##### 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, 2006
 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
 ü
 ü




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##### 



Centex Corporation and Subsidiaries
 Form 10-Q Table of Contents
 December 31, 2006
 PART I  FINANCIAL INFORMATIONItem 1.
    
    Financial Statements
    
    
    2Statements of Consolidated Earnings
    
    
    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
    
    
    27Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    48Item 4.
    
    Controls and Procedures
    
    
    48PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    49Item 1A.
    
    Risk Factors
    
    
    49Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    50Item 6.
    
    Exhibits
    
    
    51Signatures
    
    
    52Computation of Ratio of Earnings to Fixed ChargesCertification of the CEOCertification of the CFOCertification of the CEOCertification of the CFO
  1




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 Centex Corporation and Subsidiaries
 
 Statements of Consolidated Earnings
 
 For the Three Months Ended December 31,2006
    
    
    2005RevenuesHome Building
    
    $
    2,587,251
    
    
    $
    3,003,650Financial Services
    
    
    107,577
    
    
    
    112,855Construction Services
    
    
    600,721
    
    
    
    402,927Other, including Intersegment Eliminations
    
    
    (11,099
    )
    
    
    5,7133,284,450
    
    
    
    3,525,145Costs and ExpensesHome Building
    
    
    2,833,267
    
    
    
    2,547,629Financial Services
    
    
    91,081
    
    
    
    91,855Construction Services
    
    
    590,317
    
    
    
    396,516Other, including Intersegment Eliminations
    
    
    (10,444
    )
    
    
    8,271Corporate General and Administrative
    
    
    22,600
    
    
    
    26,775Interest Expense
    
    
    
    
    
    
    3,0093,526,821
    
    
    
    3,074,055Earnings (Loss) from Unconsolidated Entities
    
    
    (45,919
    )
    
    
    48,957Earnings (Loss) from Continuing Operations Before
Income Taxes
    
    
    (288,290
    )
    
    
    500,047Income Taxes Provision (Benefit)
    
    
    (52,910
    )
    
    
    186,835Earnings (Loss) from Continuing Operations
    
    
    (235,380
    )
    
    
    313,212Earnings from Discontinued Operations,
net of Taxes of $3,906 and $12,577
    
    
    7,234
    
    
    
    16,132Net Earnings (Loss)
    
    $
    (228,146
    )
    
    $
    329,344Basic Earnings (Loss) Per ShareContinuing Operations
    
    $
    (1.96
    )
    
    $
    2.47Discontinued Operations
    
    
    0.06
    
    
    
    0.13$
    (1.90
    )
    
    $
    2.60Diluted Earnings (Loss) Per ShareContinuing Operations
    
    $
    (1.96
    )
    
    $
    2.37Discontinued Operations
    
    
    0.06
    
    
    
    0.12$
    (1.90
    )
    
    $
    2.49Average Shares OutstandingBasic
    
    
    119,935,522
    
    
    
    126,572,663Dilutive Securities:Options
    
    
    
    
    
    
    5,307,073Other
    
    
    
    
    
    
    198,027Diluted
    
    
    119,935,522
    
    
    
    132,077,763Cash Dividends Per Share
    
    $
    0.04
    
    
    $
    0.04
 See Notes to Consolidated Financial Statements.
 2




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##### Table of Contents



Centex Corporation and Subsidiaries
Statements of Consolidated Earnings
 
 For the Nine Months Ended December 31,2006
    
    
    2005RevenuesHome Building
    
    $
    7,895,135
    
    
    $
    8,291,236Financial Services
    
    
    350,896
    
    
    
    343,725Construction Services
    
    
    1,648,357
    
    
    
    1,160,904Other, including Intersegment Eliminations
    
    
    (13,724
    )
    
    
    53,5709,880,664
    
    
    
    9,849,435Costs and ExpensesHome Building
    
    
    7,744,995
    
    
    
    7,054,047Financial Services
    
    
    285,149
    
    
    
    280,182Construction Services
    
    
    1,621,471
    
    
    
    1,148,023Other, including Intersegment Eliminations
    
    
    (10,793
    )
    
    
    61,776Corporate General and Administrative
    
    
    67,575
    
    
    
    70,935Interest Expense
    
    
    
    
    
    
    8,7059,708,397
    
    
    
    8,623,668Earnings (Loss) from Unconsolidated Entities
    
    
    (35,864
    )
    
    
    67,585Earnings from Continuing Operations Before
Income Taxes
    
    
    136,403
    
    
    
    1,293,352Income Taxes
    
    
    109,738
    
    
    
    448,102Earnings from Continuing Operations
    
    
    26,665
    
    
    
    845,250Earnings from Discontinued Operations,
net of Taxes of $26,678 and $61,284
    
    
    42,846
    
    
    
    52,294Net Earnings
    
    $
    69,511
    
    
    $
    897,544Basic Earnings Per ShareContinuing Operations
    
    $
    0.22
    
    
    $
    6.61Discontinued Operations
    
    
    0.36
    
    
    
    0.41$
    0.58
    
    
    $
    7.02Diluted Earnings Per ShareContinuing Operations
    
    $
    0.22
    
    
    $
    6.31Discontinued Operations
    
    
    0.34
    
    
    
    0.39$
    0.56
    
    
    $
    6.70Average Shares OutstandingBasic
    
    
    120,507,675
    
    
    
    127,933,898Dilutive Securities:Options
    
    
    3,955,648
    
    
    
    5,578,959Other
    
    
    61,540
    
    
    
    441,420Diluted
    
    
    124,524,863
    
    
    
    133,954,277Cash Dividends Per Share
    
    $
    0.12
    
    
    $
    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, 2006
    
    
    March 31, 2006AssetsCash and Cash Equivalents
    
    $
    59,795
    
    
    $
    47,168Restricted Cash
    
    
    179,196
    
    
    
    135,477Receivables -Residential Mortgage Loans Held for Sale
    
    
    1,988,948
    
    
    
    2,129,538Construction Contracts
    
    
    407,049
    
    
    
    361,393Trade, including Notes of $20,140 and $31,897
    
    
    245,241
    
    
    
    342,786Inventories -Housing Projects
    
    
    9,617,954
    
    
    
    8,419,137Land Held for Development and Sale
    
    
    201,896
    
    
    
    409,295Land Held Under Option Agreements Not Owned
    
    
    374,727
    
    
    
    817,881Other
    
    
    11,766
    
    
    
    11,615Investments -Joint Ventures and Other
    
    
    233,988
    
    
    
    310,384Financial Services
    
    
    
    
    
    
    Property and Equipment, net
    
    
    131,798
    
    
    
    182,757Other Assets -Deferred Income Taxes
    
    
    352,915
    
    
    
    233,908Goodwill
    
    
    220,159
    
    
    
    218,735Deferred Charges and Other, net
    
    
    235,579
    
    
    
    234,763Assets of Discontinued Operations
    
    
    
    
    
    
    7,510,162$
    14,261,011
    
    
    $
    21,364,999Liabilities and Stockholders EquityAccounts Payable
    
    $
    1,007,870
    
    
    $
    992,836Accrued Liabilities
    
    
    1,750,629
    
    
    
    1,766,844Debt -Centex
    
    
    4,309,339
    
    
    
    3,982,193Financial Services
    
    
    1,999,129
    
    
    
    2,077,215Receivables from Affiliates
    
    
    
    
    
    
    Liabilities of Discontinued Operations
    
    
    
    
    
    
    7,001,793Commitments and ContingenciesMinority Interests
    
    
    292,796
    
    
    
    532,460Stockholders Equity -Preferred Stock: Authorized 5,000,000 Shares, None
Issued
    
    
    
    
    
    
    Common Stock: $.25 Par Value; Authorized 300,000,000
Shares; Outstanding 119,284,860 and 122,103,713
Shares
    
    
    30,919
    
    
    
    34,132Capital in Excess of Par Value
    
    
    42,586
    
    
    
    580,010Retained Earnings
    
    
    5,056,811
    
    
    
    5,251,325Treasury Stock, at Cost; 4,391,754 and 14,424,807 Shares
    
    
    (229,068
    )
    
    
    (862,439
    )Accumulated Other Comprehensive Income
    
    
    
    
    
    
    8,630Total Stockholders Equity
    
    
    4,901,248
    
    
    
    5,011,658$
    14,261,011
    
    
    $
    21,364,999
 See Notes to Consolidated Financial Statements.
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##### Table of Contents



Centex Corporation and Subsidiaries
Consolidated Balance Sheets with Consolidating Details
 
 Centex*
    
    
    Financial ServicesDecember 31, 2006
    
    
    March 31, 2006
    
    
    December 31, 2006
    
    
    March 31, 2006$
    51,106
    
    
    $
    36,711
    
    
    $
    8,689
    
    
    $
    10,45753,595
    
    
    
    70,824
    
    
    
    125,601
    
    
    
    64,653
    
    
    
    
    
    
    
    1,988,948
    
    
    
    2,129,538407,049
    
    
    
    361,393
    
    
    
    
    
    
    
    190,315
    
    
    
    298,912
    
    
    
    54,926
    
    
    
    43,8749,617,954
    
    
    
    8,419,137
    
    
    
    
    
    
    
    201,896
    
    
    
    409,295
    
    
    
    
    
    
    
    374,727
    
    
    
    817,881
    
    
    
    
    
    
    
    5,872
    
    
    
    5,361
    
    
    
    5,894
    
    
    
    6,254233,988
    
    
    
    310,384
    
    
    
    
    
    
    
    131,041
    
    
    
    655,266
    
    
    
    
    
    
    
    114,121
    
    
    
    160,611
    
    
    
    17,677
    
    
    
    22,146334,662
    
    
    
    217,446
    
    
    
    18,253
    
    
    
    16,462211,207
    
    
    
    206,998
    
    
    
    8,952
    
    
    
    11,737220,956
    
    
    
    212,617
    
    
    
    14,623
    
    
    
    22,146
    
    
    
    
    
    
    
    
    
    
    
    7,510,162$
    12,148,489
    
    
    $
    12,182,836
    
    
    $
    2,243,563
    
    
    $
    9,837,429$
    995,276
    
    
    $
    977,608
    
    
    $
    12,594
    
    
    $
    15,2281,651,029
    
    
    
    1,680,090
    
    
    
    99,600
    
    
    
    86,7544,309,339
    
    
    
    3,982,193
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,999,129
    
    
    
    2,077,215
    
    
    
    
    
    
    
    (13,082
    )
    
    
    (9,110
    )
    
    
    
    
    
    
    
    
    
    
    
    7,001,793291,597
    
    
    
    531,287
    
    
    
    1,199
    
    
    
    1,173
    
    
    
    
    
    
    
    
    30,919
    
    
    
    34,132
    
    
    
    1
    
    
    
    142,586
    
    
    
    580,010
    
    
    
    275,467
    
    
    
    275,4675,056,811
    
    
    
    5,251,325
    
    
    
    (131,345
    )
    
    
    380,206(229,068
    )
    
    
    (862,439
    )
    
    
    
    
    
    
    
    
    
    
    8,630
    
    
    
    
    
    
    
    8,7024,901,248
    
    
    
    5,011,658
    
    
    
    144,123
    
    
    
    664,376$
    12,148,489
    
    
    $
    12,182,836
    
    
    $
    2,243,563
    
    
    $
    9,837,429
 *
    
    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 31,2006
    
    
    2005Cash Flows  Operating ActivitiesNet Earnings
    
    $
    69,511
    
    
    $
    897,544Adjustments-Depreciation and Amortization
    
    
    42,958
    
    
    
    49,441Stock-based Compensation
    
    
    52,446
    
    
    
    51,326Provision for Losses on Residential Mortgage Loans Held for Investment
    
    
    22,364
    
    
    
    68,032Impairment and Write-off of Land-related Assets
    
    
    499,177
    
    
    
    18,864Deferred Income Tax (Benefit) Provision
    
    
    (49,014
    )
    
    
    (166,994
    )Loss (Earnings) of Joint Ventures and Unconsolidated Subsidiaries
    
    
    58,973
    
    
    
    (63,039
    )Distributions of Earnings of Joint Ventures and
Unconsolidated Subsidiaries
    
    
    88,522
    
    
    
    84,994Minority Interest, net of Taxes
    
    
    (411
    )
    
    
    (517
    )Gain on Sale of Businesses
    
    
    (126,038
    )
    
    
    (6,500
    )Changes in Assets and Liabilities, Excluding Effect of Dispositions(Increase) Decrease in Restricted Cash
    
    
    (74,857
    )
    
    
    (91,324
    )Decrease (Increase) in Receivables
    
    
    40,882
    
    
    
    26,379Decrease in Residential Mortgage Loans Held for Sale
    
    
    140,590
    
    
    
    47,693Increase in Housing Projects and Land Held for Development and Sale
    
    
    (1,455,848
    )
    
    
    (2,273,722
    )(Increase) Decrease in Other Inventories
    
    
    (103
    )
    
    
    (163
    )(Decrease) Increase in Accounts Payable and Accrued Liabilities
    
    
    (32,960
    )
    
    
    311,776Decrease (Increase) in Other Assets, net
    
    
    1,572
    
    
    
    (24,938
    )(Decrease) Increase in Payables to Affiliates
    
    
    
    
    
    
    Other
    
    
    110
    
    
    
    2,447(722,126
    )
    
    
    (1,068,701
    )Cash Flows  Investing ActivitiesPayments Received on Notes Receivable
    
    
    11,757
    
    
    
    23,584Increase in Residential Mortgage Loans Held for Investment
    
    
    (292,448
    )
    
    
    (912,287
    )Investments in and Advances to Joint Ventures
    
    
    (187,052
    )
    
    
    (316,085
    )Distributions from Joint Ventures
    
    
    148,242
    
    
    
    134,740Decrease (Increase) in Investments in and Advances to Unconsolidated
Subsidiaries
    
    
    
    
    
    
    Purchases of Property and Equipment, net
    
    
    (26,929
    )
    
    
    (42,998
    )Proceeds from Dispositions
    
    
    494,013
    
    
    
    327,415Other
    
    
    (6,105
    )
    
    
    (2,857
    )141,478
    
    
    
    (788,488
    )Cash Flows  Financing ActivitiesIncrease in Short-term Debt, net
    
    
    294,129
    
    
    
    1,781,738CentexIssuance of Long-term Debt
    
    
    500,641
    
    
    
    972,049Repayment of Long-term Debt
    
    
    (192,991
    )
    
    
    (327,153
    )Financial ServicesIssuance of Long-term Debt
    
    
    961,126
    
    
    
    2,008,372Repayment of Long-term Debt
    
    
    (746,680
    )
    
    
    (2,539,019
    )Proceeds from Stock Option Exercises
    
    
    53,800
    
    
    
    28,593Purchases of Common Stock, net
    
    
    (263,235
    )
    
    
    (474,216
    )Dividends Paid
    
    
    (14,302
    )
    
    
    (15,382
    )592,488
    
    
    
    1,434,982Effect of Exchange Rate on Cash
    
    
    
    
    
    
    (1,479
    )Net Increase (Decrease) in Cash and Cash Equivalents
    
    
    11,840
    
    
    
    (423,686
    )Cash and Cash Equivalents at Beginning of Period(1)
    
    
    47,955
    
    
    
    502,586Cash and Cash Equivalents at End of Period(2)
    
    $
    59,795
    
    
    $
    78,900
 See Notes to Consolidated Financial Statements.(1)
    
    Amount includes cash and cash equivalents of discontinued operations of $787 as of March 31,
2006 and $650 as of March 31, 2005.(2)
    
    Amount includes cash and cash equivalents of discontinued operations of $0 as of December 31,
2006 and $412 as of December 31, 2005.
 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 31,2006
    
    
    2005
    
    
    2006
    
    
    2005$
    69,511
    
    
    $
    897,544
    
    
    $
    84,227
    
    
    $
    88,81536,198
    
    
    
    36,035
    
    
    
    6,760
    
    
    
    13,40652,446
    
    
    
    51,326
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,364
    
    
    
    68,032499,177
    
    
    
    18,864
    
    
    
    
    
    
    
    (117,029
    )
    
    
    (28,981
    )
    
    
    68,015
    
    
    
    (138,013
    )(25,254
    )
    
    
    (151,854
    )
    
    
    
    
    
    
    684,302
    
    
    
    109,994
    
    
    
    
    
    
    
    (437
    )
    
    
    (734
    )
    
    
    26
    
    
    
    217(4,772
    )
    
    
    (6,500
    )
    
    
    (121,266
    )
    
    
    17,229
    
    
    
    (21,519
    )
    
    
    (92,086
    )
    
    
    (69,805
    )49,811
    
    
    
    32,295
    
    
    
    (8,929
    )
    
    
    (5,916
    )
    
    
    
    
    
    
    
    140,590
    
    
    
    47,693(1,455,848
    )
    
    
    (2,273,722
    )
    
    
    
    
    
    
    (463
    )
    
    
    (730
    )
    
    
    360
    
    
    
    567(38,482
    )
    
    
    313,207
    
    
    
    (3,180
    )
    
    
    (1,222
    )(12,159
    )
    
    
    (43,559
    )
    
    
    13,731
    
    
    
    18,621
    
    
    
    
    
    
    
    (15,765
    )
    
    
    64,548110
    
    
    
    2,447
    
    
    
    
    
    
    
    (245,660
    )
    
    
    (1,065,887
    )
    
    
    94,847
    
    
    
    86,94311,651
    
    
    
    23,405
    
    
    
    106
    
    
    
    179
    
    
    
    
    
    
    
    (292,448
    )
    
    
    (912,287
    )(187,052
    )
    
    
    (316,085
    )
    
    
    
    
    
    
    148,242
    
    
    
    134,740
    
    
    
    
    
    
    
    12,672
    
    
    
    (64,757
    )
    
    
    
    
    
    
    17,150
    
    
    
    (31,199
    )
    
    
    (6,403
    )
    
    
    (11,799
    )
    
    
    
    327,415
    
    
    
    468,132
    
    
    
    (6,105
    )
    
    
    (2,857
    )
    
    
    
    
    
    
    (3,442
    )
    
    
    70,662
    
    
    
    169,387
    
    
    
    (923,907
    )179,584
    
    
    
    388,889
    
    
    
    114,545
    
    
    
    1,392,849500,641
    
    
    
    972,049
    
    
    
    
    
    
    
    (192,991
    )
    
    
    (327,153
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    961,126
    
    
    
    2,008,372
    
    
    
    
    
    
    
    (746,680
    )
    
    
    (2,539,019
    )53,800
    
    
    
    28,593
    
    
    
    
    
    
    
    (263,235
    )
    
    
    (474,216
    )
    
    
    
    
    
    
    (14,302
    )
    
    
    (15,382
    )
    
    
    (595,780
    )
    
    
    (25,000
    )263,497
    
    
    
    572,780
    
    
    
    (266,789
    )
    
    
    837,202
    
    
    
    (1,479
    )
    
    
    
    
    
    
    14,395
    
    
    
    (423,924
    )
    
    
    (2,555
    )
    
    
    23836,711
    
    
    
    490,308
    
    
    
    11,244
    
    
    
    12,278$
    51,106
    
    
    $
    66,384
    
    
    $
    8,689
    
    
    $
    12,516
 *
    
    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




---



##### Table of Contents



Centex Corporation and Subsidiaries
 
 Notes to Consolidated Financial Statements
December 31, 2006
 (A) BASIS OF PRESENTATION
    (B) STATEMENTS OF CONSOLIDATED CASH FLOWS  SUPPLEMENTAL DISCLOSURES
   For the Three Months
    
    
    For the Nine MonthsEnded December 31,
    
    
    Ended December 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Cash Paid for Interest
    
    $
    88,930
    
    
    $
    163,326
    
    
    $
    377,418
    
    
    $
    463,755Net Cash Paid for Taxes
    
    $
    19,237
    
    
    $
    174,896
    
    
    $
    290,104
    
    
    $
    600,926
 8




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##### Table of Contents



For the Three Months
    
    
    For the Nine MonthsEnded December 31,
    
    
    Ended December 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Total Interest Incurred
    
    $
    98,150
    
    
    $
    176,250
    
    
    $
    393,951
    
    
    $
    491,754Less  Interest Capitalized
    
    
    (74,314
    )
    
    
    (57,162
    )
    
    
    (219,623
    )
    
    
    (163,372
    )Financial Services
Interest Expense
    
    
    (23,836
    )
    
    
    (17,289
    )
    
    
    (66,436
    )
    
    
    (47,902
    )Discontinued Operations
    
    
    
    
    
    
    (98,790
    )
    
    
    (107,892
    )
    
    
    (271,775
    )Interest Expense, net
    
    $
    
    
    
    $
    3,009
    
    
    $
    
    
    
    $
    8,705Capitalized Interest Relieved to Home
Buildings Costs and Expenses
    
    $
    66,811
    
    
    $
    40,241
    
    
    $
    150,664
    
    
    $
    115,334
   (C) STOCK-BASED COMPENSATION ARRANGEMENTS
   9




---



##### Table of Contents



Number ofShares
    
    Fair ValuePeriod of Grant
    
    Grant Type
    
    Granted
    
    of GrantFor the year
ended March 31, 2006
    
    Stock Options
    
    
    1,716.2
    
    
    $
    39,301.2Stock Units
    
    
    556.6
    
    
    $
    31,926.9Restricted Stock
    
    
    249.4
    
    
    $
    14,551.1For the nine months
ended December 31, 2006
    
    Stock Options
    
    
    1,383.1
    
    
    $
    27,860.2Stock Units
    
    
    354.9
    
    
    $
    19,341.0Restricted Stock
    
    
    121.2
    
    
    $
    6,379.9
  (D) STOCKHOLDERS EQUITY
  AccumulatedCapital in
    
    
    
    
    
    
    Treasury
    
    
    OtherCommon Stock
    
    
    Excess of
    
    
    Retained
    
    
    Stock,
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Par Value
    
    
    Earnings
    
    
    at Cost
    
    
    Income
    
    
    TotalBalance, March 31, 2006
    
    
    122,104
    
    
    $
    34,132
    
    
    $
    580,010
    
    
    $
    5,251,325
    
    
    $
    (862,439
    )
    
    $
    8,630
    
    
    $
    5,011,658Issuance of
Restricted Stock
    
    
    121
    
    
    
    30
    
    
    
    (30
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock
Compensation
    
    
    
    
    
    
    
    
    
    
    52,446
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52,446Exercise of
Stock Options
Including Tax
Benefits
    
    
    2,022
    
    
    
    506
    
    
    
    68,205
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68,711Cash
Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,302
    )
    
    
    
    
    
    
    
    
    
    
    (14,302
    )Purchase of
Common
Stock for
Treasury
    
    
    (5,033
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (267,763
    )
    
    
    
    
    
    
    (267,763
    )Retirement of
Treasury Stock
    
    
    
    
    
    
    (3,750
    )
    
    
    (645,059
    )
    
    
    (247,797
    )
    
    
    896,606
    
    
    
    
    
    
    
    Other Stock
Transactions
    
    
    71
    
    
    
    1
    
    
    
    (12,986
    )
    
    
    (1,926
    )
    
    
    4,528
    
    
    
    
    
    
    
    (10,383
    )Net Earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69,511
    
    
    
    
    
    
    
    
    
    
    
    69,511Unrealized
Gain on
Hedging
Instruments
(1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,702
    )
    
    
    (8,702
    )Foreign
Currency
Translation
Adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    72
    
    
    
    72Balance, December 31, 2006
    
    
    119,285
    
    
    $
    30,919
    
    
    $
    42,586
    
    
    $
    5,056,811
    
    
    $
    (229,068
    )
    
    $
    
    
    
    $
    4,901,248
 (1)
    
    Amount includes a reclassification adjustment of $15,738 for hedging gain included in
earnings from discontinued operations.
 
 10




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##### Table of Contents



(E) INVENTORIES
 Housing Projects and Land Held for Development and Sale
  As ofDecember 31, 2006
    
    
    March 31, 2006Direct Construction
    
    $
    3,917,752
    
    
    $
    3,218,138Land Under Development
    
    
    5,700,202
    
    
    
    5,200,999Housing Projects
    
    $
    9,617,954
    
    
    $
    8,419,137
  Land Held Under Option Agreements Not Owned and Other Land Deposits
     As ofDecember 31, 2006
    
    
    March 31, 2006Cash Deposits included in:Land Held for Development and Sale
    
    $
    144.2
    
    
    $
    232.6Land Held Under Option Agreements Not Owned
    
    
    45.8
    
    
    
    102.7Total Cash Deposits in Inventory
    
    
    190.0
    
    
    
    335.3Letters of Credit
    
    
    15.6
    
    
    
    29.0Total Invested through Deposits or Secured with Letters of Credit
    
    $
    205.6
    
    
    $
    364.3Total Purchase Price of Land Option Agreements
    
    $
    4,491.9
    
    
    $
    9,930.2
 11




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##### Table of Contents



(F) GOODWILL
  Home
    
    
    Financial
    
    
    ConstructionBuilding
    
    
    Services
    
    
    Services
    
    
    Other
    
    
    TotalBalance as of March 31, 2006
    
    $
    121,501
    
    
    $
    11,737
    
    
    $
    1,007
    
    
    $
    84,490
    
    
    $
    218,735Goodwill Acquired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,209
    
    
    
    4,209Goodwill Disposed
    
    
    
    
    
    
    (2,785
    )
    
    
    
    
    
    
    
    
    
    
    (2,785
    )Balance as of December 31, 2006
    
    $
    121,501
    
    
    $
    8,952
    
    
    $
    1,007
    
    
    $
    88,699
    
    
    $
    220,159
  12




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##### Table of Contents



(G) INDEBTEDNESS
  As ofDecember 31, 2006
    
    
    March 31, 2006Weighted-
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    AverageInterest
    
    
    
    
    
    
    InterestRate
    
    
    
    
    
    
    RateShort-term Debt:Centex
    
    $
    306,750
    
    
    
    5.49
    %
    
    $
    127,166
    
    
    
    5.09
    %Financial ServicesFinancial Institutions
    
    
    409,303
    
    
    
    5.43
    %
    
    
    324,986
    
    
    
    5.00
    %Harwood Street Funding I, LLC Secured
Liquidity Notes
    
    
    1,529,826
    
    
    
    5.38
    %
    
    
    1,692,229
    
    
    
    4.84
    %Consolidated Short-term Debt
    
    
    2,245,879
    
    
    
    
    
    
    
    2,144,381Long-term Debt:CentexMedium-term Note Programs, due through 2008
    
    
    170,000
    
    
    
    5.62
    %
    
    
    358,000
    
    
    
    6.01
    %Senior Notes, due through 2017
    
    
    3,708,922
    
    
    
    5.89
    %
    
    
    3,208,762
    
    
    
    5.79
    %Other Indebtedness, due through 2018
    
    
    23,682
    
    
    
    6.54
    %
    
    
    188,346
    
    
    
    9.17
    %Subordinated Debentures, due in 2007
    
    
    99,985
    
    
    
    8.75
    %
    
    
    99,919
    
    
    
    8.75
    %4,002,589
    
    
    
    
    
    
    
    3,855,027Financial ServicesHarwood Street Funding I, LLC Variable-Rate
Subordinated Extendable Certificates, due through 2010
    
    
    60,000
    
    
    
    7.35
    %
    
    
    60,000
    
    
    
    6.83
    %Consolidated Long-term Debt
    
    
    4,062,589
    
    
    
    
    
    
    
    3,915,027Total Debt
    
    $
    6,308,468
    
    
    
    
    
    
    $
    6,059,408
  13




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##### Table of Contents



For the Nine Months Ended December 31,2006
    
    2005Short-term Debt:Centex
    
    
    5.33
    %
    
    
    3.78
    %Financial Services
    
    
    3.57
    %
    
    
    3.80
    %Long-term Debt:CentexMedium-term Note Programs
    
    
    6.07
    %
    
    
    5.41
    % (1)Senior Notes
    
    
    5.85
    %
    
    
    5.91
    %Other Indebtedness
    
    
    6.05
    %
    
    
    5.34
    %Subordinated Debentures
    
    
    8.75
    %
    
    
    8.50
    %Financial ServicesHarwood Street Funding I, LLC Variable-Rate
Subordinated Extendable Certificates
    
    
    7.31
    %
    
    
    5.60
    %
 (1)
    
    Interest rate includes the effect of an interest rate swap agreement.
  Centex
    
    
    Financial Services
    
    
    Total2007
    
    $
    100,385
    
    
    $
    
    
    
    $
    100,3852008
    
    
    526,916
    
    
    
    
    
    
    
    526,9162009
    
    
    150,545
    
    
    
    
    
    
    
    150,5452010
    
    
    225,101
    
    
    
    60,000
    
    
    
    285,1012011
    
    
    700,100
    
    
    
    
    
    
    
    700,100Thereafter
    
    
    2,299,542
    
    
    
    
    
    
    
    2,299,542$
    4,002,589
    
    
    $
    60,000
    
    
    $
    4,062,589
  14




---



##### Table of Contents



Credit Facilities
  Existing Credit
    
    
    AvailableFacilities
    
    
    CapacityCentexMulti-Bank Revolving Credit FacilityRevolving Credit
    
    $
    1,250,000
    
    
    $
    945,000Letters of Credit
    
    
    835,000
    
    
    
    469,3962,085,000
    
    
    
    1,414,396
    (1) (2)Unsecured Credit Facility
    
    
    150,000
    
    
    
    150,000
    (3)2,235,000
    
    
    
    1,564,396Financial ServicesSecured Credit Facilities
    
    
    740,000
    
    
    
    695,697
    (4)Mortgage Conduit Facilities
    
    
    650,000
    
    
    
    285,000
    (5)Harwood Street Funding I, LLC Facility
    
    
    3,000,000
    
    
    
    1,408,0004,390,000
    
    
    
    2,388,697$
    6,625,000
    
    
    $
    3,953,093
    (6)
 (1)
    
    This is an unsecured, committed, multi-bank revolving credit facility, maturing in July
2010, which serves as backup for Centex Corporations $1.25 billion commercial paper program
and provides $835 million of letter of credit capacity. As of December 31, 2006, the $1.25
billion commercial paper program had $305 million outstanding, which has been deducted from
the available capacity under the back-up facility. There have been no direct borrowings under
this revolving credit facility since its inception.(2)
    
    In conjunction with the issuance of surety bonds in support of our Construction Services
activity, Centex Corporation has agreed to provide letters of credit of up to $100 million if
Centex Corporations public debt ratings fall below investment grade. In support of this
ratings trigger, we maintain a minimum of $100 million in unused committed credit at all
times.(3)
    
    Centex Corporation maintains a $150 million unsecured, uncommitted credit facility.(4)
    
    CTX Mortgage Company, LLC maintains $740 million of secured, committed mortgage warehouse
facilities.(5)
    
    A wholly-owned limited purpose subsidiary of CTX Mortgage Company, LLC maintains secured,
committed facilities funded through commercial paper conduits to finance the purchase of
certain mortgage loans from CTX Mortgage Company, LLC.(6)
    
    The amount of available capacity consists of $3,803.1 million of committed capacity and
$150.0 million of uncommitted capacity as of December 31, 2006. Although we believe that the
uncommitted capacity is currently available, there can be no assurance that the lender under
this facility would elect to make advances if and when requested to do so.
 CTX Mortgage Company, LLC and Harwood Street Funding I, LLC
  15




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##### Table of Contents



16




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##### Table of Contents



(H) COMMITMENTS AND CONTINGENCIES
 Joint Ventures
    As ofDecember 31, 2006
    
    
    March 31, 2006Number of Active Joint Ventures (1)
    
    
    48
    
    
    
    44Investment in Joint Ventures
    
    $
    231,001
    
    
    $
    307,779Total Joint Venture Debt (2)
    
    $
    1,149,026
    
    
    $
    1,053,201Centexs Share of Joint Venture Debt:Based on Centexs Ownership Percentage
    
    $
    460,067
    
    
    $
    388,428Based on Limited Recourse Provisions:Limited Maintenance Guarantee (3) (5)
    
    $
    189,621
    
    
    $
    228,603Repayment Guarantee (4) (5)
    
    
    12,015
    
    
    
    8,136Total Limited Recourse Debt
    
    $
    201,636
    
    
    $
    236,739
 (1)
    
    The number of active 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 is the managing member of 28 and 24 of
the active joint ventures as of December 31, 2006 and March 31, 2006, respectively.(2)
    
    As of December 31, 2006 and March 31, 2006, 25 and 23, respectively, of the
active joint ventures have outstanding debt.(3)
    
    The Company has guaranteed that certain of the joint ventures will maintain a
specified loan to value ratio. For certain joint ventures, the Company has contributed
additional capital in order to maintain loan to value requirements.(4)
    
    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.(5)
    
    These amounts represent the Companys maximum exposure related to the joint ventures
debt at each respective date.
   17




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##### Table of Contents



Letters of Credit and Surety Bonds
   As of December 31, 2006
    
    
    As of March 31, 2006Letters of Credit
    
    
    Surety Bonds
    
    
    Letters of Credit
    
    
    Surety BondsHome Building
    
    $
    233.2
    
    
    $
    1,622.6
    (1)
    
    $
    258.5
    
    
    $
    1,342.0Financial Services
    
    
    0.3
    
    
    
    10.0
    
    
    
    0.7
    
    
    
    9.9Construction Services
    
    
    38.1
    
    
    
    4,405.8
    (2)
    
    
    37.3
    
    
    
    4,391.2Other
    
    
    94.0
    
    
    
    2.1
    
    
    
    92.2
    
    
    
    0.1Discontinued Operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7.5$
    365.6
    
    
    $
    6,040.5
    
    
    $
    388.7
    
    
    $
    5,750.7
 (1)
    
    The Company estimates that $657.9 million of work remains to be performed on these
projects.(2)
    
    The Company estimates that $1,932.3 million of work remains to be performed on these
projects.
 Warranties and Guarantees
    December 31, 2006
    
    
    March 31, 2006Balance at Beginning of Period
    
    $
    47,199
    
    
    $
    34,961Warranties Issued
    
    
    37,008
    
    
    
    53,036Settlements Made
    
    
    (37,146
    )
    
    
    (40,173
    )Changes in Liability of Pre-Existing
Warranties, Including Expirations
    
    
    (100
    )
    
    
    (625
    )Balance at End of Period
    
    $
    46,961
    
    
    $
    47,199
 18




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##### Table of Contents



Loan Loss Reserves
  December 31, 2006
    
    
    March 31, 2006Balance at Beginning of Period
    
    $
    18,500
    
    
    $
    18,803Provision for Losses
    
    
    4,678
    
    
    
    2,618Settlements
    
    
    (1,195
    )
    
    
    (2,921
    )Balance at End of Period
    
    $
    21,983
    
    
    $
    18,500
 Litigation and Related Matters
    19




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##### Table of Contents



(I) COMPREHENSIVE INCOME (LOSS)
  For the Three Months Ended December 31,
    
    
    For the Nine Months Ended December 31,2006
    
    
    2005
    
    
    2006
    
    
    2005Net Earnings (Loss)
    
    $
    (228,146
    )
    
    $
    329,344
    
    
    $
    69,511
    
    
    $
    897,544Other Comprehensive Income (Loss), net of Tax:Unrealized Gain (Loss) on Hedging Instruments
    
    
    
    
    
    
    (333
    )
    
    
    7,036
    
    
    
    (710
    )Foreign Currency Translation Adjustments
    
    
    
    
    
    
    4
    
    
    
    72
    
    
    
    (14,389
    )Hedging Gain Reclassified to Net Earnings
    
    
    
    
    
    
    
    
    
    
    (15,738
    )
    
    
    Foreign Currency Gain Reclassified to Net
Earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (48,354
    )Comprehensive Income (Loss)
    
    $
    (228,146
    )
    
    $
    329,015
    
    
    $
    60,881
    
    
    $
    834,091
  (J) BUSINESS SEGMENTS
   Home Building
   Financial Services
   20




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##### Table of Contents



Construction Services
  Other
  For the Three Months Ended December 31, 2006(Dollars in millions)Home
    
    
    Financial
    
    
    Construction
    
    
    
    
    
    
    IntersegmentBuilding
    
    
    Services
    
    
    Services
    
    
    Other
    
    
    Eliminations
    
    
    TotalRevenues
    
    $
    2,587.3
    
    
    $
    107.6
    
    
    $
    600.7
    
    
    $
    31.4
    
    
    $
    (42.5
    )
    
    $
    3,284.5Cost of Sales
    
    
    (2,412.9
    )
    
    
    (23.8
    )
    
    
    (570.4
    )
    
    
    (15.3
    )
    
    
    43.1
    
    
    
    (2,979.3
    )Selling, General and
Administrative Expenses
    
    
    (420.5
    )
    
    
    (67.3
    )
    
    
    (19.8
    )
    
    
    (40.0
    )
    
    
    
    
    
    
    (547.6
    )Earnings (Loss) from
Unconsolidated Entities
    
    
    (46.1
    )
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    (45.9
    )Earnings (Loss)
Before Income Tax
    
    $
    (292.2
    )
    
    $
    16.5
    
    
    $
    10.7
    
    
    $
    (23.9
    )
    
    $
    0.6
    
    
    $
    (288.3
    )
 For the Three Months Ended December 31, 2005(Dollars in millions)Home
    
    
    Financial
    
    
    Construction
    
    
    
    
    
    
    IntersegmentBuilding
    
    
    Services
    
    
    Services
    
    
    Other
    
    
    Eliminations
    
    
    TotalRevenues
    
    $
    3,003.6
    
    
    $
    112.9
    
    
    $
    402.9
    
    
    $
    29.0
    
    
    $
    (23.3
    )
    
    $
    3,525.1Cost of Sales
    
    
    (2,126.3
    )
    
    
    (17.3
    )
    
    
    (377.9
    )
    
    
    (14.9
    )
    
    
    22.3
    
    
    
    (2,514.1
    )Selling, General and
Administrative Expenses
    
    
    (421.3
    )
    
    
    (74.6
    )
    
    
    (18.6
    )
    
    
    (45.5
    )
    
    
    
    
    
    
    (560.0
    )Earnings from
Unconsolidated Entities
    
    
    48.9
    
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    49.0Earnings (Loss)
Before Income Tax
    
    $
    504.9
    
    
    $
    21.0
    
    
    $
    6.5
    
    
    $
    (31.4
    )
    
    $
    (1.0
    )
    
    $
    500.0
 21




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##### Table of Contents



For the Nine Months Ended December 31, 2006(Dollars in millions)Home
    
    
    Financial
    
    
    Construction
    
    
    
    
    
    
    IntersegmentBuilding
    
    
    Services
    
    
    Services
    
    
    Other
    
    
    Eliminations
    
    
    TotalRevenues
    
    $
    7,895.1
    
    
    $
    350.9
    
    
    $
    1,648.4
    
    
    $
    99.7
    
    
    $
    (113.4
    )
    
    $
    9,880.7Cost of Sales
    
    
    (6,516.9
    )
    
    
    (66.5
    )
    
    
    (1,560.5
    )
    
    
    (46.9
    )
    
    
    112.3
    
    
    
    (8,078.5
    )Selling, General and
Administrative Expenses
    
    
    (1,228.0
    )
    
    
    (218.7
    )
    
    
    (61.0
    )
    
    
    (122.2
    )
    
    
    
    
    
    
    (1,629.9
    )Earnings (Loss) from
Unconsolidated Entities
    
    
    (36.5
    )
    
    
    
    
    
    
    0.6
    
    
    
    
    
    
    
    
    
    
    
    (35.9
    )Earnings (Loss)
Before Income Tax
    
    $
    113.7
    
    
    $
    65.7
    
    
    $
    27.5
    
    
    $
    (69.4
    )
    
    $
    (1.1
    )
    
    $
    136.4
 For the Nine Months Ended December 31, 2005(Dollars in millions)Home
    
    
    Financial
    
    
    Construction
    
    
    
    
    
    
    IntersegmentBuilding
    
    
    Services
    
    
    Services
    
    
    Other
    
    
    Eliminations
    
    
    TotalRevenues
    
    $
    8,291.2
    
    
    $
    343.7
    
    
    $
    1,160.9
    
    
    $
    86.8
    
    
    $
    (33.2
    )
    
    $
    9,849.4Cost of Sales
    
    
    (5,873.0
    )
    
    
    (47.9
    )
    
    
    (1,090.9
    )
    
    
    (43.7
    )
    
    
    31.8
    
    
    
    (7,023.7
    )Selling, General and
Administrative Expenses
    
    
    (1,181.0
    )
    
    
    (232.3
    )
    
    
    (57.1
    )
    
    
    (129.5
    )
    
    
    
    
    
    
    (1,599.9
    )Earnings from
Unconsolidated Entities
    
    
    67.3
    
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    67.6Earnings (Loss)
Before Income Tax
    
    $
    1,304.5
    
    
    $
    63.5
    
    
    $
    13.2
    
    
    $
    (86.4
    )
    
    $
    (1.4
    )
    
    $
    1,293.4
 (K) INCOME TAXES
      22




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##### Table of Contents



(L) DERIVATIVES AND HEDGING
  Fair Value Hedges
  Other Derivatives
    (M) RECENT ACCOUNTING PRONOUNCEMENTS
   23




---



##### Table of Contents



(N) OFF-BALANCE SHEET OBLIGATIONS
  (O) DISCONTINUED OPERATIONS
 Condensed Financial Information
    24




---



##### Table of Contents



Sales and Related Proceeds, net of Related Expenses
    
    $
    518,791Assets Sold
    
    
    (400,706
    )Accrued Liabilities
    
    
    (2,104
    )Intercompany Liability Paid by Buyer
    
    
    (11,795
    )Deferred Income
    
    
    (6,100
    )Hedging Gain
    
    
    15,738Pre-tax Gain on Sale
    
    
    113,824Income Tax Expense
    
    
    (43,480
    )Net Gain on Sale
    
    $
    70,344
   As ofMarch 31, 2006(1)AssetsCash and Cash Equivalents
    
    $
    787Restricted Cash
    
    
    277,114Loans Held for Investment
    
    
    6,867,658Receivables
    
    
    153,517Property and Equipment, net
    
    
    17,740Deferred Income Taxes
    
    
    74,156Mortgage Securitization Residual Interest
    
    
    56,831Deferred Charges and Other, net
    
    
    62,359$
    7,510,162LiabilitiesAccounts Payable and Accrued Liabilities
    
    $
    70,434Notes Payable
    
    
    1,095,905Long-term Debt
    
    
    5,835,454$
    7,001,793
 For the Three Months Ended December 31,
    
    
    For the Nine Months Ended December 31,2006(1)
    
    
    2005 (2)
    
    
    2006(1)
    
    
    2005 (2)Revenues
    
    $
    
    
    
    $
    213,222
    
    
    $
    170,124
    
    
    $
    836,835Cost and Expenses
    
    
    (260
    )
    
    
    (180,273
    )
    
    
    (214,424
    )
    
    
    (730,432
    )Earnings from Unconsolidated Entities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    675Earnings (Loss) Before Income Taxes
    
    
    (260
    )
    
    
    32,949
    
    
    
    (44,300
    )
    
    
    107,078Provision (Benefit) for Income Taxes
    
    
    (448
    )
    
    
    13,412
    
    
    
    (16,802
    )
    
    
    45,624Gain (Loss) on Sale, net of Tax
    
    
    7,046
    
    
    
    (3,405
    )
    
    
    70,344
    
    
    
    (9,160
    )$
    7,234
    
    
    $
    16,132
    
    
    $
    42,846
    
    
    $
    52,294
 (1)
    
    Includes Home Equity only.(2)
    
    Includes Home Equity and International Home Building.
 25




---



##### Table of Contents



(P) SUBSEQUENT EVENTS
  (Q) RECLASSIFICATIONS
  26




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
  Executive Summary
  Revenues
 
 Earnings (Loss) from Continuing Operations
Before Income Taxes
 
 *
    
    Other consists of the financial results of our investment real estate and
home services operations, as well as corporate general and administrative
expense, certain interest expense and intersegment eliminations.
     
    
    decreases in revenues as discussed above,
    
    impairments recorded to land under development,
    
    an increase in write-offs of land deposits and pre-acquisition costs,
and
    
    our share of losses from joint ventures which includes land impairments
recorded by certain of such joint ventures.
 27




---



##### Table of Contents



Revenues
 
 Earnings (Loss) from Continuing Operations
Before Income Taxes
 
 *
    
    Other consists of the financial results of our investment real estate and
home services operations, as well as corporate general and administrative
expense, certain interest expense and intersegment eliminations.
   28




---



##### Table of Contents




    
    a decline in homebuyer demand due to lower consumer confidence in the
consumer real estate market and a decrease in the affordability of housing in selected
markets,
    
    increased inventory of new and used homes for sale, and
    
    pricing pressures resulting from the imbalance between supply and demand.
      29




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##### Table of Contents



HOME BUILDING
  For the Three Months Ended December 31,2006
    
    
    2005Change
    
    
    
    
    
    
    ChangeRevenues  Housing
    
    $
    2,516.1
    
    
    
    (14.9
    %)
    
    $
    2,956.3
    
    
    
    36.1
    %Revenues  Land Sales and Other
    
    
    71.2
    
    
    
    50.5
    %
    
    
    47.3
    
    
    
    (29.4
    %)Cost of Sales  Housing
    
    
    (2,020.2
    )
    
    
    (2.9
    %)
    
    
    (2,080.7
    )
    
    
    33.8
    %Cost of Sales  Land Sales and Other
    
    
    (392.7
    )
    
    
    761.2
    %
    
    
    (45.6
    )
    
    
    (16.2
    %)Selling, General and Administrative Expenses
    
    
    (420.5
    )
    
    
    (0.2
    %)
    
    
    (421.3
    )
    
    
    29.0
    %Earnings (Loss) from Unconsolidated Entities (1)
    
    
    (46.1
    )
    
    
    (194.3
    %)
    
    
    48.9
    
    
    
    12.7
    %Operating Earnings (Loss)
    
    $
    (292.2
    )
    
    
    (157.9
    %)
    
    $
    504.9
    
    
    
    45.4
    %Operating Earnings (Loss) as a Percentage of Revenues:Housing Operations (2)
    
    
    3.0
    %
    
    
    (12.4
    )
    
    
    15.4
    %
    
    
    2.0Total Homebuilding Operations
    
    
    (11.3
    %)
    
    
    (28.1
    )
    
    
    16.8
    %
    
    
    1.3
 For the Nine Months Ended December 31,2006
    
    
    2005Change
    
    
    
    
    
    
    ChangeRevenues  Housing
    
    $
    7,680.0
    
    
    
    (4.4
    %)
    
    $
    8,030.4
    
    
    
    31.7
    %Revenues  Land Sales and Other
    
    
    215.1
    
    
    
    (17.5
    %)
    
    
    260.8
    
    
    
    51.5
    %Cost of Sales  Housing
    
    
    (5,854.3
    )
    
    
    3.1
    %
    
    
    (5,676.9
    )
    
    
    28.8
    %Cost of Sales  Land Sales and Other
    
    
    (662.6
    )
    
    
    237.9
    %
    
    
    (196.1
    )
    
    
    27.3
    %Selling, General and Administrative Expenses
    
    
    (1,228.0
    )
    
    
    4.0
    %
    
    
    (1,181.0
    )
    
    
    30.0
    %Earnings (Loss) from Unconsolidated Entities (1)
    
    
    (36.5
    )
    
    
    (154.2
    %)
    
    
    67.3
    
    
    
    23.5
    %Operating Earnings
    
    $
    113.7
    
    
    
    (91.3
    %)
    
    $
    1,304.5
    
    
    
    52.8
    %Operating Earnings as a Percentage of Revenues:Housing Operations (2)
    
    
    7.8
    %
    
    
    (6.8
    )
    
    
    14.6
    %
    
    
    1.8Total Homebuilding Operations
    
    
    1.4
    %
    
    
    (14.3
    )
    
    
    15.7
    %
    
    
    2.1
 (1)
    
    Earnings (Loss) from Unconsolidated Entities includes our share of joint ventures
impairments.(2)
    
    Operating earnings from housing operations is a non-GAAP financial measure,
which we believe is useful to investors for the reasons described in our previous
reports filed with the Securities and Exchange Commission, including our Current Report
on Form 8-K filed on January 24, 2007. 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 tables above.
 30




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##### Table of Contents



For the Three Months Ended December 31,2006
    
    
    2005Change
    
    
    
    
    
    
    ChangeUnits ClosedMid-Atlantic
    
    
    1,604
    
    
    
    (11.3
    %)
    
    
    1,809
    
    
    
    32.6
    %Southeast
    
    
    1,265
    
    
    
    (22.8
    %)
    
    
    1,639
    
    
    
    27.8
    %Midwest
    
    
    1,261
    
    
    
    (24.4
    %)
    
    
    1,667
    
    
    
    (1.0
    %)Southwest
    
    
    2,558
    
    
    
    (7.3
    %)
    
    
    2,760
    
    
    
    23.5
    %West Coast
    
    
    1,672
    
    
    
    2.6
    %
    
    
    1,629
    
    
    
    9.8
    %8,360
    
    
    
    (12.0
    %)
    
    
    9,504
    
    
    
    18.1
    %Average Revenue Per UnitMid-Atlantic
    
    $
    321,719
    
    
    
    (8.2
    %)
    
    $
    350,522
    
    
    
    21.8
    %Southeast
    
    $
    300,598
    
    
    
    3.3
    %
    
    $
    290,977
    
    
    
    11.0
    %Midwest
    
    $
    226,254
    
    
    
    (0.1
    %)
    
    $
    226,379
    
    
    
    6.7
    %Southwest
    
    $
    208,529
    
    
    
    5.7
    %
    
    $
    197,237
    
    
    
    16.3
    %West Coast
    
    $
    479,110
    
    
    
    (15.5
    %)
    
    $
    566,971
    
    
    
    18.8
    %Total Home Building
    
    $
    300,968
    
    
    
    (3.2
    %)
    
    $
    311,064
    
    
    
    15.2
    %
 For the Nine Months Ended December 31,2006
    
    
    2005Change
    
    
    
    
    
    
    ChangeUnits ClosedMid-Atlantic
    
    
    4,982
    
    
    
    (2.4
    %)
    
    
    5,103
    
    
    
    28.1
    %Southeast
    
    
    4,008
    
    
    
    (15.2
    %)
    
    
    4,725
    
    
    
    21.6
    %Midwest
    
    
    4,217
    
    
    
    (15.6
    %)
    
    
    4,994
    
    
    
    2.1
    %Southwest
    
    
    7,225
    
    
    
    (1.9
    %)
    
    
    7,366
    
    
    
    16.1
    %West Coast
    
    
    4,771
    
    
    
    1.3
    %
    
    
    4,708
    
    
    
    13.3
    %25,203
    
    
    
    (6.3
    %)
    
    
    26,896
    
    
    
    15.6
    %Average Revenue Per UnitMid-Atlantic
    
    $
    327,385
    
    
    
    (2.5
    %)
    
    $
    335,776
    
    
    
    17.7
    %Southeast
    
    $
    296,327
    
    
    
    4.8
    %
    
    $
    282,818
    
    
    
    12.9
    %Midwest
    
    $
    226,899
    
    
    
    3.2
    %
    
    $
    219,812
    
    
    
    3.9
    %Southwest
    
    $
    208,508
    
    
    
    12.0
    %
    
    $
    186,151
    
    
    
    13.1
    %West Coast
    
    $
    502,614
    
    
    
    (5.8
    %)
    
    $
    533,491
    
    
    
    16.2
    %Total Home Building
    
    $
    304,725
    
    
    
    2.1
    %
    
    $
    298,571
    
    
    
    13.9
    %
   31




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##### Table of Contents



For the Three Months Ended December 31,2006
    
    
    2005Change
    
    
    
    
    
    
    ChangeAverage Operating Neighborhoods (1)
    
    
    699
    
    
    
    10.1
    %
    
    
    635
    
    
    
    6.2
    %Closings Per Average Neighborhood
    
    
    12.0
    
    
    
    (20.0
    %)
    
    
    15.0
    
    
    
    11.1
    %
 For the Nine Months Ended December 31,2006
    
    
    2005Change
    
    
    
    
    
    
    ChangeAverage Operating Neighborhoods (1)
    
    
    686
    
    
    
    11.0
    %
    
    
    618
    
    
    
    6.4
    %Closings Per Average Neighborhood
    
    
    36.7
    
    
    
    (15.6
    %)
    
    
    43.5
    
    
    
    8.8
    %
 (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.
      32




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##### Table of Contents



For the Three Months Ended December 31,2006
    
    
    2005Change
    
    
    
    
    
    
    ChangeCompensation
    
    $
    175.9
    
    
    
    (21.0
    %)
    
    $
    222.7
    
    
    
    28.0
    %Sales Commissions
    
    
    110.0
    
    
    
    1.9
    %
    
    
    107.9
    
    
    
    41.4
    %Advertising and Marketing
    
    
    52.2
    
    
    
    27.9
    %
    
    
    40.8
    
    
    
    32.0
    %Other
    
    
    82.4
    
    
    
    65.1
    %
    
    
    49.9
    
    
    
    10.2
    %Selling, General and Administrative Expenses
    
    $
    420.5
    
    
    
    (0.2
    %)
    
    $
    421.3
    
    
    
    29.0
    %SG&A as a Percentage of Revenues
    
    
    16.3
    %
    
    
    2.3
    
    
    
    14.0
    %
    
    
    (0.6
    )
 For the Nine Months Ended December 31,2006
    
    
    2005Change
    
    
    
    
    
    
    ChangeCompensation
    
    $
    577.1
    
    
    
    (7.9
    %)
    
    $
    626.4
    
    
    
    27.7
    %Sales Commissions
    
    
    317.8
    
    
    
    8.0
    %
    
    
    294.3
    
    
    
    34.7
    %Advertising and Marketing
    
    
    148.5
    
    
    
    28.8
    %
    
    
    115.3
    
    
    
    28.5
    %Other
    
    
    184.6
    
    
    
    27.3
    %
    
    
    145.0
    
    
    
    31.8
    %Selling, General and Administrative Expenses
    
    $
    1,228.0
    
    
    
    4.0
    %
    
    $
    1,181.0
    
    
    
    30.0
    %SG&A as a Percentage of Revenues
    
    
    15.6
    %
    
    
    1.4
    
    
    
    14.2
    %
    
    
    (0.3
    )
  For the Three Months Ended December 31,2006
    
    
    2005Change
    
    
    
    
    
    
    ChangeSales Orders (in Units)Mid-Atlantic
    
    
    1,209
    
    
    
    (9.8
    %)
    
    
    1,341
    
    
    
    (8.5
    %)Southeast
    
    
    627
    
    
    
    (53.6
    %)
    
    
    1,350
    
    
    
    (14.7
    %)Midwest
    
    
    909
    
    
    
    (33.6
    %)
    
    
    1,369
    
    
    
    (3.0
    %)Southwest
    
    
    1,971
    
    
    
    (23.6
    %)
    
    
    2,581
    
    
    
    28.0
    %West Coast
    
    
    1,423
    
    
    
    (4.3
    %)
    
    
    1,487
    
    
    
    10.4
    %6,139
    
    
    
    (24.5
    %)
    
    
    8,128
    
    
    
    3.9
    %Sales Orders Per Average Neighborhood
    
    
    8.8
    
    
    
    (31.3
    %)
    
    
    12.8
    
    
    
    (2.3
    %)
 For the Nine Months Ended December 31,2006
    
    
    2005Change
    
    
    
    
    
    
    ChangeSales Orders (in Units)Mid-Atlantic
    
    
    3,975
    
    
    
    (21.3
    %)
    
    
    5,048
    
    
    
    9.7
    %Southeast
    
    
    2,453
    
    
    
    (49.7
    %)
    
    
    4,875
    
    
    
    (5.7
    %)Midwest
    
    
    3,514
    
    
    
    (26.1
    %)
    
    
    4,756
    
    
    
    6.5
    %Southwest
    
    
    6,919
    
    
    
    (17.2
    %)
    
    
    8,361
    
    
    
    26.4
    %West Coast
    
    
    4,356
    
    
    
    (13.9
    %)
    
    
    5,062
    
    
    
    12.6
    %21,217
    
    
    
    (24.5
    %)
    
    
    28,102
    
    
    
    10.9
    %Sales Orders Per Average Neighborhood
    
    
    30.9
    
    
    
    (32.1
    %)
    
    
    45.5
    
    
    
    4.4
    %
 33




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##### Table of Contents



As ofDecember 31, 2006
    
    
    March 31, 2006Change
    
    
    
    
    
    
    ChangeBacklog UnitsMid-Atlantic
    
    
    2,066
    
    
    
    (32.8
    %)
    
    
    3,073
    
    
    
    (11.2
    %)Southeast
    
    
    2,561
    
    
    
    (37.8
    %)
    
    
    4,116
    
    
    
    (17.8
    %)Midwest
    
    
    2,052
    
    
    
    (25.5
    %)
    
    
    2,755
    
    
    
    (15.8
    %)Southwest
    
    
    3,788
    
    
    
    (7.5
    %)
    
    
    4,094
    
    
    
    11.0
    %West Coast
    
    
    2,934
    
    
    
    (12.4
    %)
    
    
    3,349
    
    
    
    5.9
    %13,401
    
    
    
    (22.9
    %)
    
    
    17,387
    
    
    
    (6.5
    %)
    As of December 31,
    
    
    As of September 30,2006
    
    
    2006Lots Owned
    
    
    Lots Controlled
    
    
    Total Lots
    
    
    Lots Owned
    
    
    Lots Controlled
    
    
    Total LotsMid-Atlantic
    
    
    20,444
    
    
    
    29,274
    
    
    
    49,718
    
    
    
    21,282
    
    
    
    39,965
    
    
    
    61,247Southeast
    
    
    26,958
    
    
    
    12,687
    
    
    
    39,645
    
    
    
    28,187
    
    
    
    26,047
    
    
    
    54,234Midwest
    
    
    12,902
    
    
    
    9,728
    
    
    
    22,630
    
    
    
    13,612
    
    
    
    12,345
    
    
    
    25,957Southwest
    
    
    26,771
    
    
    
    18,251
    
    
    
    45,022
    
    
    
    28,419
    
    
    
    34,151
    
    
    
    62,570West Coast
    
    
    17,111
    
    
    
    11,951
    
    
    
    29,062
    
    
    
    18,354
    
    
    
    23,241
    
    
    
    41,595104,186
    
    
    
    81,891
    
    
    
    186,077
    
    
    
    109,854
    
    
    
    135,749
    
    
    
    245,603Change (1)
    
    
    (5.2
    %)
    
    
    (39.7
    %)
    
    
    (24.2
    %)
    
    
    (2.8
    %)
    
    
    (20.0
    %)
    
    
    (13.1
    %)
 (1)
    
    From previous quarter.
  FINANCIAL SERVICES
  34




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##### Table of Contents



For the Three Months Ended December 31,2006
    
    
    2005Change
    
    
    
    
    
    
    ChangeRevenues
    
    $
    107.6
    
    
    
    (4.7
    %)
    
    $
    112.9
    
    
    
    11.3
    %Cost of Sales
    
    
    (23.8
    )
    
    
    37.6
    %
    
    
    (17.3
    )
    
    
    111.0
    %Selling, General and Administrative Expenses
    
    
    (67.3
    )
    
    
    (9.8
    %)
    
    
    (74.6
    )
    
    
    3.3
    %Operating Earnings
    
    $
    16.5
    
    
    
    (21.4
    %)
    
    $
    21.0
    
    
    
    Operating Margin
    
    
    15.3
    %
    
    
    (3.3
    )
    
    
    18.6
    %
    
    
    (2.1
    )Interest Margin
    
    $
    8.2
    
    
    
    (8.9
    %)
    
    $
    9.0
    
    
    
    (18.9
    %)Average Interest Earning Assets
    
    $
    1,672.6
    
    
    
    9.1
    %
    
    $
    1,533.4
    
    
    
    17.7
    %Average Yield
    
    
    7.66
    %
    
    
    0.81
    
    
    
    6.85
    %
    
    
    0.91Average Interest Bearing Liabilities
    
    $
    1,622.9
    
    
    
    6.3
    %
    
    $
    1,526.6
    
    
    
    18.6
    %Average Rate Paid
    
    
    5.97
    %
    
    
    1.45
    
    
    
    4.52
    %
    
    
    1.96
 For the Nine Months Ended December 31,2006
    
    
    2005Change
    
    
    
    
    
    
    ChangeRevenues
    
    $
    350.9
    
    
    
    2.1
    %
    
    $
    343.7
    
    
    
    8.9
    %Cost of Sales
    
    
    (66.5
    )
    
    
    38.8
    %
    
    
    (47.9
    )
    
    
    106.5
    %Selling, General and Administrative Expenses
    
    
    (218.7
    )
    
    
    (5.9
    %)
    
    
    (232.3
    )
    
    
    6.8
    %Operating Earnings
    
    $
    65.7
    
    
    
    3.5
    %
    
    $
    63.5
    
    
    
    (15.0
    %)Operating Margin
    
    
    18.7
    %
    
    
    0.2
    
    
    
    18.5
    %
    
    
    (5.2
    )Interest Margin
    
    $
    24.8
    
    
    
    (15.4
    %)
    
    $
    29.3
    
    
    
    (27.3
    %)Average Interest Earning Assets
    
    $
    1,589.2
    
    
    
    (0.6
    %)
    
    $
    1,599.5
    
    
    
    9.4
    %Average Yield
    
    
    7.65
    %
    
    
    1.22
    
    
    
    6.43
    %
    
    
    0.64Average Interest Bearing Liabilities
    
    $
    1,547.0
    
    
    
    (4.0
    %)
    
    $
    1,611.5
    
    
    
    13.4
    %Average Rate Paid
    
    
    5.76
    %
    
    
    1.79
    
    
    
    3.97
    %
    
    
    1.82
 35




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##### Table of Contents



For the Three Months Ended December 31,2006
    
    
    2005Change
    
    
    
    
    
    
    ChangeLoan Sales to InvestorsVolume
    
    $
    2,310.1
    
    
    
    (25.5
    %)
    
    $
    3,099.1
    
    
    
    47.3
    %Number of Loans Sold
    
    
    10,941
    
    
    
    (31.5
    %)
    
    
    15,973
    
    
    
    36.5
    %Gain on Sale of Mortgage Loans
    
    $
    36.4
    
    
    
    (10.3
    %)
    
    $
    40.6
    
    
    
    13.4
    %Loans Brokered to Third Party LendersVolume
    
    $
    772.7
    
    
    
    (9.2
    %)
    
    $
    850.8
    
    
    
    8.6
    %Number of Brokered Loans
    
    
    2,523
    
    
    
    (14.6
    %)
    
    
    2,955
    
    
    
    (7.5
    %)Broker Fees
    
    $
    15.4
    
    
    
    (3.1
    %)
    
    $
    15.9
    
    
    
    (10.7
    %)Average Loan SizeLoans Sold to Investors
    
    $
    211,142
    
    
    
    8.8
    %
    
    $
    194,027
    
    
    
    7.9
    %Loans Brokered to Third Party Lenders
    
    $
    306,261
    
    
    
    6.4
    %
    
    $
    287,961
    
    
    
    17.4
    %
 For the Nine Months Ended December 31,2006
    
    
    2005Change
    
    
    
    
    
    
    ChangeLoan Sales to InvestorsVolume
    
    $
    7,562.2
    
    
    
    (17.8
    %)
    
    $
    9,203.5
    
    
    
    28.4
    %Number of Loans Sold
    
    
    37,213
    
    
    
    (23.4
    %)
    
    
    48,570
    
    
    
    16.8
    %Gain on Sale of Mortgage Loans
    
    $
    122.8
    
    
    
    (2.5
    %)
    
    $
    126.0
    
    
    
    17.6
    %Loans Brokered to Third Party LendersVolume
    
    $
    2,596.2
    
    
    
    (0.7
    %)
    
    $
    2,614.7
    
    
    
    12.5
    %Number of Brokered Loans
    
    
    8,657
    
    
    
    (10.5
    %)
    
    
    9,677
    
    
    
    (1.3
    %)Broker Fees
    
    $
    51.3
    
    
    
    (0.6
    %)
    
    $
    51.6
    
    
    
    0.4
    %Average Loan SizeLoans Sold to Investors
    
    $
    203,217
    
    
    
    7.2
    %
    
    $
    189,490
    
    
    
    10.0
    %Loans Brokered to Third Party Lenders
    
    $
    299,901
    
    
    
    11.0
    %
    
    $
    270,216
    
    
    
    14.0
    %
  36




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##### Table of Contents



For the Three Months Ended December 31,2006
    
    
    2005Change
    
    
    
    
    
    
    ChangeOpen Applications  Beginning
    
    
    21,436
    
    
    
    (20.9
    %)
    
    
    27,114
    
    
    
    9.4
    %New Applications
    
    
    20,661
    
    
    
    (13.2
    %)
    
    
    23,816
    
    
    
    6.1
    %Cancelled Applications
    
    
    (9,665
    )
    
    
    (6.7
    %)
    
    
    (10,360
    )
    
    
    7.8
    %Originated Loans
    
    
    (13,605
    )
    
    
    (17.2
    %)
    
    
    (16,429
    )
    
    
    7.0
    %Open Applications  Ending
    
    
    18,827
    
    
    
    (22.0
    %)
    
    
    24,141
    
    
    
    8.4
    %
 For the Nine Months Ended December 31,2006
    
    
    2005Change
    
    
    
    
    
    
    ChangeOpen Applications  Beginning
    
    
    23,219
    
    
    
    (6.8
    %)
    
    
    24,912
    
    
    
    (7.1
    %)New Applications
    
    
    68,779
    
    
    
    (17.6
    %)
    
    
    83,471
    
    
    
    5.5
    %Cancelled Applications
    
    
    (30,416
    )
    
    
    (1.0
    %)
    
    
    (30,734
    )
    
    
    (5.5
    %)Originated Loans
    
    
    (42,755
    )
    
    
    (20.1
    %)
    
    
    (53,508
    )
    
    
    4.7
    %Open Applications  Ending
    
    
    18,827
    
    
    
    (22.0
    %)
    
    
    24,141
    
    
    
    8.4
    %
  For the Three Months Ended December 31,2006
    
    
    2005Change
    
    
    
    
    
    
    ChangeOrigination Volume (in millions)
    
    $
    3,291.0
    
    
    
    (11.9
    %)
    
    $
    3,737.4
    
    
    
    22.0
    %Number of Originated LoansBuilder
    
    
    6,393
    
    
    
    (3.4
    %)
    
    
    6,616
    
    
    
    21.1
    %Retail
    
    
    7,212
    
    
    
    (26.5
    %)
    
    
    9,813
    
    
    
    (0.8
    %)13,605
    
    
    
    (17.2
    %)
    
    
    16,429
    
    
    
    7.0
    %Average Loan Size  Originated Loans
    
    $
    241,900
    
    
    
    6.3
    %
    
    $
    227,500
    
    
    
    14.0
    %
 For the Nine Months Ended December 31,2006
    
    
    2005Change
    
    
    
    
    
    
    ChangeOrigination Volume (in millions)
    
    $
    10,136.9
    
    
    
    (14.4
    %)
    
    $
    11,836.9
    
    
    
    22.6
    %Number of Originated LoansBuilder
    
    
    18,887
    
    
    
    2.2
    %
    
    
    18,480
    
    
    
    17.8
    %Retail
    
    
    23,868
    
    
    
    (31.9
    %)
    
    
    35,028
    
    
    
    (1.1
    %)42,755
    
    
    
    (20.1
    %)
    
    
    53,508
    
    
    
    4.7
    %Average Loan Size  Originated Loans
    
    $
    237,100
    
    
    
    7.2
    %
    
    $
    221,200
    
    
    
    17.0
    %
  37




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##### Table of Contents



CONSTRUCTION SERVICES
  For the Three Months Ended December 31,2006
    
    
    2005Change
    
    
    
    
    
    
    ChangeRevenues
    
    $
    600.7
    
    
    
    49.1
    %
    
    $
    402.9
    
    
    
    (9.6
    %)Operating Earnings
    
    $
    10.7
    
    
    
    64.6
    %
    
    $
    6.5
    
    
    
    1.6
    %New Contracts Executed
    
    $
    585.3
    
    
    
    5.4
    %
    
    $
    555.1
    
    
    
    (38.0
    %)
 For the Nine Months Ended December 31,2006
    
    
    2005Change
    
    
    
    
    
    
    ChangeRevenues
    
    $
    1,648.4
    
    
    
    42.0
    %
    
    $
    1,160.9
    
    
    
    (12.8
    %)Operating Earnings
    
    $
    27.5
    
    
    
    108.3
    %
    
    $
    13.2
    
    
    
    (19.5
    %)New Contracts Executed
    
    $
    1,633.1
    
    
    
    (22.6
    %)
    
    $
    2,110.3
    
    
    
    32.1
    %
 As of December 31,2006
    
    
    2005Change
    
    
    
    
    
    
    ChangeBacklog of Uncompleted Contracts
    
    $
    2,942.0
    
    
    
    (0.3
    %)
    
    $
    2,950.5
    
    
    
    46.6
    %
     38




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##### Table of Contents



OTHER
   For the Three Months Ended December 31,2006
    
    
    2005Change
    
    
    
    
    
    
    ChangeOperating Loss from Home Services Operations
    
    $
    (1.2
    )
    
    
    (25.0
    %)
    
    $
    (1.6
    )
    
    
    300.0
    %Operating Loss from Investment
Real Estate Operations
    
    
    (0.1
    )
    
    
    
    
    
    
    
    
    
    
    (100.0
    %)Corporate General and Administrative Expense
    
    
    (22.6
    )
    
    
    (15.7
    %)
    
    
    (26.8
    )
    
    
    16.0
    %Interest Expense
    
    
    
    
    
    
    (100.0
    %)
    
    
    (3.0
    )
    
    
    (40.0
    %)Operating Loss
    
    $
    (23.9
    )
    
    
    (23.9
    %)
    
    $
    (31.4
    )
    
    
    44.0
    %
 For the Nine Months Ended December 31,2006
    
    
    2005Change
    
    
    
    
    
    
    ChangeOperating Loss from Home Services Operations
    
    $
    (4.3
    )
    
    
    (31.7
    %)
    
    $
    (6.3
    )
    
    
    23.5
    %Operating Earnings (Loss) from Investment
Real Estate Operations
    
    
    2.5
    
    
    
    (600.0
    %)
    
    
    (0.5
    )
    
    
    (103.0
    %)Corporate General and Administrative Expense
    
    
    (67.6
    )
    
    
    (4.7
    %)
    
    
    (70.9
    )
    
    
    15.1
    %Interest Expense
    
    
    
    
    
    
    (100.0
    %)
    
    
    (8.7
    )
    
    
    (38.3
    %)Operating Loss
    
    $
    (69.4
    )
    
    
    (19.7
    %)
    
    $
    (86.4
    )
    
    
    34.2
    %
    DISCONTINUED OPERATIONS
    39




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##### Table of Contents



For the Three Months Ended December 31,
    
    
    For the Nine Months Ended December 31,2006
    
    
    2005
    
    
    2006
    
    
    2005RevenuesInternational homebuilding
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    224.4Sub-prime home equity lending
    
    
    
    
    
    
    213.2
    
    
    
    170.1
    
    
    
    612.4$
    
    
    
    $
    213.2
    
    
    $
    170.1
    
    
    $
    836.8Operating Earnings (Loss)International homebuilding
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    15.2Sub-prime home equity lending
    
    
    (0.3
    )
    
    
    32.9
    
    
    
    (44.3
    )
    
    
    91.9$
    (0.3
    )
    
    $
    32.9
    
    
    $
    (44.3
    )
    
    $
    107.1Pre-tax Gain (Loss) on SaleInternational homebuilding
    
    $
    
    
    
    $
    (4.2
    )
    
    $
    
    
    
    $
    6.5Sub-prime home equity lending
    
    
    11.4
    
    
    
    
    
    
    
    113.8
    
    
    
    $
    11.4
    
    
    $
    (4.2
    )
    
    $
    113.8
    
    
    $
    6.5
 FINANCIAL CONDITION AND LIQUIDITY
  For the Nine Months Ended December 31,2006
    
    
    2005Net Cash Provided by (Used in)Centex*Operating Activities
    
    $
    (245,660
    )
    
    $
    (1,065,887
    )Investing Activities
    
    
    (3,442
    )
    
    
    70,662Financing Activities
    
    
    263,497
    
    
    
    572,780Effect of Exchange Rate on Cash
    
    
    
    
    
    
    (1,479
    )14,395
    
    
    
    (423,924
    )Financial ServicesOperating Activities
    
    
    94,847
    
    
    
    86,943Investing Activities
    
    
    169,387
    
    
    
    (923,907
    )Financing Activities
    
    
    (266,789
    )
    
    
    837,202(2,555
    )
    
    
    238Centex Corporation and
SubsidiariesOperating Activities
    
    
    (722,126
    )
    
    
    (1,068,701
    )Investing Activities
    
    
    141,478
    
    
    
    (788,488
    )Financing Activities
    
    
    592,488
    
    
    
    1,434,982Effect of Exchange Rate on Cash
    
    
    
    
    
    
    (1,479
    )Net Increase (Decrease) in Cash
    
    $
    11,840
    
    
    $
    (423,686
    )
 *
    
    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 cash
flows. We present the consolidating information shown above and believe that it is useful to
investors because it enables them to compare us to homebuilders that do not have financial
services operations. We also 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 that generally requires significantly
less equity to support their higher debt levels compared to the operations of our other
subsidiaries; the Financial Services subsidiaries and related companies have structured their
financing programs substantially on a stand-alone basis; 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. 40




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##### Table of Contents



Existing Credit
    
    
    AvailableFacilities
    
    
    CapacityCentexMulti-Bank Revolving Credit FacilityRevolving Credit
    
    $
    1,250,000
    
    
    $
    945,000Letters of Credit
    
    
    835,000
    
    
    
    469,3962,085,000
    
    
    
    1,414,396
    (1) (2)Unsecured Credit Facility
    
    
    150,000
    
    
    
    150,000
    (3)2,235,000
    
    
    
    1,564,396Financial ServicesSecured Credit Facilities
    
    
    740,000
    
    
    
    695,697
    (4)Mortgage Conduit Facilities
    
    
    650,000
    
    
    
    285,000
    (5)Harwood Street Funding I, LLC Facility
    
    
    3,000,000
    
    
    
    1,408,0004,390,000
    
    
    
    2,388,697$
    6,625,000
    
    
    $
    3,953,093
    (6)
 (1)
    
    This is an unsecured, committed, multi-bank revolving credit facility, maturing in July
2010, which serves as backup for Centex Corporations $1.25 billion commercial paper program
and provides $835 million of letter of credit capacity. As of December 31, 2006, the $1.25
billion commercial paper program had $305 million outstanding which has been deducted from the
available capacity under the back-up facility. There have been no direct borrowings under this
revolving credit facility since its inception.(2)
    
    In conjunction with the issuance of surety bonds in support of our Construction Services
activity, Centex Corporation has agreed to provide letters of credit of up to $100 million if
Centex Corporations public debt ratings fall below investment grade. In support of this
ratings trigger, we maintain a minimum of $100 million in unused committed credit at all
times.(3)
    
    Centex Corporation maintains a $150 million unsecured, uncommitted credit facility.(4)
    
    CTX Mortgage Company, LLC maintains $740 million of secured, committed mortgage warehouse
facilities.(5)
    
    A wholly-owned limited purpose subsidiary of CTX Mortgage Company, LLC maintains secured,
committed facilities funded through commercial paper conduits to finance the purchase of
certain mortgage loans from CTX Mortgage Company, LLC.
 41




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##### Table of Contents



(6)
    
    The amount of available capacity consists of $3,803.1 million of committed capacity and
$150.0 million of uncommitted capacity as of December 31, 2006. Although we believe that the
uncommitted capacity is currently available, there can be no assurance that the lender under
this facility would elect to make advances if and when requested to do so.
     CentexShort-term Debt:Short-term Notes Payable
    
    $
    306,750Senior Debt:Medium-term Note Programs, weighted-average 5.62%, due
through 2008
    
    
    170,000Senior Notes, weighted-average 5.89%, due through 2017
    
    
    3,708,922Other Indebtedness, weighted-average 6.54%, due through 2018
    
    
    23,682Subordinated Debt:Subordinated Debentures, 8.75%, due in 2007
    
    
    99,9854,309,339Financial ServicesShort-term Debt:Short-term Notes Payable
    
    
    409,303Harwood Street Funding I, LLC Secured Liquidity Notes
    
    
    1,529,826Harwood Street Funding I, LLC Variable Rate Subordinated Extendable
Certificates, weighted-average 7.35%, due through 2010
    
    
    60,0001,999,129$
    6,308,468
  Debt Type
    
    AmountCentexIssuances
    
    Senior Note
    
    $
    500.0Retirements, net
    
    Medium-term Note
    
    
    (187.9
    )Other Indebtedness
    
    
    (164.5
    )Total
    
    
    
    $
    147.6
 42




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CERTAIN OFF-BALANCE SHEET OBLIGATIONS
  Joint Ventures
    As ofDecember 31, 2006
    
    
    March 31, 2006Number of Active Joint Ventures (1)
    
    
    48
    
    
    
    44Investment in Joint Ventures
    
    $
    231,001
    
    
    $
    307,779Total Joint Venture Debt (2)
    
    $
    1,149,026
    
    
    $
    1,053,201Centexs Share of Joint Venture Debt:Based on Centexs Ownership Percentage
    
    $
    460,067
    
    
    $
    388,428Based on Limited Recourse Provisions:Limited Maintenance Guarantee (3) (5)
    
    $
    189,621
    
    
    $
    228,603Repayment Guarantee (4) (5)
    
    
    12,015
    
    
    
    8,136Total Limited Recourse Debt
    
    $
    201,636
    
    
    $
    236,739
 (1)
    
    The number of active 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 are the managing member of 28 and 24 of the active
joint ventures as of December 31, 2006 and March 31, 2006, respectively.(2)
    
    As of December 31, 2006 and March 31, 2006, 25 and 23, respectively, of the
active joint ventures have outstanding debt.(3)
    
    We have guaranteed that certain of the joint ventures will maintain a specified
loan to value ratio. For certain joint ventures, we have contributed additional
capital in order to maintain loan to value requirements.(4)
    
    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.(5)
    
    These amounts represent our maximum exposure related to the joint ventures
debt at each respective date.
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CRITICAL ACCOUNTING ESTIMATES
  Impairment of Long-Lived Assets
  Goodwill
  Inventory Valuation
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Land Held Under Option Agreements Not Owned
     Warranty Accruals
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Loan Origination Reserve
   Insurance Accruals
  Income Taxes
     RECENT ACCOUNTING PRONOUNCEMENTS
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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.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
   
 Item 4. Controls and Procedures
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PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
   
 Item 1A. Risk Factors
   Deterioration in economic conditions generally or in the market regions where we operate could
decrease demand and pricing for new homes and adversely affect our results of operations
  Our income tax provision and other tax reserves may be insufficient if any taxing authorities are
successful in asserting tax positions that are contrary to our positions.
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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
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    9,400,000November 1-30
    
    
    300
    
    
    $
    49.70
    
    
    
    300
    
    
    
    9,399,700December 1-31
    
    
    5,569
    
    
    $
    56.27
    
    
    
    
    
    
    
    9,399,700Total (1) (2)
    
    
    5,869
    
    
    $
    55.93
    
    
    
    300
 (1)
    
    Of the 5,869 shares repurchased for the quarter ended December 31, 2006, 5,569 shares
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.(2)
    
    Except as provided in Note (1), all share repurchases were effected in accordance with the
safe harbor provisions of Rule 10b-18 of the Securities Exchange Act of 1934.
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Item 6. Exhibits
  3.1
    
    Restated Articles of Incorporation of Centex Corporation
(Centex), as amended (incorporated by reference from Exhibit 3.1 to Centexs
Annual Report on Form 10-K for the fiscal year ended March 31, 2004).3.2
    
    Amended and Restated By-Laws of Centex dated October 11, 2005
(incorporated by reference from Exhibit 3.1 to Centexs Current Report on Form
8-K filed on October 12, 2005).4.1
    
    Specimen Centex common stock certificate (incorporated by
reference from Exhibit 4.1 to Centexs Quarterly Report on Form 10-Q filed on
November 1, 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, 2005, 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
    
    Amendment No. 2 to Securities Purchase Agreement dated as of
December 20, 2006, among Centex Financial Services, LLC, Nationstar Mortgage,
LLC and FIF HE Holdings LLC (incorporated by reference from Exhibit 2.3 to
Centexs Current Report on Form 8-K dated December 22, 2006).12.1
    
    Computation of Ratio of Earnings to Fixed Charges.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.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.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 2002.32.2
    
    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.
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Signatures
  CENTEX CORPORATIONRegistrantFebruary 1, 2007
    
    /s/ Catherine R. SmithCatherine R. SmithExecutive Vice President and Chief Financial Officer(principal financial officer)February 1, 2007
    
    /s/ Mark D. KempMark D. KempSenior Vice President-Controller(principal accounting officer)
 52