##### 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
SEPTEMBER 30, 2007
 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
 September 30, 2007
 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
    
    
    30Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    60Item 4.
    
    Controls and Procedures
    
    
    60PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    60Item 1A.
    
    Risk Factors
    
    
    60Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    63Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    63Item 6.
    
    Exhibits
    
    
    64Signatures
    
    
    66Computation of Ratio of Earnings to Fixed ChargesCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906
  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 September 30,2007
    
    
    2006RevenuesHome Building
    
    $
    2,105,484
    
    
    $
    2,658,047Financial Services
    
    
    80,700
    
    
    
    120,578Other
    
    
    34,744
    
    
    
    36,9632,220,928
    
    
    
    2,815,588Costs and ExpensesHome Building
    
    
    3,026,395
    
    
    
    2,508,333Financial Services
    
    
    134,782
    
    
    
    94,414Other
    
    
    33,021
    
    
    
    35,695Corporate General and Administrative
    
    
    34,540
    
    
    
    44,9983,228,738
    
    
    
    2,683,440Loss from Unconsolidated Entities and Other
    
    
    (31,782
    )
    
    
    (979
    )Other Income
    
    
    17,899
    
    
    
    Earnings (Loss) from Continuing Operations
Before Income Taxes
    
    
    (1,021,693
    )
    
    
    131,169Income Tax (Benefit) Provision
    
    
    (377,860
    )
    
    
    50,747Earnings (Loss) from Continuing Operations
    
    
    (643,833
    )
    
    
    80,422Earnings from Discontinued Operations, net of Tax
Provision of $0 and $36,051
    
    
    
    
    
    
    56,978Net Earnings (Loss)
    
    $
    (643,833
    )
    
    $
    137,400Basic Earnings (Loss) Per ShareContinuing Operations
    
    $
    (5.26
    )
    
    $
    0.67Discontinued Operations
    
    
    
    
    
    
    0.48$
    (5.26
    )
    
    $
    1.15Diluted Earnings (Loss) Per ShareContinuing Operations
    
    $
    (5.26
    )
    
    $
    0.65Discontinued Operations
    
    
    
    
    
    
    0.46$
    (5.26
    )
    
    $
    1.11Average Shares OutstandingBasic
    
    
    122,301,587
    
    
    
    119,634,303Dilutive Securities:Options
    
    
    
    
    
    
    3,858,252Other
    
    
    
    
    
    
    11,980Diluted
    
    
    122,301,587
    
    
    
    123,504,535Cash 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 Six Months Ended September 30,2007
    
    
    2006RevenuesHome Building
    
    $
    3,909,304
    
    
    $
    5,307,884Financial Services
    
    
    178,666
    
    
    
    243,319Other
    
    
    69,447
    
    
    
    68,2854,157,417
    
    
    
    5,619,488Costs and ExpensesHome Building
    
    
    4,981,941
    
    
    
    4,856,925Financial Services
    
    
    217,779
    
    
    
    194,068Other
    
    
    66,516
    
    
    
    68,784Corporate General and Administrative
    
    
    79,521
    
    
    
    99,7685,345,757
    
    
    
    5,219,545Earnings (Loss) from Unconsolidated Entities and Other
    
    
    (51,835
    )
    
    
    9,689Other Income
    
    
    22,825
    
    
    
    Earnings (Loss) from Continuing Operations
Before Income Taxes
    
    
    (1,217,350
    )
    
    
    409,632Income Tax (Benefit) Provision
    
    
    (442,182
    )
    
    
    156,782Earnings (Loss) from Continuing Operations
    
    
    (775,168
    )
    
    
    252,850Earnings from Discontinued Operations, net of Tax
Provision of $2,087 and $28,638
    
    
    3,376
    
    
    
    44,807Net Earnings (Loss)
    
    $
    (771,792
    )
    
    $
    297,657Basic Earnings (Loss) Per ShareContinuing Operations
    
    $
    (6.36
    )
    
    $
    2.09Discontinued Operations
    
    
    0.03
    
    
    
    0.37$
    (6.33
    )
    
    $
    2.46Diluted Earnings (Loss) Per ShareContinuing Operations
    
    $
    (6.36
    )
    
    $
    2.02Discontinued Operations
    
    
    0.03
    
    
    
    0.36$
    (6.33
    )
    
    $
    2.38Average Shares OutstandingBasic
    
    
    121,888,041
    
    
    
    120,795,315Dilutive Securities:Options
    
    
    
    
    
    
    4,037,501Other
    
    
    
    
    
    
    29,808Diluted
    
    
    121,888,041
    
    
    
    124,862,624Cash Dividends Per Share
    
    $
    0.08
    
    
    $
    0.08
 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 SubsidiariesSeptember 30, 2007
    
    
    March 31, 2007AssetsCash and Cash Equivalents
    
    $
    99,689
    
    
    $
    882,754Restricted Cash
    
    
    121,103
    
    
    
    146,532Receivables -Mortgage Loans
    
    
    934,694
    
    
    
    1,688,303Trade and Other, including Notes of $8,107 and $10,295
    
    
    348,643
    
    
    
    227,618From Affiliates
    
    
    
    
    
    
    Inventories -Housing Projects
    
    
    7,167,116
    
    
    
    8,474,883Land Held for Development and Sale
    
    
    429,064
    
    
    
    158,212Land Held Under Option Agreements Not Owned
    
    
    140,413
    
    
    
    282,116Other
    
    
    31,265
    
    
    
    35,868Investments -Joint Ventures and Other
    
    
    268,596
    
    
    
    281,644Unconsolidated Subsidiaries
    
    
    
    
    
    
    Property and Equipment, net
    
    
    103,305
    
    
    
    136,172Other Assets -Deferred Income Taxes
    
    
    974,903
    
    
    
    489,814Goodwill
    
    
    160,318
    
    
    
    219,042Deferred Charges and Other, net
    
    
    191,336
    
    
    
    176,975$
    10,970,445
    
    
    $
    13,199,933Liabilities and Stockholders EquityAccounts Payable
    
    $
    444,243
    
    
    $
    520,833Accrued Liabilities
    
    
    1,806,075
    
    
    
    1,822,429Debt -Centex
    
    
    3,659,178
    
    
    
    3,904,425Financial Services
    
    
    801,088
    
    
    
    1,663,040Commitments and Contingencies

Minority Interests
    
    
    96,063
    
    
    
    176,937Stockholders Equity -Preferred Stock: Authorized 5,000,000 Shares, None
Issued
    
    
    
    
    
    
    Common Stock: $.25 Par Value; Authorized 300,000,000
Shares; Outstanding 121,528,766 and 119,969,733 Shares
    
    
    31,394
    
    
    
    31,041Capital in Excess of Par Value
    
    
    80,776
    
    
    
    48,349Retained Earnings
    
    
    4,261,118
    
    
    
    5,250,873Treasury Stock, at Cost; 4,046,894 and 4,193,523 Shares
    
    
    (209,490
    )
    
    
    (217,994
    )Total Stockholders Equity
    
    
    4,163,798
    
    
    
    5,112,269$
    10,970,445
    
    
    $
    13,199,933
 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 ServicesSeptember 30, 2007
    
    
    March 31, 2007
    
    
    September 30, 2007
    
    
    March 31, 2007$
    81,476
    
    
    $
    870,688
    
    
    $
    18,213
    
    
    $
    12,06628,346
    
    
    
    56,467
    
    
    
    92,757
    
    
    
    90,065
    
    
    
    
    
    
    
    934,694
    
    
    
    1,688,303299,356
    
    
    
    175,683
    
    
    
    49,287
    
    
    
    51,935
    
    
    
    
    
    
    
    30,027
    
    
    
    23,7887,167,116
    
    
    
    8,474,883
    
    
    
    
    
    
    
    429,064
    
    
    
    158,212
    
    
    
    
    
    
    
    140,413
    
    
    
    282,116
    
    
    
    
    
    
    
    22,255
    
    
    
    27,121
    
    
    
    9,010
    
    
    
    8,747268,596
    
    
    
    281,644
    
    
    
    
    
    
    
    295,155
    
    
    
    137,704
    
    
    
    
    
    
    
    88,289
    
    
    
    119,203
    
    
    
    15,016
    
    
    
    16,969931,766
    
    
    
    465,247
    
    
    
    43,137
    
    
    
    24,567151,366
    
    
    
    210,090
    
    
    
    8,952
    
    
    
    8,952168,864
    
    
    
    163,497
    
    
    
    22,472
    
    
    
    13,478$
    10,072,062
    
    
    $
    11,422,555
    
    
    $
    1,223,565
    
    
    $
    1,938,870$
    431,763
    
    
    $
    510,106
    
    
    $
    12,480
    
    
    $
    10,7271,722,017
    
    
    
    1,719,753
    
    
    
    84,058
    
    
    
    102,6763,659,178
    
    
    
    3,904,425
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    801,088
    
    
    
    1,663,04095,306
    
    
    
    176,002
    
    
    
    757
    
    
    
    935
    
    
    
    
    
    
    
    
    
    
    
    31,394
    
    
    
    31,041
    
    
    
    1
    
    
    
    180,776
    
    
    
    48,349
    
    
    
    478,467
    
    
    
    275,4674,261,118
    
    
    
    5,250,873
    
    
    
    (153,286
    )
    
    
    (113,976
    )(209,490
    )
    
    
    (217,994
    )
    
    
    
    
    
    
    4,163,798
    
    
    
    5,112,269
    
    
    
    325,182
    
    
    
    161,492$
    10,072,062
    
    
    $
    11,422,555
    
    
    $
    1,223,565
    
    
    $
    1,938,870
 *
    
    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 Six Months Ended September 30,2007
    
    
    2006Cash Flows  Operating ActivitiesNet Earnings (Loss)
    
    $
    (771,792
    )
    
    $
    297,657AdjustmentsDepreciation and Amortization
    
    
    26,239
    
    
    
    29,747Stock-based Compensation
    
    
    21,939
    
    
    
    36,921Provision for Losses on Mortgage Loans Held for Investment and
Construction Loans
    
    
    37,374
    
    
    
    26,735Impairments and Write-off of Assets
    
    
    1,111,989
    
    
    
    155,811Deferred Income Tax (Benefit) Provision
    
    
    (375,859
    )
    
    
    75,364Loss (Earnings) of Joint Ventures and Unconsolidated Subsidiaries
    
    
    62,193
    
    
    
    (165
    )Distributions of Earnings of Joint Ventures and
Unconsolidated Subsidiaries
    
    
    1,669
    
    
    
    16,745Minority Interest, net of Taxes
    
    
    (178
    )
    
    
    454Gain on Sale of Assets
    
    
    (18,408
    )
    
    
    (114,638
    )Changes in Assets and Liabilities, Excluding Effect of AcquisitionsDecrease (Increase) in Restricted Cash
    
    
    26,006
    
    
    
    4,541(Increase) Decrease in Receivables
    
    
    (111,738
    )
    
    
    8,597Decrease in Mortgage Loans Held for Sale
    
    
    666,944
    
    
    
    329,117Increase in Receivables from Affiliates
    
    
    
    
    
    
    Increase in Housing Projects and Land Held for Development and Sale
    
    
    (52,739
    )
    
    
    (1,215,379
    )Decrease (Increase) in Other Inventories
    
    
    11,536
    
    
    
    394Decrease in Accounts Payable and Accrued Liabilities
    
    
    (332,847
    )
    
    
    (229,433
    )Decrease (Increase) in Other Assets, net
    
    
    21,300
    
    
    
    (12,238
    )Other
    
    
    (104
    )
    
    
    71323,524
    
    
    
    (589,699
    )Cash Flows  Investing ActivitiesPayments received on Notes Receivable
    
    
    2,188
    
    
    
    11,578Increase in Mortgage Loans Held for Investment
    
    
    
    
    
    
    (292,448
    )Decrease (Increase) in Construction Loans
    
    
    34,591
    
    
    
    (86,589
    )Investment in and Advances to Joint Ventures
    
    
    (100,548
    )
    
    
    (122,033
    )Distributions of Capital from Joint Ventures
    
    
    48,417
    
    
    
    98,813(Increase) Decrease in Investments in and Advances to Unconsolidated
Subsidiaries
    
    
    
    
    
    
    Purchases of Property and Equipment, net
    
    
    (4,615
    )
    
    
    (13,134
    )Proceeds from Dispositions
    
    
    10,813
    
    
    
    495,276Other
    
    
    (3,563
    )
    
    
    (3,861
    )(12,717
    )
    
    
    87,602Cash Flows  Financing ActivitiesIncrease in Restricted Cash
    
    
    (577
    )
    
    
    (19,583
    )(Decrease) Increase in Short-term Debt, net
    
    
    (862,201
    )
    
    
    165,109CentexIssuance of Long-term Debt
    
    
    107
    
    
    
    500,564Repayment of Long-term Debt
    
    
    (245,776
    )
    
    
    (117,373
    )Financial ServicesIssuance of Long-term Debt
    
    
    
    
    
    
    961,126Repayment of Long-term Debt
    
    
    
    
    
    
    (746,680
    )Proceeds from Stock Option Exercises
    
    
    24,654
    
    
    
    35,401Purchases of Common Stock, net
    
    
    (411
    )
    
    
    (266,008
    )Capital Contributions Received, net of Dividends Paid
    
    
    (9,668
    )
    
    
    (9,549
    )(1,093,872
    )
    
    
    503,007Net (Decrease) Increase in Cash and Cash Equivalents
    
    
    (783,065
    )
    
    
    910Cash and Cash Equivalents at Beginning of Period(1)
    
    
    882,754
    
    
    
    47,955Cash and Cash Equivalents at End of Period(2)
    
    $
    99,689
    
    
    $
    48,865
 See Notes to Consolidated Financial Statements.
 (1)
    
    Amount includes cash and cash equivalents of discontinued operations of $0 as of March 31,
2007 and $4,605 as of March 31, 2006.
 (2)
    
    Amount includes cash and cash equivalents of discontinued operations of $0 as of September
30, 2007 and $1,084 as of September 30, 2006.
 6




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##### Table of Contents



Centex Corporation and Subsidiaries
Statements of Consolidated Cash Flows with Consolidating Details
    Centex *
    
    
    Financial ServicesFor the Six Months Ended September 30,
    
    
    For the Six Months Ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006$
    (771,792
    )
    
    $
    297,657
    
    
    $
    (24,310
    )
    
    $
    67,09223,101
    
    
    
    24,306
    
    
    
    3,138
    
    
    
    5,44121,939
    
    
    
    36,921
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,374
    
    
    
    26,7351,111,989
    
    
    
    155,811
    
    
    
    
    
    
    
    (357,289
    )
    
    
    7,139
    
    
    
    (18,570
    )
    
    
    68,22586,503
    
    
    
    (67,257
    )
    
    
    
    
    
    
    16,669
    
    
    
    612,525
    
    
    
    
    
    
    
    
    
    
    
    332
    
    
    
    (178
    )
    
    
    122(18,408
    )
    
    
    (4,772
    )
    
    
    
    
    
    
    (109,866
    )28,121
    
    
    
    5,788
    
    
    
    (2,115
    )
    
    
    (1,247
    )(122,161
    )
    
    
    3,305
    
    
    
    10,423
    
    
    
    5,292
    
    
    
    
    
    
    
    666,944
    
    
    
    329,117
    
    
    
    
    
    
    
    (6,239
    )
    
    
    (27,167
    )(52,739
    )
    
    
    (1,215,379
    )
    
    
    
    
    
    
    4,874
    
    
    
    (513
    )
    
    
    6,662
    
    
    
    907(315,982
    )
    
    
    (220,926
    )
    
    
    (16,865
    )
    
    
    (17,209
    )30,294
    
    
    
    (26,338
    )
    
    
    (8,994
    )
    
    
    14,100(104
    )
    
    
    71
    
    
    
    
    
    
    
    (314,985
    )
    
    
    (391,330
    )
    
    
    647,270
    
    
    
    361,5422,188
    
    
    
    11,472
    
    
    
    
    
    
    
    106
    
    
    
    
    
    
    
    
    
    
    
    (292,448
    )
    
    
    
    
    
    
    
    34,591
    
    
    
    (86,589
    )(100,548
    )
    
    
    (122,033
    )
    
    
    
    
    
    
    48,417
    
    
    
    98,813
    
    
    
    
    
    
    
    (196,761
    )
    
    
    27,590
    
    
    
    
    
    
    
    (3,430
    )
    
    
    (8,053
    )
    
    
    (1,185
    )
    
    
    (5,081
    )10,813
    
    
    
    
    
    
    
    
    
    
    
    503,555(3,563
    )
    
    
    (3,861
    )
    
    
    
    
    
    
    (242,884
    )
    
    
    3,928
    
    
    
    33,406
    
    
    
    119,543
    
    
    
    
    
    
    
    (577
    )
    
    
    (19,583
    )(249
    )
    
    
    250,338
    
    
    
    (861,952
    )
    
    
    (85,229
    )107
    
    
    
    500,564
    
    
    
    
    
    
    
    (245,776
    )
    
    
    (117,373
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    961,126
    
    
    
    
    
    
    
    
    
    
    
    (746,680
    )24,654
    
    
    
    35,401
    
    
    
    
    
    
    
    (411
    )
    
    
    (266,008
    )
    
    
    
    
    
    
    (9,668
    )
    
    
    (9,549
    )
    
    
    188,000
    
    
    
    (595,780
    )(231,343
    )
    
    
    393,373
    
    
    
    (674,529
    )
    
    
    (486,146
    )(789,212
    )
    
    
    5,971
    
    
    
    6,147
    
    
    
    (5,061
    )870,688
    
    
    
    36,711
    
    
    
    12,066
    
    
    
    11,244$
    81,476
    
    
    $
    42,682
    
    
    $
    18,213
    
    
    $
    6,183
 *
    
    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
 September 30, 2007
   (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




---



##### Table of Contents



Interest Expense
  For the Three Months
    
    
    For the Six MonthsEnded September 30,
    
    
    Ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Total Interest Incurred
    
    $
    76,086
    
    
    $
    110,321
    
    
    $
    158,437
    
    
    $
    295,801Less  Interest Capitalized
    
    
    (59,507
    )
    
    
    (72,715
    )
    
    
    (121,370
    )
    
    
    (145,309
    )Financial Services
Interest Expense
    
    
    (16,579
    )
    
    
    (21,763
    )
    
    
    (37,067
    )
    
    
    (42,600
    )Discontinued Operations
    
    
    
    
    
    
    (15,843
    )
    
    
    
    
    
    
    (107,892
    )Interest Expense, net
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Capitalized Interest Charged to Home
Buildings Costs and Expenses
    
    $
    96,698
    
    
    $
    46,803
    
    
    $
    139,764
    
    
    $
    83,853
 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, 2007
    
    Stock Options
    
    
    1,420.3
    
    
    $
    28,603.0Stock Units
    
    
    366.2
    
    
    $
    19,955.4Restricted Stock
    
    
    121.2
    
    
    $
    6,379.9For the six months ended
September 30, 2007
    
    Stock Options
    
    
    646.6
    
    
    $
    10,116.9Stock Units
    
    
    235.7
    
    
    $
    10,693.1Restricted Stock
    
    
    53.4
    
    
    $
    2,250.0
  Statements of Consolidated Cash Flows  Supplemental Disclosures
   For the Three Months
    
    
    For the Six MonthsEnded September 30,
    
    
    Ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Cash Paid for Interest
    
    $
    75,126
    
    
    $
    119,705
    
    
    $
    153,995
    
    
    $
    288,488Net Cash Paid for Taxes
    
    $
    31,760
    
    
    $
    128,895
    
    
    $
    209,205
    
    
    $
    270,867
   10




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##### Table of Contents



Recent Accounting Pronouncements
   Reclassifications
  (B) STOCKHOLDERS EQUITY
  Capital in
    
    
    
    
    
    
    TreasuryCommon Stock
    
    
    Excess of
    
    
    Retained
    
    
    Stock,Shares
    
    
    Amount
    
    
    Par Value
    
    
    Earnings
    
    
    at Cost
    
    
    TotalBalance, March 31, 2007
    
    
    119,970
    
    
    $
    31,041
    
    
    $
    48,349
    
    
    $
    5,250,873
    
    
    $
    (217,994
    )
    
    $
    5,112,269Adoption of FIN 48
    
    
    
    
    
    
    
    
    
    
    (4,898
    )
    
    
    (208,295
    )
    
    
    
    
    
    
    (213,193
    )Issuance of Restricted Stock
and Stock Units
    
    
    212
    
    
    
    13
    
    
    
    (12,946
    )
    
    
    
    
    
    
    8,915
    
    
    
    (4,018
    )Stock Compensation
    
    
    
    
    
    
    
    
    
    
    21,939
    
    
    
    
    
    
    
    
    
    
    
    21,939Exercise of Stock Options
Including Tax Benefits
    
    
    1,357
    
    
    
    339
    
    
    
    28,229
    
    
    
    
    
    
    
    
    
    
    
    28,568Cash Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,668
    )
    
    
    
    
    
    
    (9,668
    )Purchase of Common
Stock for Treasury
    
    
    (12
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (411
    )
    
    
    (411
    )Other Stock Transactions
    
    
    2
    
    
    
    1
    
    
    
    103
    
    
    
    
    
    
    
    
    
    
    
    104Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (771,792
    )
    
    
    
    
    
    
    (771,792
    )Balance, September 30, 2007
    
    
    121,529
    
    
    $
    31,394
    
    
    $
    80,776
    
    
    $
    4,261,118
    
    
    $
    (209,490
    )
    
    $
    4,163,798
 11




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##### Table of Contents



(C) MORTGAGE LOANS
  As ofSeptember 30, 2007
    
    
    March 31, 2007Mortgage Loans Held for Sale
    
    $
    663,312
    
    
    $
    1,314,219Construction Loans, net of
Allowance of $38,478 and $5,826
    
    
    271,382
    
    
    
    374,084Mortgage Loans Receivable
    
    $
    934,694
    
    
    $
    1,688,303
  (D) INVENTORIES
 Housing Projects and Land Held for Development and Sale
  As ofSeptember 30, 2007
    
    
    March 31, 2007Direct Construction
    
    $
    2,961,336
    
    
    $
    3,041,290Land Under Development
    
    
    4,205,780
    
    
    
    5,433,593Housing Projects
    
    $
    7,167,116
    
    
    $
    8,474,883
  Land Held Under Option Agreements Not Owned and Other Land Deposits
    12




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##### Table of Contents



As ofSeptember 30, 2007
    
    
    March 31, 2007Cash Deposits included in:Land Held for Development and Sale
    
    $
    55,778
    
    
    $
    89,737Land Held Under Option Agreements Not Owned
    
    
    32,360
    
    
    
    38,642Total Cash Deposits in Inventory
    
    
    88,138
    
    
    
    128,379Letters of Credit
    
    
    3,734
    
    
    
    12,854Total Invested through Deposits or
Secured with Letters of Credit
    
    $
    91,872
    
    
    $
    141,233Total Purchase Price of Land Option Agreements
    
    $
    2,235,243
    
    
    $
    3,324,636
   (E) GOODWILL
  As of
    
    
    Goodwill
    
    
    Goodwill
    
    
    As ofMarch 31, 2007
    
    
    Acquired
    
    
    Impairments
    
    
    September 30, 2007Home BuildingEast
    
    $
    27,945
    
    
    $
    
    
    
    $
    
    
    
    $
    27,945Southeast
    
    
    29,160
    
    
    
    
    
    
    
    (22,452
    )
    
    
    6,708Central
    
    
    7,654
    
    
    
    
    
    
    
    (3,488
    )
    
    
    4,166Texas
    
    
    9,720
    
    
    
    
    
    
    
    
    
    
    
    9,720Northwest
    
    
    22,721
    
    
    
    
    
    
    
    (13,755
    )
    
    
    8,966Southwest
    
    
    24,301
    
    
    
    
    
    
    
    (21,627
    )
    
    
    2,674Other homebuilding
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Home Building
    
    
    121,501
    
    
    
    
    
    
    
    (61,322
    )
    
    
    60,179Financial Services
    
    
    8,952
    
    
    
    
    
    
    
    
    
    
    
    8,952Other
    
    
    88,589
    
    
    
    2,598
    
    
    
    
    
    
    
    91,187Total
    
    $
    219,042
    
    
    $
    2,598
    
    
    $
    (61,322
    )
    
    $
    160,318
  13




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##### Table of Contents



(F) INDEBTEDNESS
  As ofSeptember 30, 2007
    
    
    March 31, 2007Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageInterest
    
    
    
    
    
    
    InterestRate
    
    
    
    
    
    
    RateShort-term Debt:Centex
    
    $
    558
    
    
    
    
    
    
    $
    1,807
    
    
    
    Financial ServicesFinancial Institutions
    
    
    741,088
    
    
    
    5.81
    %
    
    
    428,144
    
    
    
    5.56
    %Harwood Street Funding I, LLC Secured
Liquidity Notes
    
    
    
    
    
    
    
    
    
    
    1,174,896
    
    
    
    5.38
    %Consolidated Short-term Debt
    
    
    741,646
    
    
    
    
    
    
    
    1,604,847Long-term Debt:CentexMedium-term Note Programs
    
    
    
    
    
    
    
    
    
    
    170,000
    
    
    
    5.61
    %Senior Notes, due through 2017
    
    
    3,654,083
    
    
    
    5.89
    %
    
    
    3,708,976
    
    
    
    5.89
    %Other Indebtedness, due through 2018
    
    
    4,537
    
    
    
    7.14
    %
    
    
    23,642
    
    
    
    6.57
    %3,658,620
    
    
    
    
    
    
    
    3,902,618Financial ServicesHarwood Street Funding I, LLC Variable-Rate
Subordinated Extendable Certificates,
due through 2010
    
    
    60,000
    
    
    
    7.14
    %
    
    
    60,000
    
    
    
    7.32
    %Consolidated Long-term Debt
    
    
    3,718,620
    
    
    
    
    
    
    
    3,962,618Total Debt
    
    $
    4,460,266
    
    
    
    
    
    
    $
    5,567,465
  14




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##### Table of Contents



For the Six Months Ended September 30,2007
    
    2006Short-term Debt:Centex
    
    
    
    
    
    
    5.29
    %Financial Services
    
    
    5.92
    %
    
    
    5.47
    %Long-term Debt:CentexMedium-term Note Programs
    
    
    5.68
    %
    
    
    6.07
    %Senior Notes
    
    
    5.88
    %
    
    
    5.86
    %Other Indebtedness
    
    
    6.62
    %
    
    
    6.04
    %Subordinated Debentures
    
    
    
    
    
    
    8.75
    %Financial ServicesHarwood Street Funding I, LLC Variable-Rate
Subordinated Extendable Certificates
    
    
    7.47
    %
    
    
    7.25
    %
  FinancialCentex
    
    
    Services
    
    
    Total2008
    
    $
    336,000
    
    
    $
    
    
    
    $
    336,0002009
    
    
    151,853
    
    
    
    
    
    
    
    151,8532010
    
    
    225,408
    
    
    
    60,000
    (1)
    
    
    285,4082011
    
    
    700,251
    
    
    
    
    
    
    
    700,2512012
    
    
    349,365
    
    
    
    
    
    
    
    349,365Thereafter
    
    
    1,895,743
    
    
    
    
    
    
    
    1,895,743$
    3,658,620
    
    
    $
    60,000
    
    
    $
    3,718,620
 (1)
    
    In October 2007, the Company decided to terminate Harwood Street Funding I,
LLC. As a result, Harwood Street Funding I, LLC provided notice to the certificate
holders that these certificates will be redeemed on November 20, 2007. See Note (M),
Subsequent Events, for additional information.
  15




---



##### Table of Contents



Credit Facilities
  Existing Credit
    
    
    AvailableFacilities
    
    
    CapacityCentexMulti-Bank Revolving Credit FacilityRevolving Credit
    
    $
    1,250,000
    
    
    $
    1,250,000Letters of Credit
    
    
    835,000
    
    
    
    519,4532,085,000
    
    
    
    1,769,453
    (1) (2)Financial ServicesSecured Credit Facilities
    
    
    661,000
    
    
    
    69,912
    (3)Mortgage Conduit Facilities
    
    
    150,000
    
    
    
    
    (4)Harwood Street Funding I, LLC Facility
    
    
    1,500,000
    
    
    
    
    (5)2,311,000
    
    
    
    69,912$
    4,396,000
    
    
    $
    1,839,365
 (1)
    
    This is an unsecured, committed, multi-bank revolving credit facility,
maturing in July 2010,
that serves as funding for general corporate purposes, serves as backup for Centex Corporations
$1.25 billion commercial paper program, and provides $835 million of letter of credit
capacity. As of September 30, 2007, there were no amounts outstanding under the revolving
credit facility or the commercial paper program. As further discussed in Note (M),
Subsequent Events, the Companys credit ratings were
downgraded subsequent to September 30, 2007. As a result, it is
unlikely that the Company will be able  to issue
commercial paper.(2)
    
    Centex maintains a minimum of $100 million in unused, committed letter of credit capacity at
all times in respect of certain remaining surety bond obligations relating to Construction
Services projects commenced prior to the sale of Construction Services on March 30, 2007.
Under an agreement entered into by Centex with a surety, Centex is obligated to provide a $100
million letter of credit to such surety if its long-term senior unsecured debt is downgraded
below BBB- by Standard & Poors (S&P) or below
Baa3 by Moodys Investors Service (Moodys). In connection with the sale
of Construction Services, the purchaser has indemnified Centex for losses in respect of
certain surety bond obligations, including draws on such letter of credit. In addition,
Centex has obtained a back-up indemnity from an A+ (S&P), A1 (Moodys) rated financial
institution, which indemnifies Centex against a portion of these losses, and which will
decline on a quarterly basis in accordance with an agreed upon schedule. In October 2007,
Centexs long-term senior unsecured debt was downgraded by Moodys to Ba1, which triggered the
requirement for Centex to obtain the $100 million letter of credit. See Note (M), Subsequent
Events, for additional information.(3)
    
    CTX Mortgage Company, LLC maintains $661 million of secured, committed mortgage warehouse
facilities.(4)
    
    A wholly-owned limited purpose subsidiary of CTX Mortgage Company, LLC maintains a $150
million secured, committed facility funded through commercial paper conduits to finance the
purchase of construction loans from CTX Mortgage Company, LLC.(5)
    
    This facility provides for a maximum amount of mortgage loans to be held by Harwood Street
Funding I, LLC equal to $1.5 billion. However, as shown in the table above, there is no
available capacity under this facility. Since August 2007, Harwood Street Funding I, LLC has
not been able to issue short-term liquidity notes to finance the purchase of mortgage loans
from CTX Mortgage Company, LLC due to significant market disruptions. In October 2007, the
Company decided to terminate Harwood Street Funding I, LLC.
 Funding of Mortgage Loans
  16




---



##### Table of Contents



HSF-I.
         17




---



##### Table of Contents



(G) COMMITMENTS AND CONTINGENCIES
 Joint Ventures
  18




---



##### Table of Contents



As of September 30, 2007
    
    
    As of March 31, 2007Centexs
    
    
    
    
    
    
    
    
    
    
    CentexsShare
    
    
    
    
    
    
    
    
    
    
    ShareActive (1)
    
    
    Investments
    
    
    of Debt
    
    
    Active (1)
    
    
    Investments
    
    
    of DebtUnleveraged Joint Ventures
    
    
    21
    
    
    $
    25,255
    
    
    $
    
    
    
    
    28
    
    
    $
    33,369
    
    
    $
    Joint Ventures with Debt:
    
    
    22
    
    
    
    
    
    
    
    
    
    
    
    21Limited
Maintenance Guarantee (2) (3) (4)
    
    
    
    
    
    
    106,077
    
    
    
    104,247
    
    
    
    
    
    
    
    108,057
    
    
    
    162,425Repayment Guarantee (2) (5)
    
    
    
    
    
    
    2,756
    
    
    
    16,075
    
    
    
    
    
    
    
    2,247
    
    
    
    16,045Completion Guarantee (4)
    
    
    
    
    
    
    122,263
    
    
    
    196,233
    
    
    
    
    
    
    
    126,469
    
    
    
    209,927No Recourse or Guarantee
    
    
    
    
    
    
    12,245
    
    
    
    24,000
    
    
    
    
    
    
    
    11,502
    
    
    
    24,00043
    
    
    $
    268,596
    
    
    $
    340,555
    
    
    
    49
    
    
    $
    281,644
    
    
    $
    412,397
 (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 was the managing member of 23 and 28 of the active joint ventures
as of September 30, 2007 and March 31, 2007, respectively.(2)
    
    These amounts represent the Companys maximum exposure related to the joint ventures debt at
each respective date.(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)
    
    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. For certain joint
ventures, the Company has contributed additional capital in order to complete land
development.(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.
   For the Fiscal Years EndedMarch 312008
    
    $
    123,5162009
    
    
    150,5012010
    
    
    26,3662011
    
    
    39,6702012
    
    
    502Thereafter
    
    
    $
    340,555
 Letters of Credit and Surety Bonds
  19




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##### Table of Contents



As of September 30, 2007
    
    
    As of March 31, 2007Letters of Credit
    
    
    Surety Bonds
    
    
    Letters of Credit
    
    
    Surety BondsHome Building
    
    $
    179.8
    
    
    $
    1,695.6
    (1)
    
    $
    209.1
    
    
    $
    1,542.3Financial Services
    
    
    25.7
    
    
    
    13.3
    
    
    
    0.7
    
    
    
    10.7Other
    
    
    85.4
    
    
    
    1.7
    
    
    
    94.4
    
    
    
    1.7Discontinued
Operations
(2)
    
    
    25.0
    
    
    
    3,367.3
    
    
    
    38.1
    
    
    
    4,161.8$
    315.9
    
    
    $
    5,077.9
    
    
    $
    342.3
    
    
    $
    5,716.5
 (1)
    
    The Company estimates that $590.0 million of work remains to be performed on these projects
as of September 30, 2007.(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 $3.37 billion at September
30, 2007, although the risk of liability with respect to these surety bonds declines as the
relevant construction projects are performed. At September 30, 2007, the Company estimates
that $1.27 billion of work remains to be performed on these projects. In connection with
certain of these surety bond obligations, the Company has agreed to provide a $100 million
letter of credit to such surety if its public debt ratings fall below investment grade. The
purchaser of Construction Services has agreed to indemnify Centex against losses relating to
such surety bond obligations, including amounts drawn under any such letter of credit. The
Company has purchased for its benefit an additional back-up indemnity provided by a financial
institution with an A+ (S&P), A1 (Moodys) credit rating. The obligation of such financial
institution under the back-up indemnity is $1.35 billion as of September 30, 2007, which
declines to $400 million over time and terminates in 2016. In October 2007, Centexs
long-term senior unsecured debt was downgraded by Moodys to Ba1, which triggered the
requirement for Centex to issue the $100 million letter of credit.
 Community Development and Other Special District Obligations
  Warranties and Guarantees
   20




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##### Table of Contents



September 30, 2007
    
    
    March 31, 2007
    (1)Balance at Beginning of Period
    
    $
    44,293
    
    
    $
    47,199Warranties Issued
    
    
    19,067
    
    
    
    42,422Settlements Made
    
    
    (25,279
    )
    
    
    (45,228
    )Changes in Liability of Pre-Existing
Warranties, Including Expirations
    
    
    (689
    )
    
    
    (100
    )Balance at End of Period
    
    $
    37,392
    
    
    $
    44,293
 (1)
    
    For the six months ended September 30, 2006, warranties issued, settlements
made and changes in liability of pre-existing warranties were $25,501, $(24,715) and
$(100), respectively.
  September 30, 2007
    
    
    March 31, 2007
    (1)Balance at Beginning of Period
    
    $
    16,863
    
    
    $
    18,500Provision for Losses
    
    
    908
    
    
    
    2,160Settlements
    
    
    (5,890
    )
    
    
    (1,178
    )Changes in Pre-Existing Reserves
    
    
    1,800
    
    
    
    (2,619
    )Balance at End of Period
    
    $
    13,681
    
    
    $
    16,863
 (1)
    
    For the six months ended September 30, 2006, provisions for losses,
settlements and changes in pre-existing reserves were $1,040, $(559) and $(3,294),
respectively.
 Forward Trade and Interest Rate Lock Commitments
    Litigation and Related Matters
   21




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##### Table of Contents



(H) COMPREHENSIVE INCOME
  For the Three Months Ended
    
    
    For the Six Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net Earnings (Loss)
    
    $
    (643,833
    )
    
    $
    137,400
    
    
    $
    (771,792
    )
    
    $
    297,657Other Comprehensive Income, net of Tax:Unrealized Loss on Hedging Instruments
    
    
    
    
    
    
    (1,211
    )
    
    
    
    
    
    
    7,036Foreign Currency Translation
Adjustments
    
    
    
    
    
    
    47
    
    
    
    
    
    
    
    72Hedging Gain Reclassified to Net
Earnings
    
    
    
    
    
    
    (15,738
    )
    
    
    
    
    
    
    (15,738
    )Comprehensive Income (Loss)
    
    $
    (643,833
    )
    
    $
    120,498
    
    
    $
    (771,792
    )
    
    $
    289,027
  (I) BUSINESS SEGMENTS
   East:
 Southeast:
 Central:
 Texas:
 Northwest:
 Southwest:
 Other homebuilding (1)
 (1)
    
    Other homebuilding includes projects that the Company plans to build-out and
liquidate, and ancillary businesses (including framing, carpet and holding companies)
conducting business in the following states: Florida, North Carolina, New Hampshire
and Texas. In addition, Other homebuilding includes amounts consolidated under the
caption land held under option agreements not owned and capitalized interest for all
regions.
   22




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##### Table of Contents



Home Building
  Financial Services
  Other
   For the Three Months Ended
    
    
    For the Six Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Operating Earnings (Loss) from Home Services Operations
    
    $
    1,500
    
    
    $
    (1,370
    )
    
    $
    2,708
    
    
    $
    (3,098
    )Interest Income and Other Revenue
    
    
    17,899
    
    
    
    
    
    
    
    22,825
    
    
    
    Corporate General and Administrative Expense
    
    
    (34,540
    )
    
    
    (44,998
    )
    
    
    (79,521
    )
    
    
    (99,768
    )Other
    
    
    223
    
    
    
    2,638
    
    
    
    223
    
    
    
    2,599$
    (14,918
    )
    
    $
    (43,730
    )
    
    $
    (53,765
    )
    
    $
    (100,267
    )
  For the Three Months Ended September 30,2007
    
    
    2006Earnings
    
    
    Earnings
    
    
    
    
    
    
    Earnings
    
    
    Earnings(Loss)
    
    
    (Loss) from
    
    
    
    
    
    
    (Loss)
    
    
    (Loss) fromfrom
    
    
    Continuing
    
    
    
    
    
    
    from
    
    
    ContinuingUnconsolidated
    
    
    Operations
    
    
    
    
    
    
    Unconsolidated
    
    
    OperationsEntities and
    
    
    Before
    
    
    
    
    
    
    Entities and
    
    
    BeforeRevenues
    
    
    Other
    
    
    Income Tax
    
    
    Revenues
    
    
    Other
    
    
    Income TaxHome BuildingEast
    
    $
    488,230
    
    
    $
    (2,045
    )
    
    $
    17,010
    
    
    $
    572,540
    
    
    $
    815
    
    
    $
    75,556Southeast
    
    
    260,122
    
    
    
    (24,999
    )
    
    
    (153,088
    )
    
    
    382,309
    
    
    
    1,985
    
    
    
    23,120Central
    
    
    221,939
    
    
    
    506
    
    
    
    (52,101
    )
    
    
    283,528
    
    
    
    232
    
    
    
    188Texas
    
    
    256,306
    
    
    
    318
    
    
    
    19,708
    
    
    
    267,697
    
    
    
    97
    
    
    
    23,548Northwest
    
    
    395,851
    
    
    
    1,151
    
    
    
    (195,767
    )
    
    
    536,704
    
    
    
    6,800
    
    
    
    77,841Southwest
    
    
    426,290
    
    
    
    (7,117
    )
    
    
    (480,143
    )
    
    
    549,008
    
    
    
    (10,989
    )
    
    
    (56,206
    )Other homebuilding
    
    
    56,746
    
    
    
    404
    
    
    
    (108,312
    )
    
    
    66,261
    
    
    
    81
    
    
    
    4,688Total Home Building
    
    
    2,105,484
    
    
    
    (31,782
    )
    
    
    (952,693
    )
    
    
    2,658,047
    
    
    
    (979
    )
    
    
    148,735Financial Services
    
    
    80,700
    
    
    
    
    
    
    
    (54,082
    )
    
    
    120,578
    
    
    
    
    
    
    
    26,164Other
    
    
    34,744
    
    
    
    
    
    
    
    (14,918
    )
    
    
    36,963
    
    
    
    
    
    
    
    (43,730
    )Total
    
    $
    2,220,928
    
    
    $
    (31,782
    )
    
    $
    (1,021,693
    )
    
    $
    2,815,588
    
    
    $
    (979
    )
    
    $
    131,169
 23




---



##### Table of Contents



For the Six Months Ended September 30,2007
    
    
    2006Earnings
    
    
    Earnings
    
    
    
    
    
    
    Earnings
    
    
    Earnings(Loss)
    
    
    (Loss) from
    
    
    
    
    
    
    (Loss)
    
    
    (Loss) fromfrom
    
    
    Continuing
    
    
    
    
    
    
    from
    
    
    ContinuingUnconsolidated
    
    
    Operations
    
    
    
    
    
    
    Unconsolidated
    
    
    OperationsEntities and
    
    
    Before
    
    
    
    
    
    
    Entities and
    
    
    BeforeRevenues
    
    
    Other
    
    
    Income Tax
    
    
    Revenues
    
    
    Other
    
    
    Income TaxHome BuildingEast
    
    $
    849,006
    
    
    $
    (1,980
    )
    
    $
    35,062
    
    
    $
    1,116,963
    
    
    $
    1,454
    
    
    $
    158,535Southeast
    
    
    473,979
    
    
    
    (23,065
    )
    
    
    (166,105
    )
    
    
    780,091
    
    
    
    3,205
    
    
    
    83,722Central
    
    
    407,008
    
    
    
    1,921
    
    
    
    (58,468
    )
    
    
    573,442
    
    
    
    556
    
    
    
    9,821Texas
    
    
    491,039
    
    
    
    432
    
    
    
    33,844
    
    
    
    512,053
    
    
    
    198
    
    
    
    43,895Northwest
    
    
    791,376
    
    
    
    (23,137
    )
    
    
    (227,848
    )
    
    
    1,041,583
    
    
    
    11,180
    
    
    
    151,131Southwest
    
    
    797,494
    
    
    
    (6,404
    )
    
    
    (595,743
    )
    
    
    1,141,041
    
    
    
    (9,038
    )
    
    
    (8,036
    )Other homebuilding
    
    
    99,402
    
    
    
    398
    
    
    
    (145,214
    )
    
    
    142,711
    
    
    
    2,134
    
    
    
    21,580Total Home Building
    
    
    3,909,304
    
    
    
    (51,835
    )
    
    
    (1,124,472
    )
    
    
    5,307,884
    
    
    
    9,689
    
    
    
    460,648Financial Services
    
    
    178,666
    
    
    
    
    
    
    
    (39,113
    )
    
    
    243,319
    
    
    
    
    
    
    
    49,251Other
    
    
    69,447
    
    
    
    
    
    
    
    (53,765
    )
    
    
    68,285
    
    
    
    
    
    
    
    (100,267
    )Total
    
    $
    4,157,417
    
    
    $
    (51,835
    )
    
    $
    (1,217,350
    )
    
    $
    5,619,488
    
    
    $
    9,689
    
    
    $
    409,632
  For the Three Months Ended September 30,2007
    
    
    2006Goodwill
    
    
    Land-related
    
    
    Land-related
    
    
    Goodwill
    
    
    Land-related
    
    
    Land-relatedImpairments
    
    
    Impairments
    
    
    Write-offs
    
    
    Impairments
    
    
    Impairments
    
    
    Write-offsHome BuildingEast
    
    $
    
    
    
    $
    18,109
    
    
    $
    8,233
    
    
    $
    
    
    
    $
    
    
    
    $
    3,811Southeast
    
    
    22,452
    
    
    
    78,054
    
    
    
    10,811
    
    
    
    
    
    
    
    6,140
    
    
    
    13,755Central
    
    
    3,488
    
    
    
    37,564
    
    
    
    8,078
    
    
    
    
    
    
    
    
    
    
    
    8,292Texas
    
    
    
    
    
    
    
    
    
    
    807
    
    
    
    
    
    
    
    
    
    
    
    Northwest
    
    
    13,755
    
    
    
    187,581
    
    
    
    8,604
    
    
    
    
    
    
    
    
    
    
    
    9,259Southwest
    
    
    21,627
    
    
    
    413,816
    
    
    
    1,783
    
    
    
    
    
    
    
    23,884
    
    
    
    52,565Other homebuilding
    
    
    
    
    
    
    111,763
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    1,802Total Home Building
    
    
    61,322
    
    
    
    846,887
    
    
    
    38,318
    
    
    
    
    
    
    
    30,024
    
    
    
    89,484Financial Services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    61,322
    
    
    $
    846,887
    
    
    $
    38,318
    
    
    $
    
    
    
    $
    30,024
    
    
    $
    89,484
 For the Six Months Ended September 30,2007
    
    
    2006Goodwill
    
    
    Land-related
    
    
    Land-related
    
    
    Goodwill
    
    
    Land-related
    
    
    Land-relatedImpairments
    
    
    Impairments
    
    
    Write-offs
    
    
    Impairments
    
    
    Impairments
    
    
    Write-offsHome BuildingEast
    
    $
    
    
    
    $
    18,109
    
    
    $
    15,605
    
    
    $
    
    
    
    $
    
    
    
    $
    5,729Southeast
    
    
    22,452
    
    
    
    85,469
    
    
    
    13,855
    
    
    
    
    
    
    
    6,140
    
    
    
    14,577Central
    
    
    3,488
    
    
    
    41,847
    
    
    
    8,538
    
    
    
    
    
    
    
    
    
    
    
    9,884Texas
    
    
    
    
    
    
    
    
    
    
    864
    
    
    
    
    
    
    
    
    
    
    
    19Northwest
    
    
    13,755
    
    
    
    205,877
    
    
    
    13,153
    
    
    
    
    
    
    
    
    
    
    
    18,513Southwest
    
    
    21,627
    
    
    
    495,219
    
    
    
    8,995
    
    
    
    
    
    
    
    23,884
    
    
    
    75,262Other homebuilding
    
    
    
    
    
    
    142,958
    
    
    
    178
    
    
    
    
    
    
    
    
    
    
    
    1,802Total Home Building
    
    
    61,322
    
    
    
    989,479
    
    
    
    61,188
    
    
    
    
    
    
    
    30,024
    
    
    
    125,786Financial Services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    61,322
    
    
    $
    989,479
    
    
    $
    61,188
    
    
    $
    
    
    
    $
    30,024
    
    
    $
    125,786
 24




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##### Table of Contents



As ofSeptember 30, 2007
    
    
    March 31, 2007Inventory
    
    
    Total Assets
    
    
    Inventory
    
    
    Total AssetsHome BuildingEast
    
    $
    1,437,571
    
    
    $
    1,653,093
    
    
    $
    1,477,904
    
    
    $
    1,663,815Southeast
    
    
    1,571,431
    
    
    
    1,668,198
    
    
    
    1,703,614
    
    
    
    1,821,660Central
    
    
    480,088
    
    
    
    525,035
    
    
    
    606,508
    
    
    
    652,799Texas
    
    
    612,257
    
    
    
    633,157
    
    
    
    605,200
    
    
    
    630,396Northwest
    
    
    1,527,674
    
    
    
    1,617,847
    
    
    
    1,725,847
    
    
    
    1,829,961Southwest
    
    
    1,614,090
    
    
    
    1,738,009
    
    
    
    2,112,369
    
    
    
    2,304,415Other homebuilding
    
    
    513,434
    
    
    
    1,415,440
    
    
    
    704,868
    
    
    
    1,212,444Total Home Building
    
    
    7,756,545
    
    
    
    9,250,779
    
    
    
    8,936,310
    
    
    
    10,115,490Financial Services
    
    
    9,010
    
    
    
    1,193,538
    
    
    
    8,747
    
    
    
    1,915,082Other
    
    
    2,303
    
    
    
    526,128
    
    
    
    6,022
    
    
    
    1,169,361Total
    
    $
    7,767,858
    
    
    $
    10,970,445
    
    
    $
    8,951,079
    
    
    $
    13,199,933
 (J) INCOME TAXES
        25




---



##### Table of Contents



(K) DERIVATIVES AND HEDGING
  Fair Value Hedges
  Other Derivatives
     (L) DISCONTINUED OPERATIONS
 Condensed Financial Information
  26




---



##### Table of Contents



Home Equity
    For the Year EndedMarch 31, 2007Sales and Related Proceeds, net of Related Expenses
    
    $
    518,500Assets Sold
    
    
    (400,706
    )Intercompany Liability Paid by Buyer
    
    
    (11,795
    )Deferred Income
    
    
    (6,100
    )Hedging Gain
    
    
    25,466Pre-tax Gain on Sale
    
    
    125,365Income Tax Expense
    
    
    (50,390
    )Net Gain on Sale
    
    $
    74,975
 Construction Services
   27




---



##### Table of Contents



For the Six Months Ended
    
    
    For the Year EndedSeptember 30, 2007
    
    
    March 31, 2007Sales and Related Proceeds, net of
Related Expenses
    
    $
    5,463
    
    
    $
    344,752Assets Sold
    
    
    
    
    
    
    Pre-tax Gain on Sale
    
    
    5,463
    
    
    
    344,752Income Tax Expense
    
    
    (2,087
    )
    
    
    (131,695
    )Net Gain on Sale
    
    $
    3,376
    
    
    $
    213,057
 Summarized Financial Information
  For the Three Months Ended
    
    
    For the Six Months EndedSeptember 30,
    
    
    September 30,2007(1)
    
    
    2006 (2)
    
    
    2007(1)
    
    
    2006 (2)Revenues
    
    $
    
    
    
    $
    524,384
    
    
    $
    
    
    
    $
    1,146,850Costs and Expenses
    
    
    
    
    
    
    (534,071
    )
    
    
    
    
    
    
    (1,176,195
    )Earnings from Unconsolidated Entities
and Other
    
    
    
    
    
    
    292
    
    
    
    
    
    
    
    366Loss Before Income Taxes
    
    
    
    
    
    
    (9,395
    )
    
    
    
    
    
    
    (28,979
    )Benefit for Income Taxes
    
    
    
    
    
    
    3,075
    
    
    
    
    
    
    
    10,488Gain on Sale, net of Tax
    
    
    
    
    
    
    63,298
    
    
    
    3,376
    
    
    
    63,298$
    
    
    
    $
    56,978
    
    
    $
    3,376
    
    
    $
    44,807
 (1)
    
    Includes Construction Services only.(2)
    
    Includes Construction Services and Home Equity. (M) SUBSEQUENT EVENTS
  CommercialSenior Debt
    
    
    PaperMoodys
    
    Ba1
    
    
    NP*Standard & Poors
    
    BBB-
    
    
    A3Fitch
    
    BBB
    
    
    F2
 *     NP = not prime
  28




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##### Table of Contents



29




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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 September 30,2007
    
    
    2006
    
    
    ChangeRevenuesHome Building
    
    $
    2,105,484
    
    
    $
    2,658,047
    
    
    
    (20.8
    %)Financial Services
    
    
    80,700
    
    
    
    120,578
    
    
    
    (33.1
    %)Other
    
    
    34,744
    
    
    
    36,963
    
    
    
    (6.0
    %)Total
    
    $
    2,220,928
    
    
    $
    2,815,588
    
    
    
    (21.1
    %)Earnings (Loss) from Continuing Operations Before Income TaxesHome Building
    
    $
    (952,693
    )
    
    $
    148,735
    
    
    
    (740.5
    %)Financial Services
    
    
    (54,082
    )
    
    
    26,164
    
    
    
    (306.7
    %)Other
    
    
    (14,918
    )
    
    
    (43,730
    )
    
    
    (65.9
    %)Total
    
    $
    (1,021,693
    )
    
    $
    131,169
    
    
    
    (878.9
    %)For the Six Months Ended September 30,2007
    
    
    2006
    
    
    ChangeRevenuesHome Building
    
    $
    3,909,304
    
    
    $
    5,307,884
    
    
    
    (26.3
    %)Financial Services
    
    
    178,666
    
    
    
    243,319
    
    
    
    (26.6
    %)Other
    
    
    69,447
    
    
    
    68,285
    
    
    
    1.7
    %Total
    
    $
    4,157,417
    
    
    $
    5,619,488
    
    
    
    (26.0
    %)Earnings (Loss) from Continuing Operations Before Income TaxesHome Building
    
    $
    (1,124,472
    )
    
    $
    460,648
    
    
    
    (344.1
    %)Financial Services
    
    
    (39,113
    )
    
    
    49,251
    
    
    
    (179.4
    %)Other
    
    
    (53,765
    )
    
    
    (100,267
    )
    
    
    (46.4
    %)Total
    
    $
    (1,217,350
    )
    
    $
    409,632
    
    
    
    (397.2
    %)
  
    
    increased inventory of new and existing homes for sale, including homes in
foreclosure,
    
    pricing pressures resulting from the imbalance between supply and demand fueled by
competition among homebuilders to convert their inventory to cash by offering
significant discounts and sales incentives,
    
    reduced availability and increased cost of mortgage financing due to the significant
mortgage market disruption in recent periods,
    
    a decrease in the
affordability of housing in selected markets, and
    
    a decline in homebuyer demand due to lower consumer confidence in the consumer real
estate market.
 30




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##### Table of Contents




    
    a $1,398.6 million decrease in homebuilding revenues, net of discounts,
    
    $989.5 million in land-related impairments,
    
    $63.7 million in our share of joint ventures impairments,
    
    $61.3 million in goodwill impairments, and
    
    $61.2 million in write-offs of land deposits and pre-acquisition costs.
      31




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##### Table of Contents



HOME BUILDING
  For the Three Months Ended September 30,2007
    
    
    2006Change
    
    
    
    
    
    
    ChangeRevenues  Housing
    
    $
    2,063,999
    
    
    
    (20.7
    %)
    
    $
    2,601,839
    
    
    
    (4.2
    %)Revenues  Land Sales and Other
    
    
    41,485
    
    
    
    (26.2
    %)
    
    
    56,208
    
    
    
    (67.4
    %)Cost of Sales  Housing
    
    
    (1,741,203
    )
    
    
    (11.5
    %)
    
    
    (1,967,634
    )
    
    
    2.3
    %Cost of Sales  Land Sales and Other
    
    
    (927,239
    )
    
    
    461.7
    %
    
    
    (165,070
    )
    
    
    45.5
    %Selling, General and Administrative Expenses
    
    
    (296,631
    )
    
    
    (21.0
    %)
    
    
    (375,629
    )
    
    
    5.6
    %Goodwill Impairments
    
    
    (61,322
    )
    
    
    100.0
    %
    
    
    
    
    
    
    Loss from Unconsolidated Entities and Other (1)
    
    
    (31,782
    )
    
    NM
    *
    
    
    (979
    )
    
    
    (116.4
    %)Operating Earnings (Loss)(2)
    
    $
    (952,693
    )
    
    
    (740.5
    %)
    
    $
    148,735
    
    
    
    (70.4
    %)Operating Earnings (Loss) as a Percentage of
Revenues:Housing Operations (3)
    
    
    1.3
    %
    
    
    (8.6
    )
    
    
    9.9
    %
    
    
    (6.2
    )Total Homebuilding Operations
    
    
    (45.2
    %)
    
    
    (50.8
    )
    
    
    5.6
    %
    
    
    (11.8
    )
 * NM = Not meaningful
 32




---



##### Table of Contents



For the Six Months Ended September 30,2007
    
    
    2006Change
    
    
    
    
    
    
    ChangeRevenues  Housing
    
    $
    3,838,737
    
    
    
    (25.7
    %)
    
    $
    5,163,897
    
    
    
    1.8
    %Revenues  Land Sales and Other
    
    
    70,567
    
    
    
    (51.0
    %)
    
    
    143,987
    
    
    
    (32.6
    %)Cost of Sales  Housing
    
    
    (3,222,554
    )
    
    
    (16.0
    %)
    
    
    (3,834,145
    )
    
    
    6.6
    %Cost of Sales  Land Sales and Other
    
    
    (1,102,806
    )
    
    
    308.7
    %
    
    
    (269,847
    )
    
    
    79.2
    %Selling, General and Administrative Expenses
    
    
    (595,259
    )
    
    
    (20.9
    %)
    
    
    (752,933
    )
    
    
    10.9
    %Goodwill Impairments
    
    
    (61,322
    )
    
    
    100.0
    %
    
    
    
    
    
    
    Earnings (Loss) from Unconsolidated Entities
and Other (1)
    
    
    (51,835
    )
    
    
    (635.0
    %)
    
    
    9,689
    
    
    
    (47.3
    %)Operating Earnings (Loss)(2)
    
    $
    (1,124,472
    )
    
    
    (344.1
    %)
    
    $
    460,648
    
    
    
    (47.7
    %)Operating Earnings (Loss) as a Percentage of
Revenues:Housing Operations (3)
    
    
    0.5
    %
    
    
    (10.7
    )
    
    
    11.2
    %
    
    
    (4.6
    )Total Homebuilding Operations
    
    
    (28.8
    %)
    
    
    (37.5
    )
    
    
    8.7
    %
    
    
    (7.9
    )
 (1)
    
    Earnings (Loss) from Unconsolidated Entities and Other include our share of joint ventures
impairments.(2)
    
    Operating earnings (loss) represent Home Buildings earnings exclusive of certain
homebuilding corporate general and administrative expenses.(3)
    
    Operating earnings (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.
  East:  Southeast:  Central:  Texas:  Northwest:  Southwest:  Other homebuilding (1)
 (1)
    
    Other homebuilding includes projects that we plan to build-out and liquidate,
and ancillary businesses (including framing, carpet and holding companies) conducting
business in the following states: Florida, North Carolina, New Hampshire and Texas.
In addition, Other homebuilding includes amounts consolidated under the caption land
held under option agreements not owned and capitalized interest for all regions.
 33




---



##### Table of Contents



For the Three Months Ended September 30,2007
    
    
    2006Change
    
    
    
    
    
    
    ChangeUnits ClosedEast
    
    
    1,553
    
    
    
    (10.0
    %)
    
    
    1,725
    
    
    
    0.2
    %Southeast
    
    
    965
    
    
    
    (26.1
    %)
    
    
    1,305
    
    
    
    (3.1
    %)Central
    
    
    1,079
    
    
    
    (15.3
    %)
    
    
    1,274
    
    
    
    (13.7
    %)Texas
    
    
    1,490
    
    
    
    (7.3
    %)
    
    
    1,608
    
    
    
    1.5
    %Northwest
    
    
    1,009
    
    
    
    (13.1
    %)
    
    
    1,161
    
    
    
    3.7
    %Southwest
    
    
    1,137
    
    
    
    (10.8
    %)
    
    
    1,275
    
    
    
    (12.0
    %)Other homebuilding
    
    
    117
    
    
    
    (33.9
    %)
    
    
    177
    
    
    
    (61.4
    %)7,350
    
    
    
    (13.8
    %)
    
    
    8,525
    
    
    
    (6.9
    %)Average Revenue Per UnitEast
    
    $
    305,645
    
    
    
    (7.7
    %)
    
    $
    331,027
    
    
    
    (1.5
    %)Southeast
    
    $
    262,239
    
    
    
    (7.4
    %)
    
    $
    283,193
    
    
    
    Central
    
    $
    204,566
    
    
    
    (6.6
    %)
    
    $
    218,925
    
    
    
    0.8
    %Texas
    
    $
    169,338
    
    
    
    6.9
    %
    
    $
    158,377
    
    
    
    7.8
    %Northwest
    
    $
    391,630
    
    
    
    (15.1
    %)
    
    $
    461,112
    
    
    
    0.6
    %Southwest
    
    $
    372,158
    
    
    
    (11.9
    %)
    
    $
    422,491
    
    
    
    6.4
    %Other homebuilding
    
    $
    384,043
    
    
    
    26.7
    %
    
    $
    303,068
    
    
    
    22.3
    %Total Home Building
    
    $
    280,816
    
    
    
    (8.0
    %)
    
    $
    305,021
    
    
    
    2.9
    %
 For the Six Months Ended September 30,2007
    
    
    2006Change
    
    
    
    
    
    
    ChangeUnits ClosedEast
    
    
    2,672
    
    
    
    (20.9
    %)
    
    
    3,378
    
    
    
    4.4
    %Southeast
    
    
    1,681
    
    
    
    (32.7
    %)
    
    
    2,498
    
    
    
    (4.1
    %)Central
    
    
    1,947
    
    
    
    (24.9
    %)
    
    
    2,594
    
    
    
    (6.2
    %)Texas
    
    
    2,890
    
    
    
    (7.2
    %)
    
    
    3,114
    
    
    
    (0.1
    %)Northwest
    
    
    1,996
    
    
    
    (11.3
    %)
    
    
    2,251
    
    
    
    4.1
    %Southwest
    
    
    2,032
    
    
    
    (23.0
    %)
    
    
    2,639
    
    
    
    (1.7
    %)Other homebuilding
    
    
    227
    
    
    
    (38.5
    %)
    
    
    369
    
    
    
    (55.1
    %)13,445
    
    
    
    (20.2
    %)
    
    
    16,843
    
    
    
    (3.2
    %)Average Revenue Per UnitEast
    
    $
    310,456
    
    
    
    (5.9
    %)
    
    $
    330,075
    
    
    
    (0.1
    %)Southeast
    
    $
    274,351
    
    
    
    (7.5
    %)
    
    $
    296,467
    
    
    
    5.9
    %Central
    
    $
    207,369
    
    
    
    (5.2
    %)
    
    $
    218,649
    
    
    
    0.6
    %Texas
    
    $
    167,718
    
    
    
    7.1
    %
    
    $
    156,663
    
    
    
    6.6
    %Northwest
    
    $
    394,646
    
    
    
    (13.6
    %)
    
    $
    457,003
    
    
    
    1.0
    %Southwest
    
    $
    389,309
    
    
    
    (7.7
    %)
    
    $
    421,907
    
    
    
    7.9
    %Other homebuilding
    
    $
    355,837
    
    
    
    18.1
    %
    
    $
    301,298
    
    
    
    31.5
    %Total Home Building
    
    $
    285,514
    
    
    
    (6.9
    %)
    
    $
    306,590
    
    
    
    5.1
    %
 Revenues
  34




---



##### Table of Contents



For the Three Months Ended September 30,2007
    
    2006Change
    
    
    
    
    
    
    ChangeAverage Operating Neighborhoods (1)
    
    
    658
    
    
    
    (4.9
    %)
    
    
    692
    
    
    
    12.5
    %Closings Per Average Neighborhood
    
    
    11.2
    
    
    
    (8.9
    %)
    
    
    12.3
    
    
    
    (17.4
    %)
 For the Six Months Ended September 30,2007
    
    2006Change
    
    
    
    
    
    
    ChangeAverage Operating Neighborhoods (1)
    
    
    667
    
    
    
    (1.9
    %)
    
    
    680
    
    
    
    11.3
    %Closings Per Average Neighborhood
    
    
    20.2
    
    
    
    (18.5
    %)
    
    
    24.8
    
    
    
    (13.0
    %)
 (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
     35




---



##### Table of Contents



For the Three Months Ended September 30,2007
    
    
    
    
    
    
    2006Goodwill
    
    
    Land-related
    
    
    Land-related
    
    
    
    
    
    
    Goodwill
    
    
    Land-related
    
    
    Land-relatedImpairments
    
    
    Impairments
    
    
    Write-offs
    
    
    
    
    
    
    Impairments
    
    
    Impairments
    
    
    Write-offsEast
    
    $
    
    
    
    $
    18,109
    
    
    $
    8,233
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    3,811Southeast
    
    
    22,452
    
    
    
    78,054
    
    
    
    10,811
    
    
    
    
    
    
    
    
    
    
    
    6,140
    
    
    
    13,755Central
    
    
    3,488
    
    
    
    37,564
    
    
    
    8,078
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,292Texas
    
    
    
    
    
    
    
    
    
    
    807
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Northwest
    
    
    13,755
    
    
    
    187,581
    
    
    
    8,604
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,259Southwest
    
    
    21,627
    
    
    
    413,816
    
    
    
    1,783
    
    
    
    
    
    
    
    
    
    
    
    23,884
    
    
    
    52,565Other homebuilding
    
    
    
    
    
    
    111,763
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,802$
    61,322
    
    
    $
    846,887
    
    
    $
    38,318
    
    
    
    
    
    
    $
    
    
    
    $
    30,024
    
    
    $
    89,484
 For the Six Months Ended September 30,2007
    
    
    2006Goodwill
    
    
    Land-related
    
    
    Land-related
    
    
    Goodwill
    
    
    Land-related
    
    
    Land-relatedImpairments
    
    
    Impairments
    
    
    Write-offs
    
    
    Impairments
    
    
    Impairments
    
    
    Write-offsEast
    
    $
    
    
    
    $
    18,109
    
    
    $
    15,605
    
    
    $
    
    
    
    $
    
    
    
    $
    5,729Southeast
    
    
    22,452
    
    
    
    85,469
    
    
    
    13,855
    
    
    
    
    
    
    
    6,140
    
    
    
    14,577Central
    
    
    3,488
    
    
    
    41,847
    
    
    
    8,538
    
    
    
    
    
    
    
    
    
    
    
    9,884Texas
    
    
    
    
    
    
    
    
    
    
    864
    
    
    
    
    
    
    
    
    
    
    
    19Northwest
    
    
    13,755
    
    
    
    205,877
    
    
    
    13,153
    
    
    
    
    
    
    
    
    
    
    
    18,513Southwest
    
    
    21,627
    
    
    
    495,219
    
    
    
    8,995
    
    
    
    
    
    
    
    23,884
    
    
    
    75,262Other homebuilding
    
    
    
    
    
    
    142,958
    
    
    
    178
    
    
    
    
    
    
    
    
    
    
    
    1,802$
    61,322
    
    
    $
    989,479
    
    
    $
    61,188
    
    
    $
    
    
    
    $
    30,024
    
    
    $
    125,786
   For the Three Months Ended September 30,2007
    
    
    2006Change
    
    
    
    
    
    
    ChangeCompensation and Benefits
    
    $
    104,143
    
    
    
    (35.9
    %)
    
    $
    162,457
    
    
    
    (4.2
    %)Sales Commissions
    
    
    95,802
    
    
    
    (10.0
    %)
    
    
    106,458
    
    
    
    8.2
    %Advertising and Marketing
    
    
    42,489
    
    
    
    (12.9
    %)
    
    
    48,789
    
    
    
    24.1
    %Other
    
    
    54,197
    
    
    
    (6.4
    %)
    
    
    57,925
    
    
    
    19.8
    %Selling, General and Administrative Expenses
    
    $
    296,631
    
    
    
    (21.0
    %)
    
    $
    375,629
    
    
    
    5.6
    %SG&A as a Percentage of Revenues
    
    
    14.1
    %
    
    
    
    
    
    
    14.1
    %
    
    
    1.8
 36




---



##### Table of Contents



For the Six Months Ended September 30,2007
    
    
    2006Change
    
    
    
    
    
    
    ChangeCompensation and Benefits
    
    $
    221,616
    
    
    
    (35.0
    %)
    
    $
    340,934
    
    
    
    3.8
    %Sales Commissions
    
    
    181,858
    
    
    
    (12.4
    %)
    
    
    207,719
    
    
    
    11.4
    %Advertising and Marketing
    
    
    84,428
    
    
    
    (12.4
    %)
    
    
    96,346
    
    
    
    29.3
    %Other
    
    
    107,357
    
    
    
    (0.5
    %)
    
    
    107,934
    
    
    
    20.6
    %Selling, General and Administrative Expenses
    
    $
    595,259
    
    
    
    (20.9
    %)
    
    $
    752,933
    
    
    
    10.9
    %SG&A as a Percentage of Revenues
    
    
    15.2
    %
    
    
    1.0
    
    
    
    14.2
    %
    
    
    1.4
 Sales Orders, Backlog Units and Land Holdings
  For the Three Months Ended September 30,2007
    
    
    2006Change
    
    
    
    
    
    
    ChangeSales Orders (in Units)East
    
    
    1,117
    
    
    
    (8.2
    %)
    
    
    1,217
    
    
    
    (28.4
    %)Southeast
    
    
    729
    
    
    
    (10.6
    %)
    
    
    815
    
    
    
    (40.2
    %)Central
    
    
    907
    
    
    
    (11.7
    %)
    
    
    1,027
    
    
    
    (33.2
    %)Texas
    
    
    1,267
    
    
    
    (25.9
    %)
    
    
    1,710
    
    
    
    12.5
    %Northwest
    
    
    791
    
    
    
    (20.6
    %)
    
    
    996
    
    
    
    0.2
    %Southwest
    
    
    1,085
    
    
    
    3.1
    %
    
    
    1,052
    
    
    
    (47.8
    %)Other homebuilding
    
    
    57
    
    
    
    418.2
    %
    
    
    11
    
    
    
    (97.4
    %)5,953
    
    
    
    (12.8
    %)
    
    
    6,828
    
    
    
    (28.5
    %)Sales Per Average Neighborhood
    
    
    9.0
    
    
    
    (9.1
    %)
    
    
    9.9
    
    
    
    (36.1
    %)
 For the Six Months Ended September 30,2007
    
    
    2006Change
    
    
    
    
    
    
    ChangeSales Orders (in Units)East
    
    
    2,399
    
    
    
    (13.3
    %)
    
    
    2,766
    
    
    
    (25.5
    %)Southeast
    
    
    1,472
    
    
    
    (19.7
    %)
    
    
    1,832
    
    
    
    (37.2
    %)Central
    
    
    1,880
    
    
    
    (19.5
    %)
    
    
    2,335
    
    
    
    (20.8
    %)Texas
    
    
    2,702
    
    
    
    (23.8
    %)
    
    
    3,544
    
    
    
    10.9
    %Northwest
    
    
    1,705
    
    
    
    (20.4
    %)
    
    
    2,142
    
    
    
    (3.2
    %)Southwest
    
    
    2,182
    
    
    
    (8.4
    %)
    
    
    2,381
    
    
    
    (42.8
    %)Other homebuilding
    
    
    87
    
    
    
    11.5
    %
    
    
    78
    
    
    
    (90.6
    %)12,427
    
    
    
    (17.6
    %)
    
    
    15,078
    
    
    
    (24.5
    %)Sales Per Average Neighborhood
    
    
    18.6
    
    
    
    (16.2
    %)
    
    
    22.2
    
    
    
    (32.1
    %)
 37




---



##### Table of Contents



As ofSeptember 30, 2007
    
    
    March 31, 2007Change
    
    
    
    
    
    
    ChangeBacklog UnitsEast
    
    
    1,575
    
    
    
    (14.8
    %)
    
    
    1,848
    
    
    
    (39.9
    %)Southeast
    
    
    1,310
    
    
    
    (13.8
    %)
    
    
    1,519
    
    
    
    (56.2
    %)Central
    
    
    1,677
    
    
    
    (3.8
    %)
    
    
    1,744
    
    
    
    (22.9
    %)Texas
    
    
    1,832
    
    
    
    (9.3
    %)
    
    
    2,020
    
    
    
    (7.7
    %)Northwest
    
    
    1,514
    
    
    
    (16.1
    %)
    
    
    1,805
    
    
    
    (18.5
    %)Southwest
    
    
    1,653
    
    
    
    10.0
    %
    
    
    1,503
    
    
    
    (52.6
    %)Other homebuilding
    
    
    72
    
    
    
    (66.0
    %)
    
    
    212
    
    
    
    (79.0
    %)9,633
    
    
    
    (9.6
    %)
    
    
    10,651
    
    
    
    (38.7
    %)
    As ofSeptember 30, 2007
    
    
    March 31, 2007Lots
    
    
    Lots
    
    
    
    
    
    
    Lots
    
    
    LotsOwned
    
    
    Controlled
    
    
    Total Lots
    
    
    Owned
    
    
    Controlled
    
    
    Total LotsEast
    
    
    17,255
    
    
    
    15,355
    
    
    
    32,610
    
    
    
    18,604
    
    
    
    25,829
    
    
    
    44,433Southeast
    
    
    24,191
    
    
    
    3,905
    
    
    
    28,096
    
    
    
    25,485
    
    
    
    7,113
    
    
    
    32,598Central
    
    
    7,380
    
    
    
    3,998
    
    
    
    11,378
    
    
    
    8,851
    
    
    
    5,303
    
    
    
    14,154Texas
    
    
    16,001
    
    
    
    7,084
    
    
    
    23,085
    
    
    
    16,113
    
    
    
    10,405
    
    
    
    26,518Northwest
    
    
    8,825
    
    
    
    5,710
    
    
    
    14,535
    
    
    
    10,388
    
    
    
    6,224
    
    
    
    16,612Southwest
    
    
    14,726
    
    
    
    3,428
    
    
    
    18,154
    
    
    
    14,694
    
    
    
    6,755
    
    
    
    21,449Other homebuilding
    
    
    3,657
    
    
    
    
    
    
    
    3,657
    
    
    
    4,176
    
    
    
    80
    
    
    
    4,25692,035
    
    
    
    39,480
    
    
    
    131,515
    
    
    
    98,311
    
    
    
    61,709
    
    
    
    160,020Change
    
    
    (6.4
    %)
    
    
    (36.0
    %)
    
    
    (17.8
    %)
    
    
    (9.7
    %)
    
    
    (67.0
    %)
    
    
    (45.9
    %)
   38




---



##### Table of Contents



Regional Discussion
  For the Three Months Ended September 30,2007
    
    
    2006Change
    
    
    
    
    
    
    ChangeRevenuesEast
    
    $
    488,230
    
    
    
    (14.7
    %)
    
    $
    572,540
    
    
    
    (5.4
    %)Southeast
    
    
    260,122
    
    
    
    (32.0
    %)
    
    
    382,309
    
    
    
    (16.4
    %)Central
    
    
    221,939
    
    
    
    (21.7
    %)
    
    
    283,528
    
    
    
    (12.3
    %)Texas
    
    
    256,306
    
    
    
    (4.3
    %)
    
    
    267,697
    
    
    
    9.1
    %Northwest
    
    
    395,851
    
    
    
    (26.2
    %)
    
    
    536,704
    
    
    
    4.2
    %Southwest
    
    
    426,290
    
    
    
    (22.4
    %)
    
    
    549,008
    
    
    
    (4.9
    %)Other homebuilding
    
    
    56,746
    
    
    
    (14.4
    %)
    
    
    66,261
    
    
    
    (59.7
    %)$
    2,105,484
    
    
    
    (20.8
    %)
    
    $
    2,658,047
    
    
    
    (8.0
    %)Operating Earnings (Loss)East
    
    $
    17,010
    
    
    
    (77.5
    %)
    
    $
    75,556
    
    
    
    (32.0
    %)Southeast
    
    
    (153,088
    )
    
    
    (762.1
    %)
    
    
    23,120
    
    
    
    (76.3
    %)Central
    
    
    (52,101
    )
    
    NM
    
    
    188
    
    
    
    (99.2
    %)Texas
    
    
    19,708
    
    
    
    (16.3
    %)
    
    
    23,548
    
    
    
    21.2
    %Northwest
    
    
    (195,767
    )
    
    
    (351.5
    %)
    
    
    77,841
    
    
    
    (34.9
    %)Southwest
    
    
    (480,143
    )
    
    
    (754.3
    %)
    
    
    (56,206
    )
    
    
    (158.0
    %)Other homebuilding
    
    
    (108,312
    )
    
    NM
    
    
    4,688
    
    
    
    (86.8
    %)$
    (952,693
    )
    
    
    (740.5
    %)
    
    $
    148,735
    
    
    
    (70.4
    %)
 For the Six Months Ended September 30,2007
    
    
    2006Change
    
    
    
    
    
    
    ChangeRevenuesEast
    
    $
    849,006
    
    
    
    (24.0
    %)
    
    $
    1,116,963
    
    
    
    1.5
    %Southeast
    
    
    473,979
    
    
    
    (39.2
    %)
    
    
    780,091
    
    
    
    (4.3
    %)Central
    
    
    407,008
    
    
    
    (29.0
    %)
    
    
    573,442
    
    
    
    (5.4
    %)Texas
    
    
    491,039
    
    
    
    (4.1
    %)
    
    
    512,053
    
    
    
    8.7
    %Northwest
    
    
    791,376
    
    
    
    (24.0
    %)
    
    
    1,041,583
    
    
    
    6.1
    %Southwest
    
    
    797,494
    
    
    
    (30.1
    %)
    
    
    1,141,041
    
    
    
    8.2
    %Other homebuilding
    
    
    99,402
    
    
    
    (30.3
    %)
    
    
    142,711
    
    
    
    (44.5
    %)$
    3,909,304
    
    
    
    (26.3
    %)
    
    $
    5,307,884
    
    
    
    0.4
    %Operating Earnings (Loss)East
    
    $
    35,062
    
    
    
    (77.9
    %)
    
    $
    158,535
    
    
    
    (19.1
    %)Southeast
    
    
    (166,105
    )
    
    
    (298.4
    %)
    
    
    83,722
    
    
    
    (43.3
    %)Central
    
    
    (58,468
    )
    
    
    (695.3
    %)
    
    
    9,821
    
    
    
    (77.7
    %)Texas
    
    
    33,844
    
    
    
    (22.9
    %)
    
    
    43,895
    
    
    
    27.4
    %Northwest
    
    
    (227,848
    )
    
    
    (250.8
    %)
    
    
    151,131
    
    
    
    (35.1
    %)Southwest
    
    
    (595,743
    )
    
    NM
    
    
    (8,036
    )
    
    
    (104.4
    %)Other homebuilding
    
    
    (145,214
    )
    
    
    (772.9
    %)
    
    
    21,580
    
    
    
    (49.8
    %)$
    (1,124,472
    )
    
    
    (344.1
    %)
    
    $
    460,648
    
    
    
    (47.7
    %)
 39




---



##### Table of Contents



East
     Southeast
     40




---



##### Table of Contents



Central
     Texas
     41




---



##### Table of Contents



Northwest
     Southwest
    42




---



##### Table of Contents



Other homebuilding
   FINANCIAL SERVICES
     43




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##### Table of Contents



For the Three Months Ended September 30,2007
    
    2006Change
    
    
    
    
    
    
    ChangeRevenues
    
    $
    80,700
    
    
    
    (33.1
    %)
    
    $
    120,578
    
    
    
    (0.3
    %)Cost of Sales
    
    
    (16,579
    )
    
    
    (23.8
    %)
    
    
    (21,763
    )
    
    
    22.0
    %Selling, General and Administrative Expenses
    
    
    (118,203
    )
    
    
    62.7
    %
    
    
    (72,651
    )
    
    
    (11.2
    %)Operating Earnings
    
    $
    (54,082
    )
    
    
    (306.7
    %)
    
    $
    26,164
    
    
    
    23.0
    %Operating Margin
    
    
    (67.0
    %)
    
    
    (88.7
    )
    
    
    21.7
    %
    
    
    4.1Financial Services Margin (1)
    
    
    (84.3
    %)
    
    
    (110.8
    )
    
    
    26.5
    %
    
    
    5.9Net Interest Income
    
    $
    4,620
    
    
    
    (42.5
    %)
    
    $
    8,032
    
    
    
    (17.2
    %)Average Interest Earning Assets
    
    $
    1,133,766
    
    
    
    (25.4
    %)
    
    $
    1,520,698
    
    
    
    (14.4
    %)Average Yield
    
    
    7.49
    %
    
    
    (0.35
    )
    
    
    7.84
    %
    
    
    1.64Average Interest Bearing Liabilities
    
    $
    1,086,642
    
    
    
    (26.4
    %)
    
    $
    1,476,720
    
    
    
    (18.8
    %)Average Rate Paid
    
    
    6.20
    %
    
    
    0.32
    
    
    
    5.88
    %
    
    
    1.95
 For the Six Months Ended September 30,2007

    
    2006Change
    
    
    
    
    
    
    ChangeRevenues
    
    $
    178,666
    
    
    
    (26.6
    %)
    
    $
    243,319
    
    
    
    5.4
    %Cost of Sales
    
    
    (37,067
    )
    
    
    (13.0
    %)
    
    
    (42,600
    )
    
    
    39.2
    %Selling, General and Administrative Expenses
    
    
    (180,712
    )
    
    
    19.3
    %
    
    
    (151,468
    )
    
    
    (4.0
    %)Operating Earnings
    
    $
    (39,113
    )
    
    
    (179.4
    %)
    
    $
    49,251
    
    
    
    15.8
    %Operating Margin
    
    
    (21.9
    %)
    
    
    (42.1
    )
    
    
    20.2
    %
    
    
    1.8Financial Services Margin (1)
    
    
    (27.6
    %)
    
    
    (52.1
    )
    
    
    24.5
    %
    
    
    3.3Net Interest Income
    
    $
    10,172
    
    
    
    (38.6
    %)
    
    $
    16,571
    
    
    
    (18.5
    %)Average Interest Earning Assets
    
    $
    1,289,600
    
    
    
    (16.7
    %)
    
    $
    1,547,520
    
    
    
    (5.2
    %)Average Yield
    
    
    7.33
    %
    
    
    (0.32
    )
    
    
    7.65
    %
    
    
    1.41Average Interest Bearing Liabilities
    
    $
    1,238,094
    
    
    
    (18.0
    %)
    
    $
    1,508,987
    
    
    
    (8.8
    %)Average Rate Paid
    
    
    6.07
    %
    
    
    0.42
    
    
    
    5.65
    %
    
    
    1.93
 (1)
    
    Financial Services margin is a non-GAAP financial measure, which we believe is useful as it
allows investors to assess the operating performance of our Financial Services operations by
netting the cost of funding mortgage originations (interest expense) against the related
interest income. Financial Services margin is equal to Operating Earnings as a percentage of
Financial Services Revenues less interest expense, all of which are set forth in the table
above.
   
    
    $36.7 million provision for construction loans,
    
    $18.8 million provision for loans in foreclosure,
    
    $2.3 million provision against real-estate owned, and
    
    $2.1 million provision for anticipated losses for loans originated.
 44




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##### Table of Contents



For the Three Months Ended September 30,2007
    
    2006Change
    
    
    
    
    
    
    ChangeLoan Sales to InvestorsVolume (in millions)
    
    $
    2,723.4
    
    
    
    13.7
    %
    
    $
    2,394.9
    
    
    
    (32.6
    %)Number of Loans Sold
    
    
    13,025
    
    
    
    8.9
    %
    
    
    11,960
    
    
    
    (38.4
    %)Gain on Sale of Mortgage Loans
    
    $
    30,732
    
    
    
    (22.9
    %)
    
    $
    39,875
    
    
    
    (13.3
    %)Loans Brokered to Third Party LendersVolume (in millions)
    
    $
    448.9
    
    
    
    (48.2
    %)
    
    $
    866.5
    
    
    
    (2.5
    %)Number of Brokered Loans
    
    
    1,296
    
    
    
    (55.3
    %)
    
    
    2,898
    
    
    
    (12.5
    %)Broker Fees
    
    $
    8,064
    
    
    
    (53.3
    %)
    
    $
    17,272
    
    
    
    (2.2
    %)Average Loan SizeLoans Sold to Investors
    
    $
    209,097
    
    
    
    4.4
    %
    
    $
    200,245
    
    
    
    9.4
    %Loans Brokered to Third Party
Lenders
    
    $
    346,401
    
    
    
    15.8
    %
    
    $
    299,037
    
    
    
    11.4
    %
 For the Six Months Ended September 30,2007
    
    2006Change
    
    
    
    
    
    
    ChangeLoan Sales to InvestorsVolume (in millions)
    
    $
    5,076.7
    
    
    
    (3.3
    %)
    
    $
    5,252.1
    
    
    
    (14.0
    %)Number of Loans Sold
    
    
    23,872
    
    
    
    (9.1
    %)
    
    
    26,272
    
    
    
    (19.4
    %)Gain on Sale of Mortgage Loans
    
    $
    69,366
    
    
    
    (19.8
    %)
    
    $
    86,472
    
    
    
    1.3
    %Loans Brokered to Third Party LendersVolume (in millions)
    
    $
    1,046.7
    
    
    
    (42.6
    %)
    
    $
    1,823.5
    
    
    
    3.4
    %Number of Brokered Loans
    
    
    3,015
    
    
    
    (50.9
    %)
    
    
    6,135
    
    
    
    (8.7
    %)Broker Fees
    
    $
    18,721
    
    
    
    (47.8
    %)
    
    $
    35,875
    
    
    
    0.5
    %Average Loan SizeLoans Sold to Investors
    
    $
    212,664
    
    
    
    6.4
    %
    
    $
    199,912
    
    
    
    6.8
    %Loans Brokered to Third Party
Lenders
    
    $
    347,218
    
    
    
    16.8
    %
    
    $
    297,260
    
    
    
    13.3
    %
  45




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##### Table of Contents



For the Three Months Ended September 30,2007

    
    2006Change
    
    
    
    
    
    
    ChangeOpen Applications  Beginning
    
    
    18,983
    
    
    
    (18.9
    %)
    
    
    23,417
    
    
    
    (16.5
    %)New Applications
    
    
    29,733
    
    
    
    30.9
    %
    
    
    22,709
    
    
    
    (21.0
    %)Cancelled Applications
    
    
    (20,569
    )
    
    
    95.5
    %
    
    
    (10,522
    )
    
    
    Originated Loans
    
    
    (12,048
    )
    
    
    (15.0
    %)
    
    
    (14,168
    )
    
    
    (26.0
    %)Open Applications  Ending
    
    
    16,099
    
    
    
    (24.9
    %)
    
    
    21,436
    
    
    
    (20.9
    %)
 For the Six Months Ended September 30,2007

    
    2006Change
    
    
    
    
    
    
    ChangeOpen Applications  Beginning
    
    
    17,648
    
    
    
    (24.0
    %)
    
    
    23,219
    
    
    
    (6.8
    %)New Applications
    
    
    57,282
    
    
    
    19.0
    %
    
    
    48,118
    
    
    
    (19.3
    %)Cancelled Applications
    
    
    (34,791
    )
    
    
    67.7
    %
    
    
    (20,751
    )
    
    
    1.9
    %Originated Loans
    
    
    (24,040
    )
    
    
    (17.5
    %)
    
    
    (29,150
    )
    
    
    (21.4
    %)Open Applications  Ending
    
    
    16,099
    
    
    
    (24.9
    %)
    
    
    21,436
    
    
    
    (20.9
    %)
  For the Three Months Ended September 30,2007

    
    2006Change
    
    
    
    
    
    
    ChangeOrigination Volume (in millions)
    
    $
    2,686.9
    
    
    
    (20.0
    %)
    
    $
    3,357.9
    
    
    
    (21.5
    %)Number of Originated LoansBuilder
    
    
    5,445
    
    
    
    (15.3
    %)
    
    
    6,429
    
    
    
    2.9
    %Retail
    
    
    6,602
    
    
    
    (14.7
    %)
    
    
    7,739
    
    
    
    (40.0
    %)12,047
    
    
    
    (15.0
    %)
    
    
    14,168
    
    
    
    (26.0
    %)Average Loan Size  Originated Loans
    
    $
    223,000
    
    
    
    (5.9
    %)
    
    $
    237,000
    
    
    
    6.1
    %
 For the Six Months Ended September 30,2007

    
    2006Change
    
    
    
    
    
    
    ChangeOrigination Volume (in millions)
    
    $
    5,457.2
    
    
    
    (20.3
    %)
    
    $
    6,845.9
    
    
    
    (15.5
    %)Number of Originated LoansBuilder
    
    
    9,986
    
    
    
    (20.1
    %)
    
    
    12,494
    
    
    
    5.3
    %Retail
    
    
    14,053
    
    
    
    (15.6
    %)
    
    
    16,656
    
    
    
    (33.9
    %)24,039
    
    
    
    (17.5
    %)
    
    
    29,150
    
    
    
    (21.4
    %)Average Loan Size  Originated Loans
    
    $
    227,000
    
    
    
    (3.4
    %)
    
    $
    234,900
    
    
    
    7.6
    %
   46




---



##### Table of Contents



OTHER
   For the Three Months Ended September 30,2007

    
    2006Change
    
    
    
    
    
    
    ChangeOperating Earnings (Loss) from Home ServicesOperations
    
    $
    1,500
    
    
    
    (209.5
    %)
    
    $
    (1,370
    )
    
    
    (38.8
    %)Interest Income and Other Revenue
    
    
    17,899
    
    
    
    100.0
    %
    
    
    
    
    
    
    Corporate General and Administrative Expense
    
    
    (34,540
    )
    
    
    (23.2
    %)
    
    
    (44,998
    )
    
    
    (36.4
    %)Other
    
    
    223
    
    
    
    (91.5
    %)
    
    
    2,638
    
    
    
    (826.7
    %)Operating Loss
    
    $
    (14,918
    )
    
    
    (65.9
    %)
    
    $
    (43,730
    )
    
    
    (40.4
    %)
 For the Six Months Ended September 30,2007
    
    2006Change
    
    
    
    
    
    
    ChangeOperating Earnings (Loss) from Home ServicesOperations
    
    $
    2,708
    
    
    
    (187.4
    %)
    
    $
    (3,098
    )
    
    
    (35.2
    %)Interest Income and Other Revenue
    
    
    22,825
    
    
    
    100.0
    %
    
    
    
    
    
    
    Corporate General and Administrative Expense
    
    
    (79,521
    )
    
    
    (20.3
    %)
    
    
    (99,768
    )
    
    
    (23.7
    %)Other
    
    
    223
    
    
    
    (91.4
    %)
    
    
    2,599
    
    
    
    (656.5
    %)Operating Loss
    
    $
    (53,765
    )
    
    
    (46.4
    %)
    
    $
    (100,267
    )
    
    
    (26.2
    %)
  47




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##### Table of Contents



For the Three Months Ended September 30,2007
    
    2006Change
    
    
    
    
    
    
    ChangeCompensation and Benefits
    
    $
    26,583
    
    
    
    (35.7
    %)
    
    $
    41,365
    
    
    
    (25.6
    %)Professional Services
    
    
    4,749
    
    
    
    12.7
    %
    
    
    4,215
    
    
    
    18.7
    %Rent and Utilities
    
    
    1,670
    
    
    
    8.0
    %
    
    
    1,547
    
    
    
    5.3
    %Travel
    
    
    1,375
    
    
    
    (31.3
    %)
    
    
    2,000
    
    
    
    (13.0
    %)Other
    
    
    163
    
    
    
    (103.9
    %)
    
    
    (4,129
    )
    
    
    (152.5
    %)General and Administrative Expenses
    
    $
    34,540
    
    
    
    (23.2
    %)
    
    $
    44,998
    
    
    
    (36.4
    %)
 For the Six Months Ended September 30,2007

    
    2006Change
    
    
    
    
    
    
    ChangeCompensation and Benefits
    
    $
    62,214
    
    
    
    (33.2
    %)
    
    $
    93,095
    
    
    
    (10.9
    %)Professional Services
    
    
    7,917
    
    
    
    5.9
    %
    
    
    7,475
    
    
    
    (5.0
    %)Rent and Utilities
    
    
    3,344
    
    
    
    14.6
    %
    
    
    2,918
    
    
    
    3.2
    %Travel
    
    
    2,611
    
    
    
    (36.2
    %)
    
    
    4,095
    
    
    
    (7.6
    %)Other
    
    
    3,435
    
    
    
    (144.0
    %)
    
    
    (7,815
    )
    
    
    (170.9
    %)General and Administrative Expenses
    
    $
    79,521
    
    
    
    (20.3
    %)
    
    $
    99,768
    
    
    
    (23.7
    %)
  INCOME TAXES
  DISCONTINUED OPERATIONS
    48




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##### Table of Contents



Home Equity
  For the Three Months Ended September 30,
    
    
    For the Six Months Ended September 30,2007
    
    
    2006 (1)
    
    
    2007
    
    
    2006 (1)Revenues
    
    $
    
    
    
    $
    17,181
    
    
    $
    
    
    
    $
    170,124Operating Loss
    
    $
    
    
    
    $
    (19,298
    )
    
    $
    
    
    
    $
    (44,040
    )Pre-tax Gain on Sale
    
    $
    
    
    
    $
    102,424
    
    
    $
    
    
    
    $
    102,424
 (1)
    
    Amounts include the elimination of intercompany activity related to sales of
loans from CTX Mortgage Company, LLC to Home Equity. For the three months ended
September 30, 2006, intercompany revenues and costs and expenses of $4,757 thousand and
($1,366) thousand, respectively, were eliminated. For the six months ended September
30, 2006, intercompany revenues and costs and expenses of $3,362 thousand and ($1,349)
thousand, respectively, were eliminated.
 Construction Services
  For the Three Months Ended September 30,
    
    
    For the Six Months Ended September 30,2007
    
    
    2006 (1)
    
    
    2007
    
    
    2006 (1)Revenues
    
    $
    
    
    
    $
    507,203
    
    
    $
    
    
    
    $
    976,726Operating Loss
    
    $
    
    
    
    $
    9,903
    
    
    $
    
    
    
    $
    15,061Pre-tax Gain on Sale
    
    $
    
    
    
    $
    
    
    
    $
    5,463
    
    
    $
    
 (1)
    
    Amounts include the elimination of intersegment activity related to
Construction Services multi-unit residential vertical construction for Home Building.
For the three months ended September 30, 2006, intercompany revenues and costs and
expenses of $38,973 thousand and $38,849 thousand, respectively, were eliminated. For
the six months ended September 30, 2006, intercompany revenues and costs and expenses
of $70,910 thousand and $69,133 thousand, respectively, were eliminated.
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FINANCIAL CONDITION AND LIQUIDITY
  For the Six Months Ended September 30,2007
    
    
    2006Net Cash Provided by (Used in)Centex*Operating Activities
    
    $
    (314,985
    )
    
    $
    (391,330
    )Investing Activities
    
    
    (242,884
    )
    
    
    3,928Financing Activities
    
    
    (231,343
    )
    
    
    393,373(789,212
    )
    
    
    5,971Financial ServicesOperating Activities
    
    
    647,270
    
    
    
    361,542Investing Activities
    
    
    33,406
    
    
    
    119,543Financing Activities
    
    
    (674,529
    )
    
    
    (486,146
    )6,147
    
    
    
    (5,061
    )Centex Corporation and SubsidiariesOperating Activities
    
    
    323,524
    
    
    
    (589,699
    )Investing Activities
    
    
    (12,717
    )
    
    
    87,602Financing Activities
    
    
    (1,093,872
    )
    
    
    503,007Net (Decrease) Increase in Cash
    
    $
    (783,065
    )
    
    $
    910
 *
    
    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; 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. We also use this presentation to allow investors to
compare us to homebuilders that do not have financial services operations.
  Centex
   Financial Services
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##### Table of Contents



Discontinued Operations
    Credit Facilities and Liquidity
  Existing Credit

    
    AvailableFacilities

    
    CapacityCentexMulti-Bank Revolving Credit FacilityRevolving Credit
    
    $
    1,250,000
    
    
    $
    1,250,000Letters of Credit
    
    
    835,000
    
    
    
    519,4532,085,000
    
    
    
    1,769,453
    (1) (2)Financial ServicesSecured Credit Facilities
    
    
    661,000
    
    
    
    69,912
    (3)Mortgage Conduit Facilities
    
    
    150,000
    
    
    
    
    (4)Harwood Street Funding I, LLC Facility
    
    
    1,500,000
    
    
    
    
    (5)2,311,000
    
    
    
    69,912$
    4,396,000
    
    
    $
    1,839,365
 (1)
    
    This is an unsecured, committed, multi-bank revolving credit facility, maturing in July 2010,
that serves as funding for general corporate purposes, serves as backup for Centex Corporations
$1.25 billion commercial paper program, and provides $835 million of letter of credit
capacity. As of September 30, 2007, there were no amounts outstanding under the revolving
credit facility or the commercial paper program. As further discussed in Note (M),
Subsequent Events, of the Notes to Consolidated Financial
Statements, our credit ratings were
downgraded subsequent to September 30, 2007. As a result, it is unlikely that we
will be able  to issue
commercial paper.(2)
    
    Centex maintains a minimum of $100 million in unused, committed letter of credit capacity at
all times in respect of certain remaining surety bond obligations relating to Construction
Services projects commenced prior to the sale of Construction Services on March 30, 2007.
Under an agreement entered into by Centex with a surety, Centex is obligated to provide a $100
million letter of credit to such surety if its long-term senior unsecured debt is downgraded
below BBB- by S&P or below Baa3 by Moodys. In connection with the sale of Construction
Services, the purchaser has indemnified Centex for losses in respect of certain surety bond
obligations, including draws on such letter of credit. In addition, Centex has obtained a
back-up indemnity from an A+ (S&P), A1 (Moodys) rated financial institution, which
indemnifies Centex against a portion of these losses, and which will decline on a quarterly
basis in accordance with an agreed upon schedule. In October 2007, Centexs long-term senior
unsecured debt was downgraded by Moodys to Ba1, which triggered the requirement for Centex to
obtain the $100 million letter of credit. See Note (M), Subsequent Events, of the Notes to
Consolidated Financial Statements for additional information.
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##### Table of Contents



(3)
    
    CTX Mortgage Company, LLC maintains $661 million of secured, committed mortgage warehouse
facilities.(4)
    
    A wholly-owned limited purpose subsidiary of CTX Mortgage Company, LLC maintains a $150
million secured, committed facility funded through commercial paper conduits to finance the
purchase of construction loans from CTX Mortgage Company, LLC.(5)
    
    This facility provides for a maximum amount of mortgage loans to be held by HSF-I equal to
$1.5 billion. However, as shown in the table above, there is no available capacity under this
facility. Since August 2007, HSF-I has not been able to issue short-term liquidity notes to
finance the purchase of mortgage loans from CTX Mortgage Company, LLC due to significant
market disruptions. In October 2007, we decided to terminate HSF-I.
  CentexShort-term Debt:Short-term Notes Payable
    
    $
    558Senior Debt:Senior Notes, weighted-average 5.89%, due through 2017
    
    
    3,654,083Other Indebtedness, weighted-average 7.14%, due through 2018
    
    
    4,5373,659,178Financial ServicesShort-term Debt:Short-term Notes Payable
    
    
    741,088Harwood Street Funding I, LLC Variable Rate Subordinated Extendable
Certificates, weighted-average 7.14%, due through 2010
    
    
    60,000801,088$
    4,460,266
  Debt Type
    
    AmountCentexIssuances
    
    Other Indebtedness (1)
    
    $
    1.5Retirements, net
    
    Medium-term Note
    
    
    (170.0
    )Senior Note
    
    
    (54.9
    )Other Indebtedness
    
    
    (20.6
    )Total
    
    
    
    $
    (244.0
    )
 (1)
    
    Amount includes the non-cash assumption of long-term debt.
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CERTAIN OFF-BALANCE SHEET OBLIGATIONS
  Joint Ventures
   53




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##### Table of Contents



As of September 30, 2007
    
    
    As of March 31, 2007Centexs
    
    
    
    
    
    
    
    
    
    
    CentexsShare
    
    
    
    
    
    
    
    
    
    
    ShareActive (1)
    
    
    Investments
    
    
    of Debt
    
    
    Active (1)
    
    
    Investments
    
    
    of DebtUnleveraged Joint Ventures
    
    
    21
    
    
    $
    25,255
    
    
    $
    
    
    
    
    28
    
    
    $
    33,369
    
    
    $
    Joint Ventures with Debt:
    
    
    22
    
    
    
    
    
    
    
    
    
    
    
    21Limited Maintenance
Guarantee (2) (3) (4)

    
    
    
    106,077
    
    
    
    104,247
    
    
    
    
    
    
    
    108,057
    
    
    
    162,425Repayment Guarantee (2) (5)
    
    
    
    
    
    
    2,756
    
    
    
    16,075
    
    
    
    
    
    
    
    2,247
    
    
    
    16,045Completion Guarantee (4)
    
    
    
    
    
    
    122,263
    
    
    
    196,233
    
    
    
    
    
    
    
    126,469
    
    
    
    209,927No Recourse or Guarantee
    
    
    
    
    
    
    12,245
    
    
    
    24,000
    
    
    
    
    
    
    
    11,502
    
    
    
    24,00043
    
    
    $
    268,596
    
    
    $
    340,555
    
    
    
    49
    
    
    $
    281,644
    
    
    $
    412,397
 (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 were the managing member of 23 and 28 of the active joint ventures as of
September 30, 2007 and March 31, 2007, respectively.(2)
    
    These amounts represent the Companys maximum exposure related to the joint ventures debt
at each respective date.(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)
    
    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. For certain joint
ventures, we have contributed additional capital in order to complete land development.(5)
    
    We have guaranteed repayment of a portion of certain joint venture debt limited to its
ownership percentage of the joint venture or a percentage thereof.
   For
the Fiscal Years EndedMarch 312008
    
    $
    123,5162009
    
    
    150,5012010
    
    
    26,3662011
    
    
    39,6702012
    
    
    502Thereafter
    
    
    $
    340,555
 CRITICAL ACCOUNTING ESTIMATES
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Mortgage Loan Allowances and Related Reserve
      Inventory Valuation
  55




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##### Table of Contents




    
    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),
and
    
    estimated project life.
   Land Held Under Option Agreements Not Owned and Other Land Deposits
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##### Table of Contents




    
    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,
    
    evaluation of 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
    Warranty Accruals
  57




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Insurance Accruals
  Income Taxes
       58




---



##### Table of Contents



RECENT ACCOUNTING PRONOUNCEMENTS
   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.
    59




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
   
 Item 4. Controls and Procedures
  
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
   
 Item 1A. Risk Factors
   60




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##### Table of Contents



The homebuilding industry is undergoing a significant downturn;
further deterioration in industry conditions generally or in the markets where we operate could
decrease demand and pricing for new homes and have a material adverse effect on our results of
operations.
 The market value of land may fluctuate significantly, which can
result in significant decreases in the value of our developed and
undeveloped land holdings The lag between when we acquire land and when we sell homes in our neighborhoods
can make our operations susceptible to the effects of rapid changes
in market conditions
  Increases
in interest rates or changes in federal lending programs, regulations
and laws could make it more difficult or
costly for customers to purchase our homes.
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##### Table of Contents



Market conditions in the mortgage lending and mortgage finance industries have worsened
significantly in 2007, which adversely affected the availability of credit for some purchasers of
our homes, reduced the population of potential mortgage customers and reduced mortgage liquidity.
Further tightening of mortgage lending or mortgage financing requirements or further reduced
mortgage liquidity could adversely affect the availability of credit for some purchasers of our
homes or our ability to sell or finance the mortgage loans that we originate prior to sale (or the
terms and pricing thereof).
   We could be adversely affected by a change in our credit rating or a disruption in the capital
markets.
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##### Table of Contents



Failure to comply with the covenants and conditions imposed by our credit facilities could restrict future
borrowing or cause our debt to become immediately due and payable.
  
 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
    
    
    PlansPeriodJuly 1-31
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    9,399,700August 1-31
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    9,399,700September 1-30
    
    
    5,985
    
    
    $
    26.57
    
    
    
    
    
    
    
    9,399,700Total (1)
    
    
    5,985
    
    
    $
    26.57
    
    
    
    
 (1)
    
    The 5,985 shares repurchased for the quarter ended September 30, 2007 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.
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Item 4. Submission of Matters to a Vote of Security Holders
   Number of SharesFor
    
    
    Withheld
    
    
    Broker Non-VotesClint W. Murchison, III
    
    
    102,707,435
    
    
    
    5,047,531
    
    
    
    Frederic M. Poses
    
    
    102,898,411
    
    
    
    4,856,555
    
    
    
    David W. Quinn
    
    
    102,750,126
    
    
    
    5,004,840
    
    
    
    
   Number of SharesFor
    
    Against
    
    
    Abstained
    
    
    Broker Non-Votes106,856,216
    
    
    249,883
    
    

    648,868
    
    

       
 
 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 10, 2007
(incorporated by reference from Exhibit 3.1 to Centexs Current Report on Form
8-K filed on October 16, 2007).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 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, 2007, 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
    
    Second Amendment to Credit Agreement, dated July 20, 2007, among
Centex Corporation, Bank of America, N.A., as Administrative Agent, and the
lenders named therein (incorporated by reference from Exhibit 10.3 to Centexs
Current Report on Form 8-K filed on July 23, 2007).
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##### Table of Contents



10.2
    
    Credit Support Annex, dated July 18, 2007, between Centex
Corporation and Bank of America, N.A. (incorporated by reference from Exhibit
10.4 to Centexs Current Report on Form 8-K filed on July 23, 2007).10.3
    
    Credit Support Annex, dated July 18, 2007, between Centex
Corporation and Calyon New York Branch (incorporated by reference from Exhibit
10.6 to Centexs Current Report on Form 8-K filed on July 23, 2007).10.4
    
    Executive Severance Policy (incorporated by reference from
Exhibit 10.1 to Centexs Current Report on Form 8-K filed on October 16, 2007).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 CORPORATIONRegistrantNovember 2, 2007
    
    /s/ Catherine R. SmithCatherine R. SmithExecutive Vice President and Chief Financial Officer(principal financial officer)November 2, 2007
    
    /s/ Mark D. KempMark D. KempSenior Vice President-Controller(principal accounting officer)
 66