<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
JOINT ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED MARCH 31, 1995
<TABLE>
<S> <C>
COMMISSION FILE NO. 1-6776 COMMISSION FILE NOS. 1-9624 AND 1-9625, RESPECTIVELY
CENTEX CORPORATION 3333 HOLDING CORPORATION AND
CENTEX DEVELOPMENT COMPANY, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) (EXACT NAME OF REGISTRANTS AS SPECIFIED IN THEIR CHARTERS)
NEVADA NEVADA AND DELAWARE, RESPECTIVELY
(STATE OF INCORPORATION) (STATES OF INCORPORATION OR ORGANIZATION)
75-0778259 75-2178860 AND 75-2168471, RESPECTIVELY
(I.R.S. EMPLOYER IDENTIFICATION NO.) (I.R.S. EMPLOYER IDENTIFICATION NOS.)
3333 LEE PARKWAY, SUITE 1200, DALLAS, TEXAS 75219 3333 LEE PARKWAY, SUITE 500, DALLAS, TEXAS 75219
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(214) 559-6500 (214) 559-6700
(REGISTRANT'S TELEPHONE NUMBER) (REGISTRANTS' TELEPHONE NUMBER)
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH NAME OF EACH
EXCHANGE ON WHICH EXCHANGE ON WHICH
TITLE OF EACH CLASS REGISTERED TITLE OF EACH CLASS REGISTERED
-------------------- ----------------------- ---------------------------- -----------------------
<S> <C> <C> <C>
CENTEX CORPORATION 3333 HOLDING CORPORATION
COMMON STOCK NEW YORK STOCK COMMON STOCK NEW YORK STOCK
($.25 PAR VALUE) EXCHANGE ($.01 PAR VALUE) EXCHANGE
CENTEX DEVELOPMENT COMPANY, L.P.
WARRANTS TO PURCHASE NEW YORK STOCK
CLASS B UNITS OF EXCHANGE
LIMITED PARTNERSHIP
INTEREST EXPIRING
NOVEMBER 30, 1997
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
Indicate by check mark whether each registrant: (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that each such
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X . No .
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrants' knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K, or any
amendment to Form 10-K. X
---
The aggregate market value of the tandem traded Centex Corporation common
stock, 3333 Holding Corporation common stock and Centex Development Company,
L.P. warrants to purchase Class B units of limited partnership interest held by
non-affiliates of the registrants on May 30, 1995 was approximately $780
million.
Indicate the number of shares of each of the registrants' classes of
common stock (or other similar equity securities) outstanding as of the close
of business on May 30, 1995:
<TABLE>
<S> <C> <C>
Centex Corporation Common Stock 28,147,011 shares
3333 Holding Corporation Common Stock 1,000 shares
Centex Development Company, L.P. Class A Units of Limited Partnership Interest 1,000 units
</TABLE>
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference in Parts
A.III and B.III of this Report:
Proxy statements for the annual meetings of stockholders of Centex
Corporation and 3333 Holding Corporation to be held on July 27, 1995.
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<PAGE> 2
JOINT ANNUAL REPORT ON
FORM 10-K
FOR THE FISCAL YEAR ENDED MARCH 31, 1995
CENTEX CORPORATION AND SUBSIDIARIES
AND
3333 HOLDING CORPORATION AND SUBSIDIARY
AND CENTEX DEVELOPMENT COMPANY, L.P.
JOINT EXPLANATORY STATEMENT
On November 30, 1987, Centex Corporation ("Centex" or the "Company")
distributed as a dividend to its stockholders (through a nominee, the
"Nominee") all of the issued and outstanding shares of the common stock, par
value $.01 per share ("Holding Common Stock"), of 3333 Holding Corporation, a
Nevada corporation, ("Holding"), and 900 warrants (the "Stockholder Warrants")
to purchase Class B Units of limited partnership interest in Centex Development
Company, L.P., a Delaware limited partnership, ("CDC" or the "Partnership").
Pursuant to an agreement with the Nominee (the "Nominee Agreement"), the
Nominee is the record holder of the Stockholder Warrants and 1,000 shares of
Holding Common Stock, which constitutes all of the issued and outstanding
capital stock of Holding, on behalf of and for the benefit of persons who are
from time to time the holders of the common stock, par value $.25 per share
("Centex Common Stock"), of Centex ("Centex Stockholders"). Each Centex
Stockholder owns a beneficial interest in that portion of the 1,000 shares of
Holding Common Stock and the Stockholder Warrants that the total number of
shares of Centex Common Stock held by such stockholder bears to the total
number of shares of Centex Common Stock outstanding from time to time. This
beneficial interest is not represented by a separate certificate or receipt.
Instead, each Centex Stockholder's beneficial interest in such pro rata portion
of the shares of Holding Common Stock and the Stockholder Warrants is
represented by the certificate or certificates evidencing such Centex
Stockholder's Centex Common Stock, and is currently tradeable only in tandem
with, and as a part of, each such Centex Stockholder's Centex Common Stock.
The tandem securities are listed and traded on the New York Stock Exchange and
The International Stock Exchange of the United Kingdom and the Republic of
Ireland, Ltd. and are registered with the Securities and Exchange Commission
(the "Commission") separately under Section 12(b) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). Holding and CDC were each
organized in 1987 in connection with the distribution. 3333 Development
Corporation, a wholly-owned subsidiary of Holding ("Development"), is the sole
general partner of CDC.
At present, Centex, Holding and CDC have elected to satisfy their
respective periodic reporting obligations under the Exchange Act, and the rules
and regulations promulgated thereunder, by preparing and filing joint periodic
reports. PART A of this Annual Report on Form 10-K for the fiscal year ended
March 31, 1995 (the "Report") relates to Centex and its subsidiaries. PART B
of this Report relates to Holding (and its subsidiary, Development) and to CDC.
For a complete understanding of the tandem traded securities, PART A and
PART B of this Report should be read in combination. Information concerning
the earnings and financial condition of the three companies, on an aggregate
basis, is included in Note (H) of the Notes to Consolidated Financial
Statements of Centex Corporation and subsidiaries on pages F-18 - F-19 of
Exhibit 99 to this Report.
2
<PAGE> 3
FORM 10-K
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
JOINT EXPLANATORY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
PART A. CENTEX CORPORATION AND SUBSIDIARIES
-------
PART I
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . 15
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters . . . . . . . 16
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . 16
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
PART III
Item 10. Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . . 17
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Item 12. Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . 17
Item 13. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . 17
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K . . . . . . . . . 17
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
---------------------------------
PART B. 3333 HOLDING CORPORATION AND SUBSIDIARY AND
------- CENTEX DEVELOPMENT COMPANY, L.P.
PART I
PAGE
----
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . 24
</TABLE>
3
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TABLE OF CONTENTS (CONTINUED)
<TABLE>
<CAPTION>
PART II PAGE
----
<S> <C>
Item 5. Market for Registrants' Common Equity and Related Stockholder Matters . . . . . . 26
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . 28
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
PART III
Item 10. Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . 28
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Item 12. Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . 31
Item 13. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . 34
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K . . . . . . . . 35
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36-37
------------------------------------
INDICES TO EXHIBITS
CENTEX CORPORATION AND SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38-41
3333 HOLDING CORPORATION AND SUBSIDIARY . . . . . . . . . . . . . . . . . . . . . . . . . . . 42-43
CENTEX DEVELOPMENT COMPANY, L.P. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44-46
</TABLE>
4
<PAGE> 5
PART A.
CENTEX CORPORATION AND SUBSIDIARIES
PREFATORY STATEMENT
PART A of this Report includes information relating to Centex
Corporation and subsidiaries ("Centex" or the "Company"), File No. 1-6776. See
Joint Explanatory Statement on page 2 of this Report. References to Centex or
the Company in this Report shall include Centex and its subsidiaries unless the
context otherwise requires. Reference is made to PART B of this Report for
information relating separately to 3333 Holding Corporation ("Holding") and its
subsidiary, 3333 Development Corporation ("Development"), and to Centex
Development Company, L.P. ("CDC" or the "Partnership").
PART I
ITEM 1. BUSINESS
GENERAL DEVELOPMENT OF BUSINESS
Centex is incorporated in the State of Nevada. The Company's common
stock, par value $.25 per share ("Centex Common Stock") began trading publicly
in 1969. As of May 30, 1995, 28,147,011 shares of Centex Common Stock, which
are traded on the New York Stock Exchange (NYSE) and The International Stock
Exchange of the United Kingdom and the Republic of Ireland, Ltd., were
outstanding.
Since its founding in 1950 as a Dallas, Texas-based residential and
commercial construction company, Centex has evolved into a multi-industry
company. Centex currently operates in three business segments: Home Building,
Financial Services and Contracting and Construction Services. Centex also has
a 49% interest in Centex Construction Products, Inc., a NYSE listed company in
the construction products business.
Centex is the nation's largest home builder (having built and
delivered, through its wholly-owned subsidiary Centex Real Estate Corporation
d/b/a Centex Homes ("CREC" or "Centex Homes"), 12,964 homes in its fiscal year
ended March 31, 1995). Centex's Home Building operations currently involve the
construction and sale of residential housing in 289 neighborhoods in 44
different markets. These activities also include the purchase and development
of land. Centex has participated in the home building business since 1950.
Centex's Financial Services operations in fiscal 1995 included
mortgage origination and other related services on homes sold by Centex
subsidiaries and by third parties as well as the operation of a savings and
loan. Centex has been in the mortgage banking business since 1973. Centex is
a leading retail mortgage originator (originating approximately $4.2 billion
of residential mortgages in fiscal 1995). In 1988 the Company acquired a
savings and loan operation with eight branch offices in central Texas. The
savings and loan deposits and branch operations were sold and the savings
and loan was liquidated in December 1994.
Centex entered the contracting and construction services business in
1966 with the acquisition of J.W. Bateson Company, Inc. (now known as Centex
Bateson Construction Company, Inc.), a Dallas-based contractor which has been
in business since 1936. Additional significant acquisitions of construction
companies were made in 1978, 1982 and 1990. Centex currently ranks as the
nation's largest general building contractor. The contracting and
construction activities of the Company involve the construction of buildings
for both private and government interests, including office, commercial and
industrial buildings, hospitals, hotels, museums, libraries, airport
facilities, condominiums and educational institutions.
Centex's involvement in the construction products business started in
1963 when it began construction of its first cement plant. Since that time,
this segment has expanded to include additional cement production and
distribution facilities and the production, distribution and sale of
aggregates, readymix concrete and gypsum wallboard. In April 1994, the
5
<PAGE> 6
Company's formerly wholly-owned Construction Products group, Centex
Construction Products, Inc. (CXP), completed an initial public offering of 51%
of its stock, which shares are now traded on the New York Stock Exchange. CXP
is the 6th largest U.S. owned cement producer and the nation's 13th largest
cement producer. Centex retained a 49% interest in this group.
In fiscal 1988, Centex established CDC. Reference is made to PART B
of this Report for a discussion of the business of CDC.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
Notes (B) and (I) of the Notes to Consolidated Financial Statements of
Centex on pages F-10 - F-11 and F-20 - F-21 of Exhibit 99 to this Report
contain additional information about the savings and loan and the Company's
business segments for years ended March 31, 1995, 1994 and 1993 and are
incorporated herein by reference.
NARRATIVE DESCRIPTION OF BUSINESS
HOME BUILDING
The Company's Home Building operations primarily involve the
construction and sale of residential housing, including the purchase and
development of land. The Company's Home Building operations have ranked, by the
number of units produced in a calendar year, as the largest U.S. builder of
single-family homes since 1989. Centex is also the only company to rank among
Professional Builder's top 10 home builders for each of the past 26 years.
Centex sells to both first time and move-up buyers. Approximately 95% of the
houses Centex sells are single-family detached homes and the remainder are
townhomes and low-rise condominiums.
Markets
Centex follows a strategy of reducing exposure to local market
volatility by spreading operations across geographically and economically
diverse markets. Centex presently builds in 44 market areas in 20 states and
the United Kingdom. The markets are listed below by geographic areas.
<TABLE>
<S> <C> <C>
WEST California - Seattle, Washington
East Bay Area Reno, Nevada
Sacramento Portland, Oregon
Bakersfield
Riverside/Orange/San Bernadino
Northern Los Angeles/Ventura
Central Valley (Fresno & Visalia)
San Diego
MIDWEST Chicago, Illinois Indianapolis, Indiana
Minneapolis, Minnesota Columbus, Ohio
Denver, Colorado
EAST Nashville, Tennessee Atlanta, Georgia
Virginia - North Carolina -
Northern Virginia Charlotte
Hampton Roads Raleigh/Durham
Maryland South Carolina -
East Windsor, New Jersey Charleston
Columbia
Greenville
</TABLE>
6
<PAGE> 7
<TABLE>
<S> <C> <C>
SOUTHEAST Florida -
Ft. Lauderdale Palm Beach
Jacksonville Bradenton/Sarasota
Naples/Ft. Myers Tampa
Orlando Titusville
SOUTHWEST Texas - Phoenix, Arizona
Austin Albuquerque, NM
Dallas/Fort Worth (3 markets)
Houston (2 markets)
Killeen
San Antonio
</TABLE>
In fiscal 1995, Centex closed 12,964 houses, including first time,
move-up and, in some markets, custom homes, ranging in price from approximately
$65,000 to about $650,000, with the average sale price being approximately
$159,000. In the Dallas and San Antonio locations Centex has custom home
divisions which offer higher-end homes.
Summarized below are Centex's home closings, sales (orders) backlog
and sales (orders) by geographic area for each of the five fiscal years ended
March 31, 1995.
<TABLE>
<CAPTION>
For the Year Ended March 31,
--------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
CLOSINGS (IN UNITS):
West 2,454 1,973 1,358 901 903
Midwest 1,283 1,114 1,118 860 808
East 2,921 2,599 2,118 1,595 1,731
Southeast 2,632 2,895 2,433 1,898 2,021
Southwest 3,674 3,982 3,252 2,485 2,399
------- ------- ------- ------ ------
12,964 12,563 10,279 7,739 7,862
======= ======= ======= ====== ======
AVERAGE SALES PRICE (000) $ 159 $ 147 $ 138 $ 136 $ 128
======= ======= ====== ====== ======
SALES (ORDERS) BACKLOG,
AT END OF PERIOD (IN UNITS):
West 603 756 663 581 266
Midwest 442 622 461 487 323
East 918 1,279 1,192 788 512
Southeast 892 1,387 1,260 1,022 636
Southwest 1,132 1,751 1,575 1,131 718
------- ------- ------- ----- -----
3,987 5,795 5,151 4,009 2,455
======= ======= ======= ===== =====
SALES (ORDERS) (IN UNITS):
West 2,301 2,066 1,440 1,047 676
Midwest 1,103 1,275 1,092 1,024 810
East 2,560 2,686 2,522 1,871 1,558
Southeast 2,137 3,022 2,671 2,284 1,887
Southwest 3,055 4,158 3,696 2,898 2,273
------- ------- ------- ----- -----
11,156 13,207 11,421 9,124 7,204
======= ======= ======= ===== =====
</TABLE>
7
<PAGE> 8
Inventory Turnover
The Company's policy has been to acquire land with the intent to
complete the sale of housing units within 24-36 months from the date of
acquisition. Generally, this involves land that is properly zoned and is either
ready for development or, to a much lesser degree, already developed.
The Company has acquired a substantial amount of its finished and
partially improved lots and land under option agreements which are exercised
over specified time periods, or in certain cases, as the lots are needed. The
purchase of finished lots generally allows the Company to shorten the lead time
to commence construction and reduces the risks of unforeseen improvement costs
and volatile market conditions.
Competition and Other Factors
The residential housing industry is essentially a "local" business and
is highly competitive. Centex competes in each of its market areas with
numerous other home builders. The Company's Home Building operations account
for less than 2% of the total housing starts in the United States. The main
competitive factors affecting Centex's Home Building operations are location,
price, cost of providing mortgage financing for customers, construction costs,
design and quality of homes, marketing expertise, availability of land and a
builder's reputation. Management believes the Company competes effectively by
maintaining geographic diversity, being responsive to the specific demands of
each market and managing the operations at a local level.
The home building industry is cyclical and is particularly affected by
changes in local economic conditions and in long-term and short-term interest
rates and, to a lesser extent, changes in property taxes and energy costs,
federal income tax laws, federal mortgage financing programs and various
demographic factors. The political and economic environment affects both the
demand for housing constructed by the Company and the Company's cost of
financing. Unexpected climatic conditions, such as unusually heavy or
prolonged rain or snow, may affect operations in certain areas.
The housing industry is subject to extensive and complex regulations.
The Company and its subcontractors must comply with various federal, state and
local laws and regulations including zoning, building, environmental,
advertising and consumer credit rules and regulations. The Company is also
subject to other rules and regulations in connection with its manufacturing and
sales activities, including requirements as to building materials to be used
and building designs. The Company's homes are inspected by local authorities.
The Company's Home Building operations are subject to numerous
federal, state and local regulatory schemes concerning, among other things,
worker health and safety, zoning, building design, construction materials, and
the extensive and changing federal, state and local laws, regulations and
ordinances governing the protection of the environment ("Environmental Laws"),
including protection of endangered species. All of the foregoing regulatory
requirements are applicable to all home building companies, and to date,
compliance with the foregoing requirements has not had a material impact on the
Company. The Company believes that it is in material compliance with all such
requirements.
Centex has numerous suppliers of all the materials and services and
sources of lots and land used in home building and believes that it can deal
effectively with any problems it may experience relating to the supply of
materials and services as well as lots and land.
Vista Acquisition
In December 1994, Centex International, Inc., a wholly-owned
subsidiary of Centex Corporation, entered into an agreement with Dallas-based
Vista Properties, Inc. under which it would acquire equity interests in Vista
and in its affiliated partnership, Vista Partners, as part of a proposed
prepackaged bankruptcy structuring by Vista. For an investment of
approximately $70 million, Centex would acquire an ownership in a portfolio
8
<PAGE> 9
of properties, comprising over 4,000 acres in seven states. The land is zoned,
planned or developed for: single- and multi-family residential, office and
industrial, and retail and commercial. The acquisition would provide Centex
with future residential sites in several of its existing markets as well as
opportunities in retail, industrial and office segments. The transaction is
expected to be completed during the summer of 1995, subject to the satisfaction
of the condition stated in the agreement, including approval from Vista's
securityholders and bankruptcy court approval.
United Kingdom Joint Venture
In February 1995, Centex announced its wholly-owned subsidiary, Centex
Homes (UK) Limited, had entered into a joint venture agreement with a
London-area home builder, The Charles Church Group Limited ("Charles Church"),
to build homes in the United Kingdom. The venture is the first entry into the
international home building marketplace for Centex Homes. Centex Homes (UK)
Limited and Charles Church each are contributing $3 million in cash, with the
remaining $9 million financed by a United Kingdom bank, which is guaranteed by
Centex Homes. In addition, Centex Homes will transfer some personnel to the
United Kingdom to work with the venture.
The new operation, Charles Church Homes Limited, acquired its
first parcel of undeveloped land in Berkshire County, west of London. Located
in Sunningdale, the parcel consists of 2.1 acres. Homes in the 3,500-4,000
square foot range, which will sell for approximately $750,000, should be ready
for occupancy late in calendar 1995. Several other potential sites in the
London area are currently being evaluated.
FINANCIAL SERVICES
Financial Services consist of mortgage banking and, until December
1994, the savings and loan operations. The Company's mortgage banking
activities are conducted through Centex's wholly-owned subsidiary, CTX Mortgage
Company ("CTX"), which offers mortgage origination and other related services
on homes sold by Centex Homes and by third parties. The savings and loan
activities which were conducted through Texas Trust Savings Bank, FSB were sold
in December 1994.
CTX Mortgage Company
CTX was created in 1973 to provide mortgage financing for homes built
by Centex Homes, Centex's home building operation. The establishment by CTX of
mortgage offices in substantially all of Centex Homes' housing markets has
enabled it to consistently provide mortgage financing for an average of 73% of
the homes built by Centex Homes ("Builder Loans") over the past five years. In
1985, CTX expanded its operations to include third-party loans ("Spot Loans")
that are not associated with the sale of homes built by Centex. At March 31,
1995, CTX had 110 offices located in 23 states. The offices vary in size
depending on volume in each locality.
During the 1995 fiscal year, due to the increase in mortgage rates
and the related decline in refinancings, CTX downsized its operations. The
division's operating locations and personnel were reduced by approximately 40%.
CTX is updating and expanding its mortgage banking systems, including
reautomating its accounting and loan delivery functions. This process will
continue during fiscal 1996.
9
<PAGE> 10
The unit breakdown of Builder and Spot Loans for the five years ended
March 31, 1995 are set forth in the following table:
<TABLE>
<CAPTION>
For the Years Ended March 31,
-------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
LOAN TYPES:
Builder 8,504 9,289 7,758 5,897 6,002
Spot 28,574 49,254 30,543 17,819 10,996
------ ------ ------ ------ ------
37,078 58,543 38,301 23,716 16,998
====== ====== ====== ====== ======
ORIGINATION VOLUME (IN BILLIONS) $4.2 $6.4 $4.2 $2.5 $1.5
PERCENT OF CENTEX
CLOSINGS FINANCED 66% 74% 75% 76% 76%
</TABLE>
CTX provides mortgage origination and other mortgage related
services for Federal Housing Administration ("FHA"), Veterans Administration
("VA") and conventional loans on homes built and sold by the Company or by
others. The Company's mortgage loans are first-lien mortgages secured by 1-4
family residences. A majority of the conventional loans are conforming loans
which qualify for inclusion in guaranteed programs sponsored by Fannie Mae
("FNMA") or Freddie Mac ("FHLMC"). The remainder of the conventional loans are
pre-approved and individually underwritten by private investors who purchase
such loans on a whole-loan basis for their investment portfolios.
The principal sources of income from CTX's mortgage banking business
are: loan origination fees; revenues from sale of servicing rights; positive
carry (discussed below); and marketing gains and losses. Generally, CTX sells
its right to service the mortgage loans to various loan servicing companies,
therefore, it retains no mortgage servicing rights. Accordingly, CTX avoids the
risk of early payoffs and foreclosures. CTX enters into various financial
agreements, in the normal course of business, in order to manage the exposure to
changing interest rates as a result of having issued loan commitments to its
customers at a specified price and period, committing to sell mortgage loans to
various investors. By immediately selling the mortgages for future delivery,
substantially all interest rate risk is removed at the time of closing.
CTX borrows money at short-term rates to fund its mortgage loans.
During the 30-to-60 day period between the closing of a loan and delivery of
such loan to the purchaser, CTX earns the interest accrued on the mortgage,
which is normally a higher interest rate than the rate paid on the short-term
loans used to fund the mortgage during this 30-to-60 day holding period. This
positive spread between the long-term interest rate earned and the short-term
interest rate paid is referred to as "positive carry", and generally represents
a major source of income.
Competition and Other Factors
The mortgage banking industry in the United States is highly
competitive. CTX competes with other mortgage banking companies as well as
financial institutions to supply mortgage financing at attractive rates to
purchasers of Centex homes as well as to the general public. Mortgage Banking
results in fiscal 1995 were negatively impacted by an increasingly competitive
environment. Rapidly rising interest rates commencing in February 1994,
virtually stopped refinancing activity and caused consumers to shift from more
profitable fixed-rate mortgages to lower-margin adjustable rate products.
10
<PAGE> 11
CTX is subject to the rules and regulations of, and examinations by,
the Federal National Mortgage Association ("FNMA"), the Federal Home Loan
Mortgage Corporation ("FHLMC"), the Department of Veterans' Affairs ("VA"), the
Federal Housing Administration ("FHA"), the Government National Mortgage
Association ("GNMA") and state regulatory authorities with respect to
originating, processing, underwriting, making, selling, securitizing and
servicing residential mortgage loans. In addition, there are other federal and
state statutes and regulations affecting such activities. These rules and
regulations, among other things, impose licensing obligations on CTX, establish
eligibility criteria for mortgage loans, provide for inspection and appraisals
of properties, regulate payment features and, in some cases, fix maximum
interest rates, fees and loan amounts. CTX is required to maintain specified
net worth levels by, and submit annual audited financial statements to FHA, VA,
FNMA, FHLMC and GNMA and certain state regulators. CTX's affairs are also
subject to examination by the Federal Housing Commissioner at all times to
assure compliance with FHA regulations, policies and procedures. Among other
federal and state consumer credit laws, mortgage origination and servicing
activities are subject to the Equal Credit Opportunity Act, the Federal
Truth-In-Lending Act, the Real Estate Settlement Procedures Act ("RESPA") and
the regulations promulgated under such statutes which prohibit discrimination
and unlawful kickbacks and referral fees and require the disclosure of certain
information to borrowers concerning credit and settlement costs. Many of these
regulatory requirements are designed to protect the interest of consumers,
while others protect the owners or insurers of mortgage loans. Failure to
comply with these requirements can lead to loss of approved status, demands for
indemnification or loan repurchases from investors, class action lawsuits by
borrowers, administrative enforcement actions and, in some cases, rescission or
voiding of the mortgage loan by the mortgagor.
Other financial-related services provided by CTX affiliates include
acting as an agent for the issuance of homeowners' insurance policies, title
insurance policies and escrow services. CTX Insurance Agency provides hazard
insurance to home buyers in Texas and Florida through third party insurance
companies. During fiscal 1994, CTX opened its first commercial loan operation.
In the current fiscal year, CTX entered into a joint venture agreement with
another homebuilder to provide mortgage origination for homes built by this
homebuilder. In addition, during fiscal 1995, an affiliate of CTX entered the
second lien market whereby this CTX affiliate will originate second mortgages
for home improvements and home equity lines of credit. The affiliate utilizes
CTX's branch network and telemarketing to solicit potential customers.
Savings and Loan
In December 1988, Centex purchased certain assets and assumed certain
liabilities of four Texas savings and loan associations under the Federal
Savings and Loan Insurance Corporation's assisted transactions process commonly
known as the "Southwest Plan". The acquisition was made by Texas Trust Savings
Bank, FSB ("Texas Trust"), a federal stock savings bank and subsidiary of CTX
Holding Company ("CTX Holding"), a wholly-owned subsidiary of Centex. The
acquisition was made pursuant to acquisition agreements and an assistance
agreement (the "Assistance Agreement") with the Federal Savings and Loan
Insurance Corporation (the "FSLIC").
During December 1994, Texas Trust negotiated an early termination of
the Assistance Agreement with the Federal Deposit Insurance Corporation
("FDIC") (as successor to the FSLIC). On December 30, 1994 Texas Trust's eight
branch facilities were sold to a financial institution and all deposit
liabilities were assumed by the purchaser. On the same day, immediately
following the branch sale, Texas Trust was dissolved, thereby completing
Centex's exit from the savings and loan industry.
CONTRACTING AND CONSTRUCTION SERVICES
Centex's contracting and construction services work is performed
nationwide. As a group, Centex's Contracting and Construction Services
subsidiaries rank as one of the largest building contractors in the country as
well as one of the largest U.S. - owned construction groups. The Construction
Group is made up of seven firms with various geographic locations and project
niches. The overall group is heavily weighted towards health care facility
construction which represents nearly 40% of its mix. New contracts for fiscal
1995 totaled $1.15 billion versus $1.03 billion for fiscal 1994. The backlog
of uncompleted contracts at March 31, 1995 was $1.33 billion, compared to $1.24
billion at March 31, 1994. The group's principal subsidiaries are as follows:
11
<PAGE> 12
CENTEX BATESON CONSTRUCTION COMPANY, INC. - This Dallas-based
contractor (acquired in 1966) has become one of the nation's larger
general contractors specializing in government and competitively bid
jobs. Its projects are nationwide.
CENTEX-ROONEY CONSTRUCTION COMPANY, INC. - This Ft. Lauderdale-based
subsidiary was acquired in 1978 and is one of the largest general
contractors in the state of Florida. It operates primarily in Florida
and handles predominantly negotiated work for private owners.
CENTEX GOLDEN CONSTRUCTION COMPANY - This company (acquired in fiscal
1982) operates in the San Diego, Los Angeles and Northern California
markets, handling both negotiated and competitively bid work.
CENTEX-SIMPSON CONSTRUCTION COMPANY - This contractor (organized in
1966) is based in the Washington D. C. area and is engaged primarily in
competitive bid work for the public sector.
CENTEX-RODGERS CONSTRUCTION COMPANY - This company (organized in 1987)
is headquartered in Nashville, Tennessee, and is active nationally in
the private medical construction services market.
CENTEX GREAT SOUTHWEST CORPORATION - This subsidiary (acquired in 1978)
builds principally in the Tampa and Orlando areas and is a leading
builder of airport terminals.
CENTEX FORCUM LANNOM, INC. - This industrial contracting company
(acquired in 1990) is located in Dyersburg, Tennessee and operates in
Tennessee and surrounding states.
As a general contractor or construction manager, Centex provides the
supervisory personnel for the construction of the building or facility. In
addition, Centex may perform varying amounts of the actual construction work on
a project, but will generally hire subcontractors to perform the majority of
the work. As a result, the Company's Contracting and Construction Services
operation requires a relatively small asset base.
Construction contracts are primarily entered into under two formats:
competitively bid and negotiated jobs. In a competitively bid format, Centex
will bid a fixed amount for which it will agree to construct the project based
on an evaluation of detailed plans and specifications. In a negotiated job,
the contractor bids on a fixed fee over the cost of the project and, in many
instances, agrees that the final cost will not exceed a designated amount. Such
contracts may include a provision whereby the owner will pay a part of any
savings from the guaranteed amount to the contractor. The Company's highest
margins in contracting operations have historically been on competitively bid
jobs. Currently, the margins on competitive bid and negotiated jobs are about
equal. On average, about half of Centex's projects are competitively bid,
public jobs and the other half are negotiated contracts with private owners.
The Company's public work for federal, state and local governments includes
hospitals, jails, airports, parking garages, office buildings, military
facilities, post offices and convention and performing arts centers. Most of
Centex's private owner contracts are for hotels, medical facilities and office
buildings, plus some shopping centers and condominiums.
Competition and Other Factors
The construction industry has become increasingly competitive, and
Centex competes with numerous other companies. With respect to competitively
bid projects, Centex generally competes for projects throughout the United
States and with local, regional or national contractors, depending upon the
nature of the project. For negotiated projects, Centex's subsidiaries compete
primarily in the general geographical area where they are located and with
other local, regional and national contractors. Centex solicits new projects
by attending project bid meetings and meeting with builders and owners and
through existing customers. Centex competes successfully on the basis of its
reputation and financial strength.
The Company's Contracting and Construction Services operations are
affected by federal, state and local laws and regulations relating to worker
health and workplace safety as well as Environmental Laws. With respect to
health and safety matters, the Company believes that appropriate precautions
are taken to protect employees and others from
12
<PAGE> 13
workplace hazards. Current Environmental Laws may require the Company's
operating subsidiaries to work in concert with project owners to acquire the
necessary permits or other authorizations for certain activities, including the
construction of projects located in or near wetland areas. The Company's
Contracting and Construction Services operations are also affected by
Environmental Laws regulating the use and disposal of hazardous materials
encountered during demolition operations.
The Company believes that the Contracting and Construction Services
group's current procedures and practices are consistent with industry standards
and that compliance by the Construction Group with the health and safety laws
and Environmental Laws does not constitute a material burden or expense for the
Company.
The Company's Contracting and Construction Services operations obtain
materials and services from numerous sources. The Company believes that its
construction companies can deal effectively with any problems they may
experience in the supply of materials and services.
EMPLOYEES
The breakdown of employees by line of business as of March 31, 1995 is
presented in the following table:
<TABLE>
<CAPTION>
Lines of Business Employees
----------------- ---------
<S> <C>
Home Building 2,491
Financial Services 1,654
Contracting and
Construction Services 2,164
Corporate & Other 86
-----
6,395
=====
</TABLE>
13
<PAGE> 14
The following is a summary of average balances and average interest rates for
the periods ended December 31, 1994, March 31, 1994 and 1993.
TEXAS TRUST SAVINGS BANK, FSB
AVERAGE BALANCES AND INTEREST RATES
($ IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE PERIOD FROM APRIL 1, 1994 For the Year
THROUGH DECEMBER 30, 1994 Ended March 31, 1994
------------------------------------- -------------------------------------
REVENUE/INTEREST
AVERAGE EXPENSE Average Revenue/Interest
BALANCE (ANNUALIZED) % Balance Expense %
--------- ------------ ------- --------- ------------- -------
<S> <C> <C> <C> <C> <C> <C>
Earning assets:
Interest-bearing deposits in other
financial institutions and other
investment securities . . . . . . . . . $132,022 $7,771 5.89% $101,181 $ 5,208 5.15%
Loans, primarily residential
mortgage, net of $661, $830, and
$1,565, respectively, of valuation
adjustments . . . . . . . . . . . . . . 21,199 1,484 7.00% 37,665 3,161 8.39%
Assets covered by Fund assistance . . . . 12,899 816 6.33% 60,827 1,316 2.16%
-------- ------- ------- -------- ------- ------
Total earning assets . . . . . . . . 166,120 10,071 6.06% 199,673 9,685 4.85%
------- ------- ------- ------
Cash and amounts due from banks . . . . . . . 10,507 3,465
Other assets . . . . . . . . . . . . . . . . 26,874 25,446
-------- --------
Total assets . . . . . . . . . . . . $203,501 $228,584
======== ========
Interest-bearing liabilities:
Deposits . . . . . . . . . . . . . . . . . $183,359 6,728 3.67% $197,341 7,205 3.65%
FHLB advances and short-term
borrowings . . . . . . . . . . . . . . 4,000 392 9.80% 10,882 622 5.72%
-------- ------- ------- -------- ------- ------
Total interest-bearing liabilities . 187,359 7,120 3.80% 208,223 7,827 3.76%
------- ------- ------- ------
Other liabilities . . . . . . . . . . . . . . 4,013 4,928
Stockholder's equity . . . . . . . . . . . . 12,129 15,433
-------- --------
Total liabilities and stock-
holder's equity . . . . . . . . . $203,501 $228,584
======== ========
Net interest margin . . . . . . . . . . . . . $ 2,951 $ 1,858
======= =======
Net yield on earning assets . . . . . . . . . 1.78% .93%
======= ======
Net margin . . . . . . . . . . . . . . . . . 2.26% 1.09%
======= ======
<CAPTION>
For the Year
Ended March 31, 1993
-------------------------------------
Average Revenue/Interest
Balance Expense %
--------- -------------- -------
<S> <C> <C> <C>
Earning assets:
Interest-bearing deposits in other
financial institutions and other
investment securities . . . . . . . . . $ 78,756 $ 6,469 8.21%
Loans, primarily residential
mortgage, net of $661, $830, and
$1,565, respectively, of valuation
adjustments . . . . . . . . . . . . . . 10,728 1,347 12.56%
Assets covered by Fund assistance . . . . 111,101 8,015 7.21%
-------- ------ ------
Total earning assets . . . . . . . . 200,585 15,831 7.89%
------ ------
Cash and amounts due from banks . . . . . . . 807
Other assets . . . . . . . . . . . . . . . . 84,500
--------
Total assets . . . . . . . . . . . . $285,892
========
Interest-bearing liabilities:
Deposits . . . . . . . . . . . . . . . . . $217,561 9,480 4.36%
FHLB advances and short-term
borrowings . . . . . . . . . . . . . . 47,735 2,567 5.38%
-------- ------- ------
Total interest-bearing liabilities . 265,296 12,047 4.54%
------- ------
Other liabilities . . . . . . . . . . . . . . 4,254
Stockholder's equity . . . . . . . . . . . . 16,342
--------
Total liabilities and stock-
holder's equity . . . . . . . . . $285,892
========
Net interest margin . . . . . . . . . . . . . $ 3,784
=======
Net yield on earning assets . . . . . . . . . 1.89%
======
Net margin . . . . . . . . . . . . . . . . . 3.35%
======
</TABLE>
14
<PAGE> 15
ITEM 2. PROPERTIES
PLANT FACILITIES
Prior to April 1994, the Company, in connection with its Construction
Products operations, operated cement plants, quarries and related facilities at
Buda, Texas, LaSalle, Illinois, Fernley, Nevada and Laramie, Wyoming. The Buda
and LaSalle plants are owned by separate joint ventures in each of which Centex
had a 50% interest. The Company's principal aggregate plants and quarries were
located in Austin and Fort Worth, Texas and Marysville, California. In
addition, the Company operated gypsum wallboard plants in Albuquerque and
nearby Bernalillo, New Mexico.
In April, 1994, the Company's formerly wholly-owned subsidiary, Centex
Construction Products, Inc.,completed the sale of 51% of its stock through an
initial public offering.
See "Item 1. Business" on pages 5-13 of this Report for additional
information relating to the Company's properties.
ITEM 3. LEGAL PROCEEDINGS
The management of the Company believes that none of the litigation matters
in which Centex or any subsidiary is involved, if determined unfavorable to
Centex or any subsidiary, would have a material adverse effect on the
consolidated financial condition or operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF CENTEX (SEE ITEM 10 OF PART III)
The following is an alphabetical listing of the Company's executive
officers, as such term is defined under the rules and regulations of the
Securities and Exchange Commission. All of these executive officers have been
employed by the Company and/or one or more subsidiaries of the Company for the
past five years. All of these executive officers were elected by the Board of
Directors of the Company at its Annual Meeting on July 28, 1994, to serve until
the next Annual Meeting of Directors or until their respective successors are
duly elected and qualified. There is no family relationship between any of
these officers.
<TABLE>
<CAPTION>
NAME AGE POSITIONS WITH CENTEX
---------------------------------- --- ------------------------------------------------------------------
<S> <C> <C>
Michael S. Albright 47 Vice President--Finance and Controller (Vice President--Finance
since July 1992; Controller since November 1987; Vice President
from July 1989 to July 1992)
Timothy R. Eller 46 President, Chief Executive Officer and Chief Operating Officer of
Centex Real Estate Corporation (President and Chief Operating
Officer since January 1990; Chief Executive Officer since July
1991; Executive Vice President from July 1987 to January 1990)
William J Gillilan III 49 President and Chief Operating Officer (President since July 1991;
Chief Operating Officer since January 1990; Executive Vice
President from July 1989 until July 1991)
</TABLE>
15
<PAGE> 16
<TABLE>
<S> <C> <C>
Laurence E. Hirsch 49 Chairman of the Board and Chief Executive Officer (Chairman of the
Board since July 1991; Chief Executive Officer since July 1988;
President from March 1985 until July 1991)
David W. Quinn 53 Executive Vice President and Chief Financial Officer (since
February 1987)
Raymond G. Smerge 51 Vice President, Chief Legal Officer, General Counsel and Secretary
(Vice President and Chief Legal Officer since September 1985;
General Counsel and Secretary since April 1993)
</TABLE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
(See Item 7 below.)
ITEM 6. SELECTED FINANCIAL DATA
(See Item 7 below.)
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information called for by Items 5, 6 and 7 is incorporated herein by
reference to the information set forth under the following captions (on the
page or pages indicated) in Exhibit 99 to this Report:
<TABLE>
<CAPTION>
ITEMS CAPTION IN EXHIBIT 99 Pages
----- --------------------- -----
<S> <C> <C>
5 Stock Prices and Dividends F-1
5 Indebtedness (Note (E) to Consolidated Financial F-13 - F-14
Statements of Centex)
6 Summary of Selected Financial Data F-30 - F-31
7 Short-term Debt and Long-term Debt (Note (E) to F-13
Consolidated Financial Statements of Centex)
7 Management's Discussion and Analysis of Results of F-24 - F-29
Operations and Financial Condition
</TABLE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information called for by this Item 8 is included in Exhibit 99 to
this Report as set forth in the Index to Consolidated Financial Statements and
Schedules on page 18 of this Report (see Item 14).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
16
<PAGE> 17
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(See Item 11 below.)
ITEM 11. EXECUTIVE COMPENSATION
Except for the information relating to the executive officers of the
Company, which follows Item 4 of Part I of this Report, the information called
for by Items 10, 11, 12 and 13 is incorporated herein by reference to the
information included and referenced under the following captions (on the pages
indicated) in the Company's Proxy Statement dated June 15, 1995 for the July
27, 1995 Annual Meeting of Stockholders (the "1995 Centex Proxy Statement"):
<TABLE>
<CAPTION>
ITEM CAPTION IN THE 1995 CENTEX PROXY STATEMENT PAGES
---- ------------------------------------------ -----
<S> <C> <C>
10 Election of Directors 3-6
10 Section 16(a) Compliance 14
11 Executive Compensation 9-12
12 Security Ownership of Management
and Certain Beneficial Owners 7-8
13 Certain Transactions 20-21
</TABLE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(See Item 11 above.)
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(See Item 11 above for information respecting indebtedness to Centex of
certain officers and directors.)
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this Report:
(1) and (2) See the Index to Consolidated Financial Statements and Schedules
below for a list of the Financial Statements and Financial Statement schedules
filed herewith.
17
<PAGE> 18
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
<TABLE>
<CAPTION>
REFERENCE
----------------------------------
EXHIBIT
99
-----------
<S> <C>
CENTEX CORPORATION AND SUBSIDIARIES
Data incorporated by reference to Exhibit 99
Report of Independent Public Accountants . . . . . . . . . . . . . . . F-23
Statements of Consolidated Earnings for the Years Ended March 31,
1995, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Consolidated Balance Sheets as of March 31, 1995 and 1994 . . . . . . . F-4
Statements of Consolidated Cash Flows for the Years Ended March
31, 1995, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . F-6
Statements of Consolidated Stockholders' Equity
for the Years Ended March 31, 1995, 1994 and 1993 . . . . . . . . . . F-7
Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . F-8 - F-22
Quarterly Results (Unaudited) . . . . . . . . . . . . . . . . . . . . . F-32
</TABLE>
Consolidated supporting schedules have been omitted either because the
required information is contained in notes to the consolidated financial
statements or because such schedules are not required or are not applicable.
(3) EXHIBITS
The information on exhibits required by this Item 14 is set forth in the
Centex Index to Exhibits appearing on pages 38-41 of this Report.
(b) Reports on Form 8-K:
None.
18
<PAGE> 19
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
<TABLE>
<S> <C>
CENTEX CORPORATION
---------------------------------------------------------------
Registrant
May 31, 1995 By: /s/ LAURENCE E. HIRSCH
------------------------------------------------------------
Laurence E. Hirsch, Chairman of the Board and
Chief Executive Officer
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant in the capacities and on the dates indicated.
<TABLE>
<S> <C>
May 31, 1995 /s/ LAURENCE E. HIRSCH
---------------------------------------------------------------
Laurence E. Hirsch, Chairman of the Board and
Chief Executive Officer
(principal executive officer)
May 31, 1995 /s/ DAVID W. QUINN
---------------------------------------------------------------
David W. Quinn, Executive Vice President and
Chief Financial Officer
(principal financial officer)
May 31, 1995 /s/ MICHAEL S. ALBRIGHT
---------------------------------------------------------------
Michael S. Albright, Vice President -- Finance and
Controller
(principal accounting officer)
Directors: Alan B. Coleman, Dan W. Cook III, Juan L. Elek, William J
Gillilan III, Laurence E. Hirsch, Clint W. Murchison, III,
Charles H. Pistor, David W. Quinn, Paul R. Seegers, Paul T.
Stoffel
May 31, 1995 By: /s/ LAURENCE E. HIRSCH
------------------------------------------------------------
Laurence E. Hirsch,
Individually and as
Attorney-in-Fact*
</TABLE>
- --------------------
*Pursuant to authority granted by powers of attorney, copies of which are
filed herewith, except for Mr. Coleman, Cook and Stoffel's Powers of
Attorney which will be filed upon execution.
19
<PAGE> 20
PART B.
3333 HOLDING CORPORATION AND SUBSIDIARY
AND CENTEX DEVELOPMENT COMPANY, L.P.
PREFATORY STATEMENT
PART B of this Report includes information relating to 3333 Holding
Corporation ("Holding"), File No. 1-9624, and subsidiary, and Centex
Development Company, L.P. ("CDC" or the "Partnership"), File No. 1-9625. See
the Joint Explanatory Statement on page 2 of this Report. References to
Holding in this Report shall include references to its subsidiary, 3333
Development Corporation, a Nevada corporation and the sole general partner of
CDC ("Development"), unless the context otherwise requires. Because CDC is a
separate reporting entity under the Exchange Act, the information required by
Form 10-K is separately included even though CDC may be deemed a "subsidiary"
of Holding under the rules and regulations of the Securities and Exchange
Commission (the "Commission") promulgated pursuant to the Exchange Act.
Accordingly, information provided with respect to CDC should be deemed provided
with respect to Holding to the extent appropriate. Information relating to
both Holding and CDC is included herein as a single disclosure where applicable
or appropriate; all other information is set forth separately. Reference is
made to PART A of this Report for information relating separately to Centex
Corporation ("Centex") and its subsidiaries.
PART I
ITEM 1. BUSINESS
(a) Holding
Holding is a Nevada corporation incorporated on May 5, 1987. Its executive
offices are located at 3333 Lee Parkway, Suite 500, Dallas, Texas 75219;
telephone (214) 559-6700.
Holding owns all of the outstanding common stock of Development, and, as a
result, has the ability to control Development. Development is the sole
general partner of CDC, a Delaware limited partnership engaged in the real
estate development business. Information concerning the acquisition of the
capital stock of Development by Holding is included in Note (A) of the Notes to
Combining Financial Statements of Holding and CDC (the "Holding/CDC Combining
Financial Statements") included on page F-37 of Exhibit 99 of this Report,
which is incorporated herein by this reference. Holding operates in a single
industry segment.
The principal liability of Holding is a $7,700,000 note payable to Centex
which had an unpaid balance of $7,600,000 at March 31, 1995 (the "Holding
Note"). See "Item 13. Certain Relationships and Related Transactions".
Presently, Holding is not engaged in any business other than its ownership and
control of Development. The Amended and Restated Agreement of Limited
Partnership of Centex Development Company, L.P. (the "Partnership Agreement"),
which governs the operations of CDC, provides that neither Holding nor
Development shall be permitted, prior to Payout (as defined in the Partnership
Agreement)("Payout") and repayment of the Holding Note, to own business
interests or to engage in business activities other than those relating to CDC.
Were Holding to engage in any other business activities, the Partnership
Agreement would need to be amended to provide for the same.
(b) CDC
GENERAL DEVELOPMENT OF BUSINESS
CDC is a Delaware limited partnership formed in March 1987 by Centex to
broaden its line of business to include general real estate development.
Centex believed that this expansion would improve stockholder value through the
generation of value in longer-term real estate investments, the development of
real estate and the benefits of the partnership form of business. Because the
real estate development business generally requires a longer time horizon to
maximize value than Centex's core homebuilding operations, and typically
involves substantial acquisition and development indebtedness,
20
<PAGE> 21
Centex concluded that this new line of business could best be conducted through
CDC, an independent, publicly traded entity which is not consolidated with
Centex for financial reporting purposes. Development, a wholly-owned
subsidiary of Holding, is the sole general partner of CDC. CDC's executive
offices are located at 3333 Lee Parkway, Suite 500, Dallas, Texas 75219;
telephone (214) 559-6700.
CDC was formed to manage, develop and sell (i) certain real estate,
principally nonresidential, undeveloped land (the "Original Properties"),
contributed to CDC by certain wholly-owned subsidiaries of Centex (the
"Original Limited Partners"), and (ii) other properties acquired by CDC in the
ordinary course of business (the "Additional Properties"). Pursuant to the
Distribution, the Original Limited Partners received an aggregate of 1,000
Class A Units of limited partnership interest in CDC (the "Class A Units") in
exchange for the Original Properties, which at the time of their contribution
to CDC had a market value of approximately $76 million. All of the 1,000 Class
A Units were subsequently acquired, and are currently owned, by Centex Real
Estate Corporation ("CREC"), a wholly-owned subsidiary of Centex. Under the
Partnership Agreement, as holder of the Class A Units of limited partnership
interest, CREC is entitled to a 9% preferred return (the "Preferred Return") on
its unrecovered capital and certain other distributions of cash and other
property and allocations of income and loss in preference to other limited
partners. See Note (F) of the Notes to the Holding/CDC Combining Financial
Statements included on page F-41 of Exhibit 99 to this Report which is
incorporated herein by this reference.
CDC has developed and sold several of the Original Properties. In
addition, CDC has acquired, developed and sold Additional Properties, including
two projects in the Orlando, Florida area which were developed into nearly
1,150 residential lots, a portion of a 1,077 acre development in San Clemente,
California which is zoned for residential and commercial development, and the
Timberhill Shopping Center in Sonora, California. Shortly after March 1987,
when CDC was formed, the market for real estate development of the type
contemplated for CDC at its formation began to deteriorate, and for several
years has not been particularly attractive. In fact, soon after CDC was
formed, this market suffered a recession and was heavily saturated for an
extended period of time with depressed properties being disposed of by the
Resolution Trust Corporation, banks and other financial institutions.
Accordingly, new development opportunities have been limited and certain of
CDC's properties have not reached the potential necessary to achieve the
originally targeted objectives. Notwithstanding the foregoing, Centex
management continues to believe that the original purposes for the formation of
CDC remain valid.
Given recent improvement in certain real estate markets and the economy in
general, and in an effort to maximize CDC's potential, CDC management is
evaluating the potential for development of rental apartments, retail
facilities and other types of real estate for investment or sale in certain
strategic markets, either directly or through partnerships or joint ventures
with others. In addition, Centex, through its wholly-owned subsidiary, Centex
Service Company, recently committed additional experienced personnel resources
to CDC. Management of Centex and CDC and Holding believe that the existing
relationships between them, including development and general management
assistance, are necessary in order to maximize the potential for these
additional development activities. In order to further enhance the potential
of CDC, the holder of the Class A Units has, subject to approval by the Centex
Stockholders of a proposal to extend the detachment date of the Stockholder
Warrants as described below, agreed to waive all unpaid Preferred Return
through July 1995, which totalled approximately $36 million as of March 31,
1995. The Preferred Return to be waived has not been recorded by the holder of
the Class A Units so this waiver will not impact Centex's consolidated
financial statements.
DESCRIPTION OF CDC SECURITIES
Pursuant to the terms of the Nominee Agreement, Centex may terminate the
Nominee Agreement in its sole discretion as to all or any portion of the
Stockholder Warrants and the Holding Common Stock (collectively, the "Deposited
Securities") and, unless sooner terminated, the Nominee Agreement will terminate
as to the Stockholder Warrants on November 30, 1997 (the "Scheduled Detachment
Date"), unless such date is extended by the vote of the Centex Stockholders
(the "Extended Detachment Date"). Centex is not obligated to terminate the
Nominee Agreement as to the Holding Common Stock. The termination of the
Nominee Agreement as to any of the Deposited Securities will cause a detachment
("Detachment") of such securities from the Centex Common Stock. Upon a
termination of the Nominee Agreement, certificates evidencing each Centex
Stockholder's pro rata portion of the Deposited Securities in respect of which
the Nominee Agreement was terminated will be delivered to the Centex
Stockholders of record as of the record date set for the Detachment. From and
after such record date, certificates evidencing Centex Common Stock will no
longer represent the beneficial interest in the detached Deposited Securities.
Unless sooner terminated, the Nominee Agreement will terminate as to the
Stockholder Warrants on the Scheduled Detachment Date (November 30, 1997),
unless such date is extended by the vote of the Centex Stockholders. In
Centex's proxy statement with respect to its 1995 Annual Meeting of
Stockholders to be held on July 27, 1995, Centex's Board of Directors will
solicit the vote of Centex Stockholders to adopt a proposal to extend the
Scheduled Detachment Date of the Stockholder Warrants to November 30, 2007.
NARRATIVE DESCRIPTION OF BUSINESS
In general, the Amended and Restated Agreement of Limited Partnership of CDC
(the "Partnership Agreement") authorizes CDC to engage in all aspects of the
real estate business, provided that all activities related to the Original
Properties must be conducted pursuant to the Plan for Original Properties,
which is an exhibit to the Partnership Agreement (the "Plan"). The Plan
prescribes in general terms the manner by which CDC will conduct its activities
in respect of the Original Properties, including guidelines as to sales,
maintenance and zoning of the Original Properties, and places restrictions on
these and other types of activities, including, in certain instances, the sale
of any Original Property without the consent of CREC.
21
<PAGE> 22
CDC continues to analyze potential uses for certain of the remaining
Original Properties in order to determine the highest and best use that can be
made of the tracts and, if appropriate, seeking zoning changes to accommodate
such uses. If zoning changes are obtained, CDC will decide whether to further
develop these properties or to seek the sale of all or a portion thereof. If
not developed sooner, the Plan provides that CDC will generally endeavor to
sell the Original Properties over time for the best price available, taking
into account the condition of the marketplace and CDC's cash flow requirements.
The Partnership had a backlog of land sales of approximately $7 million as
of March 31, 1995, and $11 million as of March 31, 1994. The ultimate sales
prices may vary due to contractual clauses that adjust the price depending upon
the closing date.
Pursuant to an agreement with CDC (the "Management Agreement"), Holding is
obligated to provide property management and development assistance and
expertise to CDC, including seeking zoning changes and special use permits,
negotiating utility agreements, and securing necessary rights of way and access
on behalf of CDC, and, consistent with the Plan, to develop and/or contract for
sale and sell on behalf of CDC some or all of such properties in exchange for
compensation for its efforts. Since Holding currently does not have any
employees, it contracts with Centex subsidiaries to provide such services to
CDC. Management of CDC believes that CDC receives these services at a cost
below that which unaffiliated third parties would charge for similar services.
See "Item 10. Directors and Executive Officers of the Registrant-Management
Agreement".
Centex and its affiliates continue to conduct many facets of real estate
development and, for this reason, may be in competition with CDC in certain
activities and projects. Because the relationship between Centex and its
affiliates, on the one hand, and Holding, Development and CDC, on the other
hand, involve decisions by Centex and its affiliates, directly or indirectly,
on behalf of Holding, Development and CDC, the transactions and activities of
Holding, Development and/or CDC may lack the benefit of arm's length bargaining
and may involve conflicts of interest. Holding, Development and CDC believe,
however, that adequate safeguards, including Boards of Directors of Holding and
Development consisting of a majority of independent directors, sufficiently
prevent any such conflicts from adversely affecting the business of Holding,
Development or CDC. To the extent that any conflict of interest or the lack of
arm's length bargaining may benefit Centex or its affiliates, on the one hand,
or CDC or Holding, on the other hand, the combined value of the three tandem
traded securities (Centex Common Stock, Holding Common Stock and Stockholder
Warrants) beneficially owned by a Centex Stockholder should not be affected one
way or another. See "Competition and Regulation" below in this Item 1.
CDC is not a real estate investment trust, and therefore CDC's activities
are not subject to the restrictions imposed on real estate investment trusts
qualified under the Internal Revenue Code of 1986, as amended.
For additional information concerning material properties owned by CDC at
March 31, 1995, see "Item 2. Properties".
COMPETITION AND REGULATION
Within the geographical areas where the remaining Original Properties and
the Additional Properties are located, CDC is subject to substantial
competition from other owners of similarly-situated or developed properties who
wish to sell or develop their properties, many of whom may hold or be in the
process of developing more parcels than CDC or may have greater financial
resources and longer operating histories than CDC. CDC will also compete in
the acquisition of additional desirable properties with a variety of investors,
including Centex and its affiliates, and institutional investors and
developers, seeking similar investments.
The failure of many financial institutions and seizure of assets by agencies
of the federal government created, in prior years, an oversupply of inventory
in various markets. The terms under which the Resolution Trust Corporation
(the "RTC") (depository for the seized assets) ultimately disposed of these
assets impacted property values in certain markets. Accordingly, the RTC asset
disposition program in prior years has increased the holding period necessary
to maximize CDC's property values.
22
<PAGE> 23
The economic recession in California and the overbuilding of commercial
properties in California and Texas, where certain of CDC's properties are
located, has limited CDC's ability to sell these properties at favorable prices
or has made current development of such properties by CDC inadvisable. CDC's
mixed-use properties located in California and, to a lesser extent, Texas are
believed to be most affected by the present economic environment. However,
certain of CDC's properties are located in geographical areas where there is
moderate to good demand for land suitable for development, including Florida,
Illinois and New Jersey and commercial development activity in Texas has begun
to improve. Except for the Forster Ranch property located in San Clemente,
California, CDC believes that it is well situated to weather the current
economic environment in those geographical areas affected and to take advantage
of the long-term economic outlook and opportunities in the areas where its
properties are located. See "Properties--(b) CDC--Forster Ranch" on page 24 of
this Report.
Ownership and development of each of CDC's properties is subject to
licensing and regulation by zoning, land use, environmental, health, sanitation
and other agencies in the state and/or municipality in which the property is
located. Difficulties or failures in obtaining the required licenses or
approvals could delay or prevent the development or sale of any of such
properties. In addition, certain of the Original Properties and the Additional
Properties may be subject to zoning limitations that may not permit development
of such properties for their highest and best use. The ability of CDC to
obtain favorable zoning changes may affect the ultimate value of such
properties to CDC or to a third-party purchaser.
ITEM 2. PROPERTIES
(a) Holding
Due to the nature of its business, Holding does not own or hold for
investment any real or personal properties other than cash, receivables and
other similar assets, and the securities relating to its subsidiary,
Development.
(b) CDC
The remaining Original Properties and the Additional Properties consist of
properties located in Illinois, Texas, New Jersey, Florida and California.
Such properties predominantly consist of undeveloped sites zoned for light
industrial, agricultural, general retail, office industrial, business park,
research and development and single- and multi-family residential property
purposes.
At March 31, 1995, there were four remaining Original Properties and one
Additional Property owned by CDC of material value. Set forth below is a brief
description, including the present zoning therefor, of such properties.
Colony South Planning Unit. Colony South Planning Unit is an Original
Property and is located in suburban Dallas, Texas in the cities of The Colony
(approximately 520 acres) and Lewisville (approximately 152 acres). The Colony
acreage is zoned office, general retail, business park and residential. The
Lewisville acreage is zoned light industrial.
East Windsor. East Windsor is an Original Property comprising approximately
600 acres with four separate residential tracts, 13 farm parcels and 100 acres
of office industrial zoned property in East Windsor, New Jersey, a township
located in the vicinity of Princeton. The residential tracts have final plan
approval for a total of 75 half-acre lots and 174 quarter-acre lots and
preliminary plan approval for 426 multi-family units. Forty-eight of the
quarter-acre lots have been sold to CREC, which has a contract with CDC to
purchase the remaining 126. The farm parcels vary in size from 11 to 35 acres
and total 313 acres.
Bryan Place. Bryan Place is an Original Property and is located in Dallas,
Texas just east of downtown and Central Expressway. It is comprised of 28
non-contiguous parcels zoned office, commercial, retail and residential ranging
from approximately 2,000 square feet to 80,000 square feet. The total area of
the property is approximately 622,000 square feet.
Carrollton Property. The Carrollton Property is an Original Property
located in the City of Carrollton, a suburb of Dallas, Texas. This property
consists of one office and five fabrication-warehouse buildings on
approximately 17 acres, zoned industrial, with a rail spur.
23
<PAGE> 24
Forster Ranch. Forster Ranch, located in San Clemente, California, is an
Additional Property that included 1,077 acres when it was purchased in March
1989. CDC's Development Agreement with the City of San Clemente allows a
series of residential villages containing a total of approximately 2,200 lots
and 78 acres of mixed use property. As of March 31, 1995, 580 of these lots
had been sold to CREC and 21 acres of mixed use property had been sold to other
entities. CDC has entered an agreement with the holder of the Forster Ranch
non-recourse purchase money notes that may result in the transfer of the real
estate to it in satisfaction of the debt, a portion of which is past due. The
lender in turn may sell the real estate to CREC pursuant to an agreement
between them.
Recent Write-Down of Properties. In March 1995, CDC recorded a pre-tax
adjustment to reduce the book value of certain properties in the amount of
approximately $15,500,000 to reflect CDC's view that development activity has
not reached anticipated levels during the current economic cycle in order to
continue to support the historical carrying value of such properties. This
adjustment results in carrying values that will facilitate a nearer-term
disposition or development of these properties. A substantial portion of the
adjustment related to the book values of the Colony South Planning Unit and
Bryan Place properties.
CDC's principal assets consist of the Original Properties and the Additional
Properties remaining unsold.
ITEM 3. LEGAL PROCEEDINGS
Holding is not a party to, and its assets are not the subject of, any
material pending legal proceedings. CDC may be involved from time to time in
litigation matters incident to its day-to-day business; however, management of
Development believes that such litigation, if determined unfavorably to CDC,
would not have a material adverse effect on the financial condition or
operations of CDC.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF HOLDING AND DEVELOPMENT
Information concerning the present executive officers of Holding is set
forth below. All of such officers have served in their capacities since the
organization of Holding, except as indicated. CDC has no executive officers.
The executive officers of Holding set forth below hold the same offices in
Development, the general partner of CDC, as disclosed in "Item 10. Directors
and Executive Officers of the Registrant-Directors and Executive Officers of
Development".
<TABLE>
<CAPTION>
NAME POSITION AGE
---- -------- ---
<S> <C> <C>
J. Stephen Bilheimer President (1) 63
Roger D. Sefzik Vice President and Treasurer (2) 39
Joseph J. Arcisz Vice President (3) 38
</TABLE>
(1) Mr. Bilheimer is an employee of Centex Development Management Company
("CDMC"), a wholly-owned subsidiary of Centex, and served as Executive
Vice President of CREC from April 1987 until March 31, 1988. Mr.
Bilheimer was a director of Development from its date of incorporation
until his resignation as of June 1, 1987 and was re-elected to the Board
of Directors of Development on May 24, 1989. Since April 1, 1988, Mr.
Bilheimer has devoted a majority of his time to the business and affairs
of Holding and Development.
(2) Mr. Sefzik is an employee of CDMC and was a Vice President of CTX Mortgage
Company from May 1987 to March 1988 and Executive Vice President of Centex
Title Company from July 1986 to March 1988. Prior thereto
24
<PAGE> 25
he held various offices with various Centex subsidiaries since March 1983.
Mr. Sefzik was elected to his present positions with Holding as of April
1, 1988. Since April 1, 1988, Mr. Sefzik has devoted a majority of his
time to the business and affairs of Holding and Development.
(3) Mr. Arcisz is an employee of CDMC and was a Division President of CREC,
a wholly-owned subsidiary of Centex, from October 1985 until February 28,
1995. Prior thereto he held various offices with CREC since April 1983.
Mr. Arcisz was elected to his present position with Holding as of March
10, 1995. Since March 1, 1995, Mr. Arcisz has devoted a majority of his
time to the business and affairs of Holding and Development.
All executive officers of Holding are elected annually by the Board of
Directors to serve until the next annual meeting of the Board of Directors or
until their successors have been duly elected. There are no family
relationships among or between such executive officers or the directors.
Holding's executive officers hold the same positions with its subsidiary,
Development.
Holding has no full time employees. The directors and executive officers
perform all executive management functions; all other services necessary to the
conduct of Holding's business are performed by employees of a subsidiary of
Centex or its designee under a services agreement. See "Item 10. Directors
and Executive Officers of the Registrant--Services Agreement".
25
<PAGE> 26
PART II
ITEM 5. MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) Holding
Except as additionally provided below, the information called for by this
Item 5 with respect to Holding is incorporated herein by reference to (1) the
Joint Explanatory Statement on page 2 of this Report, (2) the information
included and referenced under the caption "Stock Prices and Dividends" on page
F-1 of Exhibit 99 to this Report and (3) the information included in Notes (F)
and (G) of the Notes to the Holding/CDC Combining Financial Statements on pages
F-41 - F-42 of Exhibit 99 to this Report.
Prior to the date of the distribution, Centex owned all of the issued and
outstanding shares of Holding Common Stock and, accordingly, there was no
public market for such shares. Following the distribution by Centex, shares of
Holding Common Stock have been tradeable only in tandem with, and as a part of,
shares of Centex Common Stock, and may not be separately sold or otherwise
transferred. Therefore, except with respect to the trading market established
for the tandem traded securities, there is no separate market for shares of
Holding Common Stock. Because of the tandem trading arrangement, it is not
possible to identify precisely the portion of the market price of the tandem
traded securities allocable to shares of Holding Common Stock.
The restrictions on the transfer of the Holding Common Stock and the
Stockholder Warrants separate from Centex Common Stock are imposed by the terms
of a nominee agreement (the "Nominee Agreement") among Centex, Holding, CDC and
the Nominee. Centex Common Stock certificates issued after the date of the
Nominee Agreement bear a legend referring to the restrictions on transfer
imposed thereby.
No dividends have been paid on shares of Holding Common Stock since the
incorporation of Holding. Future cash dividends on Holding Common Stock will
depend on the earnings, financial condition, capital requirements and other
factors affecting Holding and Development.
The provisions of the loan agreement and pledge and security agreement
relating to Holding's $7,700,000 note to Centex (the "Holding Note"), which had
a balance of $7,600,000 at March 31, 1995, include certain restrictive
covenants that limit the extent to which Holding and its subsidiaries
(including Development but not CDC or any Operating Partnership) may create,
assume or guarantee additional indebtedness, pledge or encumber certain of
their assets or otherwise take certain corporate actions. These covenants
include limitations on (a) incurring, assuming or guaranteeing any other
indebtedness, except indebtedness which provides for all payments of principal
to be made after April 1, 1994, indebtedness that is fully and completely
subordinated on terms satisfactory to Centex, and certain trade debt, (b)
creating any additional liens other than statutory liens for taxes, certain
mechanics' and materialmen's liens and other similar liens, (c) effecting a
merger or consolidation, (d) selling property and (e) declaring any dividends
or making certain other shareholder payments, as defined. Holding's
obligations under the Holding Note are secured by a pledge of all of the issued
and outstanding shares of the common stock of Development pursuant to a pledge
and security agreement under which a default by Holding in the performance of
its obligations could give Centex the right to vote such shares, to seek the
registration under the Securities Act of 1933, as amended, of all or a portion
thereof, and to sell such shares to satisfy Holding's obligations. See "Item
13. Certain Relationships and Related Transactions" and Note (G) of the Notes
to the Holding/CDC Combining Financial Statements included on page F-42 of
Exhibit 99 to this Report, which is incorporated herein by reference.
(b) CDC
Except as additionally provided below, the information called for by this
Item 5 with respect to CDC is included herein in (1) the Joint Explanatory
Statement on page 2 of this Report, (2) the information included and referenced
under the caption "Stock Prices And Dividends" on page F-1 of Exhibit 99 to
this Report and (3) the information included in Notes (F) and (G) of the Notes
to the Holding/CDC Combining Financial Statements on pages F-41 - F-42 of
Exhibit 99 to this Report.
26
<PAGE> 27
The Stockholder Warrants were issued to Centex immediately prior to the
November 30, 1987 distribution to Centex Stockholders and, accordingly, there
was no public market for the Stockholder Warrants prior to the distribution.
Following the distribution by Centex, the Stockholder Warrants have been
tradeable only in tandem with, and as part of, shares of Centex Common Stock,
and may not be separately sold or otherwise transferred. Therefore, except
with respect to the trading market established for the tandem traded
securities, there is no separate market for the Stockholder Warrants. Because
of the tandem trading arrangement, it is not possible to identify precisely the
portion of the market price of the tandem traded securities allocable to the
Stockholder Warrants.
The restrictions on the transfer of the Stockholder Warrants and the
Holding Common Stock separate from Centex Common Stock are imposed by the terms
of a nominee agreement (the "Nominee Agreement") among Centex, Holding, CDC and
the Nominee. Centex Common Stock certificates issued after the date of the
Nominee Agreement bear a legend referring to the restrictions on transfer
imposed thereby.
No dividends or distributions have been made on the Stockholder Warrants
since their issuance.
CREC, a subsidiary of Centex, is the present holder of all of the Class A
Units, and accordingly, at this time there is no public market for such
securities. See "Item 1. Business--General Development of Business". CDC has
not made any payment to the holder of the Class A Units with respect to the
Preferred Return during the last four fiscal years. Preference payments in
arrears at March 31, 1995 amounted to $35,818,000.
ITEM 6. SELECTED FINANCIAL DATA
(a) Holding
The information called for by this Item 6 with respect to Holding is
incorporated herein by reference to the Combining Balance Sheets and the
Combining Statements of Operations included in the Holding/CDC Combining
Financial Statements on pages F-35 - F-36 of Exhibit 99 to this report.
(b) CDC
The information called for by this Item 6 with respect to CDC is
incorporated herein by reference to the Combining Balance Sheets and the
Combining Statements of Operations included in the Holding/CDC Combining
Financial Statements on pages F-35 - F-36 of Exhibit 99 to this report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(a) Holding
The information called for by this Item 7 with respect to Holding is
incorporated herein by reference to the information included and referenced
under the caption "Management's Discussion and Analysis of Results of
Operations and Financial Condition" on page F-44 of Exhibit 99 to this report.
(b) CDC
The information called for by this Item 7 with respect to CDC is
incorporated herein by reference to the information included and referenced
under the caption "Management's Discussion and Analysis of Results of
Operations and Financial Condition" on page F-44 of Exhibit 99 to this report.
27
<PAGE> 28
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information called for by this Item 8 is incorporated herein by
reference to Exhibit 99 to this report as set forth in the Index to Financial
Statements on page 35 to this Report (see Item 14).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Holding
DIRECTORS AND EXECUTIVE OFFICERS OF HOLDING
Except as additionally provided below, the information called for by this
Item 10 with respect to Holding is incorporated herein by reference to the
information included under the caption "Election of Directors" on page 25 and
the information included under the caption "Section 16(a) Compliance" on page
29 of Holding's proxy statement dated June 15, 1995 for the 1995 Annual Meeting
of Stockholders of Holding to be held on July 27, 1995 (the "1995 Holding Proxy
Statement"); however, as required by Instruction 3 to Item 401(b) of Regulation
S-K, information regarding executive officers of Holding is included under the
caption "Executive Officers of Holding" included in Part B of this Report
following Item 4.
SERVICES AGREEMENT
Holding has no full time employees. The directors and executive officers
of Holding, who hold the same directorships and offices in Development, perform
all executive management functions. See "Item 11. Executive Compensation".
All tax, accounting, bookkeeping, clerical and similar services that are
necessary to operate the business of Holding are provided pursuant to a
services agreement (the "Services Agreement") entered into between Holding and
Centex Service Company ("CSC"), an indirect subsidiary of Centex. See "Item 13
- -- Certain Relationships and Related Transactions". The term of the Services
Agreement is subject to automatic renewal for successive one-year terms unless
either party elects to terminate the Services Agreement upon at least 30 days'
written notice prior to December 31 of any year. However, the Services
Agreement may not be terminated by Holding (other than in the event of a breach
by CSC constituting gross negligence or willful or wanton misconduct) prior to
the payment in full of the Holding Note, the full and complete detachment of
the Stockholder Warrants from Centex Common Stock or the occurrence of Payout.
Service fees of $30,000 were paid pursuant to the Services Agreement during
fiscal 1995.
(b) CDC
GENERAL PARTNER AND MANAGEMENT
CDC has no directors, officers or employees and, instead, is managed by
Development, its sole general partner. Directors and officers of Development
perform all executive management functions required for CDC. Except as
provided in the Plan with respect to the Original Properties, the limited
partners of CDC have no power to direct or participate in the control of CDC,
and Development makes all decisions regarding the acquisition, disposition or
development of real estate belonging to CDC and all other decisions regarding
CDC's business or operations. See "Item 1. Business". CDC has entered into a
management agreement pursuant to which CDMC will operate, manage and develop
the properties of CDC for and on behalf of CDC. See "Management Agreement"
below in this Item 10. Except for the allocations of profit
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<PAGE> 29
and loss and distributions of cash and other property to which Development is
entitled under the Partnership Agreement, and except for the right to be
reimbursed for certain expenses, Development does not receive any compensation
from CDC in respect of its duties and obligations as general partner of CDC.
See "Item 11. Executive Compensation".
DIRECTORS AND EXECUTIVE OFFICERS OF DEVELOPMENT
Information concerning the present directors and executive officers of
Development is set forth below. All of such persons have served in their
capacities since the organization of Development, except as indicated.
<TABLE>
<CAPTION>
NAME POSITION AGE
---- -------- ---
<S> <C> <C>
J. Stephen Bilheimer . . . . . . . . . . Director and President (1) 63
Josiah O. Low, III . . . . . . . . . . . Director (2)* 56
David M. Sherer . . . . . . . . . . . . . Director (3)* 58
Roger D. Sefzik . . . . . . . . . . . . . Vice President and Treasurer (4) 39
Joseph J. Arcisz . . . . . . . . . . . . Vice President (5) 38
</TABLE>
_____________
*Member of the audit committee of the Board of Directors.
(1) Mr. Bilheimer is an employee of CDMC and served as Executive Vice
President of CREC from April 1987 until March 31, 1988. Mr. Bilheimer
was a director of Development from its date of incorporation until his
resignation as of June 1, 1987. Mr. Bilheimer was re-elected to the Board
of Directors on May 24, 1989.
(2) Mr. Low serves as Senior Vice President of Donaldson, Lufkin & Jenrette
Securities Corporation (since February 1985). Mr. Low is also a director
of Holding. Mr. Low was elected as a director of Development as of June
1, 1987.
(3) Mr. Sherer has been President of David M. Sherer Associates, Inc., a
commercial real estate, investment and brokerage firm, for more than five
years. Mr. Sherer is also a director of Holding. Mr. Sherer was elected
as a director of Development as of June 1, 1987.
(4) Mr. Sefzik is an employee of CDMC and served as Vice President of CTX
Mortgage Company from May 1987 to March 1988 and Executive Vice President
of Centex Title Company from July 1986 to March 1988. Mr. Sefzik was
elected to his present positions with Development as of April 1, 1988.
(5) Mr. Arcisz is an employee of CDMC and served as a Division President of
CREC from October 1985 to February 1995. Mr. Arcisz was elected to his
present position with Development as of March 10, 1995.
All directors are elected annually by the shareholders to serve until the
next annual meeting of stockholders and until their successors have been
elected and qualified, subject to removal by a vote of the holders of not less
than two-thirds of the outstanding shares of the common stock, par value $1.00
per share, of Development. All executive officers of Development are elected
annually by the Board of Directors to serve until the next annual meeting of
the Board of Directors or until their successors have been duly elected. There
are no family relationships among or between Development's directors or
executive officers.
The current executive officers of Development are employees of Centex or
one of its subsidiaries, and it is presently anticipated that this circumstance
will continue. See "Item 11. Executive Compensation".
MANAGEMENT AGREEMENT
All services (other than executive management decision-making) necessary
to operate CDC's business are provided to CDC pursuant to a management
agreement (the "Management Agreement") entered into with 3333 Holding
Corporation ("Holding"), the parent of 3333 Development Company, which is the
sole general partner of CDC. Under the Management Agreement, Holding keeps all
necessary books and records, and provides all additional accounting and
clerical services that Development may deem necessary. Holding's
responsibilities related to real estate management also include ensuring that
CDC's
29
<PAGE> 30
properties are operated, managed and maintained in full compliance with all
relevant laws and regulations, that all real property and any improvements
thereon are maintained and repaired, that all income produced by CDC's
properties is collected and that any development on any property is done in an
efficient manner.
Holding is entitled to reimbursement from CDC for all reasonable costs and
expenses incurred and paid by Holding in connection with the performance of its
duties and obligations under the Management Agreement, plus a 25% managerial
fee. During fiscal 1995, Holding earned fees from CDC totaling $922,000 for
its services.
The Management Agreement also provides that Holding will provide,
consistent with the Plan, pre-development and development services on behalf of
CDC, and the Management Agreement specifically provides that Holding is
delegated full authority to carry out and perform on behalf of CDC all aspects
of the Plan.
The term of the Management Agreement is subject to automatic renewal for
successive one-year terms unless either party elects to terminate the
Management Agreement upon at least 30 days' written notice prior to December 31
of any year. However, it may not be terminated by CDC (other than in the event
of a breach by Holding constituting gross negligence or willful or wanton
misconduct) prior to the latest of the complete detachment of the Stockholder
Warrants from Centex Common Stock, Payout or the payment in full of the Holding
Note.
From time to time, Holding may delegate the performance of certain of its
responsibilities to CREC, upon terms and conditions to be determined. These
responsibilities may include enhancement of properties owned or controlled by
CDC, for which reasonable additional compensation may be paid by CDC to Holding
pursuant to terms to be negotiated between them. In turn, some or all of such
additional compensation may be paid by Holding to CREC.
ITEM 11. EXECUTIVE COMPENSATION
Holding and CDC
The information called for by this Item 11 with respect to Holding and CDC
is incorporated herein by reference to the information included and referenced
under the caption "Executive Compensation" in the 1995 Holding Proxy Statement
on pages 27-28 thereof.
CDC does not have any directors, officers or employees, and is managed by
its sole general partner, Development. Except for the allocations of profit
and loss and distributions of cash and other property to which Development is
entitled under the Partnership Agreement, and except for the right to be
reimbursed for certain expenses, Development does not receive any compensation
from CDC in respect of its duties and obligations as general partner for CDC.
As general partner, Development is entitled to be allocated certain items of
income and loss of CDC and to receive certain distributions of cash from CDC
depending upon the level of income and cash available for distribution and
whether Payout has occurred. The terms and conditions upon which Development
will be allocated items of income and loss and will receive distributions are
set forth in the Partnership Agreement. For a summary of these rights and
benefits, see Note (F) of the Notes to the Holding/CDC Combining Financial
Statements included on page F-41 of Exhibit 99 to this report, which is
incorporated herein by this reference.
The directors and executive officers of Development perform all executive
management functions for CDC. See "Item 10. Directors and Executive Officers of
the Registrant". Services required by CDC in its operations are also provided
pursuant to a Management Agreement with Holding pursuant to which Holding
operates, manages and develops the properties of CDC for and on behalf of CDC.
See "Item 11--Directors and Executive Officers of the Registrant--Management
Agreement". The executive officers of Development did not receive any
remuneration from Development or CDC for the year ended March 31, 1995.
Directors of Development who are neither officers nor employees of Development,
Centex or Centex's subsidiaries received compensation from Development in the
form of directors' and committee members' fees. During the 1995 fiscal year,
each executive officer of Development received remuneration from Centex or one
of its subsidiaries in his capacity as a director, officer or employee thereof.
None of the directors or executive officers of Development received any
additional compensation from Centex or any of its subsidiaries
30
<PAGE> 31
for services rendered on behalf of Development or CDC during the 1995 fiscal
year.
During fiscal 1995, J. Stephen Bilheimer, a Director and the President of
Development, and Roger D. Sefzik, Vice President and Treasurer of Development,
both of whom are employees of subsidiaries of Centex, have devoted a majority
of their time and attention to the management of Development and Holding.
Messrs. Bilheimer and Sefzik provided such services to Development on behalf of
and in their capacities as officers of Holding pursuant to the Management
Agreement. Each current executive officer of Development continues to receive
remuneration from Centex or one of its subsidiaries in his capacity as an
officer or employee thereof and is not compensated by Development or CDC. As of
March 10, 1995, Joseph J. Arcisz joined Holding as a Vice President. It is
expected that during fiscal year 1996, he will devote a majority of his time to
Development and Holding.
The directors of Development, who also hold the same directorships in
Holding and are neither officers nor employees of Development, Centex or
Centex's subsidiaries, each receive approximately $8,000 annually in the form
of directors' and committee members' fees in their capacities as directors
and/or committee members of Development. In addition, Development reimburses
these directors for the reasonable expenses incurred in attending directors'
and committee meetings.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Holding
The information called for by this Item 12 with respect to Holding is
incorporated herein by reference to the information included and referenced
under the caption "Security Ownership of Management and Certain Beneficial
Owners" in the 1995 Holding Proxy Statement on pages 26-27.
(b) CDC
The following table sets forth certain information with respect to the
ownership of the equity securities of CDC as of December 31, 1994 by
Development, the directors of Development, individually itemized, all directors
and executive officers of Development as a group, and any person known to CDC
to be the beneficial owner of more than 5% of any class of CDC's equity
securities. Except as otherwise indicated, all securities are owned directly,
and the beneficial owner of such securities has the sole voting and investment
power with respect thereto.
31
<PAGE> 32
<TABLE>
<CAPTION>
NAME OF NUMBER OF UNITS PERCENT
TITLE OF CLASS* BENEFICIAL OWNER** OR WARRANTS OWNED OF CLASS
--------------- ------------------ ----------------- --------
<S> <C> <C> <C>
General Partner Interest (1) 3333 Development Corporation . . . . . . . . . . All 100%
3333 Lee Parkway, Suite 500
Dallas, Texas 75219
Class A Units (2) Centex Real Estate Corporation . . . . . . . . . 1,000 100%
3333 Lee Parkway, Suite 1100
Dallas, Texas 75219
Stockholder Warrants (3) 3333 Development Corporation . . . . . . . . . . -- ***
Joseph J. Arcisz . . . . . . . . . . . . . . . . -- ***
J. Stephen Bilheimer . . . . . . . . . . . . . . -- ***
Josiah O. Low, III . . . . . . . . . . . . . . . -- ***
Roger D. Sefzik . . . . . . . . . . . . . . . . . -- ***
David M. Sherer . . . . . . . . . . . . . . . . . -- ***
All directors and executive officers of
Development as a group (5 persons) . . . . . . . -- ***
FMR Corp (4). . . . . . . . . . . . . . . . . . . 161 13.79%
82 Devonshire Street
Boston, Massachusetts 02109
The Prudential Insurance Company
of America(5) . . . . . . . . . . . . . . . . . . 62 5.35%
Prudential Plaza
Newark, New Jersey 07102-3777
Centex Class B Unit Centex Corporation . . . . . . . . . . . . . . . 100 100%
Warrants (6) 3333 Lee Parkway, Suite 1200
Dallas, Texas 75219
Class B Units (7) Centex Corporation (8) . . . . . . . . . . . . . 350 (9) 28% (8)
3333 Lee Parkway, Suite 1200
Dallas, Texas 75219
</TABLE>
- --------------------
*Under the terms of the Partnership Agreement, CDC is managed by a sole
corporate general partner and none of the present classes of CDC's
securities are "voting securities" within the meaning of the rules and
regulations of the Commission promulgated pursuant to the Exchange Act.
Nonetheless, information with respect to each class of CDC's equity
securities has been set forth in accordance with such rules and
regulations.
**The address of any person who is the beneficial owner of more than five
percent of a class of CDC's securities is also included.
***Less than 1%.
(1) In connection with the formation of CDC, Development made a capital
contribution to CDC of $767,182, in exchange for Development's general
partner interest in CDC. As general partner, Development is entitled to
receive allocations
32
<PAGE> 33
of income and loss and distributions of property from CDC. See "Item 11.
Executive Compensation".
(2) The Class A Units were issued to the Original Limited Partners in exchange
for the contribution to CDC of the Original Properties. Record title to
the Class A Units presently is held by CREC, a subsidiary of Centex. See
"Item 1. Business--General Development of Business". As of the date or
dates when the Stockholder Warrants are deemed to have been exercised, the
Class A Units will be automatically converted into (i) a number of Class B
Units equal to 20% of the total number of Class B Units that would be
outstanding after conversion based on the actual exercise of the
Stockholder Warrants and the assumed exercise of all the then exercisable
Centex Class B Unit Warrants (see footnote (3)) and (ii) a like number of
Class A Units. The Class A Units will be automatically cancelled upon
Payout and the exercise and/or expiration of all of the Stockholder
Warrants and the Centex Class B Unit Warrants.
(3) The Nominee holds record title to the Stockholder Warrants, which are
exercisable for Class B Units, for the benefit of Centex Stockholders
pursuant to the Nominee Agreement. See "Item 5. Market for Registrant's
Common Equity and Related Stockholder Matters". However, the Nominee has
no power to vote the Class B Units issuable upon exercise of the
Stockholder Warrants or to direct the investment of the Stockholder
Warrants or such Class B Units. Beneficial ownership of the Stockholder
Warrants is, by virtue of the Nominee arrangement, indirect and undivided.
The number of Stockholder Warrants listed as beneficially owned has been
rounded to the nearest whole warrant and is based on the assumption that
options to purchase Centex Common Stock, presently exercisable, or
exercisable within 60 days, have been exercised. The Class B Units
issuable upon exercise of the Stockholder Warrants have not been shown as
"beneficially owned" under the rules and regulations of the Commission
promulgated pursuant to the Exchange Act because the beneficial owners of
the Stockholder Warrants have no present right to exercise the Stockholder
Warrants and acquire Class B Units.
(4) Centex has received information from FMR Corp. ("FMR") stating that, as of
December 31, 1994, FMR may be deemed to beneficially own 4,611,272 shares
of Centex Common Stock, (and therefore to own a beneficial interest in 161
Stockholder Warrants) acquired solely for investment purposes, as a parent
holding company with respect to holdings of wholly-owned investment
adviser subsidiaries of FMR or other entities affiliated with FMR. FMR
stated that it held 145,684 shares of Centex Common Stock with sole voting
power (and therefore held a beneficial interest in 5 Stockholder Warrants
with sole voting power), 156,284 shares of Centex Common Stock with sole
dispositive power (and therefore held a beneficial interest in 5
Stockholder Warrants with sole dispositive power), 10,600 shares of Centex
Common Stock with no power to vote (and therefore held a beneficial
interest in 0 Stockholder Warrants with no power to vote), and no shares
with shared voting power. The remaining shares (and therefore Stockholder
Warrants) that FMR may beneficially own may be voted by (i) the Board of
Trustees of certain Fidelity Funds, or (ii) certain institutions whose
funds are managed by Fidelity Management Trust Company, a wholly-owned
subsidiary of FMR.
(5) Centex has received information from The Prudential Insurance Company of
America ("Prudential") stating that, as a result of shares of Centex
Common Stock held by Prudential for the benefit of its clients by its
separate accounts, externally managed accounts, registered investment
companies, subsidiaries and/or other affiliates, as of December 31, 1994,
Prudential may be deemed to beneficially own 1,789,100 shares of Centex
Common Stock (and therefore to own a beneficial interest in 62 Stockholder
Warrants). Prudential stated that it held 331,300 shares of Centex Common
Stock with sole voting and dispositive power (and therefore held a
beneficial interest in 12 Stockholder Warrants with sole voting and
dispositive power, 1,456,900 shares of Centex Common Stock with shared
voting power (and therefore held a beneficial interest in 51 Stockholder
Warrants with shared voting power), and 1,457,800 shares of Centex Common
Stock with shared dispositive power (and therefore held a beneficial
interest in 51 Stockholder Warrants with shared dispositive power).
(6) On November 30, 1987, Centex acquired from CDC 100 warrants (the "Centex
Class B Unit Warrants") to purchase a like number of Class B Units,
subject to adjustment, pursuant to an agreement for purchase of warrants.
The Centex Class B Unit Warrants are generally in the same form as, and
contain the same terms as, the Stockholder Warrants, except for the manner
in which they may be subdivided (and the corresponding exercise price) and
the applicable exercise period. See Note (F) of the Notes to the
Holding/CDC Combining Financial Statements included on page F-41 of
Exhibit 99 to this report, which is herein incorporated by this reference.
(7) Presently, there are no Class B Units issued or outstanding.
(8) When issued, record title to 200 of these Class B Units will be held by
the owners of the Class A Units. See footnote (2).
(9) The Class B Units that may be acquired upon conversion of outstanding
Class A Units as of the date of the exercise of
33
<PAGE> 34
the Stockholder Warrants, which date Centex may indirectly determine by
virtue of its ability, in its sole and absolute discretion, to determine
the date of detachment of the Stockholder Warrants from Centex Common
Stock, and the Class B Units that may be acquired upon exercise of the
Centex Class B Unit Warrants are included as "beneficially owned" pursuant
to the rules and regulations of the Commission promulgated pursuant to the
Exchange Act. See footnotes (2) and (3). The number of Class B Units and
the percentage of class listed assume that the Stockholder Warrants and the
Centex Class B Unit Warrants have been exercised in full for Class B Units
but that no subdivision of any of the warrants has occurred; however, both
the Stockholder Warrants and the Centex Class B Unit Warrants may be
subdivided or combined and any such subdivision or combination would
necessarily change the number of Class B Units beneficially owned and the
percent of class represented thereby.
All of the issued and outstanding shares of Development have been pledged
to secure the Holding Note. See "Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters".
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Holding
The information called for by this Item 13 with respect to Holding is
incorporated herein by reference to the information included under the caption
"Certain Transactions" in the 1995 Holding Proxy Statement on pages 29-30.
(b) CDC
Holding entered into a services agreement in May, 1987 with Centex Service
Company ("CSC"), whereby CSC will provide certain tax, accounting and other
similar services for Holding at a fee of $2,500 per month. Service fees of
$30,000 were paid pursuant to this agreement for fiscal year 1995.
CDC has entered into an agreement with Holding for it to provide
management services to CDC in connection with the development and operation of
properties acquired by CDC, maintenance of CDC property, and accounting and
clerical services. Management fees and development costs totaling $922,000
were incurred in fiscal 1995.
In connection with Holding's acquisition of additional shares of common
stock of Development in 1987, Holding borrowed $7,700,000 from Centex pursuant
to a secured promissory note (the "Holding Note"). The Holding Note, which had
a fluctuating balance during 1995, bears interest, payable quarterly, at the
prime rate of interest of NationsBank of Texas, N.A. ("NationsBank") plus 1%
(10% at May 30, 1995). As of May 30, 1995, the outstanding principal balance
of the Holding Note was $5,927,000. The Holding Note is secured by a pledge of
all of the issued and outstanding shares of Development. The Holding Note, as
amended, matures on the earlier to occur of April 1, 1996 or the last
detachment of Holding Common Stock and the Stockholder Warrants from Centex
Common Stock pursuant to the Nominee Agreement. There was interest expense of
$611,000 related to the Holding Note for the year ended March 31, 1995.
In fiscal year 1995, CDC sold to CREC 254 lots for $5,423,000. CREC has
contracts to purchase an additional 364 lots from CDC.
In 1987, Development loaned $7,700,000 to CREC, pursuant to an unsecured
note (the "CREC Note") and related loan agreement. The CREC Note bears
interest, payable quarterly, at the prime rate of interest of NationsBank plus
7/8% (9 7/8% at May 30, 1995). As of May 30, 1995, the outstanding principal
balance on the CREC Note was $7,700,000. The CREC Note matures on April 30,
1996. There was interest income of $680,000 related to the CREC Note for the
year ended March 31,1995.
In July 1992, on behalf of CDC, CREC guaranteed a $10,000,000 bank line of
credit for CDC to utilize in conjunction with development of lots to be sold to
CREC. In July 1993, the amount of such line of credit was reduced to
$5,000,000. This line of credit, which had an outstanding balance of
$1,539,000 at May 30, 1995, bears interest at LIBOR plus 3/4% (6 13/16% at May
30, 1995), is unsecured and matures in July 1995.
34
<PAGE> 35
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this Report:
(1) and (2) See the Index to Financial Statements below for a list
of the Financial Statements filed herewith.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
REFERENCE
----------------------------------------
EXHIBIT
99
----------
<S> <C>
3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX
DEVELOPMENT COMPANY, L.P.
Report of Independent Public Accountants . . . . . . . . . . . . . F-33
Combining Balance Sheets as of March 31, 1995 and
1994. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-35
Combining Statements of Operations and Cash Flows for the
years ended
March 31, 1995, 1994 and 1993 . . . . . . . . . . . . . . . . . F-36
Combining Statements of Stockholders' Equity and
Partners' Capital for the years ended
March 31, 1995, 1994 and 1993 . . . . . . . . . . . . . . . . . F-37
Notes to Combining Financial Statements. . . . . . . . . . . . . . F-37 - F-42
Quarterly Results (unaudited). . . . . . . . . . . . . . . . . . . F-43
</TABLE>
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
(3) EXHIBITS
(A) Holding
The information on exhibits required by this Item 14 is set forth in the
Holding Index to Exhibits appearing on pages 42-43 of this Report.
(B) CDC
The information on exhibits required by this Item 14 is set forth in the
CDC Index to Exhibits appearing on pages 44-46 of this Report.
(b) Reports on Form 8-K:
Neither Holding nor CDC filed any reports on Form 8-K during the quarter
ended March 31, 1995.
35
<PAGE> 36
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
<TABLE>
<S> <C>
3333 HOLDING CORPORATION
------------------------------------------------------------------
Registrant
May 31, 1995 By: /s/ J. STEPHEN BILHEIMER
---------------------------------------------------------------
J. Stephen Bilheimer,
President
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant in the capacities and on the dates indicated.
<TABLE>
<S> <C>
May 31, 1995 /s/ J. STEPHEN BILHEIMER
--------------------------------------------------------------------
J. Stephen Bilheimer,
President
(principal executive officer)
May 31, 1995 /s/ ROGER D. SEFZIK
--------------------------------------------------------------------
Roger D. Sefzik,
Vice President and Treasurer
(principal financial and accounting officer)
Directors: J. Stephen Bilheimer, Josiah O. Low, III; David M. Sherer
May 31, 1995 By: /s/ J. STEPHEN BILHEIMER
-----------------------------------------------------------------
J. Stephen Bilheimer,
Individually and as
Attorney-in-Fact*
</TABLE>
- --------------------
*Pursuant to authority granted by powers of attorney, copies of which are
filed herewith, except for Mr. Low's Power of Attorney which will be filed
upon execution.
36
<PAGE> 37
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, 3333 Development Corporation, as general partner of, and
on behalf of, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
<TABLE>
<S> <C>
CENTEX DEVELOPMENT COMPANY, L.P.
---------------------------------------------------------------
Registrant
By: 3333 Development Corporation, General Partner
By: /s/ J. STEPHEN BILHEIMER
-----------------------------------------------------------
May 31, 1995 J. Stephen Bilheimer,
President
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of 3333
Development Corporation, as general partner of, and on behalf of, the
registrant in the capacities and on the dates indicated.
<TABLE>
<S> <C>
May 31, 1995 /s/ J. STEPHEN BILHEIMER
------------------------------------------------------------------
J. Stephen Bilheimer,
President
(principal executive officer)
May 31, 1995 /s/ ROGER D. SEFZIK
------------------------------------------------------------------
Roger D. Sefzik,
Vice President and Treasurer
(principal financial and accounting officer)
Directors: J. Stephen Bilheimer, Josiah O. Low, III; David M. Sherer
May 31, 1995 By: /s/ J. STEPHEN BILHEIMER
--------------------------------------------------------------
J. Stephen Bilheimer,
Individually and as
Attorney-in-Fact*
</TABLE>
- --------------------
*Pursuant to authority granted by powers of attorney, copies of which are
filed herewith, except for Mr. Low's Power of Attorney which will be filed
upon execution.
37
<PAGE> 38
INDEX TO EXHIBITS
CENTEX CORPORATION
AND SUBSIDIARIES
<TABLE>
<CAPTION>
EXHIBIT FILED HEREWITH OR SEQ. NO.
NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE
------- ------- ------------------------- --------
<S> <C> <C> <C>
3.1 Restated Articles of Incorporation of Exhibit 3.1 to Annual Report on Form
Centex 10-K of Centex Corporation ("Centex")
(File No. 1-6776) for fiscal year ended
March 31, 1993 ("Centex Form 10-K")
3.2 By-laws of Centex. Exhibit 3.2 to Centex Form 10-K
4.1 Specimen Centex common stock certificate Exhibit 4.1 to Centex Form 10-K
(with tandem trading legend and Rights
Agreement legend).
4.2 Nominee Agreement, dated November 30, Exhibit 4.2 to Centex Form 10-K
1987, by and between Centex, 3333 Holding
Corporation ("Holding") and Centex
Development Company, L.P. ("CDC"), and
Chemical Bank, as successor nominee.
4.3 Agreement for Purchase of Warrants, dated Exhibit 4.3 to Centex Form 10-K
as of November 30, 1987, by and between
Holding and Centex.
</TABLE>
38
<PAGE> 39
INDEX TO EXHIBITS
CENTEX CORPORATION
AND SUBSIDIARIES--CONTINUED
<TABLE>
<CAPTION>
EXHIBIT FILED HEREWITH OR SEQ. NO.
NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE
------ ------- ------------------------- --------
<S> <C> <C> <C>
4.4 Rights Agreement, dated as of Exhibit 1 to Form 8-A Registration
September 17, 1986, between Centex and Statement of Centex dated September 17,
Chemical Bank, as successor rights agent. 1986
4.5 Amendment No. 1 to Rights Agreement, dated Exhibit 4.6 to Centex Form 10-K
as of May 18, 1988, between Centex and
Chemical Bank, as successor rights agent.
4.6 Indenture dated as of March 12, 1987 Exhibit 4.7 to Centex Form 10-K
between Centex and Texas Commerce Bank-
Dallas, N.A. with respect to Subordinated
Debt Securities of Centex.
4.7 Supplemental Indenture dated as of Exhibit 4.8 to Centex Form 10-K
March 12, 1987 between Centex and Texas
Commerce Bank-Dallas, N.A. with respect to
$100,000,000 8 3/4% Subordinated
Debentures Due March 1, 2007.
4.8 Instruments with respect to long-term debt N/A
which do not exceed 10% of the total
assets of Centex and its subsidiaries have
not been filed. Centex agrees to furnish
a copy of such instruments to the
Commission upon request.
</TABLE>
39
<PAGE> 40
INDEX TO EXHIBITS
CENTEX CORPORATION
AND SUBSIDIARIES--CONTINUED
<TABLE>
<CAPTION>
EXHIBIT FILED HEREWITH OR SEQ. NO.
NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE
------ ------- ------------------------- --------
<S> <C> <C> <C>
4.9 Debenture Purchase Agreement, dated as of Exhibit 4.11 to Centex Form 10-K
June 17, 1987, between Centex and the
State Investment Council of New Mexico
with respect to $20,000,000 Aggregate
Principal Amount of 8.80% Subordinated
Debenture of Centex due June 30, 2007.
4.10 Indenture dated as of May 1, 1991 between Exhibit 4.12 to Centex Form 10-K
Centex and Chemical Bank with respect to
Senior Debt Securities.
4.11 Supplemental Indenture dated as of May 10, Exhibit 4.13 to Centex Form 10-K
1991 between Centex and Chemical Bank with
respect to $100,000,000 9.05% Senior Notes
due May 1, 1996.
4.12 Subordination Agreement dated as of May 1, Exhibit 4.14 to Centex Form 10-K
1991 by and among Centex Corporation and
all of its subsidiaries.
4.13 Supplemental Indenture dated as of June Exhibit 4.15 to Annual Report on Form
17, 1987 between Centex and Texas Commerce 10-K of Centex (File No. 1-6776) for
Bank--Dallas, N.A. with respect to 8.80% fiscal year ended March 31, 1994
Subordinated Debentures due June 30, 2007. ("Centex 1994 Form 10-K")
4.14 Debenture No. 1 dated June 17, 1987 of Exhibit 4.16 to Centex 1994 Form 10-K
Centex 8.80% Subordinated Debentures due
June 30, 2007.
10.1 Centex Corporation Stock Option Plan, as Exhibit 10.1 to Centex Form 10-K
amended.*
10.2 Centex Corporation 1987 Stock Option Plan, Exhibit 28.1 to Joint Registration
as amended.* Statement of Centex, Holding and CDC on
Form S-8 (No. 33-44575) dated December
13, 1991.
10.3 Credit Agreement dated as of May 1, 1987, Exhibit 10.2 to Amendment No. 3 dated
by and between Holding and Centex and November 24, 1987 to Registration
related (i) Promissory Note dated May 1, Statement of Holding on Form 10 (File
1987, executed by Holding and payable to No. 1-9624) dated July 12, 1987.
the order of Centex in the principal
amount of $7,700,000 and (ii) Pledge and
Security Agreement dated as of May 1, 1987
executed by Holding in favor of Centex.
</TABLE>
40
<PAGE> 41
INDEX TO EXHIBITS
CENTEX CORPORATION
AND SUBSIDIARIES--CONTINUED
<TABLE>
<CAPTION>
EXHIBIT FILED HEREWITH OR SEQ. NO.
NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE
------ ------- ------------------------- --------
<S> <C> <C> <C>
10.4 Consulting Agreement dated as of February 1, Filed Herewith.
1995 between Centex and Paul R. Seegers.*
10.5 Executive Employment Agreement dated as of Exhibit 10.6 to Centex Form 10-K
September 17, 1990 between Centex and
Laurence E. Hirsch.*
10.6 Executive Employment Agreement dated as of Exhibit 10.7 to Centex Form 10-K
January 18, 1991 between Centex and David
W. Quinn.*
10.7 Executive Employment Agreement dated as of Exhibit 10.8 to Centex Form 10-K
January 18, 1991 between Centex and
William J Gillilan III.*
10.8 Centex Corporation $2,000,000 Subordinated Filed Herewith.
Convertible Note issued to Laurence E.
Hirsch on March 1, 1995.*
21 List of Subsidiaries of Centex. Filed Herewith.
23 Consent of Independent Public Accountants. Filed Herewith.
24 Powers of Attorney. Filed Herewith.
27 Financial Data Schedule. Filed Herewith.
99 Financial Statements. Filed Herewith.
</TABLE>
- --------------------
* Required to be filed as an exhibit pursuant to Item 14(c).
41
<PAGE> 42
INDEX TO EXHIBITS
3333 HOLDING CORPORATION
AND SUBSIDIARY
<TABLE>
<CAPTION>
EXHIBIT FILED HEREWITH OR SEQ. NO.
NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE
------ ------- ------------------------- --------
<S> <C> <C> <C>
3.1 Articles of Incorporation of 3333 Holding Exhibit 3.2a to Amendment No. 1 dated
Corporation ("Holding"). October 14, 1987 ("Amendment No. 1") to
the Registration Statement of Holding on
Form 10 (File No. 1-9624) dated July 12,
1987 (the "Holding Registration
Statement").
3.2 By-laws of Holding, as amended. Exhibit 3.2 to Annual Report on Form 10-
K of Holding (File No. 1-9624) for
fiscal year ended March 31, 1993 (the
"Holding 10-K")
4.1 Specimen Holding common stock Exhibit 4.1 to Amendment No. 1.
certificate.
4.2 Specimen Centex Corporation ("Centex") Exhibit 4.2 to Holding Form 10-K.
common stock certificate (with tandem
trading legend and Rights Agreement
legend).
4.3 Nominee Agreement, dated as of November Exhibit 4.3 to Holding Form 10-K.
30, 1987 by and between Centex, Holding
and Centex Development Company, L.P.
("CDC"), and Chemical Bank, as successor
nominee.
4.4 Agreement for Purchase of Warrants, dated Exhibit 4.4 to Holding Form 10-K.
as of November 30, 1987, by and between
Holding and Centex.
10.1 Services Agreement, dated as of May 5, Exhibit 10.1 to Amendment No. 3 dated
1987, by and between Holding and Centex November 24, 1987 ("Amendment No. 3") to
Service Company. the Holding Registration Statement.
10.2 Credit Agreement dated as of May 1, 1987, Exhibit 10.2 to Amendment No. 3.
by and between Holding and Centex and
related (i) Promissory Note dated May 1,
1987, executed by Holding and payable to
the order of Centex in the principal
amount of $7,700,000 and (ii) Pledge and
Security Agreement dated as of May 1, 1987
executed by Holding in favor of Centex.
</TABLE>
42
<PAGE> 43
INDEX TO EXHIBITS
3333 HOLDING CORPORATION
AND SUBSIDIARY--CONTINUED
<TABLE>
<CAPTION>
EXHIBIT FILED HEREWITH OR SEQ. NO.
NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE
------ ------- ------------------------- --------
<S> <C> <C> <C>
10.3 Credit Agreement dated as of May 1, 1987, Exhibit 10.3 to the Holding Registration
by and between 3333 Development Statement.
Corporation and Centex Real Estate
Corporation and related Promissory Note
dated May 1, 1987, executed by Centex Real
Estate Corporation payable to the order of
3333 Development Corporation in the
principal amount of $7,700,000.
21 Subsidiaries of Holding. Filed Herewith.
23 Consent of Independent Public Accountants. Filed Herewith.
24 Powers of Attorney. Filed Herewith.
27 Financial Data Schedule. Filed Herewith.
99 Financial Statements. Filed Herewith.
</TABLE>
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43
<PAGE> 44
INDEX TO EXHIBITS
CENTEX DEVELOPMENT COMPANY, L.P.
<TABLE>
<CAPTION>
EXHIBIT FILED HEREWITH OR SEQ. NO.
NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE
------ ------- ------------------------- --------
<S> <C> <C> <C>
2.1 Option Agreement, dated as of November 3, Exhibit 2.1 to Centex 1994 Form 10-K
1988, by and between Centex Development
Company, L.P. ("CDC") and Estrella
Properties, Ltd.
2.2 Additional Interest Agreement, dated March Exhibit 2.2 to Centex 1994 Form 10-K
30, 1989, by and between CDC and
Westinghouse Credit Corporation.
2.3 Construction Loan Agreement, dated March Exhibit 2.3 to Centex 1994 Form 10-K
30, 1989, by and among Westinghouse Credit
Corporation and CDC.
2.4 Forster Ranch Development Agreement, dated Exhibit 2.4 to Centex 1994 Form 10-K
March 31, 1989, by and between the City of
San Clemente, California and CDC.
3.1 Articles of Incorporation, as amended, of Exhibit 3.2a to Amendment No. 1 dated
3333 Development Corporation October 14, 1987 ("CDC Amendment No. 1")
("Development") as currently in effect. to the Registration Statement of CDC on
Form 10 (File No. 1-9625) dated July 12,
1987 (the "CDC Registration Statement").
3.2 By-laws of Development, as amended. Exhibit 3.2 to Annual Report on Form 10-K
of CDC (File No. 1-9625) for fiscal year
ended March 31, 1993 (the "CDC 10-K").
4.1 Certificates of Limited Partnership of Exhibit 4.1 to the CDC Registration
CDC. Statement.
4.2 Amended and Restated Agreement of Limited Exhibit 4.2 to Amendment No. 3 dated
Partnership of CDC. November 24, 1987 ("CDC Amendment No. 3")
to the CDC Registration Statement.
4.3 Specimen certificate for Class A limited Exhibit 4.3 to the CDC Registration
partnership units. Statement.
4.4 Specimen certificate for Class B limited Exhibit 4.4 to the CDC Registration
partnership units. Statement.
</TABLE>
44
<PAGE> 45
INDEX TO EXHIBITS
CENTEX DEVELOPMENT COMPANY, L.P.
<TABLE>
<CAPTION>
EXHIBIT FILED HEREWITH OR SEQ. NO.
NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE
------ ------- ------------------------- --------
<S> <C> <C> <C>
4.5 Warrant Agreement, dated as of November Exhibit 4.5 to CDC Form 10-K
30, 1987, by and between CDC and Centex
Corporation ("Centex").
4.6 Specimen warrant certificate. Exhibit 4.6 to CDC Amendment No. 3.
4.7 Specimen Centex common stock certificate Exhibit 4.7 to CDC Form 10-K.
(with tandem trading legend and Rights
Agreement legend).
4.8 Nominee Agreement, dated as of November Exhibit 4.8 to CDC Form 10-K.
30, 1987, by and between Centex, 3333
Holding Corporation ("Holding") and CDC,
and Chemical Bank, as successor nominee.
4.9 Agreement for Purchase of Warrants, dated Exhibit 4.9 to CDC Form 10-K.
as of November 30, 1987, by and between
CDC and Centex.
4.10 Form of Operating Partnership Agreement. Exhibit 4.9 to the CDC Registration
Statement.
10.1 Management Agreement by and between Centex Exhibit 10.1 to CDC Amendment No. 3.
Real Estate Corporation and CDC.
10.2 Supplement to Management Agreement by and Exhibit 10.1a to CDC Amendment No. 3.
between Centex Real Estate Corporation and
CDC.
10.3 Documents of Conveyance of Property from Exhibit 10.2 to CDC Amendment No. 1.
Centex Land Corporation to CDC.
10.4 Documents of Conveyance of Property from Exhibit 10.3 to the CDC Registration
Centex Homes Corporation to CDC. Statement.
10.5 Documents of Conveyance of Property from Exhibit 10.4 to the CDC Registration
Fox & Jacobs, Inc. to CDC. Statement.
10.6 Documents of Conveyance of Property from Exhibit 10.5 to the CDC Registration
Great Lakes Development Co., Inc., to CDC. Statement.
10.7 Agreement dated as of April 1, 1987 by and Exhibit 10.6 to the CDC Registration
among CDC, Centex Real Estate Corporation, Statement.
Centex Homes Corporation and Centex Land
Company.
</TABLE>
45
<PAGE> 46
INDEX TO EXHIBITS
CENTEX DEVELOPMENT COMPANY, L.P.--CONTINUED
<TABLE>
<CAPTION>
EXHIBIT FILED HEREWITH OR SEQ. NO.
NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE
------ ------- ------------------------- --------
<S> <C> <C> <C>
10.8 Agreement dated as of April 1, 1987 by and Exhibit 10.7 to the CDC Registration
between CDC and Centex Homes of New Statement.
Jersey, Inc.
10.9 Agreement dated as of April 1, 1987 by and Exhibit 10.8 to CDC Amendment No. 1.
between CDC and David Little.
10.10 Trust Agreement dated March 31, 1987 by Exhibit 10.9 to CDC Amendment No. 1.
and between CDC and David Little.
23 Consent of Independent Public Accountants. Filed Herewith.
24 Powers of Attorney. Filed Herewith.
27 Financial Data Schedule. Filed Herewith.
99 Financial Statements. Filed Herewith.
</TABLE>
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46
<PAGE> 1
EXHIBIT 10.4
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT, dated as of February 1, 1995 (the
"Agreement"), is made by and between Centex Corporation, a Nevada corporation
with its principal offices at 3333 Lee Parkway, Dallas, Texas 75219
(hereinafter referred to as the "Company"), and Paul R. Seegers, a resident of
Dallas, Texas (hereinafter referred to as "Seegers").
W I T N E S S E T H:
WHEREAS, Seegers has served the Company in various capacities,
including as Chairman of the Board of the Company, Chief Executive Officer of
the Company, Co-Chief Executive Officer of the Company and President of the
Company, and he currently serves as Chairman of the Executive Committee of the
Board of Directors of the Company;
WHEREAS, the Board of Directors of the Company has determined that
Seegers' leadership, managerial skills and business acumen have constituted
major factors in the growth and development of the Company, and the Company is
and will continue to be in need of Seegers' continued expertise and business
acumen so that the future and uninterrupted progress of the Company will be
assured;
WHEREAS, the Company desires to continue to retain and secure for
itself the experience, ability and services of Seegers as a consultant for the
Company; and
WHEREAS, the Company and Seegers desire to enter into a consulting
arrangement pursuant to the terms and provisions of this Agreement as set forth
herein;
NOW, THEREFORE, the parties to this Agreement hereby agree as follows:
ARTICLE I
Rights and Duties Under Consulting Agreement
1.01 (a) Term of Agreement and Duties. The Company and
Seegers agree that for the period commencing on February 1, 1995 and
terminating on January 31, 1997, Seegers shall perform consulting-type services
for the directors and executive officers of the Company to the extent specified
thereby with respect to all matters pertaining to the business and financial
affairs of the Company.
(b) Compensation. During the term of this Agreement, the
Company shall pay to Seegers for each fiscal year of the Company during which
this Agreement is in effect (or portion thereof), an annual consulting fee of
$215,000 per annum, payable in equal semi-monthly installments on the fifteenth
(15) day of each calendar month and on the last day of each calendar month
during such term; provided, however, that if any such payment to be received by
Seegers is due on a day that is not a business day, then such payment shall be
due on the preceding business day.
1
<PAGE> 2
(c) Fringe Benefits. The Company shall provide to
Seegers during the term of this Agreement the same coverage provided to its
executive officers on the same terms and conditions under the Company's medical
insurance program and life insurance program.
(d) Reimbursement of Expenses. During the term hereof
the Company shall reimburse Seegers for all reasonable and necessary travel,
entertainment or other related expenses incurred by him in carrying out his
duties and responsibilities hereunder upon an accounting therefor in detail
submitted to the Company by Seegers at regular intervals.
(e) Right to Terminate Consulting Agreement. Seegers
may, at his option, terminate this Agreement for any reason prior January 31,
1997 upon giving not less than thirty (30) days' written notice to the Company.
Upon termination of this Agreement under this paragraph, the Company shall not
be required to continue payment of consulting fees under this Agreement as of
the end of such 30-day notice period.
1.02 Effect of Absences; Time Requirements under Consulting
Agreement. It is expressly understood that during the term of this Agreement,
the inability of Seegers to render services to the Company because of illness
shall not constitute a failure by Seegers to perform his obligations hereunder
and shall not be deemed a breach hereof or default by him hereunder. Subject
to the foregoing, Seegers agrees to devote his best energy, ability and time as
shall be necessary to perform his duties hereunder and as shall be reasonably
requested by the Company.
1.03 (a) Place of Performance of Consulting Services. The
Company shall not require Seegers to report for the performance of his services
hereunder on a permanent basis at any location or office.
(b) Relocation. If the executive offices of the Company
are relocated to any place that is more than twenty-five (25) miles from the
Company's main offices at 3333 Lee Parkway, Dallas, Texas 75219, then the
Company agrees to reimburse Seegers for any expenses incurred by Seegers in
traveling to and from such new offices, as well as any living expenses incurred
while performing services for the Company at its new location. In no event
shall Seegers be required to relocate his principal residence to such new
location.
1.04 (a) Indemnification. Seegers (or his legal
representative) shall be indemnified for all legal expenses and all liabilities
in connection with any proceeding involving him by reason of his being or
having been a director, officer, employee, independent contractor providing
services to the Company, or agent of the Company or any of its subsidiaries, or
any other enterprise if serving at the request of the Company, or any of its
subsidiaries, to the extent permitted by the laws of the State of Texas, or the
states of incorporation of the Company's subsidiaries, and by the articles of
incorporation or the by-laws of the Company or the Company's subsidiaries,
whichever is applicable.
(b) Advancement of Expenses. In the event of any action,
proceeding or claim against Seegers arising out of his serving in a capacity
specified in Section 1.04(a) hereof, which in Seegers' sole judgment requires
him to retain counsel (such choice of counsel to be made in his sole and
absolute
2
<PAGE> 3
discretion) or otherwise expend his personal funds for his defense in
connection therewith, the Company shall be obligated to advance to Seegers (or
pay directly to his counsel) counsel fees and other costs associated with
Seegers' defense of such action, proceeding or claim; provided, however, that
in such event Seegers shall first agree in writing, without posting bond or
collateral, to repay all sums paid or advanced to him pursuant to this
provision in the event that the final disposition of such action, proceeding or
claim is one for which Seegers would not be entitled to indemnification
pursuant to the provisions hereof.
1.05 (a) Trade Secrets. Seegers recognizes and acknowledges
that the names of the Company's customers, the Company's methods of operation,
sales and other trade secrets, as they may exist from time to time, are
valuable, special and unique assets of the Company. Seegers shall not, during
or after the term of this Agreement, disclose any such names or other trade
secrets or any part thereof that Seegers becomes aware of during the term of
this Agreement to any person, firm, corporation, association or other entity,
nor shall he attempt to entice away any customer or employee of the Company,
its subsidiaries or affiliates.
(b) Non-Competition. Seegers agrees that during the term
of this Agreement and for a period of one (1) year following the date of the
termination of this Agreement, regardless of the reason for such termination
and regardless of the party terminating, he will not directly or indirectly
associate with any business that is competing or developing the ability to
compete directly or indirectly with the Company or any of its subsidiaries or
affiliates or that during such year develops or begins to develop the ability
to compete with the Company or any of its subsidiaries or affiliates. For the
purposes of this Section 1.05(b), Seegers will be deemed to associate with a
business if he owns, manages, operates, controls, is employed by or
participates in the ownership, management or control, or is otherwise in any
manner connected with such business; provided, however, that Seegers may invest
in a publicly held corporation engaged in such competitive business provided
that such investment shall at no time exceed 1% of the issued and outstanding
capital stock of such corporation, and provided he is not otherwise associated
with it. A business will be deemed to be competing with the Company if it is
making products or providing services identical to or similar with those made
or provided by the Company. Notwithstanding the foregoing, Seegers shall not
be deemed to violate his agreement under this Section 1.05(b) if he associates
with a business that, subsequent to such association, begins to compete or
begins to develop the ability to compete with the Company or any of its
subsidiaries or affiliates if Seegers (1) does not participate in such
competition or in the development of the ability to compete and (2) resigns
from, disposes of his interest in, or otherwise effectively disassociates
himself from such business upon becoming aware of such competition or the
development by the business of the ability to compete with the Company.
Notwithstanding the foregoing, the Company hereby agrees with Seegers that
Seegers' investments as a limited partner in one or more limited partnerships
that develop residential lots for sale to builders shall not constitute a
violation or breach of this Section 1.05(b).
ARTICLE II
General Provisions
2.01 Reimbursement of Legal Expenses. If at any time Seegers or
his beneficiary or beneficiaries, or his estate, as the case may be, shall
commence any legal action to enforce any of the terms or provisions of this
Agreement, including, without limitation, any term or provision requiring the
payment of consulting
3
<PAGE> 4
fees to Seegers hereunder and such legal action results in a decision favorable
to the person so commencing such action, the Company agrees to reimburse such
person for all costs and expenses of such action, including reasonable
attorney's fees, incurred by such person in connection therewith. In addition,
the Company agrees to reimburse Seegers for any legal, accounting, or other
reasonable expenses incurred in entering into this Agreement.
2.02 Binding Effect, Assignment. This Agreement shall inure to the
benefit of and be binding upon the Company, and its successors and assigns,
including without limitation, any person, partnership or corporation which may
acquire all or substantially all or a majority of the Company's assets and
business, or with or into which the Company may be consolidated or merged, and
this provision shall apply in the event of any subsequent mergers,
consolidations, or transfers, and shall be binding upon and inure to the
benefit of Seegers, his heirs and personal representatives. This Agreement,
and the benefits and obligations herein, may not be assigned or delegated by
one party without the consent of the other party. Any assignment or delegation
made in violation of this Agreement shall be null and void ab initio and of no
force or effect.
2.03 Waiver of Provisions. The failure of either party to insist,
in any one or more instances, upon performance of any of the terms or
conditions of this Agreement shall not be construed as a waiver or a
relinquishment of any right granted hereunder or of the future performance of
any such term or condition, but the obligation of the other party with respect
thereto shall continue in full force and effect.
2.04 Notice. Any notice to be given to the Company hereunder shall
be deemed sufficient if addressed to the Company in writing and personally
delivered or mailed by certified mail, return receipt requested, to its office
at 3333 Lee Parkway, Suite 1200, Dallas, Texas 75219. Any notice to be given
to Seegers hereunder shall be sufficient if addressed to him in writing and
personally delivered or mailed by certified mail, return receipt requested, to
8235 Douglas Ave., Suite 925, Dallas, Texas 75225. Each party may, by notice
as aforesaid, designate a different address or addresses.
2.05 Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
shall supersede all prior written or oral and all contemporaneous oral
agreements with respect to the subject matter hereof (including, without
limitation, that certain Employment Agreement, dated as of July 15, 1988,
between Seegers and the Company, as amended by that certain Amendment to
Employment Agreement, dated as of July 18, 1991, between Seegers and the
Company), and may not be amended or supplemented in any respect, except by a
subsequent written agreement entered into by both parties hereto.
2.06 Severability. In the event any provision of this Agreement
shall be held to be illegal, invalid or unenforceable for any reason, the
illegality, invalidity or unenforceability shall not affect the remaining
provisions hereof, but such illegal, invalid or unenforceable provision shall
be fully severable and this Agreement shall be construed and enforced as if the
illegal, invalid or unenforceable provision had never been included herein.
2.07 Headings. The titles and headings of Articles and Sections
are included for convenience of reference only and are not to be considered in
construction or interpretation of the provisions hereof.
4
<PAGE> 5
2.08 Word Usage. Words used in the masculine shall apply to the
feminine where applicable, and wherever the context of this Agreement dictates,
the plural shall be read as the singular and the singular as the plural.
2.09 Governing Law. This Agreement shall be governed by, and
construed and interpreted in accordance with, the substantive laws of the State
of Texas without giving effect to any conflict-of-laws rule or principle that
could result in the application of any other laws.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the 1st day of February, 1995.
Attest: CENTEX CORPORATION
/s/ Raymond G. Smerge By: /s/ Laurence E. Hirsch
Raymond G. Smerge Laurence E. Hirsch
Secretary Chairman of the
Board and Chief
Executive Officer
/s/ Paul R. Seegers
Paul R. Seegers
5
<PAGE> 1
EXHIBIT 10.8
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS ("STATE LAWS") AND MAY NOT
BE TRANSFERRED UNLESS THE COMPANY IS FIRST FURNISHED AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY, THAT SUCH TRANSFER WILL NOT VIOLATE THE SECURITIES
ACT OR ANY STATE LAWS. TRANSFER OF THIS NOTE IS ALSO RESTRICTED AS HEREINAFTER
PROVIDED.
CENTEX CORPORATION
CONVERTIBLE SUBORDINATED NOTE
$2,100,000 Dallas, Texas March 1, 1995
FOR VALUE RECEIVED, Centex Corporation, a Nevada corporation (herein,
together with any successor to all or substantially all of its assets, by
merger or otherwise, called the "Company"), promises to pay to Laurence E.
Hirsch (the "Holder"), at the Company's principal executive office in Dallas,
Dallas County, Texas, or such other place as the Company may specify to the
Holder in writing, the principal sum of Two Million One Hundred Thousand
dollars ($2,100,000), in lawful money of the United States of America, and to
pay interest from the date hereof on the unpaid principal balance hereof at a
fluctuating rate per annum which shall change from time to time so that it will
always be equal to the Interest Rate (as hereinafter defined) or the Highest
Lawful Rate (as hereinafter defined), whichever is the lesser. As used herein,
the term "Interest Rate" shall mean the rate of interest charged from to time
on that certain Promissory Note, dated March 1, 1995, between Holder and
NationsBank of Texas, N.A., evidencing an indebtedness in a maximum amount of
$2,100,000 (the "Bank Note"). The "Highest Lawful Rate" shall be the maximum
rate of interest that the Company may pay on this Note from time to time under
applicable laws. If and to the extent the Highest Lawful Rate is determined
pursuant to the laws of the State of Texas, the Indicated Rate Ceiling provided
by Article 5069-1.04 of the Texas Revised Civil Statutes Annotated, as amended,
shall be the ceiling applicable to this Note.
1. Payment Terms.
The principal of this Note shall be payable in full on March 1, 2000.
Accrued interest on this Note shall be payable on any day on which interest is
due and payable on the Bank Note, and at maturity of this Note. The Company
promises to pay interest, payable on demand, on overdue principal and, to the
extent permitted by law, on overdue interest, from their due dates at the
Highest Lawful Rate.
2. Subordination.
Upon any liquidation of the Company or distribution of assets to
creditors of the Company in bankruptcy, receivership, or otherwise, no payment
of principal or interest shall be demanded, made, or received on this Note, nor
shall any portion of this Note be directly or indirectly repurchased by the
Company (except through conversion of this Note into Common Stock, to the
extent permitted by Section 3 below), until all Senior Indebtedness (as
hereinafter defined) has been paid in full. Any
- 1 -
<PAGE> 2
cash, securities, or property received by the Holder in violation of the
immediately preceding sentence shall be held in trust for the benefit of the
holders of Senior Indebtedness and promptly paid over to them, pro rata as
their respective interests may appear, upon demand. The Holder shall be
subrogated to the rights of any holder of Senior Indebtedness to the extent the
Holder or the Company pays funds over to any holder of Senior Indebtedness
pursuant to these subordination provisions, but such right of subrogation may
not be enforced until all Senior Indebtedness has been paid in full. "Senior
Indebtedness" means obligations of the Company, whether outstanding on the date
hereof or created hereafter, for (a) money borrowed by the Company, (b) money
borrowed by others and guaranteed by the Company, (c) indebtedness incurred,
assumed, or guaranteed by the Company in connection with the payment of all or
any portion of the purchase price of any business, real property, or other
assets (except indebtedness incurred for materials acquired or services
rendered in the ordinary course of business of the Company) purchased by the
Company or any of its subsidiaries, (d) indebtedness arising in favor of any
bonding company under any performance or payment bond or other similar bond
issued by such bonding company in connection with any construction contract to
which the Company or any of its subsidiaries is or was a party, (e) renewals,
extensions, and refundings of any indebtedness described in clauses (a)-(d),
inclusive, and (f) interest due and premium and collection costs owed by the
Company with respect to any indebtedness described in clauses (a)-(e),
inclusive, including interest which accrues subsequent to any bankruptcy or
similar proceeding involving the Company; provided, however, that Senior
Indebtedness shall not include (x) any indebtedness which is expressly stated
in any instrument binding on the holder of such indebtedness not to be Senior
Indebtedness, (y) this Note, or (z) any indebtedness as to which neither the
Company nor any subsidiary has any personal liability. Upon request of the
Company, the Holder will expressly confirm to any holder or proposed holder of
indebtedness conforming to the preceding definition that such indebtedness is
"Senior Indebtedness" within the meaning of the preceding sentence.
3. Conversion.
The Holder may, at his option (but subject to the provisions of this
Note relating to compliance with the Securities Act and State Laws), convert
the unpaid Vested Principal (as hereinafter defined) of this Note into Common
Stock (as hereinafter defined) of the Company, at the rate of one share of
Common Stock for each ten dollars and fifty cents ($10.50) of Vested Principal
so converted, at any time and from time to time, by surrendering this Note,
together with written directions as to the amount of Vested Principal to be
converted, to the Company at its principal executive office. Upon such
surrender, the Company shall promptly issue and deliver to the Holder one or
more certificates (as the Holder may specify) evidencing the shares into which
the Vested Principal has been converted, and shall return this Note to the
Holder with a notation thereon showing the amount of Vested Principal that has
been converted and the date of such conversion. Any such conversion shall be
deemed effective, and the shares issuable in respect thereof shall be deemed
issued, on the first Business Day (defined as any day on which banks are
authorized to be open for business under Texas law) following the day this Note
is duly surrendered for conversion, as described above, regardless of when the
Company actually issues and delivers the shares to the Holder. No adjustment
shall be made in respect of any dividends (except common stock dividends, as
hereinafter provided) or distributions paid prior to the effective conversion
date, or payable after the effective conversion date, to holders of record as
of a date prior to the effective conversion date.
- 2 -
<PAGE> 3
No fractional shares shall be issuable on conversion of this Note, and
if the Holder designates an amount of Vested Principal which would result in
issuance of a fractional share, the amount of Vested Principal to be converted
shall be reduced to eliminate the issuance of such fractional shares.
One Hundred Percent (100%) of the principal amount of this Note shall
be "Vested Principal" on March 1, 1995, the date of issuance of this Note (it
being acknowledged by the Company that One Hundred Percent (100%) of the Vested
Principal of the Original Note (as hereinafter defined) became Vested Principal
prior to the date of issuance of this Note, which is being issued to renew,
extend, modify, and replace the Original Note as provided in the
antepenultimate paragraph of this Note).
Notwithstanding the foregoing, if the Holder is discharged as an
employee by the Company's or an Affiliate's (defined as any parent or
subsidiary of the Company, within the meaning of subsections 425(e) and (f) of
the Internal Revenue Code of 1986, as amended) board of directors for Cause
(defined as acts constituting theft, dishonesty, fraud or embezzlement, as
determined in good faith by the Company's board of directors), then any part of
the principal of this Note which is Vested Principal shall, upon such
discharge, cease to be Vested Principal.
For purposes of this Note, the term "Common Stock" shall mean the
common stock, par value $.25 per share, of Centex Corporation as constituted on
the date of this Note and any stock, securities, or other property (including
cash), whether of Centex Corporation or some other corporation or entity, into
which the outstanding shares of such common stock may hereafter be changed
pursuant to any merger, consolidation, recapitalization, or similar transaction
(collectively, a "Reorganization"). In furtherance of the preceding sentence,
(i) if the outstanding shares of Common Stock of the Company shall be
subdivided into a greater number of shares or combined into a lesser number of
shares (by stock split, reverse stock split, stock dividend, or otherwise), the
number of shares of Common Stock issuable upon conversion of this Note shall be
appropriately adjusted to give effect to such subdivision or combination, and
(ii) if any Reorganization should occur, there shall be delivered to the
Holder, upon conversion of any portion of the Vested Principal of this Note
subsequent to such Reorganization, the stock, securities, or other property
(including cash) that the Holder would have received if he had converted such
Vested Principal into Common Stock prior to such Reorganization and
participated therein as a holder of such Common Stock. No Reorganization shall
be effected unless, under the express terms thereof, the resulting or surviving
entity assumes the obligations of the Company under this Note.
4. Prepayment.
The Company shall not be entitled to prepay all or any part of this
Note, except that this Note shall be prepaid, in full (but not in part):
(a) on the first anniversary of the date the Holder ceases to
be employed by at least one of the employers in the group of employers
consisting of the Company and its Affiliates for any reason other than
(i) the Holder's voluntary termination of employment with the Company
or an Affiliate or (ii) the Holder's discharge by the Company's or an
Affiliate's board of directors for Cause;
- 3 -
<PAGE> 4
(b) within thirty (30) days after the Holder, as a result of
his voluntary termination of employment, is no longer employed by any
of the employers in the group of employers consisting of the Company
and its Affiliates or is discharged as an employee by the Company's or
an Affiliate's board of directors for Cause; and
(c) within thirty (30) days following the approval by the
shareholders of the Company of a plan of complete liquidation and
dissolution of the Company, other than such a plan adopted in
connection with a Reorganization.
5. Default.
If any one or more of the following events (herein called "Events of
Default") shall occur and be continuing:
(a) Default shall be made in the payment of any principal of
or interest on this Note when due and shall continue for more than 10
days after written notice from the Holder to the Company; or
(b) The Company shall (i) apply for or consent to the
appointment of a receiver, trustee, or liquidator of the Company or
all or substantially all the assets of the Company, (ii) make a
general assignment for the benefit of creditors, (iii) be adjudicated
bankrupt or insolvent, or (iv) file a voluntary petition in
bankruptcy, or a petition or answer seeking reorganization or an
arrangement with creditors to take advantage of any bankruptcy,
reorganization, insolvency, readjustment of debt, moratorium,
dissolution, liquidation, or debtor relief law, or any chapter of any
such law, or an answer admitting the material allegations of a
petition filed against it in any proceeding under any such law or
chapter; or an order, judgement, or decree shall be entered, without
the application, approval, or consent of the Company by any court of
competent jurisdiction, approving a petition seeking liquidation or
reorganization of the Company or of all or substantially all of the
assets of the Company and such order, judgment, or decree shall not
have been dismissed within 120 days after it was so entered;
then and in each and every such case the Holder may, subject to the
subordination provisions previously stated in this Note, by notice in writing
to the Company declare the unpaid principal of this Note, with accrued interest
thereon, to be forthwith due and payable and thereon such principal and
interest shall be due and payable without presentment, protest, or further
demand or notice of any kind, all of which are hereby expressly waived.
6. Transfer.
This Note may not be transferred, voluntarily or involuntarily, by the
Holder to any person or entity whatsoever without the written consent of the
Company; provided, however, that such transfer restriction shall not apply (i)
to a transfer, by will or by the laws of descent and distribution, to the
executor or estate of the Holder upon his death, (ii) to the pledge of, or
grant of a security interest in, this Note by the Holder to a bank (or other
financial institution) approved by the Company
- 4 -
<PAGE> 5
in writing as security for the indebtedness of the Holder to such bank or
institution in connection with the Holder's purchase of this Note, or (iii) to
the foreclosure of any such pledge or security interest so long as only such
bank or financial institution is the purchaser at such sale. In no event may
the conversion privileges of this Note be exercised by any person or entity to
whom this Note is transferred (including the Holder), voluntarily or
involuntarily, in violation of the preceding sentence, or by any transferee of
such person or entity (including the Holder), or by any purchaser (including
the bank or other financial institution that may be the pledgee of or holder of
a security interest in this Note) at a foreclosure sale (even if such
foreclosure is permitted under the preceding sentence).
Subject to the immediately preceding paragraph, this Note is
transferable only on the books of the Company by the Holder or the Holder's
duly authorized attorney-in-fact. The Company shall be entitled to treat the
registered holder of this Note as the true and lawful owner hereof for all
purposes, including payment, notwithstanding any actual knowledge of the
Company to the contrary.
7. Miscellaneous.
Except as otherwise expressly specified in this Note, the Company and
each surety, guarantor, endorser, or other party liable for payment on this
Note hereby waive diligence, presentment, demand, protest, and notice of any
kind whatsoever, and agree that their liability on this Note shall not be
affected by any renewal or extension in the time of payment hereof, by any
indulgences, or by any release or change in any security for payment of this
Note.
In no event shall the Company be obligated to issue any Common Stock
on conversion of this Note if, in the opinion of counsel for the Company, such
issuance would violate the Securities Act, the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), or any State Laws. The Holder shall, as a
condition precedent to his right to convert Vested Principal to Common Stock,
make such written representations to, and agreements with, the Company
concerning the Holder's financial position, business and investment experience,
intentions as to resale or other disposition of the shares, and such other
matters as counsel for the Company may deem necessary in order to assure
compliance with the Securities Act, Exchange Act, and applicable State Laws.
The certificates evidencing the shares issued on conversion of this Note shall
bear such legends as counsel for the Company may deem necessary to ensure
compliance with the Securities Act, Exchange Act, and applicable State Laws.
In no event shall the existence of this Note be deemed to create any
right of continued employment of the Holder by the Company or any Affiliate.
The Company is entitled to offset against this Note (whether or not
this Note is then due), (i) any amounts due and owing by the Holder to the
Company or any Affiliate and (ii) any amounts which the Company may owe to
NationsBank of Texas, N.A. (the "Bank") arising under the Company's guarantee
of the Holder's $2,100,000 promissory note to the Bank dated March 1, 1995 (and
all renewals, extensions, modifications and amendments of and to such
promissory note). Any such offset shall be applied first to accrued and unpaid
interest, next to principal that is not Vested Principal, and then to Vested
Principal. Upon any such offset, the offset principal shall be deemed paid and
shall cease to bear interest.
- 5 -
<PAGE> 6
If this Note is placed in the hands of an attorney for collection
after occurrence of an Event of Default, or if it is collected through legal or
bankruptcy proceedings, the Company agrees to pay all costs of collection,
including but not limited to court costs and reasonable attorneys' fees.
It is the intention of the Holder and the Company that this Note
conform in all respects to applicable law so that no payment of interest or
other sum construed to be interest shall exceed the Highest Lawful Rate. In
determining the rate of interest paid or payable under this Note, all funds
paid or to be paid as interest or construed to be interest shall be prorated,
allocated, or spread as permitted under applicable law. If, through any
circumstances, the provisions of this Note would result in the Company's paying
or agreeing to pay interest on this Note in excess of the Highest Lawful Rate,
or if the Company pays any sum as interest or any amount which is construed to
be interest in excess of such rate, then (1) the amount of interest contracted
for shall be automatically reduced to the amount permitted by the Highest
Lawful Rate and (2) the amount of excess interest paid shall be applied to the
reduction of the principal balance of this Note, if any, and if the principal
balance has been fully paid, the excess interest shall be refunded to the
Company.
This Note renews, extends, modifies, and replaces, but does not
extinguish the indebtedness evidenced by, that certain Centex Corporation
Convertible Subordinated Note dated August 26, 1985, in the original principal
amount of $2,100,000, executed by the Company and payable to the Holder (the
"Original Note").
THIS NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN THE COMPANY AND THE
HOLDER AND THE SAME MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE COMPANY AND THE
HOLDER. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE COMPANY AND THE
HOLDER. THIS NOTE MAY NOT BE MODIFIED OR AMENDED, EXCEPT IN WRITING SIGNED BY
THE COMPANY AND THE HOLDER AND SPECIFICALLY REFERENCING THIS NOTE.
This Note shall be governed by, and construed and interpreted in
accordance with, the substantive laws of the State of Texas without giving
effect to any conflict-of-laws rule or principle that would result in the
application of the laws of any other jurisdiction.
CENTEX CORPORATION
By: /s/ David W. Quinn
David W. Quinn
Executive Vice President and
Chief Financial Officer
- 6 -
<PAGE> 1
EXHIBIT 21.A
The following is a list of the significant subsidiaries of the Company as
of May 30, 1995:
NEVADA CORPORATIONS:
Centex Bateson Enterprises, Inc.
Centex Construction Group, Inc.
Centex Forcum Lannom, Inc.
Centex Golden Construction Company
Centex International, Inc.
Centex Real Estate Corporation
Centex-Rodgers Construction Company
Centex-Rooney Enterprises, Inc.
Centex-Simpson Construction Company, Inc.
CTX Financial Corporation
CTX Mortgage Company
GHQ Company, Inc.
DELAWARE CORPORATIONS:
Centex Construction Products, Inc. (1)
FLORIDA CORPORATIONS:
Centex-Rooney Construction Co., Inc.
TEXAS CORPORATIONS:
Centex Bateson Construction Company, Inc.
________________________________________
(1) 49% owned subsidiary
<PAGE> 1
EXHIBIT 23.A
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in the previously filed registration statements on Form S-8 (numbers
33-44575; 33-29174; 2-95271; 2-51637; 2-54043; 2-59535; 2-68747; 2-78831;
33-55083) of our report dated May 12, 1995, included as an exhibit to Centex
Corporation's Annual Report on Form 10-K for the year ended March 31, 1995, and
to all references to our firm included in these registration statements.
ARTHUR ANDERSEN LLP
Dallas, Texas
June 2, 1995
<PAGE> 1
EXHIBIT 24.A
CENTEX CORPORATION
POWER OF ATTORNEY
THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch and
David W. Quinn, or either of such individuals, with full power of substitution
in the premises, as the undersigned's true and lawful agents and
attorneys-in-fact (the "Attorneys-in-Fact"), with full power and authority in
the name and on behalf of the undersigned, in his capacity as a Director of
Centex Corporation (the "Company"), to execute and file with the Securities and
Exchange Commission the Company's Annual Report on Form 10-K for the Company's
fiscal year ended March 31, 1995, together with any and all amendments thereto.
This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may
not be revoked until the Attorneys-in-Fact have received five days' written
notice of such revocation.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 31st day of May, 1995.
/s/ William J Gillilan III
William J Gillilan III
Director
Centex Corporation
<PAGE> 2
CENTEX CORPORATION
POWER OF ATTORNEY
THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch and
David W. Quinn, or either of such individuals, with full power of substitution
in the premises, as the undersigned's true and lawful agents and
attorneys-in-fact (the "Attorneys-in-Fact"), with full power and authority in
the name and on behalf of the undersigned, in his capacity as a Director of
Centex Corporation (the "Company"), to execute and file with the Securities and
Exchange Commission the Company's Annual Report on Form 10-K for the Company's
fiscal year ended March 31, 1995, together with any and all amendments thereto.
This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may
not be revoked until the Attorneys-in-Fact have received five days' written
notice of such revocation.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 31st day of May, 1995.
/s/ Clint W. Murchison, III
Clint W. Murchison, III
Director
Centex Corporation
<PAGE> 3
CENTEX CORPORATION
POWER OF ATTORNEY
THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch and
David W. Quinn, or either of such individuals, with full power of substitution
in the premises, as the undersigned's true and lawful agents and
attorneys-in-fact (the "Attorneys-in-Fact"), with full power and authority in
the name and on behalf of the undersigned, in his capacity as a Director of
Centex Corporation (the "Company"), to execute and file with the Securities and
Exchange Commission the Company's Annual Report on Form 10-K for the Company's
fiscal year ended March 31, 1995, together with any and all amendments thereto.
This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may
not be revoked until the Attorneys-in-Fact have received five days' written
notice of such revocation.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 31st day of May, 1995.
/s/ Charles H. Pistor
Charles H. Pistor
Director Centex Corporation
<PAGE> 4
CENTEX CORPORATION
POWER OF ATTORNEY
THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch, as
the undersigned's true and lawful agent and attorney-in-fact (the
"Attorney-in-Fact"), with full power and authority in the name and on behalf of
the undersigned, in his capacity as a Director of Centex Corporation (the
"Company"), to execute and file with the Securities and Exchange Commission the
Company's Annual Report on Form 10-K for the Company's fiscal year ended March
31, 1995, together with any and all amendments thereto.
This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may
not be revoked until the Attorneys-in-Fact have received five days' written
notice of such revocation.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 31st day of May, 1995.
/s/ David W. Quinn
David W. Quinn
Director
Centex Corporation
<PAGE> 5
CENTEX CORPORATION
POWER OF ATTORNEY
THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch and
David W. Quinn, or either of such individuals, as the undersigned's true and
lawful agents and attorneys-in-fact (the "Attorneys-in-Fact"), with full power
and authority in the name and on behalf of the undersigned, in his capacity as
a Director of Centex Corporation (the "Company"), to execute and file with the
Securities and Exchange Commission the Company's Annual Report on Form 10-K for
the Company's fiscal year ended March 31, 1995, together with any and all
amendments thereto.
This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorney-in-Fact, may not
be revoked until the Attorney-in-Fact has received five days' written notice of
such revocation.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 31st day of May, 1995.
/s/ Paul R. Seegers
Paul R. Seegers
Director
Centex Corporation
<PAGE> 6
CENTEX CORPORATION
POWER OF ATTORNEY
THE UNDERSIGNED hereby constitutes and appoints David W. Quinn as his
true and lawful agent and attorney-in-fact (the "Attorney-in-Fact"), with full
power and authority in the name and on behalf of the undersigned, in his
capacity as a Director of Centex Corporation (the "Company"), to execute and
file with the Securities and Exchange Commission the Company's Annual Report on
Form 10-K for the Company's fiscal year ended March 31, 1995, together with any
and all amendments thereto.
This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorney-in-Fact, may not
be revoked until the Attorney-in-Fact has received five days' written notice of
such revocation.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 31st day of May, 1995.
/s/ Laurence E. Hirsch
Laurence E. Hirsch
Director
Centex Corporation
<PAGE> 7
CENTEX CORPORATION
POWER OF ATTORNEY
THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch and
David W. Quinn, or either of such individuals, with full power of substitution
in the premises, as the undersigned's true and lawful agents and
attorneys-in-fact (the "Attorneys-in-Fact"), with full power and authority in
the name and on behalf of the undersigned, in his capacity as a Director of
Centex Corporation (the "Company"), to execute and file with the Securities and
Exchange Commission the Company's Annual Report on Form 10-K for the Company's
fiscal year ended March 31, 1995, together with any and all amendments thereto.
This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may
not be revoked until the Attorneys-in-Fact have received five days' written
notice of such revocation.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 17th day of May, 1995.
/s/ Juan L. Elek
Juan L. Elek
Director
Centex Corporation
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
FINANCIAL DATA SCHEDULE FOR CENTEX CORPORATION
This schedule contains summary financial information extracted from Centex
Corporation's March 31, 1995, Form 10-K and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000018532
<NAME> CENTEX CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1994
<PERIOD-END> MAR-31-1995
<CASH> 23,785
<SECURITIES> 0
<RECEIVABLES> 649,597
<ALLOWANCES> 0
<INVENTORY> 1,166,471
<CURRENT-ASSETS> 0
<PP&E> 81,511
<DEPRECIATION> 40,244
<TOTAL-ASSETS> 2,049,698
<CURRENT-LIABILITIES> 0
<BONDS> 222,530
<COMMON> 7,018
0
0
<OTHER-SE> 661,209
<TOTAL-LIABILITY-AND-EQUITY> 2,049,698
<SALES> 3,277,504
<TOTAL-REVENUES> 3,294,081
<CGS> 3,159,354
<TOTAL-COSTS> 3,159,354
<OTHER-EXPENSES> 15,253
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 33,014
<INCOME-PRETAX> 145,788
<INCOME-TAX> 53,540
<INCOME-CONTINUING> 92,268
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 92,268
<EPS-PRIMARY> 3.04
<EPS-DILUTED> 0.00
</TABLE>
<PAGE> 1
EXHIBIT 99.A
Centex Corporation and Subsidiaries
FINANCIAL HIGHLIGHTS
================================================================================
<TABLE>
<CAPTION>
For the Years Ended March 31,
======================================================================
1995 1994 1993 1992 1991
----------------------------------------------------------------------
(Amounts in thousands, except per share data)
<S> <C> <C> <C> <C>
Revenues $3,277,504 $3,039,709 $2,363,325 $2,028,646 $2,089,110
Earnings Before Income Taxes $ 145,788 $ 135,013 $ 91,759 $ 45,852 $ 56,582
Net Earnings $ 92,248 $ 85,162 $ 61,038 $ 34,557 $ 43,605
Debt $ 427,381 $ 429,470 $ 368,988 $ 298,508 $ 267,946
Stockholders' Equity $ 668,227 $ 668,659 $ 578,415 $ 518,494 $ 483,677
Average Shares Outstanding 30,327 32,790 32,016 31,252 30,813
Earnings Per Share $ 3.04 $ 2.60 $ 1.91 $ 1.11 $ 1.42
Cash Dividends Per Share $ .20 $ .20 $ .20 $ .20 $ .20
Book Value Per Share At Year End $ 23.80 $ 21.12 $ 18.57 $ 16.99 $ 16.07
</TABLE>
Net Earnings and Earnings Per Share for fiscal 1995 include $37.5 million
and $1.23, respectively, related to the April 1994 Initial Public
Offering (IPO) of 51% of the stock of Centex Construction Products, Inc.
See Note C to financial statements.
Debt represents Centex Corporation's debt with the mortgage company and
savings and loan association reflected on the equity method versus
consolidation. See Note A to financial statements.
STOCK PRICES AND DIVIDENDS
================================================================================
<TABLE>
<CAPTION>
Year Ended March 31, 1995 Year Ended March 31, 1994
================================ ================================
Price Price
------------------ ------------------
High Low Dividends High Low Dividends
------- ------- --------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
QUARTER
First $32 3/8 $23 7/8 $.05 $35 1/2 $27 1/2 $.05
Second $26 7/8 $22 3/8 $.05 $42 5/8 $32 1/2 $.05
Third $23 7/8 $20 1/4 $.05 $44 5/8 $36 7/8 $.05
Fourth $25 7/8 $22 1/2 $.05 $45 5/8 $30 7/8 $.05
</TABLE>
The common stock of Centex Corporation is traded on the New York Stock
Exchange (ticker symbol CTX) and The International Stock Exchange (London).
The approximate number of record holders of the common stock of Centex
Corporation at May 12, 1995 was 2,050.
On November 30, 1987, Centex Corporation distributed as a dividend to its
stockholders securities relating to Centex Development Company, L.P. (see
Note H to the Consolidated Financial Statements of Centex Corporation
and Subsidiaries). Since this distribution, such securities have traded in
tandem with, and as a part of, the common stock of Centex Corporation.
Amounts represent cash dividends per share paid by Centex Corporation on
the common stock of Centex Corporation. 3333 Holding Corporation has paid
no dividends on its common stock since its incorporation.
F-1
<PAGE> 2
Centex Corporation and Subsidiaries
CONSOLIDATED REVENUES AND OPERATING EARNINGS BY LINE OF BUSINESS
================================================================================
<TABLE>
<CAPTION>
For the Year Ended March 31,
================================================================
1995 1994 1993 1992 1991
----------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
REVENUES
Home Building $2,110,735 $1,869,754 $1,433,062 $1,061,886 $1,021,342
65% 61% 61% 52% 49%
Financial Services 106,841 203,393 147,041 101,751 101,942
3% 7% 6% 5% 5%
Contracting and Construction Services 1,059,928 966,562 783,222 865,009 965,826
32% 32% 33% 43% 46%
---------- ---------- ---------- ---------- ----------
$3,277,504 $3,039,709 $2,363,325 $2,028,646 $2,089,110
========== ========== ========== ========== ==========
100% 100% 100% 100% 100%
OPERATING EARNINGS
Home BuiLding $ 112,149 $ 95,977 $ 79,850 $ 55,177 $ 73,520
83% 53% 62% 68% 76%
Financial Services 9,399 73,550 50,854 21,582 9,190
7% 41% 40% 27% 10%
Contracting and Construction Services (1,790) (4,500) (4,103) 3,742 11,569
(1%) (2%) (3%) 5% 12%
Other, net (1,608) (1,799) (4,262) (840) 190
(1%) (1%) (3%) (1%) -%
Equity in Earnings of Affiliate (CXP) 16,577 16,626 4,648 1,138 1,660
12% 9% 4% 1% 2%
---------- ---------- ---------- ---------- ----------
OPERATING EARNINGS 134,727 179,854 126,987 80,799 96,129
100% 100% 100% 100% 100%
Corporate General and Administrative 15,253 15,158 13,120 12,807 12,124
Interest 33,014 29,683 22,108 22,140 27,423
---------- ---------- ---------- ---------- ----------
EARNINGS BEFORE GAIN ON CXP'S INITIAL
PUBLIC OFFERING AND INCOME TAXES 86,460 135,013 91,759 45,852 56,582
Gain on CXP'S Initial Public Offering 59,328 - - - -
---------- ---------- ---------- ---------- ----------
EARNINGS BEFORE INCOME TAXES $ 145,788 $ 135,013 $ 91,759 $ 45,852 $ 56,582
========== ========== ========== ========== ==========
</TABLE>
Centex Construction Products, Inc. (CXP) became 49% owned in April 1994 as a
result of an Initial Public Offering (IPO) representing 51% of its equity
(see Note C to financial statements). CXP's revenues of $166,826, $136,526,
$129,832 and $142,188 for the fiscal years 1994, 1993, 1992 and 1991,
respectively, and the related costs and expenses have been reclassified
into "Equity in Earnings of Affiliate (CXP)". This reclassification
facilitates comparisons between the periods.
Mortgage Banking and Savings and Loan operations are combined in the
financial reporting segment - Financial Services.
Applicable segment overhead costs have been deducted from lines of business
operating earnings.
F-2
<PAGE> 3
Centex Corporation and Subsidiaries
STATEMENTS OF CONSOLIDATED EARNINGS
================================================================================
<TABLE>
<CAPTION>
For the Years Ended Match 31,
==============================================
1995 1994 1993
----------------------------------------------
(Dollars in thousands, except per share data)
<S> <C> <C> <C>
REVENUES
Home Building $2,110,735 $1,869,754 $1,433,062
Financial Services 106,841 203,393 147,041
Contracting and Construction Services 1,059,928 966,562 783,222
---------- ---------- ----------
3,277,504 3,039,709 2,363,325
---------- ---------- ----------
COSTS AND EXPENSES
Home Building 1,998,586 1,773,777 1,353,212
Financial Services 97,442 129,843 96,187
Contracting and Construction Services 1,061,718 971,062 787,325
Other, net 1,608 1,799 4,262
Equity in Earnings of Affiliate (CXP) (16,577) (16,626) (4,648)
Corporate General and Administrative 15,253 15,158 13,120
Interest 33,014 29,683 22,108
---------- ---------- ----------
3,191,044 2,904,696 2,271,566
---------- ---------- ----------
EARNINGS BEFORE GAIN ON CXP INITIAL PUBLIC OFFERING
AND INCOME TAXES 86,460 135,013 91,759
Gain on CXP Initial Public Offering 59,328 - -
---------- ---------- ----------
EARNINGS BEFORE INCOME TAXES 145,788 135,013 91,759
Income Taxes 53,540 49,851 30,721
---------- ---------- ----------
NET EARNINGS $ 92,248 $ 85,162 $ 61,038
========== ========== ==========
EARNINGS PER SHARE $ 3.04 $ 2.60 $ 1.91
========== ========== ==========
</TABLE>
Mortgage Banking and Savings and Loan operations are combined in the
financial reporting segment - Financial Services.
See notes to consolidated financial statements.
F-3
<PAGE> 4
Centex Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS
================================================================================
<TABLE>
<CAPTION>
Centex Corporation and Subsidiaries
-----------------------------------
March 31,
===================================
1995 1994
-----------------------------------
(Dollars in thousands)
<S> <C> <C>
ASSETS
Cash and Cash Equivalents $ 23,785 $ 76,287
Marketable Securities Available for Sale - 78,241
Receivables -
Residential Mortgage Loans 413,802 677,641
Construction Contracts 177,075 161,929
Trade 53,822 79,487
Notes 4,898 10,115
Affiliates - -
Inventories -
Housing Projects 1,087,542 969,769
Land Held for Development and Sale 78,929 104,869
Construction Products - 22,819
Investments -
Centex Development Company, L.P. 46,585 71,000
Centex Construction Products, Inc. 89,871 -
Joint Ventures and Other 5,695 56,928
Unconsolidated Subsidiaries - -
Property and Equipment, net 41,267 188,930
Government-Guaranteed S&L Assets - 43,767
Other Assets and Deferred Charges 26,427 38,574
---------- ----------
$2,049,698 $2,580,356
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable and Accrued Liabilities $ 555,944 $ 643,045
S&L Deposits and FHLB Borrowings - 211,055
Short-term Debt 576,260 783,585
Long-term Debt 222,530 222,832
Deferred Income Taxes 26,737 51,180
Stockholders' Equity -
Preferred Stock, Authorized 5,000,000
Shares, None Issued - -
Common Stock, S.25 Par Value;
Authorized 50,000,000 Shares;
Issued and Outstanding
28,070,978 and 31,663,808 Shares 7,018 7,916
Capital in Excess of Par Value - 26,631
Retained Earnings 661,209 634,112
---------- ----------
Total Stockholders' Equity 668,227 668,659
---------- ----------
$2,049,698 $2,580,356
========== ==========
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE> 5
================================================================================
<TABLE>
<CAPTION>
Centex Corporation Financial Services
----------------------------- --------------------------
March 31, March 31,
============================= ==========================
1995 1994 1995 1994
----------------------------- --------------------------
(Dollars in thousands)
<S> <C> <C> <C>
$ 18,534 $ 13,284 $ 5,251 $ 63,003
- - - 78,241
- - 413,802 677,641
177,075 161,929 - -
44,771 54,630 9,051 24,857
4,898 10,115 - -
- - 65,521 80,806
1,087,542 969,769 - -
78,929 104,869 - -
- 22,819 - -
46,585 71,000 - -
89,871 - - -
5,695 56,928 - -
29,082 5,263 - -
25,341 169,234 15,926 19,696
- - - 43,767
19,739 22,101 6,688 16,473
---------- ---------- -------- ----------
$1,628,062 $1,661,941 $516,239 $1,004,484
========== ========== ======== ==========
$ 504,659 $ 528,724 $ 51,285 $ 114,321
- - - 211,055
204,851 206,638 371,409 576,947
222,530 222,832 - -
27,795 35,088 (1,058) 16,092
- - - -
7,018 7,916 12 12
- 26,631 51,908 51,938
661,209 634,112 42,683 34,119
---------- ---------- -------- ----------
668,227 668,659 94,603 86,069
---------- ---------- -------- ----------
$1,628,062 $1,661,941 $516,239 $1,004,484
========== ========== ======== ==========
</TABLE>
In the supplemental data presented above, "Centex Corporation" means the basis
of presentation as described in Note A to the consolidated financial
statements; "Financial Services" means CTX Mortgage Company and CTX Holding
Company and Affiliates. Transactions between Centex Corporation and Financial
Services have been eliminated from the Centex Corporation and Subsidiaries
balance sheets.
F-5
<PAGE> 6
Centex Corporation and Subsidiaries
STATEMENTS OF CONSOLIDATED CASH FLOWS
================================================================================
<TABLE>
<CAPTION>
For the Years Ended March 31,
===========================================
1995 1994 1993
-------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
CASH FLOWS - OPERATING ACTIVITIES
Net Earnings $ 92,248 $ 85,162 $ 61,038
Adjustments -
Depreciation, Depletion and Amortization 6,438 19,640 16,156
Deferred Income Taxes (4,285) (7,760) 3,545
Gain Related to CXP's IPO, net of Tax (37,495) - -
Equity in (Earnings) Losses of Joint Ventures,
Unconsolidated Subsidiaries and CDC 865 (3,387) 120
Equity in Earnings of Affiliate (CXP), net of Tax (10,692) - -
Increase in Receivables (10,813) (21,965) (15,001)
Decrease (Increase) in Residential Mortgage Loans 263,718 (87,048) (12,840)
Increase in Inventories (92,255) (201,539) (136,259)
Decrease in Government-Guaranteed S&L Assets 43,767 39,056 105,275
(Decrease) Increase in Payables and Accruals (56,866) 91,864 77,920
Decrease (Increase) in Other Assets 5,234 (4,190) (6,337)
Other, net (20,167) (13,859) (2,265)
-------- --------- ---------
179,697 (104,026) 91,352
-------- --------- ---------
CASH FLOWS - INVESTING ACTIVITIES
Decrease (Increase) in Advances to Joint Ventures
and Unconsolidated Subsidiaries 24,334 (2,747) 2,669
Dividend and Other Receipts Related to CXP's IPO 186,525 - -
Property and Equipment Additions, net (10,552) (31,936) (18,019)
Decrease in Marketable Securities 78,241 32,075 91,710
-------- --------- ---------
278,548 (2,608) 76,360
-------- --------- ---------
CASH FLOWS - FINANCING ACTIVITIES
(Decrease) Increase in S&L Deposits and Debt (211,055) 6,915 (241,130)
(Decrease) Increase in Debt (207,012) 144,859 30,250
Retirement of Common Stock (89,093) - (3,991)
Proceeds from Stock Option Exercises 2,320 11,386 9,028
Dividends Paid (5,907) (6,304) (6,154)
-------- --------- ---------
(510,747) 156,856 (211,997)
-------- --------- ---------
NET (DECREASE) INCREASE IN CASH (52,502) 50,222 (44,285)
CASH AT BEGINNING OF YEAR 76,287 26,065 70,350
-------- --------- ---------
CASH AT END OF YEAR $ 23,785 $ 76,287 $ 26,065
======== ========= =========
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE> 7
Centex Corporation and Subsidiaries
STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY
================================================================================
<TABLE>
<CAPTION>
Capital In
Preferred Common Excess Of Retained
Stock Stock Par Value Earnings Total
----------- ----------- ----------- ---------- ---------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Balance, March 31, 1992 $ - $7,623 $10,501 $500,370 $518,494
Exercise of Stock Options - 200 8,828 - 9,028
Retirement of 187,400 Shares - (38) (3,953) - (3,991)
Net Earnings - - - 61,038 61,038
Cash Dividends - - - (6,154) (6,154)
----- ------ ------- -------- --------
Balance, March 31, 1993 - 7,785 15,376 555,254 578,415
Exercise of Stock Options - 131 11,255 - 11,386
Net Earnings - - - 85,162 85,162
Cash Dividends - - - (6,304) (6,304)
----- ------ ------- -------- --------
Balance, March 31, 1994 - 7,916 26,631 634,112 668,659
Exercise of Stock Options - 36 2,284 - 2,320
Retirement of 3,737,500 Shares - (934) (28,915) (59,244) (89,093)
Net Earnings - - - 92,248 92,248
Cash Dividends - - - (5,907) (5,907)
----- ------ ------- -------- --------
Balance, March 31, 1995 $ - $7,018 $ - $661,209 $668,227
===== ====== ======= ======== ========
</TABLE>
See notes to consolidated financial statements.
F-7
<PAGE> 8
Centex Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
================================================================================
(Dollars in thousands, except per share data)
(A) SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION
The consolidated financial statements include the accounts of Centex
Corporation and subsidiaries (Centex or the company) after the elimination of
all significant intercompany balances and transactions.
BASIS OF BALANCE SHEET PRESENTATION
Balance sheet data are presented in the following categories:
- - Centex Corporation and Subsidiaries. This represents the adding together of
Centex Corporation, Financial Services and all of their consolidated
subsidiaries. The effects of transactions among related companies within the
consolidated group have been eliminated.
- - Centex Corporation. This information is presented as supplemental
information and represents the adding together of all subsidiaries other than
CTX Mortgage Company (Mortgage Banking group) and CTX Holding Company (CTX
Holding) and its savings and loan subsidiary, Texas Trust Savings Bank, FSB
(Texas Trust) and affiliates (together, the Savings and Loan group) which
are presented on an equity basis of accounting.
- - Financial Services. This represents the adding together of the Mortgage
Banking group and the Savings and Loan group. The assets and deposits of Texas
Trust were sold in December 1994 - See Note B.
REVENUE RECOGNITION
Revenue from housing projects is recognized as homes are sold and title passes.
Earnings from sale of mortgage servicing rights and from loan origination fees
are recognized when the related loan is sold and delivered to third-party
purchasers.
Long-term construction contract revenues are recognized on the
percentage-of-completion method based on the costs incurred relative to total
estimated costs. Full provision is made for any anticipated losses. Billings
for Long-term construction contracts are rendered monthly, incLuding the amount
of retainage withheld by the customer until contract completion. As a general
contractor, the company withholds similar retainages from each subcontractor.
Retainages of $73 million included in construction contracts receivable and $60
million included in accounts payable at March 31, 1995 are generally receivable
and payable within one year.
Claims are recognized as revenue only after management is confident of
collection or when agreement has been reached with the customer.
Notes receivable at March 31, 1995 are collectible primarily over 5 years, with
$1.6 million being due within one year. The weighted average interest rate at
March 31, 1995 was 7.2%.
F-8
<PAGE> 9
INVENTORY, CAPITALIZATION AND SEGMENT EXPENSES
Housing projects and land held for development and sale are stated at the lower
of cost (including direct construction costs and capitalized interest and real
estate taxes) or market. The capitalized costs, other than interest, are
included in Home Building costs and expenses in the statement of consolidated
earnings as related revenues are recognized. Interest costs relieved from
inventories are included as interest expense.
General operating expenses associated with each segment of business are
expensed as incurred and are included in the appropriate segment of business.
JOINT VENTURES
Earnings or losses of joint ventures are not significant and are included in
the appropriate segment of business revenues. Investments in joint ventures are
carried on the equity method in the consolidated balance sheets.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Major renewals and improvements are
capitalized and depreciated. Repairs and maintenance are expensed as incurred.
Depreciation is provided on a straight-line basis over the estimated useful
lives of depreciable assets. Costs and accumulated depreciation applicable to
assets retired or sold are eliminated from the accounts and any resulting gains
or losses are recognized at such time.
EARNINGS PER SHARE
Earnings per share are based on the weighted average number of common and
common equivalent shares outstanding in 1995, 1994 and 1993 of 30,326,906;
32,789,852 and 32,015,785, respectively.
MARKETABLE SECURITIES
MarketabLe securities at March 31, 1994 represented U.S. Government and
corporate securities owned by Texas Trust. These securities were available for
sale and had a market value which approximated book value.
RESIDENTIAL MORTGAGE LOANS RECEIVABLE
Residential mortgage loans held by CTX Mortgage of $413.8 million at March 31,
1995 are stated at the lower of aggregate cost or market. Market is determined
based on CTX Mortgage's forward sale commitments. Substantially all of the
mortgage loans are sold forward upon closing and subsequently delivered to
third-party purchasers within 60 days thereafter. Due to the fact that defaults
of new loans within the first 60 days are not material, no significant reserves
are required.
F-9
<PAGE> 10
OFF-BALANCE-SHEET RISK
CTX Mortgage enters into various financial agreements, in the normal course of
business, in order to manage the exposure to changing interest rates as a
result of having issued loan commitments to its customers at a specified price
and period, and committing to sell mortgage loans to various investors. CTX
Mortgage had commitments to mortgagors of approximately $227 million and
commitments to sell to investors against these loan commitments of
approximately $137 million at March 31, 1995.
The company does not engage in the trading of securities or other financial
instruments.
STATEMENT OF CONSOLIDATED CASH FLOWS - SUPPLEMENTAL DISCLOSURES
Interest expenses relating to the financial services operations (Mortgage
Banking and Savings and Loan) are included in their respective costs and
expenses. Interest related to non-financial services operations are included as
interest expense as summarized below.
<TABLE>
<CAPTION>
For the Years Ended March 31,
===========================================
1995 1994 1993
-------------------------------------------
<S> <C> <C> <C>
Total Interest Incurred $58,771 $68,856 $63,721
Less - Mortgage Banking (19,933) (30,696) (28,882)
Savings and Loan (5,824) (8,477) (12,731)
------- ------- -------
Interest Expense $33,014 $29,683 $22,108
======= ======= =======
</TABLE>
Net payments made for federal, state and foreign income taxes during the fiscal
years ended March 31, 1995, 1994 and 1993 were $49.8 million, $41.9 million,
and $11.4 million, respectively.
RECLASSIFICATIONS
Certain prior year balances have been reclassified to be consistent with the
1995 presentation.
(B) SAVINGS AND LOAN OPERATIONS
ACQUISITION
In December 1988, the company purchased certain assets and assumed certain
liabilities of four Texas savings and loan associations pursuant to acquisition
agreements and an assistance agreement with the Federal Savings and Loan
Insurance Corporation (FSLIC). In 1989 the FSLIC was replaced by the FSLIC
Resolution Fund (the Fund), which assumed all of FSLIC's assets, debts and
obligations. The acquisition was made by Texas Trust, a federal stock savings
bank and subsidiary of CTX Holding, a wholly-owned subsidiary of the company.
The FSLIC received a warrant to purchase a 20% interest in Texas Trust's common
stock for $.4 million through December 2003. Effective December 20, 1994, the
assistance agreement was terminated and the warrant was redeemed.
Certain of the acquired assets (Covered Assets) were subject to Fund assistance
in the form of loss reimbursements and a guaranteed minimum yield. Yield
maintenance on Covered Assets for the years ended March 31, 1995, 1994 and 1993
were $.7, $2.8, and $8.5 million, respectively. In addition, $10.0, $12.1, and
$86.1 million of assistance were provided in fiscal 1995, 1994 and 1993,
respectively, primarily as reimbursement for losses relating to Covered Assets.
F-10
<PAGE> 11
The agreements also provided for sharing by the Fund in a portion of the tax
benefits realized by Centex Corporation, indemnification by the Fund against
unassumed liabilities and claims.
DEPOSITS AND FHLB BORROWINGS
At March 31, 1994, deposits included $169.7 million of certificates of deposit
(weighted average contractual interest rate of 3.87%) and $37.3 million of
savings and checking accounts (weighted average contractual interest rate of
2.42%). In addition, the company was obligated on $4.0 million of Federal Home
Loan Bank borrowings, which bore interest at 9.88% and were secured by assets
with a book value of $4.5 million.
DISPOSITION
Effective December 20, 1994, Texas Trust and CTX Holding Company executed an
agreement with the Fund which terminated the assistance agreement. In addition,
all items in dispute with the Fund were resolved and Texas Trust redeemed the
warrant. On December 30, 1994, Coastal Bank, ssb, a non-affiliated entity,
purchased all of Texas Trust's branch office facilities and assumed its deposit
liabilities. Immediately after the sale Texas Trust was liquidated and its
charter was canceled.
(C) INVESTMENT IN CXP
In April 1994, the company's construction products subsidiary, Centex
Construction Products, Inc. (CXP), completed the sale of 11.73 million shares
(51%) of its common stock in an initial public offering. CXP's operations
include cement, concrete, aggregate and gypsum wallboard facilities, including
its 50% joint venture interests in its Texas and Illinois cement plants. Centex
retains a 49% ownership in CXP.
In connection with CXP's initial public offering, Centex received a dividend
and other payments from CXP of $186.5 million, which was used by Centex to
reduce outstanding indebtedness. The company reports its 49% investment in CXP
on the equity method of accounting.
CXP's revenues of $166,826 and $136,526 for the fiscal years ended 1994 and
1993, respectively, and the related costs and expenses have been reclassified
into "Equity in Earnings of Affiliate (CXP)" in order to facilitate comparisons
between the periods.
F-11
<PAGE> 12
Summarized financial information of CXP is presented below:
<TABLE>
<CAPTION>
For the Years Ended March 31,
============================================
1995 1994 1993
--------------------------------------------
<S> <C> <C> <C>
Revenues $194,313 $ 166,826 $136,526
Earnings Before Income Taxes $ 33,829 $ 16,626 $ 4,648
Net Earnings $ 21,820 $ 10,240 $ 3,112
</TABLE>
<TABLE>
<CAPTION>
March 31,
============================
1995 1994
----------------------------
<S> <C> <C>
ASSETS
Current Assets $ 66,562 $ 62,203
Noncurrent Assets 183,541 195,112
--------- ---------
$ 250,103 $ 257,315
========= =========
LIABILITIES AND EQUITY
Current Liabilities $ 35,493 $ 32,966
Noncurrent Liabilities 31,205 53,510
Stockholders' Equity 183,405 170,839
--------- ---------
$ 250,103 $ 257,315
========= =========
</TABLE>
(D) PROPERTY AND EQUIPMENT
Property and equipment cost by major category and accumulated depreciation are
summarized below:
<TABLE>
<CAPTION>
March 31,
===========================
1995 1994
---------------------------
<S> <C> <C>
Land, Buildings and Improvements $ 1,919 $ 37,707
Plants, Machinery, Equipment and Other 79,592 273,242
-------- ---------
81,511 310,949
Accumulated Depreciation (40,244) (122,019)
-------- --------
$ 41,267 $188,930
======== ========
</TABLE>
The decrease in property and equipment in fiscal 1995 relates primarily to the
CXP initial public offering.
F-12
<PAGE> 13
(E) INDEBTEDNESS
SHORT-TERM DEBT
Balances of short-term debt were:
<TABLE>
<CAPTION>
March 31,
=========================================================
1995 1994
---------------------------------------------------------
Centex Financial Centex Financial
Corporation Services Corporation Services
----------- -------- ----------- --------
<S> <C> <C> <C> <C>
Banks $ 79,000 $196,000 $ 84,500 $225,500
Commercial Paper 125,000 - 122,000 -
Other Financial Institutions 851 175,409 138 351,447
-------- -------- -------- --------
$204,851 $371,409 $206,638 $576,947
-------- -------- -------- --------
Consolidated Short-term Debt $576,260 $783,585
======== ========
</TABLE>
The company borrows on a short-term basis from banks under uncommitted lines
which bear interest at prevailing market rates. The weighted average interest
rates of the short-term indebtedness outstanding during fiscal 1995 and 1994
were 5.8% and 3.6%, respectively. The weighted average interest rates of
balances outstanding at March 31, 1995 and 1994 were 6.6% and 4.1%,
respectively.
LONG-TERM DEBT
Balances of long-term debt were:
<TABLE>
<CAPTION>
March 31,
===========================
1995 1994
---------------------------
<S> <C> <C>
Senior Notes, 9.05% Due in May 1996 $100,000 $100,000
Subordinated Debentures, 8.75% to 8.8% Due in 2007 119,316 119,284
Other Indebtedness, 8.0% to 9.0% Due through 2000 3,214 3,548
-------- --------
$222,530 $222,832
======== ========
</TABLE>
Maturities of long-term debt during the next five fiscal years are: 1996,
$1,114; 1997, $100,000; 1998, $O; 1999, $0; 2000, $2,100.
Included in other long-term debt is a $2.1 million convertible subordinated
debenture sold in August 1985 to a corporate officer at par. The indebtedness
bears interest at prime and is convertible into 200,000 shares of the company's
common stock. In connection with this transaction, the company has guaranteed
the payment of a $2.1 million note payable to a bank by the officer.
CREDIT FACILITIES
During fiscal 1994 Centex maintained two separate bank credit agreements
totaling $465 million, which was available for general corporate purposes. These
facilities were replaced in July 1994 with a $425 million revolving credit
agreement expiring in July 1999. Under the terms of the agreement, $170 million
may be borrowed directly by CTX Mortgage. There were no borrowings outstanding
to Centex Corporation or CTX Mortgage under this or the previous facilities
during the fiscal years ended March 31, 1995 and 1994.
F-13
<PAGE> 14
CTX Mortgage has a $300 million committed and secured mortgage warehouse
facility with a bank group, which expires in July, 1997. CTX Mortgage also
maintains committed mortgage warehouse facilities of $100 million expiring in
December 1995 with two investment banks. In addition, CTX Mortgage has a $100
million asset-backed commercial paper program which expires in March 1997. The
bank warehouse facility and the commercial paper program provide for limited
support by Centex, as defined, of up to a maximum of 10% of the commitments.
Management believes the facilities expiring in December 1995 can be renewed or
replaced on essentially the same terms.
Under the most restrictive covenants of the various debt agreements, retained
earnings of $315 million were free of restrictions at March 31, 1995.
(F) CAPITAL STOCK
SHAREHOLDER RIGHTS PLAN
In September 1986, the company adopted a Shareholder Rights Plan (Rights Plan)
pursuant to which each holder of record of a share of common stock was granted
one right for each share of common stock held. The Rights Plan was amended in
May 1988. Under the Rights Plan, as amended, each right entitles its holder to
purchase one one-hundredth of a share of a new series of preferred stock
designated Junior Participating Preferred Stock, Series D at an exercise price
of $120. The rights will become exercisable 10 days after anyone acquires 20%
or more of the company's common stock, or 10 business days after anyone
commences a tender offer which, if successful, would result in such person
owning 20% or more of the company's common stock. In addition, if anyone
acquires 20% or more of the common stock (other than pursuant to certain offers
for all shares of common stock specified in the Rights Plan), or a 20% or more
holder engages in certain specified "self-dealing" transactions or combines
with the company in a reverse merger in which the company survives and its
shares of common stock are not changed, each right will entitle its holder
(other than a holder which owns 20% or more of the common stock) to purchase
shares of company common stock (or, in certain circumstances, other
consideration) with a value of twice the $120 exercise price. If, following an
acquisition of 20% or more of the common stock, the company is acquired in a
merger or sells 50% of its assets or earning power, each right will entitle its
holder (other than a holder which owns 20% or more of the common stock) to
purchase common stock of the acquiring company with a value of twice the $120
exercise price. In general, the rights are redeemable at $.05 per right until
15 days after anyone acquires 20% or more of the common stock. Unless earlier
redeemed, the rights will expire on October 1, 1996.
F-14
<PAGE> 15
STOCK OPTIONS
The company has two stock option plans for directors, officers and key
employees of the company, the Centex Corporation 1987 Stock Option Plan (the
1987 Plan) and the Centex Corporation Stock Option Plan (the Centex Plan).
Option grants under the Centex Plan may not be less than the fair market value
at the date of the grant. Option grants under the 1987 Plan may be less than the
fair market value at the date of the grant. Under both plans, option periods and
exercise dates may vary within a maximum period of 10 years. A summary of the
activity in the stock option plans is presented below:
<TABLE>
<CAPTION>
Number Option Price
Options at March 31, of Shares Range per Share
--------- -----------------
<S> <C> <C>
Outstanding
1995 3,406,073 $8.50 to $33.875
1994 3,641,300 $8.50 to $33.875
Exercised
1995 144,670 $8.50 to $18.313
1994 518,930 $8.50 to $18.313
Exercisable
1995 1,630,987 $8.50 to $33.875
1994 849,002 $8.50 to $18.375
Available for grant
1995 963,213
1994 872,656
</TABLE>
During fiscal 1995, options for 167,500 shares were granted and previously
granted options for 258,057 shares became available for reissue. At March 31,
1995, the company had 4,369,286 common shares reserved for stock options.
The company records proceeds from the exercise of options as additions to
common stock and capital in excess of par value. The federal tax benefit, if
any, is considered additional capital in excess of par value. No charges or
credits would be made to earnings unless options were to be granted at less
than fair market value at the date of the grant.
F-15
<PAGE> 16
(G) INCOME TAXES
The provision for income taxes includes the following components:
<TABLE>
<CAPTION>
For the Years Ended March 31,
============================================
1995 1994 1993
--------------------------------------------
<S> <C> <C> <C>
Current Provision
Federal $53,754 $52,943 $22,429
State 4,071 4,668 4,747
------- ------- -------
57,825 57,611 27,176
------- ------- -------
Deferred Provision (Benefit)
Federal (4,570) (10,762) 2,581
State 285 3,002 964
------- ------- -------
(4,285) (7,760) 3,545
------- ------- -------
Provision for Income Taxes $53,540 $49,851 $30,721
======= ======= =======
</TABLE>
The effective tax rate is greater than the federal statutory rate of 35% in 1995
and 1994 and less than the federal rate of statutory 34% in 1993 due to the
following items:
<TABLE>
<CAPTION>
For the Years Ended March 31,
=============================================
1995 1994 1993
---------------------------------------------
<S> <C> <C> <C>
Financial Income Before Taxes $145,788 $ 135,013 $91,759
======== ========= =======
Income Taxes at Statutory Rate $ 51,025 $ 47,254 $31,198
Increases (Decreases) in Tax Resulting From-
State Income Taxes, net 2,791 4,826 3,840
Statutory Depletion in Excess of Cost - (912) (603)
Tax Exempt Fund Assistance - (1,238) (3,000)
Other (276) (79) (714)
-------- --------- -------
Provision for Income Taxes $ 53,540 $ 49,851 $30,721
======== ========= =======
Effective Tax Rate 37% 37% 33%
</TABLE>
During fiscal year 1994, the "Revenue Reconciliation Act of 1993" was signed
into law which, among other things, changed the federal statutory tax rate from
34% to 35% retroactive to January 1, 1993. In accordance with SFAS No. 109,
"Accounting for Income Taxes," the tax effect of this new law was recognized by
the company during fiscal year 1994. These changes had no material effect on
the financial statements of the company.
Certain payments from the Fund were exempt from federal income taxes. These tax
benefits have been reflected as a reduction of the income tax provision.
F-16
<PAGE> 17
The deferred income tax provision (benefit) results from the following
temporary differences in the recognition of revenues and expenses for tax and
financial reporting purposes:
<TABLE>
<CAPTION>
For the Years Ended March 31,
==============================================
1995 1994 1993
----------------------------------------------
<S> <C> <C> <C>
Installment Sale Reversals $ (176) $ (153) $ (326)
Net Operating Loss Utilization - 247 918
Uniform Capitalization for Tax Reporting (2,377) (777) (580)
Completed Contract Reporting 639 (318) (2,997)
Gain on CXP's Initial Public Offering 21,500 - -
Excess Tax Depreciation and Amortization (32,389) 444 88
Interest and Real Estate Taxes Expensed as Incurred (749) 430 2,988
Alternative Minimum Tax (507) 11,012 3,985
Financial Accrual Changes and Other 9,774 (18,645) (531)
-------- -------- -------
$ (4,285) $ (7,760) $ 3,545
======== ======== =======
</TABLE>
Components of deferred income taxes are as follows:
<TABLE>
<CAPTION>
March 31,
=============================
1995 1994
-----------------------------
<S> <C> <C>
Deferred Tax LiabiLities
Excess Tax Depreciation and Amortization $ 1,372 $37,977
Interest and Real Estate Taxes Expensed as Incurred 25,837 26,698
Gain on CXP's Initial Public Offering 21,500 -
Consolidated Return Regulation Deferrals 6,939 6,898
Software Development Expensed as Incurred 1,957 714
All Other 3,586 10,449
--------- --------
Total Deferred Tax Liabilities 61,191 82,736
--------- --------
Deferred Tax Assets
Alternative Minimum Tax (815) (507)
Uniform Capitalization for Tax Reporting (14,878) (12,574)
Financial Accruals (18,201) (16,143)
All Other (560) (2,332)
--------- --------
Total Deferred Tax Assets (34,454) (31,556)
--------- --------
Net Deferred Tax Liability $ 26,737 $ 51,180
========= ========
</TABLE>
F-17
<PAGE> 18
(H) CENTEX DEVELOPMENT COMPANY, L.P.
In March 1987, certain of the company's subsidiaries contributed to Centex
Development Company, L.P. (CDC), a newly formed master limited partnership,
properties with a historical cost basis (which approximated market value) of
approximately $76 million. CDC was formed to enable stockholders to participate
in long-term real estate development projects whose dynamics are inconsistent
with Centex's traditional financial objectives.
In November 1987, the company distributed as a dividend to its stockholders
securities relating to CDC. These securities included all of the issued and
outstanding shares of common stock of 3333 Holding Corporation and warrants to
purchase approximately 80% of the Class B units of limited partnership interest
in CDC. A wholly-owned subsidiary of 3333 Holding Corporation serves as general
partner of CDC. These securities are held by a nominee on behalf of the
stockholders and will trade in tandem with the common stock of the company
until such time as they are detached. The securities may be detached at any
time by Centex's Board of Directors but the warrants to purchase Class B units
automatically become detached in November 1997 unless extended by Centex's
stockholders.
The partnership agreement provides that Centex, the Class A limited partner, is
entitled to a cumulative preferred return of 9% per annum on the average
outstanding balance of its unrecovered capital, defined as its initial capital
contribution, adjusted for cash distributions representing return of the
initial capital contribution. No payments were made in fiscal 1995, 1994, or
1993.
Supplementary condensed combined financial statements for the company, 3333
Holding Corporation and subsidiary and Centex Development Company, L.P. are set
forth below. For additional information on 3333 Holding Company and its
subsidiary and Centex Development Company, L.P., see their separate financial
statements and related footnotes included elsewhere in this annual report.
F-18
<PAGE> 19
SUPPLEMENTARY CONDENSED COMBINED BALANCE SHEETS
================================================================================
<TABLE>
<CAPTION>
March 31,
=============================
1995 1994
-----------------------------
<S> <C> <C>
ASSETS
Cash and Cash Equivalents $ 25,207 $ 76,388
Marketable Securities Available for Sale - 78,241
Receivables 653,622 930,428
Inventories 1,266,509 1,223,753
Investments in
Centex Construction Products, Inc. 89,871 -
Joint Ventures and Unconsolidated Subsidiaries 5,695 56,928
Property and Equipment, net 41,267 188,930
Government-Guaranteed S&L Assets - 43,767
Other Assets and Deferred Charges 26,427 38,574
---------- ----------
$2,108,598 $2,637,009
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable and Accrued Liabilities $ 557,640 $ 644,926
S&L Deposits and FHLB Borrowings - 211,055
Short-term Debt 632,745 837,734
Long-term Debt 222,530 222,832
Deferred Income Taxes 26,737 51,180
Stockholders' Equity 668,946 669,282
---------- ----------
$2,108,598 $2,637,009
========== ==========
</TABLE>
SUPPLEMENTARY CONDENSED COMBINED STATEMENTS OF EARNINGS
================================================================================
<TABLE>
<CAPTION>
For the Years Ended March 31,
==============================================
1995 1994 1993
----------------------------------------------
<S> <C> <C> <C>
Revenues $3,281,198 $3,224,025 $2,501,691
Costs and Expenses 3,194,642 3,089,126 2,410,028
---------- ---------- ----------
Earnings Before Gain on CXP's Initial Public
Offering and Income Taxes 86,556 134,899 91,663
Gain on CXP's Initial Public Offering 59,328 - -
---------- ---------- ----------
Earnings Before Income Taxes 145,884 134,899 91,663
Income Taxes 53,540 49,851 30,721
---------- ---------- ----------
Net Earnings $ 92,344 $ 85,048 $ 60,942
========== ========== ==========
</TABLE>
F-19
<PAGE> 20
(I) BUSINESS SEGMENTS
The company operates in three business segments: Home Building, Financial
Services and Contracting and Construction Services.
Intersegment revenues and investments in joint ventures are not material and
are not shown in the following tables. The investment in Centex Development
Company, L.P. is included in the Home Building segment and the investment in
Centex Construction Products, Inc. is included in the Corporate segment.
HOME BUILDING
Home Building operations involve the construction and sale of residential
housing. These activities also include the purchase and development of land.
The following table sets forth financial information relating to the Home
Building operations.
<TABLE>
<CAPTION>
For the Years Ended March 31,
=========================================
1995 1994 1993
-----------------------------------------
(Dollars in millions)
<S> <C> <C> <C>
Revenues $ 2,110.7 $ 1,869.8 $ 1,433.1
Cost of Sales & Expenses 1,998.6 1,773.8 1,353.2
----------- ----------- -----------
Operating Earnings $ 112.1 $ 96.0 $ 79.9
=========== =========== ===========
Identifiable Assets $ 1,286.0 $ 1,203.2 $ 981.1
=========== =========== ===========
Capital Expenditures $ 6.4 $ 9.3 $ 2.1
=========== =========== ===========
Depreciation and Amortization $ 3.3 $ 2.8 $ 2.2
=========== =========== ===========
</TABLE>
FINANCIAL SERVICES
Financial Services operations involve the financing of residential housing.
These activities include mortgage origination and other related services on
homes sold by subsidiaries and by others. The Savings and Loan segment includes
the operations of CTX Holding Company and its subsidiary, Texas Trust Savings
Bank, FSB (sold during fiscal 1995 - see Note B). The following table sets
forth financial information relating to the Financial Services operations.
<TABLE>
<CAPTION>
For the Years Ended March 31,
======================================================================================
(Dollars in millions)
1995 1994
----------------------------------------- -----------------------------------------
MORTGAGE SAVINGS Mortgage Savings
BANKING & LOAN TOTAL Banking & Loan Total
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues $ 97.4 $ 9.4 $ 106.8 $ 187.9 $ 15.5 $ 203.4
Cost of Sales & Expenses 96.0 1.4 97.4 116.9 12.9 129.8
----------- ----------- ----------- ----------- ----------- -----------
Operating Earnings $ 1.4 $ 8.0 $ 9.4 $ 71.0 $ 2.6 $ 73.6
=========== =========== =========== =========== =========== ===========
Identifiable Assets $ 450.7 $ - $ 450.7 $ 685.6 $ 238.0 $ 923.6
=========== =========== =========== =========== =========== ===========
Capital Expenditures $ 6.7 $ .2 $ 6.9 $ 11.0 $ 2.3 $ 13.3
=========== =========== =========== =========== =========== ===========
Depreciation and Amortization,
including Negative Goodwill $ 6.0 $ (6.8) $ (.8) $ 3.6 $ (2.2) $ 1.4
=========== =========== =========== =========== =========== ===========
<CAPTION>
For the Year Ended March 31,
=========================================
(Dollars in millions)
1993
-----------------------------------------
Mortgage Savings
Banking & Loan Total
----------- ----------- -----------
<S> <C> <C> <C>
Revenues $ 129.7 $ 17.3 $ 147.0
Cost of Sales & Expenses 81.9 14.3 96.2
----------- ----------- -----------
Operating Earnings $ 47.8 $ 3.0 $ 50.8
=========== =========== ===========
Identifiable Assets $ 624.8 $ 216.7 $ 841.5
=========== =========== ===========
Capital Expenditures $ 7.1 $ 0.5 $ 7.6
=========== =========== ===========
Depreciation and Amortization,
including Negative Goodwill $ 1.5 $ (3.1) $ (1.6)
=========== =========== ===========
</TABLE>
F-20
<PAGE> 21
CONTRACTING AND CONSTRUCTION SERVICES
Contracting and Construction Services includes the construction of buildings
for both private and government interests, including office, commercial and
industrial buildings, hospitals, hotels, museums, libraries, airport
facilities, condominiums and educational institutions.
The following table sets forth financial information relating to the
Contracting and Construction Services operation. As this segment generates
significant levels of cash flow, Intracompany Interest Income (credited at the
prime rate in effect) is reflected in this segment. These amounts are
eliminated in consolidation.
<TABLE>
<CAPTION>
For the Years Ended March 31,
=========================================
1995 1994 1993
-----------------------------------------
(Dollars in millions)
<S> <C> <C> <C>
Revenues $ 1,059.9 $ 966.6 $ 783.2
Cost of Sales & Expenses 1,061.7 971.1 787.3
----------- ----------- -----------
Operating Loss (1.8) (4.5) (4.1)
Intracompany Interest Income 17.6 13.8 14.0
----------- ----------- -----------
Total $ 15.8 $ 9.3 $ 9.9
=========== =========== ===========
Identifiable Assets* $ 199.8 $ 178.9 $ 170.4
=========== =========== ===========
Capital Expenditures $ 2.7 $ 2.8 $ 1.8
=========== =========== ===========
Depreciation and Amortization $ 3.1 $ 3.0 $ 2.8
=========== =========== ===========
</TABLE>
*The "net assets" position of the Contracting and Construction Services
segment provides significant cash flow because payables and accruals
consistently exceed gross assets.
CORPORATE
Corporate general and administrative expenses represent salaries and other
costs not identifiable with a specific segment. Corporate assets are primarily
cash and cash equivalents, receivables and other assets not associated with a
business segment, including the investment in CXP. The following table
summarizes financial information relating to the Corporate segment.
<TABLE>
<CAPTION>
For the Years Ended March 31,
=========================================
1995 1994 1993
-----------------------------------------
(Dollars in millions)
<S> <C> <C> <C>
Corporate General and Administrative Expenses $ 15.3 $ 15.2 $ 13.1
=========== =========== ===========
Identifiable Assets $ 113.2 $ 21.3 $ 29.3
=========== =========== ===========
Capital Expenditures $ 0.2 $ 0.1 $ 0.2
=========== =========== ===========
Depreciation and Amortization $ 0.8 $ 0.8 $ 1.0
=========== =========== ===========
</TABLE>
(J) FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments", requires companies to disclose the estimated
fair value of their financial instrument assets and liabilities. The estimated
fair values shown below have been determined using current quoted market prices
where available and, where necessary, estimates based on present value
methodology suitable for each category of financial instruments. Considerable
judgment is required
F-21
<PAGE> 22
in interpreting market data to develop the estimates of fair value.
Accordingly, the estimates presented herein are not necessarily indicative of
the amounts that the company could realize in a current market exchange.
All assets and liabilities which are not considered financial instruments have
been valued using historical cost accounting. No disclosure of the intangible
relationship value of Texas Trust's customer deposits is required by Statement
No. 107, nor has the company estimated that value. There is no material
difference between the recorded amount and the estimated fair value of CTX
Mortgage or Texas Trust's off-balance-sheet unfunded loan commitments. These
are generally priced at market at the time of funding. For Texas Trust's loans
and deposits with floating interest rates, the estimated fair values generally
approximated the carrying values. The consolidated carrying values of Cash and
Cash Equivalents, Other Receivables, Accounts Payable and Accrued Liabilities
and Short-term Debt approximate their fair values. The carrying values and
estimated fair values of other financial assets and liabilities were as
follows:
<TABLE>
<CAPTION>
March 31,
=========================================================
1995 1994
--------------------------------------------------------
CARRYING FAIR Carrying Fair
VALUE VALUE Value Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Financial Assets
Marketable Securities $ - $ - $ 78,241 $ 78,241(a)
Residential Mortgage Loans $ 413,802 $ 414,962(a) $ 677,641 $ 677,052(a)
Government-Guaranteed S&L Receivables $ - $ - $ 19,030 $ 19,030(b)
Financial Liabilities
S&L Deposits and FHLB Borrowings $ - $ - $ 211,055 $ 210,930(b)
Long-term Debt $ 222,530 $ 237,603(b) $ 222,832 $ 234,618(b)
</TABLE>
(a) Fair values are based on quoted market prices for similar instruments.
(b) Fair values are based on a present value discounted cash flow with the
discount rate approximating current market for similar instruments.
(K) COMMITMENTS AND CONTINGENCIES
In order to assure the future availability of land for home building, the
company has made deposits totaling $14 million as of March 31, 1995 for options
to purchase undeveloped land and developed lots having a total purchase price
of approximately $362 million. These options expire at various dates to 2000.
The company has also committed to purchase land and developed lots totaling
approximately $69 million. In addition, the company has executed lot purchase
contracts with CDC (see Note H) which aggregate approximately $6 million.
Management believes that none of the litigation matters in which it or any
subsidiary is involved, if determined unfavorable to Centex or any subsidiary,
would have a material adverse effect on the consolidated financial condition or
results of operations of the company.
The company has certain deductible limits under its workers' compensation and
automobile and general liability insurance policies for which reserves are
established based on the estimated costs of known and anticipated claims.
F-22
<PAGE> 23
Centex Corporation and Subsidiaries
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
================================================================================
TO THE STOCKHOLDERS AND BOARD OF DIRECTORS OF CENTEX CORPORATION:
We have audited the accompanying consolidated balance sheets of Centex
Corporation (a Nevada corporation) and subsidiaries as of March 31, 1995 and
1994, and the related consolidated statements of earnings, stockholders'
equity, and cash flows for each of the three years in the period ended March
31, 1995. These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Centex Corporation and
subsidiaries as of March 31, 1995 and 1994, and the results of their operations
and their cash flows for each of the three years in the period ended March 31,
1995, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The supplemental balance
sheet data of Centex Corporation and Financial Services are presented for
purposes of additional analysis and are not a required part of the basic
consolidated financial statements. This information has been subjected to the
auditing procedures applied in our audits of the basic consolidated financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic consolidated financial statements taken as a whole.
Arthur Andersen LLP
Dallas, Texas,
May 12, 1995
F-23
<PAGE> 24
Management's Discussion and Analysis of Results of Operations and Financial
Condition
================================================================================
FISCAL YEAR 1995 COMPARED TO FISCAL YEAR 1994
Centex reported record revenues of $3.3 billion for fiscal 1995, an 8% increase
over fiscal 1994 revenues. Earnings before income taxes and prior to the gain
related to the 51% initial public offering of Centex Construction Products,
Inc. (CXP), were $86.5 million, down 36% compared to $135.0 million for fiscal
1994. Net earnings were $54.8 million and earnings per share were $1.81,
for fiscal 1995 before the CXP gain, compared to $85.2 million and $2.60 for
fiscal 1994. Including the CXP gain, net earnings and earnings per share for
fiscal 1995 were $92.2 million and $3.04, respectively.
On April 19,1994, CXP completed the sale of 11,730,000 shares, or 51% of its
common stock through an initial public offering. Including a dividend and
other payments, Centex received $186.5 million from the transaction. Centex
retains ownership of 49% of CXP's stock.
Home Building
The following summarizes Home Building results for the two-year period ending
March 31, 1995 (dollars in millions, except per unit data):
<TABLE>
<CAPTION>
1995 1994
----------------------- -----------------------
<S> <C> <C> <C> <C>
Home Building Revenues $2,110.7 100.0% $1,869.8 100.0%
Cost of Sales (1,748.6) (82.9%) (1,560.0) (83.5%)
Selling, General & Administrative (250.0) (11.8%) (213.8) (11.4%)
-------- ------ -------- ------
Operating Earnings $ 112.1 5.3% $ 96.0 5.1%
======== ====== ======== ======
Units Closed 12,964 12,563
Unit Sales Price $159,222 $147,466
% Change 8.0% 6.6%
Operating Earnings per Unit $ 8,651 $ 7,640
% Change 13.2% 3.1%
</TABLE>
Although Centex reported record home building results for fiscal 1995, the
company noted that as the year progressed, rising interest rates slowed new
orders. This slowdown resulted in price competition throughout the industry,
which negatively impacted margin improvements generally anticipated during this
stage of the housing cycle.
F-24
<PAGE> 25
Financial Services
The Financial Services segment consists of the Mortgage Banking and Savings and
Loan operations. The following summarizes Mortgage Banking's results for the
two-year period ending March 31, 1995 (dollars in millions):
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Revenues $ 97.4 $ 187.9
=========== ===========
Operating Earnings $ 1.4 $ 71.0
=========== ===========
Origination Volume $ 4,195.2 $ 6,428.4
=========== ===========
Number of Loans Originated
Centex-built Homes 8,504 9,289
Non-Centex-built Homes 28,574 49,254
----------- -----------
37,078 58,543
=========== ===========
</TABLE>
The Mortgage Banking results were negatively impacted throughout most of fiscal
1995 by rising interest rates and an increasingly competitive environment as
the industry fought for the shrinking volume in a declining market. Refinancing
activity virtually disappeared and consumers shifted from fixed-rate loans to
lower margin adjustable-rate loans. Mortgage Banking's results were also
affected by the costs associated with downsizing the organization to match the
lower business volume. During fiscal 1995, the division's operating locations
and personnel were reduced by approximately 40%. Mortgage Banking's
operational performance improved as the fourth quarter progressed due to a more
efficient operating structure and the flattening of the yield curve, which
increased the attractiveness of fixed rate mortgage product to customers.
Savings and Loan revenues in fiscal 1995 were $9.4 million compared to $15.5
million in fiscal 1994. Operating earnings for fiscal 1995 were $8.0 million
compared to $2.6 million in fiscal 1994. In December 1994, the savings and loan
sold its deposits and branches for a pre-tax gain of $3.2 million. The
completion of the sale was Centex's final step in exiting the savings and loan
industry.
Contracting and Construction Services
The following summarizes Contracting and Construction Services results for the
two-year period ending March 31, 1995 (dollars in millions):
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C>
Revenues $ 1,059.9 $ 966.6
=========== ===========
Operating Loss $ (1.8) $ (4.5)
=========== ===========
New Contracts Received $ 1,151.8 $ 1,029.2
=========== ===========
Backlog of Uncompleted Contracts $ 1,328.0 $ 1,236.1
=========== ===========
</TABLE>
Although Contracting and Construction Service's results continued to be
negatively impacted by an intensely competitive environment, the operating loss
in fiscal 1995 was reduced compared to fiscal 1994. Nonresidential construction
is improving as the economy strengthens and profit margins in this group are
beginning to improve. The Contracting and
F-25
<PAGE> 26
Construction Services operation provided a positive average net cash flow in
excess of Centex's investment in the group of $60 million during fiscal 1995
and $74 million during fiscal 1994.
Equity in Earnings of Affiliate (CXP)
Centex's 49% "Equity in Earnings of Affiliate (CXP)" was $16.6 million in
fiscal 1995. Fiscal year 1994's earnings which represented Centex's 100%
ownership of CXP were also $16.6 million. Centex Construction Products, Inc.
fiscal 1995 operating results benefitted from improved demand and pricing for
its cement and gypsum wallboard products.
FISCAL YEAR 1994 COMPARED TO FISCAL YEAR 1993
Led by outstanding results from its Home Building and Financial Services
businesses and significant improvement in its Construction Products operations,
Centex reported for fiscal year 1994 revenues of $3.0 billion ($2.4 billion in
1993), earnings before income taxes of $135 million ($91.8 million in 1993),
net earnings of $85.2 million ($61.0 million in 1993) and earnings per share
of $2.60 ($1.91 in 1993).
Home Building
The following summarizes Home Building results for the two-year period ending
March 31, 1994 (dollars in millions, except per unit data):
<TABLE>
<CAPTION>
1994 1993
------------------------- -------------------------
<S> <C> <C> <C> <C>
Home Building Revenues $ 1,869.8 100.0% $ 1,433.1 100.0%
Cost of Sales (1,560.0) (83.5%) (1,186.6) (82.8%)
Selling, General & Administrative (213.8) (11.4%) (166.6) (11.6%)
----------- ---------- ----------- ----------
Operating Earnings $ 96.0 5.1% $ 79.9 5.6%
=========== ========== =========== ==========
Units Closed 12,563 10,279
Unit Sales Price $ 147,466 $ 138,359
% Change 6.6% 2.0%
Operating Earnings per Unit $ 7,640 $ 7,408
% Change 3.1% 3.7%
</TABLE>
Home Building's gross profit margin declined in fiscal 1994 compared to fiscal
1993 due to increases in construction material costs, primarily lumber. Margins
in 1994 were also impacted by the results of operations in California, which
continued to experience negative economic conditions. Home closings and orders
for fiscal 1994 were at the highest level in company history through fiscal
1994.
F-26
<PAGE> 27
Financial Services
The following summarizes Mortgage Banking's results for the two-year period
ending March 31, 1994 (dollars in millions):
<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Revenues $ 187.9 $ 129.7
=========== ===========
Operating Earnings $ 71.0 $ 47.8
=========== ===========
Origination Volume $ 6,428.4 $ 4,205.8
=========== ===========
Number of Loans Originated
Centex-built Homes 9,289 7,758
Non-Centex-built Homes 49,254 30,543
----------- -----------
58,543 38,301
=========== ===========
</TABLE>
The 45% increase in revenues and the 49% increase in operating earnings in
fiscal 1994 compared to fiscal 1993 were the result of an improving economy and
mortgage rates, which were at a 25-year-low. These conditions resulted in an
influx of refinancing by existing homeowners. As a result, Mortgage Banking
significantly expanded its operating locations and personnel during fiscal
1994.
The Savings and Loan segment reported fiscal 1994 revenues of $15.5 million,
compared to $17.3 million in the prior fiscal year. Operating earnings from
the Savings and Loan were $2.6 million for the current fiscal year, compared to
$3.0 million in fiscal 1993.
Contracting and Construction Services
The following summarizes Contracting and Construction Services results for the
two-year period ending March 31, 1994 (dollars in millions):
<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Revenues $ 966.6 $ 783.2
=========== ===========
Operating Loss $ (4.5) $ (4.1)
=========== ===========
New Contracts Received $ 1,029.2 $ 1,166.8
=========== ===========
Backlog of Uncompleted Contracts $ 1,236.1 $ 1,173.5
=========== ===========
</TABLE>
Contracting and Construction Service's operating losses during fiscal 1994 and
1993 resulted from continued weak operating margins as a result of competition
for fewer available industry-wide projects compared to prior years. The
increase in revenues of 23% in fiscal 1994 over fiscal 1993 resulted from this
group being awarded more projects on which it submitted bids in fiscal 1993 and
early 1994. However, the increased revenues also had low margins, which did not
improve operating earnings. The Contracting and Construction Services
operations provided average positive net cash flow in excess of Centex's
investment in this group of $74 million during fiscal 1994 and $73 million
during fiscal 1993.
F-27
<PAGE> 28
Construction Products
The following summarizes Construction Products results for the two-year period
ending March 31, 1994 (dollars in millions):
<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Revenues $ 166.8 $ 136.5
=========== ===========
Operating Earnings $ 16.6 $ 4.6
=========== ===========
</TABLE>
Construction Products revenues increased 22% and operating earnings increased
261% in fiscal 1994 compared to fiscal 1993. Improved sales prices, higher
sales volumes and lower operating costs contributed toward improved operating
earnings. The higher sales volumes were primarily due to increasing demand for
the cement-related and gypsum wallboard products, which resulted in the
improved pricing levels.
STOCK REPURCHASES
As a result of Centex's strengthened financial position after CXP's initial
public offering, Centex commenced a stock purchase program as the Centex stock
price fell to and remained at depressed levels. In total, the company
repurchased 3.7 million shares of its common stock or about 12% of the shares
outstanding at the beginning of fiscal 1995. Centex currently has board
authorization to purchase approximately 930,000 additional shares.
FINANCIAL CONDITION AND LIQUIDITY
Centex fulfills its short-term financing requirements with cash generated from
its operations and funds available under its credit facilities. These credit
facilities also serve as back-up lines for overnight borrowings under its
uncommitted bank facilities and commercial paper program. During fiscal 1995,
Centex replaced two separate bank credit agreements with a five-year $425
million bank revolving credit facility. There were no borrowings under this or
the prior facilities during fiscal 1995, 1994 or 1993. In addition, CTX
Mortgage Company has its own $500 million of credit facilities to finance
mortgages which are held during the period while they are being securitized and
readied for delivery against forward sale commitments.
During fiscal 1995, $179.7 million of cash was provided by Centex's operations,
compared to $104.0 million used by operations in fiscal 1994. The improvement
in fiscal 1995 operational cash flow resulted primarily from a reduction in
residential mortgage loans being held pending delivery against forward sales
commitments.
Cash of $92.3 million in fiscal 1995 and $201.5 million in fiscal 1994 was used
to increase inventories of homes under construction, land and land development
costs as home sales and in-process construction increased during the periods.
Payables and accruals decreased in
F-28
<PAGE> 29
fiscal 1995 over the prior year end balances due primarily to reduced operating
activity in the Mortgage Banking group, the disposition of the Savings and Loan
and the CXP transaction, which deconsolidated the Construction Products group.
In fiscal 1995, another significant source of funds was the dividend and other
receipts related to CXP's initial public offering, which provided $186.5
million in cash to Centex. The cash was used to reduce short-term
indebtedness.
The decrease in marketable securities and S&L deposits during fiscal 1995
resulted from the disposition of the Savings and Loan. The fiscal 1995 decrease
in debt related primarily to the decline in mortgage loan activity in the
Mortgage Banking group and the associated decline in mortgage loans held
pending delivery against forward sale commitments.
The company believes it has adequate resources and sufficient credit facilities
to satisfy its current needs and provide for future growth.
OUTLOOK
In December 1994, the company entered into an agreement with Dallas-based Vista
Properties, Inc. under which a subsidiary of Centex has agreed to acquire
equity interests in Vista and in its affiliated partnership, Vista Partners, as
part of a proposed prepackaged bankruptcy structuring by Vista. For an
investment of approximately $70 million, Centex would acquire ownership in a
portfolio of properties, comprising over 4,000 acres in seven states. The land
is zoned, planned or developed for single- and multi-family residential, office
and industrial, and retail and commercial. The acquisition would provide Centex
with future residential sites in several of its existing markets as well as
opportunities in retail, industrial and office segments. The transaction is
expected to be completed during the summer of 1995.
The company expects fiscal 1996 results to be negatively impacted by fiscal
1995's lower home order rate (sales) and the resulting lower backlog at the
beginning of fiscal 1996 compared to fiscal 1995. Although the company's
expanding base in California should have a positive effect later in fiscal
1996, the opening of new neighborhoods there was delayed due to heavy spring
rains. The recent decline in interest rates should provide an increase in
activity for both the Home Building and Mortgage Banking operations. The
company's Mortgage Banking operation is now positioned for profitability at
lower volume levels and the Contracting and Construction Services division
should become profitable as higher margin contracts are completed.
F-29
<PAGE> 30
Centex Corporation and Subsidiaries
SUMMARY OF SELECTED FINANCIAL DATA (UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
========================================================
1995 1994 1993 1992
--------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $ 3,277,504 $ 3,039,709 $ 2,363,325 $ 2,028,646
Earnings Before 1988 Accounting Change $ 92,248 $ 85,162 $ 61,038 $ 34,557
Cumulative Effect of Change in Accounting
for Income Taxes - - - -
----------- ----------- ----------- -----------
Net Earnings $ 92,248 $ 85,162 $ 61,038 $ 34,557
=========== =========== =========== ===========
Total Assets $ 2,049,698 $ 2,580,356 $ 2,272,093 $ 2,347,452
Total Long-term Debt, including debentures $ 222,530 $ 222,832 $ 223,988 $ 232,294
Total Debt $ 427,381 $ 429,470 $ 368,988 $ 298,508
Deferred Income Taxes $ 27,795 $ 35,088 $ 55,722 $ 56,627
Stockholders' Equity $ 668,227 $ 668,659 $ 578,415 $ 518,494
Total Debt as a Percent of Total Capitalization
(Total Debt, Deferred Income Taxes,
Negative Goodwill and Stockholders' Equity) 38.0% 37.1% 35.8% 33.0%
Net Earnings as a Percent of Beginning
Stockholders' Equity 13.8% 14.7% 11.8% 7.1%
Per Common Share
Earnings Before 1988 Accounting Change $ 3.04 $ 2.60 $ 1.91 $ 1.11
Cumulative Effect of Change in Accounting
for Income Taxes - - - -
----------- ----------- ----------- -----------
Net Earnings $ 3.04 $ 2.60 $ 1.91 $ 1.11
=========== =========== =========== ===========
Cash Dividends $ .20 $ .20 $ .20 $ .20
Book Value Based on Shares Outstanding at Year End $ 23.80 $ 21.12 $ 18.57 $ 16.99
Stock Prices
High $ 32 3/8 $ 45 5/8 $ 34 1/8 $ 27 3/8
Low $ 20 1/4 $ 27 1/2 $ 20 $ 17
</TABLE>
On November 30, 1987, Centex Corporation distributed as a dividend to its
stockholders securities relating to Centex Development Company, L.P.
(see Note H to the Consolidated Financial Statements of Centex Corporation
and Subsidiaries). Since this distribution, such securities have traded in
tandem with, and as a part of, the common stock of Centex Corporation.
Net Earnings and Earnings Per Share for fiscal 1995 include $37.5 million
and $1.23, respectively, related to the April 1994 IPO of 51% of the
stock of Centex Construction Products, Inc. See Note C to financial
statements.
Debt and deferred taxes reflect Centex Corporation only, with the mortgage
company and savings and loan association reflected on the equity method
versus consolidation.
Centex Construction Products, Inc. (CXP) become 49% owned in April 1994 as
a result of an Initial Public Offering representing 51% of its equity (see
Note C to financial statements). CXP's revenues for fiscal years 1994 and
prior, and the related costs and expenses have been reclassified into
"Equity in Earnings of Affiliate (CXP)". This reclassification facilitates
comparisons between the periods.
F-30
<PAGE> 31
<TABLE>
<CAPTION>
For the Years Ended March 31,
======================================================================================
1991 1990 1989 1988 1987 1986
- --------------------------------------------------------------------------------------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
$ 2,089,110 $ 1,925,423 $ 1,707,989 $ 1,352,601 $ 1,165,375 $ 1,268,382
$ 43,605 $ 62,003 $ 40,020 $ 24,063 $ 44,204 $ 47,569
- - - 50,100 - -
- ----------- ----------- ----------- ----------- ----------- -----------
$ 43,605 $ 62,003 $ 40,020 $ 74,163 $ 44,204 $ 47,569
=========== =========== =========== =========== =========== ===========
$ 2,037,486 $ 2,045,141 $ 1,800,522 $ 1,148,098 $ 1,150,720 $ 1,068,063
$ 137,235 $ 140,112 $ 140,192 $ 178,862 $ 133,461 $ 65,263
$ 267,946 $ 267,739 $ 240,457 $ 222,962 $ 134,724 $ 120,394
$ 80,205 $ 59,311 $ 74,487 $ 139,767 $ 229,576 $ 204,588
$ 483,677 $ 447,911 $ 384,174 $ 364,846 $ 363,014 $ 327,792
30.9% 33.0% 32.6% 30.6% 18.5% 18.4%
9.7% 16.1% 11.0% 20.4% 13.5% 15.8%
$ 1.42 $ 2.01 $ 1.32 $ .75 $ 1.24 $ 1.31
- - - 1.57 - -
- ----------- ----------- ----------- ----------- ----------- -----------
$ 1.42 $ 2.01 $ 1.32 $ 2.32 $ 1.24 $ 1.31
=========== =========== =========== =========== =========== ===========
$ .20 $ .20 $ .14375 $ .125 $ .125 $ .125
$ 16.07 $ 14.85 $ 13.28 $ 12.13 $ 10.23 $ 9.17
$ 21 7/8 $ 20 7/8 $ 14 7/8 $ 17 $ 20 1/4 $ 16 3/4
$ 9 3/4 $ 14 $ 10 $ 7 7/8 $ 14 1/2 $ 10 1/4
</TABLE>
F-31
<PAGE> 32
Centex Corporation and Subsidiaries
QUARTERLY RESULTS (UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
March 31,
=========================================
1995 1994
-----------------------------------------
(Dollars in thousands, except per share data)
<S> <C> <C>
FIRST QUARTER
Revenues $ 832,517 $ 654,962
Earnings Before Income Taxes $ 84,779 $ 26,707
Net Earnings $ 53,398 $ 17,006
Earnings Per Share $ 1.67 $ .52
SECOND QUARTER
Revenues $ 855,709 $ 764,318
Earnings Before Income Taxes $ 27,087 $ 38,001
Net Earnings $ 16,901 $ 22,846
Earnings Per Share $ .55 $ .70
THIRD QUARTER
Revenues $ 793,205 $ 789,873
Earnings Before Income Taxes $ 19,311 $ 36,682
Net Earnings $ 13,057 $ 23,586
Earnings Per Share $ .44 $ .72
FOURTH QUARTER
Revenues $ 796,073 $ 830,556
Earnings Before Income Taxes $ 14,611 $ 33,623
Net Earnings $ 8,892 $ 21,724
Earnings Per Share $ .31 $ .66
</TABLE>
The first quarter ended June 30, 1994, includes amounts related to Centex
Construction Products, Inc.'s (CXP) initial public offering of: Earnings
Before Income Taxes, $59,328; Net Earnings, $37,495; and Earnings Per
Share, $1.17.
F-32
<PAGE> 1
EXHIBIT 21.B
The following is a list of subsidiaries of 3333 Holding Corporation as of
May 30, 1995:
NEVADA CORPORATIONS:
3333 Development Corporation
PARTNERSHIPS:
Centex Development Company, L.P.
<PAGE> 1
EXHIBIT 23.B
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in the previously filed registration statements on Form S-8 (numbers
33-44575; 33-29174; 2-95271; 2-51637; 2-54043; 2-59535; 2-68747; 2-78831;
33-55083-01; 33-55083-02) of our report dated May 12, 1995, included as an
exhibit to the 3333 Holding Corporation and Subsidiary and Centex Development
Company, L.P. Annual Report on Form 10-K for the year ended March 31, 1995 and
to all references to our firm included in these registration statements.
ARTHUR ANDERSEN LLP
Dallas, Texas,
June 2, 1995
<PAGE> 1
EXHIBIT 24.B
3333 HOLDING CORPORATION
POWER OF ATTORNEY
THE UNDERSIGNED hereby constitutes and appoints J. Stephen Bilheimer
as the undersigned's true and lawful agent and attorney-in-fact (the
"Attorney-in-Fact"), with full power and authority in the name and on behalf of
the undersigned, in his capacity as a Director of 3333 Holding Corporation (the
"Company"), to execute and file with the Securities and Exchange Commission the
Company's Annual Report on Form 10-K for the Company's fiscal year ended March
31, 1995, together with any and all amendments thereto.
This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorney-in-Fact, may not
be revoked until the Attorney-in-Fact has received five days' written notice of
such revocation.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 31st day of May, 1995.
/s/ David M. Sherer
David M. Sherer
Director
3333 Holding Corporation
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
FINANCIAL DATA SCHEDULE FOR 3333 HOLDING CORP.
This schedule contains summary financial information extracted from 3333 Holding
Corporation's March 31, 1995, Form 10-K and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000818762
<NAME> 3333 HOLDING CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1994
<PERIOD-END> MAR-31-1995
<CASH> 19
<SECURITIES> 0
<RECEIVABLES> 7,887
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 8,673
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 1
0
0
<OTHER-SE> 218
<TOTAL-LIABILITY-AND-EQUITY> 8,673
<SALES> 1,602
<TOTAL-REVENUES> 1,602
<CGS> 1,506
<TOTAL-COSTS> 1,506
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 96
<INCOME-TAX> 0
<INCOME-CONTINUING> 96
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 96
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
<PAGE> 1
EXHIBIT 99.B
3333 Holding Corporation and Subsidiary and Centex Development Company, L.P.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
================================================================================
TO THE BOARD OF DIRECTORS OF 3333 HOLDING CORPORATION:
We have audited the accompanying combining balance sheets of 3333 Holding
Corporation and subsidiary and Centex Development Company, L.P. as of March 31,
1995 and 1994, and the related combining statements of operations and cash
flows and stockholders' equity and partners' capital for each of the three
years in the period ended March 31, 1995. These financial statements are the
responsibility of the companies' management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the individual and combined financial positions of 3333
Holding Corporation and subsidiary and Centex Development Company, L.P. as of
March 31, 1995 and 1994, and the individual and combined results of their
operations and their cash flows for each of the three years in the period ended
March 31, 1995, in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Dallas, Texas,
May 12, 1995
F-33
<PAGE> 2
3333 Holding Corporation and Subsidiary and Centex Development Company, L.P.
FINANCIAL HIGHLIGHTS
================================================================================
<TABLE>
<CAPTION>
For the Years Ended March 31,
========================================================================
1995 1994 1993 1992 1991
------------------------------------------------------------------------
(Dollars in thousands, except per share/unit data)
<S> <C> <C> <C> <C> <C>
REVENUES
3333 Holding Corporation and Subsidiary $ 1,602 $ 537 $ 566 $ 679 $ 833
Centex Development Company, L.P. $ 9,796 $ 12,859 $ 9,783 $ 23,998 $ 11,455
Combined Revenues $ 10,342 $ 13,249 $ 10,156 $ 24,399 $ 11,902
OPERATING EARNINGS (LOSS)
3333 Holding Corporation and Subsidiary $ 96 $ (114) $ (96) $ (107) $ (113)
Centex Development Company, L.P. $ (16,323) $ (1,510) $ (4,176) $ (706) $ (303)
Combined Operating Earnings (Loss) $ (16,227) $ (1,624) $ (4,272) $ (813) $ (416)
TOTAL ASSETS
3333 Holding Corporation and Subsidiary $ 8,673 $ 8,600 $ 8,600 $ 8,613 $ 8,662
Centex Development Company, L.P. $ 105,946 $ 121,027 $ 128,621 $ 121,244 $ 126,691
Combined Assets $ 113,282 $ 128,092 $ 134,691 $ 127,402 $ 132,980
TOTAL DEBT
3333 Holding Corporation and Subsidiary $ 7,600 $ 7,600 $ 6,500 $ 6,500 $ 6,500
Centex Development Company, L.P. $ 56,485 $ 54,149 $ 59,262 $ 44,280 $ 49,281
Combined Debt $ 64,085 $ 61,749 $ 65,762 $ 50,780 $ 55,781
OPERATING EARNINGS (LOSS) PER SHARE/UNIT
(Average Outstanding Shares, 1,000; Units 1,000)
3333 Holding Corporation and Subsidiary $ 96 $ (114) $ (96) $ (107) $ (113)
Centex Development Company, L.P. $ (16,323) $ (1,510) $ (4,176) $ (706) $ (303)
</TABLE>
F-34
<PAGE> 3
3333 Holding Corporation and Subsidiary and Centex Development Company, L.P.
COMBINING BALANCE SHEETS
================================================================================
<TABLE>
<CAPTION>
March 31,
======================================================================================
1995 1994 1995 1994 1995 1994
-------------------------- -------------------------- --------------------------
3333 Holding
Centex Development Corporation
Combined Company, L.P. and Subsidiary
-------------------------- -------------------------- --------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash $ 1,422 $ 101 $ 1,403 $ 101 $ 19 $ -
Accounts Receivable -
Affiliates - - 570 768 - -
Centex Corporation and Subsidiaries 187 133 - - 187 133
Other - 105 - 105 - -
Notes Receivable -
Centex Corporation and Subsidiaries 7,700 7,700 - - 7,700 7,700
Other 4,025 1,151 4,025 1,151 - -
Investment in Affiliate - - - - 767 767
Land Held for Development and Sale -
Forster Ranch 53,493 49,199 53,493 49,199 - -
Other 46,455 69,703 46,455 69,703 - -
----------- ----------- ----------- ----------- ----------- -----------
$ 113,282 $ 128,092 $ 105,946 $ 121,027 $ 8,673 $ 8,600
=========== =========== =========== =========== =========== ===========
LIABILITIES, STOCKHOLDERS' EQUITY AND
PARTNERS' CAPITAL
Accounts Payable and Accrued Liabilities -
Affiliates $ - $ - $ - $ - $ 570 $ 768
Centex Corporation and Subsidiaries 160 894 - 785 160 109
Other 2,320 2,369 2,196 2,369 124 -
Notes Payable -
Centex Corporation and Subsidiaries 7,600 7,600 - - 7,600 7,600
Forster Ranch 53,493 49,199 53,493 49,199 - -
Other 2,992 4,950 2,992 4,950 - -
Land Sale Deposits 5 141 5 141 - -
Stockholders' Equity and Partners' Capital -
Stock and Stock/Class B Unit Warrants 501 501 500 500 1 1
Capital in Excess of Par Value 800 800 - - 800 800
Retained Earnings (Deficit) (582) (678) - - (582) (678)
Partners' Capital 45,993 62,316 46,760 63,083 - -
----------- ----------- ----------- ----------- ----------- -----------
Total Stockholders' Equity and
Partners' Capital 46,712 62,939 47,260 63,583 219 123
----------- ----------- ----------- ----------- ----------- -----------
$ 113,282 $ 128,092 $ 105,946 $ 121,027 $ 8,673 $ 8,600
=========== =========== =========== =========== =========== ===========
</TABLE>
See notes to combining financial statements.
F-35
<PAGE> 4
3333 Holding Corporation and Subsidiary and Centex Development Company, L.P.
COMBINING STATEMENTS OF OPERATIONS AND CASH FLOWS
================================================================================
<TABLE>
<CAPTION>
For the Years Ended March 31,
======================================================================================
1995 1994 1993 1995 1994 1993
----------------------------------------- -----------------------------------------
Centex
Combined Development Company, L.P.
----------------------------------------- -----------------------------------------
(Dollars in thousands, except per share/unit data)
<S> <C> <C> <C> <C> <C> <C>
COMBINING STATEMENTS OF OPERATIONS
REVENUES
Real Estate Sales $ 9,506 $ 12,540 $ 9,097 $ 9,506 $ 12,540 $ 9,097
Interest and Other Income 836 709 1,059 290 319 686
----------- ----------- ----------- ----------- ----------- -----------
10,342 13,249 10,156 9,796 12,859 9,783
----------- ----------- ----------- ----------- ----------- -----------
COSTS AND EXPENSES
Real Estate Sales 9,064 12,684 8,360 9,064 12,684 8,360
Property Valuation Adjustment 15,500 - 3,702 15,500 - 3,702
Selling and Administrative 1,394 1,750 1,962 1,555 1,685 1,897
Interest 611 439 404 - - -
----------- ----------- ----------- ----------- ----------- -----------
26,569 14,873 14,428 26,119 14,369 13,959
----------- ----------- ----------- ----------- ----------- -----------
EARNINGS (LOSS) BEFORE INCOME TAXES (16,227) (1,624) (4,272) (16,323) (1,510) (4,176)
Income Taxes - - - - - -
----------- ----------- ----------- ----------- ----------- -----------
NET EARNINGS (LOSS) $ (16,227) $ (1,624) $ (4,272) $ (16,323) $ (1,510) $ (4,176)
=========== =========== =========== =========== =========== ===========
EARNINGS (LOSS) PER SHARE/UNIT
(Average Outstanding Shares,
1,000; Units, 1,000) $ (16,323) $ (1,510) $ (4,176)
=========== =========== ===========
COMBINING STATEMENTS OF CASH FLOWS
CASH FLOWS-OPERATING ACTIVITIES
Net Earnings (Loss) $ (16,227) $ (1,624) $ (4,272) $ (16,323) $ (1,510) $ (4,176)
Property Valuation Adjustment 15,500 - 3,702 15,500 - 3,702
Net Change in Payables,
Receivables and Deposits (281) (110) (3,692) (204) (224) (3,788)
(Increase) Decrease in Notes Receivable (2,874) (480) 262 (2,874) (480) 262
Decrease (Increase) in Land Held
for Development and Sale 3,454 5,746 (10,680) 3,454 5,746 (10,680)
----------- ----------- ----------- ----------- ----------- -----------
(428) 3,532 (14,680) (447) 3,532 (14,680)
----------- ----------- ----------- ----------- ----------- -----------
CASH FLOWS-FINANCING ACTIVITIES
(Decrease) Increase in Notes Payable -
Centex Corporation & Subsidiaries (587) 430 (870) (587) 430 (870)
Other 2,336 (5,113) 15,852 2,336 (5,113) 15,852
----------- ----------- ----------- ----------- ----------- -----------
1,749 (4,683) 14,982 1,749 (4,683) 14,982
----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH 1,321 (1,151) 302 1,302 (1,151) 302
CASH AT BEGINNING OF YEAR 101 1,252 950 101 1,252 950
----------- ----------- ----------- ----------- ----------- -----------
CASH AT END OF YEAR $ 1,422 $ 101 $ 1,252 $ 1,403 $ 101 $ 1,252
=========== =========== =========== =========== =========== ===========
<CAPTION>
For the Years Ended March 31,
=========================================
1995 1994 1993
-----------------------------------------
3333 Holding
Corporation
and Subsidiary
-----------------------------------------
(Dollars in thousands, except per share/unit data)
<S> <C> <C> <C>
COMBINING STATEMENTS OF OPERATIONS
REVENUES
Real Estate Sales $ - $ - $ -
Interest and Other Income 1,602 537 566
----------- ----------- -----------
1,602 537 566
----------- ----------- -----------
COSTS AND EXPENSES
Real Estate Sales - - -
Property Valuation Adjustment - - -
Selling and Administrative 761 65 65
Interest 745 586 597
----------- ----------- -----------
1,506 651 662
----------- ----------- -----------
EARNINGS (LOSS) BEFORE INCOME TAXES 96 (114) (96)
Income Taxes - - -
----------- ----------- -----------
NET EARNINGS (LOSS) $ 96 $ (114) $ (96)
=========== =========== ===========
EARNINGS (LOSS) PER SHARE/UNIT
(Average Outstanding Shares,
1,000; Units, 1,000) $ 96 $ (114) $ (96)
=========== =========== ===========
COMBINING STATEMENTS OF CASH FLOWS
CASH FLOWS-OPERATING ACTIVITIES
Net Earnings (Loss) $ 96 $ (114) $ (96)
Property Valuation Adjustment - - -
Net Change in Payables,
Receivables and Deposits (77) 114 96
(Increase) Decrease in Notes Receivable - - -
Decrease (Increase) in Land Held
for Development and Sale - - -
----------- ----------- -----------
19 - -
----------- ----------- -----------
CASH FLOWS-FINANCING ACTIVITIES
(Decrease) Increase in Notes Payable -
Centex Corporation & Subsidiaries - - -
Other - - -
----------- ----------- -----------
- - -
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH 19 - -
CASH AT BEGINNING OF YEAR - - -
----------- ----------- -----------
CASH AT END OF YEAR $ 19 $ - $ -
=========== =========== ===========
</TABLE>
See notes to combining financial statements.
F-36
<PAGE> 5
3333 Holding Corporation and Subsidiary and Centex Development Company, L.P.
COMBINING STATEMENTS OF STOCKHOLDERS' EQUITY AND PARTNERS' CAPITAL
================================================================================
<TABLE>
<CAPTION>
For the Years Ended March 31, 1995, 1994 and 1993
========================================================
Centex Development
Company, L.P.
-----------------------------------------
Class B General Limited
Unit Partner's Partner's
Combined Warrants Capital Capital
----------- ----------- ----------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Balance at March 31, 1992 $ 68,835 $ 500 $ 767 $ 68,002
Net Loss (4,272) - - (4,176)
----------- ----------- ----------- -----------
Balance at March 31, 1993 64,563 500 767 63,826
Net Loss (1,624) - - (1,510)
----------- ----------- ----------- -----------
Balance at March 31, 1994 62,939 500 767 62,316
NET LOSS (16,227) - - (16,323)
----------- ----------- ----------- -----------
BALANCE AT MARCH 31, 1995 $ 46,712 $ 500 $ 767 $ 45,993
=========== =========== =========== ===========
<CAPTION>
For the Years Ended March 31, 1995, 1994 and 1993
========================================================
3333 Holding
Corporation and Subsidiary
--------------------------------------------------------
Capital In Retained
Stock Common Excess Of Earnings
Warrants Stock Par Value (Deficit)
----------- ----------- ----------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Balance at March 31, 1992 $ 1 $ - $ 800 $ (468)
Net Loss - - - (96)
----------- ----------- ----------- -----------
Balance at March 31, 1993 1 - 800 (564)
Net Loss - - - (114)
----------- ----------- ----------- -----------
Balance at March 31, 1994 1 - 800 (678)
NET LOSS - - - 96
----------- ----------- ----------- -----------
BALANCE AT MARCH 31, 1995 $ 1 $ - $ 800 $ (582)
=========== =========== =========== ===========
</TABLE>
See notes to combining financial statements.
NOTES TO COMBINING FINANCIAL STATEMENTS
================================================================================
(A) ORGANIZATION
Centex Development Company, L.P. (the Partnership) was formed on March 31, 1987
to invest in, acquire, develop, operate and sell residential and commercial
real estate. Centex Real Estate Corporation (CREC), its limited partner, is a
subsidiary of Centex Corporation (Centex). 3333 Development Corporation (a
Nevada corporation) (Development), which serves as its general partner, is
owned by 3333 Holding Corporation (a Nevada corporation) (Holding). In November
1987, Centex distributed all of the issued and outstanding shares of the common
stock of Holding and warrants to purchase approximately 80% of the Class B
units of limited partnership interest in the Partnership (see Note F). These
securities trade in tandem with the common stock of Centex and are being held
by a nominee on behalf of Centex stockholders until such time as the securities
are detached and trade separately. The securities may be detached at any time
by Centex's Board of Directors, but the warrants to purchase Class B units
automatically become detached in November 1997 unless extended by Centex's
stockholders.
Supplementary condensed combined financial statements of Centex Corporation and
subsidiaries, 3333 Holding Corporation and subsidiary and Centex Development
Company, L.P. are set forth below. For additional information on Centex
Corporation and subsidiaries, see their separate financial statements and
related footnotes.
F-37
<PAGE> 6
SUPPLEMENTARY CONDENSED COMBINED BALANCE SHEETS
================================================================================
<TABLE>
<CAPTION>
March 31,
=========================================
1995 1994
-----------------------------------------
(Dollars in thousands)
<S> <C> <C>
ASSETS
Cash and Cash Equivalents $ 25,207 $ 76,388
Marketable Securities Available for Sale - 78,241
Receivables 653,622 930,428
Inventories 1,266,509 1,223,753
Investments in
Centex Construction Products, Inc. 89,871 -
Joint Ventures and Unconsolidated Subsidiaries 5,695 56,928
Property and Equipment, net 41,267 188,930
Government-Guaranteed S&L Assets - 43,767
Other Assets and Deferred Charges 26,427 38,574
----------- -----------
$ 2,108,598 $ 2,637,009
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable and Accrued Liabilities $ 557,640 $ 644,926
S&L Deposits and FHLB Borrowings - 211,055
Short-term Debt 632,745 837,734
Long-term Debt 222,530 222,832
Deferred Income Taxes 26,737 51,180
Stockholders' Equity 668,946 669,282
----------- -----------
$ 2,108,598 $ 2,637,009
=========== ===========
</TABLE>
SUPPLEMENTARY CONDENSED COMBINED STATEMENT OF EARNINGS
================================================================================
<TABLE>
<CAPTION>
For the Years Ended March 31,
=========================================
1995 1994 1993
-----------------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Revenues $ 3,281,198 $ 3,224,025 $ 2,501,691
Costs and Expenses 3,194,642 3,089,126 2,410,028
----------- ----------- -----------
Earnings Before Gain on Initial Public
Offering and Income Taxes 86,556 134,899 91,663
Gain on CXP Initial Public Offering 59,328 - -
----------- ----------- -----------
Earnings Before Income Taxes 145,884 134,899 91,663
Income Taxes 53,540 49,851 30,721
----------- ----------- -----------
Net Earnings $ 92,344 $ 85,048 $ 60,942
=========== =========== ===========
</TABLE>
F-38
<PAGE> 7
(B) BASIS OF PRESENTATION
The accompanying combining financial statements present the individual and
combined financial statements of Holding and its subsidiary and the Partnership
as of March 31, 1995 and 1994 and results of operations for each of the three
years ended March 31, 1995. The financial statements of the Partnership are
included in the combined statements since Development, as general partner of
the Partnership, is able to exercise effective control over the Partnership.
(C) SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
Revenue from real estate sales is recognized as required payments are received
and title passes.
INVENTORY CAPITALIZATION AND COST ALLOCATION
Land held for development and sale is stated at the lower of cost (including
development costs and, where appropriate, capitalized interest and real estate
taxes) or market. The capitalized costs are included in cost of land sales in
the combining statements of operations as related revenues are recognized.
In March 1995, CDC recorded a pre-tax adjustment to reduce the book value of
certain properties in the amount of approximately $15.5 million to reflect
CDC's view that development activity has not reached anticipated levels during
the current economic cycle in order to continue to support the historical
carrying value of such properties. This adjustment results in carrying values
that will facilitate a nearer-term disposition or development of these
properties. A substantial portion of the adjustment related to the book values
of two Dallas area properties. In fiscal 1993, CDC wrote down its investment in
Forster Ranch real estate by $3.7 million to an amount which equaled the
related non-recourse debt.
EARNINGS (LOSS) PER SHARE/UNIT
Earnings (loss) per share/unit are based on the weighted average number of
outstanding shares of common stock (1,000 for Holding) and Class A limited
partnership units (1,000 for the Partnership). These shares/units do not
include common stock/unit equivalents because they have no material effect on
earnings (loss) per share/unit.
COMBINING STATEMENTS OF OPERATIONS AND CASH FLOWS - SUPPLEMENTAL DISCLOSURES
Interest capitalized by the Partnership during fiscal years ended March 31,
1995, 1994 and 1993 totaled $4,787,000, $4,090,000 and $4,039,000,
respectively, of which $4,687,000, $3,945,000 and $3,834,000, respectively,
relates to the Forster Ranch property. No income taxes were paid during the
years ended March 31, 1995, 1994 and 1993.
(D) NOTES RECEIVABLE
Development issued common stock to Holding and used the proceeds to advance
$7.7 million to CREC, as evidenced by a note receivable due April 30, 1996.
Interest at prime plus .875% is due in quarterly installments. Interest income
of $680,000, $537,000 and $547,000 related to this note is included in the
accompanying combining financial statements for the years ended March 31, 1995,
1994 and 1993, respectively.
Notes Receivable - Other at March 31, 1995 and 1994 have stated interest rates
ranging up to 10% and are due in monthly or quarterly installments. Discounts
and allowances totaled $40,000 at March 31, 1995 and $313,000 at March 31,
1994. The weighted average interest rate, inclusive of discounts, was 9% at
March 31, 1995 and 9% at March 31, 1994. Notes receivable at March 31, 1995 are
collectible over seven years, with $323,000 being due within one year.
F-39
<PAGE> 8
(E) NOTES PAYABLE
Centex had advanced Holding $7.6 million as of March 31, 1995 which is
evidenced by a note secured by the common stock of Development. The note, which
had a fluctuating balance during fiscal 1995 and 1994, bears interest at prime
plus 1% which is payable quarterly. The principal balance together with all
unpaid accrued interest is due on the earlier of April 1, 1996 or the date on
which the warrants to purchase Class B units of limited partnership interest
are detached from shares of the common stock of Centex. Interest expense of
$611,000, $439,000 and $404,000 related to this note is included in the
accompanying combining financial statements for the years ended March 31, 1995,
1994 and 1993, respectively.
Under the most restrictive covenants of the note agreement, Holding and its
subsidiary (excluding the Partnership) may not, without Centex's consent, (i)
create any additional liens on or sell real estate properties contributed by
the limited partner, (ii) effect a merger or consolidation, (iii) declare
dividends or make certain other shareholder payments or (iv) allow tangible net
worth, as defined, to be less than $7.7 million for Development.
All Forster Ranch and other notes payable are non-recourse, secured solely by
the underlying real estate. As land is sold, a portion of the proceeds is
restricted for repayment of the notes. The prime rate in effect was 9% at March
31, 1995 and 6 1/4% at March 31, 1994. The 30 day LIBOR rate at March 31, 1995
was 6 1/8% and 3 11/16% at March 31, 1994. The note balances and rates in
effect were as follows:
<TABLE>
<CAPTION>
March 31,
==========================
1995 1994
--------------------------
(Dollars in thousands)
<S> <C> <C>
Credit Line at LIBOR Plus 3/4% unsecured, guaranteed by CREC $ 1,039 $ 2,115
Note Payable at 6 1/2%, Paid in April 1994 - 2,050
Note Payable at 12%, Matured in April 1994 785 785
Note Payable at 5.56%, Maturing in fiscal year 1997 682 -
Note Payable, Maturing in fiscal year 1997 486 -
Forster Ranch Non-recourse Notes -
Payable at Prime Plus 1%, Matured in April 1993 11,602 12,420
Payable at Prime Plus 2% (10 1/2% floor), Maturing in fiscal year 2002 41,891 36,779
----------- -----------
$ 56,485 $ 54,149
=========== ===========
</TABLE>
The partnership and the holder of the Forster Ranch non-recourse notes have
entered into an agreement that may result in the transfer of ownership of the
property to the lender in satisfaction of this debt in June 1995. In connection
with this agreement, CREC has agreed to fund certain holding and other costs
CDC will incur through June 1995 in connection with its rezoning efforts. CDC
wrote down its investment in the Forster Ranch real estate by approximately
$3.7 million during fiscal year 1993 to an amount which equaled the related
non-recourse debt after receiving notice that the note, which matured in April
1993, would not be renewed.
F-40
<PAGE> 9
(F) STOCKHOLDERS' EQUITY AND PARTNERS' CAPITAL
PREFERRED RETURN
The partnership agreement provides that the Class A limited partner is entitled
to a cumulative preferred return of 9% per annum on the average outstanding
balance of its Unrecovered Capital, which is defined as its initial capital
contribution adjusted for cash distributions representing return of the initial
capital contributions. Preference payments in arrears at March 31, 1995
amounted to $35,818,000.
ALLOCATION OF PROFITS AND LOSSES
As provided in the partnership agreement, prior to Payout (as defined below),
net income of the Partnership is to be allocated to the partners in the
following order of priority:
(i) To the Class A limited partner to the extent of the cumulative
preferred return.
(ii) To the partners to the extent and in the same ratio that
cumulative net losses were allocated.
(iii) To the partners in accordance with their percentage interests, as
defined. Currently, this would be 20% to the Class A limited
partner and 80% to the general partner.
All loss allocations and allocations of net income after Payout, shall be made
to the partners in accordance with their percentage interests, as defined.
DISTRIBUTIONS
Distributions of cash or other property are to be made at the discretion of the
general partner and are to be distributed in the following order of priority:
(i) Prior to the time at which the Class A limited partner has
received aggregate distributions equal to its original capital
contribution (Payout), distributions of cash or other property
shall be made as follows:
(a) To the Class A limited partner with respect to its preferred
return, then
(b) To the partners in an amount equal to the maximum marginal
corporate tax rate times the amount of taxable income
allocated to the partners, then
(c) To the Class A limited partner until its Unrecovered Capital
is reduced to zero.
(ii) After Payout, distributions of cash shall be made to the partners
in accordance with their percentage interests, as defined.
WARRANTS
In November 1987, Centex acquired from the Partnership 100 warrants to purchase
100 Class B units in the Partnership at an exercise price of $500 per Class B
unit, and Centex acquired from Holding 100 warrants to purchase 100 shares of
Holding common stock at an exercise price of $800 per share. These warrants are
subject to future adjustment to provide the holders of options to purchase
Centex common stock with the opportunity to acquire Class B units and shares of
Holding. These warrants will generally become exercisable upon the detachment
of the tandem-traded securities from Centex common stock.
F-41
<PAGE> 10
(G) RELATED PARTY TRANSACTIONS
SERVICE AND MANAGEMENT AGREEMENTS
Holding entered into a service agreement in May 1987 with Centex Service
Company (CSC), a wholly-owned subsidiary of Centex, whereby CSC will provide
certain tax, accounting and other similar services for Holding at a fee of
$2,500 per month. Service fees of $30,000 for each of fiscal years 1995, 1994,
and 1993 are reflected as administrative expenses in the accompanying combining
financial statements.
The Partnership paid $922,000 to Holding during the current year pursuant to an
agreement whereby Holding provides management services to the Partnership in
connection with the development and operation of properties acquired by the
Partnership, maintenance of partnership property and accounting and clerical
services. Also in the current year, the Partnership paid certain Centex
subsidiaries $785,000 in management fees accrued in the year ended March 31,
1994 relative to a similar management agreement. For the year ended March 31,
1993, these management fees to Centex subsidiaries totaled $1,378,000 of which
$28,000 was capitalized.
SALES AND PURCHASES
Partnership revenues during fiscal years 1995, 1994, and 1993 include land
sales to CREC of $5,423,000, $2,354,000 and $8,648,000, respectively.
Additionally, CREC has contracts to purchase lots for the aggregate price of
approximately $6.1 million to be paid as lots are delivered.
ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE
Included in Accounts Receivable-Affiliates and Accounts Payable-Affiliates in
the accompanying combining financial statements are $570,000 at March 31, 1995
and $768,000 at March 31, 1994, which the Partnership advanced to Holding.
Interest of $134,000 and $148,000 was accrued on advances during fiscal years
1995 and 1994 respectively.
(H) INCOME TAXES
At March 31, 1995, Holding had operating loss carryforwards for income tax
reporting purposes of $554,000. If unused, the loss carryforwards will expire
in the fiscal years 2004 through 2010. Holding joins with its subsidiary in
filing consolidated income tax returns. The taxable income of the Partnership
has been allocated to the holder of the Class A units. Accordingly, no tax
provision for Partnership earnings is shown in the combining financial
statements.
F-42
<PAGE> 11
3333 Holding Corporation and Subsidiary and Centex Development Company, L.P.
QUARTERLY RESULTS (UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
March 31,
======================================================================================
1995 1994 1995 1994 1995 1994
-------------------------- -------------------------- --------------------------
3333 Holding
Centex Development Corporation
Combined Company, L.P. and Subsidiary
-------------------------- -------------------------- --------------------------
(Dollars in thousands, except per share/unit data)
<S> <C> <C> <C> <C> <C> <C>
FIRST QUARTER
Revenues $ 3,105 $ 1,928 $ 2,977 $ 1,832 $ 336 $ 134
Earnings (Loss) Before Taxes $ (137) $ (264) $ (151) $ (235) $ 14 $ (29)
Net Earnings (Loss) $ (137) $ (264) $ (151) $ (235) $ 14 $ (29)
Earnings (Loss) Per Share/Unit $ (151) $ (235) $ 14 $ (29)
SECOND QUARTER
Revenues $ 1,330 $ 10,136 $ 1,197 $ 10,039 $ 376 $ 134
Earnings (Loss) Before Taxes $ (229) $ (664) $ (264) $ (636) $ 35 $ (28)
Net Earnings (Loss) $ (229) $ (664) $ (264) $ (636) $ 35 $ (28)
Earnings (Loss) Per Share/Unit $ (264) $ (636) $ 35 $ (28)
THIRD QUARTER
Revenues $ 4,467 $ 374 $ 4,325 $ 275 $ 379 $ 136
Earnings (Loss) Before Taxes $ (261) $ (424) $ (283) $ (395) $ 22 $ (29)
Net Earnings (Loss) $ (261) $ (424) $ (283) $ (395) $ 22 $ (29)
Earnings (Loss) Per Share/Unit $ (283) $ (395) $ 22 $ (29)
FOURTH QUARTER
Revenues $ 1,440 $ 811 $ 1,297 $ 713 $ 511 $ 133
Earnings (Loss) Before Taxes $ (15,600) $ (272) $ (15,625) $ (244) $ 25 $ (28)
Net Earnings (Loss) $ (15,600) $ (272) $ (15,625) $ (244) $ 25 $ (28)
Earnings (Loss) Per Share/Unit $ (15,625) $ (244) $ 25 $ (28)
</TABLE>
F-43
<PAGE> 12
3333 Holding Corporation and Subsidiary and Centex Development Company, L.P.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
================================================================================
On a combined basis, revenues for the year ended March 31, 1995 of $10.3
million include the sale of a commercial property in Sonora, California and the
sale to Centex Real Estate Corporation (CREC) of 254 residential lots in
Orlando, Florida and East Windsor, New Jersey. Revenues of $13.2 million for
fiscal 1994 included: a 15 acre industrial site in Houston, Texas; 168 acres of
ranch land in Comal County, Texas; the Sonora, California shopping center
property except for one pad site; and the sale to CREC of 246 residential lots
in Orlando, Florida, The Colony, Texas and East Windsor, New Jersey. Revenues
of $10.2 million for fiscal 1993 included the sale of a restaurant site in
Sonora, California, 21 commercial acres in Orlando, Florida and the sale to
CREC of 273 residential lots in Orlando, Florida.
The year ended March 31, 1995 reflected a combined net loss of $16.2 million,
which included property valuation adjustments of $15.5 million. The property
valuation adjustments were recorded in March 1995 to reflect CDC's view that
development activity has not reached anticipated levels during the current
economic cycle in order to continue to support the historical carrying value of
such properties, primarily The Colony, and Bryan Place properties located in
the Dallas area. These adjustments result in carrying values that will
facilitate a nearer-term disposition or development of these properties.
Without the property valuation adjustments, the combined net loss was $.7
million compared to $1.6 million in fiscal 1994. The reduction in loss before
the property valuation adjustments primarily relates to the higher gross margin
on fiscal 1995 real estate sales compared to fiscal 1994 and a reduction in
selling and administrative cost and expense in fiscal 1995 compared to fiscal
1994.
The fiscal 1993 combined net loss of $4,272,000 included a $3.7 million
property carrying-value adjustment related to the Forster Ranch project in San
Clemente, California. The Forster Ranch adjustment resulted from the assertion
of the Forster Ranch property lender that CDC is in default under the
non-recourse debt and CDC's related decision to tender this property to the
lender in satisfaction of the non-recourse debt. Accordingly, the property was
written down to an amount equal to the non-recourse debt. Excluding the $3.7
million San Clemente property adjustment, the combined loss for fiscal 1993
would have been $.6 million.
Holding, Development and the Partnership believe that they will be able to
provide or obtain the necessary funding for their current operations and future
expansion needs. The revenues, earnings and liquidity of these companies are
largely dependent on future land sales, the timing of which is uncertain. The
ability to obtain external debt or equity capital is subject to the provisions
of Holding's loan agreement with Centex and the Partnership Agreement governing
the Partnership.
F-44
<PAGE> 1
EXHIBIT 23.C
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in the previously filed registration statements on Form S-8 (numbers
33-44575; 33-29174; 2-95271; 2-51637; 2-54043; 2-59535; 2-68747; 2-78831;
33-55083-01; 33-55083-02) of our report dated May 12, 1995, included as an
exhibit to the 3333 Holding Corporation and Subsidiary and Centex Development
Company, L.P. Annual Report on Form 10-K for the year ended March 31, 1995 and
to all references to our firm included in these registration statements.
ARTHUR ANDERSEN LLP
Dallas, Texas,
June 2, 1995
<PAGE> 1
EXHIBIT 24.C
CENTEX DEVELOPMENT COMPANY, L.P.
POWER OF ATTORNEY
THE UNDERSIGNED hereby constitutes and appoints J. Stephen Bilheimer
as the undersigned's true and lawful agent and attorney-in-fact (the
"Attorney-in-Fact"), with full power and authority in the name and on behalf of
the undersigned, in his capacity as a Director of 3333 Development Corporation,
as the general partner of Centex Development Company, L.P. (the "Company"), to
execute and file with the Securities and Exchange Commission the Company's
Annual Report on Form 10-K for the Company's fiscal year ended March 31, 1995,
together with any and all amendments thereto.
This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorney-in-Fact, may not
be revoked until the Attorney-in-Fact has received five days' written notice of
such revocation.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 31st day of May, 1995.
/s/ David M. Sherer
David M. Sherer
Director
3333 Development Corporation,
General Partner of Centex
Development Company, L.P.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
FINANCIAL DATA SCHEDULE FOR CENTEX DEVELOPMENT COMPANY, L.P.
This schedule contains summary financial information extracted from Centex
Development Company L.P.'s March 31, 1995, Form 10-K and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000818764
<NAME> CENTEX DEVELOPEMENT COMPANY, L.P.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1994
<PERIOD-END> MAR-31-1995
<CASH> 1,403
<SECURITIES> 0
<RECEIVABLES> 4,595
<ALLOWANCES> 0
<INVENTORY> 99,948
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 105,946
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 500
0
0
<OTHER-SE> 46,760
<TOTAL-LIABILITY-AND-EQUITY> 105,946
<SALES> 9,796
<TOTAL-REVENUES> 9,796
<CGS> 26,119
<TOTAL-COSTS> 26,119
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (16,323)
<INCOME-TAX> 0
<INCOME-CONTINUING> (16,323)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (16,323)
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
<PAGE> 1
EXHIBIT 99.C
3333 Holding Corporation and Subsidiary and Centex Development Company, L.P.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
================================================================================
TO THE BOARD OF DIRECTORS OF 3333 HOLDING CORPORATION:
We have audited the accompanying combining balance sheets of 3333 Holding
Corporation and subsidiary and Centex Development Company, L.P. as of March 31,
1995 and 1994, and the related combining statements of operations and cash
flows and stockholders' equity and partners' capital for each of the three
years in the period ended March 31, 1995. These financial statements are the
responsibility of the companies' management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the individual and combined financial positions of 3333
Holding Corporation and subsidiary and Centex Development Company, L.P. as of
March 31, 1995 and 1994, and the individual and combined results of their
operations and their cash flows for each of the three years in the period ended
March 31, 1995, in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Dallas, Texas,
May 12, 1995
F-33
<PAGE> 2
3333 Holding Corporation and Subsidiary and Centex Development Company, L.P.
FINANCIAL HIGHLIGHTS
================================================================================
<TABLE>
<CAPTION>
For the Years Ended March 31,
========================================================================
1995 1994 1993 1992 1991
------------------------------------------------------------------------
(Dollars in thousands, except per share/unit data)
<S> <C> <C> <C> <C> <C>
REVENUES
3333 Holding Corporation and Subsidiary $ 1,602 $ 537 $ 566 $ 679 $ 833
Centex Development Company, L.P. $ 9,796 $ 12,859 $ 9,783 $ 23,998 $ 11,455
Combined Revenues $ 10,342 $ 13,249 $ 10,156 $ 24,399 $ 11,902
OPERATING EARNINGS (LOSS)
3333 Holding Corporation and Subsidiary $ 96 $ (114) $ (96) $ (107) $ (113)
Centex Development Company, L.P. $ (16,323) $ (1,510) $ (4,176) $ (706) $ (303)
Combined Operating Earnings (Loss) $ (16,227) $ (1,624) $ (4,272) $ (813) $ (416)
TOTAL ASSETS
3333 Holding Corporation and Subsidiary $ 8,673 $ 8,600 $ 8,600 $ 8,613 $ 8,662
Centex Development Company, L.P. $ 105,946 $ 121,027 $ 128,621 $ 121,244 $ 126,691
Combined Assets $ 113,282 $ 128,092 $ 134,691 $ 127,402 $ 132,980
TOTAL DEBT
3333 Holding Corporation and Subsidiary $ 7,600 $ 7,600 $ 6,500 $ 6,500 $ 6,500
Centex Development Company, L.P. $ 56,485 $ 54,149 $ 59,262 $ 44,280 $ 49,281
Combined Debt $ 64,085 $ 61,749 $ 65,762 $ 50,780 $ 55,781
OPERATING EARNINGS (LOSS) PER SHARE/UNIT
(Average Outstanding Shares, 1,000; Units 1,000)
3333 Holding Corporation and Subsidiary $ 96 $ (114) $ (96) $ (107) $ (113)
Centex Development Company, L.P. $ (16,323) $ (1,510) $ (4,176) $ (706) $ (303)
</TABLE>
F-34
<PAGE> 3
3333 Holding Corporation and Subsidiary and Centex Development Company, L.P.
COMBINING BALANCE SHEETS
================================================================================
<TABLE>
<CAPTION>
March 31,
======================================================================================
1995 1994 1995 1994 1995 1994
-------------------------- -------------------------- --------------------------
3333 Holding
Centex Development Corporation
Combined Company, L.P. and Subsidiary
-------------------------- -------------------------- --------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash $ 1,422 $ 101 $ 1,403 $ 101 $ 19 $ -
Accounts Receivable -
Affiliates - - 570 768 - -
Centex Corporation and Subsidiaries 187 133 - - 187 133
Other - 105 - 105 - -
Notes Receivable -
Centex Corporation and Subsidiaries 7,700 7,700 - - 7,700 7,700
Other 4,025 1,151 4,025 1,151 - -
Investment in Affiliate - - - - 767 767
Land Held for Development and Sale -
Forster Ranch 53,493 49,199 53,493 49,199 - -
Other 46,455 69,703 46,455 69,703 - -
----------- ----------- ----------- ----------- ----------- -----------
$ 113,282 $ 128,092 $ 105,946 $ 121,027 $ 8,673 $ 8,600
=========== =========== =========== =========== =========== ===========
LIABILITIES, STOCKHOLDERS' EQUITY AND
PARTNERS' CAPITAL
Accounts Payable and Accrued Liabilities -
Affiliates $ - $ - $ - $ - $ 570 $ 768
Centex Corporation and Subsidiaries 160 894 - 785 160 109
Other 2,320 2,369 2,196 2,369 124 -
Notes Payable -
Centex Corporation and Subsidiaries 7,600 7,600 - - 7,600 7,600
Forster Ranch 53,493 49,199 53,493 49,199 - -
Other 2,992 4,950 2,992 4,950 - -
Land Sale Deposits 5 141 5 141 - -
Stockholders' Equity and Partners' Capital -
Stock and Stock/Class B Unit Warrants 501 501 500 500 1 1
Capital in Excess of Par Value 800 800 - - 800 800
Retained Earnings (Deficit) (582) (678) - - (582) (678)
Partners' Capital 45,993 62,316 46,760 63,083 - -
----------- ----------- ----------- ----------- ----------- -----------
Total Stockholders' Equity and
Partners' Capital 46,712 62,939 47,260 63,583 219 123
----------- ----------- ----------- ----------- ----------- -----------
$ 113,282 $ 128,092 $ 105,946 $ 121,027 $ 8,673 $ 8,600
=========== =========== =========== =========== =========== ===========
</TABLE>
See notes to combining financial statements.
F-35
<PAGE> 4
3333 Holding Corporation and Subsidiary and Centex Development Company, L.P.
COMBINING STATEMENTS OF OPERATIONS AND CASH FLOWS
================================================================================
<TABLE>
<CAPTION>
For the Years Ended March 31,
======================================================================================
1995 1994 1993 1995 1994 1993
----------------------------------------- -----------------------------------------
Centex
Combined Development Company, L.P.
----------------------------------------- -----------------------------------------
(Dollars in thousands, except per share/unit data)
<S> <C> <C> <C> <C> <C> <C>
COMBINING STATEMENTS OF OPERATIONS
REVENUES
Real Estate Sales $ 9,506 $ 12,540 $ 9,097 $ 9,506 $ 12,540 $ 9,097
Interest and Other Income 836 709 1,059 290 319 686
----------- ----------- ----------- ----------- ----------- -----------
10,342 13,249 10,156 9,796 12,859 9,783
----------- ----------- ----------- ----------- ----------- -----------
COSTS AND EXPENSES
Real Estate Sales 9,064 12,684 8,360 9,064 12,684 8,360
Property Valuation Adjustment 15,500 - 3,702 15,500 - 3,702
Selling and Administrative 1,394 1,750 1,962 1,555 1,685 1,897
Interest 611 439 404 - - -
----------- ----------- ----------- ----------- ----------- -----------
26,569 14,873 14,428 26,119 14,369 13,959
----------- ----------- ----------- ----------- ----------- -----------
EARNINGS (LOSS) BEFORE INCOME TAXES (16,227) (1,624) (4,272) (16,323) (1,510) (4,176)
Income Taxes - - - - - -
----------- ----------- ----------- ----------- ----------- -----------
NET EARNINGS (LOSS) $ (16,227) $ (1,624) $ (4,272) $ (16,323) $ (1,510) $ (4,176)
=========== =========== =========== =========== =========== ===========
EARNINGS (LOSS) PER SHARE/UNIT
(Average Outstanding Shares,
1,000; Units, 1,000) $ (16,323) $ (1,510) $ (4,176)
=========== =========== ===========
COMBINING STATEMENTS OF CASH FLOWS
CASH FLOWS-OPERATING ACTIVITIES
Net Earnings (Loss) $ (16,227) $ (1,624) $ (4,272) $ (16,323) $ (1,510) $ (4,176)
Property Valuation Adjustment 15,500 - 3,702 15,500 - 3,702
Net Change in Payables,
Receivables and Deposits (281) (110) (3,692) (204) (224) (3,788)
(Increase) Decrease in Notes Receivable (2,874) (480) 262 (2,874) (480) 262
Decrease (Increase) in Land Held
for Development and Sale 3,454 5,746 (10,680) 3,454 5,746 (10,680)
----------- ----------- ----------- ----------- ----------- -----------
(428) 3,532 (14,680) (447) 3,532 (14,680)
----------- ----------- ----------- ----------- ----------- -----------
CASH FLOWS-FINANCING ACTIVITIES
(Decrease) Increase in Notes Payable -
Centex Corporation & Subsidiaries (587) 430 (870) (587) 430 (870)
Other 2,336 (5,113) 15,852 2,336 (5,113) 15,852
----------- ----------- ----------- ----------- ----------- -----------
1,749 (4,683) 14,982 1,749 (4,683) 14,982
----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH 1,321 (1,151) 302 1,302 (1,151) 302
CASH AT BEGINNING OF YEAR 101 1,252 950 101 1,252 950
----------- ----------- ----------- ----------- ----------- -----------
CASH AT END OF YEAR $ 1,422 $ 101 $ 1,252 $ 1,403 $ 101 $ 1,252
=========== =========== =========== =========== =========== ===========
<CAPTION>
For the Years Ended March 31,
=========================================
1995 1994 1993
-----------------------------------------
3333 Holding
Corporation
and Subsidiary
-----------------------------------------
(Dollars in thousands, except per share/unit data)
<S> <C> <C> <C>
COMBINING STATEMENTS OF OPERATIONS
REVENUES
Real Estate Sales $ - $ - $ -
Interest and Other Income 1,602 537 566
----------- ----------- -----------
1,602 537 566
----------- ----------- -----------
COSTS AND EXPENSES
Real Estate Sales - - -
Property Valuation Adjustment - - -
Selling and Administrative 761 65 65
Interest 745 586 597
----------- ----------- -----------
1,506 651 662
----------- ----------- -----------
EARNINGS (LOSS) BEFORE INCOME TAXES 96 (114) (96)
Income Taxes - - -
----------- ----------- -----------
NET EARNINGS (LOSS) $ 96 $ (114) $ (96)
=========== =========== ===========
EARNINGS (LOSS) PER SHARE/UNIT
(Average Outstanding Shares,
1,000; Units, 1,000) $ 96 $ (114) $ (96)
=========== =========== ===========
COMBINING STATEMENTS OF CASH FLOWS
CASH FLOWS-OPERATING ACTIVITIES
Net Earnings (Loss) $ 96 $ (114) $ (96)
Property Valuation Adjustment - - -
Net Change in Payables,
Receivables and Deposits (77) 114 96
(Increase) Decrease in Notes Receivable - - -
Decrease (Increase) in Land Held
for Development and Sale - - -
----------- ----------- -----------
19 - -
----------- ----------- -----------
CASH FLOWS-FINANCING ACTIVITIES
(Decrease) Increase in Notes Payable -
Centex Corporation & Subsidiaries - - -
Other - - -
----------- ----------- -----------
- - -
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH 19 - -
CASH AT BEGINNING OF YEAR - - -
----------- ----------- -----------
CASH AT END OF YEAR $ 19 $ - $ -
=========== =========== ===========
</TABLE>
See notes to combining financial statements.
F-36
<PAGE> 5
3333 Holding Corporation and Subsidiary and Centex Development Company, L.P.
COMBINING STATEMENTS OF STOCKHOLDERS' EQUITY AND PARTNERS' CAPITAL
================================================================================
<TABLE>
<CAPTION>
For the Years Ended March 31, 1995, 1994 and 1993
========================================================
Centex Development
Company, L.P.
-----------------------------------------
Class B General Limited
Unit Partner's Partner's
Combined Warrants Capital Capital
----------- ----------- ----------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Balance at March 31, 1992 $ 68,835 $ 500 $ 767 $ 68,002
Net Loss (4,272) - - (4,176)
----------- ----------- ----------- -----------
Balance at March 31, 1993 64,563 500 767 63,826
Net Loss (1,624) - - (1,510)
----------- ----------- ----------- -----------
Balance at March 31, 1994 62,939 500 767 62,316
NET LOSS (16,227) - - (16,323)
----------- ----------- ----------- -----------
BALANCE AT MARCH 31, 1995 $ 46,712 $ 500 $ 767 $ 45,993
=========== =========== =========== ===========
<CAPTION>
For the Years Ended March 31, 1995, 1994 and 1993
========================================================
3333 Holding
Corporation and Subsidiary
--------------------------------------------------------
Capital In Retained
Stock Common Excess Of Earnings
Warrants Stock Par Value (Deficit)
----------- ----------- ----------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Balance at March 31, 1992 $ 1 $ - $ 800 $ (468)
Net Loss - - - (96)
----------- ----------- ----------- -----------
Balance at March 31, 1993 1 - 800 (564)
Net Loss - - - (114)
----------- ----------- ----------- -----------
Balance at March 31, 1994 1 - 800 (678)
NET LOSS - - - 96
----------- ----------- ----------- -----------
BALANCE AT MARCH 31, 1995 $ 1 $ - $ 800 $ (582)
=========== =========== =========== ===========
</TABLE>
See notes to combining financial statements.
NOTES TO COMBINING FINANCIAL STATEMENTS
================================================================================
(A) ORGANIZATION
Centex Development Company, L.P. (the Partnership) was formed on March 31, 1987
to invest in, acquire, develop, operate and sell residential and commercial
real estate. Centex Real Estate Corporation (CREC), its limited partner, is a
subsidiary of Centex Corporation (Centex). 3333 Development Corporation (a
Nevada corporation) (Development), which serves as its general partner, is
owned by 3333 Holding Corporation (a Nevada corporation) (Holding). In November
1987, Centex distributed all of the issued and outstanding shares of the common
stock of Holding and warrants to purchase approximately 80% of the Class B
units of limited partnership interest in the Partnership (see Note F). These
securities trade in tandem with the common stock of Centex and are being held
by a nominee on behalf of Centex stockholders until such time as the securities
are detached and trade separately. The securities may be detached at any time
by Centex's Board of Directors, but the warrants to purchase Class B units
automatically become detached in November 1997 unless extended by Centex's
stockholders.
Supplementary condensed combined financial statements of Centex Corporation and
subsidiaries, 3333 Holding Corporation and subsidiary and Centex Development
Company, L.P. are set forth below. For additional information on Centex
Corporation and subsidiaries, see their separate financial statements and
related footnotes.
F-37
<PAGE> 6
SUPPLEMENTARY CONDENSED COMBINED BALANCE SHEETS
================================================================================
<TABLE>
<CAPTION>
March 31,
=========================================
1995 1994
-----------------------------------------
(Dollars in thousands)
<S> <C> <C>
ASSETS
Cash and Cash Equivalents $ 25,207 $ 76,388
Marketable Securities Available for Sale - 78,241
Receivables 653,622 930,428
Inventories 1,266,509 1,223,753
Investments in
Centex Construction Products, Inc. 89,871 -
Joint Ventures and Unconsolidated Subsidiaries 5,695 56,928
Property and Equipment, net 41,267 188,930
Government-Guaranteed S&L Assets - 43,767
Other Assets and Deferred Charges 26,427 38,574
----------- -----------
$ 2,108,598 $ 2,637,009
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable and Accrued Liabilities $ 557,640 $ 644,926
S&L Deposits and FHLB Borrowings - 211,055
Short-term Debt 632,745 837,734
Long-term Debt 222,530 222,832
Deferred Income Taxes 26,737 51,180
Stockholders' Equity 668,946 669,282
----------- -----------
$ 2,108,598 $ 2,637,009
=========== ===========
</TABLE>
SUPPLEMENTARY CONDENSED COMBINED STATEMENT OF EARNINGS
================================================================================
<TABLE>
<CAPTION>
For the Years Ended March 31,
=========================================
1995 1994 1993
-----------------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Revenues $ 3,281,198 $ 3,224,025 $ 2,501,691
Costs and Expenses 3,194,642 3,089,126 2,410,028
----------- ----------- -----------
Earnings Before Gain on Initial Public
Offering and Income Taxes 86,556 134,899 91,663
Gain on CXP Initial Public Offering 59,328 - -
----------- ----------- -----------
Earnings Before Income Taxes 145,884 134,899 91,663
Income Taxes 53,540 49,851 30,721
----------- ----------- -----------
Net Earnings $ 92,344 $ 85,048 $ 60,942
=========== =========== ===========
</TABLE>
F-38
<PAGE> 7
(B) BASIS OF PRESENTATION
The accompanying combining financial statements present the individual and
combined financial statements of Holding and its subsidiary and the Partnership
as of March 31, 1995 and 1994 and results of operations for each of the three
years ended March 31, 1995. The financial statements of the Partnership are
included in the combined statements since Development, as general partner of
the Partnership, is able to exercise effective control over the Partnership.
(C) SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
Revenue from real estate sales is recognized as required payments are received
and title passes.
INVENTORY CAPITALIZATION AND COST ALLOCATION
Land held for development and sale is stated at the lower of cost (including
development costs and, where appropriate, capitalized interest and real estate
taxes) or market. The capitalized costs are included in cost of land sales in
the combining statements of operations as related revenues are recognized.
In March 1995, CDC recorded a pre-tax adjustment to reduce the book value of
certain properties in the amount of approximately $15.5 million to reflect
CDC's view that development activity has not reached anticipated levels during
the current economic cycle in order to continue to support the historical
carrying value of such properties. This adjustment results in carrying values
that will facilitate a nearer-term disposition or development of these
properties. A substantial portion of the adjustment related to the book values
of two Dallas area properties. In fiscal 1993, CDC wrote down its investment in
Forster Ranch real estate by $3.7 million to an amount which equaled the
related non-recourse debt.
EARNINGS (LOSS) PER SHARE/UNIT
Earnings (loss) per share/unit are based on the weighted average number of
outstanding shares of common stock (1,000 for Holding) and Class A limited
partnership units (1,000 for the Partnership). These shares/units do not
include common stock/unit equivalents because they have no material effect on
earnings (loss) per share/unit.
COMBINING STATEMENTS OF OPERATIONS AND CASH FLOWS - SUPPLEMENTAL DISCLOSURES
Interest capitalized by the Partnership during fiscal years ended March 31,
1995, 1994 and 1993 totaled $4,787,000, $4,090,000 and $4,039,000,
respectively, of which $4,687,000, $3,945,000 and $3,834,000, respectively,
relates to the Forster Ranch property. No income taxes were paid during the
years ended March 31, 1995, 1994 and 1993.
(D) NOTES RECEIVABLE
Development issued common stock to Holding and used the proceeds to advance
$7.7 million to CREC, as evidenced by a note receivable due April 30, 1996.
Interest at prime plus .875% is due in quarterly installments. Interest income
of $680,000, $537,000 and $547,000 related to this note is included in the
accompanying combining financial statements for the years ended March 31, 1995,
1994 and 1993, respectively.
Notes Receivable - Other at March 31, 1995 and 1994 have stated interest rates
ranging up to 10% and are due in monthly or quarterly installments. Discounts
and allowances totaled $40,000 at March 31, 1995 and $313,000 at March 31,
1994. The weighted average interest rate, inclusive of discounts, was 9% at
March 31, 1995 and 9% at March 31, 1994. Notes receivable at March 31, 1995 are
collectible over seven years, with $323,000 being due within one year.
F-39
<PAGE> 8
(E) NOTES PAYABLE
Centex had advanced Holding $7.6 million as of March 31, 1995 which is
evidenced by a note secured by the common stock of Development. The note, which
had a fluctuating balance during fiscal 1995 and 1994, bears interest at prime
plus 1% which is payable quarterly. The principal balance together with all
unpaid accrued interest is due on the earlier of April 1, 1996 or the date on
which the warrants to purchase Class B units of limited partnership interest
are detached from shares of the common stock of Centex. Interest expense of
$611,000, $439,000 and $404,000 related to this note is included in the
accompanying combining financial statements for the years ended March 31, 1995,
1994 and 1993, respectively.
Under the most restrictive covenants of the note agreement, Holding and its
subsidiary (excluding the Partnership) may not, without Centex's consent, (i)
create any additional liens on or sell real estate properties contributed by
the limited partner, (ii) effect a merger or consolidation, (iii) declare
dividends or make certain other shareholder payments or (iv) allow tangible net
worth, as defined, to be less than $7.7 million for Development.
All Forster Ranch and other notes payable are non-recourse, secured solely by
the underlying real estate. As land is sold, a portion of the proceeds is
restricted for repayment of the notes. The prime rate in effect was 9% at March
31, 1995 and 6 1/4% at March 31, 1994. The 30 day LIBOR rate at March 31, 1995
was 6 1/8% and 3 11/16% at March 31, 1994. The note balances and rates in
effect were as follows:
<TABLE>
<CAPTION>
March 31,
==========================
1995 1994
--------------------------
(Dollars in thousands)
<S> <C> <C>
Credit Line at LIBOR Plus 3/4% unsecured, guaranteed by CREC $ 1,039 $ 2,115
Note Payable at 6 1/2%, Paid in April 1994 - 2,050
Note Payable at 12%, Matured in April 1994 785 785
Note Payable at 5.56%, Maturing in fiscal year 1997 682 -
Note Payable, Maturing in fiscal year 1997 486 -
Forster Ranch Non-recourse Notes -
Payable at Prime Plus 1%, Matured in April 1993 11,602 12,420
Payable at Prime Plus 2% (10 1/2% floor), Maturing in fiscal year 2002 41,891 36,779
----------- -----------
$ 56,485 $ 54,149
=========== ===========
</TABLE>
The partnership and the holder of the Forster Ranch non-recourse notes have
entered into an agreement that may result in the transfer of ownership of the
property to the lender in satisfaction of this debt in June 1995. In connection
with this agreement, CREC has agreed to fund certain holding and other costs
CDC will incur through June 1995 in connection with its rezoning efforts. CDC
wrote down its investment in the Forster Ranch real estate by approximately
$3.7 million during fiscal year 1993 to an amount which equaled the related
non-recourse debt after receiving notice that the note, which matured in April
1993, would not be renewed.
F-40
<PAGE> 9
(F) STOCKHOLDERS' EQUITY AND PARTNERS' CAPITAL
PREFERRED RETURN
The partnership agreement provides that the Class A limited partner is entitled
to a cumulative preferred return of 9% per annum on the average outstanding
balance of its Unrecovered Capital, which is defined as its initial capital
contribution adjusted for cash distributions representing return of the initial
capital contributions. Preference payments in arrears at March 31, 1995
amounted to $35,818,000.
ALLOCATION OF PROFITS AND LOSSES
As provided in the partnership agreement, prior to Payout (as defined below),
net income of the Partnership is to be allocated to the partners in the
following order of priority:
(i) To the Class A limited partner to the extent of the cumulative
preferred return.
(ii) To the partners to the extent and in the same ratio that
cumulative net losses were allocated.
(iii) To the partners in accordance with their percentage interests, as
defined. Currently, this would be 20% to the Class A limited
partner and 80% to the general partner.
All loss allocations and allocations of net income after Payout, shall be made
to the partners in accordance with their percentage interests, as defined.
DISTRIBUTIONS
Distributions of cash or other property are to be made at the discretion of the
general partner and are to be distributed in the following order of priority:
(i) Prior to the time at which the Class A limited partner has
received aggregate distributions equal to its original capital
contribution (Payout), distributions of cash or other property
shall be made as follows:
(a) To the Class A limited partner with respect to its preferred
return, then
(b) To the partners in an amount equal to the maximum marginal
corporate tax rate times the amount of taxable income
allocated to the partners, then
(c) To the Class A limited partner until its Unrecovered Capital
is reduced to zero.
(ii) After Payout, distributions of cash shall be made to the partners
in accordance with their percentage interests, as defined.
WARRANTS
In November 1987, Centex acquired from the Partnership 100 warrants to purchase
100 Class B units in the Partnership at an exercise price of $500 per Class B
unit, and Centex acquired from Holding 100 warrants to purchase 100 shares of
Holding common stock at an exercise price of $800 per share. These warrants are
subject to future adjustment to provide the holders of options to purchase
Centex common stock with the opportunity to acquire Class B units and shares of
Holding. These warrants will generally become exercisable upon the detachment
of the tandem-traded securities from Centex common stock.
F-41
<PAGE> 10
(G) RELATED PARTY TRANSACTIONS
SERVICE AND MANAGEMENT AGREEMENTS
Holding entered into a service agreement in May 1987 with Centex Service
Company (CSC), a wholly-owned subsidiary of Centex, whereby CSC will provide
certain tax, accounting and other similar services for Holding at a fee of
$2,500 per month. Service fees of $30,000 for each of fiscal years 1995, 1994,
and 1993 are reflected as administrative expenses in the accompanying combining
financial statements.
The Partnership paid $922,000 to Holding during the current year pursuant to an
agreement whereby Holding provides management services to the Partnership in
connection with the development and operation of properties acquired by the
Partnership, maintenance of partnership property and accounting and clerical
services. Also in the current year, the Partnership paid certain Centex
subsidiaries $785,000 in management fees accrued in the year ended March 31,
1994 relative to a similar management agreement. For the year ended March 31,
1993, these management fees to Centex subsidiaries totaled $1,378,000 of which
$28,000 was capitalized.
SALES AND PURCHASES
Partnership revenues during fiscal years 1995, 1994, and 1993 include land
sales to CREC of $5,423,000, $2,354,000 and $8,648,000, respectively.
Additionally, CREC has contracts to purchase lots for the aggregate price of
approximately $6.1 million to be paid as lots are delivered.
ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE
Included in Accounts Receivable-Affiliates and Accounts Payable-Affiliates in
the accompanying combining financial statements are $570,000 at March 31, 1995
and $768,000 at March 31, 1994, which the Partnership advanced to Holding.
Interest of $134,000 and $148,000 was accrued on advances during fiscal years
1995 and 1994 respectively.
(H) INCOME TAXES
At March 31, 1995, Holding had operating loss carryforwards for income tax
reporting purposes of $554,000. If unused, the loss carryforwards will expire
in the fiscal years 2004 through 2010. Holding joins with its subsidiary in
filing consolidated income tax returns. The taxable income of the Partnership
has been allocated to the holder of the Class A units. Accordingly, no tax
provision for Partnership earnings is shown in the combining financial
statements.
F-42
<PAGE> 11
3333 Holding Corporation and Subsidiary and Centex Development Company, L.P.
QUARTERLY RESULTS (UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
March 31,
======================================================================================
1995 1994 1995 1994 1995 1994
-------------------------- -------------------------- --------------------------
3333 Holding
Centex Development Corporation
Combined Company, L.P. and Subsidiary
-------------------------- -------------------------- --------------------------
(Dollars in thousands, except per share/unit data)
<S> <C> <C> <C> <C> <C> <C>
FIRST QUARTER
Revenues $ 3,105 $ 1,928 $ 2,977 $ 1,832 $ 336 $ 134
Earnings (Loss) Before Taxes $ (137) $ (264) $ (151) $ (235) $ 14 $ (29)
Net Earnings (Loss) $ (137) $ (264) $ (151) $ (235) $ 14 $ (29)
Earnings (Loss) Per Share/Unit $ (151) $ (235) $ 14 $ (29)
SECOND QUARTER
Revenues $ 1,330 $ 10,136 $ 1,197 $ 10,039 $ 376 $ 134
Earnings (Loss) Before Taxes $ (229) $ (664) $ (264) $ (636) $ 35 $ (28)
Net Earnings (Loss) $ (229) $ (664) $ (264) $ (636) $ 35 $ (28)
Earnings (Loss) Per Share/Unit $ (264) $ (636) $ 35 $ (28)
THIRD QUARTER
Revenues $ 4,467 $ 374 $ 4,325 $ 275 $ 379 $ 136
Earnings (Loss) Before Taxes $ (261) $ (424) $ (283) $ (395) $ 22 $ (29)
Net Earnings (Loss) $ (261) $ (424) $ (283) $ (395) $ 22 $ (29)
Earnings (Loss) Per Share/Unit $ (283) $ (395) $ 22 $ (29)
FOURTH QUARTER
Revenues $ 1,440 $ 811 $ 1,297 $ 713 $ 511 $ 133
Earnings (Loss) Before Taxes $ (15,600) $ (272) $ (15,625) $ (244) $ 25 $ (28)
Net Earnings (Loss) $ (15,600) $ (272) $ (15,625) $ (244) $ 25 $ (28)
Earnings (Loss) Per Share/Unit $ (15,625) $ (244) $ 25 $ (28)
</TABLE>
F-43
<PAGE> 12
3333 Holding Corporation and Subsidiary and Centex Development Company, L.P.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
================================================================================
On a combined basis, revenues for the year ended March 31, 1995 of $10.3
million include the sale of a commercial property in Sonora, California and the
sale to Centex Real Estate Corporation (CREC) of 254 residential lots in
Orlando, Florida and East Windsor, New Jersey. Revenues of $13.2 million for
fiscal 1994 included: a 15 acre industrial site in Houston, Texas; 168 acres of
ranch land in Comal County, Texas; the Sonora, California shopping center
property except for one pad site; and the sale to CREC of 246 residential lots
in Orlando, Florida, The Colony, Texas and East Windsor, New Jersey. Revenues
of $10.2 million for fiscal 1993 included the sale of a restaurant site in
Sonora, California, 21 commercial acres in Orlando, Florida and the sale to
CREC of 273 residential lots in Orlando, Florida.
The year ended March 31, 1995 reflected a combined net loss of $16.2 million,
which included property valuation adjustments of $15.5 million. The property
valuation adjustments were recorded in March 1995 to reflect CDC's view that
development activity has not reached anticipated levels during the current
economic cycle in order to continue to support the historical carrying value of
such properties, primarily The Colony, and Bryan Place properties located in
the Dallas area. These adjustments result in carrying values that will
facilitate a nearer-term disposition or development of these properties.
Without the property valuation adjustments, the combined net loss was $.7
million compared to $1.6 million in fiscal 1994. The reduction in loss before
the property valuation adjustments primarily relates to the higher gross margin
on fiscal 1995 real estate sales compared to fiscal 1994 and a reduction in
selling and administrative cost and expense in fiscal 1995 compared to fiscal
1994.
The fiscal 1993 combined net loss of $4,272,000 included a $3.7 million
property carrying-value adjustment related to the Forster Ranch project in San
Clemente, California. The Forster Ranch adjustment resulted from the assertion
of the Forester Ranch property lender that CDC is in default under the
non-recourse debt and CDC's related decision to tender this property to the
lender in satisfaction of the non-recourse debt. Accordingly, the property was
written down to an amount equal to the non-recourse debt. Excluding the $3.7
million San Clemente property adjustment, the combined loss for fiscal 1993
would have been $.6 million.
Holding, Development and the Partnership believe that they will be able to
provide or obtain the necessary funding for their current operations and future
expansion needs. The revenues, earnings and liquidity of these companies are
largely dependent on future land sales, the timing of which is uncertain. The
ability to obtain external debt or equity capital is subject to the provisions
of Holding's loan agreement with Centex and the Partnership Agreement governing
the Partnership.
F-44
