MIAMI, Jan. 2 /PRNewswire-FirstCall/ -- Lennar Corporation (NYSE: LEN
and LEN.B), one of the nation's largest homebuilders, announced today that
the Company reached a definitive agreement to admit a new strategic partner
into its LandSource joint venture. The transaction will result in a cash
distribution to Lennar and its current partner, LNR Property Corporation,
of approximately $660 million each. The transaction is expected to generate
profits for financial statement purposes of approximately $500 million for
Lennar, of which approximately $125 million will be recognized at closing
and approximately $375 million will be deferred over future years. The
Company will also enter into option contracts with LandSource to purchase
land contributed by the new partner and will retain its option contracts
and rights of first offer to purchase land owned by LandSource prior to the
transaction. In addition, the Company will receive management fees over the
next eleven years and will retain an interest in LandSource of
approximately 19%.
As of July 1, 2006, LandSource had assets with a book value of
approximately $1.3 billion, with its primary investment being The Newhall
Land and Farming Company. Under the terms of the agreement, the LandSource
assets are valued at approximately $2.6 billion, with a potential increase
adjustment to that value of over $600 million.
In the context of the LandSource announcement, the Company is providing
preliminary deliveries, new orders, backlog and selected financial results
for the quarter and fiscal year ended November 30, 2006, including fourth
quarter 2006 estimated asset valuation adjustments.
During the quarter and fiscal year ended November 30, 2006, the Company
delivered 14,006 homes and a record 49,568 homes, respectively, compared to
14,403 homes and 42,359 homes in the same periods last year, an increase of
17% for fiscal year 2006. New orders for the quarter and fiscal year ended
November 30, 2006 were 9,606 and 42,212, respectively, down 6% and 3%,
compared to the same periods last year. The Company's total dollar value of
homes in backlog as of November 30, 2006 was $4.0 billion, compared to $6.9
billion as of November 30, 2005. Although deliveries increased during the
fiscal year, the Company experienced materially lower gross margins on home
sales during the quarter and year ended November 30, 2006, compared to the
same periods as last year, as a result of deteriorating market conditions
in the homebuilding industry.
The Company is in the process of completing its inventory valuation
analysis, and presently anticipates that it will incur pretax inventory
valuation adjustments, write-offs of deposits and preacquisition costs
related to land under option that the Company does not intend to purchase
and valuation adjustments to its investments in unconsolidated entities
within a range of $400 million to $500 million during the fourth quarter of
2006.
Prior to the valuation adjustments and write-offs, the Company expects
its fourth quarter earnings to be within a range of $0.70 per share to
$0.75 per share. Subsequent to the valuation adjustments and write-offs,
the Company expects a loss within a range of $0.88 per share to $1.28 per
share for its fourth quarter ended November 30, 2006.
Stuart Miller, President and Chief Executive Officer of Lennar
Corporation, said, "The recapitalization of LandSource uniquely positions
it with substantial capital and sponsorship to access the $10 billion to
$15 billion of real estate that is coming back on the market. The resulting
cash distribution to us and our current partner, LNR Property Corporation,
of approximately $660 million each, validates the substantial value that
has been created in this venture."
Mr. Miller continued, "Market conditions continued to weaken throughout
the fourth quarter and we have not yet seen tangible evidence of a market
recovery. While we are hopeful that low interest rates, strong employment
and a healthy economy will help stimulate a recovery in 2007, we have
continued to focus on strengthening our balance sheet by delivering our
backlog, selling inventory aggressively and renegotiating our land
positions. We ended the 2006 fiscal year with zero outstanding on our $2.7
billion revolving credit facility and over $600 million of cash on the
balance sheet.
"Given the steep decline in many of our markets, we are completing our
asset-by-asset review and will adjust asset balances to reflect fair value
in the current market environment. Accordingly, we expect to record pretax
impairment charges of $400 million to $500 million."
These results are preliminary and unaudited and will be reviewed by the
Audit Committee of the Company's Board of Directors. The Company will
release earnings for the quarter and fiscal year ended November 30, 2006
before the market opens on January 17, 2007. Additionally, the Company will
hold a conference call on January 17, 2007 at 11:00 a.m. Eastern Time to
further discuss the LandSource transaction and the Company's results for
the fourth quarter and fiscal year.
The call will be broadcast live on the Internet and can be accessed
through Lennar's website at http://www.lennar.com. If you are unable to
participate during the live webcast, the call will be archived at
http://www.lennar.com for 90 days.
In order to listen to the live event, a participant must have a
multimedia computer with speakers and Windows Media Player. To download the
software prior to the event, please visit http://www.lennar.com, click the
conference call link on the home page and follow the pre-event
instructions.
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. Previous press releases and further information
about the Company may be obtained at the "Investor Relations" section of
the Company's website, http://www.lennar.com.
Some of the statements in this press release are "forward-looking
statements," as that term is defined in the Private Securities Litigation
Reform Act of 1995. You can identify forward-looking statements by the fact
that these statements do not relate strictly to historical or current
matters. Rather, forward-looking statements relate to anticipated or
expected events, activities, trends or results. Because forward-looking
statements relate to matters that have not yet occurred, these statements
are inherently subject to risks and uncertainties. Many factors could cause
our actual activities or results to differ materially from the activities
and results anticipated in forward-looking statements. These factors
include those described under the caption "Risk Factors Relating to Our
Business" in Item 1A of our Annual Report on Form 10-K/A for our fiscal
year ended November 30, 2005. We do not undertake any obligation to update
forward-looking statements.
SOURCE Lennar Corporation
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http://www.lennar.com
Photo Notes:
NewsCom: http://www.newscom.com/cgi-bin/prnh/20040604/LENLOGO
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PRN Photo Desk, photodesk@prnewswire.com
http://www.prnewswire.com/comp/507038.html/
CONTACT:
Marshall Ames, Investor Relations, of Lennar
Corporation, +1-305-485-2092
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