Lennar Homebuilding Senior Notes and Other Debts Payable



	November 30,
(Dollars in thousands)	2015		2014
6.50% senior notes due 2016	$	249,905	249,735
12.25% senior notes due 2017	396,252		394,415
4.75% senior notes due 2017	397,736		396,994
6.95% senior notes due 2018	247,632		246,816
4.125% senior notes due 2018	273,319		272,747
4.500% senior notes due 2019	497,210		496,419
4.50% senior notes due 2019	596,622		347,027
2.75% convertible senior notes due 2020	233,225		429,005
3.25% convertible senior notes due 2021	398,194		393,721
4.750% senior notes due 2022	567,325		566,243
4.875% senior notes due 2023	393,545		—
4.750% senior notes due 2025	495,784		—
5.60% senior notes due 2015	—		500,092
Mortgages notes on land and other debt	278,381		368,052
	$	5,025,130	4,661,266

The carrying amount of the senior notes listed above are net of debt issuance costs as the Company adopted ASU 2015-03 (see Note 1). Debt issuance costs as of November 30, 2015 and 2014 were $26.4 million and $28.9 million, respectively

In April 2015, the Company amended its unsecured revolving credit facility (the "Credit Facility") to reduce the interest rate and increase the maximum potential borrowing capacity. At November 30, 2015, the Company had a $1.6 billion Credit Facility, which includes a $163 million accordion feature, subject to additional commitments with certain financial institutions. The maturity for $1.3 billion of the Credit Facility is in June 2019, with the remainder maturing in June 2018. 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. The credit agreement also provides that up to $500 million in commitments may be used for letters of credit. As of both November 30, 2015 and 2014, the Company had no outstanding borrowings under the Credit Facility. Under the Credit Facility agreement, the Company is required to maintain a minimum consolidated tangible net worth, a maximum leverage ratio and either a liquidity or an interest coverage ratio. These ratios are calculated per the Credit Facility agreement, which involves adjustments to GAAP financial measures. The Company believes it was in compliance with its debt covenants at November 30, 2015. In addition, the Company had $315 million letter of credit facilities with different financial institutions.

The Company’s performance letters of credit outstanding were $236.5 million and $234.1 million at November 30, 2015 and 2014, respectively. The Company’s financial letters of credit outstanding were $216.7 million and $190.4 million at November 30, 2015 and 2014, respectively. Performance letters of credit are generally posted with regulatory bodies to guarantee the Company’s performance of certain development and construction activities. Financial letters of credit are generally posted in lieu of cash deposits on option contracts, for insurance risks, credit enhancements and as other collateral. Additionally, at November 30, 2015, the Company had outstanding performance and surety bonds related to site improvements at various projects (including certain projects of the Company’s joint ventures) of $1.3 billion, which includes $223.4 million related to pending litigation. Although significant development and construction activities have been completed related to these site improvements, these bonds are generally not released until all development and construction activities are completed. As of November 30, 2015, there were approximately $490.0 million, or 38%, of anticipated future costs to complete related to these site improvements. The Company does not presently anticipate any draws upon these bonds or letters of credit, but if any such draws occur, the Company does not believe they would have a material effect on its financial position, results of operations or cash flows.

The terms of each of the Company's senior and convertible senior notes outstanding at November 30, 2015 were as follows:



Senior and Convertible Senior Notes Outstanding (1)	Principal Amount		Net Proceeds (2)		Price		Dates Issued
(Dollars in thousands)
6.50% senior notes due 2016	$	250,000	$	248,900	99.873	%	April 2006
12.25% senior notes due 2017	400,000		386,700		98.098	%	April 2009
4.75% senior notes due 2017	400,000		395,900		100	%	July 2012, August 2012
6.95% senior notes due 2018	250,000		243,900		98.929	%	May 2010
4.125% senior notes due 2018 (3)	275,000		271,718		99.998	%	February 2013
4.500% senior notes due 2019	500,000		495,725		(4)		February 2014
4.50% senior notes due 2019	600,000		595,801		(5)		November 2014, February 2015
2.75% convertible senior notes due 2020 (6)	446,000		436,400		100	%	November 2010
3.25% convertible senior notes due 2021	400,000		391,600		100	%	November 2011, December 2011
4.750% senior notes due 2022 (3)	575,000		567,585		(7)		October 2012, February 2013, April 2013
4.875% senior notes due 2023	400,000		393,622		99.169	%	November 2015
4.750% senior notes due 2025	500,000		495,528		100	%	April 2015


(1)	Interest is payable semi-annually for each of the series of senior and convertible senior notes. The senior and convertible senior notes are unsecured and unsubordinated, but are guaranteed by substantially all of the Company's 100% owned homebuilding subsidiaries.


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


(3)	During 2013, the Company incurred additional interest with respect to the 4.125% senior notes due 2018 and the 4.750% senior notes due 2022 because the registration statements relating to the notes did not become effective by, and the exchange offers were not consummated by, the dates specified in the Registration Rights Agreement related to such notes.


(4)	The Company issued $400 million aggregate principal amount at a price of 100% and $100 million aggregate principal amount at a price of 100.5%.


(5)	The Company issued $350 million aggregate principal amount at a price of 100% and $250 million aggregate principal amount at a price of 100.25%.


(6)	As of November 30, 2015, the principal amount outstanding for the 2.75% convertible senior notes was $233.9 million.


(7)	The Company issued $350 million aggregate principal amount at a price of 100%, $175 million aggregate principal amount at a price of 98.073% and $50 million aggregate principal amount at a price of 98.250%.

In April 2015, the Company retired its 5.60% senior notes due May 2015 (the "5.60% Senior Notes") for 100% of the $500 million outstanding principal amount, plus accrued and unpaid interest. At November 30, 2014, the carrying value of the 5.60% Senior Notes was $500.1 million.

The 3.25% convertible senior notes due 2021 (the "3.25% Convertible Senior Notes") are convertible into shares of Class A common stock at any time prior to maturity or redemption at the initial conversion rate of 42.5555 shares of Class A common stock per $1,000 principal amount of the 3.25% Convertible Senior Notes or 17,022,200 shares of Class A common stock if all the 3.25% Convertible Senior Notes are converted, which is equivalent to an initial conversion price of approximately $23.50 per share of Class A common stock, subject to anti-dilution adjustments. The shares are included in the calculation of diluted earnings per share. Holders of the 3.25% Convertible Senior Notes have the right to require the Company to repurchase them for cash equal to 100% of their principal amount, plus accrued but unpaid interest on November 15, 2016. The Company has the right to redeem the 3.25% Convertible Senior Notes at any time on or after November 20, 2016 for 100% of their principal amount, plus accrued but unpaid interest.

The 2.75% convertible senior notes due 2020 (the “2.75% Convertible Senior Notes”) are convertible into cash, shares of Class A common stock or a combination of both, at the Company’s election. However, it is the Company’s intent to settle the face value of the 2.75% Convertible Senior Notes in cash. Shares are included in the calculation of diluted earnings per share because even though it is the Company's intent to settle the face value of the 2.75% Convertible Senior Notes in cash, the Company's volume weighted average stock price exceeded the conversion price. For the years ended November 30, 2015, 2014 and 2013, the Company's volume weighted average stock price was $48.61, $39.96 and $37.06, respectively, which exceeded the conversion price, thus 8.6 million shares, 9.0 million shares and 8.2 million shares, respectively, were included in the calculation of diluted earnings per share.

At November 30, 2015, holders may convert the 2.75% Convertible Senior Notes at the initial conversion rate of 45.1794 shares of Class A common stock per $1,000 principal amount or 10,567,145 shares of Class A common stock if all the remaining 2.75% Convertible Senior Notes are converted, which is equivalent to an initial conversion price of approximately $22.13 per share of Class A common stock, subject to anti-dilution adjustments. Holders of the 2.75% Convertible Senior Notes have the right to convert them during any fiscal quarter (and only during such fiscal quarter, except if they are called for redemption or about to mature), if the last reported sale price of the Company’s Class A common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day. Holders of the 2.75% Convertible Senior Notes had the right to require the Company to repurchase them for cash equal to 100% of their principal amount, plus accrued but unpaid interest, on December 15, 2015, but none of them elected to do so. The Company has the right to redeem the 2.75% Convertible Senior Notes at any time on or after December 20, 2015 for 100% of their principal amount, plus accrued but unpaid interest.

During the year ended November 30, 2015, the Company exchanged and converted approximately $212 million in aggregate principal amount of the 2.75% Convertible Senior Notes for approximately $213 million in cash and 5.2 million shares of Class A common stock, including accrued and unpaid interest through the dates of completion of the exchanges and conversions. Subsequent to November 30, 2015, the Company exchanged and converted approximately $89 million in aggregate principal amount of the 2.75% Convertible Senior Notes for approximately $89 million in cash and 2.1 million shares of Class A common stock, including accrued and unpaid interest through the date of completion of the conversion.

For its 2.75% Convertible Senior Notes, the Company will be required to pay contingent interest with regard to any interest period beginning with the interest period commencing December 20, 2015 and ending June 14, 2016, and for each subsequent six-month period commencing on an interest payment date to, but excluding, the next interest payment date, if the average trading price of the 2.75% Convertible Senior Notes during the five consecutive trading days ending on the second trading day immediately preceding the first day of the applicable interest period exceeds 120% of the principal amount of the 2.75% Convertible Senior Notes. The amount of contingent interest payable per $1,000 principal amount of notes during the applicable interest period will equal 0.75% per year of the average trading price of such $1,000 principal amount of 2.75% Convertible Senior Notes during the five trading day reference period.

Certain provisions under ASC 470, Debt, require the issuer of certain convertible debt instruments that may be settled in cash on conversion to separately account for the liability and equity components of the instrument in a manner that reflects the issuer’s non-convertible debt borrowing rate. The Company has applied these provisions to its 2.75% Convertible Senior Notes. At issuance, the Company estimated the fair value of the 2.75% Convertible Senior Notes using similar debt instruments that did not have a conversion feature and allocated the residual value to an equity component that represented the estimated fair value of the conversion feature at issuance. The debt discount of the 2.75% Convertible Senior Notes was amortized over the five years ended November 30, 2015, and the annual effective interest rate was 7.1% after giving effect to the amortization of the discount and deferred financing costs. At November 30, 2015 and 2014, the principal amount of the 2.75% Convertible Senior Notes was $233.9 million and $446.0 million, respectively. At November 30, 2015 and 2014, the carrying amount of the equity component included in stockholders’ equity was $0.6 million and $15.0 million, respectively, and the net carrying amount, net of debt issuance costs, of the 2.75% Convertible Senior Notes included in Lennar Homebuilding senior notes and other debts payable was $233.2 million and $429.0 million, respectively. During the years ended November 30, 2015 and 2014, the amount of interest incurred relating to both the contractual interest and amortization of the discount was $21.2 million and $27.3 million, respectively.

Although the guarantees by substantially all of the Company's 100% owned homebuilding subsidiaries are full, unconditional and joint and several while they are in effect, (i) a subsidiary will cease to be a guarantor at any time when it is not directly or indirectly guaranteeing at least $75 million of debt of Lennar Corporation (the parent company), and (ii) a subsidiary will be released from its guarantee and any other obligations it may have regarding the senior notes if all or substantially all its assets, or all of its capital stock, are sold or otherwise disposed of.

At November 30, 2015, the Company had mortgage notes on land and other debt due at various dates through 2030 bearing interest at rates up to 7.5% with an average interest rate of 3.2%. At November 30, 2015 and 2014, the carrying amount of the mortgage notes on land and other debt was $278.4 million and $368.1 million, respectively. During the years ended November 30, 2015 and 2014, the Company retired $258.1 million and $285.9 million, respectively, of mortgage notes on land and other debt.

The minimum aggregate principal maturities of senior notes and other debts payable during the five years subsequent to November 30, 2015 and thereafter are as follows:



(In thousands)	Debt Maturities (1)
2016	$	374,665
2017	489,285
2018	655,824
2019	1,377,857
2020	2,857
Thereafter	2,161,026


(1)	Some of the debt maturities included in these amounts relate to convertible senior notes that are putable to the Company at earlier dates than in this table, as described in the detailed description of each of the convertible senior notes.

The Company expects to pay its near-term maturities as they come due through cash generated from operations, the issuance of additional debt or equity offerings as well as cash borrowed under the Company's Credit Facility.