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Item 8. Financial Statements and Supplementary Data

2022-01-28 compared with 2021-01-22 · 261 added, 297 removed, 1171 unchanged (32% of the section changed)

3 unchanged sentences

Opinion on the 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").

We have audited the accompanying consolidated balance sheets of Lennar Corporation and subsidiaries (the "Company") as of November 30, 2021 and 2020, 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, 2021, and the related notes and the financial statement schedule listed in the Index at Item 15 (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, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended November 30, 2021, in conformity with accounting principles generally accepted in the United States of America.

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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.

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 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, 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.

As of November 30, 2021, the carrying value of the Company’s consolidated VIE’s assets and non-recourse liabilities was $875.9 million and $61.9 million, respectively.

Additionally, as of November 30, 2021, the carrying value of the Company’s investments in VIEs that are unconsolidated was $686.7 million.

We identified the consolidation and primary beneficiary assessment upon formation and the occurrence of reconsideration events of certain of the Company’s VIEs 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 the complexity of the entity structures and agreements.

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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 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.

◦ 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 agreeing the terms of certain joint venture agreements and side agreements, if any.

/s/ Deloitte & Touche LLP

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(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, 2021, total assets include $ 1.1 billion related to consolidated VIEs of which $ 60.9 million is included in Homebuilding cash and cash equivalents, $ 4.4 million in Homebuilding receivables, net, $ 14.3 million in Homebuilding finished homes and construction in progress, $ 697.1 million in Homebuilding land and land under development, $ 239.2 million in Homebuilding consolidated inventory not owned, $ 1.1 million in Homebuilding investments in unconsolidated entities, $ 17.4 million in Homebuilding other assets and $ 80.6 million in Multifamily assets.

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, $ 120.6 million in Homebuilding other assets and $ 39.9 million in Multifamily assets.

See accompanying notes to consolidated financial statements.

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( 2,709,448 ) ( 1,279,227 )

Accumulated other comprehensive income (loss) ( 805 ) 498

Accumulated other comprehensive loss ( 1,341 ) ( 805 )

Total stockholders’ equity 20,816,425 17,994,856

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(2) As of November 30, 2021, total liabilities include $ 258.5 million related to consolidated VIEs as to which there was no recourse against the Company, of which $ 26.6 million is included in Homebuilding accounts payable, $ 196.6 million in Homebuilding liabilities related to consolidated inventory not owned, $ 20.1 million in Homebuilding senior notes and other debts payable, $ 12.3 million in Homebuilding other liabilities and $ 2.8 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, 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.

See accompanying notes to consolidated financial statements.

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Lennar Other 30,955 6,744 11,794

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

Corporate general and administrative 398,381 333,446 321,188

Charitable foundation contribution 59,825 24,972 19,926

Total costs and expenses 22,052,243 19,373,164 19,798,380

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Multifamily equity in earnings from unconsolidated entities and other gain 9,031 21,934 11,294

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 )

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

Lennar Other equity in earnings (loss) from unconsolidated entities and other income (expense), net 61,957 ( 44,669 ) 6,428

Lennar Other realized and unrealized gains 680,576 — —

Earnings before income taxes 5,819,058 3,123,788 2,434,292

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Net unrealized gain (loss) on securities available-for-sale $ ( 536 ) ( 851 ) 1,040

Reclassification adjustments for (gains) loss included in net

Reclassification adjustments for gains included in net

earnings — ( 452 ) ( 176 )

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Diluted earnings per share $ 14.27 7.85 5.74

(1) Provision for income taxes for the year ended November 30, 2018 includes a non-cash one-time write down of deferred tax assets of $ 68.6 million resulting from the Tax Cuts and Jobs Act enacted in December 2017.

See accompanying notes to consolidated financial statements.

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Employee stock and director plans 156 182 213

Stock issuance in connection with CalAtlantic acquisition — — 8,408

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

Balance at November 30, 30,050 29,894 29,712

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Beginning balance 3,944 3,944 3,944

Stock issuance in connection with CalAtlantic acquisition — — 168

Conversion of convertible senior notes to shares of Class B common stock — — 7

Balance at November 30, 3,944 3,944 3,944

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Employee stock and director plans 1,207 576 415

Stock issuance in connection with CalAtlantic acquisition

— — 5,061,430

Amortization of restricted stock 135,090 107,131 86,940

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

Equity adjustment related to noncontrolling interests ( 4,462 ) ( 9,870 ) ( 5,813 )

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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)

Cash dividends - Class A common stock ($ 1.00 per share for 2021, $ 0.625 per share for 2020 and $ 0.16 per share for 2019)

( 272,162 ) ( 171,520 ) ( 45,418 )

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

Cash dividends - Class B common stock ($ 1.00 per share for 2021 and $ 0.625 per share for 2020 and $ 0.16 per share for 2019)

( 37,614 ) ( 23,523 ) ( 6,036 )

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Deferred income tax expense 191,627 92,082 235,493

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

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

Unrealized (gain) loss on loans held-for-sale 14,449 ( 21,765 ) ( 4,891 )

Lennar Other unrealized/realized gains ( 680,576 ) — —

(Gain) loss on sale of other assets, operating properties and equipment, CMBS bonds, other liabilities and real estate owned ( 27,678 ) ( 8,626 ) ( 23,124 )

Loss on consolidation 4,824 48,874 —

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

(Gain) loss on deconsolidation/consolidation of an entity — ( 56,594 ) 48,874

Gain on sale of interest in unconsolidated entity and other Multifamily gain ( 1,167 ) ( 4,617 ) ( 10,865 )

Gain on sale of Financial Services' portfolio/businesses ( 3,811 ) ( 5,014 ) ( 2,368 )

(Gain) loss on retirement of senior notes and other debts payable ( 2,204 ) 7,997 —

Valuation adjustments and write-offs of option deposits and pre-acquisition costs, other receivables and other assets 25,696 117,825 56,125

Changes in assets and liabilities:

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

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 receivables ( 289,776 ) 25,868 312,255

(Increase) decrease in inventories, excluding valuation adjustments and write-offs of option deposits and pre-acquisition costs ( 1,960,614 ) 781,362 ( 623,644 )

(Increase) decrease in other assets ( 121,036 ) 90,534 ( 69,699 )

(Increase) decrease in loans held-for-sale ( 160,785 ) 176,617 ( 426,448 )

Increase (decrease) in accounts payable and other liabilities 881,309 266,488 ( 14,639 )

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Proceeds from the sale of operating properties and equipment, other assets, CMBS bonds and real estate owned 41,551 33,934 79,307

Proceeds from sale of investments in unconsolidated entities

— 17,790 225,267

Proceeds from sale of investment in consolidated/unconsolidated joint ventures 32,340 — 17,790

Proceeds from sale of Financial Services' portfolio/businesses 3,327 14,978 24,446

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

Purchases of CMBS bonds — — ( 31,068 )

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

Acquisitions, net of cash and restricted cash acquired — — ( 1,078,282 )

Increase in Financial Services loans held-for-investment, net ( 3,122 ) ( 3,516 ) ( 3,603 )

Decrease (increase) in Financial Services loans held-for-investment, net 29,397 ( 3,122 ) ( 3,516 )

Purchases of investment securities ( 128,162 ) ( 45,548 ) ( 36,261 )

Proceeds from maturities/sales of investment securities 16,312 52,918 52,593

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

Other receipts, net 16 1,643 —

Net cash (used in) provided by investing activities $ ( 105,086 ) ( 280,205 ) 19,596

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Cash flows from financing activities:

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

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

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

Net borrowings (repayments) under warehouse facilities $ 262,107 ( 281,835 ) 166,552

Redemption of senior notes ( 1,159,851 ) ( 1,499,999 ) ( 1,101,288 )

Conversions, exchanges and redemption of convertible senior notes

— ( 1,288 ) ( 59,145 )

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

Principal payments on notes payable and other borrowings ( 195,212 ) ( 604,995 ) ( 189,479 )

Proceeds from other borrowings 13,973 92,688 88,751

Proceeds from liabilities related to consolidated inventory not owned 694,185 346,406 —

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

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

Payments related to consolidated inventory not owned ( 350,583 ) — —

(Payments) proceeds related to other liabilities, net 25,564 ( 116,541 ) ( 3,850 )

Receipts related to noncontrolling interests 69,675 176,617 27,859

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Purchases of inventories, land under development and other assets financed by sellers $ 141,319 120,796 101,300

Net non-cash contributions to unconsolidated entities 97,281 156,075 162,281

Net non-cash contributions (distributions) to unconsolidated entities 27,880 97,281 156,075

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

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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

Equity component of acquisition consideration — — 5,070,006

Consolidation/deconsolidation of unconsolidated/consolidated entities, net:

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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 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.

Financial Services restricted cash consists 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.

Homebuilding cash and cash equivalents as of November 30, 2021 and 2020 included $ 940.4 million and $ 314.3 million, respectively, of cash held in escrow for approximately three days .

At November 30, 2021 and 2020, 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

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

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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.

conditions and other factors considered relevant by the Company.

Balances for the years ended November 30, 2021 and 2020 are noted below:

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492,809 301,469

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

Allowance for credit losses ( 2,531 ) ( 2,798 )

Receivables, net (1) $ 490,278 298,671

(1) At November 30, 2021, receivables, net included an $ 85 million short-term loan due from Upward America that was repaid subsequent to November 30, 2021.

Finished homes and construction in progress are included within inventories.

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Years Ended November 30,

Unobservable inputs Range Range

Unobservable inputs Range

Average selling price $ 635,000 $ 201,000 - $ 970,000

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Discount rate 20 % 20 %

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.

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 (including land funds) and unconsolidated entities until it has determined whether to exercise its option.

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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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 Company has the option to perform a qualitative or quantitative assessment to determine whether the fair value of a reporting unit exceeds its carrying value.

Qualitative factors may include, but are not limited to economic conditions, industry and market considerations, cost factors, overall financial performance of the reporting units and other entity and reporting unit specific events.

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

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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.

The annual goodwill impairment analysis was performed as of September 30, 2021 and no impairment was recorded.

LENNAR CORPORATION AND SUBSIDIARIES

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

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.

At November 30, 2021 and 2020, the Lennar Other segment had investment securities classified as held-for-sale totaling $ 41.7 million and $ 53.5 million, respectively.

Additionally, the Lennar Other segment had investments in equity securities with a readily determinable fair value (publicly traded common stock), not accounted for under the equity method, that are recorded at fair value with unrealized gains and losses included in earnings.

For equity securities without a readily determinable fair value, the investment is recorded at cost, less any impairment, plus or minus adjustments related to observable transactions for the same or similar securities, with unrealized gains and losses included in earnings.

The Lennar Other segment had investments in equity securities of $ 1.0 billion and $ 68.8 million, as of November 30, 2021 and 2020, respectively.

For equity method investments in the Lennar Other segment, the Company records the investment as Lennar Other investments in unconsolidated entities.

The Company regularly reviews its investments in unconsolidated entities to determine whether there is a decline in fair value below book value.

If there is a decline that is other-than-temporary, the investment is written down to fair value.

There was no impairment recorded during the years ended November 30, 2021 and 2020.

Interest and Real Estate Taxes

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interest capitalized into inventories was $ 254.9 million, $ 331.0 million and $ 405.1 million, respectively.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Interest expense was included in costs of homes sold, costs of land sold and other interest expense as follows:

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(1) Included in Homebuilding other income (expense), net.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company records income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and attributable to operating loss and tax credit carryforwards.

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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, 2020 and 2019 was $ 125.4 million and $ 109.6 million which is included in Homebuilding other liabilities.

The Company’s self-insurance reserve, net of

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

expected recoveries, as of November 30, 2021 and 2020 was $ 169.1 million and $ 125.4 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.

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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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During the year ended November 30, 2021, the Company’s Class A and Class B common stockholders received a per share annual dividend of $ 1.00 .

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 .

During the years ended 2020 and 2019, the Company’s Class A and Class B common stockholders received a per share annual dividend of $ 0.625 and $ 0.16 , respectively.

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, 2021, 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 35 % 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.

In January 2021, the Company's Board of Directors authorized a stock repurchase program, which replaced a January 2019 stock repurchase program, under which the Company was 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:

In October 2021, the Board of Directors authorized an increase to the stock repurchase program to enable the Company to repurchase up to the lesser of an additional $ 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.

Shortly after the new authorization, the January 2021 stock repurchase program was completed as the Company had purchased the $ 1 billion in value authorized under that stock repurchase program.

The following table provides information about the Company’s repurchases of Class A and Class B common stock for the years ended November 30, 2021 and 2020:

November 30, 2021 November 30, 2020

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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.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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.

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Total compensation expense for nonvested share-based awards $ 135,090 107,131 86,940

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.

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Fair value of the servicing rights is determined based on values in the Company’s servicing sales contracts.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Provision for Losses

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Loans Held-for-Investment, Net

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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.

Discounts are amortized over the estimated lives of the loans using the interest method.

The Financial Services segment also provides an allowance for loan losses.

The Financial Services segment also provides an allowance for credit losses.

The provision recorded and the adequacy of the related allowance is determined by management’s continuing evaluation of the loan portfolio in light of past loan loss experience, credit worthiness and nature of underlying collateral, present economic conditions and other factors considered relevant by the Company’s management.

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Both management fees and general contractor revenue are recognized over the period in which the services are performed using an input method, which properly depicts the level of effort required to complete the management or construction services.

These customer contracts require the Company to provide management and general contractor services which represents a performance obligation that the Company satisfies over time.

Management fees and general contractor services in the Multifamily segment are included in Multifamily revenue.

Recently Adopted Accounting Pronouncements

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 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 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.

These customer contracts require the Company to provide management and general

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

New Accounting Pronouncements

contractor services which represents a performance obligation that the Company satisfies over time.

Management fees and general contractor services in the Multifamily segment are included in Multifamily revenue.

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326):

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ASU 2016-13 significantly changes the impairment model for most financial assets and certain other instruments.

ASU 2016-13 will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, which will generally result in earlier recognition of allowances for credit losses on loans and other financial instruments.

ASU 2016-13 is effective for the Company's fiscal year beginning December 1, 2020 and subsequent interim periods.

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.

Instead these amendments are intended to clarify and improve operability of certain topics included within the credit losses standard.

These ASUs will have the same effective date and transition requirements as ASU 2016-13.

ASU 2016-13 requires immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, which generally results in earlier recognition of allowances for credit losses on loans and other financial instruments.

ASU 2016-13 was effective for the Company's fiscal year beginning December 1, 2020.

The adoption of ASU 2016-13 did not have a material impact on the Company's consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350), Simplifying the Accounting for Goodwill Impairment ("ASU 2017-04").

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A goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.

ASU 2017-04 will be effective for the Company’s fiscal year beginning December 1, 2020.

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

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

ASU 2017-04 was effective for the Company’s fiscal year beginning December 1, 2020.

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

New Accounting Pronouncements

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 .

The Company believes, the adoption of ASU 2019-12 will not have a material impact on the Company's consolidated financial statements .

Reclassifications

Certain prior year amounts in the consolidated financial statements have been reclassified to conform with the 2021 presentation.

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.

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.

The Company reclassified the balance of its investment in Doma, formerly States Title, to which the Company sold the majority of the Financial Services segment's retail title agency business and title insurance underwriter in the first quarter of 2019, from the Financial Services segment to the Lennar Other segment in the consolidated balance sheets for all periods presented.

This was reclassified to be included in the Company's strategic technology investments as the entity had announced that it would merge with a publicly traded special purpose acquisition company and during the year ended November 30, 2021 completed the merger and became a publicly traded entity.

In addition, the Company reflected its contributions to its charitable foundation in a new line on its consolidated statements of operations for all periods presented.

This was previously reflected in the Corporate general and administrative line.

These reclassifications had no impact on the company's total assets, total equity, revenues or net earnings in its consolidated financial statements.

Operating and Reporting Segments

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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

(2) Homebuilding Central

(3) Homebuilding Texas

(4) Homebuilding West

Homebuilding segments:

(1) East (2) Central (3) Texas (4) West

(5) Financial Services

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Loans held-for-sale (2) — 1,636,351 — — 1,636,351

Investments in equity securities (3) 1,006,599 1,006,599

Investments available-for-sale (4) — — — 41,654 41,654

Loans held-for-investments, net — 44,582 — — 44,582

Investments held-to-maturity — 157,808 — — 157,808

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

Investments in unconsolidated entities 972,084 — 654,029 346,270 1,972,383

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Notes and other debts payable, net $ 4,652,338 1,726,026 — — 6,378,364

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

Accounts payable and other liabilities 5,217,904 180,317 288,930 145,981 5,833,132

$ 9,870,242 1,906,343 288,930 145,981 12,211,496

7 unchanged sentences

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

Investments in equity securities (3) — — — 68,771 68,771

Investments available-for-sale (4) — — — 53,497 53,497

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

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

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

Investments in unconsolidated entities 953,177 — 724,647 387,097 2,064,921

3 unchanged sentences

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

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

Accounts payable and 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

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

(3) Investments in equity securities include investments of $ 100.1 million and $ 68.8 million without readily available fair values as of November 30, 2021 and November 30, 2020, respectively.

(4) 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

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Revenues $ 25,545,242 898,745 665,232 21,457 — 27,130,676

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

Operating earnings 5,031,762 491,014 21,453 733,035 — 6,277,264

Corporate general and administrative expenses — — — — ( 398,381 ) ( 398,381 )

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

Charitable foundation contribution — — — — ( 59,825 ) ( 59,825 )

Earnings before income taxes 5,031,762 491,014 21,453 733,035 ( 458,206 ) 5,819,058

Year ended November 30, 2020

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

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

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

Corporate general and administrative expenses — — — — ( 333,446 ) ( 333,446 )

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

Charitable foundation contribution — — — — ( 24,972 ) ( 24,972 )

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

Year ended November 30, 2019

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

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

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

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

Corporate general and administrative expenses — — — — ( 321,188 ) ( 321,188 )

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

Charitable foundation contribution — — — — ( 19,926 ) ( 19,926 )

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

(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.

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

Also included are property expenses related to the leases of corporate offices, data processing, general corporate expenses and charitable foundation contribution to the Lennar Foundation.

Homebuilding Segments

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

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

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

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

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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

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

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Year ended November 30, 2021

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

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

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

Net additions to (disposals of) operating properties and equipment ( 31,338 ) 89 950 63,803 ( 1,214 ) 32,290

Financial Services

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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:

At November 30, 2021, the Financial Services segment had warehouse facilities, all of which were 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

December 2021 (1) $ 500,000

April 2022 700,000

July 2022 600,000

October 2022 500,000

Total - Residential facilities $ 2,300,000

2 unchanged sentences

November 2022 100,000

December 2021 200,000

July 2023 50,000

Total - LMF Commercial facilities $ 550,000

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(1) Subsequent to November 30, 2021, the maturity date was extended to December 2022.

(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 Financial Services segment uses the residential warehouse 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.

The LMF Commercial facilities, which are guaranteed by Lennar Corporation, finance LMF Commercial loan originations and securitization activities and are secured by up to 80 % interests in the originated commercial loans financed.

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

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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.

LMF Commercial originated commercial loans as follows:

(Dollars in thousands) 2021 2020

Originations (1) $ 770,107 703,777

Sold $ 931,023 705,089

Securitizations 6 5

(1) During both the year ended November 30, 2021 and 2020 all the commercial loans originated were recorded as loans held-for-sale, which are held at fair value.

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.

At November 30, 2021 and 2020, the Financial Services segment held commercial mortgage-backed securities ("CMBS").

These securities are classified as held-to-maturity based on its intent and ability to hold the securities until maturity and changes in estimated cash flows are reviewed periodically to determine if an other-than-temporary impairment has occurred.

Based on the segment’s assessment, no impairment charges were recorded during the years ended November 30, 2021 or 2020.

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)

outstanding debt in these agreements was $ 153.5 million and $ 154.7 million, respectively, and interest incurred at a rate of 3.4 %.

Details related to Financial Services' CMBS were as follows:

(Dollars in thousands) November 30, 2021 November 30, 2020

Carrying value $ 157,808 164,230

Outstanding debt, net of debt issuance costs $ 147,474 153,505

Incurred interest rate 3.4 % 3.4 %

November 30, 2021

Discount rates at purchase 6 % — 84 %

Coupon rates 2.0 % — 5.3 %

Distribution dates October 2027 — December 2028

Stated maturity dates October 2050 — December 2051

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

1 unchanged sentence

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.

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.

Lennar Other primarily includes strategic investments in technology companies, primarily managed by the Company's LENX subsidiary, and fund interests the Company retained when it sold the Rialto asset and investment management platform.

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, gains (losses) from investments in equity securities and other income (expense), net from the remaining assets related to the Company's former Rialto segment.

During the year ended November 30, 2021, the Company completed the sale of the Company's residential solar business to Sunnova Energy International Inc.

("Sunnova") for shares in Sunnova.

The Company recorded a gain of $ 153.0 million upon the closing of the sale.

The calculation of the gain included the fair value of 3.1 million shares in initial consideration received at closing and the fair value of potential shares to be received upon achievement of earnouts.

The significant unobservable fair value assumptions used in the calculation were a terminal value multiple of 3 and a 15 % discount rate.

The fair value of the earnouts was also based on the probability of achieving full or partial earnouts.

The investments in Opendoor Technologies, Inc.

("Opendoor"), Sunnova, Hippo Holdings, Inc.

("Hippo"), SmartRent, Inc.

("SmartRent") and Blend Labs, Inc.

("Blend") are held at market and will therefore change depending on the value of the Company's share holdings in those entities on the last day of each quarter.

For the years ended November 30, 2020 and 2019, there were no mark to market gains on our strategic investments in technology companies.

The following is a detail of Lennar Other realized and unrealized gains (losses):

(In thousands) 2021

Opendoor (OPEN) mark to market $ 239,312

Hippo (HIPO) mark to market 207,634

SmartRent (SMRT) mark to market 79,483

Sunnova (NOVA) mark to market ( 8,883 )

Blend Labs (BLND) mark to market ( 6,744 )

Gain on sale of solar business 158,069

Other realized gains 11,705

During the year ended November 30, 2021, Opendoor, Hippo, SmartRent and Blend began trading and the Company began to mark to market the Company's share holdings in the public entities.

The mark to market recognition was due to the entities in which the Company holds the investments going public and the loss of a contractual right to a board seat, where applicable, during the year ended November 30, 2021 and the investments now being accounted for as investments in equity securities which are held at fair value and the changes in fair value are recognized through earnings.

As of November 30, 2020,

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

the investments, other than SmartRent since the first investment was made in fiscal 2021, were included in the Company's investments in unconsolidated entities and were accounted for using the equity method.

In addition, as previously noted, Doma Holdings, Inc.

("Doma") went public during the third quarter of 2021.

Doma is an investment that continues to be accounted for under the equity method due to the Company's significant ownership interest which allows the Company to exercise significant influence.

As of November 30, 2021, the Company owns approximately 25.0 % of Doma and the carrying amount of the Company's investment is $ 53.7 million.

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

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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 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.

The total debt of the Homebuilding unconsolidated entities in which the Company has investments was $ 1.2 billion and $ 1.1 billion as of November 30, 2021 and 2020, respectively, of which the Company's maximum recourse exposure was $ 5.3 million and $ 4.9 million as of November 30, 2021 and 2020, 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)

In a completion guarantee, the Company and its venture partners 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.

As of November 30, 2021 and 2020, the Homebuilding segment's unconsolidated entities had non-recourse debt with completion guarantees of $ 241.0 million and $ 183.3 million, respectively.

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.

As of both November 30, 2021 and 2020, the fair values of the repayment, maintenance guarantees and completion guarantees were not material.

The Company believes that as of November 30, 2020, in the event it becomes legally obligated to perform under a guarantee of the obligation of a Homebuilding unconsolidated entity due to a triggering event under a guarantee, the collateral should be sufficient to repay at least a significant portion of the obligation or the Company and its partners would contribute additional capital into the venture.

The Company believes that as of November 30, 2021, in the event it becomes legally obligated to perform under a guarantee of the obligation of a Homebuilding unconsolidated entity due to a triggering event under a guarantee, the collateral should be sufficient to repay at least a significant portion of the obligation or the Company and its

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

partners would contribute additional capital into the venture.

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

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.

In the first quarter of 2021, the Company formed the Upward America Venture (“Upward America”), and is managing and participating in Upward America.

Upward America is an investment fund that acquires new single-family homes in high growth markets across the United States and rents them to the people who will live in them.

Upward America has raised equity commitments totaling $ 1.25 billion primarily from institutional investors, including $ 125 million committed by Lennar.

During the year ended November 30, 2021, Lennar delivered 1,457 homes to Upward America.

Subsequent to November 30, 2021, the equity commitments were increased to $ 1.6 billion.

Multifamily Unconsolidated Entities

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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.

As of both November 30, 2021 and 2020, the fair value of the completion guarantees was immaterial.

As of November 30, 2021 and 2020, Multifamily segment's unconsolidated entities had non-recourse debt with completion guarantees of $ 855.2 million and $ 722.9 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.

6 unchanged sentences

Management fee income 56,573 56,253 53,597

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, 2021 are included below:

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(In thousands) November 30, 2021

Homebuilding Financial Services Multifamily Lennar

Homebuilding Multifamily Lennar

Cash and cash equivalents $ 460,901 25,972 430,807 917,680

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(In thousands) November 30, 2020

Homebuilding Financial Services Multifamily Lennar

Homebuilding Multifamily Lennar

Cash and cash equivalents $ 546,013 94,801 284,517 814,222

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Statement of Operations

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

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

November 30, 2021 $ 1,383,266 1,448,775 187,625 122,116 48,993

1 unchanged sentence

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

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

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

LENNAR CORPORATION AND SUBSIDIARIES

2 unchanged sentences

(Dollars in thousands) 2021 2020

6.25 % senior notes due December 2021

$ 305,221 310,252

4.750 % senior notes due 2022

$ 573,840 572,724

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

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895,510 894,760

6.625 % senior notes due 2020

2.95 % senior notes due 2020

6.25 % senior notes due December 2021

4.125 % senior notes due 2022

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The carrying amounts of the senior notes listed above are net of debt issuance costs of $ 11.0 million and $ 15.9 million, as of November 30, 2021 and 2020, respectively.

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.

In June 2021, the Company retired $ 300 million aggregate principal amount of its 6.25 % senior notes due December 2021 at par.

In October 2021, the Company retired $ 600 million aggregate principal amount of its 4.125 % senior notes due January 2022 at par.

In November 2021, the Company retired early, at a premium, $ 250 million aggregate principal amount of its 5.375 % senior notes due October 2022.

The loss on early retirement of the $ 250 million senior notes was $ 7.4 million.

At November 30, 2021, the Company had an unsecured revolving credit facility (the "Credit Facility") with maximum borrowings of $ 2.5 billion maturing in 2024, that included a $ 300 million accordion feature, subject to additional commitments, thus the maximum borrowings could be $ 2.8 billion.

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

As of both November 30, 2021 and 2020, 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.

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

(In thousands) November 30,

(In thousands) 2021 2020

Performance letters of credit $ 924,584 752,096

Financial letters of credit 425,843 283,193

Surety bonds 3,553,047 3,087,711

5 unchanged sentences

(Dollars in thousands)

6.25 % senior notes due December 2021

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

4.750 % 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

$ 575,000 $ 567,585 (4) October 2012, February 2013, April 2013

15 unchanged sentences

The senior notes are unsecured and unsubordinated, but are guaranteed by substantially all of the Company's 100% owned homebuilding subsidiaries.

(2) The Company generally uses the net proceeds for working capital and general corporate purposes, which can include the repayment or repurchase of other outstanding senior notes.

(2) The Company generally has historically used the net proceeds for working capital and general corporate purposes, which can include the repayment or repurchase of other outstanding senior notes.

(3) These notes were obligations of CalAtlantic when it was acquired, and were subsequently exchanged in part for notes of the Company.

10 unchanged sentences

2024 1,529,977

2024 1,518,748

Thereafter 1,294,642

19 unchanged sentences

Nondeductible compensation 0.49 0.57 0.45

Domestic production activities deduction — — ( 1.71 )

Tax reserves and interest expense, net 0.03 — ( 0.03 )

Deferred tax asset valuation allowance, net ( 0.01 ) — ( 0.02 )

Accounting method changes — — ( 1.47 )

Changes in tax law (2) — — 3.06

Other ( 0.29 ) ( 0.09 ) 0.18

Effective rate 23.52 % 21.02 % 24.26 %

(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.

(1) During fiscal year 2020, Congress extended the new energy efficient home tax credit for homes delivered from 2018 to 2021, with retroactive effect for 2018 and 2019.

LENNAR CORPORATION AND SUBSIDIARIES

9 unchanged sentences

Investments in unconsolidated entities 48,913 67,405

Employee stock incentive plan 37,813 25,060

Other assets 49,828 51,655

5 unchanged sentences

Deferred income 272,827 240,903

Unrealized gains on investments in equity securities 164,534 —

Other liabilities 44,810 47,478

Total deferred tax liabilities 669,503 470,110

Net deferred tax assets $ 187,382 279,465

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

Net deferred tax assets (liabilities) $ ( 4,245 ) 187,382

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

(In thousands) 2021 2020

Net deferred tax assets:

Net deferred tax assets (liabilities):

Homebuilding $ 84,198 119,467

2 unchanged sentences

Lennar Other ( 151,259 ) 28,736

Net deferred tax assets $ 187,382 279,465

Net deferred tax assets (liabilities) $ ( 4,245 ) 187,382

(1) Net deferred tax assets and net deferred tax liabilities detailed above are included within other assets and other liabilities in the respective segments.

6 unchanged sentences

State tax effected NOL carryforwards (3) 41,935 51,757

(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.

(1) As of November 30, 2021 and 2020, the 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.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(2) At November 30, 2021 and 2020, 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, 2021 and 2020, the Company had state tax effected NOL carryforwards that may be carried forward from 10 to 20 years or indefinitely, depending on the tax jurisdiction, with certain losses expiring between 2022 and 2039.

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

3 unchanged sentences

Lapse of statute of limitations — ( 349 ) ( 1,811 )

Decreases due to tax positions taken during prior period — — ( 2,805 )

Decreases due to settlements with tax authorities — ( 222 ) —

Increases due to the CalAtlantic acquisition — — 13,510

Increases due to tax positions taken during prior period — — 222

Gross unrecognized tax benefits, end of year $ 12,285 12,285 12,856

If the Company were to recognize its gross unrecognized tax benefits as of November 30, 2021, $ 9.7 million would affect the Company’s effective tax rate.

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.

The Company believes it is reasonably possible that its gross unrecognized tax benefits could decrease by up to $ 12.3 million within the following twelve months.

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

20 unchanged sentences

net amount attributable to noncontrolling interests in Rialto's Carried Interest Incentive Plan (1) 2,907 8,971 4,204

interest on convertible senior notes — — 80

undistributed earnings allocated to convertible shares — — 2,904

undistributed earnings reallocated to convertible shares — — 2,899

Numerator for diluted earnings per share $ 4,374,285 2,427,676 1,828,706

2 unchanged sentences

Share-based payments — 1 3

Convertible senior notes — — 549

Denominator for diluted earnings per share - weighted average common shares outstanding 306,612 309,407 318,422

1 unchanged sentence

Diluted earnings per share $ 14.27 7.85 5.74

(1) The amounts presented above relate to Rialto's Carried Interest Incentive Plan and represent the difference between the advanced tax distributions received by Lennar Other segment and the amount Lennar, as the parent company, is assumed to own.

(1) The amounts presented above relate to Rialto's Carried Interest Incentive Plan and represent the difference between the advanced tax distributions received by the Lennar Other segment and the amount Lennar, as the parent company, is assumed to own.

For the years ended November 30, 2021, 2020 and 2019, there were no options to purchase shares of common stock that were outstanding and anti-dilutive.

4 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.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fair Value Carrying Fair Carrying Fair

3 unchanged sentences

Investments held-to-maturity Level 3 157,808 184,495 164,230 196,047

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

Lennar Other:

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

Homebuilding senior notes and other debts payable, net Level 2 $ 4,652,338 5,046,721 5,955,758 6,581,798

Financial Services notes and other debts payable, net Level 2 1,726,026 1,726,860 1,463,919 1,464,850

Lennar Other notes and other debts payable, net Level 2 — — 1,906 1,906

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

1 unchanged sentence

The fair values for instruments that do not have quoted market prices are estimated by the Company on the basis of discounted cash flows or other financial information.

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

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

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Multifamily —For 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.

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.

Lennar Other —The fair value for notes payable approximate their carrying value due to variable interest pricing terms and the short-term nature of the borrowings.

Fair Value Measurements

13 unchanged sentences

Lennar Other:

Investments in equity securities Level 1 906,539 —

Investments available-for-sale Level 3 41,654 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:

8 unchanged sentences

Financial Services residential loans held-for-sale — Fair value is based on independent quoted market prices, where available, or the prices for other mortgage whole loans with similar characteristics.

Management believes carrying loans held-for-sale at fair value improves financial reporting by mitigating volatility in reported earnings caused by measuring the fair value of the loans and the derivative instruments used to economically hedge them without having to apply complex hedge accounting provisions.

In addition, the Company recognizes the fair value of its rights to service a mortgage loan as revenue upon entering into an interest rate lock loan commitment with a borrower.

The fair value of these servicing rights is included in Financial Services’ loans held-for-sale as of November 30, 2020 and 2019.

The Company recognizes the fair value of its rights to service a mortgage loan as revenue upon entering into an interest rate lock loan commitment with a borrower.

The fair value of these are included in Financial Services’ loans held-for-sale as of November 30, 2021 and 2020.

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

7 unchanged sentences

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

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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.

6 unchanged sentences

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 in equity securities - The fair value of investments in equity securities was calculated based on independent quoted market prices.

The Company’s investments in equity securities were recorded at fair value with all changes in fair value recorded to Lennar Other unrealized gain of the Company’s consolidated statements of operations and comprehensive income (loss).

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.

2 unchanged sentences

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 11,513 ( 9,805 ) 6,504

Changes in fair value included in Lennar Other realized and unrealized gains:

Investments in equity securities $ 510,802 — —

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

1 unchanged sentence

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

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.

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 loans and recorded as revenues in the Financial Services’ statement of operations.

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

9 unchanged sentences

End of year $ 2,492 68 2,113 193,588

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

(1) The year ended November 30, 2021 includes $ 28.5 million of loans sold/paid outside of LMF Commercial ’s six securitizations and $ 7.3 million of loans converted to loans held-for-investment.

The year ended November 30, 2020 includes $ 7.5 million related to the sale of a servicing portfolio.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

15 unchanged sentences

Level 3 12,764 12,024 ( 740 ) — — — 60,363 56,727 ( 3,636 )

Lennar Other:

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.

(2) Valuation adjustments for finished homes, construction in progress and land and land under development were included in Homebuilding costs and expenses and valuation adjustments for other assets were included in homebuilding other income (expense), net in the Company's consolidated statements of operations for the years ended November 30, 2021, 2020 and 2019.

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)

Variable Interest Entities

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.

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, 2021 and based on the Company's evaluation, during the year ended November 30, 2021, the Company consolidated seven entities that had a total combined assets and liabilities of $ 77.1 million and $ 3.2 million, respectively.

During the year ended November 30, 2021, there were no VIEs that were deconsolidated.

During the year ended November 30, 2020, 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.

2 unchanged sentences

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.

The JV remained a VIE at November 30, 2020, however, the Company concluded that it is no longer the primary beneficiary as the Company no longer has the power to direct the VIE.

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.

Upon deconsolidation, the Company recorded a gain of $ 61.4 million during the year ended November 30, 2020.

In the current year, the investment in that entity has been reclassified to the Lennar Other Segment, as such, the investment as of November 30, 2020 has also been reclassed to the Lennar Other segment.

See Note 1 for additional discussion regarding the reclass.

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.

5 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

8 unchanged sentences

$ 857,199 1,084,044 949,447 1,101,506

(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)

(1) As of November 30, 2021 and 2020, the maximum exposure to loss of Homebuilding's investments in unconsolidated VIEs was limited to its investments in unconsolidated VIEs, except as of November 30, 2021, with regard to the Company's remaining commitment to fund capital in the Upward America Venture, a single family for rent platform, and a short-term note provided by the Company to the Upward America Venture.

(2) As of November 30, 2021 and 2020, the maximum exposure to loss of Multifamily's investments in unconsolidated VIEs was primarily limited to its investments in the unconsolidated VIEs, except with regard to the remaining equity commitment of $ 23.1 million and $ 88.1 million, respectively, to fund LMV I and LMV II for futre expenditures related to the construction and development of its projects.

(3) As of both November 30, 2021 and 2020, the maximum exposure to loss of the Financial Services segment was limited to its investment in the unconsolidated entities VIEs and related to the Financial Services' CMBS investments held-to-maturity.

(4) At November 30, 2021, the decrease in investments in unconsolidated VIEs and maximum exposure to loss was related to an entity which had a reconsideration event due to the payoff of a note receivable which caused the entity to no longer be considered a VIE.

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.

9 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, 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.

During the year ended November 30, 2021, consolidated inventory not owned increased by $ 324.5 million with a corresponding increase to liabilities related to consolidated inventory not owned in the accompanying consolidated balance sheet as of November 30, 2021.The increase was primarily due to additions in the year ended November 30, 2021 as the Company focused on increasing its controlled homesites, partially offset by takedowns.

To reflect the purchase price of the homesite takedowns, the Company had a net reclass related to option deposits from consolidated inventory not owned to land under development in the accompanying consolidated balance sheet as of November 30, 2021.

The liabilities related to consolidated inventory not owned primarily represent the difference between the option exercise prices for the optioned land and the Company’s cash deposits.

The Company’s exposure to loss related to its option contracts with third parties and unconsolidated entities consisted of its non-refundable option deposits and pre-acquisition costs totaling $ 414.2 million and $ 320.5 million at November 30, 2020 and 2019, respectively.

Additionally, the Company had posted $ 87.5 million and $ 75.0 million of letters of credit in lieu of cash deposits under certain land and option contracts as of November 30, 2020 and 2019, respectively.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company’s exposure to loss related to its option contracts with third parties and unconsolidated entities were as follows:

(In thousands) 2021 2020

Non-refundable option deposits and pre-acquisition costs $ 1,228,057 414,154

Letters of credit in lieu of cash deposits under certain land and option contracts 175,937 87,537

Commitments and Contingent Liabilities

8 unchanged sentences

The use of option contracts allows the Company to reduce the financial risks associated with long-term land holdings.

At November 30, 2020, the Company had $ 414.2 million of non-refundable option deposits and pre-acquisition costs related to certain of these homesites, which were included in inventories in the consolidated balance sheet.

At November 30, 2021, the Company had $ 1.2 billion of non-refundable option deposits and pre-acquisition costs related to certain of these homesites, which were included in inventories in the consolidated balance sheet.

The Company has entered into agreements to lease certain office facilities and equipment under operating leases.

4 unchanged sentences

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, 2021

3 unchanged sentences

Weighted-average discount rate 2.8 %

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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, 2021 were as follows:

(Dollars in thousands) Lease Payments

(In thousands) Lease Payments

2022 $ 40,387

9 unchanged sentences

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.

The Company's rental expense was as follows:

(In thousands) 2021 2020 2019

Rental expense $ 84,991 82,090 92,178

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.

For the year ended November 30, 2021, 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.

12 unchanged sentences

Loan origination liabilities are included in Financial Services’ liabilities in the Company's consolidated balance sheets.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

Earnings before income taxes 423,552 676,577 859,013 1,164,646

Net earnings attributable to Lennar 398,452 517,406 666,418 882,760

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

Earnings before income taxes 319,124 559,399 667,083 888,686

Net earnings attributable to Lennar 239,910 421,472 513,366 674,304

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.

Therefore, the sum of per share amounts for the quarters may not agree with per share amounts for the year.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

1 unchanged sentence

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