##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    

    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD
ENDED DECEMBER 31, 2008
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM  TO
 Commission File Number: 1-6776
 CENTEX CORPORATION
 (Exact name of registrant as specified in its charter)
 Nevada
(State of incorporation)
 75-0778259
(I.R.S. Employer Identification No.)
 2728 N. Harwood, Dallas, Texas 75201
(Address of principal executive offices) (Zip Code)  (214) 981-5000
(Registrants telephone number, including area code)
 ü
  þ Large accelerated filer
    
    o Accelerated filer
    
    o Non-accelerated filer
(Do not check if a smaller
reporting company)
    
    o Smaller reporting company
 ü




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##### 



Centex Corporation and Subsidiaries
 Form 10-Q Table of Contents
 December 31, 2008
 PART I  FINANCIAL INFORMATIONItem 1.
    
    Financial Statements
    
    
    2Statements of Consolidated Operations
    
    
    2Consolidated Balance Sheets with Consolidating Details
    
    
    4Statements of Consolidated Cash Flows with Consolidating Details
    
    
    6Notes to Consolidated Financial Statements
    
    
    8Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    29Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    59Item 4.
    
    Controls and Procedures
    
    
    60PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    61Item 1A.
    
    Risk Factors
    
    
    61Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    66Item 5.
    
    Other Information
    
    
    66Item 6.
    
    Exhibits
    
    
    67Signatures
    
    
    69EX-12.1EX-31.1EX-31.2EX-32.1EX-32.2
  1




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 Centex Corporation and Subsidiaries
 
 Statements of Consolidated Operations
   For the Three Months Ended December 31,2008
    
    
    2007RevenuesHome Building
    
    $
    843,156
    
    
    $
    1,811,084Financial Services
    
    
    29,032
    
    
    
    62,203872,188
    
    
    
    1,873,287Costs and ExpensesHome Building
    
    
    1,368,478
    
    
    
    2,375,824Financial Services
    
    
    43,361
    
    
    
    122,687Other
    
    
    (60
    )
    
    
    (125
    )Corporate General and Administrative
    
    
    40,683
    
    
    
    37,850Interest Expense
    
    
    17,758
    
    
    
    1,470,220
    
    
    
    2,536,236Loss from Unconsolidated Entities
    
    
    (74,396
    )
    
    
    (63,140
    )Interest and Other Income
    
    
    11,565
    
    
    
    3,935Loss from
Continuing Operations Before Income Taxes
    
    
    (660,863
    )
    
    
    (722,154
    )Income Tax Provision
    
    
    3,043
    
    
    
    253,897Loss from Continuing Operations
    
    
    (663,906
    )
    
    
    (976,051
    )Earnings
from Discontinued Operations, net of Tax Provision of $0 and $595
    
    
    
    
    
    
    863Net Loss
    
    $
    (663,906
    )
    
    $
    (975,188
    )Basic and Diluted Earnings (Loss) Per ShareContinuing Operations
    
    $
    (5.34
    )
    
    $
    (7.95
    )Discontinued Operations
    
    
    
    
    
    
    0.01$
    (5.34
    )
    
    $
    (7.94
    )Average Shares OutstandingBasic and Diluted
    
    
    124,360,192
    
    
    
    122,787,414Cash Dividends Per Share
    
    $
    
    
    
    $
    0.04
 See Notes to Consolidated Financial Statements.
 2




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##### Table of Contents



Centex Corporation and Subsidiaries
 Statements of Consolidated Operations
   For the Nine Months Ended December 31,2008
    
    
    2007RevenuesHome Building
    
    $
    2,845,451
    
    
    $
    5,720,388Financial Services
    
    
    157,864
    
    
    
    240,8693,003,315
    
    
    
    5,961,257Costs and ExpensesHome Building
    
    
    3,590,414
    
    
    
    7,357,765Financial Services
    
    
    210,284
    
    
    
    340,466Other
    
    
    (1,170
    )
    
    
    (348
    )Corporate General and Administrative
    
    
    152,757
    
    
    
    117,371Interest Expense
    
    
    28,911
    
    
    
    3,981,196
    
    
    
    7,815,254Loss from Unconsolidated Entities
    
    
    (107,595
    )
    
    
    (125,333
    )Interest and Other Income
    
    
    29,821
    
    
    
    37,118Loss from Continuing Operations
Before Income Taxes
    
    
    (1,055,655
    )
    
    
    (1,942,212
    )Income Tax Benefit
    
    
    (21,017
    )
    
    
    (189,319
    )Loss from Continuing Operations
    
    
    (1,034,638
    )
    
    
    (1,752,893
    )Earnings from Discontinued Operations, net of Tax
Provision of $38,544 and $3,716
    
    
    48,643
    
    
    
    5,913Net Loss
    
    $
    (985,995
    )
    
    $
    (1,746,980
    )Basic and Diluted Earnings (Loss) Per ShareContinuing Operations
    
    $
    (8.32
    )
    
    $
    (14.35
    )Discontinued Operations
    
    
    0.39
    
    
    
    0.05$
    (7.93
    )
    
    $
    (14.30
    )Average Shares OutstandingBasic and Diluted
    
    
    124,290,248
    
    
    
    122,188,922Cash Dividends Per Share
    
    $
    0.08
    
    
    $
    0.12
 See Notes to Consolidated Financial Statements.
 3




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##### Table of Contents



Centex Corporation and Subsidiaries
 
 Consolidated Balance Sheets with Consolidating Details
   Centex Corporation and SubsidiariesDecember 31, 2008
    
    
    March 31, 2008AssetsCash and Cash Equivalents
    
    $
    1,471,865
    
    
    $
    586,810Restricted Cash
    
    
    46,754
    
    
    
    51,440Receivables -Mortgage Loans, net
    
    
    269,534
    
    
    
    515,880Trade and Other, including Notes of $19,945 and $17,388
    
    
    224,462
    
    
    
    823,861From Affiliates
    
    
    
    
    
    
    Inventories -Housing Projects
    
    
    3,319,811
    
    
    
    4,628,860Land Held for Development and Sale
    
    
    489,850
    
    
    
    558,756Land Held Under Option Agreements Not Owned
    
    
    114,782
    
    
    
    147,792Other
    
    
    19,147
    
    
    
    27,023Investments -Joint Ventures
    
    
    139,789
    
    
    
    206,822Unconsolidated Subsidiaries
    
    
    
    
    
    
    Property and Equipment, net
    
    
    40,057
    
    
    
    77,931Other Assets -Deferred Income Taxes, net
    
    
    50,275
    
    
    
    191,246Goodwill
    
    
    9,933
    
    
    
    51,622Deferred Charges and Other, net
    
    
    122,526
    
    
    
    172,300Assets of Discontinued Operations
    
    
    
    
    
    
    96,989$
    6,318,785
    
    
    $
    8,137,332Liabilities and Stockholders EquityAccounts Payable
    
    $
    88,424
    
    
    $
    259,170Accrued Liabilities
    
    
    1,592,938
    
    
    
    1,805,519Senior Notes and Other Debt
    
    
    3,103,594
    
    
    
    3,325,167Financial Services Mortgage Warehouse Facilities
    
    
    157,965
    
    
    
    337,053Liabilities of Discontinued Operations
    
    
    
    
    
    
    34,001Commitments and ContingenciesMinority Interests
    
    
    61,261
    
    
    
    77,761Stockholders Equity -Preferred Stock, Authorized 5,000,000 Shares, None
Issued
    
    
    
    
    
    
    Common
Stock, $.25 Par Value; Authorized 300,000,000
Shares; Outstanding 124,316,835 and 123,278,881 Shares
    
    
    31,940
    
    
    
    31,763Capital in Excess of Par Value
    
    
    88,028
    
    
    
    95,088Retained Earnings
    
    
    1,369,752
    
    
    
    2,365,634Treasury Stock, at Cost; 3,443,652 and 3,774,643 Shares
    
    
    (175,117
    )
    
    
    (193,824
    )Total Stockholders Equity
    
    
    1,314,603
    
    
    
    2,298,661$
    6,318,785
    
    
    $
    8,137,332
 See Notes to Consolidated Financial Statements.
 4




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##### Table of Contents



Centex Corporation and Subsidiaries
 Consolidated Balance Sheets with Consolidating Details
   Centex*
    
    
    Financial ServicesDecember 31, 2008
    
    
    March 31, 2008
    
    
    December 31, 2008
    
    
    March 31, 2008$
    1,432,694
    
    
    $
    562,766
    
    
    $
    39,171
    
    
    $
    24,04427,175
    
    
    
    28,562
    
    
    
    19,579
    
    
    
    22,878
    
    
    
    
    
    
    
    269,534
    
    
    
    515,880220,504
    
    
    
    800,275
    
    
    
    3,958
    
    
    
    23,586
    
    
    
    
    
    
    
    26,606
    
    
    
    (43,463
    )3,319,811
    
    
    
    4,628,860
    
    
    
    
    
    
    
    489,850
    
    
    
    558,756
    
    
    
    
    
    
    
    114,782
    
    
    
    147,792
    
    
    
    
    
    
    
    6,977
    
    
    
    16,173
    
    
    
    12,170
    
    
    
    10,850139,789
    
    
    
    206,822
    
    
    
    
    
    
    
    151,149
    
    
    
    292,647
    
    
    
    
    
    
    
    34,034
    
    
    
    65,298
    
    
    
    6,023
    
    
    
    12,63338,752
    
    
    
    119,590
    
    
    
    11,523
    
    
    
    71,6564,569
    
    
    
    42,670
    
    
    
    5,364
    
    
    
    8,952106,590
    
    
    
    145,719
    
    
    
    15,936
    
    
    
    26,581
    
    
    
    96,989
    
    
    
    
    
    
    
    $
    6,086,676
    
    
    $
    7,712,919
    
    
    $
    409,864
    
    
    $
    673,597$
    84,898
    
    
    $
    250,096
    
    
    $
    3,526
    
    
    $
    9,0741,522,361
    
    
    
    1,727,684
    
    
    
    70,577
    
    
    
    77,8353,103,594
    
    
    
    3,325,167
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    157,965
    
    
    
    337,053
    
    
    
    34,001
    
    
    
    
    
    
    
    61,220
    
    
    
    77,310
    
    
    
    41
    
    
    
    451
    
    
    
    
    
    
    
    
    
    
    
    31,940
    
    
    
    31,763
    
    
    
    1
    
    
    
    188,028
    
    
    
    95,088
    
    
    
    527,467
    
    
    
    478,4671,369,752
    
    
    
    2,365,634
    
    
    
    (349,713
    )
    
    
    (229,284
    )(175,117
    )
    
    
    (193,824
    )
    
    
    
    
    
    
    1,314,603
    
    
    
    2,298,661
    
    
    
    177,755
    
    
    
    249,184$
    6,086,676
    
    
    $
    7,712,919
    
    
    $
    409,864
    
    
    $
    673,597
 *
    
    In the supplemental data presented above, Centex represents the consolidation of all
subsidiaries other than those included in Financial Services. Transactions between Centex
and Financial Services have been eliminated from the Centex Corporation and Subsidiaries
balance sheets.
 5




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##### Table of Contents



Centex Corporation and Subsidiaries
 
 Statements of Consolidated Cash Flows with Consolidating Details
   Centex Corporation and SubsidiariesFor the Nine Months Ended December 31,2008
    
    
    2007Cash Flows  Operating ActivitiesNet Loss
    
    $
    (985,995
    )
    
    $
    (1,746,980
    )AdjustmentsDepreciation and Amortization
    
    
    27,523
    
    
    
    40,384Stock-based Compensation
    
    
    16,339
    
    
    
    29,620Provision for Losses on Mortgage Loans and Real Estate Owned
    
    
    12,139
    
    
    
    122,124Impairments and Write-off of Assets
    
    
    670,092
    
    
    
    1,641,304Deferred Income Tax Provision (Benefit)
    
    
    129,149
    
    
    
    (27,029
    )Loss of Joint Ventures and Unconsolidated Subsidiaries
    
    
    107,595
    
    
    
    125,333Distributions of Earnings of Joint Ventures and Unconsolidated Subsidiaries
    
    
    5,066
    
    
    
    6,769Gain on Sale of Assets
    
    
    (92,070
    )
    
    
    (16,966
    )Changes in Assets and Liabilities, Excluding Effect of DispositionsDecrease (Increase) in Restricted Cash
    
    
    4,686
    
    
    
    27,916Decrease (Increase) in Trade, Notes and Other Receivables
    
    
    597,374
    
    
    
    (185,541
    )Decrease in Mortgage Loans Held for Sale
    
    
    184,653
    
    
    
    727,052(Increase) Decrease in Receivables from Affiliates
    
    
    
    
    
    
    Decrease in Housing Projects and Land Held for Development and Sale
    
    
    751,468
    
    
    
    179,189Decrease in Other Inventories
    
    
    8,088
    
    
    
    15,256Decrease in Accounts Payable and Accrued Liabilities
    
    
    (371,621
    )
    
    
    (455,766
    )Decrease (Increase) in Other Assets, net
    
    
    27,222
    
    
    
    24,455Other
    
    
    (297
    )
    
    
    (71
    )1,091,411
    
    
    
    507,049Cash Flows  Investing Activities(Issuance of) Payments received on Notes Receivable
    
    
    (1,974
    )
    
    
    4,158Decrease in Construction Loans
    
    
    44,805
    
    
    
    59,546Investment in and Advances to Joint Ventures
    
    
    (65,734
    )
    
    
    (160,877
    )Distributions of Capital from Joint Ventures
    
    
    12,343
    
    
    
    67,755Distributions from (Investment in and Advances to) Unconsolidated Subsidiaries
    
    
    
    
    
    
    Purchases of Property and Equipment, net
    
    
    (3,310
    )
    
    
    (9,595
    )Proceeds from Dispositions
    
    
    217,264
    
    
    
    21,978Other
    
    
    
    
    
    
    (3,563
    )203,394
    
    
    
    (20,598
    )Cash Flows  Financing ActivitiesIncrease in Restricted Cash
    
    
    
    
    
    
    47,123Decrease in Short-term Debt, net
    
    
    (183,138
    )
    
    
    (1,034,766
    )CentexRepayment of Long-term Debt
    
    
    (217,728
    )
    
    
    (281,214
    )Financial ServicesRepayment of Long-term Debt
    
    
    
    
    
    
    (60,000
    )Proceeds from Stock Option Exercises
    
    
    631
    
    
    
    32,052Excess Tax Benefit from Stock-Based Awards
    
    
    437
    
    
    
    4,606Purchases of Common Stock, net
    
    
    (93
    )
    
    
    (598
    )(Dividends Paid) and Capital Contributions Received
    
    
    (9,887
    )
    
    
    (14,536
    )(409,778
    )
    
    
    (1,307,333
    )Net Increase (Decrease) in Cash and Cash Equivalents
    
    
    885,027
    
    
    
    (820,882
    )Cash and Cash Equivalents at Beginning of Period(1)
    
    
    586,838
    
    
    
    882,754Cash and Cash Equivalents at End of Period(2)
    
    $
    1,471,865
    
    
    $
    61,872
 See Notes to Consolidated Financial Statements.
 (1)
    
    Amount includes cash and cash equivalents of discontinued operations of $28 as of March 31,
2008 and $220 as of March 31, 2007.(2)
    
    Amount includes cash and cash equivalents of discontinued operations of $0 as of December 31,
2008 and $142 as of December 31, 2007.
 6




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##### Table of Contents



Centex Corporation and Subsidiaries
 Statements of Consolidated Cash Flows with Consolidating Details
   Centex *
    
    
    Financial ServicesFor the Nine Months Ended December 31,
    
    
    For the Nine Months Ended December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007$
    (985,995
    )
    
    $
    (1,746,980
    )
    
    $
    (56,729
    )
    
    $
    (61,706
    )24,240
    
    
    
    35,688
    
    
    
    3,283
    
    
    
    4,69616,339
    
    
    
    29,620
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,139
    
    
    
    122,124670,092
    
    
    
    1,641,304
    
    
    
    
    
    
    
    69,016
    
    
    
    13,116
    
    
    
    60,133
    
    
    
    (40,145
    )164,324
    
    
    
    187,039
    
    
    
    
    
    
    
    68,766
    
    
    
    21,769
    
    
    
    
    
    
    
    (47,414
    )
    
    
    (16,966
    )
    
    
    (44,656
    )
    
    
    1,387
    
    
    
    28,365
    
    
    
    3,299
    
    
    
    (449
    )578,704
    
    
    
    (202,314
    )
    
    
    18,670
    
    
    
    16,773
    
    
    
    
    
    
    
    184,653
    
    
    
    727,052
    
    
    
    
    
    
    
    (51,069
    )
    
    
    49,614751,468
    
    
    
    179,189
    
    
    
    
    
    
    
    4,659
    
    
    
    8,763
    
    
    
    3,429
    
    
    
    6,493(356,383
    )
    
    
    (429,124
    )
    
    
    (15,238
    )
    
    
    (26,642
    )16,687
    
    
    
    25,547
    
    
    
    10,535
    
    
    
    (1,092
    )113
    
    
    
    150
    
    
    
    (410
    )
    
    
    (221
    )976,003
    
    
    
    (224,834
    )
    
    
    128,039
    
    
    
    796,497(1,974
    )
    
    
    4,158
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44,805
    
    
    
    59,546(65,734
    )
    
    
    (160,877
    )
    
    
    
    
    
    
    12,343
    
    
    
    67,755
    
    
    
    
    
    
    
    21,069
    
    
    
    (252,614
    )
    
    
    
    
    
    
    (2,975
    )
    
    
    (7,900
    )
    
    
    (335
    )
    
    
    (1,695
    )161,858
    
    
    
    21,978
    
    
    
    55,406
    
    
    
    
    
    
    
    (3,563
    )
    
    
    
    
    
    
    124,587
    
    
    
    (331,063
    )
    
    
    99,876
    
    
    
    57,851
    
    
    
    
    
    
    
    
    
    
    
    47,123(4,050
    )
    
    
    (807
    )
    
    
    (179,088
    )
    
    
    (1,033,959
    )(217,728
    )
    
    
    (281,214
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (60,000
    )631
    
    
    
    32,052
    
    
    
    
    
    
    
    437
    
    
    
    4,606
    
    
    
    
    
    
    
    (93
    )
    
    
    (598
    )
    
    
    
    
    
    
    (9,887
    )
    
    
    (14,536
    )
    
    
    (33,700
    )
    
    
    188,000(230,690
    )
    
    
    (260,497
    )
    
    
    (212,788
    )
    
    
    (858,836
    )869,900
    
    
    
    (816,394
    )
    
    
    15,127
    
    
    
    (4,488
    )562,794
    
    
    
    870,688
    
    
    
    24,044
    
    
    
    12,066$
    1,432,694
    
    
    $
    54,294
    
    
    $
    39,171
    
    
    $
    7,578
 *
    
    In the supplemental data presented above, Centex represents the consolidation of all
subsidiaries other than those included in Financial Services. Transactions between Centex and
Financial Services have been eliminated from the Centex Corporation and Subsidiaries statements of
consolidated cash flows.
 7




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##### Table of Contents



Centex Corporation and Subsidiaries
 
 Notes to Consolidated Financial Statements
 December 31, 2008
   (A) SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation
   
    
    Centex Corporation and Subsidiaries.This represents the consolidation of Centex,
Financial Services and all of their consolidated subsidiaries, related companies and
certain variable interest entities. The effects of transactions among related
companies within the consolidated group have been eliminated.
 
    
    Centex.This information is presented as supplemental information and represents the
consolidation of all subsidiaries and certain variable interest entities other than
those included in Financial Services, which are presented on an equity basis of
accounting.
 
    
    Financial Services.This information is presented as supplemental information and
represents Centex Financial Services, its subsidiaries and related companies.
   8




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##### Table of Contents



Interest Expense
  For the Three Months
    
    
    For the Nine MonthsEnded December 31,
    
    
    Ended December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Total Interest Incurred
    
    $
    55,814
    
    
    $
    68,206
    
    
    $
    170,404
    
    
    $
    226,643Less  Interest Capitalized
    
    
    (35,710
    )
    
    
    (56,999
    )
    
    
    (131,301
    )
    
    
    (178,369
    )Financial Services
Interest Expense
    
    
    (2,346
    )
    
    
    (11,207
    )
    
    
    (10,192
    )
    
    
    (48,274
    )Interest Expense, net
    
    $
    17,758
    
    
    $
    
    
    
    $
    28,911
    
    
    $
    Capitalized Interest Charged to HomeBuildings Costs and Expenses
    
    $
    67,032
    
    
    $
    69,854
    
    
    $
    119,799
    
    
    $
    209,618
 Income Taxes
      9




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##### Table of Contents



Stock-Based Employee Compensation Arrangements
  Number ofShares
    
    Fair ValuePeriod of Grant
    
    Grant Type
    
    Granted
    
    of GrantFor the year ended March 31, 2008
    
    Stock Options
    
    
    646.6
    
    
    $
    10,116.9Stock Units
    
    
    283.3
    
    
    $
    11,901.2Restricted Stock
    
    
    160.1
    
    
    $
    5,035.0For the nine months ended
December 31, 2008
    
    Stock Options
    
    
    1,827.0
    
    
    $
    14,072.9Stock Units
    
    
    375.2
    
    
    $
    8,265.7Restricted Stock
    
    
    663.0
    
    
    $
    9,699.8
   Statements of Consolidated Cash Flows  Supplemental Disclosures
   For the Three Months
    
    
    For the Nine MonthsEnded December 31,
    
    

Ended December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Cash Paid for Interest (1)
    
    $
    54,068
    
    
    $
    65,318
    
    
    $
    161,001
    
    
    $
    219,313Net Cash Paid (Refund) for Taxes
    
    $
    (78,749
    )
    
    $
    81
    
    
    $
    (704,580
    )
    
    $
    209,286
 (1)
    
    Amounts include capitalized interest.
  10




---



##### Table of Contents



Recent Accounting Pronouncements
     Reclassifications
  11




---



##### Table of Contents



(B) STOCKHOLDERS EQUITY
  Capital in
    
    
    
    
    
    
    TreasuryCommon Stock
    
    
    Excess of
    
    
    Retained
    
    
    Stock,Shares
    
    
    Amount
    
    
    Par Value
    
    
    Earnings
    
    
    at Cost
    
    
    TotalBalance, March 31, 2008
    
    
    123,279
    
    
    $
    31,763
    
    
    $
    95,088
    
    
    $
    2,365,634
    
    
    $
    (193,824
    )
    
    $
    2,298,661Issuance of Restricted Stock
and Stock Units
    
    
    1,004
    
    
    
    166
    
    
    
    (24,456
    )
    
    
    
    
    
    
    18,800
    
    
    
    (5,490
    )Stock Compensation
    
    
    
    
    
    
    
    
    
    
    16,339
    
    
    
    
    
    
    
    
    
    
    
    16,339Exercise of Stock Options
    
    
    37
    
    
    
    9
    
    
    
    531
    
    
    
    
    
    
    
    
    
    
    
    540Tax Benefit
from Stock-BasedAwards
    
    
    
    
    
    
    
    
    
    
    437
    
    
    
    
    
    
    
    
    
    
    
    437Cash Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,887
    )
    
    
    
    
    
    
    (9,887
    )Purchase of
Common Stock forTreasury
    
    
    (9
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (93
    )
    
    
    (93
    )Other Stock Transactions
    
    
    6
    
    
    
    2
    
    
    
    89
    
    
    
    
    
    
    
    
    
    
    
    91Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (985,995
    )
    
    
    
    
    
    
    (985,995
    )Balance, December 31, 2008
    
    
    124,317
    
    
    $
    31,940
    
    
    $
    88,028
    
    
    $
    1,369,752
    
    
    $
    (175,117
    )
    
    $
    1,314,603
 (C) MORTGAGE LOANS RECEIVABLE AND REAL ESTATE OWNED
  As ofDecember 31, 2008
    
    
    March 31, 2008Gross
    
    
    Allowance
    
    
    Net
    
    
    Gross
    
    
    Allowance
    
    
    NetMortgage Loans Held for Sale
    
    $
    199,143
    
    
    $
    (1,042
    )
    
    $
    198,101
    
    
    $
    388,385
    
    
    $
    (4,092
    )
    
    $
    384,293Other Mortgage Loans
    
    
    175,705
    
    
    
    (104,272
    )
    
    
    71,433
    
    
    
    283,191
    
    
    
    (151,604
    )
    
    
    131,587Mortgage Loans Receivable
    
    $
    374,848
    
    
    $
    (105,314
    )
    
    $
    269,534
    
    
    $
    671,576
    
    
    $
    (155,696
    )
    
    $
    515,880Real Estate Owned
    
    $
    37,870
    
    
    $
    (25,700
    )
    
    $
    12,170
    
    
    $
    23,635
    
    
    $
    (12,785
    )
    
    $
    10,850
  December 31, 2008
    
    
    March 31, 2008 (1)Balance at Beginning of Period
    
    $
    168,481
    
    
    $
    17,576Provision for Losses
    
    
    12,139
    
    
    
    176,109Charge-offs/Recoveries
    
    
    (49,606
    )
    
    
    (25,204
    )Balance at End of Period
    
    $
    131,014
    
    
    $
    168,481
 (1)
    
    For the nine months ended December 31, 2007, provision for losses and
charge-offs/recoveries were $122,124 and $(7,863), respectively.
  12




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##### Table of Contents



(D) INVENTORIES
  Housing Projects
  As ofDecember 31, 2008
    
    
    March 31, 2008Direct Construction
    
    $
    1,268,872
    
    
    $
    1,746,016Land Under Development
    
    
    2,050,939
    
    
    
    2,882,844Housing Projects
    
    $
    3,319,811
    
    
    $
    4,628,860
 Land Held for Development and Sale and Land Held Under Option Agreements Not Owned
  As ofDecember 31, 2008
    
    
    March 31, 2008Number of Land Option Agreements
    
    
    65
    
    
    
    145Total Cash Deposits in Inventory
    
    $
    28,443
    
    
    $
    53,941Letters of Credit
    
    
    747
    
    
    
    943Total Invested through Deposits or Secured
with Letters of Credit
    
    $
    29,190
    
    
    $
    54,884Total Purchase Price of Land Option Agreements
    
    $
    593,258
    
    
    $
    1,131,976
 13




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##### Table of Contents



As of December 31, 2008
    
    
    As of March 31, 2008Land Held
    
    
    
    
    
    
    Land HeldLand Held for
    
    
    Under Option
    
    
    Land Held for
    
    
    Under OptionDevelopment
    
    
    Agreements
    
    
    Development
    
    
    Agreementsand Sale
    
    
    Not Owned
    
    
    and Sale
    
    
    Not OwnedCash Deposits
    
    $
    8,368
    
    
    $
    20,075
    
    
    $
    20,711
    
    
    $
    33,230Pre-acquisition Development Costs
    
    
    4,913
    
    
    
    5,994
    
    
    
    10,810
    
    
    
    1,084Remaining Purchase Price of Land
Options Recorded Pursuant to:FIN 46 (1)
    
    
    
    
    
    
    64,423
    
    
    
    
    
    
    
    75,344SFAS 49 (2)
    
    
    
    
    
    
    24,290
    
    
    
    
    
    
    
    38,134Owned Land Held for Development
and Sale (3)
    
    
    476,569
    
    
    
    
    
    
    
    527,235
    
    
    
    $
    489,850
    
    
    $
    114,782
    
    
    $
    558,756
    
    
    $
    147,792
 (1)
    
    In accordance with the provisions of FIN 46, the Company is the primary beneficiary of
certain option agreements to purchase land. Land consolidated under FIN 46 is recorded with a
corresponding increase to minority interests. At December 31, 2008, nine land option
agreements were consolidated pursuant to FIN 46.(2)
    
    As of December 31, 2008, the Company recorded six land option agreements as financing
arrangements pursuant to the provisions of SFAS 49. The remaining obligation under such
financing arrangements is recorded in accrued liabilities.(3)
    
    Amount includes owned land, including development costs, that is not currently anticipated to
be developed for more than two years and land that the Company intends to sell within one
year.
  (E) GOODWILL
  As of
    
    
    Goodwill
    
    
    Goodwill
    
    
    As ofMarch 31, 2008
    
    
    Disposed
    
    
    Impairments
    
    
    December 31, 2008Home BuildingEast
    
    $
    30,594
    
    
    $
    
    
    
    $
    (30,594
    )
    
    $
    Central
    
    
    9,671
    
    
    
    
    
    
    
    (5,102
    )
    
    
    4,569West
    
    
    2,405
    
    
    
    
    
    
    
    (2,405
    )
    
    
    Other
homebuilding
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Home Building
    
    
    42,670
    
    
    
    
    
    
    
    (38,101
    )
    
    
    4,569Financial Services
    
    
    8,952
    
    
    
    (3,588
    )(1)
    
    
    
    
    
    
    5,364Total
    
    $
    51,622
    
    
    $
    (3,588
    )
    
    $
    (38,101
    )
    
    $
    9,933
 (1)
    
    Represents disposal of goodwill related to the sale of Westwood Insurance Agency.
  14




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##### Table of Contents



(F) INDEBTEDNESS
  As ofDecember 31, 2008
    
    
    March 31, 2008Centex:Senior Notes (unsecured):Senior Notes due August 2008 at 4.875%
    
    $
    
    
    
    $
    150,000Senior Notes due September 2009 at 5.8%
    
    
    210,920
    
    
    
    225,000Senior Notes due November 2010 at 4.55%
    
    
    300,000
    
    
    
    300,000Senior Notes due February 2011 at 7.875%
    
    
    392,494
    
    
    
    399,992Senior Notes due January 2012 at 7.5%
    
    
    324,325
    
    
    
    349,198Senior Notes due August 2012 at 5.45%
    
    
    295,000
    
    
    
    315,000Senior Notes due October 2013 at 5.125%
    
    
    300,000
    
    
    
    300,000Senior Notes due May 2014 at 5.7%
    
    
    350,000
    
    
    
    350,000Senior Notes due June 2015 at 5.25%
    
    
    450,000
    
    
    
    450,000Senior Notes due May 2016 at 6.5%
    
    
    480,000
    
    
    
    480,000Land Acquisition Notes and Other due through May
2017 (1)
    
    
    855
    
    
    
    5,977Total Senior Notes and Other
    
    
    3,103,594
    
    
    
    3,325,167Financial Services (secured):Mortgage Warehouse Facilities (2)
    
    
    157,965
    
    
    
    337,053Total Debt
    
    $
    3,261,559
    
    
    $
    3,662,220
 (1)
    
    Weighted average interest rates of 10.00% and 6.45% at December 31, 2008 and March
31, 2008, respectively.(2)
    
    Weighted average interest rates of 2.33% and 3.63% at December 31, 2008 and
March 31, 2008, respectively.
  For the Nine Months Ended December 31,2008
    
    2007Centex:Senior Notes
    
    
    5.99
    %
    
    
    5.86
    %Land Acquisition Notes and Other
    
    
    10.00
    %
    
    
    6.91
    %Medium-term Note Programs
    
    
    
    
    
    
    5.68
    %Financial Services:Mortgage Warehouse Facilities
    
    
    5.47
    %
    
    
    6.05
    %Harwood Street Funding I, LLC Variable-Rate
Subordinated Extendable Certificates
    
    
    
    
    
    
    7.42
    %
  For the Fiscal Years EndingMarch 31,2009
    
    $
    232010
    
    
    211,0212011
    
    
    692,6062012
    
    
    324,4492013
    
    
    295,136Thereafter
    
    
    1,580,359$
    3,103,594
 15




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##### Table of Contents



Credit Facilities
  Credit FacilitiesCentexMulti-Bank Revolving Credit FacilityRevolving Credit
    
    $
    750,000Letters of Credit
    
    
    600,0001,350,000Financial ServicesSecured Credit Facilities
    
    
    250,000$
    1,600,000
    (1)
 (1)
    
    Prior to amendment of revolving credit facility during January 2009.
   16




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##### Table of Contents



Funding of Mortgage Loans
     17




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##### Table of Contents



(G) COMMITMENTS AND CONTINGENCIES
 Joint Ventures
   As of December 31, 2008
    
    
    As of March 31, 2008Centexs
    
    
    
    
    
    
    
    
    
    
    CentexsNumber
    
    
    
    
    
    
    Share
    
    
    Number
    
    
    
    
    
    
    Shareof JVs(1)
    
    
    Investments
    
    
    of Debt(2)
    
    
    of JVs (1)
    
    
    Investments
    
    
    of Debt (2)Unleveraged Joint Ventures
    
    
    27
    
    
    $
    152,620
    
    
    $
    
    
    
    
    29
    
    
    $
    70,043
    
    
    $
    Joint Ventures with Debt:
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    13Limited Maintenance
Guarantee(3) (4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,311
    
    
    
    27,500Repayment Guarantee(5)
    
    
    
    
    
    
    (2,959
    )
    
    
    4,197
    
    
    
    
    
    
    
    3,154
    
    
    
    13,692Completion Guarantee (4)
    
    
    
    
    
    
    (9,373
    )
    
    
    123,755
    
    
    
    
    
    
    
    78,274
    
    
    
    133,935No Recourse or Guarantee
    
    
    
    
    
    
    (499
    )
    
    
    24,000
    
    
    
    
    
    
    
    12,040
    
    
    
    24,00037
    
    
    $
    139,789
    
    
    $
    151,952
    
    
    
    42
    
    
    $
    206,822
    
    
    $
    199,127
 (1)
    
    The number of joint ventures includes unconsolidated Home Building joint ventures for which
the Company has an investment balance as of the end of the period and/or current fiscal year
activity. The Company was the managing member of 22 and 23 of the active joint ventures as of
December 31, 2008 and March 31, 2008, respectively. The number of joint ventures includes 12
and 17 joint ventures as of December 31, 2008 and March 31, 2008, respectively, for which
substantially all of the joint ventures activities are complete.(2)
    
    Centexs share of debt represents the Companys maximum exposure related to the joint
ventures debt at each respective date, exclusive of any debt-related obligations recorded by
the Company.(3)
    
    The Company guaranteed that certain of the joint ventures would maintain a specified loan to
value ratio. For certain joint ventures, the Company contributed additional capital in order
to maintain loan to value requirements.(4)
    
    Certain joint venture agreements require the Company to guarantee the completion of a project
or phase if the joint venture does not perform the required land development. A portion of
these completion guarantees are joint and several with the Companys partners.(5)
    
    The Company has guaranteed repayment of a portion of certain joint venture debt limited to
its ownership percentage of the joint venture or a percentage thereof.
   18




---



##### Table of Contents



For the Fiscal Years EndingMarch 31,2009
    
    $
    144,5662010
    
    
    3,1892011
    
    
    4,197$
    151,952
 Letters of Credit and Surety Bonds
   As of December 31, 2008
    
    
    As of March 31, 2008Letters of Credit
    
    
    Surety Bonds
    
    
    Letters of Credit
    
    
    Surety BondsHome Building
    
    $
    118.2
    
    
    $
    1,032.3
    (1)
    
    $
    168.6
    
    
    $
    1,527.9Financial Services
    
    
    30.9
    
    
    
    9.7
    
    
    
    35.7
    
    
    
    12.3Other
    
    
    168.4
    
    
    
    0.2
    
    
    
    167.0
    
    
    
    0.2Discontinued
Operations
(2)
    
    
    33.1
    
    
    
    1,868.3
    
    
    
    35.3
    
    
    
    3,093.9$
    350.6
    
    
    $
    2,910.5
    
    
    $
    406.6
    
    
    $
    4,634.3
 (1)
    
    The Company estimates that $398.5 million of work remains to be performed on these
projects as of December 31, 2008.(2)
    
    After the sale of Construction Services, the Company remains responsible to a surety for
certain surety bond obligations relating to Construction Services projects commenced prior to
March 30, 2007. These surety bonds have a total face amount of $1.87 billion at December 31,
2008, although the risk of liability with respect to these surety bonds declines as the
relevant construction projects are performed. At December 31, 2008, the Company estimates
that $263.4 million of work remains to be performed on these projects. In connection with
certain of these surety bond obligations, the Company posted a $100 million letter of credit
to such surety which is included in Other above. The purchaser of Construction Services
agreed to indemnify the Company against losses relating to such surety bond obligations,
including amounts drawn under such letter of credit. The Company purchased for its benefit an
additional back-up indemnity provided by a financial institution with an A+ (S&P) and A1
(Moodys) credit rating. The obligation of such financial institution under the back-up
indemnity is $400.0 million as of December 31, 2008 and will remain at $400.0 million until
termination in 2016.
 Community Development and Other Special District Obligations
  19




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##### Table of Contents



Warranties and Guarantees
    December 31, 2008
    
    
    March 31, 2008 (1)Balance at Beginning of Period
    
    $
    29,155
    
    
    $
    44,293Warranties Issued
    
    
    11,592
    
    
    
    27,858Settlements Made
    
    
    (13,445
    )
    
    
    (40,915
    )Changes in
Liability of Pre-ExistingWarranties, Including Expirations
    
    
    (11,155
    )
    
    
    (2,081
    )Balance at End of Period
    
    $
    16,147
    
    
    $
    29,155
 (1)
    
    For the nine months ended December 31, 2007, warranties issued, settlements made
and changes in liability of pre-existing warranties were $24,634, $(32,762) and
$(863), respectively.
  December 31, 2008
    
    
    March 31, 2008 (1)Balance at Beginning of Period
    
    $
    13,903
    
    
    $
    16,863Provision for Losses
    
    
    643
    
    
    
    1,676Settlements
    
    
    (5,730
    )
    
    
    (9,251
    )Changes in Pre-Existing Reserves
    
    
    16,668
    
    
    
    4,615Balance at End of Period
    
    $
    25,484
    
    
    $
    13,903
 (1)
    
    For the nine months ended December 31, 2007, provisions for losses, settlements and
changes in pre-existing reserves were $1,270, $(6,752) and $4,614, respectively.
 Insurance Accruals
   20




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##### Table of Contents



Forward Trade and Interest Rate Lock Commitments
    Litigation and Related Matters
  (H) FAIR VALUES OF FINANCIAL INSTRUMENTS
  
    
    Level 1   Quoted prices in active markets for identical assets or liabilities.
 
    
    Level 2  Inputs other than quoted prices included within Level 1 that are observable
either directly or indirectly through corroboration with market data.
 
    
    Level 3  Unobservable inputs that reflect the Companys own estimates about the
assumptions market participants would use in pricing the asset or liability.
  21




---



##### Table of Contents



Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalAssetsMortgage
Loans Held for Sale
    
    $
    
    
    
    $
    204,150
    
    
    $
    
    
    
    $
    204,150Forward Trade Commitments (Interest Rate Lock Commitments)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Servicing Asset
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    30Interest Rate Lock Commitments
    
    
    
    
    
    
    
    
    
    
    4,251
    
    
    
    4,251Total
    
    $
    
    
    
    $
    204,180
    
    
    $
    4,251
    
    
    $
    208,431LiabilitiesInterest Rate Swap Agreements
    
    $
    
    
    
    $
    1,072
    
    
    $
    
    
    
    $
    1,072Forward
Trade Commitments (Mortgage Loans Held for Sale)
    
    
    
    
    
    
    6,049
    
    
    
    
    
    
    
    6,049Total
    
    $
    
    
    
    $
    7,121
    
    
    $
    
    
    
    $
    7,121
   Interest RateLockCommitmentsBalance at beginning of period
    
    $
    9,271Purchases, issuances, and settlements
    
    
    (5,020
    )Loss included in earnings due to change in
valuation of items held
    
    
    Fair value at December 31, 2008
    
    $
    4,251
   Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalAssetsOther Mortgage Loans
    
    $
    
    
    
    $
    
    
    
    $
    71,433
    
    
    $
    71,433
  22




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##### Table of Contents



(I) BUSINESS SEGMENTS
   Home Building
  East:
 Central:
 West:
 Other homebuilding (1)
 (1)
    
    Other homebuilding includes certain resort/second home projects in Florida that the
Company plans to build-out and liquidate, and holding companies. In addition, Other
homebuilding includes amounts consolidated under the caption land held under option
agreements not owned and capitalized interest for all regions.
  Financial Services
     23




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##### Table of Contents



Other
   For the Three Months Ended
    
    
    For the Nine Months EndedDecember 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Corporate General and
Administrative Expense
    
    $
    (40,683
    )
    
    $
    (37,850
    )
    
    $
    (152,757
    )
    
    $
    (117,371
    )Interest Expense
    
    
    (17,758
    )
    
    
    
    
    
    
    (28,911
    )
    
    
    Interest and Other Income
    
    
    6,953
    
    
    
    1,445
    
    
    
    19,346
    
    
    
    24,493$
    (51,488
    )
    
    $
    (36,405
    )
    
    $
    (162,322
    )
    
    $
    (92,878
    )
 Summary of the Companys Results of Operations by Segment
 For the Three Months Ended December 31,2008
    
    
    2007Earnings (Loss)
    
    
    
    
    
    
    
    
    
    
    Loss fromLoss
    
    
    from Continuing
    
    
    
    
    
    
    Loss
    
    
    Continuingfrom
    
    
    Operations
    
    
    
    
    
    
    from
    
    
    OperationsUnconsolidated
    
    
    Before
    
    
    
    
    
    
    Unconsolidated
    
    
    BeforeRevenues
    
    
    Entities(1)
    
    
    Income Tax
    
    
    Revenues
    
    
    Entities (1)
    
    
    Income TaxHome BuildingEast
    
    $
    339,570
    
    
    $
    (61,809
    )
    
    $
    (285,977
    )
    
    $
    561,826
    
    
    $
    (8,046
    )
    
    $
    (177,125
    )Central
    
    
    261,684
    
    
    
    (7,717
    )
    
    
    (61,757
    )
    
    
    452,258
    
    
    
    (108
    )
    
    
    (37,032
    )West
    
    
    240,966
    
    
    
    (4,870
    )
    
    
    (262,173
    )
    
    
    763,002
    
    
    
    (54,986
    )
    
    
    (377,589
    )Other homebuilding
    
    
    936
    
    
    
    
    
    
    
    14,861
    
    
    
    33,998
    
    
    
    
    
    
    
    (33,519
    )Total Home Building
    
    
    843,156
    
    
    
    (74,396
    )
    
    
    (595,046
    )
    
    
    1,811,084
    
    
    
    (63,140
    )
    
    
    (625,265
    )Financial Services
    
    
    29,032
    
    
    
    
    
    
    
    (14,329
    )
    
    
    62,203
    
    
    
    
    
    
    
    (60,484
    )Other
    
    
    
    
    
    
    
    
    
    
    (51,488
    )
    
    
    
    
    
    
    
    
    
    
    (36,405
    )Total
    
    $
    872,188
    
    
    $
    (74,396
    )
    
    $
    (660,863
    )
    
    $
    1,873,287
    
    
    $
    (63,140
    )
    
    $
    (722,154
    )
 (1)
    
    Included in Home Buildings loss from unconsolidated entities for the three months ended
December 31, 2008 and 2007 is the Companys share of joint ventures impairments totaling
$70.6 million and $24.9 million, respectively.
 For the Nine Months Ended December 31,2008
    
    
    2007Earnings (Loss)
    
    
    
    
    
    
    Earnings
    
    
    Loss fromLoss
    
    
    from Continuing
    
    
    
    
    
    
    (Loss)
    
    
    Continuingfrom
    
    
    Operations
    
    
    
    
    
    
    from
    
    
    OperationsUnconsolidated
    
    
    Before
    
    
    
    
    
    
    Unconsolidated
    
    
    BeforeRevenues
    
    
    Entities(1)
    
    
    Income Tax
    
    
    Revenues
    
    
    Entities (1)
    
    
    Income TaxHome BuildingEast
    
    $
    958,646
    
    
    $
    (90,444
    )
    
    $
    (419,241
    )
    
    $
    1,856,359
    
    
    $
    (38,696
    )
    
    $
    (310,088
    )Central
    
    
    855,672
    
    
    
    (11,652
    )
    
    
    (97,709
    )
    
    
    1,423,409
    
    
    
    459
    
    
    
    (64,781
    )West
    
    
    1,013,637
    
    
    
    (5,499
    )
    
    
    (334,566
    )
    
    
    2,307,220
    
    
    
    (87,096
    )
    
    
    (1,196,135
    )Other homebuilding
    
    
    17,496
    
    
    
    
    
    
    
    10,603
    
    
    
    133,400
    
    
    
    
    
    
    
    (178,733
    )Total Home Building
    
    
    2,845,451
    
    
    
    (107,595
    )
    
    
    (840,913
    )
    
    
    5,720,388
    
    
    
    (125,333
    )
    
    
    (1,749,737
    )Financial Services
    
    
    157,864
    
    
    
    
    
    
    
    (52,420
    )
    
    
    240,869
    
    
    
    
    
    
    
    (99,597
    )Other
    
    
    
    
    
    
    
    
    
    
    (162,322
    )
    
    
    
    
    
    
    
    
    
    
    (92,878
    )Total
    
    $
    3,003,315
    
    
    $
    (107,595
    )
    
    $
    (1,055,655
    )
    
    $
    5,961,257
    
    
    $
    (125,333
    )
    
    $
    (1,942,212
    )
 (1)
    
    Included in Home Buildings loss from unconsolidated entities for the nine months ended
December 31, 2008 and 2007 is the Companys share of joint ventures impairments totaling
$102.2 million and $88.5 million, respectively.
 24




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##### Table of Contents



For the Three Months Ended December 31,2008
    
    
    2007Goodwill
    
    
    Land-related
    
    
    Land-related
    
    
    Goodwill
    
    
    Land-related
    
    
    Land-relatedImpairments
    
    
    Impairments
    
    
    Write-offs
    
    
    Impairments
    
    
    Impairments
    
    
    Write-offsHome BuildingEast
    
    $
    30,594
    
    
    $
    185,992
    
    
    $
    2,392
    
    
    $
    
    
    
    $
    157,284
    
    
    $
    11,477Central
    
    
    5,102
    
    
    
    49,409
    
    
    
    1,009
    
    
    
    
    
    
    
    33,009
    
    
    
    4,810West
    
    
    2,405
    
    
    
    231,673
    
    
    
    10,464
    
    
    
    
    
    
    
    283,580
    
    
    
    10,126Other homebuilding
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,076
    
    
    
    (47
    )Total Home Building
    
    
    38,101
    
    
    
    467,074
    
    
    
    13,865
    
    
    
    
    
    
    
    502,949
    
    
    
    26,366Financial Services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    38,101
    
    
    $
    467,074
    
    
    $
    13,865
    
    
    $
    
    
    
    $
    502,949
    
    
    $
    26,366
 For the Nine Months Ended December 31,2008
    
    
    2007Goodwill
    
    
    Land-related
    
    
    Land-related
    
    
    Goodwill
    
    
    Land-related
    
    
    Land-relatedImpairments
    
    
    Impairments
    
    
    Write-offs
    
    
    Impairments
    
    
    Impairments
    
    
    Write-offsHome BuildingEast
    
    $
    30,594
    
    
    $
    238,960
    
    
    $
    19,654
    
    
    $
    22,452
    
    
    $
    260,861
    
    
    $
    40,900Central
    
    
    5,102
    
    
    
    76,881
    
    
    
    3,423
    
    
    
    4,339
    
    
    
    74,856
    
    
    
    15,299West
    
    
    2,405
    
    
    
    271,075
    
    
    
    14,835
    
    
    
    34,531
    
    
    
    984,677
    
    
    
    31,224Other homebuilding
    
    
    
    
    
    
    7,163
    
    
    
    
    
    
    
    
    
    
    
    172,034
    
    
    
    131Total Home Building
    
    
    38,101
    
    
    
    594,079
    
    
    
    37,912
    
    
    
    61,322
    
    
    
    1,492,428
    
    
    
    87,554Financial Services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    38,101
    
    
    $
    594,079
    
    
    $
    37,912
    
    
    $
    61,322
    
    
    $
    1,492,428
    
    
    $
    87,554
  As ofDecember 31, 2008
    
    
    March 31, 2008Inventory
    
    
    Total Assets
    
    
    Inventory
    
    
    Total AssetsHome BuildingEast
    
    $
    1,939,043
    
    
    $
    2,133,496
    
    
    $
    2,357,273
    
    
    $
    2,631,144Central
    
    
    737,725
    
    
    
    759,457
    
    
    
    963,999
    
    
    
    1,007,937West
    
    
    970,765
    
    
    
    1,062,394
    
    
    
    1,701,506
    
    
    
    1,842,358Other homebuilding
    
    
    283,887
    
    
    
    1,247,855
    
    
    
    328,803
    
    
    
    1,128,285Total Home Building
    
    
    3,931,420
    
    
    
    5,203,202
    
    
    
    5,351,581
    
    
    
    6,609,724Financial Services
    
    
    12,170
    
    
    
    409,864
    
    
    
    10,850
    
    
    
    673,597Other (1)
    
    
    
    
    
    
    705,719
    
    
    
    
    
    
    
    757,022Discontinued Operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    96,989Total
    
    $
    3,943,590
    
    
    $
    6,318,785
    
    
    $
    5,362,431
    
    
    $
    8,137,332
 (1)
    
    The Companys Other segment includes cash, income taxes receivable and substantially all of
the Companys deferred income tax asset valuation allowance.
 25




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(J) INCOME TAXES
           26




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##### Table of Contents



(K) DERIVATIVES AND HEDGING
     (L) DISCONTINUED OPERATIONS
  27




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##### Table of Contents



For the Nine Months EndedDecember 31, 2008Sales and Related Proceeds, net of
Related Expenses
    

$
    127,810Assets Sold
    
    
    (88,431
    )Pre-tax Gain on Sale
    
    
    39,379Income Tax Expense
    
    
    (20,282
    )Net Gain on Sale
    
    $
    19,097
    For the Three Months Ended
    
    
    For the Nine Months EndedDecember 31,
    
    
    December 31,2008(1)
    
    
    2007 (2)
    
    
    2008(1)
    
    
    2007 (2)Revenues
    
    $
    
    
    
    $
    32,800
    
    
    $
    
    
    
    $
    102,247Costs and Expenses
    
    
    
    
    
    
    (31,342
    )
    
    
    
    
    
    
    (98,081
    )Earnings Before Income Taxes
    
    
    
    
    
    
    1,458
    
    
    
    
    
    
    
    4,166Provision for Income Taxes
    
    
    
    
    
    
    595
    
    
    
    
    
    
    
    1,629Gain on Sale, net of Tax
    
    
    
    
    
    
    
    
    
    
    48,643
    
    
    
    3,376$
    
    
    
    $
    863
    
    
    $
    48,643
    
    
    $
    5,913
 (1)
    
    Includes the Companys home services operations and the gain from sale of Westwood
Insurance Agency.(2)
    
    Includes the Companys home services operations and Construction Services.
 (M) SUBSEQUENT EVENTS
  28




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Executive Summary
   For the Three Months Ended December 31,2008
    
    
    2007
    
    
    ChangeRevenuesHome Building
    
    $
    843,156
    
    
    $
    1,811,084
    
    
    
    (53.4
    %)Financial Services
    
    
    29,032
    
    
    
    62,203
    
    
    
    (53.3
    %)Total
    
    $
    872,188
    
    
    $
    1,873,287
    
    
    
    (53.4
    %)Loss from Continuing Operations
Before Income TaxesHome Building
    
    $
    (595,046
    )
    
    $
    (625,265
    )
    
    
    (4.8
    %)Financial Services
    
    
    (14,329
    )
    
    
    (60,484
    )
    
    
    (76.3
    %)Other
    
    
    (51,488
    )
    
    
    (36,405
    )
    
    
    41.4
    %Total
    
    $
    (660,863
    )
    
    $
    (722,154
    )
    
    
    (8.5
    %)
 For the Nine Months Ended December 31,2008
    
    
    2007
    
    
    ChangeRevenuesHome Building
    
    $
    2,845,451
    
    
    $
    5,720,388
    
    
    
    (50.3
    %)Financial Services
    
    
    157,864
    
    
    
    240,869
    
    
    
    (34.5
    %)Total
    
    $
    3,003,315
    
    
    $
    5,961,257
    
    
    
    (49.6
    %)Loss from Continuing Operations
Before Income TaxesHome Building
    
    $
    (840,913
    )
    
    $
    (1,749,737
    )
    
    
    (51.9
    %)Financial Services
    
    
    (52,420
    )
    
    
    (99,597
    )
    
    
    (47.4
    %)Other
    
    
    (162,322
    )
    
    
    (92,878
    )
    
    
    74.8
    %Total
    
    $
    (1,055,655
    )
    
    $
    (1,942,212
    )
    
    
    (45.6
    %)
  29




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##### Table of Contents




    
    current economic conditions, including recent disruptions in the broader
financial and credit markets, the current national economic recession, and increases in
unemployment rates, which were 7.2% in December 2008, a level last seen in 1993,
 
    
    declining homebuyer demand due to lower consumer confidence and an
inability of many homebuyers to sell their existing homes,
 
    
    elevated levels of new and existing homes for sale, including the impact
of increases in residential foreclosures, which are expected to continue for the
foreseeable future,
 
    
    reduced availability and stricter terms of mortgage financing due to the
significant mortgage market disruptions and tightened credit standards for homebuyers,
and
 
    
    pricing pressures resulting from a variety of factors, including the
decision of homebuilders to offer significant discounts and sales incentives to
liquidate unsold inventories of new homes.
     
    
    $467.1 million and $594.1 million in land-related impairments,
 
    
    $70.6 million and $102.2 million in our share of joint ventures
impairments,
 
    
    $38.1 million in goodwill impairments, and
    
    $13.9 million and $37.9 million in write-offs of land deposits and
pre-acquisition costs.
  30




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31




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##### Table of Contents



32




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##### Table of Contents



HOME BUILDING
  For the Three Months Ended December 31,2008
    
    2007Change
    
    
    
    
    
    ChangeRevenues  Housing
    
    $
    821,437
    
    
    
    (54.1
    %)
    
    $
    1,787,990
    
    
    
    (28.9
    %)Revenues  Land Sales and Other
    
    
    21,719
    
    
    
    (6.0
    %)
    
    
    23,094
    
    
    
    (67.5
    %)Cost of Sales  Housing
    
    
    (710,136
    )
    
    
    (54.6
    %)
    
    
    (1,564,552
    )
    
    
    (22.6
    %)Cost of Sales  Land Sales and Other (1)
    
    
    (507,236
    )
    
    
    (8.8
    %)
    
    
    (556,320
    )
    
    
    41.6
    %Selling, General and Administrative Expenses
    
    
    (113,005
    )
    
    
    (55.7
    %)
    
    
    (254,952
    )
    
    
    (31.2
    %)Goodwill Impairment
    
    
    (38,101
    )
    
    
    100.0
    %
    
    
    
    
    
    
    Loss from Unconsolidated Entities (2)
    
    
    (74,396
    )
    
    
    17.8
    %
    
    
    (63,140
    )
    
    
    6.3
    %Other Income
    
    
    4,672
    
    
    
    78.7
    %
    
    
    2,615
    
    
    
    (80.2
    %)Operating Loss(3)
    
    $
    (595,046
    )
    
    
    (4.8
    %)
    
    $
    (625,265
    )
    
    
    157.9
    %Operating Loss as a Percentage ofRevenues:Housing Operations (4)
    
    
    (0.2
    %)
    
    
    1.6
    
    
    
    (1.8
    %)
    
    
    (6.8
    )Total Homebuilding Operations
    
    
    (70.6
    %)
    
    
    (36.1
    )
    
    
    (34.5
    %)
    
    
    (25.1
    )
 For the Nine Months Ended December 31,2008
    
    2007Change
    
    
    
    
    
    ChangeRevenues  Housing
    
    $
    2,793,516
    
    
    
    (50.4
    %)
    
    $
    5,626,727
    
    
    
    (26.7
    %)Revenues  Land Sales and Other (1)
    
    
    51,935
    
    
    
    (44.6
    %)
    
    
    93,661
    
    
    
    (56.5
    %)Cost of Sales  Housing
    
    
    (2,419,218
    )
    
    
    (49.5
    %)
    
    
    (4,787,106
    )
    
    
    (18.2
    %)Cost of Sales  Land Sales and Other
    
    
    (705,019
    )
    
    
    (57.5
    %)
    
    
    (1,659,126
    )
    
    
    150.4
    %Selling, General and Administrative Expenses
    
    
    (428,076
    )
    
    
    (49.7
    %)
    
    
    (850,211
    )
    
    
    (24.3
    %)Goodwill Impairment
    
    
    (38,101
    )
    
    
    (37.9
    %)
    
    
    (61,322
    )
    
    
    100.0
    %Loss from Unconsolidated Entities (2)
    
    
    (107,595
    )
    
    
    (14.2
    %)
    
    
    (125,333
    )
    
    
    110.3
    %Other Income
    
    
    11,645
    
    
    
    (10.2
    %)
    
    
    12,973
    
    
    
    (43.9
    %)Operating Loss(3)
    
    $
    (840,913
    )
    
    
    (51.9
    %)
    
    $
    (1,749,737
    )
    
    
    (901.7
    %)Operating Loss as a Percentage ofRevenues:Housing Operations (4)
    
    
    (1.9
    %)
    
    
    (1.7
    )
    
    
    (0.2
    %)
    
    
    (9.3
    )Total Homebuilding Operations
    
    
    (29.6
    %)
    
    
    1.0
    
    
    
    (30.6
    %)
    
    
    (33.4
    )
 (1)
    
    Includes land-related impairments and write-offs of deposits and pre-acquisition costs.(2)
    
    Loss from Unconsolidated Entities includes our share of joint ventures impairments
totaling $70.6 million and $24.9 million for the three months ended December 31, 2008 and
2007, respectively, and $102.2 million and $88.5 million for the nine months ended December
31, 2008 and 2007, respectively.(3)
    
    Operating loss represents Home Building reporting segments earnings exclusive of certain
corporate general and administrative expenses.(4)
    
    Operating loss from housing operations is a non-GAAP financial measure, which we believe is
useful to investors as it allows them to separate housing operations from activities related
to land holdings, options to acquire land and related land valuation adjustments. Management
uses this non-GAAP financial measure to aid in evaluating the performance of its ongoing
housing projects. Operating earnings from housing operations is equal to Housing Revenues
less Housing Cost of Sales and Selling, General and Administrative Expenses, all of which are
set forth in the table above.
 33




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##### Table of Contents



East:
 Central:
 West:
 Other homebuilding (1)
 (1)
    
    Other homebuilding includes certain resort/second home projects in Florida that we
plan to build-out and liquidate, and holding companies. In addition, Other
homebuilding includes amounts consolidated under the caption land held under option
agreements not owned and capitalized interest for all regions.
  For the Three Months Ended December 31,2008
    
    
    2007Change
    
    
    
    
    
    ChangeUnits ClosedEast
    
    
    1,155
    
    
    
    (40.1
    %)
    
    
    1,929
    
    
    
    (26.2
    %)Central
    
    
    1,476
    
    
    
    (40.7
    %)
    
    
    2,491
    
    
    
    (18.4
    %)West
    
    
    774
    
    
    
    (64.0
    %)
    
    
    2,148
    
    
    
    (15.0
    %)Other homebuilding
    
    
    
    
    
    
    (100.0
    %)
    
    
    89
    
    
    
    (47.0
    %)3,405
    
    
    
    (48.9
    %)
    
    
    6,657
    
    
    
    (20.4
    %)Average Revenue Per UnitEast
    
    $
    280,011
    
    
    
    (1.8
    %)
    
    $
    285,114
    
    
    
    (9.8
    %)Central
    
    $
    176,392
    
    
    
    (2.2
    %)
    
    $
    180,447
    
    
    
    (1.9
    %)West
    
    $
    307,066
    
    
    
    (13.3
    %)
    
    $
    354,202
    
    
    
    (15.6
    %)Other homebuilding
    
    $
    
    
    
    
    (100.0
    %)
    
    $
    311,101
    
    
    
    (22.7
    %)Total Home Building
    
    $
    241,244
    
    
    
    (10.2
    %)
    
    $
    268,588
    
    
    
    (10.8
    %)
 For the Nine Months Ended December 31,2008
    
    
    2007Change
    
    
    
    
    
    ChangeUnits ClosedEast
    
    
    3,361
    
    
    
    (45.1
    %)
    
    
    6,121
    
    
    
    (26.0
    %)Central
    
    
    4,640
    
    
    
    (39.5
    %)
    
    
    7,672
    
    
    
    (16.8
    %)West
    
    
    3,104
    
    
    
    (48.2
    %)
    
    
    5,993
    
    
    
    (16.5
    %)Other homebuilding
    
    
    36
    
    
    
    (88.6
    %)
    
    
    316
    
    
    
    (41.2
    %)11,141
    
    
    
    (44.6
    %)
    
    
    20,102
    
    
    
    (20.2
    %)Average Revenue Per UnitEast
    
    $
    276,843
    
    
    
    (6.5
    %)
    
    $
    296,072
    
    
    
    (7.4
    %)Central
    
    $
    182,311
    
    
    
    (0.9
    %)
    
    $
    183,919
    
    
    
    (1.1
    %)West
    
    $
    323,821
    
    
    
    (15.4
    %)
    
    $
    382,944
    
    
    
    (12.5
    %)Other homebuilding
    
    $
    332,861
    
    
    
    (3.0
    %)
    
    $
    343,237
    
    
    
    3.1
    %Total Home Building
    
    $
    250,742
    
    
    
    (10.4
    %)
    
    $
    279,909
    
    
    
    (8.1
    %)
 Revenues
  34




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##### Table of Contents



For the Three Months Ended December 31,2008
    
    
    2007Change
    
    
    
    
    
    ChangeAverage Operating Neighborhoods (1)
    
    
    499
    
    
    
    (22.5
    %)
    
    
    644
    
    
    
    (7.9
    %)Closings Per Average Neighborhood
    
    
    6.8
    
    
    
    (34.0
    %)
    
    
    10.3
    
    
    
    (14.2
    %)
 For the Nine Months Ended December 31,2008
    
    
    2007Change
    
    
    
    
    
    ChangeAverage Operating Neighborhoods (1)
    
    
    529
    
    
    
    (19.7
    %)
    
    
    659
    
    
    
    (3.9
    %)Closings Per Average Neighborhood
    
    
    21.1
    
    
    
    (30.8
    %)
    
    
    30.5
    
    
    
    (16.9
    %)
 (1)
    
    We define a neighborhood as an individual active selling location targeted to a
specific buyer segment with greater than ten homes remaining to be sold.
  Operating Margins
  For the Three Months Ended December 31,2008
    
    
    2007Goodwill
    
    
    Land-related
    
    
    Land-related
    
    
    Goodwill
    
    
    Land-related
    
    
    Land-relatedImpairments
    
    
    Impairments
    
    
    Write-offs
    
    
    Impairments
    
    
    Impairments
    
    
    Write-offsEast
    
    $
    30,594
    
    
    $
    185,992
    
    
    $
    2,392
    
    
    $
    
    
    
    $
    157,284
    
    
    $
    11,477Central
    
    
    5,102
    
    
    
    49,409
    
    
    
    1,009
    
    
    
    
    
    
    
    33,009
    
    
    
    4,810West
    
    
    2,405
    
    
    
    231,673
    
    
    
    10,464
    
    
    
    
    
    
    
    283,580
    
    
    
    10,126Other homebuilding
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,076
    
    
    
    (47
    )$
    38,101
    
    
    $
    467,074
    
    
    $
    13,865
    
    
    $
    
    
    
    $
    502,949
    
    
    $
    26,366
 35




---



##### Table of Contents



For the Nine Months Ended December 31,2008
    
    
    2007Goodwill
    
    
    Land-related
    
    
    Land-related
    
    
    Goodwill
    
    
    Land-related
    
    
    Land-relatedImpairments
    
    
    Impairments
    
    
    Write-offs
    
    
    Impairments
    
    
    Impairments
    
    
    Write-offsEast
    
    $
    30,594
    
    
    $
    238,960
    
    
    $
    19,654
    
    
    $
    22,452
    
    
    $
    260,861
    
    
    $
    40,900Central
    
    
    5,102
    
    
    
    76,881
    
    
    
    3,423
    
    
    
    4,339
    
    
    
    74,856
    
    
    
    15,299West
    
    
    2,405
    
    
    
    271,075
    
    
    
    14,835
    
    
    
    34,531
    
    
    
    984,677
    
    
    
    31,224Other homebuilding
    
    
    
    
    
    
    7,163
    
    
    
    
    
    
    
    
    
    
    
    172,034
    
    
    
    131$
    38,101
    
    
    $
    594,079
    
    
    $
    37,912
    
    
    $
    61,322
    
    
    $
    1,492,428
    
    
    $
    87,554
    For the Three Months Ended December 31,2008
    
    
    2007Change
    
    
    
    
    
    ChangeCompensation and Benefits
    
    $
    46,671
    
    
    
    (47.8
    %)
    
    $
    89,462
    
    
    
    (40.5
    %)Sales Commissions
    
    
    35,968
    
    
    
    (59.3
    %)
    
    
    88,340
    
    
    
    (19.7
    %)Advertising and Marketing
    
    
    12,043
    
    
    
    (62.4
    %)
    
    
    31,995
    
    
    
    (38.7
    %)Other
    
    
    18,323
    
    
    
    (59.4
    %)
    
    
    45,155
    
    
    
    (22.1
    %)Selling, General and Administrative Expenses
    
    $
    113,005
    
    
    
    (55.7
    %)
    
    $
    254,952
    
    
    
    (31.2
    %)SG&A as a Percentage of Revenues
    
    
    13.4
    %
    
    
    (0.7
    )
    
    
    14.1
    %
    
    
    (0.2
    )
 36




---



##### Table of Contents



For the Nine Months Ended December 31,2008
    
    
    2007Change
    
    
    
    
    
    ChangeCompensation and Benefits
    
    $
    183,803
    
    
    
    (43.2
    %)
    
    $
    323,620
    
    
    
    (34.1
    %)Sales Commissions
    
    
    126,662
    
    
    
    (53.1
    %)
    
    
    270,198
    
    
    
    (15.0
    %)Advertising and Marketing
    
    
    44,660
    
    
    
    (61.6
    %)
    
    
    116,423
    
    
    
    (21.6
    %)Other
    
    
    72,951
    
    
    
    (47.9
    %)
    
    
    139,970
    
    
    
    (15.6
    %)Selling, General and Administrative Expenses
    
    $
    428,076
    
    
    
    (49.7
    %)
    
    $
    850,211
    
    
    
    (24.3
    %)SG&A as a Percentage of Revenues
    
    
    15.0
    %
    
    
    0.1
    
    
    
    14.9
    %
    
    
    0.7
 Sales Orders, Average Cancellation Rates, Backlog Units and Land Holdings
  For the Three Months Ended December 31,2008
    
    
    2007Change
    
    
    
    
    
    ChangeSales Orders (in Units)East
    
    
    375
    
    
    
    (75.8
    %)
    
    
    1,550
    
    
    
    (9.9
    %)Central
    
    
    508
    
    
    
    (75.5
    %)
    
    
    2,074
    
    
    
    (18.5
    %)West
    
    
    197
    
    
    
    (89.4
    %)
    
    
    1,854
    
    
    
    1.1
    %Other homebuilding
    
    
    
    
    
    
    (100.0
    %)
    
    
    59
    
    
    
    55.3
    %1,080
    
    
    
    (80.5
    %)
    
    
    5,537
    
    
    
    (9.8
    %)Sales Per Average Neighborhood
    
    
    2.2
    
    
    
    (74.4
    %)
    
    
    8.6
    
    
    
    (2.3
    %)
 For the Nine Months Ended December 31,2008
    
    
    2007Change
    
    
    
    
    
    ChangeSales Orders (in Units)East
    
    
    2,934
    
    
    
    (43.8
    %)
    
    
    5,222
    
    
    
    (14.4
    %)Central
    
    
    3,333
    
    
    
    (52.7
    %)
    
    
    7,048
    
    
    
    (20.2
    %)West
    
    
    1,723
    
    
    
    (68.9
    %)
    
    
    5,548
    
    
    
    (10.1
    %)Other homebuilding
    
    
    33
    
    
    
    (77.4
    %)
    
    
    146
    
    
    
    25.9
    %8,023
    
    
    
    (55.3
    %)
    
    
    17,964
    
    
    
    (15.3
    %)Sales Per Average Neighborhood
    
    
    15.2
    
    
    
    (44.3
    %)
    
    
    27.3
    
    
    
    (11.7
    %)
 For the Three Months Ended December 31,2008
    
    
    2007Change
    
    
    
    
    
    ChangeAverage Cancellation RatesEast
    
    
    51.4
    %
    
    
    23.9
    
    
    
    27.5
    %
    
    
    (8.5
    )Central
    
    
    56.0
    %
    
    
    21.6
    
    
    
    34.4
    %
    
    
    (0.4
    )West
    
    
    57.0
    %
    
    
    21.3
    
    
    
    35.7
    %
    
    
    (8.2
    )Other homebuilding
    
    
    
    
    
    
    (24.4
    )
    
    
    24.4
    %
    
    
    (43.9
    )Total Home Building
    
    
    54.7
    %
    
    
    21.7
    
    
    
    33.0
    %
    
    
    (5.5
    )
 37




---



##### Table of Contents



For the Nine Months Ended December 31,2008
    
    
    2007Change
    
    
    
    
    
    ChangeAverage Cancellation RatesEast
    
    
    30.6
    %
    
    
    3.2
    
    
    
    27.4
    %
    
    
    (6.0
    )Central
    
    
    41.9
    %
    
    
    8.2
    
    
    
    33.7
    %
    
    
    1.0West
    
    
    41.9
    %
    
    
    4.7
    
    
    
    37.2
    %
    
    
    (4.6
    )Other homebuilding
    
    
    5.7
    %
    
    
    (30.5
    )
    
    
    36.2
    %
    
    
    (21.2
    )Total Home Building
    
    
    38.1
    %
    
    
    4.9
    
    
    
    33.2
    %
    
    
    (2.8
    )
 As ofDecember 31, 2008
    
    
    March 31, 2008Change
    
    
    
    
    
    ChangeBacklog UnitsEast
    
    
    2,021
    
    
    
    (17.4
    %)
    
    
    2,448
    
    
    
    (25.3
    %)Central
    
    
    1,648
    
    
    
    (44.2
    %)
    
    
    2,955
    
    
    
    (25.9
    %)West
    
    
    959
    
    
    
    (59.0
    %)
    
    
    2,340
    
    
    
    (26.3
    %)Other homebuilding
    
    
    
    
    
    
    (100.0
    %)
    
    
    3
    
    
    
    (98.6
    %)4,628
    
    
    
    (40.3
    %)
    
    
    7,746
    
    
    
    (27.3
    %)
     As ofDecember 31, 2008
    
    
    March 31, 2008LotsLots Owned
    
    
    Lots Controlled
    
    
    Total Lots
    
    
    Owned
    
    
    Lots Controlled
    
    
    Total LotsEast
    
    
    30,192
    
    
    
    4,805
    
    
    
    34,997
    
    
    
    35,235
    
    
    
    8,551
    
    
    
    43,786Central
    
    
    16,450
    
    
    
    3,760
    
    
    
    20,210
    
    
    
    20,261
    
    
    
    6,349
    
    
    
    26,610West
    
    
    11,197
    
    
    
    928
    
    
    
    12,125
    
    
    
    13,634
    
    
    
    3,247
    
    
    
    16,881Other homebuilding
    
    
    1,324
    
    
    
    
    
    
    
    1,324
    
    
    
    1,092
    
    
    
    
    
    
    
    1,09259,163
    
    
    
    9,493
    
    
    
    68,656
    
    
    
    70,222
    
    
    
    18,147
    
    
    
    88,369Change
    
    
    (15.7
    %)
    
    
    (47.7
    %)
    
    
    (22.3
    %)
    
    
    (28.6
    %)
    
    
    (70.6
    %)
    
    
    (44.8
    %)
  38




---



##### Table of Contents



Regional Discussion
  For the Three Months Ended December 31,2008
    
    
    2007Change
    
    
    
    
    
    ChangeRevenuesEast
    
    $
    339,570
    
    
    
    (39.6
    %)
    
    $
    561,826
    
    
    
    (32.7
    %)Central
    
    
    261,684
    
    
    
    (42.1
    %)
    
    
    452,258
    
    
    
    (20.4
    %)West
    
    
    240,966
    
    
    
    (68.4
    %)
    
    
    763,002
    
    
    
    (29.9
    %)Other homebuilding
    
    
    936
    
    
    
    (97.2
    %)
    
    
    33,998
    
    
    
    (64.1
    %)$
    843,156
    
    
    
    (53.4
    %)
    
    $
    1,811,084
    
    
    
    (30.0
    %)Operating Earnings (Loss)East
    
    $
    (285,977
    )
    
    
    61.5
    %
    
    $
    (177,125
    )
    
    
    634.4
    %Central
    
    
    (61,757
    )
    
    
    66.8
    %
    
    
    (37,032
    )
    
    
    356.2
    %West
    
    
    (262,173
    )
    
    
    (30.6
    %)
    
    
    (377,589
    )
    
    
    84.5
    %Other homebuilding
    
    
    14,861
    
    
    
    (144.3
    %)
    
    
    (33,519
    )
    
    
    508.4
    %$
    (595,046
    )
    
    
    (4.8
    %)
    
    $
    (625,265
    )
    
    
    157.9
    %
 For the Nine Months Ended December 31,2008
    
    
    2007Change
    
    
    
    
    
    ChangeRevenuesEast
    
    $
    958,646
    
    
    
    (48.4
    %)
    
    $
    1,856,359
    
    
    
    (30.9
    %)Central
    
    
    855,672
    
    
    
    (39.9
    %)
    
    
    1,423,409
    
    
    
    (19.2
    %)West
    
    
    1,013,637
    
    
    
    (56.1
    %)
    
    
    2,307,220
    
    
    
    (28.2
    %)Other homebuilding
    
    
    17,496
    
    
    
    (86.9
    %)
    
    
    133,400
    
    
    
    (43.8
    %)$
    2,845,451
    
    
    
    (50.3
    %)
    
    $
    5,720,388
    
    
    
    (27.5
    %)Operating Earnings (Loss)East
    
    $
    (419,241
    )
    
    
    35.2
    %
    
    $
    (310,088
    )
    
    
    (246.1
    %)Central
    
    
    (97,709
    )
    
    
    50.8
    %
    
    
    (64,781
    )
    
    
    (237.0
    %)West
    
    
    (334,566
    )
    
    
    (72.0
    %)
    
    
    (1,196,135
    )
    
    NMOther homebuilding
    
    
    10,603
    
    
    
    (105.9
    %)
    
    
    (178,733
    )
    
    NM$
    (840,913
    )
    
    
    (51.9
    %)
    
    $
    (1,749,737
    )
    
    
    (901.7
    %)
 NM = Not Meaningful
 39




---



##### Table of Contents



East
     Central
   40




---



##### Table of Contents



West
     41




---



##### Table of Contents



Other homebuilding
    FINANCIAL SERVICES
     42




---



##### Table of Contents



For the Three Months Ended December 31,2008
    
    
    2007Change
    
    
    
    
    
    ChangeRevenues
    
    $
    29,032
    
    
    
    (53.3
    %)
    
    $
    62,203
    
    
    
    (42.2
    %)Cost of Sales
    
    
    (2,346
    )
    
    
    (79.1
    %)
    
    
    (11,207
    )
    
    
    (53.0
    %)Selling, General and Administrative Expenses
    
    
    (41,015
    )
    
    
    (63.2
    %)
    
    
    (111,480
    )
    
    
    65.8
    %Operating Loss
    
    $
    (14,329
    )
    
    
    (76.3
    %)
    
    $
    (60,484
    )
    
    
    (466.7
    %)Operating Margin
    
    
    (49.4
    %)
    
    
    47.8
    
    
    
    (97.2
    %)
    
    
    (112.5
    )Net Interest Income
    
    $
    1,834
    
    
    
    (45.7
    %)
    
    $
    3,375
    
    
    
    (58.7
    %)Average Interest Earning Assets
    
    $
    277,139
    
    
    
    (67.2
    %)
    
    $
    845,624
    
    
    
    (49.4
    %)Average Yield
    
    
    6.03
    %
    
    
    (0.87
    )
    
    
    6.90
    %
    
    
    (0.76
    )Average Interest Bearing Liabilities
    
    $
    174,115
    
    
    
    (74.8
    %)
    
    $
    691,079
    
    
    
    (57.4
    %)Average Rate Paid
    
    
    5.73
    %
    
    
    (1.06
    )
    
    
    6.79
    %
    
    
    0.82
 For the Nine Months Ended December 31,2008
    
    
    2007Change
    
    
    
    
    
    ChangeRevenues
    
    $
    157,864
    
    
    
    (34.5
    %)
    
    $
    240,869
    
    
    
    (31.4
    %)Cost of Sales
    
    
    (10,192
    )
    
    
    (78.9
    %)
    
    
    (48,274
    )
    
    
    (27.3
    %)Selling, General and Administrative Expenses
    
    
    (200,092
    )
    
    
    (31.5
    %)
    
    
    (292,192
    )
    
    
    33.6
    %Operating Loss
    
    $
    (52,420
    )
    
    
    (47.4
    %)
    
    $
    (99,597
    )
    
    
    (251.5
    %)Operating Margin
    
    
    (33.2
    %)
    
    
    8.1
    
    
    
    (41.3
    %)
    
    
    (60.0
    )Net Interest Income
    
    $
    6,189
    
    
    
    (54.3
    %)
    
    $
    13,547
    
    
    
    (45.3
    %)Average Interest Earning Assets
    
    $
    361,006
    
    
    
    (68.1
    %)
    
    $
    1,130,929
    
    
    
    (28.8
    %)Average Yield
    
    
    6.05
    %
    
    
    (1.24
    )
    
    
    7.29
    %
    
    
    (0.36
    )Average Interest Bearing Liabilities
    
    $
    287,601
    
    
    
    (72.8
    %)
    
    $
    1,055,755
    
    
    
    (31.8
    %)Average Rate Paid
    
    
    4.98
    %
    
    
    (1.25
    )
    
    
    6.23
    %
    
    
    0.47
  43




---



##### Table of Contents



For the Three Months Ended December 31,2008
    
    
    2007Provision for Losses on Mortgage Loans
    
    $
    1,522
    
    
    $
    61,429Provision for Real Estate Owned
    
    
    5,018
    
    
    
    48Anticipated Losses for Originated Loans
    
    
    1,044
    
    
    
    3,176Total Provisions for Losses (1)
    
    $
    7,584
    
    
    $
    64,653
 For the Nine Months Ended December 31,2008
    
    
    2007Provision for Losses on Mortgage Loans
    
    $
    838
    
    
    $
    119,515Provision for Real Estate Owned
    
    
    11,301
    
    
    
    2,609Anticipated Losses for Originated Loans
    
    
    17,311
    
    
    
    5,884Total Provisions for Losses (1)
    
    $
    29,450
    
    
    $
    128,008
 (1)
    
    For additional information on Financial Services provisions, please refer to our
Critical Accounting Estimates, Mortgage Loan Allowances and Related Reserve, and Note
(C), Mortgage Loans Receivable and Real Estate Owned, of the Notes to Consolidated
Financial Statements.
    44




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For the Three Months Ended December 31,2008
    
    
    2007Change
    
    
    
    
    
    ChangeLoan Sales to InvestorsVolume (in millions)
    
    $
    690.6
    
    
    
    (64.7
    %)
    
    $
    1,954.5
    
    
    
    (15.4
    %)Number of Loans Sold
    
    
    3,430
    
    
    
    (64.8
    %)
    
    
    9,733
    
    
    
    (11.0
    %)Gain on Sale of Mortgage Loans
    
    $
    8,156
    
    
    
    (62.6
    %)
    
    $
    21,797
    
    
    
    (40.0
    %)Loans Brokered to Third Party LendersVolume (in millions)
    
    $
    40.8
    
    
    
    (90.2
    %)
    
    $
    416.4
    
    
    
    (46.1
    %)Number of Brokered Loans
    
    
    144
    
    
    
    (88.7
    %)
    
    
    1,277
    
    
    
    (49.4
    %)Broker Fees
    
    $
    727
    
    
    
    (90.6
    %)
    
    $
    7,772
    
    
    
    (49.6
    %)Average Loan SizeLoans Sold to Investors
    
    $
    201,329
    
    
    
    0.2
    %
    
    $
    200,827
    
    
    
    (4.9
    %)Loans Brokered to Third Party
Lenders
    
    $
    283,025
    
    
    
    (13.2
    %)
    
    $
    326,235
    
    
    
    6.5
    %
 For the Nine Months Ended December 31,2008
    
    
    2007Change
    
    
    
    
    
    ChangeLoan Sales to InvestorsVolume (in millions)
    
    $
    3,370.8
    
    
    
    (52.1
    %)
    
    $
    7,031.3
    
    
    
    (7.0
    %)Number of Loans Sold
    
    
    17,085
    
    
    
    (49.2
    %)
    
    
    33,605
    
    
    
    (9.7
    %)Gain on Sale of Mortgage Loans
    
    $
    54,967
    
    
    
    (39.7
    %)
    
    $
    91,163
    
    
    
    (25.8
    %)Loans Brokered to Third Party LendersVolume (in millions)
    
    $
    341.2
    
    
    
    (76.7
    %)
    
    $
    1,463.1
    
    
    
    (43.6
    %)Number of Brokered Loans
    
    
    1,106
    
    
    
    (74.2
    %)
    
    
    4,291
    
    
    
    (50.4
    %)Broker Fees
    
    $
    6,015
    
    
    
    (77.3
    %)
    
    $
    26,493
    
    
    
    (48.4
    %)Average Loan SizeLoans Sold to Investors
    
    $
    197,297
    
    
    
    (5.7
    %)
    
    $
    209,236
    
    
    
    3.0
    %Loans Brokered to Third Party
Lenders
    
    $
    308,654
    
    
    
    (9.5
    %)
    
    $
    340,976
    
    
    
    13.7
    %
  45




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For the Three Months Ended December 31,2008
    
    
    2007Change
    
    
    
    
    
    ChangeOpen Applications  Beginning
    
    
    6,955
    
    
    
    (56.8
    %)
    
    
    16,099
    
    
    
    (24.9
    %)New Applications
    
    
    13,446
    
    
    
    (49.1
    %)
    
    
    26,412
    
    
    
    27.8
    %Cancelled Applications
    
    
    (12,828
    )
    
    
    (28.4
    %)
    
    
    (17,905
    )
    
    
    85.3
    %Originated Loans
    
    
    (2,869
    )
    
    
    (71.4
    %)
    
    
    (10,036
    )
    
    
    (26.2
    %)Open Applications  Ending
    
    
    4,704
    
    
    
    (67.7
    %)
    
    
    14,570
    
    
    
    (22.6
    %)
 For the Nine Months Ended December 31,2008
    
    
    2007Change
    
    
    
    
    
    ChangeOpen Applications  Beginning
    
    
    15,107
    
    
    
    (14.4
    %)
    
    
    17,648
    
    
    
    (24.0
    %)New Applications
    
    
    79,848
    
    
    
    (7.8
    %)
    
    
    86,607
    
    
    
    25.9
    %Cancelled Applications
    
    
    (73,024
    )
    
    
    31.3
    %
    
    
    (55,610
    )
    
    
    82.8
    %Originated Loans
    
    
    (17,227
    )
    
    
    (49.4
    %)
    
    
    (34,075
    )
    
    
    (20.3
    %)Open Applications  Ending
    
    
    4,704
    
    
    
    (67.7
    %)
    
    
    14,570
    
    
    
    (22.6
    %)
  For the Three Months Ended December 31,2008
    
    
    2007Change
    
    
    
    
    
    ChangeOrigination Volume (in millions)
    
    $
    601.0
    
    
    
    (72.5
    %)
    
    $
    2,183.3
    
    
    
    (33.7
    %)Number of Originated LoansBuilder
    
    
    2,679
    
    
    
    (46.3
    %)
    
    
    4,991
    
    
    
    (21.9
    %)Retail
    
    
    190
    
    
    
    (96.2
    %)
    
    
    5,045
    
    
    
    (30.0
    %)2,869
    
    
    
    (71.4
    %)
    
    
    10,036
    
    
    
    (26.2
    %)Average Loan Size  Originated Loans
    
    $
    209,478
    
    
    
    (3.7
    %)
    
    $
    217,500
    
    
    
    (10.1
    %)
 For the Nine Months Ended December 31,2008
    
    
    2007Change
    
    
    
    
    
    ChangeOrigination Volume (in millions)
    
    $
    3,512.2
    
    
    
    (54.0
    %)
    
    $
    7,640.5
    
    
    
    (24.6
    %)Number of Originated LoansBuilder
    
    
    8,615
    
    
    
    (42.5
    %)
    
    
    14,977
    
    
    
    (20.7
    %)Retail
    
    
    8,612
    
    
    
    (54.9
    %)
    
    
    19,098
    
    
    
    (20.0
    %)17,227
    
    
    
    (49.4
    %)
    
    
    34,075
    
    
    
    (20.3
    %)Average Loan Size  Originated Loans
    
    $
    203,885
    
    
    
    (9.1
    %)
    
    $
    224,200
    
    
    
    (5.4
    %)
   46




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OTHER
  For the Three Months Ended December 31,2008
    
    
    2007Change
    
    
    
    
    
    ChangeCorporate General and Administrative Expense
    
    $
    (40,683
    )
    
    
    7.5
    %
    
    $
    (37,850
    )
    
    
    (47.7
    %)Interest Expense (1)
    
    
    (17,758
    )
    
    
    100.0
    %
    
    
    
    
    
    
    Other Income
    
    
    6,953
    
    
    
    381.2
    %
    
    
    1,445
    
    
    
    NMOperating Loss
    
    $
    (51,488
    )
    
    
    41.4
    %
    
    $
    (36,405
    )
    
    
    (49.7
    %)
 For the Nine Months Ended December 31,2008
    
    
    2007Change
    
    
    
    
    
    ChangeCorporate General and Administrative Expense
    
    $
    (152,757
    )
    
    
    30.1
    %
    
    $
    (117,371
    )
    
    
    (31.8
    %)Interest Expense (1)
    
    
    (28,911
    )
    
    
    100.0
    %
    
    
    
    
    
    
    Other Income
    
    
    19,346
    
    
    
    (21.0
    %)
    
    
    24,493
    
    
    
    867.3
    %Operating Loss
    
    $
    (162,322
    )
    
    
    74.8
    %
    
    $
    (92,878
    )
    
    
    (45.2
    %)
 (1)
    
    For further information on interest expense, see Note (A), Significant Accounting
Policies, of the Notes to Consolidated Financial Statements.
  For the Three Months Ended December 31,2008
    
    
    2007Change
    
    
    
    
    
    ChangeCompensation and Benefits
    
    $
    17,662
    
    
    
    (27.4
    %)
    
    $
    24,338
    
    
    
    (60.2
    %)Professional and Legal Costs
    
    
    10,133
    
    
    
    59.2
    %
    
    
    6,366
    
    
    
    (7.6
    %)Rent and Utilities
    
    
    6,475
    
    
    
    332.2
    %
    
    
    1,498
    
    
    
    (37.5
    %)Travel
    
    
    1,131
    
    
    
    (9.3
    %)
    
    
    1,247
    
    
    
    (27.8
    %)Other
    
    
    5,282
    
    
    
    20.0
    %
    
    
    4,401
    
    
    
    NMGeneral and Administrative Expense
    
    $
    40,683
    
    
    
    7.5
    %
    
    $
    37,850
    
    
    
    (47.7
    %)
 For the Nine Months Ended December 31,2008
    
    
    2007Change
    
    
    
    
    
    ChangeCompensation and Benefits
    
    $
    83,936
    
    
    
    (6.8
    %)
    
    $
    90,078
    
    
    
    (41.8
    %)Professional and Legal Costs
    
    
    36,668
    
    
    
    156.7
    %
    
    
    14,283
    
    
    
    (0.6
    %)Rent and Utilities
    
    
    11,112
    
    
    
    129.5
    %
    
    
    4,842
    
    
    
    (8.9
    %)Travel
    
    
    3,892
    
    
    
    0.9
    %
    
    
    3,858
    
    
    
    (33.7
    %)Other
    
    
    17,149
    
    
    
    297.9
    %
    
    
    4,310
    
    
    
    (152.5
    %)General and Administrative Expense
    
    $
    152,757
    
    
    
    30.1
    %
    
    $
    117,371
    
    
    
    (31.8
    %)
 47




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##### Table of Contents



INCOME TAXES
  DISCONTINUED OPERATIONS
     For the Three Months Ended December 31,
    
    
    For the Nine Months Ended December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenues
    
    $
    
    
    
    $
    32,800
    
    
    $
    
    
    
    $
    102,247Operating Income
    
    $
    
    
    
    $
    1,458
    
    
    $
    
    
    
    $
    4,166Pre-tax Gain on Sale
    
    $
    
    
    
    $
    
    
    
    $
    39,379
    
    
    $
    
   48




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FINANCIAL CONDITION AND LIQUIDITY
 Cash Flows
  For the Nine Months Ended December 31,2008
    
    
    2007Net Cash Provided by (Used in)Centex*Operating Activities
    
    $
    976,003
    
    
    $
    (224,834
    )Investing Activities
    
    
    124,587
    
    
    
    (331,063
    )Financing Activities
    
    
    (230,690
    )
    
    
    (260,497
    )869,900
    
    
    
    (816,394
    )Financial ServicesOperating Activities
    
    
    128,039
    
    
    
    796,497Investing Activities
    
    
    99,876
    
    
    
    57,851Financing Activities
    
    
    (212,788
    )
    
    
    (858,836
    )15,127
    
    
    
    (4,488
    )Centex Corporation and SubsidiariesOperating Activities
    
    
    1,091,411
    
    
    
    507,049Investing Activities
    
    
    203,394
    
    
    
    (20,598
    )Financing Activities
    
    
    (409,778
    )
    
    
    (1,307,333
    )Net Increase (Decrease) in Cash
    
    $
    885,027
    
    
    $
    (820,882
    )
 *
    
    Centex represents a supplemental presentation that reflects the Financial Services segment
as if accounted for under the equity method. We believe that separate disclosure of the
consolidating information is useful because the Financial Services subsidiaries and related
companies operate in a distinctly different financial environment, and Centex has limited
obligations with respect to the indebtedness of our Financial Services subsidiaries and
related companies. Management uses this information in its financial and strategic planning.
We also use this presentation to allow investors to compare us to homebuilders that do not
have financial services operations.
  Centex
   49




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Financial Services
   Discontinued Operations
  Credit Facilities and Liquidity
  Credit FacilitiesCentexMulti-Bank Revolving Credit FacilityRevolving Credit
    
    $
    750,000Letters of Credit
    
    
    600,0001,350,000Financial ServicesSecured Credit Facilities
    
    
    250,000$
    1,600,000
    (1)
 (1)
    
    Prior to amendment of revolving credit facility during January 2009.
  50




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CentexSenior Debt:Senior Notes, weighted-average 6.04%, due through 2017
    
    $
    3,102,739Land Acquisition Notes and Other, weighted-average
10.00%, due through 2018
    
    
    8553,103,594Financial ServicesMortgage Warehouse Facilities, weighted-average 2.33%
    
    
    157,965$
    3,261,559
  Debt Type
    
    
    AmountSenior Notes (1)
    
    $
    (216,451
    )Land Acquisition Notes and Other
    
    
    (1,072
    )$
    (217,523
    )
 (1)
    
    Amount includes $205 of debt discount amortization.
    Required Level
    
    
Actual LevelLeverage Ratio
    
    
    £ 47.5
    %
    
    
    45.9
    %Excess Tangible Net Worth
    
    Greater than $0
    
    Waived by lendersExcess Borrowing Base
    
    Greater than $0
    
    $
    352,651
   51




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52




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CERTAIN OFF-BALANCE SHEET OBLIGATIONS
  Joint Ventures
    As of December 31, 2008
    
    
    As of March 31, 2008Centexs
    
    
    
    
    
    
    
    
    
    
    CentexsNumber
    
    
    
    
    
    
    Share
    
    
    Number
    
    
    
    
    
    
    Shareof JVs (1)
    
    
    Investments
    
    
    of Debt (2)
    
    
    of JVs (1)
    
    
    Investments
    
    
    of Debt (2)Unleveraged Joint Ventures
    
    
    27
    
    
    $
    152,620
    
    
    $
    
    
    
    
    29
    
    
    $
    70,043
    
    
    $
    Joint Ventures with Debt:
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    13Limited Maintenance
Guarantee (3) (4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,311
    
    
    
    27,500Repayment Guarantee(5)
    
    
    
    
    
    
    (2,959
    )
    
    
    4,197
    
    
    
    
    
    
    
    3,154
    
    
    
    13,692Completion Guarantee (4)
    
    
    
    
    
    
    (9,373
    )
    
    
    123,755
    
    
    
    
    
    
    
    78,274
    
    
    
    133,935No Recourse or Guarantee
    
    
    
    
    
    
    (499
    )
    
    
    24,000
    
    
    
    
    
    
    
    12,040
    
    
    
    24,00037
    
    
    $
    139,789
    
    
    $
    151,952
    
    
    
    42
    
    
    $
    206,822
    
    
    $
    199,127
 (1)
    
    The number of joint ventures includes unconsolidated Home Building joint ventures for
which we have an investment balance as of the end of the period and/or current fiscal year
activity. We were the managing member of 22 and 23 of the active joint ventures as of
December 31, 2008 and March 31, 2008, respectively. The number of joint ventures includes 12
and 17 joint ventures as of December 31, 2008 and March 31, 2008, respectively, for which
substantially all of the joint ventures activities are complete.(2)
    
    Centexs share of debt represents our maximum exposure related to the joint ventures debt
at each respective date, exclusive of any debt-related obligations recorded by us.(3)
    
    We guaranteed that certain of the joint ventures would maintain a specified loan to value
ratio. For certain joint ventures, we contributed additional capital in order to maintain
loan to value requirements.(4)
    
    Certain joint venture agreements require us to guarantee the completion of a project or
phase if the joint venture does not perform the required land development. A portion of
these completion guarantees are joint and several with our partners.(5)
    
    We have guaranteed repayment of a portion of certain joint venture debt limited to our
ownership percentage of the joint venture or a percentage thereof.
  53




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For the Fiscal Years EndingMarch 31,2009
    
    $
    144,5662010
    
    
    3,1892011
    
    
    4,197$
    151,952
 CRITICAL ACCOUNTING ESTIMATES
  Mortgage Loan Allowances and Related Reserve
     54




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Inventory Valuation
   
    
    estimates of average future selling prices,
    
    estimates of future construction and land development costs, and
 
    
    estimated future sales rates.
  
    
    historical project results such as average sales price and sales rates, if closings
have occurred in the project,
    
    competitors local market (or neighborhood) presence and their competitive actions,
 
    
    project specific attributes such as location desirability and uniqueness of product
offering,
    
    potential for alternative product offerings to respond to local market conditions,
and
 
    
    current local market economic and demographic conditions and related trends and
forecasts.
  
    
    geographic location of project,
 
    
    product type (for example, multifamily high rise product or single family product),
    
    average sales price of the product, and
 
    
    estimated project life.
  55




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Land Held Under Option Agreements Not Owned and Other Land Deposits
      
    
    local market housing inventory levels for both existing and new homes,
    
    our existing local supply of owned and controlled lots,
 
    
    contract purchase price and terms,
    
    local regulatory environment and, if not fully entitled, likelihood of
obtaining required approvals, and
 
    
    local market economic and demographic factors such as job growth, long-
and short-term interest rates, consumer confidence, population growth and immigration.
 Goodwill
  56




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Warranty Accruals
  Insurance Accruals
  Income Taxes
    57




---



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RECENT ACCOUNTING PRONOUNCEMENTS
     58




---



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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
 This report includes various forward-looking statements, which are not facts or guarantees of
future performance and which are subject to significant risks and uncertainties.
    
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  59




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Item 4. Controls and Procedures
 
 60




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
   The homebuilding industry is undergoing a significant downturn; this downturn has had a material
adverse effect on our business and results of operations and is expected to continue.
  
    
    conditions, including recent disruptions in the broader financial and
credit markets and the current national economic recession, and increases in
unemployment rates, which were 7.2% in December 2008, a level last seen in 1993,
    
    declining homebuyer demand due to lower consumer confidence and an
inability of many homebuyers to sell their existing homes,
 
    
    elevated levels of new and existing homes for sale, including the impact
of increases in residential foreclosures, which are expected to continue for the
foreseeable future,
    
    reduced availability and stricter terms of mortgage financing due to the
significant mortgage market disruptions, tightened credit standards for homebuyers, and
 
    
    pricing pressures resulting from a variety of factors, including the
decision of homebuilders to offer significant discounts and sales incentives to
liquidate unsold inventories of new homes.
  Further decreases in the availability of mortgage financing or other adverse changes in market
conditions could make it more difficult or costly for customers to purchase our homes.
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General business, economic and market conditions may significantly affect the results of operations
of our Financial Services operations.
   Changes in lending laws could hurt our Financial Services operations.
     Current levels of volatility in the capital and credit markets are unprecedented.
  62




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We cannot yet predict the impact of the U.S. governments recently enacted emergency economic
stabilization plan on the financial markets.
  We have a substantial amount of outstanding debt, which is scheduled to mature in future
installments and may need to be refinanced or restructured.
   We could be adversely affected by a change in our credit rating.
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Changes in laws or other events that adversely affect liquidity in the secondary mortgage market
could hurt our business.
  We may not realize our net deferred tax assets.
    64




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Outstanding Common Stock and Other Securities
 Our share price will fluctuate.
  
    
    operating results that differ from the expectations of securities analysts and investors;
    
    factors influencing home purchases, such as availability of home mortgage loans and
interest rates, credit criteria applicable to prospective borrowers, ability to sell
existing residences, and homebuyer sentiment in general;
    
    the operating and securities price performance of companies that investors
consider to be comparable to us;
    
    announcements of strategic developments, combinations, acquisitions and other material
events by us or our competitors; and
    
    changes in global financial markets and global economies and general market conditions,
such as interest rates, commodity and equity prices and the value of financial assets.
 Dividends on our common stock have been suspended and future dividends remain uncertain.
  65




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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 Share Repurchases
  Issuer Purchases of Equity SecuritiesTotal Number of
    
    
    Maximum Number ofTotal Number
    
    
    
    
    
    
    Shares Purchased
    
    
    Shares that May Yet Beof Shares
    
    
    Average Price
    
    
    as Part of Publicly
    
    
    Purchased Under thePurchased
    
    
    Paid Per Share
    
    
    Announced Plans
    
    
    PlansPeriodOctober 1-31
    
    
    8,368
    
    
    $
    8.98
    
    
    
    
    
    
    
    9,399,700November 1-30
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    9,399,700December 1-31
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    9,399,700Total (1)
    
    
    8,368
    
    
    $
    8.98
    
    
    
    
 (1)
    
    The 8,368 shares repurchased for the three months ended December 31, 2008 represent the
delivery to the Company by employees or directors of previously issued shares to satisfy the
exercise price of options and/or withholding taxes that arise on the exercise of options or
the vesting of restricted stock. These transactions are authorized under the terms of the
equity plans under which the options or other equity were awarded; however, these transactions
are not considered repurchases pursuant to the Companys share repurchase program.
  
 Item 5. Other Information
 By-Laws Changes
  
    
    require stockholder proponents and their affiliates to disclose, in addition to
direct ownership interests, all other ownership interests including derivatives, hedged
and short positions and other economic and voting interests;
    
    require director-nominees to represent that they do not, and will not, have any
undisclosed voting commitments or other arrangements with respect to their actions as a
director;
 
    
    require directors nominated by stockholders to complete the Companys standard
director and officer questionnaire;
    
    require stockholders nominating directors to disclose any material relationships
between the stockholder proponents and their affiliates, on the one hand, and the
director nominees and their affiliates, on the other hand;
 
    
    clarify that director nominations by stockholders require a separate advance notice
and cannot be satisfied by any notice of meeting sent by the Company; and
    
    clarify that the advance notice provisions in Article II, Sections 12 and 13, are
the exclusive means for a stockholder to make a director nomination or submit other
business before an annual meeting of stockholders (other than matters properly brought
under Rule 14a-8 of the federal proxy rules, which contains its own procedural
requirements).
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Item 6. Exhibits
  3.1
    
    Amended and Restated Articles of Incorporation of Centex
Corporation (Centex) (incorporated by reference from Exhibit 3.1 to Centexs
Current Report on Form 8-K filed on July 15, 2008).3.2
    
    Amended and Restated By-Laws of Centex dated October 8, 2008
(incorporated by reference from Exhibit 3.1 to Centexs Current Report on Form
8-K filed on October 14, 2008).4.1
    
    Specimen Centex common stock certificate (incorporated by
reference from Exhibit 4.1 to Centexs Quarterly Report on
Form 10-Q for the
quarter ended September 30, 2006).4.2
    
    Any instrument with respect to long-term debt, where the
securities authorized thereunder do not exceed 10% of the total assets of Centex
and its subsidiaries, has not been filed; these instruments relate to (a)
long-term senior and subordinated debt of Centex issued pursuant to supplements
to the indentures filed as Exhibits 4.5 and 4.6 to Centexs Annual Report on
Form 10-K for the fiscal year ended March 31, 2008, which supplements have also
been filed with the SEC as exhibits to various Centex registration statements or
to reports incorporated by reference in such registration statements, (b)
long-term debt issued pursuant to indentures or other agreements in connection
with certain asset securitizations involving certain subsidiaries of Centex in
private transactions and (c) other long-term debt of Centex; Centex agrees to
furnish a copy of such instruments to the SEC upon request.10.1
    
    Fourth Amendment to Credit Agreement dated as of January 23,
2009, between Centex Corporation and the lenders named therein (incorporated by
reference from Exhibit 10.5 to Centexs Current Report on Form 8-K filed on
January 26, 2009).10.2
    
    Centex Corporation 2003 Equity Incentive Plan* as amended through
October 8, 2008 (incorporated by reference from Exhibit 10.2a to Centexs
Quarterly Report on Form 10-Q for the quarter ended September 30, 2008).10.3
    
    Amended and Restated Executive Severance Policy* (incorporated by
reference from Exhibit 10.1 to Centexs Current Report on Form 8-K filed on
October 14, 2008).10.4
    
    Form of Amendment to Change of Control Agreement* (incorporated
by reference from Exhibit 10.2 to Centexs Current Report on Form 8-K filed on
October 14, 2008).10.5
    
    Amendments to form of long-term performance unit award for 2003
Equity Incentive Plan (May 2007 award)* (incorporated by reference from Exhibit
10.3 to Centexs Current Report on Form 8-K filed on October 14, 2008).10.6
    
    Amendment No. 2 to Centex Comprehensive Medical Plan*
(incorporated by reference from Exhibit 10.4 to Centexs Current Report on Form
8-K filed on October 14, 2008).12.1
    
    Computation of Ratio of Earnings to Fixed Charges (filed
herewith).31.1
    
    Certification of the Chief Executive Officer of Centex
Corporation pursuant to Rules 13a-14 and 15d-14 promulgated under the
Securities Exchange Act of 1934, as amended (filed herewith).31.2
    
    Certification of the Chief Financial Officer of Centex
Corporation pursuant to Rules 13a-14 and 15d-14 promulgated under the
Securities Exchange Act of 1934, as amended (filed herewith).
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##### Table of Contents



32.1
    
    Certification of the Chief Executive Officer of Centex
Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 (filed herewith).32.2
    
    Certification of the Chief Financial Officer of Centex
Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
 *
    
    Management contract or compensatory plan or arrangement.
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##### Table of Contents



Signatures
  CENTEX CORPORATIONRegistrantFebruary 4, 2009
    
    /s/ Catherine R. SmithCatherine R. SmithExecutive Vice President and Chief Financial Officer(principal financial officer)February 4, 2009
    
    /s/ Mark D. KempMark D. KempSenior Vice President and Controller(principal accounting officer)
 69