Lennar Corporation (NYSE: LEN and LEN.B), one of the nation's largest homebuilders, today reported results for its fourth quarter and fiscal year ended November 30, 2011. Fourth quarter net earnings attributable to Lennar in 2011 were $30.3 million, or $0.16 per diluted share, compared to fourth quarter net earnings attributable to Lennar in 2010 of $32.0 million, or $0.17 per diluted share. Net earnings attributable to Lennar for the year ended November 30, 2011 were $92.2 million, or $0.48 per diluted share, compared to net earnings attributable to Lennar for the year ended November 30, 2010 of $95.3 million, or $0.51 per diluted share.

Stuart Miller, Chief Executive Officer of Lennar Corporation, said, "We are pleased to report EPS of $0.16 for our fourth fiscal quarter of 2011, making this our seventh consecutive quarter of profitability. Despite operating in a challenging real estate market, we achieved profitability in all of our business segments."

"During the quarter, we continued to manage our homebuilding business carefully with tight controls over our costs and a focus on improving our gross margins. We benefited greatly from our strategic capital investments in new higher margin communities, which helped us produce a 21.6% gross margin, excluding valuation adjustments, in the fourth quarter."

Mr. Miller continued, "As we come to the end of 2011 and head into 2012, we have seen the market start to stabilize, driven by a combination of low home prices and low interest rates, making the decision to purchase a new home more attractive, compared to the heated rental market. These factors are reflected in our new orders and sales backlog, which increased 20% and 35%, respectively, from the prior year quarter."

"On the Rialto side of our business, our first real estate fund successfully raised $700 million and is now contributing management fees and investment income to our bottom line results. We continue to see significant opportunities to invest in distressed assets for our Rialto business."

Mr. Miller concluded, "Our balance sheet strength will allow us to capitalize on future opportunities as they present themselves, and we believe that our Homebuilding and Rialto segments are well positioned to lead the way to a third consecutive profitable year in 2012."

RESULTS OF OPERATIONS

THREE MONTHS ENDED NOVEMBER 30, 2011 COMPARED TO

THREE MONTHS ENDED NOVEMBER 30, 2010

Lennar Homebuilding

Revenues from home sales increased 13% in the fourth quarter of 2011 to $816.5 million from $725.8 million in the fourth quarter of 2010. Revenues were higher primarily due to a 10% increase in the number of home deliveries, excluding unconsolidated entities and a 2% increase in the average sales price of homes delivered. New home deliveries, excluding unconsolidated entities, increased to 3,359 homes in the fourth quarter of 2011 from 3,060 homes last year. The average sales price of homes delivered increased to $243,000 in the fourth quarter of 2011 from $238,000 in the same period last year. Sales incentives offered to homebuyers were $33,900 per home delivered in the fourth quarter of 2011, or 12.2% as a percentage of home sales revenue, compared to $33,700 per home delivered in the fourth quarter of 2010, or 12.4% as a percentage of home sales revenue.

Gross margins on home sales were $158.4 million, or 19.4%, in the fourth quarter of 2011, which included $17.9 million of valuation adjustments, compared to gross margins on home sales of $128.7 million, or 17.7%, in the fourth quarter of 2010, which included $22.3 million of valuation adjustments. Gross margin percentage on home sales improved compared to last year primarily due to a reduction in valuation adjustments.

Gross profits on land sales totaled $0.8 million in the fourth quarter of 2011, net of $0.4 million of write-offs of deposits and pre-acquisition costs, compared to gross profits on land sales of $13.7 million in the fourth quarter of 2010, which included a $14.1 million reduction of an obligation related to a profit participation agreement, partially offset by $3.1 million in write-offs of deposits and pre-acquisition costs.

Selling, general and administrative expenses were $112.5 million and $102.0 million, respectively, in the fourth quarter of 2011 and 2010. Selling, general and administrative expenses as a percentage of revenues from home sales improved 30 basis points to 13.8% in the fourth quarter of 2011, compared to 14.1% in the fourth quarter of 2010.

Lennar Homebuilding equity in loss from unconsolidated entities was $69.2 million in the fourth quarter of 2011, which primarily included the Company's share of valuation adjustments of $57.6 million related to an asset distribution from a Lennar Homebuilding unconsolidated entity as the result of a linked transaction. This was offset by a pre-tax gain of $62.3 million included in Lennar Homebuilding other income, net, related to that unconsolidated entity's net asset distribution. The transaction resulted in a net pre-tax gain of $4.7 million. Lennar Homebuilding equity in loss from unconsolidated entities was $1.7 million in the fourth quarter of 2010.

Lennar Homebuilding other income, net, totaled $69.7 million in the fourth quarter of 2011, which included the $62.3 million pre-tax gain discussed above. Lennar Homebuilding other income, net, totaled $4.9 million in the fourth quarter of 2010, net of $1.2 million of valuation adjustments to the Company's investments in unconsolidated entities.

Homebuilding interest expense was $43.2 million in the fourth quarter of 2011 ($20.9 million was included in cost of homes sold, $0.3 million in cost of land sold and $22.0 million in other interest expense), compared to $36.9 million in the fourth quarter of 2010 ($19.7 million was included in cost of homes sold, $0.6 million in cost of land sold and $16.6 million in other interest expense). Interest expense increased primarily due to an increase in the Company's outstanding debt compared to the same period last year.

Lennar Financial Services

Operating earnings for the Lennar Financial Services segment was $9.1 million in the fourth quarter of 2011, compared to operating earnings of $11.7 million in the same period last year. The decrease in profitability was due primarily to decreased volume in the segment's mortgage operations.

Rialto Investments

In the fourth quarter of 2011, operating earnings for the Rialto Investments segment were $6.0 million (net of $2.0 million of net loss attributable to noncontrolling interests), compared to operating earnings of $25.1 million (which included $12.7 million of net earnings attributable to noncontrolling interests) in the same period last year. In the fourth quarter of 2011, revenues in this segment were $46.5 million, which consisted primarily of accretable interest income associated with the segment's portfolio of real estate loans and fees for managing and servicing assets, compared to revenues of $19.7 million in the same period last year, which consisted primarily of accretable interest income associated with the segment's portfolio of real estate loans. In the fourth quarter of 2011, Rialto Investments other income, net, was $0.9 million, which consisted primarily of gains from acquisition of real estate owned through foreclosure as well as gains from real estate sales, offset by expenses related to owning and maintaining real estate owned assets. In the fourth quarter of 2010, Rialto Investments other income, net, was $17.3 million, which consisted primarily of gains from acquisition of real estate owned through foreclosure as well as gains from real estate sales.

The segment also had equity in earnings (loss) from unconsolidated entities of ($3.0) million in the fourth quarter of 2011, consisting primarily of $7.6 million of unrealized losses related to the Company's share of the mark-to-market adjustments of the investment portfolio underlying the AllianceBernstein L.P. ("AB") fund formed under the Federal government's Public-Private Investment Program ("PPIP"), partially offset by interest income earned by the AB PPIP fund and equity in earnings related to the Rialto Investments Real Estate Fund. This compares to equity in earnings (loss) from unconsolidated entities of $9.0 million in the same period last year, which included $4.7 million of unrealized gains related to the Company's share of the mark-to-market adjustments of AB PPIP investments. In the fourth quarter of 2011, expenses in this segment were $38.4 million, which consisted primarily of costs related to its portfolio operations, due diligence expenses related to both completed and abandoned transactions, and other general and administrative expenses, compared to expenses of $20.8 million in the same period last year.

Corporate General and Administrative Expenses

Corporate general and administrative expenses were $28.5 million, or 3.0% as a percentage of total revenues, in the fourth quarter of 2011, compared to $25.1 million, or 2.9% as a percentage of total revenues, in the fourth quarter of 2010.

Noncontrolling Interests

Net earnings (loss) attributable to noncontrolling interests were ($4.8) million and $10.5 million, respectively, in the fourth quarter of 2011 and 2010. Net loss attributable to noncontrolling interests during the fourth quarter of 2011 was attributable to noncontrolling interests related to the Company's homebuilding and Rialto Investments operations. Net earnings attributable to noncontrolling interests during the fourth quarter of 2010 was primarily related to net earnings attributable to the FDIC's interest in the portfolio of real estate loans that the Company acquired in partnership with the FDIC, partially offset by net loss attributable to noncontrolling interests related to the Company's homebuilding operations.

Change in Reportable Segments

The Company has disaggregated its Southeast Florida homebuilding division from its Homebuilding East reportable segment and has presented Homebuilding Southeast Florida as a separate reportable segment due to the division currently achieving one of the quantitative thresholds set forth in Accounting Standard Codification Topic 280, Segment Reporting, ("ASC 280"). In addition, the Company reclassified the homebuilding activities in the states of Georgia, North Carolina and South Carolina from Homebuilding Other to the Homebuilding East reportable segment because these states currently meet the reportable segment aggregation criteria in ASC 280. All prior year segment information has been restated to conform to the quarterly and fiscal year 2011 presentation, and have no effect on the Company's consolidated financial position, results of operations or cash flows for such periods.

Debt Transactions

In October 2011, the Company retired the remaining $113.2 million of its 5.95% senior notes due October 2011 for 100% of the outstanding principal amount plus accrued and unpaid interest as of the maturity date. In November 2011, the Company issued $350 million of 3.25% convertible senior notes due 2021 in a private offering under SEC Rule 144A. Subsequent to November 30, 2011, the Company issued an additional $50.0 million of the 3.25% convertible senior notes due 2021 to cover over-allotments.

YEAR ENDED NOVEMBER 30, 2011 COMPARED TO

YEAR ENDED NOVEMBER 30, 2010

Lennar Homebuilding

For both the years ended November 30, 2011 and 2010, revenues from home sales were $2.6 billion. There was a 1% increase in the average sales price of homes delivered, offset by a 1% decrease in the number of home deliveries, excluding unconsolidated entities. New home deliveries, excluding unconsolidated entities, decreased to 10,746 homes in the year ended November 30, 2011 from 10,859 homes last year. The average sales price of homes delivered increased to $244,000 in the year ended November 30, 2011 from $243,000 in the same period last year. Sales incentives offered to homebuyers were $33,700 per home delivered in the year ended November 30, 2011, or 12.1% as a percentage of home sales revenue, compared to $32,800 per home delivered in the same period last year, or 11.9% as a percentage of home sales revenue.

Gross margins on home sales were $523.4 million, or 19.9%, in the year ended November 30, 2011, which included $35.7 million of valuation adjustments, compared to gross margins on home sales of $517.9 million, or 19.7%, in the year ended November 30, 2010, which included $44.7 million of valuation adjustments.

Gross profits on land sales totaled $7.7 million in the year ended November 30, 2011, net of $0.5 million of valuation adjustments and $1.8 million in write-offs of deposits and pre-acquisition costs, compared to gross profits on land sales of $21.4 million in the year ended November 30, 2010, primarily due to a $14.1 million reduction of an obligation related to a profit participation agreement. Gross profits on land sales for the year ended November 30, 2010 were net of $3.4 million valuation adjustments and $3.1 million in write-offs of deposits and pre-acquisition costs.

Selling, general and administrative expenses were $384.8 million in the year ended November 30, 2011, which included $8.4 million related to expenses associated with remedying pre-existing liabilities of a previously acquired company, offset by $8.0 million related to the receipt of a settlement discussed below. Selling, general and administrative expenses were $377.0 million in the year ended November 30, 2010. Selling, general and administrative expenses as a percentage of revenues from home sales increased to 14.7% in the year ended November 30, 2011, from 14.3% in 2010.

Lennar Homebuilding equity in loss from unconsolidated entities was $62.7 million in the year ended November 30, 2011, which primarily included the Company's share of valuation adjustments of $57.6 million related to an asset distribution from a Lennar Homebuilding unconsolidated entity as the result of a linked transaction. This was offset by a pre-tax gain of $62.3 million included in Lennar Homebuilding other income, net, related to that unconsolidated entity's net asset distribution. The transaction resulted in a net pre-tax gain of $4.7 million.

In addition, Lennar Homebuilding equity in loss from unconsolidated entities included $8.9 million of valuation adjustments related to assets of Lennar Homebuilding's unconsolidated entities, offset by the Company's share of a gain on debt extinguishment at one of Lennar Homebuilding's unconsolidated entities totaling $15.4 million. In the year ended November 30, 2010, Lennar Homebuilding equity in loss from unconsolidated entities was $11.0 million, which included $10.5 million of valuation adjustments related to assets of Lennar Homebuilding unconsolidated entities, partially offset by a net pre-tax gain of $7.7 million as a result of a transaction by one of Lennar Homebuilding's unconsolidated entities.

Lennar Homebuilding other income, net, totaled $116.1 million in the year ended November 30, 2011, which included the $62.3 million pre-tax gain discussed above and $29.5 million related to the receipt of a settlement. The parties to certain litigation in which the Company was plaintiff entered into a settlement agreement in which they agreed the Company may make the following statement: "Lennar recently settled litigation against a third party in connection with Lennar's ongoing dispute with Nicolas Marsch, III and his affiliates. As a result of the settlement, the third party paid Lennar total cash consideration of $37.5 million and that the terms are confidential."

Lennar Homebuilding other income, net, in the year ended November 30, 2011 also included $5.1 million related to the favorable resolution of a joint venture and the recognition of $10.0 million of deferred management fees related to management services previously performed for one of Lennar Homebuilding's unconsolidated entities. These amounts were partially offset by $10.5 million of valuation adjustments to the Company's investments in Lennar Homebuilding's unconsolidated entities. In the year ended November 30, 2010, Lennar Homebuilding other income, net, was $19.1 million, which included a $19.4 million pre-tax gain on the extinguishment of other debt and other income, partially offset by a pre-tax loss of $10.8 million related to the repurchase of senior notes through a tender offer.

Homebuilding interest expense was $163.0 million in the year ended November 30, 2011 ($70.7 million was included in cost of homes sold, $1.6 million in cost of land sold and $90.7 million in other interest expense), compared to $143.9 million in the year ended November 30, 2010 ($71.5 million was included in cost of homes sold, $2.0 million in cost of land sold and $70.4 million in other interest expense). Interest expense increased primarily due to an increase in the Company's outstanding debt compared to the same period last year.

Lennar Financial Services

Operating earnings for the Lennar Financial Services segment were $20.7 million in the year ended November 30, 2011, compared to operating earnings of $31.3 million in the same period last year. The decrease in profitability was due primarily to decreased volume in the segment's mortgage operations. In addition, in the year ended November 30, 2010, the Lennar Financial Services segment received $5.1 million of proceeds from the previous sale of a cable system.

Rialto Investments

In the year ended November 30, 2011, operating earnings for the Rialto Investments segment were $63.5 million (which included $28.9 million of net earnings attributable to noncontrolling interests), compared to operating earnings of $57.3 million (which included $33.2 million of net earnings attributable to noncontrolling interests) in the same period last year. In the year ended November 30, 2011, revenues in this segment were $164.7 million, which consisted primarily of accretable interest income associated with the segment's portfolio of real estate loans and fees for managing and servicing assets, compared to revenues of $92.6 million in the same period last year.

In the year ended November 30, 2011, Rialto Investments other income, net, was $39.2 million, which consisted primarily of gains from acquisition of real estate owned through foreclosure, as well as gains from real estate sales, partially offset by expenses related to owning and maintaining those assets, and a $4.7 million gain on the sale of investment securities. In the year ended November 30, 2010, Rialto Investments other income, net, was $17.3 million, which consisted primarily of gains from acquisition of real estate owned through foreclosure as well as gains from real estate sales.

The segment also had equity in earnings (loss) from unconsolidated entities of ($7.9) million in the year ended November 30, 2011, consisting primarily of $21.4 million of unrealized losses related to the Company's share of the mark-to-market adjustments of the investment portfolio underlying the AB PPIP fund, partially offset by interest income earned by the AB PPIP fund and equity in earnings related to the Rialto Investments Real Estate Fund.

This compares to equity in earnings (loss) from unconsolidated entities of $15.4 million in the same period last year, which included $9.3 million of unrealized gains related to the Company's share of the mark-to-market adjustments of AB PPIP investments. In the year ended November 30, 2011, expenses in this segment were $132.6 million, which consisted primarily of costs related to its portfolio operations, due diligence expenses related to both completed and abandoned transactions, and other general and administrative expenses, compared to expenses of $67.9 million in the same period last year.

Corporate General and Administrative Expenses

Corporate general and administrative expenses were $95.3 million, or 3.1% as a percentage of total revenues, in the year ended November 30, 2011, compared to $93.9 million, or 3.1% as a percentage of total revenues, in the year ended November 30, 2010.

Noncontrolling Interests

Net earnings (loss) attributable to noncontrolling interests were $20.3 million and $25.2 million, respectively, in the year ended November 30, 2011 and 2010. Net earnings attributable to noncontrolling interests during both the years ended November 30, 2011 and 2010 were primarily related to the FDIC's interest in the portfolio of real estate loans that the Company acquired in partnership with the FDIC.

Lennar Corporation, founded in 1954, is one of the nation's leading builders of quality homes for all generations. The Company builds affordable, move-up and retirement homes primarily under the Lennar brand name. Lennar's Financial Services segment provides primarily mortgage financing, title insurance and closing services for both buyers of the Company's homes and others. Lennar's Rialto Investments segment is focused on distressed real estate asset investments, asset management and workout strategies. Previous press releases and further information about the Company may be obtained at the "Investor Relations" section of the Company's website, www.lennar.com.

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