UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 2003
Commission File Number: 1-11749
Lennar Corporation
(Exact name of registrant as specified in its charter)
| Delaware |
95-4337490 | |
| (State or other jurisdiction of |
(I.R.S. Employer | |
| incorporation or organization) |
Identification No.) |
700 Northwest 107th Avenue, Miami, Florida 33172
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (305) 559-4000
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES þ NO ¨
Common shares outstanding as of March 31, 2003:
| Class A |
55,341,138 | |
| Class B |
9,700,462 |
Part I. Financial Information
Item 1. Financial Statements
Lennar Corporation and Subsidiaries
Consolidated Condensed Balance Sheets
(In thousands, except per share amounts)
| (Unaudited) February 28, 2003 |
November 30, 2002 |
||||||
| ASSETS |
|||||||
| Homebuilding: |
|||||||
| Cash |
$ |
500,227 |
|
731,163 |
| ||
| Receivables, net |
|
51,348 |
|
48,432 |
| ||
| Inventories: |
|||||||
| Finished homes and construction in progress |
|
2,300,746 |
|
2,044,694 |
| ||
| Land under development |
|
1,354,329 |
|
1,185,473 |
| ||
| Land held for development |
|
7,244 |
|
7,410 |
| ||
| Total inventories |
|
3,662,319 |
|
3,237,577 |
| ||
| Investments in unconsolidated partnerships |
|
298,440 |
|
285,594 |
| ||
| Other assets |
|
390,897 |
|
357,738 |
| ||
|
|
4,903,231 |
|
4,660,504 |
| |||
| Financial services |
|
688,595 |
|
1,095,129 |
| ||
| Total assets |
$ |
5,591,826 |
|
5,755,633 |
| ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
|||||||
| Homebuilding: |
|||||||
| Accounts payable and other liabilities |
$ |
879,703 |
|
969,779 |
| ||
| Senior notes and other debts payable, net |
|
1,826,790 |
|
1,585,309 |
| ||
|
|
2,706,493 |
|
2,555,088 |
| |||
| Financial services |
|
551,544 |
|
971,388 |
| ||
| Total liabilities |
|
3,258,037 |
|
3,526,476 |
| ||
| Stockholders’ equity: |
|||||||
| Preferred stock |
|
— |
|
— |
| ||
| Class A common stock of $0.10 par value per share, 65,138 shares issued at February 28, 2003 |
|
6,514 |
|
6,506 |
| ||
| Class B common stock of $0.10 par value per share, 9,700 shares issued at February 28, 2003 |
|
970 |
|
970 |
| ||
| Additional paid-in capital |
|
875,927 |
|
873,502 |
| ||
| Retained earnings |
|
1,644,463 |
|
1,538,945 |
| ||
| Unearned restricted stock |
|
(6,560 |
) |
(7,337 |
) | ||
| Deferred compensation plan; 73 Class A common shares at February 28, 2003 |
|
(1,342 |
) |
(1,103 |
) | ||
| Deferred compensation liability |
|
1,342 |
|
1,103 |
| ||
| Treasury stock, at cost; 9,849 Class A common shares at February 28, 2003 |
|
(159,038 |
) |
(158,992 |
) | ||
| Accumulated other comprehensive loss |
|
(28,487 |
) |
(24,437 |
) | ||
| Total stockholders’ equity |
|
2,333,789 |
|
2,229,157 |
| ||
| Total liabilities and stockholders’ equity |
$ |
5,591,826 |
|
5,755,633 |
| ||
See accompanying notes to consolidated condensed financial statements.
1
Lennar Corporation and Subsidiaries
Consolidated Condensed Statements of Earnings
(Unaudited)
(In thousands, except per share amounts)
| Three Months Ended | |||||
| February 28, | |||||
| 2003 |
2002 | ||||
| Revenues: |
|||||
| Homebuilding |
$ |
1,488,735 |
1,142,119 | ||
| Financial services |
|
128,135 |
105,625 | ||
| Total revenues |
|
1,616,870 |
1,247,744 | ||
| Costs and expenses: |
|||||
| Homebuilding |
|
1,300,422 |
1,009,384 | ||
| Financial services |
|
93,790 |
82,201 | ||
| Corporate general and administrative |
|
21,664 |
16,624 | ||
| Interest |
|
30,202 |
24,048 | ||
| Total costs and expenses |
|
1,446,078 |
1,132,257 | ||
| Earnings before provision for income taxes |
|
170,792 |
115,487 | ||
| Provision for income taxes |
|
64,474 |
43,596 | ||
| Net earnings |
$ |
106,318 |
71,891 | ||
| Basic earnings per share (adjusted for 10% stock distribution, see Notes 3 and 8) |
$ |
1.51 |
1.03 | ||
| Diluted earnings per share (adjusted for 10% stock distribution, see Notes 3 and 8) |
$ |
1.37 |
0.94 | ||
| Cash dividends per Class A common share |
$ |
0.0125 |
0.0125 | ||
| Cash dividends per Class B common share |
$ |
0.01125 |
0.01125 | ||
See accompanying notes to consolidated condensed financial statements.
2
Lennar Corporation and Subsidiaries
Consolidated Condensed Statements of Cash Flows
(Unaudited)
(In thousands)
| Three Months Ended |
|||||||
| February 28, |
|||||||
| 2003 |
2002 |
||||||
| Cash flows from operating activities: |
|||||||
| Net earnings |
$ |
106,318 |
|
71,891 |
| ||
| Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: |
|||||||
| Depreciation and amortization |
|
14,406 |
|
10,206 |
| ||
| Amortization of discount on debt |
|
6,371 |
|
6,213 |
| ||
| Tax benefit from employee stock plans and vesting of restricted stock |
|
764 |
|
2,670 |
| ||
| Equity in earnings from unconsolidated partnerships |
|
(8,602 |
) |
(6,213 |
) | ||
| Deferred income tax provision (benefit) |
|
(7,578 |
) |
10,676 |
| ||
| Changes in assets and liabilities, net of effect from acquisitions: |
|||||||
| (Increase) decrease in receivables |
|
7,251 |
|
(30,908 |
) | ||
| Increase in inventories |
|
(428,062 |
) |
(154,789 |
) | ||
| Increase in other assets |
|
(16,470 |
) |
(3,714 |
) | ||
| Decrease in financial services loans held for sale |
|
413,750 |
|
298,947 |
| ||
| Decrease in accounts payable and other liabilities |
|
(107,930 |
) |
(105,768 |
) | ||
| Net cash provided by (used in) operating activities |
|
(19,782 |
) |
99,211 |
| ||
| Cash flows from investing activities: |
|||||||
| Net additions to operating properties and equipment |
|
(4,066 |
) |
(1,957 |
) | ||
| (Increase) decrease in investments in unconsolidated partnerships, net |
|
26,032 |
|
(15,577 |
) | ||
| (Increase) decrease in financial services mortgage loans |
|
(2,460 |
) |
5,170 |
| ||
| Purchases of investment securities |
|
(3,982 |
) |
(8,978 |
) | ||
| Receipts from investment securities |
|
— |
|
14,000 |
| ||
| Acquisitions, net of cash acquired |
|
(28,194 |
) |
(20,839 |
) | ||
| Net cash used in investing activities |
|
(12,670 |
) |
(28,181 |
) | ||
| Cash flows from financing activities: |
|||||||
| Net repayments under financial services short-term debt |
|
(414,012 |
) |
(299,659 |
) | ||
| Net proceeds from issuance of 5.95% senior notes |
|
341,730 |
|
— |
| ||
| Proceeds from other borrowings |
|
— |
|
17 |
| ||
| Principal payments on other borrowings |
|
(121,305 |
) |
(90,954 |
) | ||
| Common stock: |
|||||||
| Issuance, net |
|
1,624 |
|
5,944 |
| ||
| Dividends |
|
(800 |
) |
(790 |
) | ||
| Net cash used in financing activities |
|
(192,763 |
) |
(385,442 |
) | ||
| Net decrease in cash |
|
(225,215 |
) |
(314,412 |
) | ||
| Cash at beginning of period |
|
777,159 |
|
877,274 |
| ||
| Cash at end of period |
$ |
551,944 |
|
562,862 |
| ||
3
Lennar Corporation and Subsidiaries
Consolidated Condensed Statements of Cash Flows — Continued
(Unaudited)
(In thousands)
| Three Months Ended | ||||
| February 28, | ||||
| 2003 |
2002 | |||
| Summary of cash: |
||||
| Homebuilding |
$500,227 |
483,573 | ||
| Financial services |
51,717 |
79,289 | ||
| $551,944 |
562,862 | |||
| Supplemental disclosures of cash flow information: |
||||
| Cash paid for interest, net of amounts capitalized |
$ 5,496 |
7,897 | ||
| Cash paid for income taxes |
$129,099 |
78,595 | ||
| Supplemental disclosures of non-cash investing and financing activities: |
||||
| Purchases of inventory financed by sellers |
$ 12,443 |
2,639 | ||