-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GBZQogyfW49Q0jNuFYclm+dNWE8ERSxSclhwToWfEb682TJeoPNgGcjS1Jk+3CL5 QlUTqpc2XjGYfDmBFFNAqA== 0000950134-96-002393.txt : 19960523 0000950134-96-002393.hdr.sgml : 19960523 ACCESSION NUMBER: 0000950134-96-002393 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 19 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960522 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: 96570803 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: 96570804 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: 96570805 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 FOR YEAR ENDED MARCH 31, 1996 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, 1996 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, 2007
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 1, 1996 was approximately $756 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 1, 1996: Centex Corporation Common Stock 28,425,851 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.I, A.II, A.III, B.I, B.II and B.III of this Report: (a) 1996 Annual Report to Stockholders of Centex Corporation for the fiscal year ended March 31, 1996; (b) 1996 Annual Report to Stockholders of 3333 Holding Corporation and Subsidiary and Centex Development Company, L.P. for the fiscal year ended March 31, 1996; and (c) Proxy statements for the annual meetings of stockholders of Centex Corporation and 3333 Holding Corporation to be held on July 25, 1996. ================================================================================ 2 JOINT ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED MARCH 31, 1996 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 (the "Distribution") 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, 1996 (the "Report") relates to Centex and its subsidiaries. PART B of this Report relates to Holding (and its subsidiary, Development) and to CDC. This Report should be read in conjunction with the proxy statements of Centex and Holding in connection with their respective 1996 annual meetings of stockholders, the Annual Report to Stockholders of Centex for the fiscal year ended March 31, 1996 (the "Centex 1996 Annual Report") and the Annual Report to Stockholders of Holding and CDC for the fiscal year ended March 31, 1996 (the "Holding/CDC 1996 Annual Report"), portions of which are incorporated by reference into this Report. The Centex 1996 Annual Report and the Holding/CDC 1996 Annual Report are filed as an Exhibit to this Report. 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 40-41 of the Centex 1996 Annual 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
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PART B. 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. PART I PAGE ---- Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . 44
3 4
TABLE OF CONTENTS (CONTINUED) PART II PAGE ---- Item 5. Market for Registrants' Common Equity and Related Stockholder Matters . . . . . . 45 Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . 47 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 PART III Item 10. Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . 47 Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Item 12. Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . 50 Item 13. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . 53 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K . . . . . . . . 55 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56-57 ------------------------------------ INDICES TO EXHIBITS CENTEX CORPORATION AND SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58-61 3333 HOLDING CORPORATION AND SUBSIDIARY . . . . . . . . . . . . . . . . . . . . . . . . . . . 62-63 CENTEX DEVELOPMENT COMPANY, L.P. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64-66
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 1, 1996, 28,425,851 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 principal 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 one of the nation's largest home builders, having built and delivered, through its wholly-owned subsidiary Centex Real Estate Corporation d/b/a Centex Homes ("CREC" or "Centex Homes"), 11,970 homes in its fiscal year ended March 31, 1996. Centex's Home Building operations currently involve the construction and sale of residential housing in 282 neighborhoods in 49 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 1996 included mortgage origination and other related services on homes sold by Centex subsidiaries and by third parties. Centex has been in the mortgage banking business since 1973. Centex is a leading retail mortgage originator (originating approximately $4.9 billion of residential mortgages in fiscal 1996). In 1988 the Company acquired a savings and loan operation in central Texas. The savings and loan deposits and branch operations were sold in December 1994. Centex entered the contracting and construction services business in 1966 with the acquisition of a Dallas- based contractor which had been in business since 1936. Additional significant acquisitions of construction companies were made in 1978, 1982 and 1990. Centex currently ranks among the nation's largest general building contractors. 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 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 5 6 and the production, distribution and sale of aggregates, readymix concrete and gypsum wallboard. In April 1994, the 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 NYSE. 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 Note (I) of the Notes to Consolidated Financial Statements of Centex on pages 42-43 of the Centex 1996 Annual Report contain additional information about the Company's business segments for years ended March 31, 1996, 1995 and 1994 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 development of land into residential communities and the purchase of developed lots. 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 from 1989 to 1994 and the second largest builder in 1995. Centex is also the only company to rank among Professional Builder's top 10 home builders for each of the past 27 years. Centex sells to both first time and move-up buyers. Approximately 96% 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 49 market areas in 20 states and the United Kingdom. The markets are listed below by geographic areas. WEST California - Vallejo/Fairfield/Napa Fresno Oakland Visalia/Tulane Sacramento Riverside/San Bernadino Stockton/Lodi Orange County Bakersfield Los Angeles/Long Beach San Diego Washington State - Reno, Nevada Tacoma Portland, Oregon Seattle MIDWEST Chicago, Illinois Indianapolis, Indiana Minneapolis/St. Paul, Minnesota Columbus, Ohio Colorado - Denver Boulder/Longmont
6 7 EAST Nashville, Tennessee Atlanta, Georgia Virginia - North Carolina - Washington, D.C. Charlotte Norfolk/Virginia Beach Raleigh/Durham Baltimore, Maryland South Carolina - Trenton, New Jersey Charleston Columbia Greenville/Spartanburg SOUTHEAST Florida - Ft. Lauderdale West Palm Beach/Boca Raton Jacksonville Sarasota/Bradenton Naples Ft. Myers/Cape Coral Orlando Tampa/St. Petersburg Lakeland/Winter Haven SOUTHWEST Texas - Arizona - Austin Phoenix/Mesa Dallas Albuquerque, New Mexico Houston Ft. Worth/Arlington San Antonio Killeen
In fiscal 1996, Centex closed 11,970 houses, including first time, move-up and, in some markets, custom homes, ranging in price from approximately $69,000 to about $577,000 with the average sale price being approximately $163,900. In the Dallas and San Antonio locations, Centex has custom home divisions which offer higher-end homes. Summarized below by geographic area are Centex's home closings, sales (orders) backlog and sales (orders) for each of the five fiscal years ended March 31, 1996.
For the Fiscal Year Ended March 31, ----------------------------------------------------------- 1996 1995 1994 1993 1992 ------- ------- ------- ------- ------ CLOSINGS (IN UNITS): West 2,347 2,454 1,973 1,358 901 Midwest 1,276 1,283 1,114 1,118 860 East 2,804 2,921 2,599 2,118 1,595 Southeast 2,241 2,632 2,895 2,433 1,898 Southwest 3,302 3,674 3,982 3,252 2,485 ------- ------- ------- ------- ------ 11,970 12,964 12,563 10,279 7,739 ======= ======= ======= ======= ====== AVERAGE SALES PRICE (000'S) $ 164 $ 159 $ 147 $ 138 $ 136 ======= ======= ======= ====== ======
SALES (ORDERS) BACKLOG, AT THE END OF PERIOD (IN UNITS): West 980 603 756 663 581 Midwest 652 442 622 461 487 East 1,121 918 1,279 1,192 788 Southeast 1,106 892 1,387 1,260 1,022 Southwest 1,674 1,132 1,751 1,575 1,131 ------- ------- ------- ------- ----- 5,533 3,987 5,795 5,151 4,009 ======= ======= ======= ======= =====
7 8 SALES (ORDERS) (IN UNITS): West 2,724 2,301 2,066 1,440 1,047 Midwest 1,486 1,103 1,275 1,092 1,024 East 3,007 2,560 2,686 2,522 1,871 Southeast 2,455 2,137 3,022 2,671 2,284 Southwest 3,844 3,055 4,158 3,696 2,898 -------- ------- ------- ------- ----- 13,516 11,156 13,207 11,421 9,124 ======== ======= ======= ======= =====
Inventory Turnover The Company's policy has been to acquire land with the intent to complete the sale of housing units within approximately 24 - 36 months from the date of acquisition. Generally, this involves acquiring 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 approximately 1% 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 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 worker health and safety, zoning, building, advertising, consumer credit rules and regulations 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. 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. 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 purchases materials, services and land from numerous sources and believes that it can deal effectively with any problems it may experience relating to the supply or availability of materials and services as well as land. Vista Acquisition During the quarter ended September 30, 1995, the Company acquired certain equity interests in Vista Properties, Inc. ("Vista") for a net investment of approximately $85 million in cash. At the time of the acquisition, Vista's real property portfolio consisted of approximately 3,400 acres of land located in seven states; Texas, Florida, California, 8 9 Georgia, North Carolina, Washington, D.C. and Tennessee. The Company has major operations in each of the markets where Vista owns substantial property. Vista's real property portfolio generally consists of land that is zoned, planned or developed for single- and multi-family residential, office, retail, industrial and other commercial uses. The acquisition by the Company of equity interests in Vista was a part of a pre-packaged bankruptcy plan which was approved by the Unites States Bankruptcy Court for the District of Delaware. The management of Vista and the Company are continuing to evaluate what benefits could be derived from coordinating, combining or consolidating the business activities of Vista with those of certain of the Company's subsidiaries. To date, Vista and the Company have initiated joint planning and development work at several key residential sites included in Vista's portfolio and have identified commercial development opportunities in three of Vista's major projects. Vista has also initiated discussions regarding potential joint venture activities (which involve both subsidiaries of the Company and unaffiliated third parties) with respect to selected properties. With respect to the balance of its properties, Vista is continuing to implement its existing plans to manage, maintain, develop and sell or otherwise dispose of such properties in the ordinary course of business. As a result of the above evaluations and in a further effort to optimize the benefits derived from the complementary businesses of Vista and the Company, the managements of the Company and Vista are working on a potential business combination ("Combination") pursuant to which the assets and operations of Vista would be combined with the Company's existing home building operations. The managements of the Company and Vista believe that a Combination would result in a more efficient means of operating their business activities and would facilitate the zoning, development and buildout of certain of Vista's properties as well as the disposition of the Company's excess real estate parcels. If a Combination is ultimately consummated, certain of Vista's net operating loss carryforwards and other tax-related benefits may become useable in future years, which could result in a significant contribution to the Company's consolidated earnings during the next several years. For additional information regarding Vista's financial information and potential tax-related benefits, see Note (K) of the Notes to Consolidated Financial Statements, which are incorporated by reference in this Annual Report. There can be no assurance that, if the managements of Vista and the Company make a proposal to their boards, the board of each company would approve the Combination, or that if approved, the potential operational or other benefits referred to above would be realized. 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 represents a limited entry into the international home building marketplace for Centex Homes. Centex Homes (UK) Limited and Charles Church have each contributed approximately $1.1 million in cash, with the remaining $9 million financed by a United Kingdom bank, which is guaranteed by Centex. The Centex/Charles Church joint venture acquired a parcel of undeveloped land in Berkshire County, west of London. Located in Sunningdale, the parcel consists of 2.1 acres on which 11 homes will be built. Homes in this development are in the 3,500-4,000 square foot range and will sell for approximately $750,000. At this time, Centex Homes does not expect to expand the joint venture's developments or broaden Centex's European activities. 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 deposits and branch operations, which were conducted through Texas Trust Savings Bank, FSB, were sold in December 1994. 9 10 CTX Mortgage Company CTX was established in 1973 to provide mortgage financing for homes built by Centex Homes, Centex's home building operation. The opening of CTX mortgage offices in substantially all of Centex Homes' housing markets has enabled it to consistently provide mortgage financing for an average of 72% 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, 1996, CTX had 132 offices located in 25 states. The offices vary in size depending on volume in each locality. The unit breakdown of Builder and Spot Loans for the five years ended March 31, 1996 are set forth in the following table:
For the Fiscal Years Ended March 31, --------------------------------------------- 1996 1995 1994 1993 1992 -------- ------ ------ ------ ------ LOAN TYPES: Builder 8,445 8,503 9,289 7,758 5,897 Spot 33,151 28,548 49,254 30,543 17,819 -------- ------ ------ ------ ------ 41,596 37,051 58,543 38,301 23,716 ======== ====== ====== ====== ====== ORIGINATION VOLUME (IN BILLIONS) $4.9 $4.2 $6.4 $4.2 $2.5 PERCENT OF CENTEX CLOSINGS FINANCED 71% 66% 74% 75% 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, as well as resale homes. 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, and therefore retains no mortgage servicing rights. Accordingly, CTX avoids the servicing risk associated with 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. By selling the mortgages for future delivery, the interest rate risk is minimized. 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 one of the important sources of income. 10 11 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 1996 continued to be negatively impacted by a very competitive environment. Rapidly rising interest rates commencing in February 1994 substantially slowed refinancing activity and caused consumers to shift from more profitable fixed-rate mortgages to lower-margin adjustable rate products. During a major portion of fiscal 1996, these trends reversed as interest rates fell. 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"), Department of Housing and Urban Development ("HUD"), 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 HUD, 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 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 providing escrow services. CTX Insurance Agency provides hazard insurance to home buyers in Texas and Florida through third-party insurance companies. In fiscal year 1995, CTX entered into a joint venture agreement with another home builder to provide mortgage origination for homes built by this home builder. In addition, during fiscal 1995, an affiliate of CTX entered the "B" and "C" mortgage and second lien markets whereby this CTX affiliate will originate "B" and "C" first mortgages and second mortgages for home improvements and home equity lines of credit. The affiliate is establishing its own branch network and marketing program to solicit potential customers. In April 1996, Centex acquired substantially all of the assets of Advanced Financial Technology, Inc. (Adfitech) and Loan Processing Technologies, Inc. (LPT), headquartered in Oklahoma City, Oklahoma. Adfitech is one of the largest and lowest cost providers of quality control mortgage services, and LPT owns and operates an automated mortgage processing system. The acquisitions should expand and create more flexible mortgage processing capacity for Financial Services, enhancing Financial Services' existing systems capabilities. LPT is also offering these processing services to other mortgage companies. 11 12 Savings and Loan In December 1988, Centex acquired the operations of four Texas savings and loan associations under the Federal Savings and Loan Insurance Corporation's (the "FSLIC") 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 an indirect wholly-owned subsidiary of Centex. In December 1994, Texas Trust negotiated an early termination of various agreements with the Federal Deposit Insurance Corporation (as successor to the FSLIC), and in December, 1994 sold Texas Trust's branch operations to a financial institution and all deposit liabilities were assumed by the purchaser. Immediately following the branch sale, Texas Trust was dissolved, thereby completing Centex's exit from the savings and loan industry. The following is a summary of average balances and average interest rates for the periods ended December 30, 1994 and March 31, 1994. 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 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 and $830 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% ======= =======
12 13 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 four firms with various geographic locations and project niches. Healthcare facility construction has represented nearly 40% of its business mix during recent years. New contracts for fiscal 1996 totaled $857.0 million versus $1.15 billion for fiscal 1995. The backlog of uncompleted contracts at March 31, 1996 was $1.20 billion, compared to $1.33 billion at March 31, 1995. The group's principal subsidiaries are as follows: CENTEX CONSTRUCTION COMPANY, INC. - This entity, emerging from the merger of Centex Bateson Construction Company, Inc., Centex-Simpson Construction Company, Inc., and Centex Landis Construction Co., Inc. is headquartered in Dallas with operational offices in Virginia and Louisiana. This company will pursue competitively bid projects nationwide, in addition to negotiated work in its regional market areas. CENTEX-RODGERS CONSTRUCTION COMPANY - This nationwide healthcare construction specialist is headquartered in Nashville, with operational offices in San Diego, Irvine and Sacramento, California; Detroit, Michigan and West Palm Beach, Florida. CENTEX-ROONEY CONSTRUCTION COMPANY, INC. - This Ft. Lauderdale-based subsidiary performs all types of work principally within the state of Florida. CENTEX FORCUM LANNOM, INC. - This company, which focuses on industrial client construction projects, 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 a fee (fixed or percentage) 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 competitively-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 correctional facilities and shopping centers. Competition and Other Factors The construction industry is very competitive, and Centex competes with numerous other companies. With respect to competitively-bid projects and negotiated healthcare work, Centex generally competes throughout the United States and with local, regional and national contractors, depending upon the nature of the project. For negotiated projects other than healthcare, 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, knowledge and understanding of its clients' needs and financial strength. 13 14 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 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, 1996 is presented in the following table:
Lines of Business Employees ----------------- --------- Home Building 2,441 Financial Services 1,718 Contracting and Construction Services 1,920 Corporate & Other 107 ----- 6,186 =====
14 15 ITEM 2. PROPERTIES 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 5-14 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, except as described below, in which Centex or any subsidiary is involved, if determined unfavorably to Centex or any subsidiary, would have a material adverse effect on the consolidated financial condition or operations of the Company. The contract to build the Harrah's New Orleans Casino was suspended in November, 1995 due to a bankruptcy filing by the Harrah's Jazz Company partnership, the developer of the casino. Centex and its subcontractors have claims totalling nearly $40 million against the partnership for completed but unpaid work. Centex's liability to its subcontractors is for less than the total claim. Centex has filed a $40 million lawsuit against Harrah's Entertainment, Inc., parent company of the major partner in the partnership. Centex believes that it and its subcontractors will ultimately recover substantially all of the amounts owed to them. 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 27, 1995, 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 48 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 47 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)
15 16 William J Gillilan III 50 President and Chief Operating Officer (President since July 1991; Chief Operating Officer since January 1990; Executive Vice President from July 1989 until July 1991) Laurence E. Hirsch 50 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 54 Vice Chairman of the Board and Chief Financial Officer (Vice Chairman of the Board since May 1996; Chief Financial Officer since February 1987; Executive Vice President from February 1987 until May 1996) Raymond G. Smerge 52 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 the Centex 1996 Annual Report:
ITEMS CAPTION IN THE CENTEX 1996 ANNUAL REPORT Pages ----- ---------------------------------------- ----- 5 Stock Prices and Dividends 2 5 Indebtedness (Note (E) to Consolidated Financial Statements of Centex) 36-37 6 Summary of Selected Financial Data 54-55 7 Short-term Debt and Long-term Debt (Note (E) to Consolidated Financial Statements of Centex) 36 7 Management's Discussion and Analysis of Results of Operations and Financial Condition 47-52
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information called for by this Item 8 is incorporated herein by reference to the Centex 1996 Annual Report as set forth in the Index to Consolidated Financial Statements and Schedules on page 18 of this Report (see Item 14). 16 17 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 (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 in the Company's Proxy Statement for the July 25, 1996 Annual Meeting of Stockholders (the "1996 Centex Proxy Statement"):
ITEM CAPTION IN THE 1996 CENTEX PROXY STATEMENT ---- ------------------------------------------ 10 Election of Directors 10 Section 16(a) Compliance 11 Executive Compensation 12 Security Ownership of Management and Certain Beneficial Owners 13 Certain Transactions
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
CENTEX 1996 ANNUAL REPORT PAGES ------------ CENTEX CORPORATION AND SUBSIDIARIES Data incorporated by reference to the Centex 1996 Annual Report: Report of Independent Public Accountants . . . . . . . . . 46 Statements of Consolidated Earnings for the Years Ended March 31, 1996, 1995 and 1994 . . . . . . . . . . . . . 27 Consolidated Balance Sheets as of March 31, 1996 and 1995 28-29 Statements of Consolidated Cash Flows for the Years Ended March 31, 1996, 1995 and 1994 . . . . . . . . . . . . . 30 Statements of Consolidated Stockholders' Equity for the Years Ended March 31, 1996, 1995 and 1994 . . . 31 Notes to Consolidated Financial Statements . . . . . . . . 32-45 Quarterly Results (Unaudited) . . . . . . . . . . . . . . 53
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.
FORM 10-K PAGES ------------ CENTEX CONSTRUCTION PRODUCTS, INC. Report of Independent Public Accountants . . . . . . . . . 20 Consolidated Balance Sheets as of March 31, 1996 and 1995 21 Statements of Consolidated Earnings for the Years Ended March 31, 1996, 1995 and 1994 . . . . . . . . . . . . . 22 Statements of Consolidated Cash Flows for the Years Ended March 31, 1996, 1995 and 1994 . . . . . . . . . . . . . 23 Statements of Consolidated Stockholders' Equity for the Years Ended March 31, 1996, 1995 and 1994 . . . 24 Notes to Consolidated Financial Statements . . . . . . . . 25-38
(3) EXHIBITS The information on exhibits required by this Item 14 is set forth in the Centex Index to Exhibits appearing on pages 58-61 of this Report. (b) Reports on Form 8-K: None. 18 19 CENTEX CONSTRUCTION PRODUCTS, INC. FINANCIAL STATEMENTS FISCAL YEAR 1996 19 20 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Stockholders and Board of Directors of Centex Construction Products, Inc.: We have audited the accompanying consolidated balance sheets of Centex Construction Products, Inc. (a Delaware corporation) and subsidiaries as of March 31, 1996 and 1995, and the related consolidated statements of earnings, stockholders' equity, and cash flows for each of the three years in the period ended March 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Centex Construction Products, Inc. and subsidiaries as of March 31, 1996 and 1995, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 1996, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Dallas, Texas, May 8, 1996 20 21 CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
March 31, ------------------------ 1996 1995 --------- -------- ASSETS ------ Current Assets - Cash and Cash Equivalents $ 20,799 $ 2,475 Accounts and Notes Receivable, net 33,532 32,561 Inventories 29,691 31,526 -------- --------- Total Current Assets 84,022 66,562 -------- --------- Property, Plant and Equipment 308,600 300,838 Less Accumulated Depreciation (128,419) (123,717) -------- --------- Property, Plant & Equipment, net 180,181 177,121 -------- --------- Notes Receivable, net 1,395 1,202 Other Assets 3,977 5,218 -------- --------- $269,575 $250,103 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current Liabilities - Accounts Payable $ 15,020 $ 13,447 Accrued Liabilities 23,029 22,046 Current Portion of Long-Term Debt 80 - -------- --------- Total Current Liabilities 38,129 35,493 -------- --------- Long-term Debt 640 24,500 Deferred Income Taxes 14,344 6,705 Commitments and Contingencies Stockholders' Equity - Common Stock, Par Value $0.01; Authorized 50,000,000 Shares; Issued and Outstanding 22,978,504 and 22,959,804 Shares, respectively 230 230 Capital in Excess of Par Value 161,617 161,355 Retained Earnings 54,615 21,820 -------- --------- Total Stockholders' Equity 216,462 183,405 -------- --------- $269,575 $250,103 ======== ========
See notes to consolidated financial statements. 21 22 CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED EARNINGS (Dollars in thousands, except per share data)
For the Years Ended March 31, --------------------------------- 1996 1995 1994 -------- -------- -------- Revenues Cement $125,705 $109,900 $101,714 Wallboard 58,343 51,730 32,765 Concrete and Aggregates 39,902 35,217 35,128 Other, net 2,782 1,601 1,223 Less Intersegment Sales (4,138) (4,135) (4,004) -------- -------- -------- 222,594 194,313 166,826 -------- -------- -------- Costs and Expenses Cement 90,374 83,893 85,799 Wallboard 46,409 44,482 32,808 Concrete and Aggregates 34,344 32,631 33,476 Less Intersegment Purchases (4,138) (4,135) (4,004) Corporate General and Administrative 2,498 2,343 1,831 Interest 803 1,270 336 -------- -------- -------- 170,290 160,484 150,246 -------- -------- -------- Earnings Before Income Taxes 52,304 33,829 16,580 Income Taxes 18,360 12,009 6,340 -------- -------- -------- Net Earnings $ 33,944 $ 21,820 $ 10,240 ======== ======== ======== Earnings Per Share(1) $ 1.48 $ 0.95 $ 0.45 ======== ======== ========
(1) Prior to April 1994, Centex Construction Products ("CXP") was a wholly owned subsidiary of Centex Corporation and accordingly did not report per share information. To facilitate comparisons between periods, per share data for prior years has been presented using the 23,000,000 shares outstanding immediately after the Initial Public Offering. See notes to consolidated financial statements. 22 23 CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS (Dollars in thousands)
For the Years Ended March 31, ---------------------------------- 1996 1995 1994 -------- ------- -------- Revenues Net Earnings $ 33,944 $ 21,820 $ 10,240 Adjustments to Reconcile Net Earnings to Net Cash Provided by Operating Activities - Depreciation, Depletion and Amortization 13,791 14,576 14,488 Deferred Income Tax Provision 7,639 2,658 1,938 Gain on Sale of Assets (783) - - Increase in Accounts and Notes Receivable (6,073) (1,203) (6,175) Decrease (Increase) in Inventories 1,053 (2,014) 1,927 Increase in Accounts Payable 424 64 3,680 Increase in Accrued Liabilities 859 3,078 5,443 Decrease (Increase) in Other Assets 974 2,207 (1,267) -------- --------- --------- 51,828 41,186 30,274 -------- --------- --------- Cash Flows from Investing Activities Property, Plant and Equipment Additions, net (15,294) (5,718) (8,235) Proceeds from Dispositions of Assets 5,308 - - -------- --------- --------- (9,986) (5,718) (8,235) -------- --------- --------- Cash Flows from Financing Activities Notes Payable to Centex - - 5,854 Repayment of Notes to Centex - (15,585) (21,583) (Decrease) Increase in Other Long-term Debt (23,860) 24,500 (3,205) Increase (Decrease) in Current Portion of Long-term Debt 80 (615) (3,809) Proceeds from Bridge Loan - 192,000 - Repayment of Bridge Loan - (192,000) - Dividend to Centex - (162,600) - Stock Sale Net Proceeds - 153,733 - Proceeds from Stock Option Exercises 262 - - Stock Repurchases - (387) - Payment of Deferred Income Taxes to Affiliate - (34,328) - -------- --------- --------- (23,518) (35,282) (22,743) -------- --------- --------- Net Increase (Decrease) in Cash and Cash Equivalents 18,324 186 (704) Cash at Beginning of Period 2,475 2,289 2,993 -------- --------- --------- Cash at End of Period $ 20,799 $ 2,475 $ 2,289 ======== ======== ========
See notes to consolidated financial statements. 23 24 CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY (Dollars in thousands)
For the Years Ended March 31, ----------------------------------- 1996 1995 1994 ---------- -------- ---------- COMMON STOCK - Balance at Beginning of Period $ 230 $ 2 $ 2 Stock Split - 111 - Stock Sale - 117 - -------- ------- -------- Balance at End of Period 230 230 2 -------- ------- -------- CAPITAL IN EXCESS OF PAR VALUE - Balance at Beginning of Period 161,355 22,466 22,466 Stock Split - (111) - Stock Sale - 153,616 - Dividend to Centex - (14,229) - Retirement of 40,196 Shares - (387) - Stock Option Exercises 262 - - -------- ------- -------- Balance at End of Period 161,617 161,355 22,466 -------- ------- -------- RETAINED EARNINGS - Balance at Beginning of Period 21,820 148,371 138,131 Dividend to Centex - (148,371) - Dividend to Shareholders (1,149) - - Net Earnings 33,944 21,820 10,240 -------- ------- -------- Balance at End of Period 54,615 21,820 148,371 -------- ------- -------- TOTAL STOCKHOLDERS' EQUITY $216,462 $183,405 $170,839 ======== ======== ========
See notes to consolidated financial statements. 24 25 CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share data) (A) SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation - The consolidated financial statements include the accounts of Centex Construction Products, Inc. (formerly Centex Cement Enterprises, Inc.) and its majority-owned subsidiaries ("CXP" or the "Company") after the elimination of all significant intercompany balances and transactions. In addition, the Company holds 50% joint venture interests in its cement plants in Illinois and Texas and has proportionately consolidated its pro rata interest in the revenues, expenses, assets and liabilities of those ventures. On April 19, 1994, the Company completed an Initial Public Offering ("IPO") of 51% of its common stock. As a result of the IPO, Centex Corporation's ("Centex") ownership of the Company was reduced to 49%, with the public owning 51%. Prior to that time, the Company was a wholly owned subsidiary of Centex. See Note (I) for further discussion. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Accounts and Notes Receivable - Accounts and notes receivable have been shown net of the allowance for doubtful accounts of $2.1 million and $2.4 million at March 31, 1996 and 1995, respectively. The Company has no significant credit risk concentration among its diversified customer base. Notes receivable at March 31, 1996, are collectible primarily over three years. The weighted average interest rate at March 31, 1996 and 1995, was 8.6% and 8.4%, respectively. Inventories - Inventories are stated at the lower of average cost (including applicable material, labor, depreciation, and plant overhead) or market. Inventories consist of the following:
March 31, ------------------ 1996 1995 ------- -------- Raw Materials and Materials-in-Progress $ 6,949 $ 7,948 Finished Cement 5,368 5,736 Aggregates 2,092 2,761 Wallboard 2,124 2,283 Repair Parts and Supplies 12,395 11,888 Fuel and Coal 763 910 ------- -------- $29,691 $ 31,526 ======= ========
25 26 CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Property, Plant and Equipment - Property, plant 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. Raw material deposits are depleted as such deposits are extracted for production utilizing the units-of-production method. 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. The estimated lives of the related assets are as follows: Plants 20 to 30 years Buildings 20 to 40 years Machinery and Equipment 3 to 20 years
Income Taxes - Through April 19, 1994, the Company was included in the Centex consolidated federal tax return. The Company accounted for income taxes on a separate company basis without benefit of surtax exemption. Accordingly, related payables and receivables were due to or from Centex. Subsequent to April 20, 1994, the Company files its own separate consolidated federal tax returns. The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." That statement requires, among other things, that deferred taxes be provided on differences between the financial reporting basis and tax basis of assets and liabilities using existing tax laws and rates. Notes Payable to Centex - Prior to the IPO, the Company from time to time borrowed from Centex, its former parent. These borrowings were noninterest bearing. As discussed in Note (I), notes payable to Centex were paid in full on April 19, 1994. Centex has historically provided certain administrative and other services for CXP and its other operating subsidiaries at no charge. The cost of providing these services has not been significant. See Note (I) for further discussion. 26 27 CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Statements of Consolidated Earnings -- Supplemental Disclosures - Selling, general and administrative expenses of the operating units are included in costs and expenses of each segment. Corporate general and administrative expenses are shown separately in the statements of consolidated earnings. Total selling, general and administrative expenses for each of the periods are summarized below:
For the Years Ended March 31, ------------------------------- 1996 1995 1994 ------ ----- ----- Operating Units Selling, General and Administrative $11,442 $10,866 $10,689 Corporate General & Administrative 2,498 2,343 1,831 ------- -------- -------- $13,940 $13,209 $12,520 ======= ======= =======
Maintenance and repair expenses are included in each segment's costs and expenses. The Company incurred expenses of $23.8 million, $26.0 million and $24.1 million in the years ended March 31, 1996, 1995 and 1994, respectively, for maintenance and repairs. Other net revenues include clinker sales, lease and rental income, asset sale income, and trucking income as well as other miscellaneous revenue items which have not been allocated to a business segment. Statements of Consolidated Cash Flows -- Supplemental Disclosures - All cash equivalents have original maturities of three months or less. Interest payments made during the years ended March 31, 1996, 1995 and 1994, were $0.8 million, $1.3 million and $0.3 million, respectively. Net payments made for federal and state income taxes during the years ended March 31, 1996, 1995 and 1994, were $9.8 million, $42.2 million and $1.9 million, respectively. Included therein are payments to (receipts from) Centex of ($2.9) million, $35.3 million and $1.7 million during the years ended March 31, 1996, 1995 and 1994, respectively. In connection with a litigation settlement, the Company reclassified into property $4.2 million of construction cost that was previously classified as a receivable. Employee Benefit Plans - Certain of the Company's hourly employees are covered by defined benefit plans. At April 1, 1995, the Company's pro rata share of the projected benefit obligation (assuming an 8% discount rate) was $2.5 million. The market value of assets available to pay these obligations at April 1, 1995, was $2.5 million. 27 28 CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) In addition, certain salaried employees previously participated in Centex's Profit Sharing and Retirement plan. The Company established its own Profit Sharing and Retirement plan, which is similar to the Centex plan. The expenses for each period were as follows:
For the Years Ended March 31, ------------------------------ 1996 1995 1994 ---- ----- ------ Defined Benefit Plans $ 176 $176 $160 Defined Contribution Plan $ 1,038 $934 $896
Statement of Financial Accounting Standards No. 106, "Employers Accounting for Postretirement Benefits Other Than Pensions," specifies certain required methods of accounting for postretirement benefits other than pensions. This pronouncement has no impact on the Company's financial statements as the Company has no other postretirement obligations. Earnings Per Share - Earnings per common share is based on the weighted average number of common shares outstanding in 1996, 1995 and 1994 of 22,969,643, 22,987,768 and 23,000,000, respectively. Weighted average common shares for 1994 reflect the number of shares outstanding immediately after the IPO. Reclassifications - Certain prior year balances have been reclassified to be consistent with the 1996 presentation. Impact of New Accounting Pronouncements - In March 1995, the Financial Accounting Standards Board (FASB) issued Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" (SFAS No. 121). SFAS No. 121, which is effective for fiscal years beginning after December 15, 1995, requires that certain long-lived assets and intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company is not aware of any events or changes in circumstances that will result in a material effect on its fiscal 1997 financial statements upon the Company's adoption of SFAS No. 121. In October 1995, the FASB Issued Statement No. 123, "Accounting for Stock-Based Compensation" (SFAS No. 123). SFAS No. 123, which is also effective for fiscal years beginning after December 15, 1995, allows companies either to continue to measure compensation cost based on the method prescribed by Accounting Principles Board Opinion No. 25 ( APB No. 25) or adopt a "fair value" method of accounting for all employee stock-based compensation. The Company plans to continue utilizing the accounting for stock issued to employees prescribed by APB No. 25 and, therefore, the adoption of SFAS No. 123 will have no impact on the financial position or results of operations of the Company, but will require expanded disclosure of pro forma net income and earnings per share information in the fiscal 1997 financial statements. 28 29 CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (B) PROPERTY, PLANT AND EQUIPMENT Cost by major category and accumulated depreciation are summarized below:
March 31, ---------------------- 1996 1995 -------- -------- Land and Quarry $ 36,419 $ 36,817 Plants 233,221 224,284 Buildings, Machinery and Equipment 38,960 39,737 -------- -------- 308,600 300,838 Accumulated Depreciation (128,419) (123,717) -------- -------- $180,181 $177,121 ======== ========
(C) LONG-TERM DEBT Long-term debt is set forth below. The 30-day Eurodollar rate was 5.3% and 6.1% at March 31, 1996 and 1995, respectively.
March 31, --------------------- 1996 1995 -------- -------- Bank Revolver, with interest at LIBOR plus 1/2% or Alternate Base Rate, due March 2001, unsecured $ - $24,500 Property Note, interest at 7%, due March, 2005, secured 720 - -------- ------- 720 24,500 Less Current Maturities (80) - -------- ------- $ 640 $24,500 ======== =======
Credit Facility - Upon the completion of the April 19, 1994 IPO, the Company established a $65 million unsecured long-term revolving credit line (the "Bank Revolver"). Borrowings under the Bank Revolver bear interest, at the option of the Company, at (i) a Eurodollar-based rate that varies depending on the Company's ratio of total indebtedness to total capitalization (the "Debt-to-Capital Ratio") or (ii) the greater of the bank's base rate or the federal funds rate plus .5%. Under the Bank Revolver, the Company is obligated to pay certain fees, including an annual commitment fee on the unused portion of the commitment. The Bank Revolver contains certain customary restrictive covenants (including restrictions on the consummation of mergers or asset sales, the payment of dividends, the creation of liens and the incurrence of additional indebtedness) and requires the Company to maintain or meet certain financial ratios or tests. Among other things, the Bank Revolver requires the Company to maintain a minimum ratio of earnings before interest and taxes to interest and not to exceed a maximum Debt-to-Capital Ratio and to meet a minimum tangible net worth test. The Company 29 30 CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) was in compliance with such financial ratios and tests at March 31, 1996, and throughout the fiscal year then ended. On March 20, 1996, the Bank Revolver was amended to lower the maximum borrowing capacity to $35 million, reduce the annual commitment fee, create a new lower interest rate bracket, and extend the commitment four years to expire on March 31, 2001. Other Debt - During fiscal year 1996, the Company issued a $720,000 note (at seller's request) to purchase limestone reserves. The note is due in equal installments through March 2005, and bears interest at 7%. (D) INCOME TAXES The provision for income taxes includes the following components:
For the Years Ended March 31, ------------------------------- 1996 1995 1994 ------ ------ ------- Current Provision (Benefit) Federal $12,174 $38,495 $ 4,100 State (1,453) 3,700 302 ------- ------- ------- 10,721 42,195 4,402 ------- ------- ------- Deferred Provision (Benefit) Federal 4,012 (28,214) 1,667 State 3,627 (1,972) 271 ------- ------- ------- 7,639 (30,186) 1,938 ------- ------- ------- Provision for Income Taxes $18,360 $12,009 $ 6,340 ======= ======= =======
In connection with the IPO in April 1994, $34.3 million of deferred income taxes became currently payable to Centex as a result of the Company no longer being included in Centex's consolidated federal tax return. 30 31 CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) The effective tax rates vary from the federal statutory rates due to the following items:
For the Years Ended March 31, ----------------------------- 1996 1995 1994 ------ ------ ------ Earnings Before Income Taxes $52,304 $33,829 $16,580 ======= ======= ======= Income Taxes at Statutory Rate $18,306 $11,840 $ 5,803 Increases (Decreases) in Tax Resulting from - State Income Taxes, net 1,414 1,097 379 Statutory Depletion in Excess of Cost (1,588) (1,147) (912) Change in Tax Rates - - 1,034 Other 228 219 36 ------- ------- ------- Provision for Income Taxes $18,360 $12,009 $ 6,340 ======= ======= ======= Effective Tax Rate 35% 35% 38%
The retroactive change in the statutory rate from 34% to 35%, effective January 1, 1993, resulted in a $1,034 provision to increase the deferred income tax liability for the rate change. This provision was recorded in September 1993. 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, ------------------------------ 1996 1995 1994 ------ ------ ------- Excess Tax Depreciation and Amortization $ 5,653 $(29,423) $ 1,056 Bad Debts 269 (122) 24 Uniform Capitalization 76 (11) 250 Accrual Changes 685 (2,143) 379 Other 956 1,513 229 ------- -------- ------- $ 7,639 $(30,186) $ 1,938 ======= ======== =======
31 32 CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Components of deferred income taxes are as follows:
March 31, ------------------ 1996 1995 ------- -------- Items Giving Rise to Deferred Taxes Excess Tax Depreciation and Amortization $ 13,957 $ 8,304 Other 3,782 2,826 -------- -------- 17,739 11,130 -------- -------- Items Giving Rise to Prepaid Taxes Accrual Changes (2,850) (3,535) Bad Debts (532) (801) Uniform Capitalization (13) (89) -------- -------- (3,395) (4,425) -------- -------- Net Deferred Income Tax Liability $ 14,344 $ 6,705 ======== =======
(E) BUSINESS SEGMENTS The Company operates in three business segments: Cement, Wallboard, and Concrete and Aggregates, with Cement and Wallboard being the Company's principal lines of business. These operations are conducted in the United States and include the mining of limestone and the manufacture, production, distribution and sale of Portland cement (a basic construction material which is the essential binding ingredient in concrete), the mining of gypsum and the manufacture and sale of gypsum wallboard, the sale of readymix concrete, and the mining and sale of aggregates (crushed stone, sand and gravel). These products are used primarily in commercial and residential construction, public construction projects and projects to build, expand and repair roads and highways. Demand for the Company products are derived primarily from residential construction, commercial and industrial construction and public (infrastructure) construction which are highly cyclical and are influenced by prevailing economic conditions including interest rates and availability of public funds. Due to cement, concrete and aggregates low value-to-weight ratio, these industries are largely regional and local with demand tied to local economic factors that may fluctuate more widely than those of the nation as a whole. The Company operates four cement plants, twelve cement distribution terminals, two wallboard plants, three wallboard reload centers, ten readymix concrete batch plant locations, and two aggregate processing plant locations. The principal markets for Cement products are Texas, Northern Illinois (including Chicago, Illinois), the Rocky Mountains, Northern Nevada, and Northern California. Wallboard is distributed throughout the continental United States. Concrete and Aggregates are sold to local readymix producers and paving contractors, in the Austin, Texas area and Northern California. 32 33 CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) The following table sets forth certain financial information relating to the Company's operations by segment:
For the Years Ended March 31, -------------------------------------- 1996 1995 1994 --------- --------- ---------- Revenues Cement $ 125,705 $ 109,900 $ 101,714 Wallboard 58,343 51,730 32,765 Concrete and Aggregates 39,902 35,217 35,128 Other, net 2,782 1,601 1,223 --------- --------- --------- 226,732 198,448 170,830 Less Intersegment Sales (4,138) (4,135) (4,004) --------- --------- --------- $ 222,594 $ 194,313 $ 166,826 ========= ========= ========= Segment Operating Earnings Cement $ 35,331 $ 26,007 $ 15,915 Wallboard 11,934 7,248 (43) Concrete and Aggregates 5,558 2,586 1,652 Other, net 2,782 1,601 1,223 --------- --------- --------- $ 55,605 $ 37,442 $ 18,747 ========= ========= ========= Identifiable Assets Cement $ 145,969 $ 142,122 $ 142,588 Wallboard 67,516 68,047 70,543 Concrete and Aggregates 28,749 33,128 36,185 Corporate and Other 27,341 6,806 7,999 --------- --------- --------- $ 269,575 $ 250,103 $ 257,315 ========= ========= ========= Capital Expenditures Cement $ 13,082 $ 3,680 $ 4,982 Wallboard 889 279 1,482 Concrete and Aggregates 1,746 1,869 1,941 Corporate and Other 43 89 99 --------- --------- --------- $ 15,760 $ 5,917 $ 8,504 ========= ========= ========= Depreciation, Depletion and Amortization Cement $ 7,778 $ 8,281 $ 8,211 Wallboard 2,908 2,987 2,892 Concrete and Aggregates 2,871 3,068 3,141 Corporate and Other 234 240 244 --------- --------- --------- $ 13,791 $ 14,576 $ 14,488 ========= ========= =========
Income from operations by segment represents revenues less direct operating expenses, segment depreciation, and segment selling, general and administrative expenses. Corporate assets consist primarily of cash and cash equivalents, general office assets and miscellaneous other assets. 33 34 CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (F) COMMITMENTS AND CONTINGENCIES - The Company in the ordinary course of business has various litigation, commitments and contingencies. Management believes that none of the litigation in which it or any subsidiary is involved, if finally determined unfavorably to CXP, would have a material adverse effect on the consolidated financial condition or results of operations of the Company. The Company, along with numerous other cement manufacturers, received in 1994 a civil investigative demand from the Antitrust Division of the Department of Justice that relates to the period from January 1991 to April 1994, and states that it concerns possible price fixing and possible market allocation in the industry. In November 1995, the Company received notice from the Department of Justice that the investigation against the Company, as well as all other cement manufacturers, has been closed. The Company's operations and properties are subject to extensive and changing federal, state and local laws, regulations and ordinances governing the protection of the environment, as well as laws relating to worker health and workplace safety. The Company carefully considers the requirements mandated by such laws and regulations and has procedures in place at all of its operating units to monitor compliance. Any matters which are identified as potential exposures under these laws and regulations are carefully reviewed by management to determine the Company's potential liability. Although management is not aware of any exposures which would require an accrual under Statement of Financial Accounting Standards No. 5, "Accounting for Contingencies," there can be no assurance that prior or future operations will not ultimately result in violations, claims or other liabilities associated with these regulations. The Company has certain deductible limits under its workers' compensation and liability insurance policies for which reserves are established based on the estimated costs of known and anticipated claims. The Company has certain Operating leases covering manufacturing, transportation and certain other facilities and equipment. Rental expense for the fiscal years 1996, 1995 and 1994 totaled $1.9 million, $1.8 million and $1.1 million, respectively. Minimum annual rental commitments as of March 31, 1996, under noncancelable leases are set forth as follows:
Fiscal Year Total ----------- ---------- 1997 $1,010,090 1998 $1,019,240 1999 $1,019,240 2000 $1,019,240 2001 $ 774,410 Thereafter $2,216,600
34 35 CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (G) STOCK OPTION PLAN The Company has a stock option plan for certain directors, officers and key employees of the Company, the 1994 Stock Option Plan ("1994 Plan"). The 1994 Plan provides for a total of 2,000,000 shares to be reserved for issuance. The exercise price of option grants under the 1994 plan may not be less than the fair market value at the date of grant. Option periods and exercise dates may vary within a maximum period of 10 years. The options are performance-based options and will vest on the achievement of specific financial goals of the Company. Failure to meet the specified goals will delay vesting until the end of the ten-year period. A summary of the activity of the 1994 Plan is presented below.
Options at Option Price March 31, Number of Shares Range Per Share ----------- ---------------- --------------- Outstanding - 1996 742,600 $12 to $14 1995 768,300 $12 to $14 Exercised - 1996 18,700 $14 1995 - - Exercisable - 1996 305,330 $12 to $14 1995 - - Available for Grant - 1996 1,238,700 1995 1,231,700
During fiscal 1996, options for 30,000 shares were granted and previously granted options of 37,000 shares became available for reissue. At March 31, 1996, the Company had 1,981,300 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 grant. (H) 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, 35 36 CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) estimates based on present value methodology suitable for each category of financial instruments. Considerable judgment is required 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. The consolidated carrying values of Cash and Cash Equivalents, Receivables, Accounts Payable and Accrued Liabilities approximate their fair values. The carrying values and estimated fair values of other financial assets and liabilities were as follows:
March 31, -------------------------------------------------- 1996 1995 -------------------- ------------------- Carrying Fair Carrying Fair Value Value Value Value -------- ------- --------- -------- Financial Assets Marketable Securities $ - $ - $ 673 $ 753(a) Financial Liabilities Long-term Debt $ 720 $ 720(b) $ 24,500 $24,500(b)
(a) Fair values are based on quoted market prices for similar instruments. Marketable securities consist of stock received in a settlement that is included in other assets. (b) Fair values are based on a present value discounted cash flow with the discount rate approximating current market for similar instruments. (I) INITIAL PUBLIC OFFERING On April 19, 1994 ("Closing Date") the Company completed the sale of 11,730,000 shares or 51% of its common stock through an IPO. The stock sales price was $14.00 per share and net proceeds received, after commissions and offering expenses, were $153.7 million. On the Closing Date, the Company paid a dividend of $162.6 million to its parent, Centex Corporation. To fund the remainder of the dividend and also pay its outstanding debt to Centex, the Company borrowed funds under the Bank Revolver. As a result of the IPO, approximately $34.3 million of deferred taxes became payable to Centex during fiscal 1995. Payment was funded from cash flow from operations and borrowings under the Bank Revolver. The Company entered into certain agreements with Centex on the Closing Date to define the Company's ongoing relationship with Centex. The major agreements are: Indemnification Agreement: The Company and Centex entered into an Indemnification Agreement, pursuant to which (i) the Company agreed generally to indemnify Centex against substantially all liabilities relating to the businesses of the Company and its subsidiaries as they had been and will be conducted, including environmental liabilities, and (ii) Centex agreed generally to indemnify the Company against substantially all liabilities relating to the businesses of Centex and its subsidiaries (other than the Company and its subsidiaries) as they had been and will be conducted, including environmental liabilities. 36 37 CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Tax Separation Agreement: The Company and Centex entered into a Tax Separation Agreement (the "Tax Agreement"). The Tax Agreement (i) provides for the termination of any existing tax sharing or allocation arrangements between the Company and Centex, (ii) specifies the manner in which the federal income tax liability and certain state tax liabilities (including any subsequent adjustments to such federal and state liabilities) of the consolidated group of which Centex is the common parent (the "Group") will be allocated for the final year in which the Company is a member of the Group and for any prior tax year of the Group and (iii) specifies the manner in which audits or administrative or judicial proceedings relating to federal income taxes and certain state taxes of the Group will be controlled. Administrative Services: Historically, the Company has participated in various of Centex's overall employee benefit and administrative programs, including the Profit Sharing and Retirement Plan of Centex Corporation, internal audit, tax reporting, risk management and legal services. All significant costs associated with the Company's operations under these programs have historically been paid by the Company. Following the completion of the IPO, the Company established its own employee benefit programs and files its own tax return. Centex Service Company ("CSC"), a subsidiary of Centex, provides the Company with employee benefit administration, public/investor relations and certain other services. The Administrative Services Agreement will expire on March 31, 1999, unless earlier terminated at the option of the Company. The Company pays to CSC a fee of $18,750 per month, subject to annual adjustment, for such services. In addition, the Company reimburses CSC for its out-of-pocket expenses incurred in connection with the performance of such services. Centex Guarantees of Company Obligations: Centex has guaranteed the Company's obligation under two bank loans with aggregate outstanding balances of $1.2 million made to a customer of the Company in connection with a cement purchase contract. The Company has indemnified Centex against any liabilities that may be incurred by it in respect of its guarantee thereof. 37 38 CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
QUARTERLY RESULTS (UNAUDITED) MARCH 31, ---------------------------- 1996 1995 ---------- ----- (Dollars in thousands, except per share data) First Quarter Revenues $55,104 $50,352 Earnings Before Income Taxes $12,064 $ 7,577 Net Earnings $ 7,830 $ 4,899 Earnings Per Share $ 0.34 $ 0.21 Second Quarter Revenues $66,483 $56,203 Earnings Before Income Taxes $16,179 $11,758 Net Earnings $10,500 $ 7,570 Earnings Per Share $ 0.46 $ 0.33 Third Quarter Revenues $55,429 $45,988 Earnings Before Income Taxes $15,344 $ 8,852 Net Earnings $ 9,958 $ 5,711 Earnings Per Share $ 0.43 $ 0.25 Fourth Quarter Revenues $45,578 $41,770 Earnings Before Income Taxes $ 8,717 $ 5,642 Net Earnings $ 5,656 $ 3,640 Earnings Per Share $ 0.25 $ 0.16
38 39 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 20, 1996 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 20, 1996 /s/ LAURENCE E. HIRSCH ---------------------------------------------------- Laurence E. Hirsch, Chairman of the Board and Chief Executive Officer (principal executive officer) May 20, 1996 /s/ DAVID W. QUINN ---------------------------------------------------- David W. Quinn, Vice Chairman of the Board and Chief Financial Officer (principal financial officer) May 20, 1996 /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 20, 1996 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. 39 40 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 61 of the Holding/CDC 1996 Annual Report, which Note (A) is incorporated herein by this reference. Holding operates in a single industry segment. The principal liability of Holding is a note payable to Centex which had an unpaid balance of $7,600,000 at March 31, 1996. 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") 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 longer- term real estate investments, real estate development 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, Centex concluded that this new line 40 41 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 pages 65-66 of the Holding/CDC 1996 Annual Report, which Note (F) is incorporated herein by this reference. CDC has developed and sold several of the Original Properties. In addition, CDC has acquired, developed, sold or otherwise disposed of 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 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 was not 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 were limited and certain of CDC's properties did not reach 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 is developing a rental apartment project in College Station, Texas. CDC management is evaluating the potential for development of additional rental apartments, as well as 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. 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. 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, 2007 (the "Scheduled 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. 41 42 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. 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. CDC will decide whether to seek zoning changes to accommodate a higher use, 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 $6 million as of March 31, 1996, and $7 million as of March 31, 1995. 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. During November 1995, the Partnership tendered to its non-recourse lender a deed to the remaining property in Forster Ranch, the Partnership's pro rata portion of the 1995-1996 real property taxes, as assignment of the Development Agreement made between the Partnership and the City of San Clemente and payment of certain developer fee credits. With these deliveries, the Partnership has surrendered any and all interest it may have in the Forster Ranch property to the lender. The Forster Ranch property was carried by the Partnership at an amount equal to the non-recourse indebtedness. Accordingly, these events had no adverse effect on the financial condition or results of operations of the Partnership or any related entities. 42 43 For additional information concerning material properties owned by CDC at March 31, 1996, 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, have fewer selling constraints, or may have greater financial resources and longer operating histories than CDC. CDC may 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. CDC's properties are generally located in geographical areas where there is moderate to good demand for land suitable for development, including Florida, Illinois, New Jersey and Texas. Management believes the CDC properties are well positioned to compete with similar properties within each of these geographic areas. 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, and Florida. 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, 1996, there were four remaining Original Properties owned by CDC of material value. None of the Additional Properties are considered material. Set forth below is a brief description of such properties, including the present zoning. Colony South Planning Unit. Colony South Planning Unit is located in suburban Dallas, Texas in the cities of The Colony (approximately 347 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 comprises approximately 600 acres with four separate residential tracts, 8 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 zoning for approximately 76 half-acre lots and 274 quarter acre lots. One hundred twenty-five of the quarter-acre lots and 15 of the half-acre lots have been sold to CREC, which has an agreement with CDC to purchase an additional 109 quarter-acre lots. The farm parcels vary in size from 7 to 36 acres and total 174 acres. 43 44 Bryan Place. Bryan Place is located in Dallas, Texas just east of downtown and Central Expressway. It is comprised of 20 non-contiguous parcels, zoned office, commercial, retail and residential ranging from approximately 2,000 square feet to 154,000 square feet. The total area of the property is approximately 650,000 square feet of which 578,000 square feet are Original Properties and the balance are Additional Properties. Carrollton Property. The Carrollton Property is 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. This property is leased to CREC through March 31, 1998. See "Item 13. Certain Relationships and Related Transactions." 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) 64 Roger D. Sefzik Vice President and Treasurer (2) 40
(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 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. 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. 44 45 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". 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 1 of the Centex 1996 Annual Report and (3) the information included in Notes (F) and (G) of the Notes to the Holding/CDC Combining Financial Statements on pages 65-66 of the Holding/CDC 1996 Annual 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, 1996, 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 provided for all payments of principal to be made after April 1, 1998, 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 66 of the Holding/CDC 1996 Annual Report, which Note (G) is incorporated herein by reference. 45 46 (b) CDC Except as additionally provided below, the information called for by this Item 5 with respect to CDC 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 2 of the Centex 1996 Annual Report and (3) the information included in Notes (F) and (G) of the Notes to the Holding/CDC Combining Financial Statements on pages 65-66 of the Holding/CDC 1996 Annual Report. 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". In July 1995, in conjunction with the extension of the automatic detachment date from 1997 to 2007, CREC reduced its Unrecovered Capital, which is defined as its initial capital contributions adjusted for repayments and other reductions, from $75,805,000 to $47,261,000 and waived all unpaid preference, totaling $37,523,000. Unrecovered Capital was reduced by an additional $10,000,000 during fiscal 1996 through partnership distributions. Preference payments in arrears at March 31, 1996 amounted to $2,506,000. 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 59-60 of the Holding/CDC 1996 Annual 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 59-60 of the Holding/CDC 1996 Annual Report. 46 47 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 68 of the Holding/CDC 1996 Annual 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 68 of the Holding/CDC 1996 Annual Report. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information called for by this Item 8 is incorporated herein by reference to portions of the Holding/CDC 1996 Annual Report indicated in the Index to Financial Statements on page 55 of 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" and the information included under the caption "Section 16(a) Compliance" in Holding's proxy statement for the 1996 Annual Meeting of Stockholders of Holding to be held on July 25, 1996 (the "1996 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 47 48 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 1996. (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 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) 64 Josiah O. Low, III . . . . . . . . . . . Director (2)* 57 David M. Sherer . . . . . . . . . . . . . Director (3)* 59 Roger D. Sefzik . . . . . . . . . . . . . Vice President and Treasurer (4) 40
_________ *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. 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 48 49 or until their successors have been duly elected and qualified. 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 arrangement 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 Holding. 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 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. Because Holding currently does not have any employees, it contracts with Centex subsidiaries to provide such services to CDC. 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 1996, Holding earned fees from CDC totaling $1,295,000 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 delegates the performance of certain of its responsibilities to CSC and 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 CSC or 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 1996 Holding Proxy Statement. 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 49 50 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 pages 65-66 of the Holding/CDC 1996 Annual Report, which Note (F) 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 10. 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, 1996. 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 1996 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 for services rendered on behalf of Development or CDC during the 1996 fiscal year. During fiscal 1996, J. Stephen Bilheimer, a Director and the President of Development, 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. 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 annually in the form of directors' and committee members' fees in their capacities as directors and/or committee members of Development ($8,000) and Holding ($8,000). 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 1996 Holding Proxy Statement. (b) CDC The following table sets forth certain information with respect to the ownership of the equity securities of CDC as of May 1, 1996 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. 50 51
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). . . . . . . . . . . . . . . . . 147 14.67% 82 Devonshire Street Boston, Massachusetts 02109 The Prudential Insurance Company of America(5). . . . . . . . . . . . . . . . 65 6.49% 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 51 52 for Development's general partner interest in CDC. As general partner, Development is entitled to receive allocations 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 canceled 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. 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) Based solely upon information contained in the Schedule 13G/A (Amendment No. 9) of FMR Corp. filed with the Securities and Exchange Commission (the "SEC") on February 12, 1996, for holdings as of December 31, 1995 (the "FMR 13G"), FMR may be deemed to beneficially own 4,169,447 shares of Centex Common Stock (and therefore to own a beneficial interest in 147 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. According to the FMR 13G, FMR held 12,384 shares of Centex Common Stock with sole voting power, 4,169,447 shares of Centex Common Stock with sole dispositive power (and therefore held a beneficial interest in 147 Stockholder Warrants with sole dispositive power), and no shares of Centex Common Stock with shared dispositive power (and therefore held a beneficial interest in no Stockholder Warrants with shared dispositive power). The Stockholder Warrants have no voting rights. (5) Based solely upon information contained in the Schedule 13G/A (Amendment No. 1) of the Prudential Insurance Company of America ("Prudential") filed with the SEC on February 2, 1996, for holdings as of December 31, 1995 (the "Prudential 13G"), Prudential may be deemed to beneficially own 1,845,400 shares of Centex Common Stock (and therefore to own a beneficial interest in 65 Stockholder Warrants). According to the Prudential 13G, Prudential held 318,700 shares of Centex Common Stock with sole voting and dispositive power (and therefore held a beneficial interest in 11 Stockholder Warrants with the sole voting and dispositive power), 1,481,700 shares of Centex Common Stock with shared voting power (and therefore held a beneficial interest in 52 Stockholder Warrants with shared voting power), and 1,526,700 shares of Centex Common Stock with shared dispositive power (and therefore held a beneficial interest in 54 Stockholder Warrants with shared dispositive power). The Stockholder Warrants have no voting rights. (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 pages 65-66 of the Holding/CDC 1996 Annual Report, which Note (F) is herein incorporated by this reference. 52 53 (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 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 1996 Holding Proxy Statement. (b) CDC Holding entered into a services agreement in May, 1987 with Centex Service Company ("CSC"), whereby CSC provides 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 1996. CDC has entered into an agreement with Holding to provide management services to CDC in connection with the development, operation and maintenance of CDC property and other administrative services. Management fees and reimbursable costs totaling $1,295,000 were incurred under this agreement during fiscal 1996. 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 1996, bears interest, payable quarterly, at the prime rate of interest of NationsBank of Texas, N.A. ("NationsBank") plus 1% (9 1/4% at May 1, 1996). As of May 1, 1996, the outstanding principal balance of the Holding Note was $7,155,000. The Holding Note is secured by a pledge of all the issued and outstanding shares of Development. The Holding Note, as amended, matures on the earlier to occur of April 1, 1998 or the last detachment of Holding Common Stock and the Stockholders Warrants from Centex Common Stock pursuant to the Nominee Agreement. There was interest expense of $558,000 related to the Holding Note for the year ended March 31, 1996. In fiscal year 1996, CDC sold to CREC certain tracts of land for $4,416,000 and has agreements to purchase an additional 109 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 1/8% at May 1, 1996). As of May 1, 1996, the outstanding principal balance on the CREC Note was $7,700,000. The CREC Note, as amended, matures on April 30, 1998. Fiscal year 1996 interest income on the CREC Note totaled $750,000. 53 54 CREC has guaranteed a bank line of credit for CDC (currently $5,000,000) to utilize in conjunction with development of lots to be sold to CREC. This line of credit, which had an outstanding balance of $1,373,000 at May 1, 1996, bears interest at LIBOR plus 3/4% (6 3/16% at May 1, 1996), is unsecured. CDC owns property in the City of Carrollton, a suburb of Dallas, Texas, which consists of one office and five fabrication-warehouse buildings on approximately 17 acres. CDC leases this property to CREC pursuant to a five-year lease terminating on March 31, 1998. For fiscal 1996, CDC received rent from CREC for this property in the amount of $200,000. 54 55 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
HOLDING/CDC 1996 ANNUAL REPORT PAGES ------------ 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. Data incorporated by reference to the Holding/CDC 1996 Annual Report: Report of Independent Public Accountants . . . . . . . . . . . 57 Combining Balance Sheets as of March 31, 1996 and 1995 . . . . 59 Combining Statements of Operations and Cash Flows for the Years Ended March 31, 1996, 1995 and 1994 . . . . . . . . . 60 Combining Statements of Stockholders' Equity and Partners' Capital for the Years Ended March 31, 1996, 1995 and 1994 . . . . . . . . . . . 61 Notes to Combining Financial Statements . . . . . . . . . . . 61-66 Quarterly Results (unaudited) . . . . . . . . . . . . . . . . 67
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 62-63 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 64-66 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, 1996. 55 56 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 20, 1996 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 20, 1996 By: /s/ J. STEPHEN BILHEIMER ---------------------------------------------------- J. Stephen Bilheimer, President (principal executive officer) May 20, 1996 /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 20, 1996 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. 56 57 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 May 20, 1996 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 3333 Development Corporation, as general partner of, and on behalf of, the registrant in the capacities and on the dates indicated. May 20, 1996 /s/ J. STEPHEN BILHEIMER -------------------------------------------------------- J. Stephen Bilheimer, President (principal executive officer) May 20, 1996 /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 20, 1996 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. 57 58 INDEX TO EXHIBITS CENTEX CORPORATION AND SUBSIDIARIES
EXHIBIT FILED HEREWITH OR NUMBER EXHIBIT INCORPORATED BY REFERENCE ------- ------- ------------------------- 3.1 Restated Articles of Incorporation of Exhibit 3.1 to Annual Report on Form 10-K Centex. of Centex Corporation ("Centex") (File No. 1-6776) for fiscal year ended March 31, 1993 ("Centex 1993 Form 10-K") 3.2 By-laws of Centex. Exhibit 3.2 to Centex 1993 Form 10-K 4.1 Specimen Centex common stock certificate Exhibit 4.1 to Centex 1993 Form 10-K (with tandem trading legend and Rights Agreement legend). 4.2 Nominee Agreement, dated November 30, Exhibit 4.2 to Centex 1993 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 1993 Form 10-K as of November 30, 1987, by and between Holding and Centex. 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 1993 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 1993 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 1993 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.
58 59 INDEX TO EXHIBITS CENTEX CORPORATION AND SUBSIDIARIES--CONTINUED
EXHIBIT FILED HEREWITH OR NUMBER EXHIBIT INCORPORATED BY REFERENCE ------ ------- ------------------------- 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. 4.9 Debenture Purchase Agreement, dated as of Exhibit 4.11 to Centex 1993 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 1993 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 1993 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 1993 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 10- 17, 1987 between Centex and Texas Commerce K of Centex (File No. 1-6776) for fiscal Bank--Dallas, N.A. with respect to 8.80% year ended March 31, 1994 ("Centex 1994 Subordinated Debentures due June 30, 2007. 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. 4.15 Supplemental Indenture dated as of June 9, Exhibit 4(b) to the Current Report on 1995 between Centex and Texas Commerce Form 8-K of Centex (File No. 1-6776) Bank National Association with respect to dated June 5, 1995. 7 3/8% Subordinated Debenture due June 1, 2005.
59 60 INDEX TO EXHIBITS CENTEX CORPORATION AND SUBSIDIARIES--CONTINUED
EXHIBIT FILED HEREWITH OR NUMBER EXHIBIT INCORPORATED BY REFERENCE ------ ------- ------------------------- 10.1 Centex Corporation Stock Option Plan, as Exhibit 10.1 to Centex 1993 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 No. 1987, executed by Holding and payable to 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. 10.4 Consulting Agreement dated as of February Exhibit 10.4 to Annual Report on Form 10- 1, 1995 between Centex and Paul R. K of Centex (File No. 1-6776) for fiscal Seegers.* year ended March 31, 1995 ("Centex 1995 Form 10-K") 10.5 Executive Employment Agreement dated as of Exhibit 10.6 to Centex 1993 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 1993 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 1993 Form 10-K January 18, 1991 between Centex and William J Gillilan III.* 10.8 Centex Corporation $2,000,000 Subordinated Exhibit 10.8 to Centex 1995 Form 10-K Convertible Note issued to Laurence E. Hirsch on March 1, 1995.* 10.9 Supplemental Executive Retirement Plan of Exhibit 10.9 to Centex 1995 Form 10-K Centex Corporation.* 13 Centex 1996 Annual Report and Holding/CDC Filed Herewith. 1996 Annual Report.** 21 List of Subsidiaries of Centex. Filed Herewith.
60 61 INDEX TO EXHIBITS CENTEX CORPORATION AND SUBSIDIARIES--CONTINUED
EXHIBIT FILED HEREWITH OR NUMBER EXHIBIT INCORPORATED BY REFERENCE ------ ------- ------------------------- 23 Consents of Independent Public Accountants. Filed Herewith. 24 Powers of Attorney. Filed Herewith. 27 Financial Data Schedule. Filed Herewith.
____________ * Management contract or compensatory plan or arrangement. ** With the exception of the information expressly incorporated by reference in this Report from the Centex 1996 Annual Report and the Holding/CDC 1996 Annual Report, these two annual reports are not deemed filed with the Commission as part of this Report. 61 62 INDEX TO EXHIBITS 3333 HOLDING CORPORATION AND SUBSIDIARY
EXHIBIT FILED HEREWITH OR NUMBER EXHIBIT INCORPORATED BY REFERENCE ------ ------- ------------------------- 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 Form 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.
62 63 INDEX TO EXHIBITS 3333 HOLDING CORPORATION AND SUBSIDIARY--CONTINUED
EXHIBIT FILED HEREWITH OR NUMBER EXHIBIT INCORPORATED BY REFERENCE ------ ------- ------------------------- 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. 13 Centex 1996 Annual Report and Holding/CDC Exhibit 13 to Form 10-K of Centex 1996 Annual Report.* Corporation (File No. 1-6776) dated May 22, 1996. 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. - -------
* With the exception of the information expressly incorporated by reference in this Report from the Centex 1996 Annual Report and the Holding/CDC 1996 Annual Report, these two annual reports are not deemed filed with the Commission as part of this report. 63 64 INDEX TO EXHIBITS CENTEX DEVELOPMENT COMPANY, L.P.
EXHIBIT FILED HEREWITH OR NUMBER EXHIBIT INCORPORATED BY REFERENCE ------ ------- ------------------------- 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 Form 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.
64 65 INDEX TO EXHIBITS CENTEX DEVELOPMENT COMPANY, L.P.--CONTINUED
EXHIBIT FILED HEREWITH OR NUMBER EXHIBIT INCORPORATED BY REFERENCE ------ ------- ------------------------- 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 ("CREC") and CDC. 10.2 Supplement to Management Agreement by and Exhibit 10.1a to CDC Amendment No. 3. between CREC 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, CREC, Centex Homes Corporation Statement. and Centex Land Company.
65 66 INDEX TO EXHIBITS CENTEX DEVELOPMENT COMPANY, L.P.--CONTINUED
EXHIBIT FILED HEREWITH OR NUMBER EXHIBIT INCORPORATED BY REFERENCE ------ ------- ------------------------- 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 Waiver Agreement dated as of July 28, Filed Herewith. 1995, by and between CDC, CREC and 3333 Development Corporation ("Development"). 10.10 Waiver Agreement dated as of September 13, Filed Herewith. 1995 but effective as of July 1, 1995, by and between CDC, CREC and Development. 10.11 Waiver Agreement dated as of September 27, Filed Herewith. 1995 but effective as of July 1, 1995, by and between CDC, CREC and Development. 10.12 Waiver Agreement dated as of December 31, Filed Herewith. 1995 by and between CDC, CREC and Development. 10.13 Waiver Agreement dated as of March 29, Filed Herewith. 1996 by and between CDC, CREC and Development. 10.14 Waiver Agreement dated as of January 8, Filed Herewith. 1996 but effective as of January 1, 1996, by and between CDC, CREC and Development. 13 Centex 1996 Annual Report and Holding/CDC Exhibit 13 to Form 10-K of Centex 1996 Annual Report.* Corporation (File No. 1-6776) dated May 22, 1996. 23 Consent of Independent Public Accountants. Filed Herewith. 24 Powers of Attorney. Filed Herewith. 27 Financial Data Schedule. Filed Herewith.
_________ * With the exception of the information expressly incorporated by reference in this Report from the Centex 1996 Annual Report and the Holding/CDC 1996 Annual Report, these two annual reports are not deemed filed with the Commission as part of this report. 66 EX-13 2 ANNUAL REPORT TO SHAREHOLDERS 1 EXHIBIT 13 INNER VATE Innovatively utilize Centex's unique strengths to achieve optimum organizational performance [Peephole Artwork] CENTEX 96 1996 Annual Report Centex Corporation 3333 Holding Corporation Centex Development Company, L.P. 2 INNER FOCUS/OUTER VISION Centex is dedicated to utilizing its core strengths to provide the impetus for corporate expansion. A comprehensive understanding of the culture and capabilities of our company and its people allows the careful crafting of corporate strategies. These strategies will energize Centex to move into new areas with the maximum potential for success. From our inner focus comes the outer vision that will shape our future. [Peephole Artwork] Centex Corporation, through its subsidiaries, ranks among America's premier Home Building, Financial Services, and Contracting and Construction Services companies. o CENTEX HOMES is one of the nation's largest builders of single-family homes. o CTX MORTGAGE COMPANY is the country's second largest independent retail originator of single-family home mortgages. o CENTEX CONSTRUCTION GROUP is one of the leading general building contractors in the U.S. o Centex Corporation also owns a 49% interest in its former subsidiary, Centex Construction Products, Inc., which produces and distributes cement, gypsum wallboard, and concrete and aggregates. o In fiscal 1987, Centex created CENTEX DEVELOPMENT COMPANY, L.P. (CDC), a master limited partnership, to conduct real estate activity. Ownership interests in CDC, a separate entity from Centex, currently trade in tandem with the common stock of Centex. This combined 1996 Annual Report consists of the Annual Report to Stockholders of Centex Corporation, 3333 Holding Corporation and Centex Development Company, L.P. 3 CONTENTS Centex Corporation Financial Highlights 2 Stock Prices and Dividends 2 Letter to Our Stockholders 3 Home Building 8 Financial Services 14 Contracting and Construction Services 18 Centex Construction Products, Inc. 22 Financial Information Consolidated Revenues and Operating Earnings by Line of Business 26 Statements of Consolidated Earnings 27 Consolidated Balance Sheets 28 Statements of Consolidated Cash Flows 30 Statements of Consolidated Stockholders' Equity 31 Notes to Consolidated Financial Statements 32 Report of Independent Public Accountants 46 Management's Discussion and Analysis of Results of Operations and Financial Condition 47 Quarterly Results 53 Summary of Selected Financial Data 54 Board of Directors and Officers 69 3333 Holding Corporation and Subsidiary and Centex Development Company, L.P. Letter to Our Stockholders 56 Report of Independent Public Accountants 57 Financial Highlights 58 Combining Balance Sheets 59 Combining Statements of Operations and Cash Flows 60 Combining Statements of Stockholders' Equity and Partners' Capital 61 Notes to Combining Financial Statements 61 Quarterly Results 67 Management's Discussion and Analysis of Results of Operations and Financial Condition 68 Board of Directors and Officers 72 1 4 CENTEX CORPORATION AND SUBSIDIARIES FINANCIAL HIGHLIGHTS
FOR THE YEARS ENDED MARCH 31, ------------------------------------------------------------------ 1996 1995 1994 1993 1992 ---------- ---------- ---------- ---------- ---------- (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) Revenues $3,102,987 $3,277,504 $3,039,709 $2,363,325 $2,028,646 Earnings Before Income Taxes $ 87,786 $ 145,788 $ 135,013 $ 91,759 $ 45,852 Net Earnings Before Gain on CXP's IPO $ 53,365 $ 54,753 $ 85,162 $ 61,038 $ 34,557 Gain on CXP's IPO -- 37,495 -- -- -- ---------- ---------- ---------- ---------- ---------- Net Earnings $ 53,365 $ 92,248 $ 85,162 $ 61,038 $ 34,557 ========== ========== ========== ========== ========== Earnings Per Share-- Before Gain on CXP's IPO $ 1.83 $ 1.81 $ 2.60 $ 1.91 $ 1.11 Gain on CXP's IPO -- 1.23 -- -- -- ---------- ---------- ---------- ---------- ---------- Earnings Per Share $ 1.83 $ 3.04 $ 2.60 $ 1.91 $ 1.11 ========== ========== ========== ========== ========== Cash Dividends Per Share $ .20 $ .20 $ .20 $ .20 $ .20 Average Shares Outstanding 29,091 30,327 32,790 32,016 31,252 Debt $ 408,253 $ 427,381 $ 429,470 $ 368,988 $ 298,508 Stockholders' Equity $ 722,836 $ 668,227 $ 668,659 $ 578,415 $ 518,494 Book Value Per Share At Year End $ 25.43 $ 23.80 $ 21.12 $ 18.57 $ 16.99
As reflected above, 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 financial services group reflected on the equity method versus consolidation. See Note A to financial statements. STOCK PRICES AND DIVIDENDS
YEAR ENDED MARCH 31, YEAR ENDED MARCH 31, 1996 1995 ------------------------- ------------------------- PRICE PRICE ------------ ------------ QUARTER HIGH LOW DIVIDENDS HIGH LOW DIVIDENDS ---- ---- --------- ---- ---- --------- First $ 30 $23 1/2 $ .05 $32 3/8 $23 7/8 $ .05 Second $ 31 $ 26 $ .05 $26 7/8 $22 3/8 $ .05 Third $35 5/8 $28 5/8 $ .05 $23 7/8 $20 1/4 $ .05 Fourth $35 1/4 $27 3/4 $ .05 $25 7/8 $22 1/2 $ .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 8, 1996 was 2,243. 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. 2 5 TO OUR STOCKHOLDERS In fiscal 1996, Centex renewed its focus on formulating operational goals and strategic philosophies for the future even as we enjoyed the results of some of our near-term strategies. [Photo] [LARRY HIRSCH] Although fiscal 1996's highly competitive environment kept Centex's revenues of $3.1 billion and net earnings of $53.4 million slightly below 1995's results, 1996 earnings per share of $1.83 rose marginally above last year's level due to fewer average shares outstanding in the current year. [PHOTO] BILL GILLILAN As mortgage interest rates continued to fall throughout most of the year, Centex Homes reported record home sales of 13,516 units, and its operating earnings of $106.7 million were the second highest in its history. CTX Mortgage, recovering from fiscal 1995's severely contracted market, reported per loan margins and operating earnings many times greater than last year. [PHOTO] DAVID QUINN Centex's 49% ownership interest in Centex Construction Products garnered a record $25.6 million, 55% higher than last year. Stockholders' equity per share, rising for the 28th consecutive year, reached $25.43 in fiscal 1996. Despite Centex's $85 million investment in Vista Properties, Inc., we finished fiscal 1996 with less debt than we had a year ago and a debt-to-capitalization ratio of 35.6%, down from 1995's 38.0%. 3 6 TO OUR STOCKHOLDERS [CHART] [CHART] REVENUES ($ in millions) NET EARNINGS ($ in millions) 92......................$2,029 92......................$34.6 93......................$2,363 93......................$61.0 94......................$3,040 94......................$85.2 95......................$3,278 95......................$92.2 96......................$3,103 $54.7 $37.5* Before CXP Gain CXP Gain 96......................$53.4 * GAIN ON SALE OF 51% OF CENTEX CONSTRUCTION PRODUCTS, INC. Centex Corporation aspires to a lofty goal: tobe the nation's finest building and related financial services company. To reach our objective, we must properly blend operational, growth and financial strategies. We must know who we are and where we are going. Looking inside. So, while Centex continues to build and grow, it is also going through a period of intense introspection. Corporate self-scrutiny is almost always beneficial, but it is especially critical at this point in Centex's history as we face a dual challenge: raising financial returns in our core businesses while charting a path of expansion that will successfully propel the Company into the next century. Centex definitely had its share of success in fiscal 1996. Our Home Building company achieved over $100 million of operating earnings for the second consecutive year, and our customer satisfaction levels continue to rise. After weathering a rough fiscal 1995 sparked by rapidly rising interest rates, our Financial Services Group rebounded to make a significant contribution to this year's earnings. Centex Construction Products, our 49%-owned, publicly traded affiliate, was a stellar performer, reporting record earnings. Centex was also active on the acquisi- 4 7 TO OUR STOCKHOLDERS [CHART] [CHART] SHARES OUTSTANDING AT YEAR END (in millions) EARNINGS PER SHARE (in dollars) 92......................30.5 92......................$1.11 93......................31.1 93......................$1.91 94......................31.7 94......................$2.60 95......................28.1 95......................$3.04 96......................28.4 $1.81 $1.23* Before CXP Gain CXP Gain 96......................$1.83 * GAIN ON SALE OF 51% OF CENTEX CONSTRUCTION PRODUCTS, INC. tion front. Following a hard-fought battle, we gained control of Vista Properties, Inc. for a net purchase price of $85 million. Vista Properties adds valuable real estate assets to the Centex portfolio, which should start generating income in fiscal 1997. Just after the end of fiscal 1996, our newly formed Home Services division completed its first two acquisitions, and the Financial Services Group purchased a company that utilizes sophisticated technology to automate mortgage processing services. We also had our share of disappointments. Our Contracting and Construction Services company continued to incur operating losses, causing us to initiate a major restructuring of that division. In addition, Centex's return on stockholders' equity during fiscal 1996 failed to reach acceptable levels. Raising returns in all of Centex's businesses is management's principal immediate priority. "Innergizing" for the future. Back to introspection. We coined the word "INNERVATE" for our Annual Report cover to indicate that Centex will achieve its return on equity goals and rise to its next evolutionary level by emphasizing our core strengths and determining creative ways to use them. That may sound more dramatic than we intend. It merely means that we 5 8 To Our Stockholders [CHART] STOCKHOLDER'S EQUITY ($ in millions) 92 ...................... $518 93 ...................... $578 94 ...................... $669 95 ...................... $668 96 ...................... $723 [CHART] TOTAL DEBT TO CAPITALIZATION ($ in millions) 92...................... 33.0% $299 $905 93...................... 35.8% $369 $1,031 94...................... 37.1% $429 $1,157 95...................... 38.0% $427 $1,123 96...................... 35.6% $408 $1,147 are resolved to creatively "play to our strengths." The industry leaders of the future must be innovators--companies whose people are strategically astute, adept at cyclical positioning and dedicated to constant operational improvement. Centex will be one of those leaders. In Home Building, Centex's strengths include a comprehensive understanding of land development as well as of the housing design and construction processes. We must improve margins by focusing those skills on reducing construction costs and developing more efficient and affordable housing. In order to utilize our resources more creatively, we must expand our internal definition of what it means to be a housing company. That definition must include the development of a wider variety of housing products and the construction of various types of residential living environments. As we try to differentiate ourselves from the competition, Centex will segment the housing markets more extensively than we have in the past. The search for ways in which to take greater advantage of our Home Building assets led to the creation of our Home Services group. Through this entity, we intend to offer home security and pest control services--initially to our own home buyers and later to other home builders for their customers. 6 9 To Our Stockholders In our Financial Services Group, Centex has successfully combined a flexible, people-oriented culture with sophisticated, cost-efficient systems. As a result of its growth, CTX Mortgage is now the nation's second largest non-bank-affiliated retail mortgage originator. Recognizing its own cultural strengths, Financial Services is expanding into the "B" and "C" mortgage business, where its marketing philosophy and operating systems can be successfully utilized. Financial Services also is assessing several other related operations that would be well suited to our business approach. After just two years as a separate company, Centex Construction Products has a virtually debt-free balance sheet that will enable it to expand its presence in the process-oriented construction products manufacturing industries. In addition, we have identified a number of business opportunities that our Contracting and Construction Services division will pursue after its current restructuring is successfully concluded. Centex also intends to respond aggressively to the trends that are impacting our businesses--changing demographics, the need for affordable housing, and technological advances, among others. One issue is how to satisfy the housing and other needs of the aging population. We recently completed our first specially designed facility for Alzheimer's patients, now being operated by a joint venture partner, and are searching for additional opportunities in the care-based housing field. The year to come. Centex entered fiscal 1997 with considerable momentum. Our housing backlog stood 39% higher than last year and our mortgage activity has been strong. Centex Construction Products is progressing well, and the reorganization of the Contracting Group is rapidly moving forward. We also expect to receive significant operating contributions from the Vista Properties transaction. While we must always keep a wary eye on interest rates, fiscal 1997 is shaping up to be an exceptional year for Centex. In today's business environment, prosperity will come to those companies that correctly anticipate problems and successfully implement solutions to strategic challenges. We believe that Centex, with our approximately 6,000 committed people, possesses all of the qualities and resources necessary to thrive in that environment, as well as the financial power to transform opportunities into results. We are convinced that Centex stands on the threshold of its most profitable, creative and dynamic period. /s/ LARRY HIRSCH Laurence E. Hirsch Chairman and Chief Executive Officer /s/ WILLIAM J GILLILAN III William J Gillilan III President and Chief Operating Officer /s/ DAVID W. QUINN David W. Quinn Executive Vice President and Chief Financial Officer May 8, 1996 7 10 INNER SPECT Meticulously evaluate and refine each of our processes to ensure delivery of superior products and services [PHOTO] Robert Chappell 8 11 HOME BUILDING [CHART] [CHART] REVENUES ($ IN MILLIONS) OPERATING EARNINGS ($ IN MILLIONS) 92 ................... $1,062 92 ................... $ 55.2 93 ................... $1,433 93 ................... $ 79.9 94 ................... $1,870 94 ................... $ 96.0 95 ................... $2,111 95 ................... $112.1 96 ................... $1,990 96 ................... $106.7 ROBERT CHAPPELL Field Manager Increasing returns in each neighborhood is the most critical element of Centex Homes' efforts to improve financial performance. Robert, who continuously, conscientiously inspects each home under construction from foundation to finish, is key to that process. In fiscal 1996, Home Building revenues of $1.99 billion were 6% less than $2.11 billion in fiscal 1995. o Operating earnings were $106.7 million in 1996, 5% less than $112.1 million last year. o Home closings in 1996 were 11,970, an 8% decline from the record 12,964 homes closed in 1995. o New home orders for 1996 reached a record 13,516, 21% higher than 11,156 homes last year. o The backlog of homes sold but not closed at March 31, 1996 was 5,533 units, 39% higher than 3,987 units at March 31, 1995. o Fiscal 1996's average home sales price of $163,912 was 3% above 1995's average price of $159,222. o The per unit margin of $8,914 in 1996 also rose 3% over $8,651 last year. o The Home Building operating margin was 5.4% this year versus 5.3% in fiscal 1995. 9 12 HOME BUILDING Although rising interest rates late in fiscal 1995 depressed year-end backlog and slowed closings in the first half of 1996, the rate decline that began early in the fiscal year strengthened sales and accelerated closings in the second half. Ultimately, Centex Homes posted a solid performance for 1996, successfully delivering well over 10,000 units for the fourth consecutive year. Our Home Building operating margins improved sequentially each quarter, rising from 4.3% in the first quarter to 6.1% in the fourth period, and operating earnings were the second highest in our history. Record fourth quarter home orders lifted fiscal year sales to an all-time peak, positioning Centex Homes with a near-record-high backlog as fiscal 1997 began. Most significant, these achievements were accompanied by improvement in customer satisfaction. Despite rising demand, competition in our housing markets remains intense. Readily available capital has facilitated expansion by existing builders and the proliferation of new ones. This highly competitive environment has constrained home sales price increases while putting upward pressure on costs for land, labor and materials. Centex Homes is proceeding cautiously. Understanding the potential risk of expanding at this point in the cycle, we have resisted geographic growth. We permitted our land base to shrink and stabilized the number of our communities, ending fiscal 1996 with approximately the same number of communities we had at the beginning of the year. We reduced our unsold inventory of homes under construction, already low by industry standards, to minimal levels and deferred, for the present time, our international expansion efforts. Armed with a renewed sense of urgency, Centex Homes has refocused its energies and abilities on maximizing margins, earnings and returns on our substantial nationwide housing base--282 neighborhoods in 49 market areas in 20 states. Much of our margin improvement is a result of our own cost containment. We have upgraded the skills of our estimating and purchasing personnel and aggressively sought new efficiencies in our construction processes. Refining our design. In addition, we are scrutinizing our product, phasing out features not perceived by our customers as adding value, or converting such features into options, if necessary. Centex is fortunate to have its own staff of highly-trained architects who each year produce several hundred new home designs -- first time, move up, and in some markets, custom -- for our home buyers. Our architects spend virtually all their time "on the road" -- traveling to each Home Building division to work with our local management to determine the ideal product for a particular area and neighborhood. In fiscal 1996, our homes ranged in size from approximately 1,200 to 4,000 square feet. Although the range of our home sales prices was about $69,000 to $577,000, the average price of a Centex home was around $163,900. Overall, our architects are focusing on new product design that is more efficient in terms of both material and labor costs while still meeting our customers' preferences. At Centex's unit volume level, even a small cost savings can have substan- 10 13 HOME BUILDING CENTEX HOMES - 1996 CLOSING BY REGION [MAP OF UNITED STATES] West 2,347 20% - -------------------------- Midwest 1,276 11% - -------------------------- East 2,804 23% - -------------------------- Southeast 2,241 19% - -------------------------- Southwest 3,302 27% - -------------------------- Total 11,970 100% ========================== tial leverage. A 1% reduction in cost -- $1,000 on an average home at current volume levels -- will result in $12 million of additional pretax income. Controlling our growth. Over the past quarter of a century, Centex Homes has built an organization with significant core operating strengths. Our management structure has enabled Centex Homes to achieve controlled expansion, resulting in the wide geographic diversity that has diminished our financial dependence on any one geographic market. This has enabled us to prosper despite various regional downturns, the most notable of which have been the Texas, and recently the California, recessions. Home building is a local business and because many of the critical decisions are made in the market itself, we have developed the ability to effectively manage a large number of decentralized, relatively diverse, entrepreneurial business units. Centex Homes also has learned how to quickly and accurately position and reposition assets among geographic markets and different product segments within a market. We have developed an expertise in skill-based training that enables our people to improve both technical and management skills in every aspect of the developing, building and selling processes. Last but certainly not least, we work continously to perform in a manner that supports our goals of improved execution and financial performance. The housing industry has changed dra- 11 14 HOME BUILDING matically during the past decade. Previously it was a transaction-oriented business in which countercyclical positioning and cyclical inflation brought substantial gain. Today, it can generate acceptable returns only through optimizing volumes, lowering costs and developing unique competitive advantages. Segmentation and differentiation strategies are becoming ever more critical. Centex Homes must attempt to further segment the home building market--not only to satisfy the ever changing needs of the population but also to distinguish itself from the competition. Different demographics. We continue to be convinced of the many potential opportunities associated with the changing demographics, particularly the aging of the population. During fiscal 1996, we completed our first cared-based facility designed especially for residents with Alzheimer's disease. We currently are attempting to locate sites for additional such facilities, known as Kensington Cottages. In addition, expansion into the active retiree (non-golf) market as well as into the affordable housing market are segmentation strategies that play to Centex Homes' cultural and technical strengths. Centex's awareness of the varied housing needs of the population has been heightened over the past several years by our participation in Habitat for Humanity. Under the leadership of Centex Homes and in conjunction with Habitat, employees from every part of Centex Corporation nationwide have, with the help of our subcontractors, collectively built and donated more than 100 homes to families who otherwise would not be able to afford them. By the year 2000, our goal is to have built a total of 200 homes with a projected value of approximately $10 million. In another initiative, seeking to take better advantage of our Home Building asset base and customer relationships, as well as to develop a non-cyclical, recurring revenue HOUSING ACTIVITY BY GEOGRAPHIC AREA
Closings Year Ended 3/31/96 3/31/95 - ---------------------------------------------------- West 2,347 2,454 Midwest 1,276 1,283 East 2,804 2,921 Southeast 2,241 2,632 Southwest 3,302 3,674 - ---------------------------------------------------- 11,970 12,964 ==================================================== Sales (Orders) Backlog As of 3/31/96 3/31/95 - ---------------------------------------------------- West 980 603 Midwest 652 442 East 1,121 918 Southeast 1,106 892 Southwest 1,674 1,132 - ---------------------------------------------------- 5,533 3,987 ==================================================== Sales (Orders) Year Ended 3/31/96 3/31/95 - ---------------------------------------------------- West 2,724 2,301 Midwest 1,486 1,103 East 3,007 2,560 Southeast 2,455 2,137 Southwest 3,844 3,055 - ---------------------------------------------------- 13,516 11,156 ====================================================
12 15 HOME BUILDING stream, we formed Centex Home Services Company. This new subsidiary has acquired the operating assets of two entities that will enable Centex to enter the security and pest control businesses. Initially we will offer these services only to buyers of Centex Homes, but eventually we want to market these products and services to other builders for their customers. Longer-term plans involve expanding the service package. Growth has been a consistent theme in Centex Homes for the past quarter of a century. While the lateness of the economic cycle will slow the pace of Homes' geographic expansion, there are still many untapped market opportunities, particularly in the Northeast, Midwest and Mountain states, which we may consider for the next cycle. A potential expansion area will be into smaller markets that often offer opportunities for higher margins and returns on smaller volumes and entail less capital exposure than larger markets. Right in the Neighborhood. We will continue to grow in a disciplined manner, matching asset growth with a focus on performance at the division and neighborhood level. In fact, improving the returns in each individual neighborhood is the most critical element of our efforts to improve our financial performance. In addition, we'll expand at a pace that doesn't unduly sacrifice current or near-term returns for the sake of future returns. We enter fiscal 1997 with a high backlog of sold, but not yet delivered, homes and a renewed focus on the necessity of increasing our margins. Our current concentration on margin improvement is of paramount importance because Centex Homes, along with most of the rest of the home building industry, has not been able to achieve the levels of returns on assets that were reached during previous cycles. Competitive factors have limited the industry's ability to raise prices sufficiently to cover rapidly rising material and labor costs. Although recent increases in lumber prices are troubling, the current slowing of cost increases in other areas should permit continued margin improvement. The signals of the future of the economy have been mixed, but job growth, which, together with interest rate levels, are the primary drivers of housing demand, continues at a high level, increasing confidence in the division's near-term prospects. We have also begun to see the first signs of recovery in the California markets where Centex Homes has invested substantial portion of its assets and has a significant market presence. While it is too soon to gauge the extent of this recuperation, any measurable improvement in the California home building market would have a positive impact on our Home Building earnings. It is impossible to know if or when the future may hold a severe recession or even a mild slowing of economic growth. Should the economy rebound, our conservative position may cause us to forgo some nearer-term profit opportunities. But experience has shown that it is better to be in a short rather than a long land position, particularly when land and home sales prices are not inflating rapidly. Whatever the economic scenario, higher returns will come only to those who are positioned to take advantage of opportunities when they are presented - -- or to create propitious circumstances when they are not. We believe that Centex Homes is prepared to do both. 13 16 INNER FACE Creatively combine information systems with interpersonal capabilities to build relationships [PHOTO] Becky Padilla 14 17 Financial Services [CHART] [CHART] REVENUES ($ IN MILLIONS) OPERATING EARNINGS ($ IN MILLIONS) 92 ................... $102 92 ................... $21.6 93 ................... $147 93 ................... $50.9 94 ................... $203 94 ................... $73.6 95 ................... $107 95 ................... $ 9.4 96 ................... $130 96 ................... $17.2 BECKY PADILLA Corporate Underwriter A major factor in cost reduction efforts, technology utilization has enabled CTX Mortgage to consolidate in the corporate office functions previously performed in the branches. The loans Becky underwrites each day may come from any one of our 130 offices. Financial Services revenues were $129.6 million in fiscal 1996, 21% above $106.8 million in 1995. o Mortgage Banking's 1996 per loan margin of $412 increased ten-fold over 1995's margin, and operating earnings rebounded to $17.2 million versus $1.5 million in 1995. Total Financial Services earnings for 1995, including results from our former Savings and Loan, were $9.4 million. o 1996 loan originations rose 12% to 41,596 from 37,051 originations last year. o Originations for Centex Homes totaled 8,445, about the same as last year, but retail originations of 33,151 were 16% higher than in 1995. o 1996 loan applications totaled 47,763, 31% over 36,487 applications last year. In 1996, Centex Homes applications rose 35% to 10,049 and retail applications of 37,714 were up 30%. 15 18 FINANCIAL SERVICES The Centex Financial Services Group weathered an unusually volatile interest rate environment in fiscal 1994-1995, emerging in 1996 as a more experienced entity--financially strong, operationally sound and opportunistically oriented. Fiscal 1996 was a welcome year of stabilization and re-focus for Financial Services, which includes CTX Mortgage Company; title, insurance and escrow operations; and Nova Mortgage Credit Corporation. CTX Mortgage generated significant earnings during the early 1990s, particularly in fiscal 1994, as its rapidly expanding branch office network took advantage of the record mortgage volumes spawned by low interest rates. But CTX experienced a painful retrenchment in 1995 as multiple interest rate increases halted the refinancing boom. Most industry players also had expanded during the "refi high," intensifying the competition for shrinking mortgage volumes. As market consolidation and competition persisted in fiscal 1996, CTX concentrated its efforts on achieving efficiencies at every step of the loan process, seeking to become a low-cost producer of mortgage banking services. A full service provider. CTX originates, packages, securitizes and sells all of its mortgage loans in the secondary market, simultaneously selling the servicing rights. CTX originally was established to provide mortgages for buyers of Centex Homes, and its geographic growth has generally paralleled that of the home builder. Today, more than 70% of Centex Homes buyers nationwide choose CTX as their mortgage provider. These "builder" loans account for about 20% of CTX's total loan volume, but they are CTX's most profitable loans due to lower production costs and a higher average loan amount. Centex Homes remains CTX Mortgage's largest customer and increasing this "builder" business continues to be a major CTX priority. Because it has been able to attract and retain many high production loan officers for its third-party business, CTX also has a strong retail mortgage culture. Based on retail production (company-originated mortgages), CTX currently ranks eighth in the nation but is second largest among independent (non-bank-affiliated) retail originators. During fiscal 1996, CTX originated 41,596 loans valued at approximately $4.9 billion. At this volume level, even small changes in financial variables can have significant impact. Currently, a $100 decrease in per unit loan origination costs would generate more than $4 million of incremental earnings. Therefore, reducing its loan origination costs is a primary focus for CTX. Technology utilization plays a major role in that effort and CTX aggressively applies systems technology to its business. Combined with new work approaches, this technology has facilitated corporate office consolidation of some functions previously performed at the branches. The growing sophistication of CTX's systems will make it possible to re-expand production in its office network without adding extensive field overhead or corporate office management. Shortly after fiscal year end, Financial Services continued to enhance its systems capabilities by acquiring two mortgage service providers, one of which specializes in quality control services and the other in automated loan processing services that substantially reduce costs. These entities currently serve other mortgage companies. 16 19 FINANCIAL SERVICES [CHART] MORTGAGE BANKING VALUE OF LOANS ($ in billions) 92 ................... $ 2.5 93 ................... $ 4.2 94 ................... $ 6.4 95 ................... $ 4.2 96 ................... $ 4.9 As it seeks new channels of originations, CTX has begun marketing its capabilities to other home builders through controlled business arrangements (CBAs), forming new entities to provide mortgage banking services to other builders. During fiscal 1996, CTX continued to follow the policy it initiated two years ago of increasing lending to low- to medium-income families. CTX's program sensitizes its loan officers to the specific mortgage credit considerations of low-income communities and encourages officers to solicit loans in these areas. In addition, CTX currently is participating in the FNMA (Federal National Mortgage Association) test programs targeting potential home buyers in underserved communities. CTX also is successfully increasing its business within the various minority communities. During calendar 1995, CTX's approval rate for loans to all minorities rose to 81% from 74% in 1994. Other home-buyer related services in the Centex Financial Services Group include title insurance, escrow, and hazard insurance operations, primarily for Centex Homes customers. During fiscal 1996, our Centex Title Company in Texas purchased San Antonio's largest title operation--Commerce Land Title-- and our 16 Texas title locations now operate under the Commerce name. Metropolitan Title and Guaranty Company operates in 10 Florida markets. Centex Escrow Company has two offices in Washington state, and CTX Insurance Company's information systems enable it to offer homeowner, automobile, boat and personal insurance policies to customers in 18 states. Formed in fiscal 1995, Nova Mortgage Credit Corporation offers "B" and "C" mortgages to home buyers whose credit histories prevent them from qualifying for CTX's "A" mortgages. The demand for such mortgages is increasing due to rising consumer debt and the increased ability of issuers to securitize and sell the resulting financial instruments. Nova, which also offers home equity loans, currently is establishing a retail branch network of offices due to open during fiscal 1997. A bright future. Centex Financial Services has created a substantial presence in its markets, and the high-return characteristics of the business are an excellent blend with the capital-intensive nature of our Home Building business. With increasing mortgage applications, its focus on cost reduction and its important new technological capabilities, CTX should have an excellent year in fiscal 1997. Beyond that, Financial Services represents one of Centex's most important, and potentially most lucrative, opportunities. 17 20 INNER CHANGE Aggressively reorganize our internal structure of people and companies to capitalize on our skills, talents and experience [PHOTO] Juan Rodriguez 18 21 CONTRACTING AND CONSTRUCTION SERVICES [CHART] [CHART] REVENUES ($ in millions) OPERATING EARNINGS ($ in millions) 92 ................... $ 865 92 ................... $9.3 93 ................... $ 783 $3.7*/$5.6** 94 ................... $ 967 93 ................... $ .4 95 ................... $1,060 ($4.1)*/$4.5** 96 ................... $ 984 94 ................... $ -- ($4.5)*/$4.5** 95 ................... $3.0 ($1.8)*/$4.8** 96 ................... ($ .1) ($5.0)*/$4.9** * Operating Earnings (Losses) ** Investment Earnings on Cash Flow over Equity (Eliminated in Consolidation) Contracting and Construction Services revenues for fiscal 1996 were $983.5 million, a 7% decline from revenues of $1.06 billion in 1995. The division reported an operating loss of $5.0 million for 1996 versus a $1.8 million loss in 1995. The 1996 loss was impacted by the suspension of a contract to build Harrah's Jazzville Casino in New Orleans, Louisiana, resulting from a bankruptcy filing by the casino's developer. Contracting and Construction Services was awarded new contracts totaling $857.0 million in 1996, a 25% decline from $1.15 billion of new work received in 1995. The backlog of uncompleted contracts at March 31, 1996 was $1.20 billion, slightly less than the $1.33 billion backlog reported at March 31, 1995. JUAN RODRIGUEZ Assistant Project Engineer The Centex Construction Group's internal restructuring will align the Group's unique strengths more closely with the needs of the marketplace. Juan utilizes his special experience and expertise throughout the construction of a much needed medical center. 19 22 CONTRACTING AND CONSTRUCTION SERVICES Fiscal 1996 was another challenging year for the Centex Construction Group as the division posted its fourth consecutive annual operating loss. The loss was due primarily to several underpriced projects and to the unexpected suspension of a subsidiary's contract to build Harrah's Jazzville Casino in New Orleans, Louisiana. Although the Construction Group's backlog level was high throughout the year, operating margins on work performed remained low due to the intensely competitive market. Industry margins have been under pressure since the early 1990's when less non-residential construction coupled with federal budgetary constraints severely reduced the supply of available work. The non-residential market began recovering in 1994 but project margins are still below prior cyclical peak levels. Some of Centex's recent problems are related to lower-margin contracts of several years' duration taken during the depressed period. Despite the Group's earnings problems, many improvements have occurred in the division in recent years. The Group's more unified corporate identity enables it to successfully approach markets across intercompany lines and develop industry-specific marketing initiatives. The Group also has centralized its information systems and accounting functions and innovatively trimmed insurance and other operating costs. Restructuring for strength. As the fiscal year drew to a close, the Construction Group embarked on a major organizational restructuring designed to make best and most immediate use of the Group's existing strengths and position it for both profitability and growth. The results of this effort include fewer operating entities, lower operating costs and a more focused alignment of the Group's strengths with the needs and opportunities in the marketplace. The first step in the restructuring included adding a new President/Chief Executive Officer and employing a Chief Operating Officer for the Group's senior management team, as well as hiring a new Chairman/Chief Executive Officer for one of the major operating companies. Each of these senior executives has exceptional experience and expertise, and we are certain their leadership, together with existing management, will provide strong direction for the Group. Due to the restructuring, San Diego-based Centex Golden is now an operating arm of Nashville, Tennessee-based Centex Rodgers, which has generated consistent profitability as a leader in the private healthcare construction arena. The consolidated entity will utilize the Group's greatest national strength--healthcare construction services-- to expand in California and to further extend its business activity in Texas and Virginia. As evidence of the Group's healthcare services strength and reputation, Centex-Rodgers recently established a joint venture with AIM Systems in Detroit, Michigan, known as Centex-Aim. This new entity was awarded the first project it proposed, a $26.5 million hospital in Michigan. The Group restructuring also is merging Virginia-based Centex Simpson with Centex Bateson in Dallas to form a new entity: Centex Construction Company. It will be headquartered in Dallas and maintain a substantial presence in the Washington, D.C. area. Centex Landis in New Orleans also will become part of Centex Construction Company, probably by calendar year end. 20 23 CONTRACTING AND CONSTRUCTION SERVICES The new entity will combine our historically strong estimating and operational forces to lead the Group's bidding effort on all hard-bid, fixed-price construction projects. We also employ many talented people whose expertise is in private, negotiated contracting, and Centex Construction Company's ultimate objective is to be an organization that performs a balance of negotiated and hard-bid work. Opportunities abound. Centex Rooney employees have developed substantial expertise in the education, corrections and hospitality markets, each of which could represent a national opportunity for us as does our healthcare construction expertise. Centex Rooney also has substantial market share in many other construction segments in its home state of Florida. Tennessee-based Centex Forcum Lannom will continue to specialize in the industrial contracting field and in providing value-added engineering services. There appear to be many opportunities to utilize the Group's abilities and experience to enter higher-value-added businesses with better margins. Some owners now request design/build services including development assistance. Complex projects such as these create greater opportunity for higher margins. The future of the Harrah's casino project remains unsettled. Efforts to reorganize the casino project had gained substantial momentum but were stalled recently when the State of Louisiana enacted legislation giving voters the local option to approve gambling. The casino should be reorganized assuming that, as expected, there is a favorable vote on the gambling issue in New Orleans parish in November. Any such financial reorganization is expected to include the payment of substantially all outstanding claims of Centex and its subcontractors. Any major organizational restructuring requires a period of restabilization. However, we are convinced that our strategy is the correct one and that it will create special opportunities for the exceptional people, both new and long-term, that make up the Centex Construction Group. MAJOR NEW CONTRACTS - FISCAL 1996 $ 143.6 M Disney's Coronado Springs Resort, Bay Lake, FL $ 32.0 M Texas A&M University Library, College Station, TX $ 28.0 M Miami-Dade Community College Medical Center Addition, Miami, FL $ 25.0 M Osceola Regional Hospital Replacement Facility, Kissimmee, FL $ 25.0 M Western Baptist Medical Center in Paducah, KY $ 24.7 M Multi-Cultural Performing Arts Center, Jacksonville, FL $ 23.8 M Molina High School, Dallas, TX $ 23.6 M International Center Tower II, Dallas, TX $ 22.9 M Virginia Peninsula Regional Jail, James City County, VA $ 21.5 M 482nd Fighter Wing Area, Homestead Air Force Base, Homestead, FL $ 21.0 M Abbott Diagnostic Laboratory, Irving, TX $ 18.2 M Processing Plant for Tyson's Foods, Union City, TN $ 14.0 M Columbia County Courthouse, Lake City, FL $ 11.0 M Delray Beach Mall, Delray Beach, FL $ 10.4 M Neuroscience Medical Center Addition, Louisiana State University, New Orleans, LA $ 10.0 M Flagler Hospital, St. Augustine, FL $ 9.9 M Carlsbad Seapointe Resort, Carlsbad, CA $ 9.0 M David Anchin Center, Education Building II, University of South Florida, Tampa, FL $ 8.0 M Regional Service Center, Sony Corporation, Fort Lauderdale, FL 21 24 INNER GINEER Constantly improve procedures and upgrade equipment to enhance our operational productivity and profitability [PHOTO] Aaron Alexander 22 25 CENTEX CONSTRUCTION PRODUCTS, INC. [CHART] [CHART] REVENUES ($ in millions) OPERATING EARNINGS ($ in millions) 92 ................... $135.7 92 ................... $ 1.1 93 ................... $141.2 93 ................... $ 4.6 94 ................... $172.9 94 ................... $16.6 95 ................... $194.3 95 ................... $33.8 96 ................... $222.6 $16.6* 96 ................... $52.3 Because CXP is reported on the $25.6* equity method, its revenues are not reflected in Centex's *Centex's 49% share financials. Prior to fiscal 1995, CXP was 100% owned by Centex AARON ALEXANDER Cement Plant Process Relief Man As CXP continues to focus on increased production and higher productivity at all its facilities, the company relies on employees like Aaron whose skills range from tending the cement kiln to manning the computerized console that monitors all plant processes. Early in fiscal 1995, Centex Corporation's formerly wholly-owned subsidiary, Centex Construction Products, Inc. (CXP), sold 51% of its stock in an Initial Public Offering, becoming a separate, publicly-held company. Centex's 49% share of CXP's operating earnings, which is reported on the equity basis, was $25.6 million in fiscal 1996, 55% over $16.6 million in 1995. Record profits in Cement and Wallboard and significant improvement in Concrete and Aggregates produced the all-time-high operating earnings. Increased Cement and Wallboard production, improved Cement and Concrete pricing, plus higher sales volume and lower production costs of all CXP products contributed to 1996's peak operating margin of 25% versus 19.3% in 1995. 23 26 CENTEX CONSTRUCTION PRODUCTS, INC. A dual focus on profitability and productivity, aided by economic expansion and increased construction spending, enabled CXP to report the best performance in its 32-year history in fiscal 1996. Benefitting from increased sales volumes and higher operating margins, each CXP operation--Cement, Gypsum Wallboard, and Concrete and Aggregates--contributed to the record achievement. At capacity and sold out. As a result of robust construction activity, CXP's four Cement plants, located in Nevada, Wyoming, Illinois and Texas, operated at capacity for the eighth consecutive year and were "sold out." Total Cement sales volume of 2.1 million tons, including 185,000 tons of cement purchased in order to meet demand, was an all-time high. Cement prices rose 6% over 1995, due to an improving balance of supply and demand, while production costs remained stable as the benefits of higher clinker production offset other cost increases. CXP's Gypsum Wallboard facilities in the Bernalillo and Albuquerque, New Mexico area also operated at capacity during 1996. Wallboard sales volume was a record 661 million square feet, 13% above 1995 volume, due mostly to 38% higher production at the Albuquerque facility. The 1996 sales price declined slightly from 1995, due to less construction activity in certain markets, expanding industry production capacity, and more competition due to increased distribution of wallboard in markets where pricing was higher. Unit operating margins rose 46% due primarily to lower production costs. Concrete and Aggregates' 1996 operating earnings rose 115% over 1995 on 13% higher revenues, due to both products' increased sales volume and Concrete's lower production costs and improved sales prices. Concrete sales volumes benefitted from favorable weather in Texas and Northern California. Average Aggregates pricing declined slightly due to increased sales of lower-priced Aggregates in Texas and Northern California. Key to CXP's success is ongoing implementation of innovative capital projects that improve operating efficiency at its facilities. In fiscal 1996, aided by a $400,000 grant from the Illinois Department of Natural Resources, CXP's Illinois Cement operation installed a tire-derived (TDF) system as a low-cost source of kiln fuel. This alternative combines CXP's strategy of cost-efficient production with the public's increasing interest in energy conservation and natural resource recovery. At the Albuquerque Wallboard plant, a complete modernization of the process control technology was completed, resulting in increased production volumes, improved product quality and lower production costs at the 35-year-old facility. An acquisitive nature. CXP, the only publicly traded company with a unique blend of cement and gypsum products, is at its strongest point yet, both operationally and financially. It has excellent management and is achieving high returns during the current cyclical period. Now virtually debt-free, the company is ready to expand through acquisition and continues to search for opportunities that will enable it to reach its goals and provide higher returns for its stockholders. Assuming the economy remains relatively stable, fiscal 1997 should be another year of record profitability for CXP. 24 27 FINANCIAL INFORMATION 25 28 CENTEX CORPORATION AND SUBSIDIARIES CONSOLIDATED REVENUES AND OPERATING EARNINGS BY LINE OF BUSINESS
FOR THE YEARS ENDED MARCH 31, ------------------------------------------------------------------ 1996 1995 1994 1993 1992 ---------- ---------- ---------- ---------- ---------- (DOLLARS IN THOUSANDS) REVENUES Home Building $1,989,929 $2,110,735 $1,869,754 $1,433,062 $1,061,886 64% 65% 61% 61% 52% Financial Services 129,546 106,841 203,393 147,041 101,751 4% 3% 7% 6% 5% Contracting and Construction Services 983,512 1,059,928 966,562 783,222 865,009 32% 32% 32% 33% 43% ---------- ---------- ---------- ---------- ---------- $3,102,987 $3,277,504 $3,039,709 $2,363,325 $2,028,646 ========== ========== ========== ========== ========== 100% 100% 100% 100% 100% OPERATING EARNINGS Home Building $ 106,695 $ 112,149 $ 95,977 $ 79,850 $ 55,177 74% 83% 53% 62% 68% Financial Services 17,155 9,399 73,550 50,854 21,582 12% 7% 41% 40% 27% Contracting and Construction Services (4,995) (1,790) (4,500) (4,103) 3,742 (3%) (1%) (2%) (3%) 5% Other, net (866) (1,608) (1,799) (4,262) (840) (1%) (1%) (1%) (3%) (1%) Equity in Earnings of Affiliate (CXP) 25,628 16,577 16,626 4,648 1,138 18% 12% 9% 4% 1% ---------- ---------- ---------- ---------- ---------- OPERATING EARNINGS 143,617 134,727 179,854 126,987 80,799 100% 100% 100% 100% 100% Corporate General and Administrative 14,969 15,253 15,158 13,120 12,807 Interest 40,862 33,014 29,683 22,108 22,140 ---------- ---------- ---------- ---------- ---------- EARNINGS BEFORE GAIN ON CXP'S INITIAL PUBLIC OFFERING AND INCOME TAXES 87,786 86,460 135,013 91,759 45,852 Gain on CXP's Initial Public Offering -- 59,328 -- -- -- ---------- ---------- ---------- ---------- ---------- EARNINGS BEFORE INCOME TAXES $ 87,786 $ 145,788 $ 135,013 $ 91,759 $ 45,852 ========== ========== ========== ========== ==========
Applicable segment overhead costs have been deducted from lines of business earnings. 26 29 CENTEX CORPORATION AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED EARNINGS
FOR THE YEARS ENDED MARCH 31, ---------------------------------------- 1996 1995 1994 ---------- ---------- ---------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) REVENUES Home Building $1,989,929 $2,110,735 $1,869,754 Financial Services 129,546 106,841 203,393 Contracting and Construction Services 983,512 1,059,928 966,562 ---------- ---------- ---------- 3,102,987 3,277,504 3,039,709 ---------- ---------- ---------- COSTS AND EXPENSES Home Building 1,883,234 1,998,586 1,773,777 Financial Services 112,391 97,442 129,843 Contracting and Construction Services 988,507 1,061,718 971,062 Other, net 866 1,608 1,799 Equity in Earnings of Affiliate (CXP) (25,628) (16,577) (16,626) Corporate General and Administrative 14,969 15,253 15,158 Interest 40,862 33,014 29,683 ---------- ---------- ---------- 3,015,201 3,191,044 2,904,696 ---------- ---------- ---------- EARNINGS BEFORE GAIN ON CXP'S INITIAL PUBLIC OFFERING AND INCOME TAXES 87,786 86,460 135,013 Gain on CXP's Initial Public Offering -- 59,328 -- ---------- ---------- ---------- EARNINGS BEFORE INCOME TAXES 87,786 145,788 135,013 Income Taxes 34,421 53,540 49,851 ---------- ---------- ---------- NET EARNINGS $ 53,365 $ 92,248 $ 85,162 ========== ========== ========== EARNINGS PER SHARE $ 1.83 $ 3.04 $ 2.60 ========== ========== ==========
See notes to consolidated financial statements. 27 30 CENTEX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
CENTEX CORPORATION AND SUBSIDIARIES ------------------------- MARCH 31, ------------------------- 1996 1995 ---------- ---------- (DOLLARS IN THOUSANDS) ASSETS Cash and Cash Equivalents $ 14,042 $ 23,785 Receivables -- Residential Mortgage Loans 629,756 413,802 Construction Contracts 199,232 177,075 Trade, including Notes of $8,531 and $4,898 81,571 58,720 Affiliates -- -- Inventories -- Housing Projects 1,055,478 1,087,542 Land Held for Development and Sale 149,972 78,929 Investments -- Centex Construction Products, Inc. 106,504 89,871 Centex Development Company, L.P. 36,866 46,585 Joint Ventures and Other 3,804 5,695 Unconsolidated Subsidiaries -- -- Property and Equipment, net 37,139 41,267 Other Assets and Deferred Charges 22,602 26,427 ---------- ---------- $2,336,966 $2,049,698 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts Payable and Accrued Liabilities $ 614,241 $ 555,944 Short-term Debt 662,267 576,260 Long-term Debt, including $100 million maturing May 1996 321,002 222,530 Deferred Income Taxes 16,620 26,737 Stockholders' Equity -- Preferred Stock, Authorized 5,000,000 Shares, None Issued -- -- Common Stock, $.25 Par Value; Authorized 50,000,000 Shares; Issued and Outstanding 28,425,851 and 28,070,978 Shares 7,107 7,018 Capital in Excess of Par Value 6,814 -- Retained Earnings 708,915 661,209 ---------- ---------- Total Stockholders' Equity 722,836 668,227 ---------- ---------- $2,336,966 $2,049,698 ========== ==========
See notes to consolidated financial statements. 28 31 CENTEX CORPORATION AND SUBSIDIARIES
CENTEX CORPORATION FINANCIAL SERVICES ------------------------- --------------------- MARCH 31, MARCH 31, ------------------------- --------------------- 1996 1995 1996 1995 ---------- ---------- -------- -------- (DOLLARS IN THOUSANDS) $ 11,897 $ 18,534 $ 2,145 $ 5,251 -- -- 629,756 413,802 199,232 177,075 -- -- 59,429 49,669 22,142 9,051 -- -- (1,267) 65,521 1,055,478 1,087,542 -- -- 149,972 78,929 -- -- 106,504 89,871 -- -- 36,866 46,585 -- -- 3,804 5,695 -- -- 38,366 29,082 -- -- 25,413 25,341 11,726 15,926 14,767 19,739 7,835 6,688 ---------- ---------- -------- -------- $1,701,728 $1,628,062 $672,337 $516,239 ========== ========== ======== ======== $ 554,554 $ 504,659 $ 59,687 $ 51,285 87,251 204,851 575,016 371,409 321,002 222,530 -- -- 16,085 27,795 535 (1,058) -- -- -- -- 7,107 7,018 2 12 6,814 -- 37,917 51,908 708,915 661,209 (820) 42,683 ---------- ---------- -------- -------- 722,836 668,227 37,099 94,603 ---------- ---------- -------- -------- $1,701,728 $1,628,062 $672,337 $516,239 ========== ========== ======== ========
In the supplemental data presented above, "Centex Corporation" means the basis of presentation as described in Note A to the consolidated financial statements, and "Financial Services" means CTX Mortgage Company and Affiliates. Transactions between Centex Corporation and Financial Services have been eliminated from the Centex Corporation and Subsidiaries balance sheets. 29 32 CENTEX CORPORATION AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE YEARS ENDED MARCH 31, ------------------------------------- 1996 1995 1994 --------- --------- --------- (DOLLARS IN THOUSANDS) CASH FLOWS -- OPERATING ACTIVITIES Net Earnings $ 53,365 $ 92,248 $ 85,162 Adjustments -- Depreciation, Depletion and Amortization 12,499 6,438 19,640 Deferred Income Taxes (6,542) (4,285) (7,760) Gain Related to CXP's IPO, net of Tax -- (37,495) -- Equity in Earnings of CXP, CDC and Joint Ventures (16,603) (9,827) (3,387) Increase in Receivables (42,503) (10,813) (21,965) (Increase) Decrease in Residential Mortgage Loans (215,954) 263,718 (87,048) Decrease (Increase) in Inventories 55,463 (92,255) (201,539) Decrease in Government -- Guaranteed S&L Assets -- 43,767 39,056 Increase (Decrease) in Payables and Accruals 46,772 (56,866) 91,864 Decrease (Increase) in Other Assets 2,915 5,234 (4,190) Other, net (4,011) (20,167) (13,859) --------- --------- --------- (114,599) 179,697 (104,026) --------- --------- --------- CASH FLOWS -- INVESTING ACTIVITIES Decrease (Increase) in Advances to CDC and Joint Ventures 11,580 24,334 (2,747) Acquisition of Vista Properties (85,422) -- -- Dividend and Other Receipts Related to CXP's IPO -- 186,525 -- Property and Equipment Additions, net (7,025) (10,552) (31,936) Decrease in Marketable Securities -- 78,241 32,075 --------- --------- --------- (80,867) 278,548 (2,608) --------- --------- --------- CASH FLOWS -- FINANCING ACTIVITIES (Decrease) Increase in S&L Deposits and Debt -- (211,055) 6,915 Increase (Decrease) in Debt 184,479 (207,012) 144,859 Retirement of Common Stock -- (89,093) -- Proceeds from Stock Option Exercises 6,903 2,320 11,386 Dividends Paid (5,659) (5,907) (6,304) --------- --------- --------- 185,723 (510,747) 156,856 --------- --------- --------- NET (DECREASE) INCREASE IN CASH (9,743) (52,502) 50,222 CASH AT BEGINNING OF YEAR 23,785 76,287 26,065 --------- --------- --------- CASH AT END OF YEAR $ 14,042 $ 23,785 $ 76,287 ========= ========= =========
See notes to consolidated financial statements. 30 33 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, 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 EXERCISE OF STOCK OPTIONS -- 89 6,814 -- 6,903 NET EARNINGS -- -- -- 53,365 53,365 CASH DIVIDENDS -- -- -- (5,659) (5,659) ------- ------- --------- -------- -------- Balance, March 31, 1996 $ -- $7,107 $ 6,814 $708,915 $722,836 ======= ====== ========= ======== ========
See notes to consolidated financial statements. 31 34 CENTEX CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) (A) SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION 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. 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 those included in Financial Services (CTX Mortgage and Affiliates) which are presented on an equity basis of accounting. -- Financial Services. This represents CTX Mortgage and Affiliates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. 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 $69 million included in construction contracts receivable and $63 million included in accounts payable at March 31, 1996 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, 1996 are collectible primarily over four years, with $2.6 million being due within one year. The weighted average interest rate at March 31, 1996 was 8.3%. 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. 32 35 CENTEX CORPORATION AND SUBSIDIARIES JOINT VENTURES Earnings or losses of joint ventures are not significant and are included in the appropriate segment of business revenues. Investments in non-controlled 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 1996, 1995 and 1994 of 29,090,919; 30,326,906 and 32,789,852, respectively. RESIDENTIAL MORTGAGE LOANS RECEIVABLE Residential mortgage loans of $629.8 million at March 31, 1996 are stated at the lower of aggregate cost or market. Market is determined based on 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. 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 $218 million and commitments to sell to investors against these loan commitments of approximately $196 million at March 31, 1996. The company does not engage in the trading of securities or other financial instruments. STATEMENTS 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, ---------------------------------- 1996 1995 1994 -------- -------- -------- Total Interest Incurred............................ $ 69,724 $ 58,771 $ 68,856 Less -- Financial Services......................... (28,862) (25,757) (39,173) -------- -------- -------- Interest Expense................................... $ 40,862 $ 33,014 $ 29,683 ======== ======== ========
Net payments made for federal, state and foreign income taxes during the fiscal years ended March 31, 1996, 1995 and 1994 were $28.0 million, $49.8 million, and $41.9 million, respectively. 33 36 CENTEX CORPORATION AND SUBSIDIARIES STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS Statement of Financial Accounting Standards No. 121, issued in March 1995, establishes methods of accounting for the impairment of long-lived assets, certain identifiable intangibles, and goodwill related to those assets to be held and used, and for long-lived assets and certain identifiable intangibles to be disposed of. This Statement will be implemented on April 1, 1996 and will not have a material impact on the company's financial statements. Statement of Financial Accounting Standards No. 122, issued in May 1995, eliminates the accounting distinction between mortgage servicing rights acquired through loan origination and those acquired through purchase. This standard was adopted January 1, 1996 and did not have a material impact on the company's financial statements. Statement of Financial Accounting Standards No. 123, issued in October 1995, establishes financial accounting and reporting standards for stock-based employee compensation plans. This Statement requires either (1) recognition of compensation cost in the financial statements for those companies that adopt the new fair value based method or (2) expanded disclosure of pro forma net income and earnings per share information for those companies that retain the current method set forth in APB Opinion 25, "Accounting for Stock Issued to Employees." This Statement will be effective for Centex's fiscal 1997, ending March 31, 1997. The Company plans to retain the current method set forth in APB Opinion 25 and will begin the expanded disclosure in the fiscal 1997 financial statements. (B) SAVINGS AND LOAN OPERATIONS 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), subsequently replaced by the FSLIC Resolution Fund (the Fund). 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 acquisition agreements provided for sharing by the Fund in a portion of the tax benefits realized by Centex Corporation and indemnification by the Fund against unassumed liabilities and claims. In December 1994, Texas Trust and CTX Holding company executed an agreement with the Fund which terminated the assistance agreement. In December 1994, 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 dissolved 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, gypsum wallboard, concrete and aggregate 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 for the fiscal year ended 1994 and the related costs and expenses have been reclassified into "Equity in Earnings of Affiliate (CXP)" in order to facilitate comparisons between the periods. 34 37 CENTEX CORPORATION AND SUBSIDIARIES Summarized financial information of CXP is presented below:
FOR THE YEARS ENDED MARCH 31, ---------------------------------- 1996 1995 1994 -------- -------- -------- Revenues $222,594 $194,313 $166,826 Earnings Before Income Taxes $ 52,304 $ 33,829 $ 16,626 Net Earnings $ 33,944 $ 21,820 $ 10,240
MARCH 31, --------------------- 1996 1995 -------- -------- ASSETS Current Assets $ 84,023 $ 66,562 Noncurrent Assets 185,552 183,541 -------- -------- $269,575 $250,103 ======== ======== LIABILITIES AND EQUITY Current Liabilities $ 38,129 $ 35,493 Noncurrent Liabilities 14,984 31,205 Stockholders' Equity 216,462 183,405 -------- -------- $269,575 $250,103 ======== ========
(D) PROPERTY AND EQUIPMENT Property and equipment cost by major category and accumulated depreciation are summarized below:
MARCH 31, --------------------- 1996 1995 -------- -------- Land, Buildings and Improvements $ 1,837 $ 1,919 Plants, Machinery, Equipment and Other 82,539 79,592 -------- -------- 84,376 81,511 Accumulated Depreciation (47,237) (40,244) -------- -------- $ 37,139 $ 41,267 ======== ========
35 38 CENTEX CORPORATION AND SUBSIDIARIES (E) INDEBTEDNESS SHORT-TERM DEBT Balances of short-term debt were:
MARCH 31, ---------------------------------------------------------------- 1996 1995 ------------------------------ ------------------------------ CENTEX FINANCIAL CENTEX FINANCIAL CORPORATION SERVICES CORPORATION SERVICES ----------- --------- ----------- --------- Banks $51,000 $ 245,000 $ 79,000 $ 196,000 Commercial Paper 35,000 -- 125,000 -- Other Financial Institutions 1,251 330,016 851 175,409 ------- -------- -------- --------- $87,251 $ 575,016 $ 204,851 $ 371,409 ------- -------- -------- --------- Consolidated Short-term Debt $662,267 $576,260 ======== ========
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 1996 and 1995 were 6.4% and 5.8%, respectively. The weighted average rates of balances outstanding at March 31, 1996 and 1995 were 6.1% and 6.6%, respectively. LONG-TERM DEBT Balances of long-term debt were:
MARCH 31, --------------------- 1996 1995 -------- -------- Senior Notes, 9.05% Due in May 1996 $100,000 $100,000 Subordinated Debentures, 8.75% to 8.8% Due in 2007 119,350 119,316 Subordinated Debenture, 7.375% Due in 2005 99,552 -- Other Indebtedness, 8.0% to 9.0% Due through 2000 2,100 3,214 -------- -------- $321,002 $222,530 ======== ========
Maturities of long-term debt during the next five fiscal years are: 1997, $100,000; 1998, $0; 1999, $0; 2000, $2,100; 2001, $0. 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. 36 39 CENTEX CORPORATION AND SUBSIDIARIES CREDIT FACILITIES Centex maintains a $425 million revolving credit agreement expiring in August 2000. 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 facility during the fiscal year ended March 31, 1996 and 1995. CTX Mortgage has a $300 million committed and secured mortgage warehouse facility with a bank group, which expires in July 1998. CTX Mortgage also maintains committed mortgage warehouse facilities of $200 million expiring December 1996 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. Under the most restricted covenants of the various debt agreements, retained earnings of $379 million were free of restrictions at March 31, 1996. (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 or extended, the rights will expire on October 1, 1996. 37 40 CENTEX CORPORATION AND SUBSIDIARIES 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 OF SHARES RANGE PER SHARE --------- ----------------- OPTIONS AT MARCH 31, Outstanding 1996 3,025,909 $8.50 to $33.875 1995 3,406,073 $8.50 to $33.875 Exercised 1996 372,873 $8.50 to $18.4375 1995 144,670 $8.50 to $18.313 Exercisable 1996 1,544,410 $8.50 to $33.875 1995 1,630,987 $8.50 to $33.875 Available for Grant 1996 975,504 1995 977,213
During fiscal 1996, options for 170,000 shares were granted and previously granted options for 168,291 shares became available for reissue. At March 31, 1996, the company had 4,001,413 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. 38 41 CENTEX CORPORATION AND SUBSIDIARIES (G) INCOME TAXES The provision for income taxes includes the following components:
FOR THE YEARS ENDED MARCH 31, --------------------------------- 1996 1995 1994 -------- ------- -------- Current Provision Federal $ 41,805 $53,754 $ 52,943 State (842) 4,071 4,668 -------- ------- -------- 40,963 57,825 57,611 -------- ------- -------- Deferred Provision (Benefit) Federal (10,438) (4,570) (10,762) State 3,896 285 3,002 -------- ------- -------- (6,542) (4,285) (7,760) -------- ------- -------- Provision for Income Taxes $ 34,421 $53,540 $ 49,851 ======== ======= ========
The effective tax rate is greater than the federal statutory rate of 35% in 1996, 1995 and 1994 due to the following items:
FOR THE YEARS ENDED MARCH 31, ---------------------------------- 1996 1995 1994 -------- -------- -------- Financial Income Before Taxes $ 87,786 $145,788 $135,013 ======= ======== ======== Income Taxes at Statutory Rate $ 30,724 $ 51,025 $ 47,254 Increases (Decreases) in Tax Resulting From -- State Income Taxes, net 1,966 2,791 4,826 Statutory Depletion in Excess of Cost -- -- (912) Tax Exempt Fund Assistance -- -- (1,238) Other 1,731 (276) (79) ------- -------- -------- Provision for Income Taxes $ 34,421 $ 53,540 $ 49,851 ======= ======== ======== Effective Tax Rate 39% 37% 37%
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, --------------------------------- 1996 1995 1994 ------- -------- -------- Uniform Capitalization for Tax Reporting $(5,112) $ (2,377) $ (777) Software Development Costs Expensed as Incurred 1,728 1,243 714 Equity Adjustments and Gain on CXP's Initial Public Offering (254) 21,500 -- Excess Tax Depreciation and Amortization 502 (32,389) 444 Alternative Minimum Tax (349) (507) 11,012 Interest and Real Estate Taxes Expensed as Incurred 1,736 (749) 430 Financial and Accrual Changes and Other (4,793) 8,994 (19,583) ------- -------- -------- $(6,542) $ (4,285) $ (7,760) ======= ======== ========
39 42 CENTEX CORPORATION AND SUBSIDIARIES Components of deferred income taxes are as follows:
MARCH 31, --------------------- 1996 1995 -------- -------- Deferred Tax Liabilities Excess Tax Depreciation and Amortization $ 1,874 $ 1,372 Interest and Real Estate Taxes Expensed as Incurred 27,573 25,837 Equity Adjustments and Gain on CXP's Initial Public Offering 21,246 21,500 State Income Taxes 8,354 5,929 Consolidated Return Regulation Deferrals 6,888 6,939 Software Development Costs Expensed 3,685 1,957 All Other 8,771 5,447 -------- -------- Total Deferred Tax Liabilities 78,391 68,981 -------- -------- Deferred Tax Assets Uniform Capitalization for Tax Reporting (19,990) (14,878) Financial Accruals (36,127) (18,201) All Other (5,654) (9,165) -------- -------- Total Deferred Tax Assets (61,771) (42,244) -------- -------- Net Deferred Tax Liability $ 16,620 $ 26,737 ======== ========
(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 2007. 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. In July 1995, in conjunction with the extension of the automatic detachment date from 1997 to 2007, Centex reduced its unrecovered capital from $75.8 million to $47.3 million and waived all unpaid preference, totaling $37.5 million. Unrecovered capital was reduced by an additional $10 million during fiscal 1996 through partnership distributions. No distributions were made in fiscal 1995 or 1994. 40 43 CENTEX CORPORATION AND SUBSIDIARIES 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. SUPPLEMENTARY CONDENSED COMBINED BALANCE SHEETS
MARCH 31, ------------------------- 1996 1995 ---------- ---------- ASSETS Cash and Cash Equivalents $ 14,273 $ 25,207 Receivables 914,549 653,622 Inventories 1,244,931 1,266,509 Investments in Centex Construction Products, Inc. 106,504 89,871 Joint Ventures and Unconsolidated Subsidiaries 3,984 5,695 Property and Equipment, net 37,139 41,267 Other Assets and Deferred Charges 22,602 26,427 ---------- ---------- $2,343,982 $2,108,598 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts Payable and Accrued Liabilities $ 616,959 $ 557,640 Short-term Debt 665,593 632,745 Long-term Debt 321,002 222,530 Deferred Income Taxes 16,620 26,737 Stockholders' Equity 723,808 668,946 ---------- ---------- $2,343,982 $2,108,598 ========== ==========
SUPPLEMENTARY CONDENSED COMBINED STATEMENTS OF EARNINGS
FOR THE YEARS ENDED MARCH 31, ---------------------------------------- 1996 1995 1994 ---------- ---------- ---------- Revenues $3,111,486 $3,281,198 $3,224,025 Costs and Expenses 3,023,447 3,194,642 3,089,126 ---------- ---------- ---------- Earnings Before Gain on CXP's Initial Public Offering and Income Taxes 88,039 86,556 134,899 Gain of CXP's Initial Public Offering -- 59,328 -- ---------- ---------- ---------- Earnings Before Income Taxes 88,039 145,884 134,899 Income Taxes 34,421 53,540 49,851 ---------- ---------- ---------- Net Earnings $ 53,618 $ 92,344 $ 85,048 ========== ========== ==========
41 44 CENTEX CORPORATION AND SUBSIDIARIES (I) BUSINESS SEGMENTS The company operates in three business segments: Home Building, Financial Services and Contracting and Construction Services. These segments operate primarily in the United States and their markets are nationwide. 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 tables set forth financial information relating to the Home Building operations.
FOR THE YEARS ENDED MARCH 31, ---------------------------------- 1996 1995 1994 -------- -------- -------- (DOLLARS IN MILLIONS) Revenues $1,989.9 $2,110.7 $1,869.8 Cost of Sales & Expenses 1,883.2 1,998.6 1,773.8 -------- -------- -------- Operating Earnings $ 106.7 $ 112.1 $ 96.0 ======== ======== ======== Identifiable Assets $1,318.7 $1,286.0 $1,203.2 ======== ======== ======== Capital Expenditures $ 4.9 $ 6.4 $ 9.3 ======== ======== ======== Depreciation and Amortization $ 3.1 $ 3.3 $ 2.8 ======== ======== ========
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. Savings and Loan includes the operations of CTX Holding 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, ---------------------------------------------------------------------- 1996 1995 1994 ------ ---------------------------- ---------------------------- MORTGAGE SAVINGS MORTGAGE SAVINGS BANKING & LOAN TOTAL BANKING & LOAN TOTAL -------- ------ ------ -------- ------ ------ (DOLLARS IN MILLIONS) Revenues $129.6 $ 97.4 $ 9.4 $106.8 $187.9 $ 15.5 $203.4 Cost of Sales & Expenses 112.4 96.0 1.4 97.4 116.9 12.9 129.8 ------ ------ ----- ------ ------ ------ ------ Operating Earnings $ 17.2 $ 1.4 $ 8.0 $ 9.4 $ 71.0 $ 2.6 $ 73.6 ====== ====== ===== ====== ====== ====== ====== Identifiable Assets $674.2 $450.7 $ -- $450.7 $685.6 $238.0 $923.6 ====== ====== ===== ====== ====== ====== ====== Capital Expenditures $ 2.5 $ 6.7 $ .2 $ 6.9 $ 11.0 $ 2.3 $ 13.3 ====== ====== ===== ====== ====== ====== ====== Depreciation and Amortization including Negative Goodwill $ 5.7 $ 6.0 $(6.8 ) $ (.8) $ 3.6 $ (2.2) $ 1.4 ====== ====== ===== ====== ====== ====== ======
42 45 CENTEX CORPORATION AND SUBSIDIARIES 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, 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, ------------------------------ 1996 1995 1994 ------ -------- ------ (DOLLARS IN MILLIONS) Revenues $983.5 $1,059.9 $966.6 Cost of Sales & Expenses 988.5 1,061.7 971.1 ------ -------- ------ Operating Loss (5.0) (1.8) (4.5) Intracompany Interest Income* 4.9 4.8 4.5 ------ -------- ------ Total Economic Return $ (.1) $ 3.0 $ - ====== ======== ====== Identifiable Assets* $216.1 $ 199.8 $178.9 ====== ======== ====== Capital Expenditures $ 1.7 $ 2.7 $ 2.8 ====== ======== ====== Depreciation and Amortization $ 2.9 $ 3.1 $ 3.0 ====== ======== ======
- --------------- * The "net assets" position of the Contracting and Construction Services segment provides significant cash flow because payables and accruals consistently exceed gross assets. Intracompany interest income as computed on the group's cash flow in excess of its equity. 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, ----------------------------- 1996 1995 1994 ------ ------ ----- (DOLLARS IN MILLIONS) Equity in Earnings of Affiliate (CXP) $ 25.6 $ 16.6 $16.6* ====== ====== ===== Corporate General and Administrative $ 15.0 $ 15.3 $15.2 ====== ====== ===== Identifiable Assets $127.9 $113.2 $21.3 ====== ====== ===== Capital Expenditures $ .1 $ .2 $ .1 ====== ====== ===== Depreciation and Amortization $ .8 $ .8 $ .8 ====== ====== =====
- --------------- * CXP was 100% owned in 1994 (see Note C). 43 46 CENTEX CORPORATION AND SUBSIDIARIES (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 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. There is no material difference between the recorded amount and the estimated fair value of CTX Mortgage's off-balance-sheet unfunded loan commitments. These are generally priced at market at the time of funding. 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, ----------------------------------------------- 1996 1995 -------------------- -------------------- CARRYING FAIR CARRYING FAIR VALUE VALUE VALUE VALUE -------- -------- -------- -------- Financial Assets Residential Mortgage Loans $629,756 $640,269(a) $413,802 $414,801(a) Financial Liabilities Long-term Debt $321,002 $325,455(b) $222,530 $237,603(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) ACQUISITION OF VISTA PROPERTIES, INC. During the quarter ended September 30, 1995, the company acquired certain equity interests in Vista Properties, Inc. ("Vista") for a net investment of approximately $85 million in cash. At the time of the acquisition, Vista's real property portfolio consisted of approximately 3,400 acres of land located in seven states in which the company has major operations. Vista's real property portfolio generally consists of land that is zoned, planned or developed for single- and multi-family residential, office, retail, industrial and other commercial uses. The management of Vista and the company are continuing to evaluate what benefits could be derived from coordinating, combining or consolidating the business activities of Vista with those of certain of the company's subsidiaries. To date, Vista and the company have initiated joint planning and development work at several key residential sites included in Vista's portfolio and have identified commercial development opportunities in three of Vista's major projects. Vista has also initiated discussions regarding potential joint venture activities (which involve both subsidiaries of the company and unaffiliated third parties) in connection with selected properties. With respect to the balance of its properties, Vista is continuing to implement its existing plans to manage, maintain, develop and sell or otherwise dispose of such properties in the ordinary course of business. 44 47 CENTEX CORPORATION AND SUBSIDIARIES As a result of the above evaluations and in a further effort to optimize the benefits derived from the complimentary business of Vista and the company, the managements of both companies are working on a potential business combination ("Combination") pursuant to which the assets and operations of Vista would be combined with the company's existing home building operations. The managements of the company and Vista believe that a Combination would result in a more efficient means of operating their business activities and would facilitate the zoning, development and buildout of certain of Vista's properties as well as the disposition of the company's excess real estate parcels. In addition, Vista has approximately $335 million of net operating loss carryforwards and a tax basis in its assets that exceeds their book value by approximately $265 million. If a Combination is ultimately consummated, certain of Vista's tax-related benefits may become useable in future years, which could result in a significant contribution to the company's earnings. There can be no assurance that, if the managements of Vista and the company make a proposal to their boards, the directors of each company would approve the Combination, or that if approved, the potential operational or other benefits referred to above would be realized. (L) COMMITMENTS AND CONTINGENCIES In order to assure the future availability of land for home building, the company has made deposits totaling $10 million as of March 31, 1996 for options to purchase undeveloped land and developed lots having a total purchase price of approximately $290 million. These options expire at various dates to 2001. The company has also committed to purchase land and developed lots totaling approximately $43 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, except as described below, 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 Harrah's New Orleans Casino contract was suspended in November 1995 due to a bankruptcy filing by the Harrah's Jazz Company partnership, the developer of the casino. Centex and its subcontractors have claims totaling nearly $40 million against the partnership for completed but unpaid work. Centex's liability to its subcontractors is for less than the total claim. Centex has filed a $40 million lawsuit against Harrah's Entertainment, Inc., parent company of the major partner in the partnership. Centex believes that it and its subcontractors will ultimately recover substantially all of the amounts owed to them. 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. 45 48 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, 1996 and 1995, and the related consolidated statements of earnings, stockholders' equity, and cash flows for each of the three years in the period ended March 31, 1996. 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, 1996 and 1995, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 1996, 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 8, 1996 46 49 CENTEX CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION FISCAL YEAR 1996 COMPARED TO FISCAL YEAR 1995 Centex reported consolidated revenues of $3.1 billion for fiscal 1996, 5% less than $3.3 billion for fiscal 1995. Earnings before income taxes were $87.8 million, 2% more than $86.5 million for fiscal 1995. Total earnings before income taxes for fiscal 1995, including the gain on the sale of 51% of Centex Construction Products, Inc. (CXP), were $145.8 million. Net earnings for fiscal 1996 were $53.4 million, down 3% compared to $54.7 million last year. Total net earnings for last year, including the gain on the CXP sale, were $92.2 million. Earnings per share for fiscal 1996 were $1.83 compared to $1.81 for fiscal 1995. Total earnings per share for fiscal 1995, including the gain from the CXP sale, were $3.04. HOME BUILDING The following summarizes Home Building results for the two-year period ending March 31, 1996 (dollars in millions, except per unit data):
1996 1995 ------------------ ------------------ Home Building Revenues $ 1,989.9 100.0% $ 2,110.7 100.0% Cost of Sales (1,640.0) (82.4%) (1,748.6) (82.9%) Selling, General & Administrative (243.2) (12.2%) (250.0) (11.8%) --------- ----- --------- ----- Operating Earnings $ 106.7 5.4% $ 112.1 5.3% ========= ===== ========= ===== Units Closed 11,970 12,964 Unit Sales Price $ 163,912 $ 159,222 % Change 2.9% 8.0% Operating Earnings per Unit $ 8,914 $ 8,651 % Change 3.0% 13.2% Backlog Units 5,533 3,987 % Change 38.8% (31.2%)
The operating earnings for fiscal 1996 were higher as a percentage of revenues and on a per unit basis compared to fiscal 1995 as a result of an increase in the per unit sales price even though certain general and administrative costs were being absorbed by 8% fewer closed units in fiscal 1996. FINANCIAL SERVICES The Financial Services segment consists primarily of the Mortgage Banking operations. Savings and Loan operations were also included in this segment until their sale in December 1994. The following summarizes Mortgage Banking's results for the two-year period ending March 31, 1996 (dollars in millions):
1996 1995 -------- -------- Revenues $ 129.6 $ 97.4 ======== ======== Operating Earnings $ 17.2 $ 1.4 ======== ======== Origination Volume $4,886.1 $4,195.2 ======== ======== Number of Loans Originated Centex-built Homes 8,445 8,504 Non-Centex-built Homes ("Spot") 33,151 28,574 -------- -------- 41,596 37,078 ======== ========
47 50 CENTEX CORPORATION AND SUBSIDIARIES Declining interest rates in fiscal 1996 have resulted in an increase in mortgage applications and originations compared to fiscal 1995. Applications for the current fiscal year were 47,763, up 31% from 36,487 for the prior fiscal year. Builder applications rose 35% for the year while spot applications increased 30%. These increases occurred even though Mortgage Banking had substantially fewer offices than it had during most of fiscal year 1995. Savings and Loan revenues and operating earnings in fiscal 1995 were $9.4 million and $8.0 million, respectively. 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, 1996 (dollars in millions):
1996 1995 -------- ---------- Revenues $ 983.5 $1,059.9 ======== ======== Operating Loss $ (5.0) $ (1.8) ======== ======== New Contracts Received $ 857.0 $1,151.8 ======== ======== Backlog of Uncompleted Contracts $1,201.5 $1,328.0 ======== ========
Contracting and Construction Services' operating loss during fiscal 1996 results from continued weak operating margins and write-downs of certain projects. In an effort to improve its operating margins, the Contracting and Construction Services operations have not been the low bidder as frequently as during fiscal 1995. This has resulted in a decrease in revenues, fewer new contracts received and a decrease in backlog of uncompleted contracts in fiscal 1996. The Contracting and Construction Services operation provided a positive average net cash flow in excess of Centex's investment in the group of approximately $55-$60 million during fiscal 1996 and 1995. In November 1995, the contract to build the Harrah's New Orleans Casino was suspended due to a bankruptcy filing by the Harrah's Jazz Company partnership, the developer of the casino. Centex and its subcontractors have claims totaling nearly $40 million against the partnership for completed but unpaid work. Centex's liability to its subcontractors is for less than the total claim. Centex has filed a $40 million lawsuit against Harrah's Entertainment, Inc., parent company of the major partner in the partnership. Centex believes that it and its subcontractors will ultimately recover substantially all of the amounts owed to them. EQUITY IN EARNINGS OF AFFILIATES (CXP) Centex's 49% "Equity in Earnings of Affiliate (CXP)" was $25.6 million for fiscal 1996, a 55% increase over $16.6 million for fiscal 1995. Centex Construction Products, Inc. benefited during the year from continued strong product demand, improved operating efficiencies in its wallboard plants and stronger than expected product shipments due to unseasonably mild weather. 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 CXP were $86.5 million, down 36% compared to $135.0 million for fiscal 1994. Net earnings were $54.7 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. 48 51 CENTEX CORPORATION AND SUBSIDIARIES 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 Prices $ 159,222 $ 147,466 % Change 8.0% 6.6% Operating Earnings per Unit $ 8,651 $ 7,640 % Change 13.2% 3.1% Backlog Units 3,987 5,795 % Change (31.2%) 12.5%
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. 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 ======== ========
49 52 CENTEX CORPORATION AND SUBSIDIARIES 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 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 products 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 Services' 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 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.'s fiscal 1995 operating results benefited from improved demand and pricing for its cement and gypsum wallboard products. STOCK REPURCHASE PROGRAM As a result of Centex's strengthened financial position after CXP's initial public offering, Centex commenced a stock repurchase program as the Centex stock price fell to and remained at depressed levels. In fiscal 1995, the company repurchased 3.74 million shares of its common stock, or about 12% of the shares outstanding at the beginning of fiscal 1995. No shares were repurchased in fiscal 1996. Centex currently has Board authorization to purchase approximately 930,000 additional shares. 50 53 CENTEX CORPORATION AND SUBSIDIARIES 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. During fiscal 1996, this facility was renegotiated to improve pricing and extend the term to fiscal year 2001. There were no borrowings under this or the prior facilities during fiscal 1996, 1995 or 1994. In addition, CTX Mortgage Company has its own $600 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 year 1996, debt increased by approximately $184 million. These borrowings were used to partially fund the increase in residential mortgage loans and the Vista Properties acquisition. The company believes it has adequate resources and sufficient credit facilities to satisfy its current needs and provide for future growth. The $100 million Senior Notes, due in May 1996, will be replaced by short-term borrowings under various credit facilities. OUTLOOK During the quarter ended September 30, 1995, the company acquired certain equity interests in Vista Properties, Inc. ("Vista") for a net investment of approximately $85 million in cash. At the time of the acquisition, Vista's real property portfolio consisted of approximately 3,400 acres of land located in seven states in which the company has major operations. Vista's real property portfolio generally consists of land that is zoned, planned or developed for single- and multi-family residential, office, retail, industrial and other commercial uses. The management of Vista and the company are continuing to evaluate what benefits could be derived from coordinating, combining or consolidating the business activities of Vista with those of certain of the company's subsidiaries. To date, Vista and the company have initiated joint planning and development work at several key residential sites included in Vista's portfolio and have identified commercial development opportunities in three of Vista's major projects. Vista has also initiated discussions regarding potential joint venture activities (which involve both subsidiaries of the company and unaffiliated third parties) in connection with selected properties. With respect to the balance of its properties, Vista is continuing to implement its existing plans to manage, maintain, develop and sell or otherwise dispose of such properties in the ordinary course of business. As a result of the above evaluations and in a further effort to optimize the benefits derived from the complimentary business of Vista and the company, the managements of both companies are working on a potential business combination ("Combination") pursuant to which the assets and operations of Vista would be combined with the company's existing home building operations. The managements of the company and Vista believe that a Combination would result in a more efficient means of operating their business activities and would facilitate the zoning, development and buildout of certain of Vista's properties as well as the disposition of the company's excess real estate parcels. If a Combination is ultimately consummated, certain of Vista's tax-related benefits may become useable in future years, which could result in a significant contribution to the company's earnings. There can be no assurance that, if the managements of Vista and the company make a proposal to their boards, the directors of each company would approve the Combination, or that if approved, the potential operational or other benefits referred to above would be realized. 51 54 CENTEX CORPORATION AND SUBSIDIARIES Centex Home Services Company was formed in fiscal year 1996 to provide value added services to new home buyers. These services will initially be offered to buyers of Centex homes and eventually to other builders and their customers. In April 1996, Centex Home Services Company entered the security and pest control businesses by acquiring the operating assets of two entities -- Dallas-based Advanced Protection Systems, Inc. (APS) and Environmental Safety Systems, Inc. (ESI) of Melbourne, Florida. APS specializes in the installation and monitoring of security systems as well as in access control installations, and currently monitors more than 80,000 residential security systems in 22 states. The current management of APS is retaining a minority stock ownership interest in the new company. In addition to operating a conventional pest and termite control business, ESI developed the Pest Defense System, an innovative patented method of delivering pest control material inside structural walls through permanent tubing that is accessed via ports on outside walls. Centex is acquiring approximately 7,500 of the 11,000 accounts currently being serviced by ESI. The remainder of the accounts are owned by franchisees. Also in April 1996, Centex acquired substantially all of the assets of Advanced Financial Technology, Inc. (Adfitech) and Loan Processing Technologies, Inc.(LPT), headquartered in Oklahoma City, Oklahoma. Adfitech is one of the largest and lowest cost providers of quality control mortgage services, and LPT owns and operates an automated mortgage processing system. The acquisitions should expand and create more flexible mortgage processing capacity for Financial Services, enhancing Financial Services' existing systems capabilities. LPT is also offering these processing services to other mortgage companies. The company expects fiscal 1997 results to be positively impacted by Home Building's strong beginning backlog levels and continued favorable sales trends, increasing applications and originations in Financial Services and the continuation of favorable results from CXP. 52 55 CENTEX CORPORATION AND SUBSIDIARIES QUARTERLY RESULTS (UNAUDITED)
MARCH 31, ----------------------- 1996 1995 -------- -------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) FIRST QUARTER Revenues $700,950 $832,517 Earnings Before Income Taxes $ 13,073 $ 84,779 Net Earnings $ 7,873 $ 53,398 Earnings Per Share $ .27 $ 1.67 SECOND QUARTER Revenues $786,846 $855,709 Earnings Before Income Taxes $ 24,015 $ 27,087 Net Earnings $ 14,551 $ 16,901 Earnings Per Share $ .50 $ .55 THIRD QUARTER Revenues $790,149 $793,205 Earnings Before Income Taxes $ 24,906 $ 19,311 Net Earnings $ 15,156 $ 13,057 Earnings Per Share $ .52 $ .44 FOURTH QUARTER Revenues $825,042 $796,073 Earnings Before Income Taxes $ 25,792 $ 14,611 Net Earnings $ 15,785 $ 8,892 Earnings Per Share $ .54 $ .31
53 56 CENTEX CORPORATION AND SUBSIDIARIES SUMMARY OF SELECTED FINANCIAL DATA (UNAUDITED)
1996 1995 1994 1993 ---------- ---------- ---------- ---------- Revenues $3,102,987 $3,277,504 $3,039,709 $2,363,325 Net Earnings Before 1995 CXP Gain and 1988 Accounting Change $ 53,365 $ 54,753 $ 85,162 $ 61,038 Gain on CXP's IPO for 1995 and Effect of Change in Accounting for Income Taxes in 1988 -- 37,495 -- -- ---------- ---------- ---------- ---------- Net Earnings $ 53,365 $ 92,248 $ 85,162 $ 61,038 ========= ========= ========= ========= Total Assets $2,336,966 $2,049,698 $2,580,356 $2,272,093 Total Long-term Debt, Including Debentures $ 321,002 $ 222,530 $ 222,832 $ 223,988 Total Debt $ 408,253 $ 427,381 $ 429,470 $ 368,988 Deferred Income Taxes $ 16,085 $ 27,795 $ 35,088 $ 55,722 Stockholders' Equity $ 722,836 $ 668,227 $ 668,659 $ 578,415 Total Debt as a Percent of Total Capitalization (Total Debt, Deferred Income Taxes, Negative Goodwill and Stockholders' Equity) 35.6% 38.0% 37.1% 35.8% Net Earnings as a Percent of Beginning Stockholders' Equity 8.0% 13.8% 14.7% 11.8% Per Common Share Earnings Before 1995 CXP Gain and 1988 Accounting Change $ 1.83 $ 1.81 $ 2.60 $ 1.91 Gain on CXP's IPO for 1995 and Effect of Change in Accounting for Income Taxes in 1988 -- 1.23 -- -- ---------- ---------- ---------- ---------- Net Earnings $ 1.83 $ 3.04 $ 2.60 $ 1.91 ========= ========= ========= ========= Cash Dividends $ .20 $ .20 $ .20 $ .20 Book Value Based on Shares Outstanding at Year End $ 25.43 $ 23.80 $ 21.12 $ 18.57 Stock Prices High $ 35 5/8 $ 32 3/8 $ 45 5/8 $ 34 1/8 Low $ 23 1/2 $ 20 1/4 $ 27 1/2 $ 20
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. Debt and deferred income taxes reflect Centex Corporation only, with the mortgage company and savings and loan association reflected on the equity method versus consolidation. 54 57 CENTEX CORPORATION AND SUBSIDIARIES
FOR THE YEARS ENDED MARCH 31, - ------------------------------------------------------------------------------------- 1992 1991 1990 1989 1988 1987 - ---------- ---------- ---------- ---------- ---------- ---------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) $2,028,646 $2,089,110 $1,925,423 $1,707,989 $1,352,601 $1,165,375 $ 34,557 $ 43,605 $ 62,003 $ 40,020 $ 24,063 $ 44,204 -- -- -- -- 50,100 -- - ---------- ---------- ---------- ---------- ---------- ---------- $ 34,557 $ 43,605 $ 62,003 $ 40,020 $ 74,163 $ 44,204 ========== ========== ========== ========== ========== ========== $2,347,452 $2,037,486 $2,045,141 $1,800,522 $1,148,098 $1,150,720 $ 232,294 $ 137,235 $ 140,112 $ 140,192 $ 178,862 $ 133,461 $ 298,508 $ 267,946 $ 267,739 $ 240,457 $ 222,962 $ 134,724 $ 56,627 $ 80,205 $ 59,311 $ 74,487 $ 139,767 $ 229,576 $ 518,494 $ 483,677 $ 447,911 $ 384,174 $ 364,846 $ 363,014 33.0% 30.9% 33.0% 32.6% 30.6% 18.5% 7.1% 9.7% 16.1% 11.0% 20.4% 13.5% $ 1.11 $ 1.42 $ 2.01 $ 1.32 $ .75 $ 1.24 -- -- -- -- 1.57 -- - ---------- ---------- ---------- ---------- ---------- ---------- $ 1.11 $ 1.42 $ 2.01 $ 1.32 $ 2.32 $ 1.24 ========== ========== ========== ========== ========== ========== $ .20 $ .20 $ .20 $ .14375 $ .125 $ .125 $ 16.99 $ 16.07 $ 14.85 $ 13.28 $ 12.13 $ 10.23 $ 27 3/8 $ 21 7/8 $ 20 7/8 $ 14 7/8 $ 17 $ 20 1/4 $ 17 $ 9 3/4 $ 14 $ 10 $ 7 7/8 $ 14 1/2
55 58 3333 HOLDING CORPORATION ------------------------ AND SUBSIDIARY AND CENTEX -------------------------- DEVELOPMENT COMPANY, L.P. ------------------------- TO OUR STOCKHOLDERS: For the year ended March 31, 1996, the Partnership's combined revenues were $14.5 million versus revenues of $10.3 million in the prior year. Fiscal 1996 revenues resulted from interest income and the sale of several properties including: 121.2 acres of residential land and 52.2 acres of commercial land in The Colony, near the Dallas/Fort Worth, Texas metroplex; 398.7 acres of agricultural land in New Braunfels, Texas; and 7.2 acres of agricultural land in Fate, Texas. The Partnership also sold 180 residential lots located in Orlando, Florida and East Windsor, New Jersey to Centex Homes. Net income for fiscal 1996 was $277,000 compared to the Partnership's 1995 net loss of $16.2 million. The 1995 loss included property valuation adjustments of $15.5 million. The pre-adjustment improvement in 1996 was due primarily to higher gross margins on real estate sales, principally in New Jersey, and increased interest income. Selling and administrative costs rose in 1996 due to the Partnership's multi-family development activities. A joint-venture apartment project in College Station, Texas is in the final stages of construction and leasing activities are under way. In July 1995, at the combined annual meeting of stockholders of Centex Corporation and 3333 Holding Corporation, stockholders approved the proposal to extend until November 30, 2007, the detachment of warrants to purchase limited partnership interests in the Partnership. The previous detachment date was November 30, 1997. Also in July 1995, Centex Real Estate Corporation (CREC) waived cumulative preference accruals of $37.5 million and redefined its unrecovered capital in the Partnership as $47.3 million, which became the new basis for future preference accruals. Subsequent to July 1995, the Partnership made capital return payments to CREC of $10.0 million. In November 1995, the Partnership surrendered to its non-recourse lender any and all interest it had in the Forster Ranch property located in San Clemente, California and tendered to the lender the deed for the remaining property. Since the book value of the property equaled the balance of the non-recourse debt, there was no impact on earnings or on the Partnership's capital. The revenues and earnings of the Partnership are largely dependent on lot and land sales, the timing of which is uncertain. Consistent with the nature of the land development business, the Partnership's financial results have varied significantly. We continue to examine viable alternatives for our existing residential and commercial properties and to investigate new acquisition, development and other opportunities consistent with our objectives. /s/ J.S. Bilheimer J.S. Bilheimer President May 8, 1996 56 59 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, 1996 and 1995, 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, 1996. 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, 1996 and 1995, 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, 1996, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Dallas, Texas, May 8, 1996 57 60 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. FINANCIAL HIGHLIGHTS
FOR THE YEARS ENDED MARCH 31, ------------------------------------------------------- 1996 1995 1994 1993 1992 ------- -------- -------- -------- -------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE/UNIT DATA) REVENUES 3333 Holding Corporation and Subsidiary $ 2,045 $ 1,602 $ 537 $ 566 $ 679 Centex Development Company, L.P. $13,943 $ 9,796 $ 12,859 $ 9,783 $ 23,998 Combined Revenues $14,470 $ 10,342 $ 13,249 $ 10,156 $ 24,399 OPERATING EARNINGS (LOSS) 3333 Holding Corporation and Subsidiary $ 253 $ 96 $ (114) $ (96) $ (107) Centex Development Company, L.P. $ 24 $(16,323) $ (1,510) $ (4,176) $ (706) Combined Operating Earnings (Loss) $ 277 $(16,227) $ (1,624) $ (4,272) $ (813) TOTAL ASSETS 3333 Holding Corporation and Subsidiary $ 8,652 $ 8,673 $ 8,600 $ 8,600 $ 8,613 Centex Development Company, L.P. $43,168 $105,946 $121,027 $128,621 $121,244 Combined Assets $50,786 $113,282 $128,092 $134,691 $127,402 TOTAL DEBT 3333 Holding Corporation and Subsidiary $ 7,600 $ 7,600 $ 7,600 $ 6,500 $ 6,500 Centex Development Company, L.P. $ 3,326 $ 56,485 $ 54,149 $ 59,262 $ 44,280 Combined Debt $10,926 $ 64,085 $ 61,749 $ 65,762 $ 50,780 OPERATING EARNINGS (LOSS) PER SHARE/UNIT (Average Outstanding Shares, 1,000; Units 1,000) 3333 Holding Corporation and Subsidiary $ 253 $ 96 $ (114) $ (96) $ (107) Centex Development Company, L.P. $ 24 $(16,323) $ (1,510) $ (4,176) $ (706)
58 61 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. COMBINING BALANCE SHEETS
MARCH 31, --------------------------------------------------------- 1996 1995 1996 1995 1996 1995 ------- -------- ------- -------- ------ ------ 3333 HOLDING CENTEX DEVELOPMENT CORPORATION COMBINED COMPANY, L.P. AND SUBSIDIARY ------------------ ------------------ --------------- (DOLLARS IN THOUSANDS) ASSETS Cash $ 231 $ 1,422 $ 225 $ 1,403 $ 6 $ 19 Accounts Receivable -- Affiliates -- -- 267 570 -- -- Centex Corporation and Subsidiaries 179 187 -- -- 179 187 Other 181 -- 181 -- -- -- Notes Receivable -- Centex Corporation and Subsidiaries 7,700 7,700 -- -- 7,700 7,700 Other 3,809 4,025 3,809 4,025 -- -- Investment in Affiliate -- -- -- -- 767 767 Investment in Real Estate Joint Venture 180 -- 180 -- -- -- Land Held for Development and Sale -- Forster Ranch -- 53,493 -- 53,493 -- -- Other 38,506 46,455 38,506 46,455 -- -- ------- -------- ------- -------- ------ ------ $50,786 $113,282 $43,168 $105,946 $8,652 $8,673 ======= ======= ====== ======= ====== ====== LIABILITIES, STOCKHOLDERS' EQUITY AND PARTNERS' CAPITAL Accounts Payable and Accrued Liabilities -- Affiliates $ -- $ -- $ -- $ -- $ 267 $ 570 Centex Corporation and Subsidiaries 153 160 -- -- 153 160 Other 2,718 2,320 2,558 2,196 160 124 Notes Payable -- Centex Corporation and Subsidiaries 7,600 7,600 -- -- 7,600 7,600 Forster Ranch -- 53,493 -- 53,493 -- -- Other 3,326 2,992 3,326 2,992 -- -- Land Sale Deposits -- 5 -- 5 -- -- 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) (329) (582) -- -- (329) (582) Partners' Capital 36,017 45,993 36,784 46,760 -- -- ------- -------- ------- -------- ------ ------ Total Stockholders' Equity and Partners' Capital 36,989 46,712 37,284 47,260 472 219 ------- -------- ------- -------- ------ ------ $50,786 $113,282 $43,168 $105,946 $8,652 $8,673 ======= ======== ======= ======== ====== ======
See notes to combining financial statements. 59 62 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. COMBINING STATEMENTS OF OPERATIONS AND CASH FLOWS
FOR THE YEARS ENDED MARCH 31, ----------------------------------------------------------------------------------------------- 1996 1995 1994 1996 1995 1994 1996 1995 1994 -------- -------- ------- -------- -------- ------- ------ ------ ----- CENTEX DEVELOPMENT 3333 HOLDING CORPORATION COMBINED COMPANY, L.P. AND SUBSIDIARY ------------------------------- ------------------------------- ------------------------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE/UNIT DATA) COMBINING STATEMENTS OF OPERATIONS REVENUES Real Estate Sales $ 13,018 $ 9,506 $12,540 $ 13,018 $ 9,506 $12,540 $ -- $ -- $ -- Interest and Other Income 1,452 836 709 925 290 319 2,045 1,602 537 -------- -------- ------- -------- -------- ------- ------ ------ ----- 14,470 10,342 13,249 13,943 9,796 12,859 2,045 1,602 537 -------- -------- ------- -------- -------- ------- ------ ------ ----- COSTS AND EXPENSES Real Estate Sales 11,861 9,064 12,684 11,861 9,064 12,684 -- -- -- Property Valuation Adjustment -- 15,500 -- -- 15,500 -- -- -- -- Selling and Administrative 1,774 1,394 1,750 2,058 1,555 1,685 1,011 761 65 Interest 558 611 439 -- -- -- 781 745 586 -------- -------- ------- -------- -------- ------- ------ ------ ----- 14,193 26,569 14,873 13,919 26,119 14,369 1,792 1,506 651 -------- -------- ------- -------- -------- ------- ------ ------ ----- EARNINGS (LOSS) BEFORE INCOME TAXES 277 (16,227) (1,624) 24 (16,323) (1,510) 253 96 (114) Income Taxes -- -- -- -- -- -- -- -- -- -------- -------- ------- -------- -------- ------- ------ ------ ----- NET EARNINGS (LOSS) $ 277 $(16,227) $(1,624) $ 24 $(16,323) $(1,510) $ 253 $ 96 $(114) ======== ======== ======= ======== ======== ======= ====== ====== ===== EARNINGS (LOSS) PER SHARE/UNIT (Average Outstanding Shares, 1,000; Units, 1,000) $ 24 $(16,323) $(1,510) $ 253 $ 96 $(114) ======== ======== ======= ====== ====== ===== COMBINING STATEMENTS OF CASH FLOWS CASH FLOWS -- OPERATING ACTIVITIES Net Earnings (Loss) $ 277 $(16,227) $(1,624) $ 24 $(16,323) $(1,510) $ 253 $ 96 $(114) Property Valuation Adjustment -- 15,500 -- -- 15,500 -- -- -- -- Net Change in Payables, Receivables and Deposits (90) (281) (110) 176 (204) (224) (266) (77) 114 Decrease in (Increase) in Notes Receivable 216 (2,874) (480) 216 (2,874) (480) -- -- -- Increase in Advances to Joint Venture (180) -- -- (180) -- -- -- -- -- Decrease in Land Held for Development and Sale 7,949 3,454 5,746 7,949 3,454 5,746 -- -- -- -------- -------- ------- -------- -------- ------- ------ ------ ----- 8,172 (428) 3,532 8,185 (447) 3,532 (13) 19 -- -------- -------- ------- -------- -------- ------- ------ ------ ----- CASH FLOWS -- FINANCING ACTIVITIES Increase (Decrease) in Notes Payable -- Centex Corporation & Subsidiaries 303 (587) 430 303 (587) 430 -- -- -- Other 334 2,336 (5,113) 334 2,336 (5,113) -- -- -- Capital Distributions (10,000) -- -- (10,000) -- -- -- -- -- -------- -------- ------- -------- -------- ------- ------ ------ ----- (9,363) 1,749 (4,683) (9,363) 1,749 (4,683) -- -- -- -------- -------- ------- -------- -------- ------- ------ ------ ----- NET (DECREASE) INCREASE IN CASH (1,191) 1,321 (1,151) (1,178) 1,302 (1,151) (13) 19 -- CASH AT BEGINNING OF YEAR 1,422 101 1,252 1,403 101 1,252 19 -- -- -------- -------- ------- -------- -------- ------- ------ ------ ----- CASH AT END OF YEAR $ 231 $ 1,422 $ 101 $ 225 $ 1,403 $ 101 $ 6 $ 19 $ -- ======== ======== ======= ======== ======== ======= ====== ====== =====
See notes to combining financial statements. 60 63 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, 1996, 1995 AND 1994 ---------------------------------------------------------------------------------------------- CENTEX DEVELOPMENT COMPANY, L.P. 3333 HOLDING CORPORATION AND SUBSIDIARY ---------------------------------- -------------------------------------------- CLASS B GENERAL LIMITED CAPITAL IN RETAINED UNIT PARTNER'S PARTNER'S STOCK COMMON EXCESS OF EARNINGS COMBINED WARRANTS CAPITAL CAPITAL WARRANTS STOCK PAR VALUE (DEFICIT) -------- -------- --------- --------- -------- ------ ---------- -------- (DOLLARS IN THOUSANDS) Balance at March 31, 1993 $64,563 $500 $ 767 $ 63,826 $ 1 $ -- $800 $ (564) Net Loss (1,624) -- -- (1,510) -- -- -- (114) ------- ---- ----- -------- ---- ---- ---- ------ Balance at March 31, 1994 62,939 500 767 62,316 1 -- 800 (678) Net Earnings (Loss) (16,227) -- -- (16,323) -- -- -- 96 ------- ---- ----- -------- ---- ---- ---- ------ Balance at March 31, 1995 46,712 500 767 45,993 1 -- 800 (582) CAPITAL DISTRIBUTIONS (10,000) -- -- (10,000) -- -- -- -- NET EARNINGS 277 -- -- 24 -- -- -- 253 ------- ---- ----- -------- ---- ---- ---- ------ BALANCE AT MARCH 31, 1996 $36,989 $500 $ 767 $ 36,017 $ 1 $ -- $800 $ (329) ======= ==== ===== ======== ==== ==== ==== ======
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 within the United States. 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 2007. 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. 61 64 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. SUPPLEMENTARY CONDENSED COMBINED BALANCE SHEETS
MARCH 31, --------------------------- 1996 1995 ---------- ---------- (DOLLARS IN THOUSANDS) ASSETS Cash and Cash Equivalents $ 14,273 $ 25,207 Receivables 914,549 653,622 Inventories 1,244,931 1,266,509 Investments in Centex Construction Products, Inc. 106,504 89,871 Joint Ventures and Unconsolidated Subsidiaries 3,984 5,695 Property and Equipment, net 37,139 41,267 Other Assets and Deferred Charges 22,602 26,427 ---------- ---------- $2,343,982 $2,108,598 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts Payable and Accrued Liabilities $ 616,959 $ 557,640 Short-term Debt 665,593 632,745 Long-term Debt 321,002 222,530 Deferred Income Taxes 16,620 26,737 Stockholders' Equity 723,808 668,946 ---------- ---------- $2,343,982 $2,108,598 ========== ==========
SUPPLEMENTARY CONDENSED COMBINED STATEMENTS OF EARNINGS
FOR THE YEARS ENDED MARCH 31, ----------------------------------------- 1996 1995 1994 ---------- ----------- ---------- (DOLLARS IN THOUSANDS) Revenues $3,111,486 $3,281,198 $3,224,025 Costs and Expenses 3,023,447 3,194,642 3,089,126 ---------- ---------- ---------- Earnings Before Gain on CXP's Initial Public Offering and Income Taxes 88,039 86,556 134,899 Gain on CXP's Initial Public Offering -- 59,328 -- ---------- ---------- ---------- Earnings Before Income Taxes 88,039 145,884 134,899 Income Taxes 34,421 53,540 49,851 ---------- ---------- ---------- Net Earnings $ 53,618 $ 92,344 $ 85,048 ========== ========== ==========
62 65 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. (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, 1996 and 1995 and results of operations for each of the three years ended March 31, 1996. 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 by approximately $15.5 million to reflect CDC's view that development activity had not reached anticipated levels in order to continue to support the historical carrying value of such properties. This adjustment resulted in carrying values that facilitate a nearer-term disposition or development of these properties. A substantial portion of the adjustment relates to the book values of two Dallas area properties. 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. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS Statement of Financial Accounting Standards No. 121, issued in March 1995, establishes methods of accounting for the impairment of long-lived assets, certain identifiable intangibles, and goodwill related to those assets to be held and used and for long-lived assets and certain identifiable intangibles to be disposed of. This Statement will be implemented on April 1, 1996 and will not have a material impact on the individual or combined financial statements of Holding and its subsidiary and the Partnership. COMBINING STATEMENTS OF OPERATIONS AND CASH FLOWS -- SUPPLEMENTAL DISCLOSURES Interest capitalized by the Partnership during fiscal years ended March 31, 1996, 1995 and 1994 totaled $98,000, $4,787,000 and $4,090,000, respectively, of which $4,687,000 and $3,945,000 relates to the Forster Ranch property in 1995 and 1994, respectively. No income taxes were paid during the years ended March 31, 1996, 1995 and 1994. 63 66 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. (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 bearing interest at prime plus .875%. Interest is due in quarterly installments. Interest income of $750,000, $680,000, and $537,000 related to this note is included in the accompanying combining financial statements for the years ended March 31, 1996, 1995 and 1994, respectively. On April 30, 1996 the maturity date was extended two years to April 30, 1998. Notes Receivable -- Other at March 31, 1996 and 1995 have stated interest rates ranging up to 10% and are due in monthly or quarterly installments. Discounts and allowances totaled $21,000 at March 31, 1996 and $40,000 at March 31, 1995. The weighted average interest rate, inclusive of discounts, was 9% at March 31, 1996 and 9% at March 31, 1995. Notes receivable at March 31, 1996 are collectible over seven years, with $1,028,000 being due within one year. (E) NOTES PAYABLE Centex had advanced Holding $7.6 million as of March 31, 1996 which is evidenced by a note secured by the common stock of Development. The note, which had a fluctuating balance during fiscal 1996 and 1995, bears interest at prime plus 1% that is payable quarterly. The principal balance together with all unpaid accrued interest is due on the earlier of April 1, 1998 or the date on which the warrants to purchase Class B units of limited partnership interests are detached from shares of the common stock of Centex. Interest expense of $558,000, $611,000, and $439,000 related to this note is included in the accompanying combining financial statements for the years ended March 31, 1996, 1995 and 1994, 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 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 8.25% at March 31, 1996 and 9% at March 31, 1995. The 30 day LIBOR rate at March 31, 1996 was 5 7/16% and 6 1/8% at March 31, 1995. The note balances and rates in effect were as follows:
MARCH 31, ------------------ 1996 1995 ------ ------- (DOLLARS IN THOUSANDS) Credit Line at LIBOR Plus 3/4% Maturing in Fiscal Year 1997, Unsecured, Guaranteed by CREC $1,373 $ 1,039 Note Payable at 12%, Matured in April 1994 785 785 Note Payable at 5.56%, Maturing in fiscal year 1997 682 682 Note Payable, Maturing in Fiscal Year 1997 486 486 Forster Ranch Non-recourse Notes -- Payable at Prime Plus 1%, Retired in November 1995 -- 11,602 Payable at Prime Plus 2% (10 1/2% floor), Retired in November 1995 -- 41,891 ------ ------- $3,326 $56,485 ====== =======
64 67 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. During November 1995, the Partnership tendered to its non-recourse lender a deed to the remaining property in Forster Ranch, the Partnership's pro rata portion of the 1995-1996 real property taxes, an assignment of the Development Agreement made between the Partnership and the City of San Clemente and payment of certain developer fee credits. With these deliveries, the Partnership has surrendered any and all interest it may have in the Forster Ranch property to the lender. (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. In July 1995, in conjunction with the extension of the detachment date, CREC waived unrecovered preference through July 1995 of $37.5 million, and reduced its unrecovered capital in the Partnership from $75.8 million to $47.3 million. Unrecovered Capital represents initial capital contributions as reduced by repayments, and is the basis for preference accruals. The Partnership distributed $10,000,000 to CREC as a return of original capital during fiscal year 1996. Preference payments in arrears at March 31, 1996 amounted to $2,506,000, and Unrecovered Capital totaled $37,261,000. 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. 65 68 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. 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. (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 1996, 1995, and 1994 are reflected as administrative expenses in the accompanying combining financial statements. The Partnership paid $1,295,000 and $922,000 to Holding during the fiscal years 1996 and 1995, respectively, 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 fiscal year 1995, 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. SALES AND PURCHASES Partnership revenues during fiscal years 1996, 1995, and 1994 include land sales to CREC of $4,416,000, $5,423,000, and $2,354,000, respectively. Additionally, CREC has contracts to purchase lots for the aggregate price of approximately $5.4 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 $267,000 at March 31, 1996 and $570,000 at March 31, 1995, which the Partnership advanced to Holding. Interest of $223,000 and $134,000 was accrued on advances during fiscal years 1996 and 1995, respectively. (H) INCOME TAXES At March 31, 1996, Holding had operating loss carryforwards for income tax reporting purposes of $296,000. If unused, the loss carryforwards will expire in the fiscal years 2007 through 2009. 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. 66 69 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. QUARTERLY RESULTS (UNAUDITED)
MARCH 31, -------------------------------------------------------- 1996 1995 1996 1995 1996 1995 ------ -------- ------ -------- ---- ---- 3333 HOLDING CORPORATION CENTEX DEVELOPMENT AND COMBINED COMPANY, L.P. SUBSIDIARY ------------------ ------------------ ------------ (DOLLARS IN THOUSANDS, EXCEPT PER SHARE/UNIT DATA) FIRST QUARTER Revenues $2,382 $ 3,105 $2,241 $ 2,977 $611 $336 Earnings (Loss) Before Taxes $ 10 $ (137) $ (188) $ (151) $198 $ 14 Net Earnings (Loss) $ 10 $ (137) $ (188) $ (151) $198 $ 14 Earnings (Loss) Per Share/Unit $ (188) $ (151) $198 $ 14 SECOND QUARTER Revenues $8,099 $ 1,330 $7,998 $ 1,197 $470 $376 Earnings (Loss) Before Taxes $ 186 $ (229) $ 169 $ (264) $ 17 $ 35 Net Earnings (Loss) $ 186 $ (229) $ 169 $ (264) $ 17 $ 35 Earnings (Loss) Per Share/Unit $ 169 $ (264) $ 17 $ 35 THIRD QUARTER Revenues $3,508 $ 4,467 $3,371 $ 4,325 $465 $379 Earnings (Loss) Before Taxes $ 193 $ (261) $ 184 $ (283) $ 9 $ 22 Net Earnings (Loss) $ 193 $ (261) $ 184 $ (283) $ 9 $ 22 Earnings (Loss) Per Share/Unit $ 184 $ (283) $ 9 $ 22 FOURTH QUARTER Revenues $ 481 $ 1,440 $ 333 $ 1,297 $499 $511 Earnings (Loss) Before Taxes $ (112) $(15,600) $ (141) $(15,625) $ 29 $ 25 Net Earnings (Loss) $ (112) $(15,600) $ (141) $(15,625) $ 29 $ 25 Earnings (Loss) Per Share/Unit $ (141) $(15,625) $ 29 $ 25
67 70 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, 1996 of $14.5 million are attributable to interest income and sales of 121.2 acres of residential and 52.2 acres of commercial land in The Colony, Texas; 398.7 acres of agricultural land in New Braunfels, Texas; 7.2 acres of agricultural land in Fate, Texas; and the sale of 180 residential lots to Centex Real Estate Corporation (CREC) in Orlando, Florida and East Windsor, New Jersey. Revenue of $10.3 million for fiscal 1995 included results from the sales of a commercial property in Sonora, California; 116.5 acres in Puerto Rico; a 33.9 acre commercial tract in Bolingbrook, Illinois; and 254 residential lots in Orlando, Florida and East Windsor, New Jersey to CREC. 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; and the sale to CREC of 246 residential lots in Orlando, Florida, The Colony, Texas and East Windsor, New Jersey. Operations for the year ended March 31, 1996 resulted in net income of $277,000. 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 resulted in carrying values that will facilitate a nearer-term disposition or development of these properties. Without the property valuation adjustments, the combined net loss for fiscal 1995 was $.7 million compared to $1.6 million in fiscal 1994. The improvement in operations before property valuation adjustments for each of the last three years is primarily attributed to higher gross margins on real estate sales, principally in new Jersey, and increases in interest income resulting from real estate sold with financing. During fiscal 1996, the Partnership entered into a real estate joint venture to develop an apartment complex in College Station, Texas. The related costs and expenses associated with the Partnership's investigation into the apartment business resulted in increased selling and administrative costs in fiscal 1996 compared to fiscal 1995. In July 1995, the Stockholders of Centex Corporation (Centex) approved a proposal to extend by ten years to November 2007 the date at which automatic detachment would occur of the tandemly traded shares of Holding and Centex. Also at that time, CREC waived unrecovered preference through July, 1995 of $37.5 million, and reduced its unrecovered capital in the Partnership from $75.8 million to $47.3 million. Unrecovered capital represents initial capital contributions as reduced by repayments, and is the basis for preference accruals. Subsequent to this capital reduction, the Partnership returned $10.0 million of original capital to CREC. During November 1995, the Partnership tendered to its non-recourse lender a deed to the remaining property in Forster Ranch, the Partnership's pro rata portion of the 1995-1996 real property taxes, an assignment of the Development Agreement made between the Partnership and the City of San Clemente and payment of certain developer fee credits. With these deliveries, the Partnership has surrendered any and all interest it may have in the Forster Ranch property to the lender. Since the book value of the property equaled the balance of the non-recourse debt, there was no resulting earnings impact. 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. 68 71 CENTEX CORPORATION AND SUBSIDIARIES - -------------------------------------------------------------------------------- BOARD OF DIRECTORS Vicki A. Roberts NORTHERN CALIFORNIA MINNESOTA Treasurer David L. Barclay Scott J. Richter Alan B. Coleman (3,4) President President Former President, Rodney E. Cummickel Southwestern Graduate Assistant Vice President Sacramento ILLINOIS School of Banking Jack E. Hood Jon E. Fogg Foundation Southern Barry G. Wilson Manager President Methodist University Assistant Controller CENTRAL VALLEY INDIANAPOLIS Dan W. Cook III (2*) CENTEX REAL ESTATE Richard L. Langdon, Jr. Timothy K. McMahon Former General Partner CORPORATION/CENTEX HOMES President President Goldman, Sachs & Co. Timothy R. Eller LOS ANGELES/VENTURA COLUMBUS Juan L. Elek President and Chief James J. Kopel, Jr. Joseph H. Mathias Co-Chairman Executive Officer President President Elek Moreno Valle y Asociados Andrew J. Hannigan SOUTHERN CALIFORNIA NASHVILLE Executive Vice President Larry B. Ludwig R. Martin Kerr, Jr. William J Gillilan III (1) and Chief Operating President President President and Chief Officer Operating Officer SAN DIEGO NEW JERSEY Thomas M. Boyce Douglas R. Jaeger Joseph M. Mutinsky Laurence E. Hirsch (1) Executive Vice President President President Chairman and Chief Executive Officer Robert D. Hillmann NEVADA NORTHERN VIRGINIA Executive Vice President Mark L. Krivel Gary L. Jernigan C.W. Murchison, III President President (2,3,5) Steven R. Muller Private Real Estate Executive Vice President COLORADO HAMPTON ROADS Development and Other Miles R. Grant Jode L. Kirk Investments Richard L. Sconyers President President Executive Vice President Charles H. Pistor (2,4,5*) NEW MEXICO MARYLAND Retired Vice Chair Joel H. Sowers Thomas A. Houser Jeffrey J. Doyle Southern Methodist Executive Vice President President President University Melvin M. Chadwick PHOENIX ATLANTA David W. Quinn Vice President-Finance Michael D. Trailor William F. Shean Executive Vice President President President and Chief Financial F. Timothy Hoyt Officer Vice President and Counsel DALLAS NORTH COLUMBIA Benton H. Karnes Victor L. Buscaino, Jr. Paul R. Seegers (1*,4*) John M. Lile President President President, Seegers Vice President Enterprises DALLAS NORTHEAST Greenville Joseph Luciani Richard D. Alberque Jonathan P. Giles Paul T. Stoffel (3*,5) Vice President President Manager Private Investments Joseph S. Powell DALLAS SOUTHWEST CHARLOTTE (Numbers in parentheses Vice President Joe J. Arcisz Daniel L. Barnobi indicate Board Committees) President President (1) Executive Committee Renate I. Shiver (2) Compensation Committee Vice President DALLAS FOX & JACOBS RALEIGH/DURHAM (3) Audit Committee W. Lee Thompson E. Scott Batchelor (4) Director Nominating Douglas A. Stempowski President President Committee Vice President (5) Stock Option Committee CENTRAL TEXAS COASTAL CAROLINA Burgess N. Trank Philip W. Warnick John D. Carpenter * Chairman Vice President and Counsel President President OFFICERS James B. Watkins Killeen NORTH FLORIDA Vice President and Counsel Thomas E. Lynch Douglas W. Smith Laurence E. Hirsch Manager President Chairman and Chief David C. Wheatley Executive Officer Vice President SAN ANTONIO ORLANDO NORTH J. Damon Lyles Gregory L. LePera William J Gillilan III OPERATING DIVISIONS President President President and Chief Operating Officer WASHINGTON STATE HOUSTON ORLANDO SOUTH Robert J. Fogarty A. Wayne Culpepper Patrick J. Knight David W. Quinn President President President Executive Vice President and Chief Financial PORTLAND, OREGON Officer Jay L. Smith President Raymond G. Smerge Vice President, Chief Legal Officer, General Counsel and Secretary Michael S. Albright Vice President-Finance and Controller Richard C. Harvey Vice President-Tax Sheila E. Gallagher Vice President-Corporate Communications Michael M. Vick Vice President
69 72 CENTEX CORPORATION AND SUBSIDIARIES - -------------------------------------------------------------------------------- TAMPA David F. Robinson COLORADO FORT WORTH Mikell A. McElroy Regional Vice President COLORADO SPRINGS John R. Granger President Rose M. Kelly Division Vice President John B. Rogers Division Vice President BRADENTON/SARASOTA Regional Vice President HOUSTON David L. Hahn DENVER Mark D. Cady President Andrew A. Warrick Catherine S. Stroud Division Vice President Regional Vice President Division Vice President PALM BEACH Richard D. Davis W. Trent Bass CTX MORTGAGE COMPANY ENGLEWOOD Division Vice President President BRANCH OFFICES Vicki L. Gjesdal Division Vice President Joy L. Reichart NAPLES/FORT MYERS WASHINGTON STATE Division Vice President Timothy J. Ruemler BELLEVUE FORT COLLINS President Vern Smith Karen C. Sipes Bob Tavel Division Vice President Division Vice President Division Vice President SOUTH FLORIDA Henry E. Magnuson RENTON ARIZONA LEWISVILLE President William W. Haines, Jr. PHOENIX Linda J. Frank Division Vice President Kathleen A. Doyle Division Vice President CTX BUILDERS SUPPLY Division Vice President John Mikkelson OREGON PLANO President PORTLAND Michael A. Neill Rodney J. Anderson Michael G. Russell Division Vice President Division Vice President CENTEX FINANCIAL Division Vice President SERVICES GROUP NEW MEXICO SAN ANTONIO CALIFORNIA ALBUQUERQUE Janis E. Anderson Carl N. Hearne CONCORD W. Gregory Frost Division Vice President Chairman Christie H. Craig Division Vice President Division Vice President MINNESOTA CTX MORTGAGE COMPANY Diane R. Nielsen MINNETONKA DEL MAR Division Vice President Kristin K. Hoaglund Judson H. Croom James C. Doan Division Vice President President and Chief Division Vice President UTAH Executive Officer SALT LAKE CITY ST. PAUL ELK GROVE Kevin G. Haycock Stephen J. Lange Mark L. Meyer Daniel V. Plant Division Vice President Division Vice President Executive Vice President Division Vice President and Chief Operating TEXAS ILLINOIS Officer IRVINE ARLINGTON BLOOMINGDALE Rhett A. Hubbard Barbara J. Pacetti Richard C. Grosse Rick J. Carothers Division Vice President Division Vice President Division Vice President Executive Vice President L.A. TRI-COUNTY Peggy J. Rahall CHIGAGO John L. Matthews Donald W. Petty Division Vice President Kelly A. Gleason Executive Vice President Division Vice President Division Vice President AUSTIN Steven L. Deardorff RIVERSIDE Linda I. Ingram CRYSTAL LAKE Senior Vice President Kimberly Firek Division Vice President James R. Sorenson Division Vice President Division Vice President Timothy M. Bartosh Ronnette L. Shay Vice President SACRAMENTO Division Vice President LAKE COUNTY Christie H. Craig Carl J. Macuiba Debra R. Dunn Division Vice President CASTLE HILLS Division Vice President Vice President Nancy S. Kramer SAN DIEGO Division Vice President INDIANA Carla M. Gustafson Scott D. Beyer INDIANAPOLIS Vice President Division Vice President CORPUS CHRISTI Marsha L. Gibson-Buttery Gloria A. Lopez Division Vice President Belinda M. Nicholson SOUTHERN CALIFORNIA Division Vice President Vice President Terri L. Hogerty OHIO Division Vice President DALLAS COLUMBUS Thomas E. Tuohy Patricia A. Donley Diane L. Gardner Vice President VISALIA Division Vice President Division Vice President Rebecca A. Vickers Kimberly L. Yowell Division Vice President James C. McMahan II WISCONSIN Vice President Division Vice President MILWAUKEE NEVADA Steven W. Barbera Ross T. Anderson RENO Ilda J. Putnam Division Vice President Regional Vice President Gregory D. Shanklin Division Vice President Division Vice President Mary C. Callegari Regional Vice President Paul V. Diamond Regional Vice President
70 73 CENTEX CORPORATION AND SUBSIDIARIES - -------------------------------------------------------------------------------- RACINE NORTH CHARLESTON CENTEX TITLE, INSURANCE Pamela K. Wilson Michael J. Bain Amanda J. Williams AND ESCROW OPERATIONS Manager Division Vice President Division Vice President Karren P. Bates UVALDE TENNESSEE FLORIDA President Win A. Dubose Manager BRENTWOOD FORT LAUDERDALE COMMERCE LAND TITLE, INC. A. Frederick Campbell Robin A. Karas METROPOLITAN TITLE AND Division Vice President Division Vice President Gregory M. Lyssy GUARANTY COMPANY Executive Vice President NASHVILLE JACKSONVILLE Rebecca R. Winters Vicki L. Wickline Marie M. McRee Randall P. Hood Executive Vice President Division Vice President Division Vice President Vice President FLORIDA EXAMINATION CENTER MARYLAND Kelly L. Wainwright Monte R. Sturgeon Kevin M. Arruda Division Vice President Vice President Manager CROFTON Charles B. Williams MIAMI GREATER DALLAS METROPOLITAN TITLE AND Division Vice President John T. Mickel EXAMINATION CENTER GUARANTY COMPANY BRANCH Division Vice President Bruce W. McRoberts OFFICES GREENBELT Manager Jane B. Williams NAPLES FLORIDA Division Vice President Kathleen M. Garren COMMERCE LAND TITLE, INC. Division Vice President BRANCH OFFICES BOYNTON BEACH PENNSYLVANIA Valarie S. Gross ORLANDO TEXAS Manager PHILADELPHIA Brenda C. Nicola Joseph P. Deltch Division Vice President ARLINGTON FORT LAUDERDALE Division Vice President Cindy M. Hinson Kathleen M. Beckinsale Gregory D. Pingston Manager Manager VIRGINIA Division Vice President AUSTIN JACKSONVILLE CHANTILLY SARASOTA Janet S. Lucas Deborah M. Leavitt M. Catherine Bell Todd A. Kolbe Manager Manager Division Vice President Division Vice President THE COLONY NAPLES FAIRFAX TAMPA Carla B. Montgomery Rosa M. Peck Patrick A. Miller Marsha G. Crowder Manager Manager Division Vice President Division Vice President HONDO ORLANDO VIRGINIA BEACH Judith A. Fish Thomas J. Rothe Pamela A. Morton R. Lee Pearson Division Vice President Manager Manager Louis L. Tourgee Division Vice Presidents TITUSVILLE LEWISVILLE SARASOTA Linda L. Gray Lajuannah Wilson Susan B. Anderson GEORGIA Division Vice President Manager Manager ATLANTA WEST PALM BEACH NEW BRAUNFELS TAMPA ROSWELL Diana K. Maguire Marva N. McCraw Debra Blackwell-Thompson Laurie K. Tracy Division Vice President Manager Manager Division Vice President ALABAMA PLANO CENTEX INSURANCE AGENCIES NORTH CAROLINA Connie D. Beale HUNTSVILLE Manager Charles W. Hoffman CHARLOTTE James C. Hunter Vice President and Elizabeth H. South Division Vice President Linda S. Prockup Managing Director Division Vice President Manager TUSCALOOSA CENTEX ESCROW COMPANY RALEIGH Ann G. Schieber SAN ANTONIO K. Susan Tate Division Vice President Gwen J. Derry Patty E. Parsons Division Vice President Manager Vice President NOVA MORTGAGE CREDIT Carter H. Ward CORPORATION Dinah K. Heilmann CENTEX ESCROW COMPANY Division Vice President Manager BRANCH OFFICES Richard L. Smith SOUTH CAROLINA President David D. Mirmelli WASHINGTON Manager COLUMBIA Bruce A. Bly BELLEVUE Hollie L. Davis Regional Vice President Connie Smith Patty E. Parson Division Vice President Manager Manager Gregory L. Auen GREENVILLE Regional Vice President Laurel B. Stuckey FEDERAL WAY Terri L. Davidson Manager Karen J. McMillan Division Vice President Manager
71 74 CENTEX CORPORATION AND SUBSIDIARIES - -------------------------------------------------------------------------------- CENTEX CONSTRUCTION GROUP, J. David Preston CENTEX-RODGERS James L. Johnson INC. Vice President CONSTRUCTION COMPANY Vice President Brice E. Hill John E. Reeves Edward A. Whitley Morgan D. King President and Chief Vice President President and Chief Vice President Executive Officer Executive Officer William E. Reinhart George K. Koos John P. Tarpey, Jr. Vice President Glen E. Pillow Vice President Executive Vice President Executive Vice President and Chief Operating Steven H. Williams James T. Norris Officer Vice President W. Howard Allums Vice President Senior Vice President Christopher D. Genry CENTEX FORCUM LANNOM, INC. Albert J. Petrangeli Vice President and Joseph T. Hatch, Jr. Vice President Chief Financial Officer L.D. Pennington Senior Vice President Chairman John W. Traxler Eric J. Gerner Douglas H. Jones Vice President Vice President-Finance David R. Taylor Senior Vice President President and Chief J. Michael Wood Frank J. Iuen III Executive Officer Rex E. Lewis Vice President Vice President and Co- Senior Vice President General Counsel Larry W. Rogers CENTEX HOME SERVICES Senior Vice President Dennis R. Norvet COMPANY Eric E. Krueger Senior Vice President Vice President William F. Lamers Stephen M. Weinberg Vice President and G. Roger Pitts President Jeffery A. Neyland Treasurer Senior Vice President Vice President G. Gaylon Hull CENTEX GOLDEN CONSTRUCTION Joseph M. Stephens Vice President and Charles R. Nixon COMPANY Senior Vice President and Controller Vice President and Co- Treasurer General Counsel John E. Bradel CENTEX ROOFING COMPANY Vice President Alan B. Wooten Richard M. Rantala Senior Vice President Jerry L. Morgan Vice President Blaine L. Knoll President Vice President CENTEX-ROONEY CONSTRUCTION L. Donald Sumrell CO., INC. CENTEX SENIOR SERVICES Vice President Jeffery A. Lage CORPORATION Vice President Bob L. Moss CENTEX CONSTRUCTION Chairman, President and Nat S. Leakey COMPANY, INC. Paul J. Santangelo Chief Executive Officer Vice President Vice President Robert C. Van Cleave Frederick E. Wade Terry N. Whitman Chairman and Chief Edwin M. Walsh Executive Vice President Vice President Executive Officer Vice President Gary W. Glenewinkel 3333 HOLDING CORPORATION James L. Herndon CENTEX LANDIS CONSTRUCTION Senior Vice President AND SUBSIDIARY AND CENTEX President COMPANY, INC. DEVELOPMENT COMPANY, L.P. Raymond C. Southern John D. Jeniec James C. Landis Senior Vice President BOARD OF DIRECTORS Executive Vice President President and Chief and Chief Operating Executive Officer Robert S. Baker, Jr. J. S. Bilheimer Officer Vice President President Kenneth K. Eshelman M. Lamar Martin Senior Vice President and Jessie H. Brewer Josiah O. Low, III Chief Financial Officer, Chief Operating Officer Vice President Managing Director, Senior Vice President and Donaldson, Lufkin & Treasurer James L. Clemmensen John W. Cammack Jenrette Securities Vice President Vice President Corporation Dewey W. Davis Senior Vice President James M. Lewis Larry D. Casey David M. Sherer Vice President Vice President President Randall S. Howard Shenandoah Associates, Senior Vice President Robert E. Collie Inc. Vice President Bruce W. Lady OFFICERS Senior Vice President Gary P. Esporrin Vice President, Controller J. S. Bilheimer Stephen E. Yannucci and Treasurer President Senior Vice President W. Brooks Gilmore Roger D. Sefzik Frank C. Dale Vice President Vice President and Vice President Treasurer David E. Hamlin Christopher L. Davis Vice President Vice President Gary L. Huggins George Keppler Vice President Vice President Robert W. Kriz Vice President Victorino A. Pangilinan Vice President
72 75 CORPORATE HEADQUARTERS 3333 Lee Parkway P.O. Box 199000 Dallas, TX 75219 (214) 559-6500 TRANSFER AGENT AND REGISTRAR Chemical Mellon Shareholder Services 85 Challenger Road Ridgefield Park, NJ 07660 STOCK LISTINGS New York Stock Exchange The International Stock Exchange (London) Ticker Symbol "CTX" ANNUAL MEETING The Annual Meeting of Stockholders of Centex Corporation and 3333 Holding Corporation will be held on July 25, 1996 at 10:00 a.m. in the auditorium of the Dallas Museum of Art, 1717 North Harwood, Dallas, Texas. STOCKHOLDER INQUIRIES Communications concerning transfer requirements, lost certificates, dividends or change of address should be sent to Chemical Mellon Shareholder Services at the address listed. FORM 10-K A copy of the Annual Report on Form 10-K of Centex Corporation, 3333 Holding Corporation and Centex Development Company, L.P. is available upon request to the corporate secretary at corporate headquarters. EX-21.1 3 LIST OF SUBSIDIARIES OF CENTEX 1 EXHIBIT 21.1 - -------------------------------------------------------------------------------- The following is a list of the subsidiaries of the Company, wholly-owned unless otherwise stated. This list of subsidiaries includes all of the significant subsidiaries of the Company as of May 1, 1996. UNITED KINGDOM CORPORATIONS: Centex Homes (UK) Limited Charles Church Homes Limited NEVADA CORPORATIONS: Advanced Financial Technology, Inc. Advanced Protections Systems, Inc. Braewood Development Corp. CDMC Holding, Inc. Centex Acceptance Corporation Centex Bateson Enterprises, Inc. Centex Building Services, Inc. Centex Collateralized Mortgage Corporation Centex Construction Company, Inc. Centex Construction Group, Inc. Centex Credit Corporation Centex Development Management Company Centex Escrow Company Centex Financial Corporation Centex Financial Management Corporation Centex Forcum Lannom, Inc. Centex Golden Construction Company Centex Home Services Company Centex International, Inc. Centex New Jersey Realty, Inc. Centex Real Estate Construction Company Centex Real Estate Corporation Centex Realty Company Centex-Rodgers Construction Company Centex Roofing Company Centex Senior Services Corporation Centex Service Company Centex-Simpson Construction Company, Inc. Centex Technology, Inc. Centex Title & Ancillary Services, Inc. Commerce Land Title, Inc. CTX Commercial Corporation CTX Financial Corporation CTX Holding Company CTX Mortgage Company CTX Mortgage Ventures Corporation Enhanced Safetysystems, Inc. 4500 Finance Company GHQ Company, Inc. Great Lakes Development Co., Inc. 2 NEVADA CORPORATIONS (CONTINUED): Loan Processing Technologies, Inc. M&W General Construction Company Metropolitan Tax Service, Inc. Mogul Water Company Nova Mortgage Credit Corporation Panoramic Land, Inc. Residential Contractors, Inc. San Juan Land Company Vista Properties, Inc. Vista Real Estate Development Company DELAWARE CORPORATIONS: Centex Construction Products, Inc. Vista Mortgage & Realty, Inc. FLORIDA CORPORATIONS: Centex-Great Southwest Corporation Centex-Rooney Construction Co., Inc. Metropolitan Title & Guaranty Company GEORGIA CORPORATIONS: Centex-Hamby Construction, Inc. Centex Homes Marketing, Inc. ILLINOIS CORPORATIONS: 111 E. Chestnut Corporation LOUISIANA CORPORATIONS: Centex Landis Construction Co., Inc. MICHIGAN CORPORATIONS: Beauty Built Homes, Inc. Centex-Aim Construction, L.L.C. NORTH CAROLINA CORPORATIONS: Bradfield Farms Water Company John Crosland Acceptance Corporation Three Crosland Bond Company John Crosland Company Genbond Two, Inc. TEXAS CORPORATIONS: Centex Bateson Construction Company, Inc. Centex Homes, Inc. Centex International, Inc. Dundee Insurance Agency, Inc. Fox & Jacobs, Inc. Independent General Agency, Inc. Panorama Development Corp. 1629 Service Corporation 3 VERMONT CORPORATIONS: Armor Insurance Company PARTNERSHIPS: American Priority Mortgage Company, L. P. Bateson Dailey, a Joint Venture Bayfront Associates, Ltd. Blakeney Heath Venture Company Centex Auchter, a Joint Venture Centex Concord, General Partnership Centex-Draper 156 Partnership Centex-Draper 162 Partnership Centex Engle Joint Venture Centex/Goins Rash Cain, a Joint Venture Centex Golden/Kimmel Centex-Great Southwest Corporation/Construct Two, a Joint Venture Centex Homes Company, General Partnership Centex-Kensington (Mankato I) Partnership Centex-Rodgers Construction Company-Construction Control Services Corporation, a Joint Venture Centex-Rodgers-Sorenson Gross, a Joint Venture Centex-Rooney Construction Co., Inc.-Construct Two Construction Managers, Inc., a Joint Venture Centex Rooney Construction Co., Inc./Landis Company, Inc., a Joint Venture Centex-Rooney National Development, J.V. Centex-Rooney/Sierra, J.V. Centex-Schaumberg Industrial Park Central Park Professional Center COINS #1 CCMC A FB COINS #9 CAC I, J & K, FB Crosland Acceptance Associates V, a General Partnership Golden-C A B, Joint Venture Golden Turner, a Joint Venture Mortgage Acceptance Associates No. 2, a North Carolina General Partnership Mortgage Collateral Associates No. 1, a General Partnership Mortgage Collateral Associates No. 3, a General Partnership Palmdale 101 Vista Partners, a Nevada General Partnership All of the Company's subsidiaries are included in the Consolidated Financial Statements of the Company incorporated by reference into this Form 10-K from the Centex 1996 Annual Report to Stockholders. - --------------------------------- EX-23.1 4 CONSENT OF INDEPENDENT AUDITORS - CENTEX 1 EXHIBIT 23.1 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-3 (number 33-61223) and 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 8, 1996, incorporated by reference to Centex Corporation's Annual Report on Form 10-K for the year ended March 31, 1996, and to all references to our firm included in these registration statements. Arthur Andersen LLP Dallas, Texas, May 20, 1996 2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the inclusion in this Form 10-K of our report dated May 8, 1996, relating to the March 31, 1996 consolidated financial statements of Centex Construction Products, Inc. Arthur Andersen LLP Dallas, Texas, May 20, 1996 EX-24.1 5 POWERS OF ATTORNEY - CENTEX 1 EXHIBIT 24.1 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, 1996, 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 20th day of May, 1996. /s/ Alan B. Coleman --------------------------- Alan B. Coleman 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, 1996, 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 20th day of May, 1996. /s/ Dan W. Cook III --------------------------- Dan W. Cook 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, 1996, 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 20th day of May, 1996. /s/ Juan L. Elek --------------------------- Juan L. Elek Director Centex Corporation 4 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, 1996, 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 20th day of May, 1996. /s/ William J Gillilan III ----------------------------- William J Gillilan III Director Centex Corporation 5 CENTEX CORPORATION POWER OF ATTORNEY THE UNDERSIGNED hereby constitutes and appoints David W. Quinn, with full power of substitution in the premises, 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, 1996, 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 20th day of May, 1996. /s/ Laurence E. Hirsch --------------------------- Laurence E. Hirsch Director Centex Corporation 6 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, 1996, 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 20 day of May, 1996. /s/ Clint W. Murchison, III ------------------------------- Clint W. Murchison, III 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, 1996, 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 20th day of May, 1996. /s/ Charles H. Pistor --------------------------- Charles H. Pistor Director Centex Corporation 8 CENTEX CORPORATION POWER OF ATTORNEY THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch, with full power of substitution in the premises, 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, 1996, 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 20th day of May, 1996. /s/ David W. Quinn --------------------------- David W. Quinn Director Centex Corporation 9 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, 1996, 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 20th day of May, 1996. /s/ Paul R. Seegers --------------------------- Paul R. Seegers Director Centex Corporation 10 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, 1996, 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 20th day of May, 1996. /s/ Paul T. Stoffel --------------------------- Paul T. Stoffel Director Centex Corporation EX-27.1 6 FINANCIAL DATA SCHEDULE - CENTEX
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CENTEX CORPORATION'S MARCH 31, 1996, FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000018532 CENTEX CORPORATION 1,000 12-MOS MAR-31-1996 APR-01-1995 MAR-31-1996 14,042 0 910,559 0 1,205,450 0 84,376 47,237 2,336,966 0 321,002 7,107 0 0 715,729 2,336,966 3,102,987 3,128,615 2,984,998 2,984,998 14,969 0 40,862 87,786 34,421 53,365 0 0 0 53,365 1.83 0.00
EX-21.2 7 SUBSIDIARIES OF 3333 HOLDING 1 EXHIBIT 21.2 - -------------------------------------------------------------------------------- The following list of subsidiaries of 3333 Holding Corporation, wholly-owned unless otherwise stated, includes all of the significant subsidiaries of 3333 Holding Corporation as of May 1, 1996: NEVADA CORPORATIONS: CDC MF1, LLC 3333 Development Corporation PARTNERSHIPS: Arbors of Wolf Pen Creek Partners Centex Development Company, L.P. All of the Company's subsidiaries are included in the Consolidated Financial Statements of the Company incorporated by reference into this Form 10-K from the Centex 1996 Annual Report to Stockholders. - ---------------------------------------- EX-23.2 8 CONSENT OF INDEPENDENT AUDITORS - 3333 HOLDING 1 EXHIBIT 23.2 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 8, 1996, incorporated by reference 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, 1996, and to all references to our firm included in these registration statements. Arthur Andersen LLP Dallas, Texas, May 20, 1996 EX-24.2 9 POWERS OF ATTORNEY - 3333 HOLDING 1 EXHIBIT 24.2 3333 HOLDING CORPORATION POWER OF ATTORNEY THE UNDERSIGNED hereby constitutes and appoints J. Stephen Bilheimer, with full power of substitution in the premises, 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, 1996, 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 20th day of May, 1996. /s/ Josiah O. Low, III ------------------------------ Josiah O. Low, III Director 3333 Holding Corporation 2 3333 HOLDING CORPORATION POWER OF ATTORNEY THE UNDERSIGNED hereby constitutes and appoints J. Stephen Bilheimer, with full power of substitution in the premises, 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, 1996, 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 20 day of May, 1996. ---- /s/ David M. Sherer ------------------------------ David M. Sherer Director 3333 Holding Corporation EX-27.2 10 FINANCIAL DATA SCHEDULE - 3333 HOLDING
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 3333 HOLDING CORPORATION'S MARCH 31, 1996, FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000818762 3333 HOLDING CORPORATION 1,000 12-MOS MAR-31-1996 APR-01-1995 MAR-31-1996 6 0 7,879 0 0 0 0 0 8,652 0 0 1 0 0 471 8,652 2,045 2,045 1,792 1,792 0 0 0 253 0 253 0 0 0 253 0.00 0.00
EX-10.9 11 WAIVER AGREEMENT DATED JULY 28, 1995 1 EXHIBIT 10.9 WAIVER AGREEMENT This Waiver Agreement (this "Agreement") dated as of the 28th day of July, 1995, by and between Centex Real Estate Corporation ("CREC") and 3333 Development Corporation ("3333 Development"). WHEREAS, 3333 Development is the General Partner and CREC is the sole limited partner of Centex Development Company, L.P. ("CDC"). The Amended and Restated Agreement of Limited Partnership of CDC (the "Partnership Agreement") provides, among other things, that CREC is entitled to receive from CDC an amount equal to 9% per annum cumulative preferred return (the "Preferred Return") on the outstanding difference from time to time between $76 million (the value of the properties initially contributed to CDC by CREC and its predecessors in interest) (the "Capital Contribution") and the aggregate cash distributions previously received by CREC with respect thereto, and payments to return the Capital Contribution; WHEREAS, CDC has not made any material payments to CREC to repay the Capital Contribution; WHEREAS, CDC has not made any payment of Preferred Return to CREC during the last five fiscal years; and WHEREAS, CREC has agreed to (i) reduce the Capital Contribution to be paid by CDC to CREC to $47,260,997 and (ii) waive the payment by CDC of all unpaid Preferred Return through July 31, 1995; NOW, THEREFORE, for an in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: 1. The Capital Contribution to be repaid to CREC by CDC is hereby reduced to $47,260,997. 2. CREC hereby waives payment of the Preferred Return payable to it by CDC through July 31, 1995. Subject to the provisions of paragraph 1. above, which reduces the amount of the Capital Contribution on which the Preferred Return is calculated, Preferred Return accruing from and after August 1, 1996 shall continue to be due and payable by CDC in accordance with the terms and conditions of the Partnership Agreement. 3. The Partnership Agreement is hereby amended to reflect the foregoing waivers. Except as specifically modified hereby, all terms, provisions and conditions of the Partnership Agreement will remain in full force and effect. 2 IN WITNESS WHEREOF, the parties hereto hereby execute and deliver this Waiver Agreement as of the date first set forth above. CENTEX REAL ESTATE CORPORATION By: /s/ Timothy R. Eller ------------------------------ Name: Timothy R. Eller Title: President 3333 DEVELOPMENT CORPORATION By: /s/ J. Stephen Bilheimer ------------------------------ Name: J. Stephen Bilheimer Title: President CENTEX DEVELOPMENT COMPANY, LP By: 3333 Development Company, General Partner By: /s/ J. Stephen Bilheimer ------------------------------ Name: J. Stephen Bilheimer Title: President EX-10.10 12 WAIVER AGREEMENT DATED SEPTEMBER 13, 1995 1 EXHIBIT 10.10 WAIVER AGREEMENT This Waiver Agreement (this "Agreement") dated as of September 13, 1995 but effective as of July 1, 1995, by and between Centex Real Estate Corporation ("CREC") and 3333 Development Corporation ("3333 Development"). WHEREAS, 3333 Development is the General Partner and CREC is the sole limited partner of Centex Development Company, L.P. ("CDC"). The Amended and Restated Agreement of Limited Partnership of CDC (the "Partnership Agreement") provides, among other things, that CREC is entitled to receive from CDC an amount equal to 9% per annum cumulative preferred return (the "Preferred Return") on the outstanding difference from time to time between $76 million (the value of the properties initially contributed to CDC by CREC and its predecessors in interest) (the "Capital Contribution") and the aggregate cash distributions previously received by CREC with respect thereto, and payments to return the Capital Contribution; WHEREAS, the Partnership Agreement provides that all payments by CREC to CDC shall first be applied to payment of the Preferred Return; and WHEREAS, CREC has agreed to apply a payment from CDC as a reduction to the Capital Contribution rather than to Preferred Return; NOW, THEREFORE, for an in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: 1. The $3,500,000 payment made by CDC to CREC on September 13, 1995 shall be applied to reduce the Capital Contribution effective as of July 1, 1995 by that amount. From and after the effective date of such payment, the calculation of Preferred Return payable by CDC shall reflect such reduction in the Capital Contribution. 2. The Partnership Agreement is hereby amended to reflect the foregoing waiver. Except as specifically modified hereby, all terms, provisions and conditions of the Partnership Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto hereby execute and deliver this Agreement as of the date set forth above. CENTEX REAL ESTATE CORPORATION 3333 DEVELOPMENT CORPORATION By: /s/ Timothy R. Eller By: /s/ J. Stephen Bilheimer ------------------------------ ------------------------------ Name: Timothy R. Eller Name: J. Stephen Bilheimer Title: President Title: President CENTEX DEVELOPMENT COMPANY, LP By: 3333 Development Company, General Partner By: /s/ J. Stephen Bilheimer ------------------------------ Name: J. Stephen Bilheimer Title: President EX-10.11 13 WAIVER AGREEMENT DATED SEPTEMBER 27, 1995 1 EXHIBIT 10.11 WAIVER AGREEMENT This Waiver Agreement (this "Agreement") dated as of September 27, 1995 but effective as of July 1, 1995, by and between Centex Real Estate Corporation ("CREC") and 3333 Development Corporation ("3333 Development"). WHEREAS, 3333 Development is the General Partner and CREC is the sole limited partner of Centex Development Company, L.P. ("CDC"). The Amended and Restated Agreement of Limited Partnership of CDC (the "Partnership Agreement") provides, among other things, that CREC is entitled to receive from CDC an amount equal to 9% per annum cumulative preferred return (the "Preferred Return") on the outstanding difference from time to time between $76 million (the value of the properties initially contributed to CDC by CREC and its predecessors in interest) (the "Capital Contribution") and the aggregate cash distributions previously received by CREC with respect thereto, and payments to return the Capital Contribution; WHEREAS, the Partnership Agreement provides that all payments by CREC to CDC shall first be applied to payment of the Preferred Return; and WHEREAS, CREC has agreed to apply a payment from CDC as a reduction to the Capital Contribution rather than to Preferred Return; NOW, THEREFORE, for an in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: 1. The $300,000 payment made by CDC to CREC on September 27, 1995 shall be applied to reduce the Capital Contribution effective as of July 1, 1995 by that amount. From and after the effective date of such payment, the calculation of Preferred Return payable by CDC shall reflect such reduction in the Capital Contribution. 2. The Partnership Agreement is hereby amended to reflect the foregoing waiver. Except as specifically modified hereby, all terms, provisions and conditions of the Partnership Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto hereby execute and deliver this Agreement as of the date set forth above. CENTEX REAL ESTATE CORPORATION 3333 DEVELOPMENT CORPORATION By: /s/ Timothy R. Eller By: /s/ J. Stephen Bilheimer ------------------------------ ------------------------------ Name: Timothy R. Eller Name: J. Stephen Bilheimer Title: President Title: President CENTEX DEVELOPMENT COMPANY, LP By: 3333 Development Company, General Partner By: /s/ J. Stephen Bilheimer ------------------------------ Name: J. Stephen Bilheimer Title: President EX-10.12 14 WAIVER AGREEMENT DATED DECEMBER 31, 1995 1 EXHIBIT 10.12 WAIVER AGREEMENT This Waiver Agreement (this "Agreement") dated as of December 31, 1995 by and between Centex Real Estate Corporation ("CREC") and 3333 Development Corporation ("3333 Development"). WHEREAS, 3333 Development is the General Partner and CREC is the sole limited partner of Centex Development Company, L.P. ("CDC"). The Amended and Restated Agreement of Limited Partnership of CDC (the "Partnership Agreement") provides, among other things, that CREC is entitled to receive from CDC an amount equal to 9% per annum cumulative preferred return (the "Preferred Return") on the outstanding difference from time to time between $76 million (the value of the properties initially contributed to CDC by CREC and its predecessors in interest) (the "Capital Contribution") and the aggregate cash distributions previously received by CREC with respect thereto, and payments to return the Capital Contribution; WHEREAS, the Partnership Agreement provides that all payments by CREC to CDC shall first be applied to payment of the Preferred Return; and WHEREAS, CREC has agreed to apply a payment from CDC as a reduction to the Capital Contribution rather than to Preferred Return; NOW, THEREFORE, for an in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: 1. The $2,500,000 payment made by CDC to CREC on December 31, 1995 shall be applied to reduce the Capital Contribution by that amount. From and after the effective date of such payment, the calculation of Preferred Return payable by CDC shall reflect such reduction in the Capital Contribution. 2. The Partnership Agreement is hereby amended to reflect the foregoing waiver. Except as specifically modified hereby, all terms, provisions and conditions of the Partnership Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto hereby execute and deliver this Agreement as of the date set forth above. CENTEX REAL ESTATE CORPORATION 3333 DEVELOPMENT CORPORATION By: /s/ Timothy R. Eller By: /s/ J. Stephen Bilheimer ------------------------------ ------------------------------ Name: Timothy R. Eller Name: J. Stephen Bilheimer Title: President Title: President CENTEX DEVELOPMENT COMPANY, LP By: 3333 Development Company, General Partner By: /s/ J. Stephen Bilheimer ------------------------------ Name: J. Stephen Bilheimer Title: President EX-10.13 15 WAIVER AGREEMENT DATED MARCH 29, 1996 1 EXHIBIT 10.13 WAIVER AGREEMENT This Waiver Agreement (this "Agreement") dated as of March 29, 1996 by and between Centex Real Estate Corporation ("CREC") and 3333 Development Corporation ("3333 Development"). WHEREAS, 3333 Development is the General Partner and CREC is the sole limited partner of Centex Development Company, L.P. ("CDC"). The Amended and Restated Agreement of Limited Partnership of CDC (the "Partnership Agreement") provides, among other things, that CREC is entitled to receive from CDC an amount equal to 9% per annum cumulative preferred return (the "Preferred Return") on the outstanding difference from time to time between $76 million (the value of the properties initially contributed to CDC by CREC and its predecessors in interest) (the "Capital Contribution") and the aggregate cash distributions previously received by CREC with respect thereto, and payments to return the Capital Contribution; WHEREAS, the Partnership Agreement provides that all payments by CREC to CDC shall first be applied to payment of the Preferred Return; and WHEREAS, CREC has agreed to apply a payment from CDC as a reduction to the Capital Contribution rather than to Preferred Return; NOW, THEREFORE, for an in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: 1. The $1,700,000 payment made by CDC to CREC on March 29, 1996 shall be applied to reduce the Capital Contribution by that amount. From and after the effective date of such payment, the calculation of Preferred Return payable by CDC shall reflect such reduction in the Capital Contribution. 2. The Partnership Agreement is hereby amended to reflect the foregoing waiver. Except as specifically modified hereby, all terms, provisions and conditions of the Partnership Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto hereby execute and deliver this Agreement as of the date set forth above. CENTEX REAL ESTATE CORPORATION 3333 DEVELOPMENT CORPORATION By: /s/ Timothy R. Eller By: /s/ J. Stephen Bilheimer ------------------------------ ------------------------------ Name: Timothy R. Eller Name: J. Stephen Bilheimer Title: President Title: President CENTEX DEVELOPMENT COMPANY, LP By: 3333 Development Company, General Partner By: /s/ J. Stephen Bilheimer ------------------------------ Name: J. Stephen Bilheimer Title: President EX-10.14 16 WAIVER AGREEMENT DATED JANUARY 8, 1996 1 EXHIBIT 10.14 WAIVER AGREEMENT This Waiver Agreement (this "Agreement") dated as of January 8, 1996 but effective as of January 1, 1996, by and between Centex Real Estate Corporation ("CREC") and 3333 Development Corporation ("3333 Development"). WHEREAS, 3333 Development is the General Partner and CREC is the sole limited partner of Centex Development Company, L.P. ("CDC"). The Amended and Restated Agreement of Limited Partnership of CDC (the "Partnership Agreement") provides, among other things, that CREC is entitled to receive from CDC an amount equal to 9% per annum cumulative preferred return (the "Preferred Return") on the outstanding difference from time to time between $76 million (the value of the properties initially contributed to CDC by CREC and its predecessors in interest) (the "Capital Contribution") and the aggregate cash distributions previously received by CREC with respect thereto, and payments to return the Capital Contribution; WHEREAS, the Partnership Agreement provides that all payments by CREC to CDC shall first be applied to payment of the Preferred Return; and WHEREAS, CREC has agreed to apply a payment from CDC as a reduction to the Capital Contribution rather than to Preferred Return; NOW, THEREFORE, for an in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: 1. The $2,000,000 payment made by CDC to CREC on January 8, 1996 shall be applied to reduce the Capital Contribution effective as of January 1, 1996 by that amount. From and after the effective date of such payment, the calculation of Preferred Return payable by CDC shall reflect such reduction in the Capital Contribution. 2. The Partnership Agreement is hereby amended to reflect the foregoing waiver. Except as specifically modified hereby, all terms, provisions and conditions of the Partnership Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto hereby execute and deliver this Agreement as of the date set forth above. CENTEX REAL ESTATE CORPORATION 3333 DEVELOPMENT CORPORATION By: /s/ Timothy R. Eller By: /s/ J. Stephen Bilheimer ------------------------------ ----------------------------- Name: Timothy R. Eller Name: J. Stephen Bilheimer Title: President Title: President CENTEX DEVELOPMENT COMPANY, LP By: 3333 Development Company, General Partner By: /s/ J. Stephen Bilheimer ------------------------------ Name: J. Stephen Bilheimer Title: President EX-23.3 17 CONSENT OF INDEPENDENT AUDITORS - DEVELOPMENT 1 EXHIBIT 23.3 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 8, 1996, incorporated by reference 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, 1996, and to all references to our firm included in these registration statements. Arthur Andersen LLP Dallas, Texas, May 20, 1996 EX-24.3 18 POWERS OF ATTORNEY - DEVELOPMENT 1 EXHIBIT 24.3 CENTEX DEVELOPMENT COMPANY, L.P. POWER OF ATTORNEY THE UNDERSIGNED hereby constitutes and appoints J. Stephen Bilheimer, with full power of substitution in the premises, 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, 1996, 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 20 day of May, 1996. ---- /s/ Josiah O. Low, III ----------------------------------- Josiah O. Low, III Director 3333 Development Corporation, General Partner of Centex Development Company, L.P. 2 CENTEX DEVELOPMENT COMPANY, L.P. POWER OF ATTORNEY THE UNDERSIGNED hereby constitutes and appoints J. Stephen Bilheimer, with full power of substitution in the premises, 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, 1996, 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 20 day of May, 1996. ---- /s/ David M. Sherer ----------------------------------- David M. Sherer Director 3333 Development Corporation, General Partner of Centex Development Company, L.P. EX-27.3 19 FINANCIAL DATA SCHEDULE - DEVELOPMENT
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CENTEX DEVELOPMENT COMPANY L.P.'S MARCH 31, 1996, FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000818764 CENTEX DEVELOPMENT COMPANY, L.P. 1,000 12-MOS MAR-31-1996 APR-01-1995 MAR-31-1996 225 0 4,257 0 38,506 0 0 0 43,168 0 0 500 0 0 36,784 43,168 13,943 13,943 13,919 13,919 0 0 0 24 0 24 0 0 0 24 0.00 0.00
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