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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED MARCH 31, 2006
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________ TO _______________
 Commission File Number: 1-6776
 CENTEX CORPORATION
 (Exact name of registrant as specified in its charter)
 Nevada
    
    75-0778259(State of incorporation)
    
    (I.R.S. Employer Identification No.)
 2728 N. Harwood, Dallas, Texas
75201
(Address of principal executive offices)
(Zip Code)
 (214) 981-5000
(Registrants telephone number, including area code)
  Title of each class
    
    Name of each exchange on which registeredCommon Stock ($ .25 par value)
    
    New York Stock ExchangeRights to Purchase Junior Participating Preferred Stock, Series D
    
    New York Stock Exchange
  þ o
 o þ
 þ o
 þ
  Large accelerated filer þ
    
    Accelerated filer o
    
    Nonaccelerated filer o
 o þ
  DOCUMENTS INCORPORATED BY REFERENCE




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##### 



FORM 10-K
 March 31, 2006
 TABLE OF CONTENTS
 PART IItem 1.
    
    Business
    
    
    3Item 1A.
    
    Risk Factors
    
    
    13Item 1B.
    
    Unresolved Staff Comments
    
    
    19Item 2.
    
    Properties
    
    
    19Item 3.
    
    Legal Proceedings
    
    
    19Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    21Item 4A.
    
    Executive Officers of the Registrant
    
    
    21PART IIItem 5.
    
    Market for Registrants Common Equity and Related Stockholder Matters
    
    
    22Item 6.
    
    Selected Financial Data
    
    
    23Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    24Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    49Item 8.
    
    Financial Statements and Supplementary Data
    
    
    51Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    94Item 9A.
    
    Controls and Procedures
    
    
    94Item 9B.
    
    Other Information
    
    
    94PART IIIItem 10.
    
    Directors and Executive Officers of the Registrant
    
    
    94Item 11.
    
    Executive Compensation
    
    
    95Item 12.
    
    Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
    
    
    95Item 13.
    
    Certain Relationships and Related Transactions
    
    
    95Item 14.
    
    Principal Accountant Fees and Services
    
    
    95PART IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    
    95SIGNATURES
    
    
    100Amended and Restated 1987 Stock Option PlanTenth Amended and Restated 1998 Employee Non-Qualified Stock Option PlanAmended and Restated 2001 Stock Option PlanAmended and Restated Long Term Incentive PlanAmended and Restated 2003 Equity Incentive PlanForm of Stock Option Agreement for 2003 Equity Incentive PlanForm of Stock Unit Agreement for 2003 Equity Incentive PlanAmended and Restated Executive Deferred Compensation PlanComputation of Ratio of Earnings to Fixed ChargesList of SubsidiariesConsent of Independent Registered Public Accounting FirmPowers of AttorneyCertification of CEO Pursuant to Rule 13a-14(a)Certification of CFO Pursuant to Rule 13a-14(a)Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906
  2




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PART I
 
 ITEM 1. BUSINESS
 General Development of Business
   th
     Financial Information about Segments
  Narrative Description of Business
 HOME BUILDING
  3




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Markets
  Region
    
    States
    
    Markets
    
    States and Markets (continued)Mid-Atlantic
    
    Maryland
    
    Bethesda/Frederick/Gaithersburg
    
    Pennsylvania
    
    PittsburghWashington, D.C./Arlington/Alexandria
    
    South
    
    Charleston/N. CharlestonNew Jersey
    
    Edison
Newark/Union
New York/Wayne/White Plains
    

Carolina 
Virginia
    
    Myrtle Beach/Conway
N. Myrtle Beach
CharlottesvilleNorth Carolina
    
    Charlotte/Gastonia/Concord
    
    
    
    RichmondDurham
    
    
    
    Virginia Beach/NorfolkGreensboro/High Point
    
    
    
    Newport NewsRaleigh/Cary
    
    
    
    WinchesterWilmingtonWinston-SalemSoutheast
    
    Florida
    
    Cape Coral/Ft. Myers
    
    Florida (cont)
    
    Tampa/St. Petersburg/ClearwaterFt. Lauderdale/Pompano
    
    
    
    Vero BeachBeach/Deerfield Beach
    

    

West Palm Beach/BocaJacksonville
    
    
    
    Raton/Boynton BeachNaples/Marco Island
    
    Georgia
    
    Atlanta/Sandy Springs/MariettaOrlando
    
    
    
    SavannahPort St. Lucie/Ft. Pierce
    
    Tennessee
    
    Nashville/DavidsonPunta Gorda
    
    
    
    MurfreesboroSarasota/Bradenton/VeniceMidwest
    
    Colorado
    
    Boulder
    
    Michigan
    
    FlintDenver/Aurora
    
    (cont)
    
    Warren/Farmington Hills/TroyFt. Collins/Loveland
    
    Minnesota
    
    Minneapolis/St. Paul/BloomingtonGreeley
    
    
    
    RochesterIndiana
    
    Indianapolis
    
    Missouri
    
    St. LouisFt. Wayne
    
    Ohio
    
    AkronIllinois
    
    Chicago/Naperville/Joliet
    
    
    
    Cincinnati/MiddletownKentucky
    
    Louisville
    
    
    
    ColumbusMichigan
    
    Ann Arbor
    
    
    
    DaytonDetroit/Livonia/Dearborn
    
    
    
    MonroeToledoSouthwest
    
    Arizona
    
    Phoenix/Mesa
    
    Texas
    
    Austin/Round RockNevada
    
    Las Vegas/Paradise
    
    
    
    Dallas/Plano/IrvingNew Mexico
    
    Albuquerque
    
    
    
    Ft. Worth/ArlingtonSanta Fe
    
    
    
    Houston/Baytown/Sugar LandKilleen/Temple/Ft. HoodSan AntonioWest Coast
    
    California
    
    Bakersfield
    
    California
    
    San Jose/Sunnyvale/Santa ClaraEl Centro
    
    (cont)
    
    San Luis Obispo/Paso RoblesFresno
    
    
    
    Santa Ana/Anaheim/IrvineHanford/Corcoran
    
    
    
    StocktonLos Angeles/Long Beach/Glendale
    
    
    
    Visalia/PortervilleMerced
    
    
    
    Yuba CityModesto
    
    Hawaii
    
    HonoluluOakland/Fremont/Hayward
    
    Nevada
    
    Reno/SparksOxnard/Thousand Oaks/Ventura
    
    Oregon
    
    Portland/Vancouver/BeavertonRiverside/San Bernardino/Ontario
    
    Washington
    
    Seattle/Bellevue/EverettSacramento/Arden/Arcade/RosevilleSan Diego/Carlsbad/San MarcosSan Francisco/San Mateo/Redwood City
 4




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5




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##### Table of Contents



Closings (in units):
 For the Years Ended March 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Mid-Atlantic
    
    
    7,182
    
    
    
    5,823
    
    
    
    5,201
    
    
    
    4,501
    
    
    
    3,877Southeast
    
    
    7,235
    
    
    
    5,879
    
    
    
    5,568
    
    
    
    4,851
    
    
    
    4,440Midwest
    
    
    7,153
    
    
    
    6,712
    
    
    
    5,801
    
    
    
    4,695
    
    
    
    3,688Southwest
    
    
    10,720
    
    
    
    9,158
    
    
    
    8,708
    
    
    
    8,157
    
    
    
    6,910West Coast
    
    
    6,942
    
    
    
    5,815
    
    
    
    5,080
    
    
    
    4,223
    
    
    
    4,04539,232
    
    
    
    33,387
    
    
    
    30,358
    
    
    
    26,427
    
    
    
    22,960Average Sales Price (in
000s)
    
    $
    304
    
    
    $
    270
    
    
    $
    242
    
    
    $
    220
    
    
    $
    214
 Sales (Orders) (in units):
 For the Years Ended March 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Mid-Atlantic
    
    
    6,833
    
    
    
    6,483
    
    
    
    5,854
    
    
    
    5,146
    
    
    
    3,936Southeast
    
    
    6,345
    
    
    
    7,178
    
    
    
    6,562
    
    
    
    5,249
    
    
    
    4,819Midwest
    
    
    6,596
    
    
    
    6,593
    
    
    
    6,273
    
    
    
    5,087
    
    
    
    3,744Southwest
    
    
    11,126
    
    
    
    9,977
    
    
    
    9,319
    
    
    
    8,054
    
    
    
    6,725West Coast
    
    
    7,130
    
    
    
    6,331
    
    
    
    5,714
    
    
    
    5,132
    
    
    
    3,76338,030
    
    
    
    36,562
    
    
    
    33,722
    
    
    
    28,668
    
    
    
    22,987
 Sales (Orders) Backlog, at the end of the period (in units):
 As of March 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Mid-Atlantic
    
    
    3,073
    
    
    
    3,461
    
    
    
    2,801
    
    
    
    2,148
    
    
    
    1,503Southeast
    
    
    4,116
    
    
    
    5,006
    
    
    
    3,707
    
    
    
    2,713
    
    
    
    2,315Midwest
    
    
    2,755
    
    
    
    3,273
    
    
    
    3,392
    
    
    
    2,920
    
    
    
    2,093Southwest
    
    
    4,094
    
    
    
    3,688
    
    
    
    2,869
    
    
    
    2,258
    
    
    
    2,361West Coast
    
    
    3,349
    
    
    
    3,161
    
    
    
    2,645
    
    
    
    2,011
    
    
    
    1,09917,387
    
    
    
    18,589
    
    
    
    15,414
    
    
    
    12,050
    
    
    
    9,371
   Competition and Other Factors
  6




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FINANCIAL SERVICES
  Prime Mortgage Lending
  7




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For the Years Ended March 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Loan Types (originations):Builder
    
    
    27,364
    
    
    
    22,517
    
    
    
    20,865
    
    
    
    18,127
    
    
    
    15,435Retail
    
    
    43,319
    
    
    
    44,816
    
    
    
    67,481
    
    
    
    66,807
    
    
    
    64,94970,683
    
    
    
    67,333
    
    
    
    88,346
    
    
    
    84,934
    
    
    
    80,384Origination Volume (in millions)
    
    $
    15,827.4
    
    
    $
    13,039.0
    
    
    $
    15,116.0
    
    
    $
    13,991.2
    
    
    $
    12,445.5Percent of Home Buildings
Closings Financed(1)
    
    
    75
    %
    
    
    73
    %
    
    
    74
    %
    
    
    73
    %
    
    
    72
    %
 
 (1)
    
    Excludes non-financed cash only closings.     8




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Other Financial Services Operations
   Competition and Other Factors
    CONSTRUCTION SERVICES
  9




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% of FY 2007Industry Segment
    
    % of Backlog
    
    RevenuesMulti-unit Residential (1)
    
    
    55.1
    %
    
    
    43.7
    %Healthcare
    
    
    10.9
    %
    
    
    14.2
    %Education
    
    
    8.3
    %
    
    
    11.6
    %Corporate Office Buildings
    
    
    6.2
    %
    
    
    8.9
    %Corrections
    
    
    7.4
    %
    
    
    8.6
    %Other
    
    
    12.1
    %
    
    
    13.0
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
 
 (1)
    
    The multi-unit residential industry segment includes the construction of
residences on domestic military bases. Competition and Other Factors
     10




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DISCONTINUED OPERATIONS
 Sub-Prime Home Equity Lending
    
    
    its retail branches;
    
    a broker referral network;
    
    referrals from CTX Mortgage Company, LLC;
    
    a correspondent mortgage banker network; and
    
    Home Equitys direct sales unit that sources lending opportunities from a variety of
channels including through the Internet.
  For the Years Ended March 31,2006
    
    2005
    
    2004
    
    2003
    
    2002Loans
    
    
    44,969
    
    
    
    43,617
    
    
    
    36,659
    
    
    
    29,448
    
    
    
    26,955Origination Volume (in millions)
    
    $
    5,975.6
    
    
    $
    5,276.3
    
    
    $
    3,920.7
    
    
    $
    2,506.2
    
    
    $
    2,092.4
  11




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Competition and Other Factors
  EMPLOYEES
  Business Segment
    
    EmployeesHome Building
    
    
    9,359Financial Services
    
    
    3,535Construction Services
    
    
    1,494Other
    
    
    1,956Discontinued Operations
    
    
    2,200Total
    
    
    18,544
  NYSE AND SEC CERTIFICATIONS
  AVAILABLE INFORMATION
  12




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ITEM 1A. RISK FACTORS
  HOME BUILDING
 Deterioration in economic conditions generally or in the market regions where we operate could
decrease demand and pricing for new homes and adversely affect our results of operations.
   Increases in interest rates or other adverse developments affecting mortgage credit markets could
make it more difficult or costly for customers to purchase our homes.
  Competition for homebuyers could reduce our deliveries or decrease our profitability.
   13




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We may not be able to acquire land suitable for residential homebuilding at reasonable prices,
which could limit our ability to expand our homebuilding operations and increase our costs.
  The lag between when we acquire land and when we sell homes in our communities can make our
operations susceptible to the effects of rapid changes in market conditions.
  Government entities have adopted or may adopt slow or no growth initiatives, which could adversely
affect our operations.
  Natural disasters and adverse weather conditions could delay deliveries or increase costs to build
new homes in affected areas.
  Supply or labor shortages and other risks related to the demand for building materials and skilled
labor could delay deliveries and affect our results of operations.
  14




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Compliance with regulatory requirements affecting our business could have substantial costs both in
time and money, and some regulations could prohibit or restrict some homebuilding activity.
   FINANCIAL SERVICES
 General business, economic and market conditions may significantly affect the earnings of our
Financial Services operations.
   The mortgage financing industry is highly competitive.
  15




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Changes in lending laws could hurt our Financial Services operations.
  The volatility of our Financial Services operations due to refinancing activity could negatively
impact operations.
  CONSTRUCTION SERVICES
 Supply and labor shortages and other risks could increase costs and delay completion.
  We are subject to regional changes in the demand for commercial construction projects.
  The timing and funding of awards and other factors could lead to unpredictable operating results.
  FACTORS AFFECTING MULTIPLE BUSINESS SEGMENTS
 New federal laws that adversely affect liquidity in the secondary mortgage market could hurt our
business.
  We could be adversely affected by a change in our credit rating or a disruption in the capital
markets.
  16




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Reductions in tax benefits could make home ownership more expensive or less attractive.
  We may incur increased costs related to repairing construction defects in the homes we sell or the
buildings we construct.
  An inability to obtain bonding could limit the number of projects we are able to pursue.
  DISCONTINUED OPERATIONS
 There are uncertainties associated with our planned disposition of Home Equity.
    17




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Loan losses could reduce the profitability of our Home Equity operations.
  Changes in lending laws could hurt our Home Equity operations.
  FORWARD-LOOKING STATEMENTS
 This report includes various forward-looking statements, which are not facts or guarantees of
future performance and which are subject to significant risks and uncertainties.
   
 18




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ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
       
 ITEM 3. LEGAL PROCEEDINGS
    19




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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
  Name
    
    Age
    
    Positions with Centex or Business ExperienceDavid L. Barclay
    
    
    53
    
    
    Co-President and Co-Chief Operating Officer
(West Operating Region) of Centex Real
Estate Corporation; Executive Vice
President  West Coast Region of Centex
Real Estate Corporation from May 2002 to
March 2006; President  Northern California
Division of Centex Real Estate Corporation
from June 1996 to May 2002Leldon E. Echols (1)
    
    
    50
    
    
    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 2000Timothy R. Eller
    
    
    57
    
    
    Chairman of the Board, Chief Executive
Officer, President and Chief Operating
Officer of Centex Corporation (Chairman of
the Board and Chief Executive Officer since
April 2004; President and Chief Operating
Officer since April 2002); Executive Vice
President of Centex Corporation from August
1998 to April 2002; Chairman of the Board
of Centex Real Estate Corporation from
April 1998 to April 2003, and since April
2006; Chief Executive Officer of Centex
Real Estate Corporation from July 1991 to
April 2002, and since April 2006; President
and Chief Operating Officer of Centex Real
Estate Corporation from January 1990 to
April 1998Andrew J. Hannigan
    
    
    54
    
    
    Co-President and Co-Chief Operating Officer
(East Operating Region) of Centex Real
Estate Corporation; Chairman of the Board
of Centex Real Estate Corporation from May
2003 to March 2006; Chief Executive Officer
of Centex Real Estate Corporation from May
2002 to March 2006; President and Chief
Operating Officer from May 1998 to May 2002Mark D. Kemp
    
    
    44
    
    
    Senior Vice President and Controller of
Centex Corporation since September 2004;
Vice President and Controller of Centex
Corporation from December 2002 to September
2004; Partner and employee at Arthur
Andersen LLP from December 1983 to August
2002Robert S. Stewart
    
    
    52
    
    
    Senior Vice President  Strategy and
Corporate Development of Centex Corporation
since April 2005; Senior Vice President 
Strategic Planning and Marketing from May
2000 to March 2005; Employee at the
Weyerhaeuser Company from March 1977 to May
2000, during which time he held a range of
key management positions, including
positions in strategic planningBrian J. Woram
    
    
    45
    
    
    Senior Vice President, Chief Legal Officer,
General Counsel and Assistant Secretary of
Centex Corporation (Secretary from December
2004 to March 2005); Senior Vice President,
General Counsel and Assistant Secretary of
Centex Real Estate Corporation from
September 1998 to December 2004
 
 (1)
    
    As previously announced on February 23, 2006, Leldon Echols will leave his position
effective June 30, 2006. 21




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PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 Stock Prices and Dividends
 Year Ended March 31, 2006
    
    Year Ended March 31, 2005Price
    
    
    
    
    
    PriceHigh
    
    Low
    
    Dividends
    
    High
    
    Low
    
    DividendsQuarterFirst
    
    $
    73.11
    
    
    $
    55.10
    
    
    $
    .04
    
    
    $
    54.77
    
    
    $
    43.31
    
    
    $
    .04Second
    
    $
    79.66
    
    
    $
    61.58
    
    
    $
    .04
    
    
    $
    51.96
    
    
    $
    39.94
    
    
    $
    .04Third
    
    $
    76.44
    
    
    $
    58.13
    
    
    $
    .04
    
    
    $
    59.98
    
    
    $
    45.44
    
    
    $
    .04Fourth
    
    $
    79.40
    
    
    $
    61.40
    
    
    $
    .04
    
    
    $
    66.14
    
    
    $
    54.60
    
    
    $
    .04
 The principal market for our common stock is the New York Stock Exchange (ticker symbol CTX).
The approximate number of record holders of our common stock at May 10, 2006 was 3,020.
 The remaining information called for by this item relating to securities authorized for issuance
under equity compensation plans is reported in Note (K), Capital Stock and Employee Benefit
Plans, of the Notes to Consolidated Financial Statements.
 Share Repurchases
  Issuer Purchases of Equity SecuritiesTotal Number of
    
    Maximum Number ofShares Purchased
    
    Shares that May YetTotal Number of
    
    Average Price
    
    as Part of Publicly
    
    Be Purchased UnderShares Purchased
    
    Paid Per Share
    
    Announced Plan
    
    the PlanPeriodJanuary 1-31
    
    
    1,500,000
    
    
    $
    75.03
    
    
    
    1,500,000
    
    
    
    3,500,000February 1-28
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    3,500,000March 1-31
    
    
    1,006,638
    
    
    $
    63.85
    
    
    
    1,000,000
    
    
    
    2,500,000Total (1) (2)
    
    
    2,506,638
    
    
    $
    70.54
    
    
    
    2,500,000
 
 (1)
    
    Of the 2,506,638 shares repurchased for the quarter ended March 31, 2006, 6,638 shares
represent the delivery to the Company by employees or directors of previously issued shares to
satisfy the exercise price of options and/or withholding taxes that arise on the exercise of
options or the vesting of restricted stock. These transactions are authorized under the terms
of the equity plans under which the options or other equity were awarded; however, these
transactions are not considered repurchases pursuant to the Companys share repurchase
program.(2)
    
    Except as provided in Note (1), all share repurchases were effected in accordance with the
safe harbor provisions of Rule 10b-18 of the Securities Exchange Act of 1934.   22




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ITEM 6. SELECTED FINANCIAL DATA
 Summary
of Selected Financial Data (Unaudited) (1)  (Dollars in thousands, except per share data)
 For the Years Ended March 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Revenues
    
    $
    14,399,669
    
    
    $
    11,672,885
    
    
    $
    9,756,154
    
    
    $
    8,027,614
    
    
    $
    6,821,203Earnings
from Continuing Operations
(2)
    
    $
    1,221,021
    
    
    $
    899,542
    
    
    $
    703,350
    
    
    $
    481,067
    
    
    $
    332,194Net Earnings
    
    $
    1,289,313
    
    
    $
    1,011,364
    
    
    $
    827,686
    
    
    $
    555,919
    
    
    $
    382,226Stockholders Equity
    
    $
    5,011,658
    
    
    $
    4,280,757
    
    
    $
    3,050,225
    
    
    $
    2,657,846
    
    
    $
    2,116,773Net Earnings as a Percentage of Average
Stockholders Equity
    
    
    27.8
    %
    
    
    27.6
    %
    
    
    29.0
    %
    
    
    23.3
    %
    
    
    20.0
    %Total Assets
    
    $
    21,364,999
    
    
    $
    20,011,079
    
    
    $
    16,077,260
    
    
    $
    11,639,707
    
    
    $
    8,996,991Deferred Income Tax Assets
    
    $
    233,908
    
    
    $
    184,778
    
    
    $
    106,395
    
    
    $
    133,993
    
    
    $
    113,905Total Long-term Debt, Consolidated
    
    $
    3,915,027
    
    
    $
    3,160,047
    
    
    $
    2,456,749
    
    
    $
    2,024,953
    
    
    $
    1,605,797Debt (with Financial Services reflected on the equity
method)
(3)
    
    $
    3,982,193
    
    
    $
    3,107,917
    
    
    $
    2,317,749
    
    
    $
    2,024,953
    
    
    $
    1,605,797Financial Services Debt
    
    
    2,077,215
    
    
    
    1,695,855
    
    
    
    1,676,718
    
    
    
    204,147
    
    
    
    192,673Total Debt, Consolidated
    
    $
    6,059,408
    
    
    $
    4,803,772
    
    
    $
    3,994,467
    
    
    $
    2,229,100
    
    
    $
    1,798,470Capitalization (with Financial Services
reflected on the equity method and excluding lot
option minority interest)
(3) (4)
    
    $
    9,033,042
    
    
    $
    7,429,420
    
    
    $
    5,369,822
    
    
    $
    4,683,755
    
    
    $
    3,724,827Financial
Services Capitalization
(4)
    
    
    2,742,764
    
    
    
    2,314,465
    
    
    
    2,194,533
    
    
    
    585,554
    
    
    
    505,001Lot Option
Minority Interest
(4)
    
    
    492,096
    
    
    
    415,413
    
    
    
    332,668
    
    
    
    
    
    
    
    Consolidation Eliminations
    
    
    (664,376
    )
    
    
    (617,248
    )
    
    
    (516,280
    )
    
    
    (379,671
    )
    
    
    (310,353
    )Total Capitalization, Consolidated
    
    $
    11,603,526
    
    
    $
    9,542,050
    
    
    $
    7,380,743
    
    
    $
    4,889,638
    
    
    $
    3,919,475Debt as a
Percentage of Capitalization
(4)With Financial Services reflected on the equity
method and excluding lot option minority interest
(3)
    
    
    44.1
    %
    
    
    41.8
    %
    
    
    43.2
    %
    
    
    43.2
    %
    
    
    43.1
    %Consolidated
    
    
    52.2
    %
    
    
    50.3
    %
    
    
    54.1
    %
    
    
    45.6
    %
    
    
    45.9
    %Per Common ShareEarnings from Continuing OperationsPer Share
 Basic
(2)
    
    $
    9.62
    
    
    $
    7.19
    
    
    $
    5.70
    
    
    $
    3.96
    
    
    $
    2.74Earnings from Continuing OperationsPer Share
 Diluted
(2)
    
    $
    9.20
    
    
    $
    6.79
    
    
    $
    5.44
    
    
    $
    3.82
    
    
    $
    2.66Net Earnings Per Share  Basic
    
    $
    10.16
    
    
    $
    8.08
    
    
    $
    6.70
    
    
    $
    4.57
    
    
    $
    3.16Net Earnings Per Share  Diluted
    
    $
    9.71
    
    
    $
    7.64
    
    
    $
    6.40
    
    
    $
    4.41
    
    
    $
    3.06Cash Dividends
    
    $
    .16
    
    
    $
    .16
    
    
    $
    .10
    
    
    $
    .08
    
    
    $
    .08Book Value Based on Shares Outstanding at Year End
    
    $
    41.04
    
    
    $
    33.51
    
    
    $
    24.87
    
    
    $
    21.84
    
    
    $
    17.30Average Shares OutstandingBasic
    
    
    126,870,887
    
    
    
    125,226,596
    
    
    
    123,382,068
    
    
    
    121,564,084
    
    
    
    121,121,576Diluted
    
    
    132,749,797
    
    
    
    132,397,961
    
    
    
    129,392,821
    
    
    
    126,116,312
    
    
    
    125,058,294Stock PricesHigh
    
    $
    79.66
    
    
    $
    66.14
    
    
    $
    58.40
    
    
    $
    29.60
    
    
    $
    31.55Low
    
    $
    55.10
    
    
    $
    39.94
    
    
    $
    26.78
    
    
    $
    19.16
    
    
    $
    14.02
 
 (1)
    
    The selected financial data presented in this table, excluding stock prices for the periods
covered by the financial statements included in this Report and all prior periods, have been
derived from our audited financial statements and adjusted to reflect our sub-prime home
equity lending operations, international homebuilding operations (sold in September 2005),
Centex Construction Products, Inc. (spun off in January 2004) and our manufactured housing
operations (spun off in June 2003) as discontinued operations.(2)
    
    Earnings from Continuing Operations are Before Cumulative Effect of a Change in Accounting
Principle adopted in fiscal year 2004. For more detailed discussion of the change in
accounting principle, see Note (D), Indebtedness, of the Notes to Consolidated Financial
Statements.(3)
    
    Represents a supplemental presentation that reflects the Financial Services segment as if
accounted for under the equity method. We believe that separate disclosure of the
consolidating information is useful because the Financial Services subsidiaries and related
companies operate in a distinctly different financial environment that generally requires
significantly less equity to support their higher debt levels compared to the operations of
our other subsidiaries; the Financial Services subsidiaries and related companies have
structured their financing programs substantially on a stand alone basis; and we have limited
obligations with respect to the indebtedness of our Financial Services subsidiaries and
related companies. Management uses this information in its financial and strategic planning.
We also use this presentation to allow investors to compare us to homebuilders that do not
have financial services operations.(4)
    
    Capitalization is composed of Debt, Minority Interest and Stockholders Equity. In the
calculation of Capitalization, minority interest in fiscal years 2006, 2005 and 2004 excludes
$492.1 million, $415.4 million and $332.7 million, respectively, of minority interests
recorded in connection with the consolidation of certain entities with which Home Building has
lot option agreements. This supplemental presentation is used by management in its financial
and strategic planning and allows investors to compare us to other homebuilders, which may not
have similar arrangements. 23




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##### Table of Contents



ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
  Executive Summary
  Revenues
 
 Earnings
(Loss) from Continuing Operations
Before Income Taxes and Cumulative Effect of a
Change in Accounting Principle
 
 
 *
    
    Other consists of the financial results of our investment real estate and
home services operations, as well as corporate general and administrative
expense, interest expense and intersegment eliminations.    24




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25




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##### Table of Contents



FISCAL YEAR 2006 COMPARED TO FISCAL YEAR 2005
 HOME BUILDING
  For the Years Ended March 31,2006
    
    
    2005Change
    
    
    
    
    
    
    ChangeRevenues  Housing
    
    $
    11,920.6
    
    
    
    32.3
    %
    
    $
    9,007.1
    
    
    
    22.4
    %Revenues  Land Sales and Other
    
    
    351.6
    
    
    
    (0.3
    %)
    
    
    352.6
    
    
    
    122.7
    %Cost of Sales  Housing
    
    
    (8,459.0
    )
    
    
    30.4
    %
    
    
    (6,486.7
    )
    
    
    20.1
    %Cost of Sales  Land Sales and Other
    
    
    (296.9
    )
    
    
    13.6
    %
    
    
    (261.4
    )
    
    
    82.5
    %Selling, General and Administrative Expenses
    
    
    (1,696.5
    )
    
    
    30.3
    %
    
    
    (1,301.6
    )
    
    
    25.3
    %Earnings from Unconsolidated Entities
    
    
    86.0
    
    
    
    25.0
    %
    
    
    68.8
    
    
    
    129.3
    %Operating Earnings
    
    $
    1,905.8
    
    
    
    38.2
    %
    
    $
    1,378.8
    
    
    
    42.7
    %Operating Earnings as a Percentage of
Revenues:Housing Operations
    
    
    14.8
    %
    
    
    1.3
    
    
    
    13.5
    %
    
    
    1.0Total Homebuilding Operations
    
    
    15.5
    %
    
    
    0.8
    
    
    
    14.7
    %
    
    
    1.9
 For the Years Ended March 31,2006
    
    2005Change
    
    
    
    
    
    ChangeUnits ClosedMid-Atlantic
    
    
    7,182
    
    
    
    23.3
    %
    
    
    5,823
    
    
    
    12.0
    %Southeast
    
    
    7,235
    
    
    
    23.1
    %
    
    
    5,879
    
    
    
    5.6
    %Midwest
    
    
    7,153
    
    
    
    6.6
    %
    
    
    6,712
    
    
    
    15.7
    %Southwest
    
    
    10,720
    
    
    
    17.1
    %
    
    
    9,158
    
    
    
    5.2
    %West Coast
    
    
    6,942
    
    
    
    19.4
    %
    
    
    5,815
    
    
    
    14.5
    %39,232
    
    
    
    17.5
    %
    
    
    33,387
    
    
    
    10.0
    %Average Sales Price Per UnitMid-Atlantic
    
    $
    337,274
    
    
    
    15.5
    %
    
    $
    292,086
    
    
    
    5.9
    %Southeast
    
    $
    288,751
    
    
    
    12.7
    %
    
    $
    256,246
    
    
    
    10.6
    %Midwest
    
    $
    221,306
    
    
    
    3.7
    %
    
    $
    213,323
    
    
    
    2.8
    %Southwest
    
    $
    197,718
    
    
    
    16.3
    %
    
    $
    170,028
    
    
    
    9.0
    %West Coast
    
    $
    533,949
    
    
    
    10.5
    %
    
    $
    483,391
    
    
    
    18.4
    %Total Home Building
    
    $
    303,850
    
    
    
    12.6
    %
    
    $
    269,780
    
    
    
    11.3
    %
  26




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##### Table of Contents



For the Years Ended March 31,2006
    
    
    2005Change
    
    
    
    
    
    
    ChangeAverage Operating Neighborhoods (1)
    
    
    626
    
    
    
    6.3
    %
    
    
    589
    
    
    
    5.6
    %Closings Per Average Neighborhood
    
    
    62.7
    
    
    
    10.6
    %
    
    
    56.7
    
    
    
    4.2
    %
 
 (1)
    
    We define a neighborhood as an individual active selling location targeted to a
specific buyer segment with greater than ten homes remaining to be sold.      27




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##### Table of Contents



For the Years Ended March 31,2006
    
    2005Change
    
    
    
    
    
    ChangeSales Orders (in Units)Mid-Atlantic
    
    
    6,833
    
    
    
    5.4
    %
    
    
    6,483
    
    
    
    10.7
    %Southeast
    
    
    6,345
    
    
    
    (11.6
    %)
    
    
    7,178
    
    
    
    9.4
    %Midwest
    
    
    6,596
    
    
    
    
    
    
    
    6,593
    
    
    
    5.1
    %Southwest
    
    
    11,126
    
    
    
    11.5
    %
    
    
    9,977
    
    
    
    7.1
    %West Coast
    
    
    7,130
    
    
    
    12.6
    %
    
    
    6,331
    
    
    
    10.8
    %38,030
    
    
    
    4.0
    %
    
    
    36,562
    
    
    
    8.4
    %Sales Per Average Neighborhood
    
    
    60.8
    
    
    
    (2.1
    %)
    
    
    62.1
    
    
    
    2.8
    %
 As of March 31,2006
    
    2005Change
    
    
    
    
    
    ChangeBacklog UnitsMid-Atlantic
    
    
    3,073
    
    
    
    (11.2
    %)
    
    
    3,461
    
    
    
    23.6
    %Southeast
    
    
    4,116
    
    
    
    (17.8
    %)
    
    
    5,006
    
    
    
    35.0
    %Midwest
    
    
    2,755
    
    
    
    (15.8
    %)
    
    
    3,273
    
    
    
    (3.5
    %)Southwest
    
    
    4,094
    
    
    
    11.0
    %
    
    
    3,688
    
    
    
    28.5
    %West Coast
    
    
    3,349
    
    
    
    5.9
    %
    
    
    3,161
    
    
    
    19.5
    %17,387
    
    
    
    (6.5
    %)
    
    
    18,589
    
    
    
    20.6
    %
   As of March 31,2006
    
    2005Lots
    
    Lots
    
    
    
    
    
    Lots
    
    LotsOwned
    
    Controlled
    
    Total Lots
    
    Owned
    
    Controlled
    
    Total LotsMid-Atlantic
    
    
    20,036
    
    
    
    49,421
    
    
    
    69,457
    
    
    
    15,828
    
    
    
    43,437
    
    
    
    59,265Southeast
    
    
    27,830
    
    
    
    41,011
    
    
    
    68,841
    
    
    
    21,864
    
    
    
    32,983
    
    
    
    54,847Midwest
    
    
    14,133
    
    
    
    18,724
    
    
    
    32,857
    
    
    
    12,044
    
    
    
    24,315
    
    
    
    36,359Southwest
    
    
    27,832
    
    
    
    40,390
    
    
    
    68,222
    
    
    
    32,213
    
    
    
    37,330
    
    
    
    69,543West Coast
    
    
    18,997
    
    
    
    37,347
    
    
    
    56,344
    
    
    
    14,996
    
    
    
    30,285
    
    
    
    45,281108,828
    
    
    
    186,893
    
    
    
    295,721
    
    
    
    96,945
    
    
    
    168,350
    
    
    
    265,295Change
    
    
    12.3
    %
    
    
    11.0
    %
    
    
    11.5
    %
    
    
    25.1
    %
    
    
    45.9
    %
    
    
    37.6
    %
  28




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##### Table of Contents



FINANCIAL SERVICES
   For the Years Ended March 31,2006
    
    
    2005Change
    
    
    
    
    
    
    ChangeRevenues
    
    $
    462.3
    
    
    
    9.6
    %
    
    $
    421.7
    
    
    
    (19.1
    %)Cost of Sales
    
    
    (65.9
    )
    
    
    104.7
    %
    
    
    (32.2
    )
    
    
    47.0
    %Selling, General and Administrative Expenses
    
    
    (311.9
    )
    
    
    6.3
    %
    
    
    (293.5
    )
    
    
    (12.0
    %)Operating Earnings
    
    $
    84.5
    
    
    
    (12.0
    %)
    
    $
    96.0
    
    
    
    (42.1
    %)Operating Margin
    
    
    18.3
    %
    
    
    (4.5
    )
    
    
    22.8
    %
    
    
    (9.0
    )Interest Margin
    
    $
    38.2
    
    
    
    (22.8
    %)
    
    $
    49.5
    
    
    
    4.4
    %Average Interest Earning Assets
    
    $
    1,574.9
    
    
    
    12.8
    %
    
    $
    1,395.6
    
    
    
    5.3
    %Average Yield
    
    
    6.61
    %
    
    
    0.76
    
    
    
    5.85
    %
    
    
    0.13Average Interest Bearing Liabilities
    
    $
    1,574.2
    
    
    
    15.4
    %
    
    $
    1,364.1
    
    
    
    9.5
    %Average Rate Paid
    
    
    4.18
    %
    
    
    1.84
    
    
    
    2.34
    %
    
    
    0.39
     29




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##### Table of Contents



For the Years Ended March 31,2006
    
    2005Change
    
    
    
    
    
    ChangeLoan Sales to Investors
    
    $
    11,845.5
    
    
    
    27.0
    %
    
    $
    9,328.6
    
    
    
    (28.9
    %)Gain on Sale of Mortgage Loans
    
    $
    164.8
    
    
    
    16.3
    %
    
    $
    141.7
    
    
    
    (42.4
    %)
   For the Years Ended March 31,2006
    
    
    2005Change
    
    
    
    
    
    
    ChangeOrigination Volume (in millions)
    
    $
    15,827.4
    
    
    
    21.4
    %
    
    $
    13,039.0
    
    
    
    (13.7
    %)Number of Loans OriginatedBuilder
    
    
    27,364
    
    
    
    21.5
    %
    
    
    22,517
    
    
    
    7.9
    %Retail
    
    
    43,319
    
    
    
    (3.3
    %)
    
    
    44,816
    
    
    
    (33.6
    %)70,683
    
    
    
    5.0
    %
    
    
    67,333
    
    
    
    (23.8
    %)Number of Loan ApplicationsBuilder
    
    
    27,765
    
    
    
    12.7
    %
    
    
    24,631
    
    
    
    2.5
    %Retail
    
    
    38,521
    
    
    
    (3.3
    %)
    
    
    39,848
    
    
    
    (39.2
    %)66,286
    
    
    
    2.8
    %
    
    
    64,479
    
    
    
    (28.0
    %)Average Loan Size
    
    $
    223,900
    
    
    
    15.7
    %
    
    $
    193,600
    
    
    
    13.2
    %
   30




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##### Table of Contents



CONSTRUCTION SERVICES
  For the Years Ended March 31,2006
    
    2005Change
    
    
    
    
    
    ChangeRevenues
    
    $
    1,606.6
    
    
    
    (7.6
    %)
    
    $
    1,738.6
    
    
    
    8.9
    %Operating Earnings
    
    $
    26.8
    
    
    
    14.0
    %
    
    $
    23.5
    
    
    
    43.3
    %New Contracts Executed
    
    $
    2,562.8
    
    
    
    28.6
    %
    
    $
    1,992.9
    
    
    
    9.3
    %
 As of March 31,2006
    
    2005Change
    
    
    
    
    
    ChangeBacklog of Uncompleted
Contracts
    
    $
    2,957.2
    
    
    
    47.8
    %
    
    $
    2,001.3
    
    
    
    14.6
    %
   OTHER
   For the Years Ended March 31,2006
    
    
    2005Change
    
    
    
    
    
    
    ChangeOperating Loss from Home Services
Operations
    
    $
    (7.5
    )
    
    
    (52.5
    %)
    
    $
    (15.8
    )
    
    
    587.0
    %Operating Earnings from Investment
Real Estate Operations
    
    
    1.7
    
    
    
    (92.1
    %)
    
    
    21.4
    
    
    
    (52.2
    %)Corporate General and Administrative
Expenses
    
    
    (100.1
    )
    
    
    20.7
    %
    
    
    (82.9
    )
    
    
    (21.5
    %)Interest Expense
    
    
    (12.1
    )
    
    
    (37.3
    %)
    
    
    (19.3
    )
    
    
    (51.1
    %)Operating Loss
    
    $
    (118.0
    )
    
    
    22.2
    %
    
    $
    (96.6
    )
    
    
    (5.8
    %)
  31




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##### Table of Contents



DISCONTINUED OPERATIONS
    International Home Building
  For the Years Ended March 31,2006
    
    2005Revenues
    
    $
    224.4
    
    
    $
    501.3Operating Earnings
    
    $
    15.2
    
    
    $
    66.6Pre-tax Gain on Sale
    
    $
    6.5
    
    
    $
    
  32




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##### Table of Contents



Sub-Prime Home Equity Lending
  For the Years Ended March 31,2006
    
    
    2005Change
    
    
    
    
    
    
    ChangeRevenues
    
    $
    837.9
    
    
    
    22.2
    %
    
    $
    685.5
    
    
    
    30.1
    %Cost of Sales
    
    
    (367.6
    )
    
    
    46.0
    %
    
    
    (251.8
    )
    
    
    24.7
    %Selling, General and Administrative Expenses:Operating Expenses
    
    
    (254.3
    )
    
    
    12.3
    %
    
    
    (226.5
    )
    
    
    25.2
    %Loan Loss Provision
    
    
    (94.3
    )
    
    
    (4.6
    %)
    
    
    (98.8
    )
    
    
    24.3
    %Operating Earnings
    
    $
    121.7
    
    
    
    12.3
    %
    
    $
    108.4
    
    
    
    68.1
    %Interest Margin
    
    $
    303.4
    
    
    
    (3.7
    %)
    
    $
    315.1
    
    
    
    23.8
    %Average Interest Earning Assets
    
    $
    8,267.8
    
    
    
    13.7
    %
    
    $
    7,274.0
    
    
    
    30.1
    %Average Yield
    
    
    8.12
    %
    
    
    0.33
    
    
    
    7.79
    %
    
    
    (0.37
    )Average Interest Bearing Liabilities
    
    $
    8,600.8
    
    
    
    14.7
    %
    
    $
    7,498.7
    
    
    
    28.8
    %Average Rate Paid
    
    
    4.27
    %
    
    
    0.91
    
    
    
    3.36
    %
    
    
    (0.11
    )
        33




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##### Table of Contents



For the Years Ended March 31,2006
    
    2005Change
    
    
    
    
    
    ChangeOrigination Volume (in millions)
    
    $
    5,975.6
    
    
    
    13.3
    %
    
    $
    5,276.3
    
    
    
    34.6
    %Number of Loans Originated
    
    
    44,969
    
    
    
    3.1
    %
    
    
    43,617
    
    
    
    19.0
    %Number of Loan Applications
    
    
    449,337
    
    
    
    12.0
    %
    
    
    401,302
    
    
    
    17.7
    %Average Loan Size
    
    $
    132,900
    
    
    
    9.8
    %
    
    $
    121,000
    
    
    
    13.2
    %
   For the Years Ended March 31,2006
    
    
    2005Change
    
    
    
    
    
    
    ChangeServicing Portfolio:Number of LoansPortfolio Accounting Method
    
    
    71,218
    
    
    
    (15.2
    %)
    
    
    83,972
    
    
    
    10.2
    %Serviced for Others
    
    
    31,927
    
    
    
    94.3
    %
    
    
    16,431
    
    
    
    51.3
    %Total
    
    
    103,145
    
    
    
    2.7
    %
    
    
    100,403
    
    
    
    15.3
    %Dollars in billionsPortfolio Accounting Method
    
    $
    6.87
    
    
    
    (13.1
    %)
    
    $
    7.91
    
    
    
    21.7
    %Serviced for Others
    
    
    3.68
    
    
    
    162.9
    %
    
    
    1.40
    
    
    
    118.8
    %Total
    
    $
    10.55
    
    
    
    13.3
    %
    
    $
    9.31
    
    
    
    30.4
    %
     34




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##### Table of Contents



FISCAL YEAR 2005 COMPARED TO FISCAL YEAR 2004
 HOME BUILDING
  For the Years Ended March 31,2005
    
    
    2004Change
    
    
    
    
    
    
    ChangeRevenues  Housing
    
    $
    9,007.1
    
    
    
    22.4
    %
    
    $
    7,360.7
    
    
    
    26.5
    %Revenues  Land Sales and Other
    
    
    352.6
    
    
    
    122.7
    %
    
    
    158.3
    
    
    
    52.2
    %Cost of Sales  Housing
    
    
    (6,486.7
    )
    
    
    20.1
    %
    
    
    (5,401.1
    )
    
    
    23.8
    %Cost of Sales  Land Sales and Other
    
    
    (261.4
    )
    
    
    82.5
    %
    
    
    (143.2
    )
    
    
    56.7
    %Selling, General and Administrative Expenses
    
    
    (1,301.6
    )
    
    
    25.3
    %
    
    
    (1,038.8
    )
    
    
    22.3
    %Earnings from Unconsolidated Entities
    
    
    68.8
    
    
    
    129.3
    %
    
    
    30.0
    
    
    
    154.2
    %Operating Earnings
    
    $
    1,378.8
    
    
    
    42.7
    %
    
    $
    965.9
    
    
    
    53.0
    %Operating Earnings as a Percentage of
Revenues
    
    
    14.7
    %
    
    
    1.9
    
    
    
    12.8
    %
    
    
    2.1
 For the Years Ended March 31,2005
    
    2004Change
    
    
    
    
    
    ChangeUnits Closed
    
    
    33,387
    
    
    
    10.0
    %
    
    
    30,358
    
    
    
    14.9
    %Average Unit Sales Price
    
    $
    269,780
    
    
    
    11.3
    %
    
    $
    242,465
    
    
    
    10.1
    %Operating Earnings Per Unit
    
    $
    41,298
    
    
    
    29.8
    %
    
    $
    31,816
    
    
    
    33.2
    %Average Operating Neighborhoods
    
    
    589
    
    
    
    5.6
    %
    
    
    558
    
    
    
    7.5
    %Closings Per Average Neighborhood
    
    
    56.7
    
    
    
    4.2
    %
    
    
    54.4
    
    
    
    6.9
    %
 As of March 31,2005
    
    2004Change
    
    
    
    
    
    ChangeBacklog Units
    
    
    18,589
    
    
    
    20.6
    %
    
    
    15,414
    
    
    
    27.9
    %Lots Owned
    
    
    96,945
    
    
    
    25.1
    %
    
    
    77,475
    
    
    
    29.5
    %Lots Controlled
    
    
    168,350
    
    
    
    45.9
    %
    
    
    115,366
    
    
    
    62.7
    %Total Lots Owned and Controlled
    
    
    265,295
    
    
    
    37.6
    %
    
    
    192,841
    
    
    
    47.5
    %
    35




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##### Table of Contents



FINANCIAL SERVICES
  For the Years Ended March 31,2005
    
    
    2004Change
    
    
    
    
    
    
    ChangeRevenues
    
    $
    421.7
    
    
    
    (19.1
    %)
    
    $
    521.2
    
    
    
    14.8
    %Cost of Sales
    
    
    (32.2
    )
    
    
    47.0
    %
    
    
    (21.9
    )
    
    
    212.9
    %Selling, General and Administrative Expenses
    
    
    (293.5
    )
    
    
    (12.0
    %)
    
    
    (333.5
    )
    
    
    0.4
    %Operating Earnings
    
    $
    96.0
    
    
    
    (42.1
    %)
    
    $
    165.8
    
    
    
    44.7
    %Interest Margin
    
    $
    49.5
    
    
    
    4.4
    %
    
    $
    47.4
    
    
    
    457.6
    %Average Interest Earning Assets
    
    $
    1,395.6
    
    
    
    5.3
    %
    
    $
    1,325.4
    
    
    
    567.4
    %Average Yield
    
    
    5.85
    %
    
    
    0.13
    
    
    
    5.72
    %
    
    
    (1.46
    )Average Interest Bearing Liabilities
    
    $
    1,364.1
    
    
    
    9.5
    %
    
    $
    1,246.2
    
    
    
    841.2
    %Average Rate Paid
    
    
    2.34
    %
    
    
    0.39
    
    
    
    1.95
    %
    
    
    (2.13
    )
  36




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##### Table of Contents



For the Years Ended March 31,2005
    
    2004ChangeLoan Sales to Investors
    
    $
    9,328.6
    
    
    
    (28.9
    %)
    
    $
    13,114.5Gain on Sale of Mortgage Loans
    
    $
    141.7
    
    
    
    (42.4
    %)
    
    $
    245.9
   For the Years Ended March 31,2005
    
    
    2004Change
    
    
    
    
    
    
    ChangeOrigination Volume (in millions)
    
    $
    13,039.0
    
    
    
    (13.7
    %)
    
    $
    15,116.0
    
    
    
    8.0
    %Number of Loans OriginatedBuilder
    
    
    22,517
    
    
    
    7.9
    %
    
    
    20,865
    
    
    
    15.1
    %Retail
    
    
    44,816
    
    
    
    (33.6
    %)
    
    
    67,481
    
    
    
    1.0
    %67,333
    
    
    
    (23.8
    %)
    
    
    88,346
    
    
    
    4.0
    %Number of Loan ApplicationsBuilder
    
    
    24,631
    
    
    
    2.5
    %
    
    
    24,031
    
    
    
    19.5
    %Retail
    
    
    39,848
    
    
    
    (39.2
    %)
    
    
    65,514
    
    
    
    (6.3
    %)64,479
    
    
    
    (28.0
    %)
    
    
    89,545
    
    
    
    (0.5
    %)Average Loan Size
    
    $
    193,600
    
    
    
    13.2
    %
    
    $
    171,100
    
    
    
    3.9
    %
   37




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##### Table of Contents



CONSTRUCTION SERVICES
  For the Years Ended March 31,2005
    
    2004Change
    
    
    
    
    
    ChangeRevenues
    
    $
    1,738.6
    
    
    
    8.9
    %
    
    $
    1,596.3
    
    
    
    5.2
    %Operating Earnings
    
    $
    23.5
    
    
    
    43.3
    %
    
    $
    16.4
    
    
    
    (46.6
    %)New Contracts Executed
    
    $
    1,992.9
    
    
    
    9.3
    %
    
    $
    1,823.2
    
    
    
    112.7
    %
 As of March 31,2005
    
    2004Change
    
    
    
    
    
    ChangeBacklog of Uncompleted
Contracts
    
    $
    2,001.3
    
    
    
    14.6
    %
    
    $
    1,746.4
    
    
    
    14.9
    %
  OTHER
  For the Years Ended March 31,2005
    
    
    2004Change
    
    
    
    
    
    
    ChangeOperating Loss from Home Services
Operations
    
    $
    (15.8
    )
    
    
    587.0
    %
    
    $
    (2.3
    )
    
    
    (76.0
    %)Operating Earnings from Investment
Real Estate Operations
    
    
    21.4
    
    
    
    (52.2
    %)
    
    
    44.8
    
    
    
    31.8
    %Corporate General and Administrative
Expenses
    
    
    (82.9
    )
    
    
    (21.5
    %)
    
    
    (105.6
    )
    
    
    73.4
    %Interest Expense
    
    
    (19.3
    )
    
    
    (51.1
    %)
    
    
    (39.5
    )
    
    
    (34.5
    %)Operating Loss
    
    $
    (96.6
    )
    
    
    (5.8
    %)
    
    $
    (102.6
    )
    
    
    6.0
    %
    38




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##### Table of Contents



DISCONTINUED OPERATIONS
   International Home Building
  For the Year EndedMarch 31, 2005Revenues
    
    $
    501.3Operating Earnings
    
    $
    66.6Units Closed
    
    
    1,563
  Sub-Prime Home Equity Lending
  For the Years Ended March 31,2005
    
    
    2004Change
    
    
    
    
    
    
    ChangeRevenues
    
    $
    685.5
    
    
    
    30.1
    %
    
    $
    526.8
    
    
    
    31.3
    %Cost of Sales
    
    
    (251.8
    )
    
    
    24.7
    %
    
    
    (201.9
    )
    
    
    13.7
    %Selling, General and Administrative Expenses:Operating Expenses
    
    
    (226.5
    )
    
    
    25.2
    %
    
    
    (180.9
    )
    
    
    27.8
    %Loan Loss Provision
    
    
    (98.8
    )
    
    
    24.3
    %
    
    
    (79.5
    )
    
    
    127.8
    %Operating Earnings
    
    $
    108.4
    
    
    
    68.1
    %
    
    $
    64.5
    
    
    
    36.9
    %Interest Margin
    
    $
    315.1
    
    
    
    23.8
    %
    
    $
    254.6
    
    
    
    55.3
    %Average Interest Earning Assets
    
    $
    7,274.0
    
    
    
    30.1
    %
    
    $
    5,592.2
    
    
    
    43.6
    %Average Yield
    
    
    7.79
    %
    
    
    (0.37
    )
    
    
    8.16
    %
    
    
    (0.60
    )Average Interest Bearing Liabilities
    
    $
    7,498.7
    
    
    
    28.8
    %
    
    $
    5,822.6
    
    
    
    43.8
    %Average Rate Paid
    
    
    3.36
    %
    
    
    (0.11
    )
    
    
    3.47
    %
    
    
    (0.91
    )
 39




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##### Table of Contents



For the Years Ended March 31,2005
    
    2004Change
    
    
    
    
    
    ChangeOrigination Volume (in millions)
    
    $
    5,276.3
    
    
    
    34.6
    %
    
    $
    3,920.7
    
    
    
    56.4
    %Number of Loans Originated
    
    
    43,617
    
    
    
    19.0
    %
    
    
    36,659
    
    
    
    24.5
    %Number of Loan Applications
    
    
    401,302
    
    
    
    17.7
    %
    
    
    340,894
    
    
    
    37.4
    %Average Loan Size
    
    $
    121,000
    
    
    
    13.2
    %
    
    $
    106,900
    
    
    
    25.6
    %
  40




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##### Table of Contents



For the Years Ended March 31,2005
    
    
    2004Change
    
    
    
    
    
    
    ChangeServicing Portfolio:Number of LoansPortfolio Accounting Method
    
    
    83,972
    
    
    
    10.2
    %
    
    
    76,215
    
    
    
    24.8
    %Serviced for Others
    
    
    16,431
    
    
    
    51.3
    %
    
    
    10,858
    
    
    
    (18.5
    %)Total
    
    
    100,403
    
    
    
    15.3
    %
    
    
    87,073
    
    
    
    17.0
    %Dollars in billionsPortfolio Accounting Method
    
    $
    7.91
    
    
    
    21.7
    %
    
    $
    6.50
    
    
    
    40.1
    %Serviced for Others
    
    
    1.40
    
    
    
    118.8
    %
    
    
    0.64
    
    
    
    (23.8
    %)Total
    
    $
    9.31
    
    
    
    30.4
    %
    
    $
    7.14
    
    
    
    30.3
    %
  FINANCIAL CONDITION AND LIQUIDITY
  For the Years Ended March 31,2006
    
    
    2005
    
    
    2004Net Cash (Used in) Provided byCentex*Operating Activities
    
    $
    (667,292
    )
    
    $
    (506,007
    )
    
    $
    (311,250
    )Investing Activities
    
    
    77,133
    
    
    
    (50,816
    )
    
    
    (62,830
    )Financing Activities
    
    
    138,041
    
    
    
    891,926
    
    
    
    92,881Effect of Exchange Rate on Cash
    
    
    (1,479
    )
    
    
    (5,385
    )
    
    
    692(453,597
    )
    
    
    329,718
    
    
    
    (280,507
    )Financial ServicesOperating Activities
    
    
    (156,762
    )
    
    
    150,201
    
    
    
    1,090,135Investing Activities
    
    
    941,047
    
    
    
    (1,526,148
    )
    
    
    (1,931,321
    )Financing Activities
    
    
    (785,319
    )
    
    
    1,369,956
    
    
    
    844,373(1,034
    )
    
    
    (5,991
    )
    
    
    3,187Centex Corporation and SubsidiariesOperating Activities
    
    
    (933,139
    )
    
    
    (368,077
    )
    
    
    711,196Investing Activities
    
    
    1,054,518
    
    
    
    (1,613,693
    )
    
    
    (1,925,962
    )Financing Activities
    
    
    (574,531
    )
    
    
    2,310,882
    
    
    
    936,754Effect of Exchange Rate on Cash
    
    
    (1,479
    )
    
    
    (5,385
    )
    
    
    692Net (Decrease) Increase in Cash
    
    $
    (454,631
    )
    
    $
    323,727
    
    
    $
    (277,320
    )
 
 *
    
    Centex represents a supplemental presentation that reflects the Financial Services segment
as if accounted for under the equity method. We believe that separate disclosure of the
consolidating information is useful because the Financial Services subsidiaries and related
companies operate in a distinctly different financial environment that generally requires
significantly less equity to support their higher debt levels compared to the operations of our
other subsidiaries; the Financial Services subsidiaries and related companies have structured their
financing programs substantially on a stand alone basis; and Centex has limited obligations with
respect to the indebtedness of our Financial Services subsidiaries and related companies.
Management uses this information in its financial and strategic planning. We also use this
presentation to allow investors to compare us to homebuilders that do not have financial services
operations.  41




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##### Table of Contents



Payments Due by PeriodLess Than
    
    
    1  3
    
    
    3  5
    
    
    More Than1 Year
    
    
    Years
    
    
    Years
    
    
    5 Years
    
    
    TotalCentexLong-term Debt (1)
    
    $
    514,264
    
    
    $
    1,199,112
    
    
    $
    1,224,967
    
    
    $
    2,046,344
    
    
    $
    4,984,687Capital Leases
    
    
    3,079
    
    
    
    5,516
    
    
    
    4,939
    
    
    
    4,577
    
    
    
    18,111Operating Leases
    
    
    53,281
    
    
    
    95,842
    
    
    
    68,825
    
    
    
    41,031
    
    
    
    258,979Purchase Obligations
    
    
    26,576
    
    
    
    26,879
    
    
    
    7,765
    
    
    
    
    
    
    
    61,220597,200
    
    
    
    1,327,349
    
    
    
    1,306,496
    
    
    
    2,091,952
    
    
    
    5,322,997Financial ServicesLong-term Debt (2)
    
    
    2,898
    
    
    
    5,787
    
    
    
    61,449
    
    
    
    
    
    
    
    70,134Operating Leases
    
    
    13,386
    
    
    
    14,441
    
    
    
    4,629
    
    
    
    3,230
    
    
    
    35,68616,284
    
    
    
    20,228
    
    
    
    66,078
    
    
    
    3,230
    
    
    
    105,820$
    613,484
    
    
    $
    1,347,577
    
    
    $
    1,372,574
    
    
    $
    2,095,182
    
    
    $
    5,428,817
 
 (1)
    
    The amount of debt subject to a variable interest rate is $279.3 million, of which $258.0
million was based on the U.S. 3 month Libor rate of 5.00% at March 31, 2006 and $21.3 million
was based on the U.S. 1 month Libor rate of 4.83% at March 31, 2006.(2)
    
    The amount of debt subject to a variable interest rate is $60.0 million. The basis of the
rate is U.S. 1 month Libor which was 4.83% at March 31, 2006.  42




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##### Table of Contents



Existing Credit
    
    
    AvailableFacilities
    
    
    CapacityCentexMulti-Bank Revolving Credit FacilityRevolving Credit
    
    $
    1,000,000
    
    
    $
    875,000Letters of Credit
    
    
    500,000
    
    
    
    111,6801,500,000
    
    
    
    986,680
    (1) (2)Unsecured Credit Facilities
    
    
    350,000
    
    
    
    350,000
    (3)1,850,000
    
    
    
    1,336,680Financial ServicesSecured Credit Facilities
    
    
    940,000
    
    
    
    560,023
    (4)Harwood Street Funding I, LLC Facility
    
    
    3,000,000
    
    
    
    1,244,0003,940,000
    
    
    
    1,804,023Discontinued OperationsMortgage Servicer Advance Facility
    
    
    100,000
    
    
    
    17,653
    (5)Harwood Street Funding II, LLC Facility
    
    
    4,000,000
    
    
    
    2,917,134
    (6)4,100,000
    
    
    
    2,934,787$
    9,890,000
    
    
    $
    6,075,490
    (7)
 
 (1)
    
    This is an unsecured, committed, multi-bank revolving credit facility, maturing in July
2010, which serves as backup for Centex Corporations $900 million commercial paper program
and provides $500 million of letter of credit capacity. As of March 31, 2006, the $900
million commercial paper program had $125 million outstanding which has been deducted from the
available capacity under the back-up facility. There have been no direct borrowings under this
revolving credit facility since its inception.(2)
    
    In conjunction with the issuance of surety bonds in support of our Construction Services
activity, Centex Corporation has agreed to provide letters of credit of up to $100 million if
Centex Corporations public debt ratings fall below investment grade. In support of this
ratings trigger, we maintain a minimum of $100 million in unused committed credit at all
times.(3)
    
    Centex Corporation maintains $350 million unsecured, uncommitted credit facilities.(4)
    
    CTX Mortgage Company, LLC and Home Equity share in a $300 million secured, committed credit
facility to finance mortgage inventory. The available capacity reflects $55 million of
outstanding debt for Home Equity which is included in liabilities from discontinued operations
in the Consolidated Balance Sheets. CTX Mortgage Company, LLC also maintains $640 million of
secured, committed mortgage warehouse facilities to finance mortgages.(5)
    
    Under this facility, Home Equity is permitted to securitize its mortgage servicer advances in
an amount up to $100 million with a final maturity of May 2011. This facility has no recourse
to Centex Corporation.(6)
    
    As part of the planned sale of Home Equity, on the closing date of the sale, the purchaser
will purchase all of the mortgage loans held by Harwood Street Funding II, LLC, which we refer
to as HSF-II. The change in control of Home Equity will terminate HSF-IIs commitment to
purchase new loans from Home Equity and permit the orderly liquidation of HSF-II.(7)
    
    The amount of available capacity for continuing operations consists of $2,790.7 million of
committed capacity and $350.0 million of uncommitted capacity as of March 31, 2006. Although
we believe that the uncommitted capacity is currently available, there can be no assurance
that the lenders under these facilities would elect to make advances if and when requested to
do so.  43




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##### Table of Contents



CentexShort-term Debt:Short-term Note Payable
    
    $
    127,166Senior Debt:Medium-term Note Programs, weighted-average 6.01%, due through 2008
    
    
    358,000Senior Notes, weighted-average 5.79%, due through 2016
    
    
    3,208,762Other Indebtedness, weighted-average 9.17%, due through 2015
    
    
    188,346Subordinated Debt:Subordinated Debentures, 8.75%, due in 2007
    
    
    99,9193,982,193Financial ServicesShort-term Debt:Short-term Notes Payable
    
    
    324,986Harwood Street Funding I, LLC Secured Liquidity Notes
    
    
    1,692,229Harwood Street Funding I, LLC Variable Rate Subordinated Extendable
Certificates, weighted-average 6.83%, due through 2010
    
    
    60,0002,077,215$
    6,059,408
  CERTAIN OFF-BALANCE SHEET OBLIGATIONS
  Joint Ventures
  44




---



##### Table of Contents



As of March 31,2006
    
    
    2005Number of Joint Ventures
    
    
    52
    
    
    
    41Investment in Joint Ventures
    
    $
    307,779
    
    
    $
    160,871Total Joint Venture Debt
    
    $
    1,053,201
    
    
    $
    426,335Centexs Share of Joint Venture Debt:Based on Centexs Ownership Percentage
    
    $
    388,428
    
    
    $
    160,061Based on Limited Debt Recourse Provisions:Limited
Maintenance Guarantee(1) (2)
    
    $
    228,603
    
    
    $
    132,078Repayment
Guarantee
(2) (3)
    
    
    8,136
    
    
    
    7,751Total Limited Debt Recourse
    
    $
    236,739
    
    
    $
    139,829
 
 (1)
    
    We have guaranteed that certain of the joint ventures will maintain a specified loan
to value ratio. We could be requested to contribute additional capital to these joint
ventures to the extent the loan to value ratio falls below the specified ratio. We
have not been requested to perform under a limited maintenance guarantee, and we do not
anticipate that any capital contributions will be made in future periods under these
guarantees.(2)
    
    These amounts represent our maximum exposure based on the joint ventures debt
at each respective date.(3)
    
    We have guaranteed repayment of a portion of certain joint venture debt limited
to our ownership percentage of the joint venture or a percentage thereof.   CRITICAL ACCOUNTING ESTIMATES
  Impairment of Long-Lived Assets
  45




---



##### Table of Contents



Goodwill
  Inventory Valuation
    Land Held Under Option Agreements Not Owned
    46




---



##### Table of Contents



Warranty Accruals
  Loan Origination Reserve
   Insurance Accruals
  CRITICAL ACCOUNTING ESTIMATES  DISCONTINUED OPERATIONS
  Valuation of Residential Mortgage Loans Held for Investment
  47




---



##### Table of Contents



Mortgage Securitization Residual Interest
   RECENT ACCOUNTING PRONOUNCEMENTS
   
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  48




---



##### Table of Contents



Centex
    Maturities through March 31,2007
    
    2008
    
    2009
    
    2010
    
    2011
    
    Thereafter
    
    Total
    
    Fair ValueCentex
(1)Fixed-Rate Debt
    
    $
    204,465
    
    
    $
    438,340
    
    
    $
    208,650
    
    
    $
    225,073
    
    
    $
    700,066
    
    
    $
    1,799,100
    
    
    $
    3,575,694
    
    
    $
    3,566,902Average Interest Rate
    
    
    7.99
    %
    
    
    5.94
    %
    
    
    6.31
    %
    
    
    5.80
    %
    
    
    6.45
    %
    
    
    5.79
    %
    
    
    6.10
    %Variable-Rate Debt
    
    $
    88,000
    
    
    $
    191,333
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    279,333
    
    
    $
    280,481Average Interest Rate
    
    
    6.56
    %
    
    
    5.02
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.51
    %
 
 (1)
    
    We define Centex as a supplemental presentation that reflects the Financial Services
segment as if accounted for under the equity method.  Maturities through March 31,2006
    
    2007
    
    2008
    
    2009
    
    2010
    
    Thereafter
    
    Total
    
    Fair ValueCentex
(1)Fixed-Rate Debt
    
    $
    301,814
    
    
    $
    203,872
    
    
    $
    336,505
    
    
    $
    1,246
    
    
    $
    226,264
    
    
    $
    1,710,013
    
    
    $
    2,779,714
    
    
    $
    2,876,580Average Interest Rate
    
    
    8.94
    %
    
    
    8.01
    %
    
    
    4.84
    %
    
    
    7.78
    %
    
    
    5.81
    %
    
    
    6.29
    %
    
    
    6.49
    %Variable-Rate
Hedged Debt
(2)
    
    $
    25,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    25,000
    
    
    $
    25,130Average Interest Rate
    
    
    7.99
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7.99
    %Variable-Rate Debt
    
    $
    15,000
    
    
    $
    88,000
    
    
    $
    192,333
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    295,333
    
    
    $
    298,153Average Interest Rate
    
    
    4.52
    %
    
    
    4.75
    %
    
    
    3.09
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.66
    %
 
 (1)
    
    We define Centex as a supplemental presentation that reflects the Financial Services
segment as if accounted for under the equity method.(2)
    
    These variable-rate notes in effect are fixed-rate instruments as a result of a hedge using
interest rate swaps. Financial Services
   49




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##### Table of Contents



Maturities through March 31,2007
    
    2008
    
    2009
    
    2010
    
    2011
    
    Thereafter
    
    Total
    
    Fair ValueFinancial
Services
(1)
Variable-Rate Debt
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    60,000
    
    
    $
    
    
    
    $
    
    
    
    $
    60,000
    
    
    $
    60,093Average Interest Rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6.83
    %
    
    
    
    
    
    
    
    
    
    
    6.83
    %
 
 (1)
    
    We define Financial Services as a supplemental presentation that reflects Centex Financial
Services, its subsidiaries and related companies.  Maturities through March 31,2006
    
    2007
    
    2008
    
    2009
    
    2010
    
    Thereafter
    
    Total
    
    Fair ValueFinancial
Services
(1)
Variable-Rate Debt
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    60,000
    
    
    $
    
    
    
    $
    60,000
    
    
    $
    60,000Average Interest Rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.87
    %
    
    
    
    
    
    
    4.87
    %
 
 (1)
    
    We define Financial Services as a supplemental presentation that reflects Centex Financial
Services, its subsidiaries and related companies. Discontinued Operations
  50




---



##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 Financial Information
 PageConsolidated Revenues and Operating Earnings by Line of Business
    
    
    52Statements of Consolidated Earnings
    
    
    53Consolidated Balance Sheets with Consolidating Details
    
    
    54Statements of Consolidated Cash Flows with Consolidating Details
    
    
    56Statements of Consolidated Stockholders Equity
    
    
    58Notes to Consolidated Financial Statements
    
    
    60Managements Report on Internal Control Over Financial Reporting
    
    
    91Reports of Independent Registered Public Accounting Firm
    
    
    92Quarterly Results
    
    
    94
 51




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##### Table of Contents



Centex Corporation and Subsidiaries
 
 Consolidated Revenues and Operating Earnings by Line of Business
 (Dollars in thousands)
 For the Years Ended March 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002RevenuesHome Building
    
    $
    12,272,203
    
    
    $
    9,359,741
    
    
    $
    7,519,039
    
    
    $
    5,922,724
    
    
    $
    4,972,17285
    %
    
    
    80
    %
    
    
    77
    %
    
    
    74
    %
    
    
    73
    %Financial Services
    
    
    462,223
    
    
    
    421,653
    
    
    
    521,148
    
    
    
    453,924
    
    
    
    397,1693
    %
    
    
    4
    %
    
    
    5
    %
    
    
    5
    %
    
    
    6
    %Construction Services
    
    
    1,606,609
    
    
    
    1,738,603
    
    
    
    1,596,335
    
    
    
    1,517,851
    
    
    
    1,296,02411
    %
    
    
    15
    %
    
    
    17
    %
    
    
    19
    %
    
    
    19
    %Other
(1)
    
    
    58,634
    
    
    
    152,888
    
    
    
    119,632
    
    
    
    133,115
    
    
    
    155,8381
    %
    
    
    1
    %
    
    
    1
    %
    
    
    2
    %
    
    
    2
    %$
    14,399,669
    
    
    $
    11,672,885
    
    
    $
    9,756,154
    
    
    $
    8,027,614
    
    
    $
    6,821,203100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %Business SegmentOperating
Earnings(2)Home Building
    
    $
    1,905,812
    
    
    $
    1,378,818
    
    
    $
    965,872
    
    
    $
    631,327
    
    
    $
    474,29795
    %
    
    
    92
    %
    
    
    81
    %
    
    
    79
    %
    
    
    73
    %Financial Services
    
    
    84,465
    
    
    
    95,972
    
    
    
    165,778
    
    
    
    114,676
    
    
    
    89,6514
    %
    
    
    6
    %
    
    
    14
    %
    
    
    14
    %
    
    
    14
    %Construction Services
    
    
    26,838
    
    
    
    23,524
    
    
    
    16,413
    
    
    
    30,718
    
    
    
    36,2251
    %
    
    
    2
    %
    
    
    1
    %
    
    
    4
    %
    
    
    5
    %Other
(1)
    
    
    (9,400
    )
    
    
    5,566
    
    
    
    42,458
    
    
    
    23,703
    
    
    
    51,426
    
    
    
    
    
    
    
    4
    %
    
    
    3
    %
    
    
    8
    %2,007,715
    
    
    
    1,503,880
    
    
    
    1,190,521
    
    
    
    800,424
    
    
    
    651,599100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %Corporate General and
Administrative
    
    
    100,155
    
    
    
    82,877
    
    
    
    105,529
    
    
    
    60,289
    
    
    
    50,189Interest Expense
    
    
    12,067
    
    
    
    19,348
    
    
    
    39,534
    
    
    
    60,326
    
    
    
    58,576Earnings from Continuing
Operations Before
Income Taxes and
Cumulative Effect
of a Change in
Accounting Principle
    
    $
    1,895,493
    
    
    $
    1,401,655
    
    
    $
    1,045,458
    
    
    $
    679,809
    
    
    $
    542,834
 Applicable segment operating expenses have been deducted from business segment operating
earnings.
 
 (1)
    
    Other Revenues and Other Business Segment Operating Earnings include intersegment
eliminations.(2)
    
    Business Segment Operating Earnings include earnings from unconsolidated entities and exclude
corporate general and administrative expense and interest expense. 52




---



##### Table of Contents



Centex Corporation and Subsidiaries
 
 Statements of Consolidated Earnings
 (Dollars in thousands, except per share data)
 For the Years Ended March 31,2006
    
    
    2005
    
    
    2004RevenuesHome Building
    
    $
    12,272,203
    
    
    $
    9,359,741
    
    
    $
    7,519,039Financial Services
    
    
    462,223
    
    
    
    421,653
    
    
    
    521,148Construction Services
    
    
    1,606,609
    
    
    
    1,738,603
    
    
    
    1,596,335Other, including Intersegment Eliminations
    
    
    58,634
    
    
    
    152,888
    
    
    
    119,63214,399,669
    
    
    
    11,672,885
    
    
    
    9,756,154Costs and ExpensesHome Building
    
    
    10,452,389
    
    
    
    8,049,709
    
    
    
    6,583,118Financial Services
    
    
    377,758
    
    
    
    325,681
    
    
    
    355,370Construction Services
    
    
    1,580,270
    
    
    
    1,717,025
    
    
    
    1,582,036Other, including Intersegment Eliminations
    
    
    68,034
    
    
    
    147,322
    
    
    
    91,689Corporate General and Administrative
    
    
    100,155
    
    
    
    82,877
    
    
    
    105,529Interest Expense
    
    
    12,067
    
    
    
    19,348
    
    
    
    39,53412,590,673
    
    
    
    10,341,962
    
    
    
    8,757,276Earnings from Unconsolidated Entities
    
    
    86,497
    
    
    
    70,732
    
    
    
    46,580Earnings from Continuing Operations Before Income
Taxes and Cumulative Effect of a Change in
Accounting Principle
    
    
    1,895,493
    
    
    
    1,401,655
    
    
    
    1,045,458Income Taxes
    
    
    674,472
    
    
    
    502,113
    
    
    
    342,108Earnings from Continuing Operations Before Cumulative
Effect of a Change in Accounting Principle
    
    
    1,221,021
    
    
    
    899,542
    
    
    
    703,350Earnings from Discontinued Operations, net of Tax
Provision of $71,617, $60,292 and $15,926
    
    
    68,292
    
    
    
    111,822
    
    
    
    137,596Earnings Before Cumulative Effect of a Change in
Accounting Principle
    
    
    1,289,313
    
    
    
    1,011,364
    
    
    
    840,946Cumulative Effect of a Change in Accounting Principle,
net of Tax Benefit of $0, $0 and $8,303
    
    
    
    
    
    
    
    
    
    
    (13,260
    )Net Earnings
    
    $
    1,289,313
    
    
    $
    1,011,364
    
    
    $
    827,686Basic Earnings Per ShareContinuing Operations
    
    $
    9.62
    
    
    $
    7.19
    
    
    $
    5.70Discontinued Operations
    
    
    0.54
    
    
    
    0.89
    
    
    
    1.11Cumulative Effect of a Change in Accounting Principle
    
    
    
    
    
    
    
    
    
    
    (0.11
    )$
    10.16
    
    
    $
    8.08
    
    
    $
    6.70Diluted Earnings Per ShareContinuing Operations
    
    $
    9.20
    
    
    $
    6.79
    
    
    $
    5.44Discontinued Operations
    
    
    0.51
    
    
    
    0.85
    
    
    
    1.06Cumulative Effect of a Change in Accounting Principle
    
    
    
    
    
    
    
    
    
    
    (0.10
    )$
    9.71
    
    
    $
    7.64
    
    
    $
    6.40Average Shares OutstandingBasic
    
    
    126,870,887
    
    
    
    125,226,596
    
    
    
    123,382,068Dilutive Securities:Options
    
    
    5,420,789
    
    
    
    6,725,838
    
    
    
    5,754,689Other
    
    
    458,121
    
    
    
    445,527
    
    
    
    256,064Diluted
    
    
    132,749,797
    
    
    
    132,397,961
    
    
    
    129,392,821Cash Dividends Per Share
    
    $
    .16
    
    
    $
    .16
    
    
    $
    .10
 See Notes to Consolidated Financial Statements.
 53




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##### Table of Contents



Centex Corporation and Subsidiaries
 
 Consolidated Balance Sheets with Consolidating Details
 (Dollars in thousands)
 Centex Corporation and SubsidiariesMarch 31,2006
    
    
    2005AssetsCash and Cash Equivalents
    
    $
    47,168
    
    
    $
    501,936Restricted Cash
    
    
    135,477
    
    
    
    88,235Receivables -Residential Mortgage Loans Held for Sale
    
    
    2,129,538
    
    
    
    1,775,324Construction Contracts
    
    
    361,393
    
    
    
    302,035Trade, including Notes of $31,897 and $57,071
    
    
    342,786
    
    
    
    334,672Inventories -Housing Projects
    
    
    8,433,994
    
    
    
    6,234,005Land Held for Development and Sale
    
    
    394,438
    
    
    
    205,190Land Held Under Option Agreements Not Owned
    
    
    817,881
    
    
    
    456,917Other
    
    
    11,615
    
    
    
    33,439Investments -Joint Ventures and Other
    
    
    310,384
    
    
    
    163,944Unconsolidated Subsidiaries
    
    
    
    
    
    
    Property and Equipment, net
    
    
    182,757
    
    
    
    140,930Other Assets -Deferred Income Taxes
    
    
    233,908
    
    
    
    184,778Goodwill
    
    
    218,735
    
    
    
    216,537Deferred Charges and Other, net
    
    
    234,763
    
    
    
    193,761Assets of Discontinued Operations
    
    
    7,510,162
    
    
    
    9,179,376$
    21,364,999
    
    
    $
    20,011,079Liabilities and Stockholders EquityAccounts Payable
    
    $
    992,836
    
    
    $
    589,609Accrued Liabilities
    
    
    1,766,844
    
    
    
    1,467,472Debt -Centex
    
    
    3,982,193
    
    
    
    3,107,917Financial Services
    
    
    2,077,215
    
    
    
    1,695,855Payables to (Receivables from) Affiliates
    
    
    
    
    
    
    Liabilities of Discontinued Operations
    
    
    7,001,793
    
    
    
    8,411,948Commitments and ContingenciesMinority Interests
    
    
    532,460
    
    
    
    457,521Stockholders Equity -Preferred Stock, Authorized 5,000,000 Shares, None Issued
    
    
    
    
    
    
    Common Stock, $.25 Par Value; Authorized 300,000,000
Shares; Outstanding 122,103,713 and 127,729,275 Shares
    
    
    34,132
    
    
    
    33,327Capital in Excess of Par Value
    
    
    580,010
    
    
    
    407,995Unamortized Value of Deferred Compensation
    
    
    
    
    
    
    (197
    )Retained Earnings
    
    
    5,251,325
    
    
    
    3,982,306Treasury Stock, at Cost; 14,424,807 and 5,577,686 Shares
    
    
    (862,439
    )
    
    
    (213,801
    )Accumulated Other Comprehensive Income
    
    
    8,630
    
    
    
    71,127Total Stockholders Equity
    
    
    5,011,658
    
    
    
    4,280,757$
    21,364,999
    
    
    $
    20,011,079
 See Notes to Consolidated Financial Statements.
 54




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##### Table of Contents



Centex Corporation and Subsidiaries
Consolidated Balance Sheets with Consolidating Details  (Dollars in thousands)
 Centex*
    
    
    Financial ServicesMarch 31,
    
    
    March 31,2006
    
    
    2005
    
    
    2006
    
    
    2005$
    36,711
    
    
    $
    490,308
    
    
    $
    10,457
    
    
    $
    11,62870,824
    
    
    
    53,339
    
    
    
    64,653
    
    
    
    34,896
    
    
    
    
    
    
    
    2,129,538
    
    
    
    1,775,324361,393
    
    
    
    302,035
    
    
    
    
    
    
    
    298,912
    
    
    
    292,630
    
    
    
    43,874
    
    
    
    42,0428,433,994
    
    
    
    6,234,005
    
    
    
    
    
    
    
    394,438
    
    
    
    205,190
    
    
    
    
    
    
    
    817,881
    
    
    
    456,917
    
    
    
    
    
    
    
    5,361
    
    
    
    27,133
    
    
    
    6,254
    
    
    
    6,306310,384
    
    
    
    163,944
    
    
    
    
    
    
    
    655,266
    
    
    
    572,290
    
    
    
    
    
    
    
    160,611
    
    
    
    116,487
    
    
    
    22,146
    
    
    
    24,443217,446
    
    
    
    161,055
    
    
    
    16,462
    
    
    
    23,723206,998
    
    
    
    204,800
    
    
    
    11,737
    
    
    
    11,737212,617
    
    
    
    172,100
    
    
    
    22,146
    
    
    
    21,661
    
    
    
    677,260
    
    
    
    7,510,162
    
    
    
    8,502,116$
    12,182,836
    
    
    $
    10,129,493
    
    
    $
    9,837,429
    
    
    $
    10,453,876$
    977,608
    
    
    $
    569,100
    
    
    $
    15,228
    
    
    $
    20,5091,680,090
    
    
    
    1,381,488
    
    
    
    86,754
    
    
    
    85,9843,982,193
    
    
    
    3,107,917
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,077,215
    
    
    
    1,695,855
    
    
    
    
    
    
    
    (9,110
    )
    
    
    (44,958
    )
    
    
    
    334,072
    
    
    
    7,001,793
    
    
    
    8,077,876531,287
    
    
    
    456,159
    
    
    
    1,173
    
    
    
    1,362
    
    
    
    
    
    
    
    
    
    
    
    34,132
    
    
    
    33,327
    
    
    
    1
    
    
    
    1580,010
    
    
    
    407,995
    
    
    
    275,467
    
    
    
    275,467
    
    
    
    (197
    )
    
    
    
    
    
    
    5,251,325
    
    
    
    3,982,306
    
    
    
    380,206
    
    
    
    333,568(862,439
    )
    
    
    (213,801
    )
    
    
    
    
    
    
    8,630
    
    
    
    71,127
    
    
    
    8,702
    
    
    
    8,2125,011,658
    
    
    
    4,280,757
    
    
    
    664,376
    
    
    
    617,248$
    12,182,836
    
    
    $
    10,129,493
    
    
    $
    9,837,429
    
    
    $
    10,453,876
 
 *
    
    In the supplemental data presented above, Centex represents the consolidation of all
subsidiaries other than those included in Financial Services as described in Note (A), Significant
Accounting Policies. Transactions between Centex and Financial Services have been eliminated from
the Centex Corporation and Subsidiaries balance sheets. 55




---



##### Table of Contents



Centex Corporation and Subsidiaries
 
 Statements of Consolidated Cash Flows with Consolidating Details
 (Dollars in thousands)
 Centex Corporation and SubsidiariesFor the Years Ended March 31,2006
    
    
    2005
    
    
    2004Cash Flows  Operating ActivitiesNet Earnings
    
    $
    1,289,313
    
    
    $
    1,011,364
    
    
    $
    827,686AdjustmentsCumulative Effect of a Change in Accounting Principle
    
    
    
    
    
    
    
    
    
    
    13,260Depreciation and Amortization
    
    
    63,069
    
    
    
    58,259
    
    
    
    77,777Stock-based Compensation
    
    
    68,743
    
    
    
    49,100
    
    
    
    30,349Provision for Losses on Residential Mortgage Loans Held
for Investment
    
    
    94,319
    
    
    
    98,801
    
    
    
    79,503Deferred Income Tax (Benefit) Provision
    
    
    (127,699
    )
    
    
    (6,537
    )
    
    
    17,803Distributions in Excess of Earnings (Undistributed Earnings) of
Joint Ventures and Centex Development Company, L.P.
    
    
    17,995
    
    
    
    34,197
    
    
    
    (50,518
    )Undistributed Earnings of Unconsolidated Subsidiaries
    
    
    
    
    
    
    
    
    
    
    Minority Interest, net of Taxes
    
    
    (315
    )
    
    
    (388
    )
    
    
    (8,252
    )Changes in Assets and Liabilities, Excluding Effect of AcquisitionsIncrease in Restricted Cash
    
    
    (34,802
    )
    
    
    (67,485
    )
    
    
    (130,686
    )Increase in Receivables
    
    
    (88,132
    )
    
    
    (121,375
    )
    
    
    (67,808
    )(Increase) Decrease in Residential Mortgage Loans Held for Sale
    
    
    (354,214
    )
    
    
    44,281
    
    
    
    927,151Increase in Housing Projects and Land Held for Development
and Sale
    
    
    (2,447,399
    )
    
    
    (1,928,261
    )
    
    
    (1,203,547
    )(Increase) Decrease in Other Inventories
    
    
    (1,368
    )
    
    
    47,837
    
    
    
    464Increase (Decrease) in Accounts Payable and Accrued Liabilities
    
    
    635,713
    
    
    
    421,227
    
    
    
    212,122(Increase) Decrease in Other Assets, net
    
    
    (42,264
    )
    
    
    (15,866
    )
    
    
    (17,412
    )Increase (Decrease) in Payables to Affiliates
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    (6,098
    )
    
    
    6,769
    
    
    
    3,304(933,139
    )
    
    
    (368,077
    )
    
    
    711,196Cash Flows  Investing ActivitiesPayments received on (Issuance of) Notes Receivable, net
    
    
    25,174
    
    
    
    (15,750
    )
    
    
    13,231Decrease (Increase) in Residential Mortgage Loans Held for
Investment
    
    
    952,449
    
    
    
    (1,515,072
    )
    
    
    (1,934,832
    )Investment and Advances to Joint Ventures and Centex
Development Company, L.P.
    
    
    (372,937
    )
    
    
    (223,857
    )
    
    
    (60,226
    )Distributions from Joint Ventures and Centex Development
Company, L.P.
    
    
    218,544
    
    
    
    181,099
    
    
    
    110,055(Increase) Decrease in Investment and Advances to
Unconsolidated Subsidiaries
    
    
    
    
    
    
    
    
    
    
    Purchases of Property and Equipment, net
    
    
    (92,234
    )
    
    
    (43,313
    )
    
    
    (53,758
    )Proceeds from Dispositions
    
    
    327,415
    
    
    
    9,267
    
    
    
    Other
    
    
    (3,893
    )
    
    
    (6,067
    )
    
    
    (432
    )1,054,518
    
    
    
    (1,613,693
    )
    
    
    (1,925,962
    )Cash Flows  Financing ActivitiesIncrease (Decrease) in Short-term Debt, net
    
    
    764,540
    
    
    
    371,230
    
    
    
    (1,083,468
    )CentexIssuance of Long-term Debt
    
    
    972,028
    
    
    
    1,034,509
    
    
    
    404,998Repayment of Long-term Debt
    
    
    (343,322
    )
    
    
    (217,324
    )
    
    
    (164,073
    )Financial ServicesIssuance of Long-term Debt
    
    
    2,008,372
    
    
    
    3,764,701
    
    
    
    5,334,407Repayment of Long-term Debt
    
    
    (3,366,188
    )
    
    
    (2,709,105
    )
    
    
    (3,432,323
    )Proceeds from Stock Option Exercises
    
    
    58,971
    
    
    
    87,797
    
    
    
    58,599Purchases of common stock, net
    
    
    (648,638
    )
    
    
    (979
    )
    
    
    (167,785
    )Dividends Paid
    
    
    (20,294
    )
    
    
    (19,947
    )
    
    
    (13,601
    )(574,531
    )
    
    
    2,310,882
    
    
    
    936,754Effect of Exchange Rate on Cash
    
    
    (1,479
    )
    
    
    (5,385
    )
    
    
    692Net (Decrease) Increase in Cash and Cash Equivalents
    
    
    (454,631
    )
    
    
    323,727
    
    
    
    (277,320
    )Cash and Cash Equivalents at Beginning of Year(1)
    
    
    502,586
    
    
    
    178,859
    
    
    
    456,179Cash and Cash Equivalents at End of Year(2)
    
    $
    47,955
    
    
    $
    502,586
    
    
    $
    178,859
 See Notes to Consolidated Financial Statements.
 
 (1)
    
    Amount includes cash and cash equivalents of discontinued operations of $650 and $8,216 as of
March 31, 2005 and 2004, respectively.(2)
    
    Amount includes cash and cash equivalents of discontinued operations of $787 and $650 as of
March 31, 2006 and 2005, respectively. 56




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##### Table of Contents



Centex Corporation and Subsidiaries
Statements of Consolidated Cash Flows with Consolidating Details  (Dollars in thousands)
 Centex *
    
    
    Financial ServicesFor the Years Ended March 31,
    
    
    For the Years Ended March 31,2006
    
    
    2005
    
    
    2004
    
    
    2006
    
    
    2005
    
    
    2004$
    1,289,313
    
    
    $
    1,011,364
    
    
    $
    827,686
    
    
    $
    119,385
    
    
    $
    126,078
    
    
    $
    132,845
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,26048,081
    
    
    
    40,444
    
    
    
    60,426
    
    
    
    14,988
    
    
    
    17,815
    
    
    
    17,35168,743
    
    
    
    49,100
    
    
    
    30,349
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    94,319
    
    
    
    98,801
    
    
    
    79,503(55,196
    )
    
    
    (67,223
    )
    
    
    8,076
    
    
    
    (72,503
    )
    
    
    60,686
    
    
    
    9,72717,995
    
    
    
    34,197
    
    
    
    (50,518
    )
    
    
    
    
    
    
    
    
    
    
    (46,638
    )
    
    
    (77,078
    )
    
    
    (58,345
    )
    
    
    
    
    
    
    
    
    
    
    (126
    )
    
    
    (215
    )
    
    
    (8,051
    )
    
    
    (189
    )
    
    
    (173
    )
    
    
    (201
    )(17,485
    )
    
    
    (2,899
    )
    
    
    (42,091
    )
    
    
    (17,317
    )
    
    
    (64,586
    )
    
    
    (88,595
    )(88,073
    )
    
    
    (101,871
    )
    
    
    (54,366
    )
    
    
    (59
    )
    
    
    (19,504
    )
    
    
    (13,442
    )
    
    
    
    
    
    
    
    
    
    
    
    (354,214
    )
    
    
    44,281
    
    
    
    927,151(2,447,399
    )
    
    
    (1,928,261
    )
    
    
    (1,203,547
    )
    
    
    
    
    
    
    
    
    
    
    (1,420
    )
    
    
    45,203
    
    
    
    958
    
    
    
    52
    
    
    
    2,634
    
    
    
    (494
    )622,375
    
    
    
    509,793
    
    
    
    208,755
    
    
    
    13,828
    
    
    
    (64,676
    )
    
    
    (12,022
    )(51,364
    )
    
    
    (28,561
    )
    
    
    (33,886
    )
    
    
    9,100
    
    
    
    12,695
    
    
    
    16,474
    
    
    
    
    
    
    
    
    
    
    
    35,848
    
    
    
    (60,619
    )
    
    
    8,578(6,098
    )
    
    
    10,000
    
    
    
    3,304
    
    
    
    
    
    
    
    (3,231
    )
    
    
    (667,292
    )
    
    
    (506,007
    )
    
    
    (311,250
    )
    
    
    (156,762
    )
    
    
    150,201
    
    
    
    1,090,13524,937
    
    
    
    (15,426
    )
    
    
    12,897
    
    
    
    237
    
    
    
    (324
    )
    
    
    334
    
    
    
    
    
    
    
    
    
    
    
    952,449
    
    
    
    (1,515,072
    )
    
    
    (1,934,832
    )(372,937
    )
    
    
    (223,857
    )
    
    
    (60,226
    )
    
    
    
    
    
    
    
    
    
    
    218,544
    
    
    
    181,099
    
    
    
    110,055
    
    
    
    
    
    
    
    
    
    
    
    (36,338
    )
    
    
    36,729
    
    
    
    (68,189
    )
    
    
    
    
    
    
    
    
    
    
    (80,595
    )
    
    
    (23,294
    )
    
    
    (38,935
    )
    
    
    (11,639
    )
    
    
    (20,019
    )
    
    
    (14,823
    )327,415
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,267
    
    
    
    (3,893
    )
    
    
    (6,067
    )
    
    
    (18,432
    )
    
    
    
    
    
    
    
    
    
    
    18,00077,133
    
    
    
    (50,816
    )
    
    
    (62,830
    )
    
    
    941,047
    
    
    
    (1,526,148
    )
    
    
    (1,931,321
    )119,296
    
    
    
    7,870
    
    
    
    (25,257
    )
    
    
    645,244
    
    
    
    363,360
    
    
    
    (1,058,211
    )972,028
    
    
    
    1,034,509
    
    
    
    404,998
    
    
    
    
    
    
    
    
    
    
    
    (343,322
    )
    
    
    (217,324
    )
    
    
    (164,073
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,008,372
    
    
    
    3,764,701
    
    
    
    5,334,407
    
    
    
    
    
    
    
    
    
    
    
    (3,366,188
    )
    
    
    (2,709,105
    )
    
    
    (3,432,323
    )58,971
    
    
    
    87,797
    
    
    
    58,599
    
    
    
    
    
    
    
    
    
    
    
    (648,638
    )
    
    
    (979
    )
    
    
    (167,785
    )
    
    
    
    
    
    
    
    
    
    
    (20,294
    )
    
    
    (19,947
    )
    
    
    (13,601
    )
    
    
    (72,747
    )
    
    
    (49,000
    )
    
    
    500138,041
    
    
    
    891,926
    
    
    
    92,881
    
    
    
    (785,319
    )
    
    
    1,369,956
    
    
    
    844,373(1,479
    )
    
    
    (5,385
    )
    
    
    692
    
    
    
    
    
    
    
    
    
    
    
    (453,597
    )
    
    
    329,718
    
    
    
    (280,507
    )
    
    
    (1,034
    )
    
    
    (5,991
    )
    
    
    3,187490,308
    
    
    
    160,590
    
    
    
    441,097
    
    
    
    12,278
    
    
    
    18,269
    
    
    
    15,082$
    36,711
    
    
    $
    490,308
    
    
    $
    160,590
    
    
    $
    11,244
    
    
    $
    12,278
    
    
    $
    18,269
 
 *
    
    In the supplemental data presented above, Centex represents the consolidation of all
subsidiaries other than those included in Financial Services as described in Note (A), Significant
Accounting Policies. Transactions between Centex and Financial Services have been eliminated from
the Centex Corporation and Subsidiaries statements of cash flows. 57




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##### Table of Contents



Centex Corporation and Subsidiaries
 
 Statements of Consolidated Stockholders Equity
 (in thousands)
 UnamortizedCapital in
    
    
    Value ofCommon Stock
    
    
    Excess of
    
    
    DeferredShares
    
    
    Amount
    
    
    Par Value
    
    
    CompensationBalance, March 31, 2003
    
    
    121,672
    
    
    $
    30,966
    
    
    $
    83,228
    
    
    $
    (2,398
    )Issuance of Restricted Stock
    
    
    128
    
    
    
    32
    
    
    
    (32
    )
    
    
    Stock Compensation
    
    
    
    
    
    
    
    
    
    
    28,362
    
    
    
    1,987Exercise of Stock Options, Including
Tax Benefits
    
    
    3,478
    
    
    
    870
    
    
    
    89,500
    
    
    
    Cash Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Spin-off of Subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchases of Common Stock for Treasury
    
    
    (3,418
    )
    
    
    
    
    
    
    
    
    
    
    Exercise of Convertible Debenture
    
    
    800
    
    
    
    200
    
    
    
    1,900
    
    
    
    Net Earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unrealized Gain on Hedging Instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Foreign Currency Translation Adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other Comprehensive Income Items
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Comprehensive IncomeBalance, March 31, 2004
    
    
    122,660
    
    
    
    32,068
    
    
    
    202,958
    
    
    
    (411
    )Issuance of Restricted Stock
    
    
    82
    
    
    
    20
    
    
    
    (20
    )
    
    
    Stock Compensation
    
    
    
    
    
    
    
    
    
    
    48,886
    
    
    
    214Exercise of Stock Options, Including
Tax Benefits
    
    
    4,952
    
    
    
    1,239
    
    
    
    157,932
    
    
    
    Cash Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other Stock Transactions
    
    
    35
    
    
    
    
    
    
    
    (1,761
    )
    
    
    Net Earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unrealized Gain on Hedging Instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Foreign Currency Translation
Adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Comprehensive IncomeBalance, March 31, 2005
    
    
    127,729
    
    
    
    33,327
    
    
    
    407,995
    
    
    
    (197
    )Issuance of Restricted Stock
    
    
    249
    
    
    
    62
    
    
    
    (62
    )
    
    
    Stock Compensation
    
    
    
    
    
    
    
    
    
    
    68,546
    
    
    
    197Exercise of Stock Options, Including
Tax Benefits
    
    
    2,970
    
    
    
    743
    
    
    
    115,690
    
    
    
    Cash Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchases of Common Stock for Treasury
    
    
    (9,250
    )
    
    
    
    
    
    
    
    
    
    
    Other Stock Transactions
    
    
    406
    
    
    
    
    
    
    
    (12,159
    )
    
    
    Net Earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unrealized Gain on Hedging Instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Foreign Currency Translation
Adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Comprehensive IncomeBalance, March 31, 2006
    
    
    122,104
    
    
    $
    34,132
    
    
    $
    580,010
    
    
    $
    
 See Notes to Consolidated Financial Statements.
 58




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##### Table of Contents



Centex Corporation and Subsidiaries
Statements of Consolidated Stockholders Equity  (in thousands)
 AccumulatedTreasury
    
    
    OtherRetained
    
    
    Stock
    
    
    ComprehensiveEarnings
    
    
    at Cost
    
    
    Income (Loss)
    
    
    Total$
    2,597,078
    
    
    $
    (45,037
    )
    
    $
    (5,991
    )
    
    $
    2,657,846
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,349
    
    
    
    
    
    
    
    
    
    
    
    90,370(13,601
    )
    
    
    
    
    
    
    
    
    
    
    (13,601
    )(420,274
    )
    
    
    
    
    
    
    
    
    
    
    (420,274
    )
    
    
    
    (167,785
    )
    
    
    
    
    
    
    (167,785
    )
    
    
    
    
    
    
    
    
    
    
    
    2,100827,686
    
    
    
    
    
    
    
    
    
    
    
    827,686
    
    
    
    
    
    
    
    5,706
    
    
    
    5,706
    
    
    
    
    
    
    
    36,864
    
    
    
    36,864
    
    
    
    
    
    
    
    964
    
    
    
    964871,2202,990,889
    
    
    
    (212,822
    )
    
    
    37,543
    
    
    
    3,050,225
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    49,100
    
    
    
    
    
    
    
    
    
    
    
    159,171(19,947
    )
    
    
    
    
    
    
    
    
    
    
    (19,947
    )
    
    
    
    (979
    )
    
    
    
    
    
    
    (2,740
    )1,011,364
    
    
    
    
    
    
    
    
    
    
    
    1,011,364
    
    
    
    
    
    
    
    24,615
    
    
    
    24,615
    
    
    
    
    
    
    
    8,969
    
    
    
    8,9691,044,9483,982,306
    
    
    
    (213,801
    )
    
    
    71,127
    
    
    
    4,280,757
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68,743
    
    
    
    
    
    
    
    
    
    
    
    116,433(20,294
    )
    
    
    
    
    
    
    
    
    
    
    (20,294
    )
    
    
    
    (653,490
    )
    
    
    
    
    
    
    (653,490
    )
    
    
    
    4,852
    
    
    
    
    
    
    
    (7,307
    )1,289,313
    
    
    
    
    
    
    
    
    
    
    
    1,289,313
    
    
    
    
    
    
    
    263
    
    
    
    263
    
    
    
    
    
    
    
    (62,760
    )
    
    
    (62,760
    )1,226,816$
    5,251,325
    
    
    $
    (862,439
    )
    
    $
    8,630
    
    
    $
    5,011,658
 59




---



##### Table of Contents



Centex Corporation and Subsidiaries
 
 Notes to Consolidated Financial Statements
 (Dollars in thousands, except per share data)
 (A) SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation
   
    
    Centex Corporation and Subsidiaries.This represents the consolidation of Centex,
Financial Services and all of their consolidated subsidiaries, related companies and
certain variable interest entities. The effects of transactions among related
companies within the consolidated group have been eliminated.
    
    Centex.This information is presented as supplemental information and represents the
consolidation of all subsidiaries and certain variable interest entities other than
those included in Financial Services, which are presented on an equity basis of
accounting.
    
    Financial Services.This information is presented as supplemental information and
represents Centex Financial Services, its subsidiaries and related companies.
   Revenue Recognition
     60




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##### Table of Contents



Earnings Per Share
   For the Years Ended March 31,2006
    
    2005
    
    2004Average outstanding shares
    
    
    1,515
    
    
    
    1,160
    
    
    
    1,089Average option exercise price
    
    
    57.37
    
    
    
    45.23
    
    
    
    35.49
 Cash and Cash Equivalents
  Restricted Cash
  Residential Mortgage Loans
   61




---



##### Table of Contents



Trade Accounts and Notes Receivable
  Inventory, Capitalization and Segment Expenses
  As of March 31,2006
    
    
    2005Direct Construction
    
    $
    3,218,138
    
    
    $
    2,246,301Land Under Development
    
    
    5,215,856
    
    
    
    3,987,704Housing Projects
    
    $
    8,433,994
    
    
    $
    6,234,005
    Land Held Under Option Agreements Not Owned
  62




---



##### Table of Contents



Investments in Joint Ventures
     63




---



##### Table of Contents



Property and Equipment, net
  Impairment of Long-Lived Assets
  Goodwill
  Deferred Charges and Other
  Advertising Costs
  Off-Balance Sheet Obligations
  Insurance Accruals
  64




---



##### Table of Contents



Stock-Based Employee Compensation Arrangements
      Number ofMonth/
    
    
    
    
    
    Shares
    
    Fair ValueYear of Grant
    
    Grant Type
    
    Granted
    
    of GrantMay 2003
    
    Stock Options
    
    
    3,141.3
    
    
    $
    35,145.6May 2004
    
    Stock Options
    
    
    1,820.2
    
    
    $
    31,344.4May 2005
    
    Stock Options
    
    
    1,716.2
    
    
    $
    39,301.2May 2003
    
    Stock Units
    
    
    867.4
    
    
    $
    27,615.3May 2004
    
    Stock Units
    
    
    601.0
    
    
    $
    27,190.8May 2005
    
    Stock Units
    
    
    556.6
    
    
    $
    31,926.9May/July 2003
    
    Restricted Stock
    
    
    124.9
    
    
    $
    4,439.1May/July 2004
    
    Restricted Stock
    
    
    80.9
    
    
    $
    3,633.7May/July 2005
    
    Restricted Stock
    
    
    249.4
    
    
    $
    14,551.1
  65




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##### Table of Contents



For the Years Ended March 31,2006
    
    
    2005
    
    
    2004Net Earnings  as Reported
    
    $
    1,289,313
    
    
    $
    1,011,364
    
    
    $
    827,686Stock-Based Employee Compensation Included
in Reported Net Income, net of Related Tax Effects
    
    
    44,683
    
    
    
    31,902
    
    
    
    19,727Total Stock-Based Employee Compensation Expense
Determined Under Fair Value Based Method, net of
Related Tax Effects
    
    
    (44,683
    )
    
    
    (31,902
    )
    
    
    (31,580
    )Pro Forma Net Earnings
    
    $
    1,289,313
    
    
    $
    1,011,364
    
    
    $
    815,833Earnings Per Share:Basic  as Reported
    
    $
    10.16
    
    
    $
    8.08
    
    
    $
    6.70Basic  Pro Forma
    
    $
    10.16
    
    
    $
    8.08
    
    
    $
    6.61Diluted  as Reported
    
    $
    9.71
    
    
    $
    7.64
    
    
    $
    6.40Diluted  Pro Forma
    
    $
    9.71
    
    
    $
    7.64
    
    
    $
    6.29
 Income Taxes
  Interest Expense
  For the Years Ended March 31,2006
    
    
    2005
    
    
    2004Total Interest Incurred
    
    $
    305,217
    
    
    $
    225,613
    
    
    $
    176,456Less  Interest Capitalized
    
    
    (227,246
    )
    
    
    (174,116
    )
    
    
    (114,997
    )Financial Services Interest Expense
    
    
    (65,904
    )
    
    
    (32,149
    )
    
    
    (21,925
    )Interest Expense, net
    
    $
    12,067
    
    
    $
    19,348
    
    
    $
    39,534Capitalized Interest Relieved to
Home Buildings Costs and Expenses
    
    $
    169,887
    
    
    $
    131,937
    
    
    $
    89,144
 Statements of Consolidated Cash Flows  Supplemental Disclosures
  66




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##### Table of Contents



For the Years Ended March 31,2006
    
    
    2005
    
    
    2004Cash Paid for Interest
    
    $
    656,525
    
    
    $
    460,012
    
    
    $
    362,167Net Cash Paid for Taxes
    
    $
    772,153
    
    
    $
    366,411
    
    
    $
    356,853
  Sales Proceeds
    
    $
    318,717Assets Sold
    
    
    (632,956
    )Liabilities Assumed by Buyer
    
    
    118,951Long-term Debt Assumed by Buyer
    
    
    153,434Cumulative Foreign Currency Gain
    
    
    48,354Pre-tax Gain on Sale
    
    
    6,500Income Tax Expense
    
    
    (15,660
    )Net Loss on Sale
    
    $
    (9,160
    )
  Cash and Cash Equivalents
    
    $
    18,000Residential Mortgage Loans Held for Sale
    
    
    2,443,428Other Assets
    
    
    (36,100
    )Accounts Payable
    
    
    20,910Financial Services Debt
    
    
    (2,459,498
    )Cumulative Effect of a Change in Accounting Principle
    
    $
    (13,260
    )
  Recent Accounting Pronouncements
  67




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##### Table of Contents



Reclassifications
  (B) PROPERTY AND EQUIPMENT
  March 31,2006
    
    
    2005Land, Buildings and Improvements
    
    $
    120,279
    
    
    $
    87,432Machinery, Equipment and Other
    
    
    242,519
    
    
    
    225,261362,798
    
    
    
    312,693Accumulated
Depreciation and Amortization
    
    
    (180,041
    )
    
    
    (171,763
    )$
    182,757
    
    
    $
    140,930
  (C) GOODWILL
  Home
    
    
    Financial
    
    
    ConstructionBuilding
    
    
    Services
    
    
    Services
    
    
    Other
    
    
    TotalBalance as of March 31, 2004
    
    $
    123,011
    
    
    $
    16,602
    
    
    $
    1,007
    
    
    $
    78,042
    
    
    $
    218,662Goodwill Acquired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,402
    
    
    
    4,402Goodwill Disposed
    
    
    
    
    
    
    (4,865
    )
    
    
    
    
    
    
    
    
    
    
    (4,865
    )Other
    
    
    (1,510
    )
    
    
    
    
    
    
    
    
    
    
    (152
    )
    
    
    (1,662
    )Balance as of March 31, 2005
    
    
    121,501
    
    
    
    11,737
    
    
    
    1,007
    
    
    
    82,292
    
    
    
    216,537Goodwill Acquired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,198
    
    
    
    2,198Balance as of March 31, 2006
    
    $
    121,501
    
    
    $
    11,737
    
    
    $
    1,007
    
    
    $
    84,490
    
    
    $
    218,735
  68




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##### Table of Contents



(D) INDEBTEDNESS
  March 31,2006
    
    
    2005Weighted-
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    AverageInterest
    
    
    
    
    
    
    InterestRate
    
    
    
    
    
    
    RateShort-term Debt:Centex
    
    $
    127,166
    
    
    
    5.09
    %
    
    $
    7,870
    
    
    
    1.72
    %Financial ServicesFinancial Institutions
    
    
    324,986
    
    
    
    5.00
    %
    
    
    190,779
    
    
    
    3.12
    %Harwood Street Funding I, LLC Term Notes
    
    
    
    
    
    
    
    
    
    
    250,000
    
    
    
    2.90
    %Harwood Street Funding I, LLC Secured
Liquidity Notes
    
    
    1,692,229
    
    
    
    4.84
    %
    
    
    1,195,076
    
    
    
    2.89
    %Consolidated Short-term Debt
    
    
    2,144,381
    
    
    
    
    
    
    
    1,643,725Long-term Debt:CentexMedium-term Note Programs, due through 2008
    
    
    358,000
    
    
    
    6.01
    %
    
    
    398,000
    
    
    
    4.59
    %Senior Notes, due through 2016
    
    
    3,208,762
    
    
    
    5.79
    %
    
    
    2,458,547
    
    
    
    6.32
    %Other Indebtedness, due through 2015
    
    
    188,346
    
    
    
    9.17
    %
    
    
    43,670
    
    
    
    5.57
    %Subordinated Debt:Subordinated Debentures, due in 2007
    
    
    99,919
    
    
    
    8.75
    %
    
    
    99,838
    
    
    
    8.75
    %Subordinated Debentures, due in 2006
    
    
    
    
    
    
    
    
    
    
    99,992
    
    
    
    7.38
    %3,855,027
    
    
    
    
    
    
    
    3,100,047Financial ServicesHarwood Street Funding I, LLC Variable-Rate
Subordinated Extendable Certificates,
due through 2010
    
    
    60,000
    
    
    
    6.83
    %
    
    
    60,000
    
    
    
    4.87
    %Consolidated Long-term Debt
    
    
    3,915,027
    
    
    
    
    
    
    
    3,160,047Total Debt
    
    $
    6,059,408
    
    
    
    
    
    
    $
    4,803,772
  69




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##### Table of Contents



For the Years Ended March 31,2006
    
    2005
    
    2004Short-term DebtCentex
    
    
    4.23
    %
    
    
    2.05
    %
    
    
    1.26
    %Financial Services
    
    
    4.04
    %
    
    
    1.95
    %
    
    
    1.25
    %Long-term Debt:CentexMedium-term
Note Programs
(1)
    
    
    5.54
    %
    
    
    5.41
    %
    
    
    5.30
    %Senior Notes
    
    
    5.90
    %
    
    
    6.47
    %
    
    
    6.87
    %Other Indebtedness
    
    
    5.44
    %
    
    
    5.22
    %
    
    
    3.62
    %Subordinated Debentures
    
    
    8.56
    %
    
    
    8.06
    %
    
    
    8.06
    %Financial ServicesHarwood Street Funding I, LLC Variable-Rate Subordinated
Extendable Certificates
    
    
    5.85
    %
    
    
    3.58
    %
    
    
    2.56
    %
 
 (1)
    
    Interest rates include the effects of an interest rate swap agreement.  FinancialCentex
    
    
    Services
    
    
    Total2007
    
    $
    292,465
    
    
    $
    
    
    
    $
    292,4652008
    
    
    629,673
    
    
    
    
    
    
    
    629,6732009
    
    
    208,650
    
    
    
    
    
    
    
    208,6502010
    
    
    225,073
    
    
    
    60,000
    
    
    
    285,0732011
    
    
    700,066
    
    
    
    
    
    
    
    700,066Thereafter
    
    
    1,799,100
    
    
    
    
    
    
    
    1,799,100$
    3,855,027
    
    
    $
    60,000
    
    
    $
    3,915,027
  70




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##### Table of Contents



Credit Facilities
  Existing Credit
    
    
    AvailableFacilities
    
    
    CapacityCentexMulti-Bank Revolving Credit FacilityRevolving Credit
    
    $
    1,000,000
    
    
    $
    875,000Letters of Credit
    
    
    500,000
    
    
    
    111,6801,500,000
    
    
    
    986,680

(1) (2)Unsecured Credit Facilities
    
    
    350,000
    
    
    
    350,000

(3)1,850,000
    
    
    
    1,336,680Financial ServicesSecured Credit Facilities
    
    
    940,000
    
    
    
    560,023

(4)Harwood Street Funding I, LLC Facility
    
    
    3,000,000
    
    
    
    1,244,0003,940,000
    
    
    
    1,804,023Discontinued OperationsMortgage Servicer Advance Facility
    
    
    100,000
    
    
    
    17,653

(5)Harwood Street Funding II, LLC Facility
    
    
    4,000,000
    
    
    
    2,917,134

(6)4,100,000
    
    
    
    2,934,787$
    9,890,000
    
    
    $
    6,075,490

(7)
 
 (1)
    
    This is an unsecured, committed, multi-bank revolving credit facility, maturing in July
2010, which serves as backup for Centex Corporations $900 million commercial paper program
and provides $500 million of letter of credit capacity. As of March 31, 2006, the $900
million commercial paper program had $125 million outstanding which has been deducted from the
available capacity under the back-up facility. There have been no direct borrowings under this
revolving credit facility since its inception.(2)
    
    In conjunction with the issuance of surety bonds in support of our Construction Services
activity, Centex Corporation has agreed to provide letters of credit of up to $100 million if
Centex Corporations public debt ratings fall below investment grade. In support of this
ratings trigger, we maintain a minimum of $100 million in unused committed credit at all
times.(3)
    
    Centex Corporation maintains $350 million unsecured, uncommitted credit facilities.(4)
    
    CTX Mortgage Company, LLC and Centex Home Equity, LLC and its related companies share in a
$300 million secured, committed credit facility to finance mortgage inventory. The available
capacity reflects $55 million of outstanding debt for Centex Home Equity, LLC and its related
companies which is included in liabilities from discontinued operations in the Consolidated
Balance Sheets. CTX Mortgage Company, LLC also maintains $640 million of secured, committed
mortgage warehouse facilities to finance mortgages.(5)
    
    Under this facility, Centex Home Equity, LLC and its related companies are permitted to
securitize their mortgage servicer advances in an amount up to $100 million with a final
maturity of May 2011. This facility has no recourse to Centex Corporation.(6)
    
    As part of the planned sale of Home Equity, on the closing date of the sale, the purchaser
will purchase all of the mortgage loans held by Harwood Street Funding II, LLC (HSF-II).
The change in control of Home Equity will terminate HSF-IIs commitment to purchase new loans
from Home Equity and permit the orderly liquidation of HSF-II.(7)
    
    The amount of available capacity for continuing operations consists of $2,790.7 million of
committed capacity and $350.0 million of uncommitted capacity as of March 31, 2006. Although
we believe that the uncommitted capacity is currently available, there can be no assurance
that the lenders under these facilities would elect to make advances if and when requested to
do so. CTX Mortgage Company, LLC and Harwood Street Funding I, LLC
  71




---



##### Table of Contents



72




---



##### Table of Contents



(E)
    
    MERGER OF 3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P. AND
SUBSIDIARIES
   (F)
    
    COMMITMENTS AND CONTINGENCIES
   As of March 31,2006
    
    
    2005Number of Joint Ventures
    
    
    52
    
    
    
    41Investment in Joint Ventures
    
    $
    307,779
    
    
    $
    160,871Total Joint Venture Debt
    
    $
    1,053,201
    
    
    $
    426,335Centexs Share of Joint Venture Debt:Based on Centexs Ownership Percentage
    
    $
    388,428
    
    
    $
    160,061Based on Limited Debt Recourse Provisions:Limited
Maintenance Guarantee
(1)
(2)
    
    $
    228,603
    
    
    $
    132,078Repayment
Guarantee
(2)
(3)
    
    
    8,136
    
    
    
    7,751Total Limited Debt Recourse
    
    $
    236,739
    
    
    $
    139,829
 
 (1)
    
    The Company has guaranteed that certain of the joint ventures will maintain a
specified loan to value ratio. The Company could be requested to contribute additional
capital to these joint ventures to the extent the loan to value ratio falls below the
specified ratio. The Company has not been requested to perform under a limited
maintenance guarantee, and it does not anticipate that any capital contributions will be
made in future periods under these guarantees.(2)
    
    These amounts represent the Companys maximum exposure based on the joint ventures
debt at each respective date.(3)
    
    The Company has guaranteed repayment of a portion of certain joint venture debt
limited to its ownership percentage of the joint venture or a percentage thereof. 73




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##### Table of Contents



Letters of Credit
    
    
    Surety BondsHome Building
    
    $
    258.5
    
    
    $
    1,342.0

(1)Financial Services
    
    
    0.7
    
    
    
    9.9Construction Services
    
    
    37.3
    
    
    
    4,391.2

(2)Other
    
    
    92.2
    
    
    
    0.1Discontinued Operations
    
    
    
    
    
    
    7.5$
    388.7
    
    
    $
    5,750.7
 
 (1)
    
    The Company estimates that $731.4 million of work remains to be performed on these
projects.(2)
    
    The Company estimates that $2,256.4 million of work remains to be performed on
these projects.   74




---



##### Table of Contents



As of March 31,2006
    
    
    2005Balance at Beginning of Period
    
    $
    34,961
    
    
    $
    16,683Warranties Issued
    
    
    53,036
    
    
    
    49,348Settlements Made
    
    
    (40,173
    )
    
    
    (31,070
    )Change in Liability of
Pre-Existing Warranties,
Including Expirations
    
    
    (625
    )
    
    
    Balance at End of Period
    
    $
    47,199
    
    
    $
    34,961
  As of March 31,2006
    
    
    2005Balance at Beginning of Period
    
    $
    18,803
    
    
    $
    25,045Provisions for Losses
    
    
    2,618
    
    
    
    557Settlements
    
    
    (2,921
    )
    
    
    (6,799
    )Balance at End of Period
    
    $
    18,500
    
    
    $
    18,803
     75




---



##### Table of Contents



(G)
    
    LAND HELD UNDER OPTION AGREEMENTS NOT OWNED AND OTHER LAND DEPOSITS
   As of March 31,
    
    
    As of March 31,2006
    
    
    2005Cash Deposits included in:Land Held for Development and Sale
    
    $
    246.2
    
    
    $
    141.9Land Held Under Option Agreements Not Owned
    
    
    89.1
    
    
    
    41.5Total Cash Deposits in Inventory
    
    
    335.3
    
    
    
    183.4Letters of Credit
    
    
    29.0
    
    
    
    40.4Total Invested through Deposits or Secured with Letters of Credit
    
    $
    364.3
    
    
    $
    223.8Total Purchase Price of Land Option Agreements
    
    $
    9,930.2
    
    
    $
    7,340.5
  (H)
    
    COMPREHENSIVE INCOME
  For the Years Ended March 31,2006
    
    
    2005
    
    
    2004Net Earnings
    
    $
    1,289,313
    
    
    $
    1,011,364
    
    
    $
    827,686Other Comprehensive Income (Loss), net of Tax:Unrealized Gain on Hedging Instruments
    
    
    263
    
    
    
    24,615
    
    
    
    5,706Foreign Currency Translation Adjustments
    
    
    (14,406
    )
    
    
    8,969
    
    
    
    36,864Foreign Currency Gain Reclassified to Net Earnings
    
    
    (48,354
    )
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    964Comprehensive Income
    
    $
    1,226,816
    
    
    $
    1,044,948
    
    
    $
    871,220
  76




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##### Table of Contents



As of March 31, 2006Before Tax
    
    
    
    
    
    
    Net-of-TaxAmount
    
    
    Tax Expense
    
    
    AmountUnrealized Gain on Hedging Instruments
    
    $
    14,060
    
    
    $
    (5,358
    )
    
    $
    8,702Foreign Currency Translation Adjustments
    
    
    (72
    )
    
    
    
    
    
    
    (72
    )Accumulated Other Comprehensive Income
    
    $
    13,988
    
    
    $
    (5,358
    )
    
    $
    8,630
 (I)
    
    BUSINESS SEGMENTS
    Home Building
   Financial Services
  77




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##### Table of Contents



Construction Services
  Other
   For the Years Ended March 31,2006
    
    
    2005
    
    
    2004Operating Loss from Home Services Operations
    
    $
    (7.5
    )
    
    $
    (15.8
    )
    
    $
    (2.3
    )Operating Earnings from Investment Real Estate Operations
    
    
    1.7
    
    
    
    21.4
    
    
    
    44.8Corporate General and Administrative Expense
    
    
    (100.1
    )
    
    
    (82.9
    )
    
    
    (105.6
    )Interest Expense
    
    
    (12.1
    )
    
    
    (19.3
    )
    
    
    (39.5
    )$
    (118.0
    )
    
    $
    (96.6
    )
    
    $
    (102.6
    )
 For the Year Ended March 31, 2006(Dollars in millions)Home
    
    
    Financial
    
    
    Construction
    
    
    
    
    
    
    IntersegmentBuilding
    
    
    Services
    
    
    Services
    
    
    Other
    
    
    Eliminations
    
    
    TotalRevenues
    
    $
    12,272.2
    
    
    $
    462.3
    
    
    $
    1,606.6
    
    
    $
    117.4
    
    
    $
    (58.8
    )
    
    $
    14,399.7Cost of Sales
    
    
    (8,755.9
    )
    
    
    (65.9
    )
    
    
    (1,498.1
    )
    
    
    (58.9
    )
    
    
    55.2
    
    
    
    (10,323.6
    )Selling, General and
Administrative Expenses
    
    
    (1,696.5
    )
    
    
    (311.9
    )
    
    
    (82.2
    )
    
    
    (176.5
    )
    
    
    
    
    
    
    (2,267.1
    )Earnings from
Unconsolidated Entities
    
    
    86.0
    
    
    
    
    
    
    
    0.5
    
    
    
    
    
    
    
    
    
    
    
    86.5Earnings (Loss) from
Continuing Operations
Before Income Tax
    
    $
    1,905.8
    
    
    $
    84.5
    
    
    $
    26.8
    
    
    $
    (118.0
    )
    
    $
    (3.6
    )
    
    $
    1,895.5Segment Assets
    
    $
    10,818.2
    
    
    $
    2,327.3
    
    
    $
    392.6
    
    
    $
    316.7
    
    
    
    
    
    
    $
    13,854.8Capital Expenditures
    
    $
    91.3
    
    
    $
    8.1
    
    
    $
    1.0
    
    
    $
    4.0
    
    
    
    
    
    
    $
    104.4Depreciation and
Amortization
    
    $
    32.4
    
    
    $
    7.4
    
    
    $
    1.9
    
    
    $
    13.8
    
    
    
    
    
    
    $
    55.5
 78




---



##### Table of Contents



For the Year Ended March 31, 2005(Dollars in millions)Home
    
    
    Financial
    
    
    ConstructionBuilding
    
    
    Services
    
    
    Services
    
    
    Other
    
    
    TotalRevenues
    
    $
    9,359.7
    
    
    $
    421.7
    
    
    $
    1,738.6
    
    
    $
    152.9
    
    
    $
    11,672.9Cost of Sales
    
    
    (6,748.1
    )
    
    
    (32.2
    )
    
    
    (1,646.9
    )
    
    
    (79.2
    )
    
    
    (8,506.4
    )Selling, General and Administrative
Expenses
    
    
    (1,301.6
    )
    
    
    (293.5
    )
    
    
    (70.1
    )
    
    
    (170.3
    )
    
    
    (1,835.5
    )Earnings
from Unconsolidated Entities
    
    
    68.8
    
    
    
    
    
    
    
    1.9
    
    
    
    
    
    
    
    70.7Earnings (Loss) from Continuing
Operations Before Income Tax
    
    $
    1,378.8
    
    
    $
    96.0
    
    
    $
    23.5
    
    
    $
    (96.6
    )
    
    $
    1,401.7Segment Assets
    
    $
    7,771.3
    
    
    $
    1,951.8
    
    
    $
    340.6
    
    
    $
    768.0
    
    
    $
    10,831.7Capital Expenditures
    
    $
    32.7
    
    
    $
    8.1
    
    
    $
    1.6
    
    
    $
    4.0
    
    
    $
    46.4Depreciation and Amortization
    
    $
    26.0
    
    
    $
    10.8
    
    
    $
    1.9
    
    
    $
    12.6
    
    
    $
    51.3
  For the Year Ended March 31, 2004(Dollars in millions)Home
    
    
    Financial
    
    
    ConstructionBuilding
    
    
    Services
    
    
    Services
    
    
    Other
    
    
    TotalRevenues
    
    $
    7,519.0
    
    
    $
    521.2
    
    
    $
    1,596.3
    
    
    $
    119.7
    
    
    $
    9,756.2Cost of Sales
    
    
    (5,544.3
    )
    
    
    (21.9
    )
    
    
    (1,521.9
    )
    
    
    (37.8
    )
    
    
    (7,125.9
    )Selling, General and
Administrative
Expenses
    
    
    (1,038.8
    )
    
    
    (333.5
    )
    
    
    (60.1
    )
    
    
    (199.0
    )
    
    
    (1,631.4
    )Earnings from Unconsolidated
Entities
    
    
    30.0
    
    
    
    
    
    
    
    2.1
    
    
    
    14.5
    
    
    
    46.6Earnings (Loss) from Continuing
Operations Before Income Tax
    
    $
    965.9
    
    
    $
    165.8
    
    
    $
    16.4
    
    
    $
    (102.6
    )
    
    $
    1,045.5Segment Assets
    
    $
    5,633.4
    
    
    $
    2,014.7
    
    
    $
    341.5
    
    
    $
    455.5
    
    
    $
    8,445.1Capital Expenditures
    
    $
    33.4
    
    
    $
    10.6
    
    
    $
    2.0
    
    
    $
    4.0
    
    
    $
    50.0Depreciation and Amortization
    
    $
    24.2
    
    
    $
    12.0
    
    
    $
    1.9
    
    
    $
    6.1
    
    
    $
    44.2
  79




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##### Table of Contents



For the Years Ended March 31,2006
    
    
    2005
    
    
    2004Segment Assets
    
    $
    13,854.8
    
    
    $
    10,831.7
    
    
    $
    8,445.1Assets from Discontinued Operations
    
    
    7,510.2
    
    
    
    9,179.4
    
    
    
    7,632.2Total Consolidated Assets
    
    $
    21,365.0
    
    
    $
    20,011.1
    
    
    $
    16,077.3
 (J)
    
    INCOME TAXES
  For the Years Ended March 31,2006
    
    
    2005
    
    
    2004Current ProvisionFederal
    
    $
    622,895
    
    
    $
    493,351
    
    
    $
    277,252State
    
    
    98,949
    
    
    
    81,674
    
    
    
    43,084721,844
    
    
    
    575,025
    
    
    
    320,336Deferred Provision (Benefit)Federal
    
    
    (35,390
    )
    
    
    (48,985
    )
    
    
    (2,836
    )State
    
    
    (11,982
    )
    
    
    (23,927
    )
    
    
    24,608(47,372
    )
    
    
    (72,912
    )
    
    
    21,772Provision for Income Taxes
    
    $
    674,472
    
    
    $
    502,113
    
    
    $
    342,108
  For the Years Ended March 31,2006
    
    
    2005
    
    
    2004Earnings from Continuing Operations Before
Income Taxes and Cumulative Effect of a
Change in Accounting Principle
    
    $
    1,895,493
    
    
    $
    1,401,655
    
    
    $
    1,045,458Income Taxes at Statutory Rate
    
    $
    663,423
    
    
    $
    490,579
    
    
    $
    365,910Increases
(Decreases) in Tax Resulting from 
State Income Taxes, net
    
    
    56,025
    
    
    
    37,063
    
    
    
    40,393Qualified Production Activities Deduction
    
    
    (17,990
    )
    
    
    
    
    
    
    U.S. Government Tax Refund
    
    
    (28,101
    )
    
    
    
    
    
    
    Change in Valuation Allowance
    
    
    
    
    
    
    (39,278
    )
    
    
    (54,353
    )Other
    
    
    1,115
    
    
    
    13,749
    
    
    
    (9,842
    )Provision for Income Taxes
    
    $
    674,472
    
    
    $
    502,113
    
    
    $
    342,108Effective Tax Rate
    
    
    36
    %
    
    
    36
    %
    
    
    33
    %
 80




---



##### Table of Contents



March 31,2006
    
    
    2005Deferred Tax AssetsDeferred Compensation
    
    $
    63,542
    
    
    $
    37,118Net Operating Loss Carryforwards
    
    
    504
    
    
    
    1,289Uniform Capitalization for Tax Reporting
    
    
    162,823
    
    
    
    104,939Accrued Liabilities
    
    
    134,447
    
    
    
    147,352Partnership Reporting Differences
    
    
    19,173
    
    
    
    14,205All Other
    
    
    4,169
    
    
    
    8,155Total Deferred Tax Assets
    
    
    384,658
    
    
    
    313,058Deferred Tax LiabilitiesExcess Tax Depreciation and Amortization
    
    
    15,697
    
    
    
    19,208Interest and Real Estate Taxes Expensed as Incurred
    
    
    102,881
    
    
    
    73,994Installment Sale Reporting
    
    
    3,820
    
    
    
    6,389Percentage of Completion Reporting
    
    
    23,863
    
    
    
    21,780All Other
    
    
    4,489
    
    
    
    6,909Total Deferred Tax Liabilities
    
    
    150,750
    
    
    
    128,280Net Deferred Tax Assets
    
    $
    233,908
    
    
    $
    184,778
 (K)
    
    CAPITAL STOCK AND EMPLOYEE BENEFIT PLANS
 Stock Split
  Stockholder Rights Plan
   81




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##### Table of Contents



Stock Options
     For the Year Ended March 31, 2006Weighted-Weighted
    
    
    Average-Average
    
    
    RemainingNumber of
    
    
    Exercise
    
    
    Contractual
    
    
    AggregateShares
    
    
    Price
    
    
    Life (Years)
    
    
    Intrinsic ValueOptions Outstanding, Beginning of Year
    
    
    14,042,776
    
    
    $
    23.22Options Granted at Fair Market Value
    
    
    1,716,209
    
    
    $
    57.36Options Issued as Part of Modification
    
    
    
    
    
    $
    Options Exercised
    
    
    (3,290,472
    )
    
    $
    20.59Options Cancelled
    
    
    (107,457
    )
    
    $
    42.04Options Outstanding, End of Year
    
    
    12,361,056
    
    
    $
    28.49
    
    
    
    3.7
    
    
    $
    414,095.4Options Exercisable, End of Year
    
    
    10,620,005
    
    
    $
    24.57
    
    
    
    3.4
    
    
    $
    397,400.6Shares
Available for Future Stock Option Grants, End of Year
    
    
    4,035,310Weighted-Average Fair Value of Options
Granted During the Year
    
    $
    22.90
 82




---



##### Table of Contents



For the Years Ended March 31,2005
    
    
    2004Number
    
    
    
    
    
    
    Numberof
    
    
    Weighted-Average
    
    
    of
    
    
    Weighted-AverageShares
    
    
    Exercise Price
    
    
    Shares
    
    
    Exercise PriceOptions Outstanding,
Beginning of Year
    
    
    17,197,357
    
    
    $
    19.09
    
    
    
    16,210,186
    
    
    $
    17.66Options Granted at
Fair Market Value
    
    
    1,828,230
    
    
    $
    45.30
    
    
    
    2,855,480
    
    
    $
    35.51Options Issued as Part
of Modification
    
    
    
    
    
    $
    
    
    
    
    1,737,528
    
    
    $
    Options Exercised
    
    
    (4,952,134
    )
    
    $
    17.00
    
    
    
    (3,480,371
    )
    
    $
    16.25Options Cancelled
    
    
    (30,677
    )
    
    $
    28.17
    
    
    
    (125,466
    )
    
    $
    22.73Options Outstanding,
End of Year
    
    
    14,042,776
    
    
    $
    23.22
    
    
    
    17,197,357
    
    
    $
    19.09Options Exercisable,
End of Year
    
    
    11,121,137
    
    
    
    
    
    
    
    11,614,372Shares Available for
Future Stock
Option
Grants, End of Year
    
    
    6,365,554
    
    
    
    
    
    
    
    8,808,656Weighted-Average Fair
Value of Options
Granted During
the Year
    
    $
    17.25
    
    
    
    
    
    
    $
    12.43
   As of March 31, 2006Weighted-AverageGrant-DateNonvested Shares
    
    Shares
    
    

Fair ValueNonvested at March 31, 2005
    
    
    874,516
    
    
    $
    37.72Granted
    
    
    806,007
    
    
    
    57.66Vested
    
    
    (783,717
    )
    
    
    39.61Forfeited
    
    
    (40,996
    )
    
    
    46.99Nonvested at March 31, 2006
    
    
    855,810
    
    
    
    51.52
  83




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##### Table of Contents



For the Years Ended March 31,2006
    
    
    2005
    
    
    2004Expected Volatility
    
    
    41.8
    %
    
    
    44.2
    %
    
    
    42.5
    %Risk-Free Interest Rate
    
    
    3.8
    %
    
    
    3.7
    %
    
    
    2.1
    %Dividend Yield
    
    
    0.3
    %
    
    
    0.4
    %
    
    
    0.2
    %Expected Life (Years)
    
    
    4.7
    
    
    
    4.0
    
    
    
    4.0
  (c)Number of securities(a)
    
    
    
    
    
    
    remaining available forNumber of securities
    
    
    (b)
    
    
    future issuance underto be issued upon
    
    
    Weighted-average
    
    
    equity compensationexercise of
    
    
    exercise price of
    
    
    plans [excludingoutstanding options,
    
    
    outstanding options,
    
    
    securities reflected inPlan Category
    
    Plan
    
    
    warrants and rights
    
    
    warrants and rights
    
    
    column (a)]Equity Compensation Plans
    
    
    1987
    
    
    
    3,081,087
    
    
    $
    6.55
    
    
    
    Approved by Stockholders
    
    
    2001
    
    
    
    2,005,075
    
    
    $
    34.05
    
    
    
    668,5922003
    
    
    
    1,870,677
    
    
    $
    52.13
    
    
    
    3,366,718Equity Compensation Plans
    
    
    1998
    
    
    
    5,404,217
    
    
    $
    19.94
    
    
    
    not Approved by
Stockholders
    
    
Long Term Incentive Plan
    
    
    1,663,345
    
    
    $
    
    
    
    
    123,379Total
    
    
    
    
    
    
    14,024,401
    
    
    $
    28.49
    (1)
    
    
    4,158,689
 
 (1)
    
    Weighted-average exercise price excludes any items with an exercise price of $0.  84




---



##### Table of Contents



Employee Benefit Plans
  (L)
    
    DERIVATIVES AND HEDGING
  Cash Flow Hedges
  Fixed
    
    
    
    
    
    
    Accumulated OtherNotional Value
    
    
    Interest
    
    
    Termination
    
    
    Comprehensive(in millions)
    
    
    Rate
    
    
    Date
    
    
    Income (Loss)Home EquityInterest rate swaps
    
    $
    240.0
    
    
    
    5.1
    %
(1)
    
    Through January 2013
    
    $
    736Interest rate swaps
    
    $
    2,048.3
    
    
    
    3.7
    %
(1)
    
    Through March 2009
    
    
    12,336$
    13,072
 
 (1)
    
    Weighted average fixed interest rates.   Fair Value Hedges
  85




---



##### Table of Contents



Other Derivatives
    (M)
    
    RELATED PARTY TRANSACTIONS
    (N)
    
    FAIR VALUE OF FINANCIAL INSTRUMENTS
  86




---



##### Table of Contents



March 31,2006
    
    
    2005Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairValue
    
    
    Value
    
    
    Value
    
    
    ValueFinancial AssetsResidential Mortgage Loans Held
for Sale
    
    $
    2,129,538
    
    
    $
    2,132,286
    (1)
    
    $
    1,775,324
    
    
    $
    1,775,946

(1)Financial LiabilitiesCentex Long-term Debt
    
    $
    3,855,027
    
    
    $
    3,847,383
    (2)
    
    $
    3,100,047
    
    
    $
    3,199,863

(2)Financial Services Long-term Debt
    
    $
    60,000
    
    
    $
    60,093
    (2)
    
    $
    60,000
    
    
    $
    60,000

(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. (O)
    
    OFF-BALANCE SHEET OBLIGATIONS
  (P)
    
    DISCONTINUED OPERATIONS
     87




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##### Table of Contents



As of March 31,2006(1)
    
    

2005
(2)AssetsCash and Cash Equivalents
    
    $
    787
    
    
    $
    650Restricted Cash
    
    
    277,114
    
    
    
    289,554Loans Held for Investment
    
    
    6,867,658
    
    
    
    7,914,426Receivables
    
    
    153,517
    
    
    
    159,937Inventories
    
    
    
    
    
    
    633,185Property and Equipment, net
    
    
    17,740
    
    
    
    21,375Deferred Income Taxes
    
    
    74,156
    
    
    
    (7,043
    )Goodwill
    
    
    
    
    
    
    36,626Mortgage Securitization Residual Interest
    
    
    56,831
    
    
    
    69,636Deferred Charges and Other, net
    
    
    62,359
    
    
    
    61,030$
    7,510,162
    
    
    $
    9,179,376LiabilitiesAccounts Payable and Accrued Liabilities
    
    $
    70,434
    
    
    $
    247,611Notes Payable
    
    
    1,095,905
    
    
    
    832,021Long-term Debt
    
    
    5,835,454
    
    
    
    7,332,316$
    7,001,793
    
    
    $
    8,411,948
 For the Years Ended March 31,2006(2)
    
    
    2005 (2)
    
    
    2004 (3)Revenues
    
    $
    1,065,441
    
    
    $
    1,186,810
    
    
    $
    1,069,145Costs and Expenses
    
    
    (926,207
    )
    
    
    (1,014,778
    )
    
    
    (960,965
    )Earnings from Unconsolidated Entities
    
    
    675
    
    
    
    82
    
    
    
    45,342Earnings Before Income Taxes
    
    
    139,909
    
    
    
    172,114
    
    
    
    153,522Provision for Income Taxes
    
    
    (71,617
    )
    
    
    (60,292
    )
    
    
    (15,926
    )$
    68,292
    
    
    $
    111,822
    
    
    $
    137,596
 
 (1)
    
    Includes Home Equity only.(2)
    
    Includes Home Equity and International Home Building.(3)
    
    Includes Home Equity, International Home Building, Construction Products
and Manufactured Homes. Significant Accounting Policies Related to Discontinued Operations
 Residential Mortgage Loans Held for Investment
  March 31,2006
    
    
    2005Residential Mortgage Loans Held for Investment
    
    $
    6,967,034
    
    
    $
    7,999,728Allowance for Losses on Residential Mortgage Loans
Held for Investment
    
    
    (99,376
    )
    
    
    (85,302
    )Residential Mortgage Loans Held for Investment,
net of Allowance for Losses
    
    $
    6,867,658
    
    
    $
    7,914,426
  88




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##### Table of Contents



For the Years Ended March 31,2006
    
    
    2005
    
    
    2004Balance at Beginning of Period
    
    $
    85,302
    
    
    $
    56,358
    
    
    $
    28,384Provision for Losses
    
    
    94,319
    
    
    
    98,801
    
    
    
    79,503Losses Sustained, net of Recoveries of $1,499,
$1,226 and $204
    
    
    (80,245
    )
    
    
    (69,857
    )
    
    
    (51,529
    )Balance at End of Period
    
    $
    99,376
    
    
    $
    85,302
    
    
    $
    56,358Allowance as a Percentage of Gross Loans Held
for Investment
    
    
    1.4
    %
    
    
    1.1
    %
    
    
    0.9
    %Allowance as a Percentage of 90+ Days
Contractual Delinquency
    
    
    41.0
    %
    
    
    44.2
    %
    
    
    36.4
    %90+ Days Contractual Delinquency (based on
months)Total Dollars Delinquent
    
    $
    242,241
    
    
    $
    192,835
    
    
    $
    154,868% Delinquent
    
    
    3.5
    %
    
    
    2.4
    %
    
    
    2.4
    %
  Mortgage Securitization Residual Interest
   For the Years Ended March 31,2006
    
    
    2005
    
    
    2004Beginning Balance
    
    $
    69,636
    
    
    $
    87,796
    
    
    $
    106,373Cash Received
    
    
    (14,498
    )
    
    
    (8,433
    )
    
    
    (11,256
    )Accretion and Other, Net
    
    
    1,693
    
    
    
    (9,727
    )
    
    
    (7,321
    )Ending Balance
    
    $
    56,831
    
    
    $
    69,636
    
    
    $
    87,796
   89




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##### Table of Contents





(Q)
    
    SUBSEQUENT EVENTS (UNAUDITED)




90




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Managements Report on Internal Control Over Financial Reporting
   91




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF CENTEX CORPORATION AND SUBSIDIARIES
       
   92




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Report of Independent Registered Public Accounting Firm
 TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF CENTEX CORPORATION AND SUBSIDIARIES:
       
   93




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Quarterly Results (Unaudited) (1)   (Dollars in thousands, except per share data)
 For the Quarters Ended 2006 and 2005Q1
    
    
    Q2
    
    
    Q3
    
    
    Q42006Revenues
    
    $
    2,899,910
    
    
    $
    3,424,380
    
    
    $
    3,525,145
    
    
    $
    4,550,234Earnings from Continuing Operations
    
    $
    210,839
    
    
    $
    321,199
    
    
    $
    313,212
    
    
    $
    375,771Earnings from Discontinued Operations,
net of Taxes
    
    
    22,831
    
    
    
    13,331
    
    
    
    16,132
    
    
    
    15,998Net Earnings
    
    $
    233,670
    
    
    $
    334,530
    
    
    $
    329,344
    
    
    $
    391,769Earnings from Continuing Operations
Per ShareBasic
    
    $
    1.64
    
    
    $
    2.50
    
    
    $
    2.47
    
    
    $
    3.04Diluted
    
    $
    1.57
    
    
    $
    2.39
    
    
    $
    2.37
    
    
    $
    2.92Net Earnings Per ShareBasic
    
    $
    1.82
    
    
    $
    2.60
    
    
    $
    2.60
    
    
    $
    3.17Diluted
    
    $
    1.74
    
    
    $
    2.49
    
    
    $
    2.49
    
    
    $
    3.04Average Shares OutstandingBasic
    
    
    128,672,028
    
    
    
    128,565,026
    
    
    
    126,572,663
    
    
    
    123,622,796Diluted
    
    
    134,584,442
    
    
    
    134,526,936
    
    
    
    132,077,763
    
    
    
    128,732,7052005Revenues
    
    $
    2,501,827
    
    
    $
    2,713,194
    
    
    $
    2,824,351
    
    
    $
    3,633,513Earnings from Continuing Operations
    
    $
    155,812
    
    
    $
    183,703
    
    
    $
    225,952
    
    
    $
    334,075Earnings from Discontinued Operations,
net of Taxes
    
    
    21,421
    
    
    
    26,909
    
    
    
    27,819
    
    
    
    35,673Net Earnings
    
    $
    177,233
    
    
    $
    210,612
    
    
    $
    253,771
    
    
    $
    369,748Earnings from Continuing Operations
Per ShareBasic
    
    $
    1.26
    
    
    $
    1.48
    
    
    $
    1.80
    
    
    $
    2.61Diluted
    
    $
    1.19
    
    
    $
    1.40
    
    
    $
    1.69
    
    
    $
    2.49Net Earnings Per ShareBasic
    
    $
    1.43
    
    
    $
    1.70
    
    
    $
    2.02
    
    
    $
    2.89Diluted
    
    $
    1.35
    
    
    $
    1.61
    
    
    $
    1.91
    
    
    $
    2.75Average Shares OutstandingBasic
    
    
    123,573,221
    
    
    
    124,036,791
    
    
    
    125,593,379
    
    
    
    127,739,654Diluted
    
    
    130,926,818
    
    
    
    130,981,144
    
    
    
    132,547,190
    
    
    
    134,248,349
 
 (1)
    
    The quarterly results presented in this table for the periods covered by the financial
statements included in this Report and all prior periods have been adjusted to reflect our
sub-prime home equity lending operations and international homebuilding operations (sold in
September 2005) as discontinued operations. 94




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ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
   
 ITEM 9B.
    
    OTHER INFORMATION
  
 PART III
 
 ITEM 10.
    
    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
  Item
    
    Caption in the 2006 Proxy Statement10
    
    Election of Directors and Related Matters10
    
    Other Matters  Section 16(a) Beneficial Ownership Reporting Compliance11
    
    Executive Compensation12
    
    Stock Ownership12
    
    Executive Compensation  Equity Compensation Plans13
    
    Certain Transactions
  95




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ITEM 11. EXECUTIVE COMPENSATION
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  
 PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
  1.
    
    Financial StatementsThe consolidated balance sheets of Centex Corporation and subsidiaries as of March
31, 2006 and 2005, and the related consolidated statements of earnings,
stockholders equity and cash flows for each of the three years in the period ended
March 31, 2006, together with the accompanying Notes to Consolidated Financial
Statements and the Reports of Independent Registered Public Accounting Firm of this
Report.2.
    
    SchedulesSchedules 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 15.3.
    
    ExhibitsThe information on exhibits required by this Item 15 is set forth in the Index to
Exhibits of this Report.
 96




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##### Table of Contents



INDEX TO EXHIBITS
 Exhibit
    
    
    
    Filed Herewith orNumber
    
    Exhibit
    
    Incorporated by Reference3.1
    
    Restated Articles of Incorporation of
Centex Corporation (Centex), as amended
    
    Exhibit 3.1 to Centexs
Annual Report on Form
10-K for the fiscal year
ended March 31, 20043.2
    
    Amended and Restated By-laws of Centex
dated October 11, 2005
    
    Exhibit 3.1 to Centexs
Current Report on Form
8-K dated October 7,
20054.1
    
    Specimen Centex common stock certificate
(with Rights Agreement legend)
    
    Exhibit 4.1 to Centexs
Annual Report on Form
10-K for the fiscal year
ended March 31, 20044.2
    
    Rights Agreement, dated as of October 2,
1996, between Centex and ChaseMellon
Shareholder Services, L.L.C., as rights
agent
    
    Exhibit 4 to Centexs
Registration Statement
on Form 8-A (File No.
1-6776) filed on October
8, 1996 (the 1996 Form
8-A)4.3
    
    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 to the 1996 Form
8-A, filed on February
22, 19994.4
    
    Amendment No. 2 to Rights Agreement, dated
as of April 29, 2002, between Centex and
Mellon Investor Services L.L.C. (f/k/a
ChaseMellon Shareholder Services, L.L.C.),
as rights agent
    
    Exhibit 4.3 to Amendment
No. 2 to the 1996 Form
8-A, filed on May 2,
20024.5
    
    Indenture, dated October 1, 1998, between
Centex and JPMorgan Chase Bank, N.A.
(formerly Chase Bank of Texas, National
Association)
    
    Exhibit 4.1 to Centexs
Current Report on Form
8-K dated October 21,
19984.6
    
    Indenture, dated March 12, 1987, between
Centex and JPMorgan Chase Bank, N.A.
(formerly Texas Commerce Bank National
Association)
    
    Exhibit 4.5 to Amendment
No. 1 to Centexs
Registration Statement
on Form S-3 (File No.
333-72893), filed on May
14, 1999
 97




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]

Exhibit
    
    
    
    Filed Herewith orNumber
    
    Exhibit
    
    Incorporated by Reference4.7
    
    Any instrument with respect to long-term
debt, where the securities authorized
thereunder do not exceed 10% of the total
assets of Centex and its subsidiaries, has
not been filed; these instruments relate to
(a) long-term senior and subordinated debt
of Centex issued pursuant to supplements to
the indentures filed as exhibits 4.5 and
4.6, which supplements have also been filed
with the SEC as exhibits to various Centex
registration statements or to reports
incorporated by reference in such
registration statements, (b) long-term debt
issued pursuant to pooling and servicing
agreements or similar agreements in
connection with certain asset
securitizations involving certain
subsidiaries of Centex, which agreements
have been filed with the SEC as exhibits to
various registration statements of CHEC
Funding, LLC or to reports incorporated by
reference in such registration statements,
(c) long-term debt issued pursuant to
indentures or other agreements in
connection with certain asset
securitizations involving certain
subsidiaries of Centex in private
transactions and (d) other long-term debt
of Centex; Centex agrees to furnish a copy
of such instruments to the Securities and
Exchange Commission upon request10.1
    
    Centex Corporation Amended and Restated
1987 Stock Option Plan*
    
    Filed herewith10.2
    
    Tenth Amended and Restated 1998 Centex
Corporation Employee Non-Qualified Stock
Option Plan (1998 Stock Option Plan)*
    
    Filed herewith10.2a
    
    Form of stock option agreement for 1998
Stock Option Plan*
    
    Exhibit 10.2a to
Centexs Annual Report
on Form 10-K for the
fiscal year ended March
31, 200510.3
    
    Amended and Restated Centex Corporation
2001 Stock Plan (2001 Stock Plan)*
    
    Filed herewith10.3a
    
    Form of stock option agreement for 2001
Stock Plan*
    
    Exhibit 10.1 to Centexs
Current Report on Form
8-K dated May 16, 200610.3b
    
    Form of restricted stock agreement for 2001
Stock Plan*
    
    Exhibit 10.3b to
Centexs Annual Report
on Form 10-K for the
fiscal year ended March
31, 200410.4
    
    Amended and Restated Centex Corporation
Long Term Incentive Plan (LTIP)*
    
    Filed herewith10.4a
    
    Form of award agreement for LTIP*
    
    Exhibit 10.3 to Centexs
Current Report on Form
8-K dated May 16, 200610.5
    
    Centex Corporation 2003 Annual Incentive
Compensation Plan
    
    Exhibit 10.13 to
Centexs Quarterly
Report on Form 10-Q for
the quarter ended June
30, 200310.5a
    
    Form of award agreement for incentive
compensation*
    
    Exhibit 10.5 to Centexs
Current Report on Form
8-K dated May 16, 200610.6
    
    Amended and Restated Centex Corporation
2003 Equity Incentive Plan (2003 Equity
Incentive Plan)*
    
    Filed herewith
 98




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##### Table of Contents



Exhibit
    
    
    
    Filed Herewith orNumber
    
    Exhibit
    
    Incorporated by Reference10.6a
    
    Form of stock option agreement for 2003
Equity Incentive Plan*
    
    Filed herewith10.6b
    
    Form of stock unit agreement for 2003
Equity Incentive Plan*
    
    Filed herewith10.6c
    
    Form of restricted stock agreement for 2003
Equity Incentive Plan*
    
    Exhibit 10.2 to Centexs
Current Report on Form
8-K dated May 16, 200610.7
    
    Amended and Restated Supplemental Executive
Retirement Plan of Centex Corporation*
    
    Exhibit 10.8 to Centexs
Annual Report on Form
10-K for the fiscal year
ended March 31, 200310.8
    
    Centex Corporation Deferred
Compensation Plan*
    
    Exhibit 4 to Centexs
Registration Statement
on Form S-8 (File No.
333-37956) filed on May
26, 200010.9
    
    Amended and Restated Centex Corporation
Executive Deferred Compensation Plan
(Executive Deferred CompensationPlan)*
    
    Filed herewith10.9a
    
    Form of deferred compensation agreement for
Executive Deferred Compensation Plan*
    
    Exhibit 10.4 to Centexs
Current Report on Form
8-K dated May 16, 200610.10
    
    Centex Corporation Salary Continuation Plan*
    
    Exhibit 10.10 to
Centexs Annual Report
on Form 10-K for the
fiscal year ended March
31, 200410.11
    
    Centex Comprehensive Medical Plan*
    
    Exhibit 10.11 to
Centexs Annual Report
on Form 10-K for the
fiscal year ended March
31, 200510.12
    
    Consulting Agreement, dated as of March 31,
2002, between Centex and David W. Quinn*
    
    Exhibit 10.11 to
Centexs Annual Report
on Form 10-K for the
fiscal year ended March
31, 200410.13
    
    Termination Agreement, dated as of March
31, 2004, between Centex and David W.
Quinn*
    
    Exhibit 10.12 to
Centexs Annual Report
on Form 10-K for the
fiscal year ended March
31, 200410.14
    
    Agreement, dated as of February 23, 2006,
between Centex and Leldon E. Echols*
    
    Exhibit 10.1 to Centexs
Current Report on Form
8-K dated February 24,
200610.15
    
    Distribution Agreement between Centex,
Cavco Industries L.L.C. and Cavco
Industries, Inc.
    
    Exhibit 10.15 to
Centexs Quarterly
Report on Form 10-Q for
the quarter ended June
30, 200310.16
    
    Amendment No. 1 to Distribution Agreement
between Centex, Cavco Industries L.L.C. and
Cavco Industries, Inc.
    
    Exhibit 10.19 to
Centexs Quarterly
Report on Form 10-Q for
the quarter ended June
30, 200310.17
    
    Administrative Services Agreement between
Centex Service Company and Cavco
Industries, Inc.
    
    Exhibit 10.16 to
Centexs Quarterly
Report on Form 10-Q for
the quarter ended June
30, 200310.18
    
    Tax Sharing Agreement between Centex and
affiliates and Cavco Industries, Inc.
    
    Exhibit 10.17 to
Centexs Quarterly
Report on Form 10-Q for
the quarter ended June
30, 200310.19
    
    Agreement to Assign Trademark Rights and
Limited Consent to Use Centex Trademarks
between Centex and Cavco Industries, Inc.
    
    Exhibit 10.18 to
Centexs Quarterly
Report on Form 10-Q for
the quarter ended June
30, 200310.20
    
    Amended and Restated Distribution
Agreement, dated as of November 4, 2003,
between Centex and Centex Construction
Products, Inc.
    
    Exhibit 99.1 to
Amendment No. 3 to
Centexs Schedule 13D
filed on November 5,
200310.21
    
    Amended and Restated Agreement and Plan of
Merger, dated as of November 4, 2003, among
Centex, ARG Merger Corporation and Centex
Construction Products, Inc.
    
    Exhibit 99.2 to
Amendment No. 3 to
Centexs Schedule 13D
filed on November 5,
2003
 99




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Exhibit
    
    
    
    Filed Herewith orNumber
    
    Exhibit
    
    Incorporated by Reference10.22
    
    Credit Agreement, dated
July 1, 2005
among Centex, Bank of America, N.A., as
Administrative Agent, and the lenders named
therein
    
    Exhibit 10.1 to Centexs
Current Report on Form 8-K dated July 1, 200510.23
    
    Securities Purchase Agreement,
dated as of March 30, 2006, among Centex Home Equity Company,
LLC, Centex Financial Services, LLC and FIF HE Holdings, LLC
    
    Exhibit 10.1 to Centexs
Current Report on Form
8-K dated April 4, 200610.24
    
    Outside Director Compensation Plan*
    
    Exhibit 10.6 to Centexs
Current Report on Form
8-K dated May 16, 200610.25
    
    Form of Director Indemnification Agreement*
    
    Exhibit 10.1 to Centexs
Current Report on Form
8-K dated February 14,
200610.26
    
    Form of Change of Control Agreement*
    
    Exhibit 10.2 to Centexs
Current Report on Form
8-K dated February 14,
200612.1
    
    Computation of Ratio of Earnings to Fixed
Charges
    
    Filed herewith21
    
    List of Subsidiaries of Centex
    
    Filed herewith23
    
    Consent of Independent Registered Public
Accounting Firm
    
    Filed herewith24.1
    
    Powers of Attorney
    
    Filed herewith31.1
    
    Certification of the Chief Executive
Officer of Centex pursuant to Rule
13a14(a) promulgated under the Securities
Exchange Act of 1934
    
    Filed herewith31.2
    
    Certification of the Chief Financial
Officer of Centex pursuant to Rule
13a14(a) promulgated under the Securities
Exchange Act of 1934
    
    Filed herewith32.1
    
    Certification of the Chief Executive
Officer of Centex pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of
2002
    
    Filed herewith32.2
    
    Certification of the Chief Financial
Officer of Centex pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of
2002
    
    Filed herewith
 
 *
    
    Management contract or compensatory plan or arrangement 100




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SIGNATURES
  CENTEX CORPORATIONRegistrantMay 19, 2006
    

By:
    
    /s/ TIMOTHY R. ELLERTimothy
R. Eller, Chairman of the Board
and
Chief Executive Officer
  May 19, 2006
    
    By:
    
    /s/ TIMOTHY R. ELLERTimothy R. Eller, Chairman of the Board andChief Executive Officer (principal executive officer)May 19, 2006
    
    By:
    
    /s/ LELDON E. ECHOLSLeldon E. Echols, Executive Vice President andChief Financial Officer (principal financial officer)May 19, 2006
    
    By:
    
    /s/ MARK D. KEMPMark D. Kemp, Senior Vice
President  Controller(principal accounting officer)Directors:
    
    Barbara T. Alexander, Dan W. Cook, III, Juan L. Elek,Timothy R. Eller, Ursula O. Fairbairn, Thomas J. Falk,Clint W. Murchison, III, Frederic M. Poses, James J. Postl,David W. Quinn and Thomas M. SchoeweMay 19, 2006
    
    By:
    
    /s/ TIMOTHY R. ELLERTimothy R. Eller,Individually and asAttorney-in-Fact*
 
  101