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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended November 30, 1995
Commission file number 1-6643
LENNAR CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 59-1281887
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
700 NORTHWEST 107TH AVENUE, MIAMI, FLORIDA 33172
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (305) 559-4000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
- ------------------- ---------------------
Common Stock, par value 10(cent) New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [x] NO ____
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. YES [x] NO ____
As of February 5, 1996, registrant had outstanding 25,901,227 shares of
common stock and 9,985,731 shares of Class B common stock (which can be
converted into common stock). Of the total shares outstanding 25,430,354 shares
of common stock and 40,601 shares of Class B common stock, having a combined
aggregate market value (assuming the Class B shares were converted) on that
date of $674,980,308, were held by non-affiliates of the registrant.
Documents incorporated by reference:
RELATED
SECTION DOCUMENTS
- -------------------------------------------------------------------------------
II Pages 19 through 40 of the Annual Report to
Stockholders for the year ended November 30, 1995.
III Definitive Proxy Statement to be filed pursuant to
Regulation 14 A on or before March 29, 1996.
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PART I
ITEM 1. BUSINESS.
GENERAL DEVELOPMENT OF BUSINESS
Lennar Corporation (together with its subsidiaries, the "Company") is a
diversified national real estate company with three principal businesses:
homebuilding, real estate investment and financial services. The Company's
homebuilding operations include the construction and sale of homes, as well as
the purchase, development and sale of residential land. The Investment Division
is involved in the ownership, development, management and leasing, as well as
the acquisition and sale, of commercial real estate and other real estate
related assets. The financial services operations consist of mortgage loan
origination and servicing, closing and title services and investments in rated
commercial real estate mortgage-backed securities.
For more than 25 years, Lennar has owned and managed commercial and
residential rental properties. Since 1992, the Company, through its Investment
Division, began acquiring portfolios of commercial real estate assets, including
real estate related loans, which it believed it could liquidate at a profit. As
of November 30, 1995, the Company had entered into a total of eleven
partnerships, all of which have been formed to acquire and manage portfolios of
assets. Five new partnerships were formed during 1995. The Company shares in the
profits and losses of the partnerships and also receives fees for the management
and disposition of the partnerships' assets.
Beginning in 1994, the Company also began acquiring, at a discount,
portions of commercial real estate mortgage-backed securities. The Company's
Investment Division invests in the unrated portions of these securities and the
Financial Services Division generally invests in the rated portions. The
Company's Investment Division partnerships also retain portions of these
securities when they are the issuer of the securities. The Company's Investment
Division is the special servicer on behalf of all the certificate holders (the
majority of which are not Lennar entities) of the commercial mortgage-backed
securities which are held by the Company and its partnerships.
Since 1991, the Company has expanded its homebuilding operations by
entering the following new markets: Dallas, Texas in 1991; Houston, Texas and
Port St. Lucie, Florida in 1992 and Sarasota, Florida in 1994. In addition, the
Company began the development of an adult-community in the Orlando, Florida area
in 1995. On December 29, 1995, the Company acquired the residential business of
Friendswood Development Company, the real estate subsidiary of Exxon
Corporation, for approximately $110 million. Friendswood Development Company is
based in Houston, Texas and its operations include the development of
master-planned communities, as well as Village Builders, its homebuilding
division.
During 1995, the Company acquired mortgages receivable for approximately
$47 million from the secured creditors of Bramalea of California, Inc. ("BCI")
after BCI had filed for bankruptcy protection. The Company acquired these
mortgages (at significant discounts from their face values) in order to convert
them into an ownership interest when BCI is reorganized out of bankruptcy which
is anticipated in 1996. The collateral for these mortgages consists of real
property located in California.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The Company operates in three industry segments - homebuilding, real
estate investment and financial services. The financial information related to
these industry segments is contained in the financial statements incorporated by
reference to pages 26 through 39 of the Company's 1995 Annual Report to
Stockholders.
1
NARRATIVE DESCRIPTION OF BUSINESS
HOMEBUILDING
The Company and its predecessor have been building homes since 1954. The
Company believes that, since its acquisition of Development Corporation of
America in 1986, it has each year delivered more homes in Florida than any other
homebuilder. The Company has been building homes in Arizona since 1972, where it
currently is one of the leading homebuilders. In 1991, the Company began
building homes in the Dallas/Fort Worth area of Texas. In 1992, it started
homebuilding operations in Houston, Texas and Port St. Lucie, Florida. In late
1994, the Company began homebuilding operations in Sarasota, Florida and in 1995
it started development of an adult-community in the Orlando, Florida area. The
Company has constructed and sold over 125,000 homes to date.
The Company's homebuilding activities in Florida are principally
conducted through Lennar Homes, Inc. In Arizona and Texas, these activities are
conducted through Lennar Homes of Arizona, Inc. and Lennar Homes of Texas, Inc.,
respectively. Effective with the acquisition of Friendswood Development Company,
the Company will also be conducting business in Texas through Village Builders,
Inc. and Friendswood Development Company.
The Company is involved in all phases of planning and building in its
residential communities, including land acquisition, site planning, preparation
of land, improvement of undeveloped and partially developed acreage, and design,
construction and marketing of homes. The Company subcontracts virtually all
segments of development and construction to others.
The Company sells single-family attached and detached homes and
condominiums in buildings generally one to five stories in height. Homes sold by
the Company are primarily in the moderate price range for the areas in which
they are located. They are targeted primarily at first time homebuyers, move-up
homebuyers and, in some communities, retirees. The average sales price of a
Lennar home was $138,200 in fiscal 1995.
CURRENT HOMEBUILDING ACTIVITIES
The table on the following page summarizes information about the
Company's recent homebuilding activities:
2
LENNAR CORPORATION AND CONSOLIDATED SUBSIDIARIES
Real Estate Activities
NOVEMBER 30, 1995
--------------------------------------------------------
HOMES DELIVERED HOMES COMPLETED ESTIMATED NUMBER
IN YEARS ENDED OR UNDER CONSTRUCTION OF HOMES THAT COULD
NOVEMBER 30, ----------------------- SOLD HOMES BE CONSTRUCTED ON
REGION AND TYPE OF --------------------------------- AVAILABLE FOR NOT YET LAND CURRENTLY
PRODUCTS 1995 1994 1993 SOLD (1) SALE STARTED (1) OWNED (2) (3) (4)
- ------------------ ---- ---- ---- -------- ------------- ----------- -------------------
Florida
Single-family detached 2,400 2,471 2,155 658 329 363 14,680
Single-family attached 437 426 796 77 91 23 2,280
Multi-family 558 820 772 119 187 77 7,310
Arizona
Single-family detached 466 586 596 228 108 73 1,990
Single-family attached 38 46 11 1 8 -- --
Multi-family -- -- -- -- -- -- 330
Texas
Single-family detached 781 616 304 162 152 21 2,930
Single-family attached -- -- -- -- -- -- --
Multi-family -- -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------
Totals 4,680 4,965 4,634 1,245 875 557 29,520
====== ====== ====== ====== ====== ====== ======
<FN>
Notes:
(1) Although firm contracts relating to these homes were executed, there
can be no assurance that purchasers will meet their obligations under
the contracts.
(2) Based on current management estimates, which are subject to change.
(3) The Company owns additional property, which it may decide to develop
or sell in the future.
(4) As of November 30, 1995, the Company had contracts or options to
purchase approximately 8,000 additional homesites.
</FN>
3
PROPERTY ACQUISITION
The Company continuously considers the purchase of, and from time to time
acquires, land for its development and sales programs. It generally does not
acquire land for speculation. In some instances, the Company acquires land by
acquiring options enabling it to purchase parcels as they are needed. Although
some of the Company's land is held subject to purchase money mortgages or is
mortgaged to secure $85 million of term loans, most of the Company's land
(including most of the land on which it is currently building or expects to
build during the next year) is not subject to mortgages. The Company believes
its land inventory gives it a competitive advantage, particularly in Florida.
CONSTRUCTION AND DEVELOPMENT
The Company supervises and controls the development and building of its
own residential communities. It employs subcontractors for site improvements and
virtually all of the work involved in the construction of homes. In almost all
instances, the arrangements between the Company and the subcontractors commit
the subcontractors to complete specified work in accordance with written price
schedules. These price schedules normally change to meet changes in labor and
material costs. The Company does not own heavy construction equipment and
generally has only a small labor force used to supervise development and
construction and perform routine maintenance and minor amounts of other work.
The Company generally finances construction with its own funds or
borrowings under its unsecured working capital lines, not with secured
construction loans.
MARKETING
The Company always has an inventory of homes under construction. A
majority of these homes are sold (I.E., the Company has received executed sales
contracts and deposits) before the Company starts construction.
The Company employs sales associates who are paid salaries, commissions
or both to make onsite sales of the Company's homes. The Company also sells
through independent brokers. The Company advertises its residential communities
through local media and sells primarily from models that it has designed and
constructed. In addition, the Company advertises its retirement communities in
areas where potential retirees live.
MORTGAGE FINANCING
The Company's financial services subsidiaries make conventional,
FHA-insured and VA-guaranteed mortgage loans available to qualified purchasers
of the Company's homes. Because of the availability of mortgage loans from the
Company's financial services subsidiaries, as well as independent mortgage
lenders, the Company believes access to financing has not been, and is not, a
significant problem for most purchasers of the Company's homes.
COMPETITION
The housing industry is highly competitive. In its activities, the
Company competes with other developers and builders in and near the areas where
the Company's communities are located, including a number of homebuilders with
nationwide operations. The Company has for the past 25 years been one of the
largest homebuilders in South Florida and for the past several years has
delivered more homes in the State of Florida than any other homebuilder. The
Company is also a leading homebuilder in Arizona and in Texas. Nonetheless, the
Company is subject to intense competition from a large number of homebuilders in
all of its market areas.
INVESTMENT
The Company has been engaged for more than 25 years in developing and
managing commercial and residential income-producing properties. Currently,
through its Investment Division, the Company owns and manages more than 2,800
rental apartment units (which are approximately 86% occupied) and more than 2.2
million square feet of office buildings,
4
warehouses and neighborhood retail centers (which are approximately 86%
occupied), as well as two hotels consisting of 462 rooms, a mobile home park,
and golf and other recreational facilities in various communities. At times,
when properties reach what the Company believes to be optimum value, the Company
sells them.
Since 1992, the Investment Division has been acquiring, by itself and
through partnerships, portfolios of real estate assets which it believes it can
liquidate at a profit and from which it can generate rental, interest and other
income during the liquidation process which can last several years. As of
November 30, 1995, the Investment Division had entered into eleven partnerships.
The Company's equity interests in these partnerships range from 25% to 50%
(which in one instance includes an investment by the Company's Financial
Services Division). In addition to the Company participating in the
partnerships' purchases of portfolios of real estate assets, the Investment
Division oversees the management of those portfolios, for which it receives
management fees. A portfolio may consist of a combination of performing loans,
non-performing loans and real estate. With regard to performing loans, principal
and interest payments are collected until the loans are paid in full, or the
loans are used as collateral for non-recourse debt (which has the effect of
accelerating the partnerships' cash realization). With regard to non-performing
loans, the partnerships attempt to renegotiate the terms with the borrowers or
pursue other remedies, depending on the circumstances. These loans either become
performing, are paid off, or the partnerships become the owners of the
underlying real estate. This real estate is then managed and value enhanced
until it is sold.
In several instances, loans held by partnerships have been grouped into
pools, which have obtained funding by issuing rated and unrated securities
entitling the holders to the future proceeds of the loans. Often, the
partnerships retain the unrated portions of the securities issued. Since 1994,
the Investment Division began acquiring, at substantial discounts from their
face amounts, unrated portions of commercial mortgage-backed securities issued
by others. The Investment Division is the special servicer on behalf of all
certificate holders of these securities, both those issued by the partnerships
and by others. The principal business of the special servicer is the management
of real estate loans requiring attention.
FINANCIAL SERVICES
The Company's financial services subsidiaries originate mortgage loans,
service mortgage loans which they and other lenders originate, purchase and
re-sell mortgage loan pools, arrange title insurance and provide closing
services for homebuyers. This division also invests in issues of rated portions
of commercial real estate mortgage-backed securities for which Lennar's
Investment Division is the special servicer and an investor in the unrated
portions of those securities.
MORTGAGE ORIGINATION
Through two of the financial services subsidiaries, Universal American
Mortgage Company and AmeriStar Financial Services, Inc., the Company provides
conventional, FHA-insured and VA-guaranteed mortgage loans to buyers of the
Company's homes and others from offices located in Florida, California, Arizona,
Texas, North Carolina and Maryland. In 1995, loans to buyers of the Company's
homes represented approximately 20% of the Company's $650 million of loan
originations.
The Company sells the loans it originates in the secondary mortgage
market, generally on a non-recourse basis, and retains most of the servicing
rights. The Company has an interest rate risk management policy under which it
hedges its interest rate locked loan commitments and loans held for sale against
exposure to interest rate fluctuations. The Company finances its loans held for
sale with borrowings under the financial services subsidiaries' $80 million
lines of credit (secured by the loans and by certain servicing rights) or from
Lennar Corporation when, on a consolidated basis, the Company can minimize its
overall cost of funds.
MORTGAGE SERVICING
The Company obtains significant earnings from servicing loans originated
or acquired by its financial services subsidiaries. The Company services loans
for the Government National Mortgage Association (Ginnie Mae), the Federal
National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage
Corporation (Freddie Mac) and other mortgage investors. At
5
November 30, 1995, it had a servicing portfolio of approximately 44,300 loans
with an unpaid principal balance of approximately $3.4 billion.
Revenues from servicing mortgage loans include servicing fees, late
charges and other ancillary fees and all, or in some states, part of the
interest on sums held in escrow for tax, insurance and other payments.
ASSET ACQUISITION AND DISPOSITION
The Company, from time to time, purchases pools of mortgage loans
originated by financial institutions and then re-sells the loans in the
secondary market. The benefits to the Company from these transactions include
gains from the sales of the loans and retention of the right to service the
loans after they are sold in the secondary market. In 1994, the Financial
Services Division expanded its investment activities by acquiring rated portions
of commercial mortgage-backed securities for which Lennar's Investment Division
is the special servicer.
TITLE INSURANCE AND CLOSING SERVICES
The Company arranges title insurance for, and provides closing services
to, buyers of the Company's homes and others in Florida. It provided these
services in connection with approximately 4,100 real estate transactions during
1995. During 1994, the Company formed TitleAmerica Insurance Corporation, a
title insurance underwriter, which provides title insurance to buyers of the
Company's homes and others.
OTHER ACTIVITIES
The Company has a number of limited-purpose finance subsidiaries which
have placed mortgages and other receivables as collateral for various long-term
financings. These subsidiaries pay the debt service on the long-term borrowings
primarily from the cash flows generated by the related pledged collateral. The
Company believes that the cash flows generated by these subsidiaries will be
adequate to meet the required debt payment schedules.
REGULATION
Homes and residential communities built by the Company must comply with
state and local regulations relating to, among other things, zoning, treatment
of waste, construction materials which must be used, certain aspects of building
design and minimum elevation of properties and other local ordinances. These
include laws in Florida and other states requiring use of construction materials
which reduce the need for energy-consuming heating and cooling systems. The
State of Florida has also adopted a law which requires that commitments to
provide roads and other offsite infrastructure be in place prior to the
commencement of new construction. The provisions of this law are implemented and
administered by individual counties and municipalities throughout the state and
may result in additional fees and assessments or building moratoriums. It is
difficult to predict the impact of this law on future operations, or what
changes may take place in the law in the future. However, the Company believes
that most of its Florida land presently meets the criteria under the law, and it
has the financial resources to provide for development of the balance of its
land in compliance with the law.
Recently, there have been changes to various building codes within
Florida. These changes have resulted in higher construction costs. These
additional costs have been recoverable through increased selling prices without
any significant effect on sales volume.
Virtually all areas of the United States have adopted regulations
intended to assure that construction and other activities will not have an
adverse effect on local environmental conditions. These regulations have had an
effect on the manner in which the Company has developed certain properties and
may have a continuing influence on the Company's development activities in the
future.
6
In order to make it possible for purchasers of some of the Company's
homes to obtain FHA-insured or VA-guaranteed mortgages, the Company must
construct those homes in compliance with regulations promulgated by those
agencies.
The Company has registered condominium communities with the appropriate
authorities in Florida. It has registered some of its Florida communities with
authorities in New Jersey and New York. Sales in other states would require
compliance with laws in those states regarding sales of condominium homes.
The Company's title insurance agency subsidiary must comply with
applicable insurance laws and regulations.
The Company's subsidiary which underwrites title insurance is licensed in
the State of Florida, and must comply with Florida laws and regulations
regarding title insurance companies. These laws and regulations include
provisions regarding capitalization, investments, forms of policies and
premiums.
EMPLOYEES
At November 30, 1995, the Company employed 1,552 individuals, of whom 335
were management, supervisory and other professional personnel, 176 were
construction supervisory personnel, 271 were real estate salespersons, 153 were
hospitality personnel and 617 were professional support personnel, accounting,
office clerical and skilled workers.
Some of the subcontractors utilized by the Company may employ members of
labor unions. The Company does not have collective bargaining agreements
relating to its employees.
ITEM 2. PROPERTIES.
For information about properties owned by the Company for use in its
residential and commercial activities, see Item 1.
The Company maintains its executive offices, financial services
subsidiary headquarters, Investment Division headquarters, Dade County
Homebuilding Division offices and Dade County mortgage and title company branch
offices at 700 and 730 Northwest 107th Avenue, Miami, Florida in office
buildings built and owned by the Company. These offices occupy approximately
60,000 square feet. Other Company offices are located in Company-owned
communities or retail centers, or in leased space.
ITEM 3. LEGAL PROCEEDINGS.
The Company is a defendant in various lawsuits brought by condominium and
homeowner associations in communities constructed by the Company. Although the
specific allegations in the lawsuits differ, in general, each of the lawsuits
asserts that the Company failed to construct buildings in the community involved
in accordance with plans and specifications and applicable construction codes,
and each of them seeks reimbursement for sums the plaintiff association claims
it will have to spend to remedy the alleged construction deficiencies.
Associations in other communities have threatened similar suits. Suits of this
type are common within the homebuilding industry. The Company does not believe
that these lawsuits or threatened lawsuits will have a material effect upon the
Company.
The Company had a number of claims for damages relating to a hurricane
which occurred in 1992. Most have been settled and to date, the Company's
insurers have made all payments required under settlements. Even if the Company
were required to make any payments with regard to the remaining hurricane
related claims, the Company believes that the amount it would pay would not be
material.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the fourth
quarter of fiscal 1995.
7
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY
HOLDER MATTERS.
Information concerning the market data for the Company's common stock and
related security holder matters is incorporated by reference to page 40 of the
Company's 1995 Annual Report to Stockholders.
ITEM 6. SELECTED FINANCIAL DATA.
Selected financial data is incorporated by reference to page 19 of
the Company's 1995 Annual Report to Stockholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Management's discussion and analysis of financial condition and results
of operations is incorporated by reference to pages 20 through 24 of the
Company's 1995 Annual Report to Stockholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Consolidated financial statements and supplementary data about the
Company are incorporated by reference to pages 26 through 39 of the Company's
1995 Annual Report to Stockholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information about the Company's directors is incorporated by reference to
the Company's definitive proxy statement, which will be filed with the
Securities and Exchange Commission not later than March 29, 1996 (120 days after
the end of the Company's fiscal year). The following people were the executive
officers of Lennar Corporation on February 5, 1996:
NAME/POSITION AGE YEAR OF ELECTION
------------- --- ----------------
Leonard Miller,
Chairman of the Board and
President 63 1969
Robert B. Cole,
Secretary 85 1969
Irving Bolotin,
Senior Vice President 63 1969
Allan J. Pekor,
Financial Vice President 59 1979
Sherman J. Kronick,
Vice President 70 1979
Marshall H. Ames,
Vice President 52 1982
Stuart A. Miller,
Vice President 38 1985
Jeffrey P. Krasnoff,
Vice President 40 1986
Jonathan M. Jaffe
Vice President 36 1994
8
NAME/POSITION AGE YEAR OF ELECTION
------------- --- ----------------
M. Eugene Saleda,
Treasurer 60 1977
James T. Timmons,
Controller 30 1993
Steven J. Saiontz,
President, Lennar Financial
Services, Inc. 37 1987
Mr. Leonard Miller has been the Chief Executive Officer and a director of
the Company since it was founded.
Mr. Cole was formerly a member of Mershon, Sawyer, Johnston, Dunwody &
Cole, a firm of attorneys in Miami, Florida. Since 1983, he has been a
consultant to the Company on business and legal affairs, as well as Chairman of
the Company's Executive Committee and General Counsel.
Messrs. Bolotin, Pekor, Kronick, Ames, Krasnoff and Saleda have each held
substantially their present positions with the Company for more than five years.
Mr. Stuart Miller (who is the son of Leonard Miller) and Mr. Jaffe have
held various executive positions with the Company for more than five years. Mr.
Stuart Miller has been a Vice President since 1985, and currently heads the
Company's Homebuilding and Investment Divisions. Mr. Jaffe has been a Vice
President since 1994 and serves as a Regional President in the Company's
Homebuilding Division.
Mr. Timmons has been employed by the Company since 1992. He became its
Controller in 1993. Prior to joining the Company, Mr. Timmons was employed as a
Financial Auditor with Burger King Corporation and, before that, was employed by
KPMG Peat Marwick.
Mr. Saiontz (who is the son-in-law of Leonard Miller) has been employed
by the Company since 1984 and has been the President of Lennar Financial
Services, Inc. since 1987.
ITEM 11. EXECUTIVE COMPENSATION.
The information called for by this item is incorporated by reference to
the Company's definitive proxy statement, which will be filed with the
Securities and Exchange Commission not later than March 29, 1996 (120 days after
the end of the Company's fiscal year).
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information called for by this item is incorporated by reference to
the Company's definitive proxy statement, which will be filed with the
Securities and Exchange Commission not later than March 29, 1996 (120 days after
the end of the Company's fiscal year).
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information called for by this item is incorporated by reference to
the Company's definitive proxy statement, which will be filed with the
Securities and Exchange Commission not later than March 29, 1996 (120 days after
the end of the Company's fiscal year).
9
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) Documents filed as part of this Report.
1. The following financial statements are incorporated by
reference in Item 8:
PAGE IN 1995 ANNUAL
FINANCIAL STATEMENT REPORT TO STOCKHOLDERS
------------------- -----------------------
Independent Auditors' Report 25
Consolidated Balance Sheets as of November 30,
1995 and 1994 26
Consolidated Statements of Earnings for the
years ended November 30, 1995, 1994 and 1993 27
Consolidated Statements of Cash Flows for the
years ended November 30, 1995, 1994 and 1993 28
Consolidated Statements of Stockholders' Equity
for the years ended November 30, 1995, 1994
and 1993 29
Notes to Consolidated Financial Statements 30 - 39
2. Predecessor Independent Auditors' Report on the financial
statements and financial statement schedules is included in
this report on page 15.
3. The following financial statement schedules are included in
this Report:
FINANCIAL STATEMENT SCHEDULE PAGE IN THIS REPORT
---------------------------- -------------------
Independent Auditors' Report on Schedules 14
VIII - Valuation and Qualifying Accounts 16
XI - Real Estate and Accumulated 17
Depreciation
XII - Mortgage Loans on Real Estate 18
Information required by other schedules has either been incorporated in
the financial statements and accompanying notes, or is not applicable to the
Company.
10
4. The following exhibits are filed with this Report or
incorporated by reference:
3(a). Certificate of Incorporation - Incorporated by reference
to Registration Statement No. 2-36239 and definitive proxy
statements dated February 29, 1980, March 6, 1985, March 24,
1987, March 1, 1989 and March 1, 1994.
3(b). Bylaws - Incorporated by reference to Annual Report on
Form 10-K for the year ended November 30, 1989.
10(a). Lennar Corporation 1980 Stock Option Plan - Incorporated
by reference to Registration Statement No. 2-73630.
10(b). Lennar Corporation 1991 Stock Option Plan - Incorporated
by reference to Registration Statement No. 33-45442.
10(c). Lennar Corporation Employee Stock Ownership Plan and
Trust - Incorporated by reference to Registration Statement
No. 2-89104.
10(d). Amendment dated December 13, 1989 to Lennar Corporation
Employee Stock Ownership Plan - Incorporated by reference to
Annual Report on Form 10-K for the year ended November 30,
1990.
10(e). Lennar Corporation Employee Stock Ownership/401k Trust
Agreement dated December 13, 1989 - Incorporated by reference
to Annual Report on Form 10-K for the year ended November 30,
1990.
10(f). Amendment dated April 18, 1990 to Lennar Corporation
Employee Stock Ownership/401k Plan - Incorporated by
reference to Annual Report on Form 10-K for the year ended
November 30, 1990.
10(g). Term Loan Agreement between Lennar Corporation and NCNB
National Bank of Florida dated April 14, 1988 - Incorporated
by reference to Annual Report on Form 10-K for the year ended
November 30, 1992.
10(h). Term Loan Agreement between Lennar Corporation and SunBank/
Miami, National Association dated April 27, 1988 -
Incorporated by reference to Annual Report on Form 10-K for
the year ended November 30, 1992.
10(i). Term Loan Agreement between Lennar Corporation and The
First National Bank of Chicago dated May 3, 1988 -
Incorporated by reference to Annual Report on Form 10-K for
the year ended November 30, 1992.
10(j). Revolving Credit Agreement dated July 29, 1994 between
The First National Bank of Chicago, as agent, and Lennar
Corporation and certain subsidiaries - Incorporated by
reference to Annual Report on Form 10-K for the year ended
November 30, 1994.
10(k). First Amendment to Revolving Credit Agreement dated
January 31, 1995 amending the Revolving Credit Agreement
dated July 29, 1994.
11
10(l). Second Amendment to Revolving Credit Agreement dated
April 6, 1995 amending the Revolving Credit Agreement dated
July 29, 1994.
13. Pages 19 through 40 of the 1995 Annual Report to
Stockholders.
21. List of subsidiaries.
23. Independent Auditors' Consents.
27. Financial Data Schedule.
(b) Reports on Form 8-K filed during the quarter ended November 30, 1995.
None.
(c) The exhibits to this Report are listed in Item 14(a)3.
(d) The financial statement schedules required by Regulation S-X which
are excluded from the Annual Report to Stockholders as permitted by
Rule 14a-3(b)(1) are listed in Item 14(a)2.
12
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
LENNAR CORPORATION
Leonard Miller /S/ LEONARD MILLER
Chairman of the Board and President -----------------------------------
Date: February 27, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the Company
and in the capacities and on the dates indicated:
Principal Executive Officer:
Leonard Miller /S/ LEONARD MILLER
Chairman of the Board and President ----------------------------------
Date: February 27, 1996
Principal Financial Officer:
Allan J. Pekor /S/ ALLAN J. PEKOR
Financial Vice President ----------------------------------
Date: February 26, 1996
Principal Accounting Officer:
James T. Timmons /S/ JAMES T. TIMMONS
Controller -----------------------------------
Date: February 26, 1996
Directors:
Charles I. Babcock, Jr. /S/ CHARLES I. BABCOCK, JR.
----------------------------------
Date: February 27, 1996
Irving Bolotin /S/ IRVING BOLOTIN
----------------------------------
Date: February 26, 1996
Robert B. Cole /S/ ROBERT B. COLE
----------------------------------
Date: February 26, 1996
Richard W. McEwen
----------------------------------
Date: February , 1996
James W. McLamore /S/ JAMES W. MCLAMORE
----------------------------------
Date: February 27, 1996
Stuart A. Miller /S/ STUART A. MILLER
----------------------------------
Date: February 26, 1996
Arnold P. Rosen /S/ ARNOLD P. ROSEN
----------------------------------
Date: February 26, 1996
Steven J. Saiontz /S/ STEVEN J. SAIONTZ
----------------------------------
Date: February 26, 1996
13
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of the
Lennar Corporation:
We have audited the consolidated financial statements of Lennar Corporation (the
"Corporation") as of November 30, 1995 and 1994, and for the years then ended,
and have issued our report thereon dated January 11, 1996; such financial
statements and report are included in your 1995 Annual Report to Shareholders
and are incorporated herein by reference. Our audit also included the financial
statement schedules of Lennar Corporation, listed in Item 14 as of November 30,
1995 and 1994 and for the years then ended. These financial statement schedules
are the responsibility of the Corporation's management. Our responsibility is to
express an opinion based on our audits. In our opinion, such financial statement
schedules, when considered in relation to the basic financial statements taken
as a whole, present fairly in all material respects the information set forth
therein.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Certified Public Accountants
Miami, Florida
January 11, 1996
14
INDEPENDENT AUDITOR'S REPORT
The Board of Directors
Lennar Corporation:
We have audited the consolidated statements of earnings, cash flows and
stockholders' equity of Lennar Corporation and subsidiaries for the year ended
November 30, 1993. These consolidated financial statements are incorporated by
reference in the annual report on Form 10-K for the year 1995. In connection
with our audit of the consolidated financial statements, we also have audited
the financial statement schedules. These consolidated financial statements and
financial related statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements and financial statement schedules based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the results of operations and cash flows of
Lennar Corporation and subsidiaries for the year ended November 30, 1993, in
conformity with generally accepted accounting principles. Also in our opinion,
the related financial statement schedules, when considered in relation to the
basic consolidated financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.
/s/ KPMG PEAT MARWICK LLP
January 18, 1994
15
SCHEDULE VIII
LENNAR CORPORATION AND CONSOLIDATED SUBSIDIARIES
Valuation and Qualifying Accounts
Years ended November 30, 1995, 1994 and 1993
ADDITIONS
----------------------------
CHARGED CHARGED
BEGINNING TO COSTS (CREDITED) TO ENDING
DESCRIPTION BALANCE AND EXPENSES OTHER ACCOUNTS (DEDUCTIONS) BALANCE
- ------------------------------------------------ ------------- ------------ -------------- ------------- -----------
Year ended November 30, 1995
Allowances deducted from assets to which they
apply:
Allowances for doubtful accounts and notes
receivables $ 1,528,000 2,209,000 1,000 (1,366,000) 2,372,000
============= ============= ============= ============= ===========
Deferred income and unamortized discounts $ 2,361,000 -- (681,000) (1,079,000)(A) 601,000
============= ============= ============= ============= ===========
Loan loss reserve $ 3,534,000 1,271,000 -- (1,075,000) 3,730,000
============= ============= ============= ============= ===========
Valuation allowance $ -- 1,581,000 -- (295,000) 1,286,000
============= ============= ============= ============= ===========
Year ended November 30, 1994
Allowances deducted from assets to which they
apply:
Allowances for doubtful accounts and notes
receivable $ 1,323,000 1,091,000 (66,000) (820,000) 1,528,000
============= ============= ============= ============= ===========
Deferred income and unamortized discounts $ 1,261,000 -- 1,137,000(B) (37,000)(A) 2,361,000
============= ============= ============= ============= ===========
Loan loss reserve $ 3,595,000 472,000 -- (533,000) 3,534,000
============= ============= ============= ============= ===========
Year ended November 30, 1993
Allowances deducted from assets to which they
apply:
Allowances for doubtful accounts and notes
receivable $ 603,000 1,062,000 15,000 (357,000) 1,323,000
============= ============= ============= ============= ===========
Deferred income and unamortized discounts $ 1,688,000 -- (342,000) (85,000)(A) 1,261.000
============= ============= ============= ============= ===========
Loan loss reserve $ 151,000 416,000 3,717,000 (689,000) 3,595,000
============= ============= ============= ============= ===========
Loan loss reserve included in liabilities (C) $ 3,717,000 -- (3,717,000) -- --
============= ============= ============= ============= ===========
<FN>
Notes:
(A) Amortization of discounts and recognition of deferred income.
(B) Includes discounts on mortgages purchased.
(C) Loan loss reserves relating to loans serviced for others are included in
liabilities in the balance sheet.
</FN>
16
Schedule XI
LENNAR CORPORATION AND CONSOLIDATED SUBSIDIARIES
Real Estate and Accumulated Depreciation (D)
Year ended November 30, 1995
COSTS CAPITALIZED
INITIAL COST SUBSEQUENT TO GROSS AMOUNT AT WHICH
TO COMPANY ACQUISITION CARRIED AT CLOSE OF PERIOD
----------------------- ---------------------- -----------------------------------
BUILDING
AND CARRYING
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS IMPROVEMENTS COSTS LAND (A) BUILDINGS (A) TOTAL (C)
- ------------------------ ---------- ----------- ----------- ---------- ---------- ----------- ----------- ----------
Rental apartment
property:
Dade County,
Florida $ 21,397,000 1,872,000 9,063,000 4,623,000 360,000 2,046,000 13,872,000 15,918,000
Rental office
property:
Dade County,
Florida 17,301,000 1,779,000 -- 13,577,000 1,959,000 4,319,000 12,996,000 17,315,000
Hotel:
Broward County,
Florida -- 1,000,000 3,478,000 8,824,000 367,000 1,367,000 12,302,000 13,669,000
Rental apartment
property:
Dade County,
Florida -- 3,526,000 9,999,000 -- -- 3,526,000 9,999,000 13,525,000
Rental office
property:
Orange County,
California -- 3,839,000 15,356,000 -- 120,000 3,862,000 15,453,000 19,315,000
Shopping center:
Maricopa County,
Arizona -- 2,381,000 9,524,000 -- 7,000 2,381,000 9,531,000 11,912,000
Other miscellaneous
properties which are
individually less
than 5% of total 33,088,000 33,018,000 63,177,000 24,694,000 2,367,000 36,825,000 86,431,000 123,256,000
---------- ----------- ----------- ---------- --------- ---------- ----------- -----------
$ 71,786,000 47,415,000 110,597,000 51,718,000 5,180,000 54,326,000 160,584,000 214,910,000
========== =========== =========== ========== ========= ========== =========== ===========
DATE OF
ACCUMULATED COMPLETION OF DATE
DESCRIPTION DEPRECIATION (B) CONSTRUCTION ACQUIRED
- ------------------------ ---------------- ------------ ---------
Rental apartment
property:
Dade County,
Florida 9,298,000 1979 1977
Rental office
property:
Dade County,
Florida 2,442,000 Various 1980
Hotel:
Broward County,
Florida 2,401,000 Various 1987
Rental apartment
property:
Dade County,
Florida 1,510,000 Various 1991
Rental office
property:
Orange County,
California 429,000 1989 1994
Shopping center:
Maricopa County,
Arizona 265,000 1988 1994
Other miscellaneous
properties which are
individually less
than 5% of total 13,301,000 Various Various
----------
$29,646,000
===========
<FN>
Notes:
(A) Includes related improvements and capitalized carrying costs.
(B) Depreciation is calculated using the straight-line method over the estimated
useful lives which vary from 15 to 40 years.
(C) The aggregate cost of the listed property for Federal income tax purposes
was $160,436,000 at November 30, 1995.
(D) The listed real estate includes operating properties completed or under
construction. Real estate inventories, held for resale in the ordinary
course of business, have been excluded from this schedule.
(E) Reference is made to notes 1, 9 and 10 of the consolidated financial statements.
(F) The changes in the total cost of investment properties and accumulated depreciation
for the years ended November 30, 1995, 1994 and 1993 are as follows (in thousands):
</FN>
1995 1994 1993
----------- ----------- ----------
Cost:
Balance at beginning of year $ 215,856 175,144 122,709
Additions, at cost 7,103 53,340 40,557
Accounting change -- 7,482 --
Acquisitions through foreclosure -- -- 14,410
Cost of real estate sold (8,304) (11,802) --
Transfers 255 (8,308) (2,532)
------------ ------- -------
Balance at end of year $ 214,910 215,856 175,144
============ ======= =======
Accumulated depreciation:
Balance at beginning of year $ 26,423 22,508 19,834
Depreciation and amortization charged against
earnings 5,292 4,338 3,639
Accounting change -- 165 --
Depreciation on real estate sold (2,069) (351) --
Depreciation on transfers -- (237) (965)
------------ ------- -------
Balance at end of year $ 29,646 26,423 22,508
============ ======= =======
17
SCHEDULE XII
LENNAR CORPORATION AND CONSOLIDATED SUBSIDIARIES
Mortgage Loans on Real Estate
November 30, 1995
PRINCIPAL
AMOUNT OF
LOANS
SUBJECT TO
FINAL PERIODIC FACE CARRYING DELINQUENT
INTEREST MATURITY PAYMENT PRIOR AMOUNT OF AMOUNT OF PRINCIPAL
DESCRIPTION RATE DATE TERMS LIENS MORTGAGES MORTGAGES (A) OR INTEREST
- ------------------------ -------- --------- --------- -------- ---------- --------------- -------------
First mortgage notes
secured by real estate:
Residential land -
Los Angeles County,
California 6.6% 1991 Varying $ -- 55,000,000 12,850,000 12,850,000 (C)
payment
Residential land -
Riverside County,
California 6.6% 1994 Varying -- 28,274,000 7,850,000 7,850,000 (C)
payment
Residential land -
Orange County,
California 7.6% 1992 Varying -- 29,026,000 6,729,000 6,729,000 (C)
payment
Residential land -
San Diego County,
California 6.8% 1992 Varying -- 11,826,000 6,200,000 6,200,000 (C)
payment
Residential land -
Orange County,
California 6.6% 1994 Varying -- 18,985,000 3,600,000 3,600,000 (C)
payment
Retail shopping center -
Harris County,
Texas 9.5% 1996 Single payment -- 3,704,000 3,355,000 --
Residential land -
Broward County,
Florida 9.8% 1996 Level payment -- 1,915,000 1,915,000 --
Commercial land -
Gwinnett County,
Georgia 7.0% 1996 Level payment -- 1,746,000 1,630,000 --
Office building -
San Bernardino County,
California 8.5% 1994 Level payment -- 1,707,000 1,535,000 1,535,000
Other 7.5-10.0% 1990-2022 Various -- 11,077,000 2,238,000 373,000 (C)
---------- ----------- ---------- ---------
$ -- 163,260,000 47,902,000 39,137,000
========== =========== ========== ==========
<FN>
Notes:
(A) For Federal income tax purposes, the aggregate basis of the listed mortgages was $47,902,000 at November 30, 1995.
(B) This schedule does not include mortgages held by Lennar Financial Services, Inc.
(C) During 1995, the Company acquired first mortgage notes from the secured creditors of a company that had filed for bankruptcy
protection. The Company acquired these mortgages (at significant discounts from their face amounts) in order to convert them
into an ownership interest after bankruptcy proceedings are completed.
(D) The changes in the carrying amounts of mortgages for the years ended November 30, 1995, 1994 and 1993 are as follows
(in thousands):
</FN>
1995 1994 1993
----------- ----------- ------------
Balance at beginning of year $18,360 26,605 15,520
Additions (deductions):
New mortgage loans, net 45,877 14,293 28,929
Collections of principal (9,788) (12,454) (4,099)
Transfers to Lennar Financial
Services, Inc. -- (11,151) --
Foreclosures (8,017) -- (14,576)
Amortization of discount 14 31 40
Deferred income recognized 1,065 6 45
Other 391 1,030 746
------- ------ ------
Balance at end of year $47,902 18,360 26,605
======= ====== ======
18