CTX Qwest Corp. 7.00% Notes Due 2052

DALLAS, Oct. 28 /PRNewswire-FirstCall/ -- Centex Corporation (NYSE:CTX) today reported financial results for its fiscal second quarter ended Sept. 30, 2008. Highlights of the quarter ended Sept. 30, 2008 (compared to last year's second quarter): -- Sales (orders) decreased 54% (down 42% on a per neighborhood basis) to 2,728 -- Loss from continuing operations of $1.62 per diluted share -- Reduced homebuilding SG&A expenses by 50% or $148 million -- Generated positive cash flow from homebuilding operations -- Reduced debt outstanding by $150 million during the quarter -- Sept. 30 cash balance of $1.30 billion "The homebuilding industry continues to grapple with unprecedented economic conditions. Centex has prepared for this kind of environment by building a strong cash position, consolidating operations and significantly shortening the Company's land position. We improved our gross margins and generated positive cash from operations despite the extreme weakness in the housing market," said Tim Eller, chairman and CEO of Centex Corp. "We are taking every action to ensure that we manage effectively though this difficult period." Corporate Results Fiscal second quarter revenues were $1.01 billion, 54% lower than the same quarter last year. The loss from continuing operations for the second quarter was $202 million, or a loss of $1.62 per diluted share, narrower than last year's second quarter loss of $645 million, or $5.27 per diluted share. Included in the fiscal second quarter loss from continuing operations are $103 million of impairments and other land related charges, including the Company's share of joint venture impairments, compared to $983 million of impairments and other land-related charges in last year's second quarter. The fiscal second quarter's corporate general and administrative expenses were $53.4 million this year, up from $34.5 million in last year's second quarter, reflecting primarily the centralization of certain division functions and investments to improve core business processes. "I am pleased that combined corporate and homebuilding SG&A was down 39% from last year's second quarter. Overhead costs will continue to come down," Mr. Eller said. Home Building Fiscal second quarter revenues were $953 million, 55% lower than the same quarter last year, as a result of a 48% decrease in closings to 3,797 homes and a 12% decrease in average sales price to $247,534. Home building reported an operating loss of $115 million for the quarter, significantly narrower than last year's second quarter loss of $953 million. The operating loss includes $103 million of impairments and write-offs. Housing operating losses (housing revenues less housing cost of sales and SG&A) were $8 million this quarter, compared to earnings of $26 million in the previous year's second quarter. Included in this quarter's $8 million housing operating loss are $27 million of interest costs relieved through homebuilding cost of sales and $13 million of severance costs. Financial Services Financial Services reported an operating loss of $44 million this quarter, narrowed from a loss of $54 million in last year's second quarter. Included in this quarter's loss is $26 million of expenses related to the closing of the retail mortgage business, in line with prior guidance. Also included in this quarter's loss is a $16 million net increase in loan loss reserves. In the quarter, Financial Services completed the sale of its Westwood Insurance Agency subsidiary. The after-tax gain on sale of $30 million is included in discontinued operations. Other During the fiscal second quarter, the Company increased its valuation allowance related to its deferred tax assets by $66 million in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." The increase in the valuation allowance is reflected as a charge to income tax expense and a reduction of the Company's deferred tax asset. At the end of the quarter, the balance of the Company's deferred tax asset was $65 million, net of the valuation allowance of $945 million. Non-GAAP Financial Measures Explanations of non-GAAP financial measures used in this press release and the accompanying attachments, and reconciliations of the non-GAAP financial measures to the comparable GAAP financial measures, are given in the applicable attachments. Centex senior management will host a conference call to discuss the second quarter financial results at 10 a.m. EDT (9 a.m. CDT) on Wednesday, Oct. 29. The live webcast may be accessed on the Investor Relations section of the Centex web site at http://ir.centex.com/. A replay of the webcast, as well as the presentation, will be archived on the Investor Relations page under the "Presentations" link. Forward-Looking Statements Some of the statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by the fact that they relate only to anticipated or expected events, activities, trends or results, which are inherently subject to risks, uncertainties and other factors. Actual results and outcomes may differ materially from what is expressed or forecast in such statements. Forward-looking statements included in this press release are made as of its date. We do not undertake any obligation to update or revise any forward-looking statement. Important risks and other factors include, but are not limited to: (1) the effects of recent disruptions in the global credit and securities markets, which have adversely impacted the banking and mortgage finance industries, resulting in tightening of credit and reductions in liquidity; (2) recent adverse changes in national and regional economic or business conditions, including employment levels and interest rates; (3) the effects of the current downturn in the homebuilding industry, including potential adverse market conditions that could result in reduced sales and closings and additional inventory or other impairments; (4) customer cancellations and consumer homebuyer sentiment; (5) competition; (6) price changes in raw materials or other components of our houses; (7) the availability of adequate sources of financing to continue to implement our business strategy; and (8) our ability to generate cash from sales of assets and other sources that supplement our existing cash resources. These and other risks and uncertainties are described in greater detail in our reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended March 31, 2008, and subsequent Quarterly Reports on Form 10-Q. Note Attachments (1) Revenues and Earnings by Lines of Business (2) Condensed Consolidated Balance Sheet (3) Home Building Segment Data (4) Supplemental Home Building Data (non-GAAP reconciliation) Attachment 1 Centex Corporation and Subsidiaries Revenues and Earnings by Lines of Business (Dollars in thousands, except per share data) Quarter Ended Six Months Ended September 30, September 30, (unaudited) (unaudited) 2008 2007 (C) Change 2008 2007 (C) Change Revenues Home Building (A) $952,596 $2,105,484 (55%) $2,002,295 $3,909,304 (49%) Financial Services 52,409 80,700 (35%) 128,832 178,666 (28%) Total $1,005,005 $2,186,184 (54%) $2,131,127 $4,087,970 (48%) Operating Earnings (Loss) Home Building (A) $(114,764) $(952,693) $(245,867) $(1,124,472) Financial Services (44,158) (54,082) (38,091) (39,113) Other 5,285 18,122 12,393 23,048 Total Operating Earnings (Loss) (153,637) (988,653) (271,565) (1,140,537) Corporate General and Admini- strative Expenses (53,435) (34,540) (112,074) (79,521) Interest Expense (4,973) - (11,153) - Loss from Continuing Operations Before Income Taxes (212,045) (1,023,193) (394,792) (1,220,058) Income Tax Benefit (B) 10,425 378,432 24,060 443,216 Loss from Continuing Operations (201,620) (644,761) (370,732) (776,842) Earnings from Discontinued Operations, net 29,630 928 48,643 5,050 Net Loss $(171,990) $(643,833) $(322,089) $(771,792) Earnings (Loss) Per Share - Basic and Diluted Continuing Operations $(1.62) $(5.27) $(2.98) $(6.37) Discontinued Operations 0.24 0.01 0.39 0.04 Earnings (Loss) Per Share - Basic and Diluted $(1.38) $(5.26) $(2.59) $(6.33) Average Shares Outstanding - Basic and Diluted 124,278,555 122,301,587 124,255,085 121,888,041 (A) See Attachment 3 for detailed home building segment revenues and earnings. (B) Current periods include an increase in the valuation allowance related to the deferred tax assets of $65,517 and $114,821, respectively. (C) Prior periods have been conformed to the current year presentation. INTEREST ANALYSIS Quarter Ended Six Months Ended September 30, September 30, (unaudited) (unaudited) 2008 2007 2008 2007 Total Interest Incurred $52,838 $76,086 $114,590 $158,437 Less - Interest Capitalized (44,322) (59,507) (95,591) (121,370) - Financial Services' Interest Expense (3,543) (16,579) (7,846) (37,067) Interest Expense, net $4,973 $- $11,153 $- Capitalized Interest Charged to Home Building's Costs and Expenses $27,232 $96,698 $52,767 $139,764 Attachment 2 Centex Corporation and Subsidiaries Condensed Consolidated Balance Sheet (Dollars in millions) (unaudited) BALANCE SHEET September 30, March 31, 2008 2008 Assets Cash - Unrestricted $1,299 $587 Restricted 50 51 Receivables - Residential Mortgage Loans Held for Sale, net 419 516 Other Receivables 303 824 Inventories - Direct Construction 1,481 1,746 Land Under Development 2,407 2,883 Land Held for Development and Sale 624 558 Land Held Under Option Agreements not Owned 148 148 Other 17 27 Investments 210 207 Property and Equipment, net 60 78 Goodwill 48 52 Deferred Tax Asset, Net of Valuation Allowance of $945 and $830 65 191 Deferred Charges and Other Assets 154 172 Assets of Discontinued Operations - 97 $7,285 $8,137 Liabilities and Stockholders' Equity Accounts Payable and Accrued Liabilities $1,843 $2,064 Senior Notes and Other 3,104 3,325 Financial Services Debt Secured by Mortgage Loans 300 337 Liabilities of Discontinued Operations - 34 Minority Interests 65 78 Stockholders' Equity 1,973 2,299 $7,285 $8,137 Attachment 3 Centex Corporation and Subsidiaries Home Building Segment Data (A) (Dollars in thousands, except per unit data) (Unaudited) Revenues 2008 2007 Change Quarter Ended September 30, East $311,037 $731,716 (57%) Central 295,809 522,574 (43%) West 343,484 794,448 (57%) Other homebuilding 2,266 56,746 (96%) Total Home Building $952,596 $2,105,484 (55%) Closings (Units) 2008 2007 Change Quarter Ended September 30, East 1,118 2,424 (54%) Central 1,595 2,774 (43%) West 1,084 2,035 (47%) Other homebuilding - 117 (100%) Total Home Building 3,797 7,350 (48%) Average Housing Revenue per Unit 2008 2007 Change Quarter Ended September 30, East $275,459 $293,354 (6%) Central 181,251 186,497 (3%) West 316,263 388,516 (19%) Other homebuilding - 384,043 (100%) Total Home Building $247,534 $280,816 (12%) Sales (Orders) (Units) 2008 2007 Change Quarter Ended September 30, East 1,059 1,725 (39%) Central 1,075 2,370 (55%) West 594 1,801 (67%) Other homebuilding - 57 (100%) Total Home Building 2,728 5,953 (54%) Sales (Orders) Backlog (Units) 2008 2007 Change Quarter Ended September 30, East 2,801 2,757 2% Central 2,616 3,782 (31%) West 1,536 3,022 (49%) Other homebuilding - 72 (100%) Total Home Building 6,953 9,633 (28%) Sales (Orders) Backlog 2008 2007 Change Quarter Ended September 30, East $867,366 $825,995 5% Central 472,893 699,443 (32%) West 494,599 1,125,275 (56%) Other homebuilding - 26,674 (100%) Total Home Building $1,834,858 $2,677,387 (31%) Operating Earnings (Loss) 2008 2007 Quarter Ended September 30, East $(46,462) $(137,533) Central (22,482) (33,258) West (41,906) (673,590) Other homebuilding (3,914) (108,312) Total Home Building $(114,764) $(952,693) Impairments & Write-offs (B) 2008 2007 Quarter Ended September 30, East $30,174 $137,629 Central 19,408 50,818 West 34,091 646,315 Other homebuilding 7,163 111,765 Total Home Building 90,836 946,527 Share of Joint Venture Impairments 11,983 36,612 Total Impairments $102,819 $983,139 Lots Owned (Units) Lots Controlled (Units) 2008 2007 2008 2007 Quarter Ended September 30, East 32,532 39,940 5,919 18,615 Central 17,223 25,723 4,456 11,767 West 12,232 22,715 1,491 9,098 Other homebuilding 1,324 3,657 - - Total Home Building 63,311 92,035 11,866 39,480 (A) Prior periods have been conformed to the current year presentation. (B) Impairments and write-offs by segment include land-related impairments and write-offs and goodwill impairments. Attachment 3 (Continued) Centex Corporation and Subsidiaries Home Building Segment Data (A) (Dollars in thousands, except per unit data) (Unaudited) Revenues 2008 2007 Change Six Months Ended September 30, East $619,076 $1,294,533 (52%) Central 593,988 971,151 (39%) West 772,671 1,544,218 (50%) Other homebuilding 16,560 99,402 (83%) Total Home Building $2,002,295 $3,909,304 (49%) Closings (Units) 2008 2007 Change Six Months Ended September 30, East 2,206 4,192 (47%) Central 3,164 5,181 (39%) West 2,330 3,845 (39%) Other homebuilding 36 227 (84%) Total Home Building 7,736 13,445 (42%) Average Housing Revenue per Unit 2008 2007 Change Six Months Ended September 30, East $275,184 $301,114 (9%) Central 185,072 185,588 -% West 329,387 399,002 (17%) Other homebuilding 332,861 355,837 (6%) Total Home Building $254,922 $285,514 (11%) Operating Earnings (Loss) 2008 2007 Six Months Ended September 30, East $(133,264) $(132,963) Central (35,952) (27,749) West (72,393) (818,546) Other homebuilding (4,258) (145,214) Total Home Building $(245,867) $(1,124,472) Impairments & Write-offs (B) 2008 2007 Six Months Ended September 30, East $70,230 $155,452 Central 29,886 56,675 West 43,773 756,726 Other homebuilding 7,163 143,136 Total Home Building 151,052 1,111,989 Share of Joint Venture Impairments 31,681 63,662 Total Impairments $182,733 $1,175,651 Sales (Orders) (Units) 2008 2007 Change Six Months Ended September 30, East 2,559 3,672 (30%) Central 2,825 4,974 (43%) West 1,526 3,694 (59%) Other homebuilding 33 87 (62%) Total Home Building 6,943 12,427 (44%) (A) Prior periods have been conformed to the current year presentation. (B) Impairments and write-offs by segment include land-related impairments and write-offs and goodwill impairments. Attachment 4 Centex Corporation and Subsidiaries Supplemental Home Building Data (Dollars in thousands, except per unit data) (unaudited) RECONCILIATION OF HOUSING/HOME BUILDING OPERATING EARNINGS Quarter Ended September 30, 2008 2007 HOME BUILDING Revenues - Housing $939,888 100.0% $2,063,999 100.0% Cost of Sales - Housing (798,956) (85.0%) (1,741,203) (84.4%) Gross Margin - Housing 140,932 15.0% 322,796 15.6% Selling, General & Administrative (A) (148,856) (15.8%) (296,631) (14.3%) Housing Operating (Loss) Earnings (B) (7,924) (0.8%) 26,165 1.3% Revenues - Land Sales & Other 12,708 41,485 Cost of Sales - Land Sales & Other (109,521) (927,239) Gross Margin - Land Sales & Other (96,813) (885,754) Goodwill Impairment - (61,322) Losses from Unconsolidated Entities and Other (C) (10,027) (31,782) Operating Loss $(114,764) (12.0%) $(952,693) (45.2%) Average Neighborhoods 523 658 % Change (20.5%) (4.9%) Six Months Ended September 30, 2008 2007 HOME BUILDING Revenues - Housing $1,972,079 100.0% $3,838,737 100.0% Cost of Sales - Housing (1,709,082) (86.6%) (3,222,554) (83.9%) Gross Margin - Housing 262,997 13.4% 616,183 16.1% Selling, General & Administrative (A) (315,071) (16.0%) (595,259) (15.6%) Housing Operating (Loss) Earnings (B) (52,074) (2.6%) 20,924 0.5% Revenues - Land Sales & Other 30,216 70,567 Cost of Sales - Land Sales & Other (197,783) (1,102,806) Gross Margin - Land Sales & Other (167,567) (1,032,239) Goodwill Impairment - (61,322) Losses from Unconsolidated Entities and Other (C) (26,226) (51,835) Operating Loss $(245,867) (12.3%) $(1,124,472) (28.8%) Average Neighborhoods 546 667 % Change (18.1%) (1.9%) (A) Selling, General & Administrative expenses above are those associated with field operations. (B) Housing Operating Earnings is defined as housing revenues less housing cost of sales less selling, general & administrative expenses. Housing Operating Margin is defined as housing operating earnings divided by total housing revenues. (C) Includes losses from unconsolidated entities of $12,902, $36,840, $33,199 and $62,193, respectively IMPAIRMENTS AND WRITE-OFFS Quarter Ended Six Months Ended September 30, September 30, 2008 2007 2008 2007 Impairment Charges $76,890 $846,887 $127,005 $989,479 Write-offs of Land Deposits and Pre-Acquisition Costs 13,946 38,318 24,047 61,188 Goodwill Impairment - 61,322 - 61,322 Subtotal 90,836 946,527 151,052 1,111,989 Share of Joint Venture Impairments 11,983 36,612 31,681 63,662 Total Impairments and Write-offs $102,819 $983,139 $182,733 $1,175,651 DATASOURCE: Centex Corporation CONTACT: Matthew G. Moyer, Vice President - Investor Relations, or Eric Bruner, Director - Public Relations, both of Centex Corporation, +1-214-981-5000 Web site: http://www.centex.com/

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