<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
JOINT QUARTERLY REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarter Ended
SEPTEMBER 30, 1998
Commission File No. 1-6776
CENTEX CORPORATION
A Nevada Corporation
IRS Employer Identification No. 75-0778259
2728 N. Harwood
Dallas, Texas 75201
(214) 981-5000
Commission File Nos. 1-9624 and 1-9625, respectively
3333 HOLDING CORPORATION
A Nevada Corporation
CENTEX DEVELOPMENT COMPANY, L.P.
A Delaware Limited Partnership
IRS Employer Identification Nos. 75-2178860 and 75-2168471, respectively
3100 McKinnon, Suite 370
Dallas, Texas 75201
(214) 981-6700
The registrants have 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 and
have been subject to such filing requirements for the past 90 days.
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 October 30, 1998:
<TABLE>
<S> <C> <C>
Centex Corporation Common Stock 59,409,879 shares
3333 Holding Corporation Common Stock 1,000 shares
Centex Development Company, L.P. Class A Units of Limited Partnership Interest 32,260 units
Centex Development Company, L.P. Class C Units of Limited Partnership Interest 23,001 units
</TABLE>
<PAGE> 2
CENTEX CORPORATION
3333 HOLDING CORPORATION
CENTEX DEVELOPMENT COMPANY, L.P.
FORM 10-Q TABLE OF CONTENTS
SEPTEMBER 30, 1998
CENTEX CORPORATION
<TABLE>
<CAPTION>
PAGE
PART I. FINANCIAL INFORMATION
<S> <C> <C> <C>
ITEM 1. Condensed Consolidated Financial Statements 1
Condensed Consolidated Statement of Earnings
for the Three Months Ended September 30, 1998 2
Condensed Consolidated Statement of Earnings
for the Six Months Ended September 30, 1998 3
Condensed Consolidated Balance Sheets 4
Condensed Consolidated Statement of Cash Flows
for the Six Months Ended September 30, 1998 5
Notes to Condensed Consolidated Financial Statements 6 - 9
ITEM 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition 10 - 16
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders 17
ITEM 6. Exhibits and Reports on Form 8-K 17
SIGNATURES 18
</TABLE>
-i-
<PAGE> 3
3333 HOLDING CORPORATION
CENTEX DEVELOPMENT COMPANY, L.P.
<TABLE>
<CAPTION>
PAGE
<S> <C> <C> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. Condensed Combining Financial Statements 19
Condensed Combining Statement of Operations
for the Three Months Ended September 30, 1998 20
Condensed Combining Statement of Operations
for the Six Months Ended September 30, 1998 21
Condensed Combining Balance Sheets 22
Condensed Combining Statement of Cash Flows
for the Six Months Ended September 30, 1998 23
Notes to Condensed Combining Financial Statements 24 - 25
ITEM 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition 26 - 27
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders 28
ITEM 6. Exhibits and Reports on Form 8-K 28
SIGNATURES 29 - 30
</TABLE>
-ii-
<PAGE> 4
CENTEX CORPORATION
PART I. FINANCIAL INFORMATION
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
ITEM 1.
The condensed consolidated financial statements include the
accounts of Centex Corporation and subsidiaries ("Centex" or the "Company"), and
have been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although the Company believes
that the disclosures are adequate to make the information presented not
misleading. It is suggested that these condensed consolidated financial
statements be read in conjunction with the consolidated financial statements and
the notes thereto included in the Company's latest Annual Report on Form 10-K.
In the opinion of the Company, all adjustments necessary to present fairly the
information in the following condensed consolidated financial statements of the
Company have been included. The results of operations for such interim periods
are not necessarily indicative of the results for the full year.
-1-
<PAGE> 5
CENTEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(dollars in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
September 30,
------------------------------
1998 1997
------------ ------------
<S> <C> <C>
REVENUES
Home Building
Conventional Homes $ 648,988 $ 586,839
Manufactured Homes 48,484 33,594
Investment Real Estate 4,019 5,331
Financial Services 107,766 57,294
Construction Products 91,776 83,412
Contracting and Construction Services 342,049 225,276
------------ ------------
1,243,082 991,746
------------ ------------
COSTS AND EXPENSES
Home Building
Conventional Homes 596,782 545,330
Manufactured Homes 44,492 30,754
Investment Real Estate (2,439) (1,288)
Financial Services 84,002 49,731
Construction Products 56,808 55,707
Contracting and Construction Services 337,810 224,085
Other, net 2,455 1,571
Corporate General and Administrative 6,760 4,904
Interest Expense 10,042 8,719
Minority Interest 16,004 13,538
------------ ------------
1,152,716 933,051
------------ ------------
EARNINGS BEFORE INCOME TAXES 90,366 58,695
Income Taxes 33,803 22,304
------------ ------------
NET EARNINGS $ 56,563 $ 36,391
============ ============
EARNINGS PER SHARE
Basic $ 0.95 $ 0.62
============ ============
Diluted $ 0.91 $ 0.59
============ ============
AVERAGE SHARES OUTSTANDING
Basic 59,549,247 59,008,196
Common Share Equivalents
Options 2,082,015 1,838,434
Convertible Debenture 400,000 400,000
------------ ------------
Diluted 62,031,262 61,246,630
============ ============
CASH DIVIDENDS PER SHARE $ 0.04 $ 0.035
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
-2-
<PAGE> 6
CENTEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(dollars in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended
September 30,
------------------------------
1998 1997
------------ ------------
<S> <C> <C>
REVENUES
Home Building
Conventional Homes $ 1,210,182 $ 1,047,685
Manufactured Homes 90,929 65,488
Investment Real Estate 8,913 12,111
Financial Services 207,899 104,537
Construction Products 171,622 161,366
Contracting and Construction Services 664,143 461,934
------------ ------------
2,353,688 1,853,121
------------ ------------
COSTS AND EXPENSES
Home Building
Conventional Homes 1,117,308 978,716
Manufactured Homes 84,177 60,432
Investment Real Estate (4,948) (2,657)
Financial Services 160,423 91,769
Construction Products 109,693 110,255
Contracting and Construction Services 656,428 459,732
Other, net 4,761 2,920
Corporate General and Administrative 12,111 9,264
Interest Expense 18,235 16,525
Minority Interest 28,412 25,051
------------ ------------
2,186,600 1,752,007
------------ ------------
EARNINGS BEFORE INCOME TAXES 167,088 101,114
Income Taxes 62,364 37,713
------------ ------------
NET EARNINGS $ 104,724 $ 63,401
============ ============
EARNINGS PER SHARE
Basic $ 1.76 $ 1.08
============ ============
Diluted $ 1.69 $ 1.05
============ ============
AVERAGE SHARES OUTSTANDING
Basic 59,540,096 58,596,764
Common Share Equivalents
Options 2,061,858 1,694,688
Convertible Debenture 400,000 400,000
------------ ------------
Diluted 62,001,954 60,691,452
============ ============
CASH DIVIDENDS PER SHARE $ 0.08 $ 0.06
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
-3-
<PAGE> 7
CENTEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
Centex Corporation and
Subsidiaries Centex Corporation Financial Services
------------------------- -------------------------- --------------------------
September 30, March 31, September 30, March 31, September 30, March 31,
1998* 1998** 1998* 1998** 1998* 1998**
------------- ----------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and Cash Equivalents $ 94,151 $ 98,316 $ 70,334 $ 87,491 $ 23,817 $ 10,825
Receivables -
Residential Mortgage Loans 1,289,794 1,191,450 -- -- 1,289,794 1,191,450
Other 480,818 390,891 417,337 337,558 63,481 53,333
Affiliates -- -- -- -- (31,753) (58,299)
Inventories 1,301,618 1,064,554 1,301,618 1,064,554 -- --
Investments -
Centex Development Company 57,071 34,526 57,071 34,526 -- --
Joint Ventures and Other 35,341 7,558 35,341 7,558 -- --
Unconsolidated Subsidiaries -- -- 123,261 146,592 -- --
Property and Equipment, net 293,141 295,992 270,663 276,008 22,478 19,984
Other Assets -
Deferred Income Taxes 109,643 147,607 102,825 144,090 6,818 3,517
Goodwill, net 194,619 133,847 176,329 123,709 18,290 10,138
Mortgage Securitization Residual Interest 46,203 14,747 -- -- 46,203 14,747
Deferred Charges and Other 44,038 36,731 29,435 23,730 14,603 13,001
------------- ----------- ------------- ----------- ------------- -----------
$ 3,946,437 $ 3,416,219 $ 2,584,214 $ 2,245,816 $ 1,453,731 $ 1,258,696
============= =========== ============= =========== ============= ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable and Accrued Liabilities $ 909,144 $ 799,154 $ 807,482 $ 711,564 $ 101,662 $ 87,590
Short-term Debt 1,520,850 1,152,873 265,922 73,823 1,254,928 1,079,050
Long-term Debt 209,097 237,715 209,097 237,715 -- --
Minority Stockholders' Interest 149,920 152,468 144,287 148,705 5,633 3,763
Negative Goodwill 74,837 82,837 74,837 82,837 -- --
Stockholders' Equity -
Preferred Stock, Authorized 5,000,000 -- -- -- -- -- --
Shares, None Issued
Common Stock $.25 Par Value; Authorized 14,878 14,883 14,878 14,883 1 1
100,000,000 Shares; Issued and Outstanding
59,512,305 and 59,531,758, respectively
Capital in Excess of Par Value 28,225 36,761 28,225 36,761 75,944 74,944
Retained Earnings 1,039,486 939,528 1,039,486 939,528 15,563 13,348
------------- ----------- ------------- ----------- ------------- ------------
Total Stockholders' Equity 1,082,589 991,172 1,082,589 991,172 91,508 88,293
------------- ----------- ------------- ----------- ------------- ------------
$ 3,946,437 $ 3,416,219 $ 2,584,214 $ 2,245,816 $ 1,453,731 $ 1,258,696
============= =========== ============= =========== ============= ============
</TABLE>
See notes to condensed consolidated financial statements.
* Unaudited
** Condensed from audited financial statements.
In the supplemental data presented above, "Centex Corporation" represents the
adding together of all subsidiaries other than those included in Financial
Services. Transactions between Centex Corporation and Financial Services have
been eliminated from the Centex Corporation and Subsidiaries balance sheets.
-4-
<PAGE> 8
CENTEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended
September 30,
------------------------
1998 1997
--------- ---------
<S> <C> <C>
CASH FLOWS - OPERATING ACTIVITIES
Net Earnings $ 104,724 $ 63,401
Adjustments -
Depreciation, Depletion and Amortization 19,778 11,800
Deferred Income Taxes 35,508 24,651
Equity in Loss (Earnings) of CDC and Joint Ventures 342 (915)
Minority Interest 28,412 25,051
--------- ---------
188,764 123,988
Increase in Receivables (89,927) (6,206)
Increase in Residential Mortgage Loans (98,344) (99,705)
Increase in Inventories (237,064) (92,232)
Increase (Decrease) in Payables and Accruals 109,990 (42,884)
Increase in Other Assets (103,341) (19,727)
Other, net (30,960) (24,393)
--------- ---------
(260,882) (161,159)
--------- ---------
CASH FLOWS - INVESTING ACTIVITIES
(Increase) Decrease in Investments (50,670) 7,879
Property and Equipment Additions, net (18,665) (24,385)
--------- ---------
(69,335) (16,506)
--------- ---------
CASH FLOWS - FINANCING ACTIVITIES
Increase in Debt -
Secured by Residential Mortgage Loans 175,878 119,831
Other 163,481 85,117
Proceeds from Stock Option Exercises 6,143 15,682
Retirement of Common Stock (14,684) --
Dividends Paid (4,766) (3,533)
--------- ---------
326,052 217,097
--------- ---------
NET (DECREASE) INCREASE IN CASH (4,165) 39,432
CASH AT BEGINNING OF PERIOD 98,316 31,320
--------- ---------
CASH AT END OF PERIOD $ 94,151 $ 70,752
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
-5-
<PAGE> 9
CENTEX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
(unaudited)
(A) A summary of changes in stockholders' equity is presented below:
<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, 1998 $ -- $ 14,883 $ 36,761 $ 939,528 $ 991,172
Net Earnings -- -- -- 104,724 104,724
Exercise of Stock Options -- 97 6,046 -- 6,143
Retirement of 407,700 Shares -- (102) (14,582) -- (14,684)
Cash Dividends -- -- -- (4,766) (4,766)
----------- ----------- ----------- ----------- -----------
BALANCE, SEPTEMBER 30, 1998 $ -- $ 14,878 $ 28,225 $ 1,039,486 $ 1,082,589
=========== =========== =========== =========== ===========
</TABLE>
(B) On November 30, 1987, the Company distributed to a nominee 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 Centex Development Company, L.P. ("CDC"). A
wholly-owned subsidiary of 3333 Holding Corporation serves as general
partner of Centex Development Company, L.P. These securities are held by
the nominee on behalf of Centex stockholders, and will trade in tandem with
the common stock of Centex, until such time as they are detached.
Supplementary condensed combined financial statements for Centex, 3333
Holding Corporation and Subsidiary and Centex Development Company, L.P. are
as follows:
-6-
<PAGE> 10
NOTES - continued
CENTEX CORPORATION, 3333 HOLDING CORPORATION AND SUBSIDIARY
AND CENTEX DEVELOPMENT COMPANY, L.P.
SUPPLEMENTARY CONDENSED COMBINED BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
September 30, March 31,
1998 1998 *
------------- ----------
<S> <C> <C>
ASSETS
Cash and Cash Equivalents $ 94,499 $ 98,576
Receivables 1,777,770 1,588,247
Inventories 1,380,049 1,107,941
Investments in Joint Ventures and Other 36,037 10,598
Property and Equipment, net 293,327 296,080
Other Assets 395,498 333,044
---------- ----------
$3,977,180 $3,434,486
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable and Accrued Liabilities $ 917,856 $ 802,547
Short-term Debt 1,542,234 1,166,694
Long-term Debt 209,097 237,715
Minority Stockholders' Interest 149,920 152,468
Negative Goodwill 74,837 82,837
Stockholders' Equity 1,083,236 992,225
---------- ----------
$3,977,180 $3,434,486
========== ==========
</TABLE>
*Condensed from audited financial statements.
SUPPLEMENTARY CONDENSED COMBINED STATEMENT OF EARNINGS
(dollars in thousands)
<TABLE>
<CAPTION>
For the Six Months Ended
September 30,
-------------------------
1998 1997
---------- ----------
<S> <C> <C>
Revenues $2,364,371 $1,855,818
Costs and Expenses 2,197,689 1,754,624
---------- ----------
Earnings Before Income Taxes 166,682 101,194
Income Taxes 62,364 37,713
---------- ----------
NET EARNINGS $ 104,318 $ 63,481
========== ==========
</TABLE>
-7-
<PAGE> 11
Notes - continued
(C) In order to ensure the future availability of land for homebuilding, the
Company has made deposits totaling approximately $33 million as of
September 30, 1998 for options to purchase undeveloped land and developed
lots having a total purchase price of approximately $812 million. These
options and commitments expire at various dates to the year 2003. The
Company has also committed to purchase land and developed lots totaling
approximately $9 million. In addition, the Company has executed lot
purchase contracts with CDC which aggregate approximately $4 million.
(D) Interest expense relating to the Financial Services operations is
included in its costs and expenses. Interest related to non-financial
services is included as interest expense.
<TABLE>
<CAPTION>
For the Six Months Ended
September 30,
------------------------
1998 1997
----------- -----------
<S> <C> <C>
Total Interest Incurred $ 58,595 $ 36,734
Less - Financial Services (40,360) (20,209)
----------- -----------
Interest Expense $ 18,235 $ 16,525
=========== ===========
</TABLE>
(E) During April 1994, Centex Construction Products, Inc. ("CXP") completed
an initial public offering of its stock which began trading on the New
York Stock Exchange under the symbol "CXP." Centex's ownership interest
in CXP was 57.9% as of September 30, 1998.
(F) During the quarter ended June 30, 1996, Centex's Home Building subsidiary
completed a business combination transaction and reorganization with
Vista Properties, Inc. As a result of the combination, Centex's
Investment Real Estate portfolio, valued in excess of $125 million, was
reduced to a nominal "book basis" after recording certain Vista-related
tax benefits. As these properties are developed or sold, the net sales
proceeds are reflected as operating margin. "Negative Goodwill" recorded
as a result of the business combination is being amortized to earnings
over approximately seven years which represents the estimated period over
which the land will be developed and/or sold.
All investment property operations are being reported through Centex's
"Investment Real Estate" business segment.
(G) In December 1997, Centex adopted the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings Per Share." All per
share data have been restated to conform to the provisions of this
Statement. Basic earnings per share is computed based on the
weighted-average number of shares of common stock outstanding. Diluted
earnings per share, computed similarly to fully diluted earnings per
share, is computed based upon basic plus the dilution of the stock
options and the convertible debenture.
Options to purchase approximately two million shares of common stock at
approximately $38.60 per share (expiring in April 2008) were outstanding
during the six months ended September 30, 1998 but were not included in
the computation of diluted earnings per share because they were
anti-dilutive.
-8-
<PAGE> 12
Notes - continued
(H) Effective April 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income." SFAS No.
130 establishes standards for reporting and displaying comprehensive
income and its components. There are no items that the Company is
required to recognize as components of comprehensive income.
(I) Statement of Financial Accounting Standards No. 131, issued in June 1997,
changes the way public companies report information about segments. SFAS
No. 131, which is based on the management approach to segment reporting,
requires companies to report selected quarterly segment information and
entity-wide disclosures about products and services, major customers and
the material countries in which the entity holds assets and reports
revenues. Although this Statement will be effective for the Company's
1999 annual financial statements, the Company does not expect a
significant effect on the presentation of its financials.
-9-
<PAGE> 13
CENTEX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
Centex's consolidated revenues for the quarter were $1.24 billion,
a 25% increase over $991.7 million for the same quarter last year. Earnings
before income taxes were $90.4 million, 54% higher than $58.7 million last year.
Net earnings were $56.6 million and diluted earnings per share were $.91 for
this quarter compared to $36.4 million and $.59, respectively, for the same
quarter last year.
For the six months ended September 30, 1998, corporate revenues
totaled $2.35 billion, 27% higher than $1.85 billion for the same period last
year. Earnings before income taxes were $167.1 million, 65% higher than $101.1
million for the same period last year. Net earnings were $104.7 million and
diluted earnings per share were $1.69 for the six months ended September 30,
1998 compared to $63.4 million and $1.05 for the six months ended September 30,
1997.
Net earnings for both the quarter and the six months ended
September 30, 1998 increased by a higher percentage than earnings per share due
to more average shares outstanding in the fiscal 1999 periods.
HOME BUILDING
Conventional Homes
The following summarizes Conventional Homes' results for the
quarter and fiscal year-to-date ended September 30, 1998 compared to the quarter
and fiscal year-to-date ended September 30, 1997 (dollars in millions, except
per unit data):
<TABLE>
<CAPTION>
Quarter Ended Quarter Ended
9/30/98 9/30/97
------------------ -------------------
<S> <C> <C> <C> <C>
Conventional Homes Revenues $ 649.0 100.0% $ 586.9 100.0%
Cost of Sales (506.5) (78.0%) (468.3) (79.8%)
Selling, General & Administrative (90.3) (14.0%) (77.1) (13.1%)
--------- ------- --------- -------
Operating Earnings $ 52.2 8.0% $ 41.5 7.1%
========= ======= ========= =======
Units Closed 3,467 3,118
% Change 11.2% (11.3%)
Unit Sales Price $ 184,513 $ 185,649
% Change (0.6%) 9.5%
Operating Earnings per Unit $ 15,058 $ 13,313
% Change 13.1% 22.9%
</TABLE>
-10-
<PAGE> 14
<TABLE>
<CAPTION>
Fiscal Fiscal
Year-to-Date Year-to-Date
9/30/98 9/30/97
-------------------- ------------------
<S> <C> <C> <C> <C>
Conventional Homes Revenues $ 1,210.2 100.0% $ 1,047.7 100.0%
Cost of Sales (945.4) (78.1%) (836.7) (79.8%)
Selling, General & Administrative (171.9) (14.2%) (142.0) (13.6%)
---------- -------- --------- -------
Operating Earnings $ 92.9 7.7% $ 69.0 6.6%
========== ======== ========= =======
Units Closed 6,449 5,684
% Change 13.0% (14.0%)
Unit Sales Price $ 184,444 $ 181,956
% Change 1.4% 8.0%
Operating Earnings per Unit $ 14,401 $ 12,134
% Change 18.7% 19.4%
</TABLE>
Home sales (orders) were 3,617 for the quarter this year compared
to 3,134 units for the same quarter a year ago. Home sales (orders) were 7,206
for the six months this year compared to last year's 6,233 units. The backlog of
homes sold but not closed at September 30, 1998 was 6,204 units, including 462
units related to the newly acquired Wayne Homes operation, 28% higher than 4,857
units at September 30, 1997. Centex is currently operating slightly more
neighborhoods than it did a year ago.
Manufactured Homes
The following summarizes Manufactured Homes' results for the
quarter and fiscal year-to-date ended September 30, 1998 compared to the quarter
and fiscal year-to-date ended September 30, 1997 (dollars in thousands):
<TABLE>
<CAPTION>
Quarter Ended Quarter Ended
9/30/98 9/30/97
-------------------- ------------------
<S> <C> <C> <C> <C>
Manufactured Homes Revenues (Construction) $ 38,610 100.0% $ 33,594 100.0%
Cost of Sales (30,240) (78.3%) (26,068) (77.6%)
Selling, General & Administrative (3,718) (9.6%) (4,113) (12.2%)
-------- ------- -------- -------
Earnings before Goodwill and Minority Interest (Construction) 4,652 12.1% 3,413 10.2%
======= =======
Earnings before Goodwill and Minority Interest (Retail) 122 --
-------- --------
Total Earnings Before Goodwill & Minority Interest 4,774 3,413
Goodwill Amortization (782) (573)
Minority Interest (863) (812)
-------- --------
Operating Earnings $ 3,129 $ 2,028
======== ========
Units Produced 1,479 1,400
Units Sold - Retail 221 --
Less: Intersegment Sales (164) --
-------- --------
Units Sold 1,536 1,400
======== ========
</TABLE>
-11-
<PAGE> 15
<TABLE>
<CAPTION>
Fiscal Fiscal
Year-To-Date Year-To-Date
9/30/98 9/30/97
------------------- -------------------
<S> <C> <C> <C> <C>
Manufactured Homes Revenues (Construction) $ 72,028 100.0% $ 65,488 100.0%
Cost of Sales (56,645) (78.7%) (52,420) (80.0%)
Selling, General & Administrative (6,708) (9.3%) (6,866) (10.5%)
---------- ------- --------- -------
Earnings before Goodwill and Minority Interest (Construction) 8,675 12.0% 6,202 9.5%
======= =======
Earnings before Goodwill and Minority Interest (Retail) (303) --
---------- ---------
Total Earnings Before Goodwill Minority Interest 8,372 6,202
Goodwill Amortization (1,620) (1,146)
Minority Interest (1,354) (1,300)
---------- ---------
Operating Earnings $ 5,398 $ 3,756
========== =========
Units Produced 3,045 2,618
Units Sold - Retail 449 --
Less: Intersegment Sales (347) --
---------- ---------
Units Sold 3,147 2,618
========== =========
</TABLE>
INVESTMENT REAL ESTATE
For the quarter ended September 30, 1998, Centex's Investment Real
Estate operation, through which all investment property transactions are
reported, had operating earnings of $6.5 million, 2% lower than $6.6 million for
the same quarter a year ago.
For the current six months, operating earnings from Investment
Real Estate were $13.9 million, a 6% decrease from $14.8 million for the same
period in fiscal 1998.
-12-
<PAGE> 16
FINANCIAL SERVICES
The following summarizes Financial Services' results for the
quarter and fiscal year-to-date ended September 30, 1998 compared to the quarter
and fiscal year-to-date ended September 30, 1997 (dollars in millions):
<TABLE>
<CAPTION>
Fiscal Fiscal
Quarter Ended Quarter Ended Year-to-Date Year-to-Date
9/30/98 9/30/97 9/30/98 9/30/97
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 107.8 $ 57.3 $ 207.9 $ 104.5
Operating Earnings $ 23.8 $ 7.6 $ 47.5 $ 12.8
Origination Volume $ 2,675 $ 1,660 $ 5,272 $ 3,092
% Change 61% 20% 71% 11%
Number of Loans Originated
CTX Mortgage Company ("CTX") -
Centex-built Homes ("Builder") 2,339 2,186 4,420 3,958
Non-Centex-built Homes ("Retail") 16,091 10,352 32,333 19,832
------- --------- ------- -------
18,430 12,538 36,753 23,790
Centex Home Equity Corporation ("CHEC") 3,793 1,644 7,309 2,820
Centex Finance Company 212 -- 355 --
------- --------- ------- -------
22,435 14,182 44,417 26,610
======= ========= ======= =======
% Change 58% 18% 67% 10%
</TABLE>
CTX's Builder applications for the quarter of 2,701 increased 26%
over last year while Retail applications rose 53% to 15,981. CTX's Builder
applications of 5,243 for the six month period were 15% higher than a year ago.
Retail applications increased 58% from 20,601 a year ago to 32,630 for the six
months. The profit per loan of $1,124 for this year's quarter was a 41% increase
over last year's per loan profit of $796. For the six month period, the profit
per loan increased 75% to $1,141. This increase in profit per loan is a result
of increased originations and the centralization of certain back-office
functions.
CHEC generated 18,599 sub-prime loan applications for the quarter,
an increase of 222% compared to the same quarter a year ago. CHEC applications
for the six months rose 267% to 31,687.
The recently opened manufactured-home finance unit, Centex Finance
Company, incurred net start-up costs of approximately $600,000 and $1.1 million
for the quarter and six months ended September 30, 1998, respectively.
CONSTRUCTION PRODUCTS
Revenues from CXP were $91.8 million for the quarter this year,
10% higher than last year. CXP's operating earnings, net of minority interest,
were $19.8 million for the quarter this year, 32% higher than last year's
earnings. CXP's revenues for the current six months were $171.6 million, 6%
higher than last year. CXP's operating earnings, net of minority interest, were
$34.9 million, a 28% improvement over results for the same period a year ago.
-13-
<PAGE> 17
CXP's record operating earnings resulted from improved results in
each of its businesses. Pricing improved for every product, and sales volumes
were higher for Gypsum Wallboard, Concrete and Aggregates for the six months.
Cement sales volume declined 4% for the six month period due to wet-weather
delays in some markets, but this volume should be recouped during the balance of
the fiscal year.
CONTRACTING AND CONSTRUCTION SERVICES
The following summarizes Contracting and Construction Services'
results for the quarter and fiscal year-to-date ended September 30, 1998
compared to the quarter and fiscal year-to-date ended September 30, 1997
(dollars in millions):
<TABLE>
<CAPTION>
Fiscal Fiscal
Quarter Ended Quarter Ended Year-to-Date Year-to-Date
9/30/98 9/30/97 9/30/98 9/30/97
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 342.0 $ 225.3 $ 664.1 $ 461.9
Operating Earnings $ 4.2 $ 1.2 $ 7.7 $ 2.2
New Contracts Received $ 333 $ 303 $ 724 $ 491
Backlog of Uncompleted Contracts $ 1,219 $ 1,143 $ 1,219 $ 1,143
</TABLE>
The Harrah's New Orleans Casino contract was suspended on November
22, 1995 due to a bankruptcy filing by the Harrah's Jazz Company partnership,
the developer of the casino. Centex Landis Construction Co., Inc. ("Landis") and
its subcontractors filed claims against the partnership for completed but unpaid
work. Landis also filed a lawsuit against Harrah's Entertainment, Inc., parent
company of the major partner in the partnership, to recover its claims. In late
November 1996, Landis and Harrah's reached a settlement conditioned upon
Harrah's plan of reorganization becoming effective. Harrah's plan became
effective on October 30, 1998, at which time Harrah's paid $34 million to Landis
in settlement of the claims of Landis and its subcontractors, and Landis has
resumed construction of the casino.
In October 1992, Martin County sued one of the Company's general
contracting subsidiaries, Centex-Rooney Construction Co., Inc. ("Rooney"),
alleging defects in the design and construction of the Martin County Courthouse
in Stuart, Florida. Rooney was construction manager of the project. In July
1996, a judgment of $14.2 million was returned against Rooney, and in April
1997, Martin County also obtained a judgment of $3.2 million in attorney's fees
and costs. Recently, the 4th District Court of Appeals affirmed the $14.2
million judgment, and Rooney filed an appeal to the Supreme Court of Florida. In
August 1998, the Florida Supreme Court denied Rooney's petition for review, and
shortly thereafter, Rooney paid Martin County $17.35 million in satisfaction of
the judgment. Rooney's appeal of the $3.2 million award is still pending. At
this time, Rooney is prosecuting claims and lawsuits against subcontractors,
their insurance carriers and Rooney's own insurance carriers for recovery of the
judgments. One of Rooney's carriers has agreed to pay approximately $3.5
million. While there is no assurance that Rooney will recover from such
subcontractors or other insurance carriers, management believes that Rooney will
be able to recover substantially all of both judgments. In any case, these
judgments would not have a material impact on the financial condition of the
Company.
-14-
<PAGE> 18
YEAR 2000 COMPLIANCE
The Company has a variety of operating systems, computer software
applications, computer hardware equipment and other equipment with embedded
electronic circuits, including applications that the Company uses in its
administrative functions and in the operations of its various subsidiaries and
business divisions (collectively, the "Systems"). Because resolution of Year
2000 issues is considered a priority of the Company, the Company has created a
Year 2000 Task Force to oversee the Company's Year 2000 compliance. The Task
Force, consisting of members of the Company's accounting, financial planning,
legal and internal audit departments, has oversight of the information systems
managers and other administrative personnel charged with implementing the
Company's Year 2000 compliance program (collectively, the "Year 2000 Compliance
Team").
The Task Force has surveyed the Year 2000 Compliance Team,
regarding the Year 2000 compliance of the Systems. The results of the surveys
indicate that a small number of the Systems are not Year 2000 compliant.
Affected Systems are primarily Systems that are not critical to the material
operations of the Company and its subsidiaries. The Company has replaced several
of these Systems and is in the process of replacing others. All non-compliant
Systems will be replaced no later than the fourth quarter of fiscal 1999 (i.e.
the quarter ending March 31, 1999). In substantially all of the cases, the
replacement or upgrading of, or other changes to, the non-complaint Systems (i)
has occurred or will occur for reasons unrelated to the non-compliance of the
Systems and (ii) has not been accelerated as a result of the non-compliance of
such Systems.
The Company does not believe (i) that the non-compliant Systems
pose a material risk to the financial condition of the Company as a whole, or of
the individual operations or subsidiaries or operating divisions that currently
have non-compliant Systems or (ii) that the cost of replacing, upgrading or
otherwise changing the non-compliant Systems is material to the Company as a
whole, or to the individual subsidiaries or operations divisions. The Company
has used, and believes that it will be able to continue to use, internally
generated cash to fund the correction of Systems that are not compliant.
The Task Force is presently developing a Year 2000 contingency
plan. Additionally, in order to further confirm the Company's Year 2000
readiness, the Company has engaged the services of a third-party consulting firm
to evaluate its Year 2000 readiness. The Company believes that both the
contingency plan and the consulting firm's review will be completed during the
fourth quarter of fiscal 1999.
Because of its Year 2000 compliance program, the Company believes
that it is highly unlikely that any interruption to its operations resulting
from a compliance failure will have a material adverse effect on the Company's
operations or financial condition. Achieving Year 2000 compliance is dependent
on many factors, however, and some of these factors are not completely within
the Company's control. Although the Company, its subsidiaries and other business
divisions obtain information, materials and services from numerous sources and
provide goods and services to numerous customers, the failure of these
third parties (including U.S. government agencies) to achieve Year 2000
readiness may adversely impact the Company's operations.
The Company believes the most reasonably likely Year 2000 worst
case scenario would be the failure of some vendors and subcontractors to achieve
compliance, resulting in a slowdown of the Company's operations. The Company is
not aware of any vendors or subcontractors that are not Year 2000 compliant. In
order to address the potential non-compliance by third parties affecting the
Company's operations, the Company will continue to survey its largest customers,
subcontractors and vendors.
Year 2000 Forward-looking Statements
Certain statements in this section, other than historical
information, are "forward-looking" statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements involve risks and
uncertainties, including the Company's ability to assess and remediate any Year
2000 compliance issues, the ability
-15-
<PAGE> 19
of third parties to correct material non-compliant systems, and the Company's
assessment of the Year 2000 issue's impact on its financial results and
operations.
STOCK REPURCHASES
Since April 1998, the Company has repurchased 407,700 shares of
common stock under its stock-option-related repurchase program. The Company
intends to continue to repurchase shares under this program.
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. In addition,
CTX Mortgage Company has its own $1 billion of committed and $800 million of
uncommitted credit facilities to finance mortgages which are held during the
period in which they are being securitized and readied for delivery against
forward sale commitments. Centex Home Equity Corporation has its own $300
million credit facility to finance sub-prime mortgages held until
securitization.
The $339.4 million increase in debt was primarily used to fund the
increase in both residential mortgage loans and inventories. The increase in
residential mortgage loans is primarily due to an increase in mortgage
refinancing activity which is attributed to continuing favorable mortgage
interest rates.
The Company believes it has adequate resources and sufficient
credit facilities to satisfy its current needs and to provide for future growth.
OTHER DEVELOPMENTS AND OUTLOOK
Favorable interest rates and the strong national economy in recent
months have positively affected the Company's businesses. If interest rates and
general economic conditions remain at or near current levels, Centex's Home
Building and Financial Services' results could surpass fiscal 1998's performance
levels. Centex's other businesses also should continue to report improved
results, including CXP which is anticipated to have its fifth consecutive year
of improved earnings.
FORWARD-LOOKING STATEMENTS
The information contained in this Report includes forward-looking
statements involving a number of risks and uncertainties. Forward-looking
statements may be identified by the context of the statement and generally arise
when the Company is discussing its beliefs, estimates or expectations. In
addition to the factors discussed elsewhere in this document, other determinants
that could cause actual results to differ include increases in short- and/or
long-term interest rates or a change in the relationship between short- and
long-term interest rates; business conditions; growth in the home building,
investment real estate, financial services, construction products and
contracting and construction services industries in the local markets in which
the Company through its subsidiaries conducts business and in the economy in
general: competitive factors, governmental regulation and the cost and
availability of raw materials. These and other factors are described in the
Joint Annual Report on Form 10-K of Centex Corporation and 3333 Holding
Corporation and Centex Development Company, L.P., and in the Annual Report on
Form 10-K for Centex Construction Products, Inc., for the fiscal year ended
March 31, 1998. Both reports are filed with the Securities and Exchange
Commission.
-16-
<PAGE> 20
CENTEX CORPORATION
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On July 23, 1998, Centex held its Annual Meeting of Stockholders.
At the Annual Meeting, Clint W. Murchison, III, David W. Quinn and Paul T.
Stoffel were elected as directors to serve for a three-year term until the 2001
Annual Meeting. Voting results for these nominees are summarized as follows:
<TABLE>
<CAPTION>
Number of Shares
----------------------------------------------
For Against
------------------- ------------------
<S> <C> <C>
Clint W. Murchison, III 49,112,646 819,657
David W. Quinn 49,010,491 921,812
Paul T. Stoffel 49,112,710 819,593
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27.1 - Financial Data Schedule
(b) Reports on Form 8-K
The Registrant filed no reports on Form 8-K during the quarter
ended September 30, 1998.
All other items required under Part II are omitted because they are not
applicable.
-17-
<PAGE> 21
SIGNATURES
Pursuant to the requirements 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.
CENTEX CORPORATION
------------------------------------
Registrant
November 16, 1998 /s/ David W. Quinn
------------------------------------
David W. Quinn
Vice Chairman and
Chief Financial Officer
(principal financial officer)
November 16, 1998 /s/ Barry G. Wilson
------------------------------------
Bary G. Wilson
Controller
(chief accounting officer)
-18-
<PAGE> 22
3333 HOLDING CORPORATION
CENTEX DEVELOPMENT COMPANY, L.P.
PART I. FINANCIAL INFORMATION
CONDENSED COMBINING FINANCIAL STATEMENTS
ITEM 1.
The condensed combining financial statements include the accounts
of 3333 Holding Corporation and subsidiary and Centex Development Company, L.P.
(collectively the "Companies"), and have been prepared by the Companies, without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Companies believe that the disclosures are adequate to
make the information presented not misleading. It is suggested that these
condensed combining financial statements be read in conjunction with the
financial statements and the notes thereto included in the Companies' latest
Annual Report on Form 10-K. In the opinion of the Companies, all adjustments
necessary to present fairly the information in the following condensed financial
statements of the Companies have been included. The results of operations for
such interim periods are not necessarily indicative of the results for the full
year.
-19-
<PAGE> 23
3333 HOLDING CORPORATION AND SUBSIDIARY
AND CENTEX DEVELOPMENT COMPANY, L.P.
CONDENSED COMBINING STATEMENT OF OPERATIONS
(dollars in thousands, except per unit/share data)
(unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended September 30,
-----------------------------------------------------------------------------
1998 1997
------------------------------------ --------------------------------------
3333 HOLDING 3333 HOLDING
CENTEX CORPORATION CENTEX CORPORATION
DEVELOPMENT AND DEVELOPMENT AND
COMBINED COMPANY, L.P. SUBSIDIARY COMBINED COMPANY, L.P. SUBSIDIARY
-------- ------------- ------------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Revenues $ 7,772 $ 7,656 $ 281 $ 3,094 $ 3,002 $ 337
Costs and Expenses 7,397 7,028 534 2,746 2,642 349
-------- -------- -------- -------- -------- --------
Earnings (Loss) Before Income Taxes 375 628 (253) 348 360 (12)
Income Taxes -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
NET EARNINGS (LOSS) $ 375 $ 628 $ (253) $ 348 $ 360 $ (12)
======== ======== ======== ======== ======== ========
NET EARNINGS (LOSS) PER UNIT/SHARE $ 11.79 $ (253) $ 11.16 $ (12)
======== ======== ======== ========
WEIGHTED-AVERAGE
UNITS/SHARES OUTSTANDING 53,279 1,000 32,260 1,000
======== ======== ======== ========
</TABLE>
See notes to condensed combining financial statements.
-20-
<PAGE> 24
3333 HOLDING CORPORATION AND SUBSIDIARY
AND CENTEX DEVELOPMENT COMPANY, L.P.
CONDENSED COMBINING STATEMENT OF OPERATIONS
(dollars in thousands, except per unit/share data)
(unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended September 30,
----------------------------------------------------------------------------------------
1998 1997
------------------------------------------ ----------------------------------------
3333 HOLDING 3333 HOLDING
CENTEX CORPORATION CENTEX CORPORATION
DEVELOPMENT AND DEVELOPMENT AND
COMBINED COMPANY, L.P. SUBSIDIARY COMBINED COMPANY, L.P. SUBSIDIARY
------------ ------------- ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Revenues $ 14,080 $ 13,732 $ 757 $ 6,835 $ 6,625 $ 749
Costs and Expenses 14,051 13,297 1,163 5,696 5,566 669
------------ ------------- ------------- ------------ ------------- -------------
Earnings (Loss) Before Income Taxes 29 435 (406) 1,139 1,059 80
Income Taxes -- -- -- -- -- --
------------ ------------- ------------- ------------ ------------- -------------
NET EARNINGS (LOSS) $ 29 $ 435 $ (406) $ 1,139 $ 1,059 $ 80
============ ============= ============= ============ ============= =============
NET EARNINGS (LOSS) PER UNIT/SHARE $ 8.49 $ (406) $ 32.83 $ 80
============= ============= ============= =============
WEIGHTED-AVERAGE
UNITS/SHARES OUTSTANDING 51,210 1,000 32,260 1,000
============= ============= ============= =============
</TABLE>
See notes to condensed combining financial statements.
-21-
<PAGE> 25
3333 HOLDING CORPORATION AND SUBSIDIARY
AND CENTEX DEVELOPMENT COMPANY, L.P.
CONDENSED COMBINING BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
September 30, 1998* March 31, 1998**
--------------------------------------- -----------------------------------------
3333 HOLDING 3333 HOLDING
CENTEX CORPORATION CENTEX CORPORATION
DEVELOPMENT AND DEVELOPMENT AND
COMBINED COMPANY, L.P. SUBSIDIARY COMBINED COMPANY, L.P. SUBSIDIARY
---------- -------------- ------------ ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash $ 348 $ 308 $ 40 $ 260 $ 259 $ 1
Accounts Receivable 3,353 4,012 1,668 976 8,552 761
Notes Receivable -
Centex Corporation and Subsidiaries -- -- -- 7,700 -- 7,700
Other 5,172 5,172 -- 5,110 5,110 --
Investment in Affiliate -- -- 1,078 -- -- 849
Investment in Real Estate Joint Ventures 696 1,196 523 3,040 2,478 562
Commercial Properties, net 1,914 1,914 -- 1,946 1,946 --
Projects Under Development and
Held for Sale 75,882 73,827 1,032 41,265 40,815 450
Property and Equipment, net 186 37 149 88 -- 88
Other Assets 995 863 132 112 100 12
------- ------- ------- ------- ------- -------
$88,546 $87,329 $ 4,622 $60,497 $59,260 $10,423
======= ======= ======= ======= ======= =======
LIABILITIES, STOCKHOLDERS' EQUITY AND PARTNERS' CAPITAL
Accounts Payable and Accrued
Liabilities $ 8,837 $ 8,671 $ 2,493 $ 4,341 $ 4,370 $ 8,390
Notes Payable -
Centex Corporation and Subsidiaries 1,982 -- 1,982 1,480 -- 1,480
Bank Development Facilities 21,384 21,384 -- 13,821 13,821 --
------- ------- ------- ------- ------- -------
Total Liabilities 32,203 30,055 4,475 19,642 18,191 9,870
------- ------- ------- ------- ------- -------
Stockholders' Equity and
Partners' Capital 56,343 57,274 147 40,855 41,069 553
------- ------- ------- ------- ------- -------
$88,546 $87,329 $ 4,622 $60,497 $59,260 $10,423
======= ======= ======= ======= ======= =======
</TABLE>
* Unaudited
** Condensed from audited financial statements
See notes to condensed combining financial statements.
-22-
<PAGE> 26
3333 HOLDING CORPORATION AND SUBSIDIARY
AND CENTEX DEVELOPMENT COMPANY, L.P.
CONDENSED COMBINING STATEMENT OF CASH FLOWS
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended September 30,
-----------------------------------------------------------------------------------
1998 1997
--------------------------------------- -----------------------------------------
3333 HOLDING 3333 HOLDING
CENTEX CORPORATION CENTEX CORPORATION
DEVELOPMENT AND DEVELOPMENT AND
COMBINED COMPANY, L.P. SUBSIDIARY COMBINED COMPANY, L.P. SUBSIDIARY
---------- -------------- ------------ ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS - OPERATING ACTIVITIES
Net Earnings (Loss) $ 29 $ 435 $ (406) $ 1,139 $ 1,059 $ 80
Net Change in Payables, Accruals
and Receivables 2,119 8,923 (6,804) 233 (1,678) 1,911
(Increase) Decrease in Notes Receivable (62) (62) -- 903 903 --
Decrease in Advances to Joint Venture 2,344 1,282 39 116 116 --
(Increase) Decrease in Projects Under
Development and Held for Sale (20,158) (18,553) (582) 2,016 2,016 --
Decrease in Commercial Properties, net 32 32 -- -- -- --
Property and Equipment Additions, net (98) (37) (61) -- -- --
Increase in Other Assets (883) (763) (120) (100) (100) --
---------- ------------- ------------ ---------- -------------- -------------
(16,677) (8,743) (7,934) 4,307 2,316 1,991
---------- ------------- ------------ ---------- -------------- -------------
CASH FLOWS - FINANCING ACTIVITIES
Increase (Decrease) in Notes Payable -
Centex Corporation and Subsidiaries 502 -- 502 (1,994) -- (1,994)
Bank Development Facilities 7,563 7,563 -- 2,032 2,032 --
Decrease in Notes Receivable -
Centex Corporation and Subsidiaries 7,700 -- 7,700 -- -- --
Capital Contributions 1,000 1,229 (229) -- -- --
Capital Distributions -- -- -- (4,500) (4,500) --
---------- ------------- ------------ ---------- -------------- -------------
16,765 8,792 7,973 (4,462) (2,468) (1,994)
---------- ------------- ------------ ---------- -------------- -------------
NET INCREASE (DECREASE) IN CASH 88 49 39 (155) (152) (3)
CASH AT BEGINNING OF YEAR 260 259 1 630 625 5
---------- ------------- ------------ ---------- -------------- -------------
CASH AT END OF PERIOD $ 348 $ 308 $ 40 $ 475 $ 473 $ 2
========== ============= ============ ========== ============== =============
</TABLE>
See notes to condensed combining financial statements.
-23-
<PAGE> 27
3333 HOLDING CORPORATION AND SUBSIDIARY
AND CENTEX DEVELOPMENT COMPANY, L.P.
NOTES TO CONDENSED COMBINING FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
(unaudited)
(A) On November 30, 1987 Centex Corporation ("Centex") distributed to a
nominee all of the issued and outstanding shares of common stock of
3333 Holding Corporation ("Holding") and warrants to purchase
approximately 80% of the Class B units of limited partnership interest
in Centex Development Company, L.P. ("CDC" or the "Partnership"). 3333
Development Corporation ("Development"), a wholly-owned subsidiary of
Holding, serves as general partner of the Partnership. These securities
are held by the nominee on behalf of Centex stockholders and will trade
in tandem with the common stock of Centex until such time as they are
detached.
See Note (B) to the condensed consolidated financial statements of
Centex Corporation and subsidiaries included elsewhere in this Form
10-Q for supplementary condensed combined financial statements for
Centex Corporation and Subsidiaries, Holding and Subsidiary and the
Partnership.
(B) Holding entered into a services agreement in May 1987 with Centex
Service Company ("CSC"), a wholly-owned subsidiary of Centex, whereby
CSC provides certain tax, accounting and other similar services for
Holding at a fee of $2,500 per month. In April 1998, the service
agreement was amended to also include certain real estate development
and management services and the related fee was increased to $30,000
per month.
In connection with Holding's acquisition of additional shares of common
stock of Development in 1987, Holding borrowed $7.7 million from Centex
pursuant to a secured promissory note (the "Holding Note"). On May 29,
1998, the outstanding principal balance on the Holding Note was repaid.
The Holding Note, which had a fluctuating balance during April and May
1998, bore interest, payable quarterly, at the prime rate of interest
of NationsBank, N.A. plus 1%. Interest expense on the Holding Note
during the six months ended September 30, 1998 totaled $62,000.
In 1987, Development loaned $7.7 million to a wholly-owned subsidiary
of Centex pursuant to an unsecured promissory note and related loan
agreement. The note bore interest, payable quarterly, at the prime rate
of interest of NationsBank, N.A. plus 7/8%. On May 29, 1998, the
outstanding principal balance on the note was repaid. Interest income
on the note totaled $116,000 for the six months ended September 30,
1998.
CDC sells lots to Centex Homes pursuant to certain purchase and sale
agreements. Revenues from these sales totaled $883,000 and $ 2.8
million for the quarter and six months ended September 30, 1998, and
$41,000 and $635,000 for the quarter and six months ended September 30,
1997, respectively. Additionally, during the six months ended September
30, 1997, the Partnership sold property located in Carrollton, Texas to
Centex Homes for $2.9 million.
During fiscal year 1998, Centex Multi-Family Company, L.P.
("Multi-Family"), a subsidiary of CDC, executed a construction contract
with one of Centex's construction subsidiaries in the amount of $13.2
million for the construction of a 304-unit apartment project north of
Dallas in The Colony, Texas. Also, during the current fiscal year,
Centex Office Southpointe I, L.P., a subsidiary of CDC, executed a
-24-
<PAGE> 28
construction contract with one of Centex's construction subsidiaries in
the amount of $9.4 million for the construction of a 140,000 square
foot office building in Plantation, Florida, near Ft. Lauderdale.
In April 1998, CDC acquired a 49% equity interest in an entity which
purchased real estate assets from a Centex subsidiary for $3.1 million.
(C) During fiscal year 1998, the partnership agreement governing CDC was
amended to allow for the issuance of a new class of limited partnership
units, Class C Preferred Partnership Units ("Class C Units"), to be
issued in exchange for assets contributed by a limited partner, or by
an individual or entity who is to be admitted as a limited partner.
During the six months ended September 30, 1998, Centex Homes, CDC's
sole limited partner, contributed assets valued at $15.5 million in
exchange for 15,459 Class C Units.
(D) A summary of changes in stockholders' equity and partners' capital is
presented below (dollars in thousands):
<TABLE>
<CAPTION>
For the Six Months Ended September 30, 1998
------------------------------------------------------------------------------------
3333 Holding Corporation
Centex Development Company, L.P. and Subsidiary
-------------------------------------- ---------------------------------
CLASS B GENERAL LIMITED CAPITAL IN
UNITS PARTNERS' PARTNER'S STOCK EXCESS OF RETAINED
COMBINED WARRANTS CAPITAL CAPITAL WARRANTS PAR VALUE EARNINGS
----------- ------------ ------------ ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at March 31, 1998 $ 40,855 $ 500 $ 767 39,802 $ 1 $ 800 $ (248)
Capital Contributions 15,459 -- 311 15,459 -- -- --
Net Earnings 29 -- -- 435 -- -- (406)
----------- ------------ ------------ ----------- ---------- ----------- ----------
BALANCE AT SEPTEMBER 30, 1998 $ 56,343 $ 500 $ 1,078 $ 55,696 $ 1 $ 800 $ (654)
=========== ============ ============ =========== ========== =========== ==========
</TABLE>
The Partnership agreement provides that Class A and Class C limited
partners are entitled to a cumulative preferred return of 9% per annum
on the average outstanding balance of their Unrecovered Capital.
Unrecovered Capital represents initial capital contributions as reduced
by repayments and is the basis for preference accruals. No preference
payments were made during the three months or six months ended
September 30, 1998. Preference payments in arrears at September 30,
1998 for Class A and Class C limited partners amounted to $5.7 million
and $855,000, respectively, and Unrecovered Capital for Class A and
Class C limited partners aggregated approximately $55.8 million.
-25-
<PAGE> 29
3333 HOLDING CORPORATION AND SUBSIDIARY
AND CENTEX DEVELOPMENT COMPANY, L.P.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
On a combined basis, revenues for the quarter and six months ended
September 30, 1998 totaled $7.8 million and $14.1 million, respectively.
Revenues of $3.1 million and $6.8 million for the quarter and six months ended
September 30, 1997, respectively, included the results from the sale of
commercial property in Texas and residential property in Florida.
The Companies had combined net earnings for the quarter and six
months ended September 30, 1998 of $375,000 and $29,000, respectively, compared
to combined net earnings of $348,000 and $1.1 million for the quarter and six
months ended September 30, 1997, respectively. Margins on real estate sales for
the six months ended September 30, 1998 were 2.4% versus 19.1% for the six
months ended September 30, 1997.
YEAR 2000 COMPLIANCE
The Companies have a variety of operating systems, computer
software applications, computer hardware equipment and other equipment with
embedded electronic circuits. Pursuant to the services agreement Holding has
with CSC, Year 2000 compliance issues are being addressed by a Year 2000 Task
Force Team comprised of members of the information systems, accounting,
financial planning, legal and internal audit departments of Centex as well as by
management of the Companies. Since fiscal year 1997, the Companies have been
engaged in an ongoing process of identifying, evaluating and implementing
changes to their systems in order to ensure Year 2000 compliance. As a result of
this process, a small number of systems were identified as being unable to
interpret dates after December 31, 1999. In all of the cases, the replacement or
upgrading of the non-compliant systems has already occurred as part of their
normal ongoing systems updating.
The Companies have engaged the services of a third-party
consulting firm to evaluate their Year 2000 readiness. It is anticipated that
the evaluation will be concluded during the March 1999 quarter.
Achieving Year 2000 compliance is dependent on many factors, some
of which are not completely within the Companies' control. The Companies obtain
information, materials and services from numerous sources and provide goods and
services to numerous customers. The failure of these third parties (including
U.S., state and local governments and agencies) to achieve Year 2000 readiness
could adversely affect the Companies' financial condition and results of
operations. In order to address the potential non-compliance by third parties,
the Companies will continue to survey their largest customers, contractors and
vendors, asking them to respond with their Year 2000 plans.
Year 2000 Forward-looking Statements
Certain statements in this section, other than historical
information, are "forward-looking" statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements involve risks and
uncertainties, including the Companies' ability to assess and remediate any Year
2000 compliance issues,
-26-
<PAGE> 30
the ability of third parties to correct material non-compliant systems, and the
Companies' assessment of the Year 2000 issue's impact on their financial results
and operations.
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended September 30, 1998, 15,459 Class C
Preferred Partnership Units were issued in exchange for assets valued at $15.5
million. The revenues, earnings and liquidity of the Companies for the next 12
to 18 months will be largely dependent on future real estate and home sales, the
timing of which are uncertain. Commercial development operations have recently
been initiated and are not anticipated to provide a significant source of
earnings or liquidity for approximately 18 months.
The Companies believe that they will be able to provide or obtain
the necessary funding for their current operations and future expansion needs.
The ability of the Partnership to obtain external debt or equity capital is
subject to the partnership agreement (as amended) governing the Partnership.
FORWARD-LOOKING STATEMENTS
The information contained in this Report includes forward-looking
statements involving a number of risks and uncertainties. Forward-looking
statements may be identified by the context of the statement and generally arise
when the Companies are discussing their beliefs, estimates or expectations. In
addition to the factors discussed elsewhere in this document, other determinants
that could cause actual results to differ include increases in short- and/or
long-term interest rates or a change in the relationship between short- and
long-term interest rates; business conditions; growth in the investment real
estate industry in the local markets in which the Companies conduct business and
in the economy in general: competitive factors, and governmental regulation.
These and other factors are described in the Joint Annual Report on Form 10-K of
Centex Corporation and 3333 Holding Corporation and Centex Development, L.P. for
the fiscal year ended March 31, 1998 which is filed with the Securities and
Exchange Commission.
-27-
<PAGE> 31
3333 HOLDING CORPORATION
CENTEX DEVELOPMENT COMPANY, L.P.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On July 23, 1998, 3333 Holding Corporation held its Annual Meeting
of Stockholders. At the Annual Meeting, Richard C. Decker, Josiah O. Low, III
and David M. Sherer were elected as directors to serve until the next annual
election. Voting results for these nominees are summarized as follows:
<TABLE>
<CAPTION>
Number of Shares
----------------------------------------
For Against
---------------- ------------
<S> <C> <C>
Richard C. Decker 790 16
Josiah O. Low, III 792 14
David M. Sherer 792 14
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27.2 - Financial Data Schedule
Exhibit 27.3 - Financial Data Schedule
(b) Reports on Form 8-K
The Registrant filed no reports on Form 8-K during the quarter
ended September 30, 1998.
All other items required under Part II are omitted because they are not
applicable.
-28-
<PAGE> 32
Signatures
Pursuant to the requirements 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.
3333 HOLDING CORPORATION
---------------------------------------------
Registrant
November 16, 1998 /s/ Richard C. Decker
---------------------------------------------
Richard C. Decker
President and Chief Executive Officer
(principal executive officer)
November 16, 1998 /s/ Kimberly A. Pinson
---------------------------------------------
Kimberly A. Pinson
Vice President, Treasurer and Controller
(principal financial officer
and chief accounting officer)
-29-
<PAGE> 33
Signatures
Pursuant to the requirements 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.
CENTEX DEVELOPMENT COMPANY, L.P.
-----------------------------------------------
Registrant
By: 3333 Development Corporation,
General Partner
November 16, 1998 /s/ Richard C. Decker
-----------------------------------------------
Richard C. Decker
President and Chief Executive Officer
(principal executive officer)
November 16, 1998 /s/ Kimberly A. Pinson
-----------------------------------------------
Kimberly A. Pinson
Vice President, Treasurer and Controller
(principal financial officer
and chief accounting officer)
-30-
<PAGE> 34
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No Description
- ------------ ----------------------------------------------------------
<S> <C>
Exhibit 27.1 Financial Data Schedule - Centex Corporation
Exhibit 27.2 Financial Data Schedule - 3333 Holding Corporation
Exhibit 27.3 Financial Data Schedule - Centex Development Company, L.P.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CENTEX
CORPORATION'S SEPTEMBER 30, 1998, FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000018532
<NAME> CENTEX CORP.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 94,151
<SECURITIES> 0
<RECEIVABLES> 1,770,612
<ALLOWANCES> 0
<INVENTORY> 1,301,618
<CURRENT-ASSETS> 0
<PP&E> 525,053
<DEPRECIATION> 231,912
<TOTAL-ASSETS> 3,946,437
<CURRENT-LIABILITIES> 0
<BONDS> 209,097
0
0
<COMMON> 14,878
<OTHER-SE> 1,067,711
<TOTAL-LIABILITY-AND-EQUITY> 3,946,437
<SALES> 2,353,688
<TOTAL-REVENUES> 2,353,688
<CGS> 2,127,842
<TOTAL-COSTS> 2,127,842
<OTHER-EXPENSES> 40,523
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,235
<INCOME-PRETAX> 167,088
<INCOME-TAX> 62,364
<INCOME-CONTINUING> 104,724
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 104,724
<EPS-PRIMARY> 1.76
<EPS-DILUTED> 1.69
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 3333 HOLDING
CORPORATION'S SEPTEMBER 30, 1998, FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000818762
<NAME> 3333 HOLDING CORP.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 40
<SECURITIES> 0
<RECEIVABLES> 1,668
<ALLOWANCES> 0
<INVENTORY> 1,032
<CURRENT-ASSETS> 0
<PP&E> 183
<DEPRECIATION> 34
<TOTAL-ASSETS> 4,622
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> 146
<TOTAL-LIABILITY-AND-EQUITY> 4,622
<SALES> 757
<TOTAL-REVENUES> 757
<CGS> 1,163
<TOTAL-COSTS> 1,163
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (406)
<INCOME-TAX> 0
<INCOME-CONTINUING> (406)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (406)
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CENTEX
DEVELOPMENT COMPANY, L.P.'S SEPTEMBER 30, 1998, FORM 10-Q AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000818764
<NAME> CENTEX DEVELOPMENT CO LP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 308
<SECURITIES> 0
<RECEIVABLES> 4,012
<ALLOWANCES> 0
<INVENTORY> 75,741
<CURRENT-ASSETS> 0
<PP&E> 169
<DEPRECIATION> 132
<TOTAL-ASSETS> 87,329
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 500
<OTHER-SE> 56,774
<TOTAL-LIABILITY-AND-EQUITY> 87,329
<SALES> 13,732
<TOTAL-REVENUES> 13,732
<CGS> 13,297
<TOTAL-COSTS> 13,297
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 435
<INCOME-TAX> 0
<INCOME-CONTINUING> 435
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 435
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
