Operating And Reporting Segments

3 Months Ended

Feb. 28, 2015

Segment Reporting [Abstract]

Operating And Reporting Segments

Operating and Reporting Segments

The Company’s operating segments are aggregated into reportable segments, based primarily upon similar economic characteristics, geography and product type. The Company’s reportable segments consist of:

(1) Homebuilding East

(2) Homebuilding Central

(3) Homebuilding West

(4) Homebuilding Southeast Florida

(5) Homebuilding Houston

(6) Lennar Financial Services

(7) Rialto

(8) Lennar Multifamily

Information about homebuilding activities in states which are not economically similar to other states in the same geographic area is grouped under “Homebuilding Other,” which is not considered a reportable segment.

Evaluation of segment performance is based primarily on operating earnings (loss) before income taxes. Operations of the Company’s homebuilding segments primarily include the construction and sale of single-family attached and detached homes, as well as the purchase, development and sale of residential land directly and through the Company’s unconsolidated entities. Operating earnings (loss) for the homebuilding segments consist of revenues generated from the sales of homes and land, equity in earnings (loss) from unconsolidated entities and other income (expense), net, less the cost of homes sold and land sold, selling, general and administrative expenses and other interest expense of the segment.

The Company’s reportable homebuilding segments and all other homebuilding operations not required to be reported separately 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, 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.

Operations of the Lennar Financial Services segment include primarily mortgage financing, title insurance and closing services for both buyers of the Company’s homes and others. The Lennar Financial Services segment sells substantially all of the loans it originates within a short period in the secondary mortgage market, the majority of which are sold on a servicing released, non-recourse basis. After the loans are sold, the Company retains potential liability for possible claims by purchasers that it breached certain limited industry-standard representations and warranties in the loan sale agreements. Lennar Financial Services’ operating earnings consist of revenues generated primarily from mortgage financing, title insurance and closing services, less the cost of such services and certain selling, general and administrative expenses incurred by the segment. The Lennar Financial Services segment operates generally in the same states as the Company’s homebuilding operations as well as in other states.

Operations of the Rialto segment include raising, investing and managing third-party capital, originating and securitizing commercial mortgage loans, as well as investing its 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 securities, as well as providing strategic real estate capital. Rialto’s operating earnings consist of revenues generated primarily from gains from securitization transactions and interest income from the Rialto Mortgage Finance (“RMF”) business, interest income associated with portfolios of real estate loans acquired in partnership with the FDIC and other portfolios of real estate loans and assets acquired, asset management, due diligence and underwriting fees derived from the segment's investments in the real estate investment funds managed by the Rialto segment, fees for sub-advisory services, distributions with regard to partnership interests, other income (expense), net, consisting primarily of gains upon foreclosure of real estate owned (“REO”) and gains on sale of REO, and equity in earnings (loss) from unconsolidated entities, less the costs incurred by the segment for managing portfolios, costs related to RMF, REO expenses and other general and administrative expenses.

Operations of the Lennar Multifamily segment include revenues generated primarily from construction activities and management fees generated from joint ventures as well as revenues from the sales of land and equity in earnings (loss) from unconsolidated entities, less expenses related to construction activities, the costs related to sales of land and general and administrative expenses.

Each reportable segment follows the same accounting policies described in Note 1 – “Summary of Significant Accounting Policies” to the consolidated financial statements in the Company’s Form 10-K for the year ended November 30, 2014.and Section 4 of Item 2 of this Form 10-Q, “Critical Accounting Policies.” Operational results of each segment are not necessarily indicative of the results that would have occurred had the segment been an independent, stand-alone entity during the periods presented.

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

(In thousands)	February 28, 2015		November 30, 2014
Assets:
Homebuilding East	$	2,410,301	2,323,978
Homebuilding Central	1,343,019		1,233,991
Homebuilding West	3,733,950		3,454,611
Homebuilding Southeast Florida	737,586		722,706
Homebuilding Houston	458,554		398,538
Homebuilding Other	913,372		880,912
Rialto	1,379,841		1,458,152
Lennar Financial Services	1,113,960		1,177,053
Lennar Multifamily	280,366		268,014
Corporate and unallocated	749,696		1,040,312
Total assets	$	13,120,645	12,958,267

	Three Months Ended
	February 28,
(In thousands)	2015			2014
Revenues:
Homebuilding East	$	468,335		390,508
Homebuilding Central	210,508			162,494
Homebuilding West	382,773			315,015
Homebuilding Southeast Florida	142,348			102,164
Homebuilding Houston	131,257			130,623
Homebuilding Other	106,437			130,581
Lennar Financial Services	124,827			76,952
Rialto	41,197			46,955
Lennar Multifamily	36,457			7,803
Total revenues (1)	$	1,644,139		1,363,095
Operating earnings (loss):
Homebuilding East	$	58,247		50,652
Homebuilding Central	15,052			10,660
Homebuilding West (2)	82,493			53,793
Homebuilding Southeast Florida	28,286			20,558
Homebuilding Houston	17,015			21,671
Homebuilding Other (3)	6,551			4,884
Lennar Financial Services	15,527			4,465
Rialto	2,808			3,504
Lennar Multifamily	(5,682		)	(6,199	)
Total operating earnings	220,297			163,988
Corporate general and administrative expenses	43,654			38,112
Earnings before income taxes	$	176,643		125,876

(1) Total revenues were net of sales incentives of $93.6 million ($21,800 per home delivered) for the three months ended February 28, 2015 and $76.5 million ($21,300 per home delivered) for the three months ended February 28, 2014.

(2) For the three months ended February 28, 2015, operating earnings included Lennar Homebuilding equity in earnings from unconsolidated entities of $31.3 million primarily related to the sale of approximately 600 homesites to third parties by Heritage Fields El Toro, one of the Company's unconsolidated entities.

(3) For the three months ended February 28, 2014, operating earnings included $1.0 million in write-offs of option deposits and pre-acquisition costs.