EX-99.1 2 d64764exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
     
(CENTEX LOGO)
  Centex Corporation
2728 N. Harwood
Dallas, Texas 75201-1516
P.O. Box 199000
Dallas, Texas 75219-9000
news release
 
For Immediate Release
For additional information, please contact:
Matthew G. Moyer, Vice President — Investor Relations
Eric Bruner, Director — Public Relations
214.981.5000
CENTEX REPORTS SECOND QUARTER RESULTS
DALLAS, Oct. 28, 2008 — Centex Corporation (NYSE: CTX) today reported financial results for its fiscal second quarter ended Sept. 30, 2008.
Highlights of the quarter ended Sept. 30, 2008 (compared to last year’s second quarter):
•   Sales (orders) decreased 54% (down 42% on a per neighborhood basis) to 2,728
 
•   Loss from continuing operations of $1.62 per diluted share
 
•   Reduced homebuilding SG&A expenses by 50% or $148 million
 
•   Generated positive cash flow from homebuilding operations
 
•   Reduced debt outstanding by $150 million during the quarter
 
•   Sept. 30 cash balance of $1.30 billion
“The homebuilding industry continues to grapple with unprecedented economic conditions. Centex has prepared for this kind of environment by building a strong cash position, consolidating operations and significantly shortening the Company’s land position. We improved our gross margins and generated positive cash from operations despite the extreme weakness in the housing market,” said Tim Eller, chairman and CEO of Centex Corp. “We are taking every action to ensure that we manage effectively though this difficult period.”
Corporate Results
Fiscal second quarter revenues were $1.01 billion, 54% lower than the same quarter last year. The loss from continuing operations for the second quarter was $202 million, or a loss of $1.62 per diluted share, narrower than last year’s second quarter loss of $645 million, or $5.27 per diluted share. Included in the fiscal second quarter loss from continuing operations are $103 million of impairments and other land-related charges, including the Company’s share of joint venture impairments, compared to $983 million of impairments and other land-related charges in last year’s second quarter.
The fiscal second quarter’s corporate general and administrative expenses were $53.4 million this year, up from $34.5 million in last year’s second quarter, reflecting primarily the centralization of certain division functions and investments to improve core business processes. “I am pleased that combined corporate and homebuilding SG&A was down 39% from last year’s second quarter. Overhead costs will continue to come down,” Mr. Eller said.
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Centex reports second quarter results/p. 2 of 7
Home Building
Fiscal second quarter revenues were $953 million, 55% lower than the same quarter last year, as a result of a 48% decrease in closings to 3,797 homes and a 12% decrease in average sales price to $247,534. Home building reported an operating loss of $115 million for the quarter, significantly narrower than last year’s second quarter loss of $953 million. The operating loss includes $103 million of impairments and write-offs.
Housing operating losses (housing revenues less housing cost of sales and SG&A) were $8 million this quarter, compared to earnings of $26 million in the previous year’s second quarter. Included in this quarter’s $8 million housing operating loss are $27 million of interest costs relieved through homebuilding cost of sales and $13 million of severance costs.
Financial Services
Financial Services reported an operating loss of $44 million this quarter, narrowed from a loss of $54 million in last year’s second quarter. Included in this quarter’s loss is $26 million of expenses related to the closing of the retail mortgage business, in line with prior guidance. Also included in this quarter’s loss is a $16 million net increase in loan loss reserves. In the quarter, Financial Services completed the sale of its Westwood Insurance Agency subsidiary. The after-tax gain on sale of $30 million is included in discontinued operations.
Other
During the fiscal second quarter, the Company increased its valuation allowance related to its deferred tax assets by $66 million in accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes.” The increase in the valuation allowance is reflected as a charge to income tax expense and a reduction of the Company’s deferred tax asset. At the end of the quarter, the balance of the Company’s deferred tax asset was $65 million, net of the valuation allowance of $945 million.
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 senior management will host a conference call to discuss the second quarter financial results at 10 a.m. EDT (9 a.m. CDT) on Wednesday, Oct. 29. The live webcast may be accessed on the Investor Relations section of the Centex web site at http://ir.centex.com. A replay of the webcast, as well as the presentation, will be archived on the Investor Relations page under the “Presentations” link.
Forward-Looking Statements
Some of the statements in this press release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by the fact
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Centex reports second quarter results/p. 3 of 7
that they relate only to anticipated or expected events, activities, trends or results, which are inherently subject to risks, uncertainties and other factors. Actual results and outcomes may differ materially from what is expressed or forecast in such statements. Forward-looking statements included in this press release are made as of its date. We do not undertake any obligation to update or revise any forward-looking statement.
Important risks and other factors include, but are not limited to: (1) the effects of recent disruptions in the global credit and securities markets, which have adversely impacted the banking and mortgage finance industries, resulting in tightening of credit and reductions in liquidity; (2) recent adverse changes in national and regional economic or business conditions, including employment levels and interest rates; (3) the effects of the current downturn in the homebuilding industry, including potential adverse market conditions that could result in reduced sales and closings and additional inventory or other impairments; (4) customer cancellations and consumer homebuyer sentiment; (5) competition; (6) price changes in raw materials or other components of our houses; (7) the availability of adequate sources of financing to continue to implement our business strategy; and (8) our ability to generate cash from sales of assets and other sources that supplement our existing cash resources. These and other risks and uncertainties are described in greater detail in our reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2008, and subsequent Quarterly Reports on Form 10-Q.
Note Attachments
(1) Revenues and Earnings by Lines of Business
(2) Condensed Consolidated Balance Sheet
(3) Home Building Segment Data
(4) Supplemental Home Building Data (non-GAAP reconciliation)

 

 

Attachment 1
Centex Corporation and Subsidiaries
Revenues and Earnings by Lines of Business
(Dollars in thousands, except per share data)
                                                 
    Quarter Ended     Six Months Ended  
    September 30,     September 30,  
    (unaudited)     (unaudited)  
    2008     2007 (C)     Change     2008     2007 (C)     Change  
Revenues
                                                
Home Building (A)
   $ 952,596     $ 2,105,484       (55 %)   $ 2,002,295     $ 3,909,304       (49 %)
Financial Services
     52,409       80,700       (35 %)     128,832       178,666       (28 %)
 
                                        
Total
   $ 1,005,005     $ 2,186,184       (54 %)   $ 2,131,127     $ 4,087,970       (48 %)
 
                                        
 
                                                
Operating Earnings (Loss)
                                                
Home Building (A)
   $ (114,764 )   $ (952,693 )           $ (245,867 )   $ (1,124,472 )        
Financial Services
     (44,158 )     (54,082 )             (38,091 )     (39,113 )        
Other
     5,285       18,122               12,393       23,048          
 
                                        
Total Operating Earnings (Loss)
     (153,637 )     (988,653 )             (271,565 )     (1,140,537 )        
 
                                                
Corporate General and Administrative Expenses
     (53,435 )     (34,540 )             (112,074 )     (79,521 )        
Interest Expense
     (4,973 )     —               (11,153 )     —          
 
                                        
 
                                                
Loss from Continuing Operations Before Income Taxes
     (212,045 )     (1,023,193 )             (394,792 )     (1,220,058 )        
 
                                                
Income Tax Benefit (B)
     10,425       378,432               24,060       443,216          
 
                                        
 
                                                
Loss from Continuing Operations
     (201,620 )     (644,761 )             (370,732 )     (776,842 )        
 
                                                
Earnings from Discontinued Operations, net
     29,630       928               48,643       5,050          
 
                                        
 
                                                
Net Loss
   $ (171,990 )   $ (643,833 )           $ (322,089 )   $ (771,792 )        
 
                                        
 
                                                
Earnings (Loss) Per Share — Basic and Diluted
                                                
Continuing Operations
   $ (1.62 )   $ (5.27 )           $ (2.98 )   $ (6.37 )        
Discontinued Operations
     0.24       0.01               0.39       0.04          
 
                                        
Earnings (Loss) Per Share — Basic and Diluted
   $ (1.38 )   $ (5.26 )           $ (2.59 )   $ (6.33 )        
 
                                        
 
                                                
Average Shares Outstanding — Basic and Diluted
     124,278,555       122,301,587               124,255,085       121,888,041          
 
(A)   See Attachment 3 for detailed home building segment revenues and earnings.
 
(B)   Current periods include an increase in the valuation allowance related to the deferred tax assets of $65,517 and $114,821, respectively.
 
(C)   Prior periods have been conformed to the current year presentation.
INTEREST ANALYSIS
                                 
    Quarter Ended     Six Months Ended  
    September 30,     September 30,  
    (unaudited)     (unaudited)  
    2008     2007     2008     2007  
Total Interest Incurred
   $ 52,838     $ 76,086     $ 114,590     $ 158,437  
Less - Interest Capitalized
     (44,322 )     (59,507 )     (95,591 )     (121,370 )
- Financial Services’ Interest Expense
     (3,543 )     (16,579 )     (7,846 )     (37,067 )
 
                        
Interest Expense, net
   $ 4,973     $ —     $ 11,153     $ —  
 
                        
 
                                
Capitalized Interest Charged to Home Building’s Costs and Expenses
   $ 27,232     $ 96,698     $ 52,767     $ 139,764  
 
                        

 

 

Attachment 2
Centex Corporation and Subsidiaries
Condensed Consolidated Balance Sheet
(Dollars in millions)
(unaudited)
BALANCE SHEET
                 
    September 30,     March 31,  
    2008     2008  
Assets
                
Cash -
                
Unrestricted
   $ 1,299     $ 587  
Restricted
     50       51  
Receivables -
                
Residential Mortgage Loans Held for Sale, net
     419       516  
Other Receivables
     303       824  
Inventories -
                
Direct Construction
     1,481       1,746  
Land Under Development
     2,407       2,883  
Land Held for Development and Sale
     624       558  
Land Held Under Option Agreements not Owned
     148       148  
Other
     17       27  
Investments
     210       207  
Property and Equipment, net
     60       78  
Goodwill
     48       52  
Deferred Tax Asset, Net of Valuation Allowance of $945 and $830
     65       191  
Deferred Charges and Other Assets
     154       172  
Assets of Discontinued Operations
     —       97  
 
            
 
   $ 7,285     $ 8,137  
 
            
 
                
Liabilities and Stockholders’ Equity
                
Accounts Payable and Accrued Liabilities
   $ 1,843     $ 2,064  
Senior Notes and Other
     3,104       3,325  
Financial Services Debt Secured by Mortgage Loans
     300       337  
Liabilities of Discontinued Operations
     —       34  
Minority Interests
     65       78  
Stockholders’ Equity
     1,973       2,299  
 
            
 
   $ 7,285     $ 8,137  
 
            

 

 

Attachment 3
Centex Corporation and Subsidiaries
Home Building Segment Data (A)
(Dollars in thousands, except per unit data)
(Unaudited)
                                                                         
    Revenues     Closings (Units)     Average Housing Revenue per Unit  
    2008     2007     Change     2008     2007     Change     2008     2007     Change  
Quarter Ended September 30,
                                                                        
East
   $ 311,037     $ 731,716       (57 %)     1,118       2,424       (54 %)   $ 275,459     $ 293,354       (6 %)
Central
     295,809       522,574       (43 %)     1,595       2,774       (43 %)     181,251       186,497       (3 %)
West
     343,484       794,448       (57 %)     1,084       2,035       (47 %)     316,263       388,516       (19 %)
Other homebuilding
     2,266       56,746       (96 %)     —       117       (100 %)     —       384,043       (100 %)
 
                                                            
Total Home Building
   $ 952,596     $ 2,105,484       (55 %)     3,797       7,350       (48 %)   $ 247,534     $ 280,816       (12 %)
 
                                                            
                                                                         
    Sales (Orders) (Units)     Sales (Orders) Backlog (Units)     Sales (Orders) Backlog  
    2008     2007     Change     2008     2007     Change     2008     2007     Change  
Quarter Ended September 30,
                                                                        
East
     1,059       1,725       (39 %)     2,801       2,757       2 %   $ 867,366     $ 825,995       5 %
Central
     1,075       2,370       (55 %)     2,616       3,782       (31 %)     472,893       699,443       (32 %)
West
     594       1,801       (67 %)     1,536       3,022       (49 %)     494,599       1,125,275       (56 %)
Other homebuilding
     —       57       (100 %)     —       72       (100 %)     —       26,674       (100 %)
 
                                                            
Total Home Building
     2,728       5,953       (54 %)     6,953       9,633       (28 %)   $ 1,834,858     $ 2,677,387       (31 %)
 
                                                            
                                                                 
    Operating Earnings (Loss)     Impairments & Write-offs (B)     Lots Owned (Units)     Lots Controlled (Units)  
    2008     2007     2008     2007     2008     2007     2008     2007  
Quarter Ended September 30,
                                                                
East
   $ (46,462 )   $ (137,533 )   $ 30,174     $ 137,629       32,532       39,940       5,919       18,615  
Central
     (22,482 )     (33,258 )     19,408       50,818       17,223       25,723       4,456       11,767  
West
     (41,906 )     (673,590 )     34,091       646,315       12,232       22,715       1,491       9,098  
Other homebuilding
     (3,914 )     (108,312 )     7,163       111,765       1,324       3,657       —       —  
 
                                                
Total Home Building
   $ (114,764 )   $ (952,693 )     90,836       946,527       63,311       92,035       11,866       39,480  
 
                                                    
 
                                                                
Share of Joint Venture Impairments
                     11,983       36,612                                  
 
                                                            
Total Impairments
                   $ 102,819     $ 983,139                                  
 
                                                            
 
(A)   Prior periods have been conformed to the current year presentation.
 
(B)   Impairments and write-offs by segment include land-related impairments and write-offs and goodwill impairments.

 

 

Attachment 3 (Continued)
Centex Corporation and Subsidiaries
Home Building Segment Data (A)
(Dollars in thousands, except per unit data)
(Unaudited)
                                                                         
    Revenues     Closings (Units)     Average Housing Revenue per Unit  
    2008     2007     Change     2008     2007     Change     2008     2007     Change  
Six Months Ended September 30,
                                                                        
East
   $ 619,076     $ 1,294,533       (52 %)     2,206       4,192       (47 %)   $ 275,184     $ 301,114       (9 %)
Central
     593,988       971,151       (39 %)     3,164       5,181       (39 %)     185,072       185,588       — %
West
     772,671       1,544,218       (50 %)     2,330       3,845       (39 %)     329,387       399,002       (17 %)
Other homebuilding
     16,560       99,402       (83 %)     36       227       (84 %)     332,861       355,837       (6 %)
 
                                                            
Total Home Building
   $ 2,002,295     $ 3,909,304       (49 %)     7,736       13,445       (42 %)   $ 254,922     $ 285,514       (11 %)
 
                                                            
                                                         
    Operating Earnings (Loss)     Impairments & Write-offs (B)     Sales (Orders) (Units)  
    2008     2007     2008     2007     2008     2007     Change  
Six Months Ended September 30,
                                                        
East
   $ (133,264 )   $ (132,963 )   $ 70,230     $ 155,452       2,559       3,672       (30 %)
Central
     (35,952 )     (27,749 )     29,886       56,675       2,825       4,974       (43 %)
West
     (72,393 )     (818,546 )     43,773       756,726       1,526       3,694       (59 %)
Other homebuilding
     (4,258 )     (145,214 )     7,163       143,136       33       87       (62 %)
 
                                            
Total Home Building
   $ (245,867 )   $ (1,124,472 )     151,052       1,111,989       6,943       12,427       (44 %)
 
                                                
 
                                                        
Share of Joint Venture Impairments
                     31,681       63,662                          
 
                                                    
Total Impairments
                   $ 182,733     $ 1,175,651                          
 
                                                    
 
(A)   Prior periods have been conformed to the current year presentation.
 
(B)   Impairments and write-offs by segment include land-related impairments and write-offs and goodwill impairments.

 

 

Attachment 4
Centex Corporation and Subsidiaries
Supplemental Home Building Data
(Dollars in thousands, except per unit data)
(unaudited)
RECONCILIATION OF HOUSING/HOME BUILDING OPERATING EARNINGS
                                                                 
    Quarter Ended September 30,     Six Months Ended September 30,  
    2008     2007     2008     2007  
HOME BUILDING
                                                                
                                                                 
Revenues — Housing
   $ 939,888       100.0 %   $ 2,063,999       100.0 %   $ 1,972,079       100.0 %   $ 3,838,737       100.0 %
Cost of Sales — Housing
     (798,956 )     (85.0 %)     (1,741,203 )     (84.4 %)     (1,709,082 )     (86.6 %)     (3,222,554 )     (83.9 %)
 
                                                
Gross Margin — Housing
     140,932       15.0 %     322,796       15.6 %     262,997       13.4 %     616,183       16.1 %
 
                                                                
Selling, General & Administrative (A)
     (148,856 )     (15.8 %)     (296,631 )     (14.3 %)     (315,071 )     (16.0 %)     (595,259 )     (15.6 %)
 
                                                
 
                                                                
Housing Operating (Loss) Earnings (B)
     (7,924 )     (0.8 %)     26,165       1.3 %     (52,074 )     (2.6 %)     20,924       0.5 %
 
                                                                
Revenues — Land Sales & Other
     12,708               41,485               30,216               70,567          
Cost of Sales — Land Sales & Other
     (109,521 )             (927,239 )             (197,783 )             (1,102,806 )        
 
                                                        
Gross Margin — Land Sales & Other
     (96,813 )             (885,754 )             (167,567 )             (1,032,239 )        
 
                                                                
Goodwill Impairment
     —               (61,322 )             —               (61,322 )        
 
                                                                
Losses from Unconsolidated Entities and Other (C)
     (10,027 )             (31,782 )             (26,226 )             (51,835 )        
 
                                                        
 
                                                                
Operating Loss
   $ (114,764 )     (12.0 %)   $ (952,693 )     (45.2 %)   $ (245,867 )     (12.3 %)   $ (1,124,472 )     (28.8 %)
 
                                                
 
                                                                
Average Neighborhoods
     523               658               546               667          
% Change
     (20.5 %)             (4.9 %)             (18.1 %)             (1.9 %)        
 
(A)   Selling, General & Administrative expenses above are those associated with field operations.
 
(B)   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.
 
(C)   Includes losses from unconsolidated entities of $12,902, $36,840, $33,199 and $62,193, respectively.
IMPAIRMENTS AND WRITE-OFFS
                                 
    Quarter Ended September 30,     Six Months Ended September 30,  
    2008     2007     2008     2007  
Impairment Charges
   $ 76,890     $ 846,887     $ 127,005     $ 989,479  
Write-offs of Land Deposits and Pre-Acquisition Costs
     13,946       38,318       24,047       61,188  
Goodwill Impairment
     —       61,322       —       61,322  
 
                        
Subtotal
     90,836       946,527       151,052       1,111,989  
Share of Joint Venture Impairments
     11,983       36,612       31,681       63,662  
 
                        
 
                                
Total Impairments and Write-offs
   $ 102,819     $ 983,139     $ 182,733     $ 1,175,651