UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 20192020
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from _______ To _______
Commission File Number: 1-11749
Lennar Corporation
(Exact name of registrant as specified in its charter)
Delaware
95-4337490
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)
(305) 559-4000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, par value $.10

LENNew York Stock Exchange
Class B Common Stock, par value $.10

LEN.BNew York Stock Exchange
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.    YESYes  ý    NONo  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    YESYes  ý    NONo  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerýAccelerated filer¨Emerging growth company☐
Non-accelerated filer¨Smaller reporting company¨
☐Emerging growth company¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YESYes  ¨☐    NONo  ý
Common stock outstanding as of May 31, 2019:2020:
Class A 284,403,290274,618,334
Class B 37,743,09037,623,183


LENNAR CORPORATION
FORM 10-Q
For the period ended May 31, 2020
Part I
Item 1.
3
3
5
6
8
Item 2.
37
Item 3.
56
Item 4.
57
Part II
57
Item 1.
57
Item 1A.
57
Item 2.
57
Item 3 - 5.
57
Item 6.
58
59


Part I. Financial Information
Item 1. Financial Statements

Lennar Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(Dollars in thousands)
(unaudited)
May 31,November 30,
2020 (1)2019 (1)
ASSETS
Homebuilding:
Cash and cash equivalents$1,398,682  1,200,832  
Restricted cash9,569  9,698  
Receivables, net299,494  329,124  
Inventories:
Finished homes and construction in progress9,609,146  9,195,721  
Land and land under development7,938,451  8,267,647  
Consolidated inventory not owned399,809  313,139  
Total inventories17,947,406  17,776,507  
Investments in unconsolidated entities973,044  1,009,035  
Goodwill3,442,359  3,442,359  
Other assets1,080,186  1,021,684  
25,150,740  24,789,239  
Financial Services2,577,805  3,006,024  
Multifamily1,127,929  1,068,831  
Lennar Other452,551  495,417  
Total assets$29,309,025  29,359,511  
 May 31, November 30,
 2019 (1) 2018 (1)
ASSETS   
Homebuilding:   
Cash and cash equivalents$800,678
 1,337,807
Restricted cash11,687
 12,399
Receivables, net303,595
 236,841
Inventories:   
Finished homes and construction in progress10,045,155
 8,681,357
Land and land under development8,334,678
 8,178,388
Consolidated inventory not owned394,655
 208,959
Total inventories18,774,488
 17,068,704
Investments in unconsolidated entities983,683
 870,201
Goodwill3,442,359
 3,442,359
Other assets1,202,965
 1,355,782
 25,519,455
 24,324,093
Financial Services2,468,263
 2,778,910
Multifamily1,046,196
 874,219
Lennar Other549,150
 588,959
Total assets$29,583,064
 28,566,181
(1)
(1)Under certain provisions of Accounting Standards Codification ("ASC") Topic 810, Consolidations, ("ASC 810") the Company is required to separately disclose on its condensed consolidated balance sheets the assets owned by consolidated variable interest entities ("VIEs") and liabilities of consolidated VIEs as to which neither Lennar Corporation, or any of its subsidiaries, has any obligations.
As of May 31, 2019,2020, total assets include $1.4 billion related to consolidated VIEs of which $52.9 million is included in Homebuilding cash and cash equivalents, $103.3 million in Homebuilding receivables, net, $240.1 million in Homebuilding finished homes and construction in progress, $301.0 million in Homebuilding land and land under development, $394.7 million in Homebuilding consolidated inventory not owned, $4.1 million in Homebuilding investments in unconsolidated entities, $10.4 million in Homebuilding other assets, $187.2 million in Financial Services assets, $50.8 million in Multifamily assets and $7.2 million in Lennar Other assets.
As of November 30, 2018, total assets include $666.2$873.0 million related to consolidated VIEs of which $57.6$9.1 million is included in Homebuilding cash and cash equivalents, $0.2 million in Homebuilding receivables, net, $81.7$110.6 million in Homebuilding finished homes and construction in progress, $293.1$308.4 million in Homebuilding land and land under development, $209.0$391.6 million in Homebuilding consolidated inventory not owned, $3.8$2.0 million in Homebuilding investments in unconsolidated entities, $10.5$8.0 million in Homebuilding other assets and $10.3$43.3 million in Lennar OtherMultifamily assets.
As of November 30, 2019, total assets include $980.2 million related to consolidated VIEs of which $15.5 million is included in Homebuilding cash and cash equivalents, $0.2 million in Homebuilding receivables, net, $97.5 million in Homebuilding finished homes and construction in progress, $283.2 million in Homebuilding land and land under development, $301.0 million in Homebuilding consolidated inventory not owned, $2.5 million in Homebuilding investments in unconsolidated entities, $10.0 million in Homebuilding other assets, $221.2 million in Financial Services assets and $49.1 million in Multifamily assets.
See accompanying notes to condensed consolidated financial statements.
3
Lennar Corporation and Subsidiaries
Condensed Consolidated Balance Sheets – (Continued)
(In thousands, except shares and per share amounts)
(unaudited)

May 31,November 30,
2020 (2)2019 (2)
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable$1,033,558  1,069,179  
Liabilities related to consolidated inventory not owned344,074  260,266  
Senior notes and other debts payable, net7,495,674  7,776,638  
Other liabilities1,900,970  1,900,955  
10,774,276  11,007,038  
Financial Services1,663,548  2,056,450  
Multifamily222,387  232,155  
Lennar Other16,190  30,038  
Total liabilities12,676,401  13,325,681  
Stockholders’ equity:
Preferred stock—  —  
Class A common stock of $0.10 par value; Authorized: May 31, 2020 and November 30, 2019 - 400,000,000 shares; Issued: May 31, 2020 - 298,037,274 shares and November 30, 2019 - 297,119,153 shares29,804  29,712  
Class B common stock of $0.10 par value; Authorized: May 31, 2020 and November 30, 2019 - 90,000,000 shares; Issued: May 31, 2020 - 39,443,104 shares and November 30, 2019 - 39,443,064 shares3,944  3,944  
Additional paid-in capital8,630,442  8,578,219  
Retained earnings9,132,714  8,295,001  
Treasury stock, at cost; May 31, 2020 - 23,418,940 shares of Class A common stock and 1,819,921 shares of Class B common stock; November 30, 2019 - 18,964,973 shares of Class A common stock and 1,704,630 shares of Class B common stock(1,253,863) (957,857) 
Accumulated other comprehensive income (loss)(338) 498  
Total stockholders’ equity16,542,703  15,949,517  
Noncontrolling interests89,921  84,313  
Total equity16,632,624  16,033,830  
Total liabilities and equity$29,309,025  29,359,511  
(2)Under certain provisions of ASC 810, the Company is required to separately disclose on its condensed consolidated balance sheets the assets owned by consolidated VIEs and liabilities of consolidated VIEs as to which neither Lennar Corporation, or any of its subsidiaries, has any obligations.
 May 31, November 30,
 2019 (2) 2018 (2)
LIABILITIES AND EQUITY   
Homebuilding:   
Accounts payable$1,067,984
 1,154,782
Liabilities related to consolidated inventory not owned346,287
 175,590
Senior notes and other debts payable9,390,941
 8,543,868
Other liabilities1,804,956
 1,902,658
 12,610,168
 11,776,898
Financial Services1,481,006
 1,868,202
Multifamily215,316
 170,616
Lennar Other30,039
 67,508
Total liabilities14,336,529
 13,883,224
Stockholders’ equity:   
Preferred stock—
 —
Class A common stock of $0.10 par value; Authorized: May 31, 2019 and November 30, 2018 - 400,000,000 shares; Issued: May 31, 2019 - 295,034,256 shares and November 30, 2018 - 294,992,562 shares29,503
 29,499
Class B common stock of $0.10 par value; Authorized: May 31, 2019 and November 30, 2018 - 90,000,000 shares; Issued: May 31, 2019 - 39,442,649 shares and November 30, 2018 - 39,442,219 shares3,944
 3,944
Additional paid-in capital8,529,828
 8,496,677
Retained earnings7,132,908
 6,487,650
Treasury stock, at cost; May 31, 2019 - 10,630,966 shares of Class A common stock and 1,699,559 shares of Class B common stock; November 30, 2018 - 8,498,203 shares of Class A common stock and 1,698,424 shares of Class B common stock(537,106) (435,869)
Accumulated other comprehensive income (loss)227
 (366)
Total stockholders’ equity15,159,304
 14,581,535
Noncontrolling interests87,231
 101,422
Total equity15,246,535
 14,682,957
Total liabilities and equity$29,583,064
 28,566,181
(2)Under certain provisions of ASC 810, the Company is required to separately disclose on its condensed consolidated balance sheets the assets owned by consolidated VIEs and liabilities of consolidated VIEs as to which neither Lennar Corporation, or any of its subsidiaries, has any obligations.
As of May 31, 2019,2020, total liabilities include $928.9$450.4 million related to consolidated VIEs as to which there was no recourse against the Company, of which $17.3$20.9 million is included in Homebuilding accounts payable, $370.7 million in Homebuilding senior notes and other debts payable, $346.3$335.5 million in Homebuilding liabilities related to consolidated inventory not owned, $1.7$74.5 million in Homebuilding senior notes and other debts payable, $8.6 million in Homebuilding other liabilities $190.6and $11.0 million in Financial Services liabilities, $1.0 million in Multifamily liabilities and $1.3 million in Lennar Other liabilities.
As of November 30, 2018,2019, total liabilities include $242.5$549.7 million related to consolidated VIEs as to which there was no recourse against the Company, of which $11.4$13.7 million is included in Homebuilding accounts payable, $51.9 million in Homebuilding senior notes and other debt payable, $175.6$247.5 million in Homebuilding liabilities related to consolidated inventory not owned, $2.6$47.1 million in Homebuilding senior notes and other debt payable, $8.9 million in Homebuilding other liabilities, and $1.0$231.1 million in Lennar OtherFinancial Services liabilities and $1.4 million in Multifamily liabilities.
See accompanying notes to condensed consolidated financial statements.
4
Lennar Corporation and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(Dollars in thousands, except per share amounts)
(unaudited)


 Three Months Ended Six Months Ended
 May 31, May 31,
 2019 2018 2019 2018
Revenues:       
Homebuilding$5,195,599
 5,063,997
 8,819,320
 7,726,090
Financial Services204,216
 249,709
 347,527
 445,796
Multifamily147,412
 117,693
 244,806
 210,949
Lennar Other15,663
 27,662
 19,319
 57,017
Total revenues5,562,890
 5,459,061
 9,430,972
 8,439,852
Costs and expenses:       
Homebuilding4,587,259
 4,636,063
 7,826,094
 7,040,096
Financial Services147,999
 193,935
 272,338
 364,160
Multifamily148,716
 117,186
 249,894
 214,385
Lennar Other3,194
 21,758
 4,816
 48,365
Acquisition and integration costs related to CalAtlantic—
 23,875
 —
 128,070
Corporate general and administrative76,113
 84,915
 155,456
 152,725
Total costs and expenses4,963,281
 5,077,732
 8,508,598
 7,947,801
Homebuilding equity in earnings (loss) from unconsolidated entities19,614
 (12,670) 5,858
 (26,798)
Homebuilding other income (expense), net (1)(46,165) 9,879
 (47,700) 179,874
Multifamily equity in earnings (loss) from unconsolidated entities and other gain(3,018) 14,281
 7,563
 17,023
Lennar Other equity in earnings (loss) from unconsolidated entities(4,978) 4,560
 3,352
 13,515
Lennar Other expense, net(5,663) (6,569) (12,924) (15,427)
Earnings before income taxes559,399
 390,810
 878,523
 660,238
Provision for income taxes (2)(140,530) (75,961) (220,230) (208,572)
Net earnings (including net earnings (loss) attributable to noncontrolling interests)418,869
 314,849
 658,293
 451,666
Less: Net earnings (loss) attributable to noncontrolling interests(2,603) 4,592
 (3,089) 5,194
Net earnings attributable to Lennar$421,472
 310,257
 661,382
 446,472
Other comprehensive income (loss), net of tax:       
Net unrealized gain (loss) on securities available-for-sale$561
 (589) 769
 (1,247)
Reclassification adjustments for gains included in earnings, net of tax(176) (126) (176) (126)
Total other comprehensive income (loss), net of tax$385
 (715) 593
 (1,373)
Total comprehensive income attributable to Lennar$421,857
 309,542
 661,975
 445,099
Total comprehensive income (loss) attributable to noncontrolling interests$(2,603) 4,592
 (3,089) 5,194
Basic earnings per share$1.31
 0.95
 2.05
 1.53
Diluted earnings per share$1.30
 0.94
 2.03
 1.52

(1)Homebuilding other expense, net for the three and six months ended May 31, 2019 includes a one-time loss of $48.9 million relating to the consolidation of a previously unconsolidated entity.
(2)Provision for income taxes for the six months ended May 31, 2018 includes a non-cash one-time write down of deferred tax assets of $68.6 million resulting from the Tax Cuts and Jobs Act enacted in December 2017.


Three Months EndedSix Months Ended
May 31,May 31,
2020201920202019
Revenues:
Homebuilding$4,949,484  5,195,599  9,121,600  8,819,320  
Financial Services196,263  204,216  394,924  347,527  
Multifamily123,117  147,412  255,734  244,806  
Lennar Other18,509  15,663  20,452  19,319  
Total revenues5,287,373  5,562,890  9,792,710  9,430,972  
Costs and expenses:
Homebuilding4,313,331  4,587,259  8,011,137  7,826,094  
Financial Services110,355  147,999  261,699  272,338  
Multifamily123,473  148,716  260,821  249,894  
Lennar Other(1,072) 3,194  1,502  4,816  
Corporate general and administrative83,451  76,113  170,298  155,456  
Total costs and expenses4,629,538  4,963,281  8,705,457  8,508,598  
Homebuilding equity in earnings (loss) from unconsolidated entities(9,100) 19,614  (13,646) 5,858  
Homebuilding other income (expense), net4,308  (46,165) (5,058) (47,700) 
Financial Services gain on deconsolidation61,418  —  61,418  —  
Multifamily equity in earnings (loss) from unconsolidated entities and other gain(282) (3,018) 6,234  7,563  
Lennar Other equity in earnings (loss) from unconsolidated entities(26,642) (4,978) (26,523) 3,352  
Lennar Other expense, net(10,960) (5,663) (9,549) (12,924) 
Earnings before income taxes676,577  559,399  1,100,129  878,523  
Provision for income taxes(160,479) (140,530) (192,808) (220,230) 
Net earnings (including net loss attributable to noncontrolling interests)516,098  418,869  907,321  658,293  
Less: Net loss attributable to noncontrolling interests(1,308) (2,603) (8,537) (3,089) 
Net earnings attributable to Lennar$517,406  421,472  915,858  661,382  
Other comprehensive income (loss), net of tax:
Net unrealized gain (loss) on securities available-for-sale$(338) 561  (384) 769  
Reclassification adjustments for gains included in earnings, net of tax(452) (176) (452) (176) 
Total other comprehensive income (loss), net of tax$(790) 385  (836) 593  
Total comprehensive income attributable to Lennar$516,616  421,857  915,022  661,975  
Total comprehensive loss attributable to noncontrolling interests$(1,308) (2,603) (8,537) (3,089) 
Basic earnings per share$1.66  1.31  2.92  2.05  
Diluted earnings per share$1.65  1.30  2.91  2.03  



See accompanying notes to condensed consolidated financial statements.
5
Lennar Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Continued)
(In thousands)
(unaudited)

Six Months Ended
May 31,
20202019
Cash flows from operating activities:
Net earnings (including net loss attributable to noncontrolling interests)$907,321  658,293  
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization44,464  40,986  
Amortization of discount/premium and accretion on debt, net(13,839) (13,335) 
Equity in earnings (loss) from unconsolidated entities40,355  (5,908) 
Distributions of earnings from unconsolidated entities38,000  4,037  
Share-based compensation expense55,141  31,390  
Deferred income tax expense79,738  101,477  
Gain on sale of other assets, operating properties and equipment and real estate owned(13,126) (1,471) 
Loss on consolidation—  48,874  
Gain on deconsolidation of previously consolidated entity(61,418) —  
Gain on sale of interest in unconsolidated entity and other Multifamily gain(4,661) (10,865) 
Gain on sale of Financial Services' servicing portfolio/businesses(5,014) (2,168) 
Valuation adjustments and write-offs of option deposits and pre-acquisition costs65,098  10,602  
Changes in assets and liabilities:
(Increase) decrease in receivables(7,758) 542,054  
Increase in inventories, excluding valuation adjustments and write-offs of option deposits and pre-acquisition costs(159,138) (1,501,423) 
(Increase) decrease in other assets(148,087) 66,464  
Decrease (increase) in loans held-for-sale481,583  (206,349) 
Increase (decrease) in accounts payable and other liabilities12,144  (192,548) 
Net cash provided by (used in) operating activities1,310,803  (429,890) 
Cash flows from investing activities:
Net additions of operating properties and equipment(25,731) (47,766) 
Proceeds from the sale of operating properties and equipment, other assets and real estate owned29,727  4,210  
Proceeds from sale of investment in unconsolidated entity—  17,790  
Proceeds from sale of Financial Services' servicing portfolio/businesses9,096  24,446  
Investments in and contributions to unconsolidated entities/deconsolidation of previously consolidated entity(302,784) (230,744) 
Distributions of capital from unconsolidated entities115,093  140,888  
Receipts of principal payments on loans receivable and other—  1,811  
Proceeds from sale of commercial mortgage-backed securities bonds3,248  —  
Decrease (increase) in Financial Services loans held-for-investment, net143  (5,975) 
Purchases of investment securities(29,642) (31,462) 
Proceeds from maturities/sales of investments securities25,138  35,416  
Other receipts (payments), net1,670  (200) 
Net cash used in investing activities$(174,042) (91,586) 



See accompanying notes to condensed consolidated financial statements.
6
 Six Months Ended
 May 31,
 2019 2018
Cash flows from operating activities:   
Net earnings (including net earnings (loss) attributable to noncontrolling interests)$658,293
 451,666
Adjustments to reconcile net earnings to net cash (used in) provided by operating activities:   
Depreciation and amortization40,986
 41,430
Amortization of discount/premium and accretion on debt, net(13,335) (11,984)
Equity in loss from unconsolidated entities(5,908) (3,740)
Distributions of earnings from unconsolidated entities4,037
 18,685
Share-based compensation expense31,390
 33,720
Deferred income tax expense101,477
 46,895
Gain on sale of operating properties and equipment—
 (5,107)
Gain on sale of other assets(218) —
Loss on consolidation of previously unconsolidated entity48,874
 —
Gain on sale of interest in unconsolidated entities and other Multifamily gain(10,865) (164,880)
Gain on sale of Financial Services' businesses(2,168) —
Unrealized and realized gains on real estate owned(1,253) (1,770)
Impairments of loans receivable, loans held-for-sale and real estate owned—
 6,009
Valuation adjustments and write-offs of option deposits and pre-acquisition costs10,602
 25,807
Changes in assets and liabilities:   
Decrease in receivables542,054
 44,248
Increase in inventories, excluding valuation adjustments and write-offs of option deposits and pre-acquisition costs(1,501,423) (408,913)
Decrease (increase) in other assets66,464
 (119,698)
Increase in loans held-for-sale(206,349) (43,903)
Increase (decrease) in accounts payable and other liabilities(192,548) 111,049
Net cash (used in) provided by operating activities(429,890) 19,514
Cash flows from investing activities:   
Net additions of operating properties and equipment(47,766) (58,935)
Proceeds from the sale of operating properties and equipment—
 22,820
Proceeds from sale of investment in unconsolidated entities17,790
 175,179
Proceeds from sale of Financial Services' businesses24,446
 —
Investments in and contributions to unconsolidated entities(230,744) (186,103)
Distributions of capital from unconsolidated entities140,888
 196,073
Proceeds from sales of real estate owned4,210
 21,658
Receipts of principal payments on loans receivable and other1,811
 2,147
Purchases of commercial mortgage-backed securities bonds—
 (31,068)
Acquisitions, net of cash and restricted cash acquired—
 (1,077,964)
Increase in Financial Services loans held-for-investment, net(5,975) (3,012)
Purchases of investment securities(31,462) (32,369)
Proceeds from maturities/sales of investments securities35,416
 20,578
Other payments, net(200) (318)
Net cash used in investing activities$(91,586) (951,314)





Lennar Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Continued)
(In thousands)
(unaudited)


Six Months Ended
May 31,
20202019
Cash flows from financing activities:
Net borrowings under revolving line of credit$—  550,000  
Net repayments under warehouse facilities(310,216) (365,184) 
Redemption of senior notes(300,000) —  
Proceeds from other borrowings59,139  28,620  
Principal payments on notes payable and other borrowings(174,382) (123,681) 
Proceeds (payments) related to other liabilities, net3,567  (1,046) 
Conversions, exchanges and redemption of convertible senior notes—  (1,288) 
Receipts related to noncontrolling interests169,061  8,937  
Payments related to noncontrolling interests(21,501) (23,317) 
Common stock:
Issuances—  634  
Repurchases(296,093) (101,229) 
Dividends(78,145) (25,877) 
Net cash used in financing activities$(948,570) (53,431) 
Net increase (decrease) in cash and cash equivalents and restricted cash188,191  (574,907) 
Cash and cash equivalents and restricted cash at beginning of period1,468,691  1,595,978  
Cash and cash equivalents and restricted cash at end of period$1,656,882  1,021,071  
Summary of cash and cash equivalents and restricted cash:
Homebuilding$1,408,251  812,365  
Financial Services229,621  186,760  
Multifamily13,061  16,743  
Lennar Other5,949  5,203  
$1,656,882  1,021,071  
Supplemental disclosures of non-cash investing and financing activities:
Homebuilding and Multifamily:
Purchases of inventories and other assets financed by sellers$102,982  46,631  
Non-cash contributions to unconsolidated entities13,859  —  
Consolidation/deconsolidation of unconsolidated/consolidated entities, net:
Financial Services assets$217,565  —  
Financial Services liabilities(115,175) —  
Financial Services noncontrolling interests(102,390) —  
Inventories(35,959) 187,506  
Receivables—  102,959  
Operating properties and equipment and other assets6,375  53,412  
Investments in unconsolidated entities—  67,925  
Notes payable—  (383,212) 
Other liabilities182  (19,696) 
Noncontrolling interests29,402  (8,894) 
See accompanying notes to condensed consolidated financial statements.
7
 Six Months Ended
 May 31,
 2019 2018
Cash flows from financing activities:   
Net borrowings under revolving lines of credit$550,000
 495,300
Net (repayments) borrowings under warehouse facilities(365,184) 7,710
Proceeds from other borrowings28,620
 64,072
Principal payments on other borrowings(123,681) (410,549)
Payments related to other liabilities(1,046) (1,568)
Receipts related to noncontrolling interests8,937
 3,882
Conversions, exchanges and redemption of convertible senior notes(1,288) (59,145)
Payments related to noncontrolling interests(23,317) (30,412)
Debt issuance costs—
 (12,101)
Redemption of senior notes—
 (575,000)
Common stock:   
Issuances634
 3,184
Repurchases(101,229) (28,526)
Dividends(25,877) (22,780)
Net cash used in financing activities$(53,431) (565,933)
Net decrease in cash and cash equivalents and restricted cash(574,907) (1,497,733)
Cash and cash equivalents and restricted cash at beginning of period1,595,978
 2,694,084
Cash and cash equivalents and restricted cash at end of period$1,021,071
 1,196,351
Summary of cash and cash equivalents and restricted cash:   
Homebuilding$812,365
 949,262
Financial Services186,760
 175,884
Multifamily5,203
 15,380
Lennar Other16,743
 55,825
 $1,021,071
 1,196,351
Supplemental disclosures of non-cash investing and financing activities:   
Homebuilding and Multifamily:   
Purchases of inventories and other assets financed by sellers$46,631
 45,078
Non-cash contributions to unconsolidated entities$—
 87,269
Conversions and exchanges on convertible senior notes$—
 217,154
Equity component of acquisition consideration$—
 5,070,006
Consolidation/deconsolidation of unconsolidated/consolidated entities, net:   
Inventories$187,506
 35,430
Receivables$102,959
 7,198
Operating properties and equipment and other assets$53,412
 —
Investments in unconsolidated entities$67,925
 (25,614)
Notes payable$(383,212) —
Other liabilities$(19,696) (17,014)
Noncontrolling interests$(8,894) —


Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
(1)Basis of Presentation
(1)Basis of Presentation
Basis of Consolidation
The accompanying condensed consolidated financial statements include the accounts of Lennar Corporation and all subsidiaries, partnerships and other entities in which Lennar Corporation has a controlling interest and variable interest entities ("VIEs") (see Note 1610 of the Notes to the Condensed Consolidated Financial Statements) in which Lennar Corporation is deemed to be the primary beneficiary (the "Company"). The Company’s investments in both unconsolidated entities in which a significant, but less than controlling, interest is held and in VIEs in which the Company is not deemed to be the primary beneficiary, are accounted for by the equity method. All intercompany transactions and balances have been eliminated in consolidation. The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended November 30, 2018.2019. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for the fair presentation of the accompanying condensed consolidated financial statements have been made.
The Company has historically experienced, and expects to continue to experience, variability in quarterly results. The condensed consolidated statements of operations for the three and six months ended May 31, 20192020 are not necessarily indicative of the results to be expected for the full year.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
Cash and Cash Equivalents
Homebuilding cash and cash equivalents as of May 31, 2020 and November 30, 2019 included $528.3 million and $565.8 million, respectively, of cash held in escrow for approximately three days.
Share-based Payments
During the three months ended May 31, 2020, the Company granted an immaterial number of vested shares. During the six months ended May 31, 2020, the Company granted employees 0.9 million nonvested shares. During the three and six months ended May 31, 2019, the Company granted employees an immaterial number of nonvested shares.
Recently Adopted Accounting Pronouncements
In May 2014,March 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, Revenue from Contracts with Customers,2016-02, Leases ("ASU 2014-09"2016-02"). ASU 2014-09, which provides a single comprehensive modelguidance for entities to use in accounting for revenue arising from contractsleases. ASU 2016-02 requires lessees to classify leases as either finance or operating leases and to record a right-of-use (“ROU”) asset and a lease liability for all leases with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. ASU 2014-09 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This update creates a five-step model that requires entities to exercise judgment when considering the termsterm greater than 12 months regardless of the contract(s) which include (i) identifyinglease classification. The lease classification determined whether the contract(s) withlease expense was recognized based on an effective interest rate method or on a straight line basis over the customer, (ii) identifyingterm of the separate performance obligations in the contract, (iii) determining the transaction price, (iv) allocating the transaction price to the separate performance obligations, and (v) recognizing revenue when each performance obligation is satisfied. ASU 2014-09 became effective for the Company’s fiscal year beginning December 1, 2018 and subsequent interim periods. Subsequent to the issuance of ASU 2014-09, the FASB has issued several ASUs such as ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) , ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients , and ASU 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance andlease. Accounting for Partial Sales of Nonfinancial Assets, among others. These ASUs do not change the core principle of the guidance stated inlessors remains largely unchanged from current GAAP. ASU 2014-09, instead these amendments are intended to clarify and improve operability of certain topics included within the revenue standard. These ASUs had the same effective date and transition requirements as ASU 2014-09. The Company has adopted the modified retrospective method. The Company recorded an immaterial net increase to retained earnings as of December 1, 2018, due to the cumulative impact of adopting ASU 2014-09, with the impact primarily related to the recognition of deferral of net margin from home deliveries.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15"). ASU 2016-15 reduces the existing diversity in practice in financial reporting across all industries by clarifying certain existing principles in ASC 230, Statement of Cash Flows , including providing additional guidance on how and what an entity should consider in determining the classification of certain cash flows. ASU 2016-152016-02 was effective for the Company’s fiscal yearCompany beginning December 1, 2018 and subsequent interim periods.2019. The Company elected the available practical expedients on adoption. Additionally, in preparation for adoption of ASU 2016-15the standard, the Company has implemented internal controls and key system functionality to enable the preparation of financial information. The standard did not have a material effectimpact on the Company’s consolidated financial statements.
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


The Company adopted ASU 2016-18, Statement of Cash Flows (Topic 230), Restricted Cash, effective December 1, 2018. The amendments in the standard require that the statement of cash flows explain the change during the period in the total of cash and cash equivalents and restricted cash. As a result, the Company's beginning-of-period and end-of-period cash balances presented in the condensed consolidated statements of cash flows were retrospectively adjusted to include restricted cash with cash and cash equivalents. In accordance with Securities and Exchange Commission ("SEC") Final Rule Release No. 33-10532, Disclosure Update and Simplification, the Company removed the presentation of cash dividends per each Class A and Class B common share from the accompanyingour condensed consolidated statements of operations and comprehensive income (loss). This is now disclosed with the analysis of changes in stockholders' equity within Note 5 of the Notes to the Condensed Consolidated Financial Statements.
In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities ("ASU 2016-01"). ASU 2016-01 modifies how entities measure equity investments and present changes in the fair value of financial liabilities. Under the new guidance, entities have to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income unless the investments qualify for the new practicality exception. A practicality exception will apply to those equity investments that do not have a readily determinable fair value and do not qualify for the practical expedient to estimate fair value under ASC 820, Fair Value Measurements, and as such, these investments may be measured at cost. ASU 2016-01 was effective for the Company’s fiscal year beginning December 1, 2018 and subsequent interim periods. The adoption of ASU 2016-01 did not have a material impact on the Company’s or our condensed consolidated financial statements.
In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805), Clarifying the Definitionstatements of a Business ("ASU 2017-01"). ASU 2017- 01 clarifies the definition of a business with the objective of addressing whether transactions involving in-substance nonfinancial assets, held directly or in a subsidiary, should be accounted for as acquisitions or disposals of nonfinancial assets or of businesses. ASU 2017-01 was effective for the Company’s fiscal year beginning December 1, 2018 and subsequent interim periods. The adoption of ASU 2017-01 did not have a material impact on the Company’s condensed consolidated financial statements.
Revenue Recognition
Homebuilding revenues and related profits from sales of homes are recognized at the time of the closing of a sale, when title to and possession of the property are transferred to the homebuyer. The Company’s performance obligation, to deliver the agreed-upon home, is generally satisfied in less than one year from the original contract date. Cash proceeds from home closings held in escrow for the Company’s benefit, typically for approximately three days, are included in Homebuilding cash and cash equivalents in the Condensed Consolidated Balance Sheets and disclosed in Note 11 of the Notes to the Condensed Consolidated Financial Statements. Contract liabilities include customer deposits liabilities related to sold but undelivered homes that are included in other liabilities in the Condensed Consolidated Balance Sheets. The Company periodically elects to sell parcels of land to third parties. Cash consideration from land sales is typically due on the closing date, which is generally when performance obligations are satisfied and revenue is recognized as title to and possession of the property are transferred to the buyer.
The Company’s financial services’ operations recognize revenues as follows: Title premiums on policies issued directly by the Company are recognized as revenue on the effective date of the title policies. Escrow fees and loan origination revenues are recognized at the time the related real estate transactions are completed, usually upon the close of escrow. Revenues from title policies issued by independent agents are recognized as revenue when notice of issuance is received from the agent, which is generally when cash payment is received by the Company.
The Company’s Multifamily segment provides management services with respect to the development, construction and property management of rental projects in joint ventures in which the Company has investments.flows. As a result of the Multifamily segment earns and receives fees, which are generally based upon a stated percentage of development and construction costs and a percentage of gross rental collections. These fees are recorded over the period in which the services are performed using an input method, which properly depicts the level of effort required to complete the management services. In addition, the Multifamily segment provides general contractor services for the construction of some of its rental projects and recognizes the revenue over the period in which the services are performed using an input method, which properly depicts the level of effort required to complete the construction services. These customer contracts requireadoption, on December 1, 2019, the Company to provide managementrecorded $150.7 million of ROU assets and general contractor services which represents a performance obligation that the Company satisfies over time. Management fees and general contractor services in the Multifamily segment are included in Multifamily revenue.
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


Reclassifications
Certain prior year amounts in the$159.7 million of lease liabilities on its condensed consolidated financial statements have been reclassified to conform with the 2019 presentation. The Company's segments were adjusted to reflect Rialto Mortgage Finance ("RMF")balance sheets within other assets and certain other Rialto assets within the Financial Services segment effective December 1, 2018. The remaining assets retained related to the Company's former Rialto segment were included in the Lennar Other segment. In addition, the Company's strategic technology investments, which were part of Homebuilding, were reclassified to be included in the Lennar Other segment. These reclassifications were between segments and had no impact on the Company's total assets, total equity, revenue or net income in the condensed consolidated financial statements.
(2)Business Acquisitions
Acquisition of CalAtlantic Group, Inc.
On February 12, 2018, the Company completed the acquisition of CalAtlantic Group, Inc. (“CalAtlantic”) through a transaction in which CalAtlantic was merged with and into a wholly-owned subsidiaryliabilities of the Company (“Merger Sub”), with Merger Sub continuing as the surviving corporationrespective segments.
(2)Operating and a wholly-owned subsidiary of the Company (the “Merger”). CalAtlantic was a homebuilder which built homes across the homebuilding spectrum, from entry level to luxury, in 43 metropolitan statistical areas spanning 19 states. CalAtlantic also provided mortgage, title and escrow services. A primary reason for the acquisition was to increase local market concentration in order to generate synergies and efficiencies.
Based on an evaluation of the provisions of ASC Topic 805, Business Combinations, ("ASC 805"), Lennar Corporation was determined to be the acquirer for accounting purposes. The $3.3 billion allocated to Homebuilding goodwill and the $175 million allocated to Financial Services goodwill is final and represents the excess of the purchase price over the estimated fair value of assets acquired and liabilities assumed.Reporting Segments
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


The following table summarizes the purchase price allocation based on the estimated fair value of net assets acquired and liabilities assumed at the date of acquisition:
(Dollars in thousands) 
CalAtlantic shares of common stock outstanding118,025,879
CalAtlantic shares electing cash conversion24,083,091
CalAtlantic shares exchanged93,942,788
Exchange ratio for Class A common stock0.885
Exchange ratio for Class B common stock0.0177
Number of shares of Lennar Class A common stock issued in exchange83,138,277
Number of shares of Lennar Class B common stock issued in exchange (due to Class B common stock dividend)1,662,172
  
Consideration attributable to Class A common stock$4,933,425
Consideration attributable to Class B common stock77,823
Consideration attributable to equity awards that convert upon change of control58,758
Consideration attributable to cash including fractional shares1,162,341
Total purchase price$6,232,347

(In thousands) 
ASSETS 
Homebuilding: 
Cash and cash equivalents, restricted cash and receivables, net$55,191
Inventories6,239,147
Intangible asset (1)8,000
Investments in unconsolidated entities151,900
Goodwill (2)3,305,792
Other assets561,151
Total Homebuilding assets10,321,181
Financial Services (2)355,128
Total assets10,676,309
LIABILITIES 
Homebuilding: 
Accounts payable306
Senior notes payable and other debts3,926,152
Other liabilities (3)374,656
Total Homebuilding liabilities4,301,114
Financial Services124,418
Total liabilities4,425,532
Noncontrolling interests (4)18,430
Total purchase price$6,232,347
(1)Intangible asset includes trade name. The amortization period for the trade name was six months.
(2)Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed, and it is generally not deductible for income tax purposes. As of the Merger date, goodwill consisted primarily of expected greater efficiencies and opportunities due to increased concentration of local market share, reduced general and administrative costs and reduced homebuilding costs resulting from the merger and cost savings as a result of additional homebuilding and non-homebuilding synergies. The allocation of goodwill among the Company's reporting segments included $1.1 billion to Homebuilding East, $495.0 million to Homebuilding Central, $342.2 million to Homebuilding Texas, $1.4 billion to Homebuilding West, and $175.4 million to Financial Services.
(3)
Other liabilities includes contingencies assumed at the Merger date, which includes warranty and legal reserves. Warranty reserves for homes are established at an amount estimated to be adequate to cover potential costs for materials and labor with regard to warranty-type claims expected to be incurred subsequent to the delivery of a home. Warranty reserves are determined based on historical data and trends with respect to similar product types and geographical areas. Consistent with ASC 450, Contingencies, legal reserves are established when a loss is considered probable and the amount of loss can be reasonably estimated.
(4)Fair value of noncontrolling interests was measured using discounted cash flows of expected future contributions and distributions.
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


Homebuilding revenue and net earnings attributable to Lennar for the three and six months ended May 31, 2018 included $2.1 billion and $2.5 billion, respectively, of home sales revenues, and earnings (loss) before income taxes included $56.5 million and ($52.0) million, respectively, of a pre-tax earnings (loss) from CalAtlantic since the date of acquisition, which included acquisition and integration costs of $23.9 million and $128.1 million, respectively. These transaction expenses were included within acquisition and integration costs related to CalAtlantic in the accompanying condensed consolidated statement of operations for the three and six months ended May 31, 2018.
(3)Operating and Reporting Segments
The Company's homebuilding operations construct and sell homes primarily for first-time, move-up and active adult homebuyers primarily under the Lennar brand name. In addition, the Company's homebuilding operations purchase, develop and sell land to third parties. In connection with the CalAtlantic acquisition, the Company experienced significant growth in its operations. As a result, in 2018, theThe Company's chief operating decision makers ("CODM") reassessed how they evaluate the business and allocate resources. The CODM manage and assess the Company’s performance at a regional level. Therefore, in 2018 the Company performed an assessment of its operating segments in accordance with ASC 280, Segment Reporting, (“ASC 280”) and determined that each of its four homebuilding regions, financial services operations, multifamily operations and Rialto operationsthe following are its operating segments. Priorand reportable segments:
8
Lennar Corporation and Subsidiaries
Notes to this change, in accordance with the aggregation criteria defined in ASC 280, the Company’s operating segments were aggregated into reportable segments, based primarily upon similar economic characteristics, geography and product type. In addition, in the first quarter of 2019, as a result of the reclassification of RMF and certain other Rialto assets from the Rialto segment to theCondensed Consolidated Financial Services segment effective December 1, 2018, the Company has renamed the Rialto segment as "Lennar Other" and included in this segment certain strategic technology investments, which were reclassified from Homebuilding to Lennar Other. Prior periods have been reclassified to conform with the 2019 presentation. The Company’s reportable segments consist of:Statements (unaudited) (Continued)


(1) Homebuilding East
(2) Homebuilding Central
(3) Homebuilding Texas
(4) Homebuilding West
(5) Financial Services
(6) Multifamily
(7) Lennar Other
The assets and liabilities related to the Company’s segments were as follows:
(In thousands)May 31, 2020
Assets:HomebuildingFinancial
Services		MultifamilyLennar
Other		Total
Cash and cash equivalents$1,398,682  224,229  13,061  5,949  1,641,921  
Restricted cash9,569  5,392  —  —  14,961  
Receivables, net (1)299,494  594,620  87,183  —  981,297  
Inventories17,947,406  —  328,497  —  18,275,903  
Loans held-for-sale (2)—  1,163,356  —  —  1,163,356  
Loans held-for-investment, net—  69,846  —  1,422  71,268  
Investments held-to-maturity—  164,982  —  —  164,982  
Investments available-for-sale (3)—  —  —  53,585  53,585  
Investments in unconsolidated entities (4)973,044  70,844  621,465  380,105  2,045,458  
Goodwill3,442,359  189,699  —  —  3,632,058  
Other assets (5)1,080,186  94,837  77,723  11,490  1,264,236  
$25,150,740  2,577,805  1,127,929  452,551  29,309,025  
Liabilities:
Notes and other debts payable, net$7,495,674  1,435,538  —  6,170  8,937,382  
Other liabilities (6)3,278,602  228,010  222,387  10,020  3,739,019  
$10,774,276  1,663,548  222,387  16,190  12,676,401  
(In thousands)November 30, 2019
Assets:HomebuildingFinancial
Services		MultifamilyLennar
Other		Total
Cash and cash equivalents$1,200,832  234,113  8,711  2,340  1,445,996  
Restricted cash9,698  12,022  —  975  22,695  
Receivables, net (1)329,124  500,847  76,906  —  906,877  
Inventories17,776,507  —  315,107  —  18,091,614  
Loans held-for-sale (2)—  1,644,939  —  —  1,644,939  
Loans held-for-investment, net—  73,867  —  —  73,867  
Investments held-to-maturity—  190,289  —  54,117  244,406  
Investments available-for-sale (3)—  3,732  48,206  —  51,938  
Investments in unconsolidated entities (4)1,009,035  —  561,190  403,688  1,973,913  
Goodwill3,442,359  215,516  —  —  3,657,875  
Other assets (5)1,021,684  130,699  58,711  34,297  1,245,391  
$24,789,239  3,006,024  1,068,831  495,417  29,359,511  
Liabilities:
Notes and other debts payable, net$7,776,638  1,745,755  36,125  15,178  9,573,696  
Other liabilities (6)3,230,400  310,695  196,030  14,860  3,751,985  
$11,007,038  2,056,450  232,155  30,038  13,325,681  
(1)Receivables, net for Financial Services primarily related to loans sold to investors for which the Company had not yet been paid as of May 31, 2020 and November 30, 2019, respectively.
(2)Loans held-for-sale related to unsold residential and commercial loans carried at fair value.
9
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

(3)Investments available-for-sale are carried at fair value with changes in fair value recorded as a component of accumulated other comprehensive income (loss) on the condensed consolidated balance sheet.
(4)Lennar Other investments in unconsolidated entities decreased primarily due to a $25.0 million write-down of assets held by Rialto legacy funds because of disruption in the capital markets as a result of COVID-19 and the economic shutdown.
(5)As of May 31, 2020 and November 30, 2019, Financial Services other assets included mortgage loan commitments carried at fair value of $45.0 million and $16.3 million, respectively, and mortgage servicing rights carried at fair value of $1.2 million and $24.7 million, respectively.
(6)As of May 31, 2020 and November 30, 2019, Financial Services other liabilities included $62.4 million and $60.7 million, respectively, of certain of the Company’s self-insurance reserves related to construction defects, general liability and workers’ compensation. In addition, as of May 31, 2020 and November 30, 2019, Financial Services other liabilities also included forward contracts carried at fair value of $4.7 million and $3.9 million, respectively.
Financial information relating to the Company’s segments was as follows:
Three Months Ended May 31, 2020
(In thousands)HomebuildingFinancial ServicesMultifamilyLennar OtherCorporate and unallocatedTotal
Revenues$4,949,484  196,263  123,117  18,509  —  5,287,373  
Operating earnings (loss) (1)631,361  147,326  (638) (18,021) —  760,028  
Corporate general and administrative expenses—  —  —  —  83,451  83,451  
Earnings (loss) before income taxes631,361  147,326  (638) (18,021) (83,451) 676,577  
Three Months Ended May 31, 2019
Revenues$5,195,599  204,216  147,412  15,663  —  5,562,890  
Operating earnings (loss)581,789  56,217  (4,322) 1,828  —  635,512  
Corporate general and administrative expenses—  —  —  —  76,113  76,113  
Earnings (loss) before income taxes581,789  56,217  (4,322) 1,828  (76,113) 559,399  

Six Months Ended May 31, 2020
(In thousands)HomebuildingFinancial ServicesMultifamilyLennar OtherCorporate and
unallocated		Total
Revenues$9,121,600  394,924  255,734  20,452  —  9,792,710  
Operating earnings (loss) (1)1,091,759  194,643  1,147  (17,122) —  1,270,427  
Corporate general and administrative expenses—  —  —  —  170,298  170,298  
Earnings (loss) before income taxes1,091,759  194,643  1,147  (17,122) (170,298) 1,100,129  
Six Months Ended May 31, 2019
Revenues$8,819,320  347,527  244,806  19,319  —  9,430,972  
Operating earnings951,384  75,189  2,475  4,931  —  1,033,979  
Corporate general and administrative expenses—  —  —  —  155,456  155,456  
Earnings before income taxes951,384  75,189  2,475  4,931  (155,456) 878,523  
(1)Operating loss for Lennar Other for both the three and six months ended May 31, 2020 included a $25.0 million write-down of assets held by Rialto legacy funds because of disruption in the capital markets as a result of COVID-19 and the economic shutdown.
Homebuilding Segments
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, other revenues from management fees and forfeited deposits, equity in earnings (loss) from unconsolidated entities and other income
10
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

(expense), net, less the cost of homes sold and land sold, and selling, general and administrative expenses incurred by the segment.
The Company’s reportable Homebuilding segments and all other homebuilding operations not required to be reported separately have homebuilding divisions located in:
East: Florida, New Jersey, North Carolina, Pennsylvania and South Carolina
Central: Georgia, Illinois, Indiana, Maryland, Minnesota and Virginia
Texas: Texas
West: Arizona, California, Colorado, Nevada, Oregon, Utah and Washington
Other: Urban divisions and other homebuilding related investments primarily in California, including FivePoint Holdings, LLC ("FivePoint")
The assets related to the Company’s homebuilding segments were as follows:
(In thousands)
Assets:EastCentralTexasWestOtherCorporate and UnallocatedTotal Homebuilding
Balance at May 31, 2020$6,676,730  2,664,309  2,305,777  10,815,820  1,143,132  1,544,972  25,150,740  
Balance at November 30, 2019$6,708,586  2,732,872  2,246,893  10,663,666  1,173,163  1,264,059  24,789,239  
Financial information relating to the Company’s homebuilding segments was as follows:
Three Months Ended May 31, 2020
(In thousands)EastCentralTexasWestOtherTotal Homebuilding
Revenues$1,577,716  685,999  712,756  1,959,823  13,190  4,949,484  
Operating earnings (loss)229,726  67,065  99,887  280,094  (45,411) 631,361  
Three Months Ended May 31, 2019
Revenues$1,737,342  613,785  693,212  2,143,023  8,237  5,195,599  
Operating earnings (loss)210,464  55,344  75,374  272,904  (32,297) 581,789  

Six Months Ended May 31, 2020
(In thousands)EastCentralTexasWestOtherTotal Homebuilding
Revenues$2,984,582  1,220,975  1,185,984  3,708,592  21,467  9,121,600  
Operating earnings (loss)404,731  96,537  152,960  505,001  (67,470) 1,091,759  
Six Months Ended May 31, 2019
Revenues$2,964,155  1,048,852  1,111,729  3,683,920  10,664  8,819,320  
Operating earnings (loss)345,847  86,270  107,652  463,565  (51,950) 951,384  
Financial Services
Operations of the Financial Services segment include primarily mortgage financing, title and closing services primarily for buyers of the Company’s homes. It also includes originating and selling into securitizations commercial mortgage loans through its RMF business.LMF Commercial business, formerly Rialto Mortgage Finance. The Financial Services segment sells substantially all of the loans it originates within a short period of time 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. Financial Services’ operating earnings consist of revenues generated primarily from mortgage financing, title and closing services, and property and casualty insurance, less the cost of such services and certain selling, general and administrative expenses incurred by the segment. The Financial Services segment operates generally in the same states as the Company’s homebuilding operations as well as in other states.operations.
11
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


Operations of the Multifamily segment include revenues generated from the sales of land, revenue from construction activities, and management and promote fees generated from joint ventures and equity in earnings (loss) from unconsolidated entities and other gains (which includes sales of buildings), less the cost of sales of land sold, expenses related to construction activities and general and administrative expenses.
Operations of the Lennar Other segment include operating earnings (loss) consisting of revenues generated primarily from the Company's share of carried interests in the Rialto fund investments retained after the sale of Rialto's asset and investment management platform, along with equity in earnings (loss) from the Rialto fund investments and strategic technology investments, and other income (expense), net from the remaining assets related to the Company's former Rialto segment.
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, 2018, except that as a result of the adoption of ASC 606 as of December 1, 2018, the Company updated its revenue recognition policies as noted in Note 1 of the Notes to the Condensed Consolidated Financial Statements. The Company's 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)May 31,
2019		 November 30,
2018
Assets:   
Homebuilding East$6,987,845
 7,183,758
Homebuilding Central2,782,430
 2,522,799
Homebuilding Texas2,449,590
 2,311,760
Homebuilding West10,954,282
 10,291,385
Homebuilding Other1,238,115
 1,013,367
Financial Services2,468,263
 2,778,910
Multifamily1,046,196
 874,219
Lennar Other549,150
 588,959
Corporate and unallocated1,107,193
 1,001,024
Total assets$29,583,064
 28,566,181
Homebuilding goodwill$3,442,359
 3,442,359
Financial Services goodwill (1)$215,516
 237,688

(1)Decrease in goodwill related to the Financial Services' segment sale of substantially all of its retail mortgage and its real estate brokerage business.
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


 Three Months Ended Six Months Ended
 May 31, May 31,
(In thousands)2019 2018 2019 2018
Revenues:       
Homebuilding East$1,737,342
 1,566,743
 2,964,155
 2,479,706
Homebuilding Central613,785
 636,523
 1,048,852
 891,092
Homebuilding Texas693,212
 700,767
 1,111,729
 1,056,865
Homebuilding West2,143,023
 2,144,613
 3,683,920
 3,272,569
Homebuilding Other8,237
 15,351
 10,664
 25,858
Financial Services (1)204,216
 249,709
 347,527
 445,796
Multifamily147,412
 117,693
 244,806
 210,949
Lennar Other15,663
 27,662
 19,319
 57,017
Total revenues (2)$5,562,890
 5,459,061
 9,430,972
 8,439,852
Operating earnings (loss) (3):       
Homebuilding East$210,464
 153,893
 345,847
 255,222
Homebuilding Central55,344
 25,138
 86,270
 34,174
Homebuilding Texas75,374
 37,652
 107,652
 51,665
Homebuilding West272,904
 224,595
 463,565
 364,024
Homebuilding Other (4)(32,297) (16,135) (51,950) 133,985
Total Homebuilding operating earnings581,789
 425,143
 951,384
 839,070
Financial Services56,217
 55,774
 75,189
 81,636
Multifamily(4,322) 14,788
 2,475
 13,587
Lennar Other1,828
 3,895
 4,931
 6,740
Corporate and unallocated (5)(76,113) (108,790) (155,456) (280,795)
Earnings before income taxes$559,399
 390,810
 878,523
 660,238
(1)Financial Services revenues are lower period over period primarily due to the loss of revenues as a result of the sales of substantially all of the segment's retail mortgage business and the segment's real estate brokerage business.
(2)Total revenues were net of sales incentives of $338.1 million ($26,600 per home delivered) and $560.4 million ($26,100 per home delivered) for the three and six months ended May 31, 2019, respectively, compared to $278.1 million ($23,000 per home delivered) and $428.0 million ($22,800 per home delivered) for the three and six months ended May 31, 2018, respectively.
(3)All Homebuilding segments were impacted by purchase accounting adjustments that totaled $236.8 million and $291.9 million for the three and six months ended May 31, 2018, respectively.
(4)Homebuilding Other operating earnings during the three and six months ended May 31, 2019 included a one-time loss of $48.9 million from the consolidation of a previously unconsolidated entity, partially offset by equity in earnings from one Homebuilding unconsolidated entity. Homebuilding Other operating earnings during the six months ended May 31, 2018 included $164.9 million related to a gain on the sale of an 80% interest in one of Homebuilding's strategic joint ventures, Treasure Island Holdings.
(5)Corporate and unallocated includes corporate, general and administrative expenses, and for the three and six months ended May 31, 2018, $23.9 million and $128.1 million, respectively, of acquisition and integration costs related to the CalAtlantic acquisition.
(4)Homebuilding Investments in Unconsolidated Entities
Summarized condensed financial information on a combined 100% basis related to Homebuilding’s unconsolidated entities that are accounted for by the equity method was as follows:
Statements of Operations
 Three Months Ended Six Months Ended
 May 31, May 31,
(In thousands)2019 2018 2019 2018
Revenues$65,686
 100,952
 156,330
 169,141
Costs and expenses90,363
 148,678
 214,114
 256,102
Other income (1)75,868
 105,192
 76,065
 105,192
Net earnings of unconsolidated entities$51,191
 57,466
 18,281
 18,231
Homebuilding equity in earnings (loss) from unconsolidated entities$19,614
 (12,670) 5,858
 (26,798)

Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


(1)During the three and six months ended May 31, 2019, other income was primarily attributable to a $64.9 million gain on the settlement of contingent consideration recorded by one Homebuilding unconsolidated entity, of which the Company's pro-rata share was $25.9 million. During the three and six months ended May 31, 2018, other income was primarily due to FivePoint recording income resulting from the Tax Cuts and Jobs Act of 2017’s reduction in its corporate tax rate to reduce its liability pursuant to its tax receivable agreement (“TRA Liability”) with its non-controlling interests. However, the Company has a 70% interest in the FivePoint TRA Liability. Therefore, the Company did not include in Homebuilding’s equity in earnings (loss) from unconsolidated entities its pro-rata share of earnings related to the Company’s portion of the TRA Liability. As a result, the Company’s unconsolidated entities have net earnings, but the Company has an equity in loss from unconsolidated entities.
For the three and six months ended May 31, 2019, Homebuilding equity in earnings from unconsolidated entities was primarily attributable to the Company's share of net operating income from one of Homebuilding's unconsolidated entities which was primarily attributable to a gain on settlement of contingent consideration.
For the three and six months ended May 31, 2018, Homebuilding equity in loss from unconsolidated entities was primarily attributable to the Company's share of valuation adjustments related to assets of Homebuilding's unconsolidated entities and the Company's share of net operating losses from its unconsolidated entities excluding other income.
Balance Sheets
(In thousands)May 31,
2019		 November 30,
2018
Assets:   
Cash and cash equivalents$651,681
 781,833
Inventories4,177,728
 4,291,470
Other assets988,714
 1,045,274
 $5,818,123
 6,118,577
Liabilities and equity:   
Accounts payable and other liabilities$757,410
 874,355
Debt (1)825,275
 1,202,556
Equity4,235,438
 4,041,666
 $5,818,123
 6,118,577
Homebuilding investments in unconsolidated entities (2)$983,683
 870,201
(1)Debt presented above is net of debt issuance costs of $9.9 million and $12.4 million, as of May 31, 2019 and November 30, 2018, respectively. The decrease in debt was primarily related to the Company's consolidation of a previously unconsolidated entity as of May 31, 2019.
(2)Homebuilding investments in unconsolidated entities as of November 30, 2018, does not include $62.0 million of the negative investment balance for one unconsolidated entity as it was reclassed to other liabilities.
As of May 31, 2019 and November 30, 2018, the Company’s recorded investments in Homebuilding unconsolidated entities were $983.7 million and $870.2 million, respectively, while the underlying equity in Homebuilding unconsolidated entities partners’ net assets as of May 31, 2019 and November 30, 2018 was $1.3 billion and $1.2 billion, respectively. The basis difference was primarily as a result of the Company contributing its investment in three strategic joint ventures with a higher fair value than book value for an investment in the FivePoint entity and deferring equity in earnings on land sales to the Company. Included in the Company's recorded investments in Homebuilding unconsolidated entities is the Company's 40% ownership of FivePoint. As of May 31, 2019 and November 30, 2018, the carrying amount of the Company's investment was $389.1 million and $342.7 million, respectively.
During the six months ended May 31, 2018, the Company sold 80% of a strategic joint venture to a third-party resulting in a gain of $164.9 million recorded in Homebuilding other income, net within the accompanying Condensed Consolidated Statement of Operations and Comprehensive Income (Loss).
The Homebuilding unconsolidated entities in which the Company has investments usually finance their activities with a combination of partner equity and debt financing. In some instances, the Company and its partners have guaranteed debt of certain unconsolidated entities.
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


The total debt of the Homebuilding unconsolidated entities in which the Company has investments, including Lennar's maximum recourse exposure, were as follows:
(Dollars in thousands)May 31,
2019		 November 30,
2018
Non-recourse bank debt and other debt (partner’s share of several recourse)$46,816
 48,313
Non-recourse debt with completion guarantees144,588
 239,568
Non-recourse debt without completion guarantees634,086
 861,371
Non-recourse debt to the Company825,490
 1,149,252
The Company’s maximum recourse exposure (1)9,653
 65,707
Debt issuance costs(9,868) (12,403)
Total debt (1)$825,275
 1,202,556
The Company’s maximum recourse exposure as a % of total JV debt1% 5%

(1)As of May 31, 2019 and November 30, 2018, the Company's maximum recourse exposure was primarily related to the Company providing repayment guarantees on two and four unconsolidated entities' debt, respectively. The decrease in maximum recourse exposure and total debt was primarily related to the Company's consolidation of a previously unconsolidated entity as of May 31, 2019.
In most instances in which the Company has guaranteed debt of a Homebuilding unconsolidated entity, the Company’s partners have also guaranteed that debt and are required to contribute their share of the guarantee payments. In a repayment guarantee, the Company and its venture partners guarantee repayment of a portion or all of the debt in the event of default before the lender would have to exercise its rights against the collateral.
In connection with many of the loans to Homebuilding unconsolidated entities, the Company and its joint venture partners (or entities related to them) have been required to give guarantees of completion to the lenders. Those completion guarantees may require that the guarantors complete the construction of the improvements for which the financing was obtained. If the construction is to be done in phases, the guarantee generally is limited to completing only the phases as to which construction has already commenced and for which loan proceeds were used.
If the Company is required to make a payment under any guarantee, the payment would constitute a capital contribution or loan to the Homebuilding unconsolidated entity and increase the Company’s investment in the unconsolidated entity and its share of any funds the unconsolidated entity distributes.
As of both May 31, 2019 and November 30, 2018, the fair values of the repayment guarantees, maintenance guarantees, and completion guarantees were not material. The Company believes that as of May 31, 2019, in the event it becomes legally obligated to perform under a guarantee of the obligation of a Homebuilding unconsolidated entity due to a triggering event under a guarantee, the collateral would be sufficient to repay at least a significant portion of the obligation or the Company and its partners would contribute additional capital into the venture. In certain instances, the Company has placed performance letters of credit and surety bonds with municipalities with regard to obligations of its joint ventures (see Note 12 of the Notes to the Condensed Consolidated Financial Statements).
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


(5)Stockholders' Equity
The following table reflects the changes in equity attributable to both Lennar Corporation and the noncontrolling interests of its consolidated subsidiaries in which it has less than a 100% ownership interest for both the six months ended May 31, 2019 and 2018:
   Stockholders’ Equity  
(In thousands)
Total
Equity
 Class A
Common Stock		 Class B
Common Stock		 Additional
Paid - in Capital		 
Treasury
Stock
 Accumulated Other Comprehensive Income (Loss) 
Retained
Earnings
 
Noncontrolling
Interests
Balance at November 30, 2018$14,682,957
 29,499
 3,944
 8,496,677
 (435,869) (366) 6,487,650
 101,422
Net earnings (including net loss attributable to noncontrolling interests)658,293
 —
 —
 —
 —
 —
 661,382
 (3,089)
Employee stock and directors plans(691) 4
 —
 1,761
 (2,456) —
 —
 —
Purchases of treasury stock(98,781) —
 —
 —
 (98,781) —
 —
 —
Amortization of restricted stock31,390
 —
 —
 31,390
 —
 —
 —
 —
Cash dividends(25,877) —
 —
 —
 —
 —
 (25,877) —
Receipts related to noncontrolling interests8,937
 —
 —
 —
 —
 —
 —
 8,937
Payments related to noncontrolling interests(23,317) —
 —
 —
 —
 —
 —
 (23,317)
Non-cash consolidations, net8,894
 —
 —
 —
 —
 —
 —
 8,894
Cumulative-effect of accounting change (see Note 1 to the Notes to the Condensed Consolidated Financial Statements)9,753
 —
 —
 —
 —
 —
 9,753
 —
Non-cash activity related to noncontrolling interests(5,616) —
 —
 —
 —
 —
 —
 (5,616)
Total other comprehensive income, net of tax593
 —
 —
 —
 —
 593
 —
 —
Balance at May 31, 2019$15,246,535
 29,503
 3,944
 8,529,828
 (537,106) 227
 7,132,908
 87,231
   Stockholders’ Equity  
(In thousands)
Total
Equity
 Class A
Common Stock		 Class B
Common Stock		 Additional
Paid - in Capital		 
Treasury
Stock
 Accumulated Other Comprehensive Income (Loss) 
Retained
Earnings
 
Noncontrolling
Interests
Balance at November 30, 2017$7,986,132
 20,543
 3,769
 3,142,013
 (136,020) 1,034
 4,840,978
 113,815
Net earnings (including net earnings attributable to noncontrolling interests)451,666
 —
 —
 —
 —
 —
 446,472
 5,194
Employee stock and directors plans(24,205) 57
 —
 4,266
 (28,532) —
 4
 —
Stock issuance in connection with CalAtlantic acquisition5,070,006
 8,408
 168
 5,061,430
 —
 —
 —
 —
Conversion of convertible senior notes to Class A common stock217,154
 365
 7
 216,782
 —
 —
 —
 —
Amortization of restricted stock33,720
 —
 —
 33,720
 —
 —
 —
 —
Cash dividends(22,780) —
 —
 —
 —
 —
 (22,780) —
Receipts related to noncontrolling interests3,882
 —
 —
 —
 —
 —
 —
 3,882
Payments related to noncontrolling interests(30,412) —
 —
 —
 —
 —
 —
 (30,412)
Non-cash activity to noncontrolling interests15,080
 —
 —
 —
 —
 —
 —
 15,080
Total other comprehensive loss, net of tax(1,373) —
 —
 —
 —
 (1,373) —
 —
Balance at May 31, 2018$13,698,870
 29,373
 3,944
 8,458,211
 (164,552) (339) 5,264,674
 107,559

On April 10, 2019, the Company's Board of Directors declared a quarterly cash dividend of $0.04 per share on both of its Class A and Class B common stock, payable on May 8, 2019 to holder of record at the close of business on April 24, 2019. On June 26, 2019, the Company's Board of Directors declared a quarterly cash dividend of $0.04 per share on both of its Class A and Class B common stock, payable on July 25, 2019 to holder of record at the close of business on July 11, 2019. The
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


Company approved and paid cash dividends of $0.04 per share for both its Class A and Class B common stock in each quarter for the year ended November 30, 2018.
In January 2019, the Company's Board of Directors authorized the repurchase of up to the lesser of $1 billion in value, or 25 million in shares of the Company's outstanding Class A and Class B common stock. The repurchase has no expiration date. During the three months ended May 31, 2019, under this repurchase program, the Company repurchased one million shares of its Class A common stock for approximately $51.8 million at an average share price of $51.76. During the six months ended May 31, 2019, under this repurchase program, the Company repurchased two million shares of its Class A common stock for approximately $98.8 million at an average share price of $49.37.
(6)Income Taxes
The provision for income taxes and effective tax rate were as follows:
 Three Months Ended Six Months Ended
 May 31, May 31,
(Dollars in thousands)2019 2018 2019 2018
Provision for income taxes
$140,530
 75,961
 220,230
 208,572
Effective tax rate (1)25.0% 19.7% 25.0% 31.8%
(1)For the three and six months ended May 31, 2019, the effective tax rate included state income tax expense and non-deductible executive compensation, partially offset by solar tax credits. For the three months ended May 31, 2018, the effective tax rate included tax benefits for the domestic production activities deduction and energy tax credits, offset primarily by state income tax expenses. For the six months ended May 31, 2018, the effective tax rate included a $68.6 million non-cash one-time write down of the deferred tax assets due to the enactment of the Tax Cuts and Jobs Act, offset primarily by tax benefits for the domestic production activities deduction and energy tax credits. Excluding the impact of the write down of the deferred tax assets, the effective tax rate for the six months ended May 31, 2018 was 21.4%.
As of May 31, 2019 and November 30, 2018, the Company's deferred tax assets, net, included in the condensed consolidated balance sheets were $413.5 million and $515.5 million, respectively.
As of both May 31, 2019 and November 30, 2018, the Company had $14.7 million of gross unrecognized tax benefits.
At May 31, 2019, the Company had $54.2 million accrued for interest and penalties, which increased $1.3 million during the six months ended May 31, 2019. At November 30, 2018, the Company had $52.9 million accrued for interest and penalties.
(7)Earnings Per Share
Basic earnings per share is computed by dividing net earnings attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company.
All outstanding nonvested shares that contain non-forfeitable rights to dividends or dividend equivalents that participate in undistributed earnings with common stock are considered participating securities and are included in computing earnings per share pursuant to the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating securities according to dividends or dividend equivalents and participation rights in undistributed earnings. The Company’s restricted common stock ("nonvested shares") is considered participating securities.
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


Basic and diluted earnings per share were calculated as follows:
 Three Months Ended Six Months Ended
 May 31, May 31,
(In thousands, except per share amounts)2019 2018 2019 2018
Numerator:       
Net earnings attributable to Lennar$421,472
 310,257
 661,382
 446,472
Less: distributed earnings allocated to nonvested shares94
 99
 193
 214
Less: undistributed earnings allocated to nonvested shares3,063
 2,557
 4,987
 3,929
Numerator for basic earnings per share418,315
 307,601
 656,202
 442,329
Less: net amount attributable to noncontrolling interests in Rialto's Carried Interest Incentive Plan (1)3,331
 240
 3,654
 449
Plus: interest on convertible senior notes—
 54
 —
 80
Plus: undistributed earnings allocated to convertible shares—
 12
 —
 15
Numerator for diluted earnings per share$414,984
 307,427
 652,548
 441,975
Denominator:       
Denominator for basic earnings per share - weighted average common shares outstanding320,329
 325,259
 320,834
 289,462
Effect of dilutive securities:       
Shared based payments1
 92
 6
 73
Convertible senior notes—
 1,467
 —
 1,098
Denominator for diluted earnings per share - weighted average common shares outstanding320,330
 326,818
 320,840
 290,633
Basic earnings per share$1.31
 0.95
 2.05
 1.53
Diluted earnings per share$1.30
 0.94
 2.03
 1.52

(1)The amounts presented relate to Rialto's Carried Interest Incentive Plan and represent the difference between the advanced tax distributions received from the Rialto funds included in the Lennar Other segment and the amount Lennar is assumed to own.
For both the three and six months ended May 31, 2019 and 2018, there were no options to purchase shares of common stock that were outstanding and anti-dilutive.
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


(8)Financial Services Segment
The assets and liabilities related to the Financial Services segment were as follows:
(In thousands)May 31,
2019		 November 30,
2018
Assets:   
Cash and cash equivalents$171,892
 188,485
Restricted cash14,868
 17,944
Receivables, net (1)230,452
 731,169
Loans held-for-sale (2)1,420,275
 1,213,889
Loans held-for-investment, net76,248
 70,216
Investments held-to-maturity199,412
 189,472
Investments available-for-sale (3)3,356
 4,161
Goodwill215,516
 237,688
Other assets (4)136,244
 125,886
 $2,468,263
 2,778,910
Liabilities:   
Notes and other debts payable$1,214,017
 1,558,702
Other liabilities (5)266,989
 309,500
 $1,481,006
 1,868,202
(1)Receivables, net primarily related to loans sold to investors for which the Company had not yet been paid as of May 31, 2019 and November 30, 2018, respectively.
(2)Loans held-for-sale related to unsold residential and commercial loans carried at fair value.
(3)Investments available-for-sale are carried at fair value with changes in fair value recorded as a component of accumulated other comprehensive income (loss) on the condensed consolidated balance sheet.
(4)As of May 31, 2019 and November 30, 2018, other assets included mortgage loan commitments carried at fair value of $25.2 million and $16.4 million, respectively, and mortgage servicing rights carried at fair value of $29.4 million and $37.2 million, respectively.
(5)As of May 31, 2019 and November 30, 2018, other liabilities included $61.0 million and $60.3 million, respectively, of certain of the Company’s self-insurance reserves related to construction defects, general liability and workers’ compensation. In addition, as of May 31, 2019 and November 30, 2018, other liabilities also included forward contracts carried at fair value of $11.3 million and $10.4 million, respectively.
In connection with the sale of the majority of its retail title agency business and title insurance underwriter in the first quarter of 2019, the Company provided seller financing and received a substantial minority equity ownership stake in the buyer. The combination of both the equity and debt components of this transaction caused the transaction not to meet the accounting requirements for sale treatment and, therefore, the Company is required to consolidate the buyer’s results at this time.
At May 31, 2019,2020, the Financial Services warehouse facilities were all 364-day repurchase facilities and used to fund residential mortgages wereor commercial mortgages for LMF Commercial as follows:
(In thousands)Maximum Aggregate Commitment
364-day warehouse repurchase facility that matures June 2019 (1)$700,000
364-day warehouse repurchase facility that matures August 2019 (2)300,000
364-day warehouse repurchase facility that matures October 2019 (3)500,000
364-day warehouse repurchase facility that matures March 2020 (4)300,000
Total$1,800,000
(In thousands)Maximum Aggregate Commitment
Residential facilities maturing:
June 2020 (1)$500,000 
July 2020300,000 
January 2021500,000 
March 2021300,000 
Total - Residential facilities$1,600,000 
LMF Commercial facilities maturing:
November 2020$200,000 
December 2020 (2)700,000 
(1)Subsequent to May 31, 2019, the warehouse repurchase facility maturity was extended to June 2020 and the maximum aggregate commitment amount decreased to $500 million.
(2)Total - LMF Commercial facilitiesMaximum aggregate commitment includes an uncommitted amount of $300 million.
$900,000 
(3)TotalMaximum aggregate commitment includes an uncommitted amount of $400 million.$2,500,000 
(4)Maximum aggregate commitment includes an uncommitted amount of $300 million.
(1)Subsequent to May 31, 2020, the maturity date was extended to June 2021.
(2)Includes $50.0 million LMF Commercial warehouse repurchase facility used to finance the origination of floating rate accrual loans, which are reported as accrual loans within loans held-for-investment, net. There were borrowings under this facility of $11.4 million as of May 31, 2020.
The Financial Services segment uses thesethe residential facilities to finance its residential lending activities until the mortgage loans are sold to investors and the proceeds are collected. The facilities are non-recourse to the Company and are expected to be renewed or replaced with other facilities when they mature. The LMF Commercial facilities finance LMF Commercial loan originations and securitization activities and were secured by a 75% interest in the originated commercial loans financed.
Borrowings and collateral under the facilities and their prior year predecessors were $882.0 million and $1.3 billion at May 31, 2019 and November 30, 2018, respectively, and were collateralized by residential mortgage loans and receivables on loans sold to investors but not yet paid for with outstanding principal balances of $911.5 million and $1.3 billion at May 31, 2019 and November 30, 2018, respectively. as follows:
(In thousands)May 31, 2020November 30, 2019
Borrowings under the residential facilities$1,054,588  $1,374,063  
Collateral under the residential facilities1,085,503  1,423,650  
Borrowings under the LMF Commercial facilities227,003  216,870  
If the facilities are not renewed or replaced, the borrowings under the lines of credit will be paid offrepaid by selling the mortgage loans held-for-sale to investors and
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


by collecting receivables on loans sold but not yet paid for. Without the facilities, the Financial Services segment would have to use cash from operations and other funding sources to finance its lending activities.
Substantially all of the residential loans the Financial Services segment originates are sold within a short period in the secondary mortgage market 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. Over the last several years, there has been an industry-wide effort by purchasersPurchasers sometimes try to defray their losses by purporting to have found inaccuracies related to sellers’ representations and warranties in particular loan sale agreements. Mortgage investors could seek to have the Company buy back mortgage loans or compensate them for losses incurred on mortgage loans that the Company has sold based on claims that the Company breached its limited representations or warranties. The Company’s mortgage operations have established accruals for possible losses associated with mortgage loans previously originated and sold to investors. The Company establishes accruals for such possible losses based upon, among other things, an analysis of repurchase requests received, an estimate of potential repurchase claims not yet received and actual past repurchases and losses through the disposition of affected loans as well as previous settlements. While the Company believes that it has adequately reserved for known losses and projected repurchase requests, given the volatility in the residential mortgage industry and the uncertainty regarding the ultimate resolution of these claims, if either actual repurchases or the losses incurred resolving those repurchases exceed the Company’s expectations, additional recourse expense may be incurred. Loan origination liabilities are included in Financial Services’ liabilities in the Company's condensed consolidated balance sheets.
12
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

The activity in the Company’s loan origination liabilities was as follows:
 Three Months Ended Six Months Ended
 May 31, May 31,
(In thousands)2019 2018 2019 2018
Loan origination liabilities, beginning of period$6,697
 27,110
 48,584
 22,543
Provision for losses914
 990
 1,587
 1,637
Origination liabilities assumed related to CalAtlantic acquisition—
 —
 —
 3,959
Payments/settlements(187) (84) (42,747) (123)
Loan origination liabilities, end of period$7,424
 28,016
 7,424
 28,016

Three Months EndedSix Months Ended
May 31,May 31,
(In thousands)2020201920202019
Loan origination liabilities, beginning of period$9,996  6,697  9,364  48,584  
Provision for losses1,139  914  1,915  1,587  
Payments/settlements(255) (187) (399) (42,747) 
Loan origination liabilities, end of period$10,880  7,424  10,880  7,424  
Rialto Mortgage FinanceLMF Commercial - loans held-for-sale
During the six months ended May 31, 2020, LMF Commercial originated commercial loans with a total principal balance of $417.7 million, all of which were recorded as loans held-for-sale and sold $457.4 million of commercial loans into 3 separate securitizations. As of May 31, 2020, $146.4 million of originated commercial loans were sold into a securitization trust but not settled and thus were included as receivables, net.
During the six months ended May 31, 2019, RMFLMF Commercial originated commercial loans with a total principal balance of $720.6 million, of which $705.3 million were recorded as loans held-for-sale, and sold $500.5 million of commercial loans into five5 separate securitizations. As of May 31, 2019, $61.0 million of originated loans were sold into a securitization trust but not settled and thus were included as receivables, net. As of November 30, 2018, there were no unsettled transactions.
During the six months ended May 31, 2018, RMF originated commercial loans with a total principal balance of $663.8 million, all of which were recorded as loans held-for-sale, and sold $556.3 million of commercial loans into six separate securitizations.
At May 31, 2019, the RMF warehouse facilities were as follows:
(In thousands)Maximum Aggregate Commitment
364-day warehouse repurchase facility that matures November 2019$200,000
364-day warehouse repurchase facility that matures December 2019250,000
364-day warehouse repurchase facility that matures December 2019200,000
364-day warehouse repurchase facility that matures December 2019200,000
  Total - Loans origination and securitization business$850,000
Warehouse repurchase facility that matures December 2019 (two - one year extensions) (1)50,000
  Total$900,000
(1)RMF uses this warehouse repurchase facility to finance the origination of floating rate accrual loans, which are reported as accrual loans within loans held-for-investment, net. There were no borrowings under this facility as of both May 31, 2019 and November 30, 2018.
Borrowings under the facilities that finance RMF's commercial loan originations and securitization activities were $155.9 million and $178.8 million as of May 31, 2019 and November 30, 2018, respectively, and were secured by a 75% interest in the originated commercial loans financed. The facilities require immediate repayment of the 75% interest in the
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


secured commercial loans when the loans are sold in a securitization and the proceeds are collected. These warehouse repurchase facilities are non-recourse to the Company and are expected to be renewed or replaced with other facilities when they mature. If the facilities are not renewed or replaced, the borrowings under the lines of credit will be paid off by selling the loans held-for-sale to investors. Without the facilities, the Financial Services segment would have to use cash from operations and other funding sources to finance its lending activities.
Investments held-to-maturity
At May 31, 20192020 and November 30, 2018,2019, the carrying value of Financial Services' commercial mortgage-backed securities ("CMBS") was $167.0$164.9 million and $137.0$166.0 million, respectively. These securities were purchased at discounts ranging from 6% to 84% with coupon rates ranging from 2.0% to 5.3%, stated and assumed final distribution dates between October 2027 and December 2028, and stated maturity dates between October 2050 and December 2051. The Financial Services segment reviews changes in estimated cash flows periodically to determine if an other-than-temporary impairment has occurred on its CMBS. Based on the segment’s assessment, no0 impairment charges were recorded during either the three or the six months ended May 31, 20192020 or 2018.May 31, 2019. The Financial Services segment classifies these securities as held-to-maturity based on its intent and ability to hold the securities until maturity. The Company has financing agreements to finance CMBS that have been purchased as investments by the Financial Services segment. At May 31, 20192020 and November 30, 2018,2019, the carrying amount, net of debt issuance costs, of outstanding debt in these agreements was $155.4$153.9 million and $123.7$154.7 million, respectively, and the interest is incurred at a fixed rate of 3.2% to 4.1%3.4%.
Multifamily
(9)Multifamily Segment
The Company is actively involved, primarily through unconsolidated entities, in the development, construction and property management of multifamily rental properties. The Multifamily segment focuses on developing a geographically diversified portfolio of institutional quality multifamily rental properties in select U.S. markets.
TheOperations of the Multifamily segment include revenues generated from the sales of land, revenue from construction activities, and management and promote fees generated from joint ventures and equity in earnings (loss) from unconsolidated entities and other gains (which includes sales of buildings), less the cost of sales of land sold, expenses related to construction activities and general and administrative expenses.
Lennar Other
Lennar Other primarily includes fund interests the Company retained when it sold the Rialto asset and investment management platform, as well as strategic investments in technology companies. Operations of the Lennar Other segment include operating earnings (loss) consisting of revenues generated primarily from the Company's share of carried interests in the Rialto fund investments retained after the sale of Rialto's asset and investment management platform, along with equity in earnings (loss) from the Rialto fund investments and strategic technology investments, and other income (expense), net from the remaining assets and liabilities related to the Multifamily segmentCompany's former Rialto segment.
(3)Investments in Unconsolidated Entities
Homebuilding Unconsolidated Entities
As of May 31, 2020 and November 30, 2019, the Company’s recorded investments in Homebuilding unconsolidated entities were $973.0 million and $1.0 billion, respectively, while the underlying equity in Homebuilding unconsolidated entities partners’ net assets as follows:of both May 31, 2020 and November 30, 2019 was $1.3 billion. The basis difference was primarily as a
13
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

(In thousands)May 31,
2019		 November 30,
2018
Assets:   
Cash and cash equivalents$5,203
 7,832
Receivables (1)80,270
 73,829
Land under development347,989
 277,894
Investments in unconsolidated entities510,223
 481,129
Other assets102,511
 33,535
 $1,046,196
 874,219
Liabilities:   
Accounts payable and other liabilities$175,654
 170,616
Notes payable (2)39,662
 —
 $215,316
 170,616
result of the Company contributing its investment in3 strategic joint ventures with a higher fair value than book value for an investment in the FivePoint entity and deferring equity in earnings on land sales to the Company. Included in the Company's recorded investments in Homebuilding unconsolidated entities is the Company's 40% ownership of FivePoint. As of May 31, 2020 and November 30, 2019, the carrying amount of the Company's FivePoint investment was $376.9 million and $374.0 million, respectively.
(1)Receivables primarily related to general contractor services, net of deferrals and management fee income receivables due from unconsolidated entities.
(2)Notes payable are net of debt issuance costs.
The Homebuilding unconsolidated entities in which the Company has investments usually finance their activities with a combination of partner equity and debt financing. In some instances, the Company and its partners have guaranteed debt of certain unconsolidated entities.
Indebtedness of an unconsolidated entity is secured by its own assets. Some unconsolidated entities own multiple properties and other assets. There is no cross collateralization of debt of different unconsolidated entities. The Company also does not use its investment in one unconsolidated entity as collateral for the debt of another unconsolidated entity or commingle funds among Homebuilding unconsolidated entities.
In connection with loans to a Homebuilding unconsolidated entity, the Company and its partners often guarantee to a lender, either jointly and severally or on a several basis, any or all of the following: (i) the completion of the development, in whole or in part, for which the financing was obtained (ii) indemnification of the lender against losses from environmental issues, (iii) indemnification of the lender from "bad boy acts" of the unconsolidated entity (or full recourse liability in the event of an unauthorized transfer or bankruptcy) and (iv) that the loan to value and/or loan to cost will not exceed a certain percentage (maintenance or remargining guarantee) or that a percentage of the outstanding loan will be repaid (repayment guarantee).
The total debt of the Homebuilding unconsolidated entities in which the Company has investments was $1.1 billion as of both May 31, 2020 and November 30, 2019, of which the Company's maximum recourse exposure was $4.9 million and $10.8 million as of May 31, 2020 and November 30, 2019, respectively. In most instances in which the Company has guaranteed debt of an unconsolidated entity, the Company’s partners have also guaranteed that debt and are required to contribute their share of the guarantee payments. In a repayment guarantee, the Company and its venture partners guarantee repayment of a portion or all of the debt in the event of default before the lender would have to exercise its rights against the collateral.
If the Company is required to make a payment under any guarantee, the payment would constitute a capital contribution or loan to the Homebuilding unconsolidated entity and increase the Company’s investment in the unconsolidated entity and its share of any funds the unconsolidated entity distributes.
As of both May 31, 2020 and November 30, 2019, the fair values of the repayment guarantees, maintenance guarantees, and completion guarantees were not material. The Company believes that as of May 31, 2020, in the event it becomes legally obligated to perform under a guarantee of the obligation of a Homebuilding unconsolidated entity due to a triggering event under a guarantee, the collateral would be sufficient to repay at least a significant portion of the obligation or the Company and its partners would contribute additional capital into the venture. In certain instances, the Company has placed performance letters of credit and surety bonds with municipalities with regard to obligations of its joint ventures (see Note 7 of the Notes to the Condensed Consolidated Financial Statements).
Multifamily Unconsolidated Entities
The unconsolidated entities in which the Multifamily segment has investments usually finance their activities with a combination of partner equity and debt financing. In connection with many of the loans to Multifamily unconsolidated entities, the Company (or entities related to them) has been required to give guarantees of completion and cost over-runs to the lenders and partners. Those completion guarantees may require that the guarantors complete the construction of the improvements for which the financing was obtained. Additionally, the Company guarantees the construction costs of the project as construction cost over-runs would be paid by the Company. Generally, these payments would increase the Company's investment in the entities and would increase its share of funds the entities distribute after the achievement of certain thresholds. As of both May 31, 20192020 and November 30, 2018,2019, the fair value of the completion guarantees was immaterial. Additionally, asAs of May 31, 20192020 and November 30, 2018, the Multifamily segment had $1.2 million and $4.6 million, respectively, of letters of credit outstanding primarily for credit enhancements for the bank debt of certain of its unconsolidated entities and deposits on land purchase contracts. These letters of credit are included in the disclosure in Note 12 related to the Company's performance and financial letters of credit. As of both May 31, 2019, and November 30, 2018, Multifamily segment's unconsolidated entities had non-recourse debt with completion guarantees of $1.0 billion.
Lennar Corporation$813.8 million and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


$867.3 million, respectively.
In many instances, the Multifamily segment is appointed as the construction, development and property manager for certain of its Multifamily unconsolidated entities and receives fees for performing this function. During the three and six months ended May 31, 2020, the Multifamily segment recorded fee income, net of deferrals, from its unconsolidated entities of $14.6 million and $28.4 million, respectively. During the three and six months ended May 31, 2019, the Multifamily segment recorded fee income, net of deferrals, from its unconsolidated entities of $13.3 million and $26.4 million, respectively. During the three and six months ended May 31, 2018, the Multifamily segment recorded fee income, net of deferrals, from its unconsolidated entities of $12.4 million and $23.9 million, respectively.
The Multifamily segment also provides general contractor services for construction of some of the rental properties owned by unconsolidated entities in which the Company has an investment. During the three and six months ended May 31, 2020, the
14
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

Multifamily segment provided general contractor services, net of deferrals, totaling $104.5 million and $198.4 million, respectively, which were partially offset by costs related to those services of $100.3 million and $190.5 million, respectively. During the three and six months ended May 31, 2019, the Multifamily segment provided general contractor services, net of deferrals, totaling $99.2 million and $181.6 million, respectively, which were partially offset by costs related to those services of $95.2 million and $174.6 million, respectively. During the three and six months ended May 31, 2018, the
The Multifamily segment provided general contractor services, net of deferrals, totaling $97.0 million and $178.8 million, respectively, which were partially offset by costs related to those services of $93.6 million and $172.2 million, respectively.
Lennarincludes Multifamily Venture Fund I ("LMV I") is aand Multifamily Venture Fund II LP ("LMV II"), which are long-term multifamily development investment vehiclevehicles involved in the development, construction and property management of class-A multifamily assets with $2.2 billion in equity commitments, including a $504 million co-investment commitment by Lennar comprisedassets. Details of cash, undeveloped landeach as of and preacquisition costs. Duringduring the six months ended May 31, 2019, $121.8 million2020 are included below:
May 31, 2020
(In thousands)LMV ILMV II
Lennar's carrying value of investments$355,136  213,635  
Equity commitments2,204,016  1,257,700  
Equity commitments called2,127,560  754,177  
Lennar's equity commitments504,016  381,000  
Lennar's equity commitments called493,730  227,372  
Lennar's remaining commitments10,286  153,628  
Distributions to Lennar during the six months ended May 31, 202019,969  —  
(4)Stockholders' Equity
The following tables reflect the changes in equity commitments were called,attributable to both Lennar Corporation and the noncontrolling interests of its consolidated subsidiaries in which it has less than a 100% ownership interest for the Company contributed its portion of $30.2 million. During thethree and six months ended May 31, 2019, the Company received $9.5 million of distributions as a return of capital from the LMV I. As of May 31, 2019, $1.9 billion of the $2.2 billion in equity commitments had been called, of which the Company had contributed $471.1 million, representing its pro-rata portion of the called equity, resulting in a remaining equity commitment for the Company of $32.9 million. As of May 31, 20192020 and November 30, 2018, the carrying value of the Company's investment in the LMV I was $395.4 million and $383.4 million, respectively.2019:
In March 2018, the Multifamily segment completed the first closing of a second Multifamily Venture, Multifamily Venture II LP ("LMV II"), for the development, construction and property management of class-A multifamily assets. During the three months ended May 31, 2019, LMV II's equity commitments were increased by an additional $471 million, including a $126 million additional co-investment commitment by Lennar. As of May 31, 2019, LMV II had approximately $1.3 billion of equity commitments, including a $381 million co-investment commitment by Lennar comprised of cash, undeveloped land and preacquisition costs. During the six months ended May 31, 2019, $138.3 million in equity commitments were called, of which the Company contributed $23.5 million, which was made up of $64.5 million of inventory and cash contributions, offset by $40.9 million of distributions as a return of capital resulting in a remaining commitment for the Company of $276.3 million. As of May 31, 2019, $349.4 million of the $1.3 billion in equity commitments had been called. As of May 31, 2019 and November 30, 2018, the carrying value of the Company's investment in LMV II was $85.0 million and $63.0 million, respectively. The difference between the Company's net contributions and the carrying value of the Company's investments was related to a basis difference. LMV II was seeded initially with eight undeveloped multifamily assets that were previously purchased by the Multifamily segment totaling approximately 3,000 apartments with projected project costs of approximately $1.3 billion. As of May 31, 2019, LMV II was seeded with ten undeveloped assets totaling approximately 3,800 apartments with projected costs of approximately $1.6 billion. Subsequent to May 31, 2019, the Multifamily segment announced the final closing of LMV II with $1.3 billion of equity commitments.
Summarized condensed financial information on a combined 100% basis related to Multifamily's investments in unconsolidated entities that are accounted for by the equity method was as follows:
Three Months Ended May 31, 2020
(In thousands)Total
Equity		Class A
Common Stock		Class B
Common Stock		Additional
Paid - in Capital		Treasury
Stock		Accumulated Other Comprehensive Income (Loss)Retained
Earnings		Noncontrolling
Interests
Balance at February 29, 2020$16,193,377  29,802  3,944  8,609,944  (1,253,756) 452  8,654,213  148,778  
Net earnings (including net loss attributable to noncontrolling interests)516,098  —  —  —  —  —  517,406  (1,308) 
Employee stock and directors plans651  2  —  756  (107) —  —  —  
Purchases of treasury stock—  —  —  —  —  —  —  —  
Amortization of restricted stock23,286  —  —  23,286  —  —  —  —  
Cash dividends(38,905) —  —  —  —  —  (38,905) —  
Receipts related to noncontrolling interests80,148  —  —  —  —  —  —  80,148  
Payments related to noncontrolling interests(4,767) —  —  —  —  —  —  (4,767) 
Non-cash purchase or activity of noncontrolling interests, net

(5,168) —  —  (3,544) —  —  —  (1,624) 
Non-cash consolidations/deconsolidations, net(131,306) —  —  —  —  —  —  (131,306) 
Total other comprehensive loss, net of tax(790) —  —  —  —  (790) —  —  
Balance at May 31, 2020$16,632,624  29,804  3,944  8,630,442  (1,253,863) (338) 9,132,714  89,921  
Balance Sheets


15
(Dollars in thousands)May 31,
2019		 November 30,
2018
Assets:   
Cash and cash equivalents$28,217
 61,571
Operating properties and equipment4,063,560
 3,708,613
Other assets50,227
 40,899
 $4,142,004
 3,811,083
Liabilities and equity:   
Accounts payable and other liabilities$190,785
 199,119
Notes payable (1)1,596,850
 1,381,656
Equity2,354,369
 2,230,308
 $4,142,004
 3,811,083
Multifamily investments in unconsolidated entities$510,223
 481,129
(1)Notes payable are net of debt issuance costs of $21.0 million and $15.7 million, as of May 31, 2019 and November 30, 2018,
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


Three Months Ended May 31, 2019
(In thousands)Total
Equity		Class A
Common Stock		Class B
Common Stock		Additional
Paid - in Capital		Treasury
Stock		Accumulated Other Comprehensive Income (Loss)Retained
Earnings		Noncontrolling
Interests
Balance at February 28, 2019$14,893,695  29,501  3,944  8,514,301  (485,016) (158) 6,724,242  106,881  
Net earnings (including net loss attributable to noncontrolling interests)418,869  —  —  —  —  —  421,472  (2,603) 
Employee stock and directors plans731  2  —  1,036  (307) —  —  —  
Purchases of treasury stock(51,783) —  —  —  (51,783) —  —  —  
Amortization of restricted stock14,491  —  —  14,491  —  —  —  —  
Cash dividends(13,017) —  —  —  —  —  (13,017) —  
Receipts related to noncontrolling interests589  —  —  —  —  —  —  589  
Payments related to noncontrolling interests(12,020) —  —  —  —  —  —  (12,020) 
Non-cash activities related to noncontrolling interests(5,616) —  —  —  —  —  —  (5,616) 
Cumulative-effect of accounting change211  —  —  —  —  —  211  —  
Total other comprehensive earnings, net of tax385  —  —  —  —  385  —  —  
Balance at May 31, 2019$15,246,535  29,503  3,944  8,529,828  (537,106) 227  7,132,908  87,231  
respectively.
Statements of Operations
Six Months Ended May 31, 2020
(In thousands)Total EquityClass A Common StockClass B Common StockAdditional Paid - in CapitalTreasury StockAccumulated Other Comprehensive Income (Loss)Retained EarningsNoncontrolling Interests
Balance at November 30, 2019$16,033,830  29,712  3,944  8,578,219  (957,857) 498  8,295,001  84,313  
Net earnings (including net loss attributable to noncontrolling interests)907,321  —  —  —  —  —  915,858  (8,537) 
Employee stock and directors plans(6,773) 92  —  626  (7,491) —  —  —  
Purchases of treasury stock(288,515) —  —  —  (288,515) —  —  —  
Amortization of restricted stock55,141  —  —  55,141  —  —  —  —  
Cash dividends(78,145) —  —  —  —  —  (78,145) —  
Receipts related to noncontrolling interests169,061  —  —  —  —  —  —  169,061  
Payments related to noncontrolling interests(21,501) —  —  —  —  —  —  (21,501) 
Non-cash purchase or activity of noncontrolling interests, net

(5,168) —  —  (3,544) —  —  —  (1,624) 
Non-cash consolidations/deconsolidations, net(131,791) —  —  —  —  —  —  (131,791) 
Total other comprehensive earnings, net of tax(836) —  —  —  —  (836) —  —  
Balance at May 31, 2020$16,632,624  29,804  3,944  8,630,442  (1,253,863) (338) 9,132,714  89,921  
 Three Months Ended Six Months Ended
 May 31, May 31,
(Dollars in thousands)2019 2018 2019 2018
Revenues$38,609
 27,121
 73,980
 51,073
Costs and expenses55,085
 43,482
 111,213
 75,277
Other income, net—
 31,562
 21,400
 38,869
Net earnings (loss) of unconsolidated entities$(16,476) 15,201
 (15,833) 14,665
Multifamily equity in earnings (loss) from unconsolidated entities and other gain (1)$(3,018) 14,281
 7,563
 17,023
(1)
During the six months ended May 31, 2019, the Multifamily segment sold, through its unconsolidated entities, one operating property and an investment in an operating property resulting in the segment's $15.5 million share of gains. The gain of $11.9 million recognized on the sale of the investment in an operating property and recognition of the Company's share of deferred development fees that were capitalized at the joint venture level are included in Multifamily equity in earnings (loss) from unconsolidated entities and other gain, and are not included in net earnings (loss) of unconsolidated entities. During the three and six months ended May 31, 2018, the Multifamily segment sold two and three operating properties, respectively, through its unconsolidated entities resulting in the segment's $17.4 million and $21.5 million share of gains, respectively.
(10) Lennar Other
Lennar Other primarily includes fund investments the Company retained when it sold the Rialto asset and investment management platform, as well as strategic investments in technology companies.
The assets and liabilities related to Lennar Other were as follows:
16
(In thousands)May 31,
2019		 November 30,
2018
Assets:   
Cash and cash equivalents$15,768
 24,334
Restricted cash975
 7,175
Real estate owned, net6,758
 25,632
Investments in unconsolidated entities429,943
 424,104
Investments held-to-maturity60,449
 59,974
Other assets35,257
 47,740
 $549,150
 588,959
Liabilities:   
Notes and other debts payable$15,178
 14,488
Other liabilities14,861
 53,020
 $30,039
 67,508
Investments held-to-maturity
At May 31, 2019 and November 30, 2018, the carrying value of Lennar Other's CMBS was $60.4 million and $60.0 million, respectively. These securities were purchased at discounts ranging from 6.5% to 86.1% with coupon rates ranging from 1.3% to 4.0%, stated and assumed final distribution dates between November 2020 and October 2026, and stated maturity dates between November 2049 and March 2059. The Company reviews changes in estimated cash flows periodically to determine if an other-than-temporary impairment has occurred on its CMBS. Based on the Company’s assessment, no impairment charges were recorded during either the three or the six months ended May 31, 2019 or 2018. The Company classifies these securities as held-to-maturity based on its intent and ability to hold the securities until maturity. The Company has financing agreements to finance CMBS that have been purchased as investments by the segment. At May 31, 2019 and November 30, 2018, the carrying amount, net of debt issuance costs, of outstanding debt in these agreements was $13.3 million and $12.6 million, respectively, and the interest is incurred at a rate of 4.7% to 4.8%.
(11) Cash and Cash Equivalents and Restricted Cash
The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. Due to the short maturity period of cash equivalents, the carrying amounts of these instruments approximate their fair values. Homebuilding restricted cash consists of customer deposits on home sales held in restricted accounts until title
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


Six Months Ended May 31, 2019
(In thousands)Total EquityClass A Common StockClass B Common StockAdditional Paid - in CapitalTreasury StockAccumulated Other Comprehensive Income (Loss)Retained EarningsNoncontrolling Interests
Balance at November 30, 2018$14,682,957  29,499  3,944  8,496,677  (435,869) (366) 6,487,650  101,422  
Net earnings (including net loss attributable to noncontrolling interests)658,293  —  —  —  —  —  661,382  (3,089) 
Employee stock and directors plans(691) 4  —  1,761  (2,456) —  —  —  
Purchases of treasury stock(98,781) —  —  —  (98,781) —  —  —  
Amortization of restricted stock31,390  —  —  31,390  —  —  —  —  
Cash dividends(25,877) —  —  —  —  —  (25,877) —  
Receipts related to noncontrolling interests8,937  —  —  —  —  —  —  8,937  
Payments related to noncontrolling interests(23,317) —  —  —  —  —  —  (23,317) 
Non-cash consolidations, net8,894  —  —  —  —  —  —  8,894  
Non-cash activities related to noncontrolling interests(5,616) —  —  —  —  —  —  (5,616) 
Cumulative-effect of accounting change9,753  —  —  —  —  —  9,753  —  
Total other comprehensive earnings, net of tax593  —  —  —  —  593  —  —  
Balance at May 31, 2019$15,246,535  29,503  3,944  8,529,828  (537,106) 227  7,132,908  87,231  
transfersOn June 25, 2020, the Company's Board of Directors declared a quarterly cash dividend of $0.125 per share on both its Class A and Class B common stock, payable on July 24, 2020 to holders of record at the close of business on July 10, 2020. On May 5, 2020, the Company paid cash dividends of $0.125 per share on both its Class A and Class B common stock to holders of record at the close of business on April 21, 2020, as declared by its Board of Directors on April 7, 2020. The Company approved and paid cash dividends of $0.04 per share on both its Class A and Class B common stock in each quarter for the year ended November 30, 2019.
In January 2019, the Company's Board of Directors authorized the repurchase of up to the homebuyer, as required bylesser of $1 billion in value, excluding commissions, or 25 million in shares, of the stateCompany's outstanding Class A and local governments in which the homes were sold, as well as funds on deposit to secure and support performance obligations. Financial Services’ restricted cash primarily consists of cash balances required by certain warehouse lines of credit agreements and proceeds from loan sales not yet remitted to a warehouse bank. Financial Services' restricted cash also included upfront deposits and application fees RMF receives before originating loans and is recognized as income once the loanClass B common stock. The repurchase has been originated, as well as cash held in escrow by the Company’s loan servicer provider on behalf of customers and lenders and is disbursed in accordance with agreements between the transacting parties.
no expiration date. The following table provides a reconciliationdescribes the repurchase of cashthe Company's Class A and cash equivalentsClass B common stocks, under this program, for the three and restricted cash reported in the condensed consolidated statements of cash flows to the respective condensed consolidated balance sheets:six months ended May 31, 2020 and 2019:
Three Months EndedSix Months Ended
May 31, 2020May 31, 2019May 31, 2020May 31, 2019
(Dollars in thousands, except price per share)Class AClass BClass AClass BClass AClass BClass AClass B
Shares repurchased—  —  1,000,000  —  4,250,000  115,000  2,000,000  —  
Purchase amount$—  $—  $51,783  $—  $282,274  $6,155  $98,781  $—  
Average price per share$—  $—  $51.76  $—  $66.42  $53.52  $49.37  $—  
 May 31,
(In thousands)2019 2018
Homebuilding:   
Cash and cash equivalents$800,678
 931,753
Restricted cash11,687
 17,509
Financial Services:   
Cash and cash equivalents171,892
 162,992
Restricted cash14,868
 12,892
Multifamily:   
Cash and cash equivalents5,203
 15,380
Lennar Other:   
Cash and cash equivalents15,768
 43,729
Restricted cash975
 12,096
Total cash and cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows$1,021,071
 1,196,351

Homebuilding cash
(5)Income Taxes
The provision for income taxes and cash equivalentseffective tax rate were as offollows:
Three Months EndedSix Months Ended
May 31,May 31,
(Dollars in thousands)2020201920202019
Provision for income taxes$160,479  140,530  192,808  220,230  
Effective tax rate (1)23.7 %25.0 %17.4 %25.0 %
(1)For both the three and six months ended May 31, 20192020, the effective tax rate included state income tax expense and non-deductible executive compensation, partially offset by new energy efficient home and solar tax credits. For the six months ended May 31, 2020, the effective tax rate also included a benefit related to years ended November 30, 2018 included $478.9 million and $926.1 million, respectively, of cash held2019, due to Congress retroactively extending the new energy efficient home tax credit in escrow for approximately three days.December 2019.
17
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


(6)Earnings Per Share
Basic earnings per share is computed by dividing net earnings attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company.
All outstanding nonvested shares that contain non-forfeitable rights to dividends or dividend equivalents that participate in undistributed earnings with common stock are considered participating securities and are included in computing earnings per share pursuant to the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating securities according to dividends or dividend equivalents and participation rights in undistributed earnings. The Company’s restricted common stock ("nonvested shares") is considered participating securities.
Basic and diluted earnings per share were calculated as follows:
Three Months EndedSix Months Ended
May 31,May 31,
(In thousands, except per share amounts)2020201920202019
Numerator:
Net earnings attributable to Lennar$517,406  421,472  915,858  661,382  
Less: distributed earnings allocated to nonvested shares357  94  690  193  
Less: undistributed earnings allocated to nonvested shares5,931  3,063  9,962  4,987  
Numerator for basic earnings per share511,118  418,315  905,206  656,202  
Less: net amount attributable to noncontrolling interests in Rialto's Carried Interest Incentive Plan (1)3,322  3,331  3,322  3,654  
Numerator for diluted earnings per share$507,796  414,984  901,884  652,548  
Denominator:
Denominator for basic earnings per share - weighted average common shares outstanding308,373  320,329  309,793  320,834  
Effect of dilutive securities:
Shared based payments—  1  1  6  
Denominator for diluted earnings per share - weighted average common shares outstanding308,373  320,330  309,794  320,840  
Basic earnings per share$1.66  1.31  2.92  2.05  
Diluted earnings per share$1.65  1.30  2.91  2.03  
(12)(1)The amounts presented relate to Rialto's Carried Interest Incentive Plan and represent the difference between the advanced tax distributions received from the Rialto funds included in the Lennar Other segment and the amount Lennar is assumed to own.
For both the three and six months ended May 31, 2020 and May 31, 2019, there were 0 options to purchase shares of common stock that were outstanding and anti-dilutive.
18
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

(7)Homebuilding Senior Notes and Other Debts Payable
(Dollars in thousands)May 31,
2019		 November 30,
2018
Unsecured revolving credit facility$550,000
 —
4.500% senior notes due 2019499,981
 499,585
4.50% senior notes due 2019599,602
 599,176
6.625% senior notes due 2020 (1)307,701
 311,735
2.95% senior notes due 2020299,129
 298,838
8.375% senior notes due 2021 (1)427,378
 435,897
4.750% senior notes due 2021498,502
 498,111
6.25% senior notes due December 2021 (1)312,768
 315,283
4.125% senior notes due 2022597,390
 596,894
5.375% senior notes due 2022 (1)259,627
 261,055
4.750% senior notes due 2022571,104
 570,564
4.875% senior notes due December 2023396,156
 395,759
4.500% senior notes due 2024646,440
 646,078
5.875% senior notes due 2024 (1)450,496
 452,833
4.750% senior notes due 2025497,336
 497,114
5.25% senior notes due 2026 (1)408,527
 409,133
5.00% senior notes due 2027 (1)353,083
 353,275
4.75% senior notes due 2027892,672
 892,297
0.25% convertible senior notes due 2019—
 1,291
Mortgage notes on land and other debt823,049
 508,950
 $9,390,941
 8,543,868
(Dollars in thousands)May 31,
2020		November 30,
2019
2.95% senior notes due 2020$299,712  299,421  
8.375% senior notes due 2021410,591  418,860  
4.750% senior notes due 2021499,283  498,893  
6.25% senior notes due December 2021307,737  310,252  
4.125% senior notes due 2022598,380  597,885  
5.375% senior notes due 2022256,770  258,198  
4.750% senior notes due 2022572,184  571,644  
4.875% senior notes due December 2023396,950  396,553  
4.500% senior notes due 2024647,165  646,802  
5.875% senior notes due 2024445,821  448,158  
4.750% senior notes due 2025497,780  497,558  
5.25% senior notes due 2026407,315  407,921  
5.00% senior notes due 2027352,700  352,892  
4.75% senior notes due 2027894,386  893,046  
6.625% senior notes due 2020—  303,668  
Mortgage notes on land and other debt908,900  874,887  
$7,495,674  7,776,638  

(1)These notes were obligations of CalAtlantic when it was acquired, and were subsequently exchanged in part for notes of Lennar Corporation as follows: $267.7 million principal amount of 6.625% senior notes due 2020, $397.6 million principal amount of 8.375% senior notes due 2021, $292.0 million principal amount of 6.25% senior notes due 2021, $240.8 million principal amount of 5.375% senior notes due 2022, $421.4 million principal amount of 5.875% senior notes due 2024, $395.5 million principal amount of 5.25% senior notes due 2026 and $347.3 million principal amount of 5.00% senior notes due 2027. As part of purchase accounting, the senior notes have been recorded at their fair value as of the date of acquisition (February 12, 2018).
The carrying amounts of the senior notes in the table above are net of debt issuance costs of $26.9$19.6 million and $31.2$22.9 million as of May 31, 20192020 and November 30, 2018,2019, respectively.
In April 2019,At May 31, 2020, the Company amended the credit agreement governing itshad an unsecured revolving credit facility (the "Credit Facility") to increase the commitments from $2.3with maximum borrowings of $2.45 billion to $2.4 billion and extend the maturity one year to April 2024, with $50 million maturing in June 2020.2024. The Credit Facility has a $400 million accordion feature, subject to additional commitments, thus the maximum borrowings are $2.8 billion. 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(the "Credit Agreement") provides that up to $500 million in commitments may be used for letters of credit. The maturity and details of the Credit Facility are unchanged from the disclosure in the Company's Financial Condition and Capital Resources section in its Form 10-K for the year ended November 30, 2019. Under the Credit Facility agreement,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 May 31, 2019.2020. In addition to the Credit Facility, the Company had $315 million ofhas other letter of credit facilities with different financial institutions.
The Company’s performance letters of credit outstanding were $663.0 million and $598.4 million, at May 31, 2019 and November 30, 2018, respectively. The Company’s financial letters of credit outstanding were $158.5 million and $165.4 million, at May 31, 2019 and November 30, 2018, 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 May 31, 2019,2020, the Company had outstanding surety bonds of $2.8 billion including performance surety bonds related to site improvements at various projects (including certain projects in the Company’s joint ventures) and financial surety bonds. 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 May 31, 2019, there were approximately $1.3 billion, or 46%, of anticipated future costs to complete related to these site
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


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.
Subsequent toIn May 31, 2019,2020, the Company redeemed $500$300 million aggregate principal amount of its 4.500%6.625% senior notes due June 2019.May 2020. The redemption price, which was paid in cash, was 100% of the principal amount plus accrued but unpaid interest.
The company's letter of credit and surety bond facilities are described below:
May 31,
2020		November 30,
2019
(In thousands)
Performance letters of credit$726,191  715,793  
Financial letters of credit220,264  184,075  
Surety bonds2,995,941  2,946,167  
Anticipated future costs related to site improvements subject to performance surety bonds1,496,571  1,427,145  
19
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

The Company's senior notes are guaranteed by substantially all of the Company's 100% owned homebuilding subsidiaries and some of the Company's other subsidiaries. Although the guarantees 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.
(13)Product Warranty
(8)Product Warranty
Warranty and similar reserves for homes are established at an amount estimated to be adequate to cover potential costs for materials and labor with regard to warranty-type claims expected to be incurred subsequent to the delivery of a home. Reserves are determined based on historical data and trends with respect to similar product types and geographical areas. The Company regularly monitorsactivity in the Company’s warranty reserve, and makes adjustments to its pre-existing warranties in order to reflect changes in trends and historical data as information becomes available. Warranty reserveswhich are included in Homebuilding other liabilities in the condensed consolidated balance sheets. The activity in the Company’s warranty reserve was as follows:
Three Months EndedSix Months Ended
May 31,May 31,
(In thousands)2020201920202019
Warranty reserve, beginning of the period$287,413  295,622  294,138  319,109  
Warranties issued46,272  47,855  84,543  81,826  
Adjustments to pre-existing warranties from changes in estimates (1)7,707  2,004  13,611  (7,523) 
Payments(39,930) (53,857) (90,830) (101,788) 
Warranty reserve, end of period$301,462  291,624  301,462  291,624  
(1)
 Three Months Ended Six Months Ended
 May 31, May 31,
(In thousands)2019 2018 2019 2018
Warranty reserve, beginning of the period$295,622
 270,056
 319,109
 164,619
Warranties issued47,855
 47,855
 81,826
 72,544
Adjustments to pre-existing warranties from changes in estimates (1)2,004
 7,227
 (7,523) 10,095
Warranties assumed related to acquisitions—
 9,150
 —
 117,554
Payments(53,857) (39,578) (101,788) (70,102)
Warranty reserve, end of period$291,624
 294,710
 291,624
 294,710

(1)The adjustments to pre-existing warranties from changes in estimates are primarily related to specific claims for certain of the Company's homebuilding communities and other adjustments.
(14)Share-Based Payments
DuringThe adjustments to pre-existing warranties from changes in estimates during the three and six months ended May 31, 2020 and 2019 the Company granted employees an immaterial number of nonvested shares. During the three months ended May 31, 2018, the Company granted employees an immaterial number of nonvested shares. During the six months ended May 31, 2018 the Company granted 0.4 million nonvested shares. Compensation expenseare primarily related to specific claims in certain of the Company’s nonvested shares for the threeCompany's homebuilding communities and six months ended May 31, 2019 was $14.5 millionother adjustments.
(9)Financial Instruments and $31.4 million, respectively. Compensation expense related to the Company’s nonvested shares for the three and six months ended May 31, 2018 was $16.0 million and $33.7 million, respectively.Fair Value Disclosures
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


(15)Financial Instruments and Fair Value Disclosures
The following table presents the carrying amounts and estimated fair values of financial instruments held by the Company at May 31, 20192020 and November 30, 2018,2019, using available market information and what the Company believes to be appropriate valuation methodologies. Considerable judgment is required in interpreting market data to develop the estimates of fair value. The use of different market assumptions and/or estimation methodologies might have a material effect on the estimated fair value amounts. The table excludes cash and cash equivalents, restricted cash, receivables, net and accounts payable, all of which had fair values approximating their carrying amounts due to the short maturities and liquidity of these instruments.
   May 31, 2019 November 30, 2018
(In thousands)
Fair Value
Hierarchy
 
Carrying
Amount
 Fair Value 
Carrying
Amount
 Fair Value
ASSETS         
Financial Services:         
Loans held-for-investment, netLevel 3 $76,248
 71,872
 70,216
 63,794
Investments held-to-maturityLevel 3 $167,014
 194,796
 136,982
 149,767
Investments held-to-maturityLevel 2 $32,398
 32,366
 52,490
 52,220
Lennar Other:         
Investments held-to-maturityLevel 3 $60,449
 64,364
 59,974
 72,986
LIABILITIES         
Homebuilding senior notes and other debts payableLevel 2 $9,390,941
 9,560,305
 8,543,868
 8,336,166
Financial Services notes and other debts payableLevel 2 $1,214,017
 1,215,548
 1,558,702
 1,559,718
Multifamily notes payableLevel 2 $39,662
 39,662
 —
 —
Lennar Other notes and other debts payableLevel 2 $15,178
 15,178
 14,488
 14,488

May 31, 2020November 30, 2019
(In thousands)Fair Value HierarchyCarrying AmountFair ValueCarrying AmountFair Value
ASSETS
Financial Services:
Loans held-for-investment, netLevel 3$69,846  66,529  73,867  69,708  
Investments held-to-maturityLevel 3$164,982  188,942  166,012  195,962  
Investments held-to-maturityLevel 2$—  —  24,277  24,257  
Lennar Other:
Investments held-to-maturityLevel 3$—  —  54,117  56,415  
LIABILITIES
Homebuilding senior notes and other debts payable, netLevel 2$7,495,674  7,828,214  7,776,638  8,144,632  
Financial Services notes and other debts payable, netLevel 2$1,435,538  1,436,961  1,745,755  1,745,782  
Multifamily note payable, netLevel 2$—  —  36,125  36,125  
Lennar Other notes and other debts payable, netLevel 2$6,170  6,170  15,178  15,178  
The following methods and assumptions are used by the Company in estimating fair values:
Financial Services—The fair values above are based on quoted market prices, if available. The fair values for instruments that do not have quoted market prices are estimated by the Company on the basis of discounted cash flows or other financial information. For notes and other debts payable, the fair values approximate their carrying value due to variable interest pricing terms and the short-term nature of the majority of the borrowings.
20
Lennar Other—The fair value for investments held-to-maturity is based on discounted cash flows. For notesCorporation and other debts payable, the fair value is calculated based on discounted cash flows using quoted interest rates and for the warehouse repurchase financing agreements fair values approximate their carrying value dueSubsidiaries
Notes to their short-term maturities.Condensed Consolidated Financial Statements (unaudited) (Continued)

Homebuilding—For senior notes and other debts payable, the fair value of fixed-rate borrowings is primarily based on quoted market prices and the fair value of variable-rate borrowings is based on expected future cash flows calculated using current market forward rates.
Multifamily—For notes payable, the fair values approximate their carrying value due to variable interest pricing terms and the short-term nature of the borrowings.
Lennar Other—The fair value for investments held-to-maturity is based on discounted cash flow. For notes payable, the fair values approximate their carrying value due to variable interest pricing terms and the short-term nature of the borrowings.
Fair Value Measurements:
GAAP provides a framework for measuring fair value, expands disclosures about fair value measurements and establishes a fair value hierarchy which prioritizes the inputs used in measuring fair value summarized as follows:
Level 1: Fair value determined based on quoted prices in active markets for identical assets.
Level 2: Fair value determined using significant other observable inputs.
Level 3: Fair value determined using significant unobservable inputs.
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


The Company’s financial instruments measured at fair value on a recurring basis are summarized below:
(In thousands)Fair Value HierarchyFair Value at May 31,
2020		Fair Value at November 30,
2019
Financial Services Assets:
Residential loans held-for-sale (1)Level 2$1,003,470  1,447,715  
LMF Commercial loans held-for-sale (2)Level 3$159,886  197,224  
Mortgage servicing rightsLevel 3$1,238  24,679  
Lennar Other:
Investments available-for-saleLevel 3$53,585  —  
(1)
(In thousands)
Fair Value
Hierarchy
 Fair Value at
May 31,
2019		 Fair Value at
November 30,
2018
Financial Services Assets (Liabilities):     
RMF loans held-for-sale (1)Level 3 $259,599
 61,691
Financial Services residential loans held-for-sale (2)Level 2 $1,160,676
 1,152,198
Investments available-for-saleLevel 1 $3,356
 4,161
Mortgage loan commitmentsLevel 2 $25,225
 16,373
Forward contractsLevel 2 $(11,273) (10,360)
Mortgage servicing rightsLevel 3 $29,419
 37,206

(1)The aggregate fair value of residential loans held-for-sale of $1.0 billion at May 31, 2020 exceeded their aggregate principal balance of $963.5 million by $40.0 million. The aggregate fair value of residential loans held-for-sale of $1.4 billion at November 30, 2019 exceeded their aggregate principal balance of $1.4 billion by $42.2 million.
(2)The aggregate fair value of LMF Commercial loans held-for-sale of $159.9 million at May 31, 2020 exceeded their aggregate principal balance of $156.2 million by $3.7 million. The aggregate fair value of LMF Commercial loans held-for-sale of $197.2 million at November 30, 2019 exceeded their aggregate principal balance of $196.3 million by $0.9 million.
Financial Services residential loans held-for-sale - Fair value is based on independent quoted market prices, where available, or the prices for other mortgage whole loans with similar characteristics. Management believes carrying loans held-for-sale at fair value improves financial reporting by mitigating volatility in reported earnings caused by measuring the fair value of RMF loans held-for-sale of $259.6 million at May 31, 2019 exceeded their aggregate principal balance of $255.7 million by $3.9 million. The aggregate fair value of RMF loans held-for-sale of $61.7 million at November 30, 2018 exceeded their aggregate principal balance of $61.0 million by $0.7 million.
(2)The aggregate fair value of Financial Services residential loans held-for-sale of $1.2 billion at May 31, 2019 exceeded their aggregate principal balance of $1.1 billion by $40.2 million. The aggregate fair value of Financial Services residential loans held-for-sale of $1.2 billion at November 30, 2018 exceeded their aggregate principal balance of $1.1 billion by $37.3 million.
The estimated fair values of the Company’s financialloans and the derivative instruments have been determined by using available market information and whatused to economically hedge them without having to apply complex hedge accounting provisions. In addition, the Company believes to be appropriate valuation methodologies. Considerable judgment is required in interpreting market data to developrecognizes the estimates of fair value. The use of different market assumptions and/or estimation methodologies might have a material effect on the estimated fair value amounts.of its rights to service a mortgage loan as revenue upon entering into an interest rate lock loan commitment with a borrower. The following methodsfair value of these servicing rights is included in Financial Services’ loans held-for-sale as of May 31, 2020 and assumptions are used by the Company in estimating fair values:November 30, 2019. Fair value of servicing rights is determined based on actual sales of servicing rights on loans with similar characteristics.
RMFLMF Commercial loans held-for-sale - The fair value of loans held-for-sale is calculated from model-based techniques that use discounted cash flow assumptions and the Company’s own estimates of CMBS spreads, market interest rate movements and the underlying loan credit quality. Loan values are calculated by allocating the change in value of an assumed CMBS capital structure to each loan. The value of an assumed CMBS capital structure is calculated, generally, by discounting the cash flows associated with each CMBS class at market interest rates and at the Company’s own estimate of CMBS spreads. The Company estimates CMBS spreads by observing the pricing of recent CMBS offerings, secondary CMBS markets, changes in the CMBX index, and general capital and commercial real estate market conditions. Considerations in estimating CMBS spreads include comparing the Company’s current loan portfolio with comparable CMBS offerings containing loans with similar duration, credit quality and collateral composition. These methods use unobservable inputs in estimating a discount rate that is used to assign a value to each loan. While the cash payments on the loans are contractual, the discount rate used and assumptions regarding the relative size of each class in the CMBS capital structure can significantly impact the valuation. Therefore, the estimates used could differ materially from the fair value determined when the loans are sold to a securitization trust.
Financial Services residential loans held-for-sale - Fair value is based on independent quoted market prices, where available, or the prices for other mortgage whole loans with similar characteristics. Management believes carrying loans held-for-sale at fair value improves financial reporting by mitigating volatility in reported earnings caused by measuring the fair value of the loans and the derivative instruments used to economically hedge them without having to apply complex hedge accounting provisions. In addition, the Company recognizes the fair value of its rights to service a mortgage loan as revenue upon entering into an interest rate lock loan commitment with a borrower. The fair value of these servicing rights was included in Financial Services’ loans held-for-sale as of May 31, 2019 and November 30, 2018. Fair value of servicing rights is determined based on actual sales of servicing rights on loans with similar characteristics.
21
Financial Services investments available-for-sale - The fair value of these investments is based on the quoted market prices for similar financial instruments.
Financial Services mortgage loan commitments - Fair value of commitments to originate loans is based upon the difference between the current value of similar loans and the price at which the Financial Services segment has committed to originate the loans. The fair value of commitments to sell loan contracts is the estimated amount that the Financial Services segment would receive or pay to terminate the commitments at the reporting date based on market prices for similar financial instruments. In addition, the Company recognizes the fair value of its rights to service a mortgage loan as revenue upon entering into an interest rate lock loan commitment with a borrower. The fair value of servicing rights is determined based on actual sales of servicing rights on loans with similar characteristics. The fair value of the mortgage loan commitments and related servicing rights is included in Financial Services’ other assets.
Financial Services forward contracts - Fair value is based on quoted market prices for similar financial instruments. The fair value of forward contracts was included in the Financial Services segment's other liabilities as of May 31, 2019 and November 30, 2018.
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


The Financial Services segment uses mandatory mortgage-backed securities ("MBS") forward commitments, option contracts and investor commitments to hedge its mortgage-related interest rate exposure. These instruments involve, to varying degrees, elements of credit and interest rate risk. Credit risk associated with MBS forward commitments, option contracts and loan sales transactions is managed by limiting the Company’s counterparties to investment banks, federally regulated bank affiliates and other investors meeting the Company’s credit standards. The segment’s risk, in the event of default by the purchaser, is the difference between the contract price and fair value of the MBS forward commitments and option contracts. At May 31, 2019, the segment had open commitments amounting to $1.5 billion to sell MBS with varying settlement dates through August 2019.
Financial Services mortgageMortgage servicing rights - Financial Services records mortgage servicing rights when it sells loans on a servicing-retained basis or through the acquisition or assumption of the right to service a financial asset. The fair value of the mortgage servicing rights is calculated using third-party valuations. The key assumptions, which are generally unobservable inputs, used in the valuation of the mortgage servicing rights include mortgage prepayment rates, discount rates and delinquency rates. As of May 31, 2019, the key assumptions used in determining the fair value include a 16.3% mortgage prepayment rate, a 12.4% discount raterates and a 7.7% delinquency rate.are noted below:
As of May 31, 2020
Unobservable inputs
Mortgage prepayment rate20%
Discount rate11%
Delinquency rate4%
Lennar Other investments available-for-sale - The fair value of mortgage servicing rightsinvestments available-for-sale is includedcalculated from model-based techniques that use discounted cash flow assumptions and the Company’s own estimates of CMBS spreads, market interest rate movements and the underlying loan credit quality. Loan values are calculated by allocating the change in value of an assumed CMBS capital structure to each loan. The value of an assumed CMBS capital structure is calculated, generally, by discounting the Financial Services segment's other assets.cash flows associated with each CMBS class at market interest rates and at the Company’s own estimate of CMBS spreads.
The changes in fair values for Level 1 and Level 2 financial instruments measured on a recurring basis are shown below by financial instrument and financial statement line item:
 Three Months Ended Six Months Ended
 May 31, May 31,
(In thousands)2019 2018 2019 2018
Changes in fair value included in Financial Services revenues:       
Loans held-for-sale$13,007
 16,586
 2,887
 289
Mortgage loan commitments9,111
 13,438
 8,852
 15,219
Forward contracts(9,766) (11,039) (913) (7,876)
Investments available-for-sale176
 126
 176
 126
Changes in fair value included in other comprehensive income (loss), net of tax:       
Financial Services investments available-for-sale561
 (589) 769
 (1,247)

Three Months EndedSix Months Ended
May 31,May 31,
(In thousands)2020201920202019
Changes in fair value included in Financial Services revenues:
Loans held-for-sale$5,270  13,007  (2,223) 2,887  
Mortgage loan commitments13,816  9,111  28,711  8,852  
Forward contracts8,478  (9,766) (883) (913) 
Changes in fair value included in other comprehensive income (loss), net of tax:
Lennar Other investments available-for-sale(338) —  (338) —  
Financial Services investments available-for-sale—  561  (46) 769  
Interest on Financial Services loans held-for-sale and RMFLMF Commercial loans held-for-sale measured at fair value is calculated based on the interest rate of the loans and recorded as revenues in the Financial Services’ statement of operations and RMF's statement of operations, respectively.operations.
22
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


The following table represents the reconciliation of the beginning and ending balance for the Level 3 recurring fair value measurements:measurements in the Company's Financial Services segment:
Three Months Ended
May 31, 2020May 31, 2019
(In thousands)Mortgage servicing rightsLMF Commercial loans held-for-saleMortgage servicing rightsLMF Commercial loans held-for-sale
Beginning balance$12,576  300,402  35,448  131,042  
Purchases/loan originations607  5,400  672  435,189  
Sales/loan originations sold, including those not settled—  (143,285) —  (299,962) 
Disposals/settlements (1)(8,908) —  (1,378) (9,920) 
Changes in fair value (2)(3,037) (2,334) (5,323) 3,022  
Interest and principal paydowns—  (298) —  228  
Ending balance$1,238  159,885  29,419  259,599  
Six Months Ended
May 31, 2020May 31, 2019
(In thousands)Mortgage servicing rightsLMF Commercial loans held-for-saleMortgage servicing rightsLMF Commercial loans held-for-sale
Beginning balance$24,679  197,224  37,206  61,691  
Purchases/loan originations1,354  417,650  2,259  705,311  
Sales/loan originations sold, including those not settled—  (457,724) —  (500,549) 
Disposals/settlements (1)(10,197) —  (2,287) (9,920) 
Changes in fair value (2)(14,598) 3,267  (7,759) 3,324  
Interest and principal paydowns—  (532) —  (258) 
Ending balance$1,238  159,885  29,419  259,599  
 Three Months Ended May 31,
 2019 2018
 Financial Services
(In thousands)Mortgage servicing rights RMF loans held-for-sale Mortgage servicing rights RMF loans held-for-sale
Beginning balance$35,448
 131,042
 36,772
 123,398
Purchases/loan originations672
 435,189
 1,857
 425,870
Sales/loan originations sold, including those not settled—
 (299,962) —
 (228,141)
Disposals/settlements(1,378) (9,920) (3,326) —
Changes in fair value (1)(5,323) 3,022
 (711) 2,618
Interest and principal paydowns—
 228
 —
 1,628
Ending balance$29,419
 259,599
 34,592
 325,373
(1)Includes $7.5 million related to the sale of a servicing portfolio.
 Six Months Ended May 31,
 2019 2018
 Financial Services
(In thousands)Mortgage servicing rights RMF loans held-for-sale Mortgage servicing rights RMF loans held-for-sale
Beginning balance$37,206
 61,691
 31,163
 234,403
Purchases/loan originations2,259
 705,311
 4,145
 663,835
Sales/loan originations sold, including those not settled—
 (500,549) —
 (575,853)
Disposals/settlements(2,287) (9,920) (4,539) —
Changes in fair value (1)(7,759) 3,324
 3,823
 3,370
Interest and principal paydowns—
 (258) —
 (382)
Ending balance$29,419
 259,599
 34,592
 325,373

(2)Changes in fair value for LMF Commercial loans held-for-sale and Financial Services mortgage servicing rights are included in Financial Services' revenues.
(1)Changes in fair value for RMF loans held-for-sale and Financial Services mortgage servicing rights are included in RMF's and Financial Services' revenues, respectively.
The Company’s assets measured at fair value on a nonrecurring basis are those assets for which the Company has recorded valuation adjustments and write-offs. The fair values included in the table below represent only those assets whose carrying values were adjusted to fair value during the respective periods disclosed. The assets measured at fair value on a nonrecurring basis are summarized below:
Three Months Ended
May 31, 2020May 31, 2019
(In thousands)Fair Value
Hierarchy		Carrying ValueFair ValueTotal Losses, Net (1)Carrying ValueFair ValueTotal Losses, Net
Non-financial assets
Homebuilding:
Finished homes and construction in progress (1)Level 3$68,802  61,119  (7,683) —  —  —  
Land and land under development (1)Level 3$42,609  9,709  (32,900) —  —  —  
Six Months Ended
May 31, 2020May 31, 2019
(In thousands)Fair Value
Hierarchy		Carrying ValueFair ValueTotal Losses, Net (1)Carrying ValueFair ValueTotal Losses, Net (1)
Non-financial assets
Homebuilding:
Finished homes and construction in progress (1)Level 3$141,809  120,404  (21,405) —  —  —  
Land and land under development (1)Level 3$65,062  21,369  (43,693) 6,954  3,001  (3,953) 
   Three Months Ended May 31,
   2019 2018
(In thousands)
Fair Value
Hierarchy
 Carrying Value Fair Value Total Losses, Net (1) Carrying Value Fair Value Total Losses, Net (1)
Non-financial assets             
Homebuilding:             
Land and land under development (1)Level 3 $—
 —
 —
 13,858
 3,122
 (10,736)

(1)Valuation adjustments were included in Homebuilding costs and expenses in the Company's condensed consolidated statements of operations and comprehensive income (loss).
   Six Months Ended May 31,
   2019 2018
(In thousands)
Fair Value
Hierarchy
 Carrying Value Fair Value Total Losses, Net (1) Carrying Value Fair Value Total Losses, Net (1)
Non-financial assets             
Homebuilding:             
Land and land under development (1)Level 3 $6,954
 3,001
 (3,953) 66,787
 46,687
 (20,100)
23

(1)Valuation adjustments were included in Homebuilding costs and expenses in the Company's condensed consolidated statements of operations and comprehensive income (loss).
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


Finished homes and construction in progress are included within inventories. Inventories are stated at cost unless the inventory within a community is determined to be impaired, in which case the impaired inventory is written down to fair value. The Company disclosed its accounting policy related to inventories and its review for indicators of impairment in the Summary of Significant Accounting Policies in its Form 10-K for the year ended November 30, 2018.2019.
The Company estimates the fair value of inventory evaluated for impairment based on market conditions and assumptions made by management at the time the inventory is evaluated, which may differ materially from actual results if market conditions or assumptions change. This was particularly the case with regard to inventory owned at May 31, 2020, because of the need to consider the effect of the COVID-19 pandemic and related government actions in determining whether there was a need for valuation adjustments and write-offs. For example, changes in market conditions and other specific developments or changes in assumptions may cause the Company to re-evaluate its strategy regarding previously impaired inventory, as well as inventory not currently impaired but for which indicators of impairment may arise if market deterioration occurs, and certain other assets that could result in further valuation adjustments and/or additional write-offs of option deposits and pre-acquisition costs due to abandonment of those options contracts.
The Company disclosed its accounting policy related to inventories and its review for indicators of impairment in the Summary of Significant Accounting Policies in its Form 10-K for the year ended November 30, 2019. On a quarterly basis, the Company reviews its active communities for indicators of potential impairments. As of bothMay 31, 2020 and May 31, 2019, and 2018, there were 1,241 and 1,320 active communities, excluding unconsolidated entities, respectively. AsThe table below summarizes communities reviewed for indicators of May 31, 2019, the Company identified 52impairment and communities with 2,213 homesites and a corresponding carrying value of $415.2 million as having potential indicators of impairment. For the six months ended May 31, 2019, the Company recorded no valuation adjustments related to these communities.recorded:
As of May 31, 2018, the Company identified 19 communities with 1,013 homesites and a corresponding carrying value of $113.2 million as having potential indicators of impairment. For the six months ended May 31, 2018, the Company recorded valuation adjustments of $17.6 million on 570 homesites in three communities with a carrying value of $31.3 million.
Communities with valuation adjustments
# of communities with potential indicator of impairment# of communitiesFair Value
(in thousands)		Valuation Adjustments
(in thousands)
At and for the Six Months Ended
May 31, 2020419  $69,137$32,072
May 31, 201952—  ——
The table below summarizes the most significant unobservable inputs used in the Company's discounted cash flow model to determine the fair value of its communities for which the Company recorded valuation adjustments during the six months ended May 31, 2018:adjustments:
Six Months Ended
May 31, 2020
Unobservable inputsRange
Average selling price$201,000  -  $970,000  
Absorption rate per quarter (homes)3  -  15  
Discount rate20%
 Six Months Ended
 May 31, 2018
Unobservable inputsRange
Average selling price$233,000-$572,000
Absorption rate per quarter (homes)5-16
Discount rate20%

(10)Variable Interest Entities
(16)Variable Interest Entities
The Company evaluated the joint venture ("JV") agreements of its joint venturesJV's that were formed or that had reconsideration events, such as changes in the governing documents or to debt arrangements during the six months ended May 31, 2019.2020. Based on the Company's evaluation, the Company consolidated 1 Multifamily entity that had a total assets and liabilities of $49.4 million and $0.9 million, respectively and deconsolidated 2 Multifamily entities that had total assets of $37.2 million and an immaterial amount of liabilities. In addition, the Company's Financial Services segment deconsolidated 1 entity that had total assets and liabilities of $291.2 million and $204.1 million, respectively. In January 2019, this JV was formed by the sale of the Company’s retail title agency and its retail title insurance business to this JV entity. In exchange for the sale of the retail agency and retail title insurance business, the Company received 20% of the JV entity’s preferred stock, warrants exercisable to purchase additional shares of preferred stock in the JV entity and a note due from the JV to the Company. The JV entity’s reconsideration event was due to a significant equity raise that was completed during the sixthree months ended May 31, 2019,2020. The proceeds of the equity raise resulted in approximately a 43% reduction of the principal amount of debt owed by the JV entity to the Company consolidated four entities that had a total combined assets and liabilities of $500.7 million and $585.0 million, respectively. During the six months ended May 31, 2019, there were no VIEs that were deconsolidated.
Consolidated VIEs
As of May 31, 2019, the carrying amountsas well as an approximately 20% reduction of the VIEs’ assets and non-recourse liabilitiesCompany’s ownership interest in the JV. The JV remains a VIE; however, the Company has concluded that consolidated were $1.4 billion and $928.9 million, respectively. Asit is no longer the primary beneficiary as the Company no longer has the power to direct the VIE. In particular, the additional infusion of November 30, 2018,equity from third party investors provides evidence that the carrying amountsJV entity is no longer financially dependent on the Company. The Company does not have the voting or economic power to direct the activities of the VIEs’ assetsJV entity. As a result, the Company concluded that the JV entity should be deconsolidated which required fair value accounting for its equity investment and non-recourse liabilities that consolidated were $666.2 million and $242.5 million, respectively. Those assets are owned by, and those liabilities are obligationsnote receivable. The valuation assumptions used in determining fair value of the VIEs, notequity investment began by utilizing the Company.capital raise discounted by public company comparable transactions that took into account the impact of COVID-19 and the economic shutdown and the lack of marketability of the Company’s investment. The valuation of the note receivable utilized the underlying cash flows and applied a discount, which was determined by using market comparables. The Company used discount rates ranging from 16% to 30% for the fair value
24
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


calculations. In aggregate, the resulting fair value of the equity investment and note receivable totaled $123.4 million, of which $70.8 million is included in Financial Services investments in unconsolidated entities. Upon deconsolidation, the Company recorded a gain of $61.4 million.
The increase in VIEs'carrying amount of our consolidated VIE's assets and non-recourse liabilities duringare disclosed in the six months ended May 31, 2019 was primarily duefootnote to the consolidation of a previously unconsolidated entity, which resulted from a reconsideration event that required the reassessment of a homebuilding unconsolidated entity. The reconsideration event was the change of the entity’s conclusion with respect to future capital calls required to fund operations and debt repayments. Upon reconsideration, the Company determined that the homebuilding entity continued to meet the accounting definition of a VIE and the Company was deemed to be the primary beneficiary. The Company consolidated the previously unconsolidated entity’s net assets at estimated fair value. The determination of fair value of the homebuilding entity’s net assets requires the discounting of estimated cash flows at a rate the Company believes a market participant would determine to be commensurate with the inherent risks associated with the homebuilding entity and related cash flow streams. The Company used a 15% discount rate in determining the fair value of the entity, which was subject to perceived risks associated with the entity’s cash flow streams. There was no non-controlling interest recorded in consolidation. As a result, the Company recorded a one-time loss of $48.9 million from the consolidation which was included in Homebuilding other income (expense), net on the condensed consolidated statements of operations. At May 31, 2019, the consolidated homebuilding entity had total assets and liabilities of $240.5 million and $356.4 million, respectively.balance sheets.
A VIE’s assets can only be used to settle obligations of that VIE. The VIEs are not guarantors of the Company’s senior notes or other debts payable. The assets held by a VIE usually are collateral for that VIE’s debt. The Company and other partners do not generally have an obligation to make capital contributions to a VIE unless the Company and/or the other partner(s) have entered into debt guarantees with a VIE’s banks.lenders. Other than debt guarantee agreements with a VIE’s banks,lenders, there are no liquidity arrangements or agreements to fund capital or purchase assets that could require the Company to provide financial support to a VIE. While the Company has option contracts to purchase land from certain of its VIEs, the Company is not required to purchase the assets and could walk away from the contracts.
Unconsolidated VIEs
At May 31, 20192020 and November 30, 2018,2019, the Company’s recorded investments in VIEs that are unconsolidated and its estimated maximum exposure to loss were as follows:
May 31, 2019 November 30, 2018May 31, 2020November 30, 2019
(In thousands)
Investments in
Unconsolidated VIEs
 
Lennar’s Maximum
Exposure to Loss
 Investments in
Unconsolidated VIEs		 Lennar’s Maximum
Exposure to Loss		(In thousands)Investments in
Unconsolidated VIEs		Lennar’s Maximum
Exposure to Loss (1)		Investments in
Unconsolidated VIEs		Lennar’s Maximum
Exposure to Loss (1)
Homebuilding (1)$103,818
 104,117
 123,064
 184,945
HomebuildingHomebuilding$79,553  79,714  80,939  81,118  
Multifamily (2)495,513
 810,723
 463,534
 710,754
Multifamily (2)578,026  759,633  533,018  768,651  
Financial Services (3)167,014
 167,014
 136,982
 136,982
Financial Services (3)235,626  286,608  166,012  166,012  
Lennar Other (4)65,374
 65,374
 63,919
 63,919
Lennar OtherLennar Other7,148  7,148  60,882  60,882  
$831,719
 1,147,228
 787,499
 1,096,600
$900,353  1,133,103  840,851  1,076,663  
(1)As of May 31, 2019, the maximum exposure to loss of Homebuilding’s investments in unconsolidated VIEs was limited primarily to its investments in the unconsolidated VIEs. As of November 30, 2018, the maximum exposure to loss of Homebuilding’s investments in unconsolidated VIEs was limited to its investments in the unconsolidated VIEs, except with regard to repayment guarantees of one unconsolidated entity's debt of $54.8 million.
(2)As of May 31, 2019 and November 30, 2018, the maximum exposure to loss of Multifamily's investments in unconsolidated VIEs was limited to its investments in the unconsolidated VIEs, except with regard to the remaining equity commitment of $309.2 million and $237.0 million, respectively, to fund LMV I and LMV II for future expenditures related to the construction and development of its projects and $1.2 million and $4.6 million, respectively, of letters of credit outstanding for certain of the unconsolidated VIEs that could be drawn upon in the event of default under their debt agreements.
(3)At both May 31, 2019 and November 30, 2018, the maximum recourse exposure to loss of the Financial Services segment was limited to its investments in the unconsolidated VIEs, which included $167.0 million and $137.0 million, respectively, related to the Financial Services' CMBS investments held-to-maturity.
(4)At both May 31, 2019 and November 30, 2018, the maximum recourse exposure to loss of the Lennar Other segment was limited to its investments in the unconsolidated VIEs, which included $60.4 million and $60.0 million, respectively, related to the Lennar Other segment's CMBS investments held-to-maturity.
(1)Limited to investments in unconsolidated VIEs, except as noted below.
(2)As of May 31, 2020 and November 30, 2019, the maximum exposure to loss of Multifamily's investments in unconsolidated VIEs was primarily limited to its investments in the unconsolidated VIEs, except with regard to the remaining equity commitment of $163.9 million and $224.2 million, respectively, to fund LMV I and LMV II for future expenditures related to the construction and development of its projects.
(3)As of May 31, 2020, the maximum exposure to loss of Financial Services' investments in unconsolidated entities included a note receivable.
While these entities are VIEs, the Company has determined that the power to direct the activities of the VIEs that most significantly impact the VIEs’ economic performance is generally shared and the Company and its partners are not de-facto agents. While the Company generally manages the day-to-day operations of the VIEs, each of these VIEs has an executive committee made up of representatives from each partner. The members of the executive committee have equal votes and major decisions require unanimous consent and approval from all members. The Company does not have the unilateral ability to exercise participating voting rights without partner consent.
As of May 31, 2019, the Company and other partners did not have an obligation to make capital contributions to the VIEs, except for $309.2 million remaining equity commitment to fund LMV I and LMV II for future expenditures related to the
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


construction and development of the projects and $1.2 million of letters of credit outstanding for certain Multifamily unconsolidated VIEs that could be drawn upon in the event of default under their debt agreements. In addition, thereThere are no liquidity arrangements or agreements to fund capital or purchase assets that could require the Company to provide financial support to the VIEs. Except for the unconsolidated VIEs discussed above, the Company and the other partners did not guarantee any debt of the other unconsolidated VIEs. While the Company has option contracts to purchase land from certain of its unconsolidated VIEs, the Company is not required to purchase the assets and could walk away from the contracts.
Option Contracts
The Company has access to land through option contracts, which generally enablesenable it to control portions of properties owned by third parties (including land funds) and unconsolidated entities until the Company has determined whether to exercise the option.options.
The Company evaluates all option contracts for land to determine whether they are VIEs and, if so, whether the Company is the primary beneficiary of certain of these option contracts. Although the Company does not have legal title to the optioned land, if the Company is deemed to be the primary beneficiary or makes a significant deposit for optioned land, it may need to consolidate the land under option at the purchase price of the optioned land.
During the six months ended May 31, 2019,2020, consolidated inventory not owned increased by $185.7$86.7 million with a corresponding increase to liabilities related to consolidated inventory not owned in the accompanying condensed consolidated balance sheet as of May 31, 2019.2020. The increase was primarily related to the consolidation of option contracts, partially offset by the Company exercising its options to acquire land under previously consolidated contracts. To reflect the purchase price of the inventory consolidated, the Company had a net reclass related to option deposits from consolidated inventory not owned to land
25
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

under development in the accompanying condensed consolidated balance sheet as of May 31, 2019.2020. The liabilities related to consolidated inventory not owned primarily represent the difference between the option exercise prices for the optioned land and the Company’s cash deposits.
The Company’s exposure to losses related to its option contracts with third parties and unconsolidated entities consisted of its non-refundable option deposits and pre-acquisition costs totaling $326.8$282.1 million and $209.5$320.5 million at May 31, 20192020 and November 30, 2018,2019, respectively. Additionally, the Company had posted $69.1$72.5 million and $72.4$75.0 million of letters of credit in lieu of cash deposits under certain land and option contracts as of May 31, 20192020 and November 30, 2018,2019, respectively. As a result of the COVID-19 pandemic, the Company reviewed its option contracts as of May 31, 2020 and had no write-offs of costs related to option contracts because of the COVID-19 pandemic during the three months ended May 31, 2020.
26
(17)Commitments and Contingent Liabilities
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

(11)Commitments and Contingent Liabilities
The Company is a party to various claims, legal actions and complaints arising in the ordinary course of business. In the opinion of management, the disposition of these matters will not have a material adverse effect on the Company’s consolidated financial statements. The Company is also a party to various lawsuits involving purchases and sales of real property. These lawsuits include claims regarding representations and warranties made in connection with the transfer of properties and disputes regarding the obligation to purchase or sell properties.
The Company does not believe that the ultimate resolution of these claims or lawsuits will have a material adverse effect on its business or financial position. 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.
Leases
The Company has entered into agreements to lease certain office facilities and equipment under operating leases. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. ROU assets and lease liabilities are recorded on the balance sheet for all leases, except leases with an initial term of 12 months or less. Many of the Company's leases include options to renew. The exercise of lease renewal options is at the Company's option and therefore renewal option payments have not been included in the ROU assets or lease liabilities. The following table includes additional information about the Company's leases:
(18)(Dollars in thousands)New Accounting PronouncementsMay 31, 2020
Right-of-use assets$128,423 
Lease liabilities$137,795 
Weighted-average remaining lease term (in years)2.9
Weighted-average discount rate3.0 %
The Company has entered into agreements to lease certain office facilities and equipment under operating leases. Future minimum payments under the noncancellable leases in effect at May 31, 2020 were as follows:
(Dollars in thousands)Lease Payments
2020$17,791  
202136,544  
202228,543  
202321,349  
202415,429  
2025 and thereafter30,004  
Total future minimum lease payments (1)$149,660  
Less: Interest (2)11,865  
Present value of lease liabilities (2)$137,795  
In March 2016,(1)Total future minimum lease payments exclude variable lease costs of $11.3 million and short-term lease costs of $2.3 million. This also does not include minimum lease payments for executed and legally enforceable leases that have not yet commenced. As of May 31, 2020, the FASB issued ASU 2016-02, minimum lease payments for these leases that have not yet commenced were immaterial.
(2)Leases ("ASU 2016-02"), which provides guidanceThe Company's leases do not include a readily determinable implicit rate. As such, the Company has estimated the discount rate for accounting for leases. ASU 2016-02 requires lesseesthese leases to classify leases as either finance or operating leases and to record a right-of-use asset and adetermine the present value of lease liability for all leases with a term greater than 12 months regardless ofpayments at the lease classification. The lease classification will determine whether the lease expense is recognized based on an effective interest rate methodcommencement date or on a straight line basis over the termas of the lease. Accounting for lessors remains largely unchanged from current GAAP. ASU 2016-02 will be effective for the Company’s fiscal year beginning December 1, 2019, and subsequent interim periods.which was the effective date of ASU 2016-02. The Company recognized the lease liabilities on its condensed consolidated balance sheets within other liabilities.
Rental expense for the six months ended May 31, 2020 was $41.1 million. Payments on lease liabilities during the six months ended May 31, 2020 totaled $29.0 million. Rental expense includes costs for all leases. On occasion, the Company may sublease rented space which is currently evaluating the impact the adoption of ASU 2016-02 will have onno longer used for the Company's condensed consolidated financial statements. Subsequent tooperations. For the issuancesix months ended May 31, 2020, the Company had an immaterial amount of ASU 2016-02, the FASB issued ASUs 2018-01, sublease income.
(12)Land Easement Practical Expedient for Transition to Topic 842, 2018-10, Codification Improvements to Topic 842, Leases, 2018-11, Leases (Topic 842): Targeted Improvements, 2018-20, Narrow-Scope Improvements for Lessors, and 2019-01, Leases (Topic 842) Codification Improvements. These ASUs do not change the core principle of the guidance in ASU 2016-02. Instead these amendments are intended to clarify and improve operability of certain topics included within the credit losses standard. These ASUs will have the same effective date and transition requirements as ASU 2016-02.New Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 significantly changes the impairment model for most financial assets and certain other instruments. ASU 2016-13 will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, which will generally result in earlier recognition of
27
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

allowances for credit losses on loans and other financial instruments. ASU 2016-13 is effective for the Company's fiscal year beginning December 1, 2020 and subsequent interim periods. The Company is currently evaluating the impact the adoption of ASU 2016-13 will have on its condensed consolidated financial statements. Subsequent to the issuance of ASU 2016-13, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments —Credit Losses and ASU 2019-05, Financial Instruments —Credit Losses (Topic 326) Targeted Transition Relief. These ASUs do not change the core principle of the guidance in ASU 2016-13. Instead these amendments are intended to clarify and improve operability of certain topics
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


included within the credit losses standard. These ASUs will have the same effective date and transition requirements as ASU 2016-13.
In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350), Simplifying the Accounting for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 removes the requirement to perform a hypothetical purchase price allocation to measure goodwill impairment. A goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 will be effective for the Company’s fiscal year beginning December 1, 2020. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the impact the adoption of ASU 2017-04 will have on the Company's condensed consolidated financial statements.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes ("ASU 2019-12"). ASU 2019-12 will be effective for the Company’s fiscal year beginning December 1, 2022. The Company is currently evaluating the impact the adoption of ASU 2019-12 will have on the Company's condensed consolidated financial statements.
(19)Supplemental Financial Information
(13)Supplemental Financial Information
The indentures governing the Company’s 4.500% senior notes due 2019, 4.50% senior notes due 2019, 6.625% senior notes due 2020, 2.95% senior notes due 2020, 8.375% senior notes due 2021, 4.750% senior notes due 2021, 6.25% senior notes due 2021, 4.125% senior notes due 2022, 5.375% senior notes due 2022, 4.750% senior notes due 2022, 4.875% senior notes due 2023, 4.500% senior notes due 2024, 5.875% senior notes due 2024, 4.750% senior notes due 2025, 5.25% senior notes due 2026, 5.00% senior notes due 2027 and 4.75% senior notes due 2027 require that, if any of the Company’s 100% owned subsidiaries, other than its finance company subsidiaries and foreign subsidiaries, directly or indirectly guarantee at least $75 million principal amount of debt of Lennar Corporation, those subsidiaries must also guarantee Lennar Corporation’s obligations with regard to its senior notes. The entities referred to as "guarantors" in the following tables are subsidiaries that are not finance company subsidiaries or foreign subsidiaries and were guaranteeing the senior notes because at May 31, 20192020 they were guaranteeing Lennar Corporation's letter of credit facilities and its Credit Facility, disclosed in Note 127 of the Notes to the Condensed Consolidated Financial Statements. The guarantees are full, unconditional and joint and several and the guarantor subsidiaries are 100% directly or indirectly owned by Lennar Corporation. A subsidiary's guarantee of Lennar senior notes will be suspended at any time when it is not directly or indirectly guaranteeing at least $75 million principal amount of debt of Lennar Corporation, and 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.
For purposes of the condensed consolidating statement of cash flows included in the following supplemental financial information, the Company's accounting policy is to treat cash received by Lennar Corporation (the "Parent") from its subsidiaries, to the extent of net earnings from such subsidiaries as a dividend and accordingly a return on investment within cash flows from operating activities. Distributions of capital received by the Parent from its subsidiaries are reflected as cash flows from investing activities. The cash outflows associated with the return on investment dividends and distributions of capital received by the Parent are reflected by the Guarantor and Non-Guarantor subsidiaries in the Dividends line item within cash flows from financing activities. All other cash flows between the Parent and its subsidiaries represent the settlement of receivables and payables between such entities in conjunction with the Parent's centralized cash management arrangement with its subsidiaries, which operates with the characteristics of a revolving credit facility, and are accordingly reflected net in the Intercompany line item within cash flows from investing activities for the Parent and net in the Intercompany line item within cash flows from financing activities for the Guarantor and Non-Guarantor subsidiaries.
Supplemental information for the subsidiaries that were guarantor subsidiaries at May 31, 20192020 was as follows:

28
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


Condensed Consolidating Balance Sheet
May 31, 20192020
(In thousands)Lennar
Corporation		Guarantor
Subsidiaries		Non-Guarantor
Subsidiaries		Consolidating AdjustmentsTotal
ASSETS
Homebuilding:
Cash and cash equivalents, restricted cash and receivables, net$1,000,333  695,182  12,230  —  1,707,745  
Inventories—  17,528,852  418,554  —  17,947,406  
Investments in unconsolidated entities—  971,058  1,986  —  973,044  
Goodwill—  3,442,359  —  —  3,442,359  
Other assets392,355  468,610  251,743  (32,522) 1,080,186  
Investments in subsidiaries10,270,732  21,757  —  (10,292,489) —  
Intercompany12,267,017  —  —  (12,267,017) —  
23,930,437  23,127,818  684,513  (22,592,028) 25,150,740  
Financial Services—  249,999  2,329,154  (1,348) 2,577,805  
Multifamily—  —  1,127,929  —  1,127,929  
Lennar Other—  187,352  281,789  (16,590) 452,551  
Total assets$23,930,437  23,565,169  4,423,385  (22,609,966) 29,309,025  
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable and other liabilities$832,049  1,821,132  331,807  (50,460) 2,934,528  
Liabilities related to consolidated inventory not owned—  344,074  —  —  344,074  
Senior notes and other debts payable6,555,685  865,539  74,450  —  7,495,674  
Intercompany—  10,145,745  2,121,272  (12,267,017) —  
7,387,734  13,176,490  2,527,529  (12,317,477) 10,774,276  
Financial Services—  30,344  1,633,204  —  1,663,548  
Multifamily—  —  222,387  —  222,387  
Lennar Other—  —  16,190  —  16,190  
Total liabilities7,387,734  13,206,834  4,399,310  (12,317,477) 12,676,401  
Total stockholders’ equity16,542,703  10,358,335  (65,846) (10,292,489) 16,542,703  
Noncontrolling interests—  —  89,921  89,921  
Total equity16,542,703  10,358,335  24,075  (10,292,489) 16,632,624  
Total liabilities and equity$23,930,437  23,565,169  4,423,385  (22,609,966) 29,309,025  
(In thousands)Lennar
Corporation		 Guarantor
Subsidiaries		 Non-Guarantor
Subsidiaries		 Consolidating Adjustments Total
ASSETS         
Homebuilding:         
Cash and cash equivalents, restricted cash and receivables, net$405,826
 549,492
 160,642
 —
 1,115,960
Inventories—
 18,233,687
 540,801
 —
 18,774,488
Investments in unconsolidated entities—
 979,605
 4,078
 —
 983,683
Goodwill—
 3,442,359
 —
 —
 3,442,359
Other assets350,057
 699,458
 190,544
 (37,094) 1,202,965
Investments in subsidiaries10,455,362
 120,157
 —
 (10,575,519) —
Intercompany13,167,409
 —
 —
 (13,167,409) —
 24,378,654
 24,024,758
 896,065
 (23,780,022) 25,519,455
Financial Services—
 237,468
 2,231,461
 (666) 2,468,263
Multifamily—
 —
 1,046,196
 —
 1,046,196
Lennar Other—
 119,083
 430,067
 —
 549,150
Total assets$24,378,654
 24,381,309
 4,603,789
 (23,780,688) 29,583,064
LIABILITIES AND EQUITY         
Homebuilding:         
Accounts payable and other liabilities$716,066
 1,882,106
 312,528
 (37,760) 2,872,940
Liabilities related to consolidated inventory not owned—
 346,287
 —
 —
 346,287
Senior notes and other debts payable8,503,284
 470,107
 417,550
 —
 9,390,941
Intercompany—
 11,290,326
 1,877,083
 (13,167,409) —
 9,219,350
 13,988,826
 2,607,161
 (13,205,169) 12,610,168
Financial Services—
 31,982
 1,449,024
 —
 1,481,006
Multifamily—
 —
 215,316
 —
 215,316
Lennar Other—
 —
 30,039
 —
 30,039
Total liabilities9,219,350
 14,020,808
 4,301,540
 (13,205,169) 14,336,529
Stockholders’ equity15,159,304
 10,360,501
 215,018
 (10,575,519) 15,159,304
Noncontrolling interests—
 —
 87,231
 —
 87,231
Total equity15,159,304
 10,360,501
 302,249
 (10,575,519) 15,246,535
Total liabilities and equity$24,378,654
 24,381,309
 4,603,789
 (23,780,688) 29,583,064
29

Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


Condensed Consolidating Balance Sheet
November 30, 20182019
(In thousands)Lennar
Corporation		Guarantor
Subsidiaries		Non-Guarantor
Subsidiaries		Consolidating AdjustmentsTotal
ASSETS
Homebuilding:
Cash and cash equivalents, restricted cash and receivables, net$722,172  794,588  22,894  —  1,539,654  
Inventories—  17,396,139  380,368  —  17,776,507  
Investments in unconsolidated entities—  1,006,541  2,494  —  1,009,035  
Goodwill—  3,442,359  —  —  3,442,359  
Other assets344,941  500,356  217,607  (41,220) 1,021,684  
Investments in subsidiaries10,453,165  26,773  —  (10,479,938) —  
Intercompany12,027,996  —  —  (12,027,996) —  
23,548,274  23,166,756  623,363  (22,549,154) 24,789,239  
Financial Services—  275,812  2,731,285  (1,073) 3,006,024  
Multifamily—  —  1,068,831  —  1,068,831  
Lennar Other—  158,194  339,988  (2,765) 495,417  
Total assets$23,548,274  23,600,762  4,763,467  (22,552,992) 29,359,511  
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable and other liabilities$760,981  1,935,366  318,845  (45,058) 2,970,134  
Liabilities related to consolidated inventory not owned—  260,266  —  —  260,266  
Senior notes and other debts payable6,837,776  885,783  53,079  —  7,776,638  
Intercompany—  10,122,374  1,905,622  (12,027,996) —  
7,598,757  13,203,789  2,277,546  (12,073,054) 11,007,038  
Financial Services—  40,235  2,016,215  —  2,056,450  
Multifamily—  —  232,155  —  232,155  
Lennar Other—  —  30,038  —  30,038  
Total liabilities7,598,757  13,244,024  4,555,954  (12,073,054) 13,325,681  
Total stockholders’ equity15,949,517  10,356,738  123,200  (10,479,938) 15,949,517  
Noncontrolling interests—  —  84,313  —  84,313  
Total equity15,949,517  10,356,738  207,513  (10,479,938) 16,033,830  
Total liabilities and equity$23,548,274  23,600,762  4,763,467  (22,552,992) 29,359,511  
(In thousands)
Lennar
Corporation
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 Consolidating Adjustments Total
ASSETS         
Homebuilding:         
Cash and cash equivalents, restricted cash and receivables, net$637,083
 886,059
 63,905
 —
 1,587,047
Inventories—
 16,679,245
 389,459
 —
 17,068,704
Investments in unconsolidated entities—
 857,238
 12,963
 —
 870,201
Goodwill—
 3,442,359
 —
 —
 3,442,359
Other assets339,307
 878,582
 164,848
 (26,955) 1,355,782
Investments in subsidiaries10,562,273
 89,044
 —
 (10,651,317) —
Intercompany11,815,491
 —
 —
 (11,815,491) —
 23,354,154
 22,832,527
 631,175
 (22,493,763) 24,324,093
Financial Services—
 232,632
 2,547,167
 (889) 2,778,910
Multifamily—
 —
 874,219
 —
 874,219
Lennar Other—
 126,725
 462,234
 —
 588,959
Total assets$23,354,154
 23,191,884
 4,514,795
 (22,494,652)
28,566,181
LIABILITIES AND EQUITY         
Homebuilding:         
Accounts payable and other liabilities$804,232
 1,977,579
 303,473
 (27,844) 3,057,440
Liabilities related to consolidated inventory not owned—
 162,090
 13,500
 —
 175,590
Senior notes and other debts payable7,968,387
 523,589
 51,892
 —
 8,543,868
Intercompany—
 10,116,590
 1,698,901
 (11,815,491) —
 8,772,619
 12,779,848
 2,067,766
 (11,843,335) 11,776,898
Financial Services—
 51,535
 1,816,667
 —
 1,868,202
Multifamily—
 —
 170,616
 —
 170,616
Lennar Other—
 —
 67,508
 —
 67,508
Total liabilities8,772,619
 12,831,383
 4,122,557
 (11,843,335) 13,883,224
Stockholders’ equity14,581,535
 10,360,501
 290,816
 (10,651,317) 14,581,535
Noncontrolling interests—
 —
 101,422
 —
 101,422
Total equity14,581,535
 10,360,501
 392,238
 (10,651,317) 14,682,957
Total liabilities and equity$23,354,154
 23,191,884
 4,514,795
 (22,494,652) 28,566,181
30


Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)
Three Months Ended May 31, 2019
(In thousands)Lennar
Corporation		 Guarantor
Subsidiaries		 Non-Guarantor
Subsidiaries		 Consolidating Adjustments Total
Revenues:         
Homebuilding$—
 5,175,289
 20,310
 —
 5,195,599
Financial Services—
 36,353
 172,729
 (4,866) 204,216
Multifamily—
 —
 147,412
 —
 147,412
Lennar Other—
 —
 15,663
 —
 15,663
Total revenues—
 5,211,642
 356,114
 (4,866) 5,562,890
Cost and expenses:         
Homebuilding—
 4,561,235
 19,594
 6,430
 4,587,259
Financial Services—
 20,829
 139,510
 (12,340) 147,999
Multifamily—
 —
 148,716
 —
 148,716
Lennar Other—
 —
 3,194
 —
 3,194
Corporate general and administrative74,321
 527
 —
 1,265
 76,113
Total costs and expenses74,321

4,582,591

311,014

(4,645)
4,963,281
Homebuilding equity in earnings from unconsolidated entities—
 19,537
 77
 —
 19,614
Homebuilding other income (expenses), net(222) (48,550) 2,386
 221
 (46,165)
Multifamily equity in loss from unconsolidated entities and other gain—
 —
 (3,018) —
 (3,018)
Lennar Other equity in loss from unconsolidated entities—
 (4,239) (739) —
 (4,978)
Lennar Other expense, net—
 —
 (5,663) —
 (5,663)
Earnings (loss) before income taxes(74,543) 595,799
 38,143
 —
 559,399
Benefit (provision) for income taxes18,653
 (148,736) (10,447) —
 (140,530)
Equity in earnings from subsidiaries477,362
 28,703
 —
 (506,065) —
Net earnings (including net loss attributable to noncontrolling interests)421,472
 475,766
 27,696
 (506,065) 418,869
Less: Net loss attributable to noncontrolling interests—
 —
 (2,603) —
 (2,603)
Net earnings attributable to Lennar$421,472
 475,766
 30,299
 (506,065) 421,472
Other comprehensive income, net of tax:         
Net unrealized gain on securities available-for-sale$—
 —
 561
 —
 561
Reclassification adjustments for gains included in earnings, net of tax—
 —
 (176) —
 (176)
Total other comprehensive income, net of tax$—
 —
 385
 —
 385
Total comprehensive income attributable to Lennar$421,472
 475,766
 30,684
 (506,065) 421,857
Total comprehensive loss attributable to noncontrolling interests$—
 —
 (2,603) —
 (2,603)

2020

(In thousands)Lennar
Corporation		Guarantor
Subsidiaries		Non-Guarantor
Subsidiaries		Consolidating AdjustmentsTotal
Revenues:
Homebuilding$—  4,939,857  9,627  —  4,949,484  
Financial Services—  35,534  166,712  (5,983) 196,263  
Multifamily—  —  123,117  —  123,117  
Lennar Other—  —  18,509  —  18,509  
Total revenues—  4,975,391  317,965  (5,983) 5,287,373  
Cost and expenses:
Homebuilding—  4,302,960  13,304  (2,933) 4,313,331  
Financial Services—  21,146  93,176  (3,967) 110,355  
Multifamily—  —  123,473  —  123,473  
Lennar Other—  —  (1,072) —  (1,072) 
Corporate general and administrative80,544  1,641  —  1,266  83,451  
Total costs and expenses80,544  4,325,747  228,881  (5,634) 4,629,538  
Homebuilding equity in earnings (loss) from unconsolidated entities—  (9,222) 122  —  (9,100) 
Homebuilding other income (expense), net(349) 2,809  1,499  349  4,308  
Financial Services gain on deconsolidation—  61,418  —  —  61,418  
Multifamily equity in loss from unconsolidated entities—  —  (282) —  (282) 
Lennar Other equity in loss from unconsolidated entities—  (3,922) (22,720) —  (26,642) 
Lennar Other income (expense), net—  6  (10,966) —  (10,960) 
Earnings (loss) before income taxes(80,893) 700,733  56,737  —  676,577  
Benefit (provision) for income taxes22,411  (165,874) (17,016) —  (160,479) 
Equity in earnings from subsidiaries575,888  56,130  —  (632,018) —  
Net earnings (including net loss attributable to noncontrolling interests)517,406  590,989  39,721  (632,018) 516,098  
Less: Net loss attributable to noncontrolling interests—  —  (1,308) —  (1,308) 
Net earnings attributable to Lennar$517,406  590,989  41,029  (632,018) 517,406  
Other comprehensive loss, net of tax:
Net unrealized loss on securities available-for-sale$—  —  (338) —  (338) 
Reclassification adjustments for gains included in earnings, net of tax—  —  (452) —  (452) 
Total other comprehensive loss, net of tax$—  —  (790) —  (790) 
Total comprehensive income attributable to Lennar$517,406  590,989  40,239  (632,018) 516,616  
Total comprehensive loss attributable to noncontrolling interests$—  —  (1,308) —  (1,308) 
31
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)
Three Months Ended May 31, 20182019
(In thousands)Lennar
Corporation		Guarantor
Subsidiaries		Non-Guarantor
Subsidiaries		Consolidating AdjustmentsTotal
Revenues:
Homebuilding$—  5,175,289  20,310  —  5,195,599  
Financial Services—  36,353  172,729  (4,866) 204,216  
Multifamily—  —  147,412  —  147,412  
Lennar Other—  —  15,663  —  15,663  
Total revenues—  5,211,642  356,114  (4,866) 5,562,890  
Cost and expenses:
Homebuilding—  4,561,235  19,594  6,430  4,587,259  
Financial Services—  20,829  139,510  (12,340) 147,999  
Multifamily—  —  148,716  —  148,716  
Lennar Other—  —  3,194  —  3,194  
Corporate general and administrative74,321  527  —  1,265  76,113  
Total costs and expenses74,321  4,582,591  311,014  (4,645) 4,963,281  
Homebuilding equity in earnings from unconsolidated entities—  19,537  77  —  19,614  
Homebuilding other income (expense), net(222) (48,550) 2,386  221  (46,165) 
Multifamily equity in loss from unconsolidated entities and other gain—  —  (3,018) —  (3,018) 
Lennar Other equity in loss from unconsolidated entities—  (4,239) (739) —  (4,978) 
Lennar Other expense, net—  —  (5,663) —  (5,663) 
Earnings (loss) before income taxes(74,543) 595,799  38,143  —  559,399  
Benefit (provision) for income taxes18,653  (148,736) (10,447) —  (140,530) 
Equity in earnings from subsidiaries477,362  28,703  —  (506,065) —  
Net earnings (including net loss attributable to noncontrolling interests)421,472  475,766  27,696  (506,065) 418,869  
Less: Net loss attributable to noncontrolling interests—  —  (2,603) —  (2,603) 
Net earnings attributable to Lennar$421,472  475,766  30,299  (506,065) 421,472  
Other comprehensive income, net of tax:
Net unrealized gain on securities available-for-sale$—  —  561  —  561  
Reclassification adjustments for gains included in net earnings, net of tax—  —  (176) —  (176) 
Total other comprehensive income, net of tax$—  —  385  —  385  
Total comprehensive income attributable to Lennar$421,472  475,766  30,684  (506,065) 421,857  
Total comprehensive loss attributable to noncontrolling interests$—  —  (2,603) —  (2,603) 
(In thousands)Lennar
Corporation		 Guarantor
Subsidiaries		 Non-Guarantor
Subsidiaries		 Consolidating Adjustments Total
Revenues:         
Homebuilding$—
 5,022,769
 41,228
 —
 5,063,997
Financial Services—
 100,257
 154,473
 (5,020) 249,710
Multifamily—
 —
 117,693
 —
 117,693
Lennar Other—
 —
 27,661
 —
 27,661
Total revenues—
 5,123,026
 341,055
 (5,020) 5,459,061
Cost and expenses:         
Homebuilding—
 4,597,434
 39,352
 (723) 4,636,063
Financial Services—
 89,752
 110,427
 (6,244) 193,935
Multifamily—
 —
 117,186
 —
 117,186
Lennar Other—
 —
 25,127
 (3,369) 21,758
Acquisition and integration costs related to CalAtlantic—
 23,875
 —
 —
 23,875
Corporate general and administrative82,962
 605
 —
 1,348
 84,915
Total costs and expenses82,962
 4,711,666
 292,092
 (8,988) 5,077,732
Homebuilding equity in earnings (loss) from unconsolidated entities—
 (12,789) 119
 —
 (12,670)
Homebuilding other income, net3,978
 6,889
 2,980
 (3,968) 9,879
Multifamily equity in earnings from unconsolidated entities and other gain—
 —
 14,281
 —
 14,281
Lennar Other equity in earnings from unconsolidated entities—
 444
 4,116
 —
 4,560
Lennar Other expense, net—
 (55) (6,514) —
 (6,569)
Earnings (loss) before income taxes(78,984) 405,849
 63,945
 —
 390,810
Benefit (provision) for income taxes13,957
 (74,781) (15,137) —
 (75,961)
Equity in earnings from subsidiaries375,284
 28,718
 —
 (404,002) —
Net earnings (including net earnings attributable to noncontrolling interests)310,257
 359,786
 48,808
 (404,002) 314,849
Less: Net earnings attributable to noncontrolling interests—
 —
 4,592
 —
 4,592
Net earnings attributable to Lennar$310,257
 359,786
 44,216
 (404,002) 310,257
Other comprehensive loss, net of tax:         
Net unrealized loss on securities available-for-sale$—
 —
 (589) —
 (589)
Reclassification adjustments for gains included in net earnings, net of tax—
 —
 (126) —
 (126)
Total other comprehensive loss, net of tax$—
 —
 (715) —
 (715)
Total comprehensive income attributable to Lennar$310,257
 359,786
 43,501
 (404,002) 309,542
Total comprehensive income attributable to noncontrolling interests$—
 —
 4,592
 —
 4,592
32


Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)
Six Months Ended May 31, 2019
(In thousands)Lennar
Corporation		 Guarantor
Subsidiaries		 Non-Guarantor
Subsidiaries		 Consolidating Adjustments Total
Revenues:         
Homebuilding$—
 8,789,330
 29,990
 —
 8,819,320
Financial Services—
 85,270
 271,978
 (9,721) 347,527
Multifamily—
 —
 244,806
 —
 244,806
Lennar Other—
 —
 19,319
 —
 19,319
Total revenues—
 8,874,600
 566,093
 (9,721) 9,430,972
Cost and expenses:         
Homebuilding—
 7,787,164
 31,901
 7,029
 7,826,094
Financial Services—
 59,207
 231,778
 (18,647) 272,338
Multifamily—
 —
 249,894
 —
 249,894
Lennar Other—
 —
 4,816
 —
 4,816
Corporate general and administrative151,850
 1,076
 —
 2,530
 155,456
Total costs and expenses151,850
 7,847,447
 518,389
 (9,088) 8,508,598
Homebuilding equity in earnings from unconsolidated entities—
 5,586
 272
 —
 5,858
 Homebuilding other income (expenses), net(630) (50,946) 3,243
 633
 (47,700)
Multifamily equity in earnings from unconsolidated entities and other gain—
 —
 7,563
 —
 7,563
Lennar Other equity in earnings (loss) from unconsolidated entities—
 (7,585) 10,937
 —
 3,352
Lennar Other expenses, net—
 —
 (12,924) —
 (12,924)
Earnings (loss) before income taxes(152,480) 974,208
 56,795
 —
 878,523
Benefit (provision) for income taxes38,090
 (242,575) (15,745) —
 (220,230)
Equity in earnings from subsidiaries775,772
 33,476
 —
 (809,248) —
Net earnings (including net earnings attributable to noncontrolling interests)661,382
 765,109
 41,050
 (809,248) 658,293
Less: Net loss attributable to noncontrolling interests—
 —
 (3,089) —
 (3,089)
Net earnings attributable to Lennar$661,382
 765,109
 44,139
 (809,248) 661,382
Other comprehensive income, net of tax:         
Net unrealized gain on securities available-for-sale$—
 —

769

—
 769
Reclassification adjustments for gains included in earnings, net of tax—
 —

(176)
—
 (176)
Total other comprehensive income, net of tax$—
 —
 593
 —
 593
Total comprehensive income attributable to Lennar$661,382
 765,109
 44,732
 (809,248) 661,975
Total comprehensive income attributable to noncontrolling interests$—
 —
 (3,089) —
 (3,089)


Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)
Six Months Ended May 31, 20182020
(In thousands)Lennar
Corporation		Guarantor
Subsidiaries		Non-Guarantor
Subsidiaries		Consolidating AdjustmentsTotal
Revenues:
Homebuilding$—  9,096,000  25,600  —  9,121,600  
Financial Services—  64,528  342,365  (11,969) 394,924  
Multifamily—  —  255,734  —  255,734  
Lennar Other—  —  20,452  —  20,452  
Total revenues—  9,160,528  644,151  (11,969) 9,792,710  
Cost and expenses:
Homebuilding—  7,987,657  30,647  (7,167) 8,011,137  
Financial Services—  37,599  230,727  (6,627) 261,699  
Multifamily—  —  260,821  —  260,821  
Lennar Other—  —  1,502  —  1,502  
Corporate general and administrative164,554  3,213  —  2,531  170,298  
Total costs and expenses164,554  8,028,469  523,697  (11,263) 8,705,457  
Homebuilding equity in earnings (loss) from unconsolidated entities—  (13,956) 310  —  (13,646) 
 Homebuilding other income (expense), net(706) (8,239) 3,181  706  (5,058) 
Financial Services gain on deconsolidation—  61,418  —  —  61,418  
Multifamily equity in earnings from unconsolidated entities and other gain—  —  6,234  —  6,234  
Lennar Other equity in loss from unconsolidated entities—  (8,852) (17,671) —  (26,523) 
Lennar Other income (expense), net—  6  (9,555) —  (9,549) 
Earnings (loss) before income taxes(165,260) 1,162,436  102,953  —  1,100,129  
Benefit (provision) for income taxes28,739  (191,711) (29,836) —  (192,808) 
Equity in earnings from subsidiaries1,052,379  80,835  —  (1,133,214) —  
Net earnings (including net loss attributable to noncontrolling interests)915,858  1,051,560  73,117  (1,133,214) 907,321  
Less: Net loss attributable to noncontrolling interests—  —  (8,537) —  (8,537) 
Net earnings attributable to Lennar$915,858  1,051,560  81,654  (1,133,214) 915,858  
Other comprehensive loss, net of tax:
Net unrealized loss on securities available-for-sale$—  —  (384) —  (384) 
Reclassification adjustments for gain included in earnings, net of tax—  —  (452) —  (452) 
Total other comprehensive loss, net of tax$—  —  (836) —  (836) 
Total comprehensive income attributable to Lennar$915,858  1,051,560  80,818  (1,133,214) 915,022  
Total comprehensive loss attributable to noncontrolling interests$—  —  (8,537) —  (8,537) 
(In thousands)Lennar
Corporation		 Guarantor
Subsidiaries		 Non-Guarantor
Subsidiaries		 Consolidating Adjustments Total
Revenues:         
Homebuilding$—
 7,675,963
 50,127
 —
 7,726,090
Financial Services—
 173,269
 282,522
 (9,994) 445,797
Multifamily—
 —
 210,949
 —
 210,949
Lennar Other—
 —
 57,016
 —
 57,016
Total revenues—
 7,849,232
 600,614
 (9,994) 8,439,852
Cost and expenses:         
Homebuilding—
 6,991,238
 51,615
 (2,757) 7,040,096
Financial Services—
 164,228
 212,324
 (12,393) 364,159
Multifamily—
 —
 214,385
 —
 214,385
Lennar Other—
 —
 51,735
 (3,369) 48,366
Acquisition and integration costs related to CalAtlantic—
 128,070
 —
 —
 128,070
Corporate general and administrative148,885
 1,209
 —
 2,631
 152,725
Total costs and expenses148,885
 7,284,745
 530,059
 (15,888) 7,947,801
Homebuilding equity in loss from unconsolidated entities—
 (26,761) (37) —
 (26,798)
Homebuilding other income, net5,913
 175,252
 4,603
 (5,894) 179,874
Multifamily equity in earnings from unconsolidated entities—
 —
 17,023
 —
 17,023
Lennar Other equity in earnings from unconsolidated entities—
 285
 13,230
 —
 13,515
Lennar Other expense, net—
 (122) (15,305) —
 (15,427)
Earnings (loss) before income taxes(142,972) 713,141
 90,069
 —
 660,238
Benefit (provision) for income taxes45,522
 (225,224) (28,870) —
 (208,572)
Equity in earnings from subsidiaries543,922
 38,918
 —
 (582,840) —
Net earnings (including net earnings attributable to noncontrolling interests)446,472
 526,835
 61,199
 (582,840) 451,666
Less: Net earnings attributable to noncontrolling interests—
 —
 5,194
 —
 5,194
Net earnings attributable to Lennar$446,472
 526,835
 56,005
 (582,840) 446,472
Other comprehensive loss, net of tax:         
Net unrealized loss on securities available-for-sale$—
 —
 (1,247) —
 (1,247)
Reclassification adjustments for gains included in earnings, net of tax—
 —
 (126) —
 (126)
Total other comprehensive loss, net of tax$—
 —
 (1,373) —
 (1,373)
Total comprehensive income attributable to Lennar$446,472
 526,835
 54,632
 (582,840) 445,099
Total comprehensive income attributable to noncontrolling interests$—
 —
 5,194
 —
 5,194
33


Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


Condensed Consolidating Statement of Cash FlowsOperations and Comprehensive Income (Loss)
Six Months Ended May 31, 2019
(In thousands)Lennar
Corporation		Guarantor
Subsidiaries		Non-Guarantor
Subsidiaries		Consolidating AdjustmentsTotal
Revenues:
Homebuilding$—  8,789,330  29,990  —  8,819,320  
Financial Services—  85,270  271,978  (9,721) 347,527  
Multifamily—  —  244,806  —  244,806  
Lennar Other—  —  19,319  —  19,319  
Total revenues—  8,874,600  566,093  (9,721) 9,430,972  
Cost and expenses:
Homebuilding—  7,787,164  31,901  7,029  7,826,094  
Financial Services—  59,207  231,778  (18,647) 272,338  
Multifamily—  —  249,894  —  249,894  
Lennar Other—  —  4,816  —  4,816  
Corporate general and administrative151,850  1,076  —  2,530  155,456  
Total costs and expenses151,850  7,847,447  518,389  (9,088) 8,508,598  
Homebuilding equity in earnings from unconsolidated entities—  5,586  272  —  5,858  
Homebuilding other income (expense), net(630) (50,946) 3,243  633  (47,700) 
Multifamily equity in earnings from unconsolidated entities—  —  7,563  —  7,563  
Lennar Other equity in earnings (loss) from unconsolidated entities—  (7,585) 10,937  —  3,352  
Lennar Other expense, net—  —  (12,924) —  (12,924) 
Earnings (loss) before income taxes(152,480) 974,208  56,795  —  878,523  
Benefit (provision) for income taxes38,090  (242,575) (15,745) —  (220,230) 
Equity in earnings from subsidiaries775,772  33,476  —  (809,248) —  
Net earnings (including net earnings attributable to noncontrolling interests)661,382  765,109  41,050  (809,248) 658,293  
Less: Net loss attributable to noncontrolling interests—  —  (3,089) —  (3,089) 
Net earnings attributable to Lennar$661,382  765,109  44,139  (809,248) 661,382  
Other comprehensive loss, net of tax:
Net unrealized gain on securities available-for-sale$—  —  769  —  769  
Reclassification adjustments for gains included in earnings, net of tax—  —  (176) —  (176) 
Total other comprehensive income, net of tax$—  —  593  —  593  
Total comprehensive income attributable to Lennar$661,382  765,109  44,732  (809,248) 661,975  
Total comprehensive loss attributable to noncontrolling interests$—  —  (3,089) —  (3,089) 
(In thousands)
Lennar
Corporation
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 Consolidating Adjustments Total
Cash flows from operating activities:         
Net earnings (including net loss attributable to noncontrolling interests)$661,382
 765,109
 41,050
 (809,248) 658,293
Distributions of earnings from guarantor and non-guarantor subsidiaries775,772
 33,476
 —
 (809,248) —
Other adjustments to reconcile net earnings (including net loss attributable to noncontrolling interests) to net cash provided by operating activities(819,869) (1,222,713) 145,151
 809,248
 (1,088,183)
Net cash provided by (used in) operating activities617,285
 (424,128) 186,201
 (809,248) (429,890)
Cash flows from investing activities:         
Investments in and contributions to unconsolidated entities, net of distributions of capital—
 (99,052) 11,716
 —
 (87,336)
Proceeds from sales of real estate owned—
 —
 4,210
 —
 4,210
Proceeds from sale of investment in unconsolidated entity—
 —
 17,790
 —
 17,790
Proceeds from sales of Financial Services' businesses—
 21,317
 3,129
 —
 24,446
Other(170) (30,185) (20,341) —
 (50,696)
Intercompany(1,263,527) —
 —
 1,263,527
 —
Net cash provided by (used in) investing activities(1,263,697) (107,920) 16,504
 1,263,527
 (91,586)
Cash flows from financing activities:         
Net borrowings under unsecured revolving credit facilities550,000
 —
 —
 —
 550,000
Net borrowings (repayments) under warehouse facilities—
 170
 (365,354) —
 (365,184)
Net borrowings (repayments) on convertible senior notes, other borrowings, other liabilities, and other notes payable—
 (101,052) 3,657
 —
 (97,395)
Net repayments related to noncontrolling interests—
 —
 (14,380) —
 (14,380)
Common stock:        
Issuances634
 —
 —
 —
 634
Repurchases(101,229) —
 —
 —
 (101,229)
Dividends(25,877) (765,109) (44,139) 809,248
 (25,877)
Intercompany—
 1,057,135
 206,392
 (1,263,527) —
Net cash provided by (used in) financing activities423,528
 191,144
 (213,824) (454,279) (53,431)
Net decrease in cash and cash equivalents and restricted cash(222,884) (340,904) (11,119) —
 (574,907)
Cash and cash equivalents and restricted cash at beginning of period624,694
 721,603
 249,681
 —
 1,595,978
Cash and cash equivalents and restricted cash at end of period$401,810
 380,699
 238,562
 —
 1,021,071
34


Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) - (Continued)


Condensed Consolidating Statement of Cash Flows
Six Months Ended May 31, 20182020
(In thousands)Lennar
Corporation		Guarantor
Subsidiaries		Non-Guarantor
Subsidiaries		Consolidating AdjustmentsTotal
Cash flows from operating activities:
Net earnings (including net loss attributable to noncontrolling interests)$915,858  1,051,560  73,117  (1,133,214) 907,321  
Distributions of earnings from guarantor and non-guarantor subsidiaries1,052,379  80,835  —  (1,133,214) —  
Other adjustments to reconcile net earnings (including net loss attributable to noncontrolling interests) to net cash provided by operating activities(980,620) (149,064) 399,952  1,133,214  403,482  
Net cash provided by operating activities987,617  983,331  473,069  (1,133,214) 1,310,803  
Cash flows from investing activities:
Investments in and contributions to unconsolidated entities/deconsolidation of a previously consolidated entity, net of distributions of capital—  (17,986) (169,705) —  (187,691) 
Proceeds from the sales of operating properties and equipment and other assets—  29,727  —  —  29,727  
Other(1,767) 28,454  (42,765) —  (16,078) 
Intercompany(58,949) —  —  58,949  —  
Net cash provided by (used in) investing activities(60,716) 40,195  (212,470) 58,949  (174,042) 
Cash flows from financing activities:
Net borrowings (repayments) under warehouse facilities—  404  (310,620) —  (310,216) 
Net borrowings (repayments) on senior notes, other borrowings, other liabilities, and other notes payable(267,708) (123,505) 127,097  —  (264,116) 
Common stock:
Repurchases(296,093) —  —  —  (296,093) 
Dividends(78,145) (1,051,560) (81,654) 1,133,214  (78,145) 
Intercompany—  39,591  19,358  (58,949) —  
Net cash used in financing activities(641,946) (1,135,070) (245,819) 1,074,265  (948,570) 
Net increase (decrease) in cash and cash equivalents and restricted cash284,955  (111,544) 14,780  —  188,191  
Cash and cash equivalents and restricted cash at beginning of period713,828  532,304  222,559  —  1,468,691  
Cash and cash equivalents and restricted cash at end of period$998,783  420,760  237,339  —  1,656,882  
(In thousands)
Lennar
Corporation
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 Consolidating Adjustments Total
Cash flows from operating activities:         
Net earnings (including net earnings attributable to noncontrolling interests)$446,472
 526,835
 61,199
 (582,840) 451,666
Distributions of earnings from guarantor and non-guarantor subsidiaries543,922
 38,918
 —
 (582,840) —
Other adjustments to reconcile net earnings (including net earnings attributable to noncontrolling interests) to net cash provided by (used in) operating activities(712,549) (107,511) (194,932) 582,840
 (432,152)
Net cash provided by (used in) operating activities277,845
 458,242
 (133,733) (582,840) 19,514
Cash flows from investing activities:         
Investments in and contributions to unconsolidated entities, net of distributions of capital—
 24,013
 (14,043) —
 9,970
Proceeds from sales of real estate owned—
 —
 21,658
 —
 21,658
Proceeds from sale of investment in unconsolidated entity—
 175,179
 —
 —
 175,179
Purchases of commercial mortgage-backed securities bonds—
 —
 (31,068) —
 (31,068)
Acquisition, net of cash and restricted cash acquired(1,140,367) 23,035
 39,368
 —
 (1,077,964)
Other(21,568) (5,933) (21,588) —
 (49,089)
Distributions of capital from guarantor and non-guarantor subsidiaries65,000
 20,000
 —
 (85,000) —
Intercompany(1,034,631) —
 —
 1,034,631
 —
Net cash provided by (used in) investing activities(2,131,566) 236,294
 (5,673) 949,631
 (951,314)
Cash flows from financing activities:         
Net borrowings (repayments) under unsecured revolving credit facilities950,000
 (454,700) —
 —
 495,300
Net borrowings (repayments) under warehouse facilities—
 (54) 7,764
 —
 7,710
Debt issuance costs(9,109) —
 (2,992) —
 (12,101)
Net payments on other borrowings, other liabilities, Lennar Other senior notes and other notes payable—
 (52,999) (295,046) —
 (348,045)
Redemption of senior notes(484,332) (90,668) —
 —
 (575,000)
Conversions and exchanges of convertible senior notes—
 (59,145) —
 —
 (59,145)
Net payments related to noncontrolling interests—
 —
 (26,530) —
 (26,530)
Common stock:        
Issuances3,184
 —
 —
 —
 3,184
Repurchases(28,526) —
 —
 —
 (28,526)
Dividends(22,780) (591,835) (76,005) 667,840
 (22,780)
Intercompany—
 624,070
 410,561
 (1,034,631) —
Net cash provided by (used in) financing activities408,437
 (625,331) 17,752
 (366,791) (565,933)
Net (decrease) increase in cash and cash equivalents and restricted cash(1,445,284) 69,205
 (121,654) —
 (1,497,733)
Cash and cash equivalents and restricted cash at beginning of period1,938,555
 366,946
 388,583
 —
 2,694,084
Cash and cash equivalents and restricted cash at end of period$493,271
 436,151
 266,929
 —
 1,196,351
35
Lennar Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)


Condensed Consolidating Statement of Cash Flows
Six Months Ended May 31, 2019
(In thousands)Lennar
Corporation		Guarantor
Subsidiaries		Non-Guarantor
Subsidiaries		Consolidating AdjustmentsTotal
Cash flows from operating activities:
Net earnings (including net loss attributable to noncontrolling interests)$661,382  765,109  41,050  (809,248) 658,293  
Distributions of earnings from guarantor and non-guarantor subsidiaries775,772  33,476  —  (809,248) —  
Other adjustments to reconcile net earnings (including net loss attributable to noncontrolling interests) to net cash provided by (used in) operating activities(819,869) (1,222,713) 145,151  809,248  (1,088,183) 
Net cash provided by (used in) operating activities617,285  (424,128) 186,201  (809,248) (429,890) 
Cash flows from investing activities:
Investments in and contributions to unconsolidated entities, net of distributions of capital—  (99,052) 11,716  —  (87,336) 
Proceeds from sales of real estate owned—  —  4,210  —  4,210  
Proceeds from sale of investment in unconsolidated entity—  —  17,790  —  17,790  
Proceeds from sales of Financial Services' businesses—  21,317  3,129  —  24,446  
Other(170) (30,185) (20,341) —  (50,696) 
Intercompany(1,263,527) —  —  1,263,527  —  
Net cash provided by (used in) investing activities(1,263,697) (107,920) 16,504  1,263,527  (91,586) 
Cash flows from financing activities:
Net borrowings under unsecured revolving credit facilities550,000  —  —  —  550,000  
Net borrowings (repayments) under warehouse facilities—  170  (365,354) —  (365,184) 
Net borrowings (repayments) on convertible senior notes, other borrowings, other liabilities, and other notes payable—  (101,052) 3,657  —  (97,395) 
Net repayments related to noncontrolling interests—  —  (14,380) —  (14,380) 
Common stock:
Issuances634  —  —  —  634  
Repurchases(101,229) —  —  —  (101,229) 
Dividends(25,877) (765,109) (44,139) 809,248  (25,877) 
Intercompany—  1,057,135  206,392  (1,263,527) —  
Net cash provided by (used in) financing activities423,528  191,144  (213,824) (454,279) (53,431) 
Net decrease in cash and cash equivalents and restricted cash(222,884) (340,904) (11,119) —  (574,907) 
Cash and cash equivalents and restricted cash at beginning of period624,694  721,603  249,681  —  1,595,978  
Cash and cash equivalents and restricted cash at end of period$401,810  380,699  238,562  —  1,021,071  

36

Item 2. 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 our unaudited condensed consolidated financial statements and accompanying notes included under Item 1 of this Report and our audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K, for our fiscal year ended November 30, 2018.2019.
Some of the statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, and elsewhere in this Quarterly Report on Form 10-Q, are "forward-looking statements," within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements contained herein may include opinions or beliefs regarding market conditions and similar matters. In many instances, those opinions and beliefs are based upon general observations by members of our management, anecdotal evidence and our experience in the conduct of our businesses, without specific investigation or analyses. Therefore, while they reflect our view of the industries and markets in which we are involved, they should not be viewed as reflecting verifiable views or views that are necessarily shared by all who are involved in those industries or markets. These statements concern expectations, beliefs, projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. These forward-looking statements typically include the words “anticipate,” “believe,” “consider,” “estimate,” “expect,” “forecast,” “intend,” “objective,” “plan,” “predict,” “projection,” “seek,” “strategy,” “target,” “will” or other words of similar meaning.
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 what is anticipated by our forward-looking statements. The most important factors that could cause actual results to differ materially from those anticipated by our forward-looking statements include, but are not limited to: the potential continuing negative impact of the ongoing coronavirus ("COVID-19") pandemic, the duration, impact and severity of which is highly uncertain; an extended slowdown in the real estate markets across the nation, including a slowdown in the market for single family homes or the multifamily rental market; increases in operating costs, including costs related to construction materials, labor, real estate taxes and insurance, and our inability to manage our cost structure, both in our Homebuilding and Multifamily businesses; reduced availability of mortgage financing or increased interest rates; our inability to realize all of the anticipated synergy benefits from the CalAtlantic Group, Inc. ("CalAtlantic") acquisition or to realize them in the anticipated timeline; our inability to successfully execute our strategies;strategies, including our land lighter strategy; changes in general economic and financial conditions that reduce demand for our products and services, lower our profit margins or reduce our access to credit; our inability to acquire land at anticipated prices; the possibility that we will incur nonrecurring costs that affect earnings in one or more reporting periods; decreased demand for our homes or multifamilyMultifamily rental properties; the possibility that the Tax Cuts and Jobs Act will have more negative than positive impact on us; the possibility that the benefit from our increasing use of technology will not justify its cost; increased competition for home sales from other sellers of new and resale homes; our inability to pay down debt and opportunistically repurchasedebt; whether government actions or other factors related to COVID-19 force us to delay or terminate our program of repurchasing our stock; a decline in the value of our land inventories and resulting write-downs of the carrying value of our real estate assets; the failure of the participants in various joint ventures to honor their commitments; difficulty obtaining land-use entitlements or construction financing; natural disasters and other unforeseen events for which our insurance does not provide adequate coverage; new laws or regulatory changes that adversely affect the profitability of our businesses; our inability to refinance our debt on terms that are acceptable to us; and changes in accounting conventions that adversely affect our reported earnings.
Please see our Form 10-K for the fiscal year ended November 30, 20182019 and other filings with the SEC for a further discussion of these and other risks and uncertainties which could affect our future results. We undertake no obligation, other than those imposed by securities laws, 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.
Outlook
DuringEarly in the second quarter, the homebuying market solidifiedeconomy was shuttering and unemployment was supported by favorable underlying fundamentals. We saw traffic and sales continue to strengthenrising rapidly as the combinationcoronavirus (“COVID-19”) pandemic was dramatically affecting the United States economy in general and our business specifically. While the economy is still trying to recover after the shut-down, the homebuilding industry only stalled from mid-March through April. By the end of lowerApril, most states and municipalities across the country had deemed housing an essential service, which enabled us to continue building, selling, and delivering homes to our customers. During May and for the first few weeks of June, the market for new homes had steadily strengthened in almost all areas where we have communities under development. We believe this is the result of low interest rates and short supply, together with slower price appreciation and,what appears to be a desire by many people to move out of crowded urban areas into new homes in some instances, slightly lower prices, has positively impacted affordability. That, together with low unemployment, wage growth, consumer confidence and economic growth drove the consumer to return to a more affordable housing market. While the current market conditions would not be considered robust, they would be considered solid. We believe that the housing market is generally runningsuburbs. The strength in a performance channel that is bounded on the downside by the production deficit that has persisted for the past decade and has kept housing supply constrained, while it is moderated on the upside by rising land and labor costs as well as affordability limits. Within this channel the market is generally continuingmay also be partially attributable to improve,pent up demand from the earlier part of our second quarter when more restrictive stay at home orders were in place in many of our markets and we believe, will continue to improve for the foreseeable future.when public concern over COVID-19 was much greater.

Our increasedfirst priority with regard to the COVID-19 pandemic was to do everything we could to ensure the safety, health and hygiene of our associates, customers, suppliers and others with whom we partner in our business activities. We, like many
37

businesses, required or permitted many of our associates to work remotely. This did not seem to have had a material negative impact on our business activities. However, it did require us to increase our cybersecurity monitoring. Subject to that and through the use of sales incentives duringappropriate risk mitigation and safety practices, we continued to strategically manage our business in this unprecedented environment in which we find ourselves. Part of our strategy included accelerating various technology initiatives to accommodate our safety first mandate and to continue our business in these difficult times. We are selling homes in person by appointment, virtually or by self-guided tours. Additionally, we are implementing a virtual new home orientation process so our home buyers can walk and view their completed home via FaceTime and even get keys to the market pause in 2018 helped usfront door digitally. Additionally we have increased the number of digital closings, with digital document signings and where permitted digital notarization.

We have worked closely with our strategy of using pricingtrade partners, including through our focus on an even flow approach to maintain volume and we believeproduction, which enabled our trade partners to keep our homebuilding business on track to deliver over 50,000 homes in fiscal 2019. We expect that our average sales price will continue to move lower going forward as many new entry-level communities come online, but that the lower average sales price will be offset by the drop in lumber prices, cost synergies and our production-first operating platform.


Overall, we expect to see our margins improve steadily throughout the remainder of the year as incentives continue to subside as well as a combination of additional lumber savings and direct cost synergies. Accordingly, we expect to generate strong cash flow for the remainder of 2019 and expect to continue to use excess cash flow to both pay down debt, while opportunistically repurchasing stock.
We continue to invest capital in technology initiatives that are redefining the future of both our company and our industry. We believe that our technology initiatives represent a significant opportunity and upside for the company as we create efficiencies in internal operations, improve our SG&A leveragetheir costs and reduce ourtheir prices to us. This drove a year-over-year 200-basis point improvement in cost structure. In the second quarter, our SG&A expenses as a percentage of homes sale revenues continued its downward trend withrevenue in the second quarter. Also in our lowest second quarter, level ever at 8.4%. We continueour cost per square foot was down 130 basis points from the prior quarter and 240 basis from the same period in the prior year. The benefit of pricing power and reduced costs will not all flow through to be laser-focusedmargins, as we are also focused on progress on our technology adoptions and change management, and this is being reflected in bottom line improvements and through enhancement to our customer experience and our customer interface.
We remain encouraged by both our position and market conditions forproducing affordable housing. However, we do expect further margin improvement during the remainder of 2020.

We also slowed our land purchases, land development activities and home starts. As a result, our land positions were temporarily altered, and we ended the quarter with a 3.9 year supply of land owned, compared to a 4.5 year supply of land owned in the second quarter of 2019. The portion of land we controlled through options or similar agreements was 32%, up from 25% last year. With a solid balance sheet, leading market positions and continued executionAs home sales started to recover, we restarted our development activities. However, because of the mid-March through April slowdown in construction at some of our core operating strategies,communities, we expect to have fewer deliveries in the third and fourth quarters. We expect to deliver between 50,500 and 51,000 homes in fiscal year 2020. While community count is difficult to predict, particularly in the current environment with municipal offices shutting down and being less available to provide permits for land development, we expect our community count to dip slightly in the third quarter and stabilize in the fourth quarter.

Our Lennar Financial Services business continues to lead the way for the Company on innovation and enhanced customer experiences. Confronted with limitations on the ability of borrowers to engage in normal mortgage borrowing procedures, our Lennar Financial Services business accelerated its rollout of certain technologies that enabled it to have a strong second quarter in spite of those limitations. These enhancements represent a permanent improvement in our mortgage processing procedures.

In our Multifamily business, despite the disruptions to businesses and employment resulting from the COVID-19 pandemic, occupancy in the properties in which we have investments did not change substantially, and we did not encounter a significant increase in rent delinquencies. We believe the reason we were not substantially affected by people moving from urban apartments to single family homes is because people are leaving the lower quality, less-amenitized apartments, but not higher quality residential buildings such as those offered by our Multifamily business.

There are no reliable estimates of how long the pandemic will last or how many people are likely to be affected by it and therefore, the unpredictable environment in our country will evolve over time. However, we believe that we arewill be well positioned to produce strong results throughout the remainder of 2019.through hard work, focused leadership, and innovative technology.
(1) Results of Operations
Overview
We historically have experienced, and expect to continue to experience, variability in quarterly results. Our results of operations for the three and six months ended May 31, 20192020 are not necessarily indicative of the results to be expected for the full year. Our homebuilding business is seasonal in nature and generally reflects higher levels of new home order activity in our second and third fiscal quarters and increased deliveries in the second half of our fiscal year. However, periods of economic downturn in the industry can alter seasonal patterns.patterns as noted in the Outlook section.
Our net earnings attributable to Lennar were $517.4 million, or $1.65 per diluted share ($1.66 per basic share), in the second quarter of 2020, compared to net earnings attributable to Lennar of $421.5 million, or $1.30 per diluted share ($1.31 per basic share), in the second quarter of 2019,2019. Our net earnings attributable to Lennar were $915.9 million, or $2.91 per diluted share ($2.92 per basic share), in the six months ended May 31, 2020, compared to net earnings attributable to Lennar of $310.3 million, or $0.94 per diluted share ($0.95 per basic share), in the second quarter of 2018. Our net earnings attributable to Lennar were $661.4 million, or $2.03 per diluted share ($2.05 per basic share), in the six months ended May 31, 2019, compared to net earnings attributable to Lennar of $446.5 million, or $1.52 per diluted share ($1.53 per basic share), in the six months ended May 31, 2018.2019.
38




Financial information relating to our operations was as follows:
Three Months Ended May 31, 2020
(In thousands)HomebuildingFinancial ServicesMultifamilyLennar OtherCorporateTotal
Revenues:
Sales of homes$4,925,081  —  —  —  —  4,925,081  
Sales of land19,833  —  —  —  —  19,833  
Other revenues4,570  196,263  123,117  18,509  —  342,459  
Total revenues4,949,484  196,263  123,117  18,509  —  5,287,373  
Costs and expenses:
Costs of homes sold3,862,771  —  —  —  —  3,862,771  
Costs of land sold43,369  —  —  —  —  43,369  
Selling, general and administrative expenses407,191  —  —  —  —  407,191  
Other costs and expenses—  110,355  123,473  (1,072) —  232,756  
Total costs and expenses4,313,331  110,355  123,473  (1,072) —  4,546,087  
Equity in loss from unconsolidated entities(9,100) —  (282) (26,642) —  (36,024) 
Financial Services gain on deconsolidation—  61,418  —  —  —  61,418  
Other income (expense), net4,308  —  —  (10,960) —  (6,652) 
Operating earnings (loss)$631,361  147,326  (638) (18,021) —  760,028  
Corporate general and administrative expenses—  —  —  —  83,451  83,451  
Earnings (loss) before income taxes$631,361  147,326  (638) (18,021) (83,451) 676,577  

Three Months Ended May 31, 2019
(In thousands)HomebuildingFinancial ServicesMultifamilyLennar OtherCorporateTotal
Revenues:
Sales of homes$5,176,116  —  —  —  —  5,176,116  
Sales of land16,455  —  —  —  —  16,455  
Other revenues3,028  204,216  147,412  15,663  —  370,319  
Total revenues5,195,599  204,216  147,412  15,663  —  5,562,890  
Costs and expenses:
Costs of homes sold4,137,529  —  —  —  —  4,137,529  
Costs of land sold14,008  —  —  —  —  14,008  
Selling, general and administrative expenses435,722  —  —  —  —  435,722  
Other costs and expenses—  147,999  148,716  3,194  —  299,909  
Total costs and expenses4,587,259  147,999  148,716  3,194  —  4,887,168  
Equity in earnings (loss) from unconsolidated entities and Multifamily other gain19,614  —  (3,018) (4,978) —  11,618  
Other expense, net(46,165) —  —  (5,663) —  (51,828) 
Operating earnings (loss)$581,789  56,217  (4,322) 1,828  —  635,512  
Corporate general and administrative expenses—  —  —  —  76,113  76,113  
Earnings (loss) before income taxes$581,789  56,217  (4,322) 1,828  (76,113) 559,399  
39

 Three Months Ended Six Months Ended
 May 31, May 31,
(In thousands)2019 2018 2019 2018
Homebuilding revenues:       
Sales of homes$5,176,116
 4,986,010
 8,784,245
 7,635,150
Sales of land16,455
 77,987
 30,238
 90,940
Other homebuilding revenues3,028
 —
 4,837
 —
Total Homebuilding revenues5,195,599
 5,063,997
 8,819,320
 7,726,090
Homebuilding costs and expenses:       
Costs of homes sold4,137,529
 4,145,968
 7,019,579
 6,278,480
Costs of land sold14,008
 57,647
 27,534
 72,015
Selling, general and administrative435,722
 432,448
 778,981
 689,601
Total Homebuilding costs and expenses4,587,259
 4,636,063
 7,826,094
 7,040,096
Homebuilding operating margins608,340
 427,934
 993,226
 685,994
Homebuilding equity in earnings (loss) from unconsolidated entities19,614
 (12,670) 5,858
 (26,798)
Homebuilding other income (expense), net(46,165) 9,879
 (47,700) 179,874
Homebuilding operating earnings581,789
 425,143
 951,384
 839,070
Financial Services revenues204,216
 249,709
 347,527
 445,796
Financial Services costs and expenses147,999
 193,935
 272,338
 364,160
Financial Services operating earnings56,217
 55,774
 75,189
 81,636
Multifamily revenues147,412
 117,693
 244,806
 210,949
Multifamily costs and expenses148,716
 117,186
 249,894
 214,385
Multifamily equity in earnings (loss) from unconsolidated entities and other gain(3,018) 14,281
 7,563
 17,023
Multifamily operating earnings (loss)(4,322) 14,788
 2,475
 13,587
Lennar Other revenues15,663
 27,662
 19,319
 57,017
Lennar Other costs and expenses3,194
 21,758
 4,816
 48,365
Lennar Other equity in earnings (loss) from unconsolidated entities(4,978) 4,560
 3,352
 13,515
Lennar Other expense, net(5,663) (6,569) (12,924) (15,427)
Lennar Other operating earnings1,828
 3,895
 4,931
 6,740
Total operating earnings635,512
 499,600
 1,033,979
 941,033
Acquisition and integration costs related to CalAtlantic—
 (23,875) —
 (128,070)
Corporate general and administrative expenses(76,113) (84,915) (155,456) (152,725)
Earnings before income taxes$559,399
 390,810
 878,523
 660,238
Six Months Ended May 31, 2020
(In thousands)HomebuildingFinancial ServicesMultifamilyLennar OtherCorporateTotal
Revenues:
Sales of homes$9,065,848  —  —  —  —  9,065,848  
Sales of land46,700  —  —  —  —  46,700  
Other revenues9,052  394,924  255,734  20,452  —  680,162  
Total revenues9,121,600  394,924  255,734  20,452  —  9,792,710  
Costs and expenses:
Costs of homes sold7,154,550  —  —  —  —  7,154,550  
Costs of land sold70,504  —  —  —  —  70,504  
Selling, general and administrative expenses786,083  —  —  —  —  786,083  
Other costs and expenses—  261,699  260,821  1,502  —  524,022  
Total costs and expenses8,011,137  261,699  260,821  1,502  —  8,535,159  
Equity in earnings (loss) from unconsolidated entities and Multifamily other gain(13,646) —  6,234  (26,523) —  (33,935) 
Financial Services gain on deconsolidation—  61,418  —  —  —  61,418  
Other expense, net(5,058) —  —  (9,549) —  (14,607) 
Operating earnings (loss)$1,091,759  194,643  1,147  (17,122) —  1,270,427  
Corporate general and administrative expenses—  —  —  —  170,298  170,298  
Earnings (loss) before income taxes$1,091,759  194,643  1,147  (17,122) (170,298) 1,100,129  
Effects of CalAtlantic Acquisition
In fiscal year 2018, we exceeded our initial $100 million synergy savings expectations from the CalAtlantic acquisition by $70 million and we believe we are on track to meet our $380 million synergies target for 2019. These steps included elimination of costs of having two publicly traded companies, significant reductions in combined headcount and renegotiation of both local and national supply contracts.
Homebuilding revenue and net earnings attributable to Lennar for the three and six months ended May 31, 2018 included $2.1 billion and $2.5 billion, respectively, of home sales revenues, and earnings (loss) before income taxes included $56.5 million and ($52.0) million, respectively, of a pre-tax earnings (loss) from CalAtlantic since the date of acquisition, which included acquisition and integration costs of $23.9 million and $128.1 million, respectively. These transaction expenses were included within acquisition and integration costs related to CalAtlantic in the accompanying condensed consolidated statement of operations for the three and six months ended May 31, 2018.
Six Months Ended May 31, 2019
(In thousands)HomebuildingFinancial ServicesMultifamilyLennar OtherCorporateTotal
Revenues:
Sales of homes$8,784,245  —  —  —  —  8,784,245  
Sales of land30,238  —  —  —  —  30,238  
Other revenues4,837  347,527  244,806  19,319  —  616,489  
Total revenues8,819,320  347,527  244,806  19,319  —  9,430,972  
Homebuilding costs and expenses:
Costs of homes sold7,019,579  —  —  —  —  7,019,579  
Costs of land sold27,534  —  —  —  —  27,534  
Selling, general and administrative778,981  —  —  —  —  778,981  
Other costs and expenses—  272,338  249,894  4,816  527,048  
Total costs and expenses7,826,094  272,338  249,894  4,816  —  8,353,142  
Equity in earnings from unconsolidated entities and Multifamily other gain5,858  —  7,563  3,352  —  16,773  
Other expense, net(47,700) —  —  (12,924) —  (60,624) 
Operating earnings$951,384  75,189  2,475  4,931  —  1,033,979  
Corporate general and administrative expenses—  —  —  —  155,456  155,456  
Earnings (loss) before income taxes$951,384  75,189  2,475  4,931  (155,456) 878,523  

Three Months Ended May 31, 20192020 versus Three Months Ended May 31, 20182019
Revenues from home sales increased 4%decreased 5% in the second quarter of 20192020 to $5.2$4.9 billion from $5.0$5.2 billion in the second quarter of 2018.2019. Revenues were higherlower primarily due to a 5% increase in the number of home deliveries, excluding unconsolidated entities, partially offset by a 1%4% decrease in the average sales price of homes delivered. New home deliveries,


excluding unconsolidated entities, increasedof 12,653 homes in the second quarter of 2020 were flat compared to 12,706 homes in the second quarter of 2019, from 12,078 homes in the second quarter of 2018, primarily as a result of an increase in home deliveries in the EastCOVID-19 pandemic and Texas segments.the economic shutdown. The average sales price of homes delivered was $389,000 in the second quarter of 2020, compared to $407,000 in the second quarter of 2019, compared to $413,000 in the second quarter of 2018.2019. The decrease in average sales price primarily resulted from product mix as a larger percentage of deliveries came from the East and Texas segments as well as the Texas segment continuing to shift to lower-priced communities. Sales incentives offeredcommunities and regional product mix due to homebuyers were $26,600 per home deliveredCOVID-19 stay-at-home orders in the second quarter of 2019, or 6.1% as a percentage of home sales revenue, compared to $23,000 per home delivered in the second quarter of 2018, or 5.3% as a percentage of home sales revenue, and $25,300 per home delivered in the first quarter of 2019, or 5.8% as a percentage of home sales revenue.certain higher priced markets.
40

Gross marginsmargin on home sales were $1.0was $1.1 billion, or 20.1%21.6%, in the second quarter of 2019,2020, compared to $840.0 million,$1.0 billion, or 16.8% (21.6% excluding purchase accounting),20.1% in the second quarter of 2018.2019. The gross margin percentage on home sales increased primarily becausedue to our continued focus on reducing construction costs. Loss on land sales in the second quarter of 2018 included $236.82020 was $23.5 million, or 480 basis pointsprimarily due to a write-off of backlog/constructioncosts as a result of us not moving forward with a naval base development in progress write-up related to purchase accounting adjustmentsConcord, California, northeast of San Francisco. Gross margin on CalAtlantic homes thatland sales were delivered$2.4 million in that quarter. This was partially offset by higher construction costs and increased sales incentives.the second quarter of 2019.
Selling, general and administrative expenses were $407.2 million in the second quarter of 2020, compared to $435.7 million in the second quarter of 2019, compared to $432.4 million in the second quarter of 2018.2019. As a percentage of revenues from home sales, selling, general and administrative expenses improved to 8.3% in the second quarter of 2020, from 8.4% in the second quarter of 2019, from 8.7% in the second quarter of 2018, due to improved operating leverage primarily as a result of an increase in home deliveries.2019.
Other homebuilding revenue, gross margin on land sales, homebuilding equity inOperating earnings (loss) from unconsolidated entities and homebuilding other income (expense), net, totaled a loss of $21.1for our Financial Services segment were $150.6 million in the second quarter of 2019,2020 (which included $147.3 million of operating earnings and an add back of $3.3 million of net loss attributable to noncontrolling interests) compared to earnings of $17.5 million in the second quarter of 2018. Homebuilding equity in earnings (loss) from unconsolidated entities was $19.6 million in the second quarter of 2019, compared to ($12.7) million in the second quarter of 2018. In the second quarter of 2019, Homebuilding equity in earnings from unconsolidated entities was primarily attributable to our share of net operating income from one of our homebuilding unconsolidated entities. In the second quarter of 2018, Homebuilding equity in loss from unconsolidated entities was primarily attributable to our share of valuation adjustments related to assets in one homebuilding unconsolidated entity and our share of net operating losses from our homebuilding unconsolidated entities.
Homebuilding other income (expense), net, was ($46.2) million in the second quarter of 2019, compared to $9.9 million in the second quarter of 2018. Homebuilding other expense, net in the second quarter of 2019 was primarily due to a one-time loss of $48.9 million from the consolidation of a previously unconsolidated entity. In the second quarter of 2019, a reconsideration event occurred which required the reassessment of a homebuilding unconsolidated entity. The reconsideration event was the change of the entity’s conclusion with respect to future capital calls required to fund operations and debt repayments. Upon reconsideration, we determined that the homebuilding entity continued to meet the accounting definition of a variable interest entity ("VIE") and we were deemed to be the primary beneficiary. We consolidated the previously unconsolidated entity’s net assets at estimated fair value. The determination of fair value of the homebuilding entity’s net assets requires the discounting of estimated cash flows at a rate we believe a market participant would determine to be commensurate with the inherent risks associated with the homebuilding entity and related cash flow streams. We used a 15% discount rate in determining the fair value of the entity, which was subject to perceived risks associated with the entity’s cash flow streams. There was no non-controlling interest recorded in consolidation. At May 31, 2019, the consolidated homebuilding entity had total assets and liabilities of $240.5 million and $356.4 million, respectively.
Homebuilding interest expense was $99.7 million in the second quarter of 2019 ($96.2 million was included in costs of homes sold, $0.7 million in costs of land sold and $2.9 million in homebuilding other expense, net), compared to $75.8 million in the second quarter of 2018 ($71.9 million was included in costs of homes sold, $0.9 million in costs of land sold and $3.0 million in homebuilding other income (expense), net). Interest expense included in costs of homes sold increased primarily due to an increase in home deliveries. Prior year's interest expense was favorably impacted by purchase accounting related to the CalAtlantic acquisition.
Operating earnings for the Financial Services segment were $62.5 million in the second quarter of 2019 (which included $56.2 million of operating earnings and an add back of $6.3 million of net loss attributable to noncontrolling interests). Operating earnings in the second quarter of 2018 were $55.8 million. Operating earnings increased primarily due to an improvement in the mortgage business as reductions in general and administrative expenses more than offset the decrease in retail origination volume, as a result of the sale of substantially all of the segment's retail mortgage business in the first quarter of 2019. In addition, there was an increase in operating earnings in the segment's Rialto Mortgage Finance ("RMF") business as a result of higher securitization dollar volume in the second quarter of 2019, compared to the second quarter of 2018. This was offset by a decrease in the operating earnings of the segment's title business due to a decrease in retail closed orders as a result of the sale of a majority of the retail agency business and title insurance underwriter in the first quarter of 2019. This decrease


in retail volume was partially offset by an increase in captive business volume and a decrease in general and administrative expenses.
Operating loss for the Multifamily segment was $3.9 million in the second quarter of 2019 (which included $4.3 million of operating loss and $0.4 million of net loss attributable to noncontrolling interests), primarily due to general and administrative expenses and equity in loss as there were no sales of operating properties, partially offset by management fee income and $3.7 million of promote revenue related to two properties in Lennar Multifamily Venture I (“LMV I”). In the second quarter of 2018, the Multifamily segment had operating earnings of $14.8 million primarily due to the segment's $17.4 million share of gains as a result of the sale of two operating properties by two of Multifamily's unconsolidated entities and $5.2 million of promote revenue related to two properties in LMV I, partially offset by general and administrative expenses.
Operating earnings for the Lennar Other segment were $2.2 million in the second quarter of 2019 (which included $1.8 million of operating earnings and an add back of $0.4 million of net loss attributable to noncontrolling interests), compared to $4.0 million in the second quarter of 2018 (which included $3.9 million of operating earnings and an add back of $0.1 million of net loss attributable to noncontrolling interests).
Corporate general and administrative expenses were $76.1 million, or 1.4% as a percentage of total revenues, in the second quarter of 2019, compared to $84.9 million, or 1.6% as a percentage of total revenues, in the second quarter of 2018. The decrease in corporate general and administrative expenses as a percentage of total revenues was due to improved operating leverage as a result of an increase in home deliveries.volume and margin, as well as reductions in loan origination costs and a $5.0 million gain on the sale of a servicing portfolio. Additionally, our Financial Services segment recorded a $61.4 million gain on the deconsolidation of a previously consolidated entity.
In the second quarter of 2019 and 2018, we had tax provisions of $140.5Operating loss for our Multifamily segment was $0.6 million and $76.0 million, respectively. Our overall effective income tax rates were 25.0% and 19.7% in the second quarter of 20192020, compared to $4.3 million ($3.9 million net of noncontrolling interest) in the second quarter of 2019. Operating loss for our Lennar Other segment was $18.0 million in the second quarter of 2020 primarily due to a $25.0 million write-down of assets held by Rialto legacy funds because of disruption in the capital markets as a result of COVID-19 and 2018, respectively. The effective tax rate for the three months ended May 31, 2019 included state income tax expense and non-deductible executive compensation, partially offset by solar tax credits. Foreconomic shutdown. This compared to operating earnings of $1.8 million ($2.2 million net of noncontrolling interest) in the three months ended May 31, 2018, the effective tax rate included tax benefits for the domestic production activities deduction and energy tax credits, offset primarily by state income tax expenses.second quarter of 2019.
Six Months Ended May 31, 20192020 versus Six Months Ended May 31, 2018
On February 12, 2018, Lennar Corporation completed its acquisition of CalAtlantic. Prior year information includes CalAtlantic only after the acquisition date.2019
Revenues from home sales increased 15%3% in the six months ended May 31, 20192020 to $8.8$9.1 billion from $7.6$8.8 billion in the six months ended May 31, 2018.2019. Revenues were higher primarily due to a 14%7% increase in the number of home deliveries, excluding unconsolidated entities. NewDespite new home deliveries in the second quarter of 2020 being consistent with the second quarter of 2019 as a result of COVID-19 and the economic shutdown, new home deliveries, excluding unconsolidated entities, increased to 22,966 homes in the six months ended May 31, 2020 from 21,508 homes in the six months ended May 31, 2019, from 18,812 homes in the six months ended May 31, 2018, primarily as a result of thean increase in volume resulting from the CalAtlantic acquisition.home deliveries in all of Homebuilding's segments except Other. The average sales price of homes delivered was $395,000 in the six months ended May 31, 2020, compared to $408,000 in the six months ended May 31, 2019, compared to $406,000 in the six months ended May 31, 2018.2019. The increasedecrease in average sales price primarily resulted from the CalAtlantic acquisition, partially offset by the Texas segment continuing to shift to lower-priced communities. Sales incentives offeredcommunities and regional product mix due to homebuyers were $26,100 per home deliveredCOVID-19 stay-at-home orders in the six months ended May 31, 2019, or 6.0% as a percentage of home sales revenue, compared to $22,800 per home delivered in the six months ended May 31, 2018, or 5.3% as a percentage of home sales revenue.certain higher priced markets.
Gross marginsmargin on home sales were $1.8was $1.9 billion, or 20.1%21.1%, in the six months ended May 31, 2019,2020, compared to $1.4$1.8 billion, or 17.8% (21.6% excluding purchase accounting),20.1% in the six months ended May 31, 2018.2019. The gross margin percentage on home sales increased primarily becausedue to our continued focus on reducing construction costs. Loss on land sales in the six months ended May 31, 2018 included $291.92020 was $23.8 million, or 380 basis pointsprimarily due to a write-off of backlog/constructioncosts as a result of us not moving forward with a naval base development in progress write-up related to purchase accounting adjustmentsConcord, California, northeast of San Francisco. Gross margin on CalAtlantic homes thatland sales were delivered$2.7 million in that period. This was partially offset by higher construction costs and increased sales incentives.the six months ended May 31, 2019.
Selling, general and administrative expenses were $786.1 million in the six months ended May 31, 2020, compared to $779.0 million in the six months ended May 31, 2019, compared to $689.6 million in the six months ended May 31, 2018.2019. As a percentage of revenues from home sales, selling, general and administrative expenses improved slightly to 8.7% in the six months ended May 31, 2020, from 8.9% in the six months ended May 31, 2019, from 9.0% in the six months ended May 31, 2018, due to improved operating leverage as a result of an increase in home deliveries.2019.
Other homebuilding revenue, gross margin on land sales, homebuilding equity inOperating earnings (loss) from unconsolidated entities and homebuilding other income (expense), net, totaled a loss of $34.3for our Financial Services segment were $208.8 million in the six months ended May 31, 2019, compared to2020 (which included $194.6 million of operating earnings and an add back of $172.0$14.1 million in the six months ended May 31, 2018. Homebuilding equity in earnings (loss) from unconsolidated entities was $5.9 million in the six months ended May 31, 2019, compared to ($26.8) million in the six months ended May 31, 2018. In the six months ended May 31, 2019, Homebuilding equity in earnings from unconsolidated entities was primarilyof net loss attributable to our share of net operating income from one of our homebuilding unconsolidated entities. In the six months ended May 31, 2018, Homebuilding equity in loss from unconsolidated entities was primarily attributable to our share


of valuation adjustments related to assets of a homebuilding unconsolidated entity and our share of net operating losses from our homebuilding unconsolidated entities. Homebuilding other income (expense), net, was ($47.7) million in the six months ended May 31, 2019, compared to $179.9 million in the six months ended May 31, 2018. Homebuilding other expense, net in the six months ended May 31, 2019 was primarily due to a one-time loss of $48.9 million from the consolidation of a previously unconsolidated entity. In the six months ended May 31, 2018, Homebuilding other income, net, was primarily related to a gain on the sale of an 80% interest in one of Homebuilding's strategic joint ventures, Treasure Island Holdings.
Homebuilding interest expense was $164.3 million in the six months ended May 31, 2019 ($157.5 million was included in costs of homes sold, $1.0 million in costs of land sold and $5.9 million in other income (expense), net)noncontrolling interests), compared to $127.1 million in the six months ended May 31, 2018 ($120.2 million was included in costs of homes sold, $1.4 million in costs of land sold and $5.4 million in other income (expense), net). Interest expense included in costs of homes sold increased primarily due to an increase in home deliveries. Prior year's interest expense was favorably impacted by purchase accounting related to the CalAtlantic acquisition.
Operating earnings for the Financial Services segment were $84.2 million in the six months ended May 31, 2019 (which included $75.2 million of operating earnings and an add back of $9.1 million of net loss attributable to noncontrolling interests), compared. Operating earnings increased due to $81.6an improvement in the mortgage and title businesses as a result of an increase in volume and margin, as well as reductions in loan origination costs and a $5.0 million gain on the sale of a servicing portfolio. Additionally, our Financial Services segment recorded a $61.4 million gain on the deconsolidation of a previously consolidated entity.
Operating earnings for our Multifamily segment were $1.1 million in the six months ended May 31, 2018. Operating earnings increased primarily due2020, compared to improvement$2.5 million ($2.9 million net of noncontrolling interest) in the mortgage business as reductions in general and administrative expenses more than offset the decrease in retail origination volume, as a result of the sale of substantially all ofsix months ended May 31, 2019. Operating loss for our retail mortgage business in the first quarter 2019. ThisLennar Other segment was offset by a decrease in the operating earnings of our title business due to a decrease in retail closed orders as a result of the sale of a majority of the retail agency business and title insurance underwriter in the first quarter of 2019. This decrease in retail volume was partially offset by an increase in captive business volume and a decrease in general and administrative expenses.
Operating earnings for the Multifamily segment were $2.9$17.1 million in the six months ended May 31, 2019 (which included $2.5 million of operating earnings and an add back of $0.4 million of net loss attributable to noncontrolling interests),2020 primarily due to a $25.0 million write-down of assets held by Rialto legacy funds because of disruption in the segment's $3.6 million share of a gaincapital markets as a result of COVID-19 and the sale of one operating property by Multifamily's unconsolidated entities, $11.9 million gain on the sale of an investment in an operating property and $5.6 million of promote revenue relatedeconomic shutdown.
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This compared to three properties in LMV I, partially offset by general and administrative expenses. In the six months ended May 31, 2018, the Multifamily segment had operating earnings of $13.6$4.9 million primarily due to the segment's $21.5($5.2 million sharenet of gains as a result of the sale of three operating properties by Multifamily's unconsolidated entities and $5.2 million of promote revenue related to two properties in LMV I, partially offset by general and administrative expenses.
Operating earnings for the Lennar Other segment were $5.2 millionnoncontrolling interest) in the six months ended May 31, 2019 (which included $4.9 million of operating earnings and an add back of $0.3 million of net loss attributable to noncontrolling interests), compared to $8.1 million in the six months ended May 31, 2018 (which included $6.7 million of operating earnings and an add back of $1.3 million of net loss attributable to noncontrolling interests).2019.
Corporate general and administrative expenses were $155.5 million, or 1.6% as a percentage of total revenues, in the six months ended May 31, 2019, compared to $152.7 million, or 1.8% as a percentage of total revenues, in the six months ended May 31, 2018. The decrease in corporate general and administrative expenses as a percentage of total revenues was due to improved operating leverage as a result of an increase in revenues.
In the six months ended May 31, 2019 and 2018, we had tax provisions of $220.2 million and $208.6 million, respectively. Our overall effective income tax rates were 25.0% and 31.8% in the six months ended May 31, 2019 and 2018, respectively. The effective tax rate for the six months ended May 31, 2019 included state income tax expense and non-deductible executive compensation, partially offset by solar tax credits. For the six months ended May 31, 2018, the2020 and May 31, 2019, we had a tax provision of $192.8 million and $220.2 million, respectively, which resulted in an overall effective income tax rate included a $68.6 million non-cash one-time write down of 17.4% and 25.0%, respectively. The reduction in the deferredoverall effective income tax assetsrate is primarily due to the enactmentextension of the Tax Cuts and Jobs Act and state incomenew energy efficient home tax expense, offset primarily by tax benefits forcredit during the domestic production activities deduction, and energy tax credits. Excluding the impact of the write down of the deferred tax assets, the effective tax rate for the six months ended May 31, 2018 was 21.4%.


Homebuilding Segments
In connection with the CalAtlantic acquisition, we experienced significant growth in our homebuilding operations. As a result, at the end of fiscal 2018, our chief operating decision makers ("CODM") reassessed how they evaluate the business and allocate resources. The CODM manage and assess our performance at a regional level. Therefore, in 2018 we performed an assessment of our operating segments in accordance with ASC 280, Segment Reporting, (“ASC 280”) and determined that each of our four homebuilding regions, financial services operations, multifamily operations and Rialto operations are our operating segments. Prior to this change, in accordance with the aggregation criteria defined in ASC 280, our operating segments were aggregated into reportable segments, based primarily upon similar economic characteristics, geography and product type. In addition, in first quarter of 2019, as a result of the reclassification of RMF and certain other Rialto assets from the Rialto segment to the Financial Services segment effective December 1, 2018, we renamed the Rialto segment as "Lennar Other" and included in this segment certain strategic technology investments, which were reclassified from the 2020.
Homebuilding segments to Lennar Other. Prior periods have been reclassified to conform with the 2019 presentation. References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to Homebuilding segments are to those four reportable segments.Segments
At May 31, 2019,2020, our reportable Homebuilding segments and Homebuilding Other consisted of homebuilding divisions located in:
East: Florida, New Jersey, North Carolina, Pennsylvania and South Carolina
Central: Georgia, Illinois, Indiana, Maryland, Minnesota, Tennessee and Virginia
Texas: Texas
West: Arizona, California, Colorado, Nevada, Oregon, Utah and Washington
Other: Urban divisions and other homebuilding related investments primarily in California, including FivePoint Holdings, LLC ("FivePoint")


The following tables set forth selected financial and operational information related to our homebuilding operations for the periods indicated:
Selected Financial and Operational Data
Three Months Ended May 31, 2020
Gross MarginsOperating Earnings (Loss)
($ in thousands)Sales of Homes RevenueCosts of Sales of HomesGross Margin %Net Margins on Sales of Homes (1)Gross Margins on Sales of LandOther RevenueEquity in Earnings (Loss) from Unconsolidated EntitiesOther Income (Expense), netOperating Earnings (Loss)
East$1,576,083  1,218,337  22.7 %$221,798  (1,093) 1,592  218  7,211  229,726  
Central684,440  561,076  18.0 %66,269  247  638  19  (108) 67,065  
Texas694,110  530,004  23.6 %98,566  1,524  250  1  (454) 99,887  
West1,957,435  1,533,513  21.7 %279,509  (776) 1,914  (40) (513) 280,094  
Other (2)13,013  19,841  (52.5)%(11,023) (23,438) 176  (9,298) (1,828) (45,411) 
Totals$4,925,081  3,862,771  21.6 %$655,119  (23,536) 4,570  (9,100) 4,308  631,361  
Three Months Ended May 31, 2019
Gross MarginsOperating Earnings (Loss)
($ in thousands)Sales of Homes RevenueCosts of Sales of HomesGross Margin %Net Margins on Sales of Homes (1)Gross Margins on Sales of LandOther RevenueEquity in Earnings (Loss) from Unconsolidated EntitiesOther Income (Expense), netOperating Earnings (Loss)
East$1,732,216  1,374,798  20.6 %$208,535  1,633  1,110  (135) (679) 210,464  
Central609,195  500,071  17.9 %54,684  171  112  69  308  55,344  
Texas687,011  547,648  20.3 %75,055  811  201  278  (971) 75,374  
West2,140,637  1,706,645  20.3 %270,321  (168) 425  (186) 2,512  272,904  
Other (2)7,057  8,367  (18.6)%(5,730) —  1,180  19,588  (47,335) (32,297) 
Totals$5,176,116  4,137,529  20.1 %$602,865  2,447  3,028  19,614  (46,165) 581,789  
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 Three Months Ended Six Months Ended
 May 31, May 31,
(In thousands)2019 2018 2019 2018
Homebuilding revenues:       
East:       
Sales of homes$1,732,216
 1,546,977
 2,954,860
 2,456,562
Sales of land4,016
 19,766
 7,576
 23,144
Other revenues1,110
 —
 1,719
 —
Total East1,737,342
 1,566,743
 2,964,155
 2,479,706
Central:       
Sales of homes609,195
 613,604
 1,042,320
 866,929
Sales of land4,478
 22,919
 6,256
 24,163
Other revenues112
 —
 276
 —
Total Central613,785
 636,523
 1,048,852
 891,092
Texas:       
Sales of homes687,011
 684,091
 1,099,440
 1,032,178
Sales of land6,000
 16,676
 12,034
 24,687
Other revenues201
 —
 255
 —
Total Texas693,212
 700,767
 1,111,729
 1,056,865
West:       
Sales of homes2,140,637
 2,125,987
 3,678,141
 3,253,623
Sales of land1,961
 18,626
 4,372
 18,946
Other revenues425
 —
 1,407
 —
Total West2,143,023
 2,144,613
 3,683,920
 3,272,569
Other:       
Sales of homes7,057
 15,351
 9,484
 25,858
Other revenues1,180
 —
 1,180
 —
Total Other8,237
 15,351
 10,664
 25,858
Total homebuilding revenues$5,195,599
 5,063,997
 8,819,320
 7,726,090
Six Months Ended May 31, 2020
Gross MarginsOperating Earnings (Loss)
($ in thousands)Sales of Homes RevenueCosts of Sales of HomesGross Margin %Net Margins on Sales of Homes (1)Gross Margins on Sales of LandOther RevenueEquity in Earnings (Loss) from Unconsolidated EntitiesOther Income (Expense), netOperating Earnings (Loss)
East$2,978,755  2,303,446  22.7 %$403,093  (1,836) 3,275  577  (378) 404,731  
Central1,219,186  1,014,467  16.8 %94,203  (388) 868  572  1,282  96,537  
Texas1,157,907  890,278  23.1 %151,693  3,197  767  204  (2,901) 152,960  
West3,688,948  2,912,803  21.0 %498,016  (1,339) 3,728  3,900  696  505,001  
Other (2)21,052  33,556  (59.4)%(21,790) (23,438) 414  (18,899) (3,757) (67,470) 
Totals$9,065,848  7,154,550  21.1 %$1,125,215  (23,804) 9,052  (13,646) (5,058) 1,091,759  

Six Months Ended May 31, 2019
Gross MarginsOperating Earnings (Loss)
($ in thousands)Sales of Homes RevenueCosts of Sales of HomesGross Margin %Net Margins on Sales of Homes (1)Gross Margins on Sales of LandOther RevenueEquity in Earnings (Loss) from Unconsolidated EntitiesOther Income (Expense), netOperating Earnings (Loss)
East$2,954,860  2,344,664  20.7 %$342,821  4,005  1,719  (234) (2,464) 345,847  
Central1,042,320  858,432  17.6 %84,749  574  276  138  533  86,270  
Texas1,099,440  879,750  20.0 %107,044  2,275  255  158  (2,080) 107,652  
West3,678,141  2,923,392  20.5 %464,217  (4,149) 1,407  (497) 2,587  463,565  
Other (2)9,484  13,341  (40.7)%(13,146) (1) 1,180  6,293  (46,276) (51,950) 
Totals$8,784,245  7,019,579  20.1 %$985,685  2,704  4,837  5,858  (47,700) 951,384  

(1)Net margins on sales of homes include selling, general and administrative expenses.
 Three Months Ended Six Months Ended
 May 31, May 31,
(In thousands)2019 2018 2019 2018
Homebuilding operating earnings (loss):       
East:       
Sales of homes$208,535
 133,051
 342,821
 234,792
Sales of land1,633
 15,940
 4,005
 16,702
Other homebuilding revenues1,110
 —
 1,719
 —
Equity in loss from unconsolidated entities(135) (202) (234) (314)
Other income (expense), net(679) 5,104
 (2,464) 4,042
Total East210,464
 153,893
 345,847
 255,222
Central:       
Sales of homes54,684
 23,421
 84,749
 34,255
Sales of land171
 1,282
 574
 (886)
Other homebuilding revenues112
 —
 276
 —
Equity in earnings from unconsolidated entities69
 84
 138
 458
Other income, net308
 351
 533
 347
Total Central55,344
 25,138
 86,270
 34,174
Texas:       
Sales of homes75,055
 34,489
 107,044
 47,744
Sales of land811
 2,938
 2,275
 4,952
Other homebuilding revenues201
 —
 255
 —
Equity in earnings from unconsolidated entities278
 220
 158
 284
Other income (expense), net(971) 5
 (2,080) (1,315)
Total Texas75,374
 37,652
 107,652
 51,665
West:       
Sales of homes270,321
 221,173
 464,217
 359,262
Sales of land (1)(168) 180
 (4,149) 216
Other homebuilding revenues425
 —
 1,407
 —
Equity in loss from unconsolidated entities(186) (332) (497) (723)
Other income, net2,512
 3,574
 2,587
 5,269
Total West272,904
 224,595
 463,565
 364,024
Other:       
Sales of homes (2)(5,730) (4,540) (13,146) (8,984)
Sales of land—
 —
 (1) (2,059)
Other homebuilding revenues1,180
 —
 1,180
 —
Equity in earnings (loss) from unconsolidated entities (3)19,588
 (12,440) 6,293
 (26,503)
Other income (expense), net (4)(47,335) 845
 (46,276) 171,531
Total Other(32,297) (16,135) (51,950) 133,985
Total homebuilding operating earnings$581,789
 425,143
 951,384
 839,070
(1)For the six months ended May 31, 2019, sales of land included an impairment of $4.0 million related to contracts to sell land.
(2)Operating earnings related to sales of homes in Homebuilding Other is negative because there were not sufficient home sales to offset period costs in our urban divisions and selling, general and administrative expenses.
(3)For both the three and six months ended May 31, 2019, Homebuilding Other equity in earnings from unconsolidated entities was primarily attributable to our share of net operating income from one of our Homebuilding unconsolidated entities, which was primarily due to a gain on settlement of contingent consideration.
(4)For both the three and six months ended May 31, 2019, other expense, net of Homebuilding Other was primarily due to a one-time loss of $48.9 million from the consolidation of a previously unconsolidated entity. For the six months ended May 31, 2018, other expense, net of Homebuilding Other included $164.9 million related to a gain on the sale of an 80% interest in one of Homebuilding's strategic joint ventures, Treasure Island Holdings.


(2)Negative gross and net margins were due to period costs in Urban divisions that impact costs of homes sold without any sales of homes revenue. Negative gross margins on sales of land for the three and six months ended May 31, 2020 was primarily due to a write-off of costs as a result of us not moving forward with a naval base development in Concord, California.
Summary of Homebuilding Data

Deliveries:
Three Months EndedThree Months Ended
Homes Dollar Value (In thousands) Average Sales PriceHomesDollar Value (In thousands)Average Sales Price
May 31, May 31, May 31,May 31,May 31,May 31,
2019 2018 2019 2018 2019 2018202020192020201920202019
East5,061
 4,553
 $1,735,165
 1,546,978
 $343,000
 340,000
East4,630  5,061  $1,582,360  1,735,165  $342,000  343,000  
Central1,568
 1,589
 609,195
 613,603
 389,000
 386,000
Central1,763  1,568  684,440  609,195  388,000  389,000  
Texas2,149
 1,974
 687,011
 684,091
 320,000
 347,000
Texas2,462  2,149  694,110  687,011  282,000  320,000  
West3,934
 3,953
 2,140,638
 2,125,986
 544,000
 538,000
West3,804  3,934  1,957,435  2,140,638  515,000  544,000  
Other17
 26
 17,273
 26,324
 1,016,000
 1,012,000
Other13  17  13,013  17,273  1,001,000  1,016,000  
Total12,729
 12,095
 $5,189,282
 4,996,982
 $408,000
 413,000
Total12,672  12,729  $4,931,358  5,189,282  $389,000  408,000  
Of the total homes delivered listed above, 19 homes with a dollar value of $6.3 million and an average sales price of $330,000 represent home deliveries from unconsolidated entities for the three months ended May 31, 2020, compared to 23 homeshome deliveries with a dollar value of $13.2 million and an average sales price of $572,000 for the three months ended May 31, 2019.

43

Six Months Ended
HomesDollar Value (In thousands)Average Sales Price
May 31,May 31,May 31,
202020192020201920202019
East8,695  8,673  $2,988,027  2,961,600  $344,000  341,000  
Central3,129  2,692  1,219,186  1,042,320  390,000  387,000  
Texas4,039  3,400  1,157,907  1,099,440  287,000  323,000  
West7,108  6,759  3,688,948  3,678,141  519,000  544,000  
Other22  25  21,052  25,032  957,000  1,001,000  
Total22,993  21,549  $9,075,120  8,806,533  $395,000  409,000  
Of the total homes delivered listed above, 27 homes with a dollar value of $9.3 million and an average sales price of $343,000 represent home deliveries from unconsolidated entities for the threesix months ended May 31, 2019,2020, compared to 1741 home deliveries with a dollar value of $11.0 million and an average sales price of $645,000 for the three months ended May 31, 2018.

 Six Months Ended
 Homes Dollar Value (In thousands) Average Sales Price
 May 31, May 31, May 31,
 2019 2018 2019 2018 2019 2018
East8,673
 7,310
 $2,961,600
 2,456,563
 $341,000
 336,000
Central2,692
 2,243
 1,042,320
 866,928
 387,000
 387,000
Texas3,400
 3,064
 1,099,440
 1,032,178
 323,000
 337,000
West6,759
 6,178
 3,678,141
 3,253,622
 544,000
 527,000
Other25
 65
 25,032
 59,425
 1,001,000
 914,000
Total21,549
 18,860
 $8,806,533
 7,668,716
 $409,000
 407,000
Of the total homes delivered listed above, 41 homes with a dollar value of $22.3 million and an average sales price of $544,000 represent home deliveries from unconsolidated entities for the six months ended May 31, 2019, compared to 48 home deliveries with a dollar value of $33.6 million and an average sales price of $699,000 for the six months ended May 31, 2018.
Sales Incentives (1):
 Three Months Ended
 
Sales Incentives
(In thousands)
 
Average Sales Incentives Per
Home Delivered
 
Sales Incentives
as a % of Revenue
 May 31, May 31, May 31,
 2019 2018 2019 2018 2019 2018
East$125,479
 113,514
 $24,800
 24,900
 6.8% 6.8%
Central46,627
 43,296
 29,700
 27,200
 7.1% 6.6%
Texas63,830
 63,990
 29,700
 32,400
 8.5% 8.5%
West99,952
 54,986
 25,400
 13,900
 4.5% 2.5%
Other2,217
 2,268
 554,200
 252,000
 23.9% 12.9%
Total$338,105
 278,054
 $26,600
 23,000
 6.1% 5.3%


 Six Months Ended
 
Sales Incentives
(In thousands)
 
Average Sales Incentives Per
Home Delivered
 
Sales Incentives
as a % of Revenue
 May 31, May 31, May 31,
 2019 2018 2019 2018 2019 2018
East$218,781
 181,258
 $25,300
 24,800
 6.9% 6.9%
Central80,802
 61,162
 30,000
 27,300
 7.2% 6.6%
Texas99,711
 99,840
 29,300
 32,600
 8.3% 8.8%
West158,313
 82,365
 23,400
 13,300
 4.1% 2.5%
Other2,825
 3,366
 470,800
 198,000
 23.0% 11.5%
Total$560,432
 427,991
 $26,100
 22,800
 6.0% 5.3%
(1)Sales incentives relate to home deliveries during the period, excluding deliveries by unconsolidated entities.

2019.
New Orders (2)(1):
Three Months EndedThree Months Ended
Homes Dollar Value (In thousands) Average Sales PriceActive CommunitiesHomesDollar Value (In thousands)Average Sales Price
May 31, May 31, May 31,At May 31,May 31,May 31,May 31,
2019 2018 2019 2018 2019 201820202019202020192020201920202019
East5,591
 5,643
 $1,939,901
 1,956,130
 $347,000
 347,000
East423  458  4,919  5,591  $1,644,275  1,939,901  $334,000  347,000  
Central2,062
 2,004
 798,080
 785,639
 387,000
 392,000
Central246  253  1,906  2,062  740,968  798,080  389,000  387,000  
Texas2,424
 2,346
 744,586
 778,028
 307,000
 332,000
Texas221  246  2,582  2,424  670,139  744,586  260,000  307,000  
West4,420
 4,426
 2,298,540
 2,492,083
 520,000
 563,000
West352  364  3,608  4,420  1,802,705  2,298,540  500,000  520,000  
Other21
 21
 15,238
 21,098
 726,000
 1,005,000
Other3  4  —  21  —  15,238  —  726,000  
Total14,518
 14,440
 $5,796,345
 6,032,978
 $399,000
 418,000
Total1,245  1,325  13,015  14,518  $4,858,087  5,796,345  $373,000  399,000  
Of the total new orders listed above, 25 homes with a dollar value of $9.0 million and an average sales price of $361,000 represent new orders in four active communities from unconsolidated entities for the three months ended May 31, 2020, compared to 32 homesnew orders with a dollar value of $15.1 million and an average sales price of $471,000 in five active communities for the three months ended May 31, 2019.

Six Months Ended
HomesDollar Value (In thousands)Average Sales Price
May 31,May 31,May 31,
202020192020201920202019
East9,544  10,084  $3,241,573  3,461,332  $340,000  343,000  
Central3,679  3,484  1,436,466  1,335,676  390,000  383,000  
Texas4,581  3,848  1,243,218  1,201,545  271,000  312,000  
West7,573  7,532  3,928,337  3,928,354  519,000  522,000  
Other14  33  13,581  26,551  970,000  805,000  
Total25,391  24,981  $9,863,175  9,953,458  $388,000  398,000  
Of the total new orders listed above, 51 homes with a dollar value of $17.1 million and an average sales price of $335,000 represent new orders from unconsolidated entities for the threesix months ended May 31, 2019,2020, compared to 1547 new orders with a dollar value of $12.8 million and an average sales price of $856,000 for the three months ended May 31, 2018.

 Six Months Ended
 Homes Dollar Value (In thousands) Average Sales Price
 May 31, May 31, May 31,
 2019 2018 2019 2018 2019 2018
East10,084
 9,206
 $3,461,332
 3,108,547
 $343,000
 338,000
Central3,484
 2,789
 1,335,676
 1,094,068
 383,000
 392,000
Texas3,848
 3,720
 1,201,545
 1,210,206
 312,000
 325,000
West7,532
 7,131
 3,928,354
 3,942,319
 522,000
 553,000
Other33
 50
 26,551
 46,839
 805,000
 937,000
Total24,981
 22,896
 $9,953,458
 9,401,979
 $398,000
 411,000
Of the total new orders listed above, 47 homes with a dollar value of $24.8 million and an average sales price of $527,000 represent new orders from unconsolidated entities for the six months ended May 31, 2019, compared to 412019.
(1)New orders represent the number of new orderssales contracts executed with a dollar valuehomebuyers, net of $29.2 millioncancellations, during the three and an average sales price of $711,000 for the six months ended May 31, 2018.
(2)New orders represent the number of new sales contracts executed with homebuyers, net of cancellations, during the three and six months ended May 31, 2019 and 2018.



2020 and May 31, 2019.
Backlog:
44

 Homes Dollar Value (In thousands) Average Sales Price
 May 31, May 31, May 31,
 2019 2018 (1) 2019 2018 2019 2018
East (2)8,499
 7,910
 $3,025,598
 2,899,199
 $356,000
 367,000
Central2,778
 2,555
 1,083,608
 1,020,044
 390,000
 399,000
Texas2,596
 2,912
 862,826
 1,039,320
 332,000
 357,000
West5,174
 6,231
 2,737,664
 3,592,036
 529,000
 576,000
Other14
 14
 10,507
 17,211
 751,000
 1,229,000
Total19,061
 19,622
 $7,720,203
 8,567,810
 $405,000
 437,000
Backlog:
HomesDollar Value (In thousands)Average Sales Price
May 31,May 31,May 31,
202020192020201920202019
East (1)7,676  8,499  $2,702,044  3,025,598  $352,000  356,000  
Central2,563  2,778  1,039,118  1,083,608  405,000  390,000  
Texas2,712  2,596  798,648  862,826  294,000  332,000  
West5,023  5,174  2,547,649  2,737,664  507,000  529,000  
Other1  14  1,138  10,507  1,138,000  751,000  
Total17,975  19,061  $7,088,597  7,720,203  $394,000  405,000  
Of the total homes in backlog listed above, 55 homes with a backlog dollar value of $18.0 million and an average sales price of $327,000 represent the backlog from unconsolidated entities at May 31, 2020, compared to 13 homes with a backlog dollar value of $5.2 million and an average sales price of $397,000 represent the backlog from unconsolidated entities at May 31, 2019, compared to 16 homes with a backlog dollar value of $10.7 million2019.
(1)During both the three and an average sales price of $672,000 atsix months ended May 31, 2018.2019, we acquired 13 homes in backlog.
(1)During the six months ended May 31, 2018, we acquired a total of 6,651 homes in backlog in connection with the CalAtlantic acquisition. Of the homes in backlog acquired, 2,202 homes were in the East, 1,294 homes were in the Central, 917 homes were in Texas and 2,238 homes were in the West.
(2)During both the three and six months ended May 31, 2019, we acquired 13 homes in 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 if they fail to qualify for financing or under certain other circumstances. Various state and federal laws and regulations may sometimes give purchasers a right to cancel homes in backlog. We do not recognize revenue on homes under sales contracts until the sales are closed and title passes to the new homeowners.
We experienced cancellation rates in our Homebuilding segments and Homebuilding other as follows:
 Three Months Ended Six Months Ended
 May 31, May 31,
 2019 2018 2019 2018
East15% 12% 15% 13%
Central10% 8% 11% 8%
Texas21% 15% 23% 16%
West13% 10% 15% 11%
Other13% 19% 11% 12%
Total15% 11% 16% 12%
Active Communities:
 May 31,
 2019 2018 (1)
East458
 484
Central253
 236
Texas246
 256
West364
 344
Other4
 5
Total1,325
 1,325
Of the total active communities listed above, five communities represent active communities being developed by unconsolidated entities as of both May 31, 2019 and 2018, respectively.

(1)We acquired 542 active communities related to the CalAtlantic acquisition on February 12, 2018. Of the communities acquired, 177 were in the East, 135 were in the Central, 99 were in Texas and 131 were in the West.


The following table details our gross margins on home sales for the three and six months ended May 31, 2019 and 2018 for each of our reportable Homebuilding segments and Homebuilding Other:
 Three Months Ended Six Months Ended
 May 31, May 31,
(Dollars in thousands)2019 2018 (1) 2019 2018 (1)
East:               
Sales of homes$1,732,216
   1,546,977
   $2,954,860
   2,456,562
  
Costs of homes sold1,374,798
   1,261,747
   2,344,664
   1,976,269
  
Gross margins on home sales357,418
 20.6% 285,230
 18.4% 610,196
 20.7% 480,293
 19.6%
Central:               
Sales of homes609,195
   613,604
   1,042,320
   866,929
  
Costs of homes sold500,071
   538,174
   858,432
   753,880
  
Gross margins on home sales109,124
 17.9% 75,430
 12.3% 183,888
 17.6% 113,049
 13.0%
Texas:               
Sales of homes687,011
   684,091
   1,099,440
   1,032,178
  
Costs of homes sold547,648
   576,591
   879,750
   870,659
  
Gross margins on home sales139,363
 20.3% 107,500
 15.7% 219,690
 20.0% 161,519
 15.6%
West:               
Sales of homes2,140,637
   2,125,987
   3,678,141
   3,253,623
  
Costs of homes sold1,706,645
   1,754,878
   2,923,392
   2,652,957
  
Gross margins on home sales433,992
 20.3% 371,109
 17.5% 754,749
 20.5% 600,666
 18.5%
Other:               
Sales of homes7,057
   15,351
   9,484
   25,858
  
Costs of homes sold (2)8,367
   14,578
   13,341
   24,715
  
Gross margins on home sales(1,310) (18.6)% 773
 5.0% (3,857) (40.7)% 1,143
 4.4%
Total gross margins on home sales$1,038,587
 20.1% 840,042
 16.8% $1,764,666
 20.1% 1,356,670
 17.8%
(1)During the three and six months ended May 31, 2018, gross margins on home sales included $236.8 million and $291.9 million, respectively, of purchase accounting adjustments on CalAtlantic homes in backlog/construction in progress that were delivered in the respective periods.
(2)Costs of homes sold include period costs in our urban divisions that impact costs of homes sold without any sales of homes revenue.
Three Months Ended May 31, 20192020 versus Three Months Ended May 31, 20182019
Homebuilding East: Revenues from home sales decreased in the second quarter of 2020 compared to the second quarter of 2019, primarily due to a decrease in the number of home deliveries in the Carolinas, Florida and Pennsylvania. The decrease in the number of home deliveries was primarily due to the effects of COVID-19 and the economic shutdown. The average sales price of homes delivered was consistent in the second quarter of 2020 compared to the second quarter of 2019. Gross margin percentage on home deliveries in the second quarter of 2020 improved compared to the same period last year primarily due to reducing our construction costs.
Homebuilding East:Central: Revenues from home sales increased in the second quarter of 20192020 compared to the second quarter of 2018,2019, primarily due to an increase in the number of home deliveries in all the states in the segment. Revenues from home sales also increased as a result of the increasesegment, except in the average sales price of homes delivered in the CarolinasVirginia and New Jersey. The average sales price of homes delivered in Florida were consistent from the second quarter of 2018 to the second quarter of 2019.Minnesota. The increase in the number of home deliveries iswas primarily due to higher demand as the number of deliveries per active community increased. The increase in the average sales price of homes delivered was consistent in the Carolinas and New Jersey was primarily duesecond quarter of 2020 compared to an increase in home deliveries in higher-priced communities, including higher-priced communities acquired from CalAtlantic.the second quarter of 2019. Gross margin percentage on home deliveries in the second quarter of 2019 increased2020 improved slightly compared to the same period last year primarily due to purchase accounting adjustments on CalAtlantic homes that were in backlog/reducing our construction in progress when we acquired CalAtlantic, which reduced the gross margin percentage for those deliveries in the second quarter of 2018.costs.
Homebuilding Central: Revenues from home sales were consistent in the second quarter of 2019 compared to the second quarter of 2018, primarily due to a decrease in the number of deliveries in Maryland and a decrease in the average sales price in Georgia, offset by an increase in the number of deliveries in Virginia. The decrease in the number of home deliveries in Maryland was primarily due to a decrease in active communities and timing of opening and closing of communities. The increase in the number of home deliveries in Virginia was primarily due to an increase in active communities. The decrease in the average sales price of homes delivered in Georgia was primarily driven by a change in product mix due to a higher percentage of deliveries in lower-priced communities. Gross margin percentage on home deliveries in the second quarter of 2019 increased compared to the same period last year primarily due to purchase accounting adjustments on CalAtlantic homes that were in backlog/construction in progress when we acquired CalAtlantic, which reduced the gross margin percentage for those deliveries in the second quarter of 2018. This was partially offset by higher construction costs and increased sales incentives.


Homebuilding Texas: Revenues from home sales were consistentincreased in the second quarter of 20192020 compared to the second quarter of 20182019, primarily due to an increase in the number of home deliveries, partially offset by a decrease in the average sales price of homes delivered. The increase in the number of deliveries was primarily due to higher demand as the number of deliveries per active community increased. The decrease in average sales price of homes delivered was primarily due to closing out higher priced communities and shifting into lower priced communities. Gross margin percentage on home deliveries in the second quarter of 2019 increased2020 improved compared to the same period last year primarily due to purchase accounting adjustments on CalAtlantic homes that were in backlog/reducing our construction in progress when we acquired CalAtlantic, which reduced the gross margin percentage for those deliveries in the second quarter of 2018. This was partially offset by higher construction costs and increased sales incentives.costs.
Homebuilding West: Revenues from home sales increased slightlydecreased in the second quarter of 20192020 compared to the second quarter of 2018. The2019, primarily due to a decrease in the number of home deliveries were consistent periodin all states of the segment except Arizona and due to period with slight increasesa decrease in Arizona, Oregon and Washington and slight decreases in California, Colorado and Nevada. Thethe average sales price of homes delivered was also consistent period to period with slight increases in all states of the segment except Utah. The decrease in the number of home deliveries in all states of the segment except Arizona which hadwas primarily due to the effects of COVID-19 and the economic shutdown. The increase in the number of home deliveries in Arizona was primarily due to higher demand as the number of deliveries per active community increased. The decrease in the average sales price of homes delivered in all states of the segment except Utah was primarily driven by a slight decrease.change in product mix due to a higher percentage of deliveries in lower-priced communities due to COVID-19 stay-at-home orders in certain high priced markets. The increase in the average sales price of homes delivered in Utah was primarily driven by a change in product mix due to a higher percentage of deliveries in higher-priced communities. Gross margin percentage on home deliveries in the second quarter of 2019 increased2020 improved compared to the same period last year primarily due to purchase accounting adjustments on CalAtlantic homes that were in backlog/reducing our construction in progress when we acquired CalAtlantic, which reduced the gross margin percentage for those deliveries in the second quarter of 2018. This was partially offset by higher construction costs and increased sales incentives.costs.
45

Six Months Ended May 31, 20192020 versus Six Months Ended May 31, 20182019
Homebuilding East: Revenues from home sales increased slightly in the six months ended May 31, 2020 compared to the six months ended May 31, 2019, primarily due to an increase in the number of home deliveries in Florida, partially offset by a decrease in the number of home deliveries in the Carolinas and Pennsylvania. The increase in the number of home deliveries in Florida was primarily due to higher demand as the number of deliveries per active community increased during the first quarter, partially offset by the impact of COVID-19 and economic shutdown during the second quarter. The decrease in the number of home deliveries in the Carolinas and Pennsylvania was primarily due to the impact of COVID-19 and economic shutdown during the second quarter. The average sales price of homes delivered was consistent in the six months ended May 31, 2020, compared to the same period last year. Gross margin percentage on home deliveries in the six months ended May 31, 2020 improved compared to the same period last year primarily due to reducing our construction costs.
Homebuilding East:Central: Revenues from home sales increased in the six months ended May 31, 20192020 compared to the six months ended May 31, 2018,2019, primarily due to an increase in the number of home deliveries in all the states in the segment. Revenues from home sales also increased as a result of an increase in the average sales price of homes delivered in Florida and the Carolinas, partially offset by a decrease in the average sales price of homes delivered in New Jersey. The increase in the number of home deliveries was primarily due to an increase inhigher demand as the number of deliveries per active communities including communities acquired from CalAtlantic. The increase in the average sales price of homes delivered in Florida and the Carolinas was primarily due to an increase in home deliveries in higher-priced communities, including higher-priced communities acquired from CalAtlantic. The decrease in the average sales price of homes delivered in New Jersey was primarily driven by a change in product mix due to closing out the remaining homes in higher-priced communities and opening lower-priced communities.community increased. Gross margin percentage on home deliveries in the six months ended May 31, 2019 increased2020 decreased compared to the same period last year primarily due to purchase accountingvaluation adjustments on CalAtlantic homes that weretaken in backlog/construction in progress when we acquired CalAtlantic, which reduced the gross margin percentage for those deliveries ina few communities during the six months ended May 31, 2018. This was partially offset by higher construction costs.
Homebuilding Central: Revenues from home sales increased in the six months ended May 31, 2019 compared to the six months ended May 31, 2018, primarily due to an increase in the number of home deliveries in all the states in the segment, except in Maryland and Tennessee, and an increase in the average sales price in Georgia, Illinois, Indiana and Tennessee. The increase in the number of home deliveries was primarily due to an increase in active communities including communities acquired from CalAtlantic. The decrease in the number of home deliveries in Tennessee was primarily due to a decrease in deliveries per community as a result of timing of opening and closing of communities. The increase in the average sales price of homes delivered in Georgia, Illinois, Indiana and Tennessee was primarily due to an increase in home deliveries in higher-priced communities. The decrease in the average sales price of homes delivered in Maryland, Minnesota, and Virginia was primarily driven by a change in product mix due to closing out the remaining homes in higher-priced communities and opening lower-priced communities. Gross margin percentage on home deliveries in the six months ended May 31, 2019 increased compared to the same period last year primarily due to purchase accounting adjustments on CalAtlantic homes that were in backlog/construction in progress when we acquired CalAtlantic, which reduced the gross margin percentage for those deliveries in the six months ended May 31, 2018. This was partially offset by higher construction costs and increased sales incentives.2020.
Homebuilding Texas: Revenues from home sales increased in the six months ended May 31, 20192020 compared to the six months ended May 31, 2018,2019, primarily due to an increase in the number of home deliveries, partially offset by a decrease in the average sales price.price of homes delivered. The increase in the number of home deliveries was primarily due to an increase inhigher demand as the number of deliveries per active communities due to communities acquired from CalAtlantic.community increased. The decrease in average sales price of homes delivered was primarily due to closing out higher priced communities and shifting into lower priced communities. Gross margin percentage on home deliveries in the six months ended May 31, 2019 increased2020 improved compared to the same period last year primarily due to purchase accounting adjustments on CalAtlantic homes that were in backlog/construction in progress when we acquired CalAtlantic, which reduced the gross margin percentage for those deliveries in the six months ended May 31, 2018 and decreased sales incentives. This was partially offset by higherreducing our construction costs.
Homebuilding West: Revenues from home sales increased slightly in the six months ended May 31, 20192020 compared to the six months ended May 31, 2018,second quarter of 2019, primarily due to an increase in the number of home deliveries in all the states inof the segment


except ColoradoOregon, Utah and Nevada, and an increaseWashington, partially offset by a decrease in the average sales price of homes delivered in all states inof the segment.segment except Utah. The increase in the number of home deliveries in all states of the segment except Oregon, Utah and Washington was primarily due to an increase inhigher demand as the number of deliveries per active communities due to communities acquired from CalAtlantic.community increased during the first quarter, partially offset by the impact of COVID-19 and economic shutdown during the second quarter. The decrease in the number of home deliveries in ColoradoOregon, Utah and Washington was primarily due to a decrease in active communitiesthe impact of COVID-19 and timing of opening and closing of communities.economic shutdown during the second quarter. The decrease in the numberaverage sales price of home deliverieshomes delivered in Nevadaall states of the segment except Utah was primarily driven by a change in product mix due to a decreasehigher percentage of deliveries in deliveries per active community as a result of timing of opening and closing communities.lower-priced communities due to COVID-19 stay-at-home orders in certain higher priced markets. The increase in the average sales price of homes delivered in Utah was primarily driven by a change in product mix due to an increase in homea higher percentage of deliveries in higher-priced communities, including higher-priced communities acquired from CalAtlantic.communities. Gross margin percentage on home deliveries in the six months ended May 31, 2019 increased2020 improved compared to the same period last year primarily due to purchase accounting adjustments on CalAtlantic homes that were in backlog/reducing our construction in progress when we acquired CalAtlantic, which reduced the gross margin percentage for those deliveries in the six months ended May 31, 2018 and lower land costs. This was partially offset by higher construction costs and increased sales incentives.
Financial Services Segment
Our Financial Services reportable segment primarily provides mortgage financing, title and closing services primarily for buyers of our homes. The segment also originates and sells into securitizations commercial mortgage loans through its RMFLMF Commercial business. Our Financial Services segment sells substantially all of the residential 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, we retain potential liability for possible claims by purchasers that we breached certain limited industry-standard representations and warranties in the loan sale agreements.
The following table sets forth selected financial and operational information related to our Financial Services segment:
Three Months EndedSix Months Ended
May 31,May 31,
(Dollars in thousands)2020201920202019
Dollar value of mortgages originated$3,258,000  2,620,000  $5,478,000  4,557,000  
Number of mortgages originated10,100  8,250  17,000  14,500  
Mortgage capture rate of Lennar homebuyers82 %75 %79 %74 %
Number of title and closing service transactions14,400  13,500  25,500  28,100  
46
 Three Months Ended Six Months Ended
 May 31, May 31,
(Dollars in thousands)2019 2018 2019 2018
Revenues$204,216
 249,709
 347,527
 445,796
Costs and expenses147,999
 193,935
 272,338
 364,160
Operating earnings$56,217
 55,774
 75,189
 81,636
Net loss attributable to noncontrolling interests(6,267) —
 (9,057) —
Operating earnings net of noncontrolling interests$62,484
 55,774
 84,246
 81,636
Dollar value of mortgages originated$2,620,000
 2,949,000
 4,557,000
 4,897,000
Number of mortgages originated8,250
 9,700
 14,500
 16,300
Mortgage capture rate of Lennar homebuyers75% 70% 74% 73%
Number of title and closing service transactions13,500
 31,400
 28,100
 54,800
Number of title policies issued—
 75,500
 19,800
 143,700

Consistent with our reversion to a pure-play homebuilder, during the first quarter of 2019, we sold the majority of our retail title agency business and title insurance underwriter, substantially all of our retail mortgage business and our real estate brokerage business. These transactions resulted in a net gain of $1.7 million.
In connection with the sale of the majority of our retail title agency business and title insurance underwriter, we provided seller financing and received a substantial minority equity ownership stake in the buyer. Due to the combination of both the equity and debt components of this transaction, the transaction did not meet the accounting requirements for sale treatment and, therefore, we are required to consolidate the buyer’s results at this time.
At May 31, 20192020 and November 30, 2018,2019, the carrying value of Financial Services' commercial mortgage-backed securities ("CMBS") was $167.0$164.9 million and $137.0$166.0 million, respectively. These securities were purchased at discounts ranging from 6% to 84% with coupon rates ranging from 2.0% to 5.3%, stated and assumed final distribution dates between October 2027 and December 2028, and stated maturity dates between October 2050 and December 2051. TheOur Financial Services segment classifies these securities as held-to-maturity based on its intent and ability to hold the securities until maturity.
Rialto Mortgage FinanceLMF Commercial
RMFLMF Commercial originates and sells into securitizations five, seven and ten year commercial first mortgage loans, which are secured by income producing properties.
During the six months ended May 31, 2020, LMF Commercial originated commercial loans with a total principal balance of $417.7 million, all of which were recorded as loans held-for-sale and sold $457.4 million of commercial loans into three separate securitizations. As of May 31, 2020, there were $146.4 million of originated commercial loans were sold into a securitization trust but not settled and thus were included as receivables, net.
During the six months ended May 31, 2019, RMFLMF Commercial originated commercial loans with a total principal balance of $720.6 million, of which $705.3 million were recorded as loans held-for-sale, and sold $500.5 million of commercial loans into five separate securitizations. As of May 31, 2019, $61.0 million of originated loans were sold into a securitization trust but not settled and thus were included as receivables, net. As of November 30, 2018, there were no unsettled transactions.



During the six months ended May 31, 2018, RMF originated commercial loans with a total principal balance of $663.8 million, all of which were recorded as loans held-for-sale, and sold $556.3 million of loans into six separate securitizations.
Multifamily Segment
We have been actively involved, primarily through unconsolidated entities, in the development, construction and property management of multifamily rental properties. Our Multifamily segment focuses on developing a geographically diversified portfolio of institutional quality multifamily rental properties in select U.S. markets.
As of May 31, 2019 and November 30, 2018, our condensed consolidated balance sheets had $1.0 billion and $874.2 million, respectively, of assetsThe following tables provide information related to our Multifamily segment, which included investments in unconsolidated entities of $510.2 million and $481.1 million, respectively. Our net investment in the Multifamily segment as of May 31, 2019 and November 30, 2018 was $822.4 million and $703.6 million, respectively.segment:
Our Multifamily segment had equity investments
Balance SheetsMay 31, 2020November 30, 2019
(Dollars in thousands)
Multifamily investments in unconsolidated entities$621,465  561,190  
Lennar's net investment in Multifamily888,218  829,537  
Statements of OperationsThree Months EndedSix Months Ended
(Dollars in thousands)May 31, 2020May 31, 2019May 31, 2020May 31, 2019
Number of operating properties/investments sold through joint ventures—  —  22
Lennar's share of gains on the sale of operating properties/investments$—  —  3,000  15,500  
Despite widespread reductions in 18 and 22 unconsolidated entities (includingeconomic activity due to the Lennar Multifamily Venture I, "LMV I" and Multifamily Venture Fund II LP, "LMV II") as of May 31, 2019 and November 30, 2018, respectively. As of May 31, 2019, our Multifamily segment had interestsCOVID-19 pandemic, the properties in 55 communities with development costs of approximately $6.5 billion, of which 22 communities were completed and operating, 9 communities were partially completed and leasing, 21 communities were under construction and the remaining communities were owned by unconsolidated entities. As of May 31, 2019, our Multifamily segment also had a pipeline of potential future projects, which were under contract or had letters of intent, totaling approximately $3.0 billion in development costs across a number of states that will be developed primarily by future unconsolidated entities.
LMV I is a long-term multifamily development investment vehicle involved in the development, construction and property management of class-A multifamily assets with $2.2 billion in equity commitments, including a $504 million co-investment commitment by us comprised of cash, undeveloped land and preacquisition costs.
In March 2018, the Multifamily segment completed the first closing of a second Multifamily Venture, LMV II, for the development, construction and property management of class-A multifamily assets. During the six months ended May 31, 2019, LMV II's equity commitments were increased by an additional $471 million, including a $126 million co-investment commitment by us comprised of cash, undeveloped land and preacquisition costs. As of May 31, 2019, LMV II had approximately $1.3 billion of equity commitments, including a $381 million co-investment commitment by us. Subsequent to May 31, 2019, the Multifamily segment announced the final closing of LMV II with $1.3 billion of equity commitments.
Lennar Other Segment
Our Lennar Other segment includes fundhas investments we retained subsequent to the sale of the Rialto investment and asset management platform as well as strategic investments in technology companies that are looking to improve the homebuilding and financial services industries to better serve our customers and increase efficiencies. As of May 31, 2019 and November 30, 2018, our balance sheet had $549.2 million and $589.0 million, respectively, of assets in the Lennar Other segment, which included investments in unconsolidated entities of $429.9 million and $424.1 million, respectively.
During the three and six months ended May 31, 2019, our Lennar Other segment had operating earnings of $1.8 million and $4.9 million, respectively, which related to the fund investments we retained when we sold the Rialto investment and asset management platform as well as our strategic investments in technology companies. Operating earnings for the three and six months ended May 31, 2018 were $3.9 million and $6.7 million, respectively, which primarily included the Rialto investment and asset management platform, which was sold on November 30, 2018, and the Rialto fund investments we retained when we sold the Rialto investment and asset management platform. Our strategic investments in technology companies did not, have a material impactoverall, experience significant increases in vacancies or in delinquent rent payments to the Lennar Other segment for the three and six months ended May 31, 2018.
At May 31, 2019 and November 30, 2018, the carrying value of Lennar Other's CMBS was $60.4 million and $60.0 million, respectively. These securities were purchased at discounts ranging from 6.5% to 86.1% with coupon rates ranging from 1.3% to 4.0%, stated and assumed final distribution dates between November 2020 and October 2026, and stated maturity dates between November 2049 and March 2059. We classify these securities as held-to-maturity based on our intent and ability to hold the securities until maturity.
date.

47

(2) Financial Condition and Capital Resources
At May 31, 2019,2020, we had cash and cash equivalents and restricted cash related to our homebuilding, financial services, multifamily and other operations of $1.0$1.7 billion, compared to $1.6$1.5 billion at November 30, 20182019 and $1.2$1.0 billion at May 31, 2018.2019.
We finance all of our activities, including homebuilding, financial services, multifamily, other and general operating needs, primarily with cash generated from our operations, debt issuances and cash borrowed under our warehouse lines of credit and our unsecured revolving credit facility (the "Credit Facility").
Operating Cash Flow Activities
During the six months ended May 31, 2020 and May 31, 2019, and 2018, cash provided by (used in) operating activities totaled $1.3 billion and ($429.9) million, respectively. During the six months ended May 31, 2020, cash provided by operating activities totaled ($429.9)was impacted primarily by our net earnings and a decrease in loans held-for-sale of $481.6 million primarily related to the sale of loans originated by Financial Services, partially offset by an increase in inventories due to strategic land purchases, land development and construction costs of $159.1 million and $19.5 million, respectively. an increase in other assets of $148.1 million.
During the six months ended May 31, 2019, cash used in operating activities was impacted primarily by an increase in inventories due to strategic land purchases, land development and construction costs of $1.5 billion, an increase in loans held-for-sale of $206.3 million and a decrease in accounts payable and other liabilities of $192.5 million. This was partially offset by our net earnings, a decrease in receivables of $542.1 million primarily related to a decrease in Financial Services' receivables, net, which are loans sold to investors for which we have not been paid, deferred income tax expense of $101.5 million and a decrease in other assets of $66.5 million.
Investing Cash Flow Activities
During the six months ended May 31, 2018,2020 and May 31, 2019, cash provided by operatingused in investing activities was positively impacted by our net earnings, an increase in accounts payable and other liabilities of $111.0totaled $174.0 million and a decrease in receivables of $44.2$91.6 million, partially offset by an increase in inventories due to strategic land purchase, land development and construction costs of $408.9 million, an increase in other assets of $119.7 million and an increase in loans held-for-sale of $43.9 million, of which $110.8 million related to RMF originated commercial loans that are reported within the Financial Services segment, offset by a decrease in Financial Services loans held-for-sale of $66.9 million. Forrespectively. During the six months ended May 31, 2018,2020, our cash used in investing activities was primarily due to $302.8 million of investments in and contributions to unconsolidated entities and deconsolidation of a previously consolidated entity, which included (1) $31.2 million to Homebuilding unconsolidated entities; (2) $79.7 million to Multifamily unconsolidated entities; (3) $39.3 million in strategic technology investments included in our Lennar Other segment; and (4) derecognition of $152.5 million of cash as of the date of deconsolidation of a previously consolidated Financial Services entity. This was partially offset by distributions of earningscapital from unconsolidated entities were $18.7of $115.1 million, which primarily included (1) $16.2$33.4 million from Multifamily unconsolidated entities; andentities, (2) $2.5$36.4 million from the unconsolidated Rialto real estate funds included in our Lennar Other segment.segment and (3) $45.3 million from Homebuilding unconsolidated entities.
Investing Cash Flow Activities
During the six months ended May 31, 2019 and 2018, cash used in investing activities totaled $91.6 million and $951.3 million, respectively. During the six months ended May 31, 2019, our cash used in investing activities was primarily due to cash contributions of $230.7 million to unconsolidated entities, which included (1) $136.3 million to Homebuilding unconsolidated entities, (2) $60.0 million to Multifamily unconsolidated entities primarily for working capital; and (3) $31.8 million to the unconsolidated Rialto real estate funds and strategic investments included in our Lennar Other segment. This was partially offset by distributions of capital from unconsolidated entities of $140.9 million, which included (1) $52.4 million from Multifamily unconsolidated entities; (2) $46.5 million from Homebuilding unconsolidated entities; (3) $29.3 million from the unconsolidated Rialto real estate funds and strategic technology investments included in our Lennar Other segment; and (4) $12.7 million from Financial Services unconsolidated entities.
During the six months ended May 31, 2018, our cash used in investing activities was primarily due to our $1.1 billion acquisition of CalAtlantic, net of cash acquired. In addition, we made cash contributions of $186.1 million to unconsolidated entities, which included (1) $81.2 million to Homebuilding unconsolidated entities, (2) $60.4 million to Multifamily unconsolidated entities primarily for working capital, (3) $44.5 million to the unconsolidated Rialto real estate funds included in our Lennar Other segment. Cash used in investing activities was also impacted by purchases of CMBS bonds by our Lennar Other segment. This was partially offset by the receipt of $175.2 million of proceeds from the sale of an 80% interest in one of Homebuilding's strategic joint ventures, Treasure Island Holdings, and distributions of capital from unconsolidated entities of $196.1 million, which included (1) $105.2 million from Homebuilding unconsolidated entities, (2) $66.1 million from Multifamily unconsolidated entities, (3) $24.8 million from the Rialto real estate funds unconsolidated entities included in our Lennar Other segment.
Financing Cash Flow Activities
During the six months ended May 31, 20192020 and 2018,May 31, 2019, cash used in financing activities totaled $948.6 million and $53.4 million, respectively. During the six months ended May 31, 2020, cash used in financing activities was primarily impacted by (1) $310.2 million of net repayments under our Financial Services' warehouse facilities, which included the LMF Commercial warehouse repurchase facilities; (2) the redemption of $300.0 million aggregate principal amount of our 6.625% senior notes due May 2020; (3) repurchases of our common stock, which included $288.5 million of repurchases under our repurchase program and $565.9$7.5 million respectively. of repurchases related to our equity compensation plan; and (4) $174.4 million of principal payments on notes payable and other borrowings. These were partially offset by $169.1 million of receipts related to noncontrolling interests.
During the six months ended May 31, 2019, cash used in financing activities was primarily impacted by $365.2 million of net repayments under our Financial Services' warehouse facilities, which included the RMF warehouse repurchase facilities, $123.7 million principal payment on other borrowings and repurchases of our common stock of $101.2 million, which included $98.8 million of repurchases of our stock under our repurchase program and $2.5 million of repurchases related to employee stock and directorequity
48

compensation plans, partially offset by $550.0 million of net borrowings under our Credit Facility and $28.6 million proceeds from other borrowings.
During the six months ended May 31, 2018, cash used in financing activities was primarily impacted by (1) payment at maturity of $575.0 million aggregate principal amount of the 8.375% Senior Notes due 2018; (2) $410.5 million of principal


payment on other borrowings, which included $350.6 million of aggregate principal payment on the Lennar other segment's 7.00% senior notes due December 2018; (3) $59.1 million of exchanges and conversions of our 1.625% and 0.25% convertible senior notes due 2018 and 2019, respectively, and; (4) $30.4 million of payments related to noncontrolling interests. This was partially offset by (1) $495.3 million of net borrowings under our Credit Facilities as we replaced the amount outstanding under the CalAtlantic revolving credit facility with borrowings under our unsecured revolving credit facility, which had $950 million outstanding as of May 31, 2018; (2) $64.1 million of proceeds from other borrowings.
Debt to total capital ratios are financial measures commonly used in the homebuilding industry and are presented to assist in understanding the leverage of our homebuilding operations. Homebuilding debt to total capital and net Homebuilding debt to total capital are calculated as follows:
(Dollars in thousands)May 31,
2019		 November 30,
2018		 May 31,
2018		(Dollars in thousands)May 31,
2020		November 30,
2019		May 31,
2019
Homebuilding debt$9,390,941
 8,543,868
 9,985,615
Homebuilding debt$7,495,674  7,776,638  9,390,941  
Stockholders’ equity15,159,304
 14,581,535
 13,591,311
Stockholders’ equity16,542,703  15,949,517  15,159,304  
Total capital$24,550,245
 23,125,403
 23,576,926
Total capital$24,038,377  23,726,155  24,550,245  
Homebuilding debt to total capital38.3%
36.9% 42.4%Homebuilding debt to total capital31.2 %32.8 %38.3 %
Homebuilding debt$9,390,941
 8,543,868
 9,985,615
Homebuilding debt$7,495,674  7,776,638  9,390,941  
Less: Homebuilding cash and cash equivalents800,678
 1,337,807
 931,753
Less: Homebuilding cash and cash equivalents1,398,682  1,200,832  800,678  
Net Homebuilding debt$8,590,263
 7,206,061
 9,053,862
Net Homebuilding debt$6,096,992  6,575,806  8,590,263  
Net Homebuilding debt to total capital (1)36.2% 33.1% 40.0%Net Homebuilding debt to total capital (1)26.9 %29.2 %36.2 %
(1)Net Homebuilding debt to total capital is a non-GAAP financial measure defined as net Homebuilding debt (Homebuilding debt less Homebuilding cash and cash equivalents) divided by total capital (net Homebuilding debt plus stockholders' equity). Our management believes the ratio of net Homebuilding debt to total capital is a relevant and a useful financial measure to investors in understanding the leverage employed in our homebuilding operations. However, because net Homebuilding debt to total capital is not calculated in accordance with GAAP, this financial measure should not be considered in isolation or as an alternative to financial measures prescribed by GAAP. Rather, this non-GAAP financial measure should be used to supplement our GAAP results.
(1)Net homebuilding debt to total capital is a non-GAAP financial measure defined as net homebuilding debt (homebuilding debt less homebuilding cash and cash equivalents) divided by total capital (net homebuilding debt plus stockholders' equity). We believe the ratio of net homebuilding debt to total capital is a relevant and a useful financial measure to investors in understanding the leverage employed in homebuilding operations. However, because net homebuilding debt to total capital is not calculated in accordance with GAAP, this financial measure should not be considered in isolation or as an alternative to financial measures prescribed by GAAP. Rather, this non-GAAP financial measure should be used to supplement our GAAP results.
At May 31, 2019,2020, Homebuilding debt to total capital was lowerimproved compared to May 31, 2018,2019 and November 30, 2019, primarily as a result of a decrease in Homebuilding debt and an increase in stockholders' equity primarily related to our net earnings, partially offset by stock repurchases and a decrease in Homebuilding debt. At May 31, 2019, Homebuilding debt to total capital was higher compared to November 30, 2018, as a result of an increase in Homebuilding debt primarily due to an increase in outstanding borrowings under our Credit Facility during the period and from our consolidation of a previously unconsolidated entity as of May 31, 2019, partially offset by an increase in stockholders' equity primarily related to our net earnings.
We are continually exploring various types of transactions to manage our leverage and liquidity positions, take advantage of market opportunities and increase our revenues and earnings. These transactions may include the issuance of additional indebtedness, the repurchase of our outstanding indebtedness, for cash or equity, the repurchase of our common stock, the acquisition of homebuilders and other companies, the purchase or sale of assets or lines of business, the issuance of common stock or securities convertible into shares of common stock, and/or pursuingthe pursuit other financing alternatives. In connection with some of our non-homebuilding businesses, we are also considering other types of transactions such as sales, restructurings, joint ventures, spin-offs or initial public offerings as we continue to move back towards being a pure play homebuilding company. During the first quarter of 2019, we sold the majority of our retail title agency business and its wholly owned title insurance carrier. In addition, we sold our real estate brokerage business, which operated only in Florida, and substantially all of our retail mortgage business. At May 31, 2019, we had no agreements regarding any significant transactions.


The following table summarizes ourOur Homebuilding senior notes and other debts payable including those we became subject to, on a consolidated basis, through the CalAtlantic acquisition:
(Dollars in thousands)May 31,
2019		 November 30,
2018
Unsecured revolving credit facility$550,000
 —
4.500% senior notes due 2019499,981
 499,585
4.50% senior notes due 2019599,602
 599,176
6.625% senior notes due 2020 (1)307,701
 311,735
2.95% senior notes due 2020299,129
 298,838
8.375% senior notes due 2021 (1)427,378
 435,897
4.750% senior notes due 2021498,502
 498,111
6.25% senior notes due December 2021 (1)312,768
 315,283
4.125% senior notes due 2022597,390
 596,894
5.375% senior notes due 2022 (1)259,627
 261,055
4.750% senior notes due 2022571,104
 570,564
4.875% senior notes due December 2023396,156
 395,759
4.500% senior notes due 2024646,440
 646,078
5.875% senior notes due 2024 (1)450,496
 452,833
4.750% senior notes due 2025497,336
 497,114
5.25% senior notes due 2026 (1)408,527
 409,133
5.00% senior notes due 2027 (1)353,083
 353,275
4.75% senior notes due 2027892,672
 892,297
0.25% convertible senior notes due 2019—
 1,291
Mortgage notes on land and other debt823,049
 508,950
 $9,390,941
 8,543,868
(1)These notes were obligations of CalAtlantic when it was acquired, and were subsequently exchanged in part for notes of Lennar Corporation as follows: $267.7 million principal amount of 6.625% senior notes due 2020, $397.6 million principal amount of 8.375% senior notes due 2021, $292.0 million principal amount of 6.25% senior notes due 2021, $240.8 million principal amount of 5.375% senior notes due 2022, $421.4 million principal amount of 5.875% senior notes due 2024, $395.5 million principal amount of 5.25% senior notes due 2026 and $347.3 million principal amount of 5.00% senior notes due 2027. As part of purchase accounting, the senior notes have been recorded at their fair value as of the date of acquisition (February 12, 2018).
The carrying amountsare summarized within Note 7 of the senior notes inNotes to the table above are net of debt issuance costs of $26.9 million and $31.2 million as ofCondensed Consolidated Financial Statements.
At May 31, 2019 and November 30, 2018, respectively.
Our Homebuilding average debt outstanding was $9.22020, we had an unsecured revolving credit facility (the "Credit Facility") with maximum borrowings of $2.45 billion with an average rate for interest incurred of 4.9% for the six months ended May 31, 2019, compared to $8.8 billion with an average rate for interest incurred of 4.8% for the six months ended May 31, 2018. Interest incurred related to Homebuilding debt for the six months ended May 31, 2019 was $212.6 million, compared to $201.0 million for the six months ended May 31, 2018.
In April 2019, we amended our credit agreement governing ourmaturing in 2024. The Credit Facility to increase the commitments from $2.3 billion to $2.4 billion and extend the maturity one year to April 2024, with $50 million maturing in June 2020. Our Credit Facility has a $400 million accordion feature, subject to additional commitments, thus the maximum borrowings are $2.8 billion. The proceeds available under our Credit Facility, which are subject to specified conditions for borrowing, may be used for working capital and general corporate purposes. Our credit agreement also(the "Credit Agreement") provides that up to $500 million in commitments may be used for letters of credit. Under ourthe Credit Facility agreement,Agreement, as of the end of the fiscal quarter, we are requiredsubject to maintain a minimum consolidated tangible net worth, a maximum leverage ratiodebt covenants. The maturity, details and either a liquidity or an interest coverage ratio. These ratios are calculated perdebt covenants of the Credit Facility agreement, which involves adjustments to GAAP financial measures. We believe we wereare unchanged from the disclosure in compliance with our debt covenants at May 31,Financial Condition and Capital Resources section in its Form 10-K for the year ended November 30, 2019. In addition to the Credit Facility, we had $315 million ofhave other letter of credit facilities with different financial institutions.
Our performance lettersletter of credit outstanding were $663.0 million and $598.4 million, at May 31, 2019 and November 30, 2018, respectively. Our financial letters of credit outstanding were $158.5 million and $165.4 million at May 31, 2019 and November 30, 2018, respectively. Performance letters of creditsurety bond facilities are generally posted with regulatory bodies to guarantee the 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, as credit enhancements and as other collateral. Additionally, atdescribed below:

May 31,
2020		November 30,
2019
(In thousands)
Performance letters of credit$726,191  715,793  
Financial letters of credit220,264  184,075  
Surety bonds2,995,941  2,946,167  
Anticipated future costs related to site improvements subject to performance surety bonds1,496,571  1,427,145  

May 31, 2019, we had outstanding surety bonds of $2.8 billion including performance surety bonds related to site improvements at various projects (including certain projectsCurrently, substantially all of our joint ventures) and financial surety bonds.
Subsequent to May 31, 2019, we redeemed $500 million aggregate principal amount of100% owned homebuilding subsidiaries are guaranteeing all our 4.500% senior notes due June 2019.(the "Guaranteed Notes"). The redemption price, which was paidguarantees are full and unconditional. However, they will terminate as to a subsidiary any time it is not directly or indirectly guaranteeing at least $75 million of Lennar Corporation debt or when the subsidiary is sold. These guarantees are outlined in cash, was 100%Note 13 of the principal amount plus accrued but unpaid interest.Notes to the Condensed Consolidated Financial Statements.
49

Our Homebuilding average debt outstanding with an average rate of interest was as follows:
Six Months Ended
(Dollars in thousands)May 31,
2020		May 31,
2019
Homebuilding average debt outstanding$8,171,686  $9,218,102  
Average interest rate4.9 %4.9 %
Interest incurred184,198  212,559  
Under the amended Credit Facility agreement executed in April 2019 (the "Credit Agreement"), as of the end of each fiscal quarter, we are required to maintain minimum consolidated tangible net worth of approximately $7.1 billion plus the sum of 50% of the cumulative consolidated net income for each completed fiscal quarter subsequent to February 28, 2019, if positive, and 50% of the net cash proceeds from any equity offerings from and after February 28, 2019, minus the lesser of 50% of the amount paid after April 11, 2019 to repurchase common stock and $375$375.0 million. We are required to maintain a leverage ratio that shall not exceed 65% and may be reduced by 2.5% per quarter if our interest coverage ratio is less than 2.25:1.00 for two consecutive fiscal calendar quarters. The leverage ratio will have a floor of 60%. If our interest coverage ratio subsequently exceeds 2.25:1.00 for two consecutive fiscal calendar quarters, the leverage ratio we will be required to maintain will be increased by 2.5% per quarter to a maximum of 65%. As of the end of each fiscal quarter, we are also required to maintain either (1) liquidity in an amount equal to or greater than 1.00x consolidated interest incurred for the last twelve months then ended or (2) an interest coverage ratio equal to or greater than 1.50:1.00 for the last twelve months then ended. We believe that we were in compliance with our debt covenants at May 31, 2020.
The following summarizes our required debt covenantscovenant requirements and our actual levels or ratios with respect to those covenants as calculated per the Credit Agreement as of May 31, 2019:
2020:
(Dollars in thousands)Covenant Level Level Achieved as of
May 31, 2019
Minimum net worth test$7,310,484
 9,826,907
Maximum leverage ratio65.0% 43.6%
Liquidity test (1)1.00
 1.88
(1)We are only required to maintain either (1) liquidity in an amount equal to or greater than 1.00x consolidated interest incurred for the last twelve months then ended or (2) an interest coverage ratio of equal to or greater than 1.50:1.00 for the last twelve months then ended. Although we are in compliance with our debt covenants for both calculations, we have only disclosed our liquidity test.
The terms minimum net worth test, maximum leverage ratio, liquidity test and interest coverage ratio used in the Credit Agreement are specifically calculated per the Credit Agreement and differ in specified ways from comparable GAAP or common usage terms.
(Dollars in thousands)Covenant LevelLevel Achieved as of May 31, 2020
Minimum net worth test$7,928,483  11,090,017  
Maximum leverage ratio65.0 %33.0 %
Liquidity test1.00  3.81  
Currently, substantially all of our 100% owned homebuilding subsidiaries are guaranteeing all our senior notes (the "Guaranteed Notes"). The guarantees are full and unconditional. The principal reason our 100% owned homebuilding subsidiaries are guaranteeing the Guaranteed Notes is so holders of the Guaranteed Notes will have rights at least as great with regard to those subsidiaries as any other holders of a material amount of our unsecured debt. Therefore, the guarantees of the Guaranteed Notes will remain in effect with regard to a guarantor subsidiary only while it guarantees a material amount of the debt of Lennar Corporation, as a separate entity, to others. At any time when a guarantor subsidiary is no longer guaranteeing at least $75 million of Lennar Corporation’s debt other than the Guaranteed Notes, either directly or by guaranteeing other subsidiaries’ obligations as guarantors of Lennar Corporation’s debt, the guarantor subsidiary’s guarantee of the Guaranteed Notes will be suspended. Therefore, if the guarantor subsidiaries cease guaranteeing Lennar Corporation’s obligations under our Credit Facility and our letter of credit facilities and are not guarantors of any new debt, the guarantor subsidiaries’ guarantees of the Guaranteed Notes will be suspended until such time, if any, as they again are guaranteeing at least $75 million of Lennar Corporation’s debt other than the Guaranteed Notes.
If our guarantor subsidiaries are guaranteeing revolving credit lines totaling at least $75 million, we will treat the guarantees of the Guaranteed Notes as remaining in effect even during periods when Lennar Corporation’s borrowings under the revolving credit lines are less than $75 million. 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 May 31, 2019,2020, the Financial Services warehouse facilities were all 364-day repurchase facilities and used to fund residential mortgages wereor commercial mortgages for LMF Commercial as follows:
(In thousands)Maximum Aggregate Commitment
364-day warehouse repurchase facility that matures June 2019 (1)$700,000
364-day warehouse repurchase facility that matures August 2019 (2)300,000
364-day warehouse repurchase facility that matures October 2019 (3)500,000
364-day warehouse repurchase facility that matures March 2020 (4)300,000
Total$1,800,000


(In thousands)Maximum Aggregate Commitment
Residential facilities maturing:
June 2020 (1)$500,000 
July 2020300,000 
January 2021500,000 
March 2021300,000 
Total - Residential facilities$1,600,000 
LMF Commercial facilities maturing:
November 2020$200,000 
December 2020 (2)700,000 
(1)Subsequent to May 31, 2019, the warehouse repurchase facility maturity was extended to June 2020 and the maximum aggregate commitment amount decreased to $500 million.
(2)Total - LMF Commercial facilitiesMaximum aggregate commitment includes an uncommitted amount of $300 million.
$900,000 
(3)TotalMaximum aggregate commitment includes an uncommitted amount of $400 million.$2,500,000 
(4)Maximum aggregate commitment includes an uncommitted amount of $300 million.
(1)Subsequent to May 31, 2020, the maturity date was extended to June 2021.
(2)Includes $50.0 million LMF Commercial warehouse repurchase facility used to finance the origination of floating rate accrual loans, which are reported as accrual loans within loans held-for-investment, net. There were borrowings under this facility of $11.4 million as of May 31, 2020.
Our Financial Services segment uses thesethe residential facilities to finance its residential mortgage lending activities until the mortgage loans are sold to investors and the proceeds are collected. The facilities are non-recourse to us and are expected to be renewed or replaced with other facilities when they mature. The LMF Commercial facilities finance LMF Commercial loan originations and securitization activities and were secured by a 75% interest in the originated commercial loans financed.
Borrowings and collateral under the facilities and their prior year predecessors were $882.0 million and $1.3 billion at May 31, 2019 and November 30, 2018, respectively, and were collateralized by mortgage loans and receivables on loans sold to investors but not yet paid for with outstanding principal balances of $911.5 million and $1.3 billion, at May 31, 2019 and November 30, 2018, respectively. Without the facilities, our Financial Services segment would have to use cash from operations and other funding sources to finance its residential mortgage lending activities. Since our Financial Services segment’s borrowings under the warehouse repurchase facilities are generally repaid with the proceeds from the sale of mortgage loans and receivables on loans that secure those borrowings, the facilities are not likely to be a call on our current cash or future cash resources. as follows:
50

(In thousands)May 31, 2020November 30, 2019
Borrowings under the residential facilities$1,054,588  $1,374,063  
Collateral under the residential facilities1,085,503  1,423,650  
Borrowings under the LMF Commercial facilities227,003  216,870  
If the facilities are not renewed or replaced, the borrowings under the lines of credit will be paid offrepaid by selling the mortgage loans held-for-sale to investors and by collecting on receivables on loans sold to investors but not yet paid for.
At May 31, 2019, the RMF warehouse facilities were as follows:
(In thousands)Maximum Aggregate Commitment
364-day warehouse repurchase facility that matures November 2019$200,000
364-day warehouse repurchase facility that matures December 2019250,000
364-day warehouse repurchase facility that matures December 2019200,000
364-day warehouse repurchase facility that matures December 2019200,000
  Total - Loans origination and securitization business$850,000
Warehouse repurchase facility that matures December 2019 (two - one year extensions) (1)50,000
  Total$900,000
(1)RMF uses this warehouse repurchase facility to finance the origination of floating rate accrual loans, which are reported as accrual loans within loans held-for-investment, net. There were no borrowings under this facility as of both May 31, 2019 and November 30, 2018.
Borrowings under the facilities that finance RMF's commercial loan originations and securitization activities were $155.9 million and $178.8 million as of May 31, 2019 and November 30, 2018, respectively, and were secured by a 75% interest in the originated commercial loans financed. The facilities require immediate repayment of the 75% interest in the secured commercial loans when the loans are sold in a securitization and the proceeds are collected. These warehouse repurchase facilities are non-recourse to us and are expected to be renewed or replaced with other facilities when they mature. If the facilities are not renewed or replaced, the borrowings under the lines of credit will be paid off by selling the loans held-for-sale to investors. Without the facilities, the Financial Services segment would have to use cash from operations and other funding sources to finance its lending activities.
Changes in Capital Structure
In January 2019, our Board of Directors authorized us tothe repurchase of up to the lesser of $1$1.0 billion in value, or 25 million in shares, of our outstanding Class A and Class B common stock. The repurchase authorization has no expiration date. DuringThe following table describes the repurchase of our Class A and Class B common stocks, under this program, for the three and six months ended May 31, 2019, under this repurchase program, we repurchased one million shares of our Class A common stock for approximately $51.8 million at an average share price of $51.76. 2020 and 2019:
Three Months EndedSix Months Ended
May 31, 2020May 31, 2019May 31, 2020May 31, 2019
(Dollars in thousands, except price per share)Class AClass BClass AClass BClass AClass BClass AClass B
Shares repurchased—  —  1,000,000  —  4,250,000  115,000  2,000,000  —  
Purchase amount$—  $—  $51,783  $—  $282,274  $6,155  $98,781  $—  
Average price per share$—  $—  $51.76  $—  $66.42  $53.52  $49.37  $—  
During the six months ended May 31, 2019, under this2020, treasury stock increased due to our repurchase program, we repurchased twoof 4.4 million shares of our Class A and Class B common stock for approximately $98.8 million at an average share price of $49.37.
through our stock repurchase program. During the six months ended May 31, 2019, treasury stock increased by 2.1 million shares of Class A common stock due primarily to our repurchase of two2.0 million shares of Class A common stock during the six months ended May 31, 2019 through our stock repurchase program. During the six months ended May 31, 2018, treasury stock increased by 0.5 million shares
On June 25, 2020, our Board of Directors declared a quarterly cash dividend of $0.125 per share on both our Class A and Class B common stock, primarily duepayable on July 24, 2020 to activity related to our equity compensation plan.
holders of record at the close of business on July 10, 2020. On May 8, 2019,5, 2020, we paid cash dividends of $0.04$0.125 per share foron both our Class A and Class B common stock to holders of record at the close of business on April 24, 2019,21, 2020, as declared by our Board of Directors on April 10, 2019. On June 26, 2019, our Board of Directors7, 2020. We declared a quarterly cash dividend of $0.04 per share on both of our Class A and Class B common stock, payable on July 25, 2019 to holders of record at the close of business on July 11, 2019. We approved and paid cash dividends of $0.04 per share foron both itsour Class A and Class B common stock in each quarter for the year ended November 30, 2018.


2019.
Based on our current financial condition and credit relationships, we believe that, assuming the effects of the COVID-19 pandemic and resulting governmental actions on our operations do not significantly worsen for a protracted period, our operations and borrowing resources will provide for our current and long-term capital requirements at our anticipated levels of activity.
Off-Balance Sheet Arrangements
Homebuilding: Investments in Unconsolidated Entities
At May 31, 2019,2020, we had equity investments in 5449 homebuilding and land unconsolidated entities (of which at May 31, 2019, three had recourse debt, eight10 had non-recourse debt and 4336 had no debt) compared to 5150 homebuilding and land unconsolidated entities at November 30, 2018.2019. Historically, we have invested in unconsolidated entities that acquired and developed land (1) for our homebuilding operations or for sale to third parties or (2) for the construction of homes for sale to third-party homebuyers. Through these entities, we have primarily sought to reduce and share our risk by limiting the amount of our capital invested in land, while obtaining access to potential future homesites and allowing us to participate in strategic ventures. The use of these entities also, in some instances, has enabled us to acquire land to which we could not otherwise obtain access, or could not obtain access on as favorable terms, without the participation of a strategic partner. Participants in these joint ventures have been land owners/developers, other homebuilders and financial or strategic partners. Joint ventures with land owners/developers have given us access to homesites owned or controlled by our partners. Joint ventures with other homebuilders have provided us with the ability to bid jointly with our partners for large land parcels. Joint ventures with financial partners have allowed us to combine our homebuilding expertise with access to our partners’ capital. Joint ventures with strategic partners have allowed us to combine our homebuilding expertise with the specific expertise (e.g. commercial or infill experience) of our partners. Each joint venture is governed by an executive committee consisting of members from the partners.
Summarized condensed financial information on a combined 100% basis related to Homebuilding’s unconsolidated entities that are accounted for by the equity method was as follows:
Statements of Operations and Selected Information
   As of or for the
 Three Months Ended Six Months Ended
 May 31, May 31,
(Dollars in thousands)2019 2018 2019 2018
Revenues$65,686
 100,952
 156,330
 169,141
Costs and expenses90,363
 148,678
 214,114
 256,102
Other income (1)75,868
 105,192
 76,065
 105,192
Net earnings of unconsolidated entities$51,191
 57,466
 18,281
 18,231
Homebuilding equity in earnings (loss) from unconsolidated entities$19,614
 (12,670) 5,858
 (26,798)
Homebuilding cumulative share of net earnings - deferred at May 31, 2019 and 2018, respectively    $31,969
 28,744
Homebuilding investments in unconsolidated entities    $983,683
 913,576
Equity of the Homebuilding unconsolidated entities    $4,235,438
 4,187,485
Homebuilding investment % in the unconsolidated entities (2)

 

 23% 22%
(1)During the three and six months ended May 31, 2019, other income was primarily attributable to a $64.9 million gain on the settlement of contingent consideration recorded by one Homebuilding unconsolidated entity, of which our pro-rata share was $25.9 million. During the three and six months ended May 31, 2018, other income was primarily due to FivePoint, a publicly traded company, recording income resulting from the Tax Cuts and Jobs Act of 2017’s reduction in its corporate tax rate to reduce its liability pursuant to its tax receivable agreement (“TRA Liability”) with its non-controlling interests. However, we have a 70% interest in the FivePoint TRA Liability. Therefore, we did not include in Homebuilding’s equity in earnings (loss) from unconsolidated entities its pro-rata share of earnings related to our portion of the TRA Liability. As a result, our unconsolidated entities have net earnings, but we have an equity in loss from unconsolidated entities.
(2)Our share of profit and cash distributions from the sales of land could be higher or lower compared to our ownership interest in unconsolidated entities if certain specified internal rate of return or cash flow milestones are achieved.


Balance Sheets
(In thousands)May 31,
2019		 November 30,
2018
Assets:   
Cash and cash equivalents$651,681
 781,833
Inventories4,177,728
 4,291,470
Other assets988,714
 1,045,274
 $5,818,123
 6,118,577
Liabilities and equity:   
Accounts payable and other liabilities$757,410
 874,355
Debt (1)825,275
 1,202,556
Equity4,235,438
 4,041,666
 $5,818,123
 6,118,577
(1)Debt presented above is net of debt issuance costs of $9.9 million and $12.4 million, as of May 31, 2019 and November 30, 2018, respectively. The decrease in debt was primarily related to the consolidation of an entity as of May 31, 2019.
As of May 31, 20192020 and November 30, 2018,2019, our recorded investments in Homebuilding unconsolidated entities were $983.7$973.0 million and $870.2 million,$1.0 billion, respectively, while the underlying equity related to our investments in Homebuilding unconsolidated entities partners’ net assets as of both May 31, 20192020 and November 30, 20182019 were $1.3 billion and $1.2 billion, respectively.billion. The basis
51

difference is primarily as a result of us contributing our investment in three strategic joint ventures with a higher fair value than book value for an investment in the FivePoint entity and deferring equity in earnings on land sales to us. Included in our recorded investments in Homebuilding unconsolidated entities is our 40% ownership of FivePoint. As of May 31, 20192020 and November 30, 2018,2019, the carrying amount of our investment in FivePoint was $389.1$376.9 million and $342.7$374.0 million, respectively.
During the six months ended May 31, 2018, we sold 80% of a strategic joint venture to a third-party resulting in a gain of $164.9 million recorded in Homebuilding other income, net within the accompanying Condensed Consolidated Statement of Operations and Comprehensive Income (Loss).
The Homebuilding unconsolidated entities in which we have investments usually finance their activities with a combination of partner equity and debt financing. In some instances, we and our partners have guaranteed debt of certain unconsolidated entities.
Debt to total capital of the Homebuilding unconsolidated entities in which we have investments was calculated as follows:
(Dollars in thousands)May 31,
2019		 November 30,
2018
Debt (1)$825,275
 1,202,556
Equity4,235,438
 4,041,666
Total capital$5,060,713
 5,244,222
Debt to total capital of our unconsolidated entities16.3% 22.9%
(1)Debt presented above is net of debt issuance costs of $9.9 million and $12.4 million, as of May 31, 2019 and November 30, 2018, respectively. The decrease in debt was primarily related to our consolidation of a previously unconsolidated entity as of May 31, 2019.
Our investments in Homebuilding unconsolidated entities by type of venture were as follows:
(In thousands)May 31,
2019		 November 30,
2018
Land development$908,415
 805,678
Homebuilding75,268
 64,523
Total investments (1)$983,683
 870,201
(1)As of November 30, 2018, total investments does not include the ($62.0) million balance for one unconsolidated entity as it was reclassed to other liabilities.
Indebtedness of an unconsolidated entity is secured by its own assets. Some unconsolidated entities own multiple properties and other assets. There is no cross collateralization of debt of different unconsolidated entities. We also do not use our investment in one unconsolidated entity as collateral for the debt of another unconsolidated entity or commingle funds among Homebuilding unconsolidated entities.


In connection with loans to a Homebuilding unconsolidated entity, we and our partners often guarantee to a lender, either jointly and severally or on a several basis, any or all of the following: (i) the completion of the development, in whole or in part, (ii) indemnification of the lender against losses from environmental issues, (iii) indemnification of the lender from "bad boy acts" of the unconsolidated entity (or full recourse liability in the event of an unauthorized transfer or bankruptcy) and (iv) that the loan to value and/or loan to cost will not exceed a certain percentage (maintenance or remargining guarantee) or that a percentage of the outstanding loan will be repaid (repayment guarantee).
In connection with loans to an unconsolidated entity where there is a joint and several guarantee, we sometimes have a reimbursement agreement with our partner. The reimbursement agreement provides that neither party is responsible for more than its proportionate share of the guarantee. However, if our joint venture partner does not have adequate financial resources to meet its obligations under the reimbursement agreement, we may be liable for more than our proportionate share, up to our maximum exposure, which is the full amount covered by the joint and several guarantee.
The total debt of the Homebuilding unconsolidated entities in which we have investments including Lennar'swas $1.1 billion as of both May 31, 2020 and November 30, 2019, of which our maximum recourse exposure werewas $4.9 million and $10.8 million as follows:
(Dollars in thousands)May 31,
2019		 November 30,
2018
Non-recourse bank debt and other debt (partner’s share of several recourse)$46,816
 48,313
Non-recourse debt with completion guarantees144,588
 239,568
Non-recourse debt without completion guarantees634,086
 861,371
Non-recourse debt to Lennar825,490
 1,149,252
Lennar's maximum recourse exposure (1)9,653
 65,707
Debt issue costs(9,868) (12,403)
Total debt (1)$825,275
 1,202,556
Lennar’s maximum recourse exposure as a % of total JV debt1% 5%
(1)As of May 31, 2019 and November 30, 2018, our maximum recourse exposure was primarily related to us providing repayment guarantees on two and four unconsolidated entities' debt, respectively. The decrease in maximum recourse exposure and total debt was primarily related to our consolidation of a previously unconsolidated entity as of May 31, 2019.
The recourse debt exposure in the previous table represents our maximum exposure to loss from guaranteesof May 31, 2020 and does not take into account the underlying value of the collateral or the other assets of the borrowers that are available to repay debt or to reimburse us for any payments on our guarantees.
November 30, 2019, respectively. In addition, in most instances in which we have guaranteed debt of a Homebuilding unconsolidated entity, our partners have also guaranteed that debt and are required to contribute their share of the guarantee payment. In a repayment guarantee, we and our venture partners guarantee repayment of a portion or all of the debt in the event of a default before the lender would have to exercise its rights against the collateral.
In connection with many of the loans to Homebuilding unconsolidated entities, we and our joint venture partners (or entities related to them) have been required to give guarantees of completion to the lenders. Those completion guarantees may require that the guarantors complete the construction of the improvements for which the financing was obtained. If the construction is to be done in phases, the guarantee generally is limited to completing only the phases as to which construction has already commenced and for which loan proceeds were used. If we are required to make a payment under any guarantee, the payment would generally constitute a capital contribution or loan to the Homebuilding unconsolidated entity and increase our share of any funds the unconsolidated entity distributes.
As of May 31, 20192020 and November 30, 2018,2019, the fair values of the repayment, maintenance, and completion guarantees were not material. We believe that as of May 31, 2019,2020, in the event we become legally obligated to perform under a guarantee of the obligation of a Homebuilding unconsolidated entity due to a triggering event under a guarantee, the collateral would be sufficient to repay at least a significant portion of the obligation or we and our partners would contribute additional capital into the venture. In certain instances, we have placed performance letters of credit and surety bonds with municipalities with regard to obligations of our joint ventures (see Note 127 of the Notes to Condensed Consolidated Financial Statements).


The following table summarizes the principal maturities of our Homebuilding unconsolidated entities ("JVs") debt as per current debt arrangements as of May 31, 20192020 and it does not represent estimates of future cash payments that will be made to reduce debt balances. Many JV loans have extension options in the loan agreements that would allow the loans to be extended into future years.
Principal Maturities of Unconsolidated JVs by Period
(In thousands)Total JV Debt202020212022ThereafterOther
Maximum recourse debt exposure to Lennar$4,932  —  —  4,932  —  —  
Debt without recourse to Lennar1,116,812  49,412  262,858  150,224  654,318  —  
Land seller and CDD debt9,045  —  —  —  —  9,045  
Debt issuance costs(12,415) —  —  —  —  (12,415) 
Total$1,118,374  49,412  262,858  155,156  654,318  (3,370) 
 Principal Maturities of Unconsolidated JVs by Period
(In thousands)Total JV Debt 2019 2020 2021 Thereafter Other
Maximum recourse debt exposure to Lennar$9,653
 —
 —
 3,387
 6,266
 —
Debt without recourse to Lennar825,490
 35,627
 118,735
 157,394
 513,734
 —
Debt issuance costs(9,868) —
 —
 —
 —
 (9,868)
Total$825,275
 35,627
 118,735
 160,781
 520,000
 (9,868)
The table below indicates the assets, debt and equity of our 10 largest Homebuilding unconsolidated joint venture investments by the carrying value of Lennar's investment as of May 31, 2019:
(Dollars in thousands)
Lennar’s
Investment
 
Total JV
Assets
 
Maximum
Recourse
Debt
Exposure
to Lennar
 
Total
Debt
Without
Recourse
to
Lennar
 
Total JV
Debt
 
Total JV
Equity
 
JV
Debt to
Total
Capital
Ratio
Top Ten JVs (1):             
FivePoint$389,119
 2,885,550
 —
 500,000
 500,000
 1,929,353
 21%
Dublin Crossings78,395
 242,735
 —
 —
 —
 218,606
 —%
Heritage Fields El Toro45,131
 1,189,063
 —
 5,919
 5,919
 1,042,081
 1%
Hawk Land Investors44,108
 6,086
 —
 —
 —
 6,055
 —%
SC East Landco41,750
 98,860
 —
 —
 —
 98,573
 —%
Heritage Hills Irvine34,090
 78,886
 —
 —
 —
 75,930
 —%
Mesa Canyon Community Partners33,815
 139,392
 —
 38,364
 38,364
 101,111
 28%
E.L. Urban Communities33,463
 63,501
 —
 15,911
 15,911
 44,515
 26%
Runkle Canyon33,098
 66,843
 —
 —
 —
 66,197
 —%
BHCSP30,002
 85,161
 3,387
 23,708
 27,095
 50,521
 35%
10 largest JV investments762,971
 4,856,077
 3,387
 583,902
 587,289
 3,632,942
 14%
Other JVs220,712
 962,046
 6,266
 241,588
 247,854
 602,496
 29%
Total$983,683
 5,818,123
 9,653
 825,490
 835,143
 4,235,438
 16%
Debt issuance costs    —
 (9,868) (9,868)    
Total JV debt    $9,653
 815,622
 825,275
    
(1)The 10 largest joint ventures presented above represent the majority of our total JVs assets and equity and 71% of total JV debt without recourse to Lennar. In addition, all of the joint ventures presented in the table above operate in our Homebuilding West segment except Hawk Land Investors, which is in Homebuilding East.
Multifamily: Investments in Unconsolidated Entities
At May 31, 2019,2020, Multifamily had equity investments in 1821 unconsolidated entities that are engaged in multifamily residential developments (of which 67 had non-recourse debt and 1214 had no debt), compared to 2219 unconsolidated entities at November 30, 2018.2019. We invest in unconsolidated entities that acquire and develop land to construct multifamily rental
52

properties. Through these entities, we are focusing on developing a geographically diversified portfolio of institutional quality multifamily rental properties in select U.S. markets. Initially, we participated in building multifamily developments and selling them soon after they were completed. Recently, however, we have been focused on developing properties with the intention of retaining them. Participants in these joint ventures have been financial partners. Joint ventures with financial partners have allowed us to combine our development and construction expertise with access to our partners’ capital. Each joint venture is governed by an operating agreement that provides significant substantive participating voting rights on major decisions to our partners.
The Multifamily segment includes LMV I is aand LMV II, which are long-term multifamily development investment vehiclevehicles involved in the development, construction and property management of class-A multifamily assets with $2.2 billion in equity commitments, including a $504 million co-investment commitment by us comprisedassets. Details of cash, undeveloped land and preacquisition costs. The LMV I has 39 multifamily assets totaling approximately 11,700 apartments with projected project costs of $4.1 billioneach as of May 31, 2019. There are 18 completed and operating multifamily assets with 5,111 apartments. Duringduring the six months ended May 31, 2019, $121.8 million in equity commitments were called, of which we contributed $30.2 million representing our pro-rata portion of the called equity. During the six months ended May 31, 2019, we received $9.5 million of distributions as a return of capital from LMV I. As of May 31, 2019, $1.9 billion of the $2.2 billion in equity commitments had been called, of which we had contributed2020 are included below:


$471.1 million representing our pro-rata portion of the called equity, resulting in a remaining equity commitment for us of $32.9 million. As of May 31, 2019 and November 30, 2018, the carrying value of our investment in LMV I was $395.4 million and $383.4 million, respectively.
In March 2018, our Multifamily segment completed the first closing of a second Multifamily Venture, LMV II, for the development, construction and property management of class-A multifamily assets. During the three months ended May 31, 2019, LMV II's equity commitments were increased by an additional $471 million, including $126 million additional co-investment commitment by us. As of May 31, 2019, LMV II had approximately $1.3 billion of equity commitments, including a $381 million co-investment commitment by us comprised of cash, undeveloped land and preacquisition costs. During the six months ended May 31, 2019, $138.3 million in equity commitments were called, of which we contributed $23.5 million, which was made up of $64.5 million of inventory and cash contributions, offset by $40.9 million of distributions as a return of capital resulting in a remaining commitment for us of $276.3 million. As of May 31, 2019, $349.4 million of the $1.3 billion in equity commitments had been called of which we had contributed $104.5 million, representing our pro-rata share of the called equity. As of May 31, 2019 and November 30, 2018, the carrying value of our investment in LMV II was $85.0 million and $63.0 million, respectively. The difference between our net contributions and the carrying value of our investments was related to a basis difference. LMV II was seeded initially with eight undeveloped multifamily assets that were previously purchased by our Multifamily segment totaling approximately 3,000 apartments with projected project costs of approximately $1.3 billion. As of May 31, 2019, LMV II was seeded with ten undeveloped assets totaling approximately 3,800 apartments with projected costs of approximately $1.6 billion. Subsequent to May 31, 2019, the Multifamily segment announced the final closing of LMV II with $1.3 billion of equity commitments.
May 31, 2020
(In thousands)LMV ILMV II
Lennar's carrying value of investments$355,136  213,635  
Equity commitments2,204,016  1,257,700  
Equity commitments called2,127,560  754,177  
Lennar's equity commitments504,016  381,000  
Lennar's equity commitments called493,730  227,372  
Lennar's remaining commitments10,286  153,628  
Distributions to Lennar during the six months ended May 31, 202019,969  —  
We regularly monitor the results of both our Homebuilding and Multifamily unconsolidated joint ventures and any trends that may affect their future liquidity or results of operations. We also monitor the performance of joint ventures in which we have investments on a regular basis to assess compliance with debt covenants. For those joint ventures not in compliance with the debt covenants, we evaluate and assess possible impairment of our investment. We believe all of the joint ventures were in compliance with their debt covenants at May 31, 2019.2020.
Summarized financial information on a combined 100% basis related to Multifamily’s investments in unconsolidated entities that are accounted for by the equity method was as follows:
Balance Sheets
(Dollars in thousands)May 31,
2019		 November 30,
2018
Assets:   
Cash and cash equivalents$28,217
 61,571
Operating properties and equipment4,063,560
 3,708,613
Other assets50,227
 40,899
 $4,142,004
 3,811,083
Liabilities and equity:   
Accounts payable and other liabilities$190,785
 199,119
Notes payable (1)1,596,850
 1,381,656
Equity2,354,369
 2,230,308
 $4,142,004
 3,811,083
(1)Notes payable are net of debt issuance costs of $21.0 million and $15.7 million, as of May 31, 2019 and November 30, 2018, respectively.
The following table summarizes the principal maturities of our Multifamily unconsolidated entities debt as per current debt arrangements as of May 31, 20192020 and it does not represent estimates of future cash payments that will be made to reduce debt balances.
Principal Maturities of Unconsolidated JVs by Period
(In thousands)Total JV Debt202020212022ThereafterOther
Debt without recourse to Lennar$2,345,974  88,790  653,144  453,455  1,150,585  —  
Debt issuance costs(31,789) —  —  —  —  (31,789) 
Total$2,314,185  88,790  653,144  453,455  1,150,585  (31,789) 
 Principal Maturities of Unconsolidated JVs by Period
(In thousands)Total JV Debt 2019 2020 2021 Thereafter Other
Debt without recourse to Lennar$1,617,892
 30,869
 788,933
 246,818
 551,272
 —
Debt issuance costs(21,042) —
 —
 —
 —
 (21,042)
Total$1,596,850
 30,869
 788,933
 246,818
 551,272
 (21,042)



Statements of Operations and Selected Information
     As of or for the
 Three Months Ended Six Months Ended
 May 31, May 31,
(Dollars in thousands)2019 2018 2019 2018
Revenues$38,609
 27,121
 73,980
 51,073
Costs and expenses55,085
 43,482
 111,213
 75,277
Other income, net—
 31,562
 21,400
 38,869
Net earnings (loss) of unconsolidated entities$(16,476) 15,201
 (15,833) 14,665
Multifamily equity in earnings (loss) from unconsolidated entities and other gain (1)$(3,018) 14,281
 7,563
 17,023
Our investments in unconsolidated entities    $510,223
 480,298
Equity of the unconsolidated entities    $2,354,369
 2,185,992
Our investment % in the unconsolidated entities

 

 22% 22%
(1)During the six months ended May 31, 2019, our Multifamily segment sold, through its unconsolidated entities, one operating property and an investment in an operating property resulting in the segment's $15.5 million share of gains. The gain of $11.9 million recognized on the sale of the investment in an operating property and recognition of our share of deferred development fees that were capitalized at the joint venture level are included in Multifamily equity in earnings (loss) from unconsolidated entities and other gain, and are not included in net earnings (loss) of unconsolidated entities. During the three and six months ended May 31, 2018, our Multifamily segment sold two and three operating properties, respectively, through its unconsolidated entities resulting in the segment's $17.4 million and $21.5 million share of gains, respectively.
Lennar Other: Investments in Unconsolidated Entities
We sold our Rialto Management Group on November 30, 2018. We retained our fund investments along with our carried interests in various Rialto funds and investments in other balance sheet assets. Our limited partner investments in Rialto funds and investment vehicles totaled $301.7 million at May 31, 2019. We are committed to invest as much as an additional $49.0 million in Rialto funds.
As part of the sale of the Rialto investment and asset management platform, we retained our ability to receive a portion of payments with regard to carried interests if funds meet specified performance thresholds. We will periodically receive advance distributions related to the carried interests in order to cover income tax obligations resulting from allocations of taxable income to the carried interests. These distributions are not subject to clawbacks but will reduce future carried interest payments to which we become entitled from the applicable funds and have been recorded as revenues.
The following table represents amounts our Lennar Other segment would have received had the Rialto funds ceased operations and hypothetically liquidated all their investments at their estimated fair values onAs of May 31, 2019, both gross and net of amounts already received as advanced tax distributions. The actual amounts we may receive could be materially different from amounts presented in the table below.
 May 31, 2019
(In thousands)Hypothetical Carried Interest Paid as Advanced Tax Distribution Paid as Carried Interest Hypothetical Carried Interest, Net (2)
Rialto Real Estate Fund, LP (1)$180,393
 52,711
 52,090
 75,592
Rialto Real Estate Fund II, LP (1)109,677
 19,297
 394
 89,986
 $290,070
 72,008
 52,484
 165,578
(1)Gross of interests of participating employees (refer to note below).
(2)Rialto previously adopted carried interest plans under which we and participating employees will receive 60% and 40%, respectively, of carried interest payments, net of expenses, received by entities that are general partners of a number of Rialto funds or other investment vehicles. When Rialto Management Group was sold, we retained our right to receive 60% of the distributions of carried interest payments received from funds that existed at the time of the sale.
At May 31, 20192020 and November 30, 2018,2019, we had strategic equity investments in ten and ninestrategic technology unconsolidated entities respectively, which totaled $128.2of $189.5 million and $126.7$124.3 million, respectively.


Option Contracts
We often obtain access to land through option contracts, which generally enable 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.
53

The table below indicates the number of homesites owned and homesites to which we had access through option contracts with third parties ("optioned") or unconsolidated JVs (i.e., controlled homesites) at May 31, 20192020 and 2018:
May 31, 2019:
Controlled HomesitesYears of
Controlled Homesites    
May 31, 2019Optioned JVs Total 
Owned
Homesites
 
Total
Homesites
May 31, 2020May 31, 2020OptionedJVsTotalOwned HomesitesTotal HomesitesSupply Owned (1)
East26,688
 3,482
 30,170
 79,313
 109,483
East28,763  13,608  42,371  77,370  119,741  
Central6,627
 132
 6,759
 32,559
 39,318
Central7,320  122  7,442  29,765  37,207  
Texas23,119
 —
 23,119
 35,987
 59,106
Texas23,164  —  23,164  36,179  59,343  
West8,066
 4,493
 12,559
 63,757
 76,316
West12,355  2,900  15,255  59,777  75,032  
Other—
 919
 919
 3,610
 4,529
Other—  8,681  8,681  2,071  10,752  
Total homesites64,500
 9,026
 73,526
 215,226
 288,752
Total homesites71,602  25,311  96,913  205,162  302,075  3.9  
% of total homesites% of total homesites32 %68 %
Controlled HomesitesYears of
May 31, 2019OptionedJVsTotalOwned HomesitesTotal HomesitesSupply Owned (1)
East26,688  3,482  30,170  79,313  109,483  
Central6,627  132  6,759  32,559  39,318  
Texas23,119  —  23,119  35,987  59,106  
West8,066  4,493  12,559  63,757  76,316  
Other—  919  919  3,610  4,529  
Total homesites64,500  9,026  73,526  215,226  288,752  4.5  
% of total homesites25 %75 %
 Controlled Homesites    
May 31, 2018Optioned JVs Total 
Owned
Homesites
 
Total
Homesites
East27,581
 3,482
 31,063
 66,413
 97,476
Central6,511
 —
 6,511
 31,457
 37,968
Texas14,862
 —
 14,862
 31,109
 45,971
West7,829
 6,141
 13,970
 65,732
 79,702
Other—
 —
 —
 257
 257
Total homesites56,783
 9,623
 66,406
 194,968
 261,374
(1)Based on trailing twelve months of home deliveries.
We evaluate certain option contracts for land to determine whether they are VIEs and, if so, whether we are the primary beneficiary of certain of these option contracts. Although we do not have legal title to the optioned land, if we are deemed to be the primary beneficiary or make a significant deposit for optioned land, we may need to consolidate the land under option at the purchase price of the optioned land. Consolidated land purchase options are reflected in the accompanying condensed consolidated balance sheets as consolidated inventory not owned. Over the next several years, we plan to increase the controlled homesites to approximately 40%50% of our entire homesite inventory from approximately 25%32% as of May 31, 2019.2020. Recently, we have undertaken several strategic land initiatives which include acquiring fully developed homesites from regional developers and may also include building homes in bulk for landowners who will retain them as rental properties.
During the six months ended May 31, 2019,2020, consolidated inventory not owned increased by $185.7$86.7 million with a corresponding increase to liabilities related to consolidated inventory not owned in the accompanying condensed consolidated balance sheet as of May 31, 2019.2020. The increase was primarily due to the consolidation of option contracts, partially offset by us exercising our options to acquire land under previously consolidated contracts. To reflect the purchase price of the inventory that was consolidated, we had a net reclass related to option deposits from consolidated inventory not owned to land under development in the accompanying condensed consolidated balance sheet as of May 31, 2019.2020. The liabilities related to consolidated inventory not owned primarily represent the difference between the option exercise prices for the optioned land and our cash deposits.
Our exposure to losslosses related to option contracts with third parties and unconsolidated entities consisted of non-refundable option deposits and pre-acquisition costs totaling $326.8$282.1 million and $209.5$320.5 million at May 31, 20192020 and November 30, 2018,2019, respectively. Additionally, we had posted $69.1$72.5 million and $72.4$75.0 million of letters of credit in lieu of cash deposits under certain land and option contracts as of May 31, 20192020 and November 30, 2018,2019, respectively.



Contractual Obligations and Commercial Commitments
Our contractual obligations and commercial commitments have not changed materially from those reported in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended November 30, 2018, due to the following:
We are subject to the usual obligations associated with entering into contracts (including option contracts) for the purchase, development and sale of real estate in the routine conduct of2019. There was no outstanding borrowings under our business. Option contracts for the purchase of land generally enable us to defer acquiring portions of properties owned by third parties or unconsolidated entities until we have determined whether to exercise our options. This reduces our financial risk associated with land holdings. At May 31, 2019, we had access to 73,526 homesites through option contracts with third parties and unconsolidated entities in which we have investments. At May 31, 2019, we had $326.8 million of non-refundable option deposits and pre-acquisition costs related to certain of these homesites and had posted $69.1 million of letters of credit in lieu of cash deposits under certain land and option contracts.
At May 31, 2019, we had letters of credit outstanding in the amount of $821.5 million (which included the $69.1 million of letters of credit described above). These letters of credit are generally posted either with regulatory bodies to guarantee our performance of certain development and construction activities, or in lieu of cash deposits on option contracts, for insurance risks, credit enhancements and as other collateral. Additionally, at May 31, 2019, we had outstanding surety bonds of $2.8 billion including performance surety bonds related to site improvements at various projects (including certain projects of our joint ventures) and financial surety bonds. Although significant development and construction activities have been completed related to these site improvements, these bonds are generally not released until all of the development and construction activities are completed. As of May 31, 2019, there were approximately $1.3 billion, or 46%, of anticipated future costs to complete related to these site improvements. We do not presently anticipate any draws upon these bonds or letters of credit, but if any such draws occur, we do not believe they would have a material effect on our financial position, results of operations or cash flows.
Our Financial Services segment had a pipeline of residential mortgage loan applications in process of $4.2 billion at May 31, 2019. Loans in process for which interest rates were committed to the borrowers totaled approximately $744.2 millionCredit Facility as of May 31, 2019. Substantially all of these commitments were for periods of 60 days or less. Since a portion of these commitments is expected to expire without being exercised by the borrowers or because borrowers may not meet certain criteria at the time of closing, the total commitments do not necessarily represent future cash requirements.2020.
Our Financial Services segment uses mandatory mortgage-backed securities ("MBS") forward commitments, option contracts, futures contracts and investor commitments to hedge our mortgage-related interest rate exposure. These instruments involve, to varying degrees, elements of credit and interest rate risk. Credit risk associated with MBS forward commitments, option contracts, futures contracts and loan sales transactions is managed by limiting our counterparties to investment banks, federally regulated bank affiliates and other investors meeting our credit standards. Our risk, in the event of default by the purchaser, is the difference between the contract price and fair value of the MBS forward commitments and option contracts. At May 31, 2019, we had open commitments amounting to $1.5 billion to sell MBS with varying settlement dates through August 2019 and there were no open futures contracts.
(3) New Accounting Pronouncements
See Note 1812 of the Notes to Condensed Consolidated Financial Statements included under Item 1 of this Report for a discussion of new accounting pronouncements applicable to our company.
54

(4) Critical Accounting Policies
We believe that there have been no significant changes to our critical accounting policies during the six months ended May 31, 20192020 as compared to those we disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K, for the year ended November 30, 2018, except those policies as a result of the adoption of ASC 606 as of December 1, 2018, for which we updated our revenue recognition policies as noted in Note 1 of the Notes to the Condensed Consolidated Financial Statements and as included below:
Revenue Recognition
Homebuilding revenues and related profits from sales of homes are recognized at the time of the closing of a sale, when title to and possession of the property are transferred to the homebuyer. Our performance obligation, to deliver the agreed-upon home, is generally satisfied in less than one year from the original contract date. Cash proceeds from home closings held in escrow for our benefit, typically for approximately three days, are included in Homebuilding cash and cash equivalents in the Condensed Consolidated Balance Sheets and disclosed in footnote 11 of the Notes to the Condensed Consolidated Financial Statements. Contract liabilities include customer deposits liabilities related to sold but undelivered homes that are included in


other liabilities in the Condensed Consolidated Balance Sheets. We periodically elects to sell parcels of land to third parties. Cash consideration from land sales is typically due on the closing date, which is generally when performance obligations are satisfied and revenue is recognized as title to and possession of the property are transferred to the buyer.
Our financial services’ operations recognize revenues as follows: Title premiums on policies issued directly by us are recognized as revenue on the effective date of the title policies. Escrow fees and loan origination revenues are recognized at the time the related real estate transactions are completed, usually upon the close of escrow. Revenues from title policies issued by independent agents are recognized as revenue when notice of issuance is received from the agent, which is generally when cash payment is received by us.
Our Multifamily segment provides management services with respect to the development, construction and property management of rental projects in joint ventures in which we have investments. As a result, the Multifamily segment earns and receives fees, which are generally based upon a stated percentage of development and construction costs and a percentage of gross rental collections. These fees are recorded over the period in which the services are performed using an input method, which properly depicts the level of effort required to complete the management services. In addition, the Multifamily segment provides general contractor services for the construction of some of its rental projects and recognizes the revenue over the period in which the services are performed using an input method, which properly depicts the level of effort required to complete the construction services. These customer contracts require us to provide management and general contractor services which represents a performance obligation that we satisfy over time. Management fees and general contractor services in the Multifamily segment are included in Multifamily revenue.

2019.

55

Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risks related to fluctuations in interest rates on our investments, debt obligations, loans held-for-sale and loans held-for-investment. We utilize forward commitments and option contracts to mitigate the risks associated with our mortgage loan portfolio.
As of May 31, 2019,2020, we had $550 million ofno outstanding borrowings under our Credit Facility.
As of May 31, 2019,2020, borrowings under Financial Services' warehouse repurchase facilities totaled $882.0$1.1 billion under residential facilities and $227 million under residential loan facilities and $155.9 million under RMFLMF Commercial facilities.

Information Regarding Interest Rate Sensitivity
Principal (Notional) Amount by
Expected Maturity and Average Interest Rate
May 31, 20192020
 Six Months Ending November 30, Years Ending November 30,     Fair Value at May 31,
(Dollars in millions)2019 2020 2021 2022 2023 2024 Thereafter Total 2019
LIABILITIES:                 
Homebuilding:                 
Senior Notes and
other debts payable:		                 
Fixed rate$1,232.0
 898.5
 1,043.2
 1,747.6
 91.5
 1,479.2
 2,191.1
 8,683.1
 8,872.7
Average interest rate4.4% 4.0% 6.1% 4.9% 4.4% 5.0% 4.9% 4.9% —
Variable rate$—
 74.5
 33.4
 —
 —
 538.6
 —
 646.5
 687.6
Average interest rate—
 5.1% 3.0% —
 —
 3.9% —
 4.0% —
Financial Services:                 
Notes and other
debts payable:		                 
Fixed rate$0.2
 7.5
 13.0
 —
 —
 —
 155.4
 176.1
 177.6
Average interest rate5.5% 2.8% 1.3% —
 —
 —
 3.4% 3.2% —
Variable rate$1,037.9
 —
 —
 —
 —
 —
 —
 1,037.9
 1,037.9
Average interest rate4.4% —
 —
 —
 —
 —
 —
 4.4% —
Multifamily:                 
Notes payable:                 
Variable rate$36.1
 3.6
 —
 —
 —
 —
 —
 39.7
 39.7
Average interest rate4.7% 5.9% —
 —
 —
 —
 —
 5.3% —
Lennar Other:                 
Notes and other
debts payable:		                 
Fixed rate$1.9
 —
 —
 —
 —
 —
 —
 1.9
 1.9
Average interest rate2.9% —
 —
 —
 —
 —
 —
 2.9% —
Variable rate$13.3
 —
 —
 —
 —
 —
 —
 13.3
 13.3
Average interest rate4.7% —
 —
 —
 —
 —
 —
 4.7% —
Six Months Ending November 30,Years Ending November 30,Fair Value at May 31,
(Dollars in millions)202020212022202320242025ThereafterTotal2020
LIABILITIES:
Homebuilding:
Senior notes and
other debts payable:
Fixed rate$537.8 1,156.2 1,795.7 73.2 1,522.7 572.1 1,679.3 7,337.0 7,896.4 
Average interest rate2.7 %5.7 %4.8 %3.6 %5.0 %4.8 %4.9 %4.9 %— 
Variable rate$38.6 71.5 1.5 7.2 0.9 0.9 4.2 124.8 131.8 
Average interest rate3.0 %6.7 %3.9 %4.1 %3.3 %3.3 %3.3 %5.2 %— 
Financial Services:
Notes and other
debts payable:
Fixed rate$— — — — — — 153.9 153.9 155.4 
Average interest rate— — — — — — 3.4 %3.4 %— 
Variable rate$1,282.0 — — — — — — 1,282.0 1,282.0 
Average interest rate2.4 %— — — — — — 2.4 %— 
Lennar Other:
Notes and other
debts payable:
Fixed rate$1.9 — — — — — — 1.9 1.9 
Average interest rate3.0 %— — — — — — 3.0 %— 
Variable rate$4.3 — — — — — — 4.3 4.3 
Average interest rate3.1 %— — — — — — 3.1 %— 
For additional information regarding our market risk refer to Item 7A. Quantitative and Qualitative Disclosures About Market Risk in our Annual Report on Form 10-K for the year ended November 30, 2018.

2019.

56

Item 4. Controls and Procedures
Our Chief Executive Officer and Chief Financial Officer participated in an evaluation by our management of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on their participation in that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of May 31, 20192020 to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and to ensure that information required to be disclosed in our reports filed or furnished under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosures.
Our CEO and CFO also participated in an evaluation by our management of any changes in our internal control over financial reporting that occurred during the quarter ended May 31, 2019.2020. That evaluation did not identify any changes that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Part II. Other Information

Item 1. Legal Proceedings
We are a party to various claims, legal actions and complaints arising in the ordinary course of business. In the opinion of management, the disposition of these matters will not have a material adverse effect on our condensed consolidated financial statements.
Item 1A. Risk Factors
There have been no materialOur results of operations and financial condition may be adversely affected by the COVID-19 pandemic and resulting governmental actions.
Demand for our homes is dependent on a variety of macroeconomic factors, such as employment levels, interest rates, changes in stock market valuations, consumer confidence, housing demand, availability of financing for home buyers, availability and prices of new homes compared to existing inventory, and demographic trends. These factors, in particular consumer confidence, can be significantly adversely affected by a variety of factors beyond our risk factors from those disclosed incontrol. The COVID-19 pandemic has caused the shutdown of large portions of our Annual Reportnational economy. While portions of the national economy have begun to reopen, there is still significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on Form 10-K for the year ended November 30, 2018.U.S. economy and consumer confidence. The extent to which COVID-19 impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19, whether there are additional outbreaks of COVID-19, and the actions taken to contain it or treat its impact. If the virus continues to cause significant negative impacts to economic conditions or consumer confidence, our results of operations, financial condition and cash flows could be materially adversely impacted.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table provides information about our repurchases of common stock during the three months ended May 31, 2019:2020:
Period:Total Number of Shares Purchased (1)Average Price Paid Per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)Maximum Number of Shares that may yet be Purchased under the Plans or Programs (2)
March 1 to March 31, 2020—  $—  —  10,860,271  
April 1 to April 30, 20202,801  $37.55  —  10,860,271  
May 1 to May 31, 2020—  $—  —  10,860,271  
Period:Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Maximum Number of Shares that may yet be Purchased under the Plans or Programs (2)
March 1 to March 31, 2019947
 $49.11
 —
 24,000,000
April 1 to April 30, 2019147,169
 $51.67
 142,408
 23,857,592
May 1 to May 31, 2019857,592
 $51.77
 857,592
 23,000,000
(1)Includes shares of Class A common stock withheld by us to cover withholding taxes due, at the election of certain holders of nonvested shares, with market value approximating the amount of withholding taxes due.
(1)Includes shares of Class A common stock withheld by us to cover withholding taxes due, at the election of certain holders of nonvested shares, with market value approximating the amount of withholding taxes due.
(2)In January 2019, our Board of Directors authorized a stock repurchase program, which replaced the June 2001 stock repurchase program, under which we are authorized to purchase up to the lesser of $1.0 billion in value, or 25 million in shares, of our outstanding Class A or Class B common stock. This repurchase authorization has no expiration.
(2)In January 2019, our Board of Directors authorized a stock repurchase program, which replaced the June 2001 stock repurchase program, under which we are authorized to purchase up to the lesser of $1.0 billion in value, excluding commission, or 25 million in shares, of our outstanding Class A or Class B common stock. This repurchase authorization has no expiration.
Items 3 - 5. Not Applicable

57

Item 6. Exhibits
10.1
31.1*
10.2
Seventh Amended and Restated Guarantee Agreement, dated as of April 11, 2019, among certain of Lennar Corporation’s subsidiaries in favor of guarantee - Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K, dated April 11, 2019.
31.1
Rule 13a-14(a) certification by RichardRick Beckwitt, Chief Executive Officer.
31.2
31.2*
32.
*
101.*
The following financial statements from Lennar Corporation's Quarterly Report on Form 10-Q for the quarter ended May 31, 2019,2020, filed on July 3, 2019,6, 2020, were formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), (iii) Condensed Consolidated Statements of Cash Flows and (iv) the Notes to Condensed Consolidated Financial Statements.
101.INS*iXBRL Instance Document.
101.SCH*iXBRL Taxonomy Extension Schema Document.
101.CAL*iXBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*iXBRL Taxonomy Extension Definition.
101.LAB*iXBRL Taxonomy Extension Label Linkbase Document.
101.PRE*iXBRL Taxonomy Presentation Linkbase Document.
104**The cover page from Lennar Corporation's Quarterly Report on Form 10-Q for the quarter ended May 31, 2020 was formatted in iXBRL.
* Filed herewith.
** Included in Exhibit 101.
*** Management contract or compensatory plan or arrangement.


58

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
Lennar Corporation
(Registrant)
Date:July 6, 2020Lennar Corporation
(Registrant)
Date:July 3, 2019/s/    Diane Bessette        
Diane Bessette
Vice President, Chief Financial Officer and Treasurer
Date:July 3, 20196, 2020/s/    David Collins        
David Collins
Controller


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