-----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, Oflya4sQEBQI7SVVqjcWKHdilco72hPL6bO4ExZV0kuRp/YlEISZsbyiwnzwwiqB I0R5exmXPZJUwYh6CrZKeg== 0000950134-99-000959.txt : 19990215 0000950134-99-000959.hdr.sgml : 19990215 ACCESSION NUMBER: 0000950134-99-000959 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990212 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: 99535330 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: 99535331 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: 99535332 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 DECEMBER 31, 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 DECEMBER 31, 1998 Commission File No. 1-6776 CENTEX CORPORATION A Nevada Corporation IRS Employer Identification No. 75-0778259 2728 N. Harwood Dallas, Texas 75201 (214) 981-5000 Commission File Nos. 1-9624 and 1-9625, respectively 3333 HOLDING CORPORATION A Nevada Corporation CENTEX DEVELOPMENT COMPANY, L.P. A Delaware Limited Partnership IRS Employer Identification Nos. 75-2178860 and 75-2168471, respectively 3100 McKinnon, Suite 370 Dallas, Texas 75201 (214) 981-6700 The registrants have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and have been subject to such filing requirements for the past 90 days. Indicate the number of shares of each of the registrants' classes of common stock (or other similar equity securities) outstanding as of the close of business on January 29, 1999: Centex Corporation Common Stock 59,488,014 shares 3333 Holding Corporation Common Stock 1,000 shares Centex Development Company, L.P. Class A Units of Limited Partnership Interest 32,260 units Centex Development Company, L.P. Class C Units of Limited Partnership Interest 26,987 units
2 CENTEX CORPORATION 3333 HOLDING CORPORATION CENTEX DEVELOPMENT COMPANY, L.P. Form 10-Q Table of Contents December 31, 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 December 31, 1998 2 Condensed Consolidated Statement of Earnings for the Nine Months Ended December 31, 1998 3 Condensed Consolidated Balance Sheets 4 Condensed Consolidated Statement of Cash Flows for the Nine Months Ended December 31, 1998 5 Notes to Condensed Consolidated Financial Statements 6 - 9 ITEM 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 10 - 17 PART II. OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K 18 SIGNATURES 19
-i- 3 3333 HOLDING CORPORATION CENTEX DEVELOPMENT COMPANY, L.P.
PAGE PART I. FINANCIAL INFORMATION ITEM 1. Condensed Combining Financial Statements 21 Condensed Combining Statement of Operations for the Three Months Ended December 31, 1998 22 Condensed Combining Statement of Operations for the Nine Months Ended December 31, 1998 23 Condensed Combining Balance Sheets 24 Condensed Combining Statement of Cash Flows for the Nine Months Ended December 31, 1998 25 Notes to Condensed Combining Financial Statements 26 - 27 ITEM 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 28 - 29 PART II. OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K 30 SIGNATURES 31 - 32
-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 December 31, ----------------------------------- 1998 1997 --------------- --------------- REVENUES Home Building Conventional Homes $ 671,404 $ 557,484 Manufactured Homes 39,819 38,239 Investment Real Estate 8,566 6,088 Financial Services 116,234 64,604 Construction Products 84,863 70,510 Contracting and Construction Services 335,200 246,158 --------------- --------------- 1,256,086 983,083 --------------- --------------- COSTS AND EXPENSES Home Building Conventional Homes 613,305 515,194 Manufactured Homes 36,345 34,768 Investment Real Estate 196 (986) Financial Services 92,085 56,097 Construction Products 53,314 49,811 Contracting and Construction Services 331,511 243,652 Other, net 2,844 2,025 Corporate General and Administrative 7,084 5,014 Interest Expense 10,929 8,293 Minority Interest 13,839 10,292 --------------- --------------- 1,161,452 924,160 --------------- --------------- EARNINGS BEFORE INCOME TAXES 94,634 58,923 Income Taxes 35,591 21,543 --------------- --------------- NET EARNINGS $ 59,043 $ 37,380 =============== =============== EARNINGS PER SHARE Basic $ 0.99 $ 0.63 =============== =============== Diluted $ 0.96 $ 0.61 =============== =============== AVERAGE SHARES OUTSTANDING Basic 59,410,876 59,366,822 Common Share Equivalents Options 1,851,083 1,992,650 Convertible Debenture 400,000 400,000 --------------- --------------- Diluted 61,661,959 61,759,472 =============== =============== CASH DIVIDENDS PER SHARE $ 0.04 $ 0.04 =============== ===============
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 Nine Months Ended December 31, ------------------------------------ 1998 1997 --------------- --------------- REVENUES Home Building Conventional Homes $ 1,881,586 $ 1,605,169 Manufactured Homes 130,748 103,727 Investment Real Estate 17,479 18,199 Financial Services 324,133 169,141 Construction Products 256,485 231,876 Contracting and Construction Services 999,343 708,092 --------------- --------------- 3,609,774 2,836,204 --------------- --------------- COSTS AND EXPENSES Home Building Conventional Homes 1,730,613 1,493,910 Manufactured Homes 120,522 95,200 Investment Real Estate (4,752) (3,643) Financial Services 252,508 147,866 Construction Products 163,007 160,066 Contracting and Construction Services 987,939 703,384 Other, net 7,605 4,945 Corporate General and Administrative 19,195 14,278 Interest Expense 29,164 24,818 Minority Interest 42,251 35,343 --------------- --------------- 3,348,052 2,676,167 --------------- --------------- EARNINGS BEFORE INCOME TAXES 261,722 160,037 Income Taxes 97,955 59,256 --------------- --------------- NET EARNINGS $ 163,767 $ 100,781 =============== =============== EARNINGS PER SHARE Basic $ 2.75 $ 1.71 =============== =============== Diluted $ 2.65 $ 1.65 =============== =============== AVERAGE SHARES OUTSTANDING Basic 59,496,866 58,854,384 Common Share Equivalents Options 1,991,600 1,794,009 Convertible Debenture 400,000 400,000 --------------- --------------- Diluted 61,888,466 61,048,393 =============== =============== CASH DIVIDENDS PER SHARE $ 0.12 $ 0.095 =============== ===============
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 ------------------------- ------------------------- ------------------------- December 31, March 31, December 31, March 31, December 31, March 31, 1998* 1998** 1998* 1998** 1998* 1998** ----------- ----------- ----------- ----------- ----------- ----------- ASSETS Cash and Cash Equivalents $ 111,839 $ 98,316 $ 86,006 $ 87,491 $ 25,833 $ 10,825 Receivables - Residential Mortgage Loans 1,479,171 1,191,450 -- -- 1,479,171 1,191,450 Other 422,665 390,891 350,117 337,558 72,548 53,333 Affiliates -- -- -- -- (74,973) (58,299) Inventories 1,541,106 1,064,554 1,541,106 1,064,554 -- -- Investments - Centex Development Company, L. P. 63,984 34,526 63,984 34,526 -- -- Joint Ventures and Other 40,265 7,558 40,265 7,558 -- -- Unconsolidated Subsidiaries -- -- 181,422 146,592 -- -- Property and Equipment, net 301,250 295,992 277,187 276,008 24,063 19,984 Other Assets - Deferred Income Taxes 103,603 147,607 90,785 144,090 12,818 3,517 Goodwill, net 218,683 133,847 201,270 123,709 17,413 10,138 Mortgage Securitization Residual Interest 60,100 14,747 -- -- 60,100 14,747 Deferred Charges and Other 50,618 36,731 33,437 23,730 17,181 13,001 ----------- ----------- ----------- ----------- ----------- ----------- $ 4,393,284 $ 3,416,219 $ 2,865,579 $ 2,245,816 $ 1,634,154 $ 1,258,696 =========== =========== =========== =========== =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts Payable and Accrued Liabilities $ 931,512 $ 799,154 $ 846,492 $ 711,564 $ 85,020 $ 87,590 Short-term Debt 1,822,647 1,152,873 385,276 73,823 1,437,371 1,079,050 Long-term Debt 284,151 237,715 284,151 237,715 -- -- Minority Stockholders' Interest 147,671 152,468 142,357 148,705 5,314 3,763 Negative Goodwill 70,837 82,837 70,837 82,837 -- -- Stockholders' Equity - Preferred Stock, Authorized 5,000,000 -- -- -- -- -- -- Shares, None Issued Common Stock $.25 Par Value; Authorized 14,867 14,883 14,867 14,883 1 1 100,000,000 Shares; Issued and Outstanding 59,466,599 and 59,531,758 respectively Capital in Excess of Par Value 25,447 36,761 25,447 36,761 75,944 74,944 Retained Earnings 1,096,152 939,528 1,096,152 939,528 30,504 13,348 ----------- ----------- ----------- ----------- ----------- ----------- Total Stockholders' Equity 1,136,466 991,172 1,136,466 991,172 106,449 88,293 ----------- ----------- ----------- ----------- ----------- ----------- $ 4,393,284 $ 3,416,219 $ 2,865,579 $ 2,245,816 $ 1,634,154 $ 1,258,696 =========== =========== =========== =========== =========== ===========
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 Nine Months Ended December 31, ------------------------------------ 1998 1997 --------------- --------------- CASH FLOWS - OPERATING ACTIVITIES Net Earnings $ 163,767 $ 100,781 Adjustments - Depreciation, Depletion and Amortization 27,180 18,265 Deferred Income Taxes 42,814 38,986 Equity in Loss (Earnings) of CDC and Joint Ventures 396 (3,742) Minority Interest 42,251 35,343 --------------- --------------- 276,408 189,633 (Increase) Decrease in Receivables (31,774) 7,525 Increase in Residential Mortgage Loans (287,721) (192,543) Increase in Inventories (476,552) (151,120) Increase (Decrease) in Payables and Accruals 132,358 (34,606) Increase in Other Assets (152,488) (25,272) Other, net (47,048) (32,684) --------------- --------------- (586,817) (239,067) --------------- --------------- CASH FLOWS - INVESTING ACTIVITIES (Increase) Decrease in Investments (62,561) 7,344 Property and Equipment Additions, net (34,836) (33,594) --------------- --------------- (97,397) (26,250) --------------- --------------- CASH FLOWS - FINANCING ACTIVITIES Increase in Debt Secured by Residential Mortgage Loans 358,321 218,739 Other 357,889 93,914 Proceeds from Stock Option Exercises 7,719 16,455 Retirement of Common Stock (19,049) -- Dividends Paid (7,143) (5,612) --------------- --------------- 697,737 323,496 --------------- --------------- NET INCREASE IN CASH 13,523 58,179 CASH AT BEGINNING OF PERIOD 98,316 31,320 --------------- --------------- CASH AT END OF PERIOD $ 111,839 $ 89,499 =============== ===============
See notes to condensed consolidated financial statements. -5- 9 CENTEX CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1998 (unaudited) (A) A summary of changes in stockholders' equity is presented below:
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 -- -- -- 163,767 163,767 Exercise of Stock Options -- 120 7,599 -- 7,719 Retirement of 545,400 Shares -- (136) (18,913) -- (19,049) Cash Dividends -- -- -- (7,143) (7,143) ------------- ------------- ------------- ------------- ------------- BALANCE, DECEMBER 31, 1998 $ -- $ 14,867 $ 25,447 $ 1,096,152 $ 1,136,466 ============= ============= ============= ============= =============
(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)
December 31, March 31, 1998 1998 * --------------- --------------- ASSETS Cash and Cash Equivalents $ 112,771 $ 98,576 Receivables 1,907,000 1,588,247 Inventories 1,635,148 1,107,941 Investments in Joint Ventures and Other 40,433 10,598 Property and Equipment, net 301,508 296,080 Other Assets 434,024 333,044 --------------- --------------- $ 4,430,884 $ 3,434,486 =============== =============== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts Payable and Accrued Liabilities $ 940,132 $ 802,547 Short-term Debt 1,851,358 1,166,694 Long-term Debt 284,151 237,715 Minority Stockholders' Interest 147,671 152,468 Negative Goodwill 70,837 82,837 Stockholders' Equity 1,136,735 992,225 --------------- --------------- $ 4,430,884 $ 3,434,486 =============== ===============
*Condensed from audited financial statements. SUPPLEMENTARY CONDENSED COMBINED STATEMENT OF EARNINGS (dollars in thousands)
For the Nine Months Ended December 31, ----------------------------------- 1998 1997 --------------- --------------- Revenues $ 3,626,072 $ 2,847,726 Costs and Expenses 3,365,134 2,687,629 --------------- --------------- Earnings Before Income Taxes 260,938 160,097 Income Taxes 97,955 59,256 --------------- --------------- NET EARNINGS $ 162,983 $ 100,841 =============== ===============
-7- 11 Notes - continued (C) In order to ensure the future availability of land for homebuilding, the Company has made deposits totaling approximately $37 million as of December 31, 1998 for options to purchase undeveloped land and developed lots having a total purchase price of approximately $777 million. These options and commitments expire at various dates to the year 2003. The Company has also committed to purchase land and developed lots totaling approximately $10 million. In addition, the Company has executed lot purchase contracts with CDC which aggregate approximately $4 million. (D) Interest expense relating to the Financial Services operations is included in its costs and expenses. Interest related to non-financial services is included as interest expense.
For the Nine Months Ended December 31, ------------------------------------- 1998 1997 ---------------- ---------------- Total Interest Incurred $ 89,447 $ 56,491 Less - Financial Services (60,283) (31,673) ---------------- ---------------- Interest Expense $ 29,164 $ 24,818 ================ ================
(E) During April 1994, Centex Construction Products, Inc. ("CXP") completed an initial public offering of its stock which began trading on the New York Stock Exchange under the symbol "CXP." Centex's ownership interest in CXP was 59.2% as of December 31, 1998. (F) During the quarter ended June 30, 1996, Centex's Home Building subsidiary completed a business combination transaction and reorganization with Vista Properties, Inc. As a result of the combination, Centex's Investment Real Estate portfolio, valued in excess of $125 million, was reduced to a nominal "book basis" after recording certain Vista-related tax benefits. As these properties are developed or sold, the net sales proceeds are reflected as operating margin. "Negative Goodwill" recorded as a result of the business combination is being amortized to earnings over approximately seven years which represents the estimated period over which the land will be developed and/or sold. All investment property operations are being reported through Centex's "Investment Real Estate" business segment. (G) In December 1997, Centex adopted the provisions of Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share." All per share data has been restated to conform to the provisions of this Statement. Basic earnings per share is computed based on the weighted-average number of shares of common stock outstanding. Diluted earnings per share, computed similarly to fully diluted earnings per share, are computed based upon basic plus the dilution of the stock options and the convertible debenture. -8- 12 Notes - continued Options to purchase approximately two million shares of common stock at approximately $38.60 per share (expiring in April 2008) were outstanding during the nine months ended December 31, 1998 but were not included in the computation of diluted earnings per share because they were anti-dilutive. (H) Effective April 1998, the Company adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income." SFAS No. 130 establishes standards for reporting and displaying comprehensive income and its components. There are no items that the Company is required to recognize as components of comprehensive income. (I) Statement of Financial Accounting Standards No. 131, issued in June 1997, changes the way public companies report information about segments. SFAS No. 131, which is based on the management approach to segment reporting, requires companies to report selected quarterly segment information and entity-wide disclosures about products and services, major customers and the material countries in which the entity holds assets and reports revenues. Although this Statement will be effective for the Company's 1999 annual financial statements, the Company does not expect a significant effect on the presentation of these financial statements. -9- 13 CENTEX CORPORATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Centex's consolidated revenues for the quarter were $1.26 billion, a 28% increase over $983.1 million for the same quarter last year. Earnings before income taxes were $94.6 million, 61% higher than $58.9 million last year. Net earnings were $59.0 million and diluted earnings per share were $.96 for this quarter compared to $37.4 million and $.61, respectively, for the same quarter last year. For the nine months ended December 31, 1998, corporate revenues totaled $3.61 billion, 27% higher than $2.84 billion for the same period last year. Earnings before income taxes were $261.7 million, 64% higher than $160.0 million for the same period last year. Net earnings were $163.8 million and diluted earnings per share were $2.65 for the nine months ended December 31, 1998 compared to $100.8 million and $1.65, respectively, for the nine months ended December 31, 1997. Net earnings for both the quarter and the nine months ended December 31, 1998 increased by a higher percentage than earnings per share due to more average shares outstanding in the fiscal 1999 periods. HOME BUILDING Conventional Homes The following summarizes Conventional Homes' results for the quarter and fiscal year-to-date ended December 31, 1998 compared to the quarter and fiscal year-to-date ended December 31, 1997 (dollars in millions, except per unit data):
Quarter Ended Quarter Ended 12/31/98 12/31/97 ------------------------------ ----------------------------- Conventional Homes Revenues $ 671.4 100.0% $ 557.5 100.0% Cost of Sales (518.9) (77.3%) (441.9) (79.3%) Selling, General & Administrative (94.4) (14.1%) (73.3) (13.1%) -------------- -------------- --------------- ------------ Operating Earnings $ 58.1 8.6% $ 42.3 7.6% ============== ============== =============== ============ Units Closed 3,601 3,025 % Change 19.0% (6.2%) Unit Sales Price $ 183,522 $ 181,266 % Change 1.2% 5.1% Operating Earnings per Unit $ 16,134 $ 13,980 % Change 15.4% 22.4%
-10- 14
Fiscal Fiscal Year-to-Date Year-to-Date 12/31/98 12/31/97 ------------------------------ ----------------------------- Conventional Homes Revenues $ 1,881.6 100.0% $ 1,605.2 100.0% Cost of Sales (1,464.3) (77.8%) (1,278.6) (79.7%) Selling, General & Administrative (266.3) (14.2%) (215.3) (13.4%) ------------- ------------- --------------- ----------- Operating Earnings $ 151.0 8.0% $ 111.3 6.9% ============= ============= =============== =========== Units Closed 10,050 8,709 % Change 15.4% (11.4%) Unit Sales Price $ 184,113 $ 181,716 % Change 1.3% 7.0% Operating Earnings per Unit $ 15,022 $ 12,775 % Change 17.6% 20.8%
Home sales (orders) were 3,610 for the quarter this year compared to 2,591 units for the same quarter a year ago. Home sales (orders) were 10,816 for the nine months this year compared to last year's 8,824 units. The backlog of homes sold but not closed at December 31, 1998 was 6,419 units, including 214 units related to the newly acquired Calton Homes operation, 45% higher than 4,423 units at December 31, 1997. Centex is currently operating slightly more neighborhoods than it did a year ago. Manufactured Homes The following summarizes Manufactured Homes' results for the quarter and fiscal year-to-date ended December 31, 1998 compared to the quarter and fiscal year-to-date ended December 31, 1997 (dollars in thousands):
Quarter Ended Quarter Ended 12/31/98 12/31/97 ---------------------------- ----------------------------- Manufactured Homes Revenues (Construction) $ 29,548 100.0% $ 38,239 100.0% Cost of Sales (22,532) (76.3%) (30,967) (81.0%) Selling, General & Administrative (2,791) (9.4%) (3,228) (8.4%) --------------- ----------- -------------- ------------ Earnings Before Goodwill & Minority Interest (Construction) 4,225 14.3% 4,044 10.6% ======== ============ Earnings Before Goodwill & Minority Interest (Retail) 38 -- --------------- ------------- Total Earnings Before Goodwill & Minority Interest 4,263 4,044 Goodwill Amortization (789) (573) Minority Interest (640) (742) --------------- ------------- Operating Earnings $ 2,834 $ 2,729 =============== ============= Units Produced 1,625 1,601 Units Sold - Retail 247 -- Less: Intersegment Sales (239) -- --------------- --------------- Units Sold 1,633 1,601 =============== ===============
-11- 15
Fiscal Fiscal Year-To-Date Year-To-Date 12/31/98 12/31/97 ----------------------------- -------------------------- Manufactured Homes Revenues (Construction) $ 101,575 100.0% $ 103,727 100.0% Cost of Sales (79,177) (77.9%) (83,387) (80.4%) Selling, General & Administrative (10,021) (9.9%) (10,094) (9.7%) -------------- --------- ------------ ---------- Earnings Before Goodwill & Minority Interest (Construction) 12,377 12.2% 10,246 9.9% ========= ========== Earnings Before Goodwill & Minority Interest (Retail) 258 -- -------------- ------------ Total Earnings 12,635 10,246 Goodwill Amortization (2,409) (1,719) Minority Interest (1,994) (2,042) -------------- ------------ Operating Earnings $ 8,232 $ 6,485 ============== ============ Units Produced 4,670 4,219 Units Sold - Retail 696 -- Less: Intersegment Sales (586) -- -------------- ------------ Units Sold 4,780 4,219 ============== ============
INVESTMENT REAL ESTATE For the quarter ended December 31, 1998, Centex's Investment Real Estate operation, through which all investment property transactions are reported, had operating earnings of $8.4 million, 18% higher than $7.1 million for the same quarter a year ago. For the current nine months, operating earnings from Investment Real Estate were $22.2 million, a 2% increase from $21.8 million for the same period in fiscal 1998. -12- 16 FINANCIAL SERVICES The following summarizes Financial Services' results for the quarter and fiscal year-to-date ended December 31, 1998 compared to the quarter and fiscal year-to-date ended December 31, 1997 (dollars in millions):
Fiscal Fiscal Quarter Ended Quarter Ended Year-to-Date Year-to-Date 12/31/98 12/31/97 12/31/98 12/31/97 --------------- --------------- --------------- --------------- Revenues $ 116.2 $ 64.6 $ 324.1 $ 169.1 Operating Earnings $ 24.1 $ 8.5 $ 71.6 $ 21.3 Origination Volume $ 3,096 $ 1,744 $ 8,368 $ 4,836 % Change 78% 33% 73% 18% Number of Loans Originated CTX Mortgage Company ("CTX") - Centex-built Homes ("Builder") 2,308 2,127 6,728 6,085 Non-Centex Homes ("Retail") 19,117 10,426 51,450 30,258 --------------- --------------- --------------- --------------- 21,425 12,553 58,178 36,343 Centex Home Equity Corporation ("CHEC") 4,032 2,341 11,341 5,161 Centex Finance Company 255 -- 610 -- --------------- --------------- --------------- --------------- 25,712 14,894 70,129 41,504 =============== =============== =============== =============== % Change 73% 27% 69% 16%
CTX's Builder applications for the quarter of 2,452 increased 23% over last year while Retail applications rose 80% to 18,046. CTX's Builder applications of 7,695 for the nine-month period were 18% higher than a year ago. Retail applications for the nine months increased 65% from 30,626 a year ago to 50,676. The profit per loan of $1,139 for this year's quarter was a 35% increase over last year's per loan profit of $841. For the nine-month period, the profit per loan increased 59% to $1,141. This increase in profit per loan is a result of increased originations and the centralization of certain back-office functions. CHEC generated 22,746 sub-prime loan applications for the quarter, an increase of 198% compared to the same quarter a year ago. CHEC applications for the nine months rose 234% to 54,433. The recently opened manufactured-home finance unit, Centex Finance Company, incurred net start-up costs of approximately $700,000 and $1.8 million for the quarter and nine months ended December 31, 1998, respectively. CONSTRUCTION PRODUCTS Revenues from CXP were $84.9 million for the quarter this year, 20% higher than last year. CXP's operating earnings, net of minority interest, were $18.3 million for the quarter this year, 63% higher than last year's earnings. CXP's revenues for the current nine months were $256.5 million, 11% -13- 17 higher than last year. CXP's operating earnings, net of minority interest, were $53.2 million, a 38% improvement over results for the same period a year ago. CXP's record operating earnings resulted from improved results in each of its businesses as pricing and sales volumes improved for every product line. CONTRACTING AND CONSTRUCTION SERVICES The following summarizes Contracting and Construction Services results for the quarter and fiscal year-to-date ended December 31, 1998 compared to the quarter and fiscal year-to-date ended December 31, 1997 (dollars in millions):
Quarter Quarter Fiscal Fiscal Ended Ended Year-to-Date Year-to-Date 12/31/98 12/31/97 12/31/98 12/31/97 ------------ ------------ ------------ ------------ Revenues $ 335.2 $ 246.2 $ 999.3 $ 708.1 Operating Earnings $ 3.7 $ 2.5 $ 11.4 $ 4.7 New Contracts Received $ 298 $ 122 $ 1,022 $ 613 Backlog of Uncompleted Contracts $ 1,182 $ 1,019 $ 1,182 $ 1,019
The Harrah's New Orleans Casino contract was suspended on November 22, 1995 due to a bankruptcy filing by the Harrah's Jazz Company partnership, the developer of the casino. Centex Landis Construction Co., Inc. ("Landis") and its subcontractors filed claims against the partnership for completed but unpaid work. Landis also filed a lawsuit against Harrah's Entertainment, Inc., parent company of the major partner in the partnership, to recover its claims. In late November 1996, Landis and Harrah's reached a settlement conditioned upon Harrah's plan of reorganization becoming effective. Harrah's plan became effective on October 30, 1998, at which time Harrah's paid $34 million to Landis in settlement of the claims of Landis and its subcontractors, and Landis has resumed construction of the casino. In October 1992, Martin County sued one of the Company's general contracting subsidiaries, Centex-Rooney Construction Co., Inc. ("Rooney"), alleging defects in the design and construction of the Martin County Courthouse in Stuart, Florida. Rooney was construction manager of the project. In July 1996, a judgment of $14.2 million was returned against Rooney, and in April 1997, Martin County also obtained a judgment of $3.2 million in attorney's fees and costs. The 4th District Court of Appeals affirmed the $14.2 million judgment, and Rooney filed an appeal with the Supreme Court of Florida. In August 1998, the Florida Supreme Court denied Rooney's petition for review and shortly thereafter, Rooney paid Martin County $17.35 million in satisfaction of the judgment. Rooney's appeal of the $3.2 million award was recently affirmed in large part (and reversed in small part) rendering Rooney liable for approximately $3.1 million. At this time, Rooney is prosecuting claims and lawsuits against subcontractors, their insurance carriers, and Rooney's own insurance carriers for recovery of the judgments, and settlements are underway. While there is no assurance that Rooney will recover from its subcontractors, their insurance carriers, and its own carriers, management believes that Rooney will be able to recover substantially all of both judgments. In any case, these judgments would not have a material impact on the financial condition of the Company. -14- 18 YEAR 2000 COMPLIANCE The Company has a variety of operating systems, computer software applications, computer hardware equipment and other equipment with embedded electronic circuits, including applications that the Company uses in its administrative functions and in the operations of its various subsidiaries and business divisions (collectively, the "Systems"). Because resolution of Year 2000 issues is considered a priority of the Company, the Company created a Year 2000 Task Force to oversee the Company's Year 2000 compliance. The Task Force, consisting of members of the Company's management and accounting, financial planning, legal, and internal audit departments, has oversight of the information systems managers and other administrative personnel charged with implementing the Company's Year 2000 compliance program (collectively, the "Year 2000 Compliance Team"). The Task Force has surveyed the Year 2000 Compliance Team regarding the Year 2000 compliance of the Systems. The surveys indicated that a small number of the Systems are not Year 2000 compliant. Affected Systems are primarily Systems that are not critical to the material operations of the Company and its subsidiaries. The Company and its subsidiaries have replaced several of these Systems and is in the process of replacing others. All non-compliant Systems will be replaced no later than the fourth quarter of fiscal 1999 (i.e. the quarter ending March 31, 1999). In substantially all of the cases, the replacement or upgrading of, or other changes to, the non-compliant Systems (i) has occurred or will occur for reasons unrelated to the non-compliance of the Systems and (ii) has not been accelerated as a result of the non-compliance of such Systems. The Company does not believe (i) that the non-compliant Systems pose a material risk to the financial condition of the Company as a whole, or of the individual operations or subsidiaries or operating divisions that currently have non-compliant Systems or (ii) that the cost of replacing, upgrading or otherwise changing the non-compliant Systems is material to the Company as a whole, or to the individual subsidiaries or operations divisions. The Company has used, and believes that it will be able to continue to use, internally generated cash to fund the correction of Systems that are not compliant. The Task Force is currently developing its Year 2000 contingency plan. Additionally, in order to further confirm the Company's Year 2000 readiness, the Company has engaged the services of a third-party consulting firm to evaluate its Year 2000 readiness. The contingency plan and the consulting firm's review will be completed by mid 1999. As a result of the Company's Year 2000 compliance program, the Company believes that it is highly unlikely that any interruption to its operations resulting from a compliance failure will have a material adverse effect on the Company's operations or financial condition. Achieving Year 2000 compliance is dependent on many factors, however, and some of these factors are not completely within the Company's control. Although the Company and its subsidiaries obtain information, materials and services from numerous sources and provide goods and services to numerous customers, the failure of these third-parties (including U.S. government agencies) to achieve Year 2000 readiness may adversely impact the Company's operations. The Company believes the most likely Year 2000 worst-case scenario would be the failure of some vendors, subcontractors or other third parties to achieve compliance, resulting in a slowdown of the Company's operations. The Company is not aware of any such third parties that are not Year 2000 -15- 19 compliant. In order to address the potential non-compliance of third parties affecting the Company's operations, the Company will continue to survey its largest customers, subcontractors, and vendors. Year 2000 Forward-looking Statements Certain statements in this section, other than historical information, are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties relative to the Company's ability to assess and remediate any Year 2000 compliance issues, the ability of third parties to correct material non-compliant systems, and the Company's assessment of the Year 2000 issue's impact on its financial results and operations. STOCK REPURCHASES Since April 1998, the Company has repurchased 545,400 shares of common stock under its stock option-related repurchase program. The Company intends to continue to repurchase shares under this program. FINANCIAL CONDITION AND LIQUIDITY Centex fulfills its short-term financing requirements with cash generated from its operations and funds available under its credit facilities. These credit facilities also serve as back-up lines for overnight borrowings under its uncommitted bank facilities and commercial paper program. In addition, CTX Mortgage Company has its own $1 billion of committed and $1.2 billion of uncommitted credit facilities to finance mortgages that are held during the period they are being securitized and readied for delivery against forward sale commitments. Centex Home Equity Corporation has its own $300 million of committed and $110 million of uncommitted credit facilities to finance sub-prime mortgages held until securitization. The $716.2 million increase in debt was primarily used to fund the increase in both residential mortgage loans and inventories. The increase in residential mortgage loans is primarily due to an increase in mortgage refinancing activity, which is attributed to continuing favorable mortgage interest rates. The Company believes it has adequate resources and sufficient credit facilities to satisfy its current needs and to provide for future growth. OTHER DEVELOPMENTS AND OUTLOOK On December 31, 1998, Centex Real Estate Corporation, the home building subsidiary of Centex Corporation, purchased Calton Homes, Inc., the wholly-owned single-family home building subsidiary of Calton, Inc., for $48.1 million in cash and the assumption of about $20.5 million of bank debt. In addition, Calton agreed to provide consulting services to Centex Homes over a three-year period for $1.3 million annually. Calton Homes builds and sells single-family homes in central New Jersey. During its fiscal year ended November 30, 1997 Calton Homes delivered 226 homes at an average sales price of $277,000. Calton Homes' customers include second and third-time move-up as well as "active adult" home buyers. Management believes this acquisition will substantially increase the Company's presence in New Jersey and that Calton Homes' strong management team will help expand Centex's operations in the Northeast. -16- 20 Also during the quarter, Centex announced the formation of a new subsidiary, Centex Latin America, Inc., which will pursue investments with companies operating in Mexico and in other Latin American markets, including Argentina, Brazil and Chile. Favorable interest rates during the first nine months of fiscal 1999 continue to positively impact Centex's home sales and mortgage applications, and the Company's home building and financial services operations are on track to report record performances for fiscal 1999. Contracting and Construction Services operations are also expected to report strong results as well as CXP, which is positioned to post its fifth consecutive year of record results. Consequently, the Company expects fiscal 1999 earnings to significantly exceed the record levels posted in fiscal 1998. FORWARD-LOOKING STATEMENTS The information contained in this Report includes forward-looking statements involving a number of risks and uncertainties. Forward-looking statements may be identified by the context of the statement and generally arise when the Company is discussing its beliefs, estimates or expectations. In addition to the factors discussed elsewhere in this document, other determinants that could cause actual results to differ include increases in short and/or long-term interest rates or a change in the relationship between short and long-term interest rates; business conditions; growth in the home building, investment real estate, financial services, construction products, and contracting and construction services industries in the local markets in which the Company through its subsidiaries conducts business and in the economy in general: competitive factors, governmental regulation and the cost and availability of raw materials. These and other factors are described in the Joint Annual Report on Form 10-K of Centex Corporation and 3333 Holding Corporation and Centex Development Company, L.P., and in the Annual Report on Form 10-K for Centex Construction Products, Inc., for the fiscal year ended March 31, 1998. Both reports are filed with the Securities and Exchange Commission. -17- 21 CENTEX CORPORATION PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit 27.1 - Financial Data Schedule (b) Reports on Form 8-K 1. Current Report on Form 8-K of Centex Corporation dated October 30, 1998. 2. Current Report on Form 8-K of Centex Corporation dated December 9, 1998. All other items required under Part II are omitted because they are not applicable. -18- 22 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CENTEX CORPORATION ------------------------------------------- Registrant February 12, 1999 /s/ David W. Quinn ------------------------------------------- David W. Quinn Vice Chairman and Chief Financial Officer (principal financial officer) February 12, 1999 /s/ Barry G. Wilson ------------------------------------------- Barry G. Wilson Controller (chief accounting officer) -19- 23 [This page intentionally left blank.] -20- 24 3333 HOLDING CORPORATION CENTEX DEVELOPMENT COMPANY, L.P. PART I. FINANCIAL INFORMATION CONDENSED COMBINING FINANCIAL STATEMENTS ITEM 1. The condensed combining financial statements include the accounts of 3333 Holding Corporation and subsidiary and Centex Development Company, L.P. (collectively the "Companies"), and have been prepared by the Companies, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Companies believe that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed combining financial statements be read in conjunction with the financial statements and the notes thereto included in the Companies' latest Annual Report on Form 10-K. In the opinion of the Companies, all adjustments necessary to present fairly the information in the following condensed financial statements of the Companies have been included. The results of operations for such interim periods are not necessarily indicative of the results for the full year. -21- 25 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. CONDENSED COMBINING STATEMENT OF OPERATIONS (dollars in thousands, except per unit/share data) (unaudited)
For the Three Months Ended December 31, -------------------------------------------------------------------------------------------- 1998 1997 -------------------------------------------- ------------------------------------------- 3333 HOLDING 3333 HOLDING CENTEX CORPORATION CENTEX CORPORATION DEVELOPMENT AND DEVELOPMENT AND COMBINED COMPANY, L.P. SUBSIDIARY COMBINED COMPANY, L.P. SUBSIDIARY ----------- ------------ ------------ ----------- ----------- ----------- Revenues $ 5,694 $ 5,653 $ 194 $ 9,228 $ 9,123 $ 310 Costs and Expenses 5,681 5,262 572 6,194 6,069 330 ----------- ----------- ----------- ----------- ----------- ----------- Earnings (Loss) Before Income Taxes 13 391 (378) 3,034 3,054 (20) Income Taxes -- -- -- -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- NET EARNINGS (LOSS) $ 13 $ 391 $ (378) $ 3,034 $ 3,054 $ (20) =========== =========== =========== =========== =========== =========== NET EARNINGS (LOSS) PER UNIT/SHARE $ 6.99 $ (378) $ 94.67 $ (20) =========== =========== =========== =========== WEIGHTED-AVERAGE UNITS/ SHARES OUTSTANDING 55,911 1,000 32,260 1,000 =========== =========== =========== ===========
See notes to condensed combining financial statements. -22- 26 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. CONDENSED COMBINING STATEMENT OF OPERATIONS (dollars in thousands, except per unit/share data) (unaudited)
For the Nine Months Ended December 31, -------------------------------------------------------------------------------------------- 1998 1997 -------------------------------------------- ------------------------------------------- 3333 HOLDING 3333 HOLDING CENTEX CORPORATION CENTEX CORPORATION DEVELOPMENT AND DEVELOPMENT AND COMBINED COMPANY, L.P. SUBSIDIARY COMBINED COMPANY, L.P. SUBSIDIARY ----------- ------------ ------------ ----------- ------------ ----------- Revenues $ 19,774 $ 19,385 $ 951 $ 16,063 $ 15,748 $ 1,059 Costs and Expenses 19,732 18,559 1,735 11,890 11,635 999 ----------- ----------- ----------- ----------- ----------- ----------- Earnings (Loss) Before Income Taxes 42 826 (784) 4,173 4,113 60 Income Taxes -- -- -- -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- NET EARNINGS (LOSS) $ 42 $ 826 $ (784) $ 4,173 $ 4,113 $ 60 =========== =========== =========== =========== =========== ============ NET EARNINGS (LOSS) PER UNIT/SHARE $ 15.65 $ (784) $ 127.50 $ 60 =========== =========== =========== ============ WEIGHTED-AVERAGE UNITS/ SHARES OUTSTANDING 52,783 1,000 32,260 1,000 =========== =========== =========== ============
See notes to condensed combining financial statements. -23- 27 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. CONDENSED COMBINING BALANCE SHEETS (dollars in thousands)
December 31, 1998* March 31, 1998** ----------------------------------------- ----------------------------------------- 3333 HOLDING 3333 HOLDING CENTEX CORPORATION CENTEX CORPORATION DEVELOPMENT AND DEVELOPMENT AND COMBINED COMPANY, L.P. SUBSIDIARY COMBINED COMPANY, L.P. SUBSIDIARY ---------- ------------- ------------ ---------- ------------- ------------ ASSETS Cash $ 932 $ 884 $ 48 $ 260 $ 259 $ 1 Accounts Receivable 1,953 1,128 1,451 976 8,552 761 Notes Receivable - Centex Corporation and Subsidiaries -- -- -- 7,700 -- 7,700 Other 3,735 3,735 -- 5,110 5,110 -- Investment in Affiliate -- -- 1,092 -- -- 849 Investment in Real Estate Joint Ventures 168 668 524 3,040 2,478 562 Commercial Properties, net 1,909 1,909 -- 1,946 1,946 -- Projects Under Development and Held for Sale 92,338 90,413 901 41,265 40,815 450 Property and Equipment, net 258 96 162 88 -- 88 Other Assets 1,020 945 75 112 100 12 ---------- ---------- ---------- ---------- ---------- ---------- $ 102,313 $ 99,778 $ 4,253 $ 60,497 $ 59,260 $ 10,423 ========== ========== ========== ========== ========== ========== LIABILITIES, STOCKHOLDERS' EQUITY AND PARTNERS' CAPITAL Accounts Payable and Accrued Liabilities $ 9,369 $ 9,402 $ 593 $ 4,341 $ 4,370 $ 8,390 Notes Payable - Centex Corporation and Subsidiaries 3,891 -- 3,891 1,480 -- 1,480 Bank Development Facilities 28,711 28,711 -- 13,821 13,821 -- ---------- ---------- --------- ---------- ---------- ---------- Total Liabilities 41,971 38,113 4,484 19,642 18,191 9,870 Stockholders' Equity and Partners' Capital 60,342 61,665 (231) 40,855 41,069 553 ---------- ---------- ---------- ---------- ---------- ---------- $ 102,313 $ 99,778 $ 4,253 $ 60,497 $ 59,260 $ 10,423 ========= ========== ========== ========== ========== ==========
* Unaudited ** Condensed from audited financial statements. See notes to condensed combining financial statements. -24- 28 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. CONDENSED COMBINING STATEMENT OF CASH FLOWS (dollars in thousands) (unaudited)
For the Nine Months Ended December 31, -------------------------------------------------------------------------------- 1998 1997 --------------------------------------- -------------------------------------- 3333 HOLDING 3333 HOLDING CENTEX CORPORATION CENTEX CORPORATION DEVELOPMENT AND DEVELOPMENT AND COMBINED COMPANY, L.P. SUBSIDIARY COMBINED COMPANY, L.P. SUBSIDIARY ---------- ------------ ------------ ---------- ------------ ----------- CASH FLOWS - OPERATING ACTIVITIES Net Earnings (Loss) $ 42 $ 826 $ (784) $ 4,173 $ 4,113 $ 60 Net Change in Payables, Accruals and Receivables 4,051 12,538 (8,487) 1,655 (1,999) 3,654 Decrease (Increase) in Notes Receivable 1,375 1,375 -- (5,877) (5,877) -- Decrease in Advances to Joint Venture 2,872 1,810 38 133 133 -- (Increase) Decrease in Projects Under Development and Held for Sale (51,073) (49,598) (451) 3,439 3,439 -- Decrease in Commercial Properties, net 37 37 -- -- -- -- Property and Equipment Additions, net (170) (96) (74) -- -- -- Increase in Other Assets (908) (845) (63) (100) (100) -- ---------- ---------- ---------- ---------- ---------- ---------- (43,774) (33,953) (9,821) 3,423 (291) 3,714 ---------- ---------- ---------- ---------- ---------- ---------- CASH FLOWS - FINANCING ACTIVITIES Increase (Decrease) in Notes Payable - Centex Corporation and Subsidiaries 2,411 -- 2,411 (3,712) -- (3,712) Other 14,890 14,890 -- 4,751 4,751 -- Decrease in Notes Receivable - Centex Corporation and Subsidiaries 7,700 -- 7,700 -- -- -- Capital Contributions 19,445 19,688 (243) -- -- -- Capital Distributions -- -- -- (4,500) (4,500) -- ---------- ---------- ---------- ---------- ---------- ---------- 44,446 34,578 9,868 (3,461) 251 (3,712) ---------- ---------- ---------- ---------- ---------- ---------- NET INCREASE (DECREASE) IN CASH 672 625 47 (38) (40) 2 CASH AT BEGINNING OF YEAR 260 259 1 630 625 5 ---------- ---------- ---------- ---------- ---------- ---------- CASH AT END OF PERIOD $ 932 $ 884 $ 48 $ 592 $ 585 $ 7 ========== ========== ========== ========== ========== ==========
See notes to condensed combining financial statements. -25- 29 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. NOTES TO CONDENSED COMBINING FINANCIAL STATEMENTS DECEMBER 31, 1998 (unaudited) (A) On November 30, 1987 Centex Corporation ("Centex") distributed to a nominee all of the issued and outstanding shares of common stock of 3333 Holding Corporation ("Holding") and warrants to purchase approximately 80% of the Class B units of limited partnership interest in Centex Development Company, L.P. ("CDC" or the "Partnership"). 3333 Development Corporation ("Development"), a wholly-owned subsidiary of Holding, serves as general partner of the Partnership. These securities are held by the nominee on behalf of Centex stockholders and will trade in tandem with the common stock of Centex until such time as they are detached. See Note (B) to the condensed consolidated financial statements of Centex Corporation and subsidiaries included elsewhere in this Form 10-Q for supplementary condensed combined financial statements for Centex Corporation and Subsidiaries, Holding and Subsidiary and the Partnership. (B) Holding entered into a services agreement in May 1987 with Centex Service Company ("CSC"), a wholly-owned subsidiary of Centex, whereby CSC provides certain tax, accounting, and other similar services for Holding at a fee of $2,500 per month. In April 1998, the service agreement was amended to also include certain real estate development and management services and the related fee was increased to $30,000 per month. In connection with Holding's acquisition of additional shares of common stock of Development in 1987, Holding borrowed $7.7 million from Centex pursuant to a secured promissory note (the "Holding Note"). On May 29, 1998, the outstanding principal balance on the Holding Note was repaid. The Holding Note, which had a fluctuating balance during April and May 1998, bore interest, payable quarterly, at the prime rate of interest of NationsBank, N.A. plus 1%. Interest expense on the Holding Note during the nine months ended December 31, 1998 totaled $62,000. In 1987, Development loaned $7.7 million to a wholly owned subsidiary of Centex pursuant to an unsecured promissory note and related loan agreement. The note bore interest, payable quarterly, at the prime rate of interest of NationsBank, N.A. plus 7/8%. On May 29, 1998, the outstanding principal balance on the note was repaid. Interest income on the note totaled $116,000 for the nine months ended December 31, 1998. CDC sells lots to Centex Homes pursuant to certain purchase and sale agreements. Revenues from these sales totaled $55,000 and $2.9 million for the quarter and nine months ended December 31, 1998, and $220,000 and $855,000 for the quarter and nine months ended December 31, 1997, respectively. Additionally, during the nine months ended December 31, 1997, the Partnership sold property located in Carrollton, Texas to Centex Homes for $2.9 million. -26- 30 During the current fiscal year, Centex Office Southpointe I, L.P., a subsidiary of CDC, executed a construction contract with one of Centex's construction subsidiaries in the amount of $9.4 million for the construction of a 140,000 square foot office building in Plantation, Florida, near Ft. Lauderdale. Additionally, during the current fiscal year, Centex Multi-Family Sheffield I, L.P., also a subsidiary of CDC, executed a construction contract with one of Centex's construction subsidiaries in the amount of $16.2 million for the construction of a 400-unit apartment project in Grand Prairie, Texas. During fiscal year 1998, Centex Multi-Family Company, L.P. ("Multi-Family"), a subsidiary of CDC, executed a construction contract with one of Centex's construction subsidiaries in the amount of $13.2 million for the construction of a 304-unit apartment project north of Dallas in The Colony, Texas. In April 1998, CDC acquired a 49% equity interest in an entity, which purchased real estate assets from a Centex subsidiary for $3.1 million. (C) During fiscal year 1998, the partnership agreement governing CDC was amended to allow for the issuance of a new class of limited partnership units, Class C Preferred Partnership Units ("Class C Units"), to be issued in exchange for assets contributed by a limited partner, or by an individual or entity who is to be admitted as a limited partner. During the nine months ended December 31, 1998, Centex Homes, CDC's sole limited partner, contributed assets valued at $19.4 million in exchange for 19,445 Class C Units. (D) A summary of changes in stockholders' equity and partners' capital is presented below (dollars in thousands):
For the Nine months Ended December 31, 1998 ---------------------------------------------------------------------------------------- 3333 Holding Corporation Centex Development Company, L.P. and Subsidiary ------------------------------------ ------------------------------------ CLASS B GENERAL LIMITED CAPITAL IN UNITS PARTNERS PARTNER'S STOCK EXCESS OF RETAINED COMBINED WARRANTS CAPITAL CAPITAL WARRANTS PAR VALUE EARNINGS ---------- ---------- ---------- ---------- ---------- ---------- ---------- Balance at March 31, 1998 $ 40,855 $ 500 $ 767 $ 39,802 $ 1 $ 800 $ (248) Capital Contributions 19,445 -- 325 19,445 -- -- -- Net Earnings 42 -- -- 826 -- -- (784) ---------- ---------- ---------- ---------- ---------- ---------- ---------- BALANCE AT DECEMBER 31, 1998 $ 60,342 $ 500 $ 1,092 $ 60,073 $ 1 $ 800 $ (1,032) ========== ========== ========== ========== ========== ========== ==========
The Partnership agreement provides that Class A and Class C limited partners are entitled to a cumulative preferred return of 9% per annum on the average outstanding balance of their Unrecovered Capital. Unrecovered Capital represents initial capital contributions as reduced by repayments and is the basis for preference accruals. No preference payments were made during the three months or nine months ended December 31, 1998. Preference payments in arrears at December 31, 1998 for Class A and Class C limited partners amounted to $6.3 million and $1.3 million, respectively, and Unrecovered Capital for Class A and Class C limited partners aggregated approximately $59.8 million. -27- 31 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS On a combined basis, revenues for the quarter and nine months ended December 31, 1998 totaled $5.7 million and $19.8 million, respectively compared to $9.2 million and $16.1 million for the same periods of the prior year. Revenues during the current year periods resulted primarily from the sale of single family homes in New Jersey and residential property in Texas and Florida. Revenues for the three and nine month periods ended December 31, 1997 resulted primarily from the sale of commercial property in Texas and residential property in Texas and Florida. The Companies had combined net earnings for the quarter and nine months ended December 31, 1998 of $13,000 and $42,000, respectively, compared to combined net earnings of $3.0 million and $4.2 million for the quarter and nine months ended December 31, 1997, respectively. Margins on real estate sales for the nine months ended December 31, 1998 were 5.6% versus 27.8% for the nine months ended December 31, 1997. YEAR 2000 COMPLIANCE The Companies have a variety of operating systems, computer software applications, computer hardware equipment, and other equipment with embedded electronic circuits. Pursuant to the services agreement Holding has with Centex Service Company ("CSC"), Year 2000 compliance issues are being addressed by a Year 2000 Task Force Team comprised of key personnel in the management information systems, legal, internal audit and accounting areas of Centex as well as by management of the Companies. Since fiscal year 1997, the Companies have been engaged in an ongoing process of identifying, evaluating, and implementing changes to their systems in order to ensure Year 2000 compliance. As a result of this process, a small number of systems were identified as being unable to interpret dates after December 31, 1999. In all of the cases, the replacement or upgrading of the non-compliant systems has already occurred as part of their normal ongoing systems updating. The Companies have engaged the services of a third-party consulting firm to evaluate their Year 2000 readiness. It is anticipated that the evaluation will be concluded during the March 1999 quarter. Achieving Year 2000 compliance is dependent on many factors, some of which are not completely within the Companies' control. The Companies obtain information, materials, and services from numerous sources, and provide goods and services to numerous customers. The failure of these third parties (including U.S. state and local governments and agencies) to achieve Year 2000 readiness could adversely affect the Companies' financial condition and results of operations. In order to address -28- 32 the potential non-compliance by third parties, the Companies will continue to survey their largest customers, contractors and vendors. Year 2000 Forward-looking Statements Certain statements in this section, other than historical information, are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties relative to the Companies' ability to assess and remediate any Year 2000 compliance issues, the ability of third parties to correct material non-compliant systems, and the Companies' assessment of the Year 2000 issue's impact on their financial results and operations. LIQUIDITY AND CAPITAL RESOURCES During the nine months ended December 31, 1998, 19,445 Class C Preferred Partnership Units were issued in exchange for assets valued at $19.4 million. The revenues, earnings and liquidity of the Companies for the next 12 to 18 months will be largely dependent on future real estate and home sales, the timing of which are uncertain. Commercial development operations have recently been initiated and are not anticipated to provide a significant source of earnings or liquidity for approximately 18 months. The Companies believe that they will be able to provide or obtain the necessary funding for their current operations and future expansion needs. The ability of the Partnership to obtain external debt or equity capital is subject to the partnership agreement (as amended) governing the Partnership. FORWARD-LOOKING STATEMENTS The information contained in this Report includes forward-looking statements involving a number of risks and uncertainties. Forward-looking statements may be identified by the context of the statement and generally arise when the Companies are discussing their beliefs, estimates, or expectations. In addition to the factors discussed elsewhere in this document, other determinants that could cause actual results to differ include increases in short and/or long-term interest rates or a change in the relationship between short and long-term interest rates; business conditions; growth in the investment real estate industry in the local markets in which the Companies conduct business and in the economy in general: competitive factors, and governmental regulation. These and other factors are described in the Joint Annual Report on Form 10-K of Centex Corporation and 3333 Holding Corporation and Centex Development, L.P. for the fiscal year ended March 31, 1998, which is filed with the Securities and Exchange Commission. -29- 33 3333 HOLDING CORPORATION CENTEX DEVELOPMENT COMPANY, L.P. PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit 27.1 - Financial Data Schedule Exhibit 27.2 - Financial Data Schedule Exhibit 27.3 - Financial Data Schedule (b) Reports on Form 8-K The Registrant filed no reports on Form 8-K during the quarter ended December 31, 1998. All other items required under Part II are omitted because they are not applicable. -30- 34 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. 3333 HOLDING CORPORATION ------------------------------------------ Registrant February 12, 1999 /s/ Richard C. Decker ------------------------------------------ Richard C. Decker President and Chief Executive Officer (principal executive officer) February 12, 1999 /s/ Kimberly A. Pinson ------------------------------------------ Kimberly A. Pinson Vice President, Treasurer and Controller (principal financial officer and chief accounting officer) -31- 35 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CENTEX DEVELOPMENT COMPANY, L.P. ----------------------------------------- Registrant By: 3333 Development Corporation, General Partner February 12, 1999 /s/ Richard C. Decker ----------------------------------------- Richard C. Decker President and Chief Executive Officer (principal executive officer) February 12, 1999 /s/ Kimberly A. Pinson ----------------------------------------- Kimberly A. Pinson Vice President, Treasurer and Controller (principal financial officer and chief accounting officer) -32- 36 EXHIBIT INDEX
Exhibit Number Description - ------- ----------- 27.1 - Financial Data Schedule - Centex Corporation 27.2 - Financial Data Schedule - 3333 Holding Corporation 27.3 - Financial Data Schedule - Centex Development Company, L.P.
EX-27.1 2 FINANCIAL DATA SCHEDULE - CENTEX CORPORATION
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CENTEX CORPORATION'S DECEMBER 31, 1998, FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000018532 CENTEX CORPORATION 1,000 9-MOS MAR-31-1999 APR-01-1998 DEC-31-1998 111,839 0 1,901,836 0 1,541,106 0 536,637 235,387 4,393,284 0 284,151 0 0 14,867 1,121,599 4,393,284 3,609,774 3,609,774 3,257,442 3,257,442 61,446 0 29,164 261,722 97,955 163,767 0 0 0 163,767 2.75 2.65
EX-27.2 3 FINANCIAL DATA SCHEDULE - 3333 HOLDING CORPORATOIN
5 This schedule contains summary financial information extracted from 3333 Holding Corporation's December 31, 1998, Form 10-Q and is qualified in its entirety by reference to such financial statements. 0000818762 3333 HOLDING CORPORATION 1,000 9-MOS MAR-31-1999 APR-01-1998 DEC-31-1998 48 0 1,451 0 901 0 205 43 4,253 0 0 0 0 1 (232) 4,253 951 951 1,735 1,735 0 0 0 (784) 0 (784) 0 0 0 (784) 0.00 0.00
EX-27.3 4 FINANCIAL DATA SCHEDULE - CENTEX DEVELOPMENT CO LP
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CENTEX DEVELOPMENT COMPANY, L.P.'S DECEMBER 31, 1998, FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000818764 CENTEX DEVELOPMENT COMPANY, L.P. 1,000 9-MOS MAR-31-1999 APR-01-1998 DEC-31-1998 884 0 1,128 0 90,413 0 119 23 99,778 0 0 0 0 500 61,165 99,778 19,385 19,385 18,559 18,559 0 0 0 826 0 826 0 0 0 826 0.00 0.00
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