-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Kr1tODlRy41doZMaPfX//Mu+DcD6FDPpiVxq8N0nogCb5fZDM8mxC54dveG1QdH9 vPomLf56wnv/KPWoxmMAiA== 0000950134-98-008978.txt : 19981118 0000950134-98-008978.hdr.sgml : 19981118 ACCESSION NUMBER: 0000950134-98-008978 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981116 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTEX CORP CENTRAL INDEX KEY: 0000018532 STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531] IRS NUMBER: 750778259 STATE OF INCORPORATION: NV FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-06776 FILM NUMBER: 98750246 BUSINESS ADDRESS: STREET 1: P O BOX 199000 STREET 2: 2728 N HARWOOD CITY: DALLAS STATE: TX ZIP: 75219 BUSINESS PHONE: 2145596500 MAIL ADDRESS: STREET 1: PO BOX 199000 STREET 2: 2728 N HARWOOD CITY: DALLAS STATE: TX ZIP: 75219 FORMER COMPANY: FORMER CONFORMED NAME: CENTEX CONSTRUCTION CO INC DATE OF NAME CHANGE: 19681211 FILER: COMPANY DATA: COMPANY CONFORMED NAME: 3333 HOLDING CORP CENTRAL INDEX KEY: 0000818762 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 752178860 STATE OF INCORPORATION: NV FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09624 FILM NUMBER: 98750247 BUSINESS ADDRESS: STREET 1: 3333 LEE PKWY STREET 2: SUITE 500 CITY: DALLAS STATE: TX ZIP: 75219 BUSINESS PHONE: 2145596700 MAIL ADDRESS: STREET 1: PO BOX 19000 STREET 2: PO BOX 19000 CITY: DALLAS STATE: TX ZIP: 75219 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTEX DEVELOPMENT CO LP CENTRAL INDEX KEY: 0000818764 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 752168471 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09625 FILM NUMBER: 98750248 BUSINESS ADDRESS: STREET 1: PO BOX 19000 CITY: DALLAS STATE: TX ZIP: 75219 BUSINESS PHONE: 2145596700 MAIL ADDRESS: STREET 1: PO BOX 19000 STREET 2: PO BOX 19000 CITY: DALLAS STATE: TX ZIP: 75219 10-Q 1 FORM 10-Q FOR QUARTER ENDED SEPTEMBER 30, 1998 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q JOINT QUARTERLY REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarter Ended SEPTEMBER 30, 1998 Commission File No. 1-6776 CENTEX CORPORATION A Nevada Corporation IRS Employer Identification No. 75-0778259 2728 N. Harwood Dallas, Texas 75201 (214) 981-5000 Commission File Nos. 1-9624 and 1-9625, respectively 3333 HOLDING CORPORATION A Nevada Corporation CENTEX DEVELOPMENT COMPANY, L.P. A Delaware Limited Partnership IRS Employer Identification Nos. 75-2178860 and 75-2168471, respectively 3100 McKinnon, Suite 370 Dallas, Texas 75201 (214) 981-6700 The registrants have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and have been subject to such filing requirements for the past 90 days. Indicate the number of shares of each of the registrants' classes of common stock (or other similar equity securities) outstanding as of the close of business on October 30, 1998: Centex Corporation Common Stock 59,409,879 shares 3333 Holding Corporation Common Stock 1,000 shares Centex Development Company, L.P. Class A Units of Limited Partnership Interest 32,260 units Centex Development Company, L.P. Class C Units of Limited Partnership Interest 23,001 units
2 CENTEX CORPORATION 3333 HOLDING CORPORATION CENTEX DEVELOPMENT COMPANY, L.P. FORM 10-Q TABLE OF CONTENTS SEPTEMBER 30, 1998 CENTEX CORPORATION
PAGE PART I. FINANCIAL INFORMATION ITEM 1. Condensed Consolidated Financial Statements 1 Condensed Consolidated Statement of Earnings for the Three Months Ended September 30, 1998 2 Condensed Consolidated Statement of Earnings for the Six Months Ended September 30, 1998 3 Condensed Consolidated Balance Sheets 4 Condensed Consolidated Statement of Cash Flows for the Six Months Ended September 30, 1998 5 Notes to Condensed Consolidated Financial Statements 6 - 9 ITEM 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 10 - 16 PART II. OTHER INFORMATION ITEM 4. Submission of Matters to a Vote of Security Holders 17 ITEM 6. Exhibits and Reports on Form 8-K 17 SIGNATURES 18
-i- 3 3333 HOLDING CORPORATION CENTEX DEVELOPMENT COMPANY, L.P.
PAGE PART I. FINANCIAL INFORMATION ITEM 1. Condensed Combining Financial Statements 19 Condensed Combining Statement of Operations for the Three Months Ended September 30, 1998 20 Condensed Combining Statement of Operations for the Six Months Ended September 30, 1998 21 Condensed Combining Balance Sheets 22 Condensed Combining Statement of Cash Flows for the Six Months Ended September 30, 1998 23 Notes to Condensed Combining Financial Statements 24 - 25 ITEM 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 26 - 27 PART II. OTHER INFORMATION ITEM 4. Submission of Matters to a Vote of Security Holders 28 ITEM 6. Exhibits and Reports on Form 8-K 28 SIGNATURES 29 - 30
-ii- 4 CENTEX CORPORATION PART I. FINANCIAL INFORMATION CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ITEM 1. The condensed consolidated financial statements include the accounts of Centex Corporation and subsidiaries ("Centex" or the "Company"), and have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's latest Annual Report on Form 10-K. In the opinion of the Company, all adjustments necessary to present fairly the information in the following condensed consolidated financial statements of the Company have been included. The results of operations for such interim periods are not necessarily indicative of the results for the full year. -1- 5 CENTEX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (dollars in thousands, except per share data) (unaudited)
For the Three Months Ended September 30, ------------------------------ 1998 1997 ------------ ------------ REVENUES Home Building Conventional Homes $ 648,988 $ 586,839 Manufactured Homes 48,484 33,594 Investment Real Estate 4,019 5,331 Financial Services 107,766 57,294 Construction Products 91,776 83,412 Contracting and Construction Services 342,049 225,276 ------------ ------------ 1,243,082 991,746 ------------ ------------ COSTS AND EXPENSES Home Building Conventional Homes 596,782 545,330 Manufactured Homes 44,492 30,754 Investment Real Estate (2,439) (1,288) Financial Services 84,002 49,731 Construction Products 56,808 55,707 Contracting and Construction Services 337,810 224,085 Other, net 2,455 1,571 Corporate General and Administrative 6,760 4,904 Interest Expense 10,042 8,719 Minority Interest 16,004 13,538 ------------ ------------ 1,152,716 933,051 ------------ ------------ EARNINGS BEFORE INCOME TAXES 90,366 58,695 Income Taxes 33,803 22,304 ------------ ------------ NET EARNINGS $ 56,563 $ 36,391 ============ ============ EARNINGS PER SHARE Basic $ 0.95 $ 0.62 ============ ============ Diluted $ 0.91 $ 0.59 ============ ============ AVERAGE SHARES OUTSTANDING Basic 59,549,247 59,008,196 Common Share Equivalents Options 2,082,015 1,838,434 Convertible Debenture 400,000 400,000 ------------ ------------ Diluted 62,031,262 61,246,630 ============ ============ CASH DIVIDENDS PER SHARE $ 0.04 $ 0.035 ============ ============
See notes to condensed consolidated financial statements. -2- 6 CENTEX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (dollars in thousands, except per share data) (unaudited)
For the Six Months Ended September 30, ------------------------------ 1998 1997 ------------ ------------ REVENUES Home Building Conventional Homes $ 1,210,182 $ 1,047,685 Manufactured Homes 90,929 65,488 Investment Real Estate 8,913 12,111 Financial Services 207,899 104,537 Construction Products 171,622 161,366 Contracting and Construction Services 664,143 461,934 ------------ ------------ 2,353,688 1,853,121 ------------ ------------ COSTS AND EXPENSES Home Building Conventional Homes 1,117,308 978,716 Manufactured Homes 84,177 60,432 Investment Real Estate (4,948) (2,657) Financial Services 160,423 91,769 Construction Products 109,693 110,255 Contracting and Construction Services 656,428 459,732 Other, net 4,761 2,920 Corporate General and Administrative 12,111 9,264 Interest Expense 18,235 16,525 Minority Interest 28,412 25,051 ------------ ------------ 2,186,600 1,752,007 ------------ ------------ EARNINGS BEFORE INCOME TAXES 167,088 101,114 Income Taxes 62,364 37,713 ------------ ------------ NET EARNINGS $ 104,724 $ 63,401 ============ ============ EARNINGS PER SHARE Basic $ 1.76 $ 1.08 ============ ============ Diluted $ 1.69 $ 1.05 ============ ============ AVERAGE SHARES OUTSTANDING Basic 59,540,096 58,596,764 Common Share Equivalents Options 2,061,858 1,694,688 Convertible Debenture 400,000 400,000 ------------ ------------ Diluted 62,001,954 60,691,452 ============ ============ CASH DIVIDENDS PER SHARE $ 0.08 $ 0.06 ============ ============
See notes to condensed consolidated financial statements. -3- 7 CENTEX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (dollars in thousands)
Centex Corporation and Subsidiaries Centex Corporation Financial Services ------------------------- -------------------------- -------------------------- September 30, March 31, September 30, March 31, September 30, March 31, 1998* 1998** 1998* 1998** 1998* 1998** ------------- ----------- ------------- ----------- ------------- ----------- ASSETS Cash and Cash Equivalents $ 94,151 $ 98,316 $ 70,334 $ 87,491 $ 23,817 $ 10,825 Receivables - Residential Mortgage Loans 1,289,794 1,191,450 -- -- 1,289,794 1,191,450 Other 480,818 390,891 417,337 337,558 63,481 53,333 Affiliates -- -- -- -- (31,753) (58,299) Inventories 1,301,618 1,064,554 1,301,618 1,064,554 -- -- Investments - Centex Development Company 57,071 34,526 57,071 34,526 -- -- Joint Ventures and Other 35,341 7,558 35,341 7,558 -- -- Unconsolidated Subsidiaries -- -- 123,261 146,592 -- -- Property and Equipment, net 293,141 295,992 270,663 276,008 22,478 19,984 Other Assets - Deferred Income Taxes 109,643 147,607 102,825 144,090 6,818 3,517 Goodwill, net 194,619 133,847 176,329 123,709 18,290 10,138 Mortgage Securitization Residual Interest 46,203 14,747 -- -- 46,203 14,747 Deferred Charges and Other 44,038 36,731 29,435 23,730 14,603 13,001 ------------- ----------- ------------- ----------- ------------- ----------- $ 3,946,437 $ 3,416,219 $ 2,584,214 $ 2,245,816 $ 1,453,731 $ 1,258,696 ============= =========== ============= =========== ============= =========== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts Payable and Accrued Liabilities $ 909,144 $ 799,154 $ 807,482 $ 711,564 $ 101,662 $ 87,590 Short-term Debt 1,520,850 1,152,873 265,922 73,823 1,254,928 1,079,050 Long-term Debt 209,097 237,715 209,097 237,715 -- -- Minority Stockholders' Interest 149,920 152,468 144,287 148,705 5,633 3,763 Negative Goodwill 74,837 82,837 74,837 82,837 -- -- Stockholders' Equity - Preferred Stock, Authorized 5,000,000 -- -- -- -- -- -- Shares, None Issued Common Stock $.25 Par Value; Authorized 14,878 14,883 14,878 14,883 1 1 100,000,000 Shares; Issued and Outstanding 59,512,305 and 59,531,758, respectively Capital in Excess of Par Value 28,225 36,761 28,225 36,761 75,944 74,944 Retained Earnings 1,039,486 939,528 1,039,486 939,528 15,563 13,348 ------------- ----------- ------------- ----------- ------------- ------------ Total Stockholders' Equity 1,082,589 991,172 1,082,589 991,172 91,508 88,293 ------------- ----------- ------------- ----------- ------------- ------------ $ 3,946,437 $ 3,416,219 $ 2,584,214 $ 2,245,816 $ 1,453,731 $ 1,258,696 ============= =========== ============= =========== ============= ============
See notes to condensed consolidated financial statements. * Unaudited ** Condensed from audited financial statements. In the supplemental data presented above, "Centex Corporation" represents the adding together of all subsidiaries other than those included in Financial Services. Transactions between Centex Corporation and Financial Services have been eliminated from the Centex Corporation and Subsidiaries balance sheets. -4- 8 CENTEX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (dollars in thousands) (unaudited)
For the Six Months Ended September 30, ------------------------ 1998 1997 --------- --------- CASH FLOWS - OPERATING ACTIVITIES Net Earnings $ 104,724 $ 63,401 Adjustments - Depreciation, Depletion and Amortization 19,778 11,800 Deferred Income Taxes 35,508 24,651 Equity in Loss (Earnings) of CDC and Joint Ventures 342 (915) Minority Interest 28,412 25,051 --------- --------- 188,764 123,988 Increase in Receivables (89,927) (6,206) Increase in Residential Mortgage Loans (98,344) (99,705) Increase in Inventories (237,064) (92,232) Increase (Decrease) in Payables and Accruals 109,990 (42,884) Increase in Other Assets (103,341) (19,727) Other, net (30,960) (24,393) --------- --------- (260,882) (161,159) --------- --------- CASH FLOWS - INVESTING ACTIVITIES (Increase) Decrease in Investments (50,670) 7,879 Property and Equipment Additions, net (18,665) (24,385) --------- --------- (69,335) (16,506) --------- --------- CASH FLOWS - FINANCING ACTIVITIES Increase in Debt - Secured by Residential Mortgage Loans 175,878 119,831 Other 163,481 85,117 Proceeds from Stock Option Exercises 6,143 15,682 Retirement of Common Stock (14,684) -- Dividends Paid (4,766) (3,533) --------- --------- 326,052 217,097 --------- --------- NET (DECREASE) INCREASE IN CASH (4,165) 39,432 CASH AT BEGINNING OF PERIOD 98,316 31,320 --------- --------- CASH AT END OF PERIOD $ 94,151 $ 70,752 ========= =========
See notes to condensed consolidated financial statements. -5- 9 CENTEX CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 1998 (unaudited) (A) A summary of changes in stockholders' equity is presented below:
Capital in Preferred Common Excess of Retained Stock Stock Par Value Earnings Total ----------- ----------- ----------- ----------- ----------- (dollars in thousands) Balance, March 31, 1998 $ -- $ 14,883 $ 36,761 $ 939,528 $ 991,172 Net Earnings -- -- -- 104,724 104,724 Exercise of Stock Options -- 97 6,046 -- 6,143 Retirement of 407,700 Shares -- (102) (14,582) -- (14,684) Cash Dividends -- -- -- (4,766) (4,766) ----------- ----------- ----------- ----------- ----------- BALANCE, SEPTEMBER 30, 1998 $ -- $ 14,878 $ 28,225 $ 1,039,486 $ 1,082,589 =========== =========== =========== =========== ===========
(B) On November 30, 1987, the Company distributed to a nominee all of the issued and outstanding shares of common stock of 3333 Holding Corporation and warrants to purchase approximately 80% of the Class B units of limited partnership interest in Centex Development Company, L.P. ("CDC"). A wholly-owned subsidiary of 3333 Holding Corporation serves as general partner of Centex Development Company, L.P. These securities are held by the nominee on behalf of Centex stockholders, and will trade in tandem with the common stock of Centex, until such time as they are detached. Supplementary condensed combined financial statements for Centex, 3333 Holding Corporation and Subsidiary and Centex Development Company, L.P. are as follows: -6- 10 NOTES - continued CENTEX CORPORATION, 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. SUPPLEMENTARY CONDENSED COMBINED BALANCE SHEETS (dollars in thousands)
September 30, March 31, 1998 1998 * ------------- ---------- ASSETS Cash and Cash Equivalents $ 94,499 $ 98,576 Receivables 1,777,770 1,588,247 Inventories 1,380,049 1,107,941 Investments in Joint Ventures and Other 36,037 10,598 Property and Equipment, net 293,327 296,080 Other Assets 395,498 333,044 ---------- ---------- $3,977,180 $3,434,486 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts Payable and Accrued Liabilities $ 917,856 $ 802,547 Short-term Debt 1,542,234 1,166,694 Long-term Debt 209,097 237,715 Minority Stockholders' Interest 149,920 152,468 Negative Goodwill 74,837 82,837 Stockholders' Equity 1,083,236 992,225 ---------- ---------- $3,977,180 $3,434,486 ========== ==========
*Condensed from audited financial statements. SUPPLEMENTARY CONDENSED COMBINED STATEMENT OF EARNINGS (dollars in thousands)
For the Six Months Ended September 30, ------------------------- 1998 1997 ---------- ---------- Revenues $2,364,371 $1,855,818 Costs and Expenses 2,197,689 1,754,624 ---------- ---------- Earnings Before Income Taxes 166,682 101,194 Income Taxes 62,364 37,713 ---------- ---------- NET EARNINGS $ 104,318 $ 63,481 ========== ==========
-7- 11 Notes - continued (C) In order to ensure the future availability of land for homebuilding, the Company has made deposits totaling approximately $33 million as of September 30, 1998 for options to purchase undeveloped land and developed lots having a total purchase price of approximately $812 million. These options and commitments expire at various dates to the year 2003. The Company has also committed to purchase land and developed lots totaling approximately $9 million. In addition, the Company has executed lot purchase contracts with CDC which aggregate approximately $4 million. (D) Interest expense relating to the Financial Services operations is included in its costs and expenses. Interest related to non-financial services is included as interest expense.
For the Six Months Ended September 30, ------------------------ 1998 1997 ----------- ----------- Total Interest Incurred $ 58,595 $ 36,734 Less - Financial Services (40,360) (20,209) ----------- ----------- Interest Expense $ 18,235 $ 16,525 =========== ===========
(E) During April 1994, Centex Construction Products, Inc. ("CXP") completed an initial public offering of its stock which began trading on the New York Stock Exchange under the symbol "CXP." Centex's ownership interest in CXP was 57.9% as of September 30, 1998. (F) During the quarter ended June 30, 1996, Centex's Home Building subsidiary completed a business combination transaction and reorganization with Vista Properties, Inc. As a result of the combination, Centex's Investment Real Estate portfolio, valued in excess of $125 million, was reduced to a nominal "book basis" after recording certain Vista-related tax benefits. As these properties are developed or sold, the net sales proceeds are reflected as operating margin. "Negative Goodwill" recorded as a result of the business combination is being amortized to earnings over approximately seven years which represents the estimated period over which the land will be developed and/or sold. All investment property operations are being reported through Centex's "Investment Real Estate" business segment. (G) In December 1997, Centex adopted the provisions of Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share." All per share data have been restated to conform to the provisions of this Statement. Basic earnings per share is computed based on the weighted-average number of shares of common stock outstanding. Diluted earnings per share, computed similarly to fully diluted earnings per share, is computed based upon basic plus the dilution of the stock options and the convertible debenture. Options to purchase approximately two million shares of common stock at approximately $38.60 per share (expiring in April 2008) were outstanding during the six months ended September 30, 1998 but were not included in the computation of diluted earnings per share because they were anti-dilutive. -8- 12 Notes - continued (H) Effective April 1998, the Company adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income." SFAS No. 130 establishes standards for reporting and displaying comprehensive income and its components. There are no items that the Company is required to recognize as components of comprehensive income. (I) Statement of Financial Accounting Standards No. 131, issued in June 1997, changes the way public companies report information about segments. SFAS No. 131, which is based on the management approach to segment reporting, requires companies to report selected quarterly segment information and entity-wide disclosures about products and services, major customers and the material countries in which the entity holds assets and reports revenues. Although this Statement will be effective for the Company's 1999 annual financial statements, the Company does not expect a significant effect on the presentation of its financials. -9- 13 CENTEX CORPORATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Centex's consolidated revenues for the quarter were $1.24 billion, a 25% increase over $991.7 million for the same quarter last year. Earnings before income taxes were $90.4 million, 54% higher than $58.7 million last year. Net earnings were $56.6 million and diluted earnings per share were $.91 for this quarter compared to $36.4 million and $.59, respectively, for the same quarter last year. For the six months ended September 30, 1998, corporate revenues totaled $2.35 billion, 27% higher than $1.85 billion for the same period last year. Earnings before income taxes were $167.1 million, 65% higher than $101.1 million for the same period last year. Net earnings were $104.7 million and diluted earnings per share were $1.69 for the six months ended September 30, 1998 compared to $63.4 million and $1.05 for the six months ended September 30, 1997. Net earnings for both the quarter and the six months ended September 30, 1998 increased by a higher percentage than earnings per share due to more average shares outstanding in the fiscal 1999 periods. HOME BUILDING Conventional Homes The following summarizes Conventional Homes' results for the quarter and fiscal year-to-date ended September 30, 1998 compared to the quarter and fiscal year-to-date ended September 30, 1997 (dollars in millions, except per unit data):
Quarter Ended Quarter Ended 9/30/98 9/30/97 ------------------ ------------------- Conventional Homes Revenues $ 649.0 100.0% $ 586.9 100.0% Cost of Sales (506.5) (78.0%) (468.3) (79.8%) Selling, General & Administrative (90.3) (14.0%) (77.1) (13.1%) --------- ------- --------- ------- Operating Earnings $ 52.2 8.0% $ 41.5 7.1% ========= ======= ========= ======= Units Closed 3,467 3,118 % Change 11.2% (11.3%) Unit Sales Price $ 184,513 $ 185,649 % Change (0.6%) 9.5% Operating Earnings per Unit $ 15,058 $ 13,313 % Change 13.1% 22.9%
-10- 14
Fiscal Fiscal Year-to-Date Year-to-Date 9/30/98 9/30/97 -------------------- ------------------ Conventional Homes Revenues $ 1,210.2 100.0% $ 1,047.7 100.0% Cost of Sales (945.4) (78.1%) (836.7) (79.8%) Selling, General & Administrative (171.9) (14.2%) (142.0) (13.6%) ---------- -------- --------- ------- Operating Earnings $ 92.9 7.7% $ 69.0 6.6% ========== ======== ========= ======= Units Closed 6,449 5,684 % Change 13.0% (14.0%) Unit Sales Price $ 184,444 $ 181,956 % Change 1.4% 8.0% Operating Earnings per Unit $ 14,401 $ 12,134 % Change 18.7% 19.4%
Home sales (orders) were 3,617 for the quarter this year compared to 3,134 units for the same quarter a year ago. Home sales (orders) were 7,206 for the six months this year compared to last year's 6,233 units. The backlog of homes sold but not closed at September 30, 1998 was 6,204 units, including 462 units related to the newly acquired Wayne Homes operation, 28% higher than 4,857 units at September 30, 1997. Centex is currently operating slightly more neighborhoods than it did a year ago. Manufactured Homes The following summarizes Manufactured Homes' results for the quarter and fiscal year-to-date ended September 30, 1998 compared to the quarter and fiscal year-to-date ended September 30, 1997 (dollars in thousands):
Quarter Ended Quarter Ended 9/30/98 9/30/97 -------------------- ------------------ Manufactured Homes Revenues (Construction) $ 38,610 100.0% $ 33,594 100.0% Cost of Sales (30,240) (78.3%) (26,068) (77.6%) Selling, General & Administrative (3,718) (9.6%) (4,113) (12.2%) -------- ------- -------- ------- Earnings before Goodwill and Minority Interest (Construction) 4,652 12.1% 3,413 10.2% ======= ======= Earnings before Goodwill and Minority Interest (Retail) 122 -- -------- -------- Total Earnings Before Goodwill & Minority Interest 4,774 3,413 Goodwill Amortization (782) (573) Minority Interest (863) (812) -------- -------- Operating Earnings $ 3,129 $ 2,028 ======== ======== Units Produced 1,479 1,400 Units Sold - Retail 221 -- Less: Intersegment Sales (164) -- -------- -------- Units Sold 1,536 1,400 ======== ========
-11- 15
Fiscal Fiscal Year-To-Date Year-To-Date 9/30/98 9/30/97 ------------------- ------------------- Manufactured Homes Revenues (Construction) $ 72,028 100.0% $ 65,488 100.0% Cost of Sales (56,645) (78.7%) (52,420) (80.0%) Selling, General & Administrative (6,708) (9.3%) (6,866) (10.5%) ---------- ------- --------- ------- Earnings before Goodwill and Minority Interest (Construction) 8,675 12.0% 6,202 9.5% ======= ======= Earnings before Goodwill and Minority Interest (Retail) (303) -- ---------- --------- Total Earnings Before Goodwill Minority Interest 8,372 6,202 Goodwill Amortization (1,620) (1,146) Minority Interest (1,354) (1,300) ---------- --------- Operating Earnings $ 5,398 $ 3,756 ========== ========= Units Produced 3,045 2,618 Units Sold - Retail 449 -- Less: Intersegment Sales (347) -- ---------- --------- Units Sold 3,147 2,618 ========== =========
INVESTMENT REAL ESTATE For the quarter ended September 30, 1998, Centex's Investment Real Estate operation, through which all investment property transactions are reported, had operating earnings of $6.5 million, 2% lower than $6.6 million for the same quarter a year ago. For the current six months, operating earnings from Investment Real Estate were $13.9 million, a 6% decrease from $14.8 million for the same period in fiscal 1998. -12- 16 FINANCIAL SERVICES The following summarizes Financial Services' results for the quarter and fiscal year-to-date ended September 30, 1998 compared to the quarter and fiscal year-to-date ended September 30, 1997 (dollars in millions):
Fiscal Fiscal Quarter Ended Quarter Ended Year-to-Date Year-to-Date 9/30/98 9/30/97 9/30/98 9/30/97 ------------- ------------- ------------ ------------ Revenues $ 107.8 $ 57.3 $ 207.9 $ 104.5 Operating Earnings $ 23.8 $ 7.6 $ 47.5 $ 12.8 Origination Volume $ 2,675 $ 1,660 $ 5,272 $ 3,092 % Change 61% 20% 71% 11% Number of Loans Originated CTX Mortgage Company ("CTX") - Centex-built Homes ("Builder") 2,339 2,186 4,420 3,958 Non-Centex-built Homes ("Retail") 16,091 10,352 32,333 19,832 ------- --------- ------- ------- 18,430 12,538 36,753 23,790 Centex Home Equity Corporation ("CHEC") 3,793 1,644 7,309 2,820 Centex Finance Company 212 -- 355 -- ------- --------- ------- ------- 22,435 14,182 44,417 26,610 ======= ========= ======= ======= % Change 58% 18% 67% 10%
CTX's Builder applications for the quarter of 2,701 increased 26% over last year while Retail applications rose 53% to 15,981. CTX's Builder applications of 5,243 for the six month period were 15% higher than a year ago. Retail applications increased 58% from 20,601 a year ago to 32,630 for the six months. The profit per loan of $1,124 for this year's quarter was a 41% increase over last year's per loan profit of $796. For the six month period, the profit per loan increased 75% to $1,141. This increase in profit per loan is a result of increased originations and the centralization of certain back-office functions. CHEC generated 18,599 sub-prime loan applications for the quarter, an increase of 222% compared to the same quarter a year ago. CHEC applications for the six months rose 267% to 31,687. The recently opened manufactured-home finance unit, Centex Finance Company, incurred net start-up costs of approximately $600,000 and $1.1 million for the quarter and six months ended September 30, 1998, respectively. CONSTRUCTION PRODUCTS Revenues from CXP were $91.8 million for the quarter this year, 10% higher than last year. CXP's operating earnings, net of minority interest, were $19.8 million for the quarter this year, 32% higher than last year's earnings. CXP's revenues for the current six months were $171.6 million, 6% higher than last year. CXP's operating earnings, net of minority interest, were $34.9 million, a 28% improvement over results for the same period a year ago. -13- 17 CXP's record operating earnings resulted from improved results in each of its businesses. Pricing improved for every product, and sales volumes were higher for Gypsum Wallboard, Concrete and Aggregates for the six months. Cement sales volume declined 4% for the six month period due to wet-weather delays in some markets, but this volume should be recouped during the balance of the fiscal year. CONTRACTING AND CONSTRUCTION SERVICES The following summarizes Contracting and Construction Services' results for the quarter and fiscal year-to-date ended September 30, 1998 compared to the quarter and fiscal year-to-date ended September 30, 1997 (dollars in millions):
Fiscal Fiscal Quarter Ended Quarter Ended Year-to-Date Year-to-Date 9/30/98 9/30/97 9/30/98 9/30/97 ------------- ------------- ------------ ------------ Revenues $ 342.0 $ 225.3 $ 664.1 $ 461.9 Operating Earnings $ 4.2 $ 1.2 $ 7.7 $ 2.2 New Contracts Received $ 333 $ 303 $ 724 $ 491 Backlog of Uncompleted Contracts $ 1,219 $ 1,143 $ 1,219 $ 1,143
The Harrah's New Orleans Casino contract was suspended on November 22, 1995 due to a bankruptcy filing by the Harrah's Jazz Company partnership, the developer of the casino. Centex Landis Construction Co., Inc. ("Landis") and its subcontractors filed claims against the partnership for completed but unpaid work. Landis also filed a lawsuit against Harrah's Entertainment, Inc., parent company of the major partner in the partnership, to recover its claims. In late November 1996, Landis and Harrah's reached a settlement conditioned upon Harrah's plan of reorganization becoming effective. Harrah's plan became effective on October 30, 1998, at which time Harrah's paid $34 million to Landis in settlement of the claims of Landis and its subcontractors, and Landis has resumed construction of the casino. In October 1992, Martin County sued one of the Company's general contracting subsidiaries, Centex-Rooney Construction Co., Inc. ("Rooney"), alleging defects in the design and construction of the Martin County Courthouse in Stuart, Florida. Rooney was construction manager of the project. In July 1996, a judgment of $14.2 million was returned against Rooney, and in April 1997, Martin County also obtained a judgment of $3.2 million in attorney's fees and costs. Recently, the 4th District Court of Appeals affirmed the $14.2 million judgment, and Rooney filed an appeal to the Supreme Court of Florida. In August 1998, the Florida Supreme Court denied Rooney's petition for review, and shortly thereafter, Rooney paid Martin County $17.35 million in satisfaction of the judgment. Rooney's appeal of the $3.2 million award is still pending. At this time, Rooney is prosecuting claims and lawsuits against subcontractors, their insurance carriers and Rooney's own insurance carriers for recovery of the judgments. One of Rooney's carriers has agreed to pay approximately $3.5 million. While there is no assurance that Rooney will recover from such subcontractors or other insurance carriers, management believes that Rooney will be able to recover substantially all of both judgments. In any case, these judgments would not have a material impact on the financial condition of the Company. -14- 18 YEAR 2000 COMPLIANCE The Company has a variety of operating systems, computer software applications, computer hardware equipment and other equipment with embedded electronic circuits, including applications that the Company uses in its administrative functions and in the operations of its various subsidiaries and business divisions (collectively, the "Systems"). Because resolution of Year 2000 issues is considered a priority of the Company, the Company has created a Year 2000 Task Force to oversee the Company's Year 2000 compliance. The Task Force, consisting of members of the Company's accounting, financial planning, legal and internal audit departments, has oversight of the information systems managers and other administrative personnel charged with implementing the Company's Year 2000 compliance program (collectively, the "Year 2000 Compliance Team"). The Task Force has surveyed the Year 2000 Compliance Team, regarding the Year 2000 compliance of the Systems. The results of the surveys indicate that a small number of the Systems are not Year 2000 compliant. Affected Systems are primarily Systems that are not critical to the material operations of the Company and its subsidiaries. The Company has replaced several of these Systems and is in the process of replacing others. All non-compliant Systems will be replaced no later than the fourth quarter of fiscal 1999 (i.e. the quarter ending March 31, 1999). In substantially all of the cases, the replacement or upgrading of, or other changes to, the non-complaint Systems (i) has occurred or will occur for reasons unrelated to the non-compliance of the Systems and (ii) has not been accelerated as a result of the non-compliance of such Systems. The Company does not believe (i) that the non-compliant Systems pose a material risk to the financial condition of the Company as a whole, or of the individual operations or subsidiaries or operating divisions that currently have non-compliant Systems or (ii) that the cost of replacing, upgrading or otherwise changing the non-compliant Systems is material to the Company as a whole, or to the individual subsidiaries or operations divisions. The Company has used, and believes that it will be able to continue to use, internally generated cash to fund the correction of Systems that are not compliant. The Task Force is presently developing a Year 2000 contingency plan. Additionally, in order to further confirm the Company's Year 2000 readiness, the Company has engaged the services of a third-party consulting firm to evaluate its Year 2000 readiness. The Company believes that both the contingency plan and the consulting firm's review will be completed during the fourth quarter of fiscal 1999. Because of its Year 2000 compliance program, the Company believes that it is highly unlikely that any interruption to its operations resulting from a compliance failure will have a material adverse effect on the Company's operations or financial condition. Achieving Year 2000 compliance is dependent on many factors, however, and some of these factors are not completely within the Company's control. Although the Company, its subsidiaries and other business divisions obtain information, materials and services from numerous sources and provide goods and services to numerous customers, the failure of these third parties (including U.S. government agencies) to achieve Year 2000 readiness may adversely impact the Company's operations. The Company believes the most reasonably likely Year 2000 worst case scenario would be the failure of some vendors and subcontractors to achieve compliance, resulting in a slowdown of the Company's operations. The Company is not aware of any vendors or subcontractors that are not Year 2000 compliant. In order to address the potential non-compliance by third parties affecting the Company's operations, the Company will continue to survey its largest customers, subcontractors and vendors. Year 2000 Forward-looking Statements Certain statements in this section, other than historical information, are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties, including the Company's ability to assess and remediate any Year 2000 compliance issues, the ability -15- 19 of third parties to correct material non-compliant systems, and the Company's assessment of the Year 2000 issue's impact on its financial results and operations. STOCK REPURCHASES Since April 1998, the Company has repurchased 407,700 shares of common stock under its stock-option-related repurchase program. The Company intends to continue to repurchase shares under this program. FINANCIAL CONDITION AND LIQUIDITY Centex fulfills its short-term financing requirements with cash generated from its operations and funds available under its credit facilities. These credit facilities also serve as back-up lines for overnight borrowings under its uncommitted bank facilities and commercial paper program. In addition, CTX Mortgage Company has its own $1 billion of committed and $800 million of uncommitted credit facilities to finance mortgages which are held during the period in which they are being securitized and readied for delivery against forward sale commitments. Centex Home Equity Corporation has its own $300 million credit facility to finance sub-prime mortgages held until securitization. The $339.4 million increase in debt was primarily used to fund the increase in both residential mortgage loans and inventories. The increase in residential mortgage loans is primarily due to an increase in mortgage refinancing activity which is attributed to continuing favorable mortgage interest rates. The Company believes it has adequate resources and sufficient credit facilities to satisfy its current needs and to provide for future growth. OTHER DEVELOPMENTS AND OUTLOOK Favorable interest rates and the strong national economy in recent months have positively affected the Company's businesses. If interest rates and general economic conditions remain at or near current levels, Centex's Home Building and Financial Services' results could surpass fiscal 1998's performance levels. Centex's other businesses also should continue to report improved results, including CXP which is anticipated to have its fifth consecutive year of improved earnings. FORWARD-LOOKING STATEMENTS The information contained in this Report includes forward-looking statements involving a number of risks and uncertainties. Forward-looking statements may be identified by the context of the statement and generally arise when the Company is discussing its beliefs, estimates or expectations. In addition to the factors discussed elsewhere in this document, other determinants that could cause actual results to differ include increases in short- and/or long-term interest rates or a change in the relationship between short- and long-term interest rates; business conditions; growth in the home building, investment real estate, financial services, construction products and contracting and construction services industries in the local markets in which the Company through its subsidiaries conducts business and in the economy in general: competitive factors, governmental regulation and the cost and availability of raw materials. These and other factors are described in the Joint Annual Report on Form 10-K of Centex Corporation and 3333 Holding Corporation and Centex Development Company, L.P., and in the Annual Report on Form 10-K for Centex Construction Products, Inc., for the fiscal year ended March 31, 1998. Both reports are filed with the Securities and Exchange Commission. -16- 20 CENTEX CORPORATION PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On July 23, 1998, Centex held its Annual Meeting of Stockholders. At the Annual Meeting, Clint W. Murchison, III, David W. Quinn and Paul T. Stoffel were elected as directors to serve for a three-year term until the 2001 Annual Meeting. Voting results for these nominees are summarized as follows:
Number of Shares ---------------------------------------------- For Against ------------------- ------------------ Clint W. Murchison, III 49,112,646 819,657 David W. Quinn 49,010,491 921,812 Paul T. Stoffel 49,112,710 819,593
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit 27.1 - Financial Data Schedule (b) Reports on Form 8-K The Registrant filed no reports on Form 8-K during the quarter ended September 30, 1998. All other items required under Part II are omitted because they are not applicable. -17- 21 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CENTEX CORPORATION ------------------------------------ Registrant November 16, 1998 /s/ David W. Quinn ------------------------------------ David W. Quinn Vice Chairman and Chief Financial Officer (principal financial officer) November 16, 1998 /s/ Barry G. Wilson ------------------------------------ Bary G. Wilson Controller (chief accounting officer) -18- 22 3333 HOLDING CORPORATION CENTEX DEVELOPMENT COMPANY, L.P. PART I. FINANCIAL INFORMATION CONDENSED COMBINING FINANCIAL STATEMENTS ITEM 1. The condensed combining financial statements include the accounts of 3333 Holding Corporation and subsidiary and Centex Development Company, L.P. (collectively the "Companies"), and have been prepared by the Companies, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Companies believe that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed combining financial statements be read in conjunction with the financial statements and the notes thereto included in the Companies' latest Annual Report on Form 10-K. In the opinion of the Companies, all adjustments necessary to present fairly the information in the following condensed financial statements of the Companies have been included. The results of operations for such interim periods are not necessarily indicative of the results for the full year. -19- 23 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. CONDENSED COMBINING STATEMENT OF OPERATIONS (dollars in thousands, except per unit/share data) (unaudited)
For the Three Months Ended September 30, ----------------------------------------------------------------------------- 1998 1997 ------------------------------------ -------------------------------------- 3333 HOLDING 3333 HOLDING CENTEX CORPORATION CENTEX CORPORATION DEVELOPMENT AND DEVELOPMENT AND COMBINED COMPANY, L.P. SUBSIDIARY COMBINED COMPANY, L.P. SUBSIDIARY -------- ------------- ------------- -------- ------------- ------------- Revenues $ 7,772 $ 7,656 $ 281 $ 3,094 $ 3,002 $ 337 Costs and Expenses 7,397 7,028 534 2,746 2,642 349 -------- -------- -------- -------- -------- -------- Earnings (Loss) Before Income Taxes 375 628 (253) 348 360 (12) Income Taxes -- -- -- -- -- -- -------- -------- -------- -------- -------- -------- NET EARNINGS (LOSS) $ 375 $ 628 $ (253) $ 348 $ 360 $ (12) ======== ======== ======== ======== ======== ======== NET EARNINGS (LOSS) PER UNIT/SHARE $ 11.79 $ (253) $ 11.16 $ (12) ======== ======== ======== ======== WEIGHTED-AVERAGE UNITS/SHARES OUTSTANDING 53,279 1,000 32,260 1,000 ======== ======== ======== ========
See notes to condensed combining financial statements. -20- 24 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. CONDENSED COMBINING STATEMENT OF OPERATIONS (dollars in thousands, except per unit/share data) (unaudited)
For the Six Months Ended September 30, ---------------------------------------------------------------------------------------- 1998 1997 ------------------------------------------ ---------------------------------------- 3333 HOLDING 3333 HOLDING CENTEX CORPORATION CENTEX CORPORATION DEVELOPMENT AND DEVELOPMENT AND COMBINED COMPANY, L.P. SUBSIDIARY COMBINED COMPANY, L.P. SUBSIDIARY ------------ ------------- ------------- ------------ ------------- ------------- Revenues $ 14,080 $ 13,732 $ 757 $ 6,835 $ 6,625 $ 749 Costs and Expenses 14,051 13,297 1,163 5,696 5,566 669 ------------ ------------- ------------- ------------ ------------- ------------- Earnings (Loss) Before Income Taxes 29 435 (406) 1,139 1,059 80 Income Taxes -- -- -- -- -- -- ------------ ------------- ------------- ------------ ------------- ------------- NET EARNINGS (LOSS) $ 29 $ 435 $ (406) $ 1,139 $ 1,059 $ 80 ============ ============= ============= ============ ============= ============= NET EARNINGS (LOSS) PER UNIT/SHARE $ 8.49 $ (406) $ 32.83 $ 80 ============= ============= ============= ============= WEIGHTED-AVERAGE UNITS/SHARES OUTSTANDING 51,210 1,000 32,260 1,000 ============= ============= ============= =============
See notes to condensed combining financial statements. -21- 25 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. CONDENSED COMBINING BALANCE SHEETS (dollars in thousands)
September 30, 1998* March 31, 1998** --------------------------------------- ----------------------------------------- 3333 HOLDING 3333 HOLDING CENTEX CORPORATION CENTEX CORPORATION DEVELOPMENT AND DEVELOPMENT AND COMBINED COMPANY, L.P. SUBSIDIARY COMBINED COMPANY, L.P. SUBSIDIARY ---------- -------------- ------------ ---------- -------------- ------------- ASSETS Cash $ 348 $ 308 $ 40 $ 260 $ 259 $ 1 Accounts Receivable 3,353 4,012 1,668 976 8,552 761 Notes Receivable - Centex Corporation and Subsidiaries -- -- -- 7,700 -- 7,700 Other 5,172 5,172 -- 5,110 5,110 -- Investment in Affiliate -- -- 1,078 -- -- 849 Investment in Real Estate Joint Ventures 696 1,196 523 3,040 2,478 562 Commercial Properties, net 1,914 1,914 -- 1,946 1,946 -- Projects Under Development and Held for Sale 75,882 73,827 1,032 41,265 40,815 450 Property and Equipment, net 186 37 149 88 -- 88 Other Assets 995 863 132 112 100 12 ------- ------- ------- ------- ------- ------- $88,546 $87,329 $ 4,622 $60,497 $59,260 $10,423 ======= ======= ======= ======= ======= ======= LIABILITIES, STOCKHOLDERS' EQUITY AND PARTNERS' CAPITAL Accounts Payable and Accrued Liabilities $ 8,837 $ 8,671 $ 2,493 $ 4,341 $ 4,370 $ 8,390 Notes Payable - Centex Corporation and Subsidiaries 1,982 -- 1,982 1,480 -- 1,480 Bank Development Facilities 21,384 21,384 -- 13,821 13,821 -- ------- ------- ------- ------- ------- ------- Total Liabilities 32,203 30,055 4,475 19,642 18,191 9,870 ------- ------- ------- ------- ------- ------- Stockholders' Equity and Partners' Capital 56,343 57,274 147 40,855 41,069 553 ------- ------- ------- ------- ------- ------- $88,546 $87,329 $ 4,622 $60,497 $59,260 $10,423 ======= ======= ======= ======= ======= =======
* Unaudited ** Condensed from audited financial statements See notes to condensed combining financial statements. -22- 26 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. CONDENSED COMBINING STATEMENT OF CASH FLOWS (dollars in thousands) (unaudited)
For the Six Months Ended September 30, ----------------------------------------------------------------------------------- 1998 1997 --------------------------------------- ----------------------------------------- 3333 HOLDING 3333 HOLDING CENTEX CORPORATION CENTEX CORPORATION DEVELOPMENT AND DEVELOPMENT AND COMBINED COMPANY, L.P. SUBSIDIARY COMBINED COMPANY, L.P. SUBSIDIARY ---------- -------------- ------------ ---------- -------------- ------------- CASH FLOWS - OPERATING ACTIVITIES Net Earnings (Loss) $ 29 $ 435 $ (406) $ 1,139 $ 1,059 $ 80 Net Change in Payables, Accruals and Receivables 2,119 8,923 (6,804) 233 (1,678) 1,911 (Increase) Decrease in Notes Receivable (62) (62) -- 903 903 -- Decrease in Advances to Joint Venture 2,344 1,282 39 116 116 -- (Increase) Decrease in Projects Under Development and Held for Sale (20,158) (18,553) (582) 2,016 2,016 -- Decrease in Commercial Properties, net 32 32 -- -- -- -- Property and Equipment Additions, net (98) (37) (61) -- -- -- Increase in Other Assets (883) (763) (120) (100) (100) -- ---------- ------------- ------------ ---------- -------------- ------------- (16,677) (8,743) (7,934) 4,307 2,316 1,991 ---------- ------------- ------------ ---------- -------------- ------------- CASH FLOWS - FINANCING ACTIVITIES Increase (Decrease) in Notes Payable - Centex Corporation and Subsidiaries 502 -- 502 (1,994) -- (1,994) Bank Development Facilities 7,563 7,563 -- 2,032 2,032 -- Decrease in Notes Receivable - Centex Corporation and Subsidiaries 7,700 -- 7,700 -- -- -- Capital Contributions 1,000 1,229 (229) -- -- -- Capital Distributions -- -- -- (4,500) (4,500) -- ---------- ------------- ------------ ---------- -------------- ------------- 16,765 8,792 7,973 (4,462) (2,468) (1,994) ---------- ------------- ------------ ---------- -------------- ------------- NET INCREASE (DECREASE) IN CASH 88 49 39 (155) (152) (3) CASH AT BEGINNING OF YEAR 260 259 1 630 625 5 ---------- ------------- ------------ ---------- -------------- ------------- CASH AT END OF PERIOD $ 348 $ 308 $ 40 $ 475 $ 473 $ 2 ========== ============= ============ ========== ============== =============
See notes to condensed combining financial statements. -23- 27 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. NOTES TO CONDENSED COMBINING FINANCIAL STATEMENTS SEPTEMBER 30, 1998 (unaudited) (A) On November 30, 1987 Centex Corporation ("Centex") distributed to a nominee all of the issued and outstanding shares of common stock of 3333 Holding Corporation ("Holding") and warrants to purchase approximately 80% of the Class B units of limited partnership interest in Centex Development Company, L.P. ("CDC" or the "Partnership"). 3333 Development Corporation ("Development"), a wholly-owned subsidiary of Holding, serves as general partner of the Partnership. These securities are held by the nominee on behalf of Centex stockholders and will trade in tandem with the common stock of Centex until such time as they are detached. See Note (B) to the condensed consolidated financial statements of Centex Corporation and subsidiaries included elsewhere in this Form 10-Q for supplementary condensed combined financial statements for Centex Corporation and Subsidiaries, Holding and Subsidiary and the Partnership. (B) Holding entered into a services agreement in May 1987 with Centex Service Company ("CSC"), a wholly-owned subsidiary of Centex, whereby CSC provides certain tax, accounting and other similar services for Holding at a fee of $2,500 per month. In April 1998, the service agreement was amended to also include certain real estate development and management services and the related fee was increased to $30,000 per month. In connection with Holding's acquisition of additional shares of common stock of Development in 1987, Holding borrowed $7.7 million from Centex pursuant to a secured promissory note (the "Holding Note"). On May 29, 1998, the outstanding principal balance on the Holding Note was repaid. The Holding Note, which had a fluctuating balance during April and May 1998, bore interest, payable quarterly, at the prime rate of interest of NationsBank, N.A. plus 1%. Interest expense on the Holding Note during the six months ended September 30, 1998 totaled $62,000. In 1987, Development loaned $7.7 million to a wholly-owned subsidiary of Centex pursuant to an unsecured promissory note and related loan agreement. The note bore interest, payable quarterly, at the prime rate of interest of NationsBank, N.A. plus 7/8%. On May 29, 1998, the outstanding principal balance on the note was repaid. Interest income on the note totaled $116,000 for the six months ended September 30, 1998. CDC sells lots to Centex Homes pursuant to certain purchase and sale agreements. Revenues from these sales totaled $883,000 and $ 2.8 million for the quarter and six months ended September 30, 1998, and $41,000 and $635,000 for the quarter and six months ended September 30, 1997, respectively. Additionally, during the six months ended September 30, 1997, the Partnership sold property located in Carrollton, Texas to Centex Homes for $2.9 million. During fiscal year 1998, Centex Multi-Family Company, L.P. ("Multi-Family"), a subsidiary of CDC, executed a construction contract with one of Centex's construction subsidiaries in the amount of $13.2 million for the construction of a 304-unit apartment project north of Dallas in The Colony, Texas. Also, during the current fiscal year, Centex Office Southpointe I, L.P., a subsidiary of CDC, executed a -24- 28 construction contract with one of Centex's construction subsidiaries in the amount of $9.4 million for the construction of a 140,000 square foot office building in Plantation, Florida, near Ft. Lauderdale. In April 1998, CDC acquired a 49% equity interest in an entity which purchased real estate assets from a Centex subsidiary for $3.1 million. (C) During fiscal year 1998, the partnership agreement governing CDC was amended to allow for the issuance of a new class of limited partnership units, Class C Preferred Partnership Units ("Class C Units"), to be issued in exchange for assets contributed by a limited partner, or by an individual or entity who is to be admitted as a limited partner. During the six months ended September 30, 1998, Centex Homes, CDC's sole limited partner, contributed assets valued at $15.5 million in exchange for 15,459 Class C Units. (D) A summary of changes in stockholders' equity and partners' capital is presented below (dollars in thousands):
For the Six Months Ended September 30, 1998 ------------------------------------------------------------------------------------ 3333 Holding Corporation Centex Development Company, L.P. and Subsidiary -------------------------------------- --------------------------------- CLASS B GENERAL LIMITED CAPITAL IN UNITS PARTNERS' PARTNER'S STOCK EXCESS OF RETAINED COMBINED WARRANTS CAPITAL CAPITAL WARRANTS PAR VALUE EARNINGS ----------- ------------ ------------ ----------- ---------- ----------- ---------- Balance at March 31, 1998 $ 40,855 $ 500 $ 767 39,802 $ 1 $ 800 $ (248) Capital Contributions 15,459 -- 311 15,459 -- -- -- Net Earnings 29 -- -- 435 -- -- (406) ----------- ------------ ------------ ----------- ---------- ----------- ---------- BALANCE AT SEPTEMBER 30, 1998 $ 56,343 $ 500 $ 1,078 $ 55,696 $ 1 $ 800 $ (654) =========== ============ ============ =========== ========== =========== ==========
The Partnership agreement provides that Class A and Class C limited partners are entitled to a cumulative preferred return of 9% per annum on the average outstanding balance of their Unrecovered Capital. Unrecovered Capital represents initial capital contributions as reduced by repayments and is the basis for preference accruals. No preference payments were made during the three months or six months ended September 30, 1998. Preference payments in arrears at September 30, 1998 for Class A and Class C limited partners amounted to $5.7 million and $855,000, respectively, and Unrecovered Capital for Class A and Class C limited partners aggregated approximately $55.8 million. -25- 29 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS On a combined basis, revenues for the quarter and six months ended September 30, 1998 totaled $7.8 million and $14.1 million, respectively. Revenues of $3.1 million and $6.8 million for the quarter and six months ended September 30, 1997, respectively, included the results from the sale of commercial property in Texas and residential property in Florida. The Companies had combined net earnings for the quarter and six months ended September 30, 1998 of $375,000 and $29,000, respectively, compared to combined net earnings of $348,000 and $1.1 million for the quarter and six months ended September 30, 1997, respectively. Margins on real estate sales for the six months ended September 30, 1998 were 2.4% versus 19.1% for the six months ended September 30, 1997. YEAR 2000 COMPLIANCE The Companies have a variety of operating systems, computer software applications, computer hardware equipment and other equipment with embedded electronic circuits. Pursuant to the services agreement Holding has with CSC, Year 2000 compliance issues are being addressed by a Year 2000 Task Force Team comprised of members of the information systems, accounting, financial planning, legal and internal audit departments of Centex as well as by management of the Companies. Since fiscal year 1997, the Companies have been engaged in an ongoing process of identifying, evaluating and implementing changes to their systems in order to ensure Year 2000 compliance. As a result of this process, a small number of systems were identified as being unable to interpret dates after December 31, 1999. In all of the cases, the replacement or upgrading of the non-compliant systems has already occurred as part of their normal ongoing systems updating. The Companies have engaged the services of a third-party consulting firm to evaluate their Year 2000 readiness. It is anticipated that the evaluation will be concluded during the March 1999 quarter. Achieving Year 2000 compliance is dependent on many factors, some of which are not completely within the Companies' control. The Companies obtain information, materials and services from numerous sources and provide goods and services to numerous customers. The failure of these third parties (including U.S., state and local governments and agencies) to achieve Year 2000 readiness could adversely affect the Companies' financial condition and results of operations. In order to address the potential non-compliance by third parties, the Companies will continue to survey their largest customers, contractors and vendors, asking them to respond with their Year 2000 plans. Year 2000 Forward-looking Statements Certain statements in this section, other than historical information, are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties, including the Companies' ability to assess and remediate any Year 2000 compliance issues, -26- 30 the ability of third parties to correct material non-compliant systems, and the Companies' assessment of the Year 2000 issue's impact on their financial results and operations. LIQUIDITY AND CAPITAL RESOURCES During the six months ended September 30, 1998, 15,459 Class C Preferred Partnership Units were issued in exchange for assets valued at $15.5 million. The revenues, earnings and liquidity of the Companies for the next 12 to 18 months will be largely dependent on future real estate and home sales, the timing of which are uncertain. Commercial development operations have recently been initiated and are not anticipated to provide a significant source of earnings or liquidity for approximately 18 months. The Companies believe that they will be able to provide or obtain the necessary funding for their current operations and future expansion needs. The ability of the Partnership to obtain external debt or equity capital is subject to the partnership agreement (as amended) governing the Partnership. FORWARD-LOOKING STATEMENTS The information contained in this Report includes forward-looking statements involving a number of risks and uncertainties. Forward-looking statements may be identified by the context of the statement and generally arise when the Companies are discussing their beliefs, estimates or expectations. In addition to the factors discussed elsewhere in this document, other determinants that could cause actual results to differ include increases in short- and/or long-term interest rates or a change in the relationship between short- and long-term interest rates; business conditions; growth in the investment real estate industry in the local markets in which the Companies conduct business and in the economy in general: competitive factors, and governmental regulation. These and other factors are described in the Joint Annual Report on Form 10-K of Centex Corporation and 3333 Holding Corporation and Centex Development, L.P. for the fiscal year ended March 31, 1998 which is filed with the Securities and Exchange Commission. -27- 31 3333 HOLDING CORPORATION CENTEX DEVELOPMENT COMPANY, L.P. PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On July 23, 1998, 3333 Holding Corporation held its Annual Meeting of Stockholders. At the Annual Meeting, Richard C. Decker, Josiah O. Low, III and David M. Sherer were elected as directors to serve until the next annual election. Voting results for these nominees are summarized as follows:
Number of Shares ---------------------------------------- For Against ---------------- ------------ Richard C. Decker 790 16 Josiah O. Low, III 792 14 David M. Sherer 792 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit 27.2 - Financial Data Schedule Exhibit 27.3 - Financial Data Schedule (b) Reports on Form 8-K The Registrant filed no reports on Form 8-K during the quarter ended September 30, 1998. All other items required under Part II are omitted because they are not applicable. -28- 32 Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. 3333 HOLDING CORPORATION --------------------------------------------- Registrant November 16, 1998 /s/ Richard C. Decker --------------------------------------------- Richard C. Decker President and Chief Executive Officer (principal executive officer) November 16, 1998 /s/ Kimberly A. Pinson --------------------------------------------- Kimberly A. Pinson Vice President, Treasurer and Controller (principal financial officer and chief accounting officer) -29- 33 Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CENTEX DEVELOPMENT COMPANY, L.P. ----------------------------------------------- Registrant By: 3333 Development Corporation, General Partner November 16, 1998 /s/ Richard C. Decker ----------------------------------------------- Richard C. Decker President and Chief Executive Officer (principal executive officer) November 16, 1998 /s/ Kimberly A. Pinson ----------------------------------------------- Kimberly A. Pinson Vice President, Treasurer and Controller (principal financial officer and chief accounting officer) -30- 34 INDEX TO EXHIBITS
Exhibit No Description - ------------ ---------------------------------------------------------- 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.
EX-27.1 2 FINANCIAL DATA SCHEDULE - CENTEX CORP
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CENTEX CORPORATION'S SEPTEMBER 30, 1998, FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000018532 CENTEX CORP. 1,000 6-MOS MAR-31-1999 APR-01-1998 SEP-30-1998 94,151 0 1,770,612 0 1,301,618 0 525,053 231,912 3,946,437 0 209,097 0 0 14,878 1,067,711 3,946,437 2,353,688 2,353,688 2,127,842 2,127,842 40,523 0 18,235 167,088 62,364 104,724 0 0 0 104,724 1.76 1.69
EX-27.2 3 FINANCIAL DATA SCHEDULE - 3333 HOLDING CORP.
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 3333 HOLDING CORPORATION'S SEPTEMBER 30, 1998, FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000818762 3333 HOLDING CORP. 1,000 6-MOS MAR-31-1999 APR-01-1998 SEP-30-1998 40 0 1,668 0 1,032 0 183 34 4,622 0 0 0 0 1 146 4,622 757 757 1,163 1,163 0 0 0 (406) 0 (406) 0 0 0 (406) 0.00 0.00
EX-27.3 4 FINANCIAL DATA SCHEDULE - CENTEX DEVELOPMENT
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CENTEX DEVELOPMENT COMPANY, L.P.'S SEPTEMBER 30, 1998, FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000818764 CENTEX DEVELOPMENT CO LP 1,000 6-MOS MAR-31-1999 APR-01-1998 SEP-30-1998 308 0 4,012 0 75,741 0 169 132 87,329 0 0 0 0 500 56,774 87,329 13,732 13,732 13,297 13,297 0 0 0 435 0 435 0 0 0 435 0.00 0.00
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