EX-99.1 2 d42949exv99w1.htm PRESS RELEASE exv99w1
 

Exhibit 99.1
       
(CENTEX LOGO)     www.centex.com
P.O. Box 199000
Dallas, Texas 75219-9000

 

2728 North Harwood
Dallas, Texas 75201-1516

 

Phone: (214) 981-5000
N e w s R e l e a s e
 
FOR IMMEDIATE RELEASE
For additional information, contact at (214) 981-5000:
Matthew G. Moyer, Vice President – Investor Relations
Ken Smalling, Director – External Communications
http://www.centex.com
CENTEX REPORTS THIRD QUARTER RESULTS
DALLAS — January 23, 2007: Centex Corporation (NYSE: CTX), today reported financial results for its third fiscal quarter ended December 31, 2006.
Highlights of the quarter ended December 31, 2006 (compared to last year’s third quarter):
  •   Total revenues decreased 7% to $3.28 billion
 
  •   Home closings decreased 12% to 8,360
 
  •   Housing gross margin decreased 990 bp to 19.7%
 
  •   Loss from continuing operations was $1.96 per diluted share
 
  •   Unit backlog declined 32% on a decrease in sales (orders) of 24%
     Tim Eller, Centex Corporation chairman and CEO, said, “This was certainly a challenging quarter. But our aggressiveness in responding to the current housing environment is showing positive tangible results in our operations. In the quarter we produced positive cash flow while making reductions in lots owned and controlled. Moving forward, we’re focused on generating cash, reducing costs and strengthening our balance sheet so we are well positioned when market conditions improve.”
HOME BUILDING
     Fiscal 2007’s third quarter revenues were $2.59 billion, 14% lower than the same quarter last year. Home building reported an operating loss of $292 million for the quarter, after the write off of $138 million of option deposits and land pre-acquisition costs and $297 million of land valuation adjustments, including $97 million from joint ventures. Housing operating earnings (housing revenues less housing cost of sales and SG&A) were $76 million, driven lower by a 12% decrease in closings to 8,360 homes and increased sales incentives. The margin from housing operations was 3.0% in this year’s third quarter. The home building operating margin for the quarter, as reported, was a negative 11.3%, primarily a result of the land valuation adjustments.
     For the current nine months, revenues were $7.90 billion, 5% lower than the same period last year. Reported home building operating earnings were $114 million for the nine-month period this year, 91% below the year-ago period.

 

 

Centex Corporation, Page 2 of 3
OTHER BUSINESSES
Financial Services
     Operating earnings from Financial Services totaled $16 million for the third quarter of fiscal 2007, 21% lower than the same quarter a year ago. CTX Mortgage originated loans for 80% of Centex Homes’ buyers during the third quarter, up 5 percentage points versus last year’s third quarter. Centex’s Financial Services operations provide Centex home buyers with a streamlined home-closing and settlement process, key to ensuring customer satisfaction and quality.
Construction Services
     Operating earnings from Construction Services were $11 million for the third quarter this year, resulting in an operating margin of 1.8%, up 20 basis points from last year’s third quarter. New contracts for the quarter were approximately $585 million, up 5% from last year’s third quarter, increasing the backlog of uncompleted construction contracts at December 31, 2006 to $2.94 billion.
OUTLOOK
     Taking into consideration its current backlog and the uncertainty of the current housing market conditions, Centex’s full fiscal year 2007 earnings guidance is now approximately $0.25 per fully diluted share from continuing operations. This guidance is inclusive of about $3.50 per share of land inventory adjustments and option walk-away costs as well as an approximately $0.50 per share increase in the company’s tax reserve. Centex’s guidance for its fourth fiscal quarter ending March 31, 2007 is for approximately break-even earnings from continuing operations. This guidance includes an estimate that there will be approximately $0.65 per share of option walk-away costs.
NON-GAAP FINANCIAL MEASURES
     Explanations of non-GAAP financial measures used in this press release and the accompanying attachments, and reconciliations of the non-GAAP financial measures to the comparable GAAP financial measures, are given in the applicable attachments.
     Centex’s senior management will conduct a conference call to discuss the third quarter fiscal year 2007 financial results at 10 a.m. Eastern Time (9 a.m. Central Time) on Wednesday, January 24. The conference call, accompanied by a slide presentation, will be webcast simultaneously on the Centex Web site at http://www.centex.com. A replay of the call, as well as the presentation, will be archived on that site.
# # #
Forward-Looking Statements. This press release contains 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 Centex is discussing its beliefs, estimates or expectations. Such statements include projections, forecasts, and plans and objectives of management for future operations and operating and financial performance, as well as any related assumptions. These statements are not historical facts or guarantees of future performance but instead represent only Centex’s belief at the time the statements were made regarding future events, which are subject to significant risks, uncertainties and other factors, many of which are outside of Centex’s control. Actual results and outcomes may differ materially from what is expressed or forecast in such forward-looking statements. These risks and uncertainties are described in greater detail in Centex’s most recent Annual Report on Form 10-K for the fiscal year ended March 31, 2006 (including under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”), as well as recent Quarterly Reports on Form 10-Q and Current
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Centex Corporation, Page 3 of 3
Reports on form 8-K, which are on file with the SEC and may be obtained free of charge through the Web site maintained by the SEC at http://www.sec.gov. The factors discussed in these reports include, but are not limited to, changes in national or regional economic or business conditions, including employment levels and interest rates, competition, customer cancellations, shortages or price changes in raw materials or labor, and other factors that could affect demand for our homes, mortgage loans or construction services or the profitability of our operations. All forward-looking statements made in this press release are made as of the date hereof, and the risk that actual results will differ materially from expectations expressed in this press release will increase with the passage of time. Centex makes no commitment, and disclaims any duty, to update or revise any forward-looking statement to reflect future events or changes in Centex’s expectations.
NOTE ATTACHMENTS:
(1) Revenues and Earnings by Lines of Business
(2) Condensed Consolidated Balance Sheets
(3) Condensed Consolidated Cash Flows
(4) Supplemental Home Building Data
(5) Housing Activity by Geographic Area
(6) Housing Activity Dollar Values by Geographic Area
(7) Supplemental Financial Services Data
(8) Supplemental Financial Data
(9) Reconciliation of Housing/Home Building Operating Earnings

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Attachment 1
Centex Corporation and Subsidiaries
Revenues and Earnings by Lines of Business
(Dollars in thousands, except per share data)
                                                 
    Quarter Ended     Nine Months Ended  
    December 31,     December 31,  
    (unaudited)     (unaudited)  
    2006     2005 (B)     Change     2006     2005 (B)     Change  
Revenues
                                                
Home Building
   $ 2,587,251     $ 3,003,650       (14 %)   $ 7,895,135     $ 8,291,236       (5 %)
Financial Services (A)
     107,577       112,855       (5 %)     350,896       343,725       2 %
Construction Services
     600,721       402,927       49 %     1,648,357       1,160,904       42 %
Other (Including Intersegment Eliminations)
     (11,099 )     5,713       (294 %)     (13,724 )     53,570       (126 %)
 
                                        
Total
   $ 3,284,450     $ 3,525,145       (7 %)   $ 9,880,664     $ 9,849,435       — %
 
                                        
 
                                                
Operating Earnings (Loss)
                                                
Home Building
   $ (292,181 )   $ 504,923       (158 %)   $ 113,664     $ 1,304,463       (91 %)
Financial Services (A)
     16,496       21,000       (21 %)     65,747       63,543       3 %
Construction Services
     10,650       6,466       65 %     27,498       13,192       108 %
Other (Including Intersegment Eliminations)
     (655 )     (2,558 )     74 %     (2,931 )     (8,206 )     64 %
 
                                        
Total Operating Earnings (Loss)
     (265,690 )     529,831       (150 %)     203,978       1,372,992       (85 %)
 
                                                
Corporate General Expenses
     (22,600 )     (26,775 )             (67,575 )     (70,935 )        
Interest Expense
     —       (3,009 )             —       (8,705 )        
 
                                        
 
                                                
Earnings (Loss) from Continuing Operations Before Income Taxes
     (288,290 )     500,047       (158 %)     136,403       1,293,352       (89 %)
 
                                                
Income Taxes
     52,910       (186,835 )             (109,738 )     (448,102 )        
 
                                        
 
                                                
Earnings (Loss) from Continuing Operations
     (235,380 )     313,212       (175 %)     26,665       845,250       (97 %)
 
                                                
Earnings from Discontinued Operations, net (A)
     7,234       16,132               42,846       52,294          
 
                                        
 
                                                
Net Earnings (Loss)
   $ (228,146 )   $ 329,344       (169 %)   $ 69,511     $ 897,544       (92 %)
 
                                        
 
                                                
Earnings (Loss) Per Share — Basic
                                                
Earnings (Loss) per Share — Continuing Operations
   $ (1.96 )   $ 2.47       (179 %)   $ 0.22     $ 6.61       (97 %)
Earnings (Loss) per Share — Discontinued Operations
     0.06       0.13               0.36       0.41          
 
                                        
Earnings (Loss) Per Share — Basic
   $ (1.90 )   $ 2.60       (173 %)   $ 0.58     $ 7.02       (92 %)
 
                                        
 
                                                
Earnings (Loss) Per Share — Diluted
                                                
Earnings (Loss) per Share — Continuing Operations
   $ (1.96 )   $ 2.37       (183 %)   $ 0.22     $ 6.31       (97 %)
Earnings (Loss) per Share — Discontinued Operations
     0.06       0.12               0.34       0.39          
 
                                        
Earnings (Loss) Per Share — Diluted
   $ (1.90 )   $ 2.49       (176 %)   $ 0.56     $ 6.70       (92 %)
 
                                        
 
                                                
Average Shares Outstanding:
                                                
Basic
     119,935,522       126,572,663       (5 %)     120,507,675       127,933,898       (6 %)
Diluted (C)
     119,935,522       132,077,763       (9 %)     124,524,863       133,954,277       (7 %)
 
(A)   Financial Services excludes the Centex Home Equity operations which were sold in July, 2006 and are reflected in discontinued operations.
 
(B)   Certain prior year items have been reclassified to conform to current period classifications.
 
(C)   Because of the net losses for the quarter, no dilutive effects are attributed to outstanding stock options and other equivalents, so both basic and diluted shares and EPS are the same.

 

 

Attachment 2
Centex Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(Dollars in millions)
(unaudited)
                                                 
    Centex Corporation and Subsidiaries     Centex Corporation (A)     Financial Services  
    December 31,     March 31,     December 31,     March 31,     December 31,     March 31,  
    2006     2006     2006     2006     2006     2006  
Assets
                                                
Cash -
                                                
Unrestricted
   $ 60     $ 47     $ 51     $ 37     $ 9     $ 10  
Restricted
     179       135       53       71       126       64  
Receivables -
                                                
Residential Mortgage Loans Held for Sale
     1,989       2,130       —       —       1,989       2,130  
Other Receivables
     652       704       597       660       55       44  
Inventories -
                                                
Homebuilding
     9,820       8,828       9,820       8,828       —       —  
Land Held Under Option Agreements not Owned
     375       818       375       818       —       —  
Other
     12       12       6       6       6       6  
Investments
     234       310       365       965       —       —  
Property and Equipment, net
     132       183       114       161       18       22  
Goodwill
     220       219       211       207       9       12  
Deferred Charges and Other Assets
     588       469       556       430       32       39  
Assets of Discontinued Operations
     —       7,510       —       —       —       7,510  
 
                                    
 
   $ 14,261     $ 21,365     $ 12,148     $ 12,183     $ 2,244     $ 9,837  
 
                                    
 
                                                
Liabilities and Stockholders’ Equity
                                                
Accounts Payable and Accrued Liabilities
   $ 2,759     $ 2,760     $ 2,646     $ 2,658     $ 100     $ 93  
Debt -
                                                
Non-Financial Services
     4,309       3,982       4,309       3,982       —       —  
Financial Services
     1,999       2,077       —       —       1,999       2,077  
Liabilities of Discontinued Operations
     —       7,002       —       —       —       7,002  
Minority Interests
     293       532       292       531       1       1  
Stockholders’ Equity
     4,901       5,012       4,901       5,012       144       664  
 
                                    
 
   $ 14,261     $ 21,365     $ 12,148     $ 12,183     $ 2,244     $ 9,837  
 
                                    
 
(A)   In the supplemental data presented above, “Centex Corporation” represents the consolidation 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. We present the consolidating information shown above and believe that it is useful to investors because it enables them to compare our homebuilding operations more readily to the businesses of other homebuilding companies that do not have significant financial services operations. We also believe that separate disclosure of the consolidating information is appropriate because: the Financial Services subsidiaries operate in a distinctly different financial environment that generally requires significantly less equity to support their higher debt levels compared to the operations of our other subsidiaries; the Financial Services subsidiaries have structured their financing programs substantially on a stand-alone basis; and Centex Corporation has limited obligations with respect to the indebtedness of its Financial Services subsidiaries. Management uses this information in its financial and strategic planning.

 

 

Attachment 3
Centex Corporation and Subsidiaries
Condensed Consolidated Cash Flows
(Dollars in millions)
(unaudited)
                                                 
    Centex Corporation and Subsidiaries (A)     Centex Corporation (B)     Financial Services (A)  
    For the Nine Months Ended December 31,     For the Nine Months Ended December 31,     For the Nine Months Ended December 31,  
    2006     2005     2006     2005     2006     2005  
Cash Flows — Operating Activities
                                                
Net Earnings
   $ 70     $ 898     $ 70     $ 898     $ 84     $ 89  
Adjustments -
                                                
Depreciation and Amortization
     43       49       36       36       7       13  
Other Noncash Adjustments
     546       (14 )     1,088       (8 )     (31 )     (70 )
Decrease in Loans Held for Sale
     141       48       —       —       141       48  
(Increase) Decrease in Inventories
     (1,456 )     (2,274 )     (1,456 )     (2,275 )     —       1  
Other Operating Activities
     (66 )     224       16       283       (106 )     6  
 
                                    
 
     (722 )     (1,069 )     (246 )     (1,066 )     95       87  
 
                                    
 
                                                
Cash Flows — Investing Activities
                                                
Increase in Loans Held for Investment
     (292 )     (912 )     —       —       (292 )     (912 )
Other Investing Activities
     434       124       (3 )     71       462       (12 )
 
                                    
 
     142       (788 )     (3 )     71       170       (924 )
 
                                    
 
                                                
Cash Flows — Financing Activities
                                                
Increase in Short-Term Debt, net
     294       1,782       179       389       115       1,393  
Issuance of Long-Term Debt, net
     522       114       308       645       214       (531 )
Other Financing Activities
     (224 )     (461 )     (224 )     (461 )     (596 )     (25 )
 
                                    
 
     592       1,435       263       573       (267 )     837  
 
                                    
 
                                                
Effect of Exchange Rate on Cash
     —       (2 )     —       (2 )     —       —  
 
                                    
 
                                                
Net Increase (Decrease) in Cash and Cash Equivalents
     12       (424 )     14       (424 )     (2 )     —  
Cash and Cash Equivalents at Beginning of Period
     48       503       37       490       11       13  
 
                                    
Cash and Cash Equivalents at End of Period
   $ 60     $ 79     $ 51     $ 66     $ 9     $ 13  
 
                                    
 
(A)   Beginning and ending cash balances include cash from the discontinued operations of Financial Services’ Home Equity operations — approximately $1 million as of March 31, 2006 and 2005 and as of December 31, 2005.
 
(B)   In the supplemental data presented above, “Centex Corporation” represents the consolidation 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 cash flows. We present the consolidating information shown above and believe that it is useful to investors because it enables them to compare our homebuilding operations more readily to the businesses of other homebuilding companies that do not have significant financial services operations. We also believe that separate disclosure of the consolidating information is appropriate because: the Financial Services subsidiaries operate in a distinctly different financial environment that generally requires significantly less equity to support their higher debt levels compared to the operations of our other subsidiaries; the Financial Services subsidiaries have structured their financing programs substantially on a stand-alone basis; and Centex Corporation has limited obligations with respect to the indebtedness of its Financial Services subsidiaries. Management uses this information in its financial and strategic planning.

 

 

Attachment 4
Centex Corporation and Subsidiaries
Supplemental Home Building Data
(Dollars in thousands, except per unit data)
(unaudited)
                                                                 
    Quarter Ended December 31,     Nine Months Ended December 31,  
    2006     2005     2006     2005  
HOME BUILDING
                                                                
 
                                                                
Revenues — Housing
   $ 2,516,089       100.0 %   $ 2,956,351       100.0 %   $ 7,679,986       100.0 %   $ 8,030,378       100.0 %
Cost of Sales — Housing
     (2,020,158 )     (80.3 %)     (2,080,742 )     (70.4 %)     (5,854,303 )     (76.2 %)     (5,676,908 )     (70.7 %)
 
                                                
Gross Margin — Housing
     495,931       19.7 %     875,609       29.6 %     1,825,683       23.8 %     2,353,470       29.3 %
 
                                                
 
                                                                
Revenues — Land Sales & Other
     71,162               47,299               215,149               260,858          
Cost of Sales — Land Sales & Other
     (392,758 )             (45,560 )             (662,605 )             (196,115 )        
 
                                                        
Gross Margin — Land Sales & Other
     (321,596 )             1,739               (447,456 )             64,743          
 
                                                        
 
                                                                
Total Gross Margin
     174,335       6.7 %     877,348       29.2 %     1,378,227       17.5 %     2,418,213       29.2 %
 
                                                                
Selling, General & Administrative
     (420,351 )     (16.2 %)     (421,327 )     (14.0 %)     (1,228,087 )     (15.6 %)     (1,181,024 )     (14.2 %)
 
                                                                
Other Income (Expense) (A)
     (46,165 )     (1.8 %)     48,902       1.6 %     (36,476 )     (0.5 %)     67,274       0.7 %
 
                                                
 
                                                                
Operating Earnings (Loss)
   $ (292,181 )     (11.3 %)   $ 504,923       16.8 %   $ 113,664       1.4 %   $ 1,304,463       15.7 %
 
                                                        
 
                                                                
Units Closed
     8,360               9,504               25,203               26,896          
 
                                                                
Average Unit Sales Price
   $ 300,968             $ 311,064             $ 304,725             $ 298,571          
% Change
     (3.2 %)             15.2 %             2.1 %             13.9 %        
 
                                                                
Operating Earnings (Loss) per Unit
   $ (34,950 )           $ 53,127             $ 4,510             $ 48,500          
% Change
     (165.8 %)             23.1 %             (90.7 %)             32.1 %        
 
                                                                
Average Neighborhoods
     699               635               686               618          
% Change
     10.1 %             6.2 %             11.0 %             6.4 %        
 
(A)   Other Income (Expense) includes earnings (loss) from unconsolidated entities.
LOT POSITION
                         
    As of December 31,
    2006   2005   Change
Lots Owned and Controlled:
                        
 
                        
Lots Owned
     104,186       106,595       (2 %)
 
                        
Lots Controlled
     81,891       187,126       (56 %)
 
                        
 
                        
Total
     186,077       293,721       (37 %)
 
                        

 

 

Attachment 5
Centex Corporation and Subsidiaries
Supplemental Home Building Data
Housing Activity (Units) by Geographic Area
(Unaudited)
                                                 
    Closings
    Quarter Ended December 31,   Nine Months Ended December 31,
    2006   2005   Change   2006   2005   Change
Mid-Atlantic
     1,604       1,809       (11 %)     4,982       5,103       (2 %)
Southeast
     1,265       1,639       (23 %)     4,008       4,725       (15 %)
Midwest
     1,261       1,667       (24 %)     4,217       4,994       (16 %)
Southwest
     2,558       2,760       (7 %)     7,225       7,366       (2 %)
West Coast
     1,672       1,629       3 %     4,771       4,708       1 %
 
                                                
 
     8,360       9,504       (12 %)     25,203       26,896       (6 %)
 
                                                
                         
    Sales (Orders) Backlog
    As of December 31,
    2006   2005   Change
Mid-Atlantic
     2,066       3,367       (39 %)
Southeast
     2,561       5,156       (50 %)
Midwest
     2,052       3,074       (33 %)
Southwest
     3,788       4,683       (19 %)
West Coast
     2,934       3,515       (17 %)
 
                        
 
     13,401       19,795       (32 %)
 
                        
                                                 
    Sales (Orders)
    Quarter Ended December 31,   Nine Months Ended December 31,
    2006   2005   Change   2006   2005   Change
Mid-Atlantic
     1,209       1,341       (10 %)     3,975       5,048       (21 %)
Southeast
     627       1,350       (54 %)     2,453       4,875       (50 %)
Midwest
     909       1,369       (34 %)     3,514       4,756       (26 %)
Southwest
     1,971       2,581       (24 %)     6,919       8,361       (17 %)
West Coast
     1,423       1,487       (4 %)     4,356       5,062       (14 %)
 
                                                
 
     6,139       8,128       (24 %)     21,217       28,102       (25 %)
 
                                                

 

 

Attachment 6
Centex Corporation and Subsidiaries
Supplemental Home Building Data
Housing Activity (Values) by Geographic Area
(Unaudited)
                                                 
    Housing Revenues — Closings  
    (Dollars in thousands)  
    Quarter Ended December 31,     Nine Months Ended December 31,  
    2006     2005     Change     2006     2005     Change  
Mid-Atlantic
   $ 516,038     $ 634,095       (19 %)   $ 1,631,032     $ 1,713,464       (5 %)
Southeast
     380,257       476,911       (20 %)     1,187,678       1,336,313       (11 %)
Midwest
     285,306       377,374       (24 %)     956,833       1,097,740       (13 %)
Southwest
     533,416       544,375       (2 %)     1,506,472       1,371,185       10 %
West Coast
     801,072       923,596       (13 %)     2,397,971       2,511,676       (5 %)
 
                                        
 
   $ 2,516,089     $ 2,956,351       (15 %)   $ 7,679,986     $ 8,030,378       (4 %)
 
                                        
                         
    Sales (Orders) Backlog Value  
    (Dollars in thousands)  
    As of December 31,  
    2006     2005     Change  
Mid-Atlantic
   $ 665,833     $ 1,236,973       (46 %)
Southeast
     845,594       1,659,752       (49 %)
Midwest
     494,704       711,139       (30 %)
Southwest
     837,902       1,146,650       (27 %)
West Coast
     1,470,027       1,997,713       (26 %)
 
                    
 
   $ 4,314,060     $ 6,752,227       (36 %)
 
                    

 

 

Attachment 7
Centex Corporation and Subsidiaries
Supplemental Financial Services Data
(Unaudited)
                                                 
    Quarter Ended December 31,     Nine Months Ended December 31,  
    2006     2005     Change     2006     2005     Change  
CTX Mortgage Company
                                                
Originations
                                                
Builder
     6,393       6,616       (3 %)     18,887       18,480       2 %
 
                                                
Retail
     7,212       9,813       (27 %)     23,868       35,028       (32 %)
 
                                        
 
                                                
Total
     13,605       16,429       (17 %)     42,755       53,508       (20 %)
 
                                        
 
                                                
Loan Volume (in billions)
   $ 3.29     $ 3.74       (12 %)   $ 10.14     $ 11.84       (14 %)
 
                                        
 
                                                
Average Loan Size
   $ 241,900     $ 227,500       6 %   $ 237,100     $ 221,200       7 %
 
                                        
 
                                                
Operating Profit per Loan
   $ 1,212     $ 1,278       (5 %)   $ 1,538     $ 1,177       31 %
 
                                        

 

 

Attachment 8
Centex Corporation and Subsidiaries
Supplemental Financial Data — Debt-to-Capitalization Ratio
(Dollars in millions)
(Unaudited)
                         
    As of December 31, 2006     As of March 31, 2006     As of December 31, 2005  
Consolidated Debt/Capitalization (A)
                        
Debt
   $ 6,308     $ 6,059     $ 5,771  
Minority Interests
     293       532       539  
Less Minority Interests on Lot Options (C)
     (263 )     (492 )     (497 )
Stockholders’ Equity
     4,901       5,012       4,750  
 
                  
Capitalization
     11,239       11,111       10,563  
Less Unrestricted Cash
     (60 )     (47 )     (78 )
 
                  
Net Capitalization
   $ 11,179     $ 11,064     $ 10,485  
 
                  
 
                        
Consolidated Debt-to-Capitalization Ratio
     56.1 %     54.5 %     54.6 %
 
                  
 
                        
Consolidated Net Debt-to-Capitalization Ratio (D)
     55.9 %     54.3 %     54.3 %
 
                  
 
                        
Debt/Capitalization, Excluding Financial Services (B)
                        
Debt
   $ 4,309     $ 3,982     $ 4,107  
Minority Interests
     292       531       537  
Less Minority Interests on Lot Options (C)
     (263 )     (492 )     (497 )
Stockholders’ Equity
     4,901       5,012       4,750  
 
                  
Capitalization
     9,239       9,033       8,897  
Less Unrestricted Cash
     (51 )     (37 )     (66 )
 
                  
Net Capitalization
   $ 9,188     $ 8,996     $ 8,831  
 
                  
 
                        
Debt-to-Capitalization Ratio
     46.6 %     44.1 %     46.2 %
 
                  
 
                        
Net Debt-to-Capitalization Ratio (D)
     46.3 %     43.9 %     45.8 %
 
                  
 
(A)   Consolidated capitalization includes debt, minority interest (excluding lot options), and stockholders’ equity, including Financial Services.
 
(B)   Capitalization includes debt, minority interest (excluding lot options), and stockholders’ equity. Capitalization presented above reflects Financial Services on an equity basis and does not include debt or minority interests attributable to Financial Services.
 
(C)   Pursuant to the provisions of Financial Accounting Standards Board (“FASB”) Interpretation No. 46, “Consolidation of Variable Interest Entities,” as revised (“FIN 46”), the Company consolidates certain lot option agreements and records the deposit and remaining purchase price related to these options as land held under option agreements not owned with a corresponding increase in minority interests. These minority interests are excluded from the debt-to-capitalization ratio as the Company is not obligated to purchase the properties and pay these amounts.
 
(D)   Net debt-to-capitalization ratios are provided reflecting net capitalization, including net debt (debt less unrestricted cash), minority interest (excluding lot options), and stockholders’ equity. We believe this ratio reflects the debt/capitalization structure in a more inclusive manner as unrestricted cash could be applied to reduce debt at quarter end. See Attachment 2 for more information.
Debt-to-capitalization is a common financial ratio used in the homebuilding industry to evaluate debt capacity and leverage.

 

 

Attachment 9
Centex Corporation and Subsidiaries
Reconciliation of Housing/Home Building Operating Earnings
(Dollars in thousands)
(unaudited)
                                                                 
    Quarter Ended December 31,     Nine Months Ended December 31,  
    2006     2005     2006     2005  
HOME BUILDING
                                                                
 
                                                                
Revenues — Housing
   $ 2,516,089       100.0 %   $ 2,956,351       100.0 %   $ 7,679,986       100.0 %   $ 8,030,378       100.0 %
Cost of Sales — Housing
     (2,020,158 )     (80.3 %)     (2,080,742 )     (70.4 %)     (5,854,303 )     (76.2 %)     (5,676,908 )     (70.7 %)
 
                                                
Gross Margin — Housing
     495,931       19.7 %     875,609       29.6 %     1,825,683       23.8 %     2,353,470       29.3 %
 
                                                                
Selling, General & Administrative
     (420,351 )     (16.7 %)     (421,327 )     (14.2 %)     (1,228,087 )     (16.0 %)     (1,181,024 )     (14.7 %)
 
                                                
 
                                                                
Housing Operating Earnings (A)
     75,580       3.0 %     454,282       15.4 %     597,596       7.8 %     1,172,446       14.6 %
 
                                                                
Revenues — Land Sales & Other
     71,162               47,299               215,149               260,858          
Cost of Sales — Land Sales & Other
     (392,758 )             (45,560 )             (662,605 )             (196,115 )        
 
                                                        
Gross Margin — Land Sales & Other
     (321,596 )             1,739               (447,456 )             64,743          
 
                                                                
Other Income (Expense)
     (46,165 )             48,902               (36,476 )             67,274          
 
                                                        
 
                                                                
Operating Earnings (Loss)
   $ (292,181 )     (11.3 %)   $ 504,923       16.8 %   $ 113,664       1.4 %   $ 1,304,463       15.7 %
 
                                                        
                                                 
    Fiscal Years Ending March 31,  
    2007P     2006     2005  
HOME BUILDING
                                                
 
                                                
Revenues — Housing
   $ 10,575,000       100.0 %   $ 11,920,634       100.0 %   $ 9,007,148       100.0 %
Cost of Sales — Housing
     (8,225,000 )     (77.8 %)     (8,458,995 )     (71.0 %)     (6,486,709 )     (72.0 %)
 
                                    
Gross Margin — Housing
     2,350,000       22.2 %     3,461,639       29.0 %     2,520,439       28.0 %
 
                                                
Selling, General & Administrative
     (1,625,000 )     (15.3 %)     (1,696,456 )     (14.2 %)     (1,301,606 )     (14.5 %)
 
                                    
 
                                                
Housing Operating Earnings (A)
     725,000       6.9 %     1,765,183       14.8 %     1,218,833       13.5 %
 
                                                
Revenues — Land Sales & Other
     400,000               351,569               352,593          
Cost of Sales — Land Sales & Other
     (975,000 )             (296,938 )             (261,394 )        
 
                                          
Gross Margin — Land Sales & Other
     (575,000 )             54,631               91,199          
 
                                                
Other Income (Expense)
     (25,000 )             85,998               68,786          
 
                                          
 
                                                
Operating Earnings
   $ 125,000       1.1 %   $ 1,905,812       15.5 %   $ 1,378,818       14.7 %
 
                                          
 
(A)   Housing Operating Earnings is defined as housing revenues less housing cost of sales less selling, general & administrative expenses. Housing Operating Margin is defined as housing operating earnings divided by total housing revenues.