MIAMI, April 10, 2017 /PRNewswire/ -- Lennar
Corporation (NYSE: LEN and LEN.B), one of the
nation's largest homebuilders, reported that due to recent events
which have transpired in litigation since the Company issued its
earnings release, it has recorded a litigation accrual which will
result in first quarter net earnings being lower than the
$130.8 million, or $0.56 per diluted share, stated in its first
quarter earnings press release on March 21,
2017. Subsequent to the earnings release, on March 23, 2017, the
United States Court of Appeals for the Fourth Circuit held
oral argument in an appeal in connection with litigation in which
the Company is involved. Based on the Court hearing, the Company's
assessment of the probable outcome of the litigation has changed,
and it now believes it is appropriate to record a one-time charge
of $140 million for this litigation.
The accrual represents the high end of the range of expected
liability associated with the litigation. The Company was required
to record the litigation accrual as a charge against pre-tax
earnings in its first quarter because the determination that an
accrual should be recorded was made before the Company filed its
Form 10-Q for the first quarter. In addition to the accrual, the
Company would purchase the property which is the subject of the
litigation for $114 million, which
approximates the Company's estimate of the fair value of the
property. As a result of this accrual, the Company's first quarter
net earnings reported in the Form 10-Q it filed today are
$38.1 million or $0.16 per diluted share.
Stuart Miller, Lennar's Chief
Executive Officer, said "As we have disclosed for several years in
our quarterly and annual SEC filings, we have been engaged in
litigation since 2008 regarding whether we were required to
purchase a property in Maryland.
The property was put under contract in 2005 for a purchase price of
$200 million. After entering into the
contract, we later renegotiated the purchase price during the
downturn, reducing it from $200 million to
$134 million, $20 million of
which had been paid and subsequently written-off, leaving a
purchase price balance of $114
million. As we disclosed, in January
2015, a Federal District Court rendered a decision ordering
us to purchase the property for $114
million and to pay interest at 12% per annum from
May 27, 2008 ($13.7 million per year), as well as reimbursing
the seller for real estate taxes and attorneys' fees. However, our
disclosures also stated that the Company had appealed the decision
because we believed it was contrary to applicable law and
therefore, no liability had been recorded with respect to the case.
Based on our assessment of the March 23,
2017 oral argument referenced above, we now believe that the
Company should record an accrual for this litigation."
Notwithstanding this accrual, the Company continues to believe
that the January 2015 Federal
District Court decision is contrary to applicable law, as it has
stated since it first disclosed the litigation. The Appellate
Court's final decision is still pending and could result in an
outcome lower than the Company's accrual.
About Lennar
Lennar Corporation, founded in 1954, is one of the nation's
largest 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
mortgage financing, title insurance and closing services for both
buyers of the Company's homes and others. Lennar's Rialto segment
is a vertically integrated asset management platform focused on
investing throughout the commercial real estate capital structure.
Lennar's Multifamily segment is a nationwide developer of
high-quality multifamily rental properties. 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.
Note Regarding Forward-Looking Statements: 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, including statements regarding our
belief regarding the probable outcome of the litigation. These
forward-looking statements are subject to risks, uncertainties and
assumptions. Accordingly, these forward-looking statements should
be evaluated with consideration given to the many risks and
uncertainties that could cause actual results and events to differ
materially from those in the forward-looking statements. They
include the risks detailed in the Company's filings with the SEC,
including the "Risk Factors" section of the Company's Annual Report
on Form 10-K for the fiscal year ended November 30, 2016. It is not possible for
management to predict all such risk factors or to assess the impact
of such risks on our business. Accordingly, we undertake no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events,
or otherwise.
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SOURCE Lennar Corporation