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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
JOINT ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED MARCH 31, 1994
COMMISSION FILE NO. 1-6776 COMMISSION FILE NOS. 1-9624 AND 1-9625, RESPECTIVELY
CENTEX CORPORATION 3333 HOLDING CORPORATION AND
CENTEX DEVELOPMENT COMPANY, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) (EXACT NAME OF REGISTRANTS AS SPECIFIED IN THEIR CHARTERS)
NEVADA NEVADA AND DELAWARE, RESPECTIVELY
(STATE OF INCORPORATION) (STATES OF INCORPORATION OR ORGANIZATION)
75-0778259 75-2178860 AND 75-2168471, RESPECTIVELY
(I.R.S. EMPLOYER IDENTIFICATION NO.) (I.R.S. EMPLOYER IDENTIFICATION NOS.)
3333 LEE PARKWAY, SUITE 1200, DALLAS, TEXAS 75219 3333 LEE PARKWAY, SUITE 500, DALLAS, TEXAS 75219
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(214) 559-6500 (214) 559-6700
(REGISTRANT'S TELEPHONE NUMBER) (REGISTRANTS' TELEPHONE NUMBER)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH NAME OF EACH
EXCHANGE ON WHICH EXCHANGE ON WHICH
TITLE OF EACH CLASS REGISTERED TITLE OF EACH CLASS REGISTERED
------------------- ---------- ------------------- ----------
CENTEX CORPORATION 3333 HOLDING CORPORATION
COMMON STOCK NEW YORK STOCK COMMON STOCK NEW YORK STOCK
($.25 PAR VALUE) EXCHANGE ($.01 PAR VALUE) EXCHANGE
CENTEX DEVELOPMENT COMPANY, L.P.
WARRANTS TO PURCHASE NEW YORK STOCK
CLASS B UNITS OF EXCHANGE
LIMITED PARTNERSHIP
INTEREST EXPIRING
NOVEMBER 30, 1997
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
Indicate by check mark whether each registrant: (1) has filed all
reports required to be filed by section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
each such registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X . No ___.
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrants' knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K, or any
amendment to Form 10-K. _____
The aggregate market value of the tandem traded Centex Corporation
common stock, 3333 Holding Corporation common stock and Centex Development
Company, L.P. warrants to purchase Class B units of limited partnership
interest held by non-affiliates of the registrants on June 15, 1994 was
approximately $854 million.
Indicate the number of shares of each of the registrants' classes of
common stock (or other similar equity securities) outstanding as of the close
of business on June 15, 1994:
Centex Corporation Common Stock 31,201,520 shares
3333 Holding Corporation Common Stock 1,000 shares
Centex Development Company, L.P. Class A Units of Limited Partnership Interest 1,000 units
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference in Parts
A.III and B.III of this Report: Joint proxy statement for the annual
meetings of stockholders of Centex Corporation and 3333 Holding
Corporation to be held on July 28, 1994.
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JOINT ANNUAL REPORT ON
FORM 10-K
FOR THE FISCAL YEAR ENDED MARCH 31, 1994
CENTEX CORPORATION AND SUBSIDIARIES
AND
3333 HOLDING CORPORATION AND SUBSIDIARY
AND CENTEX DEVELOPMENT COMPANY, L.P.
JOINT EXPLANATORY STATEMENT
On November 30, 1987, Centex Corporation ("Centex" or the "Company")
distributed as a dividend to its stockholders (through a nominee, the
"Nominee") all the issued and outstanding shares of the common stock, par value
$.01 per share ("Holding Common Stock"), of 3333 Holding Corporation
("Holding"), and 900 warrants (the "Stockholder Warrants") to purchase Class B
Units of limited partnership interest in Centex Development Company, L.P.
("CDC" or the "Partnership"). The Nominee is the record holder of the
Stockholder Warrants and 1,000 shares of Holding Common Stock, which
constitutes all of the issued and outstanding capital stock of Holding, on
behalf of and for the benefit of persons who are from time to time the holders
of the common stock, par value $.25 per share ("Centex Common Stock"), of
Centex ("Centex Stockholders"). Each Centex Stockholder owns a beneficial
interest in that portion of the 1,000 shares of Holding Common Stock and the
Stockholder Warrants that the total number of shares of Centex Common Stock
held by such stockholder bears to the total number of shares of Centex Common
Stock outstanding from time to time. This beneficial interest is not
represented by a separate certificate or receipt. Instead, each Centex
Stockholder's beneficial interest in such pro rata portion of the shares of
Holding Common Stock and the Stockholder Warrants is represented by the
certificate or certificates evidencing such Centex Stockholder's Centex Common
Stock, and is currently tradeable only in tandem with, and as a part of, each
such Centex Stockholder's Centex Common Stock. The tandem securities are
listed and traded on the New York Stock Exchange and The International Stock
Exchange of the United Kingdom and the Republic of Ireland, Ltd. and are
registered with the Securities and Exchange Commission (the "Commission")
separately under Section 12(b) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Holding and CDC were each organized in 1987 in
connection with the distribution. 3333 Development Corporation, a wholly owned
subsidiary of Holding ("Development"), is the sole general partner of CDC.
At present, Centex, Holding and CDC have elected to satisfy their
respective periodic reporting obligations under the Exchange Act, and the rules
and regulations promulgated thereunder, by preparing and filing joint periodic
reports. PART A of this Annual Report on Form 10-K for the fiscal year ended
March 31, 1994 (the "Report") relates to Centex and its subsidiaries. PART B
of this Report relates to Holding (and its subsidiary, Development) and to CDC.
This Report should be read in conjunction with the proxy statements of
Centex and Holding in connection with their respective 1994 annual meetings of
stockholders (portions of which are incorporated by reference into this
Report), the Annual Report to Stockholders of Centex for the fiscal year ended
March 31, 1994 and the Annual Report to Stockholders of Holding and CDC for the
fiscal year ended March 31, 1994. For a complete understanding of the tandem
traded securities, PART A and PART B of this Report should be read in
combination. Information concerning the earnings and financial condition of
the three companies, on an aggregate basis, is included in Note (G) of the
Notes to Consolidated Financial Statements of Centex Corporation and
subsidiaries on pages 34-35 of this Report.
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FORM 10-K TABLE OF CONTENTS
PAGE
----
JOINT EXPLANATORY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
PART A. CENTEX CORPORATION AND SUBSIDIARIES
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PART I
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . 14
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters . . . . . . . 15
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Item 7. Management's Discussion and Analysis of Financial Condition and Results of 17
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . 19
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial 19
Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART III
Item 10. Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . . 19
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Item 12. Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . 19
Item 13. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . 19
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K . . . . . . . . . 20
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
PART B. 3333 HOLDING CORPORATION AND SUBSIDIARY AND
CENTEX DEVELOPMENT COMPANY, L.P.
PART I
PAGE
----
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . 54
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TABLE OF CONTENTS (CONTINUED)
PART II PAGE
----
Item 5. Market for Registrants' Common Equity and Related Stockholder Matters . . . . . . 54
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Item 7. Management's Discussion and Analysis of Financial Condition and Results of 56
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . 56
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
PART III
Item 10. Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . 56
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Item 12. Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . 59
Item 13. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . 62
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K . . . . . . . . 63
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73-74
INDICES TO EXHIBITS
CENTEX CORPORATION AND SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75-79
3333 HOLDING CORPORATION AND SUBSIDIARY . . . . . . . . . . . . . . . . . . . . . . . . . . . 80-81
CENTEX DEVELOPMENT COMPANY, L.P. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82-84
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PART A.
CENTEX CORPORATION AND SUBSIDIARIES
PREFATORY STATEMENT
PART A of this Report includes information relating to Centex
Corporation and subsidiaries ("Centex" or the "Company"), file No. 1-6776. See
Joint Explanatory Statement on page 2 of this Report. References to Centex or
the Company in this Report shall include Centex and its subsidiaries unless the
context otherwise requires. Reference is made to PART B of this Report for
information relating separately to 3333 Holding Corporation ("Holding") and its
subsidiary, 3333 Development Corporation ("Development"), and to Centex
Development Company, L.P. ("CDC" or the "Partnership").
PART I
ITEM 1. BUSINESS
GENERAL DEVELOPMENT OF BUSINESS
Since its founding in 1950 as a Dallas, Texas-based residential and
commercial construction company, Centex has evolved into a multi-industry
company. Centex currently operates in five business segments: Home Building,
Mortgage Banking, Contracting and Construction Services, Construction Products
and Savings and Loan. Centex is incorporated in the State of Nevada. The
Company's common stock, par value $.25 per share ("Centex Common Stock"), began
trading publicly in 1969. As of June 15, 1994, 31,201,520 shares of Centex
Common Stock, which are traded on the New York Stock Exchange and The
International Stock Exchange of the United Kingdom and the Republic of Ireland,
Ltd., were outstanding.
Centex's Home Building and Mortgage Banking operations involve the
construction, sale and financing of residential housing. These activities
include the purchase and development of land, mortgage originations and other
related services on homes sold by subsidiaries and by others. Centex has
participated in the home building business since 1950 and the mortgage banking
business since 1973.
Centex entered the contracting and construction services business in
1966 with the acquisition of J. W. Bateson Company, Inc. (now Centex Bateson
Construction Company, Inc.), a Dallas-based contractor which has been in
business since 1936. Its contracting and construction activities involve the
construction of buildings for both government and private interests, including
office, commercial and industrial buildings, hospitals, hotels, museums,
libraries, airport facilities, condominiums and educational institutions.
Centex's involvement in the construction products business dates to
1963 when it began construction on its first cement plant. Since that time,
the Company's Construction Products operations have been expanded to include
additional cement production and distribution facilities and the production,
distribution and sale of aggregates, readymix concrete and gypsum wallboard.
In April 1994, the Construction Products group completed an initial public
offering of its common stock, resulting in the reduction of Centex's ownership
interest in this group to 49%. Centex received payments totaling $186.5
million in the transaction.
Centex's Saving and Loan operations were acquired in December 1988
under the Federal Savings and Loan Insurance Corporation's Southwest Plan.
These operations include CTX Holding Company and its subsidiary, Texas Trust
Savings Bank, FSB.
Centex established CDC in fiscal year 1988. Reference is made to PART
B of this Report for a discussion of the business of CDC.
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FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
Notes (B) and (H) of the Notes to Consolidated Financial Statements of
Centex on pages 28-29 and 36-37 of this Report contain additional information
about the savings and loan acquisition and the Company's business segments for
the years ended March 31, 1994, 1993 and 1992 and are incorporated herein by
reference.
NARRATIVE DESCRIPTION OF BUSINESS
HOME BUILDING
The Company's Home Building operation primarily involves the
construction, sale and financing of residential housing, including the purchase
and development of land. The Company's home building operation ranks, by the
number of units produced in calendar 1993, as the largest U.S. builder of
single-family homes. Centex sells to both first time and move-up home buyers.
Approximately 95% of the houses Centex sells are single-family detached homes
and the remainder are townhomes and low-rise condominiums.
Centex follows a strategy of reducing exposure to local market
volatility by spreading operations across geographically and economically
diverse markets. Centex presently builds houses in 44 market areas in 20
states. These markets include Phoenix, Arizona; Ft. Lauderdale, Orlando,
Jacksonville, Naples/Ft. Myers, Tampa, Palm Beach, Titusville and
Sarasota/Bradenton, Florida; East San Francisco Bay, Sacramento, Bakersfield,
Southern California, Los Angeles/Ventura, Central Valley and San Diego,
California; Chicago, Illinois; Seattle, Washington; Reno, Nevada; Minneapolis,
Minnesota; Portland, Oregon; Nashville, Tennessee; Atlanta, Georgia; Northern
Virginia; Hampton Roads, Virginia; Central Maryland; Western Maryland; Austin,
Dallas/Fort Worth, Houston, Killeen and San Antonio, Texas; Denver, Colorado;
Albuquerque, New Mexico; Charlotte and Raleigh/Durham, North Carolina;
Indianapolis, Indiana; Columbus, Ohio; Charleston, Columbia and Greenville,
South Carolina; and East Windsor, New Jersey.
In fiscal 1994, Centex closed 12,563 houses, including first-time,
move-up and, in some markets, custom homes, ranging in price from approximately
$64,000 to about $805,000, with the average sale price being approximately
$147,500. In several locations including Denver, Dallas, San Antonio and West
Palm Beach, Centex has opened custom home divisions which offer the higher-end
homes.
The table below sets forth information regarding Centex's house
closings, sales (orders) backlog and sales (orders) by geographic area for its
fiscal years ended March 31, 1994 and 1993.
SALES (ORDERS)
CLOSINGS BACKLOG SALES (ORDERS)
-------- ------- --------------
YEAR ENDED YEAR ENDED YEAR ENDED
---------- ---------- ----------
GEOGRAPHIC AREA 3/31/94 3/31/93 3/31/94 3/31/93 3/31/94 3/31/93
- --------------- ------- ------- ------- ------- ------- -------
West . . . . . . . . . . . . . . . . . . . 1,973 1,358 756 663 2,066 1,440
Midwest . . . . . . . . . . . . . . . . . . 1,114 1,118 622 461 1,275 1,092
East . . . . . . . . . . . . . . . . . . . 2,599 2,118 1,279 1,192 2,686 2,522
Southeast . . . . . . . . . . . . . . . . . 2,895 2,433 1,387 1,260 3,022 2,671
Southwest . . . . . . . . . . . . . . . . . 3,982 3,252 1,751 1,575 4,158 3,696
------ ------ ----- ----- ------ ------
12,563 10,279 5,795 5,151 13,207 11,421
====== ====== ===== ===== ====== ======
The residential housing industry is essentially a "local" business and
is highly competitive. Centex competes in each of its market areas with
numerous other home builders. The Company's operations account for less than
2% of the total housing starts in the United States. The main competitive
factors affecting Centex's operation are location, price, cost of providing
mortgage financing for customers, construction costs, design and quality of
homes, marketing expertise, availability of land and a builder's reputation.
Management believes the Company competes effectively by maintaining geographic
diversity, being responsive to the specific demands of each market and managing
the operations at a local level.
The home building industry is cyclical and is particularly affected by
changes in local economic conditions and in long-term and short-term interest
rates and, to a lesser extent, changes in property taxes and energy costs,
federal income tax laws, federal mortgage financing programs and various
demographic factors. The political and economic environment affects both the
demand for housing constructed by the Company and the Company's cost of
financing. Although Centex's Home Building operations, in the aggregate, are
not generally seasonal, certain phases of home construction are seasonal in
certain geographic
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areas where Centex's Home Building operations are located. Unexpected climatic
conditions, such as unusually heavy or prolonged rain or snow, may affect Home
Building operations in certain areas.
Centex has numerous suppliers of all the materials and services and
sources of lots and land used in home building and believes that it can deal
effectively with any problems it may experience relating to the supply of
materials and services as well as lots and land.
The housing industry is subject to extensive and complex regulations.
The Company and its subcontractors must comply with various federal, state and
local laws and regulations including zoning, building, environmental,
advertising and consumer credit rules and regulations. The Company is also
subject to other rules and regulations in connection with its manufacturing and
sales activities, including requirements as to building materials to be used
and building designs. The Company's homes are inspected by local authorities,
where required, and homes eligible for insurance or guarantees provided by the
Federal Housing Administration ("FHA") and the Veterans Administration ("VA")
are inspected by the FHA and VA.
MORTGAGE BANKING
The Mortgage Banking operation offers mortgage origination and other
related services on homes sold by subsidiaries and by others.
Through CTX Mortgage Company ("CTX"), Centex provides mortgage
origination and other mortgage related services for FHA and VA and conventional
loans on homes built and sold by the Company as well as for purchases of homes
not built by the Company. During fiscal 1994, CTX opened 50 new operating
locations, raising the number of CTX offices and "satellite" locations to 152
as of March 31, 1994. CTX originates mortgage loans, securitizes and sells
them on the secondary market shortly after closing and also sells the servicing
rights. Revenues come primarily from three sources: the loan origination fee,
the positive spread between short-term and long-term rates during the
securitization period (the time between the loan's closing and its delivery to
the secondary market), and the sale of servicing rights. The establishment by
CTX of mortgage operations in substantially all of Centex's housing markets has
enabled it to expand the solicitation of mortgage business that is not
associated with the sale of a Centex home. In fiscal 1994 CTX provided
financing for 9,289 Centex-built homes, representing approximately 74% of
Centex's total closings. In addition CTX provided 49,254 loans to others. The
58,543 loans for fiscal 1994 aggregated approximately $6.4 billion, compared to
$4.2 billion in the prior year. Other financial-related services provided by
CTX affiliates include acting as an agent for the issuance of homeowners'
insurance policies and title insurance policies and escrow services. CTX
Insurance Agency provides hazard insurance to home buyers in Texas and Florida.
During fiscal 1994, CTX opened its first commercial loan operation.
The mortgage banking industry in the United States is highly
competitive. CTX competes with other mortgage banking companies as well as
financial institutions to supply mortgage financing at attractive rates to
purchasers of Centex homes as well as the general public.
The origination of mortgage loans by CTX is subject to rules and
regulations promulgated by FHA, VA, Government National Mortgage Association
("Ginnie Mae"), Federal National Mortgage Association ("Fannie Mae") and
Federal Home Loan Mortgage Corporation ("Freddie Mac").
CONTRACTING AND CONSTRUCTION SERVICES
Centex's construction contracting work is performed nationwide.
Centex entered the contracting and construction services industry in 1966 with
the acquisition of J. W. Bateson Company, Inc. (now called Centex Bateson
Construction Company, Inc.), a Dallas-based contractor which has become one of
the nation's larger general contractors specializing in public facilities.
Centex's participation in the industry was expanded in 1978 with the
acquisition of Frank J. Rooney, Inc. (now Centex-Rooney Construction Co.,
Inc.), one of the larger general contractors in Florida, followed in fiscal
1982 by the purchase of M. H. Golden Company (now Centex Golden Construction
Company), a general contractor with operations in the San Diego and Los Angeles
markets, and Eugene Simpson & Brother, Inc., a contractor in the Washington,
D.C. area, which had been engaged primarily
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in negotiated work for the private sector. Centex also had a subsidiary
company, Centex Construction Company, Inc., in the Washington, D.C. area which
had been engaged primarily in construction of buildings for the federal
government. In the first half of fiscal 1991, the two Washington, D.C. area
subsidiaries, Centex Construction Company, Inc. and Eugene Simpson & Brother,
Inc. merged into a single entity, now known as Centex-Simpson Construction
Company, Inc. In 1987, the Company formed a subsidiary, Centex-Rodgers
Construction Company in Nashville, Tennessee, which is active nationally in the
private medical construction services market. Centex also has another Florida
subsidiary, Centex-Great Southwest Corporation (formerly Great Southwest
Corporation), which does work principally in the Tampa and Orlando areas.
During its 1990 fiscal year, Centex's Contracting and Construction Service
operations were expanded into the industrial contracting area with the
acquisition of the working assets of Forcum-Lannom Associates Inc. of
Dyersburg, Tennessee.
As a general contractor or construction manager, Centex provides the
supervisory personnel for the construction of the building or facility. In
addition, Centex may perform varying amounts of the actual construction work on
a project, but will generally hire subcontractors to perform the majority of
the work. As a result, the Company's Contracting and Construction Services
operation requires a relatively small asset base.
Construction contracts are primarily entered into under two formats:
competitively bid and negotiated jobs. In a competitively bid format, Centex
will bid a fixed amount for which it will agree to construct the project based
on an evaluation of detailed plans and specifications. In a negotiated job,
the contractor bids on a fixed fee over the cost of the project and, in many
instances, agrees that the final cost will not exceed a designated amount.
Such contracts may include a provision whereby the owner will pay a part of any
savings from the guaranteed amount to the contractor. The Company's highest
margins in contracting operations have usually been on competitively bid jobs.
On average, about half of Centex's projects are competitively bid, public jobs
and the other half are negotiated contracts with private owners. The Company's
public work for federal, state and local governments includes hospitals, jails,
airports, parking garages, office buildings, military facilities, post offices
and convention and performing arts centers. Most of Centex's private owner
contracts are for hotels, medical facilities and office buildings, plus some
shopping centers and condominiums.
Centex Contracting and Construction Services companies participate in
a diversified range of building construction in both the public and private
sectors across broad geographic lines. Among the buildings which Centex's
general construction group has completed are: Cinderella's Castle, the Land
Pavilion at Epcot Center, the Grand Floridian and Caribbean Beach Resorts in
the Disney World complex; portions of the Department of Labor and the Library
of Congress; the CIA Buildings in Washington, D.C.; a number of Veterans
Affairs Medical Centers and major airport terminals; Texas Stadium, the Dallas
Museum of Art and the Morton H. Meyerson Symphony Center in Dallas; the Tampa
Convention Center and the Tampa Bay Performing Arts Center in Florida; Wilshire
Court in Los Angeles and America Plaza in San Diego.
New contracts for fiscal 1994 totaled $1.03 billion versus $1.17
billion in fiscal 1993. At March 31,1994, the backlog of uncompleted
construction contracts was $1.24 billion, a record for any fiscal year end,
compared to the $1.17 billion backlog at March 31, 1993. The new contracts
included the $153.9 million Acute Care Naval Hospital in Portsmouth, Virginia;
a $100 million Clinical Addition and Spinal Cord Injury Center at the Veterans
Affairs Medical Center in Dallas, Texas; the $90.2 million Genesys Regional
Medical Center in Flint, Michigan; a $41.8 million Airside Terminal for Tampa
International Airport in Tampa, Florida; the $35.9 million Brittany
Condominiums in Naples, Florida; the $32.1 million State Farm Insurance
Regional Center in Frederick, Maryland; the $30.5 million Martin Luther King
Trauma Center in Los Angeles, California; the $29.5 million El Centro Southwest
High School in El Centro, California; a $26 million addition to Medical City
Dallas Hospital; $24.1 million Veterans Affairs Medical Center in El Paso,
Texas; a $23.5 million Performing Arts Center for California Polytechnic in San
Luis Obispo, California; $20.8 million of additions to our current contract at
Donelson Hospital in Nashville, Tennessee; a $20.8 million middle school and
elementary school complex in Naples, Florida; a $20.3 million medical center in
Odessa, Texas; the $16.2 million Catoma Water Pollution Control plant in
Montgomery, Alabama; a $14.1 million addition to the Audubon Institute's
Aquarium of the Americas in New Orleans, Louisiana; a $13.9 million police
facility in Alhambra, California; the $13.0 million Eastern Idaho Regional
Medical Center in Idaho Falls; and a $6.6 million Wal-Mart store in
Fayetteville, Arkansas.
As a group, Centex's Contracting and Construction Services
subsidiaries rank as the second largest general building contractor in the
country as well as the third largest constructor of healthcare facilities.
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The construction industry has become increasingly competitive, and
Centex competes with numerous other companies. With respect to competitively
bid projects, Centex generally competes for projects throughout the United
States and with local, regional or national contractors, depending upon the
nature of the project. In negotiated contract projects, Centex's subsidiaries
compete primarily in the general geographical area where they are located and
with other local, regional and national contractors. Centex solicits new
projects by attending project bid meetings, meetings with builders and owners
and through existing customers. Centex competes successfully on the basis of
its reputation and financial strength.
The Company's Contracting and Construction Services operations obtain
materials and services from numerous sources. The Company believes that its
construction companies can deal effectively with problems that they may
experience in the supply of materials and services.
CONSTRUCTION PRODUCTS
Centex's Construction Products operations include the manufacture,
production, distribution and sale of portland cement (a basic construction
material which is the essential binding ingredient in concrete), aggregates
(sand and gravel), readymix concrete and gypsum wallboard.
Centex operates cement plants in Buda, Texas, LaSalle, Illinois,
Fernley, Nevada and Laramie, Wyoming. The plants in LaSalle and Buda are owned
by joint ventures in which the Company has 50% interest. In fiscal 1992,
Centex completed the purchase of the remaining 1% interest in the joint venture
that owns the Laramie, Wyoming plant. As a result, Centex currently owns 100%
of this plant.
The cement plants operated by the Company use coal as their primary
source of energy. Natural gas can also be used as a backup or primary source
of fuel. All four of the cement plants are fuel efficient dry process plants.
The kiln start-up dates of the cement plants were: Buda, Texas, 1978 (expanded
in 1983); LaSalle, Illinois, 1974; Fernley, Nevada (2 kilns), 1964 and 1969;
and Laramie, Wyoming, 1988.
The principal raw material used in the production of portland cement
is calcium carbonate in the form of limestone. Limestone is obtained
principally from quarries owned or leased by Centex or the joint ventures and
located in close proximity to the plants. Other raw materials used in
substantially smaller quantities than limestone are sand, clay, iron ore and
gypsum, which are either obtained from reserves owned or leased by Centex or
the joint ventures or are purchased from outside suppliers and are readily
available. Centex's management estimates that its primary raw material
reserves, either owned, leased or available, will be adequate to permit
production at present capacities for the foreseeable future at all four of the
existing plants.
The Company's net cement production, which excludes the joint venture
partners' 50% shares in the LaSalle and Buda plants, totaled 1.8 million tons
in fiscal 1994 and 1.6 million tons in fiscal 1993. Total net cement sales
were 1.9 million tons in fiscal 1994 and 1.8 million tons in fiscal 1993. In
fiscal 1994 and 1993 all four cement plants sold all of the product that they
produced and each had supplemental sales with outside cement purchases.
Cement produced by cement plants operated by Centex is sold
principally to readymix concrete producers and paving contractors. No single
customer accounts for as much as 10% of Centex's total cement sales.
The principal markets for Centex's cement are Texas and the Western
portion of Louisiana (serviced by the Buda, Texas plant); Illinois and Southern
Wisconsin (serviced by the LaSalle, Illinois plant); Nevada (except Las Vegas)
and Northern California (serviced by the Fernley, Nevada plant) and Wyoming,
Utah, Southern Idaho, Northern Colorado and Western Nebraska (serviced by the
Laramie, Wyoming plant).
Distribution of cement is generally made by common carriers or
customer pick up and, to a lesser degree, by trucks owned and operated by
Centex. In addition, the Company transports cement principally by rail to its
storage and distribution terminals located in Roanoke, Waco, Corpus Christi,
Houston and Orange, Texas; Hartland, Wisconsin; Sacramento, California; Denver,
Colorado; Salt Lake City, Utah; Rock Springs, Wyoming; North Platte, Nebraska
and Bliss, Idaho, from which further distribution occurs.
9
10
The cement business is highly competitive. In every regional market in
which Centex sells cement, one or more other domestic producers compete for the
available business. In addition, foreign companies compete in most of the
Company's markets by importing cement into the United States. Centex competes
by operating efficient cement plants, merchandising a high quality product and
providing good service and competitive pricing. The Company also sells cement
from terminals to expand each cement plant's marketing area.
Demand for cement has generally been cyclical and is closely related
to the general level of the economy, new housing starts, government
construction programs and other construction activities. The cement business
is seasonal and requires some build-up of inventory during the winter
(particularly in northern states) to meet peak demands from spring into the
fall. Significant increases in the Texas market price have occurred during
fiscal 1994 and 1993 primarily as a result of improved levels of business
activity.
Centex's readymix concrete and aggregate operations are located in
Austin, Texas and in northern California. Centex also operates an
aggregate-only production facility south of the Dallas/Fort Worth, Texas
metropolitan area. In addition, Centex has a 10,000 acre aggregate deposit in
Northern California which contains in excess of 2 billion tons of reserves.
Centex sells aggregates from this deposit in the Sacramento, California market.
Centex operates two gypsum wallboard manufacturing facilities in
Albuquerque, New Mexico and nearby Bernilillo, New Mexico. These facilities
use natural gas as their primary energy source. The Company has lease rights
and owns mineral rights to extract gypsum rock, which is the principal
ingredient of gypsum wallboard, from quarries in close proximity to its plants.
Other materials required to manufacture gypsum wallboard are readily available
to the Company, and no problems relating to material supply are anticipated in
the foreseeable future.
The newer gypsum wallboard manufacturing facility in Bernalillo, New
Mexico, north of the original plant, more than doubled Centex's total
productive capacity. The newer plant commenced operation at the beginning of
fiscal 1991 and has made encouraging progress toward correcting design
deficiencies and attaining stable production. Centex's older Albuquerque
wallboard plant did not operate during fiscal 1993, but began operating on a
limited production schedule in early fiscal 1994. The gypsum wallboard
industry is highly competitive and subject to cyclical pricing based upon
supply and demand. During fiscal 1994, demand and pricing for gypsum wallboard
continued to increase, and the company's wallboard operation reported a
profitable fiscal year for the first time since 1990.
Subsequent to fiscal year end, 51% of the stock of Centex Construction
Products, Inc., the entity in which the Company had consolidated its
cement-related and gypsum wallboard operations, was sold through an initial
public offering, raising $164 million. Including a dividend and other
payments, Centex received $186.5 million from the transaction, which was used
to pay down corporate debt.
SAVINGS AND LOAN
In December 1988, Centex purchased certain assets and assumed certain
liabilities of four Texas savings and loan associations under the Federal
Savings and Loan Insurance Corporation's assisted transactions process commonly
known as the "Southwest Plan". The acquisition was made by Texas Trust Savings
Bank, FSB ("Texas Trust"), a federal stock savings bank and subsidiary of CTX
Holding Company ("CTX Holding"), a wholly owned subsidiary of Centex. The
Federal Savings and Loan Insurance Corporation (the "FSLIC") received a warrant
to purchase a 20% interest in Texas Trust's common stock for $400,000 through
December 2003.
The acquisition was made pursuant to acquisition agreements and an
assistance agreement (the "Assistance Agreement") with the FSLIC. Under the
terms of these agreements, the FSLIC provided assistance to Texas Trust in the
form of a note (the "Note") in the original principal amount of $172.3 million
representing the aggregate negative capital (as defined in the agreements) of
the insolvent associations as of December 29, 1988. This note, which was due
on December 29, 1998, was prepaid in fiscal 1991 and 1992.
10
11
In August 1989, the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA") was enacted which abolished the FSLIC and
established the FSLIC Resolution Fund (the "Fund") to assume all reserves,
assets, debts, obligations and other liabilities of the FSLIC. The Fund is
managed by the Federal Deposit Insurance Corporation (the "FDIC"). All
subsequent references to the Fund include its obligations created pursuant to
previous agreements with the FSLIC.
Certain of the acquired assets are subject to Fund assistance through
December 1998 ("Covered Assets"). Subject to the terms of the Assistance
Agreement, the Fund will reimburse Texas Trust for any write-downs, losses or
costs incurred in connection with the operations and disposition of these
assets. Disposition gains, if any, will be shared by the Fund and Texas Trust.
In addition, the Fund will supplement the actual yield on Covered Assets to
provide a guaranteed yield equal to the Texas Cost of Funds plus a designated
spread until December 29, 1998. At that time, any remaining Covered Assets
will be adjusted to their then fair market value and retained by Texas Trust.
The Fund will reimburse Texas Trust for any required valuation adjustments.
Yield maintenance on Covered Assets for the years ended March 31,
1994, 1993 and 1992 were $2.8, $8.5 and $22.0 million, respectively. In
addition, $12.1, $86.1 and $80.1 million of assistance was provided in fiscal
1994, 1993 and 1992, respectively, as reimbursement for losses relating to
Covered Assets.
Fund agreements also provide for maintenance by Texas Trust of certain
minimum capital levels; reimbursement by the Fund of certain amounts over a
10-year period; sharing by the Fund in a portion of the tax benefits realized
by Centex in connection with the acquisitions by Texas Trust; and
indemnification by the Fund against unassumed liabilities and claims.
Under the terms of a related capital maintenance agreement, Texas
Trust is prohibited from declaring or paying dividends that would cause its
regulatory capital to fall below specified levels. Centex has no obligations
to make additional capital contributions to CTX Holding or Texas Trust.
During fiscal 1990, certain forbearances previously granted by
regulatory authorities were rescinded by FIRREA. In addition, more stringent
capital requirements were established. At March 31, 1994, and throughout the
period since their establishment, Texas Trust has been in full compliance with
the new federally-mandated capital requirements. The elimination of
forbearances does not significantly impact Texas Trust. Also, under FIRREA,
all 1988 transactions and their agreements, including the Texas Trust
transaction, became subject to further review by the Resolution Trust
Corporation (the "RTC"). Cost reduction options exercised to date by the RTC
include the early payoff of the $172.3 million Fund note, substantial Covered
Asset write-downs and directed dispositions. Texas Trust and the RTC are
currently negotiating to terminate the Assistance Agreement. In connection
therewith, the RTC would prepay a non-interest-bearing obligation at a
discounted value, purchase all remaining Covered Assets and sell its 20%
warrant to Texas Trust. Management anticipates that the termination process
will be concluded during fiscal year 1995 without a significant impact on the
Company's financial condition or results of operations.
Texas Trust, currently headquartered in Dallas, Texas, operates eight
savings and loan branch offices in the central Texas cities of Buchanan Dam,
Burnet, Giddings, Kingsland, Llano, Marble Falls, Mason and San Angelo. In
fiscal 1993, Texas Trust expanded its financial services businesses with the
formation of a new mortgage banking operation, TxT Mortgage Company, and the
initiation of an interim lending program for single-family home builders. TxT
Mortgage Company, also headquartered in Dallas, Texas, currently has offices in
Arlington, Austin, Hurst, and, Tyler, Texas, Denver, Colorado and three offices
in California. Texas Trust offers a number of services and products including
checking accounts, savings accounts, certificates of deposit, residential
mortgage loans, consumer loans and interim construction loans to single-family
home builders. Subsequent to March 31, 1994, Texas Trust commenced
negotiations to sell the assets and related liabilities of its TXT Mortgage
Company division to CTX Mortgage Company.
The financial services industry in Texas is highly competitive.
Competition for customer deposits is intense among commercial banks, credit
unions, savings and loan associations, mutual funds and insurance companies.
After the acquisition, Texas Trust lowered the rates that it offers on variable
rate accounts and new fixed rate certificates of deposit. As expected, some
depositors responded to these changes by withdrawing or choosing not to renew
maturing deposits. Total deposits increased by $6.9 million from April 1, 1993
to March 31, 1994, and decreased by $31.8 million from April 1, 1992 to March
31, 1993, by $120.4 million from April 1, 1991 to March 31, 1992, and by $30.1
million from April 1, 1990 to March 31, 1991, and were replaced with funds
generated by the disposition of certain assets and with lower-cost funds from
the Federal Home Loan Bank of Dallas ("FHLBD") advances. At March 31, 1994,
total deposits of $207.1 million included $130.1 million of deposits which
mature
11
12
during the next twelve months. At March 31, 1993, the total deposits of $200.1
million included $144.3 million of deposits, which matured during fiscal year
1994.
Texas Trust, chartered as a federal savings bank, is required to be a
member of the Federal Home Loan Bank System and to have its deposits insured by
the Savings Association Insurance Fund administered by the FDIC. Texas Trust
is subject to extensive regulation by the Office of Thrift Supervision ("OTS"),
a bureau in the U.S. Department of Treasury. Such regulatory supervision
includes, among other things, net worth and regulatory capital maintenance
requirements, liquidity maintenance requirements, limitations on the rate of
growth of deposit liabilities and limitations on the type and amount of its
investments. Regulations promulgated under the Home Owners Loan Act and other
federal laws limit Texas Trust's ability to engage in transactions with, and
pay dividends to, Centex and Centex's affiliates. Texas Trust is also subject
to regulations of the Federal Reserve Board governing reserves required to be
maintained on deposits and other matters. The FDIC and OTS conduct periodic
examinations to test compliance with these and other regulatory requirements.
Centex and CTX Holding, as savings and loan holding companies, are
subject to certain regulation by the OTS.
Negotiations are underway with the Federal Deposit Insurance
Corporation (FDIC) to terminate the agreement under which Texas Trust was
acquired. It is expected that the termination of the Assistance Agreement will
be completed sometime during fiscal 1995. The Savings and Loan group has
established adequate reserves for the costs associated with this transaction.
12
13
The following is a summary of average balances and average interest
rates for the year ended March 31, 1994, 1993 and 1992.
TEXAS TRUST SAVINGS BANK, FSB
AVERAGE BALANCES AND INTEREST RATES
($ IN THOUSANDS)
FOR THE YEAR FOR THE YEAR
ENDED MARCH 31, 1994 ENDED MARCH 31, 1993
-------------------- --------------------
AVERAGE REVENUE/INTEREST AVERAGE REVENUE/INTEREST
BALANCE EXPENSE % BALANCE EXPENSE %
------- ------- - ------- ------- -
Earning assets:
Interest-bearing deposits in other
financial institutions and other
investment securities . . . . . . . . . $101,181 $5,208 5.15% $ 78,756 $ 6,469 8.21%
Loans, primarily residential
mortgage, net of $830, $1,565 and
$3,377, respectively, of valuation
adjustments . . . . . . . . . . . . . . 37,665 3,161 8.39% 10,728 1,347 12.56%
Assets covered by Fund assistance . . . 60,827 1,316 2.16% 111,101 8,015 7.21%
Notes and receivables from the Fund . . -- -- -- -- -- --
-------- ------ ---- -------- ------- -----
Total earning assets . . . . . . . 199,673 9,685 4.85% 200,585 15,831 7.89%
------ ---- ------- -----
Cash and amounts due from banks . . . . . . 3,465 807
Other assets . . . . . . . . . . . . . . . 25,446 84,500
-------- --------
Total assets . . . . . . . . . . . $228,584 $285,892
======== ========
Interest-bearing liabilities:
Deposits . . . . . . . . . . . . . . . . $197,341 7,205 3.65% $217,561 9,480 4.36%
FHLB advances and short-term
borrowings . . . . . . . . . . . . . . . 10,882 622 5.72% 47,735 2,567 5.38%
-------- ------ ---- -------- ------- -----
Total interest-bearing liabilities 208,223 7,827 3.76% 265,296 12,047 4.54%
------ ---- ------- -----
Other liabilities . . . . . . . . . . . . . 4,928 4,254
Stockholder's equity . . . . . . . . . . . 15,433 16,342
-------- --------
Total liabilities and stock-
holder's equity . . . . . . . . . $222,584 $285,892
======== ========
Net interest margin . . . . . . . . . . . . $1,858 $ 3,784
====== =======
Net yield on earning assets . . . . . . . . .93% 1.89%
==== =====
Net margin . . . . . . . . . . . . . . . . 1.09% 3.35%
==== =====
FOR THE YEAR
ENDED MARCH 31, 1992
--------------------
AVERAGE REVENUE/INTEREST
BALANCE EXPENSE %
------- ------- -
Earning assets:
Interest-bearing deposits in other
financial institutions and other
investment securities . . . . . . . . . $ 32,887 $2,350 7.15%
Loans, primarily residential
mortgage, net of $830, $1,565 and
$3,377, respectively, of valuation
adjustments . . . . . . . . . . . . . . 9,504 1,982 20.85%
Assets covered by Fund assistance . . . 213,822 19,218 8.99%
Notes and receivables from the Fund . . 27,831 2,263 8.13%
-------- ------ -----
Total earning assets . . . . . . . 284,044 25,813 9.09%
------ -----
Cash and amounts due from banks . . . . . . 804
Other assets . . . . . . . . . . . . . . . 52,714
--------
Total assets . . . . . . . . . . . $337,562
========
Interest-bearing liabilities:
Deposits . . . . . . . . . . . . . . . . $284,358 18,530 6.52%
FHLB advances and short-term
borrowings . . . . . . . . . . . . . . . 31,702 2,353 7.42%
-------- ------ -----
Total interest-bearing liabilities 316,060 20,883 6.61%
------ -----
Other liabilities . . . . . . . . . . . . . 2,429
Stockholder's equity . . . . . . . . . . . 19,073
--------
Total liabilities and stock-
holder's equity . . . . . . . . . $337,562
========
Net interest margin . . . . . . . . . . . . $4,930
======
Net yield on earning assets . . . . . . . . 1.74%
=====
Net margin . . . . . . . . . . . . . . . . 2.48%
=====
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EMPLOYEES
The Company and its subsidiaries had approximately 8,430 employees at
March 31, 1994.
ITEM 2. PROPERTIES
PLANT FACILITIES
The Company, in connection with its Construction Products operations,
operates cement plants, quarries and related facilities at Buda, Texas,
LaSalle, Illinois, Fernley, Nevada and Laramie, Wyoming. The Buda and LaSalle
plants are owned by separate joint ventures in each of which Centex has a 50%
interest. The Company's principal aggregate plants and quarries are located in
Austin and Cleburne, Texas and Marysville, California. In addition, the
Company operates gypsum wallboard plants near Albuquerque and Bernalillo, New
Mexico. The Buda cement plant is no longer pledged as security on debts
incurred by such joint venture for construction or renovation of this facility,
as the principal and interest relating to such debts were paid in full by the
joint venture during fiscal 1994.
See "Item 1. Business" on pages 5-14 of this Report for additional
information relating to the Company's properties.
ITEM 3. LEGAL PROCEEDINGS
The management of the Company believes that none of the litigation
matters in which Centex or any subsidiary is involved, if determined
unfavorable to Centex or any subsidiary, would have a material adverse effect
on the consolidated financial condition or operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF CENTEX (SEE ITEM 10 OF PART III)
The following is an alphabetical listing of the Company's executive
officers, as such term is defined under the rules and regulations of the
Securities and Exchange Commission. All of these executive officers have been
employed by the Company and/or one or more subsidiaries of the Company for the
past five years. All of these executive officers were elected by the Board of
Directors of the Company at its Annual Meeting on July 23, 1993, to serve until
the next Annual Meeting of Directors or until their respective successors are
duly elected. There is no family relationship between any of these officers.
Name Age Positions with Centex
---- --- ---------------------
Michael S. Albright 46 Vice President - Finance and Controller (Vice President - Finance
since July 1992; Controller since November 1987; Vice President
from July 1989 to July 1992)
Timothy R. Eller 45 President, Chief Executive Officer and Chief Operating Officer of
Centex Real Estate Corporation (President and Chief Operating
Officer since January 1990; Chief Executive Officer since July 1991;
Executive Vice President from July 1987 to January 1990)
William J Gillilan III 48 President and Chief Operating Officer (President since July 1991;
Chief Operating Officer since January 1990; Executive Vice President
from July 1989 until July 1991)
14
15
Laurence E. Hirsch 48 Chairman of the Board and Chief Executive Officer (Chairman of the
Board since July 1991; Chief Executive Officer since July 1988;
President from March 1985 until July 1991)
David W. Quinn 52 Executive Vice President and Chief Financial Officer (since February
1987)
Raymond G. Smerge 50 Vice President, Chief Legal Officer, General Counsel and Secretary
(Vice President and Chief Legal Officer since September 1985;
General Counsel and Secretary since April 1993)
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
STOCK PRICES AND DIVIDENDS
--------------------------
Year Ended March 31, 1994 Year Ended March 31, 1993
------------------------- -------------------------
Price Price
----- -----
QUARTER High Low Dividends High Low Dividends
---- --- --------- ---- --- ---------
First $35 1/2 $27 1/2 $.05 $24 3/8 $20 $.05
Second $42 5/8 $32 1/2 $.05 $26 $22 1/4 $.05
Third $44 5/8 $36 7/8 $.05 $32 3/4 $24 $.05
Fourth $45 5/8 $30 7/8 $.05 $34 1/8 $29 3/4 $.05
The common stock of Centex Corporation is traded on the New York Stock
Exchange (ticker symbol CTX) and The International Stock Exchange (London).
The approximate number of record holders of the common stock of Centex
Corporation as of June 15, 1994 was 1,713. The closing price of Centex common
stock on the New York Stock Exchange on June 15, 1994 was $28.125.
On November 30, 1987, Centex Corporation distributed as a dividend to
its stockholders securities relating to Centex Development Company, L.P. (see
Note G to the Consolidated Financial Statements of Centex Corporation and
Subsidiaries). Since this distribution, such securities have traded in tandem
with, and as a part of, the common stock of Centex Corporation.
Dividend amounts represent cash dividends per share paid by Centex
Corporation on the common stock of Centex Corporation. 3333 Holding
Corporation has paid no dividends on its common stock since its incorporation.
15
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ITEM 6. SELECTED FINANCIAL DATA
Centex Corporation and Subsidiaries
SUMMARY OF SELECTED FINANCIAL DATA (Unaudited)
For the Years Ended March 31,
-----------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
(Dollars in thousands, except per share data)
Revenues $ 3,214,482 $ 2,502,692 $ 2,165,707 $ 2,243,836 $ 2,072,644
Earnings Before Discontinued
Operations and 1988
Accounting Change $ 85,162 $ 61,038 $ 34,557 $ 43,605 $ 62,003
Net Earnings from
Discontinued Operations -- -- -- -- --
Cumulative Effect of Change in
Accounting for Income Taxes -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Net Earnings $ 85,162 $ 61,038 $ 34,557 $ 43,605 $ 62,003
=========== =========== =========== =========== ===========
Total Assets $ 2,580,356 $ 2,272,093 $ 2,347,452 $ 2,037,486 $ 2,045,141
Total Long-term Debt, including
debentures $ 222,832 $ 223,988 $ 232,294 $ 137,235 $ 140,112
Total Debt $ 429,470 $ 368,988 $ 298,508 $ 267,946 $ 267,739
Deferred Income Taxes $ 35,088 $ 55,722 $ 56,627 $ 80,205 $ 59,311
Negative Goodwill $ 24,102 $ 28,102 $ 31,702 $ 34,702 $ 37,102
Stockholders' Equity $ 668,659 $ 578,415 $ 518,494 $ 483,677 $ 447,911
Total Debt as a Percent of
Total Capitalization (Total
Debt, Deferred Income Taxes,
Negative Goodwill and
Stockholders' Equity) 37.1% 35.8% 33.0% 30.9% 33.0%
Net Earnings as a Percent of
Beginning Stockholders'
Equity 14.7% 11.8% 7.1% 9.7% 16.1%
Per Common Share
Earnings Before Discontinued
Operations and 1988
Accounting Change $ 2.60 $ 1.91 $ 1.11 $ 1.42 $ 2.01
Net Earnings from
Discontinued Operations -- -- -- -- --
Cumulative Effect of Change
in Accounting for Income
Taxes -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Net Earnings $ 2.60 $ 1.91 $ 1.11 $ 1.42 $ 2.01
=========== =========== =========== =========== ===========
Cash Dividends $ .20 $ .20 $ .20 $ .20 $ .20
Book Value Based on Shares
Outstanding at Year End $ 21.12 $ 18.57 $ 16.99 $ 16.07 $ 14.85
Stock Prices
High $ 45 5/8 $ 34 1/8 $ 27 3/8 $ 21 7/8 $ 20 7/8
Low $ 27 1/2 $ 20 $ 17 $ 9 3/4 $ 14
For the Years Ended March 31,
-----------------------------
1989 1988 1987 1986 1985
---- ---- ---- ---- ----
(Dollars in thousands, except per share data)
Revenues $ 1,845,484 $ 1,485,068 $ 1,321,961 $ 1,441,907 1,219,840
Earnings Before Discontinued
Operations and 1988
Accounting Change $ 40,020 $ 24,063 $ 44,204 $ 47,569 $ 39,354
Net Earnings from
Discontinued Operations -- -- -- -- 3,780
Cumulative Effect of Change in
Accounting for Income Taxes -- 50,100 -- -- --
----------- ----------- ----------- ----------- -----------
Net Earnings $ 40,020 $ 74,163 $ 44,204 $ 47,569 $ 43,134
=========== =========== =========== =========== ===========
Total Assets $ 1,800,522 $ 1,148,098 $ 1,150,720 $ 1,068,063 922,745
Total Long-term Debt, including
debentures $ 140,192 $ 178,862 $ 133,461 $ 65,263 $ 63,674
Total Debt $ 240,457 $ 222,962 $ 134,724 $ 120,394 $ 137,674
Deferred Income Taxes $ 74,487 $ 139,767 $ 229,576 $ 204,588 $ 169,303
Negative Goodwill $ 38,981 $ -- $ -- $ -- $ --
Stockholders' Equity $ 384,174 $ 364,846 $ 363,014 $ 327,792 $ 301,954
Total Debt as a Percent of
Total Capitalization (Total
Debt, Deferred Income Taxes,
Negative Goodwill and
Stockholders' Equity) 32.6% 30.6% 18.5% 18.4% 22.6%
Net Earnings as a Percent of
Beginning Stockholders'
Equity 11.0% 20.4% 13.5% 15.8% 10.5%
Per Common Share
Earnings Before Discontinued
Operations and 1988
Accounting Change $ 1.32 $ .75 $ 1.24 $ 1.31 $ 1.01
Net Earnings from
Discontinued Operations -- -- -- -- .09
Cumulative Effect of Change
in Accounting for Income
Taxes -- 1.57 -- -- --
----------- ----------- ----------- ----------- -----------
Net Earnings $ 1.32 $ 2.32 $ 1.24 $ 1.31 $ 1.10
=========== =========== =========== =========== ===========
Cash Dividends $ .14375 $ .125 $ .125 $ .125 $ .125
Book Value Based on Shares
Outstanding at Year End $ 13.28 $ 12.13 $ 10.23 $ 9.17 $ 8.14
Stock Prices
High $ 14 7/8 $ 17 $ 20 1/4 $ 16 3/4 $ 14 1/4
Low $ 10 $ 7 7/8 $ 14 1/2 $ 10 1/4 $ 9
Discontinued operations represents revenues and earnings data of Cenergy
Corporation, an oil and gas subsidiary spun off on October 1, 1984.
On November 30, 1987, Centex Corporation distributed as a dividend to its
stockholders securities relating to Centex Development Company, L.P. (see Note
G to the Consolidated Financial Statements of Centex Corporation and
Subsidiaries). Since this distribution, such securities have traded in tandem
with, and as a part of, the common stock of Centex Corporation.
Debt represents Centex Corporation's debt with the mortgage company and savings
and loan association reflected on the equity method versus consolidation.
16
17
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Led by record results from its Home Building and Mortgage Banking
businesses and significant improvement in its Construction Products operations,
Centex reported for fiscal year 1994 the highest fiscal year revenues of $3.2
billion, earnings before income taxes of $135 million, net earnings of $85.2
million and earnings per share of $2.60, in its history.
During fiscal 1994, Home Building revenues, operating earnings and
closings reached record highs. The following table summarizes Home Building
only results (excluding CDC and certain other items reported in this segment)
for the three-year period ending March 31, 1994 (in millions, except per unit
data):
1994 1993 1992
---- ---- ----
Home Building Revenues* $ 1,869.8 100.0% $1,433.1 100.0% $1,061.9 100.0%
Cost of Sales (1,560.0) (83.5) (1,186.6) (82.8) (869.2) (81.9)
Selling, General & Administrative (213.8) (11.4) (170.4) (11.9) (137.4) (12.9)
--------- ----- -------- ----- -------- -----
Operating Earnings* $ 96.0 5.1% $ 76.1 5.3% $ 55.3 5.2%
========= ===== ======== ===== ======== =====
Units Closed 12,563 10,279 7,739
Unit Sales Price $ 147,466 $138,359 $135,678
% Change 6.6% 2.0% 5.6%
Operating Earnings per Unit $ 7,640 $ 7,408 $ 7,141
% Change 3.1% 3.7% (23.9%)
*CDC and other items excluded from this table represented revenues of $1.8,
$(1.8) and $1.4 million, respectively, and operating losses of $1.8, $.5 and
$1.0 million, respectively.
Closings increased 22% in 1994 resulting in an approximate 31%
increase in housing revenues from 1993. The average home sales price increased
6.6% in fiscal 1994 compared to fiscal 1993. Operating earnings from this
segment, including CDC and other items, were a record $94.2 million this year,
up more than 25% over the prior fiscal year. Home Building's gross profit
margin declined in fiscal 1994 compared to fiscal 1993 due to increases in
construction materials costs, primarily lumber. Margins in 1994 were also
impacted by the results of operations in California, which continued to
experience negative economic conditions. Operating margins did, however,
improve sequentially throughout the year, rising from 4.2% in the first quarter
to 5.7% in the fourth quarter. Home closings and orders for fiscal 1994 were at
the highest level in company history. New orders for the current fiscal year
reached an all-time high of 13,207 homes, up 16% over 11,421 homes for the prior
fiscal year. The backlog of homes sold but not closed at March 31, 1994 reached
5,795 units, a 13% increase over the backlog of 5,151 homes at March 31, 1993.
Revenues from Mortgage Banking for the year ended March 31, 1994
totaled $187.9 million, up 45% from $129.7 million for the prior fiscal year.
Operating earnings reached an all-time high of $71.0 million, a 48% increase
over $47.8 million in 1993. For fiscal 1994, the company originated 58,543
loans valued at approximately $6.4 billion compared to 38,301 originations
valued at about $4.2 billion last year. Originations for Centex-built homes
rose 20% to 9,289 this year while third-party originations increased 61% to
49,254.
For fiscal 1994, revenues from Contracting and Construction Services
were $966.6 million, up 23% from $783.2 million for fiscal 1993. This segment
had an operating loss of $4.5 million this year versus an operating loss of
$4.1 million for the prior fiscal year. The operating loss was due primarily
to continued weak operating margins which resulted from fewer available
projects and increased competition. However, the backlog of uncompleted
construction contracts at March 31, 1994 was $1.24 billion, slightly higher
than the March 31, 1993 backlog of $1.17 billion and a little lower than the
record backlog of $1.3 billion reported at December 31, 1993.
Construction Products revenues were $172.9 million in fiscal 1994, up
22% from $141.2 million for fiscal 1993. Operating earnings from Construction
Products reached $16.6 million this year, compared to earnings of $4.6 million
in the prior fiscal year. The increase was due primarily to high demand for
the cement-related and Gypsum wallboard operations, which resulted in improved
pricing levels.
17
18
The Savings and Loan segment reported fiscal 1994 revenues of $15.5
million, compared to $17.3 million in the prior fiscal year. Operating
earnings from the Savings and Loan were $2.6 million for the current fiscal
year, compared to $3.0 million in the previous year.
The record fiscal year Home Building results were due to more closings
and to margins that improved throughout the year because of home price
increases and lower lumber costs. The record Mortgage Banking results were due
to the lower interest rate environment which prevailed throughout most of
fiscal 1994 and stimulated new home sales and refinancings.
The gain in Construction Products results was due primarily to
increased demand for its products, higher production levels and improved
pricing in its cement-related and gypsum wallboard operations. The company's
wallboard operation reported a profit in fiscal 1994, the first since 1990.
Despite the high construction backlog levels maintained by its Contracting and
Construction Services division throughout the year, margins in this business
remained under intense competitive pressure.
Lumber prices have recently retreated from record levels. The lower
current lumber prices coupled with higher prices for the company's homes will
result in a further strengthening of Home Building margins as fiscal 1995
progresses. Higher mortgage interest rates, however, have slowed home building
orders and significantly reduced mortgage refinancing activity, both of which
will negatively impact fiscal 1995 results for the segments. Results from the
company's Contracting and Construction Services division are not expected to
improve until later in the economic cycle.
FINANCIAL CONDITION
The company has adequate unsecured revolving credit facilities. These
credit facilities serve as back-up lines for overnight borrowings under
uncommitted bank lines and commercial paper. In addition, CTX Mortgage Company
has sufficient committed and uncommitted credit facilities of its own to
finance mortgages which are held during the period while they are being
securitized and readied for delivery against forward sale commitments.
Information regarding Centex's short-term and long-term debt is
included in Note (D) of the Notes to Consolidated Financial Statements of
Centex Corporation and subsidiaries on pages 30-31 of this Report.
Based on its financial condition and existing credit relationships,
Centex believes it will be able to provide adequately for its current and
future growth.
STOCK REPURCHASE PROGRAM
In April and May 1994, Centex announced a 2.1 million share common
stock repurchase program of which approximately 1.1 million shares have been
repurchased.
SUBSEQUENT EVENT
Subsequent to fiscal year end, the Company completed an initial public
offering of 51% of its construction products subsidiary. The new publicly-held
entity, Centex Construction Products, Inc., is trading on the New York Stock
Exchange under the symbol "CXP." Centex received a dividend and other payments
from CXP totaling approximately $186.5 million which has been used to reduce
Centex's outstanding indebtedness. In addition, Centex will report an
after-tax gain related to CXP's initial public offering of approximately $37.5
million during the first quarter of fiscal 1995.
18
19
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information called for in this Item 8 is included herein on pages
21-46 of this Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(See Item 11 below.)
ITEM 11. EXECUTIVE COMPENSATION
Except for the information relating to the executive officers of the
Company, which follows Item 4 of Part I of this Report, the information called
for by Items 10, 11, 12 and 13 is incorporated herein by reference to the
information included and referenced under the following captions (on the pages
indicated) in the Company's Proxy Statement dated July 1, 1994 for the July 28,
1994 Annual Meeting of Stockholders (the "1994 Centex Proxy Statement"):
ITEM CAPTION IN THE 1994 CENTEX PROXY STATEMENT PAGES
---- ------------------------------------------ -----
10 Election of Directors 3-6
10 Section 16(a) Compliance 15
11 Executive Compensation 9-14
12 Security Ownership of Management
and Certain Beneficial Owners 7-8
13 Certain Transactions 15-16
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(See Item 11 above.)
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(See Item 11 above and Schedule II on page 45 of this Report for
information respecting indebtedness to Centex of certain officers and
directors.)
19
20
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this Report:
(1) AND (2) See the Index to Consolidated Financial Statements and Schedules
below for a list of the Financial Statements and Financial Statement schedules
filed herewith.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
FORM 10-K
PAGE REFERENCE
--------------
CENTEX CORPORATION AND SUBSIDIARIES
Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Statement of Consolidated Earnings for the years ended March 31, 1994, 1993 and 1992 . . . . . 22
Consolidated Balance Sheets as of March 31, 1994 and 1993 . . . . . . . . . . . . . . . . . . . 23
Statement of Consolidated Cash Flows for the years ended March 31, 1994, 1993 and 1992 . . . . 24
Statement of Consolidated Stockholders' Equity for the years ended March 31, 1994, 1993 and 1992 25
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Quarterly Results (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Consolidated Supporting Schedules:
Report of Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
I - Marketable Securities - Other Investments - March 31, 1994 . . . . . . . . . . . . . . . . 44
II - Amounts Receivable from Related Parties and Underwriters, Promoters and Employees Other
Than Related Parties for the years ended March 31, 1994, 1993 and 1992 . . . . . . . . . . . . 45
IX - Short-Term Borrowings for the years ended March 31, 1994, 1993 and 1992 . . . . . . . . . 46
Consolidated supporting schedules other than those listed above have
been omitted either because the required information is contained in notes to
the consolidated financial statements or because such schedules are not
required or are not applicable.
(3) EXHIBITS
The information on exhibits required by this Item 14 is set forth in
the Centex Index to Exhibits appearing on pages 75-79 of this Report.
(b) Reports on Form 8-K:
None.
20
21
Centex Corporation and Subsidiaries
AUDITORS' REPORT
TO THE STOCKHOLDERS AND BOARD OF DIRECTORS OF CENTEX CORPORATION:
We have audited the accompanying consolidated balance sheets of Centex
Corporation (a Nevada corporation) and subsidiaries as of March 31, 1994 and
1993, and the related consolidated statements of earnings, stockholders'
equity, and cash flows for each of the three years in the period ended March
31, 1994. These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Centex Corporation and
subsidiaries as of March 31, 1994 and 1993, and the results of their operations
and their cash flows for each of the three years in the period ended March 31,
1994, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the consolidated
financial statements taken as a whole. The supplemental balance sheet data of
Centex Corporation and Financial Services are presented for purposes of
additional analysis and are not a required part of the consolidated financial
statements. This information has been subjected to the auditing procedures
applied in our audits of the consolidated financial statements and, in our
opinion, is fairly stated in all material respects in relation to the
consolidated financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
Dallas, Texas,
May 11, 1994
21
22
Centex Corporation and Subsidiaries
STATEMENT OF CONSOLIDATED EARNINGS
For the Years Ended March 31,
-----------------------------
1994 1993 1992
---- ---- ----
(Dollars in thousands, except per share data)
REVENUES
Home Building $1,871,627 $1,431,265 $1,063,271
Mortgage Banking 187,870 129,747 74,642
Contracting and Construction Services 966,562 783,222 865,009
Construction Products 172,900 141,164 135,676
Savings and Loan 15,523 17,294 27,109
---------- ---------- ----------
3,214,482 2,502,692 2,165,707
---------- ---------- ----------
COSTS AND EXPENSES
Home Building 1,777,449 1,355,677 1,008,934
Mortgage Banking 116,885 81,920 55,175
Contracting and Construction Services 971,062 787,325 861,267
Construction Products 156,274 136,516 134,538
Savings and Loan 12,958 14,267 24,994
Corporate General and Administrative 15,158 13,120 12,807
Interest 29,683 22,108 22,140
---------- ---------- ----------
3,079,469 2,410,933 2,119,855
---------- ---------- ----------
EARNINGS BEFORE INCOME TAXES 135,013 91,759 45,852
Income Taxes 49,851 30,721 11,295
---------- ---------- ----------
NET EARNINGS $ 85,162 $ 61,038 $ 34,557
========== ========== ==========
EARNINGS PER SHARE $ 2.60 $ 1.91 $ 1.11
========== ========== ==========
See notes to consolidated financial statements.
22
23
Centex Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS
Centex Corporation and
Subsidiaries Centex Corporation
------------ ------------------
March 31, March 31,
--------- ---------
1994 1993 1994 1993
---- ---- ---- ----
(Dollars in thousands)
ASSETS
Cash and Cash Equivalents $ 76,287 $ 26,065 $ 13,284 $ 13,802
Marketable Securities 78,241 110,316 - -
Receivables -
Residential Mortgage Loans 677,641 591,328 - -
Construction Contracts 161,929 153,780 161,929 153,780
Trade 79,487 67,623 54,630 45,086
Note 10,115 8,163 10,115 8,163
Affiliates - - - -
Inventories -
Housing Projects 969,769 764,959 969,769 764,959
Land Held for Development and Sale 104,869 106,785 104,869 106,785
Construction Products 22,819 24,601 22,819 24,601
Investments -
Joint Ventures and Unconsolidated Subsidiaries 56,928 50,277 62,191 73,350
Centex Development Company, L.P. 71,000 71,517 71,000 71,517
Property and Equipment, net 188,930 177,610 169,234 167,406
Government-Guaranteed S&L Assets -
Receivables 19,030 13,579 - -
Covered Assets 24,737 69,244 - -
Other Assets and Deferred Charges 38,574 36,246 22,101 24,020
---------- ---------- ---------- ----------
$2,580,356 $2,272,093 $1,661,941 $1,453,469
========== ========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable and Accrued
Liabilities $ 618,943 $ 527,094 $ 504,622 $ 422,242
S&L Deposits and FHLB Borrowings 211,055 204,140 - -
Short-term Debt 783,585 637,570 206,638 145,000
Long-term Debt 222,832 223,988 222,832 223,988
Deferred Income Taxes 51,180 72,784 35,088 55,722
Negative Goodwill 24,102 28,102 24,102 28,102
Stockholders' Equity -
Common Stock, $.25 Par Value; Authorized
50,000,000 Shares; Issued 31,663,808 and
31,140,878 Shares 7,916 7,785 7,916 7,785
Capital in Excess of Par Value 26,631 15,376 26,631 15,376
Retained Earnings 634,112 555,254 634,112 555,254
---------- ---------- ---------- ----------
Total Stockholders' Equity 668,659 578,415 668,659 578,415
---------- ---------- ---------- ----------
$2,580,356 $2,272,093 $1,661,941 $1,453,469
========== ========== ========== ==========
Financial Services
------------------
March 31,
---------
1994 1993
---- ----
ASSETS
Cash and Cash Equivalents $ 63,003 $ 12,263
Marketable Securities 78,241 110,316
Receivables -
Residential Mortgage Loans 677,641 591,328
Construction Contracts - -
Trade 24,857 22,537
Note - -
Affiliates 80,806 63,555
Inventories -
Housing Projects - -
Land Held for Development and Sale - -
Construction Products - -
Investments -
Joint Ventures and Unconsolidated Subsidiaries - -
Centex Development Company, L.P. - -
Property and Equipment, net 19,696 10,204
Government-Guaranteed S&L Assets -
Receivables 19,030 13,579
Covered Assets 24,737 69,244
Other Assets and Deferred Charges 16,473 12,226
---------- ----------
$1,004,484 $ 905,252
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable and Accrued
Liabilities $ 114,321 $ 104,852
S&L Deposits and FHLB Borrowings 211,055 204,140
Short-term Debt 576,947 492,570
Long-term Debt - -
Deferred Income Taxes 16,092 17,062
Negative Goodwill - -
Stockholders' Equity -
Common Stock, $.25 Par Value; Authorized
50,000,000 Shares; Issued 31,663,808 and
31,140,878 Shares 12 12
Capital in Excess of Par Value 51,938 46,982
Retained Earnings 34,119 39,634
---------- ----------
Total Stockholders' Equity 86,069 86,628
---------- ----------
$1,004,484 $ 905,252
========== ==========
See notes to consolidated financial statements. In the supplemental data
presented above, "Centex Corporation" means the basis of presentation as
described in Note A to the consolidated financial statements; "Financial
Services" means CTX Mortgage Company and CTX Holding Company and its savings
and loan subsidiary, Texas Trust Savings Bank, FSB and affiliates.
Transactions between Centex Corporation and Financial Services have been
eliminated from the Centex Corporation and Subsidiaries balance sheets.
23
24
Centex Corporation and Subsidiaries
STATEMENT OF CONSOLIDATED CASH FLOWS
For the Years Ended March 31,
-----------------------------
1994 1993 1992
---- ---- ----
(Dollars in thousands)
CASH FLOWS - OPERATING ACTIVITIES
Net Earnings $ 85,162 $ 61,038 $ 34,557
Adjustments -
Depreciation, Depletion and
Amortization 19,640 16,156 15,421
Deferred Income Taxes (7,760) 3,545 (3,962)
Equity in (Earnings) Losses of Joint
Ventures, Unconsolidated Subsidiaries
and CDC (3,387) 120 (1,040)
-------- -------- --------
93,655 80,859 44,976
(Increase) Decrease in Receivables (21,965) (15,001) 11,889
Increase in Inventories (201,539) (136,259) (49,221)
Increase in Payables and Accruals 91,864 77,920 3,981
(Increase) Decrease in Other Assets (4,190) (6,337) 813
Other, net (13,859) (2,265) (5,026)
-------- -------- --------
(56,034) (1,083) 7,412
-------- -------- --------
CASH FLOWS - INVESTING ACTIVITIES
(Increase) Decrease in Advances to Joint
Ventures, Unconsolidated Subsidiaries
and CDC (2,747) 2,669 (2,374)
Property and Equipment Additions, net (31,936) (18,019) (18,119)
Decrease (Increase) in
Marketable Securities 32,075 91,710 (202,026)
-------- -------- --------
(2,608) 76,360 (222,519)
-------- -------- --------
CASH FLOWS - FINANCING ACTIVITIES
Increase in Residential Mortgage Loans (87,048) (12,840) (279,453)
Decrease in Government-Guaranteed S&L Assets 39,056 105,275 241,589
Increase (Decrease) in S&L
Deposits, FHLB Borrowings and Debt 6,915 (241,130) (2,203)
Increase in Debt 144,859 30,250 284,362
Stock and Dividend Transactions, net 5,082 (1,117) 260
-------- -------- --------
108,864 (119,562) 244,555
-------- -------- --------
NET INCREASE (DECREASE) IN CASH 50,222 (44,285) 29,448
CASH AT BEGINNING OF YEAR 26,065 70,350 40,902
-------- -------- --------
CASH AT END OF YEAR $ 76,287 $ 26,065 $ 70,350
======== ======== ========
See notes to consolidated financial statements.
24
25
Centex Corporation and Subsidiaries
STATEMENT OF CONSOLIDATED STOCKHOLDERS' EQUITY
For the Years Ended March 31,
-----------------------------
1994 1993 1992
---- ---- ----
(Dollars in thousands)
COMMON STOCK
Balance at Beginning of Year $ 7,785 $ 7,623 $ 7,569
Exercise of Stock Options, net 131 200 86
Retirement of 187,400 and 128,800
Shares in 1993 and 1992 - (38) (32)
-------- -------- --------
Balance at End of Year 7,916 7,785 7,623
-------- -------- --------
CAPITAL IN EXCESS OF PAR VALUE
Balance at Beginning of Year 15,376 10,501 4,257
Exercise of Stock Options,
including related tax benefits 11,255 8,828 10,684
Retirement of Common Shares - (3,953) (4,440)
-------- -------- --------
Balance at End of Year 26,631 15,376 10,501
-------- -------- --------
RETAINED EARNINGS
Balance at Beginning of Year 555,254 500,370 471,851
Net Earnings 85,162 61,038 34,557
Cash Dividends (6,304) (6,154) (6,038)
-------- -------- --------
Balance at End of Year 634,112 555,254 500,370
-------- -------- --------
TOTAL STOCKHOLDERS' EQUITY $668,659 $578,415 $518,494
======== ======== ========
See notes to consolidated financial statements.
25
26
Centex Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(A) SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION
The consolidated financial statements include the accounts of Centex
Corporation and subsidiaries (Centex or the company) after the elimination of
all significant intercompany balances and transactions.
BASIS OF BALANCE SHEET PRESENTATION
Balance sheet data are presented in the following categories:
* CENTEX CORPORATION AND SUBSIDIARIES. This represents the adding together
of Centex Corporation, Financial Services and all of their consolidated
subsidiaries. The effects of transactions among related companies within
the consolidated group have been eliminated.
* CENTEX CORPORATION. This information is presented as supplemental
information and represents the adding together of all subsidiaries other
than CTX Mortgage Company (Mortgage Banking group) and CTX Holding Company
(CTX Holding) and its savings and loan subsidiary, Texas Trust Savings
Bank, FSB (Texas Trust) and affiliates (together, the Savings and Loan
group) which are presented on an equity basis of accounting.
* FINANCIAL SERVICES. This represents the adding together of the Mortgage
Banking group and the Savings and Loan group.
REVENUE RECOGNITION
Revenue from housing projects is recognized as homes are sold and title passes.
Earnings from sale of mortgage servicing rights and from loan origination fees
are recognized when the related loan is sold and delivered to third-party
purchasers.
Long-term construction contract revenues are recognized on the
percentage-of-completion method based on the costs incurred relative to total
estimated costs. Full provision is made for any anticipated losses. Billings
for long-term construction contracts are rendered monthly, including the amount
of retainage withheld by the customer until contract completion. As a general
contractor, the company withholds similar retainages from each subcontractor.
Retainages of $63 million included in construction contracts receivable and $54
million included in accounts payable at March 31, 1994 are generally receivable
and payable within one year.
Claims are recognized as revenue only after management is confident of
collection or when agreement has been reached with the customer.
Notes receivable at March 31, 1994 are collectible primarily over 4 years, with
$4.4 million being due within one year. The weighted average interest rate at
March 31, 1994 was 5.1%.
INVENTORY, CAPITALIZATION AND SEGMENT EXPENSES
Housing projects and land held for development and sale are stated at the lower
of cost (including direct construction costs and capitalized interest and real
estate taxes) or market. The capitalized costs, other than interest, are
included in Home Building costs and expenses in the statement of consolidated
earnings as related revenues are recognized. Interest costs relieved from
inventories are included as interest expense.
Construction Products inventories are stated at the lower of average cost
(including applicable material, labor and plant overhead) or market.
General operating expenses associated with each segment of business are
expensed as incurred and are included in the appropriate segment of business.
26
27
JOINT VENTURES
The company is involved in joint ventures with interests ranging up to 50%.
Proportionate revenues and costs and expenses, which are not significant, are
included in the statement of consolidated earnings for 50%-owned ventures.
Earnings or losses of less than 50%-owned ventures are not significant and are
included in the appropriate segment of business revenues. Investments in joint
ventures are carried on the equity method in the consolidated balance sheets.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Major renewals and improvements are
capitalized and depreciated. Repairs and maintenance are expensed as incurred.
Depreciation is provided on a straight-line basis over the estimated useful
lives of depreciable assets. Raw material deposits are depleted as such
deposits are extracted for production. Costs and accumulated depreciation
applicable to assets retired or sold are eliminated from the accounts and any
resulting gains or losses are recognized at such time.
EARNINGS PER SHARE
Earnings per share are based on the weighted average number of common and
common equivalent shares outstanding in 1994, 1993 and 1992 of 32,789,852;
32,015,785 and 31,251,626, respectively.
MARKETABLE SECURITIES
Marketable securities at March 31, 1994 represent U.S. Government and corporate
securities owned by Texas Trust. These securities had a market value which
approximates book value.
RESIDENTIAL MORTGAGE LOANS RECEIVABLE
Residential mortgage loans held by CTX Mortgage of $632.1 million and Texas
Trust of $45.5 million at March 31, 1994 are stated at the lower of aggregate
cost or market. Market is determined based on CTX Mortgage and Texas Trust's
forward sale commitments. Substantially all of CTX Mortgage and Texas Trust's
mortgage loans are sold forward upon closing and subsequently delivered to
third-party purchasers within 60 days thereafter.
STATEMENT OF CONSOLIDATED CASH FLOWS - SUPPLEMENTAL DISCLOSURES
Interest expenses relating to the financial services operations (Mortgage
Banking and Savings and Loan) are included in their respective costs and
expenses. Interest related to non-financial services operations are included
as interest expense as summarized below.
For the Years Ended March 31,
-----------------------------
1994 1993 1992
---- ---- ----
Total Interest Incurred $68,856 $63,721 $67,838
Less--Mortgage Banking (30,696) (28,882) (23,726)
Savings and Loan ( 8,477) (12,731) (21,972)
------- ------- -------
Interest Expense $29,683 $22,108 $22,140
======= ======= =======
Net payments made for federal, state and foreign income taxes during the fiscal
years ended March 31, 1994, 1993 and 1992 were $41.9 million, $11.4 million,
and $18.5 million, respectively.
OFF-BALANCE-SHEET RISK
CTX Mortgage and Texas Trust enter into various financial agreements, in the
normal course of business, in order to manage the exposure to changing interest
rates as a result of having issued loan commitments to their customers at a
specified price and period, and committing to sell mortgage loans to various
investors.
27
28
CTX Mortgage and Texas Trust had commitments to mortgagors of approximately
$505 million and commitments to sell to investors against these loan
commitments of approximately $379 million at March 31, 1994.
POST-RETIREMENT OBLIGATIONS
The company has no significant post-retirement obligations. Accordingly, the
adoption of Statement of Financial Accounting Standards (SFAS) No. 106, had no
impact on the company's financial statements.
(B) SAVINGS AND LOAN OPERATIONS
ACQUISITION
In December 1988, the company purchased certain assets and assumed certain
liabilities of four Texas savings and loan associations pursuant to acquisition
agreements and an assistance agreement with the Federal Savings and Loan
Insurance Corporation (FSLIC). The acquisition was made by Texas Trust, a
federal stock savings bank and subsidiary of CTX Holding, a wholly-owned
subsidiary of the company. The FSLIC received a warrant to purchase a 20%
interest in Texas Trust's common stock for $.4 million through December 2003.
Texas Trust's common equity as of March 31, 1994 was approximately $5.9
million.
In August 1989, Congress passed the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 (FIRREA) which abolished the FSLIC and established the
FSLIC Resolution Fund (the Fund) to assume all assets, debts, obligations and
other liabilities of the FSLIC. The Fund is managed by the Federal Deposit
Insurance Corporation (FDIC). All subsequent references to the Fund include
previous agreements with the FSLIC.
Certain of the acquired assets are subject to Fund assistance through December
1998 (Covered Assets). Any losses, write-downs or costs incurred in connection
with the operation and disposition of these assets are reimbursed by the Fund.
In addition, the Fund provided a guaranteed minimum yield on the Covered Assets
equal to the Texas Cost of Funds plus a designated spread through December
1998. At that time, any remaining Covered Assets will be adjusted to their
then fair market value and retained by Texas Trust. The Fund will reimburse
Texas Trust for any required valuation adjustments. Yield maintenance on
Covered Assets for the years ended March 31, 1994, 1993 and 1992 were $2.8,
$8.5, and $22.0 million, respectively. In addition, $12.1, $86.1, and $80.1
million of assistance were provided in fiscal 1994, 1993 and 1992,
respectively, primarily as reimbursement for losses relating to Covered Assets.
The agreements also provide for maintenance by Texas Trust of certain minimum
capital levels, reimbursement by the Fund of certain non-interest bearing
amounts over a 10-year period, sharing by the Fund in a portion of the tax
benefits realized by Centex Corporation, and indemnification by the Fund
against unassumed liabilities and claims.
Under the terms of a related capital maintenance agreement, Texas Trust cannot
declare or pay dividends that would cause its regulatory capital to fall below
specified levels or which would exceed 50% of net income on a cumulative basis
for common dividends and 75% for preferred dividends. Centex Corporation has
no obligation to make additional capital contributions to CTX Holding or Texas
Trust.
At March 31, 1994, and throughout the period since their establishment, Texas
Trust has been in full compliance with federally- mandated capital
requirements.
Centex and Texas Trust are negotiating with the FDIC to terminate the
assistance agreement and to have the FDIC prepay the non-interest-bearing fund
receivable at a discounted value, retire the warrant to purchase 20% of Texas
Trust common stock and purchase all remaining covered assets. Management
anticipates that the termination of the assistance agreement will be concluded
during fiscal year 1995 without a significant impact on the company's financial
condition or results of operations.
PURCHASE METHOD OF ACCOUNTING
The acquisition, recorded under the purchase method of accounting, resulted in
the establishment of negative goodwill representing the net assets acquired
(including the company's portion of certain tax benefits existing at
acquisition date) in excess of costs.
28
29
GOVERNMENT-GUARANTEED S&L ASSETS
March 31,
---------
1994 1993
---- ----
Receivables from the Fund $19,030 $13,579
======= =======
Covered Assets, including mortgage loans,
by type of collateral -
Land and Commercial Real Estate $11,961 $37,077
Single- and Multi-family Residential - 15,833
Investments in Subsidiaries and Other 12,776 16,334
------- -------
24,737 69,244
Less--Management's Estimate of Future
Disposition Losses to be Reimbursed
by the Fund--Unaudited (3,155) (6,000)
------- -------
Estimated Market Value--Unaudited $21,582 $63,244
======= =======
DEPOSITS AND FHLB BORROWINGS
March 31,
---------
1994 1993
---- ----
Weighted Weighted
Average Average
Contractual Contractual
Interest Rate Amount Interest Rate Amount
-------------- ------ ------------- -------
Certificates of
Deposit 3.87% $169,715 4.27% $160,828
Savings and
Checking Accounts 2.42% 37,340 2.58% 39,312
-------- --------
Total Deposits 207,055 200,140
Federal Home Loan Bank
(FHLB) Borrowings,
secured by assets
aggregating $4.5
million 9.88% 4,000 9.88% 4,000
-------- --------
$211,055 $204,140
======== ========
Contractual maturities of certificates of deposit as of March 31, 1994 are:
fiscal 1995, $130,067; fiscal 1996, $25,245; fiscal 1997, $6,131; fiscal 1998,
$2,471; fiscal 1999, $5,513; and thereafter, $288. Maturities of FHLB
borrowings at March 31, 1994 are: fiscal 1996, $2,000; and fiscal 1999, $2,000.
29
30
(C) PROPERTY AND EQUIPMENT
Cost by major category and accumulated depreciation are summarized below:
March 31,
---------
1994 1993
---- ----
Land, Buildings and Improvements $ 37,707 $ 37,793
Plants, Machinery, Equipment and
Other 273,242 247,051
---------- ---------
310,949 284,844
Accumulated Depreciation (122,019) (107,234)
---------- ---------
$ 188,930 $ 177,610
========== =========
(D) INDEBTEDNESS
SHORT-TERM DEBT
Balances of short-term debt were:
March 31,
---------
1994 1993
---- ----
Centex Mortgage Centex Mortgage
Corporation Banking Corporation Banking
----------- ------- ----------- -------
Banks $ 84,500 $ 225,500 $ 86,500 $305,000
Commercial Paper 122,000 - 58,500 -
Other Financial Institutions 138 351,447 - 187,570
-------- --------- -------- --------
$206,638 $ 576,947 $145,000 $492,570
-------- --------- -------- --------
Consolidated Short-term Debt $783,585 $637,570
======== ========
The company borrows on a short-term basis from banks under uncommitted lines
which bear interest at prevailing market rates. The weighted average interest
rates of the short-term indebtedness outstanding during fiscal 1994 and 1993
were 3.6% and 4.2%, respectively. The weighted average interest rates of
balances outstanding at March 31, 1994 and 1993 were 4.1% and 4.4%,
respectively.
LONG-TERM DEBT
Balances of long-term debt were:
30
31
March 31,
---------
1994 1993
---- ----
Senior Notes, 9.05% Due in May 1996 $100,000 $100,000
Subordinated Debentures, 8.75% to 8.8%
Due in 2007 119,284 119,255
Other Indebtedness, 4.25% to 10% Due
Through 2000 3,548 4,733
-------- --------
$222,832 $223,988
======== ========
Maturities of long-term debt during the next five fiscal years are: 1995,
$3,139; 1996, $409; 1997, $100,000; 1998, $0; 1999, $0.
Included in other long-term debt is a $2.1 million convertible subordinated
debenture sold in August 1985 to a corporate officer at par. The indebtedness
bears interest at prime and is convertible into 200,000 shares of the company's
common stock. In connection with this transaction, the company has guaranteed
the payment of a $2.1 million note payable to a bank by the officer.
CREDIT FACILITIES
Centex has a long-term revolving credit agreement totaling $350 million with a
group of banks, which is available for general corporate purposes. Borrowings
under this agreement bear interest at money market rates. Annual commitment
fees are .25% of the facility amount. The agreement expires in April 1996.
Under the terms of the agreement, $140 million may be borrowed directly by CTX
Mortgage. The maximum principal amount outstanding under this agreement during
the fiscal year ended March 31, 1994 was $140 million, all of which was
borrowed by CTX Mortgage. There were no borrowings outstanding to Centex
Corporation under this or the previous facilities during the fiscal years ended
March 31, 1994 and 1993.
During August 1993, Centex entered into a $115 million, 364-day revolving
credit agreement with a group of banks. The facility was also for general
corporate purposes and the stated interest rates were tied to short-term money
market indices. Effective May 1994, this facility was canceled by the company.
CTX Mortgage has a $300 million committed and secured mortgage warehouse
facility with a group of banks, which expires in November 1994. CTX Mortgage
also maintains committed mortgage warehouse facilities of $300 million expiring
in December 1994 with two investment banks. In addition, in May 1993, CTX
Mortgage established a $200 million asset-backed commercial paper program,
which expires in May 1996. The bank warehouse facility and the commercial
paper program provide for limited support by Centex, as defined, of up to a
maximum of 10% of the commitments. Management believes the facilities expiring
by December 1994 can be renewed or replaced on essentially the same terms.
Under the most restrictive covenants of the various debt agreements, retained
earnings of $285 million were free of restrictions at March 31, 1994.
(E) CAPITAL STOCK
SHAREHOLDER RIGHTS PLAN
In September 1986, the company adopted a Shareholder Rights Plan (Rights Plan)
pursuant to which each holder of record of a share of common stock was granted
one right for each share of common stock held. The Rights Plan was amended in
May 1988. Under the Rights Plan, as amended, each right entitles its holder to
purchase one one-hundredth of a share of a new series of preferred stock
designated Junior Participating Preferred Stock, Series D at an exercise price
of $120. The rights will become exercisable 10 days after anyone acquires 20%
or more of the company's common stock, or 10 business days after anyone
commences a tender offer which, if successful, would result in such person
owning 20% or more of the company's common stock. In addition, if anyone
acquires 20% or more of the common stock (other than pursuant to certain offers
for all shares of common stock specified in the Rights Plan), or a 20% or more
holder engages in certain specified "self-dealing" transactions or combines
with the company in a reverse merger in which the company survives and its
shares of common stock are not changed, each right will entitle its holder
(other than a holder which owns 20% or more of the common stock) to purchase
shares of company common stock (or, in certain circumstances, other
consideration) with a value of twice the $120 exercise price. If, following an
acquisition of 20% or more of the common stock, the company is acquired in a
merger or sells 50% of its assets or earning power, each right will entitle its
holder (other than a holder which owns 20% or more of the common stock) to
purchase common stock of the acquiring company with a value of twice the $120
exercise price. In general, the rights are redeemable at $.05 per right until
15 days after anyone acquires 20% or more of the common stock. Unless earlier
redeemed, the rights will expire on October 1, 1996.
31
32
STOCK OPTIONS
The company has two stock option plans for directors, officers and key
employees of the company, the Centex Corporation 1987 Stock Option Plan (the
1987 Plan) and the Centex Corporation Stock Option Plan (the Centex Plan).
Option grants under the Centex Plan may not be less than the fair market value
at the date of the grant. Option grants under the 1987 Plan may be less than
the fair market value at the date of the grant. Under both plans, option
periods and exercise dates may vary within a maximum period of 10 years. A
summary of the activity in the stock option plans is presented below:
Number Option Price
Options at March 31, of Shares Range per Share
- -------------------- --------- ---------------
Outstanding
1994 3,641,300 $8.50 TO $33.875
1993 3,699,230 $8.50 to $23.125
Exercised
1994 518,930 $8.50 TO $18.313
1993 1,262,414 $5.30 to $18.375
Exercisable
1994 849,002 $8.50 TO $18.375
1993 956,678 $8.50 to $18.375
Available for grant
1994 872,656
1993 1,333,656
During fiscal 1994, options for 475,000 shares were granted and previously
granted options for 14,000 shares became available for reissue. At March 31,
1994, the company had 4,513,956 common shares reserved for stock options.
The company records proceeds from the exercise of options as additions to
common stock and capital in excess of par value. The federal tax benefit, if
any, is considered additional capital in excess of par value. No charges or
credits would be made to earnings unless options were to be granted at less
than fair market value at the date of the grant.
PREFERRED STOCK
The company is authorized to issue 5,000,000 shares of preferred stock, the
terms of which shall be set by the Board of Directors.
(F) INCOME TAXES
The provision for income taxes includes the following components:
For the Years Ended March 31,
-----------------------------
1994 1993 1992
---- ---- ----
Current Provision
Federal $ 52,943 $ 22,429 $ 10,994
State 4,668 4,747 4,263
-------- -------- --------
57,611 27,176 15,257
-------- -------- --------
Deferred Provision (Benefit)
Federal (10,762) 2,581 (1,983)
State 3,002 964 (1,979)
-------- -------- --------
(7,760) 3,545 (3,962)
-------- -------- --------
Provision for Income Taxes $ 49,851 $ 30,721 $ 11,295
======== ======== ========
32
33
The effective tax rate is greater than the federal statutory rate of 35% in
1994 and less than the federal statutory rate of 34% in 1993 and 1992 due to
the following items:
For the Years Ended March 31,
-----------------------------
1994 1993 1992
---- ---- ----
Financial Income Before Taxes $135,013 $91,759 $45,852
======== ======= =======
Income Taxes at Statutory Rate $ 47,254 $31,198 $15,590
Increases (Decreases) in Tax Resulting From -
State Income Taxes, net 4,826 3,840 1,379
Statutory Depletion in Excess of Cost (912) (603) (560)
Tax Exempt Fund Assistance (1,238) (3,000) (4,650)
Other (79) (714) (464)
-------- ------- -------
Provision for Income Taxes $ 49,851 $30,721 $11,295
======== ======= =======
Effective Tax Rate 37% 33% 25%
During fiscal year 1994, the "Revenue Reconciliation Act of 1993" was signed
into law which, among other things, changed the federal statutory tax rate from
34% to 35%. In accordance with SFAS No. 109, "Accounting for Income Taxes,"
the tax effect of this new law was recognized by the company during the year.
These changes had no material effect on the financial statements of the
company.
Certain payments from the Fund are exempt from federal income taxes. These tax
benefits have been reflected as a reduction of the income tax provision.
The deferred income tax provision (benefit) results from the following
temporary differences in the recognition of revenues and expenses for tax and
financial reporting purposes:
For the Years Ended March 31,
------------------------------
1994 1993 1992
---- ---- ----
Installment Sale Reversals $ (153) $ (326) $(1,469)
Net Operating Loss Utilization (Carryforward) 247 918 (1,165)
Uniform Capitalization for Tax Reporting (777) (580) (605)
Completed Contract Reporting (318) (2,997) (42)
Excess Tax Depreciation and Amortization 444 88 2,878
Interest and Real Estate Taxes Expensed
as Incurred 430 2,988 2,149
Alternative Minimum Tax 11,012 3,985 (7,683)
Financial Accrual Changes and Other (18,645) (531) 1,975
------- ------- -------
$(7,760) $ 3,545 $(3,962)
======= ======= =======
33
34
Components of deferred income taxes are as follows:
March 31,
---------
1994 1993
---- ----
Deferred Tax Liabilities
Excess Tax Depreciation and Amortization $ 37,977 $ 37,533
Interest and Real Estate Taxes Expensed
as Incurred 26,698 26,459
Financial Accruals - 17,333
Consolidated Return Regulation Deferrals 6,898 6,767
All Other 11,163 9,780
------- --------
Total Deferred Tax Liabilities 82,736 97,872
------- --------
Deferred Tax Assets
Alternative Minimum Tax (507) (10,560)
Uniform Capitalization for Tax Reporting (12,574) (11,797)
Financial Accruals (16,143) -
All Other (2,332) (2,731)
------- --------
Total Deferred Tax Assets (31,556) (25,088)
------- --------
Net Deferred Tax Liability $51,180 $ 72,784
======= ========
(G) CENTEX DEVELOPMENT COMPANY, L.P.
In March 1987, certain of the company's subsidiaries contributed to Centex
Development Company, L.P. (CDC), a newly formed master limited partnership,
properties with a historical cost basis (which approximated market value) of
approximately $76 million. CDC was formed to enable stockholders to
participate in long-term real estate development projects whose dynamics are
inconsistent with Centex's traditional financial objectives.
In November 1987, the company distributed as a dividend to its stockholders
securities relating to CDC. These securities included all of the issued and
outstanding shares of common stock of 3333 Holding Corporation and warrants to
purchase approximately 80% of the Class B units of limited partnership interest
in CDC. A wholly-owned subsidiary of 3333 Holding Corporation serves as
general partner of CDC. These securities are held by a nominee on behalf of
the stockholders and will trade in tandem with the common stock of the company
until such time as they are detached. The securities may be detached at any
time by Centex's Board of Directors but the warrants to purchase Class B units
automatically become detached in November 1997 unless extended by Centex's
stockholders.
The partnership agreement provides that Centex, the Class A limited partner, is
entitled to a cumulative preferred return of 9% per annum on the average
outstanding balance of its unrecovered capital, defined as its initial capital
contribution, adjusted for cash distributions representing return of the
initial capital contribution. No payments were made in fiscal 1994, 1993 or
1992.
Supplementary condensed combined financial statements for the company, 3333
Holding Corporation and subsidiary and Centex Development Company, L.P. are set
forth below. For additional information on 3333 Holding Company and its
subsidiary and Centex Development Company, L.P., see their separate financial
statements and related footnotes included elsewhere in this annual report.
34
35
SUPPLEMENTARY CONDENSED COMBINED BALANCE SHEETS
March 31,
---------
1994 1993
---- ----
ASSETS
Cash and Cash Equivalents $ 76,388 $ 27,317
Marketable Securities 78,241 110,316
Receivables 930,428 821,852
Inventories 1,223,753 1,027,938
Investments in Joint Ventures and
Unconsolidated Subsidiaries 56,928 50,277
Property and Equipment, net 188,930 177,610
Government-Guaranteed S&L Assets 43,767 82,823
Other Assets and Deferred Charges 38,574 36,246
---------- ----------
$2,637,009 $2,334,379
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable and Accrued
Liabilities $ 620,824 $ 529,381
S&L Deposits and FHLB Borrowings 211,055 204,140
Short-term Debt 837,734 696,832
Long-term Debt 222,832 223,988
Deferred Income Taxes 51,180 72,784
Negative Goodwill 24,102 28,102
Stockholders' Equity 669,282 579,152
---------- ----------
$2,637,009 $2,334,379
========== ==========
SUPPLEMENTARY CONDENSED COMBINED STATEMENT OF EARNINGS
For the Years Ended March 31,
-----------------------------
1994 1993 1992
---- ---- ----
Revenues $3,224,025 $2,501,691 $2,174,777
Costs and Expenses 3,089,126 2,410,028 2,129,032
---------- ---------- ----------
Earnings Before Income Taxes 134,899 91,663 45,745
Income Taxes 49,851 30,721 11,295
------------ ---------- ----------
Net Earnings $ 85,048 $ 60,942 $ 34,450
=========== ========== ==========
35
36
(H) BUSINESS SEGMENTS
The company operates in five business segments: Home Building, Mortgage
Banking, Contracting and Construction Services, Construction Products and
Savings and Loan.
Intersegment revenues are not material and are not shown in the following
tables. Included with the Construction Products segment are Investments in
Joint Ventures of $50.5, $46.9 and $44.0 million at March 31, 1994, 1993, and
1992, respectively, including their earnings before income taxes of $5.3, $4.5
and $2.2 million for 1994, 1993, and 1992, respectively. The remaining
investments are included in the other segments. The investment in Centex
Development Company, L.P. is included in the Home Building segment.
HOME BUILDING
Home Building operations involve the construction and sale of residential
housing. These activities also include the purchase and development of land.
The following table sets forth financial information relating to the Home
Building operations.
For the Years Ended March 31,
-----------------------------
1994 1993 1992
---- ---- ----
(Dollars in millions)
Revenues $ 1,871.6 $1,431.3 $1,063.3
Cost of Sales & Expenses 1,777.4 1,355.7 1,009.0
--------- -------- --------
Operating Earnings $ 94.2 $ 75.6 $ 54.3
========= ======== ========
Identifiable Assets $ 1,203.2 $ 981.1 $ 838.3
========= ======== ========
Capital Expenditures $ 9.3 $ 2.1 $ 2.0
========= ======== ========
Depreciation and Amortization $ 2.8 $ 2.2 $ 1.9
========= ======== ========
Mortgage Banking
Mortgage Banking operations involve the financing of residential housing.
These activities include mortgage origination and other related services on
homes sold by subsidiaries and by others. The following table sets forth
financial information relating to the Mortgage Banking operations.
For the Years Ended March 31,
-----------------------------
1994 1993 1992
---- ---- ----
(Dollars in millions)
Revenues $187.9 $129.7 $ 74.6
Cost of Sales & Expenses 116.9 81.9 55.1
------ ------ -------
Operating Earnings $ 71.0 $ 47.8 $ 19.5
====== ====== =======
Identifiable Assets $685.6 $624.8 $ 598.1
====== ====== =======
Capital Expenditures $ 11.0 $ 7.1 $ 1.7
====== ====== =======
Depreciation and Amortization $ 3.6 $ 1.5 $ 1.0
====== ====== =======
CONTRACTING AND CONSTRUCTION SERVICES
Contracting and Construction Services includes the construction of buildings
for both private and government interests, including office, commercial and
industrial buildings, hospitals, hotels, museums, libraries, airport
facilities, condominiums and educational institutions.
The following table sets forth financial information relating to the
Contracting and Construction Services operation. As this segment generates
significant levels of cash flow for use in the company's other segments,
Intracompany Interest Income (credited at the prime rate in effect) is
reflected in this segment. These amounts are eliminated in consolidation.
For the Years Ended March 31,
-----------------------------
1994 1993 1992
---- ---- ----
(Dollars in millions)
Revenues $966.6 $783.2 $865.0
Cost of Sales & Expenses 971.1 787.3 861.3
------ ------ ------
Operating Earnings (Loss) (4.5) (4.1) 3.7
Intracompany Interest Income 13.8 14.0 16.5
------ ------ ------
Total $ 9.3 $ 9.9 $ 20.2
====== ====== ======
Identifiable Assets * $178.9 $170.4 $175.2
====== ====== ======
Capital Expenditures $ 2.8 $ 1.8 $ 2.4
====== ====== ======
Depreciation and Amortization $ 3.0 $ 2.8 $ 2.9
====== ====== ======
* The "net assets" position of the Contracting and Construction Services
segment provides significant cash flow because payables and accruals
consistently exceed gross assets.
36
37
CONSTRUCTION PRODUCTS
Construction Products operations include the production, distribution and sale
of cement, aggregates, readymix concrete and gypsum wallboard. Financial
information relating to the Construction Products operation is summarized
below:
For the Years Ended March 31,
-----------------------------
(Dollars in millions)
1994 1993 1992
---- ---- ----
Cement Gypsum Total Cement Gypsum Total Cement Gypsum Total
------ ------ ----- ------ ------ ----- ------ ------ -------
Revenues $140.1 $ 32.8 $172.9 $119.8 $ 21.4 $141.2 $118.2 $ 17.5 $135.7
Cost of Sales & Expenses 123.6 32.7 156.3 110.6 26.0 136.6 110.7 23.9 134.6
------ ------ ------ ------ ------ ------ ------ ------ ------
Operating Earnings
(Loss) $ 16.5 $ 0.1 $ 16.6 $ 9.2 $ (4.6) $ 4.6 $ 7.5 $ (6.4) $ 1.1
====== ======= ====== ====== ====== ====== ====== ====== ======
Identifiable Assets $182.8 $ 70.5 $253.3 $181.4 $ 68.3 $249.7 $180.7 $ 67.5 $248.2
====== ======= ====== ====== ====== ====== ====== ====== ======
Capital Expenditures $ 5.7 $ 1.5 $ 7.2 $ 3.3 $ 1.5 $ 4.8 $ 12.7 $ 1.3 $ 14.0
====== ======= ====== ====== ====== ====== ====== ====== ======
Depreciation,
Depletion and
Amortization $ 8.7 $ 2.9 $11.6 $ 9.0 $ 2.9 $ 11.9 $ 8.9 $ 2.8 $ 11.7
====== ======= ====== ====== ====== ====== ====== ====== ======
SAVINGS AND LOAN
The Savings and Loan segment includes the operations of CTX Holding Company and
its subsidiary, Texas Trust Savings Bank, FSB (see Note B). The following
table sets forth financial information relating to the Savings and Loan
operations.
For the Years Ended March 31,
-----------------------------
1994 1993 1992
------ ------ ------
(Dollars in millions)
Interest, Fund Assistance, Other Income and
Negative Goodwill Amortization $ 18.9 $ 20.3 $ 29.6
Interest and Other Expenses (16.3) (17.3) (27.5)
-------- ------- -------
Operating Earnings $ 2.6 $ 3.0 $ 2.1
======== ======= =======
Identifiable Assets $ 238.0 $ 216.7 $ 458.4
======== ======= =======
Capital Expenditures $ 2.3 $ 0.5 $ -
======== ======= =======
Depreciation and Amortization, including Negative Goodwill $ (2.2) $ (3.1) $ (3.0)
======== ======= =======
CORPORATE
Corporate general and administrative expenses represent salaries and other
costs not identifiable with a specific segment. Corporate assets are primarily
cash and cash equivalents, receivables and other assets not associated with a
business segment. The following table summarizes financial information
relating to the Corporate segment.
For the Years Ended March 31
----------------------------
1994 1993 1992
------ ------ ------
(Dollars in millions)
Corporate General and Administrative Expenses $ 15.2 $ 13.1 $ 12.8
====== ====== ======
Identifiable Assets $ 21.3 $ 29.3 $ 29.3
====== ====== ======
Capital Expenditures $ 0.1 $ 0.2 $ 0.7
====== ====== ======
Depreciation and Amortization $ 0.8 $ 1.0 $ 1.0
====== ====== ======
37
38
(I) FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments", requires companies to disclose the estimated
fair value of their financial instrument assets and liabilities. The estimated
fair values shown below have been determined using current quoted market prices
where available and, where necessary, estimates based on present value
methodology suitable for each category of financial instruments. Considerable
judgment is required in interpreting market data to develop the estimates of
fair value. Accordingly, the estimates presented herein are not necessarily
indicative of the amounts that the company could realize in a current market
exchange.
All assets and liabilities which are not considered financial instruments have
been valued using historical cost accounting. No disclosure of the intangible
relationship value of Texas Trust's customer deposits is required by Statement
No. 107, nor has the company estimated that value. There is no material
difference between the recorded amount and the estimated fair value of CTX
Mortgage or Texas Trust's off-balance-sheet unfunded loan commitments. These
are generally priced at market at the time of funding. For Texas Trust's loans
and deposits with floating interest rates, the estimated fair values generally
approximate the carrying values. The consolidated carrying values of Cash and
Cash Equivalents, Other Receivables, Accounts Payable and Accrued Liabilities
and Short-term Debt approximate their fair values. The carrying values and
estimated fair values of other financial assets and liabilities were as
follows:
March 31,
---------
1994 1993
---- ----
Carrying Fair Carrying Fair
Value Value Value Value
----- ----- ----- -----
Financial Assets
Marketable Securities $ 78,241 $ 78,241 (a) $110,316 $110,821 (a)
Residential Mortgage
Loans $ 677,641 $677,052 (a) $591,328 $595,103 (a)
Government-Guaranteed
S&L Receivables $ 19,030 $ 19,030 (b) $ 13,579 $ 14,138 (b)
Financial Liabilities
S&L Deposits and FHLB
Borrowings $ 211,055 $210,930 (b) $204,140 $205,772 (b)
Long-term Debt $ 222,832 $234,618 (b) $223,988 $241,632 (b)
(a) Fair values are based on quoted market prices for similar instruments.
(b) Fair values are based on a present value discounted cash flow with the
discount rate approximating current market for similar instruments.
38
39
(J) COMMITMENTS AND CONTINGENCIES
In order to assure the future availability of land for home building, the
company has made deposits totaling $8.0 million as of March 31, 1994 for
options to purchase undeveloped land and developed lots having a total purchase
price of approximately $300 million. These options expire at various dates to
1997. The company has also committed to purchase land and developed lots
totaling approximately $107 million. In addition, the company has executed lot
purchase contracts with CDC (see Note G) which aggregate approximately $9.9
million.
The company is contingently liable at March 31, 1994 on $3.8 million of
long-term debt of joint ventures which represents the company's share of
mortgages on plant facilities and land. In addition, a Centex subsidiary has
guaranteed repayment of a $2.1 million bank loan to CDC.
Management believes that none of the litigation matters in which it or any
subsidiary is involved, if determined unfavorable to Centex or any subsidiary,
would have a material adverse effect on the consolidated financial condition or
results of operations of the company.
The company has certain deductible limits under its workers' compensation and
automobile and general liability insurance policies for which reserves are
established based on the estimated costs of known and anticipated claims.
(K) SUBSEQUENT EVENT
In April 1994 the company's construction products subsidiary, Centex
Construction Products, Inc. (CXP), completed the sale of 11.73 million shares
(51%) of its common stock in an initial public offering. CXP is comprised of
Centex's cement, concrete, aggregate and gypsum wallboard operations, including
CXP's 50% joint venture interests in its Texas and Illinois cement plants.
Centex retains a 49% ownership in CXP.
In connection with CXP's initial public offering, Centex received a dividend
and other payments from CXP of $186.5 million, which was used by Centex to
reduce outstanding indebtedness. CXP used the proceeds from the offering,
together with borrowings under a credit facility, to repay the debt incurred
under a bridge loan to fund the dividend and other payments to Centex. As a
result of the sale of CXP stock, the company no longer holds a majority
interest in CXP and will account for its investment in CXP on the equity method
in subsequent periods.
The following pro forma statement of consolidated earnings for the fiscal year
ended March 31, 1994, assumes the above-mentioned transactions occurred as of
the beginning of the fiscal year. Pro forma adjustments include (i) the
elimination of CXP fiscal 1994 operating results, (ii) the addition of Centex's
49% portion of CXP earnings, (iii) the reduction of interest expense due to the
dividend and other payments being used to decrease short-term debt, and (iv)
the related tax effect of the above adjustments. The pro forma statement of
earnings does not reflect adjustments for the $37.5 million non-recurring
after-tax gain on the sale of the stock, which will be recorded in the quarter
ending June 30, 1994.
39
40
PRO FORMA STATEMENT OF CONSOLIDATED EARNINGS
As Pro Forma
Reported (Unaudited)
--------- -----------
REVENUES
Home Building $1,871,627 $1,871,627
Mortgage Banking 187,870 187,870
Contracting and Construction Services 966,562 966,562
Construction Products/49% of CXP Earnings 172,900 8,147
Savings and Loan 15,523 15,523
---------- ----------
$3,214,482 $3,049,729
---------- ----------
COSTS AND EXPENSES
Home Building $1,777,449 $1,777,449
Mortgage Banking 116,885 116,885
Contracting and Construction Services 971,062 971,062
Construction Products 156,274 -
Savings and Loan 12,958 12,958
Corporate General and Administrative 15,158 15,158
Interest 29,683 22,681
---------- ----------
$3,079,469 $2,916,193
---------- ----------
INCOME BEFORE INCOME TAXES 135,013 133,536
Income Taxes 49,851 49,568
---------- ----------
NET INCOME $ 85,162 $ 83,968
========== ==========
EARNINGS PER SHARE * $ 2.60 $ 2.56
========== ==========
* Based on the weighted average number of common and common equivalent shares
outstanding of 32,789,852.
40
41
The following pro forma consolidated balance sheets give effect to (i) the
elimination of CXP's assets and liabilities as if the initial public offering
had occurred as of March 31, 1994 and (ii) the use of the dividend and other
payments to reduce short-term debt.
PRO FORMA CONSOLIDATED BALANCE SHEETS
Centex Corporation and
Subsidiaries Centex Corporation
---------------------- ------------------
As Pro Forma As Pro Forma
Reported (unaudited) Reported (unaudited)
-------- ----------- -------- -----------
ASSETS
Cash and Cash Equivalents $ 76,287 $ 74,995 $ 13,284 $ 11,992
Marketable Securities 78,241 78,241 - -
Receivables 929,172 902,623 226,674 200,125
Inventories 1,097,457 1,074,638 1,097,457 1,074,638
Investments 127,928 156,895 133,191 162,158
Property and Equipment, net 188,930 42,273 169,234 22,577
Government-Guaranteed S&L Assets 43,767 43,767 - -
Other Assets and Deferred Charges 38,574 33,098 22,101 16,625
---------- ---------- ---------- ----------
$2,580,356 $2,406,530 $1,661,941 $1,488,115
========== ========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable and Accrued Liabilities $ 618,943 $ 610,829 $ 504,622 $ 496,508
S&L Deposits and FHLB Borrowings 211,055 211,055 - -
Short-term Debt 783,585 597,085 206,638 20,138
Long-term Debt 222,832 222,217 222,832 222,217
Deferred Income Taxes 51,180 35,088 35,088 18,996
Negative Goodwill 24,102 24,102 24,102 24,102
Stockholders' Equity 668,659 706,154* 668,659 706,154*
---------- ---------- ---------- ----------
$2,580,356 $2,406,530 $1,661,941 $1,488,115
========== ========== ========== ==========
*Reflects the $37.5 million non-recurring after-tax gain related to the CXP
initial public offering.
41
42
Centex Corporation and Subsidiaries
QUARTERLY RESULTS (UNAUDITED)
March 31,
---------
1994 1993
---- ----
(Dollars in thousands,
except per share data)
First Quarter
Revenues $ 698,249 $ 558,258
Earnings Before Income Taxes $ 26,707 $ 14,573
Net Earnings $ 17,006 $ 10,002
Earnings Per Share $ .52 $ .32
Second Quarter
Revenues $ 813,492 $ 644,799
Earnings Before Income Taxes $ 38,001 $ 27,418
Net Earnings $ 22,846 $ 18,104
Earnings Per Share $ .70 $ .57
Third Quarter
Revenues $ 833,253 $ 648,658
Earnings Before Income Taxes $ 36,682 $ 26,697
Net Earnings $ 23,586 $ 17,645
Earnings Per Share $ .72 $ .55
Fourth Quarter
Revenues $ 869,488 $ 650,977
Earnings Before Income Taxes $ 33,623 $ 23,071
Net Earnings $ 21,724 $ 15,287
Earnings Per Share $ .66 $ .47
42
43
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The Stockholders and Board of Directors of Centex Corporation:
We have audited in accordance with generally accepted auditing
standards, the consolidated financial statements of Centex Corporation (a
Nevada corporation) and subsidiaries included in Centex Corporation and
subsidiaries' annual report to the stockholders included in this Form 10-K, and
have issued our report thereon dated May 11, 1994. Our audit was made for the
purpose of forming an opinion on those statements taken as a whole. The
consolidated supporting schedules are presented for purposes of complying with
the Securities and Exchange Commission's rules and are not part of the basic
consolidated financial statements. These consolidated supporting schedules
have been subjected to the auditing procedures applied in the audit of the
basic consolidated financial statements and, in our opinion, fairly state in
all material respects the financial data required to be set forth therein in
relation to the basic consolidated financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
Dallas, Texas,
May 11, 1994
43
44
CENTEX CORPORATION AND SUBSIDIARIES
SCHEDULE I -- MARKETABLE SECURITIES -- OTHER INVESTMENTS
MARCH 31, 1994
(Amounts in thousands)
Amount At Which
No. Of Shares Market Carried In The
Description Or Units Cost Value Balance Sheet
----------- ------------- ---- ------ ---------------
U.S. Treasury Notes 33,000 $ 34,320 $ 33,899 $ 33,899
Other Securities (A) 45,357 $ 45,244 $ 44,342 44,342
--------
$ 78,241
========
(A) Securities of any one individual issuer did not exceed two percent of
total assets of the Company.
44
45
CENTEX CORPORATION AND SUBSIDIARIES
SCHEDULE II -- AMOUNTS RECEIVABLE FROM RELATED PARTIES AND
UNDERWRITERS, PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES
FOR THE YEARS ENDED MARCH 31, 1994, 1993 AND 1992
(Dollars in thousands)
Deductions
Balance ----------- Balance
At Amounts At End
Beginning Amounts Written Of
Of Period Additions Collected Off Period
--------- --------- --------- ------- -------
1994
----
(A) Laurence E. Hirsch . . . . . . . . $ 1,000 $ -- $ -- $ -- $ 1,000
(B) David W. Quinn . . . . . . . . . . $ 125 $ -- $ 125 $ -- $ --
(C) Bob L. Moss . . . . . . . . . . . . $ 150 $ -- $ 50 $ -- $ 100
1993
----
(A) Laurence E. Hirsch . . . . . . . . $ 1,000 $ -- $ -- $ -- $ 1,000
(B) David W. Quinn . . . . . . . . . . $ 250 $ -- $ 125 $ -- $ 125
(C) Bob L. Moss . . . . . . . . . . . . $ 200 $ -- $ 50 $ -- $ 150
(D) Bruce Lady . . . . . . . . . . . . $ 195 $ -- $ 195 $ -- $ --
1992
----
(A) Laurence E. Hirsch . . . . . . . . $ 1,000 $ -- $ -- $ -- $ 1,000
(B) David W. Quinn . . . . . . . . . . $ 250 $ -- $ -- $ -- $ 250
(C) Bob L. Moss . . . . . . . . . . . . $ 200 $ -- $ -- $ -- $ 200
(D) Bruce Lady . . . . . . . . . . . . $ 197 $ -- $ 2 $ -- $ 195
NOTES: (A) This represents a real estate lien note secured by Mr.
Hirsch's Dallas, Texas residence and is due in March 1995.
This loan, which was made in September 1985 in connection
with Centex's employment of Mr. Hirsch, is for the principal
amount of $1,000,000, of which $700,000 is non-interest
bearing and $300,000 bears interest at 10% (12% through
September 1990).
(B) This represents a real estate lien note secured by Mr.
Quinn's residence which bears interest at 10% and was due on
January 30, 1996. In June 1993, Mr. Quinn repaid to Centex
the full amount of all outstanding principal and interest
owed on such loan.
(C) This represents two non-interest bearing real estate lien
notes which are secured by Mr. Moss' residence. Principal is
due in four annual installments of $50,000 beginning August
8,1992 and continuing through August 8, 1995. Interest is to
accrue and be paid annually on August 8 only on matured,
unpaid principal and all interest and unpaid principal is due
and payable August 8, 1995.
(D) This represented a real estate lien note secured by Mr.
Lady's residence with an annualized interest rate of 10%.
Principal and interest were due in monthly installments
through August 1, 2019. The note was repaid in fiscal year
1993.
The above notes receivable are included in the consolidated balance sheet
caption "trade receivables" or "notes receivable". In addition, the Company
from time to time extends loans to its personnel in connection with
relocations in accordance with established policies.
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46
CENTEX CORPORATION AND SUBSIDIARIES
SCHEDULE IX - SHORT-TERM BORROWINGS
FOR THE YEARS ENDED MARCH 31, 1994, 1993 AND 1992
(Dollars in thousands)
Weighted Weighted
Average Maximum Average Average
Interest Amount Amount Interest
Balance Rate At Outstanding Outstanding Rate During
Category Of Aggregate At End End Of During The During The The
Short-term Borrowings Of Period Period Period Period Period
--------------------- -------------- ----------- -------------- ------------ -----------
(A) (B)
1994
----
Banks . . . . . . . . . . . . . . . . $310,000 3.7% $ 584,397 $ 414,969 3.6%
Commercial Paper . . . . . . . . . . 122,000 3.8% $ 177,000 $ 118,686 3.4%
Other Financial Institutions . . . . 351,585 4.3% $ 577,571 $ 350,444 3.8%
--------
$783,585
========
1993
----
Banks . . . . . . . . . . . . . . . . $391,500 4.5% $ 818,300 $ 445,205 4.3%
Commercial Paper . . . . . . . . . . 58,500 3.4% $ 215,000 $ 173,925 3.9%
Other Financial Institutions . . . . 187,570 3.8% $ 563,476 $ 128,444 4.1%
--------
$637,570
========
1992
----
Banks . . . . . . . . . . . . . . . . $579,014 4.9% $ 579,014 $ 269,154 5.5%
Commercial Paper . . . . . . . . . . 20,000 4.6% $ 217,838 $ 141,385 5.7%
Other Financial Institutions . . . . 201,195 4.2% $ 201,195 $ 16,766 4.2%
--------
$800,209
========
(A) The average amount outstanding during the period is derived by dividing
the aggregate of principal balances by the number of months in each year.
(B) The weighted average interest rate during the period is derived by
dividing the sum of calculated interest expense by the average principal
outstanding.
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47
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
CENTEX CORPORATION
------------------
Registrant
June 28, 1994 By: /s/ LAURENCE E. HIRSCH
-----------------------------------
Laurence E. Hirsch, Chairman of the
Board and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant in the capacities and on the dates indicated.
June 28, 1994 /s/ LAURENCE E. HIRSCH
----------------------
Laurence E. Hirsch, Chairman of the
Board and Chief Executive
Officer
(principal executive officer)
June 28, 1994 /s/ DAVID W. QUINN
------------------
David W. Quinn, Executive Vice
President and Chief Financial
Officer
(principal financial officer)
June 28, 1994 /s/ MICHAEL S. ALBRIGHT
-----------------------
Michael S. Albright, Vice President --
Finance and Controller
(principal accounting officer)
Directors: Alan B. Coleman, Dan W. Cook III, Frank
M. Crossen, William J Gillilan III,
Laurence E. Hirsch, Clint W. Murchison,
III, Charles H. Pistor, David W. Quinn,
Paul R. Seegers, Paul T. Stoffel
June 28, 1994 By: /s/ LAURENCE E. HIRSCH
----------------------
Laurence E. Hirsch, Individually and
as Attorney-in-Fact*
---------------
*Pursuant to authority granted by powers of attorney, copies of which
are filed herewith.
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48
PART B.
3333 HOLDING CORPORATION AND SUBSIDIARY
AND CENTEX DEVELOPMENT COMPANY, L.P.
PREFATORY STATEMENT
PART B of this Report includes information relating to 3333 Holding
Corporation ("Holding"), file No. 1-9624, and subsidiary, and Centex
Development Company, L.P. ("CDC" or the "Partnership"), file No. 1-9625. See
the Joint Explanatory Statement on page 2 of this Report. References to
Holding in this Report shall include references to its subsidiary, 3333
Development Corporation, a Nevada corporation and the sole general partner of
CDC ("Development"), unless the context otherwise requires. Because CDC is a
separate reporting entity under the Exchange Act, the information required by
Form 10-K is separately included even though CDC may be deemed a "subsidiary"
of Holding under the rules and regulations of the Securities and Exchange
Commission (the "Commission") promulgated pursuant to the Exchange Act.
Accordingly, information provided with respect to CDC should be deemed provided
with respect to Holding to the extent appropriate. Information relating to
both Holding and CDC is included herein as a single disclosure where applicable
or appropriate; all other information is set forth separately. Reference is
made to PART A of this Report for information relating separately to Centex
Corporation and its subsidiaries ("Centex").
PART I
ITEM 1. BUSINESS
(a) Holding
Holding is a Nevada corporation incorporated on May 5, 1987. Its executive
offices are located at 3333 Lee Parkway, Suite 500, Dallas, Texas 75219;
telephone (214) 559-6700.
Holding owns all of the outstanding common stock of Development, and, as a
result, has the ability to control Development. Development is the sole
general partner of CDC, a Delaware limited partnership engaged in the real
estate development business. Information concerning the acquisition of the
capital stock of Development by Holding is included in Note (A) of the Notes to
Combining Financial Statements of Holding and CDC (the "Holding/CDC Combining
Financial Statements") included on page 67 of this Report. Holding operates in
a single industry segment.
The principal liability of Holding is a $7,700,000 note payable to Centex
which had an unpaid balance of $7,600,000 at March 31, 1994 (the "Holding
Note"). See "Item 13. Certain Relationships and Related Transactions".
Presently, Holding is not engaged in any business other than its ownership and
control of Development. The Amended and Restated Agreement of Limited
Partnership of Centex Development Company, L.P. (the "Partnership Agreement"),
which governs the operations of CDC, provides that neither Holding nor
Development shall be permitted, prior to Payout (as defined in the Partnership
Agreement)("Payout") and repayment of the Holding Note, to own business
interests or to engage in business activities other than those relating to CDC.
Were Holding to engage in any other business activities the Partnership
Agreement would need to be amended to provide for the same.
(b) CDC
GENERAL DEVELOPMENT OF BUSINESS
CDC is a Delaware limited partnership formed in March 1987 to enable Centex
Stockholders to participate in long term real estate development projects whose
dynamics are inconsistent with Centex's traditional financial objectives and is
presently governed by the Partnership Agreement. Development, a wholly owned
subsidiary of Holding, is the sole general partner of CDC. CDC's executive
offices are located at 3333 Lee Parkway, Suite 500, Dallas, Texas 75219;
telephone (214) 559-6700.
Six subsidiaries of Centex (the "Original Limited Partners") contributed
certain real estate with an approximate market value of $75.9 million (the
"Original Properties") to CDC in exchange for an aggregate of 1,000 Class A
Units of limited partnership
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49
interest in CDC (the "Class A Units"). See "Item 2. Properties". The Class A
Units were originally issued to Centex Land Company ("CLC") (244 units), Centex
Homes of New Jersey, Inc. ("CHNJ") (220 units), Centex Homes Corporation
("CHC") (71 units), Fox & Jacobs, Inc. ("F&J") (400 units), Great Lakes
Development Co., Inc. ("GLD") (31 units) and 111 E. Chestnut Corp. ("111
Chestnut") (34 units). Dividends consisting of Class A partnership units were
made to Centex Real Estate Corporation ("CREC") by certain of its subsidiaries,
as follows: CHC, 71 units on March 31, 1987; F&J, 400 units on March 31, 1987;
GLD, 31 units on April 30, 1988; and CLC, 244 units on December 2, 1988. On
December 15, 1988, CREC received 34 units from 111 Chestnut in consideration
for the assumption by CREC of debt in the amount of $2,570,000. On December
31, 1989 CREC bought 220 units from Centex Development Management Company
(formerly known as CHNJ) in exchange for the assumption of debt amounting to
$16,710,000. See "Item 12. Security Ownership of Certain Beneficial Owners and
Management". Prior to their contribution to CDC, the Original Properties were
each separately owned or controlled and managed by the Original Limited
Partners. The Original Properties are now owned by or for the benefit of CDC.
Under the Partnership Agreement, the holder of the Class A Units, presently
CREC, a wholly owned subsidiary of Centex, is entitled to a 9% preferred return
(the "Preferred Return") on its unrecovered capital and certain other
distributions of cash and other property and allocations of income and loss in
preference to other limited partners. See Note (F) of the Notes to the
Holding/CDC Combining Financial Statements included on pages 70-71 of this
Report. In addition to the Original Properties, the Partnership has additional
properties which it has acquired ("Additional Properties"). The Additional
Properties were purchased from third parties at negotiated prices or from
affiliates for the affiliate's cost basis which approximated market value. To
fund the purchase of the Additional Properties, the Partnership borrowed funds
from unrelated financial institutions and CREC. Information concerning the
debt incurred by CDC is included in Note (E) of the Notes to the Holding/CDC
Combining Financial Statements included on pages 69-70 of this Report.
NARRATIVE DESCRIPTION OF BUSINESS
The purpose of CDC, as stated in the Partnership Agreement, is (a) to engage
in all aspects of the real estate business, including investing in, acquiring,
owning, holding a leasehold interest in, managing, maintaining, developing,
operating, leasing, improving, selling, exchanging and otherwise disposing of
the Original Properties and any other properties acquired by CDC, with all such
activities related to the Original Properties to be conducted pursuant to the
Plan for Original Properties (which is an exhibit to the Partnership Agreement)
(the "Plan"), (b) in connection therewith, to exercise all of the rights and
powers conferred on CDC by the Partnership Agreement, and (c) to enter into any
lawful transaction and engage in any lawful activities in furtherance of such
purposes. CDC will hold for investment and development purposes the Original
Properties, which predominantly consist of unimproved land and, to a lesser
extent, improved properties. CDC may invest in or acquire additional
properties of any kind and may dispose of or develop any or all of the Original
Properties or any other properties acquired (subject to the Plan).
Pursuant to management agreements with CDC, Centex subsidiaries provide
property management and development assistance and expertise to CDC in respect
of the properties under CDC's control, including seeking zoning changes and
special use permits, negotiating utility agreements, and securing necessary
rights of way and access on behalf of CDC, and will, consistent with the Plan,
develop and/or contract for the sale and sell on behalf of CDC some or all of
such properties in exchange for compensation for its efforts to enhance the
value of the properties owned or controlled by CDC. See "Item 10. Directors
and Executive Officers of the Registrant--Management Agreement".
Although subsidiaries of Centex also engage generally in the real estate
business, such subsidiaries typically acquire land that is already zoned for
one purpose, usually home development. These entities generally develop such
land over a relatively short time period and build and sell homes to individual
purchasers. Unlike such subsidiaries, CDC intends principally to invest in
larger tracts of undeveloped land, which land may be zoned for different types
of development or which may not be zoned for any particular development. CDC
anticipates holding such tracts for a longer period of time than Centex's
subsidiaries might otherwise have held such real estate because of the broader
range of development activities and with the anticipation that such land will
increase in value as a result of preparing such tracts for development and
subdivision into multiple parcels and/or uses, as appropriate for the
particular tract. In the course of holding such real property, CDC may sell a
portion of any particular tract and retain the remainder for eventual
development or sale. CDC may develop such properties alone or in conjunction
with others, including Centex subsidiaries. Any newly-acquired properties may
be wholly owned, or may consist of interests in joint ventures with other
persons or entities, including Centex and its affiliates, and any properties to
be sold or developed may be acquired by Centex or any of its affiliates.
However, Centex and its affiliates continue to conduct many facets of real
estate development and, for this reason, may be in competition with CDC in
certain activities and projects. See "Competition and Regulation" below in
this Item 1.
49
50
Although the real estate interests held by CDC from time to time will
normally be held for the purpose of maximizing values through the development
process, some portion of CDC's portfolio may consist of income producing
properties, and in order to meet CDC's cash flow needs, certain parcels may be
sold prior to the time that they may otherwise have been sold or developed.
Increases in real estate values may occur from development of raw land or
general increases in the value of such real estate caused by factors external
to CDC.
The Partnership had a backlog of land sales of approximately $11 million as
of March 31, 1994, and $3 million as of March 31, 1993. The ultimate sales
prices may vary due to contractual clauses that adjust the price depending upon
the closing date.
The Plan prescribes in general terms the manner by which CDC will conduct
its activities in respect of the Original Properties. The Plan sets forth
certain guidelines regarding sales and maintenance of the Original Properties
and zoning considerations, and places restrictions on these and other types of
activities, including, without the consent of the Original Limited Partner that
contributed such Original Property, the sale of any Original Property at a
price that is less than the value at which such Original Property was
contributed to CDC plus the portion of the unpaid Preferred Return related
thereto. CDC also continues to analyze the present zoning for certain of the
Original Properties with a view to determining the highest and best use to
which the tracts may be made and, if appropriate, seeking zoning changes for
such uses. If zoning changes are obtained, CDC will have to decide whether to
further develop these properties or to seek the sale of all or a portion
thereof. If not developed sooner, the Plan provides that CDC will generally
endeavor to sell the Original Properties over time for the best price
available, taking into account the condition of the marketplace and CDC's cash
flow requirements. See "Item 2. Properties".
Except as otherwise provided in the Plan, CDC is not limited by any
provision of the Partnership Agreement, any Operating Partnership Agreement (as
herein defined) or otherwise with regard to the types of real estate or other
investments it may make, the percentage of its assets that it may invest in any
one type of real estate or other investment, the percentage of securities of
any one issuer or interest in any joint venture or partnership that it may
acquire, or the geographic areas in which it may make investments. CDC is not
a real estate investment trust, and therefore CDC's activities will not be
subject to the restrictions on its activities imposed on real estate investment
trusts qualified under the Internal Revenue Code of 1986, as amended.
CDC anticipates that it will incur additional indebtedness or issue
additional equity interests to the extent that Development, as CDC's general
partner, deems it appropriate to finance operations, acquisitions of additional
properties, development or construction. Such indebtedness will generally be
in the form of temporary or term loans from banks, institutional investors or
other lenders, and, subject to the Plan, may be secured by certain mortgages on
any one or more of CDC's properties. Further, Development has the authority
under the Partnership Agreement to issue debt securities of CDC; provided, that
if Development proposes to take any of these actions prior to Payout, such
action shall require the consent of a majority in interest (as defined) of the
limited partners. Centex and its affiliates may lend additional money to or
subscribe for additional interests in CDC from time to time; however, Centex is
not obligated to make any such loans or to provide additional capital to CDC.
The Articles of Incorporation of Holding contain provisions that may affect
certain business combinations with, and sales of assets and issuances of
securities of CDC, to certain persons at any time when a subsidiary of Holding,
such as Development, acts as general partner of CDC. However, it is not
believed that such restrictions or pledge will negatively affect the ability of
CDC to undertake its activities, to incur additional indebtedness or to issue
additional securities as and when deemed necessary.
For regulatory and administrative purposes, CDC may conduct many of its
operations or own or manage certain assets through one or more Operating
Partnerships ("Operating Partnerships") in which CDC will hold a 99% interest
as the sole limited partner and Development will hold a 1% interest as the sole
general partner. To date, CDC has not determined that it is necessary or
appropriate to establish any Operating Partnerships.
COMPETITION AND REGULATION
Within the geographical areas where the remaining Original Properties and
the Additional Properties are located, CDC is subject to substantial
competition from other owners of similarly-situated or developed properties who
wish to sell or develop their properties, many of whom may hold or be in the
process of developing more parcels than CDC or may have greater financial
resources and longer operating histories than CDC. CDC will also compete in
the acquisition of additional desirable
50
51
properties with a variety of investors, including Centex and its affiliates,
and institutional investors and developers, seeking similar investments.
The failure of many financial institutions and seizure of assets by agencies
of the federal government has created an oversupply of inventory in various
markets. The terms under which the Resolution Trust Corporation (the "RTC")
(depository for the seized assets) ultimately disposes of these assets may have
a significant effect on these markets.
The economic recession in California and the overbuilding of commercial
properties in California and Texas, where certain of CDC's properties are
located, may limit CDC's ability to sell these properties at favorable prices
or may make current development of such properties by CDC inadvisable. CDC's
mixed-use properties located in California and, to a lesser extent, Texas are
believed to be most affected by the present economic environment. However,
certain of CDC's properties are located in geographical areas where there is
moderate to good demand for land suitable for development, including Florida,
Illinois and New Jersey. Except for the Forster Ranch property located in San
Clemente, California, CDC believes that it is well situated to weather the
current adverse economic environment in those geographical areas affected and
to take advantage of the long-term economic outlook for the areas where its
properties are located. See "Properties--(b) CDC--California Properties" on
pages 52-53 of this Report.
Ownership and development of each of CDC's properties is subject to
licensing and regulation by zoning, land use, environmental, health, sanitation
and other agencies in the state and/or municipality in which the property is
located. Difficulties or failures in obtaining the required licenses or
approvals could delay or prevent the development or sale of any of such
properties. In addition, certain of the Original Properties and the Additional
Properties may be subject to zoning limitations that may not permit development
of such properties for their highest and best use. The ability of CDC to
obtain favorable zoning changes may affect the ultimate value of such
properties to CDC or to a third-party purchaser.
ITEM 2. PROPERTIES
(a) Holding
Due to the nature of its business, Holding does not own or hold for
investment any real or personal properties other than cash, receivables and
other similar assets, and the securities relating to its subsidiary,
Development.
(b) CDC
The Original Properties transferred to CDC by the Original Limited Partners
and the Additional Properties consist of properties located in Illinois, Texas,
New Jersey, Florida, California and Puerto Rico. Such properties predominantly
consist of undeveloped sites zoned for light manufacturing, agricultural,
general retail, office, research and development, single- and multi-family uses
and resort property purposes.
The description set forth below of the remaining Original Properties and the
Additional Properties owned by CDC at March 31, 1994 includes the present
zoning therefor. Also, in those cases where CDC is considering seeking a
change in zoning, an alternate zoning classification is set forth.
Illinois Properties:
Fox Hills Lots--Originally 100 acres in Cook County, Illinois fronting
131st Street that have been subdivided into 118 residential lots. These
lots are located adjacent to an existing development of single-family
detached housing. CDC has installed residential improvements such as
streets, street signs, water, sanitary sewer and energy lines and other
typical pre- construction subdivision improvements. CDC still owned 20 of
these lots at March 31, 1994.
Bolingbrook Commercial--Two non-contiguous tracts totaling 33.92 acres
in Bolingbrook located at the intersection of Interstate 55 and State
highway 355. This acreage is zoned for commercial use.
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52
Texas Properties:
Colony South Planning Unit--located in suburban Dallas in the cities
of The Colony (519.87 acres) and Lewisville (151.95 acres). The
Lewisville acreage is zoned light industrial. The acreage in The Colony
is zoned office (26.84 acres), general retail (21.70 acres), business park
(350.04 acres), residential (119.22 acres) and open space (2.07 acres).
CREC acquired 113 residential lots in March 1994.
Bryan Place--located in Dallas just east of downtown and Central
Expressway. This property is comprised of 28 parcels zoned industrial and
office ranging from approximately 2,000 square feet to 80,000 square feet.
The total area of the property is approximately 622,000 square feet.
Carrollton Property--30,028 square foot office building and five
fabrication-warehouse buildings containing a total of 95,178 square feet
on 17.413 paved acres, zoned industrial, with a rail spur located in
Carrollton, a suburb of Dallas; however, the buildings do not necessarily
add value to the property.
New Braunfels Acreage--398 acres of unzoned, wooded land on FM 306 and
Hoffman Lane near the north city limits of New Braunfels. CDC may seek to
have this tract zoned for a mixed use planned development, including
residential, commercial and retail uses.
Fate Lots and Acreage--18 developed single-family residential detached
lots on Pecan and Ellis Streets and 7.152 cleared acres, to be zoned prior
to development, on State Highway 66 located in or near Fate, a community
located east of Dallas.
New Jersey Property:
East Windsor--a 600 acre parcel with four separate residential tracts,
13 farm parcels and 100 acres of office industrial zoned property in East
Windsor, a township located in the vicinity of Princeton. The residential
tracts have final plan approval for a total of 75 half-acre lots, 174
quarter-acre lots and preliminary plan approval for 426 multi-family
units. The farm parcels vary in size from 11 to 35 acres and total 313
acres. Two of the quarter-acre lots have been sold to CREC, which has a
contract for the remaining 172.
Puerto Rico Property:
116.5 acres of land (approximately 6 acres zoned commercial and the
remainder zoned residential) in Canovanas and Rio Grande, Puerto Rico.
In most cases, CDC has acquired record title to the Original
Properties. However, CDC has acquired only beneficial title rather than
record title to the New Jersey and Puerto Rico properties. Pursuant to
agreements dated as of March 31, 1987 among CDC and the entities holding
record title, the parties agreed that CDC shall have all of the benefits
and burdens of ownership of such properties. Upon the direction of CDC,
title to such properties will be conveyed to CDC or its designee or
transferee.
The descriptions set forth below of the Additional Properties owned by
CDC at March 31, 1994 include present zoning therefor. Also, in cases
where CDC is considering seeking a change in zoning, an alternate zoning
classification is set forth.
California Properties:
Forster Ranch--This property was purchased on March 31, 1989 and
originally included 1,077 acres primarily zoned agricultural. The
Partnership's Development Agreement with the City of San Clemente allows a
series of residential villages containing a total of approximately 2,200
lots and 78 acres of mixed use property. As of March 31, 1994, 580 of
these lots had been sold to CREC and 21 acres of mixed use property had
been sold to other entities. The Partnership
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53
has entered an agreement with the holder of the Forster Ranch non-recourse
notes that may result in the transfer of the underlying real estate to
them in satisfaction of the debt, a portion of which is past due.
Sonora Shopping Center--In March of 1992, the Partnership acquired
9.45 acres of commercial property that it developed into a 116,000 square
foot shopping center in Sonora, California. As of March 31, 1994, all of
this property had been sold except for a half-acre restaurant site which
sold in June 1994.
Florida Property:
Deerfield--This property, located in Orlando, Florida, was originally
purchased by CREC for the account of CDC. CDC purchased the property from
CREC at its cost utilizing bank financing. This 345 acre parcel included
994 residential lots, a 10 acre church site, a 14 acre school site and 20
acres of commercial property. As of March 31, 1994, CREC had acquired 906
residential lots and had the remaining 88 lots under contract. All other
Deerfield properties have been sold to outside entities.
Kingsbridge--CDC acquired 340 developed residential lots in the
Orlando area in January, 1993 utilizing seller provided non-recourse
financing. The Partnership sold 131 of these lots to CREC in April, 1993
and the remainder in April, 1994.
Lake Down--In April, 1992, CDC purchased 18 developed residential lots
with non-recourse financing. As of March 31, 1994, 5 of these Orlando
area lots had been sold to CREC.
Texas Property:
Allen Property--In December 1991, CDC acquired 108 acres of
residential property in Allen, Texas, principally through an exchange of a
portion of the Bryan Place property. CDC anticipates developing this
property into a residential subdivision.
CDC's principal assets consist of the Original Properties and the
Additional Properties remaining unsold.
ITEM 3. LEGAL PROCEEDINGS
Holding is not a party to, and its assets are not the subject of, any
material pending legal proceedings. CDC may be involved from time to time in
litigation matters incident to its day-to-day business; however, management of
Development believes that such litigation, if determined unfavorably to CDC,
would not have a material adverse effect on the financial condition or
operations of CDC.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF HOLDING AND DEVELOPMENT
Information concerning the present executive officers of Holding is
set forth below. All of such officers have served in their capacities since
the organization of Holding, except as indicated. CDC has no executive
officers. The executive officers of Holding set forth below hold the same
offices in Development, the general partner of CDC, as disclosed in "Item 10.
Directors and Executive Officers of the Registrant - Directors and Executive
Officers of Development".
NAME POSITION AGE
---- -------- ---
J. Stephen Bilheimer President (1) 62
Roger D. Sefzik Vice President and Treasurer (2) 38
(1) Mr. Bilheimer is an employee of Centex Development Management Company
("CDMC"), a subsidiary of Centex, and served as Executive Vice President
of CREC from April 1987 until March 31, 1988. Mr. Bilheimer was a
director of Development from its date of incorporation until his
resignation as of June 1, 1987 and was re-elected to the Board of
Directors of Development on May 24, 1989. Since April 1, 1988, Mr.
Bilheimer has devoted a majority of his time to the business and affairs
of Holding and Development.
(2) Mr. Sefzik is an employee of CDMC and was a Vice President of CTX Mortgage
Company from May 1987 to March 1988 and Executive Vice President of Centex
Title Company from July 1986 to March 1988. Prior thereto he held various
offices with various Centex subsidiaries since March 1983. Mr. Sefzik was
elected to his present positions with Holding as of April 1, 1988. Since
April 1, 1988, Mr. Sefzik has devoted a majority of his time to the
business and affairs of Holding and Development.
All executive officers of Holding are elected annually by the Board of
Directors to serve until the next annual meeting of the Board of Directors or
until their successors have been duly elected. There are no family
relationships among or between such executive officers or the directors.
Holding's executive officers hold the same positions with its subsidiary,
Development.
Holding has no full time employees. The directors and executive officers
perform all executive management functions; all other services necessary to the
conduct of Holding's business are performed by a subsidiary of Centex or its
designee under a services agreement. See "Item 10. Directors and Executive
Officers of the Registrant--Services Agreement".
PART II
ITEM 5. MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) Holding
The information called for by this Item 5 with respect to Holding is
included herein in (1) the Joint Explanatory Statement on page 2 of this
Report, (2) the information included under the caption "Stock Prices and
Dividends" is on page 15 of this Report and (3) the information included in
Notes (F) and (G) of the Notes to the Holding/CDC Combining Financial
Statements is on pages 70-71 of this Report.
Prior to the date of the distribution, Centex owned all of the issued and
outstanding shares of Holding Common Stock and, accordingly, there was no
public market for such shares. Following the distribution by Centex, shares of
Holding Common Stock have been tradeable only in tandem with, and as a part of,
shares of Centex Common Stock, and may not be separately sold or otherwise
transferred. Therefore, except with respect to the trading market established
for the tandem traded securities,
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there is no separate market for shares of Holding Common Stock. Because of the
tandem trading arrangement, it is not possible to identify precisely the
portion of the market price of the tandem traded securities allocable to shares
of Holding Common Stock.
The restrictions on the transfer of the Holding Common Stock and the
Stockholder Warrants separate from Centex Common Stock are imposed by the terms
of a nominee agreement (the "Nominee Agreement") among Centex, Holding, CDC and
the Nominee. Centex Common Stock certificates issued after the date of the
Nominee Agreement bear a legend referring to the restrictions on transfer
imposed thereby.
No dividends have been paid on shares of Holding Common Stock since the
incorporation of Holding. Future cash dividends on Holding Common Stock will
depend on the earnings, financial condition, capital requirements and other
factors affecting Holding and Development.
The provisions of the loan agreement and pledge and security agreement
relating to Holding's $7,700,000 note to Centex (the "Holding Note"), which had
a balance of $7,600,000 at March 31, 1994, include certain restrictive
covenants that limit the extent to which Holding and its subsidiaries
(including Development but not CDC or any Operating Partnership) may create,
assume or guarantee additional indebtedness, pledge or encumber certain of
their assets or otherwise take certain corporate actions. These covenants
include limitations on (a) incurring, assuming or guaranteeing any other
indebtedness, except indebtedness which provides for all payments of principal
to be made after April 1, 1994, indebtedness that is fully and completely
subordinated on terms satisfactory to Centex, and certain trade debt, (b)
creating any additional liens other than statutory liens for taxes, certain
mechanics' and materialmen's liens and other similar liens, (c) effecting a
merger or consolidation, (d) selling property and (e) declaring any dividends
or making certain other shareholder payments, as defined. Holding's
obligations under the Holding Note are secured by a pledge of all of the issued
and outstanding shares of the common stock of Development pursuant to a pledge
and security agreement under which a default by Holding in the performance of
its obligations could give Centex the right to vote such shares, to seek the
registration under the Securities Act of 1933, as amended, of all or a portion
thereof, and to sell such shares to satisfy Holding's obligations. See "Item
13. Certain Relationships and Related Transactions" and Note (G) of the Notes
to the Holding/CDC Combining Financial Statements included on page 71 of this
Report.
(b) CDC
Except as additionally provided below, the information called for by
this Item 5 with respect to CDC is included herein in (1) the Joint Explanatory
Statement on page 2 of this Report, (2) the information included and referenced
under the caption "Stock Prices And Dividends" on page 15 of this Report and
(3) the information included in Notes (F) and (G) of the Notes to the
Holding/CDC Combining Financial Statements on pages 70-71 of this Report.
The Stockholder Warrants were issued to Centex immediately prior to the
November 30, 1987 distribution to Centex Stockholders and, accordingly, there
was no public market for the Stockholder Warrants prior to the distribution.
Following the distribution by Centex, the Stockholder Warrants have been
tradeable only in tandem with, and as part of, shares of Centex Common Stock,
and may not be separately sold or otherwise transferred. Therefore, except with
respect to the trading market established for the tandem traded securities,
there is no separate market for the Stockholder Warrants. Because of the
tandem trading arrangement, it is not possible to identify precisely the
portion of the market price of the tandem traded securities allocable to the
Stockholder Warrants.
The restrictions on the transfer of the Stockholder Warrants and the
Holding Common Stock separate from Centex Common Stock are imposed by the terms
of a nominee agreement (the "Nominee Agreement") among Centex, Holding, CDC and
the Nominee. Centex Common Stock certificates issued after the date of the
Nominee Agreement bear a legend referring to the restrictions on transfer
imposed thereby.
No dividends or distributions have been made on the Stockholder Warrants
since their issuance.
CREC, a subsidiary of Centex, is the present holder of all of the Class A
Units, and accordingly, at this time there is no public market for such
securities. See "Item 1. Business--General Development of Business". CDC has
not made any payment to the holder of the Class A Units with respect to the
Preferred Return during the last four fiscal years. Preference payments in
arrears at March 31, 1994 amounted to $28,995,000.
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ITEM 6. SELECTED FINANCIAL DATA
(a) Holding
The information called for by this Item 6 with respect to Holding is
incorporated herein by reference to the Combining Statements of Operations and
the Combining Balance Sheets included in the Holding/CDC Combining Financial
Statements on pages 65-66 of this Report.
(b) CDC
The information called for by this Item 6 with respect to CDC is
incorporated herein by reference to the Combining Statements of Operations and
the Combining Balance Sheets included in the Holding/CDC Combining Financial
Statements on pages 65-66 of this Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(a) Holding
The information called for by this Item 7 with respect to Holding is
incorporated herein by reference to the information included and referenced
under the caption "Management's Discussion and Analysis of Results of
Operations and Financial Condition" on page 72 of this Report.
(b) CDC
The information called for by this Item 7 with respect to CDC is
incorporated herein by reference to the information included and referenced
under the caption "Management's Discussion and Analysis of Results of
Operations and Financial Condition" on page 72 of this Report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information called for by this Item 8 is included herein on pages
64-72 of this Report (see Item 14).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Holding
DIRECTORS AND EXECUTIVE OFFICERS OF HOLDING
Except as additionally provided below, the information called for by this
Item 10 with respect to Holding is incorporated herein by reference to the
information included under the caption "Election of Directors" on page 20 and
the information included under the caption "Section 16(a) Compliance" on
page 24 of Holding's proxy statement dated July 1, 1994
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57
for the 1994 Annual Meeting of Stockholders of Holding to be held on July 28,
1994 (the "1994 Holding Proxy Statement"); however, as required by Instruction
3 to Item 401(b) of Regulation S-K, information regarding executive officers of
Holding is included under the caption "Executive Officers of Holding" included
in Part B of this Report following Item 4.
SERVICES AGREEMENT
Holding has no full time employees. The directors and executive officers
of Holding, who hold the same directorships and offices in Development, perform
all executive management functions. See "Item 11. Executive Compensation".
All tax, accounting, bookkeeping, clerical and similar services that are
necessary to operate the business of Holding are provided pursuant to a
services agreement (the "Services Agreement") entered into between Holding and
Centex Service Company ("CSC"), an indirect subsidiary of Centex. See "Item
13--Certain Relationships and Related Transactions". The term of the Services
Agreement is subject to automatic renewal for successive one-year terms unless
either party elects to terminate the Services Agreement upon at least 30 days'
written notice prior to December 31 of any year. However, the Services
Agreement may not be terminated by Holding (other than in the event of a breach
by CSC constituting gross negligence or willful or wanton misconduct) prior to
the payment in full of the Holding Note, the full and complete detachment of
the Stockholder Warrants from Centex Common Stock or the occurrence of Payout.
Service fees of $30,000 were paid pursuant to the Services Agreement during
fiscal 1994.
(b) CDC
GENERAL PARTNER AND MANAGEMENT
CDC has no directors, officers or employees and, instead, is managed by
Development, its sole general partner. Directors and officers of Development
perform all executive management functions required for CDC. Except as
provided in the Plan with respect to the Original Properties, the limited
partners of CDC have no power to direct or participate in the control of CDC,
and Development makes all decisions regarding the acquisition, disposition or
development of real estate belonging to CDC and all other decisions regarding
CDC's business or operations. See "Item 1. Business". CDC has entered into a
management agreement pursuant to which CDMC will operate, manage and develop
the properties of CDC for and on behalf of CDC. See "Management Agreement"
below in this Item 10. Except for the allocations of profit and loss and
distributions of cash and other property to which Development is entitled under
the Partnership Agreement, and except for the right to be reimbursed for
certain expenses, Development does not receive any compensation from CDC in
respect of its duties and obligations as general partner of CDC. See "Item 11.
Executive Compensation".
DIRECTORS AND EXECUTIVE OFFICERS OF DEVELOPMENT
Information concerning the present directors and executive officers of
Development is set forth below. All of such persons have served in their
capacities since the organization of Development, except as indicated.
NAME POSITION AGE
---- -------- ---
J. Stephen Bilheimer . . . . . . Director and President (1) 62
Josiah O. Low, III . . . . . . . Director (2)* 55
David M. Sherer. . . . . . . . . Director (3)* 57
Roger D. Sefzik. . . . . . . . . Vice President and Treasurer (4) 38
- ---------------
*Member of the audit committee of the Board of Directors.
(1) Mr. Bilheimer is an employee of CDMC and served as Executive Vice
President of CREC from April 1987 until March 31, 1988. Mr. Bilheimer
was a director of Development from its date of incorporation until his
resignation as of June 1, 1987. Mr. Bilheimer was re-elected to the
Board of Directors on May 24, 1989.
(2) Mr. Low serves as Senior Vice President of Donaldson, Lufkin &
Jenrette Securities Corporation (since February 1985). Mr. Low is
also a director of Holding. Mr. Low was elected as a director of
Development as of June 1, 1987.
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(3) Mr. Sherer has been President of David M. Sherer Associates, Inc., a
commercial real estate, investment and brokerage firm, for more than
five years. Mr. Sherer is also a director of Holding. Mr. Sherer was
elected as a director of Development as of June 1, 1987.
(4) Mr. Sefzik is an employee of CDMC and served as Vice President of CTX
Mortgage Company from May 1987 to March 1988 and Executive Vice
President of Centex Title Company from July 1986 to March 1988. Mr.
Sefzik was elected to his present positions with Development as of
April 1, 1988.
All directors are elected annually by the shareholders to serve until
the next annual meeting of stockholders and until their successors have been
elected and qualified, subject to removal by a vote of the holders of not less
than two-thirds of the outstanding shares of the common stock, par value $1.00
per share, of Development. All executive officers of Development are elected
annually by the Board of Directors to serve until the next annual meeting of
the Board of Directors or until their successors have been duly elected. There
are no family relationships among or between Development's directors or
executive officers.
The current executive officers of Development are employees of Centex
or one of its subsidiaries, and it is presently anticipated that this
circumstance will continue. See "Item 11. Executive Compensation".
MANAGEMENT AGREEMENT
All services (other than executive management decision-making)
necessary to operate CDC's business are provided to CDC pursuant to a
management agreement (the "Management Agreement") entered into with Centex
Development Management Company, a subsidiary of Centex ("CDMC"). Under the
Management Agreement, CDMC keeps all necessary books and records, and provides
all additional accounting and clerical services that Development may deem
necessary. CDMC's responsibilities related to real estate management also
include ensuring that CDC's properties are operated, managed and maintained in
full compliance with all relevant laws and regulations, that all real property
and any improvements thereon are maintained and repaired, that all income
produced by CDC's properties is collected and that any development on any
property is done in an efficient manner.
CDMC is entitled to reimbursement from CDC for all reasonable costs
and expenses incurred and paid by CDMC in connection with the performance of
its duties and obligations under the Management Agreement. During fiscal 1994,
CDMC earned fees and is owed reimbursements from CDC totaling $785,000 for its
services.
The Management Agreement also provides that CDMC will provide,
consistent with the Plan, pre-development and development services on behalf of
CDC, and the Management Agreement specifically provides that CDMC is delegated
full authority to carry out and perform on behalf of CDC all aspects of the
Plan.
The term of the Management Agreement is subject to automatic renewal
for successive one-year terms unless either party elects to terminate the
Management Agreement upon at least 30 days' written notice prior to December
31st of any year. However, it may not be terminated by CDC (other than in the
event of a breach by CDMC constituting gross negligence or willful or wanton
misconduct) prior to the latest of the complete detachment of the Stockholder
Warrants from Centex Common Stock, Payout or the payment in full of the Holding
Note.
From time to time, CDMC may delegate the performance of certain of its
responsibilities to CREC, upon terms and conditions to be determined. These
responsibilities may include enhancement of properties owned or controlled by
CDC, for which reasonable additional compensation may be paid by CDC to CDMC
pursuant to terms to be negotiated between them. In turn, some or all of such
additional compensation may be paid by CDMC to CREC.
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ITEM 11. EXECUTIVE COMPENSATION
Holding and CDC
The information called for by this Item 11 with respect to Holding and
CDC is incorporated herein by reference to the information included and
referenced under the caption "Executive Compensation" in the 1994 Holding Proxy
Statement on pages 22-24 thereof.
CDC does not have any directors, officers or employees, and is managed
by its sole general partner, Development. Except for the allocations of profit
and loss and distributions of cash and other property to which Development is
entitled under the Partnership Agreement, and except for the right to be
reimbursed for certain expenses, Development does not receive any compensation
from CDC in respect of its duties and obligations as general partner for CDC.
As general partner, Development is entitled to be allocated certain items of
income and loss of CDC and to receive certain distributions of cash from CDC
depending upon the level of income and cash available for distribution and
whether Payout has occurred. The terms and conditions upon which Development
will be allocated items of income and loss and will receive distributions are
set forth in the Partnership Agreement. For a summary of these rights and
benefits, see Note (F) of the Notes to the Holding/CDC Combining Financial
Statements included on pages 70-71 of this Report.
The directors and executive officers of Development perform all
executive management functions for CDC. See "Item 10. Directors and Executive
Officers of the Registrant". Services required by CDC in its operations are
also provided pursuant to a Management Agreement with CDMC pursuant to which
CDMC operates, manages and develops the properties of CDC for and on behalf of
CDC. See "Item 11--Directors and Executive Officers of the
Registrant--Management Agreement". The executive officers of Development did
not receive any remuneration from Development or CDC for the year ended March
31, 1994. Directors of Development who are neither officers nor employees of
Development, Centex or Centex's subsidiaries received compensation from
Development in the form of directors' and committee members' fees. During the
1994 fiscal year, each executive officer of Development received remuneration
from Centex or one of its subsidiaries in his capacity as a director, officer
or employee thereof. None of the directors or executive officers of
Development received any additional compensation from Centex or any of its
subsidiaries for services rendered on behalf of Development or CDC during the
1994 fiscal year.
During fiscal 1994, J. Stephen Bilheimer, a Director and the President
of Development, and Roger D. Sefzik, Vice President and Treasurer of
Development, both of whom are employees of subsidiaries of Centex, have devoted
a majority of their time and attention to the management of Development and
Holding. Messrs. Bilheimer and Sefzik, who are the only executive officers of
Development, provided such services to Development on behalf of and in their
capacities as officers and employees of CDMC pursuant to the Management
Agreement. Each current executive officer of Development continues to receive
remuneration from Centex or one of its subsidiaries in his capacity as an
officer or employee thereof and is not compensated by Development or CDC.
The directors of Development, who also hold the same directorships in
Holding and are neither officers nor employees of Development, Centex or
Centex's subsidiaries, each receive approximately $8,000 annually in the form
of directors' and committee members' fees in their capacities as directors
and/or committee members of Development. In addition, Development reimburses
these directors for the reasonable expenses incurred in attending directors'
and committee meetings.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Holding
The information called for by this Item 12 with respect to Holding is
incorporated herein by reference to the information included and referenced
under the caption "Security Ownership of Management and Certain Beneficial
Owners" in the 1994 Holding Proxy Statement on pages 21-22.
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(b) CDC
The following table sets forth certain information with respect to the
ownership of the equity securities of CDC as of June 15, 1994 by Development,
the directors of Development, individually itemized, all directors and
executive officers of Development as a group, and any person known to CDC to be
the beneficial owner of more than 5% of any class of CDC's equity securities.
Except as otherwise indicated, all securities are owned directly, and the
beneficial owner of such securities has the sole voting and investment power
with respect thereto.
NAME OF NUMBER OF UNITS PERCENT
TITLE OF CLASS* BENEFICIAL OWNER** OR WARRANTS OWNED OF CLASS
---------------------- ------------------ ----------------- --------
General Partner Interest (1) 3333 Development Corporation . . . . . . . . All 100%
3333 Lee Parkway, Suite 500
Dallas, Texas 75219
Class A Units (2) Centex Real Estate Corporation . . . . . . . 1,000 100%
3333 Lee Parkway, Suite 1100
Dallas, Texas 75219
Stockholder Warrants (3) 3333 Development Corporation . . . . . . . . -- ***
J. Stephen Bilheimer . . . . . . . . . . . . -- ***
Josiah O. Low, III . . . . . . . . . . . . . -- ***
Roger D. Sefzik . . . . . . . . . . . . . . -- ***
David M. Sherer . . . . . . . . . . . . . . -- ***
All directors and executive officers of
Development as a group (4 persons) . . . . . -- ***
FMR Corp.(4) . . . . . . . .. . . . . . . 145 14.47%
82 Devonshire Street
Boston, Massachusetts 02109
Centex Class B Unit Centex Corporation . . . . . . . . . . . . . 100 100%
Warrants (5) 3333 Lee Parkway, Suite 1200
Dallas, Texas 75219
Class B Units (6) Centex Corporation (7) . . . . . . . . . . . 350 (8) 28% (7)
3333 Lee Parkway, Suite 1200
Dallas, Texas 75219
- ---------------
*Under the terms of the Partnership Agreement, CDC is managed by a
sole corporate general partner and none of the present classes of
CDC's securities are "voting securities" within the meaning of the
rules and regulations of the Commission promulgated pursuant to the
Exchange Act. Nonetheless, information with respect to each class of
CDC's equity securities has been set forth in accordance with such
rules and regulations.
**The address of any person who is the beneficial owner of more than
five percent of a class of CDC's securities is also included.
***Less than 1%.
(1) In connection with the formation of CDC, Development made a capital
contribution to CDC of $767,182, in exchange for Development's general
partner interest in CDC. As general partner, Development is entitled
to receive allocations of income and loss and distributions of
property from CDC. See "Item 11. Executive Compensation".
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(2) The Class A Units were issued to the Original Limited Partners in
exchange for the contribution to CDC of the Original Properties.
Record title to the Class A Units presently is held by CREC, a
subsidiary of Centex. See "Item 1. Business-- General Development of
Business". As of the date or dates when the Stockholder Warrants are
deemed to have been exercised, the Class A Units will be automatically
converted into (i) a number of Class B Units equal to 20% of the total
number of Class B Units that would be outstanding after conversion
based on the actual exercise of the Stockholder Warrants and the
assumed exercise of all the then exercisable Centex Class B Unit
Warrants (see footnote (3)) and (ii) a like number of Class A Units.
The Class A Units will be automatically cancelled upon Payout and the
exercise and/or expiration of all of the Stockholder Warrants and the
Centex Class B Unit Warrants.
(3) The Nominee holds record title to the Stockholder Warrants, which are
exercisable for Class B Units, for the benefit of Centex Stockholders
pursuant to the Nominee Agreement. See "Item 5. Market for
Registrant's Common Equity and Related Stockholder Matters". However,
the Nominee has no power to vote the Class B Units issuable upon
exercise of the Stockholder Warrants or to direct the investment of
the Stockholder Warrants or such Class B Units. Beneficial ownership
of the Stockholder Warrants is, by virtue of the Nominee arrangement,
indirect and undivided. The number of Stockholder Warrants listed as
beneficially owned has been rounded to the nearest whole warrant and
is based on the assumption that options to purchase Centex Common
Stock, presently exercisable, or exercisable within 60 days, have been
exercised. The Class B Units issuable upon exercise of the
Stockholder Warrants have not been shown as "beneficially owned" under
the rules and regulations of the Commission promulgated pursuant to
the Exchange Act because the beneficial owners of the Stockholder
Warrants have no present right to exercise the Stockholder Warrants
and acquire Class B Units.
(4) Centex has received information from FMR Corp. ("FMR") stating that,
as of June 15, 1994, FMR may be deemed to beneficially own 4,514,872
shares of Centex Common Stock, (and therefore to own a beneficial
interest in 145 Stockholder Warrants) acquired solely for investment
purposes, as a parent holding company with respect to holdings of
wholly owned investment adviser subsidiaries of FMR or other entities
affiliated with FMR. FMR stated that it held 147,284 shares of Centex
Common Stock with sole voting power (and therefore held a beneficial
interest in 5 Stockholder Warrants with sole voting power) and no
shares with shared voting power. The remaining shares that FMR may
beneficially own may be voted by (i) the Board of Trustees of certain
Fidelity Funds, or (ii) certain institutions whose funds are managed
by Fidelity Management Trust Company, a wholly owned subsidiary of
FMR.
(5) On November 30, 1987, Centex acquired from CDC 100 warrants (the
"Centex Class B Unit Warrants") to purchase a like number of Class B
Units, subject to adjustment, pursuant to an agreement for purchase of
warrants. The Centex Class B Unit Warrants are generally in the same
form as, and contain the same terms as, the Stockholder Warrants,
except for the manner in which they may be subdivided (and the
corresponding exercise price) and the applicable exercise period. See
Note (F) of the Notes to the Holding/CDC Combining Financial
Statements included on pages 54-55 of this Report.
(6) Presently, there are no Class B Units issued or outstanding.
(7) When issued, record title to 200 of these Class B Units will be held
by the owners of the Class A Units. See footnote (2).
(8) The Class B Units that may be acquired upon conversion of outstanding
Class A Units as of the date of the exercise of the Stockholder
Warrants, which date Centex may indirectly determine by virtue of its
ability, in its sole and absolute discretion, to determine the date of
detachment of the Stockholder Warrants from Centex Common Stock, and
the Class B Units that may be acquired upon exercise of the Centex
Class B Unit Warrants are included as "beneficially owned" pursuant to
the rules and regulations of the Commission promulgated pursuant to
the Exchange Act. See footnotes (2) and (3). The number of Class B
Units and the percentage of class listed assume that the Stockholder
Warrants and the Centex Class B Unit Warrants have been exercised in
full for Class B Units but that no subdivision of any of the warrants
has occurred; however, both the Stockholder Warrants and the Centex
Class B Unit Warrants may be subdivided or combined and any such
subdivision or combination would necessarily change the number of
Class B Units beneficially owned and the percent of class represented
thereby.
61
62
All of the issued and outstanding shares of Development have been
pledged to secure the Holding Note. See "Item 5. Market for Registrant's
Common Equity and Related Stockholder Matters".
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Holding
The information called for by this Item 13 with respect to Holding is
incorporated herein by reference to the information included under the caption
"Certain Transactions" in the 1994 Holding Proxy Statement on pages 24-25.
(b) CDC
Holding entered into a services agreement in May, 1987 with Centex
Service Company ("CSC"), whereby CSC will provide certain tax, accounting and
other similar services for Holding at a fee of $2,500 per month. Service fees
of $30,000 were paid pursuant to this agreement for fiscal year 1994.
CDC has entered into agreements with certain Centex subsidiaries for
them to provide management services to CDC in connection with the development
and operation of properties acquired by CDC, maintenance of CDC property, and
accounting and clerical services. Management fees and development costs
totaling $785,000 were incurred in fiscal 1994, and remain unpaid as of June
15, 1994.
In connection with Holding's acquisition of additional shares of common
stock of Development in 1987, Holding borrowed $7,700,000 from Centex pursuant
to a secured promissory note (the "Holding Note"). The Holding Note, which had
a fluctuating balance during 1994, bears interest, payable quarterly, at the
prime rate of interest of NationsBank of Texas, N.A. ("NationsBank") plus 1% (8
1/4% at June 15, 1994). As of June 15, 1994, the outstanding principal balance
of the Holding Note was $6,710,000. The Holding Note is secured by a pledge of
all of the issued and outstanding shares of Development. The Holding Note, as
amended, matures on the earlier to occur of April 1, 1996 or the last
detachment of Holding Common Stock and the Stockholder Warrants from Centex
Common Stock pursuant to the Nominee Agreement. There was interest expense of
$439,000 related to the Holding Note for the year ended March 31, 1994.
In fiscal year 1994, CDC sold to CREC 246 lots for $2,354,000. CREC
acquired 209 lots for $2,050,000 in April 1994, and has contracts to purchase
an additional 260 lots from CDC.
In 1987, Development loaned $7,700,000 to CREC, pursuant to an
unsecured note (the "CREC Note") and related loan agreement. The CREC Note
bears interest, payable quarterly, at the prime rate of interest of NationsBank
plus 7/8% (8 1/8% at June 15 , 1994). As of June 15, 1994, the outstanding
principal balance on the CREC Note was $7,700,000. The CREC Note matures on
April 30, 1996. There was interest income of $537,000 related to the CREC Note
for the year ended March 31,1994.
In July 1992, on behalf of CDC, CREC guaranteed a $10,000,000 bank
line of credit for CDC to utilize in conjunction with development of lots to be
sold to CREC. In July 1993, the amount of such line of credit was reduced to
$5,000,000. This line of credit, which had an outstanding balance of
$2,165,000 at June 15, 1994, bears interest at LIBOR plus 3/4% (5 1/16% at June
15, 1994), is unsecured and matures in July 1994.
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63
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this Report:
(1) and (2) See the Index to Financial Statements below for a
list of the Financial Statements filed herewith.
INDEX TO FINANCIAL STATEMENTS
FORM 10-K
PAGE REFERENCE
--------------
3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P.
Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Combining Balance Sheets as of March 31, 1994 and 1993 . . . . . . . . . . . . . . . 65
Combining Statements of Operations and Cash Flows for the years ended
March 31, 1994, 1993 and 1992 . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Combining Statements of Stockholders' Equity and Partners' Capital for
the years ended March 31, 1994, 1993 and 1992 . . . . . . . . . . . . . . . . . . . 67
Notes to Combining Financial Statements . . . . . . . . . . . . . . . . . . . . . . 67
Quarterly Results (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
All other schedules are omitted because they are not
applicable or the required information is shown in the financial
statements or notes thereto.
(3) EXHIBITS
(A) Holding
The information on exhibits required by this Item 14 is set
forth in the Holding Index to Exhibits appearing on pages 80-81 of
this Report.
(B) CDC
The information on exhibits required by this Item 14 is set
forth in the CDC Index to Exhibits appearing on pages 82-84 of this
Report.
(b) Reports on Form 8-K:
Neither Holding nor CDC filed any reports on Form 8-K during the
quarter ended March 31, 1994.
63
64
3333 Holding Corporation and Subsidiary and Centex Development Company, L.P.
AUDITORS'REPORT
TO THE BOARD OF DIRECTORS OF 3333 HOLDING CORPORATION:
We have audited the accompanying combining balance sheets of 3333 Holding
Corporation and subsidiary and Centex Development Company, L.P. as of March 31,
1994 and 1993, and the related combining statements of operations and cash
flows and stockholders'equity and partners'capital for each of the three years
in the period ended March 31, 1994. These financial statements are the
responsibility of the companies' management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the individual and combined financial positions of 3333
Holding Corporation and subsidiary and Centex Development Company, L.P. as of
March 31, 1994 and 1993, and the individual and combined results of their
operations and their cash flows for each of the three years in the period ended
March 31, 1994, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN & CO.
Dallas, Texas,
May 11, 1994
64
65
3333 Holding Corporation and Subsidiary and Centex Development Company, L.P.
COMBINING BALANCE SHEETS
March 31,
--------------------------------------------------------------------------------------------
1994 1993 1994 1993 1994 1993
---------------------------- ------------------------- ----------------------
3333 Holding
Centex Development Corporation
Combined Company, L.P. and Subsidiary
---------------------------- ------------------------- ----------------------
(Dollars in thousands)
Assets
Cash $ 101 $ 1,252 $ 101 $ 1,252 $ -- $ --
Accounts Receivable--
Affiliates -- -- 768 1,763 -- --
Centex Corporation
and Subsidiaries 133 133 -- -- 133 133
Other 105 287 105 287 -- --
Notes Receivable--
Centex Corporation
and Subsidiaries 7,700 7,700 -- -- 7,700 7,700
Other 1,151 671 1,151 671 -- --
Investment in Affiliate -- -- -- -- 767 767
Land Held for Development and
Sale--
Forster Ranch 49,199 44,777 49,199 44,777 -- --
Other 69,703 79,871 69,703 79,871 -- --
-------- -------- -------- -------- ------ ------
$128,092 $134,691 $121,027 $128,621 $8,600 $8,600
======== ======== ======== ======== ====== ======
Liabilities, Stockholders' Equity
And Partners' Capital
Accounts Payable and Accrued
Liabilities--
Affiliates $ -- $ -- $ -- $ -- $ 768 $1,763
Centex Corporation
and Subsidiaries 894 1,450 785 1,350 109 100
Other 2,369 2,759 2,369 2,759 -- --
Notes Payable--
Centex Corporation
and Subsidiaries 7,600 6,500 -- -- 7,600 6,500
Forster Ranch 49,199 44,777 49,199 44,777 -- --
Other 4,950 14,485 4,950 14,485 -- --
Land Sale Deposits 141 157 141 157 -- --
Stockholders' Equity
and Partners' Capital--
Stock and Stock/Class B
Unit Warrants 501 501 500 500 1 1
Capital in Excess of
Par Value 800 800 -- -- 800 800
Retained Earnings (Deficit) (678) (564) -- -- (678) (564)
Partners' Capital 62,316 63,826 63,083 64,593 -- --
-------- -------- -------- -------- ------ ------
Total Stockholders' Equity
and Partners' Capital 62,939 64,563 63,583 65,093 123 237
-------- -------- -------- -------- ------ ------
$128,092 $134,691 $121,027 $128,621 $8,600 $8,600
======== ======== ======== ======== ====== ======
See notes to combining financial statements.
65
66
3333 Holding Corporation and Subsidiary and Centex Development Company, L.P.
COMBINING STATEMENTS OF OPERATIONS AND CASH FLOWS
For the Years Ended March 31,
-----------------------------------------------------------------------------------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992
----------------------------- ------------------------------- ---------------------------
3333 Holding
Centex Corporation
Combined Development Company,L.P. and Subsidiary
----------------------------- ------------------------------- ---------------------------
(Dollars in thousands, except per share/unit data)
Combining Statements Of
Operations
Revenues
Real Estate Sales $12,540 $ 9,097 $23,601 $12,540 $ 9,097 $23,601 $ -- $ -- $ --
Interest
and Other Income 709 1,059 798 319 686 397 537 566 679
------- ------- ------- ------- ------- ------- ----- ----- -----
13,249 10,156 24,399 12,859 9,783 23,998 537 566 679
------- ------- ------- ------- ------- ------- ----- ----- -----
Costs And Expenses
Real Estate Sales 12,684 8,360 23,071 12,684 8,360 23,071 -- -- --
Forster Ranch
Valuation Provision -- 3,702 -- -- 3,702 -- -- -- --
Selling and
Administrative 1,750 1,962 1,694 1,685 1,897 1,633 65 65 61
Interest 439 404 447 -- -- -- 586 597 725
------- ------- ------- ------- ------- ------- ----- ----- -----
14,873 14,428 25,212 14,369 13,959 24,704 651 662 786
------- ------- ------- ------- ------- ------- ----- ----- -----
Loss Before Income
Taxes (1,624) (4,272) (813) (1,510) (4,176) (706) (114) (96) (107)
Income Taxes -- -- -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ----- ----- -----
Net Loss $(1,624) $(4,272) $ (813) $(1,510) $(4,176) $ (706) $(114) $ (96) $ (107)
======= ======= ======= ======= ======= ======= ===== ===== ======
Loss Per Share/Unit
(Average Outstanding
Shares, 1,000; Units,
1,000) $(1,510) $(4,176) $ (706) $(114) $ (96) $ (107)
======= ======= ======= ===== ===== ======
Combining Statements Of Cash Flows
Cash Flows-Operating Activities
Net Loss $(1,624) $(4,272) $ (813) $(1,510) $(4,176) $ (706) $(114) $ (96) $ (107)
Forster Ranch
Valuation Provision -- 3,702 -- -- 3,702 -- -- -- --
Net Change in Payables,
Receivables
and Deposits (110) (3,692) 281 (224) (3,788) 175 114 96 106
(Increase) Decrease in
Notes Receivable (480) 262 (46) (480) 262 (46) -- -- --
Decrease (Increase) in
Land Held for
Development
and Sale 5,746 (10,680) 5,494 5,746 (10,680) 5,494 -- -- --
------- ------- ------- ------- ------- ------ ----- ----- -----
3,532 (14,680) 4,916 3,532 (14,680) 4,917 -- -- (1)
------- ------- ------- ------- -------- ------ ----- ----- -----
Cash Flows-Financing Activities
Increase (Decrease) in
Notes Payable-
Centex Corporation
& Subsidiaries 430 (870) 870 430 (870) 870 -- -- --
Other (5,113) 15,852 (5,871) (5,113) 15,852 (5,871) -- -- --
------- ------- ------- ------- ------- ------ ----- ----- -----
(4,683) 14,982 (5,001) (4,683) 14,982 (5,001) -- -- --
------- ------- ------- ------- ------- ------ ----- ----- -----
Net (Decrease) Increase
In Cash (1,151) 302 (85) (1,151) 302 (84) -- -- (1)
Cash At Beginning
Of Year 1,252 950 1,035 1,252 950 1,034 -- -- 1
------- ------- ------- ------- ------ ------ ----- ----- -----
Cash At End Of Year $ 101 $ 1,252 $ 950 $ 101 $ 1,252 $ 950 $ -- $ -- $ --
======= ======= ======= ======= ======= ====== ===== ===== =====
See notes to combining financial statements.
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67
3333 Holding Corporation and Subsidiary and Centex Development Company, L.P.
COMBINING STATEMENTS OF STOCKHOLDERS' EQUITY AND PARTNERS' CAPITAL
For the Years Ended March 31, 1994, 1993 and 1992
-------------------------------------------------
Centex Development 3333 Holding
Company, L.P. Corporation and Subsidiary
-------------------------------- ------------------------------------------------
Class B General Limited Capital In Retained
Unit Partner's Partner's Stock Common Excess Of Earnings
Combined Warrants Capital Capital Warrants Stock Par Value (Deficit)
-------- -------- ------- ------- -------- ----- --------- ----------
(Dollars in thousands)
Balance at
March 31, 1991 $69,648 $500 $767 $68,708 $ 1 $ -- $800 $(361)
Net Loss (813) -- -- (706) -- -- -- (107)
------- ---- ---- ------- ---- ---- ---- -----
Balance at
March 31, 1992 68,835 500 767 68,002 1 -- 800 (468)
Net Loss (4,272) -- -- (4,176) -- -- -- (96)
------- ---- ----- ------- ---- ---- ---- -----
Balance at
March 31, 1993 64,563 500 767 63,826 1 -- 800 (564)
Net Loss (1,624) -- -- (1,510) -- -- -- (114)
------- ---- ----- ------- ---- ---- ---- -----
Balance at
March 31, 1994 $62,939 $500 $767 $62,316 $ 1 $ -- $800 $(678)
======= ==== ==== ======= ==== ==== ==== =====
See notes to combining financial statements.
NOTES TO COMBINING FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(A) ORGANIZATION
Centex Development Company, L.P. (the Partnership) was formed on March 31, 1987
to invest in, acquire, develop, operate and sell residential and commercial
real estate. Centex Real Estate Corporation (CREC), its limited partner, is
a subsidiary of Centex Corporation (Centex). 3333 Development Corporation (a
Nevada corporation) (Development), which serves as its general partner, is
owned by 3333 Holding Corporation (a Nevada corporation) (Holding). In
November 1987, Centex distributed all of the issued and outstanding shares of
the common stock of Holding and warrants to purchase approximately 80% of the
Class B units of limited partnership interest in the Partnership (see Note F).
These securities trade in tandem with the common stock of Centex and are being
held by a nominee on behalf of Centex stockholders until such time as the
securities are detached and trade separately. The securities may be detached
at any time by Centex's Board of Directors, but the warrants to purchase Class
B units automatically become detached in November 1997 unless extended by
Centex's stockholders.
Supplementary condensed combined financial statements of Centex Corporation and
subsidiaries, 3333 Holding Corporation and subsidiary and Centex Development
Company, L.P. are set forth below. For additional information on Centex
Corporation and subsidiaries, see their separate financial statements and
related footnotes.
67
68
3333 Holding Corporation and Subsidiary and Centex Development Company, L.P.
SUPPLEMENTARY CONDENSED COMBINED BALANCE SHEETS
March 31,
-------------------------------------------
1994 1993
-------------------------------------------
(Dollars in thousands)
Assets
Cash and Cash Equivalents $ 76,388 $ 27,317
Marketable Securities 78,241 110,316
Receivables 930,428 821,852
Inventories 1,223,753 1,027,938
Investments in Joint Ventures and Unconsolidated Subsidiaries 56,928 50,277
Property and Equipment, net 188,930 177,610
Government-Guaranteed S&L Assets 43,767 82,823
Other Assets and Deferred Charges 38,574 36,246
---------- ----------
$2,637,009 $2,334,379
========== ==========
Liabilities And Stockholders' Equity
Accounts Payable and Accrued Liabilities $ 620,824 $ 529,381
S&L Deposits and FHLB Borrowings 211,055 204,140
Short-term Debt 837,734 696,832
Long-term Debt 222,832 223,988
Deferred Income Taxes 51,180 72,784
Negative Goodwill 24,102 28,102
Stockholders' Equity 669,282 579,152
---------- ----------
$2,637,009 $2,334,379
========== ==========
SUPPLEMENTARY CONDENSED COMBINED STATEMENT OF EARNINGS
For the Years Ended March 31,
---------------------------------------------------------------------------
1994 1993 1992
---------------------------------------------------------------------------
(Dollars in thousands)
Revenues $3,224,025 $2,501,691 $2,174,777
Costs and Expenses 3,089,126 2,410,028 2,129,032
---------- ---------- ----------
Earnings Before Income Taxes 134,899 91,663 45,745
Income Taxes 49,851 30,721 11,295
---------- ---------- ----------
Net Earnings $ 85,048 $ 60,942 $ 34,450
========== ========== ==========
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69
(B) BASIS OF PRESENTATION
The accompanying combining financial statements present the individual and
combined financial statements of Holding and its subsidiary and the Partnership
as of March 31, 1994 and 1993 and results of operations for each of the three
years ended March 31, 1994. The financial statements of the Partnership are
included in the combined statements since Development, as general partner of
the Partnership, is able to exercise effective control over the Partnership.
(C) SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
Revenue from real estate sales is recognized as required payments are received
and title passes.
Inventory Capitalization and Cost Allocation
Land held for development and sale is stated at the lower of cost (including
development costs and, where appropriate, capitalized interest and real estate
taxes) or market. The capitalized costs are included in cost of land sales in
the combining statements of operations as related revenues are recognized.
Earnings (Loss) per Share/Unit
Earnings (loss) per share/unit are based on the weighted average number of
outstanding shares of common stock (1,000 for Holding) and Class A limited
partnership units (1,000 for the Partnership). These shares/units do not
include common stock/unit equivalents because they have no material effect on
earnings (loss) per share/unit.
Combining Statements of Operations and Cash Flows - Supplemental Disclosures
Interest capitalized by the Partnership during fiscal years ended March 31,
1994, 1993 and 1992 totaled $4,090,000, $4,039,000 and $4,288,000,
respectively, of which $3,945,000, $3,834,000 and $3,865,000, respectively,
relates to the Forster Ranch property. No income taxes were paid during the
years ended March 31, 1994, 1993 and 1992.
(D) NOTES RECEIVABLE
Development issued common stock to Holding and used the proceeds to advance
$7.7 million to CREC, as evidenced by a note receivable due April 30, 1996.
Interest at prime plus .875% is due in quarterly installments. Interest income
of $537,000, $547,000 and $679,000 related to this note is included in the
accompanying combining financial statements for the years ended March 31, 1994,
1993 and 1992, respectively.
Notes Receivable - Other at March 31, 1994 and 1993 have stated interest rates
ranging up to 10% and are due in monthly or quarterly installments. Discounts
and allowances totaled $313,000 at March 31, 1994 and $248,000 at March 31,
1993. The weighted average interest rate, inclusive of discounts, was 9% at
March 31, 1994 and 10% at March 31, 1993. Notes receivable at March 31, 1994
are collectible over eight years, with $154,000 being due within one year.
(E) NOTES PAYABLE
Centex had advanced Holding $7.6 million as of March 31, 1994 which is
evidenced by a note secured by the common stock of Development. The note,
which had a fluctuating balance during fiscal 1994 and 1993, bears interest at
prime plus 1% which is payable quarterly. The principal balance together with
all unpaid accrued interest is due on the earlier of April 1, 1996 or the date
on which the warrants to purchase Class B units of limited partnership interest
are detached from shares of the common stock of Centex. Interest expense of
$439,000, $404,000 and $447,000 related to this note is included in the
accompanying combining financial statements for the years ended March 31, 1994,
1993 and 1992, respectively.
Under the most restrictive covenants of the note agreement, Holding and its
subsidiary (excluding the Partnership) may not, without Centex's consent, (i)
create any additional liens on or sell real estate properties contributed by
the limited partner, (ii) effect a merger or consolidation, (iii) declare
dividends or make certain other shareholder payments or (iv) allow tangible net
worth, as defined, to be less than $7.7 million for Development.
69
70
All Forster Ranch and other notes payable are non-recourse, secured solely by
the underlying real estate. As land is sold, a portion of the proceeds is
restricted for repayment of the notes. The prime rate in effect was 6 1/4% at
March 31, 1994 and 6% at March 31, 1993. The 30-day LIBOR rate at March 31,
1994 was 3 11/16% and 3 3/16% at March 31, 1993. The note balances and rates
in effect were as follows:
March, 31
-----------------------
1994 1993
--------- -------
(Dollars in thousands)
Credit Line at LIBOR Plus 3/4% Maturing in fiscal year 1995
unsecured, guaranteed by CREC $ 2,115 $10,000
Note Payable at 6 1/2%, Paid in April 1994 2,050 3,700
Note Payable at 12%, Maturing in fiscal year 1995 785 785
Forster Ranch Non-recourse Notes -
Payable at Prime Plus 1%, Matured in April 1993 12,420 12,420
Payable at Prime Plus 2% (10 1/2% floor),
Maturing in fiscal year 2002 36,779 32,357
------- -------
$54,149 $59,262
======= =======
The Partnership and the holder of the Forster Ranch non-recourse notes have
signed an agreement to transfer ownership of the property in satisfaction of
this debt, subject to revision of certain land use entitlements by April 1995.
In connection with this agreement, CREC has agreed to fund certain holding and
other costs CDC will incur through April 1995 in connection with its rezoning
efforts. CDC wrote down its investment in the Forster Ranch real estate by
approximately $3.7 million during fiscal year 1993 to an amount which equaled
the related non-recourse debt after receiving notice that the note, which
matured in April 1993, would not be renewed.
(F) STOCKHOLDERS' EQUITY AND PARTNERS' CAPITAL
Preferred Return
The partnership agreement provides that the Class A limited partner is entitled
to a cumulative preferred return of 9% per annum on the average outstanding
balance of its Unrecovered Capital, which is defined as its initial capital
contribution adjusted for cash distributions representing return of the initial
capital contributions. Preference payments in arrears at March 31, 1994
amounted to $28,995,000.
Allocation of Profits and Losses
As provided in the partnership agreement, prior to Payout (as defined below),
net income of the Partnership is to be allocated to the partners in the
following order of priority:
(i) To the Class A limited partner to the extent of the cumulative
preferred return.
(ii) To the partners to the extent and in the same ratio that cumulative
net losses were allocated.
(iii) To the partners in accordance with their percentage interests, as
defined. Currently, this would be 20% to the Class A limited partner
and 80% to the general partner.
All loss allocations and allocations of net income after Payout, shall be made
to the partners in accordance with their percentage interests, as defined.
70
71
Distributions
Distributions of cash or other property are to be made at the discretion of the
general partner and are to be distributed in the following order of priority:
(i) Prior to the time at which the Class A limited partner has
received aggregate distributions equal to its original capital
contribution (Payout), distributions of cash or other property
shall be made as follows:
(a) To the Class A limited partner with respect to its
preferred return, then
(b) To the partners in an amount equal to the maximum marginal
corporate tax rate times the amount of taxable income
allocated to the partners, then
(c) To the Class A limited partner until its Unrecovered
Capital is reduced to zero.
(ii) After Payout, distributions of cash shall be made to the partners
in accordance with their percentage interests, as defined.
Warrants
In November 1987, Centex acquired from the Partnership 100 warrants to purchase
100 Class B units in the Partnership at an exercise price of $500 per Class B
unit, and Centex acquired from Holding 100 warrants to purchase 100 shares of
Holding common stock at an exercise price of $800 per share. These warrants
are subject to future adjustment to provide the holders of options to purchase
Centex common stock with the opportunity to acquire Class B units and shares of
Holding. These warrants will generally become exercisable upon the detachment
of the tandem-traded securities from Centex common stock.
(G) RELATED PARTY TRANSACTIONS
Service and Management Agreements
Holding entered into a service agreement in May 1987 with Centex Service
Company (CSC), a wholly-owned subsidiary of Centex, whereby CSC will provide
certain tax, accounting and other similar services for Holding at a fee of
$2,500 per month. Service fees of $30,000 for each of fiscal years 1994, 1993
and 1992 are reflected as administrative expenses in the accompanying combining
financial statements.
The Partnership has entered into agreements with certain Centex Corporation
subsidiaries for them to provide management services to the Partnership in
connection with the development and operation of properties acquired by the
Partnership, maintenance of partnership property and accounting and clerical
services. Management fees of $785,000 were accrued under these agreements and
are reflected as administrative expenses in the accompanying combining
financial statements for the year ended March 31, 1994. These fees amounted to
$1,350,000 and $1,100,000 for the years ended March 31, 1993 and 1992.
Additionally, property management fees of $28,000 and $104,000 were capitalized
in fiscal years 1993 and 1992 respectively.
Sales and Purchases
Partnership revenues during fiscal years 1994, 1993, and 1992 include land
sales to CREC of $2,354,000, $8,648,000 and $13,520,000, respectively.
Additionally, CREC has contracts to purchase lots for the aggregate price of
approximately $9.9 million to be paid as lots are delivered.
Accounts Receivable and Accounts Payable
Included in Accounts Receivable-Affiliates and Accounts Payable-Affiliates in
the accompanying combining financial statements are $768,000 at March 31, 1994
and $1,763,000 at March 31, 1993, which the Partnership advanced to Holding.
Interest of $148,000 and $193,000 was accrued on advances during fiscal years
1994 and 1993 respectively.
(H) INCOME TAXES
At March 31, 1994, Holding had operating loss carryforwards for income tax
reporting purposes of $650,000. If unused, the loss carryforwards will expire
in the fiscal years 2003 through 2010. Holding joins with its subsidiary in
filing consolidated income tax returns. The taxable income of the Partnership
has been allocated to the holder of the Class A units. Accordingly, no tax
provision for Partnership earnings is shown in the combining financial
statements.
71
72
3333 Holding Corporation and Subsidiary and Centex Development Company, L.P.
QUARTERLY RESULTS (Unaudited)
March 31,
------------------------------------------------------------------------------
1994 1993 1994 1993 1994 1993
---- ---- ---- ---- ---- ----
3333 Holding
Centex Development Corporation
Combined Company, L.P. and Subsidiary
-------- ------------- --------------
(Dollars in thousands, except per share/unit data)
First Quarter
Revenues $ 1,928 $ 8,734 $ 1,832 $ 8,637 $134 $144
Earnings (Loss) Before Taxes $ (264) $ 397 $ (235) $ 424 $(29) $(27)
Net Earnings (Loss) $ (264) $ 397 $ (235) $ 424 $(29) $(27)
Earnings (Loss) Per Share/Unit $ (235) $ 424 $(29) $(27)
Second Quarter
Revenues $10,136 $ 253 $10,039 $ 166 $134 $135
Loss Before Taxes $ (664) $ (321) $ (636) $ (293) $(28) $(28)
Net Loss $ (664) $ (321) $ (636) $ (293) $(28) $(28)
Loss Per Share/Unit $ (636) $ (293) $(28) $(28)
Third Quarter
Revenues $ 374 $ 947 $ 275 $ 843 $136 $155
Loss Before Taxes $ (424) $ (321) $ (395) $ (313) $(29) $ (8)
Net Loss $ (424) $ (321) $ (395) $ (313) $(29) $ (8)
Loss Per Share/Unit $ (395) $ (313) $(29) $ (8)
Fourth Quarter
Revenues $ 811 $ 222 $ 713 $ 137 $133 $132
Loss Before Taxes $ (272) $(4,027) $ (244) $(3,994) $(28) $(33)
Net Loss $ (272) $(4,027) $ (244) $(3,994) $(28) $(33)
Loss Per Share/Unit $ (244) $(3,994) $(28) $(33)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
- --------------------------------------------------------------------------------
On a combined basis, 3333 Holding Corporation (Holding) and subsidiary
(Development) and Centex Development Company, L.P. (the Partnership) operations
for the year ended March 31, 1994 reflected a loss of $1,624,000 on revenue of
$13,249,000. The loss was $4,272,000 and revenue was $10,156,000 for the
fiscal year ended March 31, 1993. The fiscal 1993 loss included the
Partnership' expensing of its equity in the Forster Ranch project. According
to an agreement with the lender, the Partnership expects to transfer ownership
of the property to the lender in satisfaction of the related non-recourse debt
upon receipt of certain development approvals.
The Partnership completed construction of its shopping center in Sonora,
California during the year, and sold all of this property except a restaurant
site which was sold in June 1994. Two of the original partnership properties,
a 15 acre industrial site in Houston, Texas, and 168 acres of ranch land in
Comal County, Texas, were also sold during the year.
The Partnership sold 131 residential lots to Centex Real Estate Corporation
(CREC) at a subdivision in Orlando, Florida. Subsequent to year end, the
Partnership sold the remaining 209 lots in the subdivision to CREC. In East
Windsor, New Jersey, CDC delivered the first two lots of this development to
CREC and expects additional sales as development continues. CDC also sold 113
lots to CREC at its development in The Colony, Texas. The Partnership has an
additional development underway in the Dallas/Fort Worth metroplex where
closings are expected next fiscal year.
Holding, Development and the Partnership believe that they will be able to
provide or obtain the necessary funding for their current operations and future
expansion needs. The revenues, earnings and liquidity of these companies are
largely dependent on future land sales, the timing of which is uncertain. The
ability to obtain external debt or equity capital is subject to the provisions
of Holding's loan agreement with Centex and the partnership agreement governing
the Partnership.
72
73
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
3333 HOLDING CORPORATION
------------------------
Registrant
June 28, 1994 By: /s/ J. STEPHEN BILHEIMER
------------------------
J. Stephen Bilheimer,
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant in the capacities and on the dates indicated.
June 28, 1994 /s/ J. STEPHEN BILHEIMER
------------------------
J. Stephen Bilheimer,
President
(principal executive officer)
June 28, 1994 /s/ ROGER D. SEFZIK
-------------------
Roger D. Sefzik,
Vice President and Treasurer
(principal financial and accounting officer)
Directors: J. Stephen Bilheimer, Josiah O. Low, III, David M. Sherer
June 28, 1994 By: /s/ J. STEPHEN BILHEIMER
------------------------
J. Stephen Bilheimer,
Individually and as
Attorney-in-Fact*
______________
*Pursuant to authority granted by powers of attorney, copies of which are
filed herewith.
73
74
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
CENTEX DEVELOPMENT COMPANY, L.P.
--------------------------------
Registrant
By: 3333 Development Corporation,
-----------------------------
General Partner
June 28, 1994 By: /s/ J. STEPHEN BILHEIMER
------------------------
J. Stephen Bilheimer,
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of 3333
Development Corporation, as general partner of, and on behalf of, the
registrant in the capacities and on the dates indicated.
June 28, 1994 /s/ J. STEPHEN BILHEIMER
------------------------
J. Stephen Bilheimer,
President
(principal executive officer)
June 28, 1994 /s/ ROGER D. SEFZIK
-------------------
Roger D. Sefzik,
Vice President and Treasurer
(principal financial and accounting officer)
Directors: J. Stephen Bilheimer, Josiah O. Low, III, David M. Sherer
June 28, 1994 By: /s/ J. STEPHEN BILHEIMER
------------------------
J. Stephen Bilheimer,
Individually and as
Attorney-in-Fact*
______________
*Pursuant to authority granted by powers of attorney, copies of which are
filed herewith.
74
75
INDEX TO EXHIBITS
CENTEX CORPORATION
AND SUBSIDIARIES
EXHIBIT FILED HEREWITH OR SEQ. NO.
NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE
------- ------- ------------------------- --------
2.1 The Acquisition Agreement, dated December Exhibit 2.1 to Annual Report on Form 10-K
29, 1988, between The Federal Savings and of Centex Corporation ("Centex") (File
Loan Insurance Corporation as Receiver for No. 1-6776) for fiscal year ended March
Burnet Savings and Loan Association and 31, 1993 ("Centex Form 10-K")
Texas Trust Savings Bank, FSB.
2.2 Capital Maintenance Agreement, dated Exhibit 2.2 to Centex Form 10-K
December 29, 1988, among CTX Holding
Company, Texas Trust Savings Bank, FSB and
The Federal Savings and Loan Insurance
Corporation.
2.3 Warrant Agreement, dated as of December 29, Exhibit 2.3 to Centex Form 10-K
1988, between Texas Trust Savings Bank, FSB
and The Federal Savings and Loan Insurance
Corporation.
2.4 Assistance Agreement, dated December 29, Exhibit 2.4 to Centex Form 10-K
1988, between the Federal Savings and Loan
Insurance Corporation, CTX Holding Company
and Texas Trust Savings Bank, FSB.
3.1 Restated Articles of Incorporation of Exhibit 3.1 to Centex Form 10-K
Centex.
3.2 By-laws of Centex. Exhibit 3.2 to Centex Form 10-K
4.1 Specimen Centex common stock certificate Exhibit 4.1 to Centex Form 10-K
(with tandem legend and Rights Agreement
legend).
4.2 Nominee Agreement, dated November 30, 1987, Exhibit 4.2 to Centex Form 10-K
by and between Centex, 3333 Holding
Corporation ("Holding") and Centex
Development Company, L.P. ("CDC"), and
Chemical Bank, as successor nominee.
4.3 Agreement for Purchase of Warrants, dated Exhibit 4.3 to Centex Form 10-K
as of November 30, 1987, by and between
Holding and Centex.
75
76
INDEX TO EXHIBITS
CENTEX CORPORATION
AND SUBSIDIARIES-CONTINUED
EXHIBIT FILED HEREWITH OR SEQ. NO.
NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE
------ ------- ------------------------- --------
4.4 Common Loan Administration Agreement dated Exhibit 4.4 to Centex Form 10-K
as of July 31, 1984, between Centex and six
commercial banks.
4.5 Rights Agreement, dated as of September 17, Exhibit 1 to Form 8-A Registration
1986, between Centex and Chemical Bank, as Statement of Centex dated September 17,
successor rights agent. 1986
4.6 Amendment No. 1 to Rights Agreement, dated Exhibit 4.6 to Centex Form 10-K
as of May 18, 1988, between Centex and
Chemical Bank, as successor rights agent.
4.7 Indenture dated as of March 12, 1987 Exhibit 4.7 to Centex Form 10-K
between Centex and Texas Commerce Bank--
Dallas, N.A. with respect to Subordinated
Debt Securities of Centex.
4.8 Supplemental Indenture dated as of Exhibit 4.8 to Centex Form 10-K
March 12, 1987 between Centex and Texas
Commerce Bank-Dallas, N.A. with respect to
$100,000,000 8 3/4% Subordinated Debentures
Due March 1, 2007.
4.9 Supplemental Indenture dated as of June 16, Exhibit 4.9 to Centex Form 10-K
1988 between Centex and Texas Commerce
Bank-Dallas, N.A. with respect to up to
$100,000,000 Subordinated Medium-Term
Notes, Series A.
4.10 Instruments with respect to long-term debt N/A
which do not exceed 10% of the total assets
of Centex and its subsidiaries have not
been filed. Centex agrees to furnish a
copy of such instruments to the Commission
upon request.
76
77
INDEX TO EXHIBITS
CENTEX CORPORATION
AND SUBSIDIARIES-CONTINUED
EXHIBIT FILED HEREWITH OR SEQ. NO.
NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE
------ ------- ------------------------- --------
4.11 Debenture Purchase Agreement, dated as of Exhibit 4.11 to Centex Form 10-K
June 17, 1987, between Centex and the State
Investment Council of New Mexico with
respect to $20,000,000 Aggregate Principal
Amount of 8.80% Subordinated Debenture of
Centex due June 30, 2007.
4.12 Indenture dated as of May 1, 1991 between Exhibit 4.12 to Centex Form 10-K
Centex and Chemical Bank with respect to
Senior Debt Securities.
4.13 Supplemental Indenture dated as of May 10, Exhibit 4.13 to Centex Form 10-K
1991 between Centex and Chemical Bank with
respect to $100,000,000 9.05% Senior Notes
due May 1, 1996.
4.14 Subordination Agreement dated as of May 1, Exhibit 4.14 to Centex Form 10-K
1991 by and among Centex Corporation and
all of its subsidiaries.
4.15 Supplemental Indenture dated as of June 17, Filed herewith.
1987 between Centex and Texas Commerce
Bank--Dallas, N.A. with respect to 8.80%
Subordinated Debentures due June 30, 2007.
4.16 Debenture No. 1 dated June 17, 1987 of Filed herewith.
Centex 8.80% Subordinated Debentures due
June 30, 2007.
10.1 Centex Corporation Stock Option Plan, as Exhibit 10.1 to Centex Form 10-K
amended.
10.2 Centex Corporation 1987 Stock Option Plan, Exhibit 28.1 to Joint Registration
as amended. Statement of Centex, Holding and CDC on
Form S-8 (No. 33-44575) dated December
13, 1991.
10.3 Credit Agreement dated as of May 1, 1987, Exhibit 10.2 to Amendment No. 3 dated
by and between Holding and Centex and November 24, 1987 to Registration
related (i) Promissory Note dated May 1, Statement of Holding on Form 10 (File No.
1987, executed by Holding and payable to 1-9624) dated July 12, 1987.
the order of Centex in the principal amount
of $7,700,000 and (ii) Pledge and Security
Agreement dated as of May 1, 1987 executed
by Holding in favor of Centex.
10.4 Employment Agreement dated as of July 15, Exhibit 10.4 to Centex Form 10-K
1988 between Centex and Paul R. Seegers.
77
78
INDEX TO EXHIBITS
CENTEX CORPORATION
AND SUBSIDIARIES-CONTINUED
EXHIBIT FILED HEREWITH OR SEQ. NO.
NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE
------ ------- ------------------------- --------
10.5 Amendment to Employment Agreement dated as Exhibit 10.5 to Centex Form 10-K.
of July 18, 1991 between Centex and Paul R.
Seegers.
10.6 Executive Employment Agreement dated as of Exhibit 10.6 to Centex Form 10-K
September 17, 1990 between Centex and
Laurence E. Hirsch.
10.7 Executive Employment Agreement dated as of Exhibit 10.7 to Centex Form 10-K
January 18, 1991 between Centex and David
W. Quinn.
10.8 Executive Employment Agreement dated as of Exhibit 10.8 to Centex Form 10-K
January 18, 1991 between Centex and William
J Gillilan III.
10.9 Centex Corporation $2,100,000 Subordinated Filed herewith.
Convertible Note issued to Laurence E.
Hirsch on August 26, 1985.
78
79
INDEX TO EXHIBITS
CENTEX CORPORATION
AND SUBSIDIARIES-CONTINUED
EXHIBIT FILED HEREWITH OR SEQ. NO.
NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE
------ ------- ------------------------- --------
21.A List of Subsidiaries of Centex. Filed herewith.
23.A Consent of Independent Public Accountants. Filed herewith.
24.A Powers of Attorney. Filed herewith.
- ---------------
79
80
INDEX TO EXHIBITS
3333 HOLDING CORPORATION
AND SUBSIDIARY
EXHIBIT FILED HEREWITH OR SEQ. NO.
NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE
------ ------- ------------------------- --------
3.1 Articles of Incorporation of 3333 Holding Exhibit 3.2a to Amendment No. 1 dated
Corporation ("Holding"). October 14, 1987 ("Amendment No. 1") to
the Registration Statement of Holding on
Form 10 (File No. 1-9624) dated July 12,
1987 (the "Holding Registration
Statement").
3.2 By-laws of Holding, as amended. Exhibit 3.2 to Annual Report on Form 10-K
of Holding (File No. 1-9624) for fiscal
year ended March 31, 1993 (the "Holding
10-K")
4.1 Specimen Holding common stock Exhibit 4.1 to Amendment No. 1.
certificate.
4.2 Specimen Centex Corporation ("Centex") Exhibit 4.2 to Holding Form 10-K.
common stock certificate (with tandem
trading legend and Rights Agreement
legend).
4.3 Nominee Agreement, dated as of November 30, Exhibit 4.3 to Holding Form 10-K.
1987 by and between Centex, Holding and
Centex Development Company, L.P. ("CDC"),
and Chemical Bank, as successor nominee.
4.4 Agreement for Purchase of Warrants, dated Exhibit 4.4 to Holding Form 10-K.
as of November 30, 1987, by and between
Holding and Centex.
10.1 Services Agreement, dated as of May 5, Exhibit 10.1 to Amendment No. 3 dated
1987, by and between Holding and Centex November 24, 1987 ("Amendment No. 3") to
Service Company. the Holding Registration Statement.
10.2 Credit Agreement dated as of May 1, 1987, Exhibit 10.2 to Amendment No. 3.
by and between Holding and Centex and
related (i) Promissory Note dated May 1,
1987, executed by Holding and payable to
the order of Centex in the principal amount
of $7,700,000 and (ii) Pledge and Security
Agreement dated as of May 1, 1987 executed
by Holding in favor of Centex.
80
81
INDEX TO EXHIBITS
3333 HOLDING CORPORATION
AND SUBSIDIARY-CONTINUED
EXHIBIT FILED HEREWITH OR SEQ. NO.
NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE
------ ------- ------------------------- -------
10.3 Credit Agreement dated as of May 1, 1987, Exhibit 10.3 to the Holding Registration
by and between 3333 Development Corporation Statement.
and Centex Real Estate Corporation and
related Promissory Note dated May 1, 1987,
executed by Centex Real Estate Corporation
payable to the order of 3333 Development
Corporation in the principal amount of
$7,700,000.
21.B Subsidiaries of Holding. Filed herewith.
23.B Consent of Independent Public Accountants. Filed herewith.
24.B Powers of Attorney. Filed herewith.
- ---------------
81
82
INDEX TO EXHIBITS
CENTEX DEVELOPMENT COMPANY, L.P.
EXHIBIT FILED HEREWITH OR SEQ. NO.
NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE
------ ------- ------------------------- ----
2.1 Option Agreement, dated as of November 3, Filed herewith.
1988, by and between Centex Development
Company, L.P. ("CDC") and Estrella
Properties, Ltd.
2.2 Additional Interest Agreement, dated March Filed herewith.
30, 1989, by and between CDC and Westinghouse
Credit Corporation.
2.3 Construction Loan Agreement, dated March 30, Filed herewith.
1989, by and among Westinghouse Credit
Corporation and CDC.
2.4 Forster Ranch Development Agreement, dated Filed herewith.
March 31, 1989, by and between the City of
San Clemente, California and CDC.
3.1 Articles of Incorporation, as amended, of Exhibit 3.2a to Amendment No. 1 dated
3333 Development Corporation ("Development") October 14, 1987 ("CDC Amendment No. 1") to
as currently in effect. the Registration Statement of CDC on Form
10 (File No. 1-9625) dated July 12, 1987
(the "CDC Registration Statement").
3.2 By-laws of Development, as amended. Exhibit 3.2 to Annual Report on Form 10-K
of CDC (File No. 1-9625) for fiscal year
ended March 31, 1993 (the "CDC 10-K").
4.1 Certificates of Limited Partnership of CDC. Exhibit 4.1 to the CDC Registration
Statement.
4.2 Amended and Restated Agreement of Limited Exhibit 4.2 to Amendment No. 3 dated
Partnership of CDC. November 24, 1987 ("CDC Amendment No. 3")
to the CDC Registration Statement.
4.3 Specimen certificate for Class A limited Exhibit 4.3 to the CDC Registration
partnership units. Statement.
4.4 Specimen certificate for Class B limited Exhibit 4.4 to the CDC Registration
partnership units. Statement.
82
83
INDEX TO EXHIBITS
CENTEX DEVELOPMENT COMPANY, L.P.
EXHIBIT FILED HEREWITH OR SEQ. NO.
NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE
------ ------- ------------------------- -------
4.5 Warrant Agreement, dated as of November 30, Exhibit 4.5 to CDC Form 10-K
1987, by and between CDC and Centex
Corporation ("Centex").
4.6 Specimen warrant certificate. Exhibit 4.6 to CDC Amendment No. 3.
4.7 Specimen Centex common stock certificate Exhibit 4.7 to CDC Form 10-K.
(with tandem trading legend and Rights
Agreement legend).
4.8 Nominee Agreement, dated as of November 30, Exhibit 4.8 to CDC Form 10-K.
1987, by and between Centex, 3333 Holding
Corporation ("Holding") and CDC, and Chemical
Bank, as successor nominee.
4.9 Agreement for Purchase of Warrants, dated as Exhibit 4.9 to CDC Form 10-K.
of November 30, 1987, by and between CDC and
Centex.
4.10 Form of Operating Partnership Agreement. Exhibit 4.9 to the CDC Registration
Statement.
10.1 Management Agreement by and between Centex Exhibit 10.1 to CDC Amendment No. 3.
Real Estate Corporation and CDC.
10.2 Supplement to Management Agreement by and Exhibit 10.1a to CDC Amendment No. 3.
between Centex Real Estate Corporation and
CDC.
10.3 Documents of Conveyance of Property from Exhibit 10.2 to CDC Amendment No. 1.
Centex Land Corporation to CDC.
10.4 Documents of Conveyance of Property from Exhibit 10.3 to the CDC Registration
Centex Homes Corporation to CDC. Statement.
10.5 Documennts of Conveyance of Property from Fox Exhibit 10.4 to the CDC Registration
& Jacobs, Inc. to CDC. Statement.
10.6 Documents of Conveyance of Property from Exhibit 10.5 to the CDC Registration
Great Lakes Development Co., Inc., to CDC. Statement.
10.7 Agreement dated as of April 1, 1987 by and Exhibit 10.6 to the CDC Registration
among CDC, Centex Real Estate Corporation, Statement.
Centex Homes Corporation and Centex Land
Company.
83
84
INDEX TO EXHIBITS
CENTEX DEVELOPMENT COMPANY, L.P.-CONTINUED
EXHIBIT FILED HEREWITH OR SEQ. NO.
NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE
------ ------- ------------------------- --------
10.8 Agreement dated as of April 1, 1987 by and Exhibit 10.7 to the CDC Registration
between CDC and Centex Homes of New Jersey, Statement.
Inc.
10.9 Agreement dated as of April 1, 1987 by and Exhibit 10.8 to CDC Amendment No. 1.
between CDC and David Little.
10.10 Trust Agreement dated March 31, 1987 by and Exhibit 10.9 to CDC Amendment No. 1.
between CDC and David Little.
23.C Consent of Independent Public Accountants. Filed herewith.
24.C Powers of Attorney. Filed herewith.
- ---------------
84