-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, VlSWxQb2WpAXxz30eF1B6kZNejwq4wtMmz/mrXYCeC55iAO8RB2lg9YiuYHLGnsM BjmwXHnaK+o7Y9DvKdzk3Q== 0000950134-95-001300.txt : 19950605 0000950134-95-001300.hdr.sgml : 19950605 ACCESSION NUMBER: 0000950134-95-001300 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 17 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950602 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTEX CORP CENTRAL INDEX KEY: 0000018532 STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531] IRS NUMBER: 750778259 STATE OF INCORPORATION: NV FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-06776 FILM NUMBER: 95544828 BUSINESS ADDRESS: STREET 1: 3333 LEE PARKWAY SUITE 1200 CITY: DALLAS STATE: TX ZIP: 75219 BUSINESS PHONE: 2145596500 MAIL ADDRESS: STREET 1: PO BOX 19000 STREET 2: PO BOX 19000 CITY: DALLAS STATE: TX ZIP: 75219 FORMER COMPANY: FORMER CONFORMED NAME: CENTEX CONSTRUCTION CO INC DATE OF NAME CHANGE: 19681211 FILER: COMPANY DATA: COMPANY CONFORMED NAME: 3333 HOLDING CORP CENTRAL INDEX KEY: 0000818762 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 752178860 STATE OF INCORPORATION: NV FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-09624 FILM NUMBER: 95544829 BUSINESS ADDRESS: STREET 1: 3333 LEE PKWY STREET 2: SUITE 500 CITY: DALLAS STATE: TX ZIP: 75219 BUSINESS PHONE: 2145596700 MAIL ADDRESS: STREET 1: PO BOX 19000 STREET 2: PO BOX 19000 CITY: DALLAS STATE: TX ZIP: 75219 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTEX DEVELOPMENT CO LP CENTRAL INDEX KEY: 0000818764 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 752168471 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-09625 FILM NUMBER: 95544830 BUSINESS ADDRESS: STREET 1: PO BOX 19000 CITY: DALLAS STATE: TX ZIP: 75219 BUSINESS PHONE: 2145596700 MAIL ADDRESS: STREET 1: PO BOX 19000 STREET 2: PO BOX 19000 CITY: DALLAS STATE: TX ZIP: 75219 10-K405 1 FORM 10-K 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K JOINT ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED MARCH 31, 1995 COMMISSION FILE NO. 1-6776 COMMISSION FILE NOS. 1-9624 AND 1-9625, RESPECTIVELY CENTEX CORPORATION 3333 HOLDING CORPORATION AND CENTEX DEVELOPMENT COMPANY, L.P. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) (EXACT NAME OF REGISTRANTS AS SPECIFIED IN THEIR CHARTERS) NEVADA NEVADA AND DELAWARE, RESPECTIVELY (STATE OF INCORPORATION) (STATES OF INCORPORATION OR ORGANIZATION) 75-0778259 75-2178860 AND 75-2168471, RESPECTIVELY (I.R.S. EMPLOYER IDENTIFICATION NO.) (I.R.S. EMPLOYER IDENTIFICATION NOS.) 3333 LEE PARKWAY, SUITE 1200, DALLAS, TEXAS 75219 3333 LEE PARKWAY, SUITE 500, DALLAS, TEXAS 75219 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (214) 559-6500 (214) 559-6700 (REGISTRANT'S TELEPHONE NUMBER) (REGISTRANTS' TELEPHONE NUMBER)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH NAME OF EACH EXCHANGE ON WHICH EXCHANGE ON WHICH TITLE OF EACH CLASS REGISTERED TITLE OF EACH CLASS REGISTERED -------------------- ----------------------- ---------------------------- ----------------------- CENTEX CORPORATION 3333 HOLDING CORPORATION COMMON STOCK NEW YORK STOCK COMMON STOCK NEW YORK STOCK ($.25 PAR VALUE) EXCHANGE ($.01 PAR VALUE) EXCHANGE CENTEX DEVELOPMENT COMPANY, L.P. WARRANTS TO PURCHASE NEW YORK STOCK CLASS B UNITS OF EXCHANGE LIMITED PARTNERSHIP INTEREST EXPIRING NOVEMBER 30, 1997
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE Indicate by check mark whether each registrant: (1) has 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 (or for such shorter period that each such registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X . No . --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrants' knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K, or any amendment to Form 10-K. X --- The aggregate market value of the tandem traded Centex Corporation common stock, 3333 Holding Corporation common stock and Centex Development Company, L.P. warrants to purchase Class B units of limited partnership interest held by non-affiliates of the registrants on May 30, 1995 was approximately $780 million. 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 May 30, 1995: Centex Corporation Common Stock 28,147,011 shares 3333 Holding Corporation Common Stock 1,000 shares Centex Development Company, L.P. Class A Units of Limited Partnership Interest 1,000 units
DOCUMENTS INCORPORATED BY REFERENCE Portions of the following documents are incorporated by reference in Parts A.III and B.III of this Report: Proxy statements for the annual meetings of stockholders of Centex Corporation and 3333 Holding Corporation to be held on July 27, 1995. ================================================================================ 2 JOINT ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED MARCH 31, 1995 CENTEX CORPORATION AND SUBSIDIARIES AND 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. JOINT EXPLANATORY STATEMENT On November 30, 1987, Centex Corporation ("Centex" or the "Company") distributed as a dividend to its stockholders (through a nominee, the "Nominee") all of the issued and outstanding shares of the common stock, par value $.01 per share ("Holding Common Stock"), of 3333 Holding Corporation, a Nevada corporation, ("Holding"), and 900 warrants (the "Stockholder Warrants") to purchase Class B Units of limited partnership interest in Centex Development Company, L.P., a Delaware limited partnership, ("CDC" or the "Partnership"). Pursuant to an agreement with the Nominee (the "Nominee Agreement"), the Nominee is the record holder of the Stockholder Warrants and 1,000 shares of Holding Common Stock, which constitutes all of the issued and outstanding capital stock of Holding, on behalf of and for the benefit of persons who are from time to time the holders of the common stock, par value $.25 per share ("Centex Common Stock"), of Centex ("Centex Stockholders"). Each Centex Stockholder owns a beneficial interest in that portion of the 1,000 shares of Holding Common Stock and the Stockholder Warrants that the total number of shares of Centex Common Stock held by such stockholder bears to the total number of shares of Centex Common Stock outstanding from time to time. This beneficial interest is not represented by a separate certificate or receipt. Instead, each Centex Stockholder's beneficial interest in such pro rata portion of the shares of Holding Common Stock and the Stockholder Warrants is represented by the certificate or certificates evidencing such Centex Stockholder's Centex Common Stock, and is currently tradeable only in tandem with, and as a part of, each such Centex Stockholder's Centex Common Stock. The tandem securities are listed and traded on the New York Stock Exchange and The International Stock Exchange of the United Kingdom and the Republic of Ireland, Ltd. and are registered with the Securities and Exchange Commission (the "Commission") separately under Section 12(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Holding and CDC were each organized in 1987 in connection with the distribution. 3333 Development Corporation, a wholly-owned subsidiary of Holding ("Development"), is the sole general partner of CDC. At present, Centex, Holding and CDC have elected to satisfy their respective periodic reporting obligations under the Exchange Act, and the rules and regulations promulgated thereunder, by preparing and filing joint periodic reports. PART A of this Annual Report on Form 10-K for the fiscal year ended March 31, 1995 (the "Report") relates to Centex and its subsidiaries. PART B of this Report relates to Holding (and its subsidiary, Development) and to CDC. For a complete understanding of the tandem traded securities, PART A and PART B of this Report should be read in combination. Information concerning the earnings and financial condition of the three companies, on an aggregate basis, is included in Note (H) of the Notes to Consolidated Financial Statements of Centex Corporation and subsidiaries on pages F-18 - F-19 of Exhibit 99 to this Report. 2 3 FORM 10-K TABLE OF CONTENTS
PAGE ---- JOINT EXPLANATORY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 PART A. CENTEX CORPORATION AND SUBSIDIARIES ------- PART I Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . 15 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters . . . . . . . 16 Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . 16 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 PART III Item 10. Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . . 17 Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Item 12. Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . 17 Item 13. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . 17 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K . . . . . . . . . 17 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 --------------------------------- PART B. 3333 HOLDING CORPORATION AND SUBSIDIARY AND ------- CENTEX DEVELOPMENT COMPANY, L.P. PART I PAGE ---- Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . 24
3 4 TABLE OF CONTENTS (CONTINUED)
PART II PAGE ---- Item 5. Market for Registrants' Common Equity and Related Stockholder Matters . . . . . . 26 Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . 28 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 PART III Item 10. Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . 28 Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Item 12. Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . 31 Item 13. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . 34 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K . . . . . . . . 35 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36-37 ------------------------------------ INDICES TO EXHIBITS CENTEX CORPORATION AND SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38-41 3333 HOLDING CORPORATION AND SUBSIDIARY . . . . . . . . . . . . . . . . . . . . . . . . . . . 42-43 CENTEX DEVELOPMENT COMPANY, L.P. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44-46
4 5 PART A. CENTEX CORPORATION AND SUBSIDIARIES PREFATORY STATEMENT PART A of this Report includes information relating to Centex Corporation and subsidiaries ("Centex" or the "Company"), File No. 1-6776. See Joint Explanatory Statement on page 2 of this Report. References to Centex or the Company in this Report shall include Centex and its subsidiaries unless the context otherwise requires. Reference is made to PART B of this Report for information relating separately to 3333 Holding Corporation ("Holding") and its subsidiary, 3333 Development Corporation ("Development"), and to Centex Development Company, L.P. ("CDC" or the "Partnership"). PART I ITEM 1. BUSINESS GENERAL DEVELOPMENT OF BUSINESS Centex is incorporated in the State of Nevada. The Company's common stock, par value $.25 per share ("Centex Common Stock") began trading publicly in 1969. As of May 30, 1995, 28,147,011 shares of Centex Common Stock, which are traded on the New York Stock Exchange (NYSE) and The International Stock Exchange of the United Kingdom and the Republic of Ireland, Ltd., were outstanding. Since its founding in 1950 as a Dallas, Texas-based residential and commercial construction company, Centex has evolved into a multi-industry company. Centex currently operates in three business segments: Home Building, Financial Services and Contracting and Construction Services. Centex also has a 49% interest in Centex Construction Products, Inc., a NYSE listed company in the construction products business. Centex is the nation's largest home builder (having built and delivered, through its wholly-owned subsidiary Centex Real Estate Corporation d/b/a Centex Homes ("CREC" or "Centex Homes"), 12,964 homes in its fiscal year ended March 31, 1995). Centex's Home Building operations currently involve the construction and sale of residential housing in 289 neighborhoods in 44 different markets. These activities also include the purchase and development of land. Centex has participated in the home building business since 1950. Centex's Financial Services operations in fiscal 1995 included mortgage origination and other related services on homes sold by Centex subsidiaries and by third parties as well as the operation of a savings and loan. Centex has been in the mortgage banking business since 1973. Centex is a leading retail mortgage originator (originating approximately $4.2 billion of residential mortgages in fiscal 1995). In 1988 the Company acquired a savings and loan operation with eight branch offices in central Texas. The savings and loan deposits and branch operations were sold and the savings and loan was liquidated in December 1994. Centex entered the contracting and construction services business in 1966 with the acquisition of J.W. Bateson Company, Inc. (now known as Centex Bateson Construction Company, Inc.), a Dallas-based contractor which has been in business since 1936. Additional significant acquisitions of construction companies were made in 1978, 1982 and 1990. Centex currently ranks as the nation's largest general building contractor. The contracting and construction activities of the Company involve the construction of buildings for both private and government interests, including office, commercial and industrial buildings, hospitals, hotels, museums, libraries, airport facilities, condominiums and educational institutions. Centex's involvement in the construction products business started in 1963 when it began construction of its first cement plant. Since that time, this segment has expanded to include additional cement production and distribution facilities and the production, distribution and sale of aggregates, readymix concrete and gypsum wallboard. In April 1994, the 5 6 Company's formerly wholly-owned Construction Products group, Centex Construction Products, Inc. (CXP), completed an initial public offering of 51% of its stock, which shares are now traded on the New York Stock Exchange. CXP is the 6th largest U.S. owned cement producer and the nation's 13th largest cement producer. Centex retained a 49% interest in this group. In fiscal 1988, Centex established CDC. Reference is made to PART B of this Report for a discussion of the business of CDC. FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS Notes (B) and (I) of the Notes to Consolidated Financial Statements of Centex on pages F-10 - F-11 and F-20 - F-21 of Exhibit 99 to this Report contain additional information about the savings and loan and the Company's business segments for years ended March 31, 1995, 1994 and 1993 and are incorporated herein by reference. NARRATIVE DESCRIPTION OF BUSINESS HOME BUILDING The Company's Home Building operations primarily involve the construction and sale of residential housing, including the purchase and development of land. The Company's Home Building operations have ranked, by the number of units produced in a calendar year, as the largest U.S. builder of single-family homes since 1989. Centex is also the only company to rank among Professional Builder's top 10 home builders for each of the past 26 years. Centex sells to both first time and move-up buyers. Approximately 95% of the houses Centex sells are single-family detached homes and the remainder are townhomes and low-rise condominiums. Markets Centex follows a strategy of reducing exposure to local market volatility by spreading operations across geographically and economically diverse markets. Centex presently builds in 44 market areas in 20 states and the United Kingdom. The markets are listed below by geographic areas. WEST California - Seattle, Washington East Bay Area Reno, Nevada Sacramento Portland, Oregon Bakersfield Riverside/Orange/San Bernadino Northern Los Angeles/Ventura Central Valley (Fresno & Visalia) San Diego MIDWEST Chicago, Illinois Indianapolis, Indiana Minneapolis, Minnesota Columbus, Ohio Denver, Colorado EAST Nashville, Tennessee Atlanta, Georgia Virginia - North Carolina - Northern Virginia Charlotte Hampton Roads Raleigh/Durham Maryland South Carolina - East Windsor, New Jersey Charleston Columbia Greenville
6 7 SOUTHEAST Florida - Ft. Lauderdale Palm Beach Jacksonville Bradenton/Sarasota Naples/Ft. Myers Tampa Orlando Titusville SOUTHWEST Texas - Phoenix, Arizona Austin Albuquerque, NM Dallas/Fort Worth (3 markets) Houston (2 markets) Killeen San Antonio
In fiscal 1995, Centex closed 12,964 houses, including first time, move-up and, in some markets, custom homes, ranging in price from approximately $65,000 to about $650,000, with the average sale price being approximately $159,000. In the Dallas and San Antonio locations Centex has custom home divisions which offer higher-end homes. Summarized below are Centex's home closings, sales (orders) backlog and sales (orders) by geographic area for each of the five fiscal years ended March 31, 1995.
For the Year Ended March 31, -------------------------------------------------------------- 1995 1994 1993 1992 1991 ---- ---- ---- ---- ---- CLOSINGS (IN UNITS): West 2,454 1,973 1,358 901 903 Midwest 1,283 1,114 1,118 860 808 East 2,921 2,599 2,118 1,595 1,731 Southeast 2,632 2,895 2,433 1,898 2,021 Southwest 3,674 3,982 3,252 2,485 2,399 ------- ------- ------- ------ ------ 12,964 12,563 10,279 7,739 7,862 ======= ======= ======= ====== ====== AVERAGE SALES PRICE (000) $ 159 $ 147 $ 138 $ 136 $ 128 ======= ======= ====== ====== ====== SALES (ORDERS) BACKLOG, AT END OF PERIOD (IN UNITS): West 603 756 663 581 266 Midwest 442 622 461 487 323 East 918 1,279 1,192 788 512 Southeast 892 1,387 1,260 1,022 636 Southwest 1,132 1,751 1,575 1,131 718 ------- ------- ------- ----- ----- 3,987 5,795 5,151 4,009 2,455 ======= ======= ======= ===== ===== SALES (ORDERS) (IN UNITS): West 2,301 2,066 1,440 1,047 676 Midwest 1,103 1,275 1,092 1,024 810 East 2,560 2,686 2,522 1,871 1,558 Southeast 2,137 3,022 2,671 2,284 1,887 Southwest 3,055 4,158 3,696 2,898 2,273 ------- ------- ------- ----- ----- 11,156 13,207 11,421 9,124 7,204 ======= ======= ======= ===== =====
7 8 Inventory Turnover The Company's policy has been to acquire land with the intent to complete the sale of housing units within 24-36 months from the date of acquisition. Generally, this involves land that is properly zoned and is either ready for development or, to a much lesser degree, already developed. The Company has acquired a substantial amount of its finished and partially improved lots and land under option agreements which are exercised over specified time periods, or in certain cases, as the lots are needed. The purchase of finished lots generally allows the Company to shorten the lead time to commence construction and reduces the risks of unforeseen improvement costs and volatile market conditions. Competition and Other Factors The residential housing industry is essentially a "local" business and is highly competitive. Centex competes in each of its market areas with numerous other home builders. The Company's Home Building operations account for less than 2% of the total housing starts in the United States. The main competitive factors affecting Centex's Home Building operations are location, price, cost of providing mortgage financing for customers, construction costs, design and quality of homes, marketing expertise, availability of land and a builder's reputation. Management believes the Company competes effectively by maintaining geographic diversity, being responsive to the specific demands of each market and managing the operations at a local level. The home building industry is cyclical and is particularly affected by changes in local economic conditions and in long-term and short-term interest rates and, to a lesser extent, changes in property taxes and energy costs, federal income tax laws, federal mortgage financing programs and various demographic factors. The political and economic environment affects both the demand for housing constructed by the Company and the Company's cost of financing. Unexpected climatic conditions, such as unusually heavy or prolonged rain or snow, may affect operations in certain areas. The housing industry is subject to extensive and complex regulations. The Company and its subcontractors must comply with various federal, state and local laws and regulations including zoning, building, environmental, advertising and consumer credit rules and regulations. The Company is also subject to other rules and regulations in connection with its manufacturing and sales activities, including requirements as to building materials to be used and building designs. The Company's homes are inspected by local authorities. The Company's Home Building operations are subject to numerous federal, state and local regulatory schemes concerning, among other things, worker health and safety, zoning, building design, construction materials, and the extensive and changing federal, state and local laws, regulations and ordinances governing the protection of the environment ("Environmental Laws"), including protection of endangered species. All of the foregoing regulatory requirements are applicable to all home building companies, and to date, compliance with the foregoing requirements has not had a material impact on the Company. The Company believes that it is in material compliance with all such requirements. Centex has numerous suppliers of all the materials and services and sources of lots and land used in home building and believes that it can deal effectively with any problems it may experience relating to the supply of materials and services as well as lots and land. Vista Acquisition In December 1994, Centex International, Inc., a wholly-owned subsidiary of Centex Corporation, entered into an agreement with Dallas-based Vista Properties, Inc. under which it would acquire equity interests in Vista and in its affiliated partnership, Vista Partners, as part of a proposed prepackaged bankruptcy structuring by Vista. For an investment of approximately $70 million, Centex would acquire an ownership in a portfolio 8 9 of properties, comprising over 4,000 acres in seven states. The land is zoned, planned or developed for: single- and multi-family residential, office and industrial, and retail and commercial. The acquisition would provide Centex with future residential sites in several of its existing markets as well as opportunities in retail, industrial and office segments. The transaction is expected to be completed during the summer of 1995, subject to the satisfaction of the condition stated in the agreement, including approval from Vista's securityholders and bankruptcy court approval. United Kingdom Joint Venture In February 1995, Centex announced its wholly-owned subsidiary, Centex Homes (UK) Limited, had entered into a joint venture agreement with a London-area home builder, The Charles Church Group Limited ("Charles Church"), to build homes in the United Kingdom. The venture is the first entry into the international home building marketplace for Centex Homes. Centex Homes (UK) Limited and Charles Church each are contributing $3 million in cash, with the remaining $9 million financed by a United Kingdom bank, which is guaranteed by Centex Homes. In addition, Centex Homes will transfer some personnel to the United Kingdom to work with the venture. The new operation, Charles Church Homes Limited, acquired its first parcel of undeveloped land in Berkshire County, west of London. Located in Sunningdale, the parcel consists of 2.1 acres. Homes in the 3,500-4,000 square foot range, which will sell for approximately $750,000, should be ready for occupancy late in calendar 1995. Several other potential sites in the London area are currently being evaluated. FINANCIAL SERVICES Financial Services consist of mortgage banking and, until December 1994, the savings and loan operations. The Company's mortgage banking activities are conducted through Centex's wholly-owned subsidiary, CTX Mortgage Company ("CTX"), which offers mortgage origination and other related services on homes sold by Centex Homes and by third parties. The savings and loan activities which were conducted through Texas Trust Savings Bank, FSB were sold in December 1994. CTX Mortgage Company CTX was created in 1973 to provide mortgage financing for homes built by Centex Homes, Centex's home building operation. The establishment by CTX of mortgage offices in substantially all of Centex Homes' housing markets has enabled it to consistently provide mortgage financing for an average of 73% of the homes built by Centex Homes ("Builder Loans") over the past five years. In 1985, CTX expanded its operations to include third-party loans ("Spot Loans") that are not associated with the sale of homes built by Centex. At March 31, 1995, CTX had 110 offices located in 23 states. The offices vary in size depending on volume in each locality. During the 1995 fiscal year, due to the increase in mortgage rates and the related decline in refinancings, CTX downsized its operations. The division's operating locations and personnel were reduced by approximately 40%. CTX is updating and expanding its mortgage banking systems, including reautomating its accounting and loan delivery functions. This process will continue during fiscal 1996. 9 10 The unit breakdown of Builder and Spot Loans for the five years ended March 31, 1995 are set forth in the following table:
For the Years Ended March 31, ------------------------------------------------------- 1995 1994 1993 1992 1991 ---- ---- ---- ---- ---- LOAN TYPES: Builder 8,504 9,289 7,758 5,897 6,002 Spot 28,574 49,254 30,543 17,819 10,996 ------ ------ ------ ------ ------ 37,078 58,543 38,301 23,716 16,998 ====== ====== ====== ====== ====== ORIGINATION VOLUME (IN BILLIONS) $4.2 $6.4 $4.2 $2.5 $1.5 PERCENT OF CENTEX CLOSINGS FINANCED 66% 74% 75% 76% 76%
CTX provides mortgage origination and other mortgage related services for Federal Housing Administration ("FHA"), Veterans Administration ("VA") and conventional loans on homes built and sold by the Company or by others. The Company's mortgage loans are first-lien mortgages secured by 1-4 family residences. A majority of the conventional loans are conforming loans which qualify for inclusion in guaranteed programs sponsored by Fannie Mae ("FNMA") or Freddie Mac ("FHLMC"). The remainder of the conventional loans are pre-approved and individually underwritten by private investors who purchase such loans on a whole-loan basis for their investment portfolios. The principal sources of income from CTX's mortgage banking business are: loan origination fees; revenues from sale of servicing rights; positive carry (discussed below); and marketing gains and losses. Generally, CTX sells its right to service the mortgage loans to various loan servicing companies, therefore, it retains no mortgage servicing rights. Accordingly, CTX avoids the risk of early payoffs and foreclosures. CTX enters into various financial agreements, in the normal course of business, in order to manage the exposure to changing interest rates as a result of having issued loan commitments to its customers at a specified price and period, committing to sell mortgage loans to various investors. By immediately selling the mortgages for future delivery, substantially all interest rate risk is removed at the time of closing. CTX borrows money at short-term rates to fund its mortgage loans. During the 30-to-60 day period between the closing of a loan and delivery of such loan to the purchaser, CTX earns the interest accrued on the mortgage, which is normally a higher interest rate than the rate paid on the short-term loans used to fund the mortgage during this 30-to-60 day holding period. This positive spread between the long-term interest rate earned and the short-term interest rate paid is referred to as "positive carry", and generally represents a major source of income. Competition and Other Factors The mortgage banking industry in the United States is highly competitive. CTX competes with other mortgage banking companies as well as financial institutions to supply mortgage financing at attractive rates to purchasers of Centex homes as well as to the general public. Mortgage Banking results in fiscal 1995 were negatively impacted by an increasingly competitive environment. Rapidly rising interest rates commencing in February 1994, virtually stopped refinancing activity and caused consumers to shift from more profitable fixed-rate mortgages to lower-margin adjustable rate products. 10 11 CTX is subject to the rules and regulations of, and examinations by, the Federal National Mortgage Association ("FNMA"), the Federal Home Loan Mortgage Corporation ("FHLMC"), the Department of Veterans' Affairs ("VA"), the Federal Housing Administration ("FHA"), the Government National Mortgage Association ("GNMA") and state regulatory authorities with respect to originating, processing, underwriting, making, selling, securitizing and servicing residential mortgage loans. In addition, there are other federal and state statutes and regulations affecting such activities. These rules and regulations, among other things, impose licensing obligations on CTX, establish eligibility criteria for mortgage loans, provide for inspection and appraisals of properties, regulate payment features and, in some cases, fix maximum interest rates, fees and loan amounts. CTX is required to maintain specified net worth levels by, and submit annual audited financial statements to FHA, VA, FNMA, FHLMC and GNMA and certain state regulators. CTX's affairs are also subject to examination by the Federal Housing Commissioner at all times to assure compliance with FHA regulations, policies and procedures. Among other federal and state consumer credit laws, mortgage origination and servicing activities are subject to the Equal Credit Opportunity Act, the Federal Truth-In-Lending Act, the Real Estate Settlement Procedures Act ("RESPA") and the regulations promulgated under such statutes which prohibit discrimination and unlawful kickbacks and referral fees and require the disclosure of certain information to borrowers concerning credit and settlement costs. Many of these regulatory requirements are designed to protect the interest of consumers, while others protect the owners or insurers of mortgage loans. Failure to comply with these requirements can lead to loss of approved status, demands for indemnification or loan repurchases from investors, class action lawsuits by borrowers, administrative enforcement actions and, in some cases, rescission or voiding of the mortgage loan by the mortgagor. Other financial-related services provided by CTX affiliates include acting as an agent for the issuance of homeowners' insurance policies, title insurance policies and escrow services. CTX Insurance Agency provides hazard insurance to home buyers in Texas and Florida through third party insurance companies. During fiscal 1994, CTX opened its first commercial loan operation. In the current fiscal year, CTX entered into a joint venture agreement with another homebuilder to provide mortgage origination for homes built by this homebuilder. In addition, during fiscal 1995, an affiliate of CTX entered the second lien market whereby this CTX affiliate will originate second mortgages for home improvements and home equity lines of credit. The affiliate utilizes CTX's branch network and telemarketing to solicit potential customers. Savings and Loan In December 1988, Centex purchased certain assets and assumed certain liabilities of four Texas savings and loan associations under the Federal Savings and Loan Insurance Corporation's assisted transactions process commonly known as the "Southwest Plan". The acquisition was made by Texas Trust Savings Bank, FSB ("Texas Trust"), a federal stock savings bank and subsidiary of CTX Holding Company ("CTX Holding"), a wholly-owned subsidiary of Centex. The acquisition was made pursuant to acquisition agreements and an assistance agreement (the "Assistance Agreement") with the Federal Savings and Loan Insurance Corporation (the "FSLIC"). During December 1994, Texas Trust negotiated an early termination of the Assistance Agreement with the Federal Deposit Insurance Corporation ("FDIC") (as successor to the FSLIC). On December 30, 1994 Texas Trust's eight branch facilities were sold to a financial institution and all deposit liabilities were assumed by the purchaser. On the same day, immediately following the branch sale, Texas Trust was dissolved, thereby completing Centex's exit from the savings and loan industry. CONTRACTING AND CONSTRUCTION SERVICES Centex's contracting and construction services work is performed nationwide. As a group, Centex's Contracting and Construction Services subsidiaries rank as one of the largest building contractors in the country as well as one of the largest U.S. - owned construction groups. The Construction Group is made up of seven firms with various geographic locations and project niches. The overall group is heavily weighted towards health care facility construction which represents nearly 40% of its mix. New contracts for fiscal 1995 totaled $1.15 billion versus $1.03 billion for fiscal 1994. The backlog of uncompleted contracts at March 31, 1995 was $1.33 billion, compared to $1.24 billion at March 31, 1994. The group's principal subsidiaries are as follows: 11 12 CENTEX BATESON CONSTRUCTION COMPANY, INC. - This Dallas-based contractor (acquired in 1966) has become one of the nation's larger general contractors specializing in government and competitively bid jobs. Its projects are nationwide. CENTEX-ROONEY CONSTRUCTION COMPANY, INC. - This Ft. Lauderdale-based subsidiary was acquired in 1978 and is one of the largest general contractors in the state of Florida. It operates primarily in Florida and handles predominantly negotiated work for private owners. CENTEX GOLDEN CONSTRUCTION COMPANY - This company (acquired in fiscal 1982) operates in the San Diego, Los Angeles and Northern California markets, handling both negotiated and competitively bid work. CENTEX-SIMPSON CONSTRUCTION COMPANY - This contractor (organized in 1966) is based in the Washington D. C. area and is engaged primarily in competitive bid work for the public sector. CENTEX-RODGERS CONSTRUCTION COMPANY - This company (organized in 1987) is headquartered in Nashville, Tennessee, and is active nationally in the private medical construction services market. CENTEX GREAT SOUTHWEST CORPORATION - This subsidiary (acquired in 1978) builds principally in the Tampa and Orlando areas and is a leading builder of airport terminals. CENTEX FORCUM LANNOM, INC. - This industrial contracting company (acquired in 1990) is located in Dyersburg, Tennessee and operates in Tennessee and surrounding states. As a general contractor or construction manager, Centex provides the supervisory personnel for the construction of the building or facility. In addition, Centex may perform varying amounts of the actual construction work on a project, but will generally hire subcontractors to perform the majority of the work. As a result, the Company's Contracting and Construction Services operation requires a relatively small asset base. Construction contracts are primarily entered into under two formats: competitively bid and negotiated jobs. In a competitively bid format, Centex will bid a fixed amount for which it will agree to construct the project based on an evaluation of detailed plans and specifications. In a negotiated job, the contractor bids on a fixed fee over the cost of the project and, in many instances, agrees that the final cost will not exceed a designated amount. Such contracts may include a provision whereby the owner will pay a part of any savings from the guaranteed amount to the contractor. The Company's highest margins in contracting operations have historically been on competitively bid jobs. Currently, the margins on competitive bid and negotiated jobs are about equal. On average, about half of Centex's projects are competitively bid, public jobs and the other half are negotiated contracts with private owners. The Company's public work for federal, state and local governments includes hospitals, jails, airports, parking garages, office buildings, military facilities, post offices and convention and performing arts centers. Most of Centex's private owner contracts are for hotels, medical facilities and office buildings, plus some shopping centers and condominiums. Competition and Other Factors The construction industry has become increasingly competitive, and Centex competes with numerous other companies. With respect to competitively bid projects, Centex generally competes for projects throughout the United States and with local, regional or national contractors, depending upon the nature of the project. For negotiated projects, Centex's subsidiaries compete primarily in the general geographical area where they are located and with other local, regional and national contractors. Centex solicits new projects by attending project bid meetings and meeting with builders and owners and through existing customers. Centex competes successfully on the basis of its reputation and financial strength. The Company's Contracting and Construction Services operations are affected by federal, state and local laws and regulations relating to worker health and workplace safety as well as Environmental Laws. With respect to health and safety matters, the Company believes that appropriate precautions are taken to protect employees and others from 12 13 workplace hazards. Current Environmental Laws may require the Company's operating subsidiaries to work in concert with project owners to acquire the necessary permits or other authorizations for certain activities, including the construction of projects located in or near wetland areas. The Company's Contracting and Construction Services operations are also affected by Environmental Laws regulating the use and disposal of hazardous materials encountered during demolition operations. The Company believes that the Contracting and Construction Services group's current procedures and practices are consistent with industry standards and that compliance by the Construction Group with the health and safety laws and Environmental Laws does not constitute a material burden or expense for the Company. The Company's Contracting and Construction Services operations obtain materials and services from numerous sources. The Company believes that its construction companies can deal effectively with any problems they may experience in the supply of materials and services. EMPLOYEES The breakdown of employees by line of business as of March 31, 1995 is presented in the following table:
Lines of Business Employees ----------------- --------- Home Building 2,491 Financial Services 1,654 Contracting and Construction Services 2,164 Corporate & Other 86 ----- 6,395 =====
13 14 The following is a summary of average balances and average interest rates for the periods ended December 31, 1994, March 31, 1994 and 1993. TEXAS TRUST SAVINGS BANK, FSB AVERAGE BALANCES AND INTEREST RATES ($ IN THOUSANDS)
FOR THE PERIOD FROM APRIL 1, 1994 For the Year THROUGH DECEMBER 30, 1994 Ended March 31, 1994 ------------------------------------- ------------------------------------- REVENUE/INTEREST AVERAGE EXPENSE Average Revenue/Interest BALANCE (ANNUALIZED) % Balance Expense % --------- ------------ ------- --------- ------------- ------- Earning assets: Interest-bearing deposits in other financial institutions and other investment securities . . . . . . . . . $132,022 $7,771 5.89% $101,181 $ 5,208 5.15% Loans, primarily residential mortgage, net of $661, $830, and $1,565, respectively, of valuation adjustments . . . . . . . . . . . . . . 21,199 1,484 7.00% 37,665 3,161 8.39% Assets covered by Fund assistance . . . . 12,899 816 6.33% 60,827 1,316 2.16% -------- ------- ------- -------- ------- ------ Total earning assets . . . . . . . . 166,120 10,071 6.06% 199,673 9,685 4.85% ------- ------- ------- ------ Cash and amounts due from banks . . . . . . . 10,507 3,465 Other assets . . . . . . . . . . . . . . . . 26,874 25,446 -------- -------- Total assets . . . . . . . . . . . . $203,501 $228,584 ======== ======== Interest-bearing liabilities: Deposits . . . . . . . . . . . . . . . . . $183,359 6,728 3.67% $197,341 7,205 3.65% FHLB advances and short-term borrowings . . . . . . . . . . . . . . 4,000 392 9.80% 10,882 622 5.72% -------- ------- ------- -------- ------- ------ Total interest-bearing liabilities . 187,359 7,120 3.80% 208,223 7,827 3.76% ------- ------- ------- ------ Other liabilities . . . . . . . . . . . . . . 4,013 4,928 Stockholder's equity . . . . . . . . . . . . 12,129 15,433 -------- -------- Total liabilities and stock- holder's equity . . . . . . . . . $203,501 $228,584 ======== ======== Net interest margin . . . . . . . . . . . . . $ 2,951 $ 1,858 ======= ======= Net yield on earning assets . . . . . . . . . 1.78% .93% ======= ====== Net margin . . . . . . . . . . . . . . . . . 2.26% 1.09% ======= ====== For the Year Ended March 31, 1993 ------------------------------------- Average Revenue/Interest Balance Expense % --------- -------------- ------- Earning assets: Interest-bearing deposits in other financial institutions and other investment securities . . . . . . . . . $ 78,756 $ 6,469 8.21% Loans, primarily residential mortgage, net of $661, $830, and $1,565, respectively, of valuation adjustments . . . . . . . . . . . . . . 10,728 1,347 12.56% Assets covered by Fund assistance . . . . 111,101 8,015 7.21% -------- ------ ------ Total earning assets . . . . . . . . 200,585 15,831 7.89% ------ ------ Cash and amounts due from banks . . . . . . . 807 Other assets . . . . . . . . . . . . . . . . 84,500 -------- Total assets . . . . . . . . . . . . $285,892 ======== Interest-bearing liabilities: Deposits . . . . . . . . . . . . . . . . . $217,561 9,480 4.36% FHLB advances and short-term borrowings . . . . . . . . . . . . . . 47,735 2,567 5.38% -------- ------- ------ Total interest-bearing liabilities . 265,296 12,047 4.54% ------- ------ Other liabilities . . . . . . . . . . . . . . 4,254 Stockholder's equity . . . . . . . . . . . . 16,342 -------- Total liabilities and stock- holder's equity . . . . . . . . . $285,892 ======== Net interest margin . . . . . . . . . . . . . $ 3,784 ======= Net yield on earning assets . . . . . . . . . 1.89% ====== Net margin . . . . . . . . . . . . . . . . . 3.35% ======
14 15 ITEM 2. PROPERTIES PLANT FACILITIES Prior to April 1994, the Company, in connection with its Construction Products operations, operated cement plants, quarries and related facilities at Buda, Texas, LaSalle, Illinois, Fernley, Nevada and Laramie, Wyoming. The Buda and LaSalle plants are owned by separate joint ventures in each of which Centex had a 50% interest. The Company's principal aggregate plants and quarries were located in Austin and Fort Worth, Texas and Marysville, California. In addition, the Company operated gypsum wallboard plants in Albuquerque and nearby Bernalillo, New Mexico. In April, 1994, the Company's formerly wholly-owned subsidiary, Centex Construction Products, Inc.,completed the sale of 51% of its stock through an initial public offering. See "Item 1. Business" on pages 5-13 of this Report for additional information relating to the Company's properties. ITEM 3. LEGAL PROCEEDINGS The management of the Company believes that none of the litigation matters in which Centex or any subsidiary is involved, if determined unfavorable to Centex or any subsidiary, would have a material adverse effect on the consolidated financial condition or operations of the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. EXECUTIVE OFFICERS OF CENTEX (SEE ITEM 10 OF PART III) The following is an alphabetical listing of the Company's executive officers, as such term is defined under the rules and regulations of the Securities and Exchange Commission. All of these executive officers have been employed by the Company and/or one or more subsidiaries of the Company for the past five years. All of these executive officers were elected by the Board of Directors of the Company at its Annual Meeting on July 28, 1994, to serve until the next Annual Meeting of Directors or until their respective successors are duly elected and qualified. There is no family relationship between any of these officers.
NAME AGE POSITIONS WITH CENTEX ---------------------------------- --- ------------------------------------------------------------------ Michael S. Albright 47 Vice President--Finance and Controller (Vice President--Finance since July 1992; Controller since November 1987; Vice President from July 1989 to July 1992) Timothy R. Eller 46 President, Chief Executive Officer and Chief Operating Officer of Centex Real Estate Corporation (President and Chief Operating Officer since January 1990; Chief Executive Officer since July 1991; Executive Vice President from July 1987 to January 1990) William J Gillilan III 49 President and Chief Operating Officer (President since July 1991; Chief Operating Officer since January 1990; Executive Vice President from July 1989 until July 1991)
15 16 Laurence E. Hirsch 49 Chairman of the Board and Chief Executive Officer (Chairman of the Board since July 1991; Chief Executive Officer since July 1988; President from March 1985 until July 1991) David W. Quinn 53 Executive Vice President and Chief Financial Officer (since February 1987) Raymond G. Smerge 51 Vice President, Chief Legal Officer, General Counsel and Secretary (Vice President and Chief Legal Officer since September 1985; General Counsel and Secretary since April 1993)
PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS (See Item 7 below.) ITEM 6. SELECTED FINANCIAL DATA (See Item 7 below.) ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information called for by Items 5, 6 and 7 is incorporated herein by reference to the information set forth under the following captions (on the page or pages indicated) in Exhibit 99 to this Report:
ITEMS CAPTION IN EXHIBIT 99 Pages ----- --------------------- ----- 5 Stock Prices and Dividends F-1 5 Indebtedness (Note (E) to Consolidated Financial F-13 - F-14 Statements of Centex) 6 Summary of Selected Financial Data F-30 - F-31 7 Short-term Debt and Long-term Debt (Note (E) to F-13 Consolidated Financial Statements of Centex) 7 Management's Discussion and Analysis of Results of F-24 - F-29 Operations and Financial Condition
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information called for by this Item 8 is included in Exhibit 99 to this Report as set forth in the Index to Consolidated Financial Statements and Schedules on page 18 of this Report (see Item 14). ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 16 17 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (See Item 11 below.) ITEM 11. EXECUTIVE COMPENSATION Except for the information relating to the executive officers of the Company, which follows Item 4 of Part I of this Report, the information called for by Items 10, 11, 12 and 13 is incorporated herein by reference to the information included and referenced under the following captions (on the pages indicated) in the Company's Proxy Statement dated June 15, 1995 for the July 27, 1995 Annual Meeting of Stockholders (the "1995 Centex Proxy Statement"):
ITEM CAPTION IN THE 1995 CENTEX PROXY STATEMENT PAGES ---- ------------------------------------------ ----- 10 Election of Directors 3-6 10 Section 16(a) Compliance 14 11 Executive Compensation 9-12 12 Security Ownership of Management and Certain Beneficial Owners 7-8 13 Certain Transactions 20-21
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (See Item 11 above.) ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS (See Item 11 above for information respecting indebtedness to Centex of certain officers and directors.) PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) The following documents are filed as part of this Report: (1) and (2) See the Index to Consolidated Financial Statements and Schedules below for a list of the Financial Statements and Financial Statement schedules filed herewith. 17 18 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
REFERENCE ---------------------------------- EXHIBIT 99 ----------- CENTEX CORPORATION AND SUBSIDIARIES Data incorporated by reference to Exhibit 99 Report of Independent Public Accountants . . . . . . . . . . . . . . . F-23 Statements of Consolidated Earnings for the Years Ended March 31, 1995, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . F-3 Consolidated Balance Sheets as of March 31, 1995 and 1994 . . . . . . . F-4 Statements of Consolidated Cash Flows for the Years Ended March 31, 1995, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . F-6 Statements of Consolidated Stockholders' Equity for the Years Ended March 31, 1995, 1994 and 1993 . . . . . . . . . . F-7 Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . F-8 - F-22 Quarterly Results (Unaudited) . . . . . . . . . . . . . . . . . . . . . F-32
Consolidated supporting schedules have been omitted either because the required information is contained in notes to the consolidated financial statements or because such schedules are not required or are not applicable. (3) EXHIBITS The information on exhibits required by this Item 14 is set forth in the Centex Index to Exhibits appearing on pages 38-41 of this Report. (b) Reports on Form 8-K: None. 18 19 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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 May 31, 1995 By: /s/ LAURENCE E. HIRSCH ------------------------------------------------------------ Laurence E. Hirsch, Chairman of the Board and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated. May 31, 1995 /s/ LAURENCE E. HIRSCH --------------------------------------------------------------- Laurence E. Hirsch, Chairman of the Board and Chief Executive Officer (principal executive officer) May 31, 1995 /s/ DAVID W. QUINN --------------------------------------------------------------- David W. Quinn, Executive Vice President and Chief Financial Officer (principal financial officer) May 31, 1995 /s/ MICHAEL S. ALBRIGHT --------------------------------------------------------------- Michael S. Albright, Vice President -- Finance and Controller (principal accounting officer) Directors: Alan B. Coleman, Dan W. Cook III, Juan L. Elek, William J Gillilan III, Laurence E. Hirsch, Clint W. Murchison, III, Charles H. Pistor, David W. Quinn, Paul R. Seegers, Paul T. Stoffel May 31, 1995 By: /s/ LAURENCE E. HIRSCH ------------------------------------------------------------ Laurence E. Hirsch, Individually and as Attorney-in-Fact*
- -------------------- *Pursuant to authority granted by powers of attorney, copies of which are filed herewith, except for Mr. Coleman, Cook and Stoffel's Powers of Attorney which will be filed upon execution. 19 20 PART B. 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. PREFATORY STATEMENT PART B of this Report includes information relating to 3333 Holding Corporation ("Holding"), File No. 1-9624, and subsidiary, and Centex Development Company, L.P. ("CDC" or the "Partnership"), File No. 1-9625. See the Joint Explanatory Statement on page 2 of this Report. References to Holding in this Report shall include references to its subsidiary, 3333 Development Corporation, a Nevada corporation and the sole general partner of CDC ("Development"), unless the context otherwise requires. Because CDC is a separate reporting entity under the Exchange Act, the information required by Form 10-K is separately included even though CDC may be deemed a "subsidiary" of Holding under the rules and regulations of the Securities and Exchange Commission (the "Commission") promulgated pursuant to the Exchange Act. Accordingly, information provided with respect to CDC should be deemed provided with respect to Holding to the extent appropriate. Information relating to both Holding and CDC is included herein as a single disclosure where applicable or appropriate; all other information is set forth separately. Reference is made to PART A of this Report for information relating separately to Centex Corporation ("Centex") and its subsidiaries. PART I ITEM 1. BUSINESS (a) Holding Holding is a Nevada corporation incorporated on May 5, 1987. Its executive offices are located at 3333 Lee Parkway, Suite 500, Dallas, Texas 75219; telephone (214) 559-6700. Holding owns all of the outstanding common stock of Development, and, as a result, has the ability to control Development. Development is the sole general partner of CDC, a Delaware limited partnership engaged in the real estate development business. Information concerning the acquisition of the capital stock of Development by Holding is included in Note (A) of the Notes to Combining Financial Statements of Holding and CDC (the "Holding/CDC Combining Financial Statements") included on page F-37 of Exhibit 99 of this Report, which is incorporated herein by this reference. Holding operates in a single industry segment. The principal liability of Holding is a $7,700,000 note payable to Centex which had an unpaid balance of $7,600,000 at March 31, 1995 (the "Holding Note"). See "Item 13. Certain Relationships and Related Transactions". Presently, Holding is not engaged in any business other than its ownership and control of Development. The Amended and Restated Agreement of Limited Partnership of Centex Development Company, L.P. (the "Partnership Agreement"), which governs the operations of CDC, provides that neither Holding nor Development shall be permitted, prior to Payout (as defined in the Partnership Agreement)("Payout") and repayment of the Holding Note, to own business interests or to engage in business activities other than those relating to CDC. Were Holding to engage in any other business activities, the Partnership Agreement would need to be amended to provide for the same. (b) CDC GENERAL DEVELOPMENT OF BUSINESS CDC is a Delaware limited partnership formed in March 1987 by Centex to broaden its line of business to include general real estate development. Centex believed that this expansion would improve stockholder value through the generation of value in longer-term real estate investments, the development of real estate and the benefits of the partnership form of business. Because the real estate development business generally requires a longer time horizon to maximize value than Centex's core homebuilding operations, and typically involves substantial acquisition and development indebtedness, 20 21 Centex concluded that this new line of business could best be conducted through CDC, an independent, publicly traded entity which is not consolidated with Centex for financial reporting purposes. Development, a wholly-owned subsidiary of Holding, is the sole general partner of CDC. CDC's executive offices are located at 3333 Lee Parkway, Suite 500, Dallas, Texas 75219; telephone (214) 559-6700. CDC was formed to manage, develop and sell (i) certain real estate, principally nonresidential, undeveloped land (the "Original Properties"), contributed to CDC by certain wholly-owned subsidiaries of Centex (the "Original Limited Partners"), and (ii) other properties acquired by CDC in the ordinary course of business (the "Additional Properties"). Pursuant to the Distribution, the Original Limited Partners received an aggregate of 1,000 Class A Units of limited partnership interest in CDC (the "Class A Units") in exchange for the Original Properties, which at the time of their contribution to CDC had a market value of approximately $76 million. All of the 1,000 Class A Units were subsequently acquired, and are currently owned, by Centex Real Estate Corporation ("CREC"), a wholly-owned subsidiary of Centex. Under the Partnership Agreement, as holder of the Class A Units of limited partnership interest, CREC is entitled to a 9% preferred return (the "Preferred Return") on its unrecovered capital and certain other distributions of cash and other property and allocations of income and loss in preference to other limited partners. See Note (F) of the Notes to the Holding/CDC Combining Financial Statements included on page F-41 of Exhibit 99 to this Report which is incorporated herein by this reference. CDC has developed and sold several of the Original Properties. In addition, CDC has acquired, developed and sold Additional Properties, including two projects in the Orlando, Florida area which were developed into nearly 1,150 residential lots, a portion of a 1,077 acre development in San Clemente, California which is zoned for residential and commercial development, and the Timberhill Shopping Center in Sonora, California. Shortly after March 1987, when CDC was formed, the market for real estate development of the type contemplated for CDC at its formation began to deteriorate, and for several years has not been particularly attractive. In fact, soon after CDC was formed, this market suffered a recession and was heavily saturated for an extended period of time with depressed properties being disposed of by the Resolution Trust Corporation, banks and other financial institutions. Accordingly, new development opportunities have been limited and certain of CDC's properties have not reached the potential necessary to achieve the originally targeted objectives. Notwithstanding the foregoing, Centex management continues to believe that the original purposes for the formation of CDC remain valid. Given recent improvement in certain real estate markets and the economy in general, and in an effort to maximize CDC's potential, CDC management is evaluating the potential for development of rental apartments, retail facilities and other types of real estate for investment or sale in certain strategic markets, either directly or through partnerships or joint ventures with others. In addition, Centex, through its wholly-owned subsidiary, Centex Service Company, recently committed additional experienced personnel resources to CDC. Management of Centex and CDC and Holding believe that the existing relationships between them, including development and general management assistance, are necessary in order to maximize the potential for these additional development activities. In order to further enhance the potential of CDC, the holder of the Class A Units has, subject to approval by the Centex Stockholders of a proposal to extend the detachment date of the Stockholder Warrants as described below, agreed to waive all unpaid Preferred Return through July 1995, which totalled approximately $36 million as of March 31, 1995. The Preferred Return to be waived has not been recorded by the holder of the Class A Units so this waiver will not impact Centex's consolidated financial statements. DESCRIPTION OF CDC SECURITIES Pursuant to the terms of the Nominee Agreement, Centex may terminate the Nominee Agreement in its sole discretion as to all or any portion of the Stockholder Warrants and the Holding Common Stock (collectively, the "Deposited Securities") and, unless sooner terminated, the Nominee Agreement will terminate as to the Stockholder Warrants on November 30, 1997 (the "Scheduled Detachment Date"), unless such date is extended by the vote of the Centex Stockholders (the "Extended Detachment Date"). Centex is not obligated to terminate the Nominee Agreement as to the Holding Common Stock. The termination of the Nominee Agreement as to any of the Deposited Securities will cause a detachment ("Detachment") of such securities from the Centex Common Stock. Upon a termination of the Nominee Agreement, certificates evidencing each Centex Stockholder's pro rata portion of the Deposited Securities in respect of which the Nominee Agreement was terminated will be delivered to the Centex Stockholders of record as of the record date set for the Detachment. From and after such record date, certificates evidencing Centex Common Stock will no longer represent the beneficial interest in the detached Deposited Securities. Unless sooner terminated, the Nominee Agreement will terminate as to the Stockholder Warrants on the Scheduled Detachment Date (November 30, 1997), unless such date is extended by the vote of the Centex Stockholders. In Centex's proxy statement with respect to its 1995 Annual Meeting of Stockholders to be held on July 27, 1995, Centex's Board of Directors will solicit the vote of Centex Stockholders to adopt a proposal to extend the Scheduled Detachment Date of the Stockholder Warrants to November 30, 2007. NARRATIVE DESCRIPTION OF BUSINESS In general, the Amended and Restated Agreement of Limited Partnership of CDC (the "Partnership Agreement") authorizes CDC to engage in all aspects of the real estate business, provided that all activities related to the Original Properties must be conducted pursuant to the Plan for Original Properties, which is an exhibit to the Partnership Agreement (the "Plan"). The Plan prescribes in general terms the manner by which CDC will conduct its activities in respect of the Original Properties, including guidelines as to sales, maintenance and zoning of the Original Properties, and places restrictions on these and other types of activities, including, in certain instances, the sale of any Original Property without the consent of CREC. 21 22 CDC continues to analyze potential uses for certain of the remaining Original Properties in order to determine the highest and best use that can be made of the tracts and, if appropriate, seeking zoning changes to accommodate such uses. If zoning changes are obtained, CDC will decide whether to further develop these properties or to seek the sale of all or a portion thereof. If not developed sooner, the Plan provides that CDC will generally endeavor to sell the Original Properties over time for the best price available, taking into account the condition of the marketplace and CDC's cash flow requirements. The Partnership had a backlog of land sales of approximately $7 million as of March 31, 1995, and $11 million as of March 31, 1994. The ultimate sales prices may vary due to contractual clauses that adjust the price depending upon the closing date. Pursuant to an agreement with CDC (the "Management Agreement"), Holding is obligated to provide property management and development assistance and expertise to CDC, including seeking zoning changes and special use permits, negotiating utility agreements, and securing necessary rights of way and access on behalf of CDC, and, consistent with the Plan, to develop and/or contract for sale and sell on behalf of CDC some or all of such properties in exchange for compensation for its efforts. Since Holding currently does not have any employees, it contracts with Centex subsidiaries to provide such services to CDC. Management of CDC believes that CDC receives these services at a cost below that which unaffiliated third parties would charge for similar services. See "Item 10. Directors and Executive Officers of the Registrant-Management Agreement". Centex and its affiliates continue to conduct many facets of real estate development and, for this reason, may be in competition with CDC in certain activities and projects. Because the relationship between Centex and its affiliates, on the one hand, and Holding, Development and CDC, on the other hand, involve decisions by Centex and its affiliates, directly or indirectly, on behalf of Holding, Development and CDC, the transactions and activities of Holding, Development and/or CDC may lack the benefit of arm's length bargaining and may involve conflicts of interest. Holding, Development and CDC believe, however, that adequate safeguards, including Boards of Directors of Holding and Development consisting of a majority of independent directors, sufficiently prevent any such conflicts from adversely affecting the business of Holding, Development or CDC. To the extent that any conflict of interest or the lack of arm's length bargaining may benefit Centex or its affiliates, on the one hand, or CDC or Holding, on the other hand, the combined value of the three tandem traded securities (Centex Common Stock, Holding Common Stock and Stockholder Warrants) beneficially owned by a Centex Stockholder should not be affected one way or another. See "Competition and Regulation" below in this Item 1. CDC is not a real estate investment trust, and therefore CDC's activities are not subject to the restrictions imposed on real estate investment trusts qualified under the Internal Revenue Code of 1986, as amended. For additional information concerning material properties owned by CDC at March 31, 1995, see "Item 2. Properties". COMPETITION AND REGULATION Within the geographical areas where the remaining Original Properties and the Additional Properties are located, CDC is subject to substantial competition from other owners of similarly-situated or developed properties who wish to sell or develop their properties, many of whom may hold or be in the process of developing more parcels than CDC or may have greater financial resources and longer operating histories than CDC. CDC will also compete in the acquisition of additional desirable properties with a variety of investors, including Centex and its affiliates, and institutional investors and developers, seeking similar investments. The failure of many financial institutions and seizure of assets by agencies of the federal government created, in prior years, an oversupply of inventory in various markets. The terms under which the Resolution Trust Corporation (the "RTC") (depository for the seized assets) ultimately disposed of these assets impacted property values in certain markets. Accordingly, the RTC asset disposition program in prior years has increased the holding period necessary to maximize CDC's property values. 22 23 The economic recession in California and the overbuilding of commercial properties in California and Texas, where certain of CDC's properties are located, has limited CDC's ability to sell these properties at favorable prices or has made current development of such properties by CDC inadvisable. CDC's mixed-use properties located in California and, to a lesser extent, Texas are believed to be most affected by the present economic environment. However, certain of CDC's properties are located in geographical areas where there is moderate to good demand for land suitable for development, including Florida, Illinois and New Jersey and commercial development activity in Texas has begun to improve. Except for the Forster Ranch property located in San Clemente, California, CDC believes that it is well situated to weather the current economic environment in those geographical areas affected and to take advantage of the long-term economic outlook and opportunities in the areas where its properties are located. See "Properties--(b) CDC--Forster Ranch" on page 24 of this Report. Ownership and development of each of CDC's properties is subject to licensing and regulation by zoning, land use, environmental, health, sanitation and other agencies in the state and/or municipality in which the property is located. Difficulties or failures in obtaining the required licenses or approvals could delay or prevent the development or sale of any of such properties. In addition, certain of the Original Properties and the Additional Properties may be subject to zoning limitations that may not permit development of such properties for their highest and best use. The ability of CDC to obtain favorable zoning changes may affect the ultimate value of such properties to CDC or to a third-party purchaser. ITEM 2. PROPERTIES (a) Holding Due to the nature of its business, Holding does not own or hold for investment any real or personal properties other than cash, receivables and other similar assets, and the securities relating to its subsidiary, Development. (b) CDC The remaining Original Properties and the Additional Properties consist of properties located in Illinois, Texas, New Jersey, Florida and California. Such properties predominantly consist of undeveloped sites zoned for light industrial, agricultural, general retail, office industrial, business park, research and development and single- and multi-family residential property purposes. At March 31, 1995, there were four remaining Original Properties and one Additional Property owned by CDC of material value. Set forth below is a brief description, including the present zoning therefor, of such properties. Colony South Planning Unit. Colony South Planning Unit is an Original Property and is located in suburban Dallas, Texas in the cities of The Colony (approximately 520 acres) and Lewisville (approximately 152 acres). The Colony acreage is zoned office, general retail, business park and residential. The Lewisville acreage is zoned light industrial. East Windsor. East Windsor is an Original Property comprising approximately 600 acres with four separate residential tracts, 13 farm parcels and 100 acres of office industrial zoned property in East Windsor, New Jersey, a township located in the vicinity of Princeton. The residential tracts have final plan approval for a total of 75 half-acre lots and 174 quarter-acre lots and preliminary plan approval for 426 multi-family units. Forty-eight of the quarter-acre lots have been sold to CREC, which has a contract with CDC to purchase the remaining 126. The farm parcels vary in size from 11 to 35 acres and total 313 acres. Bryan Place. Bryan Place is an Original Property and is located in Dallas, Texas just east of downtown and Central Expressway. It is comprised of 28 non-contiguous parcels zoned office, commercial, retail and residential ranging from approximately 2,000 square feet to 80,000 square feet. The total area of the property is approximately 622,000 square feet. Carrollton Property. The Carrollton Property is an Original Property located in the City of Carrollton, a suburb of Dallas, Texas. This property consists of one office and five fabrication-warehouse buildings on approximately 17 acres, zoned industrial, with a rail spur. 23 24 Forster Ranch. Forster Ranch, located in San Clemente, California, is an Additional Property that included 1,077 acres when it was purchased in March 1989. CDC's Development Agreement with the City of San Clemente allows a series of residential villages containing a total of approximately 2,200 lots and 78 acres of mixed use property. As of March 31, 1995, 580 of these lots had been sold to CREC and 21 acres of mixed use property had been sold to other entities. CDC has entered an agreement with the holder of the Forster Ranch non-recourse purchase money notes that may result in the transfer of the real estate to it in satisfaction of the debt, a portion of which is past due. The lender in turn may sell the real estate to CREC pursuant to an agreement between them. Recent Write-Down of Properties. In March 1995, CDC recorded a pre-tax adjustment to reduce the book value of certain properties in the amount of approximately $15,500,000 to reflect CDC's view that development activity has not reached anticipated levels during the current economic cycle in order to continue to support the historical carrying value of such properties. This adjustment results in carrying values that will facilitate a nearer-term disposition or development of these properties. A substantial portion of the adjustment related to the book values of the Colony South Planning Unit and Bryan Place properties. CDC's principal assets consist of the Original Properties and the Additional Properties remaining unsold. ITEM 3. LEGAL PROCEEDINGS Holding is not a party to, and its assets are not the subject of, any material pending legal proceedings. CDC may be involved from time to time in litigation matters incident to its day-to-day business; however, management of Development believes that such litigation, if determined unfavorably to CDC, would not have a material adverse effect on the financial condition or operations of CDC. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. EXECUTIVE OFFICERS OF HOLDING AND DEVELOPMENT Information concerning the present executive officers of Holding is set forth below. All of such officers have served in their capacities since the organization of Holding, except as indicated. CDC has no executive officers. The executive officers of Holding set forth below hold the same offices in Development, the general partner of CDC, as disclosed in "Item 10. Directors and Executive Officers of the Registrant-Directors and Executive Officers of Development".
NAME POSITION AGE ---- -------- --- J. Stephen Bilheimer President (1) 63 Roger D. Sefzik Vice President and Treasurer (2) 39 Joseph J. Arcisz Vice President (3) 38
(1) Mr. Bilheimer is an employee of Centex Development Management Company ("CDMC"), a wholly-owned subsidiary of Centex, and served as Executive Vice President of CREC from April 1987 until March 31, 1988. Mr. Bilheimer was a director of Development from its date of incorporation until his resignation as of June 1, 1987 and was re-elected to the Board of Directors of Development on May 24, 1989. Since April 1, 1988, Mr. Bilheimer has devoted a majority of his time to the business and affairs of Holding and Development. (2) Mr. Sefzik is an employee of CDMC and was a Vice President of CTX Mortgage Company from May 1987 to March 1988 and Executive Vice President of Centex Title Company from July 1986 to March 1988. Prior thereto 24 25 he held various offices with various Centex subsidiaries since March 1983. Mr. Sefzik was elected to his present positions with Holding as of April 1, 1988. Since April 1, 1988, Mr. Sefzik has devoted a majority of his time to the business and affairs of Holding and Development. (3) Mr. Arcisz is an employee of CDMC and was a Division President of CREC, a wholly-owned subsidiary of Centex, from October 1985 until February 28, 1995. Prior thereto he held various offices with CREC since April 1983. Mr. Arcisz was elected to his present position with Holding as of March 10, 1995. Since March 1, 1995, Mr. Arcisz has devoted a majority of his time to the business and affairs of Holding and Development. All executive officers of Holding are elected annually by the Board of Directors to serve until the next annual meeting of the Board of Directors or until their successors have been duly elected. There are no family relationships among or between such executive officers or the directors. Holding's executive officers hold the same positions with its subsidiary, Development. Holding has no full time employees. The directors and executive officers perform all executive management functions; all other services necessary to the conduct of Holding's business are performed by employees of a subsidiary of Centex or its designee under a services agreement. See "Item 10. Directors and Executive Officers of the Registrant--Services Agreement". 25 26 PART II ITEM 5. MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS (a) Holding Except as additionally provided below, the information called for by this Item 5 with respect to Holding is incorporated herein by reference to (1) the Joint Explanatory Statement on page 2 of this Report, (2) the information included and referenced under the caption "Stock Prices and Dividends" on page F-1 of Exhibit 99 to this Report and (3) the information included in Notes (F) and (G) of the Notes to the Holding/CDC Combining Financial Statements on pages F-41 - F-42 of Exhibit 99 to this Report. Prior to the date of the distribution, Centex owned all of the issued and outstanding shares of Holding Common Stock and, accordingly, there was no public market for such shares. Following the distribution by Centex, shares of Holding Common Stock have been tradeable only in tandem with, and as a part of, shares of Centex Common Stock, and may not be separately sold or otherwise transferred. Therefore, except with respect to the trading market established for the tandem traded securities, there is no separate market for shares of Holding Common Stock. Because of the tandem trading arrangement, it is not possible to identify precisely the portion of the market price of the tandem traded securities allocable to shares of Holding Common Stock. The restrictions on the transfer of the Holding Common Stock and the Stockholder Warrants separate from Centex Common Stock are imposed by the terms of a nominee agreement (the "Nominee Agreement") among Centex, Holding, CDC and the Nominee. Centex Common Stock certificates issued after the date of the Nominee Agreement bear a legend referring to the restrictions on transfer imposed thereby. No dividends have been paid on shares of Holding Common Stock since the incorporation of Holding. Future cash dividends on Holding Common Stock will depend on the earnings, financial condition, capital requirements and other factors affecting Holding and Development. The provisions of the loan agreement and pledge and security agreement relating to Holding's $7,700,000 note to Centex (the "Holding Note"), which had a balance of $7,600,000 at March 31, 1995, include certain restrictive covenants that limit the extent to which Holding and its subsidiaries (including Development but not CDC or any Operating Partnership) may create, assume or guarantee additional indebtedness, pledge or encumber certain of their assets or otherwise take certain corporate actions. These covenants include limitations on (a) incurring, assuming or guaranteeing any other indebtedness, except indebtedness which provides for all payments of principal to be made after April 1, 1994, indebtedness that is fully and completely subordinated on terms satisfactory to Centex, and certain trade debt, (b) creating any additional liens other than statutory liens for taxes, certain mechanics' and materialmen's liens and other similar liens, (c) effecting a merger or consolidation, (d) selling property and (e) declaring any dividends or making certain other shareholder payments, as defined. Holding's obligations under the Holding Note are secured by a pledge of all of the issued and outstanding shares of the common stock of Development pursuant to a pledge and security agreement under which a default by Holding in the performance of its obligations could give Centex the right to vote such shares, to seek the registration under the Securities Act of 1933, as amended, of all or a portion thereof, and to sell such shares to satisfy Holding's obligations. See "Item 13. Certain Relationships and Related Transactions" and Note (G) of the Notes to the Holding/CDC Combining Financial Statements included on page F-42 of Exhibit 99 to this Report, which is incorporated herein by reference. (b) CDC Except as additionally provided below, the information called for by this Item 5 with respect to CDC is included herein in (1) the Joint Explanatory Statement on page 2 of this Report, (2) the information included and referenced under the caption "Stock Prices And Dividends" on page F-1 of Exhibit 99 to this Report and (3) the information included in Notes (F) and (G) of the Notes to the Holding/CDC Combining Financial Statements on pages F-41 - F-42 of Exhibit 99 to this Report. 26 27 The Stockholder Warrants were issued to Centex immediately prior to the November 30, 1987 distribution to Centex Stockholders and, accordingly, there was no public market for the Stockholder Warrants prior to the distribution. Following the distribution by Centex, the Stockholder Warrants have been tradeable only in tandem with, and as part of, shares of Centex Common Stock, and may not be separately sold or otherwise transferred. Therefore, except with respect to the trading market established for the tandem traded securities, there is no separate market for the Stockholder Warrants. Because of the tandem trading arrangement, it is not possible to identify precisely the portion of the market price of the tandem traded securities allocable to the Stockholder Warrants. The restrictions on the transfer of the Stockholder Warrants and the Holding Common Stock separate from Centex Common Stock are imposed by the terms of a nominee agreement (the "Nominee Agreement") among Centex, Holding, CDC and the Nominee. Centex Common Stock certificates issued after the date of the Nominee Agreement bear a legend referring to the restrictions on transfer imposed thereby. No dividends or distributions have been made on the Stockholder Warrants since their issuance. CREC, a subsidiary of Centex, is the present holder of all of the Class A Units, and accordingly, at this time there is no public market for such securities. See "Item 1. Business--General Development of Business". CDC has not made any payment to the holder of the Class A Units with respect to the Preferred Return during the last four fiscal years. Preference payments in arrears at March 31, 1995 amounted to $35,818,000. ITEM 6. SELECTED FINANCIAL DATA (a) Holding The information called for by this Item 6 with respect to Holding is incorporated herein by reference to the Combining Balance Sheets and the Combining Statements of Operations included in the Holding/CDC Combining Financial Statements on pages F-35 - F-36 of Exhibit 99 to this report. (b) CDC The information called for by this Item 6 with respect to CDC is incorporated herein by reference to the Combining Balance Sheets and the Combining Statements of Operations included in the Holding/CDC Combining Financial Statements on pages F-35 - F-36 of Exhibit 99 to this report. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (a) Holding The information called for by this Item 7 with respect to Holding is incorporated herein by reference to the information included and referenced under the caption "Management's Discussion and Analysis of Results of Operations and Financial Condition" on page F-44 of Exhibit 99 to this report. (b) CDC The information called for by this Item 7 with respect to CDC is incorporated herein by reference to the information included and referenced under the caption "Management's Discussion and Analysis of Results of Operations and Financial Condition" on page F-44 of Exhibit 99 to this report. 27 28 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information called for by this Item 8 is incorporated herein by reference to Exhibit 99 to this report as set forth in the Index to Financial Statements on page 35 to this Report (see Item 14). ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (a) Holding DIRECTORS AND EXECUTIVE OFFICERS OF HOLDING Except as additionally provided below, the information called for by this Item 10 with respect to Holding is incorporated herein by reference to the information included under the caption "Election of Directors" on page 25 and the information included under the caption "Section 16(a) Compliance" on page 29 of Holding's proxy statement dated June 15, 1995 for the 1995 Annual Meeting of Stockholders of Holding to be held on July 27, 1995 (the "1995 Holding Proxy Statement"); however, as required by Instruction 3 to Item 401(b) of Regulation S-K, information regarding executive officers of Holding is included under the caption "Executive Officers of Holding" included in Part B of this Report following Item 4. SERVICES AGREEMENT Holding has no full time employees. The directors and executive officers of Holding, who hold the same directorships and offices in Development, perform all executive management functions. See "Item 11. Executive Compensation". All tax, accounting, bookkeeping, clerical and similar services that are necessary to operate the business of Holding are provided pursuant to a services agreement (the "Services Agreement") entered into between Holding and Centex Service Company ("CSC"), an indirect subsidiary of Centex. See "Item 13 - -- Certain Relationships and Related Transactions". The term of the Services Agreement is subject to automatic renewal for successive one-year terms unless either party elects to terminate the Services Agreement upon at least 30 days' written notice prior to December 31 of any year. However, the Services Agreement may not be terminated by Holding (other than in the event of a breach by CSC constituting gross negligence or willful or wanton misconduct) prior to the payment in full of the Holding Note, the full and complete detachment of the Stockholder Warrants from Centex Common Stock or the occurrence of Payout. Service fees of $30,000 were paid pursuant to the Services Agreement during fiscal 1995. (b) CDC GENERAL PARTNER AND MANAGEMENT CDC has no directors, officers or employees and, instead, is managed by Development, its sole general partner. Directors and officers of Development perform all executive management functions required for CDC. Except as provided in the Plan with respect to the Original Properties, the limited partners of CDC have no power to direct or participate in the control of CDC, and Development makes all decisions regarding the acquisition, disposition or development of real estate belonging to CDC and all other decisions regarding CDC's business or operations. See "Item 1. Business". CDC has entered into a management agreement pursuant to which CDMC will operate, manage and develop the properties of CDC for and on behalf of CDC. See "Management Agreement" below in this Item 10. Except for the allocations of profit 28 29 and loss and distributions of cash and other property to which Development is entitled under the Partnership Agreement, and except for the right to be reimbursed for certain expenses, Development does not receive any compensation from CDC in respect of its duties and obligations as general partner of CDC. See "Item 11. Executive Compensation". DIRECTORS AND EXECUTIVE OFFICERS OF DEVELOPMENT Information concerning the present directors and executive officers of Development is set forth below. All of such persons have served in their capacities since the organization of Development, except as indicated.
NAME POSITION AGE ---- -------- --- J. Stephen Bilheimer . . . . . . . . . . Director and President (1) 63 Josiah O. Low, III . . . . . . . . . . . Director (2)* 56 David M. Sherer . . . . . . . . . . . . . Director (3)* 58 Roger D. Sefzik . . . . . . . . . . . . . Vice President and Treasurer (4) 39 Joseph J. Arcisz . . . . . . . . . . . . Vice President (5) 38
_____________ *Member of the audit committee of the Board of Directors. (1) Mr. Bilheimer is an employee of CDMC and served as Executive Vice President of CREC from April 1987 until March 31, 1988. Mr. Bilheimer was a director of Development from its date of incorporation until his resignation as of June 1, 1987. Mr. Bilheimer was re-elected to the Board of Directors on May 24, 1989. (2) Mr. Low serves as Senior Vice President of Donaldson, Lufkin & Jenrette Securities Corporation (since February 1985). Mr. Low is also a director of Holding. Mr. Low was elected as a director of Development as of June 1, 1987. (3) Mr. Sherer has been President of David M. Sherer Associates, Inc., a commercial real estate, investment and brokerage firm, for more than five years. Mr. Sherer is also a director of Holding. Mr. Sherer was elected as a director of Development as of June 1, 1987. (4) Mr. Sefzik is an employee of CDMC and served as Vice President of CTX Mortgage Company from May 1987 to March 1988 and Executive Vice President of Centex Title Company from July 1986 to March 1988. Mr. Sefzik was elected to his present positions with Development as of April 1, 1988. (5) Mr. Arcisz is an employee of CDMC and served as a Division President of CREC from October 1985 to February 1995. Mr. Arcisz was elected to his present position with Development as of March 10, 1995. All directors are elected annually by the shareholders to serve until the next annual meeting of stockholders and until their successors have been elected and qualified, subject to removal by a vote of the holders of not less than two-thirds of the outstanding shares of the common stock, par value $1.00 per share, of Development. All executive officers of Development are elected annually by the Board of Directors to serve until the next annual meeting of the Board of Directors or until their successors have been duly elected. There are no family relationships among or between Development's directors or executive officers. The current executive officers of Development are employees of Centex or one of its subsidiaries, and it is presently anticipated that this circumstance will continue. See "Item 11. Executive Compensation". MANAGEMENT AGREEMENT All services (other than executive management decision-making) necessary to operate CDC's business are provided to CDC pursuant to a management agreement (the "Management Agreement") entered into with 3333 Holding Corporation ("Holding"), the parent of 3333 Development Company, which is the sole general partner of CDC. Under the Management Agreement, Holding keeps all necessary books and records, and provides all additional accounting and clerical services that Development may deem necessary. Holding's responsibilities related to real estate management also include ensuring that CDC's 29 30 properties are operated, managed and maintained in full compliance with all relevant laws and regulations, that all real property and any improvements thereon are maintained and repaired, that all income produced by CDC's properties is collected and that any development on any property is done in an efficient manner. Holding is entitled to reimbursement from CDC for all reasonable costs and expenses incurred and paid by Holding in connection with the performance of its duties and obligations under the Management Agreement, plus a 25% managerial fee. During fiscal 1995, Holding earned fees from CDC totaling $922,000 for its services. The Management Agreement also provides that Holding will provide, consistent with the Plan, pre-development and development services on behalf of CDC, and the Management Agreement specifically provides that Holding is delegated full authority to carry out and perform on behalf of CDC all aspects of the Plan. The term of the Management Agreement is subject to automatic renewal for successive one-year terms unless either party elects to terminate the Management Agreement upon at least 30 days' written notice prior to December 31 of any year. However, it may not be terminated by CDC (other than in the event of a breach by Holding constituting gross negligence or willful or wanton misconduct) prior to the latest of the complete detachment of the Stockholder Warrants from Centex Common Stock, Payout or the payment in full of the Holding Note. From time to time, Holding may delegate the performance of certain of its responsibilities to CREC, upon terms and conditions to be determined. These responsibilities may include enhancement of properties owned or controlled by CDC, for which reasonable additional compensation may be paid by CDC to Holding pursuant to terms to be negotiated between them. In turn, some or all of such additional compensation may be paid by Holding to CREC. ITEM 11. EXECUTIVE COMPENSATION Holding and CDC The information called for by this Item 11 with respect to Holding and CDC is incorporated herein by reference to the information included and referenced under the caption "Executive Compensation" in the 1995 Holding Proxy Statement on pages 27-28 thereof. CDC does not have any directors, officers or employees, and is managed by its sole general partner, Development. Except for the allocations of profit and loss and distributions of cash and other property to which Development is entitled under the Partnership Agreement, and except for the right to be reimbursed for certain expenses, Development does not receive any compensation from CDC in respect of its duties and obligations as general partner for CDC. As general partner, Development is entitled to be allocated certain items of income and loss of CDC and to receive certain distributions of cash from CDC depending upon the level of income and cash available for distribution and whether Payout has occurred. The terms and conditions upon which Development will be allocated items of income and loss and will receive distributions are set forth in the Partnership Agreement. For a summary of these rights and benefits, see Note (F) of the Notes to the Holding/CDC Combining Financial Statements included on page F-41 of Exhibit 99 to this report, which is incorporated herein by this reference. The directors and executive officers of Development perform all executive management functions for CDC. See "Item 10. Directors and Executive Officers of the Registrant". Services required by CDC in its operations are also provided pursuant to a Management Agreement with Holding pursuant to which Holding operates, manages and develops the properties of CDC for and on behalf of CDC. See "Item 11--Directors and Executive Officers of the Registrant--Management Agreement". The executive officers of Development did not receive any remuneration from Development or CDC for the year ended March 31, 1995. Directors of Development who are neither officers nor employees of Development, Centex or Centex's subsidiaries received compensation from Development in the form of directors' and committee members' fees. During the 1995 fiscal year, each executive officer of Development received remuneration from Centex or one of its subsidiaries in his capacity as a director, officer or employee thereof. None of the directors or executive officers of Development received any additional compensation from Centex or any of its subsidiaries 30 31 for services rendered on behalf of Development or CDC during the 1995 fiscal year. During fiscal 1995, J. Stephen Bilheimer, a Director and the President of Development, and Roger D. Sefzik, Vice President and Treasurer of Development, both of whom are employees of subsidiaries of Centex, have devoted a majority of their time and attention to the management of Development and Holding. Messrs. Bilheimer and Sefzik provided such services to Development on behalf of and in their capacities as officers of Holding pursuant to the Management Agreement. Each current executive officer of Development continues to receive remuneration from Centex or one of its subsidiaries in his capacity as an officer or employee thereof and is not compensated by Development or CDC. As of March 10, 1995, Joseph J. Arcisz joined Holding as a Vice President. It is expected that during fiscal year 1996, he will devote a majority of his time to Development and Holding. The directors of Development, who also hold the same directorships in Holding and are neither officers nor employees of Development, Centex or Centex's subsidiaries, each receive approximately $8,000 annually in the form of directors' and committee members' fees in their capacities as directors and/or committee members of Development. In addition, Development reimburses these directors for the reasonable expenses incurred in attending directors' and committee meetings. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (a) Holding The information called for by this Item 12 with respect to Holding is incorporated herein by reference to the information included and referenced under the caption "Security Ownership of Management and Certain Beneficial Owners" in the 1995 Holding Proxy Statement on pages 26-27. (b) CDC The following table sets forth certain information with respect to the ownership of the equity securities of CDC as of December 31, 1994 by Development, the directors of Development, individually itemized, all directors and executive officers of Development as a group, and any person known to CDC to be the beneficial owner of more than 5% of any class of CDC's equity securities. Except as otherwise indicated, all securities are owned directly, and the beneficial owner of such securities has the sole voting and investment power with respect thereto. 31 32
NAME OF NUMBER OF UNITS PERCENT TITLE OF CLASS* BENEFICIAL OWNER** OR WARRANTS OWNED OF CLASS --------------- ------------------ ----------------- -------- General Partner Interest (1) 3333 Development Corporation . . . . . . . . . . All 100% 3333 Lee Parkway, Suite 500 Dallas, Texas 75219 Class A Units (2) Centex Real Estate Corporation . . . . . . . . . 1,000 100% 3333 Lee Parkway, Suite 1100 Dallas, Texas 75219 Stockholder Warrants (3) 3333 Development Corporation . . . . . . . . . . -- *** Joseph J. Arcisz . . . . . . . . . . . . . . . . -- *** J. Stephen Bilheimer . . . . . . . . . . . . . . -- *** Josiah O. Low, III . . . . . . . . . . . . . . . -- *** Roger D. Sefzik . . . . . . . . . . . . . . . . . -- *** David M. Sherer . . . . . . . . . . . . . . . . . -- *** All directors and executive officers of Development as a group (5 persons) . . . . . . . -- *** FMR Corp (4). . . . . . . . . . . . . . . . . . . 161 13.79% 82 Devonshire Street Boston, Massachusetts 02109 The Prudential Insurance Company of America(5) . . . . . . . . . . . . . . . . . . 62 5.35% Prudential Plaza Newark, New Jersey 07102-3777 Centex Class B Unit Centex Corporation . . . . . . . . . . . . . . . 100 100% Warrants (6) 3333 Lee Parkway, Suite 1200 Dallas, Texas 75219 Class B Units (7) Centex Corporation (8) . . . . . . . . . . . . . 350 (9) 28% (8) 3333 Lee Parkway, Suite 1200 Dallas, Texas 75219
- -------------------- *Under the terms of the Partnership Agreement, CDC is managed by a sole corporate general partner and none of the present classes of CDC's securities are "voting securities" within the meaning of the rules and regulations of the Commission promulgated pursuant to the Exchange Act. Nonetheless, information with respect to each class of CDC's equity securities has been set forth in accordance with such rules and regulations. **The address of any person who is the beneficial owner of more than five percent of a class of CDC's securities is also included. ***Less than 1%. (1) In connection with the formation of CDC, Development made a capital contribution to CDC of $767,182, in exchange for Development's general partner interest in CDC. As general partner, Development is entitled to receive allocations 32 33 of income and loss and distributions of property from CDC. See "Item 11. Executive Compensation". (2) The Class A Units were issued to the Original Limited Partners in exchange for the contribution to CDC of the Original Properties. Record title to the Class A Units presently is held by CREC, a subsidiary of Centex. See "Item 1. Business--General Development of Business". As of the date or dates when the Stockholder Warrants are deemed to have been exercised, the Class A Units will be automatically converted into (i) a number of Class B Units equal to 20% of the total number of Class B Units that would be outstanding after conversion based on the actual exercise of the Stockholder Warrants and the assumed exercise of all the then exercisable Centex Class B Unit Warrants (see footnote (3)) and (ii) a like number of Class A Units. The Class A Units will be automatically cancelled upon Payout and the exercise and/or expiration of all of the Stockholder Warrants and the Centex Class B Unit Warrants. (3) The Nominee holds record title to the Stockholder Warrants, which are exercisable for Class B Units, for the benefit of Centex Stockholders pursuant to the Nominee Agreement. See "Item 5. Market for Registrant's Common Equity and Related Stockholder Matters". However, the Nominee has no power to vote the Class B Units issuable upon exercise of the Stockholder Warrants or to direct the investment of the Stockholder Warrants or such Class B Units. Beneficial ownership of the Stockholder Warrants is, by virtue of the Nominee arrangement, indirect and undivided. The number of Stockholder Warrants listed as beneficially owned has been rounded to the nearest whole warrant and is based on the assumption that options to purchase Centex Common Stock, presently exercisable, or exercisable within 60 days, have been exercised. The Class B Units issuable upon exercise of the Stockholder Warrants have not been shown as "beneficially owned" under the rules and regulations of the Commission promulgated pursuant to the Exchange Act because the beneficial owners of the Stockholder Warrants have no present right to exercise the Stockholder Warrants and acquire Class B Units. (4) Centex has received information from FMR Corp. ("FMR") stating that, as of December 31, 1994, FMR may be deemed to beneficially own 4,611,272 shares of Centex Common Stock, (and therefore to own a beneficial interest in 161 Stockholder Warrants) acquired solely for investment purposes, as a parent holding company with respect to holdings of wholly-owned investment adviser subsidiaries of FMR or other entities affiliated with FMR. FMR stated that it held 145,684 shares of Centex Common Stock with sole voting power (and therefore held a beneficial interest in 5 Stockholder Warrants with sole voting power), 156,284 shares of Centex Common Stock with sole dispositive power (and therefore held a beneficial interest in 5 Stockholder Warrants with sole dispositive power), 10,600 shares of Centex Common Stock with no power to vote (and therefore held a beneficial interest in 0 Stockholder Warrants with no power to vote), and no shares with shared voting power. The remaining shares (and therefore Stockholder Warrants) that FMR may beneficially own may be voted by (i) the Board of Trustees of certain Fidelity Funds, or (ii) certain institutions whose funds are managed by Fidelity Management Trust Company, a wholly-owned subsidiary of FMR. (5) Centex has received information from The Prudential Insurance Company of America ("Prudential") stating that, as a result of shares of Centex Common Stock held by Prudential for the benefit of its clients by its separate accounts, externally managed accounts, registered investment companies, subsidiaries and/or other affiliates, as of December 31, 1994, Prudential may be deemed to beneficially own 1,789,100 shares of Centex Common Stock (and therefore to own a beneficial interest in 62 Stockholder Warrants). Prudential stated that it held 331,300 shares of Centex Common Stock with sole voting and dispositive power (and therefore held a beneficial interest in 12 Stockholder Warrants with sole voting and dispositive power, 1,456,900 shares of Centex Common Stock with shared voting power (and therefore held a beneficial interest in 51 Stockholder Warrants with shared voting power), and 1,457,800 shares of Centex Common Stock with shared dispositive power (and therefore held a beneficial interest in 51 Stockholder Warrants with shared dispositive power). (6) On November 30, 1987, Centex acquired from CDC 100 warrants (the "Centex Class B Unit Warrants") to purchase a like number of Class B Units, subject to adjustment, pursuant to an agreement for purchase of warrants. The Centex Class B Unit Warrants are generally in the same form as, and contain the same terms as, the Stockholder Warrants, except for the manner in which they may be subdivided (and the corresponding exercise price) and the applicable exercise period. See Note (F) of the Notes to the Holding/CDC Combining Financial Statements included on page F-41 of Exhibit 99 to this report, which is herein incorporated by this reference. (7) Presently, there are no Class B Units issued or outstanding. (8) When issued, record title to 200 of these Class B Units will be held by the owners of the Class A Units. See footnote (2). (9) The Class B Units that may be acquired upon conversion of outstanding Class A Units as of the date of the exercise of 33 34 the Stockholder Warrants, which date Centex may indirectly determine by virtue of its ability, in its sole and absolute discretion, to determine the date of detachment of the Stockholder Warrants from Centex Common Stock, and the Class B Units that may be acquired upon exercise of the Centex Class B Unit Warrants are included as "beneficially owned" pursuant to the rules and regulations of the Commission promulgated pursuant to the Exchange Act. See footnotes (2) and (3). The number of Class B Units and the percentage of class listed assume that the Stockholder Warrants and the Centex Class B Unit Warrants have been exercised in full for Class B Units but that no subdivision of any of the warrants has occurred; however, both the Stockholder Warrants and the Centex Class B Unit Warrants may be subdivided or combined and any such subdivision or combination would necessarily change the number of Class B Units beneficially owned and the percent of class represented thereby. All of the issued and outstanding shares of Development have been pledged to secure the Holding Note. See "Item 5. Market for Registrant's Common Equity and Related Stockholder Matters". ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS (a) Holding The information called for by this Item 13 with respect to Holding is incorporated herein by reference to the information included under the caption "Certain Transactions" in the 1995 Holding Proxy Statement on pages 29-30. (b) CDC Holding entered into a services agreement in May, 1987 with Centex Service Company ("CSC"), whereby CSC will provide certain tax, accounting and other similar services for Holding at a fee of $2,500 per month. Service fees of $30,000 were paid pursuant to this agreement for fiscal year 1995. CDC has entered into an agreement with Holding for it to provide management services to CDC in connection with the development and operation of properties acquired by CDC, maintenance of CDC property, and accounting and clerical services. Management fees and development costs totaling $922,000 were incurred in fiscal 1995. In connection with Holding's acquisition of additional shares of common stock of Development in 1987, Holding borrowed $7,700,000 from Centex pursuant to a secured promissory note (the "Holding Note"). The Holding Note, which had a fluctuating balance during 1995, bears interest, payable quarterly, at the prime rate of interest of NationsBank of Texas, N.A. ("NationsBank") plus 1% (10% at May 30, 1995). As of May 30, 1995, the outstanding principal balance of the Holding Note was $5,927,000. The Holding Note is secured by a pledge of all of the issued and outstanding shares of Development. The Holding Note, as amended, matures on the earlier to occur of April 1, 1996 or the last detachment of Holding Common Stock and the Stockholder Warrants from Centex Common Stock pursuant to the Nominee Agreement. There was interest expense of $611,000 related to the Holding Note for the year ended March 31, 1995. In fiscal year 1995, CDC sold to CREC 254 lots for $5,423,000. CREC has contracts to purchase an additional 364 lots from CDC. In 1987, Development loaned $7,700,000 to CREC, pursuant to an unsecured note (the "CREC Note") and related loan agreement. The CREC Note bears interest, payable quarterly, at the prime rate of interest of NationsBank plus 7/8% (9 7/8% at May 30, 1995). As of May 30, 1995, the outstanding principal balance on the CREC Note was $7,700,000. The CREC Note matures on April 30, 1996. There was interest income of $680,000 related to the CREC Note for the year ended March 31,1995. In July 1992, on behalf of CDC, CREC guaranteed a $10,000,000 bank line of credit for CDC to utilize in conjunction with development of lots to be sold to CREC. In July 1993, the amount of such line of credit was reduced to $5,000,000. This line of credit, which had an outstanding balance of $1,539,000 at May 30, 1995, bears interest at LIBOR plus 3/4% (6 13/16% at May 30, 1995), is unsecured and matures in July 1995. 34 35 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) The following documents are filed as part of this Report: (1) and (2) See the Index to Financial Statements below for a list of the Financial Statements filed herewith. INDEX TO FINANCIAL STATEMENTS
REFERENCE ---------------------------------------- EXHIBIT 99 ---------- 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. Report of Independent Public Accountants . . . . . . . . . . . . . F-33 Combining Balance Sheets as of March 31, 1995 and 1994. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-35 Combining Statements of Operations and Cash Flows for the years ended March 31, 1995, 1994 and 1993 . . . . . . . . . . . . . . . . . F-36 Combining Statements of Stockholders' Equity and Partners' Capital for the years ended March 31, 1995, 1994 and 1993 . . . . . . . . . . . . . . . . . F-37 Notes to Combining Financial Statements. . . . . . . . . . . . . . F-37 - F-42 Quarterly Results (unaudited). . . . . . . . . . . . . . . . . . . F-43
All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. (3) EXHIBITS (A) Holding The information on exhibits required by this Item 14 is set forth in the Holding Index to Exhibits appearing on pages 42-43 of this Report. (B) CDC The information on exhibits required by this Item 14 is set forth in the CDC Index to Exhibits appearing on pages 44-46 of this Report. (b) Reports on Form 8-K: Neither Holding nor CDC filed any reports on Form 8-K during the quarter ended March 31, 1995. 35 36 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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 May 31, 1995 By: /s/ J. STEPHEN BILHEIMER --------------------------------------------------------------- J. Stephen Bilheimer, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated. May 31, 1995 /s/ J. STEPHEN BILHEIMER -------------------------------------------------------------------- J. Stephen Bilheimer, President (principal executive officer) May 31, 1995 /s/ ROGER D. SEFZIK -------------------------------------------------------------------- Roger D. Sefzik, Vice President and Treasurer (principal financial and accounting officer) Directors: J. Stephen Bilheimer, Josiah O. Low, III; David M. Sherer May 31, 1995 By: /s/ J. STEPHEN BILHEIMER ----------------------------------------------------------------- J. Stephen Bilheimer, Individually and as Attorney-in-Fact*
- -------------------- *Pursuant to authority granted by powers of attorney, copies of which are filed herewith, except for Mr. Low's Power of Attorney which will be filed upon execution. 36 37 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, 3333 Development Corporation, as general partner of, and on behalf of, 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 By: /s/ J. STEPHEN BILHEIMER ----------------------------------------------------------- May 31, 1995 J. Stephen Bilheimer, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of 3333 Development Corporation, as general partner of, and on behalf of, the registrant in the capacities and on the dates indicated. May 31, 1995 /s/ J. STEPHEN BILHEIMER ------------------------------------------------------------------ J. Stephen Bilheimer, President (principal executive officer) May 31, 1995 /s/ ROGER D. SEFZIK ------------------------------------------------------------------ Roger D. Sefzik, Vice President and Treasurer (principal financial and accounting officer) Directors: J. Stephen Bilheimer, Josiah O. Low, III; David M. Sherer May 31, 1995 By: /s/ J. STEPHEN BILHEIMER -------------------------------------------------------------- J. Stephen Bilheimer, Individually and as Attorney-in-Fact*
- -------------------- *Pursuant to authority granted by powers of attorney, copies of which are filed herewith, except for Mr. Low's Power of Attorney which will be filed upon execution. 37 38 INDEX TO EXHIBITS CENTEX CORPORATION AND SUBSIDIARIES
EXHIBIT FILED HEREWITH OR SEQ. NO. NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE ------- ------- ------------------------- -------- 3.1 Restated Articles of Incorporation of Exhibit 3.1 to Annual Report on Form Centex 10-K of Centex Corporation ("Centex") (File No. 1-6776) for fiscal year ended March 31, 1993 ("Centex Form 10-K") 3.2 By-laws of Centex. Exhibit 3.2 to Centex Form 10-K 4.1 Specimen Centex common stock certificate Exhibit 4.1 to Centex Form 10-K (with tandem trading legend and Rights Agreement legend). 4.2 Nominee Agreement, dated November 30, Exhibit 4.2 to Centex Form 10-K 1987, by and between Centex, 3333 Holding Corporation ("Holding") and Centex Development Company, L.P. ("CDC"), and Chemical Bank, as successor nominee. 4.3 Agreement for Purchase of Warrants, dated Exhibit 4.3 to Centex Form 10-K as of November 30, 1987, by and between Holding and Centex.
38 39 INDEX TO EXHIBITS CENTEX CORPORATION AND SUBSIDIARIES--CONTINUED
EXHIBIT FILED HEREWITH OR SEQ. NO. NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE ------ ------- ------------------------- -------- 4.4 Rights Agreement, dated as of Exhibit 1 to Form 8-A Registration September 17, 1986, between Centex and Statement of Centex dated September 17, Chemical Bank, as successor rights agent. 1986 4.5 Amendment No. 1 to Rights Agreement, dated Exhibit 4.6 to Centex Form 10-K as of May 18, 1988, between Centex and Chemical Bank, as successor rights agent. 4.6 Indenture dated as of March 12, 1987 Exhibit 4.7 to Centex Form 10-K between Centex and Texas Commerce Bank- Dallas, N.A. with respect to Subordinated Debt Securities of Centex. 4.7 Supplemental Indenture dated as of Exhibit 4.8 to Centex Form 10-K March 12, 1987 between Centex and Texas Commerce Bank-Dallas, N.A. with respect to $100,000,000 8 3/4% Subordinated Debentures Due March 1, 2007. 4.8 Instruments with respect to long-term debt N/A which do not exceed 10% of the total assets of Centex and its subsidiaries have not been filed. Centex agrees to furnish a copy of such instruments to the Commission upon request.
39 40 INDEX TO EXHIBITS CENTEX CORPORATION AND SUBSIDIARIES--CONTINUED
EXHIBIT FILED HEREWITH OR SEQ. NO. NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE ------ ------- ------------------------- -------- 4.9 Debenture Purchase Agreement, dated as of Exhibit 4.11 to Centex Form 10-K June 17, 1987, between Centex and the State Investment Council of New Mexico with respect to $20,000,000 Aggregate Principal Amount of 8.80% Subordinated Debenture of Centex due June 30, 2007. 4.10 Indenture dated as of May 1, 1991 between Exhibit 4.12 to Centex Form 10-K Centex and Chemical Bank with respect to Senior Debt Securities. 4.11 Supplemental Indenture dated as of May 10, Exhibit 4.13 to Centex Form 10-K 1991 between Centex and Chemical Bank with respect to $100,000,000 9.05% Senior Notes due May 1, 1996. 4.12 Subordination Agreement dated as of May 1, Exhibit 4.14 to Centex Form 10-K 1991 by and among Centex Corporation and all of its subsidiaries. 4.13 Supplemental Indenture dated as of June Exhibit 4.15 to Annual Report on Form 17, 1987 between Centex and Texas Commerce 10-K of Centex (File No. 1-6776) for Bank--Dallas, N.A. with respect to 8.80% fiscal year ended March 31, 1994 Subordinated Debentures due June 30, 2007. ("Centex 1994 Form 10-K") 4.14 Debenture No. 1 dated June 17, 1987 of Exhibit 4.16 to Centex 1994 Form 10-K Centex 8.80% Subordinated Debentures due June 30, 2007. 10.1 Centex Corporation Stock Option Plan, as Exhibit 10.1 to Centex Form 10-K amended.* 10.2 Centex Corporation 1987 Stock Option Plan, Exhibit 28.1 to Joint Registration as amended.* Statement of Centex, Holding and CDC on Form S-8 (No. 33-44575) dated December 13, 1991. 10.3 Credit Agreement dated as of May 1, 1987, Exhibit 10.2 to Amendment No. 3 dated by and between Holding and Centex and November 24, 1987 to Registration related (i) Promissory Note dated May 1, Statement of Holding on Form 10 (File 1987, executed by Holding and payable to No. 1-9624) dated July 12, 1987. the order of Centex in the principal amount of $7,700,000 and (ii) Pledge and Security Agreement dated as of May 1, 1987 executed by Holding in favor of Centex.
40 41 INDEX TO EXHIBITS CENTEX CORPORATION AND SUBSIDIARIES--CONTINUED
EXHIBIT FILED HEREWITH OR SEQ. NO. NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE ------ ------- ------------------------- -------- 10.4 Consulting Agreement dated as of February 1, Filed Herewith. 1995 between Centex and Paul R. Seegers.* 10.5 Executive Employment Agreement dated as of Exhibit 10.6 to Centex Form 10-K September 17, 1990 between Centex and Laurence E. Hirsch.* 10.6 Executive Employment Agreement dated as of Exhibit 10.7 to Centex Form 10-K January 18, 1991 between Centex and David W. Quinn.* 10.7 Executive Employment Agreement dated as of Exhibit 10.8 to Centex Form 10-K January 18, 1991 between Centex and William J Gillilan III.* 10.8 Centex Corporation $2,000,000 Subordinated Filed Herewith. Convertible Note issued to Laurence E. Hirsch on March 1, 1995.* 21 List of Subsidiaries of Centex. Filed Herewith. 23 Consent of Independent Public Accountants. Filed Herewith. 24 Powers of Attorney. Filed Herewith. 27 Financial Data Schedule. Filed Herewith. 99 Financial Statements. Filed Herewith.
- -------------------- * Required to be filed as an exhibit pursuant to Item 14(c). 41 42 INDEX TO EXHIBITS 3333 HOLDING CORPORATION AND SUBSIDIARY
EXHIBIT FILED HEREWITH OR SEQ. NO. NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE ------ ------- ------------------------- -------- 3.1 Articles of Incorporation of 3333 Holding Exhibit 3.2a to Amendment No. 1 dated Corporation ("Holding"). October 14, 1987 ("Amendment No. 1") to the Registration Statement of Holding on Form 10 (File No. 1-9624) dated July 12, 1987 (the "Holding Registration Statement"). 3.2 By-laws of Holding, as amended. Exhibit 3.2 to Annual Report on Form 10- K of Holding (File No. 1-9624) for fiscal year ended March 31, 1993 (the "Holding 10-K") 4.1 Specimen Holding common stock Exhibit 4.1 to Amendment No. 1. certificate. 4.2 Specimen Centex Corporation ("Centex") Exhibit 4.2 to Holding Form 10-K. common stock certificate (with tandem trading legend and Rights Agreement legend). 4.3 Nominee Agreement, dated as of November Exhibit 4.3 to Holding Form 10-K. 30, 1987 by and between Centex, Holding and Centex Development Company, L.P. ("CDC"), and Chemical Bank, as successor nominee. 4.4 Agreement for Purchase of Warrants, dated Exhibit 4.4 to Holding Form 10-K. as of November 30, 1987, by and between Holding and Centex. 10.1 Services Agreement, dated as of May 5, Exhibit 10.1 to Amendment No. 3 dated 1987, by and between Holding and Centex November 24, 1987 ("Amendment No. 3") to Service Company. the Holding Registration Statement. 10.2 Credit Agreement dated as of May 1, 1987, Exhibit 10.2 to Amendment No. 3. by and between Holding and Centex and related (i) Promissory Note dated May 1, 1987, executed by Holding and payable to the order of Centex in the principal amount of $7,700,000 and (ii) Pledge and Security Agreement dated as of May 1, 1987 executed by Holding in favor of Centex.
42 43 INDEX TO EXHIBITS 3333 HOLDING CORPORATION AND SUBSIDIARY--CONTINUED
EXHIBIT FILED HEREWITH OR SEQ. NO. NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE ------ ------- ------------------------- -------- 10.3 Credit Agreement dated as of May 1, 1987, Exhibit 10.3 to the Holding Registration by and between 3333 Development Statement. Corporation and Centex Real Estate Corporation and related Promissory Note dated May 1, 1987, executed by Centex Real Estate Corporation payable to the order of 3333 Development Corporation in the principal amount of $7,700,000. 21 Subsidiaries of Holding. Filed Herewith. 23 Consent of Independent Public Accountants. Filed Herewith. 24 Powers of Attorney. Filed Herewith. 27 Financial Data Schedule. Filed Herewith. 99 Financial Statements. Filed Herewith.
- -------------------- 43 44 INDEX TO EXHIBITS CENTEX DEVELOPMENT COMPANY, L.P.
EXHIBIT FILED HEREWITH OR SEQ. NO. NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE ------ ------- ------------------------- -------- 2.1 Option Agreement, dated as of November 3, Exhibit 2.1 to Centex 1994 Form 10-K 1988, by and between Centex Development Company, L.P. ("CDC") and Estrella Properties, Ltd. 2.2 Additional Interest Agreement, dated March Exhibit 2.2 to Centex 1994 Form 10-K 30, 1989, by and between CDC and Westinghouse Credit Corporation. 2.3 Construction Loan Agreement, dated March Exhibit 2.3 to Centex 1994 Form 10-K 30, 1989, by and among Westinghouse Credit Corporation and CDC. 2.4 Forster Ranch Development Agreement, dated Exhibit 2.4 to Centex 1994 Form 10-K March 31, 1989, by and between the City of San Clemente, California and CDC. 3.1 Articles of Incorporation, as amended, of Exhibit 3.2a to Amendment No. 1 dated 3333 Development Corporation October 14, 1987 ("CDC Amendment No. 1") ("Development") as currently in effect. to the Registration Statement of CDC on Form 10 (File No. 1-9625) dated July 12, 1987 (the "CDC Registration Statement"). 3.2 By-laws of Development, as amended. Exhibit 3.2 to Annual Report on Form 10-K of CDC (File No. 1-9625) for fiscal year ended March 31, 1993 (the "CDC 10-K"). 4.1 Certificates of Limited Partnership of Exhibit 4.1 to the CDC Registration CDC. Statement. 4.2 Amended and Restated Agreement of Limited Exhibit 4.2 to Amendment No. 3 dated Partnership of CDC. November 24, 1987 ("CDC Amendment No. 3") to the CDC Registration Statement. 4.3 Specimen certificate for Class A limited Exhibit 4.3 to the CDC Registration partnership units. Statement. 4.4 Specimen certificate for Class B limited Exhibit 4.4 to the CDC Registration partnership units. Statement.
44 45 INDEX TO EXHIBITS CENTEX DEVELOPMENT COMPANY, L.P.
EXHIBIT FILED HEREWITH OR SEQ. NO. NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE ------ ------- ------------------------- -------- 4.5 Warrant Agreement, dated as of November Exhibit 4.5 to CDC Form 10-K 30, 1987, by and between CDC and Centex Corporation ("Centex"). 4.6 Specimen warrant certificate. Exhibit 4.6 to CDC Amendment No. 3. 4.7 Specimen Centex common stock certificate Exhibit 4.7 to CDC Form 10-K. (with tandem trading legend and Rights Agreement legend). 4.8 Nominee Agreement, dated as of November Exhibit 4.8 to CDC Form 10-K. 30, 1987, by and between Centex, 3333 Holding Corporation ("Holding") and CDC, and Chemical Bank, as successor nominee. 4.9 Agreement for Purchase of Warrants, dated Exhibit 4.9 to CDC Form 10-K. as of November 30, 1987, by and between CDC and Centex. 4.10 Form of Operating Partnership Agreement. Exhibit 4.9 to the CDC Registration Statement. 10.1 Management Agreement by and between Centex Exhibit 10.1 to CDC Amendment No. 3. Real Estate Corporation and CDC. 10.2 Supplement to Management Agreement by and Exhibit 10.1a to CDC Amendment No. 3. between Centex Real Estate Corporation and CDC. 10.3 Documents of Conveyance of Property from Exhibit 10.2 to CDC Amendment No. 1. Centex Land Corporation to CDC. 10.4 Documents of Conveyance of Property from Exhibit 10.3 to the CDC Registration Centex Homes Corporation to CDC. Statement. 10.5 Documents of Conveyance of Property from Exhibit 10.4 to the CDC Registration Fox & Jacobs, Inc. to CDC. Statement. 10.6 Documents of Conveyance of Property from Exhibit 10.5 to the CDC Registration Great Lakes Development Co., Inc., to CDC. Statement. 10.7 Agreement dated as of April 1, 1987 by and Exhibit 10.6 to the CDC Registration among CDC, Centex Real Estate Corporation, Statement. Centex Homes Corporation and Centex Land Company.
45 46 INDEX TO EXHIBITS CENTEX DEVELOPMENT COMPANY, L.P.--CONTINUED
EXHIBIT FILED HEREWITH OR SEQ. NO. NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE ------ ------- ------------------------- -------- 10.8 Agreement dated as of April 1, 1987 by and Exhibit 10.7 to the CDC Registration between CDC and Centex Homes of New Statement. Jersey, Inc. 10.9 Agreement dated as of April 1, 1987 by and Exhibit 10.8 to CDC Amendment No. 1. between CDC and David Little. 10.10 Trust Agreement dated March 31, 1987 by Exhibit 10.9 to CDC Amendment No. 1. and between CDC and David Little. 23 Consent of Independent Public Accountants. Filed Herewith. 24 Powers of Attorney. Filed Herewith. 27 Financial Data Schedule. Filed Herewith. 99 Financial Statements. Filed Herewith.
- -------------------- 46 EX-10.4 2 CONSULTING AGREEMENT 1 EXHIBIT 10.4 CONSULTING AGREEMENT THIS CONSULTING AGREEMENT, dated as of February 1, 1995 (the "Agreement"), is made by and between Centex Corporation, a Nevada corporation with its principal offices at 3333 Lee Parkway, Dallas, Texas 75219 (hereinafter referred to as the "Company"), and Paul R. Seegers, a resident of Dallas, Texas (hereinafter referred to as "Seegers"). W I T N E S S E T H: WHEREAS, Seegers has served the Company in various capacities, including as Chairman of the Board of the Company, Chief Executive Officer of the Company, Co-Chief Executive Officer of the Company and President of the Company, and he currently serves as Chairman of the Executive Committee of the Board of Directors of the Company; WHEREAS, the Board of Directors of the Company has determined that Seegers' leadership, managerial skills and business acumen have constituted major factors in the growth and development of the Company, and the Company is and will continue to be in need of Seegers' continued expertise and business acumen so that the future and uninterrupted progress of the Company will be assured; WHEREAS, the Company desires to continue to retain and secure for itself the experience, ability and services of Seegers as a consultant for the Company; and WHEREAS, the Company and Seegers desire to enter into a consulting arrangement pursuant to the terms and provisions of this Agreement as set forth herein; NOW, THEREFORE, the parties to this Agreement hereby agree as follows: ARTICLE I Rights and Duties Under Consulting Agreement 1.01 (a) Term of Agreement and Duties. The Company and Seegers agree that for the period commencing on February 1, 1995 and terminating on January 31, 1997, Seegers shall perform consulting-type services for the directors and executive officers of the Company to the extent specified thereby with respect to all matters pertaining to the business and financial affairs of the Company. (b) Compensation. During the term of this Agreement, the Company shall pay to Seegers for each fiscal year of the Company during which this Agreement is in effect (or portion thereof), an annual consulting fee of $215,000 per annum, payable in equal semi-monthly installments on the fifteenth (15) day of each calendar month and on the last day of each calendar month during such term; provided, however, that if any such payment to be received by Seegers is due on a day that is not a business day, then such payment shall be due on the preceding business day. 1 2 (c) Fringe Benefits. The Company shall provide to Seegers during the term of this Agreement the same coverage provided to its executive officers on the same terms and conditions under the Company's medical insurance program and life insurance program. (d) Reimbursement of Expenses. During the term hereof the Company shall reimburse Seegers for all reasonable and necessary travel, entertainment or other related expenses incurred by him in carrying out his duties and responsibilities hereunder upon an accounting therefor in detail submitted to the Company by Seegers at regular intervals. (e) Right to Terminate Consulting Agreement. Seegers may, at his option, terminate this Agreement for any reason prior January 31, 1997 upon giving not less than thirty (30) days' written notice to the Company. Upon termination of this Agreement under this paragraph, the Company shall not be required to continue payment of consulting fees under this Agreement as of the end of such 30-day notice period. 1.02 Effect of Absences; Time Requirements under Consulting Agreement. It is expressly understood that during the term of this Agreement, the inability of Seegers to render services to the Company because of illness shall not constitute a failure by Seegers to perform his obligations hereunder and shall not be deemed a breach hereof or default by him hereunder. Subject to the foregoing, Seegers agrees to devote his best energy, ability and time as shall be necessary to perform his duties hereunder and as shall be reasonably requested by the Company. 1.03 (a) Place of Performance of Consulting Services. The Company shall not require Seegers to report for the performance of his services hereunder on a permanent basis at any location or office. (b) Relocation. If the executive offices of the Company are relocated to any place that is more than twenty-five (25) miles from the Company's main offices at 3333 Lee Parkway, Dallas, Texas 75219, then the Company agrees to reimburse Seegers for any expenses incurred by Seegers in traveling to and from such new offices, as well as any living expenses incurred while performing services for the Company at its new location. In no event shall Seegers be required to relocate his principal residence to such new location. 1.04 (a) Indemnification. Seegers (or his legal representative) shall be indemnified for all legal expenses and all liabilities in connection with any proceeding involving him by reason of his being or having been a director, officer, employee, independent contractor providing services to the Company, or agent of the Company or any of its subsidiaries, or any other enterprise if serving at the request of the Company, or any of its subsidiaries, to the extent permitted by the laws of the State of Texas, or the states of incorporation of the Company's subsidiaries, and by the articles of incorporation or the by-laws of the Company or the Company's subsidiaries, whichever is applicable. (b) Advancement of Expenses. In the event of any action, proceeding or claim against Seegers arising out of his serving in a capacity specified in Section 1.04(a) hereof, which in Seegers' sole judgment requires him to retain counsel (such choice of counsel to be made in his sole and absolute 2 3 discretion) or otherwise expend his personal funds for his defense in connection therewith, the Company shall be obligated to advance to Seegers (or pay directly to his counsel) counsel fees and other costs associated with Seegers' defense of such action, proceeding or claim; provided, however, that in such event Seegers shall first agree in writing, without posting bond or collateral, to repay all sums paid or advanced to him pursuant to this provision in the event that the final disposition of such action, proceeding or claim is one for which Seegers would not be entitled to indemnification pursuant to the provisions hereof. 1.05 (a) Trade Secrets. Seegers recognizes and acknowledges that the names of the Company's customers, the Company's methods of operation, sales and other trade secrets, as they may exist from time to time, are valuable, special and unique assets of the Company. Seegers shall not, during or after the term of this Agreement, disclose any such names or other trade secrets or any part thereof that Seegers becomes aware of during the term of this Agreement to any person, firm, corporation, association or other entity, nor shall he attempt to entice away any customer or employee of the Company, its subsidiaries or affiliates. (b) Non-Competition. Seegers agrees that during the term of this Agreement and for a period of one (1) year following the date of the termination of this Agreement, regardless of the reason for such termination and regardless of the party terminating, he will not directly or indirectly associate with any business that is competing or developing the ability to compete directly or indirectly with the Company or any of its subsidiaries or affiliates or that during such year develops or begins to develop the ability to compete with the Company or any of its subsidiaries or affiliates. For the purposes of this Section 1.05(b), Seegers will be deemed to associate with a business if he owns, manages, operates, controls, is employed by or participates in the ownership, management or control, or is otherwise in any manner connected with such business; provided, however, that Seegers may invest in a publicly held corporation engaged in such competitive business provided that such investment shall at no time exceed 1% of the issued and outstanding capital stock of such corporation, and provided he is not otherwise associated with it. A business will be deemed to be competing with the Company if it is making products or providing services identical to or similar with those made or provided by the Company. Notwithstanding the foregoing, Seegers shall not be deemed to violate his agreement under this Section 1.05(b) if he associates with a business that, subsequent to such association, begins to compete or begins to develop the ability to compete with the Company or any of its subsidiaries or affiliates if Seegers (1) does not participate in such competition or in the development of the ability to compete and (2) resigns from, disposes of his interest in, or otherwise effectively disassociates himself from such business upon becoming aware of such competition or the development by the business of the ability to compete with the Company. Notwithstanding the foregoing, the Company hereby agrees with Seegers that Seegers' investments as a limited partner in one or more limited partnerships that develop residential lots for sale to builders shall not constitute a violation or breach of this Section 1.05(b). ARTICLE II General Provisions 2.01 Reimbursement of Legal Expenses. If at any time Seegers or his beneficiary or beneficiaries, or his estate, as the case may be, shall commence any legal action to enforce any of the terms or provisions of this Agreement, including, without limitation, any term or provision requiring the payment of consulting 3 4 fees to Seegers hereunder and such legal action results in a decision favorable to the person so commencing such action, the Company agrees to reimburse such person for all costs and expenses of such action, including reasonable attorney's fees, incurred by such person in connection therewith. In addition, the Company agrees to reimburse Seegers for any legal, accounting, or other reasonable expenses incurred in entering into this Agreement. 2.02 Binding Effect, Assignment. This Agreement shall inure to the benefit of and be binding upon the Company, and its successors and assigns, including without limitation, any person, partnership or corporation which may acquire all or substantially all or a majority of the Company's assets and business, or with or into which the Company may be consolidated or merged, and this provision shall apply in the event of any subsequent mergers, consolidations, or transfers, and shall be binding upon and inure to the benefit of Seegers, his heirs and personal representatives. This Agreement, and the benefits and obligations herein, may not be assigned or delegated by one party without the consent of the other party. Any assignment or delegation made in violation of this Agreement shall be null and void ab initio and of no force or effect. 2.03 Waiver of Provisions. The failure of either party to insist, in any one or more instances, upon performance of any of the terms or conditions of this Agreement shall not be construed as a waiver or a relinquishment of any right granted hereunder or of the future performance of any such term or condition, but the obligation of the other party with respect thereto shall continue in full force and effect. 2.04 Notice. Any notice to be given to the Company hereunder shall be deemed sufficient if addressed to the Company in writing and personally delivered or mailed by certified mail, return receipt requested, to its office at 3333 Lee Parkway, Suite 1200, Dallas, Texas 75219. Any notice to be given to Seegers hereunder shall be sufficient if addressed to him in writing and personally delivered or mailed by certified mail, return receipt requested, to 8235 Douglas Ave., Suite 925, Dallas, Texas 75225. Each party may, by notice as aforesaid, designate a different address or addresses. 2.05 Entire Agreement. This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and shall supersede all prior written or oral and all contemporaneous oral agreements with respect to the subject matter hereof (including, without limitation, that certain Employment Agreement, dated as of July 15, 1988, between Seegers and the Company, as amended by that certain Amendment to Employment Agreement, dated as of July 18, 1991, between Seegers and the Company), and may not be amended or supplemented in any respect, except by a subsequent written agreement entered into by both parties hereto. 2.06 Severability. In the event any provision of this Agreement shall be held to be illegal, invalid or unenforceable for any reason, the illegality, invalidity or unenforceability shall not affect the remaining provisions hereof, but such illegal, invalid or unenforceable provision shall be fully severable and this Agreement shall be construed and enforced as if the illegal, invalid or unenforceable provision had never been included herein. 2.07 Headings. The titles and headings of Articles and Sections are included for convenience of reference only and are not to be considered in construction or interpretation of the provisions hereof. 4 5 2.08 Word Usage. Words used in the masculine shall apply to the feminine where applicable, and wherever the context of this Agreement dictates, the plural shall be read as the singular and the singular as the plural. 2.09 Governing Law. This Agreement shall be governed by, and construed and interpreted in accordance with, the substantive laws of the State of Texas without giving effect to any conflict-of-laws rule or principle that could result in the application of any other laws. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the 1st day of February, 1995. Attest: CENTEX CORPORATION /s/ Raymond G. Smerge By: /s/ Laurence E. Hirsch Raymond G. Smerge Laurence E. Hirsch Secretary Chairman of the Board and Chief Executive Officer /s/ Paul R. Seegers Paul R. Seegers 5 EX-10.8 3 CENTEX CORP. CONV. SUB. NOTE 1 EXHIBIT 10.8 THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS ("STATE LAWS") AND MAY NOT BE TRANSFERRED UNLESS THE COMPANY IS FIRST FURNISHED AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH TRANSFER WILL NOT VIOLATE THE SECURITIES ACT OR ANY STATE LAWS. TRANSFER OF THIS NOTE IS ALSO RESTRICTED AS HEREINAFTER PROVIDED. CENTEX CORPORATION CONVERTIBLE SUBORDINATED NOTE $2,100,000 Dallas, Texas March 1, 1995 FOR VALUE RECEIVED, Centex Corporation, a Nevada corporation (herein, together with any successor to all or substantially all of its assets, by merger or otherwise, called the "Company"), promises to pay to Laurence E. Hirsch (the "Holder"), at the Company's principal executive office in Dallas, Dallas County, Texas, or such other place as the Company may specify to the Holder in writing, the principal sum of Two Million One Hundred Thousand dollars ($2,100,000), in lawful money of the United States of America, and to pay interest from the date hereof on the unpaid principal balance hereof at a fluctuating rate per annum which shall change from time to time so that it will always be equal to the Interest Rate (as hereinafter defined) or the Highest Lawful Rate (as hereinafter defined), whichever is the lesser. As used herein, the term "Interest Rate" shall mean the rate of interest charged from to time on that certain Promissory Note, dated March 1, 1995, between Holder and NationsBank of Texas, N.A., evidencing an indebtedness in a maximum amount of $2,100,000 (the "Bank Note"). The "Highest Lawful Rate" shall be the maximum rate of interest that the Company may pay on this Note from time to time under applicable laws. If and to the extent the Highest Lawful Rate is determined pursuant to the laws of the State of Texas, the Indicated Rate Ceiling provided by Article 5069-1.04 of the Texas Revised Civil Statutes Annotated, as amended, shall be the ceiling applicable to this Note. 1. Payment Terms. The principal of this Note shall be payable in full on March 1, 2000. Accrued interest on this Note shall be payable on any day on which interest is due and payable on the Bank Note, and at maturity of this Note. The Company promises to pay interest, payable on demand, on overdue principal and, to the extent permitted by law, on overdue interest, from their due dates at the Highest Lawful Rate. 2. Subordination. Upon any liquidation of the Company or distribution of assets to creditors of the Company in bankruptcy, receivership, or otherwise, no payment of principal or interest shall be demanded, made, or received on this Note, nor shall any portion of this Note be directly or indirectly repurchased by the Company (except through conversion of this Note into Common Stock, to the extent permitted by Section 3 below), until all Senior Indebtedness (as hereinafter defined) has been paid in full. Any - 1 - 2 cash, securities, or property received by the Holder in violation of the immediately preceding sentence shall be held in trust for the benefit of the holders of Senior Indebtedness and promptly paid over to them, pro rata as their respective interests may appear, upon demand. The Holder shall be subrogated to the rights of any holder of Senior Indebtedness to the extent the Holder or the Company pays funds over to any holder of Senior Indebtedness pursuant to these subordination provisions, but such right of subrogation may not be enforced until all Senior Indebtedness has been paid in full. "Senior Indebtedness" means obligations of the Company, whether outstanding on the date hereof or created hereafter, for (a) money borrowed by the Company, (b) money borrowed by others and guaranteed by the Company, (c) indebtedness incurred, assumed, or guaranteed by the Company in connection with the payment of all or any portion of the purchase price of any business, real property, or other assets (except indebtedness incurred for materials acquired or services rendered in the ordinary course of business of the Company) purchased by the Company or any of its subsidiaries, (d) indebtedness arising in favor of any bonding company under any performance or payment bond or other similar bond issued by such bonding company in connection with any construction contract to which the Company or any of its subsidiaries is or was a party, (e) renewals, extensions, and refundings of any indebtedness described in clauses (a)-(d), inclusive, and (f) interest due and premium and collection costs owed by the Company with respect to any indebtedness described in clauses (a)-(e), inclusive, including interest which accrues subsequent to any bankruptcy or similar proceeding involving the Company; provided, however, that Senior Indebtedness shall not include (x) any indebtedness which is expressly stated in any instrument binding on the holder of such indebtedness not to be Senior Indebtedness, (y) this Note, or (z) any indebtedness as to which neither the Company nor any subsidiary has any personal liability. Upon request of the Company, the Holder will expressly confirm to any holder or proposed holder of indebtedness conforming to the preceding definition that such indebtedness is "Senior Indebtedness" within the meaning of the preceding sentence. 3. Conversion. The Holder may, at his option (but subject to the provisions of this Note relating to compliance with the Securities Act and State Laws), convert the unpaid Vested Principal (as hereinafter defined) of this Note into Common Stock (as hereinafter defined) of the Company, at the rate of one share of Common Stock for each ten dollars and fifty cents ($10.50) of Vested Principal so converted, at any time and from time to time, by surrendering this Note, together with written directions as to the amount of Vested Principal to be converted, to the Company at its principal executive office. Upon such surrender, the Company shall promptly issue and deliver to the Holder one or more certificates (as the Holder may specify) evidencing the shares into which the Vested Principal has been converted, and shall return this Note to the Holder with a notation thereon showing the amount of Vested Principal that has been converted and the date of such conversion. Any such conversion shall be deemed effective, and the shares issuable in respect thereof shall be deemed issued, on the first Business Day (defined as any day on which banks are authorized to be open for business under Texas law) following the day this Note is duly surrendered for conversion, as described above, regardless of when the Company actually issues and delivers the shares to the Holder. No adjustment shall be made in respect of any dividends (except common stock dividends, as hereinafter provided) or distributions paid prior to the effective conversion date, or payable after the effective conversion date, to holders of record as of a date prior to the effective conversion date. - 2 - 3 No fractional shares shall be issuable on conversion of this Note, and if the Holder designates an amount of Vested Principal which would result in issuance of a fractional share, the amount of Vested Principal to be converted shall be reduced to eliminate the issuance of such fractional shares. One Hundred Percent (100%) of the principal amount of this Note shall be "Vested Principal" on March 1, 1995, the date of issuance of this Note (it being acknowledged by the Company that One Hundred Percent (100%) of the Vested Principal of the Original Note (as hereinafter defined) became Vested Principal prior to the date of issuance of this Note, which is being issued to renew, extend, modify, and replace the Original Note as provided in the antepenultimate paragraph of this Note). Notwithstanding the foregoing, if the Holder is discharged as an employee by the Company's or an Affiliate's (defined as any parent or subsidiary of the Company, within the meaning of subsections 425(e) and (f) of the Internal Revenue Code of 1986, as amended) board of directors for Cause (defined as acts constituting theft, dishonesty, fraud or embezzlement, as determined in good faith by the Company's board of directors), then any part of the principal of this Note which is Vested Principal shall, upon such discharge, cease to be Vested Principal. For purposes of this Note, the term "Common Stock" shall mean the common stock, par value $.25 per share, of Centex Corporation as constituted on the date of this Note and any stock, securities, or other property (including cash), whether of Centex Corporation or some other corporation or entity, into which the outstanding shares of such common stock may hereafter be changed pursuant to any merger, consolidation, recapitalization, or similar transaction (collectively, a "Reorganization"). In furtherance of the preceding sentence, (i) if the outstanding shares of Common Stock of the Company shall be subdivided into a greater number of shares or combined into a lesser number of shares (by stock split, reverse stock split, stock dividend, or otherwise), the number of shares of Common Stock issuable upon conversion of this Note shall be appropriately adjusted to give effect to such subdivision or combination, and (ii) if any Reorganization should occur, there shall be delivered to the Holder, upon conversion of any portion of the Vested Principal of this Note subsequent to such Reorganization, the stock, securities, or other property (including cash) that the Holder would have received if he had converted such Vested Principal into Common Stock prior to such Reorganization and participated therein as a holder of such Common Stock. No Reorganization shall be effected unless, under the express terms thereof, the resulting or surviving entity assumes the obligations of the Company under this Note. 4. Prepayment. The Company shall not be entitled to prepay all or any part of this Note, except that this Note shall be prepaid, in full (but not in part): (a) on the first anniversary of the date the Holder ceases to be employed by at least one of the employers in the group of employers consisting of the Company and its Affiliates for any reason other than (i) the Holder's voluntary termination of employment with the Company or an Affiliate or (ii) the Holder's discharge by the Company's or an Affiliate's board of directors for Cause; - 3 - 4 (b) within thirty (30) days after the Holder, as a result of his voluntary termination of employment, is no longer employed by any of the employers in the group of employers consisting of the Company and its Affiliates or is discharged as an employee by the Company's or an Affiliate's board of directors for Cause; and (c) within thirty (30) days following the approval by the shareholders of the Company of a plan of complete liquidation and dissolution of the Company, other than such a plan adopted in connection with a Reorganization. 5. Default. If any one or more of the following events (herein called "Events of Default") shall occur and be continuing: (a) Default shall be made in the payment of any principal of or interest on this Note when due and shall continue for more than 10 days after written notice from the Holder to the Company; or (b) The Company shall (i) apply for or consent to the appointment of a receiver, trustee, or liquidator of the Company or all or substantially all the assets of the Company, (ii) make a general assignment for the benefit of creditors, (iii) be adjudicated bankrupt or insolvent, or (iv) file a voluntary petition in bankruptcy, or a petition or answer seeking reorganization or an arrangement with creditors to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, moratorium, dissolution, liquidation, or debtor relief law, or any chapter of any such law, or an answer admitting the material allegations of a petition filed against it in any proceeding under any such law or chapter; or an order, judgement, or decree shall be entered, without the application, approval, or consent of the Company by any court of competent jurisdiction, approving a petition seeking liquidation or reorganization of the Company or of all or substantially all of the assets of the Company and such order, judgment, or decree shall not have been dismissed within 120 days after it was so entered; then and in each and every such case the Holder may, subject to the subordination provisions previously stated in this Note, by notice in writing to the Company declare the unpaid principal of this Note, with accrued interest thereon, to be forthwith due and payable and thereon such principal and interest shall be due and payable without presentment, protest, or further demand or notice of any kind, all of which are hereby expressly waived. 6. Transfer. This Note may not be transferred, voluntarily or involuntarily, by the Holder to any person or entity whatsoever without the written consent of the Company; provided, however, that such transfer restriction shall not apply (i) to a transfer, by will or by the laws of descent and distribution, to the executor or estate of the Holder upon his death, (ii) to the pledge of, or grant of a security interest in, this Note by the Holder to a bank (or other financial institution) approved by the Company - 4 - 5 in writing as security for the indebtedness of the Holder to such bank or institution in connection with the Holder's purchase of this Note, or (iii) to the foreclosure of any such pledge or security interest so long as only such bank or financial institution is the purchaser at such sale. In no event may the conversion privileges of this Note be exercised by any person or entity to whom this Note is transferred (including the Holder), voluntarily or involuntarily, in violation of the preceding sentence, or by any transferee of such person or entity (including the Holder), or by any purchaser (including the bank or other financial institution that may be the pledgee of or holder of a security interest in this Note) at a foreclosure sale (even if such foreclosure is permitted under the preceding sentence). Subject to the immediately preceding paragraph, this Note is transferable only on the books of the Company by the Holder or the Holder's duly authorized attorney-in-fact. The Company shall be entitled to treat the registered holder of this Note as the true and lawful owner hereof for all purposes, including payment, notwithstanding any actual knowledge of the Company to the contrary. 7. Miscellaneous. Except as otherwise expressly specified in this Note, the Company and each surety, guarantor, endorser, or other party liable for payment on this Note hereby waive diligence, presentment, demand, protest, and notice of any kind whatsoever, and agree that their liability on this Note shall not be affected by any renewal or extension in the time of payment hereof, by any indulgences, or by any release or change in any security for payment of this Note. In no event shall the Company be obligated to issue any Common Stock on conversion of this Note if, in the opinion of counsel for the Company, such issuance would violate the Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any State Laws. The Holder shall, as a condition precedent to his right to convert Vested Principal to Common Stock, make such written representations to, and agreements with, the Company concerning the Holder's financial position, business and investment experience, intentions as to resale or other disposition of the shares, and such other matters as counsel for the Company may deem necessary in order to assure compliance with the Securities Act, Exchange Act, and applicable State Laws. The certificates evidencing the shares issued on conversion of this Note shall bear such legends as counsel for the Company may deem necessary to ensure compliance with the Securities Act, Exchange Act, and applicable State Laws. In no event shall the existence of this Note be deemed to create any right of continued employment of the Holder by the Company or any Affiliate. The Company is entitled to offset against this Note (whether or not this Note is then due), (i) any amounts due and owing by the Holder to the Company or any Affiliate and (ii) any amounts which the Company may owe to NationsBank of Texas, N.A. (the "Bank") arising under the Company's guarantee of the Holder's $2,100,000 promissory note to the Bank dated March 1, 1995 (and all renewals, extensions, modifications and amendments of and to such promissory note). Any such offset shall be applied first to accrued and unpaid interest, next to principal that is not Vested Principal, and then to Vested Principal. Upon any such offset, the offset principal shall be deemed paid and shall cease to bear interest. - 5 - 6 If this Note is placed in the hands of an attorney for collection after occurrence of an Event of Default, or if it is collected through legal or bankruptcy proceedings, the Company agrees to pay all costs of collection, including but not limited to court costs and reasonable attorneys' fees. It is the intention of the Holder and the Company that this Note conform in all respects to applicable law so that no payment of interest or other sum construed to be interest shall exceed the Highest Lawful Rate. In determining the rate of interest paid or payable under this Note, all funds paid or to be paid as interest or construed to be interest shall be prorated, allocated, or spread as permitted under applicable law. If, through any circumstances, the provisions of this Note would result in the Company's paying or agreeing to pay interest on this Note in excess of the Highest Lawful Rate, or if the Company pays any sum as interest or any amount which is construed to be interest in excess of such rate, then (1) the amount of interest contracted for shall be automatically reduced to the amount permitted by the Highest Lawful Rate and (2) the amount of excess interest paid shall be applied to the reduction of the principal balance of this Note, if any, and if the principal balance has been fully paid, the excess interest shall be refunded to the Company. This Note renews, extends, modifies, and replaces, but does not extinguish the indebtedness evidenced by, that certain Centex Corporation Convertible Subordinated Note dated August 26, 1985, in the original principal amount of $2,100,000, executed by the Company and payable to the Holder (the "Original Note"). THIS NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN THE COMPANY AND THE HOLDER AND THE SAME MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE COMPANY AND THE HOLDER. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE COMPANY AND THE HOLDER. THIS NOTE MAY NOT BE MODIFIED OR AMENDED, EXCEPT IN WRITING SIGNED BY THE COMPANY AND THE HOLDER AND SPECIFICALLY REFERENCING THIS NOTE. This Note shall be governed by, and construed and interpreted in accordance with, the substantive laws of the State of Texas without giving effect to any conflict-of-laws rule or principle that would result in the application of the laws of any other jurisdiction. CENTEX CORPORATION By: /s/ David W. Quinn David W. Quinn Executive Vice President and Chief Financial Officer - 6 - EX-21.A 4 LIST OF SUBSIDIARIES FO CENTEX CORP. 1 EXHIBIT 21.A The following is a list of the significant subsidiaries of the Company as of May 30, 1995: NEVADA CORPORATIONS: Centex Bateson Enterprises, Inc. Centex Construction Group, Inc. Centex Forcum Lannom, Inc. Centex Golden Construction Company Centex International, Inc. Centex Real Estate Corporation Centex-Rodgers Construction Company Centex-Rooney Enterprises, Inc. Centex-Simpson Construction Company, Inc. CTX Financial Corporation CTX Mortgage Company GHQ Company, Inc. DELAWARE CORPORATIONS: Centex Construction Products, Inc. (1) FLORIDA CORPORATIONS: Centex-Rooney Construction Co., Inc. TEXAS CORPORATIONS: Centex Bateson Construction Company, Inc. ________________________________________ (1) 49% owned subsidiary EX-23.A 5 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS 1 EXHIBIT 23.A CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in the previously filed registration statements on Form S-8 (numbers 33-44575; 33-29174; 2-95271; 2-51637; 2-54043; 2-59535; 2-68747; 2-78831; 33-55083) of our report dated May 12, 1995, included as an exhibit to Centex Corporation's Annual Report on Form 10-K for the year ended March 31, 1995, and to all references to our firm included in these registration statements. ARTHUR ANDERSEN LLP Dallas, Texas June 2, 1995 EX-24.A 6 POWERS OF ATTORNEY 1 EXHIBIT 24.A CENTEX CORPORATION POWER OF ATTORNEY THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch and David W. Quinn, or either of such individuals, with full power of substitution in the premises, as the undersigned's true and lawful agents and attorneys-in-fact (the "Attorneys-in-Fact"), with full power and authority in the name and on behalf of the undersigned, in his capacity as a Director of Centex Corporation (the "Company"), to execute and file with the Securities and Exchange Commission the Company's Annual Report on Form 10-K for the Company's fiscal year ended March 31, 1995, together with any and all amendments thereto. This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may not be revoked until the Attorneys-in-Fact have received five days' written notice of such revocation. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 31st day of May, 1995. /s/ William J Gillilan III William J Gillilan III Director Centex Corporation 2 CENTEX CORPORATION POWER OF ATTORNEY THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch and David W. Quinn, or either of such individuals, with full power of substitution in the premises, as the undersigned's true and lawful agents and attorneys-in-fact (the "Attorneys-in-Fact"), with full power and authority in the name and on behalf of the undersigned, in his capacity as a Director of Centex Corporation (the "Company"), to execute and file with the Securities and Exchange Commission the Company's Annual Report on Form 10-K for the Company's fiscal year ended March 31, 1995, together with any and all amendments thereto. This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may not be revoked until the Attorneys-in-Fact have received five days' written notice of such revocation. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 31st day of May, 1995. /s/ Clint W. Murchison, III Clint W. Murchison, III Director Centex Corporation 3 CENTEX CORPORATION POWER OF ATTORNEY THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch and David W. Quinn, or either of such individuals, with full power of substitution in the premises, as the undersigned's true and lawful agents and attorneys-in-fact (the "Attorneys-in-Fact"), with full power and authority in the name and on behalf of the undersigned, in his capacity as a Director of Centex Corporation (the "Company"), to execute and file with the Securities and Exchange Commission the Company's Annual Report on Form 10-K for the Company's fiscal year ended March 31, 1995, together with any and all amendments thereto. This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may not be revoked until the Attorneys-in-Fact have received five days' written notice of such revocation. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 31st day of May, 1995. /s/ Charles H. Pistor Charles H. Pistor Director Centex Corporation 4 CENTEX CORPORATION POWER OF ATTORNEY THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch, as the undersigned's true and lawful agent and attorney-in-fact (the "Attorney-in-Fact"), with full power and authority in the name and on behalf of the undersigned, in his capacity as a Director of Centex Corporation (the "Company"), to execute and file with the Securities and Exchange Commission the Company's Annual Report on Form 10-K for the Company's fiscal year ended March 31, 1995, together with any and all amendments thereto. This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may not be revoked until the Attorneys-in-Fact have received five days' written notice of such revocation. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 31st day of May, 1995. /s/ David W. Quinn David W. Quinn Director Centex Corporation 5 CENTEX CORPORATION POWER OF ATTORNEY THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch and David W. Quinn, or either of such individuals, as the undersigned's true and lawful agents and attorneys-in-fact (the "Attorneys-in-Fact"), with full power and authority in the name and on behalf of the undersigned, in his capacity as a Director of Centex Corporation (the "Company"), to execute and file with the Securities and Exchange Commission the Company's Annual Report on Form 10-K for the Company's fiscal year ended March 31, 1995, together with any and all amendments thereto. This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorney-in-Fact, may not be revoked until the Attorney-in-Fact has received five days' written notice of such revocation. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 31st day of May, 1995. /s/ Paul R. Seegers Paul R. Seegers Director Centex Corporation 6 CENTEX CORPORATION POWER OF ATTORNEY THE UNDERSIGNED hereby constitutes and appoints David W. Quinn as his true and lawful agent and attorney-in-fact (the "Attorney-in-Fact"), with full power and authority in the name and on behalf of the undersigned, in his capacity as a Director of Centex Corporation (the "Company"), to execute and file with the Securities and Exchange Commission the Company's Annual Report on Form 10-K for the Company's fiscal year ended March 31, 1995, together with any and all amendments thereto. This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorney-in-Fact, may not be revoked until the Attorney-in-Fact has received five days' written notice of such revocation. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 31st day of May, 1995. /s/ Laurence E. Hirsch Laurence E. Hirsch Director Centex Corporation 7 CENTEX CORPORATION POWER OF ATTORNEY THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch and David W. Quinn, or either of such individuals, with full power of substitution in the premises, as the undersigned's true and lawful agents and attorneys-in-fact (the "Attorneys-in-Fact"), with full power and authority in the name and on behalf of the undersigned, in his capacity as a Director of Centex Corporation (the "Company"), to execute and file with the Securities and Exchange Commission the Company's Annual Report on Form 10-K for the Company's fiscal year ended March 31, 1995, together with any and all amendments thereto. This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may not be revoked until the Attorneys-in-Fact have received five days' written notice of such revocation. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 17th day of May, 1995. /s/ Juan L. Elek Juan L. Elek Director Centex Corporation EX-27.A 7 FINANCIAL DATA SCHEDULE
5 FINANCIAL DATA SCHEDULE FOR CENTEX CORPORATION This schedule contains summary financial information extracted from Centex Corporation's March 31, 1995, Form 10-K and is qualified in its entirety by reference to such financial statements. 0000018532 CENTEX CORPORATION 1,000 12-MOS MAR-31-1995 APR-01-1994 MAR-31-1995 23,785 0 649,597 0 1,166,471 0 81,511 40,244 2,049,698 0 222,530 7,018 0 0 661,209 2,049,698 3,277,504 3,294,081 3,159,354 3,159,354 15,253 0 33,014 145,788 53,540 92,268 0 0 0 92,268 3.04 0.00
EX-99.A 8 FINANCIAL STATEMENTS 1 EXHIBIT 99.A Centex Corporation and Subsidiaries FINANCIAL HIGHLIGHTS ================================================================================
For the Years Ended March 31, ====================================================================== 1995 1994 1993 1992 1991 ---------------------------------------------------------------------- (Amounts in thousands, except per share data) Revenues $3,277,504 $3,039,709 $2,363,325 $2,028,646 $2,089,110 Earnings Before Income Taxes $ 145,788 $ 135,013 $ 91,759 $ 45,852 $ 56,582 Net Earnings $ 92,248 $ 85,162 $ 61,038 $ 34,557 $ 43,605 Debt $ 427,381 $ 429,470 $ 368,988 $ 298,508 $ 267,946 Stockholders' Equity $ 668,227 $ 668,659 $ 578,415 $ 518,494 $ 483,677 Average Shares Outstanding 30,327 32,790 32,016 31,252 30,813 Earnings Per Share $ 3.04 $ 2.60 $ 1.91 $ 1.11 $ 1.42 Cash Dividends Per Share $ .20 $ .20 $ .20 $ .20 $ .20 Book Value Per Share At Year End $ 23.80 $ 21.12 $ 18.57 $ 16.99 $ 16.07
Net Earnings and Earnings Per Share for fiscal 1995 include $37.5 million and $1.23, respectively, related to the April 1994 Initial Public Offering (IPO) of 51% of the stock of Centex Construction Products, Inc. See Note C to financial statements. Debt represents Centex Corporation's debt with the mortgage company and savings and loan association reflected on the equity method versus consolidation. See Note A to financial statements. STOCK PRICES AND DIVIDENDS ================================================================================
Year Ended March 31, 1995 Year Ended March 31, 1994 ================================ ================================ Price Price ------------------ ------------------ High Low Dividends High Low Dividends ------- ------- --------- ------- ------- --------- QUARTER First $32 3/8 $23 7/8 $.05 $35 1/2 $27 1/2 $.05 Second $26 7/8 $22 3/8 $.05 $42 5/8 $32 1/2 $.05 Third $23 7/8 $20 1/4 $.05 $44 5/8 $36 7/8 $.05 Fourth $25 7/8 $22 1/2 $.05 $45 5/8 $30 7/8 $.05
The common stock of Centex Corporation is traded on the New York Stock Exchange (ticker symbol CTX) and The International Stock Exchange (London). The approximate number of record holders of the common stock of Centex Corporation at May 12, 1995 was 2,050. On November 30, 1987, Centex Corporation distributed as a dividend to its stockholders securities relating to Centex Development Company, L.P. (see Note H to the Consolidated Financial Statements of Centex Corporation and Subsidiaries). Since this distribution, such securities have traded in tandem with, and as a part of, the common stock of Centex Corporation. Amounts represent cash dividends per share paid by Centex Corporation on the common stock of Centex Corporation. 3333 Holding Corporation has paid no dividends on its common stock since its incorporation. F-1 2 Centex Corporation and Subsidiaries CONSOLIDATED REVENUES AND OPERATING EARNINGS BY LINE OF BUSINESS ================================================================================
For the Year Ended March 31, ================================================================ 1995 1994 1993 1992 1991 ---------------------------------------------------------------- (Dollars in thousands) REVENUES Home Building $2,110,735 $1,869,754 $1,433,062 $1,061,886 $1,021,342 65% 61% 61% 52% 49% Financial Services 106,841 203,393 147,041 101,751 101,942 3% 7% 6% 5% 5% Contracting and Construction Services 1,059,928 966,562 783,222 865,009 965,826 32% 32% 33% 43% 46% ---------- ---------- ---------- ---------- ---------- $3,277,504 $3,039,709 $2,363,325 $2,028,646 $2,089,110 ========== ========== ========== ========== ========== 100% 100% 100% 100% 100% OPERATING EARNINGS Home BuiLding $ 112,149 $ 95,977 $ 79,850 $ 55,177 $ 73,520 83% 53% 62% 68% 76% Financial Services 9,399 73,550 50,854 21,582 9,190 7% 41% 40% 27% 10% Contracting and Construction Services (1,790) (4,500) (4,103) 3,742 11,569 (1%) (2%) (3%) 5% 12% Other, net (1,608) (1,799) (4,262) (840) 190 (1%) (1%) (3%) (1%) -% Equity in Earnings of Affiliate (CXP) 16,577 16,626 4,648 1,138 1,660 12% 9% 4% 1% 2% ---------- ---------- ---------- ---------- ---------- OPERATING EARNINGS 134,727 179,854 126,987 80,799 96,129 100% 100% 100% 100% 100% Corporate General and Administrative 15,253 15,158 13,120 12,807 12,124 Interest 33,014 29,683 22,108 22,140 27,423 ---------- ---------- ---------- ---------- ---------- EARNINGS BEFORE GAIN ON CXP'S INITIAL PUBLIC OFFERING AND INCOME TAXES 86,460 135,013 91,759 45,852 56,582 Gain on CXP'S Initial Public Offering 59,328 - - - - ---------- ---------- ---------- ---------- ---------- EARNINGS BEFORE INCOME TAXES $ 145,788 $ 135,013 $ 91,759 $ 45,852 $ 56,582 ========== ========== ========== ========== ==========
Centex Construction Products, Inc. (CXP) became 49% owned in April 1994 as a result of an Initial Public Offering (IPO) representing 51% of its equity (see Note C to financial statements). CXP's revenues of $166,826, $136,526, $129,832 and $142,188 for the fiscal years 1994, 1993, 1992 and 1991, respectively, and the related costs and expenses have been reclassified into "Equity in Earnings of Affiliate (CXP)". This reclassification facilitates comparisons between the periods. Mortgage Banking and Savings and Loan operations are combined in the financial reporting segment - Financial Services. Applicable segment overhead costs have been deducted from lines of business operating earnings. F-2 3 Centex Corporation and Subsidiaries STATEMENTS OF CONSOLIDATED EARNINGS ================================================================================
For the Years Ended Match 31, ============================================== 1995 1994 1993 ---------------------------------------------- (Dollars in thousands, except per share data) REVENUES Home Building $2,110,735 $1,869,754 $1,433,062 Financial Services 106,841 203,393 147,041 Contracting and Construction Services 1,059,928 966,562 783,222 ---------- ---------- ---------- 3,277,504 3,039,709 2,363,325 ---------- ---------- ---------- COSTS AND EXPENSES Home Building 1,998,586 1,773,777 1,353,212 Financial Services 97,442 129,843 96,187 Contracting and Construction Services 1,061,718 971,062 787,325 Other, net 1,608 1,799 4,262 Equity in Earnings of Affiliate (CXP) (16,577) (16,626) (4,648) Corporate General and Administrative 15,253 15,158 13,120 Interest 33,014 29,683 22,108 ---------- ---------- ---------- 3,191,044 2,904,696 2,271,566 ---------- ---------- ---------- EARNINGS BEFORE GAIN ON CXP INITIAL PUBLIC OFFERING AND INCOME TAXES 86,460 135,013 91,759 Gain on CXP Initial Public Offering 59,328 - - ---------- ---------- ---------- EARNINGS BEFORE INCOME TAXES 145,788 135,013 91,759 Income Taxes 53,540 49,851 30,721 ---------- ---------- ---------- NET EARNINGS $ 92,248 $ 85,162 $ 61,038 ========== ========== ========== EARNINGS PER SHARE $ 3.04 $ 2.60 $ 1.91 ========== ========== ==========
Mortgage Banking and Savings and Loan operations are combined in the financial reporting segment - Financial Services. See notes to consolidated financial statements. F-3 4 Centex Corporation and Subsidiaries CONSOLIDATED BALANCE SHEETS ================================================================================
Centex Corporation and Subsidiaries ----------------------------------- March 31, =================================== 1995 1994 ----------------------------------- (Dollars in thousands) ASSETS Cash and Cash Equivalents $ 23,785 $ 76,287 Marketable Securities Available for Sale - 78,241 Receivables - Residential Mortgage Loans 413,802 677,641 Construction Contracts 177,075 161,929 Trade 53,822 79,487 Notes 4,898 10,115 Affiliates - - Inventories - Housing Projects 1,087,542 969,769 Land Held for Development and Sale 78,929 104,869 Construction Products - 22,819 Investments - Centex Development Company, L.P. 46,585 71,000 Centex Construction Products, Inc. 89,871 - Joint Ventures and Other 5,695 56,928 Unconsolidated Subsidiaries - - Property and Equipment, net 41,267 188,930 Government-Guaranteed S&L Assets - 43,767 Other Assets and Deferred Charges 26,427 38,574 ---------- ---------- $2,049,698 $2,580,356 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts Payable and Accrued Liabilities $ 555,944 $ 643,045 S&L Deposits and FHLB Borrowings - 211,055 Short-term Debt 576,260 783,585 Long-term Debt 222,530 222,832 Deferred Income Taxes 26,737 51,180 Stockholders' Equity - Preferred Stock, Authorized 5,000,000 Shares, None Issued - - Common Stock, S.25 Par Value; Authorized 50,000,000 Shares; Issued and Outstanding 28,070,978 and 31,663,808 Shares 7,018 7,916 Capital in Excess of Par Value - 26,631 Retained Earnings 661,209 634,112 ---------- ---------- Total Stockholders' Equity 668,227 668,659 ---------- ---------- $2,049,698 $2,580,356 ========== ==========
See notes to consolidated financial statements. F-4 5 ================================================================================
Centex Corporation Financial Services ----------------------------- -------------------------- March 31, March 31, ============================= ========================== 1995 1994 1995 1994 ----------------------------- -------------------------- (Dollars in thousands) $ 18,534 $ 13,284 $ 5,251 $ 63,003 - - - 78,241 - - 413,802 677,641 177,075 161,929 - - 44,771 54,630 9,051 24,857 4,898 10,115 - - - - 65,521 80,806 1,087,542 969,769 - - 78,929 104,869 - - - 22,819 - - 46,585 71,000 - - 89,871 - - - 5,695 56,928 - - 29,082 5,263 - - 25,341 169,234 15,926 19,696 - - - 43,767 19,739 22,101 6,688 16,473 ---------- ---------- -------- ---------- $1,628,062 $1,661,941 $516,239 $1,004,484 ========== ========== ======== ========== $ 504,659 $ 528,724 $ 51,285 $ 114,321 - - - 211,055 204,851 206,638 371,409 576,947 222,530 222,832 - - 27,795 35,088 (1,058) 16,092 - - - - 7,018 7,916 12 12 - 26,631 51,908 51,938 661,209 634,112 42,683 34,119 ---------- ---------- -------- ---------- 668,227 668,659 94,603 86,069 ---------- ---------- -------- ---------- $1,628,062 $1,661,941 $516,239 $1,004,484 ========== ========== ======== ==========
In the supplemental data presented above, "Centex Corporation" means the basis of presentation as described in Note A to the consolidated financial statements; "Financial Services" means CTX Mortgage Company and CTX Holding Company and Affiliates. Transactions between Centex Corporation and Financial Services have been eliminated from the Centex Corporation and Subsidiaries balance sheets. F-5 6 Centex Corporation and Subsidiaries STATEMENTS OF CONSOLIDATED CASH FLOWS ================================================================================
For the Years Ended March 31, =========================================== 1995 1994 1993 ------------------------------------------- (Dollars in thousands) CASH FLOWS - OPERATING ACTIVITIES Net Earnings $ 92,248 $ 85,162 $ 61,038 Adjustments - Depreciation, Depletion and Amortization 6,438 19,640 16,156 Deferred Income Taxes (4,285) (7,760) 3,545 Gain Related to CXP's IPO, net of Tax (37,495) - - Equity in (Earnings) Losses of Joint Ventures, Unconsolidated Subsidiaries and CDC 865 (3,387) 120 Equity in Earnings of Affiliate (CXP), net of Tax (10,692) - - Increase in Receivables (10,813) (21,965) (15,001) Decrease (Increase) in Residential Mortgage Loans 263,718 (87,048) (12,840) Increase in Inventories (92,255) (201,539) (136,259) Decrease in Government-Guaranteed S&L Assets 43,767 39,056 105,275 (Decrease) Increase in Payables and Accruals (56,866) 91,864 77,920 Decrease (Increase) in Other Assets 5,234 (4,190) (6,337) Other, net (20,167) (13,859) (2,265) -------- --------- --------- 179,697 (104,026) 91,352 -------- --------- --------- CASH FLOWS - INVESTING ACTIVITIES Decrease (Increase) in Advances to Joint Ventures and Unconsolidated Subsidiaries 24,334 (2,747) 2,669 Dividend and Other Receipts Related to CXP's IPO 186,525 - - Property and Equipment Additions, net (10,552) (31,936) (18,019) Decrease in Marketable Securities 78,241 32,075 91,710 -------- --------- --------- 278,548 (2,608) 76,360 -------- --------- --------- CASH FLOWS - FINANCING ACTIVITIES (Decrease) Increase in S&L Deposits and Debt (211,055) 6,915 (241,130) (Decrease) Increase in Debt (207,012) 144,859 30,250 Retirement of Common Stock (89,093) - (3,991) Proceeds from Stock Option Exercises 2,320 11,386 9,028 Dividends Paid (5,907) (6,304) (6,154) -------- --------- --------- (510,747) 156,856 (211,997) -------- --------- --------- NET (DECREASE) INCREASE IN CASH (52,502) 50,222 (44,285) CASH AT BEGINNING OF YEAR 76,287 26,065 70,350 -------- --------- --------- CASH AT END OF YEAR $ 23,785 $ 76,287 $ 26,065 ======== ========= =========
See notes to consolidated financial statements. F-6 7 Centex Corporation and Subsidiaries STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY ================================================================================
Capital In Preferred Common Excess Of Retained Stock Stock Par Value Earnings Total ----------- ----------- ----------- ---------- --------- (Dollars in thousands) Balance, March 31, 1992 $ - $7,623 $10,501 $500,370 $518,494 Exercise of Stock Options - 200 8,828 - 9,028 Retirement of 187,400 Shares - (38) (3,953) - (3,991) Net Earnings - - - 61,038 61,038 Cash Dividends - - - (6,154) (6,154) ----- ------ ------- -------- -------- Balance, March 31, 1993 - 7,785 15,376 555,254 578,415 Exercise of Stock Options - 131 11,255 - 11,386 Net Earnings - - - 85,162 85,162 Cash Dividends - - - (6,304) (6,304) ----- ------ ------- -------- -------- Balance, March 31, 1994 - 7,916 26,631 634,112 668,659 Exercise of Stock Options - 36 2,284 - 2,320 Retirement of 3,737,500 Shares - (934) (28,915) (59,244) (89,093) Net Earnings - - - 92,248 92,248 Cash Dividends - - - (5,907) (5,907) ----- ------ ------- -------- -------- Balance, March 31, 1995 $ - $7,018 $ - $661,209 $668,227 ===== ====== ======= ======== ========
See notes to consolidated financial statements. F-7 8 Centex Corporation and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ================================================================================ (Dollars in thousands, except per share data) (A) SIGNIFICANT ACCOUNTING POLICIES CONSOLIDATION The consolidated financial statements include the accounts of Centex Corporation and subsidiaries (Centex or the company) after the elimination of all significant intercompany balances and transactions. BASIS OF BALANCE SHEET PRESENTATION Balance sheet data are presented in the following categories: - - Centex Corporation and Subsidiaries. This represents the adding together of Centex Corporation, Financial Services and all of their consolidated subsidiaries. The effects of transactions among related companies within the consolidated group have been eliminated. - - Centex Corporation. This information is presented as supplemental information and represents the adding together of all subsidiaries other than CTX Mortgage Company (Mortgage Banking group) and CTX Holding Company (CTX Holding) and its savings and loan subsidiary, Texas Trust Savings Bank, FSB (Texas Trust) and affiliates (together, the Savings and Loan group) which are presented on an equity basis of accounting. - - Financial Services. This represents the adding together of the Mortgage Banking group and the Savings and Loan group. The assets and deposits of Texas Trust were sold in December 1994 - See Note B. REVENUE RECOGNITION Revenue from housing projects is recognized as homes are sold and title passes. Earnings from sale of mortgage servicing rights and from loan origination fees are recognized when the related loan is sold and delivered to third-party purchasers. Long-term construction contract revenues are recognized on the percentage-of-completion method based on the costs incurred relative to total estimated costs. Full provision is made for any anticipated losses. Billings for Long-term construction contracts are rendered monthly, incLuding the amount of retainage withheld by the customer until contract completion. As a general contractor, the company withholds similar retainages from each subcontractor. Retainages of $73 million included in construction contracts receivable and $60 million included in accounts payable at March 31, 1995 are generally receivable and payable within one year. Claims are recognized as revenue only after management is confident of collection or when agreement has been reached with the customer. Notes receivable at March 31, 1995 are collectible primarily over 5 years, with $1.6 million being due within one year. The weighted average interest rate at March 31, 1995 was 7.2%. F-8 9 INVENTORY, CAPITALIZATION AND SEGMENT EXPENSES Housing projects and land held for development and sale are stated at the lower of cost (including direct construction costs and capitalized interest and real estate taxes) or market. The capitalized costs, other than interest, are included in Home Building costs and expenses in the statement of consolidated earnings as related revenues are recognized. Interest costs relieved from inventories are included as interest expense. General operating expenses associated with each segment of business are expensed as incurred and are included in the appropriate segment of business. JOINT VENTURES Earnings or losses of joint ventures are not significant and are included in the appropriate segment of business revenues. Investments in joint ventures are carried on the equity method in the consolidated balance sheets. PROPERTY AND EQUIPMENT Property and equipment are stated at cost. Major renewals and improvements are capitalized and depreciated. Repairs and maintenance are expensed as incurred. Depreciation is provided on a straight-line basis over the estimated useful lives of depreciable assets. Costs and accumulated depreciation applicable to assets retired or sold are eliminated from the accounts and any resulting gains or losses are recognized at such time. EARNINGS PER SHARE Earnings per share are based on the weighted average number of common and common equivalent shares outstanding in 1995, 1994 and 1993 of 30,326,906; 32,789,852 and 32,015,785, respectively. MARKETABLE SECURITIES MarketabLe securities at March 31, 1994 represented U.S. Government and corporate securities owned by Texas Trust. These securities were available for sale and had a market value which approximated book value. RESIDENTIAL MORTGAGE LOANS RECEIVABLE Residential mortgage loans held by CTX Mortgage of $413.8 million at March 31, 1995 are stated at the lower of aggregate cost or market. Market is determined based on CTX Mortgage's forward sale commitments. Substantially all of the mortgage loans are sold forward upon closing and subsequently delivered to third-party purchasers within 60 days thereafter. Due to the fact that defaults of new loans within the first 60 days are not material, no significant reserves are required. F-9 10 OFF-BALANCE-SHEET RISK CTX Mortgage enters into various financial agreements, in the normal course of business, in order to manage the exposure to changing interest rates as a result of having issued loan commitments to its customers at a specified price and period, and committing to sell mortgage loans to various investors. CTX Mortgage had commitments to mortgagors of approximately $227 million and commitments to sell to investors against these loan commitments of approximately $137 million at March 31, 1995. The company does not engage in the trading of securities or other financial instruments. STATEMENT OF CONSOLIDATED CASH FLOWS - SUPPLEMENTAL DISCLOSURES Interest expenses relating to the financial services operations (Mortgage Banking and Savings and Loan) are included in their respective costs and expenses. Interest related to non-financial services operations are included as interest expense as summarized below.
For the Years Ended March 31, =========================================== 1995 1994 1993 ------------------------------------------- Total Interest Incurred $58,771 $68,856 $63,721 Less - Mortgage Banking (19,933) (30,696) (28,882) Savings and Loan (5,824) (8,477) (12,731) ------- ------- ------- Interest Expense $33,014 $29,683 $22,108 ======= ======= =======
Net payments made for federal, state and foreign income taxes during the fiscal years ended March 31, 1995, 1994 and 1993 were $49.8 million, $41.9 million, and $11.4 million, respectively. RECLASSIFICATIONS Certain prior year balances have been reclassified to be consistent with the 1995 presentation. (B) SAVINGS AND LOAN OPERATIONS ACQUISITION In December 1988, the company purchased certain assets and assumed certain liabilities of four Texas savings and loan associations pursuant to acquisition agreements and an assistance agreement with the Federal Savings and Loan Insurance Corporation (FSLIC). In 1989 the FSLIC was replaced by the FSLIC Resolution Fund (the Fund), which assumed all of FSLIC's assets, debts and obligations. The acquisition was made by Texas Trust, a federal stock savings bank and subsidiary of CTX Holding, a wholly-owned subsidiary of the company. The FSLIC received a warrant to purchase a 20% interest in Texas Trust's common stock for $.4 million through December 2003. Effective December 20, 1994, the assistance agreement was terminated and the warrant was redeemed. Certain of the acquired assets (Covered Assets) were subject to Fund assistance in the form of loss reimbursements and a guaranteed minimum yield. Yield maintenance on Covered Assets for the years ended March 31, 1995, 1994 and 1993 were $.7, $2.8, and $8.5 million, respectively. In addition, $10.0, $12.1, and $86.1 million of assistance were provided in fiscal 1995, 1994 and 1993, respectively, primarily as reimbursement for losses relating to Covered Assets. F-10 11 The agreements also provided for sharing by the Fund in a portion of the tax benefits realized by Centex Corporation, indemnification by the Fund against unassumed liabilities and claims. DEPOSITS AND FHLB BORROWINGS At March 31, 1994, deposits included $169.7 million of certificates of deposit (weighted average contractual interest rate of 3.87%) and $37.3 million of savings and checking accounts (weighted average contractual interest rate of 2.42%). In addition, the company was obligated on $4.0 million of Federal Home Loan Bank borrowings, which bore interest at 9.88% and were secured by assets with a book value of $4.5 million. DISPOSITION Effective December 20, 1994, Texas Trust and CTX Holding Company executed an agreement with the Fund which terminated the assistance agreement. In addition, all items in dispute with the Fund were resolved and Texas Trust redeemed the warrant. On December 30, 1994, Coastal Bank, ssb, a non-affiliated entity, purchased all of Texas Trust's branch office facilities and assumed its deposit liabilities. Immediately after the sale Texas Trust was liquidated and its charter was canceled. (C) INVESTMENT IN CXP In April 1994, the company's construction products subsidiary, Centex Construction Products, Inc. (CXP), completed the sale of 11.73 million shares (51%) of its common stock in an initial public offering. CXP's operations include cement, concrete, aggregate and gypsum wallboard facilities, including its 50% joint venture interests in its Texas and Illinois cement plants. Centex retains a 49% ownership in CXP. In connection with CXP's initial public offering, Centex received a dividend and other payments from CXP of $186.5 million, which was used by Centex to reduce outstanding indebtedness. The company reports its 49% investment in CXP on the equity method of accounting. CXP's revenues of $166,826 and $136,526 for the fiscal years ended 1994 and 1993, respectively, and the related costs and expenses have been reclassified into "Equity in Earnings of Affiliate (CXP)" in order to facilitate comparisons between the periods. F-11 12 Summarized financial information of CXP is presented below:
For the Years Ended March 31, ============================================ 1995 1994 1993 -------------------------------------------- Revenues $194,313 $ 166,826 $136,526 Earnings Before Income Taxes $ 33,829 $ 16,626 $ 4,648 Net Earnings $ 21,820 $ 10,240 $ 3,112
March 31, ============================ 1995 1994 ---------------------------- ASSETS Current Assets $ 66,562 $ 62,203 Noncurrent Assets 183,541 195,112 --------- --------- $ 250,103 $ 257,315 ========= ========= LIABILITIES AND EQUITY Current Liabilities $ 35,493 $ 32,966 Noncurrent Liabilities 31,205 53,510 Stockholders' Equity 183,405 170,839 --------- --------- $ 250,103 $ 257,315 ========= =========
(D) PROPERTY AND EQUIPMENT Property and equipment cost by major category and accumulated depreciation are summarized below:
March 31, =========================== 1995 1994 --------------------------- Land, Buildings and Improvements $ 1,919 $ 37,707 Plants, Machinery, Equipment and Other 79,592 273,242 -------- --------- 81,511 310,949 Accumulated Depreciation (40,244) (122,019) -------- -------- $ 41,267 $188,930 ======== ========
The decrease in property and equipment in fiscal 1995 relates primarily to the CXP initial public offering. F-12 13 (E) INDEBTEDNESS SHORT-TERM DEBT Balances of short-term debt were:
March 31, ========================================================= 1995 1994 --------------------------------------------------------- Centex Financial Centex Financial Corporation Services Corporation Services ----------- -------- ----------- -------- Banks $ 79,000 $196,000 $ 84,500 $225,500 Commercial Paper 125,000 - 122,000 - Other Financial Institutions 851 175,409 138 351,447 -------- -------- -------- -------- $204,851 $371,409 $206,638 $576,947 -------- -------- -------- -------- Consolidated Short-term Debt $576,260 $783,585 ======== ========
The company borrows on a short-term basis from banks under uncommitted lines which bear interest at prevailing market rates. The weighted average interest rates of the short-term indebtedness outstanding during fiscal 1995 and 1994 were 5.8% and 3.6%, respectively. The weighted average interest rates of balances outstanding at March 31, 1995 and 1994 were 6.6% and 4.1%, respectively. LONG-TERM DEBT Balances of long-term debt were:
March 31, =========================== 1995 1994 --------------------------- Senior Notes, 9.05% Due in May 1996 $100,000 $100,000 Subordinated Debentures, 8.75% to 8.8% Due in 2007 119,316 119,284 Other Indebtedness, 8.0% to 9.0% Due through 2000 3,214 3,548 -------- -------- $222,530 $222,832 ======== ========
Maturities of long-term debt during the next five fiscal years are: 1996, $1,114; 1997, $100,000; 1998, $O; 1999, $0; 2000, $2,100. Included in other long-term debt is a $2.1 million convertible subordinated debenture sold in August 1985 to a corporate officer at par. The indebtedness bears interest at prime and is convertible into 200,000 shares of the company's common stock. In connection with this transaction, the company has guaranteed the payment of a $2.1 million note payable to a bank by the officer. CREDIT FACILITIES During fiscal 1994 Centex maintained two separate bank credit agreements totaling $465 million, which was available for general corporate purposes. These facilities were replaced in July 1994 with a $425 million revolving credit agreement expiring in July 1999. Under the terms of the agreement, $170 million may be borrowed directly by CTX Mortgage. There were no borrowings outstanding to Centex Corporation or CTX Mortgage under this or the previous facilities during the fiscal years ended March 31, 1995 and 1994. F-13 14 CTX Mortgage has a $300 million committed and secured mortgage warehouse facility with a bank group, which expires in July, 1997. CTX Mortgage also maintains committed mortgage warehouse facilities of $100 million expiring in December 1995 with two investment banks. In addition, CTX Mortgage has a $100 million asset-backed commercial paper program which expires in March 1997. The bank warehouse facility and the commercial paper program provide for limited support by Centex, as defined, of up to a maximum of 10% of the commitments. Management believes the facilities expiring in December 1995 can be renewed or replaced on essentially the same terms. Under the most restrictive covenants of the various debt agreements, retained earnings of $315 million were free of restrictions at March 31, 1995. (F) CAPITAL STOCK SHAREHOLDER RIGHTS PLAN In September 1986, the company adopted a Shareholder Rights Plan (Rights Plan) pursuant to which each holder of record of a share of common stock was granted one right for each share of common stock held. The Rights Plan was amended in May 1988. Under the Rights Plan, as amended, each right entitles its holder to purchase one one-hundredth of a share of a new series of preferred stock designated Junior Participating Preferred Stock, Series D at an exercise price of $120. The rights will become exercisable 10 days after anyone acquires 20% or more of the company's common stock, or 10 business days after anyone commences a tender offer which, if successful, would result in such person owning 20% or more of the company's common stock. In addition, if anyone acquires 20% or more of the common stock (other than pursuant to certain offers for all shares of common stock specified in the Rights Plan), or a 20% or more holder engages in certain specified "self-dealing" transactions or combines with the company in a reverse merger in which the company survives and its shares of common stock are not changed, each right will entitle its holder (other than a holder which owns 20% or more of the common stock) to purchase shares of company common stock (or, in certain circumstances, other consideration) with a value of twice the $120 exercise price. If, following an acquisition of 20% or more of the common stock, the company is acquired in a merger or sells 50% of its assets or earning power, each right will entitle its holder (other than a holder which owns 20% or more of the common stock) to purchase common stock of the acquiring company with a value of twice the $120 exercise price. In general, the rights are redeemable at $.05 per right until 15 days after anyone acquires 20% or more of the common stock. Unless earlier redeemed, the rights will expire on October 1, 1996. F-14 15 STOCK OPTIONS The company has two stock option plans for directors, officers and key employees of the company, the Centex Corporation 1987 Stock Option Plan (the 1987 Plan) and the Centex Corporation Stock Option Plan (the Centex Plan). Option grants under the Centex Plan may not be less than the fair market value at the date of the grant. Option grants under the 1987 Plan may be less than the fair market value at the date of the grant. Under both plans, option periods and exercise dates may vary within a maximum period of 10 years. A summary of the activity in the stock option plans is presented below:
Number Option Price Options at March 31, of Shares Range per Share --------- ----------------- Outstanding 1995 3,406,073 $8.50 to $33.875 1994 3,641,300 $8.50 to $33.875 Exercised 1995 144,670 $8.50 to $18.313 1994 518,930 $8.50 to $18.313 Exercisable 1995 1,630,987 $8.50 to $33.875 1994 849,002 $8.50 to $18.375 Available for grant 1995 963,213 1994 872,656
During fiscal 1995, options for 167,500 shares were granted and previously granted options for 258,057 shares became available for reissue. At March 31, 1995, the company had 4,369,286 common shares reserved for stock options. The company records proceeds from the exercise of options as additions to common stock and capital in excess of par value. The federal tax benefit, if any, is considered additional capital in excess of par value. No charges or credits would be made to earnings unless options were to be granted at less than fair market value at the date of the grant. F-15 16 (G) INCOME TAXES The provision for income taxes includes the following components:
For the Years Ended March 31, ============================================ 1995 1994 1993 -------------------------------------------- Current Provision Federal $53,754 $52,943 $22,429 State 4,071 4,668 4,747 ------- ------- ------- 57,825 57,611 27,176 ------- ------- ------- Deferred Provision (Benefit) Federal (4,570) (10,762) 2,581 State 285 3,002 964 ------- ------- ------- (4,285) (7,760) 3,545 ------- ------- ------- Provision for Income Taxes $53,540 $49,851 $30,721 ======= ======= =======
The effective tax rate is greater than the federal statutory rate of 35% in 1995 and 1994 and less than the federal rate of statutory 34% in 1993 due to the following items:
For the Years Ended March 31, ============================================= 1995 1994 1993 --------------------------------------------- Financial Income Before Taxes $145,788 $ 135,013 $91,759 ======== ========= ======= Income Taxes at Statutory Rate $ 51,025 $ 47,254 $31,198 Increases (Decreases) in Tax Resulting From- State Income Taxes, net 2,791 4,826 3,840 Statutory Depletion in Excess of Cost - (912) (603) Tax Exempt Fund Assistance - (1,238) (3,000) Other (276) (79) (714) -------- --------- ------- Provision for Income Taxes $ 53,540 $ 49,851 $30,721 ======== ========= ======= Effective Tax Rate 37% 37% 33%
During fiscal year 1994, the "Revenue Reconciliation Act of 1993" was signed into law which, among other things, changed the federal statutory tax rate from 34% to 35% retroactive to January 1, 1993. In accordance with SFAS No. 109, "Accounting for Income Taxes," the tax effect of this new law was recognized by the company during fiscal year 1994. These changes had no material effect on the financial statements of the company. Certain payments from the Fund were exempt from federal income taxes. These tax benefits have been reflected as a reduction of the income tax provision. F-16 17 The deferred income tax provision (benefit) results from the following temporary differences in the recognition of revenues and expenses for tax and financial reporting purposes:
For the Years Ended March 31, ============================================== 1995 1994 1993 ---------------------------------------------- Installment Sale Reversals $ (176) $ (153) $ (326) Net Operating Loss Utilization - 247 918 Uniform Capitalization for Tax Reporting (2,377) (777) (580) Completed Contract Reporting 639 (318) (2,997) Gain on CXP's Initial Public Offering 21,500 - - Excess Tax Depreciation and Amortization (32,389) 444 88 Interest and Real Estate Taxes Expensed as Incurred (749) 430 2,988 Alternative Minimum Tax (507) 11,012 3,985 Financial Accrual Changes and Other 9,774 (18,645) (531) -------- -------- ------- $ (4,285) $ (7,760) $ 3,545 ======== ======== =======
Components of deferred income taxes are as follows:
March 31, ============================= 1995 1994 ----------------------------- Deferred Tax LiabiLities Excess Tax Depreciation and Amortization $ 1,372 $37,977 Interest and Real Estate Taxes Expensed as Incurred 25,837 26,698 Gain on CXP's Initial Public Offering 21,500 - Consolidated Return Regulation Deferrals 6,939 6,898 Software Development Expensed as Incurred 1,957 714 All Other 3,586 10,449 --------- -------- Total Deferred Tax Liabilities 61,191 82,736 --------- -------- Deferred Tax Assets Alternative Minimum Tax (815) (507) Uniform Capitalization for Tax Reporting (14,878) (12,574) Financial Accruals (18,201) (16,143) All Other (560) (2,332) --------- -------- Total Deferred Tax Assets (34,454) (31,556) --------- -------- Net Deferred Tax Liability $ 26,737 $ 51,180 ========= ========
F-17 18 (H) CENTEX DEVELOPMENT COMPANY, L.P. In March 1987, certain of the company's subsidiaries contributed to Centex Development Company, L.P. (CDC), a newly formed master limited partnership, properties with a historical cost basis (which approximated market value) of approximately $76 million. CDC was formed to enable stockholders to participate in long-term real estate development projects whose dynamics are inconsistent with Centex's traditional financial objectives. In November 1987, the company distributed as a dividend to its stockholders securities relating to CDC. These securities included all of the issued and outstanding shares of common stock of 3333 Holding Corporation and warrants to purchase approximately 80% of the Class B units of limited partnership interest in CDC. A wholly-owned subsidiary of 3333 Holding Corporation serves as general partner of CDC. These securities are held by a nominee on behalf of the stockholders and will trade in tandem with the common stock of the company 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 1997 unless extended by Centex's stockholders. The partnership agreement provides that Centex, the Class A 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 initial capital contribution, adjusted for cash distributions representing return of the initial capital contribution. No payments were made in fiscal 1995, 1994, or 1993. Supplementary condensed combined financial statements for the company, 3333 Holding Corporation and subsidiary and Centex Development Company, L.P. are set forth below. For additional information on 3333 Holding Company and its subsidiary and Centex Development Company, L.P., see their separate financial statements and related footnotes included elsewhere in this annual report. F-18 19 SUPPLEMENTARY CONDENSED COMBINED BALANCE SHEETS ================================================================================
March 31, ============================= 1995 1994 ----------------------------- ASSETS Cash and Cash Equivalents $ 25,207 $ 76,388 Marketable Securities Available for Sale - 78,241 Receivables 653,622 930,428 Inventories 1,266,509 1,223,753 Investments in Centex Construction Products, Inc. 89,871 - Joint Ventures and Unconsolidated Subsidiaries 5,695 56,928 Property and Equipment, net 41,267 188,930 Government-Guaranteed S&L Assets - 43,767 Other Assets and Deferred Charges 26,427 38,574 ---------- ---------- $2,108,598 $2,637,009 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts Payable and Accrued Liabilities $ 557,640 $ 644,926 S&L Deposits and FHLB Borrowings - 211,055 Short-term Debt 632,745 837,734 Long-term Debt 222,530 222,832 Deferred Income Taxes 26,737 51,180 Stockholders' Equity 668,946 669,282 ---------- ---------- $2,108,598 $2,637,009 ========== ==========
SUPPLEMENTARY CONDENSED COMBINED STATEMENTS OF EARNINGS ================================================================================
For the Years Ended March 31, ============================================== 1995 1994 1993 ---------------------------------------------- Revenues $3,281,198 $3,224,025 $2,501,691 Costs and Expenses 3,194,642 3,089,126 2,410,028 ---------- ---------- ---------- Earnings Before Gain on CXP's Initial Public Offering and Income Taxes 86,556 134,899 91,663 Gain on CXP's Initial Public Offering 59,328 - - ---------- ---------- ---------- Earnings Before Income Taxes 145,884 134,899 91,663 Income Taxes 53,540 49,851 30,721 ---------- ---------- ---------- Net Earnings $ 92,344 $ 85,048 $ 60,942 ========== ========== ==========
F-19 20 (I) BUSINESS SEGMENTS The company operates in three business segments: Home Building, Financial Services and Contracting and Construction Services. 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. is included in the Home Building segment and the investment in Centex Construction Products, Inc. is included in the Corporate segment. HOME BUILDING Home Building operations involve the construction and sale of residential housing. These activities also include the purchase and development of land. The following table sets forth financial information relating to the Home Building operations.
For the Years Ended March 31, ========================================= 1995 1994 1993 ----------------------------------------- (Dollars in millions) Revenues $ 2,110.7 $ 1,869.8 $ 1,433.1 Cost of Sales & Expenses 1,998.6 1,773.8 1,353.2 ----------- ----------- ----------- Operating Earnings $ 112.1 $ 96.0 $ 79.9 =========== =========== =========== Identifiable Assets $ 1,286.0 $ 1,203.2 $ 981.1 =========== =========== =========== Capital Expenditures $ 6.4 $ 9.3 $ 2.1 =========== =========== =========== Depreciation and Amortization $ 3.3 $ 2.8 $ 2.2 =========== =========== ===========
FINANCIAL SERVICES Financial Services operations involve the financing of residential housing. These activities include mortgage origination and other related services on homes sold by subsidiaries and by others. The Savings and Loan segment includes the operations of CTX Holding Company and its subsidiary, Texas Trust Savings Bank, FSB (sold during fiscal 1995 - see Note B). The following table sets forth financial information relating to the Financial Services operations.
For the Years Ended March 31, ====================================================================================== (Dollars in millions) 1995 1994 ----------------------------------------- ----------------------------------------- MORTGAGE SAVINGS Mortgage Savings BANKING & LOAN TOTAL Banking & Loan Total ----------- ----------- ----------- ----------- ----------- ----------- Revenues $ 97.4 $ 9.4 $ 106.8 $ 187.9 $ 15.5 $ 203.4 Cost of Sales & Expenses 96.0 1.4 97.4 116.9 12.9 129.8 ----------- ----------- ----------- ----------- ----------- ----------- Operating Earnings $ 1.4 $ 8.0 $ 9.4 $ 71.0 $ 2.6 $ 73.6 =========== =========== =========== =========== =========== =========== Identifiable Assets $ 450.7 $ - $ 450.7 $ 685.6 $ 238.0 $ 923.6 =========== =========== =========== =========== =========== =========== Capital Expenditures $ 6.7 $ .2 $ 6.9 $ 11.0 $ 2.3 $ 13.3 =========== =========== =========== =========== =========== =========== Depreciation and Amortization, including Negative Goodwill $ 6.0 $ (6.8) $ (.8) $ 3.6 $ (2.2) $ 1.4 =========== =========== =========== =========== =========== =========== For the Year Ended March 31, ========================================= (Dollars in millions) 1993 ----------------------------------------- Mortgage Savings Banking & Loan Total ----------- ----------- ----------- Revenues $ 129.7 $ 17.3 $ 147.0 Cost of Sales & Expenses 81.9 14.3 96.2 ----------- ----------- ----------- Operating Earnings $ 47.8 $ 3.0 $ 50.8 =========== =========== =========== Identifiable Assets $ 624.8 $ 216.7 $ 841.5 =========== =========== =========== Capital Expenditures $ 7.1 $ 0.5 $ 7.6 =========== =========== =========== Depreciation and Amortization, including Negative Goodwill $ 1.5 $ (3.1) $ (1.6) =========== =========== ===========
F-20 21 CONTRACTING AND CONSTRUCTION SERVICES Contracting and Construction Services includes the construction of buildings for both private and government interests, including office, commercial and industrial buildings, hospitals, hotels, museums, libraries, airport facilities, condominiums and educational institutions. The following table sets forth financial information relating to the Contracting and Construction Services operation. As this segment generates significant levels of cash flow, Intracompany Interest Income (credited at the prime rate in effect) is reflected in this segment. These amounts are eliminated in consolidation.
For the Years Ended March 31, ========================================= 1995 1994 1993 ----------------------------------------- (Dollars in millions) Revenues $ 1,059.9 $ 966.6 $ 783.2 Cost of Sales & Expenses 1,061.7 971.1 787.3 ----------- ----------- ----------- Operating Loss (1.8) (4.5) (4.1) Intracompany Interest Income 17.6 13.8 14.0 ----------- ----------- ----------- Total $ 15.8 $ 9.3 $ 9.9 =========== =========== =========== Identifiable Assets* $ 199.8 $ 178.9 $ 170.4 =========== =========== =========== Capital Expenditures $ 2.7 $ 2.8 $ 1.8 =========== =========== =========== Depreciation and Amortization $ 3.1 $ 3.0 $ 2.8 =========== =========== ===========
*The "net assets" position of the Contracting and Construction Services segment provides significant cash flow because payables and accruals consistently exceed gross assets. CORPORATE Corporate general and administrative expenses represent salaries and other costs not identifiable with a specific segment. Corporate assets are primarily cash and cash equivalents, receivables and other assets not associated with a business segment, including the investment in CXP. The following table summarizes financial information relating to the Corporate segment.
For the Years Ended March 31, ========================================= 1995 1994 1993 ----------------------------------------- (Dollars in millions) Corporate General and Administrative Expenses $ 15.3 $ 15.2 $ 13.1 =========== =========== =========== Identifiable Assets $ 113.2 $ 21.3 $ 29.3 =========== =========== =========== Capital Expenditures $ 0.2 $ 0.1 $ 0.2 =========== =========== =========== Depreciation and Amortization $ 0.8 $ 0.8 $ 1.0 =========== =========== ===========
(J) FAIR VALUE OF FINANCIAL INSTRUMENTS Statement of Financial Accounting Standards No. 107, "Disclosures about Fair Value of Financial Instruments", requires companies to disclose the estimated fair value of their financial instrument assets and liabilities. The estimated fair values shown below have been determined using current quoted market prices where available and, where necessary, estimates based on present value methodology suitable for each category of financial instruments. Considerable judgment is required F-21 22 in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that the company could realize in a current market exchange. All assets and liabilities which are not considered financial instruments have been valued using historical cost accounting. No disclosure of the intangible relationship value of Texas Trust's customer deposits is required by Statement No. 107, nor has the company estimated that value. There is no material difference between the recorded amount and the estimated fair value of CTX Mortgage or Texas Trust's off-balance-sheet unfunded loan commitments. These are generally priced at market at the time of funding. For Texas Trust's loans and deposits with floating interest rates, the estimated fair values generally approximated the carrying values. The consolidated carrying values of Cash and Cash Equivalents, Other Receivables, Accounts Payable and Accrued Liabilities and Short-term Debt approximate their fair values. The carrying values and estimated fair values of other financial assets and liabilities were as follows:
March 31, ========================================================= 1995 1994 -------------------------------------------------------- CARRYING FAIR Carrying Fair VALUE VALUE Value Value ----------- ----------- ----------- ----------- Financial Assets Marketable Securities $ - $ - $ 78,241 $ 78,241(a) Residential Mortgage Loans $ 413,802 $ 414,962(a) $ 677,641 $ 677,052(a) Government-Guaranteed S&L Receivables $ - $ - $ 19,030 $ 19,030(b) Financial Liabilities S&L Deposits and FHLB Borrowings $ - $ - $ 211,055 $ 210,930(b) Long-term Debt $ 222,530 $ 237,603(b) $ 222,832 $ 234,618(b)
(a) Fair values are based on quoted market prices for similar instruments. (b) Fair values are based on a present value discounted cash flow with the discount rate approximating current market for similar instruments. (K) COMMITMENTS AND CONTINGENCIES In order to assure the future availability of land for home building, the company has made deposits totaling $14 million as of March 31, 1995 for options to purchase undeveloped land and developed lots having a total purchase price of approximately $362 million. These options expire at various dates to 2000. The company has also committed to purchase land and developed lots totaling approximately $69 million. In addition, the company has executed lot purchase contracts with CDC (see Note H) which aggregate approximately $6 million. Management believes that none of the litigation matters in which it or any subsidiary is involved, if determined unfavorable to Centex or any subsidiary, would have a material adverse effect on the consolidated financial condition or results of operations of the company. The company has certain deductible limits under its workers' compensation and automobile and general liability insurance policies for which reserves are established based on the estimated costs of known and anticipated claims. F-22 23 Centex Corporation and Subsidiaries REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ================================================================================ TO THE STOCKHOLDERS AND BOARD OF DIRECTORS OF CENTEX CORPORATION: We have audited the accompanying consolidated balance sheets of Centex Corporation (a Nevada corporation) and subsidiaries as of March 31, 1995 and 1994, and the related consolidated statements of earnings, stockholders' equity, and cash flows for each of the three years in the period ended March 31, 1995. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Centex Corporation and subsidiaries as of March 31, 1995 and 1994, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 1995, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic consolidated financial statements taken as a whole. The supplemental balance sheet data of Centex Corporation and Financial Services are presented for purposes of additional analysis and are not a required part of the basic consolidated financial statements. This information has been subjected to the auditing procedures applied in our audits of the basic consolidated financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic consolidated financial statements taken as a whole. Arthur Andersen LLP Dallas, Texas, May 12, 1995 F-23 24 Management's Discussion and Analysis of Results of Operations and Financial Condition ================================================================================ FISCAL YEAR 1995 COMPARED TO FISCAL YEAR 1994 Centex reported record revenues of $3.3 billion for fiscal 1995, an 8% increase over fiscal 1994 revenues. Earnings before income taxes and prior to the gain related to the 51% initial public offering of Centex Construction Products, Inc. (CXP), were $86.5 million, down 36% compared to $135.0 million for fiscal 1994. Net earnings were $54.8 million and earnings per share were $1.81, for fiscal 1995 before the CXP gain, compared to $85.2 million and $2.60 for fiscal 1994. Including the CXP gain, net earnings and earnings per share for fiscal 1995 were $92.2 million and $3.04, respectively. On April 19,1994, CXP completed the sale of 11,730,000 shares, or 51% of its common stock through an initial public offering. Including a dividend and other payments, Centex received $186.5 million from the transaction. Centex retains ownership of 49% of CXP's stock. Home Building The following summarizes Home Building results for the two-year period ending March 31, 1995 (dollars in millions, except per unit data):
1995 1994 ----------------------- ----------------------- Home Building Revenues $2,110.7 100.0% $1,869.8 100.0% Cost of Sales (1,748.6) (82.9%) (1,560.0) (83.5%) Selling, General & Administrative (250.0) (11.8%) (213.8) (11.4%) -------- ------ -------- ------ Operating Earnings $ 112.1 5.3% $ 96.0 5.1% ======== ====== ======== ====== Units Closed 12,964 12,563 Unit Sales Price $159,222 $147,466 % Change 8.0% 6.6% Operating Earnings per Unit $ 8,651 $ 7,640 % Change 13.2% 3.1%
Although Centex reported record home building results for fiscal 1995, the company noted that as the year progressed, rising interest rates slowed new orders. This slowdown resulted in price competition throughout the industry, which negatively impacted margin improvements generally anticipated during this stage of the housing cycle. F-24 25 Financial Services The Financial Services segment consists of the Mortgage Banking and Savings and Loan operations. The following summarizes Mortgage Banking's results for the two-year period ending March 31, 1995 (dollars in millions):
1995 1994 ----------- ----------- Revenues $ 97.4 $ 187.9 =========== =========== Operating Earnings $ 1.4 $ 71.0 =========== =========== Origination Volume $ 4,195.2 $ 6,428.4 =========== =========== Number of Loans Originated Centex-built Homes 8,504 9,289 Non-Centex-built Homes 28,574 49,254 ----------- ----------- 37,078 58,543 =========== ===========
The Mortgage Banking results were negatively impacted throughout most of fiscal 1995 by rising interest rates and an increasingly competitive environment as the industry fought for the shrinking volume in a declining market. Refinancing activity virtually disappeared and consumers shifted from fixed-rate loans to lower margin adjustable-rate loans. Mortgage Banking's results were also affected by the costs associated with downsizing the organization to match the lower business volume. During fiscal 1995, the division's operating locations and personnel were reduced by approximately 40%. Mortgage Banking's operational performance improved as the fourth quarter progressed due to a more efficient operating structure and the flattening of the yield curve, which increased the attractiveness of fixed rate mortgage product to customers. Savings and Loan revenues in fiscal 1995 were $9.4 million compared to $15.5 million in fiscal 1994. Operating earnings for fiscal 1995 were $8.0 million compared to $2.6 million in fiscal 1994. In December 1994, the savings and loan sold its deposits and branches for a pre-tax gain of $3.2 million. The completion of the sale was Centex's final step in exiting the savings and loan industry. Contracting and Construction Services The following summarizes Contracting and Construction Services results for the two-year period ending March 31, 1995 (dollars in millions):
1995 1994 ----------- ----------- Revenues $ 1,059.9 $ 966.6 =========== =========== Operating Loss $ (1.8) $ (4.5) =========== =========== New Contracts Received $ 1,151.8 $ 1,029.2 =========== =========== Backlog of Uncompleted Contracts $ 1,328.0 $ 1,236.1 =========== ===========
Although Contracting and Construction Service's results continued to be negatively impacted by an intensely competitive environment, the operating loss in fiscal 1995 was reduced compared to fiscal 1994. Nonresidential construction is improving as the economy strengthens and profit margins in this group are beginning to improve. The Contracting and F-25 26 Construction Services operation provided a positive average net cash flow in excess of Centex's investment in the group of $60 million during fiscal 1995 and $74 million during fiscal 1994. Equity in Earnings of Affiliate (CXP) Centex's 49% "Equity in Earnings of Affiliate (CXP)" was $16.6 million in fiscal 1995. Fiscal year 1994's earnings which represented Centex's 100% ownership of CXP were also $16.6 million. Centex Construction Products, Inc. fiscal 1995 operating results benefitted from improved demand and pricing for its cement and gypsum wallboard products. FISCAL YEAR 1994 COMPARED TO FISCAL YEAR 1993 Led by outstanding results from its Home Building and Financial Services businesses and significant improvement in its Construction Products operations, Centex reported for fiscal year 1994 revenues of $3.0 billion ($2.4 billion in 1993), earnings before income taxes of $135 million ($91.8 million in 1993), net earnings of $85.2 million ($61.0 million in 1993) and earnings per share of $2.60 ($1.91 in 1993). Home Building The following summarizes Home Building results for the two-year period ending March 31, 1994 (dollars in millions, except per unit data):
1994 1993 ------------------------- ------------------------- Home Building Revenues $ 1,869.8 100.0% $ 1,433.1 100.0% Cost of Sales (1,560.0) (83.5%) (1,186.6) (82.8%) Selling, General & Administrative (213.8) (11.4%) (166.6) (11.6%) ----------- ---------- ----------- ---------- Operating Earnings $ 96.0 5.1% $ 79.9 5.6% =========== ========== =========== ========== Units Closed 12,563 10,279 Unit Sales Price $ 147,466 $ 138,359 % Change 6.6% 2.0% Operating Earnings per Unit $ 7,640 $ 7,408 % Change 3.1% 3.7%
Home Building's gross profit margin declined in fiscal 1994 compared to fiscal 1993 due to increases in construction material costs, primarily lumber. Margins in 1994 were also impacted by the results of operations in California, which continued to experience negative economic conditions. Home closings and orders for fiscal 1994 were at the highest level in company history through fiscal 1994. F-26 27 Financial Services The following summarizes Mortgage Banking's results for the two-year period ending March 31, 1994 (dollars in millions):
1994 1993 ----------- ----------- Revenues $ 187.9 $ 129.7 =========== =========== Operating Earnings $ 71.0 $ 47.8 =========== =========== Origination Volume $ 6,428.4 $ 4,205.8 =========== =========== Number of Loans Originated Centex-built Homes 9,289 7,758 Non-Centex-built Homes 49,254 30,543 ----------- ----------- 58,543 38,301 =========== ===========
The 45% increase in revenues and the 49% increase in operating earnings in fiscal 1994 compared to fiscal 1993 were the result of an improving economy and mortgage rates, which were at a 25-year-low. These conditions resulted in an influx of refinancing by existing homeowners. As a result, Mortgage Banking significantly expanded its operating locations and personnel during fiscal 1994. The Savings and Loan segment reported fiscal 1994 revenues of $15.5 million, compared to $17.3 million in the prior fiscal year. Operating earnings from the Savings and Loan were $2.6 million for the current fiscal year, compared to $3.0 million in fiscal 1993. Contracting and Construction Services The following summarizes Contracting and Construction Services results for the two-year period ending March 31, 1994 (dollars in millions):
1994 1993 ----------- ----------- Revenues $ 966.6 $ 783.2 =========== =========== Operating Loss $ (4.5) $ (4.1) =========== =========== New Contracts Received $ 1,029.2 $ 1,166.8 =========== =========== Backlog of Uncompleted Contracts $ 1,236.1 $ 1,173.5 =========== ===========
Contracting and Construction Service's operating losses during fiscal 1994 and 1993 resulted from continued weak operating margins as a result of competition for fewer available industry-wide projects compared to prior years. The increase in revenues of 23% in fiscal 1994 over fiscal 1993 resulted from this group being awarded more projects on which it submitted bids in fiscal 1993 and early 1994. However, the increased revenues also had low margins, which did not improve operating earnings. The Contracting and Construction Services operations provided average positive net cash flow in excess of Centex's investment in this group of $74 million during fiscal 1994 and $73 million during fiscal 1993. F-27 28 Construction Products The following summarizes Construction Products results for the two-year period ending March 31, 1994 (dollars in millions):
1994 1993 ----------- ----------- Revenues $ 166.8 $ 136.5 =========== =========== Operating Earnings $ 16.6 $ 4.6 =========== ===========
Construction Products revenues increased 22% and operating earnings increased 261% in fiscal 1994 compared to fiscal 1993. Improved sales prices, higher sales volumes and lower operating costs contributed toward improved operating earnings. The higher sales volumes were primarily due to increasing demand for the cement-related and gypsum wallboard products, which resulted in the improved pricing levels. STOCK REPURCHASES As a result of Centex's strengthened financial position after CXP's initial public offering, Centex commenced a stock purchase program as the Centex stock price fell to and remained at depressed levels. In total, the company repurchased 3.7 million shares of its common stock or about 12% of the shares outstanding at the beginning of fiscal 1995. Centex currently has board authorization to purchase approximately 930,000 additional shares. FINANCIAL CONDITION AND LIQUIDITY Centex fulfills its short-term financing requirements with cash generated from its operations and funds available under its credit facilities. These credit facilities also serve as back-up lines for overnight borrowings under its uncommitted bank facilities and commercial paper program. During fiscal 1995, Centex replaced two separate bank credit agreements with a five-year $425 million bank revolving credit facility. There were no borrowings under this or the prior facilities during fiscal 1995, 1994 or 1993. In addition, CTX Mortgage Company has its own $500 million of credit facilities to finance mortgages which are held during the period while they are being securitized and readied for delivery against forward sale commitments. During fiscal 1995, $179.7 million of cash was provided by Centex's operations, compared to $104.0 million used by operations in fiscal 1994. The improvement in fiscal 1995 operational cash flow resulted primarily from a reduction in residential mortgage loans being held pending delivery against forward sales commitments. Cash of $92.3 million in fiscal 1995 and $201.5 million in fiscal 1994 was used to increase inventories of homes under construction, land and land development costs as home sales and in-process construction increased during the periods. Payables and accruals decreased in F-28 29 fiscal 1995 over the prior year end balances due primarily to reduced operating activity in the Mortgage Banking group, the disposition of the Savings and Loan and the CXP transaction, which deconsolidated the Construction Products group. In fiscal 1995, another significant source of funds was the dividend and other receipts related to CXP's initial public offering, which provided $186.5 million in cash to Centex. The cash was used to reduce short-term indebtedness. The decrease in marketable securities and S&L deposits during fiscal 1995 resulted from the disposition of the Savings and Loan. The fiscal 1995 decrease in debt related primarily to the decline in mortgage loan activity in the Mortgage Banking group and the associated decline in mortgage loans held pending delivery against forward sale commitments. The company believes it has adequate resources and sufficient credit facilities to satisfy its current needs and provide for future growth. OUTLOOK In December 1994, the company entered into an agreement with Dallas-based Vista Properties, Inc. under which a subsidiary of Centex has agreed to acquire equity interests in Vista and in its affiliated partnership, Vista Partners, as part of a proposed prepackaged bankruptcy structuring by Vista. For an investment of approximately $70 million, Centex would acquire ownership in a portfolio of properties, comprising over 4,000 acres in seven states. The land is zoned, planned or developed for single- and multi-family residential, office and industrial, and retail and commercial. The acquisition would provide Centex with future residential sites in several of its existing markets as well as opportunities in retail, industrial and office segments. The transaction is expected to be completed during the summer of 1995. The company expects fiscal 1996 results to be negatively impacted by fiscal 1995's lower home order rate (sales) and the resulting lower backlog at the beginning of fiscal 1996 compared to fiscal 1995. Although the company's expanding base in California should have a positive effect later in fiscal 1996, the opening of new neighborhoods there was delayed due to heavy spring rains. The recent decline in interest rates should provide an increase in activity for both the Home Building and Mortgage Banking operations. The company's Mortgage Banking operation is now positioned for profitability at lower volume levels and the Contracting and Construction Services division should become profitable as higher margin contracts are completed. F-29 30 Centex Corporation and Subsidiaries SUMMARY OF SELECTED FINANCIAL DATA (UNAUDITED) ================================================================================
======================================================== 1995 1994 1993 1992 -------------------------------------------------------- Revenues $ 3,277,504 $ 3,039,709 $ 2,363,325 $ 2,028,646 Earnings Before 1988 Accounting Change $ 92,248 $ 85,162 $ 61,038 $ 34,557 Cumulative Effect of Change in Accounting for Income Taxes - - - - ----------- ----------- ----------- ----------- Net Earnings $ 92,248 $ 85,162 $ 61,038 $ 34,557 =========== =========== =========== =========== Total Assets $ 2,049,698 $ 2,580,356 $ 2,272,093 $ 2,347,452 Total Long-term Debt, including debentures $ 222,530 $ 222,832 $ 223,988 $ 232,294 Total Debt $ 427,381 $ 429,470 $ 368,988 $ 298,508 Deferred Income Taxes $ 27,795 $ 35,088 $ 55,722 $ 56,627 Stockholders' Equity $ 668,227 $ 668,659 $ 578,415 $ 518,494 Total Debt as a Percent of Total Capitalization (Total Debt, Deferred Income Taxes, Negative Goodwill and Stockholders' Equity) 38.0% 37.1% 35.8% 33.0% Net Earnings as a Percent of Beginning Stockholders' Equity 13.8% 14.7% 11.8% 7.1% Per Common Share Earnings Before 1988 Accounting Change $ 3.04 $ 2.60 $ 1.91 $ 1.11 Cumulative Effect of Change in Accounting for Income Taxes - - - - ----------- ----------- ----------- ----------- Net Earnings $ 3.04 $ 2.60 $ 1.91 $ 1.11 =========== =========== =========== =========== Cash Dividends $ .20 $ .20 $ .20 $ .20 Book Value Based on Shares Outstanding at Year End $ 23.80 $ 21.12 $ 18.57 $ 16.99 Stock Prices High $ 32 3/8 $ 45 5/8 $ 34 1/8 $ 27 3/8 Low $ 20 1/4 $ 27 1/2 $ 20 $ 17
On November 30, 1987, Centex Corporation distributed as a dividend to its stockholders securities relating to Centex Development Company, L.P. (see Note H to the Consolidated Financial Statements of Centex Corporation and Subsidiaries). Since this distribution, such securities have traded in tandem with, and as a part of, the common stock of Centex Corporation. Net Earnings and Earnings Per Share for fiscal 1995 include $37.5 million and $1.23, respectively, related to the April 1994 IPO of 51% of the stock of Centex Construction Products, Inc. See Note C to financial statements. Debt and deferred taxes reflect Centex Corporation only, with the mortgage company and savings and loan association reflected on the equity method versus consolidation. Centex Construction Products, Inc. (CXP) become 49% owned in April 1994 as a result of an Initial Public Offering representing 51% of its equity (see Note C to financial statements). CXP's revenues for fiscal years 1994 and prior, and the related costs and expenses have been reclassified into "Equity in Earnings of Affiliate (CXP)". This reclassification facilitates comparisons between the periods. F-30 31
For the Years Ended March 31, ====================================================================================== 1991 1990 1989 1988 1987 1986 - -------------------------------------------------------------------------------------- (Dollars in thousands, except per share data) $ 2,089,110 $ 1,925,423 $ 1,707,989 $ 1,352,601 $ 1,165,375 $ 1,268,382 $ 43,605 $ 62,003 $ 40,020 $ 24,063 $ 44,204 $ 47,569 - - - 50,100 - - - ----------- ----------- ----------- ----------- ----------- ----------- $ 43,605 $ 62,003 $ 40,020 $ 74,163 $ 44,204 $ 47,569 =========== =========== =========== =========== =========== =========== $ 2,037,486 $ 2,045,141 $ 1,800,522 $ 1,148,098 $ 1,150,720 $ 1,068,063 $ 137,235 $ 140,112 $ 140,192 $ 178,862 $ 133,461 $ 65,263 $ 267,946 $ 267,739 $ 240,457 $ 222,962 $ 134,724 $ 120,394 $ 80,205 $ 59,311 $ 74,487 $ 139,767 $ 229,576 $ 204,588 $ 483,677 $ 447,911 $ 384,174 $ 364,846 $ 363,014 $ 327,792 30.9% 33.0% 32.6% 30.6% 18.5% 18.4% 9.7% 16.1% 11.0% 20.4% 13.5% 15.8% $ 1.42 $ 2.01 $ 1.32 $ .75 $ 1.24 $ 1.31 - - - 1.57 - - - ----------- ----------- ----------- ----------- ----------- ----------- $ 1.42 $ 2.01 $ 1.32 $ 2.32 $ 1.24 $ 1.31 =========== =========== =========== =========== =========== =========== $ .20 $ .20 $ .14375 $ .125 $ .125 $ .125 $ 16.07 $ 14.85 $ 13.28 $ 12.13 $ 10.23 $ 9.17 $ 21 7/8 $ 20 7/8 $ 14 7/8 $ 17 $ 20 1/4 $ 16 3/4 $ 9 3/4 $ 14 $ 10 $ 7 7/8 $ 14 1/2 $ 10 1/4
F-31 32 Centex Corporation and Subsidiaries QUARTERLY RESULTS (UNAUDITED) ================================================================================
March 31, ========================================= 1995 1994 ----------------------------------------- (Dollars in thousands, except per share data) FIRST QUARTER Revenues $ 832,517 $ 654,962 Earnings Before Income Taxes $ 84,779 $ 26,707 Net Earnings $ 53,398 $ 17,006 Earnings Per Share $ 1.67 $ .52 SECOND QUARTER Revenues $ 855,709 $ 764,318 Earnings Before Income Taxes $ 27,087 $ 38,001 Net Earnings $ 16,901 $ 22,846 Earnings Per Share $ .55 $ .70 THIRD QUARTER Revenues $ 793,205 $ 789,873 Earnings Before Income Taxes $ 19,311 $ 36,682 Net Earnings $ 13,057 $ 23,586 Earnings Per Share $ .44 $ .72 FOURTH QUARTER Revenues $ 796,073 $ 830,556 Earnings Before Income Taxes $ 14,611 $ 33,623 Net Earnings $ 8,892 $ 21,724 Earnings Per Share $ .31 $ .66
The first quarter ended June 30, 1994, includes amounts related to Centex Construction Products, Inc.'s (CXP) initial public offering of: Earnings Before Income Taxes, $59,328; Net Earnings, $37,495; and Earnings Per Share, $1.17. F-32 EX-21.B 9 LIST OF SUBSIDIARIES 1 EXHIBIT 21.B The following is a list of subsidiaries of 3333 Holding Corporation as of May 30, 1995: NEVADA CORPORATIONS: 3333 Development Corporation PARTNERSHIPS: Centex Development Company, L.P. EX-23.B 10 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS 1 EXHIBIT 23.B CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in the previously filed registration statements on Form S-8 (numbers 33-44575; 33-29174; 2-95271; 2-51637; 2-54043; 2-59535; 2-68747; 2-78831; 33-55083-01; 33-55083-02) of our report dated May 12, 1995, included as an exhibit to the 3333 Holding Corporation and Subsidiary and Centex Development Company, L.P. Annual Report on Form 10-K for the year ended March 31, 1995 and to all references to our firm included in these registration statements. ARTHUR ANDERSEN LLP Dallas, Texas, June 2, 1995 EX-24.B 11 POWERS OF ATTORNEY 1 EXHIBIT 24.B 3333 HOLDING CORPORATION POWER OF ATTORNEY THE UNDERSIGNED hereby constitutes and appoints J. Stephen Bilheimer as the undersigned's true and lawful agent and attorney-in-fact (the "Attorney-in-Fact"), with full power and authority in the name and on behalf of the undersigned, in his capacity as a Director of 3333 Holding Corporation (the "Company"), to execute and file with the Securities and Exchange Commission the Company's Annual Report on Form 10-K for the Company's fiscal year ended March 31, 1995, together with any and all amendments thereto. This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorney-in-Fact, may not be revoked until the Attorney-in-Fact has received five days' written notice of such revocation. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 31st day of May, 1995. /s/ David M. Sherer David M. Sherer Director 3333 Holding Corporation EX-27.B 12 FINANCIAL DATA SCHEDULE
5 FINANCIAL DATA SCHEDULE FOR 3333 HOLDING CORP. This schedule contains summary financial information extracted from 3333 Holding Corporation's March 31, 1995, Form 10-K and is qualified in its entirety by reference to such financial statements. 0000818762 3333 HOLDING CORPORATION 1,000 12-MOS MAR-31-1995 APR-01-1994 MAR-31-1995 19 0 7,887 0 0 0 0 0 8,673 0 0 1 0 0 218 8,673 1,602 1,602 1,506 1,506 0 0 0 96 0 96 0 0 0 96 0.00 0.00
EX-99.B 13 FINANCIAL STATEMENTS 1 EXHIBIT 99.B 3333 Holding Corporation and Subsidiary and Centex Development Company, L.P. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ================================================================================ TO THE BOARD OF DIRECTORS OF 3333 HOLDING CORPORATION: We have audited the accompanying combining balance sheets of 3333 Holding Corporation and subsidiary and Centex Development Company, L.P. as of March 31, 1995 and 1994, and the related combining statements of operations and cash flows and stockholders' equity and partners' capital for each of the three years in the period ended March 31, 1995. These financial statements are the responsibility of the companies' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the individual and combined financial positions of 3333 Holding Corporation and subsidiary and Centex Development Company, L.P. as of March 31, 1995 and 1994, and the individual and combined results of their operations and their cash flows for each of the three years in the period ended March 31, 1995, in conformity with generally accepted accounting principles. Arthur Andersen LLP Dallas, Texas, May 12, 1995 F-33 2 3333 Holding Corporation and Subsidiary and Centex Development Company, L.P. FINANCIAL HIGHLIGHTS ================================================================================
For the Years Ended March 31, ======================================================================== 1995 1994 1993 1992 1991 ------------------------------------------------------------------------ (Dollars in thousands, except per share/unit data) REVENUES 3333 Holding Corporation and Subsidiary $ 1,602 $ 537 $ 566 $ 679 $ 833 Centex Development Company, L.P. $ 9,796 $ 12,859 $ 9,783 $ 23,998 $ 11,455 Combined Revenues $ 10,342 $ 13,249 $ 10,156 $ 24,399 $ 11,902 OPERATING EARNINGS (LOSS) 3333 Holding Corporation and Subsidiary $ 96 $ (114) $ (96) $ (107) $ (113) Centex Development Company, L.P. $ (16,323) $ (1,510) $ (4,176) $ (706) $ (303) Combined Operating Earnings (Loss) $ (16,227) $ (1,624) $ (4,272) $ (813) $ (416) TOTAL ASSETS 3333 Holding Corporation and Subsidiary $ 8,673 $ 8,600 $ 8,600 $ 8,613 $ 8,662 Centex Development Company, L.P. $ 105,946 $ 121,027 $ 128,621 $ 121,244 $ 126,691 Combined Assets $ 113,282 $ 128,092 $ 134,691 $ 127,402 $ 132,980 TOTAL DEBT 3333 Holding Corporation and Subsidiary $ 7,600 $ 7,600 $ 6,500 $ 6,500 $ 6,500 Centex Development Company, L.P. $ 56,485 $ 54,149 $ 59,262 $ 44,280 $ 49,281 Combined Debt $ 64,085 $ 61,749 $ 65,762 $ 50,780 $ 55,781 OPERATING EARNINGS (LOSS) PER SHARE/UNIT (Average Outstanding Shares, 1,000; Units 1,000) 3333 Holding Corporation and Subsidiary $ 96 $ (114) $ (96) $ (107) $ (113) Centex Development Company, L.P. $ (16,323) $ (1,510) $ (4,176) $ (706) $ (303)
F-34 3 3333 Holding Corporation and Subsidiary and Centex Development Company, L.P. COMBINING BALANCE SHEETS ================================================================================
March 31, ====================================================================================== 1995 1994 1995 1994 1995 1994 -------------------------- -------------------------- -------------------------- 3333 Holding Centex Development Corporation Combined Company, L.P. and Subsidiary -------------------------- -------------------------- -------------------------- (Dollars in thousands) ASSETS Cash $ 1,422 $ 101 $ 1,403 $ 101 $ 19 $ - Accounts Receivable - Affiliates - - 570 768 - - Centex Corporation and Subsidiaries 187 133 - - 187 133 Other - 105 - 105 - - Notes Receivable - Centex Corporation and Subsidiaries 7,700 7,700 - - 7,700 7,700 Other 4,025 1,151 4,025 1,151 - - Investment in Affiliate - - - - 767 767 Land Held for Development and Sale - Forster Ranch 53,493 49,199 53,493 49,199 - - Other 46,455 69,703 46,455 69,703 - - ----------- ----------- ----------- ----------- ----------- ----------- $ 113,282 $ 128,092 $ 105,946 $ 121,027 $ 8,673 $ 8,600 =========== =========== =========== =========== =========== =========== LIABILITIES, STOCKHOLDERS' EQUITY AND PARTNERS' CAPITAL Accounts Payable and Accrued Liabilities - Affiliates $ - $ - $ - $ - $ 570 $ 768 Centex Corporation and Subsidiaries 160 894 - 785 160 109 Other 2,320 2,369 2,196 2,369 124 - Notes Payable - Centex Corporation and Subsidiaries 7,600 7,600 - - 7,600 7,600 Forster Ranch 53,493 49,199 53,493 49,199 - - Other 2,992 4,950 2,992 4,950 - - Land Sale Deposits 5 141 5 141 - - Stockholders' Equity and Partners' Capital - Stock and Stock/Class B Unit Warrants 501 501 500 500 1 1 Capital in Excess of Par Value 800 800 - - 800 800 Retained Earnings (Deficit) (582) (678) - - (582) (678) Partners' Capital 45,993 62,316 46,760 63,083 - - ----------- ----------- ----------- ----------- ----------- ----------- Total Stockholders' Equity and Partners' Capital 46,712 62,939 47,260 63,583 219 123 ----------- ----------- ----------- ----------- ----------- ----------- $ 113,282 $ 128,092 $ 105,946 $ 121,027 $ 8,673 $ 8,600 =========== =========== =========== =========== =========== ===========
See notes to combining financial statements. F-35 4 3333 Holding Corporation and Subsidiary and Centex Development Company, L.P. COMBINING STATEMENTS OF OPERATIONS AND CASH FLOWS ================================================================================
For the Years Ended March 31, ====================================================================================== 1995 1994 1993 1995 1994 1993 ----------------------------------------- ----------------------------------------- Centex Combined Development Company, L.P. ----------------------------------------- ----------------------------------------- (Dollars in thousands, except per share/unit data) COMBINING STATEMENTS OF OPERATIONS REVENUES Real Estate Sales $ 9,506 $ 12,540 $ 9,097 $ 9,506 $ 12,540 $ 9,097 Interest and Other Income 836 709 1,059 290 319 686 ----------- ----------- ----------- ----------- ----------- ----------- 10,342 13,249 10,156 9,796 12,859 9,783 ----------- ----------- ----------- ----------- ----------- ----------- COSTS AND EXPENSES Real Estate Sales 9,064 12,684 8,360 9,064 12,684 8,360 Property Valuation Adjustment 15,500 - 3,702 15,500 - 3,702 Selling and Administrative 1,394 1,750 1,962 1,555 1,685 1,897 Interest 611 439 404 - - - ----------- ----------- ----------- ----------- ----------- ----------- 26,569 14,873 14,428 26,119 14,369 13,959 ----------- ----------- ----------- ----------- ----------- ----------- EARNINGS (LOSS) BEFORE INCOME TAXES (16,227) (1,624) (4,272) (16,323) (1,510) (4,176) Income Taxes - - - - - - ----------- ----------- ----------- ----------- ----------- ----------- NET EARNINGS (LOSS) $ (16,227) $ (1,624) $ (4,272) $ (16,323) $ (1,510) $ (4,176) =========== =========== =========== =========== =========== =========== EARNINGS (LOSS) PER SHARE/UNIT (Average Outstanding Shares, 1,000; Units, 1,000) $ (16,323) $ (1,510) $ (4,176) =========== =========== =========== COMBINING STATEMENTS OF CASH FLOWS CASH FLOWS-OPERATING ACTIVITIES Net Earnings (Loss) $ (16,227) $ (1,624) $ (4,272) $ (16,323) $ (1,510) $ (4,176) Property Valuation Adjustment 15,500 - 3,702 15,500 - 3,702 Net Change in Payables, Receivables and Deposits (281) (110) (3,692) (204) (224) (3,788) (Increase) Decrease in Notes Receivable (2,874) (480) 262 (2,874) (480) 262 Decrease (Increase) in Land Held for Development and Sale 3,454 5,746 (10,680) 3,454 5,746 (10,680) ----------- ----------- ----------- ----------- ----------- ----------- (428) 3,532 (14,680) (447) 3,532 (14,680) ----------- ----------- ----------- ----------- ----------- ----------- CASH FLOWS-FINANCING ACTIVITIES (Decrease) Increase in Notes Payable - Centex Corporation & Subsidiaries (587) 430 (870) (587) 430 (870) Other 2,336 (5,113) 15,852 2,336 (5,113) 15,852 ----------- ----------- ----------- ----------- ----------- ----------- 1,749 (4,683) 14,982 1,749 (4,683) 14,982 ----------- ----------- ----------- ----------- ----------- ----------- NET INCREASE (DECREASE) IN CASH 1,321 (1,151) 302 1,302 (1,151) 302 CASH AT BEGINNING OF YEAR 101 1,252 950 101 1,252 950 ----------- ----------- ----------- ----------- ----------- ----------- CASH AT END OF YEAR $ 1,422 $ 101 $ 1,252 $ 1,403 $ 101 $ 1,252 =========== =========== =========== =========== =========== =========== For the Years Ended March 31, ========================================= 1995 1994 1993 ----------------------------------------- 3333 Holding Corporation and Subsidiary ----------------------------------------- (Dollars in thousands, except per share/unit data) COMBINING STATEMENTS OF OPERATIONS REVENUES Real Estate Sales $ - $ - $ - Interest and Other Income 1,602 537 566 ----------- ----------- ----------- 1,602 537 566 ----------- ----------- ----------- COSTS AND EXPENSES Real Estate Sales - - - Property Valuation Adjustment - - - Selling and Administrative 761 65 65 Interest 745 586 597 ----------- ----------- ----------- 1,506 651 662 ----------- ----------- ----------- EARNINGS (LOSS) BEFORE INCOME TAXES 96 (114) (96) Income Taxes - - - ----------- ----------- ----------- NET EARNINGS (LOSS) $ 96 $ (114) $ (96) =========== =========== =========== EARNINGS (LOSS) PER SHARE/UNIT (Average Outstanding Shares, 1,000; Units, 1,000) $ 96 $ (114) $ (96) =========== =========== =========== COMBINING STATEMENTS OF CASH FLOWS CASH FLOWS-OPERATING ACTIVITIES Net Earnings (Loss) $ 96 $ (114) $ (96) Property Valuation Adjustment - - - Net Change in Payables, Receivables and Deposits (77) 114 96 (Increase) Decrease in Notes Receivable - - - Decrease (Increase) in Land Held for Development and Sale - - - ----------- ----------- ----------- 19 - - ----------- ----------- ----------- CASH FLOWS-FINANCING ACTIVITIES (Decrease) Increase in Notes Payable - Centex Corporation & Subsidiaries - - - Other - - - ----------- ----------- ----------- - - - ----------- ----------- ----------- NET INCREASE (DECREASE) IN CASH 19 - - CASH AT BEGINNING OF YEAR - - - ----------- ----------- ----------- CASH AT END OF YEAR $ 19 $ - $ - =========== =========== ===========
See notes to combining financial statements. F-36 5 3333 Holding Corporation and Subsidiary and Centex Development Company, L.P. COMBINING STATEMENTS OF STOCKHOLDERS' EQUITY AND PARTNERS' CAPITAL ================================================================================
For the Years Ended March 31, 1995, 1994 and 1993 ======================================================== Centex Development Company, L.P. ----------------------------------------- Class B General Limited Unit Partner's Partner's Combined Warrants Capital Capital ----------- ----------- ----------- ----------- (Dollars in thousands) Balance at March 31, 1992 $ 68,835 $ 500 $ 767 $ 68,002 Net Loss (4,272) - - (4,176) ----------- ----------- ----------- ----------- Balance at March 31, 1993 64,563 500 767 63,826 Net Loss (1,624) - - (1,510) ----------- ----------- ----------- ----------- Balance at March 31, 1994 62,939 500 767 62,316 NET LOSS (16,227) - - (16,323) ----------- ----------- ----------- ----------- BALANCE AT MARCH 31, 1995 $ 46,712 $ 500 $ 767 $ 45,993 =========== =========== =========== =========== For the Years Ended March 31, 1995, 1994 and 1993 ======================================================== 3333 Holding Corporation and Subsidiary -------------------------------------------------------- Capital In Retained Stock Common Excess Of Earnings Warrants Stock Par Value (Deficit) ----------- ----------- ----------- ----------- (Dollars in thousands) Balance at March 31, 1992 $ 1 $ - $ 800 $ (468) Net Loss - - - (96) ----------- ----------- ----------- ----------- Balance at March 31, 1993 1 - 800 (564) Net Loss - - - (114) ----------- ----------- ----------- ----------- Balance at March 31, 1994 1 - 800 (678) NET LOSS - - - 96 ----------- ----------- ----------- ----------- BALANCE AT MARCH 31, 1995 $ 1 $ - $ 800 $ (582) =========== =========== =========== ===========
See notes to combining financial statements. NOTES TO COMBINING FINANCIAL STATEMENTS ================================================================================ (A) ORGANIZATION Centex Development Company, L.P. (the Partnership) was formed on March 31, 1987 to invest in, acquire, develop, operate and sell residential and commercial real estate. Centex Real Estate Corporation (CREC), its limited partner, is a subsidiary of Centex Corporation (Centex). 3333 Development Corporation (a Nevada corporation) (Development), which serves as its general partner, is owned by 3333 Holding Corporation (a Nevada corporation) (Holding). In November 1987, Centex distributed all of the issued and outstanding shares of the common stock of Holding and warrants to purchase approximately 80% of the Class B units of limited partnership interest in the Partnership (see Note F). These securities trade in tandem with the common stock of Centex and are being held by a nominee on behalf of Centex stockholders until such time as the securities are detached and trade separately. 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 1997 unless extended by Centex's stockholders. Supplementary condensed combined financial statements of Centex Corporation and subsidiaries, 3333 Holding Corporation and subsidiary and Centex Development Company, L.P. are set forth below. For additional information on Centex Corporation and subsidiaries, see their separate financial statements and related footnotes. F-37 6 SUPPLEMENTARY CONDENSED COMBINED BALANCE SHEETS ================================================================================
March 31, ========================================= 1995 1994 ----------------------------------------- (Dollars in thousands) ASSETS Cash and Cash Equivalents $ 25,207 $ 76,388 Marketable Securities Available for Sale - 78,241 Receivables 653,622 930,428 Inventories 1,266,509 1,223,753 Investments in Centex Construction Products, Inc. 89,871 - Joint Ventures and Unconsolidated Subsidiaries 5,695 56,928 Property and Equipment, net 41,267 188,930 Government-Guaranteed S&L Assets - 43,767 Other Assets and Deferred Charges 26,427 38,574 ----------- ----------- $ 2,108,598 $ 2,637,009 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts Payable and Accrued Liabilities $ 557,640 $ 644,926 S&L Deposits and FHLB Borrowings - 211,055 Short-term Debt 632,745 837,734 Long-term Debt 222,530 222,832 Deferred Income Taxes 26,737 51,180 Stockholders' Equity 668,946 669,282 ----------- ----------- $ 2,108,598 $ 2,637,009 =========== ===========
SUPPLEMENTARY CONDENSED COMBINED STATEMENT OF EARNINGS ================================================================================
For the Years Ended March 31, ========================================= 1995 1994 1993 ----------------------------------------- (Dollars in thousands) Revenues $ 3,281,198 $ 3,224,025 $ 2,501,691 Costs and Expenses 3,194,642 3,089,126 2,410,028 ----------- ----------- ----------- Earnings Before Gain on Initial Public Offering and Income Taxes 86,556 134,899 91,663 Gain on CXP Initial Public Offering 59,328 - - ----------- ----------- ----------- Earnings Before Income Taxes 145,884 134,899 91,663 Income Taxes 53,540 49,851 30,721 ----------- ----------- ----------- Net Earnings $ 92,344 $ 85,048 $ 60,942 =========== =========== ===========
F-38 7 (B) BASIS OF PRESENTATION The accompanying combining financial statements present the individual and combined financial statements of Holding and its subsidiary and the Partnership as of March 31, 1995 and 1994 and results of operations for each of the three years ended March 31, 1995. The financial statements of the Partnership are included in the combined statements since Development, as general partner of the Partnership, is able to exercise effective control over the Partnership. (C) SIGNIFICANT ACCOUNTING POLICIES REVENUE RECOGNITION Revenue from real estate sales is recognized as required payments are received and title passes. INVENTORY CAPITALIZATION AND COST ALLOCATION Land held for development and sale is stated at the lower of cost (including development costs and, where appropriate, capitalized interest and real estate taxes) or market. The capitalized costs are included in cost of land sales in the combining statements of operations as related revenues are recognized. In March 1995, CDC recorded a pre-tax adjustment to reduce the book value of certain properties in the amount of approximately $15.5 million to reflect CDC's view that development activity has not reached anticipated levels during the current economic cycle in order to continue to support the historical carrying value of such properties. This adjustment results in carrying values that will facilitate a nearer-term disposition or development of these properties. A substantial portion of the adjustment related to the book values of two Dallas area properties. In fiscal 1993, CDC wrote down its investment in Forster Ranch real estate by $3.7 million to an amount which equaled the related non-recourse debt. EARNINGS (LOSS) PER SHARE/UNIT Earnings (loss) per share/unit are based on the weighted average number of outstanding shares of common stock (1,000 for Holding) and Class A limited partnership units (1,000 for the Partnership). These shares/units do not include common stock/unit equivalents because they have no material effect on earnings (loss) per share/unit. COMBINING STATEMENTS OF OPERATIONS AND CASH FLOWS - SUPPLEMENTAL DISCLOSURES Interest capitalized by the Partnership during fiscal years ended March 31, 1995, 1994 and 1993 totaled $4,787,000, $4,090,000 and $4,039,000, respectively, of which $4,687,000, $3,945,000 and $3,834,000, respectively, relates to the Forster Ranch property. No income taxes were paid during the years ended March 31, 1995, 1994 and 1993. (D) NOTES RECEIVABLE Development issued common stock to Holding and used the proceeds to advance $7.7 million to CREC, as evidenced by a note receivable due April 30, 1996. Interest at prime plus .875% is due in quarterly installments. Interest income of $680,000, $537,000 and $547,000 related to this note is included in the accompanying combining financial statements for the years ended March 31, 1995, 1994 and 1993, respectively. Notes Receivable - Other at March 31, 1995 and 1994 have stated interest rates ranging up to 10% and are due in monthly or quarterly installments. Discounts and allowances totaled $40,000 at March 31, 1995 and $313,000 at March 31, 1994. The weighted average interest rate, inclusive of discounts, was 9% at March 31, 1995 and 9% at March 31, 1994. Notes receivable at March 31, 1995 are collectible over seven years, with $323,000 being due within one year. F-39 8 (E) NOTES PAYABLE Centex had advanced Holding $7.6 million as of March 31, 1995 which is evidenced by a note secured by the common stock of Development. The note, which had a fluctuating balance during fiscal 1995 and 1994, bears interest at prime plus 1% which is payable quarterly. The principal balance together with all unpaid accrued interest is due on the earlier of April 1, 1996 or the date on which the warrants to purchase Class B units of limited partnership interest are detached from shares of the common stock of Centex. Interest expense of $611,000, $439,000 and $404,000 related to this note is included in the accompanying combining financial statements for the years ended March 31, 1995, 1994 and 1993, respectively. Under the most restrictive covenants of the note agreement, Holding and its subsidiary (excluding the Partnership) may not, without Centex's consent, (i) create any additional liens on or sell real estate properties contributed by the limited partner, (ii) effect a merger or consolidation, (iii) declare dividends or make certain other shareholder payments or (iv) allow tangible net worth, as defined, to be less than $7.7 million for Development. All Forster Ranch and other notes payable are non-recourse, secured solely by the underlying real estate. As land is sold, a portion of the proceeds is restricted for repayment of the notes. The prime rate in effect was 9% at March 31, 1995 and 6 1/4% at March 31, 1994. The 30 day LIBOR rate at March 31, 1995 was 6 1/8% and 3 11/16% at March 31, 1994. The note balances and rates in effect were as follows:
March 31, ========================== 1995 1994 -------------------------- (Dollars in thousands) Credit Line at LIBOR Plus 3/4% unsecured, guaranteed by CREC $ 1,039 $ 2,115 Note Payable at 6 1/2%, Paid in April 1994 - 2,050 Note Payable at 12%, Matured in April 1994 785 785 Note Payable at 5.56%, Maturing in fiscal year 1997 682 - Note Payable, Maturing in fiscal year 1997 486 - Forster Ranch Non-recourse Notes - Payable at Prime Plus 1%, Matured in April 1993 11,602 12,420 Payable at Prime Plus 2% (10 1/2% floor), Maturing in fiscal year 2002 41,891 36,779 ----------- ----------- $ 56,485 $ 54,149 =========== ===========
The partnership and the holder of the Forster Ranch non-recourse notes have entered into an agreement that may result in the transfer of ownership of the property to the lender in satisfaction of this debt in June 1995. In connection with this agreement, CREC has agreed to fund certain holding and other costs CDC will incur through June 1995 in connection with its rezoning efforts. CDC wrote down its investment in the Forster Ranch real estate by approximately $3.7 million during fiscal year 1993 to an amount which equaled the related non-recourse debt after receiving notice that the note, which matured in April 1993, would not be renewed. F-40 9 (F) STOCKHOLDERS' EQUITY AND PARTNERS' CAPITAL PREFERRED RETURN The partnership agreement provides that the Class A limited partner is entitled to a cumulative preferred return of 9% per annum on the average outstanding balance of its Unrecovered Capital, which is defined as its initial capital contribution adjusted for cash distributions representing return of the initial capital contributions. Preference payments in arrears at March 31, 1995 amounted to $35,818,000. ALLOCATION OF PROFITS AND LOSSES As provided in the partnership agreement, prior to Payout (as defined below), net income of the Partnership is to be allocated to the partners in the following order of priority: (i) To the Class A limited partner to the extent of the cumulative preferred return. (ii) To the partners to the extent and in the same ratio that cumulative net losses were allocated. (iii) To the partners in accordance with their percentage interests, as defined. Currently, this would be 20% to the Class A limited partner and 80% to the general partner. All loss allocations and allocations of net income after Payout, shall be made to the partners in accordance with their percentage interests, as defined. DISTRIBUTIONS Distributions of cash or other property are to be made at the discretion of the general partner and are to be distributed in the following order of priority: (i) Prior to the time at which the Class A limited partner has received aggregate distributions equal to its original capital contribution (Payout), distributions of cash or other property shall be made as follows: (a) To the Class A limited partner with respect to its preferred return, then (b) To the partners in an amount equal to the maximum marginal corporate tax rate times the amount of taxable income allocated to the partners, then (c) To the Class A limited partner until its Unrecovered Capital is reduced to zero. (ii) After Payout, distributions of cash shall be made to the partners in accordance with their percentage interests, as defined. WARRANTS In November 1987, Centex acquired from the Partnership 100 warrants to purchase 100 Class B units in the Partnership at an exercise price of $500 per Class B unit, and Centex acquired from Holding 100 warrants to purchase 100 shares of Holding common stock at an exercise price of $800 per share. These warrants are subject to future adjustment to provide the holders of options to purchase Centex common stock with the opportunity to acquire Class B units and shares of Holding. These warrants will generally become exercisable upon the detachment of the tandem-traded securities from Centex common stock. F-41 10 (G) RELATED PARTY TRANSACTIONS SERVICE AND MANAGEMENT AGREEMENTS Holding entered into a service agreement in May 1987 with Centex Service Company (CSC), a wholly-owned subsidiary of Centex, whereby CSC will provide certain tax, accounting and other similar services for Holding at a fee of $2,500 per month. Service fees of $30,000 for each of fiscal years 1995, 1994, and 1993 are reflected as administrative expenses in the accompanying combining financial statements. The Partnership paid $922,000 to Holding during the current year pursuant to an agreement whereby Holding provides management services to the Partnership in connection with the development and operation of properties acquired by the Partnership, maintenance of partnership property and accounting and clerical services. Also in the current year, the Partnership paid certain Centex subsidiaries $785,000 in management fees accrued in the year ended March 31, 1994 relative to a similar management agreement. For the year ended March 31, 1993, these management fees to Centex subsidiaries totaled $1,378,000 of which $28,000 was capitalized. SALES AND PURCHASES Partnership revenues during fiscal years 1995, 1994, and 1993 include land sales to CREC of $5,423,000, $2,354,000 and $8,648,000, respectively. Additionally, CREC has contracts to purchase lots for the aggregate price of approximately $6.1 million to be paid as lots are delivered. ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE Included in Accounts Receivable-Affiliates and Accounts Payable-Affiliates in the accompanying combining financial statements are $570,000 at March 31, 1995 and $768,000 at March 31, 1994, which the Partnership advanced to Holding. Interest of $134,000 and $148,000 was accrued on advances during fiscal years 1995 and 1994 respectively. (H) INCOME TAXES At March 31, 1995, Holding had operating loss carryforwards for income tax reporting purposes of $554,000. If unused, the loss carryforwards will expire in the fiscal years 2004 through 2010. Holding joins with its subsidiary in filing consolidated income tax returns. The taxable income of the Partnership has been allocated to the holder of the Class A units. Accordingly, no tax provision for Partnership earnings is shown in the combining financial statements. F-42 11 3333 Holding Corporation and Subsidiary and Centex Development Company, L.P. QUARTERLY RESULTS (UNAUDITED) ================================================================================
March 31, ====================================================================================== 1995 1994 1995 1994 1995 1994 -------------------------- -------------------------- -------------------------- 3333 Holding Centex Development Corporation Combined Company, L.P. and Subsidiary -------------------------- -------------------------- -------------------------- (Dollars in thousands, except per share/unit data) FIRST QUARTER Revenues $ 3,105 $ 1,928 $ 2,977 $ 1,832 $ 336 $ 134 Earnings (Loss) Before Taxes $ (137) $ (264) $ (151) $ (235) $ 14 $ (29) Net Earnings (Loss) $ (137) $ (264) $ (151) $ (235) $ 14 $ (29) Earnings (Loss) Per Share/Unit $ (151) $ (235) $ 14 $ (29) SECOND QUARTER Revenues $ 1,330 $ 10,136 $ 1,197 $ 10,039 $ 376 $ 134 Earnings (Loss) Before Taxes $ (229) $ (664) $ (264) $ (636) $ 35 $ (28) Net Earnings (Loss) $ (229) $ (664) $ (264) $ (636) $ 35 $ (28) Earnings (Loss) Per Share/Unit $ (264) $ (636) $ 35 $ (28) THIRD QUARTER Revenues $ 4,467 $ 374 $ 4,325 $ 275 $ 379 $ 136 Earnings (Loss) Before Taxes $ (261) $ (424) $ (283) $ (395) $ 22 $ (29) Net Earnings (Loss) $ (261) $ (424) $ (283) $ (395) $ 22 $ (29) Earnings (Loss) Per Share/Unit $ (283) $ (395) $ 22 $ (29) FOURTH QUARTER Revenues $ 1,440 $ 811 $ 1,297 $ 713 $ 511 $ 133 Earnings (Loss) Before Taxes $ (15,600) $ (272) $ (15,625) $ (244) $ 25 $ (28) Net Earnings (Loss) $ (15,600) $ (272) $ (15,625) $ (244) $ 25 $ (28) Earnings (Loss) Per Share/Unit $ (15,625) $ (244) $ 25 $ (28)
F-43 12 3333 Holding Corporation and Subsidiary and Centex Development Company, L.P. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION ================================================================================ On a combined basis, revenues for the year ended March 31, 1995 of $10.3 million include the sale of a commercial property in Sonora, California and the sale to Centex Real Estate Corporation (CREC) of 254 residential lots in Orlando, Florida and East Windsor, New Jersey. Revenues of $13.2 million for fiscal 1994 included: a 15 acre industrial site in Houston, Texas; 168 acres of ranch land in Comal County, Texas; the Sonora, California shopping center property except for one pad site; and the sale to CREC of 246 residential lots in Orlando, Florida, The Colony, Texas and East Windsor, New Jersey. Revenues of $10.2 million for fiscal 1993 included the sale of a restaurant site in Sonora, California, 21 commercial acres in Orlando, Florida and the sale to CREC of 273 residential lots in Orlando, Florida. The year ended March 31, 1995 reflected a combined net loss of $16.2 million, which included property valuation adjustments of $15.5 million. The property valuation adjustments were recorded in March 1995 to reflect CDC's view that development activity has not reached anticipated levels during the current economic cycle in order to continue to support the historical carrying value of such properties, primarily The Colony, and Bryan Place properties located in the Dallas area. These adjustments result in carrying values that will facilitate a nearer-term disposition or development of these properties. Without the property valuation adjustments, the combined net loss was $.7 million compared to $1.6 million in fiscal 1994. The reduction in loss before the property valuation adjustments primarily relates to the higher gross margin on fiscal 1995 real estate sales compared to fiscal 1994 and a reduction in selling and administrative cost and expense in fiscal 1995 compared to fiscal 1994. The fiscal 1993 combined net loss of $4,272,000 included a $3.7 million property carrying-value adjustment related to the Forster Ranch project in San Clemente, California. The Forster Ranch adjustment resulted from the assertion of the Forster Ranch property lender that CDC is in default under the non-recourse debt and CDC's related decision to tender this property to the lender in satisfaction of the non-recourse debt. Accordingly, the property was written down to an amount equal to the non-recourse debt. Excluding the $3.7 million San Clemente property adjustment, the combined loss for fiscal 1993 would have been $.6 million. Holding, Development and the Partnership believe that they will be able to provide or obtain the necessary funding for their current operations and future expansion needs. The revenues, earnings and liquidity of these companies are largely dependent on future land sales, the timing of which is uncertain. The ability to obtain external debt or equity capital is subject to the provisions of Holding's loan agreement with Centex and the Partnership Agreement governing the Partnership. F-44 EX-23.C 14 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS 1 EXHIBIT 23.C CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in the previously filed registration statements on Form S-8 (numbers 33-44575; 33-29174; 2-95271; 2-51637; 2-54043; 2-59535; 2-68747; 2-78831; 33-55083-01; 33-55083-02) of our report dated May 12, 1995, included as an exhibit to the 3333 Holding Corporation and Subsidiary and Centex Development Company, L.P. Annual Report on Form 10-K for the year ended March 31, 1995 and to all references to our firm included in these registration statements. ARTHUR ANDERSEN LLP Dallas, Texas, June 2, 1995 EX-24.C 15 POWER OF ATTORNEY 1 EXHIBIT 24.C CENTEX DEVELOPMENT COMPANY, L.P. POWER OF ATTORNEY THE UNDERSIGNED hereby constitutes and appoints J. Stephen Bilheimer as the undersigned's true and lawful agent and attorney-in-fact (the "Attorney-in-Fact"), with full power and authority in the name and on behalf of the undersigned, in his capacity as a Director of 3333 Development Corporation, as the general partner of Centex Development Company, L.P. (the "Company"), to execute and file with the Securities and Exchange Commission the Company's Annual Report on Form 10-K for the Company's fiscal year ended March 31, 1995, together with any and all amendments thereto. This Power of Attorney and all authority granted and conferred hereby shall continue indefinitely and, unless waived by the Attorney-in-Fact, may not be revoked until the Attorney-in-Fact has received five days' written notice of such revocation. IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 31st day of May, 1995. /s/ David M. Sherer David M. Sherer Director 3333 Development Corporation, General Partner of Centex Development Company, L.P. EX-27.C 16 FINANCIAL DATA SCHEDULE
5 FINANCIAL DATA SCHEDULE FOR CENTEX DEVELOPMENT COMPANY, L.P. This schedule contains summary financial information extracted from Centex Development Company L.P.'s March 31, 1995, Form 10-K and is qualified in its entirety by reference to such financial statements. 0000818764 CENTEX DEVELOPEMENT COMPANY, L.P. 1,000 12-MOS MAR-31-1995 APR-01-1994 MAR-31-1995 1,403 0 4,595 0 99,948 0 0 0 105,946 0 0 500 0 0 46,760 105,946 9,796 9,796 26,119 26,119 0 0 0 (16,323) 0 (16,323) 0 0 0 (16,323) 0.00 0.00
EX-99.C 17 FINANCIAL STATEMENTS 1 EXHIBIT 99.C 3333 Holding Corporation and Subsidiary and Centex Development Company, L.P. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ================================================================================ TO THE BOARD OF DIRECTORS OF 3333 HOLDING CORPORATION: We have audited the accompanying combining balance sheets of 3333 Holding Corporation and subsidiary and Centex Development Company, L.P. as of March 31, 1995 and 1994, and the related combining statements of operations and cash flows and stockholders' equity and partners' capital for each of the three years in the period ended March 31, 1995. These financial statements are the responsibility of the companies' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the individual and combined financial positions of 3333 Holding Corporation and subsidiary and Centex Development Company, L.P. as of March 31, 1995 and 1994, and the individual and combined results of their operations and their cash flows for each of the three years in the period ended March 31, 1995, in conformity with generally accepted accounting principles. Arthur Andersen LLP Dallas, Texas, May 12, 1995 F-33 2 3333 Holding Corporation and Subsidiary and Centex Development Company, L.P. FINANCIAL HIGHLIGHTS ================================================================================
For the Years Ended March 31, ======================================================================== 1995 1994 1993 1992 1991 ------------------------------------------------------------------------ (Dollars in thousands, except per share/unit data) REVENUES 3333 Holding Corporation and Subsidiary $ 1,602 $ 537 $ 566 $ 679 $ 833 Centex Development Company, L.P. $ 9,796 $ 12,859 $ 9,783 $ 23,998 $ 11,455 Combined Revenues $ 10,342 $ 13,249 $ 10,156 $ 24,399 $ 11,902 OPERATING EARNINGS (LOSS) 3333 Holding Corporation and Subsidiary $ 96 $ (114) $ (96) $ (107) $ (113) Centex Development Company, L.P. $ (16,323) $ (1,510) $ (4,176) $ (706) $ (303) Combined Operating Earnings (Loss) $ (16,227) $ (1,624) $ (4,272) $ (813) $ (416) TOTAL ASSETS 3333 Holding Corporation and Subsidiary $ 8,673 $ 8,600 $ 8,600 $ 8,613 $ 8,662 Centex Development Company, L.P. $ 105,946 $ 121,027 $ 128,621 $ 121,244 $ 126,691 Combined Assets $ 113,282 $ 128,092 $ 134,691 $ 127,402 $ 132,980 TOTAL DEBT 3333 Holding Corporation and Subsidiary $ 7,600 $ 7,600 $ 6,500 $ 6,500 $ 6,500 Centex Development Company, L.P. $ 56,485 $ 54,149 $ 59,262 $ 44,280 $ 49,281 Combined Debt $ 64,085 $ 61,749 $ 65,762 $ 50,780 $ 55,781 OPERATING EARNINGS (LOSS) PER SHARE/UNIT (Average Outstanding Shares, 1,000; Units 1,000) 3333 Holding Corporation and Subsidiary $ 96 $ (114) $ (96) $ (107) $ (113) Centex Development Company, L.P. $ (16,323) $ (1,510) $ (4,176) $ (706) $ (303)
F-34 3 3333 Holding Corporation and Subsidiary and Centex Development Company, L.P. COMBINING BALANCE SHEETS ================================================================================
March 31, ====================================================================================== 1995 1994 1995 1994 1995 1994 -------------------------- -------------------------- -------------------------- 3333 Holding Centex Development Corporation Combined Company, L.P. and Subsidiary -------------------------- -------------------------- -------------------------- (Dollars in thousands) ASSETS Cash $ 1,422 $ 101 $ 1,403 $ 101 $ 19 $ - Accounts Receivable - Affiliates - - 570 768 - - Centex Corporation and Subsidiaries 187 133 - - 187 133 Other - 105 - 105 - - Notes Receivable - Centex Corporation and Subsidiaries 7,700 7,700 - - 7,700 7,700 Other 4,025 1,151 4,025 1,151 - - Investment in Affiliate - - - - 767 767 Land Held for Development and Sale - Forster Ranch 53,493 49,199 53,493 49,199 - - Other 46,455 69,703 46,455 69,703 - - ----------- ----------- ----------- ----------- ----------- ----------- $ 113,282 $ 128,092 $ 105,946 $ 121,027 $ 8,673 $ 8,600 =========== =========== =========== =========== =========== =========== LIABILITIES, STOCKHOLDERS' EQUITY AND PARTNERS' CAPITAL Accounts Payable and Accrued Liabilities - Affiliates $ - $ - $ - $ - $ 570 $ 768 Centex Corporation and Subsidiaries 160 894 - 785 160 109 Other 2,320 2,369 2,196 2,369 124 - Notes Payable - Centex Corporation and Subsidiaries 7,600 7,600 - - 7,600 7,600 Forster Ranch 53,493 49,199 53,493 49,199 - - Other 2,992 4,950 2,992 4,950 - - Land Sale Deposits 5 141 5 141 - - Stockholders' Equity and Partners' Capital - Stock and Stock/Class B Unit Warrants 501 501 500 500 1 1 Capital in Excess of Par Value 800 800 - - 800 800 Retained Earnings (Deficit) (582) (678) - - (582) (678) Partners' Capital 45,993 62,316 46,760 63,083 - - ----------- ----------- ----------- ----------- ----------- ----------- Total Stockholders' Equity and Partners' Capital 46,712 62,939 47,260 63,583 219 123 ----------- ----------- ----------- ----------- ----------- ----------- $ 113,282 $ 128,092 $ 105,946 $ 121,027 $ 8,673 $ 8,600 =========== =========== =========== =========== =========== ===========
See notes to combining financial statements. F-35 4 3333 Holding Corporation and Subsidiary and Centex Development Company, L.P. COMBINING STATEMENTS OF OPERATIONS AND CASH FLOWS ================================================================================
For the Years Ended March 31, ====================================================================================== 1995 1994 1993 1995 1994 1993 ----------------------------------------- ----------------------------------------- Centex Combined Development Company, L.P. ----------------------------------------- ----------------------------------------- (Dollars in thousands, except per share/unit data) COMBINING STATEMENTS OF OPERATIONS REVENUES Real Estate Sales $ 9,506 $ 12,540 $ 9,097 $ 9,506 $ 12,540 $ 9,097 Interest and Other Income 836 709 1,059 290 319 686 ----------- ----------- ----------- ----------- ----------- ----------- 10,342 13,249 10,156 9,796 12,859 9,783 ----------- ----------- ----------- ----------- ----------- ----------- COSTS AND EXPENSES Real Estate Sales 9,064 12,684 8,360 9,064 12,684 8,360 Property Valuation Adjustment 15,500 - 3,702 15,500 - 3,702 Selling and Administrative 1,394 1,750 1,962 1,555 1,685 1,897 Interest 611 439 404 - - - ----------- ----------- ----------- ----------- ----------- ----------- 26,569 14,873 14,428 26,119 14,369 13,959 ----------- ----------- ----------- ----------- ----------- ----------- EARNINGS (LOSS) BEFORE INCOME TAXES (16,227) (1,624) (4,272) (16,323) (1,510) (4,176) Income Taxes - - - - - - ----------- ----------- ----------- ----------- ----------- ----------- NET EARNINGS (LOSS) $ (16,227) $ (1,624) $ (4,272) $ (16,323) $ (1,510) $ (4,176) =========== =========== =========== =========== =========== =========== EARNINGS (LOSS) PER SHARE/UNIT (Average Outstanding Shares, 1,000; Units, 1,000) $ (16,323) $ (1,510) $ (4,176) =========== =========== =========== COMBINING STATEMENTS OF CASH FLOWS CASH FLOWS-OPERATING ACTIVITIES Net Earnings (Loss) $ (16,227) $ (1,624) $ (4,272) $ (16,323) $ (1,510) $ (4,176) Property Valuation Adjustment 15,500 - 3,702 15,500 - 3,702 Net Change in Payables, Receivables and Deposits (281) (110) (3,692) (204) (224) (3,788) (Increase) Decrease in Notes Receivable (2,874) (480) 262 (2,874) (480) 262 Decrease (Increase) in Land Held for Development and Sale 3,454 5,746 (10,680) 3,454 5,746 (10,680) ----------- ----------- ----------- ----------- ----------- ----------- (428) 3,532 (14,680) (447) 3,532 (14,680) ----------- ----------- ----------- ----------- ----------- ----------- CASH FLOWS-FINANCING ACTIVITIES (Decrease) Increase in Notes Payable - Centex Corporation & Subsidiaries (587) 430 (870) (587) 430 (870) Other 2,336 (5,113) 15,852 2,336 (5,113) 15,852 ----------- ----------- ----------- ----------- ----------- ----------- 1,749 (4,683) 14,982 1,749 (4,683) 14,982 ----------- ----------- ----------- ----------- ----------- ----------- NET INCREASE (DECREASE) IN CASH 1,321 (1,151) 302 1,302 (1,151) 302 CASH AT BEGINNING OF YEAR 101 1,252 950 101 1,252 950 ----------- ----------- ----------- ----------- ----------- ----------- CASH AT END OF YEAR $ 1,422 $ 101 $ 1,252 $ 1,403 $ 101 $ 1,252 =========== =========== =========== =========== =========== =========== For the Years Ended March 31, ========================================= 1995 1994 1993 ----------------------------------------- 3333 Holding Corporation and Subsidiary ----------------------------------------- (Dollars in thousands, except per share/unit data) COMBINING STATEMENTS OF OPERATIONS REVENUES Real Estate Sales $ - $ - $ - Interest and Other Income 1,602 537 566 ----------- ----------- ----------- 1,602 537 566 ----------- ----------- ----------- COSTS AND EXPENSES Real Estate Sales - - - Property Valuation Adjustment - - - Selling and Administrative 761 65 65 Interest 745 586 597 ----------- ----------- ----------- 1,506 651 662 ----------- ----------- ----------- EARNINGS (LOSS) BEFORE INCOME TAXES 96 (114) (96) Income Taxes - - - ----------- ----------- ----------- NET EARNINGS (LOSS) $ 96 $ (114) $ (96) =========== =========== =========== EARNINGS (LOSS) PER SHARE/UNIT (Average Outstanding Shares, 1,000; Units, 1,000) $ 96 $ (114) $ (96) =========== =========== =========== COMBINING STATEMENTS OF CASH FLOWS CASH FLOWS-OPERATING ACTIVITIES Net Earnings (Loss) $ 96 $ (114) $ (96) Property Valuation Adjustment - - - Net Change in Payables, Receivables and Deposits (77) 114 96 (Increase) Decrease in Notes Receivable - - - Decrease (Increase) in Land Held for Development and Sale - - - ----------- ----------- ----------- 19 - - ----------- ----------- ----------- CASH FLOWS-FINANCING ACTIVITIES (Decrease) Increase in Notes Payable - Centex Corporation & Subsidiaries - - - Other - - - ----------- ----------- ----------- - - - ----------- ----------- ----------- NET INCREASE (DECREASE) IN CASH 19 - - CASH AT BEGINNING OF YEAR - - - ----------- ----------- ----------- CASH AT END OF YEAR $ 19 $ - $ - =========== =========== ===========
See notes to combining financial statements. F-36 5 3333 Holding Corporation and Subsidiary and Centex Development Company, L.P. COMBINING STATEMENTS OF STOCKHOLDERS' EQUITY AND PARTNERS' CAPITAL ================================================================================
For the Years Ended March 31, 1995, 1994 and 1993 ======================================================== Centex Development Company, L.P. ----------------------------------------- Class B General Limited Unit Partner's Partner's Combined Warrants Capital Capital ----------- ----------- ----------- ----------- (Dollars in thousands) Balance at March 31, 1992 $ 68,835 $ 500 $ 767 $ 68,002 Net Loss (4,272) - - (4,176) ----------- ----------- ----------- ----------- Balance at March 31, 1993 64,563 500 767 63,826 Net Loss (1,624) - - (1,510) ----------- ----------- ----------- ----------- Balance at March 31, 1994 62,939 500 767 62,316 NET LOSS (16,227) - - (16,323) ----------- ----------- ----------- ----------- BALANCE AT MARCH 31, 1995 $ 46,712 $ 500 $ 767 $ 45,993 =========== =========== =========== =========== For the Years Ended March 31, 1995, 1994 and 1993 ======================================================== 3333 Holding Corporation and Subsidiary -------------------------------------------------------- Capital In Retained Stock Common Excess Of Earnings Warrants Stock Par Value (Deficit) ----------- ----------- ----------- ----------- (Dollars in thousands) Balance at March 31, 1992 $ 1 $ - $ 800 $ (468) Net Loss - - - (96) ----------- ----------- ----------- ----------- Balance at March 31, 1993 1 - 800 (564) Net Loss - - - (114) ----------- ----------- ----------- ----------- Balance at March 31, 1994 1 - 800 (678) NET LOSS - - - 96 ----------- ----------- ----------- ----------- BALANCE AT MARCH 31, 1995 $ 1 $ - $ 800 $ (582) =========== =========== =========== ===========
See notes to combining financial statements. NOTES TO COMBINING FINANCIAL STATEMENTS ================================================================================ (A) ORGANIZATION Centex Development Company, L.P. (the Partnership) was formed on March 31, 1987 to invest in, acquire, develop, operate and sell residential and commercial real estate. Centex Real Estate Corporation (CREC), its limited partner, is a subsidiary of Centex Corporation (Centex). 3333 Development Corporation (a Nevada corporation) (Development), which serves as its general partner, is owned by 3333 Holding Corporation (a Nevada corporation) (Holding). In November 1987, Centex distributed all of the issued and outstanding shares of the common stock of Holding and warrants to purchase approximately 80% of the Class B units of limited partnership interest in the Partnership (see Note F). These securities trade in tandem with the common stock of Centex and are being held by a nominee on behalf of Centex stockholders until such time as the securities are detached and trade separately. 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 1997 unless extended by Centex's stockholders. Supplementary condensed combined financial statements of Centex Corporation and subsidiaries, 3333 Holding Corporation and subsidiary and Centex Development Company, L.P. are set forth below. For additional information on Centex Corporation and subsidiaries, see their separate financial statements and related footnotes. F-37 6 SUPPLEMENTARY CONDENSED COMBINED BALANCE SHEETS ================================================================================
March 31, ========================================= 1995 1994 ----------------------------------------- (Dollars in thousands) ASSETS Cash and Cash Equivalents $ 25,207 $ 76,388 Marketable Securities Available for Sale - 78,241 Receivables 653,622 930,428 Inventories 1,266,509 1,223,753 Investments in Centex Construction Products, Inc. 89,871 - Joint Ventures and Unconsolidated Subsidiaries 5,695 56,928 Property and Equipment, net 41,267 188,930 Government-Guaranteed S&L Assets - 43,767 Other Assets and Deferred Charges 26,427 38,574 ----------- ----------- $ 2,108,598 $ 2,637,009 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts Payable and Accrued Liabilities $ 557,640 $ 644,926 S&L Deposits and FHLB Borrowings - 211,055 Short-term Debt 632,745 837,734 Long-term Debt 222,530 222,832 Deferred Income Taxes 26,737 51,180 Stockholders' Equity 668,946 669,282 ----------- ----------- $ 2,108,598 $ 2,637,009 =========== ===========
SUPPLEMENTARY CONDENSED COMBINED STATEMENT OF EARNINGS ================================================================================
For the Years Ended March 31, ========================================= 1995 1994 1993 ----------------------------------------- (Dollars in thousands) Revenues $ 3,281,198 $ 3,224,025 $ 2,501,691 Costs and Expenses 3,194,642 3,089,126 2,410,028 ----------- ----------- ----------- Earnings Before Gain on Initial Public Offering and Income Taxes 86,556 134,899 91,663 Gain on CXP Initial Public Offering 59,328 - - ----------- ----------- ----------- Earnings Before Income Taxes 145,884 134,899 91,663 Income Taxes 53,540 49,851 30,721 ----------- ----------- ----------- Net Earnings $ 92,344 $ 85,048 $ 60,942 =========== =========== ===========
F-38 7 (B) BASIS OF PRESENTATION The accompanying combining financial statements present the individual and combined financial statements of Holding and its subsidiary and the Partnership as of March 31, 1995 and 1994 and results of operations for each of the three years ended March 31, 1995. The financial statements of the Partnership are included in the combined statements since Development, as general partner of the Partnership, is able to exercise effective control over the Partnership. (C) SIGNIFICANT ACCOUNTING POLICIES REVENUE RECOGNITION Revenue from real estate sales is recognized as required payments are received and title passes. INVENTORY CAPITALIZATION AND COST ALLOCATION Land held for development and sale is stated at the lower of cost (including development costs and, where appropriate, capitalized interest and real estate taxes) or market. The capitalized costs are included in cost of land sales in the combining statements of operations as related revenues are recognized. In March 1995, CDC recorded a pre-tax adjustment to reduce the book value of certain properties in the amount of approximately $15.5 million to reflect CDC's view that development activity has not reached anticipated levels during the current economic cycle in order to continue to support the historical carrying value of such properties. This adjustment results in carrying values that will facilitate a nearer-term disposition or development of these properties. A substantial portion of the adjustment related to the book values of two Dallas area properties. In fiscal 1993, CDC wrote down its investment in Forster Ranch real estate by $3.7 million to an amount which equaled the related non-recourse debt. EARNINGS (LOSS) PER SHARE/UNIT Earnings (loss) per share/unit are based on the weighted average number of outstanding shares of common stock (1,000 for Holding) and Class A limited partnership units (1,000 for the Partnership). These shares/units do not include common stock/unit equivalents because they have no material effect on earnings (loss) per share/unit. COMBINING STATEMENTS OF OPERATIONS AND CASH FLOWS - SUPPLEMENTAL DISCLOSURES Interest capitalized by the Partnership during fiscal years ended March 31, 1995, 1994 and 1993 totaled $4,787,000, $4,090,000 and $4,039,000, respectively, of which $4,687,000, $3,945,000 and $3,834,000, respectively, relates to the Forster Ranch property. No income taxes were paid during the years ended March 31, 1995, 1994 and 1993. (D) NOTES RECEIVABLE Development issued common stock to Holding and used the proceeds to advance $7.7 million to CREC, as evidenced by a note receivable due April 30, 1996. Interest at prime plus .875% is due in quarterly installments. Interest income of $680,000, $537,000 and $547,000 related to this note is included in the accompanying combining financial statements for the years ended March 31, 1995, 1994 and 1993, respectively. Notes Receivable - Other at March 31, 1995 and 1994 have stated interest rates ranging up to 10% and are due in monthly or quarterly installments. Discounts and allowances totaled $40,000 at March 31, 1995 and $313,000 at March 31, 1994. The weighted average interest rate, inclusive of discounts, was 9% at March 31, 1995 and 9% at March 31, 1994. Notes receivable at March 31, 1995 are collectible over seven years, with $323,000 being due within one year. F-39 8 (E) NOTES PAYABLE Centex had advanced Holding $7.6 million as of March 31, 1995 which is evidenced by a note secured by the common stock of Development. The note, which had a fluctuating balance during fiscal 1995 and 1994, bears interest at prime plus 1% which is payable quarterly. The principal balance together with all unpaid accrued interest is due on the earlier of April 1, 1996 or the date on which the warrants to purchase Class B units of limited partnership interest are detached from shares of the common stock of Centex. Interest expense of $611,000, $439,000 and $404,000 related to this note is included in the accompanying combining financial statements for the years ended March 31, 1995, 1994 and 1993, respectively. Under the most restrictive covenants of the note agreement, Holding and its subsidiary (excluding the Partnership) may not, without Centex's consent, (i) create any additional liens on or sell real estate properties contributed by the limited partner, (ii) effect a merger or consolidation, (iii) declare dividends or make certain other shareholder payments or (iv) allow tangible net worth, as defined, to be less than $7.7 million for Development. All Forster Ranch and other notes payable are non-recourse, secured solely by the underlying real estate. As land is sold, a portion of the proceeds is restricted for repayment of the notes. The prime rate in effect was 9% at March 31, 1995 and 6 1/4% at March 31, 1994. The 30 day LIBOR rate at March 31, 1995 was 6 1/8% and 3 11/16% at March 31, 1994. The note balances and rates in effect were as follows:
March 31, ========================== 1995 1994 -------------------------- (Dollars in thousands) Credit Line at LIBOR Plus 3/4% unsecured, guaranteed by CREC $ 1,039 $ 2,115 Note Payable at 6 1/2%, Paid in April 1994 - 2,050 Note Payable at 12%, Matured in April 1994 785 785 Note Payable at 5.56%, Maturing in fiscal year 1997 682 - Note Payable, Maturing in fiscal year 1997 486 - Forster Ranch Non-recourse Notes - Payable at Prime Plus 1%, Matured in April 1993 11,602 12,420 Payable at Prime Plus 2% (10 1/2% floor), Maturing in fiscal year 2002 41,891 36,779 ----------- ----------- $ 56,485 $ 54,149 =========== ===========
The partnership and the holder of the Forster Ranch non-recourse notes have entered into an agreement that may result in the transfer of ownership of the property to the lender in satisfaction of this debt in June 1995. In connection with this agreement, CREC has agreed to fund certain holding and other costs CDC will incur through June 1995 in connection with its rezoning efforts. CDC wrote down its investment in the Forster Ranch real estate by approximately $3.7 million during fiscal year 1993 to an amount which equaled the related non-recourse debt after receiving notice that the note, which matured in April 1993, would not be renewed. F-40 9 (F) STOCKHOLDERS' EQUITY AND PARTNERS' CAPITAL PREFERRED RETURN The partnership agreement provides that the Class A limited partner is entitled to a cumulative preferred return of 9% per annum on the average outstanding balance of its Unrecovered Capital, which is defined as its initial capital contribution adjusted for cash distributions representing return of the initial capital contributions. Preference payments in arrears at March 31, 1995 amounted to $35,818,000. ALLOCATION OF PROFITS AND LOSSES As provided in the partnership agreement, prior to Payout (as defined below), net income of the Partnership is to be allocated to the partners in the following order of priority: (i) To the Class A limited partner to the extent of the cumulative preferred return. (ii) To the partners to the extent and in the same ratio that cumulative net losses were allocated. (iii) To the partners in accordance with their percentage interests, as defined. Currently, this would be 20% to the Class A limited partner and 80% to the general partner. All loss allocations and allocations of net income after Payout, shall be made to the partners in accordance with their percentage interests, as defined. DISTRIBUTIONS Distributions of cash or other property are to be made at the discretion of the general partner and are to be distributed in the following order of priority: (i) Prior to the time at which the Class A limited partner has received aggregate distributions equal to its original capital contribution (Payout), distributions of cash or other property shall be made as follows: (a) To the Class A limited partner with respect to its preferred return, then (b) To the partners in an amount equal to the maximum marginal corporate tax rate times the amount of taxable income allocated to the partners, then (c) To the Class A limited partner until its Unrecovered Capital is reduced to zero. (ii) After Payout, distributions of cash shall be made to the partners in accordance with their percentage interests, as defined. WARRANTS In November 1987, Centex acquired from the Partnership 100 warrants to purchase 100 Class B units in the Partnership at an exercise price of $500 per Class B unit, and Centex acquired from Holding 100 warrants to purchase 100 shares of Holding common stock at an exercise price of $800 per share. These warrants are subject to future adjustment to provide the holders of options to purchase Centex common stock with the opportunity to acquire Class B units and shares of Holding. These warrants will generally become exercisable upon the detachment of the tandem-traded securities from Centex common stock. F-41 10 (G) RELATED PARTY TRANSACTIONS SERVICE AND MANAGEMENT AGREEMENTS Holding entered into a service agreement in May 1987 with Centex Service Company (CSC), a wholly-owned subsidiary of Centex, whereby CSC will provide certain tax, accounting and other similar services for Holding at a fee of $2,500 per month. Service fees of $30,000 for each of fiscal years 1995, 1994, and 1993 are reflected as administrative expenses in the accompanying combining financial statements. The Partnership paid $922,000 to Holding during the current year pursuant to an agreement whereby Holding provides management services to the Partnership in connection with the development and operation of properties acquired by the Partnership, maintenance of partnership property and accounting and clerical services. Also in the current year, the Partnership paid certain Centex subsidiaries $785,000 in management fees accrued in the year ended March 31, 1994 relative to a similar management agreement. For the year ended March 31, 1993, these management fees to Centex subsidiaries totaled $1,378,000 of which $28,000 was capitalized. SALES AND PURCHASES Partnership revenues during fiscal years 1995, 1994, and 1993 include land sales to CREC of $5,423,000, $2,354,000 and $8,648,000, respectively. Additionally, CREC has contracts to purchase lots for the aggregate price of approximately $6.1 million to be paid as lots are delivered. ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE Included in Accounts Receivable-Affiliates and Accounts Payable-Affiliates in the accompanying combining financial statements are $570,000 at March 31, 1995 and $768,000 at March 31, 1994, which the Partnership advanced to Holding. Interest of $134,000 and $148,000 was accrued on advances during fiscal years 1995 and 1994 respectively. (H) INCOME TAXES At March 31, 1995, Holding had operating loss carryforwards for income tax reporting purposes of $554,000. If unused, the loss carryforwards will expire in the fiscal years 2004 through 2010. Holding joins with its subsidiary in filing consolidated income tax returns. The taxable income of the Partnership has been allocated to the holder of the Class A units. Accordingly, no tax provision for Partnership earnings is shown in the combining financial statements. F-42 11 3333 Holding Corporation and Subsidiary and Centex Development Company, L.P. QUARTERLY RESULTS (UNAUDITED) ================================================================================
March 31, ====================================================================================== 1995 1994 1995 1994 1995 1994 -------------------------- -------------------------- -------------------------- 3333 Holding Centex Development Corporation Combined Company, L.P. and Subsidiary -------------------------- -------------------------- -------------------------- (Dollars in thousands, except per share/unit data) FIRST QUARTER Revenues $ 3,105 $ 1,928 $ 2,977 $ 1,832 $ 336 $ 134 Earnings (Loss) Before Taxes $ (137) $ (264) $ (151) $ (235) $ 14 $ (29) Net Earnings (Loss) $ (137) $ (264) $ (151) $ (235) $ 14 $ (29) Earnings (Loss) Per Share/Unit $ (151) $ (235) $ 14 $ (29) SECOND QUARTER Revenues $ 1,330 $ 10,136 $ 1,197 $ 10,039 $ 376 $ 134 Earnings (Loss) Before Taxes $ (229) $ (664) $ (264) $ (636) $ 35 $ (28) Net Earnings (Loss) $ (229) $ (664) $ (264) $ (636) $ 35 $ (28) Earnings (Loss) Per Share/Unit $ (264) $ (636) $ 35 $ (28) THIRD QUARTER Revenues $ 4,467 $ 374 $ 4,325 $ 275 $ 379 $ 136 Earnings (Loss) Before Taxes $ (261) $ (424) $ (283) $ (395) $ 22 $ (29) Net Earnings (Loss) $ (261) $ (424) $ (283) $ (395) $ 22 $ (29) Earnings (Loss) Per Share/Unit $ (283) $ (395) $ 22 $ (29) FOURTH QUARTER Revenues $ 1,440 $ 811 $ 1,297 $ 713 $ 511 $ 133 Earnings (Loss) Before Taxes $ (15,600) $ (272) $ (15,625) $ (244) $ 25 $ (28) Net Earnings (Loss) $ (15,600) $ (272) $ (15,625) $ (244) $ 25 $ (28) Earnings (Loss) Per Share/Unit $ (15,625) $ (244) $ 25 $ (28)
F-43 12 3333 Holding Corporation and Subsidiary and Centex Development Company, L.P. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION ================================================================================ On a combined basis, revenues for the year ended March 31, 1995 of $10.3 million include the sale of a commercial property in Sonora, California and the sale to Centex Real Estate Corporation (CREC) of 254 residential lots in Orlando, Florida and East Windsor, New Jersey. Revenues of $13.2 million for fiscal 1994 included: a 15 acre industrial site in Houston, Texas; 168 acres of ranch land in Comal County, Texas; the Sonora, California shopping center property except for one pad site; and the sale to CREC of 246 residential lots in Orlando, Florida, The Colony, Texas and East Windsor, New Jersey. Revenues of $10.2 million for fiscal 1993 included the sale of a restaurant site in Sonora, California, 21 commercial acres in Orlando, Florida and the sale to CREC of 273 residential lots in Orlando, Florida. The year ended March 31, 1995 reflected a combined net loss of $16.2 million, which included property valuation adjustments of $15.5 million. The property valuation adjustments were recorded in March 1995 to reflect CDC's view that development activity has not reached anticipated levels during the current economic cycle in order to continue to support the historical carrying value of such properties, primarily The Colony, and Bryan Place properties located in the Dallas area. These adjustments result in carrying values that will facilitate a nearer-term disposition or development of these properties. Without the property valuation adjustments, the combined net loss was $.7 million compared to $1.6 million in fiscal 1994. The reduction in loss before the property valuation adjustments primarily relates to the higher gross margin on fiscal 1995 real estate sales compared to fiscal 1994 and a reduction in selling and administrative cost and expense in fiscal 1995 compared to fiscal 1994. The fiscal 1993 combined net loss of $4,272,000 included a $3.7 million property carrying-value adjustment related to the Forster Ranch project in San Clemente, California. The Forster Ranch adjustment resulted from the assertion of the Forester Ranch property lender that CDC is in default under the non-recourse debt and CDC's related decision to tender this property to the lender in satisfaction of the non-recourse debt. Accordingly, the property was written down to an amount equal to the non-recourse debt. Excluding the $3.7 million San Clemente property adjustment, the combined loss for fiscal 1993 would have been $.6 million. Holding, Development and the Partnership believe that they will be able to provide or obtain the necessary funding for their current operations and future expansion needs. The revenues, earnings and liquidity of these companies are largely dependent on future land sales, the timing of which is uncertain. The ability to obtain external debt or equity capital is subject to the provisions of Holding's loan agreement with Centex and the Partnership Agreement governing the Partnership. F-44 -----END PRIVACY-ENHANCED MESSAGE-----