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Item 8. Financial Statements and Supplementary Data

2021-01-22 compared with 2020-01-27 · 686 added, 1057 removed, 782 unchanged (69% of the section changed)

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Lennar Corporation

To the stockholders and the Board of Directors of Lennar Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Lennar Corporation and subsidiaries (the "Company") as of November 30, 2019 and 2018 , the related consolidated statements of operations and comprehensive income (loss), equity, and cash flows, for each of the three years in the period ended November 30, 2019 , and the related notes (collectively referred to as the "consolidated financial statements").

We have audited the accompanying consolidated balance sheets of Lennar Corporation and subsidiaries (the "Company") as of November 30, 2020 and 2019, the related consolidated statements of operations and comprehensive income (loss), stockholders' equity, and cash flows, for each of the three years in the period ended November 30, 2020, and the related notes (collectively referred to as the "consolidated financial statements").

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of November 30, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended November 30, 2020, in conformity with accounting principles generally accepted in the United States of America.

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We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Lennar Homebuilding and Lennar Multifamily Investments in Unconsolidated Entities - Consolidation of Variable Interest Entities - Refer to Note 1, Summary of Significant Accounting Policies (Variable Interest Entities) , and Note 8, Variable Interest Entities , to the financial statements

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This determination requires significant judgment by management.

As of November 30, 2019, the carrying value of the Company’s consolidated VIE’s assets and non-recourse liabilities was $980.2 million and $549.7 million , respectively.

As of November 30, 2020, the carrying value of the Company’s consolidated VIE’s assets and non-recourse liabilities was $1.1 billion and $528.5 million, respectively.

Additionally, at November 30, 2020, the carrying value of the Company’s investments in VIEs that are unconsolidated was $949.4 million.

We identified the consolidation and primary beneficiary assessment upon formation and reconsideration events of some of the Company’s VIE’s as a critical audit matter given the significant judgment required by management.

This required a high degree of auditor judgment and an increased extent of audit effort due to complexity of the entity structures and agreements.

This required a high degree of auditor judgment and an increased extent of audit effort due to the complexity of the entity structures and agreements.

How the Critical Audit Matter Was Addressed in the Audit

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◦ For those entities where the Company has determined it is the primary beneficiary, evaluating whether or not the Company consolidated the balances at the appropriate amounts.

Evaluating the evidence obtained in other areas of the audit to determine if there were additional reconsiderations events that had not been identified by the Company, including, among others, reading joint venture board minutes and confirming the terms of certain joint venture agreements and side agreements, if any.

Variable Interest Entities - Recorded Valuation Adjustment on Previously Unconsolidated Variable Interest Entity-specific transaction - Refer to Note 16, Variable Interest Entities , to the financial statements

Critical Audit Matter Description

The Company identified a reconsideration event related to a previously unconsolidated VIE during the year ended November 30, 2019.

The reconsideration event resulted from 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.

Therefore, the Company was required to consolidate the net assets of the entity at estimated fair value.

As a result, the Company recorded a one-time loss of $48.9 million from the consolidation.

At November 30, 2019, the consolidated homebuilding entity had total assets and liabilities of $240.5 million and $373.5 million , respectively.

The determination of the fair value of the homebuilding entity’s net assets requires management to make significant estimates related to the discounting of estimated cash flows at a rate the Company believes a market participant would determine to be commensurate with the inherent risks associated with the homebuilding entity and related cash flow streams.

We identified the loss on consolidation of the VIE as a critical audit matter because of the significant estimates and assumptions management made to determine the fair value of the entity.

This required a high degree of auditor judgment and a significant extent of audit effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s significant assumptions utilized to determine the fair value of the VIE.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the fair value analysis and assessment of the recorded loss included the following, among others:

We tested the effectiveness of controls over management’s evaluation of the fair value analysis of the previously unconsolidated entity, including the appropriateness of the valuation technique applied, accounting and business assumptions used in the analysis, and the mathematical accuracy of the overall model.

With the assistance of our fair value specialists we evaluated the reasonableness of the Company’s valuation technique, to determine if it is consistent with generally accepted valuation practices, and considered acceptable under the circumstances.

We evaluated the significant valuation assumptions, including the source information of the significant valuation assumptions used by management with assistance of our fair value specialists.

We evaluated the significant assumptions, including:

base home price per unit, absorption rate/sales velocity, annual inflation rate, direct construction costs, and the discount rate by (1) independently obtaining evidence from knowledgeable sources that are independent from the Company in order to benchmark, challenge, and assess management’s key assumptions, and (2) testing the mathematical accuracy of management’s calculation of the undiscounted cash flow analysis.

We assessed the reasonableness of the Company’s business assumptions, including capital expenditures and property information including location and property type, and historical and budgeted construction costs by comparing the assumptions to the Company’s historical results.

◦ Evaluating the evidence obtained in other areas of the audit to determine if there were additional reconsideration events that had not been identified by the Company, including, among others, reading joint venture board minutes and confirming the terms of certain joint venture agreements and side agreements, if any.

/s/ Deloitte & Touche LLP

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Investments in unconsolidated entities 953,177 1,009,035

Goodwill 3,442,359 3,442,359

Other assets 1,190,793 1,021,684

25,529,425 24,789,239

Financial Services 2,776,987 3,006,024

Multifamily 1,175,908 1,068,831

Lennar Other 452,857 495,417

Total assets $ 29,935,177 29,359,511

(1) Under certain provisions of Accounting Standards Codification ("ASC") Topic 810, Consolidations , ("ASC 810") the Company is required to separately disclose on its consolidated balance sheets the assets of consolidated variable interest entities ("VIEs") that are owned by the consolidated VIEs and liabilities of consolidated VIEs as to which there is no recourse against the Company.

As of November 30, 2020, total assets include $ 1.1 billion related to consolidated VIEs of which $ 32.1 million is included in Homebuilding cash and cash equivalents, $ 0.1 million in Homebuilding receivables, net, $ 14.2 million in Homebuilding finished homes and construction in progress, $ 486.8 million in Homebuilding land and land under development, $ 426.3 million in Homebuilding consolidated inventory not owned, $ 1.6 million in Homebuilding investments in unconsolidated entities, $ 110.3 million in Homebuilding operating properties and equipment, $ 10.4 million in Homebuilding other assets and $ 39.9 million in Multifamily assets.

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

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

See accompanying notes to consolidated financial statements.

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Other liabilities 2,225,864 1,969,082

9,925,651 11,075,165

Financial Services 1,644,248 1,988,323

Multifamily 252,911 232,155

Lennar Other 12,966 30,038

Total liabilities 11,835,776 13,325,681

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2019 - 297,119,153 shares

29,894 29,712

Class B common stock of $ 0.10 par value per share;

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2019 - 18,964,973 shares of Class A common stock and 1,704,630 shares of Class B common stock

( 1,279,227 ) ( 957,857 )

Accumulated other comprehensive income (loss) ( 805 ) 498

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Noncontrolling interests 104,545 84,313

Total equity 18,099,401 16,033,830

Total liabilities and equity $ 29,935,177 29,359,511

(2) As of November 30, 2020, total liabilities include $ 528.5 million related to consolidated VIEs as to which there was no recourse against the Company, of which $ 28.4 million is included in Homebuilding accounts payable, $ 351.4 million in Homebuilding liabilities related to consolidated inventory not owned, $ 129.1 million in Homebuilding senior notes and other debts payable, $ 9.9 million in Homebuilding other liabilities and $ 9.8 million in Multifamily liabilities.

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

As of November 30, 2018 , total liabilities include $ 242.5 million related to consolidated VIEs as to which there was no recourse against the Company, of which $ 11.4 million is included in Homebuilding accounts payable, $ 175.6 million in Homebuilding liabilities related to consolidated inventory not owned, $ 51.9 million in Homebuilding senior notes and other debts payable, $ 2.6 million in Homebuilding other liabilities and $ 1.0 million in Lennar Other liabilities.

See accompanying notes to consolidated financial statements.

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Years Ended November 30, 2020, 2019 and 2018

2020 2019 2018

(Dollars in thousands, except per share amounts)

Homebuilding $ 20,981,136 20,793,216 19,077,597

Financial Services 890,311 824,810 954,631

Multifamily 576,328 604,700 421,132

Lennar Other 41,079 36,835 118,271

Total revenues 22,488,854 22,259,561 20,571,631

Costs and expenses:

Homebuilding 17,961,644 18,245,700 16,936,803

Financial Services 470,777 600,168 754,915

Multifamily 575,581 599,604 429,759

Lennar Other 6,744 11,794 115,969

Acquisition and integration costs related to CalAtlantic — — 152,980

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Homebuilding other income (expense), net ( 29,749 ) ( 31,338 ) 203,902

Homebuilding loss due to litigation

Financial Services gain on deconsolidation 61,418 — —

Multifamily equity in earnings from unconsolidated entities and other gain 21,934 11,294 51,322

Lennar Other equity in earnings from unconsolidated entities

Lennar Other equity in earnings (loss) from unconsolidated entities ( 35,037 ) 15,372 24,110

Lennar Other expense, net ( 9,632 ) ( 8,944 ) ( 60,119 )

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Net earnings (including net earnings (loss) attributable to noncontrolling interests)

2,467,553 1,842,119 1,717,513

Net earnings (loss) attributable to noncontrolling interests 2,517 ( 6,933 ) 21,682

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Reclassification adjustments for (gains) loss included in net

earnings ( 452 ) ( 176 ) 234

Total other comprehensive income (loss), net of tax $ ( 1,303 ) 864 ( 1,400 )

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Total comprehensive income (loss) attributable to noncontrolling

interests $ 2,517 ( 6,933 ) 21,682

Basic earnings per share $ 7.88 5.76 5.46

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Years Ended November 30, 2020, 2019 and 2018

2020 2019 2018

(Dollars in thousands, except per share amounts)

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Beginning balance 3,944 3,944 3,769

Stock dividends - Class B common stock

Stock issuance in connection with CalAtlantic acquisition — — 168

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Stock issuance in connection with CalAtlantic acquisition

Tax benefit from employee stock plans, vesting of restricted stock and conversion of convertible senior notes

— — 5,061,430

Amortization of restricted stock 107,131 86,940 72,655

Conversion of convertible senior notes to shares of Class A common stock

Equity adjustment related to purchase of noncontrolling interests

Stock dividends - Class B common stock

Equity adjustment related to noncontrolling interests ( 9,870 ) ( 5,813 ) —

Balance at November 30, 8,676,056 8,578,219 8,496,677

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Net earnings attributable to Lennar 2,465,036 1,849,052 1,695,831

Cumulative-effect of accounting change (see Note 1 to the Notes to Consolidated Financial Statements)

Cash dividends - Class A common stock ($0.16 per share)

Cash dividends - Class B common stock ($0.16 per share)

Stock dividends - Class B common stock

Cumulative-effect of accounting change

Cash dividends - Class A common stock ($ 0.625 per share for 2020 and $ 0.16 per share for 2019 and 2018)

( 171,520 ) ( 45,418 ) ( 43,195 )

Cash dividends - Class B common stock ($ 0.625 per share for 2020 and $ 0.16 per share for 2019 and 2018)

( 23,523 ) ( 6,036 ) ( 5,964 )

Balance at November 30, 10,564,994 8,295,001 6,487,650

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Payments related to noncontrolling interests ( 42,349 ) ( 43,734 ) ( 89,575 )

Non-cash consolidations, net

Non-cash consolidations/deconsolidations, net ( 114,712 ) 8,894 —

Non-cash purchase or activity of noncontrolling interests, net ( 1,841 ) ( 3,195 ) 37,374

Balance at November 30, 104,545 84,313 101,422

Total equity $ 18,099,401 16,033,830 14,682,957

See accompanying notes to consolidated financial statements.

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Years Ended November 30, 2020, 2019 and 2018

2020 2019 2018

(In thousands)

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Equity in (earnings) loss from unconsolidated entities

22,127 ( 2,528 ) 30,518

Distributions of earnings from unconsolidated entities

62,073 12,753 113,096

Share-based compensation expense 107,131 86,940 72,655

Excess tax benefits from share-based awards

Deferred income tax expense 92,082 235,493 268,037

Loss on retirement of senior notes and other debts payable 7,997 — —

Gain on sale of Rialto investment and asset management platform — — ( 296,407 )

Gain on sale of other assets, operating properties and equipment and CMBS bonds

Loss on consolidation of previously unconsolidated entity

Gain on sale of interest in Multifamily unconsolidated entities

Gain on sale of interest in unconsolidated entities

Gain on sale of Financial Services' businesses

Unrealized and realized gains on real estate owned

Impairments of loans receivable and real estate owned

(Gain) loss on sale of other assets, operating properties and equipment, CMBS bonds, other liabilities and real estate owned ( 8,626 ) ( 23,124 ) 23,356

Loss on consolidation 4,824 48,874 —

Gain on deconsolidation of previously consolidated entity ( 61,418 ) — —

Gain on sale of interest in unconsolidated entity and other Multifamily gain ( 4,617 ) ( 10,865 ) ( 180,621 )

Gain on sale of Financial Services' portfolio/businesses ( 5,014 ) ( 2,368 ) —

Valuation adjustments and write-offs of option deposits and pre-acquisition costs, other receivables and other assets 117,825 56,125 49,338

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Decrease (increase) in receivables 25,868 312,255 ( 431,183 )

Increase in inventories, excluding valuation adjustments and write-offs of option deposits and pre-acquisition costs

Increase in other assets

(Increase) decrease in loans held-for-sale

(Decrease) increase in accounts payable and other liabilities

Decrease (increase) in inventories, excluding valuation adjustments and write-offs of option deposits and pre-acquisition costs 781,362 ( 623,644 ) ( 135,870 )

Decrease (increase) in other assets 90,534 ( 69,699 ) ( 24,923 )

Decrease (increase) in loans held-for-sale 154,852 ( 431,339 ) 5,805

Increase (decrease) in accounts payable and other liabilities 266,488 ( 14,639 ) 412,796

Net cash provided by operating activities $ 4,190,819 1,482,343 1,691,747

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Net additions to operating properties and equipment ( 72,752 ) ( 86,497 ) ( 130,439 )

Proceeds from the sale of other assets, operating properties and equipment and CMBS bonds

Proceeds from the sale of operating properties and equipment, other assets, CMBS bonds and real estate owned 33,934 79,307 70,854

Proceeds from sale of investments in unconsolidated entities

Proceeds from sale of Financial Services' businesses

Investments in and contributions to unconsolidated entities

— 17,790 225,267

Proceeds from sale of Financial Services' portfolio/businesses 14,978 24,446 —

Investments in and contributions to unconsolidated entities/deconsolidation of previously consolidated entity ( 486,217 ) ( 436,325 ) ( 405,547 )

Distributions of capital from unconsolidated and consolidated entities

Proceeds from sales of real estate owned

Receipts of principal payments on loans held-for-sale

220,713 405,677 362,516

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

Receipts of principal payments on loans receivable and other — 2,382 4,339

Originations of loans receivable

Purchases of commercial mortgage-backed securities bonds

Purchases of CMBS bonds — — ( 31,068 )

Proceeds from sale of Rialto investment and asset management platform — — 340,000

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Proceeds from maturities/sales of investment securities 52,918 52,593 85,237

Other payments, net

Net cash provided by (used in) investing activities

Other receipts (payments), net 1,643 — ( 145 )

Net cash (used in) provided by investing activities $ ( 280,205 ) 19,596 ( 593,954 )

LENNAR CORPORATION AND SUBSIDIARIES

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Years Ended November 30, 2020, 2019 and 2018

2020 2019 2018

(In thousands)

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Net repayments under revolving lines of credit $ — — ( 454,700 )

Net borrowings (repayments) under warehouse facilities

Proceeds from senior notes

Net (repayments) borrowings under warehouse facilities ( 281,835 ) 166,552 272,920

Debt issuance costs — ( 25 ) ( 14,661 )

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Conversions, exchanges and redemption of convertible senior notes

Proceeds from Rialto notes payable

— ( 1,288 ) ( 59,145 )

Principal payments on Rialto notes payable including structured notes — — ( 359,016 )

Proceeds from other borrowings 92,688 88,751 44,374

(Payments) proceeds to/from other liabilities

Principal payments on other borrowings

Proceeds from liabilities related to consolidated inventory not owned 346,406 — —

Payments to other liabilities ( 116,541 ) ( 3,850 ) ( 3,542 )

Principal payments on notes payable and other borrowings ( 604,995 ) ( 189,454 ) ( 104,751 )

Receipts related to noncontrolling interests 176,617 27,859 18,126

Payments related to noncontrolling interests ( 42,349 ) ( 43,734 ) ( 89,575 )

Excess tax benefits from share-based awards

Common stock:

Net cash (used in) provided by financing activities

Net (decrease) increase in cash and cash equivalents and restricted cash

Issuances — 493 3,061

Repurchases ( 321,524 ) ( 523,074 ) ( 299,833 )

Dividends ( 195,043 ) ( 51,454 ) ( 49,159 )

Net cash used in financing activities $ ( 2,446,575 ) ( 1,629,224 ) ( 2,195,901 )

Net increase (decrease) in cash and cash equivalents and restricted cash 1,464,039 ( 127,285 ) ( 1,098,108 )

Cash and cash equivalents and restricted cash at beginning of year 1,468,691 1,595,976 2,694,084

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Summary of cash and cash equivalents and restricted cash:

Homebuilding $ 2,703,986 1,200,832 1,337,807

Financial Services 116,171 234,113 188,485

Multifamily 38,963 8,711 7,832

Lennar Other 3,918 2,340 24,334

Homebuilding restricted cash 15,211 9,698 12,399

Financial Services restricted cash 54,481 12,022 17,944

Lennar Other restricted cash — 975 7,175

$ 2,932,730 1,468,691 1,595,976

Supplemental disclosures of cash flow information:

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Supplemental disclosures of non-cash investing and financing activities:

Homebuilding and Multifamily:

Purchases of inventories, land under development and other assets financed by sellers $ 120,796 101,300 163,519

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Non-cash sale of operating properties and equipment and other assets — 48,671 —

Non-cash right of use assets recognized due to adoption of ASU 2016-02 150,702 — —

Non-cash lease liabilities recognized due to adoption of ASU 2016-02 159,717 — —

Conversions of and exchanges on convertible senior notes to equity — — 217,154

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Consolidation/deconsolidation of unconsolidated/consolidated entities, net:

Financial Services assets $ ( 217,565 ) — —

Financial Services liabilities 115,175 — —

Financial Services noncontrolling interests 102,390 — —

Inventories 95,476 187,506 35,430

Receivables — 102,959 7,198

Operating properties and equipment and other assets 6,870 53,412 —

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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 Company's consolidated balance sheets.

Cash proceeds from home closings held in escrow for the Company’s benefit, typically for approximately three to four days, are included in Homebuilding cash and cash equivalents in the Company's consolidated balance sheets.

Contract liabilities include customer deposits liabilities related to sold but undelivered homes that are included in other liabilities in the Company's consolidated balance sheets.

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Share-Based Payments

The Company has share-based awards outstanding under the 2007 Equity Incentive Plan and the 2016 Equity Incentive Plan (the "Plans"), each of which provides for the granting of stock options, stock appreciation rights, restricted common stock ("nonvested shares") and other share based awards to officers, associates and directors.

The Company has share-based awards outstanding under the 2016 Equity Incentive Plan (the "Plan"), which provides for the granting of stock options, stock appreciation rights, restricted common stock ("nonvested shares") and other share based awards to officers, associates and directors.

The exercise prices of stock options may not be less than the market value of the common stock on the date of the grant.

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Each stock option will expire on a date determined at the time of the grant, but not more than 10 years after the date of the grant.

The Company accounts for stock option awards and nonvested share awards granted under the Plans based on the estimated grant date fair value.

The Company accounts for stock option awards and nonvested share awards granted under the Plan based on the estimated grant date fair value.

Cash and Cash Equivalents and Restricted Cash

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Homebuilding restricted cash consists of customer deposits on home sales held in restricted accounts until title transfers to the homebuyer, as required by the state and local governments in which the homes were sold, as well as funds on deposit to secure and support performance obligations.

Financial Services restricted cash consisted of upfront deposits and application fees Rialto Mortgage Finance ( “ 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 and is disbursed in accordance with agreements between the transacting parties.

Financial Services restricted cash consisted of upfront deposits and application fees LMF Commercial 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 service provider on behalf of customers and lenders and is disbursed in accordance with agreements between the transacting parties.

Lennar Other restricted cash primarily consisted of cash set aside for future investments on behalf of a real estate investment trust that Rialto Capital Management is a sub-advisor ( “Rialto” ).

Homebuilding cash and cash equivalents as of November 30, 2020 and 2019 included $ 314.3 million and $ 565.8 million, respectively, of cash held in escrow for approximately four days and three days, respectively.

At November 30, 2020 and 2019, Homebuilding accounts receivable related primarily to other receivables and rebates.

The Company performs ongoing credit evaluations of its customers and generally does not require collateral for accounts

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Mortgages and notes receivable arising from the sale of homes and land are generally collateralized by the property sold to the buyer.

Allowances are maintained for potential credit losses based on historical experience, present economic conditions and other factors considered relevant by the Company.

Balances for the years ended November 30, 2020 and 2019 are noted below:

(In thousands) 2020 2019

Homebuilding:

Cash and cash equivalents

Restricted cash

Financial Services:

Cash and cash equivalents

Restricted cash

Cash and cash equivalents

Lennar Other:

Cash and cash equivalents

Restricted cash

Total cash and cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows

Homebuilding cash and cash equivalents as of November 30, 2019 and 2018 included $ 565.8 million and $ 926.1 million , respectively, of cash held in escrow for approximately three days .

Accounts receivable $ 133,560 129,216

Mortgages and notes receivable 167,909 203,230

301,469 332,446

Allowance for doubtful accounts ( 2,798 ) ( 3,322 )

Receivables, net $ 298,671 329,124

Finished homes and construction in progress are included within inventories.

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Some of the most critical assumptions in the Company’s cash flow model are projected absorption pace for home sales, sales prices and costs to build and deliver homes on a community by community basis.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In order to arrive at the assumed absorption pace for home sales and the assumed sales prices included in the Company’s cash flow model, the Company analyzes its historical absorption pace and historical sales prices in the community and in other comparable communities in the geographical area.

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Generally, if the Company notices a variation from historical results over a span of two fiscal quarters, the Company considers such variation to be the establishment of a trend and adjusts its historical information accordingly in order to develop assumptions on the projected absorption pace and sales prices in the cash flow model for a community.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In order to arrive at the Company’s assumed costs to build and deliver homes, the Company generally assumes a cost structure reflecting contracts currently in place with its vendors adjusted for any anticipated cost reduction initiatives or increases in cost structure.

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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.

As of November 30, 2019 , the Company reviewed its communities for potential indicators of impairments and identified 40 homebuilding communities with 1,720 homesites and a carrying value of $ 212.7 million as having potential indicators of impairment.

For the year ended November 30, 2019 , the Company recorded valuation adjustments of $ 2.6 million on 149 homesites in three communities with a carrying value of $ 10.5 million .

As of November 30, 2018 , the Company reviewed its communities for potential indicators of impairments and identified 25 homebuilding communities with 1,121 homesites and a carrying value of $ 211.3 million as having potential indicators of impairment.

For the year ended November 30, 2018 , the Company recorded valuation adjustments of $ 31.3 million on 733 homesites in six communities with a carrying value of $ 64.6 million .

The table below summarizes communities reviewed for indicators of impairment and communities with valuation adjustments recorded:

At November 30, Communities with valuation adjustments

for the years ended November 30,

# of communities with potential indicator of impairment # of communities Fair Value

(in thousands) Valuation Adjustments

(in thousands)

2020 10 16 $ 79,734 $ 44,811

2019 40 3 7,910 2,582

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 years ended November 30, 2020 and 2019:

Years Ended November 30,

Unobservable inputs

Unobservable inputs Range Range

Average selling price $ 201,000 - $ 970,000 $ 167,000 - $ 222,000

2 unchanged sentences

The Company also has access to land inventory through option contracts, which generally enables the Company to defer acquiring portions of properties owned by third parties and unconsolidated entities until it has determined whether to exercise its option.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

A majority of the Company’s option contracts require a non-refundable cash deposit or irrevocable letter of credit based on a percentage of the purchase price of the land.

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When the Company does not intend to exercise an option, it writes off any unapplied deposit and pre-acquisition costs associated with the option contract.

Homebuilding, Multifamily and Lennar Other Investments in Unconsolidated Entities

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Investments in Unconsolidated Entities

The Company evaluates the long-lived assets in unconsolidated entities for indicators of impairment during each reporting period.

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In particular, business plans and budgets are generally required to be unanimously approved by all partners.

Usually, management and other fees earned by the Company are nominal and believed to be at market and there is no significant economic disproportionality

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

between the Company and other partners.

Usually, management and other fees earned by the Company are nominal and believed to be at market and there is no significant economic disproportionality between the Company and other partners.

Generally, the Company purchases less than a majority of the JV’s assets and the purchase prices under its option contracts are believed to be at market.

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As a result, the Company continues to fund operations and debt paydowns through partner loans or substituted capital contributions.

Goodwill is recorded with acquisitions of businesses when the purchase price of the business exceeds the fair value of the net tangible and identifiable assets acquired.

In accordance with ASC Topic 350, Intangibles-Goodwill and Other ("ASC 350"), the Company evaluates goodwill for potential impairment on at least an annual basis.

Potential impairment is evaluated by comparing the carrying value of each of the Company's reporting units to their estimated fair values.

The fair value estimate is derived through various valuation methods, including the use of discounted expected future cash flows of each reporting unit.

The expected future cash flows for each segment are significantly impacted by current market conditions.

If these market conditions and resulting expected future cash flows for each reporting unit decline significantly, the actual results for each segment could differ from the Company's estimate, which would cause goodwill to be impaired.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Operating Properties and Equipment

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At the time operating properties and equipment are disposed of, the asset and related accumulated depreciation are removed from the accounts and any resulting gain or loss is credited or charged to earnings.

The estimated useful life for operating properties is 30 years , for furniture, fixtures and equipment is two to ten years and for leasehold improvements is five years or the life of the lease, whichever is shorter.

The estimated useful life for operating properties is 30 years, for furniture, fixtures and equipment is two to 10 years and for leasehold improvements is five years or the life of the lease, whichever is shorter.

Operating properties are reviewed for possible impairment if there are indicators that their carrying amounts are not recoverable.

Operating properties and equipment are included in Homebuilding other assets in the consolidated balance sheets and were as follows:

(In thousands) 2020 2019

Operating properties (1) $ 386,646 225,256

Leasehold improvements 57,084 63,846

Furniture, fixtures and equipment 145,307 159,007

589,037 448,109

Accumulated depreciation and amortization ( 177,519 ) ( 168,582 )

$ 411,518 279,527

(1) Operating properties primarily include solar systems, rental operations and commercial properties.

Investment Securities

Investment securities are classified as available-for-sale unless they are classified as trading or held-to-maturity.

Securities classified as trading are carried at fair value and unrealized holding gains and losses are recorded in earnings.

The Company holds investment securities classified as available-for-sale or held-to-maturity.

Available-for-sale securities are recorded at fair value.

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treasury securities that mature at various dates, mainly within three years .

Also, at November 30, 2019 and 2018 , the Financial Services segment had available-for-sale securities totaling $ 3.7 million and $ 4.2 million , respectively, which consist primarily of preferred stock and mutual funds.

These investments available-for-sale are carried at fair value with changes recorded as a component of accumulated other comprehensive income (loss).

In addition, at November 30, 2019 and 2018 , the Lennar Other segment had investment securities classified as held-to-maturity totaling $ 54.1 million and $ 60.0 million , respectively.

The Lennar Other segment held-to-maturity securities consist of CMBS.

At both November 30, 2019 and 2018 , the Company had no investment securities classified as trading.

Also, at November 30, 2019, the Financial Services segment had $ 3.7 million of available-for-sale securities, which consisted primarily of preferred stock and mutual funds.

These investments available-for-sale were carried at fair value with changes recorded as a component of accumulated other comprehensive income (loss).

In addition, at November 30, 2020, the Lennar Other segment had investment securities classified as held-for-sale totaling $ 53.5 million.

The Lennar Other segment held-for-sale securities consist of CMBS.

At November 30, 2019, these securities were held-to-maturity with a balance of $ 54.1 million.

The CMBS in the Lennar Other segment were reclassed during the year ended November 30, 2020 due to a change in management's intent to hold.

Interest and Real Estate Taxes

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Other Liabilities

Reflected within the consolidated balance sheets, the other liabilities balance as of November 30, 2019 and 2018 , included accrued interest payable, product warranty (as noted below), accrued bonuses, accrued wages and benefits, deferred income, customer deposits, income taxes payable, and other accrued liabilities.

Reflected within the consolidated balance sheets, the other liabilities balance as of November 30, 2020 and 2019, included accrued interest payable, product warranty (as noted below), accrued bonuses, accrued wages and benefits, lease liabilities, deferred income, customer deposits, income taxes payable, and other accrued liabilities.

Product Warranty

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Adjustments to pre-existing warranties from changes in estimates (1) 29,461 ( 8,156 )

Warranties assumed related to acquisitions

Payments ( 173,145 ) ( 205,920 )

Warranty reserve, end of year $ 341,765 294,138

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Undiscounted accruals for claims under the Company’s self-insurance program are based on claims filed and estimates for claims incurred but not yet reported.

The Company’s self-insurance reserve as of November 30, 2019 and 2018 was $ 109.6 million and $ 101.4 million of which $ 60.7 million and $ 60.3 million , respectively, was included in Financial Services’ other liabilities as of November 30, 2019 and 2018 .

The Company’s self-insurance reserve as of November 30, 2020 and 2019 was $ 125.4 million and $ 109.6 million which is included in Homebuilding other liabilities.

Amounts incurred in excess of the Company's self-insurance occurrence or aggregate retention limits are covered by insurance up to the Company's purchased coverage levels.

The Company's insurance policies are maintained with highly-rated underwriters for whom the Company believes counterparty default risk is not significant.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Earnings per Share

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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 earnings of the Company.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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.

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The Company’s restricted common stock ("nonvested shares") are considered participating securities.

Preferred Stock

The Company is authorized to issue 500,000 shares of preferred stock with a par value of $ 10 per share and 100 million shares of participating preferred stock with a par value of $ 0.10 per share.

No shares of preferred stock or participating preferred stock have been issued as of November 30, 2020 and 2019.

During the year ended November 30, 2020, the Company’s Class A and Class B common stockholders received a per share annual dividend of $ 0.625 .

During the years ended 2019 and 2018, the Company’s Class A and Class B common stockholders received a per share annual dividend of $ 0.16 .

The only significant difference between the Class A common stock and Class B common stock is that Class A common stock entitles holders to one vote per share and the Class B common stock entitles holders to ten votes per share.

As of November 30, 2020, Stuart Miller, the Company’s Executive Chairman, directly owned, or controlled through family-owned entities, shares of Class A and Class B common stock, which represented approximately 34 % voting power of the Company’s stock.

In January 2019, the Company's Board of Directors authorized a stock repurchase program, which replaced a June 2001 stock repurchase program, under which the Company is authorized to purchase up to the lesser of $ 1 billion in value, or 25 million in shares, of the Company’s outstanding Class A or Class B common stock.

The repurchase authority has no expiration date.

The following table represents the repurchase of the Company's Class A and Class B common stocks under this program for the year ended November 30, 2020 and 2019:

November 30, 2020 November 30, 2019

(Dollars in thousands, except price per share) Class A Class B Class A Class B

Shares repurchased 4,250,000 115,000 9,774,729 —

Principal $ 282,274 $ 6,155 $ 492,938 $ —

Average price per share $ 66.42 $ 53.52 $ 50.41 $ —

Restrictions on Payment of Dividends

There are no restrictions on the payment of dividends on common stock by the Company.

There are no agreements which restrict the payment of dividends by subsidiaries of the Company other than the need to maintain the financial ratios and net worth requirements under the Financial Services segment’s warehouse lines of credit, which restrict the payment of dividends from the Company’s mortgage subsidiaries following the occurrence and during the continuance of an event of default thereunder and limit dividends to 50 % of net income in the absence of an event of default.

Under the Company’s 401(k) Plan (the "Plan"), contributions made by associates can be invested in a variety of mutual funds or proprietary funds provided by the Plan trustee.

The Company may also make contributions for the benefit of associates.

The Company records as compensation expense its contribution to the Plan.

For the years ended November 30, 2020, 2019 and 2018, this amount was $ 27.3 million, $ 24.5 million and $ 25.3 million, respectively.

Share-Based Payments

Compensation expense related to the Company’s share-based awards was as follows:

Years Ended November 30,

(In thousands) 2020 2019 2018

Total compensation expense for nonvested share-based awards $ 107,131 86,940 72,655

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The fair value of nonvested shares is determined based on the trading price of the Company’s common stock on the grant date.

The weighted average fair value of nonvested shares granted during the years ended November 30, 2020, 2019 and 2018 was $ 60.10 , $ 48.26 and $ 55.84 , respectively.

A summary of the Company’s nonvested shares activity for the year ended November 30, 2020 was as follows:

Shares Weighted Average Grant Date Fair Value

Nonvested shares at November 30, 2019

3,290,863 $ 50.64

Grants 1,801,630 $ 60.10

Vested ( 1,425,049 ) $ 51.71

Forfeited ( 120,868 ) $ 50.61

Nonvested shares at November 30, 2020

3,546,576 $ 55.01

At November 30, 2020, there was $ 114.3 million of unrecognized compensation expense related to unvested share-based awards granted under the Company’s share-based payment plan, all of which relates to nonvested shares with a weighted average remaining contractual life of 1.8 years.

For the years ended November 30, 2020, 2019 and 2018, 1.4 million, 1.4 million and 2.2 million nonvested shares, respectively, vested each year.

Financial Services

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Provision for losses 11,924 3,813

Adjustments to pre-existing provisions for losses from changes in estimates

Origination liabilities assumed related to CalAtlantic acquisition

Payments/settlements ( 13,719 ) ( 43,033 )

Loan origination liabilities, end of year $ 7,569 9,364

In December 2018, the Company settled litigation with the creditors of a former investor to resolve claims of breach of representations and warranties and similar claims for loans sold by the Company (or its subsidiaries or predecessors).

The Company had adequately reserved $ 42.0 million for this settlement payment as of November 30, 2018 .

Loans Held-for-Investment, Net

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Loans Held-for-Investment, Net

Loans for which the Company has the positive intent and ability to hold to maturity consist of mortgage loans carried at the principal amount outstanding, net of unamortized discounts and allowance for loan losses.

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These derivative financial instruments are carried at fair value with the changes in fair value included in Financial Services revenues.

RMF - Loans Held-for-Sale

LMF Commercial - Loans Held-for-Sale

The originated mortgage loans are classified as loans held-for-sale and are recorded at fair value.

The Company elected the fair value option for RMF 's loans held-for-sale in accordance with Accounting Standards Codification ("ASC") 825, Financial Instruments , which permits entities to measure various financial instruments and certain other items at fair value on a contract-by-contract basis.

The Company elected the fair value option for LMF Commercial's loans held-for-sale in accordance with Accounting Standards Codification ("ASC") 825, Financial Instruments , which permits entities to measure various financial instruments and certain other items at fair value on a contract-by-contract basis.

Management believes that 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, which are also carried at fair value, used to economically hedge them without having to apply complex hedge accounting provisions.

Changes in fair values of the loans are reflected in Rialto revenues in the accompanying consolidated statements of operations.

Interest income on these loans is calculated based on the interest rate of the loan and is recorded in Rialto revenues in the accompanying consolidated statements of operations.

Changes in fair values of the loans are reflected in Financial Services revenues in the accompanying consolidated statements of operations.

Interest income on these loans is calculated based on the interest rate of the loan and is recorded in Financial Services revenues in the accompanying consolidated statements of operations.

Substantially all of the mortgage loans originated are sold within a short period of time in a securitization on a servicing released, non-recourse basis;

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Recently Adopted Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2014-09, Revenue from Contracts with Customers , ("ASU 2014-09").

ASU 2014-09 provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance.

ASU 2014-09 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

This update creates a five-step model that requires entities to exercise judgment when considering the terms of the contract(s) which include (i) identifying the contract(s) with the customer, (ii) identifying the separate performance obligations in the contract, (iii) determining the transaction price, (iv) allocating the transaction price to

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

the separate performance obligations, and (v) recognizing revenue when each performance obligation is satisfied.

ASU 2014-09 became effective for the Company’s fiscal year beginning December 1, 2018 and subsequent interim periods.

Subsequent to the issuance of ASU 2014-09, the FASB has issued several ASUs such as ASU 2016-08, Revenue from Contracts with Customers (Topic 606):

Principal versus Agent Considerations (Reporting Revenue Gross versus Net) , ASU 2016-12, Revenue from Contracts with Customers (Topic 606):

Narrow-Scope Improvements and Practical Expedients , and ASU 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20):

Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets ("ASU 2017-05"), among others.

These ASUs do not change the core principle of the guidance stated in ASU 2014-09, instead these amendments are intended to clarify and improve operability of certain topics included within the revenue standard.

These ASUs had the same effective date and transition requirements as ASU 2014-09.

The Company has adopted the modified retrospective method.

The Company elected to use the practical expedient within ASU 2017-05 to apply the standard only to contracts not yet completed as of the date of adoption.

This will result in higher gains on future sales of partial real estate interests due to recognizing 100% of the gain on the sale of the partial interest and recording the retained noncontrolling interest at fair value.

The Company recorded an immaterial net increase to retained earnings as of December 1, 2018, due to the cumulative impact of adopting ASU 2014-09, with the impact primarily related to the recognition of deferral of net margin from home deliveries.

In August 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 2016-15 was effective for the Company’s fiscal year beginning December 1, 2018 and subsequent interim periods.

The adoption of ASU 2016-15 did not have a material effect on the Company’s 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 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 accompanying consolidated statements of operations and comprehensive income (loss).

This is now disclosed with the analysis of changes in stockholders' equity within the accompanying consolidated statement of equity.

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 consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805), Clarifying the Definition of a Business ("ASU 2017-01").

ASU 2017- 01 clarifies the definition of a business with the objective of addressing whether transactions involving in-substance nonfinancial assets, held directly or in a subsidiary, should be accounted for as acquisitions or disposals of nonfinancial assets or of businesses.

ASU 2017-01 was effective for the Company’s fiscal year beginning December 1, 2018 and subsequent interim periods.

The adoption of ASU 2017-01 did not have a material impact on the Company’s consolidated financial statements.

New Accounting Pronouncements

In March 2016, the FASB issued ASU 2016-02, Leases ("ASU 2016-02"), which provides guidance for accounting for leases.

In March 2016, 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 (“ROU”) 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.

The lease classification determined whether the lease expense was recognized based on an effective interest rate method or on a straight line basis over the term of the lease.

Accounting for lessors remains largely unchanged from current GAAP.

ASU 2016-02 is effective for the Company beginning December 1, 2019.

The Company elected the available practical expedients on adoption.

Additionally, in preparation for adoption of the standard, the Company has implemented internal controls and key system functionality to enable the preparation of financial information.

The standard will not have a material impact on our consolidated statements of operations

ASU 2016-02 was effective for the Company beginning December 1, 2019.

The Company adopted using the modified retrospective approach and elected the available practical expedients on adoption.

Additionally, in preparation for adoption of the standard, the Company implemented internal controls and key system functionality to enable the preparation of financial information.

The standard did not have a material impact on the Company's consolidated statements of operations and comprehensive income (loss) or the Company's consolidated statements of cash flows.

As a result of the adoption, as of December 1, 2019, the Company has recorded $ 150.7 million of ROU assets and $ 159.7 million of lease liabilities on its consolidated balance sheets within other assets and other liabilities of the respective segments.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

and comprehensive income (loss) and our consolidated statements of cash flows.

Based on the Company’s current portfolio of leases, the Company expects the adoption of the standard will result in the recognition of ROU assets of approximately $ 150 million with a corresponding lease liability on its consolidated balance sheets within other assets and other liabilities.

Subsequent to the issuance of ASU 2016-02, the FASB issued ASUs 2018-01, Land Easement Practical Expedient for Transition to Topic 842 , 2018-10, Codification Improvements to Topic 842, Leases , 2018-11, Leases (Topic 842):

Targeted Improvements and 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 had 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):

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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 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, ASU 2019-05, Financial Instruments —Credit Losses (Topic 326) Targeted Transition Relief, ASU 2016-13, the FASB issued ASU 2019-10 Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) and ASU 2019-11 Codification Improvements to Topic 326, Financial Instruments—Credit Losses .

While the Company is continuing to evaluate the impact of the adoption of ASU 2016-13, the Company does not expect the adoption to have a material impact on its 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, Financial Instruments —Credit Losses (Topic 326) Targeted Transition Relief.

These ASUs do not change the core principle of the guidance in ASU 2016-13.

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Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.

The Company does not anticipate the impact of the adoption of ASU 2017-04 will have a material impact on the Company's 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 consolidated financial statements .

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Certain prior year amounts in the consolidated financial statements have been reclassified to conform with the 2020 presentation.

The Company's segments were adjusted to reflect RMF and certain other Rialto assets within the Financial Services segment effective December 1, 2018.

The remaining assets retained related to the Company's former Rialto segment were included in the Lennar Other segment.

In addition, the Company's strategic technology investments, which were part of Homebuilding, were reclassified to be included in the Lennar Other segment.

The Company's segments were adjusted to reflect the North Carolina divisions within the Central segment, which were previously part of the East segment.

This was due to a change in operations.

Additionally, the Company's self insurance subsidiary which was previously within the Financial Services segment is now within Homebuilding.

This was to better align the self insurance reserve related to homebuilding warranty, construction defect and liability claims within the Homebuilding segments.

Both changes are effective December 1, 2018 for the Company's balance sheets.

The Homebuilding segments' statements of operations were adjusted effective December 1, 2017 for the reclass of the North Carolina divisions.

The statements of operations were not adjusted for previous periods for the self-insurance subsidiary reclass due to immateriality.

These reclassifications were between segments and had no impact on the Company's total assets, total equity, revenues or net earnings in the consolidated financial statements.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Business Acquisition

Acquisition of CalAtlantic Group, Inc.

On February 12, 2018, the Company completed the acquisition of CalAtlantic Group, Inc.

(“CalAtlantic”) through a transaction in which CalAtlantic was merged with and into a wholly-owned subsidiary of the Company (“Merger Sub”), with Merger Sub continuing as the surviving corporation and a wholly-owned subsidiary of the Company (the “Merger”).

CalAtlantic was a homebuilder which built homes across the homebuilding spectrum, from entry level to luxury, in 43 metropolitan statistical areas spanning 19 states.

CalAtlantic also provided mortgage, title and escrow services.

A primary reason for the acquisition was to increase local market concentration in order to generate synergies and efficiencies.

Based on an evaluation of the provisions of ASC Topic 805, Business Combinations , ("ASC 805"), Lennar Corporation was determined to be the acquirer for accounting purposes.

The purchase price accounting reflected in the accompanying financial statements is provisional and is based upon estimates and assumptions that are subject to change within the measurement period (up to one year from the acquisition date pursuant to ASC 805).

The $ 3.3 billion allocated to goodwill in Homebuilding and the $ 175 million allocated to goodwill in Financial Services represents the excess of the purchase price over the estimated fair value of assets acquired and liabilities assumed.

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

CalAtlantic shares electing cash conversion

CalAtlantic shares exchanged

Exchange ratio for Class A common stock

Exchange ratio for Class B common stock

Number of shares of Lennar Class A common stock issued in exchange

Number of shares of Lennar Class B common stock issued in exchange (due to Class B common stock dividend)

Consideration attributable to Class A common stock

Consideration attributable to Class B common stock

Consideration attributable to equity awards that convert upon change of control

Consideration attributable to cash including fractional shares

Total purchase price

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands)

Homebuilding:

Cash and cash equivalents, restricted cash and receivables, net

Intangible asset (1)

Investments in unconsolidated entities

Total Homebuilding assets

Financial Services (2)

Homebuilding:

Accounts payable

Senior notes payable and other debts

Other liabilities (3)

Total Homebuilding liabilities

Financial Services

Total liabilities

Noncontrolling interests (4)

Total purchase price

Intangible asset includes trade name.

The amortization period for the trade name was approximately six months .

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 assignment 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.

Other liabilities include 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, ("ASC450") legal reserves are established when a loss is considered probable and the amount of loss can be reasonably estimated.

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

Homebuilding revenue and net earnings attributable to Lennar for the year ended November 30, 2018 included $ 7.0 billion of home sales revenues, and earnings before income taxes included $ 491.3 million of pre-tax earnings from CalAtlantic after the date of acquisition, which included acquisition and integration costs of $ 153.0 million .

These transaction expenses were included within acquisition and integration costs related to CalAtlantic in the accompanying consolidated statement of operation for the year ended November 30, 2018.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Subsequent Events

Subsequent to November 30, 2020, one of the Company's strategic investments, Opendoor, began trading on the Nasdaq stock market for which the Company expects to record a significant unrealized gain in the first quarter of fiscal 2021.

Subsequent to November 30, 2020, the Company entered into a venture that will invest in single family rental homes.

Operating and Reporting Segments

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In addition, the Company's homebuilding operations purchase, develop and sell land to third parties.

The Company's chief operating decision makers ("CODM") manage and assess the Company's performance at a regional level.

Therefore, the Company performed an assessment of the Company's operating segments in accordance with ASC 280, Segment Reporting, (“ASC 280”) and determined that each of the Company's four homebuilding regions (Homebuilding East, Homebuilding Central, Homebuilding Texas, and Homebuilding West), financial services operations, multifamily operations and Lennar Other are the Company's operating segments.

Information about homebuilding activities in the urban divisions that do not have economic characteristics similar to those in other divisions within the same geographic area is grouped under "Homebuilding Other," which is not a reportable segment.

In the first quarter of 2019, as a result of the reclassification of RMF and certain other Rialto assets from the Rialto segment to the Financial Services segment effective December 1, 2018, the Company 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.

As of and for the year ended November 30, 2019 , the Company’s reportable segments consist of:

The Company's chief operating decision makers manage and assess the Company's performance at a regional level.

Therefore, the Company performed an assessment of its operating segments in accordance with ASC 280, Segment Reporting , and determined that the following are its operating and reportable segments:

(1) Homebuilding East

3 unchanged sentences

(5) Financial Services

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, equity in earnings (loss) from unconsolidated entities and other income (expense), net, less the cost of homes sold and land sold, selling, general and administrative expenses incurred by the segment and loss due to litigation.

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

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

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

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

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

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.

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 of the Lennar Other segment include 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.

Operations of the Multifamily segment include revenues generated from land sales, revenue from construction activities and management fees generated from joint ventures, and equity in earnings from unconsolidated entities, less the cost of land sold, expenses related to construction activities and general and administrative expenses.

(6) Multifamily

(7) Lennar Other

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Each reportable segment follows the same accounting policies described in Note 1—"Summary of Significant Accounting Policies" to the consolidated financial statements.

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)

Homebuilding East

Homebuilding Central

Homebuilding Texas

Homebuilding West

Homebuilding Other

Financial Services

Corporate and unallocated

Homebuilding investments in unconsolidated entities:

Homebuilding East

Homebuilding Central

Homebuilding Texas

Homebuilding West

Homebuilding Other

Total Homebuilding investments in unconsolidated entities (1)

Multifamily investments in unconsolidated entities

Lennar Other investments in unconsolidated entities

Homebuilding goodwill (2)

Financial Services goodwill (2)

Lennar Other goodwill

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

In connection with the CalAtlantic acquisition, the Company recorded a provisional amount of homebuilding goodwill of $ 3.3 billion .

In connection with the WCI acquisition in 2017, the Company allocated $ 136.6 million of goodwill to the Homebuilding East reportable segment and $ 20.0 million to the Financial Services segment.

The portion allocated to the Financial Services segment was written off as part of the sale of the Florida real estate brokerage business in the first quarter of 2019.

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

(In thousands) November 30, 2020

Homebuilding Financial

Services Multifamily Lennar

Cash and cash equivalents $ 2,703,986 116,171 38,963 3,918 2,863,038

Restricted cash 15,211 54,481 — — 69,692

Receivables, net (1) 298,671 552,779 86,629 — 938,079

Inventories 16,925,228 — 249,920 — 17,175,148

Loans held-for-sale (2) — 1,490,105 — — 1,490,105

Loans held-for-investments, net — 72,626 — — 72,626

Investments held-to-maturity — 164,230 — — 164,230

Investments available-for-sale (3) — — — 53,497 53,497

Investments in unconsolidated entities 953,177 68,869 724,647 386,999 2,133,692

Goodwill 3,442,359 189,699 — — 3,632,058

Other assets (4) 1,190,793 68,027 75,749 8,443 1,343,012

$ 25,529,425 2,776,987 1,175,908 452,857 29,935,177

Notes and other debts payable, net $ 5,955,758 1,463,919 — 1,906 7,421,583

Other liabilities 3,969,893 180,329 252,911 11,060 4,414,193

$ 9,925,651 1,644,248 252,911 12,966 11,835,776

(In thousands) November 30, 2019

Homebuilding Financial

Services Multifamily Lennar

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-investments, net — 73,867 — — 73,867

Investments held-to-maturity — 190,289 — 54,117 244,406

Investments available-for-sale (3) — 3,732 48,206 — 51,938

Investments in unconsolidated entities 1,009,035 — 561,190 403,688 1,973,913

Goodwill 3,442,359 215,516 — — 3,657,875

Other assets (4) 1,021,684 130,699 58,711 34,297 1,245,391

$ 24,789,239 3,006,024 1,068,831 495,417 29,359,511

Notes and other debts payable, net $ 7,776,638 1,745,755 36,125 15,178 9,573,696

Other liabilities 3,298,527 242,568 196,030 14,860 3,751,985

$ 11,075,165 1,988,323 232,155 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 November 30, 2020 and November 30, 2019, respectively.

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

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

(4) As of November 30, 2020 and November 30, 2019, Financial Services other assets included mortgage loan commitments carried at fair value of $ 29.1 million and $ 16.3 million, respectively, and mortgage servicing rights carried at fair value of $ 2.1 million and $ 24.7 million, respectively.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended November 30,

(In thousands)

Homebuilding East

Homebuilding Central

Homebuilding Texas

Homebuilding West

Homebuilding Other

Financial Services

Total revenues

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

Year ended November 30, 2020

(In thousands) Homebuilding Financial

Services Multifamily Lennar

Other (1) Corporate and

unallocated (2) Total

Revenues $ 20,981,136 890,311 576,328 41,079 — 22,488,854

Operating earnings (loss) 2,988,907 480,952 22,681 ( 10,334 ) — 3,482,206

Homebuilding East

Homebuilding Central (1)

Homebuilding Texas

Homebuilding West

Homebuilding Other (2)

Financial Services

Multifamily (3)

Lennar Other (4)

Total operating earnings

Corporate general and administrative expenses — — — — ( 358,418 ) ( 358,418 )

Earnings (loss) before income taxes 2,988,907 480,952 22,681 ( 10,334 ) ( 358,418 ) 3,123,788

Year ended November 30, 2019

(In thousands) Homebuilding Financial

Services Multifamily Lennar

Other Corporate and

unallocated (2) Total

Revenues $ 20,793,216 824,810 604,700 36,835 — 22,259,561

Operating earnings 2,502,905 224,642 16,390 31,469 — 2,775,406

Corporate general and administrative expenses — — — — ( 341,114 ) ( 341,114 )

Earnings before income taxes 2,502,905 224,642 16,390 31,469 ( 341,114 ) 2,434,292

Year ended November 30, 2018

(In thousands) Homebuilding Financial

Services Multifamily Lennar

Other Corporate and

unallocated (2) Total

Revenues $ 19,077,597 954,631 421,132 118,271 — 20,571,631

Operating earnings (loss) 2,254,487 199,716 42,695 ( 33,707 ) — 2,463,191

Gain on sale of Rialto investment and asset management platform — — — — 296,407 296,407

1 unchanged sentence

Corporate general and administrative expenses — — — — ( 343,934 ) ( 343,934 )

Earnings before income taxes

Homebuilding Central operating loss for the year ended November 30, 2017 included a $ 140 million loss due to litigation.

For the year ended November 30, 2019 , Homebuilding Other's operating loss includes a $ 48.9 million loss on consolidation due to the consolidation of a previously unconsolidated entity.

Additionally, Homebuilding Other's revenues increased for the year ended November 30, 2019 due to the consolidation of that entity.

For the year ended November 30, 2018 , Homebuilding Other's operating earnings includes a $ 164.9 million gain on the sale of an 80 % interest in one of the Company's strategic joint ventures, Treasure Island Holdings.

For the years ended November 30, 2018 and 2017 , Homebuilding Other's operating earnings (loss) included an equity in loss from unconsolidated entities of $ 90.3 million and $ 49.5 million , respectively.

For the years ended November 30, 2019 , 2018 and 2017 , Multifamily's operating earnings included $ 11.3 million , $ 51.3 million and $ 85.7 million , respectively, of equity in earnings from unconsolidated entities and other gain primarily as a result of $ 28.1 million share of gains from the sale of two operating properties and an investment in an unconsolidated entity for the year ended November 30, 2019 , $ 61.2 million share of gains from the sale of six operating properties and an investment in an unconsolidated entity for the year ended November 30, 2018 and $ 96.7 million share of gains from the sale of seven operating properties for the year ended November 30, 2017 by its unconsolidated entities.

For the year ended November 30, 2018 , Lennar Other's operating loss was primarily as a result of non-recurring expenses, partially offset by a decrease in real estate owned and loan impairments due to the liquidation of the FDIC and bank portfolios and a decrease in interest expense.

For the year ended November 30, 2017 , Lennar Other's operating loss included $ 96.2 million of gross REO and loan impairments ( $ 44.7 million net of noncontrolling interests) as Lennar Other liquidated most of the remaining assets of the FDIC portfolio.

Earnings (loss) before income taxes 2,254,487 199,716 42,695 ( 33,707 ) ( 200,507 ) 2,262,684

(1) Operating loss for Lennar Other for the year ended November 30, 2020 included a $ 25.0 million write-down of assets held by Rialto legacy funds because of the disruption in the capital markets as a result of COVID-19 and the economic shutdown.

(2) Corporate and unallocated expenses primarily represent costs of operations at the Company's corporate headquarters in Miami.

These operations include the Company's executive offices, information technology, treasury, corporate accounting and tax, legal, internal audit, human resources.

Also included are property expenses related to the leases of corporate offices, data processing and general corporate expenses.

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.

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

Florida, New Jersey , Pennsylvania and South Carolina

Georgia, Illinois, Indiana, Maryland, Minnesota, North Carolina, Tennessee and Virginia

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

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

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

(In thousands) East Central Texas West Other Corporate and

Unallocated Total

Balance at November 30, 2020 $ 5,308,114 3,438,600 2,150,916 10,504,374 1,301,618 2,825,803 25,529,425

Balance at November 30, 2019 5,804,764 3,636,694 2,246,893 10,663,666 1,173,163 1,264,059 24,789,239

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended November 30,

(In thousands)

Homebuilding interest expense:

Homebuilding East

Homebuilding Central

Homebuilding Texas

Homebuilding West

Homebuilding Other

Total Homebuilding interest expense

Financial Services interest income, net

Lennar Other interest expense, net

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

Year ended November 30, 2020

(In thousands) East Central Texas West Other Total

Revenues $ 5,715,028 4,093,693 2,709,681 8,437,167 25,567 20,981,136

Operating earnings (loss) 933,297 482,929 421,594 1,241,494 ( 90,407 ) 2,988,907

Interest expense 93,245 58,777 29,901 178,498 13,683 374,104

Depreciation and amortization 21,504 13,659 9,366 50,316 249 95,094

Homebuilding East

Homebuilding Central

Homebuilding Texas

Homebuilding West

Homebuilding Other

Financial Services

Corporate and unallocated

Total depreciation and amortization

Net additions to (disposals of) operating properties and equipment 955 ( 11,370 ) 712 165,869 ( 32 ) 156,134

Homebuilding East

Homebuilding Central

Homebuilding Texas

Homebuilding West

Homebuilding Other

Year ended November 30, 2019

(In thousands) East Central Texas West Other Total

Revenues $ 5,717,858 4,120,085 2,578,962 8,227,304 149,007 20,793,216

Operating earnings (loss) 830,619 431,372 285,874 1,050,850 ( 95,810 ) 2,502,905

Interest expense 96,569 64,104 37,144 183,906 13,272 394,995

Depreciation and amortization 20,623 11,356 8,395 45,456 369 86,199

Net additions to (disposals of) operating properties

and equipment ( 31,338 ) 89 950 63,803 ( 1,214 ) 32,290

Year ended November 30, 2018

(In thousands) East Central Texas West Other Total Homebuilding

Revenues $ 5,016,944 3,523,807 2,421,399 8,059,850 55,597 19,077,597

Operating earnings 621,724 320,105 172,449 1,082,302 57,907 2,254,487

Interest expense 82,024 44,925 32,930 151,823 4,462 316,164

Depreciation and amortization 17,995 7,904 9,041 36,013 1,022 71,975

Net additions to operating properties and equipment 26,387 14,692 200 42,525 15,549 99,353

Financial Services

Corporate and unallocated

Total net additions (disposals of) operating properties and equipment

Homebuilding equity in earnings (loss) from unconsolidated entities:

Homebuilding East

Homebuilding Central

Homebuilding Texas

Homebuilding West

Homebuilding Other (1)

Total Homebuilding equity in loss from unconsolidated entities

Multifamily equity in earnings from unconsolidated entities and other gain

Lennar Other equity in earnings from unconsolidated entities

For the year ended November 30, 2019 , equity in loss included the Company's share of operational net losses from unconsolidated entities driven by general and administrative expenses, partially offset by profits from land sales.

For the year ended November 30, 2018 , equity in loss included the Company's share of operational net losses from unconsolidated entities driven by valuation adjustments and general and administrative expenses, partially offset by profits from land sales.

For the year ended November 30, 2017 , equity in loss included the Company's share of operational net losses from unconsolidated entities driven by general and administrative expenses and valuation adjustments, partially offset by profits from land sales.

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 LMF Commercial business.

The Financial Services segment operates generally in the same states as the Company’s homebuilding operations as well as in other states.

At November 30, 2020, the Financial Services warehouse facilities were all 364 -day repurchase facilities and were used to fund residential mortgages or commercial mortgages for LMF Commercial as follows:

(In thousands) Maximum Aggregate Commitment

Residential facilities maturing:

January 2021 (1) $ 500,000

March 2021 500,000

June 2021 600,000

July 2021 200,000

Total - Residential facilities $ 1,800,000

LMF Commercial facilities maturing:

December 2020 (2) $ 500,000

November 2021 100,000

December 2021 200,000

Total - LMF Commercial facilities $ 800,000

Total $ 2,600,000

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Homebuilding Receivables

(In thousands)

Accounts receivable

Mortgages and notes receivable

Allowance for doubtful accounts

Receivables, net

At November 30, 2019 and 2018 , Homebuilding accounts receivable related primarily to other receivables and rebates.

The Company performs ongoing credit evaluations of its customers and generally does not require collateral for accounts receivable.

Mortgages and notes receivable arising from the sale of homes and land are generally collateralized by the property sold to the buyer.

Allowances are maintained for potential credit losses based on historical experience, present economic conditions and other factors considered relevant by the Company.

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

Years Ended November 30,

(1) Subsequent to November 30, 2020, the maturity date was extended to December 2021.

(2) Includes $ 50 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 November 30, 2020.

The Financial Services segment uses 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, which are guaranteed by Lennar Corporation, finance LMF Commercial loan originations and securitization activities and are secured by an up to 80 % interest in the originated commercial loans financed.

Borrowings and collateral under the facilities and their prior year predecessors were as follows:

(In thousands) 2020 2019

Costs and expenses

Other income (1)

Net loss of unconsolidated entities (1)

Homebuilding equity in loss from unconsolidated entities (1)

During the year ended November 30, 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 year ended November 30, 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 year ended November 30, 2018 , Homebuilding equity in loss from unconsolidated entities was

primarily attributable to our share of net operating losses from our unconsolidated entities which were primarily driven by valuation adjustments related to assets of Homebuilding's unconsolidated entities and general and administrative expenses, partially offset by profits from land sales.

For the year ended November 30, 2017 , Homebuilding equity in loss from unconsolidated entities was primarily attributable to the Company's share of net operating losses from the Company's unconsolidated entities which were primarily driven by general and administrative expenses and valuation adjustments related to assets of Homebuilding unconsolidated entities, partially offset by the profits from land sales.

One of the Company’s unconsolidated entities had equity in earnings of $ 11.9 million relating to an equity method investee selling 475 homesites to a third-party land bank.

Simultaneous with the purchase by the land bank, the Company entered into an option contract to purchase all 475 homesites from the land bank.

Due to the Company’s continuing involvement with respect to the homesites sold from the investee entity, the Company deferred all of its equity in earnings from the unconsolidated entity relating to the sale transaction, which amounted to $ 4.9 million .

Borrowings under the residential facilities $ 1,185,797 1,374,063

Collateral under the residential facilities 1,231,619 1,423,650

Borrowings under the LMF Commercial facilities 124,617 216,870

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

LMF Commercial - loans held-for-sale

During the year ended November 30, 2020, LMF Commercial originated commercial loans with a total principal balance of $ 703.8 million, all of which were recorded as loans held-for-sale and sold $ 705.1 million of commercial loans into five separate securitizations.

As of November 30, 2020, there were no unsettled transactions.

During the year ended November 30, 2019, LMF Commercial originated commercial loans with a total principal balance of $ 1.6 billion, nearly all of which were recorded as loans held-for-sale except $ 15.3 million which were recorded as accrual loans receivables, net, and sold $ 1.4 billion of loans into 11 separate securitizations.

As of November 30, 2019, originated loans with an unpaid balance of $ 158.4 million which were sold into a securitization trust but not settled and thus were included as receivables, net.

Investments held-to-maturity

At November 30, 2020 and 2019, the carrying value of Financial Services' commercial mortgage-backed securities ("CMBS") was $ 164.2 million and $ 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, no impairment charges were recorded during either the year ended November 30, 2020 or 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 November 30, 2020 and 2019, the carrying amount, net of debt issuance costs, of

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Balance Sheets

outstanding debt in these agreements was $ 153.5 million and $ 154.7 million, respectively, and interest incurred at a rate of 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.

Each reportable segment follows the same accounting policies described in Note 1—"Summary of Significant Accounting Policies" to the consolidated financial statements.

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.

Investments in Unconsolidated Entities

Homebuilding Unconsolidated Entities

The investments in Company's Homebuilding unconsolidated entities were as follows:

(In thousands) 2020 2019

Cash and cash equivalents

Liabilities and equity:

Accounts payable and other liabilities

Homebuilding investments in unconsolidated entities (2)

Debt presented above is net of debt issuance costs of $ 13.0 million and $ 12.4 million , as of November 30, 2019 and 2018 , respectively.

The decrease in debt was primarily related to the Company's consolidation of a previously unconsolidated entity during the year ended November 30, 2019 .

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 November 30, 2019 and 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 November 30, 2019 and 2018 was $ 1.3 billion and $ 1.2 billion , respectively.

Investments in unconsolidated entities (1) (2) $ 953,177 1,009,035

Underlying equity in unconsolidated entities' net assets (1) 1,269,701 1,313,892

(1) The basis difference was primarily as a result of the Company contributing its investment in three strategic joint ventures with a higher fair value than book value for an investment in the FivePoint entity and deferring equity in earnings on land sales to the Company.

1 unchanged sentence

As of November 30, 2020 and 2019, the carrying amount of the Company's investment was $ 392.1 million and $ 374.0 million, respectively.

During the year ended November 30, 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 Consolidated Statement of Operations and Comprehensive Income (Loss).

The Company’s partners generally are unrelated homebuilders, land owners/developers and financial or other strategic partners.

1 unchanged sentence

The Company shares in the profits and losses of these unconsolidated entities generally in accordance with its ownership interests.

In many instances, the Company is appointed as the day-to-day manager under the direction of a management committee that has shared powers amongst the partners of the unconsolidated entities and the Company receives management fees and/or reimbursement of expenses for performing this function.

During the years ended November 30, 2019 , 2018 and 2017 , the Company received management fees and reimbursement of expenses, net of deferrals, from Homebuilding unconsolidated entities totaling $ 2.7 million , $ 7.0 million and $ 4.4 million , respectively.

In many instances, the Company is appointed as the day-to-day manager under the direction of a management committee that has shared powers among the partners of the unconsolidated entities and the Company receives management fees and/or reimbursement of expenses for performing this function.

The Company and/or its partners sometimes obtain options or enter into other arrangements under which the Company can purchase portions of the land held by the unconsolidated entities.

Option prices are generally negotiated prices that approximate fair value when the Company receives the options.

During the years ended November 30, 2019 , 2018 and 2017 , $ 83.0 million , $ 169.5 million and $ 226.2 million , respectively, of the unconsolidated entities’ revenues were from land sales to the Company.

The details of the activity was as follows:

Years Ended November 30,

(In thousands) 2020 2019 2018

Land sales revenues (1) $ 99,935 82,966 169,521

Management fees and reimbursement of expenses, net of deferrals 2,363 2,716 7,026

(1) The Company does not include in its Homebuilding equity in loss from unconsolidated entities its pro-rata share of unconsolidated entities’ earnings resulting from land sales to its homebuilding divisions.

1 unchanged sentence

This in effect defers recognition of the Company’s share of the unconsolidated entities’ earnings related to these sales until the Company delivers a home and title passes to a third-party homebuyer.

The Homebuilding 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 was $ 1.1 billion as of both November 30, 2020 and 2019, respectively, of which the Company's maximum recourse exposure was $ 4.9 million and $ 10.8 million as of November 30, 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.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The total debt of the Homebuilding unconsolidated entities in which the Company has investments was as follows:

(Dollars in thousands)

Non-recourse bank debt and other debt (partner’s share of several recourse)

Non-recourse debt with completion guarantees

Non-recourse debt without completion guarantees

Non-recourse debt to the Company

The Company’s maximum recourse exposure (1)

Debt issuance costs

Total debt (1)

The Company’s maximum recourse exposure as a % of total JV debt

As of November 30, 2019 and 2018 , the Company's maximum recourse exposure was primarily related to the Company providing repayment guarantee on two and four 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 during the year ended November 30, 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.

The maintenance guarantees only apply if the value of the collateral (generally land and improvements) is less than a specified percentage of the loan balance.

If the Company is required to make a payment under a maintenance guarantee to bring the value of the collateral above the specified percentage of the loan balance, the payment would generally constitute a capital contribution or loan to the Homebuilding unconsolidated entity and increase the Company's share of any funds the unconsolidated entity distributes.

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 generally 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 entity distributes.

2 unchanged sentences

In certain instances, the Company has placed performance letters of credit and surety bonds with municipalities for its joint ventures (see Note 4).

Homebuilding Operating Properties and Equipment

Operating properties and equipment are included in Homebuilding other assets in the consolidated balance sheets and were as follows:

Financial Services Unconsolidated Entity

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 was required to consolidate the buyer’s results at that time.

During the year ended November 30, 2020, there was a significant equity raise that was completed, which resulted in the entity’s deconsolidation.

Upon deconsolidation, the Company recorded a gain of $ 61.4 million.

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 November 30, 2020 and November 30, 2019, the fair value of the completion guarantees was immaterial.

As of November 30, 2020 and November 30, 2019, Multifamily segment's unconsolidated entities had non-recourse debt with completion guarantees of $ 722.9 million and $ 867.3 million, respectively.

In many instances, the Multifamily segment is appointed as the construction, development and property manager for its Multifamily unconsolidated entities and receives fees for performing this function.

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 investments.

The details of the activity was as follows:

Years Ended November 30,

(In thousands) 2020 2019 2018

Operating properties (1)

Leasehold improvements

Furniture, fixtures and equipment

Accumulated depreciation and amortization

Operating properties primarily include solar systems, rental operations and commercial properties.

General contractor services, net of deferrals $ 400,808 355,388 353,194

General contractor costs 383,649 340,081 338,717

Management fee income 56,253 53,597 48,801

The Multifamily segment includes Multifamily Venture Fund I (the "LMV I") and Multifamily Venture Fund II LP (the "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 of and during the year ended November 30, 2020 are included below:

November 30, 2020

(In thousands) LMV I LMV II

Lennar's carrying value of investments $ 328,365 288,476

Equity commitments 2,204,016 1,257,700

Equity commitments called 2,139,322 995,206

Lennar's equity commitments 504,016 381,000

Lennar's equity commitments called 496,483 300,393

Lennar's remaining commitments 7,533 80,607

Distributions to Lennar during the year ended November 30, 2020

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.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Condensed Financial Information of Unconsolidated Entities

Summarized condensed financial information on a combined 100% basis related to the Company's unconsolidated entities that are accounted for under the equity method was as follows:

(In thousands) November 30, 2020

Homebuilding Financial Services Multifamily Lennar

Cash and cash equivalents $ 546,013 111,109 94,801 173,408 814,222

Loans receivable — — — 95,281 95,281

Real estate owned — — — 295,391 295,391

Investment securities — 75,714 — 2,093,766 2,093,766

Investments in partnerships — — — 260,721 260,721

Inventories 4,527,371 — — — 4,527,371

Operating properties and equipment 148,020 — 5,392,681 23,968 5,564,669

Other assets 862,875 164,782 115,968 1,099,099 2,077,942

$ 6,084,279 351,605 5,603,450 4,041,634 15,729,363

Liabilities and equity:

Accounts payable and other liabilities $ 866,812 159,271 219,522 31,113 1,117,447

Debt (1) 1,085,639 — 2,519,567 292,313 3,897,519

Equity 4,131,828 192,334 2,864,361 3,718,208 10,714,397

$ 6,084,279 351,605 5,603,450 4,041,634 15,729,363

Investments in unconsolidated entities $ 953,177 68,869 724,647 386,999 2,133,692

(In thousands) November 30, 2019

Homebuilding Financial Services Multifamily Lennar

Cash and cash equivalents $ 602,480 — 74,726 122,089 799,295

Loans receivable — — — 690,270 690,270

Real estate owned — — — 282,832 282,832

Investment securities — — — 2,404,987 2,404,987

Investments in partnerships — — — 768,219 768,219

Inventories 4,514,885 — — — 4,514,885

Operating properties and equipment — — 4,618,518 — 4,618,518

Other assets 1,007,698 — 66,960 204,009 1,278,667

$ 6,125,063 — 4,760,204 4,472,406 15,357,673

Liabilities and equity:

Accounts payable and other liabilities $ 816,719 — 212,706 38,770 1,068,195

Debt (1) 1,094,588 — 2,113,696 775,648 3,983,932

Equity 4,213,756 — 2,433,802 3,657,988 10,305,546

$ 6,125,063 — 4,760,204 4,472,406 15,357,673

Investments in unconsolidated entities $ 1,009,035 — 561,190 403,688 1,973,913

(1) Debt noted above is net of debt issuance costs.

As of November 30, 2020 and 2019 this includes $ 11.8 million and $ 13.0 million, respectively, for Homebuilding, $ 31.1 million and $ 26.8 million, respectively, for Multifamily and an immaterial amount of debt issuance costs for Lennar Other.

(In thousands)

Statement of Operations

Revenues Cost and expenses Other income (1) Net earnings (loss) of unconsolidated entities Equity in earnings (loss) from unconsolidated entities

November 30, 2020 $ 1,362,686 1,221,873 ( 244,680 ) ( 103,867 ) ( 13,939 )

November 30, 2019 782,712 774,550 347,018 355,180 13,393

November 30, 2018 1,017,271 1,004,927 222,003 234,347 ( 14,777 )

(1) Other income, net included realized and unrealized gains (losses) on investments.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Homebuilding Senior Notes and Other Debts Payable

(Dollars in thousands) 2020 2019

6.625% senior notes due 2020 (1)

6.25 % senior notes due December 2021

$ 305,221 310,252

4.125 % senior notes due 2022

598,876 597,885

5.375 % senior notes due 2022

255,342 258,198

4.750 % senior notes due 2022

572,724 571,644

4.875 % senior notes due December 2023

4.125% senior notes due 2022

397,347 396,553

4.500 % senior notes due 2024

647,528 646,802

5.875 % senior notes due 2024

4.875% senior notes due December 2023

443,484 448,158

4.750 % senior notes due 2025

498,002 497,558

5.25 % senior notes due 2026

406,709 407,921

5.00 % senior notes due 2027

352,508 352,892

4.75 % senior notes due 2027

894,760 893,046

6.625 % senior notes due 2020

2.95 % senior notes due 2020

0.25% convertible senior notes due 2019

8.375 % senior notes due 2021

1 unchanged sentence

Mortgage notes on land and other debt 583,257 874,887

These notes were obligations of CalAtlantic when it was acquired, and were subsequently exchanged in part for notes of Lennar Corporation as follows:

$ 267.7 million principal amount of 6.625 % senior notes due 2020 , $ 397.6 million principal amount of 8.375 % senior notes due 2021 , $ 292.0 million principal amount of 6.25 % senior notes due 2021 , $ 240.8 million principal amount of 5.375 % senior notes due 2022 , $ 421.4 million principal amount of 5.875 % senior notes due 2024 , $ 395.5 million principal amount of 5.25 % senior notes due 2026 and $ 347.3 million principal amount of 5.00 % senior notes due 2027 .

As part of purchase accounting, the senior notes have been recorded at their fair value as of the date of acquisition (February 12, 2018).

$ 5,955,758 7,776,638

The carrying amounts of the senior notes listed above are net of debt issuance costs of $ 15.9 million and $ 22.9 million, as of November 30, 2020 and 2019, respectively.

In November 2019, the Company redeemed $ 600 million aggregate principal amount of its 4.50 % senior notes due November 2019.

The redemption price, which was paid in cash, was 100 % of the principal amount plus accrued but unpaid interest.

In June 2019, 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 unsecured revolving credit facility (the "Credit Facility") to increase the maximum borrowings from $ 2.0 billion to $ 2.4 billion and extended the maturity to April 2024, with $ 50 million maturing in June 2020.

In September 2019, the Credit Facility commitments were increased by $ 50 million to total commitments of $ 2.5 billion .

As of November 30, 2019 , the Credit Facility included a $ 350 million accordion feature, subject to additional commitments, thus the maximum borrowings could be $ 2.8 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.

At November 30, 2020, the Company had an unsecured revolving credit facility (the "Credit Facility") with maximum borrowings of $ 2.4 billion maturing in 2024.

The credit agreement also provides that up to $ 500 million in commitments may be used for letters of credit.

As of both November 30, 2020 and 2019, the Company had no outstanding borrowings under the Credit Facility.

Subsequent to November 30, 2020, the maximum borrowings were increased by $ 100 million to $ 2.5 billion and included a $ 300 million accordion feature, subject to additional commitments, thus the maximum borrowings could be $ 2.8 billion.

Under the Credit Facility 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.

1 unchanged sentence

The Company believes it was in compliance with its debt covenants at November 30, 2020.

In addition, the Company had $ 305 million in letter of credit facilities with different financial institutions at November 30, 2019 .

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company’s performance letters of credit outstanding were $ 715.8 million and $ 598.4 million at November 30, 2019 and 2018 , respectively.

The Company’s financial letters of credit outstanding were $ 184.1 million and $ 165.4 million at November 30, 2019 and 2018 , respectively.

In addition to the Credit Facility, the Company has other letter of credit facilities with different financial institutions.

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 November 30, 2019 , the Company had outstanding surety bonds of $ 2.9 billion including performance surety bonds related to site improvements at various projects (including certain projects of the Company’s joint ventures) and financial surety bonds.

Additionally, at November 30, 2020, the Company had outstanding surety bonds including performance surety bonds related to site improvements at various projects (including certain projects of the Company’s joint ventures) and financial surety bonds.

Although significant development and construction activities have been completed related to these site improvements, these bonds are generally not released until all development and construction activities are completed.

As of November 30, 2019 , there were approximately $ 1.4 billion , or 48 % , of anticipated future costs to complete related to these site improvements.

The Company does not presently anticipate any draws upon these bonds or letters of credit, but if any such draws occur, the Company does not believe they would have a material effect on its financial position, results of operations or cash flows.

The Company's outstanding letters of credit and surety bonds are described below:

(In thousands) November 30,

Performance letters of credit $ 752,096 715,793

Surety bonds 3,087,711 2,946,167

Anticipated future costs primarily for site improvements related to performance surety bonds 1,584,642 1,427,145

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The terms of each of the Company's senior notes outstanding at November 30, 2020 were as follows:

Senior Notes Outstanding (1)

Principal Amount

Net Proceeds (2)

Senior Notes Outstanding (1) Principal Amount Net Proceeds (2) Price Dates Issued

(Dollars in thousands)

6.625% senior notes due 2020

2.95% senior notes due 2020

November 2017

8.375% senior notes due 2021

4.750% senior notes due 2021

6.25 % senior notes due December 2021

$ 300,000 (3) (3) (3)

4.125 % senior notes due 2022

600,000 595,160 100 % January 2017

5.375 % senior notes due 2022

250,000 (3) (3) (3)

4.750 % senior notes due 2022

3 unchanged sentences

4.500 % senior notes due 2024

650,000 644,838 100 % April 2017

5.875 % senior notes due 2024

425,000 (3) (3) (3)

4.750 % senior notes due 2025

500,000 495,528 100 % April 2015

5.25 % senior notes due 2026

400,000 (3) (3) (3)

5.00 % senior notes due 2027

350,000 (3) (3) (3)

4.75 % senior notes due 2027

7 unchanged sentences

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.

Although the guarantees are full, unconditional and joint and several while they are in effect, (i) a subsidiary will have its guarantee suspended at any time when it is not directly or indirectly guaranteeing at least $ 75 million of debt of Lennar Corporation (the parent company) other than senior notes, 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.

At November 30, 2020, the Company had mortgage notes on land and other debt due at various dates through 2036 bearing interest at rates up to 11.0 % with an average interest rate of 4.8 %.

1 unchanged sentence

During the years ended November 30, 2020 and 2019, the Company retired $ 555.6 million and $ 172.5 million, respectively, of mortgage notes on land and other debt.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The minimum aggregate principal maturities of Homebuilding senior notes and other debts payable during the five years subsequent to November 30, 2020 and thereafter are as follows:

(In thousands)

(In thousands) Debt

2021 $ 293,177

2022 1,805,848

2024 1,518,748

Thereafter 1,672,839

The Company expects to pay its near-term maturities as they come due through cash generated from operations, the issuance of additional debt or equity offerings as well as borrowings under the Company's Credit Facility.

Financial Services Segment

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

(In thousands)

Cash and cash equivalents

Restricted cash

Receivables, net (1)

Loans held-for-sale (2)

Loans held-for-investment, net

Investments held-to-maturity

Investments available-for-sale (3)

Other assets (5)

Notes and other debts payable

Other liabilities (6)

Receivables, net, primarily related to loans sold to investors for which the Company had not yet been paid.

Loans held-for-sale related to unsold loans carried at fair value.

Investments available-for-sale are carried at fair value with changes in fair value recorded as a component of accumulated other comprehensive income (loss).

As of November 30, 2019 and 2018 , goodwill included $ 175.4 million related to the CalAtlantic acquisition (See Note 2).

As of November 30, 2019 and 2018 , other assets included mortgage loan commitments carried at fair value of $ 16.3 million and $ 16.4 million , respectively, and mortgage servicing rights carried at fair value of $ 24.7 million and $ 37.2 million , respectively.

As of November 30, 2019 and 2018 , other liabilities included $ 60.7 million and $ 60.3 million , respectively, of certain of the Company’s self-insurance reserves related to construction defects, general liability and workers’ compensation, and forward contracts carried at fair value of $ 3.9 million and $ 10.4 million , respectively.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

At November 30, 2019 , the Financial Services segment warehouse facilities used to fund residential mortgages were as follows:

(In thousands)

Maximum Aggregate Commitment

364-day warehouse repurchase facility that matures December 2019 (1)

364-day warehouse repurchase facility that matures March 2020 (2)

364-day warehouse repurchase facility that matures June 2020

364-day warehouse repurchase facility that matures October 2020 (3)

Subsequent to November 30, 2019 , the maturity date was extended to March 2020 and the maximum aggregate commitment was decreased to $ 300 million .

As of November 30, 2019 , the maximum aggregate commitment includes an uncommitted amount of $ 500 million .

Maximum aggregate commitment includes an uncommitted amount of $ 300 million .

Maximum aggregate commitment includes an uncommitted amount of $ 400 million .

The Financial Services segment uses these facilities to finance its residential mortgage lending activities until the mortgage loans are sold to investors and the proceeds are collected.

The facilities are non-recourse to the Company and are expected to be renewed or replaced with other facilities when they mature.

Borrowings under the facilities and their prior year predecessors were $ 1.4 billion and $ 1.3 billion at November 30, 2019 and 2018 , respectively, and were collateralized by mortgage loans and receivables on loans sold to investors but not yet paid for with outstanding principal balances of $ 1.4 billion and $ 1.3 billion at November 30, 2019 and 2018 , respectively.

The combined effective interest rate on the facilities at November 30, 2019 was 3.5 % .

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

Without the facilities, the Financial Services segment would have to use cash from operations and other funding sources to finance its lending activities.

RMF - loans held-for-sale

During the year ended November 30, 2019 , RMF originated loans with a total principal balance of $ 1.6 billion , nearly all of which were recorded as loans held-for-sale, $ 15.3 million which were recorded as accrual loans within loans receivables, net, and sold $ 1.4 billion of loans into 11 separate securitizations.

During the year ended November 30, 2018 , RMF originated loans with a principal balance of $ 1.4 billion all of which were recorded as loans held-for-sale and sold $ 1.5 billion of loans into 16 separate securitizations.

As of November 30, 2019 and 2018 , originated loans with an unpaid balance of $ 158.4 million and $ 218.4 million were sold into a securitization trust but not settled and thus were included as receivables, net, respectively.

At November 30, 2019 , RMF warehouse facilities were as follows:

(In thousands)

Maximum Aggregate Commitment

364-day warehouse repurchase facility that matures December 2019 (1)

364-day warehouse repurchase facility that matures November 2020

Total - Loans origination and securitization business

Warehouse repurchase facility that matures December 2019 (two - one year extensions) (2)

Subsequent to November 30, 2019 , the maturity date was extended to December 2020.

RMF uses this warehouse repurchase facility to finance the origination of floating rate accrual loans, which are reported as accrual loans within loans receivable, net.

There were borrowings under this facility of $ 11.4 million as of November 30, 2019 .

There were no borrowings under this facility as of November 30, 2018 .

Borrowings under the facilities that finance RMF 's loan originations and securitization activities were $ 216.9 million and $ 178.8 million as of November 30, 2019 and 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 they mature.

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

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Without the facilities, the Financial Services segment would have to use cash from operations and other funding sources to finance its lending activities.

Investments held-to-maturity

At November 30, 2019 and 2018 , the carrying value of Financial Services' commercial mortgage-backed securities ("CMBS") was $ 166.0 million and $ 137.0 million , respectively.

These securities were purchased at discount rates 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 management’s assessment, no impairment charges were recorded during the years ended November 30, 2019 , 2018 and 2017 .

The Financial Services segment classified these securities as held-to-maturity based on its intent and ability to hold the securities until maturity.

Multifamily Segment

The Company is actively involved, primarily through unconsolidated entities, in the development, construction and property management of multifamily rental properties.

The Multifamily segment focuses on developing a geographically diversified portfolio of institutional quality multifamily rental properties in select U.S.

The assets and liabilities related to the Multifamily segment were as follows:

(In thousands)

Cash and cash equivalents

Receivables (1)

Land under development

Investments in unconsolidated entities

Assets held-for-sale, net

Note payable (2)

Accounts payable and other liabilities

Receivables primarily related to general contractor services, net of deferrals, and management fee income receivables due from unconsolidated entities as of November 30, 2019 and 2018 .

Note payable is net of debt issuance costs.

The unconsolidated entities in which the Multifamily segment has investments usually finance their activities with a combination of partner equity and debt financing.

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 November 30, 2019 and 2018 , the fair value of the completion guarantees was immaterial.

Additionally, as of November 30, 2019 and 2018 , the Multifamily segment had $ 4.2 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 outstanding are included in the disclosure in Note 7 related to the Company's performance and financial letters of credit.

As of November 30, 2019 and 2018 , the Multifamily segment's unconsolidated entities had non-recourse debt with completion guarantees of $ 867.3 million and $ 1.0 billion , respectively.

In many instances, the Multifamily segment is appointed as the construction, development and property manager of certain of its Multifamily unconsolidated entities and receives fees for performing this function.

During the years ended November 30, 2019 , 2018 and 2017 , the Multifamily segment received fee income, net of deferrals, from its unconsolidated entities of $ 53.6 million , $ 48.8 million and $ 53.8 million , respectively.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 investments.

During the years ended November 30, 2019 , 2018 and 2017 , the Multifamily segment provided general contractor services, net of deferrals, totaling $ 355.4 million , $ 353.2 million and $ 341.0 million , respectively, which were offset by costs related to those services of $ 340.1 million , $ 338.7 million and $ 330.4 million , respectively.

The Lennar Multifamily Venture Fund I LP ("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 year ended November 30, 2019 , $ 184.7 million in equity commitments were called, of which the Company contributed its portion of $ 44.7 million .

During the year ended November 30, 2019 , the Company received $ 35.5 million of distributions as a return of capital from LMV I.

As of November 30, 2019 , $ 2.1 billion of the $ 2.2 billion in equity commitments had been called, of which the Company had contributed $ 485.5 million representing its pro-rata portion of the called equity, resulting in a remaining equity commitment for the Company of $ 18.5 million .

As of November 30, 2019 and 2018 , the carrying value of the Company's investment in LMV I was $ 371.0 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.

As of and for the year ended November 30, 2019 , $ 330.2 million in equity commitments were called, of which the Company contributed its portion of $ 94.1 million , which was made up of a $ 191.0 million inventory and cash contributions, offset by $ 96.9 million of distributions as a return of capital, resulting in a remaining equity commitment for the Company of $ 205.7 million .

As of November 30, 2019 , $ 582.3 million of the $ 1.3 billion in equity had been called.

As of November 30, 2019 and 2018 , the carrying value of the Company's investment in LMV II was $ 153.3 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 November 30, 2019 , LMV II included 16 undeveloped multifamily assets totaling approximately 5,600 apartments with projected project costs of approximately $ 2.4 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

(In thousands)

Cash and cash equivalents

Operating properties and equipment

Liabilities and equity:

Accounts payable and other liabilities

Notes payable (1)

Multifamily investments in unconsolidated entities

Notes payable are net of debt issuance costs of $ 26.8 million and $ 15.7 million , as of November 30, 2019 and 2018 , respectively.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Statements of Operations

Years Ended November 30,

(In thousands)

Costs and expenses

Other income, net

Net earnings (loss) of unconsolidated entities

Multifamily equity in earnings from unconsolidated entities and other gain (1)

During the year ended November 30, 2019 , the Multifamily segment sold, through its unconsolidated entities, two operating properties and an investment in an unconsolidated entity 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 unconsolidated entity 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 of unconsolidated entities.

During the year ended November 30, 2018 , the Multifamily segment sold, through its unconsolidated entities six operating properties and an investment in an unconsolidated entity resulting in the segment's $ 61.2 million share of gains.

The gain of $ 15.7 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 from unconsolidated entities and other gain, and are not included in net earnings of unconsolidated entities.

During the year ended November 30, 2017 , the Multifamily segment sold seven operating properties, through its unconsolidated entities resulting in the segment's $ 96.7 million share of gains.

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 and liabilities related to Lennar Other were as follows:

(In thousands)

Cash and cash equivalents

Restricted cash

Real estate owned, net

Investments in unconsolidated entities

Investments held-to-maturity

Notes and other debts payable

Other liabilities

Investments held-to-maturity

At November 30, 2019 and 2018 , the carrying value of Lennar Other's CMBS was $ 54.1 million and $ 60.0 million , respectively.

These securities were purchased at discount rates ranging from 6 % to 86 % 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 management’s assessment, no impairment charges were recorded during the years ended November 30, 2019 , 2018 and 2017 .

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 November 30, 2019 and November 30, 2018 , the carrying amount, net of debt issuance costs, of outstanding debt in these agreements was $ 13.3 million and $ 12.6 million , respectively, and the interest is incurred at a rate of 3.9 % .

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Balance Sheets

(In thousands)

Cash and cash equivalents

Loans receivable

Real estate owned

Investment securities

Investments in partnerships

Liabilities and equity:

Accounts payable and other liabilities

Notes payable (1)

Lennar Other investments in unconsolidated entities

Notes payable are net of debt issuance costs.

Statements of Operations

Years Ended November 30,

(In thousands)

Costs and expenses

Other income, net (1)

Net earnings of unconsolidated entities

Lennar Other equity in earnings from unconsolidated entities

Other income, net included realized and unrealized gains (losses) on investments.

The provision for income taxes consisted of the following:

1 unchanged sentence

(In thousands) 2020 2019 2018

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Federal $ 428,907 298,701 246,604

State 135,246 53,400 30,530

$ 564,153 352,101 277,134

Federal $ 59,065 165,080 189,096

State 33,017 74,992 78,941

92,082 240,072 268,037

$ 656,235 592,173 545,171

A reconciliation of the statutory rate and the effective tax rate was as follows:

Percentage of Pretax Income

2020 2019 2018

Statutory rate 21.00 % 21.00 % 22.22 %

State income taxes, net of federal income tax benefit 4.00 4.17 3.81

Tax credits (1) ( 4.46 ) ( 1.49 ) ( 1.60 )

Nondeductible compensation 0.57 0.45 —

4 unchanged sentences

Changes in tax law (2) — — 3.06

Other ( 0.09 ) 0.18 0.44

Effective rate 21.02 % 24.26 % 24.33 %

In December 2017, the Tax Cuts and Jobs Act was enacted which had a positive impact on the Company's effective tax rate in 2019 and 2018 and will have a positive impact in subsequent years.

The tax reform bill reduced the maximum federal corporate income tax rate to 21% , which reduced the value of the Company's deferred tax assets.

(1) In December 2019, the Congress retroactively extended the new energy efficient home tax credit for homes delivered in 2018 to 2020.

(2) In December 2017, the Tax Cuts and Jobs Act was enacted which reduced the maximum federal corporate income tax rate to 21%, which reduced the value of the Company's deferred tax assets.

As a result, the Company recorded a non-cash one-time write down of deferred tax assets that resulted in income tax expense of $ 68.6 million in fiscal year 2018.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

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Net operating loss carryforwards 88,021 108,250

Investments in partnerships

Capitalized expenses 130,910 72,054

Investments in unconsolidated entities 67,405 55,306

Other assets 76,715 84,454

Total deferred tax assets 661,903 669,949

7 unchanged sentences

Net deferred tax assets $ 187,382 279,465

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The detail of the Company's net deferred tax assets was as follows:

Years Ended November 30,

(In thousands) 2020 2019

Net deferred tax assets:

Homebuilding $ 119,467 224,859

Financial Services 1,024 17,551

Multifamily 38,155 34,291

Lennar Other 28,736 2,764

Net deferred tax assets $ 187,382 279,465

3 unchanged sentences

This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, actual earnings, forecasts of future profitability, the duration of statutory carryforward periods, the Company’s experience with loss carryforwards not expiring unused and tax planning alternatives.

As of November 30, 2019 and 2018 , the net deferred tax assets included valuation allowances of $ 4.3 million and $ 7.2 million , respectively, primarily related to state net operating loss ("NOL") carryforwards that are not more likely than not to be utilized due to an inability to carry back these losses in most states and short carryforward periods that exist in certain states.

At November 30, 2019 and 2018 , the Company had federal tax effected NOL carryforwards totaling $ 39.1 million and $ 44.8 million , respectively, that may be carried forward up to 20 years to offset future taxable income and begin to expire in 2029.

At November 30, 2019 and 2018 , the Company had state tax effected NOL carryforwards totaling $ 69.2 million and $ 93.3 million , respectively, that may be carried forward from 5 to 20 years, depending on the tax jurisdiction, with losses expiring between 2020 and 2038 .

(In thousands) 2020 2019

Valuation allowance (1) $ ( 4,411 ) ( 4,341 )

Federal tax effected NOL carryforwards (2) 36,264 39,080

State tax effected NOL carryforwards (3) 51,757 69,170

(1) As of November 30, 2020 and 2019, the net deferred tax assets included valuation allowances primarily related to state net operating loss ("NOL") carryforwards that are not more likely than not to be utilized due to an inability to carry back these losses in most states and short carryforward periods that exist in certain states.

(2) At November 30, 2020 and 2019, the Company had federal tax effected NOL carryforwards that may be carried forward to offset future taxable income and begin to expire in 2029.

(3) At November 30, 2020 and 2019, the Company had state tax effected NOL carryforwards that may be carried forward from 5 to 20 years, depending on the tax jurisdiction, with losses expiring between 2021 and 2039.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes the changes in gross unrecognized tax benefits:

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The Company does not expect the total amount of unrecognized tax benefits to increase or decrease by a material amount within the following twelve months.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following summarizes the changes in interest and penalties accrued with respect to gross unrecognized tax benefits:

Years Ended November 30,

(In thousands) 2020 2019

Accrued interest and penalties, beginning of the year $ 55,333 52,942

Additional interest and penalties (related to the acquisition of CalAtlantic)

Accrual of interest and penalties (primarily related to state audits) 2,802 3,029

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This program operates as a contemporaneous exam throughout the year in order to keep exam cycles current and achieve a higher level of compliance.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Earnings Per Share

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For the years ended November 30, 2020, 2019 and 2018, there were no options to purchase shares of common stock that were outstanding and anti-dilutive.

Capital Stock

Preferred Stock

The Company is authorized to issue 500,000 shares of preferred stock with a par value of $ 10 per share and 100 million shares of participating preferred stock with a par value of $ 0.10 per share.

No shares of preferred stock or participating preferred stock have been issued as of November 30, 2019 and 2018 .

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

During each of the years ended November 30, 2019 , 2018 and 2017 , the Company’s Class A and Class B common stockholders received a per share annual dividend of $ 0.16 .

On November 27, 2017, the Company paid a stock dividend of one share of Class B common stock for each 50 shares of Class A common stock or Class B common stock to holders of record at the close of business on November 10, 2017, as declared by the Company's Board of Directors on October 30, 2017.

As of November 30, 2019 , Stuart Miller, the Company’s Executive Chairman, directly owned, or controlled through family-owned entities, shares of Class A and Class B common stock, which represented approximately 34 % voting power of the Company’s stock.

The repurchase authority has no expiration date.

During the year ended November 30, 2019 , the Company repurchased 9.8 million shares of Class A common stock for approximately $ 492.9 million at an average share price of $ 50.41 .

During fiscal 2018, the Company had a stock repurchase program adopted in 2001, which originally authorized the purchase of up to 20 million shares of its outstanding common stock.

During the year ended November 30, 2018 , under the Company's stock repurchase program, the Company repurchased 6.0 million shares of Class A common stock for $ 249.9 million at an average share price of $ 41.63 .

During the year ended November 30, 2017 , there were no share repurchases of common stock under the stock repurchase program.

During the year ended November 30, 2019 , treasury stock increased by 10.5 million shares of Class A common stock primarily due to the repurchase of 9.8 million shares of common stock.

During the year ended November 30, 2018 , treasury stock increased by 7.0 million shares of Class A common stock primarily due to the repurchase of 6.0 million shares of common stock.

Restrictions on Payment of Dividends

There are no restrictions on the payment of dividends on common stock by the Company.

Under the Company’s 401(k) Plan (the "Plan"), contributions made by associates can be invested in a variety of mutual funds or proprietary funds provided by the Plan trustee.

The Company may also make contributions for the benefit of associates.

The Company records as compensation expense its contribution to the Plan.

For the years ended November 30, 2019 , 2018 and 2017 , this amount was $ 24.5 million , $ 25.3 million and $ 17.2 million , respectively.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Share-Based Payments

Compensation expense related to the Company’s share-based awards was as follows:

Years ended November 30,

(In thousands)

Total compensation expense for nonvested share-based awards

The fair value of nonvested shares is determined based on the trading price of the Company’s common stock on the grant date.

The weighted average fair value of nonvested shares granted during the years ended November 30, 2019 , 2018 and 2017 was $ 48.26 , $ 55.84 and $ 51.92 , respectively.

A summary of the Company’s nonvested shares activity for the year ended November 30, 2019 was as follows:

Weighted Average Grant Date Fair Value

Nonvested shares at November 30, 2018

Nonvested shares at November 30, 2019

At November 30, 2019 , there was $ 110.1 million of unrecognized compensation expense related to unvested share-based awards granted under the Company’s share-based payment plan, all of which relates to nonvested shares with a weighted average remaining contractual life of 1.8 years .

For the years ended November 30, 2019 , 2018 and 2017 , 1.4 million , 2.2 million and 1.2 million nonvested shares, respectively, vested each year.

Financial Instruments and Fair Value Disclosures

3 unchanged sentences

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.

(In thousands)

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fair Value Carrying Fair Carrying Fair

(In thousands) Hierarchy Amount Value Amount Value

Financial Services:

Loans held-for-investment, net

Investments held-to-maturity

Loans held-for-investment, net Level 3 $ 72,626 70,808 73,867 69,708

Investments held-to-maturity Level 3 164,230 196,047 166,012 195,962

Investments held-to-maturity Level 2 — — 24,277 24,257

Lennar Other:

Investments held-to-maturity

Homebuilding senior notes and other debts payable

Financial Services notes and other debts payable

Multifamily note payable

Lennar Other notes and other debts payable

Investments held-to-maturity Level 3 — — 54,117 56,415

Homebuilding senior notes and other debts payable Level 2 $ 5,955,758 6,581,798 7,776,638 8,144,632

Financial Services notes and other debts payable Level 2 1,463,919 1,464,850 1,745,755 1,745,782

Multifamily note payable Level 2 — — 36,125 36,125

Lennar Other notes and other debts payable Level 2 1,906 1,906 15,178 15,178

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

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Financial Services —The fair values above are based on quoted market prices, if available.

1 unchanged sentence

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 borrowings.

Lennar Other —The fair value for investments held-to-maturity is based on discounted cash flows.

For notes and other debts payable, the fair value is calculated based on discounted cash flows using quoted interest rates and for the warehouse repurchase financing agreements fair values approximate their carrying value due to their short-term maturities.

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 the note payable, the fair value approximates the carrying value due to variable interest pricing terms and the short-term nature of the borrowing.

Lennar Other —The fair value for investments held-to-maturity is based on discounted cash flows.

Fair Value Measurements

4 unchanged sentences

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

(In thousands)

Fair Value at November 30,

Fair Value at November 30, 2018

(In thousands) Fair

Hierarchy 2020 2019

Financial Services Assets:

Financial Services residential loans held-for-sale (1)

RMF loans held-for-sale (2)

Investments available-for-sale

Mortgage loan commitments

Forward contracts

Mortgage servicing rights

The aggregate fair value of Financial Services residential loans held-for-sale of $ 1.4 billion at November 30, 2019 exceeded their aggregate principal balance of $ 1.4 billion by $ 42.2 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 .

The aggregate fair value of RMF 's 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 .

The aggregate fair value of RMF 's 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 .

Residential loans held-for-sale Level 2 $ 1,296,517 1,447,715

LMF Commercial loans held-for-sale

Level 3 193,588 197,224

Mortgage servicing rights Level 3 2,113 24,679

Lennar Other:

Investments available-for-sale Level 3 53,497 —

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Residential and LMF Commercial loans held-for-sale in the table above include:

(In thousands) Aggregate Principal Balance Change in Fair Value Aggregate Principal Balance Change in Fair Value

Residential loans held-for-sale $ 1,232,548 63,969 1,405,511 42,204

LMF Commercial loans held-for-sale

194,362 ( 774 ) 196,275 949

The estimated fair values of the Company’s financial instruments have been determined by using available market information and what the Company believes to be appropriate valuation methodologies.

7 unchanged sentences

Fair value of servicing rights is determined based on actual sales of servicing rights on loans with similar characteristics.

RMF 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

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

underlying loan credit quality.

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.

5 unchanged sentences

Therefore, the estimates used could differ materially from the fair value determined when the loans are sold to a securitization trust.

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 is included in the Financial Services segment's other liabilities as of November 30, 2019 and 2018 .

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 November 30, 2019 , the segment had open commitments amounting to $ 1.7 billion to sell MBS with varying settlement dates through February 2020.

Financial Services mortgage servicing rights — Financial Services records the value of 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.

Financial Services 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 November 30, 2019 , the key assumptions used in determining the fair value include an 17.8 % mortgage prepayment rate, a 12.6 % discount rate and a 9.1 % delinquency rate.

The fair value of mortgage servicing rights is included in the Financial Services segment's other assets.

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 and are noted below:

November 30, 2020

Unobservable inputs

Mortgage prepayment rate 18 %

Discount rate 12 %

Delinquency rate 4 %

Lennar Other investments available-for-sale — The fair value of these investments is based on the quoted market prices for similar financial instruments.

Lennar Other investments available-for-sale - The fair value of investments available-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 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:

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Years Ended November 30,

4 unchanged sentences

Forward contracts ( 9,805 ) 6,504 ( 12,041 )

Investments available-for-sale

Changes in fair value included in other comprehensive income (loss), net of tax:

Lennar Other investments available-for-sale ( 805 ) — —

Financial Services investments available-for-sale ( 46 ) 1,040 ( 1,634 )

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Interest on Financial Services loans held-for-sale and RMF loans held-for-sale measured at fair value is calculated based on the interest rate of the loan and recorded as revenues in the Financial Services’ statement of operations and RMF 's statement of operations, respectively.

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

The following table represents the reconciliation of the beginning and ending balance for the Level 3 recurring fair value measurements:

Years Ended November 30,

Financial Services

(In thousands)

Mortgage servicing rights

RMF loans held-for-sale

Mortgage servicing rights

RMF loans held-for-sale

(In thousands) Mortgage servicing rights LMF Commercial loans held-for-sale Mortgage servicing rights LMF Commercial loans held-for-sale

Beginning of year $ 24,679 197,224 37,206 61,691

1 unchanged sentence

Sales/loan originations sold, including those not settled

— ( 705,089 ) — ( 1,447,818 )

Disposals/settlements (1) ( 10,322 ) — ( 5,326 ) ( 9,920 )

1 unchanged sentence

Interest and principal paydowns — ( 2,299 ) — ( 814 )

Changes in fair value for RMF loans held-for-sale and Financial Services mortgage servicing rights are included in Financial Services' revenues.

End of year $ 2,113 193,588 24,679 197,224

(1) Includes $ 7.5 million related to the sale of a servicing portfolio for the year ended November 30, 2020.

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

The Company’s assets measured at fair value on a nonrecurring basis are those assets for which the Company has recorded valuation adjustments and write-offs.

2 unchanged sentences

Years Ended November 30,

(In thousands)

Carrying Value

(Losses), Net (1)

Carrying Value

Total (Losses), Net (1)

Carrying Value

Total (Losses), Net (1)

Financial assets

Lennar Other:

Impaired loans receivable

FDIC portfolios loans held-for-sale

2020 2019 2018

(In thousands) Fair

Hierarchy Carrying Value Fair Value Total

Losses, Net (1) Carrying Value Fair Value Total Losses, Net (1) Carrying Value Fair Value Total Losses, Net (1)

Non-financial assets

1 unchanged sentence

Finished homes and construction in progress (2)

Level 3 $ 176,637 148,684 ( 27,953 ) 218,942 205,201 ( 13,741 ) 4,019 3,473 ( 546 )

Land and land under development (2)

Level 3 182,227 92,355 ( 89,872 ) 121,564 82,816 ( 38,748 ) 96,093 62,850 ( 33,243 )

Other assets (2)

Level 3 — — — 60,363 56,727 ( 3,636 ) — — —

Lennar Other:

Upon acquisition/transfer

Upon management periodic valuations

Level 3 — — — — — — 58,721 25,632 ( 33,089 )

(1) Represents losses due to valuation adjustments, write-offs, gains (losses) from transfers or acquisitions of real estate through foreclosure and REO impairments recorded during the year.

(2) Valuation adjustments were included in Homebuilding costs and expenses in the Company's consolidated statements of operations for the years ended November 30, 2020, 2019 and 2018.

REO held-for-sale assets are initially recorded at fair value less estimated costs to sell at the time of the transfer or acquisition through, or in lieu of, loan foreclosure.

The fair value of REO held-for-sale is based upon appraised value at the time of foreclosure or management's best estimate.

In addition, management periodically performs valuations of its REO held-for-sale.

The gains (losses) upon

See Note 1 for a detailed description of the Company’s process for identifying and recording valuation adjustments related to Homebuilding inventory.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

the transfer or acquisition of REO and impairments were included in Lennar Other (formerly Rialto segment) other income (expense), net, in the Company’s consolidated statements of operations for the years ended November 30, 2018 and 2017 .

See Note 1 for a detailed description of the Company’s process for identifying and recording valuation adjustments related to Homebuilding inventory.

Variable Interest Entities

The Company evaluated the joint venture agreements of its joint ventures that were formed or that had reconsideration events, such as changes in the governing documents or debt arrangements, during the year ended November 30, 2019 .

Based on the Company's evaluation, during the year ended November 30, 2019 , the Company consolidated five entities that had a total combined assets and liabilities of $ 505.2 million and $ 602.1 million , respectively.

During the year ended November 30, 2019 , there were no VIEs that were deconsolidated.

Consolidated VIEs

As of November 30, 2019 , the carrying amount of the VIEs’ assets and non-recourse liabilities that consolidated was $ 980.2 million and $ 549.7 million , respectively.

As of November 30, 2018 , the carrying amount of the VIEs’ assets and non-recourse liabilities that consolidated was $ 666.2 million and $ 242.5 million , respectively.

Those assets are owned by, and those liabilities are obligations of, the VIEs, not the Company.

The increase in VIEs' assets and non-recourse liabilities during the year ended November 30, 2019 was primarily due to the consolidation of an unconsolidated entity related to the sale of the majority of the Company's retail title agency business and title insurance underwriter.

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.

During the year ended November 30, 2019 , the Company consolidated a previously unconsolidated entity, which resulted from a reconsideration event that required the reassessment of a homebuilding unconsolidated entity.

The reconsideration event was the change of the entity’s conclusion with respect to future capital calls required to fund operations and debt repayments.

Upon reconsideration, the Company determined that the homebuilding entity continued to meet the accounting definition of a VIE and the Company was deemed to be the primary beneficiary.

The Company consolidated the previously unconsolidated entity’s net assets at estimated fair value.

The determination of fair value of the homebuilding entity’s net assets requires the discounting of estimated cash flows at a rate the Company believes a market participant would determine to be commensurate with the inherent risks associated with the homebuilding entity and related cash flow streams.

The Company used a 15 % discount rate in determining the fair value of the entity, which was subject to perceived risks associated with the entity’s cash flow streams.

There was no non-controlling interest recorded in consolidation.

As a result, the Company recorded a one-time loss of $ 48.9 million from the consolidation which was included in Homebuilding other income (expense), net on the consolidated statements of operations.

During the year ended November 30, 2019 , the Company bought out the partner's interest in the entity and therefore at November 30, 2019 , the entity is no longer considered a VIE.

At November 30, 2019 , the consolidated homebuilding entity had total assets and liabilities of $ 240.5 million and $ 373.5 million , respectively.

The Company evaluated the joint venture ("JV") agreements of its JV's that were formed or that had reconsideration events, such as changes in the governing documents or to debt arrangements during the year ended November 30, 2020.

Based on the Company's evaluation, the Company consolidated one Homebuilding entity and one Multifamily entity that had a total assets and liabilities of $ 140.0 million and $ 51.2 million and $ 49.4 million and $ 0.9 million, respectively.

The Company deconsolidated two 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 one entity that had total assets and liabilities of $ 291.2 million and $ 204.1 million, respectively.

In January 2019, this JV was formed by the sale of the Company’s retail title agency and its retail title insurance business to this JV entity.

In exchange for the sale of the retail agency and retail title insurance business, the Company received 20 % of the JV entity’s preferred stock, warrants exercisable to purchase additional shares of preferred stock in the 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 the equity raise resulted in approximately a 43 % reduction of the principal amount of debt owed by the JV entity to the Company as well as an approximately 20 % reduction of the Company’s ownership interest in the JV.

The 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 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 the economic shutdown and the lack of marketability of the 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 30 % for the fair value calculations.

In aggregate, the resulting fair value of the equity investment and note receivable totaled $ 123.4 million, of which $ 70.8 million was included in Financial Services investments in unconsolidated entities at the time of deconsolidation.

Upon deconsolidation, the Company recorded a gain of $ 61.4 million.

The carrying amount of the Company's consolidated VIE's assets and non-recourse liabilities are disclosed in the footnote to the consolidated balance sheets.

A VIE’s assets can only be used to settle obligations of that VIE.

4 unchanged sentences

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.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Unconsolidated VIEs

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

(In thousands)

Investments in Unconsolidated VIEs

Exposure to Loss

Investments in

(In thousands) Investments in Unconsolidated VIEs Lennar’s Maximum Exposure to Loss (1) Investments in

Unconsolidated

Exposure to Loss

VIEs Lennar’s Maximum Exposure to Loss (1)

Homebuilding $ 89,654 89,828 80,939 81,118

2 unchanged sentences

Lennar Other 7,154 7,154 60,882 60,882

As of November 30, 2019 , the maximum exposure to loss of Homebuilding’s investments in unconsolidated VIEs was limited primarily to its investments in the unconsolidated VIEs.

As of November 30, 2018 , the maximum exposure to loss of Homebuilding’s investments in unconsolidated VIEs was limited to its investments in the unconsolidated VIEs, except with regard to repayment guarantees of one unconsolidated entity's debt of $ 54.8 million .

As of November 30, 2019 and 2018 , the maximum exposure to loss of Multifamily's investments in unconsolidated VIEs was limited to its investments in the unconsolidated VIEs, except with regard to the remaining equity commitment of $ 224.2 million and $ 237.0 million , respectively, to fund LMV I and LMV II for future expenditures related to the construction and development of its projects and $ 4.2 million and $ 4.6 million , respectively, of letters of credit outstanding for certain of the unconsolidated VIEs that could be drawn upon in the event of default under their debt agreements.

At both November 30, 2019 and 2018 , the maximum recourse exposure to loss of the Financial Services segment was limited to its investments in the unconsolidated entities VIEs.

At November 30, 2019 and 2018 , investments in unconsolidated VIEs and Financial Services' maximum exposure to loss included $ 166.0 million and $ 137.0 million , respectively, related to the Financial Services' CMBS investments held-to-maturity.

At both November 30, 2019 and 2018 , the maximum recourse exposure to loss of Lennar Other’s segment was limited to its investments in the unconsolidated entities VIEs.

At November 30, 2019 and 2018 , investments in unconsolidated VIEs and Lennar’s maximum exposure to loss included $ 54.1 million and $ 60.0 million , respectively, related to Lennar Other segment's investments held-to-maturity.

$ 949,447 1,101,506 840,851 1,076,663

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

(2) As of November 30, 2020 and 2019, the maximum exposure to loss of Multifamily's investments in unconsolidated VIEs was generally limited to its investments in the unconsolidated VIEs, except with regard to the remaining equity commitment of $ 88.1 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) At November 30, 2020, the maximum exposure to loss of Financial Services' investments in unconsolidated VIEs included a note receivable.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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.

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The Company does not have the unilateral ability to exercise participating voting rights without partner consent.

As of November 30, 2019 , the Company and other partners did not have an obligation to make capital contributions to the VIEs, except for a $ 224.2 million remaining equity commitment to fund LMV I and LMV II for future expenditures related to the construction and development of the projects and $ 4.2 million of letters of credit outstanding for certain Multifamily unconsolidated VIEs that could be drawn upon in the event of default under their debt agreements.

In addition, 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.

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.

4 unchanged sentences

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 year ended November 30, 2019 , consolidated inventory not owned increased by $ 104.2 million with a corresponding increase to liabilities related to consolidated inventory not owned in the accompanying consolidated balance

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

sheet as of November 30, 2019 .

The increase was primarily related to the consolidation of option contracts, partially offset by the Company exercising its options to acquire land under previously consolidated contracts.

To reflect the purchase price of the inventory consolidated, the Company had a net reclass related to option deposits from consolidated inventory not owned to land under development in the accompanying condensed consolidated balance sheet as of November 30, 2019 .

During the year ended November 30, 2020, consolidated inventory not owned increased by $ 523.4 million with a corresponding increase to liabilities related to consolidated inventory not owned in the accompanying consolidated balance sheet as of November 30, 2020.

The increase was primarily due to homesites sold to an investor group.

This strategic relationship is a continuation of the Company's land light strategy and allows the Company to offer the investor group the opportunity to acquire the property and give the Company an option to purchase all or a portion of it in the future.

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.

4 unchanged sentences

In the opinion of management, the disposition of these matters will not have a material adverse effect on the Company’s consolidated financial statements.

The Company is also a party to various lawsuits involving purchases and sales of real property.

From time to time, the Company is also a party to various lawsuits involving purchases and sales of real property.

These lawsuits include claims regarding representations and warranties made in connection with the transfer of properties and disputes regarding the obligation to purchase or sell properties.

6 unchanged sentences

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:

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Dollars in thousands) November 30, 2020

Right-of-use assets $ 113,390

Lease liabilities $ 122,836

Weighted-average remaining lease term (in years) 2.6

Weighted-average discount rate 3.1 %

The Company has entered into agreements to lease certain office facilities and equipment under operating leases.

Future minimum payments under the noncancellable leases in effect at November 30, 2020 were as follows:

(In thousands)

(Dollars in thousands) Lease Payments

2021 $ 33,616

2025 and thereafter 34,775

Total future minimum lease payments (1) $ 133,499

Interest (2) 10,663

Present value of lease liabilities (2) $ 122,836

(1) Future minimum lease payments exclude variable lease costs and short-term lease costs, which were $ 16.1 million and $ 2.6 million, respectively, for the year ended November 30, 2020.

This also does not include minimum lease payments for executed and legally enforceable leases that have not yet commenced.

As of November 30, 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 balance sheets within other liabilities of the respective segments.

Rental expense for the years ended November 30, 2020, 2019 and 2018 was $ 82.1 million, $ 92.2 million and $ 98.4 million, respectively.

Payments on lease liabilities during the year ended November 30, 2020 totaled $ 48.8 million.

Rental expense includes costs for all leases.

On occasion, the Company may sublease rented space which is no longer used for the Company's operations.

For the ended November 30, 2020, the Company had an immaterial amount of sublease income.

The Company is committed, under various letters of credit, to perform certain development and construction activities and provide certain guarantees in the normal course of business.

Outstanding letters of credit under these arrangements totaled $ 899.9 million at November 30, 2019 .

Outstanding letters of credit under these arrangements totaled $ 1.0 billion at November 30, 2020.

Additionally, at November 30, 2020, the Company had outstanding surety bonds of $ 3.1 billion including performance surety bonds related to site improvements at various projects (including certain projects in the Company’s joint ventures) and financial surety bonds.

3 unchanged sentences

Substantially all of the 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

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Over the last decade there has been an industry-wide effort by purchasers to defray their losses by purporting to have found inaccuracies related to sellers’ representations and warranties in particular loan sale agreements.

3 unchanged sentences

While the Company believes that it has adequately reserved for known losses and projected repurchase requests, given the volatility in the 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.

Supplemental Financial Information

The indentures governing the Company’s 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.

In addition, some subsidiaries of CalAtlantic are guaranteeing CalAtlantic senior convertible notes that also are guaranteed by Lennar Corporation.

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 November 30, 2019 they were guaranteeing Lennar Corporation's letter of credit facilities and its Credit Facility, described in Note 7.

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 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 consolidating statements 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.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Supplemental information for the subsidiaries that were guarantor subsidiaries at November 30, 2019 was as follows:

Consolidating Balance Sheet

November 30, 2019

(In thousands)

Non-Guarantor

Consolidating Adjustments

Homebuilding:

Cash and cash equivalents, restricted cash and receivables, net

Investments in unconsolidated entities

Investments in subsidiaries

Financial Services

LIABILITIES AND EQUITY

Homebuilding:

Accounts payable and other liabilities

Liabilities related to consolidated inventory not owned

Senior notes and other debts payable

Financial Services

Total liabilities

Total stockholders’ equity

Noncontrolling interests

Total liabilities and equity

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Balance Sheet

November 30, 2018

(In thousands)

Non-Guarantor

Consolidating Adjustments

Homebuilding:

Cash and cash equivalents, restricted cash and receivables, net

Investments in unconsolidated entities

Investments in subsidiaries

Financial Services

LIABILITIES AND EQUITY

Homebuilding:

Accounts payable and other liabilities

Liabilities related to consolidated inventory not owned

Senior notes and other debts payable

Financial Services

Total liabilities

Total stockholders’ equity

Noncontrolling interests

Total liabilities and equity

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Statement of Operations and Comprehensive Income (Loss)

Year Ended November 30, 2019

(In thousands)

Non-Guarantor

Consolidating Adjustments

Financial Services

Total revenues

Cost and expenses:

Financial Services

Corporate general and administrative

Total costs and expenses

Homebuilding equity in (loss) earnings from unconsolidated entities

Homebuilding other income (expense), net

Multifamily equity in earnings from unconsolidated entities and other gain

Lennar Other equity in earnings (loss) from unconsolidated entities

Lennar Other expense, net

Earnings (loss) before income taxes

Benefit (provision) for income taxes

Equity in earnings from subsidiaries

Net earnings (including net loss attributable to noncontrolling interests)

Net loss attributable to noncontrolling interests

Net earnings attributable to Lennar

Other comprehensive income, net of tax:

Net unrealized gain on securities available-for-sale

Reclassification adjustments for gains included in net earnings, net of tax

Total other comprehensive income, net of tax

Total comprehensive income attributable to Lennar

Total comprehensive loss attributable to noncontrolling interests

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Statement of Operations and Comprehensive Income (Loss)

Year Ended November 30, 2018

(In thousands)

Non-Guarantor

Consolidating Adjustments

Financial Services

Total revenues

Cost and expenses:

Financial Services

Acquisition and integration costs related to

Corporate general and administrative

Total costs and expenses

Homebuilding equity in earnings (loss) from unconsolidated entities

Homebuilding other income, net

Multifamily equity in earnings from unconsolidated entities and other gain

Lennar Other equity in earnings (loss) from unconsolidated entities

Lennar Other expense, net

Gain on sale of Rialto investment and asset

management platform

Earnings (loss) before income taxes

Benefit (provision) for income taxes

Equity in earnings from subsidiaries

Net earnings (including net earnings attributable to noncontrolling interests)

Net earnings attributable to noncontrolling interests

Net earnings attributable to Lennar

Other comprehensive loss, net of tax:

Net unrealized loss on securities available-for-sale

Reclassification adjustments for losses included in net earnings, net of tax

Total other comprehensive loss, net of tax

Total comprehensive income attributable to Lennar

Total comprehensive income attributable to noncontrolling interests

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Statement of Operations and Comprehensive Income (Loss)

Year Ended November 30, 2017

(In thousands)

Non-Guarantor

Consolidating Adjustments

Financial Services

Total revenues

Cost and expenses:

Financial Services

Corporate general and administrative

Total costs and expenses

Homebuilding equity in loss from unconsolidated entities

Homebuilding other income (expense), net

Homebuilding loss due to litigation

Multifamily equity in earnings from unconsolidated entities

Lennar Other equity in earnings from unconsolidated entities

Lennar Other expense, net

Earnings (loss) before income taxes

Benefit (provision) for income taxes

Equity in earnings from subsidiaries

Net earnings (including loss attributable to noncontrolling interests)

Net loss attributable to noncontrolling interests

Net earnings attributable to Lennar

Other comprehensive income, net of tax:

Net unrealized gain on securities available-for-sale

Reclassification adjustments for losses included in net earnings, net of tax

Total other comprehensive income, net of tax

Total comprehensive income attributable to Lennar

Total comprehensive loss attributable to noncontrolling interests

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Statement of Cash Flows

Year Ended November 30, 2019

(In thousands)

Non-Guarantor

Consolidating Adjustments

Cash flows from operating activities:

Net earnings (including net loss attributable to noncontrolling interests)

Distributions of earnings from guarantor and non-guarantor subsidiaries

Other adjustments to reconcile net earnings (including net loss attributable to noncontrolling interests) to net cash provided by operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities:

(Investments in and contributions to) and distributions of capital from unconsolidated entities, net

Proceeds from sales of real estate owned

Proceeds from sale of investment in unconsolidated entity

Net cash (used in) provided by investing activities

Cash flows from financing activities:

Net borrowings (repayments) under warehouse facilities

Net borrowings (repayments) on convertible senior notes, other borrowings, other liabilities, and other notes payable

Net payments related to noncontrolling interests

Common stock:

Net cash (used in) provided by financing activities

Net increase (decrease) in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash at beginning of period

Cash and cash equivalents and restricted cash at end of period

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Statement of Cash Flows

Year Ended November 30, 2018

(In thousands)

Non-Guarantor

Consolidating Adjustments

Cash flows from operating activities:

Net earnings (including net earnings attributable to noncontrolling interests)

Distributions of earnings from guarantor and non-guarantor subsidiaries

Other adjustments to reconcile net earnings (including net earnings attributable to noncontrolling interests) to net cash provided by operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities:

Proceeds from sale of operating properties

(Investments in and contributions to) and distributions of capital from unconsolidated entities, net

Proceeds from sales of real estate owned

Proceeds from sale of investment in unconsolidated entity

Proceeds from sale of commercial mortgage-backed securities bonds

Proceeds from sale of Rialto investment and asset management platform

Purchases of commercial mortgage-backed securities bonds

Acquisitions, net of cash and restricted cash acquired

Distributions of capital from guarantor and non-guarantor subsidiaries

Net cash (used in) provided by investing activities

Cash flows from financing activities:

Net repayments under unsecured revolving credit facility

Net (repayments) borrowings under warehouse facilities

Debt issuance costs

Redemption of senior notes

Conversions and exchanges of convertible senior notes

Net payments on other borrowings, other liabilities, Rialto Senior Notes and other notes payable

Net payments related to noncontrolling interests

Common stock:

Net cash used in financing activities

Net increase (decrease) in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash at beginning of period

Cash and cash equivalents and restricted cash at end of period

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Statement of Cash Flows

Year Ended November 30, 2017

(In thousands)

Non-Guarantor

Consolidating Adjustments

Cash flows from operating activities:

Net earnings (including net loss attributable to noncontrolling interests)

Distributions of earnings from guarantor and non-guarantor subsidiaries

Other adjustments to reconcile net earnings (including net loss attributable to noncontrolling interests) to net cash provided by (used in) operating activities

Net cash provided by operating activities

Cash flows from investing activities:

Proceeds from sale of operating properties

Investments in and contributions to unconsolidated entities, net of distributions of capital

Proceeds from sales of real estate owned

Receipts of principal payments on loans held-for-sale

Originations of loans receivable

Purchases of commercial mortgage-backed securities bonds

Acquisition, net of cash acquired

Distributions of capital from guarantor and non-guarantor subsidiaries

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Net repayments under warehouse facilities

Proceeds from senior notes, net of debt issuance costs

Redemption of senior notes

Net proceeds from Rialto notes payable

Net payments on other borrowings

Proceeds on other liabilities

Net payments related to noncontrolling interests

Excess tax benefits from share-based awards

Common stock:

Net cash provided by (used in) financing activities

Net increase (decrease) in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash at beginning of period

Cash and cash equivalents and restricted cash at end of period

Loan origination liabilities are included in Financial Services’ liabilities in the Company's consolidated balance sheets.

LENNAR CORPORATION AND SUBSIDIARIES

1 unchanged sentence

Quarterly Data (unaudited)

First Second Third Fourth

(In thousands, except per share amounts)

Revenues $ 4,505,337 5,287,373 5,870,254 6,825,890

Gross profit from sales of homes 848,988 1,062,310 1,262,550 1,574,242

2 unchanged sentences

Earnings per share:

Basic 1.27 1.66 2.13 2.82

Diluted 1.27 1.65 2.12 2.82

Revenues $ 3,868,082 5,562,890 5,857,058 6,971,531

Gross profit from sales of homes 726,079 1,038,587 1,085,633 1,385,859

2 unchanged sentences

Earnings per share:

Basic 0.74 1.31 1.60 2.13

Diluted 0.74 1.30 1.59 2.13

Quarterly and year-to-date computations of per share amounts are made independently.

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data