104.3 million with a corresponding increase to liabilities related to consolidated inventory not owned in the accompanying condensed consolidated balance sheet as of ~~August 31, 2019.~~February 29, 2020. The increase was primarily related to the consolidation of option contracts, partially offset by the Company exercising its options to acquire land under previously consolidated contracts. To reflect the purchase price of the inventory consolidated, the Company had a net reclass related to option deposits from consolidated inventory not owned to land under development in the accompanying condensed consolidated balance sheet as of ~~August 31, 2019.~~February 29, 2020. The liabilities related to consolidated inventory not owned primarily represent the difference between the option exercise prices for the optioned land and the Company’s cash deposits.

The Company’s exposure to losses related to its option contracts with third parties and unconsolidated entities consisted of its non-refundable option deposits and pre-acquisition costs totaling ~~$311.1~~$306.0 million and ~~$209.5~~$320.5 million at ~~August 31, 2019~~February 29, 2020 and November 30, ~~2018,~~2019, respectively. Additionally, for both periods, the Company had posted ~~$74.8 million and $72.4~~$75.0 million of letters of credit in lieu of cash deposits under certain land and option contracts as of ~~August 31, 2019~~February 29, 2020 and November 30, ~~2018,~~2019, respectively.


~~(17)~~	~~Commitments and Contingent Liabilities~~

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

(11)Commitments and Contingent Liabilities

The Company is a party to various claims, legal actions and complaints arising in the ordinary course of business. In the opinion of management, the disposition of these matters will not have a material adverse effect on the Company’s consolidated financial statements. The Company is also a party to various lawsuits involving purchases and sales of real property. These lawsuits include claims regarding representations and warranties made in connection with the transfer of properties and disputes regarding the obligation to purchase or sell properties.

The Company does not believe that the ultimate resolution of these claims or lawsuits will have a material adverse effect on its business or financial position. However, the financial effect of litigation concerning purchases and sales of property may depend upon the value of the subject property, which may have changed from the time the agreement for purchase or sale was entered into.

Leases

The Company has entered into agreements to lease certain office facilities and equipment under operating leases. The Company recognizes leases expense for these leases on a straight-line basis over the lease term. Right-of-use (“ROU”) assets and right-of-use lease liabilities are recorded on the balance sheet for all leases, except leases with an initial term of 12 months or less. Many of the Company's leases include options to renew. The exercise of lease renewal options is at the Company's option and therefore renewal option payments have not been included in the ROU assets or lease liabilities. The following table includes additional information about the Company's leases:



(Dollars in thousands)	February 29, 2020
Right-of-use assets	$	143,690
Lease liabilities	$	150,779
Weighted-average remaining lease term (in years)	3.4
Weighted-average discount rate	3.1		%

The Company has entered into agreements to lease certain office facilities and equipment under operating leases. Future minimum payments under the noncancellable leases in effect at February 29, 2020 were as follows:



(Dollars in thousands)	Lease Payments
2020	$	30,818
2021	38,278
2022	29,061
2023	21,754
2024	15,311
2025 and thereafter	28,550
Total future minimum lease payments (1)	$	163,772
Less: Interest (2)	12,993
Present value of lease liabilities (2)	$	150,779


~~(18)~~(1)	Total future minimum lease payments exclude variable lease costs of $13.4 million and short-term lease costs of $2.8 million. This also does not include minimum lease payments for executed and legally enforceable leases that have not yet commenced. As of February 29, 2020, the minimum lease payments for these leases that have not yet commenced were immaterial.

(2)

The Company's leases do not include a readily determinable implicit rate. As such, the Company has estimated the discount rate for these leases to determine the present value of lease payments at the lease commencement date or as of December 1, 2019, which was the effective date of ASU 2016-02. As of February 29, 2020, the weighted average remaining lease term and weighted average discount rate used in calculating the lease liabilities were 3.4 years and 3.1%, respectively. The Company recognized the lease liabilities on its condensed consolidated balance sheets within other liabilities.

Rental expense for the three months ended February 29, 2020, was $20.7 million. Payments on lease liabilities during the three months ended February 29, 2020 totaled $17.4 million. Rental expense includes costs for all leases. On occasion, the Company may sublease rented space which is no longer used for the Company's operations. For the three months ended February 29, 2020, the Company had an immaterial amount of sublease income.

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)


(12)	New Accounting Pronouncements

~~In March 2016, the FASB issued ASU 2016-02,~~ ~~Leases~~ ("ASU 2016-02"), which provides guidance for accounting for leases. ASU 2016-02 requires lessees to classify leases as either finance or operating leases and to record a right-of-use asset and a lease liability for all leases with a term greater than 12 months regardless of the lease classification. The lease classification will determine whether the lease expense is recognized based on an effective interest rate method or on a straight line basis over the term of the lease. Accounting for lessors remains largely unchanged from current GAAP. ASU 2016-02 will be effective for the Company’s fiscal year beginning December 1, 2019 and subsequent interim periods. While the Company is continuing to evaluate the impact the adoption of ASU 2016-02 will have on the Company's condensed consolidated financial statements, the Company believes the adoption of ASU 2016-02 will have a material impact on the Company's condensed consolidated balance sheets due to the recognition of right-of-use assets and related liabilities, but the Company does not expect a material impact on the Company's condensed consolidated statements of operations or cash flows. Subsequent to the issuance of ASU 2016-02, the FASB issued ASUs 2018-01, ~~Land Easement Practical Expedient for Transition to Topic 842, 2018-10,~~ ~~Codification Improvements to Topic 842, Leases, 2018-11,~~ ~~Leases~~ ~~(Topic 842):~~ ~~Targeted Improvements,~~ ~~2018-20,~~ ~~Narrow-Scope Improvements for Lessors, and 2019-01,~~ ~~Leases (Topic 842) Codification Improvements~~. These ASUs do not change the core principle of the guidance in ASU 2016-02. Instead these amendments are intended to clarify and improve operability of certain topics included within the credit losses standard. These ASUs will have the same effective date and transition requirements as ASU 2016-02.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 significantly changes the impairment model for most financial assets and certain other instruments. ASU 2016-13 will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, which will generally result in earlier recognition of allowances for credit losses on loans and other financial instruments. ASU 2016-13 is effective for the Company's fiscal year beginning December 1, 2020 and subsequent interim periods. The Company is currently evaluating the impact the adoption of ASU 2016-13 will have on its condensed consolidated financial statements. Subsequent to the issuance of ASU 2016-13, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments —Credit Losses and ASU 2019-05,

~~Lennar Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)~~

Financial Instruments —Credit Losses (Topic 326) Targeted Transition Relief. These ASUs do not change the core principle of the guidance in ASU 2016-13. Instead these amendments are intended to clarify and improve operability of certain topics included within the credit losses standard. These ASUs will have the same effective date and transition requirements as ASU 2016-13.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350), Simplifying the Accounting for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 removes the requirement to perform a hypothetical purchase price allocation to measure goodwill impairment. A goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 will be effective for the Company’s fiscal year beginning December 1, 2020. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the impact the adoption of ASU 2017-04 will have on the Company's condensed consolidated financial statements.


~~(19)~~(13)	Supplemental Financial Information

The indentures governing the Company’s ~~4.50%~~ senior notes due 2019, 6.625% senior notes due 2020, 2.95% senior notes due 2020, 8.375% senior notes due 2021, 4.750% senior notes due 2021, 6.25% senior notes due 2021, 4.125% senior notes due 2022, 5.375% senior notes due 2022, 4.750% senior notes due 2022, 4.875% senior notes due 2023, 4.500% senior notes due 2024, 5.875% senior notes due 2024, 4.750% senior notes due 2025, 5.25% senior notes due 2026, 5.00% senior notes due 2027 and 4.75% senior notes due 2027 require that, if any of the Company’s 100% owned subsidiaries, other than its finance company subsidiaries and foreign subsidiaries, directly or indirectly guarantee at least $75 million principal amount of debt of Lennar Corporation, those subsidiaries must also guarantee Lennar Corporation’s obligations with regard to its senior notes. The entities referred to as "guarantors" in the following tables are subsidiaries that are not finance company subsidiaries or foreign subsidiaries and were guaranteeing the senior notes because at ~~August 31, 2019~~February 29, 2020 they were guaranteeing Lennar Corporation's letter of credit facilities and its Credit Facility, disclosed in Note 127 of the Notes to the Condensed Consolidated Financial Statements. The guarantees are full, unconditional and joint and several and the guarantor subsidiaries are 100% directly or indirectly owned by Lennar Corporation. A subsidiary's guarantee of Lennar senior notes will be suspended at any time when it is not directly or indirectly guaranteeing at least $75 million principal amount of debt of Lennar Corporation, and a subsidiary will be released from its guarantee and any other obligations it may have regarding the senior notes if all or substantially all its assets, or all of its capital stock, are sold or otherwise disposed of.

For purposes of the condensed consolidating statement of cash flows included in the following supplemental financial information, the Company's accounting policy is to treat cash received by Lennar Corporation (the "Parent") from its subsidiaries, to the extent of net earnings from such subsidiaries as a dividend and accordingly a return on investment within cash flows from operating activities. Distributions of capital received by the Parent from its subsidiaries are reflected as cash flows from investing activities. The cash outflows associated with the return on investment dividends and distributions of capital received by the Parent are reflected by the Guarantor and Non-Guarantor subsidiaries in the Dividends line item within cash flows from financing activities. All other cash flows between the Parent and its subsidiaries represent the settlement of receivables and payables between such entities in conjunction with the Parent's centralized cash management arrangement with its subsidiaries, which operates with the characteristics of a revolving credit facility, and are accordingly reflected net in the Intercompany line item within cash flows from investing activities for the Parent and net in the Intercompany line item within cash flows from financing activities for the Guarantor and Non-Guarantor subsidiaries.

Supplemental information for the subsidiaries that were guarantor subsidiaries at ~~August 31, 2019~~February 29, 2020 was as follows:

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

Condensed Consolidating Balance Sheet

~~August 31, 2019~~February 29, 2020


(In thousands)	Lennar Corporation		Guarantor Subsidiaries	Non-Guarantor Subsidiaries	Consolidating Adjustments		Total	Lennar Corporation		Guarantor Subsidiaries	Non-Guarantor Subsidiaries		Consolidating Adjustments		Total
ASSETS
Homebuilding:
Cash and cash equivalents, restricted cash and receivables, net	$	383,310	699,003	21,748	—		1,104,061	$	392,022	696,826	16,585		—		1,105,433
Inventories	—		18,496,698	351,472	—		18,848,170	—		18,246,920	396,560		—		18,643,480
Investments in unconsolidated entities	—		998,863	4,073	—		1,002,936	—		944,034	2,682		—		946,716
Goodwill	—		3,442,359	—	—		3,442,359	—		3,442,359	—		—		3,442,359
Other assets	347,411		651,596	201,097	(41,779	)	1,158,325	380,047		485,196	234,863		(38,254	)	1,061,852
Investments in subsidiaries	10,451,599		26,682	—	(10,478,281	)	—	10,274,276		41,304	—		(10,315,580	)	—
Intercompany	13,162,167		—	—	(13,162,167	)	—	12,879,536		—	—		(12,879,536	)	—
	24,344,487		24,315,201	578,390	(23,682,227	)	25,555,851	23,925,881		23,856,639	650,690		(23,233,370	)	25,199,840
Financial Services	—		253,881	2,077,040	(1,135	)	2,329,786	—		259,786	2,116,789		(1,011	)	2,375,564
Multifamily	—		—	1,020,842	—		1,020,842	—		—	1,113,903		—		1,113,903
Lennar Other	—		140,777	412,191	—		552,968	—		183,265	308,030		(6,903	)	484,392
Total assets	$	24,344,487	24,709,859	4,088,463	(23,683,362	)	29,459,447	$	23,925,881	24,299,690	4,189,412		(23,241,284	)	29,173,699
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable and other liabilities	$	826,969	1,833,573	308,995	(42,914	)	2,926,623	$	751,475	1,894,224	314,782		(46,168	)	2,914,313
Liabilities related to consolidated inventory not owned	—		298,724	—	—		298,724	—		365,284	—		—		365,284
Senior notes and other debts payable	8,145,580		882,357	47,079	—		9,075,016	7,129,807		917,408	68,283		—		8,115,498
Intercompany	—		11,298,276	1,863,891	(13,162,167	)	—	—		10,722,529	2,157,007		(12,879,536	)	—
	8,972,549		14,312,930	2,219,965	(13,205,081	)	12,300,363	7,881,282		13,899,445	2,540,072		(12,925,704	)	11,395,095
Financial Services	—		36,421	1,419,035	—		1,455,456	—		42,628	1,316,095		—		1,358,723
Multifamily	—		—	213,054	—		213,054	—		—	201,992		—		201,992
Lennar Other	—		—	24,627	—		24,627	—		—	24,512		—		24,512
Total liabilities	8,972,549		14,349,351	3,876,681	(13,205,081	)	13,993,500	7,881,282		13,942,073	4,082,671		(12,925,704	)	12,980,322
Stockholders’ equity	15,371,938		10,360,508	117,773	(10,478,281	)	15,371,938
Total stockholders’ equity								16,044,599		10,357,617	(42,037	)	(10,315,580	)	16,044,599
Noncontrolling interests	—		—	94,009	—		94,009	—		—	148,778		—		148,778
Total equity	15,371,938		10,360,508	211,782	(10,478,281	)	15,465,947	16,044,599		10,357,617	106,741		(10,315,580	)	16,193,377
Total liabilities and equity	$	24,344,487	24,709,859	4,088,463	(23,683,362	)	29,459,447	$	23,925,881	24,299,690	4,189,412		(23,241,284	)	29,173,699

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

Condensed Consolidating Balance Sheet

November 30, ~~2018~~2019


(In thousands)	Lennar Corporation		Guarantor Subsidiaries	Non-Guarantor Subsidiaries	Consolidating Adjustments		Total	Lennar Corporation		Guarantor Subsidiaries	Non-Guarantor Subsidiaries	Consolidating Adjustments		Total
ASSETS
Homebuilding:
Cash and cash equivalents, restricted cash and receivables, net	$	637,083	886,059	63,905	—		1,587,047	$	722,172	794,588	22,894	—		1,539,654
Inventories	—		16,679,245	389,459	—		17,068,704	—		17,396,139	380,368	—		17,776,507
Investments in unconsolidated entities	—		857,238	12,963	—		870,201	—		1,006,541	2,494	—		1,009,035
Goodwill	—		3,442,359	—	—		3,442,359	—		3,442,359	—	—		3,442,359
Other assets	339,307		878,582	164,848	(26,955	)	1,355,782	344,941		500,356	217,607	(41,220	)	1,021,684
Investments in subsidiaries	10,562,273		89,044	—	(10,651,317	)	—	10,453,165		26,773	—	(10,479,938	)	—
Intercompany	11,815,491		—	—	(11,815,491	)	—	12,027,996		—	—	(12,027,996	)	—
	23,354,154		22,832,527	631,175	(22,493,763	)	24,324,093	23,548,274		23,166,756	623,363	(22,549,154	)	24,789,239
Financial Services	—		232,632	2,547,167	(889	)	2,778,910	—		275,812	2,731,285	(1,073	)	3,006,024
Multifamily	—		—	874,219	—		874,219	—		—	1,068,831	—		1,068,831
Lennar Other	—		126,725	462,234	—		588,959	—		158,194	339,988	(2,765	)	495,417
Total assets	$	23,354,154	23,191,884	4,514,795	(22,494,652	)	28,566,181	$	23,548,274	23,600,762	4,763,467	(22,552,992	)	29,359,511
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable and other liabilities	$	804,232	1,977,579	303,473	(27,844	)	3,057,440	$	760,981	1,935,366	318,845	(45,058	)	2,970,134
Liabilities related to consolidated inventory not owned	—		162,090	13,500	—		175,590	—		260,266	—	—		260,266
Senior notes and other debts payable	7,968,387		523,589	51,892	—		8,543,868	6,837,776		885,783	53,079	—		7,776,638
Intercompany	—		10,116,590	1,698,901	(11,815,491	)	—	—		10,122,374	1,905,622	(12,027,996	)	—
	8,772,619		12,779,848	2,067,766	(11,843,335	)	11,776,898	7,598,757		13,203,789	2,277,546	(12,073,054	)	11,007,038
Financial Services	—		51,535	1,816,667	—		1,868,202	—		40,235	2,016,215	—		2,056,450
Multifamily	—		—	170,616	—		170,616	—		—	232,155	—		232,155
Lennar Other	—		—	67,508	—		67,508	—		—	30,038	—		30,038
Total liabilities	8,772,619		12,831,383	4,122,557	(11,843,335	)	13,883,224	7,598,757		13,244,024	4,555,954	(12,073,054	)	13,325,681
Stockholders’ equity	14,581,535		10,360,501	290,816	(10,651,317	)	14,581,535
Total stockholders’ equity								15,949,517		10,356,738	123,200	(10,479,938	)	15,949,517
Noncontrolling interests	—		—	101,422	—		101,422	—		—	84,313	—		84,313
Total equity	14,581,535		10,360,501	392,238	(10,651,317	)	14,682,957	15,949,517		10,356,738	207,513	(10,479,938	)	16,033,830
Total liabilities and equity	$	23,354,154	23,191,884	4,514,795	(22,494,652	)	28,566,181	$	23,548,274	23,600,762	4,763,467	(22,552,992	)	29,359,511

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Three Months Ended ~~August 31, 2019~~February 29, 2020


(In thousands)	Lennar Corporation			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments		Total		Lennar Corporation			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments		Total
Revenues:
Homebuilding	$	—		5,413,602		25,396		—		5,438,998		$	—		4,156,143		15,973		—		4,172,116
Financial Services	—			36,409		192,960		(4,867	)	224,502		—			28,994		175,653		(5,986	)	198,661
Multifamily	—			—		183,958		—		183,958		—			—		132,617		—		132,617
Lennar Other	—			—		9,600		—		9,600		—			—		1,943		—		1,943
Total revenues	—			5,450,011		411,914		(4,867	)	5,857,058		—			4,185,137		326,186		(5,986	)	4,505,337
Cost and expenses:
Homebuilding	—			4,758,852		24,009		(929	)	4,781,932		—			3,684,697		17,343		(4,234	)	3,697,806
Financial Services	—			17,707		137,148		(5,051	)	149,804		—			16,453		137,551		(2,660	)	151,344
Multifamily	—			—		181,616		—		181,616		—			—		137,348		—		137,348
Lennar Other	—			—		2,734		—		2,734		—			—		2,574		—		2,574
Corporate general and administrative	86,846			4,503		—		1,266		92,615		84,010			1,572		—		1,265		86,847
Total costs and expenses	86,846			4,781,062		345,507		(4,714	)	5,208,701		84,010			3,702,722		294,816		(5,629	)	4,075,919
Homebuilding equity in loss from unconsolidated entities	—			(10,455	)	(4	)	—		(10,459	)
Homebuilding equity in earnings (loss) from unconsolidated entities												—			(4,734	)	188		—		(4,546	)
Homebuilding other income (expense), net	(153		)	7,101		5,274		153		12,375		(357		)	(11,048	)	1,682		357		(9,366	)
Multifamily equity in earnings from unconsolidated entities and other gain	—			—		7,883		—		7,883		—			—		6,516		—		6,516
Lennar Other equity in earnings from unconsolidated entities	—			561		8,342		—		8,903
Lennar Other equity in earnings (loss) from unconsolidated entities												—			(4,930	)	5,049		—		119
Lennar Other income, net	—			—		24		—		24		—			—		1,411		—		1,411
Earnings (loss) before income taxes	(86,999		)	666,156		87,926		—		667,083		(84,367		)	461,703		46,216		—		423,552
Benefit (provision) for income taxes	19,816			(151,808	)	(22,448	)	—		(154,440	)	6,328			(25,837	)	(12,820	)	—		(32,329	)
Equity in earnings from subsidiaries	580,549			42,876		—		(623,425	)	—		476,491			24,705		—		(501,196	)	—
Net earnings (including net loss attributable to noncontrolling interests)	513,366			557,224		65,478		(623,425	)	512,643		398,452			460,571		33,396		(501,196	)	391,223
Less: Net loss attributable to noncontrolling interests	—			—		(723	)	—		(723	)	—			—		(7,229	)	—		(7,229	)
Net earnings attributable to Lennar	$	513,366		557,224		66,201		(623,425	)	513,366		$	398,452		460,571		40,625		(501,196	)	398,452
Other comprehensive income, net of tax:
Net unrealized gain on securities available-for-sale	$	—		—		180		—		180
Total other comprehensive income, net of tax	$	—		—		180		—		180
Other comprehensive loss, net of tax:
Net unrealized loss on securities available-for-sale												$	—		—		(46	)	—		(46	)
Total other comprehensive loss, net of tax												$	—		—		(46	)	—		(46	)
Total comprehensive income attributable to Lennar	$	513,366		557,224		66,381		(623,425	)	513,546		$	398,452		460,571		40,579		(501,196	)	398,406
Total comprehensive loss attributable to noncontrolling interests	$	—		—		(723	)	—		(723	)	$	—		—		(7,229	)	—		(7,229	)

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Three Months Ended ~~August 31, 2018~~

(In thousands) Lennar
Corporation Guarantor
Subsidiaries Non-Guarantor
Subsidiaries Consolidating Adjustments Total
Revenues:
Homebuilding $ —
5,266,053
19,689
—
5,285,742
Financial Services —
104,233
158,996
(5,021 ) 258,208
Multifamily —
—
101,064
—
101,064
Lennar Other —
—
27,555
—
27,555
Total revenues —
5,370,286
307,304
(5,021 ) 5,672,569
Cost and expenses:
Homebuilding —
4,649,490
18,211
3,387
4,671,088
Financial Services —
89,902
118,856
(11,065 ) 197,693
Multifamily —
—
103,187
—
103,187
Lennar Other —
—
24,731
(3,213 ) 21,518
Acquisition and integration costs related to CalAtlantic —
11,992
—
—
11,992
Corporate general and administrative 94,476
604
—
1,266
96,346
Total costs and expenses 94,476
4,751,988
264,985
(9,625 ) 5,101,824
Homebuilding equity in earnings (loss) from unconsolidated entities —
(16,995 ) 256
—
(16,739 )
Homebuilding other income, net 4,614
7,618
3,211
(4,604 ) 10,839
Multifamily equity in loss from unconsolidated entities and other gain —
—
(1,730 ) —
(1,730 )
Lennar Other equity in earnings from unconsolidated entities —
1,257
5,357
—
6,614
Lennar Other income (expense), net —
122
(3,933 ) —
(3,811 )
Earnings (loss) before income taxes (89,862 ) 610,300
45,480
—
565,918
Benefit (provision) for income taxes 13,688
(101,924 ) (10,062 ) —
(98,298 )
Equity in earnings from subsidiaries 529,385
19,889
—
(549,274 ) —
Net earnings (including net earnings attributable to noncontrolling interests) 453,211
528,265
35,418
(549,274 ) 467,620
Less: Net earnings attributable to noncontrolling interests —
—
14,409
—
14,409
Net earnings attributable to Lennar $ 453,211
528,265
21,009
(549,274 ) 453,211
Other comprehensive loss, net of tax:
Net unrealized loss on securities available-for-sale $ —
—
(110 ) —
(110 )
Reclassification adjustments for gains included in net earnings, net of tax —
—
(166 ) —
(166 )
Total other comprehensive loss, net of tax $ —
—
(276 ) —
(276 )
Total comprehensive income attributable to Lennar $ 453,211
528,265
20,733
(549,274 ) 452,935
Total comprehensive income attributable to noncontrolling interests $ —
—
14,409
—
14,409

~~Lennar Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)~~

~~Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)~~

~~Nine Months Ended August 31,~~February 28, 2019

(In thousands) Lennar
Corporation Guarantor
Subsidiaries Non-Guarantor
Subsidiaries Consolidating Adjustments Total
Revenues:
Homebuilding $ —
14,202,932
55,386
—
14,258,318
Financial Services —
121,679
464,938
(14,588 ) 572,029
Multifamily —
—
428,764
—
428,764
Lennar Other —
—
28,919
—
28,919
Total revenues —
14,324,611
978,007
(14,588 ) 15,288,030
Cost and expenses:
Homebuilding —
12,546,016
55,910
6,100
12,608,026
Financial Services —
76,914
368,926
(23,698 ) 422,142
Multifamily —
—
431,510
—
431,510
Lennar Other —
—
7,550
—
7,550
Corporate general and administrative 238,696
5,579
—
3,796
248,071
Total costs and expenses 238,696
12,628,509
863,896
(13,802 ) 13,717,299
Homebuilding equity in earnings (loss) from unconsolidated entities —
(4,869 ) 268
—
(4,601 )
Homebuilding other income (expense), net (783 ) (43,845 ) 8,517
786
(35,325 )
Multifamily equity in earnings from unconsolidated entities and other gain —
—
15,446
—
15,446
Lennar Other equity in earnings (loss) from unconsolidated entities —
(7,024 ) 19,279
—
12,255
Lennar Other expense, net —
—
(12,900 ) —
(12,900 )
Earnings (loss) before income taxes (239,479 ) 1,640,364
144,721
—
1,545,606
Benefit (provision) for income taxes 57,906
(394,383 ) (38,193 ) —
(374,670 )
Equity in earnings from subsidiaries 1,356,321
76,352
—
(1,432,673 ) —
Net earnings (including net loss attributable to noncontrolling interests) 1,174,748
1,322,333
106,528
(1,432,673 ) 1,170,936
Less: Net loss attributable to noncontrolling interests —
—
(3,812 ) —
(3,812 )
Net earnings attributable to Lennar $ 1,174,748
1,322,333
110,340
(1,432,673 ) 1,174,748
Other comprehensive income, net of tax:
Net unrealized gain on securities available-for-sale $ —
—

949

—
949
Reclassification adjustments for loss included in earnings, net of tax —
—

(176 )
—
(176 )
Total other comprehensive income, net of tax $ —
—
773
—
773
Total comprehensive income attributable to Lennar $ 1,174,748
1,322,333
111,113
(1,432,673 ) 1,175,521
Total comprehensive loss attributable to noncontrolling interests $ —
—
(3,812 ) —
(3,812 )

~~Lennar Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)~~

~~Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)~~

~~Nine Months Ended August 31, 2018~~


(In thousands)	Lennar Corporation			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments		Total		Lennar Corporation			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments		Total
Revenues:
Homebuilding	$	—		12,942,016		69,816		—		13,011,832		$	—		3,614,041		9,680		—		3,623,721
Financial Services	—			277,502		441,517		(15,015	)	704,004		—			48,917		99,249		(4,855	)	143,311
Multifamily	—			—		312,013		—		312,013		—			—		97,394		—		97,394
Lennar Other	—			—		84,572		—		84,572		—			—		3,656		—		3,656
Total revenues	—			13,219,518		907,918		(15,015	)	14,112,421		—			3,662,958		209,979		(4,855	)	3,868,082
Cost and expenses:
Homebuilding	—			11,640,728		69,826		630		11,711,184		—			3,225,929		12,307		599		3,238,835
Financial Services	—			254,130		331,181		(23,458	)	561,853		—			38,378		92,268		(6,307	)	124,339
Multifamily	—			—		317,572		—		317,572		—			—		101,178		—		101,178
Lennar Other	—			—		76,465		(6,582	)	69,883		—			—		1,622		—		1,622
Acquisition and integration costs related to CalAtlantic	—			140,062		—		—		140,062
Corporate general and administrative	243,361			1,813		—		3,897		249,071		77,529			549		—		1,265		79,343
Total costs and expenses	243,361			12,036,733		795,044		(25,513	)	13,049,625		77,529			3,264,856		207,375		(4,443	)	3,545,317
Homebuilding equity in earnings (loss) from unconsolidated entities	—			(43,756	)	219		—		(43,537	)	—			(13,951	)	195		—		(13,756	)
Homebuilding other income, net	10,527			182,870		7,814		(10,498	)	190,713
Multifamily equity in earnings from unconsolidated entities	—			—		15,293		—		15,293
Lennar Other equity in earnings from unconsolidated entities	—			1,852		18,277		—		20,129
Lennar Other income (expense), net	—			—		(19,238	)	—		(19,238	)
Homebuilding other income (expense), net												(408		)	(2,396	)	857		412		(1,535	)
Multifamily equity in earnings from unconsolidated entities and other gain												—			—		10,581		—		10,581
Lennar Other equity in earnings (loss) from unconsolidated entities												—			(3,346	)	11,676		—		8,330
Lennar Other expense, net												—			—		(7,261	)	—		(7,261	)
Earnings (loss) before income taxes	(232,834		)	1,323,751		135,239		—		1,226,156		(77,937		)	378,409		18,652		—		319,124
Benefit (provision) for income taxes	59,210			(327,148	)	(38,932	)	—		(306,870	)	19,437			(93,839	)	(5,298	)	—		(79,700	)
Equity in earnings from subsidiaries	1,073,307			58,807		—		(1,132,114	)	—		298,410			4,773		—		(303,183	)	—
Net earnings (including net earnings attributable to noncontrolling interests)	899,683			1,055,410		96,307		(1,132,114	)	919,286
Less: Net earnings attributable to noncontrolling interests	—			—		19,603		—		19,603
Net earnings (including net loss attributable to noncontrolling interests)												239,910			289,343		13,354		(303,183	)	239,424
Less: Net loss attributable to noncontrolling interests												—			—		(486	)	—		(486	)
Net earnings attributable to Lennar	$	899,683		1,055,410		76,704		(1,132,114	)	899,683		$	239,910		289,343		13,840		(303,183	)	239,910
Other comprehensive loss, net of tax:
Net unrealized loss on securities available-for-sale	$	—		—		(1,357	)	—		(1,357	)
Reclassification adjustments for gains included in earnings, net of tax	—			—		(292	)	—		(292	)
Total other comprehensive loss, net of tax	$	—		—		(1,649	)	—		(1,649	)
Other comprehensive income, net of tax:
Net unrealized gain on securities available-for-sale												$	—		—		208		—		208
Total other comprehensive income, net of tax												$	—		—		208		—		208
Total comprehensive income attributable to Lennar	$	899,683		1,055,410		75,055		(1,132,114	)	898,034		$	239,910		289,343		14,048		(303,183	)	240,118
Total comprehensive income attributable to noncontrolling interests	$	—		—		19,603		—		19,603
Total comprehensive loss attributable to noncontrolling interests												$	—		—		(486	)	—		(486	)

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

Condensed Consolidating Statement of Cash Flows

~~Nine~~Three Months Ended ~~August 31, 2019~~February 29, 2020


(In thousands)	Lennar Corporation			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments		Total		Lennar Corporation			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments		Total
Cash flows from operating activities:
Net earnings (including net loss attributable to noncontrolling interests)	$	1,174,748		1,322,333		106,528		(1,432,673	)	1,170,936		$	398,452		460,571		33,396		(501,196	)	391,223
Distributions of earnings from guarantor and non-guarantor subsidiaries	1,356,321			76,352		—		(1,432,673	)	—		501,196			—		—		(501,196	)	—
Other adjustments to reconcile net earnings (including net loss attributable to noncontrolling interests) to net cash provided by operating activities	(1,261,601		)	(1,342,672	)	298,957		1,432,673		(872,643	)
Net cash provided by operating activities	1,269,468			56,013		405,485		(1,432,673	)	298,293
Other adjustments to reconcile net earnings (including net loss attributable to noncontrolling interests) to net cash provided by (used in) operating activities												(514,919		)	(686,494	)	691,970		501,196		(8,247	)
Net cash provided by (used in) operating activities												384,729			(225,923	)	725,366		(501,196	)	382,976
Cash flows from investing activities:
Investments in and contributions to unconsolidated and consolidated entities, net of distributions of capital	—			(135,395	)	55,802		—		(79,593	)
Proceeds from sales of real estate owned	—			—		8,560		—		8,560
Proceeds from sale of investment in unconsolidated entities	—			—		17,790		—		17,790
Proceeds from sales of Financial Services' businesses	—			21,517		2,929		—		24,446
Investments in and contributions to unconsolidated entities, net of distributions of capital												—			(1,178	)	8,895		—		7,717
Proceeds from the sales of operating properties and equipment and other assets												—			13,067		—		—		13,067
Other	(2,164		)	34,935		(43,331	)	—		(10,560	)	(330		)	913		(8,188	)	—		(7,605	)
Intercompany	(1,256,112		)	—		—		1,256,112		—		(672,022		)	—		—		672,022		—
Net cash provided by (used in) investing activities	(1,258,276		)	(78,943	)	41,750		1,256,112		(39,357	)	(672,352		)	12,802		707		672,022		13,179
Cash flows from financing activities:
Net borrowings under unsecured revolving credit facilities	700,000			—		—		—		700,000		300,000			—		—		—		300,000
Net repayments under warehouse facilities	—			(9	)	(423,114	)	—		(423,123	)	—			—		(755,602	)	—		(755,602	)
Net borrowings (repayments) on convertible senior notes, other borrowings, other liabilities, and other notes payable	(500,000		)	(117,444	)	21,521		—		(595,923	)
Net repayments related to noncontrolling interests	—			—		(8,294	)	—		(8,294	)
Net repayments on other borrowings, other liabilities, and other notes payable												—			(55,580	)	(15,573	)	—		(71,153	)
Net receipts related to noncontrolling interests												—			—		72,179		—		72,179
Common stock:
Issuances	388			—		—		—		388
Repurchases	(419,322		)	—		—		—		(419,322	)	(295,988		)	—		—		—		(295,988	)
Dividends	(38,776		)	(1,322,333	)	(110,340	)	1,432,673		(38,776	)	(39,240		)	(460,571	)	(40,625	)	501,196		(39,240	)
Intercompany	—			1,181,304		74,808		(1,256,112	)	—		—			605,744		66,278		(672,022	)	—
Net cash used in financing activities	(257,710		)	(258,482	)	(445,419	)	176,561		(785,050	)
Net cash provided by (used in) financing activities												(35,228		)	89,593		(673,343	)	(170,826	)	(789,804	)
Net increase (decrease) in cash and cash equivalents and restricted cash	(246,518		)	(281,412	)	1,816		—		(526,114	)	(322,851		)	(123,528	)	52,730		—		(393,649	)
Cash and cash equivalents and restricted cash at beginning of period	624,694			721,603		249,681		—		1,595,978		713,828			532,304		222,559		—		1,468,691
Cash and cash equivalents and restricted cash at end of period	$	378,176		440,191		251,497		—		1,069,864		$	390,977		408,776		275,289		—		1,075,042

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

Condensed Consolidating Statement of Cash Flows

~~Nine~~Three Months Ended ~~August 31, 2018~~February 28, 2019


(In thousands)	Lennar Corporation			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments		Total		Lennar Corporation			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments		Total
Cash flows from operating activities:
Net earnings (including net earnings attributable to noncontrolling interests)	$	899,683		1,055,410		96,307		(1,132,114	)	919,286
Net earnings (including net loss attributable to noncontrolling interests)												$	239,910		289,343		13,354		(303,183	)	239,424
Distributions of earnings from guarantor and non-guarantor subsidiaries	1,073,307			58,807		—		(1,132,114	)	—		298,410			4,773		—		(303,183	)	—
Other adjustments to reconcile net earnings (including net earnings attributable to noncontrolling interests) to net cash provided by (used in) operating activities	(1,142,909		)	(102,940	)	(79,134	)	1,132,114		(192,869	)
Net cash provided by operating activities	830,081			1,011,277		17,173		(1,132,114	)	726,417
Other adjustments to reconcile net earnings (including net loss attributable to noncontrolling interests) to net cash provided by (used in) operating activities												(339,730		)	(1,082,776	)	355,476		303,183		(763,847	)
Net cash provided by (used in) operating activities												198,590			(788,660	)	368,830		(303,183	)	(524,423	)
Cash flows from investing activities:
Investments in and contributions to unconsolidated entities, net of distributions of capital	—			(67,664	)	(6,915	)	—		(74,579	)	—			(60,660	)	(3,177	)	—		(63,837	)
Proceeds from sales of real estate owned	—			—		28,697		—		28,697		—			—		2,696		—		2,696
Proceeds from sale of investment in unconsolidated entity	—			199,654		—		—		199,654		—			—		17,790		—		17,790
Purchases of commercial mortgage-backed securities bonds	—			—		(31,068	)	—		(31,068	)
Acquisition, net of cash and restricted cash acquired	(1,140,367		)	22,654		39,368		—		(1,078,345	)
Proceeds from sales of Financial Services retail mortgage and real estate brokerage business												—			21,517		2,929		—		24,446
Other	(27,136		)	(20,555	)	(15,542	)	—		(63,233	)	(8,411		)	(15,686	)	(34,986	)	—		(59,083	)
Distributions of capital from guarantor and non-guarantor subsidiaries	65,000			20,000		—		(85,000	)	—
Intercompany	(1,035,226		)	—		—		1,035,226		—		(1,121,791		)	—		—		1,121,791		—
Net cash provided by (used in) investing activities	(2,137,729		)	154,089		14,540		950,226		(1,018,874	)
Net cash used in investing activities												(1,130,202		)	(54,829	)	(14,748	)	1,121,791		(77,988	)
Cash flows from financing activities:
Net borrowings (repayments) under unsecured revolving credit facilities	650,000			(454,700	)	—		—		195,300
Net repayments under warehouse facilities	—			(81	)	(100,882	)	—		(100,963	)
Debt issuance costs	(9,189		)	—		(3,270	)	—		(12,459	)
Net payments on other borrowings, other liabilities, Lennar Other senior notes and other notes payable	—			(78,528	)	(290,385	)	—		(368,913	)
Redemption of senior notes	(735,626		)	(89,374	)	—		—		(825,000	)
Conversions and exchanges of convertible senior notes	—			(59,145	)	—		—		(59,145	)
Net borrowings under unsecured revolving credit facilities												725,000			—		—		—		725,000
Net borrowings (repayments) under warehouse facilities												—			5,801		(514,456	)	—		(508,655	)
Net payments on other borrowings, other liabilities, and other notes payable												—			(79,281	)	(3,697	)	—		(82,978	)
Net payments related to noncontrolling interests	—			—		(64,619	)	—		(64,619	)	—			—		(2,949	)	—		(2,949	)
Common stock:
Issuances	3,189			—		—		—		3,189		607			—		—		—		607
Repurchases	(49,490		)	—		—		—		(49,490	)	(49,143		)	—		—		—		(49,143	)
Dividends	(35,985		)	(1,120,410	)	(96,704	)	1,217,114		(35,985	)	(12,860		)	(289,343	)	(13,840	)	303,183		(12,860	)
Intercompany	—			651,665		383,561		(1,035,226	)	—		—			973,489		148,302		(1,121,791	)	—
Net cash used in financing activities	(177,101		)	(1,150,573	)	(172,299	)	181,888		(1,318,085	)
Net increase (decrease) in cash and cash equivalents and restricted cash	(1,484,749		)	14,793		(140,586	)	—		(1,610,542	)
Net cash provided by (used in) financing activities												663,604			610,666		(386,640	)	(818,608	)	69,022
Net decrease in cash and cash equivalents and restricted cash												(268,008		)	(232,823	)	(32,558	)	—		(533,389	)
Cash and cash equivalents and restricted cash at beginning of period	1,938,555			366,946		388,583		—		2,694,084		624,694			721,968		249,316		—		1,595,978
Cash and cash equivalents and restricted cash at end of period	$	453,806		381,739		247,997		—		1,083,542		$	356,686		489,145		216,758		—		1,062,589

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)


(14)	Subsequent Event

Subsequent to February 29, 2020, the United States has been severely impacted by a coronavirus (COVID-19) pandemic. While response to the COVID-19 outbreak continues to rapidly evolve, it has led to stay-at-home orders and social distancing guidelines that have seriously disrupted activities in large segments of the economy. Presently, certain markets in which we do business have stopped our construction and sales of homes. Although we continue to build and sell homes in our other markets, traffic in our Welcome Home Centers and sales have slowed significantly. While the extent to which COVID-19 impacts our results will depend on future developments, the outbreak and associated economic impacts could result in a material impact to the Company's future financial condition, results of operations and cash flows.

Item 2. 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 our unaudited condensed consolidated financial statements and accompanying notes included under Item 1 of this Report and our audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K, for our fiscal year ended November 30, ~~2018~~2019.

Some of the statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, and elsewhere in this Quarterly Report on Form 10-Q, are "forward-looking statements," within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements contained herein may include opinions or beliefs regarding market conditions and similar matters. In many instances, those opinions and beliefs are based upon general observations by members of our management, anecdotal evidence and our experience in the conduct of our businesses, without specific investigation or analyses. Therefore, while they reflect our view of the industries and markets in which we are involved, they should not be viewed as reflecting verifiable views or views that are necessarily shared by all who are involved in those industries or markets. These statements concern expectations, beliefs, projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. These forward-looking statements typically include the words “anticipate,” “believe,” “consider,” “estimate,” “expect,” “forecast,” “intend,” “objective,” “plan,” “predict,” “projection,” “seek,” “strategy,” “target,” “will” or other words of similar meaning.

These forward-looking statements reflect our current views about future events and are subject to risks, uncertainties and assumptions. We wish to caution readers that certain important factors may have affected and could in the future affect our actual results and could cause actual results to differ significantly from what is anticipated by our forward-looking statements. The most important factors that could cause actual results to differ materially from those anticipated by our forward-looking statements include, but are not limited to: the negative impact of the coronavirus (COVID-19) outbreak on our financial position and ability to continue our Homebuilding or Multifamily development activities at normal levels or at all in affected regions; the duration, impact and severity of the COVID-19 outbreak; an extended slowdown in the real estate markets across the nation, including a slowdown in the market for single family homes or the multifamily rental market; increases in operating costs, including costs related to construction materials, labor, real estate taxes and insurance, and our inability to manage our cost structure, both in our Homebuilding and Multifamily businesses; reduced availability of mortgage financing or increased interest rates; ~~our inability to realize all of the anticipated synergy benefits from the CalAtlantic Group, Inc. ("CalAtlantic") acquisition or to realize them in the anticipated timeline;~~ our inability to successfully execute our strategies, including our land lighter strategy; changes in general economic and financial conditions that reduce demand for our products and services, lower our profit margins or reduce our access to credit; our inability to acquire land at anticipated prices; the possibility that we will incur nonrecurring costs that affect earnings in one or more reporting periods; decreased demand for our homes or multifamily rental properties; the possibility that the ~~Tax Cuts and Jobs Act will have more negative than positive impact on us; the possibility that the~~ benefit from our increasing use of technology will not justify its cost; increased competition for home sales from other sellers of new and resale homes; our inability to pay down ~~debt and opportunistically repurchase~~debt; whether government actions or other factors related to COVID-19 force us to delay or terminate our program of repurchasing our stock; a decline in the value of our land inventories and resulting write-downs of the carrying value of our real estate assets; the failure of the participants in various joint ventures to honor their commitments; difficulty obtaining land-use entitlements or construction financing; natural disasters and other unforeseen events for which our insurance does not provide adequate coverage; new laws or regulatory changes that adversely affect the profitability of our businesses; our inability to refinance our debt on terms that are acceptable to us; and changes in accounting conventions that adversely affect our reported earnings.

Please see our Form 10-K for the fiscal year ended November 30, ~~2018~~2019 and other filings with the SEC for a further discussion of these and other risks and uncertainties which could affect our future results. We undertake no obligation, other than those imposed by securities laws, to publicly revise any forward-looking statements to reflect events or circumstances after the date of those statements or to reflect the occurrence of anticipated or unanticipated events.

Outlook

~~During~~The United States economy in general and our business specifically have been dramatically affected by the ~~third quarter,~~coronavirus (COVID-19) pandemic. There are no reliable estimates of how long the ~~housing market continued~~pandemic will last or how many people are likely to improve. We saw traffic and sales continue to strengthen from last year's pause as lower interest rates and slower price appreciation positively impacted affordability. That, together with low unemployment, wage growth, consumer confidence and economic growth drove a more affordable housing market.

~~Stronger sales are driving higher-than-expected deliveries at stabilized margin levels as sales incentives have moderated, and we believe~~be affected by it. For that reason, we are unable to predict the long-term impact of the pandemic on ~~track~~our business at this time. Our first priority with regard to ~~deliver approximately 51,000 homes~~the COVID-19 pandemic is to do everything we can to ensure the safety, health and hygiene of our associates, customers, suppliers and others with whom we partner in ~~fiscal 2019. Our average new orders sales price declined year-over-year~~our business activities. Subject to that and ~~sequentially, reflecting our continued focus on~~through the ~~entry-level market~~use of appropriate risk mitigation and the first time homebuyer. While strong operating results drove the bottom line, our overall focus on inventory, land spend and shedding non-core assets has driven a strong and improving cash flow picture as well. We are reducing our overall inventory levels assafety practices, we are ~~focusing on~~doing everything we can to continue our pivot to a land lighter strategy. From controlling the timing of land purchases, to reducing our years owned supply of homesites, to increasing the percentage of land controlled through options or agreements versus owned land,business operations in this unprecedented business environment in which we ~~are migrating towards a significantly smaller land inventory. Our target is to increase our controlled homesites to between 40% and 50%~~find ourselves. Part of our ~~land needs~~strategy includes accelerating various technology initiatives to accommodate our safety first mandate and ~~reduce~~to continue our ~~years owned supply of homesites to three years. We are also driving our asset-base lower as we continue to focus on monetizing non-core assets and migrating~~business in these difficult times.

Subsequent to our ~~core pure-play~~first quarter earnings call, a number of states, counties and municipalities issued orders requiring persons who were not engaged in essential activities and businesses to remain at home. Other jurisdictions without stay-at-home orders required non-essential businesses to close. Some states designated residential homebuilding as an essential business activity. However, several states and ~~financial services platform.~~municipalities did not include residential construction as an essential business

and required that construction cease. Late in March, the United States Department of Homeland Security added construction to its list of critical infrastructure activities, though this is not binding on state and local governments.

Presently, certain markets in which we do business have stopped our construction and sales of homes. While we continue to build and sell homes in our other markets, traffic in our Welcome Home Centers and sales have slowed significantly. With a near shutdown of large portions of our national economy, we expect sales to continue to slow, even while we maintain and innovate our sales, construction and closing operations. In response to these rapidly changing market conditions, we are taking all appropriate steps to reduce construction costs, SG&A expenses and other cash outflows.

While we have a strong liquidity position as of February 29, 2020 with $785 million of cash and $2.1 billion of unused committed capacity under our revolving credit facility, we are taking steps to maximize positive cash flow, in case a lack of liquidity in the economy resulting from the responses to the COVID-19 pandemic limits our access to third party funding. We are doing this by limiting cash expenditures as much as possible, including working collaboratively through our strong relationships with national, regional and local developers to extend the closing date of our land purchases and defer land development activities.

Our mortgage lending operations have not yet experienced a significant slowdown in loan originations as a result of the COVID-19 pandemic. However, a material reduction in our home sales would significantly reduce our residential mortgage lending activities. To the extent we are able to continue originating residential mortgage loans, we expect to ~~see~~be able to continue selling them into the secondary mortgage market.

We do not know to what extent the financial effects of the responses to the COVID-19 pandemic will impact the demand for commercial mortgage loans of the type we originate, but they are likely to make it more difficult for us to sell loans we originate into securitization vehicles. This could require us to reduce our ~~margins improve steadily throughout~~commercial mortgage lending even if demand is not adversely affected. If the COVID-19 pandemic continues to curtail economic activity for a substantial period, it is likely to lead to rent arrearages by tenants in multifamily residential buildings in which our Multifamily segment has investments. All of our other business activities are likely to be affected by COVID-19 related reductions in economic activity.

Nobody knows the total effects the COVID-19 pandemic will have on the economy during the remainder of ~~the year as prices remain stable~~2020. Our senior management team is monitoring its impact on a daily basis and ~~incentives~~will continue to subside. Accordingly, we expect to generate strong cash flow for the remainder of 2019 and into 2020, and to continue to use excess cash flow to pay down debt while opportunistically repurchasing stock. Through this expected strong cash flow and reduction in land spend, we anticipate being able to drive meaningfully greater returns over time.

~~Our size and scale in each of~~adjust our strategic markets continues to facilitate the management of costs and production in a land and labor constrained market, and we believe this is going to continue into the fourth quarter. Our continued focus on technology and leveraging our size and scale is driving efficiencies that are reflected in our consistent improvement in SG&A and our bottom line. In the third quarter, our SG&A expensesoperations as a percentage of home sale revenues continued its downward trend with our lowest third quarter level ever at 8.3%. Through our technology initiatives, we decreased loan origination costs in our financial services platform, which in part drove the segment's record earnings in the third quarter.

With a solid balance sheet, leading market positions and continued execution of our core operating strategies, we believe that we are well positioned to deliver strong and consistent performance for the remainder of 2019 and into 2020.necessary.

(1) Results of Operations

Overview

We historically have experienced, and expect to continue to experience, variability in quarterly results. Our results of operations for the three ~~and nine~~ months ended ~~August 31, 2019~~February 29, 2020 are not necessarily indicative of the results to be expected for the full year. Our homebuilding business is seasonal in nature and generally reflects higher levels of new home order activity in our second and third fiscal quarters and increased deliveries in the second half of our fiscal year. However, periods of economic downturn in the industry can alter seasonal ~~patterns.~~patterns as noted in the Outlook section above.

Our net earnings attributable to Lennar were ~~$513.4~~$398.5 million, or ~~$1.59~~$1.27 per diluted share ($~~1.60~~1.27 per basic share), in the ~~third~~first quarter of ~~2019,~~2020, compared to net earnings attributable to Lennar of ~~$453.2~~$239.9 million, or ~~$1.37~~$0.74 per diluted share ($~~1.37~~0.74 per basic share), in the ~~third~~first quarter of 2018. Our net earnings attributable to Lennar were $1.2 billion, or $3.63 per diluted share ($3.64 per basic share), in the nine months ended August 31, 2019, compared to net earnings attributable to Lennar of $899.7 million, or $2.94 per diluted share ($2.95 per basic share), in the nine months ended August 31, 2018.

2019.

Financial information relating to our operations was as follows:

Three Months Ended Nine Months Ended
August 31, August 31,
(In thousands) 2019 2018 2019 2018
Homebuilding revenues:
Sales of homes $ 5,330,694
5,223,787
14,114,939
12,858,937
Sales of land 104,338
61,955
134,576
152,895
Other homebuilding revenues 3,966
—
8,803
—
Total Homebuilding revenues 5,438,998
5,285,742
14,258,318
13,011,832
Homebuilding costs and expenses:
Costs of homes sold 4,245,061
4,165,884
11,264,640
10,444,364
Costs of land sold 92,151
58,625
119,685
130,640
Selling, general and administrative 444,720
446,579
1,223,701
1,136,180
Total Homebuilding costs and expenses 4,781,932
4,671,088
12,608,026
11,711,184
Homebuilding operating margins 657,066
614,654
1,650,292
1,300,648
Homebuilding equity in loss from unconsolidated entities (10,459 ) (16,739 ) (4,601 ) (43,537 )
Homebuilding other income (expense), net 12,375
10,839
(35,325 ) 190,713
Homebuilding operating earnings 658,982
608,754
1,610,366
1,447,824
Financial Services revenues 224,502
258,208
572,029
704,004
Financial Services costs and expenses 149,804
197,693
422,142
561,853
Financial Services operating earnings 74,698
60,515
149,887
142,151
Multifamily revenues 183,958
101,064
428,764
312,013
Multifamily costs and expenses 181,616
103,187
431,510
317,572
Multifamily equity in earnings (loss) from unconsolidated entities and other gain 7,883
(1,730 ) 15,446
15,293
Multifamily operating earnings (loss) 10,225
(3,853 ) 12,700
9,734
Lennar Other revenues 9,600
27,555
28,919
84,572
Lennar Other costs and expenses 2,734
21,518
7,550
69,883
Lennar Other equity in earnings from unconsolidated entities 8,903
6,614
12,255
20,129
Lennar Other income (expense), net 24
(3,811 ) (12,900 ) (19,238 )
Lennar Other operating earnings 15,793
8,840
20,724
15,580
Total operating earnings 759,698
674,256
1,793,677
1,615,289
Acquisition and integration costs related to CalAtlantic —
(11,992 ) —
(140,062 )
Corporate general and administrative expenses (92,615 ) (96,346 ) (248,071 ) (249,071 )
Earnings before income taxes $ 667,083
565,918
1,545,606
1,226,156



	Three Months Ended February 29, 2020
(In thousands)	Homebuilding			Financial Services	Multifamily	Lennar Other	Corporate		Total
Revenues:
Sales of homes	$	4,140,767		—	—	—	—		4,140,767
Sales of land	26,867			—	—	—	—		26,867
Other revenues	4,482			198,661	132,617	1,943	—		337,703
Total revenues	4,172,116			198,661	132,617	1,943	—		4,505,337
Costs and expenses:
Costs of homes sold	3,291,779			—	—	—	—		3,291,779
Costs of land sold	27,135			—	—	—	—		27,135
Selling, general and administrative expenses	378,892			—	—	—	—		378,892
Other costs and expenses	—			151,344	137,348	2,574	—		291,266
Total costs and expenses	3,697,806			151,344	137,348	2,574	—		3,989,072
Equity in earnings (loss) from unconsolidated entities and Multifamily other gain	(4,546		)	—	6,516	119	—		2,089
Other income (expense), net	(9,366		)	—	—	1,411	—		(7,955	)
Operating earnings	$	460,398		47,317	1,785	899	—		510,399
Corporate general and administrative expenses	—			—	—	—	86,847		86,847
Earnings before income taxes	$	460,398		47,317	1,785	899	(86,847	)	423,552

~~Effects of CalAtlantic Acquisition~~

In fiscal year 2018, we exceeded our initial $100 million synergy savings expectations from the CalAtlantic acquisition by $70 million and we believe we are on track to meet our $380 million synergies target for 2019. Our synergy savings have resulted from elimination of costs of having two publicly traded companies, significant reductions in combined headcount and renegotiation of both local and national supply contracts.



	Three Months Ended February 28, 2019
(In thousands)	Homebuilding			Financial Services	Multifamily	Lennar Other		Corporate		Total
Revenues:
Sales of homes	$	3,608,129		—	—	—		—		3,608,129
Sales of land	13,783			—	—	—		—		13,783
Other revenues	1,809			143,311	97,394	3,656		—		246,170
Total revenues	3,623,721			143,311	97,394	3,656		—		3,868,082
Homebuilding costs and expenses:
Costs of homes sold	2,882,050			—	—	—		—		2,882,050
Costs of land sold	13,526			—	—	—		—		13,526
Selling, general and administrative	343,259			—	—	—		—		343,259
Other costs and expenses	—			124,339	101,178	1,622				227,139
Total costs and expenses	3,238,835			124,339	101,178	1,622		—		3,465,974
Equity in earnings (loss) from unconsolidated entities and Multifamily other gain	(13,756		)	—	10,581	8,330		—		5,155
Other expense, net	(1,535		)	—	—	(7,261	)	—		(8,796	)
Operating earnings	$	369,595		18,972	6,797	3,103		—		398,467
Corporate general and administrative expenses	—			—	—	—		79,343		79,343
Earnings before income taxes	$	369,595		18,972	6,797	3,103		(79,343	)	319,124

Three Months Ended ~~August 31, 2019~~February 29, 2020 versus Three Months Ended ~~August 31, 2018~~February 28, 2019

Revenues from home sales increased 2%15% in the ~~third~~first quarter of ~~2019~~2020 to ~~$5.3~~$4.1 billion from ~~$5.2~~$3.6 billion in the ~~third~~first quarter of ~~2018.~~2019. Revenues were higher primarily due to a 7%17% increase in the number of home deliveries, excluding unconsolidated entities, partially offset by a 5%2% decrease in the average sales price of homes delivered. New home deliveries, excluding

unconsolidated entities, increased to ~~13,513~~10,313 homes in the ~~third~~first quarter of ~~2019~~2020 from ~~12,600~~8,802 homes in the ~~third~~first quarter of ~~2018,~~2019, as a result of an increase in home deliveries in all homebuilding segments. The average sales price of homes delivered was ~~$394,000~~$402,000 in the ~~third~~first quarter of ~~2019,~~2020, compared to ~~$415,000~~$410,000 in the ~~third~~first quarter of ~~2018.~~2019. The decrease in average sales price primarily resulted from a continuing to shift to lower-priced communities and increased sales incentives, as well as product mix as a larger percentage of deliveries came from the East segment. Sales incentives offered to homebuyers were $24,400 per home delivered in the third quarter of 2019, or 5.8% as a percentage of home sales revenue, compared to $22,900 per home delivered in the third quarter of 2018, or 5.2% as a percentage of home sales revenue, and $26,600 per home delivered in the second quarter of 2019, or 6.1% as a percentage of home sales revenue.communities.

Gross margin on home sales were ~~$1.1 billion,~~$849.0 million, or ~~20.4%~~20.5%, in the ~~third~~first quarter of ~~2019,~~2020, compared to ~~$1.1 billion,~~$726.1 million, or ~~20.3% (21.9% excluding purchase accounting),~~20.1% in the ~~third~~first quarter of ~~2018.~~2019. The gross margin percentage on home sales increased primarily ~~because the third quarter of 2018 included $84.2 million or 160 basis points of backlog/~~due to our focus on reducing construction in progress write-up related to purchase accounting adjustments on CalAtlantic homes that were delivered in that quarter. This was partially offset by higher construction costs and increased sales incentives.costs.

Selling, general and administrative expenses were ~~$444.7~~$378.9 million in the ~~third~~first quarter of ~~2019,~~2020, compared to ~~$446.6~~$343.3 million in the ~~third~~first quarter of ~~2018.~~2019. As a percentage of revenues from home sales, selling, general and administrative expenses improved to ~~8.3%~~9.2% in the ~~third~~first quarter of ~~2019,~~2020, from ~~8.5%~~9.5% in the ~~third~~first quarter of ~~2018,~~2019, due to improved operating leverage primarily as a result of an increase in home deliveries.

Homebuilding equity in loss from unconsolidated entities, gross margin on land sales, homebuilding other income, net, and other homebuilding revenue totaled earnings of $18.1 million in the third quarter of 2019, compared to a loss of $2.6 million in the third quarter of 2018. Homebuilding equity in loss from unconsolidated entities was $10.5 million in the third quarter of 2019, compared to $16.7 million in the third quarter of 2018. In the third quarter of 2019, Homebuilding equity in loss from unconsolidated entities was primarily attributable to our share of net losses from one of our homebuilding unconsolidated entities. In the third quarter of 2018, Homebuilding equity in loss from unconsolidated entities was primarily attributable to our share of valuation adjustments related to assets of a homebuilding unconsolidated entity, partially offset by our share of net operating earnings from our other unconsolidated entities. Gross margin on land sales was $12.2 million in the third quarter of 2019, compared to $3.3 million in the third quarter of 2018. Homebuilding other income, net, was $12.4 million in the third quarter of 2019, compared to $10.8 million in the third quarter of 2018. Other homebuilding revenues were $4.0 million in the third quarter of 2019.

Homebuilding interest expense was $107.2 million in the third quarter of 2019 ($98.0 million was included in costs of homes sold, $3.6 million in costs of land sold and $5.6 million in homebuilding other income, net), compared to $86.9 million in the third quarter of 2018 ($83.0 million was included in costs of homes sold, $0.8 million in costs of land sold and $3.1 million in homebuilding other income, net). Interest expense included in costs of homes sold increased primarily due to an increase in home deliveries. The prior year's interest expense was favorably impacted by purchase accounting related to the CalAtlantic acquisition.

~~During the third quarter of 2018, we recorded $12.0 million of acquisition and integration costs related to CalAtlantic.~~

Operating earnings for the Financial Services segment were ~~$78.8~~$58.2 million in the ~~third~~first quarter of ~~2019~~2020 (which included ~~$74.7~~$47.3 million of operating earnings and an add back of ~~$4.1~~$10.9 million of net loss attributable to noncontrolling interests)~~. Operating earnings~~ compared to $21.8 million in the ~~third~~first quarter of ~~2018 were $60.5 million.~~2019 (which included $19.0 million of operating earnings and an add back of $2.8 million of net loss attributable to noncontrolling interests). Operating earnings increased due to an improvement in the mortgage business as a result of ~~a higher capture rate of increased Lennar home deliveries,~~an increase in volume and margin, as well as reductions in loan origination costs driven in part by technology initiatives. ~~These improvements more than offset the decrease in retail origination volume, as a result of the sale of substantially all~~Additionally, operating earnings of our ~~retail mortgage~~title business increased primarily due to an increase in volume.

Operating earnings for the Multifamily segment were $1.8 million in the first quarter of 2020 (which included $0.1 million of net earnings attributable to noncontrolling interests), compared to $6.8 million in the first quarter of 2019. Operating earnings of our title business decreased as a result of a decline in retail closed orders due to the sale of a majority of our retail agency business and title insurance underwriter in the first quarter of 2019. This decrease in retail volume was partially offset by an increase in captive business volume and a decrease in operating expenses.

Operating earnings for the Multifamily segment were $10.5 million in the third quarter of 2019 (which included $10.2 million of operating earnings and an add back of $0.3 million of net loss attributable to noncontrolling interests), primarily due to the segment's $12.6 million share of a gain as a result of the sale of an operating property by the segment's unconsolidated entities. In the third quarter of 2018, the Multifamily segment had an operating loss of $3.9 million primarily driven by selling, general and administrative expenses of the segment and equity in loss related to Lennar Multifamily Venture I (“LMV I”) and other Multifamily joint ventures as a result of incurring expenses that exceeded revenues while rental operations were reaching stabilization. This was partially offset by $1.7 million of our share of gains from the sale of one operating property by a Lennar Multifamily unconsolidated entity as well as $5.1 million of promote revenue related to two properties in LMV I.

~~Operating earnings~~ for the Lennar Other segment were ~~$15.9~~$0.9 million in the ~~third~~first quarter of 2020, compared to $3.1 million in the first quarter of 2019 (which included ~~$15.8 million of operating earnings and an add back of~~ $0.1 million of net ~~loss~~earnings attributable to noncontrolling interests)~~, compared to $10.1 million in the third quarter of 2018 (which included $8.8 million of operating earnings and an add back of $1.2 million of net loss attributable to noncontrolling interests)~~. Operating earnings in the third quarter of 2019 were primarily related to our equity in earnings from the Rialto fund investments that were retained when we sold the Rialto investment and asset management platform.

Corporate general and administrative expenses were $92.6 million, or 1.6% as a percentage of total revenues, in the third quarter of 2019, compared to $96.3 million, or 1.7% as a percentage of total revenues, in the third quarter of 2018. The decrease in corporate general and administrative expenses as a percentage of total revenues was due to improved operating leverage as a result of an increase in home deliveries.

In the third quarter of 2019 and 2018, we had tax provisions of $154.4 million and $98.3 million, respectively. Our overall effective income tax rates were 23.1% and 17.8% in the third quarter of 2019 and 2018, respectively. The effective tax rate for the three months ended August 31, 2019 included state income tax expense and non-deductible executive compensation, partially offset by energy credits. For the three months ended ~~August 31, 2018, the~~February 29, 2020 and February 28, 2019, we had a tax provision of $32.3 million and $79.7 million, respectively and our overall effective income tax rate ~~included tax benefits for the tax accounting method changes implemented during the third quarter~~ of ~~2018, energy credits,~~7.5% and ~~the domestic production activities deduction.~~

~~Nine Months Ended August 31, 2019 versus Nine Months Ended August 31, 2018~~

~~On February 12, 2018, Lennar Corporation completed its acquisition of CalAtlantic. Prior year information includes CalAtlantic only after the acquisition date.~~

~~Revenues from home sales increased 10%~~24.9%, respectively. The reduction in the ~~nine months ended August 31, 2019 to $14.1 billion from $12.9 billion in the nine months ended August 31, 2018. Revenues were higher~~overall effective income tax rate is primarily due to ~~an 11% increase in~~ the number of home deliveries, excluding unconsolidated entities. New home deliveries, excluding unconsolidated entities, increased to 35,021 homes in the nine months ended August 31, 2019 from 31,412 homes in the nine months ended August 31, 2018, primarily as a result of an increase in home deliveries in all of Homebuilding's segments except Other. The average sales price of homes delivered was $403,000 in the nine months ended August 31, 2019, compared to $409,000 in the nine months ended August 31, 2018. The decrease in average sales price primarily resulted from continuing to shift to lower-priced communities and increased sales incentives as well as product mix as a larger percentage of deliveries came from the East segment. Sales incentives offered to homebuyers were $25,400 per home delivered in the nine months ended August 31, 2019, or 5.9% as a percentage of home sales revenue, compared to $22,800 per home delivered in the nine months ended August 31, 2018, or 5.3% as a percentage of home sales revenue.

Gross margin on home sales were $2.9 billion, or 20.2%, in the nine months ended August 31, 2019, compared to $2.4 billion, or 18.8% (21.7% excluding purchase accounting), in the nine months ended August 31, 2018. The gross margin percentage on home sales increased primarily because the nine months ended August 31, 2018 included $376.0 million or 290 basis points of backlog/construction in progress write-up related to purchase accounting adjustments on CalAtlantic homes that were delivered in that period. This was partially offset by increased sales incentives and higher construction costs.

Selling, general and administrative expenses were $1.2 billion in the nine months ended August 31, 2019, compared to $1.1 billion in the nine months ended August 31, 2018. As a percentage of revenues from home sales, selling, general and administrative expenses improved to 8.7% in the nine months ended August 31, 2019, from 8.8% in the nine months ended August 31, 2018, due to improved operating leverage as a result of an increase in home deliveries.

Homebuilding equity in loss from unconsolidated entities, gross margin on land sales, homebuilding other income (expense), net, and other homebuilding revenue totaled a loss of $16.2 million in the nine months ended August 31, 2019, compared to earnings of $169.4 million in the nine months ended August 31, 2018. Homebuilding equity in loss from unconsolidated entities was $4.6 million in the nine months ended August 31, 2019, compared to $43.5 million in the nine months ended August 31, 2018. In the nine months ended August 31, 2019, Homebuilding equity in loss from unconsolidated entities was primarily attributable to our share of net operating losses from one of our homebuilding unconsolidated entities. In the nine months ended August 31, 2018, Homebuilding equity in loss from unconsolidated entities was primarily attributable to our share of valuation adjustments related to assets of a homebuilding unconsolidated entity and our share of net operating losses from our unconsolidated entities. Gross margin on land sales was $14.9 million in the nine months ended August 31, 2019, compared to $22.3 million in the nine months ended August 31, 2018. Homebuilding other income (expense), net, was ($35.3) million in the nine months ended August 31, 2019, compared to $190.7 million in the nine months ended August 31, 2018. Homebuilding other expense, net in the nine months ended August 31, 2019 was primarily due to a one-time loss of $48.9 million from the consolidation of a previously unconsolidated entity. In the nine months ended August 31, 2018, Homebuilding

other income, net, was primarily related to a gain on the sale of an 80% interest in one of Homebuilding's strategic joint ventures, Treasure Island Holdings. In the nine months ended August 31, 2019, other homebuilding revenues were $8.8 million.

Homebuilding interest expense was $271.5 million in the nine months ended August 31, 2019 ($255.4 million was included in costs of homes sold, $4.5 million in costs of land sold and $11.5 million in homebuilding other expense, net), compared to $214.0 million in the nine months ended August 31, 2018 ($203.2 million was included in costs of homes sold, $2.2 million in costs of land sold and $8.6 million in homebuilding other income, net). Interest expense included in costs of homes sold increased primarily due to an increase in home deliveries. The prior year's interest expense was favorably impacted by purchase accounting related to the CalAtlantic acquisition.

~~During the nine months ended August 31, 2018, we recorded $140.1 million of acquisition and integration costs related to CalAtlantic.~~

Operating earnings for the Financial Services segment were $163.0 million in the nine months ended August 31, 2019 (which included $149.9 million of operating earnings and an add back of $13.1 million of net loss attributable to noncontrolling interests), compared to $142.2 million in the nine months ended August 31, 2018. Operating earnings increased due to an improvement in the mortgage business as a result of a higher capture rate of increased Lennar home deliveries, as well as reductions in loan origination costs driven in part by technology initiatives. These improvements more than offset the decrease in retail origination volume, as a resultextension of the ~~sale of substantially all of our retail mortgage business in~~new energy efficient home tax credit during the first quarter of 2019. Operating earnings of our title business decreased as a result of a decline in retail closed orders due to the sale of a majority of our retail agency business and title insurance underwriter in the first quarter of 2019. This decrease in retail volume was partially offset by an increase in captive business volume and a decrease in operating expenses.

Operating earnings for the Multifamily segment were $13.4 million in the nine months ended August 31, 2019 (which included $12.7 million of operating earnings and an add back of $0.7 million of net loss attributable to noncontrolling interests), primarily due to the segment's $16.3 million share of gains as a result of the sale of two operating properties by Multifamily's unconsolidated entities, $11.9 million gain on the sale of an investment in an operating property and $5.6 million of promote revenue related to three properties in LMV I, partially offset by general and administrative expenses. In the nine months ended August 31, 2018, the Multifamily segment had operating earnings of $9.7 million primarily due to the segment's $23.3 million share of gains as a result of the sale of four operating properties by Lennar Multifamily's unconsolidated entities and $10.3 million of promote revenue related to four properties in LMV I, partially offset by general and administrative expenses.

Operating earnings for the Lennar Other segment were $21.2 million in the nine months ended August 31, 2019 (which included $20.7 million of operating earnings and an add back of $0.4 million of net loss attributable to noncontrolling interests), compared to $18.1 million in the nine months ended August 31, 2018 (which included $15.6 million of operating earnings and an add back of $2.6 million of net loss attributable to noncontrolling interests).

Corporate general and administrative expenses were $248.1 million, or 1.6% as a percentage of total revenues, in the nine months ended August 31, 2019, compared to $249.1 million, or 1.8% as a percentage of total revenues, in the nine months ended August 31, 2018. The decrease in corporate general and administrative expenses as a percentage of total revenues was due to improved operating leverage as a result of an increase in revenues.

In the nine months ended August 31, 2019 and 2018, we had tax provisions of $374.7 million and $306.9 million, respectively. Our overall effective income tax rates were 24.2% and 25.4% in the nine months ended August 31, 2019 and 2018, respectively. The effective tax rate for the nine months ended August 31, 2019 included state income tax expense and non-deductible executive compensation, partially offset by energy credits. For the nine months ended August 31, 2018, the effective tax rate included a $68.6 million non-cash one-time write down of the deferred tax assets due to the enactment of the Tax Cuts and Jobs Act and state income tax expense, partially offset by a $34.1 million benefit recorded in the third quarter of 2018, primarily related to tax accounting method changes and energy credits. Excluding the impact of the write down of the deferred tax assets and the benefit recorded in the third quarter of 2018, the effective tax rate for the nine months ended August 31, 2018 would have been 22.6%.2020.

Homebuilding Segments

In connection with the CalAtlantic acquisition, we experienced significant growth in our homebuilding operations. As a result, at the end of fiscal 2018, our chief operating decision makers ("CODM") reassessed how they evaluate the business and allocate resources. The CODM manage and assess our performance at a regional level. Therefore, in 2018 we performed an assessment of our operating segments in accordance with ASC 280, ~~Segment Reporting~~, (“ASC 280”) and determined that each of our four homebuilding regions, financial services operations, multifamily operations and Rialto operations are our operating segments. Prior to this change, in accordance with the aggregation criteria defined in ASC 280, our operating segments were aggregated into reportable segments, based primarily upon similar economic characteristics, geography and product type. In addition, in first quarter of 2019, as a result of the reclassification of Rialto Mortgage Finance ("RMF") and certain other Rialto assets from the Rialto segment to the Financial Services segment effective December 1, 2018, we renamed the Rialto segment as "Lennar Other" and included in this segment certain strategic technology investments, which were reclassified from the Homebuilding segments to Lennar Other. Prior periods have been reclassified to conform with the 2019 presentation. References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to Homebuilding segments are to those four reportable segments.

At ~~August 31, 2019,~~February 29, 2020, our reportable Homebuilding segments and Homebuilding Other consisted of homebuilding divisions located in:

East: Florida, New Jersey, North Carolina, Pennsylvania and South Carolina

Central: Georgia, Illinois, Indiana, Maryland, Minnesota, Tennessee and Virginia

Texas: Texas

West: Arizona, California, Colorado, Nevada, Oregon, Utah and Washington

Other: Urban divisions and other homebuilding related investments primarily in California, including FivePoint Holdings, LLC ("FivePoint")

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

Selected Financial and Operational Data

Three Months Ended Nine Months Ended
August 31, August 31,
(In thousands) 2019 2018 2019 2018
Homebuilding revenues:
East:
Sales of homes $ 1,841,468
1,680,018
4,796,328
4,136,580
Sales of land 690
21,604
8,266
44,748
Other revenues 1,512
—
3,231
—
Total East 1,843,670
1,701,622
4,807,825
4,181,328
Central:
Sales of homes 713,303
668,772
�� 1,755,623
1,535,701
Sales of land 11,180
2,136
17,436
26,299
Other revenues 270
—
546
—
Total Central 724,753
670,908
1,773,605
1,562,000
Texas:
Sales of homes 696,903
716,343
1,796,343
1,748,521
Sales of land 16,220
12,807
28,254
37,494
Other revenues 253
—
508
—
Total Texas 713,376
729,150
1,825,105
1,786,015
West:
Sales of homes 2,060,740
2,149,156
5,738,881
5,402,779
Sales of land 1,247
25,408
5,619
44,354
Other revenues 1,336
—
2,743
—
Total West 2,063,323
2,174,564
5,747,243
5,447,133
Other:
Sales of homes 18,280
9,498
27,764
35,356
Sales of land 75,001
—
75,001
—
Other revenues 595
—
1,775
—
Total Other 93,876
9,498
104,540
35,356
Total homebuilding revenues $ 5,438,998
5,285,742
14,258,318
13,011,832



	Three Months Ended February 29, 2020
	Gross Margins					Operating Earnings (Loss)
(In thousands)	Sales of Homes Revenue		Costs of Sales of Homes	Gross Margin %		Net Margins on Sales of Homes (1)			Gross Margins on Sales of Land		Other Revenue	Equity in Earnings (Loss) from Unconsolidated Entities		Other Income (Expense), net		Operating Earnings (Loss)
East	$	1,402,672	1,085,109	22.6	%	$	181,295		(743	)	1,683	359		(7,589	)	175,005
Central	534,746		453,391	15.2	%	27,934			(635	)	230	553		1,390		29,472
Texas	463,796		360,273	22.3	%	53,127			1,673		517	203		(2,447	)	53,073
West	1,731,514		1,379,291	20.3	%	218,507			(563	)	1,814	3,940		1,209		224,907
Other (2)	8,039		13,715	(70.6	)%	(10,767		)	—		238	(9,601	)	(1,929	)	(22,059	)
Totals	$	4,140,767	3,291,779	20.5	%	$	470,096		(268	)	4,482	(4,546	)	(9,366	)	460,398

Three Months Ended Nine Months Ended
August 31, August 31,
(In thousands) 2019 2018 2019 2018
Homebuilding operating earnings:
East:
Sales of homes $ 246,568
199,648
589,389
434,440
Sales of land 127
565
4,132
17,267
Other homebuilding revenues 1,512
—
3,231
—
Equity in loss from unconsolidated entities (184 ) (224 ) (418 ) (538 )
Other income (expense), net 8,692
(784 ) 6,228
3,258
Total East 256,715
199,205
602,562
454,427
Central:
Sales of homes 71,606
68,026
156,355
102,281
Sales of land 4,105
441
4,679
(445 )
Other homebuilding revenues 270
—
546
—
Equity in earnings from unconsolidated entities 14
194
152
652
Other income, net 3,214
357
3,747
704
Total Central 79,209
69,018
165,479
103,192
Texas:
Sales of homes 75,213
68,894
182,257
116,638
Sales of land 3,322
3,059
5,597
8,011
Other homebuilding revenues 253
—
508
—
Equity in earnings from unconsolidated entities 176
7
334
291
Other expense, net (666 ) (1,218 ) (2,746 ) (2,533 )
Total Texas 78,298
70,742
185,950
122,407
West:
Sales of homes 253,844
281,392
718,061
640,654
Sales of land (1) 727
(504 ) (3,422 ) (288 )
Other homebuilding revenues 1,336
—
2,743
—
Equity in earnings (loss) from unconsolidated entities 655
(607 ) 158
(1,330 )
Other income, net 2,862
11,769
5,449
17,038
Total West 259,424
292,050
722,989
656,074
Other:
Sales of homes (2) (6,318 ) (6,636 ) (19,464 ) (15,620 )
Sales of land 3,906
(231 ) 3,905
(2,290 )
Other homebuilding revenues 595
—
1,775
—
Equity in loss from unconsolidated entities (11,120 ) (16,109 ) (4,827 ) (42,612 )
Other income (expense), net (3) (1,727 ) 715
(48,003 ) 172,246
Total Other (14,664 ) (22,261 ) (66,614 ) 111,724
Total homebuilding operating earnings $ 658,982
608,754
1,610,366
1,447,824



	Three Months Ended February 28, 2019
	Gross Margins					Operating Earnings (Loss)
(In thousands)	Sales of Homes Revenue		Costs of Sales of Homes	Gross Margin %		Net Margins on Sales of Homes (1)			Gross Margins on Sales of Land		Other Revenue	Equity in Earnings (Loss) from Unconsolidated Entities		Other Income (Expense), net		Operating Earnings (Loss)
East	$	1,222,644	969,866	20.7	%	$	134,286		2,372		609	(99	)	(1,785	)	135,383
Central	433,125		358,361	17.3	%	30,065			403		164	69		225		30,926
Texas	412,430		332,103	19.5	%	31,989			1,464		54	(120	)	(1,109	)	32,278
West	1,537,503		1,216,746	20.9	%	193,896			(3,981	)	982	(311	)	75		190,661
Other (2)	2,427		4,974	(104.9	)%	(7,416		)	(1	)	—	(13,295	)	1,059		(19,653	)
Totals	$	3,608,129	2,882,050	20.1	%	$	382,820		257		1,809	(13,756	)	(1,535	)	369,595


(1)	~~For the nine months ended August 31, 2019,~~Net margins on sales of ~~land included an impairment of $4.0 million related to contracts to sell land.~~homes include selling, general and administrative expenses.


(2)	~~Operating earnings related~~Negative gross and net margins were due to period costs in Urban divisions that impact costs of homes sold without any sales of homes ~~in Homebuilding Other is negative because there were not sufficient home sales to offset period costs and selling, general and administrative expenses in our urban divisions.~~revenue.

~~(3)~~

For the nine months ended August 31, 2019, other income (expense), net of Homebuilding Other was primarily due to a one-time loss of $48.9 million from the consolidation of a previously unconsolidated entity. For the nine months ended August 31, 2018, other expense, net of Homebuilding Other included $164.9 million related to a gain on the sale of an 80% interest in one of Homebuilding's strategic joint ventures, Treasure Island Holdings.

Summary of Homebuilding Data

Deliveries:


	Three Months Ended								Three Months Ended
	Homes		Dollar Value (In thousands)			Average Sales Price			Homes		Dollar Value (In thousands)			Average Sales Price
	August 31,		August 31,			August 31,			February 29,	February 28,	February 29,		February 28,	February 29,		February 28,
	2019	2018	2019		2018	2019		2018	2020	2019	2020		2019	2020		2019
East	5,450	4,862	$	1,844,192	1,680,018	$	338,000	346,000	4,065	3,612	$	1,405,667	1,226,435	$	346,000	340,000
Central	1,880	1,735	713,303		668,772	379,000		385,000	1,366	1,124	534,746		433,125	391,000		385,000
Texas	2,260	2,169	696,904		716,343	308,000		330,000	1,577	1,251	463,796		412,429	294,000		330,000
West	3,908	3,827	2,060,740		2,149,156	527,000		562,000	3,304	2,825	1,731,514		1,537,503	524,000		544,000
Other	24	20	18,280		21,059	762,000		1,053,000	9	8	8,039		7,758	893,000		970,000
Total	13,522	12,613	$	5,333,419	5,235,348	$	394,000	415,000	10,321	8,820	$	4,143,762	3,617,250	$	401,000	410,000

Of the total homes delivered listed above, ~~nine~~eight homes with a dollar value of ~~$2.7~~$3.0 million and an average sales price of ~~$303,000~~$374,000 represent home deliveries from unconsolidated entities for the three months ended ~~August 31, 2019,~~February 29, 2020, compared to 1318 home deliveries with a dollar value of ~~$11.6~~$9.1 million and an average sales price of ~~$889,000~~$507,000 for the three months ended ~~August 31, 2018.~~February 28, 2019.

Nine Months Ended
Homes Dollar Value (In thousands) Average Sales Price
August 31, August 31, August 31,
2019 2018 2019 2018 2019 2018
East 14,123
12,172
$ 4,805,792
4,136,580
$ 340,000
340,000
Central 4,572
3,978
1,755,623
1,535,701
384,000
386,000
Texas 5,660
5,233
1,796,344
1,748,521
317,000
334,000
West 10,667
10,005
5,738,881
5,402,779
538,000
540,000
Other 49
85
43,312
80,483
884,000
947,000
Total 35,071
31,473
$ 14,139,952
12,904,064
$ 403,000
410,000

Of the total homes delivered listed above, 50 homes with a dollar value of $25.0 million and an average sales price of $500,000 represent home deliveries from unconsolidated entities for the nine months ended August 31, 2019, compared to 61 home deliveries with a dollar value of $45.1 million ~~and an average sales price of $740,000 for the nine months ended August 31, 2018.~~

~~Sales Incentives~~New Orders (1):

Three Months Ended

Sales Incentives
(In thousands)

Average Sales Incentives Per
Home Delivered

Sales Incentives
as a % of Revenue
August 31, August 31, August 31,
2019 2018 2019 2018 2019 2018
East $ 128,734
112,133
$ 23,700
23,100
6.5 % 6.3 %
Central 49,519
44,065
26,300
25,400
6.5 % 6.2 %
Texas 67,156
72,946
29,700
33,600
8.8 % 9.2 %
West 83,505
58,521
21,400
15,300
3.9 % 2.7 %
Other 1,306
1,384
54,400
197,700
6.7 % 12.7 %
Total $ 330,220
289,049
$ 24,400
22,900
5.8 % 5.2 %

Nine Months Ended

Sales Incentives
(In thousands)

Average Sales Incentives Per
Home Delivered

Sales Incentives
as a % of Revenue
August 31, August 31, August 31,
2019 2018 2019 2018 2019 2018
East $ 347,515
293,391
$ 24,700
24,100
6.8 % 6.6 %
Central 130,321
105,227
28,500
26,500
6.9 % 6.4 %
Texas 166,867
172,786
29,500
33,000
8.5 % 9.0 %
West 241,818
140,886
22,700
14,100
4.0 % 2.5 %
Other 4,131
4,750
137,700
197,900
13.0 % 11.8 %
Total $ 890,652
717,040
$ 25,400
22,800
5.9 % 5.3 %


~~(1)~~	~~Sales incentives relate to home deliveries during the period, excluding deliveries by unconsolidated entities.~~

~~New Orders (2):~~


	Three Months Ended								Three Months Ended
	Homes		Dollar Value (In thousands)			Average Sales Price			Active Communities		Homes		Dollar Value (In thousands)			Average Sales Price
	August 31,		August 31,			August 31,			February 29,	February 28,	February 29,	February 28,	February 29,		February 28,	February 29,		February 28,
	2019	2018	2019		2018	2019		2018	2020	2019	2020	2019	2020		2019	2020		2019
East	5,340	5,224	$	1,757,051	1,779,825	$	329,000	341,000	424	447	4,625	4,493	$	1,597,298	1,521,431	$	345,000	339,000
Central	1,822	1,662	708,977		627,195	389,000		377,000	243	248	1,773	1,422	695,498		537,596	392,000		378,000
Texas	2,221	1,909	660,304		612,029	297,000		321,000	236	245	1,999	1,424	573,079		456,959	287,000		321,000
West	3,949	3,502	2,049,404		2,028,251	519,000		579,000	352	348	3,965	3,112	2,125,632		1,629,814	536,000		524,000
Other	37	22	33,896		23,589	916,000		1,072,000	3	4	14	12	13,581		11,313	970,000		943,000
Total	13,369	12,319	$	5,209,632	5,070,889	$	390,000	412,000	1,258	1,292	12,376	10,463	$	5,005,088	4,157,113	$	404,000	397,000

Of the total new orders listed above, 2126 homes with a dollar value of ~~$7.3~~$8.1 million and an average sales price of ~~$349,000~~$310,000 represent new orders in five active communities from unconsolidated entities for the three months ended ~~August 31, 2019,~~February 29, 2020, compared to 1315 new orders with a dollar value of ~~$9.8~~$9.7 million and an average sales price of ~~$751,000~~$647,000 in five active communities for the three months ended ~~August 31, 2018.~~

Nine Months Ended
Homes Dollar Value (In thousands) Average Sales Price
August 31, August 31, August 31,
2019 2018 2019 2018 2019 2018
East 15,424
14,430
$ 5,218,383
4,888,372
$ 338,000
339,000
Central 5,306
4,451
2,044,653
1,721,263
385,000
387,000
Texas 6,069
5,629
1,861,849
1,822,235
307,000
324,000
West 11,481
10,633
5,977,758
5,970,570
521,000
562,000
Other 70
72
60,447
70,428
864,000
978,000
Total 38,350
35,215
$ 15,163,090
14,472,868
$ 395,000
411,000

Of the total new orders listed above, 68 homes with a dollar value of $32.1 million and an average sales price of $472,000 represent new orders from unconsolidated entities for the nine months ended August 31, 2019, compared to 54 new orders with a dollar value of $38.9 million and an average sales price of $721,000 for the nine months ended August 31, 2018.February 28, 2019.


~~(2)~~(1)	New orders represent the number of new sales contracts executed with homebuyers, net of cancellations, during the three ~~and nine~~ months ended ~~August 31, 2019~~February 29, 2020 and ~~2018.~~February 28, 2019.

Backlog:


	Homes		Dollar Value (In thousands)			Average Sales Price			Homes		Dollar Value (In thousands)			Average Sales Price
	August 31,		August 31,			August 31,			February 29,	February 28,	February 29,		February 28,	February 29,		February 28,
	2019	2018 (1)	2019		2018	2019		2018	2020	2018	2020		2019	2020		2019
East ~~(2)~~	8,389	8,234	$	2,938,456	2,982,258	$	350,000	362,000	7,387	7,956	$	2,640,129	2,817,706	$	357,000	354,000
Central	2,720	2,472	1,079,283		974,388	397,000		394,000	2,420	2,284	982,589		894,724	406,000		392,000
Texas	2,557	2,623	826,226		922,425	323,000		352,000	2,592	2,321	822,620		805,250	317,000		347,000
West	5,215	5,875	2,726,329		3,454,519	523,000		588,000	5,219	4,688	2,702,535		2,579,762	518,000		550,000
Other	27	16	26,123		19,742	968,000		1,234,000	14	10	13,995		12,543	1,000,000		1,254,000
Total	18,908	19,220	$	7,596,417	8,353,332	$	402,000	435,000	17,632	17,259	$	7,161,868	7,109,985	$	406,000	412,000

Of the total homes in backlog listed above, 2549 homes with a backlog dollar value of ~~$9.8~~$15.2 million and an average sales price of ~~$391,000~~$311,000 represent the backlog from unconsolidated entities at ~~August 31, 2019,~~February 29, 2020, compared to 1614 homes with a backlog dollar value of ~~$8.9~~$7.7 million and an average sales price of ~~$559,000~~$552,000 at ~~August 31, 2018.~~February 28, 2019.


~~(1)~~	During the nine months ended August 31, 2018, we acquired a total of 6,530 homes in backlog in connection with the CalAtlantic acquisition. Of the homes in backlog acquired, 2,151 homes were in the East, 1,275 homes were in the Central, 888 homes were in Texas and 2,216 homes were in the West.


~~(2)~~	~~During the nine months ended August 31, 2019, we acquired 13 homes in 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 if they fail to qualify for financing or under certain other circumstances. Various state and federal laws and regulations may sometimes give purchasers a right to

cancel homes in backlog. We do not recognize revenue on homes under sales contracts until the sales are closed and title passes to the new homeowners.

~~We experienced cancellation rates in our Homebuilding segments and Homebuilding other as follows:~~

Three Months Ended Nine Months Ended
August 31, August 31,
2019 2018 2019 2018
East 14 % 13 % 15 % 13 %
Central 12 % 11 % 11 % 9 %
Texas 23 % 23 % 23 % 18 %
West 15 % 15 % 15 % 12 %
Other — % 8 % 5 % 11 %
Total 16 % 15 % 16 % 13 %

~~Active Communities:~~

August 31,
2019 2018 (1)
East 444
482
Central 255
228
Texas 235
250
West 362
347
Other 4
5
Total 1,300
1,312

~~Of the total active communities listed above, five communities represent active communities being developed by unconsolidated entities as of both August 31, 2019 and 2018.~~


~~(1)~~	We acquired 542 active communities related to the CalAtlantic acquisition on February 12, 2018. Of the communities acquired, 177 were in the East, 135 were in the Central, 99 were in Texas and 131 were in the West.

~~The following table details our gross margins on home sales for the three and nine months ended August 31, 2019 and 2018 for each of our reportable Homebuilding segments and Homebuilding Other:~~

Three Months Ended Nine Months Ended
August 31, August 31,
(Dollars in thousands) 2019 2018 (1) 2019 2018 (1)
East:
Sales of homes $ 1,841,468
1,680,018
4,796,328
4,136,580

Costs of homes sold 1,444,257
1,326,865
3,788,921
3,303,134

Gross margins on home sales 397,211
21.6% 353,153
21.0% 1,007,407
21.0% 833,446
20.1%
Central:
Sales of homes 713,303
668,772
1,755,623
1,535,701

Costs of homes sold 581,617
542,242
1,440,049
1,296,121

Gross margins on home sales 131,686
18.5% 126,530
18.9% 315,574
18.0% 239,580
15.6%
Texas:
Sales of homes 696,903
716,343
1,796,343
1,748,521

Costs of homes sold 555,561
576,338
1,435,311
1,446,998

Gross margins on home sales 141,342
20.3% 140,005
19.5% 361,032
20.1% 301,523
17.2%
West:
Sales of homes 2,060,740
2,149,156
5,738,881
5,402,779

Costs of homes sold 1,646,254
1,710,233
4,569,646
4,363,544

Gross margins on home sales 414,486
20.1% 438,923
20.4% 1,169,235
20.4% 1,039,235
19.2%
Other:
Sales of homes 18,280
9,498
27,764
35,356

Costs of homes sold (2) 17,372
10,206
30,713
34,919

Gross margins on home sales 908
5.0% (708 ) (7.5)% (2,949 ) (10.6)% 437
1.2%
Total gross margins on home sales $ 1,085,633
20.4% 1,057,903
20.3% 2,850,299
20.2% 2,414,221
18.8%


~~(1)~~	During the three and nine months ended August 31, 2018, gross margins on home sales included $84.2 million and $376.0 million, respectively, of purchase accounting adjustments on CalAtlantic homes in backlog/construction in progress that were delivered in the respective periods.


~~(2)~~	~~Costs of homes sold include period costs in our urban divisions that impact costs of homes sold without any sales of homes revenue.~~

Three Months Ended ~~August 31, 2019~~February 29, 2020 versus Three Months Ended ~~August 31, 2018~~February 28, 2019

Homebuilding East: Revenues from home sales increased in the ~~third~~first quarter of ~~2019~~2020 compared to the ~~third~~first quarter of ~~2018,~~2019, primarily due to an increase in the number of home deliveries ~~in all the states in the segment, partially offset by a decrease~~and in the average sales price of homes delivered in ~~Florida.~~Florida and New Jersey, partially offset by a decrease in the number of home deliveries and the average sales price of homes delivered in the Carolinas and Pennsylvania. The increase in the number of home deliveries isin Florida and New Jersey was primarily due to higher demand as the number of deliveries per active community increased. The decrease in the number of home deliveries in the Carolinas and Pennsylvania was primarily due to a decrease in active communities. The increase in the average sales price of homes delivered in Florida and New Jersey was primarily driven by a change in product mix due to a higher percentage of deliveries in higher-priced communities. The decrease in the average sales price of homes delivered in the Carolinas and Pennsylvania was primarily driven by a change in product mix due to a higher percentage of deliveries in lower-priced communities. Gross margin percentage on home deliveries in the ~~third~~first quarter of ~~2019~~2020 increased compared to the same period last year primarily due to ~~purchase accounting adjustments on CalAtlantic homes that were in backlog/~~reducing our construction ~~in progress when we acquired CalAtlantic, which reduced the gross margin percentage for those deliveries~~costs and a slight increase in the ~~third quarter~~average sales price of ~~2018.~~homes delivered.

Homebuilding Central: Revenues from home sales increased in the ~~third~~first quarter of ~~2019~~2020 compared to the ~~third~~first quarter of ~~2018,~~2019, primarily due to an increase in the number of home deliveries in all the states in the segment except Minnesota and Tennessee. The increase in the number of home deliveries was primarily due to an increase in active communities. The decrease in the number of home deliveries in Minnesota and Tennessee was primarily due to a decrease in deliveries per community as a result of timing of opening and closing of communities. Gross margin percentage on home deliveries in the third quarter of 2019 decreased compared to the same period last year primarily due to higher construction costs and increased sales incentives, partially offset by purchase accounting adjustments on CalAtlantic homes that were in backlog/construction in progress when we acquired CalAtlantic, which reduced the gross margin percentage for those deliveries in the third quarter of 2018.

~~Homebuilding Texas:~~ Revenues from home sales decreased in the third quarter of 2019 compared to the third quarter of 2018, primarily due to a decrease in the average sales price of homes delivered, partially offset by an increase in the number of home deliveries. The decrease in average sales price of homes delivered was primarily due to closing out higher priced communities and shifting into lower priced communities. The increase in the number of deliveries was primarily due to higher demand as the number of deliveries per active community increased. Gross margin percentage on home deliveries in the third

quarter of 2019 increased compared to the same period last year primarily due to a decrease in sales incentives, a decrease in construction costs and purchase accounting adjustments on CalAtlantic homes that were in backlog/construction in progress when we acquired CalAtlantic, which reduced the gross margin percentage for those deliveries in the third quarter of 2018.

~~Homebuilding West:~~ Revenues from home sales decreased in the third quarter of 2019 compared to the third quarter of 2018, primarily due to a decrease in the average sales price of homes delivered in Arizona, California, Nevada and Oregon, partially offset by an increase in the number of home deliveries in all states of the segment except California and Colorado. The decrease in the average sales price of homes delivered in Arizona, California, Nevada and Oregon was primarily driven by a change in product mix due to a higher percentage of deliveries in lower-priced communities. The decrease in the number of home deliveries in California was primarily due to a decrease in deliveries per community as a result of timing of opening and closing of communities. The decrease in the number of home deliveries in Colorado was primarily due to a decrease in active communities and timing of opening and closing of communities. Gross margin percentage on home deliveries in the third quarter of 2019 decreased slightly compared to the same period last year primarily due to an increase in sales incentives, partially offset by purchase accounting adjustments on CalAtlantic homes that were in backlog/construction in progress when we acquired CalAtlantic, which reduced the gross margin percentage for those deliveries in the third quarter of 2018.

~~Nine Months Ended August 31, 2019 versus Nine Months Ended August 31, 2018~~

~~Homebuilding East:~~ Revenues from home sales increased in the nine months ended August 31, 2019 compared to the nine months ended August 31, 2018, primarily due to an increase in the number of home deliveries in all the states in the segment. ~~The average sales price of homes delivered was consistent with slight decreases in Florida and New Jersey offset by increases in the Carolinas.~~ The increase in the number of home deliveries was primarily due to higher demand as the number of deliveries per active community increased. Gross margin percentage on home deliveries in the ~~nine months ended August 31, 2019 increased~~first quarter of 2020 decreased compared to the same period last year primarily due to ~~purchase accounting adjustments on CalAtlantic homes that were~~impairments taken in ~~backlog/construction in progress when we acquired CalAtlantic, which reduced the gross margin percentage for those deliveries in the nine months ended August 31, 2018.~~a few communities during first quarter of 2020.

~~Homebuilding Central:~~ Revenues from home sales increased in the nine months ended August 31, 2019 compared to the nine months ended August 31, 2018, primarily due to an increase in the number of home deliveries in all the states in the segment, except in Maryland and Tennessee, and an increase in the average sales price of homes delivered in Illinois and Virginia. This was partially offset by a decrease in the average sales price of homes delivered in Georgia, Indiana and Minnesota. The increase in the number of home deliveries was primarily due to an increase in active communities including communities acquired from CalAtlantic. The decrease in the number of home deliveries in Maryland and Tennessee was primarily due to a decrease in deliveries per community as a result of timing of opening and closing of communities. The increase in the average sales price of homes delivered in Illinois and Virginia was primarily due to an increase in home deliveries in higher-priced communities. The decrease in the average sales price of homes delivered in Georgia, Indiana, and Minnesota was primarily driven by a change in product mix due to closing out the remaining homes in higher-priced communities and opening lower-priced communities. Gross margin percentage on home deliveries in the nine months ended August 31, 2019 increased compared to the same period last year primarily due to purchase accounting adjustments on CalAtlantic homes that were in backlog/construction in progress when we acquired CalAtlantic, which reduced the gross margin percentage for those deliveries in the nine months ended August 31, 2018 and decreased sales incentives. This was partially offset by higher construction costs.

Homebuilding Texas: Revenues from home sales increased in the ~~nine months ended August 31, 2019~~first quarter of 2020 compared to the ~~nine months ended August 31, 2018,~~first quarter of 2019, primarily due to an increase in the number of home deliveries, partially offset by a decrease in the average sales ~~price.~~price of homes delivered. The increase in the number of ~~home~~ deliveries was primarily due to higher demand as the number of deliveries per active community increased. The decrease in average sales price of homes delivered was primarily due to closing out higher priced communities and shifting into lower priced communities. Gross margin percentage on home deliveries in the ~~nine months ended August 31, 2019~~first quarter of 2020 increased compared to the same period last year primarily due to ~~purchase accounting adjustments on CalAtlantic homes that were in backlog/~~reducing our construction ~~in progress when we acquired CalAtlantic, which reduced the gross margin percentage for those deliveries in the nine months ended August 31, 2018 and decreased sales incentives.~~costs.

Homebuilding West: Revenues from home sales increased in the ~~nine months ended August 31, 2019~~first quarter of 2020 compared to the ~~nine months ended August 31, 2018,~~first quarter of 2019, primarily due to an increase in the number of home deliveries in all ~~the~~ states inof the segment except ~~Colorado~~Oregon and ~~Nevada, and an increase~~Utah, partially offset by a decrease in the average sales price of homes delivered in all states inof the segment except ~~Arizona.~~Utah. The increase in the number of home deliveries in all states of the segment except Oregon and Utah was primarily due to ~~an increase in~~higher demand as the number of deliveries per active ~~communities including communities acquired from CalAtlantic.~~community increased. The decrease in the number of home deliveries in ~~Colorado~~Oregon and Utah was primarily due to ~~a decrease in active communities and~~ timing of the opening and closing of communities. The decrease in the ~~number~~average sales price of ~~home deliveries~~homes delivered in ~~Nevada~~all states of the segment except Utah was primarily driven by a change in product mix due to a ~~decrease~~higher percentage of deliveries in ~~deliveries per active community as a result of timing of opening and closing~~lower-priced communities. The increase in the average sales price of homes delivered in Utah was primarily driven by a change in product mix due to ~~an increase in home~~a higher percentage of deliveries in higher-priced

communities, including higher-priced communities acquired from CalAtlantic. The decrease in average sales price of homes delivered in Arizona was primarily due to closing out higher priced communities and shifting into lower priced communities. Gross margin percentage on home deliveries in the ~~nine months ended August 31, 2019 increased~~first quarter of 2020 decreased compared to the same period last year primarily due to ~~purchase accounting adjustments on CalAtlantic homes that were in backlog/construction in progress when we acquired CalAtlantic, which reduced the gross margin percentage for those deliveries~~a decrease in the ~~nine months ended August 31, 2018. This was~~average sales price of homes delivered, partially offset by ~~higher~~a reduction in our construction ~~costs and increased sales incentives.~~costs.

Financial Services Segment

Our Financial Services reportable segment provides mortgage financing, title and closing services primarily for buyers of our homes. The segment also originates and sells into securitizations commercial mortgage loans through its ~~RMF~~LMF Commercial business. Our Financial Services segment sells substantially all of the residential loans it originates within a short period in the secondary mortgage market, the majority of which are sold on a servicing released, non-recourse basis. After the loans are sold, we retain potential liability for possible claims by purchasers that we breached certain limited industry-standard representations and warranties in the loan sale agreements.

The following table sets forth selected financial and operational information related to our Financial Services segment:

Three Months Ended Nine Months Ended
August 31, August 31,
(Dollars in thousands) 2019 2018 2019 2018
Revenues $ 224,502
258,208
572,029
704,004
Costs and expenses 149,804
197,693
422,142
561,853
Operating earnings $ 74,698
60,515
149,887
142,151
Net loss attributable to noncontrolling interests (4,076 ) —
(13,133 ) —
Operating earnings net of noncontrolling interests $ 78,774
60,515
163,020
142,151
Dollar value of mortgages originated $ 2,883,000
3,044,000
7,440,000
7,941,000
Number of mortgages originated 9,200
10,000
23,700
26,400
Mortgage capture rate of Lennar homebuyers 77 % 71 % 75 % 72 %
Number of title and closing service transactions 14,300
32,500
42,400
87,300
Number of title policies issued —
75,900
19,800
219,600

Consistent with our reversion to a pure-play homebuilder, during the first quarter of 2019, we sold the majority of our retail title agency business and title insurance underwriter, substantially all of our retail mortgage business and our real estate brokerage business. These transactions resulted in a net gain for the nine months ended August 31, 2019 of $1.9 million.

In connection with the sale of the majority of our retail title agency business and title insurance underwriter, we provided seller financing and received a substantial minority equity ownership stake in the buyer. Due to the combination of both the equity and debt components of this transaction, the transaction did not meet the accounting requirements for sale treatment and, therefore, we are required to consolidate the buyer’s results at this time.



	Three Months Ended
(Dollars in thousands)	February 29, 2020			February 28, 2019
Dollar value of mortgages originated	$	2,221,000		1,937,000
Number of mortgages originated	6,900			6,200
Mortgage capture rate of Lennar homebuyers	77		%	73	%
Number of title and closing service transactions	11,200			14,600

~~Rialto Mortgage Finance~~LMF Commercial

~~RMF~~LMF Commercial originates and sells into securitizations five, seven and ten year commercial first mortgage loans, which are secured by income producing properties.

During the ~~nine~~three months ended ~~August 31, 2019, RMF~~February 29, 2020, LMF Commercial originated commercial loans with a total principal balance of $984.5 million, of which $969.2 million were recorded as loans held-for-sale and $15.3 million were recorded as loans held-for-investments, and sold $848.3 million of commercial loans into seven separate securitizations. As of November 30, 2018, there were no unsettled transactions.

~~During the nine months ended August 31, 2018, RMF originated commercial loans with a total principal balance of $997.5~~$412.3 million, all of which were recorded as loans held-for-sale and sold ~~$1.1 billion~~$314.4 million of commercial loans into two separate securitizations. As of November 30, 2019, there were no unsettled transactions.

During the three months ended February 28, 2019, LMF Commercial originated commercial loans with a total principal balance of $270.1 million, all of which were recorded as loans held-for-sale, and sold $200.5 million of loans into 12two separate securitizations.

Multifamily Segment

We have been actively involved, primarily through unconsolidated entities, in the development, construction and property management of multifamily rental properties. Our Multifamily segment focuses on developing a geographically diversified portfolio of institutional quality multifamily rental properties in select U.S. markets.

~~As of August 31, 2019 and November 30, 2018, our condensed consolidated balance sheets had $1.0 billion and $874.2 million, respectively, of assets~~The following tables provide information related to our ~~Multifamily segment, which included investments in unconsolidated entities of $539.7 million and $481.1 million, respectively. Our net~~ investment in the Multifamily ~~segment as of August 31, 2019 and November 30, 2018 was $799.6 million and $703.6 million, respectively.~~segment:

Our Multifamily segment had equity investments in 18 and 22 unconsolidated entities (including the Lennar Multifamily Venture I, "LMV I" and Lennar Multifamily Venture Fund II LP, "LMV II") as of August 31, 2019 and November 30, 2018, respectively. As of August 31, 2019, our Multifamily segment had interests in 58 communities with development costs of approximately $6.8 billion, of which 25 communities were completed and operating, nine communities were partially completed and leasing, 19 communities were under construction and the remaining communities were owned by unconsolidated entities. As of August 31, 2019, our Multifamily segment also had a pipeline of potential future projects, which were under contract or had letters of intent, totaling approximately $5.3 billion in development costs across a number of states that will be developed primarily by future unconsolidated entities.

LMV I is a long-term multifamily development investment vehicle involved in the development, construction and property management of class-A multifamily assets with $2.2 billion in equity commitments, including a $504 million co-investment commitment by us comprised of cash, undeveloped land and preacquisition costs.

In March 2018, the Multifamily segment completed the first closing of a second Multifamily Venture, LMV II, for the development, construction and property management of class-A multifamily assets. In June 2019, the Multifamily segment completed the final closing of LMV II which has approximately $1.3 billion of equity commitments, including a $381 million co-investment commitment by Lennar comprised of cash, undeveloped land and preacquisition costs.

~~Lennar Other Segment~~

Our Lennar Other segment includes fund investments we retained subsequent to the sale of the Rialto investment and asset management platform as well as strategic investments in technology companies that are looking to improve the homebuilding and financial services industries to better serve our customers and increase efficiencies. As of August 31, 2019 and November 30, 2018, our balance sheet had $553.0 million and $589.0 million, respectively, of assets in the Lennar Other segment, which included investments in unconsolidated entities of $447.7 million and $424.1 million, respectively.

During the three and nine months ended August 31, 2019, our Lennar Other segment had operating earnings of $15.8 million and $20.7 million, respectively, which related to the fund investments we retained when we sold the Rialto investment and asset management platform as well as our strategic investments in technology companies. Operating earnings for the three and nine months ended August 31, 2018 were $8.8 million and $15.6 million, respectively, which primarily included the Rialto investment and asset management platform, which was sold on November 30, 2018, and the Rialto fund investments we retained when we sold the Rialto investment and asset management platform.

At August 31, 2019 and November 30, 2018, the carrying value of Lennar Other's CMBS was $60.8 million and $60.0 million, respectively. These securities were purchased at discounts ranging from 6.5% to 86.1% with coupon rates ranging from 1.3% to 4.0%, stated and assumed final distribution dates between November 2020 and October 2026, and stated maturity dates between November 2049 and March 2059. We classify these securities as held-to-maturity based on our intent and ability to hold the securities until maturity.

(2) Financial Condition and Capital Resources

At ~~August 31, 2019~~February 29, 2020, we had cash and cash equivalents and restricted cash related to our homebuilding, financial services, multifamily and other operations of $1.1 billion, compared to ~~$1.6~~$1.5 billion at November 30, ~~2018~~2019 and $1.1 billion at ~~August 31, 2018~~February 28, 2019.

We finance all of our activities, including homebuilding, financial services, multifamily, other and general operating needs, primarily with cash generated from our operations, debt issuances and cash borrowed under our warehouse lines of credit and our unsecured revolving credit facility (the "Credit Facility").

Operating Cash Flow Activities

During the ~~nine~~three months ended ~~August 31,~~February 29, 2020 and February 28, 2019, ~~and 2018,~~ cash provided by (used in) operating activities totaled ~~$298.3~~$383.0 million and ~~$726.4~~($524.4) million, respectively. During the ~~nine~~three months ended ~~August 31, 2019,~~February 29, 2020, cash provided by operating activities was impacted primarily by our net earnings, a decrease in receivables of ~~$528.0~~$245.7 million and a decrease in loans held-for-sale of $474.2 million primarily related to the sale of loans originated by Financial Services, partially offset by an increase in inventories due to strategic land purchases, land development and construction costs of ~~$1.6 billion.~~$777.0 million and increase in other assets of $121.5 million.

During the ~~nine~~three months ended ~~August 31, 2018,~~February 28, 2019, cash ~~provided by~~used in operating activities was ~~positively~~ impacted by our net earnings, an increase in accounts payable and other liabilities of $341.4 million, deferred income tax expense of $188.1 million and a decrease in loans held-for-sale of $130.5 million, of which $73.9 million related to RMF originated commercial loans and $56.6 million related to mortgage, both of which are reported within the Financial Services segment. This was partially offsetprimarily by an increase in inventories due to strategic land purchases, land development and ~~constructions~~construction costs of ~~$725.0~~$1.1 billion, and a decrease in accounts payable and other liabilities of $387.7 million. This was partially offset by our net earnings, a decrease in receivables of $394.7 million primarily related to a decrease in Financial Services' receivables, net, which are loans sold to investors for which we have not been paid, and a decrease in loans held-for-sale of $156.7 million.

Investing Cash Flow Activities

During the three months ended February 29, 2020 and February 28, 2019, cash provided by (used in) investing activities totaled $13.2 million and ~~an increase in other assets of $193.8 million. For~~($78.0) million, respectively. During the ~~nine~~three months ended ~~August 31, 2018,~~February 29, 2020, our cash provided by investing activities was primarily due to distributions of ~~earnings~~capital from unconsolidated entities ~~were $90.4~~of $86.3 million, which primarily included (1) $17.1 million from Multifamily unconsolidated entities, (2) $27.8 million from the unconsolidated Rialto real estate funds included in our Lennar Other segment and (3) $41.4 million from Homebuilding unconsolidated entities. This was partially offset by net additions to operating properties and equipment of $17.9 million and cash contributions of $78.6 million to unconsolidated entities, which included (1) $12.6 million to Homebuilding unconsolidated entities, (2) $35.8 million to Multifamily unconsolidated entities, and (3) $30.2 million to the strategic technology investments included in the Lennar Other segment.

During the three months ended February 28, 2019, our cash used in investing activities was primarily due to cash contributions of $133.9 million to unconsolidated entities, which included (1) $92.9 million to Homebuilding unconsolidated entities, (2) $33.8 million to Multifamily unconsolidated entities primarily for working capital; and (3) $7.2 million to the unconsolidated Rialto real estate funds included in our Lennar Other segment. This was offset by distributions of capital from unconsolidated entities of $70.1 million, which included (1) ~~$67.5~~$33.2 million from Homebuilding unconsolidated entities; (2) ~~$18.7~~$12.9 million from Multifamily unconsolidated entities; (3) $12.7 million from Financial Services unconsolidated entities; and ~~(2) $4.2~~(4) $11.3 million from the unconsolidated Rialto real estate funds included in our Lennar Other segment.

~~Investing Cash Flow Activities~~

During the nine months ended August 31, 2019 and 2018, cash used in investing activities totaled $39.4 million and $1.0 billion, respectively. During the nine months ended August 31, 2019, our cash used in investing activities was primarily due to cash contributions of $329.9 million to unconsolidated entities, which included (1) $196.4 million to Homebuilding unconsolidated entities, (2) $80.2 million to Multifamily unconsolidated entities primarily for working capital; and (3) $52.9 million to the unconsolidated Rialto real estate funds and strategic investments included in our Lennar Other segment; and $69.6 million of net addition to operating properties and equipment. This was partially offset by distributions of capital from unconsolidated and consolidated entities of $250.3 million, which included (1) $107.2 million from Multifamily unconsolidated entities; (2) $78.7 million from Homebuilding unconsolidated entities; (3) $41.6 million from the unconsolidated Rialto real estate funds and strategic investments included in our Lennar Other segment; and (4) $22.9 million from Financial Services consolidated entities. In addition, our cash used in investing activities was also offset by $50.0 million of proceeds from the sale of two Homebuilding operating properties and other assets, and $41.6 million of proceeds from the sales of available-for-sale securities.

During the nine months ended August 31, 2018, our cash used in investing activities was primarily due to our $1.1 billion acquisition of CalAtlantic, net of cash acquired. In addition, we made cash contributions of $302.3 million to unconsolidated entities, which included (1) $156.7 million to Homebuilding unconsolidated entities, (2) $93.8 million to Multifamily unconsolidated entities primarily for working capital, (3) $51.9 million to the unconsolidated Rialto real estate funds included in our Lennar Other segment. Cash used in investing activities was also impacted by purchases of CMBS bonds by our Financial Services and Lennar Other segment. This was partially offset by the receipt of $199.7 million of proceeds from the sale of an 80% interest in one of Homebuilding's strategic joint ventures, Treasure Island Holdings, and distributions of capital from unconsolidated entities of $227.8 million, which included (1) $93.8 million from Homebuilding unconsolidated entities, (2) $96.8 million from Multifamily unconsolidated entities, (3) $37.1 million from the interests in Rialto real estate funds included in our Lennar Other segment.

Financing Cash Flow Activities

During the ~~nine~~three months ended ~~August 31,~~February 29, 2020 and February 28, 2019, ~~and 2018,~~ cash ~~used in~~(used in) provided by financing activities totaled ~~$785.1~~($789.8) million and ~~$1.3 billion,~~$69.0 million, respectively. During the ~~nine~~three months ended ~~August 31, 2019,~~February 29, 2020, cash used in financing activities was primarily impacted by (1) ~~payment at maturity of $500 million aggregate principal amount of our 4.50% senior notes due June 2019; (2) $423.1~~$755.6 million of net repayments under our Financial Services' warehouse facilities, which included the ~~RMF~~LMF Commercial warehouse repurchase facilities; ~~(3) $154.7 million principal payment on other borrowings; and (4)~~(2) repurchases of our common stock for ~~$419.3~~$296.0 million, which included ~~$394.7~~$288.5 million of repurchases under our repurchase program and $7.4 million of repurchases related to our equity compensation plan and (3) $93.3 million of principal payments on notes payable and other borrowings. These were partially offset by (1) $300.0 million of net borrowings under our Credit Facility; and (2) $88.9 million of receipts related to noncontrolling interests.

During the three months ended February 28, 2019, cash provided by financing activities was primarily impacted by $725.0 million of net borrowings under our Credit Facilities, partially offset by $508.7 million of net repayments under our Financial Services' warehouse facilities which included the LMF Commercial warehouse repurchase facilities, $93.0 million of principal payments on other borrowings and repurchases of our common stock of $49.1 million, which included $47.0 million of repurchases of our stock under our repurchase program and ~~$24.6~~$2.1 million of repurchases related to ~~our equity compensation plan. These were partially offset by (1) $700.0 million of net borrowings under our Credit Facility; and (2) $62.6 million proceeds from other borrowings.~~

During the nine months ended August 31, 2018, cash used in financing activities was primarily impacted by (1) payment at maturity of $575 million aggregate principal amount of the 8.375% senior notes due 2018; (2) $436.0 million of principal payments on other borrowings, which included $350.8 million of aggregate principal payment on the Lennar Other segment's 7.00% senior notes due December 2018; (3) $250 million aggregate principal redemption of the 6.95% senior notes due 2018; (4) $101.0 million of net repayments under our Financial Services and RMF warehouse facilities; and (5) $68.6 million of payments related to noncontrolling interests. This was partially offset by $195.3 million of net borrowings under our Credit Facilities as we replaced the amount outstanding under the CalAtlantic revolving credit facility with borrowings under our unsecured revolving credit facility, which had $650 million outstanding as of August 31, 2018.employee stock plans.

Debt to total capital ratios are financial measures commonly used in the homebuilding industry and are presented to assist in understanding the leverage of our homebuilding operations. Homebuilding debt to total capital and net Homebuilding debt to total capital are calculated as follows:


(Dollars in thousands)	August 31, 2019			November 30, 2018		August 31, 2018		February 29, 2020			November 30, 2019		February 28, 2019
Homebuilding debt	$	9,075,016		8,543,868		9,407,987		$	8,115,498		7,776,638		9,256,423
Stockholders’ equity	15,371,938			14,581,535		14,032,016		16,044,599			15,949,517		14,786,814
Total capital	$	24,446,954		23,125,403		23,440,003		$	24,160,097		23,726,155		24,043,237
Homebuilding debt to total capital	37.1		%	36.9	%	40.1	%	33.6		%	32.8	%	38.5	%
Homebuilding debt	$	9,075,016		8,543,868		9,407,987		$	8,115,498		7,776,638		9,256,423
Less: Homebuilding cash and cash equivalents	795,405			1,337,807		833,274		784,950			1,200,832		852,551
Net Homebuilding debt	$	8,279,611		7,206,061		8,574,713		$	7,330,548		6,575,806		8,403,872
Net Homebuilding debt to total capital (1)	35.0		%	33.1	%	37.9	%	31.4		%	29.2	%	36.2	%

(1)

Net ~~Homebuilding~~homebuilding debt to total capital is a non-GAAP financial measure defined as net ~~Homebuilding~~homebuilding debt ~~(Homebuilding~~(homebuilding debt less ~~Homebuilding~~homebuilding cash and cash equivalents) divided by total capital (net ~~Homebuilding~~homebuilding debt plus stockholders' equity). ~~Our management believes~~We believe the ratio of net ~~Homebuilding~~homebuilding debt to total capital is a relevant and a useful financial measure to investors in understanding the leverage employed in ~~our~~ homebuilding operations. However, because net ~~Homebuilding~~homebuilding debt to total capital is not calculated in accordance with GAAP, this financial measure should not be considered in isolation or as an alternative to financial measures prescribed by GAAP. Rather, this non-GAAP financial measure should be used to supplement our GAAP results.

At ~~August 31, 2019,~~February 29, 2020, Homebuilding debt to total capital improved compared to ~~August 31, 2018,~~February 28, 2019, as a result of an increase in stockholders' equity primarily related to our net earnings, partially offset by stock repurchases. ~~In addition, there was a decrease in Homebuilding debt.~~ At ~~August 31, 2019,~~February 29, 2020, Homebuilding debt to total capital was higher compared to November 30, ~~2018,~~2019, as a result of an increase in Homebuilding debt primarily due to an increase in outstanding borrowings under our Credit Facility, ~~and from our consolidation of a previously unconsolidated entity in the second quarter of 2019. In addition, stock repurchases negatively impacted stockholders' equity. This was~~ partially offset by ana net increase in stockholders' equity primarily related to our net earnings.

We are continually exploring various types of transactions to manage our leverage and liquidity positions, take advantage of market opportunities and increase our revenues and earnings. These transactions may include the issuance of additional indebtedness, the repurchase of our outstanding indebtedness, ~~for cash or equity,~~ the repurchase of our common stock, the acquisition of homebuilders and other companies, the purchase or sale of assets or lines of business, the issuance of common stock or securities convertible into shares of common stock, and/or the pursuit other financing alternatives. In connection with some of our non-homebuilding businesses, we are also considering other types of transactions such as sales, restructurings, joint ventures, spin-offs or initial public offerings as we continue to move back towards being a pure play homebuilding company. During the first quarter of 2019, we sold the majority of our retail title agency business and title insurance underwriter. In addition, we sold our real estate brokerage business, which operated only in Florida, and substantially all of our retail mortgage business. At August 31, 2019, we had no agreements regarding any significant transactions.

~~The following table summarizes our~~Our Homebuilding senior notes and other debts payable ~~including those we became subject to, on a consolidated basis, from the CalAtlantic acquisition:~~

(Dollars in thousands) August 31,
2019 November 30,
2018
Unsecured revolving credit facility $ 700,000
—
4.50% senior notes due 2019 599,848
599,176
6.625% senior notes due 2020 (1) 305,684
311,735
2.95% senior notes due 2020 299,275
298,838
8.375% senior notes due 2021 (1) 423,119
435,897
4.750% senior notes due 2021 498,697
498,111
6.25% senior notes due December 2021 (1) 311,510
315,283
4.125% senior notes due 2022 597,637
596,894
5.375% senior notes due 2022 (1) 258,912
261,055
4.750% senior notes due 2022 571,266
570,564
4.875% senior notes due December 2023 396,456
395,759
4.500% senior notes due 2024 646,622
646,078
5.875% senior notes due 2024 (1) 449,327
452,833
4.750% senior notes due 2025 497,447
497,114
5.25% senior notes due 2026 (1) 408,224
409,133
5.00% senior notes due 2027 (1) 352,988
353,275
4.75% senior notes due 2027 892,859
892,297
4.500% senior notes due 2019 —
499,585
0.25% convertible senior notes due 2019 —
1,291
Mortgage notes on land and other debt 865,145
508,950
$ 9,075,016
8,543,868

~~(1)~~

~~The carrying amounts~~are summarized within Note 7 of the ~~senior notes in~~Notes to the ~~table above are net~~Condensed Consolidated Financial Statements.

At February 29, 2020, we had an unsecured revolving credit facility (the "Credit Facility") with maximum borrowings of ~~debt issuance costs of $24.9 million and $31.2 million as of August 31, 2019 and November 30, 2018, respectively.~~

~~Our Homebuilding average debt outstanding was $9.2~~$2.45 billion with an average rate for interest incurred of 4.8% for the nine months ended August 31, 2019, compared to $9.1 billion with an average rate for interest incurred of 4.8% for the nine months ended August 31, 2018. Interest incurred related to Homebuilding debt for the nine months ended August 31, 2019 was $321.0 million, compared to $314.0 million for the nine months ended August 31, 2018.

~~In April 2019, we amended our credit agreement governing our Credit Facility to increase the commitments from $2.3 billion to $2.4 billion and extend the maturity one year to April 2024,~~ with $50 million maturing in June ~~2020. Our~~2020 and the balance due in 2024. The Credit Facility has a $400 million accordion feature, subject to additional commitments, thus the maximum borrowings are $2.8 billion. Subsequent to August 31, 2019, our Credit Facility commitments were increased by $50 million to total commitments of $2.5 billion. The proceeds available under our Credit Facility, which are subject to specified conditions for borrowing, may be used for working capital and general corporate purposes. Our credit agreement ~~also~~(the "Credit Agreement") provides that up to $500 million in commitments may be used for letters of credit. Under ~~our~~the Credit ~~Facility agreement,~~Agreement, as of the end of the fiscal quarter, we are ~~required~~subject to ~~maintain a minimum consolidated tangible net worth, a maximum leverage ratio~~debt covenants. The maturity, details and ~~either a liquidity or an interest coverage ratio. These ratios are calculated per~~debt covenants of the Credit Facility ~~agreement, which involves adjustments to GAAP financial measures. We believe we were~~are unchanged from the disclosure in ~~compliance with~~ our ~~debt covenants at August 31,~~Financial Condition and Capital Resources section in its Form 10-K for the year ended November 30, 2019. In addition to the Credit Facility, we ~~had $305 million of~~have other letter of credit facilities with different financial institutions.

Our performance letters of credit outstanding were $682.3 million and $598.4 million, at August 31, 2019 and November 30, 2018, respectively. Our financial letters of credit outstanding were $180.8 million and $165.4 million at August 31, 2019 and November 30, 2018, respectively. Performance letters of credit are generally posted with regulatory bodies to guarantee the performance of certain development and construction activities. Financial letters of credit are generally posted in lieu of cash deposits on option contracts, for insurance risks, as credit enhancements and as other collateral. Additionally, at

~~August 31, 2019, we had~~Our letter of credit and surety bond facilities are described below:



	February 29, 2020		November 30, 2019
(In thousands)
Performance letters of credit	$	739,944	715,793
Financial letters of credit	208,871		184,075
Surety bonds	2,966,393		2,946,167
Anticipated future costs related to site improvements related to performance surety bonds	1,440,444		1,427,145

Currently, substantially all of our 100% owned homebuilding subsidiaries are guaranteeing all our senior notes (the "Guaranteed Notes"). The guarantees are full and unconditional. However, they will terminate as to a subsidiary any time it is not directly or indirectly guaranteeing at least $75 million of Lennar Corporation debt or when the subsidiary is sold. These guarantees are outlined in Note 13 of the Notes to the Condensed Consolidated Financial Statements.

Our Homebuilding average debt outstanding ~~surety bonds~~with an average rate of ~~$2.9 billion including performance surety bonds~~interest was as follows:



	Three Months Ended
(Dollars in thousands)	February 29, 2020			February 28, 2019
Homebuilding average debt outstanding	$	8,016,263		$	9,024,926
Average interest rate	4.9		%	4.9		%

Interest incurred related to ~~site improvements at various projects (including certain projects of our joint ventures) and financial surety bonds.~~

~~In June 2019, we redeemed $500~~Homebuilding debt for the three months ended February 29, 2020 was $93.3 million, ~~aggregate principal amount of our 4.500% senior notes due June~~compared to $104.4 million for the three months ended February 28, 2019. ~~The redemption price, which was paid in cash, was 100% of the principal amount plus accrued but unpaid interest.~~

Under the amended Credit Facility agreement executed in April 2019 (the "Credit Agreement"), as of the end of each fiscal quarter, we are required to maintain minimum consolidated tangible net worth of approximately $7.1 billion plus the sum of 50% of the cumulative consolidated net income for each completed fiscal quarter subsequent to February 28, 2019, if positive, and 50% of the net cash proceeds from any equity offerings from and after February 28, 2019, minus the lesser of 50% of the amount paid after April 11, 2019 to repurchase common stock and ~~$375~~$375.0 million. We are required to maintain a leverage ratio that shall not exceed 65% and may be reduced by 2.5% per quarter if our interest coverage ratio is less than 2.25:1.00 for two consecutive fiscal calendar quarters. The leverage ratio will have a floor of 60%. If our interest coverage ratio subsequently exceeds 2.25:1.00 for two consecutive fiscal calendar quarters, the leverage ratio we will be required to maintain will be increased by 2.5% per quarter to a maximum of 65%. As of the end of each fiscal quarter, we are also required to maintain either (1) liquidity in an amount equal to or greater than 1.00x consolidated interest incurred for the last twelve months then ended or (2) an interest coverage ratio equal to or greater than 1.50:1.00 for the last twelve months then ended. We believe that we were in compliance with our debt covenants at February 29, 2020.

The following summarizes our ~~required~~ debt ~~covenants~~covenant requirements and our actual levels or ratios with respect to those covenants as calculated per the Credit Agreement as of ~~August 31, 2019:~~February 29, 2020:


(Dollars in thousands)	Covenant Level			Level Achieved as of August 31, 2019		Covenant Level			Level Achieved as of February 29, 2020
Minimum net worth test	$	7,390,364		10,009,856		$	7,686,753		10,611,854
Maximum leverage ratio	65.0		%	42.2	%	65.0		%	38.0	%
Liquidity test ~~(1)~~	1.00			2.01		1.00			2.08

At February 29, 2020, the Financial Services warehouse facilities were all 364-day repurchase facilities and used to fund residential mortgages or commercial mortgages for LMF Commercial as follows:



(In thousands)	Maximum Aggregate Commitment
Residential facilities maturing:
March 2020 (1)	$	100,000
May 2020	300,000
June 2020	300,000
October 2020	500,000
Total - Residential facilities	$	1,200,000
LMF Commercial facilities maturing
November 2020	$	200,000
December 2020	650,000
December 2020 (two - one year extensions) (2)	50,000
Total - LMF Commercial facilities	$	900,000
Total	$	2,100,000

(1)

~~We are only required~~Subsequent to ~~maintain either (1) liquidity in an amount equal~~February 2020, the maturity date was extended to or greater than 1.00x consolidated interest incurred for the last twelve months then ended or (2) an interest coverage ratio of equal to or greater than 1.50:1.00 for the last twelve months then ended. Although we are in compliance with our debt covenants for both calculations, we have only disclosed our liquidity test.

The terms minimum net worth test, maximum leverage ratio, liquidity test and interest coverage ratio used in the Credit Agreement are specifically calculated per the Credit Agreement and differ in specified ways from comparable GAAP or common usage terms.

Currently, substantially all of our 100% owned homebuilding subsidiaries are guaranteeing all our senior notes (the "Guaranteed Notes"). The guarantees are full and unconditional. The principal reason our 100% owned homebuilding subsidiaries are guaranteeing the Guaranteed Notes is so holders of the Guaranteed Notes will have rights at least as great with regard to those subsidiaries as any other holders of a material amount of our unsecured debt. Therefore, the guarantees of the Guaranteed Notes will remain in effect with regard to a guarantor subsidiary only while it guarantees a material amount of the debt of Lennar Corporation, as a separate entity, to others. At any time when a guarantor subsidiary is no longer guaranteeing at least $75 million of Lennar Corporation’s debt other than the Guaranteed Notes, either directly or by guaranteeing other subsidiaries’ obligations as guarantors of Lennar Corporation’s debt, the guarantor subsidiary’s guarantee of the Guaranteed Notes will be suspended. Therefore, if the guarantor subsidiaries cease guaranteeing Lennar Corporation’s obligations under our Credit Facility and our letter of credit facilities and are not guarantors of any new debt, the guarantor subsidiaries’ guarantees of the Guaranteed Notes will be suspended until such time, if any, as they again are guaranteeing at least $75 million of Lennar Corporation’s debt other than the Guaranteed Notes.

If our guarantor subsidiaries are guaranteeing revolving credit lines totaling at least $75 million, we will treat the guarantees of the Guaranteed Notes as remaining in effect even during periods when Lennar Corporation’s borrowings under the revolving credit lines are less than $75 million. A subsidiary will be released from its guarantee and any other obligations it may have regarding the senior notes if all or substantially all its assets, or all of its capital stock, are sold or otherwise disposed of.

~~At August 31, 2019, the Financial Services warehouse facilities used to fund residential mortgages were as follows:~~


~~(1)~~	~~Maximum aggregate commitment includes an uncommitted amount of $400 million.~~March 2021.


(2)	~~Maximum aggregate commitment includes an uncommitted amount~~LMF Commercial uses this warehouse repurchase facility to finance the origination of ~~$300 million.~~floating rate accrual loans, which are reported as accrual loans within loans held-for-investment, net. There were no borrowings under this facility as of February 29, 2020.


~~(3)~~	~~Maximum aggregate commitment includes an uncommitted amount of $300 million.~~

Our Financial Services segment uses ~~these~~the residential facilities to finance its residential ~~mortgage~~ lending activities until the mortgage loans are sold to investors and the proceeds are collected. The facilities are non-recourse to us and are expected to be renewed or replaced with other facilities when they mature. The LMF Commercial facilities finance LMF Commercial loan originations and securitization activities and were secured by a 75% interest in the originated commercial loans financed.

Borrowings and collateral under the facilities and their prior year predecessors were $887.8 million and $1.3 billion at August 31, 2019 and November 30, 2018, respectively, and were collateralized by mortgage loans and receivables on loans sold to investors but not yet paid for with outstanding principal balances of $913.9 million and $1.3 billion, at August 31, 2019 and November 30, 2018, respectively. Without the facilities, our Financial Services segment would have to use cash from operations and other funding sources to finance its residential mortgage lending activities. Since our Financial Services segment’s borrowings under the warehouse repurchase facilities are generally repaid with the proceeds from the sale of mortgage loans and receivables on loans that secure those borrowings, the facilities are not likely to be a call on our current cash or future cash resources. as follows:



(In thousands)	February 29, 2020		November 30, 2019
Borrowings under the residential facilities	$	674,848	$	1,374,063
Collateral under the residential facilities	698,369		1,423,650
Borrowings under the LMF Commercial facilities	161,546		216,870

If the facilities are not renewed or replaced, the borrowings under the lines of credit will be ~~paid off~~repaid by selling the mortgage loans held-for-sale to investors and by collecting on receivables on loans sold ~~to investors~~ but not yet paid for.

~~At August 31, 2019, the RMF warehouse facilities were as follows:~~


~~(1)~~	RMF uses this warehouse repurchase facility to finance the origination of floating rate accrual loans, which are reported as accrual loans within loans held-for-investment, net. There were borrowings under this facility of $11.4 million as of August 31, 2019. There were no borrowings under this facility as of November 30, 2018.

Borrowings under the facilities that finance RMF's commercial loan originations and securitization activities were $113.0 million and $178.8 million as of August 31, 2019 and November 30, 2018, respectively, and were secured by a 75% interest in the originated commercial loans financed. The facilities require immediate repayment of the 75% interest in the secured commercial loans when the loans are sold in a securitization and the proceeds are collected. These warehouse repurchase facilities are non-recourse to us and are expected to be renewed or replaced with other facilities when they mature. If the facilities are not renewed or replaced, the borrowings under the lines of credit will be paid off by selling the loans held-for-sale to investors. Without the facilities, the Financial Services segment would have to use cash from operations and other funding sources to finance its lending activities.

Changes in Capital Structure

In January 2019, our Board of Directors authorized ~~us to~~the repurchase of up to the lesser of $1$1.0 billion in value, or 25 million in shares, of our outstanding Class A and Class B common stock. The repurchase authorization has no expiration date. The following table represents the repurchase of our Class A and Class B common stocks, under this program, for the three months ended February 29, 2020 and February 28, 2019:



	Three Months Ended
	February 29, 2020				February 28, 2019
(Dollars in thousands, except price per share)	Class A		Class B		Class A		Class B
Shares repurchased	4,250,000		115,000		1,000,000		—
Principal	$	282,274	$	6,155	$	46,998	$	—
Average price per share	$	66.42	$	53.52	$	46.98	$	—

During the three months ended August 31, 2019, under this repurchase program, we repurchased 6.1 million shares of our Class A common stock for approximately $295.9 million at an average share price of $48.41. During the nine months ended August 31, 2019, under this repurchase program, we repurchased 8.1 million shares of our Class A common stock for approximately $394.7 million at an average share price of $48.65.

~~During the nine months ended August 31, 2019,~~February 29, 2020, treasury stock increased due to our repurchase of ~~8.1~~4.4 million shares of Class A and Class B common stock ~~during the nine months ended August 31, 2019~~ through our stock repurchase ~~program and 0.6 million shares of Class A common stock primarily due to activity related to our equity compensation plan.~~program. During the ~~nine~~three months ended ~~August 31, 2018,~~February 28, 2019, treasury stock increased by 1.0 million shares of Class A common stock ~~primarily~~ due ~~to activity related~~primarily to our ~~equity compensation plan.~~repurchase of one million shares of Class A common stock through our stock repurchase program.

On ~~July 25, 2019,~~April 7, 2020, our Board of Directors declared a quarterly cash dividend of $0.125 per share on both our Class A and Class B common stock, payable on May 5, 2020 to holders of record at the close of business on April 21, 2020. On February 7, 2020, we paid cash dividends of ~~$0.04~~$0.125 per share ~~for~~on both our Class A and Class B common stock to holders of record at the close of business on ~~July 11, 2019,~~January 24, 2020, as declared by our Board of Directors on ~~June 26, 2019. On October 3, 2019, our Board of Directors~~January 9, 2020. We declared ~~a quarterly~~and paid cash ~~dividend~~

dividends of $0.04 per share on ~~both our Class A and Class B common stock, payable on November 1, 2019 to holders of record at the close of business on October 18, 2019. We approved and paid cash dividends of $0.04 per share for~~ both our Class A and Class B common stock in each quarter for the year ended November 30, ~~2018.~~2019.

Based on our current financial condition and credit relationships, we believe that, assuming our operations are not significantly affected by the COVID-19 pandemic for a protracted period, our operations and borrowing resources will provide for our current and long-term capital requirements at our anticipated levels of activity.

Off-Balance Sheet Arrangements

Homebuilding: Investments in Unconsolidated Entities

At ~~August 31, 2019,~~February 29, 2020, we had equity investments in 5148 homebuilding and land unconsolidated entities (of which ~~at August 31, 2019,~~ three had recourse debt, ~~seven~~ten had non-recourse debt and 4135 had no debt) compared to 5150 homebuilding and land unconsolidated entities at November 30, ~~2018.~~2019. Historically, we have invested in unconsolidated entities that acquired and developed land (1) for our homebuilding operations or for sale to third parties or (2) for the construction of homes for sale to third-party homebuyers. Through these entities, we have primarily sought to reduce and share our risk by limiting the amount of our capital invested in land, while obtaining access to potential future homesites and allowing us to participate in strategic ventures. The use of these entities also, in some instances, has enabled us to acquire land to which we could not otherwise obtain access, or could not obtain access on as favorable terms, without the participation of a strategic partner. Participants in these joint ventures have been land owners/developers, other homebuilders and financial or strategic partners. Joint ventures with land owners/developers have given us access to homesites owned or controlled by our partners. Joint ventures with other homebuilders have provided us with the ability to bid jointly with our partners for large land parcels. Joint ventures with financial partners have allowed us to combine our homebuilding expertise with access to our partners’ capital. Joint ventures with strategic partners have allowed us to combine our homebuilding expertise with the specific expertise (e.g. commercial or infill experience) of our partners. Each joint venture is governed by an executive committee consisting of members from the partners.

~~Summarized condensed financial information on a combined 100% basis related to Homebuilding’s unconsolidated entities that are accounted for by the equity method was as follows:~~

~~Statements of Operations and Selected Information~~

As of or for the
Three Months Ended Nine Months Ended
August 31, August 31,
(Dollars in thousands) 2019 2018 2019 2018
Revenues $ 74,939
153,136
231,269
322,277
Costs and expenses 99,611
195,525
313,725
451,627
Other income (1) 513
13,903
76,578
119,095
Net earnings of unconsolidated entities $ (24,159 ) (28,486 ) (5,878 ) (10,255 )
Homebuilding equity in loss from unconsolidated entities $ (10,459 ) (16,739 ) (4,601 ) (43,537 )
Homebuilding cumulative share of net earnings - deferred at August 31, 2019 and 2018, respectively $ 30,008
25,933
Homebuilding investments in unconsolidated entities $ 1,002,936
901,351
Equity of the Homebuilding unconsolidated entities $ 4,158,036
4,133,948
Homebuilding investment % in the unconsolidated entities (2)

24 % 22 %

~~(1)~~

During the nine months ended August 31, 2019, other income was primarily attributable to a $64.9 million gain on the settlement of contingent consideration recorded by one Homebuilding unconsolidated entity, of which our pro-rata share was $25.9 million. During the three and nine months ended August 31, 2018, other income was primarily due to FivePoint recording income resulting from the Tax Cuts and Jobs Act of 2017’s reduction in its corporate tax rate to reduce its liability pursuant to its tax receivable agreement (“TRA Liability”) with its non-controlling interests. However, we have a 70% interest in the FivePoint TRA Liability. Therefore, we did not include in Homebuilding’s equity in loss from unconsolidated entities its pro-rata share of earnings related to our portion of the TRA Liability. As a result, our unconsolidated entities have net earnings, but we have an equity in loss from unconsolidated entities.


~~(2)~~	Our share of profit and cash distributions from the sales of land could be higher or lower compared to our ownership interest in unconsolidated entities if certain specified internal rate of return or cash flow milestones are achieved.

~~Balance Sheets~~


~~(1)~~	Debt presented above is net of debt issuance costs of $9.7 million and $12.4 million, as of August 31, 2019 and November 30, 2018, respectively. The decrease in debt was primarily related to the consolidation of an unconsolidated entity during the second quarter of 2019.

As of ~~August 31, 2019~~February 29, 2020 and November 30, ~~2018,~~2019, our recorded investments in Homebuilding unconsolidated entities were $946.7 million and $1.0 billion, ~~and $870.2 million,~~ respectively, while the underlying equity related to our investments in Homebuilding unconsolidated entities partners’ net assets as of ~~August 31, 2019~~both February 29, 2020 and November 30, ~~2018~~2019 were $1.3 ~~billion and $1.2 billion, respectively.~~billion. The basis difference is primarily as a result of us contributing our investment in three strategic joint ventures with a higher fair value than book value for an investment in the FivePoint entity and deferring equity in earnings on land sales to us. Included in our recorded investments in Homebuilding unconsolidated entities is our 40% ownership of FivePoint. As of ~~August 31, 2019~~February 29, 2020 and November 30, ~~2018,~~2019, the carrying amount of our investment in FivePoint was ~~$380.5~~$366.8 million and ~~$342.7~~$374.0 million, respectively.

During the nine months ended August 31, 2018, we sold 80% of a strategic joint venture to a third-party resulting in a gain of $164.9 million recorded in Homebuilding other income, net within the accompanying Condensed Consolidated Statement of Operations and Comprehensive Income (Loss).

The Homebuilding unconsolidated entities in which we have investments usually finance their activities with a combination of partner equity and debt financing. In some instances, we and our partners have guaranteed debt of ~~certain~~ unconsolidated entities.

~~Debt to total capital of the Homebuilding unconsolidated entities in which we have investments was calculated as follows:~~

(Dollars in thousands) August 31,
2019 November 30,
2018
Debt (1) $ 852,090
1,202,556
Equity 4,158,036
4,041,666
Total capital $ 5,010,126
5,244,222
Debt to total capital of our unconsolidated entities 17.0 % 22.9 %


~~(1)~~	Debt presented above is net of debt issuance costs of $9.7 million and $12.4 million, as of August 31, 2019 and November 30, 2018, respectively. The decrease in debt was primarily related to our consolidation of a previously unconsolidated entity during the second quarter of 2019.

~~Our investments in Homebuilding unconsolidated entities by type of venture were as follows:~~

(In thousands) August 31,
2019 November 30,
2018
Land development $ 922,056
805,678
Homebuilding 80,880
64,523
Total investments (1) $ 1,002,936
870,201


~~(1)~~	~~As of November 30, 2018, total investments does not include the ($62.0) million balance for one unconsolidated entity as it was reclassed to other liabilities.~~

Indebtedness of an unconsolidated entity is secured by its own assets. Some unconsolidated entities own multiple properties and other assets. There is no cross collateralization of debt of different unconsolidated entities. We also do not use our investment in one unconsolidated entity as collateral for the debt of another unconsolidated entity or commingle funds among Homebuilding unconsolidated entities.

In connection with loans to a Homebuilding unconsolidated entity, we and our partners often guarantee to a lender, either jointly and severally or on a several basis, any or all of the following: (i) the completion of the development, in whole or in part, (ii) indemnification of the lender against losses from environmental issues, (iii) indemnification of the lender from "bad boy acts" of the unconsolidated entity (or full recourse liability in the event of an unauthorized transfer or bankruptcy) and (iv) that the loan to value and/or loan to cost will not exceed a certain percentage (maintenance or remargining guarantee) or that a percentage of the outstanding loan will be repaid (repayment guarantee).

In connection with loans to an unconsolidated entity where there is a joint and several guarantee, we sometimes have a reimbursement agreement with our partner. The reimbursement agreement provides that neither party is responsible for more than its proportionate share of the guarantee. However, if our joint venture partner does not have adequate financial resources to meet its obligations under the reimbursement agreement, we may be liable for more than our proportionate share, up to our maximum exposure, which is the full amount covered by the joint and several guarantee.

The total debt of the Homebuilding unconsolidated entities in which we have investments ~~including Lennar's~~was $1.1 billion as of both February 29, 2020 and November 30, 2019, of which our maximum recourse exposure was $4.9 million and $10.8 million as ~~follows:~~

(Dollars in thousands) August 31,
2019 November 30,
2018
Non-recourse bank debt and other debt (partner’s share of several recourse) $ 49,995
48,313
Non-recourse debt with completion guarantees 154,774
239,568
Non-recourse debt without completion guarantees 647,010
861,371
Non-recourse debt to Lennar 851,779
1,149,252
Lennar's maximum recourse exposure (1) 10,036
65,707
Debt issue costs (9,725 ) (12,403 )
Total debt (1) $ 852,090
1,202,556
Lennar’s maximum recourse exposure as a % of total JV debt 1 % 5 %


~~(1)~~	As of August 31, 2019 and November 30, 2018, our maximum recourse exposure was primarily related to us providing repayment guarantees on two and four unconsolidated entities' debt, respectively. The decrease in maximum recourse exposure and total debt was primarily related to the consolidation of a previously unconsolidated entity during the second quarter of 2019.

~~The recourse debt exposure in the previous table represents our maximum exposure to loss from guarantees~~of February 29, 2020 and ~~does not take into account the underlying value of the collateral or the other assets of the borrowers that are available to repay debt or to reimburse us for any payments on our guarantees.~~

November 30, 2019, respectively. In ~~addition, in~~ most instances in which we have guaranteed debt of a Homebuilding unconsolidated entity, our partners have also guaranteed that debt and are required to contribute their share of the guarantee payment. In a repayment guarantee, we and our venture partners guarantee repayment of a portion or all of the debt in the event of a default before the lender would have to exercise its rights against the collateral.

In connection with many of the loans to Homebuilding unconsolidated entities, we and our joint venture partners (or entities related to them) have been required to give guarantees of completion to the lenders. Those completion guarantees may require that the guarantors complete the construction of the improvements for which the financing was obtained. If the construction is to be done in phases, the guarantee generally is limited to completing only the phases as to which construction has already commenced and for which loan proceeds were used. If we are required to make a payment under any guarantee, the payment would generally constitute a capital contribution or loan to the Homebuilding unconsolidated entity and increase our share of any funds the unconsolidated entity distributes.

As of ~~August 31, 2019~~February 29, 2020 and November 30, ~~2018,~~2019, the fair values of the repayment, maintenance, and completion guarantees were not material. We believe that as of ~~August 31, 2019,~~February 29, 2020, in the event we become legally obligated to perform under a guarantee of the obligation of a Homebuilding unconsolidated entity due to a triggering event under a guarantee, the collateral would be sufficient to repay at least a significant portion of the obligation or we and our partners would contribute additional capital into the venture. In certain instances, we have placed performance letters of credit and surety bonds with municipalities with regard to obligations of our joint ventures (see Note 127 of the Notes to Condensed Consolidated Financial Statements).

The following table summarizes the principal maturities of our Homebuilding unconsolidated entities ("JVs") debt as per current debt arrangements as of ~~August 31, 2019~~February 29, 2020 and it does not represent estimates of future cash payments that will be made to reduce debt balances. Many JV loans have extension options in the loan agreements that would allow the loans to be extended into future years.


	Principal Maturities of Unconsolidated JVs by Period									Principal Maturities of Unconsolidated JVs by Period
(In thousands)	Total JV Debt			2019	2020	2021	Thereafter	Other		Total JV Debt			2020	2021	2022	Thereafter	Other
Maximum recourse debt exposure to Lennar	$	10,036		—	—	3,770	6,266	—		$	4,932		—	—	4,932	—	—
Debt without recourse to Lennar	851,779			5,316	131,681	175,813	538,969	—		1,090,853			49,093	252,073	142,123	647,564	—
Land seller and CDD debt										9,429			—	—	—	—	9,429
Debt issuance costs	(9,725		)	—	—	—	—	(9,725	)	(13,612		)	—	—	—	—	(13,612	)
Total	$	852,090		5,316	131,681	179,583	545,235	(9,725	)	$	1,091,602		49,093	252,073	147,055	647,564	(4,183	)

~~The table below indicates the assets, debt and equity of our 10 largest Homebuilding unconsolidated joint venture investments by the carrying value of Lennar's investment as of~~ ~~August 31, 2019~~:

(Dollars in thousands)
Lennar’s
Investment

Total JV
Assets

Maximum
Recourse
Debt
Exposure
to Lennar

Total
Debt
Without
Recourse
to
Lennar

Total JV
Debt

Total JV
Equity

JV
Debt to
Total
Capital
Ratio
Top Ten JVs (1):
FivePoint $ 380,476
2,877,045
—
500,000
500,000
1,908,774
21 %
Dublin Crossings 78,395
243,387
—
—
—
218,606
— %
Heritage Fields El Toro 45,131
1,191,172
—
5,919
5,919
1,027,979
1 %
Hawk Land Investors 43,588
5,899
—
—
—
5,859
— %
SC East Landco 42,705
101,675
—
—
—
101,461
— %
Greenbriar Investor 37,200
—
—
—
—
—
— %
Mesa Canyon Community Partners 35,515
145,264
—
39,500
39,500
105,965
27 %
E.L. Urban Communities 35,437
46,101
—
20,902
20,902
22,381
48 %
BHCSP 33,682
97,251
3,770
26,391
30,161
55,579
35 %
Runkle Canyon 33,056
66,181
—
—
—
66,112
— %
10 largest JV investments 765,185
4,773,975
3,770
592,712
596,482
3,512,716
15 %
Other JVs 237,751
1,037,113
6,266
259,067
265,333
645,320
29 %
Total $ 1,002,936
5,811,088
10,036
851,779
861,815
4,158,036
17 %
Debt issuance costs —
(9,725 ) (9,725 )
Total JV debt $ 10,036
842,054
852,090

~~(1)~~

The 10 largest joint ventures by carrying value presented above represent the majority of our total JVs assets and equity, 38% of the total maximum recourse debt exposure to Lennar and 70% of total JV debt without recourse to Lennar. In addition, the majority of the joint ventures presented in the table above operate in our Homebuilding West segment except FivePoint, Heritage Fields El Toro, Greenbriar Investor and E.L. Urban Communities which are in Homebuilding Other and Hawk Land Investors which is in Homebuilding East.

Multifamily: Investments in Unconsolidated Entities

At ~~August 31, 2019,~~February 29, 2020, Multifamily had equity investments in 1821 unconsolidated entities that are engaged in multifamily residential developments (of which seven had non-recourse debt and 1114 had no debt), compared to 2219 unconsolidated entities at November 30, ~~2018.~~2019. We invest in unconsolidated entities that acquire and develop land to construct multifamily rental properties. Through these entities, we are focusing on developing a geographically diversified portfolio of institutional quality multifamily rental properties in select U.S. markets. Initially, we participated in building multifamily developments and selling them soon after they were completed. Recently, however, we have been focused on developing properties with the intention of retaining them. Participants in these joint ventures have been financial partners. Joint ventures with financial partners have allowed us to combine our development and construction expertise with access to our partners’ capital. Each joint venture is governed by an operating agreement that provides significant substantive participating voting rights on major decisions to our partners.

The Multifamily segment includes LMV I ~~is a~~and LMV II, which are long-term multifamily development investment ~~vehicle~~vehicles involved in the development, construction and property management of class-A multifamily ~~assets with $2.2 billion in equity commitments, including a $504 million co-investment commitment by us comprised~~assets. Details of ~~cash, undeveloped land and preacquisition costs. LMV I has 39 multifamily assets totaling approximately 11,700 apartments with projected project costs of $4.1 billion~~each as of ~~August 31, 2019. There are 22 completed~~ and ~~operating multifamily assets with 6,200 apartments. During~~during the ~~nine~~three months ended ~~August 31, 2019, $162.4~~February 29, 2020 are included below:

million in equity commitments were called, of which we contributed $39.6 million representing our pro-rata portion of the called equity. During the nine months ended August 31, 2019, we received $12.3 million of distributions as a return of capital from LMV I. As of August 31, 2019, $2.1 billion of the $2.2 billion in equity commitments had been called, of which we had contributed $480.4 million representing our pro-rata portion of the called equity, resulting in a remaining equity commitment for us of $23.6 million. As of August 31, 2019 and November 30, 2018, the carrying value of our investment in LMV I was $397.9 million and $383.4 million, respectively.

In March 2018, our Multifamily segment completed the first closing of a second Multifamily Venture, LMV II, for the development, construction and property management of class-A multifamily assets. In June 2019, our Multifamily segment completed the final closing of LMV II, which has approximately $1.3 billion of equity commitments, including a $381 million co-investment commitment by us comprised of cash, undeveloped land and preacquisition costs. During the nine months ended August 31, 2019, $200.8 million in equity commitments were called, of which we contributed $54.9 million, which was made up of $132.2 million of inventory and cash contributions, offset by $77.3 million of distributions as a return of capital resulting in a remaining commitment for us of $244.9 million. As of August 31, 2019, $452.8 million of the $1.3 billion in equity commitments had been called. As of August 31, 2019 and November 30, 2018, the carrying value of our investment in LMV II was $115.1 million and $63.0 million, respectively. The difference between our net contributions and the carrying value of our investments was related to a basis difference. As of August 31, 2019, LMV II included 13 undeveloped multifamily assets totaling approximately 4,700 apartments with projected project costs of approximately $2.0 billion.



	February 29, 2020
(In thousands)	LMV I		LMV II
Lennar's carrying value of investments	$	365,823	181,479
Equity commitments	2,204,016		1,257,700
Equity commitments called	2,110,545		677,398
Lennar's equity commitments	504,016		381,000
Lennar's equity commitments called	489,655		204,084
Lennar's remaining commitments	14,361		176,916
Distributions to Lennar during the three months ended February 29, 2020	5,646		—

We regularly monitor the results of both our Homebuilding and Multifamily unconsolidated joint ventures and any trends that may affect their future liquidity or results of operations. We also monitor the performance of joint ventures in which we have investments on a regular basis to assess compliance with debt covenants. For those joint ventures not in compliance with the debt covenants, we evaluate and assess possible impairment of our investment. We believe all of the joint ventures were in compliance with their debt covenants at ~~August 31, 2019.~~February 29, 2020.

~~Summarized financial information on a combined 100% basis related to Multifamily’s investments in unconsolidated entities that are accounted for by the equity method was as follows:~~

~~Balance Sheets~~


~~(1)~~	~~Notes payable are net of debt issuance costs of $21.5 million and $15.7 million, as of August 31, 2019 and November 30, 2018, respectively.~~

The following table summarizes the principal maturities of our Multifamily unconsolidated entities debt as per current debt arrangements as of ~~August 31, 2019~~February 29, 2020 and it does not represent estimates of future cash payments that will be made to reduce debt balances.


	Principal Maturities of Unconsolidated JVs by Period									Principal Maturities of Unconsolidated JVs by Period
(In thousands)	Total JV Debt			2019	2020	2021	Thereafter	Other		Total JV Debt			2020	2021	2022	Thereafter	Other
Debt without recourse to Lennar	$	1,753,201		31,020	794,517	290,898	636,766	—		$	2,203,797		378,230	564,890	331,291	929,386	—
Debt issuance costs	(21,499		)	—	—	—	—	(21,499	)	(28,888		)	—	—	—	—	(28,888	)
Total	$	1,731,702		31,020	794,517	290,898	636,766	(21,499	)	$	2,174,909		378,230	564,890	331,291	929,386	(28,888	)

~~Statements of Operations and Selected Information~~

As of or for the
Three Months Ended Nine Months Ended
August 31, August 31,
(Dollars in thousands) 2019 2018 2019 2018
Revenues $ 44,338
31,907
118,318
82,980
Costs and expenses 64,423
47,235
175,636
122,512
Other income, net 33,178
13,588
54,578
52,457
Net earnings (loss) of unconsolidated entities $ 13,093
(1,740 ) (2,740 ) 12,925
Multifamily equity in earnings (loss) from unconsolidated entities and other gain (1) $ 7,883
(1,730 ) 15,446
15,293
Our investments in unconsolidated entities $ 539,697
482,241
Equity of the unconsolidated entities $ 2,341,954
2,203,792
Our investment % in the unconsolidated entities

23 % 22 %

~~(1)~~

During the three months ended August 31, 2019, our Multifamily segment sold, through its unconsolidated entities, one operating property resulting in the segment's $12.6 million share of gain. During the nine months ended August 31, 2019, our Multifamily segment sold, through its unconsolidated entities, two operating properties and an investment in an operating property resulting in the segment's $28.1 million share of gains. The gain of $11.9 million recognized on the sale of the investment in an operating property and recognition of our share of deferred development fees that were capitalized at the joint venture level are included in Multifamily equity in earnings (loss) from unconsolidated entities and other gain, and are not included in net earnings (loss) of unconsolidated entities. During the three and nine months ended August 31, 2018, our Multifamily segment sold one and four operating properties, respectively, through its unconsolidated entities resulting in the segment's $1.7 million and $23.3 million share of gains, respectively.

Lennar Other: Investments in Unconsolidated Entities

We sold our Rialto Management Group on November 30, 2018. We retained our fund investments along with our carried interests in various Rialto funds and investments in other balance sheet assets. Our limited partner investments in Rialto funds and investment vehicles totaled $297.9 million at August 31, 2019. We are committed to invest as much as an additional $49.0 million in Rialto funds.

As part of the sale of the Rialto investment and asset management platform, we retained our ability to receive a portion of payments with regard to carried interests if funds meet specified performance thresholds. We ~~will~~ periodically receive advance distributions related to the carried interests in order to cover income tax obligations resulting from allocations of taxable income to the carried interests. These distributions are not subject to clawbacks but will reduce future carried interest payments to which we become entitled from the applicable funds and have been recorded as revenues.

The following table represents amounts our Lennar Other segment would have received had the Rialto funds ceased operations and hypothetically liquidated all their investments at their estimated fair values on August 31, 2019, both gross and netAs of ~~amounts already received as advanced tax distributions and amounts paid as carried interest. The actual amounts we may receive could be materially different from amounts presented in the table below.~~

August 31, 2019
(In thousands) Hypothetical Carried Interest Paid as Advanced Tax Distribution Paid as Carried Interest Hypothetical Carried Interest, Net (2)
Rialto Real Estate Fund, LP (1) $ 182,688
52,711
53,917
76,060
Rialto Real Estate Fund II, LP (1) 107,852
21,423
465
85,964
Rialto Real Estate Fund III, LP (1) 78,218
18,151
—
60,067
$ 368,758
92,285
54,382
222,091


~~(1)~~	~~Gross of interests of participating employees (refer to note below).~~

~~(2)~~

Rialto previously adopted carried interest plans under which we and participating employees will receive 60% and 40%, respectively, of carried interest payments, net of expenses, received by entities that are general partners of a number of Rialto funds or other investment vehicles. When Rialto Management Group was sold, we retained our right to receive 60% of the distributions of carried interest payments received from funds that existed at the time of the sale.

~~In connection with our strategic technology initiatives, at August 31, 2019~~February 29, 2020 and November 30, ~~2018,~~2019, we had strategic ~~equity~~technology investments in ~~14 and nine~~ unconsolidated entities ~~respectively, which totaled $149.9~~of $192.1 million and ~~$126.7~~$124.3 million, respectively.

Option Contracts

We often obtain access to land through option contracts, which generally enable us to control portions of properties owned by third parties (including land funds) and unconsolidated entities until we have determined whether to exercise the options.

The table below indicates the number of homesites owned and homesites to which we had access through option contracts with third parties ("optioned") or unconsolidated JVs (i.e., controlled homesites) at ~~August 31, 2019~~February 29, 2020 and ~~2018:~~February 28, 2019:



	Controlled Homesites							Years of
February 29, 2020	Optioned	JVs	Total		Owned Homesites		Total Homesites	Supply Owned (1)
East	28,869	15,420	44,289		80,741		125,030
Central	6,476	122	6,598		31,038		37,636
Texas	19,914	—	19,914		38,365		58,279
West	12,275	2,940	15,215		62,048		77,263
Other	—	8,514	8,514		2,084		10,598
Total homesites	67,534	26,996	94,530		214,276		308,806	4.0
% of total homesites			31	%	69	%



	Controlled Homesites							Years of
February 28, 2019	Optioned	JVs	Total		Owned Homesites		Total Homesites	Supply Owned (1)
East	26,174	3,482	29,656		76,699		106,355
Central	6,328	—	6,328		31,754		38,082
Texas	18,845	—	18,845		35,131		53,976
West	7,257	4,525	11,782		63,810		75,592
Other	—	979	979		2,845		3,824
Total homesites	58,604	8,986	67,590		210,239		277,829	4.4
% of total homesites			24	%	76	%

Controlled Homesites
August 31, 2019 Optioned JVs Total
Owned
Homesites

Total
Homesites
East 31,489
16,613
48,102
80,074
128,176
Central 7,540
132
7,672
32,036
39,708
Texas 24,049
—
24,049
37,603
61,652
West 8,193
3,304
11,497
64,627
76,124
Other —
1,310
1,310
3,234
4,544
Total homesites 71,271
21,359
92,630
217,574
310,204

Controlled Homesites
August 31, 2018 Optioned JVs Total
Owned
Homesites

Total
Homesites
East 21,388
3,482
24,870
72,812
97,682
Central 5,854
—
5,854
32,386
38,240
Texas 10,757
—
10,757
32,096
42,853
West 7,894
6,049
13,943
67,355
81,298
Other —
1,276
1,276
250
1,526
Total homesites 45,893
10,807
56,700
204,899
261,599


(1)	Based on trailing twelve months of home deliveries.

We evaluate certain option contracts for land to determine whether they are VIEs and, if so, whether we are the primary beneficiary of certain of these option contracts. Although we do not have legal title to the optioned land, if we are deemed to be the primary beneficiary or make a significant deposit for optioned land, we may need to consolidate the land under option at the purchase price of the optioned land. Consolidated land purchase options are reflected in the accompanying condensed consolidated balance sheets as consolidated inventory not owned. Over the next several years, we plan to increase the controlled homesites to 40%-50% of our entire homesite inventory from approximately ~~30%~~31% as of ~~August 31, 2019.~~February 29, 2020. Recently, we have undertaken several strategic land initiatives which include acquiring fully developed homesites from regional developers and may also include building homes in bulk for landowners who will retain them as rental properties.

During the ~~nine~~three months ended ~~August 31, 2019,~~February 29, 2020, consolidated inventory not owned increased by ~~$143.1~~$104.3 million with a corresponding increase to liabilities related to consolidated inventory not owned in the accompanying condensed consolidated balance sheet as of ~~August 31, 2019.~~February 29, 2020. The increase was primarily due to the consolidation of option contracts, partially offset by us exercising our options to acquire land under previously consolidated contracts. To reflect the purchase price of the inventory that was consolidated, we had a net reclass related to option deposits from consolidated inventory not owned to land under development in the accompanying condensed consolidated balance sheet as of ~~August 31, 2019.~~February 29, 2020. The liabilities related to consolidated inventory not owned primarily represent the difference between the option exercise prices for the optioned land and our cash deposits.

Our exposure to losses related to option contracts with third parties and unconsolidated entities consisted of non-refundable option deposits and pre-acquisition costs totaling ~~$311.1~~$306.0 million and ~~$209.5~~$320.5 million at ~~August 31, 2019~~February 29, 2020 and November 30, ~~2018,~~2019, respectively. Additionally, we had posted ~~$74.8 million and $72.4~~$75.0 million of letters of credit in lieu of cash deposits under certain land and option contracts as of ~~August 31, 2019~~February 29, 2020 and November 30, ~~2018,~~2019, respectively.

Contractual Obligations and Commercial Commitments

Our contractual obligations and commercial commitments have not changed materially from those reported in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended November 30, ~~2018.~~

~~We are subject to the usual obligations associated with entering into contracts (including option contracts)~~2019, except for the purchase, development and sale of real estate in the routine conduct of our business. Option contracts for the purchase of land generally enable us to defer acquiring portions of properties owned by third parties or unconsolidated entities until we have determined whether to exercise our options. This reduces our financial risk associated with land holdings. At August 31, 2019, we had access to 92,630 homesites through option contracts with third parties and unconsolidated entities in which we have investments. At August 31, 2019, we had $311.1$300.0 million of ~~non-refundable option deposits and pre-acquisition costs related to certain of these homesites and had posted $74.8 million of letters of credit in lieu of cash deposits~~outstanding borrowings under ~~certain land and option contracts.~~

At August 31, 2019, we had letters of credit outstanding in the amount of $863.1 million (which included the $74.8 million of letters of credit described above). These letters of credit are generally posted either with regulatory bodies to guarantee our performance of certain development and construction activities, or in lieu of cash deposits on option contracts, for insurance risks, credit enhancements and as other collateral. Additionally, at August 31, 2019, we had outstanding surety bonds of $2.9 billion including performance surety bonds related to site improvements at various projects (including certain projects of our joint ventures) and financial surety bonds. Although significant development and construction activities have been completed related to these site improvements, these bonds are generally not released until all of the development and construction activities are completed. As of August 31, 2019, there were approximately $1.4 billion, or 47%, of anticipated future costs to complete related to these site improvements. We do not presently anticipate any draws upon these bonds or letters of credit, but if any such draws occur, we do not believe they would have a material effect on our financial position, results of operations or cash flows.

Our Financial Services segment had a pipeline of residential mortgage loan applications in process of $4.3 billion at August 31, 2019. Loans in process for which interest rates were committed to the borrowers totaled approximately $775.2 million as of August 31, 2019. Substantially all of these commitments were for periods of 60 days or less. Since a portion of these commitments is expected to expire without being exercised by the borrowers or because borrowers may not meet certain criteria at the time of closing, the total commitments do not necessarily represent future cash requirements.

Our Financial Services segment uses mandatory mortgage-backed securities ("MBS") forward commitments, option contracts, futures contracts and investor commitments to hedge our mortgage-related interest rate exposure. These instruments involve, to varying degrees, elements of credit and interest rate risk. Credit risk associated with MBS forward commitments, option contracts, futures contracts and loan sales transactions is managed by limiting our counterparties to investment banks, federally regulated bank affiliates and other investors meeting our credit standards. Our risk, in the event of default by the purchaser, is the difference between the contract price and fair value of the MBS forward commitments and option contracts. At August 31, 2019, we had open commitments amounting to $1.6 billion to sell MBS with varying settlement dates through November 2019 and there were no open futures contracts.Facility.

(3) New Accounting Pronouncements

See Note 1812 of the Notes to Condensed Consolidated Financial Statements included under Item 1 of this Report for a discussion of new accounting pronouncements applicable to our company.

(4) Critical Accounting Policies

We believe that there have been no significant changes to our critical accounting policies during the ~~nine~~three months ended ~~August 31, 2019~~February 29, 2020 as compared to those we disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K, for the year ended November 30, ~~2018~~2019, except those policies as a result of the adoption of ASC 606 as of December 1, 2018, for which we updated our revenue recognition policies as noted in Note 1 of the Notes to the Condensed Consolidated Financial Statements and as included below:.

~~Revenue Recognition~~

other liabilities in the Condensed Consolidated Balance Sheets. We periodically elect to sell parcels of land to third parties. Cash consideration from land sales is typically due on the closing date, which is generally when performance obligations are satisfied and revenue is recognized as title to and possession of the property are transferred to the buyer.

Our financial services’ operations recognize revenues as follows: Title premiums on policies issued directly by us are recognized as revenue on the effective date of the title policies. Escrow fees and loan origination revenues are recognized at the time the related real estate transactions are completed, usually upon the close of escrow. Revenues from title policies issued by independent agents are recognized as revenue when notice of issuance is received from the agent, which is generally when cash payment is received by us.

Our Multifamily segment provides management services with respect to the development, construction and property management of rental projects in joint ventures in which we have investments. As a result, the Multifamily segment earns and receives fees, which are generally based upon a stated percentage of development and construction costs and a percentage of gross rental collections. These fees are recorded over the period in which the services are performed using an input method, which properly depicts the level of effort required to complete the management services. In addition, the Multifamily segment provides general contractor services for the construction of some of its rental projects and recognizes the revenue over the period in which the services are performed using an input method, which properly depicts the level of effort required to complete the construction services. These customer contracts require us to provide management and general contractor services which represents a performance obligation that we satisfy over time. Management fees and general contractor services in the Multifamily segment are included in Multifamily revenue.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risks related to fluctuations in interest rates on our investments, debt obligations, loans held-for-sale and loans held-for-investment. We utilize forward commitments and option contracts to mitigate the risks associated with our mortgage loan portfolio.

As of ~~August 31, 2019,~~February 29, 2020, we had ~~$700~~$300 million of outstanding borrowings under our Credit Facility.

As of ~~August 31, 2019,~~February 29, 2020, borrowings under Financial Services' warehouse repurchase facilities totaled ~~$887.8~~$674.8 million under residential ~~loan~~ facilities and ~~$113~~$161.5 million under ~~RMF~~LMF Commercial facilities.

Information Regarding Interest Rate Sensitivity

Principal (Notional) Amount by

Expected Maturity and Average Interest Rate

~~August 31, 2019~~February 29, 2020


	Three Months Ending November 30,			Years Ending November 30,														Fair Value at August 31,	Nine Months Ending November 30,			Years Ending November 30,														Fair Value at February 29,
(Dollars in millions)	2019			2020		2021		2022		2023		2024		Thereafter		Total		2019	2020			2021		2022		2023		2024		2025		Thereafter		Total		2020
LIABILITIES:
Homebuilding:
Senior Notes and other debts payable:
Fixed rate	$	610.3		1,017.5		1,065.0		1,755.0		72.7		1,511.1		2,189.1		8,220.7		8,653.3	$	956.6		1,097.4		1,782.9		73.2		1,522.7		536.2		1,679.4		7,648.4		8,088.3
Average interest rate	4.5		%	4.0	%	6.0	%	4.8	%	4.2	%	5.0	%	4.9	%	4.9	%	—	4.0		%	5.9	%	4.8	%	3.6	%	5.0	%	4.9	%	4.9	%	4.9	%	—
Variable rate	$	—		69.7		44.5		—		—		685.4		—		799.6		808.3	$	52.2		67.1		1.8		7.2		294.7		0.9		4.3		428.2		446.9
Average interest rate	—			4.7	%	2.5	%	—		—		3.8	%	—		3.8	%	—	4.2		%	1.9	%	5.3	%	5.6	%	2.8	%	4.8	%	4.8	%	2.9	%	—
Financial Services:
Notes and other debts payable:
Fixed rate	$	0.1		—		—		—		—		—		155.2		155.3		156.7	$	—		—		—		—		—		—		153.8		153.8		155.6
Average interest rate	5.5		%	—		—		—		—		—		3.4	%	3.4	%	—	—			—		—		—		—		—		3.4	%	3.4	%	—
Variable rate	$	1,000.8		—		—		—		—		—		—		1,000.8		1,000.8	$	836.4		—		—		—		—		—		—		836.4		836.4
Average interest rate	4.0		%	—		—		—		—		—		—		4.0	%	—	3.5		%	—		—		—		—		—		—		3.5	%	—
Multifamily:
Notes payable:
Variable rate	$	36.1		—		—		—		—		—		—		36.1		36.1
Average interest rate	4.3		%	—		—		—		—		—		—		4.3	%	—
Lennar Other:
Notes and other debts payable:
Fixed rate	$	1.9		—		—		—		—		—		—		1.9		1.9	$	1.9		—		—		—		—		—		—		1.9		1.9
Average interest rate	2.9		%	—		—		—		—		—		—		2.9	%	—	3.0		%	—		—		—		—		—		—		3.0	%	—
Variable rate	$	13.2		—		—		—		—		—		—		13.2		13.2	$	13.3		—		—		—		—		—		—		13.3		13.3
Average interest rate	4.2		%	—		—		—		—		—		—		4.2	%	—	3.7		%	—		—		—		—		—		—		3.7	%	—

For additional information regarding our market risk refer to Item 7A. Quantitative and Qualitative Disclosures About Market Risk in our Annual Report on Form 10-K for the year ended November 30, ~~2018.~~

2019.

Item 4. Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer participated in an evaluation by our management of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on their participation in that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of ~~August 31, 2019~~February 29, 2020 to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and to ensure that information required to be disclosed in our reports

filed or furnished under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosures.

Our CEO and CFO also participated in an evaluation by our management of any changes in our internal control over financial reporting that occurred during the quarter ended ~~August 31, 2019~~February 29, 2020. That evaluation did not identify any changes that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II. Other Information

Item 1. Legal Proceedings

We are a party to various claims, legal actions and complaints arising in the ordinary course of business. In the opinion of management, the disposition of these matters will not have a material adverse effect on our condensed consolidated financial statements.

In August 2019, a subsidiary of ours was notified by the Massachusetts Department of Environmental Protection of the subsidiary’s non-compliance with the Massachusetts Contingency Plan regulations related to the clean-up of certain materials at a development formerly owned by that subsidiary in Hingham, MA. ~~We expect to pay~~In February 2020, we paid a monetary settlement that was not material to resolve this ~~matter, which we do not currently expect will be material.~~matter.

Item 1A. Risk Factors

~~There have been no material~~Our results of operations and financial condition may be adversely affected by the outbreak of the coronavirus (also known as COVID-19). That is discussed in greater detail in the Management's Discussion and Analysis of Financial Condition and Results of Operations above.

Demand for our homes is dependent on a variety of macroeconomic factors, such as employment levels, interest rates, changes in stock market valuations, consumer confidence, housing demand, availability of financing for home buyers, availability and prices of new homes compared to existing inventory, and demographic trends. These factors, in particular consumer confidence, can be significantly adversely affected by a variety of factors beyond our ~~risk factors from those disclosed~~control. The outbreak of COVID-19 has caused the shutdown of large portions of our national economy. The spread of COVID-19 has also caused significant volatility in U.S. and international debt and equity markets, which can negatively impact consumer confidence. There is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the U.S. economy and consumer confidence. The extent to which COVID-19 impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions taken to contain it or treat its impact. As a result of COVID-19, traffic in our ~~Annual Report on Form 10-K for~~Welcome Home Centers and sales have slowed significantly, and sales contract cancellations have increased significantly. If the ~~year ended November 30, 2018.~~virus continues to cause significant negative impacts to economic conditions or consumer confidence, our results of operations, financial condition and cash flows will be significantly adversely impacted.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information about our repurchases of common stock during the three months ended ~~August 31, 2019:~~February 29, 2020:

Period: Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Maximum Number of Shares that may yet be Purchased under the Plans or Programs (2)
June 1 to June 30, 2019 1,718
$ 46.33
—
23,000,000
July 1 to July 31, 2019 3,440,582
$ 47.47
2,991,893
20,008,107
August 1 to August 31, 2019 3,118,669
$ 49.47
3,118,107
16,890,000



Period:	Total Number of Shares Purchased (1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Maximum Number of Shares that may yet be Purchased under the Plans or Programs (2)
December 1 to December 30, 2019	—	$	—	—	15,225,271
January 1 to January 31, 2020	2,638,898	$	64.53	2,636,605	12,588,666
February 1 to February 29, 2020	1,857,377	$	68.06	1,728,395	10,860,271


(1)	Includes shares of Class A common stock withheld by us to cover withholding taxes due, at the election of certain holders of nonvested shares, with market value approximating the amount of withholding taxes due.

(2)

In January 2019, our Board of Directors authorized a stock repurchase program, which replaced the June 2001 stock repurchase program, under which we are authorized to purchase up to the lesser of $1.0 billion in value, excluding commission, or 25 million in shares, of our outstanding Class A or Class B common stock. During the three months ended February 29, 2020, under this repurchase program, we repurchased 4.3 million shares of our Class A common stock for approximately $282.3 million at an average share price of $66.42 and 0.1 million shares of our Class B common stock for approximately $6.2 million at an average share price of $53.52 (approximately 40,000 shares in January and 75,000 shares in February at an average share price of $51.13 and $54.81, respectively). This repurchase authorization has no expiration.

Items 3 - 5. Not Applicable

Item 6. Exhibits



~~3.1~~	~~By-Laws of Lennar Corporation, as amended effective June 26, 2019 - Incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K, dated June 26, 2019.~~
10.1***	~~2019~~2020 Award Agreements under the Company’s 2016 Incentive Compensation Plan for Stuart Miller, Rick Beckwitt, ~~and~~ Jonathan Jaffe, Diane Bessette and Jeff McCall - Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, dated ~~June 25, 2019.~~February 28, 2020.
10.2***	Form of ~~2019~~2020 Award Agreement under the Company’s 2016 Equity Incentive Plan for Stuart Miller, Rick Beckwitt, ~~and~~ Jonathan Jaffe, Diane Bessette and Jeff McCall - Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K, dated ~~June 25, 2019.~~February 28, 2020.
10.3***	~~2019 Award Agreements for Diane Bessette, Mark Sustana, Jeff McCall and Bruce Gross - Incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K, dated June 25, 2019.~~
~~31.1~~31.1*	Rule 13a-14(a) certification by Rick Beckwitt, Chief Executive Officer.
~~31.2~~31.2*	Rule 13a-14(a) certification by Diane Bessette, Vice President, Chief Financial Officer and Treasurer.
32.*	Section 1350 certifications by Rick Beckwitt, Chief Executive Officer, and Diane Bessette, Vice President, Chief Financial Officer and Treasurer.
101.*	The following financial statements from Lennar Corporation's Quarterly Report on Form 10-Q for the quarter ended ~~August 31, 2019,~~February 29, 2020, filed on ~~October 8, 2019,~~April 7, 2020, were formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), (iii) Condensed Consolidated Statements of Cash Flows and (iv) the Notes to Condensed Consolidated Financial Statements.
101.INS*	iXBRL Instance Document.
101.SCH*	iXBRL Taxonomy Extension Schema Document.
101.CAL*	iXBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*	iXBRL Taxonomy Extension Definition.
101.LAB*	iXBRL Taxonomy Extension Label Linkbase Document.
101.PRE*	iXBRL Taxonomy Presentation Linkbase Document.
104**	The cover page from Lennar Corporation's Quarterly Report on Form 10-Q for the quarter ended ~~August 31, 2019~~February 29, 2020 was formatted in iXBRL.

* Filed herewith.

** Included in Exhibit 101.

*** Management contract or compensatory plan or arrangement.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		Lennar Corporation
		(Registrant)

Date:	~~October 8, 2019~~April 7, 2020	/s/ Diane Bessette
		Diane Bessette
		Vice President, Chief Financial Officer and Treasurer

Date:	~~October 8, 2019~~April 7, 2020	/s/ David Collins
		David Collins
		Controller

7850



(Dollars in thousands)
CalAtlantic shares of common stock outstanding	118,025,879
CalAtlantic shares electing cash conversion	24,083,091
CalAtlantic shares exchanged	93,942,788
Exchange ratio for Class A common stock	0.885
Exchange ratio for Class B common stock	0.0177
Number of shares of Lennar Class A common stock issued in exchange	83,138,277
Number of shares of Lennar Class B common stock issued in exchange (due to Class B common stock dividend)	1,662,172

Consideration attributable to Class A common stock	$	4,933,425
Consideration attributable to Class B common stock	77,823
Consideration attributable to equity awards that convert upon change of control	58,758
Consideration attributable to cash including fractional shares	1,162,341
Total purchase price	$	6,232,347



				Three months ended August 31, 2019
(In thousands)	Total Equity			Class A Common Stock	Class B Common Stock	Additional Paid - in Capital		Treasury Stock		Accumulated Other Comprehensive Income		Retained Earnings		Noncontrolling Interests
Balance at May 31, 2019	$	15,246,535		29,503	3,944	8,529,828		(537,106	)	227		7,132,908		87,231
Net earnings (including net loss attributable to noncontrolling interests)	512,643			—	—	—		—		—		513,366		(723	)
Employee stock and directors plans	(22,359		)	206	—	(400	)	(22,165	)	—		—		—
Purchases of treasury stock	(295,930		)	—	—	—		(295,930	)	—		—		—
Amortization of restricted stock	34,048			—	—	34,048		—		—		—		—
Cash dividends	(12,899		)	—	—	—		—		—	—	(12,899	)	—
Receipts related to noncontrolling interests	18,458			—	—	—		—		—		—		18,458
Payments related to noncontrolling interests	(12,372		)	—	—	—		—		—		—		(12,372	)
Non cash activity related to noncontrolling interests	(2,357		)	—	—	(3,772	)	—		—		—		1,415
Total other comprehensive income, net of tax	180			—	—	—		—		180		—		—
Balance at August 31, 2019	$	15,465,947		29,709	3,944	8,559,704		(855,201	)	407		7,633,375		94,009



				Nine months ended August 31, 2019
(In thousands)	Total Equity			Class A Common Stock	Class B Common Stock	Additional Paid - in Capital		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Noncontrolling Interests
Balance at November 30, 2018	$	14,682,957		29,499	3,944	8,496,677		(435,869	)	(366	)	6,487,650		101,422
Net earnings (including net loss attributable to noncontrolling interests)	1,170,936			—	—	—		—		—		1,174,748		(3,812	)
Employee stock and directors plans	(23,050		)	210	—	1,361		(24,621	)	—		—		—
Purchases of treasury stock	(394,711		)	—	—	—		(394,711	)	—		—		—
Amortization of restricted stock	65,438			—	—	65,438		—		—		—		—
Cash dividends	(38,776		)	—	—	—		—		—		(38,776	)	—
Receipts related to noncontrolling interests	27,395			—	—	—		—		—		—		27,395
Payments related to noncontrolling interests	(35,689		)	—	—	—		—		—		—		(35,689	)
Non-cash consolidations, net	8,894			—	—	—		—		—		—		8,894
Cumulative-effect of accounting change (see Note 1 to the Notes to the Condensed Consolidated Financial Statements)	9,753			—	—	—		—		—		9,753		—
Non-cash activity related to noncontrolling interests	(7,973		)	—	—	(3,772	)	—		—		—		(4,201	)
Total other comprehensive income, net of tax	773			—	—	—		—		773		—		—
Balance at August 31, 2019	$	15,465,947		29,709	3,944	8,559,704		(855,201	)	407		7,633,375		94,009



				Three months ended August 31, 2018
(In thousands)	Total Equity			Class A Common Stock	Class B Common Stock	Additional Paid - in Capital		Treasury Stock		Accumulated Other Comprehensive Loss		Retained Earnings		Noncontrolling Interests
Balance at May 31, 2018	$	13,698,870		29,373	3,944	8,458,211		(164,552	)	(339	)	5,264,674		107,559
Net earnings (including net earnings attributable to noncontrolling interests)	467,620			—	—	—		—		—		453,211		14,409
Employee stock and directors plans	(20,943		)	125	—	(95	)	(20,969	)	—		(4	)	—
Amortization of restricted stock	21,918			—	—	21,918		—		—		—		—
Cash dividends	(13,205		)	—	—	—		—		—		(13,205	)	—
Receipts related to noncontrolling interests	126			—	—	—		—		—		—		126
Payments related to noncontrolling interests	(38,215		)	—	—	—		—		—		—		(38,215	)
Non-cash activity to noncontrolling interests	285			—	—	—		—		—		—		285
Total other comprehensive loss, net of tax	(276		)	—	—	—		—		(276	)	—		—
Balance at August 31, 2018	$	14,116,180		29,498	3,944	8,480,034		(185,521	)	(615	)	5,704,676		84,164



				Nine months ended August 31, 2018
(In thousands)	Total Equity			Class A Common Stock	Class B Common Stock	Additional Paid - in Capital	Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Noncontrolling Interests
Balance at November 30, 2017	$	7,986,132		20,543	3,769	3,142,013	(136,020	)	1,034		4,840,978		113,815
Net earnings (including net earnings attributable to noncontrolling interests)	919,286			—	—	—	—		—		899,683		19,603
Employee stock and directors plans	(45,148		)	182	—	4,171	(49,501	)	—		—		—
Stock issuance in connection with CalAtlantic acquisition	5,070,006			8,408	168	5,061,430	—		—		—		—
Conversion of convertible senior notes to Class A common stock	217,154			365	7	216,782	—		—		—		—
Amortization of restricted stock	55,638			—	—	55,638	—		—		—		—
Cash dividends	(35,985		)	—	—	—	—		—		(35,985	)	—
Receipts related to noncontrolling interests	4,008			—	—	—	—		—		—		4,008
Payments related to noncontrolling interests	(68,627		)	—	—	—	—		—		—		(68,627	)
Non-cash activity to noncontrolling interests	15,365			—	—	—	—		—		—		15,365
Total other comprehensive loss, net of tax	(1,649		)	—	—	—	—		(1,649	)	—		—
Balance at August 31, 2018	$	14,116,180		29,498	3,944	8,480,034	(185,521	)	(615	)	5,704,676		84,164



(In thousands)	Maximum Aggregate Commitment
364-day warehouse repurchase facility that matures October 2019 (1)	$	500,000
364-day warehouse repurchase facility that matures November 2019 (2)	300,000
364-day warehouse repurchase facility that matures March 2020 (3)	300,000
364-day warehouse repurchase facility that matures June 2020	500,000
Total	$	1,600,000



(In thousands)	Fair Value Hierarchy	Fair Value at August 31, 2019			Fair Value at November 30, 2018
Financial Services Assets (Liabilities):
RMF loans held-for-sale (1)	Level 3	$	178,704		61,691
Financial Services residential loans held-for-sale (2)	Level 2	$	1,049,888		1,152,198
Investments available-for-sale	Level 1	$	3,597		4,161
Mortgage loan commitments	Level 2	$	25,871		16,373
Forward contracts	Level 2	$	(9,626	)	(10,360	)
Mortgage servicing rights	Level 3	$	23,072		37,206



	Three Months Ended August 31,
	2019					2018
	Financial Services
(In thousands)	Mortgage servicing rights			RMF loans held-for-sale		Mortgage servicing rights		RMF loans held-for-sale
Beginning balance	$	29,419		259,599		34,592		325,373
Purchases/loan originations	449			263,888		1,734		333,680
Sales/loan originations sold, including those not settled	—			(347,713	)	—		(516,958	)
Disposals/settlements	(1,544		)	—		(1,290	)	—
Changes in fair value (1)	(5,252		)	3,502		38		(1,400	)
Interest and principal paydowns	—			(572	)	—		23
Ending balance	$	23,072		178,704		35,074		140,718



	Three Months Ended
	Sales Incentives (In thousands)			Average Sales Incentives Per Home Delivered			Sales Incentives as a % of Revenue
	August 31,			August 31,			August 31,
	2019		2018	2019		2018	2019		2018
East	$	128,734	112,133	$	23,700	23,100	6.5	%	6.3	%
Central	49,519		44,065	26,300		25,400	6.5	%	6.2	%
Texas	67,156		72,946	29,700		33,600	8.8	%	9.2	%
West	83,505		58,521	21,400		15,300	3.9	%	2.7	%
Other	1,306		1,384	54,400		197,700	6.7	%	12.7	%
Total	$	330,220	289,049	$	24,400	22,900	5.8	%	5.2	%



						As of or for the
	Three Months Ended					Nine Months Ended
	August 31,					August 31,
(Dollars in thousands)	2019			2018		2019			2018
Revenues	$	74,939		153,136		231,269			322,277
Costs and expenses	99,611			195,525		313,725			451,627
Other income (1)	513			13,903		76,578			119,095
Net earnings of unconsolidated entities	$	(24,159	)	(28,486	)	(5,878		)	(10,255	)
Homebuilding equity in loss from unconsolidated entities	$	(10,459	)	(16,739	)	(4,601		)	(43,537	)
Homebuilding cumulative share of net earnings - deferred at August 31, 2019 and 2018, respectively						$	30,008		25,933
Homebuilding investments in unconsolidated entities						$	1,002,936		901,351
Equity of the Homebuilding unconsolidated entities						$	4,158,036		4,133,948
Homebuilding investment % in the unconsolidated entities (2)						24		%	22	%



(Dollars in thousands)	Lennar’s Investment		Total JV Assets	Maximum Recourse Debt Exposure to Lennar		Total Debt Without Recourse to Lennar		Total JV Debt		Total JV Equity	JV Debt to Total Capital Ratio
Top Ten JVs (1):
FivePoint	$	380,476	2,877,045	—		500,000		500,000		1,908,774	21	%
Dublin Crossings	78,395		243,387	—		—		—		218,606	—	%
Heritage Fields El Toro	45,131		1,191,172	—		5,919		5,919		1,027,979	1	%
Hawk Land Investors	43,588		5,899	—		—		—		5,859	—	%
SC East Landco	42,705		101,675	—		—		—		101,461	—	%
Greenbriar Investor	37,200		—	—		—		—		—	—	%
Mesa Canyon Community Partners	35,515		145,264	—		39,500		39,500		105,965	27	%
E.L. Urban Communities	35,437		46,101	—		20,902		20,902		22,381	48	%
BHCSP	33,682		97,251	3,770		26,391		30,161		55,579	35	%
Runkle Canyon	33,056		66,181	—		—		—		66,112	—	%
10 largest JV investments	765,185		4,773,975	3,770		592,712		596,482		3,512,716	15	%
Other JVs	237,751		1,037,113	6,266		259,067		265,333		645,320	29	%
Total	$	1,002,936	5,811,088	10,036		851,779		861,815		4,158,036	17	%
Debt issuance costs				—		(9,725	)	(9,725	)
Total JV debt				$	10,036	842,054		852,090



	August 31, 2019
(In thousands)	Hypothetical Carried Interest		Paid as Advanced Tax Distribution	Paid as Carried Interest	Hypothetical Carried Interest, Net (2)
Rialto Real Estate Fund, LP (1)	$	182,688	52,711	53,917	76,060
Rialto Real Estate Fund II, LP (1)	107,852		21,423	465	85,964
Rialto Real Estate Fund III, LP (1)	78,218		18,151	—	60,067
	$	368,758	92,285	54,382	222,091

Balance Sheets

February 29, 2020

November 30, 2019

(Dollars in thousands)

Multifamily investments in unconsolidated entities

Lennar's net investment in Multifamily