01—Abstract
Summary
Summary of the 10-K filed February 28, 2002. Cited figures are marked; the original filing is the authoritative source.
Lennar Corporation (LEN) reported record results for fiscal 2001 (year ended November 30, 2001).
Net earnings were $417.8 milliona, or $6.01 per diluted share, compared with $229.1 million, or $3.64 per diluted share, in 2000. Total revenues rose to $6.03 billion from $4.71 billion. The filing attributes much of the increase to a full year of contribution from U.S. Home Corporation, acquired in May 2000.
Homebuilding operating earnings were $785.6 millionb, with gross margin on home sales of 23.9%, up from 20.4% in 2000. Homes delivered totaled 23,899, and new orders rose 34%. Financial services operating earnings increased to $89.1 million.
Balance sheet strength improved markedly. Available cash was $824.0 millionc, and the revolving credit facilities were paid down to zero. The net homebuilding debt to total capital ratio fell to 29.1% from 44.0%.
Stockholders' equity reached $1.66 billiond, and total assets were $4.71 billion. Homebuilding debt totaled $1.51 billion, and financial services debt was $707.1 million. The company issued $230 million of zero-coupon convertible senior subordinated notes due 2021 during 2001.
Investors should note that backlog dollar value declined to $1.98 billion from $2.07 billion, reflected by lower new orders after September 11, 2001. The filing also cites cyclical industry risk, interest rate sensitivity, and a 22% average cancellation rate in 2001. Leonard Miller controls about 64% of voting power through Class B stock.
02—Key points
Key Highlights
- Net earnings of $417.8 million, or $6.01 per diluted share, versus $229.1 million, or $3.64, in 2000
- Total revenues of $6.03 billion, up from $4.71 billion, driven largely by a full year of U.S. Home Corporation
- Gross margin on home sales of 23.9%, compared with 20.4% in 2000
- Net homebuilding debt to total capital ratio improved to 29.1% from 44.0%; cash of $824.0 million with revolving credit facilities paid to zero
- Homes delivered rose to 23,899 from 18,578, and new home orders increased 34%
- Backlog dollar value fell to $1.98 billion from $2.07 billion, reflecting lower orders after September 11, 2001
- Leonard Miller, Chairman, controls approximately 64% of voting power through Class B common stock
03—Questions
Frequently Asked Questions
What drove the increase in Lennar's 2001 earnings?
The filing attributes the increase primarily to the acquisition of U.S. Home Corporation, which contributed a full year of earnings in 2001 compared with seven months in 2000. Gross margins also improved to 23.9% from 20.4%, reflecting improved operational efficiencies and strength in homebuilding markets.
How strong is Lennar's balance sheet?
Lennar ended fiscal 2001 with $824.0 million of available cash and its $1 billion revolving credit facilities fully paid down to zero. The net homebuilding debt to total capital ratio was 29.1%, down from 44.0% a year earlier, and stockholders' equity rose to $1.66 billion.
Did the September 11, 2001 events affect Lennar's business?
Yes. The filing states that new orders decreased 14% in the fourth quarter of fiscal 2001 compared with the prior year period, primarily as a result of the events of September 11, 2001. This resulted in a lower backlog at November 30, 2001, with backlog dollar value at $1.98 billion versus $2.07 billion a year earlier.
Who controls Lennar, and how does that affect shareholders?
As of November 30, 2001, Chairman Leonard Miller owned or controlled 9.7 million shares of common and Class B common stock, representing approximately 64% voting control. Class B shares carry ten votes per share, so this concentration gives him significant influence over matters requiring stockholder approval.
What are the main risks the filing identifies?
The filing highlights that homebuilding is cyclical and sensitive to economic conditions, interest rates, and mortgage availability. It also notes variability in quarterly results, dependence on key senior management, and potential shortages of materials and labor. Partnership guarantees totaled $338.7 million, of which $151.0 million were limited maintenance guarantees.
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