10-K 1 len-20131130x10k.htm 10-K LEN-2013.11.30-10K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended November 30, 2013
Commission file number 1-11749
 
Lennar Corporation
(Exact name of registrant as specified in its charter)
Delaware
 
95-4337490
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
700 Northwest 107th Avenue, Miami, Florida 33172
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (305) 559-4000
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Name of each exchange on which registered
Class A Common Stock, par value 10¢
 
New York Stock Exchange
Class B Common Stock, par value 10¢
 
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
NONE
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ý NO ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES ¨ NO ý
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 ý NO ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES ý NO ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ý
Accelerated filer ¨
Non-accelerated filer ¨
Smaller reporting company ¨
 
(Do not check if a smaller reporting company)            
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  YES ¨ NO ý
The aggregate market value of the registrant’s Class A and Class B common stock held by non-affiliates of the registrant (156,171,485 Class A shares and 9,695,236 Class B shares) as of May 31, 2013, based on the closing sale price per share as reported by the New York Stock Exchange on such date, was $6,440,148,630.
As of December 31, 2013, the registrant had outstanding 173,108,794 shares of Class A common stock and 31,303,195 shares of Class B common stock.
 
DOCUMENTS INCORPORATED BY REFERENCE:
Related Section
Documents
III
Definitive Proxy Statement to be filed pursuant to Regulation 14A on or before March 31, 2014.





PART I

Item 1.
Business
Overview of Lennar Corporation
We are one of the nation’s largest homebuilders, a provider of real estate related financial services, and through our Rialto Investments (“Rialto”) segment, a commercial real estate investment, investment management and finance company. In addition, we have a multifamily business that is focused on developing multifamily rental properties in select U.S. markets primarily through unconsolidated entities.
We have grouped our homebuilding activities into five reportable segments, which we refer to as Homebuilding East, Homebuilding Central, Homebuilding West, Homebuilding Southeast Florida and Homebuilding Houston. Information about homebuilding activities in states in which our homebuilding activities are not economically similar to those in other states in the same geographic area is grouped under “Homebuilding Other.” Our reportable homebuilding segments and Homebuilding Other have operations located in:
East: Florida(1), Georgia, Maryland, New Jersey, North Carolina, South Carolina and Virginia
Central: Arizona, Colorado and Texas(2) 
West: California and Nevada
Southeast Florida: Southeast Florida
Houston: Houston, Texas
Other: Illinois, Minnesota, Tennessee, Oregon and Washington
(1)
Florida in the East reportable segment excludes Southeast Florida, which is its own reportable segment.
(2)
Texas in the Central reportable segment excludes Houston, Texas, which is its own reportable segment.
We have three other reportable segments: Lennar Financial Services, Rialto and Lennar Multifamily. For financial information about our Homebuilding, Lennar Financial Services, Rialto and Multifamily operations, you should review Management’s Discussion and Analysis of Financial Condition and Results of Operations, which is Item 7 of this Report, and our consolidated financial statements and the notes to our consolidated financial statements, which are included in Item 8 of this Report.
A Brief History of Our Company
We are a national homebuilder that operates in various states with deliveries of 18,290 new homes in 2013. Our company was founded as a local Miami homebuilder in 1954. We completed our initial public offering in 1971 and listed our common stock on the New York Stock Exchange in 1972. During the 1980s and 1990s, we entered and expanded operations in some of our current major homebuilding markets including California, Florida and Texas through both organic growth and acquisitions such as Pacific Greystone Corporation in 1997, among others. In 1997, we completed the spin-off of our then commercial real estate business to LNR Property Corporation. In 2000, we acquired U.S. Home Corporation, which expanded our operations into New Jersey, Maryland, Virginia, Minnesota and Colorado and strengthened our position in other states. From 2002 through 2005, we acquired several regional homebuilders, which brought us into new markets and strengthened our position in several existing markets. The Rialto segment began incubating in 2007 and during 2010 and 2011, it began to invest in distressed real estate assets both on its balance sheet and through funds it formed and manages to take advantage of opportunities arising from the dislocation in the United States real estate market. In 2011, we also transferred the management of several large properties in California to FivePoint Communities, a consolidated joint venture, that was formed to undertake master planned mixed use developments.
From 2010 through 2013, we started and expanded our homebuilding operations in the Atlanta, Oregon, Seattle and Nashville markets. During 2012 and 2013, we became actively involved, primarily through unconsolidated entities, in the development of multifamily rental properties by acquiring land and began the construction phase of several multifamily rental properties. The Multifamily business focuses on developing a geographically diversified portfolio of institutional quality multifamily rental properties in select U.S. markets through unconsolidated entities. During 2013, our Rialto segment began raising capital for a second distressed real estate fund, Fund II, and a mezzanine commercial fund, and formed Rialto Mortgage Finance, LLC ("RMF") to originate and sell into securitizations commercial first mortgage loans, generally with principal amounts between $2 million and $75 million, which are secured by income-producing properties.
Recent Business Developments
During 2013, we saw a housing market that was in a solid recovery mode and we believe is continuing to improve. We have seen demand for home purchases increase in the market place with regard to most of our communities, driven by a

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combination of affordable home prices, low interest rates and constrained supply as evidenced by our increase in new orders of 21% year over year.
We reported net earnings attributable to Lennar of $479.7 million, or $2.15 per diluted share, for the year ended November 30, 2013, which includes a $177.0 million, tax provision, or $0.78 per diluted share, compared to net earnings attributable to Lennar of $679.1 million, or $3.11 per diluted share, for the year ended November 30, 2012, which included a $435.2 million tax benefit, or $1.99 per diluted share. In 2013, we benefited greatly from the strategic capital investments we made in recent years and our increased operating leverage due to higher deliveries. Our principal focus has been on improving our profitability on the homes we sell by increasing sales prices and reducing sales incentives, which more than offset increasing material, labor and land costs, as well as taking advantage of the steps we have taken over the past several years to reduce costs and right-size our overhead structure.
We ended 2013 with $695.4 million in Lennar Homebuilding cash and cash equivalents. We extended our debt maturities by issuing $275 million of 4.125% senior notes due 2018 and $225 million of 4.750% senior notes due 2022, while retiring $351.1 million of senior notes and other debt and converting the entire $276.5 million principal amount of our 2.00% convertible senior notes due 2020 into shares of Class A common stock. Our strong balance sheet and liquidity will allow us to capitalize on future opportunities as they present themselves.
During 2013, our Lennar Financial Services segment had operating earnings of $85.8 million, compared to $84.8 million in the same period last year. The operating earnings were driven by an increase in profit in the title operations as a result of a higher profit per transaction, offset by a slight decrease in profitability in the mortgage operations.
During 2013, our Rialto segment, which invests, and manages funds that invest in distressed real estate opportunities and which originates and sells into securitizations commercial mortgage loans, had operating earnings attributable to Lennar of $19.9 million (which is comprised of $26.1 million of operating earnings, offset by $6.2 million of net earnings attributable to noncontrolling interests), compared to operating earnings attributable to Lennar of $26.0 million (which is comprised of $11.6 million of operating earnings and an add back of $14.4 million of net loss attributable to noncontrolling interests) in 2012. The segment's operating earnings in 2013 came primarily from equity in earnings from our Rialto real estate funds, the new RMF business, and a provisional gain related to a bargain purchase acquisition which included cash and a loan receivable as consideration, partially offset by operating losses related to the FDIC Portfolios in which we invested in 2010. The segment’s operating earnings in 2012 came primarily from equity in earnings from our investment in the Alliance Bernstein L.P. (“AB”) Public-Private Investment Program (“PPIP”) fund and the Rialto Real Estate Fund, LP ("Fund I"). Those earnings were partially offset by operating losses related to the FDIC Portfolios. For the year ended November 30, 2013, the Rialto segment had revenues of $138.1 million, which consisted primarily of accretable interest income associated with the segment’s portfolio of real estate loans, gains from securitization transactions and interest income from the new RMF business, and fees for managing and servicing assets. The Rialto segment had expenses of $151.1 million, which consisted primarily of costs related to its portfolio operations, the new RMF business, loan impairments of $16.1 million primarily associated with the segment's FDIC Portfolios (before noncontrolling interests) and other general and administrative expenses. During 2013, our Rialto segment also issued $250 million of 7.00% senior notes due 2018 (the "7.00% Senior Notes").
During 2013, our Lennar Multifamily segment had operating losses of $17.0 million primarily as a result of start up costs as we continue to invest in and begin to build-out multifamily rental properties.
Homebuilding Operations
Overview
Our homebuilding operations include the construction and sale of single-family attached and detached homes, as well as the purchase, development and sale of residential land directly and through unconsolidated entities in which we have investments. We primarily sell single-family attached and detached homes in communities targeted to first-time, move-up and active adult homebuyers. We operate primarily under the Lennar brand name. Our homebuilding mission is focused on the profitable development of these residential communities. Key elements of our strategy include:
Strong Operating Margins - We believe our operating leverage combined with our attractive land purchases positions us for continued high operating margins.
Everything’s Included® Approach - We are focused on distinguishing our products, including through our Everything’s Included® approach, which maximizes our purchasing power to include luxury features as standard items in our homes.
Innovative Homebuilding - We are constantly innovating the homes we build to create products that meet our customers' needs. Our latest innovation, NextGen homes, or a home within a home, provides a unique new home solution for multi-generational households as homebuyers often need to accommodate children and parents to share the cost of their mortgage and other living expenses.

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Flexible Operating Structure - Our local operating structure gives us the flexibility to make operating decisions based on local homebuilding conditions and customer preferences, while our centralized management structure provides oversight for our homebuilding operations.
Diversified Program of Property Acquisition
We generally acquire land for development and for the construction of homes that we sell to homebuyers. Land is subject to specified underwriting criteria and is acquired through our diversified program of property acquisition, which may consist of the following:
Acquiring land directly from individual land owners/developers or homebuilders;
Acquiring local or regional homebuilders that own, or have options to purchase, land in strategic markets;
Acquiring land through option contracts, which generally enables us to control portions of properties owned by third parties (including land funds) and unconsolidated entities until we have determined whether to exercise the options;
Acquiring parcels of land through joint ventures, which among other factors, limits the amount of our capital invested in land, while increasing our access to potential future homesites and allowing us to participate in strategic ventures; and
Acquiring distressed assets from banks and opportunity funds, often through relationships established by our Rialto segment.
At November 30, 2013, we owned 125,643 homesites and had access through option contracts to an additional 28,133 homesites, of which 20,966 homesites were through option contracts with third parties and 7,167 homesites were through option contracts with Lennar Homebuilding unconsolidated entities in which we have investments. At November 30, 2012, we owned 107,138 homesites and had access through option contracts to an additional 21,346 homesites, of which 13,312 homesites were through option contracts with third parties and 8,034 homesites were through option contracts with Lennar Homebuilding unconsolidated entities in which we have investments.
Construction and Development
Through our own efforts and those of unconsolidated entities in which Lennar Homebuilding has investments, we are involved in all phases of planning and building in our residential communities, including land acquisition, site planning, preparation and improvement of land and design, construction and marketing of homes. We use independent subcontractors for most aspects of home construction. At November 30, 2013, we were actively building and marketing homes in 535 communities, excluding communities being developed by unconsolidated entities.
We generally supervise and control the development of land and the design and building of our residential communities with a relatively small labor force. We hire subcontractors for site improvements and virtually all of the work involved in the construction of homes. Arrangements with our subcontractors generally provide that our subcontractors will complete specified work in accordance with price schedules and in compliance with applicable building codes and laws. The price schedules may be subject to change to meet changes in labor and material costs or for other reasons. We believe that the sources and availability of raw materials to our subcontractors are adequate for our current and planned levels of operation. We generally do not own heavy construction equipment. We finance construction and land development activities primarily with cash generated from operations, debt issuances and equity offerings.
For additional information about our investments in and relationships with unconsolidated entities, see Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of this Report.
Marketing
We offer a diversified line of homes for first-time, move-up and active adult homebuyers in a variety of environments ranging from urban infill communities to golf course communities. Our Everything’s Included® marketing program simplifies the homebuying experience by including most desirable features as standard items. This marketing program enables us to differentiate our homes from those of our competitors by creating value through standard upgrades and competitive pricing, while reducing construction and overhead costs through a simplified manufacturing process, product standardization and volume purchasing. In addition, our innovative NextGen homes and our advances in including solar powered technology in certain of the homes we sell, enhance our image and improve our marketing and sales efforts. We sell our homes primarily from models that we have designed and constructed.
We employ sales associates who are paid salaries, commissions or both to conduct on-site sales of homes. We also sell homes through independent brokers. Our new age marketing strategy is focused on advertising through digital and social

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media, including through our Internet website, www.lennar.com, which has allowed us to drive down marketing costs and attract more knowledgeable homebuyers. However, we also continue to advertise through more traditional marketing, including through newspapers, radio advertisements and other local and regional publications and on billboards. We also tailor our marketing strategy based on our advertised community, such as advertising our active adult communities in areas where prospective active adult homebuyers live.
Quality Service
We strive to continually improve homeowner customer satisfaction throughout the pre-sale, sale, construction, closing and post-closing periods. Through the participation of sales associates, on-site construction supervisors and customer care associates, all working in a team effort, we strive to create a quality homebuying experience for our customers, which we believe leads to enhanced customer retention and referrals. The quality of our homes is substantially affected by the efforts of on-site management and others engaged in the construction process, by the materials we use in particular homes and by other similar factors.
We warrant our new homes against defective materials and workmanship for a minimum period of one year after the date of closing. Although we subcontract virtually all segments of construction to others and our contracts call for the subcontractors to repair or replace any deficient items related to their trades, we are primarily responsible to the homebuyers for the correction of any deficiencies.
Management and Operating Structure
We balance a local operating structure with centralized corporate level management. Decisions related to our overall strategy, acquisitions of land and businesses, risk management, financing, cash management and information systems are centralized at the corporate level. Our local operating structure consists of divisions, which are managed by individuals who generally have significant experience in the homebuilding industry and, in most instances, in their particular markets. They are responsible for operating decisions regarding land identification, entitlement and development, the management of inventory levels for our current volume levels, community development, home design, construction and marketing of our homes.
Deliveries
We primarily sell single-family attached and detached homes in communities targeted to first-time, move-up and active adult homebuyers. The average sales price of a Lennar home was $290,000 in fiscal 2013, compared to $255,000 in fiscal 2012 and $244,000 in fiscal 2011.
The table below indicates the number of deliveries for each of our current reportable homebuilding segments and Homebuilding Other during our last three fiscal years:
 
Years Ended November 30,
 
2013
 
2012
 
2011
East
6,941

 
5,440

 
4,576

Central
2,814

 
2,154

 
1,661

West
3,323

 
2,301

 
1,846

Southeast Florida
1,741

 
1,314

 
904

Houston
2,266

 
1,917

 
1,411

Other
1,205

 
676

 
447

Total
18,290

 
13,802

 
10,845

Of the total home deliveries listed above, 56, 95 and 99, respectively, represent deliveries from unconsolidated entities for the years ended November 30, 2013, 2012 and 2011.
Backlog
Backlog represents the number of homes under sales contracts. Homes are sold using sales contracts, which are generally accompanied by sales deposits. In some instances, purchasers are permitted to cancel sales contracts if they fail to qualify for financing or under certain other circumstances. We experienced a cancellation rate of 16% in 2013, compared to 17% and 19% in 2012 and 2011, respectively. The cancellation rate for the year ended November 30, 2013 was within a range that is consistent with historical cancellation rates and substantially below those we experienced from 2007 through 2010. We expect that substantially all homes currently in backlog will be delivered in fiscal year 2014. We do not recognize revenue on homes under sales contracts until the sales are closed and title passes to the new homeowners.

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The table below indicates the backlog dollar value for each of our current reportable homebuilding segments and Homebuilding Other as of the end of each of our last three fiscal years:
 
Years Ended November 30,
(Dollars in thousands)
2013
 
2012
 
2011
East
$
600,257

 
368,361

 
220,974

Central
195,762

 
168,912

 
65,256

West
257,498

 
202,959

 
97,292

Southeast Florida
215,988

 
141,146

 
52,013

Houston
180,665

 
135,282

 
79,800

Other
169,431

 
143,725

 
45,324

Total
$
1,619,601

 
1,160,385

 
560,659

Of the dollar value of homes in backlog listed above, $2.5 million, $3.5 million and $1.0 million, respectively, represent the backlog dollar value from unconsolidated entities at November 30, 2013, 2012 and 2011.
Inventory Impairments and Valuation Adjustments related to Lennar Homebuilding Investments in Unconsolidated Entities
We evaluate our balance sheet quarterly for possible impairment on a community by community basis. Based on our evaluations and assessments during the years ended November 30, 2013, 2012 and 2011, we recorded the following inventory impairments:
 
Years Ended November 30,
(In thousands)
2013
 
2012
 
2011
Valuation adjustments to finished homes, CIP and land on which we intend to build homes
$
4,458

 
12,574

 
35,726

Valuation adjustments to land we intend to sell or have sold to third parties
1,222

 
666

 
456

Write-offs of option deposits and pre-acquisition costs
1,858

 
2,389

 
1,784

 
$
7,538

 
15,629

 
37,966

During the years ended November 30, 2013, 2012 and 2011, we recorded the following valuation adjustments related to Lennar Homebuilding investments in unconsolidated entities:
 
Years Ended November 30,
(In thousands)
2013
 
2012
 
2011
Our share of valuation adjustments related to assets of Lennar Homebuilding unconsolidated entities
$

 
12,145

 
8,869

Valuation adjustments to Lennar Homebuilding investments in unconsolidated entities
897

 
18

 
10,489

 
$
897

 
12,163

 
19,358

The inventory impairments and valuation adjustments to Lennar Homebuilding investments in unconsolidated entities recorded above were estimated based on market conditions and assumptions made by management at the time the valuation adjustments were recorded, which may differ materially from actual results if market conditions or our assumptions change.
FivePoint Communities
In 2011, we transferred the management of several large properties in California to FivePoint Communities Management, Inc., a consolidated joint venture. FivePoint Communities is currently undertaking six master planned mixed use developments, three in Southern California and three in or near San Francisco. These developments are planned for a total of 50,000 homesites and 20 million square feet of commercial space, as well as parks and sports and entertainment venues.
Lennar Homebuilding Investments in Unconsolidated Entities
For a number of years, we created and participated in joint ventures that acquired and developed land for our homebuilding operations, for sale to third parties or for use in their own homebuilding operations. Through these joint ventures, we reduced the amount we had to invest in order to assure access to potential future homesites, thereby mitigating

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certain risks associated with land acquisitions, and, in some instances, we obtained access to land to which we could not otherwise have obtained access or could not have obtained access on as favorable terms. Although these ventures initially served their intended purpose of risk mitigation, as the homebuilding market deteriorated between 2008 and 2010 and asset impairments resulted in the loss of equity, some of our joint venture partners became financially unable or unwilling to fulfill their obligations, which increased our exposure with regard to the joint ventures' obligations. As a result, we substantially reduced our involvement in joint ventures. During 2013, we continued to evaluate all of our joint venture arrangements. As of both November 30, 2013 and 2012, we had 36 Lennar Homebuilding unconsolidated joint ventures in which we were participating, which had been reduced from 270 joint ventures at the peak in 2006. At November 30, 2013 and 2012, our maximum recourse debt exposure related to Lennar Homebuilding unconsolidated joint ventures was $41.0 million and $66.7 million, respectively, which had been reduced from $1,764.4 million at the peak in 2006.
Lennar Financial Services Operations
Mortgage Financing
We primarily originate conforming conventional, FHA-insured and VA-guaranteed residential mortgage loan products and other products to our homebuyers and others through our financial services subsidiary, Universal American Mortgage Company, LLC, which includes Universal American Mortgage Company, LLC, d/b/a Eagle Home Mortgage, located generally in the same states as our homebuilding operations as well as some other states. In 2013, our financial services subsidiaries provided loans to 77% of our homebuyers who obtained mortgage financing in areas where we offered services. Because of the availability of mortgage loans from our financial services subsidiaries, as well as from independent mortgage lenders, we believe almost all creditworthy purchasers of our homes have access to financing.
During 2013, we originated approximately 22,300 residential mortgage loans totaling $5.3 billion, compared to 19,700 residential mortgage loans totaling $4.4 billion during 2012. Substantially all of the residential mortgage loans we originate are sold within a short period in the secondary mortgage market on a servicing released, non-recourse basis. After the loans are sold, we retain potential liability for possible claims by purchasers that we breached certain limited industry-standard representations and warranties in the loan sale agreements. Therefore, we have limited direct exposure related to the residential mortgages we originate. At November 30, 2013 and 2012, we had a reserve of $9.3 million and $7.3 million, respectively, related to claims of that type.
We have a corporate risk management policy under which we hedge our interest rate risk on rate-locked loan commitments and loans held-for-sale to mitigate exposure to interest rate fluctuations. We finance our mortgage loan activities with borrowings under our financial services warehouse facilities or from our operating funds. Our financial services warehouse facilities were as follows:
Warehouse Repurchase Facilities (Dollars in thousands)
 
Maximum Aggregate Commitment
 
Additional Uncommitted Amount
364-day warehouse repurchase facility that matures February 2014
 
$
100,000

 
100,000

364-day warehouse repurchase facility that matures November 2014
 
325,000

 

364-day warehouse repurchase facility that matures January 2015 (1)
 
300,000

 

Totals
 
$
725,000

 
100,000

(1) Maximum aggregate commitment includes a $100 million accordion feature that is usable 10 days prior to quarter-end through 20 days after quarter end.
We expect the facilities to be renewed or replaced with other facilities when they mature.
Title Insurance and Closing Services
We provide title insurance and closing services to our homebuyers and others. During 2013, we provided title and closing services for approximately 101,200 real estate transactions, and issued approximately 192,400 title insurance policies through our underwriter, North American Title Insurance Company, compared to 108,200 real estate transactions and 149,300 title insurance policies issued during 2012. Title and closing services are provided by agency subsidiaries in Arizona, California, Colorado, District of Columbia, Florida, Illinois, Maryland, Minnesota, Nevada, New Jersey, New York, Pennsylvania, Texas, Utah, Virginia and Wisconsin. Title insurance services are provided in these same states, except New York, as well as in Alabama, Delaware, Georgia, Idaho, Indiana, Kentucky, Maine, Massachusetts, Michigan, Mississippi, New Hampshire, Ohio, Oklahoma, Oregon, North Carolina, South Carolina, Tennessee, Washington and Wyoming.

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Rialto Investments Operations
The Rialto segment is a commercial real estate investment, investment management, and finance company focused on raising, investing and managing third party capital, originating and securitizing commercial mortgage loans, as well as investing our own capital in real estate related mortgage loans, properties and related securities. Rialto utilizes its vertically-integrated investment and operating platform to underwrite, diligence, acquire, manage, workout and add value to diverse portfolios of real estate loans, properties and real estate related securities, as well as providing strategic real estate capital. Rialto's primary focus is to manage third party capital and to originate and sell into securitizations commercial mortgage loans. Rialto has commenced the workout and/or oversight of billions of dollars of real estate assets across the United States, including commercial and residential real estate loans and properties, as well as mortgage backed securities, with the objective of generating superior, risk-adjusted returns. Rialto intends to capitalize on the market dynamics in the commercial real estate sector by expanding our balance sheet-light strategy to grow our investment and asset management funds and expand our commercial loan origination program. Growing our investment and asset management funds will increase the recurring fees we earn on the capital we manage for third parties. Our commercial loan origination program enables us to recycle capital with attractive risk-adjusted returns as we originate commercial mortgage loans and sell them into a resurging CMBS securitization market. We intend to monetize the investments made with our capital over the next few years to recapture capital previously invested in these assets. In addition, we may opportunistically retain or acquire other commercial real estate related investments, including non-investment grade tranches of CMBS, if we believe those investments will result in attractive risk-adjusted returns.
In 2010, our Rialto segment acquired indirectly 40% managing member equity interests in two limited liability companies (“LLCs”), in partnership with the Federal Deposit Insurance Corporation (“FDIC”), for approximately $243 million (net of transaction costs and a $22 million working capital reserve). The LLCs held performing and non-performing distressed residential and commercial real estate loans (“FDIC Portfolios”). The FDIC retained a 60% equity interest in the LLCs and provided $626.9 million of financing with 0% interest, which was non-recourse to us and the LLCs. As of November 30, 2013, the notes payable had been fully repaid and the remaining cash collected on the loans and real estate owned ("REO") properties, net of expenses and other items will be shared 60% / 40% with the FDIC. During the year ended November 30, 2013, $46.7 million had been distributed, of which $28.4 million was paid to the FDIC and $18.3 million was paid to Rialto, the parent company.
In 2010, our Rialto segment also acquired distressed residential and commercial real estate loans and REO properties from three financial institutions (“Bank Portfolios”). We paid $310 million for the Bank Portfolios, of which $124 million was financed through a 5-year senior unsecured note provided by one of the selling institutions. As of November 30, 2013, the remaining balance on the note was $90.9 million.
Rialto is the sponsor of, and an investor in, private equity vehicles that invest in and manage real estate related assets. This has included Fund I that was initially formed in 2010 to which investors committed and contributed a total of $700 million of equity (including the $75 million by us), Rialto Real Estate Fund II, LP (“Fund II”) that was formed in 2013 with investor commitments at November 30, 2013 of $1.1 billion (including $100 million by us) and the Rialto Mezzanine Partners Fund, LP (the "Mezzanine Fund") that was formed in 2013 with a target of raising $300 million in capital (including $25 million committed by us) to invest in performing mezzanine commercial loans. Rialto also earns fees for its role as a manager of these vehicles and for providing asset management and other services to those vehicles and other third parties.
In 2013, our Rialto segment had equity in earnings from unconsolidated entities of $19.4 million related to Fund I. Fund I’s objective during its three-year investment period was to invest in distressed real estate assets and other related investments that fit within Fund I’s investment parameters. As of November 30, 2013 and 2012, the carrying value of our investment in Fund I was $75.7 million and $98.9 million, respectively.
In 2013, our Rialto segment also had equity in earnings from unconsolidated entities of $2.5 million related to Fund II, which completed its first closing in the beginning of the year with initial equity commitments of approximately $260 million (including $100 million by us). As of November 30, 2013, the equity commitments of Fund II were $1.1 billion (including the $100 million committed by us). Fund II’s objective during its three-year investment period is to invest in distressed real estate assets and other related investments that fit within Fund II’s investment parameters. As of November 30, 2013, $511.4 million of the $1.1 billion in equity commitments was called, of which we contributed our portion of $50.6 million. As of November 30, 2013, the carrying value of our investment in Fund II was $53.1 million. Subsequent to November 30, 2013, Fund II was closed to additional commitments, with total equity commitments totaling $1.3 billion.
For both Fund I and Fund II, in order to protect investors in the Funds against the possibility that we would keep attractive investment opportunities for ourselves instead of presenting them to the Funds, we agreed that we would not make investments that are suitable for the applicable Fund, except to the extent an Advisory Committee of the Fund decides that the Fund should not make particular investments, with an exception enabling us to purchase properties for use in connection with our homebuilding operations.

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In addition, during 2013, the Rialto segment started raising capital and investing in mezzanine commercial loans creating the Mezzanine Fund with a target of raising $300 million (including $25 million committed by us) in capital to invest in performing mezzanine commercial loans. As of November 30, 2013, the Mezzanine Fund had total equity commitments of $82 million (including the $25 million committed by us). As of November 30, 2013, total capital invested in the Mezzanine Fund was $53.5 million, including $16.4 million, invested by us. For the year ended November 30, 2013, our share of earnings from the Mezzanine Fund was $0.4 million.
During the middle of 2013, RMF was formed and in the second half of 2013 began originating and selling into securitizations five, seven and ten year commercial first mortgage loans, generally with principle amounts between $2 million and $75 million, which are secured by income producing properties. As of November 30, 2013, RMF has originated loans with a total principal balance of $690.3 million. As of November 30, 2013, RMF sold $537.0 million of these originated loans into three separate securitizations. An additional $109.3 million of these originated loans were sold into a securitization trust but not settled as of November 30, 2013 and thus, were included as receivables, net. RMF has secured two warehouse repurchase financing agreements that mature in fiscal year 2015 totaling $500 million to help finance the loans it makes. We expect this business to be a significant contributor to the Rialto segment's revenues.
In November 2013, our Rialto segment issued $250 million aggregate principal amount of 7.00% Senior Notes due 2018, at a price of 100% in a private placement. Proceeds from the offering, after payment of expenses, were approximately $245 million. Rialto used the net proceeds of the sale of the 7.00% Senior Notes as working capital for RMF and used $100 million to repay sums that were advanced to RMF by us. Interest on the 7.00% Senior Notes is due semi-annually beginning June 1, 2014. At November 30, 2013, the carrying amount of the 7.00% Senior Notes was $250 million.
Lennar Multifamily Operations
During 2012 and 2013, we became actively involved, primarily through unconsolidated entities, in the development of multifamily rental properties. The Lennar Multifamily segment will focus on developing a geographically diversified portfolio of institutional quality multifamily rental properties in select U.S. markets. We currently use third party management companies to rent the apartments though we anticipate renting the apartments though one of our entities in the future.
As of November 30, 2013 and 2012, our balance sheet had $147.1 million and $29.1 million, respectively, of assets related to the Lennar Multifamily segment, which includes investments in unconsolidated entities of $46.3 million and $3.1 million, respectively. Our net investment in the Lennar Multifamily segment as of November 30, 2013 was $105.6 million. Our Lennar Multifamily segment was participating in 13 and 2 unconsolidated entities as of November 30, 2013 and 2012, respectively. Our Lennar Multifamily segment had a pipeline of future projects totaling $3.7 billion in assets across a number of states that will be developed by unconsolidated entities.
For additional information about our investments in and relationships with unconsolidated entities, see Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of this Report.
Seasonality
We historically have experienced, and expect to continue to experience, variability in quarterly results. Our homebuilding business is seasonal in nature and generally reflects higher levels of new home order activity in our second fiscal quarter and increased deliveries in the second half of our fiscal year. However, periods of economic downturn in the industry, such as we have experienced in previous years, can alter seasonal patterns.
Competition
The residential homebuilding industry is highly competitive. We compete for homebuyers in each of the market regions where we operate with numerous national, regional and local homebuilders, as well as with resales of existing homes and with the rental housing market. In recent years, lenders’ efforts to sell foreclosed homes have been a significant competitive factor within the homebuilding industry. We compete for homebuyers on the basis of a number of interrelated factors including location, price, reputation, amenities, design, quality and financing. In addition to competition for homebuyers, we also compete with other homebuilders for desirable properties, raw materials and access to reliable, skilled labor. We compete for land buyers with third parties in our efforts to sell land to homebuilders and others. We believe we are competitive in the market regions where we operate primarily due to our:
Balance sheet, where we continue to focus on inventory management and liquidity;
Access to land, particularly in land-constrained markets;
Access to distressed assets, primarily through relationships established by our Rialto segment;
Pricing to current market conditions through sales incentives offered to homebuyers;

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Cost efficiencies realized through our national purchasing programs and production of value-engineered homes;
Quality construction and home warranty programs, which are supported by a responsive customer care team; and
Everything’s Included® marketing program, which simplifies the homebuying experience by including most desirable features as standard items.
Our financial services operations compete with other mortgage lenders, including national, regional and local mortgage bankers and brokers, banks, savings and loan associations and other financial institutions, in the origination and sale of residential mortgage loans. Principal competitive factors include interest rates and other features of mortgage loan products available to the consumer. We compete with other title insurance agencies and underwriters for closing services and title insurance. Principal competitive factors include service and price.
The business of Rialto, and the funds it manages, of purchasing distressed assets is highly competitive and fragmented. A number of entities and funds have been formed in recent years for the purpose of acquiring real estate related assets at prices that reflect the depressed state of the real estate market, and it is likely that additional entities and funds will be formed for this purpose during the next several years. We compete with these and other purchasers of distressed assets. We compete in the marketplace for distressed asset portfolios based on many factors, including purchase price, representations, warranties and indemnities, timeliness of purchase decisions and reputation. We believe that our major distinction from the competition is that our team is made up of already in place managers who are already working out loans and dealing with similar borrowers. Additionally, because of the high number of loans made to developers, we believe having our homebuilding team participating in the underwriting process provides us with a distinct advantage in our evaluation of these assets. We believe that our experienced team and the infrastructure already in place, including our investment in a service provider, are ahead of our competitors. This has us well positioned for the large pipeline of opportunity that has been building. In marketing real estate investment funds it sponsors, Rialto competes with a large variety of asset managers, including investment banks and other financial institutions and real estate investment firms. Rialto’s newly formed RMF business competes with other commercial mortgage lenders in a competitive market and its profitability depends on our ability to originate and sell into securitizations commercial real estate loans at attractive prices. Some of our competitors are substantially larger and have greater financial, technical, marketing and other resources than we do. Some competitors may have a lower cost of funds and access to funding sources that may not be available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships than us. We believe that our major distinction from many of our competitors is that our team is made up of highly seasoned managers who have been originating and securitizing loans for over 25 years with long-standing relationships and can leverage Rialto’s/Lennar’s infrastructure facilities for a rapid market entrance as well as Rialto’s current underwriting platform.
The Multifamily operations compete with other multifamily apartment developers and operators including REITs across the United States. We will also compete in securing tenants with the large supply of already existing rental apartments. Principal competitive factors include location, rental price, occupancy rates and management of the multifamily apartments.
Regulation
The homes, multifamily apartment rentals and residential communities that we build are subject to an extensive variety of local, state and federal statutes, ordinances, rules and regulations relating to, among other things, zoning, construction permits or entitlements, construction material requirements, density requirements, and requirements relating to building design and property elevation, building codes and handling of waste. These include laws requiring the use of construction materials that reduce the need for energy-consuming heating and cooling systems. These laws and regulations are subject to frequent change and often increase construction costs. In some instances, we must comply with laws that require commitments from us to provide roads and other offsite infrastructure to be in place prior to the commencement of new construction. These laws and regulations are usually administered by counties and municipalities and may result in fees and assessments or building moratoriums. In addition, certain new development projects are subject to assessments for schools, parks, streets and highways and other public improvements, the costs of which can be substantial. Also, some states are attempting to make homebuilders responsible for violations of wage and other labor laws by their subcontractors.
Residential homebuilding and apartment development are also subject to a variety of local, state and federal statutes, ordinances, rules and regulations concerning the protection of health and the environment. These environmental laws include such areas as storm water and surface water management, soil, groundwater and wetlands protection, subsurface conditions and air quality protection and enhancement. Environmental laws and existing conditions may result in delays, may cause us to incur substantial compliance and other costs and may prohibit or severely restrict homebuilding activity in environmentally sensitive regions or areas.

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In recent years, several cities and counties in which we have developments have submitted to voters “slow growth” initiatives and other ballot measures that could impact the affordability and availability of land suitable for residential development within those localities. Although many of these initiatives have been defeated, we believe that if similar initiatives were approved, residential construction by us and others within certain cities or counties could be seriously impacted.
In order to make it possible for some of our homebuyers to obtain FHA-insured or VA-guaranteed mortgages, we must construct the homes they buy in compliance with regulations promulgated by those agencies. Various states have statutory disclosure requirements relating to the marketing and sale of new homes. These disclosure requirements vary widely from state-to-state. In addition, some states require that each new home be registered with the state at or before the time title is transferred to a buyer (e.g., the Texas Residential Construction Commission Act). In some states, we are required to be registered as a licensed contractor and comply with applicable rules and regulations. In various states, our new home consultants are required to be registered as licensed real estate agents and to adhere to the laws governing the practices of real estate agents.
Our mortgage and title subsidiaries must comply with applicable real estate laws and regulations. The subsidiaries are licensed in the states in which they do business and must comply with laws and regulations in those states. These laws and regulations include provisions regarding capitalization, operating procedures, investments, lending and privacy disclosures, forms of policies and premiums. The Dodd-Frank Wall Street Reform and Consumer Protection Act contains a number of new requirements relating to mortgage lending and securitizations. These include, among others, minimum standards for lender practices, limitations on certain fees and a requirement that the originator of loans that are securitized retain a portion of the risk, either directly or by holding interests in the securitizations.
Several federal, state and local laws, rules, regulations and ordinances, including, but not limited to, the Federal Fair Debt Collection Practices Act (“FDCPA”) and the Federal Trade Commission Act and comparable state statutes, regulate consumer debt collection activity. Although, for a variety of reasons, we may not be specifically subject to the FDCPA or certain state statutes that govern debt collectors, it is our policy to comply with applicable laws in our collection activities. To the extent that some or all of these laws apply to our collection activities our failure to comply with such laws could have a material adverse effect on us. We are also subject to regulations promulgated by the Federal Consumer Financial Protection Bureau regarding residential mortgage loans.
Because Rialto manages two real estate asset investment funds, one mezzanine loan fund and two entities partly owned by the FDIC, a Rialto segment entity is required to be registered as an investment adviser under the Investment Advisers Act of 1940. This Act has requirements related to dealings between investment advisers and the entities they advise and imposes record keeping and disclosure obligations on investment advisers. Our RMF subsidiary must comply with laws and regulations applicable to commercial mortgage lending. It or its subsidiaries must be licensed in states in which they make loans and must comply with laws and regulations in those states.
Associates
At December 31, 2013, we employed 5,741 individuals of whom 2,979 were involved in the Lennar Homebuilding operations, 2,368 were involved in the Lennar Financial Services operations, 302 were involved in the Rialto operations and 92 were involved in the Multifamily operations, compared to November 30, 2012, when we employed 4,699 individuals of whom 2,278 were involved in the Lennar Homebuilding operations, 2,157 were involved in Lennar Financial Services operations, 238 were involved in the Rialto operations and 26 were involved in Lennar Multifamily operations. We do not have collective bargaining agreements relating to any of our associates. However, we subcontract many phases of our homebuilding operations and some of the subcontractors we use have associates who are represented by labor unions.
NYSE Certification
We submitted our 2012 Annual CEO Certification to the New York Stock Exchange on April 19, 2013. The certification was not qualified in any respect.
Available Information
Our corporate website is www.lennar.com. We make available on our website, free of charge, our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to these reports filed or furnished pursuant to section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we electronically file these documents with, or furnish them to, the Securities and Exchange Commission. Information on our website is not part of this document.
Our website also includes printable versions of our Corporate Governance Guidelines, our Code of Business Conduct and Ethics and the charters for each of the Audit, Compensation and Nominating and Corporate Governance Committees of

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our Board of Directors. Each of these documents is also available in print to any stockholder who requests a copy by addressing a request to:
Lennar Corporation
Attention: Office of the General Counsel
700 Northwest 107th Avenue
Miami, Florida 33172

Item 1A.
Risk Factors.
The following are what we believe to be the principal risks that might materially affect us and our businesses.
Homebuilding Market and Economic Risks
Demand for new homes is sensitive to economic conditions over which we have no control. The economic downturn has adversely affected our operations, and a slow recovery or decline in economic conditions could continue to adversely affect our operations.
Demand for new homes is sensitive to changes in economic conditions such as the level of employment, consumer confidence, consumer income, the availability of financing and interest rate levels. The economic downturn severely affected both the numbers of homes we could sell and the prices for which we could sell them. Currently, unemployment is above historically normal levels. High unemployment affects us in two ways. Not only are people who are not employed or are concerned about loss of their jobs unlikely to purchase new homes, but they may be forced to sell the homes they own or lose their homes in foreclosure, which reduces demand for the homes we build by increasing the overall housing inventory. In addition, many lenders have limited their willingness to make, and tightened their credit requirements with regard to, residential mortgage loans. Interest rates on residential mortgage loans have increased during 2013 and could continue to increase, and this, together with the reluctance of many lenders to make residential mortgage loans, and possible effects of new governmental regulations, could reduce demand for the homes we sell. Unemployment, lack of consumer confidence and other adverse consequences of the recent economic recession could delay a full recovery in real estate markets. If economic conditions were to worsen, the demand for homes could decline, negatively impacting our business, results of operations, cash flows and financial condition.
We have had to take significant write-downs of the carrying values of land we own and of our investments in unconsolidated entities, and a future decline in land values could result in additional write-downs.
Inventory risks are substantial for our homebuilding business. There are risks inherent in controlling, owning and developing land and if housing demand declines, we may own land or lots at a cost we will not be able to recover fully, or on which we cannot build and sell homes profitably. Also, there can be significant fluctuations in the value of our owned undeveloped land, building lots and housing inventories related to changes in market conditions. As a result, our deposits for building lots controlled under option or similar contracts may be put at risk, we may have to sell homes or land for a lower than anticipated profit margin or we may have to record inventory impairment charges with regard to our developed and undeveloped land and lots. When demand for homes fell during the recent recession, we were required to take significant write-downs of the carrying value of our land inventory and we elected not to exercise many options to purchase land, even though that required us to forfeit deposits and write-off pre-acquisition costs. If market conditions were to deteriorate significantly in the future, we could again be required to make significant write downs with regard to our land inventory, which would decrease the asset values reflected on our balance sheet and adversely affect our earnings and our stockholders' equity.
Inflation may adversely affect us by increasing costs that we may not be able to recover.
Inflation can adversely affect us by increasing costs of land, materials and labor. In addition, significant inflation is often accompanied by higher interest rates, which have a negative impact on demand for our homes. In a highly inflationary environment, depending on industry and other economic conditions, we may be precluded from raising home prices enough to keep up with the rate of inflation, which could reduce our profit margins. Moreover, with inflation, the costs of capital will likely increase and the purchasing power of our cash resources can decline. Although the rate of inflation has been low for the last several years, we have begun to experience increases in the prices of labor and materials and some economists predict that government spending programs and other factors could lead to significant inflation in the future.
Homebuilding, financial services and multifamily rentals are very competitive industries, and competitive conditions could adversely affect our business or financial results.
The homebuilding industry is highly competitive. Homebuilders compete not only for homebuyers, but also for desirable properties, financing, raw materials, skilled management and labor resources. We compete in each of our markets with numerous national, regional and local homebuilders. We also compete with the resale of existing homes, including

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foreclosed homes and rental housing. These competitive conditions can reduce the number of homes we deliver, negatively impact our selling prics, reduce our profit margins, and cause impairments in the value of our inventory or other assets. Competition can also affect our ability to acquire suitable land, raw materials and skilled labor at acceptable costs or terms, or cause delays in the construction of our homes.
Our financial services business competes with other mortgage lenders, including national, regional and local mortgage banks and other financial institutions, many of which are far larger, and some of which are subject to fewer government regulations than our financial services subsidiaries. Mortgage lenders who are subject to fewer regulations or have greater access to low cost capital or different lending criteria may be able to offer more attractive financing to potential customers than we can.
The multifamily rental business competes with other multifamily apartment developers and operators including REITs across the United States. We also compete in securing tenants with the large supply of already existing rental apartments. These competitive conditions could reduce the number of apartments that can be rented, and negatively impact our ability to retain renters, and maintain or increases rental prices.
Operational Risks
We may be subject to significant potential liabilities as a result of warranty and liability claims made against us.
As a homebuilder, we are subject to home warranty and construction defect claims arising in the ordinary course of business. We are also subject to liability claims for injuries that occur in the course of construction activities. We record warranty and other reserves for the homes we sell based on historical experience in our markets and our judgment of the qualitative risks associated with the types of homes we build. We have, and many of our subcontractors have, general liability, property, workers compensation and other business insurance. These insurance policies protect us against a portion of our risk of loss from claims, subject to certain self-insured retentions, deductibles and other coverage limits. However, because of the uncertainties inherent in these matters, we cannot provide assurance that our insurance coverage or our subcontractors' insurance and financial resources will be adequate to address all warranty, construction defect and liability claims in the future. Additionally, the coverage offered and the availability of general liability insurance for construction defects are currently limited and costly and often include new exclusions based upon past losses such as defective Chinese drywall. As a result, an increasing number of our subcontractors are unable to obtain insurance, and we have in many cases waived our customary insurance requirements, and assumed responsibility for certain risks and liabilities of those subcontractors. There can be no assurance that coverage will not be further restricted and become even more costly, and we may suffer significant losses as a result of claims made against us for which we waived an insurance requirement or were unable to obtain insurance.
Products supplied to us and work done by subcontractors can expose us to warranty costs and other risks that could adversely affect our business.
We rely on subcontractors to perform the actual construction of our homes, and in many cases, to select and obtain building materials. Despite our detailed specifications and quality control procedures, in some cases, subcontractors may use improper construction processes or defective materials, such as defective Chinese drywall that at one time was installed by subcontractors in homes built for us and for many other homebuilders in Florida and elsewhere. When we find these issues, we repair them in accordance with our warranty obligations. Defective products widely used by the homebuilding industry can result in the need to perform extensive repairs to large numbers of homes. The cost of complying with our warranty obligations in these cases may be significant if we are unable to recover the cost of repair from subcontractors, materials suppliers and insurers.
We also can suffer damage to our reputation, and may be exposed to possible liability, if subcontractors fail to comply with all applicable laws, including laws involving things that are not within our control. When we learn about possibly improper practices by subcontractors, we try to cause the subcontractors to discontinue them. However, we are not always able to do that, and even when we can, it may not avoid claims against us relating to what the subcontractors had been doing.
Supply shortages and risks related to the demand for skilled labor and building materials could increase costs and delay deliveries.
Increased costs or shortages of skilled labor and/or lumber, framing, concrete, steel and other building materials could cause increases in construction costs and construction delays. During 2013, we experienced increases in the prices of some building materials and shortages of skilled labor in some areas. We generally are unable to pass on increases in construction costs to customers who have already entered into purchase contracts, as those contracts generally fix the price of the homes at the time the contracts are signed, which may be well in advance of the construction of the home. Sustained increases in construction costs may, over time, erode our margins, particularly if pricing competition restricts our ability to pass on any additional costs of materials or labor.

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Reduced numbers of home sales extend the time it takes us to recover land purchase and property development costs.
We incur many costs even before we begin to build homes in a community. Depending on the stage of development a land parcel is in when we acquire it, these may include costs of preparing land, finishing and entitling lots, installing roads, sewers, water systems and other utilities, taxes and other costs related to ownership of the land on which we plan to build homes. If the rate at which we sell and deliver homes slows, or if we delay the opening of new home communities, we may incur additional costs and it will take a longer period of time for us to recover our costs.
We have substantially reduced our corporate credit line, which could limit our ability to take full advantage of market opportunities.
Our business requires that we be able to finance the development of our residential communities. Prior to 2008, our credit line was as high as $3.1 billion. However, because of the decline in our land purchasing, development and building activities, and our ability to obtain debt and equity financing through the capital markets, we gradually reduced the credit line, and in February 2010, we terminated it (although, we established and continued to maintain letter of credit facilities). In 2012, we established a new credit line, and in 2013, we increased our credit line to $950 million, subject to additional commitments,which were obtained subsequent to November 30, 2013. The proceeds available under the Credit Facility, which are subject to specified conditions for borrowing, may be used for working capital and general corporate purposes. However, this credit line is still substantially less than the credit line we maintained in and prior to 2008. If market conditions strengthen to the point that we need additional funding but we are not able to significantly increase our credit facility, the relatively small size of our credit facility might prevent us from taking full advantage of market opportunities.
Failure to comply with the covenants and conditions imposed by our credit facilities could restrict future borrowing or cause our debt to become immediately due and payable.
We have a credit facility that is available for us to use to help finance our homebuilding, acquisitions and other activities. The agreement governing our credit facility (the “Credit Agreement”) makes it a default for us to fail to pay principal or interest when it is due (subject in some instances to grace periods) or to comply with covenants, including covenants regarding various financial ratios. In addition, our Financial Services segment has warehouse facilities to finance its lending activities and our Rialto segment has warehouse facilities to finance its mortgage origination activities. If we default under the Credit Agreement or our warehouse facilities, the lenders will have the right to terminate their commitments to lend and to require immediate repayment of all outstanding borrowings. This could reduce our available funds at a time when we are having difficulty generating all the funds we need from our operations, in capital markets or otherwise, and restrict our ability to obtain financing in the future. Further, our 7.00% Senior Notes due 2018 contain restrictive covenants imposing operational and financial restrictions on our Rialto segment, including restrictions that may limit Rialto’s ability to sell assets, pay dividends or make other distributions, enter into transactions with affiliates and incur additional indebtedness. In addition, if we default under the Credit Agreement or our warehouse facilities, it could result in the amounts outstanding under our senior notes and convertible senior notes to become immediately due and payable, which would have a material adverse impact on our consolidated financial condition.
We have a substantial level of indebtedness which may have an adverse effect on our business or limit our ability to take advantage of business, strategic or financing opportunities.
As of November 30, 2013, our consolidated debt, excluding amounts outstanding under our credit facilities was $4.6 billion. The indentures governing the senior notes and convertible senior notes of Lennar Corporation do not restrict the incurrence of future secured or unsecured debt by us, and the agreement governing our Credit Agreement allows us to incur a substantial amount of future unsecured debt. Our substantial level of indebtedness increases the possibility that we may be unable to generate cash sufficient to pay the principal, interest or other amounts due on our indebtedness. As a consequence of our indebtedness, (1) demands on our cash resources may increase, (2) we are subject to restrictive covenants that further limit our financial and operating flexibility and (3) we may choose to institute self-imposed limits on our indebtedness based on certain considerations including market interest rates, our relative leverage and our strategic plans. For example, as a result of our substantial level of indebtedness and the uncertainties arising in the credit markets and the U.S. economy:
we may be more vulnerable to general adverse economic and industry conditions;
we may have to pay higher interest rates upon refinancing or on our variable rate indebtedness if interest rates rise, thereby reducing our cash flows;
we may find it more difficult to obtain additional financing to fund future working capital, capital expenditures and other general corporate requirements that would be in our best long-term interests;
we may be required to dedicate a substantial portion of our cash flow from operations to the payment of principal and interest on our debt, reducing the cash flow available to fund operations and investments;
we may have limited flexibility in planning for, or reacting to, changes in our business or in the industry;
we may have a competitive disadvantage relative to other companies in our industry that are less leveraged;

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we may be required to sell debt or equity securities or sell some of our core assets, possibly on unfavorable terms, in order to meet payment obligations.
These factors could have a material adverse effect on our business by limiting our ability to take advantage of financing, mergers and acquisitions or other opportunities. In addition, fluctuations in market interest rates may increase interest expense relating to our floating rate indebtedness, which we expect to incur under our Credit Facility, and may make it difficult to refinance our existing indebtedness at a commercially reasonable rate or at all. There is no guarantee that in the future we will be able to refinance all of our indebtedness as it matures, or that if we do, that the replacement indebtedness will have fixed interest rates or that interest rates on the replacement indebtedness will be as low as the rates on our current indebtedness.
Our access to capital and our ability to obtain additional financing could be affected by any downgrade of our credit ratings.
Our corporate credit rating and ratings on our senior notes and convertible senior notes and our current credit condition affect, among other things, our ability to access new capital, especially debt. A substantial portion of our access to capital is through the issuance of senior notes and convertible senior notes, of which we have $4.0 billion outstanding as of November 30, 2013. Negative changes in these ratings may result in more stringent covenants and higher interest rates under the terms of any new debt. If our credit ratings are lowered or rating agencies issue adverse commentaries in the future, it could have a material adverse effect on our business, results of operations, financial condition and liquidity. In particular, a weakening of our financial condition, including a significant increase in our leverage or decrease in our profitability or cash flows, could adversely affect our ability to obtain necessary funds, result in credit rating downgrades or changes in rating agencies' view of our outlook, or otherwise increase our cost of borrowing.
The warehouse repurchase credit facilities of our Financial Services segment will mature in 2014 and 2015 and the warehouse repurchase credit facilities of RMF will mature in 2015, and we may be unable to renew or replace these facilities on as favorable terms or at all.
Our Financial Services segment has an aggregate committed and uncommitted amount under three warehouse repurchase credit facilities that totaled $725 million and $100 million, respectively, as of November 30, 2013 that will mature during 2014 and 2015. The Financial Services segment uses these facilities to finance its mortgage lending activities until the mortgage loans it originates are sold to investors. In addition, RMF in our Rialto segment has an aggregate committed amount under two warehouse repurchase credit facilities that totaled $500 million as of November 30, 2013 that will mature during 2015. RMF uses these facilities to finance its mortgage origination activities. We expect these facilities to be renewed or replaced with other facilities when they mature. If we were unable to renew or replace these facilities on favorable terms or at all when they mature, that could seriously impede the activities of our Financial Services segment and RMF, as applicable, which would have a material adverse impact on our financial results.
We conduct some of our operations through joint ventures with independent third parties and we can be adversely impacted by our joint venture partners' actions that are contrary to our instructions or failure to fulfill their obligations.
We participate in joint ventures in order to acquire attractive land positions, to manage our risk profile and to leverage our capital base. In certain circumstances, the joint venture participants, including ourselves, are required to provide guarantees of certain obligations relating to the joint ventures, such as completion and environmental guarantees. If a joint venture partner does not perform its obligations, we may be required to make significant financial expenditures or otherwise undertake the performance of our partner's obligations at what can be a significant cost to us. For example, as part of our Multifamily business, and its joint ventures, we have assumed certain obligations to complete construction of multifamily residential buildings at agreed upon costs and we could be responsible for cost overruns. In addition, because we do not have a controlling interest in some of the joint ventures in which we participate, we may not be able to sell assets, return invested capital or take other actions without the consent of at least one of our joint venture partners when such action may be in our best interest. If the joint ventures or their participants do not honor their obligations or take actions that are contrary to our instructions, we may be required to expend additional resources or suffer losses, which would have a material adverse impact on our financial results.
The unconsolidated entities in which we have investments may not be able to modify the terms of their debt arrangements, and we may need to provide a portion of their required funds.
Several of the joint ventures in which we participate will in the relatively near future be required to repay, refinance, renegotiate or extend their loans. If any of those joint ventures are unable to do this, we could be required to provide at least a portion of the funds the joint ventures need to be able to repay the loans and to conduct the activities for which they were formed, which could adversely affect our financial position.

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Our investments in new businesses may not be as successful as we anticipate, and could disrupt our ongoing businesses and adversely affect our operations.
We have invested and expect to continue to invest in new business opportunities. In July 2013, we began commercial loan origination activities through RMF. The mortgage origination business represents a new business line for us distinct from the direct investments and investment management and asset management activities upon which our Rialto segment had previously focused. In addition, our Multifamily business, in which we develop multifamily rental properties, is a new business in which we have invested substantial resources. As new businesses, these endeavors and others in which we may invest may involve significant risks and uncertainties, including distraction of management from current operations, significant start-up costs, insufficient revenues to offset expenses associated with these new investments and inadequate return of capital on our investments, and may adversely affect our financial condition and operating results.
The loss of the services of certain of our senior management or a significant number of our employees could negatively affect our business.
Our success depends to a significant extent upon performance and active participation of our senior management. We cannot guarantee that we will be successful in retaining the services of senior management. If we were to lose any members of our senior management, we may not be able to find appropriate replacements on a timely basis and our results of operations could be negatively affected. Further, the loss of a significant number of employees or our inability to hire a sufficient number of qualified employees could have a material adverse effect on our business.
Our Financial Services segment can be adversely affected by reduced demand for our homes and a slowdown in refinance transactions.
Approximately 52% of the mortgage loans made by our Financial Services segment are made to buyers of homes we build. Therefore, a decrease in the demand for our homes would adversely affect the revenues of this segment of our business. In addition, the revenues of our Financial Services segment would be adversely affected by a continuing or further decrease in refinance transactions, such as the decrease that we experienced during the second half of fiscal 2013.
If our ability to resell mortgages is impaired, it could significantly reduce our ability to sell homes unless we are willing to become a long term investor in loans we originate.
Substantially all of the residential mortgage loans we originate are sold within a short period in the secondary mortgage market on a servicing released, non-recourse basis. The secondary mortgage market was severely impacted by the decline in property values between 2007 and 2011 and it has not recovered fully, even though property values in many areas of the country stabilized significantly, and rose during 2013. If we became unable to sell loans into the secondary mortgage market or directly to Fannie Mae and Freddie Mac, we would have to either curtail our origination of mortgage loans, which among other things, could significantly reduce our ability to sell homes, or commit our own funds to long term investments in mortgage loans, which could, among other things, delay the time when we recognize revenues from home sales on our statements of operations.
Our Financial Services segment has received demands that it repurchase mortgage loans it sold in the secondary mortgage market and we may be required to repurchase loans in excess of amounts reserved.
Particularly during 2009, 2010 and 2011, our Financial Services segment received demands that it repurchase certain loans that it had previously sold in the secondary mortgage market. The demands related primarily to loans originated during 2005 through 2007 and were frequently based on assertions that information borrowers gave our Financial Services segment was not accurate. In many instances, we have successfully disputed the claims. However, in some instances we have settled claims to maintain our business relationships with the claimants or to avoid litigation costs. In other instances, there are active disputes regarding certain loans. We have established a reserve based upon, among other things, an analysis of repurchase requests received, an estimate of potential repurchase claims not yet received and our actual past repurchases and losses through the disposition of loans we repurchased, as well as previous settlements. At November 30, 2013 and 2012, this reserve was $9.3 million and $7.3 million, respectively. If there is an unexpected increase in the amount of repurchase demands we receive that we believe we should settle, or if we are not able to resolve existing repurchase demands on a basis consistent with our experience to date, the cost to us with regard to the repurchase demands could exceed the reserve we have established.
Although our investments in distressed real estate assets normally are acquired at significant discounts, if the real estate markets deteriorate significantly, we could suffer losses.
The Rialto segment focuses on identifying and underwriting real estate related investment opportunities, making real estate related investments, directly or through funds they manage, and overseeing those investments, including in particular the workout of non-performing or underperforming loans and improvement and disposition of properties acquired through foreclosure or in a similar manner. Investing in distressed debt and foreclosed properties presents many risks in addition to

15


those inherent in normal lending activities, including the risk that the anticipated restructuring and recapitalization of the United States real estate markets will not be completed for many years, the risk that defaults on debt instruments in which the Rialto segment and the funds it manages and invest will be greater than anticipated and the risk that if the Rialto segment or any of the funds it manages has to liquidate its investments into the market, it will suffer losses in doing so. There is also the possibility that, even if the investments made by the Rialto segment or the funds it manages perform as expected, absence of a liquid market for these investments will result in a need to reduce the values at which they are carried on our financial statements.
If Rialto's investments in real estate are not properly valued or sufficiently reserved to cover actual losses and we are required to increase our valuation reserves, our earnings could be reduced.
When a loan is foreclosed upon and we take title to the property, we obtain a valuation of the property and base its book value on that valuation. The book value of the foreclosed property is periodically compared to the updated market value of the foreclosed property if classified as held-and-used, or the market value of the foreclosed property less estimated selling costs if classified as held-for-sale (fair value), and a charge-off is recorded for any excess of the property's book value over its fair value. If the valuation we establish for a property proves to be too high, we may have to record additional charge-offs in subsequent periods. Material additional charge-offs could have an adverse effect on our results of operations, and possibly even on our financial condition.
There is substantial competition for the types of investments on which our Rialto segment is focused, and this may limit the ability of the Rialto segment or the investment funds it manages to make investments on terms that are attractive to it.
Our Rialto segment and its two largest funds have been focused in substantial part on investments in distressed mortgage debt, foreclosed properties and other real estate related assets that have been adversely affected by the dislocations during the last several years in the markets for real estate, mortgage loans and real estate related securities. Some of the opportunities to acquire distressed assets have arisen under programs involving co-investments with and financing provided by agencies of the Federal government. More recently, we have begun directly making mortgage loans secured by commercial real estate. There are many firms and investment funds that are trying to acquire the types of assets on which our Rialto segment and the investment funds it manages are focused, and it is likely that a significant number of additional investment funds will be formed in the future with the objective of acquiring those types of assets. In particular, there is an exception in the rules under the Dodd-Frank Act limiting banks’ investments in funds for investments in funds that are primarily engaged in purchasing or otherwise acquiring mortgages on and other interests in real estate, and there is another exception for investments in entities formed by the FDIC to facilitate the disposition of assets it acquires as a conservator or receiver. At least some of the firms with which the Rialto segment competes, or will compete, for investment opportunities have, or will have, a cost of capital that is lower than that of the Rialto segment or the investment funds it manages, and therefore those firms may be able to pay more for investment opportunities than would be prudent for our Rialto segment or the investment funds it manages.
We could be adversely affected by court and governmental responses to improper mortgage foreclosure procedures.
During recent years it appears that mortgage lenders and mortgage loan servicers have in a number of instances failed to comply with the requirements for obtaining and foreclosing mortgage loans. Even if neither our Rialto segment nor any servicing organization it uses does anything improper in foreclosing mortgages held by the Rialto segment or entities it manages, reaction by courts and regulatory agencies against apparently widespread instances of improper mortgage foreclosure procedures could make it more difficult and more expensive for our Rialto segment to foreclose mortgages that secure loans that it or entities it manages own.
The ability of our Rialto segment to profit from the investments it makes may depend to a significant extent on its ability to manage resolutions of distressed mortgages and other real estate related assets.
A principal factor in a prospective purchaser's decision regarding the price it will pay for a portfolio of mortgage loans or other real estate related assets is the cash flow the prospective purchaser expects the portfolio to generate. The cash flow a portfolio of distressed mortgage loans and related assets will generate can be affected by the way the assets in the portfolio are managed. We believe the backgrounds and experience of the personnel in our Rialto segment will enable the Rialto segment to generate better cash flows from the distressed assets it manages than what is generally expected with regard to similar assets. When we decide whether to purchase particular distressed assets and what we or a fund we manage should be willing to pay for them, one consideration is whether, and to what extent, we think we will be able to obtain above average returns in resolving the assets. If we are not able to achieve those above average returns, our results of operations could be adversely affected.
The supply of real estate related assets available at discounts from normal prices will likely decrease if the real estate markets continue to improve, which could require our Rialto segment to change its investment strategy.
A significant part of Rialto segment’s current strategy is to seek above normal risk adjusted returns for us and for the investment funds we manage by focusing on investments in real estate related assets that are available at below market prices because of the effects of the dislocations in the United States real estate markets over the past several years. A continued

16


recovery of the real estate markets would probably benefit the investments we and the funds we manage have made, but it probably would substantially reduce or end the availability of the types of distressed asset investments we seek. We are currently beginning to engage in activities that are more suitable for periods of healthy real estate markets. But those types of activities may not offer the same profit potential as investing in distressed real estate assets.
Restrictions in agreements related to Fund I and Fund II (the "Funds") could prevent the Rialto segment from making investments.
The Rialto segment manages the Funds, which were formed to make investments in, among other things, distressed real estate related debt and foreclosed properties. In order to protect investors in the Funds against the possibility that we would keep attractive investment opportunities for ourselves instead of presenting them to the Funds, we agreed that we would not make investments that are suitable for the Funds except to the extent an Advisory Committee consisting of representatives of Fund I or Fund II investors decides that Fund I or Fund II should not make particular investments, and we will probably make similar commitments with regard to subsequent funds the Rialto segment creates. There is an exception that permits us to purchase properties for use in connection with our homebuilding operations. However, it is likely that for several years the restrictions will prevent the Rialto segment from making investments in distressed mortgage loans or foreclosed properties other than through Fund I or Fund II (of which we currently own approximately 10.7% and 9.0%, respectively), except to the extent the applicable Advisory Committee decides that a fund should not make particular investments.
Natural disasters and severe weather conditions could delay deliveries, increase costs and decrease demand for new homes in affected areas, which could harm our sales and results of operations.
Many of our homebuilding operations are conducted in areas that are subject to natural disasters, including hurricanes, earthquakes, droughts, floods and wildfires, and severe weather. The occurrence of natural disasters or severe weather conditions can delay new home deliveries, increase costs by damaging inventories and lead to shortages of labor and materials in areas affected by the disasters, and can negatively impact the demand for new homes in affected areas. If our insurance does not fully cover business interruptions or losses resulting from these events, our results of operations could be adversely affected.
Regulatory Risks
Reduced availability of mortgage financing and increased interest rates could reduce the demand for the homes that we offer.
Many purchasers of our homes obtain mortgage loans to finance a substantial portion of the purchase price. Many lenders and other holders of mortgage loans have been adversely affected in recent years by a combination of reduced ability of homeowners to meet mortgage obligations and reduced value of the homes that secure mortgage loans. Changes made by Fannie Mae, Freddie Mac and FHA/VA sponsored mortgage programs, as well as changes made by private mortgage insurance companies, have reduced the ability of many potential homebuyers to qualify for mortgages. Principal among these have been tighter lending standards such as higher income requirements, larger required down payments, increased reserves and higher required credit scores. Further, in January 2013, the Federal Consumer Financial Protection Bureau proposed regulations that could make it more difficult for some potential buyers to finance home purchases. In addition, there continues to be substantial uncertainty regarding the future of Fannie Mae and Freddie Mac, including the length of time for which they may continue to exist and in what form they may operate during that period. These organizations provide significant liquidity to the secondary mortgage market. Any curtailment of their activities could increase mortgage interest rates and increase the effective cost of our homes, which could reduce demand for our homes and adversely affect our results of operations. These changes in the mortgage lending industry could adversely affect potential purchasers of our homes, thus having a negative effect on demand for our homes.
Further, while interest rates for home mortgage loans have increased during 2013, they are still generally low compared with historic norms. Mortgage interest rates could increase in the future, which could adversely affect the demand for our homes. If interest rates increase and the ability or willingness of prospective buyers to finance homes purchases is adversely affected, our sales, results of operations, cash flows and financial position may be negatively affected.

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We may be adversely impacted by legal and regulatory changes.
New or modified regulations and related regulatory guidance focused on the regulation of the financial industry, including those under the Dodd-Frank Wall Street Reform Act, may have adverse effects on our industry. For example, the Dodd-Frank Act requires the federal banking agencies to promulgate rules requiring mortgage lenders to retain a portion of the credit risk related to securitized loans. Those rules were adopted in December 2013, and appear to apply only to FDIC-insured depositories, bank holding companies and their affiliates. However, the statutory provision may also apply to other large entities including our entities involved in mortgage origination and securitization activities. If we were required to retain a portion of the mortgages that we originate, that could have a significant adverse effect on the profitability of our mortgage financing activities. Laws, regulations or policies, including accounting standards and interpretations, currently affecting us may change at any time. Regulatory authorities may also change their interpretation of these statutes and regulations. Our business could be adversely affected by changes in laws, regulations, policies or interpretations or by our inability to comply with them without making significant changes in our business.
Our ability to collect upon mortgage loans may be limited by the application of state laws.
Our mortgage loans typically permit us to accelerate the debt upon default by the borrower. The courts of all states will enforce acceleration clauses in the event of a material payment default, subject in some cases to a right of the court to revoke the acceleration and reinstate the mortgage loan if a payment default is cured. The equity courts of a state, however, may refuse to allow the foreclosure of a mortgage or to permit the acceleration of the indebtedness in instances in which they decide that the exercise of those remedies would be inequitable or unjust or the circumstances would render an acceleration unconscionable.
Further, the ability to collect upon mortgage loans may be limited by the application of state and federal laws. For example, Nevada has enacted a law providing that if an assignee of a note secured by real property paid less than the face amount of the note, the creditor cannot recover more in a deficiency action than the amount it paid for the note. If the Nevada law is upheld, or similar laws are enacted in other jurisdictions, that could materially and adversely affect our results of operations.
Governmental regulations regarding land use and environmental matters could increase the cost and limit the availability of our development and homebuilding projects and adversely affect our business or financial results.
We are subject to extensive and complex laws and regulations that affect the land development, homebuilding and apartment development process, including laws and regulations related to zoning, permitted land uses, levels of density, building design, elevation of properties, water and waste disposal and use of open spaces. These regulations often provide broad discretion to the administering governmental authorities as to the conditions we must meet prior to development or construction being approved, if they are approved at all. We are subject to determinations by these authorities as to the adequacy of water or sewage facilities, roads and other local services. New housing developments may also be subject to various assessments for schools, parks, streets and other public improvements. In addition, in many markets government authorities have implemented no growth or growth control initiatives. Any of these can limit, delay, or increase the costs of land development or home construction.
We are also subject to a significant number and variety of local, state and federal laws and regulations concerning protection of the environment. The impact of environmental laws often varies depending upon the prior uses of the building site or adjoining properties and may be greater in areas with less supply where undeveloped land or desirable alternatives are less available. In some of the markets where we operate, we are required by law to pay environmental impact fees, use energy-saving construction materials and give commitments to municipalities to provide infrastructure such as roads and sewage systems. We generally are required to obtain permits, entitlements and approvals from local authorities to commence and carry out residential development or home construction. These permits, entitlements and approvals may, from time-to-time, be opposed or challenged by local governments, neighboring property owners or other interested parties, adding delays, costs and risks of non-approval to the process. Violations of environmental laws and regulations can result in civil penalties, remediation expenses, potential injunctions and other damages. In addition, some environmental laws impose strict liability, which means that we may be held liable for any environmental damage on our property regardless of fault.
We are also subject to laws and regulations related to workers' health and safety, and there are efforts to subject us to other labor related laws or rules, some of which may make us responsible for things done by our subcontractors over which we have little or no control. In addition, our residential mortgage subsidiary is subject to various state and federal statutes, rules and regulations, including those that relate to licensing, lending operations and other areas of mortgage origination and financing. The impact of those statutes, rules and regulations can increase our home buyers’ cost of financing, and our cost of doing business, as well as restricting our home buyers’ access to some types of loans.
Our obligation to comply with the laws and regulations under which we operate, and our need to ensure that our associates, subcontractors and other agents comply with these laws and regulations, could result in delays in construction and

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land development, cause us to incur substantial costs and prohibit or restrict land development and homebuilding activity in certain areas in which we operate. Budget reductions by state and local governmental agencies may increase the time it takes to obtain required approvals and therefore may aggravate the delays we could encounter. Government agencies also routinely initiate audits, reviews or investigations of our business practices to ensure compliance with these laws and regulations, which can cause us to incur costs or create other disruptions in our business that can be significant.
We can be injured by failures of persons who act on our behalf to comply with applicable regulations and guidelines.
Although we expect all of our associates (i.e., employees), officers and directors to comply at all times with all applicable laws, rules and regulations, there may be instances in which subcontractors or others through whom we do business engage in practices that do not comply with applicable regulations or guidelines. When we learn of practices relating to homes we build or financing we provide that do not comply with applicable regulations or guidelines, we move actively to stop the non-complying practices as soon as possible and we have taken disciplinary action with regard to associates of ours who were aware of the practices and did not take steps to address them, including in some instances terminating their employment. However, regardless of the steps we take after we learn of practices that do not comply with applicable regulations or guidelines, we can in some instances be subject to fines or other governmental penalties, and our reputation can be injured, due to the practices' having taken place.
Tax law changes could make home ownership more expensive or less attractive, which could adversely affect our results of operations.
Under current tax law and policy, certain significant expenses of owning a home, including mortgage loan interest costs and real estate taxes, generally are deductible expenses for the purpose of calculating an individual’s or households federal, and in some cases state, tax liability. However, the American Taxpayer Relief Act of 2012, which was signed into law in January 2013 by the President resulted in higher income tax rates and limits the amount of tax deductions high-income individuals and households can utilize in computing their income tax liability. The changes limit the ability of high-income individuals and households to deduct certain itemized deductions such as home mortgage interest and real estate taxes, making the after-tax cost of owning a home higher than before such changes. Any additional increases in personal income tax rates and/or additional tax deduction limits or restrictions enacted at the federal or state levels, could adversely impact demand for and/or selling prices of new homes, including our homes, and could adversely affect our results of operations.
Other Risks
We have a stockholder who can exercise significant influence over matters that are brought to a vote of our stockholders.
Stuart A. Miller, our Chief Executive Officer and a Director, has voting control, through personal holdings and holdings by family-owned entities of Class B, and to a lesser extent Class A, common stock that enables Mr. Miller to cast approximately 44% of the votes that can be cast by the holders of all our outstanding Class A and Class B common stock combined. That effectively gives Mr. Miller the power to control the election of our directors and the approval of matters that are presented to our stockholders. Mr. Miller's voting power might discourage someone from seeking to acquire us or from making a significant equity investment in us, even if we needed the investment to meet our obligations or to operate our business. Also, because of his voting power, Mr. Miller could be able to authorize actions that are contrary to our other stockholders' desires.
The trading price of our Class B common stock is substantially less than that of our Class A common stock.
The only difference between our Class A common stock and our Class B common stock is that the Class B common stock entitles the holders to 10 votes per share, while the Class A common stock entitles holders to only one vote per share. However, the trading price of the Class B common stock on the New York Stock Exchange ("NYSE") normally is 20% to 30% lower than the NYSE trading price of our Class A common stock.
We could suffer adverse tax and other financial consequences if we are unable to utilize our net operating loss ("NOL") carryforwards.
As of November 30, 2013, our deferred tax assets, net, were $376.8 million. At November 30, 2013, we had federal tax effected NOL carryforwards totaling $88.1 million that may be carried forward up to 20 years to offset future taxable income and begin to expire in 2025. As of November 30, 2013,we need to generate $251.8 million of pre-tax earnings in future periods to realize all of our federal NOL carryforwards and an additional $399.1 million of pre-tax earnings to utilize our net federal deferred tax assets related to deductible temporary tax differences. At November 30, 2013, we had state tax effected NOL carryforwards totaling $143.6 million that may be carried forward from 5 to 20 years, depending on the tax jurisdiction, with losses expiring between 2013 and 2032. As of November 30, 2013, state tax effected NOL carryforwards totaling $2.7 million may expire over the next twelve months, if sufficient taxable income is not generated in the applicable states to utilize the net operating losses. At November 30, 2013, we had a valuation allowance of $10.6 million against our state NOL carryforwards

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because we believe it is more likely than not that a portion of our state NOL carryforwards will not be realized due to the limited carryforward periods in certain states. If we are unable to use our NOLs, or use of our NOLs is limited, we may have to record charges or reduce our deferred tax assets, which could have a material adverse effect on our results of operations and financial condition.
Trading in our shares could substantially reduce our ability to use tax loss carryforwards.
Under the Internal Revenue Code, if during any three year period there is a greater than 50% change of ownership of our stock by persons who own more than 5% of our stock (treating all under 5% stockholders as a single 5% stockholder), our ability to utilize NOL carryforwards would be limited to the market value of our Company at the time of the change in ownership times the long-term federal tax exempt rate. This change of ownership limitation can occur as a result of purchases and sales in the market by persons who become owners of more than 5% of our stock, even without anybody becoming a new majority owner. During the past three years, there have not been any significant changes in the holdings of our stock by 5% stockholders of which we are aware. However, it is possible that as a result of future stock trading, within a three-year period buyers could acquire in the market 5% or greater ownership interests in our stock totaling more than 50%. If that occurs, our ability to apply our tax loss carryforwards could become limited.
Information technology failures and data security breaches could harm our business.
We use information technology and other computer resources to carry out important operational and marketing activities and to maintain our business records. These information technology systems are dependent upon global communications providers, web browsers, telephone systems and other aspects of the Internet infrastructure that have experienced security breaches, cyber-attacks, significant systems failures and electrical outages in the past. A material network breach in the security of our information technology systems could include the theft of customer, employee or company data. A security breach or a significant and extended disruption in the functioning of our information technology systems could damage our reputation and cause us to lose customers, adversely impact our sales and revenue and require us to incur significant expense to address and remediate or otherwise resolve these kinds of issues. The release of confidential information as a result of a security breach could also lead to litigation or other proceedings against us by affected individuals or business partners, or by regulators, and the outcome of such proceedings, which could include penalties or fines, could have a significant negative impact on our business. If we were to experience a security breach, cyber-attack, data theft or other significant systems failures, it could have a material and adverse effect on our operations.
Increases in the rate of cancellations of existing home sale agreements could have an adverse effect on our business.
Our backlog reflects agreements of sale with our home buyers for homes that have not yet been delivered. We have received a deposit from our home buyer for each home reflected in our backlog, and generally we have the right to retain the deposit if the home buyer does not complete the purchase. In some cases, however, a home buyer may cancel the agreement of sale and receive a complete or partial refund of the deposit for reasons such as state and local law, the home buyer’s inability to obtain mortgage financing, his or her inability to sell his or her current home or our inability to complete and deliver the home within the specified time. If the current industry recovery does not continue or another decline in economic conditions occurs, or if mortgage financing becomes even less available than it currently is, more home buyers may cancel their agreements of sale with us, which would have an adverse effect on our business and results of operations.
Our success depends on our ability to acquire land suitable for residential homebuilding at reasonable prices, in accordance with our land investment criteria.
There is strong competition among homebuilders for land that is suitable for residential development. The future availability of finished and partially finished developed lots and undeveloped land that meet our internal criteria depends on a number of factors outside our control, including land availability in general, competition with other homebuilders and land buyers for desirable property, inflation in land prices, zoning, allowable housing density, and other regulatory requirements. Should suitable lots or land become less available, the number of homes we could build and sell could be reduced, and the cost of land could be increased, perhaps substantially, which could adversely impact our results of operations.
As competition for suitable land increases, and as available land is developed, the cost of acquiring suitable remaining land could rise, and the availability of suitable land at acceptable prices may decline. Any land shortages or any decrease in the supply of suitable land at reasonable prices could limit our ability to develop new communities or result in increased land costs. We may not be able to pass through to our customers any increased land costs, which could adversely impact our revenues, earnings and margins.

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Our cash flows and results of operations could be adversely affected if legal claims are brought against us and are not resolved in our favor.
Claims have been brought against us in various legal proceedings that have not had, and are not expected to have, a material adverse effect on our business or financial condition. Should such claims be resolved in an unfavorable manner or should additional claims be filed in the future, it is possible that our cash flows and results of operations could be adversely affected.
We experience fluctuations and variability in our operating results on a quarterly basis and, as a result, our historical performance may not be a meaningful indicator of future results.
We historically have experienced, and expect to continue to experience, variability in quarterly results. As a result of such variability, our short-term performance may not be a meaningful indicator of future results. Our homebuilding business is seasonal in nature and generally reflects higher levels of new home order activity in our second fiscal quarter and increased deliveries in the second half of our fiscal year. Our quarterly results of operations may continue to fluctuate in the future as a result of a variety of both national and local factors, including, among others, periods of economic downturn in the industry, raw material and labor shortages, seasonal home buying patterns, the timing of home closings and land sales and weather-related problems.
Changes in global or regional environmental conditions and governmental actions in response to such changes may adversely affect us by increasing the costs of or restricting our planned or future growth activities.
There is growing concern from members of the scientific community and the general public that an increase in global average temperatures due to emissions of greenhouse gases and other human activities have caused or will cause, significant changes in weather patterns and increase the frequency and severity of natural disasters. An increased frequency or duration of extreme weather conditions and environmental events could limit, delay and/or increase the costs to develop land and build new homes and reduce the value of our land and housing inventory in locations that become less desirable to consumers or blocked to development. Projected climate change, if it occurs, may exacerbate the scarcity of water and other natural resources in affected regions, which could limit, prevent or increase the costs of residential development in certain areas. In addition, government mandates, standards or regulations intended to mitigate or reduce greenhouse gas emissions or projected climate change impacts could result in prohibitions or severe restrictions on land development in certain areas, increased energy, transportation and raw material costs that make building materials less available or more expensive, or cause us to incur compliance expenses and other financial obligations to meet permitting or land development or home construction-related requirements that we will be unable to fully recover (due to market conditions or other factors), and reduce our housing gross profit margins and adversely effect our consolidated financial statements, potentially to a material degree. As a result, climate change impacts, and laws and land development and home construction standards, and/or the manner in which they are interpreted or implemented, to address potential climate change impacts, could increase our costs and have a long-term adverse impact on our business and our operating results.

Item 1B.
Unresolved Staff Comments.
Not applicable.
Executive Officers of Lennar Corporation
The following individuals are our executive officers as of January 27, 2014:
Name
Position
Age
Stuart A. Miller
Chief Executive Officer
56
Richard Beckwitt
President
54
Jonathan M. Jaffe
Vice President and Chief Operating Officer
54
Bruce E. Gross
Vice President and Chief Financial Officer
55
Diane J. Bessette
Vice President and Treasurer
53
Mark Sustana
Secretary and General Counsel
52
David M. Collins
Controller
44
Mr. Miller is one of our Directors and has served as our Chief Executive Officer since 1997. Mr. Miller served as our President from 1997 to April 2011. Before 1997, Mr. Miller held various executive positions with us.
Mr. Beckwitt served as our Executive Vice President from March 2006 to 2011. Since April 2011, Mr. Beckwitt has served as our President. As our Executive Vice President and then our President, Mr. Beckwitt has been involved in all operational aspects of our company. Mr. Beckwitt served on the Board of Directors of D.R. Horton, Inc. from 1993 to

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November 2003. From 1993 to March 2000, he held various executive officer positions at D.R. Horton, including President of the company.
Mr. Jaffe has served as Vice President since 1994 and has served as our Chief Operating Officer since December 2004. Before that time, Mr. Jaffe served as a Regional President in our Homebuilding operations. Additionally, prior to his appointment as Chief Operating Officer, Mr. Jaffe was one of our Directors from 1997 through June 2004.
Mr. Gross has served as Vice President and our Chief Financial Officer since 1997. Before that, Mr. Gross was Senior Vice President, Controller and Treasurer of Pacific Greystone Corporation.
Ms. Bessette joined us in 1995 and served as our Controller from 1997 to 2008. Since February 2008, she has served as our Treasurer. She was appointed a Vice President in 2000.
Mr. Sustana has served as our Secretary and General Counsel since 2005.
Mr. Collins joined us in 1998 and has served as our Controller since February 2008. Before becoming Controller, Mr. Collins served as our Executive Director of Financial Reporting.

Item 2.
Properties.
We lease and maintain our executive offices in an office complex in Miami, Florida. Our homebuilding, financial services, Rialto and multifamily offices are located in the markets where we conduct business, primarily in leased space. We believe that our existing facilities are adequate for our current and planned levels of operation.
Because of the nature of our homebuilding operations, significant amounts of property are held as inventory in the ordinary course of our homebuilding business. We discuss these properties in the discussion of our homebuilding operations in Item 1 of this Report.

Item 3.
Legal Proceedings.
We are party to various claims and lawsuits which arise in the ordinary course of business, but we do not consider the volume of our claims and lawsuits unusual given the number of homes we deliver and the fact that the lawsuits often relate to homes delivered several years before the lawsuits are commenced. Although the specific allegations in the lawsuits differ, they most commonly involve claims that we failed to construct homes in particular communities in accordance with plans and specifications or applicable construction codes and seek reimbursement for sums allegedly needed to remedy the alleged deficiencies, assert contract issues or relate to personal injuries. Lawsuits of these types are common within the homebuilding industry. We are a plaintiff in many cases in which we seek contribution from our subcontractors for home repair costs. The costs incurred by us in construction defect lawsuits may be offset by warranty reserves, our third party insurers, subcontractor insurers and indemnity contributions from subcontractors. We are also a party to various lawsuits involving purchases and sales of real property. These claims include claims regarding representations and warranties made in connection with the transfer of the property and disputes regarding the obligation to purchase or sell the property. We do not believe that the ultimate resolution of these claims or lawsuits will have a material adverse effect on our business, financial position, results of operations or cash flows. However, the financial effect of litigation concerning purchases and sales of property may depend upon the value of the subject property, which may have changed from the time the agreement for purchase or sale was entered into. From time-to-time, we also receive notices from environmental agencies or other regulators regarding alleged violations of environmental or other laws. We typically settle these matters before they reach litigation for amounts that are not material to us.
In December 2013, the Company was awarded by a civil jury $802 million in compensatory damages and $200 million in punitive damages against Nicolas Marsch III and his company, Briarwood Capital LLC, on court findings of defamation and conspiracy to extort money from the Company in 2008 and 2009 (Lennar Corp. v. Briarwood Capital LLC, 2008-055741-CA-01, Florida Circuit Court, Miami-Dade County). We do not expect to be able to collect the amount awarded to us.
Item 4.
Mine Safety Disclosures.
Not applicable.


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PART II

Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Our Class A and Class B common stock are listed on the New York Stock Exchange under the symbols “LEN” and “LEN.B,” respectively. The following table shows the high and low sales prices for our Class A and Class B common stock for the periods indicated, as reported by the NYSE, and cash dividends declared per share:
 
Class A Common  Stock
High/Low Prices
 
Cash Dividends
Per  Class A Share
Fiscal Quarter
2013
 
2012
 
2013
 
2012
First
$43.22 - 35.51
 
$24.35 - 18.12
 
 
Second
$44.40 - 36.76
 
$30.12 - 22.20
 
 
Third
$39.97 - 31.35
 
$32.85 - 23.48
 
 
Fourth
$37.84 - 31.09
 
$39.33 - 32.17
 
 
 
Class B Common  Stock
High/Low Prices
 
Cash Dividends
Per  Class B Share
Fiscal Quarter
2013
 
2012
 
2013
 
2012
First
$34.87 - 28.28
 
$19.63 - 13.73
 
 
Second
$34.73 - 28.55
 
$24.52 - 17.91
 
 
Third
$31.25 - 25.18
 
$26.20 - 18.14
 
 
Fourth
$30.94 - 25.38
 
$32.03 - 25.56
 
 
As of December 31, 2013, the last reported sale price of our Class A common stock was $39.56 and the last reported sale price of our Class B common stock was $33.72. As of December 31, 2013, there were approximately 850 and 600 holders of record, respectively, of our Class A and Class B common stock.
On January 15, 2014, our Board of Directors declared a quarterly cash dividend of $0.04 per share for both our Class A and Class B common stock, which is payable on February 13, 2014, to holders of record at the close of business on January 30, 2014. Our Board of Directors evaluates each quarter the decision whether to declare a dividend and the amount of the dividend.
In June 2001, our Board of Directors authorized a stock repurchase program to permit future purchases of up to 20 million shares of our outstanding common stock. During the year ended November 30, 2013, there were no shares repurchased under this program. At November 30, 2013, we still had authorization to purchase up to 6.2 million shares under the program.
The information required by Item 201(d) of Regulation S-K is provided in Item 12 of this Report.

23


Performance Graph
The following graph compares the five-year cumulative total return of our Class A common stock with the Dow Jones U.S. Home Construction Index and the Dow Jones U.S. Total Market Index. The graph assumes $100 invested on November 30, 2008 in our Class A common stock, the Dow Jones U.S. Home Construction Index and the Dow Jones U.S. Total Market Index, and the reinvestment of all dividends.

 
2008
 
2009
 
2010
 
2011
 
2012
 
2013
Lennar Corporation
$
100

 
182

 
221

 
271

 
565

 
533

Dow Jones U.S. Home Construction Index
$
100

 
119

 
107

 
115

 
210

 
218

Dow Jones U.S. Total Market Index
$
100

 
128

 
144

 
154

 
179

 
235



24



Item 6.
Selected Financial Data.
The following table sets forth our selected consolidated financial and operating information as of or for each of the years ended November 30, 2009 through 2013. The information presented below is based upon our historical financial statements.
 
At or for the Years Ended November 30,
(Dollars in thousands, except per share amounts)
2013
 
2012
 
2011
 
2010
 
2009
Results of Operations:
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
Lennar Homebuilding
$
5,354,947

 
3,581,232

 
2,675,124

 
2,705,639

 
2,834,285

Lennar Financial Services
$
427,342

 
384,618

 
255,518

 
275,786

 
285,102

Rialto Investments
$
138,060

 
138,856

 
164,743

 
92,597

 

Lennar Multifamily
$
14,746

 
426

 

 

 

Total revenues
$
5,935,095

 
4,105,132

 
3,095,385

 
3,074,022

 
3,119,387

Operating earnings (loss):
 
 
 
 
 
 
 
 
 
Lennar Homebuilding (1)
$
733,075

 
258,985

 
109,505

 
100,060

 
(676,293
)
Lennar Financial Services
$
85,786

 
84,782

 
20,729

 
31,284

 
35,982

Rialto Investments
$
26,128

 
11,569

 
63,457

 
57,307

 
(2,528
)
Lennar Multifamily
$
(16,988
)
 
(5,884
)
 
(461
)
 

 

Corporate general and administrative expenses
$
146,060

 
127,338

 
95,256

 
93,926

 
117,565

Earnings (loss) before income taxes
$
681,941

 
222,114

 
97,974

 
94,725

 
(760,404
)
Net earnings (loss) attributable to Lennar (2)
$
479,674

 
679,124

 
92,199

 
95,261

 
(417,147
)
Diluted earnings (loss) per share
$
2.15

 
3.11

 
0.48

 
0.51

 
(2.45
)
Cash dividends declared per each - Class A and Class B common stock
$
0.16

 
0.16

 
0.16

 
0.16

 
0.16

Financial Position:
 
 
 
 
 
 
 
 
 
Total assets
$
11,273,247

 
10,362,206

 
9,154,671

 
8,787,851

 
7,314,791

Debt:
 
 
 
 
 
 
 
 
 
Lennar Homebuilding
$
4,194,432

 
4,005,051

 
3,362,759

 
3,128,154

 
2,761,352

Rialto Investments
$
441,883

 
574,480

 
765,541

 
752,302

 

Lennar Financial Services
$
374,166

 
457,994

 
410,134

 
271,678

 
217,557

Lennar Multifamily
$
13,858

 

 

 

 

Stockholders’ equity
$
4,168,901

 
3,414,764

 
2,696,468

 
2,608,949

 
2,443,479

Total equity
$
4,627,470

 
4,001,208

 
3,303,525

 
3,194,383

 
2,558,014

Shares outstanding (000s)
204,412

 
191,548

 
188,403

 
186,636

 
184,896

Stockholders’ equity per share
$
20.39

 
17.83

 
14.31

 
13.98

 
13.22

Lennar Homebuilding Data (including unconsolidated entities):
 
 
 
 
 
 
 
 
 
Number of homes delivered
18,290

 
13,802

 
10,845

 
10,955

 
11,478

New Orders
19,043

 
15,684

 
11,412

 
10,928

 
11,510

Backlog of home sales contracts
4,806

 
4,053

 
2,171

 
1,604

 
1,631

Backlog dollar value
$
1,619,601

 
1,160,385

 
560,659

 
407,292

 
479,571

(1)
Lennar Homebuilding operating earnings (loss) include $7.5 million, $15.6 million, $38.0 million, $51.3 million and $359.9 million, respectively, of inventory valuation adjustments for the years ended November 30, 2013, 2012, 2011, 2010 and 2009. In addition, it includes $12.1 million, $8.9 million, $10.5 million and $101.9 million, respectively, of valuation adjustments related to assets of unconsolidated entities in which we have investments for the years ended November 30, 2012, 2011, 2010 and 2009, and $10.5 million, $1.7 million, and $89.0 million, respectively, of valuation adjustments to our investments in unconsolidated entities for the years ended November 30, 2011, 2010 and 2009.
(2)
Net earnings (loss) attributable to Lennar for the year ended November 30, 2013 includes $177.0 million of provision for income taxes, which includes a tax provision of $244.1 million primarily related to pre-tax earnings for fiscal year 2013, partially offset by a partial reversal of our deferred tax asset valuation allowance of $67.1 million. Net earnings (loss) attributable to Lennar for the year ended November 30, 2012 includes $435.2 million of benefit for income taxes, which includes a reversal of the majority of our deferred tax asset valuation allowance of $491.5 million, partially offset by a tax provision for fiscal year 2012 pretax earnings. Net earnings (loss) attributable to Lennar for the years ended November 30, 2011 and 2010 include $14.6 million and $25.7 million, respectively, of benefit

25


for income taxes, primarily due to settlements with various taxing authorities. Net earnings (loss) attributable to Lennar for the year ended November 30, 2009 primarily include a partial reversal of our deferred tax asset valuation allowance of $351.8 million, primarily due to a change in tax legislation, which allowed us to carry back our fiscal year 2009 tax loss to recover previously paid income taxes.

Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with “Selected Financial Data” and our audited consolidated financial statements and accompanying notes included elsewhere in this Report.

Special Note Regarding Forward-Looking Statements
This annual report on Form 10-K contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements concern expectations, beliefs, projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. The forward-looking statements in this annual report include statements regarding: our belief that the housing market is in a solid recovery mode, and our belief regarding the drivers of such recovery; our belief that we will experience a strong spring selling season in 2014, and that we will achieve another year of substantial profitability in fiscal 2014; our expectation that the Financial Services segment will continue to benefit as our homebuilding business expands; our expectation that we will continue to invest in carefully underwritten strategic land acquisitions; our expectation that the prospects for future earnings for our Rialto segment will continue to improve, and that the RMF business will be a significant contributor to Rialto’s revenues; our expectation that the construction of our Multifamily development pipeline will be completed over the next four years, and that we will see returns on invested capital in the second half of fiscal 2014 with more meaningful contributions coming from our Multifamily segment beyond fiscal 2014; our expectation regarding our business strategies, including that FivePoint Communities will continue to mature as a long-term strategy; our expectation that the Company's main driver of earnings will continue to be our homebuilding and Financial Services operations, and our belief that we are currently well positioned to deliver between 21,000 and 22,000 homes with gross margins expected to average about 25% during fiscal 2014; our expectation that substantially all homes currently in backlog will be delivered in fiscal 2014; our expectation regarding our variability in our quarterly results; our expectation regarding the growth in the Rialto management fees revenue; our expectations regarding the renewal or replacement of our warehouse facilities; our belief regarding draws upon our bonds or letters of credit, and our belief regarding the impact to the Company if there were such a draw; our belief that our operations and borrowing resources will provide for our current and long-term capital requirements at our anticipated levels of activity; our intent to settle the 2.75% Convertible Senior Notes in cash; our belief that we will not suffer credit losses from counterparty non-performance related to our forward commitments and option contracts; our estimates regarding certain accounting valuations and tax matters, including our belief regarding our effective tax rate in 2014, and our expectations regarding the result of anticipated settlements with various taxing authorities.
These forward-looking statements reflect our current views about future events and are subject to risks, uncertainties and assumptions. We wish to caution readers that certain important factors may have affected and could in the future affect our actual results and could cause actual results to differ significantly from those expressed in any forward-looking statement. The most important factors that could prevent us from achieving our goals, and cause the assumptions underlying forward-looking statements and the actual results to differ materially from those expressed in or implied by those forward-looking statements include, but are not limited to the following: a delay in the recovery of real estate markets across the nation, or any further downturn in such markets; changes in general economic and financial conditions in the U.S. leading to decreased demand for our services and homes, lower profit margins and reduced access to credit; competition for home sales from other sellers of new and resale homes; conditions in the capital, credit and financial markets, including mortgage lending standards, the availability of mortgage financing and mortgage foreclosure rates; changes in interest and unemployment rates, and inflation; a decline in the value of the land and home inventories we maintain or possible future write-downs of the book value of our real estate assets; increases in operating costs, including costs related to real estate taxes, construction materials, labor and insurance, and our ability to manage our cost structure; our inability to maintain anticipated pricing levels and our inability to predict the effect of interest rates on demand; the inability or unwillingness of the participants in various joint ventures to honor their commitments; our ability to successfully and timely obtain land-use entitlements and construction financing, and address issues that arise in connection with the use and development of our land; natural disasters and other unforeseen damage for which our insurance may not provide adequate coverage; potential liability under environmental or construction laws, or other laws or regulations affecting our business; our ability to comply with the terms of our debt instruments; unfavorable or unanticipated outcomes in legal proceedings; and our ability to successfully estimate the impact of certain accounting and tax matters.
Please see “Item 1A-Risk Factors” of this Annual Report for a further discussion of these and other risks and uncertainties which could affect our future results. We undertake no obligation to publicly revise any forward-looking statements to reflect events or circumstances after the date of those statements or to reflect the occurrence of anticipated or unanticipated events, except to the extent we are legally required to disclose certain matters in SEC filings or otherwise.

26


Outlook
We believe that the housing market is in a solid recovery mode as we enter fiscal 2014 although we have seen the rate of improvement in the overall housing market moderate due to the tapering of federal stimulus and the recent upward movement in mortgage rates from their historically low levels. The overriding driver in the recovery of the housing market is the production deficit of both single and multifamily housing that took place throughout the economic downturn and up to and including this current year. We believe that such production deficit will result in steady improvement in the housing market over an extended period of time, as builders of both single and multifamily housing will need to increase production to make up for such shortfall in an environment where inventories are likely to continue to remain low due to a shortage of entitled and developed land to build on in desirable locations and as pent-up demand continues to make its way into the market.
In the last few months of 2013, we have seen a pause in the rate of improvement in the recovery of the housing market in response to political turmoil and interest rate increases. While we recognize the potential headwinds from this and recent moves to lower loan limits on government-sponsored mortgages, we feel that the short supply of available homes and pent-up demand, along with a generally improving economy, will continue to drive the housing recovery forward. Currently, we are seeing traffic patterns in our communities that indicate that buyers are coming to the market and finding short supplies and we are anticipating a strong spring selling season for fiscal 2014.
Looking back, fiscal 2013 was an excellent year for Lennar, with revenues and pretax earnings attributable to Lennar increasing 45% and 170%, respectively, from 2012. In fiscal 2013, our gross margin increased 220 basis points to 24.9%. This gross margin, combined with our selling, general and administrative expenses of 10.6%, increased our operating margin 410 basis points to 14.3% during fiscal 2013. In addition, we ended the year with a strong sales backlog, up 19% in homes and 40% in dollar value, which gives us a great start for fiscal 2014. During fiscal 2013, we also had strong performances from our other business segments. Our Financial Services segment produced $85.8 million of pretax earnings, notwithstanding a significant slowdown in the refinance business during the second half of the year. Rialto generated $19.9 million of operating earnings net of earnings attributable to noncontrolling interests, benefiting from the successful launch of our new mortgage conduit business Rialto Mortgage Finance ("RMF") and a transition from a capital-intensive business model to an asset light, fund model. Our Multifamily rental business continued to grow during fiscal 2013, and we ended the year with 11 multifamily communities under construction and one completed, fully-leased community. Finally, our FivePoint Communities is well positioned, managing the entitlement and development of some of the most desirable real estate assets in Southern and Northern California.
In fiscal 2014, our principal focus in our homebuilding operations will continue to be on generating strong operating margins on the homes we sell by increasing sales prices and reducing sales incentives, to offset increasing material, labor and land costs, as well as taking advantage of the steps we have taken over the past several years to reduce costs and right-size our overhead structure. In addition, we will continue to invest in carefully underwritten strategic land acquisitions in well-positioned markets that we expect will continue to support our homebuilding operations going forward and help us increase operating leverage as our deliveries increase. During fiscal 2014, we expect our Financial Services segment's earnings to decrease due to the lower volume of refinance transactions and an overall more competitive environment, however, the segment will continue to benefit as our homebuilding business expands and the number of non-Lennar purchasers using our mortgage company continues to grow in various markets. In addition, as Rialto continues to grow as a blue chip capital investment management company and commercial real estate capital provider, we expect the prospects for future earnings for our Rialto segment to continue to improve throughout 2014 and we expect contributions from Rialto's RMF buisness will begin to generate a more predictable and recurring component of earnings for Rialto. Our Multifamily segment anticipates that the construction of its development pipeline will be completed over the next four years, and as a merchant builder of apartments, we plan to sell our apartments once rents and occupancies have stabilized. Our Multifamily segment is still in start-up mode and we don't expect a meaningful contribution from this segment until beyond fiscal 2014. In addition, we expect FivePoint Communities to continue to mature as a long-term strategy as it develops land in premium California locations to fill the growing demand for well-located approved and developed homesites.
In conclusion, we are aware of the concerns that are being reflected in the current market volatility. Our Company’s strategy continues to be driven by our belief that the real estate markets remain positioned to continue to recover and that our Company remains well positioned to benefit from such recovery. We expect that our Company's main driver of earnings will continue to be our homebuilding and Financial Services operations, as we are currently well positioned to deliver between 21,000 and 22,000 homes with gross margins expected to average about 25% during fiscal 2014. We are also focused on our multiple platforms including Rialto, Multifamily, and FivePoint, as such ancillary business continue to mature and expand their franchises providing longer-term opportunities that we expect will enhance shareholder value. Overall, we are on track to achieve another year of substantial profitability in fiscal 2014, as the housing market recovery continues and we will continue to benefit from our strategic land acquisitions and new community openings.


27


Results of Operations
Overview
Our net earnings attributable to Lennar in 2013 were $479.7 million, or $2.15 per diluted share ($2.48 per basic share), compared to $679.1 million, or $3.11 per diluted share ($3.58 per basic share), in 2012. Our net earnings includes a $177.0 million tax provision in 2013, compared to a tax benefit of $435.2 million in 2012, which included the reversal of our deferred tax asset valuation allowance of $491.5 million, or $2.25 per diluted share. Our 2013 earnings before taxes were $681.9 million, compared to $222.1 million in 2012.
The following table sets forth financial and operational information for the years indicated related to our operations.
 
Years Ended November 30,
(Dollars in thousands)
2013
 
2012
 
2011
Lennar Homebuilding revenues:
 
 
 
 
 
Sales of homes
$
5,292,072

 
3,492,177

 
2,624,785

Sales of land
62,875

 
89,055

 
50,339

Total Lennar Homebuilding revenues
5,354,947

 
3,581,232

 
2,675,124

Lennar Homebuilding costs and expenses:
 
 
 
 
 
Cost of homes sold
3,973,812

 
2,698,831

 
2,101,414

Cost of land sold
45,834

 
78,808

 
42,611

Selling, general and administrative
559,462

 
438,727

 
384,798

Total Lennar Homebuilding costs and expenses
4,579,108

 
3,216,366

 
2,528,823

Lennar Homebuilding operating margins
775,839

 
364,866

 
146,301

Lennar Homebuilding equity in earnings (loss) from unconsolidated entities
23,803

 
(26,672
)
 
(62,716
)
Lennar Homebuilding other income, net
27,346

 
15,144

 
116,570

Other interest expense
(93,913
)
 
(94,353
)
 
(90,650
)
Lennar Homebuilding operating earnings
$
733,075

 
258,985

 
109,505

Lennar Financial Services revenues
$
427,342

 
384,618

 
255,518

Lennar Financial Services costs and expenses
341,556

 
299,836

 
234,789

Lennar Financial Services operating earnings
$
85,786

 
84,782

 
20,729

Rialto Investments revenues
$
138,060

 
138,856

 
164,743

Rialto Investments costs and expenses
151,072

 
138,990

 
132,583

Rialto Investments equity in earnings (loss) from unconsolidated entities
22,353

 
41,483

 
(7,914
)
Rialto Investments other income (expense), net
16,787

 
(29,780
)
 
39,211

Rialto Investments operating earnings
$
26,128

 
11,569

 
63,457

Lennar Multifamily revenues
14,746

 
426

 

Lennar Multifamily costs and expenses
31,463

 
6,306

 
461

Lennar Multifamily equity in loss from unconsolidated entities
(271
)
 
(4
)
 

Lennar Multifamily operating loss
$
(16,988
)
 
(5,884
)
 
(461
)
Total operating earnings
$
828,001

 
349,452

 
193,230

Corporate general administrative expenses
146,060

 
127,338

 
95,256

Earnings before income taxes
$
681,941

 
222,114

 
97,974

Net earnings attributable to Lennar
$
479,674

 
679,124

 
92,199

Gross margin as a % of revenue from home sales
24.9
%
 
22.7
%
 
19.9
%
S,G&A expenses as a % of revenues from home sales
10.6
%
 
12.6
%
 
14.7
%
Operating margin as a % of revenues from home sales
14.3
%
 
10.2
%
 
5.3
%
Average sales price
$
290,000

 
255,000

 
244,000


28


2013 versus 2012
Revenues from home sales increased 52% in the year ended November 30, 2013 to $5.3 billion from $3.5 billion in 2012. Revenues were higher primarily due to a 33% increase in the number of home deliveries, excluding unconsolidated entities, and a 14% increase in the average sales price of homes delivered. New home deliveries, excluding unconsolidated entities, increased to 18,234 homes in the year ended November 30, 2013 from 13,707 homes last year. There was an increase in home deliveries in all of our Homebuilding segments and Homebuilding Other. The average sales price of homes delivered increased to $290,000 in the year ended November 30, 2013 from $255,000 in the same period last year, driven primarily by an increase in the average sales price of home deliveries in all of our Homebuilding segments, primarily due to increased pricing in many of our markets as the market recovery continues. Sales incentives offered to homebuyers were $20,500 per home delivered in the year ended November 30, 2013, or 6.6% as a percentage of home sales revenue, compared to $28,300 per home delivered in the same period last year, or 10.0% as a percentage of home sales revenue. Currently, our biggest competition is from the sales of existing and foreclosed homes. We differentiate our new homes from those homes by issuing new home warranties, updated floor plans, our Everything's Included marketing program, community amenities and in certain markets by emphasizing energy efficiency and new technologies.
Gross margins on home sales were $1,318.3 million, or 24.9%, in the year ended November 30, 2013, compared to gross margins on home sales of $793.3 million, or 22.7%, in the year ended November 30, 2012. Gross margin percentage on home sales improved compared to last year, primarily due to a decrease in sales incentives offered to homebuyers as a percentage of revenue from home sales, an increase in the average sales price of homes delivered and a greater percentage of deliveries from our new higher margin communities (communities where land was acquired subsequent to November 30, 2008) which made up 61% of our 2013 deliveries, partially offset by an increase in materials, labor and land costs.
Gross profits on land sales totaled $17.0 million in the year ended November 30, 2013, compared to gross profits on land sales of $10.2 million in the year ended November 30, 2012.
Selling, general and administrative expenses were $559.5 million in the year ended November 30, 2013, compared to selling, general and administrative expenses of $438.7 million last year. Selling, general and administrative expenses as a percentage of revenues from home sales improved to 10.6% in the year ended November 30, 2013, from 12.6% in 2012, due to improved operating leverage as a result of increased absorption per community and more active communities.
Lennar Homebuilding equity in earnings (loss) from unconsolidated entities was $23.8 million in the year ended November 30, 2013, related to our share of operating earnings of Lennar Homebuilding unconsolidated entities, primarily as a result of sales of approximately 500 homesites to third parties by one unconsolidated entity for approximately $204 million, resulting in a gross profit of approximately $67 million. Our share of equity in earnings for the year ended November 30, 2013 related to the sales of those homesites was $19.8 million. This compared to Lennar Homebuilding equity in earnings (loss) of ($26.7) million in the year ended November 30, 2012, primarily related to our share of operating losses of Lennar Homebuilding unconsolidated entities, which included $12.1 million of valuation adjustments related to asset sales at Lennar Homebuilding's unconsolidated entities.
Lennar Homebuilding other income, net, totaled $27.3 million in the year ended November 30, 2013, primarily due to management fees and the sale of an operating property by one of our consolidating homebuilding joint ventures that resulted in $14.4 million of other income (the transaction resulted in a net loss of $3.2 million after considering the impact of noncontrolling interests totaling $17.6 million), partially offset by other expenses. This compared to Lennar Homebuilding other income, net, of $15.1 million in the year ended November 30, 2012, which included a $15.0 million gain on the sale of an operating property, partially offset by a pre-tax loss of $6.5 million related to the repurchase of $204.7 million aggregate principal amount of our 5.95% senior notes due 2013 ("5.95% Senior Notes") through a tender offer.
Homebuilding interest expense was $214.3 million in the year ended November 30, 2013 ($117.8 million was included in cost of homes sold, $2.6 million in cost of land sold and $93.9 million in other interest expense), compared to $181.4 million in the year ended November 30, 2012 ($85.1 million was included in cost of homes sold, $1.9 million in cost of land sold and $94.4 million in other interest expense). Interest expense increased due to an increase in our weighted average outstanding debt and an increase in deliveries, partially offset by a lower weighted average interest rate compared to the prior year.
Operating earnings for our Lennar Financial Services segment were $85.8 million in the year ended November 30, 2013, compared to operating earnings of $84.8 million in the same period last year. The operating earnings were consistent year over year, which was driven by an increase in profit in the title operations as a result of a higher profit per transaction, offset by a slight decrease in profitability in the mortgage operations.
In the year ended November 30, 2013, operating earnings attributable to Lennar for the Rialto segment were $19.9 million (which included $26.1 million of operating earnings, offset by $6.2 million of net earnings attributable to noncontrolling interests), compared to operating earnings attributable to Lennar of $26.0 million (which was comprised of $11.6 million of operating earnings and an add back of $14.4 million of net loss attributable to noncontrolling interests) in the same period last year. In the year ended November 30, 2013, revenues in this segment were $138.1 million, which consisted

29


primarily of accretable interest income associated with the segment’s portfolio of real estate loans, gains from securitization transactions and interest income from the new RMF business and fees for managing and servicing assets, compared to revenues of $138.9 million in the same period last year. Revenues decreased primarily due to lower interest income as a result of a decrease in the segment's portfolio of loans, offset by gains from securitization transactions and interest income from Rialto's new RMF business. In the year ended November 30, 2013, expenses in this segment were $151.1 million, which consisted primarily of costs related to its portfolio operations, the new RMF business, loan impairments of $16.1 million primarily associated with the segment's FDIC loan portfolio (before noncontrolling interests) and other general and administrative expenses, compared to expenses of $139.0 million in the same period last year, which consisted primarily of costs related to its portfolio operations, loan impairments of $28.0 million primarily associated with the segment's FDIC loan portfolio (before noncontrolling interests), and other general and administrative expenses.
In the year ended November 30, 2013, the segment also had equity in earnings from unconsolidated entities of $22.4 million, which primarily included $21.9 million of equity in earnings related to our share of earnings from the Rialto real estate funds. This compared to equity in earnings from unconsolidated entities of $41.5 million in the same period last year, which primarily included $17.0 million of net gains primarily related to realized gains from the sale of investments in the portfolio underlying the the AllianceBernstein L.P. (“AB”) fund formed under the Federal government’s Public-Private Investment Program (“PPIP”), $6.1 million of interest income earned by the AB PPIP fund and $21.0 million of equity in earnings related to our share of earnings from the real estate investment fund managed by the Rialto segment ("Fund I").
In the year ended November 30, 2013, Rialto other income (expense), net, was $16.8 million, which consisted primarily of realized gains on the sale of REO of $48.8 million, an $8.5 million provisional gain related to a bargain purchase acquisition which included cash and a loan receivable as consideration, and rental income, partially offset by expenses related to owning and maintaining REO and impairments on REO of $16.1 million. In the year ended November 30, 2012, Rialto other income (expense), net, was ($29.8) million, which consisted primarily of expenses related to owning and maintaining REO and impairments on REO, partially offset by gains from sales of REO of $21.6 million and rental income.
Our Lennar Multifamily segment had a start-up operating loss of $17.0 million in the year ended November 30, 2013, compared to an operating loss of $5.9 million in the same period last year. The operating loss in Lennar Multifamily primarily relates to general and administrative expenses of the segment, partially offset by gross profit on a land sale and management fee income.
In the year ended November 30, 2013, corporate general and administrative expenses were $146.1 million, or 2.5% as a percentage of total revenues, compared to $127.3 million, or 3.1% as a percentage of total revenues, in the same period last year. As a percentage of total revenues, corporate general and administrative expenses improved due to increased operating leverage.
Net earnings (loss) attributable to noncontrolling interests were $25.3 million and ($21.8) million, respectively, in the years ended November 30, 2013 and 2012, primarily attributable to noncontrolling interests related to our homebuilding and Rialto operations, of which the Rialto operations related to the FDIC's interests in the portfolio of real estate loans that we acquired in partnership with the FDIC. In the year ended November 30, 2013, net earnings attributable to noncontrolling interests was primarily attributable to a transaction by one of our homebuilding consolidated joint ventures that decreased noncontrolling interests by $17.6 million.
During the years ended November 30, 2013 and 2012, we concluded that it was more likely than not that the majority of our deferred tax assets would be utilized. In 2013, additional positive evidence included actual and forecasted profitability, as well as generating cumulative pre-tax earnings over a rolling four year period including the pre-tax earnings achieved during 2013. Accordingly, for the year ended November 30, 2013, we reversed $67.1 million of our valuation allowance primarily against our state deferred tax assets. This reversal was offset by a tax provision of $244.1 million, primarily related to pre-tax earnings during the year ended November 30, 2013, resulting in a $177.0 million provision for income taxes for the year ended November 30, 2013. As of November 30, 2013, our remaining valuation allowance against our deferred tax assets was $12.7 million, which is primarily related to state net operating loss carryforwards that are expected to expire due to short carryforward periods. For the year ended November 30, 2012, we reversed $491.5 million of our valuation allowance against our deferred tax assets. This reversal was partially offset by a tax provision of $25.9 million, primarily related to pre-tax earnings during the year ended November 30, 2012, resulting in a $435.2 million benefit for income taxes for the year ended November 30, 2012. Our overall effective tax rates were 26.96% and (178.43%) for the years ended November 30, 2013 and 2012, respectively. The low effective tax rate and the negative effective tax rate were primarily related to the reversal of our valuation allowance and special tax credits taken in the years ended November 30, 2013 and 2012, respectively. We expect our effective tax rate to be higher in 2014 than it was in 2013.
During the year ended November 30, 2013, we had significant transactions involving three of our consolidated joint ventures. In the first joint venture transaction, we bought out our 50% partners for $82.3 million, paying $18.8 million in cash and financing the remainder with a short-term note. Our consolidated joint venture then contributed certain assets to a new unconsolidated joint venture and brought in a new, long-term partner for $125 million, or a 31.25% interest. Additionally, if the

30


new unconsolidated entity meets certain cash flow thresholds, the partner's equity interest in the unconsolidated entity could be decreased to 16.25% or increased to 46.25% with a corresponding increase or decrease in our equity interest percentage. During the year ended November 30, 2013, the new unconsolidated joint venture subsequently distributed $125 million of cash to us as a return of capital.
In the second joint venture transaction, we purchased our partner's interest for $153.2 million and the inventories are now wholly-owned assets, which we plan to develop and build homes. During the year ended November 30, 2013, there was a third joint venture transaction where we paid off the bank debt of the consolidated joint venture and assumed the partner's interest, resulting in the entity becoming wholly-owned.
These transactions did not impact our net earnings, but our balance sheet was affected as follows: cash was reduced by approximately $47 million, inventory decreased by approximately $225 million, investments in unconsolidated entities increased by $98 million, deferred tax assets were increased by $40 million, additional paid-in capital (equity) was reduced by $62 million, net of tax, and non-controlling interests were reduced by $134 million.
As of November 30, 2013, we owned 125,643 homesites and had access to an additional 28,133 homesites through either option contracts with third parties or agreements with unconsolidated entities in which we have investments. As of November 30, 2012, we owned 107,138 homesites and had access to an additional 21,346 homesites through either option contracts with third parties or agreements with unconsolidated entities in which we have investments. Our backlog of sales contracts was 4,806 homes ($1.6 billion) at November 30, 2013, compared to 4,053 homes ($1.2 billion) at November 30, 2012.
2012 versus 2011
Revenues from home sales increased 33% in the year ended November 30, 2012 to $3.5 billion from $2.6 billion in 2011. Revenues were higher primarily due to a 28% increase in the number of home deliveries, excluding unconsolidated entities, and a 4% increase in the average sales price of homes delivered. New home deliveries, excluding unconsolidated entities, increased to 13,707 homes in the year ended November 30, 2012 from 10,746 homes in the year ended November 30, 2011. There was an increase in home deliveries in all of our Homebuilding segments and Homebuilding Other. The average sales price of homes delivered increased to $255,000 in the year ended November 30, 2012 from $244,000 in the year ended November 30, 2011, driven primarily by an increase in the average sales price of home deliveries in all of our Homebuilding segments, primarily due to increased pricing in many of our markets as the market recovers. Sales incentives offered to homebuyers were $28,300 per home delivered in the year ended November 30, 2012, or 10.0% as a percentage of home sales revenue, compared to $33,700 per home delivered in the year ended November 30, 2011, or 12.1% as a percentage of home sales revenue. Our biggest competition in 2012 was from the sales of existing and foreclosed homes. We differentiated our new homes from those homes by issuing new home warranties, and in certain markets by emphasizing energy efficiency and new technologies.
Gross margins on home sales were $793.3 million, or 22.7%, in the year ended November 30, 2012, which included $12.6 million of valuation adjustments, compared to gross margins on home sales of $523.4 million, or 19.9%, in the year ended November 30, 2011, which included $35.7 million of valuation adjustments. Gross margin percentage on home sales improved in fiscal 2012 compared to the year ended November 30, 2011, primarily due to a greater percentage of deliveries from our new higher margin communities, a decrease in sales incentives offered to homebuyers as a percentage of revenue from home sales, an increase in the average sales price of homes delivered and lower valuation adjustments.
Gross profits on land sales totaled $10.2 million in the year ended November 30, 2012, compared to gross profits on land sales of $7.7 million in the year ended November 30, 2011.
Selling, general and administrative expenses were $438.7 million in the year ended November 30, 2012, compared to selling, general and administrative expenses of $384.8 million in the year ended November 30, 2011, which included $8.4 million related to expenses associated with remedying pre-existing liabilities of a previously acquired company, offset by $8.0 million related to the receipt of a litigation settlement. Selling, general and administrative expenses as a percentage of revenues from home sales improved to 12.6% in the year ended November 30, 2012, from 14.7% in the year ended November 30, 2011, primarily due to improved operating leverage and lower advertising costs.
Lennar Homebuilding equity in loss from unconsolidated entities was $26.7 million in the year ended November 30, 2012, primarily related to our share of operating losses of Lennar Homebuilding unconsolidated entities, which included $12.1 million of valuation adjustments primarily related to asset sales at Lennar Homebuilding's unconsolidated entities. This compared to Lennar Homebuilding equity in loss from unconsolidated entities of $62.7 million in the year ended November 30, 2011, which included our share of valuation adjustments of $57.6 million related to an asset distribution from a Lennar Homebuilding unconsolidated entity as the result of a linked transaction. The transaction resulted in a net pre-tax gain of $4.7 million in the year ended November 30, 2011. This was offset by a pre-tax gain of $62.3 million included in 2011 Lennar Homebuilding other income, net, related to that unconsolidated entity’s net asset distribution. The linked transaction occurred as follows: Lennar and another partner who were members of two separate unconsolidated entities entered into a linked transaction. As part of the linked transaction, the partners agreed to the following: (1) Lennar forgave a receivable due from the

31


other partner, (2) the partner assigned its interest in an unconsolidated entity (“Entity A”) to Lennar and (3) the partners agreed to a plan in which the other unconsolidated entity (“Entity B”) would distribute all of its land assets to the members as well as the members assuming all of its debt.
Since Entity B had a plan to spinoff and distribute the land assets to the owners of the entity, Entity B had to determine whether the fair value equaled or exceeded the carrying value of the assets. If the carrying value exceeded the fair value, Entity B had to record an impairment loss to reflect the assets at its estimated fair value. Upon determining the fair value of all of the assets being distributed, Entity B concluded that the carrying value of the assets being distributed exceeded its estimated fair value, resulting in Entity B recording an impairment loss. Our share of the impairment loss was $57.6 million which was recorded through our equity in loss from unconsolidated entities.
Additionally, we had to account for the linked transaction with the member as a non-monetary exchange. We exchanged a receivable and an investment in Entity B for land from Entity B, assumption of 75% of Entity B’s debt and the partner’s investment in Entity A. We compared the net assets that we received at fair value to the carrying value of the assets relinquished to determine the gain on the non-monetary exchange transaction. As a result of the analysis, it was determined that we received net assets of $118.1 million and relinquished assets with a carrying value of $55.8 million (net of $57.6 million of impairment discussed above), resulting in a $62.3 million gain on the non-monetary exchange. This gain was recorded in Lennar Homebuilding other income, net. The total economic gain on the linked transaction was $4.7 million.
In addition, in the year ended November 30, 2011, Lennar Homebuilding equity in loss from unconsolidated entities included $8.9 million of valuation adjustments related to assets of Lennar Homebuilding’s unconsolidated entities, partially offset by our share of a gain on debt extinguishment at one of Lennar Homebuilding’s unconsolidated entities totaling $15.4 million.
Lennar Homebuilding other income, net, totaled $15.1 million in the year ended November 30, 2012, primarily due to a $15.0 million gain on the sale of an operating property, partially offset by a pre-tax loss of $6.5 million related to the repurchase of $204.7 million aggregate principal amount of our 5.95% senior notes due 2013 ("5.95% Senior Notes") through a tender offer. This compared to Lennar Homebuilding other income, net, of $116.6 million in the year ended November 30, 2011, which included the $62.3 million pre-tax gain related to an unconsolidated entity's net asset distribution discussed in the previous paragraph and $29.5 million related to the receipt of a litigation settlement. The parties to a litigation in which the Company was a plaintiff entered into a settlement agreement in 2011 in which they agreed the Company may make the following statement: “Lennar recently settled litigation against a third party in connection with Lennar’s ongoing dispute with Nicolas Marsch, III and his affiliates. As a result of the settlement, the third party paid Lennar total cash consideration of $37.5 million and that the terms are confidential.” Lennar Homebuilding other income, net, in the year ended November 30, 2011 also included $5.1 million related to the favorable resolution of a joint venture and the recognition of $10.0 million of deferred management fees related to management services previously performed for one of Lennar Homebuilding’s unconsolidated entities. These amounts were partially offset by $10.5 million of valuation adjustments to our investments in Lennar Homebuilding’s unconsolidated entities and $4.9 million of write-offs of other assets in the year ended November 30, 2011.
Homebuilding interest expense was $181.4 million in the year ended November 30, 2012 ($85.1 million was included in cost of homes sold, $1.9 million in cost of land sold and $94.4 million in other interest expense), compared to $163.0 million in the year ended November 30, 2011 ($70.7 million was included in cost of homes sold, $1.6 million in cost of land sold and $90.7 million in other interest expense). Interest expense increased primarily due to an increase in our outstanding debt compared to the year ended November 30, 2011.
Operating earnings for our Lennar Financial Services segment were $84.8 million in the year ended November 30, 2012, compared to operating earnings of $20.7 million in the year ended November 30, 2011. The increase in profitability was primarily due to increased volume and margins in the segment’s mortgage operations and increased volume in the segment's title operations, as a result of a significant increase in refinance transactions and homebuilding deliveries.
In the year ended November 30, 2012, operating earnings attributable to Lennar for the Rialto segment were $26.0 million (which was comprised of $11.6 million of operating earnings and an add back of $14.4 million of net loss attributable to noncontrolling interests), compared to operating earnings attributable to Lennar of $34.6 million (which included $63.5 million of operating earnings, offset by $28.9 million of net earnings attributable to noncontrolling interests) in the year ended November 30, 2011. In the year ended November 30, 2012, revenues in this segment were $138.9 million, which consisted primarily of accretable interest income associated with the segment’s portfolio of real estate loans and fees for managing and servicing assets, compared to revenues of $164.7 million in the year ended November 30, 2011. Revenues decreased primarily due to lower interest income as a result of a decrease in the portfolio of loans. In the year ended November 30, 2012, expenses in this segment were $139.0 million, which consisted primarily of costs related to its portfolio operations, loan impairments of $28.0 million primarily associated with the segment's FDIC loan portfolio (before noncontrolling interests) and other general and administrative expenses, compared to expenses of $132.6 million in the year ended November 30, 2011, which consisted primarily of costs related to its portfolio operations, loan impairments of $13.8 million primarily associated with the segment's

32


FDIC loan portfolio (before noncontrolling interests), due diligence expenses related to both completed and abandoned transactions, and other general and administrative expenses.
In the year ended November 30, 2012, Rialto other income (expense), net, was ($29.8) million, which consisted primarily of expenses related to owning and maintaining REO and impairments on REO, partially offset by gains from sales of REO and rental income. In the year ended November 30, 2011, Rialto other income (expense), net, was $39.2 million, which consisted primarily of gains from acquisition of real estate owned (“REO”) through foreclosure, as well as gains from sales of REO, partially offset by expenses related to owning and maintaining those assets, and a $4.7 million gain on the sale of investment securities.
In the year ended November 30, 2012, the segment also had equity in earnings (loss) from unconsolidated entities of $41.5 million,which included $17.0 million of net gains primarily related to realized gains from the sale of investments in the portfolio underlying the the AB PPIP fund, $6.1 million of interest income earned by the AB PPIP fund and $21.0 million of equity in earnings related to our share of earnings from Fund I. During the second half of 2012, all of the securities in the investment portfolio underlying the AB PPIP fund were monetized related to the unwinding of its operations, resulting in liquidating distributions of $83.5 million. As our role as sub-advisor to the AB PPIP fund has been completed, no further management fees will be received for these services. This compared to equity in earnings (loss) from unconsolidated entities of ($7.9) million in the year ended November 30, 2011, consisting primarily of $21.4 million of unrealized losses related to our share of the mark-to-market adjustments of the investment portfolio underlying the AB PPIP fund, partially offset by $10.7 million of interest income earned by the AB PPIP fund and $2.9 million of equity in earnings related to Fund I.
In the year ended November 30, 2012, corporate general and administrative expenses were $127.3 million, or 3.1% as a percentage of total revenues, compared to $95.3 million, or 3.1% as a percentage of total revenues, in the year ended November 30, 2011. The increase in corporate general and administrative expenses was primarily due to an increase in personnel related expenses as a result of an increase in share-based and variable compensation expense.
In the years ended November 30, 2012 and 2011, net earnings (loss) attributable to noncontrolling interests were ($21.8) million and $20.3 million, respectively. Net loss attributable to noncontrolling interests during the year ended November 30, 2012 was attributable to noncontrolling interests related to our homebuilding operations and the FDIC's interest in the portfolio of real estate loans that we hold in partnership with the FDIC in our Rialto segment. Net earnings attributable to noncontrolling interests during the year ended November 30, 2011 were related to the Rialto operations, partially offset by a net loss attributable to noncontrolling interests in our homebuilding operations.
During the year ended November 30, 2012, we concluded that it was more likely than not that the majority of our deferred tax assets would be utilized. This conclusion was based on a detailed evaluation of all relevant evidence, both positive and negative. The positive evidence included factors such as eleven consecutive quarters of earnings, the expectation of continued earnings and evidence of a sustained recovery in the housing markets that we operate. Such evidence was supported by us experiencing significant increases in key financial indicators, including new orders, revenues, gross margin, backlog, gross margin in backlog, and deliveries compared with 2011. We had also restructured our corporate and field operations, significantly reducing our cost structure and permitting us to generate profits at lower level of activity. In 2012, economic data was also affirming the housing market recovery. Housing starts, homebuilding volume and prices were increasing and forecasted to continue to increase. Low mortgage rates, affordable home prices, reduced foreclosures, and a favorable home ownership to rental comparison continued to drive the recovery. Lastly, in 2012, we projected to use the majority of our net operating losses in the allowable carryforward periods, and we had no history of net operating losses expiring unutilized.
We are required to use judgment in considering the relative impact of negative and positive evidence when determining the need for a valuation allowance for our deferred tax asset. The weight given to the potential effect of negative and positive evidence shall be commensurate with the extent to which it can be objectively verified. The more negative evidence that exists, the more positive evidence is necessary. The most significant direct negative evidence that existed in 2012 was that we were in a cumulative four-year loss position. However, our cumulative four-year loss was declining significantly as a result of eleven consecutive quarters of profitability and based on the earnings level in 2012 we determined that we would realize a majority of our deferred tax assets.
Based on the analysis of positive and negative evidence in 2012, we believed that there was enough positive evidence to overcome our cumulative loss position at that time. Therefore, we concluded that it was more likely than not that we will realize our deferred tax assets, and reversed the majority of the valuation allowance established against our deferred tax assets during the year ended November 30, 2012.
Accordingly, we reversed $491.5 million of the valuation allowance against our deferred tax assets in 2012. Based on analysis utilizing objectively verifiable evidence, it was not more likely than not that certain state net operating loss carryforwards would be utilized. As a result, the remaining valuation allowance against our deferred tax assets was $88.8 million, as of November 30, 2012, which was primarily related to state net operating loss carryforwards. The valuation allowance against our deferred tax assets was $576.9 million at November 30, 2011.

33


As of November 30, 2012, we owned 107,138 homesites and had access to an additional 21,346 homesites through either option contracts with third parties or agreements with unconsolidated entities in which we have investments. As of November 30, 2011, we owned 94,684 homesites and had access to an additional 16,702 homesites through either option contracts with third parties or agreements with unconsolidated entities in which we have investments. Our backlog of sales contracts was 4,053 homes ($1.2 billion) at November 30, 2012, compared to 2,171 homes ($560.7 million) at November 30, 2011.

Homebuilding Segments
Our Homebuilding operations construct and sell homes primarily for first-time, move-up and active adult homebuyers primarily under the Lennar brand name. In addition, our homebuilding operations also purchase, develop and sell land to third parties. In certain circumstances, we diversify our operations through strategic alliances and attempt to minimize our risks by investing with third parties in joint ventures.
As of and for the year ended November 30, 2013, we have grouped our homebuilding activities into five reportable segments, which we refer to as Homebuilding East, Homebuilding Central, Homebuilding West, Homebuilding Southeast Florida and Homebuilding Houston. Information about homebuilding activities in states in which our homebuilding activities are not economically similar to other states in the same geographic area is grouped under “Homebuilding Other,” which is not considered a reportable segment. Reference in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to homebuilding segments are to those reportable segments.
At November 30, 2013, our reportable homebuilding segments and Homebuilding Other consisted of homebuilding divisions located in:
East: Florida(1), Georgia, Maryland, New Jersey, North Carolina, South Carolina and Virginia
Central: Arizona, Colorado and Texas(2) 
West: California and Nevada
Southeast Florida: Southeast Florida
Houston: Houston, Texas
Other: Illinois, Minnesota, Oregon, Tennessee and Washington
(1)
Florida in the East reportable segment excludes Southeast Florida, which is its own reportable segment.
(2)
Texas in the Central reportable segment excludes Houston, Texas, which is its own reportable segment.

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The following tables set forth selected financial and operational information related to our homebuilding operations for the years indicated:
Selected Financial and Operational Data
 
Years Ended November 30,
(In thousands)
2013
 
2012
 
2011
Revenues:
 
 
 
 
 
East:
 
 
 
 
 
Sales of homes
$
1,828,543

 
1,283,441

 
1,009,750

Sales of land
13,619

 
16,539

 
11,062

Total East
1,842,162

 
1,299,980

 
1,020,812

Central:
 
 
 
 
 
Sales of homes
736,557

 
487,317

 
355,350

Sales of land
6,918

 
19,071

 
9,907

Total Central
743,475

 
506,388

 
365,257

West:
 
 
 
 
 
Sales of homes
1,160,842

 
683,267

 
531,984

Sales of land
490

 
14,022

 
8,879

Total West
1,161,332

 
697,289

 
540,863

Southeast Florida:
 
 
 
 
 
Sales of homes
502,175

 
353,841

 
239,608

Sales of land

 
13,800

 

Total Southeast Florida
502,175

 
367,641

 
239,608

Houston:
 
 
 
 
 
Sales of homes
604,212

 
449,580

 
321,908

Sales of land
36,949

 
22,043

 
19,802

Total Houston
641,161

 
471,623

 
341,710

Other
 
 
 
 
 
Sales of homes
459,743

 
234,731

 
166,185

Sales of land
4,899

 
3,580

 
689

Total Other
464,642

 
238,311

 
166,874

Total homebuilding revenues
$
5,354,947

 
3,581,232

 
2,675,124


35


 
Years Ended November 30,
(In thousands)
2013
 
2012
 
2011
Operating earnings (loss):
 
 
 
 
 
East:
 
 
 
 
 
Sales of homes (1)
$
279,561

 
137,231

 
98,822

Sales of land
1,255

 
2,472

 
233

Equity in earnings (loss) from unconsolidated entities
678

 
542

 
(518
)
Other income (expense), net (2)
(5,354
)
 
(166
)
 
4,568

Other interest expense
(25,023
)
 
(26,082
)
 
(22,755
)
Total East
251,117

 
113,997

 
80,350

Central:
 
 
 
 
 
Sales of homes (3)
68,743

 
39,388

 
(16,109
)
Sales of land
773

 
909

 
2,129

Equity in loss from unconsolidated entities
(87
)
 
(514
)
 
(922
)
Other expense, net
(1,809
)
 
(1,529
)
 
(1,082
)
Other interest expense
(12,417
)
 
(13,427
)
 
(15,184
)
Total Central
55,203

 
24,827

 
(31,168
)
West:
 
 
 
 
 
Sales of homes (1) (3)
190,582

 
39,941

 
(3,071
)
Sales of land
3,442

 
388

 
749

Equity in earnings (loss) from unconsolidated entities (4)
22,039

 
(25,415
)
 
(57,215
)
Other income, net (5)
27,832

 
2,393

 
117,066

Other interest expense
(32,740
)
 
(31,334
)
 
(31,479
)
Total West
211,155

 
(14,027
)
 
26,050

Southeast Florida:
 
 
 
 
 
Sales of homes
107,733

 
65,745

 
34,096

Sales of land
(188
)
 
(354
)
 

Equity in loss from unconsolidated entities
(152
)
 
(961
)
 
(1,152
)
Other income, net (6)
7,778

 
15,653

 
2,488

Other interest expense
(8,282
)
 
(9,026
)
 
(8,004
)
Total Southeast Florida
106,889

 
71,057

 
27,428

Houston:
 
 
 
 
 
Sales of homes
73,024

 
43,423

 
16,115

Sales of land
10,749

 
6,182

 
4,617

Equity in earnings (loss) from unconsolidated entities
2,079

 
(35
)
 
46

Other income (expense), net
(503
)
 
1,328

 
965

Other interest expense
(4,530
)
 
(4,623
)
 
(4,563
)
Total Houston
80,819

 
46,275

 
17,180

Other
 
 
 
 
 
Sales of homes
39,155

 
28,891

 
8,720

Sales of land
1,010

 
650

 

Equity in loss from unconsolidated entities
(754
)
 
(289
)
 
(2,955
)
Other expense, net
(598
)
 
(2,535
)
 
(7,435
)
Other interest expense
(10,921
)
 
(9,861
)
 
(8,665
)
Total Other
27,892

 
16,856

 
(10,335
)
Total homebuilding operating earnings
$
733,075

 
258,985

 
109,505

(1)
The increase in the operating earnings of the sales of homes in the Homebuilding East and West segment was primarily due to an increase in the number of home deliveries, an increase in the average sales price of homes delivered, an increase in gross margins and lower selling, general and administrative expenses as a percentage of home sales revenue due to the increased operating leverage.
(2)
Other income (expense), net, for the year ended November 30, 2011 includes $5.1 million of income related to the favorable resolution of a joint venture.

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(3)
Operating earnings (loss) on the sales of homes in our Homebuilding Central segment for the year ended November 30, 2011 includes $8.4 million of additional expenses associated with remedying pre-existing liabilities of a previously acquired company. Sales of homes in our Homebuilding West segment for the year ended November 30, 2011 includes an $8.1 million benefit related to changes in our cost-to-complete estimates for homebuilding communities in the close-out phase.
(4)
Lennar Homebuilding equity in earnings (loss) from unconsolidated entities for the year ended November 30, 2013, includes the sale of approximately 500 homesites to third parties by one unconsolidated entity for approximately $204 million, resulting in a gross profit of approximately $67 million. Our share of equity in earnings for the year ended November 30, 2013 related to the sales of those homesites was $19.8 million. Equity in earnings recognized by us related to the sale of land by our unconsolidated entities may vary significantly from period to period depending on the timing of those land sales and other transactions entered into by our unconsolidated entities in which we have investments. For the year ended November 30, 2012, equity in loss from unconsolidated entities related primarily to our share of operating losses of our Lennar Homebuilding unconsolidated entities, which includes $12.1 million of our share of valuation adjustments primarily related to asset sales at Lennar Homebuilding unconsolidated entities. For the year ended November 30, 2011, equity in loss from unconsolidated entities includes a $57.6 million valuation adjustment related to an asset distribution from a Lennar Homebuilding unconsolidated entity that resulted from a linked transaction where there was also a pre-tax gain of $62.3 million related to the distribution of assets of the unconsolidated entity. The pre-tax gain of $62.3 million was included in Lennar Homebuilding other income (expense), net for the year ended November 30, 2011.
(5)
For the year ended November 30, 2013, other income, net, includes a $14.4 million gain on the sale of an operating property. For the year ended November 30, 2011, other income, net, includes a pre-tax gain of $62.3 million related to the distribution of assets of a Lennar Homebuilding unconsolidated entity, $29.5 million related to the receipt of a litigation settlement and the recognition of $10.0 million of deferred management fees related to management services previously performed by us for one of the Lennar Homebuilding unconsolidated entities.
(6)
Other income, net for the year ended November 30, 2012, includes a $15.0 million gain on the sale of an operating property.
Summary of Homebuilding Data
Deliveries:
 
Years Ended November 30,
 
Homes
 
2013
 
2012
 
2011
East
6,941

 
5,440

 
4,576

Central
2,814

 
2,154

 
1,661

West
3,323

 
2,301

 
1,846

Southeast Florida
1,741

 
1,314

 
904

Houston
2,266

 
1,917

 
1,411

Other
1,205

 
676

 
447

Total
18,290

 
13,802

 
10,845

Of the total home deliveries above, 56, 95 and 99 represent deliveries from unconsolidated entities for the years ended November 30, 2013, 2012 and 2011, respectively.
 
Years Ended November 30,
 
Dollar Value (In thousands)
 
Average Sales Price
 
2013
 
2012
 
2011
 
2013
 
2012
 
2011
East
$
1,834,794

 
1,290,549

 
1,009,750

 
$
264,000

 
237,000

 
221,000

Central
736,558

 
487,317

 
355,350

 
262,000

 
226,000

 
214,000

West
1,190,385

 
728,092

 
598,202

 
358,000

 
316,000

 
324,000

Southeast Florida
502,175

 
353,841

 
239,607

 
288,000

 
269,000

 
265,000

Houston
604,212

 
449,580

 
321,908

 
267,000

 
235,000

 
228,000

Other
459,743

 
234,731

 
166,186

 
382,000

 
347,000

 
372,000

Total
$
5,327,867

 
3,544,110

 
2,691,003

 
$
291,000

 
257,000

 
248,000

Of the total dollar value of home deliveries above, $35.8 million, $51.9 million and $66.2 million represent the dollar value of home deliveries from unconsolidated entities for the years ended November 30, 2013, 2012 and 2011, respectively. The home deliveries from unconsolidated entities had an average sales price of $639,000, $547,000 and $669,000 for the years ended November 30, 2013, 2012 and 2011, respectively.

37


Sales Incentives (1):
 
Years Ended November 30,
 
(In thousands)
 
2013
 
2012
 
2011
East
$
163,039

 
169,779

 
148,424

Central
51,557

 
49,028

 
52,117

West
29,542

 
48,341

 
54,000

Southeast Florida
47,504

 
41,529

 
33,092

Houston
64,216

 
62,497

 
54,680

Other
17,230

 
17,050

 
19,421

Total
$
373,088

 
388,224

 
361,734

 
Years Ended November 30,
 
Average Sales Incentives Per
Home Delivered
 
Sales Incentives as a
% of Revenue
 
2013
 
2012
 
2011
 
2013
 
2012
 
2011
East
$
23,600

 
31,300

 
32,400

 
8.2
%
 
11.7
%
 
12.8
%
Central
18,300

 
22,800

 
31,400

 
6.5
%
 
9.1
%
 
12.8
%
West
9,000

 
21,700

 
30,900

 
2.5
%
 
6.6
%
 
9.2
%
Southeast Florida
27,300

 
31,600

 
36,600

 
8.6
%
 
10.5
%
 
12.0
%
Houston
28,300

 
32,600

 
38,800

 
9.6
%
 
12.2
%
 
14.5
%
Other
14,300

 
25,200

 
43,400

 
3.6
%
 
6.8
%
 
10.5
%
Total
$
20,500

 
28,300

 
33,700

 
6.6
%
 
10.0
%
 
12.1
%
(1)
Sales incentives relate to home deliveries during the period, excluding deliveries by unconsolidated entities.
New Orders (2):
 
Years Ended November 30,
 
Homes
 
2013
 
2012
 
2011
East
7,533

 
5,868

 
4,769

Central
2,805

 
2,498

 
1,716

West
3,231

 
2,711

 
1,965

Southeast Florida
1,879

 
1,617

 
947

Houston
2,419

 
2,078

 
1,521

Other
1,176

 
912

 
494

Total
19,043

 
15,684

 
11,412

Of the new orders above, 55, 98 and 98 represent new orders from unconsolidated entities for the years ended November 30, 2013, 2012 and 2011, respectively.
 
Years Ended November 30,
 
Dollar Value (In thousands)
 
Average Sales Price
 
2013
 
2012
 
2011
 
2013
 
2012
 
2011
East
$
2,066,065

 
1,438,268

 
1,051,624

 
$
274,000

 
245,000

 
221,000

Central
763,895

 
591,677

 
367,274

 
272,000

 
237,000

 
214,000

West
1,243,831

 
834,426

 
638,418

 
385,000

 
308,000

 
325,000

Southeast Florida
576,781

 
441,311

 
254,632

 
307,000

 
273,000

 
269,000

Houston
649,472

 
505,579

 
342,836

 
268,000

 
243,000

 
225,000

Other
485,699

 
333,232

 
189,658

 
413,000

 
365,000

 
384,000

Total
$
5,785,743

 
4,144,493

 
2,844,442

 
$
304,000

 
264,000

 
249,000


38


Of the total dollar value of new orders above, $34.8 million, $54.4 million and $65.1 million represent the dollar value of new orders from unconsolidated entities for the years ended November 30, 2013, 2012 and 2011, respectively. The new orders from unconsolidated entities had an average sales price of $632,000, $556,000 and $664,000 for the years ended November 30, 2013, 2012 and 2011, respectively.
(2) New orders represent the number of new sales contracts executed by homebuyers, net of cancellations, during the years ended November 30, 2013, 2012 and 2011.
Backlog:
 
Years Ended November 30,
 
Homes
 
2013
 
2012
 
2011
East
1,968

 
1,376

 
948

Central
644

 
653

 
309

West
616

 
708

 
298

Southeast Florida
607

 
469

 
166

Houston
669

 
516

 
355

Other
302

 
331

 
95

Total
4,806

 
4,053

 
2,171

Of the total homes in backlog above, 4, 5 and 2 represent homes in backlog from unconsolidated entities at November 30, 2013, 2012 and 2011, respectively.
 
Dollar Value (In thousands)
 
Average Sales Price
 
2013
 
2012
 
2011
 
2013
 
2012
 
2011
East
$
600,257

 
368,361

 
220,974

 
$
305,000

 
268,000

 
233,000

Central
195,762

 
168,912

 
65,256

 
304,000

 
259,000

 
211,000

West
257,498

 
202,959

 
97,292

 
418,000

 
287,000

 
326,000

Southeast Florida
215,988

 
141,146

 
52,013

 
356,000

 
301,000

 
313,000

Houston
180,665

 
135,282

 
79,800

 
270,000

 
262,000

 
225,000

Other
169,431

 
143,725

 
45,324

 
561,000

 
434,000

 
477,000

Total
$
1,619,601

 
1,160,385

 
560,659

 
$
337,000

 
286,000

 
258,000

Of the total dollar value of homes in backlog above, $2.5 million, $3.5 million and $1.0 million represent the dollar value of homes in backlog from unconsolidated entities at November 30, 2013, 2012 and 2011, respectively. The homes in backlog from unconsolidated entities had an average sales price of $624,000, $704,000 and $506,000 at November 30, 2013, 2012 and 2011, respectively.
Backlog represents the number of homes under sales contracts. Homes are sold using sales contracts, which are generally accompanied by sales deposits. In some instances, purchasers are permitted to cancel sales if they fail to qualify for financing or under certain other circumstances.
We experienced cancellation rates in our homebuilding segments and Homebuilding Other as follows:
 
Years Ended November 30,
 
2013
 
2012
 
2011
East
16
%
 
18
%
 
18
%
Central
18
%
 
18
%
 
23
%
West
15
%
 
17
%
 
18
%
Southeast Florida
12
%
 
12
%
 
13
%
Houston
21
%
 
23
%
 
21
%
Other
13
%
 
8
%
 
8
%
Total
16
%
 
17
%
 
19
%
Our cancellation rate during 2013 was within a range that is consistent with historical cancellation rates, but substantially below those we experienced from 2007 through 2010. We do not recognize revenue on homes under sales contracts until the sales are closed and title passes to the new homeowners.

39


Active Communities:
 
November 30,
 
2013
 
2012
 
2011
East
197

 
167

 
146

Central
101

 
74

 
68

West
80

 
61

 
73

Southeast Florida
30

 
31

 
30

Houston
79

 
70

 
73

Other
50

 
56

 
32

Total
537

 
459

 
422

Of the total active communities listed above, 2 communities represent active communities being developed by unconsolidated entities during the periods ended November 30, 2013, 2012 and 2011.
Deliveries from New Higher Margin Communities (3):
 
Years Ended November 30,
 
Homes
 
2013
 
2012
 
2011
East
4,781

 
3,014

 
1,786

Central
1,356

 
884

 
504

West
2,090

 
1,375

 
882

Southeast Florida
1,137

 
933

 
523

Houston
756

 
330

 
121

Other
962

 
343

 
90

Total
11,082

 
6,879

 
3,906

 
Dollar Value (In thousands)
 
Average Sales Price
 
2013
 
2012