SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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

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

incorporation or organization)



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

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~~May 31, ~~2019:~~2020:

Class A ~~279,880,759~~274,618,334

Class B ~~37,738,347~~37,623,183

Part I. Financial Information

Item 1. Financial Statements

Lennar Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(Dollars in thousands)

(unaudited)


	May 31,		November 30,
	2020 (1)		2019 (1)
ASSETS
Homebuilding:
Cash and cash equivalents	$	1,398,682	1,200,832
Restricted cash	9,569		9,698
Receivables, net	299,494		329,124
Inventories:
Finished homes and construction in progress	9,609,146		9,195,721
Land and land under development	7,938,451		8,267,647
Consolidated inventory not owned	399,809		313,139
Total inventories	17,947,406		17,776,507
Investments in unconsolidated entities	973,044		1,009,035
Goodwill	3,442,359		3,442,359
Other assets	1,080,186		1,021,684
	25,150,740		24,789,239
Financial Services	2,577,805		3,006,024
Multifamily	1,127,929		1,068,831
Lennar Other	452,551		495,417
Total assets	$	29,309,025	29,359,511

August 31, November 30,
2019 (1) 2018 (1)
ASSETS
Homebuilding:
Cash and cash equivalents $ 795,405
1,337,807
Restricted cash 13,238
12,399
Receivables, net 295,418
236,841
Inventories:
Finished homes and construction in progress 10,256,011
8,681,357
Land and land under development 8,240,076
8,178,388
Consolidated inventory not owned 352,083
208,959
Total inventories 18,848,170
17,068,704
Investments in unconsolidated entities 1,002,936
870,201
Goodwill 3,442,359
3,442,359
Other assets 1,158,325
1,355,782
25,555,851
24,324,093
Financial Services 2,329,786
2,778,910
Multifamily 1,020,842
874,219
Lennar Other 552,968
588,959
Total assets $ 29,459,447
28,566,181


~~(1)~~	(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~~May 31, ~~2019,~~2020, total assets include ~~$1.0 billion~~$873.0 million related to consolidated VIEs of which ~~$15.3~~$9.1 million is included in Homebuilding cash and cash equivalents, $0.2 million in Homebuilding receivables, net, ~~$108.9~~$110.6 million in Homebuilding finished homes and construction in progress, ~~$242.9~~$308.4 million in Homebuilding land and land under development, ~~$352.1~~$391.6 million in Homebuilding consolidated inventory not owned, ~~$4.1~~$2.0 million in Homebuilding investments in unconsolidated entities, ~~$6.0~~$8.0 million in Homebuilding other assets ~~$222.0 million in Financial Services assets~~ and ~~$50.7~~$43.3 million in Multifamily assets.

As of November 30, ~~2018,~~2019, total assets include ~~$666.2~~$980.2 million related to consolidated VIEs of which ~~$57.6~~$15.5 million is included in Homebuilding cash and cash equivalents, $0.2 million in Homebuilding receivables, net, ~~$81.7~~$97.5 million in Homebuilding finished homes and construction in progress, ~~$293.1~~$283.2 million in Homebuilding land and land under development, ~~$209.0~~$301.0 million in Homebuilding consolidated inventory not owned, ~~$3.8~~$2.5 million in Homebuilding investments in unconsolidated entities, ~~$10.5~~$10.0 million in Homebuilding other assets, ~~and $10.3~~$221.2 million in ~~Lennar Other~~Financial Services assets and $49.1 million in Multifamily assets.

See accompanying notes to condensed consolidated financial statements.

Lennar Corporation and Subsidiaries

Condensed Consolidated Balance Sheets (Continued)

(In thousands, except shares and per share amounts)

(unaudited)


	May 31,		November 30,
	2020 (2)		2019 (2)
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable	$	1,033,558	1,069,179
Liabilities related to consolidated inventory not owned	344,074		260,266
Senior notes and other debts payable, net	7,495,674		7,776,638
Other liabilities	1,900,970		1,900,955
	10,774,276		11,007,038
Financial Services	1,663,548		2,056,450
Multifamily	222,387		232,155
Lennar Other	16,190		30,038
Total liabilities	12,676,401		13,325,681
Stockholders’ equity:
Preferred stock	—		—
Class A common stock of $0.10 par value; Authorized: May 31, 2020 and November 30, 2019 - 400,000,000 shares; Issued: May 31, 2020 - 298,037,274 shares and November 30, 2019 - 297,119,153 shares	29,804		29,712
Class B common stock of $0.10 par value; Authorized: May 31, 2020 and November 30, 2019 - 90,000,000 shares; Issued: May 31, 2020 - 39,443,104 shares and November 30, 2019 - 39,443,064 shares	3,944		3,944
Additional paid-in capital	8,630,442		8,578,219
Retained earnings	9,132,714		8,295,001
Treasury stock, at cost; May 31, 2020 - 23,418,940 shares of Class A common stock and 1,819,921 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	(1,253,863)		(957,857)
Accumulated other comprehensive income (loss)	(338)		498
Total stockholders’ equity	16,542,703		15,949,517
Noncontrolling interests	89,921		84,313
Total equity	16,632,624		16,033,830
Total liabilities and equity	$	29,309,025	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.

August 31, November 30,
2019 (2) 2018 (2)
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable $ 1,092,708
1,154,782
Liabilities related to consolidated inventory not owned 298,724
175,590
Senior notes and other debts payable 9,075,016
8,543,868
Other liabilities 1,833,915
1,902,658
12,300,363
11,776,898
Financial Services 1,455,456
1,868,202
Multifamily 213,054
170,616
Lennar Other 24,627
67,508
Total liabilities 13,993,500
13,883,224
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
Additional paid-in capital 8,559,704
8,496,677
Retained earnings 7,633,375
6,487,650
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 )
Total stockholders’ equity 15,371,938
14,581,535
Noncontrolling interests 94,009
101,422
Total equity 15,465,947
14,682,957
Total liabilities and equity $ 29,459,447
28,566,181


~~(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~~May 31, ~~2019,~~2020, total liabilities include ~~$577.7~~$450.4 million related to consolidated VIEs as to which there was no recourse against the Company, of which ~~$7.8~~$20.9 million is included in Homebuilding accounts payable, ~~$47.1 million in Homebuilding senior notes and other debts payable, $298.7~~$335.5 million in Homebuilding liabilities related to consolidated inventory not owned, ~~$4.3~~$74.5 million in Homebuilding senior notes and other debts payable, $8.6 million in Homebuilding other liabilities ~~$218.5 million in Financial Services liabilities~~ and ~~$1.2~~$11.0 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.

See accompanying notes to condensed consolidated financial statements.

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
August 31, August 31,
2019 2018 2019 2018
Revenues:
Homebuilding $ 5,438,998
5,285,742
14,258,318
13,011,832
Financial Services 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 5,857,058
5,672,569
15,288,030
14,112,421
Costs and expenses:
Homebuilding 4,781,932
4,671,088
12,608,026
11,711,184
Financial Services 149,804
197,693
422,142
561,853
Multifamily 181,616
103,187
431,510
317,572
Lennar Other 2,734
21,518
7,550
69,883
Acquisition and integration costs related to CalAtlantic —
11,992
—
140,062
Corporate general and administrative 92,615
96,346
248,071
249,071
Total costs and expenses 5,208,701
5,101,824
13,717,299
13,049,625
Homebuilding equity in loss from unconsolidated entities (10,459 ) (16,739 ) (4,601 ) (43,537 )
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
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 )
Earnings before income taxes 667,083
565,918
1,545,606
1,226,156
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
Net earnings attributable to Lennar $ 513,366
453,211
1,174,748
899,683
Other comprehensive income (loss), net of tax:
Net unrealized gain (loss) on securities available-for-sale $ 180
(110 ) 949
(1,357 )
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 )
Total comprehensive income attributable to Lennar $ 513,546
452,935
1,175,521
898,034
Total comprehensive income (loss) attributable to noncontrolling interests $ (723 ) 14,409
(3,812 ) 19,603
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)~~	~~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.


	Three Months Ended				Six Months Ended
	May 31,				May 31,
	2020		2019	2020	2019
Revenues:
Homebuilding	$	4,949,484	5,195,599	9,121,600	8,819,320
Financial Services	196,263		204,216	394,924	347,527
Multifamily	123,117		147,412	255,734	244,806
Lennar Other	18,509		15,663	20,452	19,319
Total revenues	5,287,373		5,562,890	9,792,710	9,430,972
Costs and expenses:
Homebuilding	4,313,331		4,587,259	8,011,137	7,826,094
Financial Services	110,355		147,999	261,699	272,338
Multifamily	123,473		148,716	260,821	249,894
Lennar Other	(1,072)		3,194	1,502	4,816
Corporate general and administrative	83,451		76,113	170,298	155,456
Total costs and expenses	4,629,538		4,963,281	8,705,457	8,508,598
Homebuilding equity in earnings (loss) from unconsolidated entities	(9,100)		19,614	(13,646)	5,858
Homebuilding other income (expense), net	4,308		(46,165)	(5,058)	(47,700)
Financial Services gain on deconsolidation	61,418		—	61,418	—
Multifamily equity in earnings (loss) from unconsolidated entities and other gain	(282)		(3,018)	6,234	7,563
Lennar Other equity in earnings (loss) from unconsolidated entities	(26,642)		(4,978)	(26,523)	3,352
Lennar Other expense, net	(10,960)		(5,663)	(9,549)	(12,924)
Earnings before income taxes	676,577		559,399	1,100,129	878,523
Provision for income taxes	(160,479)		(140,530)	(192,808)	(220,230)
Net earnings (including net loss attributable to noncontrolling interests)	516,098		418,869	907,321	658,293
Less: Net loss attributable to noncontrolling interests	(1,308)		(2,603)	(8,537)	(3,089)
Net earnings attributable to Lennar	$	517,406	421,472	915,858	661,382
Other comprehensive income (loss), net of tax:
Net unrealized gain (loss) on securities available-for-sale	$	(338)	561	(384)	769
Reclassification adjustments for gains included in earnings, net of tax	(452)		(176)	(452)	(176)
Total other comprehensive income (loss), net of tax	$	(790)	385	(836)	593
Total comprehensive income attributable to Lennar	$	516,616	421,857	915,022	661,975
Total comprehensive loss attributable to noncontrolling interests	$	(1,308)	(2,603)	(8,537)	(3,089)
Basic earnings per share	$	1.66	1.31	2.92	2.05
Diluted earnings per share	$	1.65	1.30	2.91	2.03

See accompanying notes to condensed consolidated financial statements.

Lennar Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Continued)

(In thousands)

(unaudited)


	Six Months Ended
	May 31,
	2020		2019
Cash flows from operating activities:
Net earnings (including net loss attributable to noncontrolling interests)	$	907,321	658,293
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization	44,464		40,986
Amortization of discount/premium and accretion on debt, net	(13,839)		(13,335)
Equity in earnings (loss) from unconsolidated entities	40,355		(5,908)
Distributions of earnings from unconsolidated entities	38,000		4,037
Share-based compensation expense	55,141		31,390

Deferred income tax expense	79,738		101,477

Gain on sale of other assets, operating properties and equipment and real estate owned	(13,126)		(1,471)

Loss on consolidation	—		48,874
Gain on deconsolidation of previously consolidated entity	(61,418)		—
Gain on sale of interest in unconsolidated entity and other Multifamily gain	(4,661)		(10,865)

Gain on sale of Financial Services' servicing portfolio/businesses	(5,014)		(2,168)


Valuation adjustments and write-offs of option deposits and pre-acquisition costs	65,098		10,602
Changes in assets and liabilities:

(Increase) decrease in receivables	(7,758)		542,054
Increase in inventories, excluding valuation adjustments and write-offs of option deposits and pre-acquisition costs	(159,138)		(1,501,423)
(Increase) decrease in other assets	(148,087)		66,464
Decrease (increase) in loans held-for-sale	481,583		(206,349)
Increase (decrease) in accounts payable and other liabilities	12,144		(192,548)
Net cash provided by (used in) operating activities	1,310,803		(429,890)
Cash flows from investing activities:

Net additions of operating properties and equipment	(25,731)		(47,766)
Proceeds from the sale of operating properties and equipment, other assets and real estate owned	29,727		4,210
Proceeds from sale of investment in unconsolidated entity	—		17,790

Proceeds from sale of Financial Services' servicing portfolio/businesses	9,096		24,446


Investments in and contributions to unconsolidated entities/deconsolidation of previously consolidated entity	(302,784)		(230,744)
Distributions of capital from unconsolidated entities	115,093		140,888




Receipts of principal payments on loans receivable and other	—		1,811


Proceeds from sale of commercial mortgage-backed securities bonds	3,248		—




Decrease (increase) in Financial Services loans held-for-investment, net	143		(5,975)
Purchases of investment securities	(29,642)		(31,462)
Proceeds from maturities/sales of investments securities	25,138		35,416

Other receipts (payments), net	1,670		(200)
Net cash used in investing activities	$	(174,042)	(91,586)

See accompanying notes to condensed consolidated financial statements.

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 )

Lennar Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Continued)

(In thousands)

(unaudited)


	Six Months Ended
	May 31,
	2020		2019
Cash flows from financing activities:
Net borrowings under revolving line of credit	$	—	550,000
Net repayments under warehouse facilities	(310,216)		(365,184)


Redemption of senior notes	(300,000)		—
Proceeds from other borrowings	59,139		28,620
Principal payments on notes payable and other borrowings	(174,382)		(123,681)


Proceeds (payments) related to other liabilities, net	3,567		(1,046)
Conversions, exchanges and redemption of convertible senior notes	—		(1,288)

Receipts related to noncontrolling interests	169,061		8,937
Payments related to noncontrolling interests	(21,501)		(23,317)


Common stock:
Issuances	—		634
Repurchases	(296,093)		(101,229)
Dividends	(78,145)		(25,877)
Net cash used in financing activities	$	(948,570)	(53,431)
Net increase (decrease) in cash and cash equivalents and restricted cash	188,191		(574,907)
Cash and cash equivalents and restricted cash at beginning of period	1,468,691		1,595,978
Cash and cash equivalents and restricted cash at end of period	$	1,656,882	1,021,071
Summary of cash and cash equivalents and restricted cash:
Homebuilding	$	1,408,251	812,365
Financial Services	229,621		186,760
Multifamily	13,061		16,743
Lennar Other	5,949		5,203
	$	1,656,882	1,021,071
Supplemental disclosures of non-cash investing and financing activities:
Homebuilding and Multifamily:
Purchases of inventories and other assets financed by sellers	$	102,982	46,631
Non-cash contributions to unconsolidated entities	13,859		—


















Consolidation/deconsolidation of unconsolidated/consolidated entities, net:
Financial Services assets	$	217,565	—
Financial Services liabilities	(115,175)		—
Financial Services noncontrolling interests	(102,390)		—
Inventories	(35,959)		187,506
Receivables	—		102,959
Operating properties and equipment and other assets	6,375		53,412


Investments in unconsolidated entities	—		67,925

Notes payable	—		(383,212)

Other liabilities	182		(19,696)
Noncontrolling interests	29,402		(8,894)

See accompanying notes to condensed consolidated financial statements.

Nine Months Ended
August 31,
2019 2018
Cash flows from financing activities:
Net borrowings under revolving lines of credit $ 700,000
195,300
Net repayments under warehouse facilities (423,123 ) (100,963 )
Redemption of senior notes (500,000 ) (825,000 )
Proceeds from other borrowings 62,634
70,322
Principal payments on other borrowings (154,736 ) (436,035 )
Payments related to other liabilities (2,533 ) (3,200 )
Conversions, exchanges and redemption of convertible senior notes (1,288 ) (59,145 )
Receipts related to noncontrolling interests 27,395
4,008
Payments related to noncontrolling interests (35,689 ) (68,627 )
Debt issuance costs —
(12,459 )
Common stock:
Issuances 388
3,189
Repurchases (419,322 ) (49,490 )
Dividends (38,776 ) (35,985 )
Net cash used in financing activities $ (785,050 ) (1,318,085 )
Net decrease in cash and cash equivalents and restricted cash (526,114 ) (1,610,542 )
Cash and cash equivalents and restricted cash at beginning of period 1,595,978
2,694,084
Cash and cash equivalents and restricted cash at end of period $ 1,069,864
1,083,542
Summary of cash and cash equivalents and restricted cash:
Homebuilding $ 808,643
845,015
Financial Services 238,406
177,162
Multifamily 16,478
13,748
Lennar Other 6,337
47,617
$ 1,069,864
1,083,542
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
Non-cash contributions to unconsolidated entities $ 107,368
91,709
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
—
Investments in unconsolidated entities $ 67,925
(25,614 )
Notes payable $ (383,212 ) —
Other liabilities $ (19,696 ) (17,014 )
Noncontrolling interests $ (8,894 ) —

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)


~~(1)~~	~~Basis of Presentation~~

(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~~six months ended ~~August~~May 31, ~~2019~~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 May 31, 2020 and November 30, 2019 included $528.3 million and $565.8 million, respectively, of cash held in escrow for approximately three days.

Share-based Payments

During the three months ended May 31, 2020, the Company granted an immaterial number of vested shares. During the six months ended May 31, 2020, the Company granted employees 0.9 million nonvested shares. During the three and six months ended May 31, 2019, the Company granted employees an immaterial number of nonvested shares.

Recently Adopted Accounting Pronouncements

In ~~May 2014,~~March 2016, the Financial Accounting Standards Board ("FASB") issued ~~Accounting Standard Update ("ASU") 2014-09,~~ ~~Revenue from Contracts with Customers~~,ASU 2016-02, Leases ("ASU ~~2014-09"~~2016-02")~~. ASU 2014-09~~, which provides ~~a single comprehensive model~~guidance for ~~entities to use in~~ accounting for ~~revenue arising from contracts~~leases. ASU 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 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~~term greater than 12 months regardless of the ~~contract(s) which include (i) identifying~~lease classification. The lease classification determined whether the ~~contract(s) with~~lease expense was recognized based on an effective interest rate method or on a straight line basis over the ~~customer, (ii) identifying~~term of 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~~lease. Accounting for ~~Partial Sales of Nonfinancial Assets~~ ("lessors remains largely unchanged from current GAAP. 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 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230),~~ ~~Classification of Certain Cash Receipts and Cash Payments~~ ~~("ASU 2016-15"). ASU 2016-15 reduces the existing diversity in practice in financial reporting across all industries by clarifying certain existing principles in ASC 230,~~ ~~Statement of Cash Flows, including providing additional guidance on how and what an entity should consider in determining the classification of certain cash flows. 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 of changes in stockholders' equity within Note 5 of the Notes to the Condensed Consolidated Financial Statements.~~

~~In January 2016, the FASB issued ASU 2016-01,~~ ~~Financial Instruments - Overall: Recognition and Measurement 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 or our condensed consolidated ~~financial statements.~~

~~In January 2017, the FASB issued ASU 2017-01,~~ ~~Business Combinations (Topic 805), Clarifying the Definition~~statements 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 the Company has investments.flows. As a result of 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 requireadoption, on December 1, 2019, the Company ~~to provide management~~recorded $150.7 million of ROU assets 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~~$159.7 million of lease liabilities on its condensed consolidated ~~financial statements have been reclassified to conform with the 2019 presentation. The Company's segments were adjusted to reflect Rialto Mortgage Finance ("RMF")~~balance sheets within other assets 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.


~~(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~~liabilities of the ~~Company (“Merger Sub”), with Merger Sub continuing as the surviving corporation~~respective segments.

(2)Operating 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.Reporting Segments

~~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)	May 31, 2020
Assets:	Homebuilding		Financial Services	Multifamily	Lennar Other	Total
Cash and cash equivalents	$	1,398,682	224,229	13,061	5,949	1,641,921
Restricted cash	9,569		5,392	—	—	14,961
Receivables, net (1)	299,494		594,620	87,183	—	981,297
Inventories	17,947,406		—	328,497	—	18,275,903
Loans held-for-sale (2)	—		1,163,356	—	—	1,163,356
Loans held-for-investment, net	—		69,846	—	1,422	71,268

Investments held-to-maturity	—		164,982	—	—	164,982
Investments available-for-sale (3)	—		—	—	53,585	53,585
Investments in unconsolidated entities (4)	973,044		70,844	621,465	380,105	2,045,458
Goodwill	3,442,359		189,699	—	—	3,632,058
Other assets (5)	1,080,186		94,837	77,723	11,490	1,264,236
	$	25,150,740	2,577,805	1,127,929	452,551	29,309,025
Liabilities:
Notes and other debts payable, net	$	7,495,674	1,435,538	—	6,170	8,937,382
Other liabilities (6)	3,278,602		228,010	222,387	10,020	3,739,019
	$	10,774,276	1,663,548	222,387	16,190	12,676,401


(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 (4)	1,009,035		—	561,190	403,688	1,973,913
Goodwill	3,442,359		215,516	—	—	3,657,875
Other assets (5)	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 (6)	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 May 31, 2020 and November 30, 2019, respectively.

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

Lennar Corporation and Subsidiaries

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

(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)Lennar Other investments in unconsolidated entities decreased primarily due to a $25.0 million write-down of assets held by Rialto legacy funds because of disruption in the capital markets as a result of COVID-19 and the economic shutdown.

(5)As of May 31, 2020 and November 30, 2019, Financial Services other assets included mortgage loan commitments carried at fair value of $45.0 million and $16.3 million, respectively, and mortgage servicing rights carried at fair value of $1.2 million and $24.7 million, respectively.

(6)As of May 31, 2020 and November 30, 2019, Financial Services other liabilities included $62.4 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 May 31, 2020 and November 30, 2019, Financial Services other liabilities also included forward contracts carried at fair value of $4.7 million and $3.9 million, respectively.

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


	Three Months Ended May 31, 2020
(In thousands)	Homebuilding		Financial Services	Multifamily	Lennar Other	Corporate and unallocated	Total
Revenues	$	4,949,484	196,263	123,117	18,509	—	5,287,373
Operating earnings (loss) (1)	631,361		147,326	(638)	(18,021)	—	760,028
Corporate general and administrative expenses	—		—	—	—	83,451	83,451
Earnings (loss) before income taxes	631,361		147,326	(638)	(18,021)	(83,451)	676,577

	Three Months Ended May 31, 2019
Revenues	$	5,195,599	204,216	147,412	15,663	—	5,562,890
Operating earnings (loss)	581,789		56,217	(4,322)	1,828	—	635,512
Corporate general and administrative expenses	—		—	—	—	76,113	76,113
Earnings (loss) before income taxes	581,789		56,217	(4,322)	1,828	(76,113)	559,399


	Six Months Ended May 31, 2020
(In thousands)	Homebuilding		Financial Services	Multifamily	Lennar Other	Corporate and unallocated	Total
Revenues	$	9,121,600	394,924	255,734	20,452	—	9,792,710
Operating earnings (loss) (1)	1,091,759		194,643	1,147	(17,122)	—	1,270,427
Corporate general and administrative expenses	—		—	—	—	170,298	170,298
Earnings (loss) before income taxes	1,091,759		194,643	1,147	(17,122)	(170,298)	1,100,129

	Six Months Ended May 31, 2019
Revenues	$	8,819,320	347,527	244,806	19,319	—	9,430,972
Operating earnings	951,384		75,189	2,475	4,931	—	1,033,979
Corporate general and administrative expenses	—		—	—	—	155,456	155,456
Earnings before income taxes	951,384		75,189	2,475	4,931	(155,456)	878,523

(1)Operating loss for Lennar Other for both the three and six months ended May 31, 2020 included a $25.0 million write-down of assets held by Rialto legacy funds because of disruption in the capital markets as a result of COVID-19 and the economic shutdown.

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

Lennar Corporation and Subsidiaries

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

(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 May 31, 2020	$	6,676,730	2,664,309	2,305,777	10,815,820	1,143,132	1,544,972	25,150,740
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

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


	Three Months Ended May 31, 2020
(In thousands)	East		Central	Texas	West	Other	Total Homebuilding
Revenues	$	1,577,716	685,999	712,756	1,959,823	13,190	4,949,484
Operating earnings (loss)	229,726		67,065	99,887	280,094	(45,411)	631,361

	Three Months Ended May 31, 2019
Revenues	$	1,737,342	613,785	693,212	2,143,023	8,237	5,195,599
Operating earnings (loss)	210,464		55,344	75,374	272,904	(32,297)	581,789


	Six Months Ended May 31, 2020
(In thousands)	East		Central	Texas	West	Other	Total Homebuilding
Revenues	$	2,984,582	1,220,975	1,185,984	3,708,592	21,467	9,121,600
Operating earnings (loss)	404,731		96,537	152,960	505,001	(67,470)	1,091,759

	Six Months Ended May 31, 2019
Revenues	$	2,964,155	1,048,852	1,111,729	3,683,920	10,664	8,819,320
Operating earnings (loss)	345,847		86,270	107,652	463,565	(51,950)	951,384

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. 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 and Subsidiaries

Notes 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 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 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


~~(1)~~	~~Decrease in goodwill related to 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 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.


~~(2)~~	Total revenues were net 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 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.


~~(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~~May 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~~,2020, the Financial Services warehouse facilities were all 364-day repurchase facilities and used to fund residential mortgages ~~were~~or commercial mortgages for LMF Commercial 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


(In thousands)	Maximum Aggregate Commitment
Residential facilities maturing:
June 2020 (1)	$	500,000
July 2020	300,000
January 2021	500,000
March 2021	300,000
Total - Residential facilities	$	1,600,000
LMF Commercial facilities maturing:
November 2020	$	200,000
December 2020 (2)	700,000

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


~~(2)~~Total - LMF Commercial facilities			~~Maximum aggregate commitment includes an uncommitted amount of $300 million.~~

$	900,000
~~(3)~~Total			~~Maximum aggregate commitment includes an uncommitted amount of $300 million.~~$	2,500,000

(1)Subsequent to May 31, 2020, the maturity date was extended to June 2021.

(2)Includes $50.0 million LMF Commercial warehouse repurchase facility used 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 May 31, 2020.

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.

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 residential 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. as follows:


(In thousands)	May 31, 2020		November 30, 2019
Borrowings under the residential facilities	$	1,054,588	$	1,374,063
Collateral under the residential facilities	1,085,503		1,423,650
Borrowings under the LMF Commercial facilities	227,003		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.

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
August 31, August 31,
(In thousands) 2019 2018 2019 2018
Loan origination liabilities, beginning of period $ 7,424
28,016
48,584
22,543
Provision for losses 1,006
1,059
2,593
2,696
Origination liabilities assumed related to CalAtlantic acquisition —
20,500
—
24,459
Payments/settlements (109 ) (124 ) (42,856 ) (247 )
Loan origination liabilities, end of period $ 8,321
49,451
8,321
49,451

~~RMF - loans held-for-sale~~

During the nine months ended August 31, 2019, RMF 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 million, all of which were recorded as loans held-for-sale, and sold $1.1 billion of commercial loans into 12 ~~separate securitizations.~~

~~At August 31, 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

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 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)

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

~~they mature. If~~


	Three Months Ended				Six Months Ended
	May 31,				May 31,
(In thousands)	2020		2019	2020	2019
Loan origination liabilities, beginning of period	$	9,996	6,697	9,364	48,584
Provision for losses	1,139		914	1,915	1,587


Payments/settlements	(255)		(187)	(399)	(42,747)
Loan origination liabilities, end of period	$	10,880	7,424	10,880	7,424

LMF Commercial - loans held-for-sale

During the ~~facilities are not renewed or replaced, the borrowings under the lines~~six months ended May 31, 2020, LMF Commercial originated commercial loans with a total principal balance of ~~credit will be paid off by selling the~~$417.7 million, all of which were recorded as loans held-for-sale ~~to investors. Without~~and sold $457.4 million of commercial loans into 3 separate securitizations. As of May 31, 2020, $146.4 million of originated commercial loans were sold into a securitization trust but not settled and thus were included as receivables, net.

During the ~~facilities, the Financial Services segment would have to use cash from operations~~six months ended May 31, 2019, LMF Commercial originated commercial loans with a total principal balance of $720.6 million, of which $705.3 million were recorded as loans held-for-sale, and ~~other funding sources to finance its lending activities.~~sold $500.5 million of commercial loans into 5 separate securitizations. As of May 31, 2019, $61.0 million of originated loans were sold into a securitization trust but not settled and thus were included as receivables, net.

Investments held-to-maturity

At ~~August~~May 31, ~~2019~~2020 and November 30, ~~2018,~~2019, the carrying value of Financial Services' commercial mortgage-backed securities ("CMBS") was ~~$166.7~~$164.9 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~~six months ended ~~August~~May 31, ~~2019~~2020 or ~~2018.~~May 31, 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~~May 31, ~~2019~~2020 and November 30, ~~2018,~~2019, the carrying amount, net of debt issuance costs, of outstanding debt in these agreements was ~~$155.2~~$153.9 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%.

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 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~~Company's former Rialto segment.

(3)Investments in Unconsolidated Entities

Homebuilding Unconsolidated Entities

As of May 31, 2020 and November 30, 2019, the Company’s recorded investments in Homebuilding unconsolidated entities were $973.0 million and $1.0 billion, respectively, while the underlying equity in Homebuilding unconsolidated entities partners’ net assets as ~~follows:~~of both May 31, 2020 and November 30, 2019 was $1.3 billion. The basis difference was primarily as a

Lennar Corporation and Subsidiaries

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

(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
result of the Company contributing its investment in3 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 May 31, 2020 and November 30, 2019, the carrying amount of the Company's FivePoint investment was $376.9 million and $374.0 million, respectively.


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


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

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. The Company also does not use its 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, the Company and its 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, for which the financing was obtained (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).

The total debt of the Homebuilding unconsolidated entities in which the Company has investments was $1.1 billion as of both May 31, 2020 and November 30, 2019, of which the Company's maximum recourse exposure was $4.9 million and $10.8 million as of May 31, 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.

As of both May 31, 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 May 31, 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).

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~~May 31, ~~2019~~2020 and November 30, ~~2018,~~2019, the fair value of the completion guarantees was immaterial. ~~Additionally, as~~As of ~~August~~May 31, ~~2019~~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~~$813.8 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~~six months ended ~~August~~May 31, 2020, the Multifamily segment recorded fee income, net of deferrals, from its unconsolidated entities of $14.6 million and $28.4 million, respectively. During the three and six months ended May 31, 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~~$13.3 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$26.4 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~~six months ended ~~August~~May 31, ~~2019,~~2020, the Multifamily segment provided general contractor services, net of deferrals, totaling $83.2 million and $264.8 million, respectively, which were partially offset by costs related to those services of $79.9 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 million, respectively.

Lennar Multifamily Venture I ("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 Lennar comprised of cash, undeveloped land and preacquisition costs. During the nine 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.

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.

~~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~~Multifamily segment provided general contractor services, net 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)~~

~~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~~deferrals, totaling $104.5 million and $198.4 million, respectively, which were partially offset by costs related to those services of $100.3 million and $190.5 million, respectively. During the three and six months ended May 31, 2019, the Multifamily segment provided general contractor services, net of deferrals, totaling $99.2 million and $181.6 million, respectively, which were partially offset by costs related to those services of $95.2 million and $174.6 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.

~~(10)~~ ~~Lennar Other~~

~~Lennar Other primarily includes fund investments the Company retained when it sold the Rialto asset and investment management platform, as well as strategic investments in technology companies.~~

The ~~assets~~Multifamily segment includes Multifamily Venture Fund I ("LMV I") and ~~liabilities related to Lennar Other were~~Multifamily Venture Fund II LP ("LMV II"), which are long-term multifamily development investment vehicles involved in the development, construction and property management of class-A multifamily assets. Details of each as ~~follows:~~

(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

~~Investments held-to-maturity~~

~~At August 31, 2019~~of and ~~November 30, 2018,~~during 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. 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 ninesix months ended ~~August~~May 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%.2020 are included below:


	May 31, 2020
(In thousands)	LMV I		LMV II
Lennar's carrying value of investments	$	355,136	213,635
Equity commitments	2,204,016		1,257,700
Equity commitments called	2,127,560		754,177
Lennar's equity commitments	504,016		381,000
Lennar's equity commitments called	493,730		227,372
Lennar's remaining commitments	10,286		153,628
Distributions to Lennar during the six months ended May 31, 2020	19,969		—

~~(11)~~ (4)~~Cash and Cash Equivalents and Restricted Cash~~Stockholders' Equity

The ~~Company considers all highly liquid investments purchased with original maturities~~following tables reflect the changes in equity attributable to both Lennar Corporation and the noncontrolling interests 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 governmentsits consolidated subsidiaries in which it has less than a 100% ownership interest for the ~~homes were sold, as well as funds on~~three and six months ended May 31, 2020 and 2019:


			Three Months Ended May 31, 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 February 29, 2020	$	16,193,377	29,802	3,944	8,609,944	(1,253,756)	452	8,654,213	148,778
Net earnings (including net loss attributable to noncontrolling interests)	516,098		—	—	—	—	—	517,406	(1,308)
Employee stock and directors plans	651		2	—	756	(107)	—	—	—
Purchases of treasury stock	—		—	—	—	—	—	—	—



Amortization of restricted stock	23,286		—	—	23,286	—	—	—	—
Cash dividends	(38,905)		—	—	—	—	—	(38,905)	—
Receipts related to noncontrolling interests	80,148		—	—	—	—	—	—	80,148
Payments related to noncontrolling interests	(4,767)		—	—	—	—	—	—	(4,767)

Non-cash purchase or activity of noncontrolling interests, net	(5,168)		—	—	(3,544)	—	—	—	(1,624)
Non-cash consolidations/deconsolidations, net	(131,306)		—	—	—	—	—	—	(131,306)



Total other comprehensive loss, net of tax	(790)		—	—	—	—	(790)	—	—
Balance at May 31, 2020	$	16,632,624	29,804	3,944	8,630,442	(1,253,863)	(338)	9,132,714	89,921

Lennar Corporation and Subsidiaries

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


			Three Months Ended May 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 February 28, 2019	$	14,893,695	29,501	3,944	8,514,301	(485,016)	(158)	6,724,242	106,881
Net earnings (including net loss attributable to noncontrolling interests)	418,869		—	—	—	—	—	421,472	(2,603)
Employee stock and directors plans	731		2	—	1,036	(307)	—	—	—
Purchases of treasury stock	(51,783)		—	—	—	(51,783)	—	—	—




Amortization of restricted stock	14,491		—	—	14,491	—	—	—	—
Cash dividends	(13,017)		—	—	—	—	—	(13,017)	—

Receipts related to noncontrolling interests	589		—	—	—	—	—	—	589
Payments related to noncontrolling interests	(12,020)		—	—	—	—	—	—	(12,020)


Non-cash activities related to noncontrolling interests	(5,616)		—	—	—	—	—	—	(5,616)
Cumulative-effect of accounting change	211		—	—	—	—	—	211	—

Total other comprehensive earnings, net of tax	385		—	—	—	—	385	—	—
Balance at May 31, 2019	$	15,246,535	29,503	3,944	8,529,828	(537,106)	227	7,132,908	87,231

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

~~Homebuilding cash and cash equivalents as of August 31, 2019 and November 30, 2018 included $492.8 million and $926.1 million, respectively, of cash held in escrow for approximately three days.~~


			Six Months Ended May 31, 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)	907,321		—	—	—	—	—	915,858	(8,537)
Employee stock and directors plans	(6,773)		92	—	626	(7,491)	—	—	—
Purchases of treasury stock	(288,515)		—	—	—	(288,515)	—	—	—



Amortization of restricted stock	55,141		—	—	55,141	—	—	—	—
Cash dividends	(78,145)		—	—	—	—	—	(78,145)	—
Receipts related to noncontrolling interests	169,061		—	—	—	—	—	—	169,061
Payments related to noncontrolling interests	(21,501)		—	—	—	—	—	—	(21,501)

Non-cash purchase or activity of noncontrolling interests, net	(5,168)		—	—	(3,544)	—	—	—	(1,624)
Non-cash consolidations/deconsolidations, net	(131,791)		—	—	—	—	—	—	(131,791)



Total other comprehensive earnings, net of tax	(836)		—	—	—	—	(836)	—	—
Balance at May 31, 2020	$	16,632,624	29,804	3,944	8,630,442	(1,253,863)	(338)	9,132,714	89,921

Lennar Corporation and Subsidiaries

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


			Six Months Ended May 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)	658,293		—	—	—	—	—	661,382	(3,089)
Employee stock and directors plans	(691)		4	—	1,761	(2,456)	—	—	—
Purchases of treasury stock	(98,781)		—	—	—	(98,781)	—	—	—




Amortization of restricted stock	31,390		—	—	31,390	—	—	—	—
Cash dividends	(25,877)		—	—	—	—	—	(25,877)	—

Receipts related to noncontrolling interests	8,937		—	—	—	—	—	—	8,937
Payments related to noncontrolling interests	(23,317)		—	—	—	—	—	—	(23,317)
Non-cash consolidations, net	8,894		—	—	—	—	—	—	8,894
Non-cash activities related to noncontrolling interests	(5,616)		—	—	—	—	—	—	(5,616)
Cumulative-effect of accounting change	9,753		—	—	—	—	—	9,753	—
Total other comprehensive earnings, net of tax	593		—	—	—	—	593	—	—
Balance at May 31, 2019	$	15,246,535	29,503	3,944	8,529,828	(537,106)	227	7,132,908	87,231

On June 25, 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 July 24, 2020 to holders of record at the close of business on July 10, 2020. On May 5, 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 April 21, 2020, as declared by its Board of Directors on April 7, 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, 2019.

In January 2019, the 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 the Company's outstanding Class A and Class B common stock. The repurchase has no expiration date. The following table describes the repurchase of the Company's Class A and Class B common stocks, under this program, for the three and six months ended May 31, 2020 and 2019:


	Three Months Ended														Six Months Ended
	May 31, 2020						May 31, 2019						May 31, 2020				May 31, 2019
(Dollars in thousands, except price per share)	Class A		Class B		Class A		Class B		Class A		Class B		Class A		Class B
Shares repurchased	—		—		1,000,000		—		4,250,000		115,000		2,000,000		—
Purchase amount	$	—	$	—	$	51,783	$	—	$	282,274	$	6,155	$	98,781	$	—
Average price per share	$	—	$	—	$	51.76	$	—	$	66.42	$	53.52	$	49.37	$	—

~~(12)~~

(5)Income Taxes

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


	Three Months Ended						Six Months Ended
	May 31,						May 31,
(Dollars in thousands)	2020		2019		2020		2019
Provision for income taxes	$160,479		140,530		192,808		220,230
Effective tax rate (1)	23.7	%	25.0	%	17.4	%	25.0	%

(1)For both the three and six months ended May 31, 2020, the effective tax rate included state income tax expense and non-deductible executive compensation, partially offset by new energy efficient home and solar tax credits. For the six months ended May 31, 2020, the effective tax rate also included a benefit related to years ended November 30, 2018 and 2019, due to Congress retroactively extending the new energy efficient home tax credit in December 2019.

Lennar Corporation and Subsidiaries

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

(6)Earnings Per Share

Basic and diluted earnings per share were calculated as follows:


	Three Months Ended				Six Months Ended
	May 31,				May 31,
(In thousands, except per share amounts)	2020		2019	2020	2019
Numerator:
Net earnings attributable to Lennar	$	517,406	421,472	915,858	661,382
Less: distributed earnings allocated to nonvested shares	357		94	690	193
Less: undistributed earnings allocated to nonvested shares	5,931		3,063	9,962	4,987
Numerator for basic earnings per share	511,118		418,315	905,206	656,202
Less: net amount attributable to noncontrolling interests in Rialto's Carried Interest Incentive Plan (1)	3,322		3,331	3,322	3,654



Numerator for diluted earnings per share	$	507,796	414,984	901,884	652,548
Denominator:
Denominator for basic earnings per share - weighted average common shares outstanding	308,373		320,329	309,793	320,834
Effect of dilutive securities:
Shared based payments	—		1	1	6

Denominator for diluted earnings per share - weighted average common shares outstanding	308,373		320,330	309,794	320,840
Basic earnings per share	$	1.66	1.31	2.92	2.05
Diluted earnings per share	$	1.65	1.30	2.91	2.03

(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 six months ended May 31, 2020 and May 31, 2019, 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)

(7)Homebuilding Senior Notes and Other Debts Payable

(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


(Dollars in thousands)	May 31, 2020		November 30, 2019

2.95% senior notes due 2020	$	299,712	299,421
8.375% senior notes due 2021	410,591		418,860
4.750% senior notes due 2021	499,283		498,893
6.25% senior notes due December 2021	307,737		310,252
4.125% senior notes due 2022	598,380		597,885
5.375% senior notes due 2022	256,770		258,198
4.750% senior notes due 2022	572,184		571,644
4.875% senior notes due December 2023	396,950		396,553
4.500% senior notes due 2024	647,165		646,802
5.875% senior notes due 2024	445,821		448,158
4.750% senior notes due 2025	497,780		497,558
5.25% senior notes due 2026	407,315		407,921
5.00% senior notes due 2027	352,700		352,892
4.75% senior notes due 2027	894,386		893,046
6.625% senior notes due 2020	—		303,668
Mortgage notes on land and other debt	908,900		874,887
	$	7,495,674	7,776,638

The carrying amounts of the senior notes in the table above are net of debt issuance costs of ~~$24.9~~$19.6 million and ~~$31.2~~$22.9 million as of ~~August~~May 31, ~~2019~~2020 and November 30, ~~2018,~~2019, respectively.

~~In June 2019,~~At May 31, 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.~~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~~May 31, ~~2019.~~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~~May 31, ~~2019,~~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.

In May 2020, the Company redeemed $300 million aggregate principal amount of its 6.625% senior notes due May 2020. The redemption price, which was paid in cash, was 100% of the principal amount plus accrued but unpaid interest.

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


	May 31, 2020		November 30, 2019
(In thousands)

Performance letters of credit	$	726,191	715,793
Financial letters of credit	220,264		184,075
Surety bonds	2,995,941		2,946,167
Anticipated future costs related to site improvements subject to performance surety bonds	1,496,571		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.

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				Six Months Ended
	May 31,				May 31,
(In thousands)	2020		2019	2020	2019
Warranty reserve, beginning of the period	$	287,413	295,622	294,138	319,109
Warranties issued	46,272		47,855	84,543	81,826
Adjustments to pre-existing warranties from changes in estimates (1)	7,707		2,004	13,611	(7,523)

Payments	(39,930)		(53,857)	(90,830)	(101,788)
Warranty reserve, end of period	$	301,462	291,624	301,462	291,624

(1)

Three Months Ended Nine Months Ended
August 31, August 31,
(In thousands) 2019 2018 2019 2018
Warranty reserve, beginning of the period $ 291,624
294,710
319,109
164,619
Warranties issued 49,603
48,878
131,429
121,422
Adjustments to pre-existing warranties from changes in estimates (1) 1,097
(4,785 ) (6,426 ) 5,310
Warranties assumed related to acquisitions —
(5 ) —
117,549
Payments (51,808 ) (40,575 ) (153,596 ) (110,677 )
Warranty reserve, end of period $ 290,516
298,223
290,516
298,223

~~During~~The adjustments to pre-existing warranties from changes in estimates during the three and ~~nine~~six months ended ~~August~~May 31, 2020 and 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 expenseare primarily related to specific claims in certain of the ~~Company’s nonvested shares for the three~~Company's homebuilding communities and ~~nine months ended August 31, 2019 was $34.0 million~~other adjustments.

(9)Financial Instruments 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.~~Fair Value Disclosures

~~Lennar Corporation and Subsidiaries~~

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

The following table presents the carrying amounts and estimated fair values of financial instruments held by the Company at ~~August~~May 31, ~~2019~~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
(In thousands)
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
Investments held-to-maturity Level 3 $ 166,672
200,743
136,982
149,767
Investments held-to-maturity Level 2 $ 26,596
27,824
52,490
52,220
Lennar Other:
Investments held-to-maturity Level 3 $ 60,803
65,888
59,974
72,986
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

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 May 31, 2020		Fair Value at November 30, 2019
Financial Services Assets:
Residential loans held-for-sale (1)	Level 2	$	1,003,470	1,447,715
LMF Commercial loans held-for-sale (2)	Level 3	$	159,886	197,224



Mortgage servicing rights	Level 3	$	1,238	24,679
Lennar Other:
Investments available-for-sale	Level 3	$	53,585	—

(1)

(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

(2)The aggregate fair value of LMF Commercial loans held-for-sale of $159.9 million at May 31, 2020 exceeded their aggregate principal balance of $156.2 million by $3.7 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 $196.3 million by $0.9 million.

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 RMF loans held-for-sale of $178.7 million at August 31, 2019 exceeded their aggregate principal balance of $171.5 million 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 million.

~~The estimated fair values~~ 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 May 31, 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 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:



	As of May 31, 2020
Unobservable inputs
Mortgage prepayment rate	20	%
Discount rate	11	%
Delinquency rate	4	%

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
August 31, August 31,
(In thousands) 2019 2018 2019 2018
Changes in fair value included in Financial Services revenues:
Loans held-for-sale $ (2,490 ) (692 ) 397
(403 )
Mortgage loan commitments 646
(5,810 ) 9,498
9,409
Forward contracts 1,646
3,550
734
(4,326 )
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 )


	Three Months Ended				Six Months Ended
	May 31,				May 31,
(In thousands)	2020		2019	2020	2019
Changes in fair value included in Financial Services revenues:
Loans held-for-sale	$	5,270	13,007	(2,223)	2,887
Mortgage loan commitments	13,816		9,111	28,711	8,852
Forward contracts	8,478		(9,766)	(883)	(913)

Changes in fair value included in other comprehensive income (loss), net of tax:
Lennar Other investments available-for-sale	(338)		—	(338)	—
Financial Services investments available-for-sale	—		561	(46)	769

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
	May 31, 2020				May 31, 2019
(In thousands)	Mortgage servicing rights		LMF Commercial loans held-for-sale	Mortgage servicing rights	LMF Commercial loans held-for-sale
Beginning balance	$	12,576	300,402	35,448	131,042
Purchases/loan originations	607		5,400	672	435,189
Sales/loan originations sold, including those not settled	—		(143,285)	—	(299,962)
Disposals/settlements (1)	(8,908)		—	(1,378)	(9,920)
Changes in fair value (2)	(3,037)		(2,334)	(5,323)	3,022
Interest and principal paydowns	—		(298)	—	228
Ending balance	$	1,238	159,885	29,419	259,599

	Six Months Ended
	May 31, 2020				May 31, 2019
(In thousands)	Mortgage servicing rights		LMF Commercial loans held-for-sale	Mortgage servicing rights	LMF Commercial loans held-for-sale
Beginning balance	$	24,679	197,224	37,206	61,691
Purchases/loan originations	1,354		417,650	2,259	705,311
Sales/loan originations sold, including those not settled	—		(457,724)	—	(500,549)
Disposals/settlements (1)	(10,197)		—	(2,287)	(9,920)
Changes in fair value (2)	(14,598)		3,267	(7,759)	3,324
Interest and principal paydowns	—		(532)	—	(258)
Ending balance	$	1,238	159,885	29,419	259,599

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
(1)Includes $7.5 million related to the sale of a servicing portfolio.

Nine 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 $ 37,206
61,691
31,163
234,403
Purchases/loan originations 2,707
969,200
5,880
997,515
Sales/loan originations sold, including those not settled —
(848,262 ) —
(1,073,211 )
Disposals/settlements (3,830 ) (9,920 ) (5,830 ) (19,600 )
Changes in fair value (1) (13,011 ) 6,825
3,861
1,970
Interest and principal paydowns —
(830 ) —
(359 )
Ending balance $ 23,072
178,704
35,074
140,718

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


~~(1)~~	~~Changes in fair value for RMF 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
		May 31, 2020						May 31, 2019
(In thousands)	Fair Value Hierarchy	Carrying Value		Fair Value	Total Losses, Net (1)	Carrying Value	Fair Value	Total Losses, Net




Non-financial assets
Homebuilding:
Finished homes and construction in progress (1)	Level 3	$	68,802	61,119	(7,683)	—	—	—
Land and land under development (1)	Level 3	$	42,609	9,709	(32,900)	—	—	—

		Six Months Ended
		May 31, 2020						May 31, 2019
(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	$	141,809	120,404	(21,405)	—	—	—
Land and land under development (1)	Level 3	$	65,062	21,369	(43,693)	6,954	3,001	(3,953)

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 )

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

Nine 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 $ 8,253
3,085
(5,168 ) 91,960
60,059
(31,901 )


~~(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. This was particularly the case with regard to inventory owned at May 31, 2020, because of the need to consider the effect of the COVID-19 pandemic and related government actions in determining whether there was a need for valuation adjustments and write-offs. 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~~May 31, 2020 and May 31, 2019, ~~and 2018,~~ there were ~~1,295~~1,241 and ~~1,307~~1,320 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)
At and for the Six Months Ended
May 31, 2020	41	9	$69,137	$32,072
May 31, 2019	52	—	—	—

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 months ended August 31, 2019 and August 31, 2018:~~adjustments:


	Six Months Ended
	May 31, 2020
Unobservable inputs	Range
Average selling price	$	201,000	-	$970,000
Absorption rate per quarter (homes)	3		-	15
Discount rate	20%

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

(10)Variable Interest Entities


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

The Company evaluated the joint venture ("JV") agreements of its ~~joint ventures~~JV's that were formed or that had reconsideration events, such as changes in the governing documents or to debt arrangements during the ~~nine~~six months ended ~~August~~May 31, ~~2019.~~2020. Based on the Company's evaluation, ~~during the nine months ended August 31, 2019,~~ the Company consolidated ~~5 entities~~1 Multifamily entity that had a total ~~combined~~ assets and liabilities of ~~$505.2~~$49.4 million and ~~$602.1~~$0.9 million, respectively and deconsolidated 2 Multifamily entities that had total assets of $37.2 million and an immaterial amount of liabilities. In addition, the Company's Financial Services segment deconsolidated 1 entity that had total assets and liabilities of $291.2 million and $204.1 million, respectively. ~~During the nine months ended August 31,~~In January 2019, ~~there were no VIEs that were deconsolidated.~~

~~Consolidated VIEs~~

As of August 31, 2019, the carrying amounts of the VIEs’ assets and non-recourse liabilities that consolidated were $1.0 billion and $577.7 million, respectively. As of November 30, 2018, 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 ownedthis JV was formed 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 to the consolidation of an unconsolidated entity related to~~ the sale of the ~~majority of the Company's~~Company’s retail title agency ~~business.~~and its retail title insurance business to this JV entity. In ~~connection with~~exchange for the sale of the ~~majority of its~~retail agency and retail title ~~agency~~insurance business, ~~and title insurance underwriter~~the Company received 20% of the JV entity’s preferred stock, warrants exercisable to purchase additional shares of preferred stock in the ~~first quarter~~JV entity and a note due from the JV to the Company. The JV entity’s reconsideration event was due to a significant equity raise that was completed during the three months ended May 31, 2020. The proceeds of ~~2019,~~the equity raise resulted in approximately a 43% reduction of the principal amount of debt owed by the JV entity to the Company ~~provided seller financing and received a substantial minority equity~~as well as an approximately 20% reduction of the Company’s ownership ~~stake~~interest in the ~~buyer.~~JV. The ~~combination~~JV remains a VIE; however, the Company has concluded that it is no longer the primary beneficiary as the Company no longer has the power to direct the VIE. In particular, the additional infusion of ~~both~~equity from third party investors provides evidence that the JV entity is no longer financially dependent on the Company. The Company does not have the voting or economic power to direct the activities of the JV entity. As a result, the Company concluded that the JV entity should be deconsolidated which required fair value accounting for its equity investment and note receivable. The valuation assumptions used in determining fair value of the equity investment began by utilizing the capital raise discounted by public company comparable transactions that took into account the impact of COVID-19 and ~~debt components~~the economic shutdown and the lack of ~~this transaction caused~~marketability of the ~~transaction not~~Company’s investment. The valuation of the note receivable utilized the underlying cash flows and applied a discount, which was determined by using market comparables. The Company used discount rates ranging from 16% to ~~meet~~30% for the ~~accounting requirements for sale treatment and, therefore, the Company is required to consolidate the buyer’s results at this time.~~fair value

Lennar Corporation and Subsidiaries

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

~~During~~calculations. In aggregate, 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 ofresulting fair value of the ~~homebuilding entity’s net assets requires the discounting~~equity investment and note receivable totaled $123.4 million, 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 ratewhich $70.8 million is included 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~~Financial Services investments in ~~consolidation. As a result,~~unconsolidated entities. Upon deconsolidation, the Company recorded a ~~one-time loss~~gain of ~~$48.9 million from~~$61.4 million.

The carrying amount of our consolidated VIE's assets and non-recourse liabilities are disclosed in the ~~consolidation which was included in Homebuilding other income (expense), net on~~footnote to 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.balance sheets.

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.~~lenders. Other than debt guarantee agreements with a VIE’s ~~banks,~~lenders, 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~~May 31, ~~2019~~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			May 31, 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	(In thousands)	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
Homebuilding						Homebuilding	$	79,553	79,714	80,939	81,118
Multifamily (2)	520,786		797,167	463,534	710,754	Multifamily (2)	578,026		759,633	533,018	768,651
Financial Services (3)	166,672		166,672	136,982	136,982	Financial Services (3)	235,626		286,608	166,012	166,012
Lennar Other (4)	67,583		67,583	63,919	63,919
Lennar Other						Lennar Other	7,148		7,148	60,882	60,882
	$	839,813	1,116,395	787,499	1,096,600		$	900,353	1,133,103	840,851	1,076,663

(1)Limited to investments in unconsolidated VIEs, except as noted below.

(2)As of May 31, 2020 and November 30, 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 $163.9 million and $224.2 million, respectively, to fund LMV I and LMV II for future expenditures related to the construction and development of its projects.

(3)As of May 31, 2020, the maximum exposure to loss of Financial Services' investments in unconsolidated entities included a note receivable.

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.

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~~six months ended ~~August~~May 31, ~~2019,~~2020, consolidated inventory not owned increased by ~~$143.1~~$86.7 million with a corresponding increase to liabilities related to consolidated inventory not owned in the accompanying condensed consolidated balance sheet as of ~~August~~May 31, ~~2019.~~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

Lennar Corporation and Subsidiaries

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

under development in the accompanying condensed consolidated balance sheet as of ~~August~~May 31, ~~2019.~~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~~$282.1 million and ~~$209.5~~$320.5 million at ~~August~~May 31, ~~2019~~2020 and November 30, ~~2018,~~2019, respectively. Additionally, the Company had posted ~~$74.8~~$72.5 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~~May 31, ~~2019~~2020 and November 30, ~~2018,~~2019, respectively. As a result of the COVID-19 pandemic, the Company reviewed its option contracts as of May 31, 2020 and had no write-offs of costs related to option contracts because of the COVID-19 pandemic during the three months ended May 31, 2020.


~~(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.

~~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~~also a party to ~~evaluate~~various lawsuits involving purchases and sales of real property. These lawsuits include claims regarding representations and warranties made in connection with the ~~impact~~transfer of properties and disputes regarding the ~~adoption~~obligation to purchase or sell properties.

The Company does not believe that the ultimate resolution of ~~ASU 2016-02 will have on the Company's condensed consolidated financial statements, the Company believes the adoption of ASU 2016-02~~these claims or lawsuits will have a material ~~impact~~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.

The Company has entered into agreements to lease certain office facilities and equipment under operating leases. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. ROU assets and 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)	May 31, 2020
Right-of-use assets	$	128,423
Lease liabilities	$	137,795
Weighted-average remaining lease term (in years)	2.9
Weighted-average discount rate	3.0		%

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 May 31, 2020 were as follows:


(Dollars in thousands)	Lease Payments
2020	$	17,791
2021	36,544
2022	28,543
2023	21,349
2024	15,429
2025 and thereafter	30,004
Total future minimum lease payments (1)	$	149,660
Less: Interest (2)	11,865
Present value of lease liabilities (2)	$	137,795

(1)Total future minimum lease payments exclude variable lease costs of $11.3 million and short-term lease costs of $2.3 million. This also does not include minimum lease payments for executed and legally enforceable leases that have not yet commenced. As of May 31, 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. The Company recognized the lease liabilities on its condensed consolidated balance sheets ~~due to~~within other liabilities.

Rental expense for the ~~recognition of right-of-use assets and related~~six months ended May 31, 2020 was $41.1 million. Payments on lease liabilities ~~but~~during the six months ended May 31, 2020 totaled $29.0 million. Rental expense includes costs for all leases. On occasion, the Company ~~does not expect a material impact on~~may sublease rented space which is no longer used for the Company's ~~condensed consolidated statements~~operations. For the six months ended May 31, 2020, the Company had an immaterial amount of ~~operations or cash flows. Subsequent to the issuance of ASU 2016-02, the FASB issued ASUs 2018-01,~~ sublease income.

(12)~~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.New Accounting Pronouncements

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

Lennar Corporation and Subsidiaries

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

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.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes ("ASU 2019-12"). ASU 2019-12 will be effective for the Company’s fiscal year beginning December 1, 2022. The Company is currently evaluating the impact the adoption of ASU 2019-12 will have on the Company's condensed consolidated financial statements.

(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~~May 31, ~~2019~~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~~May 31, ~~2019~~2020 was as follows:

Lennar Corporation and Subsidiaries

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


(In thousands)	Lennar Corporation		Guarantor Subsidiaries	Non-Guarantor Subsidiaries	Consolidating Adjustments	Total
ASSETS
Homebuilding:
Cash and cash equivalents, restricted cash and receivables, net	$	1,000,333	695,182	12,230	—	1,707,745
Inventories	—		17,528,852	418,554	—	17,947,406
Investments in unconsolidated entities	—		971,058	1,986	—	973,044
Goodwill	—		3,442,359	—	—	3,442,359
Other assets	392,355		468,610	251,743	(32,522)	1,080,186
Investments in subsidiaries	10,270,732		21,757	—	(10,292,489)	—
Intercompany	12,267,017		—	—	(12,267,017)	—
	23,930,437		23,127,818	684,513	(22,592,028)	25,150,740
Financial Services	—		249,999	2,329,154	(1,348)	2,577,805
Multifamily	—		—	1,127,929	—	1,127,929
Lennar Other	—		187,352	281,789	(16,590)	452,551
Total assets	$	23,930,437	23,565,169	4,423,385	(22,609,966)	29,309,025
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable and other liabilities	$	832,049	1,821,132	331,807	(50,460)	2,934,528
Liabilities related to consolidated inventory not owned	—		344,074	—	—	344,074
Senior notes and other debts payable	6,555,685		865,539	74,450	—	7,495,674
Intercompany	—		10,145,745	2,121,272	(12,267,017)	—
	7,387,734		13,176,490	2,527,529	(12,317,477)	10,774,276
Financial Services	—		30,344	1,633,204	—	1,663,548
Multifamily	—		—	222,387	—	222,387
Lennar Other	—		—	16,190	—	16,190
Total liabilities	7,387,734		13,206,834	4,399,310	(12,317,477)	12,676,401
Total stockholders’ equity	16,542,703		10,358,335	(65,846)	(10,292,489)	16,542,703
Noncontrolling interests	—		—	89,921		89,921
Total equity	16,542,703		10,358,335	24,075	(10,292,489)	16,632,624
Total liabilities and equity	$	23,930,437	23,565,169	4,423,385	(22,609,966)	29,309,025

(In thousands) 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
Inventories —
18,496,698
351,472
—
18,848,170
Investments in unconsolidated entities —
998,863
4,073
—
1,002,936
Goodwill —
3,442,359
—
—
3,442,359
Other assets 347,411
651,596
201,097
(41,779 ) 1,158,325
Investments in subsidiaries 10,451,599
26,682
—
(10,478,281 ) —
Intercompany 13,162,167
—
—
(13,162,167 ) —
24,344,487
24,315,201
578,390
(23,682,227 ) 25,555,851
Financial Services —
253,881
2,077,040
(1,135 ) 2,329,786
Multifamily —
—
1,020,842
—
1,020,842
Lennar Other —
140,777
412,191
—
552,968
Total assets $ 24,344,487
24,709,859
4,088,463
(23,683,362 ) 29,459,447
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable and other liabilities $ 826,969
1,833,573
308,995
(42,914 ) 2,926,623
Liabilities related to consolidated inventory not owned —
298,724
—
—
298,724
Senior notes and other debts payable 8,145,580
882,357
47,079
—
9,075,016
Intercompany —
11,298,276
1,863,891
(13,162,167 ) —
8,972,549
14,312,930
2,219,965
(13,205,081 ) 12,300,363
Financial Services —
36,421
1,419,035
—
1,455,456
Multifamily —
—
213,054
—
213,054
Lennar Other —
—
24,627
—
24,627
Total liabilities 8,972,549
14,349,351
3,876,681
(13,205,081 ) 13,993,500
Stockholders’ equity 15,371,938
10,360,508
117,773
(10,478,281 ) 15,371,938
Noncontrolling interests —
—
94,009
—
94,009
Total equity 15,371,938
10,360,508
211,782
(10,478,281 ) 15,465,947
Total liabilities and equity $ 24,344,487
24,709,859
4,088,463
(23,683,362 ) 29,459,447

Lennar Corporation and Subsidiaries

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


(In thousands)	Lennar Corporation		Guarantor Subsidiaries	Non-Guarantor Subsidiaries	Consolidating Adjustments	Total
ASSETS
Homebuilding:
Cash and cash equivalents, restricted cash and receivables, net	$	722,172	794,588	22,894	—	1,539,654
Inventories	—		17,396,139	380,368	—	17,776,507
Investments in unconsolidated entities	—		1,006,541	2,494	—	1,009,035
Goodwill	—		3,442,359	—	—	3,442,359
Other assets	344,941		500,356	217,607	(41,220)	1,021,684
Investments in subsidiaries	10,453,165		26,773	—	(10,479,938)	—
Intercompany	12,027,996		—	—	(12,027,996)	—
	23,548,274		23,166,756	623,363	(22,549,154)	24,789,239
Financial Services	—		275,812	2,731,285	(1,073)	3,006,024
Multifamily	—		—	1,068,831	—	1,068,831
Lennar Other	—		158,194	339,988	(2,765)	495,417
Total assets	$	23,548,274	23,600,762	4,763,467	(22,552,992)	29,359,511
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable and other liabilities	$	760,981	1,935,366	318,845	(45,058)	2,970,134
Liabilities related to consolidated inventory not owned	—		260,266	—	—	260,266
Senior notes and other debts payable	6,837,776		885,783	53,079	—	7,776,638
Intercompany	—		10,122,374	1,905,622	(12,027,996)	—
	7,598,757		13,203,789	2,277,546	(12,073,054)	11,007,038
Financial Services	—		40,235	2,016,215	—	2,056,450
Multifamily	—		—	232,155	—	232,155
Lennar Other	—		—	30,038	—	30,038
Total liabilities	7,598,757		13,244,024	4,555,954	(12,073,054)	13,325,681
Total stockholders’ equity	15,949,517		10,356,738	123,200	(10,479,938)	15,949,517
Noncontrolling interests	—		—	84,313	—	84,313
Total equity	15,949,517		10,356,738	207,513	(10,479,938)	16,033,830
Total liabilities and equity	$	23,548,274	23,600,762	4,763,467	(22,552,992)	29,359,511

(In thousands)
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
Inventories —
16,679,245
389,459
—
17,068,704
Investments in unconsolidated entities —
857,238
12,963
—
870,201
Goodwill —
3,442,359
—
—
3,442,359
Other assets 339,307
878,582
164,848
(26,955 ) 1,355,782
Investments in subsidiaries 10,562,273
89,044
—
(10,651,317 ) —
Intercompany 11,815,491
—
—
(11,815,491 ) —
23,354,154
22,832,527
631,175
(22,493,763 ) 24,324,093
Financial Services —
232,632
2,547,167
(889 ) 2,778,910
Multifamily —
—
874,219
—
874,219
Lennar Other —
126,725
462,234
—
588,959
Total assets $ 23,354,154
23,191,884
4,514,795
(22,494,652 )
28,566,181
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable and other liabilities $ 804,232
1,977,579
303,473
(27,844 ) 3,057,440
Liabilities related to consolidated inventory not owned —
162,090
13,500
—
175,590
Senior notes and other debts payable 7,968,387
523,589
51,892
—
8,543,868
Intercompany —
10,116,590
1,698,901
(11,815,491 ) —
8,772,619
12,779,848
2,067,766
(11,843,335 ) 11,776,898
Financial Services —
51,535
1,816,667
—
1,868,202
Multifamily —
—
170,616
—
170,616
Lennar Other —
—
67,508
—
67,508
Total liabilities 8,772,619
12,831,383
4,122,557
(11,843,335 ) 13,883,224
Stockholders’ equity 14,581,535
10,360,501
290,816
(10,651,317 ) 14,581,535
Noncontrolling interests —
—
101,422
—
101,422
Total equity 14,581,535
10,360,501
392,238
(10,651,317 ) 14,682,957
Total liabilities and equity $ 23,354,154
23,191,884
4,514,795
(22,494,652 ) 28,566,181

Lennar Corporation and Subsidiaries

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

(In thousands) Lennar
Corporation Guarantor
Subsidiaries Non-Guarantor
Subsidiaries Consolidating Adjustments Total
Revenues:
Homebuilding $ —
5,413,602
25,396
—
5,438,998
Financial Services —
36,409
192,960
(4,867 ) 224,502
Multifamily —
—
183,958
—
183,958
Lennar Other —
—
9,600
—
9,600
Total revenues —
5,450,011
411,914
(4,867 ) 5,857,058
Cost and expenses:
Homebuilding —
4,758,852
24,009
(929 ) 4,781,932
Financial Services —
17,707
137,148
(5,051 ) 149,804
Multifamily —
—
181,616
—
181,616
Lennar Other —
—
2,734
—
2,734
Corporate general and administrative 86,846
4,503
—
1,266
92,615
Total costs and expenses 86,846

4,781,062

345,507

(4,714 )
5,208,701
Homebuilding equity in loss from unconsolidated entities —
(10,455 ) (4 ) —
(10,459 )
Homebuilding other income (expense), net (153 ) 7,101
5,274
153
12,375
Multifamily equity in earnings from unconsolidated entities and other gain —
—
7,883
—
7,883
Lennar Other equity in earnings from unconsolidated entities —
561
8,342
—
8,903
Lennar Other income, net —
—
24
—
24
Earnings (loss) before income taxes (86,999 ) 666,156
87,926
—
667,083
Benefit (provision) for income taxes 19,816
(151,808 ) (22,448 ) —
(154,440 )
Equity in earnings from subsidiaries 580,549
42,876
—
(623,425 ) —
Net earnings (including net loss attributable to noncontrolling interests) 513,366
557,224
65,478
(623,425 ) 512,643
Less: Net loss attributable to noncontrolling interests —
—
(723 ) —
(723 )
Net earnings attributable to Lennar $ 513,366
557,224
66,201
(623,425 ) 513,366
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
Total comprehensive income attributable to Lennar $ 513,366
557,224
66,381
(623,425 ) 513,546
Total comprehensive loss attributable to noncontrolling interests $ —
—
(723 ) —
(723 )


(In thousands)	Lennar Corporation		Guarantor Subsidiaries	Non-Guarantor Subsidiaries	Consolidating Adjustments	Total
Revenues:
Homebuilding	$	—	4,939,857	9,627	—	4,949,484
Financial Services	—		35,534	166,712	(5,983)	196,263
Multifamily	—		—	123,117	—	123,117
Lennar Other	—		—	18,509	—	18,509
Total revenues	—		4,975,391	317,965	(5,983)	5,287,373
Cost and expenses:
Homebuilding	—		4,302,960	13,304	(2,933)	4,313,331
Financial Services	—		21,146	93,176	(3,967)	110,355
Multifamily	—		—	123,473	—	123,473
Lennar Other	—		—	(1,072)	—	(1,072)
Corporate general and administrative	80,544		1,641	—	1,266	83,451
Total costs and expenses	80,544		4,325,747	228,881	(5,634)	4,629,538
Homebuilding equity in earnings (loss) from unconsolidated entities	—		(9,222)	122	—	(9,100)
Homebuilding other income (expense), net	(349)		2,809	1,499	349	4,308
Financial Services gain on deconsolidation	—		61,418	—	—	61,418

Multifamily equity in loss from unconsolidated entities	—		—	(282)	—	(282)
Lennar Other equity in loss from unconsolidated entities	—		(3,922)	(22,720)	—	(26,642)
Lennar Other income (expense), net	—		6	(10,966)	—	(10,960)
Earnings (loss) before income taxes	(80,893)		700,733	56,737	—	676,577
Benefit (provision) for income taxes	22,411		(165,874)	(17,016)	—	(160,479)
Equity in earnings from subsidiaries	575,888		56,130	—	(632,018)	—
Net earnings (including net loss attributable to noncontrolling interests)	517,406		590,989	39,721	(632,018)	516,098
Less: Net loss attributable to noncontrolling interests	—		—	(1,308)	—	(1,308)
Net earnings attributable to Lennar	$	517,406	590,989	41,029	(632,018)	517,406
Other comprehensive loss, net of tax:
Net unrealized loss on securities available-for-sale	$	—	—	(338)	—	(338)
Reclassification adjustments for gains included in earnings, net of tax	—		—	(452)	—	(452)
Total other comprehensive loss, net of tax	$	—	—	(790)	—	(790)
Total comprehensive income attributable to Lennar	$	517,406	590,989	40,239	(632,018)	516,616
Total comprehensive loss attributable to noncontrolling interests	$	—	—	(1,308)	—	(1,308)

Lennar Corporation and Subsidiaries

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


(In thousands)	Lennar Corporation		Guarantor Subsidiaries	Non-Guarantor Subsidiaries	Consolidating Adjustments	Total
Revenues:
Homebuilding	$	—	5,175,289	20,310	—	5,195,599
Financial Services	—		36,353	172,729	(4,866)	204,216
Multifamily	—		—	147,412	—	147,412
Lennar Other	—		—	15,663	—	15,663
Total revenues	—		5,211,642	356,114	(4,866)	5,562,890
Cost and expenses:
Homebuilding	—		4,561,235	19,594	6,430	4,587,259
Financial Services	—		20,829	139,510	(12,340)	147,999
Multifamily	—		—	148,716	—	148,716
Lennar Other	—		—	3,194	—	3,194
Corporate general and administrative	74,321		527	—	1,265	76,113
Total costs and expenses	74,321		4,582,591	311,014	(4,645)	4,963,281
Homebuilding equity in earnings from unconsolidated entities	—		19,537	77	—	19,614
Homebuilding other income (expense), net	(222)		(48,550)	2,386	221	(46,165)
Multifamily equity in loss from unconsolidated entities and other gain	—		—	(3,018)	—	(3,018)
Lennar Other equity in loss from unconsolidated entities	—		(4,239)	(739)	—	(4,978)
Lennar Other expense, net	—		—	(5,663)	—	(5,663)
Earnings (loss) before income taxes	(74,543)		595,799	38,143	—	559,399
Benefit (provision) for income taxes	18,653		(148,736)	(10,447)	—	(140,530)
Equity in earnings from subsidiaries	477,362		28,703	—	(506,065)	—
Net earnings (including net loss attributable to noncontrolling interests)	421,472		475,766	27,696	(506,065)	418,869
Less: Net loss attributable to noncontrolling interests	—		—	(2,603)	—	(2,603)
Net earnings attributable to Lennar	$	421,472	475,766	30,299	(506,065)	421,472
Other comprehensive income, net of tax:
Net unrealized gain on securities available-for-sale	$	—	—	561	—	561
Reclassification adjustments for gains included in net earnings, net of tax	—		—	(176)	—	(176)
Total other comprehensive income, net of tax	$	—	—	385	—	385
Total comprehensive income attributable to Lennar	$	421,472	475,766	30,684	(506,065)	421,857
Total comprehensive loss attributable to noncontrolling interests	$	—	—	(2,603)	—	(2,603)

(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)


(In thousands)	Lennar Corporation		Guarantor Subsidiaries	Non-Guarantor Subsidiaries	Consolidating Adjustments	Total
Revenues:
Homebuilding	$	—	9,096,000	25,600	—	9,121,600
Financial Services	—		64,528	342,365	(11,969)	394,924
Multifamily	—		—	255,734	—	255,734
Lennar Other	—		—	20,452	—	20,452
Total revenues	—		9,160,528	644,151	(11,969)	9,792,710
Cost and expenses:
Homebuilding	—		7,987,657	30,647	(7,167)	8,011,137
Financial Services	—		37,599	230,727	(6,627)	261,699
Multifamily	—		—	260,821	—	260,821
Lennar Other	—		—	1,502	—	1,502

Corporate general and administrative	164,554		3,213	—	2,531	170,298
Total costs and expenses	164,554		8,028,469	523,697	(11,263)	8,705,457
Homebuilding equity in earnings (loss) from unconsolidated entities	—		(13,956)	310	—	(13,646)
Homebuilding other income (expense), net	(706)		(8,239)	3,181	706	(5,058)
Financial Services gain on deconsolidation	—		61,418	—	—	61,418

Multifamily equity in earnings from unconsolidated entities and other gain	—		—	6,234	—	6,234
Lennar Other equity in loss from unconsolidated entities	—		(8,852)	(17,671)	—	(26,523)
Lennar Other income (expense), net	—		6	(9,555)	—	(9,549)
Earnings (loss) before income taxes	(165,260)		1,162,436	102,953	—	1,100,129
Benefit (provision) for income taxes	28,739		(191,711)	(29,836)	—	(192,808)
Equity in earnings from subsidiaries	1,052,379		80,835	—	(1,133,214)	—
Net earnings (including net loss attributable to noncontrolling interests)	915,858		1,051,560	73,117	(1,133,214)	907,321
Less: Net loss attributable to noncontrolling interests	—		—	(8,537)	—	(8,537)
Net earnings attributable to Lennar	$	915,858	1,051,560	81,654	(1,133,214)	915,858
Other comprehensive loss, net of tax:
Net unrealized loss on securities available-for-sale	$	—	—	(384)	—	(384)
Reclassification adjustments for gain included in earnings, net of tax	—		—	(452)	—	(452)
Total other comprehensive loss, net of tax	$	—	—	(836)	—	(836)
Total comprehensive income attributable to Lennar	$	915,858	1,051,560	80,818	(1,133,214)	915,022
Total comprehensive loss attributable to noncontrolling interests	$	—	—	(8,537)	—	(8,537)

(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)


(In thousands)	Lennar Corporation		Guarantor Subsidiaries	Non-Guarantor Subsidiaries	Consolidating Adjustments	Total
Revenues:
Homebuilding	$	—	8,789,330	29,990	—	8,819,320
Financial Services	—		85,270	271,978	(9,721)	347,527
Multifamily	—		—	244,806	—	244,806
Lennar Other	—		—	19,319	—	19,319
Total revenues	—		8,874,600	566,093	(9,721)	9,430,972
Cost and expenses:
Homebuilding	—		7,787,164	31,901	7,029	7,826,094
Financial Services	—		59,207	231,778	(18,647)	272,338
Multifamily	—		—	249,894	—	249,894
Lennar Other	—		—	4,816	—	4,816
Corporate general and administrative	151,850		1,076	—	2,530	155,456
Total costs and expenses	151,850		7,847,447	518,389	(9,088)	8,508,598
Homebuilding equity in earnings from unconsolidated entities	—		5,586	272	—	5,858
Homebuilding other income (expense), net	(630)		(50,946)	3,243	633	(47,700)
Multifamily equity in earnings from unconsolidated entities	—		—	7,563	—	7,563
Lennar Other equity in earnings (loss) from unconsolidated entities	—		(7,585)	10,937	—	3,352
Lennar Other expense, net	—		—	(12,924)	—	(12,924)
Earnings (loss) before income taxes	(152,480)		974,208	56,795	—	878,523
Benefit (provision) for income taxes	38,090		(242,575)	(15,745)	—	(220,230)
Equity in earnings from subsidiaries	775,772		33,476	—	(809,248)	—
Net earnings (including net earnings attributable to noncontrolling interests)	661,382		765,109	41,050	(809,248)	658,293
Less: Net loss attributable to noncontrolling interests	—		—	(3,089)	—	(3,089)
Net earnings attributable to Lennar	$	661,382	765,109	44,139	(809,248)	661,382
Other comprehensive loss, net of tax:
Net unrealized gain on securities available-for-sale	$	—	—	769	—	769
Reclassification adjustments for gains included in earnings, net of tax	—		—	(176)	—	(176)
Total other comprehensive income, net of tax	$	—	—	593	—	593
Total comprehensive income attributable to Lennar	$	661,382	765,109	44,732	(809,248)	661,975
Total comprehensive loss attributable to noncontrolling interests	$	—	—	(3,089)	—	(3,089)

(In thousands) Lennar
Corporation Guarantor
Subsidiaries Non-Guarantor
Subsidiaries Consolidating Adjustments Total
Revenues:
Homebuilding $ —
12,942,016
69,816
—
13,011,832
Financial Services —
277,502
441,517
(15,015 ) 704,004
Multifamily —
—
312,013
—
312,013
Lennar Other —
—
84,572
—
84,572
Total revenues —
13,219,518
907,918
(15,015 ) 14,112,421
Cost and expenses:
Homebuilding —
11,640,728
69,826
630
11,711,184
Financial Services —
254,130
331,181
(23,458 ) 561,853
Multifamily —
—
317,572
—
317,572
Lennar Other —
—
76,465
(6,582 ) 69,883
Acquisition and integration costs related to CalAtlantic —
140,062
—
—
140,062
Corporate general and administrative 243,361
1,813
—
3,897
249,071
Total costs and expenses 243,361
12,036,733
795,044
(25,513 ) 13,049,625
Homebuilding equity in earnings (loss) from unconsolidated entities —
(43,756 ) 219
—
(43,537 )
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 )
Earnings (loss) before income taxes (232,834 ) 1,323,751
135,239
—
1,226,156
Benefit (provision) for income taxes 59,210
(327,148 ) (38,932 ) —
(306,870 )
Equity in earnings from subsidiaries 1,073,307
58,807
—
(1,132,114 ) —
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 attributable to Lennar $ 899,683
1,055,410
76,704
(1,132,114 ) 899,683
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 )
Total comprehensive income attributable to Lennar $ 899,683
1,055,410
75,055
(1,132,114 ) 898,034
Total comprehensive income attributable to noncontrolling interests $ —
—
19,603
—
19,603

Lennar Corporation and Subsidiaries

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


(In thousands)	Lennar Corporation		Guarantor Subsidiaries	Non-Guarantor Subsidiaries	Consolidating Adjustments	Total
Cash flows from operating activities:
Net earnings (including net loss attributable to noncontrolling interests)	$	915,858	1,051,560	73,117	(1,133,214)	907,321
Distributions of earnings from guarantor and non-guarantor subsidiaries	1,052,379		80,835	—	(1,133,214)	—
Other adjustments to reconcile net earnings (including net loss attributable to noncontrolling interests) to net cash provided by operating activities	(980,620)		(149,064)	399,952	1,133,214	403,482
Net cash provided by operating activities	987,617		983,331	473,069	(1,133,214)	1,310,803
Cash flows from investing activities:

Investments in and contributions to unconsolidated entities/deconsolidation of a previously consolidated entity, net of distributions of capital	—		(17,986)	(169,705)	—	(187,691)




Proceeds from the sales of operating properties and equipment and other assets	—		29,727	—	—	29,727



Other	(1,767)		28,454	(42,765)	—	(16,078)

Intercompany	(58,949)		—	—	58,949	—
Net cash provided by (used in) investing activities	(60,716)		40,195	(212,470)	58,949	(174,042)
Cash flows from financing activities:

Net borrowings (repayments) under warehouse facilities	—		404	(310,620)	—	(310,216)




Net borrowings (repayments) on senior notes, other borrowings, other liabilities, and other notes payable	(267,708)		(123,505)	127,097	—	(264,116)



Common stock:

Repurchases	(296,093)		—	—	—	(296,093)
Dividends	(78,145)		(1,051,560)	(81,654)	1,133,214	(78,145)
Intercompany	—		39,591	19,358	(58,949)	—
Net cash used in financing activities	(641,946)		(1,135,070)	(245,819)	1,074,265	(948,570)
Net increase (decrease) in cash and cash equivalents and restricted cash	284,955		(111,544)	14,780	—	188,191
Cash and cash equivalents and restricted cash at beginning of period	713,828		532,304	222,559	—	1,468,691
Cash and cash equivalents and restricted cash at end of period	$	998,783	420,760	237,339	—	1,656,882

(In thousands)
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
Distributions of earnings from guarantor and non-guarantor subsidiaries 1,356,321
76,352
—
(1,432,673 ) —
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
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
Other (2,164 ) 34,935
(43,331 ) —
(10,560 )
Intercompany (1,256,112 ) —
—
1,256,112
—
Net cash provided by (used in) investing activities (1,258,276 ) (78,943 ) 41,750
1,256,112
(39,357 )
Cash flows from financing activities:
Net borrowings under unsecured revolving credit facilities 700,000
—
—
—
700,000
Net repayments under warehouse facilities —
(9 ) (423,114 ) —
(423,123 )
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 )
Common stock:
Issuances 388
—
—
—
388
Repurchases (419,322 ) —
—
—
(419,322 )
Dividends (38,776 ) (1,322,333 ) (110,340 ) 1,432,673
(38,776 )
Intercompany —
1,181,304
74,808
(1,256,112 ) —
Net cash used in financing activities (257,710 ) (258,482 ) (445,419 ) 176,561
(785,050 )
Net increase (decrease) in cash and cash equivalents and restricted cash (246,518 ) (281,412 ) 1,816
—
(526,114 )
Cash and cash equivalents and restricted cash at beginning of period 624,694
721,603
249,681
—
1,595,978
Cash and cash equivalents and restricted cash at end of period $ 378,176
440,191
251,497
—
1,069,864

Lennar Corporation and Subsidiaries

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


(In thousands)	Lennar Corporation		Guarantor Subsidiaries	Non-Guarantor Subsidiaries	Consolidating Adjustments	Total
Cash flows from operating activities:
Net earnings (including net loss attributable to noncontrolling interests)	$	661,382	765,109	41,050	(809,248)	658,293
Distributions of earnings from guarantor and non-guarantor subsidiaries	775,772		33,476	—	(809,248)	—
Other adjustments to reconcile net earnings (including net loss attributable to noncontrolling interests) to net cash provided by (used in) operating activities	(819,869)		(1,222,713)	145,151	809,248	(1,088,183)
Net cash provided by (used in) operating activities	617,285		(424,128)	186,201	(809,248)	(429,890)
Cash flows from investing activities:

Investments in and contributions to unconsolidated entities, net of distributions of capital	—		(99,052)	11,716	—	(87,336)
Proceeds from sales of real estate owned	—		—	4,210	—	4,210
Proceeds from sale of investment in unconsolidated entity	—		—	17,790	—	17,790
Proceeds from sales of Financial Services' businesses	—		21,317	3,129	—	24,446




Other	(170)		(30,185)	(20,341)	—	(50,696)

Intercompany	(1,263,527)		—	—	1,263,527	—
Net cash provided by (used in) investing activities	(1,263,697)		(107,920)	16,504	1,263,527	(91,586)
Cash flows from financing activities:
Net borrowings under unsecured revolving credit facilities	550,000		—	—	—	550,000
Net borrowings (repayments) under warehouse facilities	—		170	(365,354)	—	(365,184)

Net borrowings (repayments) on convertible senior notes, other borrowings, other liabilities, and other notes payable	—		(101,052)	3,657	—	(97,395)






Net repayments related to noncontrolling interests	—		—	(14,380)	—	(14,380)

Common stock:
Issuances	634		—	—	—	634
Repurchases	(101,229)		—	—	—	(101,229)
Dividends	(25,877)		(765,109)	(44,139)	809,248	(25,877)
Intercompany	—		1,057,135	206,392	(1,263,527)	—
Net cash provided by (used in) financing activities	423,528		191,144	(213,824)	(454,279)	(53,431)
Net decrease in cash and cash equivalents and restricted cash	(222,884)		(340,904)	(11,119)	—	(574,907)
Cash and cash equivalents and restricted cash at beginning of period	624,694		721,603	249,681	—	1,595,978
Cash and cash equivalents and restricted cash at end of period	$	401,810	380,699	238,562	—	1,021,071

(In thousands)
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
Distributions of earnings from guarantor and non-guarantor subsidiaries 1,073,307
58,807
—
(1,132,114 ) —
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
Cash flows from investing activities:
Investments in and contributions to unconsolidated entities, net of distributions of capital —
(67,664 ) (6,915 ) —
(74,579 )
Proceeds from sales of real estate owned —
—
28,697
—
28,697
Proceeds from sale of investment in unconsolidated entity —
199,654
—
—
199,654
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 )
Other (27,136 ) (20,555 ) (15,542 ) —
(63,233 )
Distributions of capital from guarantor and non-guarantor subsidiaries 65,000
20,000
—
(85,000 ) —
Intercompany (1,035,226 ) —
—
1,035,226
—
Net cash provided by (used in) investing activities (2,137,729 ) 154,089
14,540
950,226
(1,018,874 )
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 payments related to noncontrolling interests —
—
(64,619 ) —
(64,619 )
Common stock:
Issuances 3,189
—
—
—
3,189
Repurchases (49,490 ) —
—
—
(49,490 )
Dividends (35,985 ) (1,120,410 ) (96,704 ) 1,217,114
(35,985 )
Intercompany —
651,665
383,561
(1,035,226 ) —
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 )
Cash and cash equivalents and restricted cash at beginning of period 1,938,555
366,946
388,583
—
2,694,084
Cash and cash equivalents and restricted cash at end of period $ 453,806
381,739
247,997
—
1,083,542

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 potential continuing negative impact of the ongoing coronavirus ("COVID-19") pandemic, the duration, impact and severity of which is highly uncertain; 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~~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~~Early in the ~~third~~second quarter, the economy was shuttering and unemployment was rising rapidly as the coronavirus (“COVID-19”) pandemic was dramatically affecting the United States economy in general and our business specifically. While the economy is still trying to recover after the shut-down, the homebuilding industry only stalled from mid-March through April. By the end of April, most states and municipalities across the country had deemed housing an essential service, which enabled us to continue building, selling, and delivering homes to our customers. During May and for the first few weeks of June, the market ~~continued to improve.~~for new homes had steadily strengthened in almost all areas where we have communities under development. We ~~saw traffic and sales continue to strengthen from last year's pause as lower~~believe this is the result of low interest rates and ~~slower price appreciation positively impacted affordability. That,~~short supply, together with ~~low unemployment, wage growth, consumer confidence~~what appears to be a desire by many people to move out of crowded urban areas into new homes in the suburbs. The strength in the market may also be partially attributable to pent up demand from the earlier part of our second quarter when more restrictive stay at home orders were in place in many of our markets and ~~economic growth~~when public concern over COVID-19 was much greater.

Our first priority with regard to the COVID-19 pandemic was to do everything we could to ensure the safety, health and hygiene of our associates, customers, suppliers and others with whom we partner in our business activities. We, like many

businesses, required or permitted many of our associates to work remotely. This did not seem to have had a material negative impact on our business activities. However, it did require us to increase our cybersecurity monitoring. Subject to that and through the use of appropriate risk mitigation and safety practices, we continued to strategically manage our business in this unprecedented environment in which we find ourselves. Part of our strategy included accelerating various technology initiatives to accommodate our safety first mandate and to continue our business in these difficult times. We are selling homes in person by appointment, virtually or by self-guided tours. Additionally, we are implementing a virtual new home orientation process so our home buyers can walk and view their completed home via FaceTime and even get keys to the front door digitally. Additionally we have increased the number of digital closings, with digital document signings and where permitted digital notarization.

We have worked closely with our trade partners, including through our focus on an even flow approach to production, which enabled our trade partners to lower their costs and reduce their prices to us. This drove a ~~more~~year-over-year 200-basis point improvement in cost as a percentage of revenue in the second quarter. Also in our second quarter, our cost per square foot was down 130 basis points from the prior quarter and 240 basis from the same period in the prior year. The benefit of pricing power and reduced costs will not all flow through to margins, as we are also focused on producing affordable ~~housing market.~~housing. However, we do expect further margin improvement during the remainder of 2020.

~~Stronger sales are driving higher-than-expected deliveries at stabilized margin levels as sales incentives have moderated,~~

We also slowed our land purchases, land development activities and home starts. As a result, our land positions were temporarily altered, and we ~~believe~~ended the quarter with a 3.9 year supply of land owned, compared to a 4.5 year supply of land owned in the second quarter of 2019. The portion of land we ~~are on track~~controlled through options or similar agreements was 32%, up from 25% last year. As home sales started to recover, we restarted our development activities. However, because of the mid-March through April slowdown in construction at some of our communities, we expect to have fewer deliveries in the third and fourth quarters. We expect to deliver ~~approximately~~between 50,500 and 51,000 homes in fiscal ~~2019. Our average new orders sales price declined year-over-year~~year 2020. While community count is difficult to predict, particularly in the current environment with municipal offices shutting down and ~~sequentially, reflecting our continued focus on the entry-level market and the first time homebuyer. While strong operating results drove the bottom line, our overall focus on inventory,~~being less available to provide permits for 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 as we are focusing on 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, we are migrating towards a significantly smaller land inventory. Our target is to increase our controlled homesites to between 40% and 50% of our land needs and reduce 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 to our core pure-play homebuilding and financial services platform.

~~We expect to see our margins improve steadily throughout the remainder of the year as prices remain stable and incentives continue to subside. Accordingly,~~development, we expect our community count 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 reductiondip slightly in ~~land spend, we anticipate being able to drive meaningfully greater returns over time.~~

Our size and scale in each of 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 and stabilize in the fourth quarter.

Our Lennar Financial Services business continues to lead the way for the Company on innovation and enhanced customer experiences. Confronted with limitations on the ability of borrowers to engage in normal mortgage borrowing procedures, our ~~SG&A expenses as~~Lennar Financial Services business accelerated its rollout of certain technologies that enabled it to have a ~~percentage~~strong second quarter in spite 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~~those limitations. These enhancements represent a permanent improvement in our ~~financial services platform, which in part drove~~mortgage processing procedures.

In our Multifamily business, despite the ~~segment's record earnings~~disruptions to businesses and employment resulting from the COVID-19 pandemic, occupancy in the ~~third quarter.~~properties in which we have investments did not change substantially, and we did not encounter a significant increase in rent delinquencies. We believe the reason we were not substantially affected by people moving from urban apartments to single family homes is because people are leaving the lower quality, less-amenitized apartments, but not higher quality residential buildings such as those offered by our Multifamily business.

~~With a solid balance sheet, leading market positions~~

There are no reliable estimates of how long the pandemic will last or how many people are likely to be affected by it and ~~continued execution of~~therefore, the unpredictable environment in our ~~core operating strategies,~~country will evolve over time. However, we believe that we ~~are~~will be well positioned ~~to deliver strong~~through hard work, focused leadership, and ~~consistent performance for the remainder of 2019 and into 2020.~~innovative technology.

(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~~six months ended ~~August~~May 31, ~~2019~~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.

Our net earnings attributable to Lennar were ~~$513.4~~$517.4 million, or ~~$1.59~~$1.65 per diluted share ($~~1.60~~1.66 per basic share), in the ~~third~~second quarter of ~~2019,~~2020, compared to net earnings attributable to Lennar of ~~$453.2~~$421.5 million, or ~~$1.37~~$1.30 per diluted share ($~~1.37~~1.31 per basic share), in the ~~third~~second quarter of ~~2018.~~2019. Our net earnings attributable to Lennar were ~~$1.2 billion,~~$915.9 million, or ~~$3.63~~$2.91 per diluted share ($~~3.64~~2.92 per basic share), in the ~~nine~~six months ended ~~August~~May 31, ~~2019,~~2020, compared to net earnings attributable to Lennar of ~~$899.7~~$661.4 million, or ~~$2.94~~$2.03 per diluted share ($~~2.95~~2.05 per basic share), in the ~~nine~~six months ended ~~August~~May 31, ~~2018.~~2019.

Financial information relating to our operations was as follows:


	Three Months Ended May 31, 2020
(In thousands)	Homebuilding		Financial Services	Multifamily	Lennar Other	Corporate	Total
Revenues:
Sales of homes	$	4,925,081	—	—	—	—	4,925,081
Sales of land	19,833		—	—	—	—	19,833
Other revenues	4,570		196,263	123,117	18,509	—	342,459
Total revenues	4,949,484		196,263	123,117	18,509	—	5,287,373
Costs and expenses:
Costs of homes sold	3,862,771		—	—	—	—	3,862,771
Costs of land sold	43,369		—	—	—	—	43,369
Selling, general and administrative expenses	407,191		—	—	—	—	407,191
Other costs and expenses	—		110,355	123,473	(1,072)	—	232,756
Total costs and expenses	4,313,331		110,355	123,473	(1,072)	—	4,546,087
Equity in loss from unconsolidated entities	(9,100)		—	(282)	(26,642)	—	(36,024)
Financial Services gain on deconsolidation	—		61,418	—	—	—	61,418
Other income (expense), net	4,308		—	—	(10,960)	—	(6,652)
Operating earnings (loss)	$	631,361	147,326	(638)	(18,021)	—	760,028
Corporate general and administrative expenses	—		—	—	—	83,451	83,451
Earnings (loss) before income taxes	$	631,361	147,326	(638)	(18,021)	(83,451)	676,577


	Three Months Ended May 31, 2019

(In thousands)	Homebuilding		Financial Services	Multifamily	Lennar Other	Corporate	Total
Revenues:
Sales of homes	$	5,176,116	—	—	—	—	5,176,116
Sales of land	16,455		—	—	—	—	16,455
Other revenues	3,028		204,216	147,412	15,663	—	370,319
Total revenues	5,195,599		204,216	147,412	15,663	—	5,562,890
Costs and expenses:
Costs of homes sold	4,137,529		—	—	—	—	4,137,529
Costs of land sold	14,008		—	—	—	—	14,008
Selling, general and administrative expenses	435,722		—	—	—	—	435,722
Other costs and expenses	—		147,999	148,716	3,194	—	299,909
Total costs and expenses	4,587,259		147,999	148,716	3,194	—	4,887,168
Equity in earnings (loss) from unconsolidated entities and Multifamily other gain	19,614		—	(3,018)	(4,978)	—	11,618
Other expense, net	(46,165)		—	—	(5,663)	—	(51,828)
Operating earnings (loss)	$	581,789	56,217	(4,322)	1,828	—	635,512
Corporate general and administrative expenses	—		—	—	—	76,113	76,113
Earnings (loss) before income taxes	$	581,789	56,217	(4,322)	1,828	(76,113)	559,399

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


	Six Months Ended May 31, 2020

(In thousands)	Homebuilding		Financial Services	Multifamily	Lennar Other	Corporate	Total
Revenues:
Sales of homes	$	9,065,848	—	—	—	—	9,065,848
Sales of land	46,700		—	—	—	—	46,700
Other revenues	9,052		394,924	255,734	20,452	—	680,162
Total revenues	9,121,600		394,924	255,734	20,452	—	9,792,710
Costs and expenses:
Costs of homes sold	7,154,550		—	—	—	—	7,154,550
Costs of land sold	70,504		—	—	—	—	70,504
Selling, general and administrative expenses	786,083		—	—	—	—	786,083
Other costs and expenses	—		261,699	260,821	1,502	—	524,022
Total costs and expenses	8,011,137		261,699	260,821	1,502	—	8,535,159
Equity in earnings (loss) from unconsolidated entities and Multifamily other gain	(13,646)		—	6,234	(26,523)	—	(33,935)
Financial Services gain on deconsolidation	—		61,418	—	—	—	61,418
Other expense, net	(5,058)		—	—	(9,549)	—	(14,607)
Operating earnings (loss)	$	1,091,759	194,643	1,147	(17,122)	—	1,270,427
Corporate general and administrative expenses	—		—	—	—	170,298	170,298
Earnings (loss) before income taxes	$	1,091,759	194,643	1,147	(17,122)	(170,298)	1,100,129

~~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.


	Six Months Ended May 31, 2019

(In thousands)	Homebuilding		Financial Services	Multifamily	Lennar Other	Corporate	Total
Revenues:
Sales of homes	$	8,784,245	—	—	—	—	8,784,245
Sales of land	30,238		—	—	—	—	30,238
Other revenues	4,837		347,527	244,806	19,319	—	616,489
Total revenues	8,819,320		347,527	244,806	19,319	—	9,430,972
Homebuilding costs and expenses:
Costs of homes sold	7,019,579		—	—	—	—	7,019,579
Costs of land sold	27,534		—	—	—	—	27,534
Selling, general and administrative	778,981		—	—	—	—	778,981
Other costs and expenses	—		272,338	249,894	4,816		527,048
Total costs and expenses	7,826,094		272,338	249,894	4,816	—	8,353,142
Equity in earnings from unconsolidated entities and Multifamily other gain	5,858		—	7,563	3,352	—	16,773
Other expense, net	(47,700)		—	—	(12,924)	—	(60,624)
Operating earnings	$	951,384	75,189	2,475	4,931	—	1,033,979
Corporate general and administrative expenses	—		—	—	—	155,456	155,456
Earnings (loss) before income taxes	$	951,384	75,189	2,475	4,931	(155,456)	878,523

Three Months Ended ~~August~~May 31, ~~2019~~2020 versus Three Months Ended ~~August~~May 31, ~~2018~~2019

Revenues from home sales ~~increased 2%~~decreased 5% in the ~~third~~second quarter of ~~2019~~2020 to ~~$5.3~~$4.9 billion from $5.2 billion in the ~~third~~second quarter of ~~2018.~~2019. Revenues were ~~higher~~lower primarily due to a ~~7% increase in the number of home deliveries, excluding unconsolidated entities, partially offset by a 5%~~4% decrease in the average sales price of homes delivered. New home deliveries, excluding

unconsolidated entities, ~~increased to 13,513~~of 12,653 homes in the ~~third~~second quarter of ~~2019 from 12,600~~2020 were flat compared to 12,706 homes in the ~~third~~second quarter of ~~2018,~~2019, as a result of ~~an increase in home deliveries in all homebuilding segments.~~the COVID-19 pandemic and the economic shutdown. The average sales price of homes delivered was ~~$394,000~~$389,000 in the ~~third~~second quarter of ~~2019,~~2020, compared to ~~$415,000~~$407,000 in the ~~third~~second quarter of ~~2018.~~2019. The decrease in average sales price primarily resulted from continuing to shift to lower-priced communities and ~~increased sales incentives, as well as~~regional product mix ~~as a larger percentage of deliveries came from the East segment. Sales incentives offered~~due to ~~homebuyers were $24,400 per home delivered~~COVID-19 stay-at-home orders 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.certain higher priced markets.

Gross margin on home sales ~~were~~was $1.1 billion, or ~~20.4%~~21.6%, in the ~~third~~second quarter of ~~2019,~~2020, compared to ~~$1.1~~$1.0 billion, or ~~20.3% (21.9% excluding purchase accounting),~~20.1% in the ~~third~~second quarter of ~~2018.~~2019. The gross margin percentage on home sales increased primarily ~~because~~due to our continued focus on reducing construction costs. Loss on land sales in the ~~third~~second quarter of ~~2018 included $84.2~~2020 was $23.5 million, ~~or 160 basis points~~primarily due to a write-off of ~~backlog/construction~~costs as a result of us not moving forward with a naval base development in ~~progress write-up related to purchase accounting adjustments~~Concord, California, northeast of San Francisco. Gross margin on ~~CalAtlantic homes that~~land sales were ~~delivered~~$2.4 million in ~~that quarter. This was partially offset by higher construction costs and increased sales incentives.~~the second quarter of 2019.

Selling, general and administrative expenses were ~~$444.7~~$407.2 million in the ~~third~~second quarter of ~~2019,~~2020, compared to ~~$446.6~~$435.7 million in the ~~third~~second quarter of ~~2018.~~2019. As a percentage of revenues from home sales, selling, general and administrative expenses improved to 8.3% in the ~~third~~second quarter of ~~2019,~~2020, from ~~8.5%~~8.4% in the ~~third~~second quarter of ~~2018, 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~~our Financial Services segment were ~~$78.8~~$150.6 million in the ~~third~~second quarter of ~~2019~~2020 (which included ~~$74.7~~$147.3 million of operating earnings and an add back of ~~$4.1~~$3.3 million of net loss attributable to noncontrolling interests)~~. Operating earnings~~ compared to $62.5 million in the ~~third~~second quarter of ~~2018 were $60.5 million.~~2019 (which included $56.2 million of operating earnings and an add back of $6.3 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~~and a $5.0 million gain on the sale of a servicing portfolio. Additionally, our Financial Services segment recorded a $61.4 million gain on the deconsolidation of a previously consolidated entity.

Operating loss for our Multifamily segment was $0.6 million in ~~part~~the second quarter of 2020, compared to $4.3 million ($3.9 million net of noncontrolling interest) in the second quarter of 2019. Operating loss for our Lennar Other segment was $18.0 million in the second quarter of 2020 primarily due to a $25.0 million write-down of assets held by ~~technology initiatives. These improvements more than offset~~Rialto legacy funds because of disruption in the ~~decrease in retail origination volume,~~capital markets as a result of COVID-19 and the ~~sale~~economic shutdown. This compared to operating earnings of ~~substantially all~~$1.8 million ($2.2 million net of ~~our retail mortgage business~~noncontrolling interest) in the ~~first~~second 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 million in the third quarter of 2019 (which included $15.8 million of operating earnings and an add back of $0.1 million of net loss 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 AugustSix Months Ended May 31, 2020 versus Six Months Ended May 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 effective tax rate included tax benefits for the tax accounting method changes implemented during the third quarter of 2018, energy credits, 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%~~3% in the ~~nine~~six months ended ~~August~~May 31, ~~2019~~2020 to ~~$14.1~~$9.1 billion from ~~$12.9~~$8.8 billion in the ~~nine~~six months ended ~~August~~May 31, ~~2018.~~2019. Revenues were higher primarily due to ~~an 11%~~a 7% increase in the number of home deliveries, excluding unconsolidated entities. ~~New~~Despite new home deliveries in the second quarter of 2020 being consistent with the second quarter of 2019 as a result of COVID-19 and the economic shutdown, new home deliveries, excluding unconsolidated entities, increased to ~~35,021~~22,966 homes in the ~~nine~~six months ended ~~August~~May 31, ~~2019~~2020 from ~~31,412~~21,508 homes in the ~~nine~~six months ended ~~August~~May 31, ~~2018, primarily~~2019, 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~~$395,000 in the ~~nine~~six months ended ~~August~~May 31, ~~2019,~~2020, compared to ~~$409,000~~$408,000 in the ~~nine~~six months ended ~~August~~May 31, ~~2018.~~2019. The decrease in average sales price primarily resulted from continuing to shift to lower-priced communities and ~~increased sales incentives as well as~~regional product mix ~~as a larger percentage of deliveries came from the East segment. Sales incentives offered~~due to ~~homebuyers were $25,400 per home delivered~~COVID-19 stay-at-home orders 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.certain higher priced markets.

Gross margin on home sales ~~were $2.9~~was $1.9 billion, or ~~20.2%~~21.1%, in the ~~nine~~six months ended ~~August~~May 31, ~~2019,~~2020, compared to ~~$2.4~~$1.8 billion, or ~~18.8% (21.7% excluding purchase accounting),~~20.1% in the ~~nine~~six months ended ~~August~~May 31, ~~2018.~~2019. The gross margin percentage on home sales increased primarily ~~because~~due to our continued focus on reducing construction costs. Loss on land sales in the ~~nine~~six months ended ~~August~~May 31, ~~2018 included $376.0~~2020 was $23.8 million, ~~or 290 basis points~~primarily due to a write-off of ~~backlog/construction~~costs as a result of us not moving forward with a naval base development in ~~progress write-up related to purchase accounting adjustments~~Concord, California, northeast of San Francisco. Gross margin on ~~CalAtlantic homes that~~land sales were ~~delivered~~$2.7 million in ~~that period. This was partially offset by increased sales incentives and higher construction costs.~~the six months ended May 31, 2019.

Selling, general and administrative expenses were ~~$1.2 billion~~$786.1 million in the ~~nine~~six months ended ~~August~~May 31, ~~2019,~~2020, compared to ~~$1.1 billion~~$779.0 million in the ~~nine~~six months ended ~~August~~May 31, ~~2018.~~2019. As a percentage of revenues from home sales, selling, general and administrative expenses improved to 8.7% in the ~~nine~~six months ended ~~August~~May 31, ~~2019,~~2020, from ~~8.8%~~8.9% in the ~~nine~~six months ended ~~August~~May 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.~~2019.

Operating earnings for ~~the~~our Financial Services segment were ~~$163.0~~$208.8 million in the ~~nine~~six months ended ~~August~~May 31, ~~2019~~2020 (which included ~~$149.9~~$194.6 million of operating earnings and an add back of ~~$13.1~~$14.1 million of net loss attributable to noncontrolling interests), compared to ~~$142.2~~$84.2 million in the ~~nine~~six months ended ~~August~~May 31, ~~2018.~~2019 (which included $75.2 million of operating earnings and an add back of $9.1 million of net loss attributable to noncontrolling interests). Operating earnings increased due to an improvement in the mortgage ~~business~~and title businesses 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 of our retail mortgage business 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 $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$5.0 million gain on the sale of ~~an investment~~a servicing portfolio. Additionally, our Financial Services segment recorded a $61.4 million gain on the deconsolidation of a previously consolidated entity.

Operating earnings for our Multifamily segment were $1.1 million 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~~six months ended ~~August~~May 31, ~~2018,~~2020, compared to $2.5 million ($2.9 million net of noncontrolling interest) in the ~~Multifamily~~six months ended May 31, 2019. Operating loss for our Lennar Other segment ~~had~~was $17.1 million in the six months ended May 31, 2020 primarily due to a $25.0 million write-down of assets held by Rialto legacy funds because of disruption in the capital markets as a result of COVID-19 and the economic shutdown.

This compared to operating earnings of ~~$9.7~~$4.9 million ($5.2 million net of noncontrolling interest) in the six months ended May 31, 2019.

For the six months ended May 31, 2020 and May 31, 2019, we had a tax provision of $192.8 million and $220.2 million, respectively, which resulted in an overall effective income tax rate of 17.4% and 25.0%, respectively. The reduction in the overall effective income tax rate is primarily due to the ~~segment's $23.3 million share of gains as a result~~extension 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~~new energy efficient home tax credit during 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 thirdfirst 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~~May 31, ~~2019,~~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 May 31, 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	$	1,576,083	1,218,337	22.7	%	$	221,798	(1,093)	1,592	218	7,211	229,726
Central	684,440		561,076	18.0	%	66,269		247	638	19	(108)	67,065
Texas	694,110		530,004	23.6	%	98,566		1,524	250	1	(454)	99,887
West	1,957,435		1,533,513	21.7	%	279,509		(776)	1,914	(40)	(513)	280,094
Other (2)	13,013		19,841	(52.5)	%	(11,023)		(23,438)	176	(9,298)	(1,828)	(45,411)
Totals	$	4,925,081	3,862,771	21.6	%	$	655,119	(23,536)	4,570	(9,100)	4,308	631,361


	Three Months Ended May 31, 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	$	1,732,216	1,374,798	20.6	%	$	208,535	1,633	1,110	(135)	(679)	210,464
Central	609,195		500,071	17.9	%	54,684		171	112	69	308	55,344
Texas	687,011		547,648	20.3	%	75,055		811	201	278	(971)	75,374
West	2,140,637		1,706,645	20.3	%	270,321		(168)	425	(186)	2,512	272,904
Other (2)	7,057		8,367	(18.6)	%	(5,730)		—	1,180	19,588	(47,335)	(32,297)
Totals	$	5,176,116	4,137,529	20.1	%	$	602,865	2,447	3,028	19,614	(46,165)	581,789

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


	Six Months Ended May 31, 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	$	2,978,755	2,303,446	22.7	%	$	403,093	(1,836)	3,275	577	(378)	404,731
Central	1,219,186		1,014,467	16.8	%	94,203		(388)	868	572	1,282	96,537
Texas	1,157,907		890,278	23.1	%	151,693		3,197	767	204	(2,901)	152,960
West	3,688,948		2,912,803	21.0	%	498,016		(1,339)	3,728	3,900	696	505,001
Other (2)	21,052		33,556	(59.4)	%	(21,790)		(23,438)	414	(18,899)	(3,757)	(67,470)
Totals	$	9,065,848	7,154,550	21.1	%	$	1,125,215	(23,804)	9,052	(13,646)	(5,058)	1,091,759


	Six Months Ended May 31, 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	$	2,954,860	2,344,664	20.7	%	$	342,821	4,005	1,719	(234)	(2,464)	345,847
Central	1,042,320		858,432	17.6	%	84,749		574	276	138	533	86,270
Texas	1,099,440		879,750	20.0	%	107,044		2,275	255	158	(2,080)	107,652
West	3,678,141		2,923,392	20.5	%	464,217		(4,149)	1,407	(497)	2,587	463,565
Other (2)	9,484		13,341	(40.7)	%	(13,146)		(1)	1,180	6,293	(46,276)	(51,950)
Totals	$	8,784,245	7,019,579	20.1	%	$	985,685	2,704	4,837	5,858	(47,700)	951,384

(1)Net margins on sales of homes include selling, general and administrative expenses.

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


~~(1)~~	~~For the nine months ended August 31, 2019, sales of land included an impairment of $4.0 million related to contracts to sell land.~~


~~(2)~~	Operating earnings related to 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.

~~(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.

(2)Negative gross and net margins were due to period costs in Urban divisions that impact costs of homes sold without any sales of homes revenue. Negative gross margins on sales of land for the three and six months ended May 31, 2020 was primarily due to a write-off of costs as a result of us not moving forward with a naval base development in Concord, California.

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,				May 31,				May 31,				May 31,
	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	East	4,630	5,061	$	1,582,360	1,735,165	$	342,000	343,000
Central	1,880	1,735	713,303		668,772	379,000		385,000	Central	1,763	1,568	684,440		609,195	388,000		389,000
Texas	2,260	2,169	696,904		716,343	308,000		330,000	Texas	2,462	2,149	694,110		687,011	282,000		320,000
West	3,908	3,827	2,060,740		2,149,156	527,000		562,000	West	3,804	3,934	1,957,435		2,140,638	515,000		544,000
Other	24	20	18,280		21,059	762,000		1,053,000	Other	13	17	13,013		17,273	1,001,000		1,016,000
Total	13,522	12,613	$	5,333,419	5,235,348	$	394,000	415,000	Total	12,672	12,729	$	4,931,358	5,189,282	$	389,000	408,000

Of the total homes delivered listed above, ~~nine~~19 homes with a dollar value of ~~$2.7~~$6.3 million and an average sales price of ~~$303,000~~$330,000 represent home deliveries from unconsolidated entities for the three months ended ~~August~~May 31, ~~2019,~~2020, compared to 1323 home deliveries with a dollar value of ~~$11.6~~$13.2 million and an average sales price of ~~$889,000~~$572,000 for the three months ended ~~August~~May 31, ~~2018.~~2019.

Of the total homes delivered listed above, 5027 homes with a dollar value of ~~$25.0~~$9.3 million and an average sales price of ~~$500,000~~$343,000 represent home deliveries from unconsolidated entities for the ~~nine~~six months ended ~~August~~May 31, ~~2019,~~2020, compared to 6141 home deliveries with a dollar value of ~~$45.1~~$22.3 million and an average sales price of ~~$740,000~~$544,000 for the ~~nine~~six months ended ~~August~~May 31, ~~2018.~~

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 %

Of the total new orders listed above, 2125 homes with a dollar value of ~~$7.3~~$9.0 million and an average sales price of ~~$349,000~~$361,000 represent new orders in four active communities from unconsolidated entities for the three months ended May 31, 2020, compared to 32 new orders with a dollar value of $15.1 million and an average sales price of $471,000 in five active communities for the three months ended May 31, 2019.


	Six Months Ended
	Homes				Dollar Value (In thousands)				Average Sales Price
	May 31,				May 31,				May 31,
	2020	2019	2020		2019	2020		2019
East	9,544	10,084	$	3,241,573	3,461,332	$	340,000	343,000
Central	3,679	3,484	1,436,466		1,335,676	390,000		383,000
Texas	4,581	3,848	1,243,218		1,201,545	271,000		312,000
West	7,573	7,532	3,928,337		3,928,354	519,000		522,000
Other	14	33	13,581		26,551	970,000		805,000
Total	25,391	24,981	$	9,863,175	9,953,458	$	388,000	398,000

Of the total new orders listed above, 51 homes with a dollar value of $17.1 million and an average sales price of $335,000 represent new orders from unconsolidated entities for the ~~three~~six months ended ~~August~~May 31, ~~2019,~~2020, compared to 1347 new orders with a dollar value of ~~$9.8~~$24.8 million and an average sales price of ~~$751,000~~$527,000 for the ~~three~~six months ended ~~August~~May 31, ~~2018.~~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 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

Homes Dollar Value (In thousands) Average Sales Price
August 31, August 31, August 31,
2019 2018 (1) 2019 2018 2019 2018
East (2) 8,389
8,234
$ 2,938,456
2,982,258
$ 350,000
362,000
Central 2,720
2,472
1,079,283
974,388
397,000
394,000
Texas 2,557
2,623
826,226
922,425
323,000
352,000
West 5,215
5,875
2,726,329
3,454,519
523,000
588,000
Other 27
16
26,123
19,742
968,000
1,234,000
Total 18,908
19,220
$ 7,596,417
8,353,332
$ 402,000
435,000
Backlog:

Of the total homes in backlog listed above, 2555 homes with a backlog dollar value of ~~$9.8~~$18.0 million and an average sales price of ~~$391,000~~$327,000 represent the backlog from unconsolidated entities at ~~August~~May 31, ~~2019,~~2020, compared to 1613 homes with a backlog dollar value of ~~$8.9~~$5.2 million and an average sales price of ~~$559,000~~$397,000 at ~~August~~May 31, ~~2018.~~2019.

(1)During both the three and six months ended May 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

Homebuilding East: Revenues from home sales ~~increased~~decreased in the ~~third~~second quarter of 2020 compared to the second quarter of 2019, ~~compared to the third quarter of 2018,~~ primarily due to ~~an increase~~a decrease in the number of home deliveries in ~~all~~ the ~~states~~Carolinas, Florida and Pennsylvania. The decrease in the ~~segment, partially offset by a decrease in~~number of home deliveries was primarily due to the effects of COVID-19 and the economic shutdown. The average sales price of homes delivered ~~in Florida. The increase~~was consistent in the ~~number~~second quarter of ~~home deliveries is primarily due~~2020 compared to ~~higher demand as~~ the ~~number~~second quarter of deliveries per active community increased. The decrease in the average sales price of homes delivered in Florida was primarily driven by a change in product mix due to a higher percentage of deliveries in lower-priced communities.2019. Gross margin percentage on home deliveries in the ~~third~~second quarter of ~~2019 increased~~2020 improved 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 third quarter of 2018.~~costs.

Homebuilding Central: Revenues from home sales increased in the ~~third~~second quarter of ~~2019~~2020 compared to the ~~third~~second quarter of ~~2018,~~2019, primarily due to an increase in the number of home deliveries in all the states in the segment, except ~~Minnesota~~in Virginia 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.

~~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.Minnesota. The increase in the number of home deliveries was primarily due to higher demand as the number of deliveries per active community increased. The average sales price of homes delivered was consistent in the second quarter of 2020 compared to the second quarter of 2019. Gross margin percentage on home deliveries in the ~~nine months ended August 31, 2019 increased~~second quarter of 2020 improved slightly 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.

~~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 higherreducing our construction costs.

Homebuilding Texas: Revenues from home sales increased in the ~~nine months ended August 31, 2019~~second quarter of 2020 compared to the ~~nine months ended August 31, 2018,~~second 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 increased~~second quarter of 2020 improved 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 decreased in the second quarter of 2020 compared to the second quarter of 2019, primarily due to a decrease in the number of home deliveries in all states of the segment except Arizona and due to a decrease in the average sales price of homes delivered in all states of the segment except Utah. The decrease in the number of home deliveries in all states of the segment except Arizona was primarily due to the effects of COVID-19 and the economic shutdown. The increase in the number of home deliveries in Arizona was primarily due to higher demand as the number of deliveries per active community increased. The decrease in the average sales price of homes delivered in all states of the segment except Utah was primarily driven by a change in product mix due to a higher percentage of deliveries in lower-priced communities due to COVID-19 stay-at-home orders in certain high priced markets. The increase in the average sales price of homes delivered in Utah was primarily driven by a change in product mix due to a higher percentage of deliveries in higher-priced communities. Gross margin percentage on home deliveries in the second quarter of 2020 improved compared to the same period last year primarily due to reducing our construction costs.

Six Months Ended May 31, 2020 versus Six Months Ended May 31, 2019

Homebuilding East: Revenues from home sales increased slightly in the six months ended May 31, 2020 compared to the six months ended May 31, 2019, primarily due to an increase in the number of home deliveries in Florida, partially offset by a decrease in the number of home deliveries in the Carolinas and Pennsylvania. The increase in the number of home deliveries in Florida was primarily due to higher demand as the number of deliveries per active community increased during the first quarter, partially offset by the impact of COVID-19 and economic shutdown during the second quarter. The decrease in the number of home deliveries in the Carolinas and Pennsylvania was primarily due to the impact of COVID-19 and economic shutdown during the second quarter. The average sales price of homes delivered was consistent in the six months ended May 31, 2020, compared to the same period last year. Gross margin percentage on home deliveries in the six months ended May 31, 2020 improved compared to the same period last year primarily due to reducing our construction costs.

Homebuilding Central: Revenues from home sales increased in the ~~nine~~six months ended ~~August~~May 31, ~~2019~~2020 compared to the ~~nine~~six months ended ~~August~~May 31, ~~2018,~~2019, primarily due to an increase in the number of home deliveries in all the states in the ~~segment, except Colorado and Nevada, and an increase in the average sales price in all states in the segment, except Arizona.~~segment. 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 six months ended May 31, 2020 decreased compared to the same period last year primarily due to valuation adjustments taken in a few communities during the six months ended May 31, 2020.

Homebuilding Texas: Revenues from home sales increased in the six months ended May 31, 2020 compared to the six months ended May 31, 2019, primarily due to an increase ~~in active communities including communities acquired from CalAtlantic. The decrease~~ in the number of home deliveries, ~~in Colorado was primarily due to~~partially offset by a decrease in active communities and timing of opening and closing of communities. The decrease in the number of home deliveries in Nevada was primarily due to a decrease in deliveries per active community as a result of timing of opening and closing communities. The increase in the average sales price of homes ~~delivered~~delivered. The increase in the number of deliveries was primarily due to ~~an increase in home~~higher demand as the number of deliveries ~~in higher-priced~~

~~communities, including higher-priced communities acquired from CalAtlantic.~~per active community increased. 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~~six months ended ~~August~~May 31, ~~2019 increased~~2020 improved compared to the same period last year primarily due to ~~purchase accounting adjustments on CalAtlantic~~reducing our construction costs.

Homebuilding West: Revenues from home sales increased slightly in the six months ended May 31, 2020 compared to the second quarter of 2019, primarily due to an increase in the number of home deliveries in all states of the segment except Oregon, Utah and Washington, partially offset by a decrease in the average sales price of homes ~~that were~~delivered in ~~backlog/construction~~all states of the segment except Utah. The increase in ~~progress when we acquired CalAtlantic, which reduced~~ the ~~gross~~number of home deliveries in all states of the segment except Oregon, Utah and Washington was primarily due to higher demand as the number of deliveries per active community increased during the first quarter, partially offset by the impact of COVID-19 and economic shutdown during the second quarter. The decrease in the number of home deliveries in Oregon, Utah and Washington was primarily due to the impact of COVID-19 and economic shutdown during the second quarter. The decrease in the average sales price of homes delivered in all states of the segment except Utah was primarily driven by a change in product mix due to a higher percentage of deliveries in lower-priced communities due to COVID-19 stay-at-home orders in certain higher priced markets. The increase in the average sales price of homes delivered in Utah was primarily driven by a change in product mix due to a higher percentage of deliveries in higher-priced communities. Gross margin percentage ~~for those~~on home deliveries in the ~~nine~~six months ended ~~August~~May 31, ~~2018. This was partially offset by higher~~2020 improved compared to the same period last year primarily due to reducing our construction ~~costs and increased sales incentives.~~costs.

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								Six Months Ended
	May 31,								May 31,
(Dollars in thousands)	2020			2019		2020			2019





Dollar value of mortgages originated	$	3,258,000		2,620,000		$	5,478,000		4,557,000
Number of mortgages originated	10,100			8,250		17,000			14,500
Mortgage capture rate of Lennar homebuyers	82		%	75	%	79		%	74	%
Number of title and closing service transactions	14,400			13,500		25,500			28,100

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.

~~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~~six months ended ~~August~~May 31, ~~2019, RMF~~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~~$417.7 million, all of which were recorded as loans held-for-sale and sold ~~$1.1 billion~~$457.4 million of commercial loans into three separate securitizations. As of May 31, 2020, there were $146.4 million of originated commercial loans were sold into a securitization trust but not settled and thus were included as receivables, net.

During the six months ended May 31, 2019, LMF Commercial originated commercial loans with a total principal balance of $720.6 million, of which $705.3 million were recorded as loans held-for-sale, and sold $500.5 million of loans into 12five 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~~


Balance Sheets	May 31, 2020		November 30, 2019
(Dollars in thousands)


Multifamily investments in unconsolidated entities	$	621,465	561,190
Lennar's net investment in Multifamily	888,218		829,537


Statements of Operations	Three Months Ended				Six Months Ended
(Dollars in thousands)	May 31, 2020		May 31, 2019	May 31, 2020	May 31, 2019


Number of operating properties/investments sold through joint ventures	—		—	2	2
Lennar's share of gains on the sale of operating properties/investments	$	—	—	3,000	15,500

Despite widespread reductions in ~~18 and 22 unconsolidated entities (including~~economic activity due to 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 interestsCOVID-19 pandemic, the properties 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~~did not, overall, experience significant increases in vacancies or in delinquent rent payments 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.

date.

(2) Financial Condition and Capital Resources

At ~~August~~May 31, ~~2019~~,2020, we had cash and cash equivalents and restricted cash related to our homebuilding, financial services, multifamily and other operations of ~~$1.1~~$1.7 billion, compared to ~~$1.6~~$1.5 billion at November 30, ~~2018~~2019 and ~~$1.1~~$1.0 billion at ~~August~~May 31, ~~2018~~.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~~six months ended ~~August~~May 31, ~~2019~~2020 and ~~2018,~~May 31, 2019, cash provided by (used in) operating activities totaled ~~$298.3 million~~$1.3 billion and ~~$726.4~~($429.9) million, respectively. During the ~~nine~~six months ended ~~August~~May 31, ~~2019,~~2020, cash provided by operating activities was impacted primarily by our net earnings and a decrease in ~~receivables~~loans held-for-sale of ~~$528.0~~$481.6 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.~~$159.1 million and an increase in other assets of $148.1 million.

During the ~~nine~~six months ended ~~August~~May 31, ~~2018,~~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~~$1.5 billion, an increase in loans held-for-sale of $206.3 million and ~~an increase~~a decrease in accounts payable and other liabilities of $192.5 million. This was partially offset by our net earnings, a decrease in receivables of $542.1 million primarily related to a decrease in Financial Services' receivables, net, which are loans sold to investors for which we have not been paid, deferred income tax expense of $101.5 million and a decrease in other assets of ~~$193.8~~$66.5 million. ~~For~~

Investing Cash Flow Activities

During the ~~nine~~six months ended ~~August~~May 31, ~~2018, distributions~~2020 and May 31, 2019, cash used in investing activities totaled $174.0 million and $91.6 million, respectively. During the six months ended May 31, 2020, our cash used in investing activities was primarily due to $302.8 million of ~~earnings from~~investments in and contributions to unconsolidated entities ~~were $90.4 million,~~and deconsolidation of a previously consolidated entity, which included (1) ~~$67.5~~$31.2 million ~~from~~to Homebuilding unconsolidated entities; (2) ~~$18.7~~$79.7 million to Multifamily unconsolidated entities; (3) $39.3 million in strategic technology investments included in our Lennar Other segment; and (4) derecognition of $152.5 million of cash as of the date of deconsolidation of a previously consolidated Financial Services entity. This was partially offset by distributions of capital from unconsolidated entities of $115.1 million, which primarily included (1) $33.4 million from Multifamily unconsolidated ~~entities; and~~entities, (2) ~~$4.2~~$36.4 million from the unconsolidated Rialto real estate funds included in our Lennar Other ~~segment.~~

~~Investing Cash Flow Activities~~segment and (3) $45.3 million from Homebuilding unconsolidated entities.

During the ~~nine~~six 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~~May 31, 2019, our cash used in investing activities was primarily due to cash contributions of ~~$329.9~~$230.7 million to unconsolidated entities, which included (1) ~~$196.4~~$136.3 million to Homebuilding unconsolidated entities, (2) ~~$80.2~~$60.0 million to Multifamily unconsolidated entities primarily for working capital; and (3) ~~$52.9~~$31.8 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.~~segment. This was partially offset by distributions of capital from unconsolidated ~~and consolidated~~ entities of ~~$250.3~~$140.9 million, which included (1) ~~$107.2~~$52.4 million from Multifamily unconsolidated entities; (2) ~~$78.7~~$46.5 million from Homebuilding unconsolidated entities; (3) ~~$41.6~~$29.3 million from the unconsolidated Rialto real estate funds and strategic technology investments included in our Lennar Other segment; and (4) ~~$22.9~~$12.7 million from Financial Services ~~consolidated~~unconsolidated 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~~six months ended ~~August~~May 31, ~~2019~~2020 and ~~2018,~~May 31, 2019, cash used in financing activities totaled ~~$785.1~~$948.6 million and ~~$1.3 billion,~~$53.4 million, respectively. During the ~~nine~~six months ended ~~August~~May 31, 2020, cash used in financing activities was primarily impacted by (1) $310.2 million of net repayments under our Financial Services' warehouse facilities, which included the LMF Commercial warehouse repurchase facilities; (2) the redemption of $300.0 million aggregate principal amount of our 6.625% senior notes due May 2020; (3) repurchases of our common stock, which included $288.5 million of repurchases under our repurchase program and $7.5 million of repurchases related to our equity compensation plan; and (4) $174.4 million of principal payments on notes payable and other borrowings. These were partially offset by $169.1 million of receipts related to noncontrolling interests.

During the six months ended May 31, 2019, 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~~$365.2 million of net repayments under our Financial Services' warehouse facilities, which included the RMF warehouse repurchase ~~facilities; (3) $154.7~~facilities, $123.7 million principal payment on other ~~borrowings;~~borrowings and ~~(4)~~ repurchases of our common stock ~~for $419.3~~of $101.2 million, which included ~~$394.7~~$98.8 million of repurchases of our stock under our repurchase program and ~~$24.6~~$2.5 million of repurchases related to ~~our~~ equity

compensation ~~plan. These were~~plans, partially offset by ~~(1) $700.0~~$550.0 million of net borrowings under our Credit ~~Facility;~~Facility and ~~(2) $62.6~~$28.6 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.

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		(Dollars in thousands)	May 31, 2020			November 30, 2019		May 31, 2019
Homebuilding debt	$	9,075,016		8,543,868		9,407,987		Homebuilding debt	$	7,495,674		7,776,638		9,390,941
Stockholders’ equity	15,371,938			14,581,535		14,032,016		Stockholders’ equity	16,542,703			15,949,517		15,159,304
Total capital	$	24,446,954		23,125,403		23,440,003		Total capital	$	24,038,377		23,726,155		24,550,245
Homebuilding debt to total capital	37.1		%	36.9	%	40.1	%	Homebuilding debt to total capital	31.2		%	32.8	%	38.3	%
Homebuilding debt	$	9,075,016		8,543,868		9,407,987		Homebuilding debt	$	7,495,674		7,776,638		9,390,941
Less: Homebuilding cash and cash equivalents	795,405			1,337,807		833,274		Less: Homebuilding cash and cash equivalents	1,398,682			1,200,832		800,678
Net Homebuilding debt	$	8,279,611		7,206,061		8,574,713		Net Homebuilding debt	$	6,096,992		6,575,806		8,590,263
Net Homebuilding debt to total capital (1)	35.0		%	33.1	%	37.9	%	Net Homebuilding debt to total capital (1)	26.9		%	29.2	%	36.2	%

(1)Net homebuilding debt to total capital is a non-GAAP financial measure defined as net homebuilding debt (homebuilding debt less homebuilding cash and cash equivalents) divided by total capital (net homebuilding debt plus stockholders' equity). We believe the ratio of net homebuilding debt to total capital is a relevant and a useful financial measure to investors in understanding the leverage employed in homebuilding operations. However, because net 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~~May 31, ~~2019,~~2020, Homebuilding debt to total capital improved compared to ~~August~~May 31, ~~2018,~~2019 and November 30, 2019, primarily as a result of a decrease in Homebuilding debt and 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, Homebuilding debt to total capital was higher compared to November 30, 2018, 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 an 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:~~

~~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 May 31, 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~~maturing in 2024. The 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 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~~letter 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 creditsurety bond facilities 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, atdescribed below:

~~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~~Currently, substantially all of our ~~joint ventures) and financial surety bonds.~~

~~In June 2019, we redeemed $500 million aggregate principal amount of~~100% owned homebuilding subsidiaries are guaranteeing all our ~~4.500%~~ senior notes ~~due June 2019.~~(the "Guaranteed Notes"). The ~~redemption price, which was paid~~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 ~~cash, was 100%~~Note 13 of the ~~principal amount plus accrued but unpaid interest.~~Notes to the Condensed Consolidated Financial Statements.

Our Homebuilding average debt outstanding with an average rate of interest was as follows:


	Six Months Ended
(Dollars in thousands)	May 31, 2020			May 31, 2019
Homebuilding average debt outstanding	$	8,171,686		$	9,218,102
Average interest rate	4.9		%	4.9		%
Interest incurred	184,198			212,559

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 May 31, 2020.

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



	Three Months Ended					Nine Months Ended
	August 31,					August 31,
	2019			2018		2019		2018
Revenues:
Homebuilding	$	5,438,998		5,285,742		14,258,318		13,011,832
Financial Services	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	5,857,058			5,672,569		15,288,030		14,112,421
Costs and expenses:
Homebuilding	4,781,932			4,671,088		12,608,026		11,711,184
Financial Services	149,804			197,693		422,142		561,853
Multifamily	181,616			103,187		431,510		317,572
Lennar Other	2,734			21,518		7,550		69,883
Acquisition and integration costs related to CalAtlantic	—			11,992		—		140,062
Corporate general and administrative	92,615			96,346		248,071		249,071
Total costs and expenses	5,208,701			5,101,824		13,717,299		13,049,625
Homebuilding equity in loss from unconsolidated entities	(10,459		)	(16,739	)	(4,601	)	(43,537	)
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
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	)
Earnings before income taxes	667,083			565,918		1,545,606		1,226,156
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
Net earnings attributable to Lennar	$	513,366		453,211		1,174,748		899,683
Other comprehensive income (loss), net of tax:
Net unrealized gain (loss) on securities available-for-sale	$	180		(110	)	949		(1,357	)
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	)
Total comprehensive income attributable to Lennar	$	513,546		452,935		1,175,521		898,034
Total comprehensive income (loss) attributable to noncontrolling interests	$	(723	)	14,409		(3,812	)	19,603
Basic earnings per share	$	1.60		1.37		3.64		2.95
Diluted earnings per share	$	1.59		1.37		3.63		2.94



(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


~~(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.


~~(1)~~	~~The adjustments to pre-existing warranties from changes in estimates are primarily related to specific claims for certain of the Company's homebuilding communities and other adjustments.~~


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



~~Delaware~~



(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


~~(2)~~	The aggregate fair value of Financial Services residential loans held-for-sale of $1.0 billion at August 31, 2019 exceeded their aggregate principal balance of $1.0 billion 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 million.



	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
	Financial Services
(In thousands)	Mortgage servicing rights			RMF loans held-for-sale		Mortgage servicing rights		RMF loans held-for-sale
Beginning balance	$	37,206		61,691		31,163		234,403
Purchases/loan originations	2,707			969,200		5,880		997,515
Sales/loan originations sold, including those not settled	—			(848,262	)	—		(1,073,211	)
Disposals/settlements	(3,830		)	(9,920	)	(5,830	)	(19,600	)
Changes in fair value (1)	(13,011		)	6,825		3,861		1,970
Interest and principal paydowns	—			(830	)	—		(359	)
Ending balance	$	23,072		178,704		35,074		140,718



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


~~(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.



	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	%


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


~~(2)~~	~~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 and 2018.~~



	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


~~(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.


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



(Dollars in thousands)	Covenant Level			Level Achieved as of August 31, 2019
Minimum net worth test	$	7,390,364		10,009,856
Maximum leverage ratio	65.0		%	42.2	%
Liquidity test (1)	1.00			2.01


~~(1)~~	We are only 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 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.


(Dollars in thousands)	Covenant Level			Level Achieved as of May 31, 2020
Minimum net worth test	$	7,928,483		11,090,017
Maximum leverage ratio	65.0		%	33.0	%
Liquidity test	1.00			3.81



						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	%


~~(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.


~~(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.~~


	Principal Maturities of Unconsolidated JVs by Period
(In thousands)	Total JV Debt		2020	2021	2022	Thereafter	Other


Maximum recourse debt exposure to Lennar	$	4,932	—	—	4,932	—	—
Debt without recourse to Lennar	1,116,812		49,412	262,858	150,224	654,318	—
Land seller and CDD debt	9,045		—	—	—	—	9,045
Debt issuance costs	(12,415)		—	—	—	—	(12,415)
Total	$	1,118,374	49,412	262,858	155,156	654,318	(3,370)



(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