Operating and Reporting Segments

As of and for the year ended November 30, 2015, 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 which the Company’s 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.

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.

As of November 30, 2015, 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 real estate related securities as well as providing strategic real estate capital. Rialto’s operating earnings consists of revenues generated primarily from gains from securitization transactions and interest income from the RMF business, interest income associated with portfolios of real estate loans acquired and other portfolios of real estate loans and assets acquired, asset management, due diligence and underwriting fees derived from the real estate investment funds managed by the Rialto segment, fees for sub-advisory services, other income (expense), net, consisting primarily of gains upon foreclosure of 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 from the sales of land, revenue from construction activities and management fees generated from joint ventures, and equity in earnings (loss) from unconsolidated entities, less the cost of sales of land, expenses related to construction activities 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. 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:



	November 30,
(In thousands)	2015		2014	2013
Assets:
Homebuilding East	$	2,423,389	2,323,978	1,890,138
Homebuilding Central	1,421,195		1,233,991	963,815
Homebuilding West	4,157,616		3,454,611	3,108,395
Homebuilding Southeast Florida	717,215		722,706	757,125
Homebuilding Houston	481,386		398,538	307,864
Homebuilding Other	858,000		880,912	808,496
Rialto	1,505,500		1,451,983	1,474,591
Lennar Financial Services	1,425,837		1,177,053	796,710
Lennar Multifamily	415,352		268,014	147,089
Corporate and unallocated	1,014,019		1,011,365	985,662
Total assets	$	14,419,509	12,923,151	11,239,885
Lennar Homebuilding investments in unconsolidated entities:
Homebuilding East	$	7,852	10,620	19,569
Homebuilding Central	35,850		35,772	56,136
Homebuilding West	649,170		564,643	600,622
Homebuilding Southeast Florida	32,721		32,670	36,595
Homebuilding Houston	75		162	2,074
Homebuilding Other	15,883		12,970	1,953
Total Lennar Homebuilding investments in unconsolidated entities	$	741,551	656,837	716,949
Rialto investments in unconsolidated entities	$	224,869	175,700	154,573
Lennar Multifamily investments in unconsolidated entities	$	250,876	105,674	46,301
Rialto goodwill	$	5,396	5,396	—
Lennar Financial Services goodwill	$	38,854	38,854	34,046



	Years Ended November 30,
(In thousands)	2015			2014		2013
Revenues:
Homebuilding East	$	2,761,824		2,247,681		1,842,162
Homebuilding Central	1,213,600			936,940		743,475
Homebuilding West	2,365,519			1,796,375		1,161,332
Homebuilding Southeast Florida	801,854			692,898		502,175
Homebuilding Houston	730,712			713,113		641,161
Homebuilding Other	593,436			638,123		464,642
Lennar Financial Services	620,527			454,381		427,342
Rialto	221,923			230,521		138,060
Lennar Multifamily	164,613			69,780		14,746
Total revenues (1)	$	9,474,008		7,779,812		5,935,095
Operating earnings (loss):
Homebuilding East	$	409,185		340,108		251,117
Homebuilding Central	112,752			75,585		55,203
Homebuilding West (2)	435,818			292,719		211,155
Homebuilding Southeast Florida	171,678			161,963		106,889
Homebuilding Houston	95,946			107,622		80,819
Homebuilding Other	46,262			55,724		27,892
Lennar Financial Services	127,795			80,138		85,786
Rialto	33,595			44,079		26,128
Lennar Multifamily	(7,171		)	(10,993	)	(16,988	)
Total operating earnings	1,425,860			1,146,945		828,001
Corporate general and administrative expenses	216,244			177,161		146,060
Earnings before income taxes	$	1,209,616		969,784		681,941


(1)	Total revenues were net of sales incentives of $518.1 million ($21,400 per home delivered) for the year ended November 30, 2015, $449.2 million ($21,400 per home delivered) for the year ended November 30, 2014 and $373.1 million ($20,500 per home delivered) for the year ended November 30, 2013.


(2)	For the year ended November 30, 2015, operating earnings included $82.8 million of equity in earnings related to transactions by Heritage Fields El Toro, one of the Company's unconsolidated entities ("El Toro"), and a $6.5 million gain on the sale of an operating property.



	Years Ended November 30,
(In thousands)	2015			2014		2013
Lennar Homebuilding interest expense:
Homebuilding East	$	71,439		65,437		65,123
Homebuilding Central	26,745			24,593		28,534
Homebuilding West	70,397			58,999		63,106
Homebuilding Southeast Florida	22,986			21,307		19,237
Homebuilding Houston	14,535			14,914		16,412
Homebuilding Other	14,045			16,289		21,844
Total Lennar Homebuilding interest expense	$	220,147		201,539		214,256
Lennar Financial Services interest income, net	$	13,547		6,585		5,154
Rialto interest expense	$	43,127		36,531		13,163
Depreciation and amortization:
Homebuilding East	$	13,529		10,860		8,955
Homebuilding Central	6,640			5,568		3,569
Homebuilding West	17,683			14,533		10,594
Homebuilding Southeast Florida	3,348			3,039		2,047
Homebuilding Houston	3,241			3,252		2,647
Homebuilding Other	4,477			5,729		4,213
Lennar Financial Services	6,100			4,539		2,755
Rialto	7,758			7,367		5,588
Lennar Multifamily	1,110			595		484
Corporate and unallocated	23,522			23,641		23,056
Total depreciation and amortization	$	87,408		79,123		63,908
Net additions to (disposals of) operating properties and equipment:
Homebuilding East	$	251		350		97
Homebuilding Central	(18		)	578		201
Homebuilding West (1)	(11,482		)	6,719		(128,058	)
Homebuilding Southeast Florida (2)	65			(42,780	)	78
Homebuilding Houston	—			6		—
Homebuilding Other (3)	(72,472		)	1,042		561
Lennar Financial Services	3,306			4,502		3,648
Rialto	9,382			4,361		4,052
Lennar Multifamily	2,147			1,907		92
Corporate and unallocated	27,466			1,977		401
Total net disposals of operating properties and equipment	$	(41,355	)	(21,338	)	(118,928	)
Lennar Homebuilding equity in earnings (loss) from unconsolidated entities:
Homebuilding East	$	532		2,254		678
Homebuilding Central	57			(131	)	(87	)
Homebuilding West (4)	62,960			(1,647	)	22,039
Homebuilding Southeast Florida	(414		)	(576	)	(152	)
Homebuilding Houston	18			121		2,079
Homebuilding Other	220			(376	)	(754	)
Total Lennar Homebuilding equity in earnings (loss) from unconsolidated entities	$	63,373		(355	)	23,803
Rialto equity in earnings from unconsolidated entities	$	22,293		59,277		22,353
Lennar Multifamily equity in earnings (loss) from unconsolidated entities	$	19,518		14,454		(271	)


(1)	For the years ended November 30, 2015 and 2013, net disposals of operating properties and equipment included the sale of operating properties with a basis of $59.4 million and $127.1 million, respectively.


(2)	For the year ended November 30, 2014, net disposals of operating properties and equipment included the sale of an operating property with a basis of $44.1 million.


(3)	For the year ended November 30, 2015, net disposals of operating properties and equipment included the sale of an operating property with a basis of $73.3 million.

(4)

For the year ended November 30, 2015, Lennar Homebuilding equity in earnings from unconsolidated entities included $82.8 million of equity in earnings from El Toro, for details refer to Note 4. For the year ended November 30, 2014, Lennar Homebuilding equity in loss from unconsolidated entities related primarily to the Company's share of operating losses from various Lennar Homebuilding West unconsolidated entities, which included $4.3 million of the Company's share of valuation adjustments related to assets of Lennar Homebuilding's unconsolidated entities, partially offset by $4.7 million of equity in earnings as a result of third-party land sales by one unconsolidated entity. For the year ended November 30, 2013, Lennar Homebuilding equity in earnings from unconsolidated entities included $19.8 million of equity in earnings primarily as a result of sales of homesites to third parties by one unconsolidated entity.