~~Table of Contents~~UNITED STATES

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

~~ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended March 31~~Washington, ~~2005~~ D.C. 20549

~~Commission File No. 1-6776~~FORM 10-K

~~CENTEX CORPORATION~~ (~~Exact name of registrant as specified in its charter)~~Mark One)

Nevada (State of incorporation) 75-0778259 (I.R.S. Employer Identification No.)

þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED MARCH 31, 2009
		or
¨		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________ TO _______________

~~2728 N. Harwood, Dallas, Texas 75201~~Commission ~~(Address~~File ~~of principal executive office, including zip code) (214) 981~~Number: 1-~~5000 (Registrant’s telephone number)~~ 6776

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

		Name of each
		exchange on which
Title of each class		registered
Common Stock		New York Stock Exchange
($.25 par value)

(Exact name of registrant as specified in its charter)

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

Nevada		75-0778259
(State of incorporation)		(I.R.S. Employer Identification No.)

~~Indicate by check mark whether the registrant (1) has filed all reports required to be~~2728 ~~filed~~N. byHarwood, ~~section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports)~~Dallas, ~~and (2) has been subject to such filing requirements for the past 90 days. Yes ü No .~~ Texas

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 registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ü] 75201

~~Indicate by check mark whether the registrant is an accelerated filer~~ (~~as defined in Rule~~Address ~~12b-2~~ of ~~the~~principal ~~Act~~executive offices)~~. Yes ü No .~~

~~On September 30, 2004~~ (~~the last business day of the registrant’s most recently completed~~Zip ~~second fiscal quarter~~Code), the aggregate market value of the Centex Corporation common stock held by non-affiliates of the registrant was $6.26 billion based upon the last sale price reported for such date on the New York Stock Exchange. Solely for purposes of determining this amount, Centex Corporation will treat as an affiliate (i) any director or executive officer of Centex Corporation or (ii) any person who beneficially owns more than 10% of the outstanding common stock of Centex Corporation as reflected in a Schedule 13D filed with the Securities and Exchange Commission, unless such person indicates in such filing that it holds such shares solely for investment and not with a view to exercising control over the business or affairs of Centex Corporation. As of May 19, 2005, 127,925,707 shares of the registrant’s common stock were outstanding.

~~DOCUMENTS INCORPORATED BY REFERENCE~~(214) 981-5000

~~Portions~~(Registrant’s telephone ofnumber, ~~the~~including ~~following~~area ~~documents are incorporated by reference in Part III of this Report:~~ code)

~~(a) Proxy~~SECURITIES ~~statement~~REGISTERED ~~for~~PURSUANT ~~the~~TO SECTION ~~annual~~12(b) ~~meeting~~OF ofTHE ~~stockholders of Centex Corporation to be held on July 14, 2005.~~ ACT:

Title of each class	Name of each exchange on which registered
Common Stock ($ .25 par value)	New York Stock Exchange
Rights to Purchase Junior Participating Preferred Stock, Series D	New York Stock Exchange

~~FORM 10-K~~SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None

~~TABLE~~Indicate OFby ~~CONTENTS~~check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No ¨

PART I
ITEM 1.	Business	3
ITEM 2.	Properties	19
ITEM 3.	Legal Proceedings	20
ITEM 4.	Submission of Matters to a Vote of Security Holders	20
PART II
ITEM 5.	Market for Registrant’s Common Equity and Related Stockholder Matters	22
ITEM 6.	Selected Financial Data	23
ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
ITEM 7A.	Quantitative and Qualitative Disclosures About Market Risk	52
ITEM 8.	Financial Statements and Supplementary Data	56
ITEM 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	100
ITEM 9A.	Controls and Procedures	100
ITEM 9B.	Other Information	100
PART III
ITEM 10.	Directors and Executive Officers of the Registrant	101
ITEM 11.	Executive Compensation	101
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	101
ITEM 13.	Certain Relationships and Related Transactions	101
ITEM 14.	Principal Accountant Fees and Services	101
PART IV
ITEM 15.	Exhibits and Financial Statement Schedules	102
SIGNATURES		108
INDEX TO EXHIBITS
Amended/Restated 1987 Stock Option Plan
8th Amended/Restated 1998 Employee Non-Qualified Stock Option Plan
Form of Stock Option Agreement for 1998 Stock Option Plan
Amended/Restated 2001 Stock Plan
Amended/Restated 2003 Equity Incentive Plan
Amendment No.1 to Executive Deferred Compensation Plan
Form of Deferred Compensation Agreement For Executive Deferred Compensation Plan
Comprehensive Medical Plan
Ratio of Earnings to Fixed Charges
List of Subsidiaries
Consent of Independent Registered Public Accounting Firm
Powers of Attorney
Certification of CEO Pursuant to Rule 13a-14(a)
Certification of CFO Pursuant to Rule 13a-14(a)
Certification of CEO Pursuant to Section 906
Certification of CFO Pursuant to Section 906

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No þ

Indicate by check mark whether the 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 the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

~~Table~~Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of ~~Contents~~Regulation S-T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

~~PART~~Indicate by Icheck 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 registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to the Form 10-K. þ

~~ITEM~~Indicate by 1check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See ~~BUSINESS~~the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

~~General~~þ ~~Development~~Large ofaccelerated ~~Business~~ filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company (Do not check if a smaller reporting company)

~~Centex~~Indicate ~~Corporation~~by ischeck amark ~~Nevada~~whether ~~corporation. Our common stock, par value $.25 per share, began~~the ~~trading~~registrant ~~publicly in 1969. Our common stock~~ is ~~traded~~a onshell ~~the~~company ~~New~~(as ~~York~~defined ~~Stock~~in ~~Exchange,~~Rule or12b-2 ~~the NYSE. As~~ of ~~May 19, 2005, 127,925,707 shares of our common stock were outstanding~~the Act). Yes ~~Any~~¨ ~~reference~~No ~~herein to we, us, our or the Company includes Centex Corporation and its subsidiary companies.~~ þ

~~Since~~On September ~~our founding in 1950 as a Dallas~~30, ~~Texas-based residential construction company~~2008, wethe ~~have evolved~~aggregate ~~into~~market avalue ~~company~~of ~~whose~~the ~~principal~~registrant’s ~~operations~~common ~~are focused on residential and commercial~~stock ~~construction~~held ~~and~~by ~~related~~non-affiliates ~~activities,~~of ~~including~~the ~~mortgage~~registrant ~~financing~~was $2.01 Asbillion ofbased ~~March 31,~~upon ~~2005,~~the ~~our~~last ~~subsidiary~~sale ~~companies~~price ~~operated~~reported infor ~~three~~such ~~principal~~date ~~business~~on ~~segments:~~the ~~Home~~New ~~Building,~~York ~~Financial Services~~Stock ~~and Construction Services~~Exchange. ~~We provide a brief overview~~ As of ~~each~~May ~~segment~~8, ~~below~~2009, ~~with~~124,483,451 ashares ~~more detailed discussion~~ of ~~each~~the ~~segment~~registrant’s ~~later~~common instock ~~this section.~~were outstanding.

~~Home Building’s domestic operations currently involve the purchase and development of land or~~DOCUMENTS ~~lots~~INCORPORATED ~~and~~BY the construction and sale of detached and attached single-family homes (including resort and second home properties and lots) and land or lots. We have participated in the conventional homebuilding business since 1950. We believe that the Company currently ranks as the 4th largest homebuilder in the United States, based upon publicly reported homebuilding revenues for the most recent twelve-month period for which financial information is available. Our international homebuilding operations currently involve the purchase and development of land or lots and the construction and sale of a range of products from small single-family units to executive houses and apartments in the United Kingdom. REFERENCE

~~Financial~~As permitted ~~Services’~~by ~~operations~~General ~~consist~~Instruction ~~primarily~~G of ~~home~~Form ~~financing~~10-K, ~~sub-prime~~the ~~home~~information ~~equity~~required by ~~lending~~Part ~~and~~III ~~the~~of ~~sale~~this ofForm ~~title~~10-K ~~insurance~~is ~~and~~incorporated ~~other~~by ~~various~~reference, ~~insurance~~and ~~coverages.~~will ~~These~~be ~~activities~~included ~~include~~either ~~mortgage~~in ~~origination,~~a ~~servicing,~~definitive ~~and~~proxy ~~other~~statement ~~related~~or ~~services~~an ~~for~~amendment ~~homes~~to ~~sold~~this byForm ~~the~~10-K, ~~Company’s~~which ~~subsidiaries~~must ~~and~~be ~~others.~~filed Wewith ~~have~~the ~~been~~SEC inno later than 120 days after the ~~mortgage~~end ~~lending~~of ~~business~~the ~~since~~fiscal year ~~1973~~covered by this Form 10-K.

~~Construction Services’ operations involve the construction of buildings for both private and~~FORM ~~government interests, including educational institutions, hospitals, multi~~10-unit residential, correctional institutions, airport facilities, office buildings, hotels and resorts and sports facilities. We entered the Construction Services business in 1966 by acquiring a Dallas-based contractor that had been in business since 1936. We also acquired significant construction companies in 1978, 1982, 1987 and 1990. K

~~Prior to February 2004, our common stock traded in tandem with certain equity securities of~~March ~~3333 Holding Corporation~~31, or Holding, and Centex Development Company, L.P., or the Partnership, which were separate entities not consolidated in our financial statements. In February 2004, we completed a series of transactions through which we acquired Holding and the Partnership. These transactions terminated the tandem trading relationship between our common stock and the securities of these entities. 2009

~~Financial~~TABLE ~~Information~~OF ~~about Industry Segments~~ CONTENTS

Note (K), “Business Segments,” of the Notes to Consolidated Financial Statements of this Report contains additional information about our business segments and information on revenues received from external customers located in the United States and the United Kingdom for fiscal 2005, 2004 and 2003.

	PART I
Item 1.	Business	1
Item 1A.	Risk Factors	9
Item 1B.	Unresolved Staff Comments	19
Item 2.	Properties	19
Item 3.	Legal Proceedings	19
Item 4.	Submission of Matters to a Vote of Security Holders	19
Item 4A.	Executive Officers of the Registrant	20

	PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	21
Item 6.	Selected Financial Data	23
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	59
Item 8.	Financial Statements and Supplementary Data	60
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	104
Item 9A.	Controls and Procedures	104
Item 9B.	Other Information	106

	PART III
Item 10.	Directors, Executive Officers and Corporate Governance	106
Item 11.	Executive Compensation	106
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	106
Item 13.	Certain Relationships and Related Transactions, and Director Independence	106
Item 14.	Principal Accountant Fees and Services	106

	PART IV
Item 15.	Exhibits and Financial Statement Schedules	107
SIGNATURES		114

3 i

Table of Contents

~~Narrative~~PART ~~Description of Business~~ I

~~HOME~~ITEM ~~BUILDING~~ 1. BUSINESS

~~Domestic~~General Development of Business

~~Our conventional homebuilding subsidiary,~~ Centex ~~Homes, purchases and develops land or lots~~ ~~and~~Corporation ~~constructs~~is ~~and~~a ~~sells~~Nevada ~~detached~~corporation. Our ~~and~~common ~~attached~~stock, ~~single-family~~par ~~homes~~value ~~(including resort and second~~$.25 ~~home~~per ~~properties~~share, ~~and~~began ~~lots)~~trading ~~and~~publicly ~~land~~in ~~or lots~~1969. Our ~~Centex~~common ~~Homes~~stock is currently traded on the ~~only~~New ~~company~~York toStock ~~rank~~Exchange, ~~among~~or the ~~nation’s~~ ~~top~~NYSE. As ~~10 homebuilders for each~~ of May 8, ~~the~~2009, ~~past 35~~124,483,451 ~~years~~shares ~~according~~of toour ~~Professional~~common ~~Builder~~stock ~~magazine~~were outstanding. Any ~~Home~~reference ~~Building~~herein ~~sells~~ to ~~both~~we, ~~first-time~~us, ~~and~~our ~~move-up~~or ~~buyers,~~the asCompany refers ~~well~~to asCentex ~~active~~Corporation ~~adult~~ and ~~second~~ ~~home~~its ~~buyers.~~subsidiary Incompanies ~~fiscal 2005~~or, ~~79%~~if of the ~~homes~~context requires, ~~closed~~the ~~were~~particular ~~single-family~~segment ~~detached~~or ~~homes, which~~unit ~~includes~~of ~~homes from~~ our ~~resort~~business ~~and~~that ~~second~~is ~~home and on-your-lot operations.~~being discussed.

~~Markets~~On April 7, 2009, Centex Corporation and Pulte Homes, Inc. (NYSE: PHM) entered into a definitive merger agreement pursuant to which Centex will merge with a wholly-owned subsidiary of Pulte, and survive the merger as a wholly-owned subsidiary of Pulte. Under the terms of the agreement, Centex stockholders will receive 0.975 shares of Pulte common stock for each share of Centex common stock they own. Upon closing of the transaction, Pulte stockholders will own approximately 68% of the combined company, and Centex stockholders will own approximately 32%. The transaction is subject to approval by Pulte and Centex stockholders and the satisfaction of customary closing conditions and regulatory approvals, including expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. Pulte and Centex expect to complete the transaction in the third calendar quarter of 2009.

~~Home~~Since ~~Building~~our founding ~~follows~~in 1950 as a ~~strategy~~Dallas, Texas-based residential construction company, we expanded our business to include a broad range of ~~reducing~~activities ~~exposure~~related to construction, ~~local~~construction ~~market~~products ~~volatility~~and byfinancing, but have more recently ~~diversifying~~refocused our operations ~~across~~on ~~geographically~~residential construction and ~~economically~~related ~~diverse~~activities, including ~~markets.~~mortgage financing to our homebuyers. As of March 31, ~~2005~~ 2009, our subsidiary companies operated in two principal lines of business: Home Building ~~was~~and ~~building~~Financial inServices. We 92provide a ~~market~~brief ~~areas,~~overview ~~including~~of ~~Washington,~~each ~~D.C.~~line of business below, ~~and~~with ina 26more ~~states.~~detailed discussion ~~Each~~of ~~market~~each isline ~~listed~~of ~~below~~business bylater ~~geographic~~in ~~areas~~this section.

4Home Building operations currently involve the construction and sale of detached and attached single-family homes. The land used for the construction of our homes is acquired through the purchase of finished or partially finished lots and through the purchase of raw land that must be developed.

~~Table~~Financial Services operations consist of ~~Contents~~mortgage lending and title insurance and settlement services. These activities include mortgage origination and other related services for homes sold by our subsidiaries and others. We have been in the mortgage lending business since 1973. Our mortgage lending and title insurance and settlement services provide our homebuyers with a streamlined home-closing and settlement process, which we believe is important to ensuring customer satisfaction in our homebuilding business.

~~Region~~Over ~~States~~the last ~~Markets~~several ~~States~~fiscal ~~and Markets (continued) Mid-Atlantic Maryland Bethesda/Frederick/Gaithersburg Pennsylvania Johnstown Washington~~years, ~~D.C./Arlington/Alexandria~~we ~~Pittsburgh~~have ~~New~~simplified ~~Jersey~~our ~~Edison~~business ~~South~~portfolio ~~Carolina~~as ~~Charleston/N.~~a ~~Charleston~~result of ~~Newark/Union~~a ~~Myrtle~~number ~~Beach/Conway/N.~~of Myrtle Beach Trenton/Ewing Virginia Charlottesville North Carolina Charlotte/Gastonia/Concord Richmond Durham Virginia Beach/Norfolk/Newport News Greensboro/High Point Raleigh/Cary Wilmington Winston-Salem Southeast Florida Cape Coral/Fttransactions. The ~~Myers~~following ~~Georgia~~table ~~Atlanta/Sandy~~summarizes ~~Springs/Marietta~~these transactions ~~Ft.~~over ~~Lauderdale/Pompano~~the ~~Beach/Deerfield~~last ~~Beach~~five ~~South~~fiscal ~~Carolina ColumbiaGreenville Jacksonville Tennessee Nashville/Davidson/Murfreesboro Lakeland Naples/Marco Island Orlando Port St~~years. Lucie/Ft. Pierce Punta Gorda Sarasota/Bradenton/Venice Tampa/St. Petersburg/Clearwater West Palm Beach/Boca Raton/Boynton Beach Midwest Colorado Boulder Missouri St. Louis Denver/Aurora Ohio Akron Ft. Collins/Loveland Canton/Massillon Greeley Cincinnati/Middletown Indiana Indianapolis Cleveland/Elyria/Mentor Ft. Wayne Columbus Illinois Chicago/Naperville/Joliet Dayton Lake County/Kenosha County Mansfield Kentucky Louisville Monroe Michigan Ann Arbor Sandusky Detroit/Livonia/Dearborn Springfield Flint Toledo Warren/Farmington Hills/Troy Youngstown/Warren/Boardman Minnesota Minneapolis/St. Paul/Bloomington Utah Salt Lake City Rochester Southwest Arizona Phoenix/Mesa Texas Austin/Round Rock Prescott Dallas/Plano/Irving Nevada Las Vegas/Paradise Ft. Worth/Arlington New Mexico Albuquerque Houston/Baytown/Sugar Land Santa Fe Killeen/Temple/Ft. HoodSan Antonio West Coast California Bakersfield Hawaii Honolulu Fresno Nevada Reno/Sparks Hanford/Corcoran Oregon Portland/Vancouver/Beaverton Los Angeles/Long Beach/Glendale Washington Seattle/Bellevue/Everett Oakland/Fremont/Hayward Tacoma Oxnard/Thousand Oaks/Ventura Riverside/San Bernardino/Ontario Sacramento/Arden/Arcade/Roseville San Diego/Carlsbad/San Marcos San Francisco/San Mateo/Redwood City San Jose/Sunnyvale/Santa Clara San Luis Obispo/Paso Robles Santa Ana/Anaheim/Irvine Visalia/Porterville

Business	Date	Description

Westwood Insurance	September 2008	We sold our property and casualty insurance agency operations, which were previously included in the Financial Services segment.
Home Services	April 2008	We sold our home services operations, which were previously included in our Other segment.
Construction Services	March 2007	We sold our commercial construction operations, which were previously a separate reporting segment.
Home Equity	July 2006	We sold our sub-prime home equity lending operations, which were previously included in the Financial Services segment.
International Homebuilding	September 2005	We sold our international homebuilding operations, which were previously included in the Home Building segment.

~~Table of Contents~~1

InTable ~~fiscal~~of 2005, Home Building closed 33,387 homes, including first-time, move-up and, in some markets, custom homes, generally ranging in price from $68.4 thousand to $1.6 million. The average sales price in fiscal 2005 was $269,780. Contents

~~Our~~For ~~practice~~all businesses ~~has~~sold ~~been~~in tothe ~~acquire~~table ~~land~~above, ~~build homes on~~ the ~~land~~results ~~and sell the homes within 24 to 36 months from the date~~ of ~~land~~operations ~~acquisition. Generally, this involves acquiring land that is properly zoned~~ and ~~is either ready for development or, to some degree, already developed. We~~financial ~~control~~position ~~a substantial amount~~ of ~~our~~such ~~land,~~businesses ~~including~~are ~~lots~~reported ~~and~~as ~~land~~discontinued tooperations befor ~~developed into lots,~~all ~~through option agreements that we can exercise over specified time~~ periods orpresented, inwith ~~certain cases, as~~ the ~~land~~exception orof ~~lots~~our ~~are~~property ~~needed.~~and Atcasualty ~~March 31, 2005, Home Building owned approximately 96,945 lots and~~insurance ~~had~~operations ~~options to purchase approximately 168~~which,~~350~~ ~~lots. In addition~~historically, ~~Home~~were ~~Building~~not ~~enters into joint ventures with other builders and developers for land acquisition, development and other activities~~material. For additional information ~~discussion~~on of our ~~participation~~discontinued ~~in joint ventures and lot option agreements~~operations, ~~see Notes~~please ~~(H),~~refer ~~“Commitments~~to ~~and~~Note ~~Contingencies,” and~~ (IN), “~~Land~~Discontinued ~~Held Under Option Agreements Not Owned and Other Land Deposits~~Operations,” of the Notes to Consolidated Financial Statements ~~of this Report~~.

~~Our~~Within our ~~growth~~homebuilding ~~strategy~~operations, ~~for~~we ~~Home~~determined ~~Building~~that ~~has~~our ~~been~~operating ~~focused~~segments ~~primarily~~are onour divisions, ~~organic~~which ~~growth opportunities~~have ~~through~~been ~~land~~aggregated ~~acquisition~~into ~~and~~four ~~development~~reporting segments. Our inhomebuilding ~~existing~~operations, ~~business~~or ~~units~~Home ~~and~~Building, ~~markets.~~consist Toof athe ~~lesser~~following ~~extent~~reporting segments: East, weCentral, ~~have~~West ~~also~~and ~~grown~~Other homebuilding. For ~~the~~a ~~business~~complete ~~through~~description of the ~~acquisition~~states ofand ~~other~~markets ~~homebuilding~~in ~~companies.~~each ~~Over~~of ~~the~~our ~~last~~homebuilding ~~five fiscal years~~segments, weplease ~~have~~refer ~~acquired~~to the ~~homebuilding~~Home ~~operations~~Building ~~of the~~markets ~~following~~table ~~companies:~~ later in this section.

Company	Date Acquired	Description
Real Homes	September 1999	Single-family homes for the first-time and move-up buyer in the Las Vegas, Nevada area.
Selective Group	March 2001	Single-family homes for the first-time and move-up buyer in the Detroit, Michigan area.
CityHomes	March 2001	Urban townhomes and condominiums in the Dallas, Texas area.
Jones Company	January 2003	Single-family homes for the first-time and move-up buyer in the St. Louis, Missouri and Indianapolis, Indiana areas.

Our mortgage lending and title insurance and settlement services represent one reporting segment, Financial Services.

~~In addition, in July 1999, we acquired land and other operating assets for the construction of~~Financial ~~single-family~~Information ~~homes,~~about ~~townhomes and duplexes from Sundance Homes, a suburban Chicago homebuilder. Sundance Homes retained its name and continues to operate in other markets in which we do not compete.~~ Segments

~~Home~~Note ~~Building sells its homes under a variety of brand names including several of the acquired~~(M), ~~company~~“Business ~~names listed above. Fox & Jacobs~~Segments,” ~~one~~ of ~~our~~the ~~brand~~Notes ~~names, primarily markets~~ to ~~first-time buyers.~~Consolidated ~~Centex~~Financial ~~Homes~~Statements ~~primarily markets its homes to both first-time and move-up buyers. Wayne~~contains ~~Homes~~additional ~~markets~~information ~~primarily~~about toour ~~rural~~business ~~lot~~segments ~~owners~~ for ~~construction~~fiscal ofyears a2009, ~~home on their lot. Centex~~2008 ~~Destination~~and ~~Properties markets to second home/resort home buyers~~2007.

6Description of Business

~~Table~~Beginning in fiscal year 2006, many U.S. housing markets began to experience a significant downturn. We believe the principal factors that have caused or are sustaining this downturn include: current economic conditions, including disruptions in the broader financial and credit markets and the current national economic recession, as evidenced by, among other things, high unemployment rates; declining homebuyer demand due to lower consumer confidence and an inability of many ~~Contents~~homebuyers to sell their existing homes, elevated levels of new and existing homes for sale, including the impact of increases in residential foreclosures; reduced availability and stricter terms of mortgage financing due to the significant mortgage market disruptions and tightened credit standards for homebuyers; and pricing pressures resulting from a variety of factors, including the decision of homebuilders to offer significant discounts and sales incentives to liquidate unsold inventories of new homes. These factors have had a significant negative impact on the homebuilding and mortgage finance industries and on our business and results of operations.

~~The table below summarizes by geographic area Home Building’s domestic home closings, sales~~HOME ~~(orders) backlog and sales (orders) for the five most recent fiscal years.~~ BUILDING

~~Closings~~The business ~~(in~~of ~~units):~~Home Building consists of constructing and selling detached and attached single-family homes. The land used for the construction of our homes is acquired through the purchase of finished or partially finished lots and through the purchase of raw land that must be developed. In fiscal year 2009, approximately 81% of the homes closed were single-family, detached homes.

	For the Years Ended March 31,
	2005		2004		2003		2002		2001
Mid-Atlantic		5,823		5,201		4,501		3,877		3,395
Southeast		5,879		5,568		4,851		4,440		4,137
Midwest		6,712		5,801		4,695		3,688		3,296
Southwest		9,158		8,708		8,157		6,910		5,661
West Coast		5,815		5,080		4,223		4,045		4,170
		33,387		30,358		26,427		22,960		20,659
Average Sales Price (in 000’s)	$	270	$	242	$	220	$	214	$	206

~~Sales~~Table ~~(Orders) Backlog, at the end~~ of ~~the period (in units):~~ Contents

	As of March 31,
	2005		2004		2003		2002		2001
Mid-Atlantic		3,461		2,801		2,148		1,503		1,365
Southeast		5,006		3,707		2,713		2,315		1,936
Midwest		3,273		3,392		2,920		2,093		2,037
Southwest		3,688		2,869		2,258		2,361		2,546
West Coast		3,161		2,645		2,011		1,099		1,381
		18,589		15,414		12,050		9,371		9,265

Markets

WeHome Building ~~define~~follows ~~backlog~~a ~~units~~strategy asof ~~units~~maximizing ~~that~~its ~~have~~relative ~~been~~market ~~sold,~~share asin ~~evidenced~~those local bymarkets athat ~~signed~~reward ~~contract,~~market ~~but not~~leaders ~~closed.~~and ~~Substantially~~provide ~~all~~the ofhighest ~~the~~potential returns. We ~~orders~~participate in ~~sales~~a ~~backlog~~wide asvariety of geographically and economically diverse markets that may fluctuate year to year. As of March 31, ~~2005~~2009, ~~are~~Home ~~expected~~Building tohad substantive homebuilding operations in 75 ~~close~~market ~~during~~areas ~~fiscal~~located ~~year~~in ~~2006~~22 states and the District of Columbia. Each active market is listed below within the reporting segment to which it belongs.

~~Sales~~Segment States Markets States and Markets (~~Orders~~continued) (East Florida Cape Coral/Ft. Myers New Jersey Edison Jacksonville Newark/Union Naples/Marco Island New York/Wayne/White Plains Orlando Trenton/Ewing Port St. Lucie/Ft. Pierce North Carolina Burlington Punta Gorda Charlotte/Gastonia/Concord Sarasota/Bradenton/Venice Durham Tampa/St. Petersburg/Clearwater Raleigh/Cary Vero Beach Wilmington West Palm Beach/Boca Raton/ South Carolina Charleston/N. Charleston Boynton Beach Myrtle Beach/Conway/ Georgia Atlanta/Sandy Springs/Marietta N. Myrtle Beach Savannah Virginia Richmond Maryland Bethesda/Frederick/Gaithersburg Virginia Beach/Norfolk/ Washington, D.C./Arlington/Alexandria Newport News Winchester Central Colorado Denver/Aurora Minnesota Minneapolis/St. Paul/Bloomington Ft. Collins/Loveland Rochester Greeley Missouri St. Louis Illinois Chicago/Naperville/Joliet Tennessee Nashville/Davidson/ Indiana Indianapolis Murfreesboro Michigan Ann Arbor Texas Austin/Round Rock Detroit/Livonia/Dearborn Dallas/Plano/Irving Flint Ft. Worth/Arlington Monroe Houston/Baytown/Sugar Land Warren/Farmington Hills/Troy Killeen/Temple/Ft. Hood San Antonio West Arizona Phoenix/Mesa Hawaii Honolulu California Bakersfield Nevada Las Vegas/Paradise El Centro Reno/Sparks Fresno New Mexico Albuquerque Hanford/Corcoran Santa Fe Los Angeles/Long Beach/Glendale Oregon Portland/Vancouver/Beaverton Merced Washington Seattle/Bellevue/Everett Modesto Tacoma Oakland/Fremont/Hayward Oxnard/Thousand Oaks/Ventura Riverside/San Bernardino/Ontario Sacramento/Arden/Arcade/Roseville San Diego/Carlsbad/San Marcos San Luis Obispo/Paso Robles Santa Ana/Anaheim/Irvine Santa Barbara/Santa Maria/Goleta Stockton Visalia/Porterville Yuba City Other Other homebuilding includes certain resort/second home projects in ~~units):~~ Florida that we plan to build out and liquidate, and holding companies. In addition, Other homebuilding includes amounts consolidated under the caption “land held under option agreements not owned” and capitalized interest for all regions. homebuilding

	For the Years Ended March 31,
	2005		2004		2003		2002		2001
Mid-Atlantic		6,483		5,854		5,146		3,936		3,550
Southeast		7,178		6,562		5,249		4,819		4,182
Midwest		6,593		6,273		5,087		3,744		3,572
Southwest		9,977		9,319		8,054		6,725		6,325
West Coast		6,331		5,714		5,132		3,763		4,562
		36,562		33,722		28,668		22,987		22,191

~~Competition~~Table ~~and~~of ~~Other Factors~~ Contents

~~The~~In ~~conventional~~fiscal ~~homebuilding~~year ~~industry~~2009, isHome ~~essentially a “local” business and is highly~~Building ~~competitive.~~closed ~~The top 10 builders in calendar year 2004 accounted for approximately 22% of~~ the ~~total~~ ~~for-~~sale ~~attached and detached new homes sold in the United States. We compete in each~~ of ~~Home~~ ~~Building’s~~14,434 ~~domestic market areas with numerous other homebuilders~~homes, including ~~national~~first-time, ~~regional~~ ~~and local builders. Home Building’s top six domestic competitors based on revenues for their most recent fiscal year~~move-~~end~~up ~~are~~and, asin ~~follows (listed alphabetically): Beazer Homes USA~~some markets, ~~Inc., D.~~luxury ~~R. Horton~~homes, ~~Inc.,~~ranging KBin ~~Homes,~~price ~~Lennar~~from ~~Corporation~~$39,000 ~~Pulte~~to ~~Homes, Inc~~$3. ~~and~~ 0 million. The ~~Ryland~~average ~~Group,~~revenue ~~Inc. Home~~per ~~Building’s~~unit ~~domestic~~in ~~operations~~fiscal ~~accounted~~year ~~for~~2009 ~~an estimated 3% of new~~was $247,900.

7We believe that our business requires in-depth knowledge of each market in order to acquire land in desirable locations, to procure labor and materials, to anticipate consumer preferences and to assess the regulatory environment. Our organizational structure is designed to utilize local market expertise. Additionally, we believe our business requires strong corporate and regional leadership to approve land acquisitions, to procure labor and materials on a national or regional basis when available and to develop, deploy and measure our core business practices. Our regional and corporate structures are designed to develop and leverage these core competencies.

~~Table~~Our neighborhood development process generally consists of ~~Contents~~three phases: land acquisition, land development and home construction and sale. Generally, we seek to acquire land that is properly zoned and is either ready for development or, to some degree, already developed. We acquire land only after we have completed appropriate due diligence and typically after we have obtained the rights or entitlements to begin development. Before we acquire lots or tracts of land, we will, among other things, complete a feasibility study, which includes soil tests, independent environmental studies and other engineering work, and evaluate the status of necessary zoning and other governmental entitlements required to develop and use the property for home construction. Although we purchase and develop land or lots primarily to support our homebuilding activities, we also sell land or lots to investors and other developers and homebuilders.

~~homes~~Our ~~sold~~goal is into ~~the~~own ~~United~~less ~~States~~than ~~for~~two ~~the~~years’ ~~twelve~~supply ~~months~~of ~~ended~~land ~~March 31,~~and ~~2005.~~to ~~Home~~control, ~~Building’s~~through option ~~domestic~~agreements, ~~operations~~approximately ~~calculate~~two ~~its~~more ~~market~~years ~~share~~of byland ~~dividing~~that ~~its~~we ~~new~~can ~~home~~acquire ~~sales~~over specified bytime ~~the~~periods ~~total~~or, ~~single family~~in ~~new~~certain ~~home~~cases, ~~sales~~ as ~~reported~~the byland ~~the~~or ~~census~~lots ~~bureau~~are needed. At ~~The~~March ~~main~~31, ~~competitive~~2009, ~~factors affecting~~ Home Building’s ~~domestic~~owned ~~operations~~57,289 ~~are~~lots ~~location/market,~~and ~~sales~~had options ~~price~~to purchase 7,045 ~~availability~~lots. This ofis ~~mortgage financing~~considerably ~~for~~less ~~customers~~than the 70,222 ~~construction~~owned ~~costs~~lots and 18,147 ~~design~~optioned ~~and~~lots ~~quality~~we ofheld ~~homes,~~at ~~customer~~March ~~service~~31, ~~marketing~~2008. We ~~expertise,~~are ~~availability~~transitioning to a strategy that emphasizes the purchase of ~~land,~~finished ~~price~~lots on more of a “just-in-time basis” and away from a strategy where we acquire raw land and ~~reputation.~~undertake Weall ~~believe~~development ~~that~~work. In addition, Home Building ~~competes~~has ~~effectively~~entered byinto ~~building~~joint aventures ~~high~~with ~~quality~~other ~~home,~~builders ~~maintaining~~and developers ~~geographic~~for ~~diversity, responding~~some toland ~~the~~acquisition ~~specific~~and ~~demands~~development. For additional discussion of ~~each~~our ~~market~~lot option agreements and ~~managing~~participation ~~the~~in ~~operations~~joint atventures, asee Note ~~local~~(C), ~~level.~~“Inventories,” and Note (G), “Commitments and Contingencies,” of the Notes to Consolidated Financial Statements.

~~We conduct targeted market research to identify what features, amenities and options will be~~Following ~~attractive~~the topurchase ~~prospective~~of ~~customers~~land and, ~~whether~~if wenecessary, ~~can~~the ~~satisfy~~entitlement ~~their preferences profitably. Customer preferences can vary across geographical regions~~ and ~~even~~development ~~within them~~process, ~~and can change over~~ ~~time~~we inbegin ~~response~~ to ~~changes~~market, insell ~~personal~~and ~~taste~~construct ~~(such~~homes. Substantially asall ~~the interest in some markets for housing~~of ~~with~~our ~~high~~construction ~~energy~~work ~~efficiency~~is orperformed ~~for~~by ~~housing~~independent ~~located~~contractors. Home Building ~~near~~is ~~public~~transitioning ~~transportation) and~~ to ~~changes~~an ~~in economic~~operating ~~conditions,~~model ~~like~~of ~~interest~~primarily ~~rates,~~constructing ~~which can lead customers to accept smaller or attached~~homes ~~housing~~from ~~despite~~ a ~~preference~~sold ~~for larger or detached housing~~backlog. This Weoperating ~~also~~model ~~use~~will ~~market~~provide ~~research~~more ~~techniques~~predictable toscheduling ~~quantify~~of ~~housing~~independent ~~supply~~contractors ~~and demand in a particular market and use this information to guide our strategy for meeting customer demand in the market. We believe~~ that ~~our~~will ~~use~~eventually ofresult ~~market~~in ~~research~~increased ~~allows~~efficiency ~~us to respond quickly~~ and ~~efficiently~~improved ~~to the economic reality of a market and to our prospective customers’ preferences, tastes and financial capabilities~~profitability.

~~The~~We ~~results~~market and ofsell ~~Home~~our ~~Building’s~~homes ~~operations~~through ~~may~~commissioned beemployees ~~adversely~~and ~~affected~~independent byreal ~~increases in interest~~estate ~~rates~~brokers. We ~~Any~~typically ~~significant~~conduct ~~increase~~home sales from sales offices located in ~~mortgage~~furnished ~~interest~~model ~~rates~~homes ~~above~~in ~~current~~each ~~prevailing~~neighborhood. Our ~~levels~~sales ~~could~~personnel ~~affect~~assist ~~demand~~prospective ~~for~~homebuyers ~~housing,~~by atproviding ~~least~~them inwith ~~the~~floor ~~short~~plans, ~~term~~price information, ~~and~~tours ~~could~~of ~~reduce~~ the ~~ability~~neighborhood orand ~~willingness of~~model ~~prospective~~homes ~~homebuyers~~and toassisting ~~finance~~them ~~home~~with the ~~purchases.~~selection ~~Although~~of weupgrades ~~expect~~and ~~that~~options. As wemarket ~~would~~conditions ~~make~~warrant, ~~adjustments~~we inmay ~~our~~provide ~~operations~~potential inhomebuyers anwith ~~effort~~a tovariety ~~mitigate the effects~~ of ~~any~~incentives, ~~increase in interest~~including ~~rates,~~discounts ~~there~~and ~~can~~free beupgrades, noto ~~assurances~~remain ~~that these efforts would be successful~~competitive.

~~The~~Our growth ~~homebuilding~~strategy ~~industry~~for isHome ~~affected~~Building byhas ~~changes~~been infocused ~~national~~primarily ~~and~~on ~~local economic conditions,~~organically ~~job~~growing ~~growth,~~our ~~long-term~~relative ~~and~~market ~~short-term~~share ~~interest~~in ~~rates,~~those ~~consumer~~local ~~confidence,~~markets ~~governmental~~that ~~policies,~~reward market ~~zoning~~leaders ~~restrictions~~ and, toprovide athe ~~lesser~~highest ~~extent,~~potential ~~changes~~returns. To ina ~~property taxes, energy costs, federal~~lesser ~~income tax laws~~extent, ~~federal~~we ~~mortgage~~have ~~financing~~previously ~~programs~~also ~~and~~grown ~~various~~through ~~demographic factors. The political and economic environments affect both~~ the ~~demand~~acquisition ~~for~~of ~~housing constructed and the~~other ~~subsequent~~homebuilding ~~cost of financing~~companies. There ~~Unexpected~~have ~~weather~~been ~~conditions,~~no ~~such~~acquisitions ~~as unusually heavy or prolonged~~of ~~rain~~homebuilding orcompanies ~~snow,~~in orthe ~~hurricanes,~~last ~~may~~five ~~affect~~fiscal ~~operations in certain areas~~years.

~~The homebuilding industry is subject to extensive regulations.~~ Home Building ~~and~~sells its ~~subcontractors~~ ~~must~~homes ~~comply~~principally ~~with~~under ~~various~~the ~~federal,~~Centex ~~state~~name and ~~local laws and regulations~~, ~~including worker~~in ~~health and safety, zoning, building standards, erosion and storm water pollution control,~~certain ~~advertising~~markets, ~~consumer~~under ~~credit~~a ~~rules~~variety ~~and~~of ~~regulations~~other ~~and~~brand ~~the~~names ~~extensive~~including ~~and~~several ~~changing~~from ~~federal, state~~previous ~~and~~acquisitions. Fox ~~local~~& ~~laws~~Jacobs, ~~regulations~~one ~~and ordinances governing the protection~~ of ~~the~~our ~~environment~~brand names, ~~including~~primarily ~~the~~markets ~~protection~~to offirst-time ~~endangered species and waters of the United States~~buyers. Centex ~~Home~~Homes ~~Building~~primarily ismarkets ~~also subject to other rules and regulations in connection with~~ its ~~manufacturing and sales activities,~~ ~~including~~homes ~~requirements as~~ to ~~incorporated~~first-time ~~building materials~~ and ~~building~~move-up ~~designs~~buyers. All of these regulatory requirements are applicable to all homebuilding companies, and, to date, compliance with these requirements has not had a material impact on Home Building. We believe that Home Building is in material compliance with these requirements.

We purchase materials, services and land from numerous sources, and during the past twelve months, have been able to deal effectively with the challenges we have experienced relating to the supply or availability of materials, services and land. The principal raw materials required for home construction include concrete and wood products. In addition, we use a variety of other building materials, including roofing, gypsum insulation, plumbing, and electrical components in the homebuilding process. While raw material prices may fluctuate, due to various factors, including demand or supply shortages, we do have a number of fixed-price contracts with subcontractors and material suppliers which help offset commodity price increases. We also attempt to maintain efficient operations by utilizing standardized materials available from a variety of sources. Our vendor purchase agreements also allow us to leverage our volume through quantity purchase discounts for 4

8 Table of Contents

~~Table~~The tables ofbelow ~~Contents~~summarizes by reporting segment Home Building units closed, sales orders and backlog units for the five most recent fiscal years.

the purchasing of a number of product categories. In the past, building materials have been generally available to us in adequate supply. We use many subcontractors in our various markets and are not dependent on any single subcontractor.

Units Closed:
	For the Years Ended March 31,
	2009		2008		2007		2006		2005

East		4,621		8,334		11,606		13,164		10,296
Central		5,930		10,306		12,766		13,851		12,577
West		3,847		8,211		10,512		10,763		8,788
Other homebuilding		36		351		901		1,454		1,726
		14,434		27,202		35,785		39,232		33,387

Average Revenue Per Unit (in 000’s)	$	248	$	277	$	308	$	304	$	270

International

Sales Order (in Units):
	For the Years Ended March 31,
	2009		2008		2007		2006		2005

East		3,923		7,505		8,521		12,085		12,255
Central		4,636		9,586		11,992		13,619		12,703
West		2,274		7,406		8,431		11,262		9,800
Other homebuilding		33		160		105		1,064		1,804
		10,866		24,657		29,049		38,030		36,562

Our international homebuilding operations currently involve the purchase and development of land or lots and the construction and sale of a range of products from small single-family units to executive houses and apartments in the United Kingdom. International homebuilding currently has 48 developments located throughout England. In fiscal 2005, our international homebuilding operations delivered 1,563 units, with prices generally ranging from $81.8 thousand to $1.8 million. The average sales price was approximately $314,797. As of March 31, 2005, our international homebuilding operations had 533 units in sales backlog. Substantially all of the orders in sales backlog as of March 31, 2005 are expected to close during fiscal 2006. Home Building’s international operations currently account for 1% of the new homes market in the United Kingdom, based on the most recent estimate of the office of the Deputy Prime Minister.

Backlog Units:
	For the Years Ended March 31,
	2009		2008		2007		2006		2005

East		1,750		2,448		3,277		6,362		7,441
Central		1,661		2,955		3,989		4,763		4,995
West		767		2,340		3,173		5,254		4,755
Other homebuilding		-		3		212		1,008		1,398
		4,178		7,746		10,651		17,387		18,589

Backlog Value (in millions)	$	999	$	2,016	$	3,176	$	5,774	$	5,941

~~FINANCIAL~~For ~~SERVICES~~each unit in backlog, we have received a signed customer contract and a customer deposit, which is refundable under certain circumstances. The backlog units included in the table above are net of known cancellations. Cancellations occur for a variety of reasons, including a customer’s inability to obtain financing, customer relocations or other customer financial hardships. Average cancellation rates for the years ended March 31, 2009 and 2008 were 35.4% and 32.1%, respectively. Substantially all of the orders in sales backlog as of March 31, 2009 are scheduled to close during fiscal year 2010.

~~Our Financial Services’ operations consist primarily of home financing, sub-prime home equity~~Competition ~~lending~~ and ~~the~~Other sale of title insurance and other various insurance coverages, including property and casualty. These activities include mortgage origination, servicing, and other related services for purchasers of homes sold by the Company’s subsidiaries and others. Factors

~~Prime~~The homebuilding ~~Mortgage~~industry ~~Lending~~is highly competitive and fragmented. Traditionally, competition in the industry has occurred at a local level among national, regional and local homebuilders. The prolonged downturn in the homebuilding industry has significantly impacted competition among the homebuilders. The excess supply of homes for sale and the need for builders to generate cash have caused homebuilders and other home sellers to reduce prices. This increased competition has also resulted in increases in discounts and sales incentives, including increases in seller-paid financing and closing costs, and increases in sales commissions to help stimulate sales and close homes. We believe the increased competition in the homebuilding industry affected all categories of builders, but has had a disproportionate effect on smaller homebuilders that may not be capitalized as well as most of the large homebuilders. The top ten builders in calendar year 2008 accounted for approximately 21% of the nation’s new housing stock. We believe we ranked third in the largest homebuilders in the United States at March 31, 2009, based on publicly reported homebuilding revenues for the most recent twelve-month period for which information is available. Our operations

We established the predecessor of CTX Mortgage Company, LLC and its related companies to provide mortgage financing for homes built by Home Building. By opening CTX Mortgage Company, LLC offices in Home Building’s housing markets, we have been able to provide mortgage financing for an average of 71% of Home Building’s non-cash unit sales over the past five years and for 73% of them in fiscal 2005. In 1985, we expanded CTX Mortgage Company, LLC’s operations to include the origination of mortgage loans that are not associated with the sale of homes built by Home Building. We refer to mortgage financing for homes built by Home Building as Builder loans and to mortgage financing for homes built by others, loans for resale homes and loans for refinance of existing mortgages as Retail loans. 5

AtTable ~~March 31, 2005, CTX Mortgage Company, LLC originated loans through its loan officers in 243 offices licensed in 46 states and the District~~ of ~~Columbia. The offices vary in size depending on loan volume.~~ Contents

9accounted for an estimated 3% of new homes sold in the United States for the twelve months ended March 31, 2009. We calculate our market share by dividing our new home sales by the total single family new home sales as reported by the U. S. Census Bureau. Our top four competitors based on revenues for their most recent fiscal year-end are as follows (listed alphabetically): D. R. Horton, Inc., Lennar Corporation, NVR, Inc. and Pulte Homes, Inc. The main competitive factors affecting our operations are location/market, sales price, availability of mortgage financing for customers, construction costs, design and quality of homes, customer service, marketing expertise, availability of land, price of land and reputation. We believe that Home Building competes effectively by building a high quality home, and responding to the specific demands of each market by managing operations at a local level.

~~Table~~We conduct targeted market research to identify what features, amenities and options will be attractive to prospective customers and whether we can satisfy their preferences profitably. Customer preferences can vary across geographical regions and even within them, and can change over time in response to personal or regional factors (such as the interest in some markets for housing with high energy efficiency or for housing located near public transportation) and to changes in economic conditions, such as affordability of housing ~~Contents~~and availability of financing, which can lead customers to accept smaller or attached housing despite a preference for larger or detached housing. We also use market research techniques to quantify housing supply and demand in a particular market and use this information to guide our strategy for meeting customer demand in the market.

~~The~~We ~~following~~have responded ~~table~~to ~~shows~~the downturn in the ~~unit~~industry ~~breakdown~~by adjusting certain of ~~Builder~~our product offerings and ~~Retail~~marketing ~~loans~~efforts. To ~~for~~simplify ~~CTX~~our ~~Mortgage Company~~business, ~~LLC~~reduce costs and ~~its~~offer ~~related~~products ~~companies~~that ~~for~~homebuyers can afford, we have reduced the ~~five~~number of ~~years~~floor ~~ended~~plans ~~March 31~~offered across our neighborhoods, ~~2005:~~reduced the number of available options and upgrades, and in many cases, reduced the size of our homes.

	For the Years Ended March 31,
	2005			2004			2003			2002			2001
Loan Types:
Builder		22,517			20,865			18,127			15,435			12,506
Retail (1)		44,816			67,481			66,807			64,949			48,244
		67,333			88,346			84,934			80,384			60,750
Origination Volume (in millions)	$	13,039.0		$	15,116.0		$	13,991.2		$	12,445.5		$	8,880.6
Percent of Home Building’s Non-Cash Closings Financed		73	%		74	%		73	%		72	%		64	%

The homebuilding industry will continue to be affected by changes in national and local economic conditions, the supply of new and existing homes for sale, job growth, long-term and short-term interest rates, availability of mortgage products, consumer confidence, governmental policies, zoning restrictions and, to a lesser extent, changes in property taxes, energy costs, federal income tax laws, federal mortgage financing programs and various other demographic factors. The political and economic environments affect both the demand for housing constructed and the subsequent cost of financing. Unexpected weather conditions, such as unusually heavy or prolonged rain or snow, or hurricanes, may affect operations in certain areas.

~~(1)~~The homebuilding ~~For~~industry ais ~~discussion~~subject ofto extensive regulation. Home Building and its contractors must comply with various federal, state and local laws and regulations, including worker health and safety, zoning and land entitlement, building standards, advertising, consumer credit rules and regulations and the ~~decrease~~extensive inand changing federal, state and local laws, regulations and ordinances governing the ~~number~~protection of ~~Retail~~the ~~loans originated~~environment, including ~~see~~laws ~~Management’s~~related ~~Discussion~~to erosion and ~~Analysis~~storm water pollution control and the protection of ~~Financial~~endangered ~~Condition~~species and ~~Results~~waters of ~~Operations~~the United States. We are also subject to other rules and regulations in connection with our construction and sales activities, ~~Fiscal~~including ~~Year~~requirements ~~2005~~as ~~Compared~~to incorporated building materials and building designs, such as requirements for the use of energy efficient materials or designs. While these regulatory requirements are generally applicable to ~~Fiscal~~all ~~Year~~regions ~~2004~~in which we operate, regulations ~~Financial~~in ~~Services~~coastal markets tend to be more extensive. All of these regulatory requirements are applicable to all homebuilding companies, ~~Prime~~and, to ~~Mortgage~~date, ~~Lending~~compliance with these requirements has not had a material impact on Home Building. We believe that we are in compliance with these requirements in all material respects.

We purchase ~~provide~~materials, ~~mortgage~~land ~~origination~~ and ~~other mortgage-related~~ services ~~for~~from ~~the~~numerous ~~Federal~~sources. The ~~Housing~~principal ~~Administration,~~raw ormaterials ~~FHA,~~required ~~the~~for ~~Department~~home ofconstruction ~~Veterans’~~include ~~Affairs,~~concrete ~~or VA,~~ and ~~conventional loans~~wood onproducts. In ~~homes~~addition, ~~that~~we ~~Home~~use ~~Building~~a orvariety ~~others~~of ~~build~~other ~~and~~building ~~sell~~materials, including asroofing, ~~well~~gypsum, asinsulation, ~~resale~~plumbing, ~~homes~~ and ~~refinancing~~electrical ofcomponents in ~~existing~~the ~~mortgages~~homebuilding process. We ~~Our~~attempt ~~loans~~to ~~are~~maintain ~~generally~~efficient ~~first-lien~~operations by ~~mortgages~~utilizing ~~secured~~standardized bymaterials ~~one-~~available tofrom ~~four-family~~a variety of ~~residences~~sources. A ~~majority~~number of ~~the~~our ~~loans~~vendor ~~qualify~~purchase ~~for~~agreements ~~inclusion~~also inallow ~~programs~~us ~~sponsored~~to leverage byour ~~the~~volume ~~Government National~~through ~~Mortgage~~quantity ~~Association,~~purchase ordiscounts ~~GNMA,~~for the ~~Federal~~purchasing ~~National~~of ~~Mortgage Association, or FNMA, or the~~a ~~Federal~~number ~~Home~~of ~~Loan~~product ~~Mortgage Corporation, or FHLMC~~categories. We ~~These~~use ~~loans~~many ~~are~~contractors ~~known~~ in ~~the~~our ~~industry as~~various ~~“conforming”~~markets ~~loans. The remainder of the loans are either pre-approved~~ and ~~individually underwritten by CTX Mortgage Company, LLC or by private investors who subsequently purchase the loans, or~~ are ~~funded~~not bydependent ~~private~~on ~~investors~~any ~~who~~single ~~pay a broker fee to CTX Mortgage Company, LLC for broker services rendered~~contractor.

~~CTX Mortgage Company, LLC’s principal sources of income are the sale of mortgage loans,~~FINANCIAL ~~together with all related servicing rights, interest income and other fees. Generally, we sell our right to service the mortgage loans and retain no other residual interests.~~ SERVICES

WeOur Financial ~~also~~Services ~~participate~~operations ininclude ~~joint-venture~~mortgage ~~agreements~~lending ~~with third-party homebuilders~~ and other ~~real~~related ~~estate~~services ~~professionals to provide mortgage originations~~ for ~~their~~purchasers ~~customers.~~of ~~These~~homes ~~joint~~sold ~~venture companies~~by ~~are~~our ~~fully~~homebuilding ~~consolidated~~operations inand ~~CTX Mortgage Company, LLC’s financial statements. At March 31,~~title ~~2005,~~insurance ~~CTX~~and ~~Mortgage~~settlement ~~Company, LLC had 22 of these agreements, operating in 19 offices licensed in 8 states~~services.

InWe established ~~1999,~~the predecessor of CTX Mortgage Company, LLC ~~entered~~to ~~into~~provide a mortgage ~~loan purchase agreement, as amended~~ ~~with~~financing ~~Harwood~~for ~~Street~~homes ~~Funding~~built I,by ~~LLC,~~Home ~~or HSF-I, that we refer to as the HSF-I Purchase Agreement~~Building. ~~HSF-I~~ By isopening ~~a variable interest entity for which we are the primary beneficiary and, as of July 1,~~mortgage ~~2003,~~offices isin ~~consolidated~~Home ~~with~~Building ~~our~~housing ~~Financial Services segment pursuant to the provisions of Financial Accounting Standards Board~~markets, ~~or FASB, Interpretation No. 46 “Consolidation of Variable Interest Entities,” as revised, which~~ we ~~refer to as FIN 46. Variable interest entities are entities in which (1) equity investors do not~~ have abeen ~~controlling~~able ~~financial interest and/or (2) the entity is unable~~ to ~~finance~~provide ~~its activities without additional subordinated financial support from other~~mortgage ~~parties.~~financing ~~The~~for ~~primary~~an ~~beneficiary~~average of a78% ~~variable interest entity is the owner or investor that absorbs a majority~~ of ~~the~~Home ~~variable~~Building ~~interest~~non-cash ~~entity’s~~unit ~~expected~~sales ~~losses~~over ~~and/or receives a majority of~~ the ~~variable interest entity’s expected residual returns. Since 1999, CTX Mortgage Company, LLC~~ ~~has~~past ~~sold~~five ~~substantially~~years ~~all conforming~~ and ~~Jumbo~~for ~~“A”~~84% ~~mortgage~~of ~~loans~~such ~~that~~closings ~~it originates to HSF-I~~ in ~~accordance~~ ~~with~~fiscal ~~the~~year ~~HSF-I Purchase Agreement~~2009. ~~When HSF-I acquires these loans, it holds them on average approximately 60 days and then resells them into the secondary market.~~ In ~~accordance with~~ ~~the HSF-I Purchase Agreement~~1985, ~~CTX~~we ~~Mortgage~~expanded ~~Company,~~our ~~LLC acts as servicer of the loans owned by HSF-I and arranges for the sale of the~~ mortgage ~~loans~~operations ~~into~~to ~~the~~include ~~secondary market. HSF-I purchases mortgage loans, at closing, from CTX Mortgage Company, LLC with~~ the origination

10 6

Table of Contents

~~proceeds~~of mortgage ~~from~~loans ~~its~~that ~~issuance~~are not associated with the sale of ~~short-term~~homes ~~secured~~built ~~liquidity~~by us. We ~~notes,~~refer ~~medium-term~~to ~~debt~~mortgage financing for homes built by Home Building as Builder loans, and to mortgage financing for homes built by others, loans for ~~subordinated~~existing ~~certificates.~~homes and loans to refinance existing mortgages as Retail loans.

~~Sub-Prime~~As a result of the significant disruptions in the mortgage markets and the related reductions in the mortgage market liquidity, during fiscal year 2006, we began to focus our mortgage operations on Builder loans to support Home Building. Retail ~~Equity~~mortgage ~~Lending~~originations represented approximately 44.4%, 54.8% and 53.0% of total mortgage originations during the fiscal years ended March 31, 2009, 2008, and 2007, respectively. During July 2008, Financial Services made the decision to cease the origination of Retail loans. Financial Services, which originally operated approximately 80 retail branches, ceased originating Retail loans during the fourth quarter of fiscal year 2009, and the wind-down was completed as of March 31, 2009. Due to the closure of our retail branch locations, we transitioned our mortgage operations to a centralized production model. The elimination of substantially all Retail loans, as well as the implementation of a centralized production model, may have a negative impact on Financial Services operating results.

WeAt ~~formed the predecessor of Centex Home Equity Company~~March 31, ~~LLC~~2009, orFinancial ~~Home~~Services ~~Equity,~~originated inBuilder ~~fiscal 1995. Home Equity’s business involves the origination of primarily nonconforming home equity mortgage~~ loans. ~~The~~from ~~sub-prime~~37 ~~lending~~offices ~~market is comprised of borrowers whose financing needs are not being~~licensed met by traditional mortgage lenders for a variety of reasons, including credit histories that may limit a borrower’s access to credit or a borrower’s need for specialized loan products such as cash-out refinance and jumbo loans. Since its inception, Home Equity has focused on lending to individuals who have substantial equity in ~~their~~22 ~~homes but whose financing needs are not being met by traditional mortgage lenders~~states. Home Equity’s mortgage loans to these borrowers are made primarily for such purposes as debt consolidation, refinancing, home improvement or educational expenses. Substantially all of Home Equity’s mortgage loans are secured by first mortgage liens on one- to four-family residences and have payment schedules ranging from 5 to 30 years.

AtThe following ~~March 31,~~table ~~2005,~~shows ~~Home~~the ~~Equity~~unit ~~had~~breakdown ~~166~~of ~~offices~~Builder and ~~was~~Retail ~~doing~~loans ~~business~~for ~~in 47 states. Home~~the ~~Equity~~five ~~originates~~years ~~home~~ended ~~equity~~March ~~loans~~31, ~~through five major origination sources~~2009:

• its retail branches; • a broker referral network; • referrals from its prime mortgage affiliate, CTX Mortgage Company, LLC; • a correspondent mortgage banker network; and • Home Equity’s direct sales unit that sources lending opportunities from a variety of channels including through the Internet.


	For the Years Ended March 31,
	2009			2008			2007			2006			2005
Loan Types (originations):
Builder		11,230			20,431			27,141			27,364			22,517
Retail		8,970			24,729			30,638			43,319			44,816
		20,200			45,160			57,779			70,683			67,333

Origination Volume (in millions)	$	4,137.8		$	9,991.3		$	13,826.0		$	15,827.4		$	13,039.0
Percent of Home Building
Closings Financed (1)		84	%		79	%		80	%		75	%		73	%

~~The~~(1) ~~following~~Excludes ~~table~~non-financed ~~summarizes Home Equity’s origination statistics for the five~~cash-~~year~~only ~~period ended March 31, 2005:~~ closings.

	For the Years Ended March 31,
	2005		2004		2003		2002		2001
Loans		43,617		36,659		29,448		26,955		26,418
Origination Volume (in millions)	$	5,276.3	$	3,920.7	$	2,506.2	$	2,092.4	$	1,717.9

We provide mortgage origination and other mortgage-related services for Federal Housing Administration (FHA) loans, Department of Veterans’ Affairs (VA) loans and conventional loans. Our loans are generally first-lien mortgages secured by the home. Substantially all of our loans qualify for inclusion in programs sponsored by the Government National Mortgage Association (GNMA), the Federal National Mortgage Association (FNMA), or the Federal Home Loan Mortgage Corporation (FHLMC). Loans qualifying for inclusion in FNMA or FHMLC sponsored programs are known in the industry as conforming loans. The remainder of the loans is either pre-approved and individually underwritten by us or by private investors who subsequently purchase the loans, or is funded by private investors who pay a broker fee to us for broker services rendered.

WeFinancial Services ~~began~~revenues ~~servicing loans through Home Equity in fiscal 1997,~~ and weoperating ~~generally~~earnings ~~service~~are ~~all loans~~derived ~~included~~primarily infrom ~~Home~~the ~~Equity’s~~sale ~~portfolio. Servicing fees for sub-prime loans are significantly~~of ~~higher~~mortgage ~~than for prime~~ loans, ~~primarily~~together ~~due to the higher costs associated~~ with ~~more~~related ~~frequent contact~~servicing ~~with customers. Servicing encompasses~~rights, ~~among~~broker ~~other activities~~fees, ~~the following processes:~~title ~~billing,~~insurance ~~collection~~and ofsettlement ~~payments~~services, ~~investor~~interest ~~reporting,~~income ~~customer assistance, recovery of delinquent payments~~ and ~~instituting foreclosure and liquidation of the underlying collateral~~other fees. For ~~Home~~substantially ~~Equity’s servicing~~all ~~portfolio~~mortgage ~~also includes~~ loans ~~sold on a whole loan~~originated, ~~servicing-retained~~we ~~basis.~~sell ~~As of~~our ~~March 31,~~right ~~2005,~~to ~~Home~~service ~~Equity~~the ~~was~~mortgage ~~servicing a sub-prime loan portfolio of 100,403~~ loans ~~with~~and aretain ~~total loan~~no ~~value of approximately $9.31 billion.~~residual interests.

~~From~~Generally, our ~~October 1997~~business ~~through~~strategy ~~March 2000,~~is ato ~~majority~~originate ofand ~~Home~~sell ~~Equity’s~~ loans ~~originated~~rather ~~were included~~than inhold ~~securitizations~~them, which ~~that~~reduces ~~utilized~~our acapital ~~structure~~investment ~~that~~and ~~resulted~~related inrisks. Until the second ~~loans~~quarter ~~being~~of ~~accounted for~~fiscal asyear ~~sales.~~2008, ~~Under~~mortgage ~~this~~loans ~~structure,~~held ~~Home~~for ~~Equity~~sale ~~retained~~were aprimarily funded ~~residual~~by ~~interest~~CTX inMortgage Company, asLLC’s ~~well~~sale asof substantially all the mortgage ~~servicing~~loans ~~rights~~it originated to Harwood Street Funding I, ~~the~~LLC, ~~securitized~~which ~~loans.~~we Werefer ~~call~~to ~~this~~as HSF-I. Following ~~retained~~unprecedented ~~residual~~disruptions ~~interest~~in the mortgage markets ~~securitization~~during ~~residual~~the ~~interest,~~second orquarter ~~MSRI.~~of Asfiscal ayear ~~result~~2008, ofCTX ~~the~~Mortgage ~~sales accounting treatment~~Company, ~~our~~LLC ~~balance~~discontinued ~~sheet~~sales ~~does~~of ~~not reflect the~~ mortgage loans ~~receivable~~to HSF-I, and ~~offsetting~~is ~~debt~~now ~~resulting~~relying ~~from~~on committed ~~these~~bank ~~securitizations.~~warehouse ~~The~~credit ~~estimated~~facilities ~~gain~~to onprovide ~~the~~funding ~~sale~~for ofits ~~these~~loan originations. In ~~loans~~November ~~was~~2007, ~~included~~we interminated ~~earnings during~~HSF-I ~~the~~and ~~period~~all inof ~~which~~its outstanding ~~the~~obligations ~~securitization~~were ~~transaction closed~~redeemed. HSF-I Aswas ofa ~~March 31,~~variable ~~2005, Home~~interest ~~Equity~~entity ~~had~~of awhich ~~remaining~~we ~~MSRI~~were ofthe ~~$70.1 million~~primary beneficiary, ~~which~~and ~~includes~~it ~~$68.1 million~~was ~~remaining~~consolidated onin ~~loans~~our ~~securitized~~financial ~~from October~~ statements.

11Financial Services also holds other mortgage loans, including performing and nonperforming construction loans and other nonperforming mortgage loans. During the year ended March 31, 2008, Financial Services ceased originating new construction loans; however, it intends to fulfill its existing funding commitments, which were $1.2 million at March 31, 2009.

~~Table of Contents~~7

~~1997~~Table toof March 2000 accounted for as gain on sale, $0.5 million related to an acquisition in fiscal 2002, and $1.5 million related to loans sold in fiscal year 2004 to a government sponsored enterprise that we continue to service. Contents

We ~~changed the structure of securitizations beginning April 1, 2000. Since such time,~~offer ~~securitizations~~title ~~have been accounted for as borrowings; interest has been recorded over the life of the loans using the interest~~agent, ortitle ~~actuarial~~underwriting, ~~method;~~closing ~~the mortgage loans receivable~~ and ~~the securitization~~other ~~debt~~settlement ~~have~~services ~~remained on Home Equity’s balance sheet and the related interest margin has been reflected~~ in ~~our income statement. Under both structures, recourse is limited to the~~23 ~~payments~~states ~~received~~under on the ~~underlying~~Commerce ~~mortgage~~Title ~~collateral~~name, ~~with~~including noCommerce ~~recourse~~Title ~~to Home Equity or Centex Corporation. As is common in these structures~~Company, ~~Home Equity remains liable for customary loan~~Commerce ~~representations.~~Title ~~The~~Agency ~~structure of Home Equity’s securitizations has no effect on the ultimate amount of profit~~ and ~~cash~~Commerce ~~flow~~Title ~~recognized~~Insurance ~~over the life of the mortgages~~Company. However, the structure does affect the timing of profit recognition. Interest margin, rather than gain on sale of loans, is Home Equity’s primary source of operating income. From April 1, 2000 to March 31, 2005, Home Equity completed 19 securitizations totaling approximately $12.57 billion in loans under this structure.

Competition and Other ~~Financial Services Operations~~ Factors

WeThe financial ~~offer~~services ~~title~~industry ~~agent,~~in ~~title~~the ~~underwriting,~~United ~~closing~~States is highly competitive. Financial Services competes with the mortgage banking subsidiaries of large commercial banks, ~~appraisal~~mortgage companies, and savings and other ~~settlement~~financial ~~services~~institutions into supply mortgage financing at attractive rates to 24homebuyers. Key ~~states~~competitive ~~under~~factors ~~the~~among ~~Commerce~~industry ~~Title~~participants ~~name,~~are varied ~~including~~and ~~Commerce~~include ~~Title~~convenience ~~Company~~in obtaining a loan, ~~Commerce~~customer ~~Title~~service, ~~Agency~~marketing and ~~Commerce~~distribution ~~Title~~channels, ~~Insurance~~amount ~~Company.~~and ~~Through~~term ~~Westwood~~of ~~Insurance~~the loan, aloan ~~multi-line~~origination ~~property~~ fees and interest rates. Any increase in competition may lower the rates ~~casualty~~we ~~insurance~~can ~~agency~~charge borrowers, wethereby ~~market~~potentially ~~homeowners~~reducing ~~and~~gain ~~auto~~on ~~insurance~~future toloan sales. Our ~~Home~~title ~~Building~~operations ~~and~~compete ~~Financial~~with other providers of title ~~Services~~products ~~customers~~to ~~and~~sell ~~customers~~their products to purchasers of ~~approximately~~our 6homes, ~~other~~as ~~homebuilders~~well inas 50to ~~states~~the general public. Many ~~Westwood Insurance~~of ~~also~~these ~~provides~~competitors ~~coverage~~have ~~for~~greater ~~some~~resources ~~commercial~~than we ~~customers~~do.

~~Our~~Many mortgage ~~Technologies~~lenders ~~Group,~~have ~~under~~ceased ~~the~~or ~~Adfitech~~severely ~~name,~~restricted ~~provides~~operations ~~outsourced~~due to the continued disruptions in the mortgage ~~services~~markets during the last two fiscal ~~including~~years. The ~~quality~~continued ~~control~~decline in homebuyer demand has also reduced the population of potential mortgage customers. In addition, ~~shipping~~the disruptions in the mortgage and ~~delivery.~~credit ~~Adfitech~~markets ~~currently~~eliminated ~~services~~the ~~over~~ability ~~500~~of ~~clients~~most ~~throughout~~mortgage lenders to sell nonconforming mortgage loans as there are few investors willing to accept the 50risks ~~states~~associated with these loan products. As a result, most mortgage lenders limit their mortgage loan originations to conforming loan products.

~~Competition~~Financial Services operations are subject to extensive federal and ~~Other~~state ~~Factors~~regulations, as well as rules and regulations of, and examinations by, FNMA, FHLMC, FHA, VA, the Department of Housing and Urban Development, or HUD, GNMA and state regulatory authorities with respect to originating, processing, underwriting, making and selling loans and providing title products. In addition, there are other federal and state statutes and regulations affecting such activities. These rules and regulations, among other things, impose licensing obligations on our Financial Services operations, specify standards for origination procedures, establish eligibility criteria for mortgage loans, provide for inspection and appraisals of properties, regulate payment features and, in some cases, fix maximum interest rates, fees, loan amounts and premiums for title insurance. Certain of our Financial Services operations are required to maintain specified net worth levels and submit annual audited financial statements to HUD, VA, FNMA, FHLMC, GNMA and some state regulators.

~~The~~As ~~financial~~an approved ~~services~~FHA ~~industry~~lender, inCTX ~~the~~Mortgage ~~United~~Company, ~~States~~LLC is ~~highly~~subject ~~competitive.~~to ~~CTX~~examination ~~Mortgage~~by the ~~Company,~~Federal ~~LLC~~Housing ~~competes~~Commissioner ~~with~~at ~~commercial~~all ~~banks,~~times ~~other~~to ~~prime~~ensure ~~mortgage~~compliance ~~lending~~with ~~companies and other~~FHA ~~financial~~regulations, ~~institutions~~policies toand ~~supply~~procedures. Our ~~mortgage~~title ~~financing~~operations atare subject ~~attractive~~to ~~rates~~examination toby ~~Home~~state ~~Building’s~~authorities. Mortgage origination ~~customers,~~activities asare ~~well~~subject as to the ~~general~~Equal ~~public.~~Credit ~~Home~~Opportunity ~~Equity~~Act, ~~competes~~the ~~with~~Fair ~~commercial banks~~Housing Act, ~~other sub-prime~~the ~~lenders~~Fair ~~and~~Credit ~~other~~Reporting ~~financial~~Act, ~~institutions~~the toFederal ~~supply sub~~Truth-~~prime~~In-Lending ~~financing~~Act, atthe ~~attractive~~Real ~~rates.~~Estate ~~Other~~Settlement ~~large~~Procedures ~~financial~~Act, ~~institutions~~the ~~have~~Riegle ~~gradually~~Community ~~expanded~~Development ~~their prime~~ and ~~sub-prime~~ ~~lending~~Regulatory ~~capabilities~~Improvement Act, ~~some~~the ofHome ~~whom~~Ownership ~~have~~and ~~greater~~Equity ~~access~~Protection toAct ~~capital~~and regulations atpromulgated aunder ~~cost~~such ~~lower~~statutes, ~~than~~as ~~our~~well ~~cost~~as ~~of capital~~other ~~under~~federal ~~our~~and state consumer credit ~~facilities~~laws. These ~~Competition~~statutes ~~among~~prohibit ~~industry~~discrimination ~~participants can take many forms,~~and ~~including~~unlawful ~~convenience~~kickbacks inand ~~obtaining~~referral afees ~~loan, customer service, marketing~~ and ~~distribution~~require ~~channels, amount~~the ~~and~~disclosure ~~term~~ of ~~the~~certain information ~~loan,~~to ~~loan~~borrowers ~~origination~~concerning ~~fees~~credit and ~~interest~~settlement ~~rates~~costs. Many of ~~Additional~~these ~~competition~~regulatory ~~may lower~~requirements ~~the~~seek ~~rates~~to weprotect ~~can~~the ~~charge~~interest ~~borrowers~~of consumers, while ~~thereby~~others ~~potentially~~protect ~~reducing~~the ~~gain~~owners onor ~~future~~insurers ~~loan~~of ~~sales and~~mortgage ~~earnings from securitizations~~loans. Failure ~~Our~~to ~~title~~comply ~~and~~with ~~insurance~~these ~~operations~~requirements ~~compete~~can ~~with~~lead ~~other~~to ~~providers~~loss of ~~title~~approved ~~and~~status, ~~insurance~~demands ~~products~~for toindemnification ~~sell~~or ~~their~~loan ~~products~~repurchases tofrom ~~purchasers~~investors, lawsuits ofby ~~our~~borrowers ~~homes,~~(including asclass ~~well~~actions), asadministrative ~~to the~~enforcement ~~general~~actions ~~public.~~and, ~~Many~~in ofsome ~~these~~cases, ~~competitors~~rescission ~~have~~or ~~greater~~voiding ~~resources~~of ~~than~~the weloan ~~do.~~by the consumer.

The results of operations of our Financial Services segment may be adversely affected by increases in interest rates. Any significant increase in mortgage interest rates above current prevailing levels could reduce the ability or willingness of prospective homebuyers to finance home purchases and/or it could curtail mortgage refinance activity. Although there can be no assurance that these efforts will be successful, we will seek to mitigate the effects of any increase in mortgage interest rates by increasing our market share by adding loan officers and improving their productivity while at the same time seek to improve our operating leverage. EMPLOYEES

~~Financial Services’ operations are subject to extensive state and federal regulations, as well~~The asfollowing ~~rules~~table ~~and~~presents ~~regulations~~a ~~of,~~breakdown ~~and examinations by, FNMA, FHLMC, FHA, VA, Department~~ of ~~Housing~~our ~~and Urban~~ employees:


	As of March 31,
	2009		2008		2007

Home Building		1,568		4,143		6,668
Financial Services		529		1,920		2,787
Corporate		366		467		464
Discontinued Operations		-		-		1,499
Total		2,463		6,530		11,418

~~Table of Contents~~8

~~Development,~~Table or HUD, GNMA and state regulatory authorities with respect to originating, processing, underwriting, making, selling, securitizing and servicing loans and providing title and other insurance products. In addition, there are other federal and state statutes and regulations affecting such activities. These rules and regulations, among other things, impose licensing obligations on our Financial Services operations, specify standards for origination procedures, establish eligibility criteria for mortgage loans, provide for inspection and appraisals of ~~properties,~~ regulate payment features and, in some cases, fix maximum interest rates, fees, loan amounts and premiums for title and other insurance. Certain of our Financial Services operations are required to maintain specified net worth levels and submit annual audited financial statements to HUD, VA, FNMA, FHLMC, GNMA and some state regulators. Contents

~~As an approved FHA mortgagee, CTX Mortgage Company, LLC is subject to examination by the~~NYSE ~~Federal~~AND ~~Housing~~SEC Commissioner at all times to ensure compliance with FHA regulations, policies and procedures. Our title and insurance operations are subject to examination by state authorities. Mortgage origination and servicing activities are subject to the Equal Credit Opportunity Act, the Fair Housing Act, the Fair Credit Reporting Act, the Federal Truth-In-Lending Act, the Real Estate Settlement Procedures Act, the Riegle Community Development and Regulatory Improvement Act, the Home Ownership and Equity Protection Act and regulations promulgated under such statutes, as well as other federal and state consumer credit laws. The Real Estate Settlement Procedures Act also applies to our insurance operations. These statutes prohibit discrimination and unlawful kickbacks and referral fees and require the disclosure of certain information to borrowers concerning credit and settlement costs. Many of these regulatory requirements seek to protect the interest of consumers, while others protect the owners or insurers of mortgage loans. Failure to comply with these requirements can lead to loss of approved status, demands for indemnification or loan repurchases from investors, lawsuits by borrowers (including class actions), administrative enforcement actions and, in some cases, rescission or voiding of the loan by the consumer. CERTIFICATIONS

~~CONSTRUCTION~~We ~~SERVICES~~submitted our 2008 Annual CEO Certification to the New York Stock Exchange on August 5, 2008. The certification was not qualified in any respect. Additionally, we filed with the Securities and Exchange Commission, or SEC, as exhibits to our Form 10-K for the year ended March 31, 2008, the CEO and CFO certifications required under Section 302 of the Sarbanes-Oxley Act.

~~Construction Services provides a range of commercial contracting services, including~~AVAILABLE construction management, general contracting, design-build and preconstruction services. As a general contractor or construction manager, Construction Services provides management personnel for the construction of facilities. Occasionally, Construction Services may perform some of the actual construction work on a project but will generally hire subcontractors to perform the majority of the work. INFORMATION

~~Historically,~~Anyone seeking ~~Construction~~information ~~Services~~about ~~has~~our ~~conducted~~business ~~its~~ operations ~~through~~and ~~its~~financial ~~distinct~~performance can receive copies of our Annual Report to Stockholders, ~~largely~~Annual Report on Form 10-K, ~~autonomous~~Quarterly ~~operating~~Reports ~~companies.~~on ~~Construction~~Form ~~Services’~~10-Q, ~~principal~~Current ~~operating~~Reports ~~companies~~on ~~were~~Form ~~Centex~~8-K, all amendments to ~~Construction~~those ~~Company~~reports and other documents filed with the SEC, ~~Inc.~~without charge, by contacting our Investor Relations office at (214) 981-5000; by writing to Centex Corporation, ~~Rodgers~~Investor Relations, ~~Inc~~P.O. ~~and~~Box ~~Centex-Rooney~~199000, ~~Construction~~Dallas, CoTexas 75219 or via email at ir@centex.com. In addition, ~~Inc.~~copies Inof all filings with the ~~December 2004~~SEC, ~~Construction~~news ~~Services~~releases ~~merged~~and ~~these~~quarterly ~~operating~~earnings ~~companies~~announcements, ~~into~~including ~~two~~live ~~operating~~audio and ~~companies~~replays of recent quarterly earnings web casts, can be accessed free of ~~Centex~~charge ~~Construction,~~on ~~LLC~~our ~~and~~web ~~Centex~~site ~~Construction~~(http://www.centex.com). We make copies of our Annual Report on Form 10-K, ~~Inc.~~Quarterly ~~During~~Reports ~~fiscal~~on ~~year~~Form ~~2004~~10-Q, ~~Construction~~Current Reports on ~~Services~~Form ~~transitioned~~8-K toand ~~one~~amendments ~~common~~to ~~organizational~~those ~~structure~~reports ~~with~~filed ~~one~~or ~~brand,~~furnished ~~standardized~~pursuant ~~operating~~to Section ~~policies~~13(a) ~~and~~or ~~procedures~~15(d) ~~with~~of anthe ~~emphasis~~Securities Exchange Act of 1934, or Exchange Act, available on ~~certain~~our ~~geographic~~web ~~markets~~site ~~and~~as ~~project~~soon ~~niches~~as inreasonably ~~which~~practicable after we electronically file the material with, or furnish it ~~has~~to, ~~expertise~~the SEC. To retrieve Asany of ~~March 31~~this information, ~~2005~~go to http://www.centex.com, ~~Construction~~select “Investors” ~~Services’~~and ~~primary~~select ~~offices~~“Financials,” ~~were~~and ~~located~~then inselect ~~the~~“SEC ~~metropolitan~~Filings.” Our ~~areas~~web ofsite ~~Dallas~~also includes our Corporate Governance Guidelines, ~~Nashville~~The Centex Way (our Code of Business Conduct and Ethics) and the charters for the Audit Committee, Ftthe Corporate Governance and Nominating Committee and the Compensation and Management Development Committee of our Board of Directors. Each ~~Lauderdale~~of these documents is also available in print to any stockholder who requests a copy by addressing a request to Centex Corporation, ~~Charlotte~~attention: ~~and~~Corporate ~~Washington~~Secretary, D2728 N.C Harwood, Dallas, Texas 75201. The reference to our web site is merely intended to suggest where additional information may be obtained by investors, and the materials and other information presented on our web site are not incorporated in and should not otherwise be considered part of this Report.

~~Construction~~ITEM ~~contracts are primarily procured under one of two methods: negotiated (qualifications-based selection) or competitive bid (price-based selection)~~1A. AtRISK March 31, 2005, approximately 99% of backlog was procured under the negotiated method. The backlog at March 31, 2005 was $2.00 billion compared to $1.75 billion at March 31, 2004. Approximately $1.12 billion of the backlog at March 31, 2005 is projected to be constructed and the related revenues recognized during fiscal year 2006. We define backlog in the Construction Services segment as the uncompleted portion of all signed construction contracts. FACTORS

13The foregoing discussion of our business and operations should be read together with the risk factors set forth below. They describe various risks and uncertainties to which we are or may become subject, many of which are outside of our control. These risks and uncertainties, together with other factors described elsewhere in this Report, have affected, or may in the future affect, our business, financial condition, results of operations, cash flows, strategies or prospects in a material and adverse manner.

~~Table~~HOMEBUILDING MARKET ofAND ~~Contents~~ECONOMIC RISKS

The homebuilding ~~following~~industry ~~table~~is ~~summarizes~~undergoing ~~the~~a ~~total~~significant ~~backlog~~downturn; inthis ~~dollars~~downturn ashas had a ~~percentage~~material byadverse ~~industry segment~~effect ~~and~~on ~~the~~our ~~portion~~business and results of ~~backlog~~operations ~~projected~~and is expected to becontinue ~~revenues~~through in fiscal year ~~2006 as of March 31, 2005:~~ 2010.

			% of FY 2006
Industry Segment	% of Backlog		Revenues
Multi-unit Residential		53.7%		31.5%
Education		12.1%		18.3%
Corrections		10.5%		13.3%
Corporate Office Buildings		9.1%		9.5%
Healthcare		7.5%		11.7%
Government		2.0%		2.3%
Transportation		1.9%		3.6%
Hospitality		0.1%		0.2%
Other		3.1%		9.6%
Total		100.0%		100.0%

Beginning in fiscal year 2006, the U.S. housing industry began to experience a significant downturn, which directly affected and continues to have a material adverse effect on our business, financial condition and results of operations. We believe the principal factors that have caused or are sustaining this downturn include each of the following:

~~Competition~~● current economic conditions, including disruptions in the broader financial and ~~Other~~credit ~~Factors~~ markets and the current national economic recession, as evidenced by, among other things, high unemployment rates, which were 8.5% in March 2009, a level last seen in 1983, ● declining homebuyer demand due to lower consumer confidence and an inability of many homebuyers to sell their existing homes, ● elevated levels of new and existing homes for sale, including the impact of increases in residential foreclosures, which are expected to continue for the foreseeable future, ● reduced availability and stricter terms of mortgage financing due to the significant mortgage market disruptions, and tightened credit standards for homebuyers, and ● pricing pressures resulting from a variety of factors, including the decision of homebuilders to offer significant discounts and sales incentives to liquidate unsold inventories of new homes.

The construction industry is very competitive, and Construction Services competes with numerous local, regional and national contractors depending upon the nature of the project. Top-tier construction firms distinguish themselves from regional and local firms based on their project resumes, reputation and financial strength. Construction Services focuses on maintaining a competitive advantage over other top-tier construction firms by utilizing disciplined decision making for market selection, project selection, risk assessment and pricing, and by providing excellence in customer service and recruiting top-quality, experienced industry personnel. 9

~~Although~~Table national demand for commercial construction is relatively stable, individual markets do experience moderate cyclicality and can be sensitive to overall spending trends in the economy, changes in federal, state and local appropriations for construction projects, financing and capital availability for commercial real estate and competitive pressures on the availability and pricing of ~~construction projects.~~ Contents

~~Construction~~ These ~~Services’~~conditions ~~operations~~led ~~are~~to, ~~affected~~among byother ~~federal~~things, ~~state~~(i) ~~and~~substantial ~~local~~decreases ~~laws~~in ~~and~~our ~~regulations~~homebuilding ~~relating~~revenues, to(ii) ~~worker~~significant ~~health~~land-related ~~and safety~~impairments, as(iii) ~~well as environmental laws. Current~~joint ~~environmental laws may require Construction Services~~ventures’ ~~operating~~impairments, ~~subsidiaries~~(iv) togoodwill ~~work in concert with project owners to acquire the necessary permits or other authorizations for certain activities~~impairments, ~~including~~and ~~the~~(v) ~~construction~~write-offs of ~~projects~~land deposits ~~located~~and inpre-acquisition orcosts. As ~~near~~a ~~wetland~~result, ~~areas.~~our ~~Construction~~homebuilding ~~Services’~~ operations ~~are~~incurred ~~also~~substantial ~~affected~~losses ~~by environmental laws regulating among other things, erosion~~ and ~~storm~~are ~~water~~likely ~~pollution~~to ~~control~~continue ~~and~~to ~~the use and disposal of hazardous materials encountered~~do ~~during demolition operations~~so. Any Weworsening ~~believe~~of ~~that~~market ~~Construction~~conditions ~~Services’~~in ~~current~~the ~~procedures~~homebuilding ~~and~~industry ~~practices~~would ~~are~~have ~~consistent~~a ~~with~~further ~~industry~~material ~~standards~~adverse ~~and~~effect ~~that~~on ~~compliance~~our ~~with~~business ~~the health~~ and ~~safety laws~~results ~~and environmental laws does not constitute a material burden or expense.~~of operations.

~~Construction Services’ operations obtain materials and services from numerous sources.~~ The ~~risk~~market value of ~~raw~~land ~~material price fluctuation~~ is ~~primarily~~subject ~~transferred~~ to ~~our~~significant ~~subcontractors~~fluctuations, ~~through~~which ~~lump sum~~have ~~contractual arrangements. To the extent that raw material pricing changes create subcontractor~~resulted ~~performance~~in ~~issues,~~significant ~~performance~~impairments and ~~payment~~write-offs ~~bonds~~in ~~or subcontractor default insurance facilitate mitigation of~~ our ~~risks.~~land ~~Our~~holdings ~~Construction~~and ~~Services’~~may ~~operations~~continue ~~have been able~~ to ~~deal~~do ~~effectively with challenges they have experienced relating to the supply or availability of materials and services~~so.

14The risk of owning land can be substantial for homebuilders. There is often a significant lag time between when we acquire land for development and when we sell homes in neighborhoods we have planned, developed and constructed. Inventory carrying costs for land can be significant and can result in reduced margins or losses in a poorly performing project or market. In addition, the market value of land, finished lots and housing inventories can fluctuate significantly as a result of changing economic and market conditions, including the availability of financing, such as the industry downturn we are currently experiencing. If the market value of home inventories, land/lots or other property decline during this period, we may need to sell homes or other property at a loss or at prices that generate lower margins than we anticipated when we acquired the land. To the extent projected sales prices do not exceed the carrying value of the related assets, or if other market conditions deteriorate, we may be required to record an impairment of our land or home inventories.

~~Table~~During the year ended March 31, 2009, we decided not to pursue development and construction in certain areas where we held land or had made option deposits, which resulted in $46.6 million in write-offs of ~~Contents~~option deposits and pre-acquisition costs. During the year ended March 31, 2009, we recognized losses of $955.0 million on land sales, including land-related impairments on neighborhoods and land during the year ended March 31, 2009 of $882.6 million. Land-related impairments during the quarter ended March 31, 2009 affected 81 neighborhoods and land investments, some of which have been impaired more than once. These market conditions also adversely affected land values in our Home Building joint ventures. Our share of joint ventures’ impairments was $157.1 million for the year ended March 31, 2009. These land-related impairments contributed to the significant operating losses we incurred during the year ended March 31, 2009. If market conditions do not improve in future periods, we may experience additional write-offs of option deposits and pre-acquisition costs, losses on land sales, land-related impairments and impairments relating to our ownership interest in joint ventures. Additionally, our land-related impairment analyses are affected by market conditions and certain assumptions, such as sales prices, sales rates and discount rates used, and relatively small changes in these assumptions could lead to significant land-related impairments.

~~EMPLOYEES~~Levels of volatility in the capital and credit markets during the year ended March 31, 2009 were unprecedented.

The ~~following~~capital ~~table~~and ~~presents~~credit markets have been experiencing extreme volatility and disruption for more than twelve months. In some cases, the markets have exerted significant downward pressure on stock prices and credit capacity for certain companies which, in some cases, has led these companies to seek bankruptcy protection or to be merged with or sold to stronger market participants. Although we maintain a ~~breakdown~~committed multi-bank revolving credit facility for cash borrowings and letters of credit and bank-committed warehouse lines of credit for our mortgage ~~employees~~lending asoperations, if current levels of ~~March 31~~market disruption and volatility continue or worsen, ~~2005:~~we may be unable to amend or renew these agreements on acceptable terms upon their expiration or maturity. In addition, if we fail to maintain compliance with the financial and other covenants contained in our credit facilities, we may be obliged to seek a waiver of, or amendment to, our credit facilities from our lenders. In light of the disruptions in credit markets, our lenders may not be willing to grant such a waiver, or may require the payment of significant fees or changes in the terms of our credit agreements as a condition to doing so.

Business Segment	Employees
Home Building		8,182
Financial Services		5,858
Construction Services		1,386
Other		1,708
Total		17,134

A long-term or further disruption in the mortgage finance or capital markets could make it more difficult or more expensive for us to raise capital for use in our business, for our customers to obtain home loans or for us to sell loans originated by our Financial Services operations. Further, a reduction of the positive spread between the rate at which we can borrow and the rate at which we can lend could hurt our ability to profit from our loan origination business.

~~The~~Continued cancellations ~~1,708 Other employees include 1,551 employees~~ of ~~our~~ home ~~services~~sales ~~operations,~~contracts ~~which provides~~may ~~home~~have ~~pest~~a ~~control~~material ~~services~~adverse ~~and~~effect ~~corporate~~on ~~employees. The corporate employees are employed by Centex Corporation; all others are employees of~~ our ~~various subsidiaries.~~ business.

~~RISK~~Our backlog ~~FACTORS~~reflects ~~RELATING~~the TOnumber ~~OUR~~and ~~BUSINESS~~value of homes for which we have entered into a sales contract with a customer but have not yet closed the home. We have received a customer deposit for each home reflected in our backlog, and generally we have the right to compel the customer to complete the purchase. In many cases, however, a customer may cancel the contract and receive a complete or partial refund of the deposit for reasons such as his or her

The foregoing discussion of our business and operations should be read together with the risk factors set forth below, which describe various risks and uncertainties to which we are or may become subject. These risks and uncertainties, together with other factors described elsewhere in this Report, have the potential to affect our business, financial condition, results of operations, cash flows, strategies or prospects in a material and adverse manner. 10

~~HOME~~Table ~~BUILDING~~ of Contents

~~Deterioration~~inability to inobtain ~~economic~~mortgage ~~conditions~~financing ~~generally~~or to sell his or inher current home. Customers may also decide to run the ~~market~~risk ~~regions~~of ~~where~~failing weto ~~operate~~perform under ~~could~~the contract without legal justification. If the current ~~decrease~~industry ~~demand~~downturn ~~and~~continues, ~~pricing~~or ~~for~~if ~~new~~mortgage ~~homes~~financing inbecomes ~~these~~less ~~areas~~available, more homebuyers may cancel their contracts with us. Significant cancellations have had, and ~~adversely~~could ~~affect~~have ~~our~~in ~~business~~the future, a material adverse effect on our business and results of operations.

~~The residential homebuilding industry is sensitive to changes in regional and national~~Further ~~economic~~decreases ~~conditions such as job growth, interest rates and consumer confidence. Material adverse changes~~ in ~~any of these conditions generally, or in the market regions where we operate, could decrease~~ demand ~~and pricing~~ for ~~new~~our homes inmay ~~these~~have ~~areas~~an oradverse ~~result~~effect ~~in customer defaults~~ on ~~pending contracts, which could adversely affect the number of home deliveries we make or reduce the prices we can charge for homes, either of which could result in a decrease in~~ our ~~revenues and earnings.~~Financial AServices ~~material decline in the value of new residential housing could also result in a decreased value for the land, housing inventory and housing work-in-progress that we own~~segment. ~~Any pronounced down cycle in the homebuilding industry could cause demand for our homes and land that we own to weaken significantly.~~

~~Competition~~Substantially all ~~for~~of ~~homebuyers~~the ~~could~~mortgage ~~reduce~~loans ~~our~~originated ~~deliveries~~by orFinancial ~~decrease~~Services are from the sale of homes we build. Further declines in the sale of our ~~profitability~~homes would have a direct effect on the origination volume of Financial Services. In July 2008, Financial Services made the decision to cease the origination of Retail loans (or loans for the sale of homes not built by us) and the wind-down of such Retail loan origination was completed as of March 31, 2009.

~~The homebuilding industry is highly competitive. We compete in each of our markets with many~~Inflation ~~national,~~can ~~regional~~adversely ~~and~~affect local homebuilders. We also compete with resales of existing used or foreclosed homes and available rental housing. Increased competitive conditions in the residential markets in which we operate or related markets could decrease demand for new homesus, orparticularly ~~cause us to increase our sales incentives or price discounts~~ in ~~order~~a toperiod ~~maintain~~of ~~sales~~declining ~~volume,~~home ~~and adversely~~sale ~~affect our operating results~~prices.

~~Government~~ Inflation can ~~entities~~ have ~~adopted~~a orlong-term ~~may~~impact ~~adopt~~on ~~slow~~us orbecause noincreasing ~~growth~~costs ~~initiatives~~of land, ~~which~~materials and ~~could~~labor ~~adversely affect~~require ~~our~~us ~~ability~~to attempt to ~~build~~increase orthe ~~timely~~sale ~~build~~prices of homes in ~~these~~order ~~areas~~to maintain satisfactory margins. Although an excess of supply over demand for new homes, such as the one we are currently experiencing, requires that we reduce prices, rather than increase them. Under those circumstances, the effect of cost increases is to reduce the margins on the homes we sell. That makes it more difficult for us to recover the full cost of previously purchased land. In addition, we are generally not able to pass on increases in materials and labor to customers who have already entered into home purchase contracts, as the price is generally fixed at the time the contract is signed, which may be well in advance of the commencement of construction.

~~Some municipalities where we operate have approved, and others may approve, slow growth or no~~OPERATIONAL growth homebuilding regulations or laws that could negatively impact the availability of land and building opportunities within those localities. Approval of these initiatives could adversely affect our ability to build (or RISKS

15We have a substantial amount of outstanding debt, which is scheduled to mature in future installments and may need to be refinanced or restructured.

~~Table~~We have a substantial amount of outstanding ~~Contents~~debt, which consists principally of senior unsecured notes issued from time to time in the public debt markets. The principal amount of our outstanding senior notes currently exceeds $3.10 billion, which mature at various dates through May 2016. Scheduled maturities for fiscal years ending March 31, 2010, 2011 and 2012 are $210.9 million, $692.5 million and $324.4 million, respectively. At March 31, 2009, our unrestricted cash balance was $1.36 billion, which provides sufficient liquidity to satisfy our obligations for at least the next twelve months. However, we expect we will need to generate sufficient cash flow from operations to repay our outstanding debt at maturity or otherwise be able to retire, refinance or restructure such debt. We are taking steps to improve our cash flow and strengthen our balance sheet, but our ability to refinance our debt is limited by, among other things, the current downturn in the homebuilding industry and recent disruptions in the credit markets and resulting tightening of credit standards, and there can be no assurance that these conditions will improve before the relevant maturity dates. Accordingly, we will consider various alternative transactions that would permit us to reduce our outstanding debt and manage the outstanding amounts and terms of our debt so that they do not interfere with our business plans and strategies.

~~timely~~We could ~~build)~~be ~~and~~adversely ~~sell homes in the~~ affected ~~markets~~by ~~and~~a ~~could~~change ~~create additional administrative and regulatory requirements and costs, which,~~ in ~~turn, could have an adverse effect on~~ our ~~future~~current ~~revenues and earnings.~~credit rating.

~~Natural~~Our ~~disasters~~ability to sustain or grow our business and ~~adverse~~to ~~weather~~operate ~~conditions~~in ~~could~~a ~~delay~~profitable ~~deliveries~~manner depends to a significant extent upon our ability to access capital. We use capital principally to finance operations, purchase and develop land, construct houses and originate mortgage loans. We also use our banking and credit relationships to arrange for the issuances of letters of credit and surety bonds. Until 2007, our access to capital was enhanced by the fact that our senior debt securities had an investment-grade credit rating from each of the principal credit rating agencies, and we were able to issue commercial paper. We lost our investment grade ratings during our fiscal year 2008, and since then the rating of our senior debt has been lowered further. Our long-term debt ratings are currently BB-, Ba3 and BB from Standard & Poor’s, or ~~increase~~S&P, ~~costs~~Moody’s Investors Services, or Moody’s and Fitch Ratings, or Fitch, respectively. As a result of our current rating, we do not have access to ~~build~~many financing strategies that are available to ~~new~~companies ~~homes~~with ininvestment ~~affected~~grade ~~areas~~ratings. In addition, our multi-bank credit facility includes a borrowing base limitation when we do not have an investment grade senior unsecured debt rating from at least two of the three rating agencies named above. We currently do not have investment grade ratings, and we are therefore subject to the borrowing base limitation. As a consequence, it may become more difficult and costly for us to access the capital that is required in order to implement our business plans and operate our business. Although we currently have a substantial cash balance, we are currently required to use a significant portion of these funds to provide a liquidity reserve under our multi-bank revolving credit

The occurrence of natural disasters or adverse weather conditions in the areas in which we operate can delay new home deliveries, increase costs by damaging inventories of homes and construction materials, reduce the availability of raw materials and skilled labor, and negatively impact the demand for new homes in affected areas. When natural disasters such as hurricanes, tornadoes, earthquakes, floods and fires affect an area in which we build, or one nearby, there can be a diversion of labor and materials in the area from new home construction to the rebuilding of the existing homes damaged or destroyed in the natural disaster. This can cause delays in construction and delivery of new homes and/or increase our construction costs. 11

~~Supply~~Table ~~shortages~~of ~~and other risks related to the demand for building materials and skilled labor could reduce our profits and delay deliveries.~~ Contents

~~Increased costs or shortages of building materials could cause increases in construction costs and construction delays~~facility. ~~Labor disputes, and increased costs or shortages of skilled labor, such~~ CTX asMortgage ~~carpenters~~Company, ~~plumbers~~LLC ~~and electricians, could~~ also ~~cause~~uses ~~increases~~committed inbank ~~costs~~warehouse ~~and~~credit ~~delays.~~facilities ~~We estimate and forecast construction costs as part of our business, and attempt to plan~~ for ~~possible~~ ~~cost~~its ~~increases~~funding ~~due to changes in the cost or availability of materials and labor~~needs. We ~~However, generally~~may weexperience ~~are~~a ~~unable~~further todowngrade ~~pass on unanticipated increases~~ in ~~construction costs to those customers~~our ~~who~~credit ~~have~~rating ~~already~~by ~~entered into sales contracts, as those sales contracts generally fix~~ the ~~price~~rating ~~of the~~agencies ~~home~~that atwould ~~the~~likely ~~time~~result ~~the contract is signed, which may be well~~ in ~~advance~~increased ~~of the construction of~~costs ~~the~~for ~~home.~~certain ~~We may experience unexpected increases in costs~~ of ~~materials~~our orfinancing ~~labor,~~ and ~~pricing competition~~also ~~for~~further ~~materials and labor may~~ restrict our ability to ~~pass on any additional costs to~~finance ~~homebuyers,~~mortgage ~~thereby~~loan ~~decreasing our profits~~originations. ~~These factors could have an adverse effect on our results of operations.~~

~~Compliance~~Failure to comply with ~~regulations~~the ~~affecting~~covenants ~~our~~and ~~business~~conditions ~~could~~imposed ~~have~~by ~~substantial~~our ~~costs~~credit ~~both~~facilities could inrestrict ~~time~~future ~~and money,~~borrowing ~~and~~or ~~some~~cause ~~regulations~~our ~~could~~debt ~~prohibit~~to orbecome ~~restrict~~immediately ~~some~~due ~~homebuilding activity.~~and payable.

We are required ~~subject~~ to ~~extensive~~maintain ~~and~~compliance ~~complex~~with ~~laws~~certain ~~and~~financial ~~regulations~~covenants ~~that~~in ~~affect the land development~~our ~~and~~multi-bank ~~homebuilding~~revolving ~~process,~~credit ~~including~~facility. Material ~~laws~~covenants ~~and~~include ~~regulations related to zoning, permitted land uses,~~a ~~levels~~maximum ofleverage ~~density~~ratio, ~~building~~a ~~design,~~minimum ~~warranties,~~tangible ~~storm~~net ~~water~~worth ~~and~~requirement ~~use of open spaces. In addition, we are subject to laws~~ and ~~regulations~~a ~~related to workers’ health and safety, immigration and the~~borrowing ~~protection~~base oflimiting the ~~environment.~~amount ~~In some~~ of ~~the~~available ~~markets~~borrowings. There ~~where~~can webe ~~operate, we are required to pay~~no ~~environmental~~assurance ~~impact~~that ~~fees,~~we ~~use~~will ~~energy-saving~~continue ~~construction materials and give commitments~~ to ~~municipalities~~ tocomply ~~provide~~with ~~certain~~the ~~infrastructure~~covenants ~~such~~in asour ~~roads and sewage systems. We generally~~multi-bank ~~are~~revolving ~~required~~credit tofacility, ~~obtain permits~~ and ~~approvals~~depending ~~from~~on ~~local~~our ~~authorities~~future toresults ~~commence~~of ~~and~~operations, ~~complete~~we ~~residential development or home construction. Such permits and approvals~~ may, ~~from~~need ~~time-~~to~~-time, be~~ ~~opposed~~seek waivers or ~~challenged~~amendments byfrom ~~local~~our ~~governments,~~lenders ~~neighboring~~in ~~property owners or other interested~~future ~~parties~~periods. Furthermore, ~~adding~~there ~~delays,~~can ~~costs~~be ~~and~~no ~~risks~~assurance ofthat ~~non-approval to the process. Our obligation to comply with the laws and regulations under which we operate, and the obligation of~~ our ~~subcontractors~~lenders ~~and~~will ~~other~~agree ~~agents~~ to ~~comply~~such ~~with~~waivers ~~these~~or ~~and~~amendments ~~other~~on ~~laws~~terms ~~and~~we ~~regulations,~~regard ~~could result in delays in land~~as ~~development and homebuilding activity, cause us to incur substantial costs and prohibit or restrict land development and construction~~satisfactory.

~~Foreign~~In addition, ~~exchange~~our ~~rates~~committed bank warehouse credit facilities and ~~the~~loan ~~demand~~agreements relating ~~for~~to ~~housing~~certain inof ~~the~~our ~~United~~joint ~~Kingdom~~ventures ~~may~~contain ~~affect~~various ~~our~~affirmative ~~foreign~~and ~~operations~~negative covenants and guarantees requested by lenders for facilities of these types. In order to continue to borrow funds under these facilities, we will need to continue to be in compliance with these covenants and guarantees.

~~The~~In general, ~~results~~with ofrespect ~~operations~~to of our ~~international~~multi-bank ~~homebuilding~~revolving ~~operations~~credit ~~are~~facility, ~~affected by~~bank ~~fluctuations~~warehouse incredit ~~the~~facilities ~~value~~and ofloan ~~the~~agreements ~~United~~relating ~~States~~to ~~dollar~~certain asof ~~compared~~our joint ventures, if we fail to comply with any of the ~~British~~covenants ~~pound~~or ~~sterling~~guarantees contained therein, which may occur if we experience additional asset impairments or incur ~~and~~additional ~~can~~net ~~also~~losses, we may be ~~affected~~unable byto ~~economic~~obtain future financing for working capital, ~~regulatory~~capital ~~and~~expenditures, ~~competitive~~letters ~~factors~~of ~~affecting~~credit, ~~the~~acquisitions, ~~homebuilding~~debt service ~~market~~requirements inor other requirements, or the ~~United~~credit ~~Kingdom~~providers ~~including~~could ~~the~~cause ~~overall~~our ~~demand~~debt to ~~for~~become ~~housing.~~immediately due and payable, or we may be required to make certain payments in connection with our joint venture indebtedness.

16Market conditions in the mortgage lending and mortgage finance industries worsened significantly in fiscal year 2009, which adversely affected the availability of credit for some purchasers of our homes, reduced the population of potential mortgage customers and reduced mortgage liquidity. Further tightening of mortgage lending or mortgage financing requirements or further reduced mortgage liquidity could have a material adverse effect on our homebuilding and mortgage lending operations and their respective results of operations.

~~Table~~Beginning in fiscal year 2008 and continuing through fiscal year 2009, the mortgage lending industry experienced significant disruptions due to, among other things, defaults on a variety of ~~Contents~~nonconforming loan products and a resulting decline in the market value of such loans. In light of these developments, lenders, investors, regulators and other third parties questioned the adequacy of loan documentation and credit requirements for certain types of loan programs made available to borrowers in recent years. This led to reduced investor demand for mortgage loans and mortgage-backed securities, tightened credit underwriting requirements, reduced liquidity and increased credit risk premiums. Among other things, deterioration in credit quality among nonconforming loan borrowers has caused almost all lenders to eliminate most loan products that are not conforming loans, FHA/VA-eligible loans or jumbo loans meeting conforming underwriting guidelines except as to the size of the loan. In general, fewer loan products and tighter loan qualifications make it more difficult for some categories of borrowers to finance the purchase of our homes. These developments have resulted in a reduction in demand for the homes that we sell and in the demand for the mortgage loans that we originate. These developments have had and are expected to continue to have a material adverse effect on our business and results of operations.

~~FINANCIAL~~The adverse ~~SERVICES~~market conditions in the mortgage lending industry described above have affected our business in a number of respects. For example, CTX Mortgage Company, LLC has essentially ceased originating sub-prime or other nonconforming loans. Furthermore, for various reasons, including the reduction in available mortgage loan liquidity, CTX Mortgage Company, LLC decided in the second quarter of fiscal year 2008 to discontinue the origination of new construction loans. In the second and third quarters of fiscal year 2008, CTX Mortgage Company, LLC ceased selling loans to HSF-I, which had been the principal financing vehicle for its operations, and terminated this financing vehicle. In addition, during fiscal year 2009, Financial Services ceased the origination of Retail loans.

~~Increases~~Further tightening of the mortgage lending markets in ~~interest~~the ~~rates~~form of reduced numbers or types of loan products, or tighter loan qualification requirements (including credit score and down payment requirements), could ~~hurt~~further reduce the demand for our ~~Financial~~homes ~~Services~~or the mortgages we originate, which could have a material adverse effect on our business or results of operations. In addition, further disruptions or other adverse conditions in the mortgage finance markets leading to further reduced mortgage liquidity or decreased demand for mortgage loans could result in an

Our Financial Services operations are influenced by borrowers’ perceptions of and reactions to interest rates. The operations of CTX Mortgage Company, LLC and its related companies are particularly affected by increases in interest rates, as they are likely to result in a decrease in the volume of mortgage loan refinancing transactions, which are a significant component of our business. Although the volume of originations in our Home Equity operations is less sensitive to increases in interest rates than CTX Mortgage Company, LLC and its related companies, interest rate increases can result in decreased interest margins. Any significant increase in mortgage rates above current prevailing levels could adversely affect the volume of loan originations and reduce our revenues, operating margins and earnings. In addition, increased competition for loans from other lenders could reduce our profits on the loans we originate. 12

~~Loan~~Table ~~and collateral losses could reduce the profitability~~ of ~~our Home Equity operations.~~ Contents

~~Our Home Equity operations involve holding residential mortgage loans for investment and~~inability ~~establishing~~to ansell ~~allowance~~or ~~for~~finance ~~credit~~the ~~losses on these~~ loans. Towe ~~a lesser extent~~originate, ~~our~~or ~~operations also~~less ~~involve~~favorable ~~holding~~terms ~~properties obtained through foreclosure pending resale and establishing an allowance for losses on these properties. Although the amount~~ of ~~these~~sale ~~allowances reflects our~~or ~~judgment~~reduced asyield toor ~~our~~greater ~~present~~reserves ~~loss~~pending ~~exposure on these loans and properties~~sale, ~~there~~which ~~can~~could behave noa ~~assurance~~material ~~that~~adverse iteffect ~~will~~on beour ~~sufficient~~business toor ~~cover~~results ~~any losses that may ultimately be incurred. Judgments as to loss exposure are subject to significant uncertainties, and the amount~~ of ~~the loss ultimately incurred may be determined by various factors outside our control~~operations.

~~Decline~~Further decreases in ~~our~~the ~~ratings~~availability asof amortgage ~~loan~~financing ~~servicer~~or other adverse changes in market conditions could ~~hurt~~make ~~our~~it ~~Financial~~more ~~Services~~difficult ~~operations.~~or costly for customers to purchase our homes.

~~Our~~Most ~~Home~~of our ~~Equity~~homebuilding customers finance their home purchases through our Financial Services operations ~~involve~~or, in some cases, third-party lenders. In general, housing demand is adversely affected by increases in interest rates or by decreases in the ~~servicing~~availability of ~~residential~~mortgage ~~home~~financing ~~equity~~as ~~mortgages~~a result of increased credit standards, deteriorating customer credit quality or disruptions or other adverse conditions in mortgage lending markets. Beginning ~~Our~~in fiscal ~~servicing~~year ~~activity~~2008 isand ~~rated~~continuing bythrough fiscal year 2009, the ~~principal~~mortgage ~~rating~~markets experienced ~~agencies~~significant disruptions, which led to an unprecedented combination of reduced investor demand for mortgage loans and ~~any~~mortgage-backed ~~serious~~securities, tightened ~~decline~~credit requirements for homebuyers and increased credit risk premiums. Any further tightening of credit standards or increases in interest rates could cause potential homebuyers to be less willing or able to purchase our ~~ratings~~homes. Although mortgage interest rates have declined in recent months, any future increase in mortgage rates could ~~adversely~~make ~~affect~~it ~~the~~more difficult ~~profitability~~or ofcostly for customers to purchase our ~~Home~~homes, ~~Equity~~which would have an adverse effect on our results of operations.

~~Changes~~ Reductions in ~~lending~~tax ~~laws~~benefits could ~~hurt~~make ~~our~~home ~~Financial~~ownership ~~Services~~more ~~operations.~~expensive or less attractive.

~~Our~~Significant expenses ~~Financial~~of ~~Services~~owning ~~operations~~a ~~are~~home, ~~subject~~including tomortgage ~~extensive~~interest ~~and~~expense ~~complex laws~~ and ~~regulations~~real estate ~~that~~taxes, ~~affect~~generally ~~loan~~are ~~origination.~~deductible ~~Our~~expenses ~~Home~~for ~~Equity~~an ~~operations~~individual’s ~~and~~federal, toand ain some ~~lesser~~cases ~~extent~~state, ~~the~~income ~~operations of~~taxes, ~~CTX~~subject ~~Mortgage~~to ~~Company,~~various ~~LLC~~limitations ~~and~~under ~~its~~current ~~related~~tax law ~~companies,~~and ~~are~~policy. If ~~particularly~~the ~~affected~~federal bygovernment ~~laws~~or ~~and~~a state government ~~regulations~~changes ~~related~~income tax laws to eliminate or substantially modify these income tax deductions, the ~~extension~~after-tax costs of ~~credit~~owning toa ~~individuals~~new ~~whose~~home ~~credit~~would ~~ratings~~increase dofor ~~not qualify~~the ~~them~~typical ~~for~~homeowner. If ~~conventional~~such ~~mortgage~~tax ~~financing.~~law ~~Changes~~changes inwere ~~these~~enacted ~~laws~~without orother offsetting ~~the~~provisions ~~way~~or ~~that~~effects, they ~~are~~could ~~enforced may~~ adversely ~~affect~~impact the ~~way~~demand ~~that~~for, and/or wesales ~~operate~~prices orof, ~~our~~new ~~ability~~homes, tomortgage ~~profitably~~loans ~~originate~~and home equity loans., and our operations might be negatively affected.

~~CONSTRUCTION~~We may ~~SERVICES~~incur increased costs related to repairing construction defects in the homes we sell.

~~Supply~~Our Home Building operations are subject to warranty and ~~labor~~other ~~shortages~~claims related to construction defects and other ~~risks~~construction-related ~~could~~issues, ~~increase~~including compliance with building codes. The costs we incur to resolve those warranty and other ~~delay~~claims ~~completion.~~reduce our profitability, and if we were to experience an unusually high level of claims, or unusually severe claims, our profitability could be adversely affected.

~~Our Construction Services operations could be adversely affected by fluctuating prices and~~Competition limited supplies of building materials, as well as the cost and availability of labor, particularly trades personnel. These prices and supplies may be further adversely affected by natural disasters and adverse weather conditions. These factors, like the factors identified for ~~our~~homebuyers ~~Home Building operations,~~ could ~~cause~~reduce ~~increased~~our ~~costs~~closings ~~and~~or ~~delays~~decrease ~~in construction that could have an adverse effect upon~~ our ~~Construction Services operations.~~ profitability.

The homebuilding industry is highly competitive. We ~~are~~compete ~~subject~~in toeach of our markets with many national, regional ~~changes~~and local homebuilders. In recent years, national homebuilders have been able to compete more effectively and increase their share of the national homebuilding market. The current downturn in the ~~demand~~homebuilding ~~for~~industry ~~commercial~~has ~~construction~~significantly ~~projects.~~increased competition among homebuilders, as evidenced by price reductions, increases in discounts and sales incentives and increased sales commissions in an effort to stimulate sales. Any further increases in the level of incentives from other national homebuilders or from regional and local homebuilders in the markets in which we operate could reduce the number of homes we close, or cause us to accept reduced margins or losses on home sales.

~~Although~~We ~~national~~also compete ~~demand~~with ~~for~~resales ~~commercial~~of ~~construction~~existing isor ~~relatively~~foreclosed ~~stable~~homes, ~~individual~~homes ~~markets~~offered by investors ~~experience~~and ~~greater~~housing ~~cyclicality~~speculators and ~~can~~available berental ~~sensitive~~housing. Increased competitive toconditions ~~overall~~in ~~capital~~the ~~spending~~residential ~~trends~~resale or rental market in the markets ~~economy~~where we operate could decrease demand for new homes, ~~changes~~cause us to increase our sales incentives or price discounts in ~~federal~~order ~~and~~to ~~state~~maintain ~~appropriations~~sales volumes, increase the volatility of the market for ~~construction~~new ~~projects,~~homes ~~financing~~or ~~and~~lead to cancellations of sales ~~capital~~contracts ~~availability~~in ~~for~~backlog, ~~commercial~~any ~~real~~of which could adversely affect our operating results.

17Our income tax provision and other tax reserves may be insufficient if any taxing authorities are successful in asserting tax positions that are contrary to our position.

~~Table~~Significant judgment is required to determine our provision for income taxes and for our reserves for federal, state, local and other taxes. In the ordinary course of ~~Contents~~our business, there may be matters for which the ultimate tax outcome is uncertain. Although we believe our approach to determining the tax treatment is appropriate, no assurance can be given that the final tax authority review will not be materially different than that which is reflected in our income tax provision and other tax reserves. Such differences could have a material adverse effect on our income tax

estate and competitive pressures on the availability and pricing of construction projects. These factors can result in a reduction in the supply of suitable projects, increased competition and reduced margins on construction contracts. 13

~~Our~~Table ~~Construction Services operations are also subject to other risks and uncertainties, including the timing~~ of ~~new awards and the funding of such awards; cancellations of, or changes in the scope of, existing contracts; the ability to meet performance or schedule guarantees and cost overruns.~~ Contents

~~FACTORS~~provision or ~~AFFECTING~~benefits, ~~MULTIPLE~~or ~~BUSINESS~~other ~~SEGMENTS~~tax reserves, in the period in which such determination is made and, consequently, on our results of operations for such period.

~~New~~From time to time, we are audited by various federal, ~~laws~~state ~~that~~and ~~adversely~~local ~~affect~~authorities regarding ~~liquidity~~tax matters. We fully cooperate with all audits. Our audits are in various stages of completion; however, no outcome for a particular audit can be determined with certainty prior to the conclusion ~~secondary~~of ~~mortgage~~the ~~market~~audit, ~~could~~appeal ~~hurt~~and, in some cases, litigation process. As each stage in the audit process is concluded, we record appropriate adjustments, if any, in our financial statements in the period ~~business~~determined. In accordance with the Financial Accounting Standards Board, or FASB, Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – An Interpretation of FASB No. 109,” which we refer to as FIN 48, we maintain reserves to provide for potential tax exposures relating to uncertain tax positions (including interest and penalties, when applicable) that may result from audits. However, if the results of any audit materially differ from the reserve, there would be a corresponding impact on our financial position and results of operations.

~~The Government-sponsored enterprises, principally FNMA and FHLMC, play a significant role in~~We ~~buying~~may ~~home~~not ~~mortgages~~realize and packaging them into investment securities that they either sell to investors or hold in their portfolios. Proposed legislation, supported by the current administration, could have the effect of restricting or curtailing the activities of these enterprises. These organizations provide significant liquidity to the secondary mortgage market. A restriction or curtailment of their activities could affect the ability of our ~~customers~~net ~~to obtain~~deferred ~~mortgage~~tax loans or increase mortgage interest rates (and increase the effective cost of our homes), which could reduce demand for our homes and/or the loans that we originate and adversely affect our results of operationsassets.

WeAs ~~could~~of March be31, ~~adversely~~2009, ~~affected~~we byhad net deferred tax assets of $1.29 billion for which a $1.29 ~~change~~billion valuation allowance has been established. The ultimate realization of the deferred tax assets is dependent upon a variety of factors, including taxable income in ~~our~~prior ~~credit~~carryback ~~rating~~years, estimates of future taxable income, tax planning strategies and reversals of existing taxable temporary differences. The FASB provides in SFAS No. 109, “Accounting for Income Taxes,” or SFAS 109 that a ~~disruption~~cumulative loss in recent years is significant negative evidence in considering whether deferred tax assets are realizable. Based on our assessment, the ~~capital~~realization of our deferred ~~markets~~tax assets is dependent upon future taxable income and, accordingly, we have established a full valuation allowance. The valuation allowance may increase or decrease as conditions change and/or if new tax laws are enacted, such as changes to net operating loss carryback and carryforward rules, which could have a material effect on our financial position and results of operations.

Our ability to ~~continue~~utilize tonet ~~grow~~operating ~~our~~losses ~~business~~(NOLs), ~~and operations~~ built-in alosses ~~profitable~~(BILs) ~~manner~~and ~~depends to~~tax acredit ~~significant~~carryforwards ~~extent~~to ~~upon~~offset our ~~ability~~future totaxable ~~generate~~income and/or ~~obtain~~to ~~capital~~recover previously onpaid ~~favorable~~taxes ~~terms.~~would Atbe ~~the present~~limited ~~time,~~if ~~our~~we ~~access~~were to ~~capital~~undergo isan ~~enhanced~~“ownership change” bywithin the ~~fact~~meaning ~~that~~of ~~our~~Section 382 ~~senior~~of ~~debt~~the ~~securities~~Internal ~~have~~Revenue anCode, ~~investment-grade~~which ~~credit~~we ~~rating~~refer ~~from~~to ~~each~~as of the ~~principal~~Code. ~~credit~~In ~~rating~~general, ~~agencies.~~an If“ownership wechange” ~~were~~occurs towhenever ~~lose~~the ~~our~~percentage ~~investment~~of the stock of a corporation owned by “5-~~grade~~percent ~~credit~~shareholders” (within ~~rating~~the ~~for~~meaning ~~any~~of ~~reason,~~Section 382 itof ~~would~~the ~~become~~Code) ~~more~~increases ~~difficult~~by ~~and~~more ~~costly~~than 50 ~~for~~percentage uspoints toover ~~generate~~the orlowest ~~obtain~~percentage of the ~~capital~~stock ~~that~~of issuch ~~required~~corporation owned inby ~~order~~such to“5-percent ~~implement~~shareholders” ~~our~~at ~~business~~any ~~plans and~~time ~~achieve~~over ~~our~~the ~~growth~~preceding ~~objectives.~~three years.

InAn ownership ~~addition,~~change aunder ~~long-term~~Section 382 orof ~~serious~~the ~~disruption~~Code inwould establish an annual limitation on the ~~capital~~amount ~~markets~~of NOLs or BILs we could ~~make~~utilize itto ~~more~~offset our taxable ~~difficult~~income orin ~~more~~any ~~expensive~~single ~~for~~taxable usyear to ~~raise~~an ~~capital~~amount ~~for~~equal ~~use~~to in(i) ~~our~~the ~~business,~~product of a specified rate (which is published monthly and is 4.61% for May 2009) and the aggregate value of our ~~customers~~outstanding tostock plus (ii) the amount of unutilized ~~obtain~~limitation ~~home~~from ~~loans~~prior oryears. In ~~for~~such usa case, a corresponding limitation would also apply to ~~sell~~the oramount ~~securitize~~of ~~loans~~tax ~~originated~~credit carryforwards we could utilize to offset our taxes in any single taxable year. The application of these limitations might prevent full utilization of the deferred tax assets attributable to our ~~business~~NOLs, BILs, and tax credit carryforwards. Based ~~Further~~on an analysis that we performed as of March 31, a2009, we do not believe we have experienced an ownership change ~~flat~~as ordefined ~~inverted~~by ~~yield~~Section ~~curve~~382 ~~could~~and, ~~hurt~~therefore, ~~our~~we ~~ability~~do tonot ~~profit~~believe, ~~from~~at ~~our~~March 31, 2009, ~~loan~~the ~~origination~~NOLs, ~~businesses~~BILs and tax credit carryforwards are subject to any Section 382 limitation. However, if the merger with Pulte is completed, we will experience an ownership change, and the combined company’s ability to realize Centex’s deferred income tax assets will be limited.

~~Increases~~We conduct incertain ~~interest~~of ~~rates~~our ~~may~~homebuilding ~~reduce~~operations ~~customer~~through ~~demand~~joint ~~for~~ventures ~~homes~~with independent ~~that~~third parties in which we ~~sell~~do ~~and~~not ~~the~~have ~~loans~~a ~~that~~majority interest, and we ~~offer.~~can be adversely impacted by joint venture partners’ failure to fulfill their obligations.

~~The~~We conduct ~~majority~~a portion of our ~~homebuyers~~land ~~finance~~acquisition, ~~the~~development ~~purchase~~and ofother ~~their homes~~ activities through ~~mortgage~~our ~~loans. Increases~~participation in ~~interest~~joint ~~rates~~ventures ~~generally~~in ~~increase~~which ~~monthly~~we ~~payments~~hold ~~for~~less ~~the~~than ~~same amount to be borrowed,~~a ~~thus~~majority ~~making~~interest. These ~~the~~land-related ~~homes~~activities wetypically ~~sell~~require substantial ~~less~~capital, ~~affordable~~and ~~for~~by ~~potential~~partnering ~~customers.~~with Inother ~~addition,~~homebuilders ~~increases~~or indevelopers ~~interest~~and, ~~rates~~to ~~may~~a ~~reduce~~lesser ~~the~~extent, ~~demand~~financial ~~for~~partners, ~~new~~Home orBuilding ~~refinanced~~is ~~mortgage~~able ~~loans~~to ~~offered~~share ~~by our Financial~~the ~~Services~~risks ~~operations.~~and ~~Reduced~~rewards ~~home~~of ~~sales~~ownership and ~~loan~~obtain ~~originations~~other ~~may adversely affect our operating~~strategic ~~results~~advantages.

~~The~~Total joint ~~reduction~~venture debt outstanding as of ~~tax~~March ~~benefits~~31, ~~could~~2009 ~~make~~and ~~home~~2008 ~~ownership~~was ~~more~~$270.3 ~~expensive~~million and or$423.2 ~~less~~million, ~~attractive~~respectively. Debt agreements for joint ventures with recourse to us vary by lender in terms of structure and level of recourse. For joint ventures, we are liable on a contingent basis, through guarantees, letters of credit or other arrangements, with respect to a portion of the construction debt. Additionally, we have agreed to indemnify the lender

Significant expenses of owning a home, including mortgage interest expense and real estate taxes, generally are deductible expenses for an individual’s federal, and in some cases state, income taxes, subject to various limitations under current tax law and policy. If the federal government or a state government changes income tax laws to eliminate or substantially modify these income tax deductions, the after-tax costs of owning a new home would increase for the typical homeowner. The resulting loss or limitation of homeowners’ tax deductions, if such tax law changes were enacted without other offsetting provisions, could adversely impact the demand for, and/or sales prices of, new homes, mortgage loans and home equity loans, and our operations might be negatively affected. 14

18 Table of Contents

~~Table~~for certain environmental liabilities in the case of ~~Contents~~most joint ventures and most guarantee arrangements provide that we are liable for our proportionate share of the outstanding debt if the joint venture files for voluntary bankruptcy. We have recorded obligations pursuant to our share of certain completion and repayment guarantees.

Six of our joint ventures are in default of their joint venture debt agreements. We ~~incur~~are ~~increased~~in ~~costs~~discussions ~~related~~with the joint venture partners and lenders with respect to ~~repairing~~each ~~construction~~joint ~~defects~~venture. We inexpect to fulfill our contractual obligations under the ~~homes~~joint weventure ~~sell~~agreements. Costs associated orwith fulfilling such contractual obligations may be less than our share of the joint ventures’ debt. Recourse under joint venture debt ~~buildings~~agreements weis ~~construct~~limited to either the underlying collateral or completion obligations of the joint venture partners. Based upon the terms and debt amounts outstanding for these joint ventures and the terms of the joint venture agreements, we do not believe our exposure related to these joint venture defaults in excess of amounts already accrued will be material to our financial position or results of operations.

~~Our~~In general, ~~Home~~we ~~Building~~are ~~and~~subject ~~Construction~~to ~~Services~~various ~~operations~~risks ~~are~~of ~~subject~~the totype ~~warranty~~described ~~and~~above ~~other claims~~ related to joint venture debt, construction ~~defects~~debt and other ~~construction-related~~obligations ~~issues~~and liabilities of the joint ventures in which we participate, ~~including~~and ~~compliance~~these debts, liabilities and ~~with~~obligations ~~building~~may ~~codes~~in some cases be material. In ~~The~~the ~~costs~~case of many joint ventures, we ~~incur~~have the right to ~~resolve~~be ~~those~~reimbursed ~~warranty~~by ~~and~~our ~~other~~joint ~~claims~~venture ~~reduce~~partners for any amounts that we pay that exceed our pro rata share of the joint ventures’ ~~profitability~~obligations. However, ~~and~~particularly if our joint venture partners have filed for bankruptcy protection or are having financial problems, we ~~were~~may tohave difficulty ~~experience~~collecting anthe ~~unusually~~sums ~~high~~they ~~level~~owe us, and therefore, we may be required to pay a disproportionately large portion of ~~claims~~the guaranteed amounts. In addition, orbecause ~~unusually~~we ~~severe~~lack a controlling interest in these joint ventures, we are ~~claims~~usually unable to require that the joint venture sell assets, return invested capital or take any other action without the consent of at least one of our joint ~~profitability~~venture ~~could~~partners. As a result, without the consent of one or more joint venture partners, we may be ~~adversely~~unable ~~affected~~to liquidate our joint venture investments to generate cash. If we are able to liquidate joint venture investments, the amounts received upon liquidation may be insufficient to cover the costs we have incurred.

~~AVAILABLE~~An inability ~~INFORMATION~~to obtain bonding could limit the number of projects we are able to pursue, and we could be adversely affected if we are required to post additional collateral in respect of bonds issued in connection with past construction projects.

~~Anyone~~As ~~seeking~~is customary ~~information~~in ~~about~~the ~~our~~homebuilding ~~business~~industry, ~~operations~~we ~~and~~often ~~financial~~are ~~performance~~required ~~can~~to ~~receive~~provide surety ~~copies~~bonds ~~of the 2005 Annual Report~~ to ~~Stockholders,~~secure ~~Annual~~our ~~Report~~performance onunder ~~Form~~construction ~~10-K~~contracts, ~~Quarterly Reports on~~development ~~Form~~agreements ~~10-Q,~~and ~~Current~~other ~~Reports~~arrangements. Our onability ~~Form 8-K, all amendments~~ to ~~those~~obtain ~~reports~~surety ~~and other documents filed~~bonds ~~with~~primarily ~~the~~depends ~~Securities~~upon ~~and~~our ~~Exchange~~credit ~~Commission in Washington~~rating, ~~D.C.~~capitalization, ~~without~~working ~~charge~~capital, ~~by contacting our~~past ~~Corporate~~performance, ~~Communications~~management ~~office~~expertise atand ~~(214) 981-6901;~~certain byexternal ~~writing to Centex Corporation~~factors, ~~Investor~~including the ~~Relations,~~overall ~~P.O.~~capacity ~~Box~~of ~~199000,~~the ~~Dallas,~~surety ~~Texas 75219 or via email at ir@centex~~market.~~com.~~ Under Incertain ~~addition~~circumstances, ~~all~~ ~~filings~~such ~~with~~as ~~the~~a ~~Securities~~claim ~~and~~on ~~Exchange~~a ~~Commission~~bond, ~~news~~a ~~releases~~breach ~~and~~of ~~quarterly~~the ~~earnings announcements,~~contract ~~including~~to ~~live~~which ~~audio~~the ~~and~~bond ~~replays of recent quarterly earnings webcasts~~applies, or ~~can~~a ~~be accessed~~material ~~free~~breach of ~~charge~~a onrepresentation ~~our~~made ~~web~~to ~~site~~a ~~(www.centex.com).~~surety, Wewe ~~make~~may ~~our~~be ~~Annual~~required ~~Report on Form 10-K,~~to ~~Quarterly~~provide ~~Reports~~one onor ~~Form~~more ~~10-Q,~~sureties ~~Current~~with ~~Reports~~additional oncollateral ~~Form 8-K and amendments~~ to ~~those~~support ~~reports~~our ~~filed~~bond orobligations. In ~~furnished~~addition, ~~pursuant~~in tosome ~~Section~~cases, ~~13(a)~~upon orrequest ~~15(d)~~ of ~~the~~a ~~Exchange~~surety, ~~Act available on our web site as~~we ~~soon~~may asbe ~~reasonably~~required ~~practicable~~to ~~after~~cause wethe ~~electronically~~surety ~~file~~to ~~the~~be ~~material~~discharged ~~with,~~from orall ~~furnish~~bond ~~it to,~~obligations ~~the~~by ~~Securities~~providing ~~and~~collateral ~~Exchange~~sufficient ~~Commission.~~to Tocover ~~retrieve~~all ~~any~~ of ~~this~~such ~~information,~~surety’s gobond ~~to www.centex.com,~~exposure ~~select~~or ~~“Investor~~alternative ~~Relations”~~funding ~~and~~of ~~select~~such ~~“SEC~~bond ~~Filings~~obligations.” If ~~The~~one ~~reference~~or tomore of our ~~web~~third-party ~~site~~sureties iswere ~~merely intended~~ to ~~suggest~~request ~~where~~ additional ~~information~~collateral, ~~may~~our obligations could be ~~obtained by investors~~significant, ~~and~~which ~~the~~could ~~materials and~~have ~~other~~a ~~information~~material ~~presented~~adverse effect on our financial ~~web~~position ~~site~~or ~~are~~results ~~not incorporated in and should not otherwise be considered part~~ of ~~this Report~~operations.

~~ITEM~~We may 2.be ~~PROPERTIES~~subject to claims and liabilities in connection with sales of assets or discontinued businesses.

Over the past several fiscal years, we have completed the sale of our international homebuilding operations, Home Equity, Construction Services, our home services operations and our property and casualty insurance agency operations in separate transactions to unrelated third parties. In ~~addition~~connection with each of these transactions, we made representations and warranties to ~~land~~the ~~held~~purchasers asof the ~~inventory~~applicable businesses or assets, agreed to retain responsibility for certain actual or contingent liabilities and agreed to indemnify the purchasers against breaches of representations and warranties and other liabilities. In addition, certain of the businesses we sold had bonds or letters of credit outstanding at the date of sale, which were assumed by the purchasers, but for which we retain responsibility under indemnities or other direct contractual relationships with the sureties issuing the bonds or letters of credit. To date, we have not incurred any material losses in respect of claims asserted by the purchasers in connection with these transactions or claims asserted by sureties in respect of outstanding bonds or letters of credit. In addition, our ~~residential~~liability ~~and~~to ~~commercial~~the purchasers is subject to ~~construction~~certain ~~activities~~limitations, weincluding ~~own~~limitations on the ~~following~~time ~~properties:~~period during which claims may be asserted and the amounts for which we are liable. However, there can be no assurance that we will not incur future liabilities to the purchasers in connection with these transactions or the sureties issuing any bonds or letters of credit or that the amount of such liabilities will not be material.

Home Building owns property in Phoenix, Arizona; Albemarle, North Carolina and Plant City, Florida. This property consists of office and warehouse space used to support its builder supply business. Home Building also owns smaller parcels of land in rural areas of Ohio, Indiana, Pennsylvania, Florida, North Carolina and Minnesota. Situated on this land are sales offices for its Wayne Homes “on-your-lot” market segment. Home Building owns a building in Tamworth, Staffordshire, England used by its international operations. 15

~~Financial~~Table ~~Services owns property in Edmond, Oklahoma. This property consists~~ of ~~two office buildings situated on approximately 12 acres of a 20-acre parcel of land. The remaining eight acres of the parcel are being held for future development.~~ Contents

~~In addition to land we own and use in our operations, we lease office space under operating~~RISK ~~leases~~FACTORS inRELATED ~~the~~TO ~~markets~~OUR inPROPOSED ~~which~~MERGER weWITH operate throughout the United States. For additional information on our operating leases, see Note (H), “Commitments and Contingencies,” of the Notes to Consolidated Financial Statements of this Report. PULTE

~~See~~Failure to ~~“Item 1.~~complete ~~Business”~~our ofproposed ~~this~~merger ~~Report~~with ~~for~~Pulte ~~additional~~could ~~information~~negatively ~~relating~~impact toour ~~the Company’s~~stock ~~properties~~price ~~including~~and ~~land~~our ~~owned~~future orbusiness ~~controlled~~and byfinancial ~~our Home Building segment~~results.

19If our proposed merger with Pulte is not completed, our stock price and our future business and financial results may be adversely affected and become subject to several risks, including the following:

~~Table~~● If the merger is terminated, we may be required in specified circumstances to pay a termination fee of ~~Contents~~$24 million or $48 million to Pulte, which may result in a decline in the trading price of our common stock. In addition, we expect to incur significant costs associated with negotiation of the merger agreement and seeking stockholder approval. If the transaction is not completed, we will not be able to recover these costs. ● The fact that the transaction was not completed may be viewed negatively by investors, suppliers, contractors and customers, which may cause a decline in the trading price of our common stock or demand for our products, and may harm our ability to do business. ● Our stock price could be adversely affected if the transaction is not completed since the current price reflects a premium as a result of the pending transaction.

~~ITEM~~Our competitive 3.position ~~LEGAL~~could ~~PROCEEDINGS~~suffer as a result of the pending transaction with Pulte.

InAs ~~the~~a ~~normal~~result ~~course~~ of ~~our~~the ~~business,~~pending ~~we and/or our subsidiaries are named as defendants in~~merger ~~suits~~transaction ~~filed~~with inPulte, ~~various~~our ~~state~~competitive ~~and~~position ~~federal~~could ~~courts.~~suffer Weas ~~believe~~a ~~that~~result ~~none~~ of ~~the litigation matters in~~any ~~which~~one ~~we,~~ or ~~any~~more of ~~our~~the ~~subsidiaries, are involved would have a material adverse effect on our consolidated financial condition or operations.~~ following:

In● ~~January 2003,~~We wecould ~~received~~lose akey ~~request~~management ~~for~~personnel ~~information~~who ~~from~~may ~~the~~be ~~United~~experiencing ~~States~~uncertainty ~~Environmental Protection~~about ~~Agency,~~their future roles with the ~~EPA~~combined company. Additionally, ~~pursuant~~as toa ~~Section 308~~result of ~~the~~a ~~Clean~~decline ~~Water~~in ~~Act~~our ~~seeking~~stock ~~information about~~price, ~~storm~~previous ~~water~~retention ~~discharge~~mechanisms ~~practices~~such atas ~~projects~~equity ~~that~~awards ~~Centex~~to ~~subsidiaries~~such ~~had~~key ~~completed~~personnel orhave ~~were building~~diminished in value. ~~Subsequently,~~● Our employees may become distracted during the ~~EPA~~period ~~limited~~between ~~its~~the ~~request~~announcement toof ~~Home~~the ~~Building~~transaction and 30the ~~communities.~~special ~~Home Building~~meeting ~~has~~to ~~provided~~approve the ~~requested~~transaction, ~~information~~ and ~~the~~may ~~United~~not ~~States~~perform ~~Department~~at oftheir ~~Justice,~~customary high level. ● Restrictions in the ~~Justice~~ ~~Department,~~merger ~~acting~~agreement on ~~behalf~~solicitation ofprohibit ~~the~~us ~~EPA,~~from ~~has~~soliciting ~~asserted~~any ~~that~~acquisition ~~some~~proposal ofor ~~these~~offer ~~and~~for ~~certain~~a merger or business combination with any other ~~communities~~ (party, including ~~one~~a ofproposal ~~Construction~~that ~~Services’~~might ~~projects)~~be ~~have~~advantageous ~~violated~~to ~~regulatory requirements~~our ~~applicable~~stockholders towhen ~~storm~~compared ~~water~~to ~~discharges,~~the terms and ~~that~~conditions ~~injunctive~~of ~~relief~~the ~~and~~merger. ~~civil~~These ~~penalties~~ provisions may bedeter ~~warranted~~third parties from proposing or pursuing alternative business combinations with us that might result in greater value to our stockholders than the transaction. ~~Home~~● ~~Building~~Our suppliers and ~~Construction~~contractors ~~Services~~may ~~believe~~question ~~they~~our ~~have~~commitment ~~defenses~~or ability to ~~the allegations~~continue ~~made~~operations byin the ~~EPA~~homebuilding industry and ~~are~~may ~~exploring~~not ~~methods~~be ofwilling ~~settling~~to ~~this~~perform ~~matter~~services inor ~~continuing negotiations~~deliver ~~with~~supplies ~~representatives~~on ofas ~~the~~favorable ~~Justice~~terms ~~Department~~or ~~and~~they ~~the~~may ~~EPA.~~cease ~~Centex~~or ~~does~~significantly ~~not~~reduce ~~believe that~~doing ~~this~~business ~~matter~~with ~~will~~us. ~~have~~● aOur ~~material~~customers ~~impact~~may onquestion ~~the~~our ~~Company’s~~commitment ~~consolidated~~or ~~results~~ability to complete construction of ~~operations~~new homes or ~~financial~~ ~~position~~the availability of construction defect and other warranty coverage and may be less likely to purchase a new home from us.

~~On November 23, 2004, Miami-Dade County, Florida filed suit against Centex-Rooney Construction~~REGULATORY Co., a wholly-owned subsidiary of Centex Corporation; John J. Kirlin, Inc.; and M. C. Harry and Associates, Inc., in the County’s Circuit Court of the Eleventh Judicial Circuit. Miami-Dade County alleges that, in the course of performing or managing construction work on Concourse F at the Miami International Airport, the defendants caused a jet fuel line rupture on or about July 30, 1987, which resulted in the contamination of soil, groundwater and surface water in and around airport Concourse F. Miami-Dade County seeks damages of approximately $8.0 million for its costs incurred to date and for expected future costs, civil penalties and an order requiring the defendants to address remaining contamination. Centex believes it has substantial defenses to Miami-Dade County’s claims, including waiver and release and statute of limitations defenses. Centex also believes insurance coverage may be available to cover defense costs and any potential damages. Centex does not believe that this lawsuit will have a material impact on the Company’s consolidated results of operations or financial position. RISKS

~~ITEM~~Compliance with 4.regulatory ~~SUBMISSION~~requirements OFaffecting ~~MATTERS~~our TObusiness Acould ~~VOTE~~have OFsubstantial ~~SECURITY~~costs both ~~HOLDERS~~in time and money, and some regulations could prohibit or restrict some homebuilding activity.

~~None~~We are subject to extensive and complex laws and regulations that affect the land development and homebuilding process, including laws and regulations related to zoning, permitted land uses, levels of density, building design, warranties, storm water pollution prevention and use of open spaces. In addition, we are subject to a variety of laws and regulations concerning safety and the protection of health and the environment. The particular environmental laws that apply to any given neighborhood vary greatly according to the neighborhood site, the site’s environmental conditions and the present and former uses of the site. In some of the markets where we operate, we are required to pay environmental impact fees, use energy-saving construction materials, such as extra insulation or double-paned windows, and make commitments to municipalities to provide certain infrastructure such as roads and sewage systems. We and the contractors that we engage to work on our jobsites are also subject to laws and regulations related to workers’ health and safety, wage and hour practices and immigration. We generally are required to obtain permits and approvals from local authorities to commence and complete residential development or home construction. Such permits and approvals may from time to time be opposed or challenged by local governments, neighboring property owners or other interested parties, adding delays, costs and risks of non-approval to the process. Our obligation to comply with the laws and regulations under which we operate, or the obligation of our independent

20 16

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~~SEPARATE~~contractors to ~~ITEM.~~comply ~~EXECUTIVE~~with ~~OFFICERS~~these OFand ~~CENTEX~~other ~~(SEE~~laws ~~ITEM~~and 10regulations, OFcould ~~PART~~result ~~III~~in OFdelays ~~THIS~~in land ~~REPORT)~~development and homebuilding activity, cause us to incur substantial costs and prohibit or restrict land development and construction.

~~The~~It ~~following~~ is possible anthat ~~alphabetical~~increasingly ~~listing~~stringent ofrequirements ~~our~~will ~~executive~~be ~~officers~~imposed ason ofdevelopers and ~~May 19,~~homebuilders ~~2005,~~in asthe ~~such term~~future. Although iswe ~~defined~~cannot ~~under~~predict ~~the~~with ~~rules~~any certainty ~~and~~either ~~regulations~~the nature of the ~~Securities~~requirements ~~and~~or ~~Exchange~~the ~~Commission.~~effect on our business, ~~Officers~~they ~~are~~could ~~generally~~result ~~elected~~in bytime-consuming ~~the~~and ~~Board~~expensive ofcompliance ~~Directors~~programs atand ~~its~~in substantial ~~meeting~~expenditures, ~~immediately~~which ~~following~~could cause delays and increase our cost of ~~annual~~operations. The ~~stockholders’~~additional ~~meeting,~~costs associated with ~~each~~new ~~officer~~regulatory requirements ~~serving~~or ~~until~~compliance aprograms ~~successor~~may ~~has~~not ~~been~~be ~~elected~~recoverable ~~and~~from our homebuyers ~~qualified.~~in ~~There~~the isform noof ~~family~~higher ~~relationship~~sales ~~among~~prices ~~any~~which ofcould ~~these~~adversely ~~officers.~~affect our results of operations.

Name	Age		Positions with Centex or Business Experience
Leldon E. Echols		49	Executive Vice President and Chief Financial Officer of Centex Corporation since June 2000; Partner and employee at Arthur Andersen LLP from December 1978 to May 2000
Timothy R. Eller		56	Chairman of the Board, Chief Executive Officer, President and Chief Operating Officer of Centex Corporation (Chairman of the Board and Chief Executive Officer since April 2004; President and Chief Operating Officer since April 2002); Executive Vice President of Centex Corporation from August 1998 to April 2002; Chairman of the Board of Centex Real Estate Corporation from April 1998 to April 2003; Chief Executive Officer of Centex Real Estate Corporation from July 1991 to April 2002; President and Chief Operating Officer of Centex Real Estate Corporation from January 1990 to April 1998
Andrew J. Hannigan		53	Chairman of the Board, Chief Executive Officer and President of Centex Real Estate Corporation (Chairman of the Board since May 2003; Chief Executive Officer since May 2002; President since April 2005); President and Chief Operating Officer from May 1998 to May 2002
Mark D. Kemp		43	Senior Vice President and Controller of Centex Corporation since September 2004; Vice President and Controller of Centex Corporation from December 2002 to September 2004; Partner and employee at Arthur Andersen LLP from December 1983 to August 2002
Robert S. Stewart		51	Senior Vice President of Centex Corporation since May 2000; Employee at the Weyerhaeuser Company from March 1977 to May 2000, during which time he held a range of key management positions, including positions in strategic planning
Jonathan R. Wheeler		53	Senior Vice President of Centex Corporation since May 2004; Senior Vice President of Centex Real Estate Corporation from October 1997 to May 2004
Brian J. Woram		44	Senior Vice President, Chief Legal Officer, General Counsel and Assistant Secretary of Centex Corporation since March 2005; Senior Vice President, Chief Legal Officer, General Counsel and Secretary of Centex Corporation from December 2004 to March 2005; Senior Vice President, General Counsel and Assistant Secretary of Centex Real Estate Corporation from September 1998 to December 2004

Changes in lending laws could hurt our Financial Services operations.

21Our Financial Services operations are subject to extensive and complex laws and regulations that affect loan origination. These include eligibility requirements for participation in federal loan programs and compliance with consumer lending and similar requirements such as disclosure requirements, prohibitions against discrimination and real estate settlement procedures. They may also subject our operations to examination by applicable agencies. These may limit our ability to provide mortgage financing or title services to potential purchasers of our homes.

~~Table~~On November 17, 2008, the Department of ~~Contents~~Housing and Urban Development (HUD) issued final regulations implementing various proposed changes to the federal Real Estate Settlement Procedures Act (RESPA). Among the changes was a revised definition of ‘required use’ that would prohibit homebuilders from providing financial incentives to their homebuyers that are conditioned upon the homebuyers’ use of affiliated mortgage companies or other settlement service providers. These regulations were to take effect on January 16, 2009, and would have required a significant restructuring of Home Building’s and Financial Services’ business practices in order to comply. Specifically, financial incentives for a homebuyer’s use of CTX Mortgage Company, LLC could only be offered directly to the homebuyer by CTX Mortgage Company, LLC in lieu of our current practice for Home Building to offer financial incentives to homebuyers that are conditioned on the use of CTX Mortgage Company, LLC.

~~PART~~On December II22, 2008, the National Association of Home Builders (NAHB) and certain of its members and affiliated companies filed suit against HUD challenging the proposed rule and seeking to enjoin enforcement of the regulation. In response, HUD extended the effective date of the regulation to July 16, 2009. On May 12, 2009, HUD submitted a final rule to the Federal Register for publication that withdrew the proposed definition of ‘required use’ from the rule, although HUD noted in an accompanying press release that it intends to propose a revised definition of ‘required use’ in a new proposed rule at some future date.

~~ITEM~~Changes in 5.laws ~~MARKET~~or ~~FOR~~other ~~REGISTRANT’S~~events ~~COMMON~~that ~~EQUITY~~adversely ~~AND~~affect ~~RELATED~~liquidity ~~STOCKHOLDER~~in ~~MATTERS~~the secondary mortgage market could hurt our business.

The government-sponsored enterprises, principally FNMA and FHLMC, play a significant role in buying home mortgages and creating investment securities that they either sell to investors or hold in their portfolios. These organizations provide liquidity to the secondary mortgage market. FNMA and FHLMC experienced financial difficulties in 2008 and were place into conservatorship because their ability to raise capital had become limited and there was concern about global and domestic systemic risk should either of these government-sponsored enterprises fail. The Federal Housing Finance Authority is serving as conservator until the institutions have been returned to a safe and solvent condition. We cannot predict whether the current conservatorship of FNMA or FHLMC will succeed in returning these institutions to normal business operations, or that actions of the conservator or future regulatory changes will not result in a significant restructuring of their businesses. Any new federal laws or regulations that restrict or curtail their activities, any changes in their mortgage purchase programs, or any other events or conditions that prevent or restrict these enterprises from continuing their historic businesses, could affect the ability of our customers to obtain mortgage loans or could increase mortgage interest rates or credit standards, which could reduce demand for our homes and/or the loans that we originate and adversely affect our results of operations.

	Stock Prices and Dividends
	Year Ended March 31, 2005						Year Ended March 31, 2004
	Price						Price
	High		Low		Dividends		High		Low		Dividends
Quarter
First	$	54.77	$	43.31	$	.04	$	43.75	$	26.78	$	.02
Second	$	51.96	$	39.94	$	.04	$	41.48	$	35.55	$	.02
Third	$	59.98	$	45.44	$	.04	$	56.54	$	38.55	$	.02
Fourth	$	66.14	$	54.60	$	.04	$	58.40	$	46.27	$	.04

OUTSTANDING COMMON STOCK AND OTHER SECURITIES RISK

~~The principal market for our common stock is the New York Stock Exchange (ticker symbol CTX).~~Our ~~The~~share ~~approximate~~price ~~number~~will ~~of record holders of our common stock at May 19, 2005 was 3,071~~fluctuate.

The ~~remaining~~securities ~~information~~markets ~~called~~in ~~for~~general byand our ~~this~~common ~~item~~stock ~~relating~~in toparticular ~~securities~~have ~~authorized~~experienced ~~for~~significant ~~issuance~~price and volume ~~under~~volatility ~~equity~~over ~~compensation~~the ~~plans~~past isyear. The ~~reported~~market inprice ~~Note~~and ~~(M),~~volume ~~“Capital~~of ~~Stock~~our common ~~and~~stock ~~Employee~~may ~~Benefit~~continue to experience significant fluctuations due not only to ~~Plans,”~~general ofstock ~~the~~market ~~Notes~~conditions but also to ~~Consolidated~~a ~~Financial~~change ~~Statements~~in ofsentiment ~~this~~in ~~Report.~~the market

~~The following table details our common stock repurchases for the three months ended March 31, 2005:~~ 17

	Issuer Purchases of Equity Securities
					Total Number of		Maximum Number of
					Shares Purchased as		Shares that May Yet
	Total Number of		Average Price Paid		Part of Publicly		Be Purchased Under
	Shares Purchased		Per Share		Announced Plan		the Plan
Period						5,625,600		2,724,000
January 1-31		5,071	$	58.65		—		—
February 1-28		6,933	$	62.78		—		—
March 1-31		9,019	$	59.47		—		—
Total		21,023	$	60.37		5,625,600		2,724,000

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~~On February 17, 2004,~~regarding ~~we publicly announced that the Board of Directors increased~~ our ~~open~~operations ~~market~~or ~~share~~business ~~repurchase authorization~~prospects. In ofaddition ~~common stock~~ to ~~4,000,000 shares adjusted for our March 2004 two-for-one stock split. The total number of shares purchased in~~ the ~~third~~risk ~~column of the above table represents~~factors ~~shares~~discussed ~~of common stock repurchased pursuant to Board of Directors authorizations including the February 17~~above, ~~2004 authorization and all prior authorizations. Purchases are made from time-to-time in~~ the ~~open~~price ~~market. The share repurchase authorization has no stated expiration date,~~ and ~~the Board~~volume volatility of ~~Directors~~our ~~has~~common ~~authorized~~stock ~~all~~may ~~shares repurchased.~~be affected by:

~~The~~● ~~21,023~~operating ~~shares~~results ~~repurchased~~that ~~for~~differ from the ~~quarter~~expectations ~~ended~~of ~~March 31,~~securities ~~2005,~~analysts ~~represent~~and ~~the~~investors; ~~delivery~~● ~~by employees~~factors orinfluencing ~~directors~~home purchases, such as availability of ~~previously~~home ~~issued~~mortgage ~~shares~~loans and interest rates, credit criteria applicable to ~~the~~prospective ~~Company~~borrowers, ability to ~~satisfy~~sell existing residences and homebuyer sentiment in general; ● the ~~exercise~~operating and securities price performance of ~~options~~ ~~and/or~~companies ~~withholding~~that ~~taxes~~investors ~~that~~consider ~~arise~~to onbe ~~the~~comparable ~~exercise~~to ofus; ~~options~~● orannouncements relating to the ~~vesting~~merger oftransaction ~~restricted stock.~~with ~~These~~Pulte ~~transactions~~as ~~have~~well ~~been~~as ~~approved~~other strategic developments and other material events by ~~the~~us ~~Board~~or ofour ~~Directors~~competitors; ~~however,~~and ~~these transactions~~● ~~are~~changes ~~not~~in ~~considered~~global ~~repurchases~~financial ~~pursuant~~markets toand ~~the~~global ~~Company’s~~economics ~~open~~and general market ~~stock~~conditions, ~~repurchase program~~such as interest rates, commodity and equity prices and the value of financial assets.

22Dividends on our common stock have been suspended and future dividends remain uncertain.

~~Table~~On October 9, 2008, we announced that our Board of ~~Contents~~Directors suspended our quarterly cash dividend. We will continue to weigh the alternatives for returning cash to stockholders as economic conditions improve.

~~ITEM 6. SELECTED FINANCIAL DATA~~FORWARD-LOOKING STATEMENTS

~~Summary~~This report ofincludes ~~Selected Financial~~various ~~Data~~forward-looking ~~(Unaudited)~~statements, which are not facts or ~~(1) (Dollars~~guarantees inof ~~thousands,~~future ~~except~~performance ~~per~~and ~~share~~which ~~data)~~are subject to significant risks and uncertainties.

	For the Years Ended March 31,
	2005			2004			2003			2002			2001
Revenues	$	12,859,695		$	10,363,391		$	8,428,705		$	7,123,794		$	6,138,577
Earnings from Continuing Operations (2)	$	1,011,364		$	777,131		$	526,812		$	358,402		$	265,194
Net Earnings	$	1,011,364		$	827,686		$	555,919		$	382,226		$	281,977
Stockholders’ Equity	$	4,280,757		$	3,050,225		$	2,657,846		$	2,116,773		$	1,714,064
Net Earnings as a Percentage of Average Stockholders’ Equity		27.6	%		29.0	%		23.3	%		20.0	%		18.0	%
Total Assets	$	20,011,079		$	16,087,454		$	11,639,707		$	8,996,991		$	6,649,968
Deferred Income Tax Assets	$	177,735		$	176,564		$	201,411		$	177,882		$	127,495
Total Long-term Debt, Consolidated	$	10,492,363		$	8,615,864		$	6,181,543		$	4,776,199		$	2,758,118
Debt (with Financial Services reflected on the equity method) (3)	$	3,246,963		$	2,418,190		$	2,024,953		$	1,605,797		$	1,182,250
Financial Services’ Debt		9,721,146			8,302,190			4,998,819			3,485,027			2,054,898
Total Debt, Consolidated	$	12,968,109		$	10,720,380		$	7,023,772		$	5,090,824		$	3,237,148
Capitalization (with Financial Services reflected on the equity method and excluding lot option minorityinterest)(3) (4)	$	7,568,466		$	5,470,263		$	4,683,755		$	3,724,827		$	2,901,394
Financial Services Capitalization (4)		10,339,756			8,820,005			5,380,226			3,797,355			2,323,155
Lot Option Minority Interest (4)		415,413			332,668			—			—			—
Consolidation Eliminations		(617,248	)		(516,280	)		(379,671	)		(310,353	)		(266,124	)
Total Capitalization, Consolidated	$	17,706,387		$	14,106,656		$	9,684,310		$	7,211,829		$	4,958,425
Debt as a Percentage of Capitalization (4)
With Financial Services reflected on the equity method and excluding lot option minority interest (3)		42.9	%		44.2	%		43.2	%		43.1	%		40.7	%
Consolidated		73.2	%		76.0	%		72.5	%		70.6	%		65.3	%
Per Common Share
Earnings from Continuing Operations
Per Share — Basic (2)	$	8.08		$	6.30		$	4.33		$	2.96		$	2.25
Earnings from Continuing Operations
Per Share — Diluted (2)	$	7.64		$	6.01		$	4.18		$	2.87		$	2.18
Net Earnings Per Share — Basic	$	8.08		$	6.71		$	4.57		$	3.16		$	2.39
Net Earnings Per Share — Diluted	$	7.64		$	6.40		$	4.41		$	3.06		$	2.32
Cash Dividends	$	.16		$	.10		$	.08		$	.08		$	.08
Book Value Based on Shares Outstanding at Year End	$	33.51		$	24.87		$	21.84		$	17.30		$	14.30
Average Shares Outstanding
Basic		125,226,596			123,382,068			121,564,084			121,121,576			118,190,806
Diluted		132,397,961			129,392,821			126,116,312			125,058,294			121,321,770
Stock Prices
High	$	66.14		$	58.40		$	29.60		$	31.55		$	23.10
Low	$	39.94		$	26.78		$	19.16		$	14.02		$	10.32

Certain information included in this Report or in other materials we have filed or will file with the SEC, as well as information included in oral statements or other written statements made or to be made by us, contains or may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Exchange Act and the Private Securities Litigation Reform Act of 1995, as amended. You can identify these statements by the fact that they do not relate to matters of a strictly factual or historical nature and generally discuss or relate to forecasts, estimates or other expectations regarding future events. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “may,” “can,” “could,” “might,” “will” and similar expressions identify forward-looking statements, including statements related to expected operating and performing results, planned transactions, planned objectives of management, future developments or conditions in the industries in which we participate and other trends, developments and uncertainties that may affect our business in the future. Such statements include information related to anticipated operating results, financial resources, changes in interest rates and other developments and conditions in financing markets, changes in revenues, changes in profitability, interest expense, growth and expansion, our investment in unconsolidated entities, the ability to acquire land, the ability to gain approvals and to open new neighborhoods, the ability to sell homes and properties, the ability to deliver homes from backlog, the ability to secure materials and contractors, the ability to produce the liquidity and capital necessary for our business, the completion of and effects from planned transactions and stock market valuations. From time to time, forward-looking statements also are included in our other periodic reports on Forms 10-K, 10-Q and 8-K, press releases and presentations, on our web site and in other material released to the public.

Forward-looking statements are not historical facts or guarantees of future performance but instead represent only our beliefs at the time the statements were made regarding future events, which are subject to significant risks, uncertainties, and other factors, many of which are outside of our control and certain of which are listed above. Any or all of the forward-looking statements included in this Report and in any other reports or public statements made by us may turn out to be materially inaccurate. This can occur as a result of incorrect assumptions or as a consequence of known or unknown risks and uncertainties. Many of the risks and uncertainties mentioned in this Report or another report or public statement made by us, such as those discussed in the risk factors contained in this Item 1A, will be important in determining whether these forward-looking statements prove to be accurate. Consequently, neither our stockholders nor any other person should place undue reliance on our forward-looking statements and should recognize that actual results may differ materially from those anticipated by us.

(1)	The selected financial data presented in this table, excluding stock prices for the periods covered by the financial statements included in this Report and all prior periods, have been derived from our audited financial statements and adjusted to reflect Centex Construction Products, Inc. (spun off in January 2004) and our manufactured housing operations (spun off in June 2003) as discontinued operations.
(2)	Earnings from Continuing Operations are Before Cumulative Effect of a Change in Accounting Principle adopted in fiscal 2004. For more detailed discussion of the change in accounting principle, see Note (F), “Indebtedness” of the Notes to Consolidated Financial Statements of this Report.
(3)	Represents a supplemental presentation that reflects the Financial Services segment as if accounted for under the equity method. We believe that separate disclosure of the consolidating information is useful because the Financial Services subsidiaries operate in a distinctly different financial environment that generally requires significantly less equity to support their higher debt levels compared to the operations of our other subsidiaries; the Financial Services subsidiaries have structured their financing programs substantially on a stand alone basis; and we have limited obligations with respect to the indebtedness of our Financial Services subsidiaries. Management uses this information in its financial and strategic planning. We also use this presentation to allow investors to compare us to homebuilders that do not have financial services operations.
(4)	Capitalization is composed of Debt, Negative Goodwill, Minority Interest and Stockholders’ Equity. In the calculation of Capitalization, minority interest in fiscal 2005 and 2004 excludes $415.4 million and $332.7 million, respectively, of minority interests recorded in connection with the consolidation of certain entities with which Home Building has lot option agreements. Negative Goodwill arose in conjunction with the combination of Centex Real Estate Corporation with Vista Properties, Inc. in the fiscal year ended March 31, 1997. Fiscal year 2001 includes the accretion of negative goodwill to earnings as a reduction of costs and expenses. During fiscal 2001, negative goodwill was fully accreted.

All forward-looking statements made in this Report are made as of the date hereof, and the risk that actual results will differ materially from expectations expressed in this Report will increase with the passage of time. We undertake no obligation, and disclaim any duty, to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changes in our expectations or otherwise. However, we may make further disclosures regarding future events, trends and uncertainties in our subsequent reports on Forms 10-K, 10-Q and 8-K to the extent required under the Exchange Act. The above cautionary discussion of risks, uncertainties and possible inaccurate assumptions relevant to our business include factors we believe could cause our actual results to

23 18

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~~ITEM~~differ materially 7from expected and historical results. Other ~~MANAGEMENT’S~~factors ~~DISCUSSION~~beyond those ~~AND~~listed ~~ANALYSIS~~above, OFincluding ~~FINANCIAL~~factors ~~CONDITION~~unknown ~~AND~~to ~~RESULTS~~us OFand ~~OPERATIONS~~factors known to us which we have not determined to be material, could also adversely affect us. This discussion is provided as permitted by the Private Securities Litigation Reform Act of 1995 and all of our forward-looking statements are expressly qualified in their entirety by the cautionary statements contained or referenced in this section.

~~Executive~~ITEM ~~Summary~~ 1B. UNRESOLVED STAFF COMMENTS

~~The following summarizes our results for the three-year period ended March 31, 2005:~~ None.

*ITEM ~~Other consists of the financial results of our investment real estate operations, home services operations, corporate general and administrative expense and interest expense~~2. PROPERTIES

~~Fiscal~~In addition ~~year~~to ~~2005~~land ~~represents~~held ~~our~~as ~~ninth~~inventory ~~consecutive~~in ~~year~~connection ofwith ~~growth~~our inHome ~~revenues~~Building operations, ~~and~~we ~~earnings~~lease ~~from continuing~~office ~~operations.~~space ~~Revenues~~under ~~increased~~operating ~~24.1%~~leases toin ~~$12.86 billion~~the asmarkets ~~compared~~in towhich we ~~fiscal~~operate ~~year~~throughout ~~2004~~the United States. In We ~~addition,~~believe ~~earnings~~that ~~from~~our ~~continuing~~existing facilities ~~operations~~are ~~before~~suitable ~~income~~and ~~taxes~~adequate for our current and ~~cumulative~~planned ~~effect~~levels of a ~~change~~operation. For inadditional ~~accounting~~information ~~principle~~on ~~increased~~our ~~37.0%~~operating toleases, ~~$1.57 billion~~see Note as(G), ~~compared~~“Commitments toand ~~fiscal~~Contingencies,” ~~year~~of ~~2004.~~the Notes to Consolidated Financial Statements.

~~The~~See ~~growth~~“Item 1. Business” infor ~~revenues~~additional ~~and~~information ~~operating~~relating ~~earnings is primarily attributable~~ to ~~the~~our ~~growth and~~properties ~~improvement~~including inland ~~operating~~owned ~~margin~~or ofcontrolled by our Home Building ~~segment~~operations. ~~Home Building’s operating earnings growth was slightly offset by a decline in operating earnings of our Financial Services segment in fiscal year 2005.~~

~~The~~ITEM primary drivers of the growth in our Home Building business are growth in neighborhoods open for sale, increases in closings per neighborhood, increases in average unit selling prices, and improvements in operating margins3. InLEGAL fiscal 2005, we experienced improvements in each of these key areas. Home Building’s domestic operating margin (operating earnings as a percentage of revenues) increased to 14.7%. For more specific information on the operating results of our Home Building segment, refer to the Home Building segment information below. PROCEEDINGS

~~The~~In ~~overall~~the normal ~~demand~~course ~~for~~of ~~housing~~our inbusiness, ~~the~~we ~~United~~and/or ~~States~~our ~~remains~~subsidiaries ~~favorable,~~are involved in claims and isdisputes ~~driven~~and byare named as defendants in certain suits filed in various state ~~population~~and ~~growth,~~federal ~~demographics~~courts. These claims, ~~immigration~~disputes and lawsuits include construction defect claims, ~~household~~contract ~~formations~~disputes and ~~increasing~~employee-related matters. We ~~home~~believe ~~ownership~~that none of the litigation matters in which we, ~~rates.~~or ~~Short-term~~any of our subsidiaries, are involved are likely to have a material adverse effect on our consolidated financial condition or operations.

Centex Corporation and our directors are named as defendants in five putative class action lawsuits filed between April 15 and April 23, 2009 in the District Courts of Dallas County, Texas. An additional putative class action lawsuit against Centex and our directors was filed on April 24, 2009 in the District Court of Clark County, Nevada. The cases assert claims related to alleged breaches of fiduciary duty in connection with the proposed combination between Centex and Pulte Homes, Inc. announced on April 8, 2009. The pleadings allege, among other things, that the Centex directors, aided and abetted by Centex and/or Pulte, purportedly breached their fiduciary duties by failing to maximize stockholder value, by taking steps to discourage competitive bidding or alternate proposals, and by self-dealing or acting with purported conflicts of interest. Plaintiffs seek, among other relief, an injunction against consummation of the combination with Pulte, rescission of the combination with Pulte if consummated prior to the entry of final judgment, unspecified damages, costs and attorneys’ fees. Motions have been made by certain of the Texas plaintiffs to consolidate the Texas actions. Based on the facts known to date, the defendants believe that the claims asserted against them are without merit, and the defendants intend to defend vigorously against the claims.

~~Table~~ITEM of4. ~~Contents~~SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

~~growth drivers such as mortgage rates, consumer confidence and employment levels can also impact housing demand~~None. The highly fragmented homebuilding industry in the United States is in the early stages of a consolidation phase during which large homebuilders grow faster than the industry as a whole. In 1995, based upon single-family permits issued in the United States, the 10 largest homebuilders represented approximately 7.2% of the housing market. In calendar year 2004, the 10 largest homebuilders were producing approximately 22% of the nation’s new housing stock. We believe industry consolidation will continue to be an important growth factor over the next decade or more as large homebuilders realize the benefits of size, such as capital strength, more efficient operations and technological advantages.

Currently, we have homebuilding operations in 38 of the 50 largest housing markets in the United States (2003 housing market data obtained from Professional Builder magazine). We have largely completed our geographic diversification plan and are now focused primarily on further penetration in our existing markets. 19

~~Financial~~Table Services’ operating results in fiscal year 2005 have been negatively impacted by decreased loan refinancing activity, increases in interest rates and, for our prime mortgage lending operations, an increase in the origination of less profitable adjustable rate mortgages. CTX Mortgage Company, LLC’s refinancing activity accounted for 21% of its originations for the year ended March 31, 2005 as compared to 39% for the year ended March 31, 2004. Refinancing activity has declined due to an extended period of relatively low mortgage loan rates, which has reduced the supply of loans likely to be refinanced. Our Financial Services segment will continue to focus on serving the customers of our Home Building segment and increasing the percentage of prime mortgage loans provided to them. For the year ended March 31, 2005, our prime mortgage lending business financed approximately 73% of our Home Building non-cash unit closings. In addition, the Financial Services growth model includes plans to increase the number of loan officers originating prime retail loans and improve their productivity. Our prime mortgage lending business is a fee-based business with low capital requirements. Our Financial Services segment also includes our sub-prime home equity lending operations, which is a portfolio-based model that produces more predictable earnings. Our sub-prime home equity loans are obtained principally through our organically grown origination channels using centrally controlled product, pricing and underwriting. Home Equity’s revenues and operating earnings have increased 30.1% and 68.1%, respectively, as compared to fiscal year 2004. The growth in revenues and operating earnings is primarily as a result of continued growth in Home Equity’s portfolio of residential mortgage loans held for investment and a program of whole loan sales to third parties. The Financial Services growth model includes plans to continue to grow our portfolio of sub-prime mortgage loans held for investment while adhering to our underwriting criteria. We will primarily securitize these loans and certain loans will be included in whole loan sales. Contents

~~The~~ITEM ~~results of operations of certain of our segments, including our Home Building and Financial Services operations, may be adversely affected by increases in interest rates~~4A. ~~Any significant~~EXECUTIVE ~~increase~~OFFICERS inOF ~~mortgage~~THE interest rates above current prevailing levels could affect demand for housing, at least in the short term, and could reduce the ability or willingness of prospective home buyers to finance home purchases and/or it could curtail mortgage refinance activity. Although we expect that we would make adjustments in our operations in an effort to mitigate the effects of any increase in interest rates, there can be no assurances that these efforts would be successful. REGISTRANT

~~Our Construction Services segment operating earnings have increased from the prior year, but~~The ~~have~~following ~~not~~is ~~reached~~an ~~the~~alphabetical ~~levels~~listing ~~achieved~~of inour ~~fiscal~~executive ~~2003.~~officers ~~Industry~~as ~~conditions~~of ~~have~~May ~~created increased~~19, ~~pricing~~2009, ~~pressure~~as onsuch ~~construction~~term ~~companies,~~is ~~which~~defined inunder ~~turn~~the ~~has~~rules ~~reduced~~and ~~our~~regulations ~~Construction~~of ~~Services~~the ~~operating margins~~SEC. Officers ~~However,~~are ~~revenues~~generally ~~have~~elected ~~increased~~by ~~over~~ the ~~last~~Board ~~two~~of ~~years~~Directors ~~due~~at ~~to our focus on~~its ~~increasing~~meeting ~~market~~immediately ~~share.~~following ~~The~~our ~~commercial~~annual ~~construction~~stockholders’ ~~environment~~meeting, ~~remains~~with ~~challenged but is showing~~each ~~signs~~officer ofserving ~~improvement~~at ~~as evidenced by~~ the ~~increase~~pleasure inof ~~backlog. At March 31, 2005,~~ the ~~backlog~~Board ~~was $2.00 billion, an increase~~ of ~~14.6%~~Directors ~~over~~until ~~the~~a ~~prior~~successor ~~year. Strategically, we will continue to focus~~has onbeen ~~our~~elected ~~core geographic~~ and ~~selected~~qualified. There ~~industry~~is ~~segments~~no tofamily ~~achieve~~relationship ~~growth~~among ~~in Construction Services’~~any ~~revenues~~of ~~and~~these ~~operating earnings~~officers.

Name	Age	Positions with the Company or Business Experience

Joseph A. Bosch	51	Senior Vice President – Human Resources since July 2006; Senior Vice President – Human Resources at Tenet Healthcare Corporation from August 2004 to June 2006; Chief People Officer at Pizza Hut, a unit of YUM! Brands, Inc. from June 1997 to July 2004

Timothy R. Eller	60	Chairman of the Board, Chief Executive Officer, President and Chief Operating Officer of Centex Corporation (Chairman of the Board and Chief Executive Officer since April 2004; President and Chief Operating Officer since April 2002); Executive Vice President of Centex Corporation from August 1998 to April 2002; Chairman of the Board of Centex Real Estate Corporation from April 1998 to April 2003, and since April 2006; Chief Executive Officer of Centex Real Estate Corporation from July 1991 to April 2002, and since April 2006; President and Chief Operating Officer of Centex Real Estate Corporation from January 1990 to May 1996

Mark D. Kemp	47	Senior Vice President and Controller of Centex Corporation since September 2004; interim Chief Financial Officer from June 2006 to October 2006; Vice President and Controller of Centex Corporation from December 2002 to September 2004; Partner and employee at Arthur Andersen LLP from December 1983 to August 2002

Scott J. Richter	50	Executive Vice President – Operations Support of Centex Real Estate Corporation since May 2007; Executive Vice President of Centex Real Estate Corporation from December 2006 to May 2007; President of the Minnesota Division and President of various California Divisions of Centex Real Estate Corporation from May 1990 to December 2006

Catherine R. Smith	45	Executive Vice President and Chief Financial Officer of Centex Corporation since October 2006; Executive Vice President and Chief Financial Officer of Kennametal, Inc. from April 2005 to October 2006; Executive Vice President and Chief Financial Officer of Bell Systems, a business segment of Textron, Inc., from October 2003 to April 2005; various financial positions including Vice President and Chief Financial Officer of the Intelligence and Information Systems business segment of Raytheon Company from August 1986 to September 2003

Robert S. Stewart	55	Senior Vice President – Strategy, Marketing, Sales, and Corporate Development of Centex Corporation since July 2007; Senior Vice President – Strategy and Corporate Development from April 2005 to June 2007; Senior Vice President – Strategic Planning and Marketing from May 2000 to March 2005; Employee at the Weyerhaeuser Company from March 1977 to May 2000, during which time he held a range of key management positions, including positions in strategic planning

Brian J. Woram	48	Senior Vice President, Chief Legal Officer, General Counsel and Assistant Secretary of Centex Corporation since December 2004 (Secretary from December 2004 to March 2005); Senior Vice President, General Counsel and Assistant Secretary of Centex Real Estate Corporation from September 1998 to December 2004

~~Table of Contents~~20

InTable ~~fiscal year 2004, we consummated the tax-free spin-offs to our stockholders~~ of ~~substantially~~ all of our manufactured housing operations in June 2003 and our entire ownership interest in Eagle Materials Inc., formerly known as Centex Construction Products, Inc., a former majority-owned subsidiary which we referred to as Construction Products, on January 30, 2004. Manufactured housing and Construction Products are reported as discontinued operations in our consolidated financial statements. Contents

~~FISCAL~~PART ~~YEAR 2005 COMPARED TO FISCAL YEAR 2004~~ II

~~HOME~~ITEM ~~BUILDING~~ 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The following summarizes the results of our Home Building operations for the two-year period ended March 31, 2005 (dollars in millions except per unit data and lot information):

	Stock Prices and Dividends

	Year Ended March 31, 2009						Year Ended March 31, 2008
	Price						Price
	High		Low		Dividends		High		Low		Dividends
Quarter
First	$	27.72	$	13.33	$	.04	$	49.85	$	39.59	$	.04
Second	$	18.71	$	10.91	$	.04	$	44.23	$	24.55	$	.04
Third	$	17.16	$	4.91	$	-	$	30.75	$	17.77	$	.04
Fourth	$	12.49	$	5.03	$	-	$	30.29	$	18.17	$	.04

	For the Years Ended March 31,
	2005						2004
				% Change						% Change
Revenues — Housing	$	9,499.1			27.7	%	$	7,438.0			27.8	%
Revenues — Land Sales and Other		361.9			124.1	%		161.5			55.4	%
Cost of Sales — Housing		(6,844.6	)		25.3	%		(5,460.8	)		25.2	%
Cost of Sales — Land Sales and Other		(266.9	)		82.3	%		(146.4	)		60.4	%
Selling, General and Administrative Expenses		(1,373.0	)		31.7	%		(1,042.3	)		22.7	%
Earnings from Unconsolidated Entities		68.9			24.6	%		55.3			71.7	%
Operating Earnings	$	1,445.4			43.8	%	$	1,005.3			54.3	%
Operating Earnings as a Percentage of Revenues		14.7	%	NM				13.2	%	NM

The principal market for our common stock is the New York Stock Exchange (ticker symbol CTX). The approximate number of record holders of our common stock at May 8, 2009 was 2,899.

~~Home~~The remaining ~~Building’s~~information ~~results~~called ~~are~~for ~~derived~~by ~~from~~this ~~its~~item ~~domestic~~relating ~~and~~to ~~international~~securities ~~operations~~authorized for asissuance under equity compensation plans is reported in Note (K), “Capital ~~described~~Stock ~~below.~~and Employee Benefit Plans,” of the Notes to Consolidated Financial Statements.

~~Domestic~~Share Repurchases

~~Home~~From ~~Building’s~~time to ~~domestic~~time, ~~operations~~we ~~involve~~have ~~the~~repurchased ~~purchase~~shares ~~and development~~ of ~~land~~our orcommon ~~lots~~stock ~~and the~~pursuant ~~construction~~to ~~and sale of detached and attached single-family homes (including resort and second~~publicly ~~home~~announced ~~properties~~share ~~and~~repurchase ~~lots) and land or lots~~programs. The following ~~summarizes~~table ~~the~~details ~~results of~~ our ~~Home~~ ~~Building~~common ~~domestic~~stock ~~operations~~repurchases for the ~~two-year~~three ~~period~~months ended March 31, ~~2005:~~ 2009:

	For the Years Ended March 31,
	Issuer Purchases of Equity Securities
	2005					2004
	Total Number of Shares Purchased		Average Price Paid Per Share			Total Number of Shares Purchased as Part of Publicly Announced Plan		Maximum Number of Shares that May Yet Be Purchased Under the Plan
			% Change					% Change
Period
Units Closed		33,387		10.0	%		30,358		14.9	%
January 1-31		-	$	-			-		9,399,700
Average Unit Sales Price	$	269,780		11.3	%	$	242,465		10.1	%
February 1-29		-	$	-			-		9,399,700
Operating Earnings Per Unit	$	41,298		29.8	%	$	31,816		33.2	%
March 1-31		5,718	$	7.50			-		9,399,700
Average Operating Neighborhoods		589		5.6	%		558		7.5	%
Total (1)		5,718	$	7.50			-
Closings Per Average Neighborhood		56.7		4.2	%		54.4		6.9	%

26 (1) The 5,718 shares repurchased for the three months ended March 31, 2009 represent the delivery to the Company by employees or directors of previously issued shares to satisfy the exercise price of options and/or withholding taxes that arise on the exercise of options or the vesting of restricted stock. These transactions are authorized under the terms of the equity plans under which the options or other equity were awarded; however, these transactions are not considered repurchases pursuant to the Company’s share repurchase program.

~~Table~~On May 11, 2006, our Board of ~~Contents~~Directors authorized the repurchase of 12 million shares of our common stock. After giving effect to repurchases after that date, the current approved repurchase authorization is 9,399,700 shares. Purchases are made in the open market or in block purchases, and such transactions may be effected from time to time or pursuant to share repurchase plans under SEC Rule 10b5-1. The share repurchase authorization has no stated expiration date.

	As of March 31,
	2005					2004
			% Change					% Change
Backlog Units		18,589		20.6	%		15,414		27.9	%
Lots Owned		96,945		25.1	%		77,475		29.5	%
Lots Controlled		168,350		45.9	%		115,366		62.7	%
Total Lots Owned and Controlled		265,295		37.6	%		192,841		47.5	%

~~Domestic~~Table ~~Home Building’s financial performance is reflective~~ of ~~changes in the following performance indicators:~~ Contents

~~• Growth in average neighborhoods • Growth in closings per average neighborhood • Increases in average unit sales price • Operating margin improvement~~Performance Graph

The following ~~summarizes~~graph ~~changes~~compares the yearly change in ~~performance~~the ~~indicators~~cumulative ~~for~~total stockholder return on our common stock during the ~~year~~five fiscal years ended March 31, ~~2005~~2009 aswith ~~compared~~the toS&P 500 Index and the ~~prior~~S&P ~~year~~Home Building Index.

WeThe comparison ~~define~~assumes a$100 ~~neighborhood~~was asinvested anon ~~individual~~March ~~active~~31, ~~selling~~2004 ~~location~~in ~~targeted~~our tocommon astock ~~specific buyer~~and ~~segment.~~in ~~For~~each of the ~~year~~foregoing ~~ended March 31~~indices, ~~2005,~~and weassumes ~~opened~~reinvestment ~~336~~of ~~neighborhoods~~dividends ~~and~~in ~~closed~~the form ~~out~~ of ~~293 neighborhoods,~~cash ~~driving~~or ~~our~~property. This ~~average~~graph ~~operating~~is ~~neighborhoods~~not intended to ~~589,~~forecast athe future ~~5.6%~~performance ~~increase~~of ~~over~~our ~~the~~common ~~prior~~stock and may not be indicative of such future ~~year~~performance.

~~Higher sales rates continue to contribute to our growth in closings per average neighborhood.~~Centex Sales per average neighborhood were 62.1 for the year ended March 31, 2005, a 2.8% increase over the prior year. This sales rate increase can be attributed to our continued focus on market research, enhanced sales and marketing activities and activity-based sales management. Sales orders increased in each of our geographic regions in fiscal year 2005, and sales growth rates were particularly strong in the mid-Atlantic and west coast regions, which achieved increases over the prior year of 10.7% and 10.8%, respectively. For all regions, sales orders totaled 36,562 units for the year ended March 31, 2005, an increase of 8.4% versus the prior year. The increase in sales per average neighborhood, as well as the increase in average operating neighborhoods, resulted in an increase of home closing volume of 10.0% to 33,387 homes for the year ended March 31, 2005, as compared to the prior year. Corporation

Current housing market conditions, combined with our geographic, product and segment diversification strategies, continued to drive higher average selling prices. For the year ended March 31, 2005, average selling prices were up 11.3% to $269,780 as compared to the prior year. The increase is primarily due to strong demand in the southeast and west coast regions resulting in pricing power, as well as a greater mix of homes closed in the west coast region. California continues to experience the largest average sales price increase among the states in which we operate as average prices rose to $514,081, a $68,619 increase over the prior year.

	2004	2005	2006	2007	2008	2009
Centex Corporation	$100	$106	$115	$ 78	$ 45	$14
S&P 500 Index	$100	$107	$119	$133	$127	$78
S&P HB Index	$100	$126	$138	$ 95	$ 56	$30

Selling, general and administrative expenses increased at a slightly higher rate than revenues for the year ended March 31, 2005 primarily due to increases in employee count to support planned neighborhood growth and increased incentive compensation reflective of the growth in operating earnings. 22

~~Operating~~Table ~~margins (consisting~~ of operating earnings as a percentage of revenues) for Home Building’s domestic operations improved to 14.7% for the year ended March 31, 2005, compared to 12.8% for the year ended March 31, 2004. Increased unit volume, increases in average unit selling price, continued focus on lowering direct construction costs, increased land sales, improved margin on land sales, and earnings from joint ventures resulted in margin improvement throughout Home Building’s domestic operations. National and regional purchasing programs and local cost reduction and efficiency efforts have helped partially offset Contents

27 ITEM 6. SELECTED FINANCIAL DATA

~~Table~~ Summary of ~~Contents~~Selected Financial Data (Unaudited) (1)

~~increasing raw material costs experienced throughout the year. We purchase materials,~~(Dollars ~~services~~in ~~and land from numerous sources~~thousands, ~~and~~except ~~during~~per ~~the~~share ~~past twelve months have been able to deal effectively with the challenges we have experienced relating to the supply or availability of materials, services and land.~~ data)

The above factors contributed to the improvement in our operating earnings, which is reflective of our continued focus on our “Quality Growth” strategy, consisting of growing revenue and earnings while improving margins.


	For the Years Ended March 31,
	2009			2008			2007			2006		2005

Revenues	$	3,826,530		$	8,275,562		$	11,887,601		$	12,742,666	$	9,842,700
Earnings (Loss) from Continuing
Operations	$	(1,440,151	)	$	(2,660,968	)	$	(9,477	)	$	1,212,665	$	898,571
Net Earnings (Loss)	$	(1,388,754	)	$	(2,657,482	)	$	268,366		$	1,289,313	$	1,011,364
Stockholders’ Equity	$	917,814		$	2,298,661		$	5,112,269		$	5,011,658	$	4,280,757
Total Assets	$	5,918,114		$	8,137,332		$	13,199,933		$	21,364,999	$	20,011,163
Total Debt	$	3,223,924		$	3,662,220		$	5,565,157		$	6,055,197	$	4,799,365

Per Common Share
Earnings (Loss) from Continuing
Operations Per Share – Basic	$	(11.58	)	$	(21.71	)	$	(0.08	)	$	9.56	$	7.18
Earnings (Loss) from Continuing
Operations Per Share – Diluted	$	(11.58	)	$	(21.71	)	$	(0.08	)	$	9.13	$	6.79
Net Earnings (Loss) Per Share –
Basic	$	(11.17	)	$	(21.68	)	$	2.23		$	10.16	$	8.08
Net Earnings (Loss) Per Share –
Diluted	$	(11.17	)	$	(21.68	)	$	2.23		$	9.71	$	7.64
Cash Dividends	$	0.08		$	0.16		$	0.16		$	0.16	$	0.16
Book Value Per Share Based
on Shares Outstanding at
Year End	$	7.38		$	18.65		$	42.61		$	41.04	$	33.51

Average Shares Outstanding
Basic		124,308,846			122,577,071			120,537,235			126,870,887		125,226,596
Diluted		124,308,846			122,577,071			120,537,235			132,749,797		132,397,961

Stock Prices
High	$	27.72		$	49.85		$	64.62		$	79.66	$	66.14
Low	$	4.91		$	17.77		$	40.41		$	55.10	$	39.94

~~During~~(1) ~~the~~The ~~year,~~selected wefinancial ~~continued~~data topresented ~~increase~~in ~~our~~this ~~land~~table, ~~position~~excluding tostock ~~facilitate~~prices ~~our~~for ~~short~~the ~~and~~periods ~~longer term~~covered ~~growth~~by ~~initiatives.~~the ~~Our~~financial ~~total~~statements ~~land~~included ~~position~~in ~~owned~~this orReport ~~controlled~~and ~~under~~all ~~option~~prior ~~agreements at March 31~~periods, ~~2005~~have ~~will~~been ~~provide~~derived ~~land~~from ~~for~~our ~~approximately~~audited ~~100%~~financial ofstatements ~~closings~~and ~~for~~adjusted ~~fiscal~~to ~~year~~reflect ~~2006~~home services operations (sold in April 2008), ~~80%~~Construction ~~of closings~~Services ~~for~~(sold ~~fiscal~~in ~~year~~March 2007), ~~and~~Home ~~50%~~Equity of(sold ~~closings~~in ~~for~~July ~~fiscal~~2006) ~~year~~and ~~2008~~International ~~based~~Homebuilding on(sold ~~our~~in ~~current closing~~September ~~projections~~2005) as discontinued operations.

~~International~~ 23

~~Our~~Table ~~international homebuilding operations currently involve the purchase and development~~ of ~~land~~ or lots and the construction and sale of a range of products from small single-family units to executive houses and apartments in the United Kingdom. In February 2004, we acquired the Partnership through merger transactions. Prior to the merger, we accounted for our investment in the Partnership on the equity method of accounting. Subsequent to the merger, international homebuilding operations of the Partnership have been consolidated with the Home Building segment. Prior period earnings related to the international homebuilding operations of the Partnership, previously reflected in our investment real estate operations, have been reclassified to the Home Building segment to conform to the presentation subsequent to the merger. The following summarizes the results of Home Building’s international operations for the year ended March 31, 2005 (dollars in millions): Contents

	For the Year Ended March 31, 2005
Revenues	$	501.3
Operating Earnings	$	66.6
Units Closed		1,563

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~For~~The ~~the~~following ~~year~~discussion ~~ended~~is ~~March 31,~~intended ~~2004,~~to ~~earnings~~help ~~from~~the ~~unconsolidated~~reader ~~entities~~gain ~~included~~a ~~$25.3~~better understanding ~~million~~of ~~related~~our tofinancial ~~the~~condition ~~international~~and ~~homebuilding~~our ~~operations~~results of ~~the Partnership~~operations. It ~~Earnings from~~is ~~unconsolidated~~provided ~~entities~~as ~~for~~a ~~fiscal~~supplement ~~2004 related~~ to, ~~international~~and ~~homebuilding~~should ~~operations~~be ~~are~~read ~~not comparative~~in toconjunction ~~operating~~with, ~~earnings~~our financial ~~presented~~statements ~~above~~and asaccompanying ~~operating~~notes ~~earnings~~included ~~exclude~~in ~~interest expense~~this ~~and taxes~~Report.

~~FINANCIAL SERVICES~~Executive Summary

~~The~~Our results ~~Financial~~of ~~Services~~operations ~~segment~~for isthe ~~primarily~~year ~~engaged~~ended inMarch ~~the~~31, ~~residential~~2009 were materially affected by continuing adverse conditions impacting our homebuilding and mortgage lending ~~business~~operations. Market information for calendar 2008, asthe ~~well~~most asrecent annual ~~other~~period ~~financial~~for ~~services~~which ~~that~~data ~~are~~is inavailable, ~~large~~illustrate ~~part~~the ~~related~~effect of these conditions on the homebuilding industry. According to the ~~residential~~U.S. Census ~~mortgage~~Bureau, ~~market.~~only ~~Its~~485,000 ~~operations~~new ~~include~~homes ~~mortgage~~were ~~origination~~sold in calendar 2008, ~~servicing~~a 37.5% decline from calendar 2007 and ~~other~~a ~~related~~62.2% ~~services for~~decline ~~purchasers~~from the five-year high of 1,283,000 homes ~~sold~~set in bycalendar ~~our~~2005. In ~~Home~~addition, ~~Building~~median ~~operations~~new ~~and~~home ~~other~~prices ~~homebuilders~~in calendar 2008 fell from $248,000 ~~sub~~in calendar 2007 to $232,000 in calendar 2008, reflecting the largest single year-~~prime~~to-year ~~home~~decline since ~~equity~~1970. Finally, ~~lending~~as ~~and~~of December 31, 2008, the ~~sale~~U.S. ofCensus ~~title~~Bureau estimated ~~insurance~~that ~~and~~there ~~various~~was ~~other~~an ~~insurance~~8.8 ~~coverages~~month supply of new homes, ~~including~~which is ~~property~~approximately ~~and~~double ~~casualty~~the median level since 2000.

28The current adverse market conditions began in fiscal year 2006 and, in the most recent periods, have worsened in part due to disruptions in financial and credit markets and the current national economic recession, which is one of the most pronounced downturns experienced in many years. We are unable to predict whether the market will deteriorate further or when it will improve. Any further deterioration in market conditions is likely to have a material adverse effect on our business, financial condition and results of operations.

~~Table~~A summary of ~~Contents~~our results of operations by line of business is as follows (dollars in thousands):

The following summarizes the results of our Financial Services operations for the two-year period ended March 31, 2005 (dollars in millions):


	For the Years Ended March 31,
	2009			2008			2007

Revenues
Home Building	$	3,636,530		$	7,965,614		$	11,414,827
Financial Services		190,000			309,948			468,001
Other		-			-			4,773
Total	$	3,826,530		$	8,275,562		$	11,887,601

Earnings (Loss) from Continuing Operations
Before Income Taxes
Home Building	$	(1,246,925	)	$	(2,599,576	)	$	205,353
Financial Services		(59,492	)		(138,153	)		84,530
Other		(220,354	)		(137,429	)		(183,097	)
Total	$	(1,526,771	)	$	(2,875,158	)	$	106,786

	For the Years Ended March 31,
	2005						2004
				% Change						% Change
Revenues	$	1,107.2			5.7	%	$	1,047.9			22.6	%
Cost of Sales		(284.0	)		26.9	%		(223.8	)		21.3	%
Selling, General and Administrative Expenses		(618.8	)		4.2	%		(593.8	)		16.7	%
Operating Earnings	$	204.4			(11.2	%)	$	230.3			42.3	%
Interest Margin	$	364.6			20.7	%	$	302.0			75.2	%
Origination Volume	$	18,315.3			(3.8	%)	$	19,036.7			15.4	%
Number of Loans Originated		110,950			(11.2	%)		125,005			9.3	%
Number of Loan Applications		465,781			8.2	%		430,439			27.3	%

Revenues for the year ended March 31, 2009 were $3.83 billion, which represents a 53.8% decrease compared to the year ended March 31, 2008. The loss from continuing operations before income taxes for the year ended March 31, 2009 decreased to $1.53 billion.

~~Financial~~Beginning in ~~Services’~~fiscal ~~results~~year ~~are~~2006, ~~primarily~~many ~~derived~~U.S. ~~from~~housing ~~prime~~markets ~~mortgage~~began ~~lending~~to experience a significant downturn, which directly affected and ~~sub-prime~~continues to have a material adverse ~~home~~effect ~~equity~~on ~~lending~~our ~~operations~~business, asfinancial ~~described~~condition ~~below~~and results of operations. We believe the principal factors that have caused or are sustaining this downturn include each of the following:

~~Prime~~● ~~Mortgage~~current ~~Lending~~ economic conditions, including disruptions in the broader financial and credit markets and the current national economic recession, as evidenced by, among other things, high unemployment rates, which were 8.5% in March 2009, a level last seen in 1983, ● declining homebuyer demand due to lower consumer confidence and an inability of many homebuyers to sell their existing homes, ● elevated levels of new and existing homes for sale, including the impact of increases in residential foreclosures, which are expected to continue for the foreseeable future,

The following summarizes the results of our prime mortgage lending operations, which are conducted by CTX Mortgage Company, LLC and its related companies, for the two-year period ended March 31, 2005 (dollars in millions): 24

	For the Years Ended March 31,
	2005						2004
				% Change						% Change
Revenues	$	421.7			(19.1	%)	$	521.1			14.8	%
Cost of Sales		(32.2	)		47.0	%		(21.9	)		212.9	%
Selling, General and Administrative Expenses		(293.5	)		(12.0	%)		(333.4	)		0.4	%
Operating Earnings	$	96.0			(42.1	%)	$	165.8			44.6	%
Interest Margin	$	49.5			4.4	%	$	47.4			457.6	%
Average Interest Earning Assets	$	1,395.6			5.3	%	$	1,325.4			567.4	%
Average Yield		5.85	%	NM				5.72	%	NM
Average Interest Bearing Liabilities	$	1,364.1			9.5	%	$	1,246.2			841.2	%
Average Rate Paid		2.34	%	NM				1.95	%	NM

Table of Contents

~~The~~● ~~revenues~~reduced availability and ~~operating~~stricter ~~earnings~~terms of ~~CTX~~mortgage ~~Mortgage~~financing ~~Company,~~due ~~LLC~~to ~~and its related companies are derived primarily from~~ the ~~sale~~significant of mortgage ~~loans,~~market ~~together~~disruptions ~~with all related servicing rights,~~ and ~~interest~~ ~~income~~tightened ~~and~~credit ~~other~~standards ~~fees.~~for ~~Net origination fees~~homebuyers, ~~mortgage~~and ~~servicing~~● ~~rights,~~pricing ~~and~~pressures ~~other revenues~~resulting ~~derived~~ from ~~the~~a ~~origination~~variety of ~~mortgage~~factors, ~~loans~~including ~~are deferred and recognized when~~ the ~~related~~ ~~loan~~decision isof ~~sold~~homebuilders to aoffer ~~third-party~~significant ~~purchaser.~~discounts ~~Interest revenues on residential mortgage loans receivable are recognized using the interest (actuarial) method. Other revenues, including fees for title insurance~~ and ~~other~~sales ~~services~~incentives ~~performed~~to inliquidate ~~connection~~unsold ~~with~~inventories ~~mortgage~~of ~~lending~~new ~~activities, are recognized as earned~~homes.

InThe impact of the ~~normal~~above ~~course~~factors ofvaries depending ~~its~~upon ~~activities,~~the ~~CTX~~geographic ~~Mortgage~~market ~~Company,~~affected ~~LLC~~and the time period during which the relevant events occurred. The current downturn in the housing market began in fiscal year 2006 and ~~its~~was ~~related~~precipitated ~~companies~~by factors such as reduced ~~carry~~affordability of housing in some markets, increased inventories of ~~loans~~new ~~pending~~and used homes for sale and a decline in homebuyer consumer confidence. The effect of the downturn became more severe due to ~~third~~the market disruptions resulting from the sub-~~party~~prime ~~investors~~mortgage crisis, which began in fiscal year 2008 and ~~earn~~led anto ~~interest~~reduced ~~margin~~investor demand for mortgage loans and mortgage-backed securities. In the second quarter of fiscal year 2009, ~~which~~the wedeterioration ~~define~~in the overall economy accelerated leading to several international financial institutions filing for bankruptcy or merging with other institutions, declining stock valuations around the world, and the intervention in the capital markets by the United States government. This government intervention included government control of FNMA and FHLMC as well as the enactment of the $700 billion Emergency Economic Stabilization Act. These developments have severely impacted consumer confidence and demand for our homes.

29These market conditions materially and adversely impacted Home Building operating results for the year ended March 31, 2009 as evidenced by a $4.33 billion decrease in homebuilding revenues (which are net of discounts) as compared to the prior year. The decrease in revenues was primarily attributable to a significant decrease in the number of units closed and, to a lesser extent, a decrease in average revenue per unit.

~~Table~~We ofalso ~~Contents~~experienced a very pronounced decrease in sales orders during the year ended March 31, 2009. Sales orders decreased 55.9% to 10,866 for the year ended March 31, 2009. The precipitous drop in sales orders was primarily due to the abrupt and sweeping changes in the economy described above, which significantly reduced homebuyer demand. We expect that the decrease in sales orders will have a negative impact on our closings in the near term.

~~difference~~Our operating ~~between~~loss ~~interest~~of ~~revenue~~$1.53 onbillion ~~mortgage~~for ~~loans~~the ~~held~~year ~~for~~ended ~~sale~~March ~~and~~31, ~~interest~~2009 ~~expense~~is onalso ~~debt~~attributable ~~used~~ to ~~fund~~ the ~~mortgage~~following ~~loans.~~ impairments and write-offs:

~~Our~~● business strategy of selling prime loans reduces our capital investment and related risks, provides substantial cash flow and is an efficient process given the size and liquidity of the prime mortgage loan secondary capital markets$882.6 ~~CTX~~million ~~Mortgage~~in ~~Company, LLC originates mortgage loans and sells them to HSF~~land-Irelated ~~and investors. HSF-I is a variable interest entity for which we are the primary beneficiary and~~impairments, as● ~~of July~~ $157.1, ~~2003,~~million itin ~~was consolidated with~~ our ~~Financial~~share ~~Services segment. The consolidation~~ of ~~HSF-I~~joint ~~resulted~~ventures’ inimpairments, an● ~~increase~~$46.6 inmillion ~~our residential mortgage loans held for sale with a corresponding increase~~ in ~~our~~write-offs ~~debt.~~of Inland ~~addition,~~deposits ~~interest income~~ and ~~interest expense of HSF~~pre-Iacquisition ~~subsequent to June 30~~costs, ~~2003~~and ~~are~~● ~~reflected~~$38.1 million in ~~our~~goodwill ~~financial statements~~impairments.

~~The~~However, ~~following~~when ~~table~~compared ~~quantifies:~~to ~~(1)~~ the ~~volume~~year ended ofMarch 31, ~~loan~~2008, ~~sales~~Home toBuilding ~~investors~~operating ~~(third~~loss ~~parties),~~improved $1.4 ~~and~~billion. This ~~(2) the~~improvement ~~gains~~is ~~recorded~~primarily ondue ~~those~~to ~~sales~~a ~~and~~reduction ~~related~~in ~~derivative activity, collectively, gain on~~the ~~sale~~amount of ~~mortgage~~impairments ~~loans,~~and ~~which~~land-related iswrite-offs. Impairments ~~recorded~~and land-related aswrite-offs ~~revenues~~ for the ~~years~~year ended March 31, ~~2005~~2008 ~~and~~amounted ~~2004~~to $2.09 ~~(dollars~~billion in ~~millions):~~ the aggregate.

	For the Years Ended March 31,
	2005					2004
			% Change
Loan Sales to Investors	$	9,328.6		(28.9	%)	$	13,114.5
Gain on Sale of Mortgage Loans	$	141.7		(42.4	%)	$	245.9

During the quarter ended March 31, 2009, and consistent with prior quarters, we assessed our neighborhoods and land for possible impairments. The further deterioration of market conditions during the quarter adversely impacted anticipated future selling prices, sales rates and other assumptions included in our impairment evaluations, and we recorded 81 land-related impairments totaling $288.5 million. At March 31, 2009, the remaining carrying value of neighborhoods and land investments for which an impairment was recorded in the quarter ended March 31, 2009 was $237.9 million. If market conditions worsen, or if any of our assumptions are adjusted negatively in future periods, we may have additional land-related impairments, which could be significant.

~~The~~Financial ~~decreases~~Services inoperating ~~loan~~loss ~~sales~~for the ~~and~~year ~~gain~~ended onMarch 31, ~~sale~~2009 was $59.5 million as compared to an operating loss of ~~mortgage~~$138.2 ~~loans~~million ~~are~~for the ~~result~~year ofended aMarch 31, 2008. For the year ended March 31, 2009, mortgage loan origination volume decreased 58.6%. The decrease in mortgage loan origination volume is primarily attributable to the ~~volume~~adverse ofconditions ~~loans~~in ~~originated~~the mortgage markets and ~~sold~~the todecline in ~~investors~~homebuyer ~~and~~demand, anas ~~increase~~well inas the ~~origination~~wind-down of ~~less~~our Retail loan ~~profitable~~operations. Continued ~~adjustable~~adverse ~~rate~~market ~~mortgages,~~conditions orand ~~ARMs.~~further ~~ARMs~~declines in ashomebuyer demand could have a ~~percentage~~negative ofimpact ~~total~~on ~~originations~~Financial ~~were~~Services ~~48%~~future ~~and~~operating ~~23%~~results. Contributing to the loss for the ~~years~~year ended March 31, ~~2005~~2009 were additional provisions for losses, net of recoveries, for other mortgage loans and ~~2004~~impairments of real estate owned of $14.4 million. Also contributing to the loss during the year ended March 31, ~~respectively~~2009 was an increase of $25.0 million in the reserve for anticipated losses associated with mortgage loans originated and sold. The increase in the reserve is primarily related to anticipated mortgage loan losses attributable to a significant increase in investor repurchase and indemnification requests.

30 25

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~~Consistent~~During ~~with~~July ~~decreases~~2008, inFinancial ~~loan~~Services made ~~sales~~the ~~and~~decision ~~gain~~to oncease ~~sale~~originating ofRetail ~~mortgage~~ loans~~, revenues for the~~. Financial ~~year ended March 31~~Services, ~~2005,~~ which ~~include~~originally ~~revenues~~operated ~~from~~approximately ~~our~~80 ~~title~~retail ~~and insurance operations~~branches, ~~have~~ceased ~~also~~originating ~~decreased.~~Retail ~~Decreases~~loans induring ~~gain~~the onfourth ~~sale~~quarter of ~~mortgage~~fiscal ~~loans~~year 2009, and ~~revenues~~the wind-down ~~from~~was ~~our~~completed ~~title~~as ~~and insurance~~of ~~operations~~March 31, ~~were~~2009. During ~~slightly~~the ~~offset~~year ended byMarch 31, ~~increases~~2009, inwe ~~our~~recorded ~~fees~~$25.8 ~~received~~million in ~~connection~~costs ~~with~~related to the ~~brokering~~wind-down of ~~loans.~~our ~~The~~Retail ~~table~~loan ~~below~~operations. Due ~~provides~~to athe ~~comparative~~closure ~~analysis~~ of ~~mortgage loan originations~~our ~~and~~retail ~~applications~~branch ~~for~~locations, ~~the~~we ~~years~~transitioned ~~ended~~our ~~March 31,~~mortgage ~~2005~~operations ~~and~~to ~~2004.~~a centralized ~~CTX~~production ~~Mortgage Company~~model, ~~LLC~~which ~~tracks loan~~resulted ~~applications~~in ~~until~~$7.9 ~~such~~million ~~time~~of astransition expenses ~~the~~incurred ~~loan~~during ~~application~~the isyear ~~canceled.~~ended ~~Application~~March 31, ~~data presented~~2009. The ~~below~~elimination ~~includes~~of ~~loans~~substantially ~~originated~~all inRetail ~~the period and~~ loans, ~~scheduled~~as towell ~~close~~as in the ~~subsequent~~implementation of ~~periods.~~a ~~Applications~~centralized ~~canceled~~production ~~were 16~~model,~~488~~ ~~and~~may ~~20,590~~have ~~for~~a ~~the~~negative ~~fiscal~~impact ~~years~~on ~~ended~~Financial ~~March 31, 2005~~Services ~~and~~operating ~~2004~~results.

	For the Years Ended March 31,
	2005					2004
			% Change					% Change
Origination Volume (in millions)	$	13,039.0		(13.7	%)	$	15,116.0		8.0	%
Number of Loans Originated
Builder		22,517		7.9	%		20,865		15.1	%
Retail		44,816		(33.6	%)		67,481		1.0	%
		67,333		(23.8	%)		88,346		4.0	%
Number of Loan Applications
Builder		24,631		2.5	%		24,031		19.5	%
Retail		39,848		(39.2	%)		65,514		(6.3	%)
		64,479		(28.0	%)		89,545		(0.5	%)
Average Loan Size	$	193,600		13.2	%	$	171,100		3.9	%
Profit Per Loan	$	1,425		(24.0	%)	$	1,876		39.0	%

On October 9, 2008, we announced that our Board of Directors suspended our quarterly cash dividend on our common stock. The suspension of our dividend is intended to enable us to preserve stockholders’ equity and conserve cash for use in our business during the current downturn in the housing market. We cannot predict when or under what circumstances dividend payments would resume.

~~The~~During ~~decrease in loan originations is primarily~~ the ~~result~~year ofended ~~a significant decrease in~~March 31, ~~refinancing activity~~2009, ~~partially~~we ~~offset~~generated by$1,381.4 anmillion ~~increase~~ in ~~Builder~~cash ~~originations,~~flows ~~which~~from ~~resulted~~operating ~~from~~activities, anwhich ~~increase~~was inprimarily ~~Home~~provided ~~Building’s~~by ~~closings~~home and ~~our~~land ~~continued~~sales ~~focus~~from onour ~~serving this customer base. For~~homebuilding ~~the year ended March 31~~operations, ~~2005,~~federal ~~CTX~~income ~~Mortgage~~tax ~~Company,~~refunds ~~LLC~~resulting ~~originated~~from ~~73%~~the carryback of the ~~non-cash unit~~ ~~closings~~fiscal ofyear ~~Home~~2008 ~~Building’s~~net ~~customers,~~operating ~~versus~~loss ~~74%~~to ~~for the~~ prior ~~year.~~years, ~~Profit~~and ~~per~~decreases ~~loan decreased~~ in mortgage ~~fiscal~~loans ~~2005~~held ~~due~~for tosale, anas ~~increase~~aggregate inloan ~~the~~sales ~~origination~~exceeded ofinvestment ~~less~~in ~~profitable~~new ~~ARMs,~~mortgage loans. As ~~as well as~~ a ~~reduction in~~result, ~~operating~~we ~~leverage~~had ~~resulting~~$1.36 ~~from~~billion ~~a decrease~~ in ~~the~~cash ~~volume~~and ofcash ~~loan~~equivalents at ~~originations~~March 31, 2009.

~~CTX~~We ~~Mortgage~~anticipate ~~Company,~~that ~~LLC’s~~our business and results of operations ~~are~~will ~~influenced~~continue to be affected by ~~borrowers’~~the ~~perceptions~~extremely ofdifficult industry conditions and ~~reactions~~ tothe ~~interest~~broader ~~rates~~difficult economic conditions for some time. However, ~~Refinancing~~in ~~activity~~general, ~~accounted~~we ~~for~~believe ~~21%~~that ~~and~~our ~~39%~~existing sources of funding, ~~originations~~including inavailable ~~the years~~cash ~~ended~~on ~~March 31~~hand, ~~2005~~cash ~~and~~flow ~~2004,~~from ~~respectively.~~operations ~~Refinancing~~and ~~activity~~our committed ~~has~~credit ~~declined~~facilities ~~due~~are adequate to anmeet our anticipated operating and ~~extended~~capital ~~period~~expenditure needs, letter of ~~relatively~~credit ~~low~~needs ~~mortgage~~and ~~loan~~debt ~~rates,~~service ~~which~~requirements for ~~has~~at ~~reduced~~least the ~~supply~~next oftwelve ~~loans~~months. Further ~~likely to~~deterioration bein ~~refinanced.~~market conditions, ~~Any~~including ~~significant~~lower ~~increase~~demand inor ~~mortgage~~prices ~~interest~~for ~~rates~~our ~~above~~homes, ~~current~~further ~~prevailing~~disruptions ~~levels~~of ~~could~~the ~~affect~~mortgage markets, continued disruption in the ~~ability~~broader financial services industry or ~~willingness~~the ofUnited ~~prospective~~States ~~homebuyers~~economy toin ~~finance~~general ~~home~~would ~~purchases and/or~~likely ~~curtail~~result ~~mortgage~~in ~~refinance~~declines in ~~activity.~~sales ~~Although~~of ~~there~~our ~~can~~homes beand nofewer ~~assurance~~mortgage ~~that~~loans, ~~these~~accumulation ~~efforts~~of unsold inventory ~~will~~and bemargin ~~successful~~deterioration, weas ~~will~~well ~~seek~~as topotential ~~mitigate~~additional ~~the~~land-related impairments ~~effects~~and write-offs of ~~any~~deposits ~~increase~~and inpre-acquisition costs. These ~~mortgage~~or ~~interest~~other ~~rates by~~developments ~~increasing~~could ~~our~~reduce ~~market~~cash ~~share~~flow, bycause ~~adding~~us to ~~loan~~incur ~~officers~~additional ~~and~~losses, ~~improving~~or ~~their~~cause ~~productivity~~us ~~while~~not atto be in compliance with financial ~~the~~or ~~same~~other ~~time~~covenants, requiring that we seek toamendments ~~improve~~or waivers to our ~~operating~~credit facilities ~~leverage.~~to ensure continued availability of committed debt financing.

31On October 3, 2008, the President of the United States signed into law the Emergency Economic Stabilization Act of 2008 that authorized up to $700 billion in new spending authority for the United States Secretary of the Treasury to purchase, manage and ultimately dispose of troubled assets. On February 17, 2009, the President of the United States signed into law the American Recovery and Reinvestment Act of 2009 that authorizes stimulus payments and benefits up to $800 billion. The 2009 Act included federal tax relief, expansion of unemployment benefits and other social welfare provisions, and domestic spending in education, health care, and infrastructure, including the energy sector. The United States Congress continues to consider certain proposed legislation that, if enacted, could have a favorable impact on the homebuilding industry, including provisions that would increase the carryback period for net operating losses generated during any taxable years beginning or ending in 2008 and 2009 from two years to five years. There can be no assurance that any recently enacted or possible future legislation whether or not enacted will actually have a favorable impact on our operations or financial condition.

~~Table~~The fundamentals that support homebuyer demand and the current market conditions remain unstable due to low consumer confidence, and we cannot predict the duration of ~~Contents~~the current market conditions. In response, we continue to adjust our operations by reducing our unsold inventory, reducing our land position, adjusting our workforce, and lowering our costs. Our unsold inventory decreased from 1,754 units as of March 31, 2008 to 1,258 units as of March 31, 2009. Since March 31, 2008, our total land position decreased by 24,035 lots or 27.2%. Further, Home Building selling, general and administrative expenses decreased from $1,111.6 million for the year ended March 31, 2008 to $560.2 million for the year ended March 31, 2009. We are also working to reduce the costs of constructing our homes through simplification and process improvements.

~~Sub-Prime~~Because ~~Home~~of ~~Equity~~the ~~Lending~~substantial adverse changes in business conditions and in the credit markets, we have placed a high priority on generating and conserving cash to provide stability and a source of cash for future operations. We consider and will continue to consider ways to create operating efficiencies and activities that will strengthen the Company’s financial condition including, among other things, the repurchase or restructuring of our outstanding debt securities.

~~The following summarizes the results of our sub-prime home equity lending operations for the two-year period ended March 31, 2005 (dollars in millions):~~ 26

	For the Years Ended March 31,
	2005						2004
				% Change						% Change
Revenues	$	685.5			30.1	%	$	526.8			31.3	%
Cost of Sales		(251.8	)		24.7	%		(201.9	)		13.7	%
Selling, General and Administrative Expenses:
Operating Expenses		(226.5	)		25.2	%		(180.9	)		27.8	%
Loan Loss Provision		(98.8	)		24.3	%		(79.5	)		127.8	%
Operating Earnings	$	108.4			68.1	%	$	64.5			36.9	%
Interest Margin	$	315.1			23.8	%	$	254.6			55.3	%
Average Interest Earning Assets	$	7,274.0			30.1	%	$	5,592.2			43.6	%
Average Yield		7.79	%	NM				8.16	%	NM
Average Interest Bearing Liabilities	$	7,498.7			28.8	%	$	5,822.6			43.8	%
Average Rate Paid		3.36	%	NM				3.47	%	NM

Table of Contents

~~The revenues of Home Equity increased primarily as a result of continued growth in our~~Subsequent portfolio of residential mortgage loans held for investment and as a result of a program of whole loan sales to third parties. Our portfolio growth translated into more interest income, our largest component of revenue. Home Equity recorded approximately $42.3 million in net revenue and operating earnings related to the whole loan sales for the year ended March 31, 2005. Whole loan sales have the effect of increasing current revenues but decreasing future interest margin that would have been recognized had the loans been securitized or retained as inventory. The estimated net impact on operating earnings from resulting gain on sale treatment was approximately $21.0 million. A program of whole loan sales is a component of Home Equity’s diversification of funding sources and provides more efficient utilization of capital. Events

~~Cost~~On April 7, 2009, Centex Corporation and Pulte Homes, Inc. entered into a definitive merger agreement pursuant to which Centex will merge with a wholly-owned subsidiary of ~~sales~~Pulte, and survive the merger as a wholly-owned subsidiary of Pulte. Under the terms of the agreement, Centex stockholders will receive 0.975 shares of Pulte common stock for each share of Centex common stock they own. Upon closing of the transaction, Pulte stockholders will own approximately 68% of the combined company, and Centex stockholders will own approximately 32%. The transaction is ~~comprised~~subject to approval by Pulte and Centex stockholders and the satisfaction of ~~interest~~other ~~expense~~customary closing conditions and regulatory approvals, ~~which~~including ~~increased~~expiration inor ~~fiscal~~termination ~~year~~of ~~2005~~any ~~commensurate~~applicable ~~with~~waiting ~~increases~~period inunder ~~our~~the ~~average~~Hart-Scott-Rodino ~~debt~~Antitrust ~~outstanding~~Improvements Act of 1976, as amended. Pulte and ~~increases~~Centex inexpect ~~interest~~to ~~rates~~complete ~~since~~the transaction in the ~~prior~~third ~~year~~calendar quarter of 2009. For additional information with regard to this transaction, please refer to Note (O), “Subsequent Events,” of the Notes to Consolidated Financial Statements.

~~Operating~~On May 18, ~~expenses~~2009, ~~for~~Centex and the ~~year~~IRS ~~ended~~settled ~~March 31,~~several ~~2005~~disputed ~~increased~~tax asissues relating ato ~~result~~the audit of ~~Home~~its ~~Equity’s~~federal income tax returns filed for fiscal years ~~continued~~2001 ~~growth~~through 2004. The disputed issues related primarily to our use of net operating losses, among other items. The ~~increase~~settlement resulted in ~~loan~~a ~~production~~tax ~~volume,~~liability ~~the~~of ~~expansion~~approximately $63 million of ~~branch~~which ~~offices~~$62 million was paid in June 2006. As a result of the settlement with the IRS and the ~~increase~~recognition inof the ~~number~~uncertain oftax ~~employees~~benefits ~~led~~related to athe ~~corresponding~~disputed ~~increase~~issues, inwe will ~~salaries~~record an income tax benefit and ~~related~~an ~~costs,~~increase to net equity of approximately ~~rent~~$270 ~~expense,~~million ~~group~~during ~~insurance~~the ~~costs~~first ~~and~~quarter ~~advertising~~of ~~expenditures~~fiscal year 2010.

~~The increase in the loan loss provision for the year ended March 31, 2005 occurred primarily~~FISCAL ~~because~~YEAR of2009 ~~the~~COMPARED ~~increase~~TO inFISCAL ~~residential~~YEAR mortgage loans held for investment. Also, as the portfolio continues to mature and grow, we expect the provision for losses, the loans charged off and the allowance for losses to continue to increase. For a more detailed discussion of our accounting policy and methodology for establishing the provision for losses, see “Critical Accounting Estimates-Valuation of Residential Mortgage Loans Held for Investment.” Changes in the allowance for losses are included in Note (B), “Residential Mortgage Loans Held for Investment,” of the Notes to Consolidated Financial Statements of this Report. 2008

~~The increase in operating earnings for the year ended March 31, 2005 is primarily attributable~~HOME to the increase in interest margin, which we define as the difference between interest revenue on mortgage loans held for sale or investment and interest expense on debt used to fund the mortgage loans. Interest margin for the year ended March 31, 2005 increased primarily as a result of an increase in the portfolio of mortgage loans held BUILDING

32The following summarizes the results of our Home Building operations for the two-year period ended March 31, 2009 (dollars in thousands):


	For the Years Ended March 31,
	2009						2008
				Change						Change
Revenues – Housing	$	3,578,182			(52.5	)%	$	7,529,191			(31.6	)%
Revenues – Land Sales and Other		58,348			(86.6	)%		436,423			9.1	%
Cost of Revenues – Housing		(3,124,648	)		(52.2	)%		(6,539,544	)		(24.0	)%
Cost of Revenues – Land Sales and Other (1)		(1,013,358	)		(62.8	)%		(2,721,219	)		160.5	%
Selling, General and Administrative Expenses		(560,215	)		(49.6	)%		(1,111,641	)		(27.0	)%
Goodwill Impairment		(38,101	)		(51.3	)%		(78,236	)		100.0	%
Loss from Unconsolidated Entities (2)		(159,449	)		23.7	%		(128,902	)		74.7	%
Other Income		12,316			(14.2	)%		14,352			(54.0	)%
Operating Loss (3)	$	(1,246,925	)		(52.0	)%	$	(2,599,576	)	NM
Operating Loss as a Percentage of Revenues:
Housing Operations (4)		(3.0	)%		(1.4	)		(1.6	)%		(9.7	)
Total Homebuilding Operations		(34.3	)%		(1.7	)		(32.6	)%		(34.4	)

NM = Not Meaningful

~~for~~(1) ~~investment.~~Includes Inland-related ~~the~~impairments ~~current~~and ~~year,~~write-offs ~~interest margin as a percentage~~ of ~~revenues~~deposits ~~has decreased~~and ~~primarily~~pre-acquisition ~~as a result of an increasing interest rate environment, as well as increased competitive industry conditions~~costs. ~~Whole loan sale transactions also contributed to the increase in operating earnings for the year ended March 31, 2005.~~

~~Average~~(2) ~~interest~~Loss ~~earning~~from ~~assets~~Unconsolidated ~~and~~Entities ~~liabilities~~include ~~for~~our ~~the~~share ~~year~~of ~~ended~~joint ~~March 31,~~ventures’ ~~2005~~impairments ~~increased primarily~~totaling ~~due~~$157.1 tomillion anand ~~increase~~$100.5 inmillion for the ~~volume~~years ofended ~~loan~~March ~~originations~~31, 2009 and an2008, ~~increase in average loan size (see table below)~~respectively.

~~The~~(3) ~~following~~Operating ~~table~~loss ~~provides~~represents aHome ~~comparative~~Building ~~analysis~~reporting ofsegments’ ~~mortgage~~earnings ~~loan~~exclusive ~~originations~~of ~~and applications~~certain ~~for~~corporate ~~the~~general ~~two-year~~and ~~period~~administrative ~~ended March 31, 2005:~~ expenses.

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

(4)

Operating loss from housing operations is a non-GAAP financial measure, which we believe is useful to investors as it allows them to separate housing operations from activities related to land holdings, options to acquire land and related land valuation adjustments. Management uses this non-GAAP financial measure to aid in evaluating the performance of its ongoing housing projects. Operating earnings from housing operations is equal to Housing Revenues less Housing Cost of Revenues and Selling, General and Administrative Expenses, all of which are set forth in the table above.

The increase in origination volume was due to an increase in the average loan size and an increase in the overall sales force, which resulted in an increase in the number of loan applications received. 27

~~The~~Table ~~following summarizes Home Equity’s portfolio~~ of ~~mortgage loans, classified by the securitization structure used, as of March 31, 2005 and 2004:~~ Contents

	For the Years Ended March 31,
	2005					2004
			% Change					% Change
Servicing Portfolio:
Number of Loans
Portfolio Accounting Method		83,972		10.2	%		76,215		24.8	%
Serviced for Others		16,431		51.3	%		10,858		(18.5	%)
Total		100,403		15.3	%		87,073		17.0	%
Dollars in billions
Portfolio Accounting Method	$	7.91		21.7	%	$	6.50		40.1	%
Serviced for Others		1.40		118.8	%		0.64		(23.8	%)
Total	$	9.31		30.4	%	$	7.14		30.3	%

	Home Building consists of the following reporting segments with operations located in the following states: East: Florida, Georgia, Maryland, New Jersey, North Carolina, South Carolina and Virginia Central: Colorado, Illinois, Indiana, Michigan, Minnesota, Missouri, Tennessee and Texas West: Arizona, California, Hawaii, Nevada, New Mexico, Oregon and Washington Other homebuilding (1)
	(1)	Other homebuilding includes certain resort/second home projects in Florida that we plan to build out and liquidate, and holding companies. In addition, Other homebuilding includes amounts consolidated under the caption “land held under option agreements not owned” and capitalized interest for all regions.

~~Home Equity periodically securitizes its inventory of mortgage loan originations or engages in~~The ~~whole~~following ~~loan~~tables ~~sales~~summarize inunits ~~order~~closed toand ~~provide~~average ~~funding~~revenue ~~for its mortgage operations.~~per unit:

The majority of Home Equity’s servicing portfolio is accounted for using the portfolio accounting method in accordance with FASB Statement of Financial Accounting Standards, or SFAS, No. 91, “Accounting for Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases,” where (1) loan originations are securitized and accounted for as borrowings; (2) interest income is recorded over the life of the loans using the interest (actuarial) method; (3) the mortgage loans receivable and the securitization debt (asset-backed certificates) remain on Home Equity’s balance sheet; and (4) the related interest margin is reflected in the income statement. This structure of securitizations has been utilized since April 1, 2000.


	For the Years Ended March 31,
	2009					2008
			Change					Change
Units Closed
East		4,621		(44.6	)%		8,334		(28.2	)%
Central		5,930		(42.5	)%		10,306		(19.3	)%
West		3,847		(53.1	)%		8,211		(21.9	)%
Other homebuilding		36		(89.7	)%		351		(61.0	)%
		14,434		(46.9	)%		27,202		(24.0	)%

Average Revenue Per Unit
East	$	274,676		(5.6	)%	$	290,955		(9.0	)%
Central	$	180,430		(1.3	)%	$	182,855		(0.5	)%
West	$	318,942		(15.4	)%	$	377,012		(14.3	)%
Other homebuilding	$	332,833		(6.0	)%	$	353,900		(4.7	)%
Total Home Building	$	247,900		(10.4	)%	$	276,788		(10.1	)%

Another component of Home Equity’s servicing portfolio includes securitizations accounted for as gain on sale in accordance with FASB SFAS No. 125, “Accounting for Transfers and Servicing of Financial Assets Revenues

33Housing revenues significantly decreased for the year ended March 31, 2009 as compared to the prior year primarily due to a significant decrease in the number of units closed and, to a lesser extent, a decrease in average revenue per unit. For the year ended March 31, 2009, average revenue per unit (which is net of customer discounts) decreased primarily as a result of lower prices experienced in most of our markets, offset in part by decreases in customer discounts. Customer discounts decreased to 8.9% of housing revenues for the year ended March 31, 2009, down from 12.3% for the year ended March 31, 2008. For the year ended March 31, 2009, our closings declined when compared to the prior year as a result of decreases in sales orders caused principally by the challenging market conditions as described in the Executive Summary above.

~~Table~~Revenues from land sales and other decreased 86.6% to $58.3 million for the year ended March 31, 2009 as compared to the prior year. The timing and amount of ~~Contents~~land sales may vary significantly from period to period. The decrease in revenues from land sales when compared to fiscal year 2008 is primarily the result of significant land sales in the fourth quarter of fiscal year 2008, which did not recur in fiscal year 2009.

~~and Extinguishments of Liabilities,” where from October 1997 through March 2000, an estimate~~Changes ~~of the entire gain resulting from the sale was included~~ in ~~earnings~~average ~~during~~operating ~~the~~neighborhoods ~~period~~and inclosings ~~which~~per ~~the securitization~~average ~~transaction~~neighborhood ~~occurred. This is referred to as the gain on sale method and is~~are ~~included~~outlined in the ~~“Serviced for Others” category in the above~~ table. ~~Unlike the portfolio accounting method, our balance sheet does not reflect the mortgage loans receivable or the offsetting debt resulting from these securitizations~~below. However, under the gain on sale method, Home Equity’s retained residual interest in, as well as the servicing rights to, the securitized loans are reflected on the balance sheet. Home Equity carries MSRI at fair value on the balance sheet.

The “Serviced for Others” category of Home Equity’s servicing portfolio also includes loans sold on a whole loan servicing-retained basis. Home Equity continues to service these loans, which resulted in a $2.8 million servicing asset recorded, based on the present value of estimated future cash flows as of March 31, 2005. For the year ended March 31, 2005, Home Equity’s whole loan sales on a servicing-retained basis totaled $920.4 million. No such sales occurred during fiscal year 2004.


	For the Years Ended March 31,
	2009					2008
			Change					Change
Average Operating Neighborhoods (1)		520		(19.5	)%		646		(6.0	)%
Closings Per Average Neighborhood		27.8		(34.0	)%		42.1		(19.2	)%

~~The~~(1) ~~structure~~We ofdefine ~~Home~~a ~~Equity’s~~neighborhood ~~securitizations~~as ~~has~~an noindividual ~~effect~~active onselling ~~the~~location ~~ultimate~~targeted amount of profit and cash flow recognized over the life of the mortgages. However, the structure does affect the timing of profit recognition. Under both structures, recourse on the securitized debt is limited to ~~the~~a ~~payments~~specific ~~received~~buyer onsegment ~~the~~with ~~underlying~~greater ~~mortgage~~than ~~collateral~~ten ~~with~~homes noremaining ~~recourse~~ to ~~Home~~be ~~Equity or Centex Corporation~~sold. ~~As is common in these structures, Home Equity remains liable for customary loan representations.~~

The primary risks in Home Equity’s operations are consistent with those of the financial services industry and include credit risk associated with its loans, liquidity risk related to funding its loans and interest rate risk prior to securitization of the loans. Although the volume of originations in our Home Equity operations is less sensitive to increases in interest rates than CTX Mortgage Company, LLC and its related companies, interest rate increases generally result in decreased interest margins. In addition, it is also subject to prepayment risks (principal reductions in excess of contractually scheduled reductions) associated with loans securitized prior to April 2000. For additional information on Home Equity’s MSRI, see Note (A), “Significant Accounting Policies,” of the Notes to the Consolidated Financial Statements of this Report. 28

~~CONSTRUCTION~~Table ~~SERVICES~~ of Contents

~~The~~Our neighborhood ~~following~~count ~~summarizes~~as ~~Construction~~of ~~Services’~~March ~~results~~31, ~~for~~2008 ~~the~~was ~~two-year~~602 ~~period~~neighborhoods, ~~ended~~and ~~March~~it has steadily decreased to a neighborhood count of 472 as of March 31, 2009. The ~~2005~~drop ~~(dollars~~in neighborhood count, which we expect to continue, is the result of our decisions not to reinvest in ~~millions):~~certain markets, to sell certain properties that did not meet our strategic initiatives and to significantly curtail development spending, which delays the opening of new neighborhoods.

	For the Years Ended March 31,
	2005					2004
			% Change					% Change
Revenues	$	1,738.6		8.9	%	$	1,596.3		5.2	%
Operating Earnings	$	23.5		43.3	%	$	16.4		(46.6	%)
New Contracts Executed	$	1,992.9		9.3	%	$	1,823.2		112.7	%

Operating Margins

	As of March 31,
	2005					2004
			% Change					% Change
Backlog of Uncompleted Contracts	$	2,001.3		14.6	%	$	1,746.4		14.9	%

Homebuilding operating margins (consisting of operating loss as a percentage of revenues) decreased to (34.3)% for the year ended March 31, 2009 as compared to (32.6)% for the year ended March 31, 2008. These decreases in homebuilding operating margins were primarily attributable to the timing and amount of our Home Building impairments. The following table summarizes Home Building goodwill, land-related impairments and write-offs of deposits and pre-acquisition costs, excluding our share of joint ventures’ impairments (dollars in thousands):

Revenues and operating earnings for the year ended March 31, 2005 increased as compared to the prior year. Revenue increases are due to an increase in the number of active projects and an increase in average contract size. As of March 31, 2005, we had 243 active projects, which represents a 14.1% increase over the prior year. The construction services industry continues to experience pricing pressure; however, industry conditions are improving. The increase in new contracts executed and backlog of uncompleted contracts was


	For the Years Ended March 31,
	2009						2008
	Goodwill Impairments		Land-related Impairments		Land-related Write-offs		Goodwill Impairments		Land-related Impairments (1)		Land-related Write-offs
East	$	30,594	$	329,915	$	23,055	$	24,761	$	323,738	$	62,433
Central		5,102		84,636		6,030		9,709		82,976		17,033
West		2,405		460,839		17,485		43,766		1,213,681		40,828
Other homebuilding		-		7,163		-		-		172,034		131
	$	38,101	$	882,553	$	46,570	$	78,236	$	1,792,429	$	120,425

34 (1) Land-related impairments include direct construction impairments of $14.9 million for the year ended March 31, 2008.

~~Table~~We regularly assess our land holdings, including our lot options, taking into consideration changing market conditions and other factors. In connection with our quarterly neighborhood assessments, during the quarter ended March 31, 2009, we reviewed approximately 770 neighborhoods and land investments for potential land-related impairments. Approximately 730 of ~~Contents~~these neighborhoods are owned land positions that are either designated as active neighborhoods, are under development but are not considered active neighborhoods, are currently held for sale or will be developed in future periods. The remaining 40 neighborhoods represent controlled land positions approved for purchase. Land-related impairments during the quarter ended March 31, 2009 affected 81 neighborhoods and land investments.

~~primarily~~Also, ~~due~~during to the ~~execution~~year ofended March 31, 2009, we determined it was probable we would not exercise certain lot option contracts, ~~for~~which ~~multi~~resulted in writing off deposits and pre-~~unit~~acquisition costs ~~residential~~for ~~projects~~86 option contracts, resulting in a remaining balance of 55 outstanding option contracts at March 31, 2009. Continued deterioration ~~Construction~~in demand and market conditions could result in significant ~~Services~~additional ~~defines~~impairments ~~backlog~~and asa ~~the~~decision ~~uncompleted~~to ~~portion~~not ofexercise ~~all~~additional ~~signed~~lot option contracts, which would result in additional write-offs. In addition, we could incur additional losses and impairments related to our joint ventures. Please refer to “Inventory Valuation” in the Critical Accounting Estimates and to Note (C), “Inventories,” of the Notes to Consolidated Financial Statements for additional details on our land holdings.

Construction Services has also been awarded work that is pending execution of a signed contract. At March 31, 2005 and 2004, such work, which is not included in backlog, was approximately $2.61 billion and $2.03 billion, respectively. There is no assurance that this awarded work will result in future revenues. 29

~~OTHER~~ Table of Contents

~~Our~~Home ~~Other~~Building ~~segment~~selling, ~~includes~~general ~~our~~and administrative ~~home~~expenses ~~services~~decreased ~~operations~~$551.4 million, ~~investment~~or ~~real~~49.6%, ~~estate~~for ~~operations~~the year ended March 31, 2009 when compared to the prior year. One of the factors ~~corporate~~contributing to the decrease in selling, general and administrative ~~expense~~expenses was a reduction in personnel that resulted in a substantial reduction in compensation and ~~interest~~benefit ~~expense~~costs. The number of Home Building employees, excluding sales personnel, was 874 and 3,024 as of March 31, 2009 and 2008, respectively. We are focused on adjusting our organization in response to current market conditions, and continue to combine divisions and shift divisional activities into central locations to more effectively leverage resources across the organization. In addition, sales commissions for the year ended March 31, 2009 have decreased in correlation with decreases in units closed and average revenue per unit. The following table summarizes Home Building selling, general and administrative expenses, or SG&A (dollars in thousands):

The following summarizes the components of the Other segment’s loss from continuing operations before income tax (dollars in millions):


	For the Years Ended March 31,
	2009						2008
				Change						Change
Compensation and Benefits	$	224,318			(45.1	)%	$	408,932			(35.8	)%
Sales Commissions		162,639			(55.3	)%		364,236			(21.6	)%
Advertising and Marketing		57,292			(60.7	)%		145,919			(26.9	)%
Other		115,966			(39.8	)%		192,554			(13.4	)%
Selling, General and Administrative Expenses	$	560,215			(49.6	)%	$	1,111,641			(27.0	)%

SG&A as a Percentage of Revenues		15.4	%		1.4			14.0	%		0.7

	For the Years Ended March 31,
	2005						2004
				% Change						% Change
Operating Loss from Home Services Operations	$	(15.8	)		587.0	%	$	(2.3	)		(76.0	%)
Operating Earnings from Investment Real Estate Operations		21.4			(52.2	%)		44.8			31.8	%
Corporate General and Administrative Expenses		(82.9	)		(21.4	%)		(105.5	)		75.0	%
Interest Expense		(22.2	)		(44.4	%)		(39.9	)		(33.8	%)
Operating Loss	$	(99.5	)		(3.3	%)	$	(102.9	)		6.3	%

Sales Orders, Average Cancellation Rates, Backlog Units and Land Holdings

The following ~~increase~~tables insummarize ~~our~~sales ~~home~~orders, ~~services~~average ~~division’s~~cancellation ~~operating~~rates ~~loss~~and ~~in the year ended March 31, 2005~~backlog isunits. For ~~primarily~~each ~~due~~unit ~~to an increase~~ in ~~marketing~~backlog, ~~expenses~~we ~~resulting~~have ~~from~~received ~~expansion~~a ~~and~~signed ~~growth of our~~customer ~~home~~contract ~~services~~and ~~operations~~a ~~in the homebuilder~~ customer ~~market,~~deposit. The ~~coupled~~backlog ~~with~~units ~~incremental~~included ~~commissions~~in the ~~paid~~table onbelow ~~new~~are ~~sales~~net ~~growth.~~of Inknown ~~addition~~cancellations, inwhich ~~the~~occur ~~fourth~~for ~~quarter~~a ofvariety ~~fiscal year 2005~~of reasons, weincluding ~~took~~ a ~~charge of~~customer’s ~~$10.0 million~~inability to ~~notes~~obtain ~~receivable~~financing, ~~received~~customer injob ~~connection with the sale of our security~~loss ~~monitoring~~or ~~center~~relocation inor ~~fiscal~~other ~~year~~customer ~~2004~~financial hardships. Under ~~The fluctuations in our investment real estate division’s~~certain ~~operating~~circumstances, ~~earnings~~customer ~~were~~deposits ~~primarily~~are ~~related~~refundable toupon ~~the timing of property sales~~cancellation.

Corporate general and administrative expenses represent corporate employee compensation and other corporate costs such as investor communications, insurance, rent and professional services. The decrease in corporate general and administrative expenses in fiscal year 2005 is primarily related to $16 million in incremental executive compensation costs recorded in the prior year for the retirement of an executive officer.


	For the Years Ended March 31,
	2009					2008
			Change					Change
Sales Orders (in Units)
East		3,923		(47.7	)%		7,505		(11.9	)%
Central		4,636		(51.6	)%		9,586		(20.1	)%
West		2,274		(69.3	)%		7,406		(12.2	)%
Other homebuilding		33		(79.4	)%		160		52.4	%
		10,866		(55.9	)%		24,657		(15.1	)%

Sales Per Average Neighborhood		20.9		(45.3	)%		38.2		(9.7	)%

For the year ended March 31, 2005 and 2004, interest costs include interest expense of $22.2 million and $39.9 million, respectively, and previously capitalized interest included in Home Building’s costs and expenses of $137.0 million and $89.1 million, respectively. Total interest costs, excluding Financial Services’ interest expense, were $159.2 million and $129.0 million for the year ended March 31, 2005 and 2004, respectively. See Note (A), “Significant Accounting Policies,” of the Notes to Consolidated Financial Statements of this Report for further information on interest costs. The increase in total interest costs is primarily related to an increase in average debt outstanding for the year ended March 31, 2005 as compared to the prior year.


	For the Years Ended March 31,
	2009						2008
				Change						Change
Average Cancellation Rates
East		29.1	%		2.8			26.3	%		(6.1	)
Central		38.2	%		5.4			32.8	%		0.3
West		39.3	%		3.0			36.3	%		(4.4	)
Other homebuilding		5.7	%		(30.0	)		35.7	%		(38.8	)
Total Home Building		35.4	%		3.3			32.1	%		(3.4	)

Our effective tax rate related to continuing operations increased to approximately 36% in the year ended March 31, 2005 from 32% in fiscal 2004, primarily due to the reduction in the availability of tax benefits related to the Company’s net operating loss carryforwards in fiscal 2005 as compared to the prior year. See Note (L), “Income Taxes,” of the Notes to Consolidated Financial Statements of this Report for further information on income taxes. 30

35 Table of Contents


	As of March 31,
	2009					2008
			Change					Change
Backlog Units
East		1,750		(28.5	)%		2,448		(25.3	)%
Central		1,661		(43.8	)%		2,955		(25.9	)%
West		767		(67.2	)%		2,340		(26.3	)%
Other homebuilding		-		(100.0	)%		3		(98.6	)%
		4,178		(46.1	)%		7,746		(27.3	)%

Backlog Value (in millions)	$	999		(50.4	)%	$	2,016		(36.5	)%

~~DISCONTINUED~~For ~~OPERATIONS~~the year ended March 31, 2009, sales orders declined substantially in all of the regions in which we do business when compared to the prior year. We expect that the decreases in sales orders will have a negative impact on our closings in the near term.

InAs ~~June 2003~~previously discussed, we ~~spun~~believe ~~off~~the precipitous ~~tax-free~~decrease toin ~~our~~sales ~~stockholders~~orders ~~substantially~~was ~~all~~primarily ofdue ~~our~~to ~~manufactured housing~~the ~~operations,~~abrupt and sweeping changes in ~~January 2004,~~the weeconomy ~~spun~~which ~~off~~significantly ~~tax-free~~reduced tohomebuyer demand. The ~~our~~decline ~~stockholders~~in ~~our~~consumer ~~entire~~confidence ~~equity interest~~is inevidenced ~~Construction~~by ~~Products~~a 55.8% drop Asin acustomer ~~result~~traffic ofduring the ~~spin-offs,~~year ~~the~~ended ~~earnings~~March 31, ~~from~~2009 ~~these~~when compared ~~operations~~to ~~for~~the ~~fiscal~~prior ~~2004~~year, and ~~all~~cancellation ~~periods~~rates ~~prior~~that increased to ~~the~~35.4% ~~spin-offs~~from ~~have~~32.1% ~~been reclassified to~~for ~~discontinued operations in~~ the ~~Statements~~year ofended ~~Consolidated~~March ~~Earnings~~31, 2008.

~~For~~In light of the ~~year~~continuing ~~ended~~adverse market ~~March 31~~conditions, ~~2004,~~our ~~discontinued~~strategy ~~operations~~is ~~had~~to ~~revenues~~focus ofon ~~$461.9 million~~selling homes, reducing inventories, reducing costs, generating cash and simplifying our business ~~operating~~through ~~earnings~~process ofimprovement ~~$49~~initiatives.~~9 million.~~ We are closely monitoring speculative housing starts so that we can reduce our speculative inventory and facilitate our transition to an operating model more focused on constructing homes from a sold backlog.

~~FISCAL~~Total ~~YEAR~~speculative ~~2004~~inventory ~~COMPARED~~decreased 28.3% TOto ~~FISCAL~~1,258 ~~YEAR~~units, ~~2003~~excluding models, at March 31, 2009 compared to 1,754 units at March 31, 2008. We have also continued to take actions to reduce our land position. The following table summarizes our land position:

HOME BUILDING

As of March 31,

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