<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
DECEMBER 31, 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 January 29, 1999:
<TABLE>
<S> <C> <C>
Centex Corporation Common Stock 59,488,014 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 26,987 units
</TABLE>
<PAGE> 2
CENTEX CORPORATION
3333 HOLDING CORPORATION
CENTEX DEVELOPMENT COMPANY, L.P.
Form 10-Q Table of Contents
December 31, 1998
CENTEX CORPORATION
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. Condensed Consolidated Financial Statements 1
Condensed Consolidated Statement of Earnings
for the Three Months Ended December 31, 1998 2
Condensed Consolidated Statement of Earnings
for the Nine Months Ended December 31, 1998 3
Condensed Consolidated Balance Sheets 4
Condensed Consolidated Statement of Cash Flows
for the Nine Months Ended December 31, 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 - 17
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 18
SIGNATURES 19
</TABLE>
-i-
<PAGE> 3
3333 HOLDING CORPORATION
CENTEX DEVELOPMENT COMPANY, L.P.
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. Condensed Combining Financial Statements 21
Condensed Combining Statement of Operations
for the Three Months Ended December 31, 1998 22
Condensed Combining Statement of Operations
for the Nine Months Ended December 31, 1998 23
Condensed Combining Balance Sheets 24
Condensed Combining Statement of Cash Flows
for the Nine Months Ended December 31, 1998 25
Notes to Condensed Combining Financial Statements 26 - 27
ITEM 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition 28 - 29
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 30
SIGNATURES 31 - 32
</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
December 31,
-----------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
REVENUES
Home Building
Conventional Homes $ 671,404 $ 557,484
Manufactured Homes 39,819 38,239
Investment Real Estate 8,566 6,088
Financial Services 116,234 64,604
Construction Products 84,863 70,510
Contracting and Construction Services 335,200 246,158
--------------- ---------------
1,256,086 983,083
--------------- ---------------
COSTS AND EXPENSES
Home Building
Conventional Homes 613,305 515,194
Manufactured Homes 36,345 34,768
Investment Real Estate 196 (986)
Financial Services 92,085 56,097
Construction Products 53,314 49,811
Contracting and Construction Services 331,511 243,652
Other, net 2,844 2,025
Corporate General and Administrative 7,084 5,014
Interest Expense 10,929 8,293
Minority Interest 13,839 10,292
--------------- ---------------
1,161,452 924,160
--------------- ---------------
EARNINGS BEFORE INCOME TAXES 94,634 58,923
Income Taxes 35,591 21,543
--------------- ---------------
NET EARNINGS $ 59,043 $ 37,380
=============== ===============
EARNINGS PER SHARE
Basic $ 0.99 $ 0.63
=============== ===============
Diluted $ 0.96 $ 0.61
=============== ===============
AVERAGE SHARES OUTSTANDING
Basic 59,410,876 59,366,822
Common Share Equivalents
Options 1,851,083 1,992,650
Convertible Debenture 400,000 400,000
--------------- ---------------
Diluted 61,661,959 61,759,472
=============== ===============
CASH DIVIDENDS PER SHARE $ 0.04 $ 0.04
=============== ===============
</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 Nine Months Ended
December 31,
------------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
REVENUES
Home Building
Conventional Homes $ 1,881,586 $ 1,605,169
Manufactured Homes 130,748 103,727
Investment Real Estate 17,479 18,199
Financial Services 324,133 169,141
Construction Products 256,485 231,876
Contracting and Construction Services 999,343 708,092
--------------- ---------------
3,609,774 2,836,204
--------------- ---------------
COSTS AND EXPENSES
Home Building
Conventional Homes 1,730,613 1,493,910
Manufactured Homes 120,522 95,200
Investment Real Estate (4,752) (3,643)
Financial Services 252,508 147,866
Construction Products 163,007 160,066
Contracting and Construction Services 987,939 703,384
Other, net 7,605 4,945
Corporate General and Administrative 19,195 14,278
Interest Expense 29,164 24,818
Minority Interest 42,251 35,343
--------------- ---------------
3,348,052 2,676,167
--------------- ---------------
EARNINGS BEFORE INCOME TAXES 261,722 160,037
Income Taxes 97,955 59,256
--------------- ---------------
NET EARNINGS $ 163,767 $ 100,781
=============== ===============
EARNINGS PER SHARE
Basic $ 2.75 $ 1.71
=============== ===============
Diluted $ 2.65 $ 1.65
=============== ===============
AVERAGE SHARES OUTSTANDING
Basic 59,496,866 58,854,384
Common Share Equivalents
Options 1,991,600 1,794,009
Convertible Debenture 400,000 400,000
--------------- ---------------
Diluted 61,888,466 61,048,393
=============== ===============
CASH DIVIDENDS PER SHARE $ 0.12 $ 0.095
=============== ===============
</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
------------------------- ------------------------- -------------------------
December 31, March 31, December 31, March 31, December 31, March 31,
1998* 1998** 1998* 1998** 1998* 1998**
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and Cash Equivalents $ 111,839 $ 98,316 $ 86,006 $ 87,491 $ 25,833 $ 10,825
Receivables -
Residential Mortgage Loans 1,479,171 1,191,450 -- -- 1,479,171 1,191,450
Other 422,665 390,891 350,117 337,558 72,548 53,333
Affiliates -- -- -- -- (74,973) (58,299)
Inventories 1,541,106 1,064,554 1,541,106 1,064,554 -- --
Investments -
Centex Development Company, L. P. 63,984 34,526 63,984 34,526 -- --
Joint Ventures and Other 40,265 7,558 40,265 7,558 -- --
Unconsolidated Subsidiaries -- -- 181,422 146,592 -- --
Property and Equipment, net 301,250 295,992 277,187 276,008 24,063 19,984
Other Assets -
Deferred Income Taxes 103,603 147,607 90,785 144,090 12,818 3,517
Goodwill, net 218,683 133,847 201,270 123,709 17,413 10,138
Mortgage Securitization Residual Interest 60,100 14,747 -- -- 60,100 14,747
Deferred Charges and Other 50,618 36,731 33,437 23,730 17,181 13,001
----------- ----------- ----------- ----------- ----------- -----------
$ 4,393,284 $ 3,416,219 $ 2,865,579 $ 2,245,816 $ 1,634,154 $ 1,258,696
=========== =========== =========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable and Accrued Liabilities $ 931,512 $ 799,154 $ 846,492 $ 711,564 $ 85,020 $ 87,590
Short-term Debt 1,822,647 1,152,873 385,276 73,823 1,437,371 1,079,050
Long-term Debt 284,151 237,715 284,151 237,715 -- --
Minority Stockholders' Interest 147,671 152,468 142,357 148,705 5,314 3,763
Negative Goodwill 70,837 82,837 70,837 82,837 -- --
Stockholders' Equity -
Preferred Stock, Authorized 5,000,000 -- -- -- -- -- --
Shares, None Issued
Common Stock $.25 Par Value; Authorized 14,867 14,883 14,867 14,883 1 1
100,000,000 Shares; Issued and Outstanding
59,466,599 and 59,531,758 respectively
Capital in Excess of Par Value 25,447 36,761 25,447 36,761 75,944 74,944
Retained Earnings 1,096,152 939,528 1,096,152 939,528 30,504 13,348
----------- ----------- ----------- ----------- ----------- -----------
Total Stockholders' Equity 1,136,466 991,172 1,136,466 991,172 106,449 88,293
----------- ----------- ----------- ----------- ----------- -----------
$ 4,393,284 $ 3,416,219 $ 2,865,579 $ 2,245,816 $ 1,634,154 $ 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 Nine Months Ended
December 31,
------------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
CASH FLOWS - OPERATING ACTIVITIES
Net Earnings $ 163,767 $ 100,781
Adjustments -
Depreciation, Depletion and Amortization 27,180 18,265
Deferred Income Taxes 42,814 38,986
Equity in Loss (Earnings) of CDC and Joint Ventures 396 (3,742)
Minority Interest 42,251 35,343
--------------- ---------------
276,408 189,633
(Increase) Decrease in Receivables (31,774) 7,525
Increase in Residential Mortgage Loans (287,721) (192,543)
Increase in Inventories (476,552) (151,120)
Increase (Decrease) in Payables and Accruals 132,358 (34,606)
Increase in Other Assets (152,488) (25,272)
Other, net (47,048) (32,684)
--------------- ---------------
(586,817) (239,067)
--------------- ---------------
CASH FLOWS - INVESTING ACTIVITIES
(Increase) Decrease in Investments (62,561) 7,344
Property and Equipment Additions, net (34,836) (33,594)
--------------- ---------------
(97,397) (26,250)
--------------- ---------------
CASH FLOWS - FINANCING ACTIVITIES
Increase in Debt
Secured by Residential Mortgage Loans 358,321 218,739
Other 357,889 93,914
Proceeds from Stock Option Exercises 7,719 16,455
Retirement of Common Stock (19,049) --
Dividends Paid (7,143) (5,612)
--------------- ---------------
697,737 323,496
--------------- ---------------
NET INCREASE IN CASH 13,523 58,179
CASH AT BEGINNING OF PERIOD 98,316 31,320
--------------- ---------------
CASH AT END OF PERIOD $ 111,839 $ 89,499
=============== ===============
</TABLE>
See notes to condensed consolidated financial statements.
-5-
<PAGE> 9
CENTEX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 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 -- -- -- 163,767 163,767
Exercise of Stock Options -- 120 7,599 -- 7,719
Retirement of 545,400 Shares -- (136) (18,913) -- (19,049)
Cash Dividends -- -- -- (7,143) (7,143)
------------- ------------- ------------- ------------- -------------
BALANCE, DECEMBER 31, 1998 $ -- $ 14,867 $ 25,447 $ 1,096,152 $ 1,136,466
============= ============= ============= ============= =============
</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>
December 31, March 31,
1998 1998 *
--------------- ---------------
<S> <C> <C>
ASSETS
Cash and Cash Equivalents $ 112,771 $ 98,576
Receivables 1,907,000 1,588,247
Inventories 1,635,148 1,107,941
Investments in Joint Ventures and Other 40,433 10,598
Property and Equipment, net 301,508 296,080
Other Assets 434,024 333,044
--------------- ---------------
$ 4,430,884 $ 3,434,486
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable and Accrued Liabilities $ 940,132 $ 802,547
Short-term Debt 1,851,358 1,166,694
Long-term Debt 284,151 237,715
Minority Stockholders' Interest 147,671 152,468
Negative Goodwill 70,837 82,837
Stockholders' Equity 1,136,735 992,225
--------------- ---------------
$ 4,430,884 $ 3,434,486
=============== ===============
</TABLE>
*Condensed from audited financial statements.
SUPPLEMENTARY CONDENSED COMBINED STATEMENT OF EARNINGS
(dollars in thousands)
<TABLE>
<CAPTION>
For the Nine Months Ended
December 31,
-----------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
Revenues $ 3,626,072 $ 2,847,726
Costs and Expenses 3,365,134 2,687,629
--------------- ---------------
Earnings Before Income Taxes 260,938 160,097
Income Taxes 97,955 59,256
--------------- ---------------
NET EARNINGS $ 162,983 $ 100,841
=============== ===============
</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 $37 million as of
December 31, 1998 for options to purchase undeveloped land and developed
lots having a total purchase price of approximately $777 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 $10 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 Nine Months Ended
December 31,
-------------------------------------
1998 1997
---------------- ----------------
<S> <C> <C>
Total Interest Incurred $ 89,447 $ 56,491
Less - Financial Services (60,283) (31,673)
---------------- ----------------
Interest Expense $ 29,164 $ 24,818
================ ================
</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 59.2% as of December 31, 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 has 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, are computed based upon basic plus the dilution of the stock
options and the convertible debenture.
-8-
<PAGE> 12
Notes - continued
Options to purchase approximately two million shares of common stock at
approximately $38.60 per share (expiring in April 2008) were outstanding
during the nine months ended December 31, 1998 but were not included in
the computation of diluted earnings per share because they were
anti-dilutive.
(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 these financial statements.
-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 $1.26 billion,
a 28% increase over $983.1 million for the same quarter last year. Earnings
before income taxes were $94.6 million, 61% higher than $58.9 million last year.
Net earnings were $59.0 million and diluted earnings per share were $.96 for
this quarter compared to $37.4 million and $.61, respectively, for the same
quarter last year.
For the nine months ended December 31, 1998, corporate revenues
totaled $3.61 billion, 27% higher than $2.84 billion for the same period last
year. Earnings before income taxes were $261.7 million, 64% higher than $160.0
million for the same period last year. Net earnings were $163.8 million and
diluted earnings per share were $2.65 for the nine months ended December 31,
1998 compared to $100.8 million and $1.65, respectively, for the nine months
ended December 31, 1997.
Net earnings for both the quarter and the nine months ended
December 31, 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 December 31, 1998 compared to the quarter
and fiscal year-to-date ended December 31, 1997 (dollars in millions, except per
unit data):
<TABLE>
<CAPTION>
Quarter Ended Quarter Ended
12/31/98 12/31/97
------------------------------ -----------------------------
<S> <C> <C> <C> <C>
Conventional Homes Revenues $ 671.4 100.0% $ 557.5 100.0%
Cost of Sales (518.9) (77.3%) (441.9) (79.3%)
Selling, General & Administrative (94.4) (14.1%) (73.3) (13.1%)
-------------- -------------- --------------- ------------
Operating Earnings $ 58.1 8.6% $ 42.3 7.6%
============== ============== =============== ============
Units Closed 3,601 3,025
% Change 19.0% (6.2%)
Unit Sales Price $ 183,522 $ 181,266
% Change 1.2% 5.1%
Operating Earnings per Unit $ 16,134 $ 13,980
% Change 15.4% 22.4%
</TABLE>
-10-
<PAGE> 14
<TABLE>
<CAPTION>
Fiscal Fiscal
Year-to-Date Year-to-Date
12/31/98 12/31/97
------------------------------ -----------------------------
<S> <C> <C> <C> <C>
Conventional Homes Revenues $ 1,881.6 100.0% $ 1,605.2 100.0%
Cost of Sales (1,464.3) (77.8%) (1,278.6) (79.7%)
Selling, General & Administrative (266.3) (14.2%) (215.3) (13.4%)
------------- ------------- --------------- -----------
Operating Earnings $ 151.0 8.0% $ 111.3 6.9%
============= ============= =============== ===========
Units Closed 10,050 8,709
% Change 15.4% (11.4%)
Unit Sales Price $ 184,113 $ 181,716
% Change 1.3% 7.0%
Operating Earnings per Unit $ 15,022 $ 12,775
% Change 17.6% 20.8%
</TABLE>
Home sales (orders) were 3,610 for the quarter this year compared
to 2,591 units for the same quarter a year ago. Home sales (orders) were 10,816
for the nine months this year compared to last year's 8,824 units. The backlog
of homes sold but not closed at December 31, 1998 was 6,419 units, including 214
units related to the newly acquired Calton Homes operation, 45% higher than
4,423 units at December 31, 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 December 31, 1998 compared to the quarter
and fiscal year-to-date ended December 31, 1997 (dollars in thousands):
<TABLE>
<CAPTION>
Quarter Ended Quarter Ended
12/31/98 12/31/97
---------------------------- -----------------------------
<S> <C> <C> <C> <C>
Manufactured Homes Revenues (Construction) $ 29,548 100.0% $ 38,239 100.0%
Cost of Sales (22,532) (76.3%) (30,967) (81.0%)
Selling, General & Administrative (2,791) (9.4%) (3,228) (8.4%)
--------------- ----------- -------------- ------------
Earnings Before Goodwill & Minority Interest (Construction) 4,225 14.3% 4,044 10.6%
======== ============
Earnings Before Goodwill & Minority Interest (Retail) 38 --
--------------- -------------
Total Earnings Before Goodwill & Minority Interest 4,263 4,044
Goodwill Amortization (789) (573)
Minority Interest (640) (742)
--------------- -------------
Operating Earnings $ 2,834 $ 2,729
=============== =============
Units Produced 1,625 1,601
Units Sold - Retail 247 --
Less: Intersegment Sales (239) --
--------------- ---------------
Units Sold 1,633 1,601
=============== ===============
</TABLE>
-11-
<PAGE> 15
<TABLE>
<CAPTION>
Fiscal Fiscal
Year-To-Date Year-To-Date
12/31/98 12/31/97
----------------------------- --------------------------
<S> <C> <C> <C> <C>
Manufactured Homes Revenues (Construction) $ 101,575 100.0% $ 103,727 100.0%
Cost of Sales (79,177) (77.9%) (83,387) (80.4%)
Selling, General & Administrative (10,021) (9.9%) (10,094) (9.7%)
-------------- --------- ------------ ----------
Earnings Before Goodwill & Minority Interest (Construction) 12,377 12.2% 10,246 9.9%
========= ==========
Earnings Before Goodwill & Minority Interest (Retail) 258 --
-------------- ------------
Total Earnings 12,635 10,246
Goodwill Amortization (2,409) (1,719)
Minority Interest (1,994) (2,042)
-------------- ------------
Operating Earnings $ 8,232 $ 6,485
============== ============
Units Produced 4,670 4,219
Units Sold - Retail 696 --
Less: Intersegment Sales (586) --
-------------- ------------
Units Sold 4,780 4,219
============== ============
</TABLE>
INVESTMENT REAL ESTATE
For the quarter ended December 31, 1998, Centex's Investment Real
Estate operation, through which all investment property transactions are
reported, had operating earnings of $8.4 million, 18% higher than $7.1 million
for the same quarter a year ago.
For the current nine months, operating earnings from Investment
Real Estate were $22.2 million, a 2% increase from $21.8 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 December 31, 1998 compared to the quarter
and fiscal year-to-date ended December 31, 1997 (dollars in millions):
<TABLE>
<CAPTION>
Fiscal Fiscal
Quarter Ended Quarter Ended Year-to-Date Year-to-Date
12/31/98 12/31/97 12/31/98 12/31/97
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Revenues $ 116.2 $ 64.6 $ 324.1 $ 169.1
Operating Earnings $ 24.1 $ 8.5 $ 71.6 $ 21.3
Origination Volume $ 3,096 $ 1,744 $ 8,368 $ 4,836
% Change 78% 33% 73% 18%
Number of Loans Originated
CTX Mortgage Company ("CTX") -
Centex-built Homes ("Builder") 2,308 2,127 6,728 6,085
Non-Centex Homes ("Retail") 19,117 10,426 51,450 30,258
--------------- --------------- --------------- ---------------
21,425 12,553 58,178 36,343
Centex Home Equity Corporation
("CHEC") 4,032 2,341 11,341 5,161
Centex Finance Company 255 -- 610 --
--------------- --------------- --------------- ---------------
25,712 14,894 70,129 41,504
=============== =============== =============== ===============
% Change 73% 27% 69% 16%
</TABLE>
CTX's Builder applications for the quarter of 2,452 increased 23%
over last year while Retail applications rose 80% to 18,046. CTX's Builder
applications of 7,695 for the nine-month period were 18% higher than a year ago.
Retail applications for the nine months increased 65% from 30,626 a year ago to
50,676. The profit per loan of $1,139 for this year's quarter was a 35% increase
over last year's per loan profit of $841. For the nine-month period, the profit
per loan increased 59% 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 22,746 sub-prime loan applications for the quarter,
an increase of 198% compared to the same quarter a year ago. CHEC applications
for the nine months rose 234% to 54,433.
The recently opened manufactured-home finance unit, Centex Finance
Company, incurred net start-up costs of approximately $700,000 and $1.8 million
for the quarter and nine months ended December 31, 1998, respectively.
CONSTRUCTION PRODUCTS
Revenues from CXP were $84.9 million for the quarter this year,
20% higher than last year. CXP's operating earnings, net of minority interest,
were $18.3 million for the quarter this year, 63% higher than last year's
earnings. CXP's revenues for the current nine months were $256.5 million, 11%
-13-
<PAGE> 17
higher than last year. CXP's operating earnings, net of minority interest, were
$53.2 million, a 38% improvement over results for the same period a year ago.
CXP's record operating earnings resulted from improved results in
each of its businesses as pricing and sales volumes improved for every product
line.
CONTRACTING AND CONSTRUCTION SERVICES
The following summarizes Contracting and Construction Services
results for the quarter and fiscal year-to-date ended December 31, 1998 compared
to the quarter and fiscal year-to-date ended December 31, 1997 (dollars in
millions):
<TABLE>
<CAPTION>
Quarter Quarter Fiscal Fiscal
Ended Ended Year-to-Date Year-to-Date
12/31/98 12/31/97 12/31/98 12/31/97
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 335.2 $ 246.2 $ 999.3 $ 708.1
Operating Earnings $ 3.7 $ 2.5 $ 11.4 $ 4.7
New Contracts Received $ 298 $ 122 $ 1,022 $ 613
Backlog of Uncompleted Contracts $ 1,182 $ 1,019 $ 1,182 $ 1,019
</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. The 4th District Court of Appeals affirmed the $14.2 million
judgment, and Rooney filed an appeal with 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 was recently affirmed in
large part (and reversed in small part) rendering Rooney liable for
approximately $3.1 million. 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, and settlements are underway.
While there is no assurance that Rooney will recover from its subcontractors,
their insurance carriers, and its own 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 created a Year
2000 Task Force to oversee the Company's Year 2000 compliance. The Task Force,
consisting of members of the Company's management and 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 surveys indicated 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 and its subsidiaries have 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-compliant 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 currently developing its 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 contingency plan and the consulting
firm's review will be completed by mid 1999.
As a result of the Company's 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 and its
subsidiaries 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 likely Year 2000 worst-case scenario
would be the failure of some vendors, subcontractors or other third parties to
achieve compliance, resulting in a slowdown of the Company's operations. The
Company is not aware of any such third parties that are not Year 2000
-15-
<PAGE> 19
compliant. In order to address the potential non-compliance of 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 relative to the Company's ability to assess and remediate any Year
2000 compliance issues, the ability 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 545,400 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 $1.2 billion of
uncommitted credit facilities to finance mortgages that are held during the
period they are being securitized and readied for delivery against forward sale
commitments. Centex Home Equity Corporation has its own $300 million of
committed and $110 million of uncommitted credit facilities to finance sub-prime
mortgages held until securitization.
The $716.2 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
On December 31, 1998, Centex Real Estate Corporation, the home
building subsidiary of Centex Corporation, purchased Calton Homes, Inc., the
wholly-owned single-family home building subsidiary of Calton, Inc., for $48.1
million in cash and the assumption of about $20.5 million of bank debt. In
addition, Calton agreed to provide consulting services to Centex Homes over a
three-year period for $1.3 million annually. Calton Homes builds and sells
single-family homes in central New Jersey. During its fiscal year ended November
30, 1997 Calton Homes delivered 226 homes at an average sales price of $277,000.
Calton Homes' customers include second and third-time move-up as well as "active
adult" home buyers. Management believes this acquisition will substantially
increase the Company's presence in New Jersey and that Calton Homes' strong
management team will help expand Centex's operations in the Northeast.
-16-
<PAGE> 20
Also during the quarter, Centex announced the formation of a new
subsidiary, Centex Latin America, Inc., which will pursue investments with
companies operating in Mexico and in other Latin American markets, including
Argentina, Brazil and Chile.
Favorable interest rates during the first nine months of fiscal
1999 continue to positively impact Centex's home sales and mortgage
applications, and the Company's home building and financial services operations
are on track to report record performances for fiscal 1999. Contracting and
Construction Services operations are also expected to report strong results as
well as CXP, which is positioned to post its fifth consecutive year of record
results. Consequently, the Company expects fiscal 1999 earnings to significantly
exceed the record levels posted in fiscal 1998.
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.
-17-
<PAGE> 21
CENTEX CORPORATION
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27.1 - Financial Data Schedule
(b) Reports on Form 8-K
1. Current Report on Form 8-K of Centex Corporation dated
October 30, 1998.
2. Current Report on Form 8-K of Centex Corporation dated
December 9, 1998.
All other items required under Part II are omitted because they are not
applicable.
-18-
<PAGE> 22
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
February 12, 1999 /s/ David W. Quinn
-------------------------------------------
David W. Quinn
Vice Chairman and
Chief Financial Officer
(principal financial officer)
February 12, 1999 /s/ Barry G. Wilson
-------------------------------------------
Barry G. Wilson
Controller
(chief accounting officer)
-19-
<PAGE> 23
[This page intentionally left blank.]
-20-
<PAGE> 24
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.
-21-
<PAGE> 25
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 December 31,
--------------------------------------------------------------------------------------------
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 $ 5,694 $ 5,653 $ 194 $ 9,228 $ 9,123 $ 310
Costs and Expenses 5,681 5,262 572 6,194 6,069 330
----------- ----------- ----------- ----------- ----------- -----------
Earnings (Loss) Before Income Taxes 13 391 (378) 3,034 3,054 (20)
Income Taxes -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
NET EARNINGS (LOSS) $ 13 $ 391 $ (378) $ 3,034 $ 3,054 $ (20)
=========== =========== =========== =========== =========== ===========
NET EARNINGS (LOSS) PER UNIT/SHARE $ 6.99 $ (378) $ 94.67 $ (20)
=========== =========== =========== ===========
WEIGHTED-AVERAGE UNITS/
SHARES OUTSTANDING 55,911 1,000 32,260 1,000
=========== =========== =========== ===========
</TABLE>
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 OPERATIONS
(dollars in thousands, except per unit/share data)
(unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended December 31,
--------------------------------------------------------------------------------------------
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 $ 19,774 $ 19,385 $ 951 $ 16,063 $ 15,748 $ 1,059
Costs and Expenses 19,732 18,559 1,735 11,890 11,635 999
----------- ----------- ----------- ----------- ----------- -----------
Earnings (Loss) Before Income Taxes 42 826 (784) 4,173 4,113 60
Income Taxes -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
NET EARNINGS (LOSS) $ 42 $ 826 $ (784) $ 4,173 $ 4,113 $ 60
=========== =========== =========== =========== =========== ============
NET EARNINGS (LOSS) PER UNIT/SHARE $ 15.65 $ (784) $ 127.50 $ 60
=========== =========== =========== ============
WEIGHTED-AVERAGE UNITS/
SHARES OUTSTANDING 52,783 1,000 32,260 1,000
=========== =========== =========== ============
</TABLE>
See notes to condensed combining financial statements.
-23-
<PAGE> 27
3333 HOLDING CORPORATION AND SUBSIDIARY
AND CENTEX DEVELOPMENT COMPANY, L.P.
CONDENSED COMBINING BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
December 31, 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 $ 932 $ 884 $ 48 $ 260 $ 259 $ 1
Accounts Receivable 1,953 1,128 1,451 976 8,552 761
Notes Receivable -
Centex Corporation and Subsidiaries -- -- -- 7,700 -- 7,700
Other 3,735 3,735 -- 5,110 5,110 --
Investment in Affiliate -- -- 1,092 -- -- 849
Investment in Real Estate Joint Ventures 168 668 524 3,040 2,478 562
Commercial Properties, net 1,909 1,909 -- 1,946 1,946 --
Projects Under Development and
Held for Sale 92,338 90,413 901 41,265 40,815 450
Property and Equipment, net 258 96 162 88 -- 88
Other Assets 1,020 945 75 112 100 12
---------- ---------- ---------- ---------- ---------- ----------
$ 102,313 $ 99,778 $ 4,253 $ 60,497 $ 59,260 $ 10,423
========== ========== ========== ========== ========== ==========
LIABILITIES, STOCKHOLDERS' EQUITY AND PARTNERS' CAPITAL
Accounts Payable and Accrued
Liabilities $ 9,369 $ 9,402 $ 593 $ 4,341 $ 4,370 $ 8,390
Notes Payable -
Centex Corporation and Subsidiaries 3,891 -- 3,891 1,480 -- 1,480
Bank Development Facilities 28,711 28,711 -- 13,821 13,821 --
---------- ---------- --------- ---------- ---------- ----------
Total Liabilities 41,971 38,113 4,484 19,642 18,191 9,870
Stockholders' Equity and
Partners' Capital 60,342 61,665 (231) 40,855 41,069 553
---------- ---------- ---------- ---------- ---------- ----------
$ 102,313 $ 99,778 $ 4,253 $ 60,497 $ 59,260 $ 10,423
========= ========== ========== ========== ========== ==========
</TABLE>
* Unaudited
** Condensed from audited financial statements.
See notes to condensed combining financial statements.
-24-
<PAGE> 28
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 Nine Months Ended December 31,
--------------------------------------------------------------------------------
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) $ 42 $ 826 $ (784) $ 4,173 $ 4,113 $ 60
Net Change in Payables, Accruals
and Receivables 4,051 12,538 (8,487) 1,655 (1,999) 3,654
Decrease (Increase) in Notes Receivable 1,375 1,375 -- (5,877) (5,877) --
Decrease in Advances to Joint Venture 2,872 1,810 38 133 133 --
(Increase) Decrease in Projects Under
Development and Held for Sale (51,073) (49,598) (451) 3,439 3,439 --
Decrease in Commercial Properties, net 37 37 -- -- -- --
Property and Equipment Additions, net (170) (96) (74) -- -- --
Increase in Other Assets (908) (845) (63) (100) (100) --
---------- ---------- ---------- ---------- ---------- ----------
(43,774) (33,953) (9,821) 3,423 (291) 3,714
---------- ---------- ---------- ---------- ---------- ----------
CASH FLOWS - FINANCING ACTIVITIES
Increase (Decrease) in Notes Payable -
Centex Corporation and Subsidiaries 2,411 -- 2,411 (3,712) -- (3,712)
Other 14,890 14,890 -- 4,751 4,751 --
Decrease in Notes Receivable -
Centex Corporation and Subsidiaries 7,700 -- 7,700 -- -- --
Capital Contributions 19,445 19,688 (243) -- -- --
Capital Distributions -- -- -- (4,500) (4,500) --
---------- ---------- ---------- ---------- ---------- ----------
44,446 34,578 9,868 (3,461) 251 (3,712)
---------- ---------- ---------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN CASH 672 625 47 (38) (40) 2
CASH AT BEGINNING OF YEAR 260 259 1 630 625 5
---------- ---------- ---------- ---------- ---------- ----------
CASH AT END OF PERIOD $ 932 $ 884 $ 48 $ 592 $ 585 $ 7
========== ========== ========== ========== ========== ==========
</TABLE>
See notes to condensed combining financial statements.
-25-
<PAGE> 29
3333 HOLDING CORPORATION AND SUBSIDIARY
AND CENTEX DEVELOPMENT COMPANY, L.P.
NOTES TO CONDENSED COMBINING FINANCIAL STATEMENTS
DECEMBER 31, 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 nine months ended December 31, 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 nine months ended December 31,
1998.
CDC sells lots to Centex Homes pursuant to certain purchase and sale
agreements. Revenues from these sales totaled $55,000 and $2.9 million
for the quarter and nine months ended December 31, 1998, and $220,000
and $855,000 for the quarter and nine months ended December 31, 1997,
respectively. Additionally, during the nine months ended December 31,
1997, the Partnership sold property located in Carrollton, Texas to
Centex Homes for $2.9 million.
-26-
<PAGE> 30
During the current fiscal year, Centex Office Southpointe I, L.P., a
subsidiary of CDC, executed a 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. Additionally, during the
current fiscal year, Centex Multi-Family Sheffield I, L.P., also a
subsidiary of CDC, executed a construction contract with one of
Centex's construction subsidiaries in the amount of $16.2 million for
the construction of a 400-unit apartment project in Grand Prairie,
Texas. 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.
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 nine months ended December 31, 1998, Centex Homes, CDC's
sole limited partner, contributed assets valued at $19.4 million in
exchange for 19,445 Class C Units.
(D) A summary of changes in stockholders' equity and partners' capital is
presented below (dollars in thousands):
<TABLE>
<CAPTION>
For the Nine months Ended December 31, 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 19,445 -- 325 19,445 -- -- --
Net Earnings 42 -- -- 826 -- -- (784)
---------- ---------- ---------- ---------- ---------- ---------- ----------
BALANCE AT DECEMBER 31, 1998 $ 60,342 $ 500 $ 1,092 $ 60,073 $ 1 $ 800 $ (1,032)
========== ========== ========== ========== ========== ========== ==========
</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 nine months ended
December 31, 1998. Preference payments in arrears at December 31, 1998
for Class A and Class C limited partners amounted to $6.3 million and
$1.3 million, respectively, and Unrecovered Capital for Class A and
Class C limited partners aggregated approximately $59.8 million.
-27-
<PAGE> 31
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 nine months
ended December 31, 1998 totaled $5.7 million and $19.8 million, respectively
compared to $9.2 million and $16.1 million for the same periods of the prior
year. Revenues during the current year periods resulted primarily from the sale
of single family homes in New Jersey and residential property in Texas and
Florida. Revenues for the three and nine month periods ended December 31, 1997
resulted primarily from the sale of commercial property in Texas and residential
property in Texas and Florida.
The Companies had combined net earnings for the quarter and nine
months ended December 31, 1998 of $13,000 and $42,000, respectively, compared to
combined net earnings of $3.0 million and $4.2 million for the quarter and nine
months ended December 31, 1997, respectively. Margins on real estate sales for
the nine months ended December 31, 1998 were 5.6% versus 27.8% for the nine
months ended December 31, 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 Centex Service Company ("CSC"), Year 2000 compliance issues are being
addressed by a Year 2000 Task Force Team comprised of key personnel in the
management information systems, legal, internal audit and accounting areas 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
-28-
<PAGE> 32
the potential non-compliance by third parties, the Companies will continue to
survey their largest customers, contractors 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 relative to the Companies' ability to assess and remediate any
Year 2000 compliance issues, 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 nine months ended December 31, 1998, 19,445 Class C
Preferred Partnership Units were issued in exchange for assets valued at $19.4
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.
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<PAGE> 33
3333 HOLDING CORPORATION
CENTEX DEVELOPMENT COMPANY, L.P.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27.1 - Financial Data Schedule
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 December 31, 1998.
All other items required under Part II are omitted because they are not
applicable.
-30-
<PAGE> 34
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
February 12, 1999 /s/ Richard C. Decker
------------------------------------------
Richard C. Decker
President and Chief Executive Officer
(principal executive officer)
February 12, 1999 /s/ Kimberly A. Pinson
------------------------------------------
Kimberly A. Pinson
Vice President, Treasurer and Controller
(principal financial officer and
chief accounting officer)
-31-
<PAGE> 35
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
February 12, 1999 /s/ Richard C. Decker
-----------------------------------------
Richard C. Decker
President and Chief Executive Officer
(principal executive officer)
February 12, 1999 /s/ Kimberly A. Pinson
-----------------------------------------
Kimberly A. Pinson
Vice President, Treasurer and Controller
(principal financial officer
and chief accounting officer)
-32-
<PAGE> 36
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
27.1 - Financial Data Schedule - Centex Corporation
27.2 - Financial Data Schedule - 3333 Holding Corporation
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 DECEMBER 31, 1998, FORM 10-Q 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> 9-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 111,839
<SECURITIES> 0
<RECEIVABLES> 1,901,836
<ALLOWANCES> 0
<INVENTORY> 1,541,106
<CURRENT-ASSETS> 0
<PP&E> 536,637
<DEPRECIATION> 235,387
<TOTAL-ASSETS> 4,393,284
<CURRENT-LIABILITIES> 0
<BONDS> 284,151
0
0
<COMMON> 14,867
<OTHER-SE> 1,121,599
<TOTAL-LIABILITY-AND-EQUITY> 4,393,284
<SALES> 3,609,774
<TOTAL-REVENUES> 3,609,774
<CGS> 3,257,442
<TOTAL-COSTS> 3,257,442
<OTHER-EXPENSES> 61,446
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,164
<INCOME-PRETAX> 261,722
<INCOME-TAX> 97,955
<INCOME-CONTINUING> 163,767
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 163,767
<EPS-PRIMARY> 2.75
<EPS-DILUTED> 2.65
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from 3333 Holding
Corporation's December 31, 1998, Form 10-Q 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> 9-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 48
<SECURITIES> 0
<RECEIVABLES> 1,451
<ALLOWANCES> 0
<INVENTORY> 901
<CURRENT-ASSETS> 0
<PP&E> 205
<DEPRECIATION> 43
<TOTAL-ASSETS> 4,253
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> (232)
<TOTAL-LIABILITY-AND-EQUITY> 4,253
<SALES> 951
<TOTAL-REVENUES> 951
<CGS> 1,735
<TOTAL-COSTS> 1,735
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (784)
<INCOME-TAX> 0
<INCOME-CONTINUING> (784)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (784)
<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 DECEMBER 31, 1998, FORM 10-Q AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000818764
<NAME> CENTEX DEVELOPMENT COMPANY, L.P.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 884
<SECURITIES> 0
<RECEIVABLES> 1,128
<ALLOWANCES> 0
<INVENTORY> 90,413
<CURRENT-ASSETS> 0
<PP&E> 119
<DEPRECIATION> 23
<TOTAL-ASSETS> 99,778
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 500
<OTHER-SE> 61,165
<TOTAL-LIABILITY-AND-EQUITY> 99,778
<SALES> 19,385
<TOTAL-REVENUES> 19,385
<CGS> 18,559
<TOTAL-COSTS> 18,559
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 826
<INCOME-TAX> 0
<INCOME-CONTINUING> 826
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 826
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
