<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, 1999
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 31, 2000:
<TABLE>
<S> <C> <C>
Centex Corporation Common Stock 59,385,282 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 35,082 units
</TABLE>
<PAGE> 2
CENTEX CORPORATION AND SUBSIDIARIES
3333 HOLDING CORPORATION AND SUBSIDIARY
CENTEX DEVELOPMENT COMPANY, L.P. AND SUBSIDIARIES
FORM 10-Q TABLE OF CONTENTS
DECEMBER 31, 1999
CENTEX CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. Condensed Consolidated Financial Statements 1
Condensed Consolidated Statement of Earnings
for the Three Months Ended December 31, 1999 2
Condensed Consolidated Statement of Earnings
for the Nine Months Ended December 31, 1999 3
Condensed Consolidated Balance Sheets 4
Condensed Consolidated Statement of Cash Flows
for the Nine Months Ended December 31, 1999 6
Notes to Condensed Consolidated Financial Statements 7
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 16
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 27
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 28
SIGNATURES 29
</TABLE>
i
<PAGE> 3
3333 HOLDING CORPORATION AND SUBSIDIARY
CENTEX DEVELOPMENT COMPANY, L.P. AND SUBSIDIARIES
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. Condensed Combining Financial Statements 30
Condensed Combining Statement of Operations
for the Three Months Ended December 31, 1999 31
Condensed Combining Statement of Operations
for the Nine Months Ended December 31, 1999 32
Condensed Combining Balance Sheets 33
Condensed Combining Statements of Cash Flows
for the Nine Months Ended December 31, 1999 34
Notes to Condensed Combining Financial Statements 35
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 41
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 46
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 47
SIGNATURES 48, 49
</TABLE>
ii
<PAGE> 4
CENTEX CORPORATION AND SUBSIDIARIES
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. References herein to "Centex" or the
"Company" include references to subsidiaries of Centex Corporation. 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,
-----------------------------
1999 1998
------------ ------------
<S> <C> <C>
REVENUES
Home Building
Conventional Homes $ 863,177 $ 671,404
Manufactured Homes 47,160 39,819
Investment Real Estate 15,908 8,566
Financial Services 106,568 116,234
Construction Products 108,370 84,863
Contracting and Construction Services 287,978 335,200
------------ ------------
1,429,161 1,256,086
------------ ------------
COSTS AND EXPENSES
Home Building
Conventional Homes 789,847 613,305
Manufactured Homes 44,484 36,345
Investment Real Estate 6,991 196
Financial Services 97,345 92,085
Construction Products 63,038 53,314
Contracting and Construction Services 281,178 331,511
Other, net 628 2,844
Corporate General and Administrative 8,483 7,084
Interest Expense 18,467 10,929
Minority Interest 16,971 13,839
------------ ------------
1,327,432 1,161,452
------------ ------------
EARNINGS BEFORE INCOME TAXES 101,729 94,634
Income Taxes 38,553 35,591
------------ ------------
NET EARNINGS $ 63,176 $ 59,043
============ ============
EARNINGS PER SHARE
Basic $ 1.07 $ 0.99
============ ============
Diluted $ 1.04 $ 0.96
============ ============
AVERAGE SHARES OUTSTANDING
Basic 59,230,006 59,410,876
Common Share Equivalents
Options 1,093,566 1,851,083
Convertible Debenture 400,000 400,000
------------ ------------
Diluted 60,723,572 61,661,959
============ ============
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,
-----------------------------
1999 1998
------------ ------------
<S> <C> <C>
REVENUES
Home Building
Conventional Homes $ 2,461,533 $ 1,881,586
Manufactured Homes 145,978 130,748
Investment Real Estate 27,357 17,479
Financial Services 343,932 324,133
Construction Products 323,391 256,485
Contracting and Construction Services 928,646 999,343
------------ ------------
4,230,837 3,609,774
------------ ------------
COSTS AND EXPENSES
Home Building
Conventional Homes 2,258,855 1,730,613
Manufactured Homes 138,153 120,522
Investment Real Estate 3,270 (4,752)
Financial Services 301,536 252,508
Construction Products 190,822 163,007
Contracting and Construction Services 911,176 987,939
Other, net 3,529 7,605
Corporate General and Administrative 23,821 19,195
Interest Expense 45,828 29,164
Minority Interest 51,677 42,251
------------ ------------
3,928,667 3,348,052
------------ ------------
EARNINGS BEFORE INCOME TAXES 302,170 261,722
Income Taxes 115,063 97,955
------------ ------------
NET EARNINGS $ 187,107 $ 163,767
============ ============
EARNINGS PER SHARE
Basic $ 3.15 $ 2.75
============ ============
Diluted $ 3.06 $ 2.65
============ ============
AVERAGE SHARES OUTSTANDING
Basic 59,370,180 59,496,866
Common Share Equivalents
Options 1,434,485 1,991,600
Convertible Debenture 400,000 400,000
------------ ------------
Diluted 61,204,665 61,888,466
============ ============
CASH DIVIDENDS PER SHARE $ 0.12 $ 0.12
============ ============
</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
--------------------------------
December 31, March 31,
1999* 1999**
------------ ------------
<S> <C> <C>
ASSETS
Cash and Cash Equivalents $ 161,713 $ 111,268
Receivables -
Residential Mortgage Loans 734,885 1,395,616
Other 391,937 459,778
Inventories 2,096,026 1,533,819
Investments -
Centex Development Company, L.P. 72,606 63,207
Joint Ventures and Other 66,674 48,594
Unconsolidated Subsidiaries -- --
Property and Equipment, net 338,025 313,655
Other Assets -
Deferred Income Taxes 28,123 49,107
Goodwill, net 245,719 222,162
Mortgage Securitization
Residual Interest 141,247 80,152
Deferred Charges and Other 124,201 57,388
------------ ------------
$ 4,401,156 $ 4,334,746
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable and
Accrued Liabilities $ 1,044,091 $ 1,018,650
Short-term Debt 1,236,462 1,626,600
Long-term Debt 570,179 284,299
Payables to Affiliates -- --
Minority Stockholders' Interest 133,567 140,721
Negative Goodwill 54,837 66,837
Stockholders' Equity -
Preferred Stock, Authorized 5,000,000
Shares, None Issued -- --
Common Stock $.25 Par
Value; Authorized
100,000,000 Shares; Issued
and Outstanding
59,138,968 and 59,388,350
respectively 14,785 14,847
Capital in Excess of Par Value 5,340 20,822
Retained Earnings 1,341,943 1,161,970
Accumulated Other Comprehensive Loss (48) --
------------ ------------
Total Stockholders' Equity 1,362,020 1,197,639
------------ ------------
$ 4,401,156 $ 4,334,746
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
* Unaudited
** Condensed from audited financial statements.
-4-
<PAGE> 8
CENTEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Centex Corporation Financial Services
- ----------------------------------- ----------------------------------
December 31, March 31, December 31, March 31,
1999* 1999** 1999* 1999**
- -------------- -------------- -------------- --------------
<S> <C> <C> <C>
$ 128,365 $ 72,279 $ 33,348 $ 38,989
-- -- 734,885 1,395,616
359,392 404,043 32,545 55,735
2,096,026 1,533,819 -- --
72,606 63,207 -- --
66,674 48,594 -- --
241,451 221,744 -- --
297,638 285,891 40,387 27,764
20,010 40,541 8,113 8,566
228,888 206,595 16,831 15,567
-- -- 141,247 80,152
64,644 40,962 59,557 16,426
- -------------- -------------- -------------- --------------
$ 3,575,694 $ 2,917,675 $ 1,066,913 $ 1,638,815
============== ============== ============== ==============
$ 974,347 $ 926,377 $ 69,744 $ 92,273
483,322 303,656 753,140 1,322,944
570,179 284,299 -- --
-- -- 73,781 102,652
130,989 138,867 2,578 1,854
54,837 66,837 -- --
-- -- -- --
14,785 14,847 1 1
5,340 20,822 108,467 75,944
1,341,943 1,161,970 59,202 43,147
(48) -- -- --
- -------------- -------------- -------------- --------------
1,362,020 1,197,639 167,670 119,092
- -------------- -------------- -------------- --------------
$ 3,575,694 $ 2,917,675 $ 1,066,913 $ 1,638,815
============== ============== ============== ==============
</TABLE>
In the supplemental data presented above, "Centex Corporation" represents the
combining 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.
-5-
<PAGE> 9
CENTEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
-------------------------
For the Nine Months Ended
December 31,
-------------------------
1999 1998
------------ -----------
<S> <C> <C>
CASH FLOWS - OPERATING ACTIVITIES
Net Earnings $ 187,107 $ 163,767
Adjustments -
Depreciation and Amortization 34,838 27,180
Deferred Income Taxes 10,941 42,814
Equity in (Earnings) Loss of Centex Development
Company, L.P. and Joint Ventures (648) 396
Minority Interest, net of taxes 33,233 27,674
Decrease (Increase) in Receivables 68,912 (31,774)
Decrease (Increase) in Residential Mortgage Loans 660,731 (287,721)
Increase in Inventories (485,419) (494,997)
Increase in Payables and Accruals 15,268 132,358
Increase in Other Assets (137,737) (152,488)
Other, net (40,387) (32,471)
---------- ---------
346,839 (605,262)
---------- ---------
CASH FLOWS - INVESTING ACTIVITIES
Increase in Advances to Centex Development
Company, L.P. and Joint Ventures (23,566) (44,116)
Acquisition of Home Building Operations (74,119) --
Other Acquisitions (9,349) --
Increase in Property and Equipment, net (55,220) (34,836)
---------- ---------
(162,254) (78,952)
---------- ---------
CASH FLOWS - FINANCING ACTIVITIES
(Decrease) Increase in Debt -
Secured by Residential Mortgage Loans (569,804) 358,321
Other 458,390 357,889
Retirement of Common Stock (29,032) (19,049)
Proceeds from Stock Option Exercises 13,488 7,719
Dividends Paid (7,134) (7,143)
---------- ---------
(134,092) 697,737
---------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (48) --
---------- ---------
NET INCREASE IN CASH 50,445 13,523
CASH AT BEGINNING OF PERIOD 111,268 98,316
---------- ---------
CASH AT END OF PERIOD $ 161,713 $ 111,839
========== =========
</TABLE>
See notes to condensed consolidated financial statements.
-6-
<PAGE> 10
CENTEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTES
DECEMBER 31, 1999
(Dollars in thousands)
(unaudited)
(A) Comprehensive income is summarized for the three and nine months ended
December 31, 1999 below:
<TABLE>
<CAPTION>
-------------------------- -------------------------
For the Three Months Ended For the Nine Months Ended
December 31, 1999 December 31, 1999
-------------------------- -------------------------
<S> <C> <C>
Net Earnings $ 63,176 $ 187,107
Other Comprehensive Loss:
Foreign Currency Translation Adjustments (16) (48)
-------------------- --------------------
Comprehensive Income $ 63,160 $ 187,059
==================== ====================
</TABLE>
Other Comprehensive Income results from Centex's investment in Centex
Development Company, L.P. and subsidiaries. For additional information on Centex
Development Company, L.P. and subsidiaries, see their separate financial
statements and related footnotes included elsewhere in this Report.
(B) Changes in stockholders' equity are summarized below:
<TABLE>
<CAPTION>
Accumulated
Capital in Other
Preferred Common Excess of Par Retained Comprehensive
Stock Stock Value Earnings Loss Total
------------- -------------- ------------- ------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Balance, March 31, 1999 $ -- $ 14,847 $ 20,822 $ 1,161,970 $ -- $ 1,197,639
Net Earnings -- -- -- 187,107 -- 187,107
Exercise of Stock Options -- 204 13,284 -- -- 13,488
Retirement of 1,063,300
Shares -- (266) (28,766) -- -- (29,032)
Cash Dividends -- -- -- (7,134) -- (7,134)
Foreign Currency
Translation
Adjustments -- -- -- -- (48) (48)
------------- -------------- ------------- ------------- --------------- --------------
BALANCE, DECEMBER 31, 1999 $ -- $ 14,785 $ 5,340 $ 1,341,943 $ (48) $ 1,362,020
============= ============== ============= ============= =============== ==============
</TABLE>
(C) In March 1987, certain of Centex's subsidiaries contributed to Centex
Development Company, L.P. (the "Partnership"), a newly formed master limited
partnership, certain properties at their historical cost basis. The Partnership
was formed to enable stockholders to participate in long-term real estate
development projects, the dynamics of which are inconsistent with Centex's
traditional financial objectives.
The Partnership is controlled by its general partner, 3333 Development
Corporation ("Development"), which is in turn wholly-owned by 3333 Holding
Corporation ("Holding"). Holding is a separate public company whose stock trades
in tandem with Centex's stock. The common stock of Holding (the "Securities")
-7-
<PAGE> 11
was distributed in 1987 (with warrants to purchase approximately 80% of the
Class B limited partnership units in the Partnership) as a dividend to the
stockholders of Centex. The Securities, held by a nominee on behalf of the
stockholders, will trade in tandem with the common stock of Centex until such
time as they are detached. The Securities may be detached at any time by
Centex's Board of Directors but the warrants to purchase Class B Units
automatically become detached in November 2007.
The four-person Board of Directors of Holding is elected by the
stockholders of Centex. The majority of the Board members are independent
outside directors, none of whom are directors of Centex. Accordingly, the
general partner of the Partnership is controlled by the stockholders of Centex.
The general partner and independent board of Holding manage the Partnership's
conduct of its activities including the sales, development, maintenance and
zoning of properties. The general partner may sell or acquire properties,
including the contributed property, and enter into other business transactions
without the consent of the limited partners. In addition, the limited partners
cannot remove the general partner.
The Company accounts for its investment in the Partnership on the
equity method of accounting because the Company's interest in the cash and
earnings of the Partnership is limited to defined amounts, and the Company does
not control the Partnership.
During fiscal 1998, the agreement governing the Partnership was amended
to allow for the issuance of new Class C Limited Partnership Units ("Class C
Units"). During fiscal 2000, 8,095 Class C Units were issued in exchange for
assets with a fair market value of $8.1 million. Gains, if any, related to the
assets acquired by the Partnership from Centex are deferred until the assets are
sold by the Partnership. The partnership agreement provides that Centex, as the
sole Class A and Class C limited partner, is entitled to a cumulative preferred
return of 9% per annum on the average outstanding balance of its Unrecovered
Capital, which is defined as its capital contributions, adjusted for cash
distributions representing return of the capital. Unrecovered Capital as of
December 31, 1999 was approximately $68 million and the unpaid preferred return
as of that date was $13.3 million. No preferred return payments were made during
the three or nine months ended December 31, 1999.
Supplementary condensed combined financial statements for the Company,
3333 Holding Corporation and subsidiary and Centex Development Company, L.P. and
subsidiaries are set forth below. For additional information on 3333 Holding
Corporation and its subsidiary and Centex Development Company, L.P. and
subsidiaries, see their separate financial statements and related footnotes
included elsewhere in this Report.
-8-
<PAGE> 12
SUPPLEMENTARY CONDENSED COMBINED BALANCE SHEETS OF CENTEX CORPORATION AND
SUBSIDIARIES, 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT
COMPANY, L.P. AND SUBSIDIARIES
<TABLE>
<CAPTION>
------------ ------------
DECEMBER 31, March 31,
1999 1999*
------------ ------------
<S> <C> <C>
ASSETS
Cash and Cash Equivalents $ 186,010 $ 111,632
Receivables 1,139,829 1,860,090
Inventories 2,469,072 1,639,664
Investments in Joint Ventures and Other 68,316 49,266
Property and Equipment, net 341,635 313,886
Other Assets 579,655 410,321
------------ ------------
$ 4,784,517 $ 4,384,859
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable and Accrued Liabilities $ 1,102,586 $ 1,026,867
Short-term Debt 1,561,328 1,668,496
Long-term Debt 570,179 284,299
Minority Stockholders' Interest 133,567 140,721
Negative Goodwill 54,837 66,837
Stockholders' Equity 1,362,020 1,197,639
------------ ------------
$ 4,784,517 $ 4,384,859
============ ============
</TABLE>
* Condensed from audited financial statements.
SUPPLEMENTARY CONDENSED COMBINED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
------------------------------
For the Nine Months Ended
December 31,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenues $ 4,479,147 $ 3,626,072
Costs and Expenses 4,176,376 3,365,134
------------ ------------
Earnings Before Income Taxes 302,771 260,938
Income Taxes 115,664 97,955
------------ ------------
NET EARNINGS 187,107 162,983
Other Comprehensive Loss (48) --
------------ ------------
COMPREHENSIVE INCOME $ 187,059 $ 162,983
============ ============
</TABLE>
(D) In order to ensure the future availability of land for the Company's
homebuilding operations, the Company has made cumulative deposits totaling
approximately $52 million for options to purchase undeveloped land and developed
lots having a total purchase price of approximately $1.3 billion. These options
and commitments expire at various dates through the year 2005.
-9-
<PAGE> 13
(E) Interest cost relating to the Financial Services operations is included in
its costs and expenses. Interest cost related to non-financial services
operations is included in interest expense.
<TABLE>
<CAPTION>
------------------------------
For the Three Months Ended
December 31,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Total Interest Cost Incurred $ 34,272 $ 30,852
Less - Financial Services Interest Expense (15,805) (19,923)
------------ ------------
Interest Expense, net $ 18,467 $ 10,929
============ ============
</TABLE>
<TABLE>
<CAPTION>
------------------------------
For the Nine Months Ended
December 31,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Total Interest Cost Incurred $ 97,657 $ 89,447
Less - Financial Services Interest Expense (51,829) (60,283)
------------ ------------
Interest Expense, net $ 45,828 $ 29,164
============ ============
</TABLE>
(F) In April 1994, Centex Construction Products, Inc. ("Construction Products")
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
Construction Products increased to 63.2% as of December 31, 1999 compared to
59.2% as of December 31, 1998 as a consequence of a share repurchase program
authorized by Construction Products' Board of Directors.
(G) In fiscal 1996, the Company acquired an equity interest in Vista Properties,
Inc. ("Vista"), which owned a real estate portfolio of properties located in
seven states in which the Company has significant operations. The Investment
Real Estate portfolio was reduced to a nominal "book basis" after recording
certain deferred tax benefits related to this acquisition. Accordingly, as these
properties are developed or sold the net sales proceeds are reflected as
operating margin.
Negative goodwill related to the Vista acquisition is being amortized to
earnings over the estimated period over which the related assets will be
developed, sold or realized. All investment property operations are being
reported through the "Investment Real Estate" business segment.
(H) The Company operates in five principal business segments: Home Building,
Investment Real Estate, Financial Services, Construction Products, and
Contracting and Construction Services. These segments operate primarily in the
United States and their markets are nationwide. Revenues from any one customer
are not significant to the Company.
Intersegment revenues and investments in joint ventures are not material and
are not shown in the following tables. The investment in Centex Development
Company, L.P. (approximately $73 million) is included in the Investment Real
Estate segment.
-10-
<PAGE> 14
HOME BUILDING
CONVENTIONAL HOMES
Conventional Homes operations involve the purchase and development of
land or lots as well as the construction and sale of single-family homes. The
following tables set forth financial information relating to the Conventional
Homes operations (dollars in millions):
<TABLE>
<CAPTION>
------------------------------
For the Three Months Ended
December 31,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenues $ 863.2 $ 671.4
Cost of Sales (666.6) (518.9)
Selling, General & Administrative Expenses (123.3) (94.4)
------------ ------------
Operating Earnings $ 73.3 $ 58.1
============ ============
</TABLE>
<TABLE>
<CAPTION>
------------------------------
For the Nine Months Ended
December 31,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenues $ 2,461.5 $ 1,881.6
Cost of Sales (1,898.9) (1,464.3)
Selling, General & Administrative Expenses (359.9) (266.3)
------------ ------------
Operating Earnings $ 202.7 $ 151.0
============ ============
</TABLE>
MANUFACTURED HOMES
Manufactured Homes operations involve the manufacture of residential
and park model homes and the sale of these homes through a network of
Company-owned and independent dealers. The Company entered the Manufactured
Homes industry in March 1997, when a subsidiary acquired approximately 80% of
Cavco Industries. Centex purchased the remaining minority interest in Cavco
Industries during the third quarter of fiscal 2000.
The following tables set forth financial information relating to the
Manufactured Homes operations (dollars in millions):
<TABLE>
<CAPTION>
------------------------------
For the Three Months Ended
December 31,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenues $ 47.1 $ 39.8
Cost of Sales (36.5) (29.8)
Selling, General & Administrative Expenses (7.1) (5.7)
Goodwill Amortization (0.8) (0.8)
------------ ------------
Operating Earnings 2.7 3.5
Minority Interest -- (0.7)
------------ ------------
Net Operating Earnings to Centex $ 2.7 $ 2.8
============ ============
</TABLE>
-11-
<PAGE> 15
<TABLE>
<CAPTION>
------------------------------
For the Nine Months Ended
December 31,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenues $ 146.0 $ 130.8
Cost of Sales (114.2) (101.3)
Selling, General & Administrative Expenses (21.4) (16.9)
Goodwill Amortization (2.6) (2.4)
------------ ------------
Operating Earnings 7.8 10.2
Minority Interest (1.0) (2.0)
------------ ------------
Net Operating Earnings to Centex $ 6.8 $ 8.2
============ ============
</TABLE>
INVESTMENT REAL ESTATE
Investment Real Estate operations involve the development of land
primarily for multi-family, industrial, office, retail and mixed-use projects.
The following tables set forth financial information relating to the Investment
Real Estate operations (dollars in millions):
<TABLE>
<CAPTION>
------------------------------
For the Three Months Ended
December 31,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenues $ 15.9 $ 8.6
Cost of Sales (6.8) (2.7)
Selling, General & Administrative Expenses (4.2) (1.5)
Negative Goodwill Amortization 4.0 4.0
------------ ------------
Operating Earnings $ 8.9 $ 8.4
============ ============
</TABLE>
<TABLE>
<CAPTION>
------------------------------
For the Nine Months Ended
December 31,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenues $ 27.4 $ 17.5
Cost of Sales (8.0) (2.9)
Selling, General & Administrative Expenses (7.3) (4.4)
Negative Goodwill Amortization 12.0 12.0
------------ ------------
Operating Earnings $ 24.1 $ 22.2
============ ============
</TABLE>
Property sales related to Investment Real Estate's nominally valued
assets resulted in operating margins of $7.9 million and $16.8 million for the
three and nine months ended December 31, 1999 and $5.6 million and $13.0 million
for the same three and nine month periods last year. As of December 31, 1999,
the Investment Real Estate Group had approximately $60 million of nominally
valued assets.
FINANCIAL SERVICES
Financial Services operations involve the financing of conventional and
manufactured homes, home equity and sub-prime lending and the sale of title and
other insurance coverages. These activities include
-12-
<PAGE> 16
mortgage origination and other related services for homes sold by Centex
subsidiaries and by others. The following tables set forth financial information
relating to the Financial Services operations (dollars in millions):
<TABLE>
<CAPTION>
------------------------------
For the Three Months Ended
December 31,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenues, including interest income of $19.2 million
in fiscal 2000 and $25.0 million in fiscal 1999 $ 106.6 $ 116.2
Selling, General & Administrative Expenses (81.6) (72.2)
Interest Expense (15.8) (19.9)
------------ ------------
Operating Earnings $ 9.2 $ 24.1
============ ============
</TABLE>
<TABLE>
<CAPTION>
------------------------------
For the Nine Months Ended
December 31,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenues, including interest income of $70.2 million
in fiscal 2000 and $75.0 million in fiscal 1999 $ 343.9 $ 324.1
Selling, General & Administrative Expenses (249.7) (192.2)
Interest Expense (51.8) (60.3)
------------ ------------
Operating Earnings $ 42.4 $ 71.6
============ ============
</TABLE>
CONSTRUCTION PRODUCTS
Construction Products operations involve the manufacture and sale of
cement, gypsum wallboard, and concrete and aggregates. The following tables set
forth financial information relating to the Construction Products operations
(dollars in millions):
<TABLE>
<CAPTION>
------------------------------
For the Three Months Ended
December 31,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenues $ 108.4 $ 84.9
Interest Income 1.1 0.6
Cost of Sales and Plant Operating Expenses (62.5) (52.3)
Selling, General & Administrative Expenses (1.2) (1.2)
Goodwill Amortization (0.4) (0.5)
------------ ------------
Operating Earnings 45.4 31.5
Minority Interest (17.0) (13.2)
------------ ------------
Net Operating Earnings to Centex $ 28.4 $ 18.3
============ ============
</TABLE>
-13-
<PAGE> 17
<TABLE>
<CAPTION>
------------------------------
For the Nine Months Ended
December 31,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenues $ 323.4 $ 256.5
Interest Income 2.4 2.2
Cost of Sales and Plant Operating Expenses (188.6) (161.7)
Selling, General & Administrative Expenses (3.5) (3.0)
Goodwill Amortization (1.1) (0.5)
------------ ------------
Operating Earnings 132.6 93.5
Minority Interest (50.7) (40.3)
------------ ------------
Net Operating Earnings to Centex $ 81.9 $ 53.2
============ ============
</TABLE>
CONTRACTING AND CONSTRUCTION SERVICES
Contracting and Construction Services operations involve the
construction of buildings for both private and government interests including
(among others) office, commercial and industrial buildings, hospitals, hotels,
museums, libraries, airport facilities and educational institutions.
The following tables set forth financial information relating to the
Contracting and Construction Services operations. As this segment generates
significant positive cash flow, intercompany interest income (credited at the
prime rate) is reflected in this segment data, however these amounts are
eliminated in consolidation (dollars in millions):
<TABLE>
<CAPTION>
------------------------------
For the Three Months Ended
December 31,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenues $ 288.0 $ 335.2
Construction Contract Costs (269.6) (321.1)
Selling, General & Administrative Expenses (11.6) (10.4)
------------ ------------
Operating Income, as reported 6.8 3.7
Intercompany Interest Income* 2.0 2.1
------------ ------------
Total Economic Return $ 8.8 $ 5.8
============ ============
</TABLE>
<TABLE>
<CAPTION>
------------------------------
For the Nine Months Ended
December 31,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenues $ 928.6 $ 999.3
Construction Contract Costs (875.5) (957.5)
Selling, General & Administrative Expenses (35.6) (30.4)
------------ ------------
Operating Income, as reported 17.5 11.4
Intercompany Interest Income* 6.3 4.9
------------ ------------
Total Economic Return $ 23.8 $ 16.3
============ ============
</TABLE>
*The "net assets" position of the Contracting and Construction Services segment
provides significant cash flow because payables and accruals consistently exceed
identifiable assets. Intercompany interest income is computed on the group's
cash flow in excess of its equity.
-14-
<PAGE> 18
CORPORATE AND OTHER, NET
Corporate general and administrative expenses represent salaries and
other costs not identifiable with a specific segment. Other, net includes new
business initiatives and other businesses which are not mature enough to stand
alone as separate business segments. Assets are primarily cash and cash
equivalents, receivables, property and equipment and other assets not associated
with a business segment.
The following tables summarize financial information relating to the
Corporate and Other, net segments (dollars in millions):
<TABLE>
<CAPTION>
------------------------------
For the Three Months Ended
December 31,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Operating Loss - Other, net $ (0.6) $ (2.8)
============ ============
Corporate General and Administrative Expenses $ (8.5) $ (7.1)
============ ============
</TABLE>
<TABLE>
<CAPTION>
------------------------------
For the Nine Months Ended
December 31,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Operating Loss - Other, net $ (3.5) $ (7.6)
============ ============
Corporate General and Administrative Expenses $ (23.8) $ (19.2)
============ ============
</TABLE>
(I) The computation of diluted earnings per share excludes anti-dilutive options
to purchase 4,477,000 common shares at an average price of $36.98, and 3,652,000
common shares at an average price of $37.34 for the three and nine months ended
December 31, 1999, respectively. The anti-dilutive options have expiration dates
ranging from September 2007 to October 2009.
(J) Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting
for Derivative Instruments and Hedging Activities," was issued in June 1998.
This statement addressed the accounting for derivative instruments, including
derivative instruments embedded in other contracts (collectively referred to as
derivatives), and hedging activities as well as the disclosure of these
activities. SFAS No. 133 requires that an entity recognize all derivatives as
either assets or liabilities in the consolidated balance sheet and measure those
instruments at fair value. In June 1999, SFAS No. 137 was issued which delays
the implementation of this statement for the Company until April 2001.
(K) Certain prior period balances have been reclassified to be consistent with
the December 31, 1999 presentation.
-15-
<PAGE> 19
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Centex's consolidated revenues for the three months ended December 31,
1999 were $1.43 billion, a 14% increase over $1.26 billion for the same period
last year. Earnings before income taxes were $101.7 million, 7% higher than
$94.6 million last year. Net earnings for the three months ended December 31,
1999 were $63.2 million, a 7% increase over net earnings of $59.0 million for
the same period last year.
For the nine months ended December 31, 1999, consolidated revenues
totaled $4.23 billion, 17% higher than $3.61 billion for the same period last
year. Earnings before income taxes were $302.2 million, 15% higher than $261.7
million for the same period last year. Net earnings were $187.1 million for the
nine months ended December 31, 1999, a 14% increase over net earnings of $163.8
for the same period last year.
HOME BUILDING
CONVENTIONAL HOMES
The following summarizes Conventional Homes' results for the three and
nine months ended December 31, 1999 compared to the same periods last year
(dollars in millions, except per unit data):
<TABLE>
<CAPTION>
-------------------------------------------------------------
For the Three Months Ended December 31,
-------------------------------------------------------------
1999 1998
--------------------------- ---------------------------
<S> <C> <C> <C> <C>
Conventional Homes Revenues $ 863.2 100.0% $ 671.4 100.0%
Cost of Sales (666.6) (77.2)% (518.9) (77.3)%
Selling, General & Administrative Expenses (123.3) (14.3)% (94.4) (14.1)%
---------- ---------- ---------- ----------
Operating Earnings $ 73.3 8.5% $ 58.1 8.6%
========== ========== ========== ==========
Units Closed 4,495 3,601
% Change 24.8% 19.0%
Unit Sales Price $ 189,466 $ 183,522
% Change 3.2% 1.2%
Operating Earnings Per Unit $ 16,314 $ 16,134
% Change 1.1% 15.4%
</TABLE>
-16-
<PAGE> 20
<TABLE>
<CAPTION>
-------------------------------------------------------------
For the Nine Months Ended December 31,
--------------------------- ---------------------------
1999 1998
--------------------------- ---------------------------
<S> <C> <C> <C> <C>
Conventional Homes Revenues $ 2,461.5 100.0% $ 1,881.6 100.0%
Cost of Sales (1,898.9) (77.2)% (1,464.3) (77.8)%
Selling, General & Administrative Expenses (359.9) (14.6)% (266.3) (14.2)%
---------- ---------- ---------- ----------
Operating Earnings $ 202.7 8.2% $ 151.0 8.0%
========== ========== ========== ==========
Units Closed 12,854 10,050
% Change 27.9% 15.4%
Unit Sales Price $ 188,595 $ 184,113
% Change 2.4% 1.3%
Operating Earnings Per Unit $ 15,768 $ 15,022
% Change 5.0% 17.6%
</TABLE>
Conventional Homes' revenues for the three and nine months ended
December 31, 1999 increased by $191.8 million and $579.9 million, respectively,
from revenues for the corresponding periods last year. These increases resulted
from an increased number of operating neighborhoods, revenues attributable to
newly acquired operations, and an increased average unit selling price compared
to fiscal 1999's average unit selling price.
Home sales (orders) totaled 4,089 units during the three months ended
December 31, 1999 compared to 3,610 units during the same period a year ago.
Home sales (orders) totaled 13,191 units during the nine months ended December
31, 1999 compared to last year's 10,816 units. The backlog of homes sold but not
closed at December 31, 1999 was 7,413 units, 15% higher than 6,419 units for the
same period a year ago.
-17-
<PAGE> 21
MANUFACTURED HOMES
The following summarizes Manufactured Homes' results for the three and
nine months ended December 31, 1999 compared to the same periods last year
(dollars in millions):
<TABLE>
<CAPTION>
-------------------------------------------------------------
For the Three Months Ended December 31,
-------------------------------------------------------------
1999 1998
--------------------------- ---------------------------
<S> <C> <C> <C> <C>
Manufactured Homes Revenues (Construction) $ 30.3 100.0% $ 29.5 100.0%
Cost of Sales (23.3) (76.9)% (22.5) (76.3)%
Selling, General & Administrative Expenses (3.4) (11.3)% (2.8) (9.4)%
---------- ---------- ---------- ----------
3.6 11.8% 4.2 14.3%
---------- ---------- ---------- ----------
Retail Sales Revenues 16.8 100.0% 10.3 100.0%
Cost of Sales (13.2) (78.4)% (7.3) (70.6)%
Selling, General & Administrative Expenses (3.7) (21.9)% (2.9) (29.0)%
---------- ---------- ---------- ----------
(0.1) (0.3)% 0.1 0.4%
---------- ---------- ---------- ----------
Construction and Retail Earnings 3.5 4.3
Goodwill Amortization (0.8) (0.8)
Minority Interest -- (0.7)
---------- ----------
Group Operating Earnings $ 2.7 $ 2.8
========== ==========
Units Sold 1,501 1,633
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------
For the Nine Months Ended December 31,
-------------------------------------------------------------
1999 1998
--------------------------- ---------------------------
<S> <C> <C> <C> <C>
Manufactured Homes Revenues (Construction) $ 98.1 100.0% $ 101.6 100.0%
Cost of Sales (76.2) (77.6)% (79.6) (78.3)%
Selling, General & Administrative Expenses (10.8) (11.0)% (9.6) (9.5)%
---------- ---------- ---------- ----------
11.1 11.4% 12.4 12.2%
---------- ---------- ---------- ----------
Retail Sales Revenues 47.9 100.0% 29.2 100.0%
Cost of Sales (38.0) (79.4)% (21.7) (74.6)%
Selling, General & Administrative Expenses (10.6) (22.2)% (7.3) (24.7)%
---------- ---------- ---------- ----------
(0.7) (1.6)% 0.2 0.7%
---------- ---------- ---------- ----------
Construction and Retail Earnings 10.4 12.6
Goodwill Amortization (2.6) (2.4)
Minority Interest (1.0) (2.0)
---------- ----------
Group Operating Earnings $ 6.8 $ 8.2
========== ==========
Units Sold 4,723 4,780
</TABLE>
Cavco operates five manufacturing plants: three in the Phoenix, Arizona
area, one near Albuquerque, New Mexico, and one in central Texas which was
opened in January, 1999. As of December 31, 1999, Cavco operated 23 retail
locations for the sale of manufactured homes compared to 10 retail locations in
the prior year.
-18-
<PAGE> 22
Operating earnings for the three months ended December 31, 1999 were
$2.7 million, a 6% decrease over the same period in the prior year. For the nine
months ended December 31, 1999, Manufactured Homes' operating earnings were $6.8
million compared to $8.2 million for the nine months ended December 31, 1998.
Third quarter and year-to-date operating earnings were negatively impacted by
start-up and marketing costs associated with the new Texas plant and retail
store openings in Texas as well as the extremely competitive market conditions.
INVESTMENT REAL ESTATE
The following summarizes Investment Real Estate's results for the three
and nine months ended December 31, 1999 compared to the same periods last year
(dollars in millions):
<TABLE>
<CAPTION>
-----------------------------
For the Three Months Ended
December 31,
-----------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenues $ 15.9 $ 8.6
============ ============
Operating Earnings $ 8.9 $ 8.4
============ ============
</TABLE>
<TABLE>
<CAPTION>
-----------------------------
For the Nine Months Ended
December 31,
-----------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenues $ 27.4 $ 17.5
============ ============
Operating Earnings $ 24.1 $ 22.2
============ ============
</TABLE>
For the three months ended December 31, 1999, Centex's Investment Real
Estate operations, through which all investment property transactions are
reported, had operating earnings of $8.9 million, 7% higher than $8.4 million
for the same period a year ago. For the nine months ended December 31, 1999,
Centex's Investment Real Estate operations had operating earnings of $24.1
million, 8% higher than $22.2 million for the same period last year. The timing
of land sales is uncertain and can vary significantly from period to period.
Property sales related to Investment Real Estate's nominally valued assets
resulted in operating margins of $7.9 million and $5.6 million for the three
months ended December 31, 1999 and 1998, and $16.8 million and $13.0 million for
the nine months ended December 31, 1999 and 1998, respectively. At December 31,
1999, the Investment Real Estate Group had approximately $60 million of
nominally valued assets, the majority of which are expected to be sold over the
next four years.
Negative goodwill amortization was $4 million for the three months
ended December 31, 1999 and 1998, and $12 million for the nine months ended
December 31, 1999 and 1998.
-19-
<PAGE> 23
FINANCIAL SERVICES
The following summarizes Financial Services' results for the three and
nine months ended December 31, 1999 compared to the same periods last year
(dollars in millions):
<TABLE>
<CAPTION>
-----------------------------
For the Three Months Ended
December 31,
-----------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenues $ 106.6 $ 116.2
============ ============
Operating Earnings $ 9.2 $ 24.1
============ ============
Origination Volume $ 2,176 $ 3,096
============ ============
Number of Loans Originated
CTX Mortgage Company ("CTX Mortgage")
Centex-built Homes ("Builder") 2,449 2,308
Non-Centex-built Homes ("Retail") 10,932 19,117
------------ ------------
13,381 21,425
Centex Home Equity Corporation ("Home Equity") 5,367 4,032
Centex Finance Company 202 255
------------ ------------
18,950 25,712
============ ============
</TABLE>
<TABLE>
<CAPTION>
-----------------------------
For the Nine Months Ended
December 31,
-----------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenues $ 343.9 $ 324.1
============ ============
Operating Earnings $ 42.4 $ 71.6
============ ============
Origination Volume $ 7,359 $ 8,368
============ ============
Number of Loans Originated
CTX Mortgage Company ("CTX Mortgage")
Centex-built Homes ("Builder") 7,489 6,728
Non-Centex-built Homes ("Retail") 39,850 51,450
------------ ------------
47,339 58,178
Centex Home Equity Corporation ("Home Equity") 15,237 11,341
Centex Finance Company 674 610
------------ ------------
63,250 70,129
============ ============
</TABLE>
Financial Services' operating earnings for the three months ended
December 31, 1999 were $9.2 million, 62% lower than the $24.1 million of
operating earnings for the three months ended December 31, 1998. For the nine
months ended December 31, 1999, operating earnings were $42.4 million, 41% lower
than the $71.6 million of operating earnings for the same period last year.
-20-
<PAGE> 24
CTX Mortgage's operating earnings totaled $5.8 million for the three
months ended December 31, 1999, 76% less than earnings for the same period a
year ago. CTX Mortgage originations for the three months ended December 31, 1999
were 13,381, a 38% decrease from the 21,425 originations for the same period
last year. The per loan profit for the three months ended December 31, 1999 was
$435, 62% lower than the $1,139 per loan for the same period last year. CTX
Mortgage's operating earnings for the nine months ended December 31, 1999
totaled $30.6 million, 54% less than earnings for the same period last year.
Originations from CTX Mortgage were 47,339 for the nine months ended December
31, 1999, compared to 58,178 for the same period last year. The per loan profit
for the nine months ended December 31, 1999 was $646, 43% lower than the $1,141
for the nine months ended December 31, 1998. The decline in CTX Mortgage's
operating earnings is primarily due to the decrease in refinancing activity as a
result of increasing interest rates and the delay in balancing operating costs
with reduced production levels. CTX Mortgage's total mortgage applications for
the three months ended December 31, 1999 decreased 45% to 11,197 from 20,498
applications for the same period last year. For the nine months ended December
31, 1999, CTX Mortgage's applications decreased to 44,210 from 58,371 for the
same period last year. Applications are expected to continue to decline on a
year-over-year basis if mortgage interest rates remain at present levels.
Centex Home Equity ("Home Equity") reported $4.5 million of operating
earnings for the three months ended December 31, 1999, 915% higher than the $0.4
million of operating earnings for the same period last year. Operating earnings
from Home Equity for the nine months ended December 31, 1999 totaled $15.0
million, a 113% increase over the $7.0 million in operating earnings for the
same period last year. Originations for the three months ended December 31, 1999
were 5,367, a 33% increase over the originations for the same period last year.
Originations for the nine months ended December 31, 1999 were 15,237, a 34%
increase over the 11,341 originated for the same period last year. Loan volume
for the three months ended December 31, 1999 was $350 million, a 30% improvement
over the same period a year ago. Loan volume for the nine months ended December
31, 1999 was $990 million, a 34% improvement over the prior year. Loan volume
for the three and nine month periods was favorably impacted by the opening of
new operating locations plus generally increased activity.
Home Equity's sub-prime applications totaled 32,341 for the three
months ended December 31, 1999, an increase of 42% over the 22,746 applications
for the same period last year. Home Equity's sub-prime applications totaled
89,785 for the nine months ended December 31, 1999, a 65% improvement over the
54,433 applications for the same period last year. Per loan profit was $832 and
$985 for the three and nine month periods ending December 31, 1999 compared to
$109 and $621 for the same period last year. The increase is primarily related
to earnings from the servicing operation partially offset by the absorption of
costs related to the expansion of the branch network.
As a consequence of increases in loan volume, during the three months
ended December 31, 1999, Home Equity completed a securitization for $305
million, compared to a $189 million securitization in the prior year. For the
nine months ended December 31, 1999, Home Equity completed securitizations
totaling $1.0 billion, compared to $629 million in securitizations for the same
period last year. As a result of the securitization process, Home Equity sells
the loans but retains a residual interest in the securitization instrument as
well as the servicing rights associated with these loans. Home Equity is the
long-term servicer of these loans. Service fee income related to this long-term
servicing was $4.0 million in the three months ended December 31, 1999 and $1.6
million for the same period last year. For the nine months ended December 31,
1999, service fee income was $10.0 million compared to $2.8 million for the same
period a year ago.
-21-
<PAGE> 25
Centex Finance Company, the manufactured homes finance unit that was
closed during the quarter, had an operating loss of approximately $1.1 million
and $3.2 million for the three and nine months ended December 31, 1999.
Revenues include the gains on sales of mortgage loans receivable. Such
gains decreased to $65.4 million for the three months ended December 31, 1999
from $70.3 million for the same period last year. For the nine months ended
December 31, 1999, gains on sales of mortgage loans receivable totaled $208.3
million, a 12% increase over the same period last year. The year to date
increase is due to the expansion of Financial Services' product lines and an
increase in securitization activity, partially offset by decreased loan
origination volume. Gains on sales of mortgage loans includes the gain recorded
upon the completion of securitization, the gain on sale of servicing, and/or
gain on whole loan sales.
Substantially all of the mortgage loans generated by CTX Mortgage are
sold forward upon closing and subsequently delivered to third-party purchasers
within approximately 60 days thereafter, while substantially all the mortgage
loans produced by Home Equity are securitized, generally on a quarterly basis.
In the normal course of its activities, Financial Services carries inventories
of loans pending sale or securitization and earns a positive spread between the
interest income earned on those loans and its cost of financing those loans
(referred to herein as "positive carry"). Interest income decreased 23% for the
three months ended December 31, 1999 to $19.2 million from $25.0 million for the
same period last year. Interest expense for the three months ended December 31,
1999 was $15.8 million, a 20% decrease from $19.9 million for the same period
last year. Interest income for the nine month period ended December 31, 1999 was
$70.2 million, a 6% decrease from $75.0 million for the same period last year.
For the nine month period ended December 31, 1999, interest expense was $51.8
million, a 14% decrease from $60.3 million for the same period last year.
Financial Services' other sources of income include, among other
things, loan origination fees, title policy fees and insurance commissions,
mortgage loan broker fees, and fees for mortgage loan quality control and
processing services.
CONSTRUCTION PRODUCTS
The following summarizes Construction Products' results for the three
and nine months ended December 31, 1999 compared to the same periods last year
(dollars in millions):
<TABLE>
<CAPTION>
-----------------------------
For the Three Months Ended
December 31,
-----------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenues $ 108.4 $ 84.9
Interest Income 1.1 0.6
Cost of Sales and Expenses (62.5) (52.3)
Selling, General & Administrative Expenses (1.2) (1.2)
Goodwill Amortization (0.4) (0.5)
------------ ------------
Operating Earnings 45.4 31.5
Minority Interest (17.0) (13.2)
------------ ------------
Net Operating Earnings to Centex $ 28.4 $ 18.3
============ ============
</TABLE>
-22-
<PAGE> 26
<TABLE>
<CAPTION>
-----------------------------
For the Nine Months Ended
December 31,
-----------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenues $ 323.4 $ 256.5
Interest Income 2.4 2.2
Cost of Sales and Expenses (188.6) (161.7)
Selling, General & Administrative Expenses (3.5) (3.0)
Goodwill Amortization (1.1) (0.5)
------------ ------------
Operating Earnings 132.6 93.5
Minority Interest (50.7) (40.3)
------------ ------------
Net Operating Earnings to Centex $ 81.9 $ 53.2
============ ============
</TABLE>
Construction Products' revenues were $108.4 million for the three
months ended December 31, 1999, 28% higher than the same period last year. For
the three months ended December 31, 1999, Construction Products' operating
earnings, net of minority interest, were $28.4 million, a 55% increase over
$18.3 million for the same period last year. Revenues from Construction Products
for the current nine months ended December 31, 1999 were $323.4 million, 26%
higher than the same period last year. For the nine months ended December 31,
1999, Construction Products' operating earnings, net of minority interest, were
$81.9 million, a 54% improvement over results for the same period a year ago.
Construction Products' record operating earnings resulted from improved
results in each of its businesses. Pricing and sales volume improved for
virtually every product, particularly pricing for gypsum wallboard, which rose
33% over pricing for the same three months last year and 32% for the same nine
months last year.
CONTRACTING AND CONSTRUCTION SERVICES
The following summarizes Contracting and Construction Services' results
for the three and nine months ended December 31, 1999 compared to the same
periods last year (dollars in millions):
<TABLE>
<CAPTION>
-----------------------------
For the Three Months Ended
December 31,
-----------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenues $ 288.0 $ 335.2
============ ============
Operating Earnings $ 6.8 $ 3.7
============ ============
New Contracts Received $ 487 $ 298
============ ============
Backlog of Uncompleted Contracts $ 1,322 $ 1,182
============ ============
</TABLE>
<TABLE>
<CAPTION>
-----------------------------
For the Nine Months Ended
December 31,
-----------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenues $ 928.6 $ 999.3
============ ============
Operating Earnings $ 17.5 $ 11.4
============ ============
New Contracts Received $ 1,314 $ 1,022
============ ============
Backlog of Uncompleted Contracts $ 1,322 $ 1,182
============ ============
</TABLE>
-23-
<PAGE> 27
Contracting and Construction Services' revenues for the three and nine
months ended December 31, 1999 were $288.0 million and $928.6 million,
respectively. Operating earnings for the group improved 84% to $6.8 million for
the three months and 53% to $17.5 million for the nine months ended December 31,
1999 over the same period last year. This increase was primarily the result of a
continuing shift in recent years to higher-margin private negotiated projects
from lower-margin public bid work.
The Contracting and Construction Services operations provided a
positive average net cash flow in excess of Centex's investment in the group of
$94.7 million for the three months ended December 31, 1999 and $105.5 million
for the same period last year. For the nine months ended December 31, 1999, the
positive average net cash flow in excess of Centex's investment in the group was
$102.8 million, compared to $78.6 million for the same period last year.
YEAR 2000 COMPLIANCE
Beginning in fiscal year 1997, the Company engaged in an ongoing
process of evaluating and implementing changes to its systems in order to ensure
Year 2000 compliance. As a result of this process, the Company and its
subsidiaries tested all critical systems during calendar year 1999 and repaired,
upgraded and/or replaced those found to be not Year 2000 compliant. The cost of
replacing, upgrading or otherwise changing non-compliant systems was not
material to the Company as a whole, or to the Company's individual subsidiaries.
The Company used internally generated cash to fund the correction of all
non-compliant systems. The Company's Year 2000 compliance preparation included
the completion of a contingency plan, the hiring of a third party consultant and
the surveying of material vendors and suppliers.
As a result of the attention that the Company paid to addressing its
Year 2000 readiness, the Company has not, to date, experienced any adverse
impact on the Company's operations or financial condition or the operations or
financial condition of any of its individual subsidiaries as a result of any
Year 2000 compliance issues. In addition, the Company is not aware that any of
its vendors, subcontractors or other third parties experienced any significant
problems as a result of Year 2000 compliance issues. Furthermore, if any of
those third parties were affected by Year 2000 compliance issues, such
compliance issues have not caused, to date, any adverse effects on the Company's
operations or financial condition, or the operations or financial condition of
any of its individual subsidiaries.
Although the Company has not been affected to date by the changes from
December 31, 1999 to January 1, 2000, Year 2000 issues could arise subsequent to
the filing of this report. As an example, the Company's systems could fail to
recognize 2000 as a leap year. The Company believes that such circumstances are
highly unlikely to occur and that, even if they were to occur, it is highly
unlikely that the Company's financial condition or the operations and financial
condition of its subsidiaries would be materially adversely affected.
Nevertheless, the Company intends to continue to monitor Year 2000 related
issues and immediately address any effects that may arise as a result.
Year 2000 Forward-looking Statements
Certain statements in this section, other than historical information,
are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and
the Private Securities Litigation Reform Act of 1995. 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. These statements
involve risks and uncertainties relative to the Company's ability
-24-
<PAGE> 28
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.
FINANCIAL CONDITION AND LIQUIDITY
At December 31, 1999, the Company had cash and cash equivalents of
$161.7 million. The net cash provided by or used in the operating, investing,
and financing activities for the nine months ended December 31, 1999 and 1998 is
summarized below (dollars in thousands):
<TABLE>
<CAPTION>
------------------------------
For the Nine Months Ended
December 31,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
NET CASH PROVIDED BY (USED IN):
Operating activities $ 346,839 $ (605,262)
Investing activities (162,254) (78,952)
Financing activities (134,092) 697,737
Effect of exchange rate changes on cash (48) --
------------ ------------
Net increase in cash $ 50,445 $ 13,523
============ ============
</TABLE>
For the nine months ended December 31, 1999, cash was provided by a
decreased investment in mortgage loans offset primarily by an increase in
housing inventories. The decrease in mortgage loans is a result of a decrease in
refinancing activity as well as the timing of loan sales and securitizations.
The increase in housing inventories relates to the addition of new neighborhoods
and acquisitions. Cash was used to fund acquisitions (primarily in the Home
Building segment) and to fund additions to property and equipment (primarily for
new production capacity within the Construction Products segment). The funds
used in financing activities included a reduction in mortgage loan debt,
partially offset by new debt raised primarily to fund the increased home
building activity.
Short-term debt as of December 31, 1999 was $1.2 billion, which
included $700 million of debt applicable to the Financial Services operation.
The majority of the Financial Services debt is collateralized by residential
mortgage loans. Most of the Company's other unsecured borrowings are
accomplished at prevailing market interest rates through short-term bank
borrowings and from the Company's commercial paper programs. The Company
maintains $735 million of committed credit facilities which serve as a back-up
for bank and commercial paper borrowings. Under the terms of the agreement on
one of these facilities, $170 million may be borrowed directly by CTX Mortgage.
The Financial Services segment provides most of its own short-term
financing needs through separate facilities which require only limited support
from Centex Corporation. During the third quarter of fiscal 2000, CTX Mortgage
committed to sell, and began selling to Centex Home Mortgage, LLC, a
non-affiliated third party special-purpose Delaware limited liability company
("CHM"), substantially all of the conforming, Jumbo A, and GNMA eligible
mortgages originated by CTX Mortgage. CHM is in the business of acquiring and
then reselling mortgages into secondary markets. This facility gives CTX
Mortgage access, on a revolving basis, to CHM's $1.5 billion of capacity. Sales
to CHM are non-recourse and therefore are accounted for as sales rather than as
financings. CTX Mortgage also maintains $300 million of secured committed
mortgage warehouse facilities and $1.2 billion of uncommitted credit facilities
to finance mortgages not sold to Centex Home Mortgage. Similarly, Centex Home
Equity Corporation has $250 million of committed and $165
-25-
<PAGE> 29
million of uncommitted secured mortgage warehouse facilities to finance
sub-prime mortgages held until securitization.
Long-term debt outstanding as of December 31, 1999 was as follows (in
thousands):
<TABLE>
<S> <C>
Subordinated Debentures, 7.375%, due in 2005 $ 99,735
Subordinated Debentures, 8.75%, due in 2007 99,509
Medium-term Note Programs, 6.4% to 6.95%, due through 2002 341,668
Other Indebtedness, 6.0% to 9.6%, due through 2027 29,267
------------
$ 570,179
============
</TABLE>
Maturities of long-term debt during the next five years are as follows
(in thousands):
<TABLE>
<S> <C>
Fiscal Year ending:
March 31, 2000 $ 18,060
March 31, 2001 331,159
March 31, 2002 849
March 31, 2003 15,147
March 31, 2004 205
------------
$ 365,420
============
</TABLE>
The Company believes it has adequate resources and sufficient credit
facilities to satisfy its current needs and to provide for future growth.
- --------------------------------------------------------------------------------
FORWARD-LOOKING STATEMENTS
The Management's Discussion and Analysis of Financial Condition and
Results of Operations and other sections of this report on Form 10-Q contain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private
Securities Litigation Reform Act of 1995. 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. These statements are not
guarantees of future performance and involve a number of risks and
uncertainties. Actual results and outcomes may differ materially from what is
expressed or forecast in such forward-looking statements. The principal risks
and uncertainties that may affect the Company's actual performance and results
of operations include the following: general economic conditions and interest
rates; the cyclical and seasonal nature of the Company's businesses; adverse
weather; changes in property taxes and energy costs; changes in federal income
tax laws and federal mortgage financing programs; governmental regulation;
changes in governmental and public policy; changes in economic conditions
specific to any one or more of the Company's markets and businesses;
competition; availability of raw materials; and unexpected operations
difficulties. Other risks and uncertainties may also affect the outcome of the
Company's actual performance and results of operations.
-26-
<PAGE> 30
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risks related to fluctuations in
interest rates on mortgage loans receivable, residual interest in mortgage
securitizations, and debt. The Company utilizes forward sale commitments to
mitigate the risk associated with the majority of its mortgage loan portfolio.
The Company has also entered into a swap agreement with Bank of America in order
to manage interest rate risk, non-credit related market value risk, and
prepayment risk associated with certain loans originated by CTX Mortgage
Company. Other than the forward commitments and the swap agreement listed above,
the Company does not utilize interest rate swaps, forward or option contracts on
foreign currencies or commodities, or other types of derivative financial
instruments.
There have been no material changes in the Company's market risk since
March 31, 1999. As of December 31, 1999 the market risk associated with the swap
listed above is considered minimal. For information regarding the Company's
market risk, refer to the Company's Annual Report on Form 10-K for the fiscal
year ended March 31, 1999.
-27-
<PAGE> 31
CENTEX CORPORATION AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(1) Exhibits
Exhibit 10.10 Centex Corporation Amended and Restated 1987
Stock Option Plan (Filed herewith)
Exhibit 10.11 Amended and Restated Centex Corporation
Employee Non-Qualified Stock Option Plan
(Exhibit 4 to Registration Statement of
Centex Corporation ("Centex") on Form S-8
filed with the Securities and Exchange
Commission (the "Commission") on March 10,
1999)
Exhibit 10.12 Second Amended and Restated Centex
Corporation Employee Non-Qualified Stock
Option Plan (Exhibit 4 to Registration
Statement of Centex on Form S-8 filed with
the Commission on August 27, 1999)
Exhibit 27.1 Financial Data Schedule
(2) Reports on Form 8-K
The Registrant filed no reports on Form 8-K during the quarter ended
December 31, 1999.
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.
CENTEX CORPORATION
--------------------------------------
Registrant
February 11, 2000 /s/ David W. Quinn
--------------------------------------
David W. Quinn
Vice Chairman of the Board and
Chief Financial Officer
(principal financial officer)
February 11, 2000 /s/ John S. Worth
--------------------------------------
John S. Worth
Vice President and Controller
(chief accounting officer)
-29-
<PAGE> 33
3333 HOLDING CORPORATION AND SUBSIDIARY
CENTEX DEVELOPMENT COMPANY, L.P. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
CONDENSED COMBINING FINANCIAL STATEMENTS
ITEM 1.
The condensed combining financial statements include the accounts of
3333 Holding Corporation and subsidiary ("Holding") and Centex Development
Company, L.P. and subsidiaries (the "Partnership") (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.
-30-
<PAGE> 34
3333 HOLDING CORPORATION AND SUBSIDIARY
AND CENTEX DEVELOPMENT COMPANY, L.P. AND SUBSIDIARIES
CONDENSED COMBINING STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit/share data)
(unaudited)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
For the Three Months Ended December 31,
----------------------------------------------------------------------------------------
1999 1998
------------------------------------------- -------------------------------------------
Centex Centex
Development Development
Company, L.P. 3333 Holding Company, L.P. 3333 Holding
and Corporation and Corporation
Combined Subsidiaries and Subsidiary Combined Subsidiaries and Subsidiary
------------ ------------ -------------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
REVENUES $ 79,450 $ 79,450 $ 153 $ 5,694 $ 5,653 $ 194
COSTS AND EXPENSES 79,533 79,527 159 5,681 5,262 572
------------ ------------ ------------ ------------ ------------ ------------
(LOSS) EARNINGS BEFORE INCOME TAXES (83) (77) (6) 13 391 (378)
INCOME TAXES 29 29 -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
NET (LOSS) EARNINGS $ (112) $ (106) $ (6) $ 13 $ 391 $ (378)
============ ============ ============ ============ ============ ============
NET (LOSS) EARNINGS ALLOCABLE TO LIMITED PARTNER $ (106) $ 391
============ ============
(LOSS) EARNINGS PER UNIT/SHARE $ (1.66) $ (6) $ 6.99 $ (378)
============ ============ ============ ============
WEIGHTED-AVERAGE UNITS/SHARES OUTSTANDING 63,773 1,000 55,911 1,000
</TABLE>
See notes to condensed combining financial statements.
-31-
<PAGE> 35
3333 HOLDING CORPORATION AND SUBSIDIARY
AND CENTEX DEVELOPMENT COMPANY, L.P. AND SUBSIDIARIES
CONDENSED COMBINING STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit/share data)
(unaudited)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
For the Nine Months Ended December 31,
----------------------------------------------------------------------------------------
1999 1998
------------------------------------------- -------------------------------------------
Centex Centex
Development Development
Company, L.P. 3333 Holding Company, L.P. 3333 Holding
and Corporation and Corporation
Combined Subsidiaries and Subsidiary Combined Subsidiaries and Subsidiary
------------ ------------ -------------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
REVENUES $ 249,249 $ 249,249 $ 457 $ 19,774 $ 19,385 $ 951
COSTS AND EXPENSES 248,684 247,603 1,538 19,732 18,559 1,735
------------ ------------ ------------ ------------ ------------ ------------
EARNINGS (LOSS) BEFORE INCOME TAXES 565 1,646 (1,081) 42 826 (784)
INCOME TAXES 601 601 -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
NET (LOSS) EARNINGS $ (36) $ 1,045 $ (1,081) $ 42 $ 826 $ (784)
============ ============ ============ ============ ============ ============
NET EARNINGS ALLOCABLE TO LIMITED PARTNER $ 1,045 $ 826
============ ============
EARNINGS (LOSS) PER UNIT/SHARE $ 16.99 $ (1,081) $ 15.65 $ (784)
============ ============ ============ ============
WEIGHTED-AVERAGE UNITS/SHARES OUTSTANDING 61,489 1,000 52,783 1,000
</TABLE>
See notes to condensed combining financial statements.
-32-
<PAGE> 36
3333 HOLDING CORPORATION AND SUBSIDIARY
AND CENTEX DEVELOPMENT COMPANY, L.P. AND SUBSIDIARIES
CONDENSED COMBINING BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
DECEMBER 31, 1999* March 31, 1999**
------------------------------------------ ------------------------------------------
Centex Centex
Development Development
Company, L.P. 3333 Holding Company, L.P. 3333 Holding
and Corporation and Corporation
Combined Subsidiaries and Subsidiary Combined Subsidiaries and Subsidiary
------------ ------------ -------------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash $ 24,297 $ 24,278 $ 19 $ 364 $ 331 $ 33
Accounts Receivable 9,647 12,875 10 1,180 3,133 10
Notes Receivable 3,360 3,360 -- 3,554 3,554 --
Investment in Affiliate -- -- 1,702 -- -- 1,616
Investment in Real Estate Joint Ventures 1,642 1,642 -- 672 672 --
Inventories 370,393 369,643 750 104,663 104,288 375
Property and Equipment, net 3,610 3,502 108 231 89 142
Other Assets -
Goodwill, net 29,106 29,106 -- -- -- --
Deferred Charges and Other 11,259 11,084 175 1,512 1,166 346
------------ ------------ ------------ ------------ ------------ ------------
$ 453,314 $ 455,490 $ 2,764 $ 112,176 $ 113,233 $ 2,522
============ ============ ============ ============ ============ ============
LIABILITIES, STOCKHOLDERS' EQUITY
AND PARTNERS' CAPITAL
Accounts Payable and Accrued Liabilities $ 59,707 $ 59,203 $ 4,677 $ 8,968 $ 9,008 $ 2,772
Notes Payable and Long-term Debt 324,866 324,866 -- 42,478 41,896 582
------------ ------------ ------------ ------------ ------------ ------------
Total Liabilities 384,573 384,069 4,677 51,446 50,904 3,354
------------ ------------ ------------ ------------ ------------ ------------
Stockholders' Equity and Partners' Capital 68,741 71,421 (1,913) 60,730 62,329 (832)
------------ ------------ ------------ ------------ ------------ ------------
$ 453,314 $ 455,490 $ 2,764 $ 112,176 $ 113,233 $ 2,522
============ ============ ============ ============ ============ ============
</TABLE>
* Unaudited.
** Condensed from audited financial statements.
See notes to condensed combining financial statements.
-33-
<PAGE> 37
3333 HOLDING CORPORATION AND SUBSIDIARY
AND CENTEX DEVELOPMENT COMPANY, L.P. AND SUBSIDIARIES
CONDENSED COMBINING STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
For the Nine Months Ended
December 31,
----------------------------------------------------------------------------------------
1999 1998
------------------------------------------- -------------------------------------------
Centex Centex
Development Development
Company, L.P. 3333 Holding Company, L.P. 3333 Holding
and Corporation and Corporation
Combined Subsidiaries and Subsidiary Combined Subsidiaries and Subsidiary
------------ ------------ -------------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS - OPERATING ACTIVITIES
Net (Loss) Earnings $ (36) $ 1,045 $ (1,081) $ 42 $ 826 $ (784)
Adjustments:
Depreciation and Amortization 2,752 2,719 33 75 54 21
Earnings from Joint Venture (23) (23) (15) -- -- --
(Increase) Decrease in Receivables (5,662) (5,662) -- (977) 7,424 (690)
Decrease in Notes Receivable 194 194 -- 1,375 1,375 --
Increase in Inventories (11,612) (11,237) (375) (32,938) (31,138) (451)
(Increase) Decrease in Other Assets (2,744) (2,915) 171 (908) (845) (63)
Increase (Decrease) in Payables
and Accruals 12,131 10,313 1,905 5,353 5,357 (7,797)
------------ ------------ ------------ ------------ ------------ ------------
(5,000) (5,566) 638 (27,978) (16,947) (9,764)
------------ ------------ ------------ ------------ ------------ ------------
CASH FLOWS - INVESTING ACTIVITIES
(Increase) Decrease in Advances to
Joint Ventures and Investment in
Affiliate (947) (948) (71) 2,872 1,810 (205)
Decrease (Increase) in Property
and Equipment 318 317 1 (223) (128) (95)
------------ ------------ ------------ ------------ ------------ ------------
(629) (631) (70) 2,649 1,682 (300)
------------ ------------ ------------ ------------ ------------ ------------
CASH FLOWS - FINANCING ACTIVITIES
Increase (Decrease) in Notes Payable 24,719 25,301 (582) 17,301 14,890 2,411
Decrease in Notes Receivable -- -- -- 7,700 -- 7,700
Issuance of Class "C" Partnership Units 4,830 4,830 -- 1,000 1,000 --
------------ ------------ ------------ ------------ ------------ ------------
29,549 30,131 (582) 26,001 15,890 10,111
------------ ------------ ------------ ------------ ------------ ------------
EFFECT OF EXCHANGE RATE CHANGES
ON CASH 13 13 -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH 23,933 23,947 (14) 672 625 47
CASH AT BEGINNING OF PERIOD 364 331 33 260 259 1
------------ ------------ ------------ ------------ ------------ ------------
CASH AT END OF PERIOD $ 24,297 $ 24,278 $ 19 $ 932 $ 884 $ 48
============ ============ ============ ============ ============ ============
SUPPLEMENTAL DISCLOSURES:
Increase in Notes Payable
Related to an Acquisition $ 253,812 $ 253,812 -- -- -- --
Issuance of Class C Units in
Exchange for Assets $ 3,265 $ 3,265 -- $ 18,445 $ 18,445 --
</TABLE>
See notes to condensed combining financial statements.
-34-
<PAGE> 38
3333 HOLDING CORPORATION AND SUBSIDIARY
AND CENTEX DEVELOPMENT COMPANY, L.P. AND SUBSIDIARIES
CONDENSED COMBINING FINANCIAL STATEMENTS NOTES
DECEMBER 31, 1999
(unaudited)
(A) In March 1987, Centex Development Company, L.P. (the "Partnership"), a
master limited partnership, was formed to enable holders of Centex Corporation
("Centex") stock to participate in long-term real estate development projects
whose dynamics are inconsistent with Centex's traditional financial objectives.
Certain of Centex's subsidiaries contributed to the Partnership certain
properties at their historical cost basis in exchange for 1,000 limited
partnership units ("Class A Units").
The Partnership is controlled by its general partner, 3333 Development
Corporation ("Development"), which is in turn wholly-owned by 3333 Holding
Corporation ("Holding"). Holding is a separate public company whose stock trades
in tandem with Centex's stock. The common stock of Holding (the "Securities")
was distributed in 1987 (with warrants to purchase approximately 80% of the
Class B limited partnership units in the Partnership) as a dividend to the
stockholders of Centex. The Securities, held by a nominee on behalf of the
stockholders, will trade in tandem with the common stock of Centex until such
time as they are detached. The securities may be detached at any time by
Centex's Board of Directors but the warrants to purchase Class B Units
automatically become detached in November 2007.
The Board of Directors of Holding is elected by the stockholders of
Centex. In October 1999, the Board of Directors expanded the size of the board
to four directors. The majority of the Board members are independent outside
directors, none of whom are directors of Centex. Accordingly, the general
partner of the Partnership is controlled by the stockholders of Centex. The
general partner and independent Board of Directors of Holding manage the
Partnership's conduct of its activities including the sales, development,
maintenance and zoning of properties. The general partner may sell or acquire
properties, including the contributed property, and enter into other business
transactions without the consent of the limited partners. In addition, the
limited partners cannot remove the general partner.
See Note (C) to the condensed consolidated financial statements of
Centex and subsidiaries included elsewhere in this Form 10-Q for supplementary
condensed combined financial statements for Centex and Subsidiaries, Holding and
Subsidiary, and the Partnership and Subsidiaries.
(B) Holding has a service agreement with Centex Service Company, a wholly-owned
subsidiary of Centex, whereby Centex Service Company provides certain tax,
accounting and other similar services for Holding. This agreement was amended in
fiscal 1999 to include development services and the monthly fee was increased
from $2,500 per month to $30,000 per month.
The Partnership sells lots to Centex Homes pursuant to certain purchase
and sale agreements. Revenues from these sales totaled $669,000 and $5.0 million
for the three and nine months ended
-35-
<PAGE> 39
December 31, 1999, and $55,000 and $2.9 million for the three and nine months
ended December 31, 1998, respectively. Gains associated with these sales totaled
$132,000 and $305,000 for the three and nine months ended December 31, 1999 and
$56,000 and $122,000 for the three and nine months ended December 31, 1998,
respectively.
(C) Comprehensive loss is summarized for the three and nine months ended
December 31, 1999 below (dollars in thousands):
<TABLE>
<CAPTION>
-------------------------- -------------------------
For the Three Months Ended For the Nine Months Ended
December 31, 1999 December 31, 1999
-------------------------- -------------------------
<S> <C> <C>
Net Loss $ (112) $ (36)
Other Comprehensive Loss:
Foreign Currency Translation Adjustments (16) (48)
-------------------- --------------------
Comprehensive Loss $ (128) $ (84)
==================== ====================
</TABLE>
(D) Changes in stockholders' equity and partners' capital are summarized below
(dollars in thousands):
<TABLE>
<CAPTION>
For the Nine Months Ended December 31, 1999
------------------------------------------------------------------------------------
Centex Development Company, L.P. 3333 Holding Corporation
and Subsidiaries and Subsidiary
---------------------------------- ----------------------------------
Class B General Limited Capital In Retained
Unit Partner's Partner's Stock Excess of Earnings
Combined Warrants Capital Capital Warrants Par Value (Deficit)
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at March 31, 1999 $ 60,730 $ 500 $ 767 $ 61,062 $ 1 $ 800 $ (1,633)
Partnership Units Issued in
Exchange for Assets 8,095 -- -- 8,095 -- -- --
Net (Loss) Earnings (36) -- -- 1,045 -- -- (1,081)
Accumulated Other
Comprehensive Loss:
Foreign Currency
Translation Adjustments (48) -- -- (48) -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Balance at December 31, 1999 $ 68,741 $ 500 $ 767 $ 70,154 $ 1 $ 800 $ (2,714)
========== ========== ========== ========== ========== ========== ==========
</TABLE>
During fiscal year 1998, the partnership agreement governing the
Partnership was amended to allow for the issuance of new Class C Preferred
Partnership Units ("Class C Units"), to be issued in exchange for assets. During
the nine months ended December 31, 1999, 8,095 Class C Units were issued to
Centex Homes, the Partnership's sole limited partner, in exchange for assets
having a fair market value of $8.1 million.
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 reduced by repayments thereof, and is
the basis for preference accruals. Unrecovered Capital for Class A and Class C
limited partners was
-36-
<PAGE> 40
approximately $68 million as of December 31, 1999 and the unpaid preferred
return as of that date was $13.3 million. No preferred return payments were made
during the three months or nine months ended December 31, 1999.
(E) On April 15, 1999 Centex Development Company UK Limited ("CDC-UK"), a
company incorporated in England and Wales and a wholly-owned subsidiary of the
Partnership, closed its acquisition of all of the voting shares of Fairclough
Homes Group Limited, a British home builder ("Fairclough"). The purchase price
at closing (approximately $218 million) was paid by the delivery of two-year
non-interest bearing promissory notes. Additionally, the seller of the voting
shares retained non-voting preference shares in Fairclough that will entitle it
to receive substantially all of the net after-tax earnings of Fairclough until
March 31, 2001. During that time period CDC-UK may, however, participate in
Fairclough's earnings in excess of certain specified levels.
However, because the non-voting preference shares retained by the
seller have the characteristics of debt, the preference obligations are being
reported as interest expense in the financial statements. A major portion of the
promissory notes is secured by a letter of credit obtained by the Partnership
from a United Kingdom bank.
During the period between April 15, 1999 and March 31, 2001, Fairclough
will be operated by CDC-UK subject to certain guidelines that were negotiated
with the seller. After March 31, 2001, CDC-UK will redeem, for a nominal value,
the preference shares.
The purchase of Fairclough has been accounted for using the purchase
method of accounting, pursuant to which the total cost of the acquisition has
been allocated to the tangible and intangible assets acquired and liabilities
assumed based upon their estimated fair values. The allocation of the purchase
price is as follows (dollars in thousands):
Inventories, Property and Equipment and Other $ 267,720
Goodwill 29,260
Notes Issued and Liabilities Assumed (296,980)
-------------
Cash Paid $ --
=============
The following unaudited pro forma results of operations for the three
and nine months ended December 31, 1998 give effect to the April 15, 1999
acquisition of Fairclough as if such transaction had occurred on April 1, 1998.
The financial information for Fairclough included in the unaudited pro forma
results of operations is derived from Fairclough's operating results for the
three and nine months ended December 31, 1998, in accordance with U.S. generally
accepted accounting principles and translated to U.S. dollars. This information
is based on the historical financial statements of the Companies and the
historical financial statements of Fairclough. The pro forma adjustments are
directly attributable to the transaction referenced above, and are expected to
have a continuing impact on the business, results of operations, and financial
position.
-37-
<PAGE> 41
<TABLE>
<CAPTION>
Pro Forma Results of Operations
--------------------------------------------------
For the Three Months Ended
December 31, 1998
--------------------------------------------------
(Dollars in thousands, except per unit/share data)
Centex
Development
Company, L.P. 3333 Holding
and Corporation
Combined Subsidiaries and Subsidiary
---------- ------------ --------------
<S> <C> <C> <C>
Revenues $ 122,340 $ 122,311 $ 194
========== ========== ==========
Net (Loss) Earnings $ (23) $ 355 $ (378)
========== ========== ==========
Net Earnings Allocable to Limited Partner $ 355
==========
Earnings (Loss) Per Unit/Share $ 6.35 $ (378)
========== ==========
</TABLE>
<TABLE>
<CAPTION>
Pro Forma Results of Operations
--------------------------------------------------
For the Nine Months Ended
December 31, 1998
--------------------------------------------------
(Dollars in thousands, except per unit/share data)
Centex
Development
Company, L.P. 3333 Holding
and Corporation
Combined Subsidiaries and Subsidiary
---------- ------------ --------------
<S> <C> <C> <C>
Revenues $ 290,838 $ 290,296 $ 951
========== ========== ==========
Net (Loss) Earnings $ (19) $ 765 $ (784)
========== ========== ==========
Net Earnings Allocable to Limited Partner $ 765
==========
Earnings (Loss) Per Unit/Share $ 14.49 $ (784)
========== ==========
</TABLE>
The unaudited pro forma results of operations are not necessarily
indicative of what actual results of operations of the Companies would have been
for the period, nor do they represent the Companies' results of operations for
future periods.
The unaudited pro forma results of operations include the following
adjustments:
o Amortization of goodwill and other intangibles based
upon the Partnership's allocation of the purchase
price. Goodwill is being amortized over a 20-year
period;
o Elimination of the historical interest expense of
Fairclough related to debt not assumed by the
Partnership;
o Additional interest expense representing the
preference payments to the seller;
o Amortization of deferred debt issuance costs which
are being amortized over the term of the debt;
o Income tax adjustments related to the above pro forma
items.
-38-
<PAGE> 42
(F) The Partnership operates in five principal business segments: International
Home Building, Domestic Home Building, Commercial Development, Multi-Family
Development and Land Sales. All of the segments, with the exception of
International Home Building, operate in the United States. International Home
Building currently operates in the United Kingdom.
The following tables set forth financial information relating to the
five business segments for the three and nine months ended December 31, 1999 and
December 31, 1998 (dollars in thousands):
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
Three Months Ended December 31, 1999
-------------------------------------------------------------------------------------------
Home Building
----------------------------- Commercial Multi-Family
International Domestic Development Development Land Sales Total
------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues $ 71,298 $ 3,791 $ 3,593 $ -- $ 768 $ 79,450
Cost of Sales (62,294) (3,355) (1,683) -- (539) (67,871)
General & Administrative Expenses (6,433) (369) (974) (475) (125) (8,376)
Interest Expense (2,542) -- (740) (4) -- (3,286)
----------- ----------- ----------- ----------- ----------- -----------
Operating Earnings (Loss) $ 29 $ 67 $ 196 $ (479) $ 104 $ (83)
=========== =========== =========== =========== =========== ===========
Identifiable Assets $ 327,154 $ 7,302 $ 81,175 $ 26,457 $ 11,226 $ 453,314
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
Three Months Ended December 31, 1998
-------------------------------------------------------------------------------------------
Home Building
----------------------------- Commercial Multi-Family
International Domestic Development Development Land Sales Total
------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues * $ 5,403 $ 58 $ 41 $ 192 $ 5,694
Cost of Sales * (4,596) -- -- (15) (4,611)
General & Administrative Expenses * (403) (95) (366) (120) (984)
Interest Expense * -- (32) (54) -- (86)
----------- ----------- ----------- ----------- -----------
Operating Earnings (Loss) $ 404 $ (69) $ (379) $ 57 $ 13
=========== =========== =========== =========== ===========
</TABLE>
-39-
<PAGE> 43
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
Nine Months Ended December 31, 1999
-------------------------------------------------------------------------------------------
Home Building
----------------------------- Commercial Multi-Family
International Domestic Development Development Land Sales Total
------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues $ 208,389 $ 9,781 $ 7,177 $ 17,154 $ 6,748 $ 249,249
Cost of Sales (182,110) (8,500) (3,065) (17,049) (5,943) (216,667)
General & Administrative Expenses (17,601) (1,088) (1,881) (1,505) (375) (22,450)
Interest Expense (8,077) -- (1,471) (19) -- (9,567)
----------- ----------- ----------- ----------- ----------- -----------
Operating Earnings (Loss) $ 601 $ 193 $ 760 $ (1,419) $ 430 $ 565
=========== =========== =========== =========== =========== ===========
Identifiable Assets $ 327,154 $ 7,302 $ 81,175 $ 26,457 $ 11,226 $ 453,314
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
Nine Months Ended December 31, 1998
-------------------------------------------------------------------------------------------
Home Building
----------------------------- Commercial Multi-Family
International Domestic Development Development Land Sales Total
------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues * $ 13,976 $ 1,744 $ 324 $ 3,730 $ 19,774
Cost of Sales * (11,885) (1,577) -- (3,082) (16,544)
General & Administrative Expenses * (1,205) (292) (1,111) (364) (2,972)
Interest Expense * -- (60) (94) (62) (216)
----------- ----------- ----------- ----------- -----------
Operating Earnings (Loss) $ 886 $ (185) $ (881) $ 222 $ 42
=========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
Fiscal Year Ended March 31, 1999
-------------------------------------------------------------------------------------------
Home Building
----------------------------- Commercial Multi-Family
International Domestic Development Development Land Sales Total
------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C
Identifiable Assets * $ 10,920 $ 44,820 $ 31,337 $ 25,099 $112,176
</TABLE>
* Business segment did not exist in prior fiscal year.
(G) Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting
for Derivative Instruments and Hedging Activities," was issued in June 1998.
This statement addressed the accounting for derivative instruments, including
derivative instruments embedded in other contracts (collectively referred to as
derivatives), and hedging activities as well as the disclosure of these
activities. SFAS No. 133 requires that an entity recognize all derivatives as
either assets or liabilities in the consolidated balance sheet and measure those
instruments at fair value. In June 1999, SFAS No. 137 was issued which delays
the implementation of this statement for the Companies until April 2001.
(H) Certain prior period balances have been reclassified to be consistent with
the December 31, 1999 presentation.
-40-
<PAGE> 44
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
On a combined basis, the Companies' revenues for the three and nine
months ended December 31, 1999 totaled $79.4 million and $249.2 million,
respectively. Revenues of $5.7 million and $19.8 million were reported for the
three and nine months ended December 31, 1998, respectively. The significant
increase in revenues for the three and nine months ended December 31, 1999
resulted primarily from the Partnership's acquisition of Fairclough.
The Companies had combined net loss for the three and nine months ended
December 31, 1999 of $112,000 and $36,000, respectively, compared to combined
net earnings of $13,000 and $42,000 for the three and nine months ended December
31, 1998, respectively.
HOME BUILDING
INTERNATIONAL -
The following summarizes International Home Building's results for the
three and nine months ended December 31, 1999 (dollars in thousands):
<TABLE>
<CAPTION>
-------------------------- -------------------------
For the Three Months Ended For the Nine Months Ended
December 31, 1999 December 31, 1999
-------------------------- -------------------------
<S> <C> <C>
Revenues $ 71,298 $ 208,389
Cost of Sales (62,294) (182,110)
General & Administrative Expenses (6,433) (17,601)
Interest Expense, Paid to Seller (2,542) (8,077)
-------------- --------------
Operating Earnings $ 29 $ 601
============== ==============
Units Closed 377 1,147
============== ==============
</TABLE>
-41-
<PAGE> 45
The Partnership acquired this segment in the first quarter of fiscal
2000. The seller received $221.7 million in non-interest bearing promissory
notes due March 31, 2001 and retained preferred non-voting shares in Fairclough.
The preferred shares require a preferred distribution and have a nominal
residual interest value that is mandatorily redeemable on March 31, 2001. During
the three and nine months ended December 31, 1999, Fairclough generated earnings
totaling $2.6 million and $8.1 million, respectively, which are subject to
distribution to the seller under the preferred share arrangement. The Companies
have accounted for the non-interest bearing debt and nominal residual value
preferred shares as if they were a single debt instrument. Accordingly,
distributions attributable to the preferred shares are accrued as interest
expense in the accompanying financial statements.
DOMESTIC -
The following summarizes Domestic Home Building's results for the three
and nine months ended December 31, 1999 compared to the same periods last year
(dollars in thousands):
<TABLE>
<CAPTION>
------------------------------
For the Three Months Ended
December 31,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Sales Revenues $ 3,791 $ 5,403
Cost of Sales (3,355) (4,596)
General & Administrative Expenses (369) (403)
------------ ------------
Operating Earnings $ 67 $ 404
============ ============
Units Closed 11 19
============ ============
</TABLE>
<TABLE>
<CAPTION>
------------------------------
For the Nine Months Ended
December 31,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Sales Revenues $ 9,781 $ 13,976
Cost of Sales (8,500) (11,885)
General & Administrative Expenses (1,088) (1,205)
------------ ------------
Operating Earnings $ 193 $ 886
============ ============
Units Closed 30 48
============ ============
</TABLE>
During the three and nine months ended December 31, 1999 and 1998,
sales revenues included revenues from the sale of single-family homes in New
Jersey which completed the build-out of certain communities. In July 1999, the
Partnership obtained final zoning approval for the development of an additional
251 single-family homes.
-42-
<PAGE> 46
COMMERCIAL DEVELOPMENT
The following summarizes Commercial Development's results for the three
and nine months ended December 31, 1999 compared to the same periods last year
(dollars and square feet in thousands):
<TABLE>
<CAPTION>
------------------------------
For the Three Months Ended
December 31,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Sales Revenues $ 1,901 $ (116)
Rental Income 1,692 174
Cost of Sales (1,683) --
General & Administrative Expenses (974) (95)
Interest Expense (740) (32)
------------ ------------
Operating Earnings (Loss) $ 196 $ (69)
============ ============
Operating Square Feet 956 38
============ ============
</TABLE>
<TABLE>
<CAPTION>
------------------------------
For the Nine Months Ended
December 31,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Sales Revenues $ 3,765 $ 1,570
Rental Income 3,412 174
Cost of Sales (3,065) (1,577)
General & Administrative Expenses (1,881) (292)
Interest Expense (1,471) (60)
------------ ------------
Operating Earnings (Loss) $ 760 $ (185)
============ ============
</TABLE>
Sales revenues for the three months ended December 31, 1999 included
the sale of certain residential lots in Texas and certain commercial land in
California. Sales revenues for the same period in the prior year included the
sale of industrial land to a joint venture in which the Partnership owns a 10%
interest.
-43-
<PAGE> 47
MULTI-FAMILY DEVELOPMENT
The following summarizes Multi-Family Development's ("Multi-Family")
results for the three and nine months ended December 31, 1999 compared to the
same periods last year (dollars in thousands):
<TABLE>
<CAPTION>
------------------------------
For the Three Months Ended
December 31,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenues $ -- $ 41
Cost of Sales -- --
General & Administrative Expenses (475) (366)
Interest Expense (4) (54)
------------ ------------
Operating Loss $ (479) $ (379)
============ ============
</TABLE>
<TABLE>
<CAPTION>
------------------------------
For the Nine Months Ended
December 31,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Revenues $ 17,154 $ 324
Cost of Sales (17,049) --
General & Administrative Expenses (1,505) (1,111)
Interest Expense (19) (94)
------------ ------------
Operating Loss $ (1,419) $ (881)
============ ============
</TABLE>
Revenues during the three and nine months ended December 31, 1999
resulted from the sale of a Texas apartment complex that had been constructed
subject to a pre-sale agreement. Revenues during the three and nine months ended
December 31, 1998 consisted primarily of development fee income.
LAND SALES
The following summarizes Land Sales' operating results for the three
and nine months ended December 31, 1999 compared to the same periods last year
(dollars in thousands):
<TABLE>
<CAPTION>
------------------------------
For the Three Months Ended
December 31,
------------------------------
1999 1998
---------- ----------
<S> <C> <C>
Sales Revenues $ 768 $ 192
Cost of Sales (539) (15)
General & Administrative Expenses (125) (120)
Interest Expense -- --
---------- ----------
Operating Earnings $ 104 $ 57
========== ==========
</TABLE>
-44-
<PAGE> 48
<TABLE>
<CAPTION>
------------------------------
For the Nine Months Ended
December 31,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Sales Revenues $ 6,748 $ 3,730
Cost of Sales (5,943) (3,082)
General & Administrative Expenses (375) (364)
Interest Expense -- (62)
------------ ------------
Operating Earnings $ 430 $ 222
============ ============
</TABLE>
Revenues for the three months ended December 31, 1999 included the sale
of certain residential lots in Florida, Texas and New Jersey to Centex's
homebuilding operations. Revenues for the nine month period ended December 31,
1999 consisted of $5.0 million in residential lot sales to Centex Homes and the
sale of certain commercial land in Texas. Real Estate sales during the nine
months ended December 31, 1998 included $2.9 million of lot sales to Centex
Homes and the sale of certain commercial property in Texas.
LIQUIDITY AND CAPITAL RESOURCES
During the nine months ended December 31, 1999, 8,095 Class C Preferred
Partnership Units were issued in exchange for assets with a fair market value of
$8.1 million. Also during the nine months ended December 31, 1999, the Companies
closed on non-recourse commercial development project loans totaling $49.6
million. The project loans are collateralized by commercial properties and have
ten-year maturities with fixed interest rates ranging from 6.9% to 7.8%.
The Partnership believes that the revenues, earnings, and liquidity
from its current operations and from construction and permanent financings will
be sufficient to provide the necessary funding for the current and future needs.
YEAR 2000 COMPLIANCE
Beginning in fiscal year 1997, the Companies engaged in an ongoing
process of evaluating and implementing changes to their systems in order to
ensure Year 2000 compliance. As a result of this process, the Companies and
their subsidiaries tested all critical systems during calendar year 1999 and
repaired, upgraded and/or replaced those found to be not Year 2000 compliant.
The cost of replacing, upgrading or otherwise changing non-compliant systems was
not material to the Companies as a whole, or to the Companies' individual
subsidiaries. The Companies used internally generated cash to fund the
correction of all non-compliant systems. The Companies' Year 2000 compliance
preparation included the completion of a contingency plan, the hiring of a third
party consultant (through Holding's services agreement with Centex Service
Company) and the surveying of material vendors and suppliers.
As a result of the attention that the Companies paid to addressing
their Year 2000 readiness, the Companies have not, to date, experienced any
adverse impact on the Companies' operations or financial condition or the
operations or financial condition of any of their individual subsidiaries as a
result of any Year 2000 compliance issues. In addition, the Companies are not
aware that any of their vendors, subcontractors
-45-
<PAGE> 49
or other third parties experienced any significant problems as a result of Year
2000 compliance issues. Furthermore, if any of those third parties were affected
by Year 2000 compliance issues, such compliance issues have not caused, to date,
any adverse effects on the Companies' operations or financial condition, or the
operations or financial condition of any of their individual subsidiaries.
Although the Companies have not been affected to date by the changes
from December 31, 1999 to January 1, 2000, Year 2000 issues could arise
subsequent to the filing of this report. As an example, the Companies' systems
could fail to recognize 2000 as a leap year. The Companies believe that such
circumstances are highly unlikely to occur and that, even if they were to occur,
it is highly unlikely that the Companies' operations or financial condition
would be materially adversely affected. Nevertheless, the Companies intend to
continue to monitor Year 2000 related issues and immediately address any effects
that may arise as a result.
Year 2000 Forward-looking Statements
Certain statements in this section, other than historical information,
are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and
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.
- --------------------------------------------------------------------------------
FORWARD-LOOKING STATEMENTS
The Management's Discussion and Analysis of Financial Condition and
Results of Operations and other sections of this report on Form 10-Q contain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private
Securities Litigation Reform Act of 1995. 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. These
statements are not guarantees of future performance and involve a number of
risks and uncertainties. Actual results and outcomes may differ materially from
what is expressed or forecast in such forward-looking statements. The principal
risks and uncertainties that may affect the Companies' actual performance and
results of operations include the following: general economic conditions and
interest rates; the cyclical and seasonal nature of the Companies' businesses;
changes in property taxes; changes in federal income tax laws; governmental
regulation; changes in governmental and public policy; changes in economic
conditions specific to any one or more of the Companies' markets and businesses;
competition; availability of raw materials; and unexpected operations
difficulties. Other risks and uncertainties may also affect the outcome of the
Companies' actual performance and results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
-46-
<PAGE> 50
3333 HOLDING CORPORATION AND SUBSIDIARY
CENTEX DEVELOPMENT COMPANY, L.P. AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(1) Exhibits
Exhibit 27.2 Financial Data Schedule
Exhibit 27.3 Financial Data Schedule
(2) Reports on Form 8-K
The Registrant filed no reports on Form 8-K during the quarter
ended December 31, 1999.
All other items required under Part II are omitted because they are not
applicable.
-47-
<PAGE> 51
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 11, 2000 /s/ Richard C. Decker
-------------------------------------------------
Richard C. Decker
Director, Chairman, President and
Chief Executive Officer
(principal executive officer)
February 11, 2000 /s/ Kimberly A. Pinson
-------------------------------------------------
Kimberly A. Pinson
Vice President, Treasurer, Controller and
Assistant Secretary
(principal financial officer and
chief accounting officer)
-48-
<PAGE> 52
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 11, 2000 /s/ Richard C. Decker
-------------------------------------------------
Richard C. Decker
Director, Chairman, President and
Chief Executive Officer
(principal executive officer)
February 11, 2000 /s/ Kimberly A. Pinson
-------------------------------------------------
Kimberly A. Pinson
Vice President, Treasurer, Controller and
Assistant Secretary
(principal financial officer and
chief accounting officer)
-49-
<PAGE> 53
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
Exhibit 10.10 Centex Corporation Amended and Restated 1987 Stock Option Plan
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>
<PAGE> 1
EXHIBIT 10.10
CENTEX CORPORATION
AMENDED AND RESTATED 1987 STOCK OPTION PLAN
1. PURPOSE
The purpose of this Plan is to assist Centex Corporation, a Nevada
corporation, in attracting and retaining as officers and key employees of the
Company and its Affiliates, and as non-employee directors of the Company,
individuals of training, experience and ability and to furnish additional
incentive to such individuals by encouraging them to become owners of Shares of
the Company's capital stock, by granting to such individuals Incentive Options,
Nonqualified Options, Restricted Stock, or any combination of the foregoing.
2. DEFINITIONS
Unless the context otherwise requires, the following words as used
herein shall have the following meanings:
"Act" -- The Securities Exchange Act of 1934, as amended.
"Affiliates" -- Any corporation or other entity which is a direct or
indirect parent or subsidiary (including, without limitation,
partnerships and limited liability companies) of the Company.
"Agreement" -- The written agreement between the Company and the
Optionee evidencing the Option granted by the Company and the
understanding of the parties with respect thereto.
"Board" -- The Board of Directors of the Company as the same may be
constituted from time to time.
"Code" -- The Internal Revenue Code of 1986, as amended from time to
time.
"Committee" -- The Committee provided for in Section 3 of this Plan, as
such Committee may be constituted from time to time.
"Company"-- Centex Corporation, a Nevada corporation.
"Fair Market Value" -- If a Share is traded on one or more established
market or exchanges, the mean of the opening and closing price of the
Share in the primary market or exchange on which the Share is traded,
and if the Share is not so traded or the Share does not trade on the
relevant date, the value determined in good faith by the Board. For
purposes of valuing Shares to be made subject to Incentive Options, the
Fair Market Value of stock shall be determined without regard to any
restriction other than one which, by its terms, will never lapse.
"Incentive Option" -- Stock Options that are intended to satisfy the
requirements of Section 422 of the Code and Section 16 of this Plan.
"Non-employee Director" -- An individual who satisfies the requirements
of Rule 16b-3 promulgated under the Act.
1
<PAGE> 2
"Nonqualified Options" -- Stock Options which do not satisfy the
requirements of Section 422 of the Code.
"Option" -- An option to purchase one or more Shares of the Company
granted under and pursuant to the Plan. Such Option may be either an
Incentive Option or a Nonqualified Option.
"Optionee" -- An individual who has been granted an Option under this
Plan and who has executed a written option Agreement with the Company.
"Plan"-- This Centex Corporation 1987 Stock Option Plan.
"Permitted Transferees" -- (i) members of the Optionee's immediate
family, (ii) one or more trusts for the benefit of such members of the
Optionee's immediate family, (iii) partnerships in which such immediate
family members are the only partners and (iv) limited liability
companies in which such immediate family members are the only members.
"Restricted Stock" -- Shares issued pursuant to Section 19 of the Plan.
"Senior Management" -- Members of the senior management group of the
Company and its Affiliates, such senior managers to be identified by
the Chairman and Vice Chairman of the Board of the Company.
"Share" -- A share of the Company's present twenty-five cents ($0.25)
par value common stock and any share or shares of capital stock or
other securities of the Company hereafter issued or issuable upon, in
respect of or in substitution or in exchange for each present share.
Such Shares may be unissued or reacquired Shares, as the Board, in its
sole and absolute discretion, shall from time to time determine.
3. ADMINISTRATION
The Plan shall be administered by a committee (the "Committee")
comprised of two or more Non-employee Directors appointed by the Board from time
to time. The Committee shall (a) select the eligible employees or directors who
are to receive Options or awards of Restricted Stock under the Plan, (b)
determine the type, number, vesting requirements and other features and
conditions of Options or awards of Restricted Stock, (c) interpret the Plan, and
(d) make all other determinations necessary or advisable for the administration
of the Plan. The Committee may adopt such rules or guidelines as it deems
appropriate to implement the Plan. The Committee's determinations under the Plan
shall be final and binding on all persons.
4. SHARES SUBJECT TO PLAN
(a) A maximum of 7,065,139 Shares shall be subject to grants of Options
and awards of Restricted Stock under the Plan; provided that such maximum shall
be increased or decreased as provided below in Section 12.
(b) At any time and from time to time after the Plan takes effect, the
Committee, pursuant to the provisions herein set forth, may grant Options and
award Restricted Stock until the maximum number of Shares shall be exhausted or
the Plan shall be sooner terminated; provided, however, that no Option shall be
granted and no Restricted Stock shall be awarded after May 19, 2001.
2
<PAGE> 3
(c) Should any Option expire or be cancelled without being fully
exercised, or should any Restricted Stock previously awarded be reacquired by
the Company, the number of Shares with respect to which such Option shall not
have been exercised prior to its expiration or cancellation and the number of
Shares of such Restricted Stock so reacquired may again be optioned or awarded
pursuant to the provisions hereof.
(d) Any Shares withheld pursuant to subsection 18(c) shall not be
available after such withholding for being optioned or awarded pursuant to the
provisions hereof.
5. ELIGIBILITY
Eligibility for the receipt of the grant of Options under the Plan
shall be confined to (a) a limited number of persons who are employed by the
Company, or one or more of its Affiliates and who are officers of or who, in the
opinion of the Committee, hold other key positions in or for the Company or one
or more of its Affiliates and (b) directors of the Company, including directors
who are not employees of the Company or its Affiliates; provided that only
employees of the Company or its Affiliates shall be eligible for the grant of
Incentive Options. In addition, an individual who becomes a director of the
Company, but who is not at the time he becomes a director also an employee of
the Company, shall not be eligible for a grant of Options or an award of
Restricted Stock, and shall not be eligible for the grant of an option, stock
allocation, or stock appreciation right under any other plan of the Company or
its affiliates (within the meaning of Rule 12b-2 promulgated under the Act)
until the Board expressly declares such person eligible by resolution. In no
event may an Option be granted to an individual who is not an employee of the
Company or an Affiliate or a director of the Company.
6. GRANTING OF OPTIONS
(a) From time to time while the Plan is in effect, the Committee may in
its absolute discretion, select from among the persons eligible to receive a
grant of Options under the Plan (including persons who have already received
such grants of Options) such one or more of them as in the opinion of the
Committee should be granted Options. The Committee shall thereupon, likewise in
its absolute discretion, determine the number of Shares to be allotted for
option to each person so selected; provided, however, that the total number of
Shares subject to Options granted to any one person, including directors of the
Company, when aggregated with the number of Shares of Restricted Stock awarded
to such person, shall not exceed 706,513 Shares.
(b) Each person so selected shall be offered an Option to purchase the
number of Shares so allotted to him, upon such terms and conditions, consistent
with the provisions of the Plan, as the Committee may specify. Each such person
shall have a reasonable period of time, to be fixed by the Committee, within
which to accept or reject the proffered Option. Failure to accept within the
period so fixed may be treated as a rejection.
(c) Each person who accepts an Option offered to him shall enter into
an Agreement with the Company, in such form as the Committee may prescribe,
setting forth the terms and conditions of the Option, whereupon such person
shall become a participant in the Plan. In the event an individual is granted
both one or more Incentive Options and one or more Nonqualified Options, such
grants shall be evidenced by separate Agreements, one each for the Incentive
Option grants and one each for the Nonqualified Options grants. The date which
the Committee specifies to be the grant date of an Option to an individual shall
constitute the date on which the Option covered by such Agreement is granted. In
no event, however, shall an Optionee gain any rights in addition to those
specified by the Committee in its grant, regardless of the time that may pass
between the grant of the Option and the actual signing of the Agreement by the
Company and the Optionee.
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7. OPTION PRICE
The option price for each Share covered by each Incentive Option shall
not be less than the greater of (a) the par value of each such Share or (b) the
Fair Market Value of the Share at the time such Option is granted, except as
provided hereinafter. The option price for each Share covered by each
Nonqualified Option shall not be less than the greater of (a) the par value of
each such Share or (b) 85% of the Fair Market Value of the Share at the time the
Option is granted; provided, however, that the number of Shares covered by
Nonqualified Options granted under this Plan that have an option price less than
the Fair Market Value of a Share at the time the respective Option is granted
shall not exceed 10% of the total number of Shares authorized to be issued under
this Plan. If the Company or an Affiliate agrees to substitute a new Option
under the Plan for an old Option, or to assume an old Option, by reason of a
corporate merger, consolidation, acquisition of property or stock, separation,
reorganization, or liquidation (any of such events being referred to herein as a
"Corporate Transaction"), the option price of the Shares covered by each such
new Option or assumed Option may be other than the Fair Market Value of the
stock at the time the Option is granted as determined by reference to a formula,
established at the time of the Corporate Transaction, which will give effect to
such substitution or assumption; provided, however, in no event shall --
(a) the excess of the aggregate Fair Market Value of the Share subject
to the Option immediately after the substitution or assumption over the
aggregate option price of such Shares be more than the excess of the aggregate
Fair Market Value of all Shares subject to the Option immediately prior to the
substitution or assumption over the aggregate option price of such Shares
(b) in the case of an Incentive Option, the new Option or the
assumption of the old Option give the Optionee additional benefits which he
would not have under the old Option; or
(c) the ratio of the option price to the Fair Market Value of the stock
subject to the Option immediately after the substitution or assumption be more
favorable to the Optionee than the ratio of the option price to the Fair Market
Value of the stock subject to the old Option immediately prior such substitution
or assumption, on a Share by Share basis.
Notwithstanding the above, the provisions of this Section 7 with
respect to the Option price in the event of a Corporate Transaction shall, in
case of an Incentive Option, be subject to the requirements of Section 424(a) of
the Code and the Treasury regulations and revenue rulings promulgated
thereunder. In the case of an Incentive Option, in the event of a conflict
between the terms of this Section 7 and the above cited statute, regulations,
and rulings, or in the event of an omission in this Section 7 of a provision
required by said laws, the latter shall control in all respects and are hereby
incorporated herein by reference as if set out at length.
8. OPTION PERIOD
(a) Each Option shall run for such period of time as the Committee may
specify, but in no event for longer than ten (10) years from the date when the
Option is granted, including the period of time provided in subsections (i) and
(ii) of this subsection (a); and subject to such limits, and the further
condition that, unless designated otherwise by the Committee, no Incentive
Option shall become exercisable prior to one year from the date of its grant,
(i) Except as provided below in this subsection (i), all rights to
exercise an Option shall terminate within three months after the date
the Optionee ceases to be an employee of at least one of the employers
in the group of employers consisting of the Company and its Affiliates,
or after the date the Optionee ceases to be a director of the Company,
whichever may occur later, for any reason other than
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death, except that, (x) in the case of a Nonqualified Option which is
held by an Optionee who is, on the date of cessation referred to in
this clause, an officer or director of the Company (within the
meanings thereof under Section 16b) of the Act), all rights to
exercise such Option shall terminate within seven months after the
date the Optionee ceases to be an employee of at least one of the
employers in the group of employers consisting of the Company and its
Affiliates, or, if later, after the date the Optionee ceases to be a
director of the Company, for any reason other than death; and, except
that, (y) the Committee, in its discretion, may provide in new Option
grants or amend outstanding Options to provide an extended period of
time during which an Optionee can exercise a Nonqualified Option to
the maximum permissible period for which such Optionee's Option would
have been exercisable in the absence of the Optionee's ceasing to be
an employee of the Company and its Affiliates or ceasing to be a
director of the Company; and, except that (z) in case the employment
of the Optionee is terminated for cause, the Option shall thereafter
be null and void for all purposes.
(ii) If the Optionee ceases to be employed by at least one of the
employers in the group of employers consisting of the Company and its
Affiliates, or ceases to be a director of the Company, whichever may
occur later, by reason of his death, all rights to exercise such Option
shall terminate fifteen (15) months thereafter.
(iii) If an Option is granted with a term shorter than ten (10)
years, the Committee may extend the term of the Option, but for not
more than ten (10) years from the date when the Option was originally
granted.
9. OPTIONS NOT TRANSFERABLE
No Option or interest therein shall be transferable by the person to
whom it is granted otherwise than by will or by the applicable laws of descent
and distribution. Notwithstanding the foregoing, the Committee may, in its sole
discretion, provide in the Agreement relating to the grant of an Option that the
Optionee may transfer such Option, without consideration, to members of the
Optionee's immediate family or to one or more trusts for the benefit of such
immediate family members or partnerships in which such immediate family members
are the only partners. For purposes of this Section 9, "immediate family" shall
mean the Optionee's spouse, parents, children (including adopted children) and
grandchildren.
Further, notwithstanding the foregoing, the Committee may, in its sole
discretion, provide in each of those Agreements relating to the grant of an
Option whose term will expire in 2000, 2001, 2003, 2004, 2005, 2006 or 2007 that
a Director or Senior Management Optionee may transfer such Option to one or more
Permitted Transferees with or without consideration to the Optionee provided
that the following conditions are satisfied with respect to such transfer: (i)
such transfer is made pursuant to the program that the Company has created to
facilitate the reduction of its stock option overhang and is accomplished on or
before March 5, 2000; (ii) the Permitted Transferee exercises the Option not
more than 30 days following such transfer; (iii) all fees and expenses charged
by accounting firms, law firms and all other third party consultants in
connection with such transfer are paid by the Optionee, and such fees and
expenses are not otherwise paid or reimbursed by the Company or any of its
Affiliates; (iv) the Permitted Transferee agrees to be bound by all of the terms
of the Agreement, except that once transferred by the Optionee to such Permitted
Transferee, the Option may not be subsequently transferred except back to the
Optionee; (v) if the consideration tendered by the Permitted Transferee for the
Option is a term obligation, the principal amount under such term obligation
will be due in full no later than the fifth anniversary of the Option's
expiration date; and (vi) the Permitted Transferee agrees to inform the
Company's Stock Plan Administrator upon (a) the sale or other transfer of the
shares underlying the Option and (b) any other event or action taken by the
Permitted Transferee with respect to the Option, the shares underlying the
Option or the consideration for the Option, where such event or action will give
rise to a recognizable event for the Company.
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10. EXERCISE OF OPTIONS
(a) During the lifetime of an Optionee only he or his guardian or legal
representative or transferee may exercise an Option granted to him. In the event
of his death, any then exercisable portion of his Option may, within fifteen
(15) months thereafter, or earlier date of termination of the Option, be
exercised in whole or in part by any person empowered to do so under the
deceased Optionee's will or under the applicable laws of descent and
distribution.
(b) At any time, and from time to time, during the period when any
Option, or a portion thereof, is exercisable, such Option, or portion thereof,
may be exercised in whole or in part; provided, however, that the Committee may
require any Option which is partially exercised to be so exercised with respect
to at least a stated minimum number of Shares.
(c) Each exercise of an Option or portion or part thereof shall be
evidenced by a notice in writing to the Company accompanied by payment in full
of the option price of the Shares then being purchased. Payment in full shall
mean payment of the full amount due, either in cash, by certified check or
cashier's check or, with the consent of the Committee, with Shares owned by the
Optionee, including an actual or deemed multiple series of exchanges of such
Shares.
(d) No Shares shall be issued until full payment therefor has been
made, and an Optionee shall have none of the rights of a stockholder until
Shares are issued to him.
(e) Nothing herein or in any Agreement executed or Option granted
hereunder shall require the Company to issue any Shares upon exercise of an
Option if such issuance would, in the opinion of counsel for the Company,
constitute a violation of the Securities Act of 1933, as amended, or any similar
or superseding statute or statutes, or any other applicable statute or
regulation, as then in effect. Upon the exercise of an Option or portion or part
thereof, the Optionee shall give to the Company satisfactory evidence that he is
acquiring such Shares for the purpose of investment only and not with a view to
their distribution; provided, however, if or to the extent that the Shares
subject to the Option shall be included in a registration statement filed by the
Company, or one of its Affiliates, such investment representation shall be
abrogated.
11. DELIVERY OF STOCK CERTIFICATES
As promptly as may be practicable after an Option, or a portion or part
thereof, has been exercised as hereinabove provided, the Company shall make
delivery of one or more certificates for the appropriate number of Shares. In
the event that an Optionee exercises both an Incentive Option, or a portion
thereof, and a Nonqualified Option, or a portion thereof, separate stock
certificates shall be issued, one for the Shares subject to the Incentive Option
and one for the Shares subject to the Nonqualified Option.
12. CHANGES IN COMPANY'S SHARES AND CERTAIN CORPORATE TRANSACTIONS
(a) If at any time while the Plan is in effect there shall be an
increase or decrease in the number of issued and outstanding Shares of the
Company effected without receipt of consideration therefor by the Company,
through the declaration of a stock dividend or through any recapitalization or
merger or otherwise in which the Company is the surviving corporation, resulting
in a stock split-up, combination or exchange of Shares of the Company, then and
in each such event:
(i) An appropriate adjustment shall be made in the maximum number
of Shares then subject to being optioned or awarded as Restricted Stock
under the Plan, to the end that the same proportion of
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the Company's issued and outstanding Shares shall continue to be
subject to being so optioned and awarded;
(ii) Appropriate adjustment shall be made in the number of Shares
and the option price per Share thereof then subject to purchase
pursuant to each Option previously granted, to the end that the same
proportion of the Company's issued and outstanding Shares in each such
instance shall remain subject to purchase at the same aggregate option
price: and
(iii) In the case of Incentive Options, any such adjustments shall
in all respects satisfy the requirements of Section 424(a) of the Code
and the Treasury regulations and revenue rulings promulgated
thereunder.
Except as is otherwise expressly provided herein, the issue by the
Company of shares of its capital stock of any class, or securities convertible
into shares of capital stock of any class, either in connection with a direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number of or option price of Shares then subject to
outstanding Options granted under the Plan. Furthermore, the presence of
outstanding Options granted under the Plan shall not affect in any manner the
right or power of the Company to make, authorize or consummate (i) any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business; (ii) any merger or consolidation of
the Company; (iii) any issue by the Company of debt securities or preferred or
preference stock which would rank above the Shares subject to outstanding
Options granted under the Plan; (iv) the dissolution or liquidation of the
Company; (v) any sale, transfer or assignment of all or any part of the assets
or business of the Company; or (vi) any other corporate act or proceeding,
whether of a similar character or otherwise.
(b) Notwithstanding anything to the contrary above, a dissolution or
liquidation of the Company, a merger (other than a merger effecting a
reincorporation of the Company in another state) or consolidation in which the
Company is not the surviving corporation (or survives only as a subsidiary of
another corporation in a transaction in which the stockholders of the parent of
the Company and their proportionate interests therein immediately after the
transaction are not substantially identical to the stockholders of the Company
and their proportionate interests therein immediately prior to the transaction),
a transaction in which another corporation becomes the owner of 50% or more of
the total combined voting power of all classes of stock of the Company, or a
change in control (as specified below), shall cause every Option then
outstanding to become exercisable in full, subject to the limitation on the
aggregate Fair Market Value of Shares that may become first exercisable during
any calendar year set forth in Section 16, immediately prior to such
dissolution, liquidation, merger, consolidation, transaction, or change in
control, to the extent not theretofore exercised, without regard to the
determination as to the periods and installments of exercisability contained in
the Agreements if (and only if) such Options have not at that time expired or
been terminated. For purposes of this paragraph, a change in control shall be
deemed to have taken place if: (i) a third person, including a "group" as
defined in Section 13(d)(3) of the Act, becomes the beneficial owner of Shares
of the Company having 50% or more of the total number of votes that may be cast
for the election of directors of the Company; or (ii) as a result of, or in
connection with, a contested election for directors, the persons who were
directors of the Company immediately before such election shall cease to
constitute a majority of the Board. Notwithstanding the foregoing provisions of
this paragraph, in the event of any such dissolution, merger, consolidation,
transaction, or change in control, the Board may completely satisfy all
obligations of the Company and its Affiliates with respect to any Option
outstanding on the date of such event by delivering to the Optionee cash in an
amount equal to the difference between the aggregate exercise price for Shares
under the Option and the Fair Market Value of such Shares on the date of such
event, such payment to be made within a reasonable time after such event.
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13. EFFECTIVE DATE
The Plan shall be effective on May 20, 1987, the date of its adoption
by the Board, but shall be submitted to the stockholders of the Company for
ratification at the next regular or special meeting thereof to be held within
twelve (12) months after the Board shall have adopted the Plan. If at such a
meeting of the stockholders of the Company a quorum is present, the Plan shall
be presented for ratification, and unless at such a meeting the Plan is ratified
by the affirmative vote of a majority of the outstanding $0.25 par value common
stock of the Company, then and in such event, the Plan and all Options granted
under the Plan and all awards of Restricted Stock under the Plan shall become
null and void and of no further force or effect.
14. AMENDMENT, SUSPENSION OR TERMINATION
(a) Subject to the other terms and condition of this Plan and the
limitations set forth in subsection 14(b) below, the Board may at any time
amend, suspend or terminate the Plan; provided, however, that after the
stockholders have ratified the Plan, the Board may not, without approval of the
stockholders of the Company, amend the Plan so as to:
(i) Increase the maximum number of Shares subject thereto, as
specified above in Sections 4(a) and 12; or
(ii) Increase the proportionate number of Shares which may be
purchased pursuant to Option by any one person or awarded as Restricted
Stock to any one person, as specified above in Section 6(a) or below in
Section 19(a).
(b) Neither the Board nor the Committee may amend the Plan or any
Agreement to reduce the option price of an outstanding Option or modify, impair
or cancel any existing Option without the consent of the holder thereof.
15. REQUIREMENTS OF LAW
Notwithstanding anything contained herein to the contrary, the Company
shall not be required to sell or issue Shares under any Option if the issuance
thereof would constitute a violation by the Optionee or the Company of any
provisions of any law or regulation of any governmental authority or any
national securities exchange; and as a condition of any sale or issuance of
Shares under Option the Company may require such agreements or undertakings, if
any, as the Company may deem necessary or advisable to assure compliance with
any such law or regulation.
16. INCENTIVE STOCK OPTIONS
The Committee, in its discretion, may designate any Option granted
under the Plan as an Incentive Option intended to qualify under Section 422 of
the Code. Any provision of the Plan to the contrary notwithstanding, (i) no
Incentive Option shall be granted to any person who, at the time such Incentive
Option is granted, owns stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the Company or any Affiliate
unless the purchase price under such Incentive Option is at least 110 percent of
the Fair Market Value of the Shares subject to an Incentive Option at the date
of its grant and such Incentive Option is not exercisable after the expiration
of five years from the date of its grant, and (ii) the aggregate Fair Market
Value of the Shares subject to such Incentive Option and the aggregate Fair
Market Value of the shares of stock of any Affiliate (or a predecessor of the
Company or an Affiliate) subject to any other incentive stock option (within the
meaning of
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Section 422 of the Code) of the Company and its Affiliates (or a predecessor
corporation of any such corporation), that may become first exercisable in any
calendar year, shall not (with respect to any Optionee) exceed $100,000,
determined as of the date the Incentive Option is granted. For purposes of this
Section 16, "predecessor corporation" means a corporation that was a party to a
transaction described in Section 424(a) of the Code (or which would be so
described if a substitution or assumption under such section had been effected)
with the Company, or a corporation which, at the time the new incentive stock
option (within the meaning of Section 422 of the Code) is granted, is an
Affiliate of the Company or a predecessor corporation of any such corporations.
17. MODIFICATION OF OPTIONS
Subject to the terms and conditions of and within the limitations of
the Plan, the Committee may modify, extend or renew outstanding Options granted
under the Plan, or accept the surrender of Options outstanding hereunder (to the
extent not theretofore exercised) and authorize the granting of new Options
hereunder in substitution therefor (to the extent not theretofore exercised).
Notwithstanding the foregoing provisions of this Section 17, no modification of
an Option granted hereunder shall, without the consent of the Optionee, alter or
impair any rights or obligations under any Option theretofore granted hereunder
to such Optionee under the Plan, except as may be necessary, with respect to
Incentive Options, to satisfy the requirements of Section 422 of the Code.
18. AGREEMENT PROVISIONS
(a) Each Agreement shall contain such provisions (including, without
limitation, restrictions or the removal of restrictions upon the exercise of the
Option and the transfer of shares thereby acquired) as the Committee shall deem
advisable. Each Agreement shall identify the Option evidenced thereby as an
Incentive Option or Nonqualified Option, as the case may be. Incentive Options
and Nonqualified Options may not both be covered by a single Agreement. Each
such Agreement relating to Incentive Options granted hereunder shall contain
such limitations and restrictions upon the exercise of the Incentive Option as
shall be necessary for the Incentive Option to which such Agreement related to
constitute an incentive stock option, as defined in Section 422 of the Code.
(b) The Plan shall be annexed to each Agreement and each Agreement
shall recite that it is subject to the Plan and that the Plan shall govern where
there is any inconsistency between the Plan and the Agreement.
(c) Each Agreement shall contain an agreement and covenant by the
Optionee, in such form as the Committee may require in its discretion, that he
consents to and will take whatever affirmative actions are required, in the
opinion of the Board or Committee, to enable the Company or appropriate
Affiliate to satisfy its Federal income tax and FICA withholding obligations. An
Agreement may contain such provisions as the Committee deems appropriate to
enable the Company or its Affiliates to satisfy such withholding obligations,
including provisions permitting the Company, on exercise of an Option, to
withhold Shares otherwise issuable to the Optionee exercising the Option to
satisfy the applicable withholding obligations.
(d) Each Agreement relating to an Incentive Option shall contain a
covenant by the Optionee immediately to notify the Company in writing of any
disqualifying disposition (within the meaning of section 421(b) of the Code) of
an Incentive Option.
19. RESTRICTED STOCK
(a) Shares of Restricted Stock may be awarded by the Committee to such
individuals as are eligible for grants of Options, as the Committee may
determine at any time and from time to time before the termination
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of the Plan. The total number of Shares of Restricted Stock awarded to any one
person, including directors of the Company, when aggregated with the number of
Shares subject to Options in favor of such person, shall not exceed shall not
exceed 706,513 Shares.
(b) A Share of Restricted Stock is a Share that does not irrevocably
vest in the holder or that may not be sold, exchanged, pledged, transferred,
assigned or otherwise encumbered or disposed of until the terms and conditions
set by the Committee at the time of the award of the Restricted Stock have been
satisfied. A Share of Restricted Stock shall be subject to a minimum three-year
vesting period and shall contain such other restrictions, terms and conditions
as the Committee may establish, which may include, without limitation, the
rendition of services to the Company or its Affiliates for a specified time or
the achievement of specific goals. The Committee may, when it deems it
appropriate, require the recipient of an award of Restricted Stock to enter into
an agreement with the Company evidencing the understanding of the parties with
respect to such award.
If an individual receives Shares of Restricted Stock, whether or not
escrowed as provided below, the individual shall be the record owner of such
Shares and shall have all the rights of a stockholder with respect to such
Shares (unless the escrow agreement, if any, specifically provides otherwise),
including the right to vote and the right to receive dividends or other
distributions made or paid with respect to such Shares. Any certificate or
certificates representing Shares of Restricted Stock shall bear a legend similar
to the following:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED
PURSUANT TO THE TERMS OF THE CENTEX CORPORATION 1987 STOCK OPTION PLAN
AND MAY NOT BE SOLD, PLEDGED, TRANSFERRED, ASSIGNED OR OTHERWISE
ENCUMBERED IN ANY MANNER EXCEPT AS SET FORTH IN THE TERMS OF SUCH AWARD
DATED , 19 .
In order to enforce the restrictions, terms and conditions that may be
applicable to an individual's Shares of Restricted Stock, the Committee may
require the individual, upon the receipt of a certificate or certificates
representing such Shares, or at any time thereafter, to deposit such certificate
or certificates, together with stock powers and other instruments of transfer,
appropriately endorsed in blank, with the Company or an escrow agent designated
by the Company under an escrow agreement in such form as shall be determined by
the Committee.
After the satisfaction of the terms and conditions set by the Committee
at the time of an award of Restricted Stock to an individual, which award is not
subject to a non-lapse feature, a new certificate, without the legend set forth
above, for the number of Shares that are no longer subject to such restrictions,
terms and conditions shall be delivered to the individual.
If an individual to whom Restricted Stock has been awarded dies after
satisfaction of the terms and conditions for the payment of all or a portion of
the award but prior to the actual payment of all or such portion thereof, such
payment shall be made to the individual's beneficiary or beneficiaries at the
time and in the same manner that such payment would have been made to the
individual.
The Committee may cancel all or any portion of any outstanding
restrictions prior to the expiration of such restrictions with respect to any or
all of the Shares of Restricted Stock awarded to an individual hereunder only
upon the individual's death, disability or retirement on or after the earlier of
(i) age 65 or (ii) such time as the sum of the individual's age and years of
service equals 70, provided such individual is at least 55. With respect to the
occurrence of any event specified in the last paragraph of Section 12, the
restrictions, if any, applicable to any outstanding Shares awarded as Restricted
Stock shall lapse immediately prior to the occurrence of the event.
(c) Subject to the provisions of subsection 19(b) above, if an
individual to whom Restricted Stock has been awarded ceases to be employed by at
least one of the employers in the group of employers consisting of
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the Company and its Affiliates, or ceases to be a director of the Company,
whichever may occur later, for any reason prior to the satisfaction of any terms
and conditions of an award, any Restricted Stock remaining subject to
restrictions shall thereupon be forfeited by the individual and transferred to,
and reacquired by, the Company or an Affiliate at no cost to the Company or the
Affiliate. In such event, the individual, or in the event of his death, his
personal representative, shall forthwith deliver to the Secretary of the Company
the certificates for the Shares of Restricted Stock remaining subject to such
restrictions, accompanied by such instruments of transfer, if any, as may
reasonably be required by the Secretary of the Company.
(d) In case of any consolidation or merger of another corporation into
the Company in which the Company is the surviving corporation and in which there
is a reclassification or change (including a change to the right to receive cash
or other property) of the Shares (other than a change in par value, or from par
value to no par value, or as a result of a subdivision or combination, but
including any change in such shares into two or more classes or series of
shares), the Committee may provide that payment of Restricted Stock shall take
the form of the kind and amount of shares of stock and other securities
(including those of any new direct or indirect parent of the Company), property,
cash or any combination thereof receivable upon such reclassification, change,
consolidation or merger.
20. GENERAL
(a) The proceeds received by the Company from the sale of Shares
pursuant to Options shall be used for general corporate purposes.
(b) Nothing contained in the Plan, or in any Agreement, shall confer
upon any Optionee or recipient of Restricted Stock the right to continue in the
employ of the Company or any Affiliate, or interfere in any way with the rights
of the Company or any Affiliate to terminate his employment at any time.
(c) Neither the members of the Board nor any member of the Committee
shall be liable for any act, omission, or determination taken or made in good
faith with respect to the Plan or any Option or Restricted Stock granted under
it; and the members of the Board and the Committee shall be entitled to
indemnification and reimbursement by the Company in respect of any claim, loss,
damage or expense (including counsel fees) arising therefrom to the full extent
permitted by law and under any directors and officers liability or similar
insurance coverage that may be in effect from time to time.
(d) As partial consideration for the granting of each Option or award
of Restricted Stock hereunder, the Optionee or recipient shall agree with the
Company that he will keep confidential all information and knowledge which he
has relating to the manner and amount of his participation in the Plan;
provided, however, that such information may be disclosed as required by law or
given in confidence to the individual's spouse, tax or financial advisors, or to
a financial institution to the extent that such information is necessary to
secure a loan. In the event any breach of this promise comes to the attention of
the Committee, it shall take into consideration such breach, in determining
whether to grant any future Option or award any future Restricted Stock to such
individual, as a factor militating against the advisability of granting any such
future Option or awarding any such future Restricted Stock to such individual.
(e) Participation in the Plan shall not preclude an individual from
eligibility in any other stock option plan of the Company or any Affiliate or
any old age benefit, insurance, pension, profit sharing, retirement, bonus, or
other extra compensation plans which the Company or any Affiliate has adopted,
or may, at any time, adopt for the benefit of its employees or directors.
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(f) Any payment of cash or any issuance or transfer of Shares to the
Optionee, or to his legal representative, heir, legatee, or distributee, in
accordance with the provisions hereof, shall, to the extent thereof, be in full
satisfaction of all claims of such persons hereunder. The Board or Committee may
require any Optionee, legal representative, heir, legatee, or distributee, as a
condition precedent to such payment, to execute a release and receipt therefor
in such form as it shall determine.
(g) Neither the Committee nor the Board nor the Company guarantees the
Shares from loss or depreciation.
(h) All expenses incident to the administration, termination, or
protection of the Plan, including, but not limited to, legal and accounting
fees, shall be paid by the Company or its Affiliates.
(i) Records of the Company and its Affiliates regarding an individual's
period of employment, termination of employment and the reason therefor, leaves
of absence, re-employment, tenure as a director and other matters shall be
conclusive for all purposes hereunder, unless determined by the Board or
Committee to be incorrect.
(j) The Company and its Affiliates shall, upon request or as may be
specifically required hereunder, furnish or cause to be furnished, all of the
information or documentation which is necessary or required by the Board or
Committee to perform its duties and functions under the Plan.
(k) The Company assumes no obligation or responsibility to an Optionee
or recipient of Restricted Stock or his personal representatives, heirs,
legatees, or distributees for any act of, or failure to act on the part of, the
Board or Committee.
(l) Any action required of the Company shall be by resolution of its
Board or by a person authorized to act by resolution of the Board. Any action
required of the Committee shall be by resolution of the Committee or by a person
authorized to act by resolution of the Committee.
(m) If any provision of this Plan or any Agreement is held to be
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining provisions of the Plan or the Agreement, as the case may be, but
such provision shall be fully severable and the Plan or the Agreement, as the
case may be, shall be construed and enforced as if the illegal or invalid
provision had never been included herein or therein.
(n) Whenever any notice is required or permitted hereunder, such notice
must be in writing and personally delivered or sent by mail. Any notice required
or permitted to be delivered hereunder shall be deemed to be delivered on the
date on which it is personally delivered, or, whether actually received or not,
on the third business day after it is deposited in the United States mail,
certified or registered, postage prepaid, addressed to the person who is to
receive it at the address which such person has theretofore specified by written
notice delivered in accordance herewith. The Company, an Optionee or a recipient
of Restricted Stock may change, at any time and from time to time, by written
notice to the other, the address which it or he had theretofore specified for
receiving notices. Until changed in accordance herewith, the Company and each
Optionee and recipient of Restricted Stock shall specify as its and his address
for receiving notices the address set forth in the Agreement pertaining to the
shares of Stock to which such notice relates.
(o) Any person entitled to notice hereunder may waive such notice.
12
<PAGE> 13
(p) The Plan shall be binding upon the Optionee or recipient of
Restricted Stock, his heirs, legatees, and legal representatives, upon the
Company, its successors, and assigns, and upon the Board and Committee, and
their successors.
(q) The titles and headings of Sections and paragraphs are included for
convenience of reference only and are not to be considered in construction of
the provisions hereof.
(r) All questions arising with respect to the provisions of the Plan
shall be determined by application of the laws of the State of Nevada except to
the extent Nevada law is preempted by federal law. The obligation of the Company
to sell and deliver Shares hereunder is subject to applicable laws and to the
approval of any governmental authority required in connection with the
authorization, issuance, sale, or delivery of such Shares.
(s) Words used in the masculine shall apply to the feminine where
applicable, and wherever the context of this Plan dictates, the plural shall be
read as the singular and the singular as the plural.
21. WITHHOLDING TAXES
Federal, state, or local law may require the withholding of taxes
applicable to gains resulting from the exercise of Nonqualified Options granted
hereunder. Unless otherwise prohibited by the Committee, each participant may
satisfy any such withholding tax obligation by electing (i) to tender a cash
payment to the Company, (ii) to authorize the Company to withhold from the
shares of stock of the Company otherwise issuable to the participant as a result
of the exercise of the Nonqualified Option a number of shares having a fair
market value, as of the date the withholding tax obligation arises, equal to the
withholding obligations, or, at the election of the participant, up to the
maximum of taxes due (the "Share Withholding Alternative"), (iii) to deliver to
the Company previously acquired shares of common stock of the Company having a
fair market value, as of the date the withholding tax obligation arises, equal
to the amount to be withheld, or at the election of the participant, up to the
maximum of taxes due, or (iv) any combination of the foregoing, provided the
combination permits the payment of all withholding taxes attributable to the
exercise of the Nonqualified Option. A Participant's election to pay the
withholding tax obligation must be made in writing delivered to the Company
before the time of exercise, or simultaneously with the exercise, of such
Participant's Nonqualified Option. A valid and binding written election of the
Share Withholding Alternative shall be irrevocable. A participant's failure to
elect a withholding alternative prior to the time such election is required to
be made shall be deemed to be an election to pay the withholding tax by
tendering a cash payment to the Company. For purposes of this Section 21, the
fair market value of the shares used to pay withholding taxes is the mean
between the highest and lowest price quoted on the New York Stock Exchange for
one share of common stock of the Company on the Tax Date. Also, as used in this
Section 21, "Tax Date" shall mean the date on which a withholding tax obligation
arises in connection with an exercise of a nonqualified stock option, which date
shall be presumed to be the date of exercise, unless shares subject to a
substantial risk of forfeiture (as defined in section 83(c)(1) or (c)(3) of the
Code) are issuable on exercise of the option and the participant does not make a
timely election under section 83(b) of the Code with respect thereto, in which
case the Tax Date for such shares is the date on which the substantial risk of
forfeiture lapses. Fractional shares remaining after payment of the withholding
taxes shall be paid to the participant in cash.
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CENTEX
CORPORATION'S DECEMBER 31, 1999, 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-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 161,713
<SECURITIES> 0
<RECEIVABLES> 1,126,822
<ALLOWANCES> 0
<INVENTORY> 2,096,026
<CURRENT-ASSETS> 0
<PP&E> 602,037
<DEPRECIATION> 264,012
<TOTAL-ASSETS> 4,401,156
<CURRENT-LIABILITIES> 0
<BONDS> 570,179
0
0
<COMMON> 14,785
<OTHER-SE> 1,347,235
<TOTAL-LIABILITY-AND-EQUITY> 4,401,156
<SALES> 4,230,837
<TOTAL-REVENUES> 4,230,837
<CGS> 3,807,341
<TOTAL-COSTS> 3,807,341
<OTHER-EXPENSES> 75,498
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 45,828
<INCOME-PRETAX> 302,170
<INCOME-TAX> 115,063
<INCOME-CONTINUING> 187,107
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 187,107
<EPS-BASIC> 3.15
<EPS-DILUTED> 3.06
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 3333 HOLDING
CORPORATION'S DECEMBER 31, 1999, 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-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 19
<SECURITIES> 0
<RECEIVABLES> 10
<ALLOWANCES> 0
<INVENTORY> 750
<CURRENT-ASSETS> 0
<PP&E> 191
<DEPRECIATION> 83
<TOTAL-ASSETS> 2,764
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> (1,914)
<TOTAL-LIABILITY-AND-EQUITY> 2,764
<SALES> 457
<TOTAL-REVENUES> 457
<CGS> 1,538
<TOTAL-COSTS> 1,538
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,081)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,081)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,081)
<EPS-BASIC> 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, 1999, 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-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 24,278
<SECURITIES> 0
<RECEIVABLES> 16,235
<ALLOWANCES> 0
<INVENTORY> 369,643
<CURRENT-ASSETS> 0
<PP&E> 3,923
<DEPRECIATION> 421
<TOTAL-ASSETS> 455,490
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 71,421
<TOTAL-LIABILITY-AND-EQUITY> 455,490
<SALES> 249,249
<TOTAL-REVENUES> 249,249
<CGS> 247,603
<TOTAL-COSTS> 247,603
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,646
<INCOME-TAX> 601
<INCOME-CONTINUING> 1,045
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,045
<EPS-BASIC> 0.00
<EPS-DILUTED> 0.00
</TABLE>
