10-Q 1 e10-q.txt FORM 10-Q FOR QUARTER ENDED JUNE 30, 2000 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 JUNE 30, 2000 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 2728 N. Harwood Dallas, Texas 75201 (214) 981-6770 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 July 31, 2000: Centex Corporation Common Stock 58,846,057 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 38,409 units
2 CENTEX CORPORATION AND SUBSIDIARIES 3333 HOLDING CORPORATION AND SUBSIDIARY CENTEX DEVELOPMENT COMPANY, L.P. AND SUBSIDIARIES Form 10-Q Table of Contents JUNE 30, 2000 CENTEX CORPORATION AND SUBSIDIARIES
PAGE PART I. FINANCIAL INFORMATION ITEM 1. Condensed Consolidated Financial Statements 1 Condensed Consolidated Statements of Earnings for the Three Months Ended June 30, 2000 2 Condensed Consolidated Balance Sheets 3 Condensed Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2000 5 Notes to Condensed Consolidated Financial Statements 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 14 ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 22 PART II. OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K 22 SIGNATURES 23
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 24 Condensed Combining Statements of Operations for the Three Months Ended June 30, 2000 25 Condensed Combining Balance Sheets 26 Condensed Combining Statements of Cash Flows for the Three Months Ended June 30, 2000 27 Notes to Condensed Combining Financial Statements 28 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 33 ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 36 PART II. OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K 37 SIGNATURES 38
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. 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 STATEMENTS OF EARNINGS (Dollars in thousands, except per share data) (unaudited) ----------------------------------- For the Three Months Ended June 30, ----------------------------------- 2000 1999 --------------- ---------------- REVENUES Home Building Conventional Homes $ 887,022 $ 754,611 Manufactured Homes 36,486 47,831 Investment Real Estate 3,481 3,807 Financial Services 95,909 116,887 Construction Products 100,325 97,180 Contracting and Construction Services 298,659 351,917 -------------- -------------- 1,421,882 1,372,233 -------------- -------------- COSTS AND EXPENSES Home Building Conventional Homes 814,472 695,463 Manufactured Homes 36,583 46,636 Investment Real Estate (2,621) (2,352) Financial Services 95,841 96,164 Construction Products 64,170 61,853 Contracting and Construction Services 292,155 346,362 Other, net (320) 1,847 Corporate General and Administrative 8,731 7,208 Interest Expense 21,766 11,828 Minority Interest 13,036 14,114 -------------- -------------- 1,343,813 1,279,123 -------------- -------------- EARNINGS BEFORE INCOME TAXES 78,069 93,110 Income Taxes 29,864 34,674 -------------- -------------- NET EARNINGS $ 48,205 $ 58,436 ============== ============== EARNINGS PER SHARE Basic $ 0.82 $ 0.98 ============== ============== Diluted $ 0.81 $ 0.95 ============== ============== AVERAGE SHARES OUTSTANDING Basic 58,803,345 59,446,165 Common Share Equivalents Options 651,220 1,763,126 Convertible Debenture 400,000 400,000 -------------- -------------- Diluted 59,854,565 61,609,291 ============== ============== CASH DIVIDENDS PER SHARE $ 0.04 $ 0.04 ============== ============== See notes to condensed consolidated financial statements. -2- 6 CENTEX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
-------------------------------- Centex Corporation and Subsidiaries -------------------------------- June 30, March 31, 2000* 2000** ------------- ------------- ASSETS Cash and Cash Equivalents $ 177,600 $ 139,563 Receivables - Residential Mortgage Loans 807,392 409,697 Other 510,166 483,381 Inventories 2,110,378 1,954,037 Investments - Centex Development Company, L.P. 74,614 65,550 Joint Ventures and Other 84,673 65,944 Unconsolidated Subsidiaries -- -- Property and Equipment, net 368,294 360,604 Other Assets - Deferred Income Taxes 49,839 49,907 Goodwill, net 254,342 251,780 Mortgage Securitization Residual Interest 164,926 160,999 Deferred Charges and Other 122,426 97,278 ------------- ------------- $ 4,724,650 $ 4,038,740 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Accounts Payable and Accrued Liabilities $ 1,043,231 $ 1,125,807 Short-term Debt 747,968 562,235 Long-term Debt 1,273,650 751,160 Payables to Affiliates -- -- Minority Stockholders' Interest 147,738 129,352 Negative Goodwill 46,837 50,837 Stockholders' Equity - Preferred Stock, Authorized 5,000,000 Shares, None Issued -- -- Common Stock $.25 Par Value; Authorized 100,000,000 Shares; Issued and Outstanding 58,830,945 and 58,806,217 respectively 14,708 14,702 Capital in Excess of Par Value 288 -- Retained Earnings 1,451,748 1,405,895 Accumulated Other Comprehensive Loss (1,518) (1,248) ------------- ------------- Total Stockholders' Equity 1,465,226 1,419,349 ------------- ------------- $ 4,724,650 $ 4,038,740 ============= =============
See notes to condensed consolidated financial statements. * Unaudited ** Condensed from audited financial statements. -3- 7 CENTEX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
------------------------------------------------------------ Centex Corporation Financial Services ---------------------------- --------------------------- June 30, March 31, June 30, March 31, 2000* 2000** 2000* 2000** ----------- ----------- ----------- ----------- $ 149,264 $ 123,411 $ 28,336 $ 16,152 -- -- 807,392 409,697 426,555 418,810 83,611 64,571 2,098,231 1,945,899 12,147 8,138 74,614 65,550 -- -- 84,673 65,944 -- -- 244,908 267,177 -- -- 327,216 319,255 41,078 41,349 18,796 24,018 31,043 25,889 236,253 233,059 18,089 18,721 -- -- 164,926 160,999 93,866 71,302 28,560 25,976 ----------- ----------- ----------- ----------- $ 3,754,376 $ 3,534,425 $ 1,215,182 $ 771,492 =========== =========== =========== =========== $ 968,281 $ 1,038,641 $ 74,950 $ 87,166 204,967 146,908 543,001 415,327 923,650 751,160 350,000 -- -- -- 41,783 64,246 145,415 127,530 2,323 1,822 46,837 50,837 -- -- -- -- -- -- 14,708 14,702 1 1 288 -- 150,467 150,467 1,451,748 1,405,895 52,657 52,463 (1,518) (1,248) -- -- ----------- ----------- ----------- ----------- 1,465,226 1,419,349 203,125 202,931 ----------- ----------- ----------- ----------- $ 3,754,376 $ 3,534,425 $ 1,215,182 $ 771,492 =========== =========== =========== ===========
In the supplemental data presented above, "Centex Corporation" represents the adding together of all subsidiaries other than those included in Financial Services. Transactions between Centex Corporation and Financial Services have been eliminated from the Centex Corporation and Subsidiaries balance sheets. -4- 8 CENTEX CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited)
----------------------------------- For the Three Months Ended June 30, ----------------------------------- 2000 1999 --------------- ---------------- CASH FLOWS - OPERATING ACTIVITIES Net Earnings $ 48,205 $ 58,436 Adjustments - Depreciation and Amortization 13,447 10,416 Deferred Income Taxes 519 1,308 Equity in Earnings of Centex Development Company, L.P. and Joint Ventures (313) (142) Minority Interest, net of taxes 8,291 9,091 (Increase) Decrease in Receivables (26,785) 4,701 (Increase) Decrease in Residential Mortgage Loans (397,695) 33,074 Increase in Inventories (157,687) (149,772) Decrease in Payables and Accruals (83,728) (50,668) Increase in Other Assets (38,147) (29,713) Other, net 10,095 (6,724) -------------- -------------- (623,798) (119,993) -------------- -------------- CASH FLOWS - INVESTING ACTIVITIES (Increase) Decrease in Advances to Centex Development Company, L.P. and Joint Ventures (26,134) 1,522 Increase in Property and Equipment, net (19,078) (18,453) -------------- -------------- (45,212) (16,931) -------------- -------------- CASH FLOWS - FINANCING ACTIVITIES Increase (Decrease) in Debt - Secured by Residential Mortgage Loans 477,674 (48,860) Other 230,549 181,743 Retirement of Common Stock (784) (3,279) Proceeds from Stock Option Exercises 1,078 3,838 Dividends Paid (2,352) (2,382) -------------- -------------- 706,165 131,060 -------------- -------------- EFFECT OF EXCHANGE RATE CHANGES ON CASH 882 (71) -------------- -------------- NET INCREASE (DECREASE) IN CASH 38,037 (5,935) CASH AT BEGINNING OF PERIOD 139,563 111,268 -------------- -------------- CASH AT END OF PERIOD $ 177,600 $ 105,333 ============== ==============
See notes to condensed consolidated financial statements. -5- 9 CENTEX CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2000 (Dollars in thousands) (unaudited) (A) A summary of comprehensive income for the three months ended June 30, 2000 is presented below: Net Earnings $ 48,205 Other Comprehensive Income (Loss): Foreign Currency Translation Adjustments (270) ------------ Comprehensive Income $ 47,935 ============
(B) A summary of changes in stockholders' equity is presented below:
Accumulated Capital in Other Preferred Common Excess of Par Retained Comprehensive Stock Stock Value Earnings Loss Total ------------- ------------- ------------- ------------- ------------- ------------- Balance, March 31, 2000 $ -- $ 14,702 -- $ 1,405,895 $ (1,248) $ 1,419,349 Net Earnings -- -- -- 48,205 -- 48,205 Exercise of Stock Options -- 15 1,063 -- -- 1,078 Retirement of 35,400 Shares -- (9) (775) -- -- (784) Cash Dividends -- -- -- (2,352) -- (2,352) Foreign Currency Translation Adjustments -- -- -- -- (270) (270) ------------- ------------- ------------- ------------- ------------- ------------- BALANCE, JUNE 30, 2000 $ -- $ 14,708 $ 288 $ 1,451,748 $ (1,518) $ 1,465,226 ============= ============= ============= ============= ============= =============
(C) In March 1987, certain of Centex's subsidiaries contributed to Centex Development Company, L.P., (the "Partnership") a newly formed master limited partnership, properties with a historical cost basis (which approximated market value) of approximately $76 million. 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 a limited partnership which is managed by its general partner, 3333 Development Corporation ("Development"), a wholly-owned subsidiary of 3333 Holding Corporation ("Holding"). Holding is a separate public company whose stock trades in tandem with Centex's stock. The common stock of Holding 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 and is held by a nominee. These securities, held by the 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 -6- 10 Board of Directors but the warrants to purchase Class B Units automatically become detached in November 2007. The stockholders of Centex elect the four-person Board of Directors of Holding. Three of the Board members, representing the majority of the Board, are independent outside directors who are also not directors of Centex. Thus, the stockholders of Centex control the general partner of the Partnership. The general partner and independent board of Holding manage how the Partnership conducts 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 limited partner 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 year 1998, the agreement governing the Partnership was amended to allow for the issuance of a new class of limited partnership units, Class C Limited Partnership Units ("Class C Units"). Additionally, during fiscal 1998, the 1,000 Class A Units were converted to 32,260 new Class A Units. As of June 30, 2000, 36,428 Class C Units had been issued in exchange for assets with a fair market value of $36.4 million. These assets were recorded by the Partnership at fair market value. The partnership agreement provides that Centex, the 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, defined as its capital contributions, adjusted for cash distributions representing return of the capital contributions. Unrecovered Capital as of June 30, 2000 totaled $69 million. Preference payments in arrears at June 30, 2000 amounted to $16.4 million. No preference payments were made during fiscal 2000 or fiscal 2001 year to date. 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. -7- 11 SUPPLEMENTARY CONDENSED COMBINED BALANCE SHEETS
------------------------------ JUNE 30, March 31, 2000 2000* ------------- ------------- ASSETS Cash and Cash Equivalents $ 187,674 $ 197,877 Receivables 1,332,425 907,367 Inventories 2,517,321 2,343,682 Investments in Joint Ventures and Other 86,650 68,539 Property and Equipment, net 371,632 364,182 Other Assets 641,545 599,526 ------------- ------------- $ 5,137,247 $ 4,481,173 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Accounts Payable and Accrued Liabilities $ 1,152,774 $ 1,244,500 Short-term Debt 1,000,233 834,897 Long-term Debt 1,324,439 802,238 Minority Stockholders' Interest 147,738 129,352 Negative Goodwill 46,837 50,837 Stockholders' Equity 1,465,226 1,419,349 ------------- ------------- $ 5,137,247 $ 4,481,173 ============= =============
* Condensed from audited financial statements SUPPLEMENTARY CONDENSED COMBINED STATEMENTS OF EARNINGS
------------------------------ For the Three Months Ended June 30, ------------------------------ 2000 1999 ------------- ------------- Revenues $ 1,492,624 $ 1,447,764 Costs and Expenses 1,413,909 1,354,393 ------------- ------------- Earnings Before Income Taxes 78,715 93,371 Income Taxes 30,510 34,935 ------------- ------------- NET EARNINGS 48,205 58,436 Other Comprehensive Loss (270) (71) ------------- ------------- COMPREHENSIVE INCOME $ 47,935 $ 58,365 ============= =============
(D) The Company's home building activities comprise the acquisition of raw and semi-developed land, the planning, supervision and funding of subcontractors' activities to complete development of that land primarily into single family home sites, and the construction of houses thereon for sale to individual home purchasers. Land acquisition and development activities are accomplished by the Company directly and via its participation in joint ventures in which the Company holds less than a majority interest. Home construction is likewise accomplished by subcontractors. -8- 12 In order to ensure the future availability of land for home building, the Company has made deposits totaling approximately $43 million as of June 30, 2000 for options to purchase undeveloped land and developed lots having a total purchase price of approximately $1.2 billion. These options and commitments expire at various dates through the year 2006. The Company has also committed to purchase for approximately $0.5 million certain developed lots from the Partnership and for approximately $3 million certain land and developed lots from unrelated third parties. (E) Interest expense relating to the Financial Services operations is included in its costs and expenses. Interest related to non-financial services is included in interest expense.
------------------------------ For the Three Months Ended June 30, ------------------------------ 2000 1999 ------------- ------------- Total Interest Incurred $ 33,874 $ 28,483 Less - Financial Services (12,108) (16,655) ------------- ------------- Interest Expense $ 21,766 $ 11,828 ============= =============
(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 CXP was 64.4% as of June 30, 2000 and March 31, 2000, and 61.5% as of June 30, 1999. (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 land will be developed, sold or realized. All investment property operations are being reported through the "Investment Real Estate" business segment. (H) A Centex subsidiary has a deferred tax asset of approximately $132 million, primarily related to net operating loss carryforwards. If unused, the carryforwards will expire in varying amounts through 2021. A valuation allowance equal to the deferred tax asset has been provided by the subsidiary, valuing the deferred tax asset at zero. (I) 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 $75 million) is included in the Investment Real Estate segment. -9- 13 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 table sets forth financial information relating to the Conventional Homes operations.
------------------------------ For the Three Months Ended June 30, ------------------------------ 2000 1999 ------------- ------------- (Dollars in millions) Revenues $ 887.0 $ 754.6 Cost of Sales (679.5) (581.3) Selling, General & Administrative Expenses (135.0) (114.2) ------------- ------------- Operating Earnings $ 72.5 $ 59.1 ============= =============
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 following table sets forth financial information relating to the Manufactured Homes operations.
------------------------------ For the Three Months Ended June 30, ------------------------------ 2000 1999 ------------- ------------- (Dollars in millions) Revenues $ 36.5 $ 47.8 Cost of Sales (29.3) (38.7) Selling, General & Administrative Expenses (7.3) (7.9) ------------- ------------- Operating (Loss) Earnings (0.1) 1.2 Minority Interest -- (0.2) ------------- ------------- Net Operating (Loss) Earnings to Centex $ (0.1) $ 1.0 ============= =============
-10- 14 INVESTMENT REAL ESTATE Investment Real Estate operations involve the development of land relating primarily to multi-family, industrial, office, retail and mixed-use projects. The following table sets forth financial information relating to the Investment Real Estate operations.
------------------------------ For the Three Months Ended June 30, ------------------------------ 2000 1999 ------------- ------------- (Dollars in millions) Revenues $ 3.5 $ 3.8 Cost of Sales (0.3) (0.2) Selling, General & Administrative Expenses (1.1) (1.4) Negative Goodwill Amortization 4.0 4.0 ------------- ------------- Operating Earnings $ 6.1 $ 6.2 ============= =============
Property sales related to Investment Real Estate's nominally valued assets resulted in operating margins of $1.8 million for the first quarter of fiscal 2001 and $3.0 million for the first quarter of fiscal 2000. As of June 30, 2000, the Investment Real Estate Group had approximately $40.3 million of nominally valued assets. FINANCIAL SERVICES Financial Services operations involve the financing of conventional homes, home equity and sub-prime lending, and the sale of title and other insurance coverages. These activities include mortgage origination and other related services for homes sold by Centex subsidiaries and by others. The following table sets forth financial information relating to the Financial Services operations.
------------------------------ For the Three Months Ended June 30, ------------------------------ 2000 1999 ------------- ------------- (Dollars in millions) Revenues* $ 95.9 $ 116.9 Selling, General & Administrative Expenses (83.7) (79.5) Interest Expense (12.1) (16.7) ------------- ------------- Operating Earnings $ 0.1 $ 20.7 ============= =============
* Financial Services revenues include interest income of $16.1 million and $23.6 million for the three months ended June 30, 2000 and 1999, respectively. Securitizations entered into prior to March 31, 2000 by Financial Services' Centex Home Equity Corporation subsidiary ("Home Equity"), had legal and economic structures that caused them to be accounted for as sales. The resulting gains on such sales were reported as revenues during the month in which the securitizations closed. Home Equity has changed the structure for securitizations occurring subsequent to March 31, 2000, such that securitizations after that date are being accounted for as borrowings. Although the change from accounting for the securitizations as sales to borrowings will have no effect on the profit recognized over the life of each mortgage loan, the change does affect the timing of profit recognition. The -11- 15 approximate impact of this change for the first quarter of fiscal 2001 was to reduce Home Equity's pre-tax earnings by $11.5 million from the amount it would have reported if the securitizations had been structured as sales. CONSTRUCTION PRODUCTS Construction Products operations involve the manufacture, production, distribution, and sale of cement, gypsum wallboard, and aggregates and readymix concrete. The following table sets forth financial information relating to the Construction Products operations.
------------------------------ For the Three Months Ended June 30, ------------------------------ 2000 1999 ------------- ------------- (Dollars in millions) Revenues $ 100.3 $ 97.2 Interest Income 1.7 0.5 Cost of Sales (64.2) (61.0) Selling, General & Administrative Expenses (1.7) (1.3) ------------- ------------- Operating Earnings 36.1 35.4 Minority Interest (13.0) (13.9) ------------- ------------- Net Operating Earnings to Centex $ 23.1 $ 21.5 ============= =============
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 table sets forth financial information relating to the Contracting and Construction Services operation. As this segment generates significant positive cash flow, intercompany interest income (credited at the prime rate in effect) is reflected in this segment; however, these amounts are eliminated in consolidation.
------------------------------ For the Three Months Ended June 30, ------------------------------ 2000 1999 ------------- ------------- (Dollars in millions) Revenues $ 298.7 $ 351.9 Construction Contract Costs (279.2) (333.6) Selling, General & Administrative Expenses (13.0) (12.8) ------------- ------------- Operating Income, as reported 6.5 5.5 Intercompany Interest Income* 2.3 2.2 ------------- ------------- Total Economic Return $ 8.8 $ 7.7 ============= =============
*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. -12- 16 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. The following table summarizes financial information relating to the Corporate and Other, net segments.
------------------------------ For the Three Months Ended June 30, ------------------------------ 2000 1999 ------------- ------------- (Dollars in millions) Operating Earnings (Loss)-Other, net $ 0.3 $ (1.8) ============= ============= Corporate General and Administrative Expenses $ (8.7) $ (7.2) ============= =============
(J) The computation of diluted earnings per share excludes anti-dilutive options to purchase 6,182,000 common shares at an average price of $33.00 for the three months ended June 30, 2000. The anti-dilutive options have expiration dates ranging from September 2007 to May 2010. (K) Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities," was issued in June 1998. This statement addresses 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. It 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 SFAS No. 133 for the Company until April 2001. In June 2000, SFAS No. 138 was issued which amends SFAS No. 133. The Company is in the process of assessing the impact SFAS Nos. 133 and 138 will have on its financial statements. (L) Certain prior year balances have been reclassified to be consistent with the June 30, 2000 presentation. -13- 17 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Centex's consolidated revenues for the quarter were $1.42 billion, a 4% increase over $1.37 billion for the same quarter last year. Earnings before income taxes for the quarter were $78.1 million, 16% lower than $93.1 million for the same quarter last year. Net earnings for the first quarter of fiscal 2001 were $48.2 million, an 18% decrease from net earnings of $58.4 million for the first quarter of fiscal 2000. HOME BUILDING CONVENTIONAL HOMES The following summarizes Conventional Homes' results for the quarter ended June 30, 2000 compared to the quarter ended June 30, 1999 (dollars in millions, except per unit data):
----------------------------------------------------------- For the Three Months Ended June 30, ----------------------------------------------------------- 2000 1999 ----------------------- ----------------------- Conventional Homes Revenues $ 887.0 100.0% $ 754.6 100.0% Cost of Sales (679.5) (76.6%) (581.3) (77.0%) Selling, General & Administrative Expenses (135.0) (15.2%) (114.2) (15.2%) --------- ----- --------- ----- Operating Earnings $ 72.5 8.2% $ 59.1 7.8% ========= ===== ========= ===== Units Closed 4,408 3,934 % Change 12.0% 31.9% Unit Sales Price $ 196,314 $ 188,608 % Change 4.1% 2.3% Operating Earnings Per Unit $ 16,459 $ 15,035 % Change 9.5% 10.2%
Conventional Homes' revenues for the three months ended June 30, 2000 increased by $132.4 million from revenues for the corresponding period last year. This increase resulted from a higher number of existing operating neighborhoods, revenue attributable to the full effect of operations acquired during fiscal 2000, and an increased average unit selling price compared to the fiscal 2000 unit sales price. Operating earnings for the three months ended June 30, 2000 were 8.2% as a percentage of revenue and approximately $16,459 on a per unit basis compared to the three months ended June 30, 1999, which had operating earnings of 7.8% of revenue and approximately $15,035 on a per unit basis. Home sales (orders) totaled 5,537 units during the three months ended June 30, 2000 compared to 4,774 units during the same period a year ago. The backlog of homes sold but not closed as of June 30, 2000 was 8,707 units, 14.4% more than the 7,612 units for the same period a year ago. -14- 18 MANUFACTURED HOMES The following summarizes Manufactured Homes' results for the quarter ended June 30, 2000 compared to the quarter ended June 30, 1999 (dollars in millions):
---------------------------------------------------------- For the Three Months Ended June 30, ---------------------------------------------------------- 2000 1999 ----------------------- ---------------------- Manufactured Homes Revenues (Construction) $ 24.0 100.0% $ 34.8 100.0% Cost of Sales (19.1) (79.7%) (28.2) (81.2%) Selling, General & Administrative Expenses (3.4) (14.3%) (3.7) (10.6%) ---------- ----- --------- ----- 1.5 6.0% 2.9 8.2% ---------- ----- --------- ----- Retail Sales Revenues 12.5 100.0% 13.0 100.0% Cost of Sales (10.2) (81.7%) (10.5) (80.2%) Selling, General & Administrative Expenses (3.0) (23.7%) (3.4) (26.1%) ---------- ----- --------- ----- (0.7) (5.4%) (0.9) (6.3%) ---------- ----- --------- ----- Construction and Retail Earnings 0.8 2.0 Goodwill Amortization (0.9) (0.8) Minority Interest -- (0.2) ---------- --------- Group Operating Earnings $ (0.1) $ 1.0 ========== ========= Units Sold 1,226 1,784
Manufactured Homes currently operates four manufacturing plants: three in the Phoenix, Arizona area, and one in central Texas, and also operates 23 retail locations. As a consequence of increasing interest rates, the availability of financing, and corresponding reduced consumer demand, Manufactured Housing's first quarter 2001 dealer sales and retail sales declined from the corresponding fiscal 2000 amounts. In response, management has slowed production and temporarily idled its New Mexico plant until the return of more favorable market conditions. INVESTMENT REAL ESTATE The following summarizes Investment Real Estate's results for the quarter ended June 30, 2000 compared to the quarter ended June 30, 1999 (dollars in millions):
----------------------------- For the Three Months Ended June 30, ----------------------------- 2000 1999 ------------- ------------- Revenues $ 3.5 $ 3.8 ============= ============= Operating Earnings $ 6.1 $ 6.2 ============= =============
For the quarter ended June 30, 2000, Centex's Investment Real Estate operation, through which all investment property transactions are reported, had operating earnings of $6.1 million, basically unchanged from $6.2 million for the same quarter a year ago. 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 $1.8 million in the first quarter of fiscal 2001 and $3.0 million in the first -15- 19 quarter of fiscal 2000. As of June 30, 2000, the Investment Real Estate Group has approximately $40.3 million of nominally valued assets which are expected to be sold over the next three years. Negative goodwill amortization was $4 million in the first quarter of both fiscal 2001 and 2000. FINANCIAL SERVICES The following summarizes Financial Services' results for the quarter ended June 30, 2000 compared to the quarter ended June 30, 1999 (dollars in millions):
----------------------------- For the Three Months Ended June 30, ----------------------------- 2000 1999 ------------- ------------- Revenues $ 95.9 $ 116.9 ============= ============= Operating Earnings $ 0.1 $ 20.7 ============= ============= Origination Volume $ 2,412 $ 2,773 ============= ============= Number of Loans Originated CTX Mortgage Company ("CTX Mortgage") Centex-built Homes ("Builder") 2,466 2,469 Non-Centex-built Homes ("Retail") 12,536 15,849 ------------- ------------- 15,002 18,318 Centex Home Equity Corporation ("Home Equity") 6,429 4,839 Centex Finance Company (closed during fiscal 2000) -- 168 ------------- ------------- 21,431 23,325 ============= =============
Financial Services' operating earnings for the quarter ended June 30, 2000 were $0.1 million compared to $20.7 million of operating earnings for the quarter ended June 30, 1999. Financial Services' revenues for the first quarter of fiscal 2001 were $95.9 million versus $116.9 million for the prior year's first quarter. Gains on sales of mortgage loans receivable, a component of Financial Services' revenues, decreased to $40.6 million for the quarter ended June 30, 2000 from $66.3 million for the comparable quarter of the prior year. This decline is primarily due to reduced mortgage origination volume in Financial Services' CTX Mortgage Company ("CTX Mortgage") subsidiary as well as the change, discussed below, in the method of accounting for securitizations completed by Financial Services' Centex Home Equity Corporation ("Home Equity") subsidiary. CTX Mortgage's operating earnings totaled $5.2 million for the quarter ended June 30, 2000, 70% less than earnings for the same quarter a year ago. The decline in CTX Mortgage's operating earnings is primarily due to an increase in interest rates compared to the first quarter of fiscal 2000, which has resulted in a decrease in refinancing activity, a more competitive pricing environment, and a change in product mix to a greater volume of adjustable rate loans, which have lower profit margins. CTX Mortgage originations for the first quarter of fiscal 2001 totaled 15,002, an 18% decrease from the 18,318 originations for the first quarter of fiscal 2000. The per-loan profit for the quarter ended June 30, 2000 was $346, 63% lower than -16- 20 $936 per loan for the same quarter of last fiscal year. CTX Mortgage's total mortgage applications for the first quarter of fiscal 2001 decreased 17% to 15,828 from 18,994 applications for the first quarter of fiscal 2000. Home Equity reported an operating loss of $5.1 million for the quarter ended June 30, 2000, compared to $4.6 million of operating earnings for the same quarter last fiscal year. As discussed below, this decline primarily resulted from accounting for the $350 million in securitizations completed during the quarter ended June 30, 2000 as borrowings rather than as sales. Home Equity's originations for the first quarter of fiscal year 2001 were 6,429, a 33% increase over the 4,839 originations for the first quarter of fiscal 2000. Loan volume for the quarter was $395 million, a 24% improvement over the same quarter last fiscal year, with loan volume being favorably impacted by the opening of new operating locations during the later quarters of fiscal 2000 plus generally increased activity. Home Equity's sub-prime applications totaled 37,653 for the quarter ended June 30, 2000, an increase of 31% over the 28,663 applications for the first quarter of last fiscal year. As a consequence of increases in loan volume during the quarter ended June 30, 2000, Home Equity completed $350 million in loan securitizations, compared to $285 million of loan securitizations during the first quarter of last fiscal year. Home Equity retains the servicing rights associated with these securitized loans and is the long-term servicer of these loans. Service fee income related to this long-term servicing was $5.1 million in the quarter ended June 30, 2000, almost double the $2.6 million of service fee income realized during first quarter of last fiscal year. Home Equity's securitizations entered into prior to March 31, 2000 had legal and economic structures that caused them to be accounted for as sales, and the resulting gains on such sales were reported as revenues during the month in which the securitization closed. Home Equity has changed the structure for securitizations occurring subsequent to March 31, 2000, such that securitizations after that date are being accounted for as borrowings. Although the change from accounting for the securitizations as sales to borrowings will have no effect on the profit recognized over the life of each mortgage loan, the change does affect the timing of profit recognition. The approximate impact of this change for the first quarter of fiscal 2001 was to reduce Home Equity's pre-tax earnings by $11.5 million from the amount it would have reported if the securitizations had been structured as sales. 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. Interest income decreased 32% for the quarter ended June 30, 2000 to $16.1 million from $23.6 million for the same quarter of last fiscal year. Interest expense for the quarter ended June 30, 2000 was $12.1 million, a 28% decrease from $16.7 million for the same quarter last fiscal year. The decrease in net interest income is the result of both reduced loan production and the change in product mix noted above. -17- 21 Until the third quarter of fiscal 2000, substantially all of the mortgage loans generated by CTX Mortgage were sold forward upon closing and subsequently delivered to third-party purchasers within approximately 60 days thereafter. In mid-December 1999, CTX Mortgage began to sell the majority of its mortgage loans to Centex Home Mortgage, LLC ("CHM"), a non-affiliated limited liability company which began in December 1999. This arrangement is discussed in more detail in the Financial Condition and Liquidity section below. Substantially all of the mortgage loans produced by Home Equity are securitized, generally on a quarterly basis. Financial Services' other sources of income include, among other things, loan origination fees, servicing fee income, 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 quarter ended June 30, 2000 compared to the quarter ended June 30, 1999 (dollars in millions):
------------------------------ For the Three Months Ended June 30, ------------------------------ 2000 1999 ------------- ------------- Revenues $ 100.3 $ 97.2 Interest Income 1.7 0.5 Cost of Sales (64.2) (61.0) Selling, General and Administrative Expenses (1.2) (1.0) Goodwill Amortization (0.5) (0.3) ------------- ------------- Operating Earnings $ 36.1 $ 35.4 Minority Interest (13.0) (13.9) ------------- ------------- Net Operating Earnings to Centex $ 23.1 $ 21.5 ============= =============
Construction Products' revenues were $100.3 million for the quarter this year, 3% higher than last year. For the current quarter, Construction Products' pretax earnings, net of minority interest, were $23.1 million, an 8% increase over the same quarter last year. During the first quarter of 2001, unit prices for Construction Products' gypsum wallboard products declined from the levels experienced in the last half of fiscal 2000, although those prices are still at good levels. Market demand for all of this business segments' products continues to be strong as of June 30, 2000. -18- 22 CONTRACTING AND CONSTRUCTION SERVICES The following summarizes Contracting and Construction Services' results for the quarter ended June 30, 2000 compared to the quarter ended June 30, 1999 (dollars in millions):
----------------------------- For the Three Months Ended June 30, ----------------------------- 2000 1999 ------------- ------------- Revenues $ 298.7 $ 351.9 ============= ============= Operating Earnings $ 6.5 $ 5.5 ============= ============= New Contracts Received $ 303 $ 567 ============= ============= Backlog of Uncompleted Contracts $ 1,387 $ 1,152 ============= =============
Contracting and Construction Services' revenues for the quarter ended June 30, 2000 were $298.7 million, a 15% decrease from revenues for the same quarter last year. Operating earnings for the group improved 17% to $6.5 million for the first quarter of fiscal 2001. This increase is 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 operation provided a positive average net cash flow in excess of Centex's investment in the group of $96.8 million for the first quarter of fiscal 2001 and $116 million for the first quarter of fiscal 2000. FINANCIAL CONDITION AND LIQUIDITY At June 30, 2000, the Company had cash and cash equivalents of $177.6 million, including $130.0 million belonging to the Company's 64.4% owned Construction Products subsidiary. The net cash used in or provided by the operating, investing, and financing activities for the three months ended June 30, 2000 and 1999 is summarized below (dollars in thousands):
------------------------------ For the Three Months Ended June 30, ------------------------------ 2000 1999 ------------- ------------- NET CASH (USED IN) PROVIDED BY: Operating activities $ (623,798) $ (119,993) Investing activities (45,212) (16,931) Financing activities 706,165 131,060 Effect of exchange rate changes on cash 882 (71) ------------- ------------- NET INCREASE (DECREASE) IN CASH $ 38,037 $ (5,935) ============= =============
-19- 23 For the first quarter of fiscal 2001, cash was used in the operations to finance increases in residential mortgage loans and housing inventories. The increase in housing inventories relates to the increased level of sales and resultant units under construction during the year and the acquisition of expansion land. The funds provided by financing activities included new debt used to fund both residential mortgage loans and the increased home building activity. Short-term debt as of June 30, 2000 was $0.7 billion, which included $0.5 billion of debt applicable to the Financial Services operation (see below). In June, the Company issued $200 million in Senior Notes, maturing in 2006. The proceeds were used to repay short-term debt and for general corporate purposes. Excluding Financial Services, the Company's corporate borrowings are generally accomplished at prevailing market interest rates from uncommitted bank facilities and the Company's commercial paper programs. In August, the Company entered into a $600 million committed credit facility which serves as a backup for bank and commercial paper borrowings. This new facility, which expires in 2005, replaces two similar facilities which were scheduled to terminate beginning in fiscal 2001. The Financial Services segment provides most of its own short-term liquidity needs through separate facilities which require only limited support from Centex Corporation. During the third quarter of fiscal 2000, CTX Mortgage began selling to CHM, substantially all of the conforming, Jumbo A, and GNMA eligible mortgages originated by CTX Mortgage under a revolving sales agreement. CHM is in the business of acquiring and then reselling mortgages into secondary markets. Under the sales agreement between CTX Mortgage and CHM, which has a five year term with certain renewal options, CTX Mortgage is not required to sell its mortgage loans to CHM; however, CHM is required to purchase all loans offered by CTX Mortgage that are eligible under the agreement. This arrangement gives CTX Mortgage daily access, on a revolving basis, to CHM's $1.5 billion of capacity. CTX Mortgage also maintains $150 million of secured committed mortgage warehouse facilities and $600 million of uncommitted credit facilities to finance mortgages not sold to CHM. Similarly, Home Equity has $325 million of committed and $100 million of uncommitted secured mortgage warehouse facilities to finance sub-prime mortgages held until securitization. In addition, Financial Services has $125 million of uncommitted unsecured credit facilities under which it can borrow and, in turn, allocate such borrowed funds to its CTX Mortgage, Home Equity, and other subsidiaries. At June 30, 2000, Financial Services had borrowed $125 million under the facility; $65 million of such borrowings were allocated to CTX Mortgage and $60 million to Home Equity. All borrowings under these unsecured facilities are guaranteed by Centex Corporation. The Company is exposed to market risks related to fluctuations in interest rates on mortgage loans receivable, residual interest in mortgage securitizations, and in debt. The Company utilizes forward sale commitments to mitigate the risk associated with the majority of its mortgage loan portfolio. Other than the forward commitments described above, certain interest rate swaps and interest rate caps, the Company does not utilize 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, 2000. At June 30, 2000, market risk associated with the swaps mentioned above is considered minimal. -20- 24 Long-term debt outstanding as of June 30, 2000 was as follows (in thousands): Centex Corporation: Subordinated Debentures, 7.375%, due in 2006 $ 99,760 Subordinated Debentures, 8.75%, due in 2007 99,534 Medium-Term Note Programs, 6.64% to 7.42%, due through 2003 494,523 Senior Note Programs, 6.4% to 9.75%, due through 2006 213,767 Other Indebtedness, weighted-average 6.8%, due through 2027 16,066 ---------- 923,650 Financial Services: Home Equity Loans Asset-backed Certificates, 6.60% to 8.48%, due through 2031 350,000 ---------- Centex Corporation and Subsidiaries $1,273,650 ==========
Maturities of long-term debt during the next five years (in thousands) are: 2001, $797,072; 2002, $375,586; 2003, $79,988; 2004, $38,379; and 2005, $26,823. The Company believes it has adequate resources and sufficient credit facilities to satisfy its current needs and to provide for future growth. OTHER DEVELOPMENTS AND OUTLOOK The Company expects home sales to remain strong and closings and margins to continue to increase. Fiscal 2001 Home Building results should exceed fiscal 2000's record levels, and Centex also expects all-time high results from its Contracting and Construction Services operations. Financial Services results are being affected by higher interest rates at CTX Mortgage Company, compared to first quarter 2000 levels. The change at Financial Services' Home Equity unit in its reporting of loan securitizations, which reduced operating earnings by $11.5 million or $.12 per share after tax for the first quarter of fiscal 2001, will likely reduce operating earnings by an anticipated $42 million of operating earnings or about $.45 per share after tax for the full year. Declining Gypsum Wallboard prices are expected to impact Construction Products' results. 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 -21- 25 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. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company is exposed to market risks related to fluctuations in interest rates on its direct debt obligations, on mortgage loans receivable, residual interest in mortgage securitizations, and debt. The Company utilizes derivative instruments, including interest rate swaps and interest rate caps, in conjunction with its overall strategy to manage the debt outstanding that is subject to changes in interest rates. The Company utilizes forward sale commitments to mitigate the risk associated with the majority of its mortgage loan portfolio. Other than the forward commitments, the interest rate caps and interest rate swaps listed above, the Company does not utilize 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 from March 31, 2000. For further 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, 2000. PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (1) Exhibits Exhibit 27.1 - Financial Data Schedule (2) Reports on Form 8-K Current Report on Form 8-K of Centex Corporation dated May 1, 2000. Current Report on Form 8-K of Centex Corporation dated June 14, 2000. -22- 26 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 August 11, 2000 /s/ Leldon E. Echols --------------------------------------------- Leldon E. Echols Executive Vice President and Chief Financial Officer (principal financial officer) August 11, 2000 /s/ John S. Worth, Sr. --------------------------------------------- John S. Worth, Sr. Vice President and Controller (chief accounting officer) -23- 27 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. -24- 28 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 June 30, ---------------------------------------------------- 2000 ---------------------------------------------------- Centex Development Company, L.P. 3333 Holding and Corporation Combined Subsidiaries and Subsidiary --------------- --------------- --------------- REVENUES $ 71,117 $ 71,116 $ 1 COSTS AND EXPENSES 70,070 69,965 105 --------------- --------------- --------------- EARNINGS (LOSS) BEFORE INCOME TAXES 1,047 1,151 (104) INCOME TAXES 646 646 -- --------------- --------------- --------------- NET EARNINGS (LOSS) $ 401 $ 505 $ (104) =============== =============== =============== NET EARNINGS ALLOCABLE TO LIMITED PARTNERS $ 505 =============== EARNINGS (LOSS) PER UNIT/SHARE $ 7.49 $ (104) =============== =============== WEIGHTED-AVERAGE UNITS/SHARES OUTSTANDING 67,356 1,000 ---------------------------------------------------- For the Three Months Ended June 30, ---------------------------------------------------- 1999 ---------------------------------------------------- Centex Development Company, L.P. 3333 Holding and Corporation Combined Subsidiaries and Subsidiary --------------- --------------- --------------- REVENUES $ 78,669 $ 78,669 $ 150 COSTS AND EXPENSES 78,388 77,815 723 --------------- --------------- --------------- EARNINGS (LOSS) BEFORE INCOME TAXES 281 854 (573) INCOME TAXES 261 261 -- --------------- --------------- --------------- NET EARNINGS (LOSS) $ 20 $ 593 $ (573) =============== =============== =============== NET EARNINGS ALLOCABLE TO LIMITED PARTNERS $ 593 =============== EARNINGS (LOSS) PER UNIT/SHARE $ 10.01 $ (573) =============== =============== WEIGHTED-AVERAGE UNITS/SHARES OUTSTANDING 59,270 1,000
See notes to condensed combining financial statements. -25- 29 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. AND SUBSIDIARIES CONDENSED COMBINING BALANCE SHEETS (Dollars in thousands)
--------------------------------------------------- JUNE 30, 2000* --------------------------------------------------- Centex Development Company, L.P. 3333 Holding and Corporation Combined Subsidiaries and Subsidiary --------------- --------------- --------------- ASSETS Cash $ 10,074 $ 10,073 $ 1 Accounts Receivable 13,494 14,671 3 Notes Receivable 1,373 1,373 -- Inventories 341,594 340,098 1,496 Investments - Commercial Properties, net 61,397 61,397 -- Real Estate Joint Ventures 1,977 1,977 -- Affiliate -- -- 1,716 Property and Equipment, net 3,338 3,251 87 Other Assets - Goodwill, net 31,107 31,107 -- Deferred Charges and Other 14,405 14,230 175 --------------- --------------- --------------- $ 478,759 $ 478,177 $ 3,478 =============== =============== =============== LIABILITIES, STOCKHOLDERS' EQUITY AND PARTNERS' CAPITAL Accounts Payable and Accrued Liabilities $ 105,043 $ 101,256 $ 5,541 Notes Payable 303,054 303,054 -- --------------- --------------- --------------- Total Liabilities 408,097 404,310 5,541 --------------- --------------- --------------- Stockholders' Equity and Partners' Capital 70,662 73,867 (2,063) --------------- --------------- --------------- $ 478,759 $ 478,177 $ 3,478 =============== =============== =============== --------------------------------------------------- March 31, 2000** --------------------------------------------------- Centex Development Company, L.P. 3333 Holding and Corporation Combined Subsidiaries and Subsidiary --------------- --------------- --------------- ASSETS Cash $ 58,314 $ 58,298 $ 16 Accounts Receivable 13,077 17,948 6 Notes Receivable 3,131 3,131 -- Inventories 329,941 328,928 1,013 Investments - Commercial Properties, net 61,420 61,420 -- Real Estate Joint Ventures 2,595 2,595 -- Affiliate -- -- 1,716 Property and Equipment, net 3,578 3,481 97 Other Assets - Goodwill, net 30,727 30,727 -- Deferred Charges and Other 8,835 8,660 175 --------------- --------------- --------------- $ 511,618 $ 515,188 $ 3,023 =============== =============== =============== LIABILITIES, STOCKHOLDERS' EQUITY AND PARTNERS' CAPITAL Accounts Payable and Accrued Liabilities $ 118,693 $ 119,162 $ 4,982 Notes Payable 323,740 323,740 -- --------------- --------------- --------------- Total Liabilities 442,433 442,902 4,982 --------------- --------------- --------------- Stockholders' Equity and Partners' Capital 69,185 72,286 (1,959) --------------- --------------- --------------- $ 511,618 $ 515,188 $ 3,023 =============== =============== ===============
* Unaudited. ** Condensed from audited financial statements. See notes to condensed combining financial statements. -26- 30 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 Three Months Ended June 30, ------------------------------------------------ 2000 ------------------------------------------------ Centex Development Company, L.P. 3333 Holding and Corporation Combined Subsidiaries and Subsidiary ------------- ------------- -------------- CASH FLOWS - OPERATING ACTIVITIES Net Earnings (Loss) $ 401 $ 505 $ (104) Adjustments: Depreciation and Amortization 997 987 10 Equity in Earnings from Joint Ventures (67) (67) -- (Increase) Decrease in Receivables (2,825) (2,828) 3 Decrease in Notes Receivable 1,758 1,758 -- Increase (Decrease) in Inventories (22,376) (21,893) (483) Increase in Commercial Properties (406) (406) -- (Increase) Decrease in Other Assets (8,155) (8,155) -- (Decrease) Increase in Payables and Accruals (6,858) (7,417) 559 ------------- ------------- ------------- (37,531) (37,516) (15) ------------- ------------- ------------- CASH FLOWS - INVESTING ACTIVITIES Decrease (Increase) in Advances to Joint Venture and Investment in Affiliate 685 685 -- Property and Equipment Additions, net (23) (23) -- ------------- ------------- ------------- 662 662 -- ------------- ------------- ------------- CASH FLOWS - FINANCING ACTIVITIES (Decrease) Increase in Notes Payable (9,150) (9,150) -- ------------- ------------- ------------- (9,150) (9,150) -- ------------- ------------- ------------- EFFECT OF EXCHANGE RATE CHANGES ON CASH (2,221) (2,221) -- ------------- ------------- ------------- NET (DECREASE) INCREASE IN CASH (48,240) (48,225) (15) CASH AT BEGINNING OF PERIOD 58,314 58,298 16 ------------- ------------- ------------- CASH AT END OF PERIOD $ 10,074 $ 10,073 $ 1 ============= ============= ============= SUPPLEMENTAL DISCLOSURES: Increase in Notes Payable Related to an Acquisition $ -- $ -- $ -- Issuance of Class C Units in Exchange for Assets $ 1,346 $ 1,346 $ -- ------------------------------------------------ For the Three Months Ended June 30, ------------------------------------------------ 1999 ------------------------------------------------ Centex Development Company, L.P. 3333 Holding and Corporation Combined Subsidiaries and Subsidiary ------------- ------------- ------------- CASH FLOWS - OPERATING ACTIVITIES Net Earnings (Loss) $ 20 $ 593 $ (573) Adjustments: Depreciation and Amortization 808 797 11 Equity in Earnings from Joint Ventures -- -- -- (Increase) Decrease in Receivables (4,500) (2,904) (1,596) Decrease in Notes Receivable 7 7 -- Increase (Decrease) in Inventories 25,327 25,403 (76) Increase in Commercial Properties (28,724) (28,724) -- (Increase) Decrease in Other Assets 425 450 (25) (Decrease) Increase in Payables and Accruals (3,923) (6,652) 2,751 ------------- ------------- ------------- (10,560) (11,030) 492 ------------- ------------- ------------- CASH FLOWS - INVESTING ACTIVITIES Decrease (Increase) in Advances to Joint Venture and Investment in Affiliate 30 30 (22) Property and Equipment Additions, net 89 88 1 ------------- ------------- ------------- 119 118 (21) ------------- ------------- ------------- CASH FLOWS - FINANCING ACTIVITIES (Decrease) Increase in Notes Payable 13,568 14,071 (503) ------------- ------------- ------------- 13,568 14,071 (503) ------------- ------------- ------------- EFFECT OF EXCHANGE RATE CHANGES ON CASH (59) (59) -- ------------- ------------- ------------- NET (DECREASE) INCREASE IN CASH 3,068 3,100 (32) CASH AT BEGINNING OF PERIOD 364 331 33 ------------- ------------- ------------- CASH AT END OF PERIOD $ 3,432 $ 3,431 $ 1 ============= ============= ============= SUPPLEMENTAL DISCLOSURES: Increase in Notes Payable Related to an Acquisition $ 248,339 $ 248,339 $ -- Issuance of Class C Units in Exchange for Assets $ 2,151 $ 2,151 $ --
See notes to condensed combining financial statements. -27- 31 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. AND SUBSIDIARIES NOTES TO CONDENSED COMBINING FINANCIAL STATEMENTS JUNE 30, 2000 (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 managed 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 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 stockholders of Centex elect the four-person Board of Directors of Holding. Three of the Board members, representing the majority of the Board, are independent outside directors who are also not directors of Centex. Thus, the stockholders of Centex control the general partner of the Partnership. The general partner and independent board of Holding manage how the Partnership conducts its activities, including the sales, development, maintenance and zoning of properties. The general partner, acting on behalf of the Partnership, 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 Corporation and subsidiaries included elsewhere in this Form 10-Q for supplementary condensed combined financial statements for Centex Corporation and Subsidiaries, Holding and Subsidiary, and the Partnership and Subsidiaries. (B) Holding has a service agreement with Centex Service Company, a wholly-owned subsidiary of Centex, whereby Centex Service Company provides certain development, tax, accounting and other similar services for Holding. This agreement was amended for fiscal 2001 to increase the monthly fee from $30,000 per month to $86,000 per month to reimburse Centex for the estimated cost of the expanded services it now provides to Holding. -28- 32 The Partnership sells lots to Centex Homes pursuant to certain purchase and sale agreements. Revenues from these sales were zero and $3.1 million for the three months ended June 30, 2000 and 1999, respectively. Gains associated with these sales were zero and $108,000 for the three months ended June 30, 2000 and 1999, respectively. (C) A summary of comprehensive income for the three months ended June 30, 2000 is presented below (dollars in thousands): Net Earnings $ 401 Accumulated Other Comprehensive Income (Loss): Foreign Currency Translation Adjustments (270) ---------- Comprehensive Income (Loss) $ 131 ==========
(D) A summary of changes in stockholders' equity and partners' capital is presented below (dollars in thousands):
For the Three Months Ended June 30, 2000 ----------------------------------------------------------------------------------------------- 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, 2000 $ 69,185 $ 500 $ 1,142 $ 70,644 $ 1 $ 800 $ (2,760) Partnership Units Issued in Exchange for Assets 1,346 -- -- 1,346 -- -- -- Net Earnings 401 -- -- 505 -- -- (104) Accumulated Other Comprehensive Income (Loss): Foreign Currency Translation Adjustments (270) -- -- (270) -- -- -- ------------ ------------ ------------ ------------ ------------ ------------ ------------ Balance at June 30, 2000 $ 70,662 $ 500 $ 1,142 $ 72,225 $ 1 $ 800 $ (2,864) ============ ============ ============ ============ ============ ============ ============
During fiscal year 1998, the partnership agreement governing the Partnership was amended to allow for the issuance of a new class of limited partnership units, Class C Preferred Partnership Units ("Class C Units"), to be issued in exchange for assets. During the June 2000 quarter, 1,346 Class C Units were issued in exchange for assets with a fair market value of $1.3 million to Centex Homes, the Partnership's sole limited partner. 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 -29- 33 basis for preference accruals. Unrecovered Capital for Class A and Class C limited partners aggregated approximately $69 million as of June 30, 2000 and as of that date preference payments in arrears totaled $16.4 million. No preference payments were made during the quarter. (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 $225 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 time period between April 15, 1999 and March 31, 2001, Fairclough's operations will be carried out 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 $ 270,450 Goodwill 34,904 Notes Issued and Liabilities Assumed (303,649) --------------- Cash Paid $ 1,705 ===============
(F) The Companies operate in five principal business segments: International Home Building, Domestic Home Building, Commercial Development, Multi-Family Development, and Land Sales. All of the segments operate in the United States except for International Home Building, which acquires and develops residential properties and constructs single and multi-family housing units in the United Kingdom. International Home Building currently operates in the United Kingdom. -30- 34 INTERNATIONAL HOME BUILDING The following table sets forth financial information relating to the International Homebuilding operations (dollars in thousands):
-------------------------------- For the Three Months Ended June 30, -------------------------------- 2000 1999 -------------- -------------- Revenues $ 64,172 $ 69,527 Costs and Expenses (55,321) (61,096) Selling, General & Administrative Expenses (5,660) (5,165) Interest (2,536) (3,005) -------------- -------------- Operating Earnings $ 655 $ 261 ============== ==============
DOMESTIC HOMEBUILDING The following table sets forth financial information relating to the Domestic Homebuilding operations (dollars in thousands):
------------------------------ For the Three Months Ended June 30, ------------------------------ 2000 1999 ------------- ------------- Revenues $ 3,446 $ 3,403 Cost of Sales (3,020) (2,933) Selling, General & Administrative Expenses (422) (380) ------------- ------------- Operating Earnings $ 4 $ 90 ============= =============
COMMERCIAL DEVELOPMENT The following table sets forth financial information relating to the Commercial Development operations (dollars in thousands):
------------------------------ For the Three Months Ended June 30, ------------------------------ 2000 1999 ------------- ------------- Sales Revenues $ -- $ 442 Rental Income 2,380 644 Cost of Sales -- (288) Selling, General & Administrative Expenses (1,481) (332) Interest (1,007) (291) ------------- ------------- Operating (Loss) Earnings $ (108) $ 175 ============= =============
-31- 35 MULTI-FAMILY DEVELOPMENT The following table sets forth financial information relating to the Multi-Family operation (dollars in thousands):
------------------------------ For the Three Months Ended June 30, ------------------------------ 2000 1999 ------------- ------------- Other Revenues $ 1,004 $ -- Selling, General & Administrative Expenses (476) (535) Interest -- (12) ------------- ------------- Operating Earnings (Loss) $ 528 $ (547) ============= =============
LAND SALES The following table sets forth financial information relating to the Land Sales operations (dollars in thousands):
------------------------------ For the Three Months Ended June 30, ------------------------------ 2000 1999 ------------- ------------- Sales Revenues $ -- $ 4,653 Other Revenues 115 -- Cost of Sales -- (4,247) Selling, General & Administrative Expenses (146) (104) ------------- ------------- Operating (Loss) Earnings $ (31) $ 302 ============= =============
(G) Certain prior year balances have been reclassified to be consistent with the June 30, 2000 presentation. -32- 36 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS On a combined basis, the Companies reported revenues for the quarter ended June 30, 2000 of $71.1 million compared to $78.7 million for the quarter ended June 30, 1999. Net earnings for the current quarter were $401,000 compared to $20,000 for the same period last year. The significant decrease in revenues for the quarter ended June 30, 2000 compared to the same period last year primarily resulted from decreased sales revenue in the Companies' Land Sales and International Homebuilding business segments. Net earnings for the quarter exceeded last year's comparable results due primarily to operating results of the Companies' Multi-Family Development segment. INTERNATIONAL HOME BUILDING The following summarizes International Home Building's results for the three months ended June 30, 2000, compared to the same period for the prior year (dollars in thousands):
------------------------------ For the Three Months Ended June 30, ------------------------------ 2000 1999 ------------- ------------- Revenues $ 64,172 $ 69,527 Costs and Expenses (55,321) (61,096) Selling, General & Administrative Expenses (5,660) (5,165) Interest (2,536) (3,005) ------------- ------------- Operating Earnings $ 655 $ 261 ============= =============
For the three months ended June 30, 2000, Fairclough closed on the sale of 300 single family homes compared to 409 for same period last year. The preferred distribution to the seller totaled $2.5 million. Although preferred stock is ordinarily treated as an equity security, in this case the preferred stock has the essential characteristics of debt and, among other things, it has a nominal residual interest value which is mandatorily redeemable in two years. Therefore, the preferred stock has been treated as debt and the preferred distribution has been recorded as interest expense. -33- 37 DOMESTIC HOME BUILDING The following summarizes Domestic Home Building's results for the three months ended June 30, 2000 compared to the same period for the prior year (dollars in thousands):
------------------------------ For the Three Months Ended June 30, ------------------------------ 2000 1999 ------------- ------------- Revenues $ 3,446 $ 3,403 Cost of Sales (3,020) (2,933) Selling, General & Administrative Expenses (422) (380) ------------- ------------- Operating Earnings $ 4 $ 90 ============= ============= Units Closed 17 11 ============= ============= Gross Margin Per Unit $ 25 $ 43 ============= =============
During the three months ended June 30, 2000 and 1999, revenues resulted from sales of single-family homes in New Jersey. COMMERCIAL DEVELOPMENT The following summarizes Commercial Development's results for the quarter ended June 30, 2000 compared to the same period for the prior year (dollars and square feet in thousands):
------------------------------ For the Three Months Ended June 30, ------------------------------ 2000 1999 ------------- ------------- Sales Revenues $ -- $ 442 Rental Income 2,380 644 Cost of Sales -- (288) Selling, General & Administrative Expenses (1,481) (332) Interest (1,007) (291) ------------- ------------- Operating (Loss) Earnings $ (108) $ 175 ============= ============= Operating Square Feet 1,043 490 ============= =============
-34- 38 During the quarter ended June 30, 2000, construction was completed on 67,000 square feet of office and industrial space. At June 30, 2000, the Company owned, either directly or through interests in joint ventures, 1,043,000 square feet of office and industrial buildings in California, Texas, Florida, North Carolina and Massachusetts. This space consists of twelve properties ranging in size from 11,000 square feet to 218,000 square feet. As of June 30, 2000, the occupancy level ranged from 28% to 100%, with an average occupancy level of 85%. The rental income from these properties increased during the quarter as compared to the same period last year due to the addition of 550,000 square feet of operating properties. Sales revenues for the quarter ended June 30, 1999 consisted of the sale of land in Texas. MULTI-FAMILY DEVELOPMENT The following summarizes Multi-Family Development's ("Multi-Family") results for the quarter ended June 30, 2000 compared to the same period for the prior year (dollars in thousands):
------------------------------ For the Three Months Ended June 30, ------------------------------ 2000 1999 ------------- ------------- Other Revenues - Joint Venture Earnings $ 1,004 $ -- Selling, General & Administrative Expenses (476) (535) Interest -- (12) ------------- ------------- Operating Earnings (Loss) $ 528 $ (547) ============= =============
During the quarter ended June 30, 2000, Multi-Family closed on the sale of a 182-unit apartment complex in College Station, Texas. LAND SALES The following summarizes Land Sales' results for the three months ended June 30, 2000 compared to the same period for the prior year (dollars in thousands):
------------------------------ For the Three Months Ended June 30, ------------------------------ 2000 1999 ------------- ------------- Sales Revenues $ -- $ 4,653 Other Revenues 115 -- Cost of Sales -- (4,247) Selling, General & Administrative Expenses (146) (104) ------------- ------------- Operating (Loss) Earnings $ (31) $ 302 ============= =============
-35- 39 Other Revenues included $47,000 of earnings in joint ventures and $67,000 in interest income. Sales for the quarter ended June 30, 1999 comprised lot sales to Centex Homes in Naples, Florida totaling $3.1 million plus the sale of 5 acres of commercial property in The Colony, Texas. LIQUIDITY AND CAPITAL RESOURCES During the three months ended June 30, 2000, 1,346 Class C Preferred Partnership Units were issued in exchange for assets with a fair market value of $1.3 million. Also during the quarter ended June 30, 2000, the Companies drew $6.0 million on existing project loans. Development operations are not anticipated to provide a significant source of earnings or liquidity for the Companies for the next 12 to 18 months. As a result, the revenues, earnings and liquidity of the Companies will continue to be largely dependent on the sale of single-family homes, land sales, and the sale or permanent financing of development projects. The Companies believe that the cash flows from these sources will be sufficient to provide the necessary funding for current and future needs. 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 There have been no material changes in the Companies' market risk from March 31, 2000. For more information regarding the Companies' market risk, refer to the Companies' Annual Report on Form 10-K for the fiscal year ended March 31, 2000. -36- 40 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (6) 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 June 30, 2000. All other items required under Part II are omitted because they are not applicable. -37- 41 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 August 11, 2000 /s/ Stephen M. Weinberg -------------------------------------------------- Stephen M. Weinberg Director and President (principal executive officer) August 11, 2000 /s/ Todd D. Newman -------------------------------------------------- Todd D. Newman Senior Vice President, Chief Financial Officer and Treasurer (principal financial officer and chief accounting officer) -38- 42 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 August 11, 2000 /s/ Stephen M. Weinberg --------------------------------------------------- Stephen M. Weinberg Director and President (principal executive officer) August 11, 2000 /s/ Todd D. Newman --------------------------------------------------- Todd D. Newman Senior Vice President, Chief Financial Officer and Treasurer (principal financial officer and chief accounting officer) -39- 43 INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION ------- ----------- 27.1 Financial Data Schedule - Centex Corporation 27.2 Financial Data Schedule - 3333 Holding Corporation 27.3 Financial Data Schedule - Centex Development Company, L.P.