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

JOINT ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended March 31, 2001

|                                                                                                                                                                                                                                                                                                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Commission File No. 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 office, including zip code)
(214) 981-5000
(Registrants telephone number) |  | Commission File Nos. 1-9624 and 1-9625, respectively
3333 HOLDING CORPORATION and
CENTEX DEVELOPMENT COMPANY, L.P.
(Exact name of registrants as specified in their charters)
Nevada and Delaware, respectively
(States of incorporation or organization)
75-2178860 and 75-2168471, respectively
(I.R.S. Employer Identification Nos.)
2728 N. Harwood, Dallas, Texas 75201
(Address of principal executive office, including zip code)
(214) 981-6770
(Registrants telephone number)

Securities registered pursuant to Section 12(b) of the Act:

|                              |  |                                               |                          |  |                               |                                                                                               |                                               |                                              
|----------------------------- |  | --------------------------------------------- | ------------------------ |  | ----------------------------- | --------------------------------------------------------------------------------------------- | --------------------------------------------- | ---------------------------------------------
|                              |  | Name of each                                  |                          |  |                               |                                                                                               | Name of each                                 
|                              |  | exchange on which                             |                          |  |                               |                                                                                               | exchange on which                            
|Title of each class           |  | registered                                    |                          |  | Title of each class           |                                                                                               | registered                                   
|                              |  |                                               |                          |  |                               |                                                                                               |                                              
|Centex Corporation            |  |                                               | 3333 Holding Corporation
|                             
|                             
|                             
|                             
|Common Stock
($.25 par value) |  | New York Stock Exchange
London Stock Exchange |                          |  | Common Stock
($.01 par value) |                                                                                               | New York Stock Exchange
London Stock Exchange
|                             
|                             
|                             
|                             
|                             
|                              |  |                                               |                          |  |                               | Centex Development Company, L.P.                                                             
|                             
|                             
|                             
|                             
|                              |  |                                               |                          |  |                               | Warrants to Purchase
Class B Units of
Limited Partnership
Interest Expiring
November 30, 2007 |                                               | New York Stock Exchange
London Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:None

Indicate by check mark whether each registrant: (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that each such
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X]. No [  ].

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to Form 10-K.

The aggregate market value of the tandem traded Centex Corporation common
stock, 3333 Holding Corporation common stock and Centex Development Company,
L.P. warrants to purchase Class B units of limited partnership interest held by
non-affiliates of the registrants on May 31, 2001 was approximately $2.2
billion.

Indicate the number of shares of each of the registrants classes of
common stock (or other similar equity securities) outstanding as of the close
of business on May 31, 2001:

|                                 |  |                                               |  |                  
|-------------------------------- |  | --------------------------------------------- |  | -----------------
|Centex Corporation               |  | Common Stock                                  |  | 60,366,107 shares
|                                
|                                
|                                
|                                
|3333 Holding Corporation         |  | Common Stock                                  |  | 1,000 shares     
|                                
|                                
|                                
|                                
|Centex Development Company, L.P. |  | Class A Units of Limited Partnership Interest |  | 32,260 units     
|                                
|                                
|                                
|                                
|Centex Development Company, L.P. |  | Class C Units of Limited Partnership Interest |  | 181,194 units    

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the following documents are incorporated by reference in Parts
A.III and B.III of this Report:

(a) Proxy statements for the annual meetings of stockholders of Centex
Corporation and 3333 Holding Corporation to be held on July 19, 2001.

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|                                                   |                                                                                               |                                                                    |  |  |  |  |  | 
|-------------------------------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------------------------------ |  |  |  |  |  | 
|JOINT EXPLANATORY STATEMENT                       
|PART A. CENTEX CORPORATION AND SUBSIDIARIES       
|PART I                                            
|                                                   | ITEM 1. BUSINESS                                                                             
|                                                   | ITEM 2. PROPERTIES                                                                           
|                                                   | ITEM 3. LEGAL PROCEEDINGS                                                                    
|                                                   | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|                                                   | PART II                                                                                      
|                                                   | ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                
|                                                   | ITEM 6. SELECTED FINANCIAL DATA                                                              
|                                                   | ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                                   | ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                          
|                                                   | ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                          
|                                                   |                                                                                               | Consolidated Revenues and Operating Earnings by Line of Business  
|                                                   |                                                                                               | Statements of Consolidated Earnings                               
|                                                   |                                                                                               | Consolidated Balance Sheets                                       
|                                                   |                                                                                               | Statements of Consolidated Cash Flows                             
|                                                   |                                                                                               | Statements of Consolidated Stockholders Equity                   
|                                                   |                                                                                               | Notes to Consolidated Financial Statements                        
|                                                   |                                                                                               | Report of Independent Public Accountants                          
|                                                   |                                                                                               | Quarterly Results                                                 
|                                                   | ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 
|PART III                                          
|                                                   | ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                  
|                                                   | ITEM 11. EXECUTIVE COMPENSATION                                                              
|                                                   | ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                      
|                                                   | ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                      
|PART IV                                           
|                                                   | ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K                    
|SIGNATURES                                        
|PART B.                                           
|PART I                                            
|                                                   | ITEM 1. BUSINESS                                                                             
|                                                   | ITEM 2. PROPERTIES                                                                           
|                                                   | ITEM 3. LEGAL PROCEEDINGS                                                                    
|                                                   | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|PART II                                           
|                                                   | ITEM 5. MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                
|                                                   | ITEM 6. SELECTED FINANCIAL DATA                                                              
|                                                   | ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                                   | ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                          
|                                                   | ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                          
|                                                   |                                                                                               | Combining Balance Sheets                                          
|                                                   |                                                                                               | Combining Statements of Operations                                
|                                                   |                                                                                               | Combining Statements of Cash Flows                                
|                                                   |                                                                                               | Combining Statements of Stockholders Equity and Partners Capital
|                                                   |                                                                                               | Notes to Combining Financial Statements                           
|                                                   |                                                                                               | Report of Independent Public Accountants                          
|                                                   |                                                                                               | Quarterly Results (Unaudited)                                     
|                                                   | ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 
|PART III                                          
|                                                   | ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS                                 
|                                                   | ITEM 11. EXECUTIVE COMPENSATION                                                              
|                                                   | ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                      
|                                                   | ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                      
|PART IV                                           
|                                                   | ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K                    
|SIGNATURES                                        
|INDEX TO EXHIBITS                                 
|4th Amended/Restated 1998 Non-Qualified Stock Plan
|Executive Employment Agreement - Leldon E. Echols 
|Agreement dated March 28, 2001 - Credit Facility  
|Facility Agreement between Partnership and CDCUK  
|Facility Agreement Fairclough and CDCUK           
|Asset Purchase Agreement dated March 31, 2001     
|Credit Agreement dated August 9, 2000             
|Subsidiaries-Centex, Holding and the Partnership  
|Consent of Independent Public Accountants         
|Powers of Attorney Centex Corp and Subsidiaries   
|Powers of Attorney 3333 Holding Corp & Subsidiary 
|Powers of Attorney Centex Development & Subsidiari
|Real Estate and Accumulated Depreciation Sch III  



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JOINT ANNUAL REPORT ON
FORM 10-K
FOR THE FISCAL YEAR ENDED MARCH 31, 2001

CENTEX CORPORATION AND SUBSIDIARIES
AND
3333 HOLDING CORPORATION AND SUBSIDIARY
AND CENTEX DEVELOPMENT COMPANY, L.P. AND SUBSIDIARIES




JOINT EXPLANATORY STATEMENT

On November 30, 1987, Centex Corporation (Centex or the Company)
distributed as a dividend (the Distribution) to its stockholders, through a
nominee (the Nominee), all of the 1,000 issued and outstanding shares of
common stock, par value $.01 per share (Holding Common Stock), of 3333
Holding Corporation, a Nevada corporation (Holding), and 900 warrants (the
Stockholder Warrants) to purchase Class B Units of limited partnership
interest in Centex Development Company, L.P., a Delaware limited partnership
(the Partnership). Pursuant to an agreement with the Nominee (the Nominee
Agreement), the Nominee is the recordholder of the Stockholder Warrants and
the Holding Common Stock on behalf of and for the benefit of persons who are
from time to time the holders of the common stock, par value $.25 per share
(Centex Common Stock), of Centex (Centex Stockholders). Each Centex
Stockholder owns a beneficial interest in that portion of the Holding Common
Stock and the Stockholder Warrants that the total number of shares of Centex
Common Stock held by such stockholder bears to the total number of shares of
Centex Common Stock outstanding from time to time. This beneficial interest is
not represented by a separate certificate or receipt. Instead, each Centex
Stockholders beneficial interest in such pro rata portion of the shares of
Holding Common Stock and the Stockholder Warrants is represented by the
certificate or certificates evidencing such Centex Stockholders Centex Common
Stock, and is currently tradeable only in tandem with, and as a part of, each
such Centex Stockholders Centex Common Stock. The tandem securities are
listed and traded on the New York Stock Exchange and the London Stock Exchange
and are registered with the Securities and Exchange Commission (the
Commission) separately under Section 12(b) of the Securities Exchange Act of
1934, as amended (the Exchange Act). Holding and the Partnership were each
organized in 1987 in connection with the Distribution. 3333 Development
Corporation, a wholly-owned subsidiary of Holding (Development), holds a 1%
interest in, and is the sole general partner of, the Partnership. Centex
indirectly owns 100% of the Class A Units and 100% of the Class C Units of
limited partnership interest in the Partnership, which units are collectively
convertible into 20% of the Class B Units of limited partnership in the
Partnership. Please refer to the ownership chart on page 3.

At present, Centex, Holding and the Partnership have elected to satisfy
their respective periodic reporting obligations under the Exchange Act, and the
rules and regulations promulgated thereunder, by preparing and filing joint
periodic reports. Part Aof this Annual Report on Form 10-K for the fiscal
year ended March 31, 2001 (the Report) relates to Centex and its
subsidiaries. Part Bof this Report relates to Holding and its subsidiary,
Development, and to the Partnership and its subsidiaries.

This Report should be read in conjunction with the proxy statements of
Centex and Holding in connection with their respective 2001 annual meetings of
stockholders, the Annual Report to Stockholders of Centex for the fiscal year
ended March 31, 2001 (the Centex 2001 Annual Report) and the Annual Report to
Stockholders of Holding and the Partnership for the fiscal year ended March 31,
2001 (the Holding/Partnership 2001 Annual Report). For a complete
understanding of the tandem traded securities, Part Aand Part Bof this Report
should be read in combination.

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Information concerning the earnings and financial condition of the three
companies, on an aggregate basis, is included in Note (G) of the Notes to
Consolidated Financial Statements of Centex Corporation and
subsidiaries on pages 66-68 of this Report.

For a description of this ownership chart, please see the Joint Explanatory
Statement on the previous page.

OWNERSHIP CHART

(FLOW CHART)

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TABLE OF CONTENTS

FORM 10-K

|                                                                                              |  |          |    |      |  | 
|--------------------------------------------------------------------------------------------- |  | -------- | -- | ---- |  | 
|                                                                                              |  |          |    | Page | 
|                                                                                              |  |          |    |      | 
|JOINT EXPLANATORY STATEMENT                                                                   |  |          | 2  |     
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Part A. CENTEX CORPORATION AND SUBSIDIARIES                                                  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |  | PART I  
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 1. Business                                                                              |  |          | 6  |     
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 2. Properties                                                                            |  |          | 24 |     
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 3. Legal Proceedings                                                                     |  |          | 25 |     
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 4. Submission of Matters to a Vote of Security
Holders                                   |  |          | 25 |     
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |  | PART II 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 5. Market for Registrants Common Equity and Related Stockholder
Matters                 |  |          | 27 |     
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 6. Selected Financial Data                                                               |  |          | 28 |     
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 7. Managements Discussion and Analysis of Financial Condition
and Results of Operations |  |          | 29 |     
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 7A. Quantitative and Qualitative Disclosures about Market Risk                           |  |          | 44 |     
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 8. Financial Statements and Supplementary Data                                           |  |          | 47 |     
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure  |  |          | 76 |     
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |  | PART III
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 10. Directors and Executive Officers of the Registrant                                   |  |          | 76 |     
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 11. Executive Compensation                                                               |  |          | 76 |     
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 12. Security Ownership of Certain Beneficial Owners and
Management                       |  |          | 76 |     
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 13. Certain Relationships and Related Transactions                                       |  |          | 76 |     
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |  | PART IV 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K                     |  |          | 77 |     
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|SIGNATURES                                                                                    |  |          | 78 |     

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TABLE OF CONTENTS (continued)



|        |                                                                                              |  |      |  |  | 
|------- | -------------------------------------------------------------------------------------------- |  | ---- |  |  | 
|       
|       
|       
|       
|       
|       
|       
|       
|        |                                                                                              |  | Page | 
|        |                                                                                              |  |      | 
|Part B. | 3333 HOLDING CORPORATION AND SUBSIDIARY ANDCENTEX DEVELOPMENT COMPANY, L.P. AND SUBSIDIARIES
|       
|       
|       
|       
|        |                                                                                             

|                                                                                              |          |  |     |  | 
|--------------------------------------------------------------------------------------------- | -------- |  | --- |  | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|PART I                                                                                       
|Item 1. Business                                                                              |          |  | 79  | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 2. Properties                                                                            |          |  | 85  | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 3. Legal Proceedings                                                                     |          |  | 88  | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 4. Submission of Matters to a Vote of Security
Holders                                   |          |  | 88  | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              | PART II 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 5. Market for Registrants Common Equity and Related Stockholder
Matters                 |          |  | 90  | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 6. Selected Financial Data                                                               |          |  | 91  | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 7. Managements Discussion and Analysis of Financial Condition
and Results of Operations |          |  | 92  | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 7A. Quantitative and Qualitative Disclosures about Market Risk                           |          |  | 99  | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 8. Financial Statements and Supplementary Data                                           |          |  | 100 | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure  |          |  | 119 | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              | PART III
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 10. Directors and Executive Officers of the Registrants                                  |          |  | 120 | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 11. Executive Compensation                                                               |          |  | 121 | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 12. Security Ownership of Certain Beneficial Owners and
Management                       |          |  | 121 | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 13. Certain Relationships and Related Transactions                                       |          |  | 127 | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              | PART IV 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K                     |          |  | 127 | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|SIGNATURES                                                                                    |          |  | 129 | 



---



|                                                  |  |  |     | 
|------------------------------------------------- |  |  | --- | 
|INDICES TO EXHIBITS                              
|                                                 
|                                                 
|                                                 
|                                                 
|CENTEX CORPORATION AND SUBSIDIARIES               |  |  | 131 | 
|                                                 
|                                                 
|                                                 
|                                                 
|3333 HOLDING CORPORATION AND SUBSIDIARY           |  |  | 134 | 
|                                                 
|                                                 
|                                                 
|                                                 
|CENTEX DEVELOPMENT COMPANY, L.P. AND SUBSIDIARIES |  |  | 136 | 

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PART A.

CENTEX CORPORATION AND SUBSIDIARIES

PREFATORY STATEMENT

Part Aof this
Report (pages 6 through 78) includes information relating
to Centex Corporation and subsidiaries (Centex or the Company), File No.
1-6776. See Joint Explanatory Statement on page 2 of this Report. References
to Centex or the Company in this Report include Centex and its subsidiaries
unless the context otherwise states. Part Bof this
Report (pages 79 through
130) includes information relating separately to 3333 Holding Corporation
(Holding) and its subsidiary, 3333 Development Corporation (Development),
and to Centex Development Company, L.P. and subsidiaries (Partnership).




PART I




ITEM 1. BUSINESS

General Development of Business

Centex is incorporated in the state of Nevada. The Companys common
stock, par value $.25 per share (Centex Common Stock), began trading publicly
in 1969. As of May 31, 2001, 60,366,107 shares of Centex Common Stock, which
are traded on the New York Stock Exchange (NYSE) and the London Stock
Exchange, were outstanding.

Since its founding in 1950 as a Dallas, Texas-based residential and
commercial construction company, Centex has evolved into a multi-industry
company. Centex currently operates in five principal business segments: Home
Building, Investment Real Estate, Financial Services, Construction Products,
and Contracting and Construction Services. A brief overview of each segment is
provided below and a more detailed discussion of each segment is provided later
in this section.

One of the nations largest home builders, Centexs Home Building business
includes both conventional homes and manufactured homes. Centexs Conventional
Homes operations currently involve the purchase and development of land or lots
and the construction and sale of single-family homes, town homes, and low-rise
condominiums. Centex has participated in the conventional home building
business since 1950. Centex entered the Manufactured Homes business in fiscal
1997 when Centex Real Estate Corporation acquired approximately
80% of the predecessor of Cavco Industries, LLC. During the fourth quarter of
fiscal 2000 the Company acquired the remaining approximately 20% minority
interest in Cavco. As used herein, Cavco refers to the Manufactured Homes
operations of the Company, which includes the manufacture of residential and
park model homes and, to a lesser degree, commercial structures in factories
and their sale through company-owned retail outlets and a network of
independent dealers.

Centexs Investment Real Estate operations involve the acquisition,
development, and sale of land, primarily for industrial, office, multi-family,
retail, and mixed-use projects.

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##### Table of Contents



Centexs Financial Services operations consist of home financing, home
equity and sub-prime lending, and the sale of title insurance and various other
insurance coverages. These activities include mortgage origination, servicing,
and other related services for purchasers of homes sold by Centex subsidiaries
and others. Centex has been in the mortgage banking business since 1973.

The operations of Centex Construction Products, Inc., a Delaware
corporation (Construction Products), involve the manufacture, production,
distribution, and sale of cement, gypsum wallboard, recycled paperboard,
aggregates and readymix concrete. Centexs involvement in the construction
products business started in 1963 when it began construction of its first
cement plant. During the quarter ended June 30, 1994, Construction Products
completed an initial public offering of 51% of its stock and began trading on
the NYSE under the symbol CXP. Primarily as a result of Construction
Products repurchases of its own stock during the quarter ended June 30, 1996,
Centexs ownership interest increased to more than 50%. As a result of
subsequent stock repurchases by Construction Products, Centexs ownership
interest has increased to 65.2% as of March 31, 2001. Accordingly,
Construction Products fiscal 2001, 2000, and 1999 financial results have been
consolidated with those of Centex.

Centexs Contracting and Construction Services operations involve the
construction of buildings for both private and government interests, including
office, commercial and industrial buildings, hospitals, hotels, museums,
libraries, airport facilities, and educational institutions. Centex entered
the Contracting and Construction Services business in 1966 by acquiring a
Dallas-based contractor that had been in business since 1936. Additional
significant construction companies were acquired in 1978, 1982, 1987, and 1990.
Centex currently ranks among the nations largest general building
contractors.

In fiscal 1988, Centex established Centex Development Company, L.P.
Please refer to Part Bof this Report for a discussion of the business of the
Partnership.

Financial Information about Industry Segments

Note (J) of the Notes to Consolidated Financial Statements of Centex on
pages 69-72 of this Report contains additional information about the Companys
business segments for the fiscal years ended March 31, 2001, 2000, and 1999
(fiscal 2001, fiscal 2000, and fiscal 1999, respectively).

Narrative Description of Business

HOME BUILDING

Conventional Homes

Centex Homes, Centexs conventional home building operation, is primarily
involved in the purchase and development of land or lots and the construction
and sale of single-family homes, town homes, and low-rise condominiums. Centex
Homes currently operates in 481 neighborhoods in 79 different markets. Centex
Homes is one of the leading U.S. builders of single-family detached homes, as
measured by the number of units sold and closed in a calendar year. Centex
Homes is also the only company to rank among the nations top 10 home builders
for each of the past 33 years according to Professional Buildermagazine.
Centex Homes sells to both first-time and move-up buyers. Over 90% of the
houses Centex Homes sells are single-family detached homes, and the remainder
are town homes and low-rise condominiums.

7



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Markets

Centex Homes follows a strategy of reducing exposure to local market
volatility by diversifying operations across geographically and economically
diverse markets. Centex Homes currently builds in 79 market areas in 23 states
and in Washington, D. C. The markets are listed below by geographic areas.

|             |  |                                                                                                                                         |  |                                                                                                               
|------------ |  | --------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------
|Mid-Atlantic |  | New Jersey-
Middlesex/Somerset/Hunterdon
Monmouth/Ocean
Newark
Trenton                                                                  |  | North Carolina-
Charlotte/Gastonia/Rock Hill
Greensboro/Winston Salem/Rock Hill
Raleigh/Durham/Chapel Hill    
|            
|            
|            
|            
|             |  | Virginia-
Norfolk/Virginia Beach/Newport
Richmond/Petersburg
Washington, D.C.                                                           |  | South Carolina-
Charleston/North Charleston
Myrtle Beach                                                      
|            
|            
|            
|            
|             |  | Pennsylvania-
Philadelphia
Pittsburgh                                                                                                   |  | Nashville, Tennessee
Baltimore, Maryland                                                                      
|            
|            
|            
|            
|Southeast    |  | Florida-
Daytona Beach
Ft. Lauderdale
Ft. Myers/Cape Coral
Ft. Pierce/St. Lucie
Jacksonville
Lakeland/Winter Haven
Melbourne/Titusville |  | Miami
Naples
Orlando
Punta Gorda
Sarasota/Bradenton
Tampa/St. Petersburg/Clearwater
West Palm Beach/Boca Raton
|            
|            
|            
|            
|             |  | South Carolina-
Columbia
Greenville/Spartanburg/Anderson                                                                                |  | Atlanta, Georgia                                                                                              
|            
|            
|            
|            
|Midwest      |  | Ohio-
Akron
Cincinnati
Columbus                                                                                                         |  | Dayton/Springfield
Mansfield
Toledo                                                                           
|            
|            
|            
|            
|             |  | Indiana-
Indianapolis
Fort Wayne                                                                                                        |  | Michigan-
Detroit
Grand Rapids/Muskegon/Holland
Kalamazoo/Battle Creek                                        
|            
|            
|            
|            
|             |  | Colorado-
Boulder/Longmont
Denver                                                                                                       |  | Chicago, Illinois
Minneapolis/St. Paul, Minnesota                                                             

8



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##### Table of Contents



|                |  |                                                                                                                  |  |                                                                                               
|--------------- |  | ---------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------
|               
|               
|               
|               
|South Central   |  | Texas-
Austin/San Marcos
Brazoria
Dallas
Ft. Worth/Arlington                                                     |  | Galveston/Texas City
Houston
Killeen/Temple
San Antonio                                       
|               
|               
|               
|               
|                |  | Albuquerque, New Mexico                                                                                          |  | Phoenix/Mesa, Arizona                                                                         
|               
|               
|               
|               
|Mountain States |  | Oregon-
Eugene
Portland/Vancouver
Salem                                                                          |  | Nevada-
Las Vegas
Reno                                                                        
|               
|               
|               
|               
|                |  | Salt Lake, Utah                                                                                                  |  | Edwards, Colorado                                                                             
|               
|               
|               
|               
|                |  | Seattle/Bellevue/Everett, Washington                                                                            
|               
|               
|               
|               
|West Coast      |  | California-
Bakersfield
Fresno
Los Angeles/Long Beach
Kings County
Oakland
Orange County
Riverside/San Bernadino |  | Sacramento
San Diego
San Luis Obispo
Vallejo/Fairfield/Napa
Ventura
Visalia/Tulare/Porterville

In fiscal 2001, Centex Homes closed 20,659 houses, including first-time,
move-up and, in some markets, custom homes, ranging in price from approximately
$49,000 to about $1.5 million. The average sale price in fiscal 2001 was
approximately $206,000.

Centex Homes policy has been to acquire land with the intent to complete
the sale of housing units within approximately 24 to 36 months from the date of
acquisition. Generally this involves acquiring land that is properly zoned and
is either ready for development or, to some degree, already developed. The
purchase of finished lots generally allows Centex Homes to shorten the lead
time to commence construction and reduces the risks of unforeseen improvement
costs and volatile market conditions. Centex Homes has acquired a substantial
amount of its finished and partially improved lots and land through option
agreements that are exercised over specified time periods or, in certain cases,
as the lots are needed.

Centex Homes has also grown its business through the acquisition of other
homebuilding companies. Companies recently acquired included the following.
Wayne Homes, acquired in April 1998, builds single-family homes in the
build-on-owners lot market segment. Teal Homes, acquired in May 1998,
builds single-family homes for the first-time and move-up buyer in the
Richmond, Virginia area. Calton Homes, acquired in December 1998, builds
single-family homes for the first-time and move-up buyer in New Jersey.
Sundance Homes acquired substantially all of the suburban Chicago homebuilding
operating assets in July 1999. Real Homes, acquired in September 1999, builds
single-family homes for the first-time and move-up buyer in the Las Vegas,
Nevada area. Selective Group, acquired in March 2001, builds single-family
homes for the first-time and move-up buyer in the Detroit, Michigan area.
CityHomes, acquired in March 2001, builds luxury town homes and condominiums
that appeal to young professionals wanting an urban lifestyle in the Dallas,
Texas area.

9



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##### Table of Contents



Summarized below by geographic area are Centex Homes home closings, sales
(orders) backlog, and sales (orders) for the five fiscal years ended March 31:

|                                                             |                 |   |                               |       |  |      |        |       |      |   |        |       |  |   |        |       |  |   |        |       | 
|------------------------------------------------------------ | --------------- | - | ----------------------------- | ----- |  | ---- | ------ | ----- | ---- | - | ------ | ----- |  | - | ------ | ----- |  | - | ------ | ----- | 
|                                                             |                 |   | For the Years Ended March 31, |      
|                                                             |                 |   |                               |      
|                                                             |                 |   | 2001                          |       |  | 2000 |        |       | 1999 |   |        | 1998  |  |   | 1997   |      
|                                                             |                 |   |                               |       |  |      |        |       |      |   |        |       |  |   |        |      
|Closings (in units):                                        
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Mid-Atlantic    |   |                               | 3,541 |  |      |        | 3,188 |      |   |        | 2,465 |  |   |        | 1,986 |  |   |        | 2,192 | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Southeast       |   |                               | 3,991 |  |      |        | 4,012 |      |   |        | 3,426 |  |   |        | 3,064 |  |   |        | 3,017 | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Midwest         |   |                               | 3,294 |  |      |        | 3,089 |      |   |        | 2,062 |  |   |        | 1,147 |  |   |        | 1,337 | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | South Central   |   |                               | 5,145 |  |      |        | 4,698 |      |   |        | 3,779 |  |   |        | 3,257 |  |   |        | 3,606 | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Mountain States |   |                               | 1,151 |  |      |        | 908   |      |   |        | 635   |  |   |        | 583   |  |   |        | 623   | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | West Coast      |   |                               | 3,537 |  |      |        | 3,009 |      |   |        | 2,425 |  |   |        | 2,381 |  |   |        | 2,332 | 
|                                                             |                 |   |                               |       |  |      |        |       |      |   |        |       |  |   |        |      
|                                                             |                 |   | 20,659                        |       |  |      | 18,904 |       |      |   | 14,792 |       |  |   | 12,418 |       |  |   | 13,107 |      
|                                                             |                 |   |                               |       |  |      |        |       |      |   |        |       |  |   |       
|Average Sales Price (in 000s)                               |                 | $ | 206                           |       |  | $    | 192    |       |      | $ | 186    |       |  | $ | 183    |       |  | $ | 172    |      
|                                                             |                 |   |                               |       |  |      |        |       |      |   |        |       |  |   |       
|Sales (Orders) Backlog, at
the end of the period (in units):
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Mid-Atlantic    |   |                               | 1,403 |  |      |        | 1,253 |      |   |        | 1,098 |  |   |        | 699   |  |   |        | 647   | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Southeast       |   |                               | 1,898 |  |      |        | 1,848 |      |   |        | 1,794 |  |   |        | 1,400 |  |   |        | 1,133 | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Midwest         |   |                               | 2,008 |  |      |        | 1,628 |      |   |        | 1,355 |  |   |        | 433   |  |   |        | 441   | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | South Central   |   |                               | 2,374 |  |      |        | 1,751 |      |   |        | 1,624 |  |   |        | 1,393 |  |   |        | 1,119 | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Mountain States |   |                               | 455   |  |      |        | 247   |      |   |        | 251   |  |   |        | 195   |  |   |        | 211   | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | West Coast      |   |                               | 1,127 |  |      |        | 852   |      |   |        | 670   |  |   |        | 796   |  |   |        | 757   | 
|                                                             |                 |   |                               |       |  |      |        |       |      |   |        |       |  |   |        |      
|                                                             |                 |   | 9,265                         |       |  |      | 7,579  |       |      |   | 6,792  |       |  |   | 4,916  |       |  |   | 4,308  |      
|                                                             |                 |   |                               |       |  |      |        |       |      |   |        |       |  |   |       
|Sales (Orders) (in units):                                  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Mid-Atlantic    |   |                               | 3,691 |  |      |        | 3,343 |      |   |        | 2,592 |  |   |        | 2,038 |  |   |        | 2,019 | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Southeast       |   |                               | 4,041 |  |      |        | 4,066 |      |   |        | 3,824 |  |   |        | 3,331 |  |   |        | 2,743 | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Midwest         |   |                               | 3,541 |  |      |        | 3,207 |      |   |        | 2,515 |  |   |        | 1,139 |  |   |        | 1,126 | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | South Central   |   |                               | 5,747 |  |      |        | 4,825 |      |   |        | 4,010 |  |   |        | 3,531 |  |   |        | 3,051 | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Mountain States |   |                               | 1,359 |  |      |        | 775   |      |   |        | 691   |  |   |        | 567   |  |   |        | 543   | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | West Coast      |   |                               | 3,812 |  |      |        | 3,191 |      |   |        | 2,299 |  |   |        | 2,420 |  |   |        | 2,400 | 
|                                                             |                 |   |                               |       |  |      |        |       |      |   |        |       |  |   |        |      
|                                                             |                 |   | 22,191                        |       |  |      | 19,407 |       |      |   | 15,931 |       |  |   | 13,026 |       |  |   | 11,882 |      
|                                                             |                 |   |                               |       |  |      |        |       |      |   |        |       |  |   |       

Competition and Other Factors

The conventional housing industry is essentially a local business and is
highly competitive. Centex Homes competes in each of its market areas with
numerous other home builders. Centex Homes operations account for
approximately 2% of the total for-sale housing starts in the United States.
The main competitive factors affecting Centex Homes operations are location,
price, cost of providing mortgage financing for customers, construction costs,
design and quality of homes, marketing expertise, availability of land, and
reputation. Management believes that Centex Homes competes effectively by
maintaining geographic diversity, being responsive to the specific demands of
each market, and managing the operations at a local level.

10



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The home building industry is cyclical and is particularly affected by
changes in local economic
conditions, job growth, long-term and short-term interest rates and, to a
lesser extent, changes in property taxes, energy costs, federal income tax
laws, federal mortgage financing programs, and various demographic factors.
The political and economic environments affect both the demand for housing
constructed and the subsequent cost of financing. Unexpected climatic
conditions, such as unusually heavy or prolonged rain or snow, may affect
operations in certain areas.

The housing industry is subject to extensive and complex regulations.
Centex Homes and its subcontractors must comply with various federal, state and
local laws and regulations including worker health and safety, zoning,
building, advertising, consumer credit rules and regulations, and the extensive
and changing federal, state and local laws, regulations and ordinances
governing the protection of the environment, including the protection of
endangered species. Centex Homes is also subject to other rules and
regulations in connection with its manufacturing and sales activities,
including requirements as to incorporated building materials and building
designs. All of the foregoing regulatory requirements are applicable to all
home building companies, and to date, compliance with the foregoing
requirements has not had a material impact on Centex Homes. Centex Homes
believes that it is in material compliance with these requirements.

Centex purchases materials, services, and land from numerous sources and
believes that it can deal effectively with any problems it may experience
relating to the supply or availability of materials, services, and land.

Manufactured Homes

Manufactured Homes operations include the manufacture of residential and
park model homes and, to a lesser degree, commercial structures in factories
and the sale of these products through company-owned retail outlets and a
network of independent dealers. The Company entered the manufactured homes
industry in fiscal 1997, when Centex Real Estate Corporation acquired
approximately 80% of the
predecessor of Cavco Industries, LLC for a total of $74.3 million. During
fiscal 1998, Cavco purchased substantially all of the assets of AAA Homes,
Inc., Arizonas largest retailer of manufactured homes, marking Cavcos entry
into the retailing of manufactured homes. During the fourth quarter of fiscal
2000, the Company acquired the remaining approximately 20% minority interest in
Cavco.

Markets

Cavco is the largest producer of manufactured homes in Arizona and is the
nations largest producer of park model homes, having built 3,942 manufactured
housing units during fiscal 2001. Cavco currently operates three
manufacturing plants in the Phoenix area.

Cavco sells its homes through company-owned retail outlets and a network
of independent dealers. As of March 31, 2001, Cavco products were displayed
and sold in approximately 214 outlets in 11 states, Mexico and Japan, of which
there were approximately 114 in Arizona, 32 in California, 28 in New Mexico, 16
in Texas, 6 in Colorado, 5 in Utah, 3 in Nevada, 2 each in Washington, Wyoming,
Idaho, and Oregon, and 1 each in Japan and Mexico. Twenty-four of these outlets
are company-owned, 14 in Texas, 7 in Arizona, 2 in New Mexico, and 1 in
Colorado. Among the twenty-four company-owned stores are 10 which sell Cavcos
product exclusively, and 4 which operate under the Factory Liquidators name.
Factory Liquidators, a new concept for the company, opened its first retail
store during the fourth quarter of fiscal 2001. This operation focuses on
re-marketing repossessed homes for major mortgage companies and on the

11



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##### Table of Contents



sale of
surplus or distressed new homes for manufacturers. Many of Cavcos independent
dealers operate more than one retail outlet. Most of Cavcos independent
dealers sell competing products, although from
time to time Cavco also may enter into exclusive agreements with certain
dealers. The independent dealers set their own retail prices for Cavcos
homes.

Cavcos dealers typically pay cash or finance their purchase of homes
through floor plan financing arrangements with third-party lenders. Generally,
Cavco receives a deposit or a commitment from the dealers lender for each
specific home ordered, which is identified by its serial number. Cavco then
manufactures the home and ships it at the dealers expense. Payment is due
from the lender upon the dealers notice of delivery and acceptance of the
product. The length of time it takes to manufacture and ship a home after an
order is placed varies according to Cavcos backlog.

Cavco is contingently liable under terms of repurchase agreements with the
lenders that provide dealer floor plan financing arrangements. These
arrangements, which are customary in the industry, provide for the repurchase
of the manufacturers products for a specific time period, generally 12 to 18
months, in the event that the dealer defaults on payments. The risk of loss
is spread over numerous dealers and financing institutions and is further
offset by the resale value of repurchased units. Cavco has not incurred any
significant losses from these arrangements since its inception.

Cavco extends a limited warranty to original retail purchasers of its
homes. Cavco warrants structural and nonstructural components for 12 months.
Its warranty does not extend to installation and setup of the home, which is
generally arranged by the retailer. Appliances and certain other components
are warranted by their original manufacturer for various lengths of time.

Cavcos backlog of orders for homes was approximately $1.0 million (35
units) as of March 31, 2001 and $1.9 million (86 units) as of March 31, 2000.
Cavco currently requires one to three weeks, on average, to fill an order.

Competition and Other Factors

Cavco estimates that there are six other manufacturers competing for a
significant share of the market in the Arizona and New Mexico areas. Cavco
believes that its business (based on total shipments) represents an approximate
26% share of the Arizona market area, 12% share of the New Mexico market area,
and smaller shares of market areas in other states in which it does business.
Cavco believes the principal factors affecting competition in the manufactured
housing market are price, design, product quality and reliability, distribution
network, retail financing, and brand recognition.

Cavco has not experienced any material difficulty in purchasing its raw
materials or component parts. Cavco buys the majority of component parts,
including wood, wood products, aluminum, steel, tires, hardware, windows, and
doors from third-party manufacturers and distributors located primarily in
California, Texas, and Arizona. Approximately 39% of the unit cost of Cavcos
homes is attributable to raw wood products.

The Company believes that compliance with federal, state, and local
environmental laws will not have a material adverse effect on its capital
expenditures, earnings, or competitive position.

12



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##### Table of Contents



INVESTMENT REAL ESTATE

Investment Real Estates operations involve the acquisition, development,
and sale of land, primarily for industrial, office, multi-family, retail, and
mixed-use projects.

In fiscal 1996, the Company acquired certain equity interests in Vista
Properties, Inc. (Vista), which owned a portfolio of properties located in
seven states in which the Company has significant operations. Vistas real
property portfolio generally consisted of land zoned, planned or developed for
single- and multi-family residential, office, retail, industrial, and other
commercial uses. During fiscal 1997, Centex Real Estate Corporation completed
a business combination transaction and reorganization with Vista whereby
Centexs Home Building assets and operations were contributed to Vista, and
Vista changed its name to Centex Real Estate Corporation. As a result of the
combination, the Vista portfolio was reduced to a nominal book basis after
recording certain deferred tax benefits related to the acquisition. As these
properties are developed or sold, the net sales proceeds are reflected as
operating margin. Negative goodwill recorded as a result of the business
combination was amortized to earnings over the estimated period over which the
land was developed, sold, or realized. During fiscal 2001, the Company
disposed of virtually all of the remaining
Vista portfolio, and negative goodwill was fully amortized.

As of March 31, 2001, Investment Real Estates property portfolio
consisted of land located in five states. The Company has major conventional
homebuilding operations in most markets where Investment Real Estate owns
substantial property.

The land held, by state, at March 31, 2001 is set forth in the following
table:

|           |  |       |       |  |        |                                         
|---------- |  | ----- | ----- |  | ------ | ----------------------------------------
|State      |  | Acres |       |  | Zoning
|           |  |       |       |  |       
|Texas      |  |       | 669   |  |        | Industrial, Office, Retail & Residential
|          
|          
|          
|          
|California |  |       | 367   |  |        | Industrial, Office, Retail & Residential
|          
|          
|          
|          
|Florida    |  |       | 253   |  |        | Industrial, Office & Retail             
|          
|          
|          
|          
|Georgia    |  |       | 22    |  |        | Retail                                  
|          
|          
|          
|          
|Colorado   |  |       | 3     |  |        | Residential                             
|           |  |       |       | 
|           |  |       | 1,314 | 
|           |  |       |       | 

At March 31, 2001, Investment Real Estate also owned either directly,
through interests in joint ventures, or through its ownership of a limited
partnership interest in the Partnership: 413 acres of land located in Texas,
California, Florida, Michigan, and Nevada; 4,323 plots in 79 residential
developments located throughout England; 1,749,000 square feet of industrial,
office, and retail buildings in Arizona, California, Florida, Massachusetts,
North Carolina, and Texas; a 400-unit apartment complex located in Grand
Prairie, Texas; and a 382-unit apartment complex in St. Petersburg, Florida.
During fiscal 2001, the Partnership began construction on 929,000 square feet
of office and industrial space in Michigan, California, and North Carolina.

FINANCIAL SERVICES

Financial Services operations consist primarily of home financing, home
equity and sub-prime lending, and the sale of title insurance and other
insurance coverages. These activities include mortgage origination, servicing,
and other related services for purchasers of homes sold by Centex subsidiaries
and others.

13



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##### Table of Contents



Conforming Mortgage Banking

CTX Mortgage Company (CTX Mortgage) was established in 1973 to provide
mortgage financing for homes built by Centex Homes (Builder Loans). The
opening of CTX Mortgage offices in Centex Homes housing markets has enabled it
to provide mortgage financing for an average of 69% of Centex Homes sales
(other than cash sales) over the past five years. In fiscal 2001 this capture
ratio was 64%.

In 1985, CTX Mortgage expanded its operations to include third-party loans
(Retail Loans) that are not associated with the sale of homes built by Centex
Homes. At March 31, 2001, CTX Mortgage had 215 offices located in 37 states.
The offices vary in size depending on loan volume.

The unit breakdown of Builder and Retail Loans for CTX Mortgage for the
five years ended March 31, 2001 are set forth in the following table:

|                                    |         |   |                               |        |  |      |        |        |      |   |        |        |  |   |        |        |  |   |        |        | 
|----------------------------------- | ------- | - | ----------------------------- | ------ |  | ---- | ------ | ------ | ---- | - | ------ | ------ |  | - | ------ | ------ |  | - | ------ | ------ | 
|                                    |         |   | For the Years Ended March 31, |       
|                                    |         |   |                               |       
|                                    |         |   | 2001                          |        |  | 2000 |        |        | 1999 |   |        | 1998   |  |   | 1997   |       
|                                    |         |   |                               |        |  |      |        |        |      |   |        |        |  |   |        |       
|Loan Types:                        
|                                   
|                                   
|                                   
|                                   
|                                    | Builder |   |                               | 12,506 |  |      |        | 10,958 |      |   |        | 9,882  |  |   |        | 8,748  |  |   |        | 9,483  | 
|                                   
|                                   
|                                   
|                                   
|                                    | Retail  |   |                               | 48,244 |  |      |        | 48,301 |      |   |        | 66,496 |  |   |        | 44,096 |  |   |        | 33,579 | 
|                                    |         |   |                               |        |  |      |        |        |      |   |        |        |  |   |       
|                                    |         |   | 60,750                        |        |  |      | 59,259 |        |      |   | 76,378 |        |  |   | 52,844 |        |  |   | 43,062 |       
|                                    |         |   |                               |        |  |      |        |        |      |   |        |        |  |   |       
|Origination Volume (in billions)    |         | $ | 8.9                           |        |  | $    | 8.1    |        |      | $ | 10.1   |        |  | $ | 6.7    |        |  | $ | 5.2    |       
|                                   
|                                   
|                                   
|                                   
|Percent of Centex Closings Financed |         |   | 64                            | %      |  |      | 61     | %      |      |   | 70     | %      |  |   | 75     | %      |  |   | 77     | %     

CTX Mortgage provides mortgage origination and other mortgage-related
services for Federal Housing Administration (FHA), Department of Veterans
Affairs (VA) and conventional loans on homes built and sold by Centex Homes
or by others, as well as resale homes and refinancing of existing mortgages.
CTX Mortgages loans are generally first-lien mortgages secured by one- to
four-family residences. A majority of the conventional loans qualify for
inclusion in programs sponsored by Government National Mortgage Association
(GNMA), Federal National Mortgage Association, (FNMA) or the Federal Home
Loan Mortgage Corporation (FHLMC). Such loans are known in the industry as
conforming loans. The remainder of the loans are either pre-approved and
individually underwritten by CTX Mortgage or private investors who subsequently
purchase the loans on a whole loan basis or are funded by private investors who
pay a broker fee to CTX Mortgage for referring a loan.

CTX Mortgages principal sources of income are from loan origination fees,
revenues from the sale of mortgages and servicing rights, interest income, and
secondary marketing gains and losses. Generally, CTX Mortgage sells its right
to service the mortgage loans to various loan servicing companies and,
therefore, retains no mortgage servicing rights.

CTX Mortgage also participates in joint-venture agreements with
third-party home builders and other real estate professionals to provide
mortgage originations for their customers. At March 31, 2001, CTX Mortgage had
29 of these agreements, operating in 48 offices in 13 states.

In fiscal 2000, CTX Mortgage entered into a revolving sales agreement
under which Harwood Street Funding I, LLC (HSF-I), an unaffiliated special
purpose entity, committed to purchase, at CTX

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##### Table of Contents



Mortgages option, mortgage loans
originated by CTX Mortgage on a daily basis, up to HSF-Is financing limit of
$1.5 billion. Under the terms of the sales agreement, CTX Mortgage is the sole
manager of HSF-I and, in that
capacity, arranges for the sale of such loans into the secondary market.
For a subservicing fee, CTX Mortgage also acts as servicer of these mortgage
loans for HSF-I until HSF-I sells the loans. At March 31, 2001, CTX Mortgage
was servicing approximately $1.5 billion of mortgage loans owned by HSF-I.

Home Equity and Sub-Prime Lending

Centex Credit Corporation, a Nevada corporation doing business as Centex
Home Equity Corporation (Home Equity), was formed in fiscal 1995, and is
engaged in the origination of primarily nonconforming home equity loans. The
sub-prime lending market comprises borrowers whose financing needs are not
being met by traditional mortgage lenders for a variety of reasons including
credit histories that may limit a borrowers access to credit or a borrowers
need for specialized loan products. Since its inception, Home Equity has
focused on lending to individuals who have substantial equity in their homes
but have impaired or limited credit histories. Home Equitys mortgage loans to
these borrowers are made for such purposes as debt consolidation, refinancing,
home improvement, or educational expenses. Substantially all of Home Equitys
mortgage loans are secured by first mortgage liens on one- to four-family
residences and have amortization schedules ranging from 5 to 30 years.

At March 31, 2001, Home Equity had 137 offices doing business in 48
states. Home Equity originates home equity loans through five major
origination sources: 1) retail branch network, 2) broker referral network, 3)
referrals from its affiliated conforming mortgage company, CTX Mortgage, 4)
correspondent mortgage banker network, and 5) Home Equitys direct sales unit,
which sources loans through telemarketing.

The following table summarizes origination statistics for the five years
ended March 31, 2001:

|                                 |  |                               |        |  |      |   |        |      |  |   |        |  |  |      |       |  |  |   |       | 
|-------------------------------- |  | ----------------------------- | ------ |  | ---- | - | ------ | ---- |  | - | ------ |  |  | ---- | ----- |  |  | - | ----- | 
|                                 |  | For the Years Ended March 31, |       
|                                 |  |                               |       
|                                 |  | 2001                          |        |  | 2000 |   |        | 1999 |  |   | 1998   |  |  | 1997 |      
|                                 |  |                               |        |  |      |   |        |      |  |   |        |  |  |      |      
|Loans                            |  |                               | 26,418 |  |      |   | 20,568 |      |  |   | 15,582 |  |  |      | 7,982 |  |  |   | 4,100 | 
|                                
|                                
|                                
|                                
|Origination Volume (in billions) |  | $                             | 1.7    |  |      | $ | 1.3    |      |  | $ | 1.0    |  |  | $    | 0.5   |  |  | $ | 0.2   | 

Home Equity began servicing loans in fiscal 1997. The servicing fees paid
for sub-prime loans are significantly higher than for conforming loans.
Servicing encompasses, among other activities, the following processes:
billing, collection of payments when due, movement of cash to the payment
clearing bank accounts, investor reporting, customer help, recovery of
delinquent payments, instituting foreclosure, and liquidation of the underlying
collateral. As of March 31, 2001, Home Equity was servicing a portfolio of
approximately $3.3 billion.

Since October 1997, a majority of Home Equitys volume has been
accumulated for securitizations in which Home Equity retains the residual
interest as well as the servicing rights to the securitized loans. The
remainder of the loans are sold to investors on a whole-loan sale basis. Since
February 1998, Home Equity has completed thirteen securitizations totaling
approximately $4 billion.

Securitizations entered into prior to March 31, 2000 by Home Equity were
structured in a manner that caused them to be accounted for as sales. The
resulting gains on such sales were reported as revenues during the period in
which the securitizations closed. Home Equity changed the structure for
securitizations occurring subsequent to March 31, 2000, such that
securitizations after that date are being accounted for as

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borrowings.
Although the change in structure of the securitizations resulting in the
transactions being accounted for as borrowings will have no effect on the
profit recognized over the life of the loans, the change does affect the timing
of profit recognition.

Home Equitys principal sources of income are from interest income, gains
on loan sales, loan origination fees, and servicing fees.

Other Financial Services Operations

Centexs title insurance operations are located principally in Texas,
California, Florida, Virginia, and Maryland. Through Westwood Insurance, a
multi-line insurance broker acquired during fiscal 1999, homeowners and hazard
insurance is marketed to customers of Centex Homes and approximately 141 other
home builders in 50 states. Westwood also writes coverage for certain
commercial customers.

Centex Financial Services, Inc. (CFS), the parent of all companies
within the Financial Services segment, acquired a controlling interest in
substantially all of the assets of Advanced Financial Technology, Inc.
(Adfitech) and Loan Processing Technologies, Inc. (Loan Processing) in
fiscal 1997 and of Adfinet, Inc. (Adfinet) in fiscal 1998, all of which are
headquartered in Edmond, Oklahoma and are collectively referred to as The
Technologies Group. During fiscal 1999, CFS acquired the minority interest in
these three operations. In fiscal 2001, Loan Processing was dissolved and all
of its rights and liabilities were transferred to and assumed by its corporate
parent, Adfitech. The Technologies Group provides mortgage quality control
services, owns and operates an automated mortgage processing system, and
provides the mortgage industry with regulations and guidelines in an electronic
format.

Competition and Other Factors

The mortgage banking industry in the United States is highly competitive.
CTX Mortgage competes with commercial banks, other mortgage banking companies,
and other financial institutions to supply mortgage financing at attractive
rates to purchasers of Centex homes as well as to the general public. Home
Equity competes with commercial banks, other sub-prime lenders, and other
financial institutions to supply sub-prime financing at attractive rates. The
title and insurance operations compete with other providers of title and
insurance products to purchasers of Centex homes and as well as to the general
public. During fiscal 2001, Financial Services continued to operate in a very
competitive environment.

The Financial Services operations are subject to extensive state and
federal regulations as well as the rules and regulations of, and examinations
by, FNMA, FHLMC, FHA, VA, Department of Housing and Urban Development (HUD),
GNMA, and state regulatory authorities with respect to originating, processing,
underwriting, making, selling, securitizing, and servicing loans. In addition,
there are other federal and state statutes and regulations affecting such
activities. These rules and regulations, among other things, impose licensing
obligations on Financial Services, specify standards for origination
procedures, establish eligibility criteria for mortgage loans, provide for
inspection and appraisals of properties, regulate payment features and, in some
cases, fix maximum interest rates, fees, and loan amounts. The Financial
Services operations are required to maintain specified net worth levels and
submit annual audited financial statements to HUD, VA, FNMA, FHLMC, and GNMA,
and certain state regulators. As an approved FHA mortgagee, CTX Mortgage is
subject to examination by the Federal Housing Commissioner at all times to
ensure compliance with FHA regulations, policies, and procedures. Among other
federal and state consumer credit laws, mortgage origination and servicing
activities are subject to the Equal Credit Opportunity Act, the Fair Housing
Act, the Fair Credit Reporting Act, the Federal Truth-In-Lending Act, the Real
Estate

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Settlement Procedures Act, the Riegle Community Development and
Regulatory Improvement Act, the Home Ownership and Equity Protection Act, and
the regulations promulgated under such statutes. These statutes prohibit
discrimination and unlawful kickbacks and referral fees and require the
disclosure of certain information to borrowers concerning credit and settlement
costs. Many of these regulatory requirements are designed to protect the
interest of consumers, while others protect the owners or insurers of mortgage
loans. Failure to comply with these requirements can lead to loss of approved
status, demands for indemnification or loan repurchases from investors, class
action lawsuits by borrowers, administrative enforcement actions, and, in some
cases, rescission or voiding of the loan by the consumer.

CONSTRUCTION PRODUCTS

Construction Products operations include the manufacture, production,
distribution and sale of cement, gypsum wallboard, recycled paperboard,
aggregates, and readymix concrete.

In fiscal 1995, Construction Products completed an initial public offering
of 51% of its stock and began trading on the NYSE under the symbol CXP. As a
result of Construction Products repurchase of its own stock during fiscal
years 1997 through 2001 and certain purchases of CXP common stock by Centex
from the public, Centexs ownership increased to 51.4% as of March 31, 1997,
and as of March 31, 2001 Centexs ownership was 65.2%. Accordingly,
Construction Products financial statements for the years ended March 31, 2001,
2000, and 1999 have been consolidated with those of Centex. References to
Construction Products include its subsidiaries unless the context states
otherwise.

Cement

Construction Products operates cement plants in or near Buda, Texas;
LaSalle, Illinois; Fernley, Nevada; and Laramie, Wyoming. The plants in Buda
and LaSalle are owned by separate partnerships in which Construction Products
has a 50% interest. The kiln start-up dates of the cement plants were as
follows: Buda, Texas, 1978 (expanded 1983); LaSalle, Illinois, 1974; Fernley,
Nevada (2 kilns), 1964 and 1969; and Laramie, Wyoming (2 kilns), 1988 and 1996.
All four of the cement plants are fuel-efficient dry process plants.

Construction Products net cement production, excluding the partners 50%
interest in the Buda and LaSalle plants, totaled approximately 2.3 million tons
in fiscal 2001 and 2.0 million tons in fiscal 2000. Total net cement sales
were 2.4 million tons in fiscal 2001 and 2.3 million tons in fiscal 2000, as
all four cement plants sold the entire product they produced. During the past
four years, Construction Products purchased cement from others to be resold.
In fiscal 2001, 6.6% of the cement sold by Construction Products was acquired
from outside sources, compared to 12.2% in fiscal 2000.

Raw Materials and Fuel Supplies

The principal raw material used in the production of portland cement is
calcium carbonate in the form of limestone. Limestone is obtained principally
through mining and extraction operations conducted at quarries owned or leased
by Construction Products or its partnerships that are located in close proximity to
the plants. Construction Products management believes that the estimated
recoverable limestone reserves owned or leased by it or its partnerships will
permit each of its plants to operate at its present production capacity for at
least 30 years or, in the case of the Fernley plant, at least 15 years.
Construction Products management expects that additional limestone reserves
for its Fernley plant will be available when needed on an economically feasible
basis.

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The cement plants use coal and coke as their primary fuel but are equipped
to burn natural gas as an alternative fuel. Electric power is a major cost
component in the manufacture of cement. Construction Products has sought to
diminish overall power costs by adopting interruptible power supply agreements
which may expose the plants to some production interruptions during periods of
power curtailment. Although power and natural gas costs have generally
increased during the last half of fiscal 2001, because of the
location of Construction Products' cement plants, such increases are
not expected to significantly negatively impact manufacturing costs in fiscal 2002.

Sales and Distribution

Demand for cement is highly cyclical and is derived from the demand for
concrete products which, in turn, is derived from demand for construction.
According to estimates of the Portland Cement Association, the three
construction sectors which are the major components of cement consumption are
public works construction, non-residential construction, and residential
construction and comprised 48%, 30%, and 22%, respectively, of U.S. cement
consumption in calendar 2000. No single customer accounted for as much as 10%
of total cement sales during fiscal 2001. The principal geographic markets for
Construction Products cement are Texas and western Louisiana (serviced by the
Buda, Texas plant); Illinois and southern Wisconsin (serviced by the LaSalle,
Illinois plant); Nevada (except Las Vegas) and northern California (serviced by
the Fernley, Nevada plant); and Wyoming, Utah, northern Colorado, western
Nebraska and eastern Nevada (serviced by the Laramie, Wyoming plant).

Distribution of cement is generally made by common carriers, customer
pickup and, to a lesser extent, by trucks owned and operated by Construction
Products. In addition, cement is transported principally by rail to storage
and distribution terminals for further distribution which expands each plants
selling area.

Competition and Other Factors

The cement business is extremely competitive. In every geographic area in
which Construction Products sells cement, one or more other domestic producers
compete. In addition, foreign companies compete in most sales areas by
importing cement into the United States. The number of principal competitors
operating in the same geographic areas as Construction Products cement plants
are: six in Buda, six in LaSalle, six in Fernley, and four in Laramie.
Construction Products competes by operating efficient cement plants,
merchandising a high quality product and providing good service and competitive
pricing.

Gypsum Wallboard

Construction Products owns and operates four gypsum wallboard
manufacturing facilities, two located in Albuquerque and nearby Bernalillo, New
Mexico, one located in Gypsum, Colorado (near Vail), and one located in Duke,
Oklahoma, acquired in November 2000.

Construction Products gypsum wallboard production totaled 1,649
million square feet (MMSF) in fiscal 2001 and 1,375 MMSF in fiscal 2000.
Total gypsum wallboard sales were 1,584 MMSF in fiscal 2001 and 1,363 MMSF in
fiscal 2000.

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Raw Materials and Fuel Supplies

Construction Products mines and extracts natural gypsum rock, the
principal raw material used in the manufacture of gypsum wallboard, from mines
and quarries owned, leased or subject to claims owned by Construction Products
and located near its plants. The New Mexico, Colorado, and Oklahoma mines and
quarries are estimated to contain approximately 50 million tons, 21 million
tons, and 15 million tons of proven and probable gypsum reserves, respectively.
Other gypsum deposits are located in the immediate area of the Oklahoma plant
and may be obtained at a reasonable cost. Based on its current production
capacity, Construction Products management estimates that the life of its
existing gypsum rock reserves is approximately 80 years in New Mexico, 35 years
in Colorado, and 15 years in Oklahoma.

Prior to November 2000, Construction Products purchased paper used in
manufacturing gypsum wallboard from third-party suppliers. As a result of the
acquisition of paperboard manufacturing operations in November 2000,
Construction Products now manufactures all of the paper needed for its gypsum
wallboard productions.

Construction Products wallboard plants use large quantities of natural
gas and electrical power. Substantially all of its natural gas requirements
are currently provided by three gas producers under gas supply agreements
expiring in January 2002 for Colorado, May 2002 for New Mexico, and November
2002 for Oklahoma. If the agreements were not renewed, Construction Products
management expects to be able to obtain its gas supplies from other suppliers
at competitive prices. Power for the Gypsum plant is supplied by the
cogeneration power facility that was acquired along with the gypsum wallboard plant
in 1997. Power and natural gas costs increased during the last half of fiscal
2001, and are expected to negatively impact manufacturing costs in fiscal 2002.

Sales and Distribution

The principal sources of demand for gypsum wallboard are residential and
non-residential construction, repair and remodeling. While the gypsum
wallboard industry remains highly cyclical, recent growth in the repair and
remodeling segment has partially mitigated the impact of fluctuations on
overall levels of new construction. Construction Products sells wallboard to
numerous building materials dealers, wallboard specialty distributors, home
center chains and other customers located throughout the United States.
Although wallboard is distributed principally in regional areas, Construction
Products and certain other producers have the ability to ship wallboard by rail
outside their usual regional distribution areas to take advantage of other
regional increases in demand. Construction Products rail distribution
capabilities permit it to reach customers in all states west of the Mississippi
River and many eastern states. During fiscal 2001, approximately 40% of
Construction Products sales volume of gypsum wallboard was transported by
rail.

Competition and Other Factors

There are ten principal manufacturers of wallboard operating a total of 81
plants. Centex estimates that the three largest producers, none of which is
Construction Products, account for approximately 65% of wallboard sales in the
United States. Competition among wallboard producers is primarily on a
regional basis, with local producers benefitting from lower transportation
costs and, to a lesser extent, on a national basis. Because of the commodity
nature of the product, competition is based principally on price and, to a
lesser extent, on product quality and customer service.

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Recycled Paperboard Operations

Construction Products recycled paperboard manufacturing operations are
conducted at a Lawton, Oklahoma mill and a Commerce City, Colorado mill. The
Commerce City mill was idled in April 2001. The Lawton mill commenced
commercial operation in March 2000 and was acquired in November 2000. It is
ultimately expected to have the capacity to produce approximately 11 billion
square feet, or 220,000 tons, of gypsum-grade recycled paperboard annually.

All of the paperboard products manufactured at the paperboard mills are
produced from 100% reclaimed paper fiber and are classified by the industry as
recycled paperboard. These recycled paperboard products include the facing
paper used in the manufacture of gypsum wallboard and recycled paperboard used
by manufacturers of consumer and industrial paperboard products. The principal
raw materials used by the recycled paperboard mills are reclaimed paper fiber,
chemicals, and water. Reclaimed paper fiber is currently purchased from
several sources, including Construction Products own paper fiber recycling
centers. The recycled paperboard products are sold primarily to gypsum
wallboard manufacturers. During fiscal 2001, approximately 45% of the recycled
paperboard manufactured and shipped by Construction Products recycled
paperboard mills was consumed by its own gypsum wallboard manufacturing
operations and approximately another 43% was shipped to two other gypsum
wallboard manufacturers.

The demand for recycled paperboard directly corresponds to the cyclical
gypsum wallboard market. Construction Products competes with approximately
eight other manufacturers of gypsum-grade paperboard, six of which have gypsum
wallboard manufacturing operations. Substantially all of these competitors
have greater financial resources. Price, quality, personal relationships, and
timeliness of deliveries are the principal methods of competition among
paperboard producers.

Concrete and Aggregates

Construction Products concrete and aggregates operations are located in
and around Austin, Texas and northern California. The 10,000-acre aggregates
deposit in northern California contains an estimated two billion tons of
reserves. Construction Products sells aggregates from this deposit in the
Sacramento, California area and in nearby counties. No single customer
accounted for as much as 10% of Construction Products concrete and aggregates
sales during fiscal 2001. Competition among concrete producers within
Construction Products northern California and Austin markets is strong.

Environmental Matters

The construction products industry, including the operations of
Construction Products, is regulated by federal, state, and local laws and
regulations pertaining to several areas including human health and safety and
environmental compliance (collectively, Environmental Laws). The
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Act of 1986, as well
as analogous laws in certain states, create joint and several liability for the
cost of cleaning up or correcting releases to the environment of designated
hazardous substances. None of Construction Products sites are listed as a
Superfund site.

Construction Products operations are also potentially affected by the
Resource Conservation and Recovery Act (RCRA), which is the primary federal
statute governing the management of solid waste and which includes stringent
regulation of solid waste that is considered hazardous waste. Such operations
generate non-hazardous solid waste, which may include cement kiln dust (CKD).
Because of a RCRA

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exemption, known as the Bevill Amendment, CKD generated in
Construction Products operations is
currently not considered a hazardous waste under RCRA, pending completion
of a study and recommendations to Congress by the U.S. Environmental Protection
Agency (U.S. EPA). Nevertheless, CKD is still considered a solid waste and
is regulated primarily under state environmental laws and regulations. The
U.S. EPA completed its review of CKD and has proposed regulations to govern the
handling and disposal of CKD, which will supersede the Bevill Amendment. The
Bevill Amendment will remain in effect until the final regulations are adopted.

In the past, Construction Products collected and stored CKD on-site at its
cement plants. Construction Products continues to store CKD at its Illinois,
Nevada, and Wyoming cement plants and at a former plant site in Corpus Christi,
Texas, which is no longer in operation. Currently, substantially all CKD
related to present operations at all cement facilities is recycled. When the
U.S. EPA removes the CKD exemption and develops particular CKD management
standards in the future, Construction Products may be required to incur
significant costs in connection with its CKD. CKD that comes in contact with
water might produce a leachate with an alkalinity high enough to be classified
as hazardous and might also leach certain hazardous trace metals therein.

Another issue of potential significance is the possible imposition of
government requirements of greenhouse gas reduction measures for cement
producers. This is potentially significant because carbon dioxide is generated
from combustion of fuels such as coal and coke in order to generate the high
temperatures necessary to manufacture cement clinker (which is then ground with
gypsum to make cement). Any imposition of raw material or production
limitations or fuel-use or carbon taxes could have a significant impact on the
cement manufacturing industry. It will not be possible to determine the impact
on Construction Products until governmental requirements are defined.

The Clean Air Act Amendments of 1990 (the Amendments) provided
comprehensive federal regulation of all sources of air pollution and
established a new federal operating permit and fee program for virtually all
manufacturing operations. The Amendments will likely result in increased
capital and operational expenses for Construction Products in the future, the
amounts of which are not presently determinable. Management has no reason to
believe, however, the increased capital and operational expenses would place
Construction Products at a competitive disadvantage.

Management believes that Construction Products current procedures and
practices in its operations, including those for handling and managing
materials, are consistent with industry standards. Nevertheless, because of
the complexity of operations and compliance with Environmental Laws, there can
be no assurance that past or future operations will not result in operational
errors, violations, remediation, or other liabilities or claims. Moreover,
Construction Products cannot predict what Environmental Laws will be enacted,
adopted or amended in the future or how they will be administered or
interpreted. Compliance with more stringent Environmental Laws, or stricter
interpretation of existing Environmental Laws, could necessitate significant
capital outlays.

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CONTRACTING AND CONSTRUCTION SERVICES

Contracting and Construction Services (Construction Group) subsidiaries
together rank as one of the largest building contractors in the country, as
well as one of the largest U.S.-owned construction groups. The Construction
Group is made up of four companies with various geographic locations and
project niches. Healthcare facility construction has represented nearly
one-fourth of the Construction Groups business mix during recent years. New
contracts for the group for fiscal 2001 totaled $1.9 billion versus $1.7
billion for fiscal 2000. The backlog of uncompleted contracts at March 31,
2001 was $2.0 billion, compared to $1.4 billion at March 31, 2000. The
Construction Groups principal subsidiaries are as follows:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Centex Construction Company, Inc. This entity has operational offices in
Dallas, Texas; Fairfax, Virginia; and recently opened new offices in
Charlotte, North Carolina and Atlanta, Georgia. This company pursues
negotiated work in its regional market areas.                                                                                                                                                                                                                                          
|
| | Centex-Rodgers, Inc. This nationwide healthcare construction specialist
is headquartered in Nashville, Tennessee, with operational offices in
Pasadena, California; Detroit, Michigan; and West Palm Beach, Florida.                                                                                                                                                                                                                                                                                      
|
| | Centex-Rooney Construction Co., Inc. This subsidiary, based in
Plantation, Florida, performs all types of work, principally within the
state of Florida, and has operational offices in Miami, Orlando, Tampa,
Tallahassee, Jacksonville, Ft. Myers, and West Palm Beach.                                                                                                                                                                                                                                 
|
| | Centex Forcum Lannom, Inc. d/b/a Centex Engineering & Construction, Inc. 
This company, which focuses on industrial client construction projects, is
located in Dyersburg, Tennessee and operates principally within the state
of Tennessee. The Company has additional marketing offices in Memphis,
Tennessee; Lexington, Kentucky; and Dallas, Texas. The Company is in the
process of changing the name under which it does business in all
jurisdictions to Centex Engineering and Construction, Inc.

As a general contractor or construction manager, the Construction Group
provides supervisory personnel for the construction of all facilities. In
addition, the Construction Group may perform varying amounts of the actual
construction work on a project, but will generally hire subcontractors to
perform the majority of the work.

Construction contracts are primarily entered into under two formats:
negotiated or competitive bid. In a negotiated format, the contractor bids a
fee (fixed or percentage) over the cost of the project and, in many instances,
agrees that the final cost will not exceed a designated amount. Such contracts
may include a provision whereby the owner will pay a part of any savings from
the guaranteed amount to the contractor. In a competitive bid format, the
Construction Group will bid a fixed amount to construct the project based on an
evaluation of detailed plans and specifications. Historically, the majority of
the Construction Groups projects have been in the higher risk competitive bid
jobs. Recent years have seen a shift to higher-margin negotiated private
projects from the competitive bid public projects. At March 31, 2001,
approximately 91% of the outstanding projects were negotiated. Construction
Groups projects include hospitals, hotels, office buildings, correctional
facilities, schools, shopping centers, airports, parking garages, sport
stadiums, military facilities, post offices, and convention and performing arts
centers.

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Competition and Other Factors

The construction industry is very competitive, and the Construction Group
competes with numerous other companies. With respect to competitive bid
projects and negotiated healthcare work, the Construction Group generally
competes throughout the United States with local, regional, and national
contractors, depending upon the nature of the project. For negotiated projects
other than healthcare, the Construction Group generally competes in the
subsidiarys primary geographical area with other local, regional, and national
contractors. The Construction Group solicits new projects by attending project
bid meetings, by meeting with builders and owners, and through existing
customers. The Construction Group competes successfully on the basis of its
reputation, financial strength, knowledge, and understanding of its clients
needs.

The Construction Groups operations are affected by federal, state and
local laws and regulations relating to worker health and safety as well as
Environmental Laws. With respect to health and safety matters, the Company
believes that the Construction Group has taken appropriate precautions to
protect employees and others from workplace hazards. Current Environmental
Laws may require the Construction Groups operating subsidiaries to work in
concert with project owners to acquire the necessary permits or other
authorizations for certain activities, including the construction of projects
located in or near wetland areas. The Construction Groups operations are also
affected by Environmental Laws regulating the use and disposal of hazardous
materials encountered during demolition operations.

The Company believes that the Construction Groups current procedures and
practices are consistent with industry standards and its compliance with the
health and safety laws and Environmental Laws does not constitute a material
burden or expense for the Company.

Construction Groups operations obtain materials and services from
numerous sources. The Company believes that its construction companies can
deal effectively with any problems they may experience in the supply of
materials and services.

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EMPLOYEES

The following table presents the breakdown of employees in each line of
business as of March 31, 2001:

|                                      |  |  |           |  | 
|------------------------------------- |  |  | --------- |  | 
|Line of
Business                      |  |  | Employees | 
|Home
Building                       
|                                     
|                                     
|                                     
|                                     
|Conventional Homes                    |  |  | 4,648     | 
|                                     
|                                     
|                                     
|                                     
|Manufactured Homes                    |  |  | 1,144     | 
|                                     
|                                     
|                                     
|                                     
|Investment Real Estate                |  |  | 35        | 
|                                     
|                                     
|                                     
|                                     
|Financial Services                    |  |  | 4,264     | 
|                                     
|                                     
|                                     
|                                     
|Construction Products                 |  |  | 1,665     | 
|                                     
|                                     
|                                     
|                                     
|Contracting and Construction Services |  |  | 1,664     | 
|                                     
|                                     
|                                     
|                                     
|Other Operations                      |  |  | 1,639     | 
|                                     
|                                     
|                                     
|                                     
|Corporate                             |  |  | 136       | 
|                                      |  |  |          
|                                      |  |  | 15,195    | 
|                                      |  |  |          

The 136 Corporate employees are employed by Centex Corporation; all others
are employees of the Companys various subsidiaries.




ITEM 2. PROPERTIES

Centex Homes owns property in Dallas, Texas. This property consists of
office and warehouse buildings situated on approximately 18 acres.

Manufactured Homes operations consist of five facilities. Two facilities
in Belen, New Mexico and Seguin, Texas, both of which have been temporarily
idled, are owned. The remaining three facilities, which are all located in
Phoenix, Arizona, are leased.

Financial Services owns a 20-acre parcel of land in Edmond, Oklahoma. The
Technologies Group occupies offices located on approximately 6 acres of the
parcel; the remaining 14 acres are being held for future development or sale.
Financial Services also owns two low-rise office buildings situated on
approximately 10 acres of land in Dallas, Texas, in which Home Equity conducts
certain operations.

Construction Products operates cement plants, quarries and related
facilities at Buda, Texas; LaSalle, Illinois; Fernley, Nevada; and Laramie,
Wyoming. Construction Products owns the Fernley and Laramie facilities, and
the Buda and LaSalle plants are each owned by separate joint ventures
or partnerships in which
Construction Products has a 50% interest. Construction Products owns its
principal aggregate plants and quarries, which are located near Austin, Texas
and Marysville, California. In addition, Construction Products owns gypsum
wallboard plants in Albuquerque and nearby Bernalillo, New Mexico; Gypsum,
Colorado; and Duke, Oklahoma. Construction Products owns two paperboard mills
in Commerce City, Colorado and Lawton, Oklahoma.

Construction Group owns land in Dallas, Texas, on which an office building
is located.

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Wholly-owned subsidiaries of the Company own property in Round Rock,
Texas; League City,
Texas; and Amarillo, Texas. All properties located in Texas are
assisted-living care facilities. Other property owned includes an office
building and land located in Ocala, Florida.

Except for encumbrances on Cavcos Belen, New Mexico facility, which is
not material to the Company, none of the Companys facilities described above
are pledged as security on its debts.

See Item 1.
Business on pages 6-24 of this Report for additional
information relating to the Companys properties.




ITEM 3. LEGAL PROCEEDINGS

In the normal course of its business, the Company and/or its subsidiaries
are named as defendants in certain suits filed in various state and federal
courts. Management believes that none of the litigation matters in which the
Company or any subsidiary is involved would have a material adverse effect on
the consolidated financial condition or operations of the Company.




ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

EXECUTIVE OFFICERS OF CENTEX (See Item 10 of Part III of this Report)

The following is an alphabetical listing of the Companys executive
officers, as such term is defined under the rules and regulations of the
Securities and Exchange Commission. All of these executive officers were
elected by the Board of Directors of the Company at its Annual Meeting on July
27, 2000, to serve until the next Annual Meeting of Directors or until their
respective successors are duly elected and qualified. There is no family
relationship between any of these officers.

25



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##### Table of Contents



|                   |  |     |    |  |                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                            
|------------------ |  | --- | -- |  | -------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name               |  | Age |    |  | Positions with Centex or Business Experience
|                   |  |     |    |  |                                             
|Leldon E. Echols   |  |     | 45 |  |                                              | Executive Vice President and Chief Financial
Officer of Centex Corporation since June 2000;
Partner and employee at Arthur Andersen LLP
from December 1978 to May 2000                                                                                                                                                                                                                                                                     
|                  
|                  
|                  
|                  
|Timothy R. Eller   |  |     | 52 |  |                                              | Executive Vice President of Centex Corporation
since August 1998; Chairman of the Board and
Chief Executive Officer of Centex Real Estate
Corporation (Chairman of the Board since April
1998; Chief Executive Officer of Centex Real
Estate Corporation since July 1991; President
and Chief Operating Officer of Centex Real
Estate Corporation from January 1990 to March
1998; Executive Vice President from July 1985
to January 1990)
|                  
|                  
|                  
|                  
|Laurence E. Hirsch |  |     | 55 |  |                                              | Chairman of the Board and Chief Executive
Officer of Centex Corporation (Chairman of the
Board since July 1991; Chief Executive Officer
since July 1988; President from March 1985
until July 1991)                                                                                                                                                                                                                                        
|                  
|                  
|                  
|                  
|David W. Quinn     |  |     | 59 |  |                                              | Vice Chairman of the Board of Centex
Corporation (Vice Chairman of the Board since
May 1996; Chief Financial Officer from
February 1987 to May 2000; Executive Vice
President from February 1987 until May 1996)                                                                                                                                                                                                                           
|                  
|                  
|                  
|                  
|Raymond G. Smerge  |  |     | 57 |  |                                              | Executive Vice President, Chief Legal Officer,
General Counsel and Secretary of Centex
Corporation (Executive Vice President since
July 1997; Chief Legal Officer since September
1985; General Counsel and Secretary since
April 1993; Vice President from September 1985
to July 1997)                                                                                                                                                   

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##### Table of Contents






PART II




ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Stock Prices and Dividends

|        |  |                           |       |  |                           |   |       |           |       |      |      |  |   |       |  |  |           |       |  |  |      |  |  | 
|------- |  | ------------------------- | ----- |  | ------------------------- | - | ----- | --------- | ----- | ---- | ---- |  | - | ----- |  |  | --------- | ----- |  |  | ---- |  |  | 
|        |  | Year Ended March 31, 2001 |       |  | Year Ended March 31, 2000 |  
|        |  |                           |       |  |                           |  
|        |  | Price                     |       |  |                           |   |       |           | Price |     
|        |  |                           |       |  |                           |   |       |           |       |     
|        |  | High                      |       |  | Low                       |   |       | Dividends |       |      | High |  |   | Low   |  |  | Dividends |      
|        |  |                           |       |  |                           |   |       |           |       |      |      |  |   |       |  |  |           |      
|Quarter
|       
|       
|       
|       
|First   |  | $                         | 25.81 |  |                           | $ | 20.63 |           |       | $.04 |      |  | $ | 42.88 |  |  | $         | 31.63 |  |  | $.04 | 
|       
|       
|       
|       
|Second  |  | $                         | 33.00 |  |                           | $ | 22.38 |           |       | $.04 |      |  | $ | 39.63 |  |  | $         | 26.38 |  |  | $.04 | 
|       
|       
|       
|       
|Third   |  | $                         | 40.00 |  |                           | $ | 30.63 |           |       | $.04 |      |  | $ | 30.81 |  |  | $         | 22.38 |  |  | $.04 | 
|       
|       
|       
|       
|Fourth  |  | $                         | 46.20 |  |                           | $ | 35.38 |           |       | $.04 |      |  | $ | 24.56 |  |  | $         | 17.50 |  |  | $.04 | 

The common stock of Centex Corporation is traded on the New York Stock Exchange
(ticker symbol CTX) and the London Stock Exchange. The approximate number of
record holders of the common stock of Centex Corporation at May 31, 2001 was
3,484.

Prior year stock prices have been restated using decimals instead of fractions
due to the move to decimals by the New York Stock Exchange.

On November 30, 1987, Centex Corporation distributed as a dividend to its
stockholders securities relating to Centex Development Company, L.P. (see Note
G on pages 66-68 of this Report). Since this distribution, such securities
have traded in tandem with, and as a part of, the common stock of Centex
Corporation.

Amounts represent cash dividends per share paid by Centex Corporation on the
common stock of Centex Corporation. 3333 Holding Corporation has paid no
dividends on its common stock since its incorporation.

27



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##### Table of Contents






ITEM 6. SELECTED FINANCIAL DATA

Summary of Selected Financial Data (Unaudited)(Dollars in thousands, except per share data)

|                                                                    |                                                                     |   |                               |       |   |      |           |       |      |   |           |       |   |   |           |       |   |   |           |       |  
|------------------------------------------------------------------- | ------------------------------------------------------------------- | - | ----------------------------- | ----- | - | ---- | --------- | ----- | ---- | - | --------- | ----- | - | - | --------- | ----- | - | - | --------- | ----- | -
|                                                                    |                                                                     |   | For the Years Ended March 31, |      
|                                                                    |                                                                     |   |                               |      
|                                                                    |                                                                     |   | 2001                          |       |   | 2000 |           |       | 1999 |   |           | 1998  |   |   | 1997      |      
|                                                                    |                                                                     |   |                               |       |   |      |           |       |      |   |           |       |   |   |           |      
|Revenues
(A)                                                        |                                                                     | $ | 6,710,735                     |       |   | $    | 6,008,136 |       |      | $ | 5,200,666 |       |   | $ | 4,022,392 |       |   | $ | 3,823,755 |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Net Earnings                                                        |                                                                     | $ | 281,977                       |       |   | $    | 257,132   |       |      | $ | 231,962   |       |   | $ | 144,806   |       |   | $ | 106,563   |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Total Assets                                                        |                                                                     | $ | 6,649,043                     |       |   | $    | 3,987,903 |       |      | $ | 4,267,909 |       |   | $ | 3,333,382 |       |   | $ | 2,579,992 |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Total Long-term Debt, Consolidated                                  |                                                                     | $ | 3,040,861                     |       |   | $    | 751,160   |       |      | $ | 284,299   |       |   | $ | 237,715   |       |   | $ | 236,769   |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Total Debt, Consolidated                                            |                                                                     | $ | 3,519,891                     |       |   | $    | 1,313,395 |       |      | $ | 1,910,899 |       |   | $ | 1,390,588 |       |   | $ | 864,287   |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Total Debt (with Financial Services
reflected on the equity method) |                                                                     | $ | 1,464,993                     |       |   | $    | 898,068   |       |      | $ | 587,955   |       |   | $ | 311,538   |       |   | $ | 283,769   |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Deferred Income Tax Asset                                           |                                                                     | $ | 40,172                        |       |   | $    | 49,907    |       |      | $ | 49,107    |       |   | $ | 147,607   |       |   | $ | 197,413   |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Debt as a Percentage of Capitalization                             
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Total Debt, Consolidated                                            |   |                               | 65.5  | % |      |           | 45.1  | %    |   |           | 57.6  | % |   |           | 53.1  | % |   |           | 44.5  | %
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Total Debt (with Financial Services
reflected on the equity method) |   |                               | 44.1  | % |      |           | 36.0  | %    |   |           | 29.5  | % |   |           | 20.3  | % |   |           | 20.9  | %
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Stockholders Equity                                                |                                                                     | $ | 1,714,064                     |       |   | $    | 1,419,349 |       |      | $ | 1,197,639 |       |   | $ | 991,172   |       |   | $ | 835,777   |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Net Earnings as a Percentage of
Beginning Stockholders Equity      |                                                                     |   | 19.9                          | %     |   |      | 21.5      | %     |      |   | 23.4      | %     |   |   | 17.3      | %     |   |   | 14.7      | %    
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Per Common Share                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Earnings Per Share   Basic                                         |   | $                             | 4.77  |   |      | $         | 4.34  |      |   | $         | 3.90  |   |   | $         | 2.45  |   |   | $         | 1.86  |  
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Earnings Per Share   Diluted                                       |   | $                             | 4.65  |   |      | $         | 4.22  |      |   | $         | 3.75  |   |   | $         | 2.36  |   |   | $         | 1.80  |  
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Cash Dividends                                                      |   | $                             | .16   |   |      | $         | .16   |      |   | $         | .16   |   |   | $         | .135  |   |   | $         | .10   |  
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Book Value Based on Shares
Outstanding at Year End                  |   | $                             | 28.60 |   |      | $         | 24.14 |      |   | $         | 20.17 |   |   | $         | 16.65 |   |   | $         | 14.40 |  
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Stock Prices                                                       
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | High                                                                |   | $                             | 46.20 |   |      | $         | 42.88 |      |   | $         | 45.75 |   |   | $         | 40.75 |   |   | $         | 20.88 |  
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Low                                                                 |   | $                             | 20.63 |   |      | $         | 17.50 |      |   | $         | 26.00 |   |   | $         | 16.75 |   |   | $         | 12.94 |  

On November 30, 1987, Centex Corporation distributed as a dividend to its
stockholders securities relating to Holding and Development (See Note G on
pages 66-68 of this Report). Since this distribution, such securities have
traded in tandem with, and as a part of, the common stock of Centex.



|(A) |  | Centex Construction Products, Inc. adopted the provisions of Emerging
Issues Task Force Issue No. 00-10, Accounting for Shipping and Handling
Fees and Costs, during the quarter ended March 31, 2001. As a result of
this adoption, net revenues have been restated to include freight and
delivery costs billed to customers. Previously, such billings were offset
against corresponding expenses in cost of sales.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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##### Table of Contents






ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FISCAL YEAR 2001 COMPARED TO FISCAL YEAR 2000

Centex reported consolidated revenues of $6.7 billion for fiscal 2001, 12%
above the $6.0 billion reported for fiscal 2000. Earnings before income taxes
were $436.3 million, 5% more than the $416.9 million of earnings before income
taxes reported last year. Net earnings for fiscal 2001 reached $282.0 million,
a historical high and a 10% improvement over net earnings of $257.1 million in
fiscal 2000. Earnings per share for fiscal year 2001 were $4.77 and $4.65 for
Basic and Diluted, respectively, compared to $4.34 and $4.22 for the prior
year.

HOME BUILDING

Conventional Homes

The following summarizes Conventional Homes results for the two-year
period ended March 31, 2001 (dollars in millions, except per unit data):

|                                           |          |   |                               |      |   |      |       |    |  |   |          |      |   |  |       |    | 
|------------------------------------------ | -------- | - | ----------------------------- | ---- | - | ---- | ----- | -- |  | - | -------- | ---- | - |  | ----- | -- | 
|                                           |          |   | For the Years Ended March 31, |     
|                                           |          |   |                               |     
|                                           |          |   | 2001                          |      |   | 2000 |      
|                                           |          |   |                               |      |   |      |      
|Revenues                                   |          | $ | 4,356.2                       |      |   |      | 100.0 | %  |  | $ | 3,686.8  |      |   |  | 100.0 | % 
|                                          
|                                          
|                                          
|                                          
|Cost of Sales                              |          |   | (3,304.9                      | )    |   |      | (75.9 | )% |  |   | (2,852.3 | )    |   |  | (77.3 | )%
|                                          
|                                          
|                                          
|                                          
|Selling, General & Administrative Expenses |          |   | (625.9                        | )    |   |      | (14.3 | )% |  |   | (511.3   | )    |   |  | (13.9 | )%
|                                           |          |   |                               |      |   |      |       |    |  |   |          |     
|Operating Earnings                         |          | $ | 425.4                         |      |   |      | 9.8   | %  |  | $ | 323.2    |      |   |  | 8.8   | % 
|                                           |          |   |                               |      |   |      |       |    |  |   |          |     
|Units Closed                               |          |   | 20,659                        |      |   |      |       |    |  |   | 18,904   |     
|                                          
|                                          
|                                          
|                                          
|Unit Sales Price                           |          | $ | 205,913                       |      |   |      |       |    |  | $ | 191,568  |     
|                                          
|                                          
|                                          
|                                          
|                                           | % Change |   |                               | 7.5  | % |      |       |    |  |   |          | 3.2  | %
|                                          
|                                          
|                                          
|                                          
|Operating Earnings per Unit                |          | $ | 20,594                        |      |   |      |       |    |  | $ | 17,098   |     
|                                          
|                                          
|                                          
|                                          
|                                           | % Change |   |                               | 20.4 | % |      |       |    |  |   |          | 4.4  | %
|                                          
|                                          
|                                          
|                                          
|Backlog Units                              |          |   | 9,265                         |      |   |      |       |    |  |   | 7,579    |     
|                                          
|                                          
|                                          
|                                          
|                                           | % Change |   |                               | 22.2 | % |      |       |    |  |   |          | 12.0 | %

Operating earnings for fiscal 2001 increased as a percentage of revenues
and on a per-unit basis in comparison to fiscal 2000 as a result of the
divisions continued focus on improving operating margins. Moderate interest
rates and softness in the prices of several key building materials, including
lumber, cement, and gypsum wallboard are some of the major factors that
influenced the improved performance of the Conventional Homes operation.
Additional factors that contributed to an improved operating margin include
purchasing efficiencies, higher organizational and operating productivity,
higher realized sales prices for Centexs homes, and more efficient house
designs.

The increase in average unit sales price of approximately $14,300 to
$205,913 was due primarily to a higher sales mix in California, Colorado, and
South Carolina.

Manufactured Homes

Manufactured Homes currently operates three manufacturing plants in the
Phoenix, Arizona area, and also operates 24 retail locations. As a
consequence of an oversupply of homes in the total industry distribution
pipeline and the reduced availability and higher cost of financing for
purchasers of manufactured

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##### Table of Contents



homes, Manufactured Homes construction sales and
retail sales for the three and twelve months ended
March 31, 2001 declined from the same periods last year. In response,
management idled its New Mexico and Texas plants and slowed production in its
other plants until the return of more favorable market conditions.

The following summarizes Manufactured Homes results for the two-year
period ended March 31, 2001 (dollars in millions):

|                                           |  |                               |       |   |      |  |       |    |  |   |       |   |  |  |       |   
|------------------------------------------ |  | ----------------------------- | ----- | - | ---- |  | ----- | -- |  | - | ----- | - |  |  | ----- | --
|                                           |  | For the Years Ended March 31, |      
|                                           |  |                               |      
|                                           |  | 2001                          |       |   | 2000 | 
|                                           |  |                               |       |   |      | 
|Construction Revenues                      |  | $                             | 79.3  |   |      |  | 100.0 | %  |  | $ | 121.0 |   |  |  | 100.0 | % 
|                                          
|                                          
|                                          
|                                          
|Cost of Sales                              |  |                               | (72.5 | ) |      |  | (91.4 | )% |  |   | (94.1 | ) |  |  | (77.7 | )%
|                                          
|                                          
|                                          
|                                          
|Selling, General & Administrative Expenses |  |                               | (12.7 | ) |      |  | (16.0 | )% |  |   | (13.9 | ) |  |  | (11.5 | )%
|                                           |  |                               |       |   |      |  |       |    |  |   |       |  
|                                           |  |                               | (5.9  | ) |      |  | (7.4  | )% |  |   | 13.0  |   |  |  | 10.8  | % 
|                                          
|                                          
|                                          
|                                          
|                                           |  |                               |       |   |      |  |       |    |  |   |       |  
|                                          
|                                          
|                                          
|                                          
|Retail Sales Revenues                      |  |                               | 43.5  |   |      |  | 100.0 | %  |  |   | 62.5  |   |  |  | 100.0 | % 
|                                          
|                                          
|                                          
|                                          
|Cost of Sales                              |  |                               | (37.1 | ) |      |  | (85.2 | )% |  |   | (49.6 | ) |  |  | (79.4 | )%
|                                          
|                                          
|                                          
|                                          
|Selling, General & Administrative Expenses |  |                               | (12.4 | ) |      |  | (28.6 | )% |  |   | (14.2 | ) |  |  | (22.6 | )%
|                                           |  |                               |       |   |      |  |       |    |  |   |       |  
|                                           |  |                               | (6.0  | ) |      |  | (13.8 | )% |  |   | (1.3  | ) |  |  | (2.0  | )%
|                                          
|                                          
|                                          
|                                          
|                                           |  |                               |       |   |      |  |       |    |  |   |       |  
|                                          
|                                          
|                                          
|                                          
|Construction and Retail (Loss) Earnings    |  |                               | (11.9 | ) |      |  |       |    |  |   | 11.7  |  
|                                          
|                                          
|                                          
|                                          
|Subdivision Development Activities         |  |                               | (1.3  | ) |      |  |       |    |  |   |      |  
|                                          
|                                          
|                                          
|                                          
|Goodwill Amortization                      |  |                               | (12.9 | ) |      |  |       |    |  |   | (3.4  | )
|                                          
|                                          
|                                          
|                                          
|Minority Interest                          |  |                               |      |   |      |  |       |    |  |   | (1.0  | )
|                                           |  |                               |       |   |      |  |       |    |  |  
|Group Operating (Loss) Earnings            |  | $                             | (26.1 | ) |      |  |       |    |  | $ | 7.3   |  
|                                           |  |                               |       |   |      |  |       |    |  |  
|Units Sold                                 |  |                               | 4,242 |   |      |  |       |    |  |   | 5,950 |  

Total revenues for Manufactured Homes decreased 31% or $57.1 million in
fiscal 2001 versus fiscal 2000. Construction revenues decreased 34% or $41.6
million primarily due to the market conditions noted above. For fiscal 2001
and 2000, intercompany sales to company-owned retail sales centers represented
28% of gross construction revenues. Retail sales revenues decreased 30% or $19
million primarily due to the market conditions noted above.

Due to the continued industry downturn resulting from the factors noted
above, Manufactured Homes recorded noncash charges of $19.2 million in 2001.
These charges primarily comprised $9.5 million for the impairment of goodwill
related to its retail operations and $6.5 million related to the idling of its
New Mexico and Texas manufacturing facilities. The charge for the impairment
of goodwill was the result of continued losses in the retail division which are
comparable to the losses recognized throughout this industry.

30



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##### Table of Contents



INVESTMENT REAL ESTATE

The following summarizes Investment Real Estates results for the two-year
period ended March 31, 2001 (dollars in millions):

|                   |  |                               |      |  |      |   |      | 
|------------------ |  | ----------------------------- | ---- |  | ---- | - | ---- | 
|                   |  | For the Years Ended March 31, |     
|                   |  |                               |     
|                   |  | 2001                          |      |  | 2000 |  
|                   |  |                               |      |  |      |  
|Revenues           |  | $                             | 33.0 |  |      | $ | 30.9 | 
|                   |  |                               |      |  |      |  
|Operating Earnings |  | $                             | 50.9 |  |      | $ | 30.1 | 
|                   |  |                               |      |  |      |  

Fiscal 2001 operating earnings from Investment Real Estate totaled $50.9
million compared to $30.1 million in the prior year period. Property sales
related to Investment Real Estates nominally valued assets (see Note (H) on
page 68 of this Report) contributed operating margins of $13.6 million in
fiscal 2001 and $19.6 million in fiscal 2000. As of March 31, 2001, Investment
Real Estate has approximately $24 million of nominally-valued assets. The
timing of land sales is uncertain and can vary significantly from period to
period.

During fiscal 2001, the Company disposed
of virtually all of the remaining Vista portfolio. As a result, negative goodwill
was fully amortized. For fiscal 2001 and 2000, the
Company recorded total negative goodwill amortization of $50.8 million and $16
million, respectively.

A significant portion of Investment Real Estates revenues and operating
earnings is derived from its investment in the Partnership. As noted in Note
(G) on pages 66-68 of this Report, the investment in the Partnership is
accounted for on the equity method of accounting because Investment Real Estate
does not control the Partnership.

FINANCIAL SERVICES

The Financial Services segment consists primarily of home financing, home
equity and sub-prime lending and the sale of title and other insurance
coverages. The following summarizes Financial Services results for the
two-year period ended March 31, 2001 (dollars in millions):

|                           |                                                    |                        |          |                               |        |   |         |        |        | 
|-------------------------- | -------------------------------------------------- | ---------------------- | -------- | ----------------------------- | ------ | - | ------- | ------ | ------ | 
|                           |                                                    |                        |          | For the Years Ended March 31, |       
|                           |                                                    |                        |          |                               |       
|                           |                                                    |                        |          | 2001                          |        |   | 2000    |       
|                           |                                                    |                        |          |                               |        |   |         |       
|Revenues                   |                                                    | $                      | 463.6    |                               |        | $ | 430.6   |       
|                           |                                                    |                        |          |                               |        |  
|Operating Earnings         |                                                    | $                      | 19.7     |                               |        | $ | 32.5    |       
|                           |                                                    |                        |          |                               |        |  
|Origination Volume         |                                                    | $                      | 10,598.5 |                               |        | $ | 9,459.7 |       
|                           |                                                    |                        |          |                               |        |  
|Number of Loans Originated
|                          
|                          
|                          
|                          
|                           |                                                    | CTX Mortgage Company 
|                          
|                          
|                          
|                          
|                           |                                                    | Builder Loans          |          |                               | 12,506 |   |         |        | 10,958 | 
|                          
|                          
|                          
|                          
|                           |                                                    | Retail Loans           |          |                               | 48,244 |   |         |        | 48,301 | 
|                           |                                                    |                        |          |                               |        |  
|                           |                                                    |                        | 60,750   |                               |        |   | 59,259  |       
|                          
|                          
|                          
|                          
|                           | Centex Home Equity Corporation                     |                        |          | 26,418                        |        |   |         | 20,568 |       
|                          
|                          
|                          
|                          
|                           | Centex Finance Company (closed during fiscal 2000) |                        |          |                              |        |   |         | 681    |       
|                           |                                                    |                        |          |                               |        |  
|                           |                                                    |                        | 87,168   |                               |        |   | 80,508  |       
|                           |                                                    |                        |          |                               |        |  

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Financial Services revenues for fiscal 2001 increased $33.0 million from
the prior year. Gains on sales of mortgage loans receivable, a component of
Financial Services revenues, decreased to $180.8 million,
or 28%, for fiscal 2001 from $249.6 million for the prior year. This
decline is primarily due to the change in the structure of securitizations
completed by Home Equity.

CTX Mortgages operating earnings totaled $34.0 million for fiscal 2001,
slightly higher than the $33.9 million reported for fiscal 2000. Operating
earnings were unchanged primarily as a result of increased mortgage
originations in the fourth quarter, which offset lower origination volume
earlier in the year. CTX Mortgage generally will experience increased mortgage
origination volume with decreased prevailing mortgage rates. Mortgage
originations for fiscal 2001 totaled 60,750 compared to 59,259 originations
last fiscal year. The per-loan profit for fiscal 2001 was $560, slightly lower
than $573 for last fiscal year. CTX Mortgages total mortgage applications for
fiscal 2001 increased 20% to 70,642 from 59,094 applications for last year.

Until the third quarter of fiscal 2000, substantially all of the mortgage
loans generated by CTX Mortgage were sold forward upon closing and subsequently
delivered to third-party purchasers within approximately 60 days thereafter.
In mid-March 2000, CTX Mortgage began to sell the majority of its mortgage
loans to HSF-I. In February 2001, Home Equity began financing its inventory of
mortgage loans through Harwood Street Funding II, LLC (HSF-II) under a
revolving sales agreement. HSF-II, wholly-owned special purpose limited
liability company, finances mortgages originated or acquired by Home Equity and
then sells them into the secondary market or into securitization structures.
These arrangements are discussed in more detail in the Financial Condition and
Liquidity section below.

In the normal course of its activities, CTX Mortgage carries inventories
of loans pending sale and earns a positive spread between the interest income
earned on those loans and its cost of financing those loans. CTX Mortgages
interest income decreased 65% in fiscal 2001 to $18.9 million from $54.7
million for last fiscal year. CTX Mortgages interest expense for fiscal 2001
was $18.1 million, a 58% decrease from $43.5 million for last year. The
decrease in CTX Mortgages net interest income was primarily due to the
reduction in its inventory of loans because of the sales arrangement with
HSF-I.

Home Equity reported an operating loss of $14.3 million for fiscal 2001,
compared to operating earnings of $2.7 million last fiscal year. As discussed
below, this decline primarily resulted from accounting for the $1.6 billion in
securitizations in fiscal 2001 as borrowings rather than as sales.

Home Equitys mortgage originations for fiscal 2001 were 26,418, a 28%
increase over 20,568 originations for last year. Loan volume for fiscal 2001
was $1.72 billion, a 30% improvement over last fiscal years volume of $1.32
billion. Loan volume for fiscal 2001 was favorably impacted by the opening of
new operating locations during the later quarters of fiscal 2000, the addition
of the correspondent channel, and increased efficiency and overall activity.
Home Equitys mortgage applications totaled 148,702 for fiscal 2001, an
increase of 17% over the 127,450 applications for last year.

Substantially all of the mortgage loans produced by Home Equity are
securitized, generally on a quarterly basis. During fiscal 2001, Home Equity
completed securitizations totaling $1.6 billion, compared to $1.3 billion for
the prior year. Home Equity retains the servicing rights associated with these
securitized loans and is the long-term servicer of these loans. For fiscal
2001, servicing fee revenue was $25.9 million, an increase of $11.4 million, or
79%, over last fiscal years service fee revenue of $14.5 million. At March
31, 2001, Home Equitys servicing portfolio was $3.3 billion.

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Home Equitys securitizations entered into prior to March 31, 2000 were
structured in a manner that caused them to be accounted for as sales. The
resulting gains on such sales were reported as revenues during the month in
which the securitizations closed. Home Equity has changed the structure for
securitizations
occurring subsequent to March 31, 2000, such that securitizations after
that date are being accounted for as borrowings. Although the change in
structure of the securitizations resulting in the transaction being accounted
for as borrowings will have no effect on the profit recognized over the life of
the mortgages, the change does affect the timing of profit recognition. The
impact was to reduce Home Equitys pretax earnings by $45.6 million for fiscal
2001, from the amount it would have reported if the securitizations had been
accounted for as sales. Home Equity intends to continue to utilize transaction
structures which require that its future loan originations be reflected as
loans receivable on the Companys balance sheets and the interest income and
interest expense associated with this loan portfolio be reflected on the
Companys income statement. Consequently, net interest income, rather than
gain on sale of loans, as in past years, will be Home Equitys primary source
of operating income. Primarily as a result of this change, Home Equitys
interest income increased 266% in fiscal 2001 to $104.9 million from $28.7
million for last year, and interest expense for fiscal 2001 was $74.5 million,
a 312% increase from $18.1 million for last year. Therefore, Home Equitys net
interest income increased 187% in fiscal 2001 to $30.4 million from $10.6
million for last year.

The Financial Services segment also has other sources of income that
include, among other things, loan origination fees, servicing fee income, title
policy fees and insurance commissions, mortgage loan broker fees, and fees for
mortgage loan quality control and processing services.

CONSTRUCTION PRODUCTS

The following summarizes Construction Products results for the two-year
period ended March 31, 2001 (dollars in millions):

|                                           |  |                               |        |   |      |   |        |  
|------------------------------------------ |  | ----------------------------- | ------ | - | ---- | - | ------ | -
|                                           |  | For the Years Ended March 31, |       
|                                           |  |                               |       
|                                           |  | 2001                          |        |   | 2000 |  
|                                           |  |                               |        |   |      |  
|Revenues                                   |  | $                             | 441.1  |   |      | $ | 470.5  |  
|                                          
|                                          
|                                          
|                                          
|Interest Income                            |  |                               | 6.7    |   |      |   | 3.7    |  
|                                          
|                                          
|                                          
|                                          
|Cost of Sales and Expenses                 |  |                               | (341.8 | ) |      |   | (299.2 | )
|                                          
|                                          
|                                          
|                                          
|Selling, General & Administrative Expenses |  |                               | (4.7   | ) |      |   | (4.7   | )
|                                          
|                                          
|                                          
|                                          
|Goodwill Amortization                      |  |                               | (1.9   | ) |      |   | (1.6   | )
|                                           |  |                               |        |   |      |  
|Operating Earnings                         |  |                               | 99.4   |   |      |   | 168.7  |  
|                                          
|                                          
|                                          
|                                          
|Minority Interest                          |  |                               | (32.4  | ) |      |   | (63.8  | )
|                                           |  |                               |        |   |      |  
|Net Operating Earnings to Centex           |  | $                             | 67.0   |   |      | $ | 104.9  |  
|                                           |  |                               |        |   |      |  

Construction Products revenues were 6% lower than the same period last
year. For the current year, Construction Products operating earnings, net of
minority interest, represented a 36% decrease from results for the same period
a year ago. Operating earnings declined as a result of a 75% decrease in
gypsum wallboard earnings. Sales volume improved for every product; however,
pricing for gypsum wallboard fell 41% compared to the prior year. During
fiscal 2001, pricing continued to decline primarily as a result of excess
supply. If these market conditions persist, management expects it would
negatively impact future results.

During November 2000, Construction Products purchased selected strategic
assets summarized below, and assumed certain liabilities. The purchase price
was approximately $442 million. Funding came from cash on hand and borrowings
under Construction Products new $325 million senior credit facility.

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The
acquisition has been accounted for as a purchase, and accordingly, the purchase
price was allocated to the underlying assets acquired and liabilities assumed
based on their fair market values at the date of the acquisition. The results
of operations of the asset purchase since November 10, 2000 are included in
Construction Products financial information.

The principal assets acquired were: a gypsum wallboard plant located in
Duke, Oklahoma with a production capacity of 1.1 billion square feet of
wallboard; a short line railroad and railcars linking the Duke plant to
adjacent railroads; a recently completed 220,000 ton-per-year lightweight
recycled paper mill in Lawton, Oklahoma; a 50,000 ton-per-year Commerce City
(Denver), Colorado recycled paper mill; and three recycled paper fiber
collection sites. The Commerce City, Colorado paperboard mill was idled on
April 23, 2001. The Company believes the idled facility was recorded at its
net realizable value at the purchase date. At March 31, 2001, the value of the
idled facility was $5.0 million. The gypsum wallboard operations are being
operated by Construction Products American Gypsum Company located in
Albuquerque, New Mexico. The paper operations are headquartered in Lawton,
Oklahoma and focus primarily on the gypsum wallboard paper business.

CONTRACTING AND CONSTRUCTION SERVICES

The following summarizes Contracting and Construction Services results
for the two-year period ended March 31, 2001 (dollars in millions):

|                                 |  |                               |         |  |      |   |         | 
|-------------------------------- |  | ----------------------------- | ------- |  | ---- | - | ------- | 
|                                 |  | For the Years Ended March 31, |        
|                                 |  |                               |        
|                                 |  | 2001                          |         |  | 2000 |  
|                                 |  |                               |         |  |      |  
|Revenues                         |  | $                             | 1,290.4 |  |      | $ | 1,205.8 | 
|                                 |  |                               |         |  |      |  
|Operating Earnings               |  | $                             | 30.9    |  |      | $ | 23.5    | 
|                                 |  |                               |         |  |      |  
|New Contracts Executed           |  | $                             | 1,930.1 |  |      | $ | 1,650.9 | 
|                                 |  |                               |         |  |      |  
|Backlog of Uncompleted Contracts |  | $                             | 2,021.7 |  |      | $ | 1,382.0 | 
|                                 |  |                               |         |  |      |  

Contracting and Construction Services revenues for fiscal 2001 were 7%
higher than last years revenues. Operating earnings for the group improved in
fiscal 2001 as a result of a continuing shift in recent years to higher-margin
private negotiated projects from lower-margin public bid work.

The Contracting and Construction Services segment provided a positive
average annual net cash flow in excess of Centexs investment in the segment of
$97.8 million in fiscal 2001 and $102.2 million in fiscal 2000.

FISCAL YEAR 2000 COMPARED TO FISCAL YEAR 1999

Centex reported consolidated revenues of $6.0 billion for fiscal year
ended March 31, 2000, 16% above $5.2 billion for fiscal year ended March 31,
1999. Earnings before income taxes were $416.9 million for fiscal 2000, 12%
more than $373.3 million for fiscal 1999. Net earnings for fiscal 2000 reached
$257.1 million, a historical high and an 11% improvement over net earnings of
$232.0 million in fiscal 1999. Earnings per share for fiscal year 2000 were
$4.34 and $4.22 for Basic and Diluted, respectively, compared to $3.90 and
$3.75 for the prior year.

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##### Table of Contents



HOME BUILDING

Conventional Homes

The following summarizes Conventional Homes results for the two-year
period ended March 31, 2000 (dollars in millions, except per unit data):

|                                           |          |   |                               |      |   |      |       |    |  |   |          |      |   |  |       |    | 
|------------------------------------------ | -------- | - | ----------------------------- | ---- | - | ---- | ----- | -- |  | - | -------- | ---- | - |  | ----- | -- | 
|                                           |          |   | For the Years Ended March 31, |     
|                                           |          |   |                               |     
|                                           |          |   | 2000                          |      |   | 1999 |      
|                                           |          |   |                               |      |   |      |      
|Revenues                                   |          | $ | 3,686.8                       |      |   |      | 100.0 | %  |  | $ | 2,819.4  |      |   |  | 100.0 | % 
|                                          
|                                          
|                                          
|                                          
|Cost of Sales                              |          |   | (2,852.3                      | )    |   |      | (77.3 | )% |  |   | (2,194.7 | )    |   |  | (77.8 | )%
|                                          
|                                          
|                                          
|                                          
|Selling, General &
Administrative Expenses |          |   | (511.3                        | )    |   |      | (13.9 | )% |  |   | (382.5   | )    |   |  | (13.6 | )%
|                                           |          |   |                               |      |   |      |       |    |  |   |          |     
|Operating Earnings                         |          | $ | 323.2                         |      |   |      | 8.8   | %  |  | $ | 242.2    |      |   |  | 8.6   | % 
|                                           |          |   |                               |      |   |      |       |    |  |   |          |     
|Units Closed                               |          |   | 18,904                        |      |   |      |       |    |  |   | 14,792   |     
|                                          
|                                          
|                                          
|                                          
|Unit Sales Price                           |          | $ | 191,568                       |      |   |      |       |    |  | $ | 185,668  |     
|                                          
|                                          
|                                          
|                                          
|                                           | % Change |   |                               | 3.2  | % |      |       |    |  |   |          | 1.3  | %
|                                          
|                                          
|                                          
|                                          
|Operating Earnings per Unit                |          | $ | 17,098                        |      |   |      |       |    |  | $ | 16,375   |     
|                                          
|                                          
|                                          
|                                          
|                                           | % Change |   |                               | 4.4  | % |      |       |    |  |   |          | 19.2 | %
|                                          
|                                          
|                                          
|                                          
|Backlog Units                              |          |   | 7,579                         |      |   |      |       |    |  |   | 6,792    |     
|                                          
|                                          
|                                          
|                                          
|                                           | % Change |   |                               | 12.0 | % |      |       |    |  |   |          | 38.2 | %

Operating earnings for fiscal 2000 were higher as a percentage of revenues
and on a per unit basis in comparison to fiscal 1999 as a result of the
divisions continued focus on improving operating margins. Moderate interest
rates during most of the year, a strong economy and a reduction in direct
construction costs as a percent of revenue were some of the major factors that
impacted the operating results of the Conventional Homes operation. Margin
improvement initiatives included, among others, engineering the homes to reduce
the material and labor cost components, designing the product around consumer
preferences and the adoption of special purchasing and land development
programs.

The increase in sales price of approximately $5,900 was primarily due to
increased sales in California, Colorado, and South Carolina and to the
acquisition of Calton Homes, Inc., which markets higher-priced homes. The
opening of new markets with recent acquisitions also had a positive impact on
the increase in number of units sold.

Manufactured Homes

Cavco operated three manufactured home plants in the Phoenix area, a plant
near Albuquerque, New Mexico, and a plant in central Texas, which opened in
fiscal 1999. During fiscal 1998, Cavco added retail distribution capabilities
when it purchased substantially all of the assets of AAA Homes, Inc., Arizonas
largest manufactured homes retailer. In fiscal 1999, Cavco purchased a
manufactured home retailer in central Texas.

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##### Table of Contents



The following summarizes Manufactured Homes results for the two-year
period ended March 31, 2000 (dollars in millions):

|                                           |  |                               |       |   |      |  |       |    |  |   |        |   |  |  |       |   
|------------------------------------------ |  | ----------------------------- | ----- | - | ---- |  | ----- | -- |  | - | ------ | - |  |  | ----- | --
|                                           |  | For the Years Ended March 31, |      
|                                           |  |                               |      
|                                           |  | 2000                          |       |   | 1999 | 
|                                           |  |                               |       |   |      | 
|Construction Revenues                      |  | $                             | 121.0 |   |      |  | 100.0 | %  |  | $ | 137.7  |   |  |  | 100.0 | % 
|                                          
|                                          
|                                          
|                                          
|Cost of Sales                              |  |                               | (94.1 | ) |      |  | (77.7 | )% |  |   | (108.2 | ) |  |  | (78.6 | )%
|                                          
|                                          
|                                          
|                                          
|Selling, General & Administrative Expenses |  |                               | (13.9 | ) |      |  | (11.5 | )% |  |   | (13.5  | ) |  |  | (9.8  | )%
|                                           |  |                               |       |   |      |  |       |    |  |   |        |  
|                                           |  |                               | 13.0  |   |      |  | 10.8  | %  |  |   | 16.0   |   |  |  | 11.6  | % 
|                                          
|                                          
|                                          
|                                          
|                                           |  |                               |       |   |      |  |       |    |  |   |        |  
|                                          
|                                          
|                                          
|                                          
|Retail Sales Revenues                      |  |                               | 62.5  |   |      |  | 100.0 | %  |  |   | 40.8   |   |  |  | 100.0 | % 
|                                          
|                                          
|                                          
|                                          
|Cost of Sales                              |  |                               | (49.6 | ) |      |  | (79.4 | )% |  |   | (30.0  | ) |  |  | (73.4 | )%
|                                          
|                                          
|                                          
|                                          
|Selling, General & Administrative Expenses |  |                               | (14.2 | ) |      |  | (22.6 | )% |  |   | (10.7  | ) |  |  | (26.3 | )%
|                                           |  |                               |       |   |      |  |       |    |  |   |        |  
|                                          
|                                          
|                                          
|                                          
|                                           |  |                               | (1.3  | ) |      |  | (2.0  | )% |  |   | 0.1    |   |  |  | 0.3   | % 
|                                          
|                                          
|                                          
|                                          
|                                           |  |                               |       |   |      |  |       |    |  |   |        |  
|                                          
|                                          
|                                          
|                                          
|Construction and Retail Earnings           |  |                               | 11.7  |   |      |  |       |    |  |   | 16.1   |  
|                                          
|                                          
|                                          
|                                          
|Goodwill Amortization                      |  |                               | (3.4  | ) |      |  |       |    |  |   | (3.3   | )
|                                          
|                                          
|                                          
|                                          
|Minority Interest                          |  |                               | (1.0  | ) |      |  |       |    |  |   | (2.5   | )
|                                           |  |                               |       |   |      |  |       |    |  |  
|Group Operating Earnings                   |  | $                             | 7.3   |   |      |  |       |    |  | $ | 10.3   |  
|                                           |  |                               |       |   |      |  |       |    |  |  
|Units Sold                                 |  |                               | 5,950 |   |      |  |       |    |  |   | 6,440  |  

Total revenues for Manufactured Homes increased 3% or $5 million in fiscal
2000 versus fiscal 1999. Construction revenue decreased 12% or $16.7 million
primarily due to product mix changes and an increase in intercompany sales
which are eliminated. For fiscal 2000, intercompany sales to company owned
retail sales centers represented 28% of gross construction revenues versus 16%
in fiscal 1999. Retail sales revenues increased 53% or $21.7 million primarily
due to the full year operations of 13 retail sales centers opened in fiscal
1999 and the opening of one new retail sales center in fiscal 2000.

INVESTMENT REAL ESTATE

The following summarizes Investment Real Estates results for the two-year
period ended March 31, 2000 (dollars in millions):

|                   |  |                               |      |  |      |   |      | 
|------------------ |  | ----------------------------- | ---- |  | ---- | - | ---- | 
|                   |  | For the Years Ended March 31, |     
|                   |  |                               |     
|                   |  | 2000                          |      |  | 1999 |  
|                   |  |                               |      |  |      |  
|Revenues           |  | $                             | 30.9 |  |      | $ | 33.7 | 
|                   |  |                               |      |  |      |  
|Operating Earnings |  | $                             | 30.1 |  |      | $ | 29.4 | 
|                   |  |                               |      |  |      |  

Fiscal 2000 operating earnings from Investment Real Estate totaled $30.1
million compared to $29.4 million in the prior year. The timing of land sales
is uncertain and can vary significantly from period to period. Property sales
related to Investment Real Estates nominally valued real estate resulted in
operating margins of $19.6 million in fiscal 2000 and $16.4 million in fiscal
1999.

Negative goodwill amortization was $16 million in both fiscal 2000 and
1999.

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##### Table of Contents



FINANCIAL SERVICES

The Financial Services segment consists primarily of home financing, home
equity and sub-prime lending and the sale of title and other insurance
coverages. The following summarizes Financial Services results for the
two-year period ended March 31, 2000 (dollars in millions):

|                           |                                                    |                                 |         |                               |        |   |          |        |        | 
|-------------------------- | -------------------------------------------------- | ------------------------------- | ------- | ----------------------------- | ------ | - | -------- | ------ | ------ | 
|                           |                                                    |                                 |         | For the Years Ended March 31, |       
|                           |                                                    |                                 |         |                               |       
|                           |                                                    |                                 |         | 2000                          |        |   | 1999     |       
|                           |                                                    |                                 |         |                               |        |   |          |       
|Revenues                   |                                                    | $                               | 430.6   |                               |        | $ | 436.3    |       
|                           |                                                    |                                 |         |                               |        |  
|Operating Earnings         |                                                    | $                               | 32.5    |                               |        | $ | 92.3     |       
|                           |                                                    |                                 |         |                               |        |  
|Origination Volume         |                                                    | $                               | 9,459.7 |                               |        | $ | 11,086.7 |       
|                           |                                                    |                                 |         |                               |        |  
|Number of Loans Originated
|                          
|                          
|                          
|                          
|                           |                                                    | CTX Mortgage Company          
|                          
|                          
|                          
|                          
|                           |                                                    | Centex-built Homes (Builder)    |         |                               | 10,958 |   |          |        | 9,882  | 
|                          
|                          
|                          
|                          
|                           |                                                    | Non-Centex-built Homes (Retail) |         |                               | 48,301 |   |          |        | 65,546 | 
|                           |                                                    |                                 |         |                               |        |  
|                           |                                                    |                                 | 59,259  |                               |        |   | 75,428   |       
|                          
|                          
|                          
|                          
|                           | Centex Home Equity Corporation                     |                                 |         | 20,568                        |        |   |          | 15,582 |       
|                          
|                          
|                          
|                          
|                           | Centex Finance Company (closed during fiscal 2000) |                                 |         | 681                           |        |   |          | 818    |       
|                           |                                                    |                                 |         |                               |        |  
|                           |                                                    |                                 | 80,508  |                               |        |   | 91,828   |       
|                           |                                                    |                                 |         |                               |        |  

Financial Services revenues for fiscal 2000 declined by $5.7 million from
the prior year. Revenue increases from higher loan origination volume at
Financial Services Home Equity unit were more than offset by lower revenues at
CTX Mortgage, primarily due to a decline in refinancing activity, and by a
charge to revenues related to a change in discount rate assumptions by Home
Equity. As a result, Financial Services operating earnings for fiscal 2000
were $32.5 million, 65% lower than the $92.3 million of operating earnings for
fiscal 1999.

Financial Services revenues include the gain on sale of mortgage loans
receivable which decreased $4.5 million, or 2%, to $249.6 million for fiscal
2000 from $254.1 million for the prior year. This decrease was due primarily
to a charge related to the increase in the discount rate from 12% to 15% which
reduced the carrying value of Home Equitys residual interests. Before this
charge, the expansion of Financial Services product lines and an increase in
securitization activity, partially offset by decreased loan origination volume,
resulted in an increase in gains on sales of mortgage loans of approximately
$11.5 million.

CTX Mortgages operating earnings declined significantly in fiscal 2000.
The decline in CTX Mortgages operating earnings was primarily due to the
decrease in refinancing activity as a result of increasing interest rates, and
to the delay in balancing operations costs with reduced production levels. CTX
Mortgage originations for fiscal 2000 were 59,259, a 21% decrease from 75,428
originations for the prior year. The per loan profit for fiscal 2000 was $573,
50% lower than $1,148 per loan for the prior year. CTX Mortgages total
mortgage applications for fiscal 2000 decreased 24% to 59,094 from 78,126
applications for the prior year.

Home Equitys reported operating earnings for fiscal 2000, after the
change related to the increase in discount rate from 12% to 15%, were lower by
approximately 72% compared to fiscal 1999. Originations for fiscal year 2000
were 20,568, a 32% increase over the 15,582 originated for the prior year.
Loan volume for fiscal year 2000 was $1.3 billion, a 29% improvement over the
prior year. Loan volume for fiscal year 2000 was favorably impacted by the
opening of new operating locations plus generally increased activity.

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##### Table of Contents



Home Equitys sub-prime applications totaled 127,450 for fiscal 2000, an
increase of 54% over the
82,803 applications for the prior year. Per loan profit before the
adjustment to income from securitizations, discussed below, was $911 for fiscal
2000 compared to $620 for the prior year. The increase was primarily related
to earnings from the servicing operation partially offset by the absorption of
costs related to the expansion of the branch network.

As a consequence of increases in loan volume, during fiscal year 2000 Home
Equity completed $1.3 billion in securitizations compared to $890 million in
securitizations for the prior year. As a result of the securitization process,
Home Equity sells the loans but retains a residual interest in the
securitization instrument as well as the servicing rights associated with these
loans. Home Equity is the long-term servicer of these loans. Service fee
income related to this long-term servicing was $14.5 million in fiscal 2000
versus $4.5 million for the prior year.

Home Equitys securitizations entered into prior to March 31, 2000 were
accounted for as sales, and the resulting gains on such sales were reported as
revenues during the fiscal year in which the securitizations closed. Home
Equity changed the legal and economic structure for securitizations subsequent
to March 31, 2000, such that securitizations were accounted for as borrowings.
The Company concluded that the long-term benefits of this change significantly
outweigh the short-term benefit of higher earnings under the previously used
sales treatment. The change from accounting for the securitizations as sales
to borrowings has no effect on the profit recognized over the life of each
mortgage loan. Rather, the change only affects the timing of profit
recognition.

As a result of increased interest rates, Home Equity increased the
discount rate used to value future cash flows in the valuation of historical
securitizations from 12% to 15%. The discount rate increase resulted in a $16
million reduction in Home Equitys earnings during the fourth quarter of fiscal
2000.

In the normal course of its activities, Financial Services carries
inventories of loans pending sale or securitization and earns a positive spread
between the interest income earned on those loans and its cost of financing
those loans. Interest income decreased 14% for fiscal 2000 to $83.4 million
from $97.0 million for the prior year. Interest expense for fiscal 2000 was
$61.7 million, a 20% decrease from $76.9 million for the prior year. The
decrease in net interest income was the result of both reduced loan production
and transition costs relating to initiation of the mortgage loan sales
arrangement with HSF-I.

Through the third quarter of fiscal year 2000, substantially all of the
mortgage loans generated by CTX Mortgage were sold forward upon closing and
subsequently delivered to third-party purchasers within approximately 60 days
thereafter. During December 1999, CTX Mortgage began to sell the majority of
its mortgage loans to HFS-I. This arrangement is discussed in more detail in
the Financial Condition and Liquidity section below. Substantially all of the
mortgage loans produced by Home Equity are securitized, generally on a
quarterly basis.

Centex Finance Company, the manufactured homes finance unit, was
discontinued during fiscal 2000, and had an operating loss of approximately
$4.2 million in the full year compared to a $2.8 million loss for fiscal 1999.

Financial Services other sources of income included, among other things,
loan origination fees, title policy fees and insurance commissions, mortgage
loan broker fees, and fees for mortgage loan quality control and processing
services.

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CONSTRUCTION PRODUCTS

The following summarizes Construction Products results for the two-year
period ended March 31,
2000 (dollars in millions):

|                                           |  |                               |        |   |      |   |        |  
|------------------------------------------ |  | ----------------------------- | ------ | - | ---- | - | ------ | -
|                                           |  | For the Years Ended March 31, |       
|                                           |  |                               |       
|                                           |  | 2000                          |        |   | 1999 |  
|                                           |  |                               |        |   |      |  
|Revenues                                   |  | $                             | 470.5  |   |      | $ | 381.9  |  
|                                          
|                                          
|                                          
|                                          
|Interest Income                            |  |                               | 3.7    |   |      |   | 3.0    |  
|                                          
|                                          
|                                          
|                                          
|Cost of Sales and Expenses                 |  |                               | (299.2 | ) |      |   | (259.4 | )
|                                          
|                                          
|                                          
|                                          
|Selling, General & Administrative Expenses |  |                               | (4.7   | ) |      |   | (4.4   | )
|                                          
|                                          
|                                          
|                                          
|Goodwill Amortization                      |  |                               | (1.6   | ) |      |   | (0.8   | )
|                                           |  |                               |        |   |      |  
|Operating Earnings                         |  |                               | 168.7  |   |      |   | 120.3  |  
|                                          
|                                          
|                                          
|                                          
|Minority Interest                          |  |                               | (63.8  | ) |      |   | (51.1  | )
|                                           |  |                               |        |   |      |  
|Net Operating Earnings to Centex           |  | $                             | 104.9  |   |      | $ | 69.2   |  
|                                           |  |                               |        |   |      |  

Construction Products revenues in fiscal 2000 were 23% higher than the
prior year. For fiscal 2000, Construction Products operating earnings, net of
minority interest, represented a 52% improvement over results for the prior
year.

Construction Products record operating earnings resulted from improved
results in each of its businesses. Pricing and sales volume improved for every
product, particularly pricing for gypsum wallboard, which rose by 25% compared
to the prior year.

CONTRACTING AND CONSTRUCTION SERVICES

The following summarizes Contracting and Construction Services results
for the two-year period ended March 31, 2000 (dollars in millions):

|                                 |  |                               |         |  |      |   |         | 
|-------------------------------- |  | ----------------------------- | ------- |  | ---- | - | ------- | 
|                                 |  | For the Years Ended March 31, |        
|                                 |  |                               |        
|                                 |  | 2000                          |         |  | 1999 |  
|                                 |  |                               |         |  |      |  
|Revenues                         |  | $                             | 1,205.8 |  |      | $ | 1,350.8 | 
|                                 |  |                               |         |  |      |  
|Operating Earnings               |  | $                             | 23.5    |  |      | $ | 15.2    | 
|                                 |  |                               |         |  |      |  
|New Contracts Received           |  | $                             | 1,650.9 |  |      | $ | 1,128.0 | 
|                                 |  |                               |         |  |      |  
|Backlog of Uncompleted Contracts |  | $                             | 1,382.0 |  |      | $ | 936.8   | 
|                                 |  |                               |         |  |      |  

Contracting and Construction Services revenues for fiscal 2000 were 11%
less than the prior year revenues. Operating earnings for the group improved in
fiscal 2000 as a result of a continued shift in recent years to higher-margin
private negotiated projects from lower-margin public bid work.

The Contracting and Construction Services operation provided a positive
average annual net cash flow in excess of Centexs investment in the group of
$102.2 million in fiscal 2000 and $88.9 million in fiscal 1999.

FINANCIAL CONDITION AND LIQUIDITY

At March 31, 2001, the Company had cash and cash equivalents of $115.2
million, including $57.4 million of restricted cash primarily resulting from
accounting for securitizations as secured borrowings and including $8.7 million
belonging to the Companys 65.2%-owned Construction Products subsidiary. The

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net cash used in or provided by the operating, investing, and financing
activities for the fiscal years ended March 31, 2001, 2000, and 1999 is
summarized below (dollars in thousands):

|                                |                                  |                      |         |                               |            |   |         |     |          |      |         |   |          |  
|------------------------------- | -------------------------------- | -------------------- | ------- | ----------------------------- | ---------- | - | ------- | --- | -------- | ---- | ------- | - | -------- | -
|                                |                                  |                      |         | For the Years Ended March 31, |           
|                                |                                  |                      |         |                               |           
|                                |                                  |                      |         | 2001                          |            |   | 2000    |     |          | 1999 |        
|                                |                                  |                      |         |                               |            |   |         |     |          |      |        
|Net cash provided by (used in):
|                               
|                               
|                               
|                               
|                                | Non-Financial Services          
|                                |                                  | Operating activities |         | $                             | 255,661    |   |         | $   | 13,644   |      |         | $ | (84,211  | )
|                               
|                               
|                               
|                               
|                                |                                  | Investing activities |         |                               | (757,886   | ) |         |     | (164,798 | )    |         |   | (210,441 | )
|                               
|                               
|                               
|                               
|                                |                                  | Financing activities |         |                               | 433,512    |   |         |     | 204,260  |      |         |   | 276,922  |  
|                                |                                  |                      |         |                               |            |   |         |     |         
|                                |                                  |                      | (68,713 | )                             |            |   | 53,106  |     |          |      | (17,730 | )
|                                |                                  |                      |         |                               |            |   |         |     |         
|                                | Financial Services              
|                                |                                  | Operating activities |         |                               | (1,668,964 | ) |         |     | 847,987  |      |         |   | (172,889 | )
|                               
|                               
|                               
|                               
|                                |                                  | Investing activities |         |                               | (24,994    | ) |         |     | (27,730  | )    |         |   | (17,275  | )
|                               
|                               
|                               
|                               
|                                |                                  | Financing activities |         |                               | 1,689,571  |   |         |     | (843,094 | )    |         |   | 217,894  |  
|                                |                                  |                      |         |                               |            |   |         |     |         
|                                |                                  |                      | (4,387  | )                             |            |   | (22,837 | )   |          |      | 27,730  |  
|                                |                                  |                      |         |                               |            |   |         |     |         
|                                | Effect of exchange rates on cash |                      |         | (5,001                        | )          |   |         | (96 | )        |      |         |  |         
|                                |                                  |                      |         |                               |            |   |         |     |         
|Net (decrease) increase in cash |                                  | $                    | (78,101 | )                             |            | $ | 30,173  |     |          | $    | 10,000  |  
|                                |                                  |                      |         |                               |            |   |         |     |         

For fiscal 2001, cash principally was used to finance the increases in
working capital required to support sales growth throughout the Companys
operations. The Company increased its work in process principally due to the
increased level of home sales and resulting units under construction during the
year and to the acquisition of expansion land.

Cash was used for investing activities primarily in the Home Building and
Construction Products segments.

Short-term debt as of March 31, 2001 was $479.0 million, all of which was
applicable to the Financial Services segment (see below). In June 2000, the
Company issued $200 million in Senior Notes, maturing in 2006. In February
2001, the Company issued $250 million in Senior Notes maturing in 2011. On
March 31, 2001, the Company priced and committed to sell $100 million in
medium-term notes due 2006, with proceeds received April 4, 2001. The proceeds
were used to repay short-term debt and for general corporate purposes.
Excluding Financial Services and Construction Products, the Companys
short-term borrowings are generally accomplished at prevailing market interest
rates from the Companys commercial paper programs and from uncommitted bank
facilities. In August 2000, the Company entered into a $600 million committed
multi-bank revolving credit facility which serves as a backup for commercial
paper borrowings. This facility expires in 2005. Construction Products has a
$325 million senior revolving credit facility, expiring in November 2003, under
which $268.5 million had been borrowed at March 31, 2001. This facility had no
recourse to Centex.

The Financial Services segment obtains most of its own short-term
liquidity needs through separate facilities which require only limited support
from Centex. During the third quarter of fiscal 2000, CTX Mortgage began
selling to HSF-I substantially all of the conforming, Jumbo A, and GNMA
eligible mortgages originated by CTX Mortgage under a revolving sales
agreement. HSF-I, an unaffiliated special purpose entity, acquires and then
resells mortgages originated by CTX Mortgage into secondary markets. Under the
sales agreement between CTX Mortgage and HSF-I, which has a five year term with
certain renewal options, CTX Mortgage is not required to sell its mortgage
loans to HSF-I; however, HSF-I has

40



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##### Table of Contents



committed to purchase all eligible loans
offered by CTX Mortgage. This arrangement gives CTX Mortgage daily access, on
a revolving basis, to HSF-Is $1.5 billion of capacity. CTX Mortgage also
maintains $190 million of committed secured mortgage warehouse facilities,
expiring through October 2001, to finance mortgages not sold to HSF-I.

In February 2001, Home Equity began financing its inventory of mortgage
loans through HSF-II under a revolving sales agreement. HSF-II, a wholly-owned
special purpose limited liability company, finances mortgages originated or
acquired by Home Equity and then sells them into the secondary market or into
securitization structures. Under the sales agreement between Home Equity and
HSF-II, Home Equity is not required to sell its mortgage loans to HSF-II;
however, HSF-II has committed to purchase all eligible loans offered by Home
Equity. This arrangement gives Home Equity daily access, on a revolving basis,
to HSF-IIs $550 million of capacity. HSF-II obtains its funds through the
issuance of five-year subordinated notes and short-term secured liquidity
notes. At March 31, 2001, HSF-II had outstanding $27.5 million of subordinated
notes and $118.0 million of secured liquidity notes, which are included as
Financial Services debt in the accompanying consolidated balance sheets. Home
Equity continues to service the loans financed by HSF-II. Home Equity also has
$325 million of committed secured mortgage warehouse facilities, expiring
through March 2002, to finance sub-prime mortgages not financed by HSF-II.

Financial Services also maintains a $90 million uncommitted unsecured
credit facility available to CTX Mortgage, Home Equity, and other subsidiaries.
At March 31, 2001, Financial Services had borrowed $90 million under this
facility; $45 million of such borrowings were allocated to CTX Mortgage and $45
million to Home Equity. All borrowings under this unsecured facility are
guaranteed by Centex.

CTX Mortgage and Home Equity also share a $175 million uncommitted secured
credit facility to finance mortgage inventory. At March 31, 2001, CTX Mortgage
had borrowed $43.5 million and Home Equity had borrowed $60.4 million under
this facility. This facility has limited recourse to Centex.

The Company is exposed to market risks related to fluctuations in interest
rates on mortgage loans receivable, residual interest in mortgage
securitizations, and debt. The Company utilizes forward sale commitments and
interest rate swaps to mitigate the risk associated with the majority of CTX
Mortgages mortgage loan portfolio, the Companys variable rate debt, and Home
Equitys anticipated securitization debt issuances. The Company does not
utilize forward or option contracts on foreign currencies or commodities, or
other types of derivative financial instruments. There have been no material
changes in the Companys market risk since March 31, 2000.

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Debt outstanding as of March 31, 2001 was as follows (dollars in
thousands):

|                        |                                                                               |                                                              |                                             |         |         |        | 
|----------------------- | ----------------------------------------------------------------------------- | ------------------------------------------------------------ | ------------------------------------------- | ------- | ------- | ------ | 
|Non-Financial Services:
|                       
|                       
|                       
|                       
|                        | Senior Debt:                                                                 
|                       
|                       
|                       
|                       
|                        |                                                                               | Medium-Term Note Programs, 5.45% to 7.95%, due through 2006  |                                             | $       | 486,995 |       
|                       
|                       
|                       
|                       
|                        |                                                                               | Long-Term Notes, 6.40% to 9.75%, due through 2011            |                                             |         | 464,970 |       
|                       
|                       
|                       
|                       
|                        |                                                                               | Other Indebtedness, weighted-average 5.39%, due through 2027 |                                             |         | 313,658 |       
|                       
|                       
|                       
|                       
|                        | Subordinated Debt:                                                           
|                       
|                       
|                       
|                       
|                        |                                                                               |                                                              | Subordinated Debentures, 7.38%, due in 2006 |         |         | 99,796 | 
|                       
|                       
|                       
|                       
|                        |                                                                               |                                                              | Subordinated Debentures, 8.75%, due in 2007 |         |         | 99,574 | 
|                        |                                                                               |                                                              |                                             |         |        
|                        |                                                                               |                                                              | 1,464,993                                   |        
|                        |                                                                               |                                                              |                                             |         |        
|Financial Services:    
|                       
|                       
|                       
|                       
|                        | Short-Term Bank Notes Payable                                                 |                                                              |                                             | 192,380 |        
|                       
|                       
|                       
|                       
|                        | Secured Liquidity Notes                                                       |                                                              |                                             | 117,950 |        
|                       
|                       
|                       
|                       
|                        | Other Short-Term Debt                                                         |                                                              |                                             | 168,700 |        
|                       
|                       
|                       
|                       
|                        | Home Equity Loans Asset-backed Certificates, 6.60% to 8.48%, due
through 2031 |                                                              |                                             | 310,606 |        
|                       
|                       
|                       
|                       
|                        | Home Equity Loans Asset-backed Certificates, 6.60% to 7.99%, due
through 2030 |                                                              |                                             | 373,503 |        
|                       
|                       
|                       
|                       
|                        | Home Equity Loans Asset-backed Certificates, 6.74% to 7.17%, due
through 2031 |                                                              |                                             | 389,259 |        
|                       
|                       
|                       
|                       
|                        | Home Equity Loans Asset-backed Certificates, 5.61% to 6.80%, due
through 2031 |                                                              |                                             | 475,000 |        
|                       
|                       
|                       
|                       
|                        | Home Equity Loans Asset-backed Subordinate Note, 6.75%, due 2006              |                                                              |                                             | 27,500  |        
|                        |                                                                               |                                                              |                                             |         |        
|                        |                                                                               |                                                              | 2,054,898                                   |        
|                        |                                                                               |                                                              |                                             |         |        
|Total                   |                                                                               | $                                                            | 3,519,891                                   |        
|                        |                                                                               |                                                              |                                            

Maturities of long-term debt (in thousands), excluding home equity loans
asset-backed certificates, during the next five fiscal years are: 2002,
$428,661; 2003, $68,682; 2004, $277,760; 2005, $215; 2006, $324,943; and
$364,732 thereafter.

Financial Services debt related to securitized residential mortgage loans
structured as collateralized borrowings was $1.6 billion at March 31, 2001.
The principal and interest on these notes are paid using the cash flows from
the underlying residential mortgage loans, which serve as collateral for the
debt. Accordingly, the timing of the principal payments on these notes is
dependent on the payments received on the underlying residential mortgage
loans. The expected maturities of long-term debt (in thousands) based on
contractual maturities adjusted for projected repayments and prepayments of
principal during the next five fiscal years are: 2002, $337,479; 2003,
$314,683; 2004, $221,442; 2005, $165,309; 2006, $150,612; and $386,343
thereafter.

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STOCK REPURCHASE PROGRAM

Since April 2000, the Company has repurchased a total of 35,400 shares of
common stock under its stock option-related repurchase program. The Company
plans to continue to repurchase shares under this program.

OTHER DEVELOPMENTS AND OUTLOOK

During the fourth quarter of fiscal 2001, Centex Homes completed two
acquisitions. It acquired the assets of the home building business of The
Selective Group, based in Farmington Hills, Michigan, which expands its
presence in Michigan. Centex Homes also acquired the home building business of
CityHomes, a leading builder of upscale luxury townhomes in Dallas. This
acquisition provides Centex Homes with a successful model in the urban
residential market that the Company plans to expand to other major cities.

Centex HomeTeam Services is a component of Other, net, and its operations
include security monitoring, pest control, and lawn care. After the end of
fiscal 2001, Centex HomeTeam Pest Management, a subsidiary of Centex HomeTeam
Services, announced the acquisition of Unified Services, Inc. of Atlanta,
Georgia and its subsidiaries.

The Company entered fiscal 2002 with a record backlog of home sales, and a
continuing favorable interest rate environment should continue to stimulate
home orders. The Companys mortgage refinancing business has accelerated as a
result of lower interest rates, and Home Equitys servicing portfolio is
increasing, both of which should have a positive effect on Financial Services
results in the new fiscal year. The Contracting and Construction Services
segment enters fiscal 2002 with the highest backlog and operating margins in
its history. However, Construction Products earnings are expected to continue
to be impacted adversely by depressed Gypsum Wallboard prices.



---

The Business, Managements Discussion and Analysis of Financial Condition
and Results of Operations, Other Developments and Outlook, and other sections
of this Report contain forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act
of 1934, and the Private Securities Litigation Reform Act of 1995.
Forward-looking statements may be identified by the context of the statement
and generally arise when the Company is discussing its beliefs, estimates, or
expectations. These statements are not guarantees of future performance and
involve a number of risks and uncertainties. Actual results and outcomes may
differ materially from what is expressed or forecast in such forward-looking
statements. The principal risks and uncertainties that may affect the Companys
actual performance and results of operations include the following: general
economic conditions and interest rates; the cyclical and seasonal nature of the
Companys businesses; adverse weather; changes in property taxes and energy
costs; changes in federal income tax laws and federal mortgage financing
programs; governmental regulation; changes in governmental and public policy;
changes in economic conditions specific to any one or more of the Companys
markets and businesses; competition; availability of raw materials; and
unexpected operations difficulties. Other risks and uncertainties may also
affect the outcome of the Companys actual performance and results of
operations.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risks related to fluctuations in interest
rates on its direct debt obligations, mortgage loans receivable, and residual
interest in mortgage securitizations. The following analysis provides a
framework to understand the Companys sensitivity to hypothetical changes in
interest rates as of March 31, 2001.

The Company has utilized derivative instruments, including interest rate
swaps and interest rate caps, in conjunction with its overall strategy to
manage the amount of debt outstanding that is subject to changes in interest
rates. Amounts to be paid or received under interest rate swap or cap
agreements are recognized as adjustments to interest expense. As of March 31,
2001, the Company had interest rate swap agreements which converted $438
million of the Companys variable-rate senior debt outstanding into fixed-rate
debt and no interest rate cap agreements were outstanding.

The Companys Financial Services segment originates, sells, and
securitizes conforming and nonconforming A mortgages, sub-prime first and
second mortgages, and home equity loans. Since December 1999, substantially
all conforming, Jumbo A, and GNMA-eligible mortgages have been sold to HSF-I
at or near the date on which the loans were funded. The Company is party to a
swap with Bank of America which pays the required distribution to HSF-I
certificate holders and interest due to HSF-I debt holders. The Financial
Services segment executes the forward sales of CTX Mortgages mortgages to
hedge the risk of reductions in value of mortgages sold to HSF-I or maintained
under secured financing agreements. This offsets most of the Companys risk as
the counterparty to the swap supporting the payment requirements of HSF-I. CTX
Mortgage, acting as manager of HSF-I, delivers mortgages held by HSF-I to third
party purchasers generally within 60 days of origination. Due to the high
degree of liquidity in the A mortgage market and the frequency of loan sales
and securitizations, the use of forward sales is an effective hedge against
changes in market value which result from changes in interest rates.

CTX Mortgage also uses forward sale commitments to hedge most of the
market risk associated with mortgages financed by secured credit facilities
which fund mortgage inventory in anticipation of transfer and sale.

Home Equity uses interest rate swaps to hedge the market risk associated
with the carrying of mortgages in anticipation of issuance of securitization
debt to finance subprime mortgages. Home Equity will generally hold mortgages
in anticipation of securitization for up to 120 days.

Prior to fiscal 2001, Home Equity retained the residual interest from its
securitized pools of mortgages. As of March 31, 2001, the mortgage
securitization residual interest (MSRI) was $146.4 million. The Company
continually monitors the fair value of the MSRI and reviews the factors
expected to influence the future conditional (or constant) prepayment rate
(CPR), discount rates, and credit losses. In developing assumptions
regarding expected future CPR, the Company considers a variety of factors, many
of which are interrelated. These factors include historical performance,
origination channels, characteristics of borrowers (e.g., credit quality and
loan-to-value relationships), and market factors that influence competition.
If changes in assumptions regarding future CPR, discount rates, or credit
losses are necessary, the MSRI fair value is adjusted accordingly.

The Company utilizes both short-term and long-term debt in its financing
strategy. For fixed-rate debt, changes in interest rates generally affect the
fair market value of the debt instrument but not the Companys earnings or cash
flows. Conversely, for variable-rate debt, changes in interest rates generally

44



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##### Table of Contents



do not impact the fair market value of the debt instrument but do affect the
Companys future earnings and cash
flows. The Company does not have an obligation to prepay any of its
fixed-rate debt prior to maturity, and as a result, interest rate risk and
changes in fair market value should not have a significant impact on the
fixed-rate debt until the Company is required to refinance such debt.

As of March 31, 2001, short-term debt was $479 million, all of which was
applicable to Financial Services. The majority of Financial Services debt is
collateralized by residential mortgage loans. The Company borrows on a
short-term basis from banks under committed lines, which bear interest at
prevailing market rates. The weighted-average interest rate on borrowings
outstanding at March 31, 2001 was 5.8%.

The maturities of long-term debt outstanding at March 31, 2001, excluding
home equity loans asset-backed certificates, were as follows (in thousands):

|                       |                               |                       |   |                              |      |   |      |        |      |      |   |         |      |   |   |      |      |   |            |         |      |       |   |         |            |   |   |         |      |   |   |         |  | 
|---------------------- | ----------------------------- | --------------------- | - | ---------------------------- | ---- | - | ---- | ------ | ---- | ---- | - | ------- | ---- | - | - | ---- | ---- | - | ---------- | ------- | ---- | ----- | - | ------- | ---------- | - | - | ------- | ---- | - | - | ------- |  | 
|                       |                               |                       |   | Maturities through March 31, |     
|                       |                               |                       |   |                              |     
|                       |                               |                       |   | 2002                         |      |   | 2003 |        |      | 2004 |   |         | 2005 |   |   | 2006 |      |   | Thereafter |         |      | Total |   |         | Fair Value |  
|                       |                               |                       |   |                              |      |   |      |        |      |      |   |         |      |   |   |      |      |   |            |         |      |       |   |         |            |  
|Non-Financial
Services
|                       | Fixed Rate Debt               |                       | $ | 30,853                       |      |   | $    | 28,567 |      |      | $ | 9,135   |      |   | $ | 80   |      |   | $          | 299,793 |      |       | $ | 359,582 |            |   | $ | 728,010 |      |   | $ | 759,218 | 
|                      
|                      
|                      
|                      
|                       |                               | Average Interest Rate |   |                              | 7.67 | % |      |        | 6.19 | %    |   |         | 7.93 | % |   |      | 7.00 | % |            |         | 8.96 | %     |   |         | 8.16       | % |   |         | 8.39 | %
|                      
|                      
|                      
|                      
|                       | Variable Rated Hedged Debt(1) |                       | $ | 377,995                      |      |   | $    | 35,000 |      |      | $ |        |      |   | $ |     |      |   | $          | 25,000  |      |       | $ |        |            |   | $ | 437,995 |      |   | $ | 437,449 | 
|                      
|                      
|                      
|                      
|                       |                               | Average Interest Rate |   |                              | 7.37 | % |      |        | 7.60 | %    |   |         | 0.00 | % |   |      | 0.00 | % |            |         | 7.99 | %     |   |         | 0.00       | % |   |         | 7.42 | %
|                      
|                      
|                      
|                      
|                       | Variable Rate Debt            |                       | $ | 19,813                       |      |   | $    | 5,115  |      |      | $ | 268,625 |      |   | $ | 135  |      |   | $          | 150     |      |       | $ | 5,150   |            |   | $ | 298,988 |      |   | $ | 298,858 | 
|                      
|                      
|                      
|                      
|                       |                               | Average Interest Rate |   |                              | 6.69 | % |      |        | 6.08 | %    |   |         | 6.56 | % |   |      | 4.62 | % |            |         | 4.62 | %     |   |         | 5.41       | % |   |         | 6.44 | %



---

|(1) |  | These variable rate notes are fixed rate instruments as a result of a
hedge using interest rate swaps.
|--- |  | ------------------------------------------------------------------------------------------------------

The following table sets forth the estimated maturity or repricing of
borrowings collateralized by securitized residential mortgage loans structured
as borrowings outstanding at March 31, 2001. The principal and interest on
this debt is paid using the cash flows from the underlying mortgage receivables
which serve as collateral for this debt. Accordingly, the timing of the
principal payments on this debt is dependent on the payments received on the
underlying mortgage receivables. The amounts shown within a particular period
were determined in accordance with the contractual terms of the debt, except
(i) fixed-rate mortgage securities reflect estimated prepayments, which were
estimated based on the results of a prepayment model utilized by the Company,
and empirical data, and (ii) adjustable-rate debt is included in the period in
which it is first scheduled to adjust and not in the period in which it
matures. Management believes that these assumptions approximate actual
experience and considers them reasonable; however, the interest rate
sensitivity could vary substantially if different assumptions were used or
actual experience differs from the historical experience on which the
assumptions are based.

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|                                   |                    |                       |         |                              |      |   |         |   |      |      |         |   |      |   |         |      |      |   |            |        |      |       |         |   |            |   |           |         |      |   |           |         |  | 
|---------------------------------- | ------------------ | --------------------- | ------- | ---------------------------- | ---- | - | ------- | - | ---- | ---- | ------- | - | ---- | - | ------- | ---- | ---- | - | ---------- | ------ | ---- | ----- | ------- | - | ---------- | - | --------- | ------- | ---- | - | --------- | ------- |  | 
|                                   |                    |                       |         | Maturities through March 31, |     
|                                   |                    |                       |         |                              |     
|                                   |                    |                       |         | 2002                         |      |   | 2003    |   |      | 2004 |         |   | 2005 |   |         | 2006 |      |   | Thereafter |        |      | Total |         |   | Fair
Value |  
|                                   |                    |                       |         |                              |      |   |         |   |      |      |         |   |      |   |         |      |      |   |            |        |      |       |         |   |            |  
|Financial Services
Fixed Rate Debt |                    | $                     | 243,537 |                              |      | $ | 227,777 |   |      | $    | 178,133 |   |      | $ | 137,892 |      |      | $ | 105,823    |        |      | $     | 353,278 |   |            | $ | 1,246,440 |         |      | $ | 1,269,501 |        
|                                  
|                                  
|                                  
|                                  
|                                   |                    | Average Interest Rate |         |                              | 6.99 | % |         |   | 6.80 | %    |         |   | 6.77 | % |         |      | 6.92 | % |            |        | 7.12 | %     |         |   | 7.13       | % |           |         | 6.97 | %
|                                  
|                                  
|                                  
|                                  
|                                   | Variable Rate Debt |                       | $       | 301,928                      |      |   | $       |  |      |      | $       |  |      |   | $       |     |      |   | $          | 27,500 |      |       | $       |  |            |   | $         | 329,428 |      |   | $         | 329,449 | 
|                                  
|                                  
|                                  
|                                  
|                                   |                    | Average Interest Rate |         |                              | 5.77 | % |         |   | 0.00 | %    |         |   | 0.00 | % |         |      | 0.00 | % |            |        | 6.75 | %     |         |   | 0.00       | % |           |         | 5.85 | %

The maturities of long-term debt outstanding at March 31, 2000 were as
follows (in thousands):

|                       |                               |                       |   |                              |      |   |      |         |      |      |   |        |      |   |   |      |      |   |            |     |      |       |   |         |            |   |   |         |      |   |   |         |  | 
|---------------------- | ----------------------------- | --------------------- | - | ---------------------------- | ---- | - | ---- | ------- | ---- | ---- | - | ------ | ---- | - | - | ---- | ---- | - | ---------- | --- | ---- | ----- | - | ------- | ---------- | - | - | ------- | ---- | - | - | ------- |  | 
|                       |                               |                       |   | Maturities through March 31, |     
|                       |                               |                       |   |                              |     
|                       |                               |                       |   | 2001                         |      |   | 2002 |         |      | 2003 |   |        | 2004 |   |   | 2005 |      |   | Thereafter |     |      | Total |   |         | Fair Value |  
|                       |                               |                       |   |                              |      |   |      |         |      |      |   |        |      |   |   |      |      |   |            |     |      |       |   |         |            |  
|Non-Financial Services
|                       | Fixed Rate Debt               |                       | $ | 4,091                        |      |   | $    | 1,797   |      |      | $ | 15,037 |      |   | $ | 80   |      |   | $          | 80  |      |       | $ | 199,268 |            |   | $ | 220,353 |      |   | $ | 201,914 | 
|                      
|                      
|                      
|                      
|                       |                               | Average Interest Rate |   |                              | 7.76 | % |      |         | 7.64 | %    |   |        | 6.40 | % |   |      | 7.00 | % |            |     | 7.00 | %     |   |         | 8.06       | % |   |         | 7.81 | %
|                      
|                      
|                      
|                      
|                       | Variable Rated Hedged Debt(1) |                       | $ | 176,941                      |      |   | $    | 192,652 |      |      | $ |       |      |   | $ |     |      |   | $          |    |      |       | $ |        |            |   | $ | 369,593 |      |   | $ | 369,963 | 
|                      
|                      
|                      
|                      
|                       |                               | Average Interest Rate |   |                              | 6.25 | % |      |         | 6.95 | %    |   |        | 0.00 | % |   |      | 0.00 | % |            |     | 0.00 | %     |   |         | 0.00       | % |   |         | 6.62 | %
|                      
|                      
|                      
|                      
|                       | Variable Rate Debt            |                       | $ | 150,216                      |      |   | $    | 340     |      |      | $ | 5,098  |      |   | $ | 125  |      |   | $          | 135 |      |       | $ | 5,300   |            |   | $ | 161,214 |      |   | $ | 161,214 | 
|                      
|                      
|                      
|                      
|                       |                               | Average Interest Rate |   |                              | 6.65 | % |      |         | 4.10 | %    |   |        | 6.74 | % |   |      | 4.10 | % |            |     | 4.10 | %     |   |         | 5.45       | % |   |         | 6.61 | %



---

|(1) |  | These variable rate notes are fixed rate instruments as a result of a
hedge using interest rate caps or interest rate swaps.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------

The Financial Services segment had no long-term debt outstanding at March
31, 2000.

The discussion of sales of mortgage loans to HSF-I and HSF-II, as seen in
the Financial Condition and Liquidity section of Item 7 of Part II of this
Report, is incorporated herein by reference.

Prior to the above arrangement, Home Equity financed its inventory of
mortgage loans through bank sponsored commercial paper conduit facilities and
both secured and unsecured lines of credit.

46



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##### Table of Contents






ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Financial Information

|                                                                 |  |  |    | 
|---------------------------------------------------------------- |  |  | -- | 
|Centex Corporation and Subsidiaries                             
|                                                                
|                                                                
|                                                                
|                                                                
|Consolidated Revenues and Operating Earnings by Line of Business |  |  | 48 | 
|                                                                
|                                                                
|                                                                
|                                                                
|Statements of Consolidated Earnings                              |  |  | 49 | 
|                                                                
|                                                                
|                                                                
|                                                                
|Consolidated Balance Sheets                                      |  |  | 50 | 
|                                                                
|                                                                
|                                                                
|                                                                
|Statements of Consolidated Cash Flows                            |  |  | 52 | 
|                                                                
|                                                                
|                                                                
|                                                                
|Statements of Consolidated Stockholders Equity                  |  |  | 53 | 
|                                                                
|                                                                
|                                                                
|                                                                
|Notes to Consolidated Financial Statements                       |  |  | 54 | 
|                                                                
|                                                                
|                                                                
|                                                                
|Report of Independent Public Accountants                         |  |  | 74 | 
|                                                                
|                                                                
|                                                                
|                                                                
|Quarterly Results                                                |  |  | 75 | 

47



---



##### Table of Contents






Centex Corporation and Subsidiaries
Consolidated Revenues and Operating Earnings by Line of Business(Dollars in thousands)

|                   |                                            |                              |           |                               |           |   |           |           |           |      |           |           |           |   |           |         |           |   |           |           |           | 
|------------------ | ------------------------------------------ | ---------------------------- | --------- | ----------------------------- | --------- | - | --------- | --------- | --------- | ---- | --------- | --------- | --------- | - | --------- | ------- | --------- | - | --------- | --------- | --------- | 
|                   |                                            |                              |           | For the Years Ended March 31, |          
|                   |                                            |                              |           |                               |          
|                   |                                            |                              |           | 2001                          |           |   | 2000      |           |           | 1999 |           |           | 1998      |   |           | 1997    |          
|                   |                                            |                              |           |                               |           |   |           |           |           |      |           |           |           |   |           |         |          
|Revenues          
|                  
|                  
|                  
|                  
|                   | Home Building                             
|                  
|                  
|                  
|                  
|                   |                                            | Conventional Homes           |           | $                             | 4,356,172 |   |           | $         | 3,686,844 |      |           | $         | 2,819,442 |   |           | $       | 2,312,045 |   |           | $         | 2,299,592 | 
|                  
|                  
|                  
|                  
|                   |                                            |                              | 65        | %                             |           |   | 61        | %         |           |      | 54        | %         |           |   | 57        | %       |           |   | 60        | %        
|                  
|                  
|                  
|                  
|                   |                                            | Manufactured Homes           |           |                               | 126,366   |   |           |           | 183,526   |      |           |           | 178,556   |   |           |         | 140,621   |   |           |           |          | 
|                  
|                  
|                  
|                  
|                   |                                            |                              | 2         | %                             |           |   | 3         | %         |           |      | 4         | %         |           |   | 4         | %       |           |   |          | %        
|                  
|                  
|                  
|                  
|                   | Investment Real Estate                     |                              |           | 33,042                        |           |   |           | 30,928    |           |      |           | 33,694    |           |   |           | 25,403  |           |   |           | 9,032     |          
|                  
|                  
|                  
|                  
|                   |                                            |                              |          | %                             |           |   | 1         | %         |           |      | 1         | %         |           |   | 1         | %       |           |   |          | %        
|                  
|                  
|                  
|                  
|                   | Financial Services                         |                              |           | 463,646                       |           |   |           | 430,611   |           |      |           | 436,299   |           |   |           | 246,278 |           |   |           | 168,722   |          
|                  
|                  
|                  
|                  
|                   |                                            |                              | 7         | %                             |           |   | 7         | %         |           |      | 8         | %         |           |   | 6         | %       |           |   | 5         | %        
|                  
|                  
|                  
|                  
|                   | Construction Products(A)                   |                              |           | 441,127                       |           |   |           | 470,465   |           |      |           | 381,899   |           |   |           | 344,264 |           |   |           | 278,144   |          
|                  
|                  
|                  
|                  
|                   |                                            |                              | 7         | %                             |           |   | 8         | %         |           |      | 7         | %         |           |   | 8         | %       |           |   | 7         | %        
|                  
|                  
|                  
|                  
|                   | Contracting and Construction Services      |                              |           | 1,290,382                     |           |   |           | 1,205,762 |           |      |           | 1,350,776 |           |   |           | 953,781 |           |   |           | 1,068,265 |          
|                  
|                  
|                  
|                  
|                   |                                            |                              | 19        | %                             |           |   | 20        | %         |           |      | 26        | %         |           |   | 24        | %       |           |   | 28        | %        
|                   |                                            |                              |           |                               |           |   |           |           |           |      |           |           |           |   |           |        
|                   |                                            | $                            | 6,710,735 |                               |           | $ | 6,008,136 |           |           | $    | 5,200,666 |           |           | $ | 4,022,392 |         |           | $ | 3,823,755 |          
|                   |                                            |                              |           |                               |           |   |           |           |           |      |           |           |           |   |          
|                   |                                            |                              | 100       | %                             |           |   | 100       | %         |           |      | 100       | %         |           |   | 100       | %       |           |   | 100       | %        
|                  
|                  
|                  
|                  
|Operating Earnings
|                  
|                  
|                  
|                  
|                   | Home Building                             
|                  
|                  
|                  
|                  
|                   |                                            | Conventional Homes           |           | $                             | 425,450   |   |           | $         | 323,220   |      |           | $         | 242,223   |   |           | $       | 170,531   |   |           | $         | 144,043   | 
|                  
|                  
|                  
|                  
|                   |                                            |                              | 70        | %                             |           |   | 56        | %         |           |      | 49        | %         |           |   | 52        | %       |           |   | 59        | %        
|                  
|                  
|                  
|                  
|                   |                                            | Manufactured Homes, net      |           |                               | (26,077   | ) |           |           | 7,329     |      |           |           | 10,253    |   |           |         | 8,741     |   |           |           |          | 
|                  
|                  
|                  
|                  
|                   |                                            |                              | (4        | )%                            |           |   | 1         | %         |           |      | 2         | %         |           |   | 3         | %       |           |   |          | %        
|                  
|                  
|                  
|                  
|                   | Investment Real Estate                     |                              |           | 50,908                        |           |   |           | 30,122    |           |      |           | 29,420    |           |   |           | 28,231  |           |   |           | 17,896    |          
|                  
|                  
|                  
|                  
|                   |                                            |                              | 8         | %                             |           |   | 5         | %         |           |      | 6         | %         |           |   | 9         | %       |           |   | 7         | %        
|                  
|                  
|                  
|                  
|                   | Financial Services                         |                              |           | 19,667                        |           |   |           | 32,474    |           |      |           | 92,309    |           |   |           | 31,371  |           |   |           | 24,410    |          
|                  
|                  
|                  
|                  
|                   |                                            |                              | 3         | %                             |           |   | 6         | %         |           |      | 19        | %         |           |   | 9         | %       |           |   | 10        | %        
|                  
|                  
|                  
|                  
|                   | Construction Products                      |                              |           | 99,441                        |           |   |           | 168,611   |           |      |           | 120,310   |           |   |           | 88,333  |           |   |           | 64,406    |          
|                  
|                  
|                  
|                  
|                   |                                            |                              | 17        | %                             |           |   | 29        | %         |           |      | 24        | %         |           |   | 27        | %       |           |   | 26        | %        
|                  
|                  
|                  
|                  
|                   | Contracting and Construction Services      |                              |           | 30,886                        |           |   |           | 23,471    |           |      |           | 15,209    |           |   |           | 7,152   |           |   |           | (2,183    | )        
|                  
|                  
|                  
|                  
|                   |                                            |                              | 5         | %                             |           |   | 4         | %         |           |      | 3         | %         |           |   | 2         | %       |           |   | (1        | )%       
|                  
|                  
|                  
|                  
|                   | Other, net                                 |                              |           | 4,464                         |           |   |           | (4,749    | )         |      |           | (15,624   | )         |   |           | (7,621  | )         |   |           | (2,260    | )        
|                  
|                  
|                  
|                  
|                   |                                            |                              | 1         | %                             |           |   | (1        | )%        |           |      | (3        | )%        |           |   | (2        | )%      |           |   | (1        | )%       
|                   |                                            |                              |           |                               |           |   |           |           |           |      |           |           |           |   |           |        
|                   |                                            | Operating Earnings           |           |                               | 604,739   |   |           |           | 580,478   |      |           |           | 494,100   |   |           |         | 326,738   |   |           |           | 246,312   | 
|                  
|                  
|                  
|                  
|                   |                                            |                              | 100       | %                             |           |   | 100       | %         |           |      | 100       | %         |           |   | 100       | %       |           |   | 100       | %        
|                  
|                  
|                  
|                  
|                   | Corporate General and Administrative       |                              |           | 36,924                        |           |   |           | 33,015    |           |      |           | 28,104    |           |   |           | 21,261  |           |   |           | 16,817    |          
|                  
|                  
|                  
|                  
|                   | Interest                                   |                              |           | 99,069                        |           |   |           | 66,844    |           |      |           | 41,581    |           |   |           | 33,256  |           |   |           | 34,062    |          
|                  
|                  
|                  
|                  
|                   | Minority Interest in Construction Products |                              |           | 32,415                        |           |   |           | 63,758    |           |      |           | 51,121    |           |   |           | 40,587  |           |   |           | 31,690    |          
|                   |                                            |                              |           |                               |           |   |           |           |           |      |           |           |           |   |           |        
|                   |                                            | Earnings Before Income Taxes |           | $                             | 436,331   |   |           | $         | 416,861   |      |           | $         | 373,294   |   |           | $       | 231,634   |   |           | $         | 163,743   | 
|                   |                                            |                              |           |                               |           |   |           |           |           |      |           |           |           |   |          

Applicable segment operating expenses have been deducted from lines of
business operating earnings.



|(A) |  | Centex Construction Products, Inc. adopted the provisions of Emerging
Issues Task Force Issue No. 00-10, Accounting for Shipping and Handling
Fees and Costs, during the quarter ended March 31, 2001. As a result of
this adoption, net revenues have been restated to include freight and
delivery costs billed to customers. Previously, such billings were
offset against corresponding expenses in cost of sales.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

48



---



##### Table of Contents






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

|                           |                                       |                       |           |                               |           |   |           |            |           |      |           |            |           | 
|-------------------------- | ------------------------------------- | --------------------- | --------- | ----------------------------- | --------- | - | --------- | ---------- | --------- | ---- | --------- | ---------- | --------- | 
|                           |                                       |                       |           | For the Years Ended March 31, |          
|                           |                                       |                       |           |                               |          
|                           |                                       |                       |           | 2001                          |           |   | 2000      |            |           | 1999 |          
|                           |                                       |                       |           |                               |           |   |           |            |           |      |          
|Revenues                  
|                          
|                          
|                          
|                          
|                           | Home Building                        
|                          
|                          
|                          
|                          
|                           |                                       | Conventional Homes    |           | $                             | 4,356,172 |   |           | $          | 3,686,844 |      |           | $          | 2,819,442 | 
|                          
|                          
|                          
|                          
|                           |                                       | Manufactured Homes    |           |                               | 126,366   |   |           |            | 183,526   |      |           |            | 178,556   | 
|                          
|                          
|                          
|                          
|                           | Investment Real Estate                |                       |           | 33,042                        |           |   |           | 30,928     |           |      |           | 33,694     |          
|                          
|                          
|                          
|                          
|                           | Financial Services                    |                       |           | 463,646                       |           |   |           | 430,611    |           |      |           | 436,299    |          
|                          
|                          
|                          
|                          
|                           | Construction Products                 |                       |           | 441,127                       |           |   |           | 470,465    |           |      |           | 381,899    |          
|                          
|                          
|                          
|                          
|                           | Contracting and Construction Services |                       |           | 1,290,382                     |           |   |           | 1,205,762  |           |      |           | 1,350,776  |          
|                           |                                       |                       |           |                               |           |   |           |            |           |     
|                           |                                       |                       | 6,710,735 |                               |           |   | 6,008,136 |            |           |      | 5,200,666 |           
|                           |                                       |                       |           |                               |           |   |           |            |           |     
|Costs and Expenses        
|                          
|                          
|                          
|                          
|                           | Home Building                        
|                          
|                          
|                          
|                          
|                           |                                       | Conventional Homes    |           |                               | 3,930,722 |   |           |            | 3,363,624 |      |           |            | 2,577,219 | 
|                          
|                          
|                          
|                          
|                           |                                       | Manufactured Homes    |           |                               | 152,443   |   |           |            | 175,183   |      |           |            | 165,811   | 
|                          
|                          
|                          
|                          
|                           | Investment Real Estate                |                       |           | (17,866                       | )         |   |           | 806        |           |      |           | 4,274      |          
|                          
|                          
|                          
|                          
|                           | Financial Services                    |                       |           | 443,979                       |           |   |           | 398,137    |           |      |           | 343,990    |          
|                          
|                          
|                          
|                          
|                           | Construction Products                 |                       |           | 341,686                       |           |   |           | 301,854    |           |      |           | 261,589    |          
|                          
|                          
|                          
|                          
|                           | Contracting and Construction Services |                       |           | 1,259,496                     |           |   |           | 1,182,291  |           |      |           | 1,335,567  |          
|                          
|                          
|                          
|                          
|                           | Other, net                            |                       |           | (4,464                        | )         |   |           | 4,749      |           |      |           | 15,624     |          
|                          
|                          
|                          
|                          
|                           | Corporate General and Administrative  |                       |           | 36,924                        |           |   |           | 33,015     |           |      |           | 28,104     |          
|                          
|                          
|                          
|                          
|                           | Interest                              |                       |           | 99,069                        |           |   |           | 66,844     |           |      |           | 41,581     |          
|                          
|                          
|                          
|                          
|                           | Minority Interest                     |                       |           | 32,415                        |           |   |           | 64,772     |           |      |           | 53,613     |          
|                           |                                       |                       |           |                               |           |   |           |            |           |     
|                           |                                       |                       | 6,274,404 |                               |           |   | 5,591,275 |            |           |      | 4,827,372 |           
|                           |                                       |                       |           |                               |           |   |           |            |           |     
|Earnings Before Income Tax |                                       |                       | 436,331   |                               |           |   | 416,861   |            |           |      | 373,294   |           
|                          
|                          
|                          
|                          
|                           | Income Taxes                          |                       |           | 154,354                       |           |   |           | 159,729    |           |      |           | 141,332    |          
|                           |                                       |                       |           |                               |           |   |           |            |           |     
|Net Earnings               |                                       | $                     | 281,977   |                               |           | $ | 257,132   |            |           | $    | 231,962   |           
|                           |                                       |                       |           |                               |           |   |           |            |          
|Earnings Per Share        
|                          
|                          
|                          
|                          
|                           | Basic                                 |                       | $         | 4.77                          |           |   | $         | 4.34       |           |      | $         | 3.90       |          
|                           |                                       |                       |           |                               |           |   |           |            |          
|                           | Diluted                               |                       | $         | 4.65                          |           |   | $         | 4.22       |           |      | $         | 3.75       |          
|                           |                                       |                       |           |                               |           |   |           |            |          
|Average Shares Outstanding
|                          
|                          
|                          
|                          
|                           | Basic                                 |                       |           | 59,095,403                    |           |   |           | 59,308,158 |           |      |           | 59,488,701 |          
|                          
|                          
|                          
|                          
|                           | Common Share Equivalents             
|                          
|                          
|                          
|                          
|                           |                                       | Options               |           |                               | 1,165,482 |   |           |            | 1,220,822 |      |           |            | 1,965,116 | 
|                          
|                          
|                          
|                          
|                           |                                       | Convertible Debenture |           |                               | 400,000   |   |           |            | 400,000   |      |           |            | 400,000   | 
|                           |                                       |                       |           |                               |           |   |           |            |           |     
|                           | Diluted                               |                       |           | 60,660,885                    |           |   |           | 60,928,980 |           |      |           | 61,853,817 |          
|                           |                                       |                       |           |                               |           |   |           |            |          

See notes to consolidated financial statements.

49



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##### Table of Contents






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

|                                     |                                          |                                                                                                                      |           |                    |           |   |           |           |           |  
|------------------------------------ | ---------------------------------------- | -------------------------------------------------------------------------------------------------------------------- | --------- | ------------------ | --------- | - | --------- | --------- | --------- | -
|                                     |                                          |                                                                                                                      |           | Centex Corporation |          
|                                     |                                          |                                                                                                                      |           | and Subsidiaries   |          
|                                     |                                          |                                                                                                                      |           |                    |          
|                                     |                                          |                                                                                                                      |           | March 31,          |          
|                                     |                                          |                                                                                                                      |           |                    |          
|                                     |                                          |                                                                                                                      |           | 2001               |           |   | 2000      |          
|                                     |                                          |                                                                                                                      |           |                    |           |   |           |          
|Assets                              
|                                    
|                                    
|                                    
|                                    
|                                     | Cash and Cash Equivalents                |                                                                                                                      | $         | 57,752             |           |   | $         | 135,853   |          
|                                    
|                                    
|                                    
|                                    
|                                     | Restricted Cash                          |                                                                                                                      |           | 57,428             |           |   |           | 3,710     |          
|                                    
|                                    
|                                    
|                                    
|                                     | Receivables                            
|                                    
|                                    
|                                    
|                                    
|                                     |                                          | Residential Mortgage Loans                                                                                           |           |                    | 1,996,746 |   |           |           | 409,697   |  
|                                    
|                                    
|                                    
|                                    
|                                     |                                          | Construction Contracts                                                                                               |           |                    | 212,904   |   |           |           | 206,519   |  
|                                    
|                                    
|                                    
|                                    
|                                     |                                          | Trade, including Notes of $67,085 and $28,502                                                                        |           |                    | 393,165   |   |           |           | 276,862   |  
|                                    
|                                    
|                                    
|                                    
|                                     | Inventories                            
|                                    
|                                    
|                                    
|                                    
|                                     |                                          | Housing Projects                                                                                                     |           |                    | 2,047,619 |   |           |           | 1,811,695 |  
|                                    
|                                    
|                                    
|                                    
|                                     |                                          | Land Held for Development and Sale                                                                                   |           |                    | 72,610    |   |           |           | 75,875    |  
|                                    
|                                    
|                                    
|                                    
|                                     |                                          | Construction Products                                                                                                |           |                    | 56,008    |   |           |           | 38,582    |  
|                                    
|                                    
|                                    
|                                    
|                                     |                                          | Other                                                                                                                |           |                    | 26,058    |   |           |           | 27,885    |  
|                                    
|                                    
|                                    
|                                    
|                                     | Investments                            
|                                    
|                                    
|                                    
|                                    
|                                     |                                          | Centex Development Company, L.P.                                                                                     |           |                    | 210,807   |   |           |           | 65,550    |  
|                                    
|                                    
|                                    
|                                    
|                                     |                                          | Joint Ventures and Other                                                                                             |           |                    | 72,035    |   |           |           | 65,944    |  
|                                    
|                                    
|                                    
|                                    
|                                     |                                          | Unconsolidated Subsidiaries                                                                                          |           |                    |          |   |           |           |          |  
|                                    
|                                    
|                                    
|                                    
|                                     | Property and Equipment, net              |                                                                                                                      |           | 729,099            |           |   |           | 360,604   |          
|                                    
|                                    
|                                    
|                                    
|                                     | Other Assets                           
|                                    
|                                    
|                                    
|                                    
|                                     |                                          | Deferred Income Taxes                                                                                                |           |                    | 43,116    |   |           |           | 49,907    |  
|                                    
|                                    
|                                    
|                                    
|                                     |                                          | Goodwill, net                                                                                                        |           |                    | 323,971   |   |           |           | 200,943   |  
|                                    
|                                    
|                                    
|                                    
|                                     |                                          | Mortgage Securitization Residual Interest                                                                            |           |                    | 146,394   |   |           |           | 160,999   |  
|                                    
|                                    
|                                    
|                                    
|                                     |                                          | Deferred Charges and Other                                                                                           |           |                    | 203,331   |   |           |           | 97,278    |  
|                                     |                                          |                                                                                                                      |           |                    |           |   |          
|                                     |                                          | $                                                                                                                    | 6,649,043 |                    |           | $ | 3,987,903 |          
|                                     |                                          |                                                                                                                      |           |                    |           |  
|Liabilities and Stockholders Equity
|                                    
|                                    
|                                    
|                                    
|                                     | Accounts Payable and Accrued Liabilities |                                                                                                                      | $         | 1,271,464          |           |   | $         | 1,125,807 |          
|                                    
|                                    
|                                    
|                                    
|                                     | Debt                                   
|                                    
|                                    
|                                    
|                                    
|                                     |                                          | Non-Financial Services                                                                                               |           |                    | 1,464,993 |   |           |           | 898,068   |  
|                                    
|                                    
|                                    
|                                    
|                                     |                                          | Financial Services                                                                                                   |           |                    | 2,054,898 |   |           |           | 415,327   |  
|                                    
|                                    
|                                    
|                                    
|                                     | Payables to Affiliates                   |                                                                                                                      |           |                   |           |   |           |          |          
|                                    
|                                    
|                                    
|                                    
|                                     | Minority Stockholders Interest          |                                                                                                                      |           | 143,624            |           |   |           | 129,352   |          
|                                    
|                                    
|                                    
|                                    
|                                     | Stockholders Equity                   
|                                    
|                                    
|                                    
|                                    
|                                     |                                          | Preferred Stock, Authorized 5,000,000 Shares, None Issued                                                            |           |                    |          |   |           |           |          |  
|                                    
|                                    
|                                    
|                                    
|                                     |                                          | Common Stock, $.25 Par Value; Authorized 100,000,000 Shares;
Issued and Outstanding 59,929,344 and 58,806,217 Shares |           |                    | 14,982    |   |           |           | 14,702    |  
|                                    
|                                    
|                                    
|                                    
|                                     |                                          | Capital in Excess of Par Value                                                                                       |           |                    | 25,779    |   |           |           |          |  
|                                    
|                                    
|                                    
|                                    
|                                     |                                          | Retained Earnings                                                                                                    |           |                    | 1,678,400 |   |           |           | 1,405,895 |  
|                                    
|                                    
|                                    
|                                    
|                                     |                                          | Accumulated Other Comprehensive Loss                                                                                 |           |                    | (5,097    | ) |           |           | (1,248    | )
|                                     |                                          |                                                                                                                      |           |                    |           |   |          
|                                     | Total Stockholders Equity               |                                                                                                                      |           | 1,714,064          |           |   |           | 1,419,349 |          
|                                     |                                          |                                                                                                                      |           |                    |           |   |          
|                                     |                                          | $                                                                                                                    | 6,649,043 |                    |           | $ | 3,987,903 |          
|                                     |                                          |                                                                                                                      |           |                    |           |  

See notes to consolidated financial statements.

50



---



##### Table of Contents



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



| |  |                    |           |   |                    |   |           |      |  |   |           |  |  |   |         | 
| |  | ------------------ | --------- | - | ------------------ | - | --------- | ---- |  | - | --------- |  |  | - | ------- | 
| |  | Centex Corporation |           |   | Financial Services |  
| |  |                    |           |   |                    |  
| |  | March 31,          |           |   | March 31,          |  
| |  |                    |           |   |                    |  
| |  | 2001               |           |   | 2000               |   |           | 2001 |  |   | 2000      | 
| |  |                    |           |   |                    |   |           |      |  |   |           | 
| |  |                    |           |   |                    |   |           |      |  |   |           |  |  |   |         | 
| |  | $                  | 45,987    |   |                    | $ | 119,701   |      |  | $ | 11,765    |  |  | $ | 16,152  | 
|
|
|
|
| |  |                    | 5,442     |   |                    |   | 3,710     |      |  |   | 51,986    |  |  |   |        | 
|
| |  |                    |          |   |                    |   |          |      |  |   | 1,996,746 |  |  |   | 409,697 | 
|
|
|
|
| |  |                    | 212,904   |   |                    |   | 206,519   |      |  |   |          |  |  |   |        | 
|
|
|
|
| |  |                    | 273,912   |   |                    |   | 212,291   |      |  |   | 119,253   |  |  |   | 64,571  | 
|
|
|
|
| |  |                    |           |   |                    |   |           |      |  |   |           |  |  |   |         | 
| |  |                    | 2,047,619 |   |                    |   | 1,811,695 |      |  |   |          |  |  |   |        | 
|
|
|
|
| |  |                    | 72,610    |   |                    |   | 75,875    |      |  |   |          |  |  |   |        | 
|
|
|
|
| |  |                    | 56,008    |   |                    |   | 38,582    |      |  |   |          |  |  |   |        | 
|
|
|
|
| |  |                    | 17,601    |   |                    |   | 19,747    |      |  |   | 8,457     |  |  |   | 8,138   | 
|
|
|
|
| |  |                    |           |   |                    |   |           |      |  |   |           |  |  |   |         | 
| |  |                    | 210,807   |   |                    |   | 65,550    |      |  |   |          |  |  |   |        | 
|
|
|
|
| |  |                    | 72,035    |   |                    |   | 65,944    |      |  |   |          |  |  |   |        | 
|
|
|
|
| |  |                    | 314,868   |   |                    |   | 267,177   |      |  |   |          |  |  |   |        | 
|
|
|
|
| |  |                    | 673,846   |   |                    |   | 319,255   |      |  |   | 55,253    |  |  |   | 41,349  | 
|
|
|
|
| |  |                    |           |   |                    |   |           |      |  |   |           |  |  |   |         | 
| |  |                    | 12,838    |   |                    |   | 24,018    |      |  |   | 30,278    |  |  |   | 25,889  | 
|
|
|
|
| |  |                    | 307,369   |   |                    |   | 182,222   |      |  |   | 16,602    |  |  |   | 18,721  | 
|
|
|
|
| |  |                    |          |   |                    |   |          |      |  |   | 146,394   |  |  |   | 160,999 | 
|
|
|
|
| |  |                    | 149,917   |   |                    |   | 71,302    |      |  |   | 53,414    |  |  |   | 25,976  | 
| |  |                    |           |   |                    |   |           |      |  |   |           | 
| |  | $                  | 4,473,763 |   |                    | $ | 3,483,588 |      |  | $ | 2,490,148 |  |  | $ | 771,492 | 
| |  |                    |           |   |                    |   |           |      |  |   |           | 
| |  |                    |           |   |                    |   |           |      |  |   |           |  |  |   |         | 
| |  | $                  | 1,153,215 |   |                    | $ | 1,038,641 |      |  | $ | 118,249   |  |  | $ | 87,166  | 
| |  |                    |           |   |                    |   |           |      |  |   |           |  |  |   |         | 
| |  |                    | 1,464,993 |   |                    |   | 898,068   |      |  |   |          |  |  |   |        | 
|
|
|
|
| |  |                    |          |   |                    |   |          |      |  |   | 2,054,898 |  |  |   | 415,327 | 
|
|
|
|
| |  |                    |          |   |                    |   |          |      |  |   | 50,072    |  |  |   | 64,246  | 
|
|
|
|
| |  |                    | 141,491   |   |                    |   | 127,530   |      |  |   | 2,133     |  |  |   | 1,822   | 
| |  |                    |           |   |                    |   |           |      |  |   |           |  |  |   |         | 
| |  |                    |          |   |                    |   |          |      |  |   |          |  |  |   |        | 
| |  |                    |           |   |                    |   |           |      |  |   |           |  |  |   |         | 
| |  |                    | 14,982    |   |                    |   | 14,702    |      |  |   | 1         |  |  |   | 1       | 
|
|
|
|
| |  |                    | 25,779    |   |                    |   |          |      |  |   | 200,467   |  |  |   | 150,467 | 
|
|
|
|
| |  |                    | 1,678,400 |   |                    |   | 1,405,895 |      |  |   | 64,328    |  |  |   | 52,463  | 
|
|
|
|
| |  |                    | (5,097    | ) |                    |   | (1,248    | )    |  |   |          |  |  |   |        | 
| |  |                    |           |   |                    |   |           |      |  |   |           | 
| |  |                    | 1,714,064 |   |                    |   | 1,419,349 |      |  |   | 264,796   |  |  |   | 202,931 | 
| |  |                    |           |   |                    |   |           |      |  |   |           | 
| |  | $                  | 4,473,763 |   |                    | $ | 3,483,588 |      |  | $ | 2,490,148 |  |  | $ | 771,492 | 
| |  |                    |           |   |                    |   |           |      |  |   |           | 

In the supplemental data presented above, Centex Corporation represents the
adding together of all subsidiaries other than those included in Financial
Services as described in Note A to the consolidated financial statements.
Transactions between Centex Corporation and Financial Services have been
eliminated from the Centex Corporation
and Subsidiaries balance sheets.

51



---



##### Table of Contents






Centex Corporation and Subsidiaries
Statements of Consolidated Cash Flows(Dollars in thousands)

|                                               |                                                                                            |                                                                           |            |                               |          |   |          |            |         |      |          |          |          |  
|---------------------------------------------- | ------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------- | ---------- | ----------------------------- | -------- | - | -------- | ---------- | ------- | ---- | -------- | -------- | -------- | -
|                                               |                                                                                            |                                                                           |            | For the Years Ended March 31, |         
|                                               |                                                                                            |                                                                           |            |                               |         
|                                               |                                                                                            |                                                                           |            | 2001                          |          |   | 2000     |            |         | 1999 |         
|                                               |                                                                                            |                                                                           |            |                               |          |   |          |            |         |      |         
|Cash Flows   Operating Activities            
|                                              
|                                              
|                                              
|                                              
|                                               | Net Earnings                                                                               |                                                                           | $          | 281,977                       |          |   | $        | 257,132    |         |      | $        | 231,962  |         
|                                              
|                                              
|                                              
|                                              
|                                               | Adjustments, net of Acquisitions                                                          
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                            | Depreciation, Depletion, and Amortization                                 |            |                               | 40,509   |   |          |            | 48,971  |      |          |          | 36,172   |  
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                            | Deferred Income Taxes Provision (Benefit)                                 |            |                               | 8,019    |   |          |            | (5,600  | )    |          |          | 96,462   |  
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                            | Equity in Earnings of Centex Development Company, L.P.
and Joint Ventures |            |                               | (4,958   | ) |          |            | (946    | )    |          |          | (125     | )
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                            | Minority Interest, net of Taxes                                           |            |                               | 20,881   |   |          |            | 41,564  |      |          |          | 35,112   |  
|                                              
|                                              
|                                              
|                                              
|                                               | (Increase) Decrease in Restricted Cash                                                     |                                                                           |            | (53,718                       | )        |   |          | 1,878      |         |      |          | (2,952   | )       
|                                              
|                                              
|                                              
|                                              
|                                               | Increase in Receivables                                                                    |                                                                           |            | (61,116                       | )        |   |          | (21,236    | )       |      |          | (66,897  | )       
|                                              
|                                              
|                                              
|                                              
|                                               | (Increase) Decrease in Residential Mortgage Loans                                          |                                                                           |            | (1,587,049                    | )        |   |          | 984,687    |         |      |          | (204,166 | )       
|                                              
|                                              
|                                              
|                                              
|                                               | Increase in Inventories                                                                    |                                                                           |            | (15,241                       | )        |   |          | (343,430   | )       |      |          | (426,301 | )       
|                                              
|                                              
|                                              
|                                              
|                                               | Increase in Payables and Accruals                                                          |                                                                           |            | 112,491                       |          |   |          | 90,894     |         |      |          | 205,671  |         
|                                              
|                                              
|                                              
|                                              
|                                               | Increase in Other Assets, net                                                              |                                                                           |            | (150,989                      | )        |   |          | (139,350   | )       |      |          | (115,179 | )       
|                                              
|                                              
|                                              
|                                              
|                                               | Other, net                                                                                 |                                                                           |            | (4,109                        | )        |   |          | (52,933    | )       |      |          | (46,859  | )       
|                                               |                                                                                            |                                                                           |            |                               |          |   |          |            |         |     
|                                               |                                                                                            |                                                                           | (1,413,303 | )                             |          |   | 861,631  |            |         |      | (257,100 | )       
|                                               |                                                                                            |                                                                           |            |                               |          |   |          |            |         |     
|Cash Flows   Investing Activities            
|                                              
|                                              
|                                              
|                                              
|                                               | Increase in Investment and Advances to
Centex Development Company, L.P. and Joint Ventures |                                                                           |            | (288,141                      | )        |   |          | (15,482    | )       |      |          | (51,147  | )       
|                                              
|                                              
|                                              
|                                              
|                                               | Acquisitions, net of Cash Acquired
Construction Products Operations                        |                                                                           |            | (342,200                      | )        |   |          |           |         |      |          |         |         
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                            | Home Building Operations                                                  |            |                               | (100,097 | ) |          |            | (74,119 | )    |          |          | (124,116 | )
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                            | Other                                                                     |            |                               |         |   |          |            | (15,161 | )    |          |          |         |  
|                                              
|                                              
|                                              
|                                              
|                                               | Property and Equipment Additions, net                                                      |                                                                           |            | (52,442                       | )        |   |          | (87,766    | )       |      |          | (52,453  | )       
|                                               |                                                                                            |                                                                           |            |                               |          |   |          |            |         |     
|                                               |                                                                                            |                                                                           | (782,880   | )                             |          |   | (192,528 | )          |         |      | (227,716 | )       
|                                               |                                                                                            |                                                                           |            |                               |          |   |          |            |         |     
|Cash Flows   Financing Activities            
|                                              
|                                              
|                                              
|                                              
|                                               | (Decrease) Increase in Short-Term Debt, net                                                |                                                                           |            | (83,205                       | )        |   |          | (1,071,521 | )       |      |          | 473,727  |         
|                                              
|                                              
|                                              
|                                              
|                                               | Non-Financial Services
Issuance of Long-Term Debt                                          |                                                                           |            | 943,491                       |          |   |          | 470,107    |         |      |          | 76,682   |         
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                            | Repayment of Long-Term Debt                                               |            |                               | (329,658 | ) |          |            | (3,246  | )    |          |          | (30,098  | )
|                                              
|                                              
|                                              
|                                              
|                                               | Financial Services
Issuance of Long-Term Debt                                              |                                                                           |            | 1,652,500                     |          |   |          |           |         |      |          |         |         
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                            | Repayment of Long-Term Debt                                               |            |                               | (76,632  | ) |          |            |        |      |          |          |         |  
|                                              
|                                              
|                                              
|                                              
|                                               | Proceeds from Stock Option Exercises                                                       |                                                                           |            | 26,843                        |          |   |          | 19,613     |         |      |          | 9,482    |         
|                                              
|                                              
|                                              
|                                              
|                                               | Retirement of Common Stock                                                                 |                                                                           |            | (784                          | )        |   |          | (44,301    | )       |      |          | (25,457  | )       
|                                              
|                                              
|                                              
|                                              
|                                               | Dividends Paid                                                                             |                                                                           |            | (9,472                        | )        |   |          | (9,486     | )       |      |          | (9,520   | )       
|                                               |                                                                                            |                                                                           |            |                               |          |   |          |            |         |     
|                                               |                                                                                            |                                                                           | 2,123,083  |                               |          |   | (638,834 | )          |         |      | 494,816  |         
|                                               |                                                                                            |                                                                           |            |                               |          |   |          |            |         |     
|Effect of Exchange Rate Changes on Cash        |                                                                                            |                                                                           | (5,001     | )                             |          |   | (96      | )          |         |      |         |         
|                                               |                                                                                            |                                                                           |            |                               |          |   |          |            |         |     
|Net (Decrease) Increase In Cash                |                                                                                            |                                                                           | (78,101    | )                             |          |   | 30,173   |            |         |      | 10,000   |         
|                                              
|                                              
|                                              
|                                              
|Cash and Cash Equivalents At Beginning Of Year |                                                                                            |                                                                           | 135,853    |                               |          |   | 105,680  |            |         |      | 95,680   |         
|                                               |                                                                                            |                                                                           |            |                               |          |   |          |            |         |     
|Cash and Cash Equivalents At End Of Year       |                                                                                            | $                                                                         | 57,752     |                               |          | $ | 135,853  |            |         | $    | 105,680  |         
|                                               |                                                                                            |                                                                           |            |                               |          |   |          |            |        

See notes to consolidated financial statements.

52



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##### Table of Contents






Centex Corporation and Subsidiaries
Statements of Consolidated Stockholders Equity(Dollars in thousands)

|                        |                                |                                       |                              |                                          |   |           |        |      |        |   |        |           |   |            |           |         |         |               |        |   |       |             |           |         |         |  |        |  
|----------------------- | ------------------------------ | ------------------------------------- | ---------------------------- | ---------------------------------------- | - | --------- | ------ | ---- | ------ | - | ------ | --------- | - | ---------- | --------- | ------- | ------- | ------------- | ------ | - | ----- | ----------- | --------- | ------- | ------- |  | ------ | -
|                        |                                |                                       |                              |                                          |   |           |        |      |        |   |        |           |   |            |           |         |         |               |        |   |       | Accumulated |          
|                        |                                |                                       |                              |                                          |   |           |        |      |        |   |        |           |   | Capital In |           |         |         |               |        |   | Other |            
|                        |                                |                                       |                              |                                          |   | Preferred |        |      | Common |   |        | Excess of |   |            | Retained  |         |         | Comprehensive |       
|                        |                                |                                       |                              |                                          |   | Stock     |        |      | Stock  |   |        | Par Value |   |            | Earnings  |         |         | Income (Loss) |        |   | Total |            
|                        |                                |                                       |                              |                                          |   |           |        |      |        |   |        |           |   |            |           |         |         |               |        |   |       |            
|Balance, March 31, 1998 |                                | $                                     |                             |                                          |   | $         | 14,883 |      |        | $ | 36,761 |           |   | $          | 939,528   |         |         | $             |       |   |       | $           | 991,172   |        
|                       
|                       
|                       
|                       
|                        | Exercise of Stock Options      |                                       |                              |                                         |   |           |        | 143  |        |   |        | 9,339     |   |            |           |        |         |               |        |  |       |             |           | 9,482   |        
|                       
|                       
|                       
|                       
|                        | Retirement of 714,800 Shares   |                                       |                              |                                         |   |           |        | (179 | )      |   |        | (25,278   | ) |            |           |        |         |               |        |  |       |             |           | (25,457 | )      
|                       
|                       
|                       
|                       
|                        | Net Earnings                   |                                       |                              |                                         |   |           |        |     |        |   |        |          |   |            |           | 231,962 |         |               |        |  |       |             |           | 231,962 |        
|                       
|                       
|                       
|                       
|                        | Cash Dividends                 |                                       |                              |                                         |   |           |        |     |        |   |        |          |   |            |           | (9,520  | )       |               |        |  |       |             |           | (9,520  | )      
|                        |                                |                                       |                              |                                          |   |           |        |      |        |   |        |           |   |            |           |         |         |              
|Balance, March 31, 1999 |                                |                                       |                             |                                          |   |           | 14,847 |      |        |   | 20,822 |           |   |            | 1,161,970 |         |         |               |       |   |       |             | 1,197,639 |        
|                       
|                       
|                       
|                       
|                        | Exercise of Stock Options      |                                       |                              |                                         |   |           |        | 313  |        |   |        | 19,300    |   |            |           |        |         |               |        |  |       |             |           | 19,613  |        
|                       
|                       
|                       
|                       
|                        | Retirement of 1,831,600 Shares |                                       |                              |                                         |   |           |        | (458 | )      |   |        | (40,122   | ) |            |           | (3,721  | )       |               |        |  |       |             |           | (44,301 | )      
|                       
|                       
|                       
|                       
|                        | Cash Dividends                 |                                       |                              |                                         |   |           |        |     |        |   |        |          |   |            |           | (9,486  | )       |               |        |  |       |             |           | (9,486  | )      
|                       
|                       
|                       
|                       
|                        |                                | Net Earnings                          |                              |                                          |  |           |        |      |       |   |        |           |  |            |           |         | 257,132 |               |        |   |      |             |           |         | 257,132 | 
|                       
|                       
|                       
|                       
|                        |                                | Accumulated Other
Comprehensive Loss:
|                       
|                       
|                       
|                       
|                        |                                |                                       |                              | Unrealized Loss on Investments           |   |           |       |      |        |   |       |           |   |            |          |         |         |               |       |   |       |             | (1,152    | )       |         |  | (1,152 | )
|                       
|                       
|                       
|                       
|                        |                                |                                       |                              | Foreign Currency
Translation Adjustments |   |           |       |      |        |   |       |           |   |            |          |         |         |               |       |   |       |             | (96       | )       |         |  | (96    | )
|                        |                                |                                       |                              |                                          |   |           |        |      |        |   |        |           |   |            |           |         |         |               |        |   |       |             |          
|                        | Comprehensive Income           |                                       |                              |                                          |   |           |        |      |        |   |        |           |   |            |           |         |         |               |        |   |       |             |           | 255,884 |        
|                        |                                |                                       |                              |                                          |   |           |        |      |        |   |        |           |   |            |           |         |         |              
|Balance, March 31, 2000 |                                |                                       |                             |                                          |   |           | 14,702 |      |        |   |       |           |   |            | 1,405,895 |         |         |               | (1,248 | ) |       |             | 1,419,349 |        
|                       
|                       
|                       
|                       
|                        | Exercise of Stock Options      |                                       |                              |                                         |   |           |        | 289  |        |   |        | 26,554    |   |            |           |        |         |               |        |  |       |             |           | 26,843  |        
|                       
|                       
|                       
|                       
|                        | Retirement of 35,400 Shares    |                                       |                              |                                         |   |           |        | (9   | )      |   |        | (775      | ) |            |           |        |         |               |        |  |       |             |           | (784    | )      
|                       
|                       
|                       
|                       
|                        | Cash Dividends                 |                                       |                              |                                         |   |           |        |     |        |   |        |          |   |            |           | (9,472  | )       |               |        |  |       |             |           | (9,472  | )      
|                       
|                       
|                       
|                       
|                        |                                | Net Earnings                          |                              |                                          |  |           |        |      |       |   |        |           |  |            |           |         | 281,977 |               |        |   |      |             |           |         | 281,977 | 
|                       
|                       
|                       
|                       
|                        |                                | Accumulated Other                    
|                       
|                       
|                       
|                       
|                        |                                |                                       | Comprehensive Income (Loss):
|                       
|                       
|                       
|                       
|                        |                                |                                       |                              | Unrealized Gain on Investments           |   |           |       |      |        |   |       |           |   |            |          |         |         |               |       |   |       |             | 1,152     |         |         |  | 1,152  |  
|                       
|                       
|                       
|                       
|                        |                                |                                       |                              | Foreign CurrencyTranslation Adjustments  |   |           |       |      |        |   |       |           |   |            |          |         |         |               |       |   |       |             | (5,001    | )       |         |  | (5,001 | )
|                        |                                |                                       |                              |                                          |   |           |        |      |        |   |        |           |   |            |           |         |         |               |        |   |       |             |          
|                        | Comprehensive Income           |                                       |                              |                                          |   |           |        |      |        |   |        |           |   |            |           |         |         |               |        |   |       |             |           | 278,128 |        
|                       
|                       
|                       
|                       
|                        |                                |                                       |                              |                                          |   |           |        |      |        |   |        |           |   |            |           |         |         |              
|                       
|                       
|                       
|                       
|Balance, March 31, 2001 |                                | $                                     |                             |                                          |   | $         | 14,982 |      |        | $ | 25,779 |           |   | $          | 1,678,400 |         |         | $             | (5,097 | ) |       | $           | 1,714,064 |        
|                        |                                |                                       |                              |                                          |   |           |        |      |        |   |        |           |   |            |           |         |         |              

See notes to consolidated financial statements.

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Centex Corporation and Subsidiaries
Notes to Consolidated Financial Statements(Dollars in thousands, except per share data)

(A) SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The consolidated financial statements include the accounts of Centex
Corporation and subsidiaries (Centex or the Company) after the elimination
of all significant intercompany balances and transactions.

Balance sheet data is presented in the following categories:



| |  |  | Centex Corporation and Subsidiaries. This represents the
consolidation of Centex Corporation, Financial Services and all of
their consolidated subsidiaries. The effects of transactions among
related companies within the consolidated group have been eliminated.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Centex Corporation. This information is presented as supplemental
information and represents the consolidation of all subsidiaries 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 and its
subsidiaries.                                                                                                                        

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

Revenue Recognition

Revenues from Home Building projects and Investment Real Estate are
recognized when homes and properties are sold and title passes. Revenues from
the sale of mortgage loans, mortgage servicing rights, and from loan
origination fees are recognized when the related loan is sold and delivered to
a third-party purchaser.

Long-term construction contract revenues are recognized on the
percentage-of-completion method based on the costs incurred relative to total
estimated costs. Full provision is made for any anticipated losses. Billings
for long-term construction contracts are rendered monthly, including the amount
of retainage withheld by the customer until contract completion. As a general
contractor, the Company withholds similar retainages from each subcontractor.
Retainages of $78 million included in construction contracts receivable and $67
million included in accounts payable at March 31, 2001 are generally receivable
and payable within one year.

Claims are recognized as revenue only after management has determined that
the collection is probable and the amount can be reliably estimated. Claims of
$0, $3.7 million, and $2.1 million are included in revenues for the years ended
March 31, 2001, 2000, and 1999, respectively.

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Earnings Per Share

Basic earnings per share is computed based on the weighted-average number
of shares of common stock, par value $.25 per share (Common Stock),
outstanding. Diluted earnings per share is computed based upon the basic
weighted-average number of shares plus the dilution of the stock options and
the convertible debenture.

The computation of diluted earnings per share excludes anti-dilutive
options to purchase 3,312,000 shares of Common Stock at an average price of
$35.24 for the year ended March 31, 2001. All anti-dilutive options have
expiration dates ranging from September 2007 to December 2010.

Cash and Cash Equivalents

Cash equivalents represent highly liquid investments with an original
maturity of three months or less.

Restricted Cash

Restricted cash primarily represents cash in principal and interest
accounts pending remittance into the securitization trusts. These amounts
result from accounting for securitizations as secured borrowings.

Residential Mortgage Loans Receivable

Residential mortgage loans are stated at the lower of cost or market.
Market is determined by forward sale commitments, current investor yield
requirements and current securitization market conditions, adjusted for
deferred hedging gains or losses. Substantially all of the mortgage loans are
delivered to third-party purchasers and/or subject to securitization within
three months after year end, and are subject to hedge instruments during the
time they are held in inventory. Appropriate loan loss reserves have been
provided for those mortgage loans that the Company intends to retain in its
loan portfolio.

Substantially all of the mortgage loans are pledged as collateral for
secured financings. The increase in mortgage loans was primarily the result of
the change in the legal and economic structure of securitizations subsequent to
March 31, 2000 causing the securitizations after that date to be accounted for
as borrowings.

Notes Receivable

Notes receivable at March 31, 2001 are collectible primarily over four
years with $55.1 million being due within one year. The weighted-average
interest rate at March 31, 2001 was 5.5%.

Inventory, Capitalization, and Segment Expenses

Housing projects and land held for development and sale are stated at the
lower of cost (including direct construction costs, capitalized interest, and
real estate taxes) or fair value less cost to sell. The capitalized costs,
other than interest, are included in Home Building and Investment Real Estate
costs and expenses in the Statement of Consolidated Earnings when related
revenues are recognized. Interest costs relieved from inventories are included
as interest expense. The Company reviews the recoverability of its Home
Building inventories on an individual project basis in accordance with the
provisions of Statement of Financial Accounting Standards (SFAS) No. 121,
Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of.

Construction Products inventories are stated at the lower of average cost
(including applicable material, labor, and plant overhead) or market.

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General operating expenses associated with each segment of business are
expensed when incurred and are included in the appropriate business segment.

Investments

From time to time the Company sells certain real estate assets to Centex
Development Company, L.P. and subsidiaries (the Partnership) in exchange for
cash or additional Class C limited partnership units (Class C Units). The
assets are sold at their estimated fair market value at the time of sale using
available market information, including data from recent sales, brokers, and
appraisals. The Company records any excess of the sales price over book value
as deferred income. The Company recognizes the deferred income when the
properties are subsequently sold by the Partnership. See Note (G) for
additional information regarding the Partnership.

The Company is a participant in certain joint ventures with interests
ranging from 20% to 50%. The investments in these joint ventures are carried
on the equity method in the consolidated financial statements except for
Construction Products 50% joint venture interests in its cement plants in
Illinois and Texas. Construction Products has proportionately consolidated its
pro rata interest in the revenues, expenses, assets, and liabilities of those
extractive industry ventures. The earnings or losses of the Companys other
joint ventures are not significant and are included in the appropriate business
segment.

Property and Equipment, net

Property and equipment is carried at cost less accumulated depreciation.
Depreciation is recorded using the straight-line method over the estimated
useful lives of the assets, which typically range between 1 and 40 years.
Major renewals and improvements are capitalized and depreciated. Repairs and
maintenance are expensed as incurred. Costs and accumulated depreciation
applicable to assets retired or sold are eliminated from the accounts and any
resulting gains or losses are recognized at such time. The Company monitors
its property and equipment carrying values for recoverability and, where
appropriate, provides for write-downs to estimated fair values.

Goodwill, net

Goodwill represents the excess of purchase price over net assets of
businesses acquired. Goodwill is amortized over various periods between 6
years and 40 years. The Company monitors its goodwill and other intangibles to
determine whether any impairment of these assets has occurred. In making such
determination, the Company evaluates the performance, on an undiscounted basis,
of the underlying businesses which gave rise to such amount. In case of
impairment, the recorded costs would be written down to fair value on a
discounted basis. Goodwill amortization totaled $26.8 million in fiscal 2001,
$14.2 million in fiscal 2000, and $10.5 million in fiscal 1999.

Negative goodwill arose in conjunction with the fiscal 1997 combination
transaction of Centex Real Estate Corporation with Vista Properties, Inc.
(Vista). Negative goodwill was amortized to earnings as a reduction of costs
and expenses over the estimated period during which Vistas land was developed
and/or sold. During fiscal 2001, the Company disposed of virtually all of the
remaining Vista portfolio, and negative goodwill was fully amortized. See Note
(H) for further discussion of the Vista portfolio disposition.

Mortgage Securitization Residual Interest

Centex Home Equity Corporation (Home Equity) uses mortgage
securitizations to finance its mortgage loan portfolio. Securitizations
entered into prior to March 31, 2000 were accounted for as sales, and the
resulting gains on such sales were reported in operating results during the
period in which the

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securitization closed. Home Equity changed the legal and
economic structure of securitizations subsequent to March 31, 2000 causing the
securitizations after that date to be accounted for as secured borrowings.

For securitizations accounted for as sales, Home Equity retained a
residual interest (the Mortgage Securitization Residual Interest or MSRI).
The MSRI represents the present value of Home Equitys right to receive, over
the life of the securitization, the excess of the weighted average coupon on
the loans securitized over the interest rates on the securities sold, a normal
servicing fee, a trustee fee, and an insurance
fee (where applicable) net of the credit losses relating to the loans
securitized.

The Company classifies MSRI as trading securities in accordance with SFAS
No. 115, Accounting for Certain Investments in Debt and Equity Securities,
and accordingly carries MSRI at fair value on the Companys balance sheet.
Unrealized changes in MSRI fair values are included in Financial Services
revenues in the Companys Statements of Consolidated Earnings.

Home Equity estimates the fair value of MSRI through the application of
discounted cash flow analysis. Such analysis requires the use of various
assumptions, the most significant of which are anticipated prepayments
(principal reductions in excess of contractually scheduled reductions),
estimated future credit losses, and the discount rate applied to future cash
flows. Home Equity continuously monitors the fair value of MSRI and the
reasonableness of the underlying assumptions in light of current market
conditions.

Home Equity assumes credit losses of 0.5% per annum for fixed rate loans.
Home Equity assumes a Constant Prepayment Rate (CPR) for fixed rate loans of
4.8% per annum in the first month of the loan, increasing approximately 2.1%
per annum each month to a maximum of 28% per annum by the end of the twelfth
month. Variable rate loans use a constant CPR of 32% per annum. Home Equity
assumes credit losses of 0.8% per annum for variable rate loans. Home Equity
uses a discount rate of 15% simple interest.

Deferred Charges and Other

Deferred charges and other are primarily composed of deferred home
security system installation costs, loan fees and financing costs, prepaid
expenses, deposits, and investments.

Off-Balance-Sheet Risk

The Company enters into various financial agreements in the normal course
of business in order to manage exposure to changing interest rates. The
Company generally enters into interest rate swap agreements for the purpose of
converting variable-rate debt into fixed-rate debt. As of March 31, 2001, $438
million in medium term debt was subject to interest rate swap agreements
limiting exposure such that the Company will pay a fixed rate of interest. The
fair value of these swap agreements was $(6) million at March 31, 2001. As a
result, less than 21% of the Companys non-financial services debt outstanding
at March 31, 2001 was subject to changes in various interest rates.

CTX Mortgage enters into forward sales agreements to mitigate the risk
that arises because it issues loan commitments to its customers at a specified
price and period, and subsequently commits to sell mortgage loans at a
specified price to various investors. At March 31, 2001, CTX Mortgage had loan
commitments to customers of approximately $371 million and commitments from
investors against these loan commitments of approximately $235 million.

Home Equity uses interest rate swap agreements to hedge the market risk
associated with the carrying of mortgages in anticipation of issuance of
fixed-rate securitization debt. As of March 31, 2001, Home Equity had $211
million in fixed- and variable-rate loans held for securitization, and $75
million in

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interest rate swap agreements. The fair value of these swap
agreements was $(0.4) million at March 31, 2001.

The Company does not engage in the trading of securities, derivatives, or
other financial instruments.

Statements of Consolidated Cash Flows   Supplemental Disclosures

Interest expenses relating to the Financial Services segment are included
in its costs and expenses. Interest related to segments other than Financial
Services is included as interest expense. During fiscal 2001, $52.6 million of
interest costs were capitalized to qualifying assets, principally within the
Home Building segment, and $46.6 million of previously capitalized interest was
charged to interest expense.

|                           |  |                               |         |   |      |   |         |      |  |   |         |  
|-------------------------- |  | ----------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                           |  | For the Years Ended March 31, |        
|                           |  |                               |        
|                           |  | 2001                          |         |   | 2000 |   |         | 1999 | 
|                           |  |                               |         |   |      |   |         |      | 
|Total Interest Incurred    |  | $                             | 197,679 |   |      | $ | 128,520 |      |  | $ | 118,451 |  
|                          
|                          
|                          
|                          
|Capitalized Interest, net  |  |                               | (6,038  | ) |      |   |        |      |  |   |        |  
|                          
|                          
|                          
|                          
|Less   Financial Services |  |                               | (92,572 | ) |      |   | (61,676 | )    |  |   | (76,870 | )
|                           |  |                               |         |   |      |   |         |      | 
|Interest Expense           |  | $                             | 99,069  |   |      | $ | 66,844  |      |  | $ | 41,581  |  
|                           |  |                               |         |   |      |   |         |      | 

Net payments made for federal, state, and foreign income taxes during the
fiscal years ended March 31, 2001, 2000, and 1999 were $172.1 million, $98.9
million, and $43.7 million, respectively.

Statements of Financial Accounting Standards

SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities, was issued in June 1998. This statement addresses the accounting
for derivative instruments, including derivative instruments embedded in other
contracts (collectively referred to as derivatives), and hedging activities as
well as the disclosure of these activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the consolidated
balance sheet and measure those instruments at fair value. In June 1999, SFAS
No. 137 was issued, which delays the implementation of SFAS No. 133 for the
Company until April 2001. In June 2000, SFAS No. 138 was issued, which amends
SFAS No. 133 for certain derivative instruments and certain hedging activities.

The adoption of SFAS No. 133 on April 1, 2001 resulted in an insignificant
transition adjustment. The Company does not anticipate that SFAS No. 133 will
significantly increase the volatility of earnings.

SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities, was issued in September 2000. This
statement replaces SFAS No. 125, Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities. SFAS No. 140 revises the
standards for accounting for securitizations and other transfers of financial
assets and collateral and requires certain disclosures, but carries forward
most of SFAS No. 125s provisions without reconsideration. This statement
became effective for the Company in April 2001, and the Company
does not expect a significant impact on its earnings or its statement of position.

Reclassifications

Certain prior year balances have been reclassified to be consistent with
the fiscal 2001 presentation.

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(B) PROPERTY AND EQUIPMENT

Property and equipment cost by major category and accumulated depreciation
are summarized below:

|                                  |  |           |           |   |      |   |          |  
|--------------------------------- |  | --------- | --------- | - | ---- | - | -------- | -
|                                  |  | March 31, |          
|                                  |  |           |          
|                                  |  | 2001      |           |   | 2000 |  
|                                  |  |           |           |   |      |  
|Land, Buildings, and Improvements |  | $         | 85,039    |   |      | $ | 60,203   |  
|                                 
|                                 
|                                 
|                                 
|Machinery, Equipment, and Other   |  |           | 267,950   |   |      |   | 227,391  |  
|                                 
|                                 
|                                 
|                                 
|Plants                            |  |           | 688,873   |   |      |   | 344,225  |  
|                                  |  |           |           |   |      |  
|                                  |  |           | 1,041,862 |   |      |   | 631,819  |  
|                                 
|                                 
|                                 
|                                 
|Accumulated Depreciation          |  |           | (312,763  | ) |      |   | (271,215 | )
|                                  |  |           |           |   |      |  
|                                  |  | $         | 729,099   |   |      | $ | 360,604  |  
|                                  |  |           |           |   |      |  

During November 2000, Construction Products purchased selected strategic
assets which are included in Property and Equipment. See Note (I) for further
discussion.

(C) INDEBTEDNESS

Short-term Debt

Balances of short-term debt were:

|                             |  |             |   |  |      |   |         |  |           |   |         |             |  |   |         |  |  |   |           |  |  |   |         | 
|---------------------------- |  | ----------- | - |  | ---- | - | ------- |  | --------- | - | ------- | ----------- |  | - | ------- |  |  | - | --------- |  |  | - | ------- | 
|                             |  | March 31,   |  
|                             |  |             |  
|                             |  | 2001        |   |  | 2000 |  
|                             |  |             |   |  |      |  
|                             |  | Centex      |   |  |      |   |         |  | Financial |   |         | Centex      |  |   |         |  |  |   | Financial | 
|                             |  | Corporation |   |  |      |   |         |  | Services  |   |         | Corporation |  |   |         |  |  |   | Services  | 
|                             |  |             |   |  |      |   |         |  |           |   |         |             |  |   |         |  |  |   |           | 
|Banks                        |  | $           |  |  |      |   |         |  |           | $ | 192,380 |             |  | $ | 4,000   |  |  |   |           |  |  | $ | 185,973 | 
|                            
|                            
|                            
|                            
|Secured Liquidity Notes      |  |             |  |  |      |   |         |  |           |   | 117,950 |             |  |   |        |  |  |   |           |  |  |   |        | 
|                            
|                            
|                            
|                            
|Commercial Paper             |  |             |  |  |      |   |         |  |           |   |        |             |  |   | 109,135 |  |  |   |           |  |  |   |        | 
|                            
|                            
|                            
|                            
|Other Financial Institutions |  |             |  |  |      |   |         |  |           |   | 168,700 |             |  |   | 33,773  |  |  |   |           |  |  |   | 229,354 | 
|                             |  |             |   |  |      |   |         |  |           |   |         |             |  |   |         |  |  |   |           | 
|                             |  | $           |  |  |      |   |         |  |           | $ | 479,030 |             |  | $ | 146,908 |  |  |   |           |  |  | $ | 415,327 | 
|                             |  |             |   |  |      |   |         |  |           |   |         |             |  |   |         |  |  |   |           | 
|Consolidated Short-term Debt |  |             |   |  |      | $ | 479,030 |  |           |   |         |             |  |   |         |  |  | $ | 562,235   | 
|                             |  |             |   |  |      |   |         |  |           |   |         |             |  |   |         |  |  |  

The Company borrows on a short-term basis from banks under uncommitted
lines which bear interest at prevailing market rates. The weighted-average
interest rates of the short-term borrowings during fiscal 2001 and 2000 were
7.4% and 5.7%, respectively. The weighted-average rates of balances at fiscal
year end 2001 and 2000 were 5.8% and 6.6%, respectively.

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Long-term Debt

Balances of long-term debt were:

|                        |                                                                               |                    |                                                                                     |         |           |         |         |      |   |         | 
|----------------------- | ----------------------------------------------------------------------------- | ------------------ | ----------------------------------------------------------------------------------- | ------- | --------- | ------- | ------- | ---- | - | ------- | 
|                        |                                                                               |                    |                                                                                     |         | March 31, |        
|                        |                                                                               |                    |                                                                                     |         |           |        
|                        |                                                                               |                    |                                                                                     |         | 2001      |         |         | 2000 |  
|                        |                                                                               |                    |                                                                                     |         |           |         |         |      |  
|Non-Financial Services:
|                       
|                       
|                       
|                       
|                        | Senior Debt:                                                                 
|                       
|                       
|                       
|                       
|                        |                                                                               |                    | Medium-Term Note Programs, 5.45% to 7.95%, due through 2006                         |         | $         | 486,995 |         |      | $ | 524,482 | 
|                       
|                       
|                       
|                       
|                        |                                                                               |                    | Long-Term Notes, 6.40% to 9.75%, due through 2011                                   |         |           | 464,970 |         |      |   | 14,957  | 
|                       
|                       
|                       
|                       
|                        |                                                                               |                    | Other Indebtedness, weighted-average 5.39% and 6.44%
respectively, due through 2027 |         |           | 313,658 |         |      |   | 12,453  | 
|                       
|                       
|                       
|                       
|                        |                                                                               | Subordinated Debt:
|                       
|                       
|                       
|                       
|                        |                                                                               |                    | Subordinated Debentures, 7.38%, due in 2006                                         |         |           | 99,796  |         |      |   | 99,747  | 
|                       
|                       
|                       
|                       
|                        |                                                                               |                    | Subordinated Debentures, 8.75%, due in 2007                                         |         |           | 99,574  |         |      |   | 99,521  | 
|                        |                                                                               |                    |                                                                                     |         |           |         |         |      |  
|                        |                                                                               |                    | 1,464,993                                                                           |         |           |         | 751,160 |     
|                        |                                                                               |                    |                                                                                     |         |           |         |         |      |  
|Financial Services:    
|                       
|                       
|                       
|                       
|                        | Home Equity Loans Asset-backed Certificates, 6.60% to 8.48%, due
through 2031 |                    |                                                                                     | 310,606 |           |         |         |     |  
|                       
|                       
|                       
|                       
|                        | Home Equity Loans Asset-backed Certificates, 6.60% to 7.99%, due
through 2030 |                    |                                                                                     | 373,503 |           |         |         |     |  
|                       
|                       
|                       
|                       
|                        | Home Equity Loans Asset-backed Certificates, 6.74% to 7.17%, due
through 2031 |                    |                                                                                     | 389,259 |           |         |         |     |  
|                       
|                       
|                       
|                       
|                        | Home Equity Loans Asset-backed Certificates, 5.61% to 6.80%, due
through 2031 |                    |                                                                                     | 475,000 |           |         |         |     |  
|                       
|                       
|                       
|                       
|                        | Home Equity Loans Asset-backed Subordinated Note, 6.75%, due 2006             |                    |                                                                                     | 27,500  |           |         |         |     |  
|                        |                                                                               |                    |                                                                                     |         |           |         |         |      |  
|                        |                                                                               |                    | 1,575,868                                                                           |         |           |         |        |     
|                        |                                                                               |                    |                                                                                     |         |           |         |         |      |  
|Total                   |                                                                               | $                  | 3,040,861                                                                           |         |           | $       | 751,160 |     
|                        |                                                                               |                    |                                                                                     |         |           |        

Maturities of long-term debt (in thousands), excluding home equity loans
asset-backed certificates, during the next five fiscal years are: 2002,
$428,661; 2003, $68,682; 2004, $277,760; 2005, $215; 2006, $324,943; and
$364,732 thereafter.

Debt related to securitized residential mortgage loans structured as
collateralized borrowings was $1.6 billion at March 31, 2001. The principal
and interest on these notes are paid using the cash flows from the underlying
residential mortgage loans, which serve as collateral for the debt.
Accordingly, the timing of the principal payments on these notes is dependent
on the payments received on the underlying residential mortgage loans. The
expected maturities of long-term debt (in thousands) based on contractual
maturities adjusted for projected repayments and prepayments of principal
during the next five fiscal years are: 2002, $337,479; 2003, $314,683; 2004,
$221,442; 2005, $165,309; 2006, $150,612; and $386,343 thereafter.

Included in other long-term debt is a $2.1 million convertible
subordinated debenture sold at par in 1985 to a corporate officer. The
indebtedness, which matures in 2010, bears interest at LIBOR plus 1.5%

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and is
convertible into 400,000 shares of the Companys common stock. In connection
with this transaction, the Company has guaranteed the payment of a $2.1 million
note payable to a bank by the officer.

Credit Facilities

In August 2000, the Company entered into a $600 million committed
multi-bank revolving credit facility expiring in 2005 which serves as backup
for commercial paper borrowings. There have been no borrowings under this
facility since its inception. There were no commercial paper borrowings at
March 31, 2001.

The Financial Services segment obtains most of its own short-term
liquidity needs through separate facilities which require only limited support
from Centex. During the third quarter of fiscal 2000, CTX Mortgage began
selling to Harwood Street Funding I, LLC (HSF-I) substantially all of the
Conforming, Jumbo A, and Government National Mortgage Association (GNMA)
eligible mortgages originated by CTX Mortgage under a revolving sales
agreement. HSF-I, an unaffiliated special purpose entity, acquires and then
resells mortgages originated by CTX Mortgage into secondary markets. Under the
sales agreement between CTX Mortgage and HSF-I, which has a five year term with
certain renewal options, CTX Mortgage is not required to sell its mortgage
loans to HSF-I; however, HSF-I has committed to purchase all eligible loans
offered by CTX Mortgage. This arrangement gives CTX Mortgage daily access, on
a revolving basis, to HSF-Is $1.5 billion of capacity. CTX Mortgage is the
sole manager of HSF-I and, in that capacity, arranges for the sale of such
loans into the secondary market. For a subservicing fee, CTX Mortgage also
acts as servicer of these mortgage loans for HSF-I until HSF-I sells the loans.
CTX Mortgage also maintains $190 million of committed secured mortgage
warehouse facilities, expiring through October 2001, to finance mortgages not
sold to HSF-I.

In February 2001, Home Equity began financing its inventory of mortgage
loans through Harwood Street Funding II, LLC (HSF-II) under a revolving
agreement. HSF-II, a wholly-owned special purpose limited liability company,
finances mortgages originated or acquired by Home Equity and then sells them
into the secondary market or to securitization structures. Home Equity
consolidates HSF-II for financial reporting purposes and all of the effects of
transactions between the entities has been eliminated. This arrangement gives
Home Equity daily access, on a revolving basis, to HSF-IIs $550 million of
capacity. HSF-II obtains its funds through the issuance of five-year
subordinated notes and short-term secured liquidity notes. At March 31, 2001,
HSF-II had outstanding $27.5 million of subordinated notes and $118.0 million
of secured liquidity notes, which are included as Financial Services debt in
the accompanying consolidated balance sheet. Home Equity continues to service
the loans financed by HSF-II. Home Equity also has $325 million of committed
secured mortgage warehouse facilities, expiring through March 2002, to finance
sub-prime mortgages not financed by HSF-II.

Financial Services also maintains a $90 million uncommitted unsecured
credit facility available to CTX Mortgage, Home Equity, and other subsidiaries.
At March 31, 2001, Financial Services had borrowed $90 million under this
facility; $45 million of such borrowings were allocated to CTX Mortgage and $45
million to Home Equity. All borrowings under this unsecured facility are
guaranteed by Centex.

CTX Mortgage and Home Equity share a $175 million uncommitted secured
credit facility to finance mortgage inventory. At March 31, 2001, CTX Mortgage
had borrowed $43.5 million and Home Equity had borrowed $60.4 million under
this facility. This facility has limited recourse to Centex.

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Construction Products has a $325 million senior revolving credit facility,
expiring in November 2003, under which $268.5 million had been borrowed at
March 31, 2001. This facility has no recourse to Centex.

Under the most restrictive covenants of the various debt agreements,
retained earnings of $1.7 billion were free of restrictions at March 31, 2001.

(D) COMPREHENSIVE INCOME

Comprehensive income is summarized below:

|                                   |                                          |   |                               |        |   |      |         |        |      |   |         |   | 
|---------------------------------- | ---------------------------------------- | - | ----------------------------- | ------ | - | ---- | ------- | ------ | ---- | - | ------- | - | 
|                                   |                                          |   | For the Years Ended March 31, |       
|                                   |                                          |   |                               |       
|                                   |                                          |   | 2001                          |        |   | 2000 |         |        | 1999 |  
|                                   |                                          |   |                               |        |   |      |         |        |      |  
|Net Earnings                       |                                          | $ | 281,977                       |        |   | $    | 257,132 |        |      | $ | 231,962 |  
|                                  
|                                  
|                                  
|                                  
|Other Comprehensive Income (Loss):
|                                  
|                                  
|                                  
|                                  
|                                   | Unrealized Gain (Loss) on Investments    |   |                               | 1,152  |   |      |         | (1,152 | )    |   |         |  | 
|                                  
|                                  
|                                  
|                                  
|                                   | Foreign Currency Translation Adjustments |   |                               | (5,001 | ) |      |         | (96    | )    |   |         |  | 
|                                   |                                          |   |                               |        |   |      |         |        |     
|Comprehensive Income               |                                          | $ | 278,128                       |        |   | $    | 255,884 |        |      | $ | 231,962 |  
|                                   |                                          |   |                               |        |   |      |         |        |     

Comprehensive income consists of net income, foreign currency translation
adjustments, and mark to market adjustments to securities available for sale
held by the Companys 65.2% owned subsidiary, Centex Construction Products,
Inc. (Construction Products).

(E) CAPITAL STOCK

Stockholder Rights Plan

On October 2, 1996, the Board of Directors of the Company (the Board)
adopted a new stockholder rights plan (Plan) to replace the original rights
plan which expired on October 1, 1996. In connection with the Plan, the Board
authorized and declared a dividend of one right (Right) for each share of
Common Stock of the Company to all stockholders of record at the close of
business on October 15, 1996. After giving effect to the Companys two-for-one
stock split effective March 2, 1998, each Right entitles its holder to purchase
one two-hundredths of a share of a new series of preferred stock designated
Junior Participating Preferred Stock, Series D, at an exercise price of $67.50.
The Rights will become exercisable upon the earlier of ten days after the
first public announcement that a person or group has acquired beneficial
ownership of 15% or more of the Common Stock, or ten business days after a
person or group announces an offer, the consummation of which would result in
such person or group beneficially owning 15% or more of the Common Stock (even
if no purchases actually occur), unless such time periods are deferred by
appropriate Board action. The Plan excludes FMR Corp. from causing the rights
to become exercisable until such time as FMR Corp., together with certain
affiliated and associated persons, collectively own 20% or more of the Common
Stock.

If the Company is involved in a merger or other business combination at
any time after a person or group has acquired beneficial ownership of 15% or
more (or, in the case of FMR Corp., 20% or more) of the Common Stock, the
Rights will entitle a holder to buy a number of shares of common stock of the
acquiring Company having a market value of twice the exercise price of each
Right. If any person or group acquires beneficial ownership of 15% or more
(or, in the case of FMR Corp., 20% or more) of the Common Stock, or
after reaching such 15% threshold, the Company were to sell 50% or
more of its assets or earning  power, the Rights
will entitle a holder (other than such person or any member of such group) to
buy a number of additional shares of Common Stock having a market value of
twice the exercise price of each Right.

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Alternatively, if a person or group
has acquired 15% or more (or, in the case of FMR Corp., 20% or more) of the
Common Stock, but less than 50% of the Common Stock, the Company may at its
option exchange each Right of a holder (other than such person or any member of
such group) for one share of Common Stock. In general, the Rights are
redeemable at $.01 per Right until 15 days after the Rights become exercisable
as described above. Unless earlier redeemed, the Rights will expire on October
12, 2006.

Stock Options

Stock options granted under the Fourth Amended and Restated 1998 Centex
Corporation Employee
Non-Qualified Stock Option Plan may not be granted at less than fair
market value. Although the Centex Corporation Amended and Restated 1987 Stock
Option Plan (the 1987 Plan) provides that stock options may be granted at
less than fair market value, the Company has consistently followed the practice
of issuing options at or above fair market value. The 1987 Plan will expire
subsequent to fiscal year end on May 19, 2001. Stock options granted under the
Centex Corporation Stock Option Plan (the Centex Plan) were not granted at
less than fair market value. The Centex Plan expired in fiscal 1999. Under
all three plans, the option periods and the dates that the shares covered by
the options may first become exercisable may vary within a maximum period of
ten years.

The Company records proceeds from the exercise of stock options as
additions to common stock and capital in excess of par value. The federal tax
benefit, if any, is considered additional capital in excess of par value. The
Company accounts for stock options using the intrinsic value method of
accounting as prescribed by APB Opinion No. 25, Accounting for Stock Issued to
Employees. In general, no expense is recognized related to the Companys
stock options because the stock options are granted at or above fair market
value.

A summary of the activity of the stock option plans is presented below:

|                                                               |                         |   |                               |   |  |          |           |   |           |   |            |           |  |           |           |       |  |          |           |   |           |   |       |   | 
|-------------------------------------------------------------- | ----------------------- | - | ----------------------------- | - |  | -------- | --------- | - | --------- | - | ---------- | --------- |  | --------- | --------- | ----- |  | -------- | --------- | - | --------- | - | ----- | - | 
|                                                               |                         |   | For the Years Ended March 31, |  
|                                                               |                         |   |                               |  
|                                                               |                         |   | 2001                          |   |  | 2000     |           |   | 1999      |  
|                                                               |                         |   |                               |   |  |          |           |   |           |  
|                                                               |                         |   |                               |   |  |          | Weighted- |   |           |   |            |           |  | Weighted- |           |       |  |          |           |   | Weighted- |  
|                                                               |                         |   |                               |   |  |          | Average   |   |           |   |            |           |  | Average   |           |       |  |          |           |   | Average   |  
|                                                               |                         |   | Number                        |   |  | Exercise |           |   | Number    |   |            | Exercise  |  |           | Number    |       |  | Exercise |          
|                                                               |                         |   | of Shares                     |   |  | Price    |           |   | of Shares |   |            | Price     |  |           | of Shares |       |  | Price    |          
|                                                               |                         |   |                               |   |  |          |           |   |           |   |            |           |  |           |           |       |  |          |          
|Options Outstanding,
Beginning of Year                         |                         |   | 7,370,571                     |   |  | $        | 28.23     |   |           |   | 6,763,748  |           |  | $         | 22.46     |       |  |          | 5,260,056 |   |           | $ | 14.22 |  
|                                                              
|                                                              
|                                                              
|                                                              
|Options Granted
At Fair Market Value                           |                         |   | 2,108,300                     |   |  | $        | 24.01     |   |           |   | 42,500     |           |  | $         | 27.53     |       |  |          | 2,254,800 |   |           | $ | 38.27 |  
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Above Fair Market Value |   |                               |  |  |          |           |  |           |   |            | 2,337,590 |  |           | $         | 36.06 |  |          |           |  |           |   |       |  | 
|                                                              
|                                                              
|                                                              
|                                                              
|Options Exercised                                              |                         |   | (1,159,166                    | ) |  | $        | 15.30     |   |           |   | (1,336,568 | )         |  | $         | 11.40     |       |  |          | (709,283  | ) |           | $ | 11.51 |  
|                                                              
|                                                              
|                                                              
|                                                              
|Options Cancelled                                              |                         |   | (1,447,536                    | ) |  | $        | 35.82     |   |           |   | (436,699   | )         |  | $         | 32.24     |       |  |          | (41,825   | ) |           | $ | 18.44 |  
|                                                               |                         |   |                               |   |  |          |           |   |           |   |            |           |  |           |           |       | 
|Options Outstanding, End of Year                               |                         |   | 6,872,169                     |   |  | $        | 27.52     |   |           |   | 7,370,571  |           |  | $         | 28.23     |       |  |          | 6,763,748 |   |           | $ | 22.46 |  
|                                                               |                         |   |                               |   |  |          |           |   |           |   |            |           |  |           |           |       | 
|Options Exercisable, End of Year                               |                         |   | 3,418,766                     |   |  |          |           |   |           |   | 3,546,606  |           |  |           |           |       |  |          | 2,760,743 |  
|                                                               |                         |   |                               |   |  |          |           |   |           |   |            |           |  |           |           |       | 
|Shares Available for Future Stock
Option Grants, End of Year   |                         |   | 2,461,813                     |   |  |          |           |   |           |   | 3,121,938  |           |  |           |           |       |  |          | 3,478,257 |  
|                                                               |                         |   |                               |   |  |          |           |   |           |   |            |           |  |           |           |       | 
|Weighted-Average Fair Value of
Options Granted during the Year |                         | $ | 13.14                         |   |  |          |           |   |           | $ | 14.80      |           |  |           |           |       |  | $        | 18.54     |  

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Using the treasury stock method, which assumes that any proceeds together
with the related tax benefits from the exercise of options would be used to
purchase Common Stock at current prices, the

dilutive effect of the options on
outstanding shares as of March 31, 2001 would have been 2.5%. This is
significantly less than appears on a gross basis when compared to the
59,929,344 shares of Common Stock outstanding as of March 31, 2001.

The following table summarizes information about stock options outstanding
at March 31, 2001:

|                         |  |                     |           |  |                     |           |      |                |  |   |             |  |  |                |           |  |  |   |       | 
|------------------------ |  | ------------------- | --------- |  | ------------------- | --------- | ---- | -------------- |  | - | ----------- |  |  | -------------- | --------- |  |  | - | ----- | 
|                         |  | Options Outstanding |           |  | Options Exercisable |          
|                         |  |                     |           |  |                     |          
|                         |  |                     |           |  |                     | Weighted- |     
|                         |  |                     |           |  |                     | Average   |     
|                         |  | Number of           |           |  | Remaining           |           |      | Weighted-      |  |   | Number of   |  |  | Weighted-      |          
|                         |  | Shares              |           |  | Contractual         |           |      | Average        |  |   | Shares      |  |  | Average        |          
|Range of Exercise Prices |  | Outstanding         |           |  | Life (Years)        |           |      | Exercise Price |  |   | Outstanding |  |  | Exercise Price |          
|                         |  |                     |           |  |                     |           |      |                |  |   |             |  |  |                |          
|$12.56 - $19.66          |  |                     | 1,920,399 |  |                     |           | 5.40 |                |  | $ | 16.77       |  |  |                | 1,484,761 |  |  | $ | 16.86 | 
|                        
|                        
|                        
|                        
|$20.44 - $28.53          |  |                     | 2,020,880 |  |                     |           | 8.95 |                |  | $ | 23.74       |  |  |                | 393,955   |  |  | $ | 23.97 | 
|                        
|                        
|                        
|                        
|$30.34 - $36.81          |  |                     | 1,450,740 |  |                     |           | 7.98 |                |  | $ | 35.68       |  |  |                | 653,320   |  |  | $ | 35.83 | 
|                        
|                        
|                        
|                        
|$37.06 - $39.69          |  |                     | 1,480,150 |  |                     |           | 7.04 |                |  | $ | 38.63       |  |  |                | 886,730   |  |  | $ | 38.62 | 
|                         |  |                     |           |  |                     |           |      |                |  |   |             |  |  |               
|                         |  |                     | 6,872,169 |  |                     |           | 7.34 |                |  | $ | 27.52       |  |  |                | 3,418,766 |  |  | $ | 26.95 | 
|                         |  |                     |           |  |                     |           |      |                |  |   |             |  |  |               

The Company has adopted the disclosure-only provisions of SFAS No. 123,
Accounting for Stock-Based Compensation. Accordingly, no compensation cost
has been recognized for the stock options. Had compensation cost for the
Companys stock option plans been determined based on the fair value at the
grant date for awards in fiscal 2001, 2000, and 1999 consistent with the
provisions of SFAS No. 123, the Companys net earnings and earnings per share
would have been reduced to the pro forma amounts indicated below:

|                                 |         |   |                               |      |  |      |         |      |      |   |         |      | 
|-------------------------------- | ------- | - | ----------------------------- | ---- |  | ---- | ------- | ---- | ---- | - | ------- | ---- | 
|                                 |         |   | For the Years Ended March 31, |     
|                                 |         |   |                               |     
|                                 |         |   | 2001                          |      |  | 2000 |         |      | 1999 |  
|                                 |         |   |                               |      |  |      |         |      |      |  
|Net Earnings   as Reported      |         | $ | 281,977                       |      |  | $    | 257,132 |      |      | $ | 231,962 |     
|                                
|                                
|                                
|                                
|Net Earnings  Pro Forma         |         | $ | 257,504                       |      |  | $    | 231,399 |      |      | $ | 217,504 |     
|                                
|                                
|                                
|                                
|Earnings Per Share  as Reported
|                                
|                                
|                                
|                                
|                                 | Basic   |   | $                             | 4.77 |  |      | $       | 4.34 |      |   | $       | 3.90 | 
|                                
|                                
|                                
|                                
|                                 | Diluted |   | $                             | 4.65 |  |      | $       | 4.22 |      |   | $       | 3.75 | 
|                                
|                                
|                                
|                                
|Earnings Per Share  Pro Forma  
|                                
|                                
|                                
|                                
|                                 | Basic   |   | $                             | 4.36 |  |      | $       | 3.90 |      |   | $       | 3.66 | 
|                                
|                                
|                                
|                                
|                                 | Diluted |   | $                             | 4.24 |  |      | $       | 3.80 |      |   | $       | 3.52 | 

The fair value of each option grant was estimated on the date of grant
using the Black-Scholes option-pricing model with the following
weighted-average assumptions:

|                        |  |                               |      |   |      |  |      |      |  |  |      |  
|----------------------- |  | ----------------------------- | ---- | - | ---- |  | ---- | ---- |  |  | ---- | -
|                        |  | For the Years Ended March 31, |     
|                        |  |                               |     
|                        |  | 2001                          |      |   | 2000 |  |      | 1999 | 
|                        |  |                               |      |   |      |  |      |      | 
|Expected Volatility     |  |                               | 43.5 | % |      |  | 35.0 | %    |  |  | 34.3 | %
|                       
|                       
|                       
|                       
|Risk-Free Interest Rate |  |                               | 6.3  | % |      |  | 5.5  | %    |  |  | 5.7  | %
|                       
|                       
|                       
|                       
|Dividend Yield          |  |                               | 0.7  | % |      |  | 0.5  | %    |  |  | 0.4  | %
|                       
|                       
|                       
|                       
|Expected Life (Years)   |  |                               | 8    |   |      |  | 8    |      |  |  | 8    |  

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(F) INCOME TAXES

The provision for income taxes includes the following components:

|                             |         |         |         |                               |         |   |         |        |         |      |         |        |        | 
|---------------------------- | ------- | ------- | ------- | ----------------------------- | ------- | - | ------- | ------ | ------- | ---- | ------- | ------ | ------ | 
|                             |         |         |         | For the Years Ended March 31, |        
|                             |         |         |         |                               |        
|                             |         |         |         | 2001                          |         |   | 2000    |        |         | 1999 |        
|                             |         |         |         |                               |         |   |         |        |         |      |        
|Current Provision           
|                            
|                            
|                            
|                            
|                             |         | Federal |         | $                             | 121,083 |   |         | $      | 143,101 |      |         | $      | 32,858 | 
|                            
|                            
|                            
|                            
|                             |         | State   |         |                               | 25,252  |   |         |        | 22,228  |      |         |        | 12,012 | 
|                             |         |         |         |                               |         |   |         |        |         |      |        
|                             |         |         | 146,335 |                               |         |   | 165,329 |        |         |      | 44,870  |       
|                             |         |         |         |                               |         |   |         |        |         |      |        
|Deferred Provision (Benefit)
|                            
|                            
|                            
|                            
|                             | Federal |         |         | 15,313                        |         |   |         | (3,274 | )       |      |         | 92,008 |       
|                            
|                            
|                            
|                            
|                             | State   |         |         | (7,294                        | )       |   |         | (2,326 | )       |      |         | 4,454  |       
|                             |         |         |         |                               |         |   |         |        |         |      |        
|                             |         |         | 8,019   |                               |         |   | (5,600  | )      |         |      | 96,462  |       
|                             |         |         |         |                               |         |   |         |        |         |      |        
|Provision for Income Taxes   |         | $       | 154,354 |                               |         | $ | 159,729 |        |         | $    | 141,332 |       
|                             |         |         |         |                               |         |   |         |        |        

The effective tax rate is greater than the federal statutory rate of 35%
in fiscal 2000 and 1999 due to the following items:

|                                              |                                |   |                               |         |   |      |         |        |      |   |         |        |  
|--------------------------------------------- | ------------------------------ | - | ----------------------------- | ------- | - | ---- | ------- | ------ | ---- | - | ------- | ------ | -
|                                              |                                |   | For the Years Ended March 31, |        
|                                              |                                |   |                               |        
|                                              |                                |   | 2001                          |         |   | 2000 |         |        | 1999 |  
|                                              |                                |   |                               |         |   |      |         |        |      |  
|Financial Income Before Taxes                 |                                | $ | 436,331                       |         |   | $    | 416,861 |        |      | $ | 373,294 |       
|                                              |                                |   |                               |         |   |      |         |        |     
|Income Taxes at Statutory Rate                |                                | $ | 152,716                       |         |   | $    | 145,902 |        |      | $ | 130,653 |       
|                                             
|                                             
|                                             
|                                             
|Increases
(Decreases) in Tax Resulting from 
|                                             
|                                             
|                                             
|                                             
|                                              | State Income Taxes, net        |   |                               | 10,909  |   |      |         | 10,265 |      |   |         | 9,068  |  
|                                             
|                                             
|                                             
|                                             
|                                              | Negative Goodwill Amortization |   |                               | (17,013 | ) |      |         | (6,000 | )    |   |         | (6,000 | )
|                                             
|                                             
|                                             
|                                             
|                                              | Other                          |   |                               | 7,742   |   |      |         | 9,562  |      |   |         | 7,611  |  
|                                              |                                |   |                               |         |   |      |         |        |     
|Provision for Income Taxes                    |                                | $ | 154,354                       |         |   | $    | 159,729 |        |      | $ | 141,332 |       
|                                              |                                |   |                               |         |   |      |         |        |     
|Effective Tax Rate                            |                                |   | 35                            | %       |   |      | 38      | %      |      |   | 38      | %     

The deferred income tax provision (benefit) results from the following
temporary differences in the recognition of revenues and expenses for tax and
financial reporting purposes:

|                                                |  |                               |         |   |      |   |         |      |  |   |        |  
|----------------------------------------------- |  | ----------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------ | -
|                                                |  | For the Years Ended March 31, |        
|                                                |  |                               |        
|                                                |  | 2001                          |         |   | 2000 |   |         | 1999 | 
|                                                |  |                               |         |   |      |   |         |      | 
|Utilization of Net Operating Loss Carryforwards |  | $                             |        |   |      | $ |        |      |  | $ | 28,224 |  
|                                               
|                                               
|                                               
|                                               
|Tax Basis in Excess of Book Basis               |  |                               | 7,240   |   |      |   | 7,666   |      |  |   | 71,740 |  
|                                               
|                                               
|                                               
|                                               
|Uniform Capitalization for Tax Reporting        |  |                               | (14,502 | ) |      |   |        |      |  |   | 3,525  |  
|                                               
|                                               
|                                               
|                                               
|Excess Tax Depreciation and Amortization        |  |                               | 21,242  |   |      |   | 7,626   |      |  |   | 2,366  |  
|                                               
|                                               
|                                               
|                                               
|Securitization Reporting Differences            |  |                               | (12,196 | ) |      |   | (9,567  | )    |  |   |       |  
|                                               
|                                               
|                                               
|                                               
|Financial Accrual Changes and Other             |  |                               | 6,235   |   |      |   | (11,325 | )    |  |   | (9,393 | )
|                                                |  |                               |         |   |      |   |         |      | 
|                                                |  | $                             | 8,019   |   |      | $ | (5,600  | )    |  | $ | 96,462 |  
|                                                |  |                               |         |   |      |   |         |      | 

65



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Components of deferred income taxes are as follows:

|                                                                  |                                                     |   |           |        |  |      |         |        | 
|----------------------------------------------------------------- | --------------------------------------------------- | - | --------- | ------ |  | ---- | ------- | ------ | 
|                                                                  |                                                     |   | March 31, |       
|                                                                  |                                                     |   |           |       
|                                                                  |                                                     |   | 2001      |        |  | 2000 |        
|                                                                  |                                                     |   |           |        |  |      |        
|Deferred Tax Assets                                              
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Tax Basis in Excess of Book Basis                   |   | $         | 11,642 |  |      | $       | 18,882 | 
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Net Operating Loss Carryforwards                    |   |           | 2,022  |  |      |         | 2,245  | 
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Uniform Capitalization for Tax Reporting            |   |           | 46,579 |  |      |         | 32,051 | 
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Financial Accruals                                  |   |           | 86,699 |  |      |         | 79,435 | 
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | State Income Taxes                                  |   |           | 8,769  |  |      |         | 2,423  | 
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Securitization Reporting Differences                |   |           | 20,683 |  |      |         | 8,487  | 
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | All Other                                           |   |           | 9,556  |  |      |         | 12,017 | 
|                                                                  |                                                     |   |           |        |  |     
|Total Deferred Tax Assets                                         |                                                     |   | 185,950   |        |  |      | 155,540 |       
|                                                                  |                                                     |   |           |        |  |     
|Deferred Tax Liabilities
Excess Tax Depreciation and Amortization |                                                     |   | 73,049    |        |  |      | 40,243  |       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Interest and Real Estate Taxes Expensed as Incurred |   |           | 19,827 |  |      |         | 18,913 | 
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Equity Adjustments                                  |   |           | 34,753 |  |      |         | 32,222 | 
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Consolidated Return Regulation Deferrals            |   |           | 6,597  |  |      |         | 6,856  | 
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | All Other                                           |   |           | 8,608  |  |      |         | 7,399  | 
|                                                                  |                                                     |   |           |        |  |     
|Total Deferred Tax Liabilities                                    |                                                     |   | 142,834   |        |  |      | 105,633 |       
|                                                                  |                                                     |   |           |        |  |     
|Net Deferred Tax Assets                                           |                                                     | $ | 43,116    |        |  | $    | 49,907  |       
|                                                                  |                                                     |   |           |        |  |     

At March 31, 2001, Centex had $5.8 million of net operating loss
carryforwards available to reduce future federal taxable income which, if
unused, expire in fiscal years as follows: 2006, $2.5 million; 2007, $0.5
million; 2008, $0.5 million; 2009, $0.5 million; 2010, $0.8 million; 2011, $0.5
million; 2017, $0.1 million; and 2018, $0.4 million.

A Centex subsidiary has a deferred tax asset of approximately $131 million
primarily related to net operating loss carryforwards. The carryforwards will
expire if unused in varying amounts through 2021. A valuation allowance equal
to the deferred tax asset has been provided by the subsidiary, valuing the
deferred tax asset at zero.

(G) CENTEX DEVELOPMENT COMPANY, L.P.

In March 1987, certain of Centexs subsidiaries contributed to the
Partnership properties with a historical cost basis (which approximated market
value) of approximately $76 million in exchange for 1,000 Class A limited
partnership units (Class A Units). The Partnership was formed to enable
stockholders to participate in long-term real estate development projects, the
dynamics of which are inconsistent with Centexs traditional financial
objectives.

The Partnership is managed by its general partner, 3333 Development
Corporation (Development), which is in turn wholly-owned by 3333 Holding
Corporation (Holding). Holding is a separate public company whose stock
trades in tandem with Centexs Common Stock. The common stock of Holding was
distributed in 1987, together with warrants to purchase approximately 80% of
the Partnerships Class B limited partnership units (Class B Units), as a
dividend to the stockholders of Centex. These securities are held by a nominee
on behalf of the stockholders and will trade in tandem with the Common Stock of

66



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Centex until such time as they are detached. The securities may be detached at
any time by Centexs Board of
Directors, but the warrants to purchase Class B Units automatically become
detached in November 2007.

The stockholders of Centex elect the four-person Board of Directors of
Holding. Three of the Board members, representing the majority of the Board,
are independent outside directors who are not directors, affiliates, or
employees of Centex. Thus, through Holding, the stockholders of Centex control
the general partner of the Partnership. The general partner and independent
Board of Holding manage how the Partnership conducts its activities, including
the acquisition, development, maintenance, operation, and sale of properties.
The general partner, acting on behalf of the Partnership, may sell or acquire
properties, including the contributed property, and enter into other business
transactions without the consent of the limited partners. In addition, the
limited partners cannot remove the general partner. The Company accounts for
its limited partner investment in the Partnership on the equity method of
accounting because the Company does not control the Partnership.

During fiscal year 1998, the agreement governing the Partnership was
amended to allow for the issuance of Class C Units. During fiscal year 1998,
the 1,000 outstanding Class A Units owned by Centex were converted to 32,260
new Class A Units. As of March 31, 2001, 181,194 Class C Units have been
issued in exchange for assets with a fair market value of $181.2 million. These
assets were recorded by the Partnership at fair market value. The partnership
agreement provides that Centex, the Class A and Class C limited partner, is
entitled to a cumulative preferred return of 9% per annum on the average
outstanding balance of its Unrecovered Capital, which is defined as its capital
contributions, adjusted for cash or other distributions representing return of
the capital contributions. As of March 31, 2001, Unrecovered Capital totaled
$214.0 million, and preference payments in arrears amounted to $21.2 million.
No preference payments were made during fiscal 2001 or fiscal 2000.

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

67



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Supplementary Condensed Combined Balance Sheets

|                                     |                                          |   |           |           |  |      |           |           | 
|------------------------------------ | ---------------------------------------- | - | --------- | --------- |  | ---- | --------- | --------- | 
|                                     |                                          |   | March 31, |          
|                                     |                                          |   |           |          
|                                     |                                          |   | 2001      |           |  | 2000 |          
|                                     |                                          |   |           |           |  |      |          
|Assets                              
|                                    
|                                    
|                                    
|                                    
|                                     | Cash and Cash Equivalents                |   | $         | 60,786    |  |      | $         | 192,252   | 
|                                    
|                                    
|                                    
|                                    
|                                     | Restricted Cash                          |   |           | 57,428    |  |      |           | 5,625     | 
|                                    
|                                    
|                                    
|                                    
|                                     | Receivables                              |   |           | 2,613,035 |  |      |           | 907,367   | 
|                                    
|                                    
|                                    
|                                    
|                                     | Inventories                              |   |           | 2,629,733 |  |      |           | 2,343,682 | 
|                                    
|                                    
|                                    
|                                    
|                                     | Investments in Joint Ventures and Other  |   |           | 72,679    |  |      |           | 68,539    | 
|                                    
|                                    
|                                    
|                                    
|                                     | Property and Equipment, net              |   |           | 732,490   |  |      |           | 364,182   | 
|                                    
|                                    
|                                    
|                                    
|                                     | Other Assets                             |   |           | 757,882   |  |      |           | 548,689   | 
|                                     |                                          |   |           |           |  |      |          
|                                     |                                          | $ | 6,924,033 |           |  | $    | 4,430,336 |          
|                                     |                                          |   |           |           |  |     
|Liabilities and Stockholders Equity
|                                    
|                                    
|                                    
|                                    
|                                     | Accounts Payable and Accrued Liabilities |   | $         | 1,352,467 |  |      | $         | 1,244,500 | 
|                                    
|                                    
|                                    
|                                    
|                                     | Short-term Debt                          |   |           | 602,185   |  |      |           | 834,897   | 
|                                    
|                                    
|                                    
|                                    
|                                     | Long-term Debt                           |   |           | 3,111,607 |  |      |           | 802,238   | 
|                                    
|                                    
|                                    
|                                    
|                                     | Minority Stockholders Interest          |   |           | 143,710   |  |      |           | 129,352   | 
|                                    
|                                    
|                                    
|                                    
|                                     | Stockholders Equity                     |   |           | 1,714,064 |  |      |           | 1,419,349 | 
|                                     |                                          |   |           |           |  |      |          
|                                     |                                          | $ | 6,924,033 |           |  | $    | 4,430,336 |          
|                                     |                                          |   |           |           |  |     

Supplementary Condensed Combined Statements of Earnings

|                             |  |                               |           |   |      |   |           |      |  |   |           | 
|---------------------------- |  | ----------------------------- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | 
|                             |  | For the Years Ended March 31, |          
|                             |  |                               |          
|                             |  | 2001                          |           |   | 2000 |   |           | 1999 | 
|                             |  |                               |           |   |      |   |           |      | 
|Revenues                     |  | $                             | 7,048,573 |   |      | $ | 6,380,125 |      |  | $ | 5,225,014 | 
|                            
|                            
|                            
|                            
|Cost of Sales                |  |                               | 6,612,484 |   |      |   | 5,959,430 |      |  |   | 4,851,720 | 
|                             |  |                               |           |   |      |   |           |      | 
|Earnings Before Income Taxes |  |                               | 436,089   |   |      |   | 420,695   |      |  |   | 373,294   | 
|                            
|                            
|                            
|                            
|Income Taxes                 |  |                               | 154,112   |   |      |   | 163,563   |      |  |   | 141,332   | 
|                             |  |                               |           |   |      |   |           |      | 
|Net Earnings                 |  |                               | 281,977   |   |      |   | 257,132   |      |  |   | 231,962   | 
|                            
|                            
|                            
|                            
|Other Comprehensive Loss     |  |                               | (3,849    | ) |      |   | (1,248    | )    |  |   |          | 
|                             |  |                               |           |   |      |   |           |      | 
|Comprehensive Income         |  | $                             | 278,128   |   |      | $ | 255,884   |      |  | $ | 231,962   | 
|                             |  |                               |           |   |      |   |           |      | 

(H) ACQUISITION OF VISTA PROPERTIES, INC.

In fiscal 1996, the Company acquired certain equity interests in Vista,
which owned a portfolio of properties located in seven states in which the
Company has significant operations. The Vista portfolio was reduced to a
nominal book basis after recording certain deferred tax benefits related to
the acquisition. As these properties are developed or sold, the net sales
proceeds are reflected as operating margin. Negative goodwill recorded as a
result of the business combination was being amortized to earnings over the
estimated period during which Vistas land will be developed and/or sold.
During fiscal 2001, the Company disposed of virtually all of the remaining
Vista portfolio, and negative goodwill was fully amortized. For the years
ended March 31, 2001 and 2000, the Company recorded total negative goodwill
amortization of $50.8 million and $16 million, respectively.

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(I) ACQUISITION OF CONSTRUCTION PRODUCTS OPERATIONS

During November 2000, Construction Products purchased selected strategic
assets summarized below and assumed certain related liabilities. The purchase
price was approximately $442 million. Goodwill of $59 million was recorded in
connection with the transaction. Funding came from cash on hand and borrowings
under Construction Products new $325 million senior credit facility.

The principal assets acquired
were: a gypsum
wallboard plant located in Duke, Oklahoma with a production capacity
of 1.1 billion square feet of wallboard; a short line railroad and railcars
linking the Duke plant to adjacent railroads; a recently completed 220,000
ton-per-year lightweight paper mill in Lawton, Oklahoma; a 50,000 ton-per-year
Commerce City (Denver), Colorado paper mill; and three recycled paper fiber
collection sites. The gypsum wallboard operations are being operated by
Construction Products American Gypsum Company located in Albuquerque, New
Mexico. The paper operations are headquartered in Lawton, Oklahoma and focus
primarily on the gypsum wallboard paper business.

(J) BUSINESS SEGMENTS

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

Intersegment revenues and investments in joint ventures are not material
and are not shown in the following tables. The investment in Centex
Development Company, L.P. (approximately $211 million) is included in the
Investment Real Estate segment.

HOME BUILDING

Conventional Homes

Conventional Homes operations involve the purchase and development of land
or lots as well as the construction and sale of single-family homes.

|                                           |  |                               |          |   |      |   |          |      |  |   |          |  
|------------------------------------------ |  | ----------------------------- | -------- | - | ---- | - | -------- | ---- |  | - | -------- | -
|                                           |  | For the Years Ended March 31, |         
|                                           |  |                               |         
|                                           |  | 2001                          |          |   | 2000 |   |          | 1999 | 
|                                           |  |                               |          |   |      |   |          |      | 
|                                           |  | (Dollars in millions)         |         
|Revenues                                   |  | $                             | 4,356.2  |   |      | $ | 3,686.8  |      |  | $ | 2,819.4  |  
|                                          
|                                          
|                                          
|                                          
|Cost of Sales                              |  |                               | (3,304.9 | ) |      |   | (2,852.3 | )    |  |   | (2,194.7 | )
|                                          
|                                          
|                                          
|                                          
|Selling, General & Administrative Expenses |  |                               | (625.9   | ) |      |   | (511.3   | )    |  |   | (382.5   | )
|                                           |  |                               |          |   |      |   |          |      | 
|Operating Earnings                         |  | $                             | 425.4    |   |      | $ | 323.2    |      |  | $ | 242.2    |  
|                                           |  |                               |          |   |      |   |          |      | 
|Identifiable Assets                        |  | $                             | 2,510.5  |   |      | $ | 2,204.4  |      |  | $ | 1,686.9  |  
|                                           |  |                               |          |   |      |   |          |      | 
|Capital Expenditures                       |  | $                             | 16.3     |   |      | $ | 12.6     |      |  | $ | 15.5     |  
|                                           |  |                               |          |   |      |   |          |      | 
|Depreciation and Amortization              |  | $                             | 16.6     |   |      | $ | 14.0     |      |  | $ | 8.5      |  
|                                           |  |                               |          |   |      |   |          |      | 

69



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Manufactured Homes

Manufactured Homes operations involve the construction of single-family
homes and, to a lesser degree, commercial structures in factories and the sale
of these products through a network of company-owned and independent dealers.

|                                           |  |                               |        |   |      |   |        |      |  |   |        |  
|------------------------------------------ |  | ----------------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                           |  | For the Years Ended March 31, |       
|                                           |  |                               |       
|                                           |  | 2001                          |        |   | 2000 |   |        | 1999 | 
|                                           |  |                               |        |   |      |   |        |      | 
|                                           |  | (Dollars in millions)         |       
|Revenues                                   |  | $                             | 126.4  |   |      | $ | 183.5  |      |  | $ | 178.6  |  
|                                          
|                                          
|                                          
|                                          
|Cost of Sales                              |  |                               | (113.0 | ) |      |   | (143.7 | )    |  |   | (138.3 | )
|                                          
|                                          
|                                          
|                                          
|Selling, General & Administrative Expenses |  |                               | (26.6  | ) |      |   | (28.1  | )    |  |   | (24.2  | )
|                                          
|                                          
|                                          
|                                          
|Goodwill Amortization                      |  |                               | (12.9  | ) |      |   | (3.4   | )    |  |   | (3.3   | )
|                                           |  |                               |        |   |      |   |        |      | 
|Operating (Loss) Earnings                  |  |                               | (26.1  | ) |      |   | 8.3    |      |  |   | 12.8   |  
|                                          
|                                          
|                                          
|                                          
|Minority Interest                          |  |                               |       |   |      |   | (1.0   | )    |  |   | (2.5   | )
|                                           |  |                               |        |   |      |   |        |      | 
|Net Operating (Loss) Earnings to Centex    |  | $                             | (26.1  | ) |      | $ | 7.3    |      |  | $ | 10.3   |  
|                                           |  |                               |        |   |      |   |        |      | 
|Identifiable Assets                        |  | $                             | 133.8  |   |      | $ | 144.7  |      |  | $ | 140.9  |  
|                                           |  |                               |        |   |      |   |        |      | 
|Capital Expenditures                       |  | $                             | 2.6    |   |      | $ | 3.9    |      |  | $ | 10.5   |  
|                                           |  |                               |        |   |      |   |        |      | 
|Depreciation and Amortization              |  | $                             | 15.2   |   |      | $ | 5.7    |      |  | $ | 5.1    |  
|                                           |  |                               |        |   |      |   |        |      | 

Due to continued industry
downturn, Manufactured Homes recorded a charge
of $19.2 million in fiscal 2001. This charge primarily included $9.5 million for the
impairment of goodwill related to its retail operations and $6.5 million
related to the idling of its New Mexico and Texas manufacturing facilities.

INVESTMENT REAL ESTATE

Investment Real Estate operations involve the acquisition, development,
and sale of land, primarily for industrial, office, multi-family, retail, and
mixed-use projects.

|                                                           |  |                               |       |   |      |   |      |      |  |   |       |  
|---------------------------------------------------------- |  | ----------------------------- | ----- | - | ---- | - | ---- | ---- |  | - | ----- | -
|                                                           |  | For the Years Ended March 31, |      
|                                                           |  |                               |      
|                                                           |  | 2001                          |       |   | 2000 |   |      | 1999 | 
|                                                           |  |                               |       |   |      |   |      |      | 
|                                                           |  | (Dollars in millions)         |      
|Revenues                                                   |  | $                             | 33.0  |   |      | $ | 30.9 |      |  | $ | 33.7  |  
|                                                          
|                                                          
|                                                          
|                                                          
|Cost of Sales                                              |  |                               | (11.0 | ) |      |   | (7.6 | )    |  |   | (14.9 | )
|                                                          
|                                                          
|                                                          
|                                                          
|Selling,
General, Administrative & Other Costs             |  |                               | (21.9 | ) |      |   | (9.2 | )    |  |   | (5.4  | )
|                                                          
|                                                          
|                                                          
|                                                          
|Negative Goodwill Amortization                             |  |                               | 50.8  |   |      |   | 16.0 |      |  |   | 16.0  |  
|                                                           |  |                               |       |   |      |   |      |      | 
|Operating Earnings                                         |  | $                             | 50.9  |   |      | $ | 30.1 |      |  | $ | 29.4  |  
|                                                           |  |                               |       |   |      |   |      |      | 
|Identifiable Assets                                        |  | $                             | 270.2 |   |      | $ | 66.4 |      |  | $ | 93.0  |  
|                                                           |  |                               |       |   |      |   |      |      | 
|Capital Expenditures                                       |  | $                             |      |   |      | $ |     |      |  | $ | .7    |  
|                                                           |  |                               |       |   |      |   |      |      | 
|Depreciation and Amortization, excluding
Negative Goodwill |  | $                             | .1    |   |      | $ | .1   |      |  | $ | .1    |  
|                                                           |  |                               |       |   |      |   |      |      | 

Property sales related to Investment Real Estates nominally valued assets
(See Note H) resulted in operating margins of $13.6 million in fiscal 2001,
$19.6 million in fiscal 2000, and $16.4 million in fiscal 1999. As of March
31, 2001, Investment Real Estate had approximately $24 million in nominally
valued assets.

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FINANCIAL SERVICES

Financial Services operations consist primarily of home financing, home
equity and sub-prime lending, and the sale of title and other insurance
coverages. These activities include mortgage origination and other related
services for homes sold by Centex subsidiaries and others.

|                                           |  |                               |         |   |      |   |        |      |  |   |         |  
|------------------------------------------ |  | ----------------------------- | ------- | - | ---- | - | ------ | ---- |  | - | ------- | -
|                                           |  | For the Years Ended March 31, |        
|                                           |  |                               |        
|                                           |  | 2001                          |         |   | 2000 |   |        | 1999 | 
|                                           |  |                               |         |   |      |   |        |      | 
|                                           |  | (Dollars in millions)         |        
|Revenues (1)                               |  | $                             | 463.6   |   |      | $ | 430.6  |      |  | $ | 436.3   |  
|                                          
|                                          
|                                          
|                                          
|Selling, General & Administrative Expenses |  |                               | (351.3  | ) |      |   | (336.4 | )    |  |   | (267.1  | )
|                                          
|                                          
|                                          
|                                          
|Interest Expense                           |  |                               | (92.6   | ) |      |   | (61.7  | )    |  |   | (76.9   | )
|                                           |  |                               |         |   |      |   |        |      | 
|Operating Earnings                         |  | $                             | 19.7    |   |      | $ | 32.5   |      |  | $ | 92.3    |  
|                                           |  |                               |         |   |      |   |        |      | 
|Identifiable Assets                        |  | $                             | 2,490.1 |   |      | $ | 771.5  |      |  | $ | 1,638.8 |  
|                                           |  |                               |         |   |      |   |        |      | 
|Capital Expenditures                       |  | $                             | 26.3    |   |      | $ | 25.5   |      |  | $ | 17.7    |  
|                                           |  |                               |         |   |      |   |        |      | 
|Depreciation and Amortization              |  | $                             | 15.3    |   |      | $ | 14.1   |      |  | $ | 12.9    |  
|                                           |  |                               |         |   |      |   |        |      | 



---

|(1) |  | Financial Services revenues include interest income of $123.8
million, $83.4 million, and $97.0 million in fiscal 2001, 2000, and
1999, respectively. Substantially all of Centexs interest income in
each year is earned by the Financial Services segment.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

CONSTRUCTION PRODUCTS

Construction Products operations involve the manufacture, production,
distribution and sale of cement, gypsum wallboard, recycled paperboard,
aggregates, and readymix concrete.

|                                           |  |                               |        |   |      |   |        |      |  |   |        |  
|------------------------------------------ |  | ----------------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                           |  | For the Years Ended March 31, |       
|                                           |  |                               |       
|                                           |  | 2001                          |        |   | 2000 |   |        | 1999 | 
|                                           |  |                               |        |   |      |   |        |      | 
|                                           |  | (Dollars in millions)         |       
|Revenues                                   |  | $                             | 441.1  |   |      | $ | 470.5  |      |  | $ | 381.9  |  
|                                          
|                                          
|                                          
|                                          
|Interest Income                            |  |                               | 6.7    |   |      |   | 3.7    |      |  |   | 3.0    |  
|                                          
|                                          
|                                          
|                                          
|Cost of Sales & Expenses                   |  |                               | (341.8 | ) |      |   | (299.3 | )    |  |   | (259.4 | )
|                                          
|                                          
|                                          
|                                          
|Selling, General & Administrative Expenses |  |                               | (4.7   | ) |      |   | (4.7   | )    |  |   | (4.4   | )
|                                          
|                                          
|                                          
|                                          
|Goodwill Amortization                      |  |                               | (1.9   | ) |      |   | (1.5   | )    |  |   | (0.8   | )
|                                           |  |                               |        |   |      |   |        |      | 
|Operating Earnings                         |  |                               | 99.4   |   |      |   | 168.7  |      |  |   | 120.3  |  
|                                          
|                                          
|                                          
|                                          
|Minority Interest                          |  |                               | (32.4  | ) |      |   | (63.8  | )    |  |   | (51.1  | )
|                                           |  |                               |        |   |      |   |        |      | 
|Net Operating Earnings to Centex           |  | $                             | 67.0   |   |      | $ | 104.9  |      |  | $ | 69.2   |  
|                                           |  |                               |        |   |      |   |        |      | 
|Identifiable Assets                        |  | $                             | 761.1  |   |      | $ | 410.8  |      |  | $ | 339.5  |  
|                                           |  |                               |        |   |      |   |        |      | 
|Capital Expenditures                       |  | $                             | 16.3   |   |      | $ | 28.0   |      |  | $ | 33.8   |  
|                                           |  |                               |        |   |      |   |        |      | 
|Depreciation and Amortization              |  | $                             | 24.9   |   |      | $ | 18.6   |      |  | $ | 16.2   |  
|                                           |  |                               |        |   |      |   |        |      | 

CONTRACTING AND CONSTRUCTION SERVICES

Contracting and Construction Services operations involve the construction
of buildings for both private and government interests including (among others)
office, commercial and industrial buildings, hospitals, hotels, museums,
libraries, airport facilities, and educational institutions. As this segment
generates significant positive cash flow, intercompany interest income
(credited at the prime rate in effect) is reflected in this segment data;
however, these amounts are eliminated in consolidation.

71



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|                                           |  |                               |          |   |      |   |          |      |  |   |          |  
|------------------------------------------ |  | ----------------------------- | -------- | - | ---- | - | -------- | ---- |  | - | -------- | -
|                                           |  | For the Years Ended March 31, |         
|                                           |  |                               |         
|                                           |  | 2001                          |          |   | 2000 |   |          | 1999 | 
|                                           |  |                               |          |   |      |   |          |      | 
|                                           |  | (Dollars in millions)         |         
|Revenues                                   |  | $                             | 1,290.4  |   |      | $ | 1,205.8  |      |  | $ | 1,350.8  |  
|                                          
|                                          
|                                          
|                                          
|Construction Contract Costs                |  |                               | (1,199.9 | ) |      |   | (1,130.7 | )    |  |   | (1,292.8 | )
|                                          
|                                          
|                                          
|                                          
|Selling, General & Administrative Expenses |  |                               | (59.6    | ) |      |   | (51.6    | )    |  |   | (42.8    | )
|                                           |  |                               |          |   |      |   |          |      | 
|Operating Income, as reported              |  |                               | 30.9     |   |      |   | 23.5     |      |  |   | 15.2     |  
|                                          
|                                          
|                                          
|                                          
|Intracompany Interest Income*              |  |                               | 9.1      |   |      |   | 8.4      |      |  |   | 7.2      |  
|                                           |  |                               |          |   |      |   |          |      | 
|Total Economic Return                      |  | $                             | 40.0     |   |      | $ | 31.9     |      |  | $ | 22.4     |  
|                                           |  |                               |          |   |      |   |          |      | 
|Identifiable Assets*                       |  | $                             | 248.2    |   |      | $ | 235.8    |      |  | $ | 256.7    |  
|                                           |  |                               |          |   |      |   |          |      | 
|Capital Expenditures                       |  | $                             | 6.3      |   |      | $ | 7.5      |      |  | $ | 3.0      |  
|                                           |  |                               |          |   |      |   |          |      | 
|Depreciation and Amortization              |  | $                             | 3.0      |   |      | $ | 2.9      |      |  | $ | 2.6      |  
|                                           |  |                               |          |   |      |   |          |      | 



---

|* |  | The net assets position of the Contracting and Construction
Services segment provides significant cash flow because payables and
accruals consistently exceed identifiable assets. Intracompany interest
income is computed on the segments cash flow in excess of its equity.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

CORPORATE AND OTHER, NET

Corporate general and administrative expenses represent salaries and other
costs not identifiable with a specific segment. Other, net includes new
business initiatives and other businesses which are not mature enough to stand
alone as separate business segments. Assets are primarily cash and cash
equivalents, receivables, property and equipment, and other assets not
associated with a business segment.

|                                            |  |                               |       |   |      |   |       |      |  |   |       |  
|------------------------------------------- |  | ----------------------------- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | -
|                                            |  | For the Years Ended March 31, |      
|                                            |  |                               |      
|                                            |  | 2001                          |       |   | 2000 |   |       | 1999 | 
|                                            |  |                               |       |   |      |   |       |      | 
|                                            |  | (Dollars in millions)         |      
|Operating Earnings (Loss), Other, net       |  | $                             | 4.5   |   |      | $ | (4.7  | )    |  | $ | (15.6 | )
|                                            |  |                               |       |   |      |   |       |      | 
|Corporate General & Administrative Expenses |  | $                             | (36.9 | ) |      | $ | (33.0 | )    |  | $ | (28.1 | )
|                                            |  |                               |       |   |      |   |       |      | 
|Identifiable Assets                         |  | $                             | 235.0 |   |      | $ | 154.3 |      |  | $ | 112.1 |  
|                                            |  |                               |       |   |      |   |       |      | 
|Capital Expenditures                        |  | $                             | 6.0   |   |      | $ | 4.6   |      |  | $ | 7.8   |  
|                                            |  |                               |       |   |      |   |       |      | 
|Depreciation and Amortization               |  | $                             | 16.3  |   |      | $ | 9.6   |      |  | $ | 6.9   |  
|                                            |  |                               |       |   |      |   |       |      | 

(K) FAIR VALUE OF FINANCIAL INSTRUMENTS

SFAS No. 107, Disclosures about Fair Value of Financial Instruments,
requires companies to disclose the estimated fair value of their financial
instrument assets and liabilities. The estimated fair values shown below have
been determined using current quoted market prices where available and, where
necessary, estimates based on present value methodology suitable for each
category of financial instruments. Considerable judgment is required in
interpreting market data to develop the estimates of fair value. Accordingly,
the estimates presented herein are not necessarily indicative of the amounts
that the Company could realize in a current market exchange. All assets and
liabilities that are not considered financial instruments have been valued
using historical cost accounting.

72



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##### Table of Contents



The consolidated carrying values of Cash and Cash Equivalents, Restricted
Cash, Mortgage Securitization Residual Interest, Other Receivables, Accounts
Payable and Accrued Liabilities, and Short-term Debt approximate their fair
values. The carrying values and estimated fair values of other financial
assets and liabilities were as follows:

|                      |                                       |  |                        |           |  |       |   |           |          |  |   |         |  |  |   |         |    
|--------------------- | ------------------------------------- |  | ---------------------- | --------- |  | ----- | - | --------- | -------- |  | - | ------- |  |  | - | ------- | ---
|                      |                                       |  | March 31,              |          
|                      |                                       |  |                        |          
|                      |                                       |  | 2001                   |           |  | 2000  |  
|                      |                                       |  |                        |           |  |       |  
|                      |                                       |  | Carrying               |           |  | Fair  |   |           | Carrying |  |   | Fair    | 
|                      |                                       |  | Value                  |           |  | Value |   |           | Value    |  |   | Value   | 
|                      |                                       |  |                        |           |  |       |   |           |          |  |   |         | 
|                      |                                       |  | (Dollars in thousands) |          
|Financial Assets      |                                       |  |                        |           |  |      
|                     
|                     
|                     
|                     
|                      | Residential Mortgage Loans            |  | $                      | 1,996,746 |  |       | $ | 2,012,786 | (1)      |  | $ | 409,697 |  |  | $ | 421,138 | (1)
|                     
|                     
|                     
|                     
|Financial
Liabilities |                                       |  |                        |           |  |      
|                     
|                     
|                     
|                     
|                      | Non-Financial Services Long-term Debt |  | $                      | 1,464,993 |  |       | $ | 1,495,525 | (2)      |  | $ | 751,160 |  |  | $ | 732,874 | (2)
|                     
|                     
|                     
|                     
|                      | Financial Services Long-term Debt     |  | $                      | 1,575,868 |  |       | $ | 1,598,950 | (2)      |  | $ |        |  |  | $ |        |    



---

|(1) |  | Fair values are based on quoted market prices for similar instruments.                                                                    
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Fair values are based on a present value discounted cash flow with the
discount rate approximating current market for similar instruments.

(L) COMMITMENTS AND CONTINGENCIES

The Company has deposited or invested $60.4 million as of March 31, 2001
as options toward the purchase of undeveloped land and developed lots having a
total purchase price of approximately $1.6 billion in order to ensure the
future availability of land for home building. These options expire at various
dates through the year 2006.

In the normal course of its business the Company and/or its subsidiaries
are named as defendants in certain suits filed in various state and federal
courts. Management believes that none of the litigation matters in which the
Company or any subsidiary is involved would have a material adverse effect on
the consolidated financial condition or operations of the Company.

The Company has certain deductible limits under its workers compensation
and automobile and general liability insurance policies for which reserves are
established based on the estimated costs of known and anticipated claims.

73



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Report of Independent Public Accountants

TO THE STOCKHOLDERS AND BOARD OF DIRECTORS OF CENTEX CORPORATION:

We have audited the accompanying consolidated balance sheets of Centex
Corporation, a Nevada corporation, and subsidiaries as of March 31, 2001 and
2000, and the related statements of consolidated earnings, cash flows, and
stockholders equity for each of the three years in the period ended March 31,
2001. These financial statements and the supplemental information referred to
below are the responsibility of the Companys management. Our responsibility
is to express an opinion on these financial statements and supplemental
information based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Centex
Corporation and subsidiaries as of March 31, 2001 and 2000, and the results of
their operations and their cash flows for each of the three years in the period
ended March 31, 2001, in conformity with accounting principles generally
accepted in the United States.

Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The supplemental balance
sheet data of Centex Corporation and Financial Services are presented for
purposes of additional analysis and are not a required part of the basic
consolidated financial statements. This information has been subjected to the
auditing procedures applied in our audits of the basic consolidated financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic consolidated financial statements taken as a whole.

Arthur Andersen LLP

Dallas, Texas,

May 15, 2001

74



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##### Table of Contents






Quarterly Results (Unaudited)
(Dollars in thousands, except per share data)

|               |                              |         |   |                               |            |  |      |           |            | 
|-------------- | ---------------------------- | ------- | - | ----------------------------- | ---------- |  | ---- | --------- | ---------- | 
|               |                              |         |   | For the Years Ended March 31, |           
|               |                              |         |   |                               |           
|               |                              |         |   | 2001                          |            |  | 2000 |          
|               |                              |         |   |                               |            |  |      |          
|First Quarter 
|              
|              
|              
|              
|               | Revenues                     |         | $ | 1,436,622                     |            |  | $    | 1,383,802 |           
|              
|              
|              
|              
|               | Earnings Before Income Taxes |         | $ | 78,069                        |            |  | $    | 93,110    |           
|              
|              
|              
|              
|               | Net Earnings                 |         | $ | 48,205                        |            |  | $    | 58,436    |           
|              
|              
|              
|              
|               | Earnings Per Share          
|              
|              
|              
|              
|               |                              | Basic   |   | $                             | .82        |  |      | $         | .98        | 
|              
|              
|              
|              
|               |                              | Diluted |   | $                             | .81        |  |      | $         | .95        | 
|              
|              
|              
|              
|               | Average Shares Outstanding  
|              
|              
|              
|              
|               |                              | Basic   |   |                               | 58,803,345 |  |      |           | 59,446,165 | 
|              
|              
|              
|              
|               |                              | Diluted |   |                               | 59,854,565 |  |      |           | 61,609,291 | 
|              
|              
|              
|              
|Second Quarter
|              
|              
|              
|              
|               | Revenues                     |         | $ | 1,615,784                     |            |  | $    | 1,443,055 |           
|              
|              
|              
|              
|               | Earnings Before Income Taxes |         | $ | 95,925                        |            |  | $    | 107,331   |           
|              
|              
|              
|              
|               | Net Earnings                 |         | $ | 59,094                        |            |  | $    | 65,495    |           
|              
|              
|              
|              
|               | Earnings Per Share          
|              
|              
|              
|              
|               |                              | Basic   |   | $                             | 1.00       |  |      | $         | 1.10       | 
|              
|              
|              
|              
|               |                              | Diluted |   | $                             | .98        |  |      | $         | 1.07       | 
|              
|              
|              
|              
|               | Average Shares Outstanding  
|              
|              
|              
|              
|               |                              | Basic   |   |                               | 58,954,694 |  |      |           | 59,435,195 | 
|              
|              
|              
|              
|               |                              | Diluted |   |                               | 60,303,878 |  |      |           | 61,281,959 | 
|              
|              
|              
|              
|Third Quarter 
|              
|              
|              
|              
|               | Revenues                     |         | $ | 1,653,498                     |            |  | $    | 1,441,945 |           
|              
|              
|              
|              
|               | Earnings Before Income Taxes |         | $ | 110,494                       |            |  | $    | 101,729   |           
|              
|              
|              
|              
|               | Net Earnings                 |         | $ | 68,467                        |            |  | $    | 63,176    |           
|              
|              
|              
|              
|               | Earnings Per Share          
|              
|              
|              
|              
|               |                              | Basic   |   | $                             | 1.16       |  |      | $         | 1.07       | 
|              
|              
|              
|              
|               |                              | Diluted |   | $                             | 1.12       |  |      | $         | 1.04       | 
|              
|              
|              
|              
|               | Average Shares Outstanding  
|              
|              
|              
|              
|               |                              | Basic   |   |                               | 59,080,788 |  |      |           | 59,230,006 | 
|              
|              
|              
|              
|               |                              | Diluted |   |                               | 60,929,675 |  |      |           | 60,723,572 | 
|              
|              
|              
|              
|Fourth Quarter
|              
|              
|              
|              
|               | Revenues                     |         | $ | 2,004,831                     |            |  | $    | 1,739,334 |           
|              
|              
|              
|              
|               | Earnings Before Income Taxes |         | $ | 151,843                       |            |  | $    | 114,691   |           
|              
|              
|              
|              
|               | Net Earnings                 |         | $ | 106,211                       |            |  | $    | 70,025    |           
|              
|              
|              
|              
|               | Earnings Per Share          
|              
|              
|              
|              
|               |                              | Basic   |   | $                             | 1.78       |  |      | $         | 1.18       | 
|              
|              
|              
|              
|               |                              | Diluted |   | $                             | 1.73       |  |      | $         | 1.17       | 
|              
|              
|              
|              
|               | Average Shares Outstanding  
|              
|              
|              
|              
|               |                              | Basic   |   |                               | 59,549,480 |  |      |           | 59,120,730 | 
|              
|              
|              
|              
|               |                              | Diluted |   |                               | 61,562,118 |  |      |           | 60,100,560 | 

75



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##### Table of Contents






ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.




PART III




ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Except for the information relating to the executive officers of the Company,
which follows Item 4 of Part I of Part A of this Report and is incorporated
herein by reference, the information called for by Items 10, 11, 12, and 13 is
incorporated herein by reference to the information included and referenced
under the following captions in the Companys Proxy Statement for the July 19,
2001 Annual Meeting of Stockholders:

|     |  |                                                               
|---- |  | --------------------------------------------------------------
|Item |  | Caption in the 2001 Proxy Statement                           
|10   |  | Election of Directors                                         
|    
|    
|    
|    
|10   |  | Section 16(a) Beneficial Ownership Reporting Compliance       
|    
|    
|    
|    
|11   |  | Executive Compensation                                        
|    
|    
|    
|    
|12   |  | Security Ownership of Management and Certain Beneficial Owners
|    
|    
|    
|    
|13   |  | Certain Transactions                                          




ITEM 11. EXECUTIVE COMPENSATION

See Item 10 above.




ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

See Item 10 above.




ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

See Item 10 above for information respecting indebtedness to Centex of certain
officers and directors.

76



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##### Table of Contents






PART IV




ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this Report:



| | (1) |  | Financial Statements                                                                                                                                                                                                                                                                                                                                                                                         
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | The consolidated balance sheets of Centex and subsidiaries as of
March 31, 2001 and 2000, and the related consolidated statements
of earnings, stockholders equity, and cash flows for each of the
three years in the period ended March 31, 2001, together with the
accompanying notes to consolidated financial statements and the
Report of Independent Public Accountants on pages 47-74 of this
Report.
|
| | (2) |  | Schedules                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |     |  | Schedules are omitted because they are not applicable or not
required or the information required to be set forth therein is
included in the consolidated financial statements referenced
above in section (a)(1) of this Item 14.                                                                                                                                                                           
|
| | (3) |  | Exhibits                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |     |  | The information on exhibits required by this Item 14 is set forth
in the Centex index to Exhibits appearing on pages 131-133 of
this Report.                                                                                                                                                                                                                                                                 

(b) Reports on Form 8-K:



| |  | Current Report on Form 8-K of Centex Corporation dated January 23, 2001
announcing the Companys financial results for the quarter and nine months
ended December 31, 2000.                                                                                     
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Current Report on Form 8-K of Centex Corporation dated February 1, 2001
filing certain documents relating to the public offering of $250
million aggregate principal amount of Centexs 7.88% Senior Notes due
2011.                                            
|
| |  | Current Report on Form 8-K of Centex Corporation dated March 22, 2001
filing certain documents relating to the public offering of $500 million
aggregate principal amount of Centexs Senior Medium-Term Notes, Series E,
and/or Subordinated Medium-Term Notes.

77



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##### Table of Contents






SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

|              |  |  |     |  |  |                                                                      
|------------- |  |  | --- |  |  | ---------------------------------------------------------------------
|              |  |  |     |  |  | Centex Corporation                                                   
|              |  |  |     |  |  |                                                                      
|              |  |  |     |  |  | Registrant                                                           
|             
|June 15 ,2001 |  |  | By: |  |  | /s/ Laurence E. Hirsch                                               
|              |  |  |     |  |  |                                                                      
|              |  |  |     |  |  | Laurence E. Hirsch, Chairman of the Board and
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by
the following persons on behalf of the registrant in the capacities and on the dates indicated.

|              |  |  |            |  |  |                                                                                                                                                             
|------------- |  |  | ---------- |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------
|June 15, 2001 |  |  |            |  |  | /s/ Laurence E. Hirsch                                                                                                                                      
|              |  |  |            |  |  |                                                                                                                                                             
|              |  |  |            |  |  | Laurence E. Hirsch, Chairman of the Board and
Chief Executive Officer
(principal executive officer)                                                         
|             
|June 15, 2001 |  |  |            |  |  | /s/ Leldon E. Echols                                                                                                                                        
|              |  |  |            |  |  |                                                                                                                                                             
|              |  |  |            |  |  | Leldon E. Echols, Executive Vice President and
Chief Financial Officer
(principal financial officer)                                                        
|             
|June 15, 2001 |  |  |            |  |  | /s/ Mark A. Blinn                                                                                                                                           
|              |  |  |            |  |  |                                                                                                                                                             
|              |  |  |            |  |  | Mark
A. Blinn, Vice President  Controller and
Financial Strategy
(principal accounting officer)                                                            
|             
|              |  |  | Directors: |  |  | Barbara T. Alexander, Juan L. Elek,
Laurence E. Hirsch, Clint W. Murchison, III,
Charles H. Pistor, Jr., David W. Quinn,
Paul R. Seegers and Paul T. Stoffel
|             
|June 15, 2001 |  |  | By:        |  |  | /s/ Laurence E. Hirsch                                                                                                                                      
|              |  |  |            |  |  |                                                                                                                                                             
|              |  |  |            |  |  | Laurence E. Hirsch,
Individually and as
Attorney-in-Fact*                                                                                                   



---

|* |  | Pursuant to authority granted by powers of attorney, copies of which are filed herewith.
|- |  | ----------------------------------------------------------------------------------------

78



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##### Table of Contents






PART B.

3333 HOLDING CORPORATION AND SUBSIDIARY
AND CENTEX DEVELOPMENT COMPANY, L.P. AND SUBSIDIARIES

PREFATORY STATEMENT

Part Bof this
Report (pages 79-130) includes information relating to 3333
Holding Corporation (Holding), File No. 1-9624, and subsidiary, and Centex
Development Company, L.P. (the Partnership), File No. 1-9625, and
subsidiaries (collectively the Companies). See the Joint Explanatory
Statement on page 2 of this Report. References to Holding in this Report shall
include references to its subsidiary, 3333 Development Corporation
(Development), a Nevada corporation and the sole general partner of the
Partnership, unless the context otherwise requires. Because the Partnership is
a separate reporting entity under the Securities Exchange Act of 1934, as
amended (the Exchange Act), the information required by Form 10-K is
separately included even though the Partnership may be deemed a subsidiary of
Holding under the rules and regulations of the Securities and Exchange
Commission (the Commission or the SEC) promulgated pursuant to the Exchange
Act. Accordingly, information provided with respect to the Partnership should
be deemed provided with respect to Holding to the extent appropriate.
Information relating to both Holding and the Partnership is included herein as
a single disclosure where applicable or appropriate. All other information is
set forth separately. Please refer to Part Aof this Report for information
relating separately to Centex Corporation (Centex) and its subsidiaries.




PART I




ITEM 1. BUSINESS

General Development of Business

Holding

Holding is a Nevada corporation incorporated on May 5, 1987. Holding owns
all of the outstanding common stock of Development and, as a result, has the
ability to control Development. Development is the sole general partner of the
Partnership. Information concerning the acquisition of the capital stock of
Development by Holding is included in Note (A) of the Notes to Combining
Financial Statements of Holding and the Partnership (the Holding/Partnership
Combining Financial Statements) included on pages 105-106 of this Report. The
executive offices of Holding and Development are located at 2728 N. Harwood,
Dallas, Texas 75201; telephone (214) 981-6770.

Holding is not engaged in any business other than its ownership and
control of Development. The Second Amended and Restated Agreement of Limited
Partnership of Centex Development Company, L.P. (the Partnership Agreement),
which governs the operations of the Partnership, provides that neither Holding
nor Development shall be permitted, prior to payout, as that term is defined in
the Partnership Agreement (Payout), to own business interests or to engage in
business activities other than those relating to the Partnership. The
Partnership Agreement would have to be amended to permit Holding to engage in
any other business activities.

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The Partnership

The Partnership is a Delaware limited partnership formed by Centex in
March 1987 to broaden its business to include general real estate development.
Centex believed that this expansion would improve stockholder value through
longer-term real estate investments, real estate developments and the benefits
of the partnership form of business. Because the real estate development
business generally requires a longer time horizon to maximize value than
Centexs core home building operations and typically involves substantial
acquisition and development indebtedness, Centex concluded that this new line
of business could best be conducted through the Partnership, an independent,
publicly-traded entity that is not consolidated with Centex for financial
reporting purposes.

The Partnership was formed to manage, develop, and sell (1) certain real
estate, principally nonresidential, undeveloped land acquired by the
Partnership from certain wholly-owned subsidiaries of Centex, and (2) other
properties acquired by the Partnership, either directly or indirectly, in the
ordinary course of business. In connection with the initial issuance of
Partnership units, certain of Centexs subsidiaries contributed properties with
a market value of approximately $76 million in exchange for 1,000 Class A
limited partnership units (Class A Units). During fiscal 1998, the 1,000
outstanding Class A Units owned by Centex were converted to 32,260 new Class A
units. All of the Class A Units are currently owned by Centex through its
Investment Real Estate business segment.

During fiscal 1998, the Partnership Agreement was amended to allow for
Class C limited partnership units (Class C Units) to be issued from time to
time in exchange for assets acquired from a limited partner or from an
individual or entity who is to be admitted as a limited partner. As of March
31, 2001, 181,194 Class C Units were issued in exchange for assets with a fair
market value of $181.2 million. The Partnership Agreement provides that
Centex, as the owner of the Class A Units and Class C Units, is entitled to a
cumulative preferred return of 9% per annum on the average outstanding balance
of its capital contributions, adjusted for cash or other distributions
representing a return of capital contributions (Unrecovered Capital). See
Note (L) of the Notes to the Holding/Partnership Combining Financial Statements
included on pages 114-115 of this Report.

Description of the Securities

Pursuant to the terms of a nominee agreement (the Nominee Agreement)
among Centex, Holding, the Partnership, and a nominee (the Nominee),
restrictions are imposed on the transfer of the common stock, par value $.01
per share (the Holding Common Stock), of Holding and the warrants to purchase
Class B Units of limited partnership interest in the Partnership (the
Stockholder Warrants) separate from the common stock, par value $.25 per
share (the Centex Common Stock), of Centex. Subject to certain restrictions,
Centex may, in its sole discretion, terminate the Nominee Agreement as to all
or any portion of the Stockholder Warrants and the Holding Common Stock
(collectively, the Deposited Securities), and unless sooner terminated, the
Nominee Agreement will terminate as to the Stockholder Warrants on November 30,
2007 (the Scheduled Detachment Date). Centex is not obligated to terminate
the Nominee Agreement as to the Holding Common Stock. The termination of the
Nominee Agreement as to any of the Deposited Securities will cause a detachment
(Detachment) of such securities from the Centex Common Stock. Upon a
termination of the Nominee Agreement, certificates evidencing the interest of
each holder of Centex Common Stock (a Centex Stockholder) in such
stockholders pro rata portion of the Deposited Securities in respect of which
the Nominee Agreement was terminated will be delivered to the Centex
Stockholders of record as of the record date set for the Detachment. From and
after such record date, certificates evidencing Centex Common Stock will no
longer represent the beneficial interest in the Deposited Security so detached.

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Narrative Description of Business

The Partnership is actively involved in all phases of acquisition,
development, and sale of industrial, office, multi-family, retail, mixed-use,
and residential properties. During fiscal 2001, the Partnership operated in
five segments: International Home Building, Domestic Home Building, Commercial
Development, Multi-Family Development, and Land Sales and Other.

INTERNATIONAL HOME BUILDING

The Partnership entered the International Home Building business through
the acquisition by Centex Development Company UK Limited, a wholly-owned
subsidiary of the Partnership (CDCUK), of all of the voting shares of
Fairclough Homes Group Limited, a British home builder (Fairclough), on April
15, 1999. The purchase price at closing (approximately $219 million) was paid
by the delivery of two-year non-interest-bearing promissory notes.
Additionally, the seller of the voting shares retained non-voting preference
shares in Fairclough that entitled the seller to receive substantially all of
the net after-tax earnings of Fairclough until March 31, 2001.

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

Fairclough operates in four geographical regions in the United Kingdom and
develops a range of products, from small single-family units to executive
houses and apartments. Fairclough currently has 79 developments located
throughout England and delivered 1,243 units in fiscal 2001, with prices
ranging from $50,000 to $700,000. The average selling price was $204,000.

Summarized by geographic area are International Home Buildings home
closings, sales orders (backlog) and sales orders for the two fiscal years
ended March 31.

|                               |                         |   |                               |     |  |      |       |     | 
|------------------------------ | ----------------------- | - | ----------------------------- | --- |  | ---- | ----- | --- | 
|                               |                         |   | For the Years Ended March 31, |    
|                               |                         |   |                               |    
|                               |                         |   | 2001                          |     |  | 2000 |      
|                               |                         |   |                               |     |  |      |      
|Closings (in units):          
|                              
|                              
|                              
|                              
|                               | Southern Homes Counties |   |                               | 122 |  |      |       | 161 | 
|                              
|                              
|                              
|                              
|                               | Northern Homes Counties |   |                               | 272 |  |      |       | 353 | 
|                              
|                              
|                              
|                              
|                               | North West/Yorkshire    |   |                               | 550 |  |      |       | 728 | 
|                              
|                              
|                              
|                              
|                               | Midlands                |   |                               | 299 |  |      |       | 465 | 
|                               |                         |   |                               |     |  |     
|                               |                         |   | 1,243                         |     |  |      | 1,707 |    
|                               |                         |   |                               |     |  |     
|Average Sales Price (In 000s) |                         | $ | 204                           |     |  | $    | 180   |    
|                               |                         |   |                               |     |  |     

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|                                                             |                         |  |                               |     |  |      |       |     | 
|------------------------------------------------------------ | ----------------------- |  | ----------------------------- | --- |  | ---- | ----- | --- | 
|                                                             |                         |  | For the Years Ended March 31, |    
|                                                             |                         |  |                               |    
|                                                             |                         |  | 2001                          |     |  | 2000 |      
|                                                             |                         |  |                               |     |  |      |      
|Sales (Orders) Backlog, at the
end of the period (in units):
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Southern Homes Counties |  |                               | 30  |  |      |       |    | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Northern Homes Counties |  |                               | 70  |  |      |       | 137 | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | North West/Yorkshire    |  |                               | 173 |  |      |       | 122 | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Midlands                |  |                               | 63  |  |      |       | 108 | 
|                                                             |                         |  |                               |     |  |     
|                                                             |                         |  | 336                           |     |  |      | 367   |    
|                                                             |                         |  |                               |     |  |     
|Sales (Orders) (in units):                                  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Southern Homes Counties |  |                               | 85  |  |      |       |    | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Northern Homes Counties |  |                               | 273 |  |      |       | 517 | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | North West/Yorkshire    |  |                               | 600 |  |      |       | 628 | 
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Midlands                |  |                               | 254 |  |      |       | 482 | 
|                                                             |                         |  |                               |     |  |     
|                                                             |                         |  | 1,212                         |     |  |      | 1,627 |    
|                                                             |                         |  |                               |     |  |     

DOMESTIC HOME BUILDING

The Partnership acquired its Domestic Home Building operations from Centex
Homes during fiscal 1999 through the issuance of Class C Units. Centex Homes
also licensed to the Partnership the right to use the Centex Homes trademark
and trade name in New Jersey. The Domestic Home Building operations involve
the purchase and development of land or lots as well as the construction and
sale of single-family homes. Domestic Home Building has been actively building
out the Partnerships land inventory in East Windsor, New Jersey, as well as
pursuing spot lot development outside of East Windsor. Domestic Home
Building built and delivered 119 conventional homes during fiscal 2001. In
March 2001, the Partnership sold its Domestic Home Building segment to Centex
Homes for total consideration of $21.1 million, representing book value which
also approximated market value. The financial results from the sale of this
segment are included in Land Sales and Other.

COMMERCIAL DEVELOPMENT

Commercial Development, on its own and in joint ventures with third
parties, actively develops office, industrial, and retail facilities. Many of
the areas targeted for development included land owned by the Partnership and
Centex affiliates, but Commercial Development has also purchased
strategically-positioned land for future development. Commercial Development
primarily develops commercial properties to hold for investment. Commercial
Developments operations during fiscal 2001 included: (1) completion of eight
buildings totaling 856,000 square feet of office and industrial space located
in Florida, California, Texas and North Carolina; (2) initiation of
construction on six new projects totaling 929,000 square feet of office and
industrial space in Michigan, California, and North Carolina; (3) acquisition
of a 134,500 square foot existing industrial building in Charlotte, North
Carolina; (4) the sale of five industrial buildings totaling 485,000 square
feet in Ventura County, California; and (5) the sale of five acres of land in
Lewisville, Texas. Occupancy for completed properties at March 31, 2001 was at
95%. Completed commercial properties in which the Partnership has an interest,
by geographic location, are as follows:

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|               |  |                        |  |           |                 |  |                  |  |     |  
|-------------- |  | ---------------------- |  | --------- | --------------- |  | ---------------- |  | --- | -
|               |  |                        |  | Size      |                
|State          |  | Product Type           |  | (Sq. Ft.) |                 |  | Percent by State | 
|               |  |                        |  |           |                 |  |                  | 
|California     |  | Industrial/Flex        |  |           | 133,000         |  |                  |  | 9   | %
|              
|              
|              
|              
|Florida        |  | Industrial/Flex
Office |  |           | 134,000
219,000 |  |                  |  | 23  | %
|              
|              
|              
|              
|Massachusetts  |  | Industrial/Flex        |  |           | 68,000          |  |                  |  | 4   | %
|              
|              
|              
|              
|North Carolina |  | Industrial/Flex        |  |           | 711,000         |  |                  |  | 46  | %
|              
|              
|              
|              
|Texas          |  | Office/Medical         |  |           | 276,000         |  |                  |  | 18  | %
|               |  |                        |  |           |                 |  |                  |  |     |  
|               |  |                        |  |           | 1,541,000       |  |                  |  | 100 | %
|               |  |                        |  |           |                 |  |                  |  |     |  

MULTI-FAMILY DEVELOPMENT

The Multi-Family Development segment primarily targets affordable to
mid-market priced multi-family projects. These projects are actively marketed
for sale during the development period. During fiscal 2001, Multi-Family
Development completed construction on a 382-unit apartment community in St.
Petersburg, Florida and began construction on a 398-unit apartment community in
Haltom City, Texas, as the developer for an unaffiliated owner. Multi-Family
Development also completed the sale of a 172-unit apartment community located
in College Station, Texas, that it owned in a joint venture with an
unaffiliated developer. Subsequent to March 31, 2001, Multi-Family Development
closed on the sale of a 400-unit apartment complex located in Grand Prairie,
Texas.

LAND SALES AND OTHER

The Land Sales and Other segment is involved in the acquisition and
disposition of land and other assets of the Partnership not identified with
another business segment. During fiscal 2001, the Land Sales and Other segment
purchased approximately six acres in Henderson, Nevada from an unaffiliated
third party. During fiscal 2001, revenues from the sales of real estate
included the sale of the Domestic Home Building segment to Centex Homes.

For additional information concerning material properties owned by the
Partnership at March 31, 2001, see Item 2. Properties.

Competition and Other Factors

Within the geographical areas in which the Partnership has real estate
holdings, the Partnership is subject to substantial competition from other
owners of similarly-situated or developed properties who wish to sell or
develop their properties, many of whom may hold more parcels or be in the
process of developing more projects than the Partnership, or may have greater
financial resources and longer operating histories than the Partnership. The
Partnership may also compete in the acquisition of additional desirable
properties with a variety of investors, including Centex and its affiliates and
institutional investors and developers, seeking similar investments.

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The Partnerships domestic properties are generally located in
geographical areas in which there is
moderate to good demand for land suitable for development, including
California, Florida, Michigan, Nevada, North Carolina, and Texas. Management
believes the Partnerships properties are well positioned to compete with
similar properties within each of these geographic areas.

Faircloughs operations account for approximately 1% of the new homes
market in the United Kingdom. The main competitive factors affecting
Faircloughs operations include location, price, mortgage interest rates,
construction costs, design and quality of homes, marketing expertise, and the
availability of land.

During fiscal 2001, the United Kingdom housing market continued to be
strong due to declining mortgage rates. House price inflation in England and
Wales was marginally under 6% for calendar 2000. The strength of the new home
selling prices has caused land values to escalate significantly. In order to
be able to compete successfully for the acquisition of strategic land parcels,
Fairclough has put in place procedures to ensure that the companys strategic
land portfolio is increased. At March 31, 2001, Faircloughs land inventory
for housing starts was sufficient to accommodate 30 to 36 months of building
volume at todays sales rates.

Ownership and development of each of the Partnerships properties is
subject to licensing and regulation by zoning, land use, environmental, health,
sanitation, and other agencies in the state and/or municipality in which the
property is located. Difficulties or failures in obtaining the required
licenses or approvals could delay or prevent the development or sale of any of
such properties. In addition, certain of the properties may be subject to
zoning or other regulatory limitations that may not permit development of such
properties for their highest and best use. The ability of the Partnership to
obtain favorable zoning changes may affect the ultimate value of such
properties to the Partnership or to a third-party purchaser.

Centex and its affiliates continue to conduct many facets of real estate
development and, for this reason, may be in competition with the Partnership in
certain activities and projects. Because the relationship between Centex and
its affiliates, on the one hand, and Holding, Development, and the Partnership,
on the other hand, involve decisions by Centex and its affiliates, directly or
indirectly, on behalf of Holding, Development, and the Partnership, the
transactions and activities of Holding, Development, and/or the Partnership may
lack the benefit of arms length bargaining and may involve conflicts of
interest. Holding, Development, and the Partnership believe, however, that
adequate safeguards, including Boards of Directors of Holding and Development
consisting of a majority of independent outside directors, sufficiently prevent
any such conflicts from adversely affecting the business of Holding,
Development, or the Partnership. To the extent that any conflict of interest
or the lack of arms length bargaining may benefit Centex or its affiliates, on
the one hand, or the Partnership or Holding, on the other hand, the combined
value of the three tandem traded securities (Centex Common Stock, Holding
Common Stock and Stockholder Warrants) beneficially owned by a Centex
Stockholder should not be affected one way or another.

The Partnership is not a real estate investment trust. Therefore, the
Partnerships activities are not subject to the restrictions imposed on real
estate investment trusts qualified under the Internal Revenue Code of 1986, as
amended.

Management and Employees

As of March 31, 2001, the Partnership had 524 employees, 489 of which are
employees of CDCUK and Fairclough. Neither Holding nor Development have any
employees. As a result, all executive

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management functions for Holding and
Development are performed by the directors and by the executive officers, of
the Partnership. See the information relating to the executive officers of
Holding and Development that follows Item 4 of Part B of this Report and is
included in Item 10 of Part B of this Report. Certain administrative and clerical services required by Holding and by
the Partnership that are not provided by employees of the Partnership are
provided pursuant to management and services agreements between the Partnership
and Holding and between Holding and Centex Service Company (Centex Service),
an affiliate of Centex. See Item 10. Directors and Executive Officers of the
Registrants   Management Agreement and Note (M) of the Notes to the
Holding/Partnership Combining Financial Statements included on pages
115-117 of
this Report.




ITEM 2. PROPERTIES

Holding

Due to the nature of its business, Holding does not own or hold for
investment any real or personal properties other than cash, receivables and
other similar assets, and the securities relating to its subsidiary,
Development.

The Partnership

The Partnership properties, which are located in California, Florida,
Texas, North Carolina, Massachusetts, Michigan, Nevada, and the United Kingdom,
consist of: (1) land zoned for commercial, multi-family, and residential use,
which is held for sale and near-term development, (2) commercial buildings
under development or held for investment, (3) multi-family projects under
development, and (4) office space, both owned and leased, from which the
Partnership conducts its operations. Set forth below is a brief description of
these properties.

INTERNATIONAL HOME BUILDING

United Kingdom

Fairclough operates from five divisional offices. Fairclough owns
buildings in Ware, Hertfordshire; Thames Ditton, Surrey; and Tamworth,
Staffordshire. The remaining two facilities are leased and are located in Sale,
Cheshire and Wakefield, Yorkshire. Fairclough leases its corporate office at
Meirion House, Woking, England. As of March 31, 2001, Faircloughs land bank
included 4,323 plots in 79 developments located throughout England.

DOMESTIC HOME BUILDING

None

COMMERCIAL DEVELOPMENT

California

Camarillo Ranch  this property is located in Ventura County, California
(directly off of the Ventura Freeway) and is zoned for light industrial use.
During fiscal 2000, the Partnership completed construction on a 132,500 square
foot facility which it still owns subject to permanent financing. The
Partnership sold a 70,000 square foot building during fiscal 2001 and is
currently constructing an 86,000 square foot building

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(with construction loan
financing) that is under contract to sell during fiscal 2002. The Partnership
continues to own 32 acres of undeveloped land encumbered by a mortgage in favor
of a third-party lender.

Northfield the Partnership owns 7.5 acres of undeveloped land located in
Ventura County, California, approximately 60 miles west of downtown Los
Angeles. Northfield is zoned for light industrial
uses and is situated in an industrial business park. The Partnership and
a third party entered into a joint venture which developed three industrial
buildings consisting of approximately 180,000 total square feet during fiscal
2000. These three buildings were sold during fiscal 2001. The joint venture
continues to own approximately 5.2 acres of land. The Partnership sold a
building consisting of approximately 235,000 square feet in fiscal 2001 as
well.

Florida

Park West at Gateway Centre this is a 24-acre industrial tract situated
in the Gateway Centre business park in Pinellas Park, Florida. During fiscal
2000 and 2001, the Partnership completed construction on three buildings with a
combined 134,000 square feet of office/industrial space. The Partnership
continues to own approximately six acres of undeveloped land adjacent to the
three existing buildings. All of the property at Park West is subject to a
construction loan mortgage.

Southpointe this property, located in Plantation, Florida, is zoned for
office use. During fiscal 2000, the Partnership completed construction of a
140,000 square foot office building which is fully leased to the General
Services Administration for use by the Internal Revenue Service. This building
is encumbered by a mortgage in favor of a permanent lender. During fiscal
2001, the Partnership and a Centex affiliate created a joint venture which
completed construction of a 79,000 square foot office building. This building
is subject to a construction loan mortgage. At March 31, 2001, 61% of the
rentable square footage of this building was leased and occupied by a Centex
affiliate.

Massachusetts

Summit I in a joint venture arrangement with a North Carolina-based
developer, the Partnership owns a 68,000 square foot industrial building in
Gardner, Massachusetts, subject to permanent financing. The building is 100%
leased to a single tenant.

Michigan

State Street in a joint venture arrangement with a Michigan-based
developer, the Partnership commenced construction of a 54,000 square foot
office building in the State Street Business Park located in Pittsfield
Township, Michigan. The Partnership controls approximately 15 acres of
additional land in the project subject to seller financing.

North Carolina

South Point in a joint venture arrangement with a local developer, the
Partnership owns a 122,000 square foot industrial building in South Point
Business Park, an industrial park located in Charlotte, North Carolina. This
building is encumbered by a mortgage in favor of a construction lender. The
building is 100% leased to a single tenant.

Westlake the Partnership is involved in a number of single-tenant
industrial projects in the Westlake Business Park located in Charlotte, North
Carolina. The Partnership owns a 37,000 square foot building that

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is
encumbered by a mortgage in favor of a permanent lender. The Partnership also
has entered into several joint venture arrangements with a local developer
through which it owns four buildings containing over 674,000 square feet of
office/industrial space. Each of these buildings is encumbered by permanent
loan or construction loan financing. The Partnership began construction on two
additional buildings in the fourth quarter of fiscal 2001. One project is a
474,000 square foot industrial building that is pre-leased to an existing
business park tenant. The other project is a 123,000 square foot industrial
building that is being built on a
speculative basis. Construction loans are pending on these projects as of
March 31, 2001.

Texas

Bookhout the Partnership is a 50% owner in a joint venture which owns
0.5 acres of land located north of downtown Dallas.

Citymark the Partnership owns a 218,000 square foot multi-tenant office
building located north of downtown Dallas. As of March 31, 2001, approximately
74% of Citymark was leased and occupied by subsidiaries and affiliates of
Centex. The building is encumbered by a mortgage in favor of a permanent
lender.

Colony South Planning Unit located in suburban Dallas in the cities of
The Colony (originally consisting of 590.65 acres) and Lewisville (originally
consisting of 134.05 acres). As of March 31, 2001, all acreage, other than
approximately 131 acres in The Colony and approximately 116 acres in
Lewisville, has been sold. The acreage in The Colony is zoned for office,
general retail, and business park. The Lewisville acreage is zoned for light
industrial use.

Medical Office Buildings
the Partnership and unaffiliated entities
formed several joint ventures that own four medical office buildings (ranging
in size from 9,000 to 20,000 square feet) in Denton, Lewisville, Palestine, and
Rowlett. The Partnership has a 50% interest in the facilities in Denton and
Rowlett and a 33.33% interest in the facilities in Lewisville and Palestine.
Each of these projects is encumbered by permanent loan or construction loan
financing.

Vista Ridge the Partnership owns 16.6 acres of land in Vista Ridge, a
mixed-use development located in the cities of Lewisville and Coppell. The
Partnership sold five acres of land to a retail user in fiscal 2001.

MULTI-FAMILY DEVELOPMENT

Florida

Brighton Bay this property is located in St. Petersburg, Pinellas
County, Florida. The Partnership completed construction of a 382-unit apartment
complex during fiscal 2001 and owns 16.6 acres of land on which it may develop
a second phase of apartments. The apartment complex is encumbered by
construction and mezzanine financing.

Texas

Sheffield this property is a 400-unit apartment complex located in Grand
Prairie that is encumbered by a mortgage in favor of a construction lender.
The Partnership sold the project subsequent to March 31, 2001.

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Vista Ridge the Partnership owns 32 acres of land zoned for multi-family
development in Vista Ridge, a mixed-use development located in the cities of
Lewisville and Coppell.

LAND SALES AND OTHER

Nevada

Lake Las Vegas during fiscal 2001, a wholly-owned subsidiary of the
Partnership purchased approximately six acres of land in Henderson, Nevada.
The seller of the property financed the purchase. Centex Homes has agreements
to purchase lots in the project from the subsidiary.

Texas

Allen Property (Brookside
Addition) this property is located in Allen, a
suburb of Dallas. The property is zoned for single-family residential and
commercial uses. The property originally consisted of 108 acres. As of March
31, 2001, all of the property except for 17 acres of residential land (which is
under contract to sell to Centex Homes) and 12 acres of retail land has been
sold.




ITEM 3. LEGAL PROCEEDINGS

Holding is not a party to, and its assets are not the subject of, any
material pending legal proceedings. In the normal course of its business, the
Partnership and/or its subsidiaries are named as defendants in litigation
matters. Management of Development believes that such litigation, if
determined unfavorably to the Partnership, would not have a material adverse
effect on the financial condition or operations of the Partnership.




ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

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EXECUTIVE OFFICERS OF HOLDING AND DEVELOPMENT

Set forth below is an alphabetical listing of the present executive
officers of Holding and/or Development. The Partnership has no executive
officers.

|                    |  |     |    |  |          |                                                                        
|------------------- |  | --- | -- |  | -------- | -----------------------------------------------------------------------
|Name                |  | Age |    |  | Position
|                    |  |     |    |  |         
|Richard C. Decker   |  |     | 48 |  |          | President, Centex Commercial Development (a
division of Development)(1)
|                   
|                   
|                   
|                   
|Todd D. Newman      |  |     | 44 |  |          | Senior Vice President, Chief Financial
Officer, and Treasurer(2)       
|                   
|                   
|                   
|                   
|Stephen M. Weinberg |  |     | 53 |  |          | President
and Chief Executive Officer(3)                               



---

|(1) |  | Mr. Decker is an employee of the Partnership and, since April 1, 2001,
has served as the President of the Centex Commercial Development division
of Development. Mr. Decker is also concurrently employed by Centex
Service under a dual employment arrangement. Mr. Decker was President and
Chief Executive Officer of Holding and Development, from April 1, 1998
until his resignation on March 31, 2000. Mr. Decker also served as
Director of both Holding and Development from June 10, 1998 to March 31,
2000. Mr. Decker has also been a director and officer of various Centex
subsidiaries engaged in real estate development since July 1996. From
1995 until July 1996, Mr. Decker operated Decker & Company, a Phoenix,
Arizona-based real estate development company. Prior thereto, Mr. Decker
was a partner with Dallas-based Trammell Crow Company, a commercial real
estate development firm, for 15 years and served as Principal from 1990
until 1995.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Mr. Newman is an employee of the Partnership and serves as Senior Vice
President, Chief Financial Officer, and Treasurer of Holding and
Development. Mr. Newman is also concurrently employed by Centex Service
under a dual employment arrangement. Mr. Newman joined the Partnership in
July 2000. From 1999 until joining the Partnership, Mr. Newman was Chief
Financial Officer for Internet Sportstations, Inc. From 1996 to 1999, Mr.
Newman was a financial consultant. Mr. Newman was President of
Consolidated Capital Equities Corporation from 1991 through 1996.                                                                                                                                                                                                                                                                                                                                                                                              
|   
|   
|   
|   
|(3) |  | Mr. Weinberg is an employee of the Partnership and has been President
and a director of both Holding and Development since April 1, 2000. He
has also served as Chief Executive Officer of Holding and Development
since April 1, 2001. Mr. Weinberg is also concurrently employed by Centex
Service under a dual employment arrangement. Mr. Weinberg joined Centex
in 1978 and held the positions of Centex Homes Division President from
1984 to 1988 and Centex Homes Executive Vice President from 1988 until
1995. In 1995, Mr. Weinberg was appointed Chairman and Chief Executive
Officer for Centex HomeTeam Services, a Centex subsidiary, where he served
until his appointment as President of both Holding and Development.                                                                                                                                                                                                                                   

All executive officers of Holding and Development are elected annually by
their respective Boards of Directors to serve until the next annual meeting of
the Board of Directors or until their successors have been duly elected. The
directors and executive officers perform all executive management functions.
All other services necessary to conduct Holdings business are performed by
employees of the Partnership or by Centex Service under a services agreement.
See Item 10. Directors and Executive Officers of the Registrants, and Note
(M) of the Notes to the Holding/Partnership Combining Financial Statements
included on pages 115-117 of this Report. There are no family relationships
among or between such executive officers or the directors.

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PART II




ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Except as additionally provided below, the information called for by this
Item 5 with respect to Holding and the Partnership is incorporated herein by
reference to (1) the Joint Explanatory Statement on page 2 of this Report, (2)
the information included and referenced under the caption Stock Prices and
Dividends on page 27 of this Report and (3) the information included in Note
(L) of the Notes to the Holding/Partnership Combining Financial Statements on
pages 114-115 of this Report.

Holding

Prior to the distribution of the Holding Common Stock to Centex
Stockholders on November 30, 1987 (the Distribution), Centex owned all of the
issued and outstanding shares of Holding Common Stock, and, accordingly, there
was no public market for such shares. Following the Distribution, shares of
Holding Common Stock have been tradeable only in tandem with, and as a part of,
shares of Centex Common Stock and may not be separately sold or otherwise
transferred. Therefore, except with respect to the trading market established
for the tandem traded securities, there is no separate market for shares of
Holding Common Stock. Because of the tandem trading arrangement, it is not
possible to identify precisely the portion of the market price of the tandem
traded securities allocable to shares of Holding Common Stock.

No dividends have been paid on shares of Holding Common Stock since the
incorporation of Holding. Future cash dividends on Holding Common Stock will
depend on the earnings, financial condition, capital requirements, and other
factors affecting Holding and Development.

The Partnership

The Stockholder Warrants were issued to Centex immediately prior to the
Distribution, and, accordingly, there was no public market for the Stockholder
Warrants prior to the Distribution. Following the Distribution, the
Stockholder Warrants have been tradeable only in tandem with, and as part of,
shares of Centex Common Stock and may not be separately sold or otherwise
transferred. Therefore, except with respect to the trading market established
for the tandem traded securities, there is no separate market for the
Stockholder Warrants. Because of the tandem trading arrangement, it is not
possible to identify precisely the portion of the market price of the tandem
traded securities allocable to the Stockholder Warrants. No dividends or
distributions have been made on the Stockholder Warrants since their issuance.

Centex Homes is the current holder of all of the Class A Units and Class C
Units, and, accordingly, at this time there is no public market for such
securities. At March 31, 2001, there were 32,260 Class A Units and 181,194
Class C Units outstanding. See Item 1. Business  General Development of
Business. Preference payments have not been made since fiscal 1998. As of
March 31, 2001, Unrecovered Capital totaled $214.0 million, and preference
payments in arrears amounted to $21.2 million.

Restrictions on Transfer

The restrictions on the transfer of the Stockholder Warrants and the
Holding Common Stock separate from Centex Common Stock are imposed by the terms
of the Nominee Agreement. Centex Common Stock certificates issued after the
date of the Nominee Agreement bear a legend referring to the restrictions on
transfer imposed thereby.

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ITEM 6. SELECTED FINANCIAL DATA

Financial Highlights (Unaudited)(Dollars in thousands, except per share/unit data)

|                                         |                                                           |  |                               |         |   |      |   |         |      |  |   |         |   |  |      |        |   |  |   |        | 
|---------------------------------------- | --------------------------------------------------------- |  | ----------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------ | - |  | - | ------ | 
|                                         |                                                           |  | For the Years Ended March 31, |        
|                                         |                                                           |  |                               |        
|                                         |                                                           |  | 2001                          |         |   | 2000 |   |         | 1999 |  |   | 1998    |   |  | 1997 |       
|                                         |                                                           |  |                               |         |   |      |   |         |      |  |   |         |   |  |      |       
|Revenues                                
|                                        
|                                        
|                                        
|                                        
|                                         | 3333 Holding Corporation and Subsidiary                   |  | $                             | 1,001   |   |      | $ | 607     |      |  | $ | 1,103   |   |  | $    | 1,505  |   |  | $ | 1,664  | 
|                                        
|                                        
|                                        
|                                        
|                                         | Centex Development Company, L.P. and
Subsidiaries         |  | $                             | 339,316 |   |      | $ | 378,199 |      |  | $ | 28,228  |   |  | $    | 19,618 |   |  | $ | 9,026  | 
|                                        
|                                        
|                                        
|                                        
|                                         | Combined Revenues                                         |  | $                             | 339,317 |   |      | $ | 378,199 |      |  | $ | 28,618  |   |  | $    | 20,121 |   |  | $ | 9,529  | 
|                                        
|                                        
|                                        
|                                        
|Net Earnings (Loss)                     
|                                        
|                                        
|                                        
|                                        
|                                         | 3333 Holding Corporation and Subsidiary                   |  | $                             | (746    | ) |      | $ | (1,127  | )    |  | $ | (1,385  | ) |  | $    | (125   | ) |  | $ | 206    | 
|                                        
|                                        
|                                        
|                                        
|                                         | Centex Development Company, L.P. and
Subsidiaries         |  | $                             | 5,362   |   |      | $ | 1,583   |      |  | $ | 1,815   |   |  | $    | 4,524  |   |  | $ | 719    | 
|                                        
|                                        
|                                        
|                                        
|                                         | Combined Net Earnings                                     |  | $                             | 4,616   |   |      | $ | 456     |      |  | $ | 430     |   |  | $    | 4,399  |   |  | $ | 925    | 
|                                        
|                                        
|                                        
|                                        
|Total Assets                            
|                                        
|                                        
|                                        
|                                        
|                                         | 3333 Holding Corporation and Subsidiary                   |  | $                             | 3,253   |   |      | $ | 3,023   |      |  | $ | 2,522   |   |  | $    | 10,423 |   |  | $ | 8,648  | 
|                                        
|                                        
|                                        
|                                        
|                                         | Centex Development Company, L.P. and
Subsidiaries         |  | $                             | 488,281 |   |      | $ | 515,188 |      |  | $ | 113,233 |   |  | $    | 59,260 |   |  | $ | 42,978 | 
|                                        
|                                        
|                                        
|                                        
|                                         | Combined Assets                                           |  | $                             | 484,650 |   |      | $ | 511,618 |      |  | $ | 112,176 |   |  | $    | 60,497 |   |  | $ | 50,127 | 
|                                        
|                                        
|                                        
|                                        
|Total Debt                              
|                                        
|                                        
|                                        
|                                        
|                                         | 3333 Holding Corporation and Subsidiary                   |  | $                             |        |   |      | $ |        |      |  | $ | 582     |   |  | $    | 1,480  |   |  | $ | 7,000  | 
|                                        
|                                        
|                                        
|                                        
|                                         | Centex Development Company, L.P. and
Subsidiaries         |  | $                             | 187,301 |   |      | $ | 323,740 |      |  | $ | 41,896  |   |  | $    | 13,821 |   |  | $ | 7,055  | 
|                                        
|                                        
|                                        
|                                        
|                                         | Combined Debt                                             |  | $                             | 187,301 |   |      | $ | 323,740 |      |  | $ | 42,478  |   |  | $    | 15,301 |   |  | $ | 14,055 | 
|                                        
|                                        
|                                        
|                                        
|Operating Earnings (Loss) Per Share/Unit
|                                        
|                                        
|                                        
|                                        
|                                         | 3333 Holding Corporation and Subsidiary                   |  | $                             | (746    | ) |      | $ | (1,127  | )    |  | $ | (1,385  | ) |  | $    | (125   | ) |  | $ | 206    | 
|                                        
|                                        
|                                        
|                                        
|                                         | Centex Development Company, L.P. and
Subsidiaries         |  | $                             | 76.34   |   |      | $ | 25.08   |      |  | $ | 33.38   |   |  | $    | 140.14 |   |  | $ | 22.29  | 
|                                        
|                                        
|                                        
|                                        
|Average Shares/Units Outstanding        
|                                        
|                                        
|                                        
|                                        
|                                         | 3333 Holding Corporation and Subsidiary (shares)          |  |                               | 1,000   |   |      |   | 1,000   |      |  |   | 1,000   |   |  |      | 1,000  |   |  |   | 1,000  | 
|                                        
|                                        
|                                        
|                                        
|                                         | Centex Development Company, L.P. and
Subsidiaries (units) |  |                               | 70,235  |   |      |   | 63,116  |      |  |   | 54,377  |   |  |      | 32,281 |   |  |   | 32,260 | 

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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FISCAL YEAR 2001 COMPARED TO FISCAL YEAR 2000

On a combined basis, the Companies revenues for the fiscal year ended
March 31, 2001 totaled $339.3 million compared to revenues of $378.2 million
for the prior fiscal year. The Companies had combined net earnings for the
fiscal year ended March 31, 2001 of $4.6 million compared to combined net
earnings of $456,000 in fiscal 2000.

INTERNATIONAL HOME BUILDING

The following summarizes International Home Buildings results for the
two-year period ended March 31, 2001 (dollars in thousands):

|                                  |  |                               |          |   |      |   |          |  
|--------------------------------- |  | ----------------------------- | -------- | - | ---- | - | -------- | -
|                                  |  | For the Years Ended March 31, |         
|                                  |  |                               |         
|                                  |  | 2001                          |          |   | 2000 |  
|                                  |  |                               |          |   |      |  
|Revenues                          |  | $                             | 252,487  |   |      | $ | 329,582  |  
|                                 
|                                 
|                                 
|                                 
|Cost of Sales                     |  |                               | (222,634 | ) |      |   | (283,456 | )
|                                 
|                                 
|                                 
|                                 
|General & Administrative Expenses |  |                               | (22,085  | ) |      |   | (24,188  | )
|                                 
|                                 
|                                 
|                                 
|Interest Expense, Paid to Seller  |  |                               | (7,802   | ) |      |   | (18,229  | )
|                                  |  |                               |          |   |      |  
|Operating (Loss) Earnings         |  | $                             | (34      | ) |      | $ | 3,709    |  
|                                  |  |                               |          |   |      |  
|Units Closed                      |  |                               | 1,243    |   |      |   | 1,707    |  

In connection with its sale of this segment to the Partnership, the seller
received $219 million in non-interest-bearing promissory notes due April 1,
2001 and retained preferred non-voting shares in Fairclough. During fiscal
2001, Fairclough generated after tax earnings totaling $7.8 million, which are
subject to distribution to the seller under the preferred share arrangement.
The Companies have accounted for the non-interest-bearing debt and nominal
residual value preferred shares as if they were a single debt instrument.
Accordingly, distributions attributable to the preferred shares are recorded as
interest expense in the accompanying financial statements. After taxes,
International Home Building generated earnings of $208,000 for fiscal 2001.

International Home Buildings revenues for the fiscal year ended March 31,
2001 decreased by $77.1 million from revenues for the same period last year.
The decrease is attributable to declining unit completions resulting
principally from the repositioning of Faircloughs land position and the
buildout of communities which were developed under previous ownership, offset
slightly by higher sales prices.

Home sales totaled 1,243 units during the fiscal year ended March 31,
2001, compared to 1,707 units during the same period last year, representing a
27% decrease. The backlog of homes sold but not closed at March 31, 2001 was
336 units, 8% less than the 367 units at the same point last year.

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DOMESTIC HOME BUILDING

The following summarizes Domestic Home Buildings results for the two-year
period ended March 31, 2001 (dollars in thousands):

|                                  |  |                               |         |   |      |   |         |  
|--------------------------------- |  | ----------------------------- | ------- | - | ---- | - | ------- | -
|                                  |  | For the Years Ended March 31, |        
|                                  |  |                               |        
|                                  |  | 2001                          |         |   | 2000 |  
|                                  |  |                               |         |   |      |  
|Revenues                          |  | $                             | 30,304  |   |      | $ | 13,377  |  
|                                 
|                                 
|                                 
|                                 
|Cost of Sales                     |  |                               | (24,002 | ) |      |   | (11,672 | )
|                                 
|                                 
|                                 
|                                 
|General & Administrative Expenses |  |                               | (3,461  | ) |      |   | (1,495  | )
|                                  |  |                               |         |   |      |  
|Operating Earnings                |  | $                             | 2,841   |   |      | $ | 210     |  
|                                  |  |                               |         |   |      |  
|Gross Margin per Unit             |  | $                             | 53      |   |      | $ | 39      |  
|                                 
|                                 
|                                 
|                                 
|Units Closed                      |  |                               | 119     |   |      |   | 44      |  

Fiscal 2001 revenues included revenues from the sale of single-family
homes in New Jersey. The increase in the number of single-family homes sold
during fiscal 2001 resulted from the Partnerships ability to market and sell
homes in the new single-family community for which zoning approval was obtained
in fiscal 2000.

On March 31, 2001, the Partnership sold its Domestic Home Building segment
to Centex Homes for total consideration of $21.1 million. The financial
results from the sale of this segment are included in Land Sales and Other.
Domestic Home Building accounted for 8.9% and 3.5% of revenues and 65.0% and
4.9% of operating earnings in the years ended March 31, 2001 and 2000,
respectively.

COMMERCIAL DEVELOPMENT

The following summarizes Commercial Developments results for the two-year
period ended March 31, 2001 (dollars and square feet in thousands):

|                                           |  |                               |         |   |      |   |        |  
|------------------------------------------ |  | ----------------------------- | ------- | - | ---- | - | ------ | -
|                                           |  | For the Years Ended March 31, |        
|                                           |  |                               |        
|                                           |  | 2001                          |         |   | 2000 |  
|                                           |  |                               |         |   |      |  
|Sales Revenues                             |  | $                             | 22,144  |   |      | $ | 4,465  |  
|                                          
|                                          
|                                          
|                                          
|Rental and Other Income                    |  |                               | 10,944  |   |      |   | 5,862  |  
|                                          
|                                          
|                                          
|                                          
|Cost of Sales                              |  |                               | (18,398 | ) |      |   | (3,438 | )
|                                          
|                                          
|                                          
|                                          
|Selling, General & Administrative Expenses |  |                               | (5,936  | ) |      |   | (1,758 | )
|                                          
|                                          
|                                          
|                                          
|Interest Expense                           |  |                               | (4,525  | ) |      |   | (2,440 | )
|                                           |  |                               |         |   |      |  
|Operating Earnings before Depreciation     |  |                               | 4,229   |   |      |   | 2,691  |  
|                                          
|                                          
|                                          
|                                          
|Depreciation                               |  |                               | (2,076  | ) |      |   | (1,246 | )
|                                           |  |                               |         |   |      |  
|Operating Earnings                         |  | $                             | 2,153   |   |      | $ | 1,445  |  
|                                           |  |                               |         |   |      |  
|Operating Square Feet at March 31          |  |                               | 1,541   |   |      |   | 976    |  

Commercial Developments operations during fiscal 2001 included: (1)
completion of eight buildings totaling 856,000 square feet of office and
industrial space located in Florida, California, Texas, and North Carolina; (2)
initiation of construction on six new projects totaling 929,000 square feet of
office and industrial space in Michigan, California, and North Carolina; (3)
acquisition of a 134,500 square foot existing industrial building in Charlotte,
North Carolina; (4) the sale of five industrial buildings totaling 485,000
square feet in Ventura County, California; and (5) the sale of five acres of
land in Lewisville, Texas.

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Sales revenues for the prior year included six acres in Camarillo,
California and forty developed lots in Plano, Texas.

MULTI-FAMILY DEVELOPMENT

The following summarizes Multi-Family Developments results for the
two-year period ended March 31, 2001 (dollars in thousands):

|                                  |  |                               |        |   |      |   |         |  
|--------------------------------- |  | ----------------------------- | ------ | - | ---- | - | ------- | -
|                                  |  | For the Years Ended March 31, |       
|                                  |  |                               |       
|                                  |  | 2001                          |        |   | 2000 |  
|                                  |  |                               |        |   |      |  
|Revenues                          |  | $                             | 1,664  |   |      | $ | 17,154  |  
|                                 
|                                 
|                                 
|                                 
|Cost of Sales                     |  |                               |       |   |      |   | (17,057 | )
|                                 
|                                 
|                                 
|                                 
|General & Administrative Expenses |  |                               | (2,399 | ) |      |   | (1,977  | )
|                                  |  |                               |        |   |      |  
|Operating Loss                    |  | $                             | (735   | ) |      | $ | (1,880  | )
|                                  |  |                               |        |   |      |  

Revenues for the fiscal year ended March 31, 2001 resulted from the sale
of a 172-unit apartment community in College Station, Texas, that it owned in a
joint venture with an unaffiliated developer, and the receipt of an earn-out
payment related to the fiscal 2000 sale of a 304-unit apartment community in
The Colony, Texas. Revenues for the prior year period resulted from the sale
of the property in The Colony, Texas.

During fiscal 2001, Multi-Family Development completed construction on a
382-unit apartment community in St. Petersburg, Florida and began construction
on a 398-unit apartment community in Haltom City, Texas, as the developer for
an unaffiliated owner. Subsequent to March 31, 2001, Multi-Family Development
closed on the sale of a 400-unit apartment complex located in Grand Prairie,
Texas.

LAND SALES AND OTHER

The following summarizes Land Sales and Others operating results for the
two-year period ended March 31, 2001 (dollars in thousands):

|                                  |  |                               |         |   |      |   |        |  
|--------------------------------- |  | ----------------------------- | ------- | - | ---- | - | ------ | -
|                                  |  | For the Years Ended March 31, |        
|                                  |  |                               |        
|                                  |  | 2001                          |         |   | 2000 |  
|                                  |  |                               |         |   |      |  
|Revenues                          |  | $                             | 21,774  |   |      | $ | 7,759  |  
|                                 
|                                 
|                                 
|                                 
|Cost of Sales                     |  |                               | (20,578 | ) |      |   | (6,384 | )
|                                 
|                                 
|                                 
|                                 
|General & Administrative Expenses |  |                               | (1,047  | ) |      |   | (569   | )
|                                  |  |                               |         |   |      |  
|Operating Earnings                |  | $                             | 149     |   |      | $ | 806    |  
|                                  |  |                               |         |   |      |  

The Partnerships Land Sales and Other segment is involved in the
acquisition and disposition of land and other assets of the Partnership not
identified with another business segment. Fiscal 2001 revenues from the sale
of real estate totaled $21.1 million from the sale of the Domestic Home
Building operations to Centex Homes at book value which approximated market
value. Fiscal 2000 sales totaled $7.3 million and included revenues from the
sale of 524 lots in Florida and Texas, ten acres in New Jersey to Centex
affiliates, and ten acres in The Colony and Dallas, Texas.

FISCAL YEAR 2000 COMPARED TO FISCAL YEAR 1999

On a combined basis, the Companies revenues for the fiscal year ended
March 31, 2000 totaled $378.2 million compared to revenues of $28.6 million for
the prior fiscal year. The significant increase in revenues resulted primarily
from the Partnerships acquisition of Fairclough on April 15, 1999. The

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Companies had combined net earnings for the fiscal year ended March 31,
2000 of $456,000 compared to combined net earnings of $430,000 in fiscal 1999.

INTERNATIONAL HOME BUILDING

The following summarizes International Home Buildings results for the
two-year period ended March 31, 2000 (dollars in thousands):

|                                  |  |                               |          |   |      |   |   | 
|--------------------------------- |  | ----------------------------- | -------- | - | ---- | - | - | 
|                                  |  | For the Years Ended March 31, |         
|                                  |  |                               |         
|                                  |  | 2000                          |          |   | 1999 |  
|                                  |  |                               |          |   |      |  
|Revenues                          |  | $                             | 329,582  |   |      | $ |  | 
|                                 
|                                 
|                                 
|                                 
|Cost of Sales                     |  |                               | (283,456 | ) |      |   |  | 
|                                 
|                                 
|                                 
|                                 
|General & Administrative Expenses |  |                               | (24,188  | ) |      |   |  | 
|                                 
|                                 
|                                 
|                                 
|Interest Expense, Paid to Seller  |  |                               | (18,229  | ) |      |   |  | 
|                                  |  |                               |          |   |      |  
|Operating Earnings                |  | $                             | 3,709    |   |      | $ |  | 
|                                  |  |                               |          |   |      |  
|Units Closed                      |  |                               | 1,707    |   |      |   |  | 

The Partnership acquired this segment in the first quarter of fiscal 2000.
The seller received $219 million in non interest-bearing promissory notes due
April 1, 2001 and retained preferred non-voting shares in Fairclough. During
fiscal 2000, Fairclough generated after tax earnings totaling $18.2 million,
which are subject to distribution to the seller under the preferred share
arrangement. The Companies have accounted for the non interest-bearing debt
and nominal residual value preferred shares as if they were a single debt
instrument. Accordingly, distributions attributable to the preferred shares
are recorded as interest expense in the accompanying financial statements.
After taxes, International Home Building had a loss of $128,000 for fiscal
2000.

DOMESTIC HOME BUILDING

The following summarizes Domestic Home Buildings results for the two-year
period ended March 31, 2000 (dollars in thousands):

|                                  |  |                               |         |   |      |   |         |  
|--------------------------------- |  | ----------------------------- | ------- | - | ---- | - | ------- | -
|                                  |  | For the Years Ended March 31, |        
|                                  |  |                               |        
|                                  |  | 2000                          |         |   | 1999 |  
|                                  |  |                               |         |   |      |  
|Revenues                          |  | $                             | 13,377  |   |      | $ | 21,295  |  
|                                 
|                                 
|                                 
|                                 
|Cost of Sales                     |  |                               | (11,672 | ) |      |   | (17,108 | )
|                                 
|                                 
|                                 
|                                 
|General & Administrative Expenses |  |                               | (1,495  | ) |      |   | (2,544  | )
|                                  |  |                               |         |   |      |  
|Operating Earnings                |  | $                             | 210     |   |      | $ | 1,643   |  
|                                  |  |                               |         |   |      |  
|Gross Margin per Unit             |  | $                             | 39      |   |      | $ | 57      |  
|                                 
|                                 
|                                 
|                                 
|Units Closed                      |  |                               | 44      |   |      |   | 73      |  

Fiscal 2000 revenues included revenues from the sale of single-family
homes in New Jersey, which completed the build-out of certain communities. The
Partnership obtained final zoning approval for the development of an additional
251 single-family homes in July 1999. The decrease in the number of
single-family homes sold during fiscal 2000 resulted from a delay in the
Partnerships ability to market and sell homes in the new single-family
community due to the timing of the zoning approval.

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COMMERCIAL DEVELOPMENT

Commercial Developments operations during fiscal 2000 included: (1)
completion of 720,000 square feet of office and industrial space located in
Florida, North Carolina, California, Massachusetts, and Texas, (2) initiation
of construction on five new office and industrial facilities totaling 500,000
square feet, (3) acquisition of a 218,000 square-foot existing office building
located in Dallas, Texas, and (4) the sale of developed lots and land.

The following summarizes Commercial Developments results for the two-year
period ended March 31, 2000 (dollars and square feet in thousands):

|                                           |  |                               |        |   |      |   |        |  
|------------------------------------------ |  | ----------------------------- | ------ | - | ---- | - | ------ | -
|                                           |  | For the Years Ended March 31, |       
|                                           |  |                               |       
|                                           |  | 2000                          |        |   | 1999 |  
|                                           |  |                               |        |   |      |  
|Sales Revenues                             |  | $                             | 4,465  |   |      | $ | 2,380  |  
|                                          
|                                          
|                                          
|                                          
|Rental Income                              |  |                               | 5,862  |   |      |   | 236    |  
|                                          
|                                          
|                                          
|                                          
|Cost of Sales                              |  |                               | (3,438 | ) |      |   | (2,077 | )
|                                          
|                                          
|                                          
|                                          
|Selling, General & Administrative Expenses |  |                               | (1,758 | ) |      |   | (389   | )
|                                          
|                                          
|                                          
|                                          
|Interest Expense                           |  |                               | (2,440 | ) |      |   | (91    | )
|                                           |  |                               |        |   |      |  
|Operating Earnings before Depreciation     |  |                               | 2,691  |   |      |   | 59     |  
|                                          
|                                          
|                                          
|                                          
|Depreciation                               |  |                               | (1,246 | ) |      |   | (41    | )
|                                           |  |                               |        |   |      |  
|Operating Earnings                         |  | $                             | 1,445  |   |      | $ | 18     |  
|                                           |  |                               |        |   |      |  
|Operating Square Feet at March 31          |  |                               | 976    |   |      |   | 38     |  

Fiscal 2000 sales revenues included six acres in Camarillo, California and
forty developed lots in Plano, Texas. Sales revenues for the prior year
included ten acres in Oxnard, California, which was sold to a joint venture in
which the Partnership indirectly owns a 10% interest, and ten lots in Plano,
Texas.

MULTI-FAMILY DEVELOPMENT

The following summarizes Multi-Family Developments results for the
two-year period ended March 31, 2000 (dollars in thousands):

|                                  |  |                               |         |   |      |   |        |  
|--------------------------------- |  | ----------------------------- | ------- | - | ---- | - | ------ | -
|                                  |  | For the Years Ended March 31, |        
|                                  |  |                               |        
|                                  |  | 2000                          |         |   | 1999 |  
|                                  |  |                               |         |   |      |  
|Revenues                          |  | $                             | 17,154  |   |      | $ | 342    |  
|                                 
|                                 
|                                 
|                                 
|Cost of Sales                     |  |                               | (17,057 | ) |      |   |       |  
|                                 
|                                 
|                                 
|                                 
|General & Administrative Expenses |  |                               | (1,977  | ) |      |   | (1,814 | )
|                                  |  |                               |         |   |      |  
|Operating Loss                    |  | $                             | (1,880  | ) |      | $ | (1,472 | )
|                                  |  |                               |         |   |      |  

Revenues for the fiscal year ended March 31, 2000 resulted from the sale
of a 304-unit apartment community in The Colony, Texas. Revenues for the prior
year included development fees related to The Colony project.

During fiscal 2000, Multi-Family completed construction on a 400-unit
apartment community in Grand Prairie, Texas and began construction on a
382-unit apartment community in St. Petersburg, Florida. Multi-Family is
actively marketing for sale both its completed projects and projects under
construction. Subsequent to March 31, 2000, Multi-Family closed on the sale of
the 172-unit joint venture apartment complex located in College Station, Texas.

96



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LAND SALES

The Partnerships Land Sales operation provides property management and
coordinates the liquidation efforts for land investments for which no
development opportunity has been identified. The following summarizes Land
Sales operating results for the two-year period ended March 31, 2000 (dollars
in thousands):

|                                  |  |                               |        |   |      |   |        |  
|--------------------------------- |  | ----------------------------- | ------ | - | ---- | - | ------ | -
|                                  |  | For the Years Ended March 31, |       
|                                  |  |                               |       
|                                  |  | 2000                          |        |   | 1999 |  
|                                  |  |                               |        |   |      |  
|Revenues                          |  | $                             | 7,759  |   |      | $ | 4,365  |  
|                                 
|                                 
|                                 
|                                 
|Cost of Sales                     |  |                               | (6,384 | ) |      |   | (3,570 | )
|                                 
|                                 
|                                 
|                                 
|General & Administrative Expenses |  |                               | (569   | ) |      |   | (554   | )
|                                  |  |                               |        |   |      |  
|Operating Earnings                |  | $                             | 806    |   |      | $ | 241    |  
|                                  |  |                               |        |   |      |  

Fiscal 2000 revenues from the sale of real estate totaled $7.3 million and
included revenues from the sale of 524 lots in Florida and Texas and ten acres
in New Jersey to Centex affiliates, and ten acres in The Colony and Dallas,
Texas. Fiscal 1999 sales included the sale of 319 lots to Centex affiliates in
Florida and Texas and two small parcels located in The Colony and Dallas,
Texas.

LIQUIDITY AND CAPITAL RESOURCES

The Companies finance land acquisition and development activities
primarily from financial institution borrowings, equity contributions from
third-party investors in project-specific joint ventures, seller financing,
issuance of Class C Units to Centex affiliates, and cash flow from operations
(comprised largely of proceeds from the sale of real estate).

Properties under development are typically financed through short-term
variable and fixed-rate secured construction loans, and to a limited extent
depending on the timing of the project construction, cash flow from operations.
Construction loans totaled $48.8 million at March 31, 2001. As properties are
completed, the properties are either sold or refinanced with long-term
fixed-rate debt. In both instances, the proceeds are used to repay the
short-term borrowings.

Permanent commercial project loans outstanding at March 31, 2001 totaled
$70.7 million compared to $51.1 million at March 31, 2000. The project loans
are collateralized by completed commercial properties and have terms ranging
from ten to twenty-two years with fixed interest rates ranging from 6.92% to
8.72%. Seller-financed land loans of $6.5 million were obtained during fiscal
2001, with terms of three years and fixed interest rates ranging from 9.00% to
9.50%.

The International Home Building segment has secured a revolving bank
credit facility of 100 million in British pounds sterling. The term of this
facility expires in fiscal 2003. Advances under this facility totaled $41.3
million at March 31, 2001.

During fiscal 2001, the Partnership issued 146,112 Class C Units in
exchange for assets valued at $146.1 million. The assets acquired included
both land and $142.3 million in cash.

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

97



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---

The Business, Managements Discussion and Analysis of Financial Condition
and Results of Operations, and other sections of this Report contain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
may be identified by the context of the statement and generally arise when the
Companies are discussing their beliefs, estimates, or expectations. These
statements are not guarantees of future performance and involve a number of
risks and uncertainties. Actual results and outcomes may differ materially from
what is expressed or forecasted in such forward-looking statements. The
principal risks and uncertainties that may affect the Companies actual
performance and results of operations include the following: general economic
conditions and interest rates; the cyclical and seasonal nature of the
Companies businesses; adverse weather; changes in property taxes; changes in
federal income tax laws; governmental regulation; changes in governmental and
public policy; changes in economic conditions specific to any one or more of
the Companies markets and businesses; competition; availability of raw
materials; and unexpected operations difficulties. Other risks and
uncertainties may also affect the outcome of the Companies actual performance
and results of operations.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Partnerships financial position is exposed to fluctuations in
variable interest rates for its construction loans, and to a certain extent, to
fluctuations in variable interest rates prior to obtaining a locked rate on
permanent project financing. At March 31, 2001, the Partnership did not have
any outstanding interest-protection contracts. In addition, Fairclough has
issued promissory notes and incurred bank debt payable in British pounds
sterling. As of March 31, 2001, the Partnership had not utilized any forward
or option contracts on foreign currencies or commodities, or other types of
derivative financial instruments, to mitigate any of the associated foreign
currency exchange rate risk.

The Partnership utilizes both short-term and long-term debt in its
financing strategy. For fixed-rate debt, changes in interest rates generally
affect the fair market value of the debt instrument, but not the Partnerships
earnings or cash flows. Conversely, for variable-rate debt, changes in
interest rates generally do not impact the fair market value of the debt
instrument, but do affect the Partnerships future earnings and cash flows. At
March 31, 2001, the Partnership had $70.7 million in fixed-rate permanent debt
with a weighted-average interest rate of 7.76%. The permanent debt has monthly
principal and interest debt service with maturities ranging from 2009 to 2023.
In addition, the Partnership had $15.5 million in other fixed-rate debt at
March 31, 2001, with maturities ranging from 2002 to 2004. Also at March 31,
2001, the Partnership had $94.2 million in variable-rate loans. If interest
rates increased 100 basis points, the annual effect of such an increase to the
Partnerships financial position and cash flows would approximate $942,000
based on the balances outstanding at March 31, 2001. Future fluctuations in
interest rates are not determinable, and, accordingly, actual results from
interest rate fluctuation could differ from the estimate presented above.

A single tenant leases, pursuant to leases signed at various points during
fiscal 2001, 568,000 square feet, or approximately 37%, of the Partnerships
completed commercial projects. In addition, the same tenant has executed a
lease for a 474,000 square foot industrial building under construction,
bringing its leased square footage to 1,042,000, representing approximately 45%
of completed and current commercial project construction. Fiscal 2001 revenues
from this tenant were approximately 8% of total rental revenues from commercial
projects.

99



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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

|                                                                                              |  |  |     | 
|--------------------------------------------------------------------------------------------- |  |  | --- | 
|3333 Holding Corporation and Subsidiary and Centex Development
Company, L.P. and Subsidiaries
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Combining Balance Sheets                                                                      |  |  | 101 | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Combining Statements of Operations                                                            |  |  | 102 | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Combining Statements of Cash Flows                                                            |  |  | 103 | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Combining Statements of Stockholders Equity and Partners Capital                            |  |  | 104 | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Notes to Combining Financial Statements                                                       |  |  | 105 | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Report of Independent Public Accountants                                                      |  |  | 118 | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Quarterly Results                                                                             |  |  | 119 | 

100



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

|                                                        |                                              |                                                        |                             |         |          |         |         |         |              |        |   |         |            | March 31,          |        
|------------------------------------------------------- | -------------------------------------------- | ------------------------------------------------------ | --------------------------- | ------- | -------- | ------- | ------- | ------- | ------------ | ------ | - | ------- | ---------- | ------------------ | -------
|                                                        |                                              |                                                        |                             |         |          |         |         |         |              |        |   |         |            |                   
|                                                        |                                              |                                                        |                             |         | 2001     |         |         | 2000    |              |        |   | 2001    |            |                    | 2000   
|                                                        |                                              |                                                        |                             |         |          |         |         |         |              |        |   |         |            |                    |        
|                                                        |                                              |                                                        |                             |         |          |         |         |         |              |        |   |         |            | Centex Development |        
|                                                        |                                              |                                                        |                             |         |          |         |         |         |              |        |   |         |            | Company, L.P. and  |        
|                                                        |                                              |                                                        |                             |         | Combined |         |         |         | Subsidiaries |        |   |         | Subsidiary |                   
|                                                        |                                              |                                                        |                             |         |          |         |         |         |              |        |   |         |            |                   
|Assets                                                 
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Cash and Cash Equivalents                    |                                                        | $                           | 3,034   |          |         | $       | 56,399  |              |        |   | $       | 3,029      |                    |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Restricted Cash                              |                                                        |                             |        |          |         |         | 1,915   |              |        |   |         |           |                    |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Receivables                                
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                              | Affiliates                                             |                             |         |         |         |         |         |             |        |   |         |            | 5,168              |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                              | Centex Corporation and Subsidiaries                    |                             |         | 578      |         |         |         | 1,919        |        |   |         |            | 578                |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                              | Notes                                                  |                             |         | 14       |         |         |         | 3,131        |        |   |         |            | 14                 |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                              | Other                                                  |                             |         | 9,607    |         |         |         | 11,158       |        |   |         |            | 9,607              |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Inventories                                
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                              | Housing Projects                                       |                             |         | 250,556  |         |         |         | 253,433      |        |   |         |            | 250,556            |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                              | Land Held for Development and Sale                     |                             |         | 30,954   |         |         |         | 38,044       |        |   |         |            | 30,954             |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                              | Commercial and Multi-Family
Projects Under Development |                             |         | 59,317   |         |         |         | 38,464       |        |   |         |            | 57,945             |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Investments                                
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                              | Commercial Properties, net                             |                             |         | 83,649   |         |         |         | 61,420       |        |   |         |            | 83,649             |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                              | Real Estate Joint Ventures                             |                             |         | 2,699    |         |         |         | 2,595        |        |   |         |            | 2,699              |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                              | Affiliate                                              |                             |         |         |         |         |         |             |        |   |         |            |                   |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Property and Equipment, net                  |                                                        |                             | 3,391   |          |         |         | 3,578   |              |        |   |         | 3,331      |                    |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Other Assets                               
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                              | Goodwill, net                                          |                             |         | 27,616   |         |         |         | 30,727       |        |   |         |            | 27,616             |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                              | Deferred Charges and Other                             |                             |         | 13,235   |         |         |         | 8,835        |        |   |         |            | 13,135             |        
|                                                        |                                              |                                                        |                             |         |          |         |         |         |              |        |   |         |            |                    |        
|                                                        |                                              | $                                                      | 484,650                     |         |          | $       | 511,618 |         |              |        | $ | 488,281 |            |                    | $      
|                                                        |                                              |                                                        |                             |         |          |         |         |         |              |        |   |         |            |                    |        
|Liabilities, Stockholders Equity and Partners Capital
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Accounts Payable and Accrued Liabilities   
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                              | Affiliates                                             |                             | $       |         |         |         | $       |             |        |   |         | $          |                   |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                              | Centex Corporation and Subsidiaries                    |                             |         | 591      |         |         |         |             |        |   |         |            | 327                |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                              | Other                                                  |                             |         | 80,945   |         |         |         | 118,693      |        |   |         |            | 80,993             |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Notes Payable   Other                       |                                                        |                             | 187,301 |          |         |         | 323,740 |              |        |   |         | 187,301    |                    |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Stockholders Equity and Partners Capital 
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                              | Stock and Stock/Class B Unit Warrants                  |                             |         | 501      |         |         |         | 501          |        |   |         |            | 500                |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                              | Capital in Excess of Par Value                         |                             |         | 800      |         |         |         | 800          |        |   |         |            |                   |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                              |                                                        | Retained Earnings (Deficit) |         |          | (7,702  | )       |         |              | (2,856 | ) |         |            |                    | (4,196 
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                              |                                                        | Partners Capital           |         |          | 222,214 |         |         |              | 70,740 |   |         |            |                    | 223,356
|                                                        |                                              |                                                        |                             |         |          |         |         |         |              |        |   |         |            |                    |        
|                                                        |                                              | Total Stockholders Equity and
Partners Capital       |                             |         | 215,813  |         |         |         | 69,185       |        |   |         |            | 219,660            |        
|                                                        |                                              |                                                        |                             |         |          |         |         |         |              |        |   |         |            |                    |        
|                                                        |                                              | $                                                      | 484,650                     |         |          | $       | 511,618 |         |              |        | $ | 488,281 |            |                    | $      
|                                                        |                                              |                                                        |                             |         |          |         |         |         |              |        |   |         |            |                    |        

See notes to combining financial statements.

101



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3333 Holding Corporation and Subsidiary
and Centex Development Company, L.P. and Subsidiaries
Combining Statements of Operations(Dollars in thousands, except per share/unit data)

|                                         |                                               |              | For the Years Ended March 31,
|---------------------------------------- | --------------------------------------------- | ------------ | -----------------------------
|                                         |                                               |              |                              
|                                         |                                               |              |                              
|                                         |                                               |              |                              
|                                         |                                               |              |                              
|                                         |                                               |              |                              
|                                         |                                               |              |                              
|                                         |                                               |              |                              
|Revenues                                
|                                        
|                                        
|                                        
|                                        
|                                         | Real Estate Sales                             |              | $                            
|                                         | Interest and Other Income                     |              |                              
|                                         |                                               |              |                              
|                                        
|                                        
|                                        
|                                        
|                                         |                                               |              | 339,317                      
|                                         |                                               |              |                              
|                                        
|                                        
|                                        
|                                        
|                                        
|                                        
|                                        
|                                        
|Costs and Expenses                      
|                                        
|                                        
|                                        
|                                        
|                                         | Cost of Real Estate Sold                      |              |                              
|                                        
|                                        
|                                        
|                                        
|                                         | Selling, General, and Administrative Expenses |              |                              
|                                        
|                                        
|                                        
|                                        
|                                         | Interest                                      |              |                              
|                                         |                                               |              |                              
|                                         |                                               |              | 334,943                      
|                                         |                                               |              |                              
|                                        
|                                        
|                                        
|                                        
|Earnings (Loss) BeforeIncome Taxes       |                                               |              | 4,374                        
|                                         |                                               | Income Taxes |                              
|                                         |                                               |              |                              
|                                        
|                                        
|                                        
|                                        
|Net Earnings (Loss)                      |                                               | $            | 4,616                        
|                                         |                                               |              |                              
|Net Earnings Allocable toLimited Partner |                                               |              |                              
|                                         |                                               |              |                              
|Net Earnings (Loss)PerUnit/Share         |                                               |              |                              
|                                         |                                               |              |                              
|Weighted-Average Units/                 
|                                        
|                                        
|                                        
|                                        
|                                         | Shares Outstanding                            |              |                              
|                                         |                                               |              |                              

See notes to combining financial statements.

102



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




Combining Statements of Cash Flows

(Dollars in thousands)



|                                               |                                                   |                                     |         | March 31, |         
|---------------------------------------------- | ------------------------------------------------- | ----------------------------------- | ------- | --------- | --------
|                                               |                                                   |                                     |         |           |         
|                                               |                                                   |                                     |         | 2001      |         
|                                               |                                                   |                                     |         |           |         
|                                               |                                                   |                                     |         |           |         
|                                               |                                                   |                                     |         |           |         
|                                               |                                                   |                                     |         | Combined  |         
|                                               |                                                   |                                     |         |           |         
|Cash Flows  Operating Activities             
|                                              
|                                              
|                                              
|                                              
|                                               | Net Earnings (Loss)                               |                                     | $       | 4,616     |         
|                                              
|                                              
|                                              
|                                              
|                                               | Adjustments                                     
|                                              
|                                              
|                                              
|                                              
|                                               |                                                   | Depreciation and Amortization       |         |           | 4,840   
|                                              
|                                              
|                                              
|                                              
|                                               | Loss from Joint Ventures                          |                                     |         | (394      | )       
|                                              
|                                              
|                                              
|                                              
|                                               | Decrease (Increase) in Restricted Cash            |                                     |         | 1,915     |         
|                                              
|                                              
|                                              
|                                              
|                                               | Decrease (Increase) in Receivables                |                                     |         | 133       |         
|                                              
|                                              
|                                              
|                                              
|                                               | Decrease in Notes Receivable                      |                                     |         | 3,117     |         
|                                              
|                                              
|                                              
|                                              
|                                               | (Increase) Decrease in Inventories                |                                     |         | (36,126   | )       
|                                              
|                                              
|                                              
|                                              
|                                               | (Increase) Decrease in Commercial
Properties      |                                     |         | (24,143   | )       
|                                              
|                                              
|                                              
|                                              
|                                               | (Increase) Decrease in Other Assets               |                                     |         | (7,895    | )       
|                                              
|                                              
|                                              
|                                              
|                                               | (Decrease) Increase in Payables and
Accruals      |                                     |         | (25,571   | )       
|                                               |                                                   |                                     |         |           |         
|                                               |                                                   |                                     | (79,508 | )         |         
|                                               |                                                   |                                     |         |           |         
|Cash Flows   Investing Activities            
|                                              
|                                              
|                                              
|                                              
|                                               | Decrease (Increase) in Advances to
Joint Ventures |                                     |         | 290       |         
|                                              
|                                              
|                                              
|                                              
|                                               | Property and Equipment Additions, net             |                                     |         | (633      | )       
|                                               |                                                   |                                     |         |           |         
|                                               |                                                   |                                     | (343    | )         |         
|                                               |                                                   |                                     |         |           |         
|Cash Flows   Financing Activities            
|                                              
|                                              
|                                              
|                                              
|                                               | (Decrease) Increase in Notes Payable            
|                                              
|                                              
|                                              
|                                              
|                                               |                                                   | Centex Corporation and Subsidiaries |         |           |        
|                                              
|                                              
|                                              
|                                              
|                                               |                                                   | Other                               |         |           | (114,318
|                                              
|                                              
|                                              
|                                              
|                                               | Decrease in Notes Receivable                    
|                                              
|                                              
|                                              
|                                              
|                                               |                                                   | Centex Corporation and Subsidiaries |         |           |        
|                                              
|                                              
|                                              
|                                              
|                                               | Issuance of Class C Units                         |                                     |         | 142,268   |         
|                                              
|                                              
|                                              
|                                              
|                                               | Capital Distributions                           
|                                              
|                                              
|                                              
|                                              
|                                               |                                                   | Return of Capital                   |         |           |        
|                                               |                                                   |                                     |         |           |         
|                                               |                                                   |                                     | 27,950  |           |         
|                                               |                                                   |                                     |         |           |         
|                                               | Effect of Exchange Rate Changes on Cash           |                                     |         | (1,464    | )       
|                                               |                                                   |                                     |         |           |         
|Net (Decrease) Increase in Cash                |                                                   |                                     | (53,365 | )         |         
|                                              
|                                              
|                                              
|                                              
|Cash and Cash Equivalents at Beginning of Year |                                                   |                                     | 56,399  |           |         
|                                               |                                                   |                                     |         |           |         
|Cash and Cash Equivalents at End of Year       |                                                   | $                                   | 3,034   |           |         
|                                               |                                                   |                                     |         |           |         

See notes to combining financial statements.

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




Combining Statements of Stockholders Equity and Partners Capital

(Dollars in thousands)



|                          |                              |                    |         | Centex Development Company, L.P. |        |   | 3333 Holding               |        
|------------------------- | ---------------------------- | ------------------ | ------- | -------------------------------- | ------ | - | -------------------------- | -------
|                          |                              |                    |         | and Subsidiaries                 |        |   | Corporation and Subsidiary |        
|                          |                              |                    |         |                                  |        |   |                            |        
|                          |                              |                    |         |                                  |        |   |                            | Class B
|                          |                              |                    |         |                                  |        |   |                            | Unit   
|                          |                              |                    |         | Combined                         |        |   | Warrants                   |        
|                          |                              |                    |         |                                  |        |   |                            |        
|Balance at March 31, 1998 |                              | $                  | 40,855  |                                  |        | $ | 500                        |        
|                         
|                         
|                         
|                         
|                          | Issuance of Class C Units    |                    |         | 19,445                           |        |   |                            |       
|                         
|                         
|                         
|                         
|                          | Net Earnings                 |                    |         | 430                              |        |   |                            |       
|                          |                              |                    |         |                                  |        |   |                            |        
|Balance at March 31, 1999 |                              |                    | 60,730  |                                  |        |   | 500                        |        
|                         
|                         
|                         
|                         
|                          | General Partner
Contribution |                    |         |                                 |        |   |                            |       
|                         
|                         
|                         
|                         
|                          | Issuance of Class C Units    |                    |         | 8,095                            |        |   |                            |       
|                         
|                         
|                         
|                         
|                          | Net Earnings                 |                    |         | 456                              |        |   |                            |       
|                         
|                         
|                         
|                         
|                          | Accumulated Other           
|                         
|                         
|                         
|                         
|                          |                              | Comprehensive Loss |         |                                  | (96    | ) |                            |        
|                          |                              |                    |        
|                          | Comprehensive Income         |                    |         | 360                              |       
|                          |                              |                    |         |                                  |        |   |                            |        
|Balance at March 31, 2000 |                              |                    | 69,185  |                                  |        |   | 500                        |        
|                         
|                         
|                         
|                         
|                          | Issuance of Class C Units    |                    |         | 146,112                          |        |   |                            |       
|                         
|                         
|                         
|                         
|                          | Net Earnings                 |                    |         | 4,616                            |        |   |                            |       
|                         
|                         
|                         
|                         
|                          | Accumulated Other           
|                         
|                         
|                         
|                         
|                          |                              | Comprehensive Loss |         |                                  | (4,100 | ) |                            |        
|                          |                              |                    |        
|                          | Comprehensive Income         |                    |         | 516                              |       
|                          |                              |                    |         |                                  |        |   |                            |        
|Balance at March 31, 2001 |                              | $                  | 215,813 |                                  |        | $ | 500                        |        
|                          |                              |                    |         |                                  |        |   |                            |        

See notes to combining financial statements.

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




(A) ORGANIZATION

In March 1987, certain subsidiaries of Centex Corporation (Centex)
contributed to Centex Development Company, L.P. (the Partnership), a
newly-formed master limited partnership, properties with a historical cost
basis (which approximated market value) of approximately $76 million in
exchange for 1,000 Class A limited partnership units (Class A Units). The
Partnership was formed to enable stockholders of Centex to participate in
long-term real estate development projects, the dynamics of which are
inconsistent with Centexs traditional financial objectives.

The Partnership is managed by its general partner, 3333 Development
Corporation (Development), which is in turn wholly-owned by 3333 Holding
Corporation (Holding). Holding is a separate public company whose stock
trades in tandem with Centexs common stock. The common stock of Holding was
distributed in 1987, together with warrants to purchase approximately 80% of
the Partnerships Class B limited partnership units (Class B Units) as a
dividend to the stockholders of Centex. These securities are held by a
nominee on behalf of the stockholders and will trade in tandem with the common
stock of Centex until such time as they are detached. The securities may be
detached at any time by Centexs Board of Directors, but the warrants to
purchase Class B Units will automatically become detached in November 2007.

The stockholders of Centex elect the four-person Board of Directors of
Holding. Three of the Board members, representing the majority of the Board,
are independent outside directors who are not directors, affiliates, or
employees of Centex. Thus, through Holding, the stockholders of Centex control
the general partner of the Partnership. The general partner and independent
Board of Holding manage how the Partnership conducts its activities, including
the acquisition, development, maintenance, operation, and sale of properties.
The general partner, acting on behalf of the Partnership, may sell or acquire
properties, including the contributed property, and enter into other business
transactions without the consent of the limited partners. In addition, the
limited partners cannot remove the general partner.

During fiscal year 1998, the agreement governing the Partnership was
amended to allow for the issuance of Class C limited partnership units (Class
C Units). During fiscal year 1998, the 1,000 outstanding Class A Units owned
by Centex were converted to 32,260 new Class A Units. As of March 31, 2001,
181,194 Class C Units have been issued in exchange for assets with a fair
market value of $181.2 million. These assets were recorded by the Partnership
at fair market value. The partnership agreement provides that Centex, the
Class A and Class C limited partner, is entitled to a cumulative preferred
return of 9% per annum on the average outstanding balance of its Unrecovered
Capital, which is defined as its capital contributions, adjusted for cash or
other distributions representing return of capital contributions. As of March
31, 2001, Unrecovered Capital totaled $214.0 million, and preference payments
in arrears amounted to $21.2 million. No preference payments were made during
fiscal 2001, 2000, or 1999.

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

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Supplementary Condensed Combined Balance Sheets

|                                     |                                          |   |           |           |  |      |           |           | 
|------------------------------------ | ---------------------------------------- | - | --------- | --------- |  | ---- | --------- | --------- | 
|                                     |                                          |   | March 31, |          
|                                     |                                          |   |           |          
|                                     |                                          |   | 2001      |           |  | 2000 |          
|                                     |                                          |   |           |           |  |      |          
|Assets                              
|                                    
|                                    
|                                    
|                                    
|                                     | Cash and Cash Equivalents                |   | $         | 60,786    |  |      | $         | 192,252   | 
|                                    
|                                    
|                                    
|                                    
|                                     | Restricted Cash                          |   |           | 57,428    |  |      |           | 5,625     | 
|                                    
|                                    
|                                    
|                                    
|                                     | Receivables                              |   |           | 2,613,035 |  |      |           | 907,367   | 
|                                    
|                                    
|                                    
|                                    
|                                     | Inventories                              |   |           | 2,629,733 |  |      |           | 2,343,682 | 
|                                    
|                                    
|                                    
|                                    
|                                     | Investments in Joint Ventures and Other  |   |           | 72,679    |  |      |           | 68,539    | 
|                                    
|                                    
|                                    
|                                    
|                                     | Property and Equipment, net              |   |           | 732,490   |  |      |           | 364,182   | 
|                                    
|                                    
|                                    
|                                    
|                                     | Other Assets                             |   |           | 757,882   |  |      |           | 548,689   | 
|                                     |                                          |   |           |           |  |      |          
|                                     |                                          | $ | 6,924,033 |           |  | $    | 4,430,336 |          
|                                     |                                          |   |           |           |  |     
|Liabilities and Stockholders Equity
|                                    
|                                    
|                                    
|                                    
|                                     | Accounts Payable and Accrued Liabilities |   | $         | 1,352,467 |  |      | $         | 1,244,500 | 
|                                    
|                                    
|                                    
|                                    
|                                     | Short-term Debt                          |   |           | 602,185   |  |      |           | 834,897   | 
|                                    
|                                    
|                                    
|                                    
|                                     | Long-term Debt                           |   |           | 3,111,607 |  |      |           | 802,238   | 
|                                    
|                                    
|                                    
|                                    
|                                     | Minority Stockholders Interest          |   |           | 143,710   |  |      |           | 129,352   | 
|                                    
|                                    
|                                    
|                                    
|                                     | Stockholders Equity                     |   |           | 1,714,064 |  |      |           | 1,419,349 | 
|                                     |                                          |   |           |           |  |      |          
|                                     |                                          | $ | 6,924,033 |           |  | $    | 4,430,336 |          
|                                     |                                          |   |           |           |  |     

Supplementary Condensed Combined Statements of Earnings

|                             |  |                               |           |   |      |   |           |      |  |   |           | 
|---------------------------- |  | ----------------------------- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | 
|                             |  | For the Years Ended March 31, |          
|                             |  |                               |          
|                             |  | 2001                          |           |   | 2000 |   |           | 1999 | 
|                             |  |                               |           |   |      |   |           |      | 
|Revenues                     |  | $                             | 7,048,573 |   |      | $ | 6,380,125 |      |  | $ | 5,225,014 | 
|                            
|                            
|                            
|                            
|Cost and Expenses            |  |                               | 6,612,484 |   |      |   | 5,959,430 |      |  |   | 4,851,720 | 
|                             |  |                               |           |   |      |   |           |      | 
|Earnings Before Income Taxes |  |                               | 436,089   |   |      |   | 420,695   |      |  |   | 373,294   | 
|                            
|                            
|                            
|                            
|Income Taxes                 |  |                               | 154,112   |   |      |   | 163,563   |      |  |   | 141,332   | 
|                             |  |                               |           |   |      |   |           |      | 
|                            
|                            
|                            
|                            
|                            
|                            
|                            
|                            
|Net Earnings                 |  |                               | 281,977   |   |      |   | 257,132   |      |  |   | 231,962   | 
|                            
|                            
|                            
|                            
|Other Comprehensive Loss     |  |                               | (3,849    | ) |      |   | (1,248    | )    |  |   |          | 
|                             |  |                               |           |   |      |   |           |      | 
|                            
|                            
|                            
|                            
|                            
|                            
|                            
|                            
|Comprehensive Income         |  | $                             | 278,128   |   |      | $ | 255,884   |      |  | $ | 231,962   | 
|                             |  |                               |           |   |      |   |           |      | 

(B) BASIS OF PRESENTATION

The accompanying combining financial statements present the individual and
combined financial statements of Holding and subsidiary and the Partnership and
subsidiaries as of March 31, 2001 and 2000, and results of operations for each
of the three years ended March 31, 2001. The financial statements of the
Partnership and subsidiaries are included in the combined statements since
Development, as general partner of the Partnership, is able to exercise
effective control over the Partnership.

(C) SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

Revenue from home building projects and real estate sales are recognized
as homes and properties are sold and title passes. The Partnership recognizes
revenues from rentals to tenants under operating leases

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ratably over the respective lease terms. Rental revenues are included in Interest and Other
Income in the Combining Statements of Operations.

Earnings (Loss) Per Share/Unit

Earnings (loss) per share/unit is based on the weighted-average number of
outstanding shares of common stock of 1,000 for Holding and the
weighted-average number of outstanding Class A and Class C Units of the
Partnership of 70,235; 63,116; and 54,377 for fiscal years 2001, 2000, and
1999, respectively.

Cash and Cash Equivalents

The Partnership considers all highly liquid investments purchased with an
original maturity of 90 days or less to be cash and cash equivalents.

Inventory Capitalization and Cost Allocation

Projects under development and held for sale are stated at the lower of
cost (including development costs and, where appropriate, capitalized interest
and real estate taxes) or fair value less costs to sell. Capitalized costs are
included in cost of sales in the combining statements of operations as related
revenues are recognized. Interest costs relieved from inventories are included
in cost of sales. The Companies review recoverability of their inventories on
an individual basis in accordance with Statement of Financial Accounting
Standards (SFAS) No. 121, Accounting for Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of.

Property and Equipment, net

Property and equipment are stated at cost. Major renewals and
improvements are capitalized and depreciated. Repairs and maintenance are
expensed as incurred. Depreciation is provided on a straight-line basis over
the estimated useful lives of depreciable assets ranging from three to ten
years. Costs and accumulated depreciation applicable to assets retired or sold
are eliminated from the accounts and any resulting gains or losses are
recognized at such time.

Goodwill, net

Goodwill represents the excess of purchase price over net assets of
businesses acquired. Goodwill is amortized over 20 years. The Companies
monitor goodwill and other intangibles to determine whether any impairment of
these assets has occurred. In making such determination, the Companies
evaluate the performance, on an undiscounted basis, of the underlying
businesses which gave rise to such amount. In case of an impairment, the
recorded costs would be written down to fair value on a discounted basis.
Goodwill amortization totaled $1.8 million in fiscal 2001, $2.1 million in
fiscal 2000, and zero in fiscal 1999.

Foreign Currency Exchange Gains or Losses

The Partnerships International Home Building operation, whose functional
currency is not the U.S. dollar, translates its financial statements into U.S.
dollars. Assets and liabilities are translated at the exchange rate in effect
as of the financial statement date. Income statement accounts are translated
using the average exchange rate for the period. Income statement accounts that
represent significant, nonrecurring transactions are translated at the rate in
effect as of the date of the transaction. Gains and losses resulting from the
translation are included in accumulated other comprehensive income as a
separate component of partners capital.

Use of Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts

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reported in the financial statements and accompanying notes. Actual results could differ from those
estimates.

Reclassifications

Certain prior year balances have been reclassified to be consistent with
the fiscal 2001 presentation.

Combining Statements of Cash Flows   Supplemental Disclosures

Net interest capitalized by the Partnership during fiscal years ended
March 31, 2001, 2000, and 1999 totaled $3.9 million, $3.7 million, and $1.0
million, respectively. Land assets acquired by the Partnership during fiscal
years ended March 31, 2001 and 2000 in exchange for Class C Units totaled $3.8
million and $3.3 million, respectively. In addition, during the fiscal years
ended March 31, 2001 and 2000, the Partnership issued 142,268 and 4,830 new
Class C Units for $142.3 million and $4.8 million, respectively. No income
taxes were paid during the years ended March 31, 2001, 2000, and 1999. In
fiscal 2000, the Partnership acquired the assets and assumed liabilities of
Fairclough (as defined in Note D below) totaling $267.7 million and $297.0
million, respectively.

(D) ACQUISITION OF FAIRCLOUGH HOMES GROUP LIMITED

On April 15, 1999, Centex Development Company UK Limited (CDCUK), a
company incorporated in England and Wales and a wholly-owned subsidiary of the
Partnership, closed its acquisition of all of the voting shares of Fairclough
Homes Group Limited, a British home builder (Fairclough). The purchase price
at closing (approximately $219 million) was paid by the delivery of two-year
non-interest-bearing promissory notes. Additionally, the seller of the voting
shares retained non-voting preference shares in Fairclough that entitled it to
receive substantially all of the net after-tax earnings of Fairclough until
March 31, 2001. During that time period CDCUK also retained the rights to
participate in Faircloughs earnings in excess of certain specified levels.

Because the non-voting preference shares retained by the seller had the
characteristics of debt, the preference obligations were reported as interest
expense in the financial statements. A major portion of the promissory notes
were secured by a letter of credit obtained by the Partnership from a United
Kingdom bank.

During the period between April 15, 1999 and March 31, 2001, Faircloughs
operations were carried out subject to certain guidelines that were negotiated
with the seller. After March 31, 2001, CDCUK will redeem, for a nominal value,
the preference shares.

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

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

|                                              |  |   |          |  
|--------------------------------------------- |  | - | -------- | -
|Inventories, Property and Equipment and Other |  | $ | 270,450  |  
|                                             
|                                             
|                                             
|                                             
|Goodwill                                      |  |   | 34,904   |  
|                                             
|                                             
|                                             
|                                             
|Notes Issued and Liabilities Assumed          |  |   | (303,649 | )
|                                              |  |   |         
|Cash Paid at Acquisition                      |  | $ | 1,705    |  
|                                              |  |   |         

(E) PROPERTY AND EQUIPMENT

Property and equipment cost by major category and accumulated depreciation
are summarized below:

|                                  |  |           |       |   |      |   |       |  
|--------------------------------- |  | --------- | ----- | - | ---- | - | ----- | -
|                                  |  | March 31, |      
|                                  |  |           |      
|                                  |  | 2001      |       |   | 2000 |  
|                                  |  |           |       |   |      |  
|Land, Buildings, and Improvements |  | $         | 3,022 |   |      | $ | 3,119 |  
|                                 
|                                 
|                                 
|                                 
|Machinery, Equipment, and Other   |  |           | 1,016 |   |      |   | 1,042 |  
|                                  |  |           |       |   |      |  
|                                  |  |           | 4,038 |   |      |   | 4,161 |  
|                                 
|                                 
|                                 
|                                 
|Accumulated Depreciation          |  |           | (647  | ) |      |   | (583  | )
|                                  |  |           |       |   |      |  
|                                  |  | $         | 3,391 |   |      | $ | 3,578 |  
|                                  |  |           |       |   |      |  

(F) NOTES RECEIVABLE

Receivable   Notes at March 31, 2001 and 2000 have stated interest rates
ranging up to 10% and are due in monthly or quarterly installments. The
weighted-average interest rate was 10% at March 31, 2001 and 9% at March 31,
2000. Notes receivable at March 31, 2001 are due during fiscal 2002. As of
March 31, 2001, all notes were current.

(G) NOTES PAYABLE

Pursuant to a master note agreement between Holding and Centex, Centex had
advanced Holding an additional $1.0 million at March 31, 1998 secured by a
pledge of all of the issued and outstanding shares of Development (the Holding
Note). During fiscal 1999, the Holding Note was repaid and the pledge
agreement was terminated. The Holding Note bore interest at prime plus 1%.
Interest expense of $62 thousand related to this note is included in the
accompanying financial statements for the year ended March 31, 1999.

Non-recourse debt totaled $127.0 million at March 31, 2001. As projects
are sold, a portion of the proceeds is restricted for repayment of the note
that was secured by the project sold. In addition, the Partnership, through
wholly-owned single asset entities, had construction debt outstanding at March
31, 2001 totaling $48.8 million. The Partnership itself has also issued
completion and payment guarantees for up to 100% of the construction loan
amounts. The note balances and rates in effect were as follows:

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|                   |                    |  |  |                                |  |   |           |        |  |      |         |         | 
|------------------ | ------------------ |  |  | ------------------------------ |  | - | --------- | ------ |  | ---- | ------- | ------- | 
|                   |                    |  |  |                                |  |   | March 31, |       
|                   |                    |  |  |                                |  |   |           |       
|                   |                    |  |  |                                |  |   | 2001      |        |  | 2000 |        
|                   |                    |  |  |                                |  |   |           |        |  |      |        
|Non-Recourse Debt 
|                  
|                  
|                  
|                  
|                   | Mortgage Notes     |  |  | 6.92% to 8.72%                 |  |   | $         | 70,746 |  |      | $       | 51,078  | 
|                  
|                  
|                  
|                  
|                   | Mezzanine Notes    |  |  | 9.00% (A) to LIBOR (B) + 4.00% |  |   |           | 8,470  |  |      |         | 4,294   | 
|                  
|                  
|                  
|                  
|                   | Land Notes         |  |  | 9.00% to 9.50%                 |  |   |           | 6,477  |  |      |         |        | 
|                  
|                  
|                  
|                  
|                   | Other              |  |  | LIBOR (B) + 1.00%              |  |   |           | 41,342 |  |      |         |        | 
|                   |                    |  |  |                                |  |   |           |        |  |      |        
|                   |                    |  |  |                                |  |   | 127,035   |        |  |      | 55,372  |        
|                   |                    |  |  |                                |  |   |           |        |  |      |        
|                  
|                  
|                  
|                  
|                  
|                  
|                  
|                  
|Limited-Recourse  
|                  
|                  
|                  
|                  
|                   | Construction Notes |  |  | LIBOR(B) + 1.75% to 2.00%      |  |   |           | 48,806 |  |      |         | 29,111  | 
|                   |                    |  |  |                                |  |   |           |        |  |      |        
|                  
|                  
|                  
|                  
|                  
|                  
|                  
|                  
|Full-Recourse Debt
|                  
|                  
|                  
|                  
|                   | Entity purchase    |  |  | Zero Coupon                    |  |   |           | 6,857  |  |      |         | 218,839 | 
|                  
|                  
|                  
|                  
|                   | Land Note          |  |  | 6.14%                          |  |   |           | 4,603  |  |      |         | 20,418  | 
|                   |                    |  |  |                                |  |   |           |        |  |      |        
|                   |                    |  |  |                                |  |   | 11,460    |        |  |      | 239,257 |        
|                   |                    |  |  |                                |  |   |           |        |  |      |        
|                   |                    |  |  |                                |  | $ | 187,301   |        |  | $    | 323,740 |        
|                   |                    |  |  |                                |  |   |           |        |  |     



---

|(A) |  | In addition to the stated rate, the lender receives a participation
payment of up to 35% of net proceeds upon disposition of the underlying
real estate.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(B) |  | The 30-day LIBOR rate at March 31, 2001 and 2000 was 5.08% and 6.13%
respectively.                                                                      

Maturities of debt (in thousands) during the next five fiscal years are: 2002,
$36,616; 2003, $41,962; 2004, $43,227; 2005, $2,036; 2006, $2,199; and $61,261
thereafter.

(H) COMPREHENSIVE INCOME

Comprehensive income is summarized for the three-year period ended March
31, 2001 below:

|                                         |  |                               |        |   |      |   |     |      |  |   |     | 
|---------------------------------------- |  | ----------------------------- | ------ | - | ---- | - | --- | ---- |  | - | --- | 
|                                         |  | For the Years Ended March 31, |       
|                                         |  |                               |       
|                                         |  | 2001                          |        |   | 2000 |   |     | 1999 | 
|                                         |  |                               |        |   |      |   |     |      | 
|Net Earnings                             |  | $                             | 4,616  |   |      | $ | 456 |      |  | $ | 430 | 
|                                        
|                                        
|                                        
|                                        
|Other Comprehensive Loss:               
|                                        
|                                        
|                                        
|                                        
|Foreign Currency Translation Adjustments |  | $                             | (4,100 | ) |      | $ | (96 | )    |  |   |    | 
|                                         |  |                               |        |   |      |   |     |      | 
|Comprehensive
Income                     |  | $                             | 516    |   |      | $ | 360 |      |  | $ | 430 | 
|                                         |  |                               |        |   |      |   |     |      | 

(I) COMMITMENTS AND CONTINGENCIES

As of March 31, 2001, the Partnership had remaining commitments of
approximately $33.7 million on construction contracts.

To obtain construction financing for projects being developed by its
subsidiaries, the Partnership is often required to guarantee, for the benefit
of the construction lender, the completion of the project. To further
guarantee the completion of the project and the payment of the construction
loan obligations, the Partnership, in some instances, also has issued demand
notes made payable to its subsidiaries equal to 20% of the construction loan
commitment amount. The subsidiaries then pledge the demand notes to the
lenders as a form of additional collateral on the construction loans. The
demand notes are payable only in the event of default on the construction
loans. As of March 31, 2001, the Partnership had issued demand notes totaling
$4.0 million. In some instances, the Partnership has also executed partial
recourse payment guarantees.

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The subsidiaries have also obtained demand notes from Centex for up to 10%
of the construction loan commitment amount. These demand notes have been pledged to the lenders as
additional collateral on the construction loans, and may be called only in the
event of a default on the demand notes issued by the Partnership.

(J) BUSINESS SEGMENTS

During fiscal 2001, the Partnership operated in five principal business
segments: International Home Building, Domestic Home Building, Commercial
Development, Multi-Family Development, and Land Sales and Other. All of the
segments, except for International Home Building, operate in the United States.
International Home Buildings accounting policies are the same as those
described in the summary of significant accounting policies.

International Home Building acquires and develops residential properties
and constructs single and multi-family housing units in the United Kingdom.
The Domestic Home Building operation involves the construction and sale of
single-family homes. On March 31, 2001, the Partnership sold its Domestic Home
Building operation to Centex Homes. Commercial Development actively develops
office, industrial, and retail facilities, primarily for investment.
Multi-Family Development develops affordable to mid-market-priced multi-family
projects. Multi-Family Developments strategy is to market the projects for
sale during the development period. Land Sales and Other is involved in the
acquisition and disposition of land and other assets of the Partnership not
identified with another business segment.

INTERNATIONAL HOME BUILDING

The following table sets forth financial information relating to the International Home Building segment.

|                                           |  |                               |          |   |      |   |          |      |  |   |   | 
|------------------------------------------ |  | ----------------------------- | -------- | - | ---- | - | -------- | ---- |  | - | - | 
|                                           |  | For the Years Ended March 31, |         
|                                           |  |                              
|                                           |  | 2001                          |          |   | 2000 |   |          | 1999 | 
|                                           |  |                               |          |   |      |   |          |      | 
|Revenues                                   |  | $                             | 252,487  |   |      | $ | 329,582  |      |  | $ |  | 
|                                          
|                                          
|                                          
|                                          
|Cost of Sales                              |  |                               | (222,634 | ) |      |   | (283,456 | )    |  |   |  | 
|                                          
|                                          
|                                          
|                                          
|Selling, General & Administrative Expenses |  |                               | (22,085  | ) |      |   | (24,188  | )    |  |   |  | 
|                                          
|                                          
|                                          
|                                          
|Interest Expense, Paid to Seller           |  |                               | (7,802   | ) |      |   | (18,229  | )    |  |   |  | 
|                                           |  |                               |          |   |      |   |          |      |  |  
|Operating (Loss) Earnings                  |  | $                             | (34)     |   |      | $ | 3,709    |      |  | $ |  | 
|                                           |  |                               |          |   |      |   |          |      | 
|Identifiable Assets                        |  | $                             | 295,885  |   |      | $ | 347,748  |      |  | $ |  | 
|                                           |  |                               |          |   |      |   |          |      | 
|Capital Expenditures                       |  | $                             | 629      |   |      | $ |         |      |  | $ |  | 
|                                           |  |                               |          |   |      |   |          |      | 
|Depreciation and Amortization              |  | $                             | 2,678    |   |      | $ | 2,438    |      |  | $ |  | 
|                                           |  |                               |          |   |      |   |          |      | 

The Partnership acquired this segment in the first quarter of fiscal 2000.
The seller received $219 million in non-interest-bearing promissory notes due
in April 2001 and retained preferred non-voting shares in Fairclough. During
fiscal 2001, Fairclough generated after tax earnings totaling $7.8 million,
which are subject to distribution to the seller under the preferred share
arrangement. The Companies have accounted for the non-interest-bearing debt
and nominal residual value preferred shares as if they were a single debt
instrument. Accordingly, distributions attributable to the preferred shares
are recorded as interest expense in the accompanying financial statements. See
Note (D) for additional information regarding the Fairclough acquisition.
After taxes, International Home Building generated earnings of $208 thousand
for fiscal 2001.

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DOMESTIC HOME BUILDING

The following table sets forth financial information relating to the
Domestic Home Building segment.

|                                           |  |                               |         |   |      |   |         |      |  |   |         |  
|------------------------------------------ |  | ----------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                           |  | For the Years Ended March 31, |        
|                                           |  |                               |        
|                                           |  | 2001                          |         |   | 2000 |   |         | 1999 | 
|                                           |  |                               |         |   |      |   |         |      | 
|Revenues                                   |  | $                             | 30,304  |   |      | $ | 13,377  |      |  | $ | 21,295  |  
|                                          
|                                          
|                                          
|                                          
|Cost of Sales                              |  |                               | (24,002 | ) |      |   | (11,672 | )    |  |   | (17,108 | )
|                                          
|                                          
|                                          
|                                          
|Selling, General & Administrative Expenses |  |                               | (3,461  | ) |      |   | (1,495  | )    |  |   | (2,544  | )
|                                           |  |                               |         |   |      |   |         |      | 
|Operating Earnings                         |  | $                             | 2,841   |   |      | $ | 210     |      |  | $ | 1,643   |  
|                                           |  |                               |         |   |      |   |         |      | 
|Identifiable Assets                        |  | $                             |        |   |      | $ | 9,270   |      |  | $ | 10,920  |  
|                                           |  |                               |         |   |      |   |         |      | 
|Capital Expenditures                       |  | $                             | 4       |   |      | $ |        |      |  | $ | 126     |  
|                                           |  |                               |         |   |      |   |         |      | 
|Depreciation and Amortization              |  | $                             | 45      |   |      | $ | 52      |      |  | $ | 37      |  
|                                           |  |                               |         |   |      |   |         |      | 

In March 2001, the Partnership sold its Domestic Home Building segment to
Centex Homes for total consideration of $21.1 million representing book value
which also approximated market value. The financial results from the sale of
this segment are included in Land Sales and Other. Domestic Home Building
accounted for 8.9% and 3.5% of revenues and 65.0% and 4.9% of operating
earnings in the years ended March 31, 2001 and 2000, respectively.

COMMERCIAL DEVELOPMENT

The following table sets forth financial information relating to the
Commercial Development segment.

|                                           |  |                               |         |   |      |   |        |      |  |   |        |  
|------------------------------------------ |  | ----------------------------- | ------- | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                           |  | For the Years Ended March 31, |        
|                                           |  |                               |        
|                                           |  | 2001                          |         |   | 2000 |   |        | 1999 | 
|                                           |  |                               |         |   |      |   |        |      | 
|Revenues                                   |  | $                             | 33,088  |   |      | $ | 10,327 |      |  | $ | 2,616  |  
|                                          
|                                          
|                                          
|                                          
|Cost of Sales                              |  |                               | (18,398 | ) |      |   | (3,438 | )    |  |   | (2,077 | )
|                                          
|                                          
|                                          
|                                          
|Selling, General & Administrative Expenses |  |                               | (12,537 | ) |      |   | (5,444 | )    |  |   | (521   | )
|                                           |  |                               |         |   |      |   |        |      | 
|Operating Earnings                         |  | $                             | 2,153   |   |      | $ | 1,445  |      |  | $ | 18     |  
|                                           |  |                               |         |   |      |   |        |      | 
|Identifiable Assets                        |  | $                             | 127,109 |   |      | $ | 85,905 |      |  | $ | 44,820 |  
|                                           |  |                               |         |   |      |   |        |      | 
|Capital Expenditures                       |  | $                             |        |   |      | $ |       |      |  | $ |       |  
|                                           |  |                               |         |   |      |   |        |      | 
|Depreciation and Amortization              |  | $                             | 2,076   |   |      | $ | 1,246  |      |  | $ | 41     |  
|                                           |  |                               |         |   |      |   |        |      | 

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MULTI-FAMILY DEVELOPMENT

The following table sets forth financial information relating to the
Multi-Family Development segment.

|                                           |  |                               |        |   |      |   |         |      |  |   |        |  
|------------------------------------------ |  | ----------------------------- | ------ | - | ---- | - | ------- | ---- |  | - | ------ | -
|                                           |  | For the Years Ended March 31, |       
|                                           |  |                               |       
|                                           |  | 2001                          |        |   | 2000 |   |         | 1999 | 
|                                           |  |                               |        |   |      |   |         |      | 
|Revenues                                   |  | $                             | 1,664  |   |      | $ | 17,154  |      |  | $ | 342    |  
|                                          
|                                          
|                                          
|                                          
|Cost of Sales                              |  |                               |       |   |      |   | (17,057 | )    |  |   |       |  
|                                          
|                                          
|                                          
|                                          
|Selling, General & Administrative Expenses |  |                               | (2,399 | ) |      |   | (1,977  | )    |  |   | (1,814 | )
|                                           |  |                               |        |   |      |   |         |      | 
|Operating Loss                             |  | $                             | (735   | ) |      | $ | (1,880  | )    |  | $ | (1,472 | )
|                                           |  |                               |        |   |      |   |         |      | 
|Identifiable Assets                        |  | $                             | 50,783 |   |      | $ | 30,898  |      |  | $ | 31,337 |  
|                                           |  |                               |        |   |      |   |         |      | 
|Capital Expenditures                       |  | $                             | 14     |   |      | $ |        |      |  | $ | 91     |  
|                                           |  |                               |        |   |      |   |         |      | 
|Depreciation and Amortization              |  | $                             | 41     |   |      | $ | 44      |      |  | $ | 37     |  
|                                           |  |                               |        |   |      |   |         |      | 

LAND SALES AND OTHER

The following table sets forth financial information relating to the Land
Sales and Other segment.

|                                           |  |                               |         |   |      |   |        |      |  |   |        |  
|------------------------------------------ |  | ----------------------------- | ------- | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                           |  | For the Years Ended March 31, |        
|                                           |  |                               |        
|                                           |  | 2001                          |         |   | 2000 |   |        | 1999 | 
|                                           |  |                               |         |   |      |   |        |      | 
|Revenues                                   |  | $                             | 21,774  |   |      | $ | 7,759  |      |  | $ | 4,365  |  
|                                          
|                                          
|                                          
|                                          
|Cost of Sales                              |  |                               | (20,578 | ) |      |   | (6,384 | )    |  |   | (3,570 | )
|                                          
|                                          
|                                          
|                                          
|Selling, General & Administrative Expenses |  |                               | (1,047  | ) |      |   | (569   | )    |  |   | (554   | )
|                                           |  |                               |         |   |      |   |        |      | 
|Operating Earnings                         |  | $                             | 149     |   |      | $ | 806    |      |  | $ | 241    |  
|                                           |  |                               |         |   |      |   |        |      | 
|Identifiable Assets                        |  | $                             | 10,873  |   |      | $ | 37,797 |      |  | $ | 25,099 |  
|                                           |  |                               |         |   |      |   |        |      | 
|Capital Expenditures                       |  | $                             |        |   |      | $ |       |      |  | $ |       |  
|                                           |  |                               |         |   |      |   |        |      | 
|Depreciation and Amortization              |  | $                             |        |   |      | $ |       |      |  | $ |       |  
|                                           |  |                               |         |   |      |   |        |      | 

(K) FAIR VALUE OF FINANCIAL INSTRUMENTS

Statement of Financial Accounting Standards No. 107, Disclosures about
Fair Value of Financial Instruments, requires companies to disclose the
estimated fair value of their financial instrument assets and liabilities. The
estimated fair values shown below have been determined using current quoted
market prices where available and, where necessary, estimates based on present
value methodology suitable for each category of financial instruments.
Considerable judgment is required in interpreting market data to develop the
estimates of fair value. Accordingly, the estimates presented herein are not
necessarily indicative of the amounts that the Company could realize in a
current market exchange. All assets and liabilities which are not considered
financial instruments have been valued using historical cost accounting.

The consolidated carrying values of Cash and Cash Equivalents, Other
Receivables, Accounts Payable and Accrued Liabilities, and other variable-rate
debt approximate their fair values. The carrying values and estimated fair
values of other financial liabilities were as follows:

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|                                      |  |          |        |  |       |           |        |          |  |   |        |  |  |   |        |    
|------------------------------------- |  | -------- | ------ |  | ----- | --------- | ------ | -------- |  | - | ------ |  |  | - | ------ | ---
|                                      |  |          |        |  |       | March 31, |       
|                                      |  |          |        |  |      
|                                      |  | 2001     |        |  | 2000  |          
|                                      |  |          |        |  |       |          
|                                      |  | Carrying |        |  | Fair  |           |        | Carrying |  |   | Fair   | 
|                                      |  | Value    |        |  | Value |           |        | Value    |  |   | Value  | 
|                                      |  |          |        |  |       |          
|Financial Liabilities
Fixed-Rate Debt |  | $        | 81,683 |  |       | $         | 84,722 | (A)      |  | $ | 51,078 |  |  | $ | 49,903 | (A)



---

|(A) |  | Fair values are based on a present value discounted cash flow with
the discount rate approximating current market for similar instruments.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------

(L) STOCKHOLDERS EQUITY AND PARTNERS CAPITAL

Equity Securities

The Partnership Agreement contemplates the issuance of three classes of
limited partnership units: Class A Units, Class B Units, and Class C Units. In
March 1987, 1,000 Class A Units were issued to Centex subsidiaries in exchange
for assets valued at approximately $76 million. On February 24, 1998, the
1,000 Class A Units were converted to 32,260 new Class A Units.

No Class B Units are issued and outstanding. However, warrants to
purchase approximately 80% of the Class B Units were issued to Centex
stockholders and are held by a nominee on their behalf. These warrants will
detach and trade separately from Centex common stock on the earlier of Payout
(as defined below) or November 30, 2007, the scheduled detachment date.

Under the Partnership Agreement, holders of Class C Units are entitled to
substantially the same rights as holders of Class A Units in connection with
matters in common, such as voting, allocations, and distributions. During
fiscal 2001 and 2000, 146,112 and 8,095 Class C Units, respectively, were
issued in exchange for cash and other assets with a fair market value of $146.1
million and $8.1 million. At March 31, 2001, there were 32,260 Class A Units
and 181,194 Class C Units outstanding.

Preferred Return

The Partnership Agreement provides that the Class A and Class C limited
partners are entitled to a cumulative preferred return of 9% per annum on the
average outstanding balance of their Unrecovered Capital. No preference
payments have been made subsequent to fiscal 1998. Preference payments in
arrears at March 31, 2001 amounted to $21.2 million, and Unrecovered Capital
for Class A and Class C limited partners at March 31, 2001 totaled $32.8
million and $181.2 million, respectively.

Allocation of Profits and Losses

As provided in the Partnership Agreement, prior to Payout (as defined
below), net income of the Partnership is to be allocated to the partners in the
following order of priority:



|      |  |                                                                                                                                                                                   | 
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|[i]   |  | To the Class A and Class C limited partners to the extent of
the cumulative preferred return.                                                                                    
|     
|[ii]  |  | To the partners to the extent and in the same ratio that
cumulative net losses were allocated.                                                                                   
|     
|[iii] |  | To the partners in accordance with their percentage interests.
Currently, this would be a combined 20% to the Class A and Class C
limited partner and 80% to the general partner.

All loss allocations and allocations of net income after Payout will be
made to the partners in accordance with their percentage interests.

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Distributions

Distributions of cash or other property are to be made at the discretion
of the general partner and are to be distributed in the following order of
priority:



|     |  |                                                                                                                                                                                                                                      |                                                                                                                                                 
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------
|[i]  |  | Prior to the time at which the Class A and Class C limited
partners have received aggregate distributions equal to their original capital contribution (Payout), distributions of cash or other property shall be made as follows:
|    
|     |  | [a]                                                                                                                                                                                                                                  | To the Class A and Class C limited partners with respect to their preferred return, then                                                        
|    
|     |  | [b]                                                                                                                                                                                                                                  | To the partners in an amount equal to the maximum marginal corporate tax rate times the amount of taxable income
allocated to the partners, then
|    
|     |  | [c]                                                                                                                                                                                                                                  | To the Class A and Class C limited partners until their
Unrecovered Capital is reduced to zero.                                                 
|    
|[ii] |  | After Payout, distributions of cash will be made to the
partners in accordance with their percentage interests.                                                                                                                     

Warrants

In November 1987, Centex acquired from the Partnership 100 warrants to
purchase 100 Class B Units in the Partnership at an exercise price of $500 per
Class B Unit, and Centex acquired from Holding 100 warrants to purchase 100
shares of Holding common stock at an exercise price of $800 per share. These
warrants are subject to future adjustment to provide the holders of options to
purchase Centex common stock with the opportunity to acquire Class B Units and
shares of Holding. These warrants will generally become exercisable upon the
detachment of the tandem-traded securities from Centex common stock.

(M) RELATED PARTY TRANSACTIONS

Service and Management Agreements

Holding has a services agreement with Centex Service Company (Centex
Service), a wholly-owned subsidiary of Centex, whereby Centex Service provides
certain tax, accounting, and other similar services for Holding. This
agreement was amended in fiscal 1999 to include development services, and the
monthly fee increased from $2.5 thousand per month to $30 thousand per month.
This agreement was further amended during fiscal 2001 to increase the monthly
fee from $30 thousand per month to $85.8 thousand per month. Service fees of
$1.0 million in fiscal 2001 and $360 thousand in fiscal 2000 and 1999 are
reflected as administrative expenses in the accompanying combining financial
statements.

The Partnership paid $1.0 million, $583 thousand, and $713 thousand to
Holding during fiscal years 2001, 2000, and 1999, respectively, pursuant to an
agreement whereby Holding provides management services to the Partnership in
connection with the development and operation of properties acquired by the
Partnership, maintenance of partnership property, and accounting and clerical
services.

Sales and Purchases

Partnership revenues during fiscal years 2001, 2000, and 1999 include
sales to Centex Homes of $21.1 million, $5.4 million, and $3.4 million,
respectively. During fiscal 2001, Centex Homes purchased the Partnerships
Domestic Home Building operation for $21.1 million. Gains associated with lot
sales to Centex totaled $0, $333 thousand, and $139 thousand for fiscal years
2001, 2000, and 1999, respectively. At March 31, 2001, Centex Homes had
contracts to purchase lots for the aggregate price of approximately $433
thousand to be paid as lots are delivered.

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During fiscal 2001, a subsidiary of the Partnership purchased six acres in
Henderson, Nevada, from an unaffiliated third party. The total consideration
of $6 million consisted of a $5.5 million purchase money mortgage note and a
$.5 million cash payment. Concurrently, Centex Homes has deposited $.5 million
with the subsidiary as an option payment for the purchase of the property.

Other

The Partnership, through its operating subsidiaries, executed contracts
with certain of Centexs construction subsidiaries totaling $14.9 million in
fiscal 2000 and $43.2 million in fiscal 1999 for the construction of
multi-family apartments, a recreational ice skating facility, and two office
buildings. During fiscal 2001 and 2000, $7.7 million and $23.5 million,
respectively, was paid to Centexs construction subsidiaries pursuant to the
construction contracts. Additionally, during fiscal 2001 and 2000, in
connection with third-party construction and permanent loans made to the
Partnerships operating subsidiaries and in connection with acquisition and
sale of properties during the year, the Partnership paid an aggregate of $273
thousand and $186 thousand, respectively, in title insurance premiums and
escrow fees to Centex title insurance subsidiaries.

Centex has issued demand notes or made limited guarantees relating to a
number of the Partnerships project loans. At March 31, 2001, these demand
notes totaled $2.1 million for construction loans, and the guarantees totaled
$2.0 million for permanent loans. Each demand note or guarantee is payable
only in the event of default by the Partnership or its subsidiary under its
obligations to the lender.

A subsidiary of the Partnership owns a 50% interest in a 79,000 square
foot office building in Plantation, Florida. The remaining 50% interest is
owned by a Centex affiliate. Approximately 61% of the rentable square footage
of this building is leased and occupied by a Centex affiliate.

A subsidiary of the Partnership has leased approximately 161,225 square
feet of space in its Dallas, Texas office building to Centex Service and other
Centex affiliates.

The Partnership guaranteed certain obligations of CDCUK in connection with
CDCUKs acquisition of all of the voting shares of Fairclough, for
approximately $219 million on April 15, 1999. Included among the guaranteed
obligations was payment under two promissory notes that CDCUK delivered to the
seller for the purchase price and payment of the preferred stock dividends due
to the seller from April 1, 1999 through March 31, 2001. The Partnership
guaranty was augmented with an undertaking by Centex Homes, the sole limited
partner of the Partnership, that if the Partnership did not have sufficient
funds to satisfy its obligations, Centex Homes would make such capital
contributions to the Partnership as might be necessary to enable the
Partnership to satisfy those obligations. Further supplementing the
undertaking by Centex Homes, Centex agreed that if Centex Homes did not perform
its obligations, Centex would take appropriate action to cause the performance
of those obligations. Payment of the negotiable note delivered in connection
with the acquisition was primarily secured by a letter of credit issued by a
United Kingdom bank. In order to procure the letter of credit, the Partnership
guaranteed payment of the principal amount when due to the bank. Centex also
provided an assurance to the bank that if the Partnership did not meet its
obligations, Centex would cause the Partnership to have sufficient funds for
the Partnership to perform its obligations, primarily through Centexs purchase
of limited partnership units in the Partnership. On March 30, 2001, both
promissory notes were paid in full, less a $6.9 million holdback relative to
CDCUK exercising its right of offset for asserted breaches of representation
and warranties by the seller under the share purchase agreement.

Under the partnership agreement, Class C Units may be issued in exchange
for assets acquired and capital received from a limited partner or from an
entity that is to be admitted as a limited partner. Centex

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Homes is currently the sole limited partner of the Partnership. During fiscal 2001, the
Partnership acquired assets and received capital valued at $146.1 million from
Centex Homes in exchange for 146,112 Class C Units.

The partnership agreement provides that the holders of Class A Units and
Class C Units are entitled
to a cumulative preferred return of 9% per annum on the average
outstanding balance of their Unrecovered Capital. As noted above, Centex Homes
is currently the sole limited partner of the Partnership and the sole holder of
all outstanding Class A Units and Class C Units. During fiscal 2001, the
Partnership made no preference payments to Centex Homes. At March 31, 2001,
unpaid preference accruals totaled $21.2 million, and Unrecovered Capital for
Class A Units and Class C Units totaled $32.8 million and $181.2 million,
respectively.

(N) INCOME TAXES

At March 31, 2001, Holding had operating loss carryforwards for income tax
reporting purposes of $3.4 million. If unused, the loss carryforwards will
expire in fiscal years 2008 through 2021. Holding has not recognized these tax
assets in its balance sheet due to its history of operating losses. Holding
joins with its subsidiaries in filing consolidated income tax returns. The
taxable income of the Partnership has been allocated to the holders of the
Class A and Class C Units. Accordingly, no tax provision for Partnership
earnings is shown in the combining financial statements.

(O) SUBSEQUENT EVENTS

Subsequent to March 31, 2001, the Partnership sold the 400-unit Sheffield
apartment complex located in Grand Prairie, Texas for $23 million. The sale
generated earnings of $2 million. Net sales proceeds of approximately $22.7
million were used in part to repay Notes Payable-Other of $19.6 million.

Subsequent to March 31, 2001, a subsidiary of the Partnership purchased
approximately 43 acres in South Kohala, Hawaii, from an unaffiliated third
party. The total consideration of $33 million consisted of a $32 million
purchase money mortgage note and a $1 million cash payment. Concurrently,
Centex Homes has deposited $1 million with the subsidiary as an option payment
for the purchase of the property.

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Report of Independent Public Accountants

TO THE BOARD OF DIRECTORS OF 3333 HOLDING CORPORATION:

We have audited the accompanying combining balance sheets of 3333 Holding
Corporation and subsidiary and Centex Development Company, L.P. and
subsidiaries as of March 31, 2001 and 2000, and the related combining
statements of operations, cash flows, and stockholders equity and partners
capital for each of the three years in the period ended March 31, 2001. These
financial statements and the schedule referred to below are the responsibility
of the Companies management. Our responsibility is to express an opinion on
these financial statements and the schedule based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the individual and combined financial positions of
3333 Holding Corporation and subsidiary and Centex Development Company, L.P.
and subsidiaries as of March 31, 2001 and 2000, and the individual and combined
results of their operations and their cash flows for each of the three years in
the period ended March 31, 2001, in conformity with accounting principles
generally accepted in the United States.

Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule of real estate and
accumulated depreciation listed in the index of the financial statements is
presented for purposes of complying with the Securities and Exchange
Commissions rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.

Arthur Andersen LLP

Dallas, Texas,

May 15, 2001

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Quarterly Results (Unaudited)
(Dollars in thousands, except per share/unit data)

|               |                                |  | For the Years Ended March 31, |        
|-------------- | ------------------------------ |  | ----------------------------- | -------
|               |                                |  |                               |        
|               |                                |  | 2001                          |        
|               |                                |  |                               |        
|               |                                |  |                               |        
|               |                                |  |                               |        
|               |                                |  | Combined                      |        
|               |                                |  |                               |        
|First Quarter 
|              
|              
|              
|              
|               | Revenues                       |  | $                             | 71,117 
|              
|              
|              
|              
|               | Earnings (Loss) Before Taxes   |  | $                             | 1,047  
|              
|              
|              
|              
|               | Net Earnings (Loss)            |  | $                             | 401    
|              
|              
|              
|              
|               | Earnings (Loss) Per Unit/Share |  |                               |        
|              
|              
|              
|              
|               | Average Units Outstanding      |  |                               |        
|              
|              
|              
|              
|               | Average Shares Outstanding     |  |                               |        
|              
|              
|              
|              
|Second Quarter
|              
|              
|              
|              
|               | Revenues                       |  | $                             | 70,641 
|              
|              
|              
|              
|               | Earnings (Loss) Before Taxes   |  | $                             | (775   
|              
|              
|              
|              
|               | Net Earnings (Loss)            |  | $                             | (186   
|              
|              
|              
|              
|               | Earnings (Loss) Per Unit/Share |  |                               |        
|              
|              
|              
|              
|               | Average Units Outstanding      |  |                               |        
|              
|              
|              
|              
|               | Average Shares Outstanding     |  |                               |        
|              
|              
|              
|              
|Third Quarter 
|              
|              
|              
|              
|               | Revenues                       |  | $                             | 80,752 
|              
|              
|              
|              
|               | Earnings (Loss) Before Taxes   |  | $                             | 2,721  
|              
|              
|              
|              
|               | Net Earnings (Loss)            |  | $                             | 3,649  
|              
|              
|              
|              
|               | Earnings (Loss) Per Unit/Share |  |                               |        
|              
|              
|              
|              
|               | Average Units Outstanding      |  |                               |        
|              
|              
|              
|              
|               | Average Shares Outstanding     |  |                               |        
|              
|              
|              
|              
|Fourth Quarter
|              
|              
|              
|              
|               | Revenues                       |  | $                             | 116,807
|              
|              
|              
|              
|               | Earnings (Loss) Before Taxes   |  | $                             | 1,381  
|              
|              
|              
|              
|               | Net Earnings (Loss)            |  | $                             | 752    
|              
|              
|              
|              
|               | Earnings (Loss) Per Unit/Share |  |                               |        
|              
|              
|              
|              
|               | Average Units Outstanding      |  |                               |        
|              
|              
|              
|              
|               | Average Shares Outstanding     |  |                               |        




ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

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PART III




ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS

Holding

Except for the information relating to the executive officers of Holding,
which follows Item 4 of Part I of Part B of this Report and is incorporated
herein by reference, the information called for by this Item 10 with respect to
Holding is incorporated herein by reference to the information included under
the captions Election of Directors and Section 16(a) Beneficial Ownership
Reporting Compliance in Holdings Proxy Statement for the July 19, 2001 Annual
Meeting of Stockholders (the 2001 Holding Proxy Statement).

The Partnership

Except for the information relating to the executive officers of the
Partnerships general partner, Development, which follows Item 4 of Part I of
Part B of this Report and is incorporated herein by reference, and except for
the additional information regarding the Partnership set forth below, the
information called for by this Item 10 with respect to the Partnership and the
directors and executive officers of the Partnerships general partner,
Development, is incorporated herein by reference to the information included
under the captions Election of Directors and Section 16(a) Beneficial
Ownership Reporting Compliance in the 2001 Holding Proxy Statement.

The Partnership has no directors or officers and, instead, is managed by
Development, its sole general partner. Directors and officers of Holding hold
the same positions with Development and, together with the other officers of
Development, perform all executive management functions required for the
Partnership. The limited partners of the Partnership have no power to direct
or participate in the control of the Partnership or to remove the general
partner. Through its Board of Directors, a majority of whom are independent
outside directors, Development manages how the Partnership conducts its
activities, including the acquisition, development, maintenance, and sales of
properties belonging to the Partnership and all other decisions regarding the
Partnerships business or operations. See Item 1. Business.

Management Agreement

The Partnership has entered into a management agreement (the Management
Agreement) pursuant to which Holding may acquire, develop, maintain, and sell
properties of the Partnership for and on behalf of the Partnership and provide
certain administrative and clerical services required by the Partnership that
are not performed by the employees of the Partnership. From time to time,
Holding delegates the performance of certain responsibilities to Centex Service
under the terms of a services agreement between Holding and Centex Service.

Holding is entitled to reimbursement from the Partnership for all
reasonable costs and expenses incurred and paid by Holding in connection with
the performance of its duties and obligations under the Management Agreement,
plus a $25,000 quarterly managerial fee. During fiscal 2001, Holding received
$1.0 million from the Partnership for its services.

The term of the Management Agreement is subject to automatic renewal for
successive one-year terms unless either party elects to terminate the
Management Agreement upon at least 30 days written notice prior to March 31 of
any year. However, it may not be terminated by the Partnership (other than in
the event

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of a breach by Holding constituting gross negligence or willful or
wanton misconduct) prior to the latest of the Detachment of the Stockholder
Warrants from Centex Common Stock or, Payout (as defined in
Partnership Agreement).




ITEM 11. EXECUTIVE COMPENSATION

Holding

The information called for by this Item 11 with respect to Holding is
incorporated herein by reference to the information included under the caption
Executive Compensation in the 2001 Holding Proxy Statement.

The Partnership

Except for the additional information regarding the Partnership set forth
below, the information called for by this Item 11 with respect to the
Partnership and the directors and executive officers of the Partnerships
general partner, Development, is incorporated herein by reference to the
information included under the captions Board Meetings, Fees, Committees and
Attendance Records and Executive Compensation in the 2001 Holding Proxy
Statement.

As noted above, the Partnership does not have any directors or officers
and, instead, is managed by its sole general partner, Development. See Item
10. Directors and Executive Officers of the Registrants. Under the terms of
the Partnership Agreement, Development, as general partner, is entitled to be
allocated certain items of income and loss of the Partnership and to receive
certain distributions of cash from the Partnership depending upon the level of
income and cash available for distribution and whether Payout has occurred.
For a summary of these rights and benefits, see Note (L) of the Notes to the
Holding/Partnership Combining Financial Statements included on pages
114-115 of
this Report. Except as described above, and except for the right to be
reimbursed for certain expenses, Development does not receive any compensation
from the Partnership with respect to its duties and obligations as general
partner of the Partnership.

The executive officers of Development did not receive any remuneration
from Development for the year ended March 31, 2001. Directors of Development
who are neither officers nor employees of Development, the Partnership, Centex,
or Centexs subsidiaries received compensation from Development in the form of
directors and committee members fees. During fiscal 2001, each executive
officer of Development received remuneration from Centex or one of its
subsidiaries and from the Partnership in his respective capacity as an officer
or employee thereof. Other than as previously described, none of the directors
or executive officers of Development received any additional compensation from
Centex or any of its subsidiaries for services rendered on behalf of
Development or the Partnership during fiscal 2001.




ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Holding

The information called for by this Item 12 with respect to Holding is
incorporated herein by reference to the information included and referenced
under the caption Security Ownership of Management and Certain Beneficial
Owners in the 2001 Holding Proxy Statement.

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The Partnership

The following table sets forth certain information with respect to the
beneficial ownership of the equity securities of the Partnership as of May 31,
2001 by Development, the directors and executive officers
of Development, individually itemized, all directors and executive
officers of Development as a group, and any person known to the Partnership to
be the beneficial owner of more than 5% of any class of the Partnerships
equity securities. Except as otherwise indicated, all securities are owned
directly, and the beneficial owner of such securities has the sole voting and
investment power with respect thereto.

|                            |  |                                                                                                                                              |  |             |  |          |         |  
|--------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------- |  | -------- | ------- | -
|                            |  |                                                                                                                                              |  | Number of   | 
|                            |  |                                                                                                                                              |  | Units      
|                            |  | Name of                                                                                                                                      |  | or Warrants |  | Percent  |        
|Title of Class*             |  | Beneficial Owner**                                                                                                                           |  | Owned       |  | of Class |        
|                            |  |                                                                                                                                              |  |             |  |          |        
|General Partner Interest(1) |  | 3333 Development Corporation
2728 N. Harwood
Dallas, Texas 75201                                                                             |  | All         |  |          | 100     | %
|                           
|                           
|                           
|                           
|Class A
Units(2)            |  | Centex Homes
2728 N. Harwood
Dallas, Texas 75201                                                                                             |  | 32,260.085  |  |          | 100     | %
|                           
|                           
|                           
|                           
|Stockholder Warrants(3)     |  | 3333 Development Corporation
Richard C. Decker(4)                                                                                            |  | 
1         |  |          | ***
*** |  
|                           
|                           
|                           
|                           
|                            |  | Josiah O. Low, III                                                                                                                           |  |            |  |          | ***     |  
|                           
|                           
|                           
|                           
|                            |  | Todd D. Newman (4)                                                                                                                           |  |            |  |          | ***     |  
|                           
|                           
|                           
|                           
|                            |  | David M. Sherer                                                                                                                              |  |            |  |          | ***     |  
|                           
|                           
|                           
|                           
|                            |  | Stephen M. Weinberg(4)                                                                                                                       |  |            |  |          | ***     |  
|                           
|                           
|                           
|                           
|                            |  | Roger O. West                                                                                                                                |  |            |  |          | ***     |  
|                           
|                           
|                           
|                           
|                            |  | All directors and executive officers of
Development as a group (6 persons)(4)                                                                |  | 1           |  |          | ***     |  
|                           
|                           
|                           
|                           
|                            |  | AXA Assurances I.A.R.D. Mutuelle(5)
AXA Assurances Vie Mutuelle
AXA Conseil Vie Assurance Mutuelle
370, rue Saint Honore
75001 Paris, France |  | 53          |  |          | 5.89    | %
|                           
|                           
|                           
|                           
|                            |  | AXA Courtage Assurance Mutuelle
26, rue Louis le Grand
75002 Paris, France                                                                  
|                           
|                           
|                           
|                           
|                            |  | AXA
25, avenue Matignon
75008 Paris, France                                                                                                 

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|                                |  |                                                                                                                                                                                                                    |  | Number of   |            
|------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------- | -----------
|                                |  |                                                                                                                                                                                                                    |  | Units       |            
|                                |  | Name of                                                                                                                                                                                                            |  | or Warrants |            
|Title of Class*                 |  | Beneficial Owner**                                                                                                                                                                                                 |  | Owned       |            
|                                |  |                                                                                                                                                                                                                    |  |             |            
|                                |  | AXA Financial, Inc.
1290 Avenue of the Americas
New York, New York 10104                                                                                                                                          
|                               
|                               
|                               
|                               
|                                |  | Sanford C. Bernstein & Co., Inc.(6)
767 Fifth Avenue
New York, New York 10153                                                                                                                                      |  |             | 51         
|                               
|                               
|                               
|                               
|                                |  | Barclays Global Investors, N.A.(7)
Barclays Global Fund Advisors
45 Fremont Street
San Francisco, California 94105                                                                                                 |  |             | 49         
|                               
|                               
|                               
|                               
|                                |  | Barclays Global Investors, LTD.
Murray House
1 Royal Mint Court
London, England EC3 NHH                                                                                                                           
|                               
|                               
|                               
|                               
|                                |  | Barclays Trust and Banking Company (Japan) Ltd.
Ebisu Prime Square Tower
8th Floor, 1-1-39 Hiroo, Shibuya-Ku
Tokyo, Japan 150-8402
Barclays Fund Limited
Gredley House, 11 The Broadway
Stratford, England E15 4BJ
|                               
|                               
|                               
|                               
|                                |  | Greenhaven Associates, Inc.(8)
Three Manhattanville Road
Purchase, New York 10577                                                                                                                                  |  |             | 45         
|                               
|                               
|                               
|                               
|Centex Class B Unit
Warrants(9) |  | Centex Corporation
2728 N. Harwood
Dallas, Texas 75201                                                                                                                                                             |  |             | 100        
|                               
|                               
|                               
|                               
|Class B Units(10)               |  | Centex Corporation
2728 N. Harwood
Dallas, Texas 75201                                                                                                                                                             |  |             | 350        
|                               
|                               
|                               
|                               
|Class C Units(11)               |  | Centex Homes
2728 N. Harwood
Dallas, Texas 75201                                                                                                                                                                   |  |             | 181,193.947



---

|* |  | Under the terms of the Partnership Agreement, the Partnership is managed
by a sole corporate general partner and none of the present classes of the
Partnerships securities are voting securities within the meaning of the
rules and regulations of the Commission promulgated pursuant to the
Exchange Act. Nonetheless, information with respect to each class of the
Partnerships equity securities has been set forth in accordance with such
rules and regulations.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|**  |  | The address of any person who is the beneficial owner of more than 5% of
a class of the Partnerships securities is also included.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------
|   
|*** |  | Less than 1%.                                                                                                                     



|(1) |  | In connection with the formation of the Partnership, Development made
a capital contribution to the Partnership of $767,182, in exchange for
Developments general partner interest in the Partnership. As general
partner, Development is entitled to receive allocations of income and loss
and distributions of property from the Partnership.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | The Class A Units were issued to certain wholly-owned subsidiaries of
Centex in exchange for the Original Properties, as defined in the
Partnership Agreement. Record title to the Class A Units presently is
held by Centex Homes. See Item 1. Business  General Development of
Business. As of the date or dates when the Stockholder Warrants are
deemed to have been exercised, the Class A Units and Class C Units will be
automatically converted collectively into (i) a number of Class B Units
equal to 20% of the total number of Class B Units that would be
outstanding after conversion based on the actual exercise of the
Stockholder Warrants and the assumed exercise of all the then exercisable
Centex Class B Unit Warrants (see footnote (3)) and (ii) a like number of
Class A Units and Class C Units. The Class A Units and Class C Units will
be automatically canceled upon Payout and the exercise and/or expiration
of all of the Stockholder Warrants and the Centex Class B Unit Warrants.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|(3) |  | The Nominee holds record title to the Stockholder Warrants, which are
exercisable for Class B Units, for the benefit of Centex Stockholders
pursuant to the Nominee Agreement. See Item 5. Market for Registrants
Common Equity and Related Stockholder Matters. However, the Nominee has
no power to vote the Class B Units issuable upon exercise of the
Stockholder Warrants or to direct the investment of the Stockholder
Warrants or such Class B Units. Beneficial ownership of the Stockholder
Warrants is, by virtue of the Nominee arrangement, indirect and undivided.
The number of Stockholder Warrants listed as beneficially owned has been
rounded to the nearest whole warrant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(4) |  | Shares of Centex Common Stock (and therefore a beneficial interest in
Stockholder Warrants) covered by stock options that are outstanding under
the Centex Corporation Amended and Restated 1987 Stock Option Plan and the
Fourth Amended and Restated 1998 Centex Corporation Employee Non-qualified
Stock Option Plan and exercisable on May 31, 2001 or within 60 days
thereafter are included as beneficially owned pursuant to the rules and
regulations of the Commission. Amounts include the following shares of
Centex Common Stock (and therefore a beneficial interest in the following
Stockholder Warrants) that may be acquired upon exercise of such stock
options: Mr. Decker   46,375 shares (and therefore a beneficial interest
in .69 Stockholder Warrants); Mr. Newman   375 shares (and therefore a
beneficial interest in .01 Stockholder Warrants); Mr. Weinberg   26,250
shares (and therefore a beneficial interest in .39 Stockholder Warrants);
and all directors and executive officers of Development as a group (6
persons)   73,000 shares (and therefore a beneficial interest in 1.09
Stockholder Warrants). In addition, this table includes shares of Centex
Common Stock (and therefore a beneficial interest in Stockholder Warrants)
that may be beneficially owned as of May 31, 2001 pursuant to the Centex
Common Stock Fund of the Profit Sharing and Retirement Plan of Centex
Corporation, a defined contribution plan, as follows: Mr. Weinberg   4,944
shares (and therefore a beneficial interest in .07 Stockholder Warrants);
and all directors and executive officers of Development as a group (6
persons)   4,944 shares (and therefore a beneficial interest in .07
Stockholder Warrants).

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|(5) |  | Based solely upon information contained in the Schedule 13G of AXA
Financial, Inc. (AXA Financial), AXA (AXA), which beneficially owns a
majority interest in AXA Financial, and AXA Assurances I.A.R.D Mutuelle,
AXA Assurances Vie Mutuelle, AXA Conseil Vie Assurance Mutuelle and AXA
Courtage Assurance Mutuelle (collectively, the Mutuelles AXA), which as
a group control AXA, filed with the Commission on February 12, 2001 with
respect to shares of Centex Common Stock owned as of December 31, 2000
(the AXA 13G), but calculating the percentage
shown by dividing the number of Stockholder Warrants represented by such
shares of Centex Common Stock by the total number of Stockholder Warrants
issued and outstanding on the record date. According to the AXA 13G, such
number includes 1,639,357 shares of Centex Common Stock (and therefore a
beneficial interest in 24.44 Stockholder Warrants) over which AXA
Financial, AXA and the Mutuelles AXA (collectively, the AXA Entities)
had sole voting power, 359,067 share of Centex Common Stock (and therefore
a beneficial interest in 5.35 Stockholder Warrants) over which the AXA
Entities had share voting power, 3,372,737 shares of Centex Common Stock
(and therefore a beneficial interest in 50.28 Stockholder Warrants) over
which the AXA Entities had sole dispositive power and 184,100 shares of
Centex Common Stock (and therefore a beneficial interest in 2.74
Stockholder Warrants) over which the AXA Entities had shared dispositive
power.                                                                                                     
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(6) |  | Based solely upon information contained in the Schedule 13G of Sanford
C. Bernstein & Co. (Bernstein) filed with the Commission on February 8,
2000 with respect to shares of Centex Common Stock owned as of December
31, 1999 (the Bernstein 13G), but calculating the percentage shown by
dividing the number of Stockholder Warrants represented by such shares of
Centex Common Stock by the total number of Stockholder Warrants issued and
outstanding on the record date. According to the Bernstein 13G, such
number includes 1,306,775 shares of Centex Common Stock (and therefore a
beneficial interest in 19.48 Stockholder Warrants) over which Bernstein
had sole voting or dispositive power, 416,340 shares of Centex Common
Stock (and therefore a beneficial interest in 6.21 Stockholder Warrants)
over which Bernstein had shared voting power and 3,449,075 shares of
Centex Common Stock (and therefore a beneficial interest in 51.42
Stockholder Warrants) over which Bernstein had sole dispositive power.
According to the Bernstein 13G, with respect to the 416,340 shares of
Centex Common Stock (and therefore a beneficial interest in 6.21
Stockholder Warrants) over which Bernstein had shared voting power,
Bernsteins clients have appointed an independent voting agent which has
instructions to vote such shares in the same manner as Bernstein.                                                                                                                                                                                                                                                           
|   
|(7) |  | Based solely upon information contained in the Schedule 13G of
Barclays Global Investors, N.A. (Barclays Investors), Barclays Global
Fund Advisors (Barclays Advisors), Barclays Global Investors, LTD.
(Barclays Investors LTD.), Barclays Trust and Banking Company (Japan)
Ltd. (Barclays Japan) and Barclays Fund Limited (Barclays Fund), filed
with the Commission on February 14, 2001 with respect to shares of Centex
Common Stock owned as of December 31, 2000 (the Barclays 13G), but
calculating the percentage shown by dividing the number of Stockholder
Warrants represented by such shares of Centex Common Stock by the total
number of Stockholder Warrants issued and outstanding on the record date.
According to the Barclays 13G, such number includes 2,832,655 shares of
Centex Common Stock (and therefore a beneficial interest in 42.23
Stockholder Warrants) over which Barclays Investors had sole voting power
and 3,027,128 shares of Centex Common Stock (and therefore a beneficial
interest in 45.13 Stockholder Warrants) over which Barclays Investors had
sole dispositive power, 140,388 shares of Centex Common Stock (and
therefore a beneficial interest in 2.09 Stockholder Warrants) over which
Barclays Advisors had sole voting power and 140,779 shares of Centex
Common Stock (and therefore a beneficial interest in 2.10 Stockholder
Warrants) over which Barclays Advisors had sole dispositive power, 79,880
shares of Centex Common Stock (and therefore a beneficial interest in 1.19
Stockholder Warrants) over which Barclays Investors LTD. had sole voting
power and 79,880 shares

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|     |  | of Centex Common Stock (and therefore a beneficial
interest in 1.19 Stockholder Warrants) over which Barclays Investors LTD.
had sole dispositive power, 20,439 shares of Centex Common Stock (and
therefore a beneficial interest in .30 Stockholder Warrants) over which
Barclays Japan had both sole voting power and sole dispositive power, and
4,115 shares of Centex Common Stock (and therefore a beneficial interest
in .06 Stockholder Warrants) over which Barclays Fund had both sole voting
power and sole dispositive power.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(8)  |  | Based solely upon information contained in the Schedule 13G of
Greenhaven Associates, Inc. filed with the Commission on January 11, 2001
with respect to shares of Centex Common Stock owned as of December 31,
2000 (the Greenhaven 13G), but calculating the percentage shown by
dividing the number of Stockholder Warrants represented by such shares of
Centex Common Stock by the total number of Stockholder Warrants issued and
outstanding on the record date. According to the Greenhaven 13G, such
number includes 450,200 shares of Centex Common Stock (and therefore a
beneficial interest in 6.71 Stockholder Warrants) over which Greenhaven
Associates, Inc. had both sole voting power and sole dispositive power,
and 2,598,000 shares of Centex Common Stock (and therefore a beneficial
interest in 38.73 Stockholder Warrants) over which Greenhaven Associates,
Inc. had shared dispositive power.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    
|(9)  |  | On November 30, 1987, Centex acquired from the Partnership 100
warrants (the Centex Class B Unit Warrants) to purchase a like number of
Class B Units, subject to adjustment, pursuant to an agreement for
purchase of warrants. The Centex Class B Unit Warrants are generally in
the same form as, and contain the same terms as, the Stockholder Warrants,
except for the manner in which they may be subdivided (and the
corresponding exercise price) and the applicable exercise period. See
Note (M) of the Notes to the Holding/Partnership Combining Financial
Statements included on pages 115-117 of this Report.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    
|(10) |  | Presently, there are no Class B Units issued or outstanding. The
Class B Units issuable upon exercise of the Stockholder Warrants have not
been shown as beneficially owned under the rules and regulations of the
Commission promulgated pursuant to the Exchange Act because the beneficial
owners of the Stockholder Warrants have no present right to exercise the
Stockholder Warrants and acquire Class B Units. For the purpose of
calculating Centexs beneficial interest in Class B Units, Class B Units
that may be acquired upon the exercise of the Centex Class B Unit Warrants
(100 total) and the Class B Units that may be acquired upon conversion of
outstanding Class A Units and Class C Units held by Centex Homes as of the
date of the exercise of the Stockholder Warrants (250 total), which date
Centex may indirectly determine by virtue of its ability, in its sole and
absolute discretion, to determine the date of detachment of the
Stockholder Warrants from Centex Common Stock, are included as
beneficially owned pursuant to the rules and regulations of the
Commission promulgated pursuant to the Exchange Act. See footnotes (2),
(3) and (11). The number of Class B Units and the percentage of class
listed assume that the Stockholder Warrants and the Centex Class B Unit
Warrants have been exercised in full for Class B Units but that no
subdivision of any of the warrants has occurred; however, both the
Stockholder Warrants and the Centex Class B Unit Warrants may be
subdivided or combined and any such subdivision or combination would
necessarily change the number of Class B Units beneficially owned and the
percent of class represented thereby.
|    
|(11) |  | The Class C Units were issued in exchange for assets acquired by the
Partnership from Centex Homes. See Item 1. Business  General Development
of Business. As of the date or dates when                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

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| |  | the Stockholder Warrants are
deemed to have been exercised, the Class A Units and Class C Units will be
automatically converted collectively into (i) a number of Class B Units
equal to 20% of the total number of Class B Units that would be
outstanding after conversion based on the actual exercise of the
Stockholder Warrants and the assumed exercise of all the then exercisable
Centex Class B Unit Warrants (see footnote (3)) and (ii) a like number of
Class A Units and Class C Units. The Class A Units and Class C Units will
be automatically canceled upon Payout and the exercise and/or expiration
of all of the Stockholder Warrants and the Centex Class B Unit Warrants.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information called for by this Item 13 with respect to Holding and the
Partnership is incorporated    herein by reference to the information included under the caption Certain
Transactions in the 2001 Holding Proxy Statement.




PART IV




ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K



|(a) |  | The following documents are filed as part of this Report:
|--- |  | ---------------------------------------------------------



| | (1) |     | Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --- | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |     | The combining balance sheets of Holding and subsidiary and the
Partnership and subsidiaries as of March 31, 2001 and 2000, and
the related combining statements of operations, cash flows, and
stockholders equity and partners capital for each of the three
years in the period ended March 31, 2001, together with the
accompanying notes to combining financial statements and the
Report of Independent Public Accountants on pages 100-118; of
this Report.
|
| | (2) |     | Schedules                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | (3) |     | Exhibits                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |     | (A) | Holding                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |     |     | Schedules are omitted because they are not applicable or not
required or the information required to be set forth therein
is included in the consolidated financial statements
referenced above in section (a)(1) of this Item 14.                                                                                                                                                                                                                                 
|
| |     |     | The information on exhibits required by this Item 14 with
respect to Holding is set forth in the Index to Exhibits-3333
Holding Corporation and Subsidiary appearing on pages 134-135
of this Report.                                                                                                                                                                                                                                                              
|
| |     | (B) | The Partnership                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |     |     | Real Estate and Accumulated Depreciation   Schedule III, filed
as Exhibit 99.1 to this Report.                                                                                                                                                                                                                                                                                                                                                                    

127



---



##### Table of Contents





| |     |  | The information on exhibits required by this Item 14 is set
forth in the Index to Exhibits-Centex Development Company,
L.P. and Subsidiaries appearing on pages 136-139 of this
Report.
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | Reports on Form 8-K:
No reports on Form 8-K have been filed for either Holding or the
Partnership during the last quarter of the period covered by this
Report.                        

128



---



##### Table of Contents






SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

|              |  |  |     |  |  |                                                                     
|------------- |  |  | --- |  |  | --------------------------------------------------------------------
|              |  |  |     |  |  | 3333 Holding Corporation                                            
|              |  |  |     |  |  | Registrant                                                          
|             
|June 15, 2001 |  |  | By: |  |  | /s/ Stephen M. Weinberg                                             
|              |  |  |     |  |  | Stephen M. Weinberg,
Director, President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by
the following persons on behalf of the registrant in the capacities and on the dates indicated.

|              |  |  |            |  |  |                                                                                                                                            
|------------- |  |  | ---------- |  |  | -------------------------------------------------------------------------------------------------------------------------------------------
|June 15, 2001 |  |  |            |  |  | /s/ Stephen M. Weinberg                                                                                                                    
|              |  |  |            |  |  | Stephen M. Weinberg,
Director, President and Chief Executive Officer
(principal executive officer)                                         
|             
|June 15, 2001 |  |  |            |  |  | /s/ Todd D. Newman                                                                                                                         
|              |  |  |            |  |  | Todd D. Newman,
Senior Vice President, Chief
Financial Officer and Treasurer
(principal financial officer
and principal accounting officer)
|             
|              |  |  | Directors: |  |  | Josiah O. Low, III, David M. Sherer,
Stephen M. Weinberg and Roger O. West                                                                 
|             
|June 15, 2001 |  |  | By:        |  |  | /s/ Stephen M. Weinberg                                                                                                                    
|              |  |  |            |  |  | Stephen M. Weinberg,
Individually and as
Attorney-in-Fact*                                                                                 



---

129



---



##### Table of Contents



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, 3333 Development Corporation, as general partner of, and
on behalf of, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

|              |  |  |     |  |  |                                                                     
|------------- |  |  | --- |  |  | --------------------------------------------------------------------
|              |  |  |     |  |  | Centex Development
Company, L.P.                                    
|             
|              |  |  |     |  |  | Registrant                                                          
|             
|              |  |  | By: |  |  | 3333 Development Corporation, General Partner                       
|             
|June 15, 2001 |  |  | By: |  |  | /s/ Stephen M. Weinberg                                             
|              |  |  |     |  |  | Stephen M. Weinberg,
Director, President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by
the following persons on behalf of 3333 Development Corporation, as general partner of, and on behalf of,
the registrant in the capacities and on the dates indicated.

|              |  |  |            |  |  |                                                                                                                                            
|------------- |  |  | ---------- |  |  | -------------------------------------------------------------------------------------------------------------------------------------------
|June 15, 2001 |  |  |            |  |  | /s/ Stephen M. Weinberg                                                                                                                    
|              |  |  |            |  |  | Stephen M. Weinberg,
Director, President and Chief Executive Officer
(principal executive officer)                                         
|             
|June 15, 2001 |  |  |            |  |  | /s/ Todd D. Newman                                                                                                                         
|              |  |  |            |  |  | Todd D. Newman,
Senior Vice President, Chief
Financial Officer and Treasurer
(principal financial officer
and principal accounting officer)
|             
|              |  |  | Directors: |  |  | Josiah O. Low, III, David M. Sherer,
Stephen M. Weinberg and Roger O. West                                                                 
|             
|June 15, 2001 |  |  | By:        |  |  | /s/ Stephen M. Weinberg                                                                                                                    
|              |  |  |            |  |  | Stephen M. Weinberg,
Individually and as
Attorney-in-Fact*                                                                                 



---

|* |  | Pursuant to authority granted by powers of attorney, copies of which are filed herewith.
|- |  | ----------------------------------------------------------------------------------------

130



---



##### Table of Contents






INDEX TO EXHIBITS

CENTEX CORPORATION
AND SUBSIDIARIES

|        |  |                                                                                                                                                                                                                                       |  |                                                                                                                                                                                                                                                                                                                                                           
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                       |  | Filed Herewith or                                                                                                                                                                                                                                                                                                                                         
|Number  |  | Exhibit                                                                                                                                                                                                                               |  | Incorporated by Reference                                                                                                                                                                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                       |  |                                                                                                                                                                                                                                                                                                                                                           
|3.1     |  | Restated Articles of
Incorporation of Centex
Corporation (Centex)                                                                                                                                                                   |  | Exhibit 4.1 of Centex to Joint
Registration Statement of
Centex, 3333 Holding Corporation
(Holding), and Centex
Development Company, L.P. (the
Partnership) on Form S-8 (File
Nos. 333-55717, 333-55717-01,
and 333-55717-02, respectively)
filed with the Securities and
Exchange Commission (the
Commission) on June 1, 1998
(the 1998 Form S-8)
|       
|       
|       
|       
|3.2     |  | Amended and Restated
By-laws of Centex                                                                                                                                                                                                |  | Exhibit 3.2 of Centex to the
amended Joint Annual Report on
Form 10-K/A of Centex, Holding,
and the Partnership for the
fiscal year ended March 31, 1999
(the 1999 Form 10-K/A)                                                                                                                                                                         
|       
|       
|       
|       
|4.1     |  | Specimen Centex common
stock certificate (with
tandem trading legend and
Rights Agreement legend)                                                                                                                                     |  | Exhibit 4.3 to Joint
Registration Statement of
Centex, Holding and the
Partnership on Form S-8 (File
Nos. 333-28229, 333-28229-01,
and 333-28229-02, respectively)
filed with the Commission on
June 2, 1997 (the 1997 Form
S-8)                                                                                                                        
|       
|       
|       
|       
|4.2     |  | Nominee Agreement, dated as
of November 30, 1987, by
and between Centex,
Holding, the Partnership,
and First RepublicBank
Dallas, National
Association, as nominee                                                                    |  | Exhibit 4.2 of Centex to the
Joint Annual Report on Form 10-K
of Centex, Holding, and the
Partnership for the fiscal year
ended March 31, 1993 (the 1993
Form 10-K)                                                                                                                                                                                     
|       
|       
|       
|       
|4.3     |  | Supplement to Nominee
Agreement, dated as of July
27, 2000, by and between
Centex, Holding, the
Partnership, The Chase
Manhattan Bank, as
successor nominee, and
ChaseMellon Shareholder
Services L.L.C., as
successor transfer agent |  | Exhibit 4.15 to Joint
Registration Statement of
Centex, Holding, and the
Partnership on Form S-3 (File
Nos. 333-54722, 333-54722-01,
and 333-54722-02, respectively)
filed with the Commission on
January 31, 2001 (the 2001 Form
S-3)                                                                                                                  
|       
|       
|       
|       
|4.4     |  | Rights Agreement, dated as
of October 2, 1996, between
Centex and ChaseMellon
Shareholder Services,
L.L.C., as rights agent                                                                                                           |  | Exhibit 4 to the Registration
Statement of Centex on Form 8-A
(File No. 1-6776) filed with the
Commission on October 8, 1996
(the 1996 Form 8-A)                                                                                                                                                                                                        

131



---



##### Table of Contents



INDEX TO EXHIBITS

CENTEX CORPORATION
AND SUBSIDIARIES  Continued

|        |  |                                                                                                                                                                                                                                 |  |                                                                                                                                                          
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                 |  | Filed Herewith or                                                                                                                                        
|Number  |  | Exhibit                                                                                                                                                                                                                         |  | Incorporated by Reference                                                                                                                                
|        |  |                                                                                                                                                                                                                                 |  |                                                                                                                                                          
|4.5     |  | Amendment No. 1 to
Rights Agreement,
dated as of
February 18, 1999,
between Centex and
ChaseMellon
Shareholder
Services, L.L.C.,
as rights agent                                                                                |  | Exhibit 4.2 to Amendment No. 1,
filed with the Commission on
February 22, 1999, to the 1996
Form 8-A                                                     
|       
|       
|       
|       
|4.6     |  | Instruments with
respect to
long-term debt,
which do not exceed
10% of the total
assets of Centex
and its
subsidiaries, have
not been filed;
Centex agrees to
furnish a copy of
such instruments to
the Commission upon
request |  | Not Applicable                                                                                                                                           
|       
|       
|       
|       
|10.1    |  | Centex Corporation
Amended and
Restated 1987 Stock
Option Plan*                                                                                                                                                                 |  | Exhibit 10.1 of Centex to the
Joint Quarterly Report on Form
10-Q of Centex, Holding, and the
Partnership for the fiscal
quarter ended September 30, 2000
|       
|       
|       
|       
|10.2    |  | Fourth Amended and
Restated 1998
Centex Corporation
Employee
Non-Qualified Stock
Option Plan*                                                                                                                                   |  | Filed herewith                                                                                                                                           
|       
|       
|       
|       
|10.3    |  | Executive
Employment
Agreement, dated as
of September 17,
1990, between
Centex and Laurence
E. Hirsch*                                                                                                                          |  | Exhibit 10.6 to the 1993 Form 10-K                                                                                                                       
|       
|       
|       
|       
|10.4    |  | Executive
Employment
Agreement, dated as
of January 18,
1991, between
Centex and David W.
Quinn*                                                                                                                                |  | Exhibit 10.7 to the 1993 Form 10-K                                                                                                                       
|       
|       
|       
|       
|10.5a   |  | Executive
Employment
Agreement, dated as
of June 1, 2000,
between Centex and
Leldon E. Echols*                                                                                                                                  |  | Filed herewith                                                                                                                                           

132



---



##### Table of Contents



INDEX TO EXHIBITS

CENTEX CORPORATION
AND SUBSIDIARIES  Continued

|     |  |         |  |  |         |                                                                                                                                                                                                                                |                           |                                                                                                                                                                       
|---- |  | ------- |  |  | ------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |  | Exhibit |  |  |         |                                                                                                                                                                                                                                | Filed Herewith or        
|     |  | Number  |  |  | Exhibit |                                                                                                                                                                                                                                | Incorporated by Reference
|     |  |         |  |  |         |                                                                                                                                                                                                                                |                          
|10.6 |  |         |  |  |         | Centex Corporation
$2,100,000
Convertible
Subordinated Note
issued to Laurence
E. Hirsch on May
28, 1999*                                                                                                                      |                           | Exhibit 10.8 of Centex to the
Joint Annual Report on Form 10-K
of Centex, Holding, and the
Partnership for the fiscal year
ended March 31, 2000 (the 2000
Form 10-K)
|    
|    
|    
|    
|10.7 |  |         |  |  |         | Amended and
Restated
Supplemental
Executive
Retirement Plan of
Centex Corporation*                                                                                                                                             |                           | Exhibit 10.9 to the 2000 Form 10-K                                                                                                                                    
|    
|    
|    
|    
|10.8 |  |         |  |  |         | Centex Corporation
Deferred
Compensation Plan*                                                                                                                                                                                 |                           | Exhibit 4 to Registration
Statement of Centex on Form S-8
(File No. 333-37956) filed with
the Commission on May 26, 2000                                              
|    
|    
|    
|    
|10.9 |  |         |  |  |         | Credit Agreement
dated as of August
9, 2000, among
Centex, Bank of
America, N.A., as
Administrative
Agent, The Chase
Manhattan Bank, as
Syndication Agent,
Citibank N.A. as
Documentation
Agent, and the
lenders named
therein |                           | Filed herewith                                                                                                                                                        
|    
|    
|    
|    
|21   |  |         |  |  |         | List of
Subsidiaries of
Centex, Holding
and the Partnership                                                                                                                                                                    |                           | Filed herewith                                                                                                                                                        
|    
|    
|    
|    
|23   |  |         |  |  |         | Consent of
Independent Public
Accountants                                                                                                                                                                                      |                           | Filed herewith                                                                                                                                                        
|    
|    
|    
|    
|24.1 |  |         |  |  |         | Powers of Attorney                                                                                                                                                                                                             |                           | Filed herewith                                                                                                                                                        



---

|* |  | Management contract or compensatory plan or arrangement
|- |  | -------------------------------------------------------

133



---



##### Table of Contents



INDEX TO EXHIBITS

3333 HOLDING CORPORATION
AND SUBSIDIARY

|        |  |                                                                                                                                                                                                                                       |  |                                                                                                                                                                                                                                                             
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                       |  | Filed Herewith or                                                                                                                                                                                                                                           
|Number  |  | Exhibit                                                                                                                                                                                                                               |  | Incorporated by Reference                                                                                                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                       |  |                                                                                                                                                                                                                                                             
|3.1     |  | Articles of Incorporation of Holding                                                                                                                                                                                                  |  | Exhibit 3.2a to Amendment No. 1,
filed with the Commission on
October 15, 1987 (Amendment No.
1), to the Registration
Statement of Holding on Form 10
(File No. 1-9624), filed with
the Commission on July 13, 1987
(the Holding Registration
Statement)
|       
|       
|       
|       
|3.2     |  | By-laws of Holding, as amended                                                                                                                                                                                                        |  | Exhibit 3.2 of Holding to the
1993 Form 10-K                                                                                                                                                                                                                
|       
|       
|       
|       
|4.1     |  | Specimen Holding common stock
certificate                                                                                                                                                                                             |  | Exhibit 4.1 to Amendment No. 1                                                                                                                                                                                                                              
|       
|       
|       
|       
|4.2     |  | Specimen Centex common stock
certificate (with tandem trading
legend and Rights Agreement legend)                                                                                                                                     |  | Exhibit 4.3 to the 1997 Form S-8                                                                                                                                                                                                                            
|       
|       
|       
|       
|4.3     |  | Nominee Agreement, dated as of
November 30, 1987, by and between
Centex, Holding, the Partnership,
and First RepublicBank Dallas,
National Association, as nominee                                                                    |  | Exhibit 4.3 of Holding to the
1993 Form 10-K                                                                                                                                                                                                                
|       
|       
|       
|       
|4.4     |  | Supplement to Nominee Agreement,
dated as of July 27, 2000, by and
between Centex, Holding, the
Partnership, The Chase Manhattan
Bank, as successor nominee, and
ChaseMellon Shareholder Services
L.L.C., as successor transfer agent |  | Exhibit 4.15 to the 2001 Form S-3                                                                                                                                                                                                                           
|       
|       
|       
|       
|4.6     |  | Agreement for Purchase of Warrants,
dated as of November 30, 1987, by
and between Holding and Centex                                                                                                                                  |  | Exhibit 4.4 of Holding to the
1993 Form 10-K                                                                                                                                                                                                                
|       
|       
|       
|       
|10.1    |  | Services Agreement, dated as of May
5, 1987, by and between Holding and
Centex Service Company (Centex
Service)                                                                                                                     |  | Exhibit 10.1 to Amendment No. 3,
filed with the Commission on
November 24, 1987 (Amendment
No. 3), to the Holding
Registration Statement                                                                                                                  

134



---



##### Table of Contents



INDEX TO EXHIBITS

3333 HOLDING CORPORATION
AND SUBSIDIARY  Continued

|        |  |                                                                                                               |  |                                                                                                                                                                        
|------- |  | ------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                               |  | Filed Herewith or                                                                                                                                                      
|Number  |  | Exhibit                                                                                                       |  | Incorporated by Reference                                                                                                                                              
|        |  |                                                                                                               |  |                                                                                                                                                                        
|10.2    |  | Management Agreement by and
between Holding and the
Partnership dated as of
April 1, 1994                     |  | Exhibit 10.4
of Holding to the
Joint Annual Report on Form
10-K of Centex, Holding, and
the Partnership for the
fiscal year ended March 31,
1998 (the 1998 Form 10-K)
|       
|       
|       
|       
|10.3    |  | Amendment No.1 to
Management Agreement by and
between the Partnership and
Holding dated as of October
1, 1996 |  | Exhibit 10.5 of Holding to the
1998 Form 10-K                                                                                                                          
|       
|       
|       
|       
|21      |  | Subsidiaries of Holding                                                                                       |  | Exhibit 21 of Centex
Exhibits filed herewith                                                                                                                           
|       
|       
|       
|       
|23      |  | Consent of Independent
Public Accountants                                                                     |  | Exhibit 23 of Centex Exhibits
filed herewith                                                                                                                           
|       
|       
|       
|       
|24.2    |  | Powers of Attorney                                                                                            |  | Filed herewith                                                                                                                                                         

135



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##### Table of Contents



INDEX TO EXHIBITS

CENTEX DEVELOPMENT COMPANY, L.P.
AND SUBSIDIARIES

|        |  |                                                                                                              |  |                                                                                                                                                                                                                                                                                         
|------- |  | ------------------------------------------------------------------------------------------------------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                              |  | Filed Herewith or                                                                                                                                                                                                                                                                       
|Number  |  | Exhibit                                                                                                      |  | Incorporated by Reference                                                                                                                                                                                                                                                               
|        |  |                                                                                                              |  |                                                                                                                                                                                                                                                                                         
|3.1     |  | Articles of Incorporation of
Development, as amended                                                         |  | Exhibit 3.2a to Amendment No. 1,
filed with the Commission on October 15, 1987 (the
Partnership Amendment No. 1), to
the Registration Statement of the
Partnership on Form 10 (File No.
1-9625), filed with the Commission on July 13, 1987 (the
Partnership Registration Statement)
|       
|       
|       
|       
|3.2     |  | By-laws of Development, as
amended                                                                           |  | Exhibit 3.2 of the Partnership to
the 1993 Form 10-K                                                                                                                                                                                                                                    
|       
|       
|       
|       
|4.1     |  | Certificate of Limited
Partnership of the Partnership                                                        |  | Exhibit 4.1 to the Partnership
Registration Statement                                                                                                                                                                                                                                   
|       
|       
|       
|       
|4.2     |  | Second Amended and Restated
Agreement of Limited
Partnership of the Partnership                              |  | Exhibit 4.4 to the 1998 Form S-8                                                                                                                                                                                                                                                        
|       
|       
|       
|       
|4.3     |  | Amendment No. 1 to Second
Amended and Restated Agreement
of Limited Partnership of the
Partnership           |  | Exhibit 4.6 to the 1999 Form 10-K/A                                                                                                                                                                                                                                                     
|       
|       
|       
|       
|4.4     |  | Specimen certificate for Class
A limited partnership units                                                   |  | Exhibit 4.3 to the Partnership
Registration Statement                                                                                                                                                                                                                                   
|       
|       
|       
|       
|4.5     |  | Specimen certificate for Class
B limited partnership units                                                   |  | Exhibit 4.4 to the Partnership
Registration Statement                                                                                                                                                                                                                                   
|       
|       
|       
|       
|4.6     |  | Specimen certificate for Class
C limited partnership units                                                   |  | Exhibit 4.7 to 1998 Form S-8                                                                                                                                                                                                                                                            
|       
|       
|       
|       
|4.7     |  | Warrant Agreement, dated as of
November 30, 1987, by and
between the Partnership and
Centex                  |  | Exhibit 4.5 of the Partnership to
the 1993 Form 10-K                                                                                                                                                                                                                                    
|       
|       
|       
|       
|4.8     |  | Agreement for Purchase of
Warrants, dated as of November
30, 1987, by and between the
Partnership and Centex |  | Exhibit 4.9 of the Partnership
to the 1993 Form 10-K                                                                                                                                                                                                                                    

136



---



##### Table of Contents



INDEX TO EXHIBITS

CENTEX DEVELOPMENT COMPANY, L.P.
AND SUBSIDIARIES   Continued

|        |  |                                                                                                                                                                                                                                                   |  |                                                                                                                          
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                   |  | Filed Herewith or                                                                                                        
|Number  |  | Exhibit                                                                                                                                                                                                                                           |  | Incorporated by Reference                                                                                                
|        |  |                                                                                                                                                                                                                                                   |  |                                                                                                                          
|4.9     |  | Specimen warrant certificate                                                                                                                                                                                                                      |  | Exhibit 4.6 to Amendment No. 3,
filed with the Commission on
November 24, 1987, to the
Partnership Registration Statement
|       
|       
|       
|       
|4.10    |  | Specimen Centex common stock
certificate (with tandem
trading legend and Rights
Agreement legend)                                                                                                                                                 |  | Exhibit 4.3 to the 1997 Form S-8                                                                                         
|       
|       
|       
|       
|4.11    |  | Nominee Agreement, dated as of
November 30, 1987, by and
between Centex, Holding, the
Partnership, and First
RepublicBank Dallas, National
Association, as nominee                                                                                |  | Exhibit 4.8 of the Partnership to
the 1993 Form 10-K                                                                     
|       
|       
|       
|       
|4.12    |  | Supplement to Nominee
Agreement, dated as of July
27, 2000, by and between
Centex, Holding, the
Partnership, The Chase
Manhattan Bank, as successor
nominee, and ChaseMellon
Shareholder Services L.L.C.,
as successor transfer agent             |  | Exhibit 4.15 to the 2001 Form S-3                                                                                        
|       
|       
|       
|       
|4.13    |  | Form of Operating Partnership
Agreement                                                                                                                                                                                                           |  | Exhibit 4.9 to the Partnership
Registration Statement                                                                    
|       
|       
|       
|       
|4.14    |  | Instruments with respect to
long-term debt, which do not
exceed 10% of the total assets
of the Partnership and its
subsidiaries, have not been
filed; the Partnership agrees
to furnish a copy of such
instruments to the Commission
upon request |  | Not applicable                                                                                                           
|       
|       
|       
|       
|10.1    |  | Management Agreement, dated as
of April 1, 1994, by and
between the Partnership and
Holding                                                                                                                                                       |  | Exhibit 10.4 of the Partnership to
the 1998 Form 10-K                                                                    

137



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##### Table of Contents



INDEX TO EXHIBITS

CENTEX DEVELOPMENT COMPANY, L.P.
AND SUBSIDIARIES  Continued

|        |  |                                                                                                                                                                         |  |                                                                                                                                                                   
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                         |  | Filed Herewith or                                                                                                                                                 
|Number  |  | Exhibit                                                                                                                                                                 |  | Incorporated by Reference                                                                                                                                         
|        |  |                                                                                                                                                                         |  |                                                                                                                                                                   
|10.2    |  | Amendment No. 1 to Management
Agreement, dated as of October
1, 1996, by and between the
Partnership and Holding                                                        |  | Exhibit 10.5 of the Partnership to
the 1998 Form 10-K                                                                                                             
|       
|       
|       
|       
|10.3    |  | Instrument constituting
Guaranteed Unsecured Set Off
Loan Notes 2001 dated April
15, 1999 made by Centex Development Company UK
Limited (CDCUK)                       |  | Exhibit 4.13 of the Partnership to
the Joint Quarterly Report on Form
10-Q of Centex, Holding, and the
Partnership for the fiscal quarter ended September 30, 1999
|       
|       
|       
|       
|10.4    |  | Share Purchase Agreement dated
April 15, 1999 by among AMEC
Plc, as Guarantor, AMEC
Finance Limited, as Seller,
and Centex Development Company
UK Limited, as Purchaser |  | Exhibit 10.18 to the Current Report
on Form 8-K of the Partnership filed
April 29, 1999                                                                           
|       
|       
|       
|       
|10.5b   |  | Agreement dated March 30, 2001
- £100,000,000 Credit
Facility for Fairclough Homes
Group Limited (Fairclough)
arranged by The Royal Bank of
Scotland PLC              |  | Filed herewith                                                                                                                                                    
|       
|       
|       
|       
|10.6    |  | Facility Agreement dated March
28, 2001, by and between the
Partnership, as lender, and
CDCUK, as borrower                                                              |  | Filed herewith                                                                                                                                                    
|       
|       
|       
|       
|10.7    |  | Facility Agreement dated March
28, 2001, by and between
Fairclough, as lender, and CDCUK, as borrower                                                                   |  | Filed herewith                                                                                                                                                    
|       
|       
|       
|       
|10.8    |  | Asset Purchase Agreement dated
as of March 30, 2001, between
the Partnership and Calton
Homes, Inc.                                                                     |  | Filed herewith                                                                                                                                                    

138



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##### Table of Contents



INDEX TO EXHIBITS

CENTEX DEVELOPMENT COMPANY, L.P.
AND SUBSIDIARIES  Continued

|        |  |                                                          |  |                                             
|------- |  | -------------------------------------------------------- |  | --------------------------------------------
|Exhibit |  |                                                          |  | Filed Herewith or                           
|Number  |  | Exhibit                                                  |  | Incorporated by Reference                   
|        |  |                                                          |  |                                             
|21      |  | Subsidiaries of the Partnership                          |  | Exhibit 21 of Centex Exhibits
filed herewith
|       
|       
|       
|       
|23      |  | Consent of Independent Public
Accountants                |  | Exhibit 23 of Centex Exhibits
filed herewith
|       
|       
|       
|       
|24.3    |  | Powers of Attorney                                       |  | Filed herewith                              
|       
|       
|       
|       
|99.1    |  | Real Estate and Accumulated
Depreciation   Schedule III |  | Filed herewith                              

139