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Lennar Reports First Quarter Results

MIAMI, March 27 /PRNewswire-FirstCall/ --

- Revenues of $1.1 billion - down 62%

- Loss per share of $0.56 (includes a $0.38 per share charge related to valuation adjustments and write-offs of option deposits and pre- acquisition costs)

- Homebuilding operating loss of $109.8 million (includes $107.1 million of valuation adjustments and write-offs noted above)

- Gross margin on home sales of 14.3% - up 50 basis points

- Homebuilding cash of $1.1 billion as of February 29, 2008

- No outstanding balance under the Company's credit facility as of February 29, 2008

- Homebuilding debt to total capital of 38.2% (net homebuilding debt to total capital of 24.5%)

- Deliveries of 3,596 homes - down 60%

- New orders of 3,045 homes - down 57%; cancellation rate of 26%

- Backlog dollar value of $1.2 billion - down 67%

Lennar Corporation (NYSE: LEN and LEN.B), one of the nation's largest homebuilders, today reported results for its first quarter ended February 29, 2008. First quarter net loss in 2008 was $88.2 million, or $0.56 per diluted share, compared to first quarter net earnings of $68.6 million, or $0.43 per diluted share, in 2007.

Stuart Miller, President and Chief Executive Officer of Lennar Corporation, said, "Market conditions have remained challenged and continued to deteriorate throughout our first quarter of 2008. The housing industry continues to be impacted by an unfavorable supply and demand relationship, which restricts the volume of new home sales and, concurrently, depresses home prices in most markets across the country."

"Home inventories have been expanding due to the high number of foreclosures, negotiated 'short sales,' and stretched homeowners looking to sell homes they can no longer afford. While sales are occurring and clearing prices are being reached, the pace of overall housing inventory growth is exceeding absorption at the current time."

"Concurrently, lower consumer confidence has quieted demand among prospective homebuyers and deterred them from a buying decision, while contraction in the lending markets has reduced the availability of credit for those prospective homebuyers that do wish to buy a home."

"On a more optimistic note, numerous initiatives, both private and public, have been designed and proposed to move towards stabilization and resolution. There is a growing consensus that the deterioration of the housing market has likely led us into recession, and the stabilization and recovery of the housing market will likely lead us out. Accordingly, we expect that some of these initiatives and the many that are being discussed will lead to a bottom and recovery."

Mr. Miller continued, "Our first quarter results reflect the fact that our balance sheet has been and continues to be our top priority. With most of the significant work on asset impairment behind us, throughout our first quarter we have remained focused on the delivery of our backlog, curtailing land purchases where possible, restructuring our joint ventures where necessary, and right-sizing our operations in order to protect cash, preserve value and fortify our balance sheet."

"To that end, we are very pleased that we ended our first quarter with over $1 billion in cash and no outstanding balance under our credit facility. In addition, we have reduced the number of our joint venture partnerships by approximately one-third to 180 and our maximum joint venture recourse debt by approximately one-half to $917 million, from their peak levels in 2006."

Mr. Miller concluded, "As we look ahead to the remainder of 2008, we recognize that market conditions are likely to remain challenging in the near term. Accordingly, we will continue to work diligently on rebuilding margins and ultimately, profitability as well. With a longer-term perspective, we believe that government action and normal market clearing will work together to lead the housing market to stabilization and ultimately recovery."

                            RESULTS OF OPERATIONS

               THREE MONTHS ENDED FEBRUARY 29, 2008 COMPARED TO
                     THREE MONTHS ENDED FEBRUARY 28, 2007

    Homebuilding

Revenues from home sales decreased 64% in the first quarter of 2008 to $953.1 million from $2.6 billion in 2007. Revenues were lower primarily due to a 60% decrease in the number of home deliveries and an 8% decrease in the average sales price of homes delivered in 2008. New home deliveries, excluding unconsolidated entities, decreased to 3,437 homes in the first quarter of 2008 from 8,566 homes last year. In the first quarter of 2008, new home deliveries were lower in each of the Company's homebuilding segments and Homebuilding Other, compared to 2007. The average sales price of homes delivered decreased to $278,000 in the first quarter of 2008 from $303,000 in the same period last year, due to reduced pricing and higher sales incentives offered to homebuyers ($48,000 per home delivered in the first quarter of 2008, compared to $45,500 per home delivered in the same period last year).

Gross margins on home sales excluding SFAS 144 valuation adjustments were $162.9 million, or 17.1%, in the first quarter of 2008, compared to $409.2 million, or 15.6%, in 2007. Gross margin percentage on home sales excluding SFAS 144 valuation adjustments increased compared to last year in the Company's Homebuilding East and West segments and Homebuilding Other primarily due to the Company's lower inventory basis and continued focus on reducing construction costs. Gross margins on home sales were $136.7 million, or 14.3%, in the first quarter of 2008, which included $26.2 million of SFAS 144 valuation adjustments, compared to gross margins on home sales of $360.9 million, or 13.8%, in the first quarter of 2007, which included $48.3 million of SFAS 144 valuation adjustments. Gross margins on home sales excluding SFAS 144 valuation adjustments is a non-GAAP financial measure disclosed by certain of the Company's competitors and has been presented because the Company finds it useful in evaluating its performance and believes that it helps readers of the Company's financial statements compare its operations with those of its competitors.

Selling, general and administrative expenses were reduced by $194.4 million, or 53%, in the first quarter of 2008, compared to the same period last year, primarily due to reductions in associate headcount and variable selling expense. As a percentage of revenues from home sales, selling, general and administrative expenses increased to 18.4% in the first quarter of 2008, from 14.1% in 2007, which was primarily due to lower revenues.

Loss on land sales totaled $26.5 million in the first quarter of 2008, which included $15.5 million of SFAS 144 valuation adjustments and $16.9 million of write-offs of deposits and pre-acquisition costs related to 2,600 homesites under option that the Company does not intend to purchase. In the first quarter of 2007, loss on land sales totaled $26.5 million, which included $13.2 million of SFAS 144 valuation adjustments and $21.0 million of write-offs of deposits and pre-acquisition costs related to 4,000 homesites that were under option.

Equity in loss from unconsolidated entities was $23.0 million in the first quarter of 2008, which included $18.9 million of SFAS 144 valuation adjustments related to assets of unconsolidated entities in which the Company has investments, compared to equity in loss from unconsolidated entities of $14.2 million in the first quarter of 2007, which included $6.5 million of SFAS 144 valuation adjustments related to assets of unconsolidated entities in which the Company has investments.

Management fees and other income (expense), net, totaled ($21.8) million in the first quarter of 2008, which included $29.6 million of APB 18 valuation adjustments to the Company's investments in unconsolidated entities, compared to management fees and other income (expense), net, of $13.8 million in the first quarter of 2007, net of $2.6 million of APB 18 valuation adjustments to the Company's investments in unconsolidated entities.

Minority interest expense, net was $0.2 million and $0.5 million, respectively, in the first quarter of 2008 and 2007.

Sales of land, equity in loss from unconsolidated entities, management fees and other income (expense), net and minority interest expense, net may vary significantly from period to period depending on the timing of land sales and other transactions entered into by the Company and unconsolidated entities in which it has investments.

Financial Services

Operating loss for the Financial Services segment was $9.7 million in the first quarter of 2008, compared to operating earnings of $15.9 million last year. The decline in profitability was primarily due to lower transactions in the segment's title operations, compared to last year as a result of the overall weakness in the housing market.

Corporate General and Administrative Expenses

Corporate general and administrative expenses were reduced by $12.1 million, or 26%, in the first quarter of 2008, compared to the same period last year. As a percentage of total revenues, corporate general and administrative expenses increased to 3.3% in the first quarter of 2008, compared to 1.7% in the same period last year, primarily due to lower revenues.

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, 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. These forward-looking statements include statements regarding our business, financial condition, results of operations, strategies and prospects. 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" in Item 1A of our Annual Report on Form 10-K for our fiscal year ended November 30, 2007. We do not undertake any obligation to update forward-looking statements, except as required by Federal securities laws.

A conference call to discuss the Company's first quarter earnings will be held at 11:00 a.m. Eastern Time on Thursday, March 27, 2008. The call will be broadcast live on the Internet and can be accessed through the Company's website at www.lennar.com. If you are unable to participate in the conference call, the call will be archived at www.lennar.com for 90 days. A replay of the conference call will also be available later that day by calling 402-998-1673 and entering 5932669 as the confirmation number.


                       LENNAR CORPORATION AND SUBSIDIARIES

                Selected Revenues and Earnings (Loss) Information
                     (In thousands, except per share amounts)
                                   (unaudited)


                                                      Three Months Ended
                                                 February 29,     February 28,
                                                    2008              2007

    Revenues:
      Homebuilding                                  $993,776        2,663,170
      Financial services                              69,137          128,910
         Total revenues                           $1,062,913        2,792,080

    Homebuilding operating earnings (loss)         $(109,780)         139,975
    Financial services operating earnings (loss)      (9,692)          15,869
    Corporate general and administrative expenses     34,822           46,919
    Earnings (loss) before provision
     (benefit) for income taxes                     (154,294)         108,925
    Provision (benefit) for income taxes             (66,078)          40,302

    Net earnings (loss)                             $(88,216)          68,623

    Average shares outstanding:
      Basic                                          158,204          157,130
      Diluted                                        158,204          158,866

    Earnings (loss) per share:
      Basic                                           $(0.56)            0.44
      Diluted                                         $(0.56)            0.43

    Supplemental information:
      Interest incurred (1)                          $38,095           55,721
      EBIT before valuation adjustments
       and write-offs of option deposits and
       pre-acquisition costs and financial
       services notes receivable (2):
       Earnings (loss) before provision
        (benefit) for income taxes                 $(154,294)         108,925
       Interest expense                               32,443           47,362
       Valuation adjustments and write-offs
        of option deposits and pre-acquisition
        costs and financial services notes
        receivable                                   107,111           95,876
       EBIT before valuation adjustments and
        write-offs of option deposits and pre-
        acquisition costs and financial services
        notes receivable                            $(14,740)          252,163


    (1) Amount represents interest incurred related to homebuilding debt,
        which is primarily capitalized to inventories and relieved as cost of
        sales when homes are delivered or land is sold.
    (2) EBIT before valuation adjustments and write-offs of option deposits
        and pre-acquisition costs and financial services notes receivable is a
        non-GAAP financial measure derived by adding back interest expense,
        valuation adjustments and write-offs of option deposits and pre-
        acquisition costs and financial services notes receivable reflected in
        earnings (loss) before provision (benefit) for income taxes. This
        financial measure has been presented because the Company finds it
        useful in evaluating its performance and believes that it helps
        readers of the Company's financial statements compare its operations
        with those of its competitors.



                       LENNAR CORPORATION AND SUBSIDIARIES

                             Homebuilding Information
                                  (In thousands)
                                   (unaudited)

                                                     Three Months Ended
                                                February 29,      February 28,
                                                   2008              2007

    Revenues:
       Sales of homes                            $953,066         2,622,491
       Sales of land                               40,710            40,679
         Total revenues                           993,776         2,663,170

    Costs and expenses:
       Cost of homes sold                         816,371         2,261,595
       Cost of land sold                           67,160            67,145
       Selling, general and administrative        175,018           369,426
         Total costs and expenses               1,058,549         2,698,166

    Gain on recapitalization of
     unconsolidated entity                              -           175,879
    Equity in loss from unconsolidated
     entities                                      22,980            14,205
    Management fees and other income
     (expense), net                               (21,793)           13,841
    Minority interest expense, net                    234               544
    Operating earnings (loss)                   $(109,780)          139,975



                       LENNAR CORPORATION AND SUBSIDIARIES

                       Valuation Adjustments and Write-offs
                                  (In thousands)
                                   (unaudited)

                                                    Three Months Ended
                                                February 29,      February 28,
                                                  2008               2007
    SFAS 144 valuation adjustments to
     finished homes, CIP and land on which
     the Company intends to build homes:
     East                                          $8,106            19,115
     Central                                        1,779            11,253
     West                                           9,920            17,067
     Other                                          6,424               832
        Total                                      26,229            48,267
    SFAS 144 valuation adjustments to
     land the Company intends to sell to
     third parties:
     East                                           1,372             9,520
     Central                                        9,297                57
     West                                           4,192             3,500
     Other                                            594               161
        Total                                      15,455            13,238
    Write-offs of option deposits and
     pre-acquisition costs:
     East                                           7,054            13,741
     Central                                        4,344             1,300
     West                                           3,364             3,071
     Other                                          2,090             2,838
        Total                                      16,852            20,950
    Company's share of SFAS 144 valuation
     adjustments related to assets of
     unconsolidated entities:
     East                                           4,157             3,832
     Central                                          158                 -
     West                                          14,025             2,704
     Other                                            597                 -
        Total                                      18,937             6,536
    APB 18 valuation adjustments to investments
     in unconsolidated entities:
     East                                             937             2,641
     Central                                          228                 -
     West                                          28,439                 -
     Other                                             34                 -
        Total                                      29,638             2,641
    Financial services write-offs of
     notes receivable                                   -             4,244
          Total valuation adjustments and
           write-offs of option deposits and
           pre-acquisitions costs and financial
           services notes receivable             $107,111            95,876



                       LENNAR CORPORATION AND SUBSIDIARIES

                  Summary of Deliveries, New Orders and Backlog
                              (Dollars in thousands)
                                   (unaudited)

                                                       At or for the
                                                    Three Months Ended
                                               February 29,       February 28,
                                                  2008               2007

    Deliveries:
      East                                        1,165              2,599
      Central                                     1,179              3,131
      West                                          924              2,406
      Other                                         328                899
        Total                                     3,596              9,035

Of the total deliveries listed above, 159 represents deliveries from unconsolidated entities for the three months ended February 29, 2008, compared to 469 deliveries in the same period last year.

    New Orders:
      East                                          942              2,075
      Central                                     1,061              2,373
      West                                          747              1,865
      Other                                         295                819
        Total                                     3,045              7,132

Of the total new orders listed above, 62 represents new orders from unconsolidated entities for the three months ended February 29, 2008, compared to 354 new orders in the same period last year.

    Backlog - Homes:
      East                                        1,568              3,615
      Central                                       756              2,840
      West                                          711              2,450
      Other                                         363                800
        Total                                     3,398              9,705

Of the total homes in backlog listed above, 204 represents homes in backlog from unconsolidated entities at February 29, 2008, compared to 974 homes in backlog at February 28, 2007.

    Backlog - Dollar Value:
      East                                     $492,862          1,277,842
      Central                                   174,361            673,062
      West                                      307,071          1,168,050
      Other                                     178,045            330,801
        Total                                $1,152,339          3,449,755

Of the total dollar value of homes in backlog listed above, $113,865 represents the backlog dollar value from unconsolidated entities at February 29, 2008, compared to $450,701 of backlog dollar value at February 28, 2007.


    Lennar's reportable homebuilding segments and homebuilding other consist
    of homebuilding divisions located in the following states:

        East:     Florida, Maryland, New Jersey and Virginia
        Central:  Arizona, Colorado and Texas
        West:     California and Nevada
        Other:    Illinois, Minnesota, New York, North Carolina and South
                  Carolina



                       LENNAR CORPORATION AND SUBSIDIARIES

                                Supplemental Data
                             (Dollars in thousands)
                                   (unaudited)

                                               February 29,      February 28,
                                                  2008              2007

       Homebuilding debt                        $2,279,497         2,581,494
       Stockholders' equity                      3,680,898         5,774,981
          Total capital                         $5,960,395         8,356,475
       Homebuilding debt to total
        capital                                      38.2%             30.9%

       Homebuilding debt                        $2,279,497         2,581,494
       Less: Homebuilding cash                   1,088,141           263,746
          Net homebuilding debt                 $1,191,356         2,317,748
       Net homebuilding debt to total
        capital (1)                                  24.5%             28.6%

      (1) Net homebuilding debt to total capital consists of net homebuilding
          debt (homebuilding debt less homebuilding cash) divided by total
          capital (net homebuilding debt plus stockholders' equity).

SOURCE Lennar Corporation

CONTACT:
Scott Shipley
Investor Relations of Lennar Corporation
+1-305-485-2054

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