![]() Strategic Overview Exhibit 99.1 |
![]() 1 This presentation includes "forward-looking statements," as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding our business, financial condition, results of operations, cash flows, strategies and prospects. You can identify forward-looking statements by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include those described under the caption “Risk Factors” in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission. We do not undertake any obligation to update forward-looking statements, except as required by federal securities laws. Disclaimer Statement |
![]() 2 Business Overview |
![]() 3 Business Overview Business Overview Market Conditions Remain Challenging Market Conditions Remain Challenging Market weakness has accelerated as a result of increased foreclosures, weakened consumer confidence and tightened mortgage lending standards. Additional government actions will be necessary to help stabilize home prices, which in turn will fortify banks’ balance sheets, allowing the return of government capital. While the housing market continues to search for a bottom, we have made significant progress despite this unprecedented downturn. |
![]() 4 Business Overview Business Overview Operating Focus Operating Focus Focus on a Strong Balance Sheet: Aggressive Asset Management Leading to Strong Cash Flow Generation and Ample Liquidity Significant Progress on Our Balance Sheet Significant Progress On JV’s & Recourse Debt Focus on Rebuilding Operating Profitability: Improve Gross Margins and Rightsize the Business Focus on Reducing Financial Risk: Reduce Number of Joint Ventures and Recourse Debt Exposure Significant Progress on Rebuilding Operating Profitability |
![]() 5 Significant Balance Sheet Progress |
![]() 6 25% 30% 35% 40% 45% 50% 55% 60% 65% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 0 100 200 300 400 500 600 700 800 900 1,000 1,100 Significant Balance Significant Balance Sheet Progress Strong Cash Flow Generation and Low Leverage HB Debt / Total Capital Goal 35% - 45% Operating Cash Flow (Dollars in Millions) |
![]() 7 Significant Balance Sheet Progress Long-Term Fixed Rate Debt Maturities $300 $250 $350 $250 $500 $250 $282 Mar-09 Oct-10 Oct-11 2012 Mar-13 Sep-14 May-15 Apr-16 Weighted average maturity of 4.1 years Weighted average interest rate of 5.8% At November 30, 2008 Repayment Schedule 6.50% Senior Notes 7.63% Senior Notes 5.95% Senior Notes 5.50% Senior Notes 5.60% Senior Notes 5.13% Senior Notes 5.95% Senior Notes Fixed-rate Senior Notes $2.2B Other notes payable $0.4B (Dollars in Millions) |
![]() 8 $3.2 $5.4 $1.7 $2.1 Significant Balance Sheet Progress Aggressive Inventory Reduction (Dollars in Billions) $8.6* $3.8* Peak 2006 Q4 2008 *Excludes consolidated inventory not owned Inventory 56% Land, Land Under Development and Option Deposits Construction in Progress and Finished Homesites |
![]() 9 $2,892 $1,432 $2,135 $787 $720 $194 Significant Balance Sheet Progress Land Acquisition & Development (Dollars in Millions) $914 2008 Land Development Land Acquisition $4,324 $2,922 2006 2007 |
![]() 10 Significant Joint Venture Progress |
![]() 11 Joint Ventures Joint Ventures Mitigating Risk Mitigating Risk Joint ventures were structured strategically to mitigate risk. Strategic partners with specific expertise JV with partner who brings specific expertise (e.g. commercial or infill experience) JV with other builders Joint bid on land parcels is a smarter way to purchase Homesites are allocated to each homebuilder JV with financial partners Partners bring the majority of the capital Lennar manages the JV JV with land owner/developers Access to homesites owned or controlled by partner |
![]() 12 270 116 Peak 2006 Q4 2008 Significant Joint Venture Progress Number of Joint Ventures Number of Joint Ventures 57% Joint Venture Detail JVs with recourse debt 41 JVs with non-recourse debt 27 JVs without debt 48 ____________________________ JV total 116 |
![]() 13 Significant Joint Venture Progress Joint Ventures Have Substantial Equity 2008 2007 Assets: Cash and cash equivalents $135,081 $301,468 Inventories 7,115,360 7,941,835 Other Assets 541,984 827,208 $7,792,425 $9,070,511 Liabilities and equity: Accounts payable and other liabilities $1,042,002 $1,214,374 Debt 4,062,058 5,116,670 Equity of: Lennar 766,752 934,271 Others 1,921,613 1,805,196 Total equity of unconsolidated entities 2,688,365 2,739,467 $7,792,425 $9,070,511 Lennar's equity in its unconsolidated entities 34% Partner's equity in unconsolidated entities 71% 66% November 30, (Dollars in Thousands) |
![]() 14 Significant Joint Venture Progress Joint Ventures Aren’t Overleveraged 2008 2007 Debt $4,062,058 $5,116,670 Equity 2,688,365 2,739,467 Total capital $6,750,423 $7,856,137 Debt to total capital of Lennar's unconsolidated entities 60.2% 65.1% Debt to total capital of Lennar's unconsolidated entities (excluding LandSource) 49.8% 61.1% November 30, (Dollars in Thousands) |
![]() 15 Significant Joint Venture Progress Off-Balance Sheet Debt Details (Dollars in Thousands) 2008 2007 Lennar's net recourse exposure $392,450 $794,934 Reimbursement agreements from partners 127,428 238,692 Lennar's maximum recourse exposure $519,878 $1,033,626 Partner several recourse 285,519 465,641 Non-recourse land seller debt or other debt 90,519 202,048 Non-recourse debt with completion guarantees 820,435 1,432,880 Non-recourse debt without completion guarantees - ex LandSource 974,666 726,696 Non-recourse debt without completion guarantees - LandSource 1,371,041 1,255,779 Non-recourse to Lennar $3,542,180 $4,083,044 Total debt $4,062,058 $5,116,670 Lennar's maximum recourse exposure as a % of total unconsolidated debt 13% 20% November 30, |
![]() 16 $1,034 $520 Q4 2007 Q4 2008 Significant Joint Venture Progress Recourse Debt Exposure & Equity Maximum Unconsolidated Entity Recourse Debt Exposure (Dollars in Millions) 50% $909 $1,282 Q4 2007 Q4 2008 Equity in Unconsolidated Entities with Recourse Debt (Dollars in Millions) 41% |
![]() 17 Significant Joint Venture Progress Continued Progress on Recourse Debt Reduction (Dollars in Thousands) 2008 2007 Several recourse debt - repayment $78,547 $123,022 Several recourse debt - maintenance 167,941 355,513 Joint and several recourse debt - repayment 138,169 263,364 Joint and several recourse debt - maintenance 123,051 291,727 Land seller debt recourse exposure 12,170 0 Lennar's maximum recourse exposure 519,878 1,033,626 Less joint and several reimbursement agreements with Lennar's partners (127,428) (238,692) Lennar's net recourse exposure $392,450 $794,934 Summary balance sheet for unconsolidated entities with recourse debt Total Assets $2,846,819 $3,220,695 Total Liabilities 1,565,148 2,311,216 Total Equity 1,281,671 909,479 November 30, |
![]() 18 Significant Operating Profitability Progress |
![]() 19 3% 13% 13% 15% 17% 12% 12% 9% 2% 2% -1% 0% -3% -1% 1% 2% -5% 0% 5% 10% 15% 20% 25% Q1 '05 Q2 '05 Q3 '05 Q4 '05 Q1 '06 Q2 '06 Q3 '06 Q4 '06 Q1' 07 Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q2 '08 Q3 '08 Q4 '08 Significant Operating Profitability Progress Focus on Positive Operating Margins (Pre-impairment OM%) |
![]() 20 17% 25% 25% 26% 27% 25% 24% 20% 14% 16% 14% 14% 12% 17% 16% 18% 0% 5% 10% 15% 20% 25% 30% Q1 '05 Q2 '05 Q3 '05 Q4 '05 Q1 '06 Q2 '06 Q3 '06 Q4 '06 Q1' 07 Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q2 '08 Q3 '08 Q4 '08 Significant Operating Profitability Progress Focus on Rebuilding Gross Margin Lennar was ahead of the curve in recording impairments by pricing to market early and selling portfolio of land to Morgan Stanley land venture Construction cost reductions of 15% per sq. ft. (Pre-impairment GM%) |
![]() 21 S,G&A Expenses ($) Associate Headcount Significant Operating Profitability Progress Focus on S,G&A Reduction $484 $167 Peak 2006 Q4 2008 4,913 14,064 Peak 2006 Q4 2008 (Dollars in Millions) 65% 65% |
![]() 22 Response to Recent Allegations |
![]() 23 Response To Recent Allegations Jon Jaffe’s Loan Lennar’s Chief Operating Officer, Jon Jaffe, did not receive a mortgage on his home or any other indebtedness connected to the company Loan was obtained from sources wholly independent from Lennar and with no assistance from Lennar or any of its business partners Jon was referred to the independent loan broker by his personal attorney who has never had a relationship with Lennar The broker also has a real estate development company which acquired, developed and marketed properties in Kern county. There is no connection between these properties and Jon’s loan or Lennar At the time of the loan, Jon’s house was appraised at $18 million by an independent appraiser; the first mortgage was for $3 million, the second mortgage was a line of credit for $2.1 million and the third mortgage was for $5 million resulting in a loan to value of 55% Jon has made use of the loan to increase his ownership of Lennar’s stock |
![]() 24 Response To Recent Allegations Joint Ventures Lennar never “treated its joint ventures like a Ponzi scheme” Lennar has never siphoned cash from one joint venture to another Lennar has never pledged our interest in any joint venture for the benefit of another There is no cross collateralization of debt between different ventures Each joint venture is governed by an executive committee consisting of members from all the partners Lennar’s joint ventures have substantial equity totaling $2.7 billion Joint venture debt is secured by joint venture assets that are adjusted for impairment on a quarterly basis as necessary |
![]() 25 Response To Recent Allegations Litigation Lennar’s litigation is accurately reported and reserved for in accordance with generally accepted accounting principles and the reserves and processes for determining them are audited by its outside independent accounting firm Lennar has never used lawsuits as a mechanism for avoiding cash payments owed Over the past decade Lennar has delivered more than 250,000 homes, resulting in tens of millions of underlying payments and contracts As of November 30, 2008, Lennar was defending or prosecuting or defending approximately 620 lawsuits including homeowner construction, premises liability, personal injury, contract and subcontract disputes, employment, environmental and land use, insurance coverage, advertising, collections, intellectual property, automobile liability, tax matters and others |
![]() 26 Response To Recent Allegations The Bridges Lawsuit No money was ever misdirected in The Bridges project Lennar did not divert a $37.5 million judgment contributed by Nicholas Marsch to the venture; Lennar and Marsch had a 50-50 interest in the judgment Proceeds from judgment were used for the benefit of the venture to pay for construction and operating costs Lennar’s co-member in The Bridges, Nicholas Marsch III, has received the benefit of more then $50 million, notwithstanding statements to the contrary Lennar has never pledged The Bridges’ assets for the obligations of any other joint venture The Bridges doesn’t have a bankrupt partner as a result of the LandSource bankruptcy Lennar has regularly provided audited balance sheets and audited reports to Marsch for more than 10 years Marsch has been integrally involved in the day to day management of The Bridges |
![]() 27 Response To Recent Allegations LandSource LandSource was an arm’s length transaction involving large, sophisticated financial institutions that fully reviewed, vetted and appraised the terms of the venture The claim that Lennar caused the other investors and lenders to lose approximately $1 billion is false Bankruptcy is a matter of public record with complete financial disclosures The LandSource bankruptcy was the product of unprecedented market shifts |
![]() 28 Response To Recent Allegations Chinese Drywall Lennar never ordered imported drywall from China and never received a discount for its use as a substitute material Lennar has been cited by the media as “the most responsive builder” in dealing with the industry wide issue of imported drywall Lennar has been proactive in working with its homeowners to address the product issue Lennar intends to seek compensation from the drywall manufacturer and other responsible parties |
![]() 29 Response To Recent Allegations Whistleblower There have been no reports of any whistleblower complaints concerning these matters to Lennar management, the Board of Directors, independent auditors or an outside employee hotline Lennar has extensive procedures in place to ensure the free flow of confidential communication by whistleblowers and to ensure their protection from retaliation Independent firm receives complaints anonymously and reports the complaints directly to the Audit Committee of the Board of Directors in addition to management Lennar also provides an email address to communicate directly with the independent members of the Board of Directors |
![]() 30 Conclusion |
![]() 31 Conclusion “Moving From Defense to Offense” Lennar Homebuilding Manufacturing Plant Product simplification & offering Cost reduction Cycle time reduction Customer experience Land Asset Manager Due diligence focused Evaluate & underwrite distressed opportunities Ability to manage assets to effectively realize long- term value Homebuilding machine will continue to manage existing assets No legacy assets moving over to fund Fund Fund The Road Ahead |
![]() 32 $- $200 $400 $600 $800 $1,000 $1,200 $1,400 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 - 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 2,000,000 Net Earnings Before Impairments National Single Unit Starts Lennar Will The Cycle Be Our Ally? Acquired Texas Operations Acquired Amerifirst Portfolio Acquired California Operations Acquired Greystone; Spun-off LNR Repurchase 9.8 Million Shares; Acquired U.S. Homes Acquired Private Builders Military Base Redevelopment Roseland Infill JVs (Dollars in Millions) Starts Starts Notes: Notes: - - 2008 2008 net net earnings earnings before before impairments impairments excludes excludes deferred deferred tax tax valuation valuation allowance. allowance. . - - 2008 National single unit starts at Nov. 2008. 2008 National single unit starts at Nov. 2008. |