##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

JOINT QUARTERLY REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarterly Period Ended

June 30, 2002

Commission File No. 1-6776

Centex Corporation

A Nevada Corporation

IRS Employer Identification No. 75-0778259
2728 N. Harwood
Dallas, Texas 75201
(214) 981-5000

Commission File Nos. 1-9624 and 1-9625, respectively

3333 Holding Corporation
A Nevada CorporationCentex Development Company, L.P.
A Delaware Limited Partnership

IRS Employer Identification Nos. 75-2178860 and 75-2168471, respectively
2728 N. Harwood
Dallas, Texas 75201
(214) 981-6770

The registrants have filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and
have been subject to such filing requirements for the past 90 days.

Indicate the number of shares of each of the registrants classes of common
stock (or other similar equity securities) outstanding as of the close of
business on July 31, 2002:

|                                 |  |                                               |  |                  
|-------------------------------- |  | --------------------------------------------- |  | -----------------
|Centex Corporation               |  | Common Stock                                  |  | 61,595,148 shares
|3333 Holding Corporation         |  | Common Stock                                  |  | 1,000 shares     
|Centex Development Company, L.P. |  | Class A Units of Limited Partnership Interest |  | 32,260 units     
|Centex Development Company, L.P. |  | Class C Units of Limited Partnership Interest |  | 208,330 units    





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TABLE OF CONTENTS



|                               |                                                                                               |                                                                  |  |  |  |  |  | 
|------------------------------ | --------------------------------------------------------------------------------------------- | ---------------------------------------------------------------- |  |  |  |  |  | 
|Part I  Financial Information
|                               | Item 1. Financial Statements                                                                 
|                               |                                                                                               | Statements of Consolidated Earnings                             
|                               |                                                                                               | Consolidated Balance Sheets with Consolidating Details          
|                               |                                                                                               | Statements of Consolidated Cash Flows with Consolidating Details
|                               |                                                                                               | Notes to Consolidated Financial Statements                      
|                               | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                               | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|Part II. Other Information    
|                               | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|Signatures                    
|Part I  Financial Information
|                               | Item 1. Financial Statements                                                                 
|                               |                                                                                               | Condensed Combining Statements of Operations                    
|                               |                                                                                               | Condensed Combining Balance Sheets                              
|                               |                                                                                               | Condensed Combining Statements of Cash Flows                    
|                               |                                                                                               | Notes to Condensed Combining Financial Statements               
|                               | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                               | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|Part II. Other Information    
|                               | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|Signatures                    



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##### Table of Contents



Centex Corporation and Subsidiaries
3333 Holding Corporation and Subsidiary
Centex Development Company, L.P. and Subsidiaries

Form 10-Q Table of Contents

June 30, 2002

Centex Corporation and Subsidiaries

|           |  |                       |  |         |  |                                                                                       |  |                                                                  |    |      |   | 
|---------- |  | --------------------- |  | ------- |  | ------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------- | -- | ---- | - | 
|           |  |                       |  |         |  |                                                                                       |  |                                                                  |    | Page |  
|Part I.    |  | Financial Information |  |         |  |                                                                                      
|           |  |                       |  | Item 1. |  | Financial Statements                                                                  |  |                                                                  |    |     
|           |  |                       |  |         |  |                                                                                       |  | Statements of Consolidated Earnings                              |    |      | 1 | 
|           |  |                       |  |         |  |                                                                                       |  | Consolidated Balance Sheets with Consolidating Details           |    |      | 2 | 
|           |  |                       |  |         |  |                                                                                       |  | Statements of Consolidated Cash Flows with Consolidating Details |    |      | 4 | 
|           |  |                       |  |         |  |                                                                                       |  | Notes to Consolidated Financial Statements                       |    |      | 6 | 
|           |  |                       |  | Item 2. |  | Managements Discussion and Analysis of Financial Condition
and Results of Operations |  |                                                                  | 19 |     
|           |  |                       |  | Item 3. |  | Quantitative and Qualitative Disclosures about Market Risk                            |  |                                                                  | 33 |     
|Part II.   |  | Other Information     |  |         |  |                                                                                      
|           |  |                       |  | Item 6. |  | Exhibits and Reports on Form 8-K                                                      |  |                                                                  | 34 |     
|Signatures |  |                       |  |         |  |                                                                                       |  |                                                                  | 35 |     

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##### Table of Contents



3333 Holding Corporation and Subsidiary
Centex Development Company, L.P. and Subsidiaries

|           |  |                       |  |         |  |                                                                                       |  |                                                   |    |      |    | 
|---------- |  | --------------------- |  | ------- |  | ------------------------------------------------------------------------------------- |  | ------------------------------------------------- | -- | ---- | -- | 
|           |  |                       |  |         |  |                                                                                       |  |                                                   |    | Page |   
|Part I.    |  | Financial Information |  |         |  |                                                                                      
|           |  |                       |  | Item 1. |  | Financial Statements                                                                  |  |                                                   |    |     
|           |  |                       |  |         |  |                                                                                       |  | Condensed Combining Statements of Operations      |    |      | 36 | 
|           |  |                       |  |         |  |                                                                                       |  | Condensed Combining Balance Sheets                |    |      | 37 | 
|           |  |                       |  |         |  |                                                                                       |  | Condensed Combining Statements of Cash Flows      |    |      | 38 | 
|           |  |                       |  |         |  |                                                                                       |  | Notes to Condensed Combining Financial Statements |    |      | 39 | 
|           |  |                       |  | Item 2. |  | Managements Discussion and Analysis of Financial Condition
and Results of Operations |  |                                                   | 45 |     
|           |  |                       |  | Item 3. |  | Quantitative and Qualitative Disclosures about Market Risk                            |  |                                                   | 50 |     
|Part II.   |  | Other Information     |  |         |  |                                                                                      
|           |  |                       |  | Item 6. |  | Exhibits and Reports on Form 8-K                                                      |  |                                                   | 51 |     
|Signatures |  |                       |  |         |  |                                                                                       |  |                                                   | 52 |     

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##### Table of Contents












Part I  Financial Information

Item 1. Financial Statements

Centex Corporation and Subsidiaries
Statements of Consolidated Earnings
(Dollars in thousands, except per share data)
(unaudited)

|                             |                                      |                                            |           |                                     |           |   |           |            |           | 
|---------------------------- | ------------------------------------ | ------------------------------------------ | --------- | ----------------------------------- | --------- | - | --------- | ---------- | --------- | 
|                             |                                      |                                            |           |                                     |          
|                             |                                      |                                            |           | For the Three Months Ended June 30, |          
|                             |                                      |                                            |           |                                     |          
|                             |                                      |                                            |           | 2002                                |           |   | 2001      |           
|                             |                                      |                                            |           |                                     |           |   |           |           
|Revenues                     |                                      |                                            |           |                                     |           |   |           |           
|                             | Home Building                        |                                            | $         | 1,105,718                           |           |   | $         | 1,039,161  |          
|                             | Financial Services                   |                                            |           | 180,540                             |           |   |           | 162,593    |          
|                             | Construction Products                |                                            |           | 128,775                             |           |   |           | 117,423    |          
|                             | Construction Services                |                                            |           | 360,721                             |           |   |           | 313,633    |          
|                             | Investment Real Estate               |                                            |           | 5,945                               |           |   |           | 24,098     |          
|                             | Other                                |                                            |           | 62,156                              |           |   |           | 52,237     |          
|                             |                                      |                                            |           |                                     |           |  
|                             |                                      |                                            | 1,843,855 |                                     |           |   | 1,709,145 |           
|                             |                                      |                                            |           |                                     |           |  
|Costs and Expenses           |                                      |                                            |           |                                     |           |   |           |           
|                             | Home Building                        |                                            |           | 997,094                             |           |   |           | 941,041    |          
|                             | Financial Services                   |                                            |           | 156,234                             |           |   |           | 137,423    |          
|                             | Construction Products                |                                            |           | 101,043                             |           |   |           | 104,481    |          
|                             | Construction Services                |                                            |           | 352,641                             |           |   |           | 306,175    |          
|                             | Investment Real Estate               |                                            |           | 2,548                               |           |   |           | 8,843      |          
|                             | Other                                |                                            |           | 63,581                              |           |   |           | 51,875     |          
|                             | Corporate General and Administrative |                                            |           | 12,634                              |           |   |           | 11,246     |          
|                             | Interest Expense                     |                                            |           | 23,726                              |           |   |           | 27,242     |          
|                             | Minority Interest                    |                                            |           | 8,882                               |           |   |           | 2,833      |          
|                             |                                      |                                            |           |                                     |           |  
|                             |                                      |                                            | 1,718,383 |                                     |           |   | 1,591,159 |           
|                             |                                      |                                            |           |                                     |           |  
|Earnings Before Income Taxes |                                      |                                            | 125,472   |                                     |           |   | 117,986   |           
|                             | Income Taxes                         |                                            |           | 37,717                              |           |   |           | 42,770     |          
|                             |                                      |                                            |           |                                     |           |  
|Net Earnings                 |                                      | $                                          | 87,755    |                                     |           | $ | 75,216    |           
|                             |                                      |                                            |           |                                     |           |  
|Earnings Per
Share          
|                             | Basic                                |                                            | $         | 1.43                                |           |   | $         | 1.25       |          
|                             |                                      |                                            |           |                                     |           |  
|                             | Diluted                              |                                            | $         | 1.38                                |           |   | $         | 1.22       |          
|                             |                                      |                                            |           |                                     |           |  
|Average Shares Outstanding   |                                      |                                            |           |                                     |           |   |           |           
|                             | Basic                                |                                            |           | 61,168,777                          |           |   |           | 60,174,973 |          
|                             | Dilutive Securities:                 |                                            |           |                                     |           |   |           |            |          
|                             |                                      | Options                                    |           |                                     | 1,998,229 |   |           |            | 1,332,271 | 
|                             |                                      | Convertible Debenture and Restricted Stock |           |                                     | 430,110   |   |           |            | 402,848   | 
|                             |                                      |                                            |           |                                     |           |  
|                             | Diluted                              |                                            |           | 63,597,116                          |           |   |           | 61,910,092 |          
|                             |                                      |                                            |           |                                     |           |  
|Cash Dividends Per Share     |                                      | $                                          | 0.04      |                                     |           | $ | 0.04      |           
|                             |                                      |                                            |           |                                     |           |  

See Notes to Consolidated Financial Statements.

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##### Table of Contents






Centex Corporation and Subsidiaries
Consolidated Balance Sheets with Consolidating Details
(Dollars in thousands)

|                                         |                                                              |                                              |           |                                     |        |   |                |           |        | 
|---------------------------------------- | ------------------------------------------------------------ | -------------------------------------------- | --------- | ----------------------------------- | ------ | - | -------------- | --------- | ------ | 
|                                         |                                                              |                                              |           |                                     |       
|                                         |                                                              |                                              |           | Centex Corporation and Subsidiaries |       
|                                         |                                                              |                                              |           |                                     |       
|                                         |                                                              |                                              |           | June 30, 2002*                      |        |   | March 31, 2002 |          
|                                         |                                                              |                                              |           |                                     |        |   |                |          
|Assets                                   |                                                              |                                              |           |                                     |        |   |                |          
|Cash and Cash Equivalents                |                                                              | $                                            | 52,879    |                                     |        | $ | 219,716        |          
|Restricted Cash                          |                                                              |                                              | 119,278   |                                     |        |   | 106,270        |          
|Receivables -                            |                                                              |                                              |           |                                     |        |   |                |          
|                                         | Residential Mortgage Loans Held for Investment               |                                              |           | 3,489,044                           |        |   |                | 3,254,017 |       
|                                         | Residential Mortgage Loans Held for Sale                     |                                              |           | 207,016                             |        |   |                | 241,793   |       
|                                         | Construction Contracts                                       |                                              |           | 232,681                             |        |   |                | 221,705   |       
|                                         | Trade, including Notes of $32,657 and $30,908                |                                              |           | 378,401                             |        |   |                | 345,311   |       
|Inventories -                            |                                                              |                                              |           |                                     |        |   |                |          
|                                         | Housing Projects                                             |                                              |           | 2,835,018                           |        |   |                | 2,513,168 |       
|                                         | Land Held for Development and Sale                           |                                              |           | 102,872                             |        |   |                | 85,997    |       
|                                         | Construction Products                                        |                                              |           | 55,798                              |        |   |                | 54,220    |       
|                                         | Other                                                        |                                              |           | 64,022                              |        |   |                | 51,059    |       
|Investments -                            |                                                              |                                              |           |                                     |        |   |                |          
|                                         | Centex Development Company, L.P.                             |                                              |           | 289,091                             |        |   |                | 269,178   |       
|                                         | Joint Ventures and Other                                     |                                              |           | 104,323                             |        |   |                | 94,609    |       
|                                         | Unconsolidated Subsidiaries                                  |                                              |           |                                    |        |   |                |          |       
|Property and Equipment, net              |                                                              |                                              | 729,777   |                                     |        |   | 720,285        |          
|Other Assets -                           |                                                              |                                              |           |                                     |        |   |                |          
|                                         | Deferred Income Taxes                                        |                                              |           | 82,819                              |        |   |                | 76,167    |       
|                                         | Goodwill                                                     |                                              |           | 350,034                             |        |   |                | 349,712   |       
|                                         | Mortgage Securitization Residual Interest                    |                                              |           | 120,088                             |        |   |                | 125,272   |       
|                                         | Deferred Charges and Other                                   |                                              |           | 242,831                             |        |   |                | 256,976   |       
|                                         |                                                              |                                              |           |                                     |        |  
|                                         |                                                              | $                                            | 9,455,972 |                                     |        | $ | 8,985,455      |          
|                                         |                                                              |                                              |           |                                     |        |  
|Liabilities and Stockholders Equity     |                                                              |                                              |           |                                     |        |   |                |          
|Accounts Payable and Accrued Liabilities |                                                              | $                                            | 1,369,908 |                                     |        | $ | 1,438,613      |          
|Debt -                                   |                                                              |                                              |           |                                     |        |   |                |          
|                                         | Non-Financial Services                                       |                                              |           | 1,909,870                           |        |   |                | 1,791,752 |       
|                                         | Financial Services                                           |                                              |           | 3,804,644                           |        |   |                | 3,485,027 |       
|Payables to Affiliates                   |                                                              |                                              |          |                                     |        |   |               |          
|Minority Stockholders Interest          |                                                              |                                              | 161,319   |                                     |        |   | 153,290        |          
|Stockholders Equity -                   |                                                              |                                              |           |                                     |        |   |                |          
|                                         | Preferred Stock, Authorized 5,000,000 Shares, None Issued    |                                              |           |                                    |        |   |                |          |       
|                                         | Common Stock, $.25 Par Value; Authorized 100,000,000 Shares; |                                              |           |                                     |        |   |                |           |       
|                                         |                                                              | Outstanding 61,260,108 and 61,171,149 Shares |           |                                     | 15,396 |   |                |           | 15,348 | 
|                                         | Capital in Excess of Par Value                               |                                              |           | 80,209                              |        |   |                | 72,446    |       
|                                         | Unamortized Value of Restricted Stock                        |                                              |           | (3,161                              | )      |   |                | (2,408    | )     
|                                         | Retained Earnings                                            |                                              |           | 2,136,194                           |        |   |                | 2,050,902 |       
|                                         | Treasury Stock, at cost; 321,915 and 221,854 Shares          |                                              |           | (11,542                             | )      |   |                | (6,559    | )     
|                                         | Accumulated Other Comprehensive Loss                         |                                              |           | (6,865                              | )      |   |                | (12,956   | )     
|                                         |                                                              |                                              |           |                                     |        |  
|Total Stockholders Equity               |                                                              |                                              | 2,210,231 |                                     |        |   | 2,116,773      |          
|                                         |                                                              |                                              |           |                                     |        |  
|                                         |                                                              | $                                            | 9,455,972 |                                     |        | $ | 8,985,455      |          
|                                         |                                                              |                                              |           |                                     |        |  

See Notes to Consolidated Financial Statements.
*Unaudited

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##### Table of Contents



Centex Corporation and Subsidiaries
Consolidated Balance Sheets with Consolidating Details
(Dollars in thousands)

| |    |                                                                                                                                                                                                                                                                                                                   |           |   |                    |   |           |                |   |   |                |   |   |   |           |  
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------- | - | ------------------ | - | --------- | -------------- | - | - | -------------- | - | - | - | --------- | -
| |    |                                                                                                                                                                                                                                                                                                                   |           |   |                    |  
| |    | Centex Corporation **                                                                                                                                                                                                                                                                                             |           |   | Financial Services |  
| |    |                                                                                                                                                                                                                                                                                                                   |           |   |                    |  
| |    | June 30, 2002*                                                                                                                                                                                                                                                                                                    |           |   | March 31, 2002     |   |           | June 30, 2002* |   |   | March 31, 2002 |  
| |    |                                                                                                                                                                                                                                                                                                                   |           |   |                    |   |           |                |   |   |                |  
| |    |                                                                                                                                                                                                                                                                                                                   |           |   |                    |  
| |    | $                                                                                                                                                                                                                                                                                                                 | 32,461    |   |                    | $ | 192,591   |                |   | $ | 20,418         |   |   | $ | 27,125    |  
| |    |                                                                                                                                                                                                                                                                                                                   | 13,141    |   |                    |   | 4,760     |                |   |   | 106,137        |   |   |   | 101,510   |  
| |    |                                                                                                                                                                                                                                                                                                                   |           |   |                    |  
| |    |                                                                                                                                                                                                                                                                                                                   |          |   |                    |   |          |                |   |   | 3,489,044      |   |   |   | 3,254,017 |  
| |    |                                                                                                                                                                                                                                                                                                                   |          |   |                    |   |          |                |   |   | 207,016        |   |   |   | 241,793   |  
| |    |                                                                                                                                                                                                                                                                                                                   | 232,681   |   |                    |   | 221,705   |                |   |   |               |   |   |   |          |  
| |    |                                                                                                                                                                                                                                                                                                                   | 202,039   |   |                    |   | 197,613   |                |   |   | 176,362        |   |   |   | 147,698   |  
| |    |                                                                                                                                                                                                                                                                                                                   |           |   |                    |  
| |    |                                                                                                                                                                                                                                                                                                                   | 2,835,018 |   |                    |   | 2,513,168 |                |   |   |               |   |   |   |          |  
| |    |                                                                                                                                                                                                                                                                                                                   | 102,872   |   |                    |   | 85,997    |                |   |   |               |   |   |   |          |  
| |    |                                                                                                                                                                                                                                                                                                                   | 55,798    |   |                    |   | 54,220    |                |   |   |               |   |   |   |          |  
| |    |                                                                                                                                                                                                                                                                                                                   | 25,291    |   |                    |   | 22,186    |                |   |   | 38,731         |   |   |   | 28,873    |  
| |    |                                                                                                                                                                                                                                                                                                                   |           |   |                    |  
| |    |                                                                                                                                                                                                                                                                                                                   | 289,091   |   |                    |   | 269,178   |                |   |   |               |   |   |   |          |  
| |    |                                                                                                                                                                                                                                                                                                                   | 104,323   |   |                    |   | 94,609    |                |   |   |               |   |   |   |          |  
| |    |                                                                                                                                                                                                                                                                                                                   | 388,903   |   |                    |   | 498,117   |                |   |   |               |   |   |   |          |  
| |    |                                                                                                                                                                                                                                                                                                                   | 688,069   |   |                    |   | 672,165   |                |   |   | 41,708         |   |   |   | 48,120    |  
| |    |                                                                                                                                                                                                                                                                                                                   |           |   |                    |  
| |    |                                                                                                                                                                                                                                                                                                                   | (27       | ) |                    |   | (3,456    | )              |   |   | 82,846         |   |   |   | 79,623    |  
| |    |                                                                                                                                                                                                                                                                                                                   | 333,219   |   |                    |   | 332,897   |                |   |   | 16,815         |   |   |   | 16,815    |  
| |    |                                                                                                                                                                                                                                                                                                                   |          |   |                    |   |          |                |   |   | 120,088        |   |   |   | 125,272   |  
| |    |                                                                                                                                                                                                                                                                                                                   | 177,119   |   |                    |   | 179,810   |                |   |   | 65,712         |   |   |   | 77,166    |  
| |    |                                                                                                                                                                                                                                                                                                                   |           |   |                    |   |           |                |   |   |                |  
| |    | $                                                                                                                                                                                                                                                                                                                 | 5,479,998 |   |                    | $ | 5,335,560 |                |   | $ | 4,364,877      |   |   | $ | 4,148,012 |  
| |    |                                                                                                                                                                                                                                                                                                                   |           |   |                    |   |           |                |   |   |                |  
| |    |                                                                                                                                                                                                                                                                                                                   |           |   |                    |  
| |    | $                                                                                                                                                                                                                                                                                                                 | 1,200,304 |   |                    | $ | 1,275,720 |                |   | $ | 169,604        |   |   | $ | 162,893   |  
| |    |                                                                                                                                                                                                                                                                                                                   |           |   |                    |  
| |    |                                                                                                                                                                                                                                                                                                                   | 1,909,870 |   |                    |   | 1,791,752 |                |   |   |               |   |   |   |          |  
| |    |                                                                                                                                                                                                                                                                                                                   |          |   |                    |   |          |                |   |   | 3,804,644      |   |   |   | 3,485,027 |  
| |    |                                                                                                                                                                                                                                                                                                                   |          |   |                    |   |          |                |   |   | 61,741         |   |   |   | 187,764   |  
| |    |                                                                                                                                                                                                                                                                                                                   | 159,593   |   |                    |   | 151,315   |                |   |   | 1,726          |   |   |   | 1,975     |  
| |    |                                                                                                                                                                                                                                                                                                                   |           |   |                    |  
| |    |                                                                                                                                                                                                                                                                                                                  |           |   |                    |  |           |                |  |   |                |   |  |  
| |    |                                                                                                                                                                                                                                                                                                                   |           |   |                    |  
| |    |                                                                                                                                                                                                                                                                                                                   | 15,396    |   |                    |   | 15,348    |                |   |   | 1              |   |   |   | 1         |  
| |    |                                                                                                                                                                                                                                                                                                                   | 80,209    |   |                    |   | 72,446    |                |   |   | 202,671        |   |   |   | 202,671   |  
| |    |                                                                                                                                                                                                                                                                                                                   | (3,161    | ) |                    |   | (2,408    | )              |   |   |               |   |   |   |          |  
| |    |                                                                                                                                                                                                                                                                                                                   | 2,136,194 |   |                    |   | 2,050,902 |                |   |   | 139,699        |   |   |   | 116,748   |  
| |    |                                                                                                                                                                                                                                                                                                                   | (11,542   | ) |                    |   | (6,559    | )              |   |   |               |   |   |   |          |  
| |    |                                                                                                                                                                                                                                                                                                                   | (6,865    | ) |                    |   | (12,956   | )              |   |   | (15,209        | ) |   |   | (9,067    | )
| |    |                                                                                                                                                                                                                                                                                                                   |           |   |                    |   |           |                |   |   |                |  
| |    |                                                                                                                                                                                                                                                                                                                   | 2,210,231 |   |                    |   | 2,116,773 |                |   |   | 327,162        |   |   |   | 310,353   |  
| |    |                                                                                                                                                                                                                                                                                                                   |           |   |                    |   |           |                |   |   |                |  
| |    | $                                                                                                                                                                                                                                                                                                                 | 5,479,998 |   |                    | $ | 5,335,560 |                |   | $ | 4,364,877      |   |   | $ | 4,148,012 |  
| |    |                                                                                                                                                                                                                                                                                                                   |           |   |                    |   |           |                |   |   |                |  
|
| | ** | In the supplemental data presented above, Centex Corporation represents
the consolidation of all subsidiaries other than those included in
Financial Services. Transactions between Centex Corporation and Financial
Services have been eliminated from the Centex Corporation and Subsidiaries
balance sheets. |          

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##### Table of Contents






Centex Corporation and Subsidiaries
Statements of Consolidated Cash Flows with Consolidating Details
(Dollars in thousands)
(unaudited)

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See Notes to Consolidated Financial Statements.

-4-



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##### Table of Contents



Centex Corporation and Subsidiaries
Statements of Consolidated Cash Flows with Consolidating Details
(Dollars in thousands)
(unaudited)

| |    |                                                                                                                                                                                                                                                                                                                             |          |   |                                     |   |          |      |  |   |          |   |  |   |          |  
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- | - | ----------------------------------- | - | -------- | ---- |  | - | -------- | - |  | - | -------- | -
| |    |                                                                                                                                                                                                                                                                                                                             |          |   |                                     |  
| |    | Centex Corporation **                                                                                                                                                                                                                                                                                                       |          |   | Financial Services                  |  
| |    |                                                                                                                                                                                                                                                                                                                             |          |   |                                     |  
| |    | For the Three Months Ended June 30,                                                                                                                                                                                                                                                                                         |          |   | For the Three Months Ended June 30, |  
| |    |                                                                                                                                                                                                                                                                                                                             |          |   |                                     |  
| |    | 2002                                                                                                                                                                                                                                                                                                                        |          |   | 2001                                |   |          | 2002 |  |   | 2001     |  
| |    |                                                                                                                                                                                                                                                                                                                             |          |   |                                     |   |          |      |  |   |          |  
| |    |                                                                                                                                                                                                                                                                                                                             |          |   |                                     |  
| |    | $                                                                                                                                                                                                                                                                                                                           | 64,804   |   |                                     | $ | 59,437   |      |  | $ | 22,951   |   |  | $ | 15,779   |  
| |    |                                                                                                                                                                                                                                                                                                                             |          |   |                                     |  
| |    |                                                                                                                                                                                                                                                                                                                             | 19,622   |   |                                     |   | 17,703   |      |  |   | 4,104    |   |  |   | 3,662    |  
| |    |                                                                                                                                                                                                                                                                                                                             |          |   |                                     |  
| |    |                                                                                                                                                                                                                                                                                                                             |         |   |                                     |   |         |      |  |   | 7,043    |   |  |   | 2,648    |  
| |    |                                                                                                                                                                                                                                                                                                                             | (5,322   | ) |                                     |   | 9,275    |      |  |   | 189      |   |  |   | (5,800   | )
| |    |                                                                                                                                                                                                                                                                                                                             |          |   |                                     |  
| |    |                                                                                                                                                                                                                                                                                                                             | 25       |   |                                     |   | (2,660   | )    |  |   |         |   |  |   |         |  
| |    |                                                                                                                                                                                                                                                                                                                             | 5,907    |   |                                     |   | 1,898    |      |  |   |         |   |  |   |         |  
| |    |                                                                                                                                                                                                                                                                                                                             | (8,381   | ) |                                     |   | 799      |      |  |   | (4,627   | ) |  |   | (7,348   | )
| |    |                                                                                                                                                                                                                                                                                                                             | (15,402  | ) |                                     |   | 14,519   |      |  |   | (28,664  | ) |  |   | (18,134  | )
| |    |                                                                                                                                                                                                                                                                                                                             |          |   |                                     |  
| |    |                                                                                                                                                                                                                                                                                                                             |         |   |                                     |   |         |      |  |   | 34,777   |   |  |   | (274,396 | )
| |    |                                                                                                                                                                                                                                                                                                                             |          |   |                                     |  
| |    |                                                                                                                                                                                                                                                                                                                             | (338,794 | ) |                                     |   | (172,095 | )    |  |   |         |   |  |   |         |  
| |    |                                                                                                                                                                                                                                                                                                                             |          |   |                                     |  
| |    |                                                                                                                                                                                                                                                                                                                             | (4,683   | ) |                                     |   | 4,344    |      |  |   | (9,858   | ) |  |   | (502     | )
| |    |                                                                                                                                                                                                                                                                                                                             | (78,132  | ) |                                     |   | (46,528  | )    |  |   | 569      |   |  |   | (2,310   | )
| |    |                                                                                                                                                                                                                                                                                                                             | 298      |   |                                     |   | (49,807  | )    |  |   | 12,744   |   |  |   | 531      |  
| |    |                                                                                                                                                                                                                                                                                                                             | 126,023  |   |                                     |   | (12,920  | )    |  |   | (126,023 | ) |  |   | 12,920   |  
| |    |                                                                                                                                                                                                                                                                                                                             | 2,371    |   |                                     |   | 489      |      |  |   | (249     | ) |  |   | 666      |  
| |    |                                                                                                                                                                                                                                                                                                                             |          |   |                                     |   |          |      |  |   |          |  
| |    |                                                                                                                                                                                                                                                                                                                             | (231,664 | ) |                                     |   | (175,546 | )    |  |   | (87,044  | ) |  |   | (272,284 | )
| |    |                                                                                                                                                                                                                                                                                                                             |          |   |                                     |   |          |      |  |   |          |  
| |    |                                                                                                                                                                                                                                                                                                                             |          |   |                                     |  
| |    |                                                                                                                                                                                                                                                                                                                             |          |   |                                     |  
| |    |                                                                                                                                                                                                                                                                                                                             |         |   |                                     |   |         |      |  |   | (242,070 | ) |  |   | (175,520 | )
| |    |                                                                                                                                                                                                                                                                                                                             |          |   |                                     |  
| |    |                                                                                                                                                                                                                                                                                                                             | (15,850  | ) |                                     |   | (27,375  | )    |  |   |         |   |  |   |         |  
| |    |                                                                                                                                                                                                                                                                                                                             | (30,099  | ) |                                     |   | (24,666  | )    |  |   | 2,790    |   |  |   | (371     | )
| |    |                                                                                                                                                                                                                                                                                                                             |          |   |                                     |   |          |      |  |   |          |  
| |    |                                                                                                                                                                                                                                                                                                                             | (45,949  | ) |                                     |   | (52,041  | )    |  |   | (239,280 | ) |  |   | (175,891 | )
| |    |                                                                                                                                                                                                                                                                                                                             |          |   |                                     |   |          |      |  |   |          |  
| |    |                                                                                                                                                                                                                                                                                                                             |          |   |                                     |  
| |    |                                                                                                                                                                                                                                                                                                                             | 125,744  |   |                                     |   | 76,187   |      |  |   | 498,619  |   |  |   | 71,679   |  
| |    |                                                                                                                                                                                                                                                                                                                             |          |   |                                     |  
| |    |                                                                                                                                                                                                                                                                                                                             | 30,256   |   |                                     |   | 376,213  |      |  |   |         |   |  |   |         |  
| |    |                                                                                                                                                                                                                                                                                                                             | (37,882  | ) |                                     |   | (221,843 | )    |  |   |         |   |  |   |         |  
| |    |                                                                                                                                                                                                                                                                                                                             |          |   |                                     |  
| |    |                                                                                                                                                                                                                                                                                                                             |         |   |                                     |   |         |      |  |   | 30,949   |   |  |   | 480,000  |  
| |    |                                                                                                                                                                                                                                                                                                                             |         |   |                                     |   |         |      |  |   | (209,951 | ) |  |   | (86,032  | )
| |    |                                                                                                                                                                                                                                                                                                                             | 6,811    |   |                                     |   | 10,168   |      |  |   |         |   |  |   | 1,353    |  
| |    |                                                                                                                                                                                                                                                                                                                             | (4,983   | ) |                                     |   |         |      |  |   |         |   |  |   |         |  
| |    |                                                                                                                                                                                                                                                                                                                             | (2,463   | ) |                                     |   | (2,416   | )    |  |   |         |   |  |   |         |  
| |    |                                                                                                                                                                                                                                                                                                                             |          |   |                                     |   |          |      |  |   |          |  
| |    |                                                                                                                                                                                                                                                                                                                             | 117,483  |   |                                     |   | 238,309  |      |  |   | 319,617  |   |  |   | 467,000  |  
| |    |                                                                                                                                                                                                                                                                                                                             |          |   |                                     |   |          |      |  |   |          |  
| |    |                                                                                                                                                                                                                                                                                                                             | (160,130 | ) |                                     |   | 10,722   |      |  |   | (6,707   | ) |  |   | 18,825   |  
| |    |                                                                                                                                                                                                                                                                                                                             | 192,591  |   |                                     |   | 45,987   |      |  |   | 27,125   |   |  |   | 11,765   |  
| |    |                                                                                                                                                                                                                                                                                                                             |          |   |                                     |   |          |      |  |   |          |  
| |    | $                                                                                                                                                                                                                                                                                                                           | 32,461   |   |                                     | $ | 56,709   |      |  | $ | 20,418   |   |  | $ | 30,590   |  
| |    |                                                                                                                                                                                                                                                                                                                             |          |   |                                     |   |          |      |  |   |          |  
|
| | ** | In the supplemental data presented above, Centex Corporation represents
the consolidation of all subsidiaries other than those included in
Financial Services. Transactions between Centex Corporation and Financial
Services have been eliminated from the Centex Corporation and Subsidiaries
statements of cash flows. |         

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##### Table of Contents






Centex Corporation and Subsidiaries
Notes to Consolidated Financial Statements
June 30, 2002
(Dollars and shares in thousands, except per share data)
(unaudited)

(A)  BASIS OF PRESENTATION

The consolidated interim financial statements include the accounts of
Centex Corporation and subsidiaries (Centex or the Company) after
elimination of all significant intercompany balances and transactions. The
statements have been prepared, without audit, in accordance with accounting
principles generally accepted in the United States for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, certain information and footnote disclosures normally
included in financial statements prepared in accordance with accounting
principles generally accepted in the United States have been condensed or
omitted.

In the opinion of the Company, all adjustments (consisting of normal,
recurring accruals) necessary to present fairly the information in the
consolidated financial statements of the Company have been included. The
results of operations for such interim periods are not necessarily indicative
of results for the full year. The Company suggests that these consolidated financial statements be read in conjunction with the consolidated
financial statements and the notes to consolidated financial statements
included in the Companys latest Annual Report on Form 10-K.

(B)  STATEMENTS OF CONSOLIDATED CASH FLOWS  SUPPLEMENTAL DISCLOSURES

Interest expense relating to the Financial Services segment is included in
its costs and expenses. Interest expense related to segments other than
Financial Services is included as a separate line item on the Statements of
Consolidated Earnings.

|                                         |  |                      |         |   |      |   |         |  
|---------------------------------------- |  | -------------------- | ------- | - | ---- | - | ------- | -
|                                         |  |                      |        
|                                         |  | For the Three Months |        
|                                         |  | Ended June 30,       |        
|                                         |  |                      |        
|                                         |  | 2002                 |         |   | 2001 |  
|                                         |  |                      |         |   |      |  
|Total Interest Incurred                  |  | $                    | 78,566  |   |      | $ | 67,167  |  
|Interest Capitalized                     |  |                      | (18,551 | ) |      |   | (10,447 | )
|Capitalized Interest Relieved to Expense |  |                      | 8,358   |   |      |   | 6,455   |  
|Less  Financial Services                |  |                      | (44,647 | ) |      |   | (35,933 | )
|                                         |  |                      |         |   |      |  
|Interest Expense, net                    |  | $                    | 23,726  |   |      | $ | 27,242  |  
|                                         |  |                      |         |   |      |  

Cash payments made for interest, excluding Financial Services, were $23.0
million and $28.1 million for the three months ended June 30, 2002 and 2001,
respectively. Net payments made for federal, state and foreign income taxes
during the three months ended June 30, 2002 and 2001 were $37.1 million and
$10.0 million, respectively.

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##### Table of Contents



(C)  STOCKHOLDERS EQUITY

A summary of changes in stockholders equity is presented below:

|                        |                                          |  |              |      |   |            |        |    |            |   |        |          |  |   |             |          |   |               |           |        |               |   |         |        |   |             |         |        |   |   |           |        |  
|----------------------- | ---------------------------------------- |  | ------------ | ---- | - | ---------- | ------ | -- | ---------- | - | ------ | -------- |  | - | ----------- | -------- | - | ------------- | --------- | ------ | ------------- | - | ------- | ------ | - | ----------- | ------- | ------ | - | - | --------- | ------ | -
|                        |                                          |  |              |      |   |            |        |    |            |   |        |          |  |   | Unamortized |          |   |               |           |        |               |   |         |        |   | Accumulated |         |        |   |   |          
|                        |                                          |  | Common Stock |      |   | Capital in |        |    | Value of   |   |        |          |  |   |             | Treasury |   |               | Other     |        |               |   |         |       
|                        |                                          |  |              |      |   | Excess of  |        |    | Restricted |   |        | Retained |  |   | Stock at    |          |   | Comprehensive |           |        |               |   |        
|                        |                                          |  | Shares       |      |   | Amount     |        |    | Par Value  |   |        | Stock    |  |   | Earnings    |          |   | Cost          |           |        | (Loss) Income |   |         | Total  |  
|                        |                                          |  |              |      |   |            |        |    |            |   |        |          |  |   |             |          |   |               |           |        |               |   |         |        |  
|Balance, March 31, 2002 |                                          |  | 61,171       |      |   | $          | 15,348 |    |            | $ | 72,446 |          |  | $ | (2,408      | )        |   | $             | 2,050,902 |        |               | $ | (6,559  | )      |   | $           | (12,956 | )      |   | $ | 2,116,773 |       
|                        | Issuance of Restricted
Stock             |  |              | 20   |   |            |        | 5  |            |   |        | 995      |  |   |             | (1,000   | ) |               |           |       |               |   |         |       |   |             |         |       |   |   |           |       |  
|                        | Amortization of
Restricted Stock         |  |              |     |   |            |        |   |            |   |        |         |  |   |             | 247      |   |               |           |       |               |   |         |       |   |             |         |       |   |   |           | 247    |  
|                        | Exercise of Stock Options                |  |              | 169  |   |            |        | 43 |            |   |        | 6,768    |  |   |             |         |   |               |           |       |               |   |         |       |   |             |         |       |   |   |           | 6,811  |  
|                        | Cash Dividends                           |  |              |     |   |            |        |   |            |   |        |         |  |   |             |         |   |               |           | (2,463 | )             |   |         |       |   |             |         |       |   |   |           | (2,463 | )
|                        | Purchase of Common Stock
for Treasury    |  |              | (100 | ) |            |        |   |            |   |        |         |  |   |             |         |   |               |           |       |               |   |         | (4,983 | ) |             |         |       |   |   |           | (4,983 | )
|                        | Net Earnings                             |  |              |     |   |            |        |   |            |   |        |         |  |   |             |         |   |               |           | 87,755 |               |   |         |       |   |             |         |       |   |   |           | 87,755 |  
|                        | Unrealized Loss on
Hedging Instruments   |  |              |     |   |            |        |   |            |   |        |         |  |   |             |         |   |               |           |       |               |   |         |       |   |             |         | (6,951 | ) |   |           | (6,951 | )
|                        | Foreign Currency
Translation Adjustments |  |              |     |   |            |        |   |            |   |        |         |  |   |             |         |   |               |           |       |               |   |         |       |   |             |         | 13,976 |   |   |           | 13,976 |  
|                        | Other                                    |  |              |     |   |            |        |   |            |   |        |         |  |   |             |         |   |               |           |       |               |   |         |       |   |             |         | (934   | ) |   |           | (934   | )
|                        |                                          |  |              |      |   |            |        |    |            |   |        |          |  |   |             |          |   |               |           |        |               |   |         |       
|Balance, June 30, 2002  |                                          |  | 61,260       |      |   | $          | 15,396 |    |            | $ | 80,209 |          |  | $ | (3,161      | )        |   | $             | 2,136,194 |        |               | $ | (11,542 | )      |   | $           | (6,865  | )      |   | $ | 2,210,231 |       
|                        |                                          |  |              |      |   |            |        |    |            |   |        |          |  |   |             |          |   |               |           |        |               |   |         |       

(D)  RESIDENTIAL MORTGAGE LOANS HELD FOR INVESTMENT

Residential mortgage loans held for investment consisted of the following:

|                                                                            |  |               |           |   |                |   |           |   | 
|--------------------------------------------------------------------------- |  | ------------- | --------- | - | -------------- | - | --------- | - | 
|                                                                            |  |               |          
|                                                                            |  | June 30, 2002 |           |   | March 31, 2002 |  
|                                                                            |  |               |           |   |                |  
|Residential Mortgage Loans Held for Investment                              |  | $             | 3,506,364 |   |                | $ | 3,268,123 |  
|Allowance for Losses on Residential Mortgage Loans
Held for Investment      |  |               | (17,320   | ) |                |   | (14,106   | )
|                                                                            |  |               |           |   |                |  
|Residential Mortgage Loans Held for Investment,
net of Allowance for Losses |  | $             | 3,489,044 |   |                | $ | 3,254,017 |  
|                                                                            |  |               |           |   |                |  

Changes in the allowance for losses on residential mortgage loans held for
investment were as follows:

|                               |                                 |   |                                     |        |   |      |       |        |  
|------------------------------ | ------------------------------- | - | ----------------------------------- | ------ | - | ---- | ----- | ------ | -
|                               |                                 |   |                                     |       
|                               |                                 |   | For the Three Months Ended June 30, |       
|                               |                                 |   |                                     |       
|                               |                                 |   | 2002                                |        |   | 2001 |      
|                               |                                 |   |                                     |        |   |      |      
|Balance at Beginning of Period |                                 | $ | 14,106                              |        |   | $    | 2,814 |       
|                               | Provision for Losses            |   |                                     | 7,043  |   |      |       | 2,648  |  
|                               | Recoveries on Loans Charged Off |   |                                     | 18     |   |      |       |       |  
|                               | Losses Sustained                |   |                                     | (3,847 | ) |      |       | (1,426 | )
|                               |                                 |   |                                     |        |   |     
|Balance at End of Period       |                                 | $ | 17,320                              |        |   | $    | 4,036 |       
|                               |                                 |   |                                     |        |   |     

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##### Table of Contents



(E)  GOODWILL

A summary of changes in goodwill by segment for the three months ended
June 30, 2002 is presented below:

|                             |  |          |        |  |           |   |        |              |  |   |              |   |  |       |       |  |       |   |         |   |  |   |         |  
|---------------------------- |  | -------- | ------ |  | --------- | - | ------ | ------------ |  | - | ------------ | - |  | ----- | ----- |  | ----- | - | ------- | - |  | - | ------- | -
|                             |  |         
|                             |  | Home     |        |  | Financial |   |        | Construction |  |   | Construction |   |  |       |       |  |       |   |         |  
|                             |  | Building |        |  | Services  |   |        | Products     |  |   | Services     |   |  | Other |       |  | Total |  
|                             |  |          |        |  |           |   |        |              |  |   |              |   |  |       |       |  |       |  
|Balance as of March 31, 2002 |  | $        | 84,151 |  |           | $ | 16,815 |              |  | $ | 41,088       |   |  | $     | 1,007 |  |       | $ | 206,651 |   |  | $ | 349,712 |  
|Goodwill Acquired            |  |          |       |  |           |   |       |              |  |   |             |   |  |       |      |  |       |   | 1,848   |   |  |   | 1,848   |  
|Other                        |  |          |       |  |           |   |       |              |  |   | (891         | ) |  |       |      |  |       |   | (635    | ) |  |   | (1,526  | )
|                             |  |          |        |  |           |   |        |              |  |   |              |   |  |       |       |  |       |  
|Balance as of June 30, 2002  |  | $        | 84,151 |  |           | $ | 16,815 |              |  | $ | 40,197       |   |  | $     | 1,007 |  |       | $ | 207,864 |   |  | $ | 350,034 |  
|                             |  |          |        |  |           |   |        |              |  |   |              |   |  |       |       |  |       |  

Goodwill for the Other segment at June 30, 2002 includes $69 million
related to the Companys manufactured homes operations, $89 million related to
the Companys home services operations and $50 million related to the Companys
investment in Construction Products.

(F)  INDEBTEDNESS

Short-term Debt

Balances of short-term debt were:

|                             |  |               |         |   |                |   |         |             |  |   |           |   |         |   |         |   
|---------------------------- |  | ------------- | ------- | - | -------------- | - | ------- | ----------- |  | - | --------- | - | ------- | - | ------- | --
|                             |  |               |        
|                             |  | June 30, 2002 |         |   | March 31, 2002 |  
|                             |  |               |         |   |                |  
|                             |  | Centex        |         |   | Financial      |   |         | Centex      |  |   | Financial |  
|                             |  | Corporation   |         |   | Services       |   |         | Corporation |  |   | Services  |  
|                             |  |               |         |   |                |   |         |             |  |   |           |  
|Banks                        |  | $             | 24,374  | * |                | $ | 179,569 |             |  | $ | 18,630    | * |         | $ | 92,109  |   
|Commercial Paper             |  |               | 120,000 |   |                |   |        |             |  |   |          |   |         |   |        |   
|Secured Liquidity Notes      |  |               |        |   |                |   | 556,935 | **          |  |   |          |   |         |   | 102,583 | **
|Other Financial Institutions |  |               |        |   |                |   | 76,740  |             |  |   |          |   |         |   | 119,933 |   
|                             |  |               |         |   |                |   |         |             |  |   |           |  
|                             |  | $             | 144,374 |   |                | $ | 813,244 |             |  | $ | 18,630    |   |         | $ | 314,625 |   
|                             |  |               |         |   |                |   |         |             |  |   |           |  
|Consolidated Short-term Debt |  |               |         | $ | 957,618        |   |         |             |  |   |           | $ | 333,255 |   |         |   
|                             |  |               |         |   |                |   |         |             |  |   |           |   |         |  

*   Debt relates entirely to Construction Products.
**  Debt relates entirely to Harwood Street Funding II, L.L.C.

The Company borrows on a short-term basis from banks under uncommitted
lines that bear interest at prevailing market rates. The weighted-average
interest rates of balances at June 30, 2002 and March 31, 2002 were 2.2% and
2.4%, respectively.

-8-



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##### Table of Contents



Long-term Debt

Balances of long-term debt were:

|                        |                                                                                      |                                             |           |               |        |   |                |           |        | 
|----------------------- | ------------------------------------------------------------------------------------ | ------------------------------------------- | --------- | ------------- | ------ | - | -------------- | --------- | ------ | 
|                        |                                                                                      |                                             |           |               |       
|                        |                                                                                      |                                             |           | June 30, 2002 |        |   | March 31, 2002 |          
|                        |                                                                                      |                                             |           |               |        |   |                |          
|Non-Financial Services: |                                                                                      |                                             |           |               |        |   |                |          
|                        | Medium-Term Note Programs, 2.59% to 7.95%, due through 2007                          |                                             | $         | 418,000       |        |   | $              | 418,000   |       
|                        | Long-Term Notes, 6.40% to 9.75%, due through 2012                                    |                                             |           | 962,950       |        |   |                | 962,892   |       
|                        | Other Indebtedness, weighted-average 3.80% due through 2027                          |                                             |           | 185,042       |        |   |                | 192,753   |       
|                        | Subordinated Debt:                                                                   |                                             |           |               |        |   |                |           |       
|                        |                                                                                      | Subordinated Debentures, 7.38%, due in 2006 |           |               | 99,857 |   |                |           | 99,845 | 
|                        |                                                                                      | Subordinated Debentures, 8.75%, due in 2007 |           |               | 99,647 |   |                |           | 99,632 | 
|                        |                                                                                      |                                             |           |               |        |  
|                        |                                                                                      |                                             | 1,765,496 |               |        |   | 1,773,122      |          
|                        |                                                                                      |                                             |           |               |        |  
|Financial Services:     |                                                                                      |                                             |           |               |        |   |                |          
|                        | Home Equity Loans Asset-Backed Certificates, 2.91% to 8.48%,
due through 2032        |                                             |           | 2,941,400     |        |   |                | 3,120,402 |       
|                        | Harwood Street Funding II, L.L.C. Variable Rate Subordinated
Notes, due through 2007 |                                             |           | 50,000        |        |   |                | 50,000    |       
|                        |                                                                                      |                                             |           |               |        |  
|                        |                                                                                      |                                             | 2,991,400 |               |        |   | 3,170,402      |          
|                        |                                                                                      |                                             |           |               |        |  
|Total                   |                                                                                      | $                                           | 4,756,896 |               |        | $ | 4,943,524      |          
|                        |                                                                                      |                                             |           |               |        |  

Financial Services debt related to securitized residential mortgage loans
structured as collateralized borrowings (Home Equity Loans Asset-Backed
Certificates) was $2.9 billion at June 30, 2002. The principal and interest on
these notes are paid using the cash flow from the underlying residential
mortgage loans, which serve as collateral for the debt. Accordingly, the
timing of the principal payments on these notes is dependent upon the payment
received on the underlying residential mortgage loans. The expected maturities
of this component of long-term debt are based on contractual maturities
adjusted for projected repayments and prepayments of principal. Maturities of
Non-Financial Services and Financial Services long-term debt during the next
five years ended March 31 are:

|                                    |  |               |                                                |  |           |   |                                                 |       |  |   |                                                   | 
|----------------------------------- |  | ------------- | ---------------------------------------------- |  | --------- | - | ----------------------------------------------- | ----- |  | - | ------------------------------------------------- | 
|                                    |  | Non-Financial |                                                |  | Financial |   |                                                 |       |  |  
|                                    |  | Services      |                                                |  | Services  |   |                                                 | Total | 
|                                    |  |               |                                                |  |           |   |                                                 |       | 
|2003
2004
2005
2006
2007
Thereafter |  | $             | 181,278
156,229
33,582
325,373
290,559
778,475 |  |           | $ | 579,454
626,634
453,420
347,302
423,675
560,915 |       |  | $ | 760,732
782,863
487,002
672,675
714,234
1,339,390 | 
|                                    |  |               |                                                |  |           |   |                                                 |       | 
|                                    |  | $             | 1,765,496                                      |  |           | $ | 2,991,400                                       |       |  | $ | 4,756,896                                         | 
|                                    |  |               |                                                |  |           |   |                                                 |       | 

Included in other indebtedness is a $2.1 million convertible subordinated
debenture sold at par in 1985 to a corporate officer. The indebtedness, which
matures in 2010, bears interest at LIBOR plus 1.5% and is convertible into
400,000 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.

Under our debt covenants, we are required to maintain certain leverage and
interest coverage ratios and a minimum tangible net worth. At June 30, 2002,
we were in compliance with all of these covenants.

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Credit Facilities

The Companys existing credit facilities and available capacity as of June
30, 2002 are summarized below:

|                       |                                             |   |                 |           |  |           |           |         |    
|---------------------- | ------------------------------------------- | - | --------------- | --------- |  | --------- | --------- | ------- | ---
|                       |                                             |   | Existing Credit |           |  | Available |          
|                       |                                             |   | Facilities      |           |  | Capacity  |          
|                       |                                             |   |                 |           |  |           |          
|Non-Financial Services |                                             |   |                 |           |  |           |           |        
|                       | Centex Corporation                          |   |                 |           |  |           |           |         |    
|                       | Multi-Bank Revolving Credit Facility        |   | $               | 700,000   |  |           | $         | 700,000 | (1)
|                       | Uncommitted Bank Lines                      |   |                 | 60,000    |  |           |           | 60,000  |    
|                       | Construction Products                       |   |                 |           |  |           |           |         |    
|                       | Senior Revolving Credit Facility            |   |                 | 275,000   |  |           |           | 138,900 | (2)
|                       | Annually Renewable Commercial Paper
Conduit |   |                 | 50,000    |  |           |           | 25,626  | (2)
|                       |                                             |   |                 |           |  |          
|                       |                                             |   | 1,085,000       |           |  |           | 924,526   |        
|                       |                                             |   |                 |           |  |          
|Financial Services     |                                             |   |                 |           |  |           |           |        
|                       | Unsecured Credit Facilities                 |   |                 | 125,000   |  |           |           | 30,000  | (3)
|                       | Secured Credit Facilities                   |   |                 | 560,000   |  |           |           | 412,941 | (4)
|                       | Harwood Street Funding II, L.L.C
Facility   |   |                 | 1,000,000 |  |           |           | 393,065 |    
|                       | Line of Credit                              |   |                 | 15,245    |  |           |           | 995     | (5)
|                       |                                             |   |                 |           |  |          
|                       |                                             |   | 1,700,245       |           |  |           | 837,001   |        
|                       |                                             |   |                 |           |  |          
|                       |                                             | $ | 2,785,245       |           |  | $         | 1,761,527 | (6)    
|                       |                                             |   |                 |           |  |          



| | (1) | This is a committed, multi-bank revolving credit facility, maturing in
August 2005, which serves as backup for commercial paper borrowings. This
facility was increased on May 31, 2002 from $600 million to $700 million.
As of June 30, 2002, there were no borrowings under this facility, and the
companys $600 million commercial paper program had $120 million of
outstanding borrowings. There have been no borrowings under this facility
since inception.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (2) | These committed facilities were entered into by Construction Products and
have no recourse to Centex Corporation. The Senior Revolving Credit
Facility matures in November 2003 and the Annually Renewable Commercial
Paper Conduit matures in June 2003.                                                                                                                                                                                                           
|
| | (3) | Centex Corporation, CTX Mortgage and Home Equity on a joint and several
basis share in a $125 million uncommitted, unsecured credit facility.                                                                                                                                                                                                                                                                                                                       
|
| | (4) | CTX Mortgage and Home Equity share in $275 million of committed and $215
million of uncommitted secured credit facilities to finance mortgage
inventory. CTX Mortgage maintains $70 million of committed secured
mortgage warehouse facilities to finance mortgages not sold to HSF-I.
Centex Corporation has guaranteed $11.5 million of these facilities.                                                                                                         
|
| | (5) | The United Kingdom mortgage operation maintained a £10 million ($15.2
million) uncommitted unsecured line of credit guaranteed by Centex
Corporation. This facility was repaid and cancelled in July 2002.                                                                                                                                                                                                                                                          
|
| | (6) | The amount of available capacity includes $260 million of uncommitted
borrowings. Although the Company believes that this capacity is currently
available, there can be no assurance that the lenders under the applicable
facilities would elect to make advances to the Company or its subsidiaries
if and when requested to do so.                                                                                                                               

Home Equity finances its inventory of mortgage loans held for investment
through Harwood Street Funding II, L.L.C. (HSF-II), a wholly-owned,
consolidated entity, under a revolving sales agreement that expires upon final
payment of the senior and subordinated debt issued by HSF-II. This
arrangement, where HSF-II has committed to finance all eligible loans, gives
Home Equity daily access to HSF-IIs capacity of $1.0 billion. HSF-II obtains
funds through the sale of five-year subordinated notes that are rated BBB by

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Standard & Poors (S&P), Baa2 by Moodys Investors Service (Moodys),
and BBB by Fitch Ratings (Fitch) and short-term secured liquidity notes that
are rated A1+ by S&Ps, P1 by Moodys and F1+ by Fitch. Because HSF-II is a
consolidated entity, the debt, interest income and interest expense of HSF-II
are reflected on the financial statements of Financial Services.

Harwood Street Funding I, L.L.C.

CTX Mortgage finances its inventory of mortgage loans held for sale
principally through sales of Jumbo A and conforming loans to Harwood Street
Funding I, L.L.C. (HSF-I), an unaffiliated entity established in 1999 that is
not consolidated with Financial Services or Centex. These mortgage loans are
sold pursuant to a mortgage loan purchase agreement that expires in November
2004, subject to certain renewal options (the HSF-I Purchase Agreement).
Since 1999, CTX Mortgage has sold substantially all of the Jumbo A and
conforming mortgage loans that it originates to HSF-I in accordance with the
HSF-I Purchase Agreement. When HSF-I acquires these loans, it typically holds
them for a period averaging between 45 and 60 days and then resells them into
the secondary market. HSF-I obtains the funds needed to purchase eligible
mortgage loans from CTX Mortgage by issuing (i) securitized term debt that is
currently rated AAA by S&P and Aaa by Moodys, (ii) short-term secured
liquidity notes that are currently rated A1+ by S&P and P1 by Moodys and (iii)
five year extendable subordinated certificates maturing in November 2004 that
are rated BBB by S&P and Baa2 by Moodys. The purpose of this arrangement is
to allow CTX Mortgage to reduce the cost of financing eligible mortgage loans
originated by it and to improve its liquidity.

Under the terms of the HSF-I Purchase Agreement, CTX Mortgage may elect to
sell to HSF-I, and HSF-I is obligated to purchase from CTX Mortgage, mortgage
loans that satisfy certain eligibility criteria and portfolio requirements.
The maximum amount of mortgage loans that HSF-I is allowed to carry in its
inventory under the HSF-I Purchase Agreement is limited to $2.0 billion.

The HSF-I Purchase Agreement currently has a term expiring in November
2004, subject to certain renewal options. In addition, HSF-Is commitment to
purchase eligible mortgage loans is subject to termination upon the occurrence
of certain events of default and other termination events described in the
HSF-I Purchase Agreement, including a downgrade in Centexs credit ratings
below BB+ by S&P or Ba1 by Moodys. In the event CTX Mortgage was unable to
sell loans to HSF-I, it might need to make other customary financing
arrangements to fund its mortgage loan origination activities. Although we
believe that CTX Mortgage could arrange for alternative financing that is
common for non-investment grade mortgage companies, there can be no assurance
that such financing would be available on satisfactory terms, and any delay in
obtaining such financing could adversely affect the results of operations of
CTX Mortgage.

In accordance with the HSF-I Purchase Agreement, CTX Mortgage acts as
servicer of the loans owned by HSF-I and arranges for the sale of the eligible
mortgage loans into the secondary market. In its capacity as servicer, CTX
Mortgage must act in the best interest of HSF-I so as to maximize the proceeds
of sales of eligible mortgage loans. The performance and payment of obligations
of CTX Mortgage, in its capacity as servicer, are guaranteed by Centex. These
servicer obligations include the obligation of the servicer to repurchase a
mortgage loan from HSF-I in the event of a breach of the servicers
representations and warranties, which materially and adversely affects the
value of the mortgage loan and is not cured within 60 days.

HSF-I has entered into a swap arrangement with a bank (the Harwood Swap)
under which the bank has agreed to make certain payments to HSF-I, and HSF-I
has agreed to make certain payments to the bank, the net effect of which is
that the bank has agreed to bear certain interest rate risks, non-credit
related market

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risks and prepayment risks related to the mortgage loans held by HSF-I.
The purpose of this arrangement is to provide credit enhancement to HSF-I by
permitting it to hedge these risks with a counterparty having a short-term
credit rating of A1+ from S&P and P1 from Moodys. Additionally, Centex has
entered into a separate swap arrangement with the bank pursuant to which Centex
has agreed to pay to the bank all amounts that the bank is required to pay to
HSF-I pursuant to the Harwood Swap plus a monthly fee equal to a percentage of
the notional amount of the Harwood Swap, and the bank is required to pay to
Centex all amounts that the bank receives from HSF-I pursuant to the Harwood Swap.
Accordingly, Centex effectively bears all interest rate risks, non-credit
related market risks and prepayment risks that are the subject of the Harwood
Swap. Centex is also required to reimburse the bank for certain expenses,
costs and damages that it may incur.

As of June 30, 2002, HSF-I owned $1.19 billion in securitized residential
mortgage loans sold to it by CTX Mortgage and had $1.10 billion of outstanding
securitized term debt and $93.1 million of outstanding subordinated
certificates. The Company does not guarantee the payment of any debt or
subordinated certificates of HSF-I and is not liable for credit losses relating
to securitized residential mortgage loans sold to HSF-I. However, the Company
retains certain risks related to the portfolio of mortgage loans held by HSF-I.
In particular, CTX Mortgage makes representations and warranties to HSF-I to
the effect that each mortgage loan sold to HSF-I satisfies the eligibility
criteria and portfolio requirements discussed above. CTX Mortgage may be
required to repurchase mortgage loans sold to HSF-I if such mortgage loans are
determined to be ineligible loans or there occur certain other breaches of
representations and warranties of CTX Mortgage, as seller or servicer. During
the three months ended June 30, 2002, CTX Mortgage sold $1.84 billion of
mortgage loans to HSF-I.

(G)  CENTEX DEVELOPMENT COMPANY, L.P.

Centex Development Company, L.P. (the Partnership) is a master limited
partnership formed by Centex in March 1987 to broaden the range of business
activities that may be conducted for the benefit of Centexs stockholders to
include general real estate development. Centex believed that this expansion
would improve stockholder value through longer-term real estate investments,
real estate developments 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 of business could best be conducted through the
Partnership, an independent, publicly-traded entity that is not consolidated
with Centex for financial reporting purposes.

The Partnership is authorized to issue three classes of limited
partnership interest. Centex indirectly holds 100% of the Partnerships Class
A and Class C limited partnership units (Class A Units and Class C Units,
respectively), which are collectively convertible into 20% of the Partnerships
Class B limited partnership units (Class B Units). The Partnership may issue
additional Class C Units in connection with the acquisition of real property
and other assets. No Class B Units have been issued. However, the
stockholders of Centex hold warrants to purchase approximately 80% of the Class
B Units. The warrants are held through a nominee arrangement and trade in
tandem with the common stock of Centex.

As holder of the Class A and Class C Units, Centex is entitled to a
cumulative preferred return of 9% per annum on the average outstanding balance
of its capital contributions to the Partnership, adjusted for cash and other
distributions representing return of capital. As of June 30, 2002, these
adjusted capital contributions, or Unrecovered Capital, were $241.1 million and
preference payments in arrears totaled $46.8 million. The Partnership has made
no preference payments since fiscal 1998.

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The Partnership is managed by its general partner, 3333 Development
Corporation, a wholly-owned subsidiary of 3333 Holding Corporation (Holding).
The common stock of Holding is held by the stockholders of Centex through a
nominee arrangement and trades in tandem with the common stock of Centex. The
stockholders of Centex elect the four-person board of directors of Holding,
three of whom are independent outside directors who are not directors,
affiliates or employees of Centex. Thus, through Holding, the stockholders of
Centex control the general partner of the Partnership. The general partner,
through its independent board and the independent board of Holding, including
its non-executive Chairman, oversees the Partnerships activities, including
the acquisition, development, maintenance, operation and sale of properties.
Consent of the limited partners for the activities of the Partnership is not
required, and the limited partners cannot remove the general partner. As a
result, Centex accounts for its limited partnership interest in the Partnership
using the equity method of accounting for investments.

Supplementary condensed combined financial statements for Centex and
subsidiaries, Holding and subsidiary and the Partnership and subsidiaries are
set forth below. For additional information on Holding and subsidiary and the
Partnership and subsidiaries, see their separate financial statements and
related footnotes included elsewhere in this Report.

Supplementary Condensed Combined Balance Sheets of Centex and Subsidiaries,
Holding and Subsidiary and Partnership and Subsidiaries

|                                     |                                          |   |           |           |  |           |           |           | 
|------------------------------------ | ---------------------------------------- | - | --------- | --------- |  | --------- | --------- | --------- | 
|                                     |                                          |   |           |          
|                                     |                                          |   | June 30,  |           |  | March 31, |          
|                                     |                                          |   | 2002      |           |  | 2002      |          
|                                     |                                          |   |           |           |  |           |          
|Assets                               |                                          |   |           |           |  |           |           |          
|                                     | Cash and Cash Equivalents                |   | $         | 76,685    |  |           | $         | 242,254   | 
|                                     | Restricted Cash                          |   |           | 119,278   |  |           |           | 106,270   | 
|                                     | Receivables                              |   |           | 4,313,440 |  |           |           | 4,066,401 | 
|                                     | Inventories                              |   |           | 3,653,173 |  |           |           | 3,283,719 | 
|                                     | Investments in Joint Ventures and Other  |   |           | 109,574   |  |           |           | 99,962    | 
|                                     | Property and Equipment, net              |   |           | 733,160   |  |           |           | 723,497   | 
|                                     | Other Assets                             |   |           | 849,190   |  |           |           | 862,580   | 
|                                     |                                          |   |           |           |  |          
|                                     |                                          | $ | 9,854,500 |           |  | $         | 9,384,683 |          
|                                     |                                          |   |           |           |  |          
|Liabilities and Stockholders Equity |                                          |   |           |           |  |           |           |          
|                                     | Accounts Payable and Accrued Liabilities |   | $         | 1,467,895 |  |           | $         | 1,546,334 | 
|                                     | Short-term Debt                          |   |           | 1,179,760 |  |           |           | 545,789   | 
|                                     | Long-term Debt                           |   |           | 4,833,027 |  |           |           | 5,020,116 | 
|                                     | Minority Stockholders Interest          |   |           | 163,587   |  |           |           | 155,671   | 
|                                     | Stockholders Equity                     |   |           | 2,210,231 |  |           |           | 2,116,773 | 
|                                     |                                          |   |           |           |  |          
|                                     |                                          | $ | 9,854,500 |           |  | $         | 9,384,683 |          
|                                     |                                          |   |           |           |  |          

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Supplementary Condensed Combined Statements of Earnings of Centex and
Subsidiaries, Holding and Subsidiary and Partnership and Subsidiaries

|                                  |  |                      |           |  |      |   |           |  
|--------------------------------- |  | -------------------- | --------- |  | ---- | - | --------- | -
|                                  |  |                      |          
|                                  |  | For the Three Months |          
|                                  |  | Ended June 30,       |          
|                                  |  |                      |          
|                                  |  | 2002                 |           |  | 2001 |  
|                                  |  |                      |           |  |      |  
|Revenues                          |  | $                    | 1,912,002 |  |      | $ | 1,789,975 |  
|Costs and Expenses                |  |                      | 1,787,000 |  |      |   | 1,671,698 |  
|                                  |  |                      |           |  |      |  
|Earnings Before Income Taxes      |  |                      | 125,002   |  |      |   | 118,277   |  
|Income Taxes                      |  |                      | 37,247    |  |      |   | 43,061    |  
|                                  |  |                      |           |  |      |  
|Net Earnings                      |  |                      | 87,755    |  |      |   | 75,216    |  
|Other Comprehensive Income (Loss) |  |                      | 6,091     |  |      |   | (3,518    | )
|                                  |  |                      |           |  |      |  
|Comprehensive Income              |  | $                    | 93,846    |  |      | $ | 71,698    |  
|                                  |  |                      |           |  |      |  

(H)  COMMITMENTS AND CONTINGENCIES

The Company conducts a portion of its land acquisition, development and
other activities directly and through its participation in joint ventures in
which the Company holds less than a majority interest. The Companys
investment in these non-consolidated joint ventures was $104.3 million and
$94.6 million at June 30, 2002 and March 31, 2002, respectively. These joint
ventures had total outstanding secured construction debt of approximately
$138.1 million at June 30, 2002 and $144.6 million at March 31, 2002. The
Companys pro rata limited liability with respect to this debt is limited to
approximately $29.3 million and $27.9 million at June 30, 2002 and March 31,
2002, respectively. Under the structure of this debt, the Company becomes
liable up to these amounts only to the extent that the construction debt
exceeds a certain percentage of the value of the project. At June 30, 2002 and
March 31, 2002, the Company was not liable for any of this debt.

In order to ensure the future availability of land for homebuilding, the
Company has deposited or invested with third parties $76.4 million, as of June
30, 2002, as options toward the purchase of undeveloped land and developed lots
having a total purchase price of approximately $1.6 billion. These options
expire at various dates through the year 2007.

(I)  COMPREHENSIVE INCOME

A summary of comprehensive income for the three months ended June 30, 2002
and 2001 is presented below:

|                                   |                                          |   |                                    |        |   |      |        |        |  
|---------------------------------- | ---------------------------------------- | - | ---------------------------------- | ------ | - | ---- | ------ | ------ | -
|                                   |                                          |   |                                    |       
|                                   |                                          |   | For the Three Months EndedJune 30, |       
|                                   |                                          |   |                                    |       
|                                   |                                          |   | 2002                               |        |   | 2001 |       
|                                   |                                          |   |                                    |        |   |      |       
|Net Earnings                       |                                          | $ | 87,755                             |        |   | $    | 75,216 |       
|Other Comprehensive Income (Loss): |                                          |   |                                    |        |   |      |        |       
|                                   | Foreign Currency Translation Adjustments |   |                                    | 13,976 |   |      |        | 1,373  |  
|                                   | Unrealized Loss on Hedging Instruments   |   |                                    | (6,951 | ) |      |        | (4,891 | )
|                                   | Other                                    |   |                                    | (934   | ) |      |        |       |  
|                                   |                                          |   |                                    |        |   |     
|Comprehensive Income               |                                          | $ | 93,846                             |        |   | $    | 71,698 |       
|                                   |                                          |   |                                    |        |   |     

The Foreign Currency Translation Adjustments are primarily the result of
Centexs investment in the Partnership and its foreign subsidiaries. For
additional information on the Partnership and subsidiaries, see

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their separate financial statements included elsewhere in the Report. The
Unrealized Loss on Hedging Instruments represents the deferral in Other
Comprehensive Income of the unrealized loss on swap agreements designated as
cash flow hedges. The accounting for interest rate swaps and other derivative
financial instruments is discussed in detail below in Note (K), Derivatives
and Hedging.

(J)  BUSINESS SEGMENTS

The Company operates in five principal business segments: Home Building,
Financial Services, Construction Products, Construction Services and Investment
Real Estate. These segments operate primarily in the United States, and their
markets are nationwide. Revenues from any one customer are not significant to
the Company.

Intersegment revenues and investments in joint ventures are not material
and are not shown in the following tables. The investment in the Partnership
(approximately $289.1 million) is included in the Investment Real Estate
segment.

Home Building

Home Buildings operations involve the purchase and development of land or
lots and the construction and sale of single-family and multi-family homes.

Financial Services

Financial Services operations consist primarily of home financing,
sub-prime home equity lending and the sale of title insurance and other various
insurance coverages. These activities include mortgage origination, servicing
and other related services for homes sold by Centex subsidiaries and others.
Financial Services revenues include interest income of $80.8 million and $52.6
million for the three months ended June 30, 2002 and 2001, respectively.
Substantially all of Centexs interest income in each year is earned by the
Financial Services segment. Financial Services cost of sales is primarily
comprised of interest expense related to debt issued to fund its home financing
and sub-prime home equity lending activities.

Construction Products

Construction Products operations involve the manufacture, production,
distribution and sale of cement, gypsum wallboard, recycled paperboard,
aggregates and readymix concrete. The Company owned 64.6% of Centex
Construction Products, Inc. at June 30, 2002 and 65.2% at June 30, 2001.

Construction Services

Construction Services operations involve the construction of buildings
for both private and government interests including office, commercial and
industrial buildings, hospitals, hotels, correctional facilities, educational
institutions, museums, libraries, airport facilities and sports facilities. As
this segment generates significant positive cash flow, intercompany interest
income (credited at the prime rate in effect) of $1.6 million and $2.1 million
for the three months ended June 30, 2002 and 2001, respectively, is included in
the evaluation of this segment. However, the intercompany interest income is
eliminated in consolidation and excluded from the table presented below.

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Investment Real Estate

Investment Real Estates operations involve the acquisition, development
and sale of land, primarily for industrial, office, multi-family, retail,
residential and mixed-use projects. Under the equity method of accounting for
investments, Investment Real Estate also records as revenues income or loss
from its investment in the Partnership.

Other

The Companys manufactured homes and home services operations are not
material for purposes of segment reporting and have therefore been included in
Other for reporting purposes.

Included in Other in the tables below are corporate general and
administrative expenses of $12.6 million and $11.2 million; interest expense of
$23.7 million and $27.2 million; and minority interest of $8.9 million and $2.8
million for the three months ended June 30, 2002 and 2001, respectively.

Income tax expense for the Company decreased 11.8% from $42.8 million to
$37.7 million and the effective tax rate decreased by 6.2% from 36.3% to 30.1%
for the three months ended June 30, 2001 and 2002, respectively. The decrease
in the effective tax rate is primarily the result of the expected utilization
of net operating loss carryforwards during fiscal 2003.

|                                           |  |                                          |         |   |           |   |        |              |  |   |              |   |  |             |        |   |       |   |      |       |  |   |       |   |  |   |          |  
|------------------------------------------ |  | ---------------------------------------- | ------- | - | --------- | - | ------ | ------------ |  | - | ------------ | - |  | ----------- | ------ | - | ----- | - | ---- | ----- |  | - | ----- | - |  | - | -------- | -
|                                           |  |                                          |        
|                                           |  | For the Three Months Ended June 30, 2002 |        
|                                           |  | (Dollars in millions)                    |        
|                                           |  |                                          |        
|                                           |  | Home                                     |         |   | Financial |   |        | Construction |  |   | Construction |   |  | Investment  |        |   |       |   |      |       |  |   |      
|                                           |  | Building                                 |         |   | Services  |   |        | Products     |  |   | Services     |   |  | Real Estate |        |   | Other |   |      | Total | 
|                                           |  |                                          |         |   |           |   |        |              |  |   |              |   |  |             |        |   |       |   |      |       | 
|Revenues                                   |  | $                                        | 1,105.7 |   |           | $ | 180.5  |              |  | $ | 128.8        |   |  | $           | 360.7  |   |       | $ | 5.9  |       |  | $ | 62.3  |   |  | $ | 1,843.9  |  
|Cost of Sales                              |  |                                          | (812.1  | ) |           |   | (44.6  | )            |  |   | (99.7        | ) |  |             | (335.4 | ) |       |   | (0.4 | )     |  |   | (38.6 | ) |  |   | (1,330.8 | )
|Selling, General &
Administrative Expenses |  |                                          | (185.0  | ) |           |   | (111.6 | )            |  |   | (1.4         | ) |  |             | (17.2  | ) |       |   | (2.1 | )     |  |   | (70.3 | ) |  |   | (387.6   | )
|                                           |  |                                          |         |   |           |   |        |              |  |   |              |   |  |             |        |   |       |   |      |       | 
|Earnings (Loss) Before
Income Tax          |  | $                                        | 108.6   |   |           | $ | 24.3   |              |  | $ | 27.7         |   |  | $           | 8.1    |   |       | $ | 3.4  |       |  | $ | (46.6 | ) |  | $ | 125.5    |  
|                                           |  |                                          |         |   |           |   |        |              |  |   |              |   |  |             |        |   |       |   |      |       | 

|                                           |  |                                          |         |   |           |   |        |              |  |   |              |   |  |             |        |   |       |   |      |       |  |   |       |   |  |   |          |  
|------------------------------------------ |  | ---------------------------------------- | ------- | - | --------- | - | ------ | ------------ |  | - | ------------ | - |  | ----------- | ------ | - | ----- | - | ---- | ----- |  | - | ----- | - |  | - | -------- | -
|                                           |  |                                          |        
|                                           |  | For the Three Months Ended June 30, 2001 |        
|                                           |  | (Dollars in millions)                    |        
|                                           |  |                                          |        
|                                           |  | Home                                     |         |   | Financial |   |        | Construction |  |   | Construction |   |  | Investment  |        |   |       |   |      |       |  |   |      
|                                           |  | Building                                 |         |   | Services  |   |        | Products     |  |   | Services     |   |  | Real Estate |        |   | Other |   |      | Total | 
|                                           |  |                                          |         |   |           |   |        |              |  |   |              |   |  |             |        |   |       |   |      |       | 
|Revenues                                   |  | $                                        | 1,039.2 |   |           | $ | 162.6  |              |  | $ | 117.4        |   |  | $           | 313.6  |   |       | $ | 24.1 |       |  | $ | 52.2  |   |  | $ | 1,709.1  |  
|Cost of Sales                              |  |                                          | (772.4  | ) |           |   | (35.9  | )            |  |   | (103.3       | ) |  |             | (291.0 | ) |       |   | (5.2 | )     |  |   | (32.6 | ) |  |   | (1,240.4 | )
|Selling, General &
Administrative Expenses |  |                                          | (168.7  | ) |           |   | (101.5 | )            |  |   | (1.2         | ) |  |             | (15.1  | ) |       |   | (3.6 | )     |  |   | (60.6 | ) |  |   | (350.7   | )
|                                           |  |                                          |         |   |           |   |        |              |  |   |              |   |  |             |        |   |       |   |      |       | 
|Earnings (Loss) Before
Income Tax          |  | $                                        | 98.1    |   |           | $ | 25.2   |              |  | $ | 12.9         |   |  | $           | 7.5    |   |       | $ | 15.3 |       |  | $ | (41.0 | ) |  | $ | 118.0    |  
|                                           |  |                                          |         |   |           |   |        |              |  |   |              |   |  |             |        |   |       |   |      |       | 

(K)  DERIVATIVES AND HEDGING

The Company is exposed to the risk of interest rate fluctuations on its
debt and other obligations. As part of its strategy to manage this risk, the
Company has entered into various interest rate swap agreements, designated as
cash flow hedges as described below. The swap agreements are recorded at their
fair value in Other Assets or Accrued Liabilities in the condensed consolidated
balance sheets. To the extent the hedging

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relationship is effective, gains or losses in the fair value of the derivative
are deferred as a component of Stockholders Equity through Other Comprehensive
(Loss) Income. Fluctuations in the fair value of the ineffective portion of
the derivative would be reflected in the current period earnings.

Centex Corporation and Construction Products each have interest rate swap
agreements that, in effect, fix the variable interest rate on a portion of
their outstanding debt at June 30, 2002. During the three months ended June
30, 2002, there was no hedge ineffectiveness related to these derivatives.
These swaps expire at varying times through October 2005. Amounts to be
received or paid under the swap agreements are recognized as a change in
interest incurred on the related debt instrument. Based on the balance in
Accumulated Other Comprehensive Loss at June 30, 2002 related to these
derivatives, the Company would estimate increases in interest incurred over the
next 12 months to be approximately $3 million. As of June 30, 2002, the
balance in Accumulated Other Comprehensive Loss related to these derivatives
was $4.6 million ($3.0 million net of tax).

Financial Services, through Home Equity, uses interest rate swaps to hedge
the market risk associated with the anticipated issuance of fixed rate
securitization debt used to finance sub-prime mortgages. Changes in fair value
of these derivatives are deferred in Accumulated Other Comprehensive Loss and
recorded through current earnings as an adjustment of the interest incurred
over the life of the securitization debt. Home Equity also uses interest rate
swaps that, in effect, fix the interest rate on its variable interest rate
debt. Amounts to be received or paid as a result of these swap agreements are
recognized as adjustments to interest incurred on the related debt instrument.
During the three months ended June 30, 2002, there was no hedge ineffectiveness
related to these interest rate swaps. These swaps expire at varying times
through January 2008. Based on the balance in Accumulated Other Comprehensive
Loss at June 30, 2002 related to these derivatives, the Company estimates
increases in interest incurred over the next 12 months to be approximately $3
million. As of June 30, 2002, the balance in Accumulated Other Comprehensive
Loss related to these derivatives was $9.4 million ($6.1 million net of tax).

Financial Services, through CTX Mortgage, enters into interest rate lock
commitments (IRLCs) with its customers under which CTX Mortgage agrees to
make mortgage loans at agreed upon rates within a period of time, generally
from 1 to 30 days, if certain conditions are met within the terms of the IRLCs.
In order to hedge the risk of fluctuations in the value of these IRLCs and
mortgage loans held by it, CTX Mortgage executes mandatory forward trades of
mortgage loans and mortgage backed securities. CTX Mortgage also uses
mandatory forward trades to hedge the Companys obligation, created through the
Harwood Swap, to protect against certain interest rate risk, non-credit related
market risk and prepayment risk related to mortgage loans held by HSF-I, an
unaffiliated entity that is not consolidated with Financial Services or the
Company. The Company has elected not to utilize hedge accounting treatment
under SFAS 133 for these derivatives. Initially, the fair value of the IRLCs
is recorded on the balance sheet as a deferred item. Subsequent changes in the
fair value of the IRLCs, mandatory forward trades and swaps are recorded as an
adjustment to earnings. The net change in the estimated fair value of these
derivative positions resulted in a loss of $8.2 million for the three months
ended June 30, 2002.

(L)  RELATED PARTY TRANSACTIONS

At June 30, 2002 and 2001, Centex Homes had $8.1 million and $1.5 million,
respectively, deposited with the Partnership as option deposits for the
purchase of land. Centex Homes also entered into agreements to reimburse the
Partnership for certain costs and fees incurred in the Partnerships purchase
and ownership of these tracts of land. During the three months ended June 30,
2002, Centex Homes paid $1.4 million to the Partnership in fees and
reimbursements pursuant to these agreements and consideration of $21.1 million
for

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the purchase of residential lots. Centex Homes expects to pay an
additional $42.6 million to the Partnership to complete the purchase of these
tracts of land over the next three years.

Construction Services has executed contracts with the Partnership for the
construction of two industrial facilities. These contracts totaled $15.1
million and zero at June 30, 2002 and 2001, respectively. During the three
months ended June 30, 2002 and 2001, the Partnership paid $3.5 million and
zero, respectively, to Construction Services pursuant to these contracts.

(M)  STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS

In August 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets (SFAS No. 144), that addresses financial
accounting and reporting for the impairment or disposal of long-lived assets.
The statement is effective for financial statements issued for fiscal years
beginning after December 15, 2001, and interim periods within those fiscal
years. The implementation of SFAS No. 144 on April 1, 2002 did not have a
material impact on the Companys results of operations or financial position.

(N)  OFF-BALANCE-SHEET RISK

The Company enters into various off-balance-sheet transactions in the
normal course of business in order to reduce financing costs and improve access
to liquidity, facilitate homebuilding activities and manage exposure to
changing interest rates. Further discussion regarding these transactions can
be found above in Note (F), Indebtedness, and Note (K), Derivatives and
Hedging.

(O)  RECLASSIFICATIONS

Certain prior year balances have been reclassified to be consistent with
the June 30, 2002 presentation.

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|        |  |                                                                                      
|------- |  | -------------------------------------------------------------------------------------
|ITEM 2. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our consolidated revenues for the three months ended June 30, 2002 were
$1.8 billion, a 7.9% increase over $1.7 billion for the same period last year.
Earnings before income taxes were $125.5 million, 6.3% higher than $118.0
million last year. The fluctuations in our revenues and earnings before income
taxes are explained below by segment.

Net earnings for the three months ended June 30, 2002 were $87.8 million,
16.7% higher than $75.2 million for the same period last year. The increase in
net earnings is significantly higher than the increase in earnings before
income taxes due to a change in our effective tax rate. Our effective tax rate
decreased to 30.1% for the three months ended June 30, 2002 from 36.3% for the
same period last year. The decrease in the effective tax rate is primarily the
result of the expected utilization of net operating loss carryforwards during
fiscal 2003.

Any reference herein to we, us or our includes Centex Corporation and its
subsidiary companies.

HOME BUILDING

The following summarizes results of our Home Building operations for the
three months ended June 30, 2002 compared to the same period last year (dollars
in millions, except per unit data):

|                                           |          |   |                                     |       |  |      |       |    |  |   |         |        |  |  |       |    | 
|------------------------------------------ | -------- | - | ----------------------------------- | ----- |  | ---- | ----- | -- |  | - | ------- | ------ |  |  | ----- | -- | 
|                                           |          |   |                                     |      
|                                           |          |   | For the Three Months Ended June 30, |      
|                                           |          |   |                                     |      
|                                           |          |   | 2002                                |       |  | 2001 |      
|                                           |          |   |                                     |       |  |      |      
|Revenues                                   |          | $ | 1,105.7                             |       |  |      | 100.0 | %  |  | $ | 1,039.2 |        |  |  | 100.0 | % 
|Cost of Sales                              |          |   | (812.1                              | )     |  |      | (73.5 | %) |  |   | (772.4  | )      |  |  | (74.4 | %)
|Selling, General &
Administrative Expenses |          |   | (185.0                              | )     |  |      | (16.7 | %) |  |   | (168.7  | )      |  |  | (16.2 | %)
|                                           |          |   |                                     |       |  |      |       |    |  |   |         |       
|Operating Earnings                         |          | $ | 108.6                               |       |  |      | 9.8   | %  |  | $ | 98.1    |        |  |  | 9.4   | % 
|                                           |          |   |                                     |       |  |      |       |    |  |   |         |       
|Units Closed                               |          |   | 4,995                               |       |  |      |       |    |  |   | 4,850   |        |  |  |       |   
|                                           | % Change |   |                                     | 3.0 % |  |      |       |    |  |   |         | 10.0 % |  |  |       |    | 
|Unit Sales Price                           |          | $ | 213,825                             |       |  |      |       |    |  | $ | 210,754 |        |  |  |       |   
|                                           | % Change |   |                                     | 1.5 % |  |      |       |    |  |   |         | 7.4 %  |  |  |       |    | 
|Operating Earnings Per Unit                |          | $ | 21,747                              |       |  |      |       |    |  | $ | 20,231  |        |  |  |       |   
|                                           | % Change |   |                                     | 7.5 % |  |      |       |    |  |   |         | 22.9 % |  |  |       |    | 
|Backlog Units                              |          |   | 11,150                              |       |  |      |       |    |  |   | 10,152  |        |  |  |       |   
|                                           | % Change |   |                                     | 9.8 % |  |      |       |    |  |   |         | 16.6 % |  |  |       |    | 

Revenues for the three months ended June 30, 2002 increased 6.4% versus
the same period last year primarily due to an increase in units closed, higher
unit sales prices, and increased land sales. Units closed increased 3.0% from
4,850 units to 4,995 units, and the average unit sales price increased 1.5%
from $210,754 to $213,825. The increase in units closed was primarily the
result of a higher number of operating neighborhoods, combined with an increase
in the number of closings per neighborhood. The increase in the unit sales
price was primarily the result of higher selling prices in the New Jersey,
Washington DC, and California markets.

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Revenues from land sales increased $19.8 million from $11.9 million for
the three months ended June 30, 2001 to $31.7 million for the three months
ended June 30, 2002. The timing of land sales is uncertain and can vary
significantly from period to period.

Cost of sales decreased to 73.5% of revenues for the three months ended
June 30, 2002 compared to 74.4% of revenues for the same period last year. The
cost of sales decrease primarily resulted from purchasing efficiencies realized
through regional and national programs, more efficient house designs, other
process improvement initiatives and lower raw material prices, such as lumber
and cement.

Selling, general and administrative expenses increased 9.6% to $185.0
million for the three months ended June 30, 2002 compared to $168.7 million for
the three months ended June 30, 2001. The cost increase is attributable to
higher selling and insurance costs, as well as employee increases to support
future neighborhood growth.

Operating earnings increased $10.5 million year over year from $98.1
million to $108.6 million. This was primarily due to the $8.3 million increase
in operating earnings related to land sales from $2.7 million for the three
months ended June 30, 2001 to $11.0 million for the three months ended June 30,
2002.

Units in backlog increased 9.8% to 11,150 at June 30, 2002 compared to
10,152 at June 30, 2001 primarily as a result of a 19% increase in sales per
average neighborhood. We define backlog units as units which have been sold,
as indicated by a signed contract, but not closed.

FINANCIAL SERVICES

The following summarizes Financial Services results for the three months
ended June 30, 2002 compared to the same period last year (dollars in
millions):

|                           |                                    |                                   |        |                            |        |   |        |       |        | 
|-------------------------- | ---------------------------------- | --------------------------------- | ------ | -------------------------- | ------ | - | ------ | ----- | ------ | 
|                           |                                    |                                   |        |                            |       
|                           |                                    |                                   |        | For the Three Months Ended |       
|                           |                                    |                                   |        | June 30,                   |       
|                           |                                    |                                   |        |                            |       
|                           |                                    |                                   |        | 2002                       |        |   | 2001   |      
|                           |                                    |                                   |        |                            |        |   |        |      
|Revenues                   |                                    | $                                 | 180.5  |                            |        | $ | 162.6  |      
|                           |                                    |                                   |        |                            |        |  
|Interest Margin            |                                    | $                                 | 36.1   |                            |        | $ | 16.6   |      
|                           |                                    |                                   |        |                            |        |  
|Operating Earnings         |                                    | $                                 | 24.3   |                            |        | $ | 25.2   |      
|                           |                                    |                                   |        |                            |        |  
|Origination Volume         |                                    | $                                 | 2,979  |                            |        | $ | 3,719  |      
|                           |                                    |                                   |        |                            |        |  
|Number of Loans Originated |                                    |                                   |        |                            |        |   |        |      
|                           | CTX Mortgage Company, L.L.C.       |                                   |        |                            |        |   |        |       |       
|                           |                                    | Centex-built Homes (Builder)    |        |                            | 3,378  |   |        |       | 3,182  | 
|                           |                                    | Non-Centex-built Homes (Retail) |        |                            | 12,406 |   |        |       | 18,110 | 
|                           |                                    |                                   |        |                            |        |  
|                           |                                    |                                   | 15,784 |                            |        |   | 21,292 |      
|                           | Centex Home Equity Company, L.L.C. |                                   |        | 6,359                      |        |   |        | 6,808 |       
|                           |                                    |                                   |        |                            |        |  
|                           |                                    |                                   | 22,143 |                            |        |   | 28,100 |      
|                           |                                    |                                   |        |                            |        |  

Financial Services results are derived primarily from conforming mortgage
banking and sub-prime home equity lending operations as described below.

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Conforming Mortgage Banking

The revenues and operating earnings of CTX Mortgage Company, L.L.C., or
CTX Mortgage, are derived primarily from the sale of mortgage loans, inclusive
of all service rights and, to a lesser extent, interest income and other fees.
CTX Mortgage originates mortgage loans, holds them for a short period and sells
them to investors and Harwood Street Funding I, L.L.C., or HSF-I. HSF-I is an
unaffiliated entity that is not consolidated with Financial Services or Centex
Corporation. HSF-I purchases mortgage loans, at closing, from CTX Mortgage
with the proceeds from the issuance of securitized term debt, secured liquidity
notes and five-year extendable subordinated certificates. The debt, interest
income and interest expense of HSF-I are not reflected in the financial
statements of Financial Services or Centex Corporation. For additional
information regarding HSF-I, see Certain Off-Balance-Sheet and Other
Obligations.

Revenues decreased 16.8% to $89.9 million for the three months ended June
30, 2002 as compared to the same period last year. The decrease in revenues is
primarily related to fewer originations resulting in a decline in gains related
to the sale of mortgage loans to HSF-I.

CTX Mortgages operating earnings were $14.9 million for the three months
ended June 30, 2002, 41.1% lower than earnings of $25.3 million for the three
months ended June 30, 2001. The decrease in CTX Mortgages operating earnings
is primarily due to the decline in revenues mentioned above.

For the three months ended June 30, 2002, originations totaled 15,784
compared to 21,292 originations in the same period last year; origination
volume was $2.48 billion compared to $3.22 billion for the same period last
year; the per-loan profit was $943, a decrease of 21% compared to $1,189 for
the same period last year; and total mortgage applications decreased 28% to
15,919 from 22,016 applications for the same period last year. These changes
occurred primarily as a result of slowing refinance activity. While mortgage
rates currently remain low, refinance activity has slowed during the current
quarter as a result of lower market demand. Demand for conforming mortgage
loans decreased primarily due to the effects of the high level of refinancing
activity during the past two years, which reduced the pipeline of loans likely
to be refinanced. The results of operations of CTX Mortgage depend to a
significant extent on the level of interest rates. Any significant increases
in mortgage rates above currently prevailing levels could adversely affect the
volume of loan originations. There can be no assurance that mortgage rates
will remain at the current level in the future.

The U.K. mortgage operation had an operating loss of $1.3 million for the
first quarter of fiscal 2003 versus a loss of $572,000 for the same quarter a
year ago, as accruals were made in connection with a substantial reduction in
operations.

Sub-Prime Home Equity Lending

The revenues of Centex Home Equity Company, L.L.C., or Home Equity,
increased 44.4% to $90.7 million as a result of continued growth in residential
mortgage loans held for investment, as discussed further below. Interest
margin, which we define as the difference between interest revenue on mortgage
loans held for sale or investment and interest expense on debt used to fund the
mortgage loans, increased to $33.8 million for the three months ended June 30,
2002 as compared to $16.1 million for the same period last year. The increase
in interest margin is primarily a result of an increase in the portfolio of
mortgage loans held for investment. Home Equity reported operating earnings of
$10.7 million for the three months ended June 30, 2002, as compared to
operating earnings of $0.4 million for the same period last year. The increase
in Home Equitys operating earnings is primarily the result of the increase in
interest margin, as noted above. This was

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partially offset by an increase in general and administrative costs and an
increase in the provision for losses on residential mortgage loans held for
investment.

From October 1997 through March 2000, a majority of Home Equitys loans
originated were included in securitizations that utilized a structure that
caused them to be accounted for as sales. Under this structure, Home Equity
retained a residual interest as well as the servicing rights to the securitized
loans. We call this retained residual interest the mortgage securitization
residual interest, or MSRI. As a result, our balance sheet does not reflect
the mortgage loans receivable and offsetting debt resulting from these
securitizations. The estimated gain on the sale of these loans was included in
earnings during the period in which the securitization transaction closed. We
changed the structure of securitizations beginning April 1, 2000.
Securitizations since that time have been accounted for as borrowings. Under
this structure, we record interest over the life of the loans using the
interest, or actuarial, method. The mortgage loans receivable and the
securitization debt remain on Home Equitys balance sheet and the related
interest margin is reflected in our income statement. Although the change in
structure of the securitizations has no effect on the cash flow and profit
recognized over the life of the mortgages, the change does affect the timing of
profit recognition. Interest margin, rather than gain on sale of loans, is now
Home Equitys primary source of operating income. As the balance of
securitizations accounted for as borrowings increases, the operating earnings
should continue to increase. For the three months ended June 30, 2002,
originations totaled 6,359 compared to 6,808 originations for the same period
last year; origination volume was $497.9 million compared to $503.9 million for
the same period last year; and total applications increased 21.8% to 50,044
from 41,074 applications for the same period last year. Originations decreased
6.6% while origination volume only decreased 1.2% due to an increase in average
loan size. The decrease in the number of originations despite the increase in
total applications is mainly attributable to a decrease in approval ratios
related to Home Equitys continued adherence to its credit underwriting
guidelines.

At June 30, 2002, Home Equitys total servicing portfolio consisted of
65,107 loans totaling $4.56 billion compared to 52,804 loans totaling $3.55
billion at June 30, 2001. For the three months ended June 30, 2002, service
fee income related to this long-term servicing, which is not included in
interest income, was $11.8 million compared to $8.5 million for the same period
last year.

Allowance for Losses

Home Equity establishes an allowance for losses when we believe the event
causing the loss has occurred by charging the provision for losses in the
statement of consolidated earnings. When we determine that a residential
mortgage loan held for investment is uncollectible, it is charged against the
allowance for losses. Recoveries on losses previously charged to the allowance
are credited to the allowance at the time the recovery is collected.

We believe that the allowance for losses is sufficient to provide for
credit losses in the existing residential mortgage loans held for investment.
We evaluate the allowance on an aggregate basis considering, among other
things, the relationship of the allowance to residential mortgage loans held
for investment and historical credit losses. The allowance reflects our
judgment of the present loss exposure at the end of the reporting period.

Although we consider the allowance for losses on residential mortgage
loans held for investment reflected in our consolidated balance sheet to be
adequate, there can be no assurance that this allowance will prove to be
adequate over time to cover ultimate losses. This allowance may prove to be
inadequate due to

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unanticipated adverse changes in the economy or discrete events adversely
affecting specific customers or industries.

Changes in the allowance for losses on residential mortgage loans held for
investment were as follows (dollars in thousands):

|                                                                       |                                 |   |                                     |        |   |      |        |        |  
|---------------------------------------------------------------------- | ------------------------------- | - | ----------------------------------- | ------ | - | ---- | ------ | ------ | -
|                                                                       |                                 |   |                                     |       
|                                                                       |                                 |   | For the Three Months Ended June 30, |       
|                                                                       |                                 |   |                                     |       
|                                                                       |                                 |   | 2002                                |        |   | 2001 |       
|                                                                       |                                 |   |                                     |        |   |      |       
|Balance at Beginning of Period                                         |                                 | $ | 14,106                              |        |   | $    | 2,814  |       
|                                                                       | Provision for Losses            |   |                                     | 7,043  |   |      |        | 2,648  |  
|                                                                       | Recoveries on Loans Charged Off |   |                                     | 18     |   |      |        |       |  
|                                                                       | Losses Sustained                |   |                                     | (3,847 | ) |      |        | (1,426 | )
|                                                                       |                                 |   |                                     |        |   |     
|Balance at End of Period                                               |                                 | $ | 17,320                              |        |   | $    | 4,036  |       
|                                                                       |                                 |   |                                     |        |   |     
|Allowance for Losses to Residential Mortgage Loans
Held for Investment |                                 |   | 0.5 %                               |        |   |      | 0.2 %  |       
|90+ Days Contractual Delinquency
Total Dollars Delinquent              |                                 | $ | 87,304                              |        |   | $    | 37,516 |       
|                                                                       | % Delinquent                    |   |                                     | 2.5 %  |   |      |        | 1.9 %  |  

The allowance for losses on residential mortgage loans held for investment
has increased to $17.3 million at June 30, 2002 from $4.0 million at June 30,
2001. In addition, the ratio of allowance for losses to residential mortgage
loans held for investment, or the allowance ratio, increased to 0.5% at June
30, 2002 from 0.2% at June 30, 2001. Prior to April 2000, the residential
mortgage loans were recorded as sales and anticipated future credit losses were
considered in valuing the MSRI. As a result, no allowance for losses was
necessary. After April 2000, we began recording residential mortgage loans
held for investment on the balance sheet, as previously discussed, and,
accordingly, began recording an allowance for losses based on managements
judgment of loss exposure. The increase in the allowance for losses occurred
primarily because the amount of the residential mortgage loans held for
investment increased and the residential mortgage loan portfolio continued to
mature. As the age and size of the residential mortgage loan portfolio
continues to mature and grow, we expect the balance in the allowance for losses
and the allowance ratio to continue to increase. The increase in 90+ days
contractual delinquency occurred primarily because the residential mortgage
loan portfolio continued to mature.

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CONSTRUCTION PRODUCTS

The following summarizes Construction Products results for the three
months ended June 30, 2002 compared to the same period last year (dollars in
millions):

|                                           |  |                            |       |   |      |   |        |  
|------------------------------------------ |  | -------------------------- | ----- | - | ---- | - | ------ | -
|                                           |  |                            |      
|                                           |  | For the Three Months Ended |      
|                                           |  | June 30,                   |      
|                                           |  |                            |      
|                                           |  | 2002                       |       |   | 2001 |  
|                                           |  |                            |       |   |      |  
|Revenues                                   |  | $                          | 128.8 |   |      | $ | 117.4  |  
|Interest Income                            |  |                            |      |   |      |   | 1.0    |  
|Cost of Sales                              |  |                            | (99.7 | ) |      |   | (104.3 | )
|Selling, General & Administrative Expenses |  |                            | (1.4  | ) |      |   | (1.2   | )
|                                           |  |                            |       |   |      |  
|Operating Earnings*                        |  | $                          | 27.7  |   |      | $ | 12.9   |  
|                                           |  |                            |       |   |      |  

*     Before Minority Interest of $8.9 million and $2.8 million, respectively.

Construction Products revenues were 9.7% higher than the same period last
year. This increase was primarily the result of a 38% increase in gypsum
wallboard revenues. The increase in gypsum wallboard revenues was primarily
caused by a higher average net sales price, offset by slightly lower volume.

Construction Products cost of sales was 4.4% lower than the same period
last year. This decrease was primarily the result of significantly decreased
paperboard costs due to reduced energy costs and better plant operating
efficiencies in the current year. In addition, the decrease was also due to a
one-time charge of $1.3 million that was incurred in the first quarter last
year related to idling a paperboard plant.

Construction Products selling, general and administrative expenses were
16.7% higher than the same period last year. This increase was primarily the
result of increased personnel and higher office expenses.

For the three months ended June 30, 2002, Construction Products operating
earnings, net of minority interest, represented a 114.3% increase from results
for the same period a year ago. Operating earnings increased primarily due to
the increase in gypsum wallboard pricing.

CONSTRUCTION SERVICES

The following summarizes Construction Services results for the three
months ended June 30, 2002 compared to the same period last year (dollars in
millions):

|                                 |  |                            |       |  |      |   |       | 
|-------------------------------- |  | -------------------------- | ----- |  | ---- | - | ----- | 
|                                 |  |                            |      
|                                 |  | For the Three Months Ended |      
|                                 |  | June 30,                   |      
|                                 |  |                            |      
|                                 |  | 2002                       |       |  | 2001 |  
|                                 |  |                            |       |  |      |  
|Revenues                         |  | $                          | 360.7 |  |      | $ | 313.6 | 
|                                 |  |                            |       |  |      |  
|Operating Earnings               |  | $                          | 8.1   |  |      | $ | 7.5   | 
|                                 |  |                            |       |  |      |  
|New Contracts Executed           |  | $                          | 272   |  |      | $ | 391   | 
|                                 |  |                            |       |  |      |  
|Backlog of Uncompleted Contracts |  | $                          | 2,092 |  |      | $ | 2,099 | 
|                                 |  |                            |       |  |      |  

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Construction Services revenues for the three months ended June 30, 2002
were 15.0% higher than revenues for the same period last year. The increase
was the result of several high revenue, short-term contracts that were in
progress in the current quarter. Operating earnings for the group improved in
the first quarter of fiscal 2003 compared to the same period last year as a
result of additional margins generated by the higher revenue base. New
contracts executed decreased 30.4% and backlog of uncompleted contracts
decreased 0.3% from the same period last year, primarily due to timing
differences experienced with contract awards and executions.

The Construction Services segment provided a positive average annual net
cash flow in excess of our investment in the segment of $129.3 million for the
three months ended June 30, 2002 and $110.5 million for the same period last
year.

INVESTMENT REAL ESTATE

The following summarizes Investment Real Estates results for the three
months ended June 30, 2002 compared to the same period last year (dollars in
millions):

|                   |  |                            |     |  |      |   |      | 
|------------------ |  | -------------------------- | --- |  | ---- | - | ---- | 
|                   |  |                            |    
|                   |  | For the Three Months Ended |    
|                   |  | June 30,                   |    
|                   |  |                            |    
|                   |  | 2002                       |     |  | 2001 |  
|                   |  |                            |     |  |      |  
|Revenues           |  | $                          | 5.9 |  |      | $ | 24.1 | 
|                   |  |                            |     |  |      |  
|Operating Earnings |  | $                          | 3.4 |  |      | $ | 15.3 | 
|                   |  |                            |     |  |      |  

Investment Real Estates revenues for the three months ended June 30, 2002
were 75.3% lower than revenues for the same period last year. Operating
earnings from Investment Real Estate in the first quarter of fiscal 2003
totaled $3.4 million compared to $15.3 million in the same period last year.
The decreases in revenues and operating earnings were primarily related to the
timing of property sales of nominally-valued assets, the investment in Centex
Development Company, L.P., or the Partnership, and a cash settlement of
litigation, as discussed below.

Property sales related to Investment Real Estates nominally-valued assets
contributed revenues and operating earnings of $1.8 million and $1.4 million,
respectively, for the three months ended June 30, 2002 and $18.7 million and
$13.4 million, respectively, for the same period last year. These
nominally-valued assets resulted from the fiscal 1996 acquisition of Vista
Properties, Inc., or Vista, and its subsequent combination with Centex Real
Estate Corporation. The Vista portfolio of properties was reduced to a nominal
book basis after recording certain deferred tax benefits related to the
combination. The timing of land sales is uncertain and can vary significantly
from period to period.

Included in Investment Real Estates revenues and operating earnings for
the three months ended June 30, 2002 was a loss of $0.8 million derived from
its investment in the Partnership compared to earnings of $3.4 million for the
same period last year. As noted in Note (G) of the Notes to Consolidated
Financial Statements of Centex, the investment in the Partnership is not
consolidated and is accounted for on the equity method of accounting because we
do not control the Partnership. The largest component of the Partnership is
its International Home Building segment, based in London, England. Included in
Investment Real Estates revenues and operating earnings were a loss of $0.4
million and earnings of $2.4 million for the three months ended June 30, 2002
and 2001, respectively, derived from its investment in this segment. The
decrease in operating earnings was primarily due to under-absorption of certain
fixed costs resulting from the decline in unit closings, cost overruns,
write-offs of costs associated with failed land acquisitions and increases in
labor

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costs caused by a shortage of skilled labor. For the three months ended June
30, 2002 and 2001, this segment closed 269 units at an average sales price per
unit of $226,766 and 299 units at an average sales price per unit of $187,836,
respectively. Operating earnings per unit, before interest, were $461 and
$7,936 for the three months ended June 30, 2002 and 2001, respectively.

The remainder of Investment Real Estates revenues and operating earnings
for the three months ended June 30, 2002 were primarily related to the receipt
of a cash settlement from litigation that was settled in our favor.

OTHER

Our manufactured homes operations and our home services operations are not
material for purposes of segment reporting and have therefore been included in
Other for reporting purposes.

Our manufactured homes operations had operating earnings of $0.2 million
for the three months ended June 30, 2002 versus a loss of $1.6 million for the
same period last year. The improvement in operating earnings is primarily the
result of higher production and improved efficiency in manufacturing, lower
general and administrative expenses and reduced losses in the retail segment of
the business.

Our home services operations reported operating losses of $1.6 million for
the three months ended June 30, 2002 compared to operating earnings of $1.9
million for the same period last year. The decrease in earnings is primarily
due to the expensing of all customer creation costs during the quarter.

Corporate general and administrative expense increased 12.5% to $12.6
million for the three months ended June 30, 2002 compared to $11.2 million for
the same period last year. The increase primarily relates to an increase in
personnel and higher compensation resulting from growth in our profitability.
Corporate general and administrative expenses represent compensation and other
costs not identifiable with a specific segment.

Interest expense decreased 12.9% to $23.7 million for the three months
ended June 30, 2002 compared to $27.2 million for the same period last year.
The change is primarily related to an increase in the net interest capitalized
during the three months ended June 30, 2002 as compared to the same period last
year. The increase in net interest capitalized is a result of growth in our
housing projects inventory.

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FINANCIAL CONDITION AND LIQUIDITY

At June 30, 2002, we had cash and cash equivalents of $52.9 million,
including $20.4 million in Financial Services and $8.9 million belonging to our
64.6%-owned Construction Products subsidiary. The net cash used in or provided
by the operating, investing and financing activities for the three months ended
June 30, 2002 and 2001 is summarized below (dollars in thousands):

|                                |                         |                      |          |                            |          |   |        |   |          |  
|------------------------------- | ----------------------- | -------------------- | -------- | -------------------------- | -------- | - | ------ | - | -------- | -
|                                |                         |                      |          |                            |         
|                                |                         |                      |          | For the Three Months Ended |         
|                                |                         |                      |          | June 30,                   |         
|                                |                         |                      |          |                            |         
|                                |                         |                      |          | 2002                       |          |   | 2001   |  
|                                |                         |                      |          |                            |          |   |        |  
|Net cash (used in) provided by  |                         |                      |          |                            |          |   |        |  
|                                | Non-Financial Services* |                      |          |                            |          |   |        |   |         
|                                |                         | Operating Activities |          | $                          | (231,664 | ) |        | $ | (175,546 | )
|                                |                         | Investing Activities |          |                            | (45,949  | ) |        |   | (52,041  | )
|                                |                         | Financing Activities |          |                            | 117,483  |   |        |   | 238,309  |  
|                                |                         |                      |          |                            |          |  
|                                |                         |                      | (160,130 | )                          |          |   | 10,722 |  
|                                |                         |                      |          |                            |          |  
|                                | Financial Services      |                      |          |                            |          |   |        |   |         
|                                |                         | Operating Activities |          |                            | (87,044  | ) |        |   | (272,284 | )
|                                |                         | Investing Activities |          |                            | (239,280 | ) |        |   | (175,891 | )
|                                |                         | Financing Activities |          |                            | 319,617  |   |        |   | 467,000  |  
|                                |                         |                      |          |                            |          |  
|                                |                         |                      | (6,707   | )                          |          |   | 18,825 |  
|                                |                         |                      |          |                            |          |  
|Net (decrease) increase in cash |                         | $                    | (166,837 | )                          |          | $ | 29,547 |  
|                                |                         |                      |          |                            |          |  



|* |  | Non-Financial Services represents the consolidation of all subsidiaries
other than those included in the Financial Services business segment.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------

We generally fund our Non-Financial Services operating and other
short-term needs through cash from operations, borrowings from commercial paper
and other short-term credit arrangements and the issuance of medium-term notes
and other debt securities. During the three months ended June 30, 2002, cash
was primarily used in Non-Financial Services-Operating Activities to finance
increases in housing inventories relating to the increased level of sales and
resulting units under construction during the year and for the acquisition of
land for development. The funds provided by Non-Financial Services-Financing
Activities included new debt used to fund the increased homebuilding activity.

We generally fund our Financial Services operating and other short-term
needs through cash flows from operations, credit facilities, securitizations
and proceeds from the sale of mortgage loans to HSF-I, as described below.
During the three months ended June 30, 2002, cash was primarily used in
Financial Services-Investing Activities to finance increases in residential
mortgage loans held for investment. The funds provided by Financial
Services-Financing Activities included new debt used to fund the increased
residential mortgage loan activity.

Centex Corporation currently has an investment grade credit rating from
each of the principal credit rating agencies. Our ability to finance our
activities on favorable terms is dependent to a significant extent on whether
we are able to maintain our investment-grade credit rating. We attempt to
manage our debt levels in order to maintain an investment-grade rating. If,
however, our debt rating were downgraded to below investment grade, we would
not have access to the commercial paper markets and might need to draw on our
existing committed backup facility, which exceeds our commercial paper program
size.

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Our existing credit facilities and available capacity as of June 30, 2002
are summarized below (dollars in thousands):

|                       |                                             |   |                 |           |  |           |           |         |    
|---------------------- | ------------------------------------------- | - | --------------- | --------- |  | --------- | --------- | ------- | ---
|                       |                                             |   | Existing Credit |           |  | Available |          
|                       |                                             |   | Facilities      |           |  | Capacity  |          
|                       |                                             |   |                 |           |  |          
|Non-Financial Services |                                             |   |                 |           |  |           |           |        
|                       | Centex Corporation                          |   |                 |           |  |           |           |         |    
|                       | Multi-Bank Revolving Credit Facility        |   | $               | 700,000   |  |           | $         | 700,000 | (1)
|                       | Uncommitted Bank Lines                      |   |                 | 60,000    |  |           |           | 60,000  |    
|                       | Construction Products                       |   |                 |           |  |           |           |         |    
|                       | Senior Revolving Credit Facility            |   |                 | 275,000   |  |           |           | 138,900 | (2)
|                       | Annually Renewable Commercial Paper
Conduit |   |                 | 50,000    |  |           |           | 25,626  | (2)
|                       |                                             |   |                 |           |  |          
|                       |                                             |   | 1,085,000       |           |  |           | 924,526   |        
|                       |                                             |   |                 |           |  |          
|Financial Services     |                                             |   |                 |           |  |           |           |        
|                       | Unsecured Credit Facilities                 |   |                 | 125,000   |  |           |           | 30,000  | (3)
|                       | Secured Credit Facilities                   |   |                 | 560,000   |  |           |           | 412,941 | (4)
|                       | Harwood Street Funding II, L.L.C. Facility  |   |                 | 1,000,000 |  |           |           | 393,065 |    
|                       | Line of Credit                              |   |                 | 15,245    |  |           |           | 995     | (5)
|                       |                                             |   |                 |           |  |          
|                       |                                             |   | 1,700,245       |           |  |           | 837,001   |        
|                       |                                             |   |                 |           |  |          
|                       |                                             | $ | 2,785,245       |           |  | $         | 1,761,527 | (6)    
|                       |                                             |   |                 |           |  |          



|(1) |  | This is a committed, multi-bank revolving credit facility, maturing in
August 2005, which serves as backup for commercial paper borrowings. This
facility was increased on May 31, 2002 from $600 million to $700 million.
As of June 30, 2002, there were no borrowings under this facility, and our
$600 million commercial paper program had $120 million of outstanding
borrowings. We have not borrowed under this facility since its inception.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | These committed facilities were entered into by Construction Products and
have no recourse to Centex Corporation. The Senior Revolving Credit
Facility matures in November 2003 and the Annually Renewable Commercial
Paper Conduit matures in June 2003.                                                                                                                                                                                            
|   
|(3) |  | Centex Corporation, CTX Mortgage and Home Equity on a joint and several
basis share in a $125 million uncommitted, unsecured credit facility.                                                                                                                                                                                                                                                                                                        
|   
|(4) |  | CTX Mortgage and Home Equity share in $275 million of committed and $215
million of uncommitted secured credit facilities to finance mortgage
inventory. CTX Mortgage maintains $70 million of committed secured
mortgage warehouse facilities to finance mortgages not sold to HSF-I.
Centex Corporation has guaranteed $11.5 million of these facilities.                                                                                          
|   
|(5) |  | The United Kingdom mortgage operation maintained a £10 million ($15.2
million) uncommitted unsecured line of credit guaranteed by Centex
Corporation. This facility was repaid and cancelled in July 2002.                                                                                                                                                                                                                                           
|   
|(6) |  | The amount of available capacity includes $260 million of uncommitted
borrowings. Although we believe that this capacity is currently
available, there can be no assurance that the lenders under the applicable
facilities would elect to make advances to Centex Corporation or its
subsidiaries if and when requested to do so.                                                                                                                   

CTX Mortgage finances its inventory of mortgage loans principally through
sales of Jumbo A and conforming loans to HSF-I. These mortgage loans are
sold pursuant to a mortgage loan purchase agreement that expires in November
2004, subject to certain renewal options. HSF-I acquires mortgage loans from
CTX Mortgage, holds them for a period averaging between 45 and 60 days and then
resells them into the secondary market. HSF-I obtains the funds needed to
purchase eligible mortgage loans from CTX Mortgage by issuing investment grade
senior debt obligations and subordinated certificates. The purpose of this
arrangement is to allow CTX Mortgage to reduce the cost of financing the
mortgage loans originated by it and to improve its

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liquidity. For additional information regarding HSF-I, see Certain
Off-Balance-Sheet and Other Obligations.

Home Equity finances its inventory of mortgage loans through HSF-II, a
wholly-owned, consolidated entity, under a revolving sales agreement that
expires upon final payment of the senior and subordinated debt issued by
HSF-II. This arrangement, where HSF-II has committed to finance all eligible
loans, gives Home Equity daily access to HSF-IIs capacity of $1.0 billion.
HSF-II obtains funds through the sale of five-year subordinated notes, that are
rated BBB by Standard & Poors, or S&P, Baa2 by Moodys Investors Service, or
Moodys, and BBB by Fitch Ratings, or Fitch, and short-term secured liquidity
notes that are rated A1+ by S&P, P1 by Moodys and F1+ by Fitch. Because
HSF-II is a consolidated entity, the debt, interest income and interest expense
of HSF-II are reflected on the financial statements of Financial Services.

Under our debt covenants, we are required to maintain certain leverage and
interest coverage ratios and a minimum tangible net worth. At June 30, 2002,
we were in compliance with all of these covenants.

As of June 30, 2002 our short-term debt was $957.6 million, approximately
$813.2 million of which was applicable to Financial Services and $24.4 million
of which was applicable to Construction Products. Excluding Financial Services
and Construction Products, our short-term borrowings are generally financed at
prevailing market interest rates from our commercial paper programs and from
uncommitted bank facilities.
Our outstanding debt as of June 30, 2002 was as follows (dollars in
thousands)(1):

|                        |                                                                               |                                                              |           |           |        
|----------------------- | ----------------------------------------------------------------------------- | ------------------------------------------------------------ | --------- | --------- | -------
|Non-Financial Services: |                                                                               |                                                              |          
|                        | Short-Term Notes Payable                                                      |                                                              | $         | 144,374  
|                        | Senior Debt:                                                                  |                                                              |           |          
|                        |                                                                               | Medium-Term Note Programs, 2.59% to 7.95%, due through 2007  |           |           | 418,000
|                        |                                                                               | Long-Term Notes, 6.40% to 9.75%, due through 2012            |           |           | 962,950
|                        |                                                                               | Other Indebtedness, weighted-average 3.80%, due through 2027 |           |           | 185,042
|                        | Subordinated Debt:                                                            |                                                              |           |          
|                        |                                                                               | Subordinated Debentures, 7.38%, due in 2006                  |           |           | 99,857 
|                        |                                                                               | Subordinated Debentures, 8.75%, due in 2007                  |           |           | 99,647 
|                        |                                                                               |                                                             
|                        |                                                                               |                                                              | 1,909,870
|                        |                                                                               |                                                             
|Financial Services:     |                                                                               |                                                              |          
|                        | Short-Term Debt:                                                              |                                                              |           |          
|                        |                                                                               | Short-Term Bank Notes Payable                                |           |           | 179,569
|                        |                                                                               | Harwood Street Funding II, L.L.C. Secured Liquidity Notes    |           |           | 556,935
|                        |                                                                               | Other Short-Term Debt                                        |           |           | 76,740 
|                        | Home Equity Loans Asset-Backed Certificates, 2.91% to 8.48%, due
through 2032 |                                                              |           | 2,941,400
|                        | Harwood Street Funding II, L.L.C. Variable Rate Subordinated Notes, due       |                                                             
|                        |                                                                               | through 2007                                                 |           |           | 50,000 
|                        |                                                                               |                                                             
|                        |                                                                               |                                                              | 3,804,644
|                        |                                                                               |                                                             
|Total                   |                                                                               | $                                                            | 5,714,514
|                        |                                                                               |                                                             



|(1) |  | Our principal business segments are somewhat cyclical and are
particularly affected by changes in local economic conditions and in
long-term and short-term interest rates. As a result, certain of the
borrowings described in the table above vary on a seasonal basis and
depend on the working capital needs of our operations.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Financial Services debt related to securitized residential mortgage loans
structured as collateralized borrowings (Home Equity Loans Asset-Backed
Certificates) was $2.9 billion at June 30, 2002. The principal

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and interest on these notes are paid using the cash flow from the
underlying residential mortgage loans, which serve as collateral for the debt.
Accordingly, the timing of the principal payments on these notes is dependent
upon the payment received on the underlying residential mortgage loans. The
expected maturities of this component of long-term debt are based on
contractual maturities adjusted for projected repayments and prepayments of
principal. Maturities of Non-Financial Services and Financial Services
long-term debt (in thousands) during the next five years ended March 31 are:

|                                    |  |               |                                                |  |           |   |                                                 |       |  |   |                                                   | 
|----------------------------------- |  | ------------- | ---------------------------------------------- |  | --------- | - | ----------------------------------------------- | ----- |  | - | ------------------------------------------------- | 
|                                    |  | Non-Financial |                                                |  | Financial |   |                                                 |       |  |  
|                                    |  | Services      |                                                |  | Services  |   |                                                 | Total | 
|                                    |  |               |                                                |  |           |   |                                                 |       | 
|2003
2004
2005
2006
2007
Thereafter |  | $             | 181,278
156,229
33,582
325,373
290,559
778,475 |  |           | $ | 579,454
626,634
453,420
347,302
423,675
560,915 |       |  | $ | 760,732
782,863
487,002
672,675
714,234
1,339,390 | 
|                                    |  |               |                                                |  |           |   |                                                 |       | 
|                                    |  | $             | 1,765,496                                      |  |           | $ | 2,991,400                                       |       |  | $ | 4,756,896                                         | 
|                                    |  |               |                                                |  |           |   |                                                 |       | 

CERTAIN OFF-BALANCE-SHEET AND OTHER OBLIGATIONS

The following is a summary of certain off-balance-sheet arrangements and
other obligations and their possible effects on our liquidity and capital
resources.

Harwood Street Funding I, L.L.C.

HSF-I is an entity established in July 1999 that is not one of our
affiliates and is not consolidated with Financial Services or Centex
Corporation. Since December 1999, CTX Mortgage has sold substantially all of
the Jumbo A and conforming mortgage loans that it originates to HSF-I in
accordance with the HSF-I Purchase Agreement. When HSF-I acquires these loans,
it typically holds them for a period averaging between 45 and 60 days and then
resells them into the secondary market. HSF-I obtains the funds needed to
purchase eligible mortgage loans from CTX Mortgage by issuing (1) securitized
term debt that is currently rated AAA by S&P and Aaa by Moodys, (2) short-term
secured liquidity notes that are currently rated A1+ by S&P and P1 by Moodys
and (3) five year extendable subordinated certificates maturing in November
2004 that are rated BBB by S&P and Baa2 by Moodys. This arrangement provides
CTX Mortgage with reduced financing cost for eligible mortgage loans it
originates and improves its liquidity.

Under the terms of the HSF-I Purchase Agreement, CTX Mortgage may elect to
sell to HSF-I, and HSF-I is obligated to purchase from CTX Mortgage, mortgage
loans that satisfy certain eligibility criteria and portfolio requirements.
The maximum amount of mortgage loans that HSF-I is allowed to carry in its
inventory under the HSF-I Purchase Agreement is limited to $2.0 billion.

The HSF-I Purchase Agreement currently has a term expiring in November
2004, subject to certain renewal options. In addition, HSF-Is commitment to
purchase eligible mortgage loans is subject to termination upon the occurrence
of certain events of default and other termination events described in the
HSF-I Purchase Agreement, including a downgrade in Centex Corporations credit
ratings below BB+ by S&P or Ba1 by Moodys. In the event CTX Mortgage was
unable to sell loans to HSF-I, it would draw on existing credit facilities
currently held in addition to HSF-I. In addition, it might need to make other
customary financing arrangements to fund its mortgage loan origination
activities. Although we believe that CTX

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Mortgage could arrange for alternative financing that is common for
non-investment grade mortgage companies, there can be no assurance that such
financing would be available on satisfactory terms, and any delay in obtaining
such financing could adversely affect the results of operations of CTX
Mortgage.

In accordance with the HSF-I Purchase Agreement, CTX Mortgage acts as
servicer of the loans owned by HSF-I and arranges for the sale of the eligible
mortgage loans into the secondary market. In its capacity as servicer, CTX
Mortgage must act in the best interests of HSF-I so as to maximize the proceeds
of sales of eligible mortgage loans. The performance and payment of obligations
of CTX Mortgage, in its capacity as servicer, are guaranteed by Centex
Corporation. These servicer obligations include the obligation of the servicer
to repurchase a mortgage loan from HSF-I in the event of a breach of the
servicers representations and warranties, which materially and adversely
affects the value of the mortgage loan and is not cured within 60 days.

HSF-I has entered into a swap arrangement with a bank, that we refer to as
the Harwood Swap, under which the bank has agreed to make certain payments to
HSF-I, and HSF-I has agreed to make certain payments to the bank, the net
effect of which is that the bank has agreed to bear certain interest rate
risks, non-credit related market risks and prepayment risks related to the
mortgage loans held by HSF-I. The purpose of this arrangement is to provide
credit enhancement to HSF-I by permitting it to hedge these risks with a
counterparty having a short-term credit rating of A1+ from S&P and P1 from
Moodys. Additionally, we have entered into a separate swap arrangement with
the bank pursuant to which we have agreed to pay to the bank all amounts that
the bank is required to pay to HSF-I pursuant to the Harwood Swap plus a
monthly fee equal to a percentage of the notional amount of the Harwood Swap,
and the bank is required to pay to us all amounts that the bank receives from
HSF-I pursuant to the Harwood Swap. Accordingly, we effectively bear all
interest rate risks, non-credit related market risks and prepayment risks that
are the subject of the Harwood Swap. We are also required to reimburse the
bank for certain expenses, costs and damages that it may incur.

As of June 30, 2002, HSF-I owned $1.19 billion in securitized residential
mortgage loans sold to it by CTX Mortgage and had $1.10 billion of outstanding
securitized term debt and $93.1 million of outstanding subordinated
certificates. We do not guarantee the payment of any debt or subordinated
certificates of HSF-I, and we are not liable for credit losses relating to
securitized residential mortgage loans sold to HSF-I. However, we do retain
certain risks related to the portfolio of mortgage loans held by HSF-I. In
particular, CTX Mortgage makes representations and warranties to HSF-I to the
effect that each mortgage loan sold to HSF-I satisfies the eligibility criteria
and portfolio requirements discussed above. CTX Mortgage may be required to
repurchase mortgage loans sold to HSF-I if such mortgage loans are determined
to be ineligible loans or there occur certain other breaches of representations
and warranties of CTX Mortgage, as seller or servicer. During the three months
ended June 30, 2002, CTX Mortgage sold $1.84 billion of mortgage loans to
HSF-I.

3333 Holding Corporation, 3333 Development Corporation and Centex Development
Company, L.P.

3333 Holding Corporation, 3333 Development Corporation and the Partnership
are entities that are not affiliates of and are not consolidated with Centex
Corporation. These entities were established in 1987 in order to broaden the
range of business activities that may be conducted for the benefit of our
stockholders to include general real estate development. We determined that
this expansion would improve stockholder value through longer-term real estate
investments, real estate developments 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 our core homebuilding operations and
typically involves substantial acquisition and development indebtedness, we
concluded that this new line of business could best be conducted through the

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Partnership, an independent, publicly-traded entity that is not
consolidated with us. The Partnership is managed by its general partner, 3333
Development Corporation, a wholly-owned subsidiary of 3333 Holding Corporation.
We generally are not liable for the obligations of 3333 Holding Corporation,
3333 Development Corporation or the Partnership. However, as of June 30, 2002,
we guaranteed approximately $1.7 million of indebtedness of the Partnership.
In addition, we enter into certain land purchase and other transactions with
the Partnership. For additional information regarding these entities, see Part
B of this Report. In addition, for information regarding these entities and
Centex Corporation, on an aggregate basis, see Note (G) of the Notes to
Consolidated Financial Statements of Centex Corporation.

Joint Ventures

We conduct a portion of our land acquisition, development and other
activities through joint ventures in which we hold less than a majority
interest. Our investment in these non-consolidated joint ventures was $104.3
million and $94.6 million at June 30, 2002 and March 31, 2002, respectively.
These joint ventures had total outstanding secured construction debt of
approximately $138.1 million at June 30, 2002 and $144.6 million at March 31,
2002. Our pro rata limited liability with respect to this debt is limited to
approximately $29.3 million and $27.9 million at June 30, 2002 and March 31,
2002, respectively. Under the structure of this debt, we become liable up to
these amounts only to the extent that the construction debt exceeds a certain
percentage of the value of the project. At June 30, 2002 and March 31, 2002,
we were not liable for any of this debt.

Letters of Credit and Guarantees

At June 30, 2002 we had outstanding letters of credit of $101.4 million
that primarily relate to projects undertaken by Construction Services and
development obligations of Home Building. We expect that the obligations
secured by these letters of credit will generally be performed by our
subsidiaries in the ordinary course of business and in accordance with the
applicable contractual terms. To the extent that the underlying commercial
obligations are performed by our subsidiaries, the related letters of credit
will be released and we will not have any continuing obligations. We have no
material third-party guarantees.



---

Various sections of this Report, including Managements Discussion and
Analysis of Financial Condition and Results of Operations, contain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, Section 21E of the Securities Act of 1934, and the Private
Securities Litigation Reform Act of 1995. Forward-looking statements may be
identified by the context of the statement and generally arise when we are
discussing our beliefs, estimates or expectations. These statements are not
guarantees of future performance and involve a number of risks and
uncertainties. Actual results and outcomes may differ materially from what we
express or forecast in these forward-looking statements. In addition to the
specific uncertainties discussed elsewhere in this Report, the following risks
and uncertainties may affect our actual performance and results of operations:



| |  | Our residential Home Building and Construction Services operations are somewhat
cyclical and sensitive to changes in economic conditions, including levels of
employment, consumer confidence and income, availability of financing, interest
rate levels, and changes in the economic condition of the local markets in which we
operate.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |  | Our residential Home Building and Construction Services operations are also
subject to other risks and uncertainties, including seasonal variations, adverse
weather conditions, the availability of adequate land in desirable locations, the
cost and availability of labor and construction materials, labor disputes, the
general demand for housing and new construction and the resale market for existing
homes.                                                                                                                                                                                                                        
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Virtually all of our homebuyers finance their home acquisitions through our
Financial Services operation or third party lenders. In general, our Home Building
and mortgage lending operations can be adversely affected by increases in interest
rates. Our mortgage loan operations are also dependent upon the securitization
market for mortgage-backed securities and the availability of mortgage warehouse
financing.                                                                                                                                                                                                                   
| 
| |  | Demand for the products that our Construction Products operations produce is
directly related to activity in the homebuilding and construction industries and to
general economic conditions. Our Construction Products operations are also
concentrated in particular regional and local markets that may experience cyclical
downturns at different times than the national economy. The price at which we
sell our construction products, particularly gypsum wallboard, is highly sensitive
to changes in supply and demand for such products, energy costs, raw material
prices and competition from other domestic and foreign producers.
| 
| |  | Our businesses may be affected by the impact and uncertainties created by the
events of September 11, 2001 and the consequences of any future attacks as well as
other events affecting national and international economic and other conditions.                                                                                                                                                                                                                                                                                                                                                                                              
| 
| |  | All of our businesses operate in very competitive environments, which are
characterized by competition from a number of other homebuilders, mortgage lenders,
construction products producers and contractors in each of the markets in which we
operate.                                                                                                                                                                                                                                                                                                                                                                                      
| 
| |  | We are subject to various federal, state and local statutes, rules and regulations
that could affect our businesses, including those concerning zoning, construction,
protecting the environment and health. In addition, our businesses could be
affected by changes in federal income tax policy, federal mortgage loan financing
programs and by other changes in regulation or policy.                                                                                                                                                                                                                                                     




ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks related to fluctuations in interest rates
on our direct debt obligations, on mortgage loans receivable, residual interest
in mortgage securitizations and securitizations classified as debt. We utilize
derivative instruments, including interest rate swaps, in conjunction with our
overall strategy to manage the debt outstanding that is subject to changes in
interest rates. We utilize forward sale commitments to mitigate the risk
associated with the majority of our mortgage loan portfolio. Other than the
forward commitments and interest rate swaps discussed earlier, we do not
utilize forward or option contracts on foreign currencies or commodities, or
other types of derivative financial instruments.

There have been no material changes in our market risk from March 31,
2002. For further information regarding our market risk, refer to our Annual
Report on Form 10-K for the fiscal year ended March 31, 2002.

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|        |  |                                  | 
|------- |  | -------------------------------- | 
|ITEM 6. |  | EXHIBITS AND REPORTS ON FORM 8-K

| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | 
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
| | (1) | Exhibits                                                                                                                                                                                                                                                                                                                                                                                                                              |  | 
|
| |     | None.                                                                                                                                                                                                                                                                                                                                                                                                                                 |  | 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (2) | Reports on Form 8-K                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | Current Report on Form 8-K of Centex Corporation dated April
23, 2002, announcing the Companys financial results for the
quarter and fiscal year ended March 31, 2002.                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | Current Report on Form 8-K of Centex Corporation dated May 2,
2002, announcing that the Company and the Rights Agent had
entered into Amendment No. 2 dated as of April 29, 2002 to the
Rights Agreement between Centex Corporation and Mellon Investor
Services LLC as Rights Agent (the Rights Agreement), to amend
the Rights Agreement to raise the Purchase Price (as defined in
the Rights Agreement) from $67.50 to $210.00.

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

|                |  |                                                                                                    
|--------------- |  | ---------------------------------------------------------------------------------------------------
|                |  | CENTEX CORPORATION                                                                                 
|                |  |                                                                                                    
|                |  | Registrant                                                                                         
|                |  |                                                                                                    
|August 12, 2002 |  | /s/ Leldon E. Echols                                                                               
|                |  |                                                                                                    
|                |  | Leldon E. Echols
Executive Vice President and
Chief Financial Officer
(principal financial officer)
|                |  |                                                                                                    
|August 12, 2002 |  | /s/ Mark A. Blinn                                                                                  
|                |  |                                                                                                    
|                |  | Mark A. Blinn
Vice President  Controller and
Financial Strategy
(principal accounting officer)    

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Part I  Financial Information
Item 1. Financial Statements
3333 Holding Corporation and Subsidiary
and Centex Development Company, L.P. and Subsidiaries
Condensed Combining Statements of Operations
(Dollars in thousands, except per unit/share data)
(unaudited)

|                                                  |  |                                     |        |   |              |               |         |                |              |   |          |  |  |              |        |               |                |   |              |  |  |   |       | 
|------------------------------------------------- |  | ----------------------------------- | ------ | - | ------------ | ------------- | ------- | -------------- | ------------ | - | -------- |  |  | ------------ | ------ | ------------- | -------------- | - | ------------ |  |  | - | ----- | 
|                                                  |  |                                     |       
|                                                  |  | For the Three Months Ended June 30, |       
|                                                  |  |                                     |       
|                                                  |  | 2002                                |        |   | 2001         |              
|                                                  |  |                                     |        |   |              |              
|                                                  |  |                                     |        |   |              | Centex        |         |                |              |   |          |  |  |              |        |               | Centex         |   |              |  |  |  
|                                                  |  |                                     |        |   |              | Development   |         |                |              |   |          |  |  |              |        |               | Development    |   |              |  |  |  
|                                                  |  |                                     |        |   |              | Company, L.P. |         |                | 3333 Holding |   |          |  |  |              |        | Company, L.P. |                |   | 3333 Holding | 
|                                                  |  |                                     |        |   |              | and           |         |                | Corporation  |   |          |  |  |              |        | and           |                |   | Corporation  | 
|                                                  |  | Combined                            |        |   | Subsidiaries |               |         | and Subsidiary |              |   | Combined |  |  | Subsidiaries |        |               | and Subsidiary |  
|                                                  |  |                                     |        |   |              |               |         |                |              |   |          |  |  |              |        |               |                |  
|Revenues                                          |  | $                                   | 90,335 |   |              | $             | 90,285  |                |              | $ | 88       |  |  | $            | 83,955 |               |                | $ | 83,345       |  |  | $ | 660   | 
|Costs and Expenses                                |  |                                     | 91,108 |   |              |               | 91,070  |                |              |   | 76       |  |  |              | 80,589 |               |                |   | 80,555       |  |  |   | 84    | 
|                                                  |  |                                     |        |   |              |               |         |                |              |   |          |  |  |              |        |               |                |  
|(Loss) Earnings Before Income
Taxes               |  |                                     | (773   | ) |              |               | (785    | )              |              |   | 12       |  |  |              | 3,366  |               |                |   | 2,790        |  |  |   | 576   | 
|Income Taxes                                      |  |                                     | (470   | ) |              |               | (470    | )              |              |   |         |  |  |              | 291    |               |                |   | 291          |  |  |   |      | 
|                                                  |  |                                     |        |   |              |               |         |                |              |   |          |  |  |              |        |               |                |  
|Net (Loss) Earnings                               |  | $                                   | (303   | ) |              | $             | (315    | )              |              | $ | 12       |  |  | $            | 3,075  |               |                | $ | 2,499        |  |  | $ | 576   | 
|                                                  |  |                                     |        |   |              |               |         |                |              |   |          |  |  |              |        |               |                |  
|Net (Loss) Earnings Allocable to
Limited Partners |  |                                     |        |   |              | $             | (315    | )              |              |   |          |  |  |              |        |               |                | $ | 2,499        |  |  |   |       | 
|                                                  |  |                                     |        |   |              |               |         |                |              |   |          |  |  |              |        |               |                |   |              |  |  |  
|(Loss) Earnings Per Unit/Share                    |  |                                     |        |   |              | $             | (1.31   | )              |              | $ | 12       |  |  |              |        |               |                | $ | 11.70        |  |  | $ | 576   | 
|                                                  |  |                                     |        |   |              |               |         |                |              |   |          |  |  |              |        |               |                |   |              | 
|Weighted-Average Units/Shares
Outstanding         |  |                                     |        |   |              |               | 240,591 |                |              |   | 1,000    |  |  |              |        |               |                |   | 213,504      |  |  |   | 1,000 | 

See Notes to Condensed Combining Financial Statements.

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3333 Holding Corporation and Subsidiary
and Centex Development Company, L.P. and Subsidiaries
Condensed Combining Balance Sheets
(Dollars in thousands)

|                                                       |                            |                   |         |               
|------------------------------------------------------ | -------------------------- | ----------------- | ------- | --------------
|                                                       |                            |                   |         | June 30, 2002*
|                                                       |                            |                   |         |               
|                                                       |                            |                   |         |               
|                                                       |                            |                   |         |               
|                                                       |                            |                   |         |               
|                                                       |                            |                   |         |               
|                                                       |                            |                   |         | Combined      
|                                                       |                            |                   |         |               
|Assets                                                 |                            |                   |         |               
|Cash and Cash Equivalents                              |                            | $                 | 23,806  |               
|Accounts Receivable                                    |                            |                   | 6,298   |               
|Inventories                                            |                            |                   | 457,837 |               
|Investments-                                           |                            |                   |         |               
|                                                       | Commercial Properties, net |                   |         | 137,670       
|                                                       | Real Estate Joint Ventures |                   |         | 5,251         
|                                                       | Affiliate                  |                   |         |              
|Property and Equipment, net                            |                            |                   | 3,383   |               
|Other Assets-                                          |                            |                   |         |               
|                                                       | Goodwill, net              |                   |         | 29,877        
|                                                       | Deferred Charges and Other |                   |         | 23,541        
|                                                       |                            |                   |         |               
|                                                       |                            | $                 | 687,663 |               
|                                                       |                            |                   |         |               
|Liabilities, Stockholders
EquityAnd Partners Capital |                            |                   |         |               
|Accounts Payable and Accrued
Liabilities               |                            | $                 | 113,807 |               
|Notes Payable                                          |                            |                   | 298,273 |               
|                                                       |                            |                   |         |               
|                                                       |                            | Total Liabilities |         |               
|                                                       |                            |                   |         |               
|Stockholders Equity and
Partners Capital             |                            |                   | 275,583 |               
|                                                       |                            |                   |         |               
|                                                       |                            | $                 | 687,663 |               
|                                                       |                            |                   |         |               



|*  |  | Unaudited                                   
|-- |  | --------------------------------------------
|** |  | Condensed from audited financial statements.

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3333 Holding Corporation and Subsidiary
and Centex Development Company, L.P. and Subsidiaries
Condensed Combining Statements of Cash Flows
(Dollars in thousands)
(unaudited)

|                                                                              |                                        |   |                                    
|----------------------------------------------------------------------------- | -------------------------------------- | - | -----------------------------------
|                                                                              |                                        |   | For the Three Months Ended June 30,
|                                                                              |                                        |   |                                    
|                                                                              |                                        |   | 2002                               
|                                                                              |                                        |   |                                    
|                                                                              |                                        |   |                                    
|                                                                              |                                        |   |                                    
|                                                                              |                                        |   |                                    
|                                                                              |                                        |   |                                    
|                                                                              |                                        |   | Combined                           
|                                                                              |                                        |   |                                    
|Cash Flows  Operating Activities                                             |                                        |   |                                    
|Net (Loss) Earnings                                                           |                                        | $ | (303                               
|Adjustments:                                                                  |                                        |   |                                    
|                                                                              | Depreciation and Amortization          |   |                                    
|                                                                              | Equity in Earnings from Joint
Ventures |   |                                    
|Decrease (Increase) in Receivables                                            |                                        |   | 1,535                              
|Decrease in Notes Receivable                                                  |                                        |   |                                   
|Decrease (Increase) in Inventories                                            |                                        |   | 12,430                             
|Increase in Commercial Properties                                             |                                        |   | (6,059                             
|Increase in Other Assets                                                      |                                        |   | (566                               
|(Decrease) Increase in Payables
and Accruals                                  |                                        |   | (10,248                            
|                                                                              |                                        |   |                                    
|                                                                              |                                        |   | (2,078                             
|                                                                              |                                        |   |                                    
|Cash Flows  Investing Activities                                             |                                        |   |                                    
|Decrease (Increase) in Advances to
Joint Ventures and Investment in
Affiliate |                                        |   | 92                                 
|(Increase) Decrease in Property and
Equipment, net                            |                                        |   | (78                                
|                                                                              |                                        |   |                                    
|                                                                              |                                        |   | 14                                 
|                                                                              |                                        |   |                                    
|Cash Flows  Financing Activities                                             |                                        |   |                                    
|Increase in Notes Payable                                                     |                                        |   | 2,040                              
|                                                                              |                                        |   |                                    
|Effect of Exchange Rate Changes
On Cash                                       |                                        |   | 1,292                              
|                                                                              |                                        |   |                                    
|Net Increase (Decrease) In Cash                                               |                                        |   | 1,268                              
|Cash at Beginning of Period                                                   |                                        |   | 22,538                             
|                                                                              |                                        |   |                                    
|Cash at End of Period                                                         |                                        | $ | 23,806                             
|                                                                              |                                        |   |                                    

See Notes to Condensed Combining Financial Statements.

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3333 Holding Corporation and Subsidiary
and Centex Development Company, L.P. and Subsidiaries
Notes to Condensed Combining Financial Statements
June 30, 2002
(Dollars in thousands, except per share data)
(unaudited)

(A)  BASIS OF PRESENTATION

The condensed combining interim financial statements include the accounts
of 3333 Holding Corporation (Holding) and subsidiary and Centex Development
Company, L.P. (the Partnership) and subsidiaries (collectively the
Companies) after elimination of all significant intercompany balances and
transactions. These statements have been prepared, without audit, in
accordance with accounting principles generally accepted in the United States
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, certain information and footnote
disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States have been
condensed or omitted.

In the opinion of the Companies, all adjustments (consisting of normal,
recurring accruals) necessary to present fairly the information in the
condensed combining financial statements of the Companies have been included.
The results of operations for such interim periods are not necessarily
indicative of the results for the full year. The Companies suggest that these
condensed combining financial statements be read in conjunction with the
financial statements and the notes thereto included in the Companies latest
Annual Report on Form 10-K.

(B)  ORGANIZATION

The Partnership is a master limited partnership formed by Centex
Corporation (Centex) in March 1987 to broaden the range of business
activities that may be conducted for the benefit of Centexs stockholders to
include general real estate development. Centex believed that this expansion
would improve stockholder value through longer-term real estate investments,
real estate developments 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 of business could best be conducted through the
Partnership, an independent, publicly-traded entity that is not consolidated
with Centex for financial reporting purposes.

The Partnership is authorized to issue three classes of limited
partnership interest. Centex indirectly holds 100% of the Partnerships Class
A and Class C limited partnership units (Class A Units and Class C Units,
respectively), which are collectively convertible into 20% of the Partnerships
Class B limited partnership units (Class B Units). The Partnership may issue
additional Class C Units in connection with the acquisition of real property
and other assets. No Class B Units have been issued. However, the
stockholders of Centex hold warrants to purchase approximately 80% of the Class
B Units. The warrants are held through a nominee arrangement and trade in
tandem with the common stock of Centex.

As holder of the Class A and Class C Units, Centex is entitled to a
cumulative preferred return of 9% per annum on the average outstanding balance
of its capital contributions to the Partnership, adjusted for cash and other
distributions representing return of capital. As of June 30, 2002, these
adjusted capital

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contributions, or Unrecovered Capital, were $241.1 million and preference
payments in arrears totaled $46.8 million. The Partnership has made no
preference payments since fiscal 1998.

The Partnership is managed by its general partner, 3333 Development
Corporation, a wholly-owned subsidiary of Holding. The common stock of Holding
is held by the stockholders of Centex through a nominee arrangement and trades
in tandem with the common stock of Centex. The stockholders of Centex elect
the four-person board of directors of Holding, three of whom are independent
outside directors who are not directors, affiliates or employees of Centex.
Thus, through Holding, the stockholders of Centex control the general partner
of the Partnership. The general partner, through its independent board and the
independent board of Holding, including its non-executive Chairman, oversees
the Partnerships activities, including the acquisition, development,
maintenance, operation and sale of properties. Consent of the limited partners
for the activities of the Partnership is not required, and the limited partners
cannot remove the general partner. As a result, Centex accounts for its
limited partnership interest in the Partnership using the equity method of
accounting for investments.

See Note (G) to the consolidated financial statements of Centex included
elsewhere in this Report for supplementary condensed combined financial
statements for Centex and subsidiaries, Holding and subsidiary, and the
Partnership and subsidiaries.

(C)  STATEMENTS OF COMBINING CASH FLOWS  SUPPLEMENTAL DISCLOSURES

|                        |  |                      |       |   |      |   |        |  
|----------------------- |  | -------------------- | ----- | - | ---- | - | ------ | -
|                        |  |                      |      
|                        |  | For the Three Months |      
|                        |  | Ended June 30,       |      
|                        |  |                      |      
|                        |  | 2002                 |       |   | 2001 |  
|                        |  |                      |       |   |      |  
|Total Interest Incurred |  | $                    | 4,234 |   |      | $ | 3,236  |  
|Interest Capitalized    |  |                      | (856  | ) |      |   | (1,645 | )
|                        |  |                      |       |   |      |  
|Interest Expense        |  | $                    | 3,378 |   |      | $ | 1,591  |  
|                        |  |                      |       |   |      |  

Cash payments made for interest were $4.1 million and $3.2 million for the
three months ended June 30, 2002 and 2001, respectively. Land assets acquired
by the Partnership for Class C limited partnership units during the three
months ended June 30, 2002 and 2001 totaled zero and $4.5 million,
respectively.

(D)  RELATED PARTY TRANSACTIONS

At June 30, 2002 and 2001, Centex Homes had $8.1 million and $1.5 million,
respectively, deposited with the Partnership as option deposits for the
purchase of land. Centex Homes also entered into agreements to reimburse the
Partnership for certain costs and fees incurred in the Partnerships purchase
and ownership of these tracts of land. During the three months ended June 30,
2002, Centex Homes paid $1.4 million to the Partnership in fees and
reimbursements pursuant to these agreements and consideration of $21.1 million
for the purchase of residential lots. Centex Homes expects to pay an
additional $42.6 million to the Partnership to complete the purchase of these
tracts of land over the next three years.

Construction Services has executed contracts with the Partnership for the
construction of two industrial facilities. These contracts totaled $15.1
million and zero at June 30, 2002 and 2001, respectively. During the three
months ended June 30, 2002 and 2001, the Partnership paid $3.5 million and
zero, respectively, to Construction Services pursuant to these contracts.

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(E)  COMPREHENSIVE INCOME

A summary of comprehensive income for the three months ended June 30, 2002
and 2001 is presented below:

|                                   |                                          |   |                      |        |   |      |       |     | 
|---------------------------------- | ---------------------------------------- | - | -------------------- | ------ | - | ---- | ----- | --- | 
|                                   |                                          |   |                      |       
|                                   |                                          |   | For the Three Months |       
|                                   |                                          |   | Ended June 30,       |       
|                                   |                                          |   |                      |       
|                                   |                                          |   | 2002                 |        |   | 2001 |      
|                                   |                                          |   |                      |        |   |      |      
|Net (Loss) Earnings                |                                          | $ | (303                 | )      |   | $    | 3,075 |    
|Other Comprehensive Income (Loss): |                                          |   |                      |        |   |      |       |    
|                                   | Foreign Currency Translation Adjustments |   |                      | 13,973 |   |      |       | 554 | 
|                                   | Unrealized Loss on Hedging Instruments   |   |                      | (234   | ) |      |       |    | 
|                                   |                                          |   |                      |        |   |     
|Comprehensive Income               |                                          | $ | 13,436               |        |   | $    | 3,629 |    
|                                   |                                          |   |                      |        |   |     

(F)  STOCKHOLDERS EQUITY

A summary of changes in stockholders equity is presented below:

|                                        |                                          |   |          |   |  |          |                            |  |         |                          |       |         |           |   |          |       |  |           |           |            |           |          |          |  |  |   |        |   | 
|--------------------------------------- | ---------------------------------------- | - | -------- | - |  | -------- | -------------------------- |  | ------- | ------------------------ | ----- | ------- | --------- | - | -------- | ----- |  | --------- | --------- | ---------- | --------- | -------- | -------- |  |  | - | ------ | - | 
|                                        |                                          |   |          |  
|                                        |                                          |   |          |   |  |          | Centex Development Company |  |         | 3333 Holding Corporation |      
|                                        |                                          |   |          |   |  |          | L.P. and Subsidiaries      |  |         | and Subsidiary           |      
|                                        |                                          |   |          |   |  |          |                            |  |         |                          |      
|                                        |                                          |   |          |   |  |          | Class B                    |  |         | General                  |       |         | Limited   |   |          |       |  |           |           | Capital in |           |          | Retained | 
|                                        |                                          |   |          |   |  |          | Unit                       |  |         | Partner's                |       |         | Partner's |   |          | Stock |  |           | Excess of |            |           | Earnings |         
|                                        |                                          |   | Combined |   |  | Warrants |                            |  | Capital |                          |       | Capital |           |   | Warrants |       |  | Par Value |           |            | (Deficit) |         
|                                        |                                          |   |          |   |  |          |                            |  |         |                          |       |         |           |   |          |       |  |           |           |            |           |         
|Balance at March 31, 2002               |                                          | $ | 262,147  |   |  | $        | 500                        |  |         | $                        | 1,142 |         |           | $ | 263,015  |       |  | $         | 1         |            |           | $        | 800      |  |  | $ | (2,169 | )
|Net (Loss) Earnings                     |                                          |   | (303     | ) |  |          |                           |  |         |                          |      |         |           |   | (315     | )     |  |           |          |            |           |          |         |  |  |   | 12     |  
|Accumulated Other
Comprehensive Income: |                                          |   |          |   |  |          |                            |  |         |                          |       |         |           |   |          |       |  |           |           |            |           |          |          |  |  |   |        |  
|                                        | Foreign Currency
Translation Adjustments |   | 13,973   |   |  |          |                           |  |         |                          |      |         |           |   | 13,973   |       |  |           |          |            |           |          |         |  |  |   |       |  
|                                        | Unrealized Loss on
Hedging Instruments   |   | (234     | ) |  |          |                           |  |         |                          |      |         |           |   | (234     | )     |  |           |          |            |           |          |         |  |  |   |       |  
|                                        |                                          |   |          |   |  |          |                            |  |         |                          |       |         |           |   |          |       |  |           |           |            |          
|Balance at June 30, 2002                |                                          | $ | 275,583  |   |  | $        | 500                        |  |         | $                        | 1,142 |         |           | $ | 276,439  |       |  | $         | 1         |            |           | $        | 800      |  |  | $ | (2,157 | )
|                                        |                                          |   |          |   |  |          |                            |  |         |                          |       |         |           |   |          |       |  |           |           |            |          

(G)  ACQUISITION OF FAIRCLOUGH HOMES GROUP LIMITED

On April 15, 1999, Centex Development Company UK Limited (CDCUK), a
United Kingdom company and a wholly-owned subsidiary, acquired all of the
voting shares of Fairclough Homes Group Limited, a British homebuilder
(Fairclough), with the purchase price paid by the delivery of
non-interest-bearing promissory notes.

As of March 31, 2001, the non-interest-bearing promissory notes were paid
in full (less the holdback described below) from a combination of bank
borrowings, equity contributions to CDCUK from the Partnership and a loan to
CDCUK from the Partnership. CDCUK retained a $6.9 million holdback relative to
CDCUK exercising its right of offset for asserted breaches of representations
and warranties by the seller under the share purchase agreement. In fiscal
2002, $1.2 million of this holdback was paid to the seller and

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$5.7 million has been dedicated to fund repair costs and claims arising
out of a project completed prior to CDCUKs acquisition of Fairclough.

The purchase of Fairclough has been accounted for using the purchase
method of accounting, pursuant to which the total cost of the acquisition has
been allocated to the tangible and intangible assets acquired and liabilities
assumed based upon their estimated fair values.

(H)  BUSINESS SEGMENTS

The Companies operate in four principal business segments: International
Home Building, Commercial Development, Multi-Family Communities, and
Corporate-Other. All of the segments, except for International Home Building,
operate in the United States. International Home Buildings accounting
policies are the same as those described in the summary of significant
accounting policies in the Companies latest Annual Report on Form 10-K.

International Home Building acquires and develops residential properties
and constructs single and multi-family housing units in the United Kingdom.
Commercial Development develops office, industrial, retail and mixed-use
projects, for sale and for investment. Multi-Family Communities develops
multi-family projects, which it markets for sale during the development period.
Corporate-Other is involved in the acquisition and disposition of land and
other assets of the Partnership not identified with another specific business
segment.

|                                           |  |                                          |         |   |             |   |        |              |  |   |            |   |  |       |         |   |  |   |         |  
|------------------------------------------ |  | ---------------------------------------- | ------- | - | ----------- | - | ------ | ------------ |  | - | ---------- | - |  | ----- | ------- | - |  | - | ------- | -
|                                           |  |                                         
|                                           |  | For the Three Months Ended June 30, 2002 |        
|                                           |  |                                         
|                                           |  | Int'l Home                               |         |   | Commercial  |   |        | Multi-Family |  |   | Corporate- |   |  |       |         |  
|                                           |  | Building                                 |         |   | Development |   |        | Communities  |  |   | Other      |   |  | Total |        
|                                           |  |                                          |         |   |             |   |        |              |  |   |            |   |  |       |        
|Revenues                                   |  | $                                        | 61,000  |   |             | $ | 6,487  |              |  | $ | 342        |   |  | $     | 22,506  |   |  | $ | 90,335  |  
|Cost of Sales                              |  |                                          | (53,765 | ) |             |   | (275   | )            |  |   | (78        | ) |  |       | (21,085 | ) |  |   | (75,203 | )
|Selling, General & Administrative
Expenses |  |                                          | (7,111  | ) |             |   | (3,618 | )            |  |   | (629       | ) |  |       | (1,169  | ) |  |   | (12,527 | )
|Interest Expense                           |  |                                          | (494    | ) |             |   | (2,096 | )            |  |   |           |   |  |       | (788    | ) |  |   | (3,378  | )
|                                           |  |                                          |         |   |             |   |        |              |  |   |            |   |  |       |        
|(Loss) Earnings Before Income Tax          |  | $                                        | (370    | ) |             | $ | 498    |              |  | $ | (365       | ) |  | $     | (536    | ) |  | $ | (773    | )
|                                           |  |                                          |         |   |             |   |        |              |  |   |            |   |  |       |        

|                                           |  |                                          |         |   |             |   |        |              |  |   |            |   |  |       |      |   |  |   |         |  
|------------------------------------------ |  | ---------------------------------------- | ------- | - | ----------- | - | ------ | ------------ |  | - | ---------- | - |  | ----- | ---- | - |  | - | ------- | -
|                                           |  |                                         
|                                           |  | For the Three Months Ended June 30, 2001 |        
|                                           |  |                                         
|                                           |  | Int'l Home                               |         |   | Commercial  |   |        | Multi-Family |  |   | Corporate- |   |  |       |      |  
|                                           |  | Building                                 |         |   | Development |   |        | Communities  |  |   | Other      |   |  | Total |     
|                                           |  |                                          |         |   |             |   |        |              |  |   |            |   |  |       |     
|Revenues                                   |  | $                                        | 56,163  |   |             | $ | 4,110  |              |  | $ | 23,621     |   |  | $     | 61   |   |  | $ | 83,955  |  
|Cost of Sales                              |  |                                          | (48,201 | ) |             |   | 153    |              |  |   | (21,682    | ) |  |       |     |   |  |   | (69,730 | )
|Selling, General & Administrative Expenses |  |                                          | (5,589  | ) |             |   | (2,518 | )            |  |   | (559       | ) |  |       | (602 | ) |  |   | (9,268  | )
|Interest Expense                           |  |                                          |        |   |             |   | (1,591 | )            |  |   |           |   |  |       |     |   |  |   | (1,591  | )
|                                           |  |                                          |         |   |             |   |        |              |  |   |            |   |  |       |     
|Earnings (Loss) Before Income Tax          |  | $                                        | 2,373   |   |             | $ | 154    |              |  | $ | 1,380      |   |  | $     | (541 | ) |  | $ | 3,366   |  
|                                           |  |                                          |         |   |             |   |        |              |  |   |            |   |  |       |     

(I)  GOODWILL

The Partnerships International Home Building segment carries all of the
Partnerships goodwill. The carrying amount of goodwill was $29.9 million and
$27.8 million at June 30, 2002 and March 31, 2002,

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respectively. The increase
during the three months ended June 30, 2002 reflects the impact of foreign
currency translation adjustments.

(J)  DERIVATIVES AND HEDGING

The Partnership is exposed to the risk of interest rate fluctuations on
its debt obligations. As part of its strategy to manage the obligations that
are subject to changes in interest rates, the Partnership has entered into an
interest rate swap agreement, designated as a cash flow hedge, on a portion of
its debt. The swap agreement is recorded at its fair value in Other Assets in
the condensed combining balance sheets. To the extent the hedging relationship
is effective, fluctuations in the fair value of the derivative are deferred as
a component of Accumulated Other Comprehensive Income. Fluctuations in the
fair value of the ineffective portion of the derivative would be reflected in
the current period earnings. During the three months ended June 30, 2002,
there was no hedge ineffectiveness related to this derivative.

This swap expires in March 2004. Amounts to be received or paid as a
result of the swap agreement are recognized as adjustments to interest incurred
on the related debt instrument. As of June 30, 2002, the Accumulated Other
Comprehensive Income was $215 thousand ($154 thousand net of tax).

(K)  STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS

In August 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 144 (SFAS 144), Accounting for the
Impairment or Disposal of Long-Lived Assets, which addresses financial
accounting and reporting for the impairment or disposal of long-lived assets.
The statement was effective for the Companies beginning April 1, 2002.

Due to the adoption of SFAS 144, the Companies now report assets
identified subsequent to March 31, 2002 as held for sale (as defined by SFAS
144), if any, and any such assets sold in the current period, as discontinued
operations. All results of these discontinued operations, less applicable
income taxes, are included in discontinued operations on the statements of
operations. Those assets identified as held for sale prior to April 1, 2002,
and any such assets sold subsequent to March 31, 2002, are reported in
continuing operations.

(L)  INVESTMENTS IN CERTAIN JOINT VENTURES

The Partnership conducts certain operations through its participation in
joint ventures in which the Partnership holds less than a majority interest.
These non-consolidated joint ventures had total debt outstanding of
approximately $19.7 million as of June 30, 2002 and $16.1 million as of March
31, 2002. The Partnerships liability for the obligations of these
non-consolidated joint ventures is limited to approximately $2.3 million as of
June 30, 2002.

(M)  COMMITMENTS AND CONTINGENCIES

As of June 30, 2002, the Partnership had remaining commitments of
approximately $39.5 million on construction contracts.

To obtain construction financing for projects being developed by its
subsidiaries, the Partnership is often required to guarantee, for the benefit
of the construction lender, the completion of the project. To further
guarantee the completion of the project and the payment of the construction
loan obligations, the Partnership, in some instances, also has issued demand
notes made payable to its subsidiaries of up to 20% of the

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construction loan
commitment amount. The subsidiaries then pledge the demand notes to the
lenders as a form of additional collateral on the construction loans. The
demand notes are payable only in the event of default on the construction
loans. As of June 30, 2002, the Partnership had issued demand notes totaling
$1.6 million. In some instances, the Partnership has also executed partial
recourse payment guarantees.

Subsidiaries of the Partnership have also obtained demand notes or letters
of credit from Centex for up to 10% of the construction loan commitment amount.
These demand notes or letters of credit have been pledged or endorsed to the
lenders as additional collateral on the construction loans, and may be called
only in the event of an uncured default by the Partnership. This additional
collateral totals approximately $1.7 million as of June 30, 2002.

(N)  RECLASSIFICATIONS

Certain prior year balances have been reclassified to be consistent with
the June 30, 2002 presentation.

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|        |  |                                                                                      
|------- |  | -------------------------------------------------------------------------------------
|ITEM 2. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

On a combined basis, our revenues were $90.3 million for the three months
ended June 30, 2002, a 7.6% increase over $84.0 million for the same period
last year. The revenue increase is primarily related to Corporate-Others
sale of residential lots to Centex Homes and an increase in International Home
Buildings average unit sales price. However, the revenue increase was offset
by a decline in units closed by International Home Building and a decline in
Multi-Family Communities sales revenues. Revenues from residential lot sales,
multi-family project sales and commercial project sales can vary significantly
from period to period.

Our operating loss for the three months ended June 30, 2002 was $0.8
million compared to operating earnings of $3.4 million for the same period last
year, and our net loss was $0.3 million compared to net earnings of $3.1
million for the same period last year. The decline in operating earnings and
net earnings is primarily related to a decline in International Home Buildings
closings and operating margins, together with an increase in general and
administrative expenses.

Any reference herein to we, us or our includes 3333 Holding Company and
subsidiary and Centex Development Company, L.P. and subsidiaries.

INTERNATIONAL HOME BUILDING

The following summarizes International Home Buildings results for the
three months ended June 30, 2002 compared to the same period last year (dollars
in thousands, except per unit data):

|                                    |          |   |                                     |       |    |      |       |    |  |   |         |       |    |  |       |    | 
|----------------------------------- | -------- | - | ----------------------------------- | ----- | -- | ---- | ----- | -- |  | - | ------- | ----- | -- |  | ----- | -- | 
|                                    |          |   |                                     |      
|                                    |          |   | For the Three Months Ended June 30, |      
|                                    |          |   |                                     |      
|                                    |          |   | 2002                                |       |    | 2001 |      
|                                    |          |   |                                     |       |    |      |      
|Revenues  Home Building            |          | $ | 61,000                              |       |    |      | 100.0 | %  |  | $ | 56,163  |       |    |  | 100.0 | % 
|Cost of Sales  Home Building       |          |   | (53,765                             | )     |    |      | (88.1 | %) |  |   | (48,201 | )     |    |  | (85.8 | %)
|General and Administrative Expenses |          |   | (7,111                              | )     |    |      | (11.7 | %) |  |   | (5,589  | )     |    |  | (10.0 | %)
|                                    |          |   |                                     |       |    |      |       |    |  |   |         |      
|Operating Earnings                  |          |   | 124                                 |       |    |      | 0.2   | %  |  |   | 2,373   |       |    |  | 4.2   | % 
|Interest                            |          |   | (494                                | )     |    |      | (0.8  | %) |  |   |        |       |    |  |      |   
|                                    |          |   |                                     |       |    |      |       |    |  |   |         |      
|(Loss) Earnings Before Taxes        |          | $ | (370                                | )     |    |      | (0.6  | %) |  | $ | 2,373   |       |    |  | 4.2   | % 
|                                    |          |   |                                     |       |    |      |       |    |  |   |         |      
|Units Closed                        |          |   | 269                                 |       |    |      |       |    |  |   | 299     |       |    |  |       |   
|                                    | % Change |   |                                     | (10.0 | %) |      |       |    |  |   |         | (0.3  | %) |  |       |    | 
|Unit Sales Price                    |          | $ | 226,766                             |       |    |      |       |    |  | $ | 187,836 |       |    |  |       |   
|                                    | % Change |   |                                     | 20.7  | %  |      |       |    |  |   |         | (12.2 | %) |  |       |    | 
|Operating Earnings Per Unit         |          | $ | 461                                 |       |    |      |       |    |  | $ | 7,936   |       |    |  |       |   
|                                    | % Change |   |                                     | (94.2 | %) |      |       |    |  |   |         | 263.5 | %  |  |       |    | 

International Home Buildings revenues for the three months ended June 30,
2002 increased by $4.8 million from revenues for the same period last year.
This increase is comprised of $10.4 million from an increase in the average
unit sales price, offset by $5.6 million from a decrease in units closed. Home
sales totaled 269 units during the three months ended June 30, 2002, compared
to 299 units during the same period in the preceding year, representing a 10.0%
decrease. International Home Buildings cost of sales increased 2.3% as a
percentage of revenues compared to the same period last year, primarily due to
under-absorption of

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certain fixed costs resulting from the decline in unit closings, cost overruns,
write-offs of costs associated with failed land acquisitions and increases in
labor costs caused by a shortage of skilled labor.

International Home Buildings general and administrative expenses
increased 1.7% as a percentage of revenues compared to the same period last
year, primarily due to the addition of personnel.

International Home Building, whose functional currency is the British
pound sterling, translates its financial statements into U.S. dollars. Income
statement accounts are translated using the average exchange rate for the
period, except for significant, non-recurring transactions that are translated
at the rate in effect as of the date of the transaction. The average exchange
rate used for translation was 1.46 and 1.42 for the quarters ending June 30,
2002 and 2001, respectively, representing an increase of 2.8%.

The backlog of homes sold but not closed at June 30, 2002 was 731 units,
69.2% more than the 432 units at the same point in the preceding year.

COMMERCIAL DEVELOPMENT

The following summarizes Commercial Developments results for the three
months ended June 30, 2002, compared to the same period last year (dollars and
square feet in thousands):

|                                            |  |                            |        |   |      |   |        |  
|------------------------------------------- |  | -------------------------- | ------ | - | ---- | - | ------ | -
|                                            |  |                            |       
|                                            |  | For the Three Months Ended |       
|                                            |  | June 30,                   |       
|                                            |  |                            |       
|                                            |  | 2002                       |        |   | 2001 |  
|                                            |  |                            |        |   |      |  
|Sales Revenues                              |  | $                          | 725    |   |      | $ |       |  
|Rental Income and Other Revenues            |  |                            | 5,762  |   |      |   | 4,110  |  
|Cost of Sales                               |  |                            | (275   | ) |      |   | 153    |  
|Selling, General and Administrative Expense |  |                            | (2,664 | ) |      |   | (1,767 | )
|Interest                                    |  |                            | (2,096 | ) |      |   | (1,591 | )
|                                            |  |                            |        |   |      |  
|Operating Earnings before Depreciation      |  |                            | 1,452  |   |      |   | 905    |  
|Depreciation                                |  |                            | (954   | ) |      |   | (751   | )
|                                            |  |                            |        |   |      |  
|Operating Earnings                          |  | $                          | 498    |   |      | $ | 154    |  
|                                            |  |                            |        |   |      |  
|Operating Square Footage at June 30         |  |                            | 2,626  |   |      |   | 1,664  |  

Commercial Developments operations during the three months ended June 30, 2002
included:



| |  |  | sale of a 0.9 acre pad site at the Vista Ridge retail project in Lewisville, Texas; and
| | - |  | ---------------------------------------------------------------------------------------
| |  |  | completion of a 40,000 square foot office project in Lewisville, Texas.                

Sales revenues and cost of sales for the three months ended June 30, 2002
reflect the sale of the pad site referred to above. Rental income and other
revenues; selling, general and administrative expenses; interest expense and
depreciation increased for the three months ended June 30, 2002 compared to the
same period in the preceding year as a result of the addition of 962,000 square
feet of operating properties.

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|                     |  |                                     |       |  |           |  |      |          |  |  |           |  |  |  |      |  
|-------------------- |  | ----------------------------------- | ----- |  | --------- |  | ---- | -------- |  |  | --------- |  |  |  | ---- | -
|                     |  |                                     |      
|                     |  | For the Three Months Ended June 30, |      
|                     |  |                                     |      
|                     |  | 2002                                |       |  | 2001      | 
|                     |  |                                     |       |  |           | 
|                     |  | (000's)                             |       |  | Weighted  |  |      | (000's)  |  |  | Weighted  | 
|                     |  | Rentable                            |       |  | Average   |  |      | Rentable |  |  | Average   | 
|                     |  | Sq. Ft.                             |       |  | Occupancy |  |      | Sq. Ft.  |  |  | Occupancy | 
|                     |  |                                     |       |  |           |  |      |          |  |  |           | 
|Operating Properties |  |                                     |       |  |           |  |      |          |  |  |           |  |  |  |      |  
|Industrial           |  |                                     | 2,024 |  |           |  | 92.4 | %        |  |  | 1,168     |  |  |  | 94.9 | %
|Office/Medical       |  |                                     | 602   |  |           |  | 84.2 | %        |  |  | 496       |  |  |  | 94.2 | %
|                     |  |                                     |       |  |           |  |      |          |  |  |           |  |  | 
|                     |  |                                     | 2,626 |  |           |  | 90.5 | %        |  |  | 1,664     |  |  |  | 94.7 | %
|                     |  |                                     |       |  |           |  |      |          |  |  |           |  |  | 

|                            |  |          |     |  |  |  |  |  |          |  |     |  |  |  |  | 
|--------------------------- |  | -------- | --- |  |  |  |  |  | -------- |  | --- |  |  |  |  | 
|                            |  | (000's)  |     |  |  |  |  |  | (000's)  |  |     |  |  | 
|                            |  | Rentable |     |  |  |  |  |  | Rentable |  |     |  |  | 
|                            |  | Sq. Ft.  |     |  |  |  |  |  | Sq. Ft.  |  |     |  |  | 
|                            |  |          |     |  |  |  |  |  |          |  |     |  |  | 
|Projects Under Construction |  |          |     |  |  |  |  |  |          |  |     |  |  |  |  | 
|Industrial                  |  |          | 308 |  |  |  |  |  |          |  | 597 |  |  |  |  | 
|Office/Medical              |  |          |    |  |  |  |  |  |          |  | 55  |  |  |  |  | 
|Retail                      |  |          | 194 |  |  |  |  |  |          |  |    |  |  |  |  | 
|                            |  |          |     |  |  |  |  |  |          |  |     |  |  | 
|                            |  |          | 502 |  |  |  |  |  |          |  | 652 |  |  |  |  | 
|                            |  |          |     |  |  |  |  |  |          |  |     |  |  | 

MULTI-FAMILY COMMUNITIES

The following summarizes the results of Multi-Family Communities for the
three months ended June 30, 2002, compared to the same period last year
(dollars in thousands):

|                                             |  |                                     |      |   |      |   |         |  
|-------------------------------------------- |  | ----------------------------------- | ---- | - | ---- | - | ------- | -
|                                             |  |                                     |     
|                                             |  | For the Three Months Ended June 30, |     
|                                             |  |                                     |     
|                                             |  | 2002                                |      |   | 2001 |  
|                                             |  |                                     |      |   |      |  
|Revenues                                     |  | $                                   | 342  |   |      | $ | 23,621  |  
|Cost of Sales                                |  |                                     | (78  | ) |      |   | (21,682 | )
|Selling, General and Administrative Expenses |  |                                     | (629 | ) |      |   | (559    | )
|                                             |  |                                     |      |   |      |  
|Operating (Loss) Earnings                    |  | $                                   | (365 | ) |      | $ | 1,380   |  
|                                             |  |                                     |      |   |      |  

During the three months ended June 30, 2002, Multi-Family Communities
revenues consisted of development fees and an earn-out payment related to the
prior sale of a 382-unit rental apartment complex in St. Petersburg, Florida.
During the three months ended June 30, 2001, Multi-Family Communities closed on
the sale of a 400-unit rental apartment complex in Grand Prairie, Texas.
Selling, general and administrative expenses increased 12.5% primarily due to
an increase in personnel costs.

As of June 30, 2002, Multi-Family Communities owns 984 rental apartment
units under construction in Florida and Texas and is developing an additional
734 rental apartment units in Texas for unaffiliated owners.

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CORPORATE-OTHER

The following summarizes the results of Corporate-Other for the three
months ended June 30, 2002, compared to the same period last year (dollars in
thousands):

|                                             |  |                            |         |   |      |   |      |  
|-------------------------------------------- |  | -------------------------- | ------- | - | ---- | - | ---- | -
|                                             |  |                            |        
|                                             |  | For the Three Months Ended |        
|                                             |  | June 30,                   |        
|                                             |  |                            |        
|                                             |  | 2002                       |         |   | 2001 |  
|                                             |  |                            |         |   |      |  
|Revenues                                     |  | $                          | 22,506  |   |      | $ | 61   |  
|Cost of Sales                                |  |                            | (21,085 | ) |      |   |     |  
|Selling, General and Administrative Expenses |  |                            | (1,169  | ) |      |   | (602 | )
|Interest Expense                             |  |                            | (788    | ) |      |   |     |  
|                                             |  |                            |         |   |      |  
|Operating Loss                               |  | $                          | (536    | ) |      | $ | (541 | )
|                                             |  |                            |         |   |      |  

Our Corporate-Other segment acquires and disposes of land and other assets
that are not identified with another specific business segment. Revenues for
the quarter ended June 30, 2002 included $22.5 million, primarily related to
the sale of residential lots to Centex Homes, and $28 thousand in interest
income. Cost of sales for the quarter ended June 30, 2002 related to the sale
of residential lots to Centex Homes. Revenues for the quarter ended June 30,
2001 included $53 thousand in interest income and $8 thousand in other income.
Selling, general and administrative expenses increased 94.2% primarily due to
the addition of internal legal and marketing personnel and increased real
estate taxes related to residential lots subject to option agreements with
Centex Homes. Interest expense for the quarter ended June 30, 2002 also
relates to these residential lots.

LIQUIDITY AND CAPITAL RESOURCES

We finance land acquisition and development activities primarily from
financial institution borrowings, equity contributions from third-party
investors in project-specific joint ventures, seller financing, issuance of
Class C limited partnership units to Centex affiliates and cash flow from
operations, which is comprised largely of proceeds from the sale of real estate
and operating projects.

We typically finance properties under development through short-term
variable and fixed-rate secured construction loans, and to a limited extent
depending on the timing of the project construction, cash flow from operations.
Construction loans totaled $76.5 million at June 30, 2002. As properties are
completed, we either sell the properties or refinance the properties with
long-term fixed-rate debt. In both instances, the proceeds are used to repay
the short-term borrowings. Under the terms of various construction loan
agreements, we are required to maintain certain minimum liquidity and net worth
levels. At June 30, 2002, we were in compliance with these covenants.

Permanent commercial project loans outstanding at June 30, 2002 totaled
$76.1 million compared to $75.2 million at June 30, 2001. The project loans are
collateralized by completed commercial properties and have original terms
ranging from ten to twenty-two years with fixed interest rates ranging from
6.92% to 8.72%.

No new seller-financed land loans were obtained during the quarter ended
June 30, 2002, while a $32.0 million seller-financed land loan was obtained
during the quarter ended June 30, 2001. Outstanding balances on
seller-financed loans at June 30, 2002 totaled $42.9 million, with terms of up
to three years and fixed interest rates ranging from 8.00% to 14.00%.

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The International Home Building segment has secured a revolving bank
credit facility of 100 million in British pounds sterling. The term of this
facility expires in fiscal 2004. Advances under this facility totaled £67.0
million, or $102.7 million, at June 30, 2002. Under the terms of this
facility, Fairclough is required to maintain certain leverage and interest
coverage ratios and a minimum tangible net worth. At June 30, 2002, Fairclough
was in compliance with all of these covenants.

We believe that the revenues, earnings, and liquidity from the sale of
single-family homes, land sales, the sale and permanent financing of
development projects and issuance of Class C units will be sufficient to
provide the necessary funding for their current and future needs.

CERTAIN OFF-BALANCE-SHEET AND OTHER OBLIGATIONS

The following is a summary of certain off-balance-sheet arrangements and
other obligations and their possible effects on our liquidity and capital
resources.

Joint Ventures

We conduct certain operations through our participation in joint ventures
in which we hold less than a majority interest. These non-consolidated joint
ventures had total debt outstanding of approximately $19.7 million as of June
30, 2002 and $16.1 million as of March 31, 2002. Our liability for the
obligations of these non-consolidated joint ventures is limited to
approximately $2.3 million as of June 30, 2002.

Letters of Credit, Guarantees and Leases

At June 30, 2002 we had outstanding performance bonds and bank guarantees
of $27.6 million that relate to projects undertaken by International Home
Building and development obligations of International Home Building.

To obtain construction financing for commercial and multi-family projects
being developed by our subsidiaries, we are often required to guarantee, for
the benefit of the construction lender, the completion of the project. To
further guarantee the completion of the project and the payment of the
construction loan obligations, we, in some instances, also have issued demand
notes made payable to our subsidiaries of up to 20% of the construction loan
commitment amount. Our subsidiaries then pledge the demand notes to the
lenders as a form of additional collateral on the construction loans. The
demand notes are payable only in the event of default on the construction
loans. As of June 30, 2002, we had issued demand notes totaling $1.6 million.
In some instances, we have also executed partial recourse payment guarantees.
At June 30, 2002, our subsidiaries had outstanding letters of credit of $0.7
million that primarily relate to development obligations of Multi-Family
Communities.

We expect that our subsidiaries will satisfy their loan and other
contractual obligations in the ordinary course of business and in accordance
with applicable contractual terms. As that occurs, our liability exposure will
be decreased and, eventually, we will not have any continuing obligations with
respect to these projects.

We have no material capital or operating leases.

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---

The Business, Managements Discussion and Analysis of Financial Condition and
Results of Operations, and other sections of this Report contain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
may be identified by the context of the statement and generally arise when we
are discussing our beliefs, estimates, or expectations. These statements are
not guarantees of future performance and involve a number of risks and
uncertainties. Actual results and outcomes may differ materially from what is
expressed or forecasted in these forward-looking statements. The principal
risks and uncertainties that may affect the actual performance and results of
operations of the Companies include the following:



| |  |  | general economic conditions and interest rates in the United States and the United Kingdom;               
| | - |  | ----------------------------------------------------------------------------------------------------------
| |  |  | the cyclical nature of the businesses of the Companies;                                                   
| |  |  | adverse weather;                                                                                          
| |  |  | changes in property taxes;                                                                                
| |  |  | changes in federal income tax laws;                                                                       
| |  |  | governmental regulation;                                                                                  
| |  |  | changes in governmental and public policy;                                                                
| |  |  | changes in economic conditions specific to any one or more of the
markets and businesses of the Companies;
| |  |  | competition;                                                                                              
| |  |  | availability of raw materials; and                                                                        
| |  |  | unexpected operations difficulties.                                                                       

Other risks and uncertainties may also affect the outcome of the actual
performance and results of operations of the Companies.




ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in the Companies market risk from
March 31, 2002. For further information regarding the Companies market risk,
refer to the Companies Annual Report on Form 10-K for the fiscal year ended
March 31, 2002.

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Part II. Other Information

|        |  |                                  | 
|------- |  | -------------------------------- | 
|ITEM 6. |  | EXHIBITS AND REPORTS ON FORM 8-K

| |     |                                                                                     |  | 
| | --- | ----------------------------------------------------------------------------------- |  | 
| | (3) | Exhibits                                                                            |  | 
|
| |     | None.                                                                               |  | 
|
| | (4) | Reports on Form 8-K                                                                 | 
|
| |     | The Registrant filed no reports on Form 8-K during the quarter ended June 30, 2002.

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##### Table of Contents






Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

|                |  |                                                                                                                                           
|--------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------
|                |  | 3333 HOLDING CORPORATION                                                                                                                  
|                |  |                                                                                                                                           
|                |  | Registrant                                                                                                                                
|                |  |                                                                                                                                           
|August 12, 2002 |  | /s/ Stephen M. Weinberg                                                                                                                   
|                |  |                                                                                                                                           
|                |  | Stephen M. Weinberg
Director, President and
Chief Executive Officer
(principal executive officer)                                         
|                |  |                                                                                                                                           
|August 12, 2002 |  | /s/ Todd D. Newman                                                                                                                        
|                |  |                                                                                                                                           
|                |  | Todd D. Newman
Senior Vice President, Chief Financial
Officer and Treasurer
(principal financial officer and
principal accounting officer)

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Signatures

Pursuant to the requirements 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                                                                                
|                |  |                                                                                                                                           
|August 12, 2002 |  | /s/ Stephen M. Weinberg                                                                                                                   
|                |  |                                                                                                                                           
|                |  | Stephen M. Weinberg
Director, President and
Chief Executive Officer
(principal executive officer)                                         
|                |  |                                                                                                                                           
|August 12, 2002 |  | /s/ Todd D. Newman                                                                                                                        
|                |  |                                                                                                                                           
|                |  | Todd D. Newman
Senior Vice President, Chief Financial
Officer and Treasurer
(principal financial officer and
principal accounting officer)

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