UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended AUGUST 31, 1995
Commission file number: 1-6643
LENNAR CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 59-1281887
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
700 NORTHWEST 107 AVENUE, MIAMI, FLORIDA 33172
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(Address of principal executive offices) (Zip Code)
(305) 559-4000
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No
Common shares outstanding as of the end of the current fiscal quarter:
Common 25,840,444
Class B Common 9,985,731
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
LENNAR CORPORATION AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(In thousands)
(Unaudited)
August 31, November 30,
ASSETS 1995 1994
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<S> <C> <C>
HOMEBUILDING, INVESTMENT AND FINANCIAL SERVICES:
Homebuilding and investment assets:
Cash and cash equivalents $ 13,601 16,801
Receivables, net 37,312 48,165
Inventories:
Construction in progress and model homes 233,590 175,547
Land held for development 294,684 300,488
---------------------------
Total inventories 528,274 476,035
Land held for investment 75,202 80,747
Operating properties and equipment, net 191,269 193,621
Investments in and advances to partnerships 121,717 106,637
Other assets 34,665 29,598
Financial services assets 319,140 252,195
- ----------------------------------------------------------------------------------------------------------
Total assets - homebuilding, investment and financial services 1,321,180 1,203,799
- ----------------------------------------------------------------------------------------------------------
LIMITED-PURPOSE FINANCE SUBSIDIARIES - COLLATERAL FOR BONDS AND NOTES PAYABLE 78,236 89,424
- ----------------------------------------------------------------------------------------------------------
$ 1,399,416 1,293,223
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LIABILITIES AND STOCKHOLDERS' EQUITY
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HOMEBUILDING, INVESTMENT AND FINANCIAL SERVICES:
Homebuilding and investment liabilities:
Accounts payable and accrued liabilities $ 107,026 102,582
Customer deposits 19,205 15,271
Income taxes:
Currently payable 7,102 10,205
Deferred 50,249 50,796
Mortgage notes and other debts payable 327,347 328,936
Financial services liabilities 231,978 168,348
- ----------------------------------------------------------------------------------------------------------
Total liabilities - homebuilding, investment and financial services 742,907 676,138
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LIMITED-PURPOSE FINANCE SUBSIDIARIES - BONDS AND NOTES PAYABLE 73,942 82,997
- ----------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY:
Common stock 2,584 2,578
Class B common stock 999 999
Additional paid-in capital 170,291 169,605
Retained earnings 408,693 360,906
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Total stockholders' equity 582,567 534,088
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$ 1,399,416 1,293,223
==========================================================================================================
</TABLE>
See accompanying notes to consolidated condensed financial statements.
1
<PAGE>
<TABLE>
<CAPTION>
LENNAR CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Earnings
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
August 31, August 31,
1995 1994 1995 1994
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES:
Homebuilding $ 159,902 143,727 445,523 461,941
Investment 28,077 40,415 104,845 86,582
Financial services 14,875 13,022 40,193 42,683
Limited-purpose finance subsidiaries 1,876 2,260 5,884 7,362
- --------------------------------------------------------------------------------------------------
Total revenues 204,730 199,424 596,445 598,568
- --------------------------------------------------------------------------------------------------
COSTS AND EXPENSES:
Homebuilding 146,153 127,988 409,997 412,658
Investment 14,388 23,487 51,311 44,712
Financial services 9,469 9,139 26,638 31,493
Limited-purpose finance subsidiaries 1,883 2,161 5,881 7,320
Corporate general and administrative 2,343 2,849 7,640 7,979
Interest 4,733 3,545 12,358 10,424
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Total costs and expenses 178,969 169,169 513,825 514,586
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EARNINGS BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES 25,761 30,255 82,620 83,982
INCOME TAXES 10,047 11,799 32,222 32,753
- --------------------------------------------------------------------------------------------------
EARNINGS BEFORE CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES 15,714 18,456 50,398 51,229
CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING
PRINCIPLES FOR:
Income taxes -- -- -- 4,745
Purchased mortgage servicing rights -- -- -- (3,784)
- --------------------------------------------------------------------------------------------------
NET EARNINGS $ 15,714 18,456 50,398 52,190
==================================================================================================
AVERAGE SHARES OUTSTANDING 36,107 36,056 36,081 36,108
==================================================================================================
NET EARNINGS PER SHARE:
BEFORE CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES $ .44 .51 1.40 1.42
CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING
PRINCIPLES -- -- -- .03
- --------------------------------------------------------------------------------------------------
NET EARNINGS PER SHARE $ .44 .51 1.40 1.45
==================================================================================================
==================================================================================================
CASH DIVIDENDS PER COMMON SHARE $ 0.025 0.025 0.075 0.07
- --------------------------------------------------------------------------------------------------
CASH DIVIDENDS PER CLASS B COMMON SHARE $ 0.0225 0.0225 0.0675 0.062
==================================================================================================
</TABLE>
See accompanying notes to consolidated condensed financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
LENNAR CORPORATION AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
(Unaudited)
(In thousands)
Nine Months Ended
August 31,
1995 1994
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 50,398 52,190
Adjustments to reconcile net earnings to net cash provided by (used in) operating
activities:
Depreciation and amortization 8,048 6,859
Equity in earnings of partnerships (22,838) (17,225)
Gain on sales of other real estate (15,086) (8,942)
Decrease in deferred income taxes (547) (2,120)
Cumulative effect of changes in accounting principles -- (961)
Changes in assets and liabilities, net of effects from accounting changes:
Decrease in receivables 11,608 21,343
Increase in inventories (56,071) (60,121)
Decrease in financial services' loans held for sale or disposition 48 117,699
Increase (decrease) in accounts payable and accrued liabilities 6,099 (29,474)
Decrease in income taxes currently payable (3,103) (3,836)
Other, net 3,934 1,163
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Net cash provided by (used in) operating activities (17,510) 76,575
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to operating properties and equipment (8,768) (9,628)
Sales of operating properties and equipment 20,444 20,007
Sales of land held for investment 9,833 1,096
Decrease (increase) in investments in and advances to partnerships 7,758 (1,675)
Additions to financial services' loans held for investment (37,115) (52,408)
Sales and collections of financial services' loans held for investment 3,880 40,546
Purchase of commercial mortgage-backed securities (21,345) (29,121)
Other, net 1,417 7,082
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Net cash used in investing activities (23,896) (24,101)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under revolving credit agreement 68,300 8,700
Net borrowings (repayments) under financial services' warehouse lines of credit 12,600 (104,534)
Mortgage notes and other debts payable:
Proceeds from borrowings 152,486 60,371
Principal payments (191,118) (16,660)
Limited-purpose finance subsidiaries:
Principal reduction of mortgage loans and other receivables 11,175 35,319
Principal reduction of bonds and notes payable (9,630) (33,513)
Common stock:
Issuance 692 716
Dividends (2,611) (2,420)
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Net cash provided by (used in) financing activities 41,894 (52,021)
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Net increase in cash and cash equivalents 488 453
Cash and cash equivalents at beginning of period 17,942 14,225
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Cash and cash equivalents at end of period $ 18,430 14,678
==============================================================================================================
Summary of cash and cash equivalent balances:
Homebuilding and investment $ 13,601 10,158
Financial services 4,829 4,520
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$ 18,430 14,678
==============================================================================================================
Supplemental disclosures of cash flow information:
Cash paid for interest, net of amounts capitalized $ 15,746 8,804
Cash paid for income taxes $ 36,361 37,798
==============================================================================================================
</TABLE>
See accompanying notes to consolidated condensed financial statements.
3
<PAGE>
LENNAR CORPORATION AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
(1) BASIS OF CONSOLIDATION
The accompanying consolidated condensed financial statements include the
accounts of Lennar Corporation and all wholly-owned subsidiaries (the
"Company"). All significant intercompany transactions and balances have been
eliminated. The Company's investments in partnerships are accounted for by the
equity method. The financial statements have been prepared by management without
audit by independent public accountants and should be read in conjunction with
the November 30, 1994 audited financial statements in the Company's Annual
Report on Form 10-K for the year then ended. However, in the opinion of
management, all adjustments (consisting of normal recurring adjustments)
necessary for fair presentation of the accompanying consolidated condensed
financial statements have been made.
(2) BUSINESS SEGMENTS
The Company has three business segments: Homebuilding, Investment and Financial
Services. The limited-purpose finance subsidiaries are not considered a business
segment.
Homebuilding operations include the construction and sale of single-family and
multi-family homes. These activities also include the purchase, development and
sale of residential land.
The Investment Division is involved in the development, management and leasing,
as well as the acquisition and sale, of commercial and residential properties
and land. This division also manages and participates in partnerships with
financial institutions. During 1994, the Investment Division began acquiring, at
a discount, the unrated portions of debt securities which are collateralized by
real estate loans. The division has only invested in securities in which it is
the special servicer on behalf of all the certificate holders of the security.
The division earns interest on these investments as well as fees for the special
servicing activities.
Financial services activities are conducted primarily through Lennar Financial
Services, Inc. ("LFS") and five subsidiaries: Universal American Mortgage
Company, AmeriStar Financial Services, Inc., Universal Title Insurors, Inc.,
Lennar Capital Corporation and TitleAmerica Insurance Corporation. These
companies arrange mortgage financing, title insurance and closing services for
Lennar homebuyers and others, acquire, package and resell home mortgage loans
and perform mortgage loan servicing activities. This division also invests in
rated portions of commercial real estate mortgage-backed securities for which
Lennar's Investment Division is the special servicer and an investor in the
unrated portion of those securities.
The limited-purpose finance subsidiaries of LFS have placed mortgages and other
receivables as collateral for various long-term financings. These
limited-purpose finance subsidiaries are not considered a part of the financial
services operations and are reported separately.
(3) NET EARNINGS PER SHARE
Net earnings per share is calculated by dividing net earnings by the weighted
average number of the total of common shares, Class B common shares and common
equivalent shares outstanding during the period.
4
<PAGE>
(4) RESTRICTED CASH
Cash includes restricted deposits of $3.0 million and $3.7 million as of August
31, 1995 and November 30, 1994, respectively. These balances are comprised
primarily of escrow deposits held related to condominium purchases and security
deposits from tenants of commercial and apartment properties.
(5) FINANCIAL SERVICES
The assets and liabilities related to the Company's financial services
operations (as described in Note 2) are summarized as follows:
<TABLE>
<CAPTION>
(Unaudited)
August 31, November 30,
(In thousands) 1995 1994
-----------------------------------------------------------------------
<S> <C> <C>
Assets:
Loans held for sale or disposition, net $ 124,452 124,324
Loans and mortgage-backed securities
held for investment, net 172,600 107,989
Cash and receivables, net 14,855 11,579
Servicing acquisition costs 2,681 3,949
Other 4,552 4,354
-----------------------------------------------------------------------
$ 319,140 252,195
=======================================================================
Liabilities:
Notes and other debts payable $ 216,678 154,379
Other 15,300 13,969
-----------------------------------------------------------------------
$ 231,978 168,348
=======================================================================
</TABLE>
(6) ACCOUNTING CHANGES
Effective December 1, 1993, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes". This
change in accounting principle resulted in an increase to net earnings of $4.7
million in the first quarter of 1994. The change in accounting for income taxes
did not have a significant impact on the Company's results of operations.
The first quarter of 1994 also included a charge of $3.8 million (net of income
taxes of $2.4 million) for the cumulative effect on prior years of a change in
accounting for purchased mortgage servicing rights. The Company changed the way
in which it evaluates these assets for impairment from an undiscounted and
disaggregated cash flow basis to a discounted and disaggregated cash flow basis.
(7) SUMMARY OF NONCASH INVESTING AND FINANCING ACTIVITIES
During the nine months ended August 31, 1995, the Company acquired commercial
mortgage-backed securities for $40.0 million. Of this amount, $21.3 million was
paid in cash and $18.7 million was financed by the sellers. During the same
period in 1994, the Company acquired $64.0 million of commercial
mortgage-backed securities of which $29.1 million was paid in cash and $34.9
million was financed by the sellers.
(8) RECLASSIFICATIONS
Certain prior year amounts in the consolidated condensed financial statements
have been reclassified to conform with the current period presentation.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(1) MATERIAL CHANGES IN RESULTS OF OPERATIONS
OVERVIEW
Net earnings before the cumulative effect of changes in accounting principles
were $15.7 million and $50.4 million, respectively, for the three-month and
nine-month periods ended August 31, 1995, compared to $18.5 million and $51.2
million, respectively, for the three-month and nine-month periods ended August
31, 1994. The decrease in 1995 third quarter net earnings before changes in
accounting principles was due to lower operating earnings from the Homebuilding
and Investment Divisions and higher interest expense. These decreases were
partially offset by higher operating earnings from the Financial Services
Division. Operating earnings in the third quarter of 1994 included a significant
sale of real estate in the Investment Division. The decrease in the 1995
nine-month net earnings before changes in accounting principles was due to lower
operating earnings from the Homebuilding Division and higher interest expense
which were partially offset by higher operating earnings from the Investment and
Financial Services Divisions. In the first quarter of 1994, the Company made two
one-time adjustments for changes in accounting principles which increased net
earnings by approximately $1.0 million. There were no accounting changes in
1995.
HOMEBUILDING
The following tables set forth selected financial and operational information
related to the Homebuilding Division for the periods indicated (unaudited):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
(DOLLARS IN THOUSANDS, EXCEPT August 31, August 31,
AVERAGE SALES PRICES) 1995 1994 1995 1994
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES:
Sales of homes $156,751 142,009 433,244 451,919
Other 3,151 1,718 12,279 10,022
- --------------------------------------------------------------------------------------
Total revenues 159,902 143,727 445,523 461,941
COSTS AND EXPENSES:
Cost of homes sold 127,997 113,176 351,187 360,362
Cost of other revenues 1,875 1,068 9,159 7,126
Selling, general and administrative 16,281 13,744 49,651 45,170
- --------------------------------------------------------------------------------------
Total costs and expenses 146,153 127,988 409,997 412,658
- --------------------------------------------------------------------------------------
OPERATING EARNINGS $ 13,749 15,739 35,526 49,283
======================================================================================
Gross profit - home sales $ 28,754 28,833 82,057 91,557
Gross profit percentage 18.3% 20.3% 18.9% 20.3%
S,G&A as a percentage of homebuilding
revenues 10.2% 9.6% 11.1% 9.8%
Average sales price $133,600 125,600 137,400 125,400
======================================================================================
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
SUMMARY OF HOME AND BACKLOG DATA Three Months Ended Nine Months Ended
August 31, August 31,
DELIVERIES 1995 1994 1995 1994
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Florida 803 800 2,243 2,642
Arizona 124 151 356 505
Texas 246 180 554 458
- --------------------------------------------------------------------------------------
1,173 1,131 3,153 3,605
======================================================================================
NEW ORDERS
- --------------------------------------------------------------------------------------
Florida 878 882 2,642 2,660
Arizona 175 94 419 377
Texas 247 166 630 544
- --------------------------------------------------------------------------------------
1,300 1,142 3,691 3,581
======================================================================================
BACKLOG - HOMES
- --------------------------------------------------------------------------------------
Florida 1,721 1,696
Arizona 301 212
Texas 219 173
- --------------------------------------------------------------------------------------
2,241 2,081
======================================================================================
BACKLOG - DOLLAR VALUE (in thousands) $317,702 287,651
======================================================================================
</TABLE>
Homebuilding revenues in the three-month and nine-month periods ended August 31,
1995 were $159.9 million and $445.5 million, respectively, compared to $143.7
million and $461.9 million, respectively, in the same periods of 1994.
Homebuilding revenues were higher in the 1995 third quarter due to a higher
number of home deliveries and an increase in the average sales price.
Homebuilding revenues were lower in the 1995 nine-month period due to a lower
number of home deliveries, partially offset by an increase in the average sales
price. New home deliveries for the 1995 three-month and nine-month periods were
1,173 and 3,153, respectively, compared to 1,131 and 3,605, respectively, for
the same periods of 1994. The average sales price of a home delivered during the
three-month and nine-month periods ended August 31, 1995 was $133,600 and
$137,400, respectively, compared to $125,600 and $125,400, respectively, in the
corresponding periods of the prior year. The higher average sales price was due
to a proportionately greater number of sales of higher-priced homes, as well as
price increases for existing products.
Gross profit percentages from the sales of homes were 18.3% and 18.9%,
respectively, in the three-month and nine-month periods ending August 31, 1995,
compared to 20.3% in both of the corresponding periods of the prior year. These
decreases were primarily attributable to an increase in land costs related to
the mix of homes delivered.
Selling, general and administrative expenses increased to $16.3 million and
$49.7 million for the three-month and nine-month periods ended August 31, 1995,
respectively, from $13.7 million and $45.2 million, respectively, for the
comparable periods in 1994. As a percentage of homebuilding revenues, selling,
general and administrative expenses increased to 10.2% and 11.1%, respectively,
for the three-month and nine-month periods ended August 31, 1995 from 9.6% and
9.8%, respectively, for the comparable periods in 1994. These increases were
primarily the result of increased advertising and promotional expenses,
increased expenses associated with the opening of new communities and a higher
level of outside broker participation in the sale of homes.
7
<PAGE>
At August 31, 1995, the Company had approximately $318 million (2,241 homes) of
sales contracts in backlog, compared to $288 million (2,081 homes) at the end of
the same period in the prior year. The increase in backlog is attributable to
the increase in new orders in 1995.
INVESTMENT
The following table presents selected financial data related to the Investment
Division for the periods indicated (unaudited):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
August 31, August 31,
(IN THOUSANDS) 1995 1994 1995 1994
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES:
Rental income $11,652 9,965 37,330 31,843
Equity in earnings of partnerships 7,401 5,802 22,838 17,225
Management fees 2,095 3,141 7,293 10,144
Sales of other real estate 4,592 20,000 30,271 21,083
Other 2,337 1,507 7,113 6,287
- --------------------------------------------------------------------------------------
Total revenues 28,077 40,415 104,845 86,582
COST OF SALES AND EXPENSES 14,388 23,487 51,311 44,712
- --------------------------------------------------------------------------------------
OPERATING EARNINGS $13,689 16,928 53,534 41,870
======================================================================================
</TABLE>
For the three-month and nine-month periods ended August 31, 1995, Investment
Division revenues were $28.1 million and $104.8 million, respectively, compared
to $40.4 million and $86.6 million, respectively, in the same periods of 1994.
Operating earnings were $13.7 million and $53.5 million, respectively, in the
third quarter and first nine months of 1995, compared to $16.9 million and $41.9
million, respectively, in the corresponding periods of 1994. The decrease in
operating earnings for the third quarter of 1995 was primarily due to the
decrease in sales of other real estate and slightly lower partnership management
fees. In the third quarter of 1995, sales of real estate totaled $4.6 million.
In the third quarter of 1994, a significant sale of real estate totaling $20.0
million occurred. The decrease in operating earnings from sales of other real
estate was partially offset by increased rental income as a result of the
acquisition of additional operating properties late in fiscal 1994 and an
increase in equity in earnings of partnerships. A significant portion of
partnership earnings are derived from loan payoffs and asset sales which can
vary substantially from period to period.
For the first nine months of 1995, revenues and earnings increased as a result
of increased sales of other real estate, increased rental income on operating
properties and an increase in equity in earnings of partnerships. This increase
was partially offset by lower partnership management fees.
8
<PAGE>
FINANCIAL SERVICES
The following table presents selected financial data related to the Financial
Services Division for the periods indicated (unaudited):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
August 31, August 31,
(DOLLARS IN THOUSANDS) 1995 1994 1995 1994
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES $ 14,875 13,022 40,193 42,683
COSTS AND EXPENSES 9,469 9,139 26,638 31,493
INTERCOMPANY INTEREST EXPENSE 653 830 1,853 2,022
- ------------------------------------------------------------------------------------------
OPERATING EARNINGS $ 4,753 3,053 11,702 9,168
- ------------------------------------------------------------------------------------------
Dollar volume of mortgages originated $ 191,135 177,335 456,113 773,567
- ------------------------------------------------------------------------------------------
Number of mortgages originated 1,700 1,700 4,200 7,400
- ------------------------------------------------------------------------------------------
Principal balance of servicing portfolio $ 3,388,265 3,337,338
- ------------------------------------------------------------------------------------------
Number of loans serviced 44,500 44,800
==========================================================================================
</TABLE>
Operating earnings of the Financial Services Division were $4.8 million and
$11.7 million, respectively, for the three-month and nine-month periods ended
August 31, 1995, compared to $3.1 million and $9.2 million, respectively, for
the same periods of 1994. The increases in operating earnings were primarily the
result of earnings from the division's investment in the rated portions of
commercial real estate mortgage-backed securities. The Financial Services
Division began acquiring these investments during the third quarter of 1994.
Therefore, earnings from these investments for the first nine months of 1995
were significantly greater than for the same period last year. Additionally,
earnings from Financial Services' title operations increased for both the third
quarter and first nine months of 1995, when compared to the same periods of last
year. Earnings from the division's mortgage operations increased slightly for
the 1995 third quarter compared to the 1994 third quarter, whereas year-to-date
1995 operating earnings from mortgage operations decreased from the same period
in 1994.
INTEREST EXPENSE
Interest expense during the three-month and nine-month periods ended August 31,
1995 was $4.7 million and $12.4 million, respectively, compared to $3.5 million
and $10.4 million, respectively, in the corresponding periods of the prior year.
The increase in interest expense was primarily the result of higher debt levels
and interest rates. Previously capitalized interest charged to interest expense
during the third quarter and first nine months of 1995 was $4.3 million and
$11.6 million, respectively, compared to $3.5 million and $10.4 million,
respectively, for the comparable periods last year.
ACCOUNTING CHANGES
Effective December 1, 1993, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes". This
change in accounting principle resulted in an increase to net earnings of $4.7
million in the first quarter of 1994. The change in accounting for income taxes
did not have a significant impact on the Company's results of operations.
The first quarter of 1994 also included a charge of $3.8 million (net of income
taxes of $2.4 million) for the cumulative effect on prior years of a change in
accounting for purchased mortgage servicing rights. The Company changed the way
in which it evaluates these assets for impairment from an undiscounted and
disaggregated cash flow basis to a discounted and disaggregated cash flow basis.
9
<PAGE>
(2) MATERIAL CHANGES IN FINANCIAL CONDITION
During the nine months ended August 31, 1995, $17.5 million was used in the
Company's operations, compared to $76.6 million provided by operations during
the corresponding period of the prior year. The primary use of cash in
operations during 1995 was $56.1 million used to increase inventories through
land purchases, land development and construction. The use of cash was partially
offset by $11.6 million of cash provided by a decrease in receivables and $6.1
million of cash provided by an increase in accounts payable and accrued
liabilities.
During the nine months ended August 31, 1994, cash was primarily provided from
net earnings of $52.2 million, a $117.7 million decrease in loans held for sale
or disposition by the Financial Services Division and a $21.3 million decrease
in receivables. These increases in cash were partially offset by the use of
$60.1 million to increase inventories and $29.5 million to decrease accounts
payable and accrued liabilities.
Cash used in investing activities was $23.9 million in the first nine months of
1995, compared to $24.1 million of cash used in the first nine months of 1994.
During 1995, cash was primarily used to acquire loans held for investment by
the Company's financial services operations, additional commercial
mortgage-backed securities and operating properties. These uses of cash were
partially offset by sales of operating properties and land held for investment
and cash provided by the Company's investments in partnerships.
During 1994, the Company's primary use of cash in investing activities was to
acquire loans held for investment by the Company's financial services
operations, commercial mortgage-backed securities and operating properties.
These uses of cash were partially offset by sales and collections of financial
services' loans held for investment and sales of operating properties.
During fiscal 1995, the Company amended its unsecured revolving credit agreement
to provide for a five-year commitment of $310 million. At August 31, 1995,
$244.0 million was outstanding on the revolving credit agreement.
A majority of the Company's variable rate borrowings are based on the London
Interbank Offering Rate ("LIBOR") index. In June 1995, the Company entered into
seven-year interest rate swap agreements which fixed the LIBOR index at 5.99% -
6.06% on $200 million of variable debt.
10
<PAGE>
PART II. OTHER INFORMATION
ITEMS 1-5. NOT APPLICABLE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit:
(27) Financial Data Schedule.
(b) Reports on Form 8-K: Registrant was not required to file,
and has not filed, a Form 8-K during the quarter for which
this report is being filed.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LENNAR CORPORATION
------------------------
(Registrant)
Date: OCTOBER 13, 1995 ALLAN J. PEKOR
---------------- ------------------------
Allan J. Pekor
Financial Vice President
Chief Financial Officer
Date: OCTOBER 13, 1995 JAMES T. TIMMONS
---------------- ------------------------
James T. Timmons
Controller
Chief Accounting Officer
12
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION PAGE
- ------- ----------- ----
27. Financial Data Schedule 14
13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> AUG-31-1995
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<DEPRECIATION> (35,150)
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0
0
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<EPS-PRIMARY> 1.40
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</TABLE>
