Item 8. Financial Statements and Supplementary Data.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Lennar Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Lennar Corporation and subsidiaries (the "Company") as of November 30, 2019 and 2018, the related consolidated statements of operations and comprehensive income (loss), equity, and cash flows, for each of the three years in the period ended November 30, 2019, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of November 30, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended November 30, 2019, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of November 30, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated January 27, 2020, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Lennar Homebuilding and Lennar Multifamily Investments in Unconsolidated Entities - Consolidation of Variable Interest Entities - Refer to Note 1, Summary of Significant Accounting Policies (Variable Interest Entities)****, and Note 16, Variable Interest Entities**, to the financial statements**

Critical Audit Matter Description

Certain of the Company’s investments in unconsolidated entities within their Homebuilding and Multifamily segments have complex structures and agreements which need to be evaluated for consolidation, including determining whether the joint venture is a variable interest entity (“VIE”), and if so, whether the Company is the primary beneficiary. This assessment is performed at the formation of the joint venture and upon the occurrence of reconsideration events. This determination requires significant judgment by management.

As of November 30, 2019, the carrying value of the Company’s consolidated VIE’s assets and non-recourse liabilities was $980.2 million and $549.7 million, respectively. Additionally, at November 30, 2019, the carrying value of the Company’s investments in VIEs that are unconsolidated was $840.9 million.

We identified the consolidation and primary beneficiary assessment upon formation and reconsideration events of some of the Company’s VIE’s as a critical audit matter given the significant judgment required by management. This required a high degree of auditor judgment and an increased extent of audit effort due to complexity of the entity structures and agreements.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the accounting determination for unconsolidated joint ventures included the following, among others:

•	We tested the effectiveness of the investment consolidation controls over the initial accounting assessment of joint ventures and the continuous reassessment for reconsideration events, as required by the accounting framework.

•	We selected a sample of unconsolidated joint ventures and evaluated the appropriateness of the Company’s accounting conclusions upon formation and reconsideration events by:

•	Reading the joint venture agreements and other related documents and evaluating the structure and terms of the agreement to determine if the joint venture should be classified as a VIE.

•	If an entity is determined to be a VIE, considering whether the Company appropriately determined the primary beneficiary by evaluating the contractual arrangements of the entity to determine if the Company has the power to direct activities, and if the Company has the obligation to absorb losses of the entity or the right to receive benefits from the entity that could be significant to the VIE.

•	For those entities where the Company has determined it is the primary beneficiary, evaluating whether or not the Company consolidated the balances at the appropriate amounts.

•	Evaluating the evidence obtained in other areas of the audit to determine if there were additional reconsiderations events that had not been identified by the Company, including, among others, reading joint venture board minutes and confirming the terms of certain joint venture agreements and side agreements, if any.

Variable Interest Entities - Recorded Valuation Adjustment on Previously Unconsolidated Variable Interest Entity-specific transaction - Refer to Note 16, Variable Interest Entities**, to the financial statements**

Critical Audit Matter Description

The Company identified a reconsideration event related to a previously unconsolidated VIE during the year ended November 30, 2019. The reconsideration event resulted from 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. Therefore, the Company was required to consolidate the net assets of the entity at estimated fair value. As a result, the Company recorded a one-time loss of $48.9 million from the consolidation. At November 30, 2019, the consolidated homebuilding entity had total assets and liabilities of $240.5 million and $373.5 million, respectively.

The determination of the fair value of the homebuilding entity’s net assets requires management to make significant estimates related to 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.

We identified the loss on consolidation of the VIE as a critical audit matter because of the significant estimates and assumptions management made to determine the fair value of the entity. This required a high degree of auditor judgment and a significant extent of audit effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s significant assumptions utilized to determine the fair value of the VIE.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the fair value analysis and assessment of the recorded loss included the following, among others:

•	We tested the effectiveness of controls over management’s evaluation of the fair value analysis of the previously unconsolidated entity, including the appropriateness of the valuation technique applied, accounting and business assumptions used in the analysis, and the mathematical accuracy of the overall model.

•	With the assistance of our fair value specialists we evaluated the reasonableness of the Company’s valuation technique, to determine if it is consistent with generally accepted valuation practices, and considered acceptable under the circumstances.

•

We evaluated the significant valuation assumptions, including the source information of the significant valuation assumptions used by management with assistance of our fair value specialists. We evaluated the significant assumptions, including: base home price per unit, absorption rate/sales velocity, annual inflation rate, direct construction costs, and the discount rate by (1) independently obtaining evidence from knowledgeable sources that are independent from the Company in order to benchmark, challenge, and assess management’s key assumptions, and (2) testing the mathematical accuracy of management’s calculation of the undiscounted cash flow analysis.

•	We assessed the reasonableness of the Company’s business assumptions, including capital expenditures and property information including location and property type, and historical and budgeted construction costs by comparing the assumptions to the Company’s historical results.

/s/ Deloitte & Touche LLP

Miami, Florida

January 27, 2020

We have served as the Company's auditor since 1994.

LENNAR CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

November 30, 2019 and 2018

	2019 (1)				2018 (1)
	(Dollars in thousands)
ASSETS
Homebuilding:
Cash and cash equivalents	$	1,200,832			1,337,807
Restricted cash	9,698				12,399
Receivables, net	329,124				236,841
Inventories:
Finished homes and construction in progress	9,195,721				8,681,357
Land and land under development	8,267,647				8,178,388
Consolidated inventory not owned	313,139				208,959
Total inventories	17,776,507				17,068,704
Investments in unconsolidated entities	1,009,035				870,201
Goodwill	3,442,359				3,442,359
Other assets	1,021,684				1,355,782
	24,789,239				24,324,093
Financial Services	3,006,024				2,778,910
Multifamily	1,068,831				874,219
Lennar Other	495,417				588,959
Total assets	$	29,359,511			28,566,181

(1)	Under certain provisions of Accounting Standards Codification ("ASC") Topic 810, Consolidations, ("ASC 810") the Company is required to separately disclose on its consolidated balance sheets the assets of consolidated variable interest entities ("VIEs") that are owned by the consolidated VIEs and liabilities of consolidated VIEs as to which there is no recourse against the Company.

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.

As of November 30, 2018, total assets include $666.2 million related to consolidated VIEs of which $57.6 million is included in Homebuilding cash and cash equivalents, $0.2 million in Homebuilding receivables, net, $81.7 million in Homebuilding finished homes and construction in progress, $293.1 million in Homebuilding land and land under development, $209.0 million in Homebuilding consolidated inventory not owned, $3.8 million in Homebuilding investments in unconsolidated entities, $10.5 million in Homebuilding other assets and $10.3 million in Lennar Other assets.

See accompanying notes to consolidated financial statements.

LENNAR CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

November 30, 2019 and 2018

	2019 (2)				2018 (2)
	(Dollars in thousands except per share amounts)
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable	$	1,069,179			1,154,782
Liabilities related to consolidated inventory not owned	260,266				175,590
Senior notes and other debts payable, net	7,776,638				8,543,868
Other liabilities	1,900,955				1,902,658
	11,007,038				11,776,898
Financial Services	2,056,450				1,868,202
Multifamily	232,155				170,616
Lennar Other	30,038				67,508
Total liabilities	13,325,681				13,883,224
Stockholders’ equity:
Preferred stock	—				—
Class A common stock of $0.10 par value per share; Authorized: 2019 and 2018 - 400,000,000 shares; Issued: 2019 - 297,119,153 shares; 2018 - 294,992,562 shares	29,712				29,499
Class B common stock of $0.10 par value per share; Authorized: 2019 and 2018 - 90,000,000 shares, Issued: 2019 - 39,443,064 shares; 2018 - 39,442,219 shares	3,944				3,944
Additional paid-in capital	8,578,219				8,496,677
Retained earnings	8,295,001				6,487,650
Treasury stock, at cost; 2019 - 18,964,973 shares of Class A common stock and 1,704,630 shares of Class B common stock; 2018 - 8,498,203 shares of Class A common stock and 1,698,424 shares of Class B common stock	(957,857		)		(435,869	)
Accumulated other comprehensive income (loss)	498				(366	)
Total stockholders’ equity	15,949,517				14,581,535
Noncontrolling interests	84,313				101,422
Total equity	16,033,830				14,682,957
Total liabilities and equity	$	29,359,511			28,566,181

(2)

As of November 30, 2019, total liabilities include $549.7 million related to consolidated VIEs as to which there was no recourse against the Company, of which $13.7 million is included in Homebuilding accounts payable, $247.5 million in Homebuilding liabilities related to consolidated inventory not owned, $47.1 million in Homebuilding senior notes and other debts payable, $8.9 million in Homebuilding other liabilities, $231.1 million in Financial Services liabilities and $1.4 million in Multifamily liabilities.

As of November 30, 2018, total liabilities include $242.5 million related to consolidated VIEs as to which there was no recourse against the Company, of which $11.4 million is included in Homebuilding accounts payable, $175.6 million in Homebuilding liabilities related to consolidated inventory not owned, $51.9 million in Homebuilding senior notes and other debts payable, $2.6 million in Homebuilding other liabilities and $1.0 million in Lennar Other liabilities.

See accompanying notes to consolidated financial statements.

LENNAR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

Years Ended November 30, 2019**,** 2018 and 2017

	2019				2018			2017
	(Dollars in thousands, except per share amounts)
Revenues:
Homebuilding	$	20,793,216			19,077,597			11,188,876
Financial Services	824,810				954,631			891,957
Multifamily	604,700				421,132			394,771
Lennar Other	36,835				118,271			170,761
Total revenues	22,259,561				20,571,631			12,646,365
Costs and expenses:
Homebuilding	18,245,700				16,936,803			9,743,148
Financial Services	600,168				754,915			696,650
Multifamily	599,604				429,759			407,078
Lennar Other	11,794				115,969			174,605
Acquisition and integration costs related to CalAtlantic	—				152,980			—
Corporate general and administrative	341,114				343,934			285,889
Total costs and expenses	19,798,380				18,734,360			11,307,370
Homebuilding equity in loss from unconsolidated entities	(13,273		)		(90,209	)		(63,637	)
Homebuilding other income (expense), net	(31,338		)		203,902			23,245
Homebuilding loss due to litigation	—				—			(140,000	)
Multifamily equity in earnings from unconsolidated entities and other gain	11,294				51,322			85,739
Lennar Other equity in earnings from unconsolidated entities	15,372				24,110			27,376
Lennar Other expense, net	(8,944		)		(60,119	)		(82,107	)
Gain on sale of Rialto investment and asset management platform	—				296,407			—
Earnings before income taxes	2,434,292				2,262,684			1,189,611
Provision for income taxes (1)	(592,173		)		(545,171	)		(417,857	)
Net earnings (including net earnings (loss) attributable to noncontrolling interests)	1,842,119				1,717,513			771,754
Less: Net earnings (loss) attributable to noncontrolling interests	(6,933		)		21,682			(38,726	)
Net earnings attributable to Lennar	$	1,849,052			1,695,831			810,480
Other comprehensive income (loss), net of tax:
Net unrealized gain (loss) on securities available-for-sale	1,040				(1,634	)		1,331
Reclassification adjustments for (gains) loss included in net earnings	(176		)		234			12
Total other comprehensive income (loss), net of tax	$	864			(1,400	)		1,343
Total comprehensive income attributable to Lennar	$	1,849,916			1,694,431			811,823
Total comprehensive income (loss) attributable to noncontrolling interests	$	(6,933	)		21,682			(38,726	)
Basic earnings per share	$	5.76			5.46			3.38
Diluted earnings per share	$	5.74			5.44			3.38

(1)	Provision for income taxes for the year ended November 30, 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.

See accompanying notes to consolidated financial statements.

LENNAR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

Years Ended November 30, 2019**,** 2018 and 2017

	2019				2018			2017
	(Dollars in thousands, except per share amounts)
Class A common stock:
Beginning balance	$	29,499			20,543			20,409
Employee stock and director plans	213				183			134
Stock issuance in connection with CalAtlantic acquisition	—				8,408			—
Conversion of convertible senior notes to shares of Class A common stock	—				365			—
Balance at November 30,	29,712				29,499			20,543
Class B common stock:
Beginning balance	3,944				3,769			3,298
Stock dividends - Class B common stock	—				—			471
Stock issuance in connection with CalAtlantic acquisition	—				168			—
Conversion of convertible senior notes to shares of Class B common stock	—				7			—
Balance at November 30,	3,944				3,944			3,769
Additional paid-in capital:
Beginning balance	8,496,677				3,142,013			2,805,349
Employee stock and director plans	415				3,797			2,086
Stock issuance in connection with CalAtlantic acquisition	—				5,061,430			—
Tax benefit from employee stock plans, vesting of restricted stock and conversion of convertible senior notes	—				—			35,543
Amortization of restricted stock	86,940				72,655			61,356
Conversion of convertible senior notes to shares of Class A common stock	—				216,782			—
Equity adjustment related to purchase of noncontrolling interests	(5,813		)		—			—
Stock dividends - Class B common stock	—				—			237,679
Balance at November 30,	8,578,219				8,496,677			3,142,013
Retained earnings:
Beginning balance	6,487,650				4,840,978			4,306,256
Net earnings attributable to Lennar	1,849,052				1,695,831			810,480
Cumulative-effect of accounting change (see Note 1 to the Notes to Consolidated Financial Statements)	9,753				—			—
Cash dividends - Class A common stock ($0.16 per share)	(45,418		)		(43,195	)		(32,600	)
Cash dividends - Class B common stock ($0.16 per share)	(6,036		)		(5,964	)		(5,008	)
Stock dividends - Class B common stock	—				—			(238,150	)
Balance at November 30,	8,295,001				6,487,650			4,840,978
Treasury stock, at cost:
Beginning balance	(435,869		)		(136,020	)		(108,961	)
Employee stock and directors plans	(29,049		)		(49,939	)		(27,059	)
Purchases of treasury stock	(492,939		)		(249,910	)		—
Balance at November 30,	(957,857		)		(435,869	)		(136,020	)
Accumulated other comprehensive income (loss):
Beginning balance	(366		)		1,034			(309	)
Total other comprehensive income (loss), net of tax	864				(1,400	)		1,343
Balance at November 30,	498				(366	)		1,034
Total stockholders’ equity	15,949,517				14,581,535			7,872,317
Noncontrolling interests:
Beginning balance	101,422				113,815			185,525
Net earnings (loss) attributable to noncontrolling interests	(6,933		)		21,682			(38,726	)
Receipts related to noncontrolling interests	27,859				18,126			5,786
Payments related to noncontrolling interests	(43,734		)		(89,575	)		(74,372	)
Non-cash consolidations, net	8,894				—			37,292
Non-cash purchase or activity of noncontrolling interests, net	(3,195		)		37,374			(1,690	)
Balance at November 30,	84,313				101,422			113,815
Total equity	$	16,033,830			14,682,957			7,986,132

See accompanying notes to consolidated financial statements.

LENNAR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended November 30, 2019**,** 2018 and 2017

	2019				2018			2017
	(In thousands)
Cash flows from operating activities:
Net earnings (including net earnings (loss) attributable to noncontrolling interests)	$	1,842,119			1,717,513			771,754
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	92,200				91,181			66,324
Amortization of discount/premium and accretion on debt, net	(26,210		)		(23,544	)		11,312
Equity in (earnings) loss from unconsolidated entities	(2,528		)		30,518			(49,478	)
Distributions of earnings from unconsolidated entities	12,753				113,096			137,669
Share-based compensation expense	86,940				72,655			61,356
Excess tax benefits from share-based awards	—				—			(1,981	)
Deferred income tax expense	235,493				268,037			91,050
Gain on sale of Rialto investment and asset management platform	—				(296,407	)		—
Gain on sale of other assets, operating properties and equipment and CMBS bonds	(21,941		)		(11,963	)		(12,789	)
Loss on consolidation of previously unconsolidated entity	48,874				—			—
Gain on sale of interest in Multifamily unconsolidated entities	(10,865		)		(15,741	)		—
Gain on sale of interest in unconsolidated entities	—				(164,880	)		—
Gain on sale of Financial Services' businesses	(2,368		)		—			—
Unrealized and realized gains on real estate owned	(1,183		)		(3,734	)		(5,119	)
Impairments of loans receivable and real estate owned	—				39,053			97,786
Valuation adjustments and write-offs of option deposits and pre-acquisition costs, other receivables and other assets	56,125				49,338			16,339
Changes in assets and liabilities:
Decrease (increase) in receivables	312,255				(431,183	)		253,111
Increase in inventories, excluding valuation adjustments and write-offs of option deposits and pre-acquisition costs	(623,644		)		(135,870	)		(661,494	)
Increase in other assets	(69,699		)		(24,923	)		(44,535	)
(Increase) decrease in loans held-for-sale	(431,339		)		5,805			(105,600	)
(Decrease) increase in accounts payable and other liabilities	(14,639		)		412,796			356,669
Net cash provided by operating activities	$	1,482,343			1,691,747			982,374
Cash flows from investing activities:
Net additions to operating properties and equipment	(86,497		)		(130,439	)		(111,773	)
Proceeds from the sale of other assets, operating properties and equipment and CMBS bonds	70,441				52,855			63,936
Proceeds from sale of investments in unconsolidated entities	17,790				225,267			—
Proceeds from sale of Financial Services' businesses	24,446				—			—
Investments in and contributions to unconsolidated entities	(436,325		)		(405,547	)		(430,304	)
Distributions of capital from unconsolidated and consolidated entities	405,677				362,516			207,327
Proceeds from sales of real estate owned	8,866				32,221			86,565
Receipts of principal payments on loans held-for-sale	—				—			11,251
Receipts of principal payments on loans receivable and other	2,382				4,339			165,413
Originations of loans receivable	—				—			(98,375	)
Purchases of commercial mortgage-backed securities bonds	—				(31,068	)		(107,262	)
Proceeds from sale of Rialto investment and asset management platform	—				340,000			—
Acquisitions, net of cash and restricted cash acquired	—				(1,078,282	)		(604,366	)
Increase in Financial Services loans held-for-investment, net	(3,516		)		(3,603	)		(14,257	)
Purchases of investment securities	(36,261		)		(47,305	)		(53,558	)
Proceeds from maturities/sales of investment securities	52,593				85,237			41,765
Other payments, net	—				(145	)		(1,442	)
Net cash provided by (used in) investing activities	$	19,596			(593,954	)		(845,080	)

LENNAR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

Years Ended November 30, 2019**,** 2018 and 2017

	2019				2018			2017
	(In thousands)
Cash flows from financing activities:
Net repayments under revolving lines of credit	$	—			(454,700	)		—
Net borrowings (repayments) under warehouse facilities	166,552				272,920			(199,684	)
Proceeds from senior notes	—				—			2,450,000
Debt issuance costs	(25		)		(14,661	)		(28,590	)
Redemption of senior notes	(1,100,000		)		(1,100,000	)		(1,058,595	)
Conversions, exchanges and redemption of convertible senior notes	(1,288		)		(59,145	)		—
Proceeds from Rialto notes payable	—				33,724			99,630
Principal payments on Rialto notes payable including structured notes	—				(359,016	)		(24,964	)
Proceeds from other borrowings	88,751				44,374			31,230
(Payments) proceeds to/from other liabilities	(3,850		)		(3,542	)		195,541
Principal payments on other borrowings	(189,454		)		(138,475	)		(139,725	)
Receipts related to noncontrolling interests	27,859				18,126			5,786
Payments related to noncontrolling interests	(43,734		)		(89,575	)		(74,372	)
Excess tax benefits from share-based awards	—				—			1,981
Common stock:
Issuances	493				3,061			720
Repurchases	(523,074		)		(299,833	)		(27,054	)
Dividends	(51,454		)		(49,159	)		(37,608	)
Net cash (used in) provided by financing activities	$	(1,629,224	)		(2,195,901	)		1,194,296
Net (decrease) increase in cash and cash equivalents and restricted cash	(127,285		)		(1,098,108	)		1,331,590
Cash and cash equivalents and restricted cash at beginning of year	1,595,976				2,694,084			1,362,494
Cash and cash equivalents and restricted cash at end of year	$	1,468,691			1,595,976			2,694,084
Summary of cash and cash equivalents and restricted cash:
Homebuilding	$	1,210,530			1,350,206			2,291,665
Financial Services	246,135				206,429			129,416
Multifamily	8,711				7,832			8,676
Lennar Other	3,315				31,509			264,327
	$	1,468,691			1,595,976			2,694,084
Supplemental disclosures of cash flow information:
Cash paid for interest, net of amounts capitalized	$	49,870			128,877			89,485
Cash paid for income taxes, net	$	261,445			376,609			199,557
Supplemental disclosures of non-cash investing and financing activities:
Homebuilding and Multifamily:
Purchases of inventories, land under development and other assets financed by sellers	$	101,300			163,519			279,323
Net non-cash contributions to unconsolidated entities	156,075				162,281			62,618
Non-cash sale of operating properties and equipment and other assets	48,671				—			—
Conversions of and exchanges on convertible senior notes to equity	—				217,154			—
Equity component of acquisition consideration	—				5,070,006			—
Consolidation/deconsolidation of unconsolidated/consolidated entities, net:
Inventories	187,506				35,430			48,656
Receivables	102,959				7,198			—
Operating properties and equipment and other assets	53,412				—			(1,716	)
Investments in unconsolidated entities	67,925				(25,614	)		(9,692	)
Notes payable	(383,212		)		—			—
Other liabilities	(19,696		)		(17,014	)		44
Noncontrolling interests	(8,894		)		—			(37,292	)

See accompanying notes to consolidated financial statements.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

Basis of Consolidation

The accompanying 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 VIEs (see Note 16) in which Lennar Corporation is deemed 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.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

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 Company's consolidated balance sheets. Contract liabilities include customer deposits liabilities related to sold but undelivered homes that are included in other liabilities in the Company's 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.

Advertising Costs

The Company expenses advertising costs as incurred. Advertising costs were $84.3 million, $72.1 million and $47.0 million for the years ended November 30, 2019, 2018 and 2017, respectively.

Share-Based Payments

The Company has share-based awards outstanding under the 2007 Equity Incentive Plan and the 2016 Equity Incentive Plan (the "Plans"), each of which provides for the granting of stock options, stock appreciation rights, restricted common stock ("nonvested shares") and other share based awards to officers, associates and directors. The exercise prices of stock options may not be less than the market value of the common stock on the date of the grant. Exercises are permitted in installments determined when options are granted. Each stock option will expire on a date determined at the time of the grant, but not more than 10 years after the date of the grant. The Company accounts for stock option awards and nonvested share awards granted under the Plans based on the estimated grant date fair value.

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 transfers to the homebuyer, as required by the state 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 consisted of upfront deposits and application fees Rialto Mortgage Finance (“RMF”) receives before originating loans and is recognized as income once the loan 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. Lennar Other restricted cash primarily consisted of cash set aside for future investments on behalf of a real estate investment trust that Rialto Capital Management is a sub-advisor (“Rialto”).

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported in the consolidated statements of cash flows to the respective consolidated balance sheets:

	November 30,
(In thousands)	2019				2018
Homebuilding:
Cash and cash equivalents	$	1,200,832			1,337,807
Restricted cash	9,698				12,399
Financial Services:
Cash and cash equivalents	234,113				188,485
Restricted cash	12,022				17,944
Multifamily:
Cash and cash equivalents	8,711				7,832
Lennar Other:
Cash and cash equivalents	2,340				24,334
Restricted cash	975				7,175
Total cash and cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows	$	1,468,691			1,595,976

Homebuilding cash and cash equivalents as of November 30, 2019 and 2018 included $565.8 million and $926.1 million, respectively, of cash held in escrow for approximately three days.

Inventories

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. Inventory costs include land, land development and home construction costs, real estate taxes, deposits on land purchase contracts and interest related to development and construction. Construction overhead and selling expenses are expensed as incurred. Homes held-for-sale are classified as inventories until delivered. Land, land development, amenities and other costs are accumulated by specific area and allocated to homes within the respective areas.

The Company reviews its inventory for indicators of impairment by evaluating each community during each reporting period. The inventory within each community is categorized as finished homes and construction in progress or land under development based on the development state of the community. There were 1,278 and 1,324 active communities, excluding unconsolidated entities, as of November 30, 2019 and 2018, respectively. If the undiscounted cash flows expected to be generated by a community are less than its carrying amount, an impairment charge is recorded to write down the carrying amount of such community to its estimated fair value.

In conducting its review for indicators of impairment on a community level, the Company evaluates, among other things, the margins on homes that have been delivered, margins on homes under sales contracts in backlog, projected margins with regard to future home sales over the life of the community, projected margins with regard to future land sales and the estimated fair value of the land itself. The Company pays particular attention to communities in which inventory is moving at a slower than anticipated absorption pace and communities whose average sales price and/or margins are trending downward and are anticipated to continue to trend downward. From this review, the Company identifies communities in which to assess if the carrying values exceed their undiscounted projected cash flows.

The Company estimates the fair value of its communities using a discounted cash flow model. The projected cash flows for each community are significantly impacted by estimates related to market supply and demand, product type by community, homesite sizes, sales pace, sales prices, sales incentives, construction costs, sales and marketing expenses, the local economy, competitive conditions, labor costs, costs of materials and other factors for that particular community. Every division evaluates the historical performance of each of its communities as well as current trends in the market and economy impacting the community and its surrounding areas. These trends are analyzed for each of the estimates listed above.

Each of the homebuilding markets in which the Company operates is unique, as homebuilding has historically been a local business driven by local market conditions and demographics. Each of the Company’s homebuilding markets has specific supply and demand relationships reflective of local economic conditions. The Company’s projected cash flows are impacted by many assumptions. Some of the most critical assumptions in the Company’s cash flow model are projected absorption pace for home sales, sales prices and costs to build and deliver homes on a community by community basis.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In order to arrive at the assumed absorption pace for home sales and the assumed sales prices included in the Company’s cash flow model, the Company analyzes its historical absorption pace and historical sales prices in the community and in other comparable communities in the geographical area. In addition, the Company considers internal and external market studies and places greater emphasis on more current metrics and trends, which generally include, but are not limited to, statistics and forecasts on population demographics and on sales prices in neighboring communities, unemployment rates and availability and sales prices of competing product in the geographical area where the community is located as well as the absorption pace realized in its most recent quarters and the sales prices included in the Company's current backlog for such communities.

Generally, if the Company notices a variation from historical results over a span of two fiscal quarters, the Company considers such variation to be the establishment of a trend and adjusts its historical information accordingly in order to develop assumptions on the projected absorption pace and sales prices in the cash flow model for a community.

In order to arrive at the Company’s assumed costs to build and deliver homes, the Company generally assumes a cost structure reflecting contracts currently in place with its vendors adjusted for any anticipated cost reduction initiatives or increases in cost structure. Those costs assumed are used in the cash flow model for the Company’s communities.

Since the estimates and assumptions included in the Company’s cash flow models are based upon historical results and projected trends, they do not anticipate unexpected changes in market conditions or strategies that may lead the Company to incur additional impairment charges in the future.

The determination of fair value requires discounting the estimated cash flows at a rate the Company believes a market participant would determine to be commensurate with the inherent risks associated with the assets and related estimated cash flow streams. The discount rate used in determining each asset’s fair value depends on the community’s projected life and development stage.

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. 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.

As of November 30, 2019, the Company reviewed its communities for potential indicators of impairments and identified 40 homebuilding communities with 1,720 homesites and a carrying value of $212.7 million as having potential indicators of impairment. For the year ended November 30, 2019, the Company recorded valuation adjustments of $2.6 million on 149 homesites in three communities with a carrying value of $10.5 million.

As of November 30, 2018, the Company reviewed its communities for potential indicators of impairments and identified 25 homebuilding communities with 1,121 homesites and a carrying value of $211.3 million as having potential indicators of impairment. For the year ended November 30, 2018, the Company recorded valuation adjustments of $31.3 million on 733 homesites in six communities with a carrying value of $64.6 million.

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 years ended November 30, 2019 and 2018:

	Years ended November 30,
	2019								2018
Unobservable inputs	Range								Range
Average selling price		$167,000		-		$222,000				$233,000		-	$843,000
Absorption rate per quarter (homes)	4			-	12				4			-	16
Discount rate	20%								20%

The Company also has access to land inventory through option contracts, which generally enables the Company to defer acquiring portions of properties owned by third parties and unconsolidated entities until it has determined whether to exercise its option.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

A majority of the Company’s option contracts require a non-refundable cash deposit or irrevocable letter of credit based on a percentage of the purchase price of the land. The Company’s option contracts sometimes include price adjustment provisions, which adjust the purchase price of the land to its approximate fair value at the time of acquisition or are based on the fair value at the time of takedown.

In determining whether to walk away from an option contract, the Company evaluates the option primarily based upon its expected cash flows from the property under option. If the Company intends to walk away from an option contract, it records a charge to earnings in the period such decision is made for the deposit amount and any related pre-acquisition costs associated with the option contract.

Some option contracts contain a predetermined take-down schedule for the optioned land parcels. However, in almost all instances, the Company is not required to purchase land in accordance with those take-down schedules. In substantially all instances, the Company has the right and ability to not exercise its option and forfeit its deposit without further penalty, other than termination of the option and loss of any unapplied portion of its deposit and pre-acquisition costs. Therefore, in substantially all instances, the Company does not consider the take-down price to be a firm contractual obligation. When the Company does not intend to exercise an option, it writes off any unapplied deposit and pre-acquisition costs associated with the option contract.

Homebuilding, Multifamily and Lennar Other Investments in Unconsolidated Entities

The Company evaluates the long-lived assets in unconsolidated entities for indicators of impairment during each reporting period. If a valuation adjustment is recorded by an unconsolidated entity related to its assets, the Company generally uses a discount rate between 10% and 20%, subject to the perceived risks associated with the community’s cash flow streams relative to its inventory or operating assets. The Company’s proportionate share of a valuation adjustment is reflected in the Company's Homebuilding, Multifamily or Lennar Other equity in earnings (loss) from unconsolidated entities with a corresponding decrease to its Homebuilding, Multifamily or Lennar Other investment in unconsolidated entities.

Additionally, the Company evaluates if a decrease in the value of an investment below its carrying value is other-than-temporary. This evaluation includes certain critical assumptions made by management: (1) projected future distributions from the unconsolidated entities, (2) discount rates applied to the future distributions and (3) various other factors, which include age of the venture, relationships with the other partners and banks, general economic market conditions, land status and liquidity needs of the unconsolidated entity. If the decline in the fair value of the investment is other-than-temporary, then these losses are included in Homebuilding other income, net, Multifamily other gain (loss) or Lennar Other other gain (loss).

The Company tracks its share of cumulative earnings and distributions of its joint ventures ("JVs"). For purposes of classifying distributions received from JVs in the Company’s consolidated statements of cash flows, cumulative distributions are treated as returns on capital to the extent of cumulative earnings and included in the Company’s consolidated statements of cash flows as operating activities. Cumulative distributions in excess of the Company’s share of cumulative earnings are treated as returns of capital and included in the Company’s consolidated statements of cash flows as cash from investing activities.

Variable Interest Entities

GAAP requires the assessment of whether an entity is a VIE and, if so, if the Company is the primary beneficiary at the inception of the entity or at a reconsideration event. Additionally, GAAP requires the consolidation of VIEs in which an enterprise has a controlling financial interest. A controlling financial interest will have both of the following characteristics: (a) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and (b) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

The Company’s variable interest in VIEs may be in the form of (1) equity ownership, (2) contracts to purchase assets, (3) management and development agreements between the Company and a VIE, (4) loans provided by the Company to a VIE or other partner and/or (5) guarantees provided by members to banks and other third parties. The Company examines specific criteria and uses its judgment when determining if it is the primary beneficiary of a VIE. Factors considered in determining whether the Company is the primary beneficiary include risk and reward sharing, experience and financial condition of other partner(s), voting rights, involvement in day-to-day capital and operating decisions, representation on a VIE’s executive committee, existence of unilateral kick-out rights or voting rights, level of economic disproportionality, if any, between the Company and the other partner(s) and contracts to purchase assets from VIEs. The determination whether an entity is a VIE and, if so, whether the Company is the primary beneficiary may require it to exercise significant judgment.

Generally, all major decision making in the Company’s joint ventures is shared among all partners. In particular, business plans and budgets are generally required to be unanimously approved by all partners. Usually, management and other fees earned by the Company are nominal and believed to be at market and there is no significant economic disproportionality

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

between the Company and other partners. Generally, the Company purchases less than a majority of the JV’s assets and the purchase prices under its option contracts are believed to be at market.

Generally, Homebuilding and Multifamily unconsolidated entities become VIEs and consolidate when the other partner(s) lack the intent and financial wherewithal to remain in the entity. As a result, the Company continues to fund operations and debt paydowns through partner loans or substituted capital contributions.

Operating Properties and Equipment

Operating properties and equipment are recorded at cost and are included in other assets in the consolidated balance sheets. The assets are depreciated over their estimated useful lives using the straight-line method. At the time operating properties and equipment are disposed of, the asset and related accumulated depreciation are removed from the accounts and any resulting gain or loss is credited or charged to earnings. The estimated useful life for operating properties is 30 years, for furniture, fixtures and equipment is two to ten years and for leasehold improvements is five years or the life of the lease, whichever is shorter. Operating properties are reviewed for possible impairment if there are indicators that their carrying amounts are not recoverable.

Investment Securities

Investment securities are classified as available-for-sale unless they are classified as trading or held-to-maturity. Securities classified as trading are carried at fair value and unrealized holding gains and losses are recorded in earnings. Available-for-sale securities are recorded at fair value. Any unrealized holding gains or losses on available-for-sale securities are reported as accumulated other comprehensive gain or loss, which is a separate component of stockholders’ equity, net of tax, until realized. Securities classified as held-to-maturity are carried at amortized cost because they are purchased with the intent and ability to hold to maturity.

At November 30, 2019 and 2018, the Financial Services segment had investment securities classified as held-to-maturity totaling $190.3 million and $189.5 million, respectively, which consist mainly of commercial mortgage-backed securities ("CMBS") corporate debt obligations, U.S. government agency obligations, certificates of deposit and U.S. treasury securities that mature at various dates, mainly within three years. Also, at November 30, 2019 and 2018, the Financial Services segment had available-for-sale securities totaling $3.7 million and $4.2 million, respectively, which consist primarily of preferred stock and mutual funds. These investments available-for-sale are carried at fair value with changes recorded as a component of accumulated other comprehensive income (loss).

In addition, at November 30, 2019 and 2018, the Lennar Other segment had investment securities classified as held-to-maturity totaling $54.1 million and $60.0 million, respectively. The Lennar Other segment held-to-maturity securities consist of CMBS.

At both November 30, 2019 and 2018, the Company had no investment securities classified as trading.

Interest and Real Estate Taxes

Interest and real estate taxes attributable to land and homes are capitalized as inventory costs while they are being actively developed. Interest related to homebuilding and land, including interest costs relieved from inventories, is included in costs of homes sold and costs of land sold. Interest expense related to the Financial Services and Multifamily operations is included in its costs and expenses.

During the years ended November 30, 2019, 2018 and 2017, interest incurred by the Company’s homebuilding operations related to homebuilding debt was $422.7 million, $423.7 million and $290.3 million, respectively; interest capitalized into inventories was $405.1 million, $412.5 million and $283.2 million, respectively.

Interest expense was included in costs of homes sold, costs of land sold and other interest expense as follows:

	Years Ended November 30,
(In thousands)	2019				2018			2017
Interest expense in costs of homes sold	$	371,821			301,339			260,650
Interest expense in costs of land sold	5,554				3,567			9,995
Other interest expense (1)	17,620				11,258			7,164
Total interest expense	$	394,995			316,164			277,809

(1)	Included in Homebuilding other income (expense), net.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Income Taxes

The Company records income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and attributable to operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which the temporary differences are expected to be recovered or paid. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period when the changes are enacted. Interest related to unrecognized tax benefits is recognized in the financial statements as a component of income tax expense.

A reduction of the carrying amounts of deferred tax assets by a valuation allowance is required if, based on the available evidence, it is more likely than not that such assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed each reporting period by the Company based on the consideration of all available positive and negative evidence using a "more-likely-than-not" standard with respect to whether deferred tax assets will be realized. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, actual earnings, forecasts of future profitability, the duration of statutory carryforward periods, the Company’s experience with loss carryforwards not expiring unused and tax planning alternatives.

Based on the analysis of positive and negative evidence, the Company believed that there was enough positive evidence for the Company to conclude that it was more likely than not that the Company would realize the majority of its deferred tax assets. As of November 30, 2019 and 2018, the Company's net deferred tax assets included a valuation allowance of $4.3 million and $7.2 million, respectively. See Note 11 for additional information.

Other Liabilities

Reflected within the consolidated balance sheets, the other liabilities balance as of November 30, 2019 and 2018, included accrued interest payable, product warranty (as noted below), accrued bonuses, accrued wages and benefits, deferred income, customer deposits, income taxes payable, and other accrued liabilities.

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 monitors the 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 reserves are included in Homebuilding other liabilities in the consolidated balance sheets. The activity in the Company’s warranty reserve was as follows:

	Years Ended November 30,
(In thousands)	2019				2018
Warranty reserve, beginning of year	$	319,109			164,619
Warranties issued	189,105				175,410
Adjustments to pre-existing warranties from changes in estimates (1)	(8,156		)		3,116
Warranties assumed related to acquisitions	—				140,959
Payments	(205,920		)		(164,995	)
Warranty reserve, end of year	$	294,138			319,109

(1)	The adjustments to pre-existing warranties from changes in estimates during the years ended November 30, 2019 and 2018 primarily related to specific claims in certain of the Company's homebuilding communities and other adjustments.

Self-Insurance

Certain insurable risks such as construction defects, general liability, medical and workers’ compensation are self-insured by the Company up to certain limits. Undiscounted accruals for claims under the Company’s self-insurance program are based on claims filed and estimates for claims incurred but not yet reported. The Company’s self-insurance reserve as of November 30, 2019 and 2018 was $109.6 million and $101.4 million of which $60.7 million and $60.3 million, respectively, was included in Financial Services’ other liabilities as of November 30, 2019 and 2018. Amounts incurred in excess of the Company's self-insurance occurrence or aggregate retention limits are covered by insurance up to the Company's purchased coverage levels. The Company's insurance policies are maintained with highly-rated underwriters for whom the Company believes counterparty default risk is not significant.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 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") are considered participating securities.

Financial Services

Revenue Recognition

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. Expected gains and losses from the sale of loans and their related servicing rights are included in the measurement of all written loan commitments that are accounted for at fair value through earnings at the time of commitment. Interest income on loans held-for-sale and loans held-for-investment is recognized as earned over the terms of the mortgage loans based on the contractual interest rates.

Loans Held-for-Sale

Loans held-for-sale by the Financial Services segment, including the rights to service the mortgage loans, are carried at fair value and changes in fair value are reflected in earnings. Premiums and discounts recorded on these loans are presented as an adjustment to the carrying amount of the loans and are not amortized. 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 Financial Services segment 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 is included in Financial Services' other assets as of November 30, 2019 and 2018. Fair value of the servicing rights is determined based on values in the Company’s servicing sales contracts.

Provision for Losses

The Company establishes reserves for possible losses associated with mortgage loans previously originated and sold to investors 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. Loan origination liabilities are included in Financial Services’ liabilities in the consolidated balance sheets. The activity in the Company’s loan origination liabilities was as follows:

	Years Ended November 30,
(In thousands)	2019				2018
Loan origination liabilities, beginning of year	$	48,584			22,543
Provision for losses	3,813				5,787
Adjustments to pre-existing provisions for losses from changes in estimates	—				4,625
Origination liabilities assumed related to CalAtlantic acquisition	—				29,959
Payments/settlements (1)	(43,033		)		(14,330	)
Loan origination liabilities, end of year	$	9,364			48,584

(1)	In December 2018, the Company settled litigation with the creditors of a former investor to resolve claims of breach of representations and warranties and similar claims for loans sold by the Company (or its subsidiaries or predecessors). The Company had adequately reserved $42.0 million for this settlement payment as of November 30, 2018.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Loans Held-for-Investment, Net

Loans for which the Company has the positive intent and ability to hold to maturity consist of mortgage loans carried at the principal amount outstanding, net of unamortized discounts and allowance for loan losses. Discounts are amortized over the estimated lives of the loans using the interest method.

The Financial Services segment also provides an allowance for loan losses. The provision recorded and the adequacy of the related allowance is determined by management’s continuing evaluation of the loan portfolio in light of past loan loss experience, credit worthiness and nature of underlying collateral, present economic conditions and other factors considered relevant by the Company’s management. Anticipated changes in economic factors, which may influence the level of the allowance, are considered in the evaluation by the Company’s management when the likelihood of the changes can be reasonably determined. While the Company’s management uses the best information available to make such evaluations, future adjustments to the allowance may be necessary as a result of future economic and other conditions that may be beyond management’s control.

Derivative Financial Instruments

The Financial Services segment, in the normal course of business, uses derivative financial instruments to reduce its exposure to fluctuations in mortgage-related interest rates. The segment uses mortgage-backed securities ("MBS") forward commitments, option contracts, future contracts and investor commitments to protect the value of fixed rate-locked loan commitments and loans held-for-sale from fluctuations in mortgage-related interest rates. These derivative financial instruments are carried at fair value with the changes in fair value included in Financial Services revenues.

RMF - Loans Held-for-Sale

The originated mortgage loans are classified as loans held-for-sale and are recorded at fair value. The Company elected the fair value option for RMF's loans held-for-sale in accordance with Accounting Standards Codification ("ASC") 825, Financial Instruments, which permits entities to measure various financial instruments and certain other items at fair value on a contract-by-contract basis. Management believes that 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, which are also carried at fair value, used to economically hedge them without having to apply complex hedge accounting provisions. Changes in fair values of the loans are reflected in Rialto revenues in the accompanying consolidated statements of operations. Interest income on these loans is calculated based on the interest rate of the loan and is recorded in Rialto revenues in the accompanying consolidated statements of operations. Substantially all of the mortgage loans originated are sold within a short period of time in a securitization on a servicing released, non-recourse basis; although, the Company remains liable for certain limited industry-standard representations and warranties related to loan sales. The Company recognizes revenue on the sale of loans into securitization trusts when control of the loans has been relinquished.

Multifamily

Management Fees and General Contractor Revenue

The 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. 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. In addition, the Multifamily segment provides general contractor services for the construction of some of its rental projects. Both management fees and general contractor revenue are recognized 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 or construction services. These customer contracts require the Company to provide management 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.

Recently Adopted Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2014-09, Revenue from Contracts with Customers, ("ASU 2014-09"). ASU 2014-09 provides a single comprehensive model for entities to use in accounting for revenue arising from contracts 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 terms of the contract(s) which include (i) identifying the contract(s) with the customer, (ii) identifying the separate performance obligations in the contract, (iii) determining the transaction price, (iv) allocating the transaction price to

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 and Accounting for Partial Sales of Nonfinancial Assets ("ASU 2017-05"), among others. These ASUs do not change the core principle of the guidance stated in 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 elected to use the practical expedient within ASU 2017-05 to apply the standard only to contracts not yet completed as of the date of adoption. This will result in higher gains on future sales of partial real estate interests due to recognizing 100% of the gain on the sale of the partial interest and recording the retained noncontrolling interest at fair value. 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 2016-15 was effective for the Company’s fiscal year beginning December 1, 2018 and subsequent interim periods. The adoption of ASU 2016-15 did not have a material effect on the Company’s consolidated financial statements.

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 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 accompanying consolidated statements of operations and comprehensive income (loss). This is now disclosed with the analysis of changes in stockholders' equity within the accompanying consolidated statement of equity.

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 consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805), Clarifying the Definition 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 consolidated financial statements.

New Accounting Pronouncements

In March 2016, the FASB issued ASU 2016-02, Leases ("ASU 2016-02"), which provides guidance for accounting for leases. 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 a term greater than 12 months regardless of the lease classification. The lease classification will determine whether the lease expense is recognized based on an effective interest rate method or on a straight line basis over the term of the lease. Accounting for lessors remains largely unchanged from current GAAP. ASU 2016-02 is effective for the Company beginning December 1, 2019. The Company elected the available practical expedients on adoption. Additionally, in preparation for adoption of the standard, the Company has implemented internal controls and key system functionality to enable the preparation of financial information. The standard will not have a material impact on our consolidated statements of operations

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

and comprehensive income (loss) and our consolidated statements of cash flows. Based on the Company’s current portfolio of leases, the Company expects the adoption of the standard will result in the recognition of ROU assets of approximately $150 million with a corresponding lease liability on its consolidated balance sheets within other assets and other liabilities.

Subsequent to the issuance of ASU 2016-02, the FASB issued ASUs 2018-01, Land Easement Practical Expedient for Transition to Topic 842, 2018-10, Codification Improvements to Topic 842, Leases, 2018-11, Leases (Topic 842): Targeted Improvements and 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 had the same effective date and transition requirements as ASU 2016-02.

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 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 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, ASU 2019-05, Financial Instruments —Credit Losses (Topic 326) Targeted Transition Relief, ASU 2016-13, the FASB issued ASU 2019-10 Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) and ASU 2019-11 Codification Improvements to Topic 326, Financial Instruments—Credit Losses. 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 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 consolidated financial statements.

Reclassifications

Certain prior year amounts in the consolidated financial statements have been reclassified to conform with the 2019 presentation. The Company's segments were adjusted to reflect RMF 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, revenues or net earnings in the consolidated financial statements.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

2. Business Acquisition

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 subsidiary of the Company (“Merger Sub”), with Merger Sub continuing as the surviving corporation 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 purchase price accounting reflected in the accompanying financial statements is provisional and is based upon estimates and assumptions that are subject to change within the measurement period (up to one year from the acquisition date pursuant to ASC 805). The $3.3 billion allocated to goodwill in Homebuilding and the $175 million allocated to goodwill in Financial Services represents the excess of the purchase price over the estimated fair value of assets acquired and liabilities assumed.

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 outstanding	118,025,879
CalAtlantic shares electing cash conversion	24,083,091
CalAtlantic shares exchanged	93,942,788
Exchange ratio for Class A common stock	0.885
Exchange ratio for Class B common stock	0.0177
Number of shares of Lennar Class A common stock issued in exchange	83,138,277
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 stock	77,823
Consideration attributable to equity awards that convert upon change of control	58,758
Consideration attributable to cash including fractional shares	1,162,341
Total purchase price	$	6,232,347

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands)
ASSETS
Homebuilding:
Cash and cash equivalents, restricted cash and receivables, net	$	55,191
Inventories	6,239,147
Intangible asset (1)	8,000
Investments in unconsolidated entities	151,900
Goodwill (2)	3,305,792
Other assets	561,151
Total Homebuilding assets	10,321,181
Financial Services (2)	355,128
Total assets	$	10,676,309
LIABILITIES
Homebuilding:
Accounts payable	$	306
Senior notes payable and other debts	3,926,152
Other liabilities (3)	374,656
Total Homebuilding liabilities	4,301,114
Financial Services	124,418
Total liabilities	4,425,532
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 approximately 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 assignment 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 include 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, ("ASC450") 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.

Homebuilding revenue and net earnings attributable to Lennar for the year ended November 30, 2018 included $7.0 billion of home sales revenues, and earnings before income taxes included $491.3 million of pre-tax earnings from CalAtlantic after the date of acquisition, which included acquisition and integration costs of $153.0 million. These transaction expenses were included within acquisition and integration costs related to CalAtlantic in the accompanying consolidated statement of operation for the year ended November 30, 2018.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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. The Company's chief operating decision makers ("CODM") manage and assess the Company's performance at a regional level. Therefore, the Company performed an assessment of the Company's operating segments in accordance with ASC 280, Segment Reporting, (“ASC 280”) and determined that each of the Company's four homebuilding regions (Homebuilding East, Homebuilding Central, Homebuilding Texas, and Homebuilding West), financial services operations, multifamily operations and Lennar Other are the Company's operating segments. Information about homebuilding activities in the urban divisions that do not have economic characteristics similar to those in other divisions within the same geographic area is grouped under "Homebuilding Other," which is not a reportable segment. In the 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, the Company renamed the Rialto segment as "Lennar Other" and included in this segment certain strategic technology investments, which were reclassified from the Homebuilding segments to Lennar Other. Prior periods have been reclassified to conform with the 2019 presentation. As of and for the year ended November 30, 2019, the Company’s reportable segments consist of:

(1)	Homebuilding East

(2)	Homebuilding Central

(3)	Homebuilding Texas

(4)	Homebuilding West

(5)	Financial Services

(6)	Multifamily

(7)	Lennar Other

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

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, 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 Five Point Holdings, LLC ("FivePoint")

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. 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 of the Lennar Other segment include 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.

Operations of the Multifamily segment include revenues generated from land sales, revenue from construction activities and management fees generated from joint ventures, and equity in earnings from unconsolidated entities, less the cost of land sold, expenses related to construction activities and general and administrative expenses.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Each reportable segment follows the same accounting policies described in Note 1—"Summary of Significant Accounting Policies" to the consolidated financial statements. Operational results of each segment are not necessarily indicative of the results that would have occurred had the segment been an independent, stand-alone entity during the periods presented.

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

	November 30,
(In thousands)	2019				2018			2017
Assets:
Homebuilding East	$	6,708,586			7,183,758			3,817,454
Homebuilding Central	2,732,872				2,522,799			1,275,623
Homebuilding Texas	2,246,893				2,311,760			1,199,971
Homebuilding West	10,663,666				10,291,385			5,432,485
Homebuilding Other	1,173,163				1,013,367			1,086,739
Financial Services	3,006,024				2,778,910			2,054,317
Multifamily	1,068,831				874,219			710,725
Lennar Other	495,417				588,959			827,452
Corporate and unallocated	1,264,059				1,001,024			2,340,268
Total assets	$	29,359,511			28,566,181			18,745,034
Homebuilding investments in unconsolidated entities:
Homebuilding East	$	162,108			76,627			68,670
Homebuilding Central	6,520				6,510			2,971
Homebuilding Texas	1,629				1,902			—
Homebuilding West	270,931				311,200			225,803
Homebuilding Other	567,847				473,962			564,905
Total Homebuilding investments in unconsolidated entities (1)	$	1,009,035			870,201			862,349
Multifamily investments in unconsolidated entities	$	561,190			481,129			407,544
Lennar Other investments in unconsolidated entities	$	403,688			424,104			303,839
Homebuilding goodwill (2)	$	3,442,359			3,442,359			136,566
Financial Services goodwill (2)	$	215,516			237,688			59,838
Lennar Other goodwill	$	—			—			5,396

(1)	Homebuilding investments in unconsolidated entities as of November 30, 2018, does not include the ($62.0) million investment balance for one unconsolidated entity as it was reclassed to other liabilities.

(2)

In connection with the CalAtlantic acquisition, the Company recorded a provisional amount of homebuilding goodwill of $3.3 billion. The assignment 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. In connection with the WCI acquisition in 2017, the Company allocated $136.6 million of goodwill to the Homebuilding East reportable segment and $20.0 million to the Financial Services segment. The portion allocated to the Financial Services segment was written off as part of the sale of the Florida real estate brokerage business in the first quarter of 2019.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Years Ended November 30,
(In thousands)	2019				2018			2017
Revenues:
Homebuilding East	$	7,098,937			6,249,864			4,054,849
Homebuilding Central	2,739,006				2,290,887			923,518
Homebuilding Texas	2,578,962				2,421,399			1,697,731
Homebuilding West	8,227,304				8,059,850			4,447,084
Homebuilding Other	149,007				55,597			65,694
Financial Services	824,810				954,631			891,957
Multifamily	604,700				421,132			394,771
Lennar Other	36,835				118,271			170,761
Total revenues	$	22,259,561			20,571,631			12,646,365
Operating earnings (loss):
Homebuilding East	$	977,375			759,221			575,701
Homebuilding Central (1)	284,616				182,608			(52,301	)
Homebuilding Texas	285,874				172,449			180,212
Homebuilding West	1,050,850				1,082,302			615,916
Homebuilding Other (2)	(95,810		)		57,907			(55,134	)
Financial Services	224,642				199,716			195,307
Multifamily (3)	16,390				42,695			73,432
Lennar Other (4)	31,469				(33,707	)		(57,633	)
Total operating earnings	2,775,406				2,463,191			1,475,500
Gain on sale of Rialto investment and asset management platform	—				296,407			—
Acquisition and integration costs related to CalAtlantic	—				152,980			—
Corporate general and administrative expenses	341,114				343,934			285,889
Earnings before income taxes	$	2,434,292			2,262,684			1,189,611

(1)	Homebuilding Central operating loss for the year ended November 30, 2017 included a $140 million loss due to litigation.

(2)

For the year ended November 30, 2019, Homebuilding Other's operating loss includes a $48.9 million loss on consolidation due to the consolidation of a previously unconsolidated entity. Additionally, Homebuilding Other's revenues increased for the year ended November 30, 2019 due to the consolidation of that entity. For the year ended November 30, 2018, Homebuilding Other's operating earnings includes a $164.9 million gain on the sale of an 80% interest in one of the Company's strategic joint ventures, Treasure Island Holdings. For the years ended November 30, 2018 and 2017, Homebuilding Other's operating earnings (loss) included an equity in loss from unconsolidated entities of $90.3 million and $49.5 million, respectively.

(3)

For the years ended November 30, 2019, 2018 and 2017, Multifamily's operating earnings included $11.3 million, $51.3 million and $85.7 million, respectively, of equity in earnings from unconsolidated entities and other gain primarily as a result of $28.1 million share of gains from the sale of two operating properties and an investment in an unconsolidated entity for the year ended November 30, 2019, $61.2 million share of gains from the sale of six operating properties and an investment in an unconsolidated entity for the year ended November 30, 2018 and $96.7 million share of gains from the sale of seven operating properties for the year ended November 30, 2017 by its unconsolidated entities.

(4)

For the year ended November 30, 2018, Lennar Other's operating loss was primarily as a result of non-recurring expenses, partially offset by a decrease in real estate owned and loan impairments due to the liquidation of the FDIC and bank portfolios and a decrease in interest expense. For the year ended November 30, 2017, Lennar Other's operating loss included $96.2 million of gross REO and loan impairments ($44.7 million net of noncontrolling interests) as Lennar Other liquidated most of the remaining assets of the FDIC portfolio.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Years Ended November 30,
(In thousands)	2019				2018			2017
Homebuilding interest expense:
Homebuilding East	$	118,270			98,478			85,761
Homebuilding Central	42,403				28,471			21,061
Homebuilding Texas	37,144				32,930			34,237
Homebuilding West	183,906				151,823			135,574
Homebuilding Other	13,272				4,462			1,176
Total Homebuilding interest expense	$	394,995			316,164			277,809
Financial Services interest income, net	$	22,800			19,774			20,359
Lennar Other interest expense, net	$	587			557			1,761
Depreciation and amortization:
Homebuilding East	$	23,969			20,614			17,258
Homebuilding Central	8,010				5,285			3,879
Homebuilding Texas	8,395				9,041			8,228
Homebuilding West	45,456				36,013			27,403
Homebuilding Other	369				1,022			2,447
Financial Services	10,430				13,473			10,022
Multifamily	6,209				4,357			2,910
Lennar Other	—				5,687			5,164
Corporate and unallocated	75,197				66,261			50,369
Total depreciation and amortization	$	178,035			161,753			127,680
Net additions to (disposals of) operating properties and equipment:
Homebuilding East	$	(31,323	)		26,402			(27	)
Homebuilding Central	74				14,677			32
Homebuilding Texas	950				200			(40	)
Homebuilding West	63,803				42,525			32,995
Homebuilding Other	(1,214		)		15,549			10,833
Financial Services	6,942				7,703			11,185
Multifamily	495				1,558			12,657
Lennar Other	—				6,416			4,115
Corporate and unallocated	7,183				55,364			40,023
Total net additions (disposals of) operating properties and equipment	$	46,910			170,394			111,773
Homebuilding equity in earnings (loss) from unconsolidated entities:
Homebuilding East	$	(793	)		(818	)		(754	)
Homebuilding Central	178				691			(255	)
Homebuilding Texas	569				469			8
Homebuilding West	1,263				(212	)		(13,095	)
Homebuilding Other (1)	(14,490		)		(90,339	)		(49,541	)
Total Homebuilding equity in loss from unconsolidated entities	$	(13,273	)		(90,209	)		(63,637	)
Multifamily equity in earnings from unconsolidated entities and other gain	$	11,294			51,322			85,739
Lennar Other equity in earnings from unconsolidated entities	$	15,372			24,110			27,376

(1)

For the year ended November 30, 2019, equity in loss included the Company's share of operational net losses from unconsolidated entities driven by general and administrative expenses, partially offset by profits from land sales. For the year ended November 30, 2018, equity in loss included the Company's share of operational net losses from unconsolidated entities driven by valuation adjustments and general and administrative expenses, partially offset by profits from land sales. For the year ended November 30, 2017, equity in loss included the Company's share of operational net losses from unconsolidated entities driven by general and administrative expenses and valuation adjustments, partially offset by profits from land sales.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

4. Homebuilding Receivables

	November 30,
(In thousands)	2019				2018
Accounts receivable	$	129,216			115,642
Mortgages and notes receivable	203,230				123,796
	332,446				239,438
Allowance for doubtful accounts	(3,322		)		(2,597	)
Receivables, net	$	329,124			236,841

At November 30, 2019 and 2018, Homebuilding accounts receivable related primarily to other receivables and rebates. The Company performs ongoing credit evaluations of its customers and generally does not require collateral for accounts receivable. Mortgages and notes receivable arising from the sale of homes and land are generally collateralized by the property sold to the buyer. Allowances are maintained for potential credit losses based on historical experience, present economic conditions and other factors considered relevant by the Company.

5. 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
	Years Ended November 30,
(In thousands)	2019				2018			2017
Revenues	$	303,963			522,811			465,182
Costs and expenses	401,396				720,849			603,079
Other income (1)	78,406				120,620			16,440
Net loss of unconsolidated entities (1)	$	(19,027	)		(77,418	)		(121,457	)
Homebuilding equity in loss from unconsolidated entities (1)	$	(13,273	)		(90,209	)		(63,637	)

(1)

During the year ended November 30, 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 year ended November 30, 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 year ended November 30, 2018, Homebuilding equity in loss from unconsolidated entities was

primarily attributable to our share of net operating losses from our unconsolidated entities which were primarily driven by valuation adjustments related to assets of Homebuilding's unconsolidated entities and general and administrative expenses, partially offset by profits from land sales.

For the year ended November 30, 2017, Homebuilding equity in loss from unconsolidated entities was primarily attributable to the Company's share of net operating losses from the Company's unconsolidated entities which were primarily driven by general and administrative expenses and valuation adjustments related to assets of Homebuilding unconsolidated entities, partially offset by the profits from land sales. One of the Company’s unconsolidated entities had equity in earnings of $11.9 million relating to an equity method investee selling 475 homesites to a third-party land bank. Simultaneous with the purchase by the land bank, the Company entered into an option contract to purchase all 475 homesites from the land bank. Due to the Company’s continuing involvement with respect to the homesites sold from the investee entity, the Company deferred all of its equity in earnings from the unconsolidated entity relating to the sale transaction, which amounted to $4.9 million.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Balance Sheets
	November 30,
(In thousands)	2019				2018
Assets:
Cash and cash equivalents	$	602,480			781,833
Inventories	4,514,885				4,291,470
Other assets	1,007,698				1,045,274
	$	6,125,063			6,118,577
Liabilities and equity:
Accounts payable and other liabilities	$	816,719			874,355
Debt (1)	1,094,588				1,202,556
Equity	4,213,756				4,041,666
	$	6,125,063			6,118,577
Homebuilding investments in unconsolidated entities (2)	$	1,009,035			870,201

(1)	Debt presented above is net of debt issuance costs of $13.0 million and $12.4 million, as of November 30, 2019 and 2018, respectively. The decrease in debt was primarily related to the Company's consolidation of a previously unconsolidated entity during the year ended November 30, 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 November 30, 2019 and 2018, the Company’s recorded investments in Homebuilding unconsolidated entities were $1.0 billion and $870.2 million, respectively, while the underlying equity in Homebuilding unconsolidated entities partners’ net assets as of November 30, 2019 and 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 November 30, 2019 and 2018, the carrying amount of the Company's investment was $374.0 million and $342.7 million, respectively.

During the year ended November 30, 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 Consolidated Statement of Operations and Comprehensive Income (Loss).

The Company’s partners generally are unrelated homebuilders, land owners/developers and financial or other strategic partners. The unconsolidated entities follow accounting principles that are in all material respects the same as those used by the Company. The Company shares in the profits and losses of these unconsolidated entities generally in accordance with its ownership interests. In many instances, the Company is appointed as the day-to-day manager under the direction of a management committee that has shared powers amongst the partners of the unconsolidated entities and the Company receives management fees and/or reimbursement of expenses for performing this function. During the years ended November 30, 2019, 2018 and 2017, the Company received management fees and reimbursement of expenses, net of deferrals, from Homebuilding unconsolidated entities totaling $2.7 million, $7.0 million and $4.4 million, respectively.

The Company and/or its partners sometimes obtain options or enter into other arrangements under which the Company can purchase portions of the land held by the unconsolidated entities. Option prices are generally negotiated prices that approximate fair value when the Company receives the options. During the years ended November 30, 2019, 2018 and 2017, $83.0 million, $169.5 million and $226.2 million, respectively, of the unconsolidated entities’ revenues were from land sales to the Company. The Company does not include in its Homebuilding equity in loss from unconsolidated entities its pro-rata share of unconsolidated entities’ earnings resulting from land sales to its homebuilding divisions. Instead, the Company accounts for those earnings as a reduction of the cost of purchasing the land from the unconsolidated entities. This in effect defers recognition of the Company’s share of the unconsolidated entities’ earnings related to these sales until the Company delivers a home and title passes to a third-party homebuyer.

The Homebuilding 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 CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The total debt of the Homebuilding unconsolidated entities in which the Company has investments was as follows:

	November 30,
(Dollars in thousands)	2019				2018
Non-recourse bank debt and other debt (partner’s share of several recourse)	$	52,007			48,313
Non-recourse debt with completion guarantees	219,558				239,568
Non-recourse debt without completion guarantees	825,192				861,371
Non-recourse debt to the Company	1,096,757				1,149,252
The Company’s maximum recourse exposure (1)	10,787				65,707
Debt issuance costs	(12,956		)		(12,403	)
Total debt (1)	$	1,094,588			1,202,556
The Company’s maximum recourse exposure as a % of total JV debt	1		%		5	%

(1)	As of November 30, 2019 and 2018, the Company's maximum recourse exposure was primarily related to the Company providing repayment guarantee 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 during the year ended November 30, 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. The maintenance guarantees only apply if the value of the collateral (generally land and improvements) is less than a specified percentage of the loan balance. If the Company is required to make a payment under a maintenance guarantee to bring the value of the collateral above the specified percentage of the loan balance, the payment would generally constitute a capital contribution or loan to the Homebuilding unconsolidated entity and increase the Company's share of any funds the unconsolidated entity distributes.

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 generally 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 entity distributes.

As of both November 30, 2019 and 2018, the fair values of the repayment, maintenance guarantees and completion guarantees were not material. The Company believes that as of November 30, 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 should 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 for its joint ventures (see Note 7).

6. Homebuilding Operating Properties and Equipment

Operating properties and equipment are included in Homebuilding other assets in the consolidated balance sheets and were as follows:

	November 30,
(In thousands)	2019				2018
Operating properties (1)	$	225,256			255,203
Leasehold improvements	63,846				61,990
Furniture, fixtures and equipment	159,007				141,466
	448,109				458,659
Accumulated depreciation and amortization	(168,582		)		(138,798	)
	$	279,527			319,861

(1)	Operating properties primarily include solar systems, rental operations and commercial properties.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

7. Homebuilding Senior Notes and Other Debts Payable

	November 30,
(Dollars in thousands)	2019				2018
6.625% senior notes due 2020 (1)	$	303,668			311,735
2.95% senior notes due 2020	299,421				298,838
8.375% senior notes due 2021 (1)	418,860				435,897
4.750% senior notes due 2021	498,893				498,111
6.25% senior notes due December 2021 (1)	310,252				315,283
4.125% senior notes due 2022	597,885				596,894
5.375% senior notes due 2022 (1)	258,198				261,055
4.750% senior notes due 2022	571,644				570,564
4.875% senior notes due December 2023	396,553				395,759
4.500% senior notes due 2024	646,802				646,078
5.875% senior notes due 2024 (1)	448,158				452,833
4.750% senior notes due 2025	497,558				497,114
5.25% senior notes due 2026 (1)	407,921				409,133
5.00% senior notes due 2027 (1)	352,892				353,275
4.75% senior notes due 2027	893,046				892,297
0.25% convertible senior notes due 2019	—				1,291
4.500% senior notes due 2019	—				499,585
4.50% senior notes due 2019	—				599,176
Mortgage notes on land and other debt	874,887				508,950
	$	7,776,638			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 amounts of the senior notes listed above are net of debt issuance costs of $22.9 million and $31.2 million, as of November 30, 2019 and 2018, respectively.

In November 2019, the Company redeemed $600 million aggregate principal amount of its 4.50% senior notes due November 2019. The redemption price, which was paid in cash, was 100% of the principal amount plus accrued but unpaid interest.

In June 2019, the Company redeemed $500 million aggregate principal amount of its 4.50% senior notes due June 2019. The redemption price, which was paid in cash, was 100% of the principal amount plus accrued but unpaid interest.

In April 2019, the Company amended the credit agreement governing its unsecured revolving credit facility (the "Credit Facility") to increase the maximum borrowings from $2.0 billion to $2.4 billion and extended the maturity to April 2024, with $50 million maturing in June 2020. In September 2019, the Credit Facility commitments were increased by $50 million to total commitments of $2.5 billion. As of November 30, 2019, the Credit Facility included a $350 million accordion feature, subject to additional commitments, thus the maximum borrowings could be $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 provides that up to $500 million in commitments may be used for letters of credit. As of both November 30, 2019 and 2018, the Company had no outstanding borrowings under the Credit Facility. Under the Credit Facility agreement, the Company is required to maintain a minimum consolidated tangible net worth, a maximum leverage ratio and either a liquidity or an interest coverage ratio. These ratios are calculated per the Credit Facility agreement, which involves adjustments to GAAP financial measures. The Company believes it was in compliance with its debt covenants at November 30, 2019. In addition, the Company had $305 million in letter of credit facilities with different financial institutions at November 30, 2019.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company’s performance letters of credit outstanding were $715.8 million and $598.4 million at November 30, 2019 and 2018, respectively. The Company’s financial letters of credit outstanding were $184.1 million and $165.4 million at November 30, 2019 and 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 November 30, 2019, the Company had outstanding surety bonds of $2.9 billion including performance surety bonds related to site improvements at various projects (including certain projects of 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 November 30, 2019, there were approximately $1.4 billion, or 48%, of anticipated future costs to complete related to these site improvements. The Company does not presently anticipate any draws upon these bonds or letters of credit, but if any such draws occur, the Company does not believe they would have a material effect on its financial position, results of operations or cash flows.

The terms of each of the Company's senior notes outstanding at November 30, 2019 were as follows:

Senior Notes Outstanding (1)		Principal Amount				Net Proceeds (2)			Price			Dates Issued
(Dollars in thousands)
6.625% senior notes due 2020		$	300,000			(3)			(3)			(3)
2.95% senior notes due 2020		300,000				298,800			100	%		November 2017
8.375% senior notes due 2021		400,000				(3)			(3)			(3)
4.750% senior notes due 2021		500,000				495,974			100	%		March 2016
6.25% senior notes due December 2021		300,000				(3)			(3)			(3)
4.125% senior notes due 2022		600,000				595,160			100	%		January 2017
5.375% senior notes due 2022		250,000				(3)			(3)			(3)
4.750% senior notes due 2022		575,000				567,585			(4)			October 2012, February 2013, April 2013
4.875% senior notes due December 2023		400,000				393,622			99.169	%		November 2015
4.500% senior notes due 2024		650,000				644,838			100	%		April 2017
5.875% senior notes due 2024		425,000				(3)			(3)			(3)
4.750% senior notes due 2025		500,000				495,528			100	%		April 2015
5.25% senior notes due 2026		400,000				(3)			(3)			(3)
5.00% senior notes due 2027		350,000				(3)			(3)			(3)
4.75% senior notes due 2027		900,000				894,650			100	%		November 2017

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

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

(3)	These notes were obligations of CalAtlantic when it was acquired, and were subsequently exchanged in part for notes of the Company. As part of purchase accounting, the senior notes have been recorded at their fair value as of the date of acquisition (February 12, 2018).

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

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.

At November 30, 2019, the Company had mortgage notes on land and other debt due at various dates through 2036 bearing interest at rates up to 7.5% with an average interest rate of 3.4%. At November 30, 2019 and 2018, the carrying amount of the mortgage notes on land and other debt was $874.9 million and $509.0 million, respectively. During the years ended November 30, 2019 and 2018, the Company retired $172.5 million and $128.3 million, respectively, of mortgage notes on land and other debt.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The minimum aggregate principal maturities of Homebuilding senior notes and other debts payable during the five years subsequent to November 30, 2019 and thereafter are as follows:

(In thousands)	Debt Maturities
2020	$	1,055,076
2021	1,131,303
2022	1,759,816
2023	72,419
2024	1,523,125
Thereafter	2,187,082

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

8. Financial Services Segment

The assets and liabilities related to the Financial Services segment were as follows:

	November 30,
(In thousands)	2019				2018
Assets:
Cash and cash equivalents	$	234,113			188,485
Restricted cash	12,022				17,944
Receivables, net (1)	500,847				731,169
Loans held-for-sale (2)	1,644,939				1,213,889
Loans held-for-investment, net	73,867				70,216
Investments held-to-maturity	190,289				189,472
Investments available-for-sale (3)	3,732				4,161
Goodwill (4)	215,516				237,688
Other assets (5)	130,699				125,886
	$	3,006,024			2,778,910
Liabilities:
Notes and other debts payable	$	1,745,755			1,558,702
Other liabilities (6)	310,695				309,500
	$	2,056,450			1,868,202

(1)	Receivables, net, primarily related to loans sold to investors for which the Company had not yet been paid.

(2)	Loans held-for-sale related to unsold 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).

(4)	As of November 30, 2019 and 2018, goodwill included $175.4 million related to the CalAtlantic acquisition (See Note 2).

(5)	As of November 30, 2019 and 2018, other assets included mortgage loan commitments carried at fair value of $16.3 million and $16.4 million, respectively, and mortgage servicing rights carried at fair value of $24.7 million and $37.2 million, respectively.

(6)	As of November 30, 2019 and 2018, other liabilities included $60.7 million and $60.3 million, respectively, of certain of the Company’s self-insurance reserves related to construction defects, general liability and workers’ compensation, and forward contracts carried at fair value of $3.9 million and $10.4 million, respectively.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

At November 30, 2019, the Financial Services segment warehouse facilities used to fund residential mortgages were as follows:

(In thousands)	Maximum Aggregate Commitment
364-day warehouse repurchase facility that matures December 2019 (1)	$	500,000
364-day warehouse repurchase facility that matures March 2020 (2)	300,000
364-day warehouse repurchase facility that matures June 2020	500,000
364-day warehouse repurchase facility that matures October 2020 (3)	500,000
Total	$	1,800,000

(1)	Subsequent to November 30, 2019, the maturity date was extended to March 2020 and the maximum aggregate commitment was decreased to $300 million. As of November 30, 2019, the maximum aggregate commitment includes an uncommitted amount of $500 million.

(2)	Maximum aggregate commitment includes an uncommitted amount of $300 million.

(3)	Maximum aggregate commitment includes an uncommitted amount of $400 million.

The Financial Services segment uses these 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 the Company and are expected to be renewed or replaced with other facilities when they mature. Borrowings under the facilities and their prior year predecessors were $1.4 billion and $1.3 billion at November 30, 2019 and 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 $1.4 billion and $1.3 billion at November 30, 2019 and 2018, respectively. The combined effective interest rate on the facilities at November 30, 2019 was 3.5%. If the facilities are not renewed or replaced, the borrowings under the lines of credit will be paid off by selling the mortgage loans held-for-sale to investors and by collecting on receivables on loans sold but not yet paid. Without the facilities, the Financial Services segment would have to use cash from operations and other funding sources to finance its lending activities.

RMF - loans held-for-sale

During the year ended November 30, 2019, RMF originated loans with a total principal balance of $1.6 billion, nearly all of which were recorded as loans held-for-sale, $15.3 million which were recorded as accrual loans within loans receivables, net, and sold $1.4 billion of loans into 11 separate securitizations. During the year ended November 30, 2018, RMF originated loans with a principal balance of $1.4 billion all of which were recorded as loans held-for-sale and sold $1.5 billion of loans into 16 separate securitizations. As of November 30, 2019 and 2018, originated loans with an unpaid balance of $158.4 million and $218.4 million were sold into a securitization trust but not settled and thus were included as receivables, net, respectively.

At November 30, 2019, RMF warehouse facilities were as follows:

(In thousands)	Maximum Aggregate Commitment
364-day warehouse repurchase facility that matures December 2019 (1)	$	250,000
364-day warehouse repurchase facility that matures December 2019 (1)	200,000
364-day warehouse repurchase facility that matures December 2019 (1)	200,000
364-day warehouse repurchase facility that matures November 2020	200,000
Total - Loans origination and securitization business	850,000
Warehouse repurchase facility that matures December 2019 (two - one year extensions) (2)	50,000
Total	$	900,000

(1)	Subsequent to November 30, 2019, the maturity date was extended to December 2020.

(2)	RMF uses this warehouse repurchase facility to finance the origination of floating rate accrual loans, which are reported as accrual loans within loans receivable, net. There were borrowings under this facility of $11.4 million as of November 30, 2019. There were no borrowings under this facility as of November 30, 2018.

Borrowings under the facilities that finance RMF's loan originations and securitization activities were $216.9 million and $178.8 million as of November 30, 2019 and 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 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.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 November 30, 2019 and 2018, the carrying value of Financial Services' commercial mortgage-backed securities ("CMBS") was $166.0 million and $137.0 million, respectively. These securities were purchased at discount rates 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 management’s assessment, no impairment charges were recorded during the years ended November 30, 2019, 2018 and 2017. The Financial Services segment classified these securities as held-to-maturity based on its intent and ability to hold the securities until maturity.

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.

The assets and liabilities related to the Multifamily segment were as follows:

	November 30,
(In thousands)	2019				2018
Assets:
Cash and cash equivalents	$	8,711			7,832
Receivables (1)	76,906				73,829
Land under development	315,107				277,894
Investments in unconsolidated entities	561,190				481,129
Assets held-for-sale, net	48,206				—
Other assets	58,711				33,535
	$	1,068,831			874,219
Liabilities:
Note payable (2)	$	36,125			—
Accounts payable and other liabilities	196,030				170,616
	$	232,155			170,616

(1)	Receivables primarily related to general contractor services, net of deferrals, and management fee income receivables due from unconsolidated entities as of November 30, 2019 and 2018.

(2)	Note payable is net of debt issuance costs.

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 November 30, 2019 and 2018, the fair value of the completion guarantees was immaterial. Additionally, as of November 30, 2019 and 2018, the Multifamily segment had $4.2 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 outstanding are included in the disclosure in Note 7 related to the Company's performance and financial letters of credit. As of November 30, 2019 and 2018, the Multifamily segment's unconsolidated entities had non-recourse debt with completion guarantees of $867.3 million and $1.0 billion, respectively.

In many instances, the Multifamily segment is appointed as the construction, development and property manager of certain of its Multifamily unconsolidated entities and receives fees for performing this function. During the years ended November 30, 2019, 2018 and 2017, the Multifamily segment received fee income, net of deferrals, from its unconsolidated entities of $53.6 million, $48.8 million and $53.8 million, respectively.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 investments. During the years ended November 30, 2019, 2018 and 2017, the Multifamily segment provided general contractor services, net of deferrals, totaling $355.4 million, $353.2 million and $341.0 million, respectively, which were offset by costs related to those services of $340.1 million, $338.7 million and $330.4 million, respectively.

The Lennar Multifamily Venture Fund I LP ("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 Lennar comprised of cash, undeveloped land and preacquisition costs. During the year ended November 30, 2019, $184.7 million in equity commitments were called, of which the Company contributed its portion of $44.7 million. During the year ended November 30, 2019, the Company received $35.5 million of distributions as a return of capital from LMV I. As of November 30, 2019, $2.1 billion of the $2.2 billion in equity commitments had been called, of which the Company had contributed $485.5 million representing its pro-rata portion of the called equity, resulting in a remaining equity commitment for the Company of $18.5 million. As of November 30, 2019 and 2018, the carrying value of the Company's investment in LMV I was $371.0 million and $383.4 million, respectively.

In March 2018, the Multifamily segment completed the first closing of a second Multifamily Venture, Lennar Multifamily Venture II LP, ("LMV II"), for the development, construction and property management of Class-A multifamily assets. In June 2019, the Multifamily segment completed the final closing of LMV II which has approximately $1.3 billion of equity commitments, including a $381 million co-investment commitment by Lennar comprised of cash, undeveloped land and preacquisition costs. As of and for the year ended November 30, 2019, $330.2 million in equity commitments were called, of which the Company contributed its portion of $94.1 million, which was made up of a $191.0 million inventory and cash contributions, offset by $96.9 million of distributions as a return of capital, resulting in a remaining equity commitment for the Company of $205.7 million. As of November 30, 2019, $582.3 million of the $1.3 billion in equity had been called. As of November 30, 2019 and 2018, the carrying value of the Company's investment in LMV II was $153.3 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. As of November 30, 2019, LMV II included 16 undeveloped multifamily assets totaling approximately 5,600 apartments with projected project costs of approximately $2.4 billion.

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:

Balance Sheets
	November 30,
(In thousands)	2019				2018
Assets:
Cash and cash equivalents	$	74,726			61,571
Operating properties and equipment	4,618,518				3,708,613
Other assets	66,960				40,899
	$	4,760,204			3,811,083
Liabilities and equity:
Accounts payable and other liabilities	$	212,706			199,119
Notes payable (1)	2,113,696				1,381,656
Equity	2,433,802				2,230,308
	$	4,760,204			3,811,083
Multifamily investments in unconsolidated entities	$	561,190			481,129

(1)	Notes payable are net of debt issuance costs of $26.8 million and $15.7 million, as of November 30, 2019 and 2018, respectively.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Statements of Operations
	Years Ended November 30,
(In thousands)	2019				2018			2017
Revenues	$	170,598			117,985			67,578
Costs and expenses	247,207				172,089			108,610
Other income, net	54,578				93,778			207,793
Net earnings (loss) of unconsolidated entities	$	(22,031	)		39,674			166,761
Multifamily equity in earnings from unconsolidated entities and other gain (1)	$	11,294			51,322			85,739

(1)

During the year ended November 30, 2019, the Multifamily segment sold, through its unconsolidated entities, two operating properties and an investment in an unconsolidated entity resulting in the segment's $28.1 million share of gains. The gain of $11.9 million recognized on the sale of the investment in an unconsolidated entity 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 of unconsolidated entities. During the year ended November 30, 2018, the Multifamily segment sold, through its unconsolidated entities six operating properties and an investment in an unconsolidated entity resulting in the segment's $61.2 million share of gains. The gain of $15.7 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 from unconsolidated entities and other gain, and are not included in net earnings of unconsolidated entities. During the year ended November 30, 2017, the Multifamily segment sold seven operating properties, through its unconsolidated entities resulting in the segment's $96.7 million share of gains.

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:

	November 30,
(In thousands)	2019				2018
Assets:
Cash and cash equivalents	$	2,340			24,334
Restricted cash	975				7,175
Real estate owned, net	2,033				25,632
Investments in unconsolidated entities	403,688				424,104
Investments held-to-maturity	54,117				59,974
Other assets	32,264				47,740
	$	495,417			588,959
Liabilities:
Notes and other debts payable	$	15,178			14,488
Other liabilities	14,860				53,020
	$	30,038			67,508

Investments held-to-maturity

At November 30, 2019 and 2018, the carrying value of Lennar Other's CMBS was $54.1 million and $60.0 million, respectively. These securities were purchased at discount rates ranging from 6% to 86% 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 management’s assessment, no impairment charges were recorded during the years ended November 30, 2019, 2018 and 2017. 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 November 30, 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 3.9%.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Summarized condensed financial information on a combined 100% basis related to Lennar Other's investments in unconsolidated entities that are accounted for by the equity method or cost method was as follows:

Balance Sheets
	November 30,
(In thousands)	2019				2018
Assets:
Cash and cash equivalents	$	122,089			50,775
Loans receivable	690,270				705,414
Real estate owned	282,832				298,332
Investment securities	2,404,987				2,296,768
Investments in partnerships	768,219				561,234
Other assets	204,009				39,818
	$	4,472,406			3,952,341
Liabilities and equity:
Accounts payable and other liabilities	$	38,770			31,262
Notes payable (1)	775,648				605,208
Equity	3,657,988				3,315,871
	$	4,472,406			3,952,341
Lennar Other investments in unconsolidated entities	$	403,688			424,104

(1)	Notes payable are net of debt issuance costs.

Statements of Operations
	Years Ended November 30,
(In thousands)	2019				2018			2017
Revenues	$	305,348			376,475			245,698
Costs and expenses	101,369				111,989			117,481
Other income, net (1)	138,443				7,605			116,740
Net earnings of unconsolidated entities	$	342,422			272,091			244,957
Lennar Other equity in earnings from unconsolidated entities	$	15,372			24,110			27,376

(1)	Other income, net included realized and unrealized gains (losses) on investments.

11. Income Taxes

The provision for income taxes consisted of the following:

	Years Ended November 30,
(In thousands)	2019				2018			2017
Current:
Federal	$	298,701			246,604			309,235
State	53,400				30,530			17,572
	$	352,101			277,134			326,807
Deferred:
Federal	$	165,080			189,096			40,641
State	74,992				78,941			50,409
	240,072				268,037			91,050
	$	592,173			545,171			417,857

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

A reconciliation of the statutory rate and the effective tax rate was as follows:

	Percentage of Pretax Income
	2019			2018			2017
Statutory rate	21.00	%		22.22	%		35.00	%
State income taxes, net of federal income tax benefit	4.17			3.81			3.29
Tax credits	(1.49	)		(1.60	)		(2.03	)
Nondeductible compensation	0.45			—			—
Domestic production activities deduction	—			(1.71	)		(2.77	)
Tax reserves and interest expense, net	(0.03	)		(0.39	)		0.27
Deferred tax asset valuation allowance, net	(0.02	)		(0.03	)		0.17
Accounting method changes	—			(1.47	)		—
Changes in tax law (1)	—			3.06			—
Other	0.18			0.44			0.09
Effective rate	24.26	%		24.33	%		34.02	%

(1)

In December 2017, the Tax Cuts and Jobs Act was enacted which had a positive impact on the Company's effective tax rate in 2019 and 2018 and will have a positive impact in subsequent years. The tax reform bill reduced the maximum federal corporate income tax rate to 21%, which reduced the value of the Company's deferred tax assets. As a result, the Company recorded a non-cash one-time write down of deferred tax assets that resulted in income tax expense of $68.6 million in fiscal year 2018.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The tax effects of significant temporary differences that give rise to the net deferred tax assets were as follows:

	November 30,
(In thousands)	2019				2018
Deferred tax assets:
Inventory valuation adjustments	$	201,408			315,006
Reserves and accruals	148,477				175,626
Net operating loss carryforwards	108,250				138,094
Investments in partnerships	2,800				5,938
Capitalized expenses	72,054				51,477
Investments in unconsolidated entities	52,506				63,339
Other assets	84,454				115,266
Total deferred tax assets	669,949				864,746
Valuation allowance	(4,341		)		(7,219	)
Total deferred tax assets after valuation allowance	665,608				857,527
Deferred tax liabilities:
Capitalized expenses	152,208				153,392
Deferred income	198,503				156,376
Other liabilities	35,432				32,271
Total deferred tax liabilities	386,143				342,039
Net deferred tax assets	$	279,465			515,488

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The detail of the Company's net deferred tax assets was as follows:

	Years Ended November 30,
(In thousands)	2019				2018
Net deferred tax assets: (1)
Homebuilding	$	224,859			477,676
Financial Services	17,551				5,075
Multifamily	34,291				15,272
Lennar Other	2,764				17,465
Net deferred tax assets	$	279,465			515,488

(1)	Net deferred tax assets and net deferred tax liabilities detailed above are included within other assets and other liabilities in the respective segments.

A reduction of the carrying amounts of deferred tax assets by a valuation allowance is required if, based on the available evidence, it is more likely than not that such assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed each reporting period by the Company based on the consideration of all available positive and negative evidence using a "more-likely-than-not" standard with respect to whether deferred tax assets will be realized. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, actual earnings, forecasts of future profitability, the duration of statutory carryforward periods, the Company’s experience with loss carryforwards not expiring unused and tax planning alternatives.

As of November 30, 2019 and 2018, the net deferred tax assets included valuation allowances of $4.3 million and $7.2 million, respectively, primarily related to state net operating loss ("NOL") carryforwards that are not more likely than not to be utilized due to an inability to carry back these losses in most states and short carryforward periods that exist in certain states.

At November 30, 2019 and 2018, the Company had federal tax effected NOL carryforwards totaling $39.1 million and $44.8 million, respectively, that may be carried forward up to 20 years to offset future taxable income and begin to expire in 2029. At November 30, 2019 and 2018, the Company had state tax effected NOL carryforwards totaling $69.2 million and $93.3 million, respectively, that may be carried forward from 5 to 20 years, depending on the tax jurisdiction, with losses expiring between 2020 and 2038.

The following table summarizes the changes in gross unrecognized tax benefits:

	Years Ended November 30,
(In thousands)	2019				2018			2017
Gross unrecognized tax benefits, beginning of year	$	14,667			12,285			12,285
Lapse of statute of limitations	(1,811		)		(2,052	)		—
Decreases due to tax positions taken during prior period	—				(2,805	)		—
Decreases due to settlements with tax authorities	—				(6,493	)		—
Increases due to the CalAtlantic acquisition	—				13,510			—
Increases due to tax positions taken during prior period	—				222			—
Gross unrecognized tax benefits, end of year	$	12,856			14,667			12,285

If the Company were to recognize its gross unrecognized tax benefits as of November 30, 2019, $10.2 million would affect the Company’s effective tax rate. The Company does not expect the total amount of unrecognized tax benefits to increase or decrease by a material amount within the following twelve months.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following summarizes the changes in interest and penalties accrued with respect to gross unrecognized tax benefits:

	Years Ended November 30,
(In thousands)	2019				2018
Accrued interest and penalties, beginning of the year	$	52,942			49,723
Additional interest and penalties (related to the acquisition of CalAtlantic)	—				1,515
Accrual of interest and penalties (primarily related to state audits)	3,029				1,894
Reduction of interest and penalties	(638		)		(190	)
Accrued interest and penalties, end of the year	$	55,333			52,942

The IRS is currently examining the Company's federal tax income tax returns for fiscal year 2018, and certain state taxing authorities are examining various fiscal years. The final outcome of these examinations is not yet determinable. The statute of limitations for the Company's major tax jurisdictions remains open for examination for fiscal year 2005 and subsequent years. The Company participates in an IRS examination program, Compliance Assurance Process, "CAP". This program operates as a contemporaneous exam throughout the year in order to keep exam cycles current and achieve a higher level of compliance.

12. Earnings Per Share

Basic and diluted earnings per share were calculated as follows:

	Years Ended November 30,
(In thousands, except per share amounts)	2019				2018			2017
Numerator:
Net earnings attributable to Lennar	$	1,849,052			1,695,831			810,480
Less: distributed earnings allocated to nonvested shares	420				429			377
Less: undistributed earnings allocated to nonvested shares	15,722				14,438			7,447
Numerator for basic earnings per share	1,832,910				1,680,964			802,656
Less: net amount attributable to noncontrolling interests in Rialto's Carried Interest Incentive Plan (1)	4,204				3,320			1,009
Plus: interest on convertible senior notes	—				80			—
Plus: undistributed earnings allocated to convertible shares	—				2,904			—
Less: undistributed earnings reallocated to convertible shares	—				2,899			—
Numerator for diluted earnings per share	$	1,828,706			1,677,729			801,647
Denominator:
Denominator for basic earnings per share - weighted average common shares outstanding	318,419				307,968			237,155
Effect of dilutive securities:
Share-based payments	3				48			1
Convertible senior notes	—				549			—
Denominator for diluted earnings per share - weighted average common shares outstanding	318,422				308,565			237,156
Basic earnings per share	$	5.76			5.46			3.38
Diluted earnings per share	$	5.74			5.44			3.38

(1)	The amounts presented above relate to Rialto's Carried Interest Incentive Plan and represent the difference between the advanced tax distributions received by Lennar Other segment and the amount Lennar, as the parent company, is assumed to own.

For the years ended November 30, 2019, 2018 and 2017, there were no options to purchase shares of common stock that were outstanding and anti-dilutive.

13. Capital Stock

Preferred Stock

The Company is authorized to issue 500,000 shares of preferred stock with a par value of $10 per share and 100 million shares of participating preferred stock with a par value of $0.10 per share. No shares of preferred stock or participating preferred stock have been issued as of November 30, 2019 and 2018.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Common Stock

During each of the years ended November 30, 2019, 2018 and 2017, the Company’s Class A and Class B common stockholders received a per share annual dividend of $0.16. The only significant difference between the Class A common stock and Class B common stock is that Class A common stock entitles holders to one vote per share and the Class B common stock entitles holders to ten votes per share.

On November 27, 2017, the Company paid a stock dividend of one share of Class B common stock for each 50 shares of Class A common stock or Class B common stock to holders of record at the close of business on November 10, 2017, as declared by the Company's Board of Directors on October 30, 2017.

As of November 30, 2019, Stuart Miller, the Company’s Executive Chairman, directly owned, or controlled through family-owned entities, shares of Class A and Class B common stock, which represented approximately 34% voting power of the Company’s stock.

In January 2019, the Company's Board of Directors authorized a stock repurchase program, which replaced a June 2001 stock repurchase program, under which the Company is authorized to purchase up to the lesser of $1 billion in value, or 25 million in shares, of the Company’s outstanding Class A or Class B common stock. The repurchase authority has no expiration date. During the year ended November 30, 2019, the Company repurchased 9.8 million shares of Class A common stock for approximately $492.9 million at an average share price of $50.41.

During fiscal 2018, the Company had a stock repurchase program adopted in 2001, which originally authorized the purchase of up to 20 million shares of its outstanding common stock. During the year ended November 30, 2018, under the Company's stock repurchase program, the Company repurchased 6.0 million shares of Class A common stock for $249.9 million at an average share price of $41.63. During the year ended November 30, 2017, there were no share repurchases of common stock under the stock repurchase program.

During the year ended November 30, 2019, treasury stock increased by 10.5 million shares of Class A common stock primarily due to the repurchase of 9.8 million shares of common stock. During the year ended November 30, 2018, treasury stock increased by 7.0 million shares of Class A common stock primarily due to the repurchase of 6.0 million shares of common stock.

Restrictions on Payment of Dividends

There are no restrictions on the payment of dividends on common stock by the Company. There are no agreements which restrict the payment of dividends by subsidiaries of the Company other than the need to maintain the financial ratios and net worth requirements under the Financial Services segment’s warehouse lines of credit, which restrict the payment of dividends from the Company’s mortgage subsidiaries following the occurrence and during the continuance of an event of default thereunder and limit dividends to 50% of net income in the absence of an event of default.

401(k) Plan

Under the Company’s 401(k) Plan (the "Plan"), contributions made by associates can be invested in a variety of mutual funds or proprietary funds provided by the Plan trustee. The Company may also make contributions for the benefit of associates. The Company records as compensation expense its contribution to the Plan. For the years ended November 30, 2019, 2018 and 2017, this amount was $24.5 million, $25.3 million and $17.2 million, respectively.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

14. Share-Based Payments

Compensation expense related to the Company’s share-based awards was as follows:

	Years ended November 30,
(In thousands)	2019				2018			2017
Total compensation expense for nonvested share-based awards	$	86,940			72,655			61,356

The fair value of nonvested shares is determined based on the trading price of the Company’s common stock on the grant date. The weighted average fair value of nonvested shares granted during the years ended November 30, 2019, 2018 and 2017 was $48.26, $55.84 and $51.92, respectively. A summary of the Company’s nonvested shares activity for the year ended November 30, 2019 was as follows:

	Shares			Weighted Average Grant Date Fair Value
Nonvested shares at November 30, 2018	2,737,352			$	52.37
Grants	2,081,935			$	48.26
Vested	(1,421,613	)		$	50.43
Forfeited	(106,811	)		$	51.50
Nonvested shares at November 30, 2019	3,290,863			$	50.64

At November 30, 2019, there was $110.1 million of unrecognized compensation expense related to unvested share-based awards granted under the Company’s share-based payment plan, all of which relates to nonvested shares with a weighted average remaining contractual life of 1.8 years. For the years ended November 30, 2019, 2018 and 2017, 1.4 million, 2.2 million and 1.2 million nonvested shares, respectively, vested each year.

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 November 30, 2019 and 2018, 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.

			November 30,
			2019							2018
	Fair Value		Carrying				Fair			Carrying			Fair
(In thousands)	Hierarchy		Amount				Value			Amount			Value
ASSETS
Financial Services:
Loans held-for-investment, net	Level 3		$	73,867			69,708			70,216			63,794
Investments held-to-maturity	Level 3		$	166,012			195,962			136,982			149,767
Investments held-to-maturity	Level 2		$	24,277			24,257			52,490			52,220
Lennar Other:
Investments held-to-maturity	Level 3		$	54,117			56,415			59,974			72,986
LIABILITIES
Homebuilding senior notes and other debts payable	Level 2		$	7,776,638			8,144,632			8,543,868			8,336,166
Financial Services notes and other debts payable	Level 2		$	1,745,755			1,745,782			1,558,702			1,559,718
Multifamily note payable	Level 2		$	36,125			36,125			—			—
Lennar Other notes and other debts payable	Level 2		$	15,178			15,178			14,488			14,488

The following methods and assumptions are used by the Company in estimating fair values:

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 borrowings.

Lennar Other—The fair value for investments held-to-maturity is based on discounted cash flows. For notes 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 due to their short-term maturities.

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 the note payable, the fair value approximates the carrying value due to variable interest pricing terms and the short-term nature of the borrowing.

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.

The Company’s financial instruments measured at fair value on a recurring basis are summarized below:

(In thousands)	Fair Value Hierarchy		Fair Value at November 30, 2019				Fair Value at November 30, 2018
Financial Services Assets:
Financial Services residential loans held-for-sale (1)	Level 2		$	1,447,715			1,152,198
RMF loans held-for-sale (2)	Level 3		$	197,224			61,691
Investments available-for-sale	Level 1		$	3,732			4,161
Mortgage loan commitments	Level 2		$	16,288			16,373
Forward contracts	Level 2		$	(3,856	)		(10,360	)
Mortgage servicing rights	Level 3		$	24,679			37,206

(1)	The aggregate fair value of Financial Services 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. 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.

(2)	The aggregate fair value of RMF's 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. The aggregate fair value of RMF's 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.

The estimated fair values of the Company’s financial instruments have been determined by 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 following methods and assumptions are used by the Company in estimating fair values:

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 is included in Financial Services’ loans held-for-sale as of November 30, 2019 and 2018. Fair value of servicing rights is determined based on actual sales of servicing rights on loans with similar characteristics.

RMF 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

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 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 is included in the Financial Services segment's other liabilities as of November 30, 2019 and 2018.

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 November 30, 2019, the segment had open commitments amounting to $1.7 billion to sell MBS with varying settlement dates through February 2020.

Financial Services mortgage servicing rights — Financial Services records the value of 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 November 30, 2019, the key assumptions used in determining the fair value include an 17.8% mortgage prepayment rate, a 12.6% discount rate and a 9.1% delinquency rate. The fair value of mortgage servicing rights is included in the Financial Services segment's other assets.

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:

	Years Ended November 30,
(In thousands)	2019				2018			2017
Changes in fair value included in Financial Services revenues:
Loans held-for-sale	$	4,891			8,621			20,309
Mortgage loan commitments	$	(85	)		6,500			2,436
Forward contracts	$	6,504			(12,041	)		(24,786	)
Investments available-for-sale	$	(176	)		(234	)		(12	)
Changes in fair value included in other comprehensive income (loss), net of tax:
Financial Services investments available-for-sale	$	1,040			(1,634	)		1,331

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Interest on Financial Services loans held-for-sale and RMF loans held-for-sale measured at fair value is calculated based on the interest rate of the loan and recorded as revenues in the Financial Services’ statement of operations and RMF's statement of operations, respectively.

The following table represents the reconciliation of the beginning and ending balance for the Level 3 recurring fair value measurements:

	Years Ended November 30,
	2019							2018
	Financial Services
(In thousands)	Mortgage servicing rights				RMF loans held-for-sale			Mortgage servicing rights			RMF loans held-for-sale
Beginning of year	$	37,206			61,691			31,163			234,403
Purchases/loan originations	3,417				1,593,655			7,841			1,350,091
Sales/loan originations sold, including those not settled	—				(1,447,818	)		—			(1,504,554	)
Disposals/settlements	(5,326		)		(9,920	)		(6,948	)		(19,600	)
Changes in fair value (1)	(10,618		)		430			5,150			1,481
Interest and principal paydowns	—				(814	)		—			(130	)
End of year	$	24,679			197,224			37,206			61,691

(1)	Changes in fair value for RMF loans held-for-sale and Financial Services mortgage servicing rights are included in Financial Services' revenues.

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 tables 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:

	Years Ended November 30,
			2019										2018									2017
(In thousands)	Fair Value Hierarchy		Carrying Value				Fair Value			Total (Losses), Net (1)			Carrying Value			Fair Value			Total (Losses), Net (1)			Carrying Value			Fair Value			Total (Losses), Net (1)
Financial assets
Lennar Other:
Impaired loans receivable	Level 3		$	—			—			—			—			—			—			31,561			18,885			(12,676	)
FDIC portfolios loans held-for-sale	Level 3		$	—			—			—			—			—			—			32,018			12,072			(19,946	)
Non-financial assets
Homebuilding:
Finished homes and construction in progress (2)	Level 3		$	218,942			205,201			(13,741	)		4,019			3,473			(546	)		8,601			4,227			(4,374	)
Land and land under development (2)	Level 3		$	121,564			82,816			(38,748	)		96,093			62,850			(33,243	)		6,771			3,094			(3,677	)
Other assets (2)	Level 3		$	60,363			56,727			(3,636	)		—			—			—			—			—			—
Lennar Other:
REO, net (3)
Upon acquisition/transfer	Level 3		$	—			—			—			—			—			—			27,640			26,591			(1,049	)
Upon management periodic valuations	Level 3		$	—			—			—			58,721			25,632			(33,089	)		145,251			81,677			(63,574	)

(1)	Represents losses due to valuation adjustments, write-offs, gains (losses) from transfers or acquisitions of real estate through foreclosure and REO impairments recorded during the year.

(2)	Valuation adjustments were included in Homebuilding costs and expenses in the Company's consolidated statements of operations for the years ended November 30, 2019, 2018 and 2017.

(3)

REO held-for-sale assets are initially recorded at fair value less estimated costs to sell at the time of the transfer or acquisition through, or in lieu of, loan foreclosure. The fair value of REO held-for-sale is based upon appraised value at the time of foreclosure or management's best estimate. In addition, management periodically performs valuations of its REO held-for-sale. The gains (losses) upon

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

the transfer or acquisition of REO and impairments were included in Lennar Other (formerly Rialto segment) other income (expense), net, in the Company’s consolidated statements of operations for the years ended November 30, 2018 and 2017.

See Note 1 for a detailed description of the Company’s process for identifying and recording valuation adjustments related to Homebuilding inventory.

16. Variable Interest Entities

The Company evaluated the joint venture agreements of its joint ventures that were formed or that had reconsideration events, such as changes in the governing documents or debt arrangements, during the year ended November 30, 2019. Based on the Company's evaluation, during the year ended November 30, 2019, the Company consolidated five entities that had a total combined assets and liabilities of $505.2 million and $602.1 million, respectively. During the year ended November 30, 2019, there were no VIEs that were deconsolidated.

Consolidated VIEs

As of November 30, 2019, the carrying amount of the VIEs’ assets and non-recourse liabilities that consolidated was $980.2 million and $549.7 million, respectively. As of November 30, 2018, the carrying amount of the VIEs’ assets and non-recourse liabilities that consolidated was $666.2 million and $242.5 million, respectively. Those assets are owned by, and those liabilities are obligations of, the VIEs, not the Company.

The increase in VIEs' assets and non-recourse liabilities during the year ended November 30, 2019 was primarily due to the consolidation of an unconsolidated entity related to the sale of the majority of the Company's retail title agency business and title insurance underwriter. 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.

During the year ended November 30, 2019, the Company consolidated 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 consolidated statements of operations. During the year ended November 30, 2019, the Company bought out the partner's interest in the entity and therefore at November 30, 2019, the entity is no longer considered a VIE. At November 30, 2019, the consolidated homebuilding entity had total assets and liabilities of $240.5 million and $373.5 million, respectively.

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 and 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 the VIE’s banks. Other than debt guarantee agreements with a VIE’s banks, 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.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Unconsolidated VIEs

At November 30, 2019 and 2018, the Company’s recorded investments in VIEs that are unconsolidated and its estimated maximum exposure to loss were as follows:

	November 30,
	2019							2018
(In thousands)	Investments in Unconsolidated VIEs				Lennar’s Maximum Exposure to Loss			Investments in Unconsolidated VIEs			Lennar’s Maximum Exposure to Loss
Homebuilding (1)	$	80,939			81,118			123,064			184,945
Multifamily (2)	533,018				768,651			463,534			710,754
Financial Services (3)	166,012				166,012			136,982			136,982
Lennar Other (4)	60,882				60,882			63,919			63,919
	$	840,851			1,076,663			787,499			1,096,600

(1)

As of November 30, 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 November 30, 2019 and 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 $224.2 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 $4.2 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 November 30, 2019 and 2018, the maximum recourse exposure to loss of the Financial Services segment was limited to its investments in the unconsolidated entities VIEs. At November 30, 2019 and 2018, investments in unconsolidated VIEs and Financial Services' maximum exposure to loss included $166.0 million and $137.0 million, respectively, related to the Financial Services' CMBS investments held-to-maturity.

(4)	At both November 30, 2019 and 2018, the maximum recourse exposure to loss of Lennar Other’s segment was limited to its investments in the unconsolidated entities VIEs. At November 30, 2019 and 2018, investments in unconsolidated VIEs and Lennar’s maximum exposure to loss included $54.1 million and $60.0 million, respectively, related to Lennar Other segment's investments held-to-maturity.

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 November 30, 2019, the Company and other partners did not have an obligation to make capital contributions to the VIEs, except for a $224.2 million remaining equity commitment to fund LMV I and LMV II for future expenditures related to the construction and development of the projects and $4.2 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, there 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 enable 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 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 year ended November 30, 2019, consolidated inventory not owned increased by $104.2 million with a corresponding increase to liabilities related to consolidated inventory not owned in the accompanying consolidated balance

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

sheet as of November 30, 2019. 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 under development in the accompanying condensed consolidated balance sheet as of November 30, 2019. 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 loss related to its option contracts with third parties and unconsolidated entities consisted of its non-refundable option deposits and pre-acquisition costs totaling $320.5 million and $209.5 million at November 30, 2019 and 2018, respectively. Additionally, the Company had posted $75.0 million and $72.4 million of letters of credit in lieu of cash deposits under certain land and option contracts as of November 30, 2019 and 2018, respectively.

17. Commitments and Contingent Liabilities

The Company is 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.

The Company is subject to the usual obligations associated with entering into contracts (including option contracts) for the purchase, development and sale of real estate, which it does in the routine conduct of its business. Option contracts generally enable the Company to control portions of properties owned by third parties (including land funds) and unconsolidated entities until the Company determines whether to exercise the option. The use of option contracts allows the Company to reduce the financial risks associated with long-term land holdings. At November 30, 2019, the Company had $320.5 million of non-refundable option deposits and pre-acquisition costs related to certain of these homesites, which were included in inventories in the consolidated balance sheet.

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 November 30, 2019 were as follows:

(In thousands)	Lease Payments
2020	$	41,952
2021	41,076
2022	31,140
2023	22,507
2024	16,443
Thereafter	31,909

Rental expense for the years ended November 30, 2019, 2018 and 2017 was $92.2 million, $98.4 million and $74.6 million, respectively.

The Company is committed, under various letters of credit, to perform certain development and construction activities and provide certain guarantees in the normal course of business. Outstanding letters of credit under these arrangements totaled $899.9 million at November 30, 2019. Additionally, at November 30, 2019, the Company had outstanding surety bonds of $2.9 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 November 30, 2019, there were approximately $1.4 billion, or 48%, of anticipated future costs to complete related to these site improvements. The Company does not presently anticipate any draws upon these bonds that would have a material effect on its consolidated financial statements.

Substantially all of the 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

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

agreements. Over the last decade there has been an industry-wide effort by purchasers to defray their losses by purporting to have found inaccuracies related to sellers’ representations and warranties in particular loan sale agreements. Mortgage investors or others 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 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.

18. Supplemental Financial Information

The indentures governing the Company’s 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. In addition, some subsidiaries of CalAtlantic are guaranteeing CalAtlantic senior convertible notes that also are guaranteed by Lennar Corporation. 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 November 30, 2019 they were guaranteeing Lennar Corporation's letter of credit facilities and its Credit Facility, described in Note 7. 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 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 consolidating statements 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.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Supplemental information for the subsidiaries that were guarantor subsidiaries at November 30, 2019 was as follows:

Consolidating Balance Sheet November 30, 2019
(In thousands)	Lennar Corporation				Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
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 assets	344,941				500,356			217,607			(41,220	)		1,021,684
Investments in subsidiaries	10,453,165				26,773			—			(10,479,938	)		—
Intercompany	12,027,996				—			—			(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 payable	6,837,776				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 liabilities	$	7,598,757			13,244,024			4,555,954			(12,073,054	)		13,325,681
Total stockholders’ equity	15,949,517				10,356,738			123,200			(10,479,938	)		15,949,517
Noncontrolling interests	—				—			84,313			—			84,313
Total equity	15,949,517				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

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Balance Sheet November 30, 2018
(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	—				866,395			3,806			—			870,201
Goodwill	—				3,442,359			—			—			3,442,359
Other assets	339,307				878,582			164,848			(26,955	)		1,355,782
Investments in subsidiaries	10,562,273				89,044			—			(10,651,317	)		—
Intercompany	11,815,491				—			—			(11,815,491	)		—
	23,354,154				22,841,684			622,018			(22,493,763	)		24,324,093
Financial Services	—				232,632			2,547,167			(889	)		2,778,910
Multifamily	—				—			874,219			—			874,219
Lennar Other	—				117,568			471,391			—			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 payable	7,968,387				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 liabilities	$	8,772,619			12,831,383			4,122,557			(11,843,335	)		13,883,224
Total stockholders’ equity	14,581,535				10,360,501			290,816			(10,651,317	)		14,581,535
Noncontrolling interests	—				—			101,422			—			101,422
Total equity	14,581,535				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

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Statement of Operations and Comprehensive Income (Loss) Year Ended November 30, 2019
(In thousands)	Lennar Corporation				Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Revenues:
Homebuilding	$	—			20,707,299			85,917			—			20,793,216
Financial Services	—				165,498			679,887			(20,575	)		824,810
Multifamily	—				—			604,700			—			604,700
Lennar Other	—				—			36,835			—			36,835
Total revenues	—				20,872,797			1,407,339			(20,575	)		22,259,561
Cost and expenses:
Homebuilding	—				18,154,739			89,352			1,609			18,245,700
Financial Services	—				97,719			528,678			(26,229	)		600,168
Multifamily	—				—			599,604			—			599,604
Lennar Other	—				—			11,794			—			11,794
Corporate general and administrative	328,014				8,039			—			5,061			341,114
Total costs and expenses	328,014				18,260,497			1,229,428			(19,559	)		19,798,380
Homebuilding equity in (loss) earnings from unconsolidated entities	—				(13,716	)		443			—			(13,273	)
Homebuilding other income (expense), net	(1,013		)		(41,119	)		9,778			1,016			(31,338	)
Multifamily equity in earnings from unconsolidated entities and other gain	—				—			11,294			—			11,294
Lennar Other equity in earnings (loss) from unconsolidated entities	—				(12,609	)		27,981			—			15,372
Lennar Other expense, net	—				—			(8,944	)		—			(8,944	)
Earnings (loss) before income taxes	(329,027		)		2,544,856			218,463			—			2,434,292
Benefit (provision) for income taxes	79,822				(613,579	)		(58,416	)		—			(592,173	)
Equity in earnings from subsidiaries	2,098,257				110,943			—			(2,209,200	)		—
Net earnings (including net loss attributable to noncontrolling interests)	1,849,052				2,042,220			160,047			(2,209,200	)		1,842,119
Less: Net loss attributable to noncontrolling interests	—				—			(6,933	)		—			(6,933	)
Net earnings attributable to Lennar	$	1,849,052			2,042,220			166,980			(2,209,200	)		1,849,052
Other comprehensive income, net of tax:
Net unrealized gain on securities available-for-sale	$	—			—			1,040			—			1,040
Reclassification adjustments for gains included in net earnings, net of tax	—				—			(176	)		—			(176	)
Total other comprehensive income, net of tax	—				—			864			—			864
Total comprehensive income attributable to Lennar	$	1,849,052			2,042,220			167,844			(2,209,200	)		1,849,916
Total comprehensive loss attributable to noncontrolling interests	$	—			—			(6,933	)		—			(6,933	)

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Statement of Operations and Comprehensive Income (Loss) Year Ended November 30, 2018
(In thousands)	Lennar Corporation				Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Revenues:
Homebuilding	$	—			18,972,723			104,874			—			19,077,597
Financial Services	—				371,063			603,491			(19,923	)		954,631
Multifamily	—				—			421,132			—			421,132
Lennar Other	—				—			118,271			—			118,271
Total revenues	—				19,343,786			1,247,768			(19,923	)		20,571,631
Cost and expenses:
Homebuilding	—				16,831,780			104,880			143			16,936,803
Financial Services	—				339,211			447,186			(31,482	)		754,915
Multifamily	—				—			429,759			—			429,759
Lennar Other	—				—			124,417			(8,448	)		115,969
Acquisition and integration costs related to CalAtlantic	—				152,980			—			—			152,980
Corporate general and administrative	336,355				2,417			—			5,162			343,934
Total costs and expenses	336,355				17,326,388			1,106,242			(34,625	)		18,734,360
Homebuilding equity in earnings (loss) from unconsolidated entities	—				(91,013	)		804			—			(90,209	)
Homebuilding other income, net	14,740				192,951			10,913			(14,702	)		203,902
Multifamily equity in earnings from unconsolidated entities and other gain	—				—			51,322			—			51,322
Lennar Other equity in earnings (loss) from unconsolidated entities	—				(1,304	)		25,414			—			24,110
Lennar Other expense, net	—				—			(60,119	)		—			(60,119	)
Gain on sale of Rialto investment and asset management platform	—				—			296,407			—			296,407
Earnings (loss) before income taxes	(321,615		)		2,118,032			466,267			—			2,262,684
Benefit (provision) for income taxes	78,249				(498,424	)		(124,996	)		—			(545,171	)
Equity in earnings from subsidiaries	1,939,197				93,612			—			(2,032,809	)		—
Net earnings (including net earnings attributable to noncontrolling interests)	1,695,831				1,713,220			341,271			(2,032,809	)		1,717,513
Less: Net earnings attributable to noncontrolling interests	—				—			21,682			—			21,682
Net earnings attributable to Lennar	$	1,695,831			1,713,220			319,589			(2,032,809	)		1,695,831
Other comprehensive loss, net of tax:
Net unrealized loss on securities available-for-sale	$	—			—			(1,634	)		—			(1,634	)
Reclassification adjustments for losses included in net earnings, net of tax	$	—			—			234			—			234
Total other comprehensive loss, net of tax	—				—			(1,400	)		—			(1,400	)
Total comprehensive income attributable to Lennar	$	1,695,831			1,713,220			318,189			(2,032,809	)		1,694,431
Total comprehensive income attributable to noncontrolling interests	$	—			—			21,682			—			21,682

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Statement of Operations and Comprehensive Income (Loss) Year Ended November 30, 2017
(In thousands)	Lennar Corporation				Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Revenues:
Homebuilding	$	—			11,118,553			70,323			—			11,188,876
Financial Services	—				307,892			604,075			(20,010	)		891,957
Multifamily	—				—			394,906			(135	)		394,771
Lennar Other	—				—			170,761			—			170,761
Total revenues	—				11,426,445			1,240,065			(20,145	)		12,646,365
Cost and expenses:
Homebuilding	—				9,676,548			70,217			(3,617	)		9,743,148
Financial Services	—				280,349			437,212			(20,911	)		696,650
Multifamily	—				—			407,078			—			407,078
Lennar Other	—				—			174,818			(213	)		174,605
Corporate general and administrative	279,490				1,338			—			5,061			285,889
Total costs and expenses	279,490				9,958,235			1,089,325			(19,680	)		11,307,370
Homebuilding equity in loss from unconsolidated entities	—				(63,567	)		(70	)		—			(63,637	)
Homebuilding other income (expense), net	(427		)		17,488			5,719			465			23,245
Homebuilding loss due to litigation	—				(140,000	)		—			—			(140,000	)
Multifamily equity in earnings from unconsolidated entities	—				—			85,739			—			85,739
Lennar Other equity in earnings from unconsolidated entities	—				2,167			25,209			—			27,376
Lennar Other expense, net	—				—			(82,107	)		—			(82,107	)
Earnings (loss) before income taxes	(279,917		)		1,284,298			185,230			—			1,189,611
Benefit (provision) for income taxes	95,228				(427,961	)		(85,124	)		—			(417,857	)
Equity in earnings from subsidiaries	995,169				72,104			—			(1,067,273	)		—
Net earnings (including loss attributable to noncontrolling interests)	810,480				928,441			100,106			(1,067,273	)		771,754
Less: Net loss attributable to noncontrolling interests	—				—			(38,726	)		—			(38,726	)
Net earnings attributable to Lennar	$	810,480			928,441			138,832			(1,067,273	)		810,480
Other comprehensive income, net of tax:
Net unrealized gain on securities available-for-sale	$	—			—			1,331			—			1,331
Reclassification adjustments for losses included in net earnings, net of tax	$	—			—			12			—			12
Total other comprehensive income, net of tax	—				—			1,343			—			1,343
Total comprehensive income attributable to Lennar	$	810,480			928,441			140,175			(1,067,273	)		811,823
Total comprehensive loss attributable to noncontrolling interests	$	—			—			(38,726	)		—			(38,726	)

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Statement of Cash Flows Year Ended November 30, 2019
(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)	$	1,849,052			2,042,220			160,047			(2,209,200	)		1,842,119
Distributions of earnings from guarantor and non-guarantor subsidiaries	2,098,257				110,943			—			(2,209,200	)		—
Other adjustments to reconcile net earnings (including net loss attributable to noncontrolling interests) to net cash provided by operating activities	(2,061,774		)		(53,114	)		(454,088	)		2,209,200			(359,776	)
Net cash provided by (used in) operating activities	1,885,535				2,100,049			(294,041	)		(2,209,200	)		1,482,343
Cash flows from investing activities:
(Investments in and contributions to) and distributions of capital from unconsolidated entities, net	—				(174,481	)		143,833			—			(30,648	)
Proceeds from sales of real estate owned	—				—			8,866			—			8,866
Proceeds from sale of investment in unconsolidated entity	—				—			17,790			—			17,790
Other	(10,557		)		81,993			(55,227	)		7,379			23,588
Intercompany	(111,809		)		—			—			111,809			—
Net cash (used in) provided by investing activities	(122,366		)		(92,488	)		115,262			119,188			19,596
Cash flows from financing activities:
Net borrowings (repayments) under warehouse facilities	—				(20,472	)		187,024			—			166,552
Net borrowings (repayments) on convertible senior notes, other borrowings, other liabilities, and other notes payable	(1,100,000		)		(131,737	)		25,871			—			(1,205,866	)
Net payments related to noncontrolling interests	—				—			(15,875	)		—			(15,875	)
Common stock:
Issuances	493				—			—			—			493
Repurchases	(523,074		)		—			—			—			(523,074	)
Dividends	(51,454		)		(2,042,220	)		(159,601	)		2,201,821			(51,454	)
Intercompany	—				(2,431	)		114,240			(111,809	)		—
Net cash (used in) provided by financing activities	(1,674,035		)		(2,196,860	)		151,659			2,090,012			(1,629,224	)
Net increase (decrease) in cash and cash equivalents and restricted cash	89,134				(189,299	)		(27,120	)		—			(127,285	)
Cash and cash equivalents and restricted cash at beginning of period	624,694				721,603			249,679			—			1,595,976
Cash and cash equivalents and restricted cash at end of period	$	713,828			532,304			222,559			—			1,468,691

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Statement of Cash Flows Year Ended November 30, 2018
(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)	$	1,695,831			1,713,220			341,271			(2,032,809	)		1,717,513
Distributions of earnings from guarantor and non-guarantor subsidiaries	1,939,197				93,612			—			(2,032,809	)		—
Other adjustments to reconcile net earnings (including net earnings attributable to noncontrolling interests) to net cash provided by operating activities	(1,731,192		)		579,779			(907,162	)		2,032,809			(25,766	)
Net cash provided by (used in) operating activities	1,903,836				2,386,611			(565,891	)		(2,032,809	)		1,691,747
Cash flows from investing activities:
Proceeds from sale of operating properties	—				38,633			—			—			38,633
(Investments in and contributions to) and distributions of capital from unconsolidated entities, net	—				(94,937	)		51,906			—			(43,031	)
Proceeds from sales of real estate owned	—				—			32,221			—			32,221
Proceeds from sale of investment in unconsolidated entity	—				199,654			25,613			—			225,267
Proceeds from sale of commercial mortgage-backed securities bonds	—				—			14,222			—			14,222
Proceeds from sale of Rialto investment and asset management platform	—				—			340,000			—			340,000
Purchases of commercial mortgage-backed securities bonds	—				—			(31,068	)		—			(31,068	)
Acquisitions, net of cash and restricted cash acquired	(1,162,342		)		44,711			39,349			—			(1,078,282	)
Other	(56,050		)		(35,982	)		116			—			(91,916	)
Distributions of capital from guarantor and non-guarantor subsidiaries	94,987				40,987			—			(135,974	)		—
Intercompany	(728,546		)		—			—			728,546			—
Net cash (used in) provided by investing activities	(1,851,951		)		193,066			472,359			592,572			(593,954	)
Cash flows from financing activities:
Net repayments under unsecured revolving credit facility	—				(454,700	)		—			—			(454,700	)
Net (repayments) borrowings under warehouse facilities	—				(108	)		273,028			—			272,920
Debt issuance costs	(9,189		)		—			(5,472	)		—			(14,661	)
Redemption of senior notes	(1,010,626		)		(89,374	)		—			—			(1,100,000	)
Conversions and exchanges of convertible senior notes	—				(59,145	)		—			—			(59,145	)
Net payments on other borrowings, other liabilities, Rialto Senior Notes and other notes payable	—				(128,685	)		(294,250	)		—			(422,935	)
Net payments related to noncontrolling interests	—				—			(71,449	)		—			(71,449	)
Common stock:
Issuances	3,061				—			—			—			3,061
Repurchases	(299,833		)		—			—			—			(299,833	)
Dividends	(49,159		)		(1,799,207	)		(369,576	)		2,168,783			(49,159	)
Intercompany	—				306,199			422,347			(728,546	)		—
Net cash used in financing activities	(1,365,746		)		(2,225,020	)		(45,372	)		1,440,237			(2,195,901	)
Net increase (decrease) in cash and cash equivalents and restricted cash	(1,313,861		)		354,657			(138,904	)		—			(1,098,108	)
Cash and cash equivalents and restricted cash at beginning of period	1,938,555				366,946			388,583			—			2,694,084
Cash and cash equivalents and restricted cash at end of period	$	624,694			721,603			249,679			—			1,595,976

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Statement of Cash Flows Year Ended November 30, 2017
(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)	$	810,480			928,441			100,106			(1,067,273	)		771,754
Distributions of earnings from guarantor and non-guarantor subsidiaries	995,169				72,104			—			(1,067,273	)		—
Other adjustments to reconcile net earnings (including net loss attributable to noncontrolling interests) to net cash provided by (used in) operating activities	(740,008		)		(251,428	)		134,783			1,067,273			210,620
Net cash provided by operating activities	1,065,641				749,117			234,889			(1,067,273	)		982,374
Cash flows from investing activities:
Proceeds from sale of operating properties	—				60,326			—			—			60,326
Investments in and contributions to unconsolidated entities, net of distributions of capital	—				(181,101	)		(41,876	)		—			(222,977	)
Proceeds from sales of real estate owned	—				—			86,565			—			86,565
Receipts of principal payments on loans held-for-sale	—				—			11,251			—			11,251
Originations of loans receivable	—				—			(98,375	)		—			(98,375	)
Purchases of commercial mortgage-backed securities bonds	—				—			(107,262	)		—			(107,262	)
Acquisition, net of cash acquired	(604,366		)		—			—			—			(604,366	)
Other	(35,251		)		(49,356	)		114,365			—			29,758
Distributions of capital from guarantor and non-guarantor subsidiaries	115,000				80,000			—			(195,000	)		—
Intercompany	(865,364		)		—			—			865,364			—
Net cash provided by (used in) investing activities	(1,389,981		)		(90,131	)		(35,332	)		670,364			(845,080	)
Cash flows from financing activities:
Net repayments under warehouse facilities	—				(104	)		(199,580	)		—			(199,684	)
Proceeds from senior notes, net of debt issuance costs	2,433,539				—			(12,129	)		—			2,421,410
Redemption of senior notes	(800,000		)		(258,595	)		—			—			(1,058,595	)
Net proceeds from Rialto notes payable	—				—			74,666			—			74,666
Net payments on other borrowings	—				(104,471	)		(4,024	)		—			(108,495	)
Proceeds on other liabilities	—				—			195,541			—			195,541
Net payments related to noncontrolling interests	—				—			(68,586	)		—			(68,586	)
Excess tax benefits from share-based awards	1,981				—			—			—			1,981
Common stock:
Issuances	720				—			—			—			720
Repurchases	(27,054		)		—			—			—			(27,054	)
Dividends	(37,608		)		(1,018,441	)		(243,832	)		1,262,273			(37,608	)
Intercompany	—				700,197			165,167			(865,364	)		—
Net cash provided by (used in) financing activities	1,571,578				(681,414	)		(92,777	)		396,909			1,194,296
Net increase (decrease) in cash and cash equivalents and restricted cash	1,247,238				(22,428	)		106,780			—			1,331,590
Cash and cash equivalents and restricted cash at beginning of period	691,317				389,374			281,803			—			1,362,494
Cash and cash equivalents and restricted cash at end of period	$	1,938,555			366,946			388,583			—			2,694,084

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

19. Quarterly Data (unaudited)

	First				Second			Third			Fourth
(In thousands, except per share amounts)
2019
Revenues	$	3,868,082			5,562,890			5,857,058			6,971,531
Gross profit from sales of homes	$	726,079			1,038,587			1,085,633			1,385,859
Earnings before income taxes	$	319,124			559,399			667,083			888,686
Net earnings attributable to Lennar	$	239,910			421,472			513,366			674,304
Earnings per share:
Basic	$	0.74			1.31			1.60			2.13
Diluted	$	0.74			1.30			1.59			2.13
2018
Revenues	$	2,980,791			5,459,061			5,672,569			6,459,210
Gross profit from sales of homes	$	516,628			840,042			1,057,903			1,274,241
Earnings before income taxes	$	269,428			390,810			565,918			1,036,528
Net earnings attributable to Lennar	$	136,215			310,257			453,211			796,148
Earnings per share:
Basic	$	0.53			0.95			1.37			2.42
Diluted	$	0.53			0.94			1.37			2.42

Quarterly and year-to-date computations of per share amounts are made independently. Therefore, the sum of per share amounts for the quarters may not agree with per share amounts for the year.