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 MAY 31, 1995
Commission file number: 1-6643
LENNAR CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 59-1281887
------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
700 Northwest 107 Avenue, Miami, Florida 33172
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(Address of principal executive offices) (Zip Code)
(305) 559-4000
------------------------------------------------------
(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 25,836,544
Class B Common 9,986,631
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
LENNAR CORPORATION AND SUBSIDIARIES
Consolidated Condensed Balance Sheets
(In thousands)
(Unaudited)
May 31, November 30,
ASSETS 1995 1994
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
HOMEBUILDING, INVESTMENT AND FINANCIAL SERVICES:
Homebuilding and investment assets:
Cash and cash equivalents $ 8,437 16,801
Receivables, net 35,761 48,165
Inventories:
Construction in progress and model homes 205,407 175,547
Land held for development 305,121 300,488
--------------------------
Total inventories 510,528 476,035
Land held for investment 76,339 80,747
Operating properties and equipment, net 193,143 193,621
Investments in and advances to partnerships 103,268 106,637
Other assets 35,004 29,598
Financial services assets 315,093 252,195
- ----------------------------------------------------------------------------------------------------------
Total assets - homebuilding, investment and financial services 1,277,573 1,203,799
- ----------------------------------------------------------------------------------------------------------
LIMITED-PURPOSE FINANCE SUBSIDIARIES - COLLATERAL FOR BONDS AND NOTES PAYABLE 80,724 89,424
- ----------------------------------------------------------------------------------------------------------
$ 1,358,297 1,293,223
==========================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ----------------------------------------------------------------------------------------------------------
HOMEBUILDING, INVESTMENT AND FINANCIAL SERVICES:
Homebuilding and investment liabilities:
Accounts payable and accrued liabilities $ 103,106 102,582
Customer deposits 16,276 15,271
Income taxes:
Currently payable 1,963 10,205
Deferred 54,010 50,796
Mortgage notes and other debts payable 327,701 328,936
Financial services liabilities 212,713 168,348
- ----------------------------------------------------------------------------------------------------------
Total liabilities - homebuilding, investment and financial services 715,769 676,138
- ----------------------------------------------------------------------------------------------------------
LIMITED-PURPOSE FINANCE SUBSIDIARIES - BONDS AND NOTES PAYABLE 74,836 82,997
- ----------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY:
Common stock 2,584 2,578
Class B common stock 999 999
Additional paid-in capital 170,259 169,605
Retained earnings 393,850 360,906
- ----------------------------------------------------------------------------------------------------------
Total stockholders' equity 567,692 534,088
- ----------------------------------------------------------------------------------------------------------
$ 1,358,297 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 Six Months Ended
May 31, May 31,
1995 1994 1995 1994
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES:
Homebuilding $ 147,194 164,344 285,621 318,214
Investment 48,213 25,653 76,768 46,167
Financial services 13,187 14,933 25,318 29,661
Limited-purpose finance subsidiaries 1,938 2,388 4,008 5,102
- -------------------------------------------------------------------------------------------------
Total revenues 210,532 207,318 391,715 399,144
- -------------------------------------------------------------------------------------------------
COSTS AND EXPENSES:
Homebuilding 136,727 146,518 263,844 284,670
Investment 23,670 11,102 36,923 21,225
Financial services 8,911 11,203 17,169 22,354
Limited-purpose finance subsidiaries 1,934 2,369 3,998 5,159
Corporate general and administrative 2,841 2,812 5,297 5,130
Interest 4,192 3,771 7,625 6,879
- -------------------------------------------------------------------------------------------------
Total costs and expenses 178,275 177,775 334,856 345,417
- -------------------------------------------------------------------------------------------------
EARNINGS BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES 32,257 29,543 56,859 53,727
INCOME TAXES 12,580 11,522 22,175 20,954
- -------------------------------------------------------------------------------------------------
EARNINGS BEFORE CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES 19,677 18,021 34,684 32,773
CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING
PRINCIPLES FOR:
Income taxes --- --- --- 4,745
Purchased mortgage servicing rights --- --- --- (3,784)
- -------------------------------------------------------------------------------------------------
NET EARNINGS $ 19,677 18,021 34,684 33,734
=================================================================================================
AVERAGE SHARES OUTSTANDING 36,100 36,180 36,069 36,134
=================================================================================================
NET EARNINGS PER SHARE:
BEFORE CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES $ .55 .50 .96 .91
CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING
PRINCIPLES --- --- --- .03
- -------------------------------------------------------------------------------------------------
NET EARNINGS PER SHARE $ .55 .50 .96 .94
=================================================================================================
=================================================================================================
CASH DIVIDENDS PER COMMON SHARE $ 0.025 0.025 0.05 0.045
- -------------------------------------------------------------------------------------------------
CASH DIVIDENDS PER CLASS B COMMON SHARE $ 0.0225 0.0225 0.045 0.039
=================================================================================================
</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)
Six Months Ended
May 31,
1995 1994
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 34,684 33,734
Adjustments to reconcile net earnings to net cash provided by (used in) operating
activities:
Depreciation and amortization 5,488 4,338
Equity in earnings of partnerships (15,308) (11,423)
Gain on sales of other real estate (13,190) (963)
Increase (decrease) in deferred income taxes 3,214 (3,111)
Cumulative effect of changes in accounting principles --- (961)
Changes in assets and liabilities, net of effects from accounting changes:
Decrease in receivables 11,300 19,628
Increase in inventories (37,936) (40,629)
Decrease (increase) in financial services' loans held for sale or disposition (525) 91,995
Increase (decrease) in accounts payable and accrued liabilities 1,361 (29,687)
Decrease in income taxes currently payable (8,242) (4,069)
Other, net 1,005 (772)
- --------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities (18,149) 58,080
- --------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to operating properties and equipment (7,704) (8,343)
Sales of operating properties and equipment 17,944 ---
Sales of land held for investment 7,741 1,095
Decrease (increase) in investments in and advances to partnerships 18,677 (4,055)
Increase in loans held for investment (29,546) (8,359)
Purchase of commercial mortgage-backed securities (22,299) (14,821)
Other, net (1,015) 7,277
- --------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (16,202) (27,206)
- --------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under revolving credit agreement 72,000 6,500
Net borrowings (repayments) under financial services' short-term debt 28,225 (84,875)
Mortgage notes and other debts payable:
Proceeds from borrowings 3,044 57,106
Principal payments (72,032) (9,978)
Limited-purpose finance subsidiaries:
Principal reduction of mortgage loans and other receivables 8,943 26,925
Principal reduction of bonds and notes payable (8,455) (25,407)
Common stock:
Issuance 660 694
Dividends (1,740) (1,551)
- --------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 30,645 (30,586)
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (3,706) 288
Cash and cash equivalents at beginning of period 17,942 14,225
- --------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 14,236 14,513
==============================================================================================================
Summary of cash and cash equivalent balances:
Homebuilding and investment $ 8,437 10,910
Financial services 5,799 3,603
- --------------------------------------------------------------------------------------------------------------
$ 14,236 14,513
==============================================================================================================
Supplemental disclosures of cash flow information:
Cash paid for interest, net of amounts capitalized $ 10,441 7,701
Cash paid for income taxes $ 27,307 27,620
==============================================================================================================
</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.,
Loan Funding, Inc. 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 $2.7 million and $3.7 million as of May 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>
May 31, November 30,
(In thousands) 1995 1994
- ------------------------------------------------------------------------
<S> <C> <C>
Assets:
Loans held for sale or disposition, net $ 125,004 124,324
Loans and mortgage-backed securities
held for investment, net 165,964 107,989
Cash and receivables, net 16,969 11,579
Servicing acquisition costs 3,034 3,949
Other 4,122 4,354
- ------------------------------------------------------------------------
$ 315,093 252,195
- ------------------------------------------------------------------------
Liabilities:
Notes and other debts payable $ 197,936 154,379
Other 14,777 13,969
- ------------------------------------------------------------------------
$ 212,713 168,348
- ------------------------------------------------------------------------
</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. During the first quarter of
1994, the Company changed the way in which it evaluates these assets 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 second quarter of 1995, the Company acquired commercial mortgage-
backed securities for $33.7 million. Of this amount, $22.3 million was paid
in cash and the balance of $11.4 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 $19.7 million and $34.7 million, respectively, for the three-month and six-
month periods ended May 31, 1995 and $18.0 million and $32.8 million,
respectively, for the three-month and six-month periods ended May 31, 1994. The
increase in 1995 was due to higher operating earnings from the Investment and
Financial Services Divisions which were partially offset by lower operating
earnings from the Homebuilding Division and higher interest expense. 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:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
(DOLLARS IN THOUSANDS, EXCEPT May 31, May 31,
AVERAGE SALES PRICES) 1995 1994 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES:
Sales of homes $143,520 162,468 276,493 309,910
Other 3,674 1,876 9,128 8,304
- --------------------------------------------------------------------------------
Total revenues 147,194 164,344 285,621 318,214
COSTS AND EXPENSES:
Cost of homes sold 116,320 129,424 223,190 247,186
Cost of other revenues 2,823 1,007 7,284 6,058
Selling, general and administrative 17,584 16,087 33,370 31,426
- --------------------------------------------------------------------------------
Total costs and expenses 136,727 146,518 263,844 284,670
- --------------------------------------------------------------------------------
OPERATING EARNINGS $ 10,467 17,826 21,777 33,544
================================================================================
Gross profit - home sales $ 27,200 33,044 53,303 62,724
Gross profit percentage 19.0% 20.3% 19.3% 20.2%
S,G&A as a percentage of homebuilding
revenues 11.9% 9.8% 11.7% 9.9%
Average sales price $140,200 125,200 139,600 125,300
================================================================================
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
SUMMARY OF HOME AND BACKLOG DATA Three Months Ended Six Months Ended
May 31, May 31,
DELIVERIES 1995 1994 1995 1994
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Florida 741 927 1,440 1,842
Arizona 122 200 232 354
Texas 161 171 308 278
- ---------------------------------------------------------------------------
1,024 1,298 1,980 2,474
===========================================================================
NEW ORDERS
- ---------------------------------------------------------------------------
Florida 1,055 893 1,764 1,778
Arizona 152 141 244 283
Texas 227 212 383 378
- ---------------------------------------------------------------------------
1,434 1,246 2,391 2,439
===========================================================================
BACKLOG - HOMES
- ---------------------------------------------------------------------------
Florida 1,646 1,614
Arizona 250 269
Texas 218 187
- ---------------------------------------------------------------------------
2,114 2,070
===========================================================================
BACKLOG - DOLLAR VALUE
(in thousands) $296,507 270,326
===========================================================================
</TABLE>
Homebuilding revenues in the three-month and six-month periods ended May 31,
1995 were $147.2 million and $285.6 million, respectively, compared to $164.3
million and $318.2 million, respectively, in the same periods of 1994.
Homebuilding revenues were lower in the 1995 periods due to a lower number of
home deliveries, partially offset by an increase in average sales prices. New
home deliveries for the 1995 three-month and six-month periods were 1,024 and
1,980, respectively, compared to 1,298 and 2,474, respectively, for the same
periods of fiscal 1994. The average sales price of a home delivered during the
three-month and six-month periods ended May 31, 1995 was $140,200 and $139,600,
respectively, compared to $125,200 and $125,300, 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 19.0% and 19.3%,
respectively, for the three-month and six-month periods ended May 31, 1995,
compared to 20.3% and 20.2%, respectively, in the corresponding periods of last
year. These decreases were attributable to an increase in land costs related to
the mix of homes delivered and field overhead expenses being absorbed by a fewer
number of home deliveries. Field overhead expenses are charged to cost of homes
sold in the period incurred.
Selling, general and administrative expenses increased to $17.6 million and
$33.4 million for the three-month and six-month periods ended May 31, 1995,
respectively, from $16.1 million and $31.4 million, respectively, for the
comparable periods in fiscal 1994. As a percentage of homebuilding revenues,
selling, general and administrative expenses increased to 11.9% and 11.7%,
respectively, for the three-month and six-month periods ended May 31, 1995 from
9.8% and 9.9%, respectively, for the corresponding periods of the prior year.
These increases were primarily the result of a higher level of outside broker
participation in the sale of homes, expenses associated with the opening of new
communities and an increase in the amount of real estate tax expense
attributable to new land acquisitions.
7
<PAGE>
At May 31, 1995, the Company had approximately $297 million (2,114 homes) of
sales contracts in backlog, compared to $270 million (2,070 homes) at the end of
the same period a year ago. The increase in the backlog reflects the increase
in second quarter new orders that resulted as interest rates declined from
higher levels earlier this year.
INVESTMENT
The following table presents the selected financial data related to the
Investment Division for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
May 31, May 31,
(IN THOUSANDS) 1995 1994 1995 1994
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES:
Rental income $12,740 10,934 25,678 21,878
Equity in earnings of partnerships 6,179 6,511 15,437 11,423
Management fees 2,575 4,814 5,198 7,003
Sales of other real estate 24,279 450 25,679 1,083
Other 2,440 2,944 4,776 4,780
- ---------------------------------------------------------------------------
Total revenues 48,213 25,653 76,768 46,167
COST OF SALES AND EXPENSES 23,670 11,102 36,923 21,225
- ---------------------------------------------------------------------------
OPERATING EARNINGS $24,543 14,551 39,845 24,942
===========================================================================
</TABLE>
For the three-month and six-month periods ended May 31, 1995, Investment
Division revenues increased to $48.2 million and $76.8 million, respectively,
compared to $25.7 million and $46.2 million, respectively, in the same periods
of 1994. Operating earnings increased to $24.5 million and $39.8 million,
respectively, in the second quarter and first six months of fiscal 1995 from
$14.6 million and $24.9 million, respectively, in the corresponding periods of
1994. The increase in revenues and operating earnings during the second quarter
of 1995 was primarily attributable to sales of other real estate which included
a $16.5 million sale of a recreational facility. This increase was partially
offset by a decline in equity in earnings of partnerships and management fees.
A significant portion of the partnerships earnings are derived from loan payoffs
and asset sales which can vary substantially from period to period.
For the first six months of 1995, revenues and earnings increased as a result of
increased sales of other real estate, increased rental income on operating
properties as a result of the acquisition of additional operating properties
throughout fiscal 1994 and an increase in equity in earnings of partnerships.
These increases were partially offset by slightly lower management fees in the
first six months of 1995 when compared to the same period of last year.
8
<PAGE>
FINANCIAL SERVICES
The following table presents the selected financial data related to the
Financial Services Division for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
May 31, May 31,
(DOLLARS IN THOUSANDS) 1995 1994 1995 1994
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES $13,187 14,933 25,318 29,661
COSTS AND EXPENSES 8,911 11,203 17,169 22,354
INTERCOMPANY INTEREST EXPENSE 630 708 1,200 1,192
- ---------------------------------------------------------------------------------------
OPERATING EARNINGS $3,646 3,022 6,949 6,115
=======================================================================================
Dollar volume of mortgages originated $137,878 260,529 264,978 596,232
- ---------------------------------------------------------------------------------------
Number of mortgages originated 1,300 2,600 2,500 5,800
- ---------------------------------------------------------------------------------------
Principal balance of servicing portfolio $3,351,402 3,451,577
- ---------------------------------------------------------------------------------------
Number of loans serviced 44,600 46,000
=======================================================================================
</TABLE>
Operating earnings of the Financial Services Division were $3.6 million and $6.9
million, respectively, for the three-month and six-month periods ended May 31,
1995, compared to $3.0 million and $6.1 million, respectively, for the same
periods last year. 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, there was no comparable income in the first two quarters of last
year. The additional earnings from these investments were partially offset by
lower earnings from other financial services' activities. The division has also
reduced its general and administrative expenses in its production and support
areas in response to the industry wide decline in mortgage loan origination
volume.
INTEREST EXPENSE
Interest expense during the three-month and six-month periods ended May 31, 1995
was $4.2 million and $7.6 million, respectively, compared to $3.8 million and
$6.9 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 second quarter and first six months of 1995 was $3.8 million and $7.3
million, respectively, compared to $3.8 million and $6.9 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 cash flow
basis to a discounted cash flow basis.
9
<PAGE>
(2) MATERIAL CHANGES IN FINANCIAL CONDITION
During the six months ended May 31, 1995, $18.1 million was used in the
Company's operations, compared to $58.1 million provided by operations during
the corresponding period of the prior year. The primary use of cash in the
first half of 1995 was $37.9 million used to increase inventories through land
purchases, land development and construction. Additionally, $8.2 million was
used for income taxes. The use of cash was primarily offset by $11.3 million of
cash provided by a decrease in receivables and $1.4 million of cash provided by
an increase in accounts payable and accrued liabilities.
In the first six months of 1994, cash was primarily generated from net earnings,
a $92.0 million decrease in loans held for sale or disposition by the Financial
Services Division and $19.6 million provided by a decrease in receivables.
These increases in cash were partially offset by the use of $40.6 million to
increase inventories and $29.7 million to decrease accounts payable and accrued
liabilities.
Cash used in investing activities was $16.2 million in the first six months of
1995, compared to $27.2 million of cash used in the first six months of 1994.
During 1995, cash was primarily used to increase loans held for investment by
the Company's financial services operations, acquire additional commercial
mortgage-backed securities and for additions to operating properties. These
uses of cash were partially offset by sales of operating properties and cash
provided by the Company's investments in partnerships.
During the 1994 period, the Company's primary use of cash in investing
activities was to fund increases in operating properties, increases in loans
held for investment by the Company's financial services operations and the
purchase of commercial mortgage-backed securities.
During the first quarter of 1995, the Company amended its revolving credit
agreement to provide for a five year commitment of $300 million. Additionally,
in March 1995, the agreement was amended to increase the amount of the
commitment to $310 million. At May 31, 1995, $247.7 million was outstanding on
the revolving credit agreement.
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: July 12, 1995 s/s ALLAN J. PEKOR
------------- --------------------------
Allan J. Pekor
Financial Vice President
Chief Financial Officer
Date: July 12, 1995 s/s JAMES T. TIMMONS
------------- --------------------------
James T. Timmons
Controller
Chief Accounting Officer
12
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> MAY-31-1995
<CASH> 14,236
<SECURITIES> 0
<RECEIVABLES> 46,931
<ALLOWANCES> 0
<INVENTORY> 510,528
<CURRENT-ASSETS> 571,695
<PP&E> 227,126
<DEPRECIATION> (33,983)
<TOTAL-ASSETS> 1,358,297
<CURRENT-LIABILITIES> 136,122
<BONDS> 600,473
<COMMON> 3,583
0
0
<OTHER-SE> 564,109
<TOTAL-LIABILITY-AND-EQUITY> 1,358,297
<SALES> 276,493
<TOTAL-REVENUES> 391,715
<CGS> 223,190
<TOTAL-COSTS> 288,564
<OTHER-EXPENSES> 38,667
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,625
<INCOME-PRETAX> 56,859
<INCOME-TAX> 22,175
<INCOME-CONTINUING> 34,684
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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