-----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, TE0ZcByRhfp61q9kOWDmljsSC6R1QrT1iRdF8TnSWVxz33NVJRbIxs7j2cuFKhp+ 2L6JEAwaG5xssL5AjR23Dg== 0000950134-00-001102.txt : 20000215 0000950134-00-001102.hdr.sgml : 20000215 ACCESSION NUMBER: 0000950134-00-001102 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000214 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: 537312 BUSINESS ADDRESS: STREET 1: P O BOX 199000 STREET 2: 2728 N HARWOOD CITY: DALLAS STATE: TX ZIP: 75201 BUSINESS PHONE: 2149815000 MAIL ADDRESS: STREET 1: PO BOX 199000 STREET 2: 2728 N HARWOOD CITY: DALLAS STATE: TX ZIP: 75201 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: 537313 BUSINESS ADDRESS: STREET 1: PO BOX 199000 STREET 2: 3100 MCKINNON STE 370 CITY: DALLAS STATE: TX ZIP: 75219 BUSINESS PHONE: 2149816548 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: 537314 BUSINESS ADDRESS: STREET 1: PO BOX 19000 STREET 2: 3100 MCKINNON STE 370 CITY: DALLAS STATE: TX ZIP: 75219 BUSINESS PHONE: 2149816548 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 ENDING DECEMBER 31, 1999 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q JOINT QUARTERLY REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarter Ended DECEMBER 31, 1999 Commission File No. 1-6776 CENTEX CORPORATION A Nevada Corporation IRS Employer Identification No. 75-0778259 2728 N. Harwood Dallas, Texas 75201 (214) 981-5000 Commission File Nos. 1-9624 and 1-9625, respectively 3333 HOLDING CORPORATION A Nevada Corporation CENTEX DEVELOPMENT COMPANY, L.P. A Delaware Limited Partnership IRS Employer Identification Nos. 75-2178860 and 75-2168471, respectively 3100 McKinnon, Suite 370 Dallas, Texas 75201 (214) 981-6700 The registrants have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and have been subject to such filing requirements for the past 90 days. Indicate the number of shares of each of the registrants' classes of common stock (or other similar equity securities) outstanding as of the close of business on January 31, 2000: Centex Corporation Common Stock 59,385,282 shares 3333 Holding Corporation Common Stock 1,000 shares Centex Development Company, L.P. Class A Units of Limited Partnership Interest 32,260 units Centex Development Company, L.P. Class C Units of Limited Partnership Interest 35,082 units
2 CENTEX CORPORATION AND SUBSIDIARIES 3333 HOLDING CORPORATION AND SUBSIDIARY CENTEX DEVELOPMENT COMPANY, L.P. AND SUBSIDIARIES FORM 10-Q TABLE OF CONTENTS DECEMBER 31, 1999 CENTEX CORPORATION AND SUBSIDIARIES
PAGE PART I. FINANCIAL INFORMATION ITEM 1. Condensed Consolidated Financial Statements 1 Condensed Consolidated Statement of Earnings for the Three Months Ended December 31, 1999 2 Condensed Consolidated Statement of Earnings for the Nine Months Ended December 31, 1999 3 Condensed Consolidated Balance Sheets 4 Condensed Consolidated Statement of Cash Flows for the Nine Months Ended December 31, 1999 6 Notes to Condensed Consolidated Financial Statements 7 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 16 ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 27 PART II. OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K 28 SIGNATURES 29
i 3 3333 HOLDING CORPORATION AND SUBSIDIARY CENTEX DEVELOPMENT COMPANY, L.P. AND SUBSIDIARIES
PAGE PART I. FINANCIAL INFORMATION ITEM 1. Condensed Combining Financial Statements 30 Condensed Combining Statement of Operations for the Three Months Ended December 31, 1999 31 Condensed Combining Statement of Operations for the Nine Months Ended December 31, 1999 32 Condensed Combining Balance Sheets 33 Condensed Combining Statements of Cash Flows for the Nine Months Ended December 31, 1999 34 Notes to Condensed Combining Financial Statements 35 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 41 ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 46 PART II. OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K 47 SIGNATURES 48, 49
ii 4 CENTEX CORPORATION AND SUBSIDIARIES PART I. FINANCIAL INFORMATION CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ITEM 1. The condensed consolidated financial statements include the accounts of Centex Corporation and subsidiaries ("Centex" or the "Company"), and have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. References herein to "Centex" or the "Company" include references to subsidiaries of Centex Corporation. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's latest Annual Report on Form 10-K. In the opinion of the Company, all adjustments necessary to present fairly the information in the following condensed consolidated financial statements of the Company have been included. The results of operations for such interim periods are not necessarily indicative of the results for the full year. -1- 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, ----------------------------- 1999 1998 ------------ ------------ REVENUES Home Building Conventional Homes $ 863,177 $ 671,404 Manufactured Homes 47,160 39,819 Investment Real Estate 15,908 8,566 Financial Services 106,568 116,234 Construction Products 108,370 84,863 Contracting and Construction Services 287,978 335,200 ------------ ------------ 1,429,161 1,256,086 ------------ ------------ COSTS AND EXPENSES Home Building Conventional Homes 789,847 613,305 Manufactured Homes 44,484 36,345 Investment Real Estate 6,991 196 Financial Services 97,345 92,085 Construction Products 63,038 53,314 Contracting and Construction Services 281,178 331,511 Other, net 628 2,844 Corporate General and Administrative 8,483 7,084 Interest Expense 18,467 10,929 Minority Interest 16,971 13,839 ------------ ------------ 1,327,432 1,161,452 ------------ ------------ EARNINGS BEFORE INCOME TAXES 101,729 94,634 Income Taxes 38,553 35,591 ------------ ------------ NET EARNINGS $ 63,176 $ 59,043 ============ ============ EARNINGS PER SHARE Basic $ 1.07 $ 0.99 ============ ============ Diluted $ 1.04 $ 0.96 ============ ============ AVERAGE SHARES OUTSTANDING Basic 59,230,006 59,410,876 Common Share Equivalents Options 1,093,566 1,851,083 Convertible Debenture 400,000 400,000 ------------ ------------ Diluted 60,723,572 61,661,959 ============ ============ CASH DIVIDENDS PER SHARE $ 0.04 $ 0.04 ============ ============
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, ----------------------------- 1999 1998 ------------ ------------ REVENUES Home Building Conventional Homes $ 2,461,533 $ 1,881,586 Manufactured Homes 145,978 130,748 Investment Real Estate 27,357 17,479 Financial Services 343,932 324,133 Construction Products 323,391 256,485 Contracting and Construction Services 928,646 999,343 ------------ ------------ 4,230,837 3,609,774 ------------ ------------ COSTS AND EXPENSES Home Building Conventional Homes 2,258,855 1,730,613 Manufactured Homes 138,153 120,522 Investment Real Estate 3,270 (4,752) Financial Services 301,536 252,508 Construction Products 190,822 163,007 Contracting and Construction Services 911,176 987,939 Other, net 3,529 7,605 Corporate General and Administrative 23,821 19,195 Interest Expense 45,828 29,164 Minority Interest 51,677 42,251 ------------ ------------ 3,928,667 3,348,052 ------------ ------------ EARNINGS BEFORE INCOME TAXES 302,170 261,722 Income Taxes 115,063 97,955 ------------ ------------ NET EARNINGS $ 187,107 $ 163,767 ============ ============ EARNINGS PER SHARE Basic $ 3.15 $ 2.75 ============ ============ Diluted $ 3.06 $ 2.65 ============ ============ AVERAGE SHARES OUTSTANDING Basic 59,370,180 59,496,866 Common Share Equivalents Options 1,434,485 1,991,600 Convertible Debenture 400,000 400,000 ------------ ------------ Diluted 61,204,665 61,888,466 ============ ============ CASH DIVIDENDS PER SHARE $ 0.12 $ 0.12 ============ ============
See notes to condensed consolidated financial statements. -3- 7 CENTEX CORPORATION AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Dollars in thousands)
-------------------------------- Centex Corporation and Subsidiaries -------------------------------- December 31, March 31, 1999* 1999** ------------ ------------ ASSETS Cash and Cash Equivalents $ 161,713 $ 111,268 Receivables - Residential Mortgage Loans 734,885 1,395,616 Other 391,937 459,778 Inventories 2,096,026 1,533,819 Investments - Centex Development Company, L.P. 72,606 63,207 Joint Ventures and Other 66,674 48,594 Unconsolidated Subsidiaries -- -- Property and Equipment, net 338,025 313,655 Other Assets - Deferred Income Taxes 28,123 49,107 Goodwill, net 245,719 222,162 Mortgage Securitization Residual Interest 141,247 80,152 Deferred Charges and Other 124,201 57,388 ------------ ------------ $ 4,401,156 $ 4,334,746 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Accounts Payable and Accrued Liabilities $ 1,044,091 $ 1,018,650 Short-term Debt 1,236,462 1,626,600 Long-term Debt 570,179 284,299 Payables to Affiliates -- -- Minority Stockholders' Interest 133,567 140,721 Negative Goodwill 54,837 66,837 Stockholders' Equity - Preferred Stock, Authorized 5,000,000 Shares, None Issued -- -- Common Stock $.25 Par Value; Authorized 100,000,000 Shares; Issued and Outstanding 59,138,968 and 59,388,350 respectively 14,785 14,847 Capital in Excess of Par Value 5,340 20,822 Retained Earnings 1,341,943 1,161,970 Accumulated Other Comprehensive Loss (48) -- ------------ ------------ Total Stockholders' Equity 1,362,020 1,197,639 ------------ ------------ $ 4,401,156 $ 4,334,746 ============ ============
See notes to condensed consolidated financial statements. * Unaudited ** Condensed from audited financial statements. -4- 8 CENTEX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
- ---------------------------------------------------------------------------- Centex Corporation Financial Services - ----------------------------------- ---------------------------------- December 31, March 31, December 31, March 31, 1999* 1999** 1999* 1999** - -------------- -------------- -------------- -------------- $ 128,365 $ 72,279 $ 33,348 $ 38,989 -- -- 734,885 1,395,616 359,392 404,043 32,545 55,735 2,096,026 1,533,819 -- -- 72,606 63,207 -- -- 66,674 48,594 -- -- 241,451 221,744 -- -- 297,638 285,891 40,387 27,764 20,010 40,541 8,113 8,566 228,888 206,595 16,831 15,567 -- -- 141,247 80,152 64,644 40,962 59,557 16,426 - -------------- -------------- -------------- -------------- $ 3,575,694 $ 2,917,675 $ 1,066,913 $ 1,638,815 ============== ============== ============== ============== $ 974,347 $ 926,377 $ 69,744 $ 92,273 483,322 303,656 753,140 1,322,944 570,179 284,299 -- -- -- -- 73,781 102,652 130,989 138,867 2,578 1,854 54,837 66,837 -- -- -- -- -- -- 14,785 14,847 1 1 5,340 20,822 108,467 75,944 1,341,943 1,161,970 59,202 43,147 (48) -- -- -- - -------------- -------------- -------------- -------------- 1,362,020 1,197,639 167,670 119,092 - -------------- -------------- -------------- -------------- $ 3,575,694 $ 2,917,675 $ 1,066,913 $ 1,638,815 ============== ============== ============== ==============
In the supplemental data presented above, "Centex Corporation" represents the combining of all subsidiaries other than those included in Financial Services. Transactions between Centex Corporation and Financial Services have been eliminated from the Centex Corporation and Subsidiaries balance sheets. -5- 9 CENTEX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Dollars in thousands) (unaudited)
------------------------- For the Nine Months Ended December 31, ------------------------- 1999 1998 ------------ ----------- CASH FLOWS - OPERATING ACTIVITIES Net Earnings $ 187,107 $ 163,767 Adjustments - Depreciation and Amortization 34,838 27,180 Deferred Income Taxes 10,941 42,814 Equity in (Earnings) Loss of Centex Development Company, L.P. and Joint Ventures (648) 396 Minority Interest, net of taxes 33,233 27,674 Decrease (Increase) in Receivables 68,912 (31,774) Decrease (Increase) in Residential Mortgage Loans 660,731 (287,721) Increase in Inventories (485,419) (494,997) Increase in Payables and Accruals 15,268 132,358 Increase in Other Assets (137,737) (152,488) Other, net (40,387) (32,471) ---------- --------- 346,839 (605,262) ---------- --------- CASH FLOWS - INVESTING ACTIVITIES Increase in Advances to Centex Development Company, L.P. and Joint Ventures (23,566) (44,116) Acquisition of Home Building Operations (74,119) -- Other Acquisitions (9,349) -- Increase in Property and Equipment, net (55,220) (34,836) ---------- --------- (162,254) (78,952) ---------- --------- CASH FLOWS - FINANCING ACTIVITIES (Decrease) Increase in Debt - Secured by Residential Mortgage Loans (569,804) 358,321 Other 458,390 357,889 Retirement of Common Stock (29,032) (19,049) Proceeds from Stock Option Exercises 13,488 7,719 Dividends Paid (7,134) (7,143) ---------- --------- (134,092) 697,737 ---------- --------- EFFECT OF EXCHANGE RATE CHANGES ON CASH (48) -- ---------- --------- NET INCREASE IN CASH 50,445 13,523 CASH AT BEGINNING OF PERIOD 111,268 98,316 ---------- --------- CASH AT END OF PERIOD $ 161,713 $ 111,839 ========== =========
See notes to condensed consolidated financial statements. -6- 10 CENTEX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTES DECEMBER 31, 1999 (Dollars in thousands) (unaudited) (A) Comprehensive income is summarized for the three and nine months ended December 31, 1999 below:
-------------------------- ------------------------- For the Three Months Ended For the Nine Months Ended December 31, 1999 December 31, 1999 -------------------------- ------------------------- Net Earnings $ 63,176 $ 187,107 Other Comprehensive Loss: Foreign Currency Translation Adjustments (16) (48) -------------------- -------------------- Comprehensive Income $ 63,160 $ 187,059 ==================== ====================
Other Comprehensive Income results from Centex's investment in Centex Development Company, L.P. and subsidiaries. For additional information on Centex Development Company, L.P. and subsidiaries, see their separate financial statements and related footnotes included elsewhere in this Report. (B) Changes in stockholders' equity are summarized below:
Accumulated Capital in Other Preferred Common Excess of Par Retained Comprehensive Stock Stock Value Earnings Loss Total ------------- -------------- ------------- ------------- --------------- -------------- Balance, March 31, 1999 $ -- $ 14,847 $ 20,822 $ 1,161,970 $ -- $ 1,197,639 Net Earnings -- -- -- 187,107 -- 187,107 Exercise of Stock Options -- 204 13,284 -- -- 13,488 Retirement of 1,063,300 Shares -- (266) (28,766) -- -- (29,032) Cash Dividends -- -- -- (7,134) -- (7,134) Foreign Currency Translation Adjustments -- -- -- -- (48) (48) ------------- -------------- ------------- ------------- --------------- -------------- BALANCE, DECEMBER 31, 1999 $ -- $ 14,785 $ 5,340 $ 1,341,943 $ (48) $ 1,362,020 ============= ============== ============= ============= =============== ==============
(C) In March 1987, certain of Centex's subsidiaries contributed to Centex Development Company, L.P. (the "Partnership"), a newly formed master limited partnership, certain properties at their historical cost basis. The Partnership was formed to enable stockholders to participate in long-term real estate development projects, the dynamics of which are inconsistent with Centex's traditional financial objectives. The Partnership is controlled by its general partner, 3333 Development Corporation ("Development"), which is in turn wholly-owned by 3333 Holding Corporation ("Holding"). Holding is a separate public company whose stock trades in tandem with Centex's stock. The common stock of Holding (the "Securities") -7- 11 was distributed in 1987 (with warrants to purchase approximately 80% of the Class B limited partnership units in the Partnership) as a dividend to the stockholders of Centex. The Securities, held by a nominee on behalf of the stockholders, will trade in tandem with the common stock of Centex until such time as they are detached. The Securities may be detached at any time by Centex's Board of Directors but the warrants to purchase Class B Units automatically become detached in November 2007. The four-person Board of Directors of Holding is elected by the stockholders of Centex. The majority of the Board members are independent outside directors, none of whom are directors of Centex. Accordingly, the general partner of the Partnership is controlled by the stockholders of Centex. The general partner and independent board of Holding manage the Partnership's conduct of its activities including the sales, development, maintenance and zoning of properties. The general partner may sell or acquire properties, including the contributed property, and enter into other business transactions without the consent of the limited partners. In addition, the limited partners cannot remove the general partner. The Company accounts for its investment in the Partnership on the equity method of accounting because the Company's interest in the cash and earnings of the Partnership is limited to defined amounts, and the Company does not control the Partnership. During fiscal 1998, the agreement governing the Partnership was amended to allow for the issuance of new Class C Limited Partnership Units ("Class C Units"). During fiscal 2000, 8,095 Class C Units were issued in exchange for assets with a fair market value of $8.1 million. Gains, if any, related to the assets acquired by the Partnership from Centex are deferred until the assets are sold by the Partnership. The partnership agreement provides that Centex, as the sole Class A and Class C limited partner, is entitled to a cumulative preferred return of 9% per annum on the average outstanding balance of its Unrecovered Capital, which is defined as its capital contributions, adjusted for cash distributions representing return of the capital. Unrecovered Capital as of December 31, 1999 was approximately $68 million and the unpaid preferred return as of that date was $13.3 million. No preferred return payments were made during the three or nine months ended December 31, 1999. Supplementary condensed combined financial statements for the Company, 3333 Holding Corporation and subsidiary and Centex Development Company, L.P. and subsidiaries are set forth below. For additional information on 3333 Holding Corporation and its subsidiary and Centex Development Company, L.P. and subsidiaries, see their separate financial statements and related footnotes included elsewhere in this Report. -8- 12 SUPPLEMENTARY CONDENSED COMBINED BALANCE SHEETS OF CENTEX CORPORATION AND SUBSIDIARIES, 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. AND SUBSIDIARIES
------------ ------------ DECEMBER 31, March 31, 1999 1999* ------------ ------------ ASSETS Cash and Cash Equivalents $ 186,010 $ 111,632 Receivables 1,139,829 1,860,090 Inventories 2,469,072 1,639,664 Investments in Joint Ventures and Other 68,316 49,266 Property and Equipment, net 341,635 313,886 Other Assets 579,655 410,321 ------------ ------------ $ 4,784,517 $ 4,384,859 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Accounts Payable and Accrued Liabilities $ 1,102,586 $ 1,026,867 Short-term Debt 1,561,328 1,668,496 Long-term Debt 570,179 284,299 Minority Stockholders' Interest 133,567 140,721 Negative Goodwill 54,837 66,837 Stockholders' Equity 1,362,020 1,197,639 ------------ ------------ $ 4,784,517 $ 4,384,859 ============ ============
* Condensed from audited financial statements. SUPPLEMENTARY CONDENSED COMBINED STATEMENTS OF EARNINGS
------------------------------ For the Nine Months Ended December 31, ------------------------------ 1999 1998 ------------ ------------ Revenues $ 4,479,147 $ 3,626,072 Costs and Expenses 4,176,376 3,365,134 ------------ ------------ Earnings Before Income Taxes 302,771 260,938 Income Taxes 115,664 97,955 ------------ ------------ NET EARNINGS 187,107 162,983 Other Comprehensive Loss (48) -- ------------ ------------ COMPREHENSIVE INCOME $ 187,059 $ 162,983 ============ ============
(D) In order to ensure the future availability of land for the Company's homebuilding operations, the Company has made cumulative deposits totaling approximately $52 million for options to purchase undeveloped land and developed lots having a total purchase price of approximately $1.3 billion. These options and commitments expire at various dates through the year 2005. -9- 13 (E) Interest cost relating to the Financial Services operations is included in its costs and expenses. Interest cost related to non-financial services operations is included in interest expense.
------------------------------ For the Three Months Ended December 31, ------------------------------ 1999 1998 ------------ ------------ Total Interest Cost Incurred $ 34,272 $ 30,852 Less - Financial Services Interest Expense (15,805) (19,923) ------------ ------------ Interest Expense, net $ 18,467 $ 10,929 ============ ============
------------------------------ For the Nine Months Ended December 31, ------------------------------ 1999 1998 ------------ ------------ Total Interest Cost Incurred $ 97,657 $ 89,447 Less - Financial Services Interest Expense (51,829) (60,283) ------------ ------------ Interest Expense, net $ 45,828 $ 29,164 ============ ============
(F) In April 1994, Centex Construction Products, Inc. ("Construction Products") completed an initial public offering of its stock which began trading on the New York Stock Exchange under the symbol "CXP". Centex's ownership interest in Construction Products increased to 63.2% as of December 31, 1999 compared to 59.2% as of December 31, 1998 as a consequence of a share repurchase program authorized by Construction Products' Board of Directors. (G) In fiscal 1996, the Company acquired an equity interest in Vista Properties, Inc. ("Vista"), which owned a real estate portfolio of properties located in seven states in which the Company has significant operations. The Investment Real Estate portfolio was reduced to a nominal "book basis" after recording certain deferred tax benefits related to this acquisition. Accordingly, as these properties are developed or sold the net sales proceeds are reflected as operating margin. Negative goodwill related to the Vista acquisition is being amortized to earnings over the estimated period over which the related assets will be developed, sold or realized. All investment property operations are being reported through the "Investment Real Estate" business segment. (H) The Company operates in five principal business segments: Home Building, Investment Real Estate, Financial Services, Construction Products, and Contracting and Construction Services. These segments operate primarily in the United States and their markets are nationwide. Revenues from any one customer are not significant to the Company. Intersegment revenues and investments in joint ventures are not material and are not shown in the following tables. The investment in Centex Development Company, L.P. (approximately $73 million) is included in the Investment Real Estate segment. -10- 14 HOME BUILDING CONVENTIONAL HOMES Conventional Homes operations involve the purchase and development of land or lots as well as the construction and sale of single-family homes. The following tables set forth financial information relating to the Conventional Homes operations (dollars in millions):
------------------------------ For the Three Months Ended December 31, ------------------------------ 1999 1998 ------------ ------------ Revenues $ 863.2 $ 671.4 Cost of Sales (666.6) (518.9) Selling, General & Administrative Expenses (123.3) (94.4) ------------ ------------ Operating Earnings $ 73.3 $ 58.1 ============ ============
------------------------------ For the Nine Months Ended December 31, ------------------------------ 1999 1998 ------------ ------------ Revenues $ 2,461.5 $ 1,881.6 Cost of Sales (1,898.9) (1,464.3) Selling, General & Administrative Expenses (359.9) (266.3) ------------ ------------ Operating Earnings $ 202.7 $ 151.0 ============ ============
MANUFACTURED HOMES Manufactured Homes operations involve the manufacture of residential and park model homes and the sale of these homes through a network of Company-owned and independent dealers. The Company entered the Manufactured Homes industry in March 1997, when a subsidiary acquired approximately 80% of Cavco Industries. Centex purchased the remaining minority interest in Cavco Industries during the third quarter of fiscal 2000. The following tables set forth financial information relating to the Manufactured Homes operations (dollars in millions):
------------------------------ For the Three Months Ended December 31, ------------------------------ 1999 1998 ------------ ------------ Revenues $ 47.1 $ 39.8 Cost of Sales (36.5) (29.8) Selling, General & Administrative Expenses (7.1) (5.7) Goodwill Amortization (0.8) (0.8) ------------ ------------ Operating Earnings 2.7 3.5 Minority Interest -- (0.7) ------------ ------------ Net Operating Earnings to Centex $ 2.7 $ 2.8 ============ ============
-11- 15
------------------------------ For the Nine Months Ended December 31, ------------------------------ 1999 1998 ------------ ------------ Revenues $ 146.0 $ 130.8 Cost of Sales (114.2) (101.3) Selling, General & Administrative Expenses (21.4) (16.9) Goodwill Amortization (2.6) (2.4) ------------ ------------ Operating Earnings 7.8 10.2 Minority Interest (1.0) (2.0) ------------ ------------ Net Operating Earnings to Centex $ 6.8 $ 8.2 ============ ============
INVESTMENT REAL ESTATE Investment Real Estate operations involve the development of land primarily for multi-family, industrial, office, retail and mixed-use projects. The following tables set forth financial information relating to the Investment Real Estate operations (dollars in millions):
------------------------------ For the Three Months Ended December 31, ------------------------------ 1999 1998 ------------ ------------ Revenues $ 15.9 $ 8.6 Cost of Sales (6.8) (2.7) Selling, General & Administrative Expenses (4.2) (1.5) Negative Goodwill Amortization 4.0 4.0 ------------ ------------ Operating Earnings $ 8.9 $ 8.4 ============ ============
------------------------------ For the Nine Months Ended December 31, ------------------------------ 1999 1998 ------------ ------------ Revenues $ 27.4 $ 17.5 Cost of Sales (8.0) (2.9) Selling, General & Administrative Expenses (7.3) (4.4) Negative Goodwill Amortization 12.0 12.0 ------------ ------------ Operating Earnings $ 24.1 $ 22.2 ============ ============
Property sales related to Investment Real Estate's nominally valued assets resulted in operating margins of $7.9 million and $16.8 million for the three and nine months ended December 31, 1999 and $5.6 million and $13.0 million for the same three and nine month periods last year. As of December 31, 1999, the Investment Real Estate Group had approximately $60 million of nominally valued assets. FINANCIAL SERVICES Financial Services operations involve the financing of conventional and manufactured homes, home equity and sub-prime lending and the sale of title and other insurance coverages. These activities include -12- 16 mortgage origination and other related services for homes sold by Centex subsidiaries and by others. The following tables set forth financial information relating to the Financial Services operations (dollars in millions):
------------------------------ For the Three Months Ended December 31, ------------------------------ 1999 1998 ------------ ------------ Revenues, including interest income of $19.2 million in fiscal 2000 and $25.0 million in fiscal 1999 $ 106.6 $ 116.2 Selling, General & Administrative Expenses (81.6) (72.2) Interest Expense (15.8) (19.9) ------------ ------------ Operating Earnings $ 9.2 $ 24.1 ============ ============
------------------------------ For the Nine Months Ended December 31, ------------------------------ 1999 1998 ------------ ------------ Revenues, including interest income of $70.2 million in fiscal 2000 and $75.0 million in fiscal 1999 $ 343.9 $ 324.1 Selling, General & Administrative Expenses (249.7) (192.2) Interest Expense (51.8) (60.3) ------------ ------------ Operating Earnings $ 42.4 $ 71.6 ============ ============
CONSTRUCTION PRODUCTS Construction Products operations involve the manufacture and sale of cement, gypsum wallboard, and concrete and aggregates. The following tables set forth financial information relating to the Construction Products operations (dollars in millions):
------------------------------ For the Three Months Ended December 31, ------------------------------ 1999 1998 ------------ ------------ Revenues $ 108.4 $ 84.9 Interest Income 1.1 0.6 Cost of Sales and Plant Operating Expenses (62.5) (52.3) Selling, General & Administrative Expenses (1.2) (1.2) Goodwill Amortization (0.4) (0.5) ------------ ------------ Operating Earnings 45.4 31.5 Minority Interest (17.0) (13.2) ------------ ------------ Net Operating Earnings to Centex $ 28.4 $ 18.3 ============ ============
-13- 17
------------------------------ For the Nine Months Ended December 31, ------------------------------ 1999 1998 ------------ ------------ Revenues $ 323.4 $ 256.5 Interest Income 2.4 2.2 Cost of Sales and Plant Operating Expenses (188.6) (161.7) Selling, General & Administrative Expenses (3.5) (3.0) Goodwill Amortization (1.1) (0.5) ------------ ------------ Operating Earnings 132.6 93.5 Minority Interest (50.7) (40.3) ------------ ------------ Net Operating Earnings to Centex $ 81.9 $ 53.2 ============ ============
CONTRACTING AND CONSTRUCTION SERVICES Contracting and Construction Services operations involve the construction of buildings for both private and government interests including (among others) office, commercial and industrial buildings, hospitals, hotels, museums, libraries, airport facilities and educational institutions. The following tables set forth financial information relating to the Contracting and Construction Services operations. As this segment generates significant positive cash flow, intercompany interest income (credited at the prime rate) is reflected in this segment data, however these amounts are eliminated in consolidation (dollars in millions):
------------------------------ For the Three Months Ended December 31, ------------------------------ 1999 1998 ------------ ------------ Revenues $ 288.0 $ 335.2 Construction Contract Costs (269.6) (321.1) Selling, General & Administrative Expenses (11.6) (10.4) ------------ ------------ Operating Income, as reported 6.8 3.7 Intercompany Interest Income* 2.0 2.1 ------------ ------------ Total Economic Return $ 8.8 $ 5.8 ============ ============
------------------------------ For the Nine Months Ended December 31, ------------------------------ 1999 1998 ------------ ------------ Revenues $ 928.6 $ 999.3 Construction Contract Costs (875.5) (957.5) Selling, General & Administrative Expenses (35.6) (30.4) ------------ ------------ Operating Income, as reported 17.5 11.4 Intercompany Interest Income* 6.3 4.9 ------------ ------------ Total Economic Return $ 23.8 $ 16.3 ============ ============
*The "net assets" position of the Contracting and Construction Services segment provides significant cash flow because payables and accruals consistently exceed identifiable assets. Intercompany interest income is computed on the group's cash flow in excess of its equity. -14- 18 CORPORATE AND OTHER, NET Corporate general and administrative expenses represent salaries and other costs not identifiable with a specific segment. Other, net includes new business initiatives and other businesses which are not mature enough to stand alone as separate business segments. Assets are primarily cash and cash equivalents, receivables, property and equipment and other assets not associated with a business segment. The following tables summarize financial information relating to the Corporate and Other, net segments (dollars in millions):
------------------------------ For the Three Months Ended December 31, ------------------------------ 1999 1998 ------------ ------------ Operating Loss - Other, net $ (0.6) $ (2.8) ============ ============ Corporate General and Administrative Expenses $ (8.5) $ (7.1) ============ ============
------------------------------ For the Nine Months Ended December 31, ------------------------------ 1999 1998 ------------ ------------ Operating Loss - Other, net $ (3.5) $ (7.6) ============ ============ Corporate General and Administrative Expenses $ (23.8) $ (19.2) ============ ============
(I) The computation of diluted earnings per share excludes anti-dilutive options to purchase 4,477,000 common shares at an average price of $36.98, and 3,652,000 common shares at an average price of $37.34 for the three and nine months ended December 31, 1999, respectively. The anti-dilutive options have expiration dates ranging from September 2007 to October 2009. (J) Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities," was issued in June 1998. This statement addressed the accounting for derivative instruments, including derivative instruments embedded in other contracts (collectively referred to as derivatives), and hedging activities as well as the disclosure of these activities. SFAS No. 133 requires that an entity recognize all derivatives as either assets or liabilities in the consolidated balance sheet and measure those instruments at fair value. In June 1999, SFAS No. 137 was issued which delays the implementation of this statement for the Company until April 2001. (K) Certain prior period balances have been reclassified to be consistent with the December 31, 1999 presentation. -15- 19 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Centex's consolidated revenues for the three months ended December 31, 1999 were $1.43 billion, a 14% increase over $1.26 billion for the same period last year. Earnings before income taxes were $101.7 million, 7% higher than $94.6 million last year. Net earnings for the three months ended December 31, 1999 were $63.2 million, a 7% increase over net earnings of $59.0 million for the same period last year. For the nine months ended December 31, 1999, consolidated revenues totaled $4.23 billion, 17% higher than $3.61 billion for the same period last year. Earnings before income taxes were $302.2 million, 15% higher than $261.7 million for the same period last year. Net earnings were $187.1 million for the nine months ended December 31, 1999, a 14% increase over net earnings of $163.8 for the same period last year. HOME BUILDING CONVENTIONAL HOMES The following summarizes Conventional Homes' results for the three and nine months ended December 31, 1999 compared to the same periods last year (dollars in millions, except per unit data):
------------------------------------------------------------- For the Three Months Ended December 31, ------------------------------------------------------------- 1999 1998 --------------------------- --------------------------- Conventional Homes Revenues $ 863.2 100.0% $ 671.4 100.0% Cost of Sales (666.6) (77.2)% (518.9) (77.3)% Selling, General & Administrative Expenses (123.3) (14.3)% (94.4) (14.1)% ---------- ---------- ---------- ---------- Operating Earnings $ 73.3 8.5% $ 58.1 8.6% ========== ========== ========== ========== Units Closed 4,495 3,601 % Change 24.8% 19.0% Unit Sales Price $ 189,466 $ 183,522 % Change 3.2% 1.2% Operating Earnings Per Unit $ 16,314 $ 16,134 % Change 1.1% 15.4%
-16- 20
------------------------------------------------------------- For the Nine Months Ended December 31, --------------------------- --------------------------- 1999 1998 --------------------------- --------------------------- Conventional Homes Revenues $ 2,461.5 100.0% $ 1,881.6 100.0% Cost of Sales (1,898.9) (77.2)% (1,464.3) (77.8)% Selling, General & Administrative Expenses (359.9) (14.6)% (266.3) (14.2)% ---------- ---------- ---------- ---------- Operating Earnings $ 202.7 8.2% $ 151.0 8.0% ========== ========== ========== ========== Units Closed 12,854 10,050 % Change 27.9% 15.4% Unit Sales Price $ 188,595 $ 184,113 % Change 2.4% 1.3% Operating Earnings Per Unit $ 15,768 $ 15,022 % Change 5.0% 17.6%
Conventional Homes' revenues for the three and nine months ended December 31, 1999 increased by $191.8 million and $579.9 million, respectively, from revenues for the corresponding periods last year. These increases resulted from an increased number of operating neighborhoods, revenues attributable to newly acquired operations, and an increased average unit selling price compared to fiscal 1999's average unit selling price. Home sales (orders) totaled 4,089 units during the three months ended December 31, 1999 compared to 3,610 units during the same period a year ago. Home sales (orders) totaled 13,191 units during the nine months ended December 31, 1999 compared to last year's 10,816 units. The backlog of homes sold but not closed at December 31, 1999 was 7,413 units, 15% higher than 6,419 units for the same period a year ago. -17- 21 MANUFACTURED HOMES The following summarizes Manufactured Homes' results for the three and nine months ended December 31, 1999 compared to the same periods last year (dollars in millions):
------------------------------------------------------------- For the Three Months Ended December 31, ------------------------------------------------------------- 1999 1998 --------------------------- --------------------------- Manufactured Homes Revenues (Construction) $ 30.3 100.0% $ 29.5 100.0% Cost of Sales (23.3) (76.9)% (22.5) (76.3)% Selling, General & Administrative Expenses (3.4) (11.3)% (2.8) (9.4)% ---------- ---------- ---------- ---------- 3.6 11.8% 4.2 14.3% ---------- ---------- ---------- ---------- Retail Sales Revenues 16.8 100.0% 10.3 100.0% Cost of Sales (13.2) (78.4)% (7.3) (70.6)% Selling, General & Administrative Expenses (3.7) (21.9)% (2.9) (29.0)% ---------- ---------- ---------- ---------- (0.1) (0.3)% 0.1 0.4% ---------- ---------- ---------- ---------- Construction and Retail Earnings 3.5 4.3 Goodwill Amortization (0.8) (0.8) Minority Interest -- (0.7) ---------- ---------- Group Operating Earnings $ 2.7 $ 2.8 ========== ========== Units Sold 1,501 1,633
------------------------------------------------------------- For the Nine Months Ended December 31, ------------------------------------------------------------- 1999 1998 --------------------------- --------------------------- Manufactured Homes Revenues (Construction) $ 98.1 100.0% $ 101.6 100.0% Cost of Sales (76.2) (77.6)% (79.6) (78.3)% Selling, General & Administrative Expenses (10.8) (11.0)% (9.6) (9.5)% ---------- ---------- ---------- ---------- 11.1 11.4% 12.4 12.2% ---------- ---------- ---------- ---------- Retail Sales Revenues 47.9 100.0% 29.2 100.0% Cost of Sales (38.0) (79.4)% (21.7) (74.6)% Selling, General & Administrative Expenses (10.6) (22.2)% (7.3) (24.7)% ---------- ---------- ---------- ---------- (0.7) (1.6)% 0.2 0.7% ---------- ---------- ---------- ---------- Construction and Retail Earnings 10.4 12.6 Goodwill Amortization (2.6) (2.4) Minority Interest (1.0) (2.0) ---------- ---------- Group Operating Earnings $ 6.8 $ 8.2 ========== ========== Units Sold 4,723 4,780
Cavco operates five manufacturing plants: three in the Phoenix, Arizona area, one near Albuquerque, New Mexico, and one in central Texas which was opened in January, 1999. As of December 31, 1999, Cavco operated 23 retail locations for the sale of manufactured homes compared to 10 retail locations in the prior year. -18- 22 Operating earnings for the three months ended December 31, 1999 were $2.7 million, a 6% decrease over the same period in the prior year. For the nine months ended December 31, 1999, Manufactured Homes' operating earnings were $6.8 million compared to $8.2 million for the nine months ended December 31, 1998. Third quarter and year-to-date operating earnings were negatively impacted by start-up and marketing costs associated with the new Texas plant and retail store openings in Texas as well as the extremely competitive market conditions. INVESTMENT REAL ESTATE The following summarizes Investment Real Estate's results for the three and nine months ended December 31, 1999 compared to the same periods last year (dollars in millions):
----------------------------- For the Three Months Ended December 31, ----------------------------- 1999 1998 ------------ ------------ Revenues $ 15.9 $ 8.6 ============ ============ Operating Earnings $ 8.9 $ 8.4 ============ ============
----------------------------- For the Nine Months Ended December 31, ----------------------------- 1999 1998 ------------ ------------ Revenues $ 27.4 $ 17.5 ============ ============ Operating Earnings $ 24.1 $ 22.2 ============ ============
For the three months ended December 31, 1999, Centex's Investment Real Estate operations, through which all investment property transactions are reported, had operating earnings of $8.9 million, 7% higher than $8.4 million for the same period a year ago. For the nine months ended December 31, 1999, Centex's Investment Real Estate operations had operating earnings of $24.1 million, 8% higher than $22.2 million for the same period last year. The timing of land sales is uncertain and can vary significantly from period to period. Property sales related to Investment Real Estate's nominally valued assets resulted in operating margins of $7.9 million and $5.6 million for the three months ended December 31, 1999 and 1998, and $16.8 million and $13.0 million for the nine months ended December 31, 1999 and 1998, respectively. At December 31, 1999, the Investment Real Estate Group had approximately $60 million of nominally valued assets, the majority of which are expected to be sold over the next four years. Negative goodwill amortization was $4 million for the three months ended December 31, 1999 and 1998, and $12 million for the nine months ended December 31, 1999 and 1998. -19- 23 FINANCIAL SERVICES The following summarizes Financial Services' results for the three and nine months ended December 31, 1999 compared to the same periods last year (dollars in millions):
----------------------------- For the Three Months Ended December 31, ----------------------------- 1999 1998 ------------ ------------ Revenues $ 106.6 $ 116.2 ============ ============ Operating Earnings $ 9.2 $ 24.1 ============ ============ Origination Volume $ 2,176 $ 3,096 ============ ============ Number of Loans Originated CTX Mortgage Company ("CTX Mortgage") Centex-built Homes ("Builder") 2,449 2,308 Non-Centex-built Homes ("Retail") 10,932 19,117 ------------ ------------ 13,381 21,425 Centex Home Equity Corporation ("Home Equity") 5,367 4,032 Centex Finance Company 202 255 ------------ ------------ 18,950 25,712 ============ ============
----------------------------- For the Nine Months Ended December 31, ----------------------------- 1999 1998 ------------ ------------ Revenues $ 343.9 $ 324.1 ============ ============ Operating Earnings $ 42.4 $ 71.6 ============ ============ Origination Volume $ 7,359 $ 8,368 ============ ============ Number of Loans Originated CTX Mortgage Company ("CTX Mortgage") Centex-built Homes ("Builder") 7,489 6,728 Non-Centex-built Homes ("Retail") 39,850 51,450 ------------ ------------ 47,339 58,178 Centex Home Equity Corporation ("Home Equity") 15,237 11,341 Centex Finance Company 674 610 ------------ ------------ 63,250 70,129 ============ ============
Financial Services' operating earnings for the three months ended December 31, 1999 were $9.2 million, 62% lower than the $24.1 million of operating earnings for the three months ended December 31, 1998. For the nine months ended December 31, 1999, operating earnings were $42.4 million, 41% lower than the $71.6 million of operating earnings for the same period last year. -20- 24 CTX Mortgage's operating earnings totaled $5.8 million for the three months ended December 31, 1999, 76% less than earnings for the same period a year ago. CTX Mortgage originations for the three months ended December 31, 1999 were 13,381, a 38% decrease from the 21,425 originations for the same period last year. The per loan profit for the three months ended December 31, 1999 was $435, 62% lower than the $1,139 per loan for the same period last year. CTX Mortgage's operating earnings for the nine months ended December 31, 1999 totaled $30.6 million, 54% less than earnings for the same period last year. Originations from CTX Mortgage were 47,339 for the nine months ended December 31, 1999, compared to 58,178 for the same period last year. The per loan profit for the nine months ended December 31, 1999 was $646, 43% lower than the $1,141 for the nine months ended December 31, 1998. The decline in CTX Mortgage's operating earnings is primarily due to the decrease in refinancing activity as a result of increasing interest rates and the delay in balancing operating costs with reduced production levels. CTX Mortgage's total mortgage applications for the three months ended December 31, 1999 decreased 45% to 11,197 from 20,498 applications for the same period last year. For the nine months ended December 31, 1999, CTX Mortgage's applications decreased to 44,210 from 58,371 for the same period last year. Applications are expected to continue to decline on a year-over-year basis if mortgage interest rates remain at present levels. Centex Home Equity ("Home Equity") reported $4.5 million of operating earnings for the three months ended December 31, 1999, 915% higher than the $0.4 million of operating earnings for the same period last year. Operating earnings from Home Equity for the nine months ended December 31, 1999 totaled $15.0 million, a 113% increase over the $7.0 million in operating earnings for the same period last year. Originations for the three months ended December 31, 1999 were 5,367, a 33% increase over the originations for the same period last year. Originations for the nine months ended December 31, 1999 were 15,237, a 34% increase over the 11,341 originated for the same period last year. Loan volume for the three months ended December 31, 1999 was $350 million, a 30% improvement over the same period a year ago. Loan volume for the nine months ended December 31, 1999 was $990 million, a 34% improvement over the prior year. Loan volume for the three and nine month periods was favorably impacted by the opening of new operating locations plus generally increased activity. Home Equity's sub-prime applications totaled 32,341 for the three months ended December 31, 1999, an increase of 42% over the 22,746 applications for the same period last year. Home Equity's sub-prime applications totaled 89,785 for the nine months ended December 31, 1999, a 65% improvement over the 54,433 applications for the same period last year. Per loan profit was $832 and $985 for the three and nine month periods ending December 31, 1999 compared to $109 and $621 for the same period last year. The increase is primarily related to earnings from the servicing operation partially offset by the absorption of costs related to the expansion of the branch network. As a consequence of increases in loan volume, during the three months ended December 31, 1999, Home Equity completed a securitization for $305 million, compared to a $189 million securitization in the prior year. For the nine months ended December 31, 1999, Home Equity completed securitizations totaling $1.0 billion, compared to $629 million in securitizations for the same period last year. As a result of the securitization process, Home Equity sells the loans but retains a residual interest in the securitization instrument as well as the servicing rights associated with these loans. Home Equity is the long-term servicer of these loans. Service fee income related to this long-term servicing was $4.0 million in the three months ended December 31, 1999 and $1.6 million for the same period last year. For the nine months ended December 31, 1999, service fee income was $10.0 million compared to $2.8 million for the same period a year ago. -21- 25 Centex Finance Company, the manufactured homes finance unit that was closed during the quarter, had an operating loss of approximately $1.1 million and $3.2 million for the three and nine months ended December 31, 1999. Revenues include the gains on sales of mortgage loans receivable. Such gains decreased to $65.4 million for the three months ended December 31, 1999 from $70.3 million for the same period last year. For the nine months ended December 31, 1999, gains on sales of mortgage loans receivable totaled $208.3 million, a 12% increase over the same period last year. The year to date increase is due to the expansion of Financial Services' product lines and an increase in securitization activity, partially offset by decreased loan origination volume. Gains on sales of mortgage loans includes the gain recorded upon the completion of securitization, the gain on sale of servicing, and/or gain on whole loan sales. Substantially all of the mortgage loans generated by CTX Mortgage are sold forward upon closing and subsequently delivered to third-party purchasers within approximately 60 days thereafter, while substantially all the mortgage loans produced by Home Equity are securitized, generally on a quarterly basis. In the normal course of its activities, Financial Services carries inventories of loans pending sale or securitization and earns a positive spread between the interest income earned on those loans and its cost of financing those loans (referred to herein as "positive carry"). Interest income decreased 23% for the three months ended December 31, 1999 to $19.2 million from $25.0 million for the same period last year. Interest expense for the three months ended December 31, 1999 was $15.8 million, a 20% decrease from $19.9 million for the same period last year. Interest income for the nine month period ended December 31, 1999 was $70.2 million, a 6% decrease from $75.0 million for the same period last year. For the nine month period ended December 31, 1999, interest expense was $51.8 million, a 14% decrease from $60.3 million for the same period last year. Financial Services' other sources of income include, among other things, loan origination fees, title policy fees and insurance commissions, mortgage loan broker fees, and fees for mortgage loan quality control and processing services. CONSTRUCTION PRODUCTS The following summarizes Construction Products' results for the three and nine months ended December 31, 1999 compared to the same periods last year (dollars in millions):
----------------------------- For the Three Months Ended December 31, ----------------------------- 1999 1998 ------------ ------------ Revenues $ 108.4 $ 84.9 Interest Income 1.1 0.6 Cost of Sales and Expenses (62.5) (52.3) Selling, General & Administrative Expenses (1.2) (1.2) Goodwill Amortization (0.4) (0.5) ------------ ------------ Operating Earnings 45.4 31.5 Minority Interest (17.0) (13.2) ------------ ------------ Net Operating Earnings to Centex $ 28.4 $ 18.3 ============ ============
-22- 26
----------------------------- For the Nine Months Ended December 31, ----------------------------- 1999 1998 ------------ ------------ Revenues $ 323.4 $ 256.5 Interest Income 2.4 2.2 Cost of Sales and Expenses (188.6) (161.7) Selling, General & Administrative Expenses (3.5) (3.0) Goodwill Amortization (1.1) (0.5) ------------ ------------ Operating Earnings 132.6 93.5 Minority Interest (50.7) (40.3) ------------ ------------ Net Operating Earnings to Centex $ 81.9 $ 53.2 ============ ============
Construction Products' revenues were $108.4 million for the three months ended December 31, 1999, 28% higher than the same period last year. For the three months ended December 31, 1999, Construction Products' operating earnings, net of minority interest, were $28.4 million, a 55% increase over $18.3 million for the same period last year. Revenues from Construction Products for the current nine months ended December 31, 1999 were $323.4 million, 26% higher than the same period last year. For the nine months ended December 31, 1999, Construction Products' operating earnings, net of minority interest, were $81.9 million, a 54% improvement over results for the same period a year ago. Construction Products' record operating earnings resulted from improved results in each of its businesses. Pricing and sales volume improved for virtually every product, particularly pricing for gypsum wallboard, which rose 33% over pricing for the same three months last year and 32% for the same nine months last year. CONTRACTING AND CONSTRUCTION SERVICES The following summarizes Contracting and Construction Services' results for the three and nine months ended December 31, 1999 compared to the same periods last year (dollars in millions):
----------------------------- For the Three Months Ended December 31, ----------------------------- 1999 1998 ------------ ------------ Revenues $ 288.0 $ 335.2 ============ ============ Operating Earnings $ 6.8 $ 3.7 ============ ============ New Contracts Received $ 487 $ 298 ============ ============ Backlog of Uncompleted Contracts $ 1,322 $ 1,182 ============ ============
----------------------------- For the Nine Months Ended December 31, ----------------------------- 1999 1998 ------------ ------------ Revenues $ 928.6 $ 999.3 ============ ============ Operating Earnings $ 17.5 $ 11.4 ============ ============ New Contracts Received $ 1,314 $ 1,022 ============ ============ Backlog of Uncompleted Contracts $ 1,322 $ 1,182 ============ ============
-23- 27 Contracting and Construction Services' revenues for the three and nine months ended December 31, 1999 were $288.0 million and $928.6 million, respectively. Operating earnings for the group improved 84% to $6.8 million for the three months and 53% to $17.5 million for the nine months ended December 31, 1999 over the same period last year. This increase was primarily the result of a continuing shift in recent years to higher-margin private negotiated projects from lower-margin public bid work. The Contracting and Construction Services operations provided a positive average net cash flow in excess of Centex's investment in the group of $94.7 million for the three months ended December 31, 1999 and $105.5 million for the same period last year. For the nine months ended December 31, 1999, the positive average net cash flow in excess of Centex's investment in the group was $102.8 million, compared to $78.6 million for the same period last year. YEAR 2000 COMPLIANCE Beginning in fiscal year 1997, the Company engaged in an ongoing process of evaluating and implementing changes to its systems in order to ensure Year 2000 compliance. As a result of this process, the Company and its subsidiaries tested all critical systems during calendar year 1999 and repaired, upgraded and/or replaced those found to be not Year 2000 compliant. The cost of replacing, upgrading or otherwise changing non-compliant systems was not material to the Company as a whole, or to the Company's individual subsidiaries. The Company used internally generated cash to fund the correction of all non-compliant systems. The Company's Year 2000 compliance preparation included the completion of a contingency plan, the hiring of a third party consultant and the surveying of material vendors and suppliers. As a result of the attention that the Company paid to addressing its Year 2000 readiness, the Company has not, to date, experienced any adverse impact on the Company's operations or financial condition or the operations or financial condition of any of its individual subsidiaries as a result of any Year 2000 compliance issues. In addition, the Company is not aware that any of its vendors, subcontractors or other third parties experienced any significant problems as a result of Year 2000 compliance issues. Furthermore, if any of those third parties were affected by Year 2000 compliance issues, such compliance issues have not caused, to date, any adverse effects on the Company's operations or financial condition, or the operations or financial condition of any of its individual subsidiaries. Although the Company has not been affected to date by the changes from December 31, 1999 to January 1, 2000, Year 2000 issues could arise subsequent to the filing of this report. As an example, the Company's systems could fail to recognize 2000 as a leap year. The Company believes that such circumstances are highly unlikely to occur and that, even if they were to occur, it is highly unlikely that the Company's financial condition or the operations and financial condition of its subsidiaries would be materially adversely affected. Nevertheless, the Company intends to continue to monitor Year 2000 related issues and immediately address any effects that may arise as a result. Year 2000 Forward-looking Statements Certain statements in this section, other than historical information, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the context of the statement and generally arise when the Company is discussing its beliefs, estimates or expectations. These statements involve risks and uncertainties relative to the Company's ability -24- 28 to assess and remediate any Year 2000 compliance issues, the ability of third parties to correct material non-compliant systems, and the Company's assessment of the Year 2000 issue's impact on its financial results and operations. FINANCIAL CONDITION AND LIQUIDITY At December 31, 1999, the Company had cash and cash equivalents of $161.7 million. The net cash provided by or used in the operating, investing, and financing activities for the nine months ended December 31, 1999 and 1998 is summarized below (dollars in thousands):
------------------------------ For the Nine Months Ended December 31, ------------------------------ 1999 1998 ------------ ------------ NET CASH PROVIDED BY (USED IN): Operating activities $ 346,839 $ (605,262) Investing activities (162,254) (78,952) Financing activities (134,092) 697,737 Effect of exchange rate changes on cash (48) -- ------------ ------------ Net increase in cash $ 50,445 $ 13,523 ============ ============
For the nine months ended December 31, 1999, cash was provided by a decreased investment in mortgage loans offset primarily by an increase in housing inventories. The decrease in mortgage loans is a result of a decrease in refinancing activity as well as the timing of loan sales and securitizations. The increase in housing inventories relates to the addition of new neighborhoods and acquisitions. Cash was used to fund acquisitions (primarily in the Home Building segment) and to fund additions to property and equipment (primarily for new production capacity within the Construction Products segment). The funds used in financing activities included a reduction in mortgage loan debt, partially offset by new debt raised primarily to fund the increased home building activity. Short-term debt as of December 31, 1999 was $1.2 billion, which included $700 million of debt applicable to the Financial Services operation. The majority of the Financial Services debt is collateralized by residential mortgage loans. Most of the Company's other unsecured borrowings are accomplished at prevailing market interest rates through short-term bank borrowings and from the Company's commercial paper programs. The Company maintains $735 million of committed credit facilities which serve as a back-up for bank and commercial paper borrowings. Under the terms of the agreement on one of these facilities, $170 million may be borrowed directly by CTX Mortgage. The Financial Services segment provides most of its own short-term financing needs through separate facilities which require only limited support from Centex Corporation. During the third quarter of fiscal 2000, CTX Mortgage committed to sell, and began selling to Centex Home Mortgage, LLC, a non-affiliated third party special-purpose Delaware limited liability company ("CHM"), substantially all of the conforming, Jumbo A, and GNMA eligible mortgages originated by CTX Mortgage. CHM is in the business of acquiring and then reselling mortgages into secondary markets. This facility gives CTX Mortgage access, on a revolving basis, to CHM's $1.5 billion of capacity. Sales to CHM are non-recourse and therefore are accounted for as sales rather than as financings. CTX Mortgage also maintains $300 million of secured committed mortgage warehouse facilities and $1.2 billion of uncommitted credit facilities to finance mortgages not sold to Centex Home Mortgage. Similarly, Centex Home Equity Corporation has $250 million of committed and $165 -25- 29 million of uncommitted secured mortgage warehouse facilities to finance sub-prime mortgages held until securitization. Long-term debt outstanding as of December 31, 1999 was as follows (in thousands): Subordinated Debentures, 7.375%, due in 2005 $ 99,735 Subordinated Debentures, 8.75%, due in 2007 99,509 Medium-term Note Programs, 6.4% to 6.95%, due through 2002 341,668 Other Indebtedness, 6.0% to 9.6%, due through 2027 29,267 ------------ $ 570,179 ============
Maturities of long-term debt during the next five years are as follows (in thousands): Fiscal Year ending: March 31, 2000 $ 18,060 March 31, 2001 331,159 March 31, 2002 849 March 31, 2003 15,147 March 31, 2004 205 ------------ $ 365,420 ============
The Company believes it has adequate resources and sufficient credit facilities to satisfy its current needs and to provide for future growth. - -------------------------------------------------------------------------------- FORWARD-LOOKING STATEMENTS The Management's Discussion and Analysis of Financial Condition and Results of Operations and other sections of this report on Form 10-Q contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the context of the statement and generally arise when the Company is discussing its beliefs, estimates or expectations. These statements are not guarantees of future performance and involve a number of risks and uncertainties. Actual results and outcomes may differ materially from what is expressed or forecast in such forward-looking statements. The principal risks and uncertainties that may affect the Company's actual performance and results of operations include the following: general economic conditions and interest rates; the cyclical and seasonal nature of the Company's businesses; adverse weather; changes in property taxes and energy costs; changes in federal income tax laws and federal mortgage financing programs; governmental regulation; changes in governmental and public policy; changes in economic conditions specific to any one or more of the Company's markets and businesses; competition; availability of raw materials; and unexpected operations difficulties. Other risks and uncertainties may also affect the outcome of the Company's actual performance and results of operations. -26- 30 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company is exposed to market risks related to fluctuations in interest rates on mortgage loans receivable, residual interest in mortgage securitizations, and debt. The Company utilizes forward sale commitments to mitigate the risk associated with the majority of its mortgage loan portfolio. The Company has also entered into a swap agreement with Bank of America in order to manage interest rate risk, non-credit related market value risk, and prepayment risk associated with certain loans originated by CTX Mortgage Company. Other than the forward commitments and the swap agreement listed above, the Company does not utilize interest rate swaps, forward or option contracts on foreign currencies or commodities, or other types of derivative financial instruments. There have been no material changes in the Company's market risk since March 31, 1999. As of December 31, 1999 the market risk associated with the swap listed above is considered minimal. For information regarding the Company's market risk, refer to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1999. -27- 31 CENTEX CORPORATION AND SUBSIDIARIES PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (1) Exhibits Exhibit 10.10 Centex Corporation Amended and Restated 1987 Stock Option Plan (Filed herewith) Exhibit 10.11 Amended and Restated Centex Corporation Employee Non-Qualified Stock Option Plan (Exhibit 4 to Registration Statement of Centex Corporation ("Centex") on Form S-8 filed with the Securities and Exchange Commission (the "Commission") on March 10, 1999) Exhibit 10.12 Second Amended and Restated Centex Corporation Employee Non-Qualified Stock Option Plan (Exhibit 4 to Registration Statement of Centex on Form S-8 filed with the Commission on August 27, 1999) Exhibit 27.1 Financial Data Schedule (2) Reports on Form 8-K The Registrant filed no reports on Form 8-K during the quarter ended December 31, 1999. All other items required under Part II are omitted because they are not applicable. -28- 32 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CENTEX CORPORATION -------------------------------------- Registrant February 11, 2000 /s/ David W. Quinn -------------------------------------- David W. Quinn Vice Chairman of the Board and Chief Financial Officer (principal financial officer) February 11, 2000 /s/ John S. Worth -------------------------------------- John S. Worth Vice President and Controller (chief accounting officer) -29- 33 3333 HOLDING CORPORATION AND SUBSIDIARY CENTEX DEVELOPMENT COMPANY, L.P. AND SUBSIDIARIES PART I. FINANCIAL INFORMATION CONDENSED COMBINING FINANCIAL STATEMENTS ITEM 1. The condensed combining financial statements include the accounts of 3333 Holding Corporation and subsidiary ("Holding") and Centex Development Company, L.P. and subsidiaries (the "Partnership") (collectively the "Companies"), and have been prepared by the Companies, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Companies believe that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed combining financial statements be read in conjunction with the financial statements and the notes thereto included in the Companies' latest Annual Report on Form 10-K. In the opinion of the Companies, all adjustments necessary to present fairly the information in the following condensed financial statements of the Companies have been included. The results of operations for such interim periods are not necessarily indicative of the results for the full year. -30- 34 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. AND SUBSIDIARIES CONDENSED COMBINING STATEMENTS OF OPERATIONS (Dollars in thousands, except per unit/share data) (unaudited)
---------------------------------------------------------------------------------------- For the Three Months Ended December 31, ---------------------------------------------------------------------------------------- 1999 1998 ------------------------------------------- ------------------------------------------- Centex Centex Development Development Company, L.P. 3333 Holding Company, L.P. 3333 Holding and Corporation and Corporation Combined Subsidiaries and Subsidiary Combined Subsidiaries and Subsidiary ------------ ------------ -------------- ------------ ------------ -------------- REVENUES $ 79,450 $ 79,450 $ 153 $ 5,694 $ 5,653 $ 194 COSTS AND EXPENSES 79,533 79,527 159 5,681 5,262 572 ------------ ------------ ------------ ------------ ------------ ------------ (LOSS) EARNINGS BEFORE INCOME TAXES (83) (77) (6) 13 391 (378) INCOME TAXES 29 29 -- -- -- -- ------------ ------------ ------------ ------------ ------------ ------------ NET (LOSS) EARNINGS $ (112) $ (106) $ (6) $ 13 $ 391 $ (378) ============ ============ ============ ============ ============ ============ NET (LOSS) EARNINGS ALLOCABLE TO LIMITED PARTNER $ (106) $ 391 ============ ============ (LOSS) EARNINGS PER UNIT/SHARE $ (1.66) $ (6) $ 6.99 $ (378) ============ ============ ============ ============ WEIGHTED-AVERAGE UNITS/SHARES OUTSTANDING 63,773 1,000 55,911 1,000
See notes to condensed combining financial statements. -31- 35 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. AND SUBSIDIARIES CONDENSED COMBINING STATEMENTS OF OPERATIONS (Dollars in thousands, except per unit/share data) (unaudited)
---------------------------------------------------------------------------------------- For the Nine Months Ended December 31, ---------------------------------------------------------------------------------------- 1999 1998 ------------------------------------------- ------------------------------------------- Centex Centex Development Development Company, L.P. 3333 Holding Company, L.P. 3333 Holding and Corporation and Corporation Combined Subsidiaries and Subsidiary Combined Subsidiaries and Subsidiary ------------ ------------ -------------- ------------ ------------ -------------- REVENUES $ 249,249 $ 249,249 $ 457 $ 19,774 $ 19,385 $ 951 COSTS AND EXPENSES 248,684 247,603 1,538 19,732 18,559 1,735 ------------ ------------ ------------ ------------ ------------ ------------ EARNINGS (LOSS) BEFORE INCOME TAXES 565 1,646 (1,081) 42 826 (784) INCOME TAXES 601 601 -- -- -- -- ------------ ------------ ------------ ------------ ------------ ------------ NET (LOSS) EARNINGS $ (36) $ 1,045 $ (1,081) $ 42 $ 826 $ (784) ============ ============ ============ ============ ============ ============ NET EARNINGS ALLOCABLE TO LIMITED PARTNER $ 1,045 $ 826 ============ ============ EARNINGS (LOSS) PER UNIT/SHARE $ 16.99 $ (1,081) $ 15.65 $ (784) ============ ============ ============ ============ WEIGHTED-AVERAGE UNITS/SHARES OUTSTANDING 61,489 1,000 52,783 1,000
See notes to condensed combining financial statements. -32- 36 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. AND SUBSIDIARIES CONDENSED COMBINING BALANCE SHEETS (Dollars in thousands)
-------------------------------------------------------------------------------------- DECEMBER 31, 1999* March 31, 1999** ------------------------------------------ ------------------------------------------ Centex Centex Development Development Company, L.P. 3333 Holding Company, L.P. 3333 Holding and Corporation and Corporation Combined Subsidiaries and Subsidiary Combined Subsidiaries and Subsidiary ------------ ------------ -------------- ------------ ------------ -------------- ASSETS Cash $ 24,297 $ 24,278 $ 19 $ 364 $ 331 $ 33 Accounts Receivable 9,647 12,875 10 1,180 3,133 10 Notes Receivable 3,360 3,360 -- 3,554 3,554 -- Investment in Affiliate -- -- 1,702 -- -- 1,616 Investment in Real Estate Joint Ventures 1,642 1,642 -- 672 672 -- Inventories 370,393 369,643 750 104,663 104,288 375 Property and Equipment, net 3,610 3,502 108 231 89 142 Other Assets - Goodwill, net 29,106 29,106 -- -- -- -- Deferred Charges and Other 11,259 11,084 175 1,512 1,166 346 ------------ ------------ ------------ ------------ ------------ ------------ $ 453,314 $ 455,490 $ 2,764 $ 112,176 $ 113,233 $ 2,522 ============ ============ ============ ============ ============ ============ LIABILITIES, STOCKHOLDERS' EQUITY AND PARTNERS' CAPITAL Accounts Payable and Accrued Liabilities $ 59,707 $ 59,203 $ 4,677 $ 8,968 $ 9,008 $ 2,772 Notes Payable and Long-term Debt 324,866 324,866 -- 42,478 41,896 582 ------------ ------------ ------------ ------------ ------------ ------------ Total Liabilities 384,573 384,069 4,677 51,446 50,904 3,354 ------------ ------------ ------------ ------------ ------------ ------------ Stockholders' Equity and Partners' Capital 68,741 71,421 (1,913) 60,730 62,329 (832) ------------ ------------ ------------ ------------ ------------ ------------ $ 453,314 $ 455,490 $ 2,764 $ 112,176 $ 113,233 $ 2,522 ============ ============ ============ ============ ============ ============
* Unaudited. ** Condensed from audited financial statements. See notes to condensed combining financial statements. -33- 37 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. AND SUBSIDIARIES CONDENSED COMBINING STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited)
---------------------------------------------------------------------------------------- For the Nine Months Ended December 31, ---------------------------------------------------------------------------------------- 1999 1998 ------------------------------------------- ------------------------------------------- Centex Centex Development Development Company, L.P. 3333 Holding Company, L.P. 3333 Holding and Corporation and Corporation Combined Subsidiaries and Subsidiary Combined Subsidiaries and Subsidiary ------------ ------------ -------------- ------------ ------------ -------------- CASH FLOWS - OPERATING ACTIVITIES Net (Loss) Earnings $ (36) $ 1,045 $ (1,081) $ 42 $ 826 $ (784) Adjustments: Depreciation and Amortization 2,752 2,719 33 75 54 21 Earnings from Joint Venture (23) (23) (15) -- -- -- (Increase) Decrease in Receivables (5,662) (5,662) -- (977) 7,424 (690) Decrease in Notes Receivable 194 194 -- 1,375 1,375 -- Increase in Inventories (11,612) (11,237) (375) (32,938) (31,138) (451) (Increase) Decrease in Other Assets (2,744) (2,915) 171 (908) (845) (63) Increase (Decrease) in Payables and Accruals 12,131 10,313 1,905 5,353 5,357 (7,797) ------------ ------------ ------------ ------------ ------------ ------------ (5,000) (5,566) 638 (27,978) (16,947) (9,764) ------------ ------------ ------------ ------------ ------------ ------------ CASH FLOWS - INVESTING ACTIVITIES (Increase) Decrease in Advances to Joint Ventures and Investment in Affiliate (947) (948) (71) 2,872 1,810 (205) Decrease (Increase) in Property and Equipment 318 317 1 (223) (128) (95) ------------ ------------ ------------ ------------ ------------ ------------ (629) (631) (70) 2,649 1,682 (300) ------------ ------------ ------------ ------------ ------------ ------------ CASH FLOWS - FINANCING ACTIVITIES Increase (Decrease) in Notes Payable 24,719 25,301 (582) 17,301 14,890 2,411 Decrease in Notes Receivable -- -- -- 7,700 -- 7,700 Issuance of Class "C" Partnership Units 4,830 4,830 -- 1,000 1,000 -- ------------ ------------ ------------ ------------ ------------ ------------ 29,549 30,131 (582) 26,001 15,890 10,111 ------------ ------------ ------------ ------------ ------------ ------------ EFFECT OF EXCHANGE RATE CHANGES ON CASH 13 13 -- -- -- -- ------------ ------------ ------------ ------------ ------------ ------------ NET INCREASE (DECREASE) IN CASH 23,933 23,947 (14) 672 625 47 CASH AT BEGINNING OF PERIOD 364 331 33 260 259 1 ------------ ------------ ------------ ------------ ------------ ------------ CASH AT END OF PERIOD $ 24,297 $ 24,278 $ 19 $ 932 $ 884 $ 48 ============ ============ ============ ============ ============ ============ SUPPLEMENTAL DISCLOSURES: Increase in Notes Payable Related to an Acquisition $ 253,812 $ 253,812 -- -- -- -- Issuance of Class C Units in Exchange for Assets $ 3,265 $ 3,265 -- $ 18,445 $ 18,445 --
See notes to condensed combining financial statements. -34- 38 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. AND SUBSIDIARIES CONDENSED COMBINING FINANCIAL STATEMENTS NOTES DECEMBER 31, 1999 (unaudited) (A) In March 1987, Centex Development Company, L.P. (the "Partnership"), a master limited partnership, was formed to enable holders of Centex Corporation ("Centex") stock to participate in long-term real estate development projects whose dynamics are inconsistent with Centex's traditional financial objectives. Certain of Centex's subsidiaries contributed to the Partnership certain properties at their historical cost basis in exchange for 1,000 limited partnership units ("Class A Units"). The Partnership is controlled by its general partner, 3333 Development Corporation ("Development"), which is in turn wholly-owned by 3333 Holding Corporation ("Holding"). Holding is a separate public company whose stock trades in tandem with Centex's stock. The common stock of Holding (the "Securities") was distributed in 1987 (with warrants to purchase approximately 80% of the Class B limited partnership units in the Partnership) as a dividend to the stockholders of Centex. The Securities, held by a nominee on behalf of the stockholders, will trade in tandem with the common stock of Centex until such time as they are detached. The securities may be detached at any time by Centex's Board of Directors but the warrants to purchase Class B Units automatically become detached in November 2007. The Board of Directors of Holding is elected by the stockholders of Centex. In October 1999, the Board of Directors expanded the size of the board to four directors. The majority of the Board members are independent outside directors, none of whom are directors of Centex. Accordingly, the general partner of the Partnership is controlled by the stockholders of Centex. The general partner and independent Board of Directors of Holding manage the Partnership's conduct of its activities including the sales, development, maintenance and zoning of properties. The general partner may sell or acquire properties, including the contributed property, and enter into other business transactions without the consent of the limited partners. In addition, the limited partners cannot remove the general partner. See Note (C) to the condensed consolidated financial statements of Centex and subsidiaries included elsewhere in this Form 10-Q for supplementary condensed combined financial statements for Centex and Subsidiaries, Holding and Subsidiary, and the Partnership and Subsidiaries. (B) Holding has a service agreement with Centex Service Company, a wholly-owned subsidiary of Centex, whereby Centex Service Company provides certain tax, accounting and other similar services for Holding. This agreement was amended in fiscal 1999 to include development services and the monthly fee was increased from $2,500 per month to $30,000 per month. The Partnership sells lots to Centex Homes pursuant to certain purchase and sale agreements. Revenues from these sales totaled $669,000 and $5.0 million for the three and nine months ended -35- 39 December 31, 1999, and $55,000 and $2.9 million for the three and nine months ended December 31, 1998, respectively. Gains associated with these sales totaled $132,000 and $305,000 for the three and nine months ended December 31, 1999 and $56,000 and $122,000 for the three and nine months ended December 31, 1998, respectively. (C) Comprehensive loss is summarized for the three and nine months ended December 31, 1999 below (dollars in thousands):
-------------------------- ------------------------- For the Three Months Ended For the Nine Months Ended December 31, 1999 December 31, 1999 -------------------------- ------------------------- Net Loss $ (112) $ (36) Other Comprehensive Loss: Foreign Currency Translation Adjustments (16) (48) -------------------- -------------------- Comprehensive Loss $ (128) $ (84) ==================== ====================
(D) Changes in stockholders' equity and partners' capital are summarized below (dollars in thousands):
For the Nine Months Ended December 31, 1999 ------------------------------------------------------------------------------------ Centex Development Company, L.P. 3333 Holding Corporation and Subsidiaries and Subsidiary ---------------------------------- ---------------------------------- Class B General Limited Capital In Retained Unit Partner's Partner's Stock Excess of Earnings Combined Warrants Capital Capital Warrants Par Value (Deficit) ---------- ---------- ---------- ---------- ---------- ---------- ---------- Balance at March 31, 1999 $ 60,730 $ 500 $ 767 $ 61,062 $ 1 $ 800 $ (1,633) Partnership Units Issued in Exchange for Assets 8,095 -- -- 8,095 -- -- -- Net (Loss) Earnings (36) -- -- 1,045 -- -- (1,081) Accumulated Other Comprehensive Loss: Foreign Currency Translation Adjustments (48) -- -- (48) -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Balance at December 31, 1999 $ 68,741 $ 500 $ 767 $ 70,154 $ 1 $ 800 $ (2,714) ========== ========== ========== ========== ========== ========== ==========
During fiscal year 1998, the partnership agreement governing the Partnership was amended to allow for the issuance of new Class C Preferred Partnership Units ("Class C Units"), to be issued in exchange for assets. During the nine months ended December 31, 1999, 8,095 Class C Units were issued to Centex Homes, the Partnership's sole limited partner, in exchange for assets having a fair market value of $8.1 million. The partnership agreement provides that Class A and Class C limited partners are entitled to a cumulative preferred return of 9% per annum on the average outstanding balance of their Unrecovered Capital. Unrecovered Capital represents initial capital contributions reduced by repayments thereof, and is the basis for preference accruals. Unrecovered Capital for Class A and Class C limited partners was -36- 40 approximately $68 million as of December 31, 1999 and the unpaid preferred return as of that date was $13.3 million. No preferred return payments were made during the three months or nine months ended December 31, 1999. (E) On April 15, 1999 Centex Development Company UK Limited ("CDC-UK"), a company incorporated in England and Wales and a wholly-owned subsidiary of the Partnership, closed its acquisition of all of the voting shares of Fairclough Homes Group Limited, a British home builder ("Fairclough"). The purchase price at closing (approximately $218 million) was paid by the delivery of two-year non-interest bearing promissory notes. Additionally, the seller of the voting shares retained non-voting preference shares in Fairclough that will entitle it to receive substantially all of the net after-tax earnings of Fairclough until March 31, 2001. During that time period CDC-UK may, however, participate in Fairclough's earnings in excess of certain specified levels. However, because the non-voting preference shares retained by the seller have the characteristics of debt, the preference obligations are being reported as interest expense in the financial statements. A major portion of the promissory notes is secured by a letter of credit obtained by the Partnership from a United Kingdom bank. During the period between April 15, 1999 and March 31, 2001, Fairclough will be operated by CDC-UK subject to certain guidelines that were negotiated with the seller. After March 31, 2001, CDC-UK will redeem, for a nominal value, the preference shares. The purchase of Fairclough has been accounted for using the purchase method of accounting, pursuant to which the total cost of the acquisition has been allocated to the tangible and intangible assets acquired and liabilities assumed based upon their estimated fair values. The allocation of the purchase price is as follows (dollars in thousands): Inventories, Property and Equipment and Other $ 267,720 Goodwill 29,260 Notes Issued and Liabilities Assumed (296,980) ------------- Cash Paid $ -- ============= The following unaudited pro forma results of operations for the three and nine months ended December 31, 1998 give effect to the April 15, 1999 acquisition of Fairclough as if such transaction had occurred on April 1, 1998. The financial information for Fairclough included in the unaudited pro forma results of operations is derived from Fairclough's operating results for the three and nine months ended December 31, 1998, in accordance with U.S. generally accepted accounting principles and translated to U.S. dollars. This information is based on the historical financial statements of the Companies and the historical financial statements of Fairclough. The pro forma adjustments are directly attributable to the transaction referenced above, and are expected to have a continuing impact on the business, results of operations, and financial position. -37- 41
Pro Forma Results of Operations -------------------------------------------------- For the Three Months Ended December 31, 1998 -------------------------------------------------- (Dollars in thousands, except per unit/share data) Centex Development Company, L.P. 3333 Holding and Corporation Combined Subsidiaries and Subsidiary ---------- ------------ -------------- Revenues $ 122,340 $ 122,311 $ 194 ========== ========== ========== Net (Loss) Earnings $ (23) $ 355 $ (378) ========== ========== ========== Net Earnings Allocable to Limited Partner $ 355 ========== Earnings (Loss) Per Unit/Share $ 6.35 $ (378) ========== ==========
Pro Forma Results of Operations -------------------------------------------------- For the Nine Months Ended December 31, 1998 -------------------------------------------------- (Dollars in thousands, except per unit/share data) Centex Development Company, L.P. 3333 Holding and Corporation Combined Subsidiaries and Subsidiary ---------- ------------ -------------- Revenues $ 290,838 $ 290,296 $ 951 ========== ========== ========== Net (Loss) Earnings $ (19) $ 765 $ (784) ========== ========== ========== Net Earnings Allocable to Limited Partner $ 765 ========== Earnings (Loss) Per Unit/Share $ 14.49 $ (784) ========== ==========
The unaudited pro forma results of operations are not necessarily indicative of what actual results of operations of the Companies would have been for the period, nor do they represent the Companies' results of operations for future periods. The unaudited pro forma results of operations include the following adjustments: o Amortization of goodwill and other intangibles based upon the Partnership's allocation of the purchase price. Goodwill is being amortized over a 20-year period; o Elimination of the historical interest expense of Fairclough related to debt not assumed by the Partnership; o Additional interest expense representing the preference payments to the seller; o Amortization of deferred debt issuance costs which are being amortized over the term of the debt; o Income tax adjustments related to the above pro forma items. -38- 42 (F) The Partnership operates in five principal business segments: International Home Building, Domestic Home Building, Commercial Development, Multi-Family Development and Land Sales. All of the segments, with the exception of International Home Building, operate in the United States. International Home Building currently operates in the United Kingdom. The following tables set forth financial information relating to the five business segments for the three and nine months ended December 31, 1999 and December 31, 1998 (dollars in thousands):
------------------------------------------------------------------------------------------- Three Months Ended December 31, 1999 ------------------------------------------------------------------------------------------- Home Building ----------------------------- Commercial Multi-Family International Domestic Development Development Land Sales Total ------------- ----------- ----------- ----------- ----------- ----------- Revenues $ 71,298 $ 3,791 $ 3,593 $ -- $ 768 $ 79,450 Cost of Sales (62,294) (3,355) (1,683) -- (539) (67,871) General & Administrative Expenses (6,433) (369) (974) (475) (125) (8,376) Interest Expense (2,542) -- (740) (4) -- (3,286) ----------- ----------- ----------- ----------- ----------- ----------- Operating Earnings (Loss) $ 29 $ 67 $ 196 $ (479) $ 104 $ (83) =========== =========== =========== =========== =========== =========== Identifiable Assets $ 327,154 $ 7,302 $ 81,175 $ 26,457 $ 11,226 $ 453,314
------------------------------------------------------------------------------------------- Three Months Ended December 31, 1998 ------------------------------------------------------------------------------------------- Home Building ----------------------------- Commercial Multi-Family International Domestic Development Development Land Sales Total ------------- ----------- ----------- ----------- ----------- ----------- Revenues * $ 5,403 $ 58 $ 41 $ 192 $ 5,694 Cost of Sales * (4,596) -- -- (15) (4,611) General & Administrative Expenses * (403) (95) (366) (120) (984) Interest Expense * -- (32) (54) -- (86) ----------- ----------- ----------- ----------- ----------- Operating Earnings (Loss) $ 404 $ (69) $ (379) $ 57 $ 13 =========== =========== =========== =========== ===========
-39- 43
------------------------------------------------------------------------------------------- Nine Months Ended December 31, 1999 ------------------------------------------------------------------------------------------- Home Building ----------------------------- Commercial Multi-Family International Domestic Development Development Land Sales Total ------------- ----------- ----------- ----------- ----------- ----------- Revenues $ 208,389 $ 9,781 $ 7,177 $ 17,154 $ 6,748 $ 249,249 Cost of Sales (182,110) (8,500) (3,065) (17,049) (5,943) (216,667) General & Administrative Expenses (17,601) (1,088) (1,881) (1,505) (375) (22,450) Interest Expense (8,077) -- (1,471) (19) -- (9,567) ----------- ----------- ----------- ----------- ----------- ----------- Operating Earnings (Loss) $ 601 $ 193 $ 760 $ (1,419) $ 430 $ 565 =========== =========== =========== =========== =========== =========== Identifiable Assets $ 327,154 $ 7,302 $ 81,175 $ 26,457 $ 11,226 $ 453,314
------------------------------------------------------------------------------------------- Nine Months Ended December 31, 1998 ------------------------------------------------------------------------------------------- Home Building ----------------------------- Commercial Multi-Family International Domestic Development Development Land Sales Total ------------- ----------- ----------- ----------- ----------- ----------- Revenues * $ 13,976 $ 1,744 $ 324 $ 3,730 $ 19,774 Cost of Sales * (11,885) (1,577) -- (3,082) (16,544) General & Administrative Expenses * (1,205) (292) (1,111) (364) (2,972) Interest Expense * -- (60) (94) (62) (216) ----------- ----------- ----------- ----------- ----------- Operating Earnings (Loss) $ 886 $ (185) $ (881) $ 222 $ 42 =========== =========== =========== =========== ===========
------------------------------------------------------------------------------------------- Fiscal Year Ended March 31, 1999 ------------------------------------------------------------------------------------------- Home Building ----------------------------- Commercial Multi-Family International Domestic Development Development Land Sales Total ------------- ----------- ----------- ----------- ----------- ----------- * Business segment did not exist in prior fiscal year. (G) Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities," was issued in June 1998. This statement addressed the accounting for derivative instruments, including derivative instruments embedded in other contracts (collectively referred to as derivatives), and hedging activities as well as the disclosure of these activities. SFAS No. 133 requires that an entity recognize all derivatives as either assets or liabilities in the consolidated balance sheet and measure those instruments at fair value. In June 1999, SFAS No. 137 was issued which delays the implementation of this statement for the Companies until April 2001. (H) Certain prior period balances have been reclassified to be consistent with the December 31, 1999 presentation. -40- 44 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS On a combined basis, the Companies' revenues for the three and nine months ended December 31, 1999 totaled $79.4 million and $249.2 million, respectively. Revenues of $5.7 million and $19.8 million were reported for the three and nine months ended December 31, 1998, respectively. The significant increase in revenues for the three and nine months ended December 31, 1999 resulted primarily from the Partnership's acquisition of Fairclough. The Companies had combined net loss for the three and nine months ended December 31, 1999 of $112,000 and $36,000, respectively, compared to combined net earnings of $13,000 and $42,000 for the three and nine months ended December 31, 1998, respectively. HOME BUILDING INTERNATIONAL - The following summarizes International Home Building's results for the three and nine months ended December 31, 1999 (dollars in thousands):
-------------------------- ------------------------- For the Three Months Ended For the Nine Months Ended December 31, 1999 December 31, 1999 -------------------------- ------------------------- Revenues $ 71,298 $ 208,389 Cost of Sales (62,294) (182,110) General & Administrative Expenses (6,433) (17,601) Interest Expense, Paid to Seller (2,542) (8,077) -------------- -------------- Operating Earnings $ 29 $ 601 ============== ============== Units Closed 377 1,147 ============== ==============
-41- 45 The Partnership acquired this segment in the first quarter of fiscal 2000. The seller received $221.7 million in non-interest bearing promissory notes due March 31, 2001 and retained preferred non-voting shares in Fairclough. The preferred shares require a preferred distribution and have a nominal residual interest value that is mandatorily redeemable on March 31, 2001. During the three and nine months ended December 31, 1999, Fairclough generated earnings totaling $2.6 million and $8.1 million, respectively, which are subject to distribution to the seller under the preferred share arrangement. The Companies have accounted for the non-interest bearing debt and nominal residual value preferred shares as if they were a single debt instrument. Accordingly, distributions attributable to the preferred shares are accrued as interest expense in the accompanying financial statements. DOMESTIC - The following summarizes Domestic Home Building's results for the three and nine months ended December 31, 1999 compared to the same periods last year (dollars in thousands):
------------------------------ For the Three Months Ended December 31, ------------------------------ 1999 1998 ------------ ------------ Sales Revenues $ 3,791 $ 5,403 Cost of Sales (3,355) (4,596) General & Administrative Expenses (369) (403) ------------ ------------ Operating Earnings $ 67 $ 404 ============ ============ Units Closed 11 19 ============ ============
------------------------------ For the Nine Months Ended December 31, ------------------------------ 1999 1998 ------------ ------------ Sales Revenues $ 9,781 $ 13,976 Cost of Sales (8,500) (11,885) General & Administrative Expenses (1,088) (1,205) ------------ ------------ Operating Earnings $ 193 $ 886 ============ ============ Units Closed 30 48 ============ ============
During the three and nine months ended December 31, 1999 and 1998, sales revenues included revenues from the sale of single-family homes in New Jersey which completed the build-out of certain communities. In July 1999, the Partnership obtained final zoning approval for the development of an additional 251 single-family homes. -42- 46 COMMERCIAL DEVELOPMENT The following summarizes Commercial Development's results for the three and nine months ended December 31, 1999 compared to the same periods last year (dollars and square feet in thousands):
------------------------------ For the Three Months Ended December 31, ------------------------------ 1999 1998 ------------ ------------ Sales Revenues $ 1,901 $ (116) Rental Income 1,692 174 Cost of Sales (1,683) -- General & Administrative Expenses (974) (95) Interest Expense (740) (32) ------------ ------------ Operating Earnings (Loss) $ 196 $ (69) ============ ============ Operating Square Feet 956 38 ============ ============
------------------------------ For the Nine Months Ended December 31, ------------------------------ 1999 1998 ------------ ------------ Sales Revenues $ 3,765 $ 1,570 Rental Income 3,412 174 Cost of Sales (3,065) (1,577) General & Administrative Expenses (1,881) (292) Interest Expense (1,471) (60) ------------ ------------ Operating Earnings (Loss) $ 760 $ (185) ============ ============
Sales revenues for the three months ended December 31, 1999 included the sale of certain residential lots in Texas and certain commercial land in California. Sales revenues for the same period in the prior year included the sale of industrial land to a joint venture in which the Partnership owns a 10% interest. -43- 47 MULTI-FAMILY DEVELOPMENT The following summarizes Multi-Family Development's ("Multi-Family") results for the three and nine months ended December 31, 1999 compared to the same periods last year (dollars in thousands):
------------------------------ For the Three Months Ended December 31, ------------------------------ 1999 1998 ------------ ------------ Revenues $ -- $ 41 Cost of Sales -- -- General & Administrative Expenses (475) (366) Interest Expense (4) (54) ------------ ------------ Operating Loss $ (479) $ (379) ============ ============
------------------------------ For the Nine Months Ended December 31, ------------------------------ 1999 1998 ------------ ------------ Revenues $ 17,154 $ 324 Cost of Sales (17,049) -- General & Administrative Expenses (1,505) (1,111) Interest Expense (19) (94) ------------ ------------ Operating Loss $ (1,419) $ (881) ============ ============
Revenues during the three and nine months ended December 31, 1999 resulted from the sale of a Texas apartment complex that had been constructed subject to a pre-sale agreement. Revenues during the three and nine months ended December 31, 1998 consisted primarily of development fee income. LAND SALES The following summarizes Land Sales' operating results for the three and nine months ended December 31, 1999 compared to the same periods last year (dollars in thousands):
------------------------------ For the Three Months Ended December 31, ------------------------------ 1999 1998 ---------- ---------- Sales Revenues $ 768 $ 192 Cost of Sales (539) (15) General & Administrative Expenses (125) (120) Interest Expense -- -- ---------- ---------- Operating Earnings $ 104 $ 57 ========== ==========
-44- 48
------------------------------ For the Nine Months Ended December 31, ------------------------------ 1999 1998 ------------ ------------ Sales Revenues $ 6,748 $ 3,730 Cost of Sales (5,943) (3,082) General & Administrative Expenses (375) (364) Interest Expense -- (62) ------------ ------------ Operating Earnings $ 430 $ 222 ============ ============
Revenues for the three months ended December 31, 1999 included the sale of certain residential lots in Florida, Texas and New Jersey to Centex's homebuilding operations. Revenues for the nine month period ended December 31, 1999 consisted of $5.0 million in residential lot sales to Centex Homes and the sale of certain commercial land in Texas. Real Estate sales during the nine months ended December 31, 1998 included $2.9 million of lot sales to Centex Homes and the sale of certain commercial property in Texas. LIQUIDITY AND CAPITAL RESOURCES During the nine months ended December 31, 1999, 8,095 Class C Preferred Partnership Units were issued in exchange for assets with a fair market value of $8.1 million. Also during the nine months ended December 31, 1999, the Companies closed on non-recourse commercial development project loans totaling $49.6 million. The project loans are collateralized by commercial properties and have ten-year maturities with fixed interest rates ranging from 6.9% to 7.8%. The Partnership believes that the revenues, earnings, and liquidity from its current operations and from construction and permanent financings will be sufficient to provide the necessary funding for the current and future needs. YEAR 2000 COMPLIANCE Beginning in fiscal year 1997, the Companies engaged in an ongoing process of evaluating and implementing changes to their systems in order to ensure Year 2000 compliance. As a result of this process, the Companies and their subsidiaries tested all critical systems during calendar year 1999 and repaired, upgraded and/or replaced those found to be not Year 2000 compliant. The cost of replacing, upgrading or otherwise changing non-compliant systems was not material to the Companies as a whole, or to the Companies' individual subsidiaries. The Companies used internally generated cash to fund the correction of all non-compliant systems. The Companies' Year 2000 compliance preparation included the completion of a contingency plan, the hiring of a third party consultant (through Holding's services agreement with Centex Service Company) and the surveying of material vendors and suppliers. As a result of the attention that the Companies paid to addressing their Year 2000 readiness, the Companies have not, to date, experienced any adverse impact on the Companies' operations or financial condition or the operations or financial condition of any of their individual subsidiaries as a result of any Year 2000 compliance issues. In addition, the Companies are not aware that any of their vendors, subcontractors -45- 49 or other third parties experienced any significant problems as a result of Year 2000 compliance issues. Furthermore, if any of those third parties were affected by Year 2000 compliance issues, such compliance issues have not caused, to date, any adverse effects on the Companies' operations or financial condition, or the operations or financial condition of any of their individual subsidiaries. Although the Companies have not been affected to date by the changes from December 31, 1999 to January 1, 2000, Year 2000 issues could arise subsequent to the filing of this report. As an example, the Companies' systems could fail to recognize 2000 as a leap year. The Companies believe that such circumstances are highly unlikely to occur and that, even if they were to occur, it is highly unlikely that the Companies' operations or financial condition would be materially adversely affected. Nevertheless, the Companies intend to continue to monitor Year 2000 related issues and immediately address any effects that may arise as a result. Year 2000 Forward-looking Statements Certain statements in this section, other than historical information, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties relative to the Companies' ability to assess and remediate any Year 2000 compliance issues, the ability of third parties to correct material non-compliant systems, and the Companies' assessment of the Year 2000 issue's impact on their financial results and operations. - -------------------------------------------------------------------------------- FORWARD-LOOKING STATEMENTS The Management's Discussion and Analysis of Financial Condition and Results of Operations and other sections of this report on Form 10-Q contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the context of the statement and generally arise when the Companies are discussing their beliefs, estimates or expectations. These statements are not guarantees of future performance and involve a number of risks and uncertainties. Actual results and outcomes may differ materially from what is expressed or forecast in such forward-looking statements. The principal risks and uncertainties that may affect the Companies' actual performance and results of operations include the following: general economic conditions and interest rates; the cyclical and seasonal nature of the Companies' businesses; changes in property taxes; changes in federal income tax laws; governmental regulation; changes in governmental and public policy; changes in economic conditions specific to any one or more of the Companies' markets and businesses; competition; availability of raw materials; and unexpected operations difficulties. Other risks and uncertainties may also affect the outcome of the Companies' actual performance and results of operations. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable. -46- 50 3333 HOLDING CORPORATION AND SUBSIDIARY CENTEX DEVELOPMENT COMPANY, L.P. AND SUBSIDIARIES PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (1) Exhibits Exhibit 27.2 Financial Data Schedule Exhibit 27.3 Financial Data Schedule (2) Reports on Form 8-K The Registrant filed no reports on Form 8-K during the quarter ended December 31, 1999. All other items required under Part II are omitted because they are not applicable. -47- 51 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. 3333 HOLDING CORPORATION ------------------------------------------------- Registrant February 11, 2000 /s/ Richard C. Decker ------------------------------------------------- Richard C. Decker Director, Chairman, President and Chief Executive Officer (principal executive officer) February 11, 2000 /s/ Kimberly A. Pinson ------------------------------------------------- Kimberly A. Pinson Vice President, Treasurer, Controller and Assistant Secretary (principal financial officer and chief accounting officer) -48- 52 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CENTEX DEVELOPMENT COMPANY, L.P. ------------------------------------------------- Registrant By: 3333 Development Corporation, General Partner February 11, 2000 /s/ Richard C. Decker ------------------------------------------------- Richard C. Decker Director, Chairman, President and Chief Executive Officer (principal executive officer) February 11, 2000 /s/ Kimberly A. Pinson ------------------------------------------------- Kimberly A. Pinson Vice President, Treasurer, Controller and Assistant Secretary (principal financial officer and chief accounting officer) -49- 53 EXHIBIT INDEX
Exhibit Number Description ------- ----------- Exhibit 10.10 Centex Corporation Amended and Restated 1987 Stock Option Plan Exhibit 27.1 Financial Data Schedule - Centex Corporation Exhibit 27.2 Financial Data Schedule - 3333 Holding Corporation Exhibit 27.3 Financial Data Schedule - Centex Development Company, L.P.
EX-10.10 2 AMENDED/RESTATED 1987 STOCK OPTION PLAN 1 EXHIBIT 10.10 CENTEX CORPORATION AMENDED AND RESTATED 1987 STOCK OPTION PLAN 1. PURPOSE The purpose of this Plan is to assist Centex Corporation, a Nevada corporation, in attracting and retaining as officers and key employees of the Company and its Affiliates, and as non-employee directors of the Company, individuals of training, experience and ability and to furnish additional incentive to such individuals by encouraging them to become owners of Shares of the Company's capital stock, by granting to such individuals Incentive Options, Nonqualified Options, Restricted Stock, or any combination of the foregoing. 2. DEFINITIONS Unless the context otherwise requires, the following words as used herein shall have the following meanings: "Act" -- The Securities Exchange Act of 1934, as amended. "Affiliates" -- Any corporation or other entity which is a direct or indirect parent or subsidiary (including, without limitation, partnerships and limited liability companies) of the Company. "Agreement" -- The written agreement between the Company and the Optionee evidencing the Option granted by the Company and the understanding of the parties with respect thereto. "Board" -- The Board of Directors of the Company as the same may be constituted from time to time. "Code" -- The Internal Revenue Code of 1986, as amended from time to time. "Committee" -- The Committee provided for in Section 3 of this Plan, as such Committee may be constituted from time to time. "Company"-- Centex Corporation, a Nevada corporation. "Fair Market Value" -- If a Share is traded on one or more established market or exchanges, the mean of the opening and closing price of the Share in the primary market or exchange on which the Share is traded, and if the Share is not so traded or the Share does not trade on the relevant date, the value determined in good faith by the Board. For purposes of valuing Shares to be made subject to Incentive Options, the Fair Market Value of stock shall be determined without regard to any restriction other than one which, by its terms, will never lapse. "Incentive Option" -- Stock Options that are intended to satisfy the requirements of Section 422 of the Code and Section 16 of this Plan. "Non-employee Director" -- An individual who satisfies the requirements of Rule 16b-3 promulgated under the Act. 1 2 "Nonqualified Options" -- Stock Options which do not satisfy the requirements of Section 422 of the Code. "Option" -- An option to purchase one or more Shares of the Company granted under and pursuant to the Plan. Such Option may be either an Incentive Option or a Nonqualified Option. "Optionee" -- An individual who has been granted an Option under this Plan and who has executed a written option Agreement with the Company. "Plan"-- This Centex Corporation 1987 Stock Option Plan. "Permitted Transferees" -- (i) members of the Optionee's immediate family, (ii) one or more trusts for the benefit of such members of the Optionee's immediate family, (iii) partnerships in which such immediate family members are the only partners and (iv) limited liability companies in which such immediate family members are the only members. "Restricted Stock" -- Shares issued pursuant to Section 19 of the Plan. "Senior Management" -- Members of the senior management group of the Company and its Affiliates, such senior managers to be identified by the Chairman and Vice Chairman of the Board of the Company. "Share" -- A share of the Company's present twenty-five cents ($0.25) par value common stock and any share or shares of capital stock or other securities of the Company hereafter issued or issuable upon, in respect of or in substitution or in exchange for each present share. Such Shares may be unissued or reacquired Shares, as the Board, in its sole and absolute discretion, shall from time to time determine. 3. ADMINISTRATION The Plan shall be administered by a committee (the "Committee") comprised of two or more Non-employee Directors appointed by the Board from time to time. The Committee shall (a) select the eligible employees or directors who are to receive Options or awards of Restricted Stock under the Plan, (b) determine the type, number, vesting requirements and other features and conditions of Options or awards of Restricted Stock, (c) interpret the Plan, and (d) make all other determinations necessary or advisable for the administration of the Plan. The Committee may adopt such rules or guidelines as it deems appropriate to implement the Plan. The Committee's determinations under the Plan shall be final and binding on all persons. 4. SHARES SUBJECT TO PLAN (a) A maximum of 7,065,139 Shares shall be subject to grants of Options and awards of Restricted Stock under the Plan; provided that such maximum shall be increased or decreased as provided below in Section 12. (b) At any time and from time to time after the Plan takes effect, the Committee, pursuant to the provisions herein set forth, may grant Options and award Restricted Stock until the maximum number of Shares shall be exhausted or the Plan shall be sooner terminated; provided, however, that no Option shall be granted and no Restricted Stock shall be awarded after May 19, 2001. 2 3 (c) Should any Option expire or be cancelled without being fully exercised, or should any Restricted Stock previously awarded be reacquired by the Company, the number of Shares with respect to which such Option shall not have been exercised prior to its expiration or cancellation and the number of Shares of such Restricted Stock so reacquired may again be optioned or awarded pursuant to the provisions hereof. (d) Any Shares withheld pursuant to subsection 18(c) shall not be available after such withholding for being optioned or awarded pursuant to the provisions hereof. 5. ELIGIBILITY Eligibility for the receipt of the grant of Options under the Plan shall be confined to (a) a limited number of persons who are employed by the Company, or one or more of its Affiliates and who are officers of or who, in the opinion of the Committee, hold other key positions in or for the Company or one or more of its Affiliates and (b) directors of the Company, including directors who are not employees of the Company or its Affiliates; provided that only employees of the Company or its Affiliates shall be eligible for the grant of Incentive Options. In addition, an individual who becomes a director of the Company, but who is not at the time he becomes a director also an employee of the Company, shall not be eligible for a grant of Options or an award of Restricted Stock, and shall not be eligible for the grant of an option, stock allocation, or stock appreciation right under any other plan of the Company or its affiliates (within the meaning of Rule 12b-2 promulgated under the Act) until the Board expressly declares such person eligible by resolution. In no event may an Option be granted to an individual who is not an employee of the Company or an Affiliate or a director of the Company. 6. GRANTING OF OPTIONS (a) From time to time while the Plan is in effect, the Committee may in its absolute discretion, select from among the persons eligible to receive a grant of Options under the Plan (including persons who have already received such grants of Options) such one or more of them as in the opinion of the Committee should be granted Options. The Committee shall thereupon, likewise in its absolute discretion, determine the number of Shares to be allotted for option to each person so selected; provided, however, that the total number of Shares subject to Options granted to any one person, including directors of the Company, when aggregated with the number of Shares of Restricted Stock awarded to such person, shall not exceed 706,513 Shares. (b) Each person so selected shall be offered an Option to purchase the number of Shares so allotted to him, upon such terms and conditions, consistent with the provisions of the Plan, as the Committee may specify. Each such person shall have a reasonable period of time, to be fixed by the Committee, within which to accept or reject the proffered Option. Failure to accept within the period so fixed may be treated as a rejection. (c) Each person who accepts an Option offered to him shall enter into an Agreement with the Company, in such form as the Committee may prescribe, setting forth the terms and conditions of the Option, whereupon such person shall become a participant in the Plan. In the event an individual is granted both one or more Incentive Options and one or more Nonqualified Options, such grants shall be evidenced by separate Agreements, one each for the Incentive Option grants and one each for the Nonqualified Options grants. The date which the Committee specifies to be the grant date of an Option to an individual shall constitute the date on which the Option covered by such Agreement is granted. In no event, however, shall an Optionee gain any rights in addition to those specified by the Committee in its grant, regardless of the time that may pass between the grant of the Option and the actual signing of the Agreement by the Company and the Optionee. 3 4 7. OPTION PRICE The option price for each Share covered by each Incentive Option shall not be less than the greater of (a) the par value of each such Share or (b) the Fair Market Value of the Share at the time such Option is granted, except as provided hereinafter. The option price for each Share covered by each Nonqualified Option shall not be less than the greater of (a) the par value of each such Share or (b) 85% of the Fair Market Value of the Share at the time the Option is granted; provided, however, that the number of Shares covered by Nonqualified Options granted under this Plan that have an option price less than the Fair Market Value of a Share at the time the respective Option is granted shall not exceed 10% of the total number of Shares authorized to be issued under this Plan. If the Company or an Affiliate agrees to substitute a new Option under the Plan for an old Option, or to assume an old Option, by reason of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization, or liquidation (any of such events being referred to herein as a "Corporate Transaction"), the option price of the Shares covered by each such new Option or assumed Option may be other than the Fair Market Value of the stock at the time the Option is granted as determined by reference to a formula, established at the time of the Corporate Transaction, which will give effect to such substitution or assumption; provided, however, in no event shall -- (a) the excess of the aggregate Fair Market Value of the Share subject to the Option immediately after the substitution or assumption over the aggregate option price of such Shares be more than the excess of the aggregate Fair Market Value of all Shares subject to the Option immediately prior to the substitution or assumption over the aggregate option price of such Shares (b) in the case of an Incentive Option, the new Option or the assumption of the old Option give the Optionee additional benefits which he would not have under the old Option; or (c) the ratio of the option price to the Fair Market Value of the stock subject to the Option immediately after the substitution or assumption be more favorable to the Optionee than the ratio of the option price to the Fair Market Value of the stock subject to the old Option immediately prior such substitution or assumption, on a Share by Share basis. Notwithstanding the above, the provisions of this Section 7 with respect to the Option price in the event of a Corporate Transaction shall, in case of an Incentive Option, be subject to the requirements of Section 424(a) of the Code and the Treasury regulations and revenue rulings promulgated thereunder. In the case of an Incentive Option, in the event of a conflict between the terms of this Section 7 and the above cited statute, regulations, and rulings, or in the event of an omission in this Section 7 of a provision required by said laws, the latter shall control in all respects and are hereby incorporated herein by reference as if set out at length. 8. OPTION PERIOD (a) Each Option shall run for such period of time as the Committee may specify, but in no event for longer than ten (10) years from the date when the Option is granted, including the period of time provided in subsections (i) and (ii) of this subsection (a); and subject to such limits, and the further condition that, unless designated otherwise by the Committee, no Incentive Option shall become exercisable prior to one year from the date of its grant, (i) Except as provided below in this subsection (i), all rights to exercise an Option shall terminate within three months after the date the Optionee ceases to be an employee of at least one of the employers in the group of employers consisting of the Company and its Affiliates, or after the date the Optionee ceases to be a director of the Company, whichever may occur later, for any reason other than 4 5 death, except that, (x) in the case of a Nonqualified Option which is held by an Optionee who is, on the date of cessation referred to in this clause, an officer or director of the Company (within the meanings thereof under Section 16b) of the Act), all rights to exercise such Option shall terminate within seven months after the date the Optionee ceases to be an employee of at least one of the employers in the group of employers consisting of the Company and its Affiliates, or, if later, after the date the Optionee ceases to be a director of the Company, for any reason other than death; and, except that, (y) the Committee, in its discretion, may provide in new Option grants or amend outstanding Options to provide an extended period of time during which an Optionee can exercise a Nonqualified Option to the maximum permissible period for which such Optionee's Option would have been exercisable in the absence of the Optionee's ceasing to be an employee of the Company and its Affiliates or ceasing to be a director of the Company; and, except that (z) in case the employment of the Optionee is terminated for cause, the Option shall thereafter be null and void for all purposes. (ii) If the Optionee ceases to be employed by at least one of the employers in the group of employers consisting of the Company and its Affiliates, or ceases to be a director of the Company, whichever may occur later, by reason of his death, all rights to exercise such Option shall terminate fifteen (15) months thereafter. (iii) If an Option is granted with a term shorter than ten (10) years, the Committee may extend the term of the Option, but for not more than ten (10) years from the date when the Option was originally granted. 9. OPTIONS NOT TRANSFERABLE No Option or interest therein shall be transferable by the person to whom it is granted otherwise than by will or by the applicable laws of descent and distribution. Notwithstanding the foregoing, the Committee may, in its sole discretion, provide in the Agreement relating to the grant of an Option that the Optionee may transfer such Option, without consideration, to members of the Optionee's immediate family or to one or more trusts for the benefit of such immediate family members or partnerships in which such immediate family members are the only partners. For purposes of this Section 9, "immediate family" shall mean the Optionee's spouse, parents, children (including adopted children) and grandchildren. Further, notwithstanding the foregoing, the Committee may, in its sole discretion, provide in each of those Agreements relating to the grant of an Option whose term will expire in 2000, 2001, 2003, 2004, 2005, 2006 or 2007 that a Director or Senior Management Optionee may transfer such Option to one or more Permitted Transferees with or without consideration to the Optionee provided that the following conditions are satisfied with respect to such transfer: (i) such transfer is made pursuant to the program that the Company has created to facilitate the reduction of its stock option overhang and is accomplished on or before March 5, 2000; (ii) the Permitted Transferee exercises the Option not more than 30 days following such transfer; (iii) all fees and expenses charged by accounting firms, law firms and all other third party consultants in connection with such transfer are paid by the Optionee, and such fees and expenses are not otherwise paid or reimbursed by the Company or any of its Affiliates; (iv) the Permitted Transferee agrees to be bound by all of the terms of the Agreement, except that once transferred by the Optionee to such Permitted Transferee, the Option may not be subsequently transferred except back to the Optionee; (v) if the consideration tendered by the Permitted Transferee for the Option is a term obligation, the principal amount under such term obligation will be due in full no later than the fifth anniversary of the Option's expiration date; and (vi) the Permitted Transferee agrees to inform the Company's Stock Plan Administrator upon (a) the sale or other transfer of the shares underlying the Option and (b) any other event or action taken by the Permitted Transferee with respect to the Option, the shares underlying the Option or the consideration for the Option, where such event or action will give rise to a recognizable event for the Company. 5 6 10. EXERCISE OF OPTIONS (a) During the lifetime of an Optionee only he or his guardian or legal representative or transferee may exercise an Option granted to him. In the event of his death, any then exercisable portion of his Option may, within fifteen (15) months thereafter, or earlier date of termination of the Option, be exercised in whole or in part by any person empowered to do so under the deceased Optionee's will or under the applicable laws of descent and distribution. (b) At any time, and from time to time, during the period when any Option, or a portion thereof, is exercisable, such Option, or portion thereof, may be exercised in whole or in part; provided, however, that the Committee may require any Option which is partially exercised to be so exercised with respect to at least a stated minimum number of Shares. (c) Each exercise of an Option or portion or part thereof shall be evidenced by a notice in writing to the Company accompanied by payment in full of the option price of the Shares then being purchased. Payment in full shall mean payment of the full amount due, either in cash, by certified check or cashier's check or, with the consent of the Committee, with Shares owned by the Optionee, including an actual or deemed multiple series of exchanges of such Shares. (d) No Shares shall be issued until full payment therefor has been made, and an Optionee shall have none of the rights of a stockholder until Shares are issued to him. (e) Nothing herein or in any Agreement executed or Option granted hereunder shall require the Company to issue any Shares upon exercise of an Option if such issuance would, in the opinion of counsel for the Company, constitute a violation of the Securities Act of 1933, as amended, or any similar or superseding statute or statutes, or any other applicable statute or regulation, as then in effect. Upon the exercise of an Option or portion or part thereof, the Optionee shall give to the Company satisfactory evidence that he is acquiring such Shares for the purpose of investment only and not with a view to their distribution; provided, however, if or to the extent that the Shares subject to the Option shall be included in a registration statement filed by the Company, or one of its Affiliates, such investment representation shall be abrogated. 11. DELIVERY OF STOCK CERTIFICATES As promptly as may be practicable after an Option, or a portion or part thereof, has been exercised as hereinabove provided, the Company shall make delivery of one or more certificates for the appropriate number of Shares. In the event that an Optionee exercises both an Incentive Option, or a portion thereof, and a Nonqualified Option, or a portion thereof, separate stock certificates shall be issued, one for the Shares subject to the Incentive Option and one for the Shares subject to the Nonqualified Option. 12. CHANGES IN COMPANY'S SHARES AND CERTAIN CORPORATE TRANSACTIONS (a) If at any time while the Plan is in effect there shall be an increase or decrease in the number of issued and outstanding Shares of the Company effected without receipt of consideration therefor by the Company, through the declaration of a stock dividend or through any recapitalization or merger or otherwise in which the Company is the surviving corporation, resulting in a stock split-up, combination or exchange of Shares of the Company, then and in each such event: (i) An appropriate adjustment shall be made in the maximum number of Shares then subject to being optioned or awarded as Restricted Stock under the Plan, to the end that the same proportion of 6 7 the Company's issued and outstanding Shares shall continue to be subject to being so optioned and awarded; (ii) Appropriate adjustment shall be made in the number of Shares and the option price per Share thereof then subject to purchase pursuant to each Option previously granted, to the end that the same proportion of the Company's issued and outstanding Shares in each such instance shall remain subject to purchase at the same aggregate option price: and (iii) In the case of Incentive Options, any such adjustments shall in all respects satisfy the requirements of Section 424(a) of the Code and the Treasury regulations and revenue rulings promulgated thereunder. Except as is otherwise expressly provided herein, the issue by the Company of shares of its capital stock of any class, or securities convertible into shares of capital stock of any class, either in connection with a direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of or option price of Shares then subject to outstanding Options granted under the Plan. Furthermore, the presence of outstanding Options granted under the Plan shall not affect in any manner the right or power of the Company to make, authorize or consummate (i) any or all adjustments, recapitalizations, reorganizations or other changes in the Company's capital structure or its business; (ii) any merger or consolidation of the Company; (iii) any issue by the Company of debt securities or preferred or preference stock which would rank above the Shares subject to outstanding Options granted under the Plan; (iv) the dissolution or liquidation of the Company; (v) any sale, transfer or assignment of all or any part of the assets or business of the Company; or (vi) any other corporate act or proceeding, whether of a similar character or otherwise. (b) Notwithstanding anything to the contrary above, a dissolution or liquidation of the Company, a merger (other than a merger effecting a reincorporation of the Company in another state) or consolidation in which the Company is not the surviving corporation (or survives only as a subsidiary of another corporation in a transaction in which the stockholders of the parent of the Company and their proportionate interests therein immediately after the transaction are not substantially identical to the stockholders of the Company and their proportionate interests therein immediately prior to the transaction), a transaction in which another corporation becomes the owner of 50% or more of the total combined voting power of all classes of stock of the Company, or a change in control (as specified below), shall cause every Option then outstanding to become exercisable in full, subject to the limitation on the aggregate Fair Market Value of Shares that may become first exercisable during any calendar year set forth in Section 16, immediately prior to such dissolution, liquidation, merger, consolidation, transaction, or change in control, to the extent not theretofore exercised, without regard to the determination as to the periods and installments of exercisability contained in the Agreements if (and only if) such Options have not at that time expired or been terminated. For purposes of this paragraph, a change in control shall be deemed to have taken place if: (i) a third person, including a "group" as defined in Section 13(d)(3) of the Act, becomes the beneficial owner of Shares of the Company having 50% or more of the total number of votes that may be cast for the election of directors of the Company; or (ii) as a result of, or in connection with, a contested election for directors, the persons who were directors of the Company immediately before such election shall cease to constitute a majority of the Board. Notwithstanding the foregoing provisions of this paragraph, in the event of any such dissolution, merger, consolidation, transaction, or change in control, the Board may completely satisfy all obligations of the Company and its Affiliates with respect to any Option outstanding on the date of such event by delivering to the Optionee cash in an amount equal to the difference between the aggregate exercise price for Shares under the Option and the Fair Market Value of such Shares on the date of such event, such payment to be made within a reasonable time after such event. 7 8 13. EFFECTIVE DATE The Plan shall be effective on May 20, 1987, the date of its adoption by the Board, but shall be submitted to the stockholders of the Company for ratification at the next regular or special meeting thereof to be held within twelve (12) months after the Board shall have adopted the Plan. If at such a meeting of the stockholders of the Company a quorum is present, the Plan shall be presented for ratification, and unless at such a meeting the Plan is ratified by the affirmative vote of a majority of the outstanding $0.25 par value common stock of the Company, then and in such event, the Plan and all Options granted under the Plan and all awards of Restricted Stock under the Plan shall become null and void and of no further force or effect. 14. AMENDMENT, SUSPENSION OR TERMINATION (a) Subject to the other terms and condition of this Plan and the limitations set forth in subsection 14(b) below, the Board may at any time amend, suspend or terminate the Plan; provided, however, that after the stockholders have ratified the Plan, the Board may not, without approval of the stockholders of the Company, amend the Plan so as to: (i) Increase the maximum number of Shares subject thereto, as specified above in Sections 4(a) and 12; or (ii) Increase the proportionate number of Shares which may be purchased pursuant to Option by any one person or awarded as Restricted Stock to any one person, as specified above in Section 6(a) or below in Section 19(a). (b) Neither the Board nor the Committee may amend the Plan or any Agreement to reduce the option price of an outstanding Option or modify, impair or cancel any existing Option without the consent of the holder thereof. 15. REQUIREMENTS OF LAW Notwithstanding anything contained herein to the contrary, the Company shall not be required to sell or issue Shares under any Option if the issuance thereof would constitute a violation by the Optionee or the Company of any provisions of any law or regulation of any governmental authority or any national securities exchange; and as a condition of any sale or issuance of Shares under Option the Company may require such agreements or undertakings, if any, as the Company may deem necessary or advisable to assure compliance with any such law or regulation. 16. INCENTIVE STOCK OPTIONS The Committee, in its discretion, may designate any Option granted under the Plan as an Incentive Option intended to qualify under Section 422 of the Code. Any provision of the Plan to the contrary notwithstanding, (i) no Incentive Option shall be granted to any person who, at the time such Incentive Option is granted, owns stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Company or any Affiliate unless the purchase price under such Incentive Option is at least 110 percent of the Fair Market Value of the Shares subject to an Incentive Option at the date of its grant and such Incentive Option is not exercisable after the expiration of five years from the date of its grant, and (ii) the aggregate Fair Market Value of the Shares subject to such Incentive Option and the aggregate Fair Market Value of the shares of stock of any Affiliate (or a predecessor of the Company or an Affiliate) subject to any other incentive stock option (within the meaning of 8 9 Section 422 of the Code) of the Company and its Affiliates (or a predecessor corporation of any such corporation), that may become first exercisable in any calendar year, shall not (with respect to any Optionee) exceed $100,000, determined as of the date the Incentive Option is granted. For purposes of this Section 16, "predecessor corporation" means a corporation that was a party to a transaction described in Section 424(a) of the Code (or which would be so described if a substitution or assumption under such section had been effected) with the Company, or a corporation which, at the time the new incentive stock option (within the meaning of Section 422 of the Code) is granted, is an Affiliate of the Company or a predecessor corporation of any such corporations. 17. MODIFICATION OF OPTIONS Subject to the terms and conditions of and within the limitations of the Plan, the Committee may modify, extend or renew outstanding Options granted under the Plan, or accept the surrender of Options outstanding hereunder (to the extent not theretofore exercised) and authorize the granting of new Options hereunder in substitution therefor (to the extent not theretofore exercised). Notwithstanding the foregoing provisions of this Section 17, no modification of an Option granted hereunder shall, without the consent of the Optionee, alter or impair any rights or obligations under any Option theretofore granted hereunder to such Optionee under the Plan, except as may be necessary, with respect to Incentive Options, to satisfy the requirements of Section 422 of the Code. 18. AGREEMENT PROVISIONS (a) Each Agreement shall contain such provisions (including, without limitation, restrictions or the removal of restrictions upon the exercise of the Option and the transfer of shares thereby acquired) as the Committee shall deem advisable. Each Agreement shall identify the Option evidenced thereby as an Incentive Option or Nonqualified Option, as the case may be. Incentive Options and Nonqualified Options may not both be covered by a single Agreement. Each such Agreement relating to Incentive Options granted hereunder shall contain such limitations and restrictions upon the exercise of the Incentive Option as shall be necessary for the Incentive Option to which such Agreement related to constitute an incentive stock option, as defined in Section 422 of the Code. (b) The Plan shall be annexed to each Agreement and each Agreement shall recite that it is subject to the Plan and that the Plan shall govern where there is any inconsistency between the Plan and the Agreement. (c) Each Agreement shall contain an agreement and covenant by the Optionee, in such form as the Committee may require in its discretion, that he consents to and will take whatever affirmative actions are required, in the opinion of the Board or Committee, to enable the Company or appropriate Affiliate to satisfy its Federal income tax and FICA withholding obligations. An Agreement may contain such provisions as the Committee deems appropriate to enable the Company or its Affiliates to satisfy such withholding obligations, including provisions permitting the Company, on exercise of an Option, to withhold Shares otherwise issuable to the Optionee exercising the Option to satisfy the applicable withholding obligations. (d) Each Agreement relating to an Incentive Option shall contain a covenant by the Optionee immediately to notify the Company in writing of any disqualifying disposition (within the meaning of section 421(b) of the Code) of an Incentive Option. 19. RESTRICTED STOCK (a) Shares of Restricted Stock may be awarded by the Committee to such individuals as are eligible for grants of Options, as the Committee may determine at any time and from time to time before the termination 9 10 of the Plan. The total number of Shares of Restricted Stock awarded to any one person, including directors of the Company, when aggregated with the number of Shares subject to Options in favor of such person, shall not exceed shall not exceed 706,513 Shares. (b) A Share of Restricted Stock is a Share that does not irrevocably vest in the holder or that may not be sold, exchanged, pledged, transferred, assigned or otherwise encumbered or disposed of until the terms and conditions set by the Committee at the time of the award of the Restricted Stock have been satisfied. A Share of Restricted Stock shall be subject to a minimum three-year vesting period and shall contain such other restrictions, terms and conditions as the Committee may establish, which may include, without limitation, the rendition of services to the Company or its Affiliates for a specified time or the achievement of specific goals. The Committee may, when it deems it appropriate, require the recipient of an award of Restricted Stock to enter into an agreement with the Company evidencing the understanding of the parties with respect to such award. If an individual receives Shares of Restricted Stock, whether or not escrowed as provided below, the individual shall be the record owner of such Shares and shall have all the rights of a stockholder with respect to such Shares (unless the escrow agreement, if any, specifically provides otherwise), including the right to vote and the right to receive dividends or other distributions made or paid with respect to such Shares. Any certificate or certificates representing Shares of Restricted Stock shall bear a legend similar to the following: THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO THE TERMS OF THE CENTEX CORPORATION 1987 STOCK OPTION PLAN AND MAY NOT BE SOLD, PLEDGED, TRANSFERRED, ASSIGNED OR OTHERWISE ENCUMBERED IN ANY MANNER EXCEPT AS SET FORTH IN THE TERMS OF SUCH AWARD DATED , 19 . In order to enforce the restrictions, terms and conditions that may be applicable to an individual's Shares of Restricted Stock, the Committee may require the individual, upon the receipt of a certificate or certificates representing such Shares, or at any time thereafter, to deposit such certificate or certificates, together with stock powers and other instruments of transfer, appropriately endorsed in blank, with the Company or an escrow agent designated by the Company under an escrow agreement in such form as shall be determined by the Committee. After the satisfaction of the terms and conditions set by the Committee at the time of an award of Restricted Stock to an individual, which award is not subject to a non-lapse feature, a new certificate, without the legend set forth above, for the number of Shares that are no longer subject to such restrictions, terms and conditions shall be delivered to the individual. If an individual to whom Restricted Stock has been awarded dies after satisfaction of the terms and conditions for the payment of all or a portion of the award but prior to the actual payment of all or such portion thereof, such payment shall be made to the individual's beneficiary or beneficiaries at the time and in the same manner that such payment would have been made to the individual. The Committee may cancel all or any portion of any outstanding restrictions prior to the expiration of such restrictions with respect to any or all of the Shares of Restricted Stock awarded to an individual hereunder only upon the individual's death, disability or retirement on or after the earlier of (i) age 65 or (ii) such time as the sum of the individual's age and years of service equals 70, provided such individual is at least 55. With respect to the occurrence of any event specified in the last paragraph of Section 12, the restrictions, if any, applicable to any outstanding Shares awarded as Restricted Stock shall lapse immediately prior to the occurrence of the event. (c) Subject to the provisions of subsection 19(b) above, if an individual to whom Restricted Stock has been awarded ceases to be employed by at least one of the employers in the group of employers consisting of 10 11 the Company and its Affiliates, or ceases to be a director of the Company, whichever may occur later, for any reason prior to the satisfaction of any terms and conditions of an award, any Restricted Stock remaining subject to restrictions shall thereupon be forfeited by the individual and transferred to, and reacquired by, the Company or an Affiliate at no cost to the Company or the Affiliate. In such event, the individual, or in the event of his death, his personal representative, shall forthwith deliver to the Secretary of the Company the certificates for the Shares of Restricted Stock remaining subject to such restrictions, accompanied by such instruments of transfer, if any, as may reasonably be required by the Secretary of the Company. (d) In case of any consolidation or merger of another corporation into the Company in which the Company is the surviving corporation and in which there is a reclassification or change (including a change to the right to receive cash or other property) of the Shares (other than a change in par value, or from par value to no par value, or as a result of a subdivision or combination, but including any change in such shares into two or more classes or series of shares), the Committee may provide that payment of Restricted Stock shall take the form of the kind and amount of shares of stock and other securities (including those of any new direct or indirect parent of the Company), property, cash or any combination thereof receivable upon such reclassification, change, consolidation or merger. 20. GENERAL (a) The proceeds received by the Company from the sale of Shares pursuant to Options shall be used for general corporate purposes. (b) Nothing contained in the Plan, or in any Agreement, shall confer upon any Optionee or recipient of Restricted Stock the right to continue in the employ of the Company or any Affiliate, or interfere in any way with the rights of the Company or any Affiliate to terminate his employment at any time. (c) Neither the members of the Board nor any member of the Committee shall be liable for any act, omission, or determination taken or made in good faith with respect to the Plan or any Option or Restricted Stock granted under it; and the members of the Board and the Committee shall be entitled to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expense (including counsel fees) arising therefrom to the full extent permitted by law and under any directors and officers liability or similar insurance coverage that may be in effect from time to time. (d) As partial consideration for the granting of each Option or award of Restricted Stock hereunder, the Optionee or recipient shall agree with the Company that he will keep confidential all information and knowledge which he has relating to the manner and amount of his participation in the Plan; provided, however, that such information may be disclosed as required by law or given in confidence to the individual's spouse, tax or financial advisors, or to a financial institution to the extent that such information is necessary to secure a loan. In the event any breach of this promise comes to the attention of the Committee, it shall take into consideration such breach, in determining whether to grant any future Option or award any future Restricted Stock to such individual, as a factor militating against the advisability of granting any such future Option or awarding any such future Restricted Stock to such individual. (e) Participation in the Plan shall not preclude an individual from eligibility in any other stock option plan of the Company or any Affiliate or any old age benefit, insurance, pension, profit sharing, retirement, bonus, or other extra compensation plans which the Company or any Affiliate has adopted, or may, at any time, adopt for the benefit of its employees or directors. 11 12 (f) Any payment of cash or any issuance or transfer of Shares to the Optionee, or to his legal representative, heir, legatee, or distributee, in accordance with the provisions hereof, shall, to the extent thereof, be in full satisfaction of all claims of such persons hereunder. The Board or Committee may require any Optionee, legal representative, heir, legatee, or distributee, as a condition precedent to such payment, to execute a release and receipt therefor in such form as it shall determine. (g) Neither the Committee nor the Board nor the Company guarantees the Shares from loss or depreciation. (h) All expenses incident to the administration, termination, or protection of the Plan, including, but not limited to, legal and accounting fees, shall be paid by the Company or its Affiliates. (i) Records of the Company and its Affiliates regarding an individual's period of employment, termination of employment and the reason therefor, leaves of absence, re-employment, tenure as a director and other matters shall be conclusive for all purposes hereunder, unless determined by the Board or Committee to be incorrect. (j) The Company and its Affiliates shall, upon request or as may be specifically required hereunder, furnish or cause to be furnished, all of the information or documentation which is necessary or required by the Board or Committee to perform its duties and functions under the Plan. (k) The Company assumes no obligation or responsibility to an Optionee or recipient of Restricted Stock or his personal representatives, heirs, legatees, or distributees for any act of, or failure to act on the part of, the Board or Committee. (l) Any action required of the Company shall be by resolution of its Board or by a person authorized to act by resolution of the Board. Any action required of the Committee shall be by resolution of the Committee or by a person authorized to act by resolution of the Committee. (m) If any provision of this Plan or any Agreement is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions of the Plan or the Agreement, as the case may be, but such provision shall be fully severable and the Plan or the Agreement, as the case may be, shall be construed and enforced as if the illegal or invalid provision had never been included herein or therein. (n) Whenever any notice is required or permitted hereunder, such notice must be in writing and personally delivered or sent by mail. Any notice required or permitted to be delivered hereunder shall be deemed to be delivered on the date on which it is personally delivered, or, whether actually received or not, on the third business day after it is deposited in the United States mail, certified or registered, postage prepaid, addressed to the person who is to receive it at the address which such person has theretofore specified by written notice delivered in accordance herewith. The Company, an Optionee or a recipient of Restricted Stock may change, at any time and from time to time, by written notice to the other, the address which it or he had theretofore specified for receiving notices. Until changed in accordance herewith, the Company and each Optionee and recipient of Restricted Stock shall specify as its and his address for receiving notices the address set forth in the Agreement pertaining to the shares of Stock to which such notice relates. (o) Any person entitled to notice hereunder may waive such notice. 12 13 (p) The Plan shall be binding upon the Optionee or recipient of Restricted Stock, his heirs, legatees, and legal representatives, upon the Company, its successors, and assigns, and upon the Board and Committee, and their successors. (q) The titles and headings of Sections and paragraphs are included for convenience of reference only and are not to be considered in construction of the provisions hereof. (r) All questions arising with respect to the provisions of the Plan shall be determined by application of the laws of the State of Nevada except to the extent Nevada law is preempted by federal law. The obligation of the Company to sell and deliver Shares hereunder is subject to applicable laws and to the approval of any governmental authority required in connection with the authorization, issuance, sale, or delivery of such Shares. (s) Words used in the masculine shall apply to the feminine where applicable, and wherever the context of this Plan dictates, the plural shall be read as the singular and the singular as the plural. 21. WITHHOLDING TAXES Federal, state, or local law may require the withholding of taxes applicable to gains resulting from the exercise of Nonqualified Options granted hereunder. Unless otherwise prohibited by the Committee, each participant may satisfy any such withholding tax obligation by electing (i) to tender a cash payment to the Company, (ii) to authorize the Company to withhold from the shares of stock of the Company otherwise issuable to the participant as a result of the exercise of the Nonqualified Option a number of shares having a fair market value, as of the date the withholding tax obligation arises, equal to the withholding obligations, or, at the election of the participant, up to the maximum of taxes due (the "Share Withholding Alternative"), (iii) to deliver to the Company previously acquired shares of common stock of the Company having a fair market value, as of the date the withholding tax obligation arises, equal to the amount to be withheld, or at the election of the participant, up to the maximum of taxes due, or (iv) any combination of the foregoing, provided the combination permits the payment of all withholding taxes attributable to the exercise of the Nonqualified Option. A Participant's election to pay the withholding tax obligation must be made in writing delivered to the Company before the time of exercise, or simultaneously with the exercise, of such Participant's Nonqualified Option. A valid and binding written election of the Share Withholding Alternative shall be irrevocable. A participant's failure to elect a withholding alternative prior to the time such election is required to be made shall be deemed to be an election to pay the withholding tax by tendering a cash payment to the Company. For purposes of this Section 21, the fair market value of the shares used to pay withholding taxes is the mean between the highest and lowest price quoted on the New York Stock Exchange for one share of common stock of the Company on the Tax Date. Also, as used in this Section 21, "Tax Date" shall mean the date on which a withholding tax obligation arises in connection with an exercise of a nonqualified stock option, which date shall be presumed to be the date of exercise, unless shares subject to a substantial risk of forfeiture (as defined in section 83(c)(1) or (c)(3) of the Code) are issuable on exercise of the option and the participant does not make a timely election under section 83(b) of the Code with respect thereto, in which case the Tax Date for such shares is the date on which the substantial risk of forfeiture lapses. Fractional shares remaining after payment of the withholding taxes shall be paid to the participant in cash. 13 EX-27.1 3 FINANCIAL DATA SCHEDULE-CENTEX CORPORATION
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CENTEX CORPORATION'S DECEMBER 31, 1999, FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000018532 CENTEX CORPORATION 1,000 9-MOS MAR-31-2000 APR-01-1999 DEC-31-1999 161,713 0 1,126,822 0 2,096,026 0 602,037 264,012 4,401,156 0 570,179 0 0 14,785 1,347,235 4,401,156 4,230,837 4,230,837 3,807,341 3,807,341 75,498 0 45,828 302,170 115,063 187,107 0 0 0 187,107 3.15 3.06
EX-27.2 4 FINANCIAL DATA SCHEDULE-3333 HOLDING CORPORATION
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 3333 HOLDING CORPORATION'S DECEMBER 31, 1999, FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000818762 3333 HOLDING CORPORATION 1,000 9-MOS MAR-31-2000 APR-01-1999 DEC-31-1999 19 0 10 0 750 0 191 83 2,764 0 0 0 0 1 (1,914) 2,764 457 457 1,538 1,538 0 0 0 (1,081) 0 (1,081) 0 0 0 (1,081) 0.00 0.00
EX-27.3 5 FINANCIAL DATA SCHEDULE-CENTEX DEVELOPMENT CO, LP
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CENTEX DEVELOPMENT COMPANY, L.P.'S DECEMBER 31, 1999, FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000818764 CENTEX DEVELOPMENT COMPANY, L.P. 1,000 9-MOS MAR-31-2000 APR-01-1999 DEC-31-1999 24,278 0 16,235 0 369,643 0 3,923 421 455,490 0 0 0 0 0 71,421 455,490 249,249 249,249 247,603 247,603 0 0 0 1,646 601 1,045 0 0 0 1,045 0.00 0.00
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